Document:

EX-10.3

 

Exhibit 10.3

Plan Document

and

Summary Plan Description

of the

Kennametal Inc.

Supplemental Executive Retirement Plan

As Amended Effective July 31, 2006

 

 

KENNAMETAL INC. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

(As Amended, effective July 31, 2006)

Section 1. Purpose and Effective Date.

	1.1	 	The purpose of this Supplemental Executive Retirement Plan is to ensure the payment of a
competitive level of retirement income, in order to attract, retain, and motivate selected
executives. The Plan is also intended to provide eligible executives with a retirement
benefit that cannot be paid from the Company’s qualified Retirement Income Plan, due to
various limitations of the United States Internal Revenue Code.

	1.2	 	This Plan was previously amended and adopted, effective April 21, 1995; amended and adopted,
effective July 26, 1999; amended and adopted, effective January 1, 2004; amended and adopted
July 25, 2005, and was most recently amended and adopted, effective as of July 31, 2006. It
is effective for each participant on the date he or she is designated as a Participant.

	1.3	 	The terms of this Plan are applicable only to eligible executives who are employed by the
Company on or after April 21, 1995. Any executive who retired or otherwise terminated
employment prior to such date, shall not be eligible to be designated a Participant under this
Plan unless he or she returns to service with the Company on or after April 21, 1995.

	1.4	 	Notwithstanding the foregoing, in connection with the amendment of this Plan adopted
effective July 31, 2006, the Company has provided for the closing of the class of officers and
key executive employees who will be eligible to receive benefits under this Plan. (In
connection with the adoption of such amendment, the Company has adopted a separate “Kennametal
Inc. 2006 Executive Retirement Plan” to provide nonqualified retirement benefits for
designated officers who are not eligible to participate in this Plan.)

Section II. Definitions.

	2.1	 	Board of Directors means the Directors of the Company.

	2.2	 	Bonus Award means the annual cash award, if any, received by a Participant under the
provisions of the Kennametal Inc. Management Performance Bonus Plan of any given fiscal year.
Only an award generated by successful attainment of the Bonus Plan’s business objectives shall
be considered a “Bonus Award” for the purposes of this Plan, provided that a Bonus Plan award
of $0.00 to the Participant for a given fiscal year shall be taken into account for purposes
of this Plan. No other kind of bonus award or grant will qualify as a “Bonus Award” for
purposes of this Plan.

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	2.3	 	Cause means that the Participant:

(a) shall be guilty of malfeasance, willful misconduct or gross negligence in the
performance of services for the Company

(b) shall not make his or her services available to the Company on a full time basis for
any reason other than arising from Disability or from the Participant’s incapacity due to
physical or mental illness or injury which does not constitute Disability and other than by
reason of the fact that the Participant’s employment has been terminated by the Company
prior to a Change in Control and other than for Cause; or

(c) during the period of Participant’s employment by the Company, shall, in any geographic
area in which the Company is offering its services and products, without the prior written
consent of the Company:

(1) directly or indirectly engage in, or

(2) assist or have an active interest in (whether as proprietor, partner, investor,
shareholder, officer, director or any type of principal whatsoever), or enter the
employ of, or act as agent for, or advisor or consultant to, any person, firm,
partnership, association, corporation or business organization, entity or enterprise
which is or is about to become directly or indirectly engaged in,

any business which is competitive with any business of the Company or any subsidiary or
affiliate thereof in which the Participant is or was engaged; provided, however, that the
foregoing provisions of this definition are not intended to include (or classify as “Cause”)
the Participant’s purchasing, for investment, not in excess of 1% of any class of stock or
other corporate security of any company which is registered pursuant to Section 12 of the
Securities Exchange Act of 1934.

The Committee shall determine whether or not Cause exists for termination of Participant’s
employment unless the Participant has a written employment agreement with the Company, in
which case the determination shall be made in the manner provided under the Participant’s
said employment agreement.

	2.4	 	Change in Control shall mean a change in control of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A promulgated under the Securities Exchange
Act of 1934 as in effect on the date hereof (“1934 Act”), or if Item 6(e) is no longer in
effect, any regulations issued by the Securities and Exchange Commission pursuant to the 1934
Act which serve similar purposes; provided that, without limitation, such a change in control
shall be deemed to have occurred if (i) Kennametal shall be merged or consolidated with any
corporation or other entity other than a merger or consolidation with a corporation or other
entity all of whose equity interests are owned by Kennametal immediately prior to the merger
or consolidation, or (ii) Kennametal shall
sell all or substantially all of its operating properties and assets to another person,
group of associated persons, or corporation; or (iii) any “person” (as such term is used in

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Sections 13(d) and 14(d) of the 1934 Act), is or becomes a beneficial owner, directly or
indirectly, of securities of Kennametal representing 25% or more of the combined voting
power of Kennametal’s then outstanding securities coupled with or followed by the existence
of a majority of the board of directors of Kennametal consisting of persons other than
persons who either were directors of Kennametal immediately prior to or were nominated by
those persons who were directors of Kennametal immediately prior to such person becoming a
beneficial owner, directly or indirectly, of securities of Kennametal representing 25% or
more of the combined voting power of Kennametal’s then outstanding securities.

	2.5	 	Code means the Internal Revenue Code of 1986, as amended from time to time. References in
the Plan to a Code Section shall be deemed to refer to any successor provision of the Code, as
appropriate.

	2.6	 	Committee means Compensation Committee of the Board, or such other committee designated by
the Board to discharge the duties of the Committee hereunder.

	2.7	 	Company means Kennametal Inc., a Pennsylvania corporation, or any successor bound by this
Plan pursuant to Section 8.5.

	2.8	 	Disability means such incapacity due to physical or mental illness or injury, as causes the
Participant to be absent from his principal office at the Company’s offices for the entire
portion of 180 consecutive business days.
	 
	2.9	 	Employee means an employee of the Employer.

	2.10	 	Employer means the Company and any subsidiary or affiliate of the Company whose employees
participate in the Plan.

	2.11	 	Final Base Salary means the Participant’s monthly base salary rate, before any pre-tax
reductions pursuant to the Participant’s elections under IRC § § 125 or 402(e)(3), for the
calendar month in which Participant’s Termination of Employment occurs, without regard to any
limitations on compensation under the Code, including those under IRC § 401(a)(17).
	 
	2.12	 	IRC means the Code.

	2.13	 	Participant means any Employee of an Employer who is entitled to participate in the Plan in
accordance with Section III. Where the context so indicates, “Participant” shall also include
a retired or deceased Participant with respect to whom a SERP Benefit is payable.

	2.14	 	Plan means the Company’s Supplemental Executive Retirement Plan (SERP), as set forth herein
and as amended and restated from time to time.

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	2.15	 	Primary Social Security Benefit means the monthly benefit, as provided by the Federal Social
Security Act, to which the Participant would be entitled at age 65, based upon the assumption
that such Participant will continue to receive until reaching age 65 monthly earnings at the
same rate as he or she received such monthly earnings at the time of retirement, termination
of employment or death. (Note: This definition is identical to that used under the
Retirement Income Plan.)

	2.16	 	Retirement Income Plan means the funded, tax-qualified Kennametal Inc. Retirement Income
Plan, as it may be amended and restated, from time to time.

	2.17	 	Retirement Income Plan Benefit means either (a) the monthly benefit that would be payable as
a single life annuity under the Retirement Income Plan commencing upon a retirement at age 65,
based on credited service and average earnings as of the Participant’s termination of service,
calculated pursuant to the terms and provisions of the Retirement Income Plan as such terms
and provisions literally apply to the Participant because the Participant is an active
participant (accruing additional benefits) in the Retirement Income Plan up to his or her
termination of service and will in fact be eligible to receive benefits reflecting credited
service and average earnings determined to his or her termination of service; or (b) but for
the amendment to the Retirement Income Plan effective December 31, 2003 that excluded such
Participant from further active participation in such plan after such date, or in the case of
a Participant first hired after December 31, 2003, excluded such Participant from any active
participation in such plan, the monthly benefit that would be payable as a single life annuity
under the Retirement Income Plan commencing upon a retirement at age 65, based on credited
service and average earnings as of the Participant’s termination of service calculated
pursuant to the terms and provisions of the Retirement Income Plan (other than vesting
provisions) as such terms and provisions theoretically would have applied to the Participant
if the Participant had not been excluded from active participation, or from further active
participation, in the plan, but had instead been an active participant (accruing benefits) in
the Retirement Income Plan up to his or her termination of service, based on his or her
credited service and average earnings to such termination of service. That is, the Retirement
Income Plan Benefit determined hereunder is either (a) the actual benefit that a Participant
is eligible to receive under such plan because he or she is active participant in the
Retirement Income Plan at termination of service, or (b) the theoretical benefit the
Participant would have been eligible to receive had he or she been eligible to be an active
participant in the Retirement Income Plan up to termination of service (determined without
regard to the vesting provisions of the Retirement Income Plan).

	2.18	 	SERP Benefit means the benefit, calculated pursuant to Section V and Appendix A, that is
payable to a Participant under the Plan who has attained a 100% vested percentage pursuant to
Section IV.

	2.19	 	Surviving Spouse means the individual to whom the Participant is legally married at the time
of his or her death.

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	2.20	 	Vested SERP Benefit means the percentage of the Participant’s SERP Benefit determined
pursuant to Section IV.

	2.21	 	Target Retirement Income means the monthly amount determined as the “applicable percentage”
of the total of (a) the Participant’s Final Base Salary plus (b) 1/36th of the sum of the
Participant’s last three Bonus Awards. For this purpose, the applicable percentage is 60% at
30 Years of Service, plus or minus 1% for each Year of Service greater than or less than
thirty.

	2.22	 	Year of Service means each full twelve-month period beyond Employee’s most recent hire date,
as determined pursuant to the Company’s regular personnel records and policies. (Note: This
definition is not intended to be coextensive with the definition of “Credited Service” as used
in the Retirement Income Plan.)

Section III. Eligibility.

	3.1	 	Each officer or key executive Employee of the Company approved by the Committee, in its sole
and complete discretion, shall be eligible to participate in the Plan.

	3.2	 	Any officer or key executive who becomes a Participant shall continue to be a Participant
until his or her termination of employment, or until a date prior to such time, as determined
by the Committee, in its sole discretion.

	3.3	 	Notwithstanding the foregoing, in connection with the amendment of this Plan adopted
effective July 31, 2006, the Company has provided for the closing of the class of officers and
key executive employees who will be eligible to receive benefits under this Plan. In
connection with the adoption of the July 2006 amendment to this Plan, the Company has adopted
a separate “Kennametal Inc. 2006 Executive Retirement Plan” to provide nonqualified retirement
benefits for designated officers who are not eligible to participate in this Plan.
Accordingly:

(a) No officer or key employee hired by the Company from and after July 31, 2006 shall be
eligible to be designated as a Participant in this Plan.

(b) Any Participant in this Plan as of July 31, 2006 who shall have attained the age of at
least 56 years no later than December 31, 2006, shall remain a Participant in this Plan and
shall not be eligible to be approved by the Committee to become a participant in the
Kennametal Inc. 2006 Executive Retirement Plan.

(c) Any Participant in this Plan as of July 31, 2006 who shall not have attained the age of
at least 56 years no later than December 31, 2006, will be provided the option irrevocably
to elect either

     (1) to become a participant in the Kennametal Inc. 2006 Executive Retirement Plan with
respect to all of his or her prior service from and after the date he or she

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became a
Participant in this Plan pursuant to the Committee’s approval (but excluding service prior
to the commencement of participation in this Plan even though such pre-participation service
is recognized for purposes of calculating Target Retirement Income under Section 2.22 of
this Plan) to July 31, 2006, plus his or her future service as an officer of the Company, as
such prior and future service is credited under the terms of the Kennametal Inc. 2006
Executive Retirement Plan; and, in such case, to receive no benefits whatsoever pursuant to
the terms of this Plan; or

     (2) to receive his or benefits as accrued to July 31, 2006 under the terms of (and
subject to all other applicable provisions of) this Plan but “frozen” as of that date, with
no further accrual of benefits under this Plan after July 31, 2006; and, in such case, to be
irrevocably ineligible for participation in the Kennametal Inc. 2006 Executive Retirement
Plan.

Section IV. Vesting.

	4.1	 	A Participant shall become vested in the SERP Benefit, determined under the provisions of
Section V, only in accordance with the following vesting schedule:

	 	 	 
	Age of Participant at	 	 
	Termination of	 	Cumulative Vested
	Employment	 	SERP Benefit
	Less than age 56
	 	0%
	56
	 	20%
	57
	 	40%
	58
	 	60%
	59
	 	80%
	60 or older
	 	100%

Notwithstanding the foregoing, a Participant whose employment is involuntarily
terminated with Cause shall forfeit any entitlement to a benefit under the Plan.

	4.2	 	Notwithstanding the percentage vesting schedule in Section 4.1, the SERP Benefit (determined
under the provisions of Section V) of each Participant who is an Employee at the time of a
Change in Control of the Company, shall become 100% vested.

Section V. Amount of Benefit

	5.1	 	The amount of each Participant’s SERP Benefit shall initially be calculated as the excess of
the Target Retirement Income over the sum of (a) the Participant’s Retirement Income Plan
Benefit plus (b) the Participant’s Primary Social Security Benefit.

	5.2	 	The Target Retirement Income, the Retirement Income Plan Benefit, and the Social Security
Benefit, shall be calculated according to the methodology described in Appendix A.

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	5.3	 	The Committee shall cause the formula calculation described in Section 5.1 to be done
annually, or as otherwise required, for each Participant. The Committee shall then be advised
of the SERP Benefit amount for each Participant, and shall direct that an official list of
Participants and their accrued SERP Benefit be prepared, which shall govern the payment of a
benefit under the Plan, pursuant to Section VI (but subject to Section IV), until the next
annual review and redetermination of a SERP Benefit amount.

Section VI. Payment of Benefit.

	6.1	 	Payment of the Participant’s Vested SERP Benefit, if any, shall commence on the first day of
the seventh month following the month in which the Participant’s employment with the Company
terminates voluntarily or involuntarily (except for Cause).
	 
	 	 	A Participant’s Vested SERP Benefit shall be paid in equal monthly installments, in the form
of a single life annuity with no death or other survivor benefit other than those described
in Section VII. However, the first monthly payment to the Participant shall equal the sum
of seven monthly payments (to account for the six month delay in commencement of payments
required under IRC § 409A(a)(1)(B)(i)).

Section VII. Surviving Spouse and other Death Benefit.

	7.1	 	In the event of the death of a Participant prior to the commencement of payment of a Plan
benefit to the Participant, an amount equal to 50% of the amount of the benefit calculated in
accordance with the vesting provisions of Section IV and the amount of the benefit of Section
V which would otherwise have been payable to the Participant, will instead be payable to the
Participant’s Surviving Spouse. Payments to such Surviving Spouse shall be made from the
month following the month in which the death of the Participant occurred until the death of
the Surviving Spouse. However, in the event the Participant’s death occurs after termination
of employment as described in Section 6.1, the first monthly payment to the Surviving Spouse
shall include an additional amount equal to the sum of the monthly payments that would have
been made to the Participant prior to his or her death had monthly payments commenced on the
first of the month following the Participant’s termination of employment as described in
Section 6.1. For example, if a
Participant terminated employment, as described in Section 6.1, on December 15 and then died
on the following April 15, survived by a Surviving Spouse, the first payment to the
Surviving Spouse shall include the sum of four monthly payments that would have been paid to
the Participant in January, February and March and April (but for the six-month delay in
commencement of payments) as well as the 50% Surviving Spouse benefit described in this
Section VII.

	7.2	 	In the event of the death of a Participant after the commencement of payment of a Plan
benefit to the Participant, an amount equal to 50% of the amount of the Plan benefit then
being paid to the Participant will instead be payable to the Participant’s Surviving

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Spouse.
Payments to such Surviving Spouse shall be made from the month following the month in which
the death of the Participant occurred, until the death of the Surviving Spouse.

	7.3	 	If the Surviving Spouse is five (5) or more years younger than the Participant, the monthly
payment to the Surviving Spouse pursuant to paragraphs 7.1 and 7.2 shall be actuarially
adjusted, so that it has the same present actuarial value as the full 50% payment to a
hypothetical Surviving Spouse who is less than five (5) years younger than the Participant.
For this purpose, the Committee shall use a life expectancy factor derived from the definition
of “Actuarial Equivalent” under the Retirement Income Plan as in effect as of the date of the
calculation. Effective as of January 1, 2004, the basis of Actuarial Equivalence under the
Retirement Income Plan is the 1983 Group Annuity Mortality Table for Males, using 0% interest
with the Surviving Spouse’s age set back four years. The life expectancy factors derived
therefrom are set forth in Appendix B of the Plan. The foregoing actuarial adjustment shall
be effected by dividing the life expectancy factor for the hypothetical Surviving Spouse by
the life expectancy for the Surviving Spouse (calculated to four decimals). The quotient
obtained shall be multiplied by the Surviving Spouse’s 50% benefit pursuant to paragraphs 7.1
and 7.2. An example of the method of actuarial adjustment is shown in Appendix C of the Plan.

	7.4	 	In the event that the Participant shall have been entitled to payments under Section 6 of the
Plan, and/ or his or her Surviving Spouse (if any) shall have been entitled to payments under
Section 7 of the Plan, and, in either case, upon the death of last to die of the Participant
and Surviving Spouse (if any), the aggregate amount of the cumulative payments of the SERP
Benefit shall have been less than $50,000, the Company shall pay a lump sum amount, equal to
$50,000 less the aggregate amount of the cumulative payments of the SERP Benefit already made,
to the person(s) determined below in the following order of preference: (1) to the person
designated by the Participant in a written notice filed with the Committee, or, if the
Participant has no such notice on file, or the person(s) designated in such notice do(es) not
exist at the relevant time, then (2) to the executor or administrator of the Participant’s
estate.

Section VIII. Claims Procedures

	8.1	 	Claims for Benefits. The Committee shall determine the rights of any Participant to any
benefits hereunder. Any Participant who believes that he or she has not received the benefits
to which he is entitled under the Plan may file a claim in writing with the Committee. The
Committee shall, no later than 90 days after the receipt of a claim (plus an additional period
of 90 days if required for processing, provided that notice of the extension of time is given
to the claimant within the first 90-day period), either allow or deny the claim in writing.
If a claimant does not receive written notice of the Committee’s decision on his claim within
the above-mentioned period, the claim shall be deemed to have been denied in full.

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	 	 	A denial of a claim by the Committee, wholly or partially, shall be written in a manner
calculated to be understood by the claimant and shall include:

	 	•	 	the specific reasons for the denial;
	 
	 	•	 	specific reference to pertinent Plan provisions on which the denial is based;
	 
	 	•	 	a description of any additional material or information necessary for the claimant
to perfect the claim;
	 
	 	•	 	an explanation of why such material or information is necessary; and

	 
	 	•	 	an explanation of the claim review procedure and the time limits applicable to such
procedures, including a statement of the claimant’s right to bring a civil action under
Section 502(a) of ERISA.

	8.2	 	Appeal Provisions. A claimant whose claim is denied (or his duly authorized representative)
may within 60 days after receipt of denial of a claim file with the Committee a written
request for a review of such claim. If the claimant does not file a request for review of his
claim within such 60-day period, the claimant shall be deemed to have acquiesced in the
original decision of the Committee on his claim, the decision shall become final and the
claimant will not be entitled to bring a civil action under ERISA § 502(a). If such an
appeal is so filed within such 60-day period, the Committee (or its delegate) shall conduct a
full and fair review of such claim. During such review, the claimant (or the claimant’s
authorized representative) shall be given the opportunity to review all documents that are
pertinent to his claim and to submit issues and comments in writing.
	 
	 	 	The Committee (or its delegate) shall mail or deliver to the claimant a written decision on
the matter based on the facts and the pertinent provisions of the Plan within 60 days after
the receipt of the request for review (unless special circumstances require an extension of
up to 60 additional days, in which case written notice of such extension shall be given to
the claimant prior to the commencement of such extension). Such decision shall be written
in a manner calculated to be understood by the claimant, shall state the specific reasons
for the decision and the specific Plan provisions on which the decision was based and shall,
to the extent permitted by law, be final and binding on all interested persons. If the
decision on review is not furnished to the claimant within the above-mentioned time period,
the claim shall be deemed to have been denied on review.
	 
	8.3	 	Further Proceedings. If a Participant’s claim for benefits is denied in whole or in part,
such Participant may file suit only in a state court located in Westmoreland County,
Pennsylvania or federal court located in Allegheny County, Pennsylvania. Notwithstanding,
before such Participant may file suit in a state or federal court, Participant must
exhaust the Plan’s administrative claims procedure. If any such judicial or administrative
proceeding is undertaken, the evidence presented will be strictly limited to the evidence
timely presented to the Plan Administrator. In addition, any such judicial or administrative
proceeding must be filed within six months after the Plan Administrator’s final decision.

Section IX. Miscellaneous Provisions.

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	9.1	 	Administration. The Committee shall be responsible for all facets of interpretation and
administration of the Plan. The Committee may adopt rules and regulations to assist it in the
administration of the Plan. The Board of Directors has also delegated to the Committee the
right to modify provisions of the Plan in individual cases.
	 
	9.2	 	No Guaranty of Employment. Nothing in this Plan shall be construed as guaranteeing future
employment to any Participant. Without limiting the generality of the preceding sentence,
except as otherwise set forth in a written agreement, a Participant continues to be an
employee of the Company solely at the will of the Company, subject to discharge at any time,
with or without Cause. The benefits provided for herein for a Participant shall not be deemed
to modify, affect or limit any salary or salary increases, bonuses, profit sharing or any
other type of compensation of a Participant in any manner whatsoever. Except as otherwise
specifically provided herein, nothing contained in this Plan shall affect the right of a
Participant to participate in or be covered by or under any qualified or nonqualified pension,
profit sharing, group, bonus or other supplemental compensation, retirement or fringe benefit
Plan constituting any part of the Company’s compensation structure whether now or hereinafter
existing.
	 
	9.3	 	Non-Competition. Receipt of the SERP Benefit is expressly conditioned upon the
non-competition of the retired Participant with the Company, for so long as any payments are
being made hereunder. Accordingly, unless the Participant first secures the written consent
of the Board of Directors or the Committee, he shall not directly or indirectly, as an
officer, director, employee, consultant, agent, partner, joint venturer, proprietor, or other,
engage in or assist any business which is or may become in direct or indirect competition with
the Company or any of its subsidiaries, other than as a mere investor holding not more than
one percent of the equity interest of any such competing enterprise. In the event that the
Committee makes a good-faith determination that a Participant receiving a SERP Benefit is or
may be violating the non-competition provisions hereof, it shall immediately notify him or her
of such finding in writing and afford him or her a reasonable opportunity (a period of not
less than sixty days) to rebut such finding, or to desist from such competitive activity. In
the event that the Committee believes that a violation of the non-competition provision
continues uncorrected following the sixty-day period, it may then cease making SERP Benefit
payments, and the retired Participant (and any Spouse or other beneficiary claiming through
the Participant) shall forfeit any right to future payment of a SERP Benefit under the Plan.
	 
	9.4	 	Source of Benefit Payments. This Plan is intended to be an unfunded plan of deferred
compensation for a select group of management or highly compensated individuals, and it is
intended that a SERP Benefit payable hereunder will be paid from the general assets of the
Company. However, in the event of a Change in Control, amounts payable to a Participant or
the Surviving Spouse or estate, under Sections 6 and 7 of the Plan, may be provided for in
accordance with an Executive Deferred Compensation Trust (a so-called
“Rabbi” trust) between the Company and a trustee. Should such an Executive Deferred

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	 	 	Compensation Trust be established, the Company shall inform the Participant of the identity
of the trustee upon the Participant’s request.
	 
	9.5	 	Non-Assignment, Alienation. Nothing in this Plan gives a Participant or any person claiming
payments for or through him or her, any right, title, or interest in any asset held in the
Company, prior to the payment thereof, and that the right of a Participant to any payment
hereunder is strictly contractual and unsecured. In addition, the benefit to be paid
hereunder may not be voluntarily or involuntarily sold, transferred, assigned, alienated, or
encumbered, and any such attempt shall be void.
	 
	9.6	 	Obligation of Successors. This Plan shall be binding upon the Company or any successor
(whether direct or indirect, by purchase, merger, consolidation, or otherwise), to all or
substantially all of the business and/or assets of the Company, or to any assignee thereof.
To the extent that the Company must take additional contractual or other steps to make the
Plan an enforceable contractual obligation of a successor (e.g., a purchaser of assets), the
Company shall take such steps. This Plan and all rights of the Participant hereunder shall
inure to the benefit of and be enforceable by the Participant or the Participant’s personal or
legal representatives, executors, administrators, successors, heirs, distributees, devisees,
and legatees.
	 
	9.7	 	Amendment, Termination. This Plan may be amended or terminated at any time by action of the
Board of Directors, provided that no such amendment or termination shall reduce or eliminate
the right of a Participant to the payment of a Plan benefit earned prior to such amendment or
termination.
	 
	9.8	 	Withholding. The Company may provide for the withholding, from any benefit payable under
this Plan, all Federal, state, city, or other taxes as shall be appropriate pursuant to any
law or governmental regulation or ruling, and may delay the payment of any benefit until the
Participant or beneficiary provides payment to the Company of all applicable withholding
taxes.
	 
	9.9	 	Miscellaneous. This Plan shall be governed by and construed in accordance with the laws of
the Commonwealth of Pennsylvania, to the extent not governed by federal law. Section headings
are for convenience of reference only, and shall not affect the construction or interpretation
of any of the provisions hereof.

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     Amended and restated in its entirety (including Appendices A through D attached hereto) by
order of the Board of Directors.

	 	 	 	 	 	 	 	 	 
	 	 	 	 	KENNAMETAL INC	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Kevin R. Walling	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Kevin R. Walling	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Vice President and	 	 
	 

	 	Date: September 11, 2006
	 	 	 	Chief Human Resource Officer	 	 

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APPENDIX A

	t	 	Calculation begins with current monthly base salary and years of service, up to the present date.
	 
	t	 	Target Retirement Income equals a percent of (a) Final Base Salary plus (b) the monthly average (i.e., 1/36) of the sum
of the last three Bonus Awards. The percentage is calculated as 60% for 30 years of service, plus or minus 1% for each
year of service greater than or less than thirty. For example:

	 	 	 
	Years of	 	Retirement
	Service	 	Target
	Newly hired
	 	30%
	5
	 	35%
	10
	 	40%
	15
	 	45%
	20
	 	50%
	25
	 	55%
	30
	 	60%
	35
	 	65%
	40
	 	70%
	45
	 	75%

	t	 	 Calculate the Retirement Income Plan Benefit, based on current years of service and pensionable earnings, to date, and
including current statutory limitations (IRC §§ 415 and 401A(17)), but not actuarially reduced for age less than 65.
This calculation is made on the assumption (whether or not true) that the Participant is an active participant in the
RIP and is currently eligible to accrue additional benefits thereunder. (Thus, the calculation is made even if the
Participant is excluded from active participation under the terms of the RIP, as amended effective December 31, 2003.)
	 
	t	 	Calculate the Primary Social Security Benefit, based on earnings to date and assuming that current level of earnings
will continue through age 65.
	 
	t	 	The SERP Benefit equals the Target Retirement Income (above) minus the sum of (a) the Retirement Income Plan Benefit
plus (b) the Primary Social Security Benefit.
	 
	t	 	The SERP Benefit is then adjusted, if applicable, under the vesting schedule in Section 4.1.

13

 

APPENDIX A

continued

	t	 	However, the minimum SERP Benefit is 10% of current Base Salary.
	 
	t	 	If the prior Vested SERP benefit (as last calculated under the
above described method and posted to the official list of
Participants and their respective Vested SERP Benefits) is greater
than the new Vested SERP Benefit, use the prior Vested SERP
Benefit.
	 
	t	 	Therefore, the Vested SERP Benefit is the greatest of:

	 	•	 	Target Retirement Income minus sum of (a) Retirement Income Plan Benefit plus (b)
the Primary Social Security Benefit, adjusted, if applicable, under the vesting
schedule in Section 4.1.
	 
	 	•	 	10% of Current Base Salary, or
	 
	 	•	 	Prior Vested SERP Benefit.

14

 

APPENDIX B

LIFE EXPECTANCIES FROM THE 1983 GROUP ANNUITY TABLE FOR MALES

(Set back 4 years for Joint Annuitants)

	 	 	 	 	 
	Age	 	Joint Annuitant
	20
	 	 	61.8209	 
	21
	 	 	60.8413	 
	22
	 	 	59.8620	 
	23
	 	 	58.8830	 
	24
	 	 	57.9043	 
	25
	 	 	56.9259	 
	26
	 	 	55.9480	 
	27
	 	 	54.9706	 
	28
	 	 	53.9937	 
	29
	 	 	53.0174	 
	30
	 	 	52.0418	 
	31
	 	 	51.0670	 
	32
	 	 	50.0929	 
	33
	 	 	49.1198	 
	34
	 	 	48.1476	 
	35
	 	 	47.1765	 
	36
	 	 	46.2066	 
	37
	 	 	45.2380	 
	38
	 	 	44.2708	 
	39
	 	 	43.3052	 
	40
	 	 	42.3420	 
	41
	 	 	41.3799	 
	42
	 	 	40.4194	 
	43
	 	 	39.4609	 
	44
	 	 	38.5048	 
	45
	 	 	37.5519	 
	46
	 	 	36.6027	 
	47
	 	 	35.6578	 
	48
	 	 	34.7181	 
	49
	 	 	33.7843	 
	50
	 	 	32.8570	 
	51
	 	 	31.9371	 
	52
	 	 	31.0249	 
	53
	 	 	30.1209	 
	54
	 	 	29.2251	 
	55
	 	 	28.3377	 
	56
	 	 	27.4584	 
	57
	 	 	26.5870	 
	58
	 	 	25.7232	 
	59
	 	 	24.8665	 
	60
	 	 	24.0165	 
	61
	 	 	23.1729	 
	62
	 	 	22.3357	 
	63
	 	 	21.5052	 
	64
	 	 	20.6824	 
	65
	 	 	19.8686	 
	66
	 	 	19.0651	 
	67
	 	 	18.2736	 
	68
	 	 	17.4961	 
	69
	 	 	16.7345	 
	70
	 	 	15.9910	 
	71
	 	 	15.2675	 
	72
	 	 	14.5650	 
	73
	 	 	13.8838	 
	74
	 	 	13.2233	 
	75
	 	 	12.5823	 
	76
	 	 	11.9593	 
	77
	 	 	11.3534	 
	78
	 	 	10.7651	 
	79
	 	 	10.1954	 
	80
	 	 	9.6460	 
	81
	 	 	9.1190	 
	82
	 	 	8.6159	 
	83
	 	 	8.1375	 
	84
	 	 	7.6840	 
	85
	 	 	7.2554	 
	86
	 	 	6.8510	 
	87
	 	 	6.4698	 
	88
	 	 	6.1104	 
	89
	 	 	5.7710	 
	90
	 	 	5.4494	 
	91
	 	 	5.1452	 
	92
	 	 	4.8567	 
	93
	 	 	4.5831	 
	94
	 	 	4.3236	 
	95
	 	 	4.0780	 
	96
	 	 	3.8449	 
	97
	 	 	3.6221	 
	98
	 	 	3.4067	 
	99
	 	 	3.2050	 
	100
	 	 	3.0190	 
	101
	 	 	2.8379	 
	102
	 	 	2.6613	 
	103
	 	 	2.4889	 
	104
	 	 	2.3201	 
	105
	 	 	2.1539	 
	106
	 	 	1.9885	 
	107
	 	 	1.8203	 
	108
	 	 	1.6485	 
	109
	 	 	1.4741	 

15

 

APPENDIX C

Example:

A Participant receiving a SERP Benefit in the amount of $10,000 dies at age 74. His or her
Surviving Spouse is age 65. The benefit payable to the Surviving Spouse would be calculated as
follows.

	1.	 	Life expectancy set forth on the Group Annuity Mortality
Table of a hypothetical Surviving Spouse who is age 69 = 16.7345
	 
	2.	 	Life expectancy set forth on the Group Annuity Mortality Table of the Surviving Spouse who is
age 65 = 19.8686
	 
	3.	 	Quotient obtained by dividing 1 above by 2 above (16.7345 ÷ 19.8686) = 0.8423
	 
	4.	 	Yearly benefit payable to Surviving Spouse = $10,000 x 50% x 0.8423 = $4,211.50

16

 

APPENDIX D

STATEMENT OF ERISA RIGHTS

     Each Participant in the Plan is entitled to certain rights and protections under ERISA. ERISA
provides that all Participants shall be entitled to:

Receive Information About the Plan and Benefits

     Examine, without charge, at the Plan Administrator’s office, all documents governing the Plan.

     Obtain, upon written request to the Plan Administrator, copies of documents governing the
operation of the Plan and an updated summary plan description. The Plan Administrator may make a
reasonable charge for the copies.

Prudent Actions by Plan Fiduciaries

     In addition to creating rights for Participants, ERISA imposes duties upon the people who are
responsible for the operation of the employee benefit plan. The people who operate the Plan,
called “fiduciaries” of the Plan, have a duty to do so prudently and in the interest of
Participants and beneficiaries. No one, including a Participant’s employer or any other person,
may fire such Participant or otherwise discriminate against a Participant in any way to prevent
such Participant from obtaining a welfare benefit or exercising such Participant’s rights under
ERISA. However, this rule neither guarantees continued employment, nor affects the Company’s right
to terminate a Participant’s employment for other reasons.

Enforce Participant Rights

     If a Participant’s claim for a benefit is denied or ignored, in whole or in part, a
Participant has a right to know why this was done, to obtain copies of documents relating to the
decision without charge, and to appeal any denial, all within certain time schedules.

     Under ERISA, there are steps a Participant can take to enforce the above rights. For instance, if
a Participant requests a copy of Plan documents and does not receive them within 30 days, such
Participant may file suit in a Federal court. In such a case, the court may require the Plan
Administrator to provide the materials and pay such Participant up to $110 a day until Participant
receives the materials, unless the materials were not sent because of reasons beyond the control of
the Plan Administrator. If a Participant has a claim for benefits which is denied or ignored, in
whole or in part, such Participant may file suit in a state or Federal court. If a Participant is
discriminated against for asserting such Participant’s rights, such Participant may seek assistance
from the U.S. Department of Labor, or may file suit in a Federal court. The court will decide who
should pay court costs and legal fees. If a Participant is successful the court may order the
person such Participant has sued to pay these costs and fees. If a Participant loses, the court
may order such Participant to pay these costs and fees, for example, if it finds such Participant’s
claim is frivolous.

17

 

APPENDIX D

continued

Assistance with Participant Questions

     If a Participant has any questions about the Plan, such Participant should contact the Plan
Administrator. If a Participant has any questions about this statement or about such Participant’s
rights under ERISA, or if a Participant needs assistance in obtaining documents from the Plan
Administrator, such Participant should contact the nearest office of the Employee Benefits Security
Administration, U.S. Department of Labor, listed in such Participant’s telephone directory or the
Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S.
Department of Labor, 200 Constitution Avenue N.W., Washington, D.C. 20210. A Participant may also
obtain certain publications about such Participant’s rights and responsibilities under ERISA by
calling the publications hotline of the Employee Benefits Security Administration.

SUMMARY INFORMATION

     Name of Plan: The name of the plan under which benefits are provided is the
Kennametal Inc. Supplemental Executive Retirement Plan

     Plan Sponsor: The Sponsor of the Plan is:

Kennametal Inc.

1600 Technology Way

P. O. Box 231

Latrobe, PA 15650-0231

Telephone: (724) 539-5000

     Plan Administrator: The Plan Administrator of the Plan is:

The Compensation Committee of the Board of Directors

Kennametal Inc.

1600 Technology Way

P. O. Box 231

Latrobe, PA 15650-0231

     Telephone: (724) 539-5000

     Employer Identification Number: The Employer Identification Number (EIN) assigned to
the Plan Sponsor by the Internal Revenue Service is 25-0900168.

     Type of Plan: Nonqualified unfunded deferred compensation plan (“top hat”).

18

 

APPENDIX D

continued

     Type of Administration: The Plan is administered by the Plan Administrator without
use of third party administrators or insurers.

     Funding: Benefits payable under the Plan are provided from the general assets of the
Company.

     Agent for Service of Legal Process: For disputes arising under the Plan, service of
legal process may be made upon the General Counsel of Plan Sponsor.

     Plan Year: The Plan’s fiscal records are kept on a June 30 fiscal year basis (July 1
to June 30).

19EX-10.22

 

Exhibit 10.22

EIGHTH AMENDMENT TO LOAN AGREEMENT

     This Eighth Amendment to Loan Agreement (“Amendment”) is made as of September 27, 2006,
by and among THE ANDERSONS, INC., an Ohio corporation (the “Borrower”), the financial institutions
signatory hereto (being all of the Lenders as of the date of this Amendment) and U.S. BANK NATIONAL
ASSOCIATION, a national banking association (“U.S. Bank”), in its capacity as Agent for the Lenders
(in such capacity, the “Agent”) and as one of the Lenders.

RECITAL

     This Amendment is made with respect to the Loan Agreement made as of October 30, 2002, (as
amended, modified, supplemented, renewed or restated from time to
time, the “Agreement”).
Capitalized terms that are not defined in this Amendment shall have the meanings assigned to them
in the Agreement. The Borrower and the Lenders desire to extend the term of the Commitments and to
otherwise amend certain provisions of the Agreement.

     NOW, THEREFORE, in consideration of the foregoing and of the terms and conditions contained in
this Amendment, and of any loans or extensions of credit or other financial accommodations
heretofore, now or hereafter made to or for the benefit of Borrower, the parties agree as follows:

     1. Section 1.1 of the Agreement, General Definitions, is hereby amended by
adding, deleting and amending the following definitions as follows:

     “Agent’s Letter” shall mean the letter agreement between Borrower and the
Agent dated September 27, 2006.

     “Applicable Margin” shall mean with respect to Swing Line Advances, Line of
Credit A Advances or Line of Credit B Advances which are Daily Reset LIBOR Rate Loans, Base
Rate Loans or LIBOR Rate Loans, Commitment Fees for the Line of Credit A Loan Commitments
and the Commitment Fees for the Line of Credit B Loan Commitments (“Non-Use Fees”), Standby
LC Fees and Commercial LC Fees, the rates per annum set forth below for the then applicable
Financial Performance Level:

     Swing Line Advances, Line of Credit A Advances and Commitment Fees Line A:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Financial	 	 	 	 	 	Daily Reset LIBOR	 	Non-Use Fees
	Performance Level	 	Base Rate	 	Rate & LIBOR Rate	 	Line A and Line B
	Level 1
	 	 	0.0	%	 	 	1.000	%	 	 	0.225	%
	Level 2
	 	 	0.0	%	 	 	0.850	%	 	 	0.200	%
	Level 3
	 	 	0.0	%	 	 	0.700	%	 	 	0.175	%
	Level 4
	 	 	0.0	%	 	 	0.550	%	 	 	0.150	%
	Level 5
	 	 	0.0	%	 	 	0.400	%	 	 	0.125	%
	Level 6
	 	 	0.0	%	 	 	0.325	%	 	 	0.100	%

39

 

     Line of Credit B Advances, Letter of Credit Fees and Commitment Fees Line B:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Financial	 	 	 	 	 	LIBOR Rate &	 	 
	Performance Level	 	Base Rate	 	Standby LC Fees	 	Commercial LC Fees
	Level 1
	 	 	0.0	%	 	 	1.000	%	 	 	0.450	%
	Level 2
	 	 	0.0	%	 	 	0.850	%	 	 	0.395	%
	Level 3
	 	 	0.0	%	 	 	0.700	%	 	 	0.340	%
	Level 4
	 	 	0.0	%	 	 	0.550	%	 	 	0.285	%
	Level 5
	 	 	0.0	%	 	 	0.400	%	 	 	0.230	%
	Level 6
	 	 	0.0	%	 	 	0.325	%	 	 	0.175	%

     The initial Financial Performance Level shall be Level 6. The Agent will review
Borrower’s financial performance as of each fiscal quarter end, beginning with fiscal
quarter end September 30, 2006, after its receipt of Borrower’s financial statements and
Compliance Certificate as of the end of such fiscal quarter, and will confirm Borrower’s
determination as to whether Borrower’s Financial Performance Level based on such fiscal
quarter is Level 1, Level 2, Level 3, Level 4, Level 5 or Level 6. As so confirmed by the
Agent, Borrower’s Financial Performance Level will determine the Applicable Margin
effective for Swing Line Advances, Line of Credit A Advances, the Commitment Fees for the
Line of Credit A Loan Commitments and the Line of Credit B Loan Commitments, Standby LC
Fees and Commercial LC Fees for the three month period beginning on the first Business Day
of the third month following the end of such fiscal quarter if the Agent receives such
quarter end financial statements prior to the last five (5) Business Days of the second
month following the end of such fiscal quarter. If the Agent receives such quarter end
financial statements during or after the last five (5) Business Days of the second month
following the end of such fiscal quarter (but prior to the end of the third month following
the end of such fiscal quarter), any reduction in the Applicable Margin will be delayed
until the tenth day of the month following the month in which the Agent receives such
quarter end financial statements, but any increase in the Applicable Margin will be
effective as of the first Business Day of the third month following the end of such fiscal
quarter. If the Agent does not receive such quarter end statements prior to the end of the
third month following the end of such fiscal quarter, Borrower’s Financial Performance
Level shall be deemed to be Level 1 beginning with the tenth day of the fourth month
following the end of such fiscal quarter and shall remain at Level 1 until the
15th Business Day after such financial statements are received by the Agent and
a determination by the Agent that a different Financial Level shall apply during the
remainder of the three month period.

     “Asset Coverage Ratio” shall mean, for any date of determination, the ratio of
(a) the sum of (i) the aggregate principal amount of the Line of Credit A Loan Liabilities,
(ii) the aggregate amount of the LC Obligations, and (iii) the aggregate principal amount
of the Line of Credit B Loan Liabilities; divided by (b) the of the sum of the amounts of
Borrower’s accounts receivable and inventory as they would normally appear on Borrower’s
balance sheet according to GAAP.

     “Available Amount A” shall mean, at any time, an amount equal to (i) the Line
of Credit A Loan Commitments minus (ii) the sum of (A) the aggregate principal
amount of the Line of Credit A Loan Liabilities, and (B) the aggregate amount of the LC
Obligations.

     “Available Amount B” shall mean, at any time, an amount equal to (i) the Line
of Credit B Loan Commitments minus (ii) the aggregate principal amount of the Line
of Credit B Loan Liabilities.

     “Borrowing
Base” — Deleted.

     “Borrowing Base Certificate” — Deleted.

40

 

     “Borrowing Base Limit” — Deleted.

     “Commitment” shall mean, as to any Lender, such Lender’s Line of Credit A Loan
Commitment and Line of Credit B Loan Commitment, the Agent’s commitment to make Swing Line
Advances under the Line of Credit A and the Agent’s commitment to cause the issuance of
Letters under the Line of Credit A, and “Commitments” shall mean collectively, such
Commitments for all the Lenders and the Agent.

     “Financial Performance Level” shall mean the applicable level of
Borrower’s financial performance determined in accordance with the table and
paragraph set forth below, provided, however, notwithstanding the definition
thereof, Debt to Capitalization Ratio shall be determined as if the Top Cat
Subsidiaries were not consolidated subsidiaries of Borrower.

	 	 	 	 	 
	 	 	Financial	 	 
	 	 	Performance	 	 
	 	 	Level	 	Debt to Capitalization Ratio
	 

	 	Level 1
	 	Greater than 65%
	 

	 	Level 2
	 	Less than or equal to 65% but greater than 60%
	 

	 	Level 3
	 	Less than or equal to 60% but greater than 55%
	 

	 	Level 4
	 	Less than or equal to 55% but greater than 50%
	 

	 	Level 5
	 	Less than or equal to 50% but greater than 40%
	 

	 	Level 6
	 	Less than or equal to 40%

     “Line of Credit A Loan Commitment” shall mean as to any Lender, such Lender’s
Pro Rata Percentage of $300,000,000, as set forth opposite such Lender’s name under the
heading “Line of Credit A Loan Commitments” on Schedule A-4, subject to Assignment
and Acceptance in accordance with Section 10.23, and as such amount may be reduced
or terminated from time to time pursuant to Sections 2.3(c), 2.8 or 9.1 and as such
amount may be increased from time to time pursuant to Section 10.31(b); and
“Line of Credit A Loan Commitments” shall mean collectively, the Line of Credit A
Loan Commitments for all the Lenders.

     “Line of Credit B Loan Commitment” shall mean as to any Lender, such Lender’s
Pro Rata Percentage of $50,000,000, as set forth opposite such Lender’s name under the
heading “ Line of Credit B Loan Commitments” on Schedule A-4, subject to Assignment
and Acceptance in accordance with Section 10.23, and as such amount may be reduced
or terminated from time to time pursuant to Sections 2.3(c), 2.8 or 9.1 and as such
amount may be increased from time to time pursuant to Section 10.31(b); and
“Line of Credit B Loan Commitments” shall mean collectively, the Line of Credit B
Loan Commitments for all the Lenders.

     “Line of Credit A Loan Liabilities” shall mean the principal and interest
owing under the Line of Credit A.

     “Line of Credit B Loan Liabilities” shall mean all of the Liabilities other
than: (a) the LC Obligations; and (b) the principal and interest owing under the Line of
Credit A.

     “Matured Default” shall mean the occurrence or existence of any one or more of
the following events: (a) Borrower fails to pay any principal pursuant to any of the
Financing Agreements on the day such principal becomes due or is declared due or Borrower
fails to pay any interest pursuant to any of the Financing Agreements on or before five (5)
days after such interest becomes due or is declared due; (b) Borrower fails to pay any of
the Liabilities (other than principal and interest) on or before ten (10) days after such
Liabilities become due or are declared due; (c) a Change of Control shall occur; (d)
Borrower or any consolidated subsidiary of Borrower fails or neglects to perform, keep or
observe any of the covenants, conditions, promises or

41

 

agreements contained in this
Agreement or in any of the other Financing Agreements (other than
those covenants, conditions, promises and agreements referred to or covered in
(a), (b), and (c) above), and such failure or neglect continues for
more than thirty (30) days after such failure or neglect first occurs; (e) the Available
Amount A or the Available Amount B, as calculated in accordance with the definitions
thereof, result in a negative amount; (f) any warranty or representation at any time made
by or on behalf of Borrower in connection with this Agreement or any of the other Financing
Agreements is untrue or incorrect in any material respect, or any schedule, certificate,
statement, report, financial data, notice, or writing furnished at any time by or on behalf
of Borrower to the Agent or any other Lender is untrue or incorrect in any material respect
on the date as of which the facts set forth therein are stated or certified; (g) a judgment
in excess of $5,000,000 is rendered against Borrower or any guarantor of any of the
Liabilities and such judgment remains unsatisfied or un-discharged and in effect for sixty
(60) consecutive days without a stay of enforcement or execution, provided,
however, that this clause (g) shall not apply to any judgment for which Borrower is
fully insured (through insurance policies and/or self insurance reserves); (h) all or any
material part of the assets of Borrower or any guarantor of any of the Liabilities come
within the possession of any receiver, trustee, custodian or assignee for the benefit of
creditors; (i) a proceeding under any bankruptcy, reorganization, arrangement of debt,
insolvency, readjustment of debt or receivership law or statute is filed against Borrower
or any guarantor of any of the Liabilities and such proceeding is not dismissed within
thirty (30) days of the date of its filing, or a proceeding under any bankruptcy,
reorganization, arrangement of debt, insolvency, readjustment of debt or receivership law
or statute is filed by Borrower or any guarantor of any of the Liabilities, or Borrower or
any guarantor of any of the Liabilities makes an assignment for the benefit of creditors;
(j) Borrower or any guarantor of any of the Liabilities voluntarily or involuntarily
dissolves or is dissolved, terminates or is terminated; (k) Borrower or any consolidated
subsidiary of Borrower is enjoined, restrained, or in any way prevented by the order of any
court or any administrative or regulatory agency or by the termination or expiration of any
permit or license, from conducting all or any material part of its business affairs; (l)
Borrower or any guarantor of any of the Liabilities fails to make any payment due or
otherwise defaults on any other obligation for borrowed money and the effect of such
failure or default is to cause or permit the holder of such obligation or a trustee to
cause such obligation to become due prior to its date of maturity; (m) any guarantor of any
of the Liabilities asserts the invalidity of their guaranty, purports to terminate their
guaranty or purports to limit the application thereof to then existing Liabilities; or (n)
the Agent, at any time reasonably determines that the Lenders are insecure with respect to
the prompt payment of all or any part of the Liabilities, or that such change has occurred
in the condition or affairs (financial or otherwise) of Borrower or any of Borrower’s
Affiliates as, in the reasonable opinion of the Agent, materially affects Borrower’s
ability to make prompt payment on the Liabilities.

     “Maturity Date” shall mean, as applicable, the earlier of: (a) as to the Swing
Line or the Line of Credit A and LC Obligations, September 30, 2009; (b) as to the Line of
Credit B, September 30, 2009; and (c) in all cases, the earlier date of termination in
whole of the Commitments pursuant to Sections 2.3(c), 2.8 or 9.1.

     “Total Adjusted Funded Debt” shall mean as of any particular date (a)
Borrower’s consolidated short term notes payable, plus (b) Borrower’s consolidated long
term debt, plus (c) the current maturities of Borrower’s consolidated long term debt, minus
(d) to the extent included in b. or c., non-recourse debt, plus (e) to the extent not
included in a., b. or c., the Liabilities, minus (f) 90% of the result of (i) the book
value of Inventory consisting of grain, minus (ii) 100% of the accounts payable related
thereto, minus (g) 100% of the net equity in Margin Accounts.

     2. Subsection (a) of Section 2.1.4 of the Agreement, Letters of Credit, shall
be amended to read as follows:

     (a) The Agent further agrees to issue or cause to be issued by a Lender, Letters for
Borrower’s account for any purpose acceptable to the Agent in its reasonable discretion
(the Agent or such Lender thereby becoming an Issuer), with an expiration date not later
than the earlier of (a)

42

 

one year after the date of issuance, or (b) the fifth day prior to
the Maturity Date, in amounts up to
the lesser of: (y) Thirty Million Dollars ($30,000,000) minus the then outstanding LC
Obligations; or (z) the Available Amount A, for the benefit of one or more beneficiaries to
be named by Borrower (the “Beneficiary”, whether one or more), in form and substance
acceptable to the Beneficiary. Letters which provide for an automatic extension of the
expiration date may not automatically extend for more than one year at each extension and
shall, in the sole discretion of the Agent, not be allowed to automatically extend to a
date later than the fifth day prior to the Maturity Date. In order to effect the issuance
of each Letter, Borrower shall deliver to the Agent a letter of credit application (the
“Application”) not later than 11:00 a.m. (Denver time), five (5) Business Days prior to the
proposed date of issuance of the Letter. The Application shall be duly executed by a
responsible officer of Borrower, shall be irrevocable and shall (i) specify the day on
which such Letter is to be issued (which shall be a Business Day), and (ii) be accompanied
by a certificate executed by a responsible officer setting forth calculations evidencing
availability for the Letter and stating that all conditions precedent to such issuance have
been satisfied. Each Letter shall (i) provide for the payment of drafts presented for
honor thereunder by the beneficiary in accordance with the terms thereof, when such drafts
are accompanied by the documents described in the Letter, if any, and (ii) to the extent
not inconsistent with the express terms hereof or the applicable Application, be subject to
the Uniform Customs and Practice for Documentary Credits (1993 Revision), International
Chamber of Commerce Publication No. 500 (together with any subsequent revisions thereof
approved by a Congress of the International Chamber of Commerce and adhered to by the
Issuer, the “UCP”), and shall, as to matters not governed by the UCP, be governed by, and
construed and interpreted in accordance with, the laws of the State in which the Issuer
resides.

     3. Subsection (c) of Section 2.3 of the Agreement, Prepayments; Termination of the
Commitments, shall be amended to read as follows:

     (c) Borrower shall have the right, upon at least five Business Days’ written notice to
the Lenders, to terminate the Line of Credit A Loan Commitments, (i) in whole (subject to
the last sentence of this Section 2.3(c)) or (ii) in part, in a minimum amount of
$5,000,000 and an integral multiple of $1,000,000, but not to an amount less than
$80,000,000. Provided, however, that any such termination shall be accompanied, (i) in the
case of a termination in whole, by payment of the Line of Credit A Loan Liabilities in full
and the return or cash coverage of any Letter then outstanding, or (ii) in the case of a
partial termination, payment of the Line of Credit A Loan Liabilities to the extent
necessary to cause the Available Amount A to be not less than zero. Any partial reduction
of the Line of Credit A Loan Commitments pursuant to this Section 2.3(c) shall
result in a reduction pro-rata of the Line of Credit A Loan Commitments of each of the
Lenders. Borrower shall have the right, upon at least five Business Days’ written notice
to the Lenders, to terminate the Line of Credit B Loan Commitments, (i) in whole, or (ii)
in part, in a minimum amount of $5,000,000 and an integral multiple of $1,000,000, but not
to an amount less than $20,000,000. Provided, however, that any such termination shall be
accompanied, (i) in the case of a termination in whole, by payment of the Line of Credit B
Loan Liabilities in full, or (ii) in the case of a partial termination, payment of the Line
of Credit B Loan Liabilities to the extent necessary to cause the Available Amount B to be
not less than zero. Any partial reduction of the Line of Credit B Loan Commitments
pursuant to this Section 2.3(c) shall result in a reduction pro-rata of the Line of
Credit B Loan Commitments of each of the Lenders. In the event Borrower elects to
terminate the Line of Credit A Loan Commitments in whole as set forth in this Section
2.3(c), then Borrower shall also terminate the Line of Credit B Loan Commitments in
whole as set forth in this Section 2.3(c).

     4. Section 3.1 of the Agreement, Eligible Accounts, shall be deleted.

     5. Section 3.2 of the Agreement, Eligible Inventory, shall be deleted.

43

 

     6. Subsection (a) of Section 2.1.5 of the Agreement, Equalization Transfers,
shall be amended as follows: The amount $20,000,000 shall be amended to read $30,000,000 in each
place that it appears.

     7. Section 6.16 of the Agreement, Account Warranties, shall be amended to read
as follows:

     6.16 Account Warranties. Except as disclosed to the Agent from time to time
in writing, all Accounts which are reflected on Borrower’s financial statements delivered
to the Agent pursuant to Section 7.1 are genuine, in all respects what they purport
to be, have not been reduced to any judgment, are evidenced by not more than one executed
original agreement, contract or document, and represent undisputed, bona fide transactions
completed in accordance with the terms and conditions of any related document; the Accounts
have not been pledged, sold or assigned to any Person; and except as disclosed to the Agent
from time to time in writing, Borrower has no knowledge of any fact or circumstance which
would impair the validity or collectibility of any of the Accounts that in the aggregate
are material in amount.

     8. Section 6.17 of the Agreement, Inventory Warranties, shall be amended to
read as follows:

     6.17 Inventory Warranties. Except as disclosed to the Agent from time to time
in writing, all Inventory reflected on Borrower’s financial statements delivered to the
Agent pursuant to Section 7.1 shall be of good and merchantable quality, free from
any defects which might affect the market value of such Inventory.

     9. The Compliance Certificate required by Subsection (b) of Section 7.1 of the Loan
Agreement, Financial and Other Information, shall be in the form as attached hereto as
Exhibit 7A-2.

     10. Subsection (c) and Subsection (d) of Section 7.1 of the Loan Agreement,
Financial and Other Information, shall be deleted.

     11. Section 7.4 of the Agreement, Financial Covenants and Ratios, shall be
amended to read as follows:

     7.4 Financial Covenants and Ratios. Borrower shall maintain at all times:
(a) a Tangible Net Worth of not less than $125,000,000; (b) a Current Ratio Net of Hedged
Inventory of not less than 1.25 to 1; (c) a Debt to Capitalization Ratio of not more than
70%; (d) Working Capital of not less than $55,000,000; and (e) an Asset Coverage Ratio of
not more than 65%. Notwithstanding the definitions of the terms used in this Section 7.4,
the amounts referred to therein shall be determined as if the Top Cat Subsidiaries were not
consolidated subsidiaries of Borrower, and the Borrower shall deliver to the Lenders with
each Compliance Certificate consolidating statements and such other schedules to support
the calculations demonstrating compliance (or non-compliance, as the case may be) with the
Financial Covenants and Ratios set forth in this Section 7.4, as they were
presented prior to the formation of the Top Cat Subsidiaries.

     12. Section 10.31 of the Agreement, Amendments and Waivers, shall be amended
to read as follows:

     10.31 Amendments and Waivers. (a) Except as provided in the following
Subsections 10.31(b) and (c), any term, covenant, agreement or condition of this
Agreement or the other Financing Agreements may be amended only by a written amendment
executed by Borrower, the Required Lenders and, if the rights or duties of the Agent or
Issuer are affected thereby, the Agent and such Issuer, respectively, or compliance
therewith only may be waived (either generally or in a particular instance and either
retroactively or prospectively), if Borrower shall have obtained the consent in writing of
the Required Lenders and, if the rights or duties of the Agent are affected thereby, the
Agent, provided however, that without the consent in writing of the holders
of all outstanding Notes and LC Obligations, or of all Lenders if no Notes or Letters

44

 

are outstanding, no such amendment or waiver shall (i) change the amount or postpone the date
of payment of any scheduled payment or required payment of principal of the Notes or LC
Obligations or reduce the rate or extend the time of payment of
interest on the Notes, or reduce the amount of principal thereof, or modify any of the
provisions with respect to the payment or prepayment thereof, (ii) give to any Note any
preference over any other Notes, (iii) amend the definition of Required Lenders, (iv)
alter, modify or amend the provisions of this Section 10.31, (v) reduce the fees
required under Section 2.5, (vi) alter, modify or amend the provisions of
Sections 9.1 or 9.2 of this Agreement, (vii) alter, modify or amend any Lender’s
right hereunder to consent to any action, make any request or give any notice, or (viii)
release any guarantor of any of the Liabilities.

     (b) Provided that a Default or a Matured Default has not occurred and is continuing,
this Agreement may be amended from time to time (i) to increase the total amount of the
Line of Credit A Loan Commitments to an amount not exceeding $400,000,000 in the aggregate,
and/or (ii) to increase the total amount of the Line of Credit B Loan Commitments to an
amount not exceeding $100,000,000 in the aggregate, by one or more written amendments
executed by Borrower, the Agent and one or more Lenders (together with new Notes and other
Financing Agreements as may be reasonably required by the Agent). Subject to the following
Section 10.31(c), any such increase shall be allocated to new or existing Lenders
at the discretion of the Agent and Borrower.

     (c) Without the consent in writing of the affected Lender, no amendment or waiver
shall increase the amount of or the Pro Rata Percentage of any Commitment of such Lender
(but the amount of or the Pro Rata Percentage of any Commitment of such Lender may be
decreased without the consent of such Lender).

     (d) Any amendment or waiver made in accordance with this Section 10.31 shall
apply equally to all Lenders and all the holders of the Notes and/or LC Obligations and
shall be binding upon them, upon each future holder of any Note or LC Obligation and upon
Borrower, whether or not such Note or Letter shall have been marked to indicate such
amendment or waiver. No such amendment or waiver shall extend to or affect any obligation
not expressly amended or waived.

     13. This Amendment shall be effective as of its date, and Equalization Transfers shall be made
in accordance with Section 2.1.5 of the Agreement so that each Lender holds its pro rata share of
the outstanding principal balance of all Loans, conditioned upon the execution and delivery to the
Agent, in form and substance reasonably acceptable to the Agent, of the following: (a) this
Amendment, executed by the Borrower, the Agent and the Lenders; (b) an amended and restated Agents
Letter; and (c) Line of Credit A Notes and Line of Credit B Notes reflecting the revised Commitment
Amounts.

     14. This Amendment shall be an integral part of the Agreement, and all of the terms
set forth therein are hereby incorporated in this Amendment by reference, and all terms of this
Amendment are hereby incorporated into said Agreement as if made an original part thereof. All of
the terms and conditions of the Agreement, which are not modified in this Amendment, shall remain
in full force and effect. To the extent the terms of this Amendment conflict with the terms of the
Agreement, the terms of this Amendment shall control.

{Signature Pages Follow}

45

 

     IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year
first herein above written.

	 	 	 	 	 	 	 
	 	 	THE ANDERSONS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By
	 	/s/ Gary Smith	 	 
	 

	 	 	 	 	 	 
	 

	 	Its
	 	Vice President, Finance and Treasurer	 	 
	 
	 	 	 	 	 	 
	 	 	U.S. BANK NATIONAL ASSOCIATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By
	 	/s/ Jason Lueders	 	 
	 

	 	 	 	 	 	 
	 

	 	Its
	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	COBANK, ACB	 	 
	 
	 	 	 	 	 	 
	 

	 	By
	 	/s/ S. Richard Dill	 	 
	 

	 	 	 	 	 	 
	 

	 	Its
	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	HARRIS N.A. (as successor by merger with
Harris Trust and Savings Bank)	 	 
	 
	 	 	 	 	 	 
	 

	 	By
	 	/s/ Robert Wolohan	 	 
	 

	 	 	 	 	 	 
	 

	 	Its
	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	FIFTH THIRD BANK	 	 
	 
	 	 	 	 	 	 
	 

	 	By
	 	/s/ David Gerkent	 	 
	 

	 	 	 	 	 	 
	 

	 	Its
	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A., “RABOBANK
NEDERLAND”, NEW YORK BRANCH	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Brett Delfino	 	 
	 

	 	 	 	 	 	 
	 

	 	Its:
	 	Executive Director	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Timothy Devane	 	 
	 

	 	 	 	 	 	 
	 

	 	Its:
	 	Executive Director	 	 

{Signature Page to Eighth Amendment to Loan Agreement — The Andersons, Inc.}

46

 

	 	 	 	 	 	 	 
	 	 	ABN AMRO BANK N.V.	 	 
	 
	 	 	 	 	 	 
	 

	 	By
	 	/s/ Jeffrey Ware	 	 
	 

	 	 	 	 	 	 
	 

	 	Its
	 	First Vice President	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Brian Moeller	 	 
	 

	 	 	 	 	 	 
	 

	 	Its:
	 	Senior Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	BRANCH BANKING AND TRUST

COMPANY	 	 
	 
	 	 	 	 	 	 
	 

	 	By
	 	/s/ Robert Searson	 	 
	 

	 	 	 	 	 	 
	 

	 	Its
	 	Senior Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	WELLS FARGO BANK, NATIONAL

ASSOCIATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By
	 	/s/ Edward L. Cooper III	 	 
	 

	 	 	 	 	 	 
	 

	 	Its
	 	Senior Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	BANK OF AMERICA, NA	 	 
	 
	 	 	 	 	 	 
	 

	 	By
	 	/s/ Daniel R. Petrick	 	 
	 

	 	 	 	 	 	 
	 

	 	Its
	 	Senior Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	BANK OF THE WEST	 	 
	 
	 	 	 	 	 	 
	 

	 	By
	 	/s/ Lee Rosin	 	 
	 

	 	 	 	 	 	 
	 

	 	Its
	 	Regional Vice President	 	 

{Signature Page to Eighth Amendment to Loan Agreement — The Andersons, Inc.}

47

 

Schedule A-4 to

Loan Agreement

Lenders’ Commitments

Line of Credit A Loan Commitments

	 	 	 	 	 	 	 	 	 
	Name of Lender	 	Pro Rata Percentage	 	 	Maximum $Amount	 
	U.S. Bank National Association
	 	 	16.428571428571	%	 	$	49,285,714.29	 
	CoBank, ACB
	 	 	13.571428571429	%	 	$	40,714,285.71	 
	Harris N.A.
	 	 	13.571428571429	%	 	$	40,714,285.71	 
	Fifth Third Bank
	 	 	8.571428571429	%	 	$	25,714,285.71	 
	Rabobank International
	 	 	10.714285714286	%	 	$	32,142,857.14	 
	ABN AMRO Bank N.V.
	 	 	7.142857142857	%	 	$	21,428,571.43	 
	Branch Banking and Trust Company
	 	 	10.000000000000	%	 	$	30,000,000.00	 
	Wells Fargo Bank, National Assn.
	 	 	8.571428571429	%	 	$	25,714,285.71	 
	Bank of America, NA
	 	 	5.714285714285	%	 	$	17,142,857.14	 
	Bank of the West
	 	 	5.714285714285	%	 	$	17,142,857.14	 
	 
	 	 	 	 	 	 
	TOTAL:
	 	 	100	%	 	$	300,000,000.00	 
	 
	Line of Credit B Loan Commitments
	 
	Name of Lender	 	Pro Rata Percentage	 	 	Maximum $Amount	 
	U.S. Bank National Association
	 	 	16.428571428571	%	 	$	8,214,285.71	 
	CoBank, ACB
	 	 	13.571428571429	%	 	$	6,785,714.29	 
	Harris N.A.
	 	 	13.571428571429	%	 	$	6,785,714.29	 
	Fifth Third Bank
	 	 	8.571428571429	%	 	$	4,285,714.29	 
	Rabobank International
	 	 	10.714285714286	%	 	$	5,357,142.86	 
	ABN AMRO Bank N.V.
	 	 	7.142857142857	%	 	$	3,571,428.57	 
	Branch Banking and Trust Company
	 	 	10.000000000000	%	 	$	5,000,000.00	 
	Wells Fargo Bank, National Assn.
	 	 	8.571428571429	%	 	$	4,285,714.29	 
	Bank of America, NA
	 	 	5.714285714285	%	 	$	2,857,142.86	 
	Bank of the West
	 	 	5.714285714285	%	 	$	2,857,142.86	 
	 
	 	 	 	 	 	 
	TOTAL:
	 	 	100	%	 	$	50,000,000.00	 

48

 

Exhibit 7A-2 to

Loan and Security Agreement

Compliance Certificate

     Pursuant to Section 7.1 of the Loan Agreement dated October 30, 2002 (as amended,
replaced, restated or supplemented from time to time, the “Loan Agreement”) by and between The
Andersons, Inc., an Ohio corporation (“Borrower”), the financial institutions party to the
Loan Agreement (collectively the “Lenders”) and U.S. Bank National Association in its capacity as
the Agent (the “Agent”), the undersigned certifies to the Agent and the Lenders as follows:

	1.	 	The financial statements of Borrower, attached hereto, for the period ending
                                                             the “Financial Statements”), have been prepared in
accordance with the requirements of Section 7.1 of the Loan Agreement and have been
delivered on or before the date they are due.
	 
	2.	 	The representations and warranties contained in Section 6 of the Loan Agreement are
true and correct as of the date hereof as though made on this date.
	 
	3.	 	Borrower is in compliance with all of the affirmative and negative covenants set forth in
Section 7 and 8 of the Loan Agreement as of the date hereof.
	 
	4.	 	Specifically, as of the date of the Financial Statements:

	 	a.	 	Borrower’s “Tangible Net Worth” (as described in the Loan Agreement) is
required not to be less than $125,000,000; Borrower’s actual Tangible Net Worth as so
described is $                    .
	 
	 	 	 	In Compliance:           Yes ___           No ___
	 
	 	b.	 	Borrower’s “Working Capital” (as described in the Loan Agreement) is required
not to be less than $55,000,000; Borrower’s actual Working Capital as so described is
$                    .
	 
	 	 	 	In Compliance:           Yes ___           No ___
	 
	 	c.	 	Borrower’s “Current Ratio Net of Hedged Inventory” (as described in the Loan
Agreement) is required not to be less than 1.25 to 1; Borrower’s actual Current Ratio
Net of Hedged Inventory as so described is                     .
	 
	 	 	 	In Compliance:           Yes ___           No ___

49

 

	 	d.	 	Borrower’s “Debt to Capitalization Ratio” (as described in the Loan
Agreement) is required not to be more than 70%; Borrower’s actual Debt to
Capitalization Ratio as so described is                     .
	 
	 	 	 	In Compliance:           Yes ___          No ___
	 
	 	e.	 	Borrower’s “Asset Coverage Ratio” (as described in the Loan Agreement) is
required not to be more than 65%; Borrower’s actual Asset Coverage Ratio as so
described is                     .
	 
	 	 	 	In Compliance:           Yes ___          No ___
	 
	 	f.	 	The rate at which interest accrues under the Loan Agreement is determined in
accordance with a Financial Performance Level, as defined therein, which, in turn, is
determined by the Borrower’s Debt to Capitalization Ratio. As of                                          (the
most recent fiscal quarter end), Borrower’s Debt to Capitalization Ratio was ___
and the Financial Performance Level was                     .

	5.	 	All adjustments and calculations related to the amounts set forth in each of 4 a through f
above are attached hereto.
	 
	 	 	Dated:                                                            , 200___

	 	 	 	 	 	 	 
	 	 	THE ANDERSONS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By
	 	/s/ Gary Smith	 	 
	 

	 	 	 	 	 	 
	 

	 	Its
	 	Vice President, Finance and Treasurer	 	 

50

 

     All of the following to be calculated on a consolidated basis.

Schedule 4.a. Tangible Net Worth

	 	 	 	 	 	 	 	 	 
	Total Assets
	 	 	 	 	 	$	                    	 
	Minus Intangible Assets and Other Required Deductions	 	$                                        	 
	Minus Total Liabilities	 	$                                        	 
	Tangible Net Worth
	 	 	 	 	 	$	                    	 

Schedule 4.b. Working Capital

	 	 	 	 	 	 	 	 	 
	Current Assets
	 	 	 	 	 	$	                    	 
	Minus Current Liabilities	 	$                                        	 
	Working Capital
	 	 	 	 	 	$	                    	 

Schedule 4.c. Current Ratio Net of Hedged Inventory

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Current Assets
	 	 	 	 	 	 	 	 	 	$	                    	 
	Minus the Book Value of Hedged Inventory	 	 	 	 	 	$                                        	 
	Minus the Net Liquidation Value of Related Margin Accounts	 	$                                        
	Adjusted Current Assets	 	 	 	 	 	$                                        	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Current Liabilities
	 	 	 	 	 	 	 	 	 	$	                    	 
	Minus the Book Value of Hedged Inventory	 	 	 	 	 	$                                        	 
	Minus the Net Liquidation Value of Related Margin Accounts	 	$                                        
	Adjusted Current Liabilities
	 	 	 	 	 	 	 	 	 	$	                    	 
	 
	Adjusted
Current Assets
	 	 	 	 	 	$                                        	 
	Divided By
Adjusted Current Liabilities
	 	 	 	 	 	$                                        	 
	Current
Ratio Net of Hedged Inventory
	 	 	 	 	 	                                          	 

51

 

Schedule 4.d. Debt to Capitalization Ratio

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Short Term Notes Payable	 	 	 	 	 	$                                        	 
	Plus Current Maturities of Long Term Debt	 	 	 	 	 	$                                        	 
	Plus Long Term Debt
	 	 	 	 	 	 	 	 	 	 	$                    	 
	Minus, to the extent included in Long Term Debt, Non-recourse Debt	 	$                                        
	Plus, to the extent not included above, the Liabilities	 	$                                        
	Book Value of Grain Inventory       $                                        
	 	 	 	 	 	 	 	 	 	 	 	 
	Minus Grain Payables                      $                                         
	 	 	 	 	 	 	 	 	 	 	 	 
	Minus Net Grain @ 90%           $                                         x 90%	 	 	 	 	 	$                                        	 
	Minus100% of the Net Equity in Margin Accounts	 	 	 	 	 	$                                        	 
	Total Adjusted Funded Debt	 	 	 	 	 	$                                        	 
	 
	Tangible Net Worth
	 	 	 	 	 	 	 	 	 	 	$                    	 
	 
	Plus Total Adjusted Funded Debt	 	 	 	 	 	$                                        	 
	Capitalization
	 	 	 	 	 	$                                        	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Total Adjusted Funded Debt
	 	 	 	 	 	 	 	 	 	 	$                    	 
	 
	Divided By
Capitalization
	 	 	 	 	 	$                                        	 
	Debt to
Capitalization Ratio
	 	 	 	 	 	                                        	 
	 
	Schedule 4.e. Asset Coverage Ratio
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Line of Credit A Loan Liabilities	 	 	 	 	 	$                                        	 
	Plus LC Obligations
	 	 	 	 	 	 	 	 	 	 	$                    	 
	 
	Plus, Line of Credit B Loan Liabilities	 	 	 	 	 	$                                        	 
	Total
Loan Liabilities
	 	 	 	 	 	$                                        	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Accounts Receivable
	 	 	 	 	 	 	 	 	 	 	$                    	 
	 
	Inventory
	 	 	 	 	 	 	 	 	 	 	$                    	 
	 
	Total Receivables and Inventory
	 	 	 	 	 	$                                        	 
	 
	Total Loan Liabilities
	 	 	 	 	 	 	 	 	 	 	$                                        	 
	 
	Divided By
Total Receivables and Inventory
	 	 	 	 	 	$                                        	 
	Asset
Coverage Ratio
	 	 	 	 	 	                                        	 

52

 

Schedule 4.f. Financial Performance Level

	 	 	 	 	 	 	 
	 

	 	Debt to Capitalization Ratio
	 	                                        
	 	 

	 	 	 
	Financial	 	 
	Performance	 	 
	Level	 	Debt to Capitalization Ratio
	Level 1

	 	Greater than 65%
	Level 2

	 	Less than or equal to 65% but greater than 60%
	Level 3

	 	Less than or equal to 60% but greater than 55%
	Level 4

	 	Less than or equal to 55% but greater than 50%
	Level 5

	 	Less than or equal to 50% but greater than 40%
	Level 6

	 	Less than or equal to 40%

	 	 	 	 	 	 	 
	 

	 	Financial Performance Level Is
	 	                    
	 	 

53

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