exv10w4









Exhibit 10.4



 


Third Amended and Restated Credit Agreement




Dated as of April 7, 2010




among




Penford Corporation




The Guarantors from time to time parties hereto,




the Lenders from time to time parties hereto,




Bank of Montreal,

as Administrative Agent




and




Bank of America National Association,

as Syndication Agent



 

BMO Capital Markets

 as Sole Lead Arranger and Sole Book Runner








 









 








Table of Contents




	 	 	 	 	 	 	 
	Section	 	Heading	 	Page	 
	Section 1.
	 	The Credit Facilities	 	 	1	 
	 
	 	 	 	 	 	 
	Section 1.1.
	 	Revolving Credit Commitments	 	 	1	 
	Section 1.2.
	 	Letters of Credit	 	 	2	 
	Section 1.3.
	 	Applicable Interest Rates	 	 	5	 
	Section 1.4.
	 	Minimum Borrowing Amounts; Maximum Eurodollar Loans	 	 	6	 
	Section 1.5.
	 	Manner of Borrowing Loans and Designating Applicable Interest Rates	 	 	6	 
	Section 1.6.
	 	Interest Periods	 	 	8	 
	Section 1.7.
	 	Maturity of Loans	 	 	9	 
	Section 1.8.
	 	Prepayments	 	 	9	 
	Section 1.9.
	 	Default Rate	 	 	10	 
	Section 1.10.
	 	The Notes	 	 	10	 
	Section 1.11.
	 	Funding Indemnity	 	 	11	 
	Section 1.12.
	 	Commitment Terminations	 	 	11	 
	Section 1.13.
	 	Substitution of Lenders	 	 	12	 
	Section 1.14.
	 	Swing Loans	 	 	12	 
	Section 1.15.
	 	Defaulting Lenders	 	 	14	 
	 
	 	 	 	 	 	 
	Section 2.
	 	Fees	 	 	15	 
	 
	 	 	 	 	 	 
	Section 2.1.
	 	Fees	 	 	15	 
	 
	 	 	 	 	 	 
	Section 3.
	 	Place and Application of Payments	 	 	16	 
	 
	 	 	 	 	 	 
	Section 3.1.
	 	Place and Application of Payments	 	 	16	 
	Section 3.2.
	 	Account Debit	 	 	17	 
	 
	 	 	 	 	 	 
	Section 4.
	 	Guaranties and Collateral	 	 	17	 
	 
	 	 	 	 	 	 
	Section 4.1.
	 	Guaranties	 	 	17	 
	Section 4.2.
	 	Collateral	 	 	18	 
	Section 4.3.
	 	Liens on Real Property	 	 	18	 
	Section 4.4.
	 	Further Assurances	 	 	19	 
	Section 4.5.
	 	Operating Accounts	 	 	19	 
	 
	 	 	 	 	 	 
	Section 5.
	 	Definitions; Interpretation	 	 	19	 
	 
	 	 	 	 	 	 
	Section 5.1.
	 	Definitions	 	 	19	 
	Section 5.2.
	 	Interpretation	 	 	37	 
	Section 5.3.
	 	Change in Accounting Principles	 	 	37	 
	 
	 	 	 	 	 	 
	Section 6.
	 	Representations and Warranties	 	 	37	 
	 
	 	 	 	 	 	 
	Section 6.1.
	 	Organization and Qualification	 	 	37	 






 









 






	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	Section 6.2.
	 	Subsidiaries	 	 	37	 
	Section 6.3.
	 	Authority and Validity of Obligations	 	 	38	 
	Section 6.4.
	 	Use of Proceeds; Margin Stock	 	 	39	 
	Section 6.5.
	 	Financial Reports	 	 	39	 
	Section 6.6.
	 	No Material Adverse Change	 	 	39	 
	Section 6.7.
	 	Full Disclosure	 	 	39	 
	Section 6.8.
	 	Trademarks, Franchises, and Licenses	 	 	40	 
	Section 6.9.
	 	Governmental Authority and Licensing	 	 	40	 
	Section 6.10.
	 	Good Title	 	 	40	 
	Section 6.11.
	 	Litigation and Other Controversies	 	 	40	 
	Section 6.12.
	 	Taxes	 	 	40	 
	Section 6.13.
	 	Approvals	 	 	41	 
	Section 6.14.
	 	Affiliate Transactions	 	 	41	 
	Section 6.15.
	 	Investment Company	 	 	41	 
	Section 6.16.
	 	ERISA	 	 	41	 
	Section 6.17.
	 	Compliance with Laws	 	 	41	 
	Section 6.18.
	 	Other Agreements	 	 	43	 
	Section 6.19.
	 	Solvency	 	 	43	 
	Section 6.20.
	 	No Default	 	 	43	 
	Section 6.21.
	 	OFAC	 	 	43	 
	 
	 	 	 	 	 	 
	Section 7.
	 	Conditions Precedent	 	 	43	 
	 
	 	 	 	 	 	 
	Section 7.1.
	 	All Credit Events	 	 	43	 
	Section 7.2.
	 	Initial Credit Event	 	 	44	 
	 
	 	 	 	 	 	 
	Section 8.
	 	Covenants	 	 	47	 
	 
	 	 	 	 	 	 
	Section 8.1.
	 	Maintenance of Business	 	 	47	 
	Section 8.2.
	 	Maintenance of Properties	 	 	47	 
	Section 8.3.
	 	Taxes and Assessments	 	 	47	 
	Section 8.4.
	 	Insurance	 	 	47	 
	Section 8.5.
	 	Financial Reports	 	 	48	 
	Section 8.6.
	 	Inspection	 	 	50	 
	Section 8.7.
	 	Borrowings and Guaranties	 	 	50	 
	Section 8.8.
	 	Liens	 	 	51	 
	Section 8.9.
	 	Investments, Acquisitions, Loans and Advances	 	 	52	 
	Section 8.10.
	 	Mergers, Consolidations and Sales	 	 	53	 
	Section 8.11.
	 	Maintenance of Subsidiaries	 	 	54	 
	Section 8.12.
	 	Dividends and Certain Other Restricted Payments	 	 	54	 
	Section 8.13.
	 	ERISA	 	 	55	 
	Section 8.14.
	 	Compliance with Laws	 	 	55	 
	Section 8.15.
	 	Burdensome Contracts With Affiliates	 	 	57	 
	Section 8.16.
	 	No Changes in Fiscal Year	 	 	57	 
	Section 8.17.
	 	Formation of Subsidiaries	 	 	57	 
	Section 8.18.
	 	Change in the Nature of Business	 	 	58	 
	Section 8.19.
	 	Use of Proceeds	 	 	58	 






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	 	 	 	 	Page	 
	Section 8.20.
	 	No Restrictions	 	 	58	 
	Section 8.21.
	 	Subordinated Debt	 	 	58	 
	Section 8.22.
	 	Financial Covenants	 	 	58	 
	Section 8.23.
	 	Post-Closing Items	 	 	59	 
	Section 8.24.
	 	Compliance with OFAC Sanctions Programs	 	 	59	 
	 
	 	 	 	 	 	 
	Section 9.
	 	Events of Default and Remedies	 	 	60	 
	 
	 	 	 	 	 	 
	Section 9.1.
	 	Events of Default	 	 	60	 
	Section 9.2.
	 	Non-Bankruptcy Defaults	 	 	62	 
	Section 9.3.
	 	Bankruptcy Defaults	 	 	62	 
	Section 9.4.
	 	Collateral for Undrawn Letters of Credit	 	 	63	 
	Section 9.5.
	 	Notice of Default	 	 	63	 
	Section 9.6.
	 	Expenses	 	 	63	 
	Section 9.7.
	 	Right to Cure	 	 	64	 
	 
	 	 	 	 	 	 
	Section 10.
	 	Change in Circumstances	 	 	65	 
	 
	 	 	 	 	 	 
	Section 10.1.
	 	Change of Law	 	 	65	 
	Section 10.2.
	 	Unavailability of Deposits or Inability to Ascertain, or	 	 	 	 
	 
	 	Inadequacy of, LIBOR	 	 	65	 
	Section 10.3.
	 	Increased Cost and Reduced Return	 	 	65	 
	Section 10.4.
	 	Lending Offices	 	 	67	 
	Section 10.5.
	 	Discretion of Lender as to Manner of Funding	 	 	67	 
	 
	 	 	 	 	 	 
	Section 11.
	 	The Administrative Agent	 	 	67	 
	 
	 	 	 	 	 	 
	Section 11.1.
	 	Appointment and Authorization of Administrative Agent	 	 	67	 
	Section 11.2.
	 	Administrative Agent and its Affiliates	 	 	68	 
	Section 11.3.
	 	Action by Administrative Agent	 	 	68	 
	Section 11.4.
	 	Consultation with Experts	 	 	68	 
	Section 11.5.
	 	Liability of Administrative Agent; Credit Decision	 	 	69	 
	Section 11.6.
	 	Indemnity	 	 	69	 
	Section 11.7.
	 	Resignation of
Administrative Agent and Successor Administrative Agent	 	 	70	 
	Section 11.8.
	 	L/C Issuer	 	 	70	 
	Section 11.9.
	 	Hedging Liability and Funds
Transfer and Deposit Account Liability Arrangements	 	 	70	 
	Section 11.10.
	 	Designation of Additional Agents	 	 	71	 
	Section 11.11.
	 	Authorization to Release or Subordinate or Limit Liens	 	 	71	 
	Section 11.12.
	 	Authorization to Enter into, and
Enforcement of, the Collateral Documents	 	 	71	 
	 
	 	 	 	 	 	 
	Section 12.
	 	The Guarantees	 	 	72	 
	 
	 	 	 	 	 	 
	Section 12.1.
	 	The Guarantees	 	 	72	 
	Section 12.2.
	 	Guarantee Unconditional	 	 	72	 






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	 	 	 	 	Page	 
	Section 12.3.
	 	Discharge Only upon Payment in
Full; Reinstatement in Certain Circumstances	 	 	73	 
	Section 12.4.
	 	Subrogation	 	 	74	 
	Section 12.5.
	 	Waivers	 	 	74	 
	Section 12.6.
	 	Limit on Recovery	 	 	74	 
	Section 12.7.
	 	Stay of Acceleration	 	 	74	 
	Section 12.8.
	 	Benefit to Guarantors	 	 	75	 
	Section 12.9.
	 	Guarantor Covenants	 	 	75	 
	 
	 	 	 	 	 	 
	Section 13.
	 	Miscellaneous	 	 	75	 
	 
	 	 	 	 	 	 
	Section 13.1.
	 	Withholding Taxes	 	 	75	 
	Section 13.2.
	 	No Waiver, Cumulative Remedies	 	 	76	 
	Section 13.3.
	 	Non-Business Days	 	 	76	 
	Section 13.4.
	 	Documentary Taxes	 	 	76	 
	Section 13.5.
	 	Survival of Representations	 	 	77	 
	Section 13.6.
	 	Survival of Indemnities	 	 	77	 
	Section 13.7.
	 	Sharing of Set-Off	 	 	77	 
	Section 13.8.
	 	Notices	 	 	77	 
	Section 13.9.
	 	Counterparts	 	 	78	 
	Section 13.10.
	 	Successors and Assigns	 	 	78	 
	Section 13.11.
	 	Participants	 	 	78	 
	Section 13.12.
	 	Assignments	 	 	79	 
	Section 13.13.
	 	Amendments	 	 	81	 
	Section 13.14.
	 	Headings	 	 	81	 
	Section 13.15.
	 	Costs and Expenses; Indemnification	 	 	81	 
	Section 13.16.
	 	Set-off	 	 	82	 
	Section 13.17.
	 	Entire Agreement	 	 	83	 
	Section 13.18.
	 	Governing Law	 	 	83	 
	Section 13.19.
	 	Severability of Provisions	 	 	83	 
	Section 13.20.
	 	Excess Interest	 	 	83	 
	Section 13.21.
	 	Construction	 	 	84	 
	Section 13.22.
	 	Lender’s Obligations Several	 	 	84	 
	Section 13.23.
	 	Submission to Jurisdiction; Waiver of Jury Trial	 	 	84	 
	Section 13.24.
	 	USA Patriot Act	 	 	84	 
	Section 13.25.
	 	Amendment and Restatement	 	 	85	 






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	Exhibit A
	 	—           Notice of Payment Request	 	 	 	 
	Exhibit B
	 	—           Notice of Borrowing	 	 	 	 
	Exhibit C
	 	—           Notice of Continuation/Conversion	 	 	 	 
	Exhibit D-1
	 	—           Revolving Note	 	 	 	 
	Exhibit D-2
	 	—           Swing Note	 	 	 	 
	Exhibit E
	 	—           Compliance Certificate	 	 	 	 
	Exhibit F
	 	—           Additional Guarantor Supplement	 	 	 	 
	Exhibit G
	 	—           Assignment and Acceptance	 	 	 	 
	Exhibit H
	 	—           Opinion of Counsel	 	 	 	 
	Exhibit I
	 	—           Commitment Amount Increase Request	 	 	 	 
	Schedule 1
	 	—           Commitments	 	 	 	 
	Schedule 6.2
	 	—           Subsidiaries	 	 	 	 
	Schedule 8.22(C)
	 	—           Capital Expenditure Exceptions	 	 	 	 







-v-











 





Third Amended and Restated Credit Agreement




     This Third Amended and Restated Credit Agreement is entered into as of April 7, 2010, 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 Bank of Montreal,
a Canadian chartered bank acting through its Chicago branch, as Administrative Agent as provided
herein. All capitalized terms used herein without definition shall have the same meanings herein
as such terms are defined in Section 5.1 hereof.



Preliminary Statement




     The Borrower, the Lenders and the Administrative Agent are parties to a Second Amended and
Restated Credit Agreement dated as of October 5, 2006 (as previously supplemented and amended, the
“Original Credit Agreement”). The Borrower has requested that the Lenders make certain further
amendments to the Original Credit Agreement and, for the sake of convenience and clarity, to
restate the Original Credit Agreement in its entirety as so amended. Accordingly, upon
satisfaction of the conditions precedent to effectiveness contained in Section 7.2 hereof, the
Original Credit Agreement and all Exhibits and Schedules thereto shall be amended and as so amended
shall be restated in their entirety to read as follows:


Section 1. The Credit Facilities.




     Section 1.1. Revolving Credit Commitments. (a) Subject to the terms and conditions hereof,
each Lender, by its acceptance hereof, severally agrees to make a loan or loans (individually a
“Revolving Loan” and collectively the “Revolving Loans”) in U.S. Dollars to the Borrower from time
to time on a revolving basis up to the amount of such Lender’s Revolving Credit Commitment, subject
to any reductions thereof pursuant to the terms hereof, before the Revolving Credit Termination
Date. The sum of the aggregate principal amount of all Revolving Loans, Swing Loans and L/C
Obligations at any time outstanding shall not exceed the Revolving Credit Commitments in effect at
such time. Each Borrowing of Revolving Loans shall be made ratably by the Lenders in proportion to
their respective Revolver Percentages. As provided in Section 1.5(a) hereof, the Borrower may
elect that each Borrowing of Revolving Loans be either Base Rate Loans or Eurodollar Loans.
Revolving Loans may be repaid and the principal amount thereof reborrowed before the Revolving
Credit Termination Date, subject to the terms and conditions hereof.



     (b) The Borrower may with the consent of the Administrative Agent, which consent shall not be
unreasonably withheld or delayed (but without the consent of any Lender), on any Business Day prior
to the Revolving Credit Termination Date, increase the aggregate amount of the Revolving Credit
Commitments by delivering a Commitment Amount Increase Request substantially in the form attached
hereto as Exhibit I or in such other form acceptable to the Administrative Agent at least five (5)
Business Days prior to the desired effective date of such increase (the “Commitment Amount
Increase”) identifying an additional Lender (or additional Revolving Credit Commitments for
existing Lender(s)) and the amount of its Revolving Credit



 









 




Commitment (or additional amount of its Revolving Credit Commitment(s)); provided, however, that
(i) any increase of the aggregate amount of the Revolving Credit Commitments to an amount in excess
of $75,000,000 will require the approval of the Required Lenders, (ii) any increase of the
aggregate amount of the Revolving Credit Commitments shall be in an amount not less than
$5,000,000, (iii) no Default or Event of Default shall have occurred and be continuing at the time
of the request or the effective date of the Commitment Amount Increase, and (iv) any new Lender
providing a new commitment shall be approved by the Administrative Agent (which approval shall not
be unreasonably withheld or delayed). The effective date of the Commitment Amount Increase shall
be agreed upon by the Borrower and the Administrative Agent. Upon the effectiveness thereof, the
new Lender(s) (or, if applicable, existing Lender(s)) shall advance Revolving Loans in an amount
sufficient such that after giving effect to its Loans each Lender shall have outstanding its
Revolver Percentage of Revolving Loans. It shall be a condition to such effectiveness that (i) if
any Eurodollar Loans are outstanding under the Revolving Credit on the date of such effectiveness,
such Eurodollar Loans shall be deemed to be prepaid on such date and the Borrower shall pay any
amounts owing to the Lenders pursuant to Section 1.11 hereof and (ii) the Borrower shall not have
terminated any portion of the Revolving Credit Commitments pursuant to Section 1.12 hereof. The
Borrower agrees to pay any reasonable expenses of the Administrative Agent relating to any
Commitment Amount Increase. Promptly upon the effectiveness of any Commitment Amount Increase, the
Borrower shall execute and deliver new Revolving Notes in the amount of any additional Lender’s
Revolving Credit Commitment (or in the amount of any existing Lender’s increased Revolving Credit
Commitment). Notwithstanding anything herein to the contrary, no Lender shall have any obligation
to increase its Revolving Credit Commitment and no Lender’s Revolving Credit Commitment shall be
increased without its consent thereto, and each Lender may at its option, unconditionally and
without cause, decline to increase its Revolving Credit Commitment.




     Section 1.2. Letters of Credit. (a) General Terms. Subject to the terms and conditions
hereof, as part of the Revolving Credit, the L/C Issuer shall issue standby and commercial letters
of credit (each a “Letter of Credit”) in U.S. Dollars for the account of the Borrower or for the
account of the Borrower and one or more of its Subsidiaries in an aggregate undrawn face amount up
to the lesser of (i) the L/C Sublimit and (ii) the excess (if any) of the Revolving Credit
Commitments over the aggregate principal amount of all Revolving Loans, Swing Loans and L/C
Obligations then outstanding. Each Letter of Credit shall be issued by the L/C Issuer, but each
Lender shall be obligated to reimburse the L/C Issuer for such Lender’s Revolver Percentage of the
amount of each drawing thereunder and, accordingly, each Letter of Credit shall constitute usage of
the Revolving Credit Commitment of each Lender pro rata in an amount equal to its Revolver
Percentage of the L/C Obligations then outstanding. Notwithstanding anything in this Agreement to
the contrary, upon the making of the initial Revolving Loan under this Agreement, the Existing
Letters of Credit shall be deemed to be Letters of Credit issued under this Agreement for all
purposes whatsoever and each application pursuant to which an Existing Letter of Credit was issued
shall be deemed to be an Application for all purposes.



     (b) Applications. At any time before the Revolving Credit Termination Date, the L/C Issuer
shall, at the request of the Borrower, issue one or more Letters of Credit in U.S. Dollars, in a
form satisfactory to the L/C Issuer, with expiration dates no later than the earlier of 12 months
from the date of issuance (or which are cancelable not later than 12 months from the date



-2-









 




of issuance and each renewal) or 30 days prior to the Revolving Credit Termination Date, in an
aggregate face amount as set forth above, upon the receipt of an application duly executed by the
Borrower and, if such Letter of Credit is for the account of one of its Subsidiaries, such
Subsidiary for the relevant Letter of Credit in the form then customarily prescribed by the L/C
Issuer for the Letter of Credit requested (each an “Application”). Notwithstanding anything
contained in any Application to the contrary: (i) the Borrower shall pay fees in connection with
each Letter of Credit as set forth in Section 2.1 hereof, and (ii) except as otherwise provided in
Section 1.8 hereof, unless an Event of Default has occurred and is continuing, the L/C Issuer will
not call for the funding by the Borrower of any amount under a Letter of Credit before being
presented with a drawing thereunder. If the L/C Issuer issues any Letter of Credit with an
expiration date that is automatically extended unless the L/C Issuer gives notice that the
expiration date will not so extend beyond its then scheduled expiration date, unless the Lenders
instruct the L/C Issuer otherwise, the L/C Issuer will give such notice of non-renewal before the
time necessary to prevent such automatic extension if before such required notice date: (i) the
expiration date of such Letter of Credit if so extended would be after the Revolving Credit
Termination Date, (ii) the Revolving Credit Commitments have been terminated, or (iii) an Event of
Default exists and the Administrative Agent, at the request or with the consent of the Required
Lenders, has given the L/C Issuer instructions not to so permit the extension of the expiration
date of such Letter of Credit. The L/C Issuer agrees to issue amendments to the Letter(s) of
Credit increasing the amount, or extending the expiration date, thereof at the request of the
Borrower subject to the conditions of Section 7 hereof and the other terms of this Section 1.2.




     (c) The Reimbursement Obligations. Subject to Section 1.2(b) hereof, the obligation of the
Borrower to reimburse the L/C Issuer for all drawings under a Letter of Credit (a “Reimbursement
Obligation”) shall be governed by the Application related to such Letter of Credit, except that
reimbursement shall be made by no later than 12:00 Noon (Chicago time) on the date when each
drawing is to be paid if the Borrower has been informed of such drawing by the L/C Issuer on or
before 9:00 a.m. (Chicago time) on the date when such drawing is to be paid or, if notice of such
drawing is given to the Borrower after 9:00 a.m. (Chicago time) on the date when such drawing is to
be paid, by the end of such day, in immediately available funds at the Administrative Agent’s
principal office in Chicago, Illinois or such other office as the Administrative Agent may
designate in writing to the Borrower (who shall thereafter cause to be distributed to the L/C
Issuer such amount(s) in like funds). Unless the Borrower has reimbursed the L/C Issuer 12:00 Noon
(Chicago time) on the date a drawing is paid, the Borrower shall be deemed to have requested a
Borrowing of Base Rate Loans in the amount paid by the L/C Issuer in connection with the relevant
drawing and the Administrative Agent shall promptly notify the Lenders of the amount of such
requested Borrowing and each Lender’s Revolver Percentage thereof. Such Base Rate Loans shall only
be made if all conditions precedent to the Lender’s obligation to make the requested Loans are
satisfied, other than the minimum amount required by Section 1.4 hereof and the delivery of a
Notice of Borrowing as required by Section 1.5(a). Each Lender shall fund its Revolver Percentage
of the requested Base Rate Loans in the manner specified in Section 1.5(c) hereof. If the Borrower
does not make any such reimbursement payment on the date due and the Participating Lenders fund
their participations therein in the manner set forth in Section 1.2(d) below, then all payments
thereafter received by the Administrative Agent in discharge of any of the relevant Reimbursement
Obligations shall be



-3-









 




distributed in accordance with Section 1.2(d) below. All unpaid Reimbursement
Obligations that
are not required to be paid on the date the relevant drawing under a Letter of Credit is paid shall
bear interest from the date such drawing is honored at a rate per annum equal to the sum of the
Base Rate from time to time in effect plus the Applicable Margin, subject to Section 1.9 hereof.
The Reimbursement Obligations of the Borrower under this Agreement shall be absolute,
unconditional, and irrevocable, and shall be performed strictly in accordance with the terms of the
Loan Documents under all circumstances whatsoever and the Borrower hereby waives any defense to the
payment of the Reimbursement Obligations based on any circumstance whatsoever, including in any
case, the following circumstances: (i) any lack of validity or enforceability of any Letter of
Credit or any other Loan Document; (ii) any amendment or waiver of or any consent to departure
from any Loan Document made after the Closing Date; (iii) the existence of any claim, set-off,
counterclaim, defense, or other rights which the Borrower or any other Person may have at any time
against any beneficiary of any Letter of Credit, the Administrative Agent, the L/C Issuer, any
Lender, or any other Person, whether in connection with any Loan Document or any unrelated
transaction; (iv) any statement, draft, or other documentation presented under any Letter of Credit
proving to be forged, fraudulent, invalid, or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect whatsoever; (v) payment by the L/C Issuer under any
Letter of Credit against presentation of a draft or other document that does not comply with the
terms of such Letter of Credit; or (vi) any other circumstance whatsoever, whether or not similar
to any of the foregoing.




     (d) The Participating Interests. Each Lender (other than the Lender acting as L/C Issuer in
issuing the relevant Letter of Credit), by its acceptance hereof, severally agrees to purchase from
the L/C Issuer, and the L/C Issuer hereby agrees to sell to each such Lender (a “Participating
Lender”), an undivided percentage participating interest (a “Participating Interest”), to the
extent of its Revolver Percentage, in each Letter of Credit issued by, and each Reimbursement
Obligation owed to, the L/C Issuer. Upon any failure by the Borrower to pay any Reimbursement
Obligation at the time required on the date the related drawing is to be paid, as set forth in
Section 1.2(c) above, or if the L/C Issuer is required at any time to return to the Borrower or to
a trustee, receiver, liquidator, custodian or other Person any portion of any payment of any
Reimbursement Obligation, each Participating Lender shall, not later than the Business Day it
receives a certificate in the form of Exhibit A hereto from the L/C Issuer (with a copy to the
Administrative Agent) to such effect, if such certificate is received before 1:00 p.m. (Chicago
time), or not later than 1:00 p.m. (Chicago time) the following Business Day, if such certificate
is received after such time, pay to the Administrative Agent for the account of the L/C Issuer an
amount equal to such Participating Lender’s Revolver Percentage of such unpaid or recaptured
Reimbursement Obligation together with interest on such amount accrued from the date the related
payment was made by the L/C Issuer to the date of such payment by such Participating Lender at a
rate per annum equal to: (i) from the date the related payment was made by the L/C Issuer to the
date 2 Business Days after payment by such Participating Lender is due hereunder, the Federal Funds
Rate for each such day and (ii) from the date 2 Business Days after the date such payment is due
from such Participating Lender to the date such payment is made by such Participating Lender, the
Base Rate in effect for each such day. Each such Participating Lender shall thereafter be entitled
to receive its Revolver Percentage of each payment received in respect of the relevant
Reimbursement Obligation and of interest paid thereon, with the L/C Issuer retaining its Revolver
Percentage thereof as a Lender hereunder.



-4-









 




The several obligations of the Participating Lenders to
the L/C Issuer under this Section 1.2 shall
be absolute, irrevocable, and unconditional under any and all circumstances whatsoever and shall
not be subject to any set-off, counterclaim or defense to payment which any Participating Lender
may have or have had against the Borrower, the L/C Issuer, the Administrative Agent, any Lender or
any other Person whatsoever. Without limiting the generality of the foregoing, such obligations
shall not be affected by any Default or Event of Default or by any reduction or termination of any
Commitment of any Lender, and each payment by a Participating Lender under this Section 1.2 shall
be made without any offset, abatement, withholding or reduction whatsoever.




     (e) Indemnification. The Participating Lenders shall, to the extent of their respective
Revolver Percentages, indemnify the L/C Issuer (to the extent not reimbursed by the Borrower)
against any cost, expense (including reasonable counsel fees and disbursements), claim, demand,
action, loss or liability (except such as result from the L/C Issuer’s gross negligence or willful
misconduct) that the L/C Issuer may suffer or incur in connection with any Letter of Credit issued
by it. The obligations of the Participating Lenders under this Section 1.2(e) and all other parts
of this Section 1.2 shall survive termination of this Agreement and of all Applications, Letters of
Credit, and all drafts and other documents presented in connection with drawings thereunder.



     (f) Manner of Requesting a Letter of Credit. The Borrower shall provide at least three (3)
Business Days’ advance written notice to the Administrative Agent of each request for the issuance
of a Letter of Credit, such notice in each case to be accompanied by an Application for such Letter
of Credit properly completed and executed by the Borrower and, in the case of an extension or an
increase in the amount of a Letter of Credit, a written request therefor, in a form acceptable to
the Administrative Agent and the L/C Issuer, in each case, together with the fees called for by
this Agreement. The Administrative Agent shall promptly notify the L/C Issuer of the
Administrative Agent’s receipt of each such notice and the L/C Issuer shall promptly notify the
Administrative Agent and the Lenders of the issuance of the Letter of Credit so requested.



     Section 1.3. 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 365 or 366 days, as the case may be, and the actual days elapsed) on the
unpaid principal amount thereof from the date such Loan is advanced or continued, or created by
conversion from a 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 on the last day of its Interest Period and at maturity (whether by acceleration or
otherwise).



     (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



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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 and the Reimbursement Obligations hereunder, and its determination thereof
shall be conclusive and binding except in the case of manifest error.



     Section 1.4. Minimum Borrowing Amounts; Maximum Eurodollar Loans. 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 10 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 1:00 p.m. (Chicago time): (i) at least 3 Business Days before the date on which the
Borrower requests the Lenders to advance a Borrowing of Eurodollar Loans, and (ii) on the date the
Borrower requests the Lenders to advance a Borrowing of Base Rate Loans. The Loans included in
each Borrowing shall bear interest initially at the type of rate specified in such notice of a new
Borrowing. Thereafter, the Borrower may from time to time elect to change or continue the type of
interest rate borne by each Borrowing or, subject to Section 1.4’s minimum amount requirement 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 1:00 p.m. (Chicago time) at least 3 Business
Days before the date of the requested continuation or conversion. All such notices concerning the
advance, continuation or conversion of a Borrowing shall specify the date of the requested advance,
continuation or conversion of a Borrowing (which shall be a Business Day), the amount of the
requested Borrowing to be advanced, continued or converted, the type of Loans to comprise such new,
continued or converted Borrowing and, if such Borrowing is to be comprised of Eurodollar Loans, the
Interest Period applicable thereto. The Borrower agrees that the Administrative Agent may rely on
any such telephonic or telecopy notice given by any person the Administrative Agent in good faith
believes is an Authorized Representative without the necessity of independent investigation, and in
the event any such notice by telephone



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conflicts with any written confirmation such telephonic
notice shall govern if the Administrative Agent has acted in reliance thereon.




     (b) Notice to the Lenders. The Administrative Agent shall give prompt telephonic or telecopy
notice to each Lender of any notice from the Borrower received pursuant to Section 1.5(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. In the event the Borrower fails to give notice pursuant to Section 1.5(a) above of a
Borrowing equal to the amount of a Reimbursement Obligation and has not notified the Administrative
Agent by 1:00 p.m. (Chicago time) on the day such Reimbursement Obligation becomes due that it
intends to repay such Reimbursement Obligation through funds not borrowed under this Agreement, the
Borrower shall be deemed to have requested a Borrowing of Base Rate Loans under the Revolving
Credit (or, at the option of the Administrative Agent, under the Swing Line) on such day in the
amount of the Reimbursement Obligation then due, which Borrowing shall be applied to pay the
Reimbursement Obligation then due.



     (d) Disbursement of Loans. Not later than 2:00 p.m. (Chicago time) on the date of any
requested advance of a new Borrowing, subject to Section 7 hereof, each Lender shall make available
its Loan comprising part of such Borrowing in funds immediately available at the principal office
of the Administrative Agent in Chicago, Illinois. The Administrative Agent shall make the proceeds
of each new Borrowing available to the Borrower at the Administrative Agent’s principal office in
Chicago, Illinois, in the type of funds received by the Administrative Agent from the Lenders.



     (e) Administrative Agent Reliance on Lender Funding. Unless the Administrative Agent shall
have been notified by a Lender prior to (or, in the case of a Borrowing of Base Rate Loans, by 2:00
p.m. (Chicago time) on) the date on which such Lender is scheduled to make payment to the
Administrative Agent of the proceeds of a Loan (which notice shall be effective upon receipt) that
such Lender does not intend to make such payment, the Administrative Agent



-7-









 




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.




     Section 1.6. Interest Periods. As provided in Section 1.5(a) and 1.14 hereof, at the time of
each request to advance, continue or create by conversion a Borrowing of Eurodollar Loans or Swing
Loans, the Borrower shall select an Interest Period applicable to such Loans from among the
available options. The term “Interest Period” means the period commencing on the date a Borrowing
of Loans is advanced, continued or created by conversion and ending: (a) in the case of Base Rate
Loans, on the last day of the calendar quarter (i.e., the last day of March, June, September or
December, as applicable) in which such Borrowing is advanced, continued or created by conversion
(or on the last day of the following calendar quarter if such Loan is advanced, continued or
created by conversion on the last day of a calendar quarter), (b) in the case of a Eurodollar Loan,
1, 2, 3 or 6 months thereafter, and (c) in the case of a Swing Loan, on the date 1 to 5 days
thereafter as mutually agreed to by the Borrower and the Administrative Agent; provided, however,
that:




     (i) any Interest Period for a Borrowing of Revolving Loans or Swing Loans
consisting of Base Rate Loans that otherwise would end after the Revolving Credit
Termination Date shall end on the Revolving Credit Termination Date;




     (ii) no Interest Period with respect to any portion of the Revolving Loans or
Swing Loans shall extend beyond the Revolving Credit Termination Date;




     (iii) whenever the last day of any Interest Period would otherwise be a day that
is not a Business Day, the last day of such Interest Period shall be extended to the
next succeeding Business Day, provided that, if such extension would cause the last
day of an Interest Period for a Borrowing of Eurodollar Loans to occur in the
following calendar month, the last day of such Interest Period shall be the
immediately preceding Business Day; and



-8-









 






     (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 Revolving Loan and Swing Loan, both for principal and
interest not sooner paid, shall mature and become due and payable by the Borrower on the Revolving
Credit Termination Date.



     Section 1.8. Prepayments. (a) Optional. 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 Sections 1.4 and 1.14 hereof remains
outstanding) any Borrowing of Eurodollar Loans at any time upon three (3) Business Days’ prior
notice to the Administrative Agent by the Borrower or, in the case of a Borrowing of Base Rate
Loans, notice delivered to the Administrative Agent by the Borrower no later than 1:00 p.m.
(Chicago time) on the date of such prepayment. Each such prepayment shall be made by the payment
of the principal amount to be prepaid and, in the case of any Eurodollar Loans or Swing Loans,
accrued interest thereon to the date fixed for prepayment plus any amounts due the Lenders under
Section 1.11 and shall be subject to Section 1.8(d).



     (b) Mandatory. (i) The Borrower covenants and agrees that if at any time the aggregate
principal amount of all outstanding Revolving Loans, Swing Loans and L/C Obligations exceeds the
Revolving Credit Commitments then in effect, the Borrower shall immediately and without notice or
demand pay over the amount of the excess to the Administrative Agent for the ratable benefit of the
Lenders as and for a mandatory prepayment on the Revolving Notes, Swing Note and L/C Obligations
until payment in full thereof. Each such prepayment shall be accompanied by accrued interest on
the amount prepaid to the date of prepayment plus any amounts due to the Lenders under Section 1.11
hereof and shall be subject to Section 1.8(d).



     (ii) The Borrower shall, on each date the Revolving Credit Commitments are reduced pursuant to
Section 1.12 hereof, prepay the Revolving Loans, Swing Loans, and, if necessary, prefund the L/C
Obligations by the amount, if any, necessary to reduce the sum of the aggregate principal amount of
all Revolving Loans, Swing Loans and L/C Obligations then outstanding to the amount to which the
Revolving Credit Commitments have been so reduced. Each such prepayment shall be subject to
Section 1.8(d).



     (c) The Administrative Agent will promptly advise each Lender of any notice of prepayment it
receives from the Borrower. Any amount of Revolving Loans and Swing Loans paid or prepaid before
the Revolving Credit Termination Date may, subject to the terms and conditions of this Agreement,
be borrowed, repaid and borrowed again.



-9-









 





     (d) Unless the Borrower otherwise directs, prepayments of Loans under Section 1.8(b) shall be
applied first to Borrowings of Base Rate Loans until payment in full thereof with any
balance applied to Borrowings of Eurodollar Loans in the order in which their Interest Periods
expire. Each prepayment of Loans under Section 1.8(b) shall be made by the payment of the
principal amount to be prepaid and, in the case of Eurodollar Loans or Swing Loans, accrued
interest thereon to the date of prepayment together with any amounts due the Lenders under Section
1.11 hereof. Each prefunding of L/C Obligations shall be made in accordance with Section 9.4
hereof.



     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 and Reimbursement Obligations, and letter of credit fees at a rate per annum
equal to:




     (a) for any Base Rate Loan or any Swing Loan bearing interest based on the Base Rate,
the sum of 2.0% plus the Applicable Margin plus the Base Rate from time to time in effect;




     (b) for any Eurodollar Loan or any Swing Loan bearing interest at the Administrative
Agent’s Quoted Rate, the sum of 2.0% plus the rate of interest in effect thereon at the time
of such default until the end of the Interest Period applicable thereto and, thereafter, at
a rate per annum equal to the sum of 2.0% plus the Applicable Margin for Base Rate Loans
plus the Base Rate from time to time in effect; and




     (c) for any Reimbursement Obligation, the sum of 2% plus the Applicable Margin 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 Revolving Loans made to the Borrower by a Lender shall be
evidenced by a single promissory note of the Borrower issued to such Lender in the form of Exhibit
D-1 hereto. Each such promissory note is hereinafter referred to as a “Revolving Note” and
collectively such promissory notes are referred to as the “Revolving Notes.”



     (b) The Swing Loans made to the Borrower by the Administrative Agent shall be evidenced by a
single promissory note of the Borrower issued to the Administrative Agent in the form of Exhibit
D-2 hereto. Such promissory note is hereinafter referred to as the “Swing Note.”



     (c) 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



-10-









 




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




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




     (a) any payment, prepayment or conversion of a Eurodollar Loan on a date other than the
last day of its Interest Period, including without limitation as a result of a reallocation
of Revolving Loans pursuant to Section 1.1(b) hereof,




     (b) any failure (because of a failure to meet the conditions of Section 7 or otherwise)
by the Borrower to borrow or continue a Eurodollar Loan or Swing Loan, or to convert a Base
Rate Loan into a Eurodollar Loan or Swing Loan on the date specified in a notice given
pursuant to Section 1.5(a) or 1.14 hereof,




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




     (d) any acceleration of the maturity of a Eurodollar Loan or Swing Loan as a result of
the occurrence of any Event of Default hereunder,


then, upon the demand of such Lender, the Borrower shall pay to such Lender such amount as will
reimburse such Lender for such loss, cost or expense. If any Lender makes such a claim for
compensation, it shall provide to the Borrower, with a copy to the Administrative Agent, a
certificate setting forth the amount of such loss, cost or expense in reasonable detail (including
an explanation of the basis for and the computation of such loss, cost or expense) and the amounts
shown on such certificate shall be conclusive if reasonably determined.




     Section 1.12. Commitment Terminations. (a) Optional Revolving Credit Terminations. The
Borrower shall have the right at any time and from time to time, upon five (5) Business Days’ prior
written notice to the Administrative Agent (or such shorter time period agreed to by the
Administrative Agent), to terminate the Revolving Credit Commitments without premium or penalty and
in whole or in part, any partial termination to be (i) in an amount not less than $1,000,000 or a
whole multiple thereof, and (ii) allocated ratably among the Lenders in



-11-









 




proportion to their
respective Revolver Percentages, provided that the Revolving Credit Commitments may not be reduced
to an amount less than the sum of the aggregate principal
amount of all Revolving Loans, Swing Loans, and L/C Obligations then outstanding. Any termination
of the Revolving Credit Commitments below the L/C Sublimit or Swing Line Sublimit then in effect
shall reduce the L/C Sublimit and Swing Line Sublimit, as applicable, to an amount equal to the
Revolving Credit Commitments. The Administrative Agent shall give prompt notice to each Lender of
any such termination of the Revolving Credit Commitments.




     (b) No Reinstatement. Any termination of the Revolving Credit Commitments pursuant to this
Section 1.12 may not be reinstated.



     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) any Lender is then a Defaulting
Lender or such Lender is a Subsidiary of a Person who has been deemed insolvent or becomes the
subject of a bankruptcy or insolvency proceeding or a receiver or conservator has been appointed
for any such person, (any such Lender referred to in clause (a), (b) or (c) above being hereinafter
referred to as an “Affected Lender”), the Borrower may, in addition to any other rights the
Borrower may have hereunder or under applicable law, require, at its expense, any such Affected
Lender to assign, at par plus accrued interest and fees, without recourse, all of its interest,
rights, and obligations hereunder (including all of its Commitments and the Loans and participation
interests in Letters of Credit and other amounts at any time owing to it hereunder and the other
Loan Documents) to a bank or other institutional Lender specified by the Borrower, provided that
(i) such assignment shall not conflict with or violate any law, rule or regulation or order of any
court or other governmental authority, (ii) the Borrower shall have received the written consent of
the Administrative Agent, which consent shall not be unreasonably withheld, to such assignment,
(iii) the Borrower shall have paid to the Affected Lender all monies (together with amounts due
such Affected Lender under Section 1.11 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.



     Section 1.14. Swing Loans. (a) Generally. Subject to the terms and conditions hereof, as
part of the Revolving Credit, the Administrative Agent agrees to make loans in U.S. Dollars to the
Borrower under the Swing Line (individually a “Swing Loan” and collectively the “Swing Loans”)
which shall not in the aggregate at any time outstanding exceed the Swing Line Sublimit. The Swing
Loans may be availed of the Borrower from time to time and Borrowings thereunder may be repaid and
used again during the period ending on the Revolving Credit Termination Date; provided that each
Swing Loan must be repaid on the last day of the Interest Period applicable thereto and on the
Revolving Credit Termination Date. Each Swing Loan shall be in a minimum amount of $100,000 or
such greater amount which is an integral multiple of $50,000.



     (b) Interest on Swing Loans. Each Swing Loan shall bear interest until maturity (whether by
acceleration or otherwise) at a rate per annum equal to (i) the sum of the Base Rate plus the
Applicable Margin for Base Rate Loans under the Revolving Credit as from time to time



-12-









 




in effect
(computed on the basis of a year of 365 or 366 days, as the case may be, for the actual number of
days elapsed) or (ii) the Administrative Agent’s Quoted Rate (computed on the basis
of a year of 360 days for the actual number of days elapsed). Interest on each Swing Loan shall be
due and payable prior to such maturity on the last day of each Interest Period applicable thereto
and on the Revolving Credit Termination Date.




     (c) Requests for Swing Loans. The Borrower shall give the Administrative Agent prior notice
(which may be written or oral) no later than (x) 12:00 Noon (Chicago time) on the date upon which
the Borrower requests that any Swing Loan be made at the Administrative Agent’s Quoted Rate and (y)
3:00 p.m. (Chicago time) on the date upon which the Borrower requests that any Swing Loan be at the
Base Rate, of the amount and date of such Swing Loan, and the Interest Period requested therefor.
Within 30 minutes after receiving such notice, the Administrative Agent shall in its discretion
quote an interest rate to the Borrower at which the Administrative Agent would be willing to make
such Swing Loan available to the Borrower for the Interest Period so requested (the rate so quoted
for a given Interest Period being herein referred to as “Administrative Agent’s Quoted Rate”). The
Borrower acknowledges and agrees that the interest rate quote is given for immediate and
irrevocable acceptance. If the Borrower does not so immediately accept the Administrative Agent’s
Quoted Rate for the full amount requested by the Borrower for such Swing Loan, the Administrative
Agent’s Quoted Rate shall be deemed immediately withdrawn and such Swing Loan shall bear interest
at the rate per annum determined by adding the Applicable Margin for Base Rate Loans under the
Revolving Credit to the Base Rate as from time to time in effect. If the Borrower requests a Swing
Loan at the Base Rate, such Swing Loan shall bear interest at the rate per annum determined by
adding the Applicable Margin for the Base Rate Loans under the Revolving Credit to the Base Rate as
from time to time in effect. Subject to the terms and conditions hereof, the proceeds of such
Swing Loan shall be made available to the Borrower on the date so requested at the offices of the
Administrative Agent in Chicago, Illinois. Anything contained in the foregoing to the contrary
notwithstanding, (i) the obligation of the Administrative Agent to make Swing Loans shall be
subject to all of the terms and conditions of this Agreement and (ii) the Administrative Agent
shall not be obligated to make more than one Swing Loan during any one day.



     (d) Refunding Loans. In its sole and absolute discretion, the Administrative Agent may at any
time, on behalf of the Borrower (which hereby irrevocably authorizes the Administrative Agent to
act on its behalf for such purpose) and with notice to the Borrower, request each Lender to make a
Revolving Loan in the form of a Base Rate Loan in an amount equal to such Lender’s Revolver
Percentage of the amount of the Swing Loans outstanding on the date such notice is given. Unless
an Event of Default described in Section 9.1(j) or 9.1(k) exists with respect to the Borrower,
regardless of the existence of any other Event of Default, each Lender shall make the proceeds of
its requested Revolving Loan available to the Administrative Agent, in immediately available funds,
at the Administrative Agent’s principal office in Chicago, Illinois, before 12:00 Noon (Chicago
time) on the Business Day following the day such notice is given. The proceeds of such Borrowing
of Revolving Loans shall be immediately applied to repay the outstanding Swing Loans.



     (e) Participations. If any Lender refuses or otherwise fails to make a Revolving Loan when
requested by the Administrative Agent pursuant to Section 1.14(d) above (because an



-13-









 




Event of
Default described in Section 9.1(j) or 9.1(k) exists with respect to the Borrower or otherwise),
such Lender will, by the time and in the manner such Revolving Loan was to have
been funded to the Administrative Agent, purchase from the Administrative Agent an undivided
participating interest in the outstanding Swing Loans in an amount equal to its Revolver Percentage
of the aggregate principal amount of Swing Loans that were to have been repaid with such Revolving
Loans. Each Lender that so purchases a participation in a Swing Loan shall thereafter be entitled
to receive its Revolver Percentage of each payment of principal received on the Swing Loan and of
interest received thereon accruing from the date such Lender funded to the Administrative Agent its
participation in such Loan. The several obligations of the Lenders under this Section shall be
absolute, irrevocable and unconditional under any and all circumstances whatsoever and shall not be
subject to any set-off, counterclaim or defense to payment which any Lender may have or have had
against the Borrower, any other Lender or any other Person whatsoever. Without limiting the
generality of the foregoing, such obligations shall not be affected by any Default or Event of
Default or by any reduction or termination of the Commitments of any Lender, and each payment made
by a Lender under this Section shall be made without any offset, abatement, withholding or
reduction whatsoever.




     Section 1.15. Defaulting Lenders. Anything contained herein to the contrary notwithstanding,
in the event that any Lender at any time is a Defaulting Lender, then (a) during any Defaulting
Lender Period with respect to such Defaulting Lender, such Defaulting Lender shall be deemed not to
be a “Lender” for purposes of voting on any matters (including the granting of any consents or
waivers) with respect to any of the Loan Documents and such Defaulting Lender’s Commitments shall
be excluded for purposes of determining “Required Lenders” (provided that the foregoing shall not
permit an increase in such Lender’s Commitments or an extension of the maturity date of such
Lender’s Loans or other Obligations without such Lender’s consent); (b) to the extent permitted by
applicable law, until such time as the Defaulting Lender Excess with respect to such Defaulting
Lender shall have been reduced to zero, any voluntary prepayment of the Loans shall, if the
Administrative Agent so directs at the time of making such voluntary prepayment, be applied to the
Loans of other Lenders as if such Defaulting Lender had no Loans outstanding; (c) such Defaulting
Lender’s Commitments and outstanding Loans shall be excluded for purposes of calculating any
commitment fee payable to Lenders pursuant to Section 2.1 in respect of any day during any
Defaulting Lender Period with respect to such Defaulting Lender, and such Defaulting Lender shall
not be entitled to receive any fee pursuant to Section 2.1 with respect to such Defaulting Lender’s
Revolving Credit Commitment in respect of any Defaulting Lender Period with respect to such
Defaulting Lender (and any letter of credit fee otherwise payable to a Lender who is a Defaulting
Lender shall instead be paid to the L/C Issuer for its use and benefit); (d) the utilization of
Commitments as at any date of determination shall be calculated as if such Defaulting Lender had
funded all Loans of such Defaulting Lender; and (e) if so requested by the L/C Issuer at any time
during the Defaulting Lender Period with respect to such Defaulting Lender, the Borrower shall
deliver to the Administrative Agent cash collateral in an amount equal to such Defaulting Lender’s
Revolver Percentage of L/C Obligations then outstanding (to be held by the Administrative Agent as
set forth in Section 9.4 hereof). No Commitment of any Lender shall be increased or otherwise
affected, and, except as otherwise expressly provided in this Section 1.15, performance by the
Borrower of its obligations hereunder and the other Loan Documents shall not be excused or
otherwise modified as a result of the operation of this Section 1.15. The rights



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and remedies
against a Defaulting Lender under this Section 1.15 are in addition
to other rights and remedies which the Borrower may have against such Defaulting Lender and which
the Administrative Agent or any Lender may have against such Defaulting Lender.



Section 2. Fees.




     Section 2.1. Fees. (a) Revolving Credit Commitment Fee. The Borrower shall pay to the
Administrative Agent for the ratable account of the Lenders in accordance with their Revolver
Percentages a commitment fee at the rate per annum equal to the Applicable Margin (computed on the
basis of a year of 360 days and the actual number of days elapsed) on the average daily Unused
Revolving Credit Commitments. Such commitment fee shall be payable quarter-annually in arrears on
the last day of each March, June, September and December in each year (commencing on the first such
date occurring after the date hereof) and on the Revolving Credit Termination Date, unless the
Revolving Credit Commitments are terminated in whole on an earlier date, in which event the
commitment fee for the period to the date of such termination in whole shall be paid on the date of
such termination.



     (b) Letter of Credit Fees. On the date of issuance or extension, or increase in the amount,
of any Letter of Credit pursuant to Section 1.2 hereof, the Borrower shall pay to the L/C Issuer
for its own account a fronting fee equal to 0.25% of the face amount of (or of the increase in the
face amount of) such Letter of Credit. Quarterly in arrears, on the last day of each March, June,
September and December, commencing on the first such date occurring after the date hereof, the
Borrower shall pay to the Administrative Agent, for the ratable benefit of the Lenders in
accordance with their Revolver Percentages, a letter of credit fee at a rate per annum equal to the
Applicable Margin (computed on the basis of a year of 360 days and the actual number of days
elapsed) in effect during each day of such quarter applied to the daily average face amount of
Letters of Credit outstanding during such quarter. In addition, the Borrower shall pay to the L/C
Issuer for its own account the L/C Issuer’s standard issuance, drawing, negotiation, amendment,
assignment, and other administrative fees for each Letter of Credit as established by the L/C
Issuer from time to time.



     (c) Administrative Agent Fees. The Borrower shall pay to the Administrative Agent, for its
own use and benefit, the fees agreed to between the Administrative Agent and the Borrower in a
letter dated March 15, 2010 or as otherwise agreed to in writing between them.



     (d) Audit Fees. The Borrower shall pay to the Administrative Agent for its own use and
benefit 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.



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Section 3. Place and Application of Payments.




     Section 3.1. Place and Application of Payments. All payments of principal of and interest on
the Loans and the Reimbursement Obligations, and of all other Obligations payable by the Borrower
under this Agreement and the other Loan Documents, shall be made by the Borrower to the
Administrative Agent by no later than 12:00 Noon (Chicago time) on the due date thereof at the
office of the Administrative Agent in Chicago, Illinois (or such other location as the
Administrative Agent may designate to the Borrower) 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 on Reimbursement Obligations in which the Lenders have purchased
Participating Interests ratably to the Lenders and like funds relating to the payment of any other
amount payable to any Lender to such Lender, in each case to be applied in accordance with the
terms of this Agreement. If the Administrative Agent causes amounts to be distributed to the
Lenders in reliance upon the assumption that the Borrower will make a scheduled payment and such
scheduled payment is not so made, each Lender shall, on demand, repay to the Administrative Agent
the amount distributed to such Lender together with interest thereon in respect of each day during
the period commencing on the date such amount was distributed to such Lender and ending on (but
excluding) the date such Lender repays such amount to the Administrative Agent, at a rate per annum
equal to: (i) from the date the distribution was made to the date 2 Business Days after payment by
such Lender is due hereunder, 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:




     (a) first, to the payment of any outstanding costs and expenses incurred by the
Administrative Agent, and any security trustee therefor, in monitoring, verifying,
protecting, preserving or enforcing the Liens on the Collateral, in protecting, preserving
or enforcing rights under the Loan Documents, and in any event including all costs and
expenses of a character which the Borrower has agreed to pay the Administrative Agent under
Section 13.15 hereof (such funds to be retained by the Administrative Agent for its own
account unless it has previously been reimbursed for such costs and expenses by the Lenders,
in which event such amounts shall be remitted to the Lenders to reimburse them for payments
theretofore made to the Administrative Agent);




     (b) second, to the payment of principal and interest on the Swing Note until paid in
full;



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     (c) third, to the payment of any outstanding interest and fees due under the Loan
Documents to be allocated pro rata in accordance with the aggregate unpaid amounts owing to
each holder thereof;




     (d) fourth, to the payment of principal on the Notes, unpaid Reimbursement Obligations,
together with amounts to be held by the Administrative Agent as collateral security for any
outstanding L/C Obligations pursuant to Section 9.4 hereof (until the Administrative Agent
is holding an amount of cash equal to the then outstanding amount of all such L/C
Obligations), and Hedging Liability, the aggregate amount paid to, or held as collateral
security for, the Lenders and the L/C Issuer and, in the case of Hedging Liability, their
Affiliates to be allocated pro rata in accordance with the aggregate unpaid amounts owing to
each holder thereof;




     (e) fifth, to the payment of all other unpaid Obligations and all other indebtedness,
obligations, and liabilities of the Borrower and its Subsidiaries secured by the Loan
Documents (including, without limitation, Funds Transfer and Deposit Account Liability) to
be allocated pro rata in accordance with the aggregate unpaid amounts owing to each holder
thereof; and




     (f) finally, to the Borrower or whoever else may be lawfully entitled thereto.



     Section 3.2. Account Debit. The Borrower hereby irrevocably authorizes the Administrative
Agent to charge any of the Borrower’s deposit accounts maintained with the Administrative Agent for
the amounts from time to time necessary to pay any then due Obligations; provided that the Borrower
acknowledges and agrees that the Administrative Agent shall not be under an obligation to do so and
the Administrative Agent shall not incur any liability to the Borrower or any other Person for the
Administrative Agent’s failure to do so.


Section 4. Guaranties and Collateral.




     Section 4.1. Guaranties. The payment and performance of the Obligations, Hedging Liability,
and Funds Transfer and Deposit Account Liability shall at all times be guaranteed by each direct
and indirect Domestic Subsidiary of the Borrower (individually a “Guarantor” and collectively the
“Guarantors”) pursuant to Section 12 hereof or pursuant to one or more guaranty agreements in form
and substance acceptable to the Administrative Agent, as the same may be amended, modified or
supplemented from time to time (individually a “Guaranty” and collectively the “Guaranties”).



     Section 4.2. Collateral. The Obligations, Hedging Liability, and Funds Transfer and Deposit
Account Liability shall be secured 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,
(b) valid, perfected and enforceable Liens on all right, title, and interest of the Borrower and
the Guarantors in 65% of the capital stock and other equity interests held by such Person in
Penford Holdings, whether now owned or hereafter formed or acquired, and all



-17-









 




proceeds thereof, and (c) valid, perfected, and enforceable Liens on all right, title, and interest
of the Borrower and each Guarantor in all personal property, fixtures, and 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
accounts maintained by the Borrower and the Guarantors need not be perfected provided the total
amount on deposit at any time does not exceed the current amount of their payroll obligations, (ii)
until an Event of Default has occurred and is continuing and thereafter until otherwise required by
the Administrative Agent or the Required Lenders, Liens on vehicles which are subject to a
certificate of title law need not be perfected provided that the total value of such property at
any one time not so perfected shall not exceed $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, the Hedging Liability, and the Funds Transfer and Deposit Account Liability and shall
be a valid and perfected first priority Lien subject only to Liens permitted by Section 8.8 hereof,
in each case pursuant to one or more Collateral Documents from such Persons, each in form and
substance satisfactory to the Administrative Agent. In furtherance and not in limitation of the
foregoing the Borrower and the Guarantors agree that any reference to the Original Credit Agreement
and the Original Security Agreement contained in any Collateral Documents (other than the Original
Security Agreement and the Mortgages) shall without any further action be deemed to refer to this
Agreement and the Security Agreement, respectively.




     Section 4.3. Liens on Real Property. In the event that the Borrower or any Guarantor owns or
hereafter acquires any real property 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, execute and deliver to the Administrative Agent a mortgage or deed
of trust acceptable in form and substance to the Administrative Agent for the purpose of granting
to the Administrative Agent (or a security trustee therefor) a Lien on such real property to secure
the Obligations, Hedging Liability, and Funds Transfer and Deposit Account Liability, shall pay all
taxes, costs, and expenses incurred by the Administrative Agent in recording such mortgage or deed
of trust, and shall supply to the Administrative Agent at the Borrower’s cost and expense a survey,
environmental report, hazard insurance policy, appraisal report, and a mortgagee’s policy of title
insurance from a title insurer acceptable to the



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Administrative Agent insuring the validity of such mortgage or deed of trust and its status as a first Lien (subject to
Liens permitted by this Agreement) on the real property encumbered thereby and such other
instrument, documents, certificates, and opinions reasonably required by the Administrative Agent
in connection therewith.




     Section 4.4. Further Assurances. The Borrower agrees that it shall, and shall cause each
Guarantor to, from time to time at the request of the Administrative Agent or the Required Lenders,
execute and deliver such documents and do such acts and things as the Administrative Agent or the
Required Lenders may reasonably request in order to provide for or perfect or protect such Liens on
the Collateral. In the event the Borrower or any Guarantor forms or acquires any other Subsidiary
after the date hereof, except as otherwise provided in Sections 4.1 and 4.2 above, the Borrower
shall promptly upon such formation or acquisition cause such newly formed or acquired Subsidiary to
execute a Guaranty and such Collateral Documents as the Administrative Agent may then require, and
the Borrower shall also deliver to the Administrative Agent, or cause such Subsidiary to deliver to
the Administrative Agent, at the Borrower’s cost and expense, such other instruments, documents,
certificates, and opinions reasonably required by the Administrative Agent in connection therewith.



     Section 4.5. Operating Accounts. The Borrower shall maintain all of its operating deposit
accounts with the Administrative Agent (or an Affiliate of the Administrative Agent) or with other
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 relating to such accounts.


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
	 	 






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     “Administrative Agent” means Bank of Montreal and any successor pursuant to Section 11.7
hereof.



     “Administrative Agent’s Quoted Rate” is defined in Section 1.14(c) hereof.



     “Affiliate” means any Person directly or indirectly controlling or controlled by, or under
direct or indirect common control with, another Person. A Person shall be deemed to control
another Person for the purposes of this definition if such Person possesses, directly or
indirectly, the power to direct, or cause the direction of, the management and policies of the
other Person, whether through the ownership of voting securities, common directors, trustees or
officers, by contract or otherwise; provided that, in any event for purposes of this definition,
any Person that owns, directly or indirectly, 5% or more of the securities having the ordinary
voting power for the election of directors or governing body of a corporation or 5% or more of the
partnership or other ownership interest of any other Person (other than as a limited partner of
such other Person) will be deemed to control such corporation or other Person; provided further,
however, that the term “Affiliate” shall exclude in any event all Related Parties.



     “Agreement” means this Third Amended and Restated Credit Agreement, as the same may be
amended, modified, restated or supplemented from time to time pursuant to the terms hereof.



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



	 	 	 	 	 	 	 	 	 
	 	 	 	 	Applicable	 	Applicable	 	 
	 	 	 	 	Margin for Base	 	Margin for	 	Applicable
	 	 	 	 	Rate Loans and	 	Eurodollar Loans	 	Margin for
	 	 	Total Funded Debt	 	Reimbursement	 	and Letter of	 	Revolving Credit
	 	 	Ratio for Such	 	Obligations shall	 	credit Fee Shall	 	Commitment Fee
	Level	 	Pricing Date	 	be:	 	Be:	 	Shall Be:
	V
	 	Greater than 2.50 to 1.0	 	3.00%	 	4.00%	 	0.50%
	IV
	 	Less than  or equal to 2.50 to 1.0, but greater than 2.00 to 1.0	 	2.75%	 	3.75%	 	0.50%
	III
	 	Less than  or equal to 2.00 to 1.0, but greater than 1.50 to 1.0	 	2.50%	 	3.50%	 	0.50%
	II
	 	Less than  or equal to 1.50 to 1.0, but greater than 1.00 to 1.0	 	2.25%	 	3.25%	 	0.50%
	I
	 	Less than or equal to 1.00	 	2.00%	 	3.00%	 	0.45%






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For purposes hereof, the term “Pricing Date” means, for any fiscal quarter of the Borrower
ending on or after May 31, 2010, the date on which the Administrative Agent is in receipt of the
Borrower’s most recent financial statements (and, in the case of the year-end financial statements,
audit report) for the fiscal quarter then ended, pursuant to Section 8.5 hereof. The Applicable
Margin shall be established based on the Total Funded Debt Ratio for the most recently completed
fiscal quarter and the Applicable Margin established on a Pricing Date shall remain in effect until
the next Pricing Date. If the Borrower has not delivered its financial statements by the date such
financial statements (and, in the case of the year-end financial statements, audit report) are
required to be delivered under Section 8.5 hereof, until such financial statements and audit report
are delivered, the Applicable Margin shall be the highest Applicable Margin (i.e., the Total Funded
Debt Ratio shall be deemed to be greater than 2.50 to 1.0). If the Borrower subsequently delivers
such financial statements before the next Pricing Date, the Applicable Margin established by such
late delivered financial statements shall take effect from the date of delivery until the next
Pricing Date. In all other circumstances, the Applicable Margin established by such financial
statements shall be in effect from the Pricing Date that occurs immediately after the end of the
fiscal quarter covered by such financial statements until the next Pricing Date. Each
determination of the Applicable Margin made by the Administrative Agent in accordance with the
foregoing shall be conclusive and binding on the Borrower and the Lenders if reasonably determined.




     “Application” is defined in Section 1.2(b) hereof.



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



     “Authorized Representative” means those persons shown on the list of officers provided by the
Borrower pursuant to Section 7.2 hereof or on any update of any such list provided by the Borrower
to the Administrative Agent, or any further or different officers of the Borrower so named by any
Authorized Representative of the Borrower in a written notice to the Administrative Agent.



     “Base Rate” means with respect to credit extended in U.S. Dollars, for any day, the rate per
annum equal to the greatest of: (a) the rate of interest announced or otherwise established by the
Administrative Agent from time to time as its prime commercial rate, or its equivalent, for U.S.
Dollar loans to borrowers located in the United States as in effect on such day, with any change in
the Base Rate resulting from a change in said prime commercial rate to be effective as of the date
of the relevant change in said prime commercial rate (it being acknowledged and agreed that such
rate may not be the Administrative Agent’s best or lowest rate), (b) the sum of (i) the rate
determined by the Administrative Agent to be the average (rounded upward, if



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necessary, to the next
higher 1/100 of 1%) of the rates per annum quoted to the Administrative Agent at approximately
10:00 a.m. (Chicago time) (or as soon thereafter as is practicable) on such day (or, if such day is
not a Business Day, on the immediately preceding Business Day) by two or more Federal funds brokers
selected by the Administrative Agent for sale to the Administrative Agent at face value of Federal
funds in the secondary market in an amount equal or comparable to the principal amount for which
such rate is being determined, plus (ii) 1/2 of 1%, and (c) the LIBOR Quoted Rate for such day plus
1.00%.




     “Base Rate Loan” means a Loan bearing interest at a rate specified in Section 1.3(a) hereof.



     “BMO” means Bank of Montreal, a Canadian chartered bank.



     “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 Revolver 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. Borrowings of Swing Loans are made by the
Administrative Agent in accordance with the procedures set forth in Section 1.14 hereof.



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



     “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.



-22-









 





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



     “Change of Control” means any of (a) the acquisition by any “person” or “group” (as such terms
are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) at any
time of beneficial ownership of 40% or more of the outstanding capital stock or other equity
interests of the Borrower on a fully-diluted basis, (b) the failure of individuals who are members
of the board of directors (or similar governing body) of the Borrower on the Closing Date (together
with any new or replacement directors whose initial nomination for election was approved by 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 any agreement or indenture, in each case, relating to any issue of
Indebtedness for Borrowed Money having an aggregate principal amount in excess of $5,000,000 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.



     “Code” means the Internal Revenue Code of 1986, as amended, and any successor statute thereto.



     “Collateral” means all properties, rights, interests, and privileges from time to time subject
to the Liens granted to the Administrative Agent, or any security trustee therefore, by the
Collateral Documents.



     “Collateral Account” is defined in Section 9.4 hereof.



     “Collateral Documents” means the Mortgages, the Security Agreement and all other mortgages,
deeds of trust, security agreements, pledge agreements, assignments, financing statements and other
documents as shall from time to time secure or relate to the Obligations, the Hedging Liability,
and the Funds Transfer and Deposit Account Liability or any part thereof.



     “Commitment Amount Increase” is defined in Section 1.1(b) hereof.



     “Commitments” means the Revolving Credit Commitments.



     “Controlled Group” means all members of a controlled group of corporations and all trades or
businesses (whether or not incorporated) under common control which, together with the Borrower,
are treated as a single employer under Section 414 of the Code.



     “Credit Event” means the advancing of any Loan, the continuation of or conversion into a
Eurodollar Loan, or the issuance of, or extension of the expiration date or increase in the amount
of, any Letter of Credit.



-23-









 





     “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 any Lender that (a) has failed to fund any portion of the Loans,
participations in Letters of Credit or Reimbursement Obligations or participations in Swingline
Loans required to be funded by it hereunder (herein, a “Defaulted Loan”) within two Business Days
of the date required to be funded by it hereunder unless such failure has been cured, (b) has
otherwise failed to pay over to the Administrative Agent or any other Lender any other amount
required to paid by it hereunder within two Business Days of the date when due, unless the subject
of a good faith dispute or unless such failure has been cured, or (c) has been deemed insolvent or
become the subject of a bankruptcy or insolvency proceeding or a receiver or conservator has been
appointed for such Lender.



     “Defaulting Lender Excess” means, with respect to any Defaulting Lender, the excess, if any,
of such Defaulting Lender’s Revolver Percentage of the aggregate outstanding principal amount of
Loans of all Lenders (calculated as if all Defaulting Lenders other than such Defaulting Lender had
funded all of their respective Defaulted Loans) over the aggregate outstanding principal amount of
all Loans of such Defaulting Lender.



     “Defaulting Lender Period” means, with respect to any Defaulting Lender, the period commencing
on the date upon which such Lender first became a Defaulting Lender and ending on the earliest of
the following dates: (i) the date on which all Revolving Credit Commitments are cancelled or
terminated and/or the Loans are declared or become immediately due and payable and (ii) the date on
which (a) such Defaulting Lender is no longer insolvent, the subject of a bankruptcy or insolvency
proceeding or, if applicable, under the direction of a receiver or conservator, (b) the Defaulting
Lender Excess with respect to such Defaulting Lender shall have been reduced to zero (whether by
the funding by such Defaulting Lender of any Defaulted Loans of such Defaulting Lender or
otherwise), and (c) such Defaulting Lender shall have delivered to the Borrower and the
Administrative Agent a written reaffirmation of its intention to honor its obligations hereunder
with respect to its Revolving Credit Commitments.



     “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 the sum of all amounts deducted in arriving at such Net Income amount in respect of (a)
Interest Expense for such period, (b) federal, state, and local income taxes for such
period, (c) depreciation of fixed assets and amortization of intangible assets for such
period, plus cash distributions received from Joint Ventures not otherwise included in Net Income,
plus (minus) any non-cash losses (gains) but only to the extent such losses (gains) have not become
a cash loss (or gain), plus non-cash stock compensation charges incurred in such period, plus
(minus) (d) any extraordinary or nonrecurring losses (gains) (including any cash losses related to
the unwinding of existing interest rate hedging arrangements), plus (e) the aggregate amount of all
severance charges incurred by the Borrower in such fiscal quarters, provided the aggregate amount
of such charges that are added to EBITDA pursuant to this clause (e) shall not exceed



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$2,500,000
during the term of this Agreement, plus (f) the amount of all non-cash charges incurred as a result
of the accounting treatment of interest rate hedging arrangements, minus (g) 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.




     “Eligible Assignee” means (a) a Lender, (b) an Affiliate of a Lender, (c) an Approved Fund,
and (d) any other Person (other than a natural person) approved by (i) the Administrative Agent,
(ii) in the case of any assignment of a Revolving Credit Commitment, the L/C Issuer, and (iii)
unless an Event of Default has occurred and is continuing, the Borrower (each such approval not to
be unreasonably withheld or delayed); provided that notwithstanding the foregoing, “Eligible
Assignee” shall not include the Borrower or any Guarantor or any of the Borrower’s or such
Guarantor’s Affiliates, Joint Ventures or Subsidiaries or any Related Party or, so long as no Event
of Default shall have occurred and be continuing, any of their respective suppliers, customers or
competitors.



     “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 of Revolving Credit
Loans, the daily average for the applicable Interest Period of the maximum rate, expressed as a
decimal, at which reserves (including, without limitation, any supplemental, marginal, and
emergency reserves) are imposed during such Interest Period by the Board of Governors of the
Federal Reserve System (or any successor) on “eurocurrency liabilities“, as defined in such Board’s
Regulation D (or in respect of any other category of liabilities that includes deposits by
reference to which the interest rate on Revolving Credit 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 Revolving Credit 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.



     “Existing Letter of Credit” means a Letter of Credit as defined in and outstanding under the
Original Credit Agreement.



     “Federal Funds Rate” means the fluctuating interest rate per annum described in part (i) of
clause (b) of the definition of Base Rate.



     “Fixed Charges” means, with reference to any period, the sum of (a) all scheduled payments of
principal (excluding the scheduled principal installments on the Capital Expansion Loans and the
Term Loans (as each such term is defined in the Original Credit Agreement)) 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 redemptions of the Preferred Stock permitted by Section 8.12(iii) hereof 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 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 EBITDA of the Borrower
and its Subsidiaries for such period minus the sum of (a) Capital Expenditures made by the Borrower
and its Subsidiaries during such period, (b) payments of principal paid in cash during such period
with respect to Indebtedness for Borrowed Money of the Borrower and its Subsidiaries, (c) Interest
Expense paid in cash by the Borrower and its Subsidiaries for such period, and (d) federal, state,
and local income taxes paid in cash by the Borrower and its



-26-









 




Subsidiaries during such period, plus
(e) all federal, state, and local income tax refunds received by the Borrower and its Subsidiaries
during such period.




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



     “Funds Transfer and Deposit Account Liability” means the liability of the Borrower or any
Subsidiary owing to any of the Lenders, or any Affiliates of such Lenders, arising out of (a) the
execution or processing of electronic transfers of funds by automatic clearing house transfer, wire
transfer or otherwise to or from the deposit accounts of the Borrower and/or any Subsidiary now or
hereafter maintained with any of the Lenders or their Affiliates, (b) the acceptance for deposit or
the honoring for payment of any check, draft or other item with respect to any such deposit
accounts, including any overdraft facility that is solely ancillary to any of the foregoing, and
(c) any other deposit, disbursement, and cash management services afforded to the Borrower or any
Subsidiary by any of such Lenders or their Affiliates.



     “GAAP” means generally accepted accounting principles set forth from time to time in the
opinions and pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial Accounting
Standards Board (or agencies with similar functions of comparable stature and authority within the
U.S. accounting profession), which are applicable to the circumstances as of the date of
determination.



     “Guarantor” and “Guarantors” each is defined in Section 4.1 hereof.



     “Guaranty” and “Guaranties” each is defined in Section 4.1 hereof.



     “Hazardous Material” means any substance, chemical, compound, product, solid, gas, liquid,
waste, 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
Lenders, or any Affiliates of such Lenders, in respect of any interest rate, foreign currency,
and/or commodity swap, exchange, cap, collar, floor, forward, future or option agreement, or any
other similar interest rate, currency or commodity hedging arrangement (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 Lenders party to this Agreement or their Affiliates.



-27-









 





     “Hostile Acquisition” means the acquisition of the capital stock or other equity interests of
a Person through a tender offer or similar solicitation of the owners of such capital stock or
other equity interests which has not been approved (prior to the consummation of such acquisition)
by resolutions of the Board of Directors of such Person or by similar action if such Person is not
a corporation, and as to which such approval has not been withdrawn.



     “Indebtedness for Borrowed Money” means for any Person (without duplication) (a) all
indebtedness of such Person for borrowed money, whether current or funded, or secured or unsecured,
(b) all indebtedness for the deferred purchase price of Property or services, (c) all indebtedness
created or arising under any conditional sale or other title retention agreement with respect to
Property acquired by such Person (even though the rights and remedies of the seller or Lender under
such agreement in the event of a default are limited to repossession or sale of such Property), (d)
all indebtedness secured by a purchase money mortgage or other Lien to secure all or part of the
purchase price of Property subject to such mortgage or Lien, (e) all obligations under leases which
shall have been or must be, in accordance with GAAP, recorded as Capital Leases in respect of which
such Person is liable as lessee, (f) any 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) the Preferred Stock, and (z) any
liabilities with respect to any post-retirement benefits under a Welfare Plan.



     “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.



     “L/C Issuer” means the Administrative Agent, any Affiliate of the Agent, or any other Lender
requested by the Borrower and approved by the Administrative Agent in its sole discretion with
respect to any Letter of Credit.



     “L/C Obligations” means the aggregate undrawn face amounts of all outstanding Letters of
Credit and all unpaid Reimbursement Obligations.



     “L/C Sublimit” means $10,000,000 as reduced pursuant to the terms hereof.



-28-









 





     “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.



     “Lenders” means and includes Bank of Montreal and the other financial institutions from time
to time party to this Agreement, including each party that becomes a lender hereunder pursuant to
Section 1.1(b) hereof and each assignee Lender pursuant to Section 13.12 hereof. It is understood
and agreed that any “Lender” party to the Original Credit Agreement that does not execute and
deliver this Agreement shall not be a Lender party to this Agreement.



     “Lending Office” is defined in Section 10.4 hereof.



     “Letter of Credit” is defined in Section 1.2(a) 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, and (b) if the LIBOR Index Rate cannot be
determined, the arithmetic average of the rates of interest per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) at which deposits in U.S. Dollars 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.



     “LIBOR Index Rate” means, for any Interest Period, the rate per annum (rounded upwards, if
necessary, to the next higher one hundred-thousandth of a percentage point) for deposits in U.S.
Dollars 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 British Bankers’ Association as the information vendor for the purpose of
displaying British Bankers’ Association Interest Settlement Rates for U.S. Dollar deposits).



     “LIBOR Quoted Rate” means, for any day, the rate per annum equal to the quotient of (i) the
rate per annum (rounded upwards, if necessary, to the next higher one hundred-thousandth of a
percentage point) for deposits in U.S. Dollars for a one-month interest period which appears on the
LIBOR01 Page as of 11:00 a.m. (London, England time) on such day (or, if such day is not a Business
Day, on the immediately preceding Business Day) divided by (ii) one (1) minus the Eurocurrency
Reserve Percentage.



-29-









 





     “Lien” means any mortgage, lien, security interest, pledge, charge or encumbrance of any kind
in respect of any Property, including the interests of a vendor or lessor under any conditional
sale, Capital Lease or other title retention arrangement.



     “Loan” means any Revolving Loan or Swing 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 Applications, the Collateral Documents,
the Guaranties, and each other instrument or document to be delivered hereunder or thereunder or
otherwise in connection therewith.



     “Material Adverse Effect” means (a) a material adverse change in, or material adverse effect
upon, the operations, business, Property, condition (financial or otherwise) or prospects of the
Borrower or of the Borrower and its Subsidiaries taken as a whole, (b) a material impairment of the
ability of the Borrower or any Subsidiary to perform its material obligations under any Loan
Document or (c) a material adverse effect upon (i) the legality, validity, binding effect or
enforceability against the Borrower or any Subsidiary of any Loan Document or the rights and
remedies of the Administrative Agent and the Lenders thereunder or (ii) the perfection or priority
of any Lien granted under any Collateral Document.



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



     “Mortgages” means, collectively, each Mortgage and Security Agreement with Assignment of
Rents, each Deed of Trust and Security Agreement with Assignment of Rents, each Leasehold Mortgage
and Security Agreement with Assignment of Rents, and each Leasehold Deed of Trust and Security
Agreement with Assignment of Rents between the Borrower or the relevant Domestic Subsidiary and the
Administrative Agent relating to such Person’s real property owned or leased, as applicable, as of
the Closing Date and located in the states of Iowa, Idaho, Washington and Wisconsin, and any other
mortgages or deeds of trust delivered to the Administrative Agent pursuant to Section 4.3 hereof 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 a equity
interest in, except to the extent of the amount of dividends or other distributions actually
paid to the Borrower or any of its Subsidiaries during such period.



     “Notes” means and includes the Revolving Notes and the Swing Note.



     “Obligations” means all obligations of the Borrower to pay principal and interest on the
Loans, all Reimbursement Obligations owing under the Applications, all fees and charges payable
hereunder, and all other payment obligations of the Borrower or any of its Subsidiaries



-30-









 




arising under or in relation to any Loan Document, in each case whether now existing or hereafter arising,
due or to become due, direct or indirect, absolute or contingent, and howsoever evidenced, held or
acquired.




     “Original Security Agreement” means the Security Agreement dated as of October 7, 2003, among
the Borrower, Penford Products Co. and the Administrative Agent, as amended and restated by that
certain Amended and Restated Security Agreement dated as of August 22, 2005, and as further amended
and restated by that certain Second Amended and Restated Security Agreement dated as of October 5,
2006, in each case as previously supplemented and amended.



     “OFAC” means the United States Department of Treasury Office of Foreign Assets Control.



     “OFAC Event” means the event specified in Section 8.24 hereof.



     “OFAC Sanctions Programs” means all laws, regulations, and Executive Orders administered by
OFAC, including without limitation, the Bank Secrecy Act, anti-money laundering laws (including,
without limitation, the Uniting and Strengthening America by Providing Appropriate Tools Required
to Intercept and Obstruct Terrorism Act of 2001, Pub. L. 107-56 (a/k/a the USA Patriot Act)), and
all economic and trade sanction programs administered by OFAC, any and all similar United States
federal laws, regulations or Executive Orders, and any similar laws, regulators or orders adopted
by any State within the United States.



     “OFAC SDN List” means the list of the Specially Designated Nationals and Blocked Persons
maintained by OFAC.



     “Participating Interest” is defined in Section 1.2(d) hereof.



     “Participating Lender” is defined in Section 1.2(d) hereof.



     “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,



-31-









 







(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 Acquisitions 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, does not exceed
$50,000,000 in the aggregate, (or $100,000,000 so long as the amount in excess of
$50,000,000 is funded solely with 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 during the term of this Agreement
does not exceed $100,000,000 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;




     (g) after giving effect to the Acquisition, no Default or Event of Default shall exist,
including demonstration to the satisfaction of the Administrative Agent with respect to the
covenants contained in Section 8.22 on a pro forma basis (calculated on the basis of actual
financial results for the most recently completed four consecutive fiscal quarters); and




     (h) after giving effect to the Acquisition, the amount of the Unused Revolving Credit
Commitments shall be not less than $15,000,000.



     “Permitted Transactions” means (a) the execution, delivery and performance by the Borrower and
the other parties to the Preferred Stock Documents and the consummation of the transactions
contemplated thereby, (b) the making of Restricted Payments permitted under
Section 8.12 hereof with respect to the Preferred Stock, and (c) 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.



-32-









 





     “Plan” means any employee pension benefit plan covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Code that either (a) is maintained by a member
of the Controlled Group for employees of a member of the Controlled Group or (b) is maintained
pursuant to a collective bargaining agreement or any other arrangement under which more than one
employer makes contributions and to which a member of the Controlled Group is then making or
accruing an obligation to make contributions or has within the preceding five plan years made
contributions.



     “Preferred Stock” means the Borrower’s Series A 15.0% Cumulative Non-Voting Non-Convertible
Preferred Stock, par value $1.00 per share and Series B Voting Convertible Preferred Stock, par
value $1.00 per share.



     “Preferred Stock Documents” means the Securities Purchase Agreement by and between the
Borrower and Zell Credit Opportunities Master Fund, L.P. (the “Investor”) dated as of April 7,
2010, the Investor Rights Agreement by and between the Borrower and the Investor dated as of April
7, 2010, the Articles of Amendment of the Borrower (Series A 15.0% Cumulative Non-Voting
Non-Convertible Preferred Stock) dated as of April 6, 2010, the Articles of Amendment of Borrower
(Series B Voting Convertible Preferred Stock) dated as of April 6, 2010 and the Standstill Letter
from Investor to the Borrower, dated as of April 7, 2010.



     “Premises” means the real property owned or leased by the Borrower or any Subsidiary,
including without limitation the real property and improvements thereon owned by the Borrower or
any Subsidiary subject to the Lien of the Mortgages or any other Collateral Documents.



     “Property” means, as to any Person, all types of real, personal, tangible, intangible or mixed
property owned by such Person whether or not included in the most recent balance sheet of such
Person and its subsidiaries under GAAP.



     “RCRA” means the Solid Waste Disposal Act, as amended by the Resource Conservation and
Recovery Act of 1976 and Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. §§6901 et seq.,
and any future amendments.



     “Reimbursement Obligation” is defined in Section 1.2(c) hereof.



     “Related Party” means (a) any Person in which the Investor directly or indirectly owns an
equity interest, (b) any Person that is controlled by the Investor, or (c) any Person that is
controlled by a Person that is under common control with the Investor; provided that, for the
purpose of this definition any Person that owns, directly or indirectly, 5% or more of the
securities having the ordinary voting power for the election of directors or governing body of a
corporation or 5% or more of the partnership or other ownership interest of any other Person
(other than as a limited partner of such other Person) will be deemed to control such corporation
or other Person.



     “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,



-33-









 




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, two or more Lenders whose
outstanding Loans and interests in Letters of Credit and Unused Revolving Credit Commitments as of
such date constitute more than 50% of the sum of the total outstanding Loans, interests in Letters
of Credit and Unused Revolving Credit Commitments of the Lenders as of such date.



     “Restricted Payments” is defined in Section 8.12.



     “Revolver Percentage” means, for each Lender, the percentage of the Revolving Credit
Commitments represented by such Lender’s Revolving Credit Commitment or, if the Revolving Credit
Commitments have been terminated, the percentage held by such Lender (including through
participation interests in Reimbursement Obligations) of the aggregate principal amount of all
Revolving Loans and L/C Obligations then outstanding.



     “Revolving Credit” means the credit facility for making Revolving Loans and issuing Letters of
Credit described in Sections 1.1 and 1.2 hereof.



     “Revolving Credit Commitment” means, as to any Lender, the obligation of such Lender to make
Revolving Loans and to participate in Swing Loans and Letters of Credit issued for the account of
the Borrower hereunder in an aggregate principal or face amount at any one time outstanding not to
exceed the amount set forth opposite such Lender’s name on Schedule 1 attached hereto and made a
part hereof, as the same may be reduced or modified at any time or from time to time pursuant to
the terms hereof. The Borrower and the Lenders acknowledge and agree that the Revolving Credit
Commitments of the Lenders aggregate $60,000,000 on the date hereof.



     “Revolving Credit Termination Date” means April 7, 2015, or such earlier date on which the
Revolving Credit Commitments are terminated in whole pursuant to Section 1.12, 9.2 or 9.3 hereof.



     “Revolving 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 Revolving Loan hereunder.



     “Revolving Note” is defined in Section 1.10 hereof.



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



     “Security Agreement” means that certain Third Amended and Restated Security Agreement dated
the date of this Agreement among the Borrower and the Guarantors and the Administrative Agent, as
the same may be amended, modified, supplemented or restated from time to time.



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     “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.



     “Swing Line” means the credit facility for making one or more Swing Loans described in Section
1.14 hereof.



     “Swing Line Sublimit” means $5,000,000, as reduced pursuant to the terms hereof.



     “Swing Loan” and “Swing Loans” each is defined in Section 1.14 hereof.



     “Swing Note” is defined in Section 1.10 hereof.



     “Total Consideration” means, the total amount (but without duplication) of (a) cash paid in
connection with any Acquisition, plus (b) indebtedness payable to the seller in connection with
such Acquisition, plus (c) the fair market value of any equity securities, including any warrants
or options therefor, delivered in connection with any Acquisition, plus (d) the present value of
covenants not to compete entered into in connection with such Acquisition or other future payments
which are required to be made over a period of time and are not contingent upon the Borrower or its
Subsidiary meeting financial performance objectives (exclusive of salaries paid in the ordinary
course of business) (discounted at the Base Rate), but only to the extent not included in clause
(a), (b) or (c) above, plus (e) the amount of indebtedness assumed in connection with such
Acquisition.



     “Total Funded Debt” means, at any time the same is to be determined, the sum (but without
duplication) of (a) all Indebtedness for Borrowed Money of the Borrower and its Subsidiaries at
such time, plus (b) all Indebtedness for Borrowed Money of any other Person which is directly or
indirectly guaranteed by the Borrower or any of its Subsidiaries or which the
Borrower or any of its Subsidiaries has agreed (contingently or otherwise) to purchase or
otherwise acquire or in respect of which the Borrower or any of its Subsidiaries has otherwise
assured a creditor against loss, plus (c) the maximum amount available to be drawn under all
letters of credit issued for the account of such Person and all unpaid drawings in respect of such
letters of credit.



     “Total Funded Debt Ratio” is defined in Section 8.22 hereto.



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



     “Unused Revolving Credit Commitments” means, at any time, the difference between the Revolving
Credit Commitments then in effect and the aggregate outstanding principal amount of all Revolving
Loans, Swing Loans and L/C Obligations, provided that Swing Loans outstanding from time to time
shall be deemed to reduce the Unused Revolving Credit Commitment of the Administrative Agent for
purposes of computing the commitment fee under Section 2.1(a) hereof.



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



     “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.



     Section 5.2. Interpretation. The foregoing definitions are equally applicable to both the
singular and plural forms of the terms defined. The words “hereof“, “herein“, and “hereunder” and
words of like import when used in this Agreement shall refer to this Agreement as a whole and not
to any particular provision of this Agreement. All references to time of day herein are references
to Chicago, Illinois, time unless otherwise specifically provided. Where the character or amount
of any asset or liability or item of income or expense is required to be determined or any
consolidation or other accounting computation is required to be made for the purposes of this
Agreement, it shall be done in accordance with GAAP except where such principles are inconsistent
with the specific provisions of this Agreement.



     Section 5.3. Change in Accounting Principles. If, after the date of this Agreement, there
shall occur any change in GAAP from those used in the preparation of the financial statements
referred to in Section 6.5 hereof and such change shall result in a change in the method of
calculation of any financial covenant, standard or term found in this Agreement, either the
Borrower or the Required Lenders may by notice to the Lenders and the Borrower, respectively,
require that the Lenders and the Borrower negotiate in good faith to amend such covenants,
standards, and terms so as equitably to reflect such change in accounting principles, with the
desired result being that the criteria for evaluating the financial condition of the Borrower and
its Subsidiaries shall be the same as if such change had not been made. No delay by the Borrower



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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
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.



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     Section 6.3. Authority and Validity of Obligations. The Borrower has full right and authority
to enter into this Agreement and the other Loan Documents executed by it, to make the borrowings
herein provided for or under the other Loan Documents, to issue the Notes in evidence thereof, to
grant to the Administrative Agent the Liens described in the Collateral Documents, and to perform
all of its obligations hereunder and under the other Loan Documents executed by it. Each
Subsidiary has full right and authority to enter into the Loan Documents executed by it, to
guarantee the Obligations, Hedging Liability, and Funds Transfer and Deposit Account Liability, to
grant to the Administrative Agent the Liens described in the Collateral Documents executed by such
Person, and to perform all of its obligations under the Loan Documents executed by it. The Loan
Documents delivered by the Borrower and its Subsidiaries have been duly authorized, executed, and
delivered by such Persons and constitute valid and binding obligations of the Borrower and its
Subsidiaries enforceable against them in accordance with their terms, except as enforceability may
be limited by bankruptcy, insolvency, fraudulent conveyance or similar laws affecting creditors’
rights generally and general principles of equity (regardless of whether the application of such
principles is considered in a proceeding in equity or at law); and this Agreement and the other
Loan Documents do not, nor does the performance or observance by the Borrower or any Subsidiary of
any of the matters and things herein or therein provided for, (a) contravene or constitute a
default under any provision of law or any judgment, injunction, order or decree binding upon the
Borrower or any Subsidiary or any provision of the organizational documents (e.g., charter,
articles of incorporation or by-laws, articles of association or operating agreement, partnership
agreement, or other similar document) of the Borrower or any Subsidiary, (b) contravene or
constitute a default under any covenant, indenture or agreement of or affecting the Borrower or any
Subsidiary or any of its Property, in each case where such contravention or default, individually
or in the aggregate, could reasonably be expected to have a Material Adverse Effect or (c) result
in the creation or imposition of any Lien on any Property of the Borrower or any Subsidiary other
than the Liens granted in favor of the Administrative Agent pursuant to the Collateral Documents.



     Section 6.4. Use of Proceeds; Margin Stock. The Borrower shall use the proceeds of the Loans
to refinance existing indebtedness, for their general working capital purposes, to finance capital
expenditures, to fund certain fees and expenses associated with the negotiation, documentation,
closing and syndication of the credit facilities provided to the Borrower under the Loan Documents
and for such other legal and proper purposes as are consistent with all applicable laws. Neither
the Borrower nor any Subsidiary is engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulation U of the Board of Governors
of the Federal Reserve System), and no part of the proceeds of any Loan or any other extension of
credit made hereunder will be used to purchase or
carry any such margin stock or to extend credit to others for the purpose of purchasing or carrying
any such margin stock. Margin stock (as hereinabove defined) constitutes less than 25% of the
assets of the Borrower and its Subsidiaries which are subject to any limitation on sale, pledge or
other restriction hereunder.



     Section 6.5. Financial Reports. The consolidated balance sheet of the Borrower and its
Subsidiaries as at August 31, 2009, 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



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Ernst & Young, LLP, independent public accountants, and the unaudited interim consolidated balance sheet
of the Borrower and its Subsidiaries as at February 28, 2010, 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, 2009, there has been no Material
Adverse Effect.



     Section 6.7. Full Disclosure. The statements and information furnished to the Administrative
Agent and the Lenders in connection with the negotiation of this Agreement and the other Loan
Documents and the commitments by the Lenders to provide all or part of the financing contemplated
hereby or by the other Loan Documents do not contain any untrue statements of a material fact or
omit a material fact necessary to make the material statements contained herein or therein not
misleading, the Administrative Agent and the Lenders acknowledging that as to any projections
furnished to the Administrative Agent and the Lenders, the Borrower only represents that the same
were prepared on the basis of information and estimates the Borrower believed to be reasonable.



     Section 6.8. Trademarks, Franchises, and Licenses. The Borrower and its Subsidiaries own,
possess, or have the right to use all necessary patents, licenses, franchises, trademarks, trade
names, trade styles, copyrights, trade secrets, know how, and confidential commercial and
proprietary information to conduct their businesses as now conducted, without known conflict with
any patent, license, franchise, trademark, trade name, trade style, copyright or other proprietary
right of any other Person 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.



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     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.



     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 November 13, 2009,
neither the Borrower nor any Subsidiary has any contingent liabilities



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with respect to any
post-retirement benefits under a Welfare Plan, other than liability for continuation coverage
described in article 6 of Title I of ERISA.




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



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




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




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




     (iii) the Borrower and its Subsidiaries have not, and the Borrower has no knowledge of
any other Person who has, caused any Release, threatened Release or 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:
(1) 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



-41-









 







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.


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. OFAC. (a) The Borrower is in compliance with the requirements of all OFAC
Sanctions Programs applicable to it, (b) each Subsidiary of the Borrower is in compliance with the
requirements of all OFAC Sanctions Programs applicable to such Subsidiary, (c) the Borrower has
provided to the Administrative Agent, the L/C Issuer, and the Lenders all information regarding the
Borrower and its Affiliates and Subsidiaries necessary for the Administrative Agent, the L/C
Issuer, and the Lenders to comply with all applicable OFAC Sanctions Programs, and (d) to the best
of the Borrower’s knowledge, neither the Borrower nor any of its Affiliates or Subsidiaries is, as
of the date hereof, named on the current OFAC SDN List.



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	 	 	Section 7. Conditions Precedent.





     The obligation of each Lender to advance, continue or convert any Loan (other than the
continuation of, or conversion into, a Base Rate Loan) or of the L/C Issuer to issue, extend the
expiration date (including by not giving notice of non-renewal) of or increase the amount of any
Letter of Credit under this Agreement, shall be subject to the following conditions precedent:



     Section 7.1. All Credit Events. At the time of each Credit Event hereunder:




     (a) each of the representations and warranties set forth herein and in the other Loan
Documents shall be and remain true and correct as of said time, except to the extent the
same expressly relate to an earlier date;




     (b) no Default or Event of Default shall have occurred and be continuing or would occur
as a result of such Credit Event;




     (c) in the case of a Borrowing the Administrative Agent shall have received the notice
required by Section 1.5 hereof, in the case of the issuance of any Letter of Credit the L/C
Issuer shall have received a duly completed Application for such Letter of Credit together
with any fees called for by Section 2.1 hereof, and, in the case of an extension or increase
in the amount of a Letter of Credit, a written request therefor in a form acceptable to the
L/C Issuer together with fees called for by Section 2.1 hereof;




     (d) after giving effect to such extension of credit, the aggregate principal amount of
all Revolving Loans, Swing Loans and Letters of Credit outstanding under this Agreement
shall not exceed the Revolving Credit Commitments then in effect;




     (e) after giving effect to such extension of credit, the aggregate amount of all
Letters of Credit issued shall not exceed the L/C Sublimit; and




     (f) such Credit Event shall not violate any order, judgment or decree of any court or
other authority or any provision of law or regulation applicable to the Administrative
Agent, the L/C Issuer, or any Lender (including, without limitation, Regulation U of the
Board of Governors of the Federal Reserve System) as then in effect;


Each request for a Borrowing hereunder and each request for the issuance of, increase in the amount
of, or extension of the expiration date of, a Letter of Credit shall be deemed to be a
representation and warranty by the Borrower on the date on such Credit Event as to the facts
specified in subsections (a) through (e), both inclusive, of this Section.




     Section 7.2. Initial Credit Event. Before or concurrently with the initial Credit Event:




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



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




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




     (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 supplements
in form and substance satisfactory to the Administrative Agent to each of the Mortgages,
duly executed by the Borrower and its Domestic Subsidiaries, together with (i) original
stock certificates or other similar instruments or securities representing all of the issued
and outstanding shares of capital stock or other equity interests in each Subsidiary as
required pursuant to Section 4 of this Agreement, and (ii) stock powers for the Collateral
consisting of the stock or other equity interest in each Guarantor and Penford Holdings
executed in blank and undated;




     (f) the Administrative Agent shall have received evidence of insurance required to be
maintained under the Loan Documents, naming the Administrative Agent as mortgagee, loss
payee and additional insured;




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




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




     (i) the Administrative Agent shall have received copies of each of the Preferred Stock
Documents, and all amendments thereto, certified as true, correct and complete by the
Secretary or Assistant Secretary of the Borrower;




     (j) the Borrower shall have received cash proceeds from the issuance and sale of the
Preferred Stock pursuant to the Preferred Stock Documents in an amount not less than
$39,990,000;



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     (k) each Lender shall have received such evaluations and certifications as it may
reasonably require (including a compliance certificate in the forms attached hereto as
Exhibit E containing calculations of the compliance calculations of the financial covenants
as of February 28, 2010) in order to satisfy itself as to the value of the Collateral, the
financial condition of the Borrower and its Subsidiaries, and the lack of material
contingent liabilities of the Borrower and its Subsidiaries;




     (l) the Administrative Agent shall have received financing statement, tax, and judgment
lien search results against the Property of the Borrower and each Guarantor evidencing the
absence of Liens on its Property except as permitted by Section 8.8 hereof;




     (m) the Administrative Agent shall have received for the account of the Lenders such
other agreements, instruments, resolutions, documents (including documents relating to tax
and regulatory maters), certificates, information and opinions as the Administrative Agent
may reasonably request;




     (n) the Administrative Agent shall have received evidence satisfactory thereto that, as
of February 28, 2010, (x) the Borrower’s EBITDA for the twelve consecutive months then ended
is not less than $15,000,000 and (y) the Total Funded Debt Ratio is not greater than 1.5 to
1.0, in each case calculated on the basis of the Borrower’s EBITDA for the twelve
consecutive months ended February 28, 2010, and the Borrower’s Total Funded Debt outstanding
on the Closing Date after giving effect to the initial Credit Event hereunder and the
Borrower’s receipt of the proceeds of the issuance and sale of the Preferred stock pursuant
to the Preferred Stock Documents;




     (o) the Administrative Agent shall have received the quarterly consolidated and
consolidating financial statements (including consolidated and consolidating balance sheets
and consolidated and consolidating statements of income and cash flows) of the Borrower for
the fiscal quarter ended February 28, 2010, each in form and substance acceptable to the
Administrative Agent;




     (p) 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, 2009 shall have occurred;




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




     (r) the Borrower shall have paid the Administrative Agent all fees and expenses of
counsel to the Administrative Agent for which an invoice has been submitted to the Borrower;




     (s) the Borrower shall have repaid in full (i) all outstanding Loans together with
accrued and unpaid interest thereon, (ii) all accrued and unpaid unused commitment



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fees owed
to the Lenders under Section 2.1(a) of the Original Credit Agreement, and (iii) all amounts
payable under Section 1.11 of the Original Credit Agreement as a result of all of the
foregoing repayments; and




     (t) the Administrative Agent shall have received from the Borrower written instructions
as to the disbursement and application of the proceeds of the initial Loans made hereunder.



Section 8. Covenants.




     The Borrower agrees that, so long as any credit is available to or in use by the Borrower
hereunder, except to the extent compliance in any case or cases is waived in writing pursuant to
the terms of Section 13.13 hereof:



     Section 8.1. Maintenance of Business. The Borrower shall, and shall cause each Subsidiary
other than Penford Export Corporation, Penford Holdings Pty. Ltd. and Penford Australia Limited 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, Penford Holdings Pty. Ltd. and
Penford Australia Limited 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, Penford
Holdings Pty. Ltd. and Penford Australia Limited 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



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similarly situated and operating like Properties against loss or damage from such hazards and risks, and in
such amounts, as are insured by Persons similarly situated and operating like Properties; and the
Borrower shall insure, and shall cause each Subsidiary to insure, such other hazards and risks
(including, without limitation, employers’ and public liability risks) with reputable, good and
responsible insurance companies as and to the extent usually insured by Persons similarly situated
and conducting similar businesses. The Borrower shall in any event maintain, and cause each
Subsidiary to maintain, insurance on the Collateral to the extent required by the Collateral
Documents. The Borrower shall, upon the request of the Administrative Agent, furnish to the
Administrative Agent and the Lenders a certificate setting forth in summary form the nature and
extent of the insurance maintained pursuant to this Section and the other Loan Documents.




     Section 8.5. Financial Reports. The Borrower shall, and shall cause each Subsidiary to,
maintain a standard system of accounting in accordance with GAAP and shall furnish to the
Administrative Agent, each Lender and each of their duly authorized representatives such
information respecting the business and financial condition of the Borrower and each Subsidiary as
the Administrative Agent or such Lender may reasonably request; and without any request, shall
furnish to the Administrative Agent and the Lenders:




     (a) as soon as available, and in any event within forty-five (45) days after the close
of each of the first three (3) fiscal quarters of each fiscal year of the Borrower, a copy
of the consolidated and consolidating balance sheet of the Borrower and its Subsidiaries as
of the last day of such fiscal quarter and the consolidated and consolidating statements of
income, retained earnings, and cash flows of the Borrower and its Subsidiaries for the
fiscal quarter and for the fiscal year to date period then ended, each in reasonable detail
showing in comparative form the figures for the corresponding date and period in the
previous fiscal year, prepared by the Borrower in accordance with GAAP (subject to the
absence of footnote disclosures and year end audit adjustments) and certified to by its
chief financial officer or another officer of the Borrower acceptable to the Administrative
Agent;




     (b) as soon as available, and in any event within ninety (90) days after the close of
each fiscal year of the Borrower, a copy of the consolidated and consolidating balance sheet
of the Borrower and its Subsidiaries as of the last day of the fiscal year then ended and
the consolidated and consolidating statements of income, retained earnings, and cash flows
of the Borrower and its Subsidiaries for the fiscal year then ended, and
accompanying notes thereto, each in reasonable detail showing in comparative form the
figures for the previous fiscal year, accompanied in the case of the consolidated financial
statements by an unqualified opinion of Ernst & Young, LLP or another firm of independent
public accountants of recognized national or international standing, selected by the
Borrower and reasonably satisfactory to the Administrative Agent and the Required Lenders,
to the effect that the consolidated financial statements have been prepared in accordance
with GAAP and present fairly in accordance with GAAP the 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



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statements has been made in accordance with
generally accepted auditing standards and, accordingly, such examination included such tests
of the accounting records and such other auditing procedures as were considered necessary in
the circumstances;




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




     (d) promptly after receipt thereof, any additional written reports, management letters
or other detailed information contained in writing concerning significant aspects of the
Borrower’s or any Subsidiary’s operations and financial affairs given to it by its
independent public accountants;




     (e) promptly after the sending or filing thereof, copies of each financial statement,
report, notice or proxy statement sent by the Borrower or any Subsidiary to its stockholders
or other equity holders, and copies of each annual return, regular, periodic or special
report, registration statement, investment statement or prospectus (including all Form 10-K,
Form 10-Q and Form 8-K reports) or equivalent document filed by the Borrower or any
Subsidiary with any securities exchange, or the Securities and Exchange Commission or any
successor agency, 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 forty-five (45) days after the end of
each fiscal year of the Borrower, a copy of the Borrower’s consolidated and consolidating
operating budget for the following fiscal year, such operating budget to show the Borrower’s
projected consolidated and consolidating revenues, expenses and balance sheet on a
quarter-by-quarter basis, such operating budget to be in reasonable detail prepared by the
Borrower and in form satisfactory to the Administrative Agent and the Required Lenders
(which shall include a summary of all assumptions made in preparing such operating budget);




     (h) notice of any Change of Control;



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     (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.



     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, Hedging Liability, and Funds Transfer and Deposit Account
Liability of the Borrower and its Subsidiaries owing to the Administrative Agent or the
Lenders (and their Affiliates);



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     (b) purchase money indebtedness and Capitalized Lease Obligations of the Borrower and
its Subsidiaries in an amount not to exceed $10,000,000 in the aggregate at any one time
outstanding;




     (c) obligations of the Borrower arising out of interest rate, commodity and foreign
currency hedging agreements entered into with financial institutions in the ordinary course
of business and not for speculative purposes;




     (d) endorsement of items for deposit or collection of commercial paper received in the
ordinary course of business;




     (e) indebtedness from time to time owing by any Subsidiary to the Borrower (the
“Intercompany Indebtedness“);




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




     (g) unsecured Indebtedness for Borrowed Money of the Borrower not otherwise permitted
by this Section in an amount not to exceed $10,000,000 in the aggregate at any one time
outstanding.



     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,



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including interest and
penalties thereon, if any, shall not be in excess of $5,000,000 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;




     (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;




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




     (h) Liens not otherwise permitted hereby securing obligations not exceeding $5,000,000
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



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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;




     (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 $20,000,000
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;



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     (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;




     (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 merger of Penford Holdings Pty. Ltd with and into Penford Australia Limited,
provided that after giving effect to such merger the Administrative agent shall have a
perfected first priority security (or its equivalent) in 65% of the Voting Stock of Penford
Australia Limited.



     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, (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;




     (ii) dividends on the Borrower’s Preferred Stock so long as (x) the Borrower shall have
delivered to the Administrative Agent a certificate of the chief financial officer



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of the Borrower showing, in reasonable detail, after giving effect thereto the Borrower shall be in
pro forma compliance with the financial covenants contained in Section 8.22 hereof based on
the Borrower’s financial performance for the four consecutive fiscal quarters most recently
ended, and (y) no Default or Event of Default shall exist after giving effect thereto;




     (iii) at any time from and after two years after the Closing Date, redemptions of the
Borrower’s Preferred Stock so long as (x) the Borrower shall have delivered to the
Administrative Agent a certificate of the chief financial officer of the Borrower showing,
in reasonable detail, after giving effect thereto the Borrower’s Total Funded Debt Ratio
(based on the Borrower’s financial performance for the four consecutive fiscal quarters most
recently ended) shall be less than 2.00 to 1, (y) after giving effect thereto the amount of
the Unused Revolving Credit Commitments shall be not less than $10,000,000, and (z) no
Default or Event of Default shall exist after giving effect thereto; and




     (iv) Restricted Payments not otherwise permitted hereby, excluding Restricted Payments
with respect to the Preferred Stock and 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 $10,000,000 and 50% of the
Borrower’s Free Cash Flow for the four consecutive fiscal quarters most recently ended, in
each case reduced by the amount of Subordinated Debt repaid as permitted by the exception
appearing at the end of Section 8.21, provided such repayment shall not be deducted in
determining Borrower’s Free Cash Flow for those purposes.



     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.



     (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



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do so, individually or in the aggregate, could reasonably be expected to have a Material Adverse
Effect:




     (i) comply in all material respects with, and maintain each of the Premises in
compliance in all material respects with, all applicable Environmental Laws;




     (ii) require that each tenant and subtenant, if any, of any of the Premises or any part
thereof comply in all material respects with all applicable Environmental Laws;




     (iii) obtain and maintain in full force and effect all material governmental approvals
required by any applicable Environmental Law for operations at each of the Premises;




     (iv) cure any material violation by it or at any of the Premises of applicable
Environmental Laws;




     (v) not allow the presence or operation at any of the Premises of any (1) landfill or
dump or (2) hazardous waste management facility or solid waste disposal facility as defined
pursuant to RCRA or any comparable state law or law of any other jurisdiction;




     (vi) not manufacture, use, generate, transport, treat, store, release, dispose or
handle any Hazardous Material at any of the Premises except in the ordinary course of its
business and in compliance with applicable Environmental Law;




     (vii) within 10 Business Days notify the Administrative Agent in writing of and provide
any reasonably requested documents upon learning of any of the following in connection with
the Borrower or any Subsidiary or any of the Premises: (1) any material liability for
response or corrective action, natural resource damage or other harm pursuant to CERCLA,
RCRA or any comparable state law or law of any other jurisdiction; (2) any material
Environmental Claim; (3) any material violation of an Environmental Law or material Release,
threatened Release or 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;



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     (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.



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



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



     (b) Inactive Subsidiary. The Borrower shall not permit Penford Export Corporation to engage
in any operations, conduct any business or own any assets having an aggregate value in excess of
$50,000.



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



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     Section 8.20. No Restrictions. Except as provided herein, the Borrower shall not, nor shall
it permit any Subsidiary to, directly or indirectly create or otherwise cause or suffer to exist or
become effective any consensual encumbrance or restriction of any kind on the ability of the
Borrower or any Subsidiary to: (a) pay dividends or make any other distribution on any
Subsidiary’s capital stock or other equity interests owned by the Borrower or any other Subsidiary,
(b) pay any indebtedness owed to the Borrower or any other Subsidiary, (c) make loans or advances
to the Borrower or any other Subsidiary, (d) transfer any of its Property to the Borrower or any
other Subsidiary or (e) guarantee the Obligations and/or grant Liens on its assets to the
Administrative Agent as required by the Loan Documents.



     Section 8.21. Subordinated Debt. The Borrower shall not, nor shall it permit any Subsidiary
to, amend or modify any of the terms or conditions relating to any Subordinated Debt, or make any
voluntary prepayment of thereof or effect any voluntary redemption thereof, or make any payment on
account of Subordinated Debt which is prohibited under the terms of any instrument or agreement
subordinating the same to the Obligations, except to the extent the Borrower could make Restricted
Payments permitted by Section 8.12(iv) during any fiscal year.



     Section 8.22. Financial Covenants. (a) Total Funded Debt Ratio. The Borrower shall not, as
of the last day of each fiscal quarter of the Borrower, permit the ratio of (x) Total Funded Debt
of the Borrower and its Subsidiaries (determined on a consolidated basis in accordance with GAAP),
to (y) EBITDA of the Borrower and its Subsidiaries (determined on a consolidated basis in
accordance with GAAP) for the four fiscal quarters of the Borrower then ended (the “Total Funded
Debt Ratio“) to be more than 3.00 to 1.



     (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 (determined
on a consolidated basis in accordance with GAAP) for the four consecutive fiscal quarters of the
Borrower ended on such date minus the aggregate amount of all Capital Expenditures made or incurred
by the Borrower and its Subsidiaries (determined on a consolidated basis in accordance with GAAP)
for the repair or maintenance of property, plant or equipment (but in any event not less than
$2,500,000 from the date hereof through August 30, 2011, $3,000,000 from August 31, 2011 through
August 30, 2012 and $4,500,000 at all times thereafter) during the same period, to (ii) Fixed
Charges of the Borrower and its Subsidiaries (determined on a consolidated basis in accordance with
GAAP) for the same period, of not less than 1.35 to 1.



     (c) Capital Expenditures. During any fiscal year of the Borrower during which the Borrower’s
Total Funded Debt Ratio for the two most recent fiscal quarters is greater than 2.00 to 1, the
Borrower shall not, nor shall it permit any of its Subsidiaries to, incur Capital Expenditures in
excess of $15,000,000 in the aggregate during such fiscal year, except for Capital Expenditures set
forth on Schedule 8.22(c).



     Section 8.23. Post-Closing Items. (a) No later than August 7, 2010 (or such later date as
the Borrower and the Administrative Agent may agree upon), the Borrower shall deliver to the
Administrative Agent:



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     (i) a date down endorsement (or a binding commitment therefore) to each mortgagee’s title
insurance policy insuring the Mortgages in form and substance reasonably acceptable to the
Administrative Agent from the title insurance company that issued such title insurance policies
insuring the Lien of the Mortgages as supplemented in connection with this Agreement to be valid
first priority Liens (other than as permitted by Section 8.8) subject to no defects or objections
which are reasonably unacceptable to the Administrative Agent, together with such endorsements as
the Administrative Agent may require;



     (ii) to the extent necessary to eliminate any survey exception contained in any endorsement
required by Section 8.23(a)(i), an updated survey of each of the Premises satisfactory in form and
substance to the Administrative Agent; and



     (iii) deposit account, securities account, and commodity account control agreements with
respect to the Borrower’s and the Guarantor’s deposit accounts, commodity accounts and securities
accounts.



     (b) Borrower shall deliver to the Administrative Agent warehouse agreements with respect to
inventory of the Borrower and the Guarantors maintained in third party warehouses, except to the
extent agreed upon by the Administrative Agent.



     Section 8.24. Compliance with OFAC Sanctions Programs. (a) The Borrower shall at all times
comply with the requirements of all OFAC Sanctions Programs applicable to the Borrower and shall
cause each of its Subsidiaries to comply with the requirements of all OFAC Sanctions Programs
applicable to such Subsidiary.



     (b) The Borrower shall provide the Administrative Agent, the L/C Issuer, and the Lenders any
information regarding the Borrower, its Affiliates, and its Subsidiaries necessary for the
Administrative Agent, the L/C Issuer, and the Lenders to comply with all applicable OFAC Sanctions
Programs; 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 SDN List (such occurrence, an
“OFAC Event“), the Borrower shall promptly (i) give written notice to the Administrative Agent, the
L/C Issuer, 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 SDN List is located within the jurisdiction of the United States of America), including
the OFAC Sanctions Programs, and the Borrower hereby authorizes and consents to the Administrative
Agent, the L/C Issuer, and the Lenders taking any and all steps the Administrative Agent, the L/C
Issuer, 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 requirements of the OFAC
Sanctions Programs (including the freezing and/or blocking of assets and reporting such action to
OFAC).



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Section 9. Events of Default and Remedies.




     Section 9.1. Events of Default. Any one or more of the following shall constitute an “Event
of Default” hereunder:




     (a) (i) default in the payment when due of all or any part of the principal of any Note
(whether at the stated maturity thereof or at any other time provided for in this Agreement)
or of any Reimbursement Obligation (whether at the stated maturity thereof or at any other
time provided for in this Agreement) or (ii) default for a period of 3 Business Days in the
payment of any interest or any fee or other Obligation payable hereunder or under any other
Loan Document;




     (b) default in the observance or performance of any covenant set forth in Sections 8.1,
8.5, 8.7, 8.8, 8.9, 8.10, 8.11, 8.12, 8.17, 8.18, 8.21, 8.22 (subject to Section 9.7 in the
case only of section 8.22(a) and (b)) or 8.23 hereof or of any provision in any Loan
Document dealing with the use, disposition or remittance of the proceeds of Collateral or
requiring the maintenance of insurance thereon;




     (c) default in the observance or performance of any other provision hereof or of any
other Loan Document which is not remedied within 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 first
priority Lien in favor of the Administrative Agent in any Collateral purported to be covered
thereby except as expressly permitted by the terms thereof, or the Borrower or any
Subsidiary takes any action for the purpose of
terminating, repudiating or rescinding any Loan Document executed by it or any of its
obligations thereunder;




     (f) default shall occur under any Indebtedness for Borrowed Money (other than the
Intercompany Indebtedness) issued, assumed or guaranteed by the Borrower or any Subsidiary
aggregating in excess of $5,000,000, 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



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Indebtedness for Borrowed Money (whether or not such maturity is in fact accelerated), or any such Indebtedness for
Borrowed Money shall not be paid when due (whether by demand, lapse of time, acceleration or
otherwise);




     (g) any judgment or judgments, writ or writs or warrant or warrants of attachment, or
any similar process or processes, shall be entered or filed against the Borrower or any
Subsidiary, or against any of its Property, in an aggregate amount in excess of $5,000,000,
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 $5,000,000 which it shall have
become liable to pay to the PBGC or to a Plan under Title IV of ERISA; or notice of intent
to terminate a Plan or Plans having aggregate Unfunded Vested Liabilities in excess of
$5,000,000 (collectively, a “Material Plan“) shall be filed under Title IV of ERISA by the
Borrower or any Subsidiary, or any other member of its Controlled Group, any plan
administrator or any combination of the foregoing; or the PBGC shall institute proceedings
under Title IV of ERISA to terminate or to cause a trustee to be appointed to administer any
Material Plan or a proceeding shall be instituted by a fiduciary of any Material Plan
against the Borrower or any Subsidiary, or any member of its Controlled Group, to enforce
Section 515 or 4219(c)(5) of ERISA and such proceeding shall not have been dismissed within
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; or



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     (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.



     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 Revolving Credit Commitments and all other obligations of the Lenders
hereunder on the date stated in such notice (which may be the date thereof); (b) if so directed by
the Required Lenders, declare the principal of and the accrued interest on all outstanding Notes to
be forthwith due and payable and thereupon all outstanding Notes, including both principal and
interest thereon, shall be and become immediately due and payable together with all other amounts
payable under the Loan Documents without further demand, presentment, protest or notice of any
kind; and (c) if so directed by the Required Lenders, demand that the Borrower immediately pay to
the Administrative Agent the full amount then available for drawing under each or any Letter of
Credit, and the Borrower agrees to immediately make such payment and acknowledges and agrees that
the Lenders would not have an adequate remedy at law for failure by the Borrower to honor any such
demand and that the Administrative Agent, for the benefit of the Lenders, shall have the right to
require the Borrower to specifically perform such undertaking whether or not any drawings or other
demands for payment have been made under any Letter of Credit. The Administrative Agent, after
giving notice to the Borrower pursuant to Section 9.1(c) or this Section 9.2, shall also promptly
send a copy of such notice to the other Lenders, but the failure to do so shall not impair or annul
the effect of such notice.



     Section 9.3. Bankruptcy Defaults. When any Event of Default described in subsections (j) or
(k) of Section 9.1 hereof has occurred and is continuing, then all outstanding Notes shall
immediately become due and payable together with all other amounts payable under the Loan Documents
without presentment, demand, protest or notice of any kind, the obligation of the Lenders to extend
further credit pursuant to any of the terms hereof shall immediately terminate and the Borrower
shall immediately pay to the Administrative Agent the full amount then available for drawing under
all outstanding Letters of Credit, the Borrower acknowledging and agreeing that the Lenders would
not have an adequate remedy at law for failure by the Borrower to honor any such demand and that
the Lenders, and the Administrative Agent on their behalf, shall have the right to require the
Borrower to specifically perform such undertaking whether or not any draws or other demands for
payment have been made under any of the Letters of Credit.



     Section 9.4. Collateral for Undrawn Letters of Credit. (a) If the prepayment of the amount
available for drawing under any or all outstanding Letters of Credit is required under Section
1.8(b) or under Section 9.2 or 9.3 above, the Borrower shall forthwith pay the amount required to
be so prepaid, to be held by the Administrative Agent as provided in subsection (b) below.



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     (b) All amounts prepaid pursuant to subsection (a) above shall be held by the Administrative
Agent in one or more separate collateral accounts (each such account, and the credit balances,
properties, and any investments from time to time held therein, and any substitutions for such
account, any certificate of deposit or other instrument evidencing any of the foregoing and all
proceeds of and earnings on any of the foregoing being collectively called the “Collateral
Account“) as security for, and for application by the Administrative Agent (to the extent
available) to, the reimbursement of any payment under any Letter of Credit then or thereafter made
by the Administrative Agent, and to the payment of the unpaid balance of any other Obligations.
The Collateral Account shall be held in the name of and subject to the exclusive dominion and
control of the Administrative Agent for the benefit of the Administrative Agent, the Lenders, and
the L/C Issuer. If and when requested by the Borrower, the Administrative Agent shall invest funds
held in the Collateral Account from time to time in direct obligations of, or obligations the
principal of and interest on which are unconditionally guaranteed by, the United States of America
with a remaining maturity of one year or less, provided that the Administrative Agent is
irrevocably authorized to sell investments held in the Collateral Account when and as required to
make payments out of the Collateral Account for application to amounts due and owing from the
Borrower to the L/C Issuer, the Administrative Agent or the Lenders; provided, however, that (i) if
the Borrower shall have made payment of all obligations referred to in subsection (a) above (ii)
all relevant preference or other disgorgement periods relating to the receipt of such payments have
passed, and (iii) no Letters of Credit, Revolving Credit Commitments, Loans or other Obligations
remain outstanding, at the request of the Borrower the Administrative Agent shall release to the
Borrower any remaining amounts held in the Collateral Account.



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



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



     Section 9.7. Right to Cure. (a) 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 Sections 8.22(a) and (b), on or before
the date on which a certificate of an Authorized Representative certifying compliance with Sections
8.22(a) and (b) is required to be delivered pursuant to Section 8.5(j), the Borrower may, subject
to Section 9.7(b), 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 Sections 8.22(a) and (b), as
applicable, provided that within 20 Business Days after the date the Cure Notice is



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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 Sections 8.22(a) and (b) 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 and Reimbursement
Obligations outstanding hereunder, the covenants in Sections 8.22(a) and (b) shall be recalculated
giving effect to the following pro forma adjustments:




     (i) the Cure Amount shall be deemed to have been applied to the payment of Loans and
Reimbursement Obligations 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 Funded Debt 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




     (ii) if after giving effect to the foregoing recalculations, the Borrower shall then be
in compliance with the requirements of Section 8.22(a) and (b) 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.



     (b) Notwithstanding anything herein to the contrary, if the Borrower exercises the Cure Right
in more than two quarters in any four-quarter period, the Revolving Credit Commitments shall be
permanently reduced without any action by the Borrower, the Administrative Agent or any Lender by
an amount equal to the aggregate amount of all proceeds of equity received by the Borrower in
connection with the exercise of such Cure Right, and each Lender’s Revolving Credit Commitment
shall be reduced by its Revolver Percentage of such reduction.



Section 10. Change in Circumstances.




     Section 10.1. Change of Law. Notwithstanding any other provisions of this Agreement or any
Note, if at any time any change in applicable law or regulation or in the interpretation thereof
makes it unlawful for any Lender to make or continue to maintain any 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



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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




     (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, on or after the date hereof, the
adoption of any applicable law, rule or regulation, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance by any Lender (or
its Lending Office) with any request or directive (whether or not having the force of law) of any
such authority, central bank or comparable agency:




     (i) shall subject any Lender (or its Lending Office) to any tax, duty or other charge
with respect to its Eurodollar Loans, its Notes, its Letter(s) of Credit, or its
participation in any thereof, any Reimbursement Obligations owed to it or its obligation to
make Eurodollar Loans, issue a Letter of Credit, or to participate therein, or shall change
the basis of taxation of payments to any Lender (or its Lending Office) of the principal of
or interest on its Eurodollar Loans, Letter(s) of Credit, or participations therein or any
other amounts due under this Agreement or any other Loan Document in respect of its
Eurodollar Loans, Letter(s) of Credit, any participation therein, any Reimbursement
Obligations owed to it, or its obligation to make Eurodollar Loans, or
issue a Letter of Credit, or acquire participations therein (except for changes in the rate
of tax on the overall net income of such Lender or its Lending Office imposed by the
jurisdiction in which such Lender’s principal executive office or Lending Office is
located); or



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     (ii) shall impose, modify or deem applicable any reserve, special deposit or similar
requirement (including, without limitation, any such requirement imposed by the Board of
Governors of the Federal Reserve System, but excluding with respect to any 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, its Letter(s) of
Credit, or its participation in any thereof, any Reimbursement Obligation owed to it, or its
obligation to make Eurodollar Loans, or to issue a Letter of Credit, or to participate
therein;


and the result of any of the foregoing is to increase the cost to such Lender (or its Lending
Office) of making or maintaining any Eurodollar Loan, issuing or maintaining a Letter of Credit, or
participating therein, or to reduce the amount of any sum received or receivable by such Lender (or
its Lending Office) under this Agreement or under any other Loan Document with respect thereto, by
an amount deemed by such Lender to be material, then, within 15 days after demand by such Lender
(with a copy to the Administrative Agent), the Borrower shall be obligated to pay to such Lender
such additional amount or amounts as will compensate such Lender for such increased cost or
reduction.




     (b) If, after the date hereof, any Lender or the Administrative Agent shall have determined
that the adoption of any applicable law, rule or regulation regarding capital adequacy, or any
change therein, or any change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender (or its Lending Office) or any corporation controlling such
Lender with any request or directive regarding capital adequacy (whether or not having the force of
law) of any such authority, central bank or comparable agency, has had the effect of reducing the
rate of return on such Lender’s or such corporation’s capital as a consequence of its obligations
hereunder to a level below that which such Lender or such corporation could have achieved but for
such adoption, change or compliance (taking into consideration such Lender’s or such corporation’s
policies with respect to capital adequacy) by an amount deemed by such Lender to be material, then
from time to time, within 15 days after 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



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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 Bank of Montreal as the Administrative Agent under the Loan Documents and hereby
authorizes the Administrative Agent to take such action as Administrative Agent on its behalf and
to exercise such powers under the Loan Documents as are delegated to the Administrative Agent by
the terms thereof, together with such powers as are reasonably incidental thereto. The Lenders
expressly agree that the Administrative Agent is not acting as a fiduciary of the Lenders in
respect of the Loan Documents, the Borrower or otherwise, and nothing herein or in any of the other
Loan Documents shall result in any duties or obligations on the Administrative Agent or any of the
Lenders except as expressly set forth herein.



     Section 11.2. Administrative Agent and its Affiliates. The Administrative Agent shall have
the same rights and powers under this Agreement and the other Loan Documents as any other Lender
and may exercise or refrain from exercising such rights and power as though it were not the
Administrative Agent, and the Administrative Agent and its affiliates may accept deposits from,
lend money to, and generally engage in any kind of business with the Borrower or any Affiliate of
the Borrower as if it were not the Administrative Agent under the Loan Documents. The term
“Lender” as used herein and in all other Loan Documents, unless the context otherwise clearly
requires, includes the Administrative Agent in its individual capacity as a Lender. References in
Section 1 hereof to the Administrative Agent’s Loans, or to the amount owing to the Administrative
Agent for which an interest rate is being determined, refer to the Administrative Agent in its
individual capacity as a Lender.



     Section 11.3. Action by Administrative Agent. If the Administrative Agent receives from the
Borrower a written notice of an Event of Default pursuant to Section 8.5 hereof, the Administrative
Agent shall promptly give each of the Lenders written notice thereof. The obligations of the
Administrative Agent under the Loan Documents are only those expressly set
forth therein. Without limiting the generality of the foregoing, the Administrative Agent shall
not be required to take any action hereunder with respect to any Default or Event of Default,
except as expressly provided in Sections 9.2 and 9.5. Upon the occurrence of an Event of Default,
the Administrative Agent shall take such action to enforce its Lien on the Collateral and to
preserve and protect the Collateral as may be directed by the Required Lenders. Unless and



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until the Required Lenders give such direction, the Administrative Agent may (but shall not be obligated
to) take or refrain from taking such actions as it deems appropriate and in the best interest of
all the Lenders. In no event, however, shall the Administrative Agent be required to take any
action in violation of applicable law or of any provision of any Loan Document, and the
Administrative Agent shall in all cases be fully justified in failing or refusing to act hereunder
or under any other Loan Document unless it first receives any further assurances of its
indemnification from the Lenders that it may require, including prepayment of any related expenses
and any other protection it requires against any and all costs, expense, and liability which may be
incurred by it by reason of taking or continuing to take any such action. The Administrative Agent
shall be entitled to assume that no Default or Event of Default exists unless notified in writing
to the contrary by a Lender or the Borrower. In all cases in which the Loan Documents do not
require the Administrative Agent to take specific action, the Administrative Agent shall be fully
justified in using its discretion in failing to take or in taking any action thereunder. Any
instructions of the Required Lenders, or of any other group of Lenders called for under the
specific provisions of the Loan Documents, shall be binding upon all the Lenders and the holders of
the Obligations.



     Section 11.4. Consultation with Experts. The Administrative Agent may consult with legal
counsel, independent public accountants, and other experts selected by it and shall not be liable
for any action taken or omitted to be taken by it in good faith in accordance with the advice of
such counsel, accountants or experts.



     Section 11.5. Liability of Administrative Agent; Credit Decision. Neither the Administrative
Agent nor any of its directors, officers, agents or employees shall be liable for any action taken
or not taken by it in connection with the Loan Documents: (i) with the consent or at the request
of the Required Lenders or (ii) in the absence of its own gross negligence or willful misconduct.
Neither the Administrative Agent nor any of its directors, officers, agents or employees shall be
responsible for or have any duty to ascertain, inquire into or verify: (i) any statement, warranty
or representation made in connection with this Agreement, any other Loan Document or any Credit
Event; (ii) the performance or observance of any of the covenants or agreements of the Borrower or
any Subsidiary contained herein or in any other Loan Document; (iii) the satisfaction of any
condition specified in Section 7 hereof, except receipt of items required to be delivered to the
Administrative Agent; or (iv) the validity, effectiveness, genuineness, enforceability, perfection,
value, worth or collectibility hereof or of any other Loan Document or of any other documents or
writing furnished in connection with any Loan Document or of any Collateral; and the Administrative
Agent makes no representation of any kind or character with respect to any such matter mentioned in
this sentence. The Administrative Agent may execute any of its duties under any of the Loan
Documents by or through employees, agents, and attorneys-in-fact and shall not be answerable to the
Lenders, the Borrower, or any other Person for the default or misconduct of any such agents or
attorneys-in-fact selected with reasonable care. The Administrative Agent shall not incur any
liability by acting in reliance upon
any notice, consent, certificate, other document or statement (whether written or oral) believed by
it to be genuine or to be sent by the proper party or parties. In particular and without limiting
any of the foregoing, the Administrative Agent shall have no responsibility for confirming the
accuracy of any compliance certificate or other document or instrument received by it under the
Loan Documents. The Administrative Agent may treat the payee of any Note as



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the holder thereof until written notice of transfer shall have been filed with the Administrative Agent signed by such
payee in form satisfactory to the Administrative Agent. Each Lender acknowledges that it has
independently and without reliance on the Administrative Agent or any other Lender, and based upon
such information, investigations and inquiries as it deems appropriate, made its own credit
analysis and decision to extend credit to the Borrower in the manner set forth in the Loan
Documents. It shall be the responsibility of each Lender to keep itself informed as to the
creditworthiness of the Borrower and its Subsidiaries, and the Administrative Agent shall have no
liability to any Lender with respect thereto.



     Section 11.6. Indemnity. The Lenders shall ratably, in accordance with their respective
Percentages, indemnify and hold the Administrative Agent, and its directors, officers, employees,
agents, and representatives harmless from and against any liabilities, losses, costs or expenses
suffered or incurred by it under any Loan Document or in connection with the transactions
contemplated thereby, regardless of when asserted or arising, except to the extent they are
promptly reimbursed for the same by the Borrower and except to the extent that any event giving
rise to a claim was caused by the gross negligence or willful misconduct of the party seeking to be
indemnified. The obligations of the Lenders under this Section shall survive termination of this
Agreement. The Administrative Agent shall be entitled to offset amounts received for the account
of a Lender under this Agreement against unpaid amounts due from such Lender to the Administrative
Agent hereunder (whether as fundings of participations, indemnities or otherwise), but shall not be
entitled to offset against amounts owed to the Administrative Agent by any Lender arising outside
of this Agreement and the other Loan Documents.



     Section 11.7. Resignation of Administrative Agent and Successor Administrative Agent. The
Administrative Agent may resign at any time by giving written notice thereof to the Lenders and the
Borrower. Upon any such resignation of the Administrative Agent, the Required Lenders shall have
the right to appoint a successor Administrative Agent 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



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predecessor. If the Administrative Agent resigns and
no successor is appointed, the rights and obligations of such Administrative Agent shall be
automatically assumed by the Required Lenders and (i) the Borrower shall be directed to make all
payments due each Lender hereunder directly to such Lender and (ii) the Administrative Agent’s
rights in the Collateral Documents shall be assigned without representation, recourse or warranty
to the Lenders as their interests may appear.



     Section 11.8. L/C Issuer. The L/C Issuer shall act on behalf of the Lenders with respect to
any Letters of Credit issued by it and the documents associated therewith. The L/C Issuer shall
have all of the benefits and immunities (i) provided to the Administrative Agent in this Section 11
with respect to any acts taken or omissions suffered by the L/C Issuer in connection with Letters
of Credit issued by it or proposed to be issued by it and the Applications pertaining to such
Letters of Credit as fully as if the term “Administrative Agent”, as used in this Section 11,
included the L/C Issuer with respect to such acts or omissions and (ii) as additionally provided in
this Agreement with respect to such L/C Issuer.



     Section 11.9. Hedging Liability and Funds Transfer and Deposit Account Liability Arrangements.
By virtue of a Lender’s execution of this Agreement or an assignment agreement pursuant to Section
13.12 hereof, as the case may be, any Affiliate of such Lender with whom the Borrower or any
Subsidiary has entered into an agreement creating Hedging Liability or Funds Transfer and Deposit
Account Liability shall be deemed a Lender party hereto for purposes of any reference in a Loan
Document to the parties for whom the Administrative Agent is acting, it being understood and agreed
that the rights and benefits of such Affiliate under the Loan Documents consist exclusively of such
Affiliate’s right to share in payments and collections out of the Collateral and the Guaranties as
more fully set forth in Section 3.1 hereof. In connection with any such distribution of payments
and collections, the Administrative Agent shall be entitled to assume no amounts are due to any
Lender or its Affiliate with respect to Hedging Liability or Funds Transfer and Deposit Account
Liability unless such Lender has notified the Administrative Agent in writing of the amount of any
such liability owed to it or its Affiliate prior to such distribution.



     Section 11.10. Designation of Additional Agents. The Administrative Agent shall have the
continuing right, for purposes hereof, at any time and from time to time to designate one or more
of the Lenders (and/or its or their Affiliates) as “syndication agents,” “documentation agents,”
“arrangers,” or other designations for purposes hereto, but such designation shall have no
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



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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, and (d) release Liens on the Collateral following termination or expiration of the Commitments
and payment in full in cash of the Obligations and, if then due, Hedging Liability and Funds
Transfer and Deposit Account Liability and the termination of all Hedging Agreements. The
Administrative Agent agrees with the Borrower that upon the termination or expiration of the
Commitments and payment in full in cash of the Obligations and, if then due, Hedging Liability and
Funds Transfer and Deposit Account Liability 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 on behalf of each of the Lenders and their Affiliates and to take such
action and exercise such powers under the Collateral Documents as the Administrative Agent
considers appropriate, provided the Administrative Agent shall not amend the Collateral Documents
unless such amendment is agreed to in writing by the Required Lenders or all of the Lenders if
required by Section 13.13. Each Lender acknowledges and agrees that it will be bound by the terms
and conditions of the Collateral Documents upon the execution and delivery thereof by the
Administrative Agent. Except as otherwise specifically provided for herein, no Lender (or its
Affiliates) other than the Administrative Agent shall have the right to institute any suit, action
or proceeding in equity or at law for the foreclosure or other realization upon any Collateral or
for the execution of any trust or power in respect of the Collateral or for the appointment of a
receiver or for the enforcement of any other remedy under the Collateral Documents; it being
understood and intended that no one or more of the Lenders (or their Affiliates) shall have any
right in any manner whatsoever to affect, disturb or prejudice the Lien of the Administrative Agent
(or any security trustee therefor) under the Collateral Documents by its or their action or to
enforce any right thereunder, and that all proceedings at law or in equity shall be instituted,
had, and maintained by the Administrative Agent (or its security trustee) in the manner provided
for in the relevant Collateral Documents for the benefit of the Lenders and their Affiliates.



Section 12. The Guarantees.




     Section 12.1. The Guarantees. To induce the Lenders to provide the credits described herein
and in consideration of benefits expected to accrue to the Borrower by reason of the Revolving
Credit 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, the L/C Issuer and their Affiliates, the due
and punctual payment of all present and future Obligations, Hedging Liability, and Funds



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Transfer and Deposit Account Liability, including, but not limited to, the due and punctual payment of
principal of and interest on the Notes, the Reimbursement Obligations, and the due and punctual
payment of all other Obligations now or hereafter owed by the Borrower under the Loan Documents as
and when the same shall become due and payable, whether at stated maturity, by acceleration, or
otherwise, according to the terms hereof and thereof. In case of failure by the Borrower or other
obligor punctually to pay any Obligations, Hedging Liability, or Funds Transfer and Deposit Account
Liability guaranteed hereby, each Guarantor hereby unconditionally agrees to make such payment or
to cause such payment to be made punctually as and when the same shall become due and payable,
whether at stated maturity, by acceleration, or otherwise, and as if such payment were made by the
Borrower or such obligor.




     Section 12.2. Guarantee Unconditional. The obligations of each Guarantor under this Section
12 shall be unconditional and absolute and, without limiting the generality of the foregoing, shall
not be released, discharged, or otherwise affected by:




     (a) any extension, renewal, settlement, compromise, waiver, or release in respect of
any obligation of the Borrower or other obligor or of any other guarantor under this
Agreement or any other Loan Document or by operation of law or otherwise;




     (b) any modification or amendment of or supplement to this Agreement or any other Loan
Document;




     (c) any change in the corporate existence, structure, or ownership of, or any
insolvency, bankruptcy, reorganization, or other similar proceeding affecting, the Borrower
or other obligor, any other guarantor, or any of their respective assets, or any resulting
release or discharge of any obligation of the Borrower or other obligor or of any other
guarantor contained in any Loan Document;




     (d) the existence of any claim, set-off, or other rights which the Borrower or other
obligor or any other guarantor may have at any time against the Administrative Agent, any
Lender, or any other Person, whether or not arising in connection herewith;




     (e) any failure to assert, or any assertion of, any claim or demand or any exercise of,
or failure to exercise, any rights or remedies against the Borrower or other obligor, any
other guarantor, or any other Person or Property;




     (f) any application of any sums by whomsoever paid or howsoever realized to any
obligation of the Borrower or other obligor, regardless of what obligations of the Borrower
or other obligor remain unpaid, 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



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interest on any Note or any Reimbursement Obligation or any other amount payable under the
Loan Documents; or




     (h) any other act or omission to act or delay of any kind by the Administrative Agent,
any Lender, or any other Person or any other circumstance whatsoever that might, but for the
provisions of this paragraph, constitute a legal or equitable discharge of the obligations
of any Guarantor under this Section 12.



     Section 12.3. Discharge Only upon Payment in Full; Reinstatement in Certain Circumstances.
Each Guarantor’s obligations under this Section 12 shall remain in full force and effect until the
Revolving Credit Commitments are terminated, all Letters of Credit have expired, and the principal
of and interest on the Notes and all other amounts payable by the Borrower and the Guarantors under
this Agreement and all other Loan Documents and, if then outstanding and unpaid, all Hedging
Liability and Funds Transfer and Deposit Account Liability shall have been paid in full. If at any
time any payment of the principal of or interest on any Note or any Reimbursement Obligation or any
other amount payable by the Borrower or other obligor or any Guarantor under the Loan Documents is
rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy, or
reorganization of the Borrower or other obligor or of any guarantor, or otherwise, each Guarantor’s
obligations under this Section 12 with respect to such payment shall be reinstated at such time as
though such payment had become due but had not been made at such time.



     Section 12.4. Subrogation. Each Guarantor agrees it will not exercise any rights which it may
acquire by way of subrogation by any payment made hereunder, or otherwise, until all the
Obligations, Hedging Liability, and Funds Transfer and Deposit Account Liability shall have been
paid in full subsequent to the termination of all the Revolving Credit Commitments and expiration
of all Letters of Credit. If any amount shall be paid to a Guarantor on account of such
subrogation rights at any time prior to the later of (x) the payment in full of the Obligations,
Hedging Liability, and Funds Transfer and Deposit Account Liability and all other amounts payable
by the Borrower hereunder and the other Loan Documents and (y) the termination of the Revolving
Credit Commitments and expiration of all Letters of Credit, such amount shall be held in trust for
the benefit of the Administrative Agent and the Lenders and shall forthwith be paid to the
Administrative Agent for the benefit of the Lenders or be credited and applied upon the
Obligations, Hedging Liability, and Funds Transfer and Deposit Account Liability, whether matured
or unmatured, in accordance with the terms of this Agreement.



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



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



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     Section 12.7. Stay of Acceleration. If acceleration of the time for payment of any amount
payable by the Borrower or other obligor under this Agreement or any other Loan Document, or under
any agreement establishing Hedging Liability or Funds Transfer and Deposit Account Liability, is
stayed upon the insolvency, bankruptcy or reorganization of the Borrower or such obligor, all such
amounts otherwise subject to acceleration under the terms of this Agreement or the other Loan
Documents, or under any agreement relating to Hedging Liability or Funds Transfer and Deposit
Account Liability, shall nonetheless be payable by the Guarantors hereunder forthwith on demand by
the Administrative Agent made at the request of the Required Lenders.



     Section 12.8. Benefit to Guarantors. The Borrower and the Guarantors are engaged in related
businesses and integrated to such an extent that the financial strength and flexibility of the
Borrower has a direct impact on the success of each Guarantor. Each Guarantor will derive
substantial direct and indirect benefit from the extensions of credit hereunder.



     Section 12.9. Guarantor Covenants. Each Guarantor shall take such action as the Borrower is
required by this Agreement to cause such Guarantor to take, and shall refrain from taking such
action as the Borrower is required by this Agreement to prohibit such Guarantor from taking.



Section 13. Miscellaneous.




     Section 13.1. Withholding Taxes. (a) Payments Free of Withholding. Except as otherwise
required by law and subject to Section 13.1(b) hereof, each payment by the Borrower and the
Guarantors under this Agreement or the other Loan Documents shall be made without withholding for
or on account of any present or future taxes (other than overall net income taxes on the recipient)
imposed by or within the jurisdiction in which the Borrower or such Guarantor is domiciled, any
jurisdiction from which the Borrower or such Guarantor makes any payment, or (in each case) any
political subdivision or taxing authority thereof or therein. If any such withholding is so
required, the Borrower or such Guarantor shall make the withholding, pay the amount withheld to the
appropriate governmental authority before penalties attach thereto or interest accrues thereon, and
forthwith pay such additional amount as may be necessary to ensure that the net amount actually
received by each Lender and the Administrative Agent free and clear of such taxes (including such
taxes on such additional amount) is equal to the amount which that Lender or the Administrative
Agent (as the case may be) would have received had such withholding not been made. If the
Administrative Agent or any Lender pays any amount in respect of any such taxes, penalties or
interest, the Borrower or such Guarantor shall reimburse the Administrative Agent or such Lender
for that payment on demand in the currency in which such payment was made. If the Borrower or such
Guarantor pays any such taxes, penalties or interest, it shall deliver official tax receipts
evidencing that payment or certified copies thereof to the Lender or Administrative Agent on whose
account such withholding was made (with a copy to the Administrative Agent if not the recipient of
the original) on or before the thirtieth day after payment.



     (b) U.S. Withholding Tax Exemptions. Each Lender that is not a United States person (as such
term is defined in Section 7701(a)(30) of the Code) shall submit to the Borrower and the



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Administrative Agent on or before the date the initial Credit Event is made hereunder or, if later,
the date such financial institution becomes a Lender hereunder, two duly completed and signed
copies of (i) either Form W-8 BEN (relating to such Lender and entitling it to a complete exemption
from withholding under the Code on all amounts to be received by such Lender, including fees,
pursuant to the Loan Documents and the Obligations) or Form W-8 ECI (relating to all amounts to be
received by such Lender, including fees, pursuant to the Loan Documents and the Obligations) of the
United States Internal Revenue Service or (ii) solely if such Lender is claiming exemption from
United States withholding tax under Section 871(h) or 881(c) of the Code with respect to payments
of “portfolio interest”, a Form W-8 BEN, or any successor form prescribed by the Internal Revenue
Service, and a certificate representing that such Lender is not a bank for purposes of Section
881(c) of the Code, is not a 10-percent shareholder (within the meaning of Section 871(h)(3)(B) of
the Code) of the Borrower and is not a controlled foreign corporation related to the Borrower
(within the meaning of Section 864(d)(4) of the Code). Thereafter and from time to time, each
Lender shall submit to the Borrower and the Administrative Agent such additional duly completed and
signed copies of one or the other of such Forms (or such successor forms as shall be adopted from
time to time by the relevant United States taxing authorities) and such other certificates as may
be (i) requested by the Borrower in a written notice, directly or through the Administrative Agent,
to such Lender and (ii) required under then-current United States law or regulations to avoid or
reduce United States withholding taxes on payments in respect of all amounts to be received by such
Lender, including fees, pursuant to the Loan Documents or the Obligations. Upon the request of the
Borrower or the Administrative Agent, each Lender that is a United States person (as such term is
defined in Section 7701(a)(30) of the Code) shall submit to the Borrower and the Administrative
Agent a certificate to the effect that it is such a United States person.



     (c) Inability of Lender to Submit Forms. If any Lender determines, as a result of any change
in applicable law, regulation or treaty, or in any official application or interpretation thereof,
that it is unable to submit to the Borrower or the Administrative Agent any form or certificate
that such Lender is obligated to submit pursuant to subsection (b) of this Section 13.1 or that
such Lender is required to withdraw or cancel any such form or certificate previously submitted or
any such form or certificate otherwise becomes ineffective or inaccurate, such Lender shall
promptly notify the Borrower and Administrative Agent of such fact and the Lender shall to that
extent not be obligated to provide any such form or certificate and will be entitled to withdraw or
cancel any affected form or certificate, as applicable.



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



     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



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succeeding Business Day on which date such payment shall be due and payable. In the case of any payment of
principal falling due on a day which is not a Business Day, interest on such principal amount shall
continue to accrue during such extension at the rate per annum then in effect, which accrued amount
shall be due and payable on the next scheduled date for the payment of interest.



     Section 13.4. Documentary Taxes. The Borrower agrees to pay on demand any documentary, stamp
or similar taxes payable in respect of this Agreement or any other Loan Document, including
interest and penalties, in the event any such taxes are assessed, irrespective of when such
assessment is made and whether or not any credit is then in use or available hereunder.



     Section 13.5. Survival of Representations. All representations and warranties made herein or
in any other Loan Document or in certificates given pursuant hereto or thereto shall survive the
execution and delivery of this Agreement and the other Loan Documents, and shall continue in full
force and effect with respect to the date as of which they were made as long as any credit is in
use or available hereunder.



     Section 13.6. Survival of Indemnities. All indemnities and other provisions relative to
reimbursement to the Lenders of amounts sufficient to protect the yield of the Lenders with respect
to the Loans and Letters of Credit, including, but not limited to, Sections 1.12, 10.3, and 13.15
hereof, shall survive the termination of this Agreement and the other Loan Documents and the
payment of the Obligations.



     Section 13.7. Sharing of Set-Off. Each Lender agrees with each other Lender a party hereto
that if such Lender shall receive and retain any payment, whether by set-off or application of
deposit balances or otherwise, on any of the Loans or Reimbursement Obligations in excess of its
ratable share of payments on all such Obligations then outstanding to the Lenders, then such Lender
shall purchase for cash at face value, but without recourse, ratably from each of the other Lenders
such amount of the Loans or Reimbursement Obligations, or participations therein, held by each such
other Lenders (or interest therein) as shall be necessary to cause such Lender to share such excess
payment ratably with all the other Lenders; provided, however, that if any such purchase is made by
any Lender, and if such excess payment or part thereof is thereafter recovered from such purchasing
Lender, the related purchases from the other Lenders shall be rescinded ratably and the purchase
price restored as to the portion of such excess payment so recovered, but without interest. For
purposes of this Section, amounts owed to or recovered by the L/C Issuer in connection with
Reimbursement Obligations in which Lenders have been required to fund their participation shall be
treated as amounts owed to or recovered by the L/C Issuer as a Lender hereunder.



     Section 13.8. Notices. Except as otherwise specified herein, all notices hereunder and under
the other Loan Documents shall be in writing (including, without limitation, notice by telecopy)
and shall be given to the relevant party at its address or telecopier number set forth below, or
such other address or telecopier number as such party may hereafter specify by notice
to the Administrative Agent and the Borrower given by courier, by United States certified or
registered mail, by telecopy or by other telecommunication device capable of creating a written



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


Penford Corporation

7094 South Revere Parkway

Centennial, Colorado 80112

Attention:  Chief Financial Officer

Telephone:  (303) 649-1900

Telecopy:  (303) 649-1700



Each such notice, request or other communication shall be effective (i) if given by telecopier,
when such telecopy is transmitted to the telecopier number specified in this Section or on the
signature pages hereof and a confirmation of such telecopy has been received by the sender, (ii) if
given by mail, 5 days after such communication is deposited in the mail, certified or registered
with return receipt requested, addressed as aforesaid or (iii) if given by any other means, when
delivered at the addresses specified in this Section or on the signature pages hereof; provided
that any notice given pursuant to Section 1 hereof shall be effective only upon receipt.




     Section 13.9. Counterparts. This Agreement may be executed in any number of counterparts, and
by the different parties hereto on separate counterpart signature pages, and all such counterparts
taken together shall be deemed to constitute one and the same instrument.



     Section 13.10. Successors and Assigns. This Agreement shall be binding upon the Borrower and
the Guarantors and their successors and assigns, and shall inure to the benefit of the
Administrative Agent and each of the Lenders and the benefit of their respective successors and
assigns, including any subsequent holder of any of the Obligations. The Borrower and the
Guarantors may not assign any of their rights or obligations under any Loan Document without the
written consent of all of the Lenders.



     Section 13.11. Participants. Each Lender shall have the right at its own cost to grant
participations (to be evidenced by one or more agreements or certificates of participation) in the
Loans made and Reimbursement Obligations and/or Commitments held by such Lender at any time and
from time to time to one or more 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



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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 and Section
10.3 hereof. The Borrower authorizes each Lender to disclose to any participant or prospective
participant under this Section any financial or other information pertaining to the Borrower or any
Subsidiary thereof, provided that such participant or prospective participant shall have agreed in
writing prior to its receipt of such information to maintain all such information confidential and
not to disclose such information to any other Person except any such information (a) that has
become generally available to the public, (b) if required or appropriate in any report, statement
or testimony submitted to any regulatory body having or claiming to have jurisdiction over such
Lender, (c) if required or appropriate in response to any summons or subpoena or in connection with
any litigation or (d) in order to comply with any law, order, regulation or ruling applicable to
such Lender.



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



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



     (ii) Proportionate Amounts. Each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender’s rights and obligations under this Agreement with
respect to the Loan or the Commitment assigned, except that this clause (ii) shall not prohibit any
Lender from assigning all or a portion of its rights and obligations among separate Credits on a
non-pro rata basis.



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




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



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     (b) the consent of the Administrative Agent (such consent not to be unreasonably
withheld or delayed) shall be required for assignments in respect of the Revolving Credit if
such assignment is to a Person that is not a Lender with a Commitment in respect of such
facility, an Affiliate of such Lender or an Approved Fund with respect to such Lender; and




     (c) the consent of the L/C Issuer (such consent not to be unreasonably withheld or
delayed) shall be required for any assignment that increases the obligation of the assignee
to participate in exposure under one or more Letters of Credit (whether or not then
outstanding).



     (iv) Assignment and Acceptance. The parties to each assignment shall execute and deliver to
the Administrative Agent an Assignment and Acceptance in the form of Exhibit G, 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 or any Related Party.



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


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




     (b) Register. The Administrative Agent, acting solely for this purpose as an agent of the
Borrower, shall maintain at one of its offices in Chicago, Illinois, a copy of each Assignment and
Acceptance delivered to it and a register for the recordation of the names and addresses of the
Lenders, and the Commitments of, and principal amounts of the Loans owing to, each Lender pursuant
to the terms hereof from time to time (the “Register“). The entries in the Register shall be
conclusive, and the Borrower, the Administrative Agent, and the Lenders may treat each Person whose
name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The 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.



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



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




     (i) no amendment or waiver pursuant to this Section 13.13 shall (A) increase any
Commitment of any Lender without the consent of such Lender or (B) reduce the amount of or
postpone the date for any scheduled payment of any principal of or interest on any Loan or
of any Reimbursement Obligation or of any fee payable hereunder without the consent of the
Lender to which such payment is owing or which has committed to make such Loan or Letter of
Credit (or participate therein) hereunder;




     (ii) no amendment or waiver pursuant to this Section 13.13 shall, unless signed by each
Lender, change the definitions of Revolving Credit Termination Date or Required Lenders,
change the provisions of this Section 13.13, release any material guarantor or any
substantial part of the Collateral (except as otherwise provided for in the Loan Documents),
or affect the number of Lenders required to take any action hereunder or under any other
Loan Document; and




     (iii) no amendment to Section 12 hereof shall be made without the consent of the
Guarantor(s) affected thereby.



     Section 13.14. Headings. Section headings used in this Agreement are for reference only and
shall not affect the construction of this Agreement.



     Section 13.15. Costs and Expenses; Indemnification. (a) Except as otherwise provided
hereunder, the Borrower agrees to pay all reasonable costs and expenses of the Administrative Agent
in connection with the preparation, negotiation, syndication, and administration of the Loan
Documents, including, without limitation, the reasonable fees and disbursements of counsel to the
Administrative Agent, in connection with the preparation and execution of the Loan Documents, and
any amendment, waiver or consent related thereto, whether or not the
transactions contemplated herein are consummated, together with any fees and charges suffered or
incurred by the Administrative 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



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directors, officers, employees, agents, financial advisors, and consultants against all losses, claims,
damages, penalties, judgments, liabilities and expenses (including, without limitation, all
reasonable expenses of litigation or preparation therefor, whether or not the indemnified Person is
a party thereto, or any settlement arrangement arising from or relating to any such litigation)
which any of them may pay or incur arising out of or relating to any Loan Document or any of the
transactions contemplated thereby or the direct or indirect application or proposed application of
the proceeds of any Loan or Letter of Credit, other than those which arise from the gross
negligence or willful misconduct of the party claiming indemnification. The Borrower, upon demand
by the Administrative Agent or a Lender at any time, shall reimburse the Administrative Agent or
such Lender for any legal or other expenses incurred in connection with investigating or defending
against any of the foregoing (including any settlement costs relating to the foregoing) except if
the same is directly due to the gross negligence or willful misconduct of the party to be
indemnified. The obligations of the Borrower under this Section shall survive the termination of
this Agreement.



     (b) The Borrower unconditionally agrees to forever indemnify, defend and hold harmless, and
covenants not to sue for any claim for contribution against, the Administrative Agent and the
Lenders for any damages, costs, loss or expense, including without limitation, response, remedial
or removal costs, arising out of any of the following: (i) any presence, release, threatened
release or disposal of any hazardous or toxic substance or petroleum by the Borrower or any
Subsidiary or otherwise occurring on or with respect to its Property (whether owned or leased),
(ii) the operation or violation of any environmental law, whether federal, state, or local, and any
regulations promulgated thereunder, by the Borrower or any Subsidiary or otherwise occurring on or
with respect to its Property (whether owned or leased), (iii) any claim for personal injury or
property damage in connection with the Borrower or any Subsidiary or otherwise occurring on or with
respect to its Property (whether owned or leased), and (iv) the inaccuracy or breach of any
environmental representation, warranty or covenant by the Borrower or any Subsidiary made herein or
in any other Loan Document evidencing or securing any Obligations or setting forth terms and
conditions applicable thereto or otherwise relating thereto, except for damages arising from the
willful misconduct or gross negligence of the party claiming indemnification. This indemnification
shall survive the payment and satisfaction of all Obligations and the termination of this
Agreement, and shall remain in force beyond the expiration of any applicable statute of limitations
and payment or satisfaction in full of any single claim under this indemnification. This
indemnification shall be binding upon the successors and assigns of the Borrower and shall inure to
the benefit of Administrative Agent and the Lenders directors, officers, employees, agents, and
collateral trustees, and their successors and assigns.



     Section 13.16. Set-off. In addition to any rights now or hereafter granted under applicable
law and not by way of limitation of any such rights, upon the occurrence of any Event of Default,
each Lender and each subsequent holder of any Obligation is hereby authorized by the Borrower and
each Guarantor at any time or from time to time, without notice to the Borrower or such Guarantor
or to any other Person, any such notice being hereby expressly waived, to set-off and
to appropriate and to apply any and all deposits (general or special, including, but not 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



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at any time held or owing by that Lender or that subsequent holder to or for the credit or the account of
the Borrower or such Guarantor, whether or not matured, against and on account of the Obligations
of the Borrower or such Guarantor to that Lender or that subsequent holder under the Loan
Documents, including, but not limited to, all claims of any nature or description arising out of or
connected with the Loan Documents, irrespective of whether or not (a) that Lender or that
subsequent holder shall have made any demand hereunder or (b) the principal of or the interest on
the Loans or Notes and other amounts due hereunder shall have become due and payable pursuant to
Section 9 and although said obligations and liabilities, or any of them, may be contingent or
unmatured.



     Section 13.17. Entire Agreement. The Loan Documents constitute the entire understanding of
the parties thereto with respect to the subject matter thereof and any prior agreements, whether
written or oral, with respect thereto are superseded hereby.



     Section 13.18. Governing Law. This Agreement and the other Loan Documents (except as
otherwise specified therein), and the rights and duties of the parties hereto, shall be governed by
and construed and determined in accordance with the internal laws of the State of Illinois.



     Section 13.19. Severability of Provisions. Any provision of any Loan Document which is
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such unenforceability without invalidating the remaining provisions hereof or affecting the
validity or enforceability of such provision in any other jurisdiction. All rights, remedies and
powers provided in this Agreement and the other Loan Documents may be exercised only to the extent
that the exercise thereof does not violate any applicable mandatory provisions of law, and all the
provisions of this Agreement and other Loan Documents are intended to be subject to all applicable
mandatory provisions of law which may be controlling and to be limited to the extent necessary so
that they will not render this Agreement or the other Loan Documents invalid or unenforceable.



     Section 13.20. Excess Interest. Notwithstanding any provision to the contrary contained
herein or in any other Loan Document, no such provision shall require the payment or permit the
collection of any amount of interest in excess of the maximum amount of interest permitted by
applicable law to be charged for the use or detention, or the forbearance in the collection, of all
or any portion of the Loans or other obligations outstanding under this Agreement or any other Loan
Document (“Excess Interest“). If any Excess Interest is provided for, or is adjudicated to be
provided for, herein or in any other Loan Document, then in such event (a) the provisions of this
Section shall govern and control, (b) neither the Borrower nor any guarantor or endorser shall be
obligated to pay any Excess Interest, (c) any Excess Interest that the Administrative Agent or any
Lender may have received hereunder shall, at the option of the Administrative Agent, be (i) applied
as a credit against the then outstanding principal amount of Obligations hereunder and accrued and
unpaid interest thereon (not to exceed the maximum amount permitted by applicable law), (ii)
refunded to the Borrower, or (iii) any combination of the foregoing, (d) the interest rate payable
hereunder or under any other Loan Document shall be automatically subject to reduction
to the maximum lawful contract rate allowed under applicable 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



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relevant interest rate, and (e) neither the Borrower
nor any guarantor or endorser shall have any action against the Administrative Agent or any Lender
for any damages whatsoever arising out of the payment or collection of any Excess Interest.
Notwithstanding the foregoing, if for any period of time interest on any of Borrower’s Obligations
is calculated at the Maximum Rate rather than the applicable rate under this Agreement, and
thereafter such applicable rate becomes less than the Maximum Rate, the rate of interest payable on
the Borrower’s Obligations shall remain at the Maximum Rate until the Lenders have received the
amount of interest which such Lenders would have received during such period on the Borrower’s
Obligations had the rate of interest not been limited to the Maximum Rate during such period.



     Section 13.21. Construction. Nothing contained herein shall be deemed or construed to
permit any act or omission which is prohibited by the terms of any of the other Loan Document, the
covenants and agreements contained herein being in addition to and not in substitution for the
covenants and agreements contained in the other Loan Documents.



     Section 13.22. Lender’s Obligations Several. The obligations of the Lenders hereunder are
several and not joint. Nothing contained in this Agreement and no action taken by the Lenders
pursuant hereto shall be deemed to constitute the Lenders a partnership, association, joint venture
or other entity.



     Section 13.23. Submission to Jurisdiction; Waiver of Jury Trial. The Borrower and the
Guarantors hereby submit to the nonexclusive jurisdiction of the United States District Court for
the Northern District of Illinois and of any Illinois State court sitting in the City of Chicago
for purposes of all legal proceedings arising out of or relating to this Agreement, the other Loan
Documents or the transactions contemplated hereby or thereby. The Borrower and the Guarantors
irrevocably waive, to the fullest extent permitted by law, any objection which they may now or
hereafter have to the laying of the venue of any such proceeding brought in such a court and any
claim that any such proceeding brought in such a court has been brought in an inconvenient forum.
The Borrower, the Guarantors, the Administrative Agent, and the Lenders hereby irrevocably
waive any and all right to trial by jury in any legal proceeding arising out of or relating to any
Loan Document or the transactions contemplated thereby.



     Section 13.24. USA Patriot Act. Each Lender that is subject to the requirements of the USA
Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act“) hereby
notifies the Borrower that pursuant to the requirements of the Act, it is required to obtain,
verify, and record information that identifies the Borrower, which information includes the name
and address of the Borrower and other information that will allow such Lender to identify the
Borrower in accordance with the Act.



     Section 13.25. Amendment and Restatement. This Agreement amends and restates the Original
Credit Agreement and is not intended to be or operate as a novation or an accord and
satisfaction of the Original Credit Agreement or the Obligations evidenced or provided for
thereunder. Without limiting the generality of the foregoing, the Borrower agrees that
notwithstanding the execution and delivery of this Agreement and the Security Agreement, the



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Liens previously granted to the Administrative Agent pursuant to the Collateral Documents shall be and
remain in full force and effect and that any rights and remedies of the Administrative Agent
thereunder and obligations of the Borrower thereunder shall be and remain in full force and effect,
shall not be affected, impaired or discharged thereby and shall secure all of the Borrower’s
indebtedness, obligations and liabilities to the Administrative Agent and the Lenders under the
Original Credit Agreement as amended and restated hereby. Nothing herein contained shall in any
manner affect or impair the priority of the Liens created and provided for by the Documents as to
the indebtedness which would be secured thereby prior to giving effect hereto.



[Signature Pages to Follow]





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



	 	 	 	 	 
	 	“Borrower”



Penford Corporation

 	 
	 	By  	/s/ Steven O. Cordier
 	 
	 	 	Name  Steven O. Cordier 	 
	 	 	Title  Senior Vice President and Chief
Financial Officer 	 
	 
	 	“Guarantors”



Penford Products Co.

 	 
	 	By  	/s/ Steven O. Cordier
 	 
	 	 	Name Steven O. Cordier 	 
	 	 	Title  Senior Vice President and Assistant
Secretary 	 
	 



Penford Corporation

Signature Page to Third Amended and Restated Credit Agreement






 









 









     Subject to the satisfaction of the conditions precedent set forth in Sections 7.1 and 7.2
hereof, the Lenders (other than Australia and New Zealand Banking Group Limited and U.S. Bank
National Association (collectively the “Departing Lenders” and individually a “Departing Lender"))
each agree to make such purchases and sales of interests in the Credit Agreement and the Loan
Documents such that from and after the date of this Agreement (a) each such Lender’s Revolving
Credit Commitment and Revolver Percentage (and corresponding Revolver Percentage of outstanding
Revolving Loans, participation in Swing Loans, Letters of Credit and Reimbursement Obligations)
after giving effect this Agreement shall be as set forth in Section 1.1 hereto and (b) each
Departing Lender’s Revolver Percentage (and corresponding Revolver Percentage of outstanding
Revolving Loans, participation in Swing Loans, Letters of Credit and Reimbursement Obligations)
after giving effect to this Agreement shall be zero. Such purchases and sales shall be arranged
through the Administrative Agent and each such Lender hereby agrees to execute such further
instruments and documents, if any, as the Administrative Agent may reasonably request in connection
therewith. The Borrower will pay all accrued interest thereon and all other fees and other amounts
due to the Departing Lenders, including without limitation accrued and unpaid commitment fees,
letter of credit fees and all amounts, if any, payable under Section 1.11 hereof with respect to
such prepayment. Upon payment in full of all principal of and accrued interest on such notes, and
all such other amounts, all participations in Swing Loans, Letters of Credit and Reimbursement
Obligations by the Departing Lenders shall terminate, and the Departing Lenders shall cease to be
parties to this Agreement and shall have no rights or obligations hereunder except for their rights
under Sections 1.12, 10.3, 12.3, 13.4 and 13.15 of the Original Credit Agreement which shall
continue unaffected by this Agreement. Notwithstanding the foregoing, in the event any letter of
credit fees received by any Departing Lender pursuant to this paragraph are required to be rebated
to the Borrower pursuant hereto, such Departing Lender will promptly remit to the Administrative
Agent the amount so required to be rebated upon the Administrative Agent’s request.



[Signature Pages to Follow]




Penford Corporation

Signature Page to Third Amended and Restated Credit Agreement







 









 








	 	 	 	 	 
	 	“Lenders”



Bank of Montreal, in its individual

capacity as a Lender, as L/C Issuer, and as

Administrative Agent (as successor to

Harris, N.A.)

 	 
	 	By  	/s/ Betzaida Erdelyi
 	 
	 	 	Name:  	Betzaida Erdelyi 	 
	 	 	Title:  	Managing Director 	 
	 



Address:



111 West Monroe Street

Chicago, Illinois 60603

Attention: Food and Consumer Group

Telecopy: (312) 765-1030

Telephone: (312) 461-4049




Penford Corporation

Signature Page to Third Amended and Restated Credit Agreement






 









 








	 	 	 	 	 
	 	Bank of America National Association, as

Successor by Merger to LaSalle Bank National

Association

 	 
	 	By  	/s/ Robert Hamman
 	 
	 	 	Name Robert Hamman 	 
	 	 	Title   Vice President 	 
	 



Address:




135 S. LaSalle Street

Suite IL4-135-07-13

Chiacgo, IL 60603




Attention: Robert Hamman

Telecopy: (312) 904-7621

Telephone: (312) 453-3547




	 	 	 	 	 
	 	Cooperatieve Centrale

Raiffeisen-Boerenleenbank B.A., “Rabobank

Nederland,” New York Branch

 	 
	 	By  	/s/ Brad Peterson
 	 
	 	 	Name Brad Peterson 	 
	 	 	Title   Executive Director 	 
	 
	 	 	 
	 	By  	                       /s/ Andrew Sherman
 	 
	 	 	Name Andrew Sherman 	 
	 	 	Title   Executive Director 	 
	 



Address:




123 North Wacker Drive

Suite 2100

Chicago, IL 60606

Attention: Brad Peterson

Telecopy: (312) 408-8240

Telephone: (312) 408-8222




Penford Corporation

Signature Page to Third Amended and Restated Credit Agreement







 









 









     The undersigned, Australia and New Zealand Banking Group Limited and U.S. Bank
National Association, are executing this Agreement solely for purposes of last paragraph set
forth above and for no other purposes.



	 	 	 	 	 
	 	Australia and New Zealand Banking Group

Limited

 	 
	 	By  	/s/ John W. Wade
 	 
	 	 	Name John W. Wade
	 
	 	 	Title   Deputy General Manager and Head of
Operations and Infrastructure 	 
	 
	 	U.S. Bank National Association

 	 
	 	By  	 	 
	 	 	Name

	 
	 	 	Title 	 
	 



Penford Corporation

Signature Page to Third Amended and Restated Credit Agreement





 











 





t




Exhibit A




Notice of Payment Request



[Date]



[Name of Lender]

[Address]




Attention:




     Reference is made to the Third Amended and Restated Credit Agreement, dated as of April 7,
2010 among Penford Corporation, the Lenders party thereto, and Bank of Montreal, as Administrative
Agent (as extended, renewed, amended or restated from time to time, the “Credit Agreement”).
Capitalized terms used herein and not defined herein have the meanings assigned to them in the
Credit Agreement. [The Borrower has failed to pay its Reimbursement Obligation in the amount of
$                    . Your Revolver Percentage of the unpaid Reimbursement Obligation is $                    ]
or [                                                             has been required to return a payment by the Borrower of a
Reimbursement Obligation in the amount of $                    . Your Revolver Percentage of the
returned Reimbursement Obligation is $                    .]




	 	 	 	 	 
	 	Very truly yours,


Bank of Montreal,
as L/C Issuer

 	 
	 	By  	
 	 
	 	 	Name 	 	 
	 	 	Title 	 	 
	 






 









 








Exhibit B




Notice of Borrowing



Date:                                         , ______





			
	To:	 	Bank of Montreal, as Administrative Agent for the Lenders parties to the Third Amended and Restated Credit Agreement dated
as of April 7, 2010 (as extended, renewed, amended or restated from time to time, the “Credit Agreement”), among Penford
Corporation, certain Lenders which are signatories thereto, and Bank of Montreal, as Administrative Agent





Ladies and Gentlemen:




     The undersigned, Penford Corporation (the “Borrower”), refers to the Second Amended and
Restated Credit Agreement, the terms defined therein being used herein as therein defined, and
hereby gives you notice irrevocably, pursuant to Section 1.5 of the Credit Agreement, of the
Borrowing specified below:




     1. The Business Day of the proposed Borrowing is                     , ___.




     2. The aggregate amount of the proposed Borrowing is $                                        .




     3. The Borrowing is to be comprised of $                     of [Base Rate] [Eurodollar] Loans.




     [4. The duration of the Interest Period for the Eurodollar Loans included in the
Borrowing shall be                      months.]



     The undersigned hereby certifies that the following statements are true on the date hereof,
and will be true on the date of the proposed Borrowing, before and after giving effect thereto and
to the application of the proceeds therefrom:




     (a) the representations and warranties of the Borrower contained in Section 6 of the
Credit Agreement are true and correct as though made on and as of such date (except to the
extent such representations and warranties relate to an earlier date, in which case they are
true and correct as of such date); and



 









 






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



	 	 	 	 	 
	 	Penford Corporation

 	 
	 	By  	
 	 
	 	 	Name 	 	 
	 	 	Title 	 	 
	 




- 2 -









 






	 	 	 	 	 



Exhibit C




Notice of Continuation/Conversion



Date:                     , ______





			
	To:	 	Bank of Montreal, as Administrative Agent for the Lenders parties to the Third Amended and
Restated Credit Agreement dated as of April 7, 2010 (as extended, renewed, amended or restated
from time to time, the “Credit Agreement”) among Penford Corporation, certain Lenders which
are signatories thereto, and Bank of Montreal, as Administrative Agent





Ladies and Gentlemen:





     The undersigned, Penford Corporation (the “Borrower”), refers to the Credit Agreement, the
terms defined therein being used herein as therein defined, and hereby gives you notice
irrevocably, pursuant to Section 1.5 of the Credit Agreement, of the [conversion] [continuation] of
the Loans specified herein, that:




     1. The conversion/continuation Date is                     , ___.




     2. The aggregate amount of the Revolving Loans to be [converted] [continued] is
$                                        .




     3. The Loans are to be [converted into] [continued as] [Eurodollar] [Base Rate] Loans.




     4. [If applicable:] The duration of the Interest Period for the Revolving Loans
included in the [conversion] [continuation] shall be                      months.



     The undersigned hereby certifies that the following statements are true on the date hereof,
and will be true on the proposed conversion/continuation date, before and after giving effect
thereto and to the application of the proceeds therefrom:




     (a) the representations and warranties of the Borrower contained in Section 6 of the
Credit Agreement are true and correct as though made on and as of such date (except to the
extent such representations and warranties relate to an earlier date, in which case they are
true and correct as of such date); provided, however, that this condition shall not apply to
the conversion of an outstanding Eurodollar Loan to a Base Rate Loan; and




     (b) no Default or Event of Default has occurred and is continuing, or would result from
such proposed [conversion] [continuation].



	 	 	 	 	 
	 	Penford Corporation

 	 
	 	By  	
 	 
	 	 	Name 	 	 
	 	 	Title 	 	 
	 




 









 






	 	 	 	 	 



Exhibit D-1




Revolving Note



			
	U.S. $                                        
	 	                                        ,                     






     For Value Received, the undersigned, Penford Corporation, a
Washington corporation (the “Borrower”), hereby promises to pay to the order of
                                                             (the “Lender”) on the Revolving Credit Termination Date of the hereinafter
defined Credit Agreement, at the principal office of Bank of Montreal, as Administrative Agent, in
Chicago, Illinois, the aggregate unpaid principal amount of all Revolving Loans made by the Lender
to the Borrower pursuant to the Credit Agreement, together with interest on the principal amount of
each Revolving Loan from time to time outstanding hereunder at the rates, and payable in the manner
and on the dates, specified in the Credit Agreement.



     This Note is one of the Revolving Notes referred to in the Third Amended and Restated Credit
Agreement dated as of April 7, 2010 among the Borrower, the Guarantors party thereto, the Lenders
party thereto, and Bank of Montreal, as Administrative Agent for the Lenders (as extended, renewed,
amended or restated from time to time, the “Credit Agreement”), and this Note and the holder hereof
are entitled to all the benefits and security provided for thereby or referred to therein, to which
Credit Agreement reference is hereby made for a statement thereof. All defined terms used in this
Note, except terms otherwise defined herein, shall have the same meaning as in the Credit
Agreement. This Note shall be governed by and construed in accordance with the internal laws of
the State of Illinois.



     Voluntary prepayments may be made hereon, certain prepayments are required to be made hereon,
and this Note may be declared due prior to the expressed maturity hereof, all in the events, on the
terms and in the manner as provided for in the Credit Agreement.



     The Borrower hereby waives demand, presentment, protest or notice of any kind hereunder.



	 	 	 	 	 
	 	Penford Corporation

 	 
	 	By  	
 	 
	 	 	Name 	 	 
	 	 	Title 	 	 
	 



 









 






	 	 	 	 	 



Exhibit D-2




Swing Note


	U.S. $5,000,000  	 	 	 	                                        , ___ 






     For Value Received, the undersigned, Penford Corporation, a
Washington corporation (the “Borrower”), hereby promises to pay to the order of                                                             
(the “Lender”) on the Revolving Credit Termination Date of the hereinafter defined Credit
Agreement, at the principal office of Bank of Montreal, as Administrative Agent, in Chicago,
Illinois, in immediately available funds, the principal sum of Five Million Dollars ($5,000,000)
or, if less, the aggregate unpaid principal amount of all Swing Loans made by the Lender to the
Borrower pursuant to the Credit Agreement, together with interest on the principal amount of each
Swing Loan from time to time outstanding hereunder at the rates, and payable in the manner and on
the dates, specified in the Credit Agreement.



     This Note is the Swing Note referred to in the Third Amended and Restated Credit Agreement
dated as of April 7, 2010, among the Borrower, the Guarantors party thereto, the Lenders party
thereto, and Bank of Montreal, as Administrative Agent for the Lenders (as extended, renewed,
amended or restated from time to time, the “Credit Agreement”), and this Note and the holder hereof
are entitled to all the benefits and security provided for thereby or referred to therein, to which
Credit Agreement reference is hereby made for a statement thereof. All defined terms used in this
Note, except terms otherwise defined herein, shall have the same meaning as in the Credit
Agreement. This Note shall be governed by and construed in accordance with the internal laws of
the State of Illinois.



     Voluntary prepayments may be made hereon, certain prepayments are required to be made hereon,
and this Note may be declared due prior to the expressed maturity hereof, all in the events, on the
terms and in the manner as provided for in the Credit Agreement.



     The Borrower hereby waives demand, presentment, protest or notice of any kind hereunder.



	 	 	 	 	 
	 	Penford Corporation

 	 
	 	By  	
 	 
	 	 	Name 	 	 
	 	 	Title 	 	 
	 




 









 






	 	 	 	 	 



Exhibit E




Penford Corporation



Compliance Certificate




			
	To:	 	Bank of Montreal, as Administrative Agent
under, and the Lenders party to, the Credit
Agreement described below






     This Compliance Certificate is furnished to the Administrative Agent and the Lenders pursuant
to that certain Third Amended and Restated Credit Agreement dated as of April 7, 2010, among us (as
extended, renewed, amended or restated from time to time, the “Credit Agreement”). Unless
otherwise defined herein, the terms used in this Compliance Certificate have the meanings ascribed
thereto in the Credit Agreement.



     The Undersigned hereby certifies that:



     1. I am the duly elected                                          of Penford Corporation;



     2. I have reviewed the terms of the Credit Agreement and I have made, or have caused to be
made under my supervision, a detailed review of the transactions and conditions of the Borrower and
its Subsidiaries during the accounting period covered by the attached financial statements;



     3. The examinations described in paragraph 2 did not disclose, and I have no knowledge of, the
existence of any condition or the occurrence of any event which constitutes a Default or Event of
Default during or at the end of the accounting period covered by the attached financial statements
or as of the date of this Compliance Certificate, except as set forth below;



     4. The financial statements required by Section 8.5 of the Credit Agreement and being
furnished to you concurrently with this Compliance Certificate are true, correct and complete as of
the date and for the periods covered thereby; and



     5. The Schedule I hereto sets forth financial data and computations evidencing the Borrower’s
compliance with certain covenants of the Credit Agreement, all of which data and computations are,
to the best of my knowledge, true, complete and correct and have been made in accordance with the
relevant Sections of the Credit Agreement.



     Described below are the exceptions, if any, to paragraph 3 by listing, in detail, the nature
of the condition or event, the period during which it has existed and the action which the Borrower
has taken, is taking, or proposes to take with respect to each such condition or event:



 









 





      




      




      




      




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



	 	 	 	 	 
	 	Penford Corporation

 	 
	 	By  	
 	 
	 	 	Name 	 	 
	 	 	Title 	 	 
	 




-2-











 





Exhibit F




Additional Guarantor Supplement



	 	 	 

	 

	 	                    , ___
	 
	 	 
	Bank of Montreal, as Administrative Agent
for the Lenders named in the Third Amended and
Restated Credit Agreement dated as of April 7, 2010,
among Penford Corporation, as Borrower, the
Guarantors referred to therein, the Lenders from
time to time party thereto, and the Administrative
Agent (as extended, renewed, amended or restated
from time to time, the “Credit Agreement”)
	 	 
	 
	 	 
	Ladies and Gentlemen:
	 	 






     Reference is made to the Credit Agreement described above. Terms not defined herein which are
defined in the Credit Agreement shall have for the purposes hereof the meaning provided therein.



     The undersigned, [name of Subsidiary Guarantor], a [jurisdiction of incorporation or
organization] hereby elects to be a “Guarantor” for all purposes of the Credit Agreement, effective
from the date hereof. The undersigned confirms that the representations and warranties set forth
in Section 6 of the Credit Agreement are true and correct as to the undersigned as of the date
hereof and the undersigned shall comply with each of the covenants set forth in Section 8 of the
Credit Agreement applicable to it.



     Without limiting the generality of the foregoing, the undersigned hereby agrees to perform all
the obligations of a Guarantor under, and to be bound in all respects by the terms of, the Credit
Agreement, including without limitation Section 12 thereof, to the same extent and with the same
force and effect as if the undersigned were a signatory party thereto.



     The undersigned acknowledges that this Agreement shall be effective upon its execution and
delivery o by the undersigned to the Administrative Agent, and it shall not be necessary for the
Administrative Agent or any Lender, or any of their Affiliates entitled to the benefits hereof, to
execute this Agreement or any other acceptance hereof. This Agreement shall be construed in
accordance with and governed by the internal laws of the State of Illinois.



	 	 	 	 	 
	 	Very truly yours,




[Name of Subsidiary Guarantor]

 	 
	 	By  	 	 
	 	 	Name  	 	 
	 	 	Title  	 	 



 









 






	 	 	 	 	 



Exhibit G




Assignment and Acceptance



Dated                     , ___




     Reference is made to the Third Amended and Restated Credit Agreement dated as of April 7, 2010
(as extended, renewed, amended or restated from time to time, the “Credit Agreement”) among Penford
Corporation, the Guarantors party thereto, the Lenders party thereto, and Bank of Montreal, as
Administrative Agent for the Lenders (the “Administrative Agent”). Terms defined in the Credit
Agreement are used herein with the same meaning.



                                                                     
                                     (the “Assignor”) and
                                         (the “Assignee”) agree as follows:




     1. The Assignor hereby sells and assigns to the Assignee, and the Assignee hereby
purchases and assumes from the Assignor, the amount and specified percentage interest shown
on Annex I hereto of the Assignor’s rights and obligations under the Credit Agreement as of
the Effective Date (as defined below), including, without limitation, the Assignor’s
Commitments as in effect on the Effective Date and the Loans, if any, owing to the Assignor
on the Effective Date and the Assignor’s Revolver Percentage of any outstanding L/C
Obligations and Swing Loans.




     2. The Assignor (i) represents and warrants that it is the legal and beneficial owner
of the interest being assigned by it hereunder and that such interest is free and clear of
any adverse claim, lien, or encumbrance of any kind; (ii) makes no representation or
warranty and assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit Agreement or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement or any other instrument or document furnished pursuant thereto; and (iii) makes no
representation or warranty and assumes no responsibility with respect to the financial
condition of the Borrower or any Subsidiary or the performance or observance by the Borrower
or any Subsidiary of any of their respective obligations under the Credit Agreement or any
other instrument or document furnished pursuant thereto.




     3. The Assignee (i) confirms that it has received a copy of the Credit Agreement,
together with copies of the most recent financial statements delivered to the Lenders
pursuant to Section 8.5(a) and (b) thereof and such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance; (ii) agrees that it will, independently and without reliance upon
the Administrative Agent, the Assignor or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under the Credit Agreement; (iii) appoints and
authorizes the Administrative Agent to take such action as Administrative Agent on its
behalf and to exercise such powers under the Credit



 









 






Agreement and the other Loan Documents as are delegated to the Administrative Agent by the
terms thereof, together with such powers as are reasonably incidental thereto; (iv) agrees
that it will perform in accordance with their terms all of the obligations which by the
terms of the Credit Agreement are required to be performed by it as a Lender; and
(v) specifies as its lending office (and address for notices) the offices set forth beneath
its name on the signature pages hereof.




     4. As consideration for the assignment and sale contemplated in Annex 1 hereof, the
Assignee shall pay to the Assignor on the Effective Date in Federal funds an amount agreed
upon by the Assignor and the Assignee. It is understood that commitment and/or letter of
credit fees accrued to the Effective Date with respect to the interest assigned hereby are
for the account of the Assignor and such fees accruing from and including the date hereof
are for the account of the Assignee. Each of the Assignor and the Assignee hereby agrees
that if it receives any amount under the Credit Agreement which is for the account of the
other party hereto, it shall receive the same for the account of such other party to the
extent of such other party’s interest therein and shall promptly pay the same to such other
party.




     5. The effective date for this Assignment and Acceptance shall be                      (the
“Effective Date”). Following the execution of this Assignment and Acceptance, it will be
delivered to the Administrative Agent for acceptance and recording by the Administrative
Agent and, if required, the Borrower.




     6. Upon such acceptance and recording, as of the Effective Date, (i) the Assignee shall
be a party to the Credit Agreement and, to the extent provided in this Assignment and
Acceptance, have the rights and obligations of a Lender thereunder and (ii) the Assignor
shall, to the extent provided in this Assignment and Acceptance, relinquish its rights and
be released from its obligations under the Credit Agreement.




     7. Upon such acceptance and recording, from and after the Effective Date, the
Administrative Agent shall make all payments under the Credit Agreement in respect of the
interest assigned hereby (including, without limitation, all payments of principal, interest
and commitment fees with respect thereto) to the Assignee. The Assignor and Assignee shall
make all appropriate adjustments in payments under the Credit Agreement for periods prior to
the Effective Date directly between themselves.




     8. In accordance with Section 13.12 of the Credit Agreement, the Assignor and the
Assignee request and direct that the Administrative Agent prepare and cause the Borrower to
execute and deliver to the Assignee the relevant Notes payable to the Assignee in the amount
of its Commitments and new Notes to the Assignor in the amount of its Commitments after
giving effect to this assignment.



-2-









 






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



	 	 	 	 	 
	 	[Assignor Lender]

 	 
	 	By  	 	 
	 	 	Name  	 	 
	 	 	Title  	 	 
	 
	 	[Assignee Lender]

 	 
	 	By  	 	 
	 	 	Name  	 	 
	 	 	Title  	 	 
	 
	 	Lending office (and address for notices):

 	 
	 



Accepted and consented this

___day of                     



Penford Corporation




	 	 	 	 	 
	 	 
	By  	 	 
	 	Name  	 	 
	 	Title  	 	 
	 



Accepted and consented to by the Administrative

Agent and L/C Issuer this ___ day of                     




Bank of Montreal, as

Administrative Agent and L/C Issuer




	 	 	 	 	 
	By  	 	 
	 	Name  	 	 
	 	Title  	 	 



-3-









 






	 	 	 	 	 



Annex I

to Assignment and Acceptance





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



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






 











 





Exhibit I




Commitment Amount Increase Request



__________________, ______




	 	 	To: Bank of Montreal, as Administrative Agent for the Lenders parties to the Third Amended and
Restated Credit Agreement dated as of April 7, 2010 (as extended, renewed, amended or restated
from time to time, the “Credit Agreement"), among Penford Corporation, the Guarantors party
thereto, certain Lenders which are signatories thereto, and Bank of Montreal, as
Administrative Agent





Ladies and Gentlemen:




     The undersigned, Penford Corporation (the “Borrower"), hereby refers to the Credit Agreement
and requests that the Administrative Agent consent to an increase in the aggregate Revolving Credit
Commitments (the “Commitment Amount Increase"), in accordance with Section 1.1(b) of the Credit
Agreement, to be effected by [an increase in the Revolving Credit Commitment of [name of existing
Lender] [the addition of [name of new Lender] (the “New Lender") as a Lender under the terms of the
Credit Agreement]. Capitalized terms used herein without definition shall have the same meanings
herein as such terms have in the Credit Agreement.



     After giving effect to such Commitment Amount Increase, the Revolving Credit Commitment of the
[Lender] [New Lender] shall be $__________________.



[Include paragraphs 1-4 for a New Lender]




     1. The New Lender hereby confirms that it has received a copy of the Loan Documents and the
exhibits related thereto, together with copies of the documents which were required to be delivered
under the Credit Agreement as a condition to the making of the Loans and other extensions of credit
thereunder. The New Lender acknowledges and agrees that it has made and will continue to make,
independently and without reliance upon the Administrative Agent or any other Lender and based on
such documents and information as it has deemed appropriate, its own credit analysis and decisions
relating to the Credit Agreement. The New Lender further acknowledges and agrees that the
Administrative Agent has not made any representations or warranties about the credit worthiness of
the Borrower or any other party to the Credit Agreement or any other Loan Document or with respect
to the legality, validity, sufficiency or enforceability of the Credit Agreement or any other Loan
Document or the value of any security therefor.



     2. Except as otherwise provided in the Credit Agreement, effective as of the date of
acceptance hereof by the Administrative Agent, the New Lender (i) shall be deemed



 









 





automatically to have become a party to the Credit Agreement and have all the rights and
obligations of a “Lender” under the Credit Agreement as if it were an original signatory thereto
and (ii) agrees to be bound by the terms and conditions set forth in the Credit Agreement as if it
were an original signatory thereto.




     3. The New Lender hereby advises you of the following administrative details with respect to
its Loans and Revolving Credit Commitments:




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





     [4. The New Lender has delivered, if appropriate, to the Borrower and the Administrative Agent
(or is delivering to the Borrower and the Administrative Agent concurrently herewith) the tax forms
referred to in Section 13.1 of the Credit Agreement.]*



     This Agreement shall be deemed to be a contractual obligation under, and shall be
governed by and construed in accordance with, the laws of the state of Illinois.



     The Commitment Amount Increase shall be effective when the executed consent of the
Administrative Agent is received or otherwise in accordance with Section 1.1(b) of the Credit
Agreement, but not in any case prior to _______________, _________. It shall be a condition to the
effectiveness of the Commitment Amount Increase that all expenses referred to in Section 1.1(b) of
the Credit Agreement shall have been paid.



     The Borrower hereby certifies that no Default or Event of Default has occurred and is
continuing.





 




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




-2- 









 










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



	 	 	 	 	 
	 	Very truly yours,

 	 
	 	
 	 
	 	By 	
 	 
	 	 	Name: 	 	 
	 	 	Title: 	 	 
	 
	 	[New or existing Lender Increasing Commitments]
 
	 
	 	By 	
 	 
	 	 	Name 	 	 
	 	 	Title 	 	 
	 



The undersigned hereby consents on this
___ day of
_______________, _________ to the
above-requested Commitment
 Amount
Increase.




	 	 	 	 	 
	Bank of Montreal,

as Administrative Agent

 	 
	By 	
 	 
	 	Name 	 	 
	 	Title 	 	 
	 




-3-