Document:

exv10w64

EXHIBIT
10.64

[EMPL_NAME]

Employee ID: [EMPLID]

Grant Number: [GRANT_ID]

APPLIED MATERIALS, INC.

NON-QUALIFIED STOCK OPTION AGREEMENT

NOTICE OF GRANT

Applied Materials, Inc. (the “Company”)
hereby grants you, [EMPL_NAME] (the “Employee”),
an Option under the
Company’s 2000 Global Equity Incentive Plan (the “Plan”) to
purchase shares of common stock of the Company (the
“Option”).
The date of this Non-Qualified Stock Option Agreement (the “Agreement”) is
[GRANT_DT] (the “Grant
Date”). The terms used and not defined in this Agreement have the meaning set forth in the Plan. Subject to the
provisions of the Terms and Conditions of the Non-Qualified Stock Option Grant (the “Terms and Conditions”),
which
constitute part of this Agreement and of the Plan, the principal features of this Option are as follows:

	 	 	 
	Maximum Number of Shares Purchasable with this	 	Exercise Price per Share:
	Option: [MAX_SHARES]

	 	US[PRICE]

Vesting of Option: Please refer to the UBS One Source website for the vesting schedule related to this Option grant
(click on the specific grant under the tab labeled “Grants/Awards/Units”) or its successor, as well as the Terms
and Conditions.*

 

			
	*	 	Except as otherwise provided in the Terms and Conditions, on any scheduled vesting date, vesting actually will
occur only if the Employee has been continuously employed by the Company or one of its Affiliates from the Grant
Date through the scheduled vesting date.

Expiration
Date of Option: In general, the latest date this Option will terminate is (a) [EXPR_DT], provided that
[EXPR_DT] is a day on which the Nasdaq U.S. stock trading market is open for trading (a “Nasdaq trading day”) or (b)
if [EXPR_DT] is not a Nasdaq trading day, then the Nasdaq trading day immediately preceding [EXPR_DT] (the
“Expiration Date”). However, this Option may terminate earlier than the Expiration Date, as set forth immediately
below and in the Terms and Conditions.

	 	 	 
	Event Triggering Option Termination:	 	Maximum Time to Exercise After Triggering Event**
	Termination of Service (except as shown below)

	 	30 days
	 
	 	 
	Termination of Service due to Retirement
	 	 
	(Age 65 or age 60 or over, with at least 10 Years of Service)

	 	1 year
	 
	 	 
	Termination of Service due to Death

	 	1 year (6 months for Employees in France)

 

			
	**	 	This Option may not be exercised after the Expiration Date (except in certain
cases of the death of the Employee). In addition, the maximum time to exercise
this Option may be further limited by the Company where required by applicable
law.

For Employees employed in Belgium on the Grant Date: Depending on when you
formally accept the Option, the taxable event for the Option will be either on
the Grant Date or the date of exercise of the Option, if any. If you accept
the Option during the 60-day period following your receipt of the Option
information, you will be taxed as of the Grant Date. If you accept the Option
after the 60-day period following your receipt of the Option information, you
will be taxed on the exercise date, if any. To obtain the deferred taxable
event (i.e., at exercise), you must accept the

 

 

Option as
described below after
the 60-day period following receipt of the Option information has passed.

For Employees employed in China, Indonesia, Italy, and Korea on the Exercise
Date: Your Option only may be exercised through a “cashless exercise” (also
known as a “same-day-sale” or “immediate sale”).

For Employees employed in France on the Grant Date: Your Option is granted
under a tax-qualified plan. Certain restrictions apply to the Option. Except
in the event of your death, the Shares acquired upon any exercise of the Option
may not be sold or transferred until the expiration of the holding period
provided by article 163 bis C of the French Tax Code, which is currently four
years after the Grant Date.

For Employees employed in Israel on the Grant Date: Your Option is granted
under a tax-qualified plan, called a Section 102 capital gains tax route plan.
Information regarding the Section 102 capital gains tax route plan and related
forms will be provided to you by your manager. In order to qualify for
favorable tax treatment, the Shares acquired upon any exercise of your Option
generally must not be sold until the expiration of the holding period provided
by Section 102 of the Israel Income Tax Ordinance [New Version], 1961 (“Section
102”), which is currently two years from the Grant Date. Your acceptance of
this Option, if done timely, will also indicate your acceptance of the capital
gains tax route under Section 102, as more specifically set forth below.
Further, upon receipt of the Shares issued upon any exercise of this Option
grant, you authorize and direct UBS Financial Services, Inc. (“UBS”) to
transfer to the Section 102 Trustee (as described below) all net proceeds of
cash or Shares resulting from any transaction involving this Option grant and
to share information about your UBS brokerage account pursuant to the terms of
the UBS Letter of Authorization as more specifically set forth below.

For Employees employed in the United Kingdom (U.K.) on the Grant Date: As a
condition to your acceptance of this Option, you agree to sign an election
under which you will be obligated to pay all National Insurance Contributions
(“NICs”) that may become due on any gains realized upon exercise of the Option
(with certain exceptions). The NICs include the ”primary” NIC payable by an
employee as well as the “secondary” NIC payable by the employer in the absence
of any election (referred to as the Secondary Contributions under paragraph
3B(4) of Schedule 1 to the Social Security Contributions and Benefits Act of
1992).

IMPORTANT:

IT IS YOUR RESPONSIBILITY TO EXERCISE THIS OPTION, IF VESTED, BEFORE IT

OTHERWISE TERMINATES.

Your electronic signature below
indicates your agreement and understanding that this Option is
subject to all of the rules and other provisions contained in
the Terms and Conditions to this Agreement and the Plan. For
example, important additional information on vesting and
termination of this Option is contained in Paragraphs 1 through
5 of the Terms and Conditions. PLEASE BE SURE TO READ ALL OF
THE TERMS AND CONDITIONS, WHICH CONTAINS THE SPECIFIC TERMS AND
CONDITIONS OF THIS OPTION, INCLUDING INFORMATION CONCERNING
CANCELLATION AND TERMINATION OF THIS OPTION. CLICK HERE TO
READ THE TERMS AND CONDITIONS.

By clicking the “ACCEPT” button below, you agree that:

“This electronic contract contains my electronic
signature, which I have executed with the intent to
sign this Agreement.”

For Employees in Israel: By clicking the “ACCEPT” button
below, you agree to all the provisions of this electronic
contract and the Declaration of Employee as set forth below:

 

 

“This electronic contract contains my electronic
signature, which I have executed with the intent to
sign this Agreement. Further, I have read and
accept the terms and conditions of the Trust Deed
executed between the Company and the Plan Trustee
under Section 102 of the Israeli Income Tax
ordinance [New Version], 1961 (“Section 102”). I
declare that I am familiar with the provisions of
Section 102 and the Capital Gains Route under
Section 102. I undertake not to sell or transfer
from the Trustee any Shares or any rights issued in
respect of such Shares prior to the lapse of the
requisite period under the Capital Gains Route of
Section 102 unless I pay all taxes, which may arise
in connection with such sale and/or transfer.”

Upon receipt of the Shares issued upon exercise of this Grant,
you also agree to the following Letter of Authorization:

“I authorize and direct UBS Financial Services Inc.
(“UBS”) to transfer to Tamir Fishman (the “Section
102 Trustee”), or its designee, as soon as
practicable after settlement all net proceeds of
cash or shares resulting from any transactions
involving Stock Options pursuant to the following
bank wire and depository trust company instructions
for such transfers to the Section 102 Trustee:

	 	 	 	 	 
	 	 	Bank Wire Instructions:	 	 
	 

	 	Bank Name
	 	[WIRE INSTRUCTIONS INFORMATION]
	 

	 	Branch
	 	[WIRE INSTRUCTIONS INFORMATION]
	 

	 	Account Name
	 	[WIRE INSTRUCTIONS INFORMATION]
	 

	 	Account Number
	 	[WIRE INSTRUCTIONS INFORMATION]
	 

	 	SWIFT
	 	[WIRE INSTRUCTIONS INFORMATION]
	 

	 	Bank Address
	 	[WIRE INSTRUCTIONS INFORMATION]

	 	 	 	 	 
	 	 	Depository Trust Company Instructions:
	 
	 	Bank Name
	 	[WIRE INSTRUCTIONS INFORMATION]
	 

	 	DTC Number
	 	[WIRE INSTRUCTIONS INFORMATION]
	 

	 	Account Name
	 	[WIRE INSTRUCTIONS INFORMATION]
	 

	 	Account Number
	 	[WIRE INSTRUCTIONS INFORMATION]
	 

	 	F/F/C
	 	[WIRE INSTRUCTIONS INFORMATION]
	 

	 	Bank Address
	 	[WIRE INSTRUCTIONS INFORMATION]

I further authorize UBS to share information about
me and about transactions in my account with
Applied Materials, Inc., its subsidiaries and the
Section 102 Trustee as may be reasonably necessary
for Applied Materials, Inc., its subsidiaries and
the Section 102 Trustee to meet tax withholding and
reporting obligations and otherwise to administer
the trust agreement(s) between Applied Materials,
Inc. and the Section 102 Trustee.

I authorize Applied Materials, Inc. to provide a
copy of this Letter of Authorization to UBS and the
Section 102 Trustee. This Letter of Authorization
supersedes any earlier Letter of Authorization that
I have provided to UBS concerning the transfer of
proceeds.”

[VIEW_ACCEPT_STATEMENT]

 

 

Please be sure to print and retain a copy of your electronically signed
Agreement (although the electronic version will be available for you to access
at any time). You may obtain a paper copy at any time and at the Company’s
expense by requesting one from Stock Programs (see Paragraph 13 of the Terms
and Conditions). If you prefer not to electronically sign this Agreement, you
may accept this Option by signing a paper copy of the Agreement and delivering
it to Stock Programs.

For Employees in Israel: If you prefer not to electronically sign this
Agreement, or do not wish to elect to receive preferential Section 102 capital
gains tax treatment, please see your local Human Resources representative to
obtain a paper copy of this Agreement and indicate your acceptance of the
Option and your acceptance or rejection of Section 102’s provisions. Note: 
Failure to timely accept Section 102’s provisions will automatically result in
a rejection of such preferential tax treatment. Please see your Human
Resources representative for details.

 

 

TERMS AND CONDITIONS OF

NONQUALIFIED STOCK OPTION GRANT

1. Vesting Schedule. Except as provided in Paragraphs 2, 3, and 5 below, this Option is
scheduled to become exercisable (vest) as to the number of Shares, and on the dates shown, in
accordance with the vesting schedule set forth on the UBS One Source website (click on the
specific grant under the tab labeled “Grants/Awards/Units”) or its successor (the “Vesting
Schedule”). However, on any such scheduled vesting date, vesting actually will occur only if the
Employee has been continuously employed by the Company or an Affiliate from the Grant Date until
the scheduled vesting date (except to the limited extent provided in Paragraphs 3 and 5 below).

2. Modifications to Vesting Schedule. In the event that the Employee takes a personal
leave of absence (“PLOA”), the Shares subject to this Option that are scheduled to become
exercisable shall be modified as follows:

          (a) if the duration of the Employee’s PLOA is six (6) months or less, the Vesting Schedule
shall not be affected by the Employee’s PLOA.

          (b) if the duration of the Employee’s PLOA is greater than six (6) months but not more than
twelve (12) months, the scheduled exercisability of any Shares subject to this Option that are not
then exercisable shall be deferred for a period of time equal to the duration of the Employee’s
PLOA less six (6) months.

          (c) if the duration of the Employee’s PLOA is greater than twelve (12) months, any Shares
subject to this Option that are not then exercisable immediately will terminate.

          (d) Examples.

               (i) Example 1. Assume Shares subject to the Option are scheduled to vest on January 1, 2010.
On May 1, 2009, Employee begins a 6-month PLOA. Such Shares still will be scheduled to vest on
January 1, 2010.

               (ii) Example 2. Assume Shares subject to the Option are scheduled to vest on January 1, 2010.
On May 1, 2009, Employee begins a 9-month PLOA. The Shares subject to the Option that are
scheduled to vest after November 2, 2009 will be modified (November 2, 2009 is the date on which
Employee’s PLOA exceeds 6 months). Such Shares now will be scheduled to vest on April 1, 2010
(or 3 months after the originally scheduled date).

               (iii) Example 3. Assume Shares subject to the Option are scheduled to vest on January 1,
2010. On May 1, 2009, Employee begins a 13-month PLOA. Such Shares will terminate on May 2, 2010
(which is the date on which Employee’s PLOA exceeds 12 months).

     In general, a PLOA does not include any legally required leave of absence. The duration of
the Employee’s PLOA, if any, will be determined over a rolling twelve (12) month measurement
period. Shares subject to this Option that are scheduled to vest during the first six (6) months
of the Employee’s PLOA will continue to vest as scheduled. However, Shares subject to this Option
that are scheduled to vest after the first six (6) months of the Employee’s PLOA will be deferred
or terminated depending on the length of the Employee’s PLOA. The Employee’s right to exercise all
Shares subject to this Option that remain unexercisable shall be modified as soon as the duration
of the Employee’s PLOA exceeds six (6) months.

3. Accelerated Vesting upon Retirement of Employee. In the event that the Employee is age
sixty (60) or over and completes at least ten (10) Years of Service and then incurs a Termination
of Service due to Retirement, the right to exercise all or a portion of any Shares subject to this
Option that remain unexercisable immediately prior to such Retirement shall vest on the date on
which the Retirement occurs as follows:

          (a) if the Employee has less than fifteen (15) Years of Service as of the date of his or her
Retirement, fifty percent (50%) of the Shares that otherwise would have vested during the twelve
(12) months immediately following the Retirement (had the Employee remained an Employee throughout
such twelve (12) month period) shall vest on the Retirement date;

 

 

          (b) if the Employee has at least fifteen (15) (but less than twenty (20)) Years of Service as
of the date of the Retirement, one hundred percent (100%) of the Shares that otherwise would have
vested during the twelve (12) months immediately following the Retirement (had the Employee
remained an Employee throughout such twelve (12) month period) shall vest on the Retirement date;

          (c) if the Employee has at least twenty (20) (but less than twenty-five (25)) Years of Service
as of the date of the Retirement, (i) one hundred percent (100%) of the Shares that otherwise would
have vested during the twelve (12) months immediately following the Retirement (had the Employee
remained an Employee throughout such twelve (12) month period) shall accrue on the Retirement date,
and (ii) fifty percent (50%) of the Shares that otherwise would have vested during the second
twelve (12) months following the Retirement (had the Employee remained an Employee throughout such
second twelve (12) month period) shall vest on the Retirement date; and

          (d) if the Employee has at least twenty-five (25) Years of Service as of the date of the
Retirement,  one hundred percent (100%) of the Shares that otherwise would have vested during the
twenty-four (24) months immediately following the Retirement (had the Employee remained an Employee
throughout such twenty-four (24) month period) shall vest on the Retirement date.

     “Retirement” and “Years of Service” are defined in the Plan. In general, “Retirement” means
a Termination of Service by an Employee after he or she is at least age sixty (60) and has
completed at least ten (10) Years of Service, and for purposes of this Agreement also means a
Termination of Service by an Employee on or after the date he or she turns age sixty-five (65).
In general, “Years of Service” means full years of employment since the Employee’s last hire date
with the Company or an Affiliate (but giving credit for prior service under the non-401(k) Plan
principles of the Company’s U.S. Human Resources Policy No. 2-06, or any successor thereto). In
the event that any applicable law limits the Committee’s ability to provide accelerated vesting
upon the Employee’s Retirement, this Paragraph 3 shall be limited to the extent required to comply
with applicable law. Notwithstanding any contrary provision of this Agreement, if the Employee is
subject to Hong Kong’s ORSO provisions, this Paragraph 3 shall not apply to this Option.

4. Termination of Option. In the event of the Employee’s Termination of Service for any
reason other than Retirement or death, the Employee may, within thirty (30) days after
the date of the Termination, or prior to the Expiration Date, whichever shall first occur,
exercise any vested but unexercised portion of this Option. However, in the event the date that
is thirty (30) days after the date of the Termination of Service is not a Nasdaq trading day, the
Employee may exercise the vested but unexercised portion of this Option only until the Nasdaq
trading day immediately preceding such date or prior to the Expiration Date, whichever shall first
occur. In the event of the Employee’s Termination of Service due to Retirement, the Employee may,
within one (1) year after the date of such Termination, or prior to the Expiration Date, whichever
shall first occur, exercise any vested but unexercised portion of this Option. However, in the
event the date that is one (1) year after the date of the Termination of Service due to Retirement
is not a Nasdaq trading day, the Employee may exercise the vested but unexercised portion of this
Option only until the Nasdaq trading day immediately preceding such date or prior to the
Expiration Date, whichever shall first occur. Upon the Employee’s Termination of Service, any unvested portion of this Option (after applying
the rules of Paragraphs 3 and 5) shall immediately terminate.

5. Death of Employee. In the event that the Employee incurs a Termination of Service due
to his or her death, the right to exercise one hundred percent (100%) of the Shares subject to
this Option shall vest on the date of the Employee’s death. In the event that the Employee incurs
a Termination of Service due to his or her death or in the event the Employee dies after incurring
a Termination of Service but before any vested portion of this Option terminates in accordance
with Paragraph 4 above, the administrator or executor of the Employee’s estate, may, within one
(1) year after the date of the Employee’s death, exercise any vested but unexercised portion of
this Option. However, in the event the date that is one (1) year after the date of a death
described in the preceding sentence is not a Nasdaq trading day, the administrator or

 

 

executor of the Employee’s estate may exercise the vested but unexercised portion of this Option
only until the Nasdaq trading day immediately preceding such date. Notwithstanding any contrary
provision of this Agreement, if the Employee is a resident of France and the Employee incurs a
Termination of Service due to his or her death or in the event the Employee dies after incurring a
Termination of Service but before any vested portion of this Option terminates in accordance with
Paragraph 4 above, the administrator or executor of the Employee’s estate, may, within six (6)
months after the date of the Employee’s death, exercise any vested but unexercised portion of this
Option; however, if the date that is six (6) months after the date of such a death is not a Nasdaq
trading day, the administrator or executor of the Employee’s estate may exercise the vested but
unexercised portion of this Option only until the Nasdaq trading day immediately preceding such
date. Any transferee under this Paragraph 5 must furnish the Company in such form or manner as
the Company may designate (a) written notice of his or her status as a transferee, (b) evidence
satisfactory to the Company to establish the validity of the transfer of this Option and
compliance with any applicable law pertaining to the transfer, and (c) written acceptance of the
terms and conditions of this Option as set forth in this Agreement. In the event that any
applicable law limits the Committee’s ability to accelerate the vesting of this Option or to
extend the exercise period of this Option, this Paragraph 5 shall be limited to the extent
required to comply with applicable law. Notwithstanding any contrary provision of this Agreement,
if the Employee is subject to Hong Kong’s ORSO provisions, the first sentence of this Paragraph 5
(relating to accelerated vesting upon death) shall not apply to this Option.

6. Persons Eligible to Exercise Option. Except as provided in Paragraph 5 above or as
otherwise determined by the Committee in its discretion, this Option shall be exercisable during
the Employee’s lifetime only by the Employee.

7. Option is Not Transferable. Except as provided in Paragraph 5 above or in the Plan,
this Option and the rights and privileges conferred hereby shall not be transferred, assigned,
pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be
subject to sale under execution, attachment or similar process. Upon any attempt to transfer,
assign, pledge, hypothecate or otherwise dispose of this Option, or of any right or privilege
conferred hereby, or upon any attempted sale under any execution, attachment or similar process,
this Option and the rights and privileges conferred hereby immediately shall become null and void.

8. Exercise of Option. This Option may be exercised by the person then entitled to do so
as to any Shares which may then be purchased by (a) giving notice in such form or manner as the
Company may designate, (b) providing full payment of the Exercise Price and any applicable fees
and required Tax Obligations (as defined in Paragraph 11 below), and (c) giving satisfactory
assurances in the form or manner requested by the Company that the Shares to be purchased upon the
exercise of this Option are being purchased for investment and not with a view to the distribution
thereof. Exercise of this option will be permitted only in the form and manner specified by the
Company’s Stock Programs department in Santa Clara, California (or such successor as the Company
may later designate) from time to time. This Option may be exercised only on Nasdaq trading days.
However, if Nasdaq is scheduled to be open for trading on a particular day but does not so open
or closes substantially early due to an unforeseen event (for example, a natural or man-made
catastrophic event), as determined by the Committee, and that day otherwise would be the last day
this Option is exercisable, the Option shall remain exercisable through the next Nasdaq trading
day. If the Employee receives a hardship withdrawal from his or her account (if any) under the
Company’s Employee Savings and Retirement Plan (the “401(k) Plan”), this Option may not be
exercised during the six (6) month period following the hardship withdrawal (unless the Company
determines that such exercise would not jeopardize the tax-qualification of the 401(k) Plan).

9. Cashless Exercise Required. If the Committee determines that a cashless exercise of
this Option is necessary or advisable, any Shares to be acquired pursuant to the exercise of the
Option shall be sold immediately upon exercise and the Employee shall receive the proceeds from
the sale, less the Exercise Price and any applicable fees and required Tax Obligations (as defined
in Paragraph 11 below).

10. Conditions to Exercise. Except as provided in Paragraph 9 above or as otherwise
required as a matter of law, the Exercise Price for this Option may be paid in one (1) (or a
combination of two (2) or more) of the following forms:

          (a) Personal check, a cashier’s check or a money order.

 

 

          (b) Irrevocable directions to a securities broker approved by the Company to sell all or part
of the Shares subject to the Option and to deliver to the Company from the sale proceeds an amount
sufficient to pay the Exercise Price and any applicable fees and required Tax Obligations (as
defined in Paragraph 11 below). (The balance of the sale proceeds, if any, will be delivered to
Employee.)

          (c) Irrevocable directions to a securities broker or lender approved by the Company to pledge
all or part of the Shares subject to the Option as security for a loan and to deliver to the
Company from the loan proceeds an amount sufficient to pay the Exercise Price and any applicable
fees and required Tax Obligations (as defined in Paragraph 11 below).

11. Tax Withholding and Payment Obligations. Before the delivery of any Shares or cash
pursuant to the exercise of this Option or at such earlier time as the Tax Obligations (as defined
below) are due, the Employee acknowledges and agrees that the Company shall have the power and the
right to deduct or withhold, or require the Employee to remit to the Company, an amount sufficient
to satisfy all Tax Obligations. “Tax Obligations” for this purpose means all taxes and social
insurance liability obligations and other requirements in connection with this Option, including,
without limitation, (a) all federal, state and local income, employment and any other applicable
taxes that are required to be withheld by the Company (or the employing Affiliate), (b) the
Employee’s and, to the extent required by the Company (or the employing Affiliate), the Company’s
(or the employing Affiliate’s) fringe benefit tax liability, if any, associated with the grant,
vesting or exercise of the Option or the sale or other transfer of Shares acquired pursuant to the
exercise of the Option, and (c) all other taxes or social insurance liabilities with respect to
which the Employee has agreed to bear responsibility.

     The Employee agrees as a condition of the grant of this Option to make arrangements
satisfactory to the Company to enable it to satisfy all withholding or remitting requirements
related to any and all Tax Obligations. The Employee authorizes the Company (or the employing
Affiliate) to withhold all applicable Tax Obligations from the Employee’s wages. Furthermore, the
Employee agrees to pay the Company (or the employing Affiliate) any amount of Tax Obligations the
Company (or the employing Affiliate) may be required to withhold or with respect to which the
Employee has agreed to bear as a result of the Employee’s participation in the Plan that cannot be
satisfied by deduction from the Employee’s wages or other amounts payable to the Employee. All Tax
Obligations related to this Option grant are the sole responsibility of the Employee and the
Employee acknowledges that he or she may not exercise this Option unless all Tax Obligations are
satisfied. Further, the Employee shall be bound by any additional withholding requirements included
in the Notice of Grant of this Agreement.

12. Suspension of Exercisability. If at any time the Company shall determine, in its
discretion, that the listing, registration or qualification of Shares upon any securities exchange
or under any applicable law, or the consent or approval of any governmental regulatory authority,
is necessary or desirable as a condition of the purchase of Shares hereunder, this Option may not
be exercised, in whole or in part, unless and until such listing, registration, qualification,
consent or approval shall have been effected or obtained free of any conditions not acceptable to
the Company. The Company shall make reasonable efforts to meet the requirements of any applicable
law or securities exchange and to obtain any required consent or approval of any governmental
authority.

13. Address for Notices. Any notice to be given to the Company under the terms of this
Agreement shall be addressed to the Company, in care of Stock Programs, at Applied Materials,
Inc., 2881 Scott Blvd., M/S 2023, P.O. Box 58039, Santa Clara, CA 95050, U.S.A. or at such other
address as the Company may hereafter designate in writing.

14. No Rights of Stockholder. Neither the Employee (nor any transferee) shall be or have
any of the rights or privileges of a stockholder of the Company in respect of any of the Shares
issuable pursuant to the exercise of this Option, unless and until certificates representing such
Shares (which may be in book entry form), shall have been issued, recorded on the records of the
Company or its transfer agents or registrars, and delivered to the Employee (or transferee)
(including through electronic delivery to a brokerage account). Nothing in the Plan or this
Agreement shall create an obligation on the part of the Company to repurchase any Shares purchased
hereunder.

15. No Effect on Employment. Subject to any employment contract with the Employee, the
terms of the Employee’s employment with the Company and its Affiliates shall be determined from
time to time by the Company or the Affiliate employing the Employee (as the case may be), and the
Company or the Affiliate employing the Employee, as the case may

 

 

be, shall have the right, which is hereby expressly reserved, to terminate or change the terms of
the employment of the Employee at any time for any reason whatsoever, with or without good cause
(subject to the provisions of applicable law). The transactions contemplated hereunder and the
Option’s Vesting Schedule do not constitute any express or implied promise of continued employment
for any period of time. A leave of absence or an interruption in service (including an
interruption during military service) authorized or acknowledged by the Company or the Affiliate
employing the Employee, as the case may be, will not be deemed a Termination of Service for
purposes of this Agreement.

16. Plan Governs. This Agreement is subject to all terms and provisions of the Plan. In
the event of a conflict between one or more provisions of this Agreement and one or more
provisions of the Plan, the provisions of the Plan shall govern. Terms used and not defined in
this Agreement shall have the meaning set forth in the Plan. This Option is not an incentive
stock option as defined in Section 422 of the U.S. Internal Revenue Code. The Company may, in its
discretion, issue newly issued Shares or treasury Shares pursuant to this Option.

17. Maximum Term of Option. Except as provided in Paragraph 5 above, this Option is not
exercisable after the Expiration Date.

18. Binding Agreement. Subject to the limitation on the transferability of this Option
contained herein, this Agreement shall be binding upon and inure to the benefit of the heirs,
legatees, legal representatives, successors and assigns of the parties hereto.

19. Committee Authority. The Committee shall have the power to interpret the Plan and
this Agreement and to adopt such rules for the administration, interpretation and application of
the Plan as are consistent therewith and to interpret or revoke any such rules. The Committee may
delegate certain of its authority and powers with respect to the Plan and this Agreement in
accordance with the terms of the Plan. All actions taken and all interpretations and
determinations made by the Committee or its delegates in good faith shall be final and binding
upon the Employee, the Company and all other interested persons, and shall be given the maximum
deference permitted by law. The Committee and its delegates shall not be personally liable for
any action, determination or interpretation made in good faith with respect to the Plan or this
Agreement.

20. Restrictions on Share Transferability. The Committee may impose such restrictions on
any Shares acquired pursuant to the exercise of this Option as it may deem advisable, including,
but not limited to, restrictions related to applicable federal securities laws, the requirements
of any national securities exchange or system upon which Shares are then listed or traded, or any
blue sky or state securities laws. The Employee’s sale or other transfer of the Shares may be
subject to any market blackout period that may be imposed by the Company and must comply with the
Company’s insider trading policies and any other applicable securities laws.

21. Captions. Captions provided herein are for convenience only and are not to serve as a
basis for interpretation or construction of this Agreement.

22. Agreement Severable. In the event that any provision in this Agreement shall be held
invalid or unenforceable, such provision shall be severable from, and such invalidity or
unenforceability shall not be construed to have any effect on, the remaining provisions of this
Agreement.

23. Modifications to the Agreement. This Agreement constitutes the entire understanding
of the parties on the subjects covered. The Employee expressly warrants that he or she is not
accepting this Agreement in reliance on any promises, representations, or inducements other than
those contained herein. Modifications to this Agreement can be made only in an express written
contract executed by a duly authorized officer of the Company.

24. Amendment, Suspension, Termination. By accepting this Option, the Employee expressly
warrants that he or she has received an Option to purchase Shares under the Plan as set forth in
this Agreement, and has received, read and understood a description of the Plan. The Employee
understands that the Plan is discretionary in nature and may be modified, suspended or terminated
by the Company at any time in accordance with the terms of the Plan.

 

 

25. Labor Law. By accepting this Option, the Employee acknowledges that: (a) the grant
of this Option is a one-time benefit which does not create any contractual or other right to
receive any future grants of stock options or other awards, or any benefits in lieu of such
awards; (b) all determinations with respect to any future grants, including, but not limited to,
the times when any awards shall be granted, the number of Shares subject to any awards, the
Exercise Price or purchase price of any awards, and the time or times when any awards shall be
exercisable or vested, will be at the sole discretion of the Committee; (c) the Employee’s
participation in the Plan is voluntary; (d) the value of this Option is an extraordinary item of
compensation which is outside the scope of the Employee’s employment contract, if any; (e) this
Option is not part of the Employee’s normal or expected compensation for purposes of calculating
any severance, resignation, redundancy, end of service payments, bonuses, long-service awards,
pension or retirement benefits or any similar payments; (f) the vesting of this Option shall cease
upon the Employee’s termination of employment for any reason except as may otherwise be explicitly
provided in the Plan or this Agreement; (g) the future value of the underlying Shares is unknown
and cannot be predicted with any certainty; (h) if the underlying Shares do not increase in value
during term of this Option, the Option will have no value; (i) this Option has been granted to the
Employee in the Employee’s status as an employee of the Company or its Affiliate; (j) any claims
resulting from this Option shall be enforceable, if at all, solely against the Company; and (k)
there shall be no additional obligations for any Affiliate employing the Employee as a result of
this Option.

26. Disclosure of Employee Information. By accepting this Option, the Employee consents
to the collection, use and transfer of personal data as described in this Paragraph. The Employee
understands that the Company and its Affiliates hold certain personal information about him or
her, including his or her name, home address and telephone number, date of birth, social security
or identity number, salary, nationality, job title, any shares of stock or directorships held in
the Company, details of all stock options or any other entitlement to shares of stock awarded,
canceled, exercised, vested, unvested or outstanding in his or her favor, for the purpose of
managing and administering the Plan (collectively, “Data”).

The Employee further understands that the Company and/or its Affiliates will transfer Data amongst
themselves as necessary for the purpose of implementation, administration and management of his or
her participation in the Plan, and that the Company and/or any of its Affiliates may each further
transfer Data to any third parties assisting the Company in the implementation, administration and
management of the Plan. The Employee understands that these recipients may be located in the
European Economic Area, or elsewhere, such as in the U.S. or Asia.

The Employee authorizes the Company to receive, possess, use, retain and transfer the Data in
electronic or other form, for the purposes of implementing, administering and managing his or her
participation in the Plan, including any requisite transfer to a broker or other third party with
whom he or she may elect to deposit any Shares acquired upon exercise of this Option of such Data
as may be required for the administration of the Plan and/or the subsequent holding of Shares on
his or her behalf. The Employee understands that he or she may, at any time, view the Data,
require any necessary amendments to the Data or withdraw the consent herein in writing by
contacting the Human Resources department and/or the Stock Programs Administrator for the Company
and/or its applicable Affiliates.

27. Notice of Governing Law. This Option shall be governed by, and construed in
accordance with, the laws of the State of California in the U.S.A. without regard to principles of
conflict of laws.exv10w1

Exhibit 10.1

Penford Corporation

Second Amendment to Second Amended and Restated Credit Agreement,

Resignation of Agent 

and 

Appointment of Successor Agent 

     This Second Amendment to Second Amended and Restated Credit Agreement, Resignation of Agent
and Appointment of Successor Agent (herein, the “Amendment”) is entered into as of February 26,
2009, by and among Penford Corporation, a Washington corporation (the “Borrower”), the
direct and indirect Subsidiaries of the Borrower from time to time party to the Credit Agreement,
as Guarantors, the several financial institutions signing this Amendment as Lenders, and Harris N.
A., as a departing Lender (the “Departing Lender”) and resigning Administrative Agent (the
“Resigning Agent”), and Bank of Montreal, a Canadian chartered bank, acting through its Chicago
branch, as a new Lender and successor Administrative Agent (the “Successor Agent”).

Preliminary Statements

     A. The Borrower, the Guarantors, the Lenders and the Administrative Agent are parties to that
certain Second Amended and Restated Credit Agreement dated as of October 5, 2006 (the “Credit
Agreement”). All capitalized terms used herein without definition shall have the same meanings
herein as such terms have in the Credit Agreement.

     B. The Borrower and the Lenders have agreed to make certain amendments to the Credit
Agreement, in each case under the terms and conditions set forth in this Amendment.

     C. Harris N.A. has given notice of its intention to resign as Agent and the parties have
agreed to substitute Bank of Montreal (“BMO”), acting through its Chicago branch, for Harris N.A.
as Agent and, in connection therewith, to replace Harris N.A. as a Bank with BMO, all under the
terms and conditions set forth in this Amendment.

     Now, Therefore, for good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree as follows:

Section 1. Amendments to the Credit Agreement.

     Subject to the satisfaction of the conditions precedent set forth in Section 3 hereof, the
Credit Agreement shall be and hereby is amended as follows:

     1.1. Clause (c) of Section 1.14 of the Credit Agreement shall be amended to read as follows:

     (c) any Lender is then a Defaulting Lender or such Lender is a Subsidiary or Affiliate
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,

     1.2. The Credit Agreement shall be amended by adding the following provision thereto as
Section 1.16 thereof:

     Section 1.16. 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 1.16,
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 1.16. The
rights and remedies against a Defaulting Lender under this Section 1.16 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.

-2-

 

     1.3. The first sentence of Section 2.1(b) of the Credit Agreement shall be amended by
replacing the figure “0.125%” appearing therein with the figure “0.25%”.

     1.4. The definitions of the following terms appearing in Section 5.1 of the Credit Agreement
shall be amended to read as follows:

     “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 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%.

     “EBITDA” means, with reference to any period, Net Income for such period plus the sum
of all amounts deducted in arriving at such Net Income amount in respect of (a) Interest
Expense for such period, (b) federal, state, and local income taxes for such period,
(c) depreciation of fixed assets and amortization of intangible assets for such period, plus
(minus) any non-cash losses (gains) but only to the extent such losses (gains) have not
become a cash loss (or gain), plus non-cash stock compensation charges incurred in such
period, plus (d) $32,384,000 for the Borrower’s fiscal quarter ending August 31, 2008, minus
(e) $234,000 for the Borrower’s fiscal quarter ending November 30, 2008, plus (f) for each
fiscal quarter of the Borrower ending after November 30, 2008, and without duplication of
amounts otherwise included in the determination of EBITDA, the aggregate amount of (i) the
direct costs incurred by the Borrower and its Subsidiaries with respect to such fiscal
quarter to restore, repair or replace Property at the Borrower’s facilities in Cedar Rapids,
Iowa as a result of flooding that commenced during the month of June 2008 (the “June 2008
Flood”), which must be reasonably acceptable to the Administrative Agent, plus (ii) the
aggregate amount of all claims made by the Borrower and its Subsidiaries under its business
interruption insurance policies, including any deductibles, as a result of the June 2008
Flood during such fiscal quarter, which must be reasonably acceptable to the Administrative
Agent, minus (iii) the aggregate amount of all insurance proceeds, including business
interruption insurance proceeds, received by the Borrower and its Subsidiaries during such
fiscal quarter as a result of the June 2008 Flood to the extent included in Net Income.

-3-

 

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

     1.5. The two tables appearing in the definition of the term “Applicable Margin” appearing in
Section 5.1 of the Credit Agreement shall be replaced with the following table:

	 	 	 	 	 	 	 	 	 
	 	 	 	 	Applicable Margin for 	 	Applicable Margin for 	 	Applicable Margin 
	 	 	Total Funded Debt 	 	Base Rate Loans and 	 	Eurocurrency Loans 	 	for Revolving Credit 
	 	 	Ratio for Such 	 	Reimbursement 	 	and Letter of credit Fee 	 	Commitment Fee 
	Level	 	Pricing Date	 	Obligations shall be:	 	Shall Be:	 	Shall Be:
	V
	 	Greater than or equal to	 	2.50%	 	3.50%	 	0.50%
	 
	 	3.25 to 1.0	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	IV
	 	Less than 3.25 to 1.0, but	 	2.25%	 	3.25%	 	0.50%
	 
	 	greater than or equal to	 	 	 	 	 	 
	 
	 	2.75 to 1.0	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	III
	 	Less than 2.75 to 1.0, but	 	2.00%	 	3.00%	 	0.50%
	 
	 	greater than or equal to	 	 	 	 	 	 
	 
	 	2.25 to 1.0	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	II
	 	Less than 2.25 to 1.0, but	 	1.75%	 	2.75%	 	0.50%
	 
	 	greater than or equal to	 	 	 	 	 	 
	 
	 	1.75 to 1.0	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	I
	 	Less than 1.75 to 1.0	 	1.50%	 	2.50%	 	0.50%

Until the date on which the Administrative Agent is in receipt of the Borrower’s financial
statements for the fiscal quarter ending February 28, 2009, the Applicable Margin shall be the
rates per annum shown opposite Level V in the table above.

     1.6. Section 5.1 of the Credit Agreement shall be amended by adding the following defined
terms thereto in the appropriate alphabetical order:

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

     “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

-4-

 

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 Commitment 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 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 Commitments.

     “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 Reserve Percentage.

     1.7. Clause (i) of Section 8.12 of the Credit Agreement shall be amended to read as follows:

     (i) the making of any Restricted Payments by the Borrower so long as no Default or
Event of Default shall exist both before and after giving effect thereto and the aggregate
amount thereof does not exceed $4,000,000 during the fiscal year of the Borrower ending
August 31, 2009, and $8,000,000 in any fiscal year of the Borrower ending thereafter,

     1.8. The table appearing in Section 8.22(a) of the Credit Agreement shall be amended to read
as follows:

-5-

 

	 	 	 	 	 
	 	 	 	 	Total Funded Debt Ratio 
	From and Including	 	To and Including	 	shall not be more than
	September 1, 2008
	 	November 30, 2008
	 	4.25 to 1.0
	 	 	 	 	 
	December 1, 2008
	 	August 31, 2009
	 	4.00 to 1.0
	 	 	 	 	 
	September 1, 2009
	 	November 30, 2009
	 	3.25 to 1.0
	 	 	 	 	 
	December 1, 2009
	 	At all times thereafter
	 	3.00 to 1.0

     1.9. Section 8.22(d) of the Credit Agreement shall be amended to read as follows:

     (d) Capital Expenditures. The Borrower shall not, nor shall it permit any of its
Subsidiaries to, incur Capital Expenditures (but excluding (i) Capital Expenditures made
with the Net Cash Proceeds of any Event of Loss as permitted by Section 1.9(b)(i) hereof,
(ii) Capital Expenditures incurred in connection with the repair, restoration or replacement
of Property damaged or destroyed as a result of the flooding of the Borrower’s facilities in
Cedar Rapids, Iowa during the month of June, 2008, that the Borrower reasonably believes are
covered by insurance, for which at the time such expenditure is incurred the Borrower has
made or reasonably expects to make a written claim under the applicable insurance policy and
which claim has not been denied by the insurer, and (iii) Capital Expenditures made with the
proceeds of grants from governmental entities) in the aggregate amount of $12,000,000 (or
the Australian Dollar Equivalent or NZ Dollar Equivalent) during the Borrower’s fiscal year
ending August 31, 2009, and $20,000,000 (or the Australian Dollar Equivalent or NZ Dollar
Equivalent) in the aggregate during any fiscal year thereafter; provided, however, for any
fiscal year when Total Funded Debt Ratio is less than 2.0 to 1.0 for each fiscal quarter of
such fiscal year, Capital Expenditures for such year shall not exceed $25,000,000 (or the
Australian Dollar Equivalent or NZ Dollar Equivalent) for such fiscal year.

     1.10. Section 8.22 of the Credit Agreement shall be amended by adding the following provision
thereto as subsection (e) thereof:

     (e) Minimum EBITDA. The Borrower shall have EBITDA for each period of twelve
consecutive months ending on February 28, 2009, May 31, 2009, August 31, 2009, and
November 30, 2009, in an amount not less than $20,000,000.

     1.11. Schedule I attached to the form of Compliance Certificate attached to the Credit
Agreement as Exhibit E shall be replaced by Schedule I attached to this Amendment.

     1.12. The Required Lenders hereby agree that the Borrower and its Subsidiaries may use
proceeds of insurance on Property damaged or destroyed by the flooding of the Borrower’s facilities
in Cedar Rapids, Iowa during the month of June, 2008, to repay Revolving Loans under

-6-

 

the Credit
Agreement that were used to repair, restore or replace Property damaged or destroyed by such floods
without having to comply with the requirements of Section 9(d) of the Mortgages or
Section 1.9(b)(i) of the Credit Agreement.

Section 2. Resignation of Agent and Appointment of Successor Agent.

     Subject to the satisfaction of the conditions precedent set forth in Section 3 below:

     2.1. Pursuant to Section 11.7 of the Credit Agreement, the Resigning Agent hereby resigns as
Administrative Agent under the Credit Agreement and all of the other Loan Documents. The Borrower
and the Lenders hereby accept such resignation, and the Borrower and the Banks hereby consent to
the appointment of the Successor Agent to act as Administrative Agent under the Credit Agreement
and the other Loan Documents, subject to all of the conditions and provisions of the Credit
Agreement and the other Loan Documents, to fill the vacancy created by the resignation of the
Resigning Agent, such resignation and appointment to be effective as of the effective date of this
Amendment (the “Effective Time”).

     2.2. The Resigning Agent hereby conveys, assigns, delegates and transfers to the Successor
Agent, and to its successors and assigns, all of the rights, powers, duties and obligations of the
Resigning Agent as Administrative Agent under and pursuant to the Credit Agreement and the other
Loan Documents and all liens and security interests in all Collateral held by the Resigning Agent
in its capacity as Administrative Agent.

     2.3. The Successor Agent hereby accepts the appointment as Administrative Agent under the
Credit Agreement and the other Loan Documents, subject to all the conditions and provisions of the
Credit Agreement and the other Loan Documents, and accepts and assumes all of the rights, powers,
duties and obligations of the Resigning Agent as Administrative Agent under and pursuant to the
Credit Agreement and the other Loan Documents and agrees to be bound by all the terms of the Credit
Agreement and the other Loan Documents, such acceptance and assumption to be effective as of the
Effective Time.

     2.4. The Resigning Agent, for the purpose of more fully and certainly vesting in and
confirming to the Successor Agent as Administrative Agent under the Credit Agreement and the other
Loan Documents, the rights and powers which the Resigning Agent now holds under and by virtue of
the Credit Agreement and the other Loan Documents, hereby agrees, upon reasonable request of the
Successor Agent, to execute, acknowledge and deliver such further instruments of conveyance and
further assurance and to do such other things as may reasonably be required for more fully and
certainly vesting in and confirming to the Successor Agent such rights and powers.

     2.5. Effective as of the Effective Time, all reference in the Credit Agreement and the other
Loan Documents to the Resigning Agent shall be deemed references to the Successor Agent.

-7-

 

Section 3. Conditions Precedent.

     The effectiveness of this Amendment is subject to the satisfaction of all of the following
conditions precedent:

     3.1. The Borrower, the Guarantors, the Required Lenders, the Departing Lender, the Resigning
Agent and the Successor Agent shall have executed and delivered this Amendment.

     3.2. The Borrower shall have executed and delivered to the Successor Agent a Term Note in the
form of Exhibit D-1 to the Credit Agreement, a Capital Expansion Note in the form of Exhibit D-2 to
the Credit Agreement, a Revolving Note in the form of Exhibit D-3 to the Credit Agreement and a
Swing Note in the form of Exhibit D-4 to the Credit Agreement, each payable to the order of BMO.

     3.3. Each of the representations and warranties set forth in Section 6 of the Credit Agreement
shall be true and correct in all material respects, except that the representations and warranties
made under Section 6.5 shall be deemed to refer to the most recent financial statements of the
Borrower delivered to the Lenders and the June 2008 flooding at the Borrower’s Cedar Rapids, Iowa
facilities shall not be taken into account with respect to the representations and warranties made
under Section 6.6 of the Credit Agreement.

     3.4. Upon giving effect to this Amendment, (a) the Borrower shall be in full compliance with
all of the terms and conditions of the Loan Documents and (b) no Default or Event of Default shall
have occurred and be continuing thereunder or shall result after giving effect to this Amendment.

     3.5. The Successor Agent shall have received from the Borrower (a) all fees and expenses that
the Borrower has agreed to pay BMO in connection with this Amendment, which shall be solely for the
account of BMO, and (b) all fees that the Borrower has agreed to pay to the Lenders in connection
with this Amendment, which shall be for the ratable account of the Lenders, including BMO.

Section 4. Representations.

     In order to induce the Required Lenders to execute and deliver this Amendment, the Borrower
hereby represents to the Lenders that as of the date hereof, and after giving effect to the
amendments called for hereby, the representations and warranties set forth in Section 6 of the
Credit Agreement are and shall be and remain true and correct in all material respects (except that
for purposes of this paragraph the representations contained in Section 6.5 shall be deemed to
refer to the most recent financial statements of the Borrower delivered to the Lenders and the June
2008 flooding at the Borrower’s Cedar Rapids, Iowa facilities shall not be taken into account with
respect to the representations and warranties made under Section 6.6 of the Credit
Agreement) and after giving effect to this Amendment (a) the Borrower is in compliance with
all of the terms and conditions of the Loan Documents and (b) no Default or Event of Default exists
under the Credit Agreement or shall result after giving effect to this Amendment.

-8-

 

Section 5. The Departing Lender.

          The Departing Lender hereby agrees to sell and assign without representation, recourse, or
warranty (except the Departing Lender represents it has authority to execute and deliver this
Amendment and sell all of the Obligations of the Borrower and the Guarantors to the Departing
Lender under the Loan Documents as contemplated hereby, which Obligations are owned by the
Departing Lender free and clear of all Liens), and simultaneously with the satisfaction of the
conditions precedent set forth in Sections 3 hereof, BMO hereby agrees to purchase 100% of the
Departing Lender’s outstanding Obligations hereunder and under the Loan Documents (including,
without limitation, all of the Loans held by the Departing Lender, together with an undivided
participation interest in the Departing Lender’s otherwise unparticipated interests in outstanding
Letters of Credit and Reimbursement Obligations) for a purchase price equal to the outstanding
principal balance of Loans owed to the Departing Lender hereunder as of the date hereof, which
purchase price shall be paid in immediately available funds on the date hereof. Such purchases and
sales shall be arranged through the Successor Agent and the Departing Lender hereby agrees to
execute such further instruments and documents, if any, as the Successor Agent may reasonably
request in connection therewith. Upon the execution and delivery of this Amendment by the
Departing Lender, the Lenders, the Resigning Agent, the Successor Agent, the Borrower and the
Guarantors and the payment of the purchase price owing to the Departing Lender pursuant hereto, the
Departing Lender shall cease to be a Lender hereunder and under the other Loan Documents, and
(i) BMO shall have the rights and obligations of the Departing Lender hereunder subject to the
terms and conditions hereof, and (ii) the Departing Lender shall have relinquished its rights
(other than (a) rights to indemnification and reimbursements referred to herein which survive the
repayment of the Obligations owed to the Departing Lender in accordance with its terms, including
Sections 1.3(e), 1.12, 10.3, 11.6 and 13.15 of the Credit Agreement, and (b) its right to receive
interest and fees accrued to the date hereof and remaining unpaid) and be released from its
obligations thereunder. It is understood that all unpaid interest and fees accrued to the date
hereof that are owed to the Departing Lender with respect to the interest assigned hereby are for
the account of the Departing Lender and such interest and fees accruing from and including the date
hereof are for the account of BMO. Each of the Departing Lender and BMO hereby agrees that if it
receives any amount hereunder which is for the account of the other, 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.

Section 6. Miscellaneous.

     6.1. The Borrower and the Guarantors heretofore executed and delivered to the Agent and the
Lenders the Collateral Documents to which it is a party. Each of the Borrower and the Guarantors
hereby acknowledges and agrees that the Liens created and provided for by the Collateral Documents
to which it is a party continue to secure, among other things, the indebtedness, obligations and
liabilities described therein; and the Collateral Documents to
which it is a party and the rights and remedies of the Agents and the Lenders thereunder, the
obligations of the Borrower and the Guarantors thereunder, and the Liens created and provided for
thereunder remain in full force and effect and shall not be affected, impaired or discharged
hereby. Nothing herein contained shall in any manner affect or impair the priority of the Liens

-9-

 

created and provided for by the Collateral Documents to which it is a party as to the indebtedness,
obligations and liabilities which would be secured thereby prior to giving effect to this
Amendment.

     6.2. Except as specifically amended herein or waived hereby, the Credit Agreement shall
continue in full force and effect in accordance with its original terms. Reference to this
specific Amendment need not be made in the Credit Agreement, the other Loan Documents, or any other
instrument or document executed in connection therewith, or in any certificate, letter or
communication issued or made pursuant to or with respect to the Credit Agreement, any reference in
any of such items to the Credit Agreement being sufficient to refer to the Credit Agreement as
amended hereby.

     6.3. This Amendment may be executed in any number of counterparts, and by the different
parties on different counterpart signature pages, all of which taken together shall constitute one
and the same agreement. Any of the parties hereto may execute this Amendment by signing any such
counterpart and each of such counterparts shall for all purposes be deemed to be an original. This
Amendment shall be governed by the internal laws of the State of Illinois.

     6.4. The Borrower agrees to pay all reasonable out-of-pocket costs and expenses incurred by
the Administrative Agent in connection with the credit facilities and the preparation, execution
and delivery of this Amendment, and the documents and transactions contemplated hereby, including
the reasonable fees and expenses of counsel for the Administrative Agent with respect to the
foregoing.

[Remainder of Page Intentionally Left Blank]

-10-

 

          This Second Amendment to Second Amended and Restated Credit Agreement, Resignation of Agent
and Appointment of Successor Agent is entered into as of the date and year first above written.

	 	 	 	 	 	 	 	 	 
	 	 	“Borrower”	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Penford Corporation	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Title	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	“Guarantors”	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Penford Products Co.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Title	 	 	 	 
	 

	 	 	 	 	 	 	 	 

Penford Corporation

Signature Page to Second Amendment

to Second Amended and Restated Credit Agreement, Resignation of Agent and

Appointment of Successor Agent

 

 

     Accepted and agreed to as of the date and year last above written.

	 	 	 	 	 	 	 	 	 
	 	 	“Lenders”	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Harris N.A., in its individual capacity
as the Departing Lender and as Resigning
Agent
	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Title	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Bank of Montreal, in its individual
capacity as a Lender, as L/C Issuer, and as
Successor Agent
	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Title	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	U.S. Bank National Association	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Title	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Bank of America, National Association,
as Successor by Merger to LaSalle Bank,
National Association
	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Title	 	 	 	 
	 

	 	 	 	 	 	 	 	 

Penford Corporation

Signature Page to Second Amendment

to Second Amended and Restated Credit Agreement, Resignation of Agent and

Appointment of Successor Agent

 

 

	 	 	 	 	 	 	 	 	 
	 	 	Cooperative Centrale
Raiffeisen-Boerenleenbank B.A., “Rabobank
Nederland,” New York Branch
	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Title	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Title	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Australia and New Zealand Banking Group
Limited	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Title	 	 	 	 
	 

	 	 	 	 	 	 	 	 

Penford Corporation

Signature Page to Second Amendment

to Second Amended and Restated Credit Agreement, Resignation of Agent and

Appointment of Successor Agent

 

 

Schedule I

to Compliance Certificate

Penford Corporation

Compliance Calculations

for Second Amended and Restated Credit Agreement

dated as of October 5, 2006, as amended

Calculations as of                     , ___

	 	 	 	 	 
	A. Total Funded Debt Ratio (Section 8.22(a))
	 	 	 	 
	 
	 	 	 	 
	1. Total Funded Debt
	 	$	                    	 
	2. Net Income for past 4 quarters
	 	$	                    	 
	3. Interest Expense for past 4 quarters
	 	$	                    	 
	4. Income taxes for past 4 quarters
	 	$	                    	 
	5. Depreciation and Amortization Expense for past 4
quarters
	 	$	                    	 
	6. Non-cash Loss (Gain) realized on sale/disposition of
assets [Loss shall be identified by a positive number;
Gains shall be identified by a negative number]
	 	$	                    	 
	7. Non-cash stock compensation charges for past 4 quarters
	 	$	                    	 
	8. For the fiscal quarter ended August 31, 2008
	 	$	32,384,000	 
	9. For the fiscal quarter ended November 30, 2008
	 	$	234,000	 
	10. Direct flood-related charges and business interruption
insurance claims (including deductibles) made with respect
to the Borrower’s fiscal quarters ending after
November 30, 2008
	 	$	                    	 
	11. Sum of Lines A2, A3, A4, A5, A6, A7, A8 minus A9 plus
A10
	 	$	                    	 
	12. Flood-related insurance proceeds received during past
4 quarters (applies only after November 30, 2008)
	 	$	                    	 
	13. Line A11 minus A12 (“EBITDA”)
	 	$	                    	 
	14. Ratio of Line A1 to A13
	 	 	____:1.0	 
	15. Line A14 ratio must not exceed
	 	 	____:1.0	 

 

 

	 	 	 	 	 
	16. The Borrower is in compliance (circle yes or no)
	 	yes/no	 
	 
	 	 	 	 
	B. Fixed Charge Coverage Ratio (Section 8.22(b))
	 	 	 	 
	1. EBITDA (Line A13 above)
	 	$	                    	 
	2. Principal payments made in cash during past 4 quarters
	 	$	                    	 
	3. Interest Expense for past 4 quarters paid in cash
	 	$	                    	 
	4. Restricted Payments for past 4 quarters made in cash
	 	$	                    	 
	5. Income taxes for 4 quarters paid in cash
	 	$	                    	 
	6. Income tax refunds for 4 quarters received in cash
	 	$	                    	 
	7. Sum of Lines B2, B3, B4, and B5 minus Line B6
	 	$	                    	 
	8. Ratio of Line B1 to Line B7
	 	 	____:1.0	 
	9. Line B8 ratio must not be less than
	 	 	1.50:1.0	 
	10. The Borrower is in compliance (circle yes or no)
	 	yes/no	 
	 
	 	 	 	 
	C. Leverage Ratio (Section 8.22(c))
	 	 	 	 
	1. Net Worth
	 	$	                    	 
	2. Intangible Assets
	 	$	                    	 
	3. Write-up of assets
	 	$	                    	 
	4. Line C1 minus the sum of Lines C2 and C3
	 	$	                    	 
	5. Line C4 ratio must not be less than
	 	$	65,000,000	 
	6. The Borrower is in compliance (circle yes or no)
	 	yes/no	 
	 
	 	 	 	 
	D. Capital Expenditures (Section 8.22(d))
	 	 	 	 
	1. Year-to-date Capital Expenditures (net of permitted
exclusions other than for the Ethanol Facility)
	 	$	                    	 
	2. Maximum permitted amount
	 	$	                    	 
	3. The Borrower is in compliance (circle yes or no)
	 	yes/no	 
	 
	 	 	 	 
	E. Minimum EBITDA(Section 8.22(e))
	 	 	 	 
	1. EBITDA for 12-month period ended _______, 2009
	 	$	                    	 
	2. Minimum required amount
	 	$	20,000,000	 
	3. The Borrower is in compliance (circle yes or no)
	 	yes/no	 

- 2 -

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