Exhibit 10.2

Execution Version

 

 

DELAYED DRAW TERM LOAN CREDIT AGREEMENT

DATED AS OF AUGUST 1, 2014

AMONG

PENFORD CORPORATION,

THE GUARANTORS FROM TIME TO TIME PARTY HERETO,

THE LENDERS FROM TIME TO TIME PARTY HERETO,

AND

COÖPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A.,

“RABOBANK NEDERLAND,” NEW YORK BRANCH,

as Administrative Agent,

 

 

 

COÖPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., “RABOBANK NEDERLAND,”

NEW YORK BRANCH,

as Sole Lead Arranger and Sole Book Runner

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TABLE OF CONTENTS

 

SECTION   HEADING    PAGE  

SECTION 1.

  THE CREDIT FACILITIES      1   

Section 1.1.

  Delayed Draw Term Loan Commitments      1   

Section 1.2.

  [Intentionally Omitted]      1   

Section 1.3.

  Applicable Interest Rates      1   

Section 1.4.

  Minimum Borrowing Amounts      2   

Section 1.5.

  Manner of Borrowing Loans and Designating Applicable Interest Rates      2   

Section 1.6.

  Interest Periods      4   

Section 1.7.

  Maturity of Loans      5   

Section 1.8.

  Prepayments      5   

Section 1.9.

  Default Rate      6   

Section 1.10.

  The Notes      6   

Section 1.11.

  Funding Indemnity      6   

Section 1.12.

  [Intentionally Omitted.]      7   

Section 1.13.

  Substitution of Lenders      7   

Section 1.14.

  [Intentionally Omitted]      8   

Section 1.15.

  Defaulting Lenders      8   

SECTION 2.

  FEES      9   

Section 2.1.

  Fees      9   

SECTION 3.

  PLACE AND APPLICATION OF PAYMENTS      10   

Section 3.1.

  Place and Application of Payments      10   

Section 3.2.

  Account Debit      11   

SECTION 4.

  GUARANTIES AND COLLATERAL      11   

Section 4.1.

  Guaranties      11   

Section 4.2.

  Collateral      11   

Section 4.3.

  Liens on Real Property      12   

Section 4.4.

  Further Assurances      12   

Section 4.5.

  Operating Accounts      13   

SECTION 5.

  DEFINITIONS; INTERPRETATION      13   

Section 5.1.

  Definitions      13   

Section 5.2.

  Interpretation      32   

Section 5.3.

  Change in Accounting Principles      32   

 

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SECTION 6.

  REPRESENTATIONS AND WARRANTIES      33   

Section 6.1.

  Organization and Qualification      33   

Section 6.2.

  Subsidiaries      33   

Section 6.3.

  Authority and Validity of Obligations      33   

Section 6.4.

  Use of Proceeds; Margin Stock      34   

Section 6.5.

  Financial Reports      34   

Section 6.6.

  No Material Adverse Change      35   

Section 6.7.

  Full Disclosure      35   

Section 6.8.

  Trademarks, Franchises, and Licenses      35   

Section 6.9.

  Governmental Authority and Licensing      35   

Section 6.10.

  Good Title      35   

Section 6.11.

  Litigation and Other Controversies      35   

Section 6.12.

  Taxes      36   

Section 6.13.

  Approvals      36   

Section 6.14.

  Affiliate Transactions      36   

Section 6.15.

  Investment Company      36   

Section 6.16.

  ERISA      36   

Section 6.17.

  Compliance with Laws      36   

Section 6.18.

  Other Agreements      38   

Section 6.19.

  Solvency      38   

Section 6.20.

  No Default      38   

Section 6.21.

  AML Laws and Anti-Corruption Laws      38   

SECTION 7.

  CONDITIONS PRECEDENT      40   

Section 7.1.

  All Credit Events      40   

Section 7.2.

  Closing Date      40   

SECTION 8.

  COVENANTS      44   

Section 8.1.

  Maintenance of Business      44   

Section 8.2.

  Maintenance of Properties      44   

Section 8.3.

  Taxes and Assessments      44   

Section 8.4.

  Insurance      44   

Section 8.5.

  Financial Reports      45   

Section 8.6.

  Inspection      47   

Section 8.7.

  Borrowings and Guaranties      47   

Section 8.8.

  Liens      48   

Section 8.9.

  Investments, Acquisitions, Loans and Advances      49   

Section 8.10.

  Mergers, Consolidations and Sales      51   

Section 8.11.

  Maintenance of Subsidiaries      51   

Section 8.12.

  Dividends and Certain Other Restricted Payments      51   

Section 8.13.

  ERISA      52   

Section 8.14.

  Compliance with Laws      52   

Section 8.15.

  Burdensome Contracts With Affiliates      54   

Section 8.16.

  No Changes in Fiscal Year      54   

Section 8.17.

  Formation of Subsidiaries      54   

Section 8.18.

  Change in the Nature of Business      54   

 

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Section 8.19.

  Use of Proceeds      54   

Section 8.20.

  No Restrictions      54   

Section 8.21.

  Subordinated Debt; First Lien Loans      55   

Section 8.22.

  Financial Covenants      55   

Section 8.23.

  Compliance with AML Laws and Anti-Corruption Laws      55   

SECTION 9.

  EVENTS OF DEFAULT AND REMEDIES      56   

Section 9.1.

  Events of Default      56   

Section 9.2.

  Non-Bankruptcy Defaults      58   

Section 9.3.

  Bankruptcy Defaults      58   

Section 9.4.

  [Intentionally Omitted]      59   

Section 9.5.

  Notice of Default      59   

Section 9.6.

  Expenses      59   

Section 9.7.

  Right to Cure      59   

SECTION 10.

  CHANGE IN CIRCUMSTANCES      60   

Section 10.1.

  Change of Law      60   

Section 10.2.

  Unavailability of Deposits or Inability to Ascertain, or Inadequacy of, LIBOR
     60   

Section 10.3.

  Increased Cost and Reduced Return      60   

Section 10.4.

  Lending Offices      61   

Section 10.5.

  Discretion of Lender as to Manner of Funding      62   

SECTION 11.

  THE ADMINISTRATIVE AGENT      62   

Section 11.1.

  Appointment and Authorization of Administrative Agent      62   

Section 11.2.

  Administrative Agent and its Affiliates      62   

Section 11.3.

  Action by Administrative Agent      62   

Section 11.4.

  Consultation with Experts      63   

Section 11.5.

  Liability of Administrative Agent; Credit Decision      63   

Section 11.6.

  Indemnity      64   

Section 11.7.

  Resignation of Administrative Agent and Successor Administrative Agent      64
  

Section 11.8.

  Delegation of Duties      65   

Section 11.9.

  [Intentionally Omitted]      65   

Section 11.10.

  Designation of Additional Agents      65   

Section 11.11.

  Authorization to Release or Subordinate or Limit Liens      65   

Section 11.12.

  Authorization to Enter into, and Enforcement of, the Collateral Documents     
66   

Section 11.13.

  Administrative Agent May File Proofs of Claim      67   

 

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SECTION 12.

  THE GUARANTEES      67   

Section 12.1.

  The Guarantees      67   

Section 12.2.

  Guarantee Unconditional      68   

Section 12.3.

  Discharge Only upon Full Satisfaction; Reinstatement in Certain Circumstances
     69   

Section 12.4.

  Subrogation      69   

Section 12.5.

  Waivers      69   

Section 12.6.

  Limit on Recovery      69   

Section 12.7.

  Stay of Acceleration      69   

Section 12.8.

  Benefit to Guarantors      70   

Section 12.9.

  Guarantor Covenants      70   

SECTION 13.

  MISCELLANEOUS      70   

Section 13.1.

  Taxes      70   

Section 13.2.

  No Waiver, Cumulative Remedies      74   

Section 13.3.

  Non-Business Days      74   

Section 13.4.

  Documentary Taxes      75   

Section 13.5.

  Survival of Representations      75   

Section 13.6.

  Survival of Indemnities      75   

Section 13.7.

  Sharing of Set-Off      75   

Section 13.8.

  Notices      75   

Section 13.9.

  Counterparts      76   

Section 13.10.

  Successors and Assigns      77   

Section 13.11.

  Participants      77   

Section 13.12.

  Assignments      78   

Section 13.13.

  Amendments      80   

Section 13.14.

  Headings      80   

Section 13.15.

  Costs and Expenses; Indemnification      80   

Section 13.16.

  Set-off      81   

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.

  Electronic Communications; Platform      83   

 

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EXHIBIT B    —    Notice of Borrowing

EXHIBIT C

   —    Notice of Continuation/Conversion

EXHIBIT D

   —    Delayed Draw Term Note

EXHIBIT E

   —    Compliance Certificate

EXHIBIT F

   —    Additional Guarantor Supplement

EXHIBIT G

   —    Assignment and Acceptance

EXHIBIT H

   —    Opinion of Counsel

EXHIBIT 13.1-1

   —    U.S. Tax Compliance Certificate

EXHIBIT 13.1-2

   —    U.S. Tax Compliance Certificate

EXHIBIT 13.1-3

   —    U.S. Tax Compliance Certificate

EXHIBIT 13.1-4

   —    U.S. Tax Compliance Certificate

SCHEDULE 1

   —    Commitments

SCHEDULE 6.2

   —    Subsidiaries

 

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DELAYED DRAW TERM LOAN CREDIT AGREEMENT

This Delayed Draw Term Loan Credit Agreement is entered into as of August 1,
2014, 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 Coöperatieve Centrale
Raiffeisen-Boerenleenbank B.A., “Rabobank Nederland,” New York Branch
(“Rabobank”), 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 STATEMENTS

WHEREAS, the Borrower has requested that the Lenders make available for the
purposes specified in this Agreement a term loan credit facility; and

WHEREAS, the Lenders are willing to make available to the Borrower such term
loan credit facility upon the terms and subject to the conditions set forth
herein;

NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, the parties hereto hereby agree as follows:

SECTION 1. THE CREDIT FACILITIES.

Section 1.1. Delayed Draw Term Loan Commitments. Subject to the terms and
conditions hereof, each Lender, by its acceptance hereof, severally agrees to
make a loan or loans (individually a “Delayed Draw Term Loan” and collectively
for all the Lenders the “Delayed Draw Term Loans”) in U.S. Dollars to the
Borrower from time to time up to the amount of such Lender’s Delayed Draw Term
Loan Commitment during the Delayed Draw Term Loan Availability Period; provided,
that (a) the aggregate original principal amount of all Delayed Draw Term Loans
shall not exceed the Delayed Draw Term Loan Commitment and (b) the aggregate
original principal amount of all Delayed Draw Term Loans of any Lender shall not
exceed such Lender’s Delayed Draw Term Loan Commitment. Each Borrowing of
Delayed Draw Term Loans shall be made ratably by the Lenders in proportion to
their respective Delayed Draw Term Loan Percentages; provided, that the Borrower
shall be limited to six (6) Borrowings during the Delayed Draw Term Loan
Availability Period. As provided in Section 1.5(a) hereof, the Borrower may
elect that the Delayed Draw Term Loans be outstanding as Base Rate Loans or
Eurodollar Loans. No amount repaid or prepaid on any Delayed Draw Term Loan may
be borrowed again.

Section 1.2. [Intentionally Omitted]

Section 1.3. 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 360 days and actual days
elapsed) on the unpaid principal amount thereof from the date such Loan is
advanced or continued, or created by conversion from a Eurodollar 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 quarterly in arrears on the second Business Day immediately following
each Quarterly Date and at maturity (whether by acceleration or otherwise).

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(b) Eurodollar Loans. Each Eurodollar 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.

(c) Rate Determinations. The Administrative Agent shall determine each interest
rate applicable to the Loans hereunder, and its determination thereof shall be
conclusive and binding except in the case of manifest error.

Section 1.4. Minimum Borrowing Amounts. Each Borrowing of Base Rate Loans 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 Eurodollar Loans advanced,
continued or converted shall be in an amount equal to $500,000 or such greater
amount which is an integral multiple of $100,000. Without the Administrative
Agent’s consent, there shall not be more than six (6) Borrowings of Eurodollar
Loans outstanding at any one time.

Section 1.5. 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: (i) 2:00 p.m. (New York, New York
time) at least 3 Business Days before the date on which the Borrower requests
the Lenders to advance a Borrowing of Eurodollar Loans, and (ii) 11:00 a.m. (New
York, New York time) 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 the
minimum amount requirement set forth in Section 1.4 for each outstanding
Borrowing, a portion thereof, as follows: (i) if such Borrowing is of Eurodollar
Loans, on the last day of the Interest Period applicable thereto, the Borrower
may continue part or all of such Borrowing as Eurodollar Loans or 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 Eurodollar 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 Eurodollar Loans for an additional Interest Period or of the
conversion of part or all of a Borrowing of Base Rate Loans into Eurodollar
Loans must be given by no later than 2:00 p.m. (New York, New York 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

 

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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 Eurodollar Loans, the
Interest Period applicable thereto (and the last day thereof). 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 Section 1.5(a) above and, if such notice requests the Lenders to
make Eurodollar 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. Each Lender shall, subject to Section 7 hereof, make its Loan in
accordance with Section 1.5 hereof.

(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 1.5(a) that the Borrower intends to convert such Borrowing,
subject to Section 7.1 hereof, into a Borrowing of Eurodollar Loans or such
Borrowing is prepaid in accordance with Section 1.8(a). If the Borrower fails to
give notice pursuant to Section 1.5(a) above of the continuation or conversion
of any outstanding principal amount of a Borrowing of Eurodollar Loans before
the last day of its then current Interest Period within the period required by
Section 1.5(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 Eurodollar Loans would not be satisfied, and such Borrowing is not
prepaid in accordance with Section 1.8(a), such Borrowing shall automatically be
converted into a Borrowing of Base Rate Loans. If no Interest Period is
specified in any such notice with respect to any conversion to or continuation
of a Eurodollar Loan, the Borrower shall be deemed to have selected an Interest
Period of one month’s duration.

(d) Disbursement of Loans. Not later than 2:00 p.m. (New York, New York time) on
the date of any requested advance of a new Borrowing, 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 New York, New York. The Administrative Agent shall make
the proceeds of each new Borrowing available to the Borrower at the
Administrative Agent’s principal office in New York, New York, in the type of
funds received by the Administrative Agent from the Lenders.

 

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(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. (New York, New York 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 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. 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 1.11 hereof so that the Borrower
will have no liability under such Section with respect to such payment. The
failure of any Lender to make the payment to be made by it as part of any
Borrowing shall not relieve any other Lender of its obligation, if any,
hereunder to make its payment on the date of such Borrowing, but no Lender shall
be responsible for the failure of any other Lender to make the payment to be
made by such other Lender on the date of any Borrowing.

Section 1.6. Interest Periods. As provided in Section 1.5(a) hereof, at the time
of each request to advance, continue or create by conversion a Borrowing of
Eurodollar 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 Business Day of the calendar quarter (i.e., the last Business Day of March,
June, September or December, as applicable) in which such Borrowing is advanced,
continued or created by conversion (or on the last Business Day of the following
calendar quarter if such Loan is advanced, continued or created by conversion on
the last Business Day of a calendar quarter) and (b) in the case of a Eurodollar
Loan, 1, 2, 3 or 6 months thereafter; provided, however, that:

(i) any Interest Period for a Borrowing of Delayed Draw Term Loans consisting of
Base Rate Loans that otherwise would end after the Delayed Draw Termination Date
shall end on the Delayed Draw Termination Date;

(ii) no Interest Period with respect to any portion of the Delayed Draw Term
Loans shall extend beyond the Delayed Draw Termination Date;

 

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(iii) whenever the last day of any Interest Period for Eurodollar Loans 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
Eurodollar Loans to occur in the following calendar month, the last day of such
Interest Period shall be the immediately preceding Business Day; and

(iv) for purposes of determining an Interest Period for a Borrowing of
Eurodollar 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 1.7. Maturity of Loans. Each Loan, both for principal and interest not
sooner paid, shall mature and become due and payable by the Borrower on the
Delayed Draw Termination Date.

Section 1.8. Prepayments. (a) Optional. Subject to any restrictions with respect
thereto set forth in the Intercreditor Agreement, the Borrower shall have the
privilege of prepaying without premium or penalty (except as set forth in
Section 1.11 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 Eurodollar Loans, in an amount not less than $500,000 or
any greater amount that is an integral multiple of $100,000, and (iii) in each
case, in an amount such that the minimum amount required for a Borrowing
pursuant to Section 1.4 hereof remains outstanding) any Borrowing at any time
with up to 50% of the net proceeds of an equity issuance by the Borrower so long
as after giving pro forma effect to such prepayment measured as of the last day
of the immediately preceding fiscal quarter for which financial statements have
been delivered to Administrative Agent (and as demonstrated in an officer’s
certificate delivered to the Administrative Agent), the Total Leverage Ratio is
less than 3.75 to 1.00; provided, that, if such prepayment is with respect to a
Borrowing of Eurodollar Loans, the Borrower has delivered three (3) Business
Days’ prior notice to the Administrative Agent or, in the case of a prepayment
of a Borrowing of Base Rate Loans, the Borrower has delivered notice to the
Administrative Agent no later than 2:00 p.m. (New York, New York time) on the
date of such prepayment. Each such prepayment shall be made by the payment of
the principal amount to be prepaid and, in the case of any Eurodollar Loans
accrued interest thereon to the date fixed for prepayment plus any amounts due
the Lenders under Section 1.11.

(b) [Intentionally Omitted].

(c) The Administrative Agent will promptly advise each Lender of any notice of
prepayment it receives from the Borrower.

(d) [Intentionally Omitted].

 

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Section 1.9. Default Rate. Notwithstanding anything to the contrary contained in
Section 1.3 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 at a rate
per annum equal to:

(a) for any Base Rate Loan, the sum of 2.0% plus the Applicable Margin plus the
Base Rate from time to time in effect; and

(b) for any Eurodollar Loan, 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;

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 1.10. The Notes. (a) The Delayed Draw Term 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 hereto. Each such promissory note is
hereinafter referred to as a “Delayed Draw Term Note” and collectively such
promissory notes are referred to as the “Delayed Draw Term Notes.”

(b) 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 Eurodollar Loan,
the Interest Period, the currency in which such Loan is denominated, and the
interest rate applicable thereto. The record thereof, whether shown on such
books and records of a Lender or on a schedule to the relevant Note, shall be
prima facie evidence as to all such matters; provided, however, that the failure
of any Lender to record any of the foregoing or any error in any such record
shall not limit or otherwise affect the obligation of the Borrower to repay all
Loans made to it hereunder together with accrued interest thereon. At the
request of any Lender and upon such Lender tendering to the Borrower the
appropriate Note to be replaced, the Borrower shall furnish a new Note to such
Lender to replace any outstanding Note, and at such time the first notation
appearing on a schedule on the reverse side of, or attached to, such Note shall
set forth the aggregate unpaid principal amount of all Loans, if any, then
outstanding thereon.

Section 1.11. 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 Eurodollar Loan or
the relending or reinvesting of such deposits or amounts paid or prepaid to such
Lender) as a result of:

 

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(a) any payment, prepayment or conversion of a Eurodollar Loan on a date other
than the last day of its Interest Period,

(b) any failure (because of a failure to meet the conditions of Section 7 or
otherwise) by the Borrower to borrow or continue a Eurodollar Loan, or to
convert a Base Rate Loan into a Eurodollar Loan on the date specified in a
notice given pursuant to Section 1.5(a) hereof,

(c) any failure by the Borrower to make any payment of principal on any
Eurodollar Loan when due (whether by acceleration or otherwise), or

(d) any acceleration of the maturity of a Eurodollar 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 1.12. [Intentionally Omitted.]

Section 1.13. 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) notice that any Lender is then a Defaulting Lender
(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 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 1.11 hereof as if the Loans owing to it were prepaid rather
than assigned) owed hereunder 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. If the Borrower
exercises its option hereunder to cause an assignment by any Affected Lender,
such Affected Lender shall, promptly after receipt of written notice of such
election, execute and deliver all documentation necessary to effectuate such
assignment in accordance with Section 13.12. In the event that an Affected
Lender does not comply with the requirements of the immediately preceding
sentence within five Business Days after receipt of such notice, such Affected
Lender hereby authorizes and directs the Administrative Agent to execute and
deliver such documentation as may be required to give effect to an assignment in
accordance with Section 13.12 on behalf of such Affected Lender and any such
documentation so executed by the Administrative Agent shall be effective for
purposes of documenting an assignment pursuant to Section 13.12.

 

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Section 1.14. [Intentionally Omitted].

Section 1.15. Defaulting Lenders.

(a) Defaulting Lender Adjustments. Notwithstanding anything to the contrary
contained in this Agreement, if any Lender becomes a Defaulting Lender, then,
until such time as such Lender is no longer a Defaulting Lender, to the extent
permitted by applicable law:

(i) Waivers and Amendments. Such Defaulting Lender’s right to approve or
disapprove any amendment, waiver or consent with respect to this Agreement shall
be restricted as set forth in the definition of “Required Lenders”.

(ii) Defaulting Lender Waterfall. Any payment of principal, interest, fees, or
other amounts received by Administrative Agent for the account of such
Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to
Section 9 or otherwise) or received by Administrative Agent from a Defaulting
Lender pursuant to Section 13.16 shall be applied at such time or times as may
be determined by Administrative Agent as follows: first, to the payment of any
amounts owing by such Defaulting Lender to Administrative Agent hereunder;
second, as Borrower may request (so long as no Default or Event of Default
exists), to the funding of any Delayed Draw Term Loan in respect of which such
Defaulting Lender has failed to fund its portion thereof as required by this
Agreement, as determined by Administrative Agent; third, if so determined by
Administrative Agent and Borrower, to be held in a Deposit Account controlled by
Administrative Agent and released pro rata in order to satisfy such Defaulting
Lender’s potential future funding obligations with respect to Delayed Draw Term
Loans remaining available under this Agreement; fourth, to the payment of any
amounts owing to the Lenders as a result of any judgment of a court of competent
jurisdiction obtained by any Lender against such Defaulting Lender as a result
of such Defaulting Lender’s breach of its obligations under this Agreement;
fifth, so long as no Default or Event of Default exists, to the payment of any
amounts owing to Borrower as a result of any judgment of a court of competent
jurisdiction obtained by Borrower against such Defaulting Lender as a result of
such Defaulting Lender’s breach of its obligations under this Agreement; and
sixth, to such Defaulting Lender or as otherwise directed by a court of
competent jurisdiction; provided that if (A) such payment is a payment of the
principal amount of any Delayed Draw Term Loans in respect of which such
Defaulting Lender has not fully funded its appropriate share, and (B) such
Delayed Draw Term Loans were made at a time when the conditions set forth in
Section 7.1 were satisfied or waived, such payment shall be applied solely to
pay the Delayed Draw Term Loans of all Non-Defaulting Lenders on a pro rata
basis prior to being applied to the payment of any Delayed Draw Term Loans of
such Defaulting Lender until such time as all Delayed Draw Term Loans are held
by the Lenders pro rata in accordance with their respective Commitments. Any
payments, prepayments or other amounts paid or payable to a Defaulting Lender
that are applied (or held) to pay amounts owed by a Defaulting Lender shall be
deemed paid to and redirected by such Defaulting Lender, and each Lender
irrevocably consents hereto.

 

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(iii) Certain Fees. No Defaulting Lender shall be entitled to receive any
commitment fee pursuant to Section 2.1(a) for any period during which that
Lender is a Defaulting Lender (and Borrower shall not be required to pay any
such fee that otherwise would have been required to have been paid to that
Defaulting Lender).

(b) Defaulting Lender Cure. If Borrower and Administrative Agent agree in
writing that a Lender is no longer a Defaulting Lender, Administrative Agent
will so notify the parties hereto, whereupon as of the effective date specified
in such notice and subject to any conditions set forth therein, that Lender
will, to the extent applicable, purchase at par that portion of outstanding
Loans of the other Lenders or take such other actions as Administrative Agent
may determine to be necessary to cause the Loans to be held pro rata by the
Lenders in accordance with the Delayed Draw Term Loan Commitments (without
giving effect to Section 1.15(a)(iv)), and reimburse each such Lender for any
costs of the type described in Section 1.11 incurred by any Lender as a result
of such purchase, whereupon such Lender will cease to be a Defaulting Lender;
provided that no adjustments will be made retroactively with respect to fees
accrued or payments made by or on behalf of Borrower while that Lender was a
Defaulting Lender; and provided, further, that except to the extent otherwise
expressly agreed by the affected parties, no change hereunder from Defaulting
Lender to Lender will constitute a waiver or release of any claim of any party
hereunder arising from that Lender’s having been a Defaulting Lender.

SECTION 2. FEES.

Section 2.1. Fees. (a) Delayed Draw Commitment Fee. The Borrower shall pay to
the Administrative Agent for the ratable account of the Lenders in accordance
with their Delayed Draw Term Loan Percentages a commitment fee during the
Delayed Draw Term Loan Availability Period 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 Delayed Draw Commitments.
Such commitment fee shall be payable quarterly in arrears on the second Business
Day following each Quarterly Date in each year (commencing on the first such
date occurring after the date hereof) and on the second Business Day after the
expiration of the Delayed Draw Term Loan Availability Period.

(b) 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 letter dated as of the Closing Date,
or as otherwise agreed to in writing between them.

 

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(c) Audit Fees. The Borrower shall pay to the Administrative Agent for its own
use and benefit reasonable 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 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 1:00 p.m. (New York, New York time) on
the due date thereof at the office of the Administrative Agent in New York, New
York (or such other location as the Administrative Agent may designate 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
in immediately available funds at the place of payment 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 any 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, 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 Lender to
the date such payment is made by such Lender, the Base Rate in effect for each
such day.

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
(subject to the Intercreditor Agreement):

(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);

 

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(b) second, 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;

(c) third, to the payment of principal of the Delayed Draw Term Loans;

(d) fourth, 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 to be allocated pro rata in accordance with the
aggregate unpaid amounts owing to each holder thereof;

(e) fifth, to the First Lien Agent to the extent required by the Intercreditor
Agreement; 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 or its Affiliates for the amounts from time to
time necessary to pay any then due Obligations; provided that the Borrower
acknowledges and agrees that the Administrative Agent shall not be under an
obligation to do so and the Administrative Agent shall not incur any liability
to the Borrower or any other Person for the Administrative Agent’s failure to do
so.

SECTION 4. GUARANTIES AND COLLATERAL.

Section 4.1. Guaranties. The payment and performance of the Obligations 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 shall be secured to the extent provided
herein and in the Collateral Documents 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, and (b) valid, perfected, and enforceable Liens on all
right, title, and interest of the Borrower and each Guarantor in all personal
property, fixtures, and to the extent provided in Section 4.3 hereof, real
estate, whether now owned or hereafter acquired or arising, and all proceeds
thereof; provided, however, that: (i) 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 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 $1,000,000 in the aggregate and Liens on
payroll, withholding tax, or tax trust or fiduciary 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
liabilities, payroll taxes or other wage

 

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and benefit liabilities, (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 $1,000,000 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 are not required to 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 $1,000,000 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 (or, to
the extent contemplated by the Intercreditor Agreement, to the First Lien Agent
for the benefit of the Secured Parties) and shall be a valid and perfected 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.

Section 4.3. Liens on Real Property. In the event that the Borrower or any
Guarantor owns or hereafter acquires any real property which, in the case of
hereafter acquired property (a) has a fair market value greater than $1,000,000,
or (b) is contiguous to the Borrower’s or such Guarantor’s operations and has a
fair market value greater than $500,000, the Borrower shall, or shall cause such
Guarantor to: (i) execute and deliver to the Administrative Agent a mortgage or
deed of trust in substantially the form of the Closing Date Mortgages (with such
modifications thereto as are necessary to comply with local law and custom and
are otherwise reasonably 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 Borrower’s
obligation to pay (or the applicable Guarantor’s obligation to pay, pursuant to
and in accordance with Section 12) the Obligations, (ii) pay all taxes, costs,
and expenses incurred by the Administrative Agent in recording such mortgage or
deed of trust, and (iii) supply to the Administrative Agent, at the Borrower’s
cost and expense, a survey, environmental report, hazard insurance policy,
appraisal report, flood hazard determination certificates (and, if applicable,
evidence of flood insurance that is in compliance with applicable law), and a
mortgagee’s policy of title insurance from First American Title Insurance
Company or such other title insurer as shall be acceptable to the Administrative
Agent insuring the validity of such mortgage or deed of trust and its status as
a second Lien (subject to Liens permitted by this Agreement) on the real
property encumbered thereby and otherwise in form and substance acceptable to
Administrative Agent and such other instruments, documents, certificates, and
opinions reasonably required by the Administrative Agent in connection
therewith. The Lenders acknowledge that Carolina Starches, LLC and Penford
Carolina, LLC shall not be required to grant mortgages to the Administrative
Agent in respect of the real property owned and/or leased by them on the Closing
Date.

 

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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 4.5. Operating Accounts. The Borrower shall maintain all of its Deposit
Accounts with financial institutions selected by the Borrower and acceptable to
the Administrative Agent which financial institutions have entered, or will
enter, into acceptable account control agreements with the Administrative Agent
(or the Administrative Agent and the First Lien Agent) relating to such accounts
to the extent required by Section 4.2 hereof.

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 after the date hereof.

“Acquisition” means any transaction or series of related transactions for the
purpose of or resulting, directly or indirectly, in (a) the acquisition of all
or substantially all of the assets of a Person, or of any business or division
of a Person, (b) the acquisition of in excess of 50% of the capital stock,
partnership interests, membership interests or equity of any Person (other than
a Person that is a Subsidiary), or otherwise causing any Person to become a
Subsidiary, or (c) a merger or consolidation or any other combination with
another Person (other than a Person that is a Subsidiary) provided that the
Borrower or the Subsidiary is the surviving entity.

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

 

                                Adjusted LIBOR   =    LIBOR        
        1 - Eurocurrency Reserve Percentage       

“Administrative Agent” means Rabobank and any successor pursuant to Section 11.7
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

 

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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; provided further, however, that the term
“Affiliate” shall exclude in any event all Related Parties.

“Affiliated Parties” means, with respect to any Person, such Person’s Affiliates
and the partners, directors, officers, employees, agents, trustees,
administrators, managers, advisors, attorneys-in-fact, and representatives of
such Person and of such Person’s Affiliates.

“Agreement” means this Delayed Draw Term Loan Credit Agreement, as the same may
be amended, modified, restated or supplemented from time to time pursuant to the
terms hereof.

“AML Laws” is defined in Section 6.21(a) hereof.

“Anti-Corruption Laws” is defined in Section 6.21(e) hereof.

“Applicable Margin” means, with respect to Loans and the commitment 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 schedules:

 

LEVEL   

TOTAL LEVERAGE

RATIO FOR SUCH

PRICING DATE

  

APPLICABLE MARGIN

FOR

BASE RATE LOANS

SHALL BE:

   

APPLICABLE

MARGIN FOR

EURODOLLAR
LOANS SHALL BE:

   

APPLICABLE

MARGIN

FOR DELAYED

DRAW

COMMITMENT FEE

SHALL BE:

 

IV

   Greater than 3.75 to 1.0      5.00 %      7.00 %      0.90 % 

III

   Less than or equal to 3.75 to 1.0, but greater than 3.00 to 1.0      4.00 % 
    6.00 %      0.80 % 

II

   Less than or equal to 3.00 to 1.0, but greater than 2.25 to 1.0      3.00 % 
    5.00 %      0.70 % 

I

   Less than or equal to 2.25      2.00 %      4.00 %      0.60 % 

For purposes hereof, the term “Pricing Date” means, for any fiscal quarter of
the Borrower ending on or after August 31, 2014, 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 Leverage 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

 

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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 Leverage Ratio
shall be deemed to be greater than 3.75 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.

“Approved Fund” means any Fund that is administered or managed by (a) a Lender,
(b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.

“Assignment and Acceptance” is defined in Section 13.12(a)(iv) 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, for any day, the highest of (a) the Prime Rate at such time,
(b) 1/2 of 1% in excess of the Federal Funds Rate at such time and (c) the LIBOR
Index Rate for a Eurodollar Loan with a one-month Interest Period commencing at
such time plus 1.0%. For the purposes of this definition, the LIBOR Index Rate
shall be determined using the LIBOR Index Rate as otherwise determined by
Administrative Agent in accordance with the definition of LIBOR Index Rate,
except that (x) if a given day is a Business Day, such determination shall be
made on such day (rather than two Business Days prior to the commencement of an
Interest Period) or (y) if a given day is not a Business Day, the LIBOR Index
Rate for such day shall be the rate determined by Administrative Agent pursuant
to preceding clause (x) for the most recent Business Day preceding such day.

“Base Rate Loan” means a Loan bearing interest at a rate specified in
Section 1.3(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 on a single date and, in the case of Eurodollar Loans, for a single
Interest Period. Borrowings of Loans are made and maintained ratably from each
of the Lenders according to their Delayed Draw Term Loan Percentages. 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 1.5(a) hereof.

 

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“Business Day” means any day (other than a Saturday or Sunday) on which banks
are not authorized or required to close in New York, New York or Englewood,
Colorado, and, if the applicable Business Day relates to the advance or
continuation of, or conversion into, or payment of a Eurodollar Loan, on which
banks are open for dealing in U.S. Dollar deposits in the interbank market in
London, England.

“Capital Expenditures” means, with respect to any Person for any period, the
aggregate amount of all expenditures (whether paid in cash or accrued as a
liability) by such Person during that period for the acquisition or leasing
(pursuant to a Capital Lease) of fixed or capital assets or additions to
property, plant, or equipment (including replacements, capitalized repairs, and
improvements) which should be capitalized on the balance sheet of such Person in
accordance with GAAP.

“Capital Lease” means any lease of Property, which in accordance with GAAP is
required to be capitalized on the balance sheet of the lessee.

“Capitalized Lease Obligation” means, for any Person, the amount of the
liability shown on the balance sheet of such Person in respect of a Capital
Lease determined in accordance with GAAP.

“CERCLA” means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, 42 U.S.C. §§9601 et seq., and any future
amendments.

“Change in Law” means the occurrence, after the date of this Agreement, of any
of the following: (a) the adoption or taking effect of any law, rule, regulation
or treaty, (b) any change in any law, rule, regulation or treaty or in the
administration, interpretation, implementation or application thereof by any
Governmental Authority, or (c) the making or issuance of any request, rule,
guideline or directive (whether or not having the force of law) by any
Governmental Authority; provided that notwithstanding anything herein to the
contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and
all requests, rules, regulations, guidelines or directives thereunder or issued
in connection therewith shall be deemed to be a “Change in Law”, regardless of
the date enacted, adopted or issued and (y) all requests, rules, guidelines or
directives promulgated by the Bank for International Settlements, the Basel
Committee on Banking Supervision (or any successor or similar authority) or the
United States or foreign regulatory authorities, in each case pursuant to Basel
III, shall in each case be deemed to be a “Change in Law”, regardless of the
date enacted, adopted or issued.

“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

 

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Closing Date (together with any new or replacement directors whose initial
nomination for election was approved by either a majority of the Borrower’s
shareholders or 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 (i) any First Lien Related
Documents or (ii) any other agreement or indenture relating to any issue of
Indebtedness for Borrowed Money having an aggregate principal amount in excess
of $5,750,000 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.

“Closing Date Mortgaged Properties” means, collectively, the following Premises,
each of which is owned or leased by the Borrower or a Domestic Subsidiary as of
the Closing Date: (i) Premises commonly known as 1088 W. Sunnyside Road, Idaho
Falls, Idaho, (ii) Premises commonly known as 1001 1st Street S.W., Cedar
Rapids, Iowa, (iii) Premises commonly known as 216 University Drive, Richland,
Washington and (iv) Premises commonly known as 3100 Willow Drive, Plover,
Wisconsin and 10995 State Highway 54 East, Wisconsin Rapids, Wisconsin.

“Closing Date Mortgages” means, collectively, each Second Lien Mortgage,
Security Agreement, Assignment of Rents and Fixture Filing, each Second Lien
Deed of Trust, Security Agreement, Assignment of Rents and Fixture Filing, each
Second Lien Leasehold Mortgage, Security Agreement, Assignment of Rents and
Fixture Filing, and each Second Lien Leasehold Deed of Trust, Security
Agreement, Assignment of Rents and Fixture Filing by the Borrower or the
relevant Domestic Subsidiary in favor of the Administrative Agent (or a security
trustee therefor) and encumbering a Closing Date Mortgaged Property.

“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 over which a Lien has been or is intended to be granted to the
Administrative Agent, or any security trustee therefore, pursuant to any of the
Collateral Documents.

“Collateral Documents” means the Mortgages, the Security Agreement 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 Delayed Draw Term Loan Commitment.

“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.

“Credit Event” means the advancing of any Loan, or the continuation of or
conversion into a Eurodollar Loan.

 

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“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.

“Defaulting Lender” means, subject to Section 1.15(b), any Lender that (a) has
failed to (i) fund all or any portion of its Loans within two Business Days of
the date such Loans were required to be funded hereunder unless such Lender
notifies the Administrative Agent and the Borrower in writing that such failure
is the result of such Lender’s determination that one or more conditions
precedent to funding (each of which conditions precedent, together with any
applicable default, shall be specifically identified in such writing) has not
been satisfied, or (ii) pay to the Administrative Agent or any other Lender any
other amount required to be paid by it hereunder within two Business Days of the
date when due, (b) has notified the Borrower or the Administrative Agent in
writing that it does not intend to comply with its funding obligations
hereunder, or has made a public statement to that effect (unless such writing or
public statement relates to such Lender’s obligation to fund a Loan hereunder
and states that such position is based on such Lender’s determination that a
condition precedent to funding (which condition precedent, together with any
applicable default, shall be specifically identified in such writing or public
statement) cannot be satisfied), (c) has failed, within three Business Days
after written request by the Administrative Agent or the Borrower, to confirm in
writing to the Administrative Agent and the Borrower that it will comply with
its prospective funding obligations hereunder (provided that such Lender shall
cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such
written confirmation by the Administrative Agent and the Borrower), or (d) has,
or has a direct or indirect parent company that has, (i) become the subject of a
proceeding under the United States Bankruptcy Code or similar debtor relief
laws, or (ii) had appointed for it a receiver, custodian, conservator, trustee,
administrator, assignee for the benefit of creditors or similar Person charged
with reorganization or liquidation of its business or assets, including the
Federal Deposit Insurance Corporation or any other state or federal regulatory
authority acting in such a capacity; provided that a Lender shall not be a
Defaulting Lender solely by virtue of the ownership or acquisition of any equity
interest in that Lender or any direct or indirect parent company thereof by a
Governmental Authority so long as such ownership interest does not result in or
provide such Lender with immunity from the jurisdiction of courts within the
United States or from the enforcement of judgments or writs of attachment on its
assets or permit such Lender (or such Governmental Authority) to reject,
repudiate, disavow or disaffirm any contracts or agreements made with such
Lender. Any determination by the Administrative Agent that a Lender is a
Defaulting Lender under clauses (a) through (d) above shall be conclusive and
binding absent manifest error, and such Lender shall be deemed to be a
Defaulting Lender upon delivery of written notice of such determination to the
Borrower and each Lender.

“Delayed Draw Termination Date” means July 31, 2020, or such earlier date on
which the Delayed Draw Term Loan Commitments are terminated in whole pursuant to
Section 9.2 or 9.3 hereof.

“Delayed Draw Term Loan” is defined in Section 1.1 hereof and, as so defined,
includes a Base Rate Loan or a Eurodollar Loan, each of which is a “type” of
Delayed Draw Term Loan hereunder.

 

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“Delayed Draw Term Loan Availability Period” means the period from and including
the Closing Date and ending on the earliest of the following: (i) the first day
on which the aggregate amount of the Delayed Draw Term Loans advanced hereunder
is equal to $25,000,000, (ii) the date that is the eighteen (18) month
anniversary of the Closing Date, and (iii) such earlier date on which the
Delayed Draw Term Loan Commitments are terminated in whole pursuant to
Section 9.2 or 9.3 hereof.

“Delayed Draw Term Loan Commitment” means, as to any Lender, the obligation of
such Lender to make Delayed Draw Term Loans hereunder during the Delayed Draw
Term Loan Availability Period in an aggregate principal 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, or in the Assignment and
Acceptance pursuant to which such Lender becomes a party hereto. The Borrower
and the Lenders acknowledge and agree that the Delayed Draw Term Loan
Commitments of the Lenders aggregate $25,000,000 on the date hereof.

“Delayed Draw Term Loan Credit” means the credit facility for making Delayed
Draw Term Loans described in Sections 1.1 hereof.

“Delayed Draw Term Loan Percentage” means, for each Lender, the percentage of
the Delayed Draw Term Loan Commitments represented by such Lender’s Delayed Draw
Term Loan Commitment, or if after the Delayed Draw Term Loan Availability
Period, the percentage held by such Lender of the aggregate outstanding amount
of all Delayed Draw Term Loans.

“Delayed Draw Term Note” is defined in Section 1.10 hereof.

“Deposit Account” means a demand, time, savings, passbook, or similar account
maintained with an organization engaged in the business of banking, including
savings banks, savings and loan associations, credit unions, and trust
companies. Neither investment property nor accounts evidenced by an instrument
shall constitute a Deposit Account for purposes of this Agreement.

“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 from continuing
operations for such period plus (a) the sum of all amounts deducted in arriving
at such Net Income amount in respect of (i) Interest Expense for such period,
(ii) federal, state, and local income taxes for such period, and
(iii) depreciation of fixed assets and amortization of intangible assets for
such period, plus (b) cash distributions received from Joint Ventures not
otherwise included in Net Income, plus (minus) (c) any non-cash losses (gains)
but only to the extent such losses (gains) have not become a cash loss (or
gain), plus (d) non-cash stock compensation charges incurred in such period,
plus (minus) (e) any extraordinary or nonrecurring losses (gains) (including any
cash losses related to the unwinding of existing interest rate hedging
arrangements), plus (f) the aggregate amount of all severance charges incurred
by the Borrower in such period, provided the aggregate amount of such charges
that are added to EBITDA pursuant to this clause (f) shall not exceed $2,500,000
during the term of this Agreement, plus (g) the amount of all non- cash charges
incurred as a result of the accounting treatment of interest rate hedging
arrangements, minus (h) the amount of all non-cash gains resulting from the
accounting treatment of interest rate hedging arrangements, in each case
relating solely to continuing operations.

 

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“Eligible Assignee” means (a) a Lender, (b) an Affiliate of a Lender, (c) an
Approved Fund, and (d) any other Person (other than a natural person) approved
by (i) the Administrative Agent and (ii) unless an Event of Default has occurred
and is continuing, the Borrower (each such approval not to be unreasonably
withheld or delayed); provided that notwithstanding the foregoing, “Eligible
Assignee” shall not include the Borrower or any Guarantor or any of the
Borrower’s or such Guarantor’s Affiliates, Joint Ventures or Subsidiaries or, so
long as no Event of Default shall have occurred and be continuing, any of their
respective suppliers, customers or competitors; provided further that
Administrative Agent shall be under no duty to monitor or otherwise make any
determinations with respect to the foregoing proviso and the Administrative
Agent shall not be liable for any losses, damages, penalties, claims, demands,
actions, judgments, suits, costs, expenses and disbursements of any kind or
nature whatsoever incurred or suffered by any Person in connection with any
compliance or non-compliance with the foregoing proviso.

“Eligible Line of Business” means any business in which the Borrower and any
Subsidiary are engaged as of the date of this Agreement or any business which is
based upon or is an extension of such a business, including, without limitation,
any business that manufactures or markets (i) ingredients or ingredient systems
developed from starch or other form of carbohydrate, (ii) human or animal food,
(iii) ethanol or any other type of biofuel, or (iv) any other type of material
or chemical developed primarily from natural or renewable sources.

“Environmental Claim” means any investigation, notice, violation, demand,
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 a law relating to 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 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 by a recognized and legally authorized
entity.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
or any successor statute thereto.

“Eurodollar Loan” means a Loan bearing interest at the rate specified in
Section 1.3(b) hereof.

 

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“Eurocurrency Reserve Percentage” means, with respect to any Borrowing, 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 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 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.

“Excluded Taxes” means any of the following taxes imposed on or with respect to
a Recipient or required to be withheld or deducted from a payment to a
Recipient, (a) taxes imposed on or measured by net income (however denominated),
franchise taxes, and branch profits taxes, in each case, (i) imposed as a result
of such Recipient being organized under the laws of, or having its principal
office or, in the case of any Lender, its applicable lending office located in,
the jurisdiction imposing such tax (or any political subdivision thereof) or
(ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal
withholding taxes imposed on amounts payable to or for the account of such
Lender with respect to an applicable interest in a Loan or Commitment pursuant
to a law in effect on the date on which (i) such Lender acquires such interest
in the Loan or Commitment (other than pursuant to an assignment request by
Borrower under Section 1.13) or (ii) such Lender changes its lending office,
except in each case to the extent that, pursuant to Section 13.1, amounts with
respect to such taxes were payable either to such Lender’s assignor immediately
before such Lender became a party hereto or to such Lender immediately before it
changed its lending office, (c) taxes attributable to such Recipient’s failure
to comply with Section 13.1(g), and (d) any U.S. federal withholding taxes
imposed under FATCA.

“Executive Order” is defined in Section 6.21(a) hereof.

“Existing Credit Agreement” means that certain Fourth Amended and Restated
Credit Agreement, dated as of July 9, 2012 (as amended, restated, supplemented
or otherwise modified from time to time), by and among Borrower, the direct and
indirect Subsidiaries of Borrower from time to time party thereto, the lenders
from time to time party thereto and Bank of Montreal, a Canadian chartered bank
acting through its Chicago branch, as administrative agent.

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this
Agreement (or any amended or successor version that is substantively comparable
and not materially more onerous to comply with) and any current or future
regulations or official interpretations thereof, and any agreements entered into
pursuant to Section 1471(b)(1) of the Code and any intergovernmental agreement
between the United States and another jurisdiction implementing the foregoing
(or any law, regulations or other official administrative interpretation
implementing such intergovernmental agreement).

 

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“Federal Funds Rate” means, for any day, the weighted average of the rates on
overnight federal funds transactions with members of the Federal Reserve System
arranged by federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average of the quotations for
such day for such transactions received by Administrative Agent from three
federal funds brokers of recognized standing selected by it.

“First Lien Agent” means Rabobank, in its separate capacity as the
“Administrative Agent” under, and as such term is defined in, the First Lien
Credit Agreement (as in effect on the Closing Date) on behalf and for the
benefit of the First Lien Lenders under the First Lien Credit Agreement, and
also means any successor “Administrative Agent” appointed pursuant to the First
Lien Credit Agreement.

“First Lien Cap Amount” has the meaning assigned to such term in the
Intercreditor Agreement.

“First Lien Credit Agreement” means that Credit Agreement dated as of the
Closing Date by and among Borrower, as borrower, Guarantors, as guarantors, the
First Lien Lenders and the First Lien Agent, on behalf and for the benefit of
the First Lien Secured Parties, as the same may from time to time be amended,
modified, supplemented, restated, or refinanced in accordance with, and subject
to the terms and conditions of, the Intercreditor Agreement.

“First Lien Indebtedness” means the “Secured Obligations”, as such term is
defined in the First Lien Credit Agreement.

“First Lien Lenders” means each institutional lender or other Person as shall
from time to time be a “Lender” under, as defined in and for purposes of the
First Lien Credit Agreement.

“First Lien Loans” means the revolving loans which may be advanced from time to
time by the First Lien Lenders to the Borrower under and pursuant to the First
Lien Credit Agreement and the other First Lien Related Documents.

“First Lien Related Documents” means the First Lien Credit Agreement, the
promissory notes, if any, issued by the Borrower in favor of the First Lien
Lenders, the First Lien Security Documents and any and all other agreements,
documents and instruments executed and delivered by or on behalf of or in
support of the Borrower or any Guarantor to the First Lien Agent or any other
First Lien Secured Party or their respective authorized designee evidencing or
otherwise relating to the First Lien Loans to be made pursuant to the First Lien
Credit Agreement, as the same may from time to time be amended, modified,
supplemented, extended, renewed or restated in accordance with, and subject to
the terms and conditions of, the Intercreditor Agreement.

“First Lien Secured Parties” means, collectively, the First Lien Agent and the
First Lien Lenders and the other “Secured Parties” (as defined in the First Lien
Credit Agreement).

“First Lien Security Documents” means collectively, each of the mortgages, deeds
of trust, security agreements, pledge agreements, grants of security interest in
intellectual property assets, Form UCC-1 financing statements and such other
agreements, assignments, documents and instruments from time to time executed
and delivered by the Borrower or any Guarantor

 

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granting, assigning or transferring or otherwise evidencing or relating to any
Lien granted, assigned or transferred to the First Lien Agent (or its designee
or agent), on behalf and for the benefit of the First Lien Secured Parties, to
secure the First Lien Indebtedness, as the same may from time to time be
amended, modified, supplemented or restated in accordance with, and subject to
the terms and conditions of, the Intercreditor Agreement.

“Fixed Charges” means, with reference to any period, the sum of (a) all
scheduled payments of principal paid in cash during such period with respect to
Indebtedness for Borrowed Money of the Borrower and its Subsidiaries plus
(b) Interest Expense paid in cash by the Borrower and its Subsidiaries for such
period plus (c) all Restricted Payments made by the Borrower during such period
in cash, but excluding the amount of all accrued dividends during such period,
plus (d) federal, state, and local income taxes paid or payable by the Borrower
and its Subsidiaries in cash during such period, minus (e) all federal, state
and local income tax refunds received by the Borrower and its Subsidiaries
during such period.

“Foreign Lender” means any Lender that is not a U.S. Person.

“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.

“Free Cash Flow” means, with respect to any period, an amount equal to
(a) EBITDA of the Borrower and its Subsidiaries for such period minus (b) the
sum of (i) Capital Expenditures made by the Borrower and its Subsidiaries during
such period, (ii) payments of principal paid in cash during such period with
respect to Indebtedness for Borrowed Money of the Borrower and its Subsidiaries,
(iii) Interest Expense paid in cash by the Borrower and its Subsidiaries for
such period, and (iv) federal, state, and local income taxes paid in cash by the
Borrower and its Subsidiaries during such period, plus (c) all federal, state,
and local income tax refunds received by the Borrower and its Subsidiaries
during such period.

“Fully Satisfied” or “Full Satisfaction” means, as of any date, that on or
before such date, with respect to the Loans: (i) the principal of and interest
accrued to such date on the Loans shall have been paid in full in cash, (ii) all
fees, expenses, and other amounts then due and payable (other than contingent
amounts for which a claim has not been made) shall have been paid in full in
cash, and (iii) the Commitments shall have expired or irrevocably been
terminated.

“Fund” means any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business.

“Funds Transfer and Deposit Account Liability” means the liability of the
Borrower or any Subsidiary owing to any of the First Lien Lenders, or any
Affiliates of such First Lien 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 First
Lien 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

 

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facility that is solely ancillary to any of the foregoing, and (c) any credit
card, purchase card or other deposit, disbursement, and cash management services
afforded to the Borrower or any Subsidiary by any of such First Lien 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.

“Governmental Authority” means the government of the United States of America or
any other nation, or of any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government (including any supra-national bodies such as the European Union or
the European Central Bank).

“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
classified or regulated as “hazardous” or “toxic” or words of like import
pursuant to any Environmental Law and including, without limitation, asbestos,
polychlorinated biphenyls and petroleum (including crude oil or any fraction
thereof).

“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 First Lien Lenders, or any Affiliates of such First Lien 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 (each, a “Hedging
Agreement”), 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 First Lien Lenders 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.

 

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“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
indebtedness, whether or not assumed, secured by Liens on Property acquired by
such Person at the time of acquisition thereof, (g) any shares which are
expressed to be redeemable, (h) any liability in respect of any guarantee or
indemnity for any of the items referred to above, and (i) all indebtedness
secured by any Lien upon Property of such Person, whether or not such Person has
assumed or become liable for the payment of such indebtedness; it being
understood that the term “Indebtedness for Borrowed Money” shall not include
(x) trade payables arising in the ordinary course of business, (y) payroll
liabilities, payroll taxes and other wage and related benefits, and (z) any
liabilities with respect to any post-retirement benefits under a Welfare Plan.

“Indemnified Taxes” means (a) taxes, other than Excluded Taxes, imposed on or
with respect to any payment made by or on account of any obligation of Borrower
or any Guarantor under any Loan Document and (b) to the extent not otherwise
described in clause (a) of this definition, Other Taxes.

“Intercreditor Agreement” means that Intercreditor Agreement dated as of the
Closing Date as entered into by and between the Administrative Agent, on behalf
of the Secured Parties, and the First Lien Agent, on behalf of the First Lien
Secured Parties, and consented to by the Borrower and Guarantors, as the same
may from time to time be amended, modified, supplemented, extended, renewed or
restated.

“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 1.6 hereof.

“Joint Venture” means an entity formed or acquired after the date of this
Agreement for which ownership, control and/or profits and losses are shared by
the Borrower or any Subsidiary with a third party pursuant to a written
agreement, in each case to the extent the Borrower’s or such Subsidiary’s equity
interest therein is permitted by Section 8.9(h) hereof.

“Legal Requirement” means any applicable 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 whether in effect as of the date of
this Agreement or hereafter.

 

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“Lenders” means and includes Rabobank and the other financial institutions from
time to time party to this Agreement, including each assignee Lender pursuant to
Section 13.12 hereof (other than any Person that ceases to be a party hereto
pursuant to an Assignment and Acceptance).

“Lending Office” is defined in Section 10.4 hereof.

“LIBOR” means, for an Interest Period for a Borrowing of Eurodollar Loans,
(a) the LIBOR Index Rate for such Interest Period, if such rate is available,
provided that if the LIBOR Index Rate shall be less than zero, such rate shall
be deemed to be zero for the purposes of this Agreement, and (b) if the LIBOR
Index Rate cannot be determined, the arithmetic average of the rates of interest
per annum at which deposits in U.S. Dollars in immediately available funds are
offered to the Administrative Agent at 11:00 a.m. (London, England time) two
(2) Business Days before the beginning of such Interest Period by three (3) or
more major banks in the interbank eurodollar 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 Eurodollar Loan scheduled to be made as part of such Borrowing,
provided that if such average rate of interest shall be less than zero, such
rate shall be deemed to be zero for the purposes of this Agreement.

“LIBOR Index Rate” means, for any Interest Period, the rate per annum for
deposits in U.S. Dollars for a period equal to such Interest Period, which
appears on the LIBOR01 Page as of 11:00 a.m. (London, England time) on the day
two (2) Business Days before the commencement of such Interest Period.

“LIBOR01 Page” means the display designated as “LIBOR01 Page” on the Reuters
Service (or such other page as may replace the LIBOR01 Page on that service or
such other service as may be nominated by the ICE Benchmark Administration as
the information vendor for the purpose of displaying the London interbank
offered rate for U.S. Dollar deposits).

“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 Delayed Draw Term Loan, whether outstanding as a Base Rate Loan
or Eurodollar Loan or otherwise, each of which is a “type” of Loan hereunder.

“Loan Documents” means this Agreement, the Notes, the Collateral Documents, the
Guaranties, the Intercreditor Agreement 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 (subject to the Intercreditor Agreement) of
any Lien granted under any Collateral Document.

 

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“Moody’s” means Moody’s Investors Service, Inc.

“Mortgages” means, collectively, each Closing Date Mortgage and any other
mortgages or deeds of trust delivered to the Administrative Agent pursuant to
Section 4.3 hereof, in each case, as the same may be amended, modified,
supplemented or restated from time to time.

“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 an 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.

“Non-Defaulting Lender” means, at any time, each Lender that is not a Defaulting
Lender at such time.

“Notes” means and includes the Delayed Draw Term Notes.

“Obligations” means all obligations of the Borrower to pay principal and
interest on the Loans, all fees and charges payable hereunder, and all other
payment obligations of the Borrower or any of its Subsidiaries arising under or
in relation to any Loan Document, in each case whether now existing or hereafter
arising, due or to become due, direct or indirect, absolute or contingent, and
howsoever evidenced, held or acquired and including interest, fees, and expenses
that accrue after the commencement by or against Borrower or any Guarantor of
any proceeding under any bankruptcy or insolvency law, regardless of whether
such interest, fees, and expenses are allowed or allowable in whole or in part
as a claim in such proceeding .

“OFAC” is defined in Section 6.21(b)(i) hereof.

“OFAC Event” means the event specified in Section 8.23 hereof.

“OFAC List” is defined in Section 6.21(b)(iv) hereof.

“Other Connection Taxes” means, with respect to any Recipient, taxes imposed as
a result of a present or former connection between such Recipient and the
jurisdiction imposing such tax (other than connections arising from such
Recipient having executed, delivered, become a party to, performed its
obligations under, received payments under, received or perfected a security
interest under, engaged in any other transaction pursuant to or enforced any
Loan Document, or sold or assigned an interest in any Loan or Loan Document).

“Other Taxes” means all present or future stamp, court or documentary,
intangible, recording, filing, or similar taxes that arise from any payment made
under, from the execution, delivery, performance, enforcement or registration
of, from the receipt or perfection of a security interest under, or otherwise
with respect to, any Loan Document, except any such taxes that are Other
Connection Taxes imposed with respect to an assignment (other than an assignment
made pursuant to Section 1.13).

 

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“PBGC” means the Pension Benefit Guaranty Corporation or any Person succeeding
to any or all of its functions under ERISA.

“Permitted Acquisition” means any Acquisition with respect to which all of the
following conditions shall have been satisfied:

(a) the Acquired Business is in an Eligible Line of Business and has its primary
operations within the United States of America;

(b) the Acquisition shall not be a Hostile Acquisition, unless otherwise
approved by the Administrative Agent;

(c) the financial statements of the Acquired Business shall have been audited by
one of the “Big Four” 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 review by an accounting firm acceptable to the Administrative Agent
as part of the Borrower’s due diligence on the Acquisition;

(d) (i) the Total Consideration for any Acquisition of an Acquired Business
organized in the United States, when taken together with the Total Consideration
for all Acquired Businesses acquired during the immediately preceding 12-month
period (other than the acquisition of Gum Technology Corporation), does not
exceed $63,250,000 in the aggregate (or $126,500,000 so long as the amount in
excess of $63,250,000 is funded solely with Loans hereunder and/or the cash
proceeds of the issuance and sale of equity securities of the Borrower on terms
acceptable to the Administrative Agent) and the Total Consideration paid for all
Permitted Acquisitions made after the Closing Date does not exceed $126,500,000
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; and

 

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(g) the Borrower shall have delivered to the Administrative Agent a completed
officer’s certificate of the Borrower certifying that, after giving effect to
such Acquisition, (i) no Default or Event of Default shall exist, (ii) the
Borrower and its Subsidiaries would be in pro forma compliance with the
financial covenants set forth in Section 8.22 measured as of the last day of the
immediately preceding fiscal quarter for which financial statements have been
delivered to Administrative Agent, (iii) the Borrower would be in compliance on
a pro forma basis with Section 8.22(a) hereof by more than 0.25 to 1.0 measured
as of the last day of the immediately preceding fiscal quarter for which
financial statements have been delivered to Administrative Agent.

“Permitted Transactions” means the transactions contemplated by the Cure Right
pursuant to Section 9.7 of this Agreement.

“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 Sections 412, 430, 431 or 432 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.

“Prime Rate” means the rate of interest per annum published in the Wall Street
Journal as the “prime rate” for such day and if the Wall Street Journal does not
publish such rate on such day then such rate as most recently published prior to
such day.

“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.

“Quarterly Dates” means the last Business Day of March, June, September, and
December of each year through the Delayed Draw Termination Date.

“Rabobank” is defined in the introductory paragraph of this Agreement.

“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.

“Recipient” means (a) Administrative Agent and (b) any Lender, as applicable.

 

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“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 in any
manner or quantity contrary to, or otherwise potentially giving rise to
liability under, any Environmental Law.

“Required Lenders” means, as of the date of determination thereof, Lenders whose
outstanding Loans and Unused Delayed Draw Commitments as of such date constitute
more than 50% of the sum of the total outstanding Loans and Unused Delayed Draw
Commitments of the Lenders as of such date; provided the outstanding Loans and
Unused Delayed Draw Commitments of any Defaulting Lender shall be excluded for
purposes of making a determination of Required Lenders.

“Restricted Payments” is defined in Section 8.12.

“S&P” means Standard & Poor’s Ratings Services Group, a division of The
McGraw-Hill Companies, Inc.

“Sanctioned Country” is defined in Section 6.21(b)(v) hereof.

“Sanctioned Person” is defined in Section 6.21(b) hereof.

“Sanctions” is defined in Section 6.21(b)(i) hereof.

“Secured Parties” means, collectively, the Administrative Agent and the Lenders.

“Security Agreement” means that certain Second Lien 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, provided, however, that
a Joint Venture shall not be considered a Subsidiary. Unless otherwise expressly
noted herein, the term “Subsidiary” means a Subsidiary of the Borrower or of any
of its direct or indirect Subsidiaries.

“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

 

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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 Leverage Ratio” is defined in Section 8.22 hereto.

“Unfunded Vested Liabilities” means, for any Plan at any time, the amount (if
any) by which the present value of all vested nonforfeitable accrued benefits
under such Plan exceeds the fair market value of all Plan assets allocable to
such benefits, all determined as of the then most recent valuation date for such
Plan, but only to the extent that such excess represents a potential liability
of a member of the Controlled Group to the PBGC or the Plan under Title IV of
ERISA.

“Unused Delayed Draw Commitments” means, at any time, the difference between the
Delayed Draw Term Loan Commitments then in effect and the aggregate principal
amount of all Delayed Draw Term Loans advanced hereunder as of such time
(whether or not repaid).

“USA PATRIOT Act” is defined in Section 6.21(a) hereof.

“U.S. Dollars” and “$” each means the lawful currency of the United States of
America.

“U.S. Person” means any Person that is a “United States Person” as defined in
Section 7701(a)(30) of the Code.

“Voting Stock” of any Person means capital stock or other equity interests of
any class or classes (however designated) having ordinary power for the election
of directors or other similar governing body of such Person, other than stock or
other equity interests having such power only by reason of the happening of a
contingency.

“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.

 

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“Withholding Agent” means Borrower, any Guarantor and Administrative Agent.

Section 5.2. Interpretation. The foregoing definitions are equally applicable to
both the singular and plural forms of the terms defined. The words “hereto”,
“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 New York,
New York, time unless otherwise specifically provided. Where the character or
amount of any asset or liability or item of income or expense is required to be
determined or any consolidation or other accounting computation is required to
be made for the purposes of this Agreement, it shall be done in accordance with
GAAP except where such principles are inconsistent with the specific provisions
of this Agreement.

Section 5.3. Change in Accounting Principles. If, after the date of this
Agreement, there shall occur any change in GAAP from those used in the
preparation of the financial statements referred to in Section 6.5 hereof and
such change shall result in a change in the method of calculation of any
financial covenant, standard or term found in this Agreement, either the
Borrower or the Required Lenders may by notice to the Lenders and the Borrower,
respectively, require that the Lenders and the Borrower negotiate in good faith
to amend such covenants, standards, and terms so as equitably to reflect such
change in accounting principles, with the desired result being that the criteria
for evaluating the financial condition of the Borrower and its Subsidiaries
shall be the same as if such change had not been made. No delay by the Borrower
or the Required Lenders in requiring such negotiation shall limit their right to
so require such a negotiation at any time after such a change in accounting
principles. Until any such covenant, standard, or term is amended in accordance
with this Section 5.3, financial covenants shall be computed and determined in
accordance with GAAP in effect prior to such change in accounting principles.
Without limiting the generality of the foregoing, the Borrower shall neither be
deemed to be in compliance with any financial covenant hereunder nor out of
compliance with any financial covenant hereunder if such state of compliance or
noncompliance, as the case may be, would not exist but for the occurrence of a
change in accounting principles after the date hereof.

SECTION 6. REPRESENTATIONS AND WARRANTIES.

The Borrower represents and warrants to the Administrative Agent and the Lenders
as follows:

Section 6.1. Organization and Qualification. The Borrower is duly organized,
validly existing, and in good standing as a corporation under the laws of the
State of Washington. The Borrower has full and adequate power to own its
Property and conduct its business as now conducted, and is duly licensed or
qualified and in good standing in each jurisdiction in which the nature of the
business conducted by it or the nature of the Property owned or leased by it
requires such licensing or qualifying, except where the failure to do so would
not have a Material Adverse Effect.

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

 

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incorporated or organized, as the case may be, has full and adequate power to
own its Property and conduct its business as now conducted, and is duly licensed
or qualified and in good standing (to the extent the concept of good standing is
applicable in such jurisdiction) in each jurisdiction in which the nature of the
business conducted by it or the nature of the Property owned or leased by it
requires such licensing or qualifying, except where the failure to do so would
not have a Material Adverse Effect. Schedule 6.2 hereto identifies each
Subsidiary, the jurisdiction of its incorporation or organization, as the case
may be, the percentage of issued and outstanding shares of each class of its
capital stock or other equity interests owned by the Borrower and its other
Subsidiaries and, if such percentage is not 100% (excluding, if applicable,
directors’ qualifying shares as required by law), a description of each class of
its authorized capital stock and other equity interests and the number of shares
of each class issued and outstanding. All of the outstanding shares of capital
stock and other equity interests of each Subsidiary are validly issued and
outstanding and fully paid and nonassessable and all such shares and other
equity interests indicated on Schedule 6.2 as owned by the Borrower or another
Subsidiary are owned, beneficially and of record, by the Borrower or such
Subsidiary free and clear of all Liens other than the Liens granted in favor of
the Administrative Agent pursuant to the Collateral Documents. There are no
outstanding commitments or other obligations of any Subsidiary to issue, and no
options, warrants or other rights of any Person to acquire, any shares of any
class of capital stock or other equity interests of any Subsidiary.

Section 6.3. Authority and Validity of Obligations. The Borrower has full right
and authority to enter into this Agreement and the other Loan Documents executed
by it, to make the borrowings herein provided for or under the other Loan
Documents, to issue the Notes in evidence thereof, to grant to the
Administrative Agent the Liens described in the Collateral Documents, and to
perform all of its obligations hereunder and under the other Loan Documents
executed by it. Each Subsidiary has full right and authority to enter into the
Loan Documents executed by it, to guarantee the Obligations, to grant to the
Administrative Agent (or the First Lien Agent on behalf of the Secured Parties)
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 (or the First Lien
Agent on behalf of the Secured Parties) pursuant to the Collateral Documents.

 

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Section 6.4. Use of Proceeds; Margin Stock. The Borrower shall use the proceeds
of the Loans for general corporate working capital purposes, to finance
acquisitions and 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. The Borrower will not request any Borrowing, and the
Borrower shall not use, and shall procure that its Subsidiaries and its or their
respective directors, officers, employees and agents shall not use, the proceeds
of any Borrowing (A) in furtherance of an offer, payment, promise to pay, or
authorization of the payment or giving of money, or anything else of value, to
any Person in violation of any Anti-Corruption Laws, (B) for the purpose of
funding, financing or facilitating any activities, business or transaction of or
with any Sanctioned Person, or in any Sanctioned Country, or (C) in any manner
that would result in the violation of any Sanctions applicable to any party
hereto.

Section 6.5. Financial Reports. The consolidated balance sheet of the Borrower
and its Subsidiaries as of August 31, 2013, 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 KPMG, LLP,
independent public accountants, and the unaudited interim consolidated balance
sheet of the Borrower and its Subsidiaries as of February 28, 2014, and the
related consolidated statements of income, retained earnings and cash flows of
the Borrower and its Subsidiaries for the 6 months then ended, heretofore
furnished to the Administrative Agent and the Lenders, fairly present the
consolidated financial condition of the Borrower and its Subsidiaries as at said
dates and the consolidated results of their operations and cash flows for the
periods then ended in conformity with GAAP applied on a consistent basis and
disclose or reflect all its actual and contingent liabilities at that date.
Neither the Borrower nor any Subsidiary has contingent liabilities which are
material to it other than as indicated on such financial statements or, with
respect to future periods, on the financial statements furnished pursuant to
Section 8.5 hereof.

Section 6.6. No Material Adverse Change. Since August 31, 2013, 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.

 

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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 which could reasonably be expected
to have a Material Adverse Effect.

Section 6.9. Governmental Authority and Licensing. The Borrower and its
Subsidiaries have received all licenses, permits, and approvals of all federal,
state, and local governmental authorities, if any, necessary to conduct their
businesses, in each case where the failure to obtain or maintain the same could
reasonably be expected to have a Material Adverse Effect. No investigation or
proceeding which, if adversely determined, could reasonably be expected to
result in revocation or denial of any material license, permit or approval is
pending or, to the knowledge of the Borrower, threatened.

Section 6.10. Good Title. The Borrower and its Subsidiaries have good and
defensible title (or valid leasehold interests) to their assets as reflected on
the most recent consolidated balance sheet of the Borrower and its Subsidiaries
furnished to the Administrative Agent and the Lenders (except for sales of
assets in the ordinary course of business), subject to no Liens other than such
thereof as are permitted by Section 8.8 hereof.

Section 6.11. Litigation and Other Controversies. Except as disclosed in filings
with the Securities and Exchange Commission made by the Borrower before the
Closing Date or which 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,
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, individually or in
the aggregate, could reasonably be expected to have a Material Adverse Effect.

Section 6.12. Taxes. All tax returns required to be filed by the Borrower or any
Subsidiary in any jurisdiction have, in fact, been filed, and all taxes,
assessments, fees, and other governmental charges upon the Borrower or any
Subsidiary or upon any of its Property, income or franchises, which are shown to
be due and payable in such returns, have been paid, except such taxes,
assessments, fees and governmental charges, if any, as are being contested in
good faith and by appropriate proceedings which prevent enforcement of the
matter under contest and as to which adequate reserves established in accordance
with GAAP have been provided. The Borrower does not know of any proposed
additional tax assessment against it or its Subsidiaries for which adequate
provisions in accordance with GAAP have not been made on their accounts.
Adequate provisions in accordance with GAAP for taxes on the books of the
Borrower and each Subsidiary have been made for all open years, and for its
current fiscal period.

 

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Section 6.13. Approvals. No authorization, consent, license or exemption from,
or filing or registration with, any court or governmental department, agency or
instrumentality, nor any approval or consent of any other Person, is or will be
necessary to the valid execution, delivery or performance by the Borrower or any
Subsidiary of any Loan Document, except for such approvals which have been
obtained prior to the date of this Agreement and remain in full force and
effect.

Section 6.14. Affiliate Transactions. Neither the Borrower nor any Subsidiary is
a party to any contracts or agreements with any of its Affiliates (other than
with Wholly-owned Subsidiaries) on terms and conditions which are less favorable
to the Borrower or such Subsidiary than would be usual and customary in similar
contracts or agreements between Persons not affiliated with each other, provided
that the foregoing shall not apply to any Permitted Transaction.

Section 6.15. Investment Company. Neither the Borrower nor any Subsidiary is an
“investment company” or a company “controlled” by an “investment company” within
the meaning of the Investment Company Act of 1940, as amended.

Section 6.16. ERISA. The Borrower and each other member of its Controlled Group
has fulfilled its obligations under the minimum funding standards of and is in
compliance in all material respects with ERISA and the Code to the extent
applicable to it and has not incurred any liability to the PBGC or a Plan under
Title IV of ERISA other than a liability to the PBGC for premiums under
Section 4007 of ERISA. Except as disclosed in the Borrower’s Form 10-K dated for
the fiscal year ended August 31, 2013, neither the Borrower nor any Subsidiary
has any contingent liabilities with respect to any post-retirement benefits
under a Welfare Plan, other than liability for continuation coverage described
in article 6 of Title I of ERISA.

Section 6.17. Compliance with Laws. (a) The Borrower and its Subsidiaries are in
compliance with the requirements of all federal, state and local laws, rules and
regulations applicable to or pertaining to their Property or business operations
(including, without limitation, the Occupational Safety and Health Act of 1970,
the Americans with Disabilities Act of 1990, and laws and regulations
establishing quality criteria and standards for air, water, land and toxic or
hazardous wastes and substances), where any such non-compliance, individually or
in the aggregate, could reasonably be expected to have a Material Adverse
Effect.

(b) Without limiting the representations and warranties set forth in
Section 6.17(a) above, except for such matters, individually or in the
aggregate, which could not reasonably be expected to result in a Material
Adverse Effect, the Borrower represents and warrants that:

(i) the Borrower and its Subsidiaries, and each of the Premises, comply in all
material respects with all applicable Environmental Laws;

(ii) the Borrower and its Subsidiaries have obtained all governmental approvals
required for their operations and each of the Premises by any applicable
Environmental Law;

 

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(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
unlawful disposal of any Hazardous Material at, on, about, or off any of the
Premises in any material quantity, which could reasonably be expected to have a
Material Adverse Effect, and, to the knowledge of the Borrower, none of the
Premises are adversely affected by any Release, threatened Release or unlawful
disposal of a Hazardous Material originating or emanating from any other
property;

(iv) to the Borrower’s knowledge, none of the Premises contain and have
contained any: (l) underground storage tank, which could reasonably be expected
to have a Material Adverse Effect, (2) material amounts of asbestos containing
building material, which could reasonably be expected to have a Material Adverse
Effect, (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, in each case, 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.

 

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Notwithstanding any other provision of this Agreement, this Section 6.17(b)
shall not apply to the extent that: (i) neither Borrower nor any of its
Subsidiaries has any ownership interest in a particular Premises; (ii) such
Premises are not within the care, custody or control of either the Borrower or
any of its Subsidiaries; (iii) neither the Borrower nor any of its Subsidiaries
has conducted or authorized any Hazardous Material Activity on or at such
Premises; and (iv) neither the Borrower nor any of its Subsidiaries has caused
or contributed to any Environmental Claim related to such Premises.

Section 6.18. Other Agreements. Neither the Borrower nor any Subsidiary is in
default under the terms of any covenant, indenture or agreement of or affecting
such Person or any of its Property, which default if uncured could reasonably be
expected to have a Material Adverse Effect.

Section 6.19. Solvency. The Borrower and its Subsidiaries are solvent, able to
pay their debts as they become due, and have sufficient capital to carry on
their business and all businesses in which they are about to engage.

Section 6.20. No Default. No Default or Event of Default has occurred and is
continuing.

Section 6.21. AML Laws and Anti-Corruption Laws. (a) Neither the Borrower nor
any of its Subsidiaries is and to its knowledge none of its Affiliates is in
violation of any law, statute, regulation, order, executive order, or rule of
any jurisdiction or governmental authority relating to terrorism or money
laundering (collectively, “AML Laws”), including, but not limited to, Executive
Order No. 13224 on Terrorist Financing, effective September 24, 2001 (the
“Executive Order”), and the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001,
Public Law 107-56 (“USA PATRIOT Act”);

(b) Neither the Borrower nor any of its Subsidiaries is and to its knowledge no
Affiliate or broker or other agent of any of the Borrower or any of its
Subsidiaries acting or benefiting in any capacity in connection with the Loans
is any of the following (each a “Sanctioned Person”):

(i) a person that is listed in the annex to, or is otherwise subject of, or a
person owned or controlled by, or acting for or on behalf of, any person that is
listed in the annex to, or is otherwise the subject of, the provisions of the
Executive Order or any sanctions or trade embargoes administered or enforced by
the U.S. Treasury Department Office of Foreign Asset Control (“OFAC”), the U.S.
Department of State, the United Nations Security Council, Her Majesty’s Treasury
of the United Kingdom, the Netherlands or the European Union (collectively,
“Sanctions”);

(ii) a person with which the Lender is prohibited from dealing or otherwise
engaging in any transaction by any applicable AML Law;

 

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(iii) a person that commits, threatens or conspires to commit or supports
“terrorism” as defined in the Executive Order or other applicable OFAC
regulations;

(iv) a person that is (1) named as a “specially designated national” or “blocked
person” on the most current list published by OFAC at its official website,
currently available at www.treas.gov/offices/enforcement/ofac/ or any
replacement website or other replacement official publication of such list (the
“OFAC List”) or (2) similarly designated in any comparable list published by any
governmental authority of the European Union or the Netherlands; or

(v) a person located, organized or resident in a country or territory that is,
or whose government is, the subject of Sanctions including, without limitation,
Cuba, Iran, North Korea, Sudan, and Syria (each such country or territory is a
“Sanctioned Country”), or a person that is owned or controlled by any such
Person described in this clause (v);

(c) Neither the Borrower nor any of its Subsidiaries is and to its knowledge no
broker or other agent of any of the Borrower or any of its Subsidiaries acting
in any capacity in connection with the Loans (A) conducts any business or
engages in making or receiving any contribution of funds, goods or services to
or for the benefit of any Sanctioned Person, (B) deals in, or otherwise engages
in any transaction relating to, any property or interests in property that would
result in a violation of Sanctions by such Person, or (C) engages in or
conspires to engage in any transaction that evades or avoids, or has the purpose
of evading or avoiding, or attempts to violate, any of the prohibitions set
forth in any applicable AML Law;

(d) No part of the proceeds of any Loan will be used (or otherwise lent,
contributed, or made available), directly or indirectly, (A) to fund any
activities or business of or with any person, or in any country or territory,
that, at the time of such funding, is, or whose government is, the subject of
Sanctions, or (B) for any payments to any Sanctioned Person, any subsidiary or
joint venture partner of such person, or any governmental official, or employee,
political party, official of a political party, candidate for political office,
or anyone else acting in an official capacity, in order to obtain, retain or
direct business or obtain any improper advantage, in violation of Sanctions or
the United States Foreign Corrupt Practices Act of 1977, as amended;

(e) The Borrower has implemented and maintains in effect policies and procedures
designed to ensure compliance by the Borrower, its Subsidiaries and their
respective directors, officers, employees and agents with all laws, rules, and
regulations of any jurisdiction applicable to the Borrower or any of its
Subsidiaries from time to time concerning or relating to bribery or corruption
(“Anti-Corruption Laws”) and applicable Sanctions, and the Borrower, its
Subsidiaries and their respective officers and employees and to the knowledge of
the Borrower, its directors and agents, are in compliance with Anti-Corruption
Laws and applicable Sanctions in all material respects. None of (a) the
Borrower, any Subsidiary or any of their respective directors, officers or
employees, or (b) to the knowledge of the Borrower, any agent of the Borrower or
any Subsidiary that

 

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will act in any capacity in connection with or benefit from the credit facility
established hereby, is a Sanctioned Person. No Borrowing, use of proceeds or
other transaction contemplated by this Agreement will violate any
Anti-Corruption Law or applicable Sanctions.

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) shall be subject
to the following conditions precedent:

Section 7.1. All Credit Events. At the time of each Credit Event hereunder
(including the initial Credit Event):

(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) the Administrative Agent shall have received the notice required by
Section 1.5 hereof;

(d) after giving effect to such extension of credit, the aggregate principal
amount of all Delayed Draw Term Loans outstanding under this Agreement shall not
exceed the Delayed Draw Term Loan Commitments then in effect; and

(e) 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 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 shall be deemed to be a representation
and warranty by the Borrower on the date on such Credit Event as to the facts
specified in subsections (a) through (e), both inclusive, of this Section.

Section 7.2. Closing Date. Before or concurrently with the Closing Date:

(a) the Administrative Agent shall have received for each Lender the favorable
written opinion of Perkins Coie LLP, counsel to the Borrower and each Domestic
Subsidiary, in substantially the form of Exhibit H hereto, and otherwise in form
and substance satisfactory to the Required Lenders;

(b) the Administrative Agent shall have received for each Lender (i) certified
copies of resolutions of the Board of Directors of the Borrower and each
Guarantor authorizing the execution, delivery and performance of the Loan
Documents, indicating the Borrower’s and each Guarantor’s authorized signers of
the Loan Documents and all other documents relating thereto and the specimen
signatures of such signers and (ii) copies of the Borrower’s and each
Guarantor’s Certificate of Incorporation and by-laws certified by the Secretary
or other appropriate officer of the Borrower or such Guarantor;

 

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(c) the Administrative Agent shall have received for each Lender this Agreement
duly executed by the Borrower, each Guarantor and the Lenders;

(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 1.10 hereof;

(e) the Administrative Agent shall have received the Security Agreement and the
Closing Date Mortgages, in form and substance satisfactory to the Administrative
Agent, duly executed by the Borrower and/or the relevant Domestic Subsidiary or
Domestic Subsidiaries, together with (unless delivered to the First Lien Agent)
(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 executed in blank and undated;

(f) the Administrative Agent shall have received the Intercreditor Agreement
duly executed by the Administrative Agent, on behalf of and for the benefit of
the Secured Parties, as the second lien creditors, and the First Lien Agent, on
behalf of and for the benefit of itself and the First Lien Secured Parties, and
consented to by the Borrower and the Guarantors;

(g) the Administrative Agent shall have received evidence that each of the
conditions precedent to the effectiveness of the First Lien Credit Agreement
shall have been satisfied or shall have been waived in writing by the First Lien
Lenders and the Administrative Agent shall have received a copy of each of the
First Lien Related Documents, duly executed by each of the parties thereto and
in form and substance satisfactory to the Administrative Agent and the Required
Lenders;

(h) the Administrative Agent shall have received evidence of insurance
(including flood insurance that is in compliance with applicable law) required
to be maintained under the Loan Documents, naming the Administrative Agent (or
the First Lien Agent) as mortgagee, loss payee and additional insured;

(i) the Administrative Agent shall have received for each Lender copies of the
certificates of good standing for the Borrower and each Guarantor, dated no
earlier than 30 days prior to the date hereof from the office of the secretary
of the state of its incorporation or organization and of each state in which it
is qualified to do business as a foreign corporation or organization;

(j) the Administrative Agent shall have received for each Lender a list of the
Borrower’s Authorized Representatives;

 

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(k) [Intentionally omitted];

(l) [Intentionally omitted];

(m) [Intentionally omitted];

(n) 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;

(o) 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 matters), certificates, information and opinions
as the Administrative Agent may reasonably request;

(p) [Intentionally omitted];

(q) the Administrative Agent shall have received audited annual consolidated and
consolidating financial statements and quarterly unaudited consolidated and
consolidating financial statements (including in each case consolidated and
consolidating balance sheets and consolidated and consolidating statements of
income and cash flows) of the Borrower for the three consecutive fiscal years
ended August 31, 2011, August 31, 2012, and August 31, 2013, projected financial
statements for the fiscal years ending August 31, 2014, August 31, 2015,
August 31, 2016, August 31, 2017, August 31, 2018, August 31, 2019 and
August 31, 2020, and a closing balance sheet adjusted to give effect to the
initial transactions under the First Lien Credit Agreement, each in form and
substance acceptable to the Administrative Agent;

(r) no material adverse change in the business, condition (financial or
otherwise), operations, performance, Properties or prospects of the Borrower,
any of its Subsidiaries or any Guarantor from that reflected in the Borrower’s
audited financial statements for the fiscal year ended August 31, 2013 shall
have occurred;

(s) the Administrative Agent shall have received for itself and for the Lenders
the initial fees owed to them;

(t) the Administrative Agent shall have received, in respect of each Closing
Date Mortgaged Property:

(i) a copy of the most recent survey of such Closing Date Mortgaged Property, in
form and substance acceptable to the Administrative Agent, prepared by a
licensed surveyor and stating whether or not any portion of the same is in a
federally designated flood hazard area;

(ii) copies of the most recent environmental questionnaire and EDR report for
such Closing Date Mortgaged Property concerning the environmental hazards and
matters with respect to the same, which questionnaire and report shall be in
form and substance acceptable to the Administrative Agent;

 

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(iii) a certificate indicating whether any portion of such Closing Date
Mortgaged Property is in a federally designated flood hazard area;

(iv) a mortgagee policy of title insurance in the form reasonably satisfactory
to the Administrative Agent and issued by First American Title Insurance
Company, insuring the validity and second-priority of the Liens created under
the Closing Date Mortgage with respect to such Closing Date Mortgaged Property,
for and in amounts and containing such endorsements and affirmative coverage
reasonably satisfactory to the Administrative Agent, subject only to such
exceptions as are reasonably satisfactory to the Administrative Agent;

(v) to the extent reasonably necessary under applicable law, for filing in the
appropriate county land office, a Uniform Commercial Code financing statement
covering fixtures located at such Closing Date Mortgaged Property, which
financing statement shall be appropriately completed; and

(vi) the written opinion of counsel to the Borrower or the relevant Domestic
Subsidiary in the state in which such Closing Date Mortgaged Property is located
regarding the Lien of the Closing Date Mortgage with respect to the same and
such other matters as the Administrative Agent shall reasonably request, and
otherwise in form and substance reasonably satisfactory to the Required Lenders;

(u) the Borrower shall have paid the Administrative Agent all reasonable, actual
out-of-pocket fees and expenses of counsel to the Administrative Agent for which
an invoice has been submitted to the Borrower;

(v) the Administrative Agent shall have received evidence (including payoff
letters and applicable lien releases) that, upon the advance of the initial
First Lien Loans under the First Lien Credit Agreement, the Borrower shall have
repaid in full all “Obligations” (as such term is defined in the Existing Credit
Agreement) under the Existing Credit Agreement and all other amounts owing or
secured by the liens thereunder; and

(w) the Administrative Agent shall have received a fully executed Internal
Revenue Service Form W-9 for the Borrower and each Guarantor (or any similar
form for each foreign entity) and the Administrative Agent and the Lenders all
documentation and other information required by bank regulatory authorities
under applicable “know-your-customer” and AML Laws, including the USA PATRIOT
Act and the Executive Order.

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:

 

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Section 8.1. Maintenance of Business. The Borrower shall, and shall cause each
Subsidiary other than Penford Export Corporation 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 other than Penford Export Corporation 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 other than Penford
Export Corporation to, preserve and keep in force and effect all licenses,
permits, franchises, approvals, patents, trademarks, trade names, trade styles,
copyrights, and other proprietary rights necessary to the proper conduct of its
business where the failure to do so could reasonably be expected to have a
Material Adverse Effect.

Section 8.2. Maintenance of Properties. The Borrower shall, and shall cause each
Subsidiary to, maintain, preserve, and keep its property, plant, and equipment
in good repair, working order and condition (ordinary wear and tear excepted),
and shall from time to time make all needful and proper repairs, renewals,
replacements, additions, and betterments thereto so that at all times the
efficiency thereof shall be fully preserved and maintained, except to the extent
that, in the reasonable business judgment of such Person, any such Property is
no longer necessary for the proper conduct of the business of such Person.

Section 8.3. Taxes and Assessments. The Borrower shall duly pay and discharge,
and shall cause each Subsidiary to duly pay and discharge, all taxes, rates,
assessments, fees, and governmental charges upon or against it or its Property,
in each case before the same become delinquent and before penalties accrue
thereon, unless and to the extent that the same are being contested in good
faith and by appropriate proceedings which prevent enforcement of the matter
under contest and adequate reserves are provided therefor.

Section 8.4. Insurance. The Borrower shall insure and keep insured, and shall
cause each Subsidiary to insure and keep insured, with reputable, good and
responsible insurance companies, all insurable Property owned by it which is of
a character usually insured by Persons similarly situated and operating like
Properties against loss or damage from such hazards and risks, and in such
amounts, as are insured by Persons similarly situated and operating like
Properties; and the Borrower shall insure, and shall cause each Subsidiary to
insure, such other hazards and risks (including, without limitation, employers’
and public liability risks) with reputable, good and responsible insurance
companies as and to the extent usually insured by Persons similarly situated and
conducting similar businesses. The Borrower shall maintain flood insurance that
is in compliance with applicable law on any improvements on any Premises that
are subject to a Mortgage and are located in a special hazard flood zone. 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:

 

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(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),
consistent with the public financial documents filed with the SEC 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, consistent with the public financial documents filed with
the SEC, accompanied in the case of the consolidated financial statements by an
unqualified opinion of KPMG or another firm of independent public accountants of
recognized national or international standing, selected by the Borrower and
reasonably satisfactory to the Administrative Agent and the Required Lenders, to
the effect that the consolidated financial statements have been prepared in
accordance with GAAP and present fairly in accordance with GAAP the consolidated
financial condition of the Borrower and its Subsidiaries as of the close of such
fiscal year and the results of their operations and cash flows for the fiscal
year then ended and that an examination of such accounts in connection with such
financial statements has been made in accordance with generally accepted
auditing standards and, accordingly, such examination included such tests of the
accounting records and such other auditing procedures as were considered
necessary in the circumstances;

(c) within the period provided in subsection (b) above, the written statement of
the accountants who certified the audit report thereby required that in the
course of their audit they have obtained no knowledge of any Default or Event of
Default, or, if such accountants have obtained knowledge of any such Default or
Event of Default, they shall disclose in such statement the nature and period of
the existence thereof;

(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;

 

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(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, provided, however, that the obligations under this clause
(e) shall not apply to the extent that any such document is available on the
EDGAR website so long as the Borrower shall have given the Administrative Agent
prior notice (which shall contain an electronic link to the location on EDGAR
where such forms are located) of such availability on EDGAR in connection with
each delivery;

(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 to the extent not
publicly available (provided that, with respect to items that are publicly
available, the Borrower shall have given the Administrative Agent prior notice
(which shall contain an electronic link to the location where such items are
located) of such availability) and other than tax audits in the ordinary course
of business;

(g) as soon as available, and in any event within ninety (90) days after the end
of each fiscal year of the Borrower, a copy of the Borrower’s consolidated and
consolidating operating budget for the current 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) promptly after the occurrence thereof, written notice of any Change of
Control;

(i) promptly after knowledge thereof shall have come to the attention of any
responsible officer of the Borrower, written notice of (i) any threatened or
pending litigation or governmental or arbitration proceeding or labor
controversy against the Borrower or any Subsidiary which, if adversely
determined, could reasonably be expected to have a Material Adverse Effect,
(ii) the occurrence of any Default or Event of Default hereunder and (iii) the
occurrence of any event described as an “Event of Default” under any other Loan
Document; 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.

 

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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 Person other
than themselves (including the Borrower or any Subsidiary of the Borrower), or
otherwise agree to provide funds for payment of the obligations of any Person
(including the Borrower or any Subsidiary of the Borrower), or supply funds
thereto or invest therein or otherwise assure a creditor of any Person other
than themselves (including the Borrower or any Subsidiary of the Borrower)
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 of the Borrower and its Subsidiaries owing to the
Administrative Agent or the Lenders;

(b) purchase money indebtedness and Capitalized Lease Obligations of the
Borrower and its Subsidiaries in an amount not to exceed $11,500,000 in the
aggregate at any one time outstanding;

(c) obligations of the Borrower arising out of (i) interest rate, commodity and
foreign currency hedging agreements entered into with financial institutions in
the ordinary course of business and not for speculative purposes (including
Hedging Liability), and (ii) Funds Transfer and Deposit Account Liability;

(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”);

 

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(f) the obligations of Borrower pursuant to the First Lien Credit Agreement in
an aggregate principal amount that is not in excess of the First Lien Cap Amount
and the guaranty by each Guarantor thereof;

(g) unsecured indebtedness of the Borrower’s Subsidiaries to the Iowa Department
of Economic Development in an amount not to exceed $2,300,000 in the aggregate
at any one time outstanding; and

(h) unsecured Indebtedness for Borrowed Money of the Borrower and guarantees by
Borrower on behalf of any Subsidiary, each not otherwise permitted by this
Section, and together in an amount not to exceed $10,000,000 in the aggregate at
any one time outstanding.

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 $5,750,000 at any one time outstanding;

(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;

 

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(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 the
Lenders hereby acknowledge and agree that, with respect to each Premises subject
to a Mortgage, any of the foregoing items which are (i) in writing,
(ii) recorded in the public records, and (iii) specifically referenced as
exceptions to title (by reference to instrument number, book and page number, or
some other similar form of reference) in any mortgagee’s policy of title
insurance for such Premises delivered to Administrative Agent pursuant to
Section 4.3 hereof or Section 7.2(t)(iv) hereof are deemed to be included within
this exception);

(g) Liens securing the First Lien Indebtedness in or on any of the Collateral
created under any First Lien Security Documents in favor of the First Lien Agent
(or its designee or agent) on behalf of and for the benefit of the First Lien
Secured Parties or held by the First Lien Agent on behalf of and for the benefit
of the Secured Parties in accordance with the terms of the Intercreditor
Agreement;

(h) the Liens granted in favor of the Administrative Agent pursuant to the
Collateral Documents; and

(i) Liens not otherwise permitted hereby securing obligations not exceeding
$5,750,000 at any time.

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 before the date of this Agreement
and outstanding on the date of this Agreement, and (iii) by a Domestic
Subsidiary to the Borrower or to any one or more of its Domestic Subsidiaries in
the ordinary course of business to finance working capital needs;

(h) other investments (including investments in Joint Ventures), loans, and
advances in addition to those otherwise permitted by this Section in an amount
not to exceed $23,000,000 in the aggregate at any one time outstanding; and

(i) Permitted Acquisitions.

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
(other than as part of a Permitted Acquisition), 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 Domestic Subsidiaries to one another;

(c) the merger of any Domestic Subsidiary with and into the Borrower or any
other Domestic Subsidiary, provided that, in the case of any merger involving
the Borrower, the Borrower is the corporation surviving the merger;

 

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(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;

(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% of the Borrower’s total assets (determined in accordance
with GAAP) as shown on the Borrower’s audited balance sheet as of the last the
day of the most recently completed fiscal year during any fiscal year of the
Borrower; and

(g) the dissolution of (i) Penford Export Corporation, and (ii) any immaterial
Subsidiary approved by the Administrative Agent.

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;
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 or granted to the
First Lien Agent pursuant to the First Lien Security 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 Sections 8.10(c) and (g) 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 dividends or distributions by any Wholly-owned Subsidiary of
the Borrower to its parent corporation; and

(ii) Restricted Payments not otherwise permitted hereby, excluding Restricted
Payments with respect to any stock issued in connection with the exercise of the
Cure Right pursuant to Section 9.7 hereof, in an aggregate amount not to exceed
during any period of four consecutive fiscal quarters the lesser of $11,500,000
and 50% of the Borrower’s Free Cash Flow for the four consecutive fiscal
quarters most recently ended.

 

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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 for which a notice to the PBGC is required,
(b) receipt of any notice from the PBGC of its intention to seek 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
not permitted by Section 8.8.

(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;

 

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(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 unlawful disposal of a Hazardous Material; (4) any restriction on the
ownership, occupancy, use or transferability arising pursuant to any
(x) Release, threatened Release or unlawful 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
unlawful 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, or included in any
no further action letter or covenant not to sue issued by any governmental
authority under any Environmental Law, to the extent any of which apply to the
Borrower, any Subsidiary or the Premises.

Notwithstanding any other provision of this Agreement, this Section 8.14(b)
shall not apply to the extent that: (i) neither Borrower nor any of its
Subsidiaries has any ownership interest in a particular Premises; (ii) such
Premises are not within the care, custody or control of either the Borrower or
any of its Subsidiaries; (iii) neither the Borrower nor any of its Subsidiaries
has conducted or authorized any Hazardous Material Activity on or at such
Premises; and (iv) neither the Borrower nor any of its Subsidiaries has caused
or contributed to any Environmental Claim related to such Premises.

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, provided that the foregoing shall not apply to any Permitted Transaction.

 

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Section 8.16. No Changes in Fiscal Year. The fiscal year of the Borrower and its
Subsidiaries ends on August 31 of each year; and the Borrower shall not, nor
shall it permit any Subsidiary to, change its fiscal year from its present
basis.

Section 8.17. Formation of Subsidiaries. (a) Promptly upon the formation or
acquisition of any Subsidiary, the Borrower shall provide the Administrative
Agent and the Lenders notice thereof and timely comply with the requirements of
Section 4 hereof (at which time Schedule 6.2 shall be deemed amended to include
reference to such Subsidiary).

(b) Inactive Subsidiary. The Borrower shall not permit Penford Export
Corporation to engage in any operations, conduct any business or own any assets
having an aggregate value in excess of $57,500.

Section 8.18. Change in the Nature of Business. The Borrower shall not, nor
shall it permit any Subsidiary to, engage in any business or activity if as a
result the general nature of the business of the Borrower or any Subsidiary
would be changed in any material respect from the general nature of the business
engaged in by it as of the Closing Date, it being agreed that an Eligible Line
of Business shall not be a violation of this Section.

Section 8.19. Use of Proceeds. The Borrower shall use the credit extended under
this Agreement solely for the purposes set forth in, or otherwise permitted by,
Section 6.4 hereof.

Section 8.20. No Restrictions. Except as provided herein or in the First Lien
Related Documents, 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; First Lien Loans. The Borrower shall not, nor
shall it permit any Subsidiary to, (a) amend or modify any of the terms or
conditions (i) of the First Lien Related Documents to the extent such amendment
or modification would be prohibited by the Intercreditor Agreement, or
(ii) relating to any Subordinated Debt, or (b) make any voluntary prepayment,
any voluntary redemption, or any payment on account of Subordinated Debt which
is prohibited under the terms of any instrument or agreement subordinating the
same to the Obligations.

Section 8.22. Financial Covenants. (a) Total Leverage Ratio. The Borrower shall
not, as of the last day of each fiscal quarter of the Borrower, permit the ratio
of (x) Total Funded Debt of the Borrower and its Subsidiaries (with the
components thereof determined on a consolidated basis in accordance with GAAP),
to (y) EBITDA of the Borrower and its Subsidiaries for the

 

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four fiscal quarters of the Borrower then ended (the “Total Leverage Ratio”) to
be more than (i) 5.50 to 1.0 on the Closing Date and on the last day of each
fiscal quarter ending thereafter to and including August 31, 2015, (ii) 5.00 to
1.0 from November 30, 2015, to and including August 31, 2016, (iii) 4.75 to 1.0
on November 30, 2016, to and including August 31, 2017, and (iv) 4.25 to 1.0 on
the last day of each fiscal quarter thereafter.

(b) Fixed Charge Coverage Ratio. As of the last day of each fiscal quarter of
the Borrower, the Borrower shall maintain a ratio of (i) EBITDA of the Borrower
and its Subsidiaries for the four consecutive fiscal quarters of the Borrower
ended on such date minus Capital Expenditures for the repair or maintenance of
property, plant or equipment in the amount of $4,500,000 during the same period,
to (ii) Fixed Charges of the Borrower and its Subsidiaries (with the components
thereof determined on a consolidated basis in accordance with GAAP) for the same
period, of not less than 1.10 to 1.

Section 8.23. Compliance with AML Laws and Anti-Corruption Laws. (a) The
Borrower shall at all times comply with the requirements of all AML Laws
applicable to the Borrower and shall cause each of its Subsidiaries to comply
with the requirements of all AML Laws applicable to such Subsidiary.

(b) The Borrower shall provide the Administrative Agent and the Lenders any
information regarding the Borrower, its Affiliates, and its Subsidiaries
necessary for the Administrative Agent and the Lenders to comply with all
applicable AML Laws; provided however, in the case of Affiliates, to the
Borrower’s obligations hereunder are limited to providing information available
to the Borrower regarding any Affiliate.

(c) If the Borrower obtains actual knowledge or receives any written notice that
the Borrower, any Affiliate or any Subsidiary is named on the then current OFAC
List or any other equivalent list for any other AML Laws (such occurrence, an
“OFAC Event”), the Borrower shall promptly (i) give written notice to the
Administrative Agent and the Lenders of such OFAC Event, and (ii) comply with
all applicable laws with respect to such OFAC Event (regardless of whether the
party included on the OFAC List is located within the jurisdiction of the United
States of America), and the Borrower hereby authorizes and consents to the
Administrative Agent and the Lenders taking any and all steps the Administrative
Agent, or the Lenders deem necessary, in their sole but reasonable discretion,
to avoid violation of all applicable laws with respect to any such OFAC Event
(including the freezing and/or blocking of assets and reporting such action to
OFAC) and any other AML Laws.

(d) The Borrower will maintain in effect and enforce policies and procedures
designed to ensure compliance by the Borrower, its Subsidiaries and their
respective directors, officers, employees and agents with Anti-Corruption Laws
and applicable Sanctions.

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:

 

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(a) (i) default in the payment when due of all or any part of the principal of
any Loan (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 or 8.22
(subject to Section 9.7 in the case only of Section 8.22) 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 45 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
Lien in favor of the Administrative Agent in any Collateral purported to be
covered thereby (free and clear of all other Liens except as permitted by
Section 8.8) 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 the First Lien Credit Agreement or any other
Indebtedness for Borrowed Money (other than the Intercompany Indebtedness)
issued, assumed or guaranteed by the Borrower or any Subsidiary aggregating in
excess of $5,750,000, 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); provided
that, with respect to any defaults described in this clause (f) in respect of
the First Lien Credit Agreement, such default shall only constitute an Event of
Default under this Agreement if the First Lien Loans are accelerated or
otherwise declared to be due and payable in full as a result of such default;

 

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(g) any judgment or judgments, writ or writs or warrant or warrants of
attachment, or any similar process or processes, shall be entered or filed
against the Borrower or any Subsidiary, or against any of its Property, in an
aggregate amount in excess of $5,750,000, and which remains undischarged,
unvacated, unbonded or unstayed for a period of 60 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 $5,750,000
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 $5,750,000 (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 45 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,
(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, 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, trustee, examiner, liquidator,
provisional liquidator, statutory manager or similar official shall be appointed
for the Borrower or any Subsidiary, or any substantial part of any of its
Property, or a proceeding described in Section 9.1(j)(v) shall be instituted
against the Borrower or any Subsidiary, and such appointment continues
undischarged or such proceeding continues undismissed or unstayed for a period
of sixty (60) days; or

 

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(l) (i) Borrower, any Guarantor or any holder of the First Lien Indebtedness
shall, directly or indirectly, disavow or contest in any manner the
effectiveness, validity or enforceability of the Intercreditor Agreement, or
(ii) the Intercreditor Agreement shall cease to be in full force.

Section 9.2. Non-Bankruptcy Defaults. When any Event of Default other than those
described in subsection (j) or (k) 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 Delayed Draw
Term Loan Commitments and all other obligations of the Lenders hereunder on the
date stated in such notice (which may be the date thereof) and (b) if so
directed by the Required Lenders, declare the principal of and the accrued
interest on all outstanding Loans to be forthwith due and payable and thereupon
all outstanding Loans, 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. 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) or (k) of Section 9.1 hereof has occurred and is continuing,
then all outstanding Loans 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.

Section 9.4. [Intentionally Omitted].

Section 9.5. Notice of Default. The Administrative Agent shall give notice to
the Borrower under Section 9.1(c) hereof promptly upon being requested to do so
by any Lender and shall thereupon notify all the Lenders thereof.

Section 9.6. Expenses. The Borrower agrees to pay to the Administrative Agent
and each Lender, and any other holder of any Note outstanding hereunder, all
costs and expenses reasonably incurred or paid by the Administrative Agent and
such Lender or any such holder, including reasonable attorneys’ fees and court
costs, in connection with any Default or Event of Default hereunder or in
connection with the enforcement of any of the Loan Documents (including all such
costs and expenses incurred in connection with any proceeding under the United
States Bankruptcy Code involving the Borrower or any Subsidiary as a debtor
thereunder).

Section 9.7. Right to Cure. Notwithstanding anything to the contrary contained
in Section 9.1, in the event the Borrower anticipates that it will not be able
to comply or fails to comply with the requirements of any covenant set forth in
Section 8.22, on or before the date on which a certificate of an Authorized
Representative certifying compliance with Section 8.22 is required to be
delivered pursuant to Section 8.5(j), the Borrower may notify the Administrative
Agent that it intends to exercise its Cure Right (as defined below) (each such
notice, a “Cure Notice”), and if the Borrower has given a Cure Notice then the
Lenders shall not exercise their remedies with respect to Section 8.22, provided
that within 20 Business Days after the date the

 

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Cure Notice is given, the Borrower shall issue common and/or preferred stock to
any Person other than the Borrower or a Subsidiary for cash or otherwise receive
cash contributions, in each case, on terms and conditions acceptable to the
Administrative Agent in an aggregate amount equal to the amount necessary to
cure the relevant failure to comply with Section 8.22 by means of the repayment
of Total Funded Debt (collectively, the “Cure Right”), and upon the receipt by
the Borrower of such cash (the “Cure Amount”) pursuant to the exercise by the
Borrower of such Cure Right and the application within such 20 Business Day
period of the Cure Amount to the payment of Loans outstanding hereunder, the
covenants in Section 8.22 shall be recalculated giving effect to the following
pro forma adjustments:

(a) the Cure Amount shall be deemed to have been applied to the payment of Loans
hereunder (x) as of the last day of the fiscal quarter for which a Cure Right
has been exercised in the case of the Total Leverage Ratio contained in
Section 8.22(a) and (y) as of the first day of the four consecutive fiscal
quarters of the Borrower ended on the last day of the fiscal quarter for which a
Cure Right has been exercised in the case of the Fixed Charge Coverage Ratio
contained in Section 8.22(b); and

(b) if after giving effect to the foregoing recalculations, the Borrower shall
then be in compliance with the requirements of Section 8.22 the Borrower shall
be deemed to have satisfied the requirements of Section 8.22 as of the relevant
date of determination with the same effect as though there had been no failure
to comply therewith at such date, and the applicable breach or default of the
covenants in Section 8.22 that had occurred shall be deemed cured for the
purposes of this Agreement.

SECTION 10. CHANGE IN CIRCUMSTANCES.

Section 10.1. Change of Law. Notwithstanding any other provisions of this
Agreement or any other Loan Document, if at any time any Change in Law makes it
unlawful for any Lender to make or continue to maintain any Eurodollar 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 Eurodollar Loans under this Agreement shall be
suspended until it is no longer unlawful for such Lender to make or maintain
Eurodollar Loans in such currency. The Borrower shall prepay on demand the
outstanding principal amount of any such affected Eurodollar 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 Eurodollar 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 Eurodollar 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
Eurodollar market for such Interest Period, or that by reason of circumstances
affecting the interbank Eurodollar market adequate and reasonable means do not
exist for ascertaining the applicable LIBOR, or

 

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(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 Eurodollar Loans for such Interest
Period or (ii) that the making or funding of Eurodollar 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 Eurodollar Loans shall be
suspended.

Section 10.3. Increased Cost and Reduced Return. (a) If any Change in Law:

(i) shall subject any Lender (or its Lending Office) to any tax, duty or other
charge with respect to its Eurodollar Loans, its Notes, or its obligation to
make Eurodollar Loans, or shall change the basis of taxation of payments to any
Lender (or its Lending Office) of the principal of or interest on its Eurodollar
Loans or any other amounts due under this Agreement or any other Loan Document
in respect of its Eurodollar Loans or its obligation to make Eurodollar Loans
(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,
compulsory loan, insurance charge 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 Eurodollar 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 Eurodollar
Loans, its Notes, or its obligation to make Eurodollar Loans;

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 Eurodollar Loan, 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 liquidity requirements, 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

 

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compliance by any Lender (or its Lending Office) or any Person controlling such
Lender with any request or directive regarding capital adequacy or liquidity
requirements (whether or not having the force of law) of any such authority,
central bank or comparable agency, has had the effect of reducing the rate of
return on such Lender’s or such Person’s capital as a consequence of its
obligations hereunder to a level below that which such Lender or such Person
could have achieved but for such adoption, change or compliance (taking into
consideration such Lender’s or such Person’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 Eurodollar
Loans to reduce any liability of the Borrower to such Lender under Section 10.3
hereof or to avoid the unavailability of Eurodollar 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 Eurodollar Loans shall be made as if
each Lender had actually funded and maintained each Eurodollar Loan through the
purchase of deposits in the interbank eurodollar market having a maturity
corresponding to such Loan’s Interest Period, 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 Rabobank to act on its behalf 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
provisions of this Section are solely for the benefit of the Administrative
Agent and the Lenders, and the Borrower and Guarantors shall not have rights as
a third-party beneficiary of any of such provisions. It is understood and agreed
that the use of the term “agent” herein or in any other Loan Documents (or any
other similar term) with reference to the Administrative Agent is not intended
to connote any fiduciary or other implied (or express) obligations arising under
agency doctrine of any applicable law. Instead such term is used as a matter of
market custom, and is intended to create or reflect only an administrative
relationship between contracting parties.

 

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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 in its capacity as a Lender as any other Lender and may exercise or
refrain from exercising such rights and power as though it were not the
Administrative Agent. 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 and without any duty to account
therefor to the Lenders. 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 and in the
Intercreditor Agreement. 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, and shall not, except as expressly set forth herein and in
the other Loan Documents, have any duty to disclose, and shall not be liable for
the failure to disclose, any information relating to the Borrower or any of its
Affiliates that is communicated to or obtained by the Person serving as the
Administrative Agent or any of its Affiliates in any capacity. Upon the
occurrence of an Event of Default and subject to the Intercreditor Agreement,
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 that, in its opinion or the opinion of its counsel, may expose
the Administrative Agent to liability or is in violation of applicable law or of
any provision of any Loan Document (including for the avoidance of doubt any
action that may be in violation of the automatic stay under any bankruptcy or
insolvency law or that may effect a forfeiture, modification or termination of
property of a Defaulting Lender in violation of any bankruptcy or insolvency
law), 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 Secured Parties.

 

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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 Affiliated Parties 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 (as finally determined by a court
of competent jurisdiction). Neither the Administrative Agent nor any of its
directors, officers, agents or employees shall be responsible for or have any
duty to ascertain, inquire into or verify: (i) any statement, warranty or
representation made in connection with this Agreement, any other Loan Document
or any Credit Event; (ii) the performance or observance of any of the covenants
or agreements of the Borrower or any Subsidiary contained herein or in any other
Loan Document or the occurrence of any Default; (iii) the satisfaction of any
condition specified in Section 7 hereof, except receipt of items required to be
delivered to the Administrative Agent pursuant to Section 7; 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 and including by telephone and any electronic message, Internet or
intranet website posting or other distribution) 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.

 

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Section 11.6. Indemnity. The Lenders shall ratably, in accordance with their
respective Percentages, indemnify and hold the Administrative Agent, and its
Affiliated Parties, 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 (as finally determined by a court of competent
jurisdiction). 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 subject, so long as no Default or Event of
Default shall have occurred and be continuing, to the Borrower’s prior written
consent (which will not be unreasonably withheld or delayed). If no successor
Administrative Agent shall have been so appointed by the Required Lenders, and
shall have accepted such appointment, within 30 days after the retiring
Administrative Agent’s giving of notice of resignation then the retiring
Administrative Agent may, on behalf of the Lenders, 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 subject, so
long as no Default or Event of Default shall have occurred and be continuing, to
the Borrower’s prior written consent (which will not be unreasonably withheld or
delayed). 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. Delegation of Duties. The Administrative Agent may perform any and
all of its duties and exercise its rights and powers hereunder or under any
other Loan Document by or through any one or more sub agents appointed by the
Administrative Agent (or through the First Lien Agent as may be set forth in the
Intercreditor Agreement). The Administrative Agent and any such sub agent may
perform any and all of its duties and exercise its rights and powers

 

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by or through their respective Affiliated Parties. The exculpatory provisions of
this Section 11 shall apply to any such sub agent and to the Affiliated Parties
of the Administrative Agent and any such sub agent. The Administrative Agent
shall not be responsible for the negligence or misconduct of any sub-agents
except to the extent that a court of competent jurisdiction determines in a
final and nonappealable judgment that the Administrative Agent acted with gross
negligence or willful misconduct in the selection of such sub agents.

Section 11.9. [Intentionally Omitted].

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, (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, (d) release Liens on the
Collateral following Full Satisfaction of the Obligations, (e) confirm in
writing whether specific items or types of the Borrower’s or any Guarantor’s
property are or are not included in the Collateral pursuant to the Loan
Documents, and (f) enter into the Intercreditor Agreement and perform all
obligations thereunder, and to enter into any amendments of the Intercreditor
Agreement which do not materially modify the rights of the Secured Parties
thereunder. Each Secured Party agrees to be bound by the terms of the
Intercreditor Agreement and each Secured Party hereby acknowledges and agrees
that, as of the date hereof, Rabobank will be acting as the First Lien Agent,
including under the Intercreditor Agreement.

The Administrative Agent, at the sole expense of the Borrower, shall execute and
deliver to the Borrower all releases or other documents reasonably necessary or
desirable to evidence or effect any release of Liens authorized under this
Section; provided, that (i) the Administrative Agent shall not be required to
execute any document necessary to evidence such release (other than a release
pursuant to clause (d) above) unless a responsible officer of the Borrower shall
certify in writing to the Administrative Agent that the transaction requiring
such release is permitted under the Loan Documents (it being acknowledged that
the Administrative Agent may rely on any such certificate without further
inquiry), (ii) the Administrative Agent shall not be required to execute any
document necessary to evidence such release on terms that, in the Administrative
Agent’s opinion, would expose the Administrative Agent to liability or create
any

 

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obligation or entail any consequence other than the release of such Lien without
recourse, representation, or warranty, and (iii) no such release in connection
with a permitted sale or transfer shall in any manner discharge, affect, or
impair the Obligations or any Liens (other than those expressly being released)
upon all interests retained by the Borrower and the Guarantors, including, the
proceeds of any such sale, all of which shall continue to constitute part of the
Collateral. The Administrative Agent agrees with the Borrower that upon the Full
Satisfaction of the Obligations, the Administrative Agent shall release all
Liens on the Collateral, at the Borrower’s cost and expense and the
Administrative Agent agrees with the Borrower that the costs of the
Administrative Agent and its agents that are passed on to the Borrower shall be
reasonable.

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 (including control
agreements and collateral access agreements which may be delivered from time to
time) 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 and, in connection with any such
agreements with a third party other than the Borrower and its Affiliates, to
undertake indemnification and expense reimbursement obligations as may be
customary for such agreements, provided the Administrative Agent shall not amend
the Collateral Documents in any manner which materially and adversely modifies
the rights of the Secured Parties thereunder 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 11.13. Administrative Agent May File Proofs of Claim. In case of the
pendency of any proceeding under any bankruptcy or insolvency law or any other
judicial proceeding relative to any Borrower or Guarantor, the Administrative
Agent (irrespective of whether the principal of any Loan shall then be due and
payable as herein expressed or by declaration or otherwise and irrespective of
whether the Administrative Agent shall have made any demand on the Borrower)
shall be entitled and empowered (but not obligated) by intervention in such
proceeding or otherwise:

(a) to file and prove a claim for the whole amount of the principal and interest
owing and unpaid in respect of the Loans and all other Obligations that are
owing and unpaid and to file such other documents as may be necessary or
advisable in order to

 

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have the claims of the Lenders and the Administrative Agent (including any claim
for the reasonable compensation, expenses, disbursements and advances of the
Lenders and the Administrative Agent and their respective agents and counsel and
all other amounts due the Lenders and the Administrative Agent under the Loan
Documents) allowed in such judicial proceeding; and

(b) to collect and receive any monies or other property payable or deliverable
on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to the Administrative Agent and, in the event
that the Administrative Agent shall consent to the making of such payments
directly to the Lenders, to pay to the Administrative Agent any amount due for
the reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under the Loan Documents.

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 Delayed Draw Term Loan Commitments and for other good
and valuable consideration, receipt of which is hereby acknowledged, each
Subsidiary party hereto in accordance with Section 4.1 hereof (including any
Subsidiary formed or acquired after the Closing Date executing an Additional
Guarantor Supplement in the form attached hereto as Exhibit F or such other form
acceptable to the Administrative Agent) hereby unconditionally and irrevocably
guarantees jointly and severally to the Administrative Agent, the Lenders and
their Affiliates, the due and punctual payment of all present and future
Obligations, including, but not limited to, the due and punctual payment of
principal of and interest on the Loans, 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. This
is a guarantee of payment and not of collection. In case of failure by the
Borrower or other obligor punctually to pay any Obligations, 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;

 

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(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, other than the payment in full of
the indebtedness, obligations and liabilities guarantied hereby, but subject to
the last sentence of Section 12.3;

(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 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 Full Satisfaction; Reinstatement in Certain
Circumstances. Each Guarantor’s obligations under this Section 12 shall remain
in full force and effect until the Delayed Draw Term Loan Commitments have been
Fully Satisfied, and the principal of and interest on the Loans and all other
amounts payable by the Borrower and the Guarantors under this Agreement and all
other Loan Documents have been Fully Satisfied. If at any time any payment of
the principal of or interest on any Note 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.

 

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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 shall have been Fully Satisfied. If any
amount shall be paid to a Guarantor on account of such subrogation rights at any
time prior to the Full Satisfaction of the Obligations, 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, whether matured or
unmatured, in accordance with the terms of this Agreement.

Section 12.5. Waivers. Each Guarantor irrevocably waives acceptance hereof,
presentment, demand, protest, and any notice not provided for herein, as well as
any requirement that at any time any action be taken by the Administrative
Agent, any Lender, or any other Person against the Borrower or other obligor,
another guarantor, or any other Person.

Section 12.6. Limit on Recovery. Notwithstanding any other provision hereof, the
right of recovery against each Guarantor under this Section 12 shall not exceed
$1.00 less than the lowest amount which would render such Guarantor’s
obligations under this Section 12 void or voidable under applicable law,
including, without limitation, fraudulent conveyance law.

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 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 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. Each Guarantor (each referred
to herein as a “Subordinated Creditor”) hereby subordinates the payment of all
indebtedness, obligations, and liabilities of the Borrower or other Guarantor
owing to such Subordinated Creditor, whether now existing or hereafter arising,
to the indefeasible payment in full in cash of all Obligations. During the
existence of any Event of Default, subject to Section 12.4 above, any such
indebtedness, obligation, or liability of the Borrower or other Guarantor owing
to such Subordinated Creditor shall be enforced and performance received by such
Subordinated Creditor as trustee for the benefit of the Secured Parties and the
proceeds thereof shall be paid over to the Administrative Agent for application
to the Obligations (whether or not then due), but without reducing or affecting
in any manner the liability of such Guarantor under this Section 12.

 

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SECTION 13. MISCELLANEOUS.

Section 13.1. Taxes.

(a) Defined Terms. For purposes of this Section 13.1, the term “applicable law”
includes FATCA.

(b) Payments Free of Taxes. Any and all payments by or on account of any
obligation of Borrower or any Guarantor under any Loan Document shall be made
without deduction or withholding for any taxes, except as required by applicable
law. If any applicable law (as determined in the good faith discretion of an
applicable Withholding Agent) requires the deduction or withholding of any tax
from any such payment by a Withholding Agent, then the applicable Withholding
Agent shall be entitled to make such deduction or withholding and shall timely
pay the full amount deducted or withheld to the relevant Governmental Authority
in accordance with applicable law and, if such tax is an Indemnified Tax, then
the sum payable by Borrower or the applicable Guarantor shall be increased as
necessary so that after such deduction or withholding has been made (including
such deductions and withholdings applicable to additional sums payable under
this Section) the applicable Recipient receives an amount equal to the sum it
would have received had no such deduction or withholding been made.

(c) Payment of Other Taxes by Borrower and the Guarantors. Borrower and the
Guarantors shall timely pay to the relevant Governmental Authority in accordance
with applicable law, or at the option of Administrative Agent timely reimburse
it for the payment of, any Other Taxes.

(d) Indemnification by Borrower and the Guarantors. Borrower and the Guarantors
shall jointly and severally indemnify each Recipient, within 10 days after
demand therefor, for the full amount of any Indemnified Taxes (including
Indemnified Taxes imposed or asserted on or attributable to amounts payable
under this Section) payable or paid by such Recipient or required to be withheld
or deducted from a payment to such Recipient and any reasonable expenses arising
therefrom or with respect thereto, whether or not such Indemnified Taxes were
correctly or legally imposed or asserted by the relevant Governmental Authority.
A certificate as to the amount of such payment or liability delivered to
Borrower by a Lender (with a copy to Administrative Agent), or by Administrative
Agent on its own behalf or on behalf of a Lender, shall be conclusive absent
manifest error.

(e) Indemnification by the Lenders. Each Lender shall severally indemnify
Administrative Agent, within 10 days after demand therefor, for (i) any
Indemnified Taxes attributable to such Lender (but only to the extent that
Borrower or any Guarantor has not already indemnified Administrative Agent for
such Indemnified Taxes and without limiting the obligation of Borrower or the
Guarantors to do so), (ii) any taxes attributable to such Lender’s failure to
comply with the provisions of Section 13.11 relating to the maintenance of a
Participant Register, and (iii) any Excluded Taxes attributable to such Lender,
in each case, that are payable or paid by Administrative Agent in connection
with any Loan Document, and any reasonable expenses arising therefrom or with
respect thereto, whether or not such taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority. A certificate as to the amount
of such payment or liability delivered to any Lender by Administrative Agent

 

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shall be conclusive absent manifest error. Each Lender hereby authorizes
Administrative Agent to set off and apply any and all amounts at any time owing
to such Lender under any Loan Document or otherwise payable by Administrative
Agent to the Lender from any other source against any amount due to
Administrative Agent under this Section 13.1(e).

(f) Evidence of Payments. As soon as practicable after any payment of taxes by
Borrower or any Guarantor to a Governmental Authority pursuant to this
Section 13.1(f), Borrower or such Guarantor shall deliver to Administrative
Agent the original or a certified copy of a receipt issued by such Governmental
Authority evidencing such payment, a copy of the return reporting such payment
or other evidence of such payment reasonably satisfactory to Administrative
Agent.

(g) Status of Lenders.

(i) Any Lender that is entitled to an exemption from or reduction of withholding
tax with respect to payments made under any Loan Document shall deliver to
Borrower and Administrative Agent, at the time or times reasonably requested by
Borrower or Administrative Agent, such properly completed and executed
documentation reasonably requested by Borrower or Administrative Agent as will
permit such payments to be made without withholding or at a reduced rate of
withholding. In addition, any Lender, if reasonably requested by Borrower or
Administrative Agent, shall deliver such other documentation prescribed by
applicable law or reasonably requested by Borrower or Administrative Agent as
will enable Borrower or Administrative Agent to determine whether or not such
Lender is subject to backup withholding or information reporting requirements.
Notwithstanding anything to the contrary in the preceding two sentences, the
completion, execution, and submission of such documentation (other than such
documentation set forth in clauses (A), (B), and (D) of Section 13.1(g)(ii))
shall not be required if in the Lender’s reasonable judgment such completion,
execution, or submission would subject such Lender to any material unreimbursed
cost or expense or would materially prejudice the legal or commercial position
of such Lender.

(ii) Without limiting the generality of the foregoing,

(A) any Lender that is a U.S. Person shall deliver to Borrower and
Administrative Agent on or prior to the date on which such Lender becomes a
Lender under this Agreement (and from time to time thereafter upon the
reasonable request of Borrower or Administrative Agent), executed originals of
IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup
withholding tax;

(B) any Foreign Lender shall, to the extent it is legally entitled to do so,
deliver to Borrower and Administrative Agent (in such number of copies as shall
be requested by the recipient) on or prior to the date on which such Foreign
Lender becomes a Lender under this Agreement (and from time to time thereafter
upon the reasonable request of Borrower or Administrative Agent), whichever of
the following is applicable:

 

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(1) in the case of a Foreign Lender claiming the benefits of an income tax
treaty to which the United States is a party (I) with respect to payments of
interest under any Loan Document, executed originals of IRS Form W-8BEN or IRS
Form W-8BEN-E, as applicable, establishing an exemption from, or reduction of,
U.S. federal withholding tax pursuant to the “interest” article of such tax
treaty and (II) with respect to any other applicable payments under any Loan
Document, IRS Form W-8BEN establishing an exemption from, or reduction of, U.S.
federal withholding tax pursuant to the “business profits” or “other income”
article of such tax treaty;

(2) executed originals of IRS Form W-8ECI;

(3) in the case of a Foreign Lender claiming the benefits of the exemption for
portfolio interest under Section 881(c) of the Code, (I) a certificate
substantially in the form of Exhibit 13.1-1 to the effect that such Foreign
Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a
“10 percent shareholder” of Borrower or the Guarantors within the meaning of
Section 871(h)(3)(B) of the Code, or a “controlled foreign corporation”
described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance
Certificate”) and (II) executed originals of IRS Form W-8BEN or IRS Form
W-8BEN-E, as applicable; or

(4) to the extent a Foreign Lender is not the beneficial owner, executed
originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN,
IRS Form W-8BEN-E, a U.S. Tax Compliance Certificate substantially in the form
of Exhibit 13.1-2 or Exhibit 13.1-3, IRS Form W-9, and/or other certification
documents from each beneficial owner, as applicable; provided that if the
Foreign Lender is a partnership and one or more direct or indirect partners of
such Foreign Lender are claiming the portfolio interest exemption, such Foreign
Lender may provide a U.S. Tax Compliance Certificate substantially in the form
of Exhibit 13.1-4 on behalf of each such direct and indirect partner;

(C) any Foreign Lender shall, to the extent it is legally entitled to do so,
deliver to Borrower and Administrative Agent (in such number of copies as shall
be requested by the recipient) on or prior to the date on which such Foreign
Lender becomes a Lender under this Agreement (and from time to time thereafter
upon the reasonable request of Borrower or Administrative Agent), executed
originals of any other form prescribed

 

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by applicable law as a basis for claiming exemption from or a reduction in U.S.
federal withholding tax, duly completed, together with such supplementary
documentation as may be prescribed by applicable law to permit Borrower or
Administrative Agent to determine the withholding or deduction required to be
made; and

(D) if a payment made to a Lender under any Loan Document would be subject to
U.S. federal withholding tax imposed by FATCA if such Lender were to fail to
comply with the applicable reporting requirements of FATCA (including those
contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender
shall deliver to Borrower and Administrative Agent at the time or times
prescribed by law and at such time or times reasonably requested by Borrower or
Administrative Agent such documentation prescribed by applicable law (including
as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional
documentation reasonably requested by Borrower or Administrative Agent as may be
necessary for Borrower and Administrative Agent to comply with their obligations
under FATCA and to determine that such Lender has complied with such Lender’s
obligations under FATCA or to determine the amount to deduct and withhold from
such payment. Solely for purposes of this clause (D), “FATCA” shall include any
amendments made to FATCA after the date of this Agreement.

Each Lender agrees that if any form or certification it previously delivered
expires or becomes obsolete or inaccurate in any respect, it shall update such
form or certification or promptly notify Borrower and Administrative Agent in
writing of its legal inability to do so.

(h) Treatment of Certain Refunds. If any party determines, in its sole
discretion exercised in good faith, that it has received a refund of any taxes
as to which it has been indemnified pursuant to this Section 13.1 (including by
the payment of additional amounts pursuant to this Section 13.1), it shall pay
to the indemnifying party an amount equal to such refund (but only to the extent
of indemnity payments made under this Section with respect to the taxes giving
rise to such refund), net of all out-of-pocket expenses (including taxes) of
such indemnified party and without interest (other than any interest paid by the
relevant Governmental Authority with respect to such refund). Such indemnifying
party, upon the request of such indemnified party, shall repay to such
indemnified party the amount paid over pursuant to this Section 13.1(h) (plus
any penalties, interest or other charges imposed by the relevant Governmental
Authority) in the event that such indemnified party is required to repay such
refund to such Governmental Authority. Notwithstanding anything to the contrary
in this Section 13.1(h), in no event will the indemnified party be required to
pay any amount to an indemnifying party pursuant to this Section 13.1(h) the
payment of which would place the indemnified party in a less favorable net
after-tax position than the indemnified party would have been in if the tax
subject to indemnification and giving rise to such refund had not been deducted,
withheld, or otherwise imposed and the indemnification payments or additional
amounts with respect to such tax had never been paid. This Section 13.1(h) shall
not be construed to require any indemnified party to make available its tax
returns (or any other information relating to its taxes that it deems
confidential) to the indemnifying party or any other Person.

 

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(i) Survival. Each party’s obligations under this Section 13.1 shall survive the
resignation or replacement of Administrative Agent or any assignment of rights
by, or the replacement of, a Lender, the termination of the Commitments and the
repayment, satisfaction, or discharge of all obligations under any Loan
Document.

Section 13.2. No Waiver, Cumulative Remedies. No delay or failure on the part of
the Administrative Agent or any Lender or on the part of the holder or holders
of any of the Obligations in the exercise of any power or right under any Loan
Document shall operate as a waiver thereof or as an acquiescence in any default,
nor shall any single or partial exercise of any power or right preclude any
other or further exercise thereof or the exercise of any other power or right.
The rights and remedies hereunder of the Administrative Agent, the Lenders and
of the holder or holders of any of the Obligations are cumulative to, and not
exclusive of, any rights or remedies which any of them would otherwise have.

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, including, but not limited to,
Sections 1.11, 10.3, 13.1, 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
in excess of its ratable share of payments

 

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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 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:

(a) 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, and

(b) the provisions of this paragraph shall not be construed to apply to (x) any
payment made by the Borrower pursuant to and in accordance with the express
terms of this Agreement (including the application of funds arising from the
existence of a Defaulting Lender), or (y) any payment obtained by a Lender as
consideration for the assignment of or sale of a participation in any of its
Loans to any assignee or participant permitted by this Agreement.

Section 13.8. Notices. Except as otherwise specified herein, all notices and
communications (“Communications”) hereunder and under the other Loan Documents
shall be in writing (including, without limitation, notice by email or telecopy)
and shall be delivered by hand or overnight courier service, mailed by certified
or registered mail or sent by email or telecopy or, subject to Section 13.25, by
electronic communication, as follows:

 

  (i) if to the Borrower or any Guarantor to:

 

    Penford Corporation

    7094 South Revere Parkway

    Centennial, Colorado 80112

    Attention: Chief Financial Officer; General Counsel

    Telephone: (303) 649-1900

    Telecopy: (303) 649-1700

    Email: scordier@penx.com ; clawlor@penx.com

(ii) if to Administrative Agent in connection with any Notice of Borrowing,
Notice of Continuation/Conversion, or any payment or prepayment of the
Obligations, to it at c/o Rabo Support Services, Inc., at 245 Park Avenue, New
York, NY 10167, Attention: Corporate Bank Services; Telecopy No. (201) 499-5328;
Telephone No. (212) 574-7327; Email: fm.am.syndicatedloans@rabobank.com, with a
copy to: punam.gambhir@rabobank.com;

(iii) if to Administrative Agent in connection with any other matter (including
deliveries under Section 8.5 and other matters), to it at Rabobank Loan
Syndications, 245 Park Avenue, New York, NY 10167, Attention: Loan Syndications;
Telecopy No. (212) 808-2578; Telephone No. (212) 808-6808; Email:
syndications.ny@rabobank.com; and

 

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(iv) if to a Lender, to it at its address (or telecopy number) set forth in its
administrative questionnaire delivered to the Administrative Agent from time to
time.

Each such notice, request or other communication shall be effective (i) if given
by telecopier or electronic transmission, when such telecopy or electronic
transmission is transmitted to the telecopier number or email address specified
in this Section or on the signature pages hereof and a confirmation of such
telecopy or electronic transmission 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, provided
further, notices delivered through electronic communications to the extent
provided in Section 13.25, shall be effective as provided in such Section 13.25,
and provided further, if any notice given to the Borrower or any Guarantor
relating to the occurrence of a Default or Event of Default is delivered through
electronic communications, a courtesy copy of such notice shall thereafter also
be sent via overnight courier to the address noted above.

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/or Commitments held by such Lender at
any time and from time to time to one or more Eligible Assignees, subject to the
consent of the Borrower (such consent not to be unreasonably withheld or
delayed) unless (x) an Event of Default has occurred and is continuing at the
time of such participation or (y) such participation is to a Lender, an
Affiliate of a Lender or an Approved Fund; provided that no such participation
shall relieve any Lender of any of its obligations under this Agreement, and,
provided, further that no such participant shall have any rights under this
Agreement except as provided in this Section, and the Administrative Agent shall
have no obligation or responsibility to such participant. Any agreement pursuant
to which such participation is granted shall provide that the granting Lender
shall retain the sole right and responsibility to enforce the obligations of the
Borrower under this Agreement and the other Loan Documents including, without
limitation, the right to approve any amendment, modification or waiver of any
provision of the Loan Documents, except that such agreement may provide that
such Lender will not agree to any modification, amendment or waiver of the Loan
Documents that would reduce the amount of or postpone any fixed date for payment
of any Obligation in which such participant has an interest. Any party to which
such a participation has been granted shall have the benefits of Section 1.11,
Section 10.3 and Section 13.1 hereof. The

 

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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. Each Lender that sells a participation shall, acting
solely for this purpose as an agent of the Borrower, maintain a register on
which it enters the name and address of each participant and the principal
amounts (and stated interest) of each participant’s interest in the Loans or
other obligations under the Loan Documents (the “Participant Register”);
provided that no Lender shall have any obligation to disclose all or any portion
of the Participant Register (including the identity of any participant or any
information relating to a participant’s interest in any Commitments, Loans or
its other obligations under any Loan Document) to any Person except to the
extent that such disclosure is necessary to establish that such Commitment, Loan
or other obligation is in registered form under Section 5f.103-1(c) of the
United States Treasury Regulations. The entries in the Participant Register
shall be conclusive absent manifest error, and such Lender shall treat each
Person whose name is recorded in the Participant Register as the owner of such
participation for all purposes of this Agreement notwithstanding any notice to
the contrary. For the avoidance of doubt, the Administrative Agent (in its
capacity as Administrative Agent) shall have no responsibility for maintaining a
Participant Register.

Section 13.12. Assignments. (a) Any Lender may at any time assign to one or more
Eligible Assignees all or a portion of such Lender’s rights and obligations
under this Agreement (including all or a portion of its Commitment and the Loans
at the time owing to it); provided that any such assignment shall be subject to
the following conditions:

(i) Minimum Amounts. (A) In the case of an assignment of the entire remaining
amount of the assigning Lender’s Commitment and the Loans at the time owing to
it or in the case of an assignment to a Lender, an Affiliate of a Lender or an
Approved Fund, no minimum amount need be assigned; and (B) in any case not
described in subsection (a)(i)(A) of this Section, the aggregate amount of the
Commitment or, if the applicable Commitment is not then in effect, the principal
outstanding balance of the Loans of the assigning Lender subject to each such
assignment (determined as of the date the Assignment and Acceptance with respect
to such assignment is delivered to the Administrative Agent or, if “Effective
Date” is specified in the Assignment and Acceptance, as of the Effective Date)
shall not be less than $5,000,000 and shall be an integral multiple of $500,000,
unless each of the Administrative Agent and, so long as no Event of Default has
occurred and is continuing, the Borrower otherwise consents (each such consent
not to be unreasonably withheld or delayed);

(ii) Proportionate Amounts. Each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender’s rights and
obligations under this Agreement with respect to its Delayed Draw Term Loans and
its Delayed Draw Term Commitment.

 

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(iii) Required Consents. No consent shall be required for any assignment except
to the extent required by Section 13.12(a)(i)(B) and, in addition:

(A) the consent of the Borrower (such consent not to be unreasonably withheld or
delayed) shall be required unless (x) an Event of Default has occurred and is
continuing at the time of such assignment or (y) such assignment is to a Lender,
an Affiliate of a Lender or an Approved Fund; and

(B) the consent of the Administrative Agent (such consent not to be unreasonably
withheld or delayed) shall be required for assignments if such assignment is to
a Person that is not a Lender, an Affiliate of such Lender or an Approved Fund
with respect to such Lender.

(iv) Assignment and Acceptance. The parties to each assignment shall execute and
deliver to the Administrative Agent an Assignment and Acceptance in the form of
Exhibit G (an “Assignment and Acceptance”), together with a processing and
recordation fee of $3,500, and the assignee, if it is not a Lender, shall
deliver to the Administrative Agent an Administrative Questionnaire.

(v) No Assignment to Borrower or Parent. No such assignment shall be made to the
Borrower or any of its Affiliates, Joint Ventures or Subsidiaries.

(vi) No Assignment to Natural Persons. No such assignment shall be made to a
natural person.

Subject to acceptance and recording thereof by the Administrative Agent pursuant
to Section 13.12(b) hereof, from and after the effective date specified in each
Assignment and Acceptance, the assignee thereunder shall be a party to this
Agreement and, to the extent of the interest assigned by such Assignment and
Acceptance, have the rights and obligations of a Lender under this Agreement,
and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Acceptance, be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance covering
all of the assigning Lender’s rights and obligations under this Agreement, such
Lender shall cease to be a party hereto) but shall continue to be entitled to
the benefits of Sections 13.6 and 13.15 with respect to facts and circumstances
occurring prior to the effective date of such assignment. Any assignment or
transfer by a Lender of rights or obligations under this Agreement that does not
comply with this Section shall be treated for purposes of this Agreement as a
sale by such Lender of a participation in such rights and obligations in
accordance with Section 13.11 hereof.

(b) Register. The Administrative Agent, acting solely for this purpose as an
agent of the Borrower, shall maintain at one of its offices in New York, New
York, a copy of each Assignment and Acceptance delivered to it and a register
for the recordation of the names and addresses of the Lenders, and the
Commitments of, and principal

 

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amounts of the Loans owing to, each Lender pursuant to the terms hereof from
time to time (the “Register”). The entries in the Register shall be conclusive,
and the Borrower, the Administrative Agent, and the Lenders may treat each
Person whose name is recorded in the Register pursuant to the terms hereof as a
Lender hereunder for all purposes of this Agreement, notwithstanding notice to
the contrary. The Register shall be available for inspection by the Borrower and
any Lender, at any reasonable time and from time to time upon reasonable prior
notice.

(c) Any Lender may at any time pledge or grant a security interest in all or any
portion of its rights under this Agreement to secure obligations of such Lender,
including any such pledge or grant to a Federal Reserve Bank, and this Section
shall not apply to any such pledge or grant of a security interest; provided
that no such pledge or grant of a security interest shall release a Lender from
any of its obligations hereunder or substitute any such pledgee or secured party
for such Lender as a party hereto; provided further, however, the right of any
such pledgee or grantee (other than any Federal Reserve Bank) to further
transfer all or any portion of the rights pledged or granted to it, whether by
means of foreclosure or otherwise, shall be at all times subject to the terms of
this Agreement.

Section 13.13. Amendments. Any provision of this Agreement or the other Loan
Documents may be amended or waived if, but only if, such amendment or waiver is
in writing and is signed by (a) the Borrower, (b) the Required Lenders, and
(c) if the rights or duties of the Administrative Agent are affected thereby,
the Administrative Agent; provided that:

(i) no amendment or waiver pursuant to this Section 13.13 shall (A) increase or
extend 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 fee payable hereunder or any
other amount payable under the Loan Documents without the consent of the Lender
to which such payment is owing or which has committed to make such Loan
hereunder;

(ii) no amendment or waiver pursuant to this Section 13.13 shall, unless signed
by each Lender, change the definitions of Delayed Draw 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.

 

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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) Except as otherwise
provided hereunder, the Borrower agrees to pay all reasonable, actual
out-of-pocket costs and expenses of the Administrative Agent in connection with
the preparation, negotiation, syndication, and administration of the Loan
Documents, including, without limitation, the reasonable fees and disbursements
of counsel to the Administrative Agent, in connection with the preparation and
execution of the Loan Documents, and any amendment, waiver or consent related
thereto, whether or not the transactions contemplated herein are consummated,
together with any fees and charges suffered or incurred by the Administrative
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 Affiliated Parties, 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, other
than those which arise from the gross negligence or willful misconduct of the
party claiming indemnification (as finally determined by a court of competent
jurisdiction). 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 (as finally determined by a court of
competent jurisdiction). 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, the Lenders and any Affiliated Parties 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 New York.

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

 

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be provided for, herein or in any other Loan Document, then in such event
(a) the provisions of this Section shall govern and control, (b) neither the
Borrower nor any guarantor or endorser shall be obligated to pay any Excess
Interest, (c) any Excess Interest that the Administrative Agent or any Lender
may have received hereunder shall, at the option of the Administrative Agent, be
(i) applied as a credit against the then outstanding principal amount of
Obligations hereunder and accrued and unpaid interest thereon (not to exceed the
maximum amount permitted by applicable law), (ii) refunded to the Borrower, or
(iii) any combination of the foregoing, (d) the interest rate payable hereunder
or under any other Loan Document shall be automatically subject to reduction to
the maximum lawful contract rate allowed under applicable 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 any New
York State or federal court sitting in New York City and any appellate court
from any thereof 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 hereby notifies the Borrower that pursuant to the
requirements of the USA PATRIOT Act, it is required to obtain, verify, and
record information that identifies the Borrower, which information includes the
name and address of the Borrower and other information that will allow such
Lender to identify the Borrower in accordance with the USA PATRIOT Act.

 

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Section 13.25. Electronic Communications; Platform.

(a) Electronic Communications. Communications to the Lenders under the Loan
Documents may be delivered or furnished by electronic communications pursuant to
procedures approved by the Administrative Agent. The Administrative Agent and
the Borrower may, in their discretion, agree to accept Communications to it
under the Loan Documents by electronic communications pursuant to procedures
approved by it; provided that approval of such procedures may be limited to
particular Communications. Unless the Administrative Agent otherwise prescribes,
(i) Communications sent to an e-mail address shall be deemed received upon the
sender’s receipt of an acknowledgment from the intended recipient (such as by
the “return receipt requested” function, as available, return e-mail or other
written acknowledgment), and (ii) Communications posted on an Internet or
intranet website shall be deemed received upon the deemed receipt by the
intended recipient at its e-mail address as described in Section 13.8
notification that such Communication is available and identifying the website
address thereof; provided that, for both clauses (i) and (ii) of this Section,
if such Communication is not sent before or during the normal business hours of
the recipient, such Communication shall be deemed to have been sent at the
opening of business on the next Business Day.

(b) Electronic Transmission System. The Borrower and the Lenders agree that the
Administrative Agent may make the Communications available to the Lenders and
the Borrower by posting the Communications on Debt Domain, IntraLinks, SyndTrak
or a substantially similar electronic transmission system or digital workspace
provider (the “Platform”). THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE”.
THE ADMINISTRATIVE AGENT DOES NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE
COMMUNICATIONS OR THE ADEQUACY OF THE PLATFORM AND EXPRESSLY DISCLAIMS LIABILITY
FOR ERRORS OR OMISSIONS IN THE COMMUNICATIONS. NO WARRANTY OF ANY KIND, EXPRESS,
IMPLIED, OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM
VIRUSES OR OTHER CODE DEFECTS, IS MADE BY THE ADMINISTRATIVE AGENT IN CONNECTION
WITH THE COMMUNICATIONS OR THE PLATFORM. IN NO EVENT SHALL THE ADMINISTRATIVE
AGENT OR ITS AFFILIATED PARTIES HAVE ANY LIABILITY TO BORROWER, ANY LENDER OR
ANY OTHER PERSON OR ENTITY FOR DAMAGES OF ANY KIND INCLUDING DIRECT OR INDIRECT,
SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN
TORT, CONTRACT, OR OTHERWISE) ARISING OUT OF BORROWER’S OR THE ADMINISTRATIVE
AGENT’S TRANSMISSION OF COMMUNICATIONS THROUGH THE INTERNET, EXCEPT TO THE
EXTENT THE LIABILITY OF THE ADMINISTRATIVE AGENT IS FOUND IN A FINAL
NON-APPEALABLE

 

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JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED PRIMARILY FROM
THE ADMINISTRATIVE AGENTS GROSS NEGLIGENCE OR WILLFUL MISCONDUCT; PROVIDED,
HOWEVER, THAT IN NO EVENT SHALL THE ADMINISTRATIVE AGENT HAVE ANY LIABILITY TO
THE BORROWER, ANY GUARANTOR, ANY LENDER OR ANY OTHER PERSON FOR INDIRECT,
SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES (AS OPPOSED TO DIRECT OR
ACTUAL DAMAGES).

(c) Communications through the Platform. Each Lender agrees that notice to it
(as provided in the next sentence) specifying that the Communications have been
posted to the Platform shall constitute effective delivery of the Communications
to such Lender for purposes hereof. Each Lender agrees (i) to provide to the
Administrative Agent in writing (including by electronic communication),
promptly after the date of this Agreement, an e-mail address to which the
foregoing notice may be sent by electronic transmission and (ii) that the
foregoing notice may be sent to such e-mail address.

[SIGNATURE PAGES TO FOLLOW]

 

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“BORROWER”

 

PENFORD CORPORATION

BY:  

 

       

“GUARANTORS”

 

PENFORD PRODUCTS CO.

BY:  

 

       

PENFORD CAROLINA, LLC

 

BY:     PENFORD PRODUCTS CO., SOLE MEMBER OF PENFORD CAROLINA, LLC

BY:  

 

       

CAROLINA STARCHES, LLC

 

BY:     ITS SOLE MEMBER, PENFORD CAROLINA, LLC

BY:  

 

       

 

DELAYED DRAW TERM LOAN CREDIT AGREEMENT   S-1

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

“LENDERS”

 

COÖPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., RABOBANK NEDERLAND”, NEW
YORK BRANCH, in its individual capacity as a Lender and as Administrative Agent

BY:  

 

        BY:  

 

       

 

DELAYED DRAW TERM LOAN CREDIT AGREEMENT   S-2