Exhibit 10.1
 
 
Amended and Restated Credit Agreement
Dated as of August 22, 2005,
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
 
 

 

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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     2  
Section 1.4.
  Applicable Interest Rates     5  
Section 1.5.
  Minimum Borrowing Amounts; Maximum Eurocurrency Loans     5  
Section 1.6.
  Manner of Borrowing Loans and Designating Applicable Interest Rates     6  
Section 1.7.
  Interest Periods     8  
Section 1.8.
  Maturity of Loans     10  
Section 1.9.
  Prepayments     11  
Section 1.10.
  Default Rate     14  
Section 1.11.
  The Notes     15  
Section 1.12.
  Funding Indemnity     16  
Section 1.13.
  Commitment Terminations     16  
Section 1.14.
  Substitution of Lenders     17  
Section 1.15.
  Swing Loans     17  
 
           
Section 2.
  Fees     19  
 
           
Section 2.1.
  Fees     19  
 
           
Section 3.
  Place and Application of Payments     20  
 
           
Section 3.1.
  Place and Application of Payments     20  
Section 3.2.
  Account Debit     21  
 
           
Section 4.
  Guaranties and Collateral     22  
 
           
Section 4.1.
  Guaranties     22  
Section 4.2.
  Collateral     22  
Section 4.3.
  Liens on Real Property     23  
Section 4.4.
  Further Assurances     23  
 
           
Section 5.
  Definitions; Interpretation     23  
 
           
Section 5.1.
  Definitions     23  
Section 5.2.
  Interpretation     42  
Section 5.3.
  Change in Accounting Principles     42  
 
           
Section 6.
  Representations and Warranties     43  
 
           
Section 6.1.
  Organization and Qualification     43  

 

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              Section   Heading   Page  
Section 6.2.
  Subsidiaries     43  
Section 6.3.
  Authority and Validity of Obligations     43  
Section 6.4.
  Use of Proceeds; Margin Stock     44  
Section 6.5.
  Financial Reports     44  
Section 6.6.
  No Material Adverse Change     45  
Section 6.7.
  Full Disclosure     45  
Section 6.8.
  Trademarks, Franchises, and Licenses     45  
Section 6.9.
  Governmental Authority and Licensing     45  
Section 6.10.
  Good Title     45  
Section 6.11.
  Litigation and Other Controversies     45  
Section 6.12.
  Taxes     46  
Section 6.13.
  Approvals     46  
Section 6.14.
  Affiliate Transactions     46  
Section 6.15.
  Investment Company; Public Utility Holding Company     46  
Section 6.16.
  ERISA     46  
Section 6.17.
  Compliance with Laws     46  
Section 6.18.
  Other Agreements     47  
Section 6.19.
  Solvency     47  
Section 6.20.
  No Default     47  
Section 6.21.
  Outstanding Australian Obligations     48  
 
           
Section 7.
  Conditions Precedent     48  
 
           
Section 7.1.
  All Credit Events     48  
Section 7.2.
  Initial Credit Event     49  
 
           
Section 8.
  Covenants     51  
 
           
Section 8.1.
  Maintenance of Business     51  
Section 8.2.
  Maintenance of Properties     51  
Section 8.3.
  Taxes and Assessments     51  
Section 8.4.
  Insurance     52  
Section 8.5.
  Financial Reports     52  
Section 8.6.
  Inspection     54  
Section 8.7.
  Borrowings and Guaranties     54  
Section 8.8.
  Liens     55  
Section 8.9.
  Investments, Acquisitions, Loans and Advances     56  
Section 8.10.
  Mergers, Consolidations and Sales     57  
Section 8.11.
  Maintenance of Subsidiaries     58  
Section 8.12.
  Dividends and Certain Other Restricted Payments     58  
Section 8.13.
  ERISA     58  
Section 8.14.
  Compliance with Laws     59  
Section 8.15.
  Burdensome Contracts With Affiliates     60  
Section 8.16.
  No Changes in Fiscal Year     60  
Section 8.17.
  Formation of Subsidiaries     60  
Section 8.18.
  Change in the Nature of Business     60  
Section 8.19.
  Use of Proceeds     60  

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              Section   Heading   Page  
Section 8.20.
  No Restrictions     60  
Section 8.21.
  Subordinated Debt     60  
Section 8.22.
  Financial Covenants     61  
Section 8.23.
  Australian Borrowings     61  
 
           
Section 9.
  Events of Default and Remedies     61  
 
           
Section 9.1.
  Events of Default     61  
Section 9.2.
  Non-Bankruptcy Defaults     64  
Section 9.3.
  Bankruptcy Defaults     64  
Section 9.4.
  Collateral for Undrawn Letters of Credit     65  
Section 9.5.
  Notice of Default     65  
Section 9.6.
  Expenses     65  
 
           
Section 10.
  Change in Circumstances     66  
 
           
Section 10.1.
  Change of Law     66  
Section 10.2.
  Unavailability of Deposits or Inability to Ascertain, or        
 
  Inadequacy of, LIBOR     66  
Section 10.3.
  Increased Cost and Reduced Return     66  
Section 10.4.
  Lending Offices     68  
Section 10.5.
  Discretion of Lender as to Manner of Funding     68  
 
           
Section 11.
  The Administrative Agent     68  
 
           
Section 11.1.
  Appointment and Authorization of Administrative Agent     68  
Section 11.2.
  Administrative Agent and its Affiliates     68  
Section 11.3.
  Action by Administrative Agent     69  
Section 11.4.
  Consultation with Experts     69  
Section 11.5.
  Liability of Administrative Agent; Credit Decision     69  
Section 11.6.
  Indemnity     70  
Section 11.7.
  Resignation of Administrative Agent and Successor Administrative        
 
  Agent     70  
Section 11.8.
  L/C Issuer.     71  
Section 11.9.
  Hedging Liability and Funds Transfer and Deposit Account Liability        
 
  Arrangements     71  
Section 11.10.
  Designation of Additional Agents     72  
Section 11.11.
  Authorization to Release or Subordinate or Limit Liens     72  
Section 11.12.
  Authorization to Enter into, and Enforcement of, the Collateral        
 
  Documents     72  
 
           
Section 12.
  The Guarantees     72  
 
           
Section 12.1.
  The Guarantees     72  
Section 12.2.
  Guarantee Unconditional     73  
Section 12.3.
  Discharge Only upon Payment in Full; Reinstatement in Certain        
 
  Circumstances     74  
Section 12.4.
  Subrogation     74  

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              Section   Heading   Page  
Section 12.5.
  Waivers     74  
Section 12.6.
  Limit on Recovery     75  
Section 12.7.
  Stay of Acceleration     75  
Section 12.8.
  Benefit to Guarantors     75  
Section 12.9.
  Guarantor Covenants     75  
 
           
Section 13.
  Miscellaneous     75  
 
           
Section 13.1.
  Withholding Taxes     75  
Section 13.2.
  No Waiver, Cumulative Remedies     76  
Section 13.3.
  Non-Business Days     77  
Section 13.4.
  Documentary Taxes     77  
Section 13.5.
  Survival of Representations     77  
Section 13.6.
  Survival of Indemnities     77  
Section 13.7.
  Sharing of Set-Off     77  
Section 13.8.
  Notices     78  
Section 13.9.
  Counterparts     78  
Section 13.10.
  Successors and Assigns     78  
Section 13.11.
  Participants     78  
Section 13.12.
  Assignments     79  
Section 13.13.
  Amendments     80  
Section 13.14.
  Headings     80  
Section 13.15.
  Costs and Expenses; Indemnification     80  
Section 13.16.
  Set-off     82  
Section 13.17.
  Entire Agreement     82  
Section 13.18.
  Governing Law     82  
Section 13.19.
  Severability of Provisions     82  
Section 13.20.
  Excess Interest     82  
Section 13.21.
  Construction     83  
Section 13.22.
  Lender’s Obligations Several     83  
Section 13.23.
  Submission to Jurisdiction; Waiver of Jury Trial     83  
Section 13.24.
  USA Patriot Act     83  
Section 13.25.
  Currency     84  
Section 13.26.
  Currency Equivalence     84  
Section 13.27.
  Amendment and Restatement     84  
Section 13.28.
  Withdrawal of Trustee     85  

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Exhibit A
  —   Notice of Payment Request
Exhibit B
  —   Notice of Borrowing
Exhibit C
  —   Notice of Continuation/Conversion
Exhibit D-1
  —   U.S. Dollar Term Note
Exhibit D-2
  —   Australian Dollar Term 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
Schedule 1
  —   Commitments
Schedule 6.2
  —   Subsidiaries
Schedule 8.9
  —   Existing Investments

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Amended and Restated Credit Agreement
     This Amended and Restated Credit Agreement is entered into as of August 22,
2005, 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 a
Credit Agreement dated as of October 7, 2003 (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 “U.S. Dollar Term Loan” and collectively for all the Lenders the
“U.S. Dollar Term Loans”) in U.S. Dollars to the Borrower in the amount of such
Lender’s U.S. Dollar Term Loan Commitment. The U.S. Dollar 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 U.S. Dollar Term Loan Percentages,
at which time the U.S. Dollar Term Loan Commitments shall expire. As provided in
Section 1.6(a) hereof, the Borrower may elect that the U.S. Dollar Term Loans be
outstanding as Base Rate Loans or Eurocurrency Loans. No amount repaid or
prepaid on any U.S. Dollar 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 “Australian
Dollar Term Loan” and collectively for all the Lenders the “Australian Dollar
Term Loans”) in Australian Dollars to the Borrower in the amount of such
Lender’s Australian Dollar Term Loan Commitment. The Australian Dollar 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 Australian Dollar
Term Loan Percentages, at which time the Australian Dollar Term Loan Commitments
shall expire. All Australian Dollar Term Loans shall be outstanding as
Eurocurrency Loans. No amount repaid or prepaid on any Australian Dollar Term
Loan may be borrowed again.

 

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     Section 1.2. Revolving Credit Commitments. 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. Dollar 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. 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
$15,000,000. 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.
     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. 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.
     (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 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

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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 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

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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, 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,

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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.
     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

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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 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

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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 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

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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 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,

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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 U.S. Dollar Term Loans consisting of Base
Rate Loans that otherwise would end after the final maturity date of the U.S.
Dollar Term Loans shall end on the final maturity date of the U.S. Dollar Term
Loans, and any Interest Period for a Borrowing of Australian Dollar Term Loans
consisting of Base Rate Loans that would otherwise end after the final maturity
date of the Australian Dollar Term Loans shall end on the final maturity date of
the Australian Dollar Term 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 U.S. Dollar Term Loans shall
extend beyond the final maturity date of the U.S. Dollar Term Loans, and no
Interest Period with respect to any portion of the Australian Dollar Term Loans
shall extend beyond the final maturity date of the Australian Dollar Term Loans;
     (iii) no Interest Period with respect to any portion of the U.S. Dollar
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 U.S.
Dollar Term Loans, unless the sum of (a) the aggregate principal amount of U.S.
Dollar Term Loans that are Base Rate Loans plus (b) the aggregate principal
amount of U.S. Dollar 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 U.S. Dollar Term Loans on such payment date;
     (iv) no Interest Period with respect to any portion of the Australian
Dollar 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
Australian Dollar Term Loans, unless the aggregate principal amount of
Australian Dollar 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 Australian Dollar Term 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 the following calendar month, the last day of such Interest
Period shall be the immediately preceding Business Day; and

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     (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
installments on the last day of each March, June, September, and December in
each year, commencing with the calendar quarter ending September 30, 2005, 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 A   Column B     Scheduled Principal Payment Date   Payment on Term
Loans
09/30/05
  $1,000,000
12/31/05
  $1,000,000
03/31/06
  $1,000,000
06/30/06
  $1,000,000
09/30/06
  $1,250,000
12/31/06
  $1,250,000
03/31/07
  $1,250,000
06/30/07
  $1,250,000
09/30/07
  $1,500,000
12/31/07
  $1,500,000
03/31/08
  $1,500,000
06/30/08
  $1,500,000
09/30/08
  $1,500,000
12/31/08
  $1,500,000
03/31/09
  $1,500,000
06/30/09
  $1,500,000
09/30/09
  $1,500,000
12/31/09
  $1,500,000
03/31/10
  $1,500,000
06/30/10
  $1,500,000

, 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 August 22, 2010, the
final maturity thereof. Each such

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principal payment shall be allocated to the U.S. Dollar Term Loans and the
Australian Dollar Term Loans ratably in accordance with the Original Dollar
Amount of the U.S. Dollar Term Loans the Australian Dollar Term Loans. All
principal payments allocated to the U.S. Dollar Term Loans shall be applied to
the Lenders holding the U.S. Dollar Term Loans pro rata based on their U.S.
Dollar Term Loan Percentages and all principal payments allocated to the
Australian Dollar Term Loans shall be applied to the Lenders holding the
Australian Dollar Term Loans pro rata based upon their Australian Dollar Term
Loan Percentages.
     (b) 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 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 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 the Term Loans in the manner
specified in Section 1.9(e) hereof until the Term 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

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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 the Term Loans (or 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 the Term
Loans in the manner specified in Section 1.9(e) hereof until the Term 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 Senior Funded
Debt/EBITDA Ratio was less than 2.0 to 1.0 for the two consecutive fiscal
quarters immediately preceding the date of such 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 the Term Loans in the
manner specified in Section 1.9(e) hereof until the Term Loans are paid in full
and then the Revolving Loans, Swing Loans and L/C Obligations (or all
outstanding Loans and

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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) Within 90 days after the close of each year, beginning August 31,
2006, the Borrower shall prepay first the Term Loans in the manner specified in
Section 1.9(e) hereof until the Term 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 Senior Funded Debt/EBITDA Ratio is
less than 2.0 to 1.0 for the last two fiscal quarters of such fiscal year, then
the Excess Cash Flow Percentage shall be deemed to be 0% until such time as the
Borrower’s Total Senior Funded Debt/EBITDA Ratio equals or exceeds 2.0 to 1.0.
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.
     (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 $15,000,000, the
Borrower shall, no later than three (3) Business 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

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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 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 direct, 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 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 under Section 1.9(b) shall be
allocated to the U.S. Dollar Term Loans and the Australian Dollar Term Loans in
the manner specified by the Borrower in writing to the Administrative Agent on
or before the date of such prepayment. In the absence of any such written
allocation by the Borrower with respect to any such prepayment, the
Administrative shall allocate such prepayment to the U.S. Dollar Term Loans and
the Australian Dollar Term Loans ratably in accordance with the Original Dollar
Amount of the U.S. Dollar Term Loans the Australian Dollar Term Loans.
     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;

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     (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 U.S. Dollar 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 “U.S. Dollar Term Note” and collectively
such promissory notes are referred to as the “U.S. Dollar Term Notes.”
     (b) The Australian Dollar 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-2 hereto. Each such promissory note is hereinafter
referred to as a “Australian Dollar Term Note” and collectively such promissory
notes are referred to as the “Australian Dollar Term 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,

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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
     (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

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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 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) 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 “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. 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

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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.
     (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
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

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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.
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.

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     (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 7, 2005 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.
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

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(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.
     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

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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.
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

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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 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.

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     “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.
     “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 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 III below, and thereafter from one Pricing Date to the next the
Applicable Margin means the rates per annum determined in accordance with the
following schedule:

                                      Applicable Margin for                 Base
Rate Loans under   Applicable Margin for             Revolving Credit and  
Eurocurrency Loans under         Total Funded Debt   Term Credit and   Revolving
Credit and   Applicable Margin for     Ratio for Such   Reimbursement   Term
Credit and Letter   Commitment Fee Shall Level   Pricing Date   Obligations
shall be:   of credit Fee Shall Be:   Be:
IV
  Greater than 3.0 to 1.0     0.75 %     2.25 %     0.40 %
 
                           
III
  Less than or equal to 3.0 to 1.0, but greater than 2.5 to 1.0     0.50 %    
2.00 %     0.35 %
 
                           
II
  Less than or equal to 2.5 to 1.0, but greater than 2.0 to 1.0     0.25 %    
1.75 %     0.30 %
 
                           
I
  Less than or equal to 2.0 to 1.0     0.00 %     1.50 %     0.25 %

For purposes hereof, the term “Pricing Date” means, for any fiscal quarter of
the Borrower ending on or after November 30, 2005, 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 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 3.0 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.

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     “Australian Loan Documents” has the meaning specified in the Original
Credit Agreement.
     “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.
     “Australian Dollar Term Credit” means the credit facility for the
Australian Dollar Term Loans described in Section 1.1(b) hereof.
     “Australian Dollar Term 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 Australian Dollar Term Loan hereunder.
     “Australian Dollar Term Loan Commitment” means, as to any Lender, the
obligation of such Lender to make its Australian Dollar 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 Australian Dollar Term Loan
Commitments of the Lenders aggregate the Australian Dollar Equivalent of
$10,000,000 on the date hereof.
     “Australian Dollar Term Loan Percentage” means, for each Lender, the
percentage of the Australian Dollar Term Loan Commitments represented by such
Lender’s Australian Dollar Term Loan Commitment or, if the Australian Dollar
Term Loan Commitments have been terminated or have expired, the percentage held
by such Lender of the aggregate principal amount of all Australian Dollar Term
Loans then outstanding.
     “Australian Dollar Term Note” is defined in Section 1.11 hereof.
     “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.
     “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

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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 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.
     “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 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.

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     “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 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.
     “Commitments” means the Revolving Credit Commitments, the U.S. Dollar Term
Loan Commitments and the Australian Dollar Term Loan Commitments.

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     “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.
     “Credit” means any of the Revolving Credit, the Swing Line, the U.S. Dollar
Term Credit or the Australian Dollar Term 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.
     “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 costs related to the labor strike at the Borrower’s plant
located in Cedar Rapids, Iowa in an amount not to exceed $4,300,000 during the
fiscal quarter ending August 31, 2004 and $4,100,000 during the fiscal quarter
ending November 30, 2004.
     “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.

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     “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.
     “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.
     “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.

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     “Excess Cash Flow” means, with respect to any period, the amount (if any)
by which (a) EBITDA during 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 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, mandatory prepayments (other
than upon mandatory sinking fund redemptions, at maturity and upon acceleration)
and prepayments of the Term Loans made out of Excess Cash Flow), (iv) all
Restricted Payments made by the Borrower during such period in cash, (v) the
aggregate amount of Capital Expenditures incurred by the Borrower and its
Subsidiaries during such period, plus (minus) (vi) commencing with the fiscal
year ending August 31, 2006, additions (reductions) to non-cash working capital
of the Borrower and its Subsidiaries for such period.
     “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 to be made during the twelve month period
following 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.
     “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 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.

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     “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, byproduct, 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
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) such Person’s net mark-to-market exposure under all
agreements of such person evidencing Hedging Liability, (h) any indebtedness,
whether or not assumed, secured by Liens on Property acquired by such Person at
the time of acquisition thereof, (i) any shares which are expressed to be
redeemable and (j) any liability in respect of any guarantee or indemnity for
any of the items referred to above, and (k) all indebtedness secured by any Lien
upon Property of such Person, whether or not such

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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 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.
     “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.

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     “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 U.S. Dollar Term Loan or
the Australian Dollar Term 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 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

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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 U.S.
Dollar Term Notes and the Australian Dollar Term 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 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

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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 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.
     “Penford Holdings” means Penford Holdings Pty. Limited ACN 094 279 339.
     “Percentage” means for any Lender its Revolver Percentage, U.S. Dollar Term
Loan Percentage or Australian Dollar Term 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, U.S. Dollar
Term Loan Percentage and Australian Dollar Term 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:

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          (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, when taken together with the Total Consideration for all Acquired
Businesses 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;
          (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; and
          (h) after giving effect to the Acquisition, the amount of the Unused
Revolving Credit Commitments shall be not less than $5,000,000.

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     “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.
     “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 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, 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.

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     “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 $55,000,000 on the date hereof.
     “Revolving Credit Termination Date” means August 22, 2010, 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 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 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.

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     “Swing Loan” and “Swing Loans” each is defined in Section 1.15 hereof.
     “Swing Note” is defined in Section 1.11 hereof.
     “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 U.S. Dollar Term Credit and the Australian Dollar
Term Credit
     “Term Loans” means the U.S. Dollar Term Loans and the Australian Dollar
Term Loans.
     “Term Loan Commitments” means the U.S. Dollar Term Loan Commitments and the
Australian Dollar Term Loan Commitments.
     “Term Loan Percentage” means, as applicable, the U.S. Dollar Term Loan
Percentage and the Australian Dollar Term Loan Percentage.
     “Term Notes” means the U.S. Dollar Term Notes and the Australian Dollar
Term Notes.
     “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.

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     “Total Senior Funded Debt” means, at any time the same is to be determined,
Total Funded Debt at such time minus the principal balance of Subordinated Debt
of the Borrower.
     “Total Senior Funded Debt/EBITDA Ratio” means, as of the last day of any
fiscal quarter of the Borrower, the ratio of Total Senior Funded Debt of the
Borrower and its Subsidiaries as of the last day of such fiscal quarter to
EBITDA of the Borrower and its Subsidiaries for the period of four fiscal
quarters then ended.
     “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 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 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.
     “U.S. Dollar Term Credit” means the credit facility for the U.S. Dollar
Term Loans described in Section 1.1(a) hereof.
     “U.S. Dollar 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 U.S. Dollar Term Loan hereunder.
     “U.S. Dollar Term Loan Commitment” means, as to any Lender, the obligation
of such Lender to make its U.S. Dollar 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 U.S. Dollar Term Loan Commitments of the
Lenders aggregate $40,000,000 on the date hereof.
     “U.S. Dollar Term Loan Percentage” means, for each Lender, the percentage
of the U.S. Dollar Term Loan Commitments represented by such Lender’s U.S.
Dollar Term Loan Commitment or, if the U.S. Dollar Term Loan Commitments have
been terminated or have

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expired, the percentage held by such Lender of the aggregate principal amount of
all U.S. Dollar Term Loans then outstanding.
     “U.S. Dollar 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 other equity interests are owned by the Borrower and/or one
or more Wholly-owned Subsidiaries within the meaning of this definition.
     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

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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.
     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

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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 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 to refinance existing indebtedness, for their general
working capital purposes, to finance capital expenditures and for such other
legal and proper purposes as are consistent with all applicable laws. 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, 2004, 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,
2005, 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

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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, 2004, 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 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. 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.

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     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.
     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; Public Utility Holding 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, or a “public utility holding company” within
the meaning of the Public Utility Holding Company Act of 1935, 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.

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          (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
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.

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     Section 6.21. Outstanding Australian Obligations. On the date of this
Agreement the aggregate principal amount of all indebtedness, obligations and
liabilities outstanding under the Australian Loan Documents is AUD
$26,358,217.91.
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;
          (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, neither (i) 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 and (ii) the aggregate
Original Dollar Amount of all Revolving Loans denominated in Alternative
Currencies shall not exceed $15,000,000;
          (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.

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          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 (i) 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, and (ii) Mallesons Stephen Jaques, special Australian counsel to the
Lenders, 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, the Lenders and the
Australian security trustee;
          (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 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 an environmental
questionnaire acceptable to the Administrative Agent concerning the
environmental hazards and matters with respect to the parcels of real property
subject to the Lien of the Mortgages;
          (g) 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;
          (h) 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

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incorporation or organization and of each state in which it is qualified to do
business as a foreign corporation or organization;
          (i) the Administrative Agent shall have received for each Lender a
list of the Borrower’s Authorized Representatives;
          (j) the Administrative Agent shall have received for itself and for
the Lenders the initial fees owed to them;
          (k) 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 the date of this
Agreement) 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;
          (l) 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;
          (m) all of the indebtedness of the Borrower’s Subsidiaries under the
Australian Loan Documents shall be fully paid and satisfied with the proceeds of
the initial Loans made hereunder;
          (n) 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;
          (o) the Administrative Agent shall have received evidence satisfactory
thereto that, as of May 31, 2005, (x) the Borrower’s pro forma EBITDA for the
four fiscal quarters then ended is not less than $24,000,000 and (y) the Total
Funded Debt Ratio is not greater than 3.20 to 1.0;
          (p) the Administrative Agent shall have (i) received the three year
projections of the Borrower in form and substance satisfactory to the Lenders
and (ii) conducted a satisfactory review of the May 31, 2005 interim financial
statements and commentary of the Borrower;
          (q) 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;
          (r) the Administrative Agent shall have received from the Borrower
written instructions as to the disbursement and application of the proceeds of
the initial Loans

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made hereunder, which instructions must provide for the payment in full of all
indebtedness outstanding under the Australian Loan Documents;
          (s) the Administrative Agent shall have received 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; and
          (t) the Administrative Agent shall have received a fully executed
termination of the intercreditor agreement in form and substance satisfactory to
the Administrative Agent.
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.

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     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.
     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

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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;
          (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

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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; and
          (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.
     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 and 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;
          (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 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.
     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:

                  Total Funded Debt Ratio From and Including   To and Including
  shall not be more than
the date hereof
  May 31, 2006   3.50 to 1.0
 
       
June 1, 2006
  May 31, 2007   3.25 to 1.0
 
       
June 1, 2007
  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, 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 1.5 to 1.0.
          (c) Leverage Ratio. The Borrower shall not, as of the last day of any
fiscal quarter of the Borrower, permit the ratio of (a) Total Funded Debt at
such time to (b) the sum of Total Funded Debt and Net Worth at such time (the
“Total Funded Debt Ratio”) to be more than 0.60 to 1.0.
          (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 and Capital Expenditures made with the proceeds of
grants from governmental entities) 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 Senior Funded
Debt/EBITDA 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. Australian Borrowings. The Borrower shall not permit Penford
Australia, Penford Holdings or any of their respective Subsidiaries to borrower
or obtain other extensions of credit under the Australian Loan Documents on and
after the date of this Agreement.
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

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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 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

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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 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

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Section 9.1(j)(v) shall be instituted against the Borrower or any Subsidiary,
and such 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

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full amount then available for drawing under all outstanding Letters of Credit,
the Borrower 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

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(including all such costs and expenses incurred in connection with any
proceeding under the 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

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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:
     (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

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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 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

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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 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

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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; (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

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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, 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.

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     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 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

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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 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;

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          (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 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.

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     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.
     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

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to the Administrative Agent if not the recipient of the original) on or before
the thirtieth day after payment.
          (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

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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.
     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.

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     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 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

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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
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) Each Lender shall have the right at any
time, with the prior consent of the Administrative Agent and, so long as no
Event of Default then exists, the Borrower (which consent of the Borrower shall
not be unreasonably withheld) to sell, assign, transfer or negotiate all or any
part of its rights and obligations under the Loan Documents (including, without
limitation, the indebtedness evidenced by the Notes then held by such assigning
Lender, together with an equivalent percentage of its obligation to make Loans
and participate in Letters of Credit) to one or more commercial banks or other
financial institutions or investors, provided that, unless otherwise agreed to
by the Administrative Agent, such assignment shall be of a fixed percentage (and
not by its terms of varying percentage) of the assigning Lender’s rights and
obligations under the Loan Documents; provided, however, that in order to make
any such assignment (i) unless the assigning Lender is assigning all of its
Commitments, outstanding Loans and interests in L/C Obligations, the assigning
Lender shall retain at least $5,000,000 in unused Commitments, outstanding Loans
and interests in Letters of Credit, (ii) the assignee Lender shall have
Commitments, outstanding Loans and interests in Letters of Credit of at least
$5,000,000, (iii) each such assignment shall be evidenced by a written agreement
(substantially in the form attached hereto as Exhibit G or in such other form
acceptable to the Administrative Agent) executed by such assigning Lender, such
assignee Lender or Lenders, the Administrative Agent and, if required as
provided above, the Borrower, which agreement shall specify in each instance the
portion of the Obligations which are to be assigned to the assignee Lender and
the portion of the Commitments of the assigning Lender to be assumed by the
assignee Lender, and (iv) the assigning Lender shall pay to the Administrative
Agent a processing fee of $3,500 and any out-of-pocket attorneys’ fees and
expenses incurred by the Administrative Agent in connection with any such
assignment agreement. Any such assignee shall become a Lender for all purposes
hereunder to the extent of the rights and obligations under the Loan Documents
it assumes and the assigning Lender shall be released from its obligations, and
will have released its rights, under the Loan Documents to the extent of such
assignment. The address for notices to such assignee Lender shall be as
specified in the assignment agreement executed by it. Promptly upon the
effectiveness of any such assignment agreement, the Borrower shall execute and
deliver replacement Notes to the assignee Lender and the assigning Lender in the
respective amounts of their Commitments (or assigned principal

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amounts, as applicable) after giving effect to the reduction occasioned by such
assignment (all such Notes to constitute “Notes” for all purposes of the Loan
Documents), and the assignee Lender shall thereafter surrender to the Borrower
its old Notes. The Borrower authorizes each Lender to disclose to any purchaser
or prospective purchaser of an interest in the Loans and interest in Letters of
Credit owed to it or its Commitments under this Section any financial or other
information pertaining to the Borrower or any Subsidiary.
          (b) 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, increase the aggregate Commitments of the Lenders,
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,

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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 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.

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     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 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

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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 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

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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 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

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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.
     Section 13.28. Withdrawal of Trustee. Subject to the satisfaction of the
conditions precedent set forth in Sections 7.1 and 7.2 hereof with respect to
the initial Credit Event, and the payment and performance in full of all
indebtedness, obligations and liabilities of Penford Holdings and Penford
Australia under the Australian Loan Documents, ANZ Capel Court Limited, as
trustee under the Debenture Trust Deed and Security Trust Deed (each as defined
in the Original Credit Agreement), shall cease to be a party to this Agreement
and shall have no rights or obligations hereunder or under the other Loan
Documents, provided that the foregoing shall not terminate any rights ANZ Capel
Court Limited, as trustee under the Debenture Trust Deed and Security Trust
Deed, may have under Section 12.24 of the original Credit Agreement or any other
provisions of the Original Credit Agreement which by their terms survive the
termination of the Original Credit Agreement, all of which shall continue
unaffected by this Agreement. In furtherance and not in limitation of the
foregoing the parties to this Agreement agree that Section 12.24 of the Original
Credit Agreement applies to this Agreement as though set out in full in this
Agreement.
[Signature Pages to Follow]

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     This Credit Agreement 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 Amended and Restated Credit Agreement

 

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                  “Lenders”
 
                Harris N.A., successor by merger to Harris Trust and Savings
Bank, 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
 
                Wells Fargo Bank, N.A.
 
           
 
  By                  
 
      Name    
 
           
 
      Title    
 
           
 
                Address:
 
                Wells Fargo Bank, N.A.     1740 Broadway Mac# C7301-031
Denver, CO 80274     Attention: Catherine M. Jones     Telecopy: (303) 863-6670
    Telephone: (303) 863-5070

Penford Corporation
Signature Page to 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 Amended and Restated Credit Agreement

 

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                  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 Amended and Restated Credit Agreement

 

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     The undersigned, ANZ Capel Court Limited, is executing this Agreement
solely for purposes of Section 13.28 and for no other purposes.

                  ANZ Capel Court Limited, as Australian Trustee
 
           
 
  By                  
 
      Name    
 
           
 
      Title    
 
           

Penford Corporation
Signature Page to 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 Amended and Restated Credit Agreement, dated
as of August 22, 2005 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
Amended and Restated Credit Agreement dated as of August 22, 2005 (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
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] [U.S. Dollar
Term] [Australian Dollar Term] 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    
 
           

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Exhibit C
Notice of Continuation/Conversion
Date: ____________, ____

To:        Harris N.A., as Administrative Agent for the Lenders parties to the
Amended and Restated Credit Agreement dated as of August 22, 2005 (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] [U.S. Dollar Term]
[Australian Dollar Term] 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] [U.S. Dollar Term] [Australian Dollar Term] 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    
 
           

 

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Exhibit D-1
U.S. Dollar 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 U.S.
Dollar 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 September 30, 2005,
together with interest on the principal amount of such U.S. Dollar 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 U.S. Dollar Term Notes referred to in the
Amended and Restated Credit Agreement dated as of August 22, 2005 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 D-2
Australian Dollar Term Note

AUS $___   ___, ___

          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 Australian Dollar 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 September 30, 2005, together with interest on
the principal amount of such Australian Dollar 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 Australian Dollar Term Notes referred to in
the Amended and Restated Credit Agreement dated as of August 22, 2005 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 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 Amended and
Restated Credit Agreement dated as of August 22, 2005 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 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 Amended and Restated
Credit Agreement dated as of August 22, 2005, 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 Amended and Restated Credit Agreement
dated as of August 22, 2005, 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:

 

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          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 Amended and Restated Credit Agreement dated as of August 22, 2005
Calculations as of                     ,      
 

                    A.    
Total Senior Funded Debt to EBITDA
               
 
               
1. Total Funded Debt
  $                          
 
             
 
               
2. Subordinated Debt
  $            
 
             
 
               
3. Line A1 minus A2 (Total Senior Funded Debt)
  $            
 
             
 
               
4. Net Income for past 4 quarters
  $            
 
             
 
               
5. Interest Expense for past 4 quarters
  $            
 
             
 
               
6. Income taxes for past 4 quarters
  $            
 
             
 
               
7. Depreciation and Amortization Expense for past 4 quarters
  $            
 
             
 
               
8. Costs related to labor strike
  $            
 
             
 
               
9. 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]
  $            
 
             
 
               
10. Sum of Lines A4, A5, A6, A7, A8 and A9 (“EBITDA”)
  $            
 
             
 
               
11. Ratio of Line A3 to A10
    ____:1.0          
 
               
12. Line A11 ratio must not exceed
    ____:1.0          
 
               
13. The Borrower is in compliance (circle yes or no)
  yes/no        
 
          B.    
Total Funded Debt Ratio (Section 8.22(a))
               
 
               
1. Total Funded Debt (Line A1 above)
  $            
 
             
 
               
2. EBITDA (Line A10 above)
  $            
 
             
 
               
3. Ratio of Line B1 to B2
    ____:1.0          
 
               
4. Line B3 ratio must not exceed
    ____:1.0          
 
               
5. The Borrower is in compliance (circle yes or no)
  yes/no

 

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                    C.    
Fixed Charge Coverage Ratio (Section 8.22(b))
               
 
               
1. EBITDA (Line A10 above)
  $            
 
             
 
               
2. Scheduled principal payments due within next 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 C2, C3, C4, and C5
  $            
 
             
 
               
7. Ratio of Line C1 to Line C6
    ____:1.0          
 
               
8. Line C7 ratio must not be less than
    ____:1.0          
 
               
9. The Borrower is in compliance (circle yes or no)
  yes/no        
 
          D.    
Leverage Ratio (Section 8.22(c))
               
 
               
1. Total Funded Debt (Line A1 above)
  $            
 
             
 
               
2. Net Worth
  $            
 
             
 
               
3. Ratio of Line D1 to the sum of Line D1 and D2
    ____:1.0          
 
               
4. Line D3 ratio must not be less than
    ____:1.0          
 
               
5. The Borrower is in compliance (circle yes or no)
  yes/no        
 
          E.    
Capital Expenditures (Section 8.22(d))
               
 
               
1. Year-to-date Capital Expenditures
  $            
 
             
 
               
2. Maximum permitted amount
  $            
 
             
 
               
3. 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 Amended and
Restated Credit Agreement dated as of August 22, 2005, 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 Amended and Restated Credit Agreement dated as of
August 22, 2005 (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, a ___% interest in and
to all of the Assignor’s rights and obligations under the Credit Agreement as of
the Effective Date (as defined below), including, without limitation, such
percentage interest in 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.
          2. The Assignor (i) represents and warrants that as of the date hereof
(A) its Revolving Credit Commitment is $___, its U.S. Dollar Term Loan
Commitment is $___and its Australian Dollar Term Loan Commitment is $___,
(B) the aggregate outstanding U.S. Dollar Equivalent principal amount of Loans
made by it under the Credit Agreement that have not been repaid is $___($___of
Revolving Loan, $___of U.S. Dollar Term Loans and $___of Australian Dollar Term
Loans) and a description of the interest rates and interest periods of such
Loans is attached as Annex 1 hereto, and (C) the aggregate principal amount of
Assignor’s Revolver Percentage of outstanding L/C Obligations is $___;
(ii) 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; (iii) 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 (iv) 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.

 

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          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 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.

-2-

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          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.
          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

Principal Amount   Type of Loan   Interest Rate   Maturity Date