Exhibit 10.1
 
Second Amended and Restated Credit Agreement
Dated as of October 5, 2006,
among
Penford Corporation
The Guarantors from time to time parties hereto,
the Lenders from time to time parties hereto,
and
Harris N.A.
as Administrative Agent
 
BMO Capital Markets
as Sole Lead Arranger and Sole Book Runner

 

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Table of Contents

              Section   Heading   Page  
 
           
Section 1.
  The Credit Facilities     1  
 
           
Section 1.1.
  Term Loan Commitments     1  
Section 1.2.
  Revolving Credit Commitments     2  
Section 1.3.
  Letters of Credit     3  
Section 1.4.
  Applicable Interest Rates     6  
Section 1.5.
  Minimum Borrowing Amounts; Maximum Eurocurrency Loans     7  
Section 1.6.
  Manner of Borrowing Loans and Designating Applicable Interest Rates     7  
Section 1.7.
  Interest Periods     9  
Section 1.8.
  Maturity of Loans     11  
Section 1.9.
  Prepayments     12  
Section 1.10.
  Default Rate     16  
Section 1.11.
  The Notes     16  
Section 1.12.
  Funding Indemnity     17  
Section 1.13.
  Commitment Terminations     18  
Section 1.14.
  Substitution of Lenders     18  
Section 1.15.
  Swing Loans     19  
 
           
Section 2.
  Fees     21  
 
           
Section 2.1.
  Fees     21  
 
           
Section 3.
  Place and Application of Payments     22  
 
           
Section 3.1.
  Place and Application of Payments     22  
Section 3.2.
  Account Debit     23  
 
           
Section 4.
  Guaranties and Collateral     24  
 
           
Section 4.1.
  Guaranties     24  
Section 4.2.
  Collateral     24  
Section 4.3.
  Liens on Real Property     25  
Section 4.4.
  Further Assurances     25  
 
           
Section 5.
  Definitions; Interpretation     25  
 
           
Section 5.1.
  Definitions     25  
Section 5.2.
  Interpretation     46  
Section 5.3.
  Change in Accounting Principles     46  
 
           
Section 6.
  Representations and Warranties     46  
 
           
Section 6.1.
  Organization and Qualification     46  

 

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              Section   Heading   Page  
Section 6.2.
  Subsidiaries     47  
Section 6.3.
  Authority and Validity of Obligations     47  
Section 6.4.
  Use of Proceeds; Margin Stock     48  
Section 6.5.
  Financial Reports     48  
Section 6.6.
  No Material Adverse Change     48  
Section 6.7.
  Full Disclosure     48  
Section 6.8.
  Trademarks, Franchises, and Licenses     49  
Section 6.9.
  Governmental Authority and Licensing     49  
Section 6.10.
  Good Title     49  
Section 6.11.
  Litigation and Other Controversies     49  
Section 6.12.
  Taxes     49  
Section 6.13.
  Approvals     49  
Section 6.14.
  Affiliate Transactions     50  
Section 6.15.
  Investment Company; Public Utility Holding Company     50  
Section 6.16.
  ERISA     50  
Section 6.17.
  Compliance with Laws     50  
Section 6.18.
  Other Agreements     51  
Section 6.19.
  Solvency     51  
Section 6.20.
  No Default     51  
 
           
Section 7.
  Conditions Precedent     51  
 
           
Section 7.1.
  All Credit Events     51  
Section 7.2.
  Initial Credit Event     52  
Section 7.3.
  Initial Loan Under Capital Expansion Credit     54  
 
           
Section 8.
  Covenants     55  
 
           
Section 8.1.
  Maintenance of Business     55  
Section 8.2.
  Maintenance of Properties     55  
Section 8.3.
  Taxes and Assessments     55  
Section 8.4.
  Insurance     55  
Section 8.5.
  Financial Reports     56  
Section 8.6.
  Inspection     58  
Section 8.7.
  Borrowings and Guaranties     58  
Section 8.8.
  Liens     59  
Section 8.9.
  Investments, Acquisitions, Loans and Advances     60  
Section 8.10.
  Mergers, Consolidations and Sales     61  
Section 8.11.
  Maintenance of Subsidiaries     62  
Section 8.12.
  Dividends and Certain Other Restricted Payments     62  
Section 8.13.
  ERISA     62  
Section 8.14.
  Compliance with Laws     63  
Section 8.15.
  Burdensome Contracts With Affiliates     64  
Section 8.16.
  No Changes in Fiscal Year     64  
Section 8.17.
  Formation of Subsidiaries     64  
Section 8.18.
  Change in the Nature of Business     64  
Section 8.19.
  Use of Proceeds     64  

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              Section   Heading   Page  
Section 8.20.
  No Restrictions     64  
Section 8.21.
  Subordinated Debt     64  
Section 8.22.
  Financial Covenants     65  
Section 8.23.
  Cost Over-Runs     66  
Section 8.24.
  Post-Closing Items     66  
 
           
Section 9.
  Events of Default and Remedies     66  
 
           
Section 9.1.
  Events of Default     66  
Section 9.2.
  Non-Bankruptcy Defaults     69  
Section 9.3.
  Bankruptcy Defaults     69  
Section 9.4.
  Collateral for Undrawn Letters of Credit     70  
Section 9.5.
  Notice of Default     70  
Section 9.6.
  Expenses     70  
 
           
Section 10.
  Change in Circumstances     71  
 
           
Section 10.1.
  Change of Law     71  
Section 10.2.
  Unavailability of Deposits or Inability to Ascertain, or Inadequacy of, LIBOR
    71  
Section 10.3.
  Increased Cost and Reduced Return     71  
Section 10.4.
  Lending Offices     73  
Section 10.5.
  Discretion of Lender as to Manner of Funding     73  
 
           
Section 11.
  The Administrative Agent     73  
 
           
Section 11.1.
  Appointment and Authorization of Administrative Agent     73  
Section 11.2.
  Administrative Agent and its Affiliates     73  
Section 11.3.
  Action by Administrative Agent     74  
Section 11.4.
  Consultation with Experts     74  
Section 11.5.
  Liability of Administrative Agent; Credit Decision     74  
Section 11.6.
  Indemnity     75  
Section 11.7.
  Resignation of Administrative Agent and Successor Administrative Agent     75
 
Section 11.8.
  L/C Issuer     76  
Section 11.9.
  Hedging Liability and Funds Transfer and Deposit Account Liability
Arrangements     76  
Section 11.10.
  Designation of Additional Agents     76  
Section 11.11.
  Authorization to Release or Subordinate or Limit Liens     77  
Section 11.12.
  Authorization to Enter into, and Enforcement of, the Collateral Documents    
77  
 
           
Section 12.
  The Guarantees     77  
 
           
Section 12.1.
  The Guarantees     77  
Section 12.2.
  Guarantee Unconditional     78  
Section 12.3.
  Discharge Only upon Payment in Full; Reinstatement in Certain Circumstances  
  79  

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              Section   Heading   Page  
Section 12.4.
  Subrogation     79  
Section 12.5.
  Waivers     79  
Section 12.6.
  Limit on Recovery     79  
Section 12.7.
  Stay of Acceleration     80  
Section 12.8.
  Benefit to Guarantors     80  
Section 12.9.
  Guarantor Covenants     80  
 
           
Section 13.
  Miscellaneous     80  
 
           
Section 13.1.
  Withholding Taxes     80  
Section 13.2.
  No Waiver, Cumulative Remedies     81  
Section 13.3.
  Non-Business Days     81  
Section 13.4.
  Documentary Taxes     82  
Section 13.5.
  Survival of Representations     82  
Section 13.6.
  Survival of Indemnities     82  
Section 13.7.
  Sharing of Set-Off     82  
Section 13.8.
  Notices     82  
Section 13.9.
  Counterparts     83  
Section 13.10.
  Successors and Assigns     83  
Section 13.11.
  Participants     83  
Section 13.12.
  Assignments     84  
Section 13.13.
  Amendments     86  
Section 13.14.
  Headings     86  
Section 13.15.
  Costs and Expenses; Indemnification     86  
Section 13.16.
  Set-off     87  
Section 13.17.
  Entire Agreement     88  
Section 13.18.
  Governing Law     88  
Section 13.19.
  Severability of Provisions     88  
Section 13.20.
  Excess Interest     88  
Section 13.21.
  Construction     89  
Section 13.22.
  Lender’s Obligations Several     89  
Section 13.23.
  Submission to Jurisdiction; Waiver of Jury Trial     89  
Section 13.24.
  USA Patriot Act     89  
Section 13.25.
  Currency     89  
Section 13.26.
  Currency Equivalence     90  
Section 13.27.
  Amendment and Restatement     90  

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Exhibit A
  —   Notice of Payment Request
Exhibit B
  —   Notice of Borrowing
Exhibit C
  —   Notice of Continuation/Conversion
Exhibit D-1
  —   Term Note
Exhibit D-2
  —   Capital Expansion Note
Exhibit D-3
  —   Revolving Note
Exhibit D-4
  —   Swing Note
Exhibit E
  —   Compliance Certificate
Exhibit F
  —   Additional Guarantor Supplement
Exhibit G
  —   Assignment and Acceptance
Exhibit H
  —   Opinion of Counsel
Exhibit I
  —   Commitment Amount Increase Request
Schedule 1
  —   Commitments
Schedule 6.2
  —   Subsidiaries
Schedule 8.9
  —   Existing Investments

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Second Amended and Restated Credit Agreement
     This Second Amended and Restated Credit Agreement is entered into as of
October 5, 2006, by and among Penford Corporation, a Washington corporation (the
“Borrower”), the direct and indirect Subsidiaries of the Borrower from time to
time party to this Agreement, as Guarantors, the several financial institutions
from time to time party to this Agreement, as Lenders, and Harris N.A., as
Administrative Agent as provided herein. All capitalized terms used herein
without definition shall have the same meanings herein as such terms are defined
in Section 5.1 hereof.
Preliminary Statement
     The Borrower, the Lenders and the Administrative Agent are parties to an
Amended and Restated Credit Agreement dated as of August 22, 2005 (as previously
supplemented and amended, the “Original Credit Agreement”). The Borrower has
requested that the Lenders make certain further amendments to the Original
Credit Agreement and, for the sake of convenience and clarity, to restate the
Original Credit Agreement in its entirety as so amended. Accordingly, upon
satisfaction of the conditions precedent to effectiveness contained in
Section 7.2 hereof, the Credit Agreement and all Exhibits and Schedules thereto
shall be amended and as so amended shall be restated in their entirety to read
as follows:
Section 1. The Credit Facilities.
     Section 1.1. Term Loan Commitments. (a) Subject to the terms and conditions
hereof, each Lender, by its acceptance hereof, severally agrees to make a loan
(individually a “New Term Loan” and collectively for all the Lenders the “New
Term Loans”) in U.S. Dollars to the Borrower in the amount equal to the excess
of (i) such Lender’s Term Loan Commitment over (ii) such Lender’s Existing Term
Loans. The New Term Loans shall be advanced in a single Borrowing on the Closing
Date and shall be made ratably by the Lenders in proportion to their respective
Term Loan Percentages, at which time the Term Loan Commitments shall expire.
Upon the making of the New Term Loans, the Existing Term Loans shall be deemed
to be outstanding under this Agreement for all purposes whatsoever and each New
Term Loan and Existing Term Loan held by each Lender shall be deemed to
constitute a single debt of the Borrower to such Lender. The New Term Loans and
the Existing Term Loans together shall be referred to individually as a “Term
Loan” and collectively for all the Lenders the “Term Loans”). As provided in
Section 1.6(a) hereof, the Borrower may elect that the Term Loans be outstanding
as Base Rate Loans or Eurocurrency Loans. No amount repaid or prepaid on any
Term Loan may be borrowed again.
     (b) Subject to the terms and conditions hereof, each Lender, by its
acceptance hereof, severally agrees to make a loan (individually a “Capital
Expansion Loan” and collectively for all the Lenders the “Capital Expansion
Loans”) in U.S. Dollars to the Borrower from time to time up to the amount of
such Lender’s Capital Expansion Loan Commitment, subject to any reductions
thereof pursuant to the terms hereof, before the Capital Expansion Credit
Termination Date, at which time the unused Capital Expansion Loan Commitments
shall expire (the period

 

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commencing on the Closing Date and ending on the Capital Expansion Credit
Termination Date is referred to as the “Availability Period”). Each Borrowing of
Capital Expansion Loans shall be made ratably by the Lenders in proportion to
their respective Capital Expansion Loan Percentages. As provided in
Section 1.6(a) hereof, the Borrower may elect that the Capital Expansion Loans
be outstanding as Base Rate Loans or Eurocurrency Loans. No amount repaid or
prepaid on any Capital Expansion Loan may be borrowed again.
     Section 1.2. Revolving Credit Commitments. (a) Subject to the terms and
conditions hereof, each Lender, by its acceptance hereof, severally agrees to
make a loan or loans (individually a “Revolving Loan” and collectively the
“Revolving Loans”) in U.S. Dollars and in Alternative Currencies to the Borrower
from time to time on a revolving basis up to the amount of such Lender’s
Revolving Credit Commitment, subject to any reductions thereof pursuant to the
terms hereof, before the Revolving Credit Termination Date,; provided that any
Blocked Unused Commitments may be used only to pay Cost Over-Runs related to the
Ethanol Facility. Upon the making of the initial Revolving Loans hereunder, the
Existing Revolving Loans and the Existing Australian Dollar Term Loans shall be
deemed to be Revolving Loans in U.S. Dollars and Australian Dollars,
respectively, outstanding under this Agreement for all purposes whatsoever. The
sum of the (i) aggregate Original Dollar Amount of Revolving Loans,
(ii) aggregate principal amount of Swing Loans, and (iii) U.S. Dollar Equivalent
of all L/C Obligations at any time outstanding shall not exceed the Revolving
Credit Commitments in effect at such time and the aggregate Original Dollar
Amount of Revolving Loans denominated in Alternative Currencies shall not exceed
$25,000,000. Each Borrowing of Revolving Loans shall be made ratably by the
Lenders in proportion to their respective Revolver Percentages. As provided in
Section 1.6(a) hereof, the Borrower may elect that each Borrowing of Revolving
Loans be either Base Rate Loans or Eurocurrency Loans. All Loans denominated in
an Alternative Currency shall be Eurocurrency Loans. Revolving Loans may be
repaid and the principal amount thereof reborrowed before the Revolving Credit
Termination Date, subject to the terms and conditions hereof.
     (b) The Borrower may, on any Business Day prior to the Revolving Credit
Termination Date, increase the aggregate amount of the Revolving Credit
Commitments by delivering a Commitment Amount Increase Request substantially in
the form attached hereto as Exhibit I or in such other form acceptable to the
Administrative Agent at least five (5) Business Days prior to the desired
effective date of such increase (the “Commitment Amount Increase”) identifying
an additional Lender (or additional Revolving Credit Commitments for existing
Lender(s)) and the amount of its Revolving Credit Commitment (or additional
amount of its Revolving Credit Commitment(s)); provided, however, that (i) any
increase of the aggregate amount of the Revolving Credit Commitments to an
amount in excess of $90,000,000 will require the approval of the Required
Lenders, (ii) any increase of the aggregate amount of the Revolving Credit
Commitments shall be in an amount not less than $10,000,000, (iii) no Default or
Event of Default shall have occurred and be continuing at the time of the
request or the effective date of the Commitment Amount Increase, and (iv) any
new Lender providing a new commitment shall be approved by the Administrative
Agent (which approval shall not be unreasonably withheld or delayed). The
effective date of the Commitment Amount Increase shall be agreed upon by the
Borrower and the Administrative Agent. Upon the effectiveness thereof, the new
Lender(s) (or, if applicable, existing Lender(s)) shall advance Revolving Loans
in an amount sufficient such

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that after giving effect to its Loans each Lender shall have outstanding its
Revolver Percentage of Revolving Loans. It shall be a condition to such
effectiveness that (i) if any Eurodollar Loans are outstanding under the
Revolving Credit on the date of such effectiveness, such Eurodollar Loans shall
be deemed to be prepaid on such date and the Borrower shall pay any amounts
owing to the Lenders pursuant to Section 1.12 hereof and (ii) the Borrower shall
not have terminated any portion of the Revolving Credit Commitments pursuant to
Section 1.13 hereof. The Borrower agrees to pay any reasonable expenses of the
Administrative Agent relating to any Commitment Amount Increase. Promptly upon
the effectiveness of any Commitment Amount Increase, the Borrower shall execute
and deliver new Revolving Notes in the amount of any additional Lender’s
Revolving Credit Commitment (or in the amount of any existing Lender’s increased
Revolving Credit Commitment). Notwithstanding anything herein to the contrary,
no Lender shall have any obligation to increase its Revolving Credit Commitment
and no Lender’s Revolving Credit Commitment shall be increased without its
consent thereto, and each Lender may at its option, unconditionally and without
cause, decline to increase its Revolving Credit Commitment.
     Section 1.3. Letters of Credit. (a) General Terms. Subject to the terms and
conditions hereof, as part of the Revolving Credit, the L/C Issuer shall issue
standby and commercial letters of credit (each a “Letter of Credit”) in U.S.
Dollars for the account of the Borrower or for the account of the Borrower and
one or more of its Subsidiaries in an aggregate undrawn face amount up to the
lesser of (i) the L/C Sublimit and (ii) the excess (if any) of the Revolving
Credit Commitments over the sum of the (x) aggregate Original Dollar Amount of
Revolving Loans, (y) aggregate principal amount of Swing Loans and (z) the U.S.
Dollar Equivalent of all L/C Obligations then outstanding, provided that the
aggregate U.S. Dollar Equivalent of all Letters of Credit issued for the account
of the Borrower’s Foreign Subsidiaries and the related L/C Obligations shall not
exceed $10,000,000 at any time. Each Letter of Credit shall be issued by the L/C
Issuer, but each Lender shall be obligated to reimburse the L/C Issuer for such
Lender’s Revolver Percentage of the amount of each drawing thereunder and,
accordingly, each Letter of Credit shall constitute usage of the Revolving
Credit Commitment of each Lender pro rata in an amount equal to its Revolver
Percentage of the L/C Obligations then outstanding. Notwithstanding anything in
this Agreement to the contrary, upon the making of the initial Revolving Loan
under this Agreement, the Existing Letters of Credit shall be deemed to be
Letters of Credit issued under this Agreement for all purposes whatsoever and
each application pursuant to which an Existing Letter of Credit was issued shall
be deemed to be an Application for all purposes.
     (b) Applications. At any time before the Revolving Credit Termination Date,
the L/C Issuer shall, at the request of the Borrower, issue one or more Letters
of Credit in U.S. Dollars, in a form satisfactory to the L/C Issuer, with
expiration dates no later than the earlier of 12 months from the date of
issuance (or which are cancelable not later than 12 months from the date of
issuance and each renewal) or 30 days prior to the Revolving Credit Termination
Date, in an aggregate face amount as set forth above, upon the receipt of an
application duly executed by the Borrower and, if such Letter of Credit is for
the account of one of its Subsidiaries, such Subsidiary for the relevant Letter
of Credit in the form then customarily prescribed by the L/C Issuer for the
Letter of Credit requested (each an “Application”). Notwithstanding anything
contained in any Application to the contrary: (i) the Borrower shall pay fees in
connection with

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each Letter of Credit as set forth in Section 2.1 hereof, (ii) except as
otherwise provided in Section 1.9 hereof, before the occurrence of a Default or
an Event of Default, the L/C Issuer will not call for the funding by the
Borrower of any amount under a Letter of Credit before being presented with a
drawing thereunder, and (iii) if the L/C Issuer is not timely reimbursed for the
amount of any drawing under a Letter of Credit on the date such drawing is paid,
the Borrower’s obligation to reimburse the L/C Issuer for the amount of such
drawing shall bear interest (which the Borrower hereby promises to pay) from and
after the date such drawing is paid at a rate per annum equal to the sum of 2.0%
plus the Applicable Margin plus the Base Rate from time to time in effect
(computed on the basis of a year of 365 or 366 days, as the case may be, and the
actual number of days elapsed). If the L/C Issuer issues any Letter of Credit
with an expiration date that is automatically extended unless the L/C Issuer
gives notice that the expiration date will not so extend beyond its then
scheduled expiration date, unless the Lenders instruct the L/C Issuer otherwise,
the L/C Issuer will give such notice of non-renewal before the time necessary to
prevent such automatic extension if before such required notice date: (i) the
expiration date of such Letter of Credit if so extended would be after the
Revolving Credit Termination Date, (ii) the Revolving Credit Commitments have
been terminated, or (iii) a Default or an Event of Default exists and the
Administrative Agent, at the request or with the consent of the Required
Lenders, has given the L/C Issuer instructions not to so permit the extension of
the expiration date of such Letter of Credit. The L/C Issuer agrees to issue
amendments to the Letter(s) of Credit increasing the amount, or extending the
expiration date, thereof at the request of the Borrower subject to the
conditions of Section 7 hereof and the other terms of this Section 1.3.
     (c) The Reimbursement Obligations. Subject to Section 1.3(b) hereof, the
obligation of the Borrower to reimburse the L/C Issuer for all drawings under a
Letter of Credit (a “Reimbursement Obligation”) shall be governed by the
Application related to such Letter of Credit, except that reimbursement shall be
made by no later than 12:00 Noon (Chicago time) on the date when each drawing is
to be paid if the Borrower has been informed of such drawing by the L/C Issuer
on or before 11:00 a.m. (Chicago time) on the date when such drawing is to be
paid or, if notice of such drawing is given to the Borrower after 11:00 a.m.
(Chicago time) on the date when such drawing is to be paid, by the end of such
day, in immediately available funds at the Administrative Agent’s principal
office in Chicago, Illinois or such other office as the Administrative Agent may
designate in writing to the Borrower (who shall thereafter cause to be
distributed to the L/C Issuer such amount(s) in like funds). If the Borrower
does not make any such reimbursement payment on the date due and the
Participating Lenders fund their participations therein in the manner set forth
in Section 1.3(d) below, then all payments thereafter received by the
Administrative Agent in discharge of any of the relevant Reimbursement
Obligations shall be distributed in accordance with Section 1.3(d) below. The
Reimbursement Obligations of the Borrower under this Agreement shall be
absolute, unconditional, and irrevocable, and shall be performed strictly in
accordance with the terms of the Loan Documents under all circumstances
whatsoever and the Borrower hereby waives any defense to the payment of the
Reimbursement Obligations based on any circumstance whatsoever, including in any
case, the following circumstances: (i) any lack of validity or enforceability of
any Letter of Credit or any other Loan Document; (ii) any amendment or waiver of
or any consent to departure from any Loan Document; (iii) the existence of any
claim, set-off, counterclaim, defense, or other rights which the Borrower or any
other Person may have at any time against any beneficiary of any Letter of
Credit, the Administrative Agent, the L/C

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Issuer, any Lender, or any other Person, whether in connection with any Loan
Document or any unrelated transaction; (iv) any statement, draft, or other
documentation presented under any 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 whatsoever; (v) payment by the L/C
Issuer under any Letter of Credit against presentation of a draft or other
document that does not comply with the terms of such Letter of Credit; or
(vi) any other circumstance whatsoever, whether or not similar to any of the
foregoing.
     (d) The Participating Interests. Each Lender (other than the Lender acting
as L/C Issuer in issuing the relevant Letter of Credit), by its acceptance
hereof, severally agrees to purchase from the L/C Issuer, and the L/C Issuer
hereby agrees to sell to each such Lender (a “Participating Lender”), an
undivided percentage participating interest (a “Participating Interest”), to the
extent of its Revolver Percentage, in each Letter of Credit issued by, and each
Reimbursement Obligation owed to, the L/C Issuer. Upon any failure by the
Borrower to pay any Reimbursement Obligation at the time required on the date
the related drawing is to be paid, as set forth in Section 1.3(c) above, or if
the L/C Issuer is required at any time to return to the Borrower or to a
trustee, receiver, liquidator, custodian or other Person any portion of any
payment of any Reimbursement Obligation, each Participating Lender shall, not
later than the Business Day it receives a certificate in the form of Exhibit A
hereto from the L/C Issuer (with a copy to the Administrative Agent) to such
effect, if such certificate is received before 1:00 p.m. (Chicago time), or not
later than 1:00 p.m. (Chicago time) the following Business Day, if such
certificate is received after such time, pay to the Administrative Agent for the
account of the L/C Issuer an amount equal to such Participating Lender’s
Revolver Percentage of such unpaid or recaptured Reimbursement Obligation
together with interest on such amount accrued from the date the related payment
was made by the L/C Issuer to the date of such payment by such Participating
Lender at a rate per annum equal to: (i) from the date the related payment was
made by the L/C Issuer to the date 2 Business Days after payment by such
Participating Lender is due hereunder, the Federal Funds Rate for each such day
and (ii) from the date 2 Business Days after the date such payment is due from
such Participating Lender to the date such payment is made by such Participating
Lender, the Base Rate in effect for each such day. Each such Participating
Lender shall thereafter be entitled to receive its Revolver Percentage of each
payment received in respect of the relevant Reimbursement Obligation and of
interest paid thereon, with the L/C Issuer retaining its Revolver Percentage
thereof as a Lender hereunder. The several obligations of the Participating
Lenders to the L/C Issuer under this Section 1.3 shall be absolute, irrevocable,
and unconditional under any and all circumstances whatsoever and shall not be
subject to any set-off, counterclaim or defense to payment which any
Participating Lender may have or have had against the Borrower, the L/C Issuer,
the Administrative Agent, any Lender or any other Person whatsoever. Without
limiting the generality of the foregoing, such obligations shall not be affected
by any Default or Event of Default or by any reduction or termination of any
Commitment of any Lender, and each payment by a Participating Lender under this
Section 1.3 shall be made without any offset, abatement, withholding or
reduction whatsoever.
     (e) Indemnification. The Participating Lenders shall, to the extent of
their respective Revolver Percentages, indemnify the L/C Issuer (to the extent
not reimbursed by the Borrower) against any cost, expense (including reasonable
counsel fees and disbursements), claim, demand,

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action, loss or liability (except such as result from the L/C Issuer’s gross
negligence or willful misconduct) that the L/C Issuer may suffer or incur in
connection with any Letter of Credit issued by it. The obligations of the
Participating Lenders under this Section 1.3(e) and all other parts of this
Section 1.3 shall survive termination of this Agreement and of all Applications,
Letters of Credit, and all drafts and other documents presented in connection
with drawings thereunder.
     (f) Manner of Requesting a Letter of Credit. The Borrower shall provide at
least five (5) Business Days’ advance written notice to the Administrative Agent
of each request for the issuance of a Letter of Credit, such notice in each case
to be accompanied by an Application for such Letter of Credit properly completed
and executed by the Borrower and, in the case of an extension or an increase in
the amount of a Letter of Credit, a written request therefor, in a form
acceptable to the Administrative Agent and the L/C Issuer, in each case,
together with the fees called for by this Agreement. The Administrative Agent
shall promptly notify the L/C Issuer of the Administrative Agent’s receipt of
each such notice and the L/C Issuer shall promptly notify the Administrative
Agent and the Lenders of the issuance of the Letter of Credit so requested.
     Section 1.4. Applicable Interest Rates. (a) Base Rate Loans. Each Base Rate
Loan made or maintained by a Lender shall bear interest during each Interest
Period it is outstanding (computed on the basis of a year of 365 or 366 days, as
the case may be, and the actual days elapsed) on the unpaid principal amount
thereof from the date such Loan is advanced or continued, or created by
conversion from a Eurocurrency Loan, until maturity (whether by acceleration or
otherwise) at a rate per annum equal to the sum of the Applicable Margin plus
the Base Rate from time to time in effect, payable on the last day of its
Interest Period and at maturity (whether by acceleration or otherwise). Base
Rate Loans must be denominated in U.S. Dollars.
     (b) Eurocurrency Loans. Each Eurocurrency Loan made or maintained by a
Lender shall bear interest during each Interest Period it is outstanding
(computed on the basis of a year of 360 days and actual days elapsed) on the
unpaid principal amount thereof from the date such Loan is advanced, continued
or created by conversion from a Base Rate Loan, until maturity (whether by
acceleration or otherwise) at a rate per annum equal to the sum of the
Applicable Margin plus the Adjusted LIBOR applicable for such Interest Period,
payable on the last day of the Interest Period and at maturity (whether by
acceleration or otherwise), and, if the applicable Interest Period is longer
than three months, on each day occurring every three months after the
commencement of such Interest Period. Eurocurrency Loans may be denominated in
U.S. Dollars or an Alternative Currency.
     (c) Rate Determinations. The Administrative Agent shall determine each
interest rate applicable to the Loans and the Reimbursement Obligations
hereunder, and its determination thereof shall be conclusive and binding except
in the case of manifest error. The Original Dollar Amount of each Eurocurrency
Loan denominated in an Alternative Currency shall be determined or redetermined,
as applicable, effective as of the first day of each Interest Period applicable
to such Loan.

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     Section 1.5. Minimum Borrowing Amounts; Maximum Eurocurrency Loans. Each
Borrowing of Base Rate Loans advanced under a Credit shall be in an amount not
less than $250,000, or such greater amount which is an integral multiple of
$50,000. Each Borrowing of Eurocurrency Loans denominated in U.S. Dollars
advanced, continued or converted under a Credit shall be in an amount equal to
$500,000 or such greater amount which is an integral multiple of $100,000. Each
Eurocurrency Loan denominated in an Alternative Currency shall be in a minimum
amount for which the U.S. Dollar Equivalent is $500,000 and which is an integral
multiple of 100,000 units of the relevant currency or, solely in the case of a
Eurocurrency Loan denominated in an Alternative Currency being continued in the
same currency, if less, the same amount of such currency. Without the
Administrative Agent’s consent, there shall not be more than 10 Borrowings of
Eurocurrency Loans outstanding under a Credit at any one time.
     Section 1.6. Manner of Borrowing Loans and Designating Applicable Interest
Rates. (a) Notice to the Administrative Agent. The Borrower shall give notice to
the Administrative Agent by no later than 1:00 p.m. (Chicago time): (i) at least
3 Business Days before the date on which the Borrower requests the Lenders to
advance a Borrowing of Eurocurrency Loans denominated in U.S. Dollars, (ii) at
least 4 Business Days before the date on which the Borrower requests the Lenders
to advance a Borrowing of Eurocurrency Loans denominated in an Alternative
Currency and (iii) on the date the Borrower requests the Lenders to advance a
Borrowing of Base Rate Loans. The Loans included in each Borrowing shall bear
interest initially at the type of rate specified in such notice of a new
Borrowing. Thereafter, the Borrower may from time to time elect to change or
continue the type of interest rate borne by each Borrowing or, subject to
Section 1.5’s minimum amount requirement for each outstanding Borrowing, a
portion thereof, as follows: (i) if such Borrowing is of Eurocurrency Loans, on
the last day of the Interest Period applicable thereto, the Borrower may
continue part or all of such Borrowing as Eurocurrency Loans or , in the case of
Loans denominated in U.S. Dollars, convert part or all of such Borrowing into
Base Rate Loans or (ii) if such Borrowing is of Base Rate Loans, on any Business
Day, the Borrower may convert all or part of such Borrowing into Eurocurrency
Loans for an Interest Period or Interest Periods specified by the Borrower. The
Borrower shall give all such notices requesting the advance, continuation or
conversion of a Borrowing to the Administrative Agent by telephone or telecopy
(which notice shall be irrevocable once given and, if by telephone, shall be
promptly confirmed in writing), substantially in the form attached hereto as
Exhibit B (Notice of Borrowing) or Exhibit C (Notice of
Continuation/Conversion), as applicable, or in such other form acceptable to the
Administrative Agent. Notice of the continuation of a Borrowing of Eurocurrency
Loans for an additional Interest Period or of the conversion of part or all of a
Borrowing of Base Rate Loans into Eurocurrency Loans must be given by no later
than 1:00 p.m. (Chicago time) at least 3 Business Days before the date of the
requested continuation or conversion. All such notices concerning the advance,
continuation or conversion of a Borrowing shall specify the date of the
requested advance, continuation or conversion of a Borrowing (which shall be a
Business Day), the amount of the requested Borrowing to be advanced, continued
or converted, the type of Loans to comprise such new, continued or converted
Borrowing and, if such Borrowing is to be comprised of Eurocurrency Loans, the
Interest Period applicable thereto. The Borrower agrees that the Administrative
Agent may rely on any such telephonic or telecopy notice given by any person the
Administrative Agent in good faith believes is an Authorized Representative
without the necessity of independent investigation, and in the event any such
notice by telephone

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conflicts with any written confirmation such telephonic notice shall govern if
the Administrative Agent has acted in reliance thereon.
     (b) Notice to the Lenders. The Administrative Agent shall give prompt
telephonic or telecopy notice to each Lender of any notice from the Borrower
received pursuant to Section 1.6(a) above and, if such notice requests the
Lenders to make Eurocurrency Loans, the Administrative Agent shall give notice
to the Borrower and each Lender by like means of the applicable currency and
interest rate applicable thereto promptly after the Administrative Agent has
made such determination. On the date the Borrower requests a Loan in an
Alternative Currency, as provided in Section 1.6(a), the Administrative Agent
shall promptly notify each Lender of the currency in which such Loan is
requested. Each Lender shall, subject to Section 7 hereof, make its Loan in the
requested Alternative Currency in accordance with Section 1.6 hereof. Any Loan
made in an Alternative Currency shall be advanced in such currency, and all
payments of principal and interest thereon shall be made in such Alternative
Currency.
     (c) Borrower’s Failure to Notify; Automatic Continuations and Conversions.
Any outstanding Borrowing of Base Rate Loans shall automatically be continued
for an additional Interest Period on the last day of its then current Interest
Period unless the Borrower has notified the Administrative Agent within the
period required by Section 1.6(a) that the Borrower intends to convert such
Borrowing, subject to Section 7.1 hereof, into a Borrowing of Eurocurrency Loans
or such Borrowing is prepaid in accordance with Section 1.9(a). If the Borrower
fails to give notice pursuant to Section 1.6(a) above of the continuation or
conversion of any outstanding principal amount of a Borrowing of Eurocurrency
Loans denominated in U.S. Dollars before the last day of its then current
Interest Period within the period required by Section 1.6(a) or, whether or not
such notice has been given, one or more of the conditions set forth in
Section 7.1 for the continuation or conversion of a Borrowing of Eurocurrency
Loans would not be satisfied, and such Borrowing is not prepaid in accordance
with Section 1.9(a), such Borrowing shall automatically be converted into a
Borrowing of Base Rate Loans. If the Borrower fails to give notice pursuant to
Section 1.6(a) above of the continuation of any outstanding principal amount of
a Borrowing of Eurocurrency Loans denominated in an Alternative Currency before
the last day of its then current Interest Period within the period required by
Section 1.6(a) and has not notified the Administrative Agent within the period
required by Section 1.9(a) that it intends to prepay such Borrowing, such
Borrowing shall automatically be continued as a Borrowing of Eurocurrency Loans
in the same Alternative Currency with an Interest Period of one month. In the
event the Borrower fails to give notice pursuant to Section 1.6(a) above of a
Borrowing equal to the amount of a Reimbursement Obligation and has not notified
the Administrative Agent by 1:00 p.m. (Chicago time) on the day such
Reimbursement Obligation becomes due that it intends to repay such Reimbursement
Obligation through funds not borrowed under this Agreement, the Borrower shall
be deemed to have requested a Borrowing of Base Rate Loans under the Revolving
Credit (or, at the option of the Administrative Agent, under the Swing Line) on
such day in the amount of the Reimbursement Obligation then due, which Borrowing
shall be applied to pay the Reimbursement Obligation then due.
     (d) Disbursement of Loans. Not later than 2:00 p.m. (Chicago time) on the
date of any requested advance of a new Borrowing (other than a Borrowing of
Loans to the extent constituting a Eurocurrency Loan denominated in an
Alternative Currency), subject to Section 7

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hereof, each Lender shall make available its Loan comprising part of such
Borrowing in funds immediately available at the principal office of the
Administrative Agent in Chicago, Illinois. Each Lender shall make the proceeds
of each Loan constituting a Eurocurrency Loan denominated in an Alternative
Currency at such office as the Administrative Agent has previously specified in
a notice to such Lender in such funds which are then customary for the
settlement of international transactions in such currency and no later than such
local time as is necessary for such funds to be received and transferred to the
Borrower for same day value on the date the Loan is to be made. The
Administrative Agent shall make the proceeds of each new Borrowing denominated
in U.S. Dollars available to the Borrower of the Administrative Agent’s
principal office in Chicago, Illinois, and the proceeds of each Lender’s Loans
denominated in an Alternative Currency at such office as the Administrative
Agent has previously agreed to with the Borrower, in each case in the type of
funds received by the Administrative Agent from the Lenders.
     (e) Administrative Agent Reliance on Lender Funding. Unless the
Administrative Agent shall have been notified by a Lender prior to (or, in the
case of a Borrowing of Base Rate Loans, by 2:00 p.m. (Chicago time) on) the date
on which such Lender is scheduled to make payment to the Administrative Agent of
the proceeds of a Loan (which notice shall be effective upon receipt) that such
Lender does not intend to make such payment, the Administrative Agent may assume
that such Lender has made such payment when due and the Administrative Agent may
in reliance upon such assumption (but shall not be required to) make available
to the Borrower the proceeds of the Loan to be made by such Lender and, if any
Lender has not in fact made such payment to the Administrative Agent, such
Lender shall, on demand, pay to the Administrative Agent the amount made
available to the Borrower attributable to such Lender together with interest
thereon in respect of each day during the period commencing on the date such
amount was made available to the Borrower and ending on (but excluding) the date
such Lender pays such amount to the Administrative Agent at a rate per annum
equal to: (i) from the date the related advance was made by the Administrative
Agent to the date 2 Business Days after payment by such Lender is due hereunder,
the Federal Funds Rate (or in the case of Loan denominated in an Alternative
Currency, the Overnight Foreign Currency Rate) for each such day and (ii) from
the date 2 Business Days after the date such payment is due from such Lender to
the date such payment is made by such Lender, the Base Rate in effect for each
such day or in the case of a Loan denominated in an Alternative Currency, the
rate established by Section 1.10(c) for Eurocurrency Loans denominated in such
currency. If such amount is not received from such Lender by the Administrative
Agent immediately upon demand, the Borrower will, on demand, repay to the
Administrative Agent the proceeds of the Loan attributable to such Lender with
interest thereon at a rate per annum equal to the interest rate applicable to
the relevant Loan, but without such payment being considered a payment or
prepayment of a Loan under Section 1.12 hereof so that the Borrower will have no
liability under such Section with respect to such payment.
     Section 1.7. Interest Periods. As provided in Section 1.6(a) and 1.15
hereof, at the time of each request to advance, continue or create by conversion
a Borrowing of Eurocurrency Loans or Swing Loans, the Borrower shall select an
Interest Period applicable to such Loans from among the available options. The
term “Interest Period” means the period commencing on the date a Borrowing of
Loans is advanced, continued or created by conversion and ending: (a) in

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the case of Base Rate Loans, on the last day of the calendar quarter (i.e., the
last day of March, June, September or December, as applicable) in which such
Borrowing is advanced, continued or created by conversion (or on the last day of
the following calendar quarter if such Loan is advanced, continued or created by
conversion on the last day of a calendar quarter), (b) in the case of a
Eurocurrency Loan, 1, 2, 3 or 6 months thereafter, and (c) in the case of a
Swing Loan, on the date 1 to 5 days thereafter as mutually agreed to by the
Borrower and the Administrative Agent; provided, however, that:
     (i) any Interest Period for a Borrowing of Revolving Loans or Swing Loans
consisting of Base Rate Loans that otherwise would end after the Revolving
Credit Termination Date shall end on the Revolving Credit Termination Date, and
any Interest Period for a Borrowing of Term Loans consisting of Base Rate Loans
that otherwise would end after the final maturity date of the Term Loans shall
end on the final maturity date of the Term Loans, and any Interest Period for a
Borrowing of Capital Expansion Loans consisting of Base Rate Loans that would
otherwise end after the final maturity date of the Capital Expansion Loans shall
end on the final maturity date of the Capital Expansion Loan;
     (ii) no Interest Period with respect to any portion of the Revolving Loans
or Swing Loans shall extend beyond the Revolving Credit Termination Date, no
Interest Period with respect to any portion of the Term Loans shall extend
beyond the final maturity date of the Term Loans, and no Interest Period with
respect to any portion of the Capital Expansion Loans shall extend beyond the
final maturity date of the Capital Expansion Loans;
     (iii) no Interest Period with respect to any portion of the Term Loans
consisting of Eurocurrency Loans shall extend beyond a date on which the
Borrower is required to make a scheduled payment of principal on the Term Loans,
unless the sum of (a) the aggregate principal amount of Term Loans that are Base
Rate Loans plus (b) the aggregate principal amount of Term Loans that are
Eurocurrency Loans with Interest Periods expiring on or before such date equals
or exceeds the principal amount to be paid on the Term Loans on such payment
date;
     (iv) no Interest Period with respect to any portion of the Capital
Expansion Loans consisting of Eurocurrency Loans shall extend beyond a date on
which the Borrower is required to make a scheduled payment of principal on the
Capital Expansion Loans, unless the aggregate principal amount of Capital
Expansion Loans that are Eurocurrency Loans with Interest Periods expiring on or
before such date equals or exceeds the principal amount to be paid on the
Capital Expansion Loans on such payment date;
     (v) whenever the last day of any Interest Period would otherwise be a day
that is not a Business Day, the last day of such Interest Period shall be
extended to the next succeeding Business Day, provided that, if such extension
would cause the last day of an Interest Period for a Borrowing of Eurocurrency
Loans to occur in

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the following calendar month, the last day of such Interest Period shall be the
immediately preceding Business Day; and
     (vi) for purposes of determining an Interest Period for a Borrowing of
Eurocurrency Loans, a month means a period starting on one day in a calendar
month and ending on the numerically corresponding day in the next calendar
month; provided, however, that if there is no numerically corresponding day in
the month in which such an Interest Period is to end or if such an Interest
Period begins on the last Business Day of a calendar month, then such Interest
Period shall end on the last Business Day of the calendar month in which such
Interest Period is to end.
     Section 1.8. Maturity of Loans. (a) Scheduled Payments of Term Loans. The
Borrower shall make principal payments on the Term Loans on a pro rata basis in
quarterly installments on the last day of each March, June, September and
December in each year, commencing with the fiscal quarter ending December 31,
2006, with each of the first 20 installments to be in the amount of $1,000,000,
it being agreed that the final payment of both principal and interest not sooner
paid on the Term Loans shall be due and payable on December 31, 2011, the final
maturity thereof. Each such principal payment shall be applied to the Lenders
holding the Term Loans pro rata based upon their Term Loan Percentages.
     (b) Schedule Payments of Capital Expansion Loans. The Borrower shall make
principal payments on the on a pro rata basis in installments on the last day of
each March, June, September and December in each year, commencing with the
fiscal quarter ending December 31, 2008, with the amount of each such principal
installment to equal the U.S. Dollar Equivalent set forth in Column B below
shown opposite of the relevant due date as set forth in Column A below:

              Column B Column A   Scheduled Principal Payment Date   Payment on
Capital Expansion Loans
12/31/08
  $ 1,250,000  
03/31/09
  $ 1,250,000  
06/30/09
  $ 1,250,000  
09/30/09
  $ 1,250,000  
12/31/09
  $ 2,500,000  
03/30/10
  $ 2,500,000  
06/30/10
  $ 2,500,000  
09/30/10
  $ 2,500,000  
12/31/10
  $ 2,500,000  
03/31/11
  $ 2,500,000  
06/30/11
  $ 2,500,000  

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              Column B Column A   Scheduled Principal Payment Date   Payment on
Capital Expansion Loans
09/31/11
  $ 2,500,000  
12/31/11
  $ 2,500,000  
03/31/12
  $ 2,500,000  
06/30/12
  $ 2,500,000  
09/30/12
  $ 2,500,000  

, it being agreed that the final payment of both principal and interest not
sooner paid on the Capital Expansion Loans shall be due and payable on
December 31, 2012, the final maturity thereof. Each such principal payment shall
be allocated to the Lenders holding the Capital Expansion Loans pro rata based
upon their Capital Expansion Loan Percentages.
     (c) Revolving Loans and Swing Loans. Each Revolving Loan and Swing Loan,
both for principal and interest not sooner paid, shall mature and become due and
payable by the Borrower on the Revolving Credit Termination Date.
     Section 1.9. Prepayments. (a) Optional. The Borrower shall have the
privilege of prepaying without premium or penalty (except as set forth in
Section 1.12 hereof) and in whole or in part (but, if in part, then: (i) if such
Borrowing is of Base Rate Loans, in an amount not less than $250,000, (ii) if
such Borrowing is of Eurocurrency Loans denominated in U.S. Dollars, in an
amount not less than $500,000 or any greater amount that is an integral multiple
of $100,000 or any greater amount that (iii) if such Borrowing is a Eurocurrency
Loan denominated in an Alternative Currency or any greater amount that, in an
amount for which the U.S. Dollar Equivalent is not less than $500,000 is an
integral multiple of 100,000 units of relevant currency and (iv) in each case,
in an amount such that the minimum amount required for a Borrowing pursuant to
Sections 1.5 and 1.15 hereof remains outstanding) any Borrowing of Eurocurrency
Loans denominated in U.S. Dollars at any time upon three (3) Business Days’
prior notice to the Administrative Agent by the Borrower or, in the case of any
Borrowing of Eurocurrency Loans denominated in an Alternative Currency, at any
time upon four (4) Business Days prior notice to the Administrative Agent by the
Borrower or, in the case of a Borrowing of Base Rate Loans, notice delivered to
the Administrative Agent by the Borrower no later than 1:00 p.m. (Chicago time)
on the date of such prepayment. Each such prepayment to be made by the payment
of the principal amount to be prepaid and, in the case of any Term Loans,
Capital Expansion Loans or Eurocurrency Loans or Swing Loans, accrued interest
thereon to the date fixed for prepayment plus any amounts due the Lenders under
Section 1.12.
     (b) Mandatory. (i) If the Borrower or any Subsidiary shall at any time or
from time to time make or agree to make a Disposition or shall suffer an Event
of Loss resulting in Net Cash Proceeds in excess of $1,000,000 (or the U.S.
Dollar Equivalent thereof, if applicable) individually or on a cumulative basis
in any fiscal year of the Borrower, then (x) the Borrower

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shall promptly notify the Administrative Agent of such proposed Disposition or
Event of Loss (including the amount of the estimated Net Cash Proceeds to be
received by the Borrower or such Subsidiary in respect thereof) and (y) promptly
upon receipt by the Borrower or such Subsidiary of the Net Cash Proceeds of such
Disposition or Event of Loss, the Borrower shall prepay first, (A) during the
Availability Period, the Term Loans, and (B) after the Availability Period, the
Term Loans and the Capital Expansion Loans, in each case in the manner specified
in Section 1.9(e) hereof until the Term Loans and, if applicable, the Capital
Expansion Loans are paid in full and then the Revolving Loans, Swing Loans and
L/C Obligations (or all outstanding Loans and L/C Obligations if an Event of
Default exists) in an aggregate amount equal to 100% of the amount of all such
Net Cash Proceeds; provided that in the case of each Disposition and Event of
Loss, if the Borrower states in its notice of such event that the Borrower or
the applicable Subsidiary intends to reinvest, within 180 days of the applicable
Disposition or receipt of Net Cash Proceeds from an Event of Loss, the Net Cash
Proceeds thereof in assets for use in the ordinary course of the Borrower’s or
the applicable Subsidiary’s business as then conducted, then so long as no
Default or Event of Default then exists, the Borrower shall not be required to
make a mandatory prepayment under this Section in respect of such Net Cash
Proceeds to the extent such Net Cash Proceeds are actually reinvested in such
assets with such 180-day period. Promptly after the end of such 180-day period,
the Borrower shall notify the Administrative Agent whether the Borrower or such
Subsidiary has reinvested such Net Cash Proceeds in such assets, and to the
extent such Net Cash Proceeds have not been so reinvested, the Borrower shall
promptly prepay (A) during the Availability Period, the Term Loans, and
(A) after the Availability Period, the Term Loans and the Capital Expansion
Loans, (or in each case all outstanding Loans and L/C Obligations if an Event of
Default exists) in the amount of such Net Cash Proceeds not so reinvested. The
amount of each such prepayment shall be applied on a ratable basis among the
relevant outstanding Obligations based on the principal amounts (in the U.S.
Dollar Equivalent) thereof. If the Administrative Agent or the Required Lenders
so request, all proceeds of such Disposition or Event of Loss shall be deposited
with the Administrative Agent and held by it in the Collateral Account. So long
as no Default or Event of Default exists, the Administrative Agent is authorized
to disburse amounts representing such proceeds from the Collateral Account to or
at the Borrower’s direction for application to or reimbursement for the costs of
replacing, rebuilding or restoring such Property.
     (ii) If after the Closing Date the Borrower or any Subsidiary shall issue
new equity securities (whether common or preferred stock or otherwise), other
than equity securities issued in connection with the exercise of employee stock
options and capital stock issued to the seller of an Acquired Business in
connection with an Acquisition permitted hereby, the Borrower shall promptly
notify the Administrative Agent of the estimated Net Cash Proceeds of such
issuance to be received by or for the account of the Borrower or such Subsidiary
in respect thereof. Promptly upon receipt by the Borrower or such Subsidiary of
Net Cash Proceeds of such issuance, the Borrower shall prepay first, (A) during
the Availability Period, the Term Loans, and (B) after the Availability Period,
the Term Loans and the Capital Expansion Loans, in each case in the manner
specified in Section 1.9(e) hereof until the Term Loans and, if applicable, the
Capital Expansion Loans are paid in full and then the Revolving Loans, Swing
Loans and L/C Obligations (or all outstanding Loans and L/C Obligations if an
Event of Default exists), in an aggregate amount equal to 100% (or 50% if the
Borrower’s Total Funded Debt Ratio was less than 2.0 to 1.0 for the two
consecutive fiscal quarters immediately preceding the date of such

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required payment) of the amount of such Net Cash Proceeds. The amount of each
such prepayment shall be applied on a ratable basis among the relevant
outstanding Obligations based on the principal amounts (in U.S. Dollar
Equivalent) thereof. The Borrower acknowledges that its performance hereunder
shall not limit the rights and remedies of the Lenders for any breach of
Section 8.11 (Maintenance of Subsidiaries) or Section 9.1(i) (Change of Control)
hereof or any other terms of the Loan Documents.
     (iii) If after the Closing Date the Borrower or any Subsidiary shall issue
any Indebtedness for Borrowed Money, other than Indebtedness for Borrowed Money
permitted by Section 8.7(a)-(e) hereof, the Borrower shall promptly notify the
Administrative Agent of the estimated Net Cash Proceeds of such issuance to be
received by or for the account of the Borrower or such Subsidiary in respect
thereof. Promptly upon receipt by the Borrower or such Subsidiary of Net Cash
Proceeds of such issuance, the Borrower shall prepay first, (A) during the
Availability Period, the Term Loans, and (A) after the Availability Period, the
Term Loans and the Capital Expansion Loans, in each case in the manner specified
in Section 1.9(e) hereof until the Term Loans and, if applicable, the Capital
Expansion Loans are paid in full and then the Revolving Loans, Swing Loans and
L/C Obligations (or all outstanding Loans and L/C Obligations if an Event of
Default exists), in an aggregate amount equal to 100% of the amount of such Net
Cash Proceeds. The amount of each such prepayment shall be applied on a ratable
basis among the relevant outstanding Obligations based on the principal amounts
(in U.S. Dollar Equivalent) thereof. The Borrower acknowledges that its
performance hereunder shall not limit the rights and remedies of the Lenders for
any breach of Section 8.7 hereof or any other terms of the Loan Documents.
     (iv) If the Borrower’s Total Funded Debt Ratio is greater than 4.0 to 1.0
for two consecutive fiscal quarters, then within 90 days after the close of each
year, beginning August 31, 2007, the Borrower shall prepay first, (A) during the
Availability Period, the Term Loans, and (B) after the Availability Period, the
Term Loans and the Capital Expansion Loans, in each case in the manner specified
in Section 1.9(e) hereof until the Term Loans and, if applicable, the Capital
Expansion Loans are paid in full and then the Revolving Loans, Swing Loans and
L/C Obligations (or all outstanding Loans and L/C Obligations if an Event of
Default exists), by an amount equal to 50% (the “Excess Cash Flow Percentage”)
of Excess Cash Flow of the Borrower and its Subsidiaries for the most recently
completed fiscal year of the Borrower; provided, however, if the Borrower’s
Total Funded Debt Ratio is less than 3.25 to 1.0 for two consecutive fiscal
quarters and no Default or Event of Default has occurred and is continuing as of
the last day of each of such two consecutive fiscal quarters, then the Excess
Cash Flow Percentage shall be deemed to be 25% and if the Borrower’s Total
Funded Debt Ratio is less than 2.50 to 1.0 for two consecutive fiscal quarters
and no Default or Event of Default has occurred and is continuing as of the last
day of each of such two consecutive fiscal quarters, then the Excess Cash Flow
Percentage shall be deemed to be 0%. The amount of each such prepayment shall be
applied on a ratable basis among the relevant outstanding Obligations based on
the principal amounts thereof.
     (v) The Borrower covenants and agrees that if at any time the sum of the
then aggregate Original Dollar Amount of Revolving Loans then outstanding
denominated in Alternative Currencies shall be in excess of $25,000,000, the
Borrower shall, no later than three (3) Business

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Days after the Administrative Agent’s demand, pay over the amount of such excess
to the Administrative Agent for the ratable benefit of the Lenders as and for a
mandatory prepayment on the Revolving Notes until payment in full thereof. Each
such prepayment shall be accompanied by accrued interest on the amount prepaid
to the date of prepayment plus any amounts due to the Lenders under Section 1.12
hereof. The Lenders acknowledge and agree that, upon such demand by the
Administrative Agent, the Borrower may, subject to Section 7 hereof, request a
Borrowing of Revolving Loans in order to provide it the funds necessary to repay
such excess. The Borrower shall be responsible for making such arrangements with
the Lenders as shall be necessary to repay such excess. Unless and to the extent
a Lender in its discretion agrees otherwise, nothing in this Section shall
impair or otherwise affect the Borrower’s obligation to repay a Revolving Loan
made by such Lender denominated in an Alternative Currency, nor obligate a
Lender to accept repayment of a Revolving Loan made by such Lender denominated
in an Alternative Currency, in a currency other than such Alternative Currency.
     (vi) The Borrower covenants and agrees that if at any time the sum of the
greater of (x) the aggregate Original Dollar Amount of all Revolving Loans, the
aggregate principal amount of Swing Loans and the U.S. Dollar Equivalent of all
L/C Obligations and (y) the U.S. Dollar Equivalent of all Revolving Loans, Swing
Loans and L/C Obligations exceeds the Revolving Credit Commitments then in
effect, the Borrower shall immediately and without notice or demand pay over the
amount of the excess to the Administrative Agent for the ratable benefit of the
Lenders as and for a mandatory prepayment on the Revolving Notes, Swing Note and
L/C Obligations until payment in full thereof. Each such prepayment shall be
accompanied by accrued interest on the amount prepaid to the date of prepayment
plus any amounts due to the Lenders under Section 1.12 hereof.
     (vii) The Borrower shall, on each date the Revolving Credit Commitments are
reduced pursuant to Section 1.13 hereof, prepay the Revolving Loans, Swing
Loans, and, if necessary, prefund the L/C Obligations by the amount, if any,
necessary to reduce the sum of the greater of the Original Dollar Amount or U.S.
Dollar Equivalent amount of the aggregate of all Revolving Loans, Swing Loans,
and L/C Obligations then outstanding to the amount to which the Revolving Credit
Commitments have been so reduced.
     (c) The Administrative Agent will promptly advise each Lender of any notice
of prepayment it receives from the Borrower. Any amount of Revolving Loans and
Swing Loans paid or prepaid before the Revolving Credit Termination Date may,
subject to the terms and conditions of this Agreement, be borrowed, repaid and
borrowed again. No amount of the Term Loans or Capital Expansion Loans paid or
prepaid may be reborrowed, and, in the case of any partial prepayment, such
prepayment shall be applied to the relevant Loans on a ratable basis among all
remaining payments on the relevant Loans based on the principal amounts thereof.
     (d) Unless the Borrower otherwise directs, prepayments of Loans made in
U.S. Dollars under Section 1.9(b) shall be applied first to Borrowings of Base
Rate Loans until payment in full thereof with any balance applied to Borrowings
of Eurocurrency Loans in the order in which their Interest Periods expire. Each
prepayment of Loans under Section 1.9(b) shall be made by the payment of the
principal amount to be prepaid and, in the case of any Term Loans, Capital

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Expansion Loans or Eurocurrency Loans or Swing Loans, accrued interest thereon
to the date of prepayment together with any amounts due the Lenders under
Section 1.12 hereof. Each prefunding of L/C Obligations shall be made in
accordance with Section 9.4 hereof.
     (e) Each prepayment of the Term Loans and the Capital Expansion Loans under
Section 1.9(b) shall be allocated to the Term Loans and the Capital Expansion
Loans ratably in accordance with the principal amount of the Term Loans and the
Capital Expansion Loans. Each partial prepayment of the Term Loans and the
Capital Expansion Loans shall be applied to the remaining amortization payments
on the relevant Loans in the reverse order of maturity.
     Section 1.10. Default Rate. Notwithstanding anything to the contrary
contained in Section 1.4 hereof, while any Event of Default exists or after
acceleration, the Borrower shall pay interest (after as well as before entry of
judgment thereon to the extent permitted by law) on the principal amount of all
Loans and Reimbursement Obligations, and letter of credit fees at a rate per
annum equal to:
     (a) for any Base Rate Loan or any Swing Loan bearing interest based on the
Base Rate, the sum of 2.0% plus the Applicable Margin plus the Base Rate from
time to time in effect;
     (b) for any Eurocurrency Loan denominated in U.S. Dollars or any Swing Loan
bearing interest at the Administrative Agent’s Quoted Rate, the sum of 2.0% plus
the rate of interest in effect thereon at the time of such default until the end
of the Interest Period applicable thereto and, thereafter, at a rate per annum
equal to the sum of 2.0% plus the Applicable Margin for Base Rate Loans plus the
Base Rate from time to time in effect; and
     (c) for any Eurocurrency Loan denominated in an Alternative Currency, the
sum of 2.0% plus the rate of interest in effect thereon at the time of such
default until the end of the Interest Period applicable thereto and, thereafter,
at a rate per annum equal to the sum of 2.0% plus the Applicable Margin for Base
Rate Loans plus the Overnight Foreign Currency Rate from time to time in effect;
provided, however, that in the absence of acceleration, any adjustments pursuant
to this Section shall be made at the election of the Administrative Agent,
acting at the request or with the consent of the Required Lenders, with written
notice to the Borrower. While any Event of Default exists or after acceleration,
interest shall be paid on demand of the Administrative Agent at the request or
with the consent of the Required Lenders.
     Section 1.11. The Notes. (a) The Term Loan made to the Borrower by a Lender
shall be evidenced by a single promissory note of the Borrower issued to such
Lender in the form of Exhibit D-1 hereto. Each such promissory note is
hereinafter referred to as a “Term Note” and collectively such promissory notes
are referred to as the “Term Notes.”

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     (b) The Capital Expansion Loans made to the Borrower by a Lender shall be
evidenced by a single promissory note of the Borrower issued to such Lender in
the form of Exhibit D-2 hereto. Each such promissory note is hereinafter
referred to as a “Capital Expansion Note” and collectively such promissory notes
are referred to as the “Capital Expansion Notes.”
     (c) The Revolving Loans made to the Borrower by a Lender shall be evidenced
by a single promissory note of the Borrower issued to such Lender in the form of
Exhibit D-3 hereto. Each such promissory note is hereinafter referred to as a
“Revolving Note” and collectively such promissory notes are referred to as the
“Revolving Notes.”
     (d) The Swing Loans made to the Borrower by the Administrative Agent shall
be evidenced by a single promissory note of the Borrower issued to the
Administrative Agent in the form of Exhibit D-4 hereto. Such promissory note is
hereinafter referred to as the “Swing Note.”
     (e) Each Lender shall record on its books and records or on a schedule to
its appropriate Note the amount of each Loan advanced, continued or converted by
it, all payments of principal and interest and the principal balance from time
to time outstanding thereon, the type of such Loan, and, for any Eurocurrency
Loan or Swing Loan, the Interest Period, the currency in which such Loan is
denominated, and the interest rate applicable thereto. The record thereof,
whether shown on such books and records of a Lender or on a schedule to the
relevant Note, shall be prima facie evidence as to all such matters; provided,
however, that the failure of any Lender to record any of the foregoing or any
error in any such record shall not limit or otherwise affect the obligation of
the Borrower to repay all Loans made to it hereunder together with accrued
interest thereon. At the request of any Lender and upon such Lender tendering to
the Borrower the appropriate Note to be replaced, the Borrower shall furnish a
new Note to such Lender to replace any outstanding Note, and at such time the
first notation appearing on a schedule on the reverse side of, or attached to,
such Note shall set forth the aggregate unpaid principal amount of all Loans, if
any, then outstanding thereon.
     Section 1.12. Funding Indemnity. If any Lender shall incur any loss, cost
or expense (including, without limitation, any loss of profit, and any loss,
cost or expense incurred by reason of the liquidation or re-employment of
deposits or other funds acquired by such Lender to fund or maintain any
Eurocurrency Loan or Swing Loan or the relending or reinvesting of such deposits
or amounts paid or prepaid to such Lender) as a result of:
     (a) any payment, prepayment or conversion of a Eurocurrency Loan on a date
other than the last day of its Interest Period, including without limitation as
a result of a reallocation of Revolving Loans pursuant to Section 1.2(b) hereof,
     (b) any failure (because of a failure to meet the conditions of Section 7
or otherwise) by the Borrower to borrow or continue a Eurocurrency Loan or Swing
Loan, or to convert a Base Rate Loan into a Eurocurrency Loan or Swing Loan on
the date specified in a notice given pursuant to Section 1.6(a) or 1.15 hereof,
     (c) any failure by the Borrower to make any payment of principal on any
Eurocurrency Loan or Swing Loan when due (whether by acceleration or otherwise),
or

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     (d) any acceleration of the maturity of a Eurocurrency Loan or Swing Loan
as a result of the occurrence of any Event of Default hereunder,
then, upon the demand of such Lender, the Borrower shall pay to such Lender such
amount as will reimburse such Lender for such loss, cost or expense. If any
Lender makes such a claim for compensation, it shall provide to the Borrower,
with a copy to the Administrative Agent, a certificate setting forth the amount
of such loss, cost or expense in reasonable detail (including an explanation of
the basis for and the computation of such loss, cost or expense) and the amounts
shown on such certificate shall be conclusive if reasonably determined.
     Section 1.13. Commitment Terminations. (a) Optional Revolving Credit
Terminations. The Borrower shall have the right at any time and from time to
time, upon five (5) Business Days’ prior written notice to the Administrative
Agent (or such shorter time period agreed to by the Administrative Agent), to
terminate the Revolving Credit Commitments without premium or penalty and in
whole or in part, any partial termination to be (i) in an amount not less than
$1,000,000 or a whole multiple thereof, and (ii) allocated ratably among the
Lenders in proportion to their respective Revolver Percentages, provided that
the Revolving Credit Commitments may not be reduced to an amount less than the
sum of the aggregate Original Dollar Amount of Revolving Loans, Swing Loans, and
L/C Obligations then outstanding. Any termination of the Revolving Credit
Commitments below the L/C Sublimit or Swing Line Sublimit then in effect shall
reduce the L/C Sublimit and Swing Line Sublimit, as applicable, by a like
amount. The Administrative Agent shall give prompt notice to each Lender of any
such termination of the Revolving Credit Commitments.
     (b) Mandatory Revolving Credit Termination. If at any time Net Cash
Proceeds or Excess Cash Flow remain after the prepayment of the Term Loans and
Capital Expansion Loans in full pursuant to Section 1.9(b) hereof, the Revolving
Credit Commitments shall ratably terminate by an amount equal to 100% of such
excess proceeds.
     (c) Optional Capital Expansion Credit Terminations. The Borrower shall have
the right at any time and from time to time, upon five (5) Business Days’ prior
written notice to the Administrative Agent (or such shorter time period agreed
to by the Administrative Agent), to terminate the Capital Expansion Loan
Commitments without premium or penalty and in whole or in part, any partial
termination to be (i) in an amount not less than $1,000,000 or a whole multiple
thereof, and (ii) allocated ratably among the Lenders in proportion to their
respective Capital Expansion Loan Percentages. The Administrative Agent shall
give prompt notice to each Lender of any such termination of the Capital
Expansion Loan Commitments.
     (d) Any termination of the Commitments pursuant to this Section 1.13 may
not be reinstated.
     Section 1.14. Substitution of Lenders. Upon the receipt by the Borrower of
(a) a claim from any Lender for compensation under Section 10.3 or 13.1 hereof,
(b) notice by any Lender to the Borrower of any illegality pursuant to
Section 10.1 hereof or (c) in the event any Lender is in default in any material
respect with respect to its obligations under the Loan Documents (any such
Lender referred to in clause (a), (b) or (c) above being hereinafter referred to
as an

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“Affected Lender”), the Borrower may, in addition to any other rights the
Borrower may have hereunder or under applicable law, require, at its expense,
any such Affected Lender to assign, at par plus accrued interest and fees,
without recourse, all of its interest, rights, and obligations hereunder
(including all of its Commitments and the Loans and participation interests in
Letters of Credit and other amounts at any time owing to it hereunder and the
other Loan Documents) to a bank or other institutional Lender specified by the
Borrower, provided that (i) such assignment shall not conflict with or violate
any law, rule or regulation or order of any court or other governmental
authority, (ii) the Borrower shall have received the written consent of the
Administrative Agent, which consent shall not be unreasonably withheld, to such
assignment, (iii) the Borrower shall have paid to the Affected Lender all monies
(together with amounts due such Affected Lender under Section 1.12 hereof as if
the Loans owing to it were prepaid rather than assigned) other than such
principal, interest, and fees accrued and owing to it hereunder, and (iv) the
assignment is entered into in accordance with the other requirements of
Section 13.12 hereof.
     Section 1.15. Swing Loans. (a) Generally. Subject to the terms and
conditions hereof, as part of the Revolving Credit, the Administrative Agent
agrees to make loans in U.S. Dollars to the Borrower under the Swing Line
(individually a “Swing Loan” and collectively the “Swing Loans”) which shall not
in the aggregate at any time outstanding exceed the Swing Line Sublimit. The
Swing Loans may be availed of the Borrower from time to time and Borrowings
thereunder may be repaid and used again during the period ending on the
Revolving Credit Termination Date; provided that each Swing Loan must be repaid
on the last day of the Interest Period applicable thereto and on the Revolving
Credit Termination Date. Each Swing Loan shall be in a minimum amount of
$100,000 or such greater amount which is an integral multiple of $50,000.
     (b) Interest on Swing Loans. Each Swing Loan shall bear interest until
maturity (whether by acceleration or otherwise) at a rate per annum equal to
(i) the sum of the Base Rate plus the Applicable Margin for Base Rate Loans
under the Revolving Credit as from time to time in effect (computed on the basis
of a year of 365 or 366 days, as the case may be, for the actual number of days
elapsed) or (ii) the Administrative Agent’s Quoted Rate (computed on the basis
of a year of 360 days for the actual number of days elapsed). Interest on each
Swing Loan shall be due and payable prior to such maturity on the last day of
each Interest Period applicable thereto and on the Revolving Credit Termination
Date.
     (c) Requests for Swing Loans. The Borrower shall give the Administrative
Agent prior notice (which may be written or oral) no later than (x) 12:00 Noon
(Chicago time) on the date upon which the Borrower requests that any Swing Loan
be made at the Administrative Agent’s Quoted Rate and (y) 3:00 p.m. (Chicago
time) on the date upon which the Borrower requests that any Swing Loan be at the
Base Rate, of the amount and date of such Swing Loan, and the Interest Period
requested therefor. Within 30 minutes after receiving such notice, the
Administrative Agent shall in its discretion quote an interest rate to the
Borrower at which the Administrative Agent would be willing to make such Swing
Loan available to the Borrower for the Interest Period so requested (the rate so
quoted for a given Interest Period being herein referred to as “Administrative
Agent’s Quoted Rate”). The Borrower acknowledges and agrees that the interest
rate quote is given for immediate and irrevocable acceptance. If the Borrower

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does not so immediately accept the Administrative Agent’s Quoted Rate for the
full amount requested by the Borrower for such Swing Loan, the Administrative
Agent’s Quoted Rate shall be deemed immediately withdrawn and such Swing Loan
shall bear interest at the rate per annum determined by adding the Applicable
Margin for Base Rate Loans under the Revolving Credit to the Base Rate as from
time to time in effect. If the Borrower requests a Swing Loan at the Base Rate,
such Swing Loan shall bear interest at the rate per annum determined by adding
the Applicable Margin for the Base Rate Loans under the Revolving Credit to the
Base Rate as from time to time in effect. Subject to the terms and conditions
hereof, the proceeds of such Swing Loan shall be made available to the Borrower
on the date so requested at the offices of the Administrative Agent in Chicago,
Illinois. Anything contained in the foregoing to the contrary notwithstanding,
(i) the obligation of the Administrative Agent to make Swing Loans shall be
subject to all of the terms and conditions of this Agreement and (ii) the
Administrative Agent shall not be obligated to make more than one Swing Loan
during any one day.
     (d) Refunding Loans. In its sole and absolute discretion, the
Administrative Agent may at any time, on behalf of the Borrower (which hereby
irrevocably authorizes the Administrative Agent to act on its behalf for such
purpose) and with notice to the Borrower, request each Lender to make a
Revolving Loan in the form of a Base Rate Loan in an amount equal to such
Lender’s Revolver Percentage of the amount of the Swing Loans outstanding on the
date such notice is given. Unless an Event of Default described in
Section 9.1(j) or 9.1(k) exists with respect to the Borrower, regardless of the
existence of any other Event of Default, each Lender shall make the proceeds of
its requested Revolving Loan available to the Administrative Agent, in
immediately available funds, at the Administrative Agent’s principal office in
Chicago, Illinois, before 12:00 Noon (Chicago time) on the Business Day
following the day such notice is given. The proceeds of such Borrowing of
Revolving Loans shall be immediately applied to repay the outstanding Swing
Loans.
     (e) Participations. If any Lender refuses or otherwise fails to make a
Revolving Loan when requested by the Administrative Agent pursuant to
Section 1.15(d) above (because an Event of Default described in Section 9.1(j)
or 9.1(k) exists with respect to the Borrower or otherwise), such Lender will,
by the time and in the manner such Revolving Loan was to have been funded to the
Administrative Agent, purchase from the Administrative Agent an undivided
participating interest in the outstanding Swing Loans in an amount equal to its
Revolver Percentage of the aggregate principal amount of Swing Loans that were
to have been repaid with such Revolving Loans. Each Lender that so purchases a
participation in a Swing Loan shall thereafter be entitled to receive its
Revolver Percentage of each payment of principal received on the Swing Loan and
of interest received thereon accruing from the date such Lender funded to the
Administrative Agent its participation in such Loan. The several obligations of
the Lenders under this Section shall be absolute, irrevocable and unconditional
under any and all circumstances whatsoever and shall not be subject to any
set-off, counterclaim or defense to payment which any Lender may have or have
had against the Borrower, any other Lender or any other Person whatsoever.
Without limiting the generality of the foregoing, such obligations shall not be
affected by any Default or Event of Default or by any reduction or termination
of the Commitments of any Lender, and each payment made by a Lender under this
Section shall be made without any offset, abatement, withholding or reduction
whatsoever.

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Section 2. Fees.
     Section 2.1. Fees. (a) Revolving Credit Commitment Fee. The Borrower shall
pay to the Administrative Agent for the ratable account of the Lenders in
accordance with their Revolver Percentages a commitment fee at the rate per
annum equal to the Applicable Margin (computed on the basis of a year of
360 days and the actual number of days elapsed) on the average daily Unused
Revolving Credit Commitments. Such commitment fee shall be payable
quarter-annually in arrears on the last day of each March, June, September and
December in each year (commencing on the first such date occurring after the
date hereof) and on the Revolving Credit Termination Date, unless the Revolving
Credit Commitments are terminated in whole on an earlier date, in which event
the commitment fee for the period to the date of such termination in whole shall
be paid on the date of such termination.
     (b) Letter of Credit Fees. On the date of issuance or extension, or
increase in the amount, of any Letter of Credit pursuant to Section 1.3 hereof,
the Borrower shall pay to the L/C Issuer for its own account a fronting fee
equal to 0.125% of the face amount of (or of the increase in the face amount of)
such Letter of Credit. Quarterly in arrears, on the last day of each March,
June, September and December, commencing on the first such date occurring after
the date hereof, the Borrower shall pay to the Administrative Agent, for the
ratable benefit of the Lenders in accordance with their Revolver Percentages, a
letter of credit fee at a rate per annum equal to the Applicable Margin
(computed on the basis of a year of 360 days and the actual number of days
elapsed) in effect during each day of such quarter applied to the daily average
face amount of Letters of Credit outstanding during such quarter. In addition,
the Borrower shall pay to the L/C Issuer for its own account the L/C Issuer’s
standard issuance, drawing, negotiation, amendment, assignment, and other
administrative fees for each Letter of Credit as established by the L/C Issuer
from time to time.
     (c) Administrative Agent Fees. The Borrower shall pay to the Administrative
Agent, for its own use and benefit, the fees agreed to between the
Administrative Agent and the Borrower in a fee letter dated July 21, 2006 or as
otherwise agreed to in writing between them.
     (d) Audit Fees. The Borrower shall pay to the Administrative Agent for its
own use and benefit charges for audits of the Collateral performed by the
Administrative Agent or its agents or representatives in such amounts as the
Administrative Agent may from time to time request (the Administrative Agent
acknowledging and agreeing that such charges shall be computed in the same
manner as it at the time customarily uses for the assessment of charges for
similar collateral audits); provided, however, that in the absence of any
Default and Event of Default, the Borrower shall not be required to pay the
Administrative Agent for more than one (1) such audit per calendar year.
     (e) Capital Expansion Credit Commitment Fee. The Borrower shall pay to the
Administrative Agent for the ratable account of the Lenders in accordance with
their Capital Expansion Loan Percentages a commitment fee at the rate per annum
equal to the Applicable Margin (computed on the basis of a year of 360 days and
the actual number of days elapsed) on the average daily Unused Capital Expansion
Loan Commitments during the Availability Period. Such commitment fee shall be
payable quarter-annually in arrears on the last day of each March,

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June, September and December in each year (commencing on the first such date
occurring after the date hereof) and on the Capital Expansion Credit Termination
Date, unless the Capital Expansion Loan Commitments are terminated in whole on
an earlier date, in which event the commitment fee for the period to the date of
such termination in whole shall be paid on the date of such termination.
     (f) Engineering Fees. The Borrower shall pay to the Administrative Agent
the reasonable fees and expenses of the engineering firm selected to prepare
each of the reports in accordance with Section 8.5(k) hereof.
Section 3. Place and Application of Payments.
     Section 3.1. Place and Application of Payments. All payments of principal
of and interest on the Loans and the Reimbursement Obligations, and of all other
Obligations payable by the Borrower under this Agreement and the other Loan
Documents, shall be made by the Borrower to the Administrative Agent by no later
than 12:00 Noon (Chicago time) on the due date thereof at the office of the
Administrative Agent in Chicago, Illinois (or such other location as the
Administrative Agent may designate to the Borrower) or, if such payment is to be
made in an Alternative Currency, no later than 12:00 noon local time at the
place of payment to such office as the Administrative Agent has previously
specified in a notice to the Borrower for the benefit of the Lender or Lenders
entitled thereto. Any payments received after such time shall be deemed to have
been received by the Administrative Agent on the next Business Day. All such
payments shall be made (i) in the case of U.S. Dollars, in immediately available
funds at the place of payment or (ii) in the case of an Alternative Currency, in
such funds then customary for settlement of international transactions in such
currency, in each case without set-off or counterclaim. The Administrative Agent
will promptly thereafter cause to be distributed like funds relating to the
payment of principal or interest on Loans and on Reimbursement Obligations in
which the Lenders have purchased Participating Interests ratably to the Lenders
and like funds relating to the payment of any other amount payable to any Lender
to such Lender, in each case to be applied in accordance with the terms of this
Agreement. If the Administrative Agent causes amounts to be distributed to the
Lenders in reliance upon the assumption that the Borrower will make a scheduled
payment and such scheduled payment is not so made, each Lender shall, on demand,
repay to the Administrative Agent the amount distributed to such Lender together
with interest thereon in respect of each day during the period commencing on the
date such amount was distributed to such Lender and ending on (but excluding)
the date such Lender repays such amount to the Administrative Agent, at a rate
per annum equal to: (i) from the date the distribution was made to the date 2
Business Days after payment by such Lender is due hereunder, (x) if such
scheduled payment was to be made in U.S. Dollars, the Federal Funds Rate for
each such day and (y) if such scheduled payment was to be made in an Alternative
Currency, the rate established by Section 1.10(c) hereof for Eurocurrency Loans
denominated in such currency and (ii) from the date 2 Business Days after the
date such payment is due from such Lender to the date such payment is made by
such Lender, (x) if such scheduled payment was to be made in U.S. Dollars, the
Base Rate in effect for each such day and (y) if such scheduled payment was to
be made in an Alternative Currency, the rate per annum established by
Section 1.10(c) hereof for Eurocurrency Loans denominated in such currency.

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     Anything contained herein to the contrary notwithstanding, all payments and
collections received in respect of the Obligations and all proceeds of the
Collateral received, in each instance, by the Administrative Agent or any of the
Lenders after the occurrence and during the continuation of an Event of Default,
shall be remitted to the Administrative Agent and distributed as follows:
     (a) first, to the payment of any outstanding costs and expenses incurred by
the Administrative Agent, and any security trustee therefor, in monitoring,
verifying, protecting, preserving or enforcing the Liens on the Collateral, in
protecting, preserving or enforcing rights under the Loan Documents, and in any
event including all costs and expenses of a character which the Borrower has
agreed to pay the Administrative Agent under Section 13.15 hereof (such funds to
be retained by the Administrative Agent for its own account unless it has
previously been reimbursed for such costs and expenses by the Lenders, in which
event such amounts shall be remitted to the Lenders to reimburse them for
payments theretofore made to the Administrative Agent);
     (b) second, to the payment of principal and interest on the Swing Note
until paid in full;
     (c) third, to the payment of any outstanding interest and fees due under
the Loan Documents to be allocated pro rata in accordance with the aggregate
unpaid amounts owing to each holder thereof;
     (d) fourth, to the payment of principal on the Notes, unpaid Reimbursement
Obligations, together with amounts to be held by the Administrative Agent as
collateral security for any outstanding L/C Obligations pursuant to Section 9.4
hereof (until the Administrative Agent is holding an amount of cash equal to the
then outstanding amount of all such L/C Obligations), and Hedging Liability, the
aggregate amount paid to, or held as collateral security for, the Lenders and,
in the case of Hedging Liability, their Affiliates to be allocated pro rata in
accordance with the aggregate unpaid amounts owing to each holder thereof;
     (e) fifth, to the payment of all other unpaid Obligations and all other
indebtedness, obligations, and liabilities of the Borrower and its Subsidiaries
secured by the Loan Documents (including, without limitation, Funds Transfer and
Deposit Account Liability) to be allocated pro rata in accordance with the
aggregate unpaid amounts owing to each holder thereof; and
     (f) finally, to the Borrower or whoever else may be lawfully entitled
thereto.
     Section 3.2. Account Debit. The Borrower hereby irrevocably authorizes the
Administrative Agent to charge any of the Borrower’s deposit accounts maintained
with the Administrative Agent for the amounts from time to time necessary to pay
any then due Obligations; provided that the Borrower acknowledges and agrees
that the Administrative Agent shall not be under an obligation to do so and the
Administrative Agent shall not incur any liability to the Borrower or any other
Person for the Administrative Agent’s failure to do so.

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Section 4. Guaranties and Collateral.
     Section 4.1. Guaranties. The payment and performance of the Obligations,
Hedging Liability, and Funds Transfer and Deposit Account Liability shall at all
times be guaranteed by each direct and indirect Domestic Subsidiary of the
Borrower (individually a “Guarantor” and collectively the “Guarantors”) pursuant
to Section 12 hereof or pursuant to one or more guaranty agreements in form and
substance acceptable to the Administrative Agent, as the same may be amended,
modified or supplemented from time to time (individually a “Guaranty” and
collectively the “Guaranties”).
     Section 4.2. Collateral. The Obligations, Hedging Liability, and Funds
Transfer and Deposit Account Liability shall be secured by (a) valid, perfected
and enforceable Liens on all right, title, and interest of the Borrower and the
Guarantors in all capital stock and other equity interests held by such Person
in each of its Domestic Subsidiaries, whether now owned or hereafter formed or
acquired, and all proceeds thereof, (b) valid, perfected and enforceable Liens
on all right, title, and interest of the Borrower and the Guarantors in 65% of
the capital stock and other equity interests held by such Person in Penford
Holdings, whether now owned or hereafter formed or acquired, and all proceeds
thereof, and (c) valid, perfected, and enforceable Liens on all right, title,
and interest of the Borrower and each Guarantor in all personal property,
fixtures, and real estate, whether now owned or hereafter acquired or arising,
and all proceeds thereof; provided, however, that: (i) until a Default or Event
of Default has occurred and is continuing and thereafter until otherwise
required by the Administrative Agent or the Required Lenders, Liens on local
petty cash deposit accounts maintained by the Borrower and the Guarantors in
proximity to their operations need not be perfected provided that the total
amount on deposit at any one time not so perfected shall not exceed $500,000 in
the aggregate and Liens on payroll accounts maintained by the Borrower and the
Guarantors need not be perfected provided the total amount on deposit at any
time does not exceed the current amount of their payroll obligations, (ii) until
an Event of Default has occurred and is continuing and thereafter until
otherwise required by the Administrative Agent or the Required Lenders, Liens on
vehicles which are subject to a certificate of title law need not be perfected
provided that the total value of such property at any one time not so perfected
shall not exceed $500,000 in the aggregate and (iii) until an Event of Default
has occurred and is continuing and thereafter until otherwise required by the
Administrative Agent or the Required Lenders, Liens need not be granted or
perfected on (A) Property of the Borrower and the Guarantors (other than
Property which is being pledged pursuant to the Security Agreement) located
outside of the United States of America or Property as to which the grant or
perfection of a Lien thereon would not be governed by the laws of the United
States of America or any State thereof, provided that the aggregate net book
value of such Property at any one time not so encumbered does not exceed
$500,000 in the aggregate and (B) goods in transit outside of the United States
of America in the ordinary course of business. The Borrower and the Guarantors
acknowledge and agree that each Lien on the Collateral shall be granted by the
Borrower and the Guarantors to the Administrative Agent for the benefit of the
holder of the Obligations, the Hedging Liability, and the Funds Transfer and
Deposit Account Liability and shall be a valid and perfected first priority Lien
subject only to Liens permitted by Section 8.8 hereof, in each case pursuant to
one or more Collateral Documents from such Persons, each in form and substance
satisfactory to the Administrative Agent. In furtherance and not in limitation
of the foregoing the Borrower and the Guarantors

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agree that any reference to the Original Credit Agreement and the Original
Security Agreement contained in any Collateral Documents (other than the
Original Security Agreement and the Mortgages) shall without any further action
be deemed to refer to this Agreement and the Security Agreement, respectively.
     Section 4.3. Liens on Real Property. In the event that the Borrower or any
Guarantor owns or hereafter acquires any real property, the Borrower shall, or
shall cause such Guarantor to, execute and deliver to the Administrative Agent a
mortgage or deed of trust acceptable in form and substance to the Administrative
Agent for the purpose of granting to the Administrative Agent (or a security
trustee therefor) a Lien on such real property to secure the Obligations,
Hedging Liability, and Funds Transfer and Deposit Account Liability, shall pay
all taxes, costs, and expenses incurred by the Administrative Agent in recording
such mortgage or deed of trust, and shall supply to the Administrative Agent at
the Borrower’s cost and expense a survey, environmental report, hazard insurance
policy, appraisal report, and a mortgagee’s policy of title insurance from a
title insurer acceptable to the Administrative Agent insuring the validity of
such mortgage or deed of trust and its status as a first Lien (subject to Liens
permitted by this Agreement) on the real property encumbered thereby and such
other instrument, documents, certificates, and opinions reasonably required by
the Administrative Agent in connection therewith.
     Section 4.4. Further Assurances. The Borrower agrees that it shall, and
shall cause each Guarantor to, from time to time at the request of the
Administrative Agent or the Required Lenders, execute and deliver such documents
and do such acts and things as the Administrative Agent or the Required Lenders
may reasonably request in order to provide for or perfect or protect such Liens
on the Collateral. In the event the Borrower or any Guarantor forms or acquires
any other Subsidiary after the date hereof, except as otherwise provided in
Sections 4.1 and 4.2 above, the Borrower shall promptly upon such formation or
acquisition cause such newly formed or acquired Subsidiary to execute a Guaranty
and such Collateral Documents as the Administrative Agent may then require, and
the Borrower shall also deliver to the Administrative Agent, or cause such
Subsidiary to deliver to the Administrative Agent, at the Borrower’s cost and
expense, such other instruments, documents, certificates, and opinions
reasonably required by the Administrative Agent in connection therewith.
Section 5. Definitions; Interpretation.
     Section 5.1. Definitions. The following terms when used herein shall have
the following meanings:
     “Acquired Business” means the entity or assets acquired by the Borrower or
a Subsidiary in an Acquisition, whether before or after the date hereof.
     “Acquisition” means any transaction or series of related transactions for
the purpose of or resulting, directly or indirectly, in (a) the acquisition of
all or substantially all of the assets of a Person, or of any business or
division of a Person, (b) the acquisition of in excess of 50% of the capital
stock, partnership interests, membership interests or equity of any Person
(other than a Person that is a Subsidiary), or otherwise causing any Person to
become a Subsidiary, or (c) a merger or consolidation or any other combination
with another Person (other than a Person that is a Subsidiary) provided that the
Borrower or the Subsidiary is the surviving entity.

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     “Adjusted LIBOR” means, for any Borrowing of Eurocurrency Loans, a rate per
annum determined in accordance with the following formula:

                 
 
  Adjusted LIBOR   =   LIBOR    
 
         
 
1 — Eurocurrency Reserve Percentage    

     “Administrative Agent” means Harris N.A. and any successor pursuant to
Section 11.7 hereof.
     “Administrative Agent’s Quoted Rate” is defined in Section 1.15(c) hereof.
     “Affiliate” means any Person directly or indirectly controlling or
controlled by, or under direct or indirect common control with, another Person.
A Person shall be deemed to control another Person for the purposes of this
definition if such Person possesses, directly or indirectly, the power to
direct, or cause the direction of, the management and policies of the other
Person, whether through the ownership of voting securities, common directors,
trustees or officers, by contract or otherwise; provided that, in any event for
purposes of this definition, any Person that owns, directly or indirectly, 5% or
more of the securities having the ordinary voting power for the election of
directors or governing body of a corporation or 5% or more of the partnership or
other ownership interest of any other Person (other than as a limited partner of
such other Person) will be deemed to control such corporation or other Person.
     “Agreement” means this Second Amended and Restated Credit Agreement, as the
same may be amended, modified, restated or supplemented from time to time
pursuant to the terms hereof.
     “Alternate Currency” means Australian Dollars and any other currency (other
than U.S. Dollars) approved by the Lenders, in each case for so long as such
currency is readily available and is freely transferable and freely convertible
into U.S. Dollars and the Dow Jones Telerate Service or Reuters Monitor Money
Rates Service (or any successor to either) reports a LIBOR for such currency for
interest periods of one, two, three and six calendar months; provided that if
any Lender provides written notice to the Borrower (with a copy to the
Administrative Agent) that any currency control or other exchange regulations
are imposed in the country in which any such Alternative Currency is issued and
that in the reasonable opinion of such Lender funding a Loan in such currency is
impractical, then such currency shall cease to be an Alternative Currency
hereunder until such time as all the Lenders reinstate such country’s currency
as an Alternative Currency.

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     “Applicable Margin” means, with respect to Loans, Reimbursement
Obligations, and the commitment fees and letter of credit fees payable under
Section 2.1 hereof, until the first Pricing Date, the rates per annum shown
opposite Level II below, and thereafter from one Pricing Date to the next the
Applicable Margin means the rates per annum determined in accordance with the
following schedules:

                                      Applicable Margin for   Applicable Margin
for             Base Rate Loans under   Eurocurrency Loans             Revolving
Credit and   under Revolving Credit   Applicable Margin     Total Funded Debt  
Term Credit and   and Term Credit and   for Revolving Credit     Ratio for Such
  Reimbursement   Letter of credit Fee   Commitment Fee Level   Pricing Date  
Obligations shall be:   Shall Be:   Shall Be:
V
  Greater than 4.0 to 1.0     1.00 %     2.50 %     0.40 %
 
                           
IV
  Less than or equal to 4.0 to 1.0, but greater than 3.5 to 1.0     0.75 %    
2.25 %     0.35 %
 
                           
III
  Less than or equal to 3.5 to 1.0, but greater than 3.0 to 1.0     0.50 %    
2.00 %     0.325 %
 
                           
II
  Less than or equal to 3.0 to 1.0, but greater than 2.5 to 1.0     0.25 %    
1.75 %     0.30 %
 
                           
I
  Less than or equal to 2.5 to 1.0     0.00 %     1.50 %     0.25 %

                                      Applicable Margin for   Applicable Margin
for   Applicable Margin for     Total Funded Debt   Base Rate Loans under  
Eurocurrency Loans   Capital Expansion     Ratio for Such   Capital Expansion  
under Capital Expansion   Credit Commitment Fee Level   Pricing Date   Credit
shall be:   Credit Shall Be:   Shall Be:
V
  Greater than 4.0 to 1.0     1.00 %     2.50 %     0.40 %
 
                           
IV
  Less than or equal to 4.0 to 1.0, but greater than 3.5 to 1.0     0.75 %    
2.25 %     0.40 %
 
                           
III
  Less than or equal to 3.5 to 1.0, but greater than 3.0 to 1.0     0.50 %    
2.00 %     0.40 %
 
                           
II
  Less than or equal to 3.0 to 1.0, but greater than 2.5 to 1.0     0.25 %    
1.75 %     0.40 %
 
                           
I
  Less than or equal to 2.5 to 1.0     0.00 %     1.50 %     0.40 %

For purposes hereof, the term “Pricing Date” means, for any fiscal quarter of
the Borrower ending on or after November 30, 2006, the date on which the
Administrative Agent is in receipt of the Borrower’s most recent financial
statements (and, in the case of the year-end financial statements, audit report)
for the fiscal quarter then ended, pursuant to Section 8.5 hereof. The
Applicable Margin shall be established based on the Total Funded Debt Ratio for
the most

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recently completed fiscal quarter and the Applicable Margin established on a
Pricing Date shall remain in effect until the next Pricing Date. If the Borrower
has not delivered its financial statements by the date such financial statements
(and, in the case of the year-end financial statements, audit report) are
required to be delivered under Section 8.5 hereof, until such financial
statements and audit report are delivered, the Applicable Margin shall be the
highest Applicable Margin (i.e., the Total Funded Debt Ratio shall be deemed to
be greater than 4.0 to 1.0). If the Borrower subsequently delivers such
financial statements before the next Pricing Date, the Applicable Margin
established by such late delivered financial statements shall take effect from
the date of delivery until the next Pricing Date. In all other circumstances,
the Applicable Margin established by such financial statements shall be in
effect from the Pricing Date that occurs immediately after the end of the fiscal
quarter covered by such financial statements until the next Pricing Date. Each
determination of the Applicable Margin made by the Administrative Agent in
accordance with the foregoing shall be conclusive and binding on the Borrower
and the Lenders if reasonably determined.
     “Application” is defined in Section 1.3(b) hereof.
     “Approved Fund” means any Fund that is administered or managed by (a) a
Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an
entity that administers or manages a Lender.
     “Australian Dollar Equivalent” means with respect to amounts in U.S.
Dollars, the amount of Australian Dollars which would be realized by converting
U.S. Dollars into Australian Dollars in the spot market at the exchange rate
quoted by the Administrative Agent, at approximately 11:00 a.m. (London time)
two Business Days prior to the date on which a computation thereof is required
to be made, to major banks in the interbank foreign exchange market for the
purchase of Australian Dollars for U.S. Dollars.
     “Australian Dollars” or “AUS $” means the lawful currency of the
Commonwealth of Australia.
     “Authorized Representative” means those persons shown on the list of
officers provided by the Borrower pursuant to Section 7.2 hereof or on any
update of any such list provided by the Borrower to the Administrative Agent, or
any further or different officers of the Borrower so named by any Authorized
Representative of the Borrower in a written notice to the Administrative Agent.
     “Availability Period” is defined in Section 1.1(b) hereof.
     “Base Rate” means with respect to Credit extended in U.S. Dollars, for any
day the greater of: (i) the rate of interest announced or otherwise established
by the Administrative Agent from time to time as its prime commercial rate as in
effect on such day, with any change in the Base Rate resulting from a change in
said prime commercial rate to be effective as of the date of the relevant change
in said prime commercial rate (it being acknowledged and agreed that such rate
may not be the Administrative Agent’s best or lowest rate) and (ii) the sum of
(x) the rate determined by the Administrative Agent to be the average (rounded
upward, if

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necessary, to the next higher 1/100 of 1%) of the rates per annum quoted to the
Administrative Agent at approximately 10:00 a.m. (Chicago time) (or as soon
thereafter as is practicable) on such day (or, if such day is not a Business
Day, on the immediately preceding Business Day) by two or more Federal funds
brokers selected by the Administrative Agent for sale to the Administrative
Agent at face value of Federal funds in the secondary market in an amount equal
or comparable to the principal amount owed to the Administrative Agent for which
such rate is being determined, plus (y) 1/2 of 1%.
     “Base Rate Loan” means a Loan bearing interest at a rate specified in
Section 1.4(a) hereof.
     “Blocked Unused Commitments” is defined in Section 8.23
     “Borrower” is defined in the introductory paragraph of this Agreement.
     “Borrowing” means the total of Loans of a single type advanced, continued
for an additional Interest Period, or converted from a different type into such
type by the Lenders under a Credit on a single date and, in the case of
Eurocurrency Loans, for a single Interest Period. Borrowings of Loans are made
and maintained ratably from each of the Lenders under a Credit according to
their Percentages of such Credit. A Borrowing is “advanced” on the day Lenders
advance funds comprising such Borrowing to the Borrower, is “continued” on the
date a new Interest Period for the same type of Loans commences for such
Borrowing, and is “converted” when such Borrowing is changed from one type of
Loans to the other, all as requested pursuant to Section 1.6(a) hereof.
Borrowings of Swing Loans are made by the Administrative Agent in accordance
with the procedures set forth in Section 1.15 hereof.
     “Business Day” means if the applicable Business Day relates to the
borrowing or payment of a Loan or Reimbursement Obligation denominated in U.S.
Dollars or is addressed to the Administrative Agent, any day (other than a
Saturday or Sunday) on which banks are not authorized or required to close in
Chicago, Illinois or Englewood, Colorado, and, if the applicable Business Day
relates to the advance or continuation of, or conversion into, or payment of a
Eurocurrency Loan, on which banks are dealing in U.S. Dollar deposits in the
interbank Eurocurrency market in London, England and Nassau, Bahamas and, if the
applicable Business Day relates to the borrowing or payment of a Eurocurrency
Loan denominated in an Alternative Currency, on which banks and foreign exchange
markets are open for business in the city where disbursements of or payments on
such Loan are to be made and, if such Alternative Currency is the euro or any
national currency of a nation that is a member of the European Economic and
Monetary Union, which is a TARGET Settlement Day.
     “Capital Expansion Credit” means the credit facility for the Capital
Expansion Loans described in Section 1.1(b) hereof.
     “Capital Expansion Credit Termination Date” means October 5, 2008, or such
earlier date on which the Capital Expansion Loan Commitments are terminated in
whole pursuant to Section 1.13, 9.2 or 9.3 hereof.

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     “Capital Expansion Loan” is defined in Section 1.1(b) hereof and, as so
defined, includes a Base Rate Loan or a Eurocurrency Loan, each of which is a
“type” of Capital Expansion Loan hereunder.
     “Capital Expansion Loan Commitment” means, as to any Lender, the obligation
of such Lender to make its Capital Expansion Loan during the Availability Period
in the principal amount not to exceed the amount set forth opposite such
Lender’s name on Schedule 1 attached hereto and made a part hereof. The Borrower
and the Lenders acknowledge and agree that the Capital Expansion Loan
Commitments of the Lenders aggregate $45,000,000 on the date hereof.
     “Capital Expansion Loan Percentage” means, for each Lender, the percentage
of the Capital Expansion Loan Commitments represented by such Lender’s Capital
Expansion Loan Commitment or, if the Capital Expansion Loan Commitments have
been terminated or have expired, the percentage held by such Lender of the
aggregate principal amount of all Capital Expansion Loans then outstanding.
     “Capital Expansion Note” is defined in Section 1.11 hereof.
     “Capital Expenditures” means, with respect to any Person for any period,
the aggregate amount of all expenditures (whether paid in cash or accrued as a
liability) by such Person during that period for the acquisition or leasing
(pursuant to a Capital Lease) of fixed or capital assets or additions to
property, plant, or equipment (including replacements, capitalized repairs, and
improvements) which should be capitalized on the balance sheet of such Person in
accordance with GAAP.
     “Capital Lease” means any lease of Property, which in accordance with GAAP
is required to be capitalized on the balance sheet of the lessee.
     “Capitalized Lease Obligation” means, for any Person, the amount of the
liability shown on the balance sheet of such Person in respect of a Capital
Lease determined in accordance with GAAP.
     “CERCLA” means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, 42 U.S.C. §§9601 et seq., and any future
amendments.
     “Change of Control” means any of (a) the acquisition by any “person” or
“group” (as such terms are used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended) at any time of beneficial ownership of 40% or
more of the outstanding capital stock or other equity interests of the Borrower
on a fully-diluted basis, (b) the failure of individuals who are members of the
board of directors (or similar governing body) of the Borrower on the Closing
Date (together with any new or replacement directors whose initial nomination
for election was approved by a majority of the directors who were either
directors on the Closing Date or previously so approved) to constitute a
majority of the board of directors (or similar governing body) of the Borrower,
or (c) any “Change of Control” (or words of like import), as

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\

defined in any agreement or indenture relating to any issue of Indebtedness for
Borrowed Money shall occur.
     “Closing Date” means the date of this Agreement or such later Business Day
upon which each condition described in Section 7.2 shall be satisfied or waived
in a manner acceptable to the Administrative Agent in its discretion.
     “Code” means the Internal Revenue Code of 1986, as amended, and any
successor statute thereto.
     “Collateral” means all properties, rights, interests, and privileges from
time to time subject to the Liens granted to the Administrative Agent, or any
security trustee therefore, by the Collateral Documents.
     “Collateral Account” is defined in Section 9.4 hereof.
     “Collateral Documents” means the Mortgages, the Security Agreement, the
U.S. Memorandum of Deposit, and all other mortgages, deeds of trust, security
agreements, pledge agreements, assignments, financing statements and other
documents as shall from time to time secure or relate to the Obligations, the
Hedging Liability, and the Funds Transfer and Deposit Account Liability or any
part thereof.
     “Commitment Amount Increase” is defined in Section 1.2(b) hereof.
     “Commitments” means the Revolving Credit Commitments, the Term Loan
Commitments and the Capital Expansion Loan Commitments.
     “Controlled Group” means all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together with the Borrower, are treated as a single employer under
Section 414 of the Code.
     “Controller” has the meaning it has in the Corporations Act.
     “Corporations Act” means the Corporations Act 2001 of the Commonwealth of
Australia.
     “Cost Over-Runs” is defined in Section 8.23.
     “Credit” means any of the Revolving Credit, the Swing Line, the Term Credit
or the Capital Expansion Credit.
     “Credit Event” means the advancing of any Loan, the continuation of or
conversion into a Eurocurrency Loan, or the issuance of, or extension of the
expiration date or increase in the amount of, any Letter of Credit.

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     “Damages” means all damages including, without limitation, punitive
damages, liabilities, costs, expenses, losses, diminutions in value, fines,
penalties, demands, claims, cost recovery actions, lawsuits, administrative
proceedings, orders, response action, removal and remedial costs, compliance
costs, investigation expenses, consultant fees, attorneys’ and paralegals’ fees
and litigation expenses.
     “Default” means any event or condition the occurrence of which would, with
the passage of time or the giving of notice, or any combination of the
foregoing, constitute an Event of Default.
     “Disposition” means the sale, lease, conveyance or other disposition of
Property, other than sales or other dispositions expressly permitted under
Section 8.10 hereof.
     “Domestic Subsidiary” means each Subsidiary of the Borrower which is
organized under the laws of the United States of America or any State thereof.
     “EBITDA” means, with reference to any period, Net Income for such period
plus the sum of all amounts deducted in arriving at such Net Income amount in
respect of (a) Interest Expense for such period, (b) federal, state, and local
income taxes for such period, (c) depreciation of fixed assets and amortization
of intangible assets for such period, plus (minus) any non-cash losses
(gains) but only to the extent such losses (gains) have not become a cash loss
(or gain), plus non-cash stock compensation charges incurred in such period.
     “Eligible Assignee” means (a) a Lender, (b) an Affiliate of a Lender,
(c) an Approved Fund, and (d) any other Person (other than a natural person)
approved by (i) the Administrative Agent, (ii) in the case of any assignment of
a Revolving Credit Commitment, the L/C Issuer, and (iii) unless an Event of
Default has occurred and is continuing, the Borrower (each such approval not to
be unreasonably withheld or delayed); provided that notwithstanding the
foregoing, “Eligible Assignee” shall not include the Borrower or any Guarantor
or any of the Borrower’s or such Guarantor’s Affiliates or Subsidiaries.
     “Eligible Line of Business” means any business engaged in as of the date of
this Agreement by the Borrower or any of its Subsidiaries or any substantially
similar business engaged in after the date of this Agreement.
     “Environmental Claim” means any investigation, notice, violation, demand,
allegation, action, suit, injunction, judgment, order, consent decree, penalty,
fine, lien, proceeding or claim (whether administrative, judicial or private in
nature) arising (a) pursuant to, or in connection with an actual or alleged
violation of, any Environmental Law, (b) in connection with any Hazardous
Material, (c) from any abatement, removal, remedial, corrective or response
action in connection with a Hazardous Material, Environmental Law or order of a
governmental authority or (d) from any actual or alleged damage, injury, threat
or harm to health, safety, natural resources or the environment.

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     “Environmental Law” means any current or future Legal Requirement
pertaining to (a) the protection of health, safety and the indoor or outdoor
environment, (b) the conservation, management or use of natural resources and
wildlife, (c) the protection or use of surface water or groundwater, (d) the
management, manufacture, possession, presence, use, generation, transportation,
treatment, storage, disposal, Release, threatened Release, abatement, removal,
remediation or handling of, or exposure to, any Hazardous Material or
(e) pollution (including any Release to air, land, surface water or
groundwater), and any amendment, rule, regulation, order or directive issued
thereunder.
     “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute thereto.
     “Ethanol Facility” means an ethanol production facility to be located at
the site of the Borrower’s existing facility in Cedar Rapids, Iowa.
     “Ethanol Facility Budget” means the budget delivered to the Administrative
Agent in satisfaction of the condition precedent contained in Section 7.3(c).
     “Eurocurrency Loan” means a Loan bearing interest at the rate specified in
Section 1.4(b) hereof.
     “Eurocurrency Reserve Percentage” means, with respect to any Credit
extended in U.S. Dollars for any Borrowing of Eurocurrency Loans, the daily
average for the applicable Interest Period of the maximum rate, expressed as a
decimal, at which reserves (including, without limitation, any supplemental,
marginal, and emergency reserves) are imposed during such Interest Period by the
Board of Governors of the Federal Reserve System (or any successor) on
“eurocurrency liabilities”, as defined in such Board’s Regulation D (or in
respect of any other category of liabilities that includes deposits by reference
to which the interest rate on Eurocurrency Loans is determined or any category
of extensions of credit or other assets that include loans by non-United States
offices of any Lender to United States residents), subject to any amendments of
such reserve requirement by such Board or its successor, taking into account any
transitional adjustments thereto. For purposes of this definition, the
Eurocurrency Loans shall be deemed to be “eurocurrency liabilities” as defined
in Regulation D without benefit or credit for any prorations, exemptions or
offsets under Regulation D.
     “Event of Default” means any event or condition identified as such in
Section 9.1 hereof.
     “Event of Loss” means, with respect to any Property, any of the following:
(a) any loss, destruction or damage of such Property or (b) any condemnation,
seizure, or taking, by exercise of the power of eminent domain or otherwise, of
such Property, or confiscation of such Property or the requisition of the use of
such Property.
     “Excess Cash Flow” means, with respect to any period, the amount (if any)
by which (a) the sum of EBITDA during such period and, commencing with the
fiscal year ending August 31, 2007, all reductions to non-cash working capital
of the Borrower and its Subsidiaries for such period, exceeds (b) the sum of
(i) Interest Expense for such period paid in cash, (ii) all federal, state and
local income taxes paid or payable by the Borrower and its Subsidiaries in cash
during such period, (iii) the aggregate amount of payments required to be made
by the Borrower

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and its Subsidiaries in cash during such period in respect of all principal on
all Indebtedness for Borrowed Money (whether at maturity, as a result of
mandatory sinking fund redemption, acceleration or otherwise, but excluding
payments made on the Revolving Credit and prepayments of the Term Loans and the
Capital Expansion Loans made pursuant to Section 1.9(b) hereof), (iv) all
Restricted Payments made by the Borrower during such period in cash, (v) the
aggregate amount of Capital Expenditures (other than Capital Expenditures
incurred in connection with the Ethanol Facility that are financed with the
proceeds of the Capital Expansion Loans) incurred by the Borrower and its
Subsidiaries during such period, plus (vi) commencing with the fiscal year
ending August 31, 2007, additions to non-cash working capital of the Borrower
and its Subsidiaries for such period.
     “Existing Australian Dollar Term Loan” means an Australian Dollar Term Loan
as defined in and outstanding under the Original Credit Agreement.
     “Existing Letter of Credit” means a Letter of Credit as defined in and
outstanding under the Original Credit Agreement.
     “Existing Revolving Loan” means a Revolving Loan as defined in and
outstanding under the Original Credit Agreement.
     “Existing Term Loan” means a Term Loan as defined in and outstanding under
the Original Credit Agreement.
     “Federal Funds Rate” means the fluctuating interest rate per annum
described in part (x) of clause (ii) of the definition of Base Rate.
     “Fixed Charges” means, with reference to any period, the sum of (a) all
scheduled payments of principal paid in cash during such period with respect to
Indebtedness for Borrowed Money of the Borrower and its Subsidiaries plus
(b) Interest Expense paid in cash for such period plus (c) all Restricted
Payments made by the Borrower during such period in cash, plus (d) federal,
state, and local income taxes paid or payable by the Borrower and its
Subsidiaries in cash during such period.
     “Foreign Subsidiary” means each Subsidiary which (a) is organized under the
laws of a jurisdiction other than the United States of America or any state
thereof, (b) conducts substantially all of its business outside of the United
States of America, and (c) has substantially all of its assets outside of the
United States of America.
     “Fund” means any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business.
     “Funds Transfer and Deposit Account Liability” means the liability of the
Borrower or any Subsidiary owing to any of the Lenders, or any Affiliates of
such Lenders, arising out of (a) the execution or processing of electronic
transfers of funds by automatic clearing house transfer, wire transfer or
otherwise to or from the deposit accounts of the Borrower and/or any

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Subsidiary now or hereafter maintained with any of the Lenders or their
Affiliates, (b) the acceptance for deposit or the honoring for payment of any
check, draft or other item with respect to any such deposit accounts, including
any overdraft facility that is solely ancillary to any of the foregoing, and
(c) any other deposit, disbursement, and cash management services afforded to
the Borrower or any Subsidiary by any of such Lenders or their Affiliates.
     “GAAP” means generally accepted accounting principles set forth from time
to time in the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date of
determination.
     “Guarantor” and “Guarantors” each is defined in Section 4.1 hereof.
     “Guaranty” and “Guaranties” each is defined in Section 4.1 hereof.
     “Hazardous Material” means any substance, chemical, compound, product,
solid, gas, liquid, waste, by product, pollutant, contaminant or material which
is hazardous or toxic, and includes, without limitation, (a) asbestos,
polychlorinated biphenyls and petroleum (including crude oil or any fraction
thereof) and (b) any material classified or regulated as “hazardous” or “toxic”
or words of like import pursuant to an Environmental Law.
     “Hazardous Material Activity” means any activity, event or occurrence
involving a Hazardous Material, including, without limitation, the manufacture,
possession, presence, use, generation, transportation, treatment, storage,
disposal, Release, threatened Release, abatement, removal, remediation, handling
of or corrective or response action to any Hazardous Material.
     “Hedging Liability” means the liability of the Borrower or any Subsidiary
to any of the Lenders, or any Affiliates of such Lenders, in respect of any
interest rate, foreign currency, and/or commodity swap, exchange, cap, collar,
floor, forward, future or option agreement, or any other similar interest rate,
currency or commodity hedging arrangement, including any overdraft facility that
is solely ancillary to any of the foregoing, as the Borrower or such Subsidiary,
as the case may be, may from time to time enter into with any one or more of the
Lenders party to this Agreement or their Affiliates.
     “Hostile Acquisition” means the acquisition of the capital stock or other
equity interests of a Person through a tender offer or similar solicitation of
the owners of such capital stock or other equity interests which has not been
approved (prior to the consummation of such acquisition) by resolutions of the
Board of Directors of such Person or by similar action if such Person is not a
corporation, and as to which such approval has not been withdrawn.
     “Indebtedness for Borrowed Money” means for any Person (without
duplication) (a) all indebtedness of such Person for borrowed money, whether
current or funded, or secured or unsecured, (b) all indebtedness for the
deferred purchase price of Property or services, (c) all indebtedness created or
arising under any conditional sale or other title retention agreement with

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respect to Property acquired by such Person (even though the rights and remedies
of the seller or Lender under such agreement in the event of a default are
limited to repossession or sale of such Property), (d) all indebtedness secured
by a purchase money mortgage or other Lien to secure all or part of the purchase
price of Property subject to such mortgage or Lien, (e) all obligations under
leases which shall have been or must be, in accordance with GAAP, recorded as
Capital Leases in respect of which such Person is liable as lessee, (f) any
counter-indemnity obligation in respect of a guarantee, indemnity, bond, standby
or documentary letter of credit or any other instrument issued by a bank or
financial institution, (g) any indebtedness, whether or not assumed, secured by
Liens on Property acquired by such Person at the time of acquisition thereof,
(h) any shares which are expressed to be redeemable and (i) any liability in
respect of any guarantee or indemnity for any of the items referred to above,
and (j) all indebtedness secured by any Lien upon Property of such Person,
whether or not such Person has assumed or become liable for the payment of such
indebtedness; it being understood that the term “Indebtedness for Borrowed
Money” shall not include trade payables arising in the ordinary course of
business.
     “Interest Expense” means, with reference to any period, the sum of all
interest charges (including imputed interest charges with respect to Capitalized
Lease Obligations and all amortization of debt discount and expense) of the
Borrower and its Subsidiaries for such period determined on a consolidated basis
in accordance with GAAP.
     “Interest Period” is defined in Section 1.7 hereof.
     “L/C Issuer” means the Administrative Agent, or any other Lender requested
by the Borrower and approved by the Administrative Agent in its sole discretion
with respect to any Letter of Credit.
     “L/C Obligations” means the aggregate undrawn face amounts of all
outstanding Letters of Credit and all unpaid Reimbursement Obligations.
     “L/C Sublimit” means $20,000,000 as reduced pursuant to the terms hereof;
provided, however only $10,000,000 of the L/C Sublimit may be used for Letters
of Credit issued for the benefit of Subsidiaries organized under the laws of the
Commonwealth of Australia.
     “Legal Requirement” means any treaty, convention, statute, law, regulation,
ordinance, license, permit, governmental approval, injunction, judgment, order,
consent decree or other requirement of any governmental authority, whether
federal, state, or local.
     “Lenders” means and includes Harris N.A. and the other financial
institutions from time to time party to this Agreement, including each party
that becomes a lender hereunder pursuant to Section 1.2(b) hereof and each
assignee Lender pursuant to Section 13.12 hereof.
     “Lending Office” is defined in Section 10.4 hereof.
     “Letter of Credit” is defined in Section 1.3(a) hereof.

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     “LIBOR” means, for an Interest Period for a Borrowing of Eurocurrency
Loans, (a) the LIBOR Index Rate for such Interest Period, if such rate is
available, and (b) if the LIBOR Index Rate cannot be determined, the arithmetic
average of the rates of interest per annum (rounded upwards, if necessary, to
the nearest 1/100 of 1%) at which deposits in U.S. Dollars or the relevant
Alternative Currency, as appropriate, in immediately available funds are offered
to the Administrative Agent at 11:00 a.m. (London, England time) 2 Business Days
before the beginning of such Interest Period by 3 or more major banks in the
interbank Eurocurrency market selected by the Administrative Agent for delivery
on the first day of and for a period equal to such Interest Period and in an
amount equal or comparable to the principal amount of the Eurocurrency Loan
scheduled to be made by the Administrative Agent as part of such Borrowing.
     “LIBOR Index Rate” means, for any Interest Period, the rate per annum
(rounded upwards, if necessary, to the next higher one hundred-thousandth of a
percentage point) for deposits in U.S. Dollars or the relevant Alternative
Currency, as appropriate, for a period equal to such Interest Period, which
appears on the appropriate Telerate Page (or any replacement page therefore) as
appropriate for such currency as of 11:00 a.m. (London, England time) on the day
2 Business Days before the commencement of such Interest Period.
     “Lien” means any mortgage, lien, security interest, pledge, charge or
encumbrance of any kind in respect of any Property, including the interests of a
vendor or lessor under any conditional sale, Capital Lease or other title
retention arrangement.
     “Loan” means any Revolving Loan, Swing Loan, the Term Loan or Capital
Expansion Loan, whether outstanding as a Base Rate Loan or Eurocurrency Loan or
otherwise, each of which is a “type” of Loan hereunder.
     “Loan Documents” means this Agreement, the Notes, the Applications, the
Collateral Documents, the Guaranties, and each other instrument or document to
be delivered hereunder or thereunder or otherwise in connection therewith.
     “Material Adverse Effect” means (a) a material adverse change in, or
material adverse effect upon, the operations, business, Property, condition
(financial or otherwise) or prospects of the Borrower or of the Borrower and its
Subsidiaries taken as a whole, (b) a material impairment of the ability of the
Borrower or any Subsidiary to perform its material obligations under any Loan
Document or (c) a material adverse effect upon (i) the legality, validity,
binding effect or enforceability against the Borrower or any Subsidiary of any
Loan Document or the rights and remedies of the Administrative Agent and the
Lenders thereunder or (ii) the perfection or priority of any Lien granted under
any Collateral Document.
     “Moody’s” means Moody’s Investors Service, Inc.
     “Mortgages” means, collectively, each Mortgage and Security Agreement with
Assignment of Rents, each Deed of Trust and Security Agreement with Assignment
of Rents, each Leasehold Mortgage and Security Agreement with Assignment of
Rents, and each Leasehold Deed of Trust and Security Agreement with Assignment
of Rents between the

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Borrower or the relevant Domestic Subsidiary and the Administrative Agent
relating to such Person’s real property owned or leased, as applicable, as of
the Closing Date and located in the states of Iowa, Idaho, Washington and
Wisconsin, and any other mortgages or deeds of trust delivered to the
Administrative Agent pursuant to Section 3.2 hereof as the same may be amended,
modified, supplemented or restated from time to time.
     “Net Cash Proceeds” means, as applicable, (a) with respect to any
Disposition by a Person, cash and cash equivalent proceeds received by or for
such Person’s account, net of (i) reasonable direct costs relating to such
Disposition and (ii) sale, use or other transactional taxes paid or payable by
such Person as a direct result of such Disposition, (b) with respect to any
Event of Loss of a Person, cash and cash equivalent proceeds received by or for
such Person’s account (whether as a result of payments made under any applicable
insurance policy therefor or in connection with condemnation proceedings or
otherwise), net of reasonable direct costs incurred in connection with the
collection of such proceeds, awards or other payments, but excluding in any
event proceeds received under any business interruption insurance and any tax
benefits (including tax credits and abatements) received in connection with any
condemnation or seizure of Property for a governmental authority, and (c) with
respect to any offering of equity securities of a Person or the issuance of any
Indebtedness for Borrowed Money by a Person, cash and cash equivalent proceeds
received by or for such Person’s account, net of reasonable legal, underwriting,
and other fees and expenses incurred as a direct result thereof.
     “Net Income” means, with reference to any period, the net income (or net
loss) of the Borrower and its Subsidiaries for such period computed on a
consolidated basis in accordance with GAAP; provided that there shall be
excluded from Net Income (a) the net income (or net loss) of any Person accrued
prior to the date it becomes a Subsidiary of, or has merged into or consolidated
with, the Borrower or another Subsidiary, and (b) the net income (or net loss)
of any Person (other than a Subsidiary) in which the Borrower or any of its
Subsidiaries has a equity interest in, except to the extent of the amount of
dividends or other distributions actually paid to the Borrower or any of its
Subsidiaries during such period.
     “Net Worth” means, for any Person and at any time the same is to be
determined, total shareholder’s equity (including capital stock, additional
paid-in capital, and retained earnings after deducting treasury stock) which
would appear on the balance sheet of such Person in accordance with GAAP.
     “New Zealand Dollars” or “NZ $” means the lawful currency of New Zealand.
     “Non Voting Equity” shall mean issued and outstanding shares of each class
of capital stock or other ownership interest not entitled to vote (within the
meaning of Treas. Reg., Section 1.956(c)(2).
     “Notes” means and includes the Revolving Notes, the Swing Note, the Term
Notes and the Capital Expansion Notes.
     “NZ Dollar Equivalent” means with respect to amounts in U.S. Dollars, the
amount of New Zealand Dollars which would be realized by converting U.S. Dollars
into New Zealand

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Dollars in the spot market at the exchange rate quoted by the Administrative
Agent, at approximately 11:00 a.m. (London time) two Business Days prior to the
date on which a computation thereof is required to be made, to major banks in
the interbank foreign exchange market for the purchase of New Zealand Dollars
for U.S. Dollars.
     “NZ Subsidiary” means any Subsidiary incorporated or organized under the
laws of New Zealand.
     “Obligations” means all obligations of the Borrower to pay principal and
interest on the Loans, all Reimbursement Obligations owing under the
Applications, all fees and charges payable hereunder, and all other payment
obligations of the Borrower or any of its Subsidiaries arising under or in
relation to any Loan Document, in each case whether now existing or hereafter
arising, due or to become due, direct or indirect, absolute or contingent, and
howsoever evidenced, held or acquired.
     “Original Dollar Amount” means at any time the same is to be determined
(x) in relation to any Eurocurrency Loan denominated in an Alternative Currency,
the U.S. Dollar Equivalent of such Loan on the first day of the Interest Period
then applicable thereto (the day on which such Loan was most recently created,
continued or effected by conversion) and (y) in relation to any other Loan, the
amount thereof in U.S. Dollars.
     “Original Security Agreement” means the Security Agreement dated as of
October 7, 2003, among the Borrower, Penford Products Co. and the Administrative
Agent, as amended and restated by that certain Amended and Restated Security
Agreement dated as of August 22, 2005, in each case as previously supplemented
and amended.
     “Overnight Foreign Currency Rate” shall mean for any amount payable in a
currency other than U.S. Dollars, the rate of interest per annum as determined
by the Administrative Agent (rounded upwards, if necessary, to the nearest whole
multiple of one-one hundred thousandth of one percent (1/100,000 of 1%)) at
which overnight or weekend deposits of the appropriate currency (or, if such
amount due remains unpaid more than three (3) Business Days, then for such
period of time not longer than six months as the Administrative Agent may elect
in its absolute discretion) for delivery in immediately available and freely
transferable funds would be offered by the Administrative Agent to major banks
in the interbank market upon request of such major banks for the applicable
period as determined above and in an amount comparable to the unpaid principal
amount of the related Loan (or, if the Administrative Agent is not placing
deposits in such currency in the interbank market, then the Administrative
Agent’s cost of funds in such currency for such period).
     “Participating Interest” is defined in Section 1.3(d) hereof.
     “Participating Lender” is defined in Section 1.3(d) hereof.
     “PBGC” means the Pension Benefit Guaranty Corporation or any Person
succeeding to any or all of its functions under ERISA.

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     “Penford Holdings” means Penford Holdings Pty. Limited ACN 094 279 339.
     “Percentage” means for any Lender its Revolver Percentage, Term Loan
Percentage or Capital Expansion Loan Percentage, as applicable; and where the
term “Percentage” is applied on an aggregate basis (including, without
limitation, Section 11.6 hereof), such aggregate percentage shall be calculated
by aggregating the separate components of the Revolver Percentage, Term Loan
Percentage and Capital Expansion Loan Percentage, and expressing such components
on a single percentage basis.
     “Permitted Acquisition” means any Acquisition with respect to which all of
the following conditions shall have been satisfied:
     (a) the Acquired Business is in an Eligible Line of Business and has its
primary operations within the United States of America, Australia, New Zealand
or, with the prior written consent of the Administrative Agent, any other
country reasonably acceptable to the Administrative Agent;
     (b) the Acquisition shall not be a Hostile Acquisition;
     (c) the financial statements of the Acquired Business shall have been
audited by one of the “Big Three” accounting firms or by another independent
accounting firm of national or regional repute or otherwise reasonably
satisfactory to the Administrative Agent, or if such financial statements have
not been audited by such an accounting firm, (i) such financial statements shall
have been approved by the Administrative Agent and (ii) the Acquired Business
has undergone a successful so-called businessman’s review by one of the “Big
Three” accounting firms as part of the Borrower’s due diligence on the
Acquisition;
     (d) (i) the Total Consideration for any Acquisitions of an Acquired
Business organized in the United States, when taken together with the Total
Consideration for all Acquired Businesses organized in the United States
acquired during the immediately preceding 12-month period, does not exceed
$70,000,000 (or, if paid in an Alternative Currency, the U.S. Dollar Equivalent
thereof) in the aggregate and (ii) for Acquisitions of Acquired Businesses
organized outside the United States, the Total Consideration for any such
Acquired Business, when taken together with the Total Consideration for all such
Acquired Businesses acquired during the immediately preceding 12-month period,
does not exceed $20,000,000 (or, if paid in an Alternative Currency, the U.S.
Dollar Equivalent thereof) in the aggregate;
     (e) the Borrower shall have notified the Administrative Agent and Lenders
not less than 30 days prior to any such Acquisition and furnished to the
Administrative Agent and Lenders at such time reasonable details as to such
Acquisition (including sources and uses of funds therefor), and 3-year
historical financial information and 3-year pro forma financial forecasts of the
Acquired Business on a stand alone basis as well as of the Borrower on a
consolidated basis after giving effect to the Acquisition and covenant
compliance calculations reasonably satisfactory to the Administrative Agent;

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     (f) if a new Subsidiary is formed or acquired as a result of or in
connection with the Acquisition, the Borrower shall have complied with the
requirements of Section 4 hereof in connection therewith;
     (g) after giving effect to the Acquisition, no Default or Event of Default
shall exist, including with respect to the covenants contained in Section 8.22
on a pro forma basis (calculated on the basis of actual financial results for
the most recently completed four consecutive fiscal quarters and prospectively
for the Ethanol Facility as contemplated in this Agreement); and
     (h) after giving effect to the Acquisition, the amount of the Unused
Revolving Credit Commitments shall be not less than $15,000,000.
     “Person” means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization or any other entity or
organization, including a government or agency or political subdivision thereof.
     “Plan” means any employee pension benefit plan covered by Title IV of ERISA
or subject to the minimum funding standards under Section 412 of the Code that
either (a) is maintained by a member of the Controlled Group for employees of a
member of the Controlled Group or (b) is maintained pursuant to a collective
bargaining agreement or any other arrangement under which more than one employer
makes contributions and to which a member of the Controlled Group is then making
or accruing an obligation to make contributions or has within the preceding five
plan years made contributions.
     “Premises” means the real property owned or leased by the Borrower or any
Subsidiary, including without limitation the real property and improvements
thereon owned by the Borrower or any Subsidiary subject to the Lien of the
Mortgages or any other Collateral Documents.
     “Property” means, as to any Person, all types of real, personal, tangible,
intangible or mixed property owned by such Person whether or not included in the
most recent balance sheet of such Person and its subsidiaries under GAAP.
     “RCRA” means the Solid Waste Disposal Act, as amended by the Resource
Conservation and Recovery Act of 1976 and Hazardous and Solid Waste Amendments
of 1984, 42 U.S.C. §§6901 et seq., and any future amendments.
     “Reimbursement Obligation” is defined in Section 1.3(c) hereof.
     “Release” means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, migration, dumping, or
disposing into the indoor or outdoor environment, including, without limitation,
the abandonment or discarding of barrels, drums, containers, tanks or other
receptacles containing or previously containing any Hazardous Material.

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     “Required Lenders” means, as of the date of determination thereof, Lenders
whose U.S. Dollar Equivalent amount of the outstanding Loans and interests in
Letters of Credit, Unused Capital Expansion Loan Commitments and Unused
Revolving Credit Commitments as of such date constitute more than 50% of the sum
of the U.S. Dollar Equivalent of the total outstanding Loans, interests in
Letters of Credit, Unused Capital Expansion Loan Commitments and Unused
Revolving Credit Commitments of the Lenders as of such date.
     “Restricted Payments” is defined in Section 8.12.
     “Revolver Percentage” means, for each Lender, the percentage of the
Revolving Credit Commitments represented by such Lender’s Revolving Credit
Commitment or, if the Revolving Credit Commitments have been terminated, the
percentage held by such Lender (including through participation interests in
Reimbursement Obligations) of the aggregate principal amount of all Revolving
Loans and L/C Obligations then outstanding.
     “Revolving Credit” means the credit facility for making Revolving Loans and
issuing Letters of Credit described in Sections 1.2 and 1.3 hereof.
     “Revolving Credit Commitment” means, as to any Lender, the obligation of
such Lender to make Revolving Loans and to participate in Swing Loans and
Letters of Credit issued for the account of the Borrower hereunder in an
aggregate principal or face amount at any one time outstanding not to exceed the
amount set forth opposite such Lender’s name on Schedule 1 attached hereto and
made a part hereof, as the same may be reduced or modified at any time or from
time to time pursuant to the terms hereof. The Borrower and the Lenders
acknowledge and agree that the Revolving Credit Commitments of the Lenders
aggregate $60,000,000 on the date hereof.
     “Revolving Credit Termination Date” means December 31, 2011, or such
earlier date on which the Revolving Credit Commitments are terminated in whole
pursuant to Section 1.13, 9.2 or 9.3 hereof.
     “Revolving Loan” is defined in Section 1.2 hereof and, as so defined,
includes a Base Rate Loan or a Eurocurrency Loan, each of which is a “type” of
Revolving Loan hereunder.
     “Revolving Note” is defined in Section 1.11 hereof.
     “S&P” means Standard & Poor’s Ratings Services Group, a division of The
McGraw-Hill Companies, Inc.
     “Security Agreement” means that certain Second Amended and Restated
Security Agreement dated the date of this Agreement among the Borrower and the
Guarantors and the Administrative Agent, as the same may be amended, modified,
supplemented or restated from time to time.
     “Subordinated Debt” means Indebtedness for Borrowed Money owing to any
Person on terms and conditions, and in such amounts, acceptable to the
Administrative Agent and the

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Required Lenders and which is subordinated in right of payment to the prior
payment in full of the Obligations pursuant to written subordination provisions
approved in writing by the Administrative Agent and the Required Lenders.
     “Subsidiary” means, as to any particular parent corporation or
organization, any other corporation or organization more than 50% of the
outstanding Voting Stock of which is at the time directly or indirectly owned by
such parent corporation or organization or by any one or more other entities
which are themselves subsidiaries of such parent corporation or organization.
Unless otherwise expressly noted herein, the term “Subsidiary” means a
Subsidiary of the Borrower or of any of its direct or indirect Subsidiaries.
     “Swing Line” means the credit facility for making one or more Swing Loans
described in Section 1.15 hereof.
     “Swing Line Sublimit” means $5,000,000, as reduced pursuant to the terms
hereof.
     “Swing Loan” and “Swing Loans” each is defined in Section 1.15 hereof.
     “Swing Note” is defined in Section 1.11 hereof.
     “Tangible Net Worth” means, for any Person and at any time the same is to
be determined, the Net Worth of such Person less the sum of (a) the aggregate
book value of all assets which would be classified as intangible assets under
GAAP, including, without limitation, goodwill, patents, trademarks, trade names,
copyrights, franchises and deferred charges (including, without limitation,
unamortized debt discount and expense, organization costs and deferred research
and development expense) and similar assets, and (b) the write-up of assets
above cost.
     “TARGET Settlement Day” means any day on which the Trans-European Automated
Real-Time Gross Settlement Express Transfer (TARGET) System is open.
     “Telerate Page” means the display designated on the Telerate Service (or
such other service as may be nominated by the British Bankers’ Association as
the information vendor for the purpose of displaying British Bankers’
Association Interest Settlement Rates) for the applicable currency.
     “Term Credit” means the credit facility for the Term Loans described in
Section 1.1(a) hereof.
     “Term Loan” is defined in Section 1.1(a) hereof and, as so defined,
includes a Base Rate Loan or a Eurocurrency Loan, each of which is a “type” of
Term Loan hereunder.
     “Term Loan Commitment” means, as to any Lender, the obligation of such
Lender to make its Term Loan on the Closing Date in the principal amount not to
exceed the amount set forth opposite such Lender’s name on Schedule 1 attached
hereto and made a part hereof. The

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Borrower and the Lenders acknowledge and agree that the Term Loan Commitments of
the Lenders aggregate $40,000,000 on the date hereof.
     “Term Loan Percentage” means, for each Lender, the percentage of the Term
Loan Commitments represented by such Lender’s Term Loan Commitment or, if the
Term Loan Commitments have been terminated or have expired, the percentage held
by such Lender of the aggregate principal amount of all Term Loans then
outstanding.
     “Term Note” is defined in Section 1.11 hereof.
     “Total Consideration” means, the total amount (but without duplication) of
(a) cash paid in connection with any Acquisition, plus (b) indebtedness payable
to the seller in connection with such Acquisition, plus (c) the fair market
value of any equity securities, including any warrants or options therefor,
delivered in connection with any Acquisition, plus (d) the present value of
covenants not to compete entered into in connection with such Acquisition or
other future payments which are required to be made over a period of time and
are not contingent upon the Borrower or its Subsidiary meeting financial
performance objectives (exclusive of salaries paid in the ordinary course of
business) (discounted at the Base Rate), but only to the extent not included in
clause (a), (b) or (c) above, plus (e) the amount of indebtedness assumed in
connection with such Acquisition.
     “Total Funded Debt” means, at any time the same is to be determined, the
sum (but without duplication) of (a) all Indebtedness for Borrowed Money of the
Borrower and its Subsidiaries at such time, plus (b) all Indebtedness for
Borrowed Money of any other Person which is directly or indirectly guaranteed by
the Borrower or any of its Subsidiaries or which the Borrower or any of its
Subsidiaries has agreed (contingently or otherwise) to purchase or otherwise
acquire or in respect of which the Borrower or any of its Subsidiaries has
otherwise assured a creditor against loss, plus (c) the maximum amount available
to be drawn under all letters of credit issued for the account of such Person
and all unpaid drawings in respect of such letters of credit.
     “Total Funded Debt Ratio” is defined in Section 8.22 hereto.
     “Unfunded Vested Liabilities” means, for any Plan at any time, the amount
(if any) by which the present value of all vested nonforfeitable accrued
benefits under such Plan exceeds the fair market value of all Plan assets
allocable to such benefits, all determined as of the then most recent valuation
date for such Plan, but only to the extent that such excess represents a
potential liability of a member of the Controlled Group to the PBGC or the Plan
under Title IV of ERISA.
     “Unused Capital Expansion Loan Commitments” means, at any time, the
difference between the Capital Expansion Loan Commitments then in effect and the
aggregate principal amount of the Capital Expansion Loans then outstanding.
     “Unused Revolving Credit Commitments” means, at any time, the difference
between the Revolving Credit Commitments then in effect and the aggregate
outstanding Original Dollar Amount of Revolving Loans and L/C Obligations,
provided that Swing Loans outstanding from

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time to time shall be deemed to reduce the Unused Revolving Credit Commitment of
the Administrative Agent for purposes of computing the commitment fee under
Section 2.1(a) hereof.
     “U.S. Dollar Equivalent” means (x) with respect to amounts in an
Alternative Currency, the amount of U.S. Dollars which would be realized by
converting such amount into U.S. Dollars in the spot market at the exchange rate
quoted by the Administrative Agent, at approximately 11:00 a.m. (London time)
two Business Days prior to the date on which a computation thereof is required
to be made, to major banks in the interbank foreign exchange market for the
purchase of U.S. Dollars for such Alternative Currency and (y) with respect to
amounts in U.S. Dollars, such amount.
     “Term Credit” means the credit facility for the Term Loans described in
Section 1.1(a) hereof.
     “Term Loan” is defined in Section 1.1(a) hereof and, as so defined,
includes a Base Rate Loan or a Eurocurrency Loan, each of which is a “type” of
Term Loan hereunder.
     “Term Loan Commitment” means, as to any Lender, the obligation of such
Lender to make its Term Loan on the Closing Date in the principal amount not to
exceed the amount set forth opposite such Lender’s name on Schedule 1 attached
hereto and made a part hereof. The Borrower and the Lenders acknowledge and
agree that the Term Loan Commitments of the Lenders aggregate $40,000,000 on the
date hereof.
     “Term Loan Percentage” means, for each Lender, the percentage of the Term
Loan Commitments represented by such Lender’s Term Loan Commitment or, if the
Term Loan Commitments have been terminated or have expired, the percentage held
by such Lender of the aggregate principal amount of all Term Loans then
outstanding.
     “Term Note” is defined in Section 1.11 hereof.
     “U.S. Dollars” and “$” each means the lawful currency of the United States
of America.
     “U.S. Memorandum of Deposit” means the deed entitled U.S. Memorandum of
Deposit dated on or about the date of this Agreement between the Borrower and
the Administrative Agent, as the same may be amended, restated, supplemented,
modified or replaced from time to time.
     “Voting Equity” shall mean the issued and outstanding shares of each class
of capital stock or other ownership interests entitled to vote (within the
meaning of Treas. Reg. Section 1.956-2(c)(2).
     “Welfare Plan” means a “welfare plan” as defined in Section 3(1) of ERISA.
     “Wholly-owned Subsidiary” means a Subsidiary of which all of the issued and
outstanding shares of capital stock (other than directors’ qualifying shares as
required by law) or interests are owned by the Borrower and/or one or more
Wholly-owned Subsidiaries within the meaning of this definition.

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     Section 5.2. Interpretation. The foregoing definitions are equally
applicable to both the singular and plural forms of the terms defined. The words
“hereof”, “herein”, and “hereunder” and words of like import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. All references to time of day herein are references
to Chicago, Illinois, time unless otherwise specifically provided. 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, it shall be done in
accordance with GAAP except where such principles are inconsistent with the
specific provisions of this Agreement.
     Section 5.3. Change in Accounting Principles. If, after the date of this
Agreement, there shall occur any change in GAAP from those used in the
preparation of the financial statements referred to in Section 6.5 hereof and
such change shall result in a change in the method of calculation of any
financial covenant, standard or term found in this Agreement, either the
Borrower or the Required Lenders may by notice to the Lenders and the Borrower,
respectively, require that the Lenders and the Borrower negotiate in good faith
to amend such covenants, standards, and terms so as equitably to reflect such
change in accounting principles, with the desired result being that the criteria
for evaluating the financial condition of the Borrower and its Subsidiaries
shall be the same as if such change had not been made. No delay by the Borrower
or the Required Lenders in requiring such negotiation shall limit their right to
so require such a negotiation at any time after such a change in accounting
principles. Until any such covenant, standard, or term is amended in accordance
with this Section 5.3, financial covenants shall be computed and determined in
accordance with GAAP in effect prior to such change in accounting principles.
Without limiting the generality of the foregoing, the Borrower shall neither be
deemed to be in compliance with any financial covenant hereunder nor out of
compliance with any financial covenant hereunder if such state of compliance or
noncompliance, as the case may be, would not exist but for the occurrence of a
change in accounting principles after the date hereof.
Section 6. Representations and Warranties.
     The Borrower represents and warrants to the Administrative Agent and the
Lenders as follows:
     Section 6.1. Organization and Qualification. The Borrower is duly
organized, validly existing, and in good standing as a corporation under the
laws of the State of Washington. The Borrower has full and adequate power to own
its Property and conduct its business as now conducted, and is duly licensed or
qualified and in good standing in each jurisdiction in which the nature of the
business conducted by it or the nature of the Property owned or leased by it
requires such licensing or qualifying, except where the failure to do so would
not have a Material Adverse Effect.

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     Section 6.2. Subsidiaries. Each Subsidiary is duly incorporated (or
otherwise organized if such Subsidiary is not a corporation), validly existing
and in good standing (to the extent the concept of good standing is applicable)
under the laws of the jurisdiction in which it is incorporated or organized, as
the case may be, has full and adequate power to own its Property and conduct its
business as now conducted, and is duly licensed or qualified and in good
standing (to the extent the concept of good standing is applicable in such
jurisdiction) in each jurisdiction in which the nature of the business conducted
by it or the nature of the Property owned or leased by it requires such
licensing or qualifying, except where the failure to do so would not have a
Material Adverse Effect. Schedule 6.2 hereto identifies each Subsidiary, the
jurisdiction of its incorporation or organization, as the case may be, the
percentage of issued and outstanding shares of each class of its capital stock
or other equity interests owned by the Borrower and its other Subsidiaries and,
if such percentage is not 100% (excluding, if applicable, directors’ qualifying
shares as required by law), a description of each class of its authorized
capital stock and other equity interests and the number of shares of each class
issued and outstanding. All of the outstanding shares of capital stock and other
equity interests of each Subsidiary are validly issued and outstanding and fully
paid and nonassessable and all such shares and other equity interests indicated
on Schedule 6.2 as owned by the Borrower or another Subsidiary are owned,
beneficially and of record, by the Borrower or such Subsidiary free and clear of
all Liens other than the Liens granted in favor of the Administrative Agent
pursuant to the Collateral Documents. There are no outstanding commitments or
other obligations of any Subsidiary to issue, and no options, warrants or other
rights of any Person to acquire, any shares of any class of capital stock or
other equity interests of any Subsidiary.
     Section 6.3. Authority and Validity of Obligations. The Borrower has full
right and authority to enter into this Agreement and the other Loan Documents
executed by it, to make the borrowings herein provided for or under the other
Loan Documents, to issue the Notes in evidence thereof, to grant to the
Administrative Agent the Liens described in the Collateral Documents, and to
perform all of its obligations hereunder and under the other Loan Documents
executed by it. Each Subsidiary has full right and authority to enter into the
Loan Documents executed by it, to guarantee the Obligations, Hedging Liability,
and Funds Transfer and Deposit Account Liability, to grant to the Administrative
Agent the Liens described in the Collateral Documents executed by such Person,
and to perform all of its obligations under the Loan Documents executed by it.
The Loan Documents delivered by the Borrower and its Subsidiaries have been duly
authorized, executed, and delivered by such Persons and constitute valid and
binding obligations of the Borrower and its Subsidiaries enforceable against
them in accordance with their terms, except as enforceability may be limited by
bankruptcy, insolvency, fraudulent conveyance or 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); and this Agreement and the other Loan Documents do not, nor
does the performance or observance by the Borrower or any Subsidiary of any of
the matters and things herein or therein provided for, (a) contravene or
constitute a default under any provision of law or any judgment, injunction,
order or decree binding upon the Borrower or any Subsidiary or any provision of
the organizational documents (e.g., charter, articles of incorporation or
by-laws, articles of association or operating agreement, partnership agreement,
or other similar document) of the Borrower or any Subsidiary, (b) contravene or
constitute a default under any covenant, indenture or agreement of or affecting
the Borrower or any Subsidiary or any of its Property, in

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each case where such contravention or default, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect or (c) result in
the creation or imposition of any Lien on any Property of the Borrower or any
Subsidiary other than the Liens granted in favor of the Administrative Agent
pursuant to the Collateral Documents.
     Section 6.4. Use of Proceeds; Margin Stock. The Borrower shall use the
proceeds of the Loans (other than the Capital Expansion Loans) to refinance
existing indebtedness, for their general working capital purposes, to finance
capital expenditures, to fund certain fees and expenses associated with the
negotiation, documentation, closing and syndication of the credit facilities
provided to the Borrower under the Loan Documents, to pay for Cost Over-Runs
related to the Ethanol Facility and for such other legal and proper purposes as
are consistent with all applicable laws, and the Borrower shall use the proceeds
of the Capital Expansion Loans to finance the construction of the Ethanol
Facility. Neither the Borrower nor any Subsidiary is engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulation U of the Board of Governors of the Federal Reserve
System), and no part of the proceeds of any Loan or any other extension of
credit made hereunder will be used to purchase or carry any such margin stock or
to extend credit to others for the purpose of purchasing or carrying any such
margin stock. Margin stock (as hereinabove defined) constitutes less than 25% of
the assets of the Borrower and its Subsidiaries which are subject to any
limitation on sale, pledge or other restriction hereunder.
     Section 6.5. Financial Reports. The consolidated balance sheet of the
Borrower and its Subsidiaries as at August 31, 2005, and the related
consolidated statements of income, retained earnings and cash flows of the
Borrower and its Subsidiaries for the fiscal year then ended, and accompanying
notes thereto, which financial statements are accompanied by the audit report of
Ernst & Young, LLP, independent public accountants, and the unaudited interim
consolidated balance sheet of the Borrower and its Subsidiaries as at May 31,
2006, and the related consolidated statements of income, retained earnings and
cash flows of the Borrower and its Subsidiaries for the 9 months then ended,
heretofore furnished to the Administrative Agent and the Lenders, fairly present
the consolidated financial condition of the Borrower and its Subsidiaries as at
said dates and the consolidated results of their operations and cash flows for
the periods then ended in conformity with GAAP applied on a consistent basis and
disclose or reflect all its actual and contingent liabilities at that date.
Neither the Borrower nor any Subsidiary has contingent liabilities which are
material to it other than as indicated on such financial statements or, with
respect to future periods, on the financial statements furnished pursuant to
Section 8.5 hereof.
     Section 6.6. No Material Adverse Change. Since August 31, 2005, there has
been no Material Adverse Effect.
     Section 6.7. Full Disclosure. The statements and information furnished to
the Administrative Agent and the Lenders in connection with the negotiation of
this Agreement and the other Loan Documents and the commitments by the Lenders
to provide all or part of the financing contemplated hereby or by the other Loan
Documents do not contain any untrue statements of a material fact or omit a
material fact necessary to make the material statements contained herein or
therein not misleading, the Administrative Agent and the Lenders

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acknowledging that as to any projections furnished to the Administrative Agent
and the Lenders, the Borrower only represents that the same were prepared on the
basis of information and estimates the Borrower believed to be reasonable.
     Section 6.8. Trademarks, Franchises, and Licenses. The Borrower and its
Subsidiaries own, possess, or have the right to use all necessary patents,
licenses, franchises, trademarks, trade names, trade styles, copyrights, trade
secrets, know how, and confidential commercial and proprietary information to
conduct their businesses as now conducted, without known conflict with any
patent, license, franchise, trademark, trade name, trade style, copyright or
other proprietary right of any other Person.
     Section 6.9. Governmental Authority and Licensing. The Borrower and its
Subsidiaries have received all licenses, permits, and approvals of all federal,
state, and local governmental authorities, if any, necessary to conduct their
businesses, in each case where the failure to obtain or maintain the same could
reasonably be expected to have a Material Adverse Effect. No investigation or
proceeding which, if adversely determined, could reasonably be expected to
result in revocation or denial of any material license, permit or approval is
pending or, to the knowledge of the Borrower, threatened.
     Section 6.10. Good Title. The Borrower and its Subsidiaries have good and
defensible title (or valid leasehold interests) to their assets as reflected on
the most recent consolidated balance sheet of the Borrower and its Subsidiaries
furnished to the Administrative Agent and the Lenders (except for sales of
assets in the ordinary course of business), subject to no Liens other than such
thereof as are permitted by Section 8.8 hereof.
     Section 6.11. Litigation and Other Controversies. Except as disclosed in
filings with the Securities and Exchange Commission made by the Borrower before
the Closing Date, there is no litigation or governmental or arbitration
proceeding or labor controversy pending, nor to the knowledge of the Borrower
threatened, against the Borrower or any Subsidiary or any of its Property which
if adversely determined, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
     Section 6.12. Taxes. All tax returns required to be filed by the Borrower
or any Subsidiary in any jurisdiction have, in fact, been filed, and all taxes,
assessments, fees, and other governmental charges upon the Borrower or any
Subsidiary or upon any of its Property, income or franchises, which are shown to
be due and payable in such returns, have been paid, except such taxes,
assessments, fees and governmental charges, if any, as are being contested in
good faith and by appropriate proceedings which prevent enforcement of the
matter under contest and as to which adequate reserves established in accordance
with GAAP have been provided. The Borrower does not know of any proposed
additional tax assessment against it or its Subsidiaries for which adequate
provisions in accordance with GAAP have not been made on their accounts.
Adequate provisions in accordance with GAAP for taxes on the books of the
Borrower and each Subsidiary have been made for all open years, and for its
current fiscal period.

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     Section 6.13. Approvals. No authorization, consent, license or exemption
from, or filing or registration with, any court or governmental department,
agency or instrumentality, nor any approval or consent of any other Person, is
or will be necessary to the valid execution, delivery or performance by the
Borrower or any Subsidiary of any Loan Document, except for such approvals which
have been obtained prior to the date of this Agreement and remain in full force
and effect.
     Section 6.14. Affiliate Transactions. Neither the Borrower nor any
Subsidiary is a party to any contracts or agreements with any of its Affiliates
(other than with Wholly-owned Subsidiaries) on terms and conditions which are
less favorable to the Borrower or such Subsidiary than would be usual and
customary in similar contracts or agreements between Persons not affiliated with
each other.
     Section 6.15. Investment Company. Neither the Borrower nor any Subsidiary
is an “investment company” or a company “controlled” by an “investment company”
within the meaning of the Investment Company Act of 1940, as amended.
     Section 6.16. ERISA. The Borrower and each other member of its Controlled
Group has fulfilled its obligations under the minimum funding standards of and
is in compliance in all material respects with ERISA and the Code to the extent
applicable to it and has not incurred any liability to the PBGC or a Plan under
Title IV of ERISA other than a liability to the PBGC for premiums under
Section 4007 of ERISA. Neither the Borrower nor any Subsidiary has any
contingent liabilities with respect to any post-retirement benefits under a
Welfare Plan, other than liability for continuation coverage described in
article 6 of Title I of ERISA.
     Section 6.17. Compliance with Laws. (a) The Borrower and its Subsidiaries
are in compliance with the requirements of all federal, state and local laws,
rules and regulations applicable to or pertaining to their Property or business
operations (including, without limitation, the Occupational Safety and Health
Act of 1970, the Americans with Disabilities Act of 1990, and laws and
regulations establishing quality criteria and standards for air, water, land and
toxic or hazardous wastes and substances), where any such non-compliance,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
     (b) Without limiting the representations and warranties set forth in
Section 6.17(a) above, except for such matters, individually or in the
aggregate, which could not reasonably be expected to result in a Material
Adverse Effect, the Borrower represents and warrants that: (i) the Borrower and
its Subsidiaries, and each of the Premises, comply in all material respects with
all applicable Environmental Laws; (ii) the Borrower and its Subsidiaries have
obtained all governmental approvals required for their operations and each of
the Premises by any applicable Environmental Law; (iii) the Borrower and its
Subsidiaries have not, and the Borrower has no knowledge of any other Person who
has, caused any Release, threatened Release or disposal of any Hazardous
Material at, on, about, or off any of the Premises in any material quantity and,
to the knowledge of the Borrower, none of the Premises are adversely affected by
any Release, threatened Release or disposal of a Hazardous Material originating
or emanating from any other property; (iv) none of the Premises contain and have
contained any: (1) underground storage tank, (2) material amounts of asbestos
containing building material, (3) landfills or dumps, (4) hazardous waste
management facility as defined pursuant to RCRA or any comparable state law or
any Environmental Law of any jurisdiction in which any of the Borrower’s or

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Subsidiary’s assets are located, or (5) site on or nominated for the National
Priority List promulgated pursuant to CERCLA or any state remedial priority list
promulgated or published pursuant to any comparable state law; (v) the Borrower
and its Subsidiaries have not used a material quantity of any Hazardous Material
and have conducted no Hazardous Material Activity at any of the Premises except
in compliance with Environmental Laws; (vi) the Borrower and its Subsidiaries
have no material liability for response or corrective action, natural resource
damage or other harm pursuant to CERCLA, RCRA or any comparable state law or any
Environmental Law of any jurisdiction in which any of the Borrower’s or
Subsidiary’s assets are located; (vii) the Borrower and its Subsidiaries are not
subject to, have no notice or knowledge of and are not required to give any
notice of any Environmental Claim involving the Borrower or any Subsidiary or
any of the Premises, and there are no conditions or occurrences at any of the
Premises which could reasonably be anticipated to form the basis for an
Environmental Claim against the Borrower or any Subsidiary or such Premises
which it adversely determined would have a Material Adverse Effect; (viii) none
of the Premises are subject to any, and the Borrower has no knowledge of any
imminent restriction on the ownership, occupancy, use or transferability of the
Premises in connection with any (1) Environmental Law or (2) Release, threatened
Release or disposal of a Hazardous Material; and (ix) there are no conditions or
circumstances at any of the Premises which pose an unreasonable risk to the
environment or the health or safety of Persons.
     Section 6.18. Other Agreements. Neither the Borrower nor any Subsidiary is
in default under the terms of any covenant, indenture or agreement of or
affecting such Person or any of its Property, which default if uncured could
reasonably be expected to have a Material Adverse Effect.
     Section 6.19. Solvency. The Borrower and its Subsidiaries are solvent, able
to pay their debts as they become due, and have sufficient capital to carry on
their business and all businesses in which they are about to engage.
     Section 6.20. No Default. No Default or Event of Default has occurred and
is continuing.
Section 7. Conditions Precedent.
          The obligation of each Lender to advance, continue or convert any Loan
(other than the continuation of, or conversion into, a Base Rate Loan) or of the
L/C Issuer to issue, extend the expiration date (including by not giving notice
of non-renewal) of or increase the amount of any Letter of Credit under this
Agreement, shall be subject to the following conditions precedent:
     Section 7.1. All Credit Events. At the time of each Credit Event hereunder:
     (a) each of the representations and warranties set forth herein and in the
other Loan Documents shall be and remain true and correct as of said time,
except to the extent the same expressly relate to an earlier date;
     (b) no Default or Event of Default shall have occurred and be continuing or
would occur as a result of such Credit Event;

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     (c) in the case of a Borrowing the Administrative Agent shall have received
the notice required by Section 1.6 hereof, in the case of the issuance of any
Letter of Credit the L/C Issuer shall have received a duly completed Application
for such Letter of Credit together with any fees called for by Section 2.1
hereof, and, in the case of an extension or increase in the amount of a Letter
of Credit, a written request therefor in a form acceptable to the L/C Issuer
together with fees called for by Section 2.1 hereof;
     (d) after giving effect to such extension of credit, (i) neither the
aggregate Original Dollar Amount nor the U.S. Dollar Equivalent of all Revolving
Loans, Swing Loans and Letters of Credit outstanding under this Agreement shall
exceed the Revolving Credit Commitments then in effect, (ii) the aggregate
Original Dollar Amount of all Revolving Loans denominated in Alternative
Currencies shall not exceed $25,000,000, and (iii) the aggregate amount of all
Letters of Credit issued for the account of the Borrower’s Foreign Subsidiaries
shall not exceed $10,000,000;
     (e) after giving effect to such extension of credit, the aggregate amount
of all Letters of Credit issued shall not exceed the L/C Sublimit; and
     (f) such Credit Event shall not violate any order, judgment or decree of
any court or other authority or any provision of law or regulation applicable to
the Administrative Agent, the L/C Issuer, or any Lender (including, without
limitation, Regulation U of the Board of Governors of the Federal Reserve
System) as then in effect.
     Each request for a Borrowing hereunder and each request for the issuance
of, increase in the amount of, or extension of the expiration date of, a Letter
of Credit shall be deemed to be a representation and warranty by the Borrower on
the date on such Credit Event as to the facts specified in subsections
(a) through (e), both inclusive, of this Section.
     Section 7.2. Initial Credit Event. Before or concurrently with the initial
Credit Event:
     (a) the Administrative Agent shall have received for each Lender the
favorable written opinion of Preston, Gates & Ellis, LLP, counsel to the
Borrower and each Domestic Subsidiary, in substantially the forms of Exhibit H
hereto, and otherwise in form and substance satisfactory to the Required
Lenders;
     (b) the Administrative Agent shall have received for each Lender
(i) certified copies of resolutions of the Board of Directors of the Borrower
and each Guarantor authorizing the execution, delivery and performance of the
Loan Documents, indicating the Borrower’s and each Guarantor’s authorized
signers of the Loan Documents and all other documents relating thereto and the
specimen signatures of such signers and (ii) copies of the Borrower’s and each
Guarantor’s Certificate of Incorporation and by-laws certified by the Secretary
or other appropriate officer of the Borrower or such Guarantor;
     (c) the Administrative Agent shall have received for each Lender this
Agreement duly executed by the Borrower, each Guarantor and the Lenders;

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     (d) the Administrative Agent shall have received for each applicable Lender
such Lender’s duly executed Notes of the Borrower dated the date hereof and
otherwise in compliance with the provisions of Section 1.11 hereof;
     (e) the Administrative Agent shall have received a reaffirmation of the
U.S. Memorandum of Deposit, the Security Agreement and supplements in form and
substance satisfactory to the Administrative Agent to each of the Mortgages,
duly executed by the Borrower and its Domestic Subsidiaries, together with
(i) original stock certificates or other similar instruments or securities
representing all of the issued and outstanding shares of capital stock or other
equity interests in each Subsidiary as required pursuant to Section 4 of this
Agreement, and (ii) stock powers for the Collateral consisting of the stock or
other equity interest in each Guarantor and Penford Holdings executed in blank
and undated;
     (f) the Administrative Agent shall have received evidence of insurance
required to be maintained under the Loan Documents, naming the Administrative
Agent as mortgagee, loss payee and additional insured;
     (g) the Administrative Agent shall have received for each Lender copies of
the certificates of good standing for the Borrower and each Guarantor, dated no
earlier than 30 days prior to the date hereof from the office of the secretary
of the state of its incorporation or organization and of each state in which it
is qualified to do business as a foreign corporation or organization;
     (h) the Administrative Agent shall have received for each Lender a list of
the Borrower’s Authorized Representatives;
     (i) the Administrative Agent shall have received for itself and for the
Lenders the initial fees owed to them;
     (j) each Lender shall have received such evaluations and certifications as
it may reasonably require (including a compliance certificate in the forms
attached hereto as Exhibit E containing calculations of the compliance
calculations of the financial covenants as of May 31, 2006) in order to satisfy
itself as to the value of the Collateral, the financial condition of the
Borrower and its Subsidiaries, and the lack of material contingent liabilities
of the Borrower and its Subsidiaries;
     (k) the Administrative Agent shall have received financing statement, tax,
and judgment lien search results against the Property of the Borrower and each
Guarantor evidencing the absence of Liens on its Property except as permitted by
Section 8.8 hereof;
     (l) the Administrative Agent shall have received for the account of the
Lenders such other agreements, instruments, resolutions, documents (including
documents relating to tax and regulatory maters), certificates, information and
opinions as the Administrative Agent may reasonably request;

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     (m) the Administrative Agent shall have received evidence satisfactory
thereto that, as of May 31, 2006, (x) the Borrower’s pro forma EBITDA for the
four fiscal quarters then ended is not less than $25,000,000 and (y) the Total
Funded Debt Ratio (calculated on a pro forma basis to give effect to the Capital
Expansion Loans hereunder) is not greater than 4.0 to 1.0, in each case
calculated on the basis of the Borrower’s EBITDA for the twelve consecutive
months ended May 31, 2006, and the Borrower’s Total Funded Debt outstanding on
the Closing Date after giving effect to the initial Credit Event hereunder;
     (n) the Administrative Agent shall have received (i) the audited financial
statements of the Borrower for the three consecutive fiscal years ended on or
before August 31, 2005, (ii) the quarterly financial statements of the Borrower
for each of the three consecutive fiscal quarters ended on or before May 31,
2006, and (iii) six years of projected financial statements of the Borrower for
each of the six consecutive fiscal years ending on or before August 31, 2012;
     (o) the Borrower shall have paid the Administrative Agent all fees and
expenses of counsel to the Administrative Agent for which an invoice has been
submitted to the Borrower; and
     (p) the Administrative Agent shall have received from the Borrower written
instructions as to the disbursement and application of the proceeds of the
initial Loans made hereunder.
     Section 7.3. Initial Loan Under Capital Expansion Credit. Before or
concurrently with the initial Loan under the Capital Expansion Credit Event:
     (a) the Administrative Agent shall have received a written report prepared
by an independent third party engineering firm acceptable to the Administrative
Agent as to such engineering firm’s review of all contracts and permits existing
at the time and budgeted cost of the Ethanol Facility;
     (b) (i) the Administrative Agent shall have received copies of all licenses
and permits received by the Borrower in respect of the Ethanol Facility and a
firm independent engineers mutually acceptable to the Borrower and the
Administrative Agent (or if the Borrower and the Administrative Agent cannot
agree, independent engineers acceptable to the Required Lenders) shall be
satisfied that such licenses and permits are sufficient to enable the Borrower
to commence construction of the Ethanol Facility, and (ii) the Administrative
Agent shall be satisfied with the status of the application for licenses and
permits relating to the Ethanol Facility that are not in effect on the date of
the initial Loan under the Capital Expansion Credit; and
     (c) the Administrative Agent shall have received a budget of the costs
reasonably estimated by the Borrower as of that date of completing the Ethanol
Facility prepared by the Borrower and in reasonable detail.

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Section 8. Covenants.
     The Borrower agrees that, so long as any credit is available to or in use
by the Borrower hereunder, except to the extent compliance in any case or cases
is waived in writing pursuant to the terms of Section 13.13 hereof:
     Section 8.1. Maintenance of Business. The Borrower shall, and shall cause
each Subsidiary to, preserve and maintain its existence and registration in the
place of its registration at the date of this Agreement, except as otherwise
provided in Section 8.10(c) hereof. The Borrower shall, and shall cause each
Subsidiary to, preserve and keep in force and effect all licenses, permits,
consents, authorizations, exemptions, except as otherwise provided in
Section 8.10(c) hereof. The Borrower shall, and shall cause each Subsidiary to,
preserve and keep in force and effect all licenses, permits, franchises,
approvals, patents, trademarks, trade names, trade styles, copyrights, and other
proprietary rights necessary to the proper conduct of its business where the
failure to do so could reasonably be expected to have a Material Adverse Effect.
     Section 8.2. Maintenance of Properties. The Borrower shall, and shall cause
each Subsidiary to, maintain, preserve, and keep its property, plant, and
equipment in good repair, working order and condition (ordinary wear and tear
excepted), and shall from time to time make all needful and proper repairs,
renewals, replacements, additions, and betterments thereto so that at all times
the efficiency thereof shall be fully preserved and maintained, except to the
extent that, in the reasonable business judgment of such Person, any such
Property is no longer necessary for the proper conduct of the business of such
Person.
     Section 8.3. Taxes and Assessments. The Borrower shall duly pay and
discharge, and shall cause each Subsidiary to duly pay and discharge, all taxes,
rates, assessments, fees, and governmental charges upon or against it or its
Property, in each case before the same become delinquent and before penalties
accrue thereon, unless and to the extent that the same are being contested in
good faith and by appropriate proceedings which prevent enforcement of the
matter under contest and adequate reserves are provided therefor.
     Section 8.4. Insurance. The Borrower shall insure and keep insured, and
shall cause each Subsidiary to insure and keep insured, with reputable, good and
responsible insurance companies, all insurable Property owned by it which is of
a character usually insured by Persons similarly situated and operating like
Properties against loss or damage from such hazards and risks, and in such
amounts, as are insured by Persons similarly situated and operating like
Properties; and the Borrower shall insure, and shall cause each Subsidiary to
insure, such other hazards and risks (including, without limitation, employers’
and public liability risks) with reputable, good and responsible insurance
companies as and to the extent usually insured by Persons similarly situated and
conducting similar businesses. The Borrower shall in any event maintain, and
cause each Subsidiary to maintain, insurance on the Collateral to the extent
required by the Collateral Documents. The Borrower shall, upon the request of
the Administrative Agent, furnish to the Administrative Agent and the Lenders a
certificate setting forth in summary form the nature and extent of the insurance
maintained pursuant to this Section and the other Loan Documents.

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     Section 8.5. Financial Reports. The Borrower shall, and shall cause each
Subsidiary to, maintain a standard system of accounting in accordance with GAAP
and shall furnish to the Administrative Agent, each Lender and each of their
duly authorized representatives such information respecting the business and
financial condition of the Borrower and each Subsidiary as the Administrative
Agent or such Lender may reasonably request; and without any request, shall
furnish to the Administrative Agent and the Lenders:
     (a) as soon as available, and in any event within forty-five (45) days
after the close of each of the first three (3) fiscal quarters of each fiscal
year of the Borrower, a copy of the consolidated and consolidating balance sheet
of the Borrower and its Subsidiaries as of the last day of such fiscal quarter
and the consolidated and consolidating statements of income, retained earnings,
and cash flows of the Borrower and its Subsidiaries for the fiscal quarter and
for the fiscal year to date period then ended, each in reasonable detail showing
in comparative form the figures for the corresponding date and period in the
previous fiscal year, prepared by the Borrower in accordance with GAAP (subject
to the absence of footnote disclosures and year end audit adjustments) and
certified to by its chief financial officer or another officer of the Borrower
acceptable to the Administrative Agent;
     (b) as soon as available, and in any event within ninety (90) days after
the close of each fiscal year of the Borrower, a copy of the consolidated and
consolidating balance sheet of the Borrower and its Subsidiaries as of the last
day of the fiscal year then ended and the consolidated and consolidating
statements of income, retained earnings, and cash flows of the Borrower and its
Subsidiaries for the fiscal year then ended, and accompanying notes thereto,
each in reasonable detail showing in comparative form the figures for the
previous fiscal year, accompanied in the case of the consolidated financial
statements by an unqualified opinion of Ernst & Young, LLP or another firm of
independent public accountants of recognized national or international standing,
selected by the Borrower and reasonably satisfactory to the Administrative Agent
and the Required Lenders, to the effect that the consolidated financial
statements have been prepared in accordance with GAAP and present fairly in
accordance with GAAP the consolidated financial condition of the Borrower and
its Subsidiaries as of the close of such fiscal year and the results of their
operations and cash flows for the fiscal year then ended and that an examination
of such accounts in connection with such financial statements has been made in
accordance with generally accepted auditing standards and, accordingly, such
examination included such tests of the accounting records and such other
auditing procedures as were considered necessary in the circumstances;
     (c) within the period provided in subsection (b) above, the written
statement of the accountants who certified the audit report thereby required
that in the course of their audit they have obtained no knowledge of any Default
or Event of Default, or, if such accountants have obtained knowledge of any such
Default or Event of Default, they shall disclose in such statement the nature
and period of the existence thereof;

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     (d) promptly after receipt thereof, any additional written reports,
management letters or other detailed information contained in writing concerning
significant aspects of the Borrower’s or any Subsidiary’s operations and
financial affairs given to it by its independent public accountants;
     (e) promptly after the sending or filing thereof, copies of each financial
statement, report, notice or proxy statement sent by the Borrower or any
Subsidiary to its stockholders or other equity holders, and copies of each
annual return, regular, periodic or special report, registration statement,
investment statement or prospectus (including all Form 10-K, Form 10-Q and Form
8-K reports) or equivalent document filed by the Borrower or any Subsidiary with
any securities exchange, or the Securities and Exchange Commission or any
successor agency;
     (f) promptly after receipt thereof, a copy of each audit made by any
regulatory agency of the books and records of the Borrower or any Subsidiary or
of notice of any material noncompliance with any applicable law, regulation or
guideline relating to the Borrower or any Subsidiary, or its business;
     (g) as soon as available, and in any event within forty-five (45) days
after the end of each fiscal year of the Borrower, a copy of the Borrower’s
consolidated and consolidating operating budget for the following fiscal year,
such operating budget to show the Borrower’s projected consolidated and
consolidating revenues, expenses and balance sheet on a quarter-by-quarter
basis, such operating budget to be in reasonable detail prepared by the Borrower
and in form satisfactory to the Administrative Agent and the Required Lenders
(which shall include a summary of all assumptions made in preparing such
operating budget);
     (h) notice of any Change of Control;
     (i) promptly after knowledge thereof shall have come to the attention of
any responsible officer of the Borrower, written notice of (i) any threatened or
pending litigation or governmental or arbitration proceeding or labor
controversy against the Borrower or any Subsidiary which, if adversely
determined, could reasonably be expected to have a Material Adverse Effect,
(ii) the occurrence of any Default or Event of Default hereunder and (iii) the
occurrence of any event described as an “Event of Default” under any other Loan
Document;
     (j) with each of the financial statements furnished to the Lenders pursuant
to subsections (a) and (b) above, a written certificate in the form attached
hereto as Exhibit E signed by the chief financial officer of the Borrower or
another officer of the Borrower acceptable to the Administrative Agent to the
effect that to the best of such officer’s knowledge and belief no Default or
Event of Default has occurred during the period covered by such statements or,
if any such Default or Event of Default has occurred during such period, setting
forth a description of such Default or Event of Default and specifying the
action, if any, taken by the Borrower or any Subsidiary to remedy the same. Such
certificate shall also set forth the calculations supporting such statements in
respect of Section 8.22 hereof;

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     (k) as soon as available, and in any event no later than 45 days after the
last day of each fiscal quarter of the Borrower, a written engineering progress
report prepared by the Borrower and reasonably satisfactory in form to the
Administrative Agent, including a description in reasonable detail of the
project costs incurred in connection with the Ethanol Facility through the last
day of the immediately preceding fiscal quarter and the year to date, revisions
to the original Ethanol Facility Budget, cost of work completed on the Ethanol
Facility, the estimated cost of work remaining to be completed on the Ethanol
Facility, the amount of all retainages from amounts paid to contracts on the
Ethanol Facility, the Ethanol Facility costs paid, the Ethanol Facility costs
incurred but not yet paid, and an estimated completion schedule for the Ethanol
Facility; and
     (l) by each date occurring every six months after the initial borrowing of
Capital Expansion Loans, a report reasonably satisfactory in form to the
Administrative Agent from a firm of independent engineers mutually acceptable to
the Borrower and the Administrative Agent (or if the Borrower and the
Administrative Agent cannot agree, independent engineers acceptable to the
Required Lenders), and retained by the Administrative Agent as to the progress
of the construction of the Ethanol Facility.
     Section 8.6. Inspection. The Borrower shall, and shall cause each
Subsidiary to, permit the Administrative Agent, each Lender, and each of their
duly authorized representatives and agents to visit and inspect any of its
Property, corporate books, and financial records, to examine and make copies of
its books of accounts and other financial records, and to discuss its affairs,
finances, and accounts with, and to be advised as to the same by, its officers,
employees and independent public accountants (and by this provision the Borrower
hereby authorizes such accountants to discuss with the Administrative Agent and
such Lenders the finances and affairs of the Borrower and its Subsidiaries) at
such reasonable times and intervals as the Administrative Agent or any such
Lender may designate and, so long as no Default or Event of Default exists, with
reasonable prior notice to the Borrower.
     Section 8.7. Borrowings and Guaranties. The Borrower shall not, nor shall
it permit any Subsidiary to, issue, incur, assume, create or have outstanding
any Indebtedness for Borrowed Money, or be or become liable as endorser,
guarantor, surety or otherwise for any debt, obligation or undertaking of any
other Person, or otherwise agree to provide funds for payment of the obligations
of another, or supply funds thereto or invest therein or otherwise assure a
creditor of another against loss, or apply for or become liable to the issuer of
a letter of credit which supports an obligation of another, or subordinate any
claim or demand it may have to the claim or demand of any other Person;
provided, however, that the foregoing shall not restrict nor operate to prevent:
     (a) the Obligations, Hedging Liability, and Funds Transfer and Deposit
Account Liability of the Borrower and its Subsidiaries owing to the
Administrative Agent or the Lenders (and their Affiliates);
     (b) purchase money indebtedness and Capitalized Lease Obligations of the
Borrower and its Subsidiaries in an amount not to exceed $5,000,000 (or the
Australian Dollar Equivalent or NZ Dollar Equivalent) in the aggregate at any
one time outstanding;

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     (c) obligations of the Borrower arising out of interest rate and foreign
currency, hedging agreements entered into with financial institutions in the
ordinary course of business and not for speculative purposes;
     (d) endorsement of items for deposit or collection of commercial paper
received in the ordinary course of business;
     (e) indebtedness from time to time owing by any Subsidiary to the Borrower
(the “Intercompany Indebtedness”) in an aggregate principal amount not to exceed
$35,000,000 or the Australian Dollar Equivalent thereof;
     (f) unsecured indebtedness of the Borrower not otherwise permitted by this
Section in an amount not to exceed $10,000,000 in the aggregate at any one time
outstanding; and
     (g) unsecured indebtedness of the Borrower’s Foreign Subsidiaries in an
aggregate principal amount not to exceed $5,000,000 (or the Australian Dollar
Equivalent thereof or New Zealand Dollar Equivalent thereof) at any time.
     Section 8.8. Liens. The Borrower shall not, nor shall it permit any
Subsidiary to, create, incur or permit to exist any Lien of any kind on any
Property owned by any such Person; provided, however, that the foregoing shall
not apply to nor operate to prevent:
     (a) Liens arising by statute in connection with worker’s compensation,
unemployment insurance, old age benefits, social security obligations, taxes,
assessments, statutory obligations or other similar charges (other than Liens
arising under ERISA), good faith cash deposits in connection with tenders,
contracts or leases to which the Borrower or any Subsidiary is a party or other
cash deposits required to be made in the ordinary course of business, provided
in each case that the obligation is not for borrowed money and that the
obligation secured is not overdue or, if overdue, is being contested in good
faith by appropriate proceedings which prevent enforcement of the matter under
contest and adequate reserves have been established therefor;
     (b) mechanics’, workmen’s, materialmen’s, landlords’, carriers’ or other
similar Liens arising in the ordinary course of business with respect to
obligations which are not due or which are being contested in good faith by
appropriate proceedings which prevent enforcement of the matter under contest;
     (c) judgment liens and judicial attachment liens not constituting an Event
of Default under Section 9.1(g) hereof and the pledge of assets for the purpose
of securing an appeal, stay or discharge in the course of any legal proceeding,
provided that the aggregate amount of such judgment liens and attachments and
liabilities of the Borrower and its Subsidiaries secured by a pledge of assets
permitted under this subsection, including interest and penalties thereon, if
any, shall not be in excess of $2,000,000 (or the Australian Dollar Equivalent
or NZ Dollar Equivalent) at any one time outstanding;

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     (d) Liens on property of the Borrower or any Subsidiary created solely for
the purpose of securing indebtedness permitted by Section 8.7(b) hereof,
representing or incurred to finance the purchase price of such Property,
provided that no such Lien shall extend to or cover other Property of the
Borrower or such Subsidiary other than the respective Property so acquired, and
the principal amount of indebtedness secured by any such Lien shall at no time
exceed the purchase price of such Property, as reduced by repayments of
principal thereon;
     (e) any interest or title of a lessor under any operating lease;
     (f) easements, rights-of-way, restrictions, and other similar encumbrances
against real property incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not materially detract
from the value of the Property subject thereto or materially interfere with the
ordinary conduct of the business of the Borrower or any Subsidiary; and
     (g) the Liens granted in favor of the Administrative Agent pursuant to the
Collateral Documents.
     Section 8.9. Investments, Acquisitions, Loans and Advances. The Borrower
shall not, nor shall it permit any Subsidiary to, directly or indirectly, make,
retain or have outstanding any investments (whether through purchase of stock or
obligations or otherwise) in, or loans or advances to any other Person, or
acquire all or any substantial part of the assets or business of any other
Person or division thereof; provided, however, that the foregoing shall not
apply to nor operate to prevent:
     (a) investments in direct obligations of the United States of America or of
any agency or instrumentality thereof whose obligations constitute full faith
and credit obligations of the United States of America, provided that any such
obligations shall mature within one year of the date of issuance thereof;
     (b) investments in commercial paper rated at least P-1 by Moody’s and at
least A-1 by S&P maturing within one year of the date of issuance thereof;
     (c) investments in certificates of deposit issued by any Lender or by any
United States commercial bank having capital and surplus of not less than
$100,000,000 which have a maturity of one year or less;
     (d) investments in repurchase obligations with a term of not more than
7 days for underlying securities of the types described in subsection (a) above
entered into with any bank meeting the qualifications specified in subsection
(c) above, provided all such agreements require physical delivery of the
securities securing such repurchase agreement, except those delivered through
the Federal Reserve Book Entry System;

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     (e) investments in money market funds that invest solely, and which are
restricted by their respective charters to invest solely, in investments of the
type described in the immediately preceding subsections (a), (b), (c), and
(d) above;
     (f) the Borrower’s investments in its Subsidiaries existing on the Closing
Date, and investments made from time to time by a Subsidiary in one or more of
its Subsidiaries;
     (g) intercompany advances made from time to time (i) by the Borrower or a
Domestic Subsidiary to another Domestic Subsidiary, (ii) by the Borrower or any
Domestic Subsidiary to a Foreign Subsidiary or to any one or more of its Foreign
Subsidiaries in an amount not to exceed $25,000,000 in the aggregate at any one
time outstanding, (iii) by a Subsidiary to the Borrower or to any one or more of
its Subsidiaries in the ordinary course of business to finance working capital
needs, and (iv) by a Foreign Subsidiary to another Foreign Subsidiary;
     (h) Permitted Acquisitions;
     (i) investments identified on Schedule 7.9 hereof; and
     (j) other investments, loans, and advances in addition to those otherwise
permitted by this Section in an amount not to exceed $20,000,000 in the
aggregate at any one time outstanding; provided, however no investment, loan or
advance permitted by this clause (j) may be made by the Borrower or any Domestic
Subsidiary in or to a Foreign Subsidiary.
In determining the amount of investments, acquisitions, loans, and advances
permitted under this Section, investments and acquisitions shall always be taken
at the original cost thereof (regardless of any subsequent appreciation or
depreciation therein), and loans and advances shall be taken at the principal
amount thereof then remaining unpaid.
     Section 8.10. Mergers, Consolidations and Sales. The Borrower shall not,
nor shall it permit any Subsidiary to, be a party to any merger or
consolidation, or sell, transfer, lease or otherwise dispose of all or any part
of its Property, including any disposition of Property as part of a sale and
leaseback transaction, or in any event sell or discount (with or without
recourse) any of its notes or accounts receivable; provided, however, that so
long as no Default or Event of Default exists (except in the case of sales of
inventory permitted by subsection (a) hereof) this Section shall not apply to
nor operate to prevent:
     (a) the sale or lease of inventory in the ordinary course of business;
     (b) the sale, transfer, lease or other disposition of Property of the
Borrower and its Subsidiaries to one another in the ordinary course of its
business;

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     (c) the merger of any Subsidiary with and into the Borrower or any other
Subsidiary, provided that, in the case of any merger involving the Borrower, the
Borrower is the corporation surviving the merger;
     (d) the sale of delinquent notes or accounts receivable in the ordinary
course of business for purposes of collection only (and not for the purpose of
any bulk sale or securitization transaction);
     (e) the sale, transfer or other disposition of any tangible personal
property that, in the reasonable business judgment of the Borrower or its
Subsidiary, has become obsolete or worn out, and which is disposed of in the
ordinary course of business; and
     (f) the sale, transfer, lease or other disposition of Property of the
Borrower or any Subsidiary (including any disposition of Property as part of a
sale and leaseback transaction) aggregating for the Borrower and its
Subsidiaries in an amount not to exceed $5,000,000 (or the Australian Dollar
Equivalent or NZ Dollar Equivalent) during any fiscal year of the Borrower.
     Section 8.11. Maintenance of Subsidiaries. The Borrower shall not assign,
sell or transfer, nor shall it permit any Subsidiary to issue, assign, sell or
transfer, any shares of capital stock or other equity interests of a Subsidiary;
and, for the avoidance of doubt, Penford Holdings shall not issue shares of
capital stock or other equity interests; provided, however, that the foregoing
shall not operate to prevent (a) Liens on the capital stock or other equity
interests of Subsidiaries granted to the Administrative Agent pursuant to the
Collateral Documents, (b) the issuance, sale, and transfer to any person of any
shares of capital stock of a Subsidiary solely for the purpose of qualifying,
and to the extent legally necessary to qualify, such person as a director of
such Subsidiary, and (c) any transaction permitted by Section 8.10(c) above.
     Section 8.12. Dividends and Certain Other Restricted Payments. The Borrower
shall not, nor shall it permit any Subsidiary to, (a) declare or pay any
dividends on or make any other distributions in respect of any class or series
of its capital stock or other equity interests or (b) directly or indirectly
purchase, redeem, or otherwise acquire or retire any of its capital stock or
other equity interests or any warrants, options, or similar instruments to
acquire the same (collectively, the “Restricted Payments”); provided, however,
that the foregoing shall not operate to prevent (i) the making of any Restricted
Payments by the Borrower so long as no Default or Event of Default shall exist
both before and after giving effect thereto and the aggregate amount thereof
does not exceed $8,000,000 in any fiscal year of the Borrower, and (ii) the
making of dividends or distributions by any Wholly-owned Subsidiary of the
Borrower to its parent corporation.
     Section 8.13. ERISA. The Borrower shall, and shall cause each Subsidiary
to, promptly pay and discharge all obligations and liabilities arising under
ERISA of a character which if unpaid or unperformed could reasonably be expected
to result in the imposition of a Lien against any of its Property. The Borrower
shall, and shall cause each Subsidiary to, promptly notify the Administrative
Agent and each Lender of: (a) the occurrence of any reportable event (as defined
in ERISA) with respect to a Plan, (b) receipt of any notice from the PBGC of its
intention to seek

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termination of any Plan or appointment of a trustee therefor, (c) its intention
to terminate or withdraw from any Plan, and (d) the occurrence of any event with
respect to any Plan which would result in the incurrence by the Borrower or any
Subsidiary of any material liability, fine or penalty, or any material increase
in the contingent liability of the Borrower or any Subsidiary with respect to
any post-retirement Welfare Plan benefit.
     Section 8.14. Compliance with Laws. (a) The Borrower shall, and shall cause
each Subsidiary to, comply in all respects with the requirements of all federal,
state, and local laws, rules, regulations, ordinances and orders applicable to
or pertaining to its Property or business operations, where any such
non-compliance, individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect or result in a Lien upon any of its Property.
     (b) Without limiting the agreements set forth in Section 8.14(a) above, the
Borrower shall, and shall cause each Subsidiary to, at all times, do the
following to the extent the failure to do so, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect: (i) comply in
all material respects with, and maintain each of the Premises in compliance in
all material respects with, all applicable Environmental Laws; (ii) require that
each tenant and subtenant, if any, of any of the Premises or any part thereof
comply in all material respects with all applicable Environmental Laws;
(iii) obtain and maintain in full force and effect all material governmental
approvals required by any applicable Environmental Law for operations at each of
the Premises; (iv) cure any material violation by it or at any of the Premises
of applicable Environmental Laws; (v) not allow the presence or operation at any
of the Premises of any (1) landfill or dump or (2) hazardous waste management
facility or solid waste disposal facility as defined pursuant to RCRA or any
comparable state law or law of any other jurisdiction; (vi) not manufacture,
use, generate, transport, treat, store, release, dispose or handle any Hazardous
Material at any of the Premises except in the ordinary course of its business
and in compliance with applicable Environmental Law; (vii) within 10 Business
Days notify the Administrative Agent in writing of and provide any reasonably
requested documents upon learning of any of the following in connection with the
Borrower or any Subsidiary or any of the Premises: (1) any material liability
for response or corrective action, natural resource damage or other harm
pursuant to CERCLA, RCRA or any comparable state law or law of any other
jurisdiction; (2) any material Environmental Claim; (3) any material violation
of an Environmental Law or material Release, threatened Release or disposal of a
Hazardous Material; (4) any restriction on the ownership, occupancy, use or
transferability arising pursuant to any (x) Release, threatened Release or
disposal of a Hazardous Material or (y) Environmental Law; or (5) any
environmental, natural resource, health or safety condition, which could
reasonably be expected to have a Material Adverse Effect; (viii) conduct at its
expense any investigation, study, sampling, testing, abatement, cleanup,
removal, remediation or other response action necessary to remove, remediate,
clean up or abate any material Release, threatened Release or disposal of a
Hazardous Material as required by any applicable Environmental Law, (ix) abide
by and observe any restrictions on the use of the Premises imposed by any
governmental authority as set forth in a deed or other instrument affecting the
Borrower’s or any Subsidiary’s interest therein; (x) promptly provide or
otherwise make available to the Administrative Agent any reasonably requested
environmental record concerning the Premises which the Borrower or any
Subsidiary possesses or can reasonably obtain; and (xi) perform, satisfy, and
implement any operation or maintenance actions required by any governmental
authority or Environmental Law,

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or included in any no further action letter or covenant not to sue issued by any
governmental authority under any Environmental Law.
     Section 8.15. Burdensome Contracts With Affiliates. The Borrower shall not,
nor shall it permit any Subsidiary to, enter into any contract, agreement or
business arrangement with any of its Affiliates (other than with Wholly-owned
Subsidiaries) on terms and conditions which are less favorable to the Borrower
or such Subsidiary than would be usual and customary in similar contracts,
agreements or business arrangements between Persons not affiliated with each
other.
     Section 8.16. No Changes in Fiscal Year. The fiscal year of the Borrower
and its Subsidiaries ends on August 31 of each year; and the Borrower shall not,
nor shall it permit any Subsidiary to, change its fiscal year from its present
basis.
     Section 8.17. Formation of Subsidiaries. (a) Promptly upon the formation or
acquisition of any Subsidiary, the Borrower shall provide the Administrative
Agent and the Lenders notice thereof and timely comply with the requirements of
Section 4 hereof (at which time Schedule 6.2 shall be deemed amended to include
reference to such Subsidiary).
          (b) Inactive Subsidiary. The Borrower shall not permit Penford Export
Corporation to engage in any operations, conduct any business or own any assets
having an aggregate value in excess of $50,000.
     Section 8.18. Change in the Nature of Business. The Borrower shall not, nor
shall it permit any Subsidiary to, engage in any business or activity if as a
result the general nature of the business of the Borrower or any Subsidiary
would be changed in any material respect from the general nature of the business
engaged in by it as of the Closing Date, it being agreed that the construction
and operation of the Ethanol Facility shall not be a violation of this Section.
     Section 8.19. Use of Proceeds. The Borrower shall use the credit extended
under this Agreement solely for the purposes set forth in, or otherwise
permitted by, Section 6.4 hereof.
     Section 8.20. No Restrictions. Except as provided herein, the Borrower
shall not, nor shall it permit any Subsidiary to, directly or indirectly create
or otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of the Borrower or any
Subsidiary to: (a) pay dividends or make any other distribution on any
Subsidiary’s capital stock or other equity interests owned by the Borrower or
any other Subsidiary, (b) pay any indebtedness owed to the Borrower or any other
Subsidiary, (c) make loans or advances to the Borrower or any other Subsidiary,
(d) transfer any of its Property to the Borrower or any other Subsidiary or
(e) guarantee the Obligations and/or grant Liens on its assets to the
Administrative Agent as required by the Loan Documents.
     Section 8.21. Subordinated Debt. The Borrower shall not, nor shall it
permit any Subsidiary to, amend or modify any of the terms or conditions
relating to any Subordinated Debt, or make any voluntary prepayment of thereof
or effect any voluntary redemption thereof, or make any payment on account of
Subordinated Debt which is prohibited under the terms of any instrument or
agreement subordinating the same to the Obligations.

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     Section 8.22. Financial Covenants. (a) Total Funded Debt Ratio. The
Borrower shall not, as of the last day of each fiscal quarter of the Borrower
ending during the periods specified below, permit the ratio of (a) Total Funded
Debt to (b) EBITDA for the four calendar fiscal quarters of the Borrower then
ended (the “Total Funded Debt Ratio”) to be more than the ratio set forth below
opposite such period:

                  Total Funded Debt Ratio From and Including   To and Including
  shall not be more than
August 31, 2006
  November 30, 2006   3.25 to 1.0
 
       
December 1, 2006
  February 28, 2007   3.50 to 1.0
 
       
March 1, 2007
  May 31, 2007   4.00 to 1.0
 
       
June 1, 2007
  August 31, 2008   4.50 to 1.0
 
       
September 1, 2008
  November 30, 2008   4.25 to 1.0
 
       
December 1, 2008
  February 28, 2009   4.00 to 1.0
 
       
March 1, 2009
  May 31, 2009   3.50 to 1.0
 
       
June 1, 2009
  At all times thereafter   3.00 to 1.0

          (b) Fixed Charge Coverage Ratio. As of the last day of each fiscal
quarter of the Borrower ending during the periods specified below, the Borrower
shall maintain a ratio of (a) EBITDA for the four fiscal quarters of the
Borrower then ended to (b) Fixed Charges for the same four fiscal quarters then
ended of not less than the ratio set forth below opposite such period:

                  Total Funded Debt Ratio From and Including   To and Including
  shall not be more than
August 31, 2006
  August 31, 2007   1.50 to 1.0
 
       
September 1, 2007
  August 31, 2008   1.25 to 1.0
 
       
September 1, 2008
  At all times thereafter   1.50 to 1.0

          (c) Tangible Net Worth. The Borrower shall maintain at all times
Tangible Net Worth in an amount not less than $65,000,000.

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          (d) Capital Expenditures. The Borrower shall not, nor shall it permit
any of its Subsidiaries to, incur Capital Expenditures (but excluding Capital
Expenditures made with the Net Cash Proceeds of any Event of Loss as permitted
by Section 1.9(b)(i) hereof, Capital Expenditures made with the proceeds of
grants from governmental entities and Capital Expenditures incurred in
connection with the Ethanol Facility that are financed with the proceeds of the
Capital Expansion Loans) in an amount in excess of $20,000,000 (or the
Australian Dollar Equivalent or NZ Dollar Equivalent) in the aggregate during
any fiscal year; provided, however, for any fiscal year when Total Funded Debt
Ratio is less than 2.0 to 1.0 for each fiscal quarter of such fiscal year,
Capital Expenditures for such year shall not exceed $25,000,000 (or the
Australian Dollar Equivalent or NZ Dollar Equivalent) for such fiscal year.
     Section 8.23. Cost Over-Runs. If, as of the last day of any fiscal quarter
of the Borrower, the costs of the Ethanol Facility actually paid through such
date together with the amount of all costs of the Ethanol Facility remaining to
be paid (including the Borrower’s reasonable estimates of any amounts which are
not fixed amounts) in order to complete the Ethanol Facility, shall exceed the
total amount of the Ethanol Facility Budget (including any contingency reserves
included therein) (each such excess being referred to herein as a “Cost
Over-Run”) by more than 10% of the total Ethanol Facility Budget amount, the
Borrower shall (a) at all times thereafter until the Ethanol Facility is
completed or such Cost Over-Run is eliminated, which ever occurs first, maintain
Unused Revolving Credit Commitments (the “Blocked Unused Commitments”) in an
amount not less than the amount of such Cost Over-Run, and (b) promptly deliver
to the Administrative Agent evidence reasonably satisfactory to the
Administrative Agent that the Borrower will be in pro forma compliance with the
financial covenants contained in Section 8.22 of this Agreement for the four
consecutive fiscal quarters immediately following such fiscal quarter after
giving effect to the maintenance of the Blocked Unused Commitments as required
by this Section.
     Section 8.24. Post-Closing Items. No later than November 30, 2006, the
Borrower shall deliver to the Administrative Agent a date down endorsement (or a
binding commitment therefore) to each mortgagee’s title insurance policy
insuring the Mortgages in form and substance acceptable to the Administrative
Agent from the title insurance company that issued such title insurance policies
insuring the Lien of the Mortgages as supplemented in connection with this
Agreement to be valid first priority Liens subject to no defects or objections
which are unacceptable to the Administrative Agent, together with such
endorsements as the Administrative Agent may require.
Section 9. Events of Default and Remedies.
     Section 9.1. Events of Default. Any one or more of the following shall
constitute an “Event of Default” hereunder:
     (a) (i) default in the payment when due of all or any part of the principal
of any Note (whether at the stated maturity thereof or at any other time
provided for in this Agreement) or of any Reimbursement Obligation (whether at
the stated maturity thereof or at any other time provided for in this Agreement)
or (ii) default for a period of

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3 Business Days in the payment of any interest or any fee or other Obligation
payable hereunder or under any other Loan Document;
     (b) default in the observance or performance of any covenant set forth in
Sections 8.1, 8.5, 8.7, 8.8, 8.9, 8.10, 8.11, 8.12, 8.17, 8.18, 8.21, 8.22 or
8.23 hereof or of any provision in any Loan Document dealing with the use,
disposition or remittance of the proceeds of Collateral or requiring the
maintenance of insurance thereon;
     (c) default in the observance or performance of any other provision hereof
or of any other Loan Document which is not remedied within 30 days after the
earlier of (i) the date on which such failure shall first become known to any
officer of the Borrower or (ii) written notice thereof is given to the Borrower
by the Administrative Agent;
     (d) any representation or warranty made herein or in any other Loan
Document or in any certificate furnished to the Administrative Agent or the
Lenders pursuant hereto or thereto or in connection with any transaction
contemplated hereby or thereby proves untrue or misleading in any material
respect as of the date of the issuance or making or deemed making thereof;
     (e) any event occurs or condition exists (other than those described in
subsections (a) through (d) above) which is specified as an event of default
under any of the other Loan Documents which have not been cured or waived within
any applicable cure period, or any of the Loan Documents shall for any reason
not be or shall cease to be in full force and effect or is declared to be, in
whole or in part, unenforceable, voidable or null and void, or any of the
Collateral Documents shall for any reason fail to create a valid and perfected
first priority Lien in favor of the Administrative Agent in any Collateral
purported to be covered thereby except as expressly permitted by the terms
thereof, or the Borrower or any Subsidiary takes any action for the purpose of
terminating, repudiating or rescinding any Loan Document executed by it or any
of its obligations thereunder;
     (f) default shall occur under any Indebtedness for Borrowed Money (other
than the Intercompany Indebtedness) issued, assumed or guaranteed by the
Borrower or any Subsidiary aggregating in excess of $2,000,000 (or the
Australian Dollar Equivalent or NZ Dollar Equivalent), or under any indenture,
agreement or other instrument under which the same may be issued, and such
default shall continue for a period of time sufficient to permit the
acceleration of the maturity of any such Indebtedness for Borrowed Money
(whether or not such maturity is in fact accelerated), or any such Indebtedness
for Borrowed Money shall not be paid when due (whether by demand, lapse of time,
acceleration or otherwise);
     (g) any judgment or judgments, writ or writs or warrant or warrants of
attachment, or any similar process or processes, shall be entered or filed
against the Borrower or any Subsidiary, or against any of its Property, in an
aggregate amount in excess of $2,000,000 (or the Australian Dollar Equivalent or
NZ Dollar Equivalent except to the extent covered by insurance with respect to
which the insurer has not denied

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liability therefor), and which remains undischarged, unvacated, unbonded or
unstayed for a period of 30 days;
     (h) the Borrower or any Subsidiary, or any member of its Controlled Group,
shall fail to pay when due an amount or amounts aggregating in excess of
$1,000,000 which it shall have become liable to pay to the PBGC or to a Plan
under Title IV of ERISA; or notice of intent to terminate a Plan or Plans having
aggregate Unfunded Vested Liabilities in excess of $1,000,000 (collectively, a
“Material Plan”) shall be filed under Title IV of ERISA by the Borrower or any
Subsidiary, or any other member of its Controlled Group, any plan administrator
or any combination of the foregoing; or the PBGC shall institute proceedings
under Title IV of ERISA to terminate or to cause a trustee to be appointed to
administer any Material Plan or a proceeding shall be instituted by a fiduciary
of any Material Plan against the Borrower or any Subsidiary, or any member of
its Controlled Group, to enforce Section 515 or 4219(c)(5) of ERISA and such
proceeding shall not have been dismissed within 30 days thereafter; or a
condition shall exist by reason of which the PBGC would be entitled to obtain a
decree adjudicating that any Material Plan must be terminated;
     (i) any Change of Control shall occur;
     (j) the Borrower or any Subsidiary shall (i) have entered involuntarily
against it an order for relief under the United States Bankruptcy Code, as
amended, or be (or have stated that it is) insolvent (as defined in the
Corporations Act) (ii) not pay, or admit in writing its inability to pay, or
stop or suspend the payment of its debts generally as they become due,
(iii) make an assignment or enter into an arrangement or composition with or for
the benefit of creditors generally or any class of them, (iv) apply for, seek,
consent to or acquiesce in, the appointment of an administrator, receiver,
receiver and manager, controller (as defined in the Corporations Act),
custodian, trustee, examiner, liquidator, provisional liquidator, statutory
manager or similar official for it or any substantial part of its Property,
(v) institute any proceeding seeking to have entered against it an order for
relief under the United States Bankruptcy Code, as amended, or any other order
under the laws of another jurisdiction having substantially similar effect, to
adjudicate it insolvent, or seeking dissolution, winding 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, (vi) take any action in
furtherance of any matter described in parts (i) through (v) above, or (vii)
fail to contest in good faith any appointment or proceeding described in
Section 9.1(k) hereof;
     (k) an administrator, custodian, receiver, receiver and manager, controller
(as defined in the Corporations Act, trustee, examiner, liquidator, provisional
liquidator, statutory manager or similar official shall be appointed for the
Borrower or any Subsidiary, or any substantial part of any of its Property, or a
proceeding described in Section 9.1(j)(v) shall be instituted against the
Borrower or any Subsidiary, and such

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appointment continues undischarged or such proceeding continues undismissed or
unstayed for a period of sixty (60) days;
     (l) any Subsidiary is the subject of an event described in section 459C(2)
or section 585 of the Corporations Act, or it makes a statement from which the
Administrative Agent reasonably deduces it is so subject;
     (m) a step is taken under Part 5A.1 of the Corporations Act to deregister
any Subsidiary;
     (n) a circumstance specified in section 461 of the Corporations Act occurs
with respect to any Subsidiary; or
     (o) any Subsidiary, without the consent of the Administrative Agent,
(i) takes action to reduce its share capital (other than by redeeming redeemable
preference shares) or to buy back its shares, or (ii) passes a resolution of a
type referred to in section 254N(1) or 260B of the Corporations Act, or a
meeting to consider such a resolution is summoned or convened.
     Section 9.2. Non-Bankruptcy Defaults. When any Event of Default other than
those described in subsection (j), (k) or (l) of Section 9.1 hereof has occurred
and is continuing, the Administrative Agent shall, by written notice to the
Borrower: (a) if so directed by the Required Lenders, terminate the remaining
Commitments and all other obligations of the Lenders hereunder on the date
stated in such notice (which may be the date thereof); (b) if so directed by the
Required Lenders, declare the principal of and the accrued interest on all
outstanding Notes to be forthwith due and payable and thereupon all outstanding
Notes, including both principal and interest thereon, shall be and become
immediately due and payable together with all other amounts payable under the
Loan Documents without further demand, presentment, protest or notice of any
kind; and (c) if so directed by the Required Lenders, demand that the Borrower
immediately pay to the Administrative Agent the full amount then available for
drawing under each or any Letter of Credit, and the Borrower agrees to
immediately make such payment and acknowledges and agrees that the Lenders would
not have an adequate remedy at law for failure by the Borrower to honor any such
demand and that the Administrative Agent, for the benefit of the Lenders, shall
have the right to require the Borrower to specifically perform such undertaking
whether or not any drawings or other demands for payment have been made under
any Letter of Credit. The Administrative Agent, after giving notice to the
Borrower pursuant to Section 9.1(c) or this Section 9.2, shall also promptly
send a copy of such notice to the other Lenders, but the failure to do so shall
not impair or annul the effect of such notice.
     Section 9.3. Bankruptcy Defaults. When any Event of Default described in
subsections (j), (k) or (l) of Section 9.1 hereof has occurred and is
continuing, then all outstanding Notes shall immediately become due and payable
together with all other amounts payable under the Loan Documents without
presentment, demand, protest or notice of any kind, the obligation of the
Lenders to extend further credit pursuant to any of the terms hereof shall
immediately terminate and the Borrower shall immediately pay to the
Administrative Agent the full amount then available for drawing under all
outstanding Letters of Credit, the Borrower

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acknowledging and agreeing that the Lenders would not have an adequate remedy at
law for failure by the Borrower to honor any such demand and that the Lenders,
and the Administrative Agent on their behalf, shall have the right to require
the Borrower to specifically perform such undertaking whether or not any draws
or other demands for payment have been made under any of the Letters of Credit.
     Section 9.4. Collateral for Undrawn Letters of Credit. (a) If the
prepayment of the amount available for drawing under any or all outstanding
Letters of Credit is required under Section 1.9(b) or under Section 9.2 or 9.3
above, the Borrower shall forthwith pay the amount required to be so prepaid, to
be held by the Administrative Agent as provided in subsection (b) below.
          (b) All amounts prepaid pursuant to subsection (a) above shall be held
by the Administrative Agent in one or more separate collateral accounts (each
such account, and the credit balances, properties, and any investments from time
to time held therein, and any substitutions for such account, any certificate of
deposit or other instrument evidencing any of the foregoing and all proceeds of
and earnings on any of the foregoing being collectively called the “Collateral
Account”) as security for, and for application by the Administrative Agent (to
the extent available) to, the reimbursement of any payment under any Letter of
Credit then or thereafter made by the Administrative Agent, and to the payment
of the unpaid balance of any other Obligations. The Collateral Account shall be
held in the name of and subject to the exclusive dominion and control of the
Administrative Agent for the benefit of the Administrative Agent, the Lenders,
and the L/C Issuer. If and when requested by the Borrower, the Administrative
Agent shall invest funds held in the Collateral Account from time to time in
direct obligations of, or obligations the principal of and interest on which are
unconditionally guaranteed by, the United States of America with a remaining
maturity of one year or less, provided that the Administrative Agent is
irrevocably authorized to sell investments held in the Collateral Account when
and as required to make payments out of the Collateral Account for application
to amounts due and owing from the Borrower to the L/C Issuer, the Administrative
Agent or the Lenders; provided, however, that (i) if the Borrower shall have
made payment of all obligations referred to in subsection (a) above (ii) all
relevant preference or other disgorgement periods relating to the receipt of
such payments have passed, and (iii) no Letters of Credit, Commitments, Loans or
other Obligations remain outstanding, at the request of the Borrower the
Administrative Agent shall release to the Borrower any remaining amounts held in
the Collateral Account.
     Section 9.5. Notice of Default. The Administrative Agent shall give notice
to the Borrower under Section 9.1(c) hereof promptly upon being requested to do
so by any Lender and shall thereupon notify all the Lenders thereof.
     Section 9.6. Expenses. The Borrower agrees to pay to the Administrative
Agent and each Lender, and any other holder of any Note outstanding hereunder,
all costs and expenses reasonably incurred or paid by the Administrative Agent
and such Lender or any such holder, including reasonable attorneys’ fees and
court costs, in connection with any Default or Event of Default hereunder or in
connection with the enforcement of any of the Loan Documents (including all such
costs and expenses incurred in connection with any proceeding under the

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United States Bankruptcy Code involving the Borrower or any Subsidiary as a
debtor thereunder).
Section 10. Change in Circumstances.
     Section 10.1. Change of Law. Notwithstanding any other provisions of this
Agreement or any Note, if at any time any change in applicable law or regulation
or in the interpretation thereof makes it unlawful for any Lender to make or
continue to maintain any Eurocurrency Loans in the relevant currency or to
perform its obligations as contemplated hereby, such Lender shall promptly give
notice thereof to the Borrower and such Lender’s obligations to make or maintain
Eurocurrency Loans under this Agreement shall be suspended until it is no longer
unlawful for such Lender to make or maintain Eurocurrency Loans in such
currency. The Borrower shall prepay on demand the outstanding principal amount
of any such affected Eurocurrency Loans, together with all interest accrued
thereon and all other amounts then due and payable to such Lender under this
Agreement; provided, however, subject to all of the terms and conditions of this
Agreement, the Borrower may then elect to borrow the principal amount of the
affected Eurocurrency Loans from such Lender by means of Base Rate Loans from
such Lender, which Base Rate Loans shall not be made ratably by the Lenders but
only from such affected Lender.
     Section 10.2. Unavailability of Deposits or Inability to Ascertain, or
Inadequacy of, LIBOR. If on or prior to the first day of any Interest Period for
any Borrowing of Eurocurrency Loans:
     (a) the Administrative Agent determines that deposits in the applicable
currency (in the applicable amounts) are not being offered to it in the
interbank Eurocurrency market for such Interest Period, or that by reason of
circumstances affecting the interbank Eurocurrency market adequate and
reasonable means do not exist for ascertaining the applicable LIBOR, or
     (b) the Required Lenders advise the Administrative Agent that (i) LIBOR as
determined by the Administrative Agent will not adequately and fairly reflect
the cost to such Lenders of funding their Eurocurrency Loans for such Interest
Period or (ii) that the making or funding of Eurocurrency Loans become
impracticable,
then the Administrative Agent shall forthwith give notice thereof to the
Borrower and the Lenders, whereupon until the Administrative Agent notifies the
Borrower that the circumstances giving rise to such suspension no longer exist,
the obligations of the Lenders to make Eurocurrency Loans shall be suspended.
     Section 10.3. Increased Cost and Reduced Return. (a) If, on or after the
date hereof, the adoption of any applicable law, rule or regulation, or any
change therein, or any change in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender (or its
Lending Office) with any request or directive (whether or not having the force
of law) of any such authority, central bank or comparable agency:

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     (i) shall subject any Lender (or its Lending Office) to any tax, duty or
other charge with respect to its Eurocurrency Loans, its Notes, its Letter(s) of
Credit, or its participation in any thereof, any Reimbursement Obligations owed
to it or its obligation to make Eurocurrency Loans, issue a Letter of Credit, or
to participate therein, or shall change the basis of taxation of payments to any
Lender (or its Lending Office) of the principal of or interest on its
Eurocurrency Loans, Letter(s) of Credit, or participations therein or any other
amounts due under this Agreement or any other Loan Document in respect of its
Eurocurrency Loans, Letter(s) of Credit, any participation therein, any
Reimbursement Obligations owed to it, or its obligation to make Eurocurrency
Loans, or issue a Letter of Credit, or acquire participations therein (except
for changes in the rate of tax on the overall net income of such Lender or its
Lending Office imposed by the jurisdiction in which such Lender’s principal
executive office or Lending Office is located); or
     (ii) shall impose, modify or deem applicable any reserve, special deposit
or similar requirement (including, without limitation, any such requirement
imposed by the Board of Governors of the Federal Reserve System, but excluding
with respect to any Eurocurrency Loans any such requirement included in an
applicable Eurocurrency Reserve Percentage) against assets of, deposits with or
for the account of, or credit extended by, any Lender (or its Lending Office) or
shall impose on any Lender (or its Lending Office) or on the interbank market
any other condition affecting its Eurocurrency Loans, its Notes, its Letter(s)
of Credit, or its participation in any thereof, any Reimbursement Obligation
owed to it, or its obligation to make Eurocurrency Loans, or to issue a Letter
of Credit, or to participate therein;
and the result of any of the foregoing is to increase the cost to such Lender
(or its Lending Office) of making or maintaining any Eurocurrency Loan, issuing
or maintaining a Letter of Credit, or participating therein, or to reduce the
amount of any sum received or receivable by such Lender (or its Lending Office)
under this Agreement or under any other Loan Document with respect thereto, by
an amount deemed by such Lender to be material, then, within 15 days after
demand by such Lender (with a copy to the Administrative Agent), the Borrower
shall be obligated to pay to such Lender such additional amount or amounts as
will compensate such Lender for such increased cost or reduction.
          (b) If, after the date hereof, any Lender or the Administrative Agent
shall have determined that the adoption of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or its Lending Office) or
any corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has had the effect of reducing the rate of
return on such Lender’s or such corporation’s capital as a consequence of its
obligations hereunder to a level below that which such Lender or such
corporation could have achieved but for such adoption, change or compliance
(taking into consideration such Lender’s or such corporation’s policies with
respect to capital adequacy) by an amount deemed by such Lender to be material,
then from time to time, within 15 days after

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demand by such Lender (with a copy to the Administrative Agent), the Borrower
shall pay to such Lender such additional amount or amounts as will compensate
such Lender for such reduction.
          (c) A certificate of a Lender claiming compensation under this
Section 10.3 and setting forth the additional amount or amounts to be paid to it
hereunder shall be conclusive if reasonably determined. In determining such
amount, such Lender may use any reasonable averaging and attribution methods.
     Section 10.4. Lending Offices. Each Lender may, at its option, elect to
make its Loans hereunder at the branch, office or affiliate specified on the
appropriate signature page hereof (each a “Lending Office”) for each type of
Loan available hereunder or at such other of its branches, offices or affiliates
as it may from time to time elect and designate in a written notice to the
Borrower and the Administrative Agent. To the extent reasonably possible, a
Lender shall designate an alternative branch or funding office with respect to
its Eurocurrency Loans to reduce any liability of the Borrower to such Lender
under Section 10.3 hereof or to avoid the unavailability of Eurocurrency Loans
under Section 10.2 hereof, so long as such designation is not otherwise
disadvantageous to the Lender.
     Section 10.5. Discretion of Lender as to Manner of Funding. Notwithstanding
any other provision of this Agreement, each Lender shall be entitled to fund and
maintain its funding of all or any part of its Loans in any manner it sees fit,
it being understood, however, that for the purposes of this Agreement all
determinations hereunder with respect to Eurocurrency Loans shall be made as if
each Lender had actually funded and maintained each Eurocurrency Loan through
the purchase of deposits in the applicable currency in the interbank
Eurocurrency market having a maturity corresponding to such Loan’s Interest
Period, denominated in the relevant currency and bearing an interest rate equal
to LIBOR for such Interest Period.
Section 11. The Administrative Agent.
     Section 11.1. Appointment and Authorization of Administrative Agent. Each
Lender hereby appoints Harris N.A. as the Administrative Agent under the Loan
Documents and hereby authorizes the Administrative Agent to take such action as
Administrative Agent on its behalf and to exercise such powers under the Loan
Documents as are delegated to the Administrative Agent by the terms thereof,
together with such powers as are reasonably incidental thereto. The Lenders
expressly agree that the Administrative Agent is not acting as a fiduciary of
the Lenders in respect of the Loan Documents, the Borrower or otherwise, and
nothing herein or in any of the other Loan Documents shall result in any duties
or obligations on the Administrative Agent or any of the Lenders except as
expressly set forth herein.
     Section 11.2. Administrative Agent and its Affiliates. The Administrative
Agent shall have the same rights and powers under this Agreement and the other
Loan Documents as any other Lender and may exercise or refrain from exercising
such rights and power as though it were not the Administrative Agent, and the
Administrative Agent and its affiliates may accept deposits from, lend money to,
and generally engage in any kind of business with the Borrower or any Affiliate
of the Borrower as if it were not the Administrative Agent under the Loan

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Documents. The term “Lender” as used herein and in all other Loan Documents,
unless the context otherwise clearly requires, includes the Administrative Agent
in its individual capacity as a Lender. References in Section 1 hereof to the
Administrative Agent’s Loans, or to the amount owing to the Administrative Agent
for which an interest rate is being determined, refer to the Administrative
Agent in its individual capacity as a Lender.
     Section 11.3. Action by Administrative Agent. If the Administrative Agent
receives from the Borrower a written notice of an Event of Default pursuant to
Section 8.5 hereof, the Administrative Agent shall promptly give each of the
Lenders written notice thereof. The obligations of the Administrative Agent
under the Loan Documents are only those expressly set forth therein. Without
limiting the generality of the foregoing, the Administrative Agent shall not be
required to take any action hereunder with respect to any Default or Event of
Default, except as expressly provided in Sections 9.2 and 9.5. Upon the
occurrence of an Event of Default, the Administrative Agent shall take such
action to enforce its Lien on the Collateral and to preserve and protect the
Collateral as may be directed by the Required Lenders. Unless and until the
Required Lenders give such direction, the Administrative Agent may (but shall
not be obligated to) take or refrain from taking such actions as it deems
appropriate and in the best interest of all the Lenders. In no event, however,
shall the Administrative Agent be required to take any action in violation of
applicable law or of any provision of any Loan Document, and the Administrative
Agent shall in all cases be fully justified in failing or refusing to act
hereunder or under any other Loan Document unless it first receives any further
assurances of its indemnification from the Lenders that it may require,
including prepayment of any related expenses and any other protection it
requires against any and all costs, expense, and liability which may be incurred
by it by reason of taking or continuing to take any such action. The
Administrative Agent shall be entitled to assume that no Default or Event of
Default exists unless notified in writing to the contrary by a Lender or the
Borrower. In all cases in which the Loan Documents do not require the
Administrative Agent to take specific action, the Administrative Agent shall be
fully justified in using its discretion in failing to take or in taking any
action thereunder. Any instructions of the Required Lenders, or of any other
group of Lenders called for under the specific provisions of the Loan Documents,
shall be binding upon all the Lenders and the holders of the Obligations.
     Section 11.4. Consultation with Experts. The Administrative Agent may
consult with legal counsel, independent public accountants, and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken by it in good faith in accordance with the advice of such counsel,
accountants or experts.
     Section 11.5. Liability of Administrative Agent; Credit Decision. Neither
the Administrative Agent nor any of its directors, officers, agents or employees
shall be liable for any action taken or not taken by it in connection with the
Loan Documents: (i) with the consent or at the request of the Required Lenders
or (ii) in the absence of its own gross negligence or willful misconduct.
Neither the Administrative Agent nor any of its directors, officers, agents or
employees shall be responsible for or have any duty to ascertain, inquire into
or verify: (i) any statement, warranty or representation made in connection with
this Agreement, any other Loan Document or any Credit Event; (ii) the
performance or observance of any of the covenants or agreements of the Borrower
or any Subsidiary contained herein or in any other Loan Document;

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(iii) the satisfaction of any condition specified in Section 7 hereof, except
receipt of items required to be delivered to the Administrative Agent; or
(iv) the validity, effectiveness, genuineness, enforceability, perfection,
value, worth or collectibility hereof or of any other Loan Document or of any
other documents or writing furnished in connection with any Loan Document or of
any Collateral; and the Administrative Agent makes no representation of any kind
or character with respect to any such matter mentioned in this sentence. The
Administrative Agent may execute any of its duties under any of the Loan
Documents by or through employees, agents, and attorneys-in-fact and shall not
be answerable to the Lenders, the Borrower, or any other Person for the default
or misconduct of any such agents or attorneys-in-fact selected with reasonable
care. The Administrative Agent shall not incur any liability by acting in
reliance upon any notice, consent, certificate, other document or statement
(whether written or oral) believed by it to be genuine or to be sent by the
proper party or parties. In particular and without limiting any of the
foregoing, the Administrative Agent shall have no responsibility for confirming
the accuracy of any compliance certificate or other document or instrument
received by it under the Loan Documents. The Administrative Agent may treat the
payee of any Note as the holder thereof until written notice of transfer shall
have been filed with the Administrative Agent signed by such payee in form
satisfactory to the Administrative Agent. Each Lender acknowledges that it has
independently and without reliance on the Administrative Agent or any other
Lender, and based upon such information, investigations and inquiries as it
deems appropriate, made its own credit analysis and decision to extend credit to
the Borrower in the manner set forth in the Loan Documents. It shall be the
responsibility of each Lender to keep itself informed as to the creditworthiness
of the Borrower and its Subsidiaries, and the Administrative Agent shall have no
liability to any Lender with respect thereto.
     Section 11.6. Indemnity. The Lenders shall ratably, in accordance with
their respective Percentages, indemnify and hold the Administrative Agent, and
its directors, officers, employees, agents, and representatives harmless from
and against any liabilities, losses, costs or expenses suffered or incurred by
it under any Loan Document or in connection with the transactions contemplated
thereby, regardless of when asserted or arising, except to the extent they are
promptly reimbursed for the same by the Borrower and except to the extent that
any event giving rise to a claim was caused by the gross negligence or willful
misconduct of the party seeking to be indemnified. The obligations of the
Lenders under this Section shall survive termination of this Agreement. The
Administrative Agent shall be entitled to offset amounts received for the
account of a Lender under this Agreement against unpaid amounts due from such
Lender to the Administrative Agent hereunder (whether as fundings of
participations, indemnities or otherwise), but shall not be entitled to offset
against amounts owed to the Administrative Agent by any Lender arising outside
of this Agreement and the other Loan Documents.
     Section 11.7. Resignation of Administrative Agent and Successor
Administrative Agent. The Administrative Agent may resign at any time by giving
written notice thereof to the Lenders and the Borrower. Upon any such
resignation of the Administrative Agent, the Required Lenders shall have the
right to appoint a successor Administrative Agent. If no successor
Administrative Agent shall have been so appointed by the Required Lenders, and
shall have accepted such appointment, within 30 days after the retiring
Administrative Agent’s giving of notice of resignation then the retiring
Administrative Agent may, on behalf of the Lenders,

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appoint a successor Administrative Agent, which may be any Lender hereunder or
any commercial bank organized under the laws of the United States of America or
of any State thereof and having a combined capital and surplus of at least
$200,000,000. Upon the acceptance of its appointment as the Administrative Agent
hereunder, such successor Administrative Agent shall thereupon succeed to and
become vested with all the rights and duties of the retiring Administrative
Agent under the Loan Documents, and the retiring Administrative Agent shall be
discharged from its duties and obligations thereunder. After any retiring
Administrative Agent’s resignation hereunder as Administrative Agent, the
provisions of this Section 11 and all protective provisions of the other Loan
Documents shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Administrative Agent, but no successor Administrative
Agent shall in any event be liable or responsible for any actions of its
predecessor. If the Administrative Agent resigns and no successor is appointed,
the rights and obligations of such Administrative Agent shall be automatically
assumed by the Required Lenders and (i) the Borrower shall be directed to make
all payments due each Lender hereunder directly to such Lender and (ii) the
Administrative Agent’s rights in the Collateral Documents shall be assigned
without representation, recourse or warranty to the Lenders as their interests
may appear.
     Section 11.8. L/C Issuer. The L/C Issuer shall act on behalf of the Lenders
with respect to any Letters of Credit issued by it and the documents associated
therewith. The L/C Issuer shall have all of the benefits and immunities
(i) provided to the Administrative Agent in this Section 11 with respect to any
acts taken or omissions suffered by the L/C Issuer in connection with Letters of
Credit issued by it or proposed to be issued by it and the Applications
pertaining to such Letters of Credit as fully as if the term “Administrative
Agent”, as used in this Section 11, included the L/C Issuer with respect to such
acts or omissions and (ii) as additionally provided in this Agreement with
respect to such L/C Issuer.
     Section 11.9. Hedging Liability and Funds Transfer and Deposit Account
Liability Arrangements. By virtue of a Lender’s execution of this Agreement or
an assignment agreement pursuant to Section 13.12 hereof, as the case may be,
any Affiliate of such Lender with whom the Borrower or any Subsidiary has
entered into an agreement creating Hedging Liability or Funds Transfer and
Deposit Account Liability shall be deemed a Lender party hereto for purposes of
any reference in a Loan Document to the parties for whom the Administrative
Agent is acting, it being understood and agreed that the rights and benefits of
such Affiliate under the Loan Documents consist exclusively of such Affiliate’s
right to share in payments and collections out of the Collateral and the
Guaranties as more fully set forth in Section 3.1 hereof. In connection with any
such distribution of payments and collections, the Administrative Agent shall be
entitled to assume no amounts are due to any Lender or its Affiliate with
respect to Hedging Liability or Funds Transfer and Deposit Account Liability
unless such Lender has notified the Administrative Agent in writing of the
amount of any such liability owed to it or its Affiliate prior to such
distribution.
     Section 11.10. Designation of Additional Agents. The Administrative Agent
shall have the continuing right, for purposes hereof, at any time and from time
to time to designate one or more of the Lenders (and/or its or their Affiliates)
as “syndication agents,” “documentation agents,” “arrangers,” or other
designations for purposes hereto, but such designation shall have no

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substantive effect, and such Lenders and their Affiliates shall have no
additional powers, duties or responsibilities as a result thereof.
     Section 11.11. Authorization to Release or Subordinate or Limit Liens. The
Administrative Agent is hereby irrevocably authorized by each of the Lenders to
(a) release any Lien covering any Collateral that is sold, transferred, or
otherwise disposed of in accordance with the terms and conditions of this
Agreement and the relevant Collateral Documents (including a sale, transfer, or
disposition permitted by the terms of Section 8.10 hereof or which has otherwise
been consented to in accordance with Section 13.13 hereof), (b) release or
subordinate any Lien on Collateral consisting of goods financed with purchase
money indebtedness or under a Capital Lease to the extent such purchase money
indebtedness or Capitalized Lease Obligation, and the Lien securing the same,
are permitted by Sections 8.7(b) and 8.8(d) hereof, and (c) reduce or limit the
amount of the indebtedness secured by any particular item of Collateral to an
amount not less than the estimated value thereof to the extent necessary to
reduce mortgage registry, filing and similar tax.
     Section 11.12. Authorization to Enter into, and Enforcement of, the
Collateral Documents. The Administrative Agent is hereby irrevocably authorized
by each of the Lenders to execute and deliver the Collateral Documents on behalf
of each of the Lenders and their Affiliates and to take such action and exercise
such powers under the Collateral Documents as the Administrative Agent considers
appropriate, provided the Administrative Agent shall not amend the Collateral
Documents unless such amendment is agreed to in writing by the Required Lenders
or all of the Lenders if required by Section 13.13. Each Lender acknowledges and
agrees that it will be bound by the terms and conditions of the Collateral
Documents upon the execution and delivery thereof by the Administrative Agent.
Except as otherwise specifically provided for herein, no Lender (or its
Affiliates) other than the Administrative Agent shall have the right to
institute any suit, action or proceeding in equity or at law for the foreclosure
or other realization upon any Collateral or for the execution of any trust or
power in respect of the Collateral or for the appointment of a receiver or for
the enforcement of any other remedy under the Collateral Documents; it being
understood and intended that no one or more of the Lenders (or their Affiliates)
shall have any right in any manner whatsoever to affect, disturb or prejudice
the Lien of the Administrative Agent (or any security trustee therefor) under
the Collateral Documents by its or their action or to enforce any right
thereunder, and that all proceedings at law or in equity shall be instituted,
had, and maintained by the Administrative Agent (or its security trustee) in the
manner provided for in the relevant Collateral Documents for the benefit of the
Lenders and their Affiliates.
Section 12. The Guarantees.
     Section 12.1. The Guarantees. To induce the Lenders to provide the credits
described herein and in consideration of benefits expected to accrue to the
Borrower by reason of the Commitments and for other good and valuable
consideration, receipt of which is hereby acknowledged, each Subsidiary party
hereto in accordance with Section 4.1 hereof (including any Subsidiary formed or
acquired after the Closing Date executing an Additional Guarantor Supplement in
the form attached hereto as Exhibit F or such other form acceptable to the
Administrative Agent) hereby unconditionally and irrevocably guarantees jointly
and severally

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to the Administrative Agent, the Lenders, and their Affiliates, the due and
punctual payment of all present and future Obligations, Hedging Liability, and
Funds Transfer and Deposit Account Liability, including, but not limited to, the
due and punctual payment of principal of and interest on the Notes, the
Reimbursement Obligations, and the due and punctual payment of all other
Obligations now or hereafter owed by the Borrower under the Loan Documents as
and when the same shall become due and payable, whether at stated maturity, by
acceleration, or otherwise, according to the terms hereof and thereof. In case
of failure by the Borrower or other obligor punctually to pay any Obligations,
Hedging Liability, or Funds Transfer and Deposit Account Liability guaranteed
hereby, each Guarantor hereby unconditionally agrees to make such payment or to
cause such payment to be made punctually as and when the same shall become due
and payable, whether at stated maturity, by acceleration, or otherwise, and as
if such payment were made by the Borrower or such obligor.
     Section 12.2. Guarantee Unconditional. The obligations of each Guarantor
under this Section 12 shall be unconditional and absolute and, without limiting
the generality of the foregoing, shall not be released, discharged, or otherwise
affected by:
     (a) any extension, renewal, settlement, compromise, waiver, or release in
respect of any obligation of the Borrower or other obligor or of any other
guarantor under this Agreement or any other Loan Document or by operation of law
or otherwise;
     (b) any modification or amendment of or supplement to this Agreement or any
other Loan Document;
     (c) any change in the corporate existence, structure, or ownership of, or
any insolvency, bankruptcy, reorganization, or other similar proceeding
affecting, the Borrower or other obligor, any other guarantor, or any of their
respective assets, or any resulting release or discharge of any obligation of
the Borrower or other obligor or of any other guarantor contained in any Loan
Document;
     (d) the existence of any claim, set-off, or other rights which the Borrower
or other obligor or any other guarantor may have at any time against the
Administrative Agent, any Lender, or any other Person, whether or not arising in
connection herewith;
     (e) any failure to assert, or any assertion of, any claim or demand or any
exercise of, or failure to exercise, any rights or remedies against the Borrower
or other obligor, any other guarantor, or any other Person or Property;
     (f) any application of any sums by whomsoever paid or howsoever realized to
any obligation of the Borrower or other obligor, regardless of what obligations
of the Borrower or other obligor remain unpaid;
     (g) any invalidity or unenforceability relating to or against the Borrower
or other obligor or any other guarantor for any reason of this Agreement or of
any other Loan Document or any provision of applicable law or regulation
purporting to prohibit the payment by the Borrower or other obligor or any other
guarantor of the principal of or

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interest on any Note or any Reimbursement Obligation or any other amount payable
under the Loan Documents; or
     (h) any other act or omission to act or delay of any kind by the
Administrative Agent, any Lender, or any other Person or any other circumstance
whatsoever that might, but for the provisions of this paragraph, constitute a
legal or equitable discharge of the obligations of any Guarantor under this
Section 12.
     Section 12.3. Discharge Only upon Payment in Full; Reinstatement in Certain
Circumstances. Each Guarantor’s obligations under this Section 12 shall remain
in full force and effect until the Commitments are terminated, all Letters of
Credit have expired, and the principal of and interest on the Notes and all
other amounts payable by the Borrower and the Guarantors under this Agreement
and all other Loan Documents and, if then outstanding and unpaid, all Hedging
Liability and Funds Transfer and Deposit Account Liability shall have been paid
in full. If at any time any payment of the principal of or interest on any Note
or any Reimbursement Obligation or any other amount payable by the Borrower or
other obligor or any Guarantor under the Loan Documents is rescinded or must be
otherwise restored or returned upon the insolvency, bankruptcy, or
reorganization of the Borrower or other obligor or of any guarantor, or
otherwise, each Guarantor’s obligations under this Section 12 with respect to
such payment shall be reinstated at such time as though such payment had become
due but had not been made at such time.
     Section 12.4. Subrogation. Each Guarantor agrees it will not exercise any
rights which it may acquire by way of subrogation by any payment made hereunder,
or otherwise, until all the Obligations, Hedging Liability, and Funds Transfer
and Deposit Account Liability shall have been paid in full subsequent to the
termination of all the Commitments and expiration of all Letters of Credit. If
any amount shall be paid to a Guarantor on account of such subrogation rights at
any time prior to the later of (x) the payment in full of the Obligations,
Hedging Liability, and Funds Transfer and Deposit Account Liability and all
other amounts payable by the Borrower hereunder and the other Loan Documents and
(y) the termination of the Commitments and expiration of all Letters of Credit,
such amount shall be held in trust for the benefit of the Administrative Agent
and the Lenders and shall forthwith be paid to the Administrative Agent for the
benefit of the Lenders or be credited and applied upon the Obligations, Hedging
Liability, and Funds Transfer and Deposit Account Liability, whether matured or
unmatured, in accordance with the terms of this Agreement.
     Section 12.5. Waivers. Each Guarantor irrevocably waives acceptance hereof,
presentment, demand, protest, and any notice not provided for herein, as well as
any requirement that at any time any action be taken by the Administrative
Agent, any Lender, or any other Person against the Borrower or other obligor,
another guarantor, or any other Person.
     Section 12.6. Limit on Recovery. Notwithstanding any other provision
hereof, the right of recovery against each Guarantor under this Section 12 shall
not exceed $1.00 less than the lowest amount which would render such Guarantor’s
obligations under this Section 12 void or voidable under applicable law,
including, without limitation, fraudulent conveyance law.

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     Section 12.7. Stay of Acceleration. If acceleration of the time for payment
of any amount payable by the Borrower or other obligor under this Agreement or
any other Loan Document, or under any agreement establishing Hedging Liability
or Funds Transfer and Deposit Account Liability, is stayed upon the insolvency,
bankruptcy or reorganization of the Borrower or such obligor, all such amounts
otherwise subject to acceleration under the terms of this Agreement or the other
Loan Documents, or under any agreement relating to Hedging Liability or Funds
Transfer and Deposit Account Liability, shall nonetheless be payable by the
Guarantors hereunder forthwith on demand by the Administrative Agent made at the
request of the Required Lenders.
     Section 12.8. Benefit to Guarantors. The Borrower and the Guarantors are
engaged in related businesses and integrated to such an extent that the
financial strength and flexibility of the Borrower has a direct impact on the
success of each Guarantor. Each Guarantor will derive substantial direct and
indirect benefit from the extensions of credit hereunder.
     Section 12.9. Guarantor Covenants. Each Guarantor shall take such action as
the Borrower is required by this Agreement to cause such Guarantor to take, and
shall refrain from taking such action as the Borrower is required by this
Agreement to prohibit such Guarantor from taking.
Section 13. Miscellaneous.
     Section 13.1. Withholding Taxes. (a) Payments Free of Withholding. Except
as otherwise required by law and subject to Section 13.1(b) hereof, each payment
by the Borrower and the Guarantors under this Agreement or the other Loan
Documents shall be made without withholding for or on account of any present or
future taxes (other than overall net income taxes on the recipient) imposed by
or within the jurisdiction in which the Borrower or such Guarantor is domiciled,
any jurisdiction from which the Borrower or such Guarantor makes any payment, or
(in each case) any political subdivision or taxing authority thereof or therein.
If any such withholding is so required, the Borrower or such Guarantor shall
make the withholding, pay the amount withheld to the appropriate governmental
authority before penalties attach thereto or interest accrues thereon, and
forthwith pay such additional amount as may be necessary to ensure that the net
amount actually received by each Lender and the Administrative Agent free and
clear of such taxes (including such taxes on such additional amount) is equal to
the amount which that Lender or the Administrative Agent (as the case may be)
would have received had such withholding not been made. If the Administrative
Agent or any Lender pays any amount in respect of any such taxes, penalties or
interest, the Borrower or such Guarantor shall reimburse the Administrative
Agent or such Lender for that payment on demand in the currency in which such
payment was made. If the Borrower or such Guarantor pays any such taxes,
penalties or interest, it shall deliver official tax receipts evidencing that
payment or certified copies thereof to the Lender or Administrative Agent on
whose account such withholding was made (with a copy to the Administrative Agent
if not the recipient of the original) on or before the thirtieth day after
payment.

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     (b) U.S. Withholding Tax Exemptions. Each Lender that is not a United
States person (as such term is defined in Section 7701(a)(30) of the Code) shall
submit to the Borrower and the Administrative Agent on or before the date the
initial Credit Event is made hereunder or, if later, the date such financial
institution becomes a Lender hereunder, two duly completed and signed copies of
(i) either Form W-8 BEN (relating to such Lender and entitling it to a complete
exemption from withholding under the Code on all amounts to be received by such
Lender, including fees, pursuant to the Loan Documents and the Obligations) or
Form W-8 ECI (relating to all amounts to be received by such Lender, including
fees, pursuant to the Loan Documents and the Obligations) of the United States
Internal Revenue Service or (ii) solely if such Lender is claiming exemption
from United States withholding tax under Section 871(h) or 881(c) of the Code
with respect to payments of “portfolio interest”, a Form W-8 BEN, or any
successor form prescribed by the Internal Revenue Service, and a certificate
representing that such Lender is not a bank for purposes of Section 881(c) of
the Code, is not a 10-percent shareholder (within the meaning of
Section 871(h)(3)(B) of the Code) of the Borrower and is not a controlled
foreign corporation related to the Borrower (within the meaning of
Section 864(d)(4) of the Code). Thereafter and from time to time, each Lender
shall submit to the Borrower and the Administrative Agent such additional duly
completed and signed copies of one or the other of such Forms (or such successor
forms as shall be adopted from time to time by the relevant United States taxing
authorities) and such other certificates as may be (i) requested by the Borrower
in a written notice, directly or through the Administrative Agent, to such
Lender and (ii) required under then-current United States law or regulations to
avoid or reduce United States withholding taxes on payments in respect of all
amounts to be received by such Lender, including fees, pursuant to the Loan
Documents or the Obligations. Upon the request of the Borrower or the
Administrative Agent, each Lender that is a United States person (as such term
is defined in Section 7701(a)(30) of the Code) shall submit to the Borrower and
the Administrative Agent a certificate to the effect that it is such a United
States person.
     (c) Inability of Lender to Submit Forms. If any Lender determines, as a
result of any change in applicable law, regulation or treaty, or in any official
application or interpretation thereof, that it is unable to submit to the
Borrower or the Administrative Agent any form or certificate that such Lender is
obligated to submit pursuant to subsection (b) of this Section 13.1 or that such
Lender is required to withdraw or cancel any such form or certificate previously
submitted or any such form or certificate otherwise becomes ineffective or
inaccurate, such Lender shall promptly notify the Borrower and Administrative
Agent of such fact and the Lender shall to that extent not be obligated to
provide any such form or certificate and will be entitled to withdraw or cancel
any affected form or certificate, as applicable.
     Section 13.2. No Waiver, Cumulative Remedies. No delay or failure on the
part of the Administrative Agent or any Lender or on the part of the holder or
holders of any of the Obligations in the exercise of any power or right under
any Loan Document shall operate as a waiver thereof or as an acquiescence in any
default, nor shall any single or partial exercise of any power or right preclude
any other or further exercise thereof or the exercise of any other power or
right. The rights and remedies hereunder of the Administrative Agent, the
Lenders and of the holder or holders of any of the Obligations are cumulative
to, and not exclusive of, any rights or remedies which any of them would
otherwise have.

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     Section 13.3. Non-Business Days. If any payment hereunder becomes due and
payable on a day which is not a Business Day, the due date of such payment shall
be extended to the next succeeding Business Day on which date such payment shall
be due and payable. In the case of any payment of principal falling due on a day
which is not a Business Day, interest on such principal amount shall continue to
accrue during such extension at the rate per annum then in effect, which accrued
amount shall be due and payable on the next scheduled date for the payment of
interest.
     Section 13.4. Documentary Taxes. The Borrower agrees to pay on demand any
documentary, stamp or similar taxes payable in respect of this Agreement or any
other Loan Document, including interest and penalties, in the event any such
taxes are assessed, irrespective of when such assessment is made and whether or
not any credit is then in use or available hereunder.
     Section 13.5. Survival of Representations. All representations and
warranties made herein or in any other Loan Document or in certificates given
pursuant hereto or thereto shall survive the execution and delivery of this
Agreement and the other Loan Documents, and shall continue in full force and
effect with respect to the date as of which they were made as long as any credit
is in use or available hereunder.
     Section 13.6. Survival of Indemnities. All indemnities and other provisions
relative to reimbursement to the Lenders of amounts sufficient to protect the
yield of the Lenders with respect to the Loans and Letters of Credit, including,
but not limited to, Sections 1.12, 10.3, and 13.15 hereof, shall survive the
termination of this Agreement and the other Loan Documents and the payment of
the Obligations.
     Section 13.7. Sharing of Set-Off. Each Lender agrees with each other Lender
a party hereto that if such Lender shall receive and retain any payment, whether
by set-off or application of deposit balances or otherwise, on any of the Loans
or Reimbursement Obligations in excess of its ratable share of payments on all
such Obligations then outstanding to the Lenders, then such Lender shall
purchase for cash at face value, but without recourse, ratably from each of the
other Lenders such amount of the Loans or Reimbursement Obligations, or
participations therein, held by each such other Lenders (or interest therein) as
shall be necessary to cause such Lender to share such excess payment ratably
with all the other Lenders; provided, however, that if any such purchase is made
by any Lender, and if such excess payment or part thereof is thereafter
recovered from such purchasing Lender, the related purchases from the other
Lenders shall be rescinded ratably and the purchase price restored as to the
portion of such excess payment so recovered, but without interest. For purposes
of this Section, amounts owed to or recovered by the L/C Issuer in connection
with Reimbursement Obligations in which Lenders have been required to fund their
participation shall be treated as amounts owed to or recovered by the L/C Issuer
as a Lender hereunder.
     Section 13.8. Notices. Except as otherwise specified herein, all notices
hereunder and under the other Loan Documents shall be in writing (including,
without limitation, notice by telecopy) and shall be given to the relevant party
at its address or telecopier number set forth below, or such other address or
telecopier number as such party may hereafter specify by notice to the
Administrative Agent and the Borrower given by courier, by United States
certified or registered mail, by telecopy or by other telecommunication device
capable of creating a written

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record of such notice and its receipt. Notices under the Loan Documents to the
Lenders and the Administrative Agent shall be addressed to their respective
addresses or telecopier numbers set forth on the signature pages hereof, and to
the Borrower or any Guarantor to:

              Penford Corporation     7094 South Revere Parkway     Centennial,
Colorado 80112
 
  Attention:   Chief Financial Officer
 
  Telephone:   (303) 649-1900
 
  Telecopy:   (303) 649-1700

Each such notice, request or other communication shall be effective (i) if given
by telecopier, when such telecopy is transmitted to the telecopier number
specified in this Section or on the signature pages hereof and a confirmation of
such telecopy has been received by the sender, (ii) if given by mail, 5 days
after such communication is deposited in the mail, certified or registered with
return receipt requested, addressed as aforesaid or (iii) if given by any other
means, when delivered at the addresses specified in this Section or on the
signature pages hereof; provided that any notice given pursuant to Section 1
hereof shall be effective only upon receipt.
     Section 13.9. Counterparts. This Agreement may be executed in any number of
counterparts, and by the different parties hereto on separate counterpart
signature pages, and all such counterparts taken together shall be deemed to
constitute one and the same instrument.
     Section 13.10. Successors and Assigns. This Agreement shall be binding upon
the Borrower and the Guarantors and their successors and assigns, and shall
inure to the benefit of the Administrative Agent and each of the Lenders and the
benefit of their respective successors and assigns, including any subsequent
holder of any of the Obligations. The Borrower and the Guarantors may not assign
any of their rights or obligations under any Loan Document without the written
consent of all of the Lenders.
     Section 13.11. Participants. Each Lender shall have the right at its own
cost to grant participations (to be evidenced by one or more agreements or
certificates of participation) in the Loans made and Reimbursement Obligations
and/or Commitments held by such Lender at any time and from time to time to one
or more other Persons; provided that no such participation shall relieve any
Lender of any of its obligations under this Agreement, and, provided, further
that no such participant shall have any rights under this Agreement except as
provided in this Section, and the Administrative Agent shall have no obligation
or responsibility to such participant. Any agreement pursuant to which such
participation is granted shall provide that the granting Lender shall retain the
sole right and responsibility to enforce the obligations of the Borrower under
this Agreement and the other Loan Documents including, without limitation, the
right to approve any amendment, modification or waiver of any provision of the
Loan Documents, except that such agreement may provide that such Lender will not
agree to any modification, amendment or waiver of the Loan Documents that would
reduce the amount of or postpone any fixed date for payment of any Obligation in
which such participant has an interest. Any party to which such a participation
has been granted shall have the benefits of Section 1.12 and Section 10.3
hereof. The Borrower authorizes each Lender to disclose to any participant or

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prospective participant under this Section any financial or other information
pertaining to the Borrower or any Subsidiary thereof, provided that such
participant or prospective participant shall have agreed in writing prior to its
receipt of such information to maintain all such information confidential and
not to disclose such information to any other Person except any such information
(a) that has become generally available to the public. (b) if required or
appropriate in any report, statement or testimony submitted to any regulatory
body having or claiming to have jurisdiction over such Lender, (c) if required
or appropriate in response to any summons or subpoena or in connection with any
litigation or (d) in order to comply with any law, order, regulation or ruling
applicable to such Lender.
     Section 13.12. Assignments. (a) Any Lender may at any time assign to one or
more Eligible Assignees all or a portion of such Lender’s rights and obligations
under this Agreement (including all or a portion of its Commitment and the Loans
at the time owing to it); provided that any such assignment shall be subject to
the following conditions:
     (i) Minimum Amounts. (A) In the case of an assignment of the entire
remaining amount of the assigning Lender’s Commitment and the Loans and
participation interest in L/C Obligations at the time owing to it or in the case
of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no
minimum amount need be assigned; and (B) in any case not described in subsection
(a)(i)(A) of this Section, the aggregate amount of the Commitment (which for
this purpose includes Loans and participation interest in L/C Obligations
outstanding thereunder) or, if the applicable Commitment is not then in effect,
the principal outstanding balance of the Loans and participation interest in L/C
Obligations of the assigning Lender subject to each such assignment (determined
as of the date the Assignment and Acceptance with respect to such assignment is
delivered to the Administrative Agent or, if “Effective Date” is specified in
the Assignment and Acceptance, as of the Effective Date) shall not be less than
$5,000,000, in the case of any assignment in respect of the Revolving Credit, or
$1,000,000, in the case of any assignment in respect of any Term Loan or Capital
Expansion Loan, unless each of the Administrative Agent and, so long as no Event
of Default has occurred and is continuing, the Borrower otherwise consents (each
such consent not to be unreasonably withheld or delayed);
     (ii) Proportionate Amounts. Each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender’s rights and
obligations under this Agreement with respect to the Loan or the Commitment
assigned, except that this clause (ii) shall not prohibit any Lender from
assigning all or a portion of its rights and obligations among separate Credits
on a non-pro rata basis.
     (iii) Required Consents. No consent shall be required for any assignment
except to the extent required by Section 13.12(a)(i)(B) and, in addition:
     (a) the consent of the Borrower (such consent not to be unreasonably
withheld or delayed) shall be required unless (x) an Event of Default has
occurred and is continuing at the time of such assignment or (y) such assignment
is to a Lender, an Affiliate of a Lender or an Approved Fund;

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     (b) the consent of the Administrative Agent (such consent not to be
unreasonably withheld or delayed) shall be required for assignments in respect
of (i) the Revolving Credit if such assignment is to a Person that is not a
Lender with a Commitment in respect of such facility, an Affiliate of such
Lender or an Approved Fund with respect to such Lender or (ii) the Term Loans
and the Capital Expansion Loans to a Person who is not a Lender, an Affiliate of
a Lender or an Approved Fund; and
     (c) the consent of the L/C Issuer (such consent not to be unreasonably
withheld or delayed) shall be required for any assignment that increases the
obligation of the assignee to participate in exposure under one or more Letters
of Credit (whether or not then outstanding).
     (iv) Assignment and Acceptance. The parties to each assignment shall
execute and deliver to the Administrative Agent an Assignment and Acceptance,
together with a processing and recordation fee of $3,500, and the assignee, if
it is not a Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire.
     (v) No Assignment to Borrower or Parent. No such assignment shall be made
to the Borrower or any of its Affiliates or Subsidiaries.
     (vi) No Assignment to Natural Persons. No such assignment shall be made to
a natural person.
Subject to acceptance and recording thereof by the Administrative Agent pursuant
to Section 13.12(b) hereof, from and after the effective date specified in each
Assignment and Acceptance, the assignee thereunder shall be a party to this
Agreement and, to the extent of the interest assigned by such Assignment and
Acceptance, have the rights and obligations of a Lender under this Agreement,
and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Acceptance, be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance covering
all of the assigning Lender’s rights and obligations under this Agreement, such
Lender shall cease to be a party hereto) but shall continue to be entitled to
the benefits of Sections 13.6 and 13.15 with respect to facts and circumstances
occurring prior to the effective date of such assignment. Any assignment or
transfer by a Lender of rights or obligations under this Agreement that does not
comply with this Section shall be treated for purposes of this Agreement as a
sale by such Lender of a participation in such rights and obligations in
accordance with Section 13.11 hereof.
          (b) Register. The Administrative Agent, acting solely for this purpose
as an agent of the Borrower, shall maintain at one of its offices in Chicago,
Illinois, a copy of each Assignment and Acceptance delivered to it and a
register for the recordation of the names and addresses of the Lenders, and the
Commitments of, and principal amounts of the Loans owing to, each Lender
pursuant to the terms hereof from time to time (the “Register”). The entries in
the Register shall be conclusive, and the Borrower, the Administrative Agent,
and the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary. The

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Register shall be available for inspection by the Borrower and any Lender, at
any reasonable time and from time to time upon reasonable prior notice.
          (c) Any Lender may at any time pledge or grant a security interest in
all or any portion of its rights under this Agreement to secure obligations of
such Lender, including any such pledge or grant to a Federal Reserve Bank, and
this Section shall not apply to any such pledge or grant of a security interest;
provided that no such pledge or grant of a security interest shall release a
Lender from any of its obligations hereunder or substitute any such pledgee or
secured party for such Lender as a party hereto; provided further, however, the
right of any such pledgee or grantee (other than any Federal Reserve Bank) to
further transfer all or any portion of the rights pledged or granted to it,
whether by means of foreclosure or otherwise, shall be at all times subject to
the terms of this Agreement.
     Section 13.13. Amendments. Any provision of this Agreement or the other
Loan Documents may be amended or waived if, but only if, such amendment or
waiver is in writing and is signed by (a) the Borrower, (b) the Required
Lenders, and (c) if the rights or duties of the Administrative Agent or the L/C
Issuer are affected thereby, the Administrative Agent or such L/C Issuer, as
applicable; provided that:
     (i) no amendment or waiver pursuant to this Section 13.13 shall
(A) increase any Commitment of any Lender without the consent of such Lender or
(B) reduce the amount of or postpone the date for any scheduled payment of any
principal of or interest on any Loan or of any Reimbursement Obligation or of
any fee payable hereunder without the consent of the Lender to which such
payment is owing or which has committed to make such Loan or Letter of Credit
(or participate therein) hereunder;
     (ii) no amendment or waiver pursuant to this Section 13.13 shall, unless
signed by each Lender, change the definitions of Revolving Credit Termination
Date or Required Lenders, change the provisions of this Section 13.13, release
any material guarantor or any substantial part of the Collateral (except as
otherwise provided for in the Loan Documents), or affect the number of Lenders
required to take any action hereunder or under any other Loan Document; and
     (iii) no amendment to Section 12 hereof shall be made without the consent
of the Guarantor(s) affected thereby.
     Section 13.14. Headings. Section headings used in this Agreement are for
reference only and shall not affect the construction of this Agreement.
     Section 13.15. Costs and Expenses; Indemnification. (a) The Borrower agrees
to pay all reasonable costs and expenses of the Administrative Agent in
connection with the preparation, negotiation, syndication, and administration of
the Loan Documents, including, without limitation, the reasonable fees and
disbursements of counsel to the Administrative Agent, in connection with the
preparation and execution of the Loan Documents, and any amendment, waiver or
consent related thereto, whether or not the transactions contemplated herein are
consummated, together with any fees and charges suffered or incurred by the
Administrative

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Agent in connection with periodic environmental audits, fixed asset appraisals,
title insurance policies, collateral filing fees and lien searches. The Borrower
further agrees to indemnify the Administrative Agent, each Lender, and their
respective directors, officers, employees, agents, financial advisors, and
consultants against all losses, claims, damages, penalties, judgments,
liabilities and expenses (including, without limitation, all reasonable expenses
of litigation or preparation therefor, whether or not the indemnified Person is
a party thereto, or any settlement arrangement arising from or relating to any
such litigation) which any of them may pay or incur arising out of or relating
to any Loan Document or any of the transactions contemplated thereby or the
direct or indirect application or proposed application of the proceeds of any
Loan or Letter of Credit, other than those which arise from the gross negligence
or willful misconduct of the party claiming indemnification. The Borrower, upon
demand by the Administrative Agent or a Lender at any time, shall reimburse the
Administrative Agent or such Lender for any legal or other expenses incurred in
connection with investigating or defending against any of the foregoing
(including any settlement costs relating to the foregoing) except if the same is
directly due to the gross negligence or willful misconduct of the party to be
indemnified. The obligations of the Borrower under this Section shall survive
the termination of this Agreement.
          (b) The Borrower unconditionally agrees to forever indemnify, defend
and hold harmless, and covenants not to sue for any claim for contribution
against, the Administrative Agent and the Lenders for any damages, costs, loss
or expense, including without limitation, response, remedial or removal costs,
arising out of any of the following: (i) any presence, release, threatened
release or disposal of any hazardous or toxic substance or petroleum by the
Borrower or any Subsidiary or otherwise occurring on or with respect to its
Property (whether owned or leased), (ii) the operation or violation of any
environmental law, whether federal, state, or local, and any regulations
promulgated thereunder, by the Borrower or any Subsidiary or otherwise occurring
on or with respect to its Property (whether owned or leased), (iii) any claim
for personal injury or property damage in connection with the Borrower or any
Subsidiary or otherwise occurring on or with respect to its Property (whether
owned or leased), and (iv) the inaccuracy or breach of any environmental
representation, warranty or covenant by the Borrower or any Subsidiary made
herein or in any other Loan Document evidencing or securing any Obligations or
setting forth terms and conditions applicable thereto or otherwise relating
thereto, except for damages arising from the willful misconduct or gross
negligence of the party claiming indemnification. This indemnification shall
survive the payment and satisfaction of all Obligations and the termination of
this Agreement, and shall remain in force beyond the expiration of any
applicable statute of limitations and payment or satisfaction in full of any
single claim under this indemnification. This indemnification shall be binding
upon the successors and assigns of the Borrower and shall inure to the benefit
of Administrative Agent and the Lenders directors, officers, employees, agents,
and collateral trustees, and their successors and assigns.
     Section 13.16. Set-off. In addition to any rights now or hereafter granted
under applicable law and not by way of limitation of any such rights, upon the
occurrence of any Event of Default, each Lender and each subsequent holder of
any Obligation is hereby authorized by the Borrower and each Guarantor at any
time or from time to time, without notice to the Borrower or such Guarantor or
to any other Person, any such notice being hereby expressly waived, to set-off
and to appropriate and to apply any and all deposits (general or special,
including, but not

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limited to, indebtedness evidenced by certificates of deposit, whether matured
or unmatured, but not including trust accounts, and in whatever currency
denominated) and any other indebtedness at any time held or owing by that Lender
or that subsequent holder to or for the credit or the account of the Borrower or
such Guarantor, whether or not matured, against and on account of the
Obligations of the Borrower or such Guarantor to that Lender or that subsequent
holder under the Loan Documents, including, but not limited to, all claims of
any nature or description arising out of or connected with the Loan Documents,
irrespective of whether or not (a) that Lender or that subsequent holder shall
have made any demand hereunder or (b) the principal of or the interest on the
Loans or Notes and other amounts due hereunder shall have become due and payable
pursuant to Section 9 and although said obligations and liabilities, or any of
them, may be contingent or unmatured.
     Section 13.17. Entire Agreement. The Loan Documents constitute the entire
understanding of the parties thereto with respect to the subject matter thereof
and any prior agreements, whether written or oral, with respect thereto are
superseded hereby.
     Section 13.18. Governing Law. This Agreement and the other Loan Documents
(except as otherwise specified therein), and the rights and duties of the
parties hereto, shall be governed by and construed and determined in accordance
with the internal laws of the State of Illinois.
     Section 13.19. Severability of Provisions. Any provision of any Loan
Document which is unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction. All rights, remedies
and powers provided in this Agreement and the other Loan Documents may be
exercised only to the extent that the exercise thereof does not violate any
applicable mandatory provisions of law, and all the provisions of this Agreement
and other Loan Documents are intended to be subject to all applicable mandatory
provisions of law which may be controlling and to be limited to the extent
necessary so that they will not render this Agreement or the other Loan
Documents invalid or unenforceable.
     Section 13.20. Excess Interest. Notwithstanding any provision to the
contrary contained herein or in any other Loan Document, no such provision shall
require the payment or permit the collection of any amount of interest in excess
of the maximum amount of interest permitted by applicable law to be charged for
the use or detention, or the forbearance in the collection, of all or any
portion of the Loans or other obligations outstanding under this Agreement or
any other Loan Document (“Excess Interest”). If any Excess Interest is provided
for, or is adjudicated to be provided for, herein or in any other Loan Document,
then in such event (a) the provisions of this Section shall govern and control,
(b) neither the Borrower nor any guarantor or endorser shall be obligated to pay
any Excess Interest, (c) any Excess Interest that the Administrative Agent or
any Lender may have received hereunder shall, at the option of the
Administrative Agent, be (i) applied as a credit against the then outstanding
principal amount of Obligations hereunder and accrued and unpaid interest
thereon (not to exceed the maximum amount permitted by applicable law), (ii)
refunded to the Borrower, or (iii) any combination of the foregoing, (d) the
interest rate payable hereunder or under any other Loan Document shall be
automatically subject to reduction to the maximum lawful contract rate allowed
under applicable

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usury laws (the “Maximum Rate”), and this Agreement and the other Loan Documents
shall be deemed to have been, and shall be, reformed and modified to reflect
such reduction in the relevant interest rate, and (e) neither the Borrower nor
any guarantor or endorser shall have any action against the Administrative Agent
or any Lender for any damages whatsoever arising out of the payment or
collection of any Excess Interest. Notwithstanding the foregoing, if for any
period of time interest on any of Borrower’s Obligations is calculated at the
Maximum Rate rather than the applicable rate under this Agreement, and
thereafter such applicable rate becomes less than the Maximum Rate, the rate of
interest payable on the Borrower’s Obligations shall remain at the Maximum Rate
until the Lenders have received the amount of interest which such Lenders would
have received during such period on the Borrower’s Obligations had the rate of
interest not been limited to the Maximum Rate during such period.
     Section 13.21. Construction. Nothing contained herein shall be deemed or
construed to permit any act or omission which is prohibited by the terms of any
of the other Loan Document, the covenants and agreements contained herein being
in addition to and not in substitution for the covenants and agreements
contained in the other Loan Documents.
     Section 13.22. Lender’s Obligations Several. The obligations of the Lenders
hereunder are several and not joint. Nothing contained in this Agreement and no
action taken by the Lenders pursuant hereto shall be deemed to constitute the
Lenders a partnership, association, joint venture or other entity.
     Section 13.23. Submission to Jurisdiction; Waiver of Jury Trial. The
Borrower and the Guarantors hereby submit to the nonexclusive jurisdiction of
the United States District Court for the Northern District of Illinois and of
any Illinois State court sitting in the City of Chicago for purposes of all
legal proceedings arising out of or relating to this Agreement, the other Loan
Documents or the transactions contemplated hereby or thereby. The Borrower and
the Guarantors irrevocably waive, to the fullest extent permitted by law, any
objection which they may now or hereafter have to the laying of the venue of any
such proceeding brought in such a court and any claim that any such proceeding
brought in such a court has been brought in an inconvenient forum. The Borrower,
the Guarantors, the Administrative Agent, and the Lenders hereby irrevocably
waive any and all right to trial by jury in any legal proceeding arising out of
or relating to any Loan Document or the transactions contemplated thereby.
     Section 13.24. USA Patriot Act. Each Lender that is subject to the
requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into
law October 26, 2001)) (the “Act”) hereby notifies the Borrower that pursuant to
the requirements of the Act, it is required to obtain, verify, and record
information that identifies the Borrower, which information includes the name
and address of the Borrower and other information that will allow such Lender to
identify the Borrower in accordance with the Act.
     Section 13.25. Currency. Each reference in this Agreement to U.S. Dollars
or to an Alternative Currency (the “relevant currency”) is of the essence. To
the fullest extent permitted by law, the obligation of the Borrower and each
Guarantor in respect of any amount due in the

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relevant currency under this Agreement shall, notwithstanding any payment in any
other currency (whether pursuant to a judgment or otherwise), be discharged only
to the extent of the amount in the relevant currency that the Person entitled to
receive such payment may, in accordance with normal banking procedures, purchase
with the sum paid in such other currency (after any premium and costs of
exchange) on the Business Day immediately following the day on which such Person
receives such payment. If the amount of the relevant currency so purchased is
less than the sum originally due to such Person in the relevant currency, the
Borrower or relevant Guarantor agrees, as a separate obligation and
notwithstanding any such judgment, to indemnify such Person against such loss,
and if the amount of the specified currency so purchased exceeds the sum of
(a) the amount originally due to the relevant Person in the specified currency
plus (b) any amounts shared with other Lenders as a result of allocations of
such excess as a disproportionate payment to such Person under Section 13.7
hereof, such Person agrees to remit such excess to the Borrower.
     Section 13.26. Currency Equivalence. If for the purposes of obtaining
judgment in any court it is necessary to convert a sum due from the Borrower on
the Obligations in the currency expressed to be payable herein or under the
Notes (the “specified currency”) into another currency, the parties agree that
the rate of exchange used shall be that at which in accordance with normal
banking procedures the Administrative Agent could purchase the specified
currency with such other currency on the Business Day preceding that on which
final judgment is given. The obligation of the Borrower in respect of any such
sum due to the Administrative Agent or any Lender on the Obligations shall,
notwithstanding any judgment in a currency other than the specified currency, be
discharged only to the extent that on the Business Day following receipt by the
Administrative Agent or such Lender, as applicable, of any sum adjudged to be so
due in such other currency, the Administrative Agent or such Lender, as
applicable, may in accordance with normal banking procedures purchase the
specified currency with such other currency. If the amount of the specified
currency so purchased is less than the sum originally due to the Agent or such
Lender in the specified currency, the Borrower agrees, as a separate obligation
and notwithstanding any such judgment, to indemnify the Administrative Agent or
such Lender, as the case may be, against such loss, and if the amount of the
specified currency so purchased exceeds the amount originally due to the
Administrative Agent or such Lender in the specified currency, the
Administrative Agent or such Lender, as the case may be, agrees to remit such
excess to the Borrower.
     Section 13.27. Amendment and Restatement. This Agreement amends and
restates the Original Credit Agreement and is not intended to be or operate as a
novation or an accord and satisfaction of the Original Credit Agreement or the
Obligations evidenced or provided for thereunder. Without limiting the
generality of the foregoing, the Borrower agrees that notwithstanding the
execution and delivery of this Agreement and the Security Agreement, the Liens
previously granted to the Administrative Agent pursuant to the Collateral
Documents shall be and remain in full force and effect and that any rights and
remedies of the Administrative Agent thereunder and obligations of the Borrower
thereunder shall be and remain in full force and effect, shall not be affected,
impaired or discharged thereby and shall secure all of the Borrower’s
indebtedness, obligations and liabilities to the Administrative Agent and the
Lenders under the Original Credit Agreement as amended and restated hereby.
Nothing herein contained shall in any manner affect or impair the priority of
the Liens created and provided for by the Documents as to the indebtedness which
would be secured thereby prior to giving effect hereto.
[Signature Pages to Follow]

 

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     This Second Amended and Restated Credit Agreement (including the paragraph
set forth below the Lender’s signatures hereto) is entered into between us for
the uses and purposes hereinabove set forth as of the date first above written.

                      “Borrower”    
 
                    Penford Corporation    
 
               
 
  By            
 
      Name        
 
               
 
      Title        
 
               
 
                    “Guarantors”    
 
                    Penford Products Co.    
 
               
 
  By            
 
      Name        
 
               
 
      Title        
 
         
 
   

Penford Corporation
Signature Page to Second Amended and Restated Credit Agreement

 

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     Subject to the satisfaction of the conditions precedent set forth in
Sections 7.1 and 7.2 hereof, the Lenders (including Wells Fargo Bank, N.A.
(“Wells Fargo”)) each agree to make such purchases and sales of interests in the
Credit Agreement and the Loan Documents between themselves so that from and
after the date of this Agreement (a) each such Lender’s Revolving Credit
Commitment and Revolver Percentage (and corresponding Revolver Percentage of
outstanding Revolving Loans, participation in Swing Loans, Letters of Credit and
Reimbursement Obligations), Term Loan Commitment and Term Loan Percentage (and
Term Loan Percentage off the outstanding Term Loans) after giving effect this
Agreement shall be as set forth in Section 1.1 hereto and (b) Wells Fargo’s
Revolver Percentage (and corresponding Revolver Percentage of outstanding
Revolving Loans, participation in Swing Loans, Letters of Credit and
Reimbursement Obligations), Term Loan Commitment and Term Loan Percentage (and
Term Loan Percentage off the outstanding Term Loans) after giving effect this
Agreement shall be zero. Such purchases and sales shall be arranged through the
Administrative Agent and each such Lender hereby agrees to execute such further
instruments and documents, if any, as the Administrative Agent may reasonably
request in connection therewith. The Borrower will pay all accrued interest
thereon and all other fees and other amounts due to Wells Fargo, including
without limitation accrued and unpaid commitment fees, letter of credit fees and
all amounts, if any, payable under Section 1.12 hereof with respect to such
prepayment. Upon payment in full of all principal of and accrued interest on
such notes, and all such other amounts, all participations in Swing Loans,
Letters of Credit and Reimbursement Obligations by Wells Fargo shall terminate,
Wells Fargo shall cease to be a party to this Agreement and shall have no rights
or obligations hereunder except for its rights under Sections 1.12, 10.3, 12.3,
13.4 and 13.15 of the Original Credit Agreement which shall continue unaffected
by this Agreement. Notwithstanding the foregoing, in the event any letter of
credit fees received by Wells Fargo pursuant to this paragraph are required to
be rebated to the Borrower pursuant hereto, Wells Fargo will promptly remit to
the Administrative Agent the amount so required to be rebated upon the
Administrative Agent’s request.

                  “Lenders”
 
                Harris N.A., in its individual capacity as a
   Lender, as L/C Issuer, and as Administrative
   Agent
 
           
 
  By        
 
      Name: Betzaida Erdelyi    
 
      Title: Vice President    
 
                Address:
 
                111 West Monroe Street     Chicago, Illinois 60603    
Attention:     Food Group     Telecopy:      (312) 765-8095     Telephone:   
(312) 461-4049  

Penford Corporation
Signature Page to Second Amended and Restated Credit Agreement

 

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                      U.S. Bank National Association    
 
               
 
  By                          
 
      Name        
 
               
 
      Title        
 
               
 
                    Address:    
 
                    918-17th St., 5th Floor         Denver, CO 80202        
Attention:    Thomas McCarthy         Telecopy:     (303) 585-4229        
Telephone:   (303) 585-4234    
 
                    LaSalle Bank National Association    
 
               
 
  By                          
 
      Name        
 
               
 
      Title        
 
               
 
                    Address:    
 
                    135 S. LaSalle Bank         Suite 1110         Chicago, IL
60603         Attention:    Keith J. Cable         Telecopy:     (312) 904-6242
        Telephone:   (312) 904-7621    

Penford Corporation
Signature Page to Second Amended and Restated Credit Agreement

 

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

 

                      Cooperative Centrale
Raiffeisen-Boerenleenbank B.A., “Rabobank Nederland,”
New York Branch    
 
               
 
  By                          
 
      Name        
 
               
 
      Title        
 
               
 
               
 
  By                          
 
      Name        
 
               
 
      Title        
 
               
 
                    Address:    
 
                    123 North Wacker Drive         Suite 2100         Chicago,
IL 60606         Attention:    Brad Peterson         Telecopy:     
(312) 408-8240         Telephone:   (312) 408-8222    
 
                    Australia and New Zealand Banking Group Limited    
 
               
 
  By                          
 
      Name        
 
               
 
      Title        
 
               
 
                    Address:    
 
                    1177 Avenue of the Americas         New York, New York 10036
        Attention:    Vibhu Juneja         Telecopy:     (212) 536-9264        
Telephone:   (212) 801-9164    

Penford Corporation
Signature Page to Second Amended and Restated Credit Agreement

 

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

 

     The undersigned, Wells Fargo Bank, N.A., is executing this Agreement solely
for purposes of last paragraph set forth above and for no other purposes.

                      Wells Fargo Bank, N.A.    
 
               
 
  By                          
 
      Name        
 
               
 
      Title        
 
         
 
   

Penford Corporation
Signature Page to Second Amended and Restated Credit Agreement

 

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Exhibit A
Notice of Payment Request
[Date]
[Name of Lender]
[Address]
Attention:
     Reference is made to the Second Amended and Restated Credit Agreement,
dated as of October 5, 2006 among Penford Corporation, the Lenders party
thereto, and Harris N.A., as Administrative Agent (as extended, renewed, amended
or restated from time to time, the “Credit Agreement”). Capitalized terms used
herein and not defined herein have the meanings assigned to them in the Credit
Agreement. [The Borrower has failed to pay its Reimbursement Obligation in the
amount of $                    . Your Revolver Percentage of the unpaid
Reimbursement Obligation is $                    ] or [                     has
been required to return a payment by the Borrower of a Reimbursement Obligation
in the amount of $                    . Your Revolver Percentage of the returned
Reimbursement Obligation is $                    .]

                      Very truly yours,    
 
                    Harris N.A.,         as L/C Issuer    
 
               
 
  By            
 
      Name        
 
               
 
      Title        
 
         
 
   

 

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Exhibit B
Notice of Borrowing
Date:                    , ____

To:   Harris N.A., as Administrative Agent for the Lenders parties to the Second
Amended and Restated Credit Agreement dated as of October 5, 2006 (as extended,
renewed, amended or restated from time to time, the “Credit Agreement”), among
Penford Corporation, certain Lenders which are signatories thereto, and Harris
N.A., as Administrative Agent

Ladies and Gentlemen:
     The undersigned, Penford Corporation (the “Borrower”), refers to the Second
Amended and Restated Credit Agreement, the terms defined therein being used
herein as therein defined, and hereby gives you notice irrevocably, pursuant to
Section 1.6 of the Credit Agreement, of the Borrowing specified below:
     1. The Business Day of the proposed Borrowing is                     , ___.
     2. The aggregate amount of the proposed Borrowing is $                    .
     3. The Borrowing is being advanced under the [Revolving] [Term] [Capital
Expansion] Credit.
     4. The Borrowing is being advanced under                      currency.
     5. The Borrowing is to be comprised of $                     of [Base Rate]
[Eurocurrency] Loans.
     [6. The duration of the Interest Period for the Eurocurrency Loans included
in the Borrowing shall be                      months.]
     The undersigned hereby certifies that the following statements are true on
the date hereof, and will be true on the date of the proposed Borrowing, before
and after giving effect thereto and to the application of the proceeds
therefrom:
     (a) the representations and warranties of the Borrower contained in
Section 6 of the Credit Agreement are true and correct as though made on and as
of such date (except to the extent such representations and warranties relate to
an earlier date, in which case they are true and correct as of such date); and

 

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

 

     (b) no Default or Event of Default has occurred and is continuing or would
result from such proposed Borrowing.

                      Penford Corporation    
 
               
 
  By            
 
      Name        
 
               
 
      Title        
 
         
 
   

- 2 -

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Exhibit C
Notice of Continuation/Conversion
Date:                     , ____

To:   Harris N.A., as Administrative Agent for the Lenders parties to the Second
Amended and Restated Credit Agreement dated as of October 5, 2006 (as extended,
renewed, amended or restated from time to time, the “Credit Agreement”) among
Penford Corporation, certain Lenders which are signatories thereto, and Harris
N.A., as Administrative Agent

Ladies and Gentlemen:
     The undersigned, Penford Corporation (the “Borrower”), refers to the Credit
Agreement, the terms defined therein being used herein as therein defined, and
hereby gives you notice irrevocably, pursuant to Section 1.6 of the Credit
Agreement, of the [conversion] [continuation] of the Loans specified herein,
that:
     1. The conversion/continuation Date is                     , ___.
     2. The aggregate amount of the [Revolving] [Term] [Capital Expansion] Loans
to be [converted] [continued] is $                    .
     3. The Loans are to be [converted into] [continued as] [Eurocurrency] [Base
Rate] Loans.
     4. [If applicable:] The duration of the Interest Period for the [Revolving]
[Term] [Capital Expansion] Loans included in the [conversion] [continuation]
shall be                      months.
     The undersigned hereby certifies that the following statements are true on
the date hereof, and will be true on the proposed conversion/continuation date,
before and after giving effect thereto and to the application of the proceeds
therefrom:
     (a) the representations and warranties of the Borrower contained in
Section 6 of the Credit Agreement are true and correct as though made on and as
of such date (except to the extent such representations and warranties relate to
an earlier date, in which case they are true and correct as of such date);
provided, however, that this condition shall not apply to the conversion of an
outstanding Eurocurrency Loan to a Base Rate Loan; and
     (b) no Default or Event of Default has occurred and is continuing, or would
result from such proposed [conversion] [continuation].

                      Penford Corporation    
 
               
 
  By            
 
      Name        
 
               
 
      Title        
 
         
 
   

 

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

 

Exhibit D-1
Term Note

      U.S. $                                           , ___

     For Value Received, the undersigned, Penford Corporation, a Washington
corporation (the “Borrower”), hereby promises to pay to the order of
                                         (the “Lender”) at the principal office
of Harris N.A., as Administrative Agent, in Chicago, Illinois, in immediately
available funds, the principal sum of                                         
U.S. Dollars ($                    ) or, if less, the aggregate unpaid principal
amount of all Term Loans made or maintained by the Lender to the Borrower
pursuant to the Credit Agreement, in installments in the amounts called for by
Section 1.8(a) of the Credit Agreement, commencing on December 31, 2006,
together with interest on the principal amount of such Term Loans from time to
time outstanding hereunder at the rates, and payable in the manner and on the
dates, specified in the Credit Agreement.
     This Note is one of the Term Notes referred to in the Second Amended and
Restated Credit Agreement dated as of October 5, 2006, among the Borrower, the
Guarantors party thereto, the Lenders party thereto, and Harris N.A., as
Administrative Agent for the Lenders (as extended, renewed, amended or restated
from time to time, the “Credit Agreement”), and this Note and the holder hereof
are entitled to all the benefits and security provided for thereby or referred
to therein, to which Credit Agreement reference is hereby made for a statement
thereof. All defined terms used in this Note, except terms otherwise defined
herein, shall have the same meaning as in the Credit Agreement. This Note shall
be governed by and construed in accordance with the internal laws of the State
of Illinois.
     Voluntary prepayments may be made hereon, certain prepayments are required
to be made hereon, and this Note may be declared due prior to the expressed
maturity hereof, all in the events, on the terms and in the manner as provided
for in the Credit Agreement.
     The Borrower hereby waives demand, presentment, protest or notice of any
kind hereunder.

                      Penford Corporation    
 
               
 
  By            
 
      Name        
 
               
 
      Title        
 
         
 
   

 

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

 

Exhibit D-2
Capital Expansion Note

      A US $                                           , ___

     For Value Received, the undersigned, Penford Corporation, a Washington
corporation (the “Borrower”), hereby promises to pay to the order of
                                         (the “Lender”) at the principal office
of Harris N.A., as Administrative Agent, in Chicago, Illinois (or such other
office as the Administrative Agent has previously notified the Borrower in
accordance with the Credit Agreement), in immediately available funds, the
principal sum of the Australian Dollar Equivalent (as defined in the Credit
Agreement) of                      U.S. Dollars (U.S.$                    ) or,
if less, the aggregate unpaid principal amount of all Capital Expansion Loans
made or maintained by the Lender to the Borrower pursuant to the Credit
Agreement, in installments in the amounts called for by Section 1.8(a) of the
Credit Agreement, commencing on December 31, 2008, together with interest on the
principal amount of such Capital Expansion Loans from time to time outstanding
hereunder at the rates, and payable in the manner and on the dates, specified in
the Credit Agreement.
     This Note is one of the Capital Expansion Notes referred to in the Second
Amended and Restated Credit Agreement dated as of October 5, 2006, among the
Borrower, the Guarantors party thereto, the Lenders party thereto, and Harris
N.A., as Administrative Agent for the Lenders (as extended, renewed, amended or
restated from time to time, the “Credit Agreement”), and this Note and the
holder hereof are entitled to all the benefits and security provided for thereby
or referred to therein, to which Credit Agreement reference is hereby made for a
statement thereof. All defined terms used in this Note, except terms otherwise
defined herein, shall have the same meaning as in the Credit Agreement. This
Note shall be governed by and construed in accordance with the internal laws of
the State of Illinois.
     Voluntary prepayments may be made hereon, certain prepayments are required
to be made hereon, and this Note may be declared due prior to the expressed
maturity hereof, all in the events, on the terms and in the manner as provided
for in the Credit Agreement.
     The Borrower hereby waives demand, presentment, protest or notice of any
kind hereunder.

                      Penford Corporation    
 
               
 
  By            
 
      Name        
 
               
 
      Title        
 
         
 
   

 

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

 

Exhibit D-3
Revolving Note

      U.S. $                                           , ___

     For Value Received, the undersigned, Penford Corporation, a Washington
corporation (the “Borrower”), hereby promises to pay to the order of
                                         (the “Lender”) on the Revolving Credit
Termination Date of the hereinafter defined Credit Agreement, at the principal
office of Harris N.A., as Administrative Agent, in Chicago, Illinois (or in the
case of Eurocurrency Loan denominated in an Alternative Currency, at such office
as the Administrative Agent has previously notified the Borrower in the currency
of such Eurocurrency Loan in accordance with Section 3.1 of the Credit
Agreement), the aggregate unpaid principal amount of all Revolving Loans made by
the Lender to the Borrower pursuant to the Credit Agreement, together with
interest on the principal amount of each Revolving Loan from time to time
outstanding hereunder at the rates, and payable in the manner and on the dates,
specified in the Credit Agreement.
     This Note is one of the Revolving Notes referred to in the Second Amended
and Restated Credit Agreement dated as of October 5, 2006 among the Borrower,
the Guarantors party thereto, the Lenders party thereto, and Harris N.A., as
Administrative Agent for the Lenders (as extended, renewed, amended or restated
from time to time, the “Credit Agreement”), and this Note and the holder hereof
are entitled to all the benefits and security provided for thereby or referred
to therein, to which Credit Agreement reference is hereby made for a statement
thereof. All defined terms used in this Note, except terms otherwise defined
herein, shall have the same meaning as in the Credit Agreement. This Note shall
be governed by and construed in accordance with the internal laws of the State
of Illinois.
     Voluntary prepayments may be made hereon, certain prepayments are required
to be made hereon, and this Note may be declared due prior to the expressed
maturity hereof, all in the events, on the terms and in the manner as provided
for in the Credit Agreement.
     The Borrower hereby waives demand, presentment, protest or notice of any
kind hereunder.

                      Penford Corporation    
 
               
 
  By            
 
      Name        
 
               
 
      Title        
 
         
 
   

 

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

 

Exhibit D-4
Swing Note

      U.S. $                                           , ___

     For Value Received, the undersigned, Penford Corporation, a Washington
corporation (the “Borrower”), hereby promises to pay to the order of
                                         (the “Lender”) on the Revolving Credit
Termination Date of the hereinafter defined Credit Agreement, at the principal
office of Harris N.A., as Administrative Agent, in Chicago, Illinois, in
immediately available funds, the principal sum of
                                         Dollars ($                    ) or, if
less, the aggregate unpaid principal amount of all Swing Loans made by the
Lender to the Borrower pursuant to the Credit Agreement, together with interest
on the principal amount of each Swing Loan from time to time outstanding
hereunder at the rates, and payable in the manner and on the dates, specified in
the Credit Agreement.
     This Note is the Swing Note referred to in the Second Amended and Restated
Credit Agreement dated as of October 5, 2006, among the Borrower, the Guarantors
party thereto, the Lenders party thereto, and Harris N.A., as Administrative
Agent for the Lenders (as extended, renewed, amended or restated from time to
time, the “Credit Agreement”), and this Note and the holder hereof are entitled
to all the benefits and security provided for thereby or referred to therein, to
which Credit Agreement reference is hereby made for a statement thereof. All
defined terms used in this Note, except terms otherwise defined herein, shall
have the same meaning as in the Credit Agreement. This Note shall be governed by
and construed in accordance with the internal laws of the State of Illinois.
     Voluntary prepayments may be made hereon, certain prepayments are required
to be made hereon, and this Note may be declared due prior to the expressed
maturity hereof, all in the events, on the terms and in the manner as provided
for in the Credit Agreement.
     The Borrower hereby waives demand, presentment, protest or notice of any
kind hereunder.

                      Penford Corporation    
 
               
 
  By            
 
      Name        
 
               
 
      Title        
 
         
 
   

 

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Exhibit E
Penford Corporation
Compliance Certificate

To:   Harris N.A., as Administrative Agent under,
and the Lenders party to, the Credit
Agreement described below

     This Compliance Certificate is furnished to the Administrative Agent and
the Lenders pursuant to that certain Second Amended and Restated Credit
Agreement dated as of October 5, 2006, among us (as extended, renewed, amended
or restated from time to time, the “Credit Agreement”). Unless otherwise defined
herein, the terms used in this Compliance Certificate have the meanings ascribed
thereto in the Credit Agreement.
     The Undersigned hereby certifies that:
     1. I am the duly elected                      of Penford Corporation;
     2. I have reviewed the terms of the Credit Agreement and I have made, or
have caused to be made under my supervision, a detailed review of the
transactions and conditions of the Borrower and its Subsidiaries during the
accounting period covered by the attached financial statements;
     3. The examinations described in paragraph 2 did not disclose, and I have
no knowledge of, the existence of any condition or the occurrence of any event
which constitutes a Default or Event of Default during or at the end of the
accounting period covered by the attached financial statements or as of the date
of this Compliance Certificate, except as set forth below;
     4. The financial statements required by Section 8.5 of the Credit Agreement
and being furnished to you concurrently with this Compliance Certificate are
true, correct and complete as of the date and for the periods covered thereby;
and
     5. The Schedule I hereto sets forth financial data and computations
evidencing the Borrower’s compliance with certain covenants of the Credit
Agreement, all of which data and computations are, to the best of my knowledge,
true, complete and correct and have been made in accordance with the relevant
Sections of the Credit Agreement.
     Described below are the exceptions, if any, to paragraph 3 by listing, in
detail, the nature of the condition or event, the period during which it has
existed and the action which the Borrower has taken, is taking, or proposes to
take with respect to each such condition or event:

 

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

 

     
 
     
 
     
 
     
 
     The foregoing certifications, together with the computations set forth in
Schedule I hereto and the financial statements delivered with this Certificate
in support hereof, are made and delivered this                      day of
                                         20___.

                  Penford Corporation
 
           
 
  By        
 
      Name    
 
           
 
      Title    
 
           

- 2 -

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Schedule I
to Compliance Certificate
Penford Corporation
Compliance Calculations
for Second Amended and Restated Credit Agreement
dated as of October 5, 2006
Calculations as of                     , _______

A.   Total Funded Debt Ratio (Section 8.22(a))

                     
 
    1.     Total Funded Debt   $                    
 
                   
 
    2.     Net Income for past 4 quarters   $                    
 
                   
 
    3.     Interest Expense for past 4 quarters   $                    
 
                   
 
    4.     Income taxes for past 4 quarters   $                    
 
                   
 
    5.     Depreciation and Amortization Expense for past 4 quarters  
$                    
 
                   
 
    6.     Non-cash Loss (Gain) realized on sale/disposition of assets [Loss
shall be identified by a positive number; Gains shall be identified by a
negative number]   $                    
 
                   
 
    7.     Non-cash stock compensation charges for past 4 quarters  
$                    
 
                   
 
    8.     Sum of Lines A2, A3, A4, A5, A6 and A7 (“EBITDA”)  
$                    
 
                   
 
    9.     Ratio of Line A1 to A8     ___:1.0  
 
                   
 
    10.     Line A9 ratio must not exceed     ___:1.0  
 
                   
 
    11.     The Borrower is in compliance (circle yes or no)   yes/no
 
                   
B.
  Fixed Charge   Coverage Ratio (Section 8.22(b))        
 
                   
 
    1.     EBITDA (Line A8 above)   $                    
 
                   
 
    2.     Principal payments made in cash during past 4 quarters  
$                    
 
                   
 
    3.     Interest Expense for past 4 quarters paid in cash  
$                    
 
                   
 
    4.     Restricted Payments for past 4 quarters made in cash  
$                    
 
                   
 
    5.     Income taxes for 4 quarters paid in cash   $                    
 
                   
 
    6.     Sum of Lines B2, B3, B4, and B5   $                    

 

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

 

                     
 
    7.     Ratio of Line B1 to Line B6     ___:1.0  
 
                   
 
    8.     Line B7 ratio must not be less than     1.50:1.0  
 
                   
 
    9.     The Borrower is in compliance (circle yes or no)   yes/no
 
                   
C.
  Leverage   Ratio (Section 8.22(c))        
 
                   
 
    1.     Net Worth   $                    
 
                   
 
    2.     Intangible Assets   $                    
 
                   
 
    3.     Write-up of assets   $                    
 
                   
 
    4.     Line C1 minus the sum of Lines C2 and C3   $                    
 
                   
 
    5.     Line C4 ratio must not be less than   $ 65,000,000  
 
                   
 
    6.     The Borrower is in compliance (circle yes or no)   yes/no
 
                   

D.   Capital Expenditures (Section 8.22(d))

                 
 
    1.     Year-to-date Capital Expenditures   $                    
 
               
 
    2.     Year-to-date Capital Expenditures for Ethanol Facility  
$                    
 
               
 
    3.     Line D1 minus Line D2   $                    
 
               
 
    4.     Maximum permitted amount   $                    
 
               
 
    5.     The Borrower is in compliance (circle yes or no)   yes/no

- 2 -

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Exhibit F
Additional Guarantor Supplement
                    , ___
Harris N.A.., as Administrative Agent for the Lenders named in the Second
Amended and Restated Credit Agreement dated as of October 5, 2006, among Penford
Corporation, as Borrower, the Guarantors referred to therein, the Lenders from
time to time party thereto, and the Administrative Agent (as extended, renewed,
amended or restated from time to time, the “Credit Agreement”)
Ladies and Gentlemen:
     Reference is made to the Credit Agreement described above. Terms not
defined herein which are defined in the Credit Agreement shall have for the
purposes hereof the meaning provided therein.
     The undersigned, [name of Subsidiary Guarantor], a [jurisdiction of
incorporation or organization] hereby elects to be a “Guarantor” for all
purposes of the Credit Agreement, effective from the date hereof. The
undersigned confirms that the representations and warranties set forth in
Section 6 of the Credit Agreement are true and correct as to the undersigned as
of the date hereof and the undersigned shall comply with each of the covenants
set forth in Section 8 of the Credit Agreement applicable to it.
     Without limiting the generality of the foregoing, the undersigned hereby
agrees to perform all the obligations of a Guarantor under, and to be bound in
all respects by the terms of, the Credit Agreement, including without limitation
Section 12 thereof, to the same extent and with the same force and effect as if
the undersigned were a signatory party thereto.
     The undersigned acknowledges that this Agreement shall be effective upon
its execution and delivery o by the undersigned to the Administrative Agent, and
it shall not be necessary for the Administrative Agent or any Lender, or any of
their Affiliates entitled to the benefits hereof, to execute this Agreement or
any other acceptance hereof. This Agreement shall be construed in accordance
with and governed by the internal laws of the State of Illinois.

                  Very truly yours,     [Name of Subsidiary Guarantor]
 
           
 
  By        
 
      Name    
 
           
 
      Title    
 
           

 

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Exhibit G
Assignment and Acceptance
Dated                     , _____
     Reference is made to the Second Amended and Restated Credit Agreement dated
as of October 5, 2006 (as extended, renewed, amended or restated from time to
time, the “Credit Agreement”) among Penford Corporation, the Guarantors party
thereto, the Lenders party thereto, and Harris N.A., as Administrative Agent for
the Lenders (the “Administrative Agent”). Terms defined in the Credit Agreement
are used herein with the same meaning.
                                                                      
                                                                  
                                    (the “Assignor”) and (the “Assignee”) agree
as follows:
     1. The Assignor hereby sells and assigns to the Assignee, and the Assignee
hereby purchases and assumes from the Assignor, the amount and specified
percentage interest shown on Annex I hereto of the Assignor’s rights and
obligations under the Credit Agreement as of the Effective Date (as defined
below), including, without limitation, the Assignor’s Commitments as in effect
on the Effective Date and the Loans, if any, owing to the Assignor on the
Effective Date and the Assignor’s Revolver Percentage of any outstanding L/C
Obligations and Swing Loans.
     2. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim, lien, or encumbrance of any
kind; (ii) makes no representation or warranty and assumes no responsibility
with respect to any statements, warranties or representations made in or in
connection with the Credit Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Credit Agreement or any
other instrument or document furnished pursuant thereto; and (iii) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower or any Subsidiary or the performance or
observance by the Borrower or any Subsidiary of any of their respective
obligations under the Credit Agreement or any other instrument or document
furnished pursuant thereto.
     3. The Assignee (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the most recent financial statements
delivered to the Lenders pursuant to Section 8.5(a) and (b) thereof and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Assignment and Acceptance;
(ii) agrees that it will, independently and without reliance upon the
Administrative Agent, the Assignor 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 the Credit
Agreement; (iii) appoints and authorizes the Administrative Agent to take such
action as Administrative Agent on its behalf and to exercise such powers under
the Credit

 

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Agreement and the other Loan Documents as are delegated to the Administrative
Agent by the terms thereof, together with such powers as are reasonably
incidental thereto; (iv) agrees that it will perform in accordance with their
terms all of the obligations which by the terms of the Credit Agreement are
required to be performed by it as a Lender; and (v) specifies as its lending
office (and address for notices) the offices set forth beneath its name on the
signature pages hereof.
     4. As consideration for the assignment and sale contemplated in Annex 1
hereof, the Assignee shall pay to the Assignor on the Effective Date in Federal
funds an amount agreed upon by the Assignor and the Assignee. It is understood
that commitment and/or letter of credit fees accrued to the Effective Date with
respect to the interest assigned hereby are for the account of the Assignor and
such fees accruing from and including the date hereof are for the account of the
Assignee. Each of the Assignor and the Assignee hereby agrees that if it
receives any amount under the Credit Agreement which is for the account of the
other party hereto, it shall receive the same for the account of such other
party to the extent of such other party’s interest therein and shall promptly
pay the same to such other party.
     5. The effective date for this Assignment and Acceptance shall be
                     (the “Effective Date”). Following the execution of this
Assignment and Acceptance, it will be delivered to the Administrative Agent for
acceptance and recording by the Administrative Agent and, if required, the
Borrower.
     6. Upon such acceptance and recording, as of the Effective Date, (i) the
Assignee shall be a party to the Credit Agreement and, to the extent provided in
this Assignment and Acceptance, have the rights and obligations of a Lender
thereunder and (ii) the Assignor shall, to the extent provided in this
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Credit Agreement.
     7. Upon such acceptance and recording, from and after the Effective Date,
the Administrative Agent shall make all payments under the Credit Agreement in
respect of the interest assigned hereby (including, without limitation, all
payments of principal, interest and commitment fees with respect thereto) to the
Assignee. The Assignor and Assignee shall make all appropriate adjustments in
payments under the Credit Agreement for periods prior to the Effective Date
directly between themselves.
     8. In accordance with Section 13.12 of the Credit Agreement, the Assignor
and the Assignee request and direct that the Administrative Agent prepare and
cause the Borrower to execute and deliver to the Assignee the relevant Notes
payable to the Assignee in the amount of its Commitments and new Notes to the
Assignor in the amount of its Commitments after giving effect to this
assignment.

- 2 -

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     9. This Assignment and Acceptance shall be governed by, and construed in
accordance with, the laws of the State of Illinois.

                      [Assignor Lender]    
 
               
 
  By            
 
      Name        
 
      Title  
 
   
 
               
 
                    [Assignee Lender]    
 
               
 
  By            
 
      Name        
 
               
 
      Title        
 
               
 
                    Lending office (and address for notices):    

Accepted and consented this
____ day of _____________
Penford Corporation

             
By
                     
 
  Name        
 
  Title  
 
   
 
           

Accepted and consented to by the Administrative
  Agent and L/C Issuer this ___day of _________
Harris N.A., as
   Administrative Agent and L/C Issuer

             
By
                     
 
  Name        
 
  Title  
 
   
 
           

- 3 -

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Annex I
to Assignment and Acceptance
     The assignee hereby purchases and assumes from the assignor the following
interest in and to all of the Assignor’s rights and obligations under the Credit
Agreement as of the effective date.

                              Aggregate     Amount of     Percentage    
Commitment/Loans     Commitment/Loans     Assigned of Facility Assigned   For
All Lenders     Assigned     Commitment/Loans
Revolving Credit
  $       $           %
 
                 
 
                       
Term Loan
  $       $           %
 
                 
 
                       
Capital Expansion Loan
  $       $           %
 
                 

 

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Exhibit H
Opinion of Counsel
[to Follow]

 

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Exhibit I
Commitment Amount Increase Request
                    , ___

To:   Harris N.A., as Administrative Agent for the Lenders parties to the Second
Amended and Restated Credit Agreement dated as of October 5, 2006 (as extended,
renewed, amended or restated from time to time, the “Credit Agreement”), among
Penford Corporation, the Guarantors party thereto, certain Lenders which are
signatories thereto, and Harris N.A., as Administrative Agent

Ladies and Gentlemen:
     The undersigned, Penford Corporation (the “Borrower”), hereby refers to the
Credit Agreement and requests that the Administrative Agent consent to an
increase in the aggregate Revolving Credit Commitments (the “Commitment Amount
Increase”), in accordance with Section 1.2(b) of the Credit Agreement, to be
effected by [an increase in the Revolving Credit Commitment of [name of existing
Lender] [the addition of [name of new Lender] (the “New Lender”) as a Lender
under the terms of the Credit Agreement]. Capitalized terms used herein without
definition shall have the same meanings herein as such terms have in the Credit
Agreement.
     After giving effect to such Commitment Amount Increase, the Revolving
Credit Commitment of the [Lender] [New Lender] shall be $                    .
[Include paragraphs 1-4 for a New Lender]
     1. The New Lender hereby confirms that it has received a copy of the Loan
Documents and the exhibits related thereto, together with copies of the
documents which were required to be delivered under the Credit Agreement as a
condition to the making of the Loans and other extensions of credit thereunder.
The New Lender acknowledges and agrees that it has made and will continue to
make, independently and without reliance upon the Administrative Agent or any
other Lender and based on such documents and information as it has deemed
appropriate, its own credit analysis and decisions relating to the Credit
Agreement. The New Lender further acknowledges and agrees that the
Administrative Agent has not made any representations or warranties about the
credit worthiness of the Borrower or any other party to the Credit Agreement or
any other Loan Document or with respect to the legality, validity, sufficiency
or enforceability of the Credit Agreement or any other Loan Document or the
value of any security therefor.
     2. Except as otherwise provided in the Credit Agreement, effective as of
the date of acceptance hereof by the Administrative Agent, the New Lender
(i) shall be deemed

 

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automatically to have become a party to the Credit Agreement and have all the
rights and obligations of a “Lender” under the Credit Agreement as if it were an
original signatory thereto and (ii) agrees to be bound by the terms and
conditions set forth in the Credit Agreement as if it were an original signatory
thereto.
     3. The New Lender hereby advises you of the following administrative
details with respect to its Loans and Revolving Credit Commitments:

  (A)   Notices:         Institution
Name:                                                
Address:                                                
                                                               Telephone:
                                                 Facsimile:
                                             (B)   Payment Instructions:

     [4. The New Lender has delivered, if appropriate, to the Borrower and the
Administrative Agent (or is delivering to the Borrower and the Administrative
Agent concurrently herewith) the tax forms referred to in Section 13.1 of the
Credit Agreement.]*
     This Agreement shall be deemed to be a contractual obligation under, and
shall be governed by and construed in accordance with, the laws of the state of
Illinois.
     The Commitment Amount Increase shall be effective when the executed consent
of the Administrative Agent is received or otherwise in accordance with
Section 1.2(b) of the Credit Agreement, but not in any case prior to ___, ___.
It shall be a condition to the effectiveness of the Commitment Amount Increase
that all expenses referred to in Section 1.2(b) of the Credit Agreement shall
have been paid.
     The Borrower hereby certifies that no Default or Event of Default has
occurred and is continuing.
 

*   Insert bracketed paragraph if New Lender is organized under the law of a
jurisdiction other than the United States of America or a state thereof.

-2-

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     Please indicate the Administrative Agent’s consent to such Commitment
Amount Increase by signing the enclosed copy of this letter in the space
provided below.

                          Very truly yours,    
 
                             
 
                   
 
  By                          
 
      Name:            
 
                   
 
      Title:            
 
                   
 
                        [New or existing Lender Increasing
    Commitments]    
 
                   
 
  By                          
 
      Name            
 
                   
 
      Title            
 
                   

The undersigned hereby consents on this
___day of                      , ___ to the
above-requested Commitment Amount
Increase.
Harris N.A.,
      as Administrative Agent

             
 
           
By
                     
 
  Name        
 
           
 
  Title        
 
           

-3-

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Schedule 1
Commitments

                                      Capital     Revolving       Term Loan    
Expansion Loan     Credit   Name of Lender   Commitment     Commitment    
Commitment  
Harris N.A.
  $ 11,034,482.76     $ 12,413,793.10     $ 16,551,724.14    
Australia and New Zealand Banking Group Limited
  $ 6,896,551.72     $ 7,758,620.69     $ 10,344,827.59  
 
                       
LaSalle Bank National Association
  $ 8,275,862.07     $ 9,310,344.83     $ 12,413,793.10  
 
                       
Rabobank
  $ 8,275,862.07     $ 9,310,344.83     $ 12,413,793.10  
 
                       
U.S. Bank, National Association
  $ 5,517,241.38     $ 6,206,896.55     $ 8,275,862.07  
 
                       
Total
  $ 40,000,000     $ 45,000,000     $ 60,000,000  
 
                 

 

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Schedule 6.2
Subsidiaries

                              Jurisdiction of     Percentage     Name  
Organization     Ownership Owner  
1. Penford Products Co.
  Delaware     100 %   U.S. Borrower
 
                       
2. Penford Holdings
  New South Wales,                
    Pty. Ltd.
  Australia     100 %   U.S. Borrower
 
                       
3. Penford Australia
  New South Wales,                
    Limited
  Australia     100 %   Penford Holdings Pty. Ltd.
 
                       
4. Penford New Zealand Limited
  New Zealand     100 %   Penford Australia Limited
 
                       
5. Penford Export Corporation
  U.S. Virgin Islands     100 %   U.S. Borrower

 

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Schedule 8.9
Existing Investments
Plantic Technologies, Ltd.