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Exhibit 10.1
AMENDED AND RESTATED CREDIT AGREEMENT
AMONG
PENFORD CORPORATION
AND
PENFORD PRODUCTS CO.
AS BORROWERS
CERTAIN COMMERCIAL LENDING INSTITUTIONS,
AS LENDERS
THE BANK OF NOVA SCOTIA,
AS ADMINISTRATIVE LENDER AND L/C BANK
KEYBANK NATIONAL ASSOCIATION,
AS SYNDICATION LENDER
U.S. BANK NATIONAL ASSOCIATION,
AS DOCUMENTATION LENDER
TOTAL COMMITMENT -- $105,000,000
NOVEMBER 15, 2000
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CONTENTS
ARTICLE I. DEFINITIONS..................................................1
1.1 DEFINED
TERMS........................................................1
1.2 ACCOUNTING AND FINANCIAL DETERMINATIONS.....................14
1.3 HEADINGS....................................................15
1.4 ADDITIONAL DEFINITION PROVISIONS............................15
ARTICLE II. APPOINTMENT OF BORROWERS' AGENT; JOINT AND SEVERAL
LIABILITY...................................................15
2.1 APPOINTMENT OF BORROWERS' AGENT.............................15
2.2 AUTHORIZED REPRESENTATIVES..................................15
2.3 JOINT AND SEVERAL LIABILITY; RIGHTS OF
CONTRIBUTION................................................16
ARTICLE III. THE CREDITS.................................................18
3.1 REVOLVING LOANS.............................................18
3.2 TERM LOAN...................................................19
3.3 LETTER OF CREDIT FACILITY...................................21
3.4 INTEREST AND FEES...........................................23
3.5 INTEREST OPTIONS............................................24
3.6 OTHER PAYMENT TERMS.........................................24
3.7 FUNDING.....................................................25
3.8 PRO RATA TREATMENT..........................................26
3.9 CHANGE OF CIRCUMSTANCES.....................................27
3.10 TAXES ON PAYMENTS...........................................28
3.11 FUNDING LOSS INDEMNIFICATION................................29
ARTICLE IV. LOAN ADMINISTRATION.........................................29
4.1 STATEMENTS..................................................29
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4.2 PAYMENTS....................................................30
ARTICLE V. SECURITY....................................................30
5.1 GRANT OF SECURITY INTEREST..................................30
5.2 PERFECTION; DUTY OF CARE....................................30
5.3 REAL ESTATE COLLATERAL......................................31
ARTICLE VI. REPRESENTATIONS AND WARRANTIES..............................31
6.1 LEGAL STATUS; SUBSIDIARIES..................................31
6.2 DUE AUTHORIZATION; NO VIOLATION.............................32
6.3 GOVERNMENT APPROVAL, REGULATION.............................32
6.5 CORRECTNESS OF FINANCIAL STATEMENTS.........................32
6.6 TAXES.......................................................33
6.7 LITIGATION, LABOR CONTROVERSIES.............................33
6.8 TITLE TO PROPERTY, LIENS....................................33
6.9 ERISA.......................................................33
6.10 OTHER OBLIGATIONS...........................................33
6.11 ENVIRONMENTAL MATTERS.......................................33
6.12 NO BURDENSOME RESTRICTIONS; NO DEFAULTS.....................34
6.13 NO OTHER VENTURES...........................................34
6.14 INSURANCE...................................................34
6.15 FORCE MAJEURE...............................................34
6.16 INTELLECTUAL PROPERTY.......................................34
6.17 CERTAIN INDEBTEDNESS........................................35
6.18 SOLVENCY....................................................35
6.19 CHIEF EXECUTIVE OFFICE AND OTHER LOCATIONS..................35
6.20 FISCAL YEAR.................................................35
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6.21 COMPLIANCE WITH LAW.........................................35
6.22 NO SUBORDINATION............................................36
6.23 TRUTH, ACCURACY OF INFORMATION..............................36
6.24 EXCLUDED PATENTS............................................36
ARTICLE VII. CONDITIONS..................................................36
7.1 CONDITIONS OF INITIAL EXTENSION OF CREDIT...................36
7.2 CONDITIONS OF EACH EXTENSION OF CREDIT......................37
ARTICLE VIII. AFFIRMATIVE COVENANTS.......................................38
8.1 PAYMENTS....................................................38
8.2 ACCOUNTING RECORDS..........................................38
8.3 INFORMATION AND REPORTS.....................................38
8.4 COMPLIANCE..................................................39
8.5 INSURANCE...................................................40
8.6 FACILITIES..................................................40
8.7 TAXES AND OTHER LIABILITIES.................................40
8.8 LITIGATION..................................................41
8.9 NOTICE TO ADMINISTRATIVE LENDER.............................41
8.10 CONDUCT OF BUSINESS.........................................41
8.11 PRESERVATION OF CORPORATE EXISTENCE, ETC....................42
8.12 ACCESS......................................................42
8.13 PERFORMANCE AND COMPLIANCE WITH OTHER COVENANTS.............42
8.14 FISCAL YEAR; ACCOUNTING PRACTICES...........................43
8.15 ENVIRONMENTAL...............................................43
8.16 LIENS.......................................................43
8.17 FUTURE SUBSIDIARIES.........................................43
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8.18 USE OF PROCEEDS.............................................43
8.19 FURTHER ASSURANCES..........................................43
ARTICLE IX. NEGATIVE COVENANTS..........................................44
9.1 LIENS.......................................................44
9.2 INDEBTEDNESS................................................44
9.3 RESTRICTED PAYMENTS, REDEMPTIONS............................45
9.4 MERGERS, STOCK ISSUANCES, SALE OF ASSETS, ETC...............45
9.5 INVESTMENTS.................................................46
9.6 CHANGE IN NATURE OF BUSINESS................................46
9.7 PLANS.......................................................46
9.8 CANCELLATION OF INDEBTEDNESS OWED TO IT.....................47
9.9 MARGIN REGULATIONS..........................................47
9.10 ENVIRONMENTAL...............................................47
9.11 TRANSACTIONS WITH AFFILIATES................................47
9.12 NEW COLLATERAL LOCATION; NAME CHANGE........................47
9.13 NO SPECULATIVE TRANSACTIONS.................................47
ARTICLE X. FINANCIAL COVENANTS.........................................48
10.1 LEVERAGE RATIO..............................................48
10.2 INTEREST COVERAGE RATIO.....................................48
10.3 FIXED CHARGE COVERAGE RATIO.................................48
10.4 TANGIBLE NET WORTH..........................................48
10.5 CAPITAL EXPENDITURES........................................48
ARTICLE XI. EVENTS OF DEFAULT...........................................49
11.1 EVENTS OF DEFAULT...........................................49
11.2 REMEDIES....................................................51
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11.3 ADMINISTRATIVE LENDER AS BORROWERS' ATTORNEY................53
ARTICLE XII. ADMINISTRATIVE LENDER.......................................54
ARTICLE XIII. MISCELLANEOUS...............................................54
13.1 NOTICES.....................................................54
13.2 COSTS, EXPENSES, ATTORNEYS' FEES............................54
13.3 INDEMNIFICATION.............................................55
13.4 WAIVERS, AMENDMENTS.........................................56
13.5 SUCCESSORS AND ASSIGNS......................................56
13.6 SETOFF......................................................58
13.7 NO WAIVER; CUMULATIVE REMEDIES..............................59
13.8 ENTIRE AGREEMENT............................................59
13.9 NO THIRD PARTY BENEFICIARIES................................59
13.10 TIME........................................................59
13.11 SEVERABILITY OF PROVISIONS..................................59
13.12 GOVERNING LAW...............................................59
13.13 SUBMISSION TO JURISDICTION..................................59
13.14 WAIVER OF JURY TRIAL........................................60
13.15 COUNTERPARTS................................................60
13.16 CONFIDENTIALITY.............................................60
13.17 OTHER TRANSACTIONS..........................................61
13.18 WASHINGTON STATUTORY NOTICE.................................61
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SCHEDULES
I Lenders
II Disclosure Schedule
III Pricing Schedule
EXHIBITS
A Note Forms
B Notice of Authorized Representatives
C Notice of Borrowing
D Notice of Conversion or Continuation
E Form of Officer's Certificate
F List of Excluded Patents
G Form of Letter of Credit
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AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of
November 15, 2000 by and among PENFORD CORPORATION, a Washington corporation,
and PENFORD PRODUCTS CO., a Delaware corporation, (each individually referred to
as "Borrower" and both collectively referred to as "Borrowers"), each of the
financial institutions from time to time listed on Schedule I attached hereto,
as amended from time to time, and THE BANK OF NOVA SCOTIA ("Scotiabank"), as the
administrator for Lenders (in such capacity, "Administrative Lender").
RECITALS
Borrowers, Administrative Lender and Lenders are parties to that certain
Credit Agreement dated September 26, 2000 (as amended by that certain First
Amendment to Credit Agreement dated as of October 27, 2000, the "Existing Credit
Agreement"). The parties desire to make certain changes to the Existing Credit
Agreement and have decided, for ease of reference, to amend and restate the
Existing Credit Agreement in its entirety.
NOW, THEREFORE, in consideration of the mutual covenants and promises of
the parties contained herein, Administrative Lender, Lenders and Borrowers
hereby agree as follows:
ARTICLE I. DEFINITIONS
1.1 DEFINED TERMS
All terms defined above shall have the meanings set forth above. The
following terms shall have the meanings set forth below (with all such meanings
to be equally applicable to both the singular and plural forms of the terms
defined):
"ACCOUNTS" means (i) all "accounts" as defined in the Code and (ii) all
presently existing and hereafter arising rights to payment of a monetary
obligation, whether or not earned by performance.
"ADMINISTRATIVE LENDER'S OFFICE" means (i) initially, Administrative
Lender's office designated as such in Schedule I hereto, and (ii) subsequently,
such other office designated as such, from time to time, in writing by
Administrative Lender to Lenders and Borrowers' Agent.
"AFFILIATE" of any Person means any other Person that, directly or
indirectly, controls, is controlled by or is under common control with such
Person (excluding any trustee under, or any committee with responsibility for
administering, any Plan). A Person shall be deemed to be "controlled by" any
other Person if such other Person possesses, directly or indirectly, power: (a)
to vote 15% or more of the securities (on a fully diluted basis) having ordinary
voting power for the election of directors or managing general partners; or (b)
to direct or
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cause the direction of the management and policies of such Person whether by
contract or otherwise.
"AGREEMENT" means this Amended and Restated Credit Agreement as amended,
modified or supplemented from time to time.
"APPLICABLE LENDING OFFICE" means, with respect to each Lender, (i)
initially, its office designated as such in Schedule I hereto, and (ii)
subsequently, such other office designated as such from time to time in writing
by such Lender to Administrative Lender.
"APPLICABLE RATE" means, at any date, the lesser of (a) the Highest
Lawful Rate or (b) the following: (i) with respect to each Base Rate Loan, a per
annum rate equal to the sum of the Alternate Base Rate in effect on such date
and the applicable Base Rate Margin; and (ii) with respect to each LIBOR Loan, a
per annum rate equal to the sum of (x) LIBOR in effect on the first day of the
Fixed Rate Term for such Loan plus (y) the applicable LIBOR Margin in effect on
the second Business Day before the first day of such Fixed Rate Term.
"ALTERNATE BASE RATE" means, for any day, an interest rate per annum
equal to the higher of (a) the rate of interest most recently announced by
Scotiabank at its Applicable Lending Office as its base rate for U.S. Dollar
loans and (b) the Federal Funds Rate plus 50 basis points. The Alternate Base
Rate is not necessarily intended to be the lowest rate of interest determined by
Scotiabank in connection with extensions of credit. Changes in the rate of
interest on that portion of any Loans maintained as Base Rate Loans will take
effect simultaneously with each change in the Alternate Base Rate.
"ANZ" means Australia and New Zealand Banking Group Limited ACN 005 357
522.
"AUSTRALIAN FACILITIES" means (a) the credit facility provided for in
that certain Syndicated Facility Agreement dated November 15, 2000 among Penford
Australia, ANZ and certain other lenders named therein and in the "Financing
Documents" (as defined in said Syndicated Facility Agreement), as said
Syndicated Facility Agreement and each such Financing Document may be amended,
modified or supplemented from time to time, and (b) the credit facility provided
for in that certain Debenture Trust Deed dated November 15, 2000 between Penford
Holdings and ANZ Capel Court Limited ACN 004 768 807 and in the "Transaction
Documents" (as defined in said Debenture Trust Deed), as said Debenture Trust
Deed and each such Transaction Document may be amended, modified or supplemented
from time to time.
"AUTHORIZED REPRESENTATIVE" means a person designated as such by
Borrowers' Agent in a Notice of Authorized Representatives delivered to
Administrative Lender.
"AVAILABLE CREDIT" means, at any time, the amount by which the total of
the Revolving Loan Commitments is greater than the total of the outstanding
principal amount of the Revolving Loans.
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"BANKRUPTCY CODE" means the Bankruptcy Reform Act, Title 11 of the
United States Code, as amended or recodified from time to time, including
(unless the context otherwise requires) any rules or regulations promulgated
thereunder.
"BASE RATE LOAN" means any Loan that bears interest at a fluctuating
rate determined by reference to the Alternate Base Rate.
"BASE RATE MARGIN" means the number of basis points determined in
accordance with Schedule III.
"BORROWERS' AGENT" means Parent in its capacity as agent for each
Borrower.
"BUSINESS DAY" means (a) any day that is not a Saturday, Sunday or other
day on which commercial banks are authorized or required to be closed in
Portland, Oregon, New York, New York, Seattle, Washington or Atlanta, Georgia
and (b) with respect to all notices, determinations, fundings and payments in
connection with any LIBOR interest selection or LIBOR Loan, any day on which
dealings in U.S. Dollars are carried on in the London interbank market.
"CASH EQUIVALENT INVESTMENT" means, at any time: (a) any evidence of
indebtedness, maturing not more than one year after such time, issued or
guaranteed by the United States government; (b) commercial paper, maturing not
more than nine months from the date of issue, which is issued by (i) a
corporation (other than an Affiliate of any Obligor) organized under the laws of
any state of the United States or of the District of Columbia and rated at least
A-1 by Standard & Poor's Corporation or P-1 by Moody's Investors Service, Inc.,
or (ii) any Lender (or its holding company); (c) any certificate of deposit or
bankers acceptance, maturing not more than one year after such time, which is
issued by either (i) a commercial banking institution that is a member of the
Federal Reserve System and has a combined capital and surplus and undivided
profits of not less than $500,000,000, or (ii) any Lender; or (d) any repurchase
agreement entered into with any Lender (or other commercial banking institution
of the stature referred to in clause (c)(i) which (i) is secured by a fully
perfected security interest in any obligation of the type described in any of
clauses (a) through (c), and (ii) has a market value at the time such repurchase
agreement is entered into of not less than 100% of the repurchase obligation of
such Lender (or other commercial banking institution) thereunder.
"CHANGE IN CONTROL" means the acquisition by any Person, or two or more
Persons acting in concert, of beneficial ownership (within the meaning of Rule
13d-3 of the Securities and Exchange Commission under the Securities Exchange
Act of 1934) of one-third or more of the outstanding shares of voting stock of
Borrower.
"CHANGE OF LAW" means the adoption of any Governmental Rule, any change
in any Governmental Rule or the application or requirements thereof (whether
such change occurs in accordance with the terms of such Governmental Rule as
enacted, as a result of amendment or otherwise), any change in the
interpretation or administration of any
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Governmental Rule by any Governmental Authority, or compliance by any Lender (or
any entity controlling a Lender) with any request, guideline or directive
(whether or not having the force of law) of any Governmental Authority.
"CLOSING DATE" means November 15, 2000.
"CODE" means the Uniform Commercial Code of the State of Washington, as
amended from time to time (including, without limitation, amendments to defined
terms).
"COLLATERAL" means all of Borrowers' assets, including, without
limitation, (a) all Accounts, Rights to Payment, General Intangibles, Records,
goods, fixtures, inventory, equipment, money, letter of credit rights,
supporting obligations, instruments, chattel paper, deposit accounts, documents,
investment property and commercial tort claims; (b) all products, proceeds,
rents and profits of the foregoing; and (c) all of the foregoing, whether now
owned or existing or hereafter acquired or arising or in which Borrower now has
or hereafter acquires any rights, but excluding (i) all outstanding shares of
capital stock of Penford Products Co. and Penford Holdings and (ii) the Excluded
Patents.
"COMMITMENTS" means, with respect to a Lender, such Lender's Revolving
Loan Commitment, L/C Commitment and Term Loan Commitment.
"COMMODITY CONTRACTS" means commodity options, futures, swaps, and other
similar agreements and arrangements designed to provide protection against
fluctuations in commodity prices.
"CONTAMINANT" means any pollutant, hazardous substance, toxic substance,
hazardous waste or other substance regulated or forming the basis of liability
under any Environmental Law.
"CONTINGENT OBLIGATION" means, as applied to any Person, any direct or
indirect liability, contingent or otherwise, of such Person with respect to any
Indebtedness or contractual obligation of a partnership or joint venture of
which such Person is a general partner or joint venturer or with respect to any
Indebtedness or contractual obligation of another Person, if the purpose or
intent of such Person in incurring such liability is to provide assurance to the
obligee of such Indebtedness or contractual obligation that such Indebtedness or
contractual obligation will be paid or discharged, or that any agreement entered
into by such other Person relating to such Indebtedness or contractual
obligation will be complied with, or that any holder of such Indebtedness or
contractual obligation will be protected against loss in respect thereof.
Contingent Obligations of a Person include, without limitation, (a) the direct
or indirect guarantee, endorsement (other than for collection or deposit in the
ordinary course of business), co-making, discounting with recourse or sale with
recourse by such Person of an obligation of another Person, and (b) any
liability of such Person for an obligation of another Person through any
agreement (contingent or otherwise) (i) to purchase, repurchase or otherwise
acquire such obligation or any security therefor, or to provide funds for the
payment or discharge of such obligation (whether in the form of a loan,
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advance, stock purchase, capital contribution or otherwise), (ii) to maintain
the solvency or any balance sheet item, level of income or financial condition
of another Person, (iii) to make take-or-pay or similar payments, if required,
regardless of nonperformance by any other party or parties to an agreement, (iv)
to purchase, sell or lease (as lessor or lessee) property, or to purchase or
sell services, primarily for the purpose of enabling the debtor to make payment
of such obligation or to assure the holder of such obligation against loss, or
(v) to supply funds to or in any other manner invest in such other Person
(including, without limitation, to pay for property or services irrespective of
whether such property is received or such services are rendered), if in the case
of any agreement or liability described under subclauses (i) through (v) of this
sentence the primary purpose or intent thereof is as described in the preceding
sentence. The amount of any Contingent Obligation shall be equal to the lesser
of (A) the amount payable under such Contingent Obligation (if quantifiable) or
(B) the portion of the obligation so guaranteed or otherwise supported.
"DEBT" means, without duplication, (a) all obligations of Parent or any
Subsidiary for borrowed money and all obligations of Parent or any Subsidiary
evidenced by bonds, debentures, notes, bills or other similar instruments; (b)
all obligations, contingent or otherwise, relative to the face amount of all
letters of credit, whether or not drawn, and banker's acceptances issued for the
account of Parent or any Subsidiary; (c) all obligations of Parent or any
Subsidiary as lessee under leases which have been or should be, in accordance
with GAAP, recorded as capital leases or are synthetic leases, tax retention
operating leases or financing leases; (d) whether or not so included as
liabilities in accordance with GAAP, all obligations of Parent or any Subsidiary
to pay the deferred purchase price of property or services, and indebtedness
(excluding prepaid interest thereon) secured by a Lien on property owned or
being purchased by Parent or any Subsidiary (including indebtedness arising
under conditional sales or other title retention agreements), whether or not
such indebtedness shall have been assumed by Parent or any Subsidiary or is
limited in recourse; and (e) all Contingent Liabilities of Parent or any
Subsidiary in respect of any of the foregoing.
"DEFAULT" means (i) an Event of Default, (ii) an event or condition that
with the giving of notice or the passage of time, or both, would constitute an
Event of Default, or (iii) the filing against Borrower of a petition commencing
an involuntary case under the Bankruptcy Code.
"DISCLOSURE SCHEDULE" means Schedule II attached hereto.
"EBITDA" means, as of the end of a fiscal quarter, Parent's consolidated
net income after taxes for the twelve months ending with such quarter plus (A)
the sum of the amounts for such twelve month period included in determining such
net income of (i) interest expense, (ii) income tax expense, (iii) depreciation
expense, (iv) amortization expense, and (v) extraordinary non-cash losses and
charges and other non-recurring non-cash losses and charges; less (B) gains on
sales of assets (excluding sales of inventory in the ordinary course of
business) and other extraordinary non-cash gains for such twelve month period;
provided, however, that until the fiscal quarter ending August 31, 2001, all
computations described
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above based on a twelve month period shall be determined on an annualized basis
based on results for the period from September 1, 2000 through the end of the
quarter as of which the determination is made.
"EBITDAR" means, as of the end of a fiscal quarter, the sum of EBITDA
plus Rental Expense.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended or recodified from time to time, including (unless the context otherwise
requires) any rules or regulations promulgated thereunder.
"ENVIRONMENTAL LAW" means all applicable federal, state and local laws,
statutes, ordinances and regulations, and any applicable judicial or
administrative interpretation, order, consent decree or judgment, relating to
the regulation and protection of the environment. Environmental Laws include but
are not limited to the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended (42 U.S.C. Section 9601 et seq.); the
Hazardous Material Transportation Act, as amended (49 U.S.C. Section 180 et
seq.); the Federal Insecticide, Fungicide, and Rodenticide Act, as amended (7
U.S.C. Section 136 et seq.); the Resource Conservation and Recovery Act, as
amended (42 U.S.C. Section 6901 et seq.); the Toxic Substance Control Act, as
amended (42 U.S.C. Section 7401 et seq.); the Clean Air Act, as amended (42
U.S.C. Section 740 et seq.); the Federal Water Pollution Control Act, as amended
(33 U.S.C. Section 1251 et seq.); and the Safe Drinking Water Act, as amended
(42 U.S.C. Section 300f et seq.), and their state and local counterparts or
equivalents and any applicable transfer of ownership notification or approval
statutes.
"ENVIRONMENTAL LIABILITIES AND COSTS" means, as to any Person, all
liabilities, obligations, responsibilities, Remedial Actions, losses, damages,
punitive damages, consequential damages, treble damages, costs and expenses
(including, without limitation, all fees, disbursements and expenses of counsel,
experts and consultants and costs of investigation and feasibility studies),
fines, penalties, sanctions and interest incurred as a result of any claim or
demand by any other Person, whether based in contract, tort, implied or express
warranty, strict liability, criminal or civil statute, including, without
limitation, any thereof arising under any Environmental Law, Permit, order or
agreement with any Governmental Authority or other Person, and which relate to
any violation or alleged violation of an Environmental Law or a Permit, or a
Release or threatened Release.
"EVENT OF DEFAULT" has the meaning set forth in Section 11.1.
"EXCESS CASH FLOW" means, with respect to any fiscal year of Parent,
EBITDA for such year, minus (A) cash interest expense paid during such year, (B)
cash taxes paid during such year, (C) capital expenditures made during such year
permitted under Section 10.5 and not financed with Debt (other than Loans), (D)
cash payments during such year of amounts described in Section 9.3 and permitted
by Section 9.3, (E) payments made during such year under Section 3.2(b)(ii) and
(F) if during such year Borrowers take action under Section 3.1(e), the amount
by which the Revolving Loan Commitment on the last day of such
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year (after being reduced by such action) is less than the peak outstanding
principal balance of the Revolving Loans during such year.
"EXCLUDED PATENTS" means the patents and patent applications listed on
Exhibit F.
"FEDERAL FUNDS RATE" means, for any day, the weighted average of the per
annum rates on overnight Federal funds transactions with member banks of the
Federal Reserve System arranged by Federal funds brokers as published by the
Federal Reserve Bank of New York for such day (or, if such rate is not so
published for any day, the average rate quoted to Administrative Lender on such
day by three Federal funds brokers of recognized standing selected by
Administrative Lender).
"FIXED CHARGE COVERAGE RATIO" means, as of the end of a fiscal quarter,
the ratio of (i) EBITDAR, less the sum of the following for the twelve month
period ending with such quarter (or annualized in the manner described in the
definition of EBITDA): all expenses of Parent and the Subsidiaries during such
period which were permitted under Sections 9.3 and 10.5 and less cash taxes paid
by Parent and the Subsidiaries for the twelve month period ending with such
quarter (or annualized in the manner described in the definition of EBITDA) to
(ii) the sum of Interest Expense, Rental Expense and scheduled principal
payments of Debt for the twelve month period ending with such quarter (or
annualized in the manner described in the definition of EBITDA).
"FIXED RATE TERM" means a period of one, two, three or six months, as
designated by Borrowers' Agent, during which a Loan bears interest determined in
relation to LIBOR; provided, however, that no Fixed Rate Term for a Revolving
Loan may extend beyond the Revolver Maturity Date, no Fixed Rate Term for any
Term Loan may extend beyond the Maturity Date, and if the last day of a Fixed
Rate Term is not a Business Day, such term shall be extended to the next
succeeding Business Day, or if the next succeeding Business Day falls in another
calendar month, such term shall end on the next preceding Business Day.
"GAAP" means generally accepted accounting principles as in effect in
the United States from time to time, consistently applied.
"GENERAL INTANGIBLES" means (i) all "general intangibles" as defined in
the Code and (ii) all tax and duty refunds, registered and unregistered patents,
trademarks, service marks, copyrights, trade names, applications for the
foregoing, trade secrets, goodwill, processes, drawings, blueprints, customer
lists, licenses, whether as licensor or licensee, choses in action, causes of
action and other claims, judgments in favor of Borrower, leasehold interests in
equipment, software and payment intangibles.
"GOOD FAITH" means honesty in fact in the conduct or transaction
concerned, without regard to whether standards that might be deemed commercially
reasonable have been observed.
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"GOVERNMENTAL AUTHORITY" means any domestic or foreign national, state
or local government, any political subdivision thereof, any department, agency,
authority or bureau of any of the foregoing, or any other entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, including the Federal Deposit Insurance Corporation,
the Federal Reserve Board, the Comptroller of the Currency, any central bank or
any comparable authority.
"GOVERNMENTAL RULE" means any applicable law, rule, regulation,
ordinance, order, code, interpretation, judgment, decree, directive, guidelines,
policy or similar form of decision of any Governmental Authority.
"HIGHEST LAWFUL RATE" means, at the particular time in question, the
maximum rate of interest which, under applicable law, Lenders are then permitted
to charge Borrowers on the applicable Loan, and if the maximum rate changes at
any time, the Highest Lawful Rate shall increase or decrease, as the case may
be, as of the effective time of each such change, without notice to Borrowers.
"INDEBTEDNESS" of any Person means, without duplication, (a) all
liabilities of such Person as determined in accordance with GAAP, (b) all
obligations of such Person created or arising under any conditional sale or
other title retention agreement with respect to property acquired by such Person
(even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property), (c) all lease obligations of such Person (including, without
limitation, operating leases, capital leases, synthetic leases, tax retention
operating leases, and financing leases), (d) all Contingent Obligations of such
Person, (e) all obligations of such Person to purchase, redeem, retire, defease
or otherwise acquire for value any Stock or Stock Equivalents of such Person
with a mandatory repurchase or redemption date of less than ten years from the
date of issuance thereof, (f) all obligations secured by (or for which the
holder of such obligations has an existing right, contingent or otherwise, to be
secured by) any Lien upon or in property owned by such Person, even though such
Person has not assumed or become liable for the payment of such obligations, (g)
all liabilities of such Person in connection with the failure to make when due
any contribution or payment pursuant to or under any Plan and (h) net
liabilities of such Person under all Commodity Contracts, Interest Rate
Contracts and Rate Protection Agreements. For purposes of determining the amount
of Indebtedness in a circumstance when the creditor has recourse only to
specified assets, the amount shall be the lesser of (i) the amount of such
obligation or (ii) the fair market value of such assets.
"INDEMNITEES" has the meaning set forth in Section 13.3.
"INDEMNIFIED LIABILITIES" has the meaning set forth in Section 13.3.
"INTERCREDITOR AGREEMENT" means that certain Intercreditor Agreement of
even date herewith among Lenders and ANZ, as amended, modified or supplemented
from time to time.
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"INTEREST COVERAGE RATIO" means, as of the end of a fiscal quarter, the
ratio of (i) EBITDAR to (ii) the sum of Rental Expense plus Interest Expense.
"INTEREST EXPENSE" means, as of the end of a fiscal quarter, Parent's
consolidated cash interest expense for the twelve months ending with such
quarter; provided, however, that until the end of the fiscal quarter ending
August 31, 2001, interest expense shall be determined on an annualized basis
based on cash interest expense for the period from September 1, 2000 through the
end of the quarter as of which the determination is made.
"INTEREST RATE CONTRACTS" means interest rate swap agreements, interest
rate cap agreements, interest rate collar agreements, interest rate insurance,
and other agreements or arrangements designed to provide protection against
fluctuations in interest rates.
"INVESTMENT" means, relative to any Person, (a) any loan or advance made
by such Person to any other Person (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business); (b)
any Contingent Obligation of such Person; and (c) any ownership or similar
interest held by such Person in any other Person. The amount of any Investment
shall be the original principal or capital amount thereof less all returns of
principal or equity thereon (and without adjustment by reason of the financial
condition of such other Person) and shall, if made by the transfer or exchange
of property other than cash, be deemed to have been made in an original
principal or capital amount equal to the fair market value of such property.
"L/C BANK" means Scotiabank.
"L/C COMMITMENT" means, as to any Lender, the obligation of such Lender
to make the payments required under Section 3.3(g) in an aggregate principal
amount at any one time outstanding not to exceed the L/C Commitment amount set
opposite such Lender's name on Schedule I, as such amount may be reduced from
time to time pursuant to this Agreement or as such amount may be adjusted
pursuant to Section 13.5(c).
"LENDERS" means, collectively, each of the financial institutions from
time to time listed on Schedule I and L/C Bank, and "LENDER" means any one of
the Lenders.
"LETTER OF CREDIT" means a standby letter of credit issued by L/C Bank
for the benefit of ANZ having substantially the same terms as the draft letter
of credit attached hereto as Exhibit G.
"LETTER OF CREDIT AGREEMENT" means L/C Bank's standard letter of credit
application and documentation modified to such extent, if any, as L/C Bank deems
necessary.
"LETTER OF CREDIT OBLIGATIONS" means, at any time, all liabilities at
such time of Borrowers to L/C Bank with respect to Letters of Credit, whether or
not any such liability is contingent.
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"LEVERAGE RATIO" means, as of the end of a fiscal quarter, the ratio of
(i) Debt as of the end of such quarter to (ii) EBITDA.
"LIBOR" means, for each Fixed Rate Term, the rate per annum (rounded
upward if necessary to the nearest whole 1/16 of 1%) and determined pursuant to
the following formula:
LIBOR = Base LIBOR
-------------------------------
100% - LIBOR Reserve Percentage
As used herein, (a) "Base LIBOR" means the average of the rates per annum at
which U.S. Dollar deposits are offered to Scotiabank in the London interbank
eurocurrency market on the second Business Day prior to the commencement of a
Fixed Rate Term at or about 11:00 A.M. (London time), for delivery on the first
day of such Fixed Rate Term, for a term comparable to the number of days in such
Fixed Rate Term and in an amount approximately equal to the principal amount to
which such Fixed Rate Term shall apply, and (b) "LIBOR Reserve Percentage"
means, for any day, the aggregate (without duplication) of the maximum rates
(expressed as a decimal) of reserve requirements in effect on such day
(including basic, supplemental, marginal and emergency reserves under any
regulations of the Federal Reserve Board or other Governmental Authority having
jurisdiction with respect thereto) dealing with reserve requirements prescribed
for eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Federal Reserve Board) maintained by a member bank of the
Federal Reserve System.
"LIBOR LOAN" means any Loan that bears interest with reference to LIBOR.
"LIBOR MARGIN" means the number of basis points determined in accordance
with Schedule III.
"LIEN" means any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other),
security interest, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever, including, without limitation, any
conditional sale or other title retention agreement or the interest of a lessor
under a capital lease, synthetic lease, tax retention operating lease, financing
lease or any lease having substantially the same economic effect as a
conditional sale, title retention agreement or similar arrangement.
"LOAN" means an advance made by a Lender pursuant to any of Sections
3.1, 3.2 or 3.3(g).
"LOAN DOCUMENTS" means this Agreement, the Notes, each Letter of Credit
Agreement, each Rate Protection Agreement and each other agreement, note, deed
of trust, mortgage, notice, document, contract or instrument to which Borrower
now or hereafter is a party and that is required by Lender in connection with
the Obligations.
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"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
condition (financial or otherwise), business, performance, operations or
properties of Borrower, (b) the ability of Borrower to perform its obligations
under the Loan Documents, or (c) the rights and remedies of any Lender or
Administrative Lender under the Loan Documents.
"MATURITY DATE" means the earlier of October 31, 2005 or the due date
determined pursuant to Section 11.2.
"NOTE" means a promissory note executed by Borrowers in favor of a
Lender evidencing Loans, substantially in one of the forms attached as Exhibit A
hereto.
"NOTICE OF AUTHORIZED REPRESENTATIVES" has the meaning set forth in
Section 2.2.
"NOTICE OF BORROWING" has the meaning set forth in Section 3.1(c).
"NOTICE OF CONVERSION OR CONTINUATION" has the meaning set forth in
Section 3.5(c).
"OBLIGATIONS" means all of Borrowers' obligations under the Loan
Documents, whether direct or indirect, absolute or contingent, due or to become
due, now existing or hereafter arising, including, without limitation, all
interest that accrues after the commencement of any case or proceeding by or
against Borrower under the Bankruptcy Code, whether or not allowed in such case
or proceeding, and the obligations of Borrowers to Scotiabank under that certain
$5,000,000 Demand Promissory Note dated November 15, 2000, as amended, modified,
restated or supplemented from time to time.
"OBLIGOR" means any of Borrower or any other Person (other than
Administrative Lender or any Lender) obligated under, or otherwise a party to,
any Loan Document.
"ORGANIC DOCUMENTS" means, relative to any Obligor, as applicable, its
certificate or articles of incorporation, its by-laws, its partnership
agreement, its certificate of partnership, and all shareholder agreements,
voting trusts and similar arrangements applicable to any of the authorized
shares of capital stock or partnership interests of such Obligor.
"PARENT" means Penford Corporation, a Washington corporation.
"PBGC" means the Pension Benefit Guaranty Corporation established
pursuant to Title IV of ERISA.
"PENFORD AUSTRALIA" means Penford Australia Limited ACN 003 780 229.
"PENFORD HOLDINGS" means Penford Holdings Pty. Ltd. ACN 094 279 339.
"PERMIT" means any permit, approval, authorization, license, variance or
permission required from a Governmental Authority under an applicable
Governmental Rule.
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"PERMITTED LIENS" means (a) Liens arising by operation of law for taxes,
assessments or governmental charges not yet due; (b) statutory Liens of
mechanics, materialmen, shippers, warehousemen, carriers, and other similar
persons for services or materials arising in the ordinary course of business for
which payment is not yet due; (c) nonconsensual Liens incurred or deposits made
in the ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of social security; (d) Liens for taxes
or statutory Liens of mechanics, materialmen, shippers, warehousemen, carriers
and other similar persons for services or materials that are due but are being
contested in good faith and by appropriate and lawful proceedings promptly
initiated and diligently conducted and for which reserves satisfactory to
Administrative Lender have been established; (e) Liens listed on the Disclosure
Schedule and any replacement Lien for such Liens to the extent the Indebtedness
secured thereby is refinanced or otherwise replaced as contemplated by Section
9.2(c); (f) Liens granted in the Loan Documents; (g) zoning restrictions,
easements, rights of way, survey exceptions, encroachments, covenants, licenses,
reservations, leasehold interests, restrictions on the use of real property or
minor irregularities incident thereto which do not in the aggregate materially
detract from the value or use of the property or assets of Borrower or impair,
in any material manner, the use of such property for the purposes for which such
property is held by Borrower; (h) the interests of lessors or lessees of
property leased pursuant to leases permitted hereunder; (i) Liens of a
depository institution arising solely by virtue of any statutory or common law
provision relating to banker's liens, rights of setoff, or similar rights and
remedies as to deposit accounts or other funds maintained with such institution,
provided that (X) such deposit account is not a dedicated cash collateral
account and is not subject to restrictions against access by Borrower in excess
of those set forth by regulations promulgated by any Government Authority, and
(Y) such deposit account is not intended by Borrower to provide collateral to
the depository institution; (j) judgment Liens to the extent the existence of
such Liens is not an Event of Default under Section 11.1(g); and (k) purchase
money Liens upon or in any property of Borrower and used by Borrower in the
ordinary course of business and Liens to secure capital leases if, in each case,
the incurrence of such Indebtedness is permitted by Section 9.2; provided,
however, that: (X) any such Lien is created solely for the purpose of securing
Indebtedness representing, or incurred to finance, refinance or refund, the cost
(including, without limitation, the cost of construction and the reasonable fees
and expenses relating to such Indebtedness) of the property subject thereto, (Y)
the principal amount of the Indebtedness secured by such Lien does not exceed
such cost, and (Z) such Lien does not extend to or cover any other property
other than such item of property, any improvements on such item, and the
proceeds from the disposition of such items.
"PERSON" means an individual, partnership, corporation (including,
without limitation, a business trust), joint stock company, limited liability
company, trust, unincorporated association, joint venture or other entity, or a
Governmental Authority.
"PLAN" means an employee benefit plan, as defined in Section 3(3) of
ERISA, which Parent or any Subsidiary maintains, contributes to or has an
obligation to contribute to on behalf of participants who are or were employed
by any of them.
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"RATABLE PORTION" or "RATABLY" means, with respect to any Lender, the
quotient obtained by dividing (i) the total of such Lender's Commitments by (ii)
the Total Commitments, and at all times when the Total Commitments are zero,
means, with respect to any Lender, the quotient obtained by dividing item (i) by
item (ii) immediately before the Total Commitments became zero.
"RATE PROTECTION AGREEMENT" means any Interest Rate Contract, Commodity
Contract or foreign exchange agreement entered into by Borrower in which the
counterparty is a Lender.
"RECORDS" means all of Borrowers' present and future records and books
of account of every kind or nature, purchase and sale agreements, invoices,
ledger cards, bills of lading and other shipping evidence, statements,
correspondence, memoranda, credit files, electronically stored data and other
data, together with the tapes, disks, diskettes, drives and other data and
software storage media and devices, file cabinets or containers in or on which
the foregoing are stored (including any rights of Borrower with respect to the
foregoing maintained with or by any other Person).
"RELEASE" means, as to any Person, any unpermitted spill, emission,
leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching
or migration of a Contaminant into the environment and any "release" as defined
in the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended (42 U.S.C. Section 9601 et seq.).
"REMEDIAL ACTION" means all actions required to clean up, remove,
prevent or minimize a Release or threat of Release or to perform pre-remedial
studies and investigations and post-remedial monitoring and care.
"RENTAL EXPENSE" means, as of the end of a fiscal quarter, Parent's
consolidated rental expense for the twelve months ending with such quarter.
"REQUIRED LENDERS" shall have the meaning attributed to such term in the
Intercreditor Agreement.
"REVOLVER MATURITY DATE" means the earlier of October 31, 2003 or the
due date pursuant to Section 11.2.
"REVOLVING LOAN" means a Loan made by a Lender pursuant to Section 3.1.
"REVOLVING LOAN COMMITMENT" means, as to any Lender, the obligation of
such Lender to advance credit under Section 3.1 in an aggregate principal amount
at any one time outstanding not to exceed the Revolving Loan Commitment amount
set opposite such Lender's name on Schedule I, as such amount may be reduced
from time to time pursuant to this Agreement or as such amount may be adjusted
pursuant to Section 13.5(c).
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"RIGHTS TO PAYMENT" means all Accounts, General Intangibles (except
Excluded Patents), contract rights, chattel paper, documents, instruments,
letters of credit, bankers acceptances and guaranties, and all present and
future liens, security interests, rights, remedies, title and interest in, to
and in respect of Accounts and other Collateral, and shall include without
limitation, (a) rights and remedies under or relating to guaranties, contracts
of suretyship, letters of credit and credit and other insurance related to the
Collateral, (b) rights of stoppage in transit, replevin, repossession,
reclamation and other rights and remedies of an unpaid vendor, lienor or secured
party, (c) goods described in invoices, documents, contracts or instruments with
respect to, or otherwise representing or evidencing, Accounts or other
Collateral, including without limitation, returned, repossessed and reclaimed
goods, and (d) deposits by and property of account debtors or other persons
securing the obligations of account debtors, moneys, securities, credit
balances, deposits, deposit accounts and other property of Borrower now or
hereafter held or received by or in transit to Administrative Lender, any Lender
or any of their Affiliates or at any other depository or other institution from
or for the account of Borrower, whether for safekeeping, pledge, custody,
transmission, collection or otherwise.
"STOCK" means shares of capital stock, beneficial or partnership
interests, participations or other equivalents (regardless of how designated) of
or in a corporation or other entity, whether voting or nonvoting, and includes,
without limitation, common stock and preferred stock.
"STOCK EQUIVALENTS" means all securities convertible into or
exchangeable for Stock and all warrants, options or other rights to purchase or
subscribe for any Stock, whether or not presently convertible, exchangeable or
exercisable.
"SUBSIDIARY" means any Person required by GAAP to be included in the
consolidated financial reporting of Parent.
"TANGIBLE NET WORTH" means the total of Parent's shareholders' equity,
plus Debt subordinated in writing to the Obligations on terms acceptable to
Administrative Lender in favor of the prior payment in full in cash of the
Obligations, less consolidated intangible assets.
"TERM LOAN" means a Loan made by a Lender pursuant to Section 3.2.
"TERM LOAN COMMITMENT" means, as to any Lender, the obligation of such
Lender to advance credit under Section 3.2 in an aggregate principal amount at
any one time outstanding not to exceed the Term Loan Commitment amount set
opposite such Lender's name on Schedule I, as such amount may be reduced from
time to time pursuant to this Agreement or as such amount may be adjusted
pursuant to Section 13.5(c).
"TRANCHE" means a collective reference to LIBOR Loans which have
identical Fixed Rate Terms that begin on the same date and end on the same later
date.
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"TOTAL COMMITMENTS" means the total of all Commitments of all Lenders.
"U.S. SUBSIDIARY" means a Subsidiary having its principal place of
business in the United States.
1.2 ACCOUNTING AND FINANCIAL DETERMINATIONS
Any accounting term used in this Agreement that is not specifically
defined herein shall have the meaning customarily given to it under GAAP, and
all accounting determinations and computations under any Loan Document shall be
made, and all financial statements required to be delivered under any Loan
Document shall be prepared, in accordance with GAAP applied in the preparation
of the financial statements referred to in Section 6.5.
1.3 HEADINGS
Headings in this Agreement and each of the other Loan Documents are for
convenience of reference only and are not part of the substance hereof or
thereof.
1.4 ADDITIONAL DEFINITION PROVISIONS
Whenever the terms "herein," "hereof," "hereto," "hereunder," "therein,"
"thereof," "thereto," "thereunder," and similar terms contained in this
Agreement or any Loan Document refer to this Agreement or other Loan Document,
such terms refer to the whole of this Agreement or other Loan Document and not
to any particular section, paragraph or provision. All other terms contained in
this Agreement that are not defined herein shall, unless the context indicates
otherwise, have the meanings provided in the Code to the extent such terms are
defined therein.
ARTICLE II. APPOINTMENT OF BORROWERS' AGENT; JOINT AND SEVERAL LIABILITY
2.1 APPOINTMENT OF BORROWERS' AGENT
In order to facilitate and insure prompt and accurate communication
among Borrowers and Lenders and to insure the efficient and effective
distribution of proceeds of the Loans, each Borrower hereby appoints Parent as
its agent to perform the functions of Borrowers' Agent under the Loan Documents,
to take such actions and make such elections on such Borrower's behalf as are
delegated to Borrowers' Agent in the Loan Documents and for the following
purposes: (i) communicating to and receiving communications from Administrative
Lender and Lenders; (ii) receiving all proceeds of the Loans and making all
decisions regarding the distribution of such proceeds among Borrowers as
Borrowers' Agent, in the sole exercise of its discretion, deems fair and
appropriate; and (iii) making all decisions and elections with respect to
requests for advances of credit and election of interest options.
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2.2 AUTHORIZED REPRESENTATIVES
On the Closing Date, and from time to time subsequent thereto at
Borrowers' Agent's option, Borrowers' Agent shall deliver to Administrative
Lender a notice in the form of Exhibit B attached hereto, which designates by
name one or more Authorized Representatives and includes each of their
respective specimen signatures (each, a "Notice of Authorized Representatives").
Administrative Lender shall be entitled to rely conclusively on the authority of
each person designated as an Authorized Representative in the most current
Notice of Authorized Representatives delivered by Borrowers' Agent to
Administrative Lender, to request borrowings, to select interest rate options
hereunder, and to give to Administrative Lender such other notices as are
specified herein as being made through an Authorized Representative, until such
time as Borrowers' Agent has delivered to Administrative Lender, and
Administrative Lender has actual receipt of, a new Notice of Authorized
Representatives. Administrative Lender shall have no duty or obligation to
Borrowers to verify the authenticity of any signature appearing on any Notice of
Borrowing, Notice of Conversion or Continuation or any other notice from an
Authorized Representative or to verify the authenticity of any person purporting
to be an Authorized Representative giving any telephonic notice permitted
hereby.
2.3 JOINT AND SEVERAL LIABILITY; RIGHTS OF CONTRIBUTION
(a) Each Borrower states and acknowledges that: (i) pursuant to this
Agreement, Borrowers desire to utilize their borrowing potential on a
consolidated basis to the same extent possible if they were merged into a single
corporate entity; (ii) it has determined that it will benefit specifically and
materially from the advances of credit contemplated by this Agreement; (iii) it
is both a condition precedent to the obligations of Lenders hereunder and a
desire of Borrowers that each Borrower execute and deliver to Lenders this
Agreement; and (iv) Borrowers have requested and bargained for the structure and
terms of the credit contemplated by this Agreement.
(b) Each Borrower hereby irrevocably and unconditionally: (i) agrees
that it is jointly and severally liable to Lenders for the full and prompt
payment of the Obligations and the performance by each Borrower of its
obligations hereunder in accordance with the terms of the Loan Documents; (ii)
agrees to fully and promptly perform all of its obligations under the Loan
Documents with respect to each advance of credit hereunder as if such advance
had been made directly to it; and (iii) agrees as a primary obligation to
indemnify Lenders on demand for and against any loss incurred by Lenders (other
than a loss arising from Lenders' willful misconduct or gross negligence) as a
result of any of the obligations of any one or more of Borrowers under the Loan
Documents being or becoming void, voidable, unenforceable or ineffective for any
reason whatsoever, whether or not known to Lenders or any other Person, the
amount of such loss being the amount which Lenders would otherwise have been
entitled to recover from any one or more of Borrowers. Each Borrower hereby
irrevocably and unconditionally accepts, not merely as a surety but also as a
co-debtor, joint and several liability with each other Borrower with respect to
the payment and performance
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of all of the Obligations. If and to the extent that any Borrower fails to make
any payment with respect to the Obligations as and when due or to perform any of
its obligations in accordance with the terms of the Loan Documents, then in each
such event the other Borrowers will make such payment with respect to, or
perform, such obligations.
(c) The joint and several liability of each Borrower for the Obligations
shall be absolute and unconditional irrespective of and shall not be subject to
any reduction, limitation, impairment or termination for any reason, including,
without limitation, any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to any defense or setoff, counterclaim,
recoupment or termination whatsoever by reason of the invalidity, illegality or
unenforceability of any of the Obligations. Without limiting the generality of
the foregoing, the obligations of each Borrower shall not be discharged or
impaired or otherwise affected by:
(i) any change in the manner, place or terms of payment or
performance and/or any change or extension of the time of payment or
performance of, renewal or alteration of, any Obligation, any security
therefor, or any liability incurred directly or indirectly in respect
thereof, or any rescission of, or amendment, waiver or other
modification of, or any consent to departure from any Loan Document,
including any increase in the Obligations resulting from the extension
of additional credit to any Borrower;
(ii) any sale, exchange, release, surrender, realization upon any
property at any time pledged or mortgaged to secure any of the
Obligations, and/or any offset against, or failure to perfect, or
continue the perfection of, any lien in any such property, or delay in
the perfection of any such lien, or any amendment or waiver of or
consent to departure from any other guaranty for any of the Obligations;
(iii) the failure of Lenders to assert any claim or demand or to
enforce any right or remedy against any Borrower or any other Person
under the provisions of any Loan Document;
(iv) any settlement or compromise of any Obligation, any security
therefor or any liability incurred directly or indirectly in respect
thereof, and any subordination of the payment of any part thereof to the
payment of any obligation (whether due or not) of any other Borrower to
creditors of such other Borrower other than any other Borrower;
(v) any manner of application of any collateral for the
Obligations or proceeds thereof, to any of the Obligations, or any
manner of sale or other disposition of any such collateral for all or
any of the Obligations or any other assets of any Borrower;
(vi) any change, restructuring or termination of the existence
of any Borrower; or
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(vii) any other agreement or circumstance of any nature
whatsoever that might in any manner or to any extent vary the risk of
any Borrower, or that might otherwise at law or in equity constitute a
defense available to, or a discharge of, the obligations of any
Borrower, or a defense to, or discharge of, any Borrower or any other
Person relating to any of the Obligations.
(d) The joint and several liability of Borrowers shall continue in full
force and effect notwithstanding any absorption, merger, amalgamation or any
other change whatsoever in the name, membership, constitution or place of
formation of any Borrower.
(e) It is the intent of each Borrower that the indebtedness, obligations
and liability hereunder of no one of them be subject to challenge on any basis.
Accordingly, as of the date hereof, the liability of each Borrower under the
Loan Documents, together with all of its other liabilities to all Persons as of
the date hereof and as of any other date on which a transfer is deemed to occur
by virtue of this Agreement, calculated in an amount sufficient to pay its
probable net liabilities (including contingent liabilities) as the same become
absolute and matured ("Dated Liabilities") is, and is to be, less than the
amount of the aggregate of a fair valuation of its property as of such
corresponding date ("Dated Assets"). To this end each Borrower hereby (i) grants
to and recognizes in each other Borrower, ratably, rights of subrogation and
contribution in the amount, if any, by which the Dated Assets of such Borrower,
but for the aggregate of subrogation and contribution in its favor recognized
herein, would exceed the Dated Liabilities of such Borrower or, as the case may
be (ii) acknowledges receipt of and recognizes its right to subrogation and
contribution ratably from each of the other Borrowers in the amount, if any, by
which the Dated Liabilities of such Borrower, but for the aggregate of
subrogation and contribution in its favor recognized herein, would exceed the
Dated Assets of such Borrower. In recognizing the value of the Dated Assets and
the Dated Liabilities, it is understood that Borrowers will recognize, to at
least the same extent of their aggregate recognition of liabilities hereunder,
their rights to subrogation and contribution hereunder. It is a material
objective of this Section that each Borrower recognizes rights to subrogation
and contribution rather than be deemed to be insolvent (or in contemplation
thereof) by reason of its joint and several obligations hereunder.
ARTICLE III. THE CREDITS
3.1 REVOLVING LOANS
(a) On the terms and subject to the conditions contained in this
Agreement, each Lender severally agrees to make loans (each a "Revolving Loan")
to Borrowers from time to time until the Revolver Maturity Date in an aggregate
amount not to exceed at any time outstanding such Lender's Revolving Loan
Commitment; provided, however, that at no time shall any Lender be obligated to
make a Revolving Loan in excess of such Lender's Ratable Portion of the
Available Credit. Borrowers may from time to time borrow, partially or wholly
repay its outstanding borrowings, and reborrow, subject to all the limitations,
terms
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and conditions contained herein. The Revolving Loans of each Lender shall be
evidenced by a Note payable to the order of such Lender.
(b) If at any time the Available Credit is negative, Borrowers, without
demand or notice, shall immediately repay that portion of the Revolving Loans
necessary to cause the Available Credit to be zero. Borrowers shall repay the
outstanding principal balance of the Revolving Loans, together with all accrued
and unpaid interest and related fees on the Revolver Maturity Date.
(c) Borrowers' Agent, through an Authorized Representative, shall
request each advance of a Revolving Loan by giving Administrative Lender
irrevocable notice or telephonic notice (confirmed promptly in writing), in the
form of Exhibit C attached hereto (each, a "Notice of Borrowing"), which
specifies, among other things:
(i) the aggregate principal amount of the requested advances
(which aggregate amount must be a minimum of $500,000 and in integral
multiples of $100,000 if the advances are to be Base Rate Loans and a
minimum of $1,000,000 and in integral multiples of $500,000 if the
advances are to be LIBOR Loans);
(ii) the proposed date of borrowing, which shall be a Business
Day; and
(iii) whether such advance is to be a Base Rate Loan or a LIBOR
Loan.
Each such Notice of Borrowing must be received by Administrative Lender
not later than (x) 9:00 A.M. (Portland time) at least one Business Day prior to
the date of borrowing if a Base Rate Loan or (y) at least three Business Days
prior to the date of borrowing if a LIBOR Loan. Administrative Lender shall
promptly notify each Lender of the contents of each Notice of Borrowing and of
the amount of the advance to be made by such Lender no later than 1:00 P.M.
(Portland time) on the Business Day of receipt for Base Rate Loans and 1:00 P.M.
(Portland time) the Business Day after receipt with respect to LIBOR Loans.
(d) From time to time on any Business Day, Borrowers may make a
voluntary prepayment, in whole or in part, of the outstanding principal amount
of any Revolving Loans; provided, however, that (i) each voluntary partial
prepayment of Base Rate Loans must be in a minimum of $500,000 and in integral
multiples of $100,000, or, if less, the entire principal amount of the Base Rate
Loans and (ii) each voluntary partial prepayment of LIBOR Loans must be in a
minimum of $1,000,000 and in integral multiples of $500,000, or, if less, the
entire principal amount of a Tranche; provided, further, that any prepayment of
a LIBOR Loan shall be subject to the provisions of Section 3.11.
(e) From time to time on any Business Day, Borrowers may permanently
reduce the aggregate Revolving Loan Commitments by giving at least five Business
Days prior notice to Administrative Lender of the amount of such aggregate
reduction; provided that any partial aggregate reduction shall be in a minimum
amount of $5,000,000 and in an integral
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multiple of $1,000,000. Each such reduction shall reduce ratably the respective
Revolving Loan Commitments of the Lenders.
3.2 TERM LOAN
(a) On the terms and subject to the conditions contained in this
Agreement, each Lender severally agrees to make in a single advance on the
Closing Date a term loan (each a "Term Loan") to Borrowers in the amount of such
Lender's Term Loan Commitment. The Term Loan of each Lender shall be evidenced
by a Note payable to the order of such Lender.
(b) On the Maturity Date, Borrowers shall repay the unpaid principal
amount of each Term Loan, and prior thereto, Borrowers
(i) shall, on the last day of each February, May, August and
November beginning May 31, 2001 repay the outstanding principal balance
of the Term Loans, or, if less, make a scheduled repayment of the
aggregate outstanding principal amount of the Term Loans as follows: (A)
before September 1, 2001, the aggregate amount of each payment shall be
$1,538,462; and (B) after September 1, 2001, the aggregate amount of
each payment shall be $2,307,692;
(ii) may, from time to time on any Business Day, make a voluntary
prepayment, in whole or in part, of the outstanding principal amount of
the Term Loans; provided, however, that (A) any such prepayment shall be
made among the Term Loans having the same Fixed Rate Term, if
applicable; (B) no such prepayment of any LIBOR Loan may be made on any
day other than the last day of the Fixed Rate Term for such Loan; (C)
all such voluntary prepayments shall require at least three but no more
than five Business Days' prior written notice to Administrative Lender;
and (D) all such voluntary partial prepayments shall be in an aggregate
minimum amount of $5,000,000 and an integral multiple of $1,000,000;
(iii) shall, within twelve months of receipt of any proceeds from
the sale of Borrower's or any U.S. Subsidiary's assets (other than the
sale of inventory in the ordinary course), prepay the outstanding
principal amount of the Terms Loans by an amount equal to such proceeds
less the portion thereof reinvested during such twelve month period in
assets of like kind to the assets sold;
(iv) shall, within twelve months of receipt by Borrower or any
U.S. Subsidiary of any insurance or condemnation proceeds, prepay the
outstanding principal amount of the Term Loans by an amount equal to
such proceeds less the portion thereof utilized in the repair or
replacement of the affected property;
(v) shall, upon receipt of net cash proceeds of Debt by Parent or
any U.S. Subsidiary (other than proceeds of Loans and Debt described in
Section 9.2(d)), prepay the outstanding principal amount of the Term
Loans by an amount equal to such proceeds;
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(vi) shall, upon receipt of net cash proceeds of any issuance of
Stock or Stock Equivalent by Parent or any Subsidiary (other than
proceeds not exceeding $1,000,000 in any fiscal year from the exercise
of options granted to directors or employees), prepay the outstanding
principal amount of the Term Loans by an amount equal to such proceeds
multiplied by that fraction the numerator of which is the then
outstanding principal balance of the Term Loans and the denominator of
which is the then outstanding principal balance of the Term Loans and
all terms loans provided for in the Australian Facilities; and
(vii) shall, within (90) days after the last day of each fiscal
year of Parent, prepay the outstanding principal amount of the Term
Loans by an amount equal to 50% of the Excess Cash Flow for the
immediately preceding fiscal year of Parent multiplied by that fraction
the numerator of which is the then outstanding principal balance of the
Term Loans and the denominator of which is the then outstanding
principal balance of the Term Loans and all terms loans provided for in
the Australian Facilities.
Each prepayment of Term Loans made pursuant to any of clauses (ii) through (vii)
shall be applied in the inverse order of the scheduled repayments of Term Loans
set forth in clause (i) and shall be applied ratably among the Term Loans. Each
prepayment of any Term Loans made pursuant to this Section shall be without
premium or penalty, except for any funding loss indemnification required by
Section 3.11. No amounts paid or prepaid with respect to Term Loans may be
reborrowed.
3.3 LETTER OF CREDIT FACILITY
(a) On the terms and subject to the conditions contained in this
Agreement, on the Closing Date, the L/C Bank shall issue and deliver to ANZ a
Letter of Credit in the amount of $10,000,000 and having an expiry date of
November 14, 2001. Within fifteen Business Days before the expiry date of a
Letter of Credit (or such shorter period as is acceptable to ANZ), L/C Bank
shall issue and deliver to ANZ a replacement Letter of Credit in exchange for
the expiring Letter of Credit unless:
(i) any order, judgment or decree of any Governmental Authority
or arbitrator of which the L/C Bank is aware shall purport by its terms
to enjoin or restrain the L/C Bank from issuing such Letter of Credit or
any Governmental Rule applicable to the L/C Bank or any request or
directive (whether or not having the force of law) from any Governmental
Authority with jurisdiction over the L/C Bank shall prohibit, or request
that the L/C Bank refrain from, the issuance of letters of credit
generally or such Letter of Credit in particular or shall impose upon
the L/C Bank with respect to such Letter of Credit any restriction or
reserve or capital requirement (for which the L/C Bank is not otherwise
compensated) not in effect on the date hereof or result in any loss,
cost or expense which (A) was not applicable, in effect or known to the
L/C Bank on the Closing Date and which the L/C Bank in
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Good Faith deems material to it, and (B) the reimbursement of which is
not provided for hereunder;
(ii) after giving effect to the issuance of such Letter of
Credit, the Letter of Credit Obligations exceed an amount equal to
$10,000,000; or
(iii) fees due in connection therewith have not been paid.
None of the Lenders (other than the Lender that is the L/C Bank) shall have any
obligation to issue any Letters of Credit.
(b) In no event shall the expiry date of any Letter of Credit fall after
the Maturity Date.
(c) Prior to the issuance of each Letter of Credit, Borrowers' Agent
shall have delivered to the L/C Bank, if requested by the L/C Bank, a Letter of
Credit Agreement, signed by Borrowers, and such other documents or items as L/C
Bank may require pursuant to the terms thereof.
(d) Immediately upon the issuance by the L/C Bank of a Letter of Credit,
the L/C Bank shall be deemed to have sold and transferred to each Lender, and
each Lender shall be deemed irrevocably and unconditionally to have purchased
and received from the L/C Bank, without recourse or warranty, an undivided
interest and participation, to the extent of such Lender's Ratable Portion, in
such Letter of Credit and the obligations of Borrowers with respect thereto
(including, without limitation, all Letter of Credit Obligations with respect
thereto) and any security therefor and guaranty pertaining thereto.
(e) In determining whether to pay under any Letter of Credit, the L/C
Bank shall not have any obligation relative to Lenders other than to confirm
that any documents required to be delivered under such Letter of Credit appear
to have been delivered and that they appear to comply on their face with the
requirements of such Letter of Credit. Any action taken or omitted to be taken
by the L/C Bank under or in connection with any Letter of Credit, if taken or
omitted in the absence of gross negligence or willful misconduct, shall not put
the L/C Bank under any resulting liability to any other Lender.
(f) If the L/C Bank makes any payment under any Letter of Credit,
Borrowers shall reimburse the L/C Bank on demand for the amount thereof, except
to the extent L/C Bank receives payment of such amount pursuant to Section
3.3(g).
(g) If the L/C Bank makes any payment under any Letter of Credit, the
L/C Bank shall promptly notify Administrative Lender, who shall promptly notify
each Lender, and each Lender shall promptly and unconditionally pay to
Administrative Lender for the account of the L/C Bank the amount of such
Lender's Ratable Portion of such payment in same day funds (and upon receipt,
Administrative Lender shall promptly pay the same to the L/C Bank), but in no
event shall the aggregate of all such payments by a Lender exceed such
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Lender L/C Commitment. Each such payment, when made by a Lender to
Administrative Lender, shall be deemed to be and shall constitute a Base Rate
Loan by such Lender to Borrowers payable on demand. The Base Rate Loans shall be
made as contemplated in the preceding sentence notwithstanding Borrowers'
failure to satisfy the conditions set forth in Section 7.2. If Administrative
Lender so notifies a Lender before 10:00 A.M. (Portland time) on any Business
Day, such Lender shall make available to Administrative Lender for the account
of the L/C Bank its Ratable Portion of the amount of such payment by 1:00 P.M.
(Portland time) on such Business Day in same day funds. If and to the extent
such Lender does not make its Ratable Portion of such payment available to
Administrative Lender for the account of the L/C Bank, such Lender agrees to
repay to Administrative Lender for the account of such L/C Bank on demand such
amount together with interest thereon, for each day from such date until the
date such amount is repaid to Administrative Lender for the account of the L/C
Bank, at the Federal Funds Rate. The failure of any Lender to make available to
Administrative Lender for the account of the L/C Bank its Ratable Portion of any
such payment shall not relieve any other Lender of its obligation hereunder, but
no Lender shall be responsible for the failure of any other Lender to make
available to Administrative Lender for the account of the L/C Bank such other
Lender' s Ratable Portion of any such payment.
(h) The obligations of Lenders to make payments to Administrative Lender
for the account of the L/C Bank with respect to Letters of Credit are
irrevocable and not subject to any qualification or exception whatsoever.
3.4 INTEREST AND FEES
(a) INTEREST. The outstanding principal balance of each Loan shall bear
interest at the Applicable Rate. The foregoing notwithstanding, the rate of
interest applicable at all times during the continuation of an Event of Default
shall be a fluctuating rate per annum equal to the lesser of (i) the Highest
Lawful Rate or (ii) the Alternate Base Rate in effect from time to time, plus
300 basis points. All fees, expenses and other amounts not paid when due shall
bear interest (from the date due until paid) at the rate set forth in the
preceding sentence.
(b) LETTER OF CREDIT FEE. On the last day of each February, May, August
and November beginning November 30, 2000, Borrowers shall pay to Administrative
Lender, for the ratable benefit of Lenders, a fee equal to the face amount of
the outstanding Letters of Credit multiplied by 25% of an amount equal to the
LIBOR Margin in effect on the date such fee is payable. In addition, upon the
occurrence of any amendment, extension, issuance or other activity with respect
to any Letter of Credit, Borrowers shall pay to L/C Bank a fee determined in
accordance with L/C Bank's standard fees and charges then in effect for such
activity.
(c) CLOSING FEE. Before the Closing Date, Borrowers paid to
Administrative Lender, for the ratable benefit of Lenders, a closing fee of
$787,500.
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(d) COMMITMENT FEE. Borrowers shall pay to Administrative Lender, for
the account of each Lender, for the period commencing on the Closing Date and
continuing through the Revolver Maturity Date, a commitment fee at the per annum
rate set forth in Schedule III on such Lender's Ratable Portion of the amount by
which the Revolving Loan Commitments are greater than the average daily
outstanding balance of the Revolving Loans. Such commitment fees shall be
payable by Borrowers in arrears on the last day of each February, May, August
and November beginning November 30, 2000 and on the Revolver Maturity Date.
(e) ADMINISTRATIVE LENDER'S AND L/C BANK'S FEES. Borrowers shall pay to
Administrative Lender, for Administrative Lender's own account, and to L/C Bank,
for L/C Bank's own account, the fees set forth in that certain fee letter from
Scotiabank to Parent dated August 29, 2000.
(f) COMPUTATION AND PAYMENT. All interest and per annum fees shall be
computed on the basis of a 360-day year, actual days elapsed, except interest on
Base Rate Loans shall be computed on the basis of a 365/366-day year. Interest
on Base Rate Loans shall be payable monthly, in arrears, on the last day of each
month beginning November 30, 2000, on the Revolver Maturity Date (with respect
to Revolving Loans) and on the Maturity Date. Interest on LIBOR Loans shall be
paid on the last day of each Fixed Rate Term, on the Revolver Maturity Date
(with respect to Revolving Loans) and on the Maturity Date.
3.5 INTEREST OPTIONS
(a) ELECTION. Subject to the requirement that each LIBOR Loan be in a
minimum amount of $1,000,000 and in integral multiples of $500,000 and each Base
Rate Loan be in a minimum amount of $500,000 and in integral multiples of
$100,000 and the limitation in Section 3.5(b) regarding the number of Tranches
outstanding at any time, (i) except as otherwise provided herein, at any time
when a Default is not continuing Borrowers' Agent may convert all or any portion
of a Base Rate Loan to a LIBOR Loan for a Fixed Rate Term designated by
Borrowers' Agent, and (ii) at any time Borrowers' Agent may convert all or a
portion of a LIBOR Loan at the end of the Fixed Rate Term applicable thereto to
a Base Rate Loan or, if no Default is continuing, to a LIBOR Loan for a new
Fixed Rate Term designated by Borrowers' Agent. If Borrowers' Agent has not made
the required interest rate conversion or continuation election prior to the last
day of any Fixed Rate Term, such LIBOR Loan shall be converted to a Base Rate
Loan.
(b) MAXIMUM NUMBER OF TRANCHES. At no time shall there be more than ten
Tranches outstanding at any time.
(c) NOTICE TO ADMINISTRATIVE LENDER. Borrowers' Agent shall request each
interest rate conversion or continuation by giving Administrative Lender
irrevocable notice or telephonic notice (confirmed promptly in writing), in the
form of Exhibit D attached hereto (a "Notice of Conversion or Continuation"),
that specifies, among other things: (i) the Loan to which such Notice of
Conversion or Continuation applies; (ii) the principal amount
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that is the subject of such conversion or continuation; (iii) the proposed date
of such conversion or continuation, which shall be a Business Day; and (iv) if
such Notice pertains to a LIBOR Loan, the length of the applicable Fixed Rate
Term. Any such Notice of Conversion or Continuation must be received by
Administrative Lender not later than (i) 9:00 A.M. (Portland time) at least one
Business Day prior to the effective date of any Alternate Base Rate interest
selection, and (ii) at least three Business Days prior to the effective date of
any LIBOR interest selection. Administrative Lender shall promptly notify each
Lender of the contents of each such Notice of Conversion or Continuation, or if
timely notice is not received from Borrowers' Agent prior to the last day of any
Fixed Rate Term, of the automatic conversion of such LIBOR Loan to a Base Rate
Loan.
3.6 OTHER PAYMENT TERMS
(a) AUTOMATIC DEBIT. Administrative Lender may, and Borrowers hereby
authorize Administrative Lender to, instruct any Lender to debit any deposit
account of Borrower with such Lender for all payments of principal, interest,
fees and other amounts due under the Loan Documents as they become due (and
Borrowers hereby authorize each Lender to follow any such instruction from
Administrative Lender).
(b) PLACE AND MANNER. Borrowers shall make all payments due to each
Lender under the Loan Documents by payment to Administrative Lender at
Administrative Lender's Office, for the account of such Lender, in lawful money
of the United States and in same day or immediately available funds by 11:00
A.M. (Portland time) on the date due. Administrative Lender shall promptly
disburse to each Lender at such Lender's Applicable Lending Office each such
payment received by Administrative Lender for such Lender no later than 2:00
P.M. (Portland time) on the Business Day received if received by 11:00 A.M.
(Portland time), or if received later, by 2:00 P.M. (Portland time) on the next
Business Day.
(c) DATE. Whenever any payment due hereunder shall fall due on a day
other than a Business Day, such payment shall be made on the next succeeding
Business Day, and such extension of time shall be included in the computation of
interest or fees, as the case may be.
(d) APPLICATION OF PAYMENTS. All payments under the Loan Documents
(including prepayments) shall be applied first to unpaid fees, costs and
expenses then due and payable under the Loan Documents, second to accrued
interest then due and payable under the Loan Documents and finally to reduce the
principal amount of the outstanding Obligations.
(e) FAILURE TO PAY ADMINISTRATIVE LENDER. Unless Administrative Lender
shall have received notice from Borrowers' Agent at least one Business Day prior
to the date on which any payment is due to Lenders hereunder that Borrowers will
not make such payment in full, Administrative Lender may assume that Borrowers
have made such payment in full to Administrative Lender on such date and
Administrative Lender may, in reliance upon such assumption, cause to be
distributed to each Lender on such due date an amount equal to the amount then
due such Lender. If and to the extent Borrowers shall not have made such
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payment in full to Administrative Lender, such Lender shall repay to
Administrative Lender on demand the amount distributed to such Lender together
with interest thereon, for each day from the date distributed until the date
repaid, at the Federal Funds Rate. A certificate of Administrative Lender
submitted to any Lender with respect to any amounts owing by such Lender under
this Section shall be presumptive evidence of such amounts.
3.7 FUNDING
(a) LENDER FUNDING AND DISBURSEMENT. Each Lender shall, by 11:00 A.M.
(Portland time) on the date of each borrowing under Section 3.1, make available
to Administrative Lender at Administrative Lender's Office, in same day or
immediately available funds, such Lender's Ratable Portion thereof. After
Administrative Lender's receipt of such funds and upon fulfillment of the
applicable conditions set forth in Article VII, Administrative Lender will
promptly disburse such funds in same day or immediately available funds to
Borrowers. Unless otherwise directed by Borrowers' Agent in writing,
Administrative Lender shall disburse the proceeds of each borrowing to Borrowers
by deposit to any demand deposit account maintained by Parent with a Lender,
which account is designated by Borrowers' Agent in a notice to Administrative
Lender.
(b) LENDER FAILURE TO FUND. Unless Administrative Lender receives notice
from a Lender on or before the date of any borrowing hereunder that such Lender
will not make available to Administrative Lender such Lender's Ratable Portion
thereof, Administrative Lender may assume that such Lender has made such portion
available to Administrative Lender on the date of such borrowing in accordance
with Section 3.7(a), and Administrative Lender may, in reliance upon such
assumption, make available to Borrowers (or otherwise disburse) on such date a
corresponding amount. If any Lender does not make the amount of its Ratable
Portion of any borrowing available to Administrative Lender on the date of such
borrowing, such Lender shall pay to Administrative Lender, on demand, interest
which shall accrue on such amount until made available to Administrative Lender
at a rate equal to the daily Federal Funds Rate. A certificate of Administrative
Lender submitted to any Lender with respect to any amounts owing under this
Section shall be presumptive evidence of such amounts. If any Lender's Ratable
Portion of any borrowing is not in fact made available to Administrative Lender
by such Lender within three Business Days after the date of such borrowing,
Borrowers shall pay to Administrative Lender, on demand, an amount equal to such
Ratable Portion together with interest thereon, for each day from the date such
amount was made available to Borrowers until the date such amount is repaid to
Administrative Lender, at the rate of interest then applicable thereto.
(c) LENDERS' OBLIGATIONS SEVERAL. The obligation of each Lender
hereunder is several. The failure of any Lender to make available its Ratable
Portion of any borrowing shall not relieve any other Lender of its obligation
hereunder to do so on the date requested, but no Lender shall be responsible for
the failure of any other Lender to make available the Ratable Portion to be
funded by such other Lender.
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3.8 PRO RATA TREATMENT
(a) BORROWINGS. Each Loan shall be made or shared among Lenders ratably.
(b) SHARING OF PAYMENTS, ETC. Except as otherwise provided herein, each
payment of principal, interest or fees shall be made or shared among Lenders
ratably. If any Lender obtains any payment (whether voluntary, involuntary,
through the exercise of any right of setoff or otherwise) on account of a Loan
in excess of its Ratable Portion of payments on the Loans obtained by all
Lenders, such Lender ("Purchasing Lender") shall forthwith purchase from the
other Lenders sufficient participations to cause the Purchasing Lender's
interest in the Loans to be in the same proportionate relationship with all
Loans as before such payment was received; provided, however, that if all or any
portion of such excess payment is thereafter recovered from the Purchasing
Lender, the purchased participation shall be rescinded and each other Lender
shall repay to the Purchasing Lender (i) the purchase price to the extent of
such recovery together with (ii) an amount equal to such other Lender's ratable
share (according to the proportion of (A) the amount of such other Lender's
required repayment to (B) the total amount so recovered from the Purchasing
Lender) of any interest or other amount paid or payable by the Purchasing Lender
in respect of the total amount so recovered. Borrowers agree that any Purchasing
Lender may, to the fullest extent permitted by law, exercise all its rights of
payment (including the right of setoff) with respect to such participation as
fully as if the Purchasing Lender were the direct creditor of Borrowers in the
amount of such participation.
3.9 CHANGE OF CIRCUMSTANCES
(a) INABILITY TO DETERMINE RATE. If Administrative Lender at any time
determines that adequate and reasonable means do not exist for ascertaining
LIBOR, or the Required Lenders determine at any time that LIBOR does not
accurately reflect the cost to Lenders of making or maintaining LIBOR interest
rates hereunder, then Administrative Lender shall give telephonic notice
(promptly confirmed in writing) to Borrowers' Agent and each Lender of such
determination. If such notice is given and until such notice has been withdrawn
in writing by Administrative Lender, no LIBOR interest option may be selected by
Borrowers' Agent and each LIBOR Loan, subsequent to the end of the Fixed Rate
Term applicable thereto, shall become a Base Rate Loan.
(b) ILLEGALITY: TERMINATION OF COMMITMENT. Notwithstanding any other
provisions herein, if any Change of Law shall make it unlawful for any Lender
(i) to make a LIBOR interest rate available, or (ii) to maintain LIBOR interest
rates hereunder, then, in the former event, any obligation of such Lender to
make available such unlawful LIBOR interest rate shall be suspended until such
time as it is once again lawful to make such rate available, and in the latter
event, any such unlawful LIBOR interest rate then outstanding shall be converted
so that interest is determined in relation to the Alternate Base Rate pursuant
to the terms of this Agreement; provided, however, if any such Change in Law
shall permit a LIBOR interest rate until the expiration of the Fixed Rate Term
relating thereto, then such permitted LIBOR interest rate shall continue as such
until the end of such Fixed Rate Term.
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If as a result of this Section a LIBOR interest rate is converted to a lower
interest rate, Borrowers shall pay to each Lender immediately upon demand such
amount or amounts as may be necessary to compensate such Lender for any loss in
connection therewith.
(c) CHARGES: ILLEGALITY. Upon the occurrence of any event described in
Section 3.9(b), Borrowers shall pay to each Lender, within five days after
demand, such amount or amounts as may be necessary to compensate such Lender for
any fines, fees, charges, penalties or other amounts payable by such Lender as a
result thereof and that are attributable to LIBOR interest rates made available
to Borrowers hereunder. In determining which amounts payable by any Lender
and/or losses incurred by any Lender are attributable to LIBOR interest rates
made available to Borrowers hereunder, any reasonable allocation made by any
Lender among its operations shall, in the absence of manifest error, be
conclusive and binding upon Borrowers.
(d) INCREASED LIBOR LOAN COSTS, ETC. Borrowers shall reimburse each
Lender for any increase in the cost to such Lender of, or any reduction in the
amount of any sum receivable by such Lender in respect of, making, continuing or
maintaining (or of its obligation to make, continue or maintain) any Loans as,
or of converting (or of its obligation to convert) any Loans into, LIBOR Loans
which results from any Change of Law after the Closing Date. Such Lender shall
promptly notify Administrative Lender and Borrowers' Agent in writing of the
occurrence of any such event, such notice to state, in reasonable detail, the
reasons therefor and the additional amount required fully to compensate such
Lender for such increased cost or reduced amount. Such additional amounts shall
be payable by Borrowers directly to such Lender within five days of Borrowers'
Agent's receipt of such notice, and such notice shall, in the absence of
manifest error, be conclusive and binding on Borrowers.
(e) CAPITAL REQUIREMENTS. If any Lender determines that any Change of
Law regarding capital adequacy which occurs after the Closing Date has or shall
have the effect of reducing the rate of return on the capital of such Lender (or
any entity controlling such Lender) as a consequence of such Lender's
obligations hereunder to a level below that which such Lender or such entity
would have achieved but for such Change of Law (taking into consideration such
Lender's or such entity's policies with respect to capital adequacy), by an
amount reasonably deemed by such Lender to be material, then from time to time,
within fifteen days after demand by such Lender (with a copy to Administrative
Lender), Borrowers shall pay to such Lender or such entity such additional
amounts as shall compensate such Lender or such entity for such reduction. Any
request by a Lender under this Section shall set forth the basis of the
calculation of such additional amounts and shall, in the absence of manifest
error, be conclusive and binding on Borrowers for all purposes.
3.10 TAXES ON PAYMENTS
(a) PAYMENTS FREE OF TAXES. All payments made by Borrowers under the
Loan Documents shall be made free and clear of, and without deduction or
withholding for or on account of, any present or future income, stamp or other
taxes, levies, imposts, duties,
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charges, fees, deductions or withholdings, now or hereafter imposed, levied,
collected, withheld or assessed by any Governmental Authority (except taxes
based on the overall net income imposed on Administrative Lender or any Lender
by any Governmental Authority located in the United States) (with all such
non-excluded taxes, levies, imposts, duties, charges, fees, deductions and
withholdings being hereinafter referred to herein as "Taxes"). If any Taxes are
required to be withheld from any amounts payable to Administrative Lender or any
Lender under the Loan Documents, the amounts so payable to Administrative Lender
or such Lender shall be increased to the extent necessary to yield to
Administrative Lender or such Lender (after payment of all Taxes) interest or
any such other amounts payable hereunder at the rates or in the amounts
specified in the Loan Documents. Whenever any Taxes are payable by Borrowers, as
promptly as possible thereafter, Borrowers' Agent shall send to Administrative
Lender for its own account or for the account of such Lender, as the case may
be, a certified copy of an original official receipt received by Borrowers
showing payment thereof. If Borrowers fail to pay any Taxes when due to the
appropriate taxing authority or Borrowers' Agent fails to remit to
Administrative Lender the required receipts or other required documentary
evidence, Borrowers shall indemnify Administrative Lender and Lenders for any
incremental taxes, interest or penalties that may become payable by
Administrative Lender or any Lender as a result of any such failure. This
Section shall survive the payment in full and performance of all of Borrowers'
other Obligations.
(b) WITHHOLDING EXEMPTION CERTIFICATES. Each Lender agrees that it will
deliver to Borrowers' Agent and Administrative Lender, upon the reasonable
request of Borrowers' Agent or Administrative Lender, either (i) a statement
that it is incorporated under the laws of the United States of America or a
state thereof, or (ii) if it is not so incorporated, two duly completed copies
of United States Internal Revenue Service Form 1001 or 4224 or successor
applicable form, as the case may be, certifying in each case that such Lender is
entitled to receive payments under this Agreement without deduction or
withholding of any United States federal income taxes.
3.11 FUNDING LOSS INDEMNIFICATION
If any portion of a LIBOR Loan is repaid before the last day of the
Fixed Rate Term applicable thereto (whether through voluntary prepayment,
acceleration or otherwise), or if Borrowers fail to borrow the full amount of a
requested LIBOR Loan set forth in any Notice of Borrowing or to convert or
continue at the LIBOR interest option any portion of a Loan in accordance with a
Notice of Conversion or Continuation (in either event, whether as a result of
the failure to satisfy any applicable conditions or otherwise), Borrowers shall
pay to Administrative Lender, for the ratable benefit of Lenders, an amount
equal to the present value (calculated in accordance with this Section) of
interest for the unexpired portion of such Fixed Rate Term on the portion of the
Loan so repaid or the Fixed Rate Term specified in such Notice, at a per annum
rate equal to the excess, if any, of (a) the rate applicable to such LIBOR Loan
or proposed LIBOR Loan minus (b) the rate of interest obtainable by
Administrative Lender upon the purchase of debt securities customarily issued by
the Treasury of the United States of America which have a maturity date
approximating the last
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Business Day of such Fixed Rate Term. The present value of such additional
interest will be calculated by discounting the amount of such interest for each
day in the unexpired portion of such Fixed Rate Term at a per annum interest
rate equal to the interest rate determined pursuant to clause (b) of the
preceding sentence, and by adding all such amounts for all such days during such
period. The determination by Administrative Lender of such amount shall, in the
absence of manifest error, be conclusive and binding on Borrowers for all
purposes. This Section shall survive the payment in full and performance of all
of Borrowers' other Obligations.
ARTICLE IV. LOAN ADMINISTRATION
4.1 STATEMENTS
From time to time, Administrative Lender may render to Borrowers' Agent
a statement setting forth the balance in the loan account(s) maintained by
Administrative Lender for Borrowers pursuant to this Agreement, including
principal, interest, fees, costs and expenses. Each such statement shall be
subject to subsequent adjustment by Administrative Lender but shall, absent
manifest errors or omissions, be considered correct and deemed accepted by
Borrowers and conclusively binding upon Borrowers as an account stated except to
the extent that Administrative Lender receives a notice from Borrowers' Agent of
any specific exceptions thereto within thirty days after the date such statement
has been mailed by Administrative Lender. Until such time as Administrative
Lender shall have rendered to Borrowers' Agent a written statement as provided
above, the balance in the loan account(s) shall be presumptive evidence of the
amounts due and owing to Lenders by Borrowers.
4.2 PAYMENTS
All amounts due under any of the Loan Documents shall be payable to such
account as Administrative Lender may designate from time to time. Borrowers
shall make all payments due hereunder free and clear of, and without deduction
or withholding for or on account of, any setoff, counterclaim, defense, duties,
taxes, levies, imposts, fees, deductions, withholding, restrictions or
conditions of any kind. If after receipt of any payment of, or proceeds of
Collateral applied to the payment of, any of the Obligations any Lender is
required to surrender or return such payment or proceeds to any person or entity
for any reason, then the Obligations intended to be satisfied by such payment or
proceeds shall be reinstated and continue and this Agreement shall continue in
full force and effect as if such payment or proceeds had not been received by
such Lender. Borrowers hereby indemnify and hold Lenders harmless for the amount
of any payments or proceeds surrendered or returned. This Section shall remain
effective notwithstanding any contrary action which may be taken by any Lender
in reliance upon such payment or proceeds. This Section shall survive the
payment in full and performance of all of Borrowers' other Obligations.
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ARTICLE V. SECURITY
5.1 GRANT OF SECURITY INTEREST
Borrowers hereby grant to Administrative Lender, for the benefit of and
on behalf of Lenders, a security interest in all of the Collateral as security
for the full and prompt payment in cash and performance of the Obligations.
5.2 PERFECTION; DUTY OF CARE
(a) Until all the Obligations have been fully satisfied and paid in
cash, Borrowers shall perform all steps requested by Administrative Lender to
perfect, maintain and protect Administrative Lender's security interest in the
Collateral, including, without limitation, (i) executing and filing financing
and continuation statements in form and substance satisfactory to Administrative
Lender, and (ii) delivering all Collateral in which Administrative Lender's
security interest may be perfected by possession together with such indorsements
as Administrative Lender may request. Borrowers hereby authorize Administrative
Lender to execute and file UCC financing statements signed only by
Administrative Lender, except to the extent prohibited by law.
(b) Administrative Lender shall have the right at all times, and from
time to time, to contact Borrowers' account debtors to verify Rights to Payment.
(c) Borrowers shall pay or cause to be paid all taxes, assessments and
governmental charges levied or assessed or imposed upon or with respect to the
Collateral or any part thereof; provided, however, Borrowers shall not be
required to pay any tax if the validity and/or amount thereof is being contested
in good faith and by appropriate and lawful proceedings promptly initiated and
diligently conducted of which Borrowers' Agent has given prior notice to
Administrative Lender and for which appropriate reserves have been established
and so long as levy and execution have been and continue to be stayed. If
Borrowers fail to pay or so contest and reserve for such taxes, assessments and
governmental charges, Administrative Lender may (but shall not be required to)
pay the same and add the amount of such payment to the principal of the
Revolving Loans.
(d) In order to protect or perfect the security interest granted under
the Loan Documents, Administrative Lender may discharge any Lien that is not a
Permitted Lien or bond the same, pay for any insurance that Borrowers have
failed to maintain as required by this Agreement, maintain guards, pay any
service bureau, or obtain any record and add the same to the principal of the
Revolving Loans.
(e) Administrative Lender shall have no duty of care with respect to the
Collateral, except to exercise reasonable care with respect to the Collateral in
its custody, but shall be deemed to have exercised reasonable care if such
property is accorded treatment either (i) substantially equal to that which it
accords its own property or (ii) as Borrowers' Agent requests in writing,
provided that no failure to comply with any such request nor any
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omission to do any such act requested by Borrowers' Agent shall be deemed a
failure to exercise reasonable care. Administrative Lender's failure to take
steps to preserve rights against any parties or property shall not be deemed to
be a failure to exercise reasonable care with respect to the Collateral in its
custody.
5.3 REAL ESTATE COLLATERAL
As additional security for the full and prompt payment in cash and
performance of the Obligations, Borrowers have executed and delivered to
Administrative Lender certain deeds of trust and mortgages creating Liens for
the benefit of Administrative Lender and Lenders on certain of Borrowers' real
property. Borrowers shall execute and deliver such further mortgages and deeds
of trust as Administrative Lender reasonably requests for the purpose of
granting and perfecting a first priority Lien for the benefit of Lenders in each
parcel of real estate owned or leased by Borrower.
ARTICLE VI. REPRESENTATIONS AND WARRANTIES
Borrower makes the following representations and warranties to
Administrative Lender and Lenders, subject to the exceptions set forth on the
Disclosure Schedule, which representations and warranties shall survive the
execution of this Agreement and shall continue in full force and effect until
the performance and payment in full, in cash, of all Obligations:
6.1 LEGAL STATUS; SUBSIDIARIES
Borrower and each Subsidiary is a corporation validly organized and
existing and in good standing under the laws of the jurisdiction of its
incorporation, is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction where the nature of its business
requires such qualification, and has full power and authority and holds all
requisite governmental licenses, permits and other approvals to enter into and
perform the Obligations and to own and hold under lease its property and to
conduct its business substantially as currently conducted by it. Except as
otherwise disclosed in Section 6.1 of the Disclosure Schedule, Borrower has no
Subsidiaries other than those which it is permitted to acquire in accordance
with Section 9.4 and does not otherwise own or hold, directly or indirectly, any
capital stock or equity security of, or any equity interest in, any Person.
6.2 DUE AUTHORIZATION; NO VIOLATION
The execution, delivery and performance by each Obligor of the Loan
Documents executed or to be executed by it are within such Obligor's corporate
powers, have been duly authorized by all necessary corporate action, and do not
(a) contravene such Obligor's Organic Documents; (b) contravene any contractual
restriction or Governmental Rule binding on or affecting such Obligor; or (c)
result in, or require the creation or imposition of, any Lien on any Obligor's
or Subsidiary's properties, except Liens for the benefit of Lenders.
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6.3 GOVERNMENT APPROVAL, REGULATION
No authorization or approval or other action by, and no notice to or
filing with, any Governmental Authority or other Person is required for the due
execution, delivery or performance by any Obligor of the Loan Documents to which
it is a party. Neither Borrower nor any Subsidiary is an "investment company"
within the meaning of the Investment Company Act of 1940, as amended, or a
"holding company", or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company", within the meaning of the Public Utility Holding Company Act of 1935,
as amended. Neither Borrower nor any Subsidiary is engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock, and no
proceeds of any Loans will be used for a purpose which violates, or would be
inconsistent with, Regulation G, U or X of the Board of Governors of the Federal
Reserve System
6.4 VALIDITY, ENFORCEABILITY
The Loan Documents executed by each Obligor will, on the due execution
and delivery thereof, constitute, the legal, valid and binding obligations of
such Obligor enforceable in accordance with their respective terms.
6.5 CORRECTNESS OF FINANCIAL STATEMENTS
The financial statements of Parent and each Subsidiary dated as of May
31, 2000 heretofore delivered by Borrowers' Agent to Administrative Lender, (a)
present fairly the financial condition and results of operations of Parent and
the Subsidiaries; (b) disclose all liabilities of Parent and the Subsidiaries
that are required to be reflected or reserved against under GAAP, whether
liquidated or unliquidated, fixed or contingent; and (c) have been prepared in
accordance with GAAP consistently applied. Except as disclosed to Administrative
Lender pursuant to Section 8.3, since the date of such financial statements
there has been no change or changes that have resulted in a Material Adverse
Effect.
6.6 TAXES
Borrower and each Subsidiary has filed, or caused to be filed, all
federal, state, local and foreign tax returns required to be filed by it, and
has paid, or caused to be paid, all taxes as are shown on such returns, or on
any assessment received by it, to the extent that such taxes have become due,
except as otherwise contested in good faith. Borrower has set aside proper
amounts on its books, determined in accordance with GAAP, for the payment of all
taxes for the years that have not been audited by the respective tax authorities
and for taxes being contested by it.
6.7 LITIGATION, LABOR CONTROVERSIES
There is no pending or, to the knowledge of Borrower, threatened
litigation, action, proceeding, or labor controversy affecting Parent or any
Subsidiary, or any of their respective
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properties, businesses, assets or revenues, which could have a Material Adverse
Effect. As of the Closing Date, neither Borrower nor any Subsidiary is a party
to, and has no obligations under, any collective bargaining agreement.
6.8 TITLE TO PROPERTY, LIENS
Borrower and each Subsidiary has good, indefeasible, and merchantable
title to and ownership of the Collateral, free and clear of all Liens, except
Permitted Liens.
6.9 ERISA
Borrower and each Subsidiary is in compliance in all material respects
with the applicable provisions of ERISA. Neither Borrower nor any Subsidiary has
violated any provision of any Plan maintained or contributed to by it in a
manner that could result in a Material Adverse Effect. No "reportable event" (as
defined in Title IV of ERISA) has occurred and is continuing with respect to any
Plan initiated by it.
6.10 OTHER OBLIGATIONS
Neither Borrower nor any Subsidiary is in default with respect to any
Debt in excess of $2,000,000 or any of its material contractual obligations.
6.11 ENVIRONMENTAL MATTERS
Borrower and each Subsidiary is in compliance in all material respects
with all Environmental Laws applicable to it, other than such noncompliance as
in the aggregate could not have a Material Adverse Effect. Neither Borrower nor
any Subsidiary has received notice that it is the subject of any federal or
state investigation evaluating whether any Remedial Action is needed, except for
such notices received that in the aggregate do not refer to Remedial Actions
that could result in a Material Adverse Effect. There have been no Releases by
Borrower or a Subsidiary that could result in a Material Adverse Effect.
6.12 NO BURDENSOME RESTRICTIONS; NO DEFAULTS
(a) Neither Borrower nor any Subsidiary is a party to any contractual
obligation the compliance with which could have a Material Adverse Effect or the
performance of which, either unconditionally or upon the happening of an event,
will result in the creation of a Lien (other than Permitted Liens) on its
property or assets.
(b) No facts or circumstances exist which would constitute a breach of
any obligation, representation or warranty of Borrower hereunder if this
Agreement were in effect immediately prior to Borrower's execution hereof.
(c) There is no Governmental Rule the compliance with which by Borrower
or any Subsidiary could have a Material Adverse Effect.
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6.13 NO OTHER VENTURES
Neither Borrower nor any Subsidiary is engaged in any joint purchasing
arrangement, joint venture or partnership with any other Person.
6.14 INSURANCE
All current policies of insurance of any kind or nature owned by or
issued to Borrower and the Subsidiaries, including, without limitation, policies
of fire, theft, product liability, public liability, property damage, other
casualty, employee fidelity, workers' compensation and employee health and
welfare insurance, are in full force and effect and are of a nature and provide
such coverage as is sufficient and as is customarily carried by companies of its
size and character. Neither Borrower nor any Subsidiary has any reason to
believe that it will be unable to comply with Section 8.5.
6.15 FORCE MAJEURE
Neither Borrower's nor any Subsidiary's business or properties is
currently suffering from the effects of any fire, explosion, accident, strike,
lockout or other labor dispute, drought, storm, hail, earthquake, embargo, act
of God or of the public enemy or other casualty (whether or not covered by
insurance), other than those the consequences of which in the aggregate could
not have a Material Adverse Effect.
6.16 INTELLECTUAL PROPERTY
Borrower and each Subsidiary owns or licenses or otherwise has the right
to use all material licenses, Permits, patents, patent applications, trademarks,
trademark applications, service marks, trade names, copyrights, copyright
applications, franchises, authorizations and other intellectual property rights
and General Intangibles that are necessary for the operation of its businesses,
without infringement upon or conflict with the rights of any other Person with
respect thereto, including, without limitation, all trade names. No slogan or
other advertising device, product, process, method, substance, part or other
material now employed, or now contemplated to be employed, by Borrower or any
Subsidiary infringes upon or conflicts with any rights owned by any other
Person, which infringement or conflict could have a Material Adverse Effect, and
no claim or litigation regarding any of the foregoing is pending or, to its
knowledge, threatened, the existence of which could have a Material Adverse
Effect. No patent, invention, device, application, principle or any statute,
law, rule, regulation, standard or code is pending or, to its knowledge,
proposed, other than those the consequences of which in the aggregate could not
have a Material Adverse Effect.
6.17 CERTAIN INDEBTEDNESS
The Disclosure Schedule identifies as of the Closing Date all
Indebtedness of Parent and the Subsidiaries which is either (a) Debt or (b)
incurred outside of the ordinary course of the business.
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6.18 SOLVENCY
Each Obligor has received consideration that is the reasonably
equivalent value of the obligations and liabilities that it has incurred to
Lenders. Each Obligor is not insolvent as defined in any applicable state or
federal statute, nor will it be rendered insolvent by the execution and delivery
of this Agreement or the other Loan Documents. No Obligor intends to, nor does
it believe that it will, incur debts beyond its ability to pay them as they
mature. Each Obligor has capital sufficient to carry on its business and
transactions and all business and transactions in which it is about to engage.
6.19 CHIEF EXECUTIVE OFFICE AND OTHER LOCATIONS
Borrower's chief executive office and principal place of business is set
forth in Section 6.19 of the Disclosure Schedule. Borrower's books and records
are located at its chief executive office, and the only other offices and/or
locations where it keeps the Collateral (except for inventory which is in
transit) or conducts any of its business are set forth in Section 6.19 of the
Disclosure Schedule.
6.20 FISCAL YEAR
Parent's fiscal year ends on August 31.
6.21 COMPLIANCE WITH LAW
Borrower and each Subsidiary is in compliance with all Governmental
Rules and law, except where the failure to do so could not have a Material
Adverse Effect.
6.22 NO SUBORDINATION
There is no agreement, indenture, contract or instrument to which any
Obligor is a party or by which it or any Subsidiary may be bound that requires
the subordination in right of payment of any of its obligations subject to this
Agreement to any other obligation of it.
6.23 TRUTH, ACCURACY OF INFORMATION
All factual information furnished to Administrative Lender and Lenders
in connection with the Loan Documents is accurate in all material respects and
does not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the information furnished, in light of
the circumstances under which furnished, not misleading.
6.24 EXCLUDED PATENTS
The Excluded Patents relate solely to starch co-polymers. The Excluded
Patents will not be necessary, used or useful in the generation of more than two
percent of Parent's consolidated revenue in any fiscal year.
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ARTICLE VII. CONDITIONS
7.1 CONDITIONS OF INITIAL EXTENSION OF CREDIT
The obligation of Lenders to extend any credit contemplated by this
Agreement and of L/C Bank to issue any Letter of Credit is subject to the
fulfillment to Administrative Lender's satisfaction of all of the following
conditions:
(a) DOCUMENTATION. Administrative Lender shall have received, in form
and substance satisfactory to it, each of the following duly executed:
(i) this Agreement, the Notes and such mortgages, deeds of trust
and other security instruments as Administrative Lender may require;
(ii) from each Obligor, a certificate of its secretary or
assistant secretary dated as of the Closing Date as to: (A) resolutions
of its board of directors then in full force and effect authorizing the
execution, delivery and performance of each of the Loan Documents to be
executed by it; (B) its Organic Documents, a copy of each of which is
attached; and (C) the incumbency and signatures of those of its officers
authorized to act with respect to the Loan Documents to be executed by
it;
(iii) with respect to each Obligor: (A) from the Secretary of
State (or other appropriate governmental official) of its jurisdiction
of its incorporation, a good standing certificate or certificate of
existence, as applicable, and a certified copy of its filed Organic
Documents; and (B) a certificate of good standing as a foreign
corporation in each jurisdiction described in Section 6.1;
(iv) a Notice of Authorized Representatives, the initial Notice
of Borrowing and a disbursement direction letter;
(v) the opinion of Preston Gates & Ellis LLP, counsel to
Borrowers, as to such matters as Administrative Lender and each Lender
shall reasonably require; and
(viii) such other documents as Administrative Lender and each
Lender may require.
(b) FINANCIAL CONDITION. There is no event or circumstance that could
have a Material Adverse Effect.
(c) FEES AND EXPENSES. Borrowers shall have paid all fees and invoiced
costs and expenses then due pursuant to the terms of this Agreement.
(d) INSURANCE. Borrowers' Agent shall have delivered to Administrative
Lender evidence of the insurance coverage, including loss payable endorsements,
required pursuant to Section 8.5.
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7.2 CONDITIONS OF EACH EXTENSION OF CREDIT
The obligation of each Lender to make any credit available under the
Loan Documents (including any Loan being made by such Lender on the Closing
Date) shall be subject to the further conditions precedent that:
(a) the following statements shall be true on the date such credit is
advanced, both before and after giving effect thereto and to the application of
the proceeds therefrom, and the acceptance by Borrowers' Agent of the proceeds
of such credit shall constitute a representation and warranty by Borrowers that
on the date such credit is advanced such statements are true:
(i) the representations and warranties of Borrowers contained in
the Loan Documents are correct in all material respects on and as of
such date as though made on and as of such date or, as to those
representations and warranties limited by their terms to a specified
date, were correct in all material respects on and as of such date;
(ii) no Default is continuing or would result from the credit
being advanced; and
(iii) no "Potential Event of Default" (as defined in the
Australian Facilities) exists.
(b) advancing such credit on such date does not violate any Governmental
Rule and is not enjoined, temporarily, preliminarily or permanently;
(c) Administrative Lender shall have received such additional documents,
information and materials as any Lender, through Administrative Lender, may
reasonably request; and
(d) no event or circumstance exists that could have a Material Adverse
Effect.
ARTICLE VIII. AFFIRMATIVE COVENANTS
Borrower covenants that so long as Lenders remain committed to extend
credit to Borrower pursuant to the terms hereof and until performance and
payment in full, in cash, of all Obligations, Borrower shall:
8.1 PAYMENTS
Pay all principal, interest, fees and other liabilities due under any of
the Loan Documents at the times and place and in the manner specified therein.
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8.2 ACCOUNTING RECORDS
Keep, and cause each Subsidiary to keep, accurate books and records of
its financial affairs sufficient to permit the preparation of financial
statements therefrom in accordance with GAAP.
8.3 INFORMATION AND REPORTS
Provide to Administrative Lender all of the following, in form and
detail reasonably satisfactory to Administrative Lender and with sufficient
copies for distribution to all Lenders:
(i) as soon as available but not later than 120 days after and as
of the end of each fiscal year of Parent, a copy of the annual
unqualified audit report for such fiscal year for Parent and the
Subsidiaries, including therein consolidated balance sheets of Parent
and the Subsidiaries as of the end of such fiscal year and consolidated
statements of earnings and cash flow of Parent and the Subsidiaries for
such fiscal year, in each case certified in a manner acceptable to
Administrative Lender by Ernst & Young or any other independent public
accountants acceptable to Administrative Lender, together with a report
from such accountants to the effect that, in making the examination
necessary for the signing of such annual report by such accountants,
they have not become aware of any Default that has occurred and is
continuing, or, if they have become aware of such Default, describing
such Default and the steps, if any, of which they are aware being taken
to cure it;
(ii) as soon as available but not later than 60 days after and as
of the end of each of Parent's first three fiscal quarters, nor later
than 120 days after and as of the end of each of Parent's fourth fiscal
quarters, consolidated and consolidating balance sheets of Parent and
the Subsidiaries as of the end of such fiscal quarter and consolidated
and consolidating statements of earnings and cash flow of Parent and the
Subsidiaries for such fiscal quarter and for fiscal year-to-date,
together with a comparison of Parent's financial condition for such
quarter and year-to-date with the corresponding quarter and year-to-date
in Parent's immediately preceding fiscal year;
(iii) contemporaneously with the delivery of each financial
statement required hereby, a certificate of Parent's principal financial
officer substantially in the form of Exhibit E attached hereto (A)
certifying that such financial statements fairly present in all material
respects Parent's balance sheet as of the end of such quarter/year and
income and cash flow for such quarter/year and year-to-date (subject to
normal year-end adjustments), (B) stating that no Default existed at any
time during the period covered by such statement, except for those
events or conditions, if any, described in such certificate in
reasonable detail together with a statement of any action taken or
proposed to be taken with respect thereto, and (C) setting forth the
calculations required to establish compliance by Borrowers with the
covenants set forth in Article X;
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(iv) not later than November 1 of each year beginning November 1,
2001, or sooner if available, Borrowers' Agent shall furnish to
Administrative Lender detailed projections setting forth Parent's
projected consolidated income and cash flow for Parent's current fiscal
year and for each of Parent's fiscal years through August 31, 2005 and
Parent's projected consolidated balance sheet as of the end of each such
fiscal year, together with a certificate of Parent's principal financial
officer setting forth the assumptions on which such projections are
based;
(v) promptly after the sending or filing thereof, copies of all
reports which Borrower sends to any of its securityholders, and all
reports and registration statements which Parent or any Subsidiary files
with the Securities and Exchange Commission or any national securities
exchange;
(vi) not later than December 31, 2000, or sooner if available, a
copy of Parent's consolidated balance sheet as of immediately after
Penford Holdings' acquisition of Penford Australia, as audited by Ernst
& Young, together with sufficient detail to identify all intangible
assets included in such balance sheet and a certificate of Parent's
principal financial officer setting forth the calculation necessary to
determine Tangible Net Worth as of the date of such balance sheet; and
(vii) from time to time such other information as Administrative
Lender may reasonably request.
8.4 COMPLIANCE
Comply in all material respects, and cause each Subsidiary to comply in
all material respects, with all Governmental Rules, contractual obligations,
commitments, instruments, licenses, Permits and franchises, other than such
noncompliance the consequences of which in the aggregate could not have a
Material Adverse Effect.
8.5 INSURANCE
(a) Maintain, and cause each Subsidiary to maintain, insurance with
insurance companies reasonably acceptable to Administrative Lender with respect
to its properties and business (including business interruption and extra
expense endorsements) against such casualties and contingencies and of such
types, with such deductibles and in such amounts as is customary in the case of
similar businesses. With respect to the insurance maintained by Borrower: (i)
such insurance shall contain a lender's loss payable endorsement acceptable to
Administrative Lender and shall name Administrative Lender as an additional
named insured; (ii) the policies or a certificate thereof signed by the insurer
shall be delivered to Administrative Lender within five Business Days after the
issuance or renewal of the policies to Borrower; (iii) each such policy shall
provide that such policy may not be amended (except to increase coverage) or
canceled without thirty days prior notice to Administrative Lender; and (iv) at
least five days before the expiration of a policy, Borrowers' Agent shall
deliver to Administrative Lender a binder (or other evidence reasonably
acceptable to
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Administrative Lender) indicating that such policy has been renewed or that a
substitute for such policy will be issued effective upon the expiration of such
policy. If Borrowers' Agent fails to comply with the foregoing, Administrative
Lender may (but shall not be required to) procure such insurance and add the
cost thereof to the Revolving Loans.
(b) Maintain, and cause each Subsidiary to maintain, in full force and
effect such liability and other insurance with respect to its activities as is
customary in the case of similar businesses or as may be reasonably required by
Administrative Lender. Such liability insurance maintained by Borrower shall
name Administrative Lender as an additional insured with respect to the
activities of Borrower and shall be provided by insurer(s) reasonably acceptable
to Administrative Lender.
8.6 FACILITIES
Keep, and cause each Subsidiary to keep, all properties useful or
necessary to its business in good repair and condition, and from time to time
make necessary repairs, renewals and replacements thereto so that such property
shall be fully and efficiently preserved and maintained.
8.7 TAXES AND OTHER LIABILITIES
Pay and discharge, and cause each Subsidiary to pay and discharge, when
due any and all indebtedness, obligations, assessments and taxes, both real or
personal, including without limitation Federal and state income taxes and state
and local property taxes and assessments, except such as Borrower may in good
faith contest or as to which a bona fide dispute may arise, and for which
Borrowers have made provision for adequate reserves in accordance with GAAP.
8.8 LITIGATION
Promptly give notice in writing to Administrative Lender of any
litigation pending or threatened against Borrower or any Subsidiary with a claim
in excess of $2,000,000 in the aggregate for Parent and all Subsidiaries.
8.9 NOTICE TO ADMINISTRATIVE LENDER
(a) Promptly (but in no event more than two Business Days after the
occurrence of each such event or matter) cause Borrowers' Agent to give notice
to Administrative Lender in reasonable detail of: (i) the occurrence of any
Default; (ii) any termination or cancellation of any insurance policy which
Borrower or any Subsidiary is required to maintain, unless such policy is
replaced without any break in coverage with an equivalent or better policy;
(iii) any uninsured or partially uninsured loss or losses through liability or
property damage, or through fire, theft or any other cause affecting the
property of Borrower or any Subsidiary in excess of an aggregate of $2,000,000
during any twelve month period; (iv) any change in the Organic Documents of
Parent or any Subsidiary; (v) the occurrence of any adverse
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development with respect to any litigation, action, proceeding, or labor
controversy described in Section 6.7 or the commencement of any labor
controversy, litigation, action, proceeding of the type described in Section 6.7
together with copies of all documentation relating thereto; or (vi) the
occurrence of any event that could have a Material Adverse Effect.
(b) As soon as possible and in any event within ten days after Borrower
knows or has reason to know that any "reportable event" (as defined in Title IV
of ERISA) that triggers an obligation to file a notice with the PBGC with
respect to any Plan has occurred, cause Borrowers' Agent to deliver to
Administrative Lender a statement of the President or principal financial
officer of Parent setting forth details as to such reportable event and the
action which Borrowers propose to take with respect thereto, together with a
copy of the notice of such reportable event to the PBGC.
(c) Promptly, upon receipt (but in no event more than ten Business Days
after receipt) of a notice by Borrower, any Affiliate of Borrower or any
administrator of any Plan that the PBGC has instituted proceedings to terminate
a Plan or to appoint a trustee to administer a Plan, cause Borrowers' Agent to
provide to Administrative Lender a copy of such notice.
8.10 CONDUCT OF BUSINESS
Except as otherwise permitted by this Agreement, (a) conduct, and cause
each Subsidiary to conduct, its business in the ordinary course and (b) use, and
cause each Subsidiary to use, its reasonable efforts in the ordinary course and
consistent with past practice to (i) preserve its business and the goodwill and
business of the customers, advertisers, suppliers and others with whom it has
business relations and (ii) keep available the services and goodwill of its
present employees.
8.11 PRESERVATION OF CORPORATE EXISTENCE, ETC.
Preserve and maintain, and cause each Subsidiary to preserve and
maintain, (i) all licenses, Permits, governmental approvals, rights, privileges,
franchises and General Intangibles necessary for the conduct of its business,
and (ii) its corporate existence and rights (charter and statutory), except to
the extent that the failure to do so could not have a Material Adverse Effect.
8.12 ACCESS
(a) At any reasonable time and from time to time upon at least two
Business Days prior notice from Lender (unless a Default shall have occurred and
be continuing, in which case no prior notice is necessary), permit Lender and/or
any of Lender's agents or representatives, to (i) examine and make copies of and
abstracts from Borrower's and each Subsidiary's records and books of account,
(ii) visit Borrower's properties, (iii) discuss Borrower's and each Subsidiary's
affairs, finances and accounts with any of its officers or directors who may
then be reasonably available, (iv) communicate directly with Borrower's
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independent certified public accountants, (v) arrange for verification of
Borrower's Rights to Payment under reasonable procedures directly with the
obligors thereon or by other methods, and (vi) examine and inspect Borrower's
and each Subsidiary's assets. Borrower shall authorize its independent certified
public accountants to disclose to Lender any and all financial statements and
other information of any kind, including, without limitation, copies of any
management letter, work papers or the substance of any oral information that
such accountants may have with respect to the business, financial condition,
results of operations or other affairs of Borrower and each Subsidiary.
(b) Borrower shall execute and deliver at the request of Administrative
Lender such instruments as may be necessary for Administrative Lender or any
Lender to obtain such information concerning the business of Borrower as
Administrative Lender or any Lender may require from accountants, service
bureaus or others having custody of or maintaining records or assets of
Borrower, provided that the foregoing shall not (and is not intended to) require
Borrower to take any action that would constitute a waiver of Borrower's
attorney/client privilege with any of Borrower's attorneys.
8.13 PERFORMANCE AND COMPLIANCE WITH OTHER COVENANTS
Perform and observe, and cause each Subsidiary to perform and observe,
all the terms, covenants and conditions required to be performed and observed by
it under its contractual obligations (including, without limitation, to pay all
rent and other charges payable under any lease and all debts and other
obligations as the same become due), and do all things necessary to preserve and
to keep unimpaired its rights under such contractual obligations, other than
such failures the consequences of which in the aggregate could not have a
Material Adverse Effect.
8.14 FISCAL YEAR; ACCOUNTING PRACTICES
Notify Administrative Lender at least 30 days in advance of any action
it intends to take to change (i) its fiscal year or (ii) its method of
accounting, or any accounting practice used by it, or the application of GAAP in
a manner inconsistent with the financial statements previously delivered by it
to Administrative Lender.
8.15 ENVIRONMENTAL
(a) Promptly give notice to Administrative Lender upon obtaining
knowledge of (i) any claim, injury, proceeding, investigation or other action,
including a request for information or a notice of potential environmental
liability, by or from any Governmental Authority or any third-party claimant
that could result in Borrower or any Subsidiary incurring Environmental
Liabilities and Costs that could have a Material Adverse Effect or (ii) the
discovery of any Release at, on, under or from any real property, facility or
equipment owned or leased by Borrower or a Subsidiary in excess of reportable or
allowable standards or levels under any applicable Environmental Law, or in any
manner or amount that could
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result in Borrower or any Subsidiary incurring Environmental Liabilities and
Costs that could have a Material Adverse Effect.
(b) Upon discovery of the presence on any property owned or leased by
Borrower or a Subsidiary of any Contaminant that reasonably could be expected to
result in Environmental Liabilities and Costs that could have a Material Adverse
Effect, take all Remedial Action required by applicable Environmental Law.
8.16 LIENS
Keep the Collateral free and clear of all Liens, except Permitted Liens.
8.17 FUTURE SUBSIDIARIES
Upon any Person becoming a Subsidiary after the Closing Date, notify
Administrative Lender of such event, and execute and deliver, and cause such
Subsidiary to execute and deliver, such additional Loan Documents as
Administrative Lender may reasonably require, including, without limitation,
security agreements, guaranties and pledge agreements.
8.18 USE OF PROCEEDS
Use the proceeds of the Loans solely for Borrowers' general working
capital and corporate purposes.
8.19 FURTHER ASSURANCES
At Administrative Lender's request at any time and from time to time,
duly execute and deliver, and cause each Subsidiary to execute and deliver, such
further agreements, documents and instruments, and do or cause to be done such
further acts as may reasonably be necessary or proper to evidence, perfect,
maintain and enforce the security interests and the priority thereof in the
Collateral and to otherwise effectuate the provisions or purposes of this
Agreement or any of the other Loan Documents, at Borrowers' expense.
Administrative Lender may at any time and from time to time request a
certificate from Borrowers' Agent representing that all conditions precedent to
the advancement of credit contained herein are satisfied. In the event of such
request by Administrative Lender, each Lender may cease to make any further
advancements of credit until Administrative Lender has received such certificate
and Administrative Lender has determined that such conditions are satisfied.
ARTICLE IX. NEGATIVE COVENANTS
Borrower covenants that so long as Lenders remain committed to extend
credit to Borrower pursuant to the terms hereof and until performance and
payment in full, in cash, of all Obligations, Borrower will not:
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9.1 LIENS
Create or suffer to exist, or permit any U.S. Subsidiary to create or
suffer to exist, any Lien upon or with respect to any of its properties, whether
now owned or hereafter acquired, or assign any right to receive income, except
Permitted Liens.
9.2 INDEBTEDNESS
Create or suffer to exist, or permit any Subsidiary to create or suffer
to exist, any Indebtedness, except the following to the extent that after giving
effect to the incurrence thereof no Default exists:
(a) the Obligations;
(b) current liabilities in respect of taxes, assessments and
governmental charges or levies incurred, or liabilities for labor, materials,
inventory, services, supplies and rentals incurred, or for goods or services
purchased, in the ordinary course of business consistent with past practice and
industry practice in respect of arm's length transactions;
(c) Indebtedness outstanding on the Closing Date and referenced on
Section 6.17 of the Disclosure Schedule and all renewals, extensions,
refinancing or refunding of such Indebtedness in a principal amount which does
not exceed the principal amount outstanding immediately before such refinancing,
together with all prepayment fees, penalties and expenses in respect of the
Indebtedness being renewed, extended, refinanced or refunded, provided each such
renewal, extension, refinancing or refunding is on terms and conditions no less
favorable to the creditors than the Indebtedness being renewed, extended,
refinanced or refunded;
(d) Debt subordinated in writing to the Obligations on terms acceptable
to Administrative Lender in favor of the prior payment in full in cash of the
Obligations;
(e) Indebtedness under Rate Protection Agreements permitted under
Section 9.13;
(f) Indebtedness of a U.S. Subsidiary owed to Borrower or to another
U.S. Subsidiary; and
(g) purchase money Indebtedness to finance the purchase of fixed assets
(including equipment); provided that (i) the total of all such Indebtedness
shall not exceed an aggregate principal amount of $10,000,000 at any one time
outstanding (in addition to any such Indebtedness referred to in Section
9.2(c)); (ii) such Indebtedness when incurred shall not exceed the purchase
price of the assets financed; and (iii) no such Indebtedness shall be refinanced
for a principal amount in excess of the principal balance outstanding thereon at
the time of such refinancing.
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9.3 RESTRICTED PAYMENTS, REDEMPTIONS
Do any of the following at any time if after giving effect to any such
action a Default is continuing or would be caused by such action:
(a) declare or make any dividend payment or other distribution of
assets, properties, cash, rights, obligations or securities on account or in
respect of any of its Stock or Stock Equivalents except (i) dividends paid to
Borrower or (ii) dividends paid by Parent solely in Stock or Stock Equivalents
of Parent; or
(b) purchase, redeem or otherwise acquire for value any of Parent's
Stock or Stock Equivalents.
9.4 MERGERS, STOCK ISSUANCES, SALE OF ASSETS, ETC.
(a) Merge or consolidate with, or permit any Subsidiary to merge or
consolidate with, any Person or acquire all or substantially all of the Stock or
Stock Equivalents of any Person; provided any Subsidiary may liquidate or
dissolve voluntarily into, and may merge with and into, or have its stock
otherwise acquired by Parent or any other Subsidiary located in the United
States or any other Subsidiary having its principal place of business in the
same country as such Subsidiary;
(b) Acquire all or substantially all, or permit any Subsidiary to
acquire all or substantially all of (i) the assets of any Person or (ii) the
assets constituting the business of a division, branch or other unit operation
of any Person; provided any Subsidiary may acquire all or substantially all of
the assets of (or the assets constituting the business of a division, branch or
other unit operation of) any other Subsidiary located in the United States or
any other Subsidiary having its principal place of business in the same country
as such Subsidiary; or
(c) Sell, convey, transfer, lease or otherwise dispose of, or permit any
Subsidiary to sell, convey, transfer, lease or otherwise dispose of, any of its
assets or any interest therein to any Person, or permit or suffer any other
Person to acquire any interest in any of its assets, except (i) Permitted Liens,
(ii) as otherwise permitted under item (a) or (b) above, or (iii) the sale or
disposition of inventory in the ordinary course of business and/or assets which
have become obsolete or are replaced in the ordinary course of business.
9.5 INVESTMENTS
Make, incur, assume or suffer to exist any Investment in any other
Person, except: (a) Investments existing on the Closing Date and identified in
Section 9.5 of the Disclosure Schedule; (b) Cash Equivalent Investments; (c)
without duplication, Investments permitted as Indebtedness pursuant to Section
9.2; (d) without duplication, Investments permitted as Capital Expenditures
pursuant to Section 10.5; (e) an Investment by Parent in Colorado Sweet Gold LLC
which does not exceed $10,000,000, of which not more than $5,000,000
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may be in cash payable before the first anniversary of the closing of such
Investment; (f) in the ordinary course of business, Investments by Borrower in
any Subsidiary, or by any such Subsidiary in any of its subsidiaries, by way of
contributions to capital or loans or advances; and (g) other Investments in an
aggregate amount at any one time not to exceed $5,000,000 minus any losses on
such Investments; provided, however, that (i) any Investment which when made
complies with the requirements of the definition of the term "Cash Equivalent
Investment" may continue to be held notwithstanding that such Investment if made
thereafter would not comply with such requirements; and (ii) no Investment
otherwise permitted by item (f) or (g) shall be permitted to be made if,
immediately before or after giving effect thereto, any Default shall have
occurred and be continuing.
9.6 CHANGE IN NATURE OF BUSINESS
Directly or indirectly engage, or permit any Subsidiary to directly or
indirectly engage, in any business activity other than its current business
activity.
9.7 PLANS
(a) Adopt or become obligated to contribute to, or permit any U.S.
Subsidiary to adopt or become obligated to contribute to, any Plan subject to
Title IV or any multi-employer Plan or any other Plan subject to Section 412 of
the Internal Revenue Code (except for any such Plan listed on the Disclosure
Schedule on the Closing Date), (b) establish or become obligated with respect
to, or permit any U.S. Subsidiary to establish or become obligated to contribute
to, any new welfare benefit Plan, or modify any existing welfare benefit Plan,
which is reasonably likely to result in an increase of the present value of
future liabilities for post-retirement life insurance and medical benefits, or
(c) establish or become obligated to contribute to, or permit any U.S.
Subsidiary to establish or become obligated to contribute to, any new unfunded
pension Plan, or modify any existing unfunded pension Plan, which is reasonably
likely to result in an increase in the present value of future unfunded
liabilities under all such plans.
9.8 CANCELLATION OF INDEBTEDNESS OWED TO IT
Cancel, or permit any Subsidiary to cancel, any claim or Indebtedness
owed to it except for legitimate business purposes in the reasonable judgment of
Borrower and in the ordinary course of business.
9.9 MARGIN REGULATIONS
Use, or permit any Subsidiary to use, the proceeds of any Loan to
purchase or carry any margin stock (within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System).
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9.10 ENVIRONMENTAL
Permit any lessee or any other Person to dispose of any Contaminant by
placing it in or on the ground or waters of any property owned or leased by
Borrower or any Subsidiary, except in material compliance with Environmental Law
or the terms of any Permit or other than those which in the aggregate could not
have a Material Adverse Effect.
9.11 TRANSACTIONS WITH AFFILIATES
Enter, or permit any Subsidiary to enter, into any transaction directly
or indirectly with or for any Affiliate of Borrower except in the ordinary
course of business on a basis no less favorable to such Affiliate than would be
obtained in a comparable arm's length transaction with a Person not an Affiliate
of Borrower involving assets that are not material to the business and
operations of Borrower or the Subsidiaries.
9.12 NEW COLLATERAL LOCATION; NAME CHANGE
Open any new location or change its name, or permit any U.S. Subsidiary
to do so, unless (i) Borrowers' Agent gives Administrative Lender (a) 30 days
prior notice of the intended name change, (b) 30 days prior notice of the
intended opening of such new location, and (ii) Borrowers execute and Borrowers'
Agent delivers to Administrative Lender such agreements, documents and
instruments as Administrative Lender deems reasonably necessary or desirable to
protect its interests in the Collateral, including, without limitation, UCC-1
financing statements.
9.13 NO SPECULATIVE TRANSACTIONS
Engage in, or permit any Subsidiary to engage in, any Commodity Contract
or Interest Rate Contract, except (i) on terms consistent with prior practice or
(ii) one or more Rate Protection Agreements on terms reasonably acceptable to
Administrative Lender.
ARTICLE X. FINANCIAL COVENANTS
10.1 LEVERAGE RATIO
As of the end of each fiscal quarter, Parent shall maintain a Leverage
Ratio not greater than: (i) 2.75:1 as of fiscal quarters ending on or before May
31, 2002; (ii) 2.5:1 as of fiscal quarters ending after May 31, 2002 and before
June 1, 2003; and (iii) 2:1 as of fiscal quarters ending after May 31, 2003.
10.2 INTEREST COVERAGE RATIO
As of the end of each fiscal quarter, Parent shall maintain an Interest
Coverage Ratio not less than 3:1.
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10.3 FIXED CHARGE COVERAGE RATIO
As of the end of each fiscal quarter, Parent shall maintain a Fixed
Charge Coverage Ratio not less than 1:1.
10.4 TANGIBLE NET WORTH
Parent will not permit its Tangible Net Worth as of the end of any
fiscal quarter to be less than the total of (i) an amount equal to the greater
of $43,950,000 or 90% of Parent's Tangible Net Worth immediately after Penford
Holdings' acquisition of Penford Australia, plus (ii) 50% of the sum of Parent's
consolidated net income for each fiscal quarter since the Closing Date
(exclusive of any fiscal quarter in which Parent's consolidated net income is
less than zero), plus (iii) an amount equal to the proceeds of any Stock or
Stock Equivalent issued by Parent or any Subsidiary after the Closing Date.
10.5 CAPITAL EXPENDITURES
Parent shall not make, nor permit any Subsidiary to make, capital
expenditures, including, without limitation, capital leases, synthetic leases,
tax retention operating leases, and financing leases, at any time, except in an
amount not in excess of $20,000,000 in any fiscal year of Parent in the
aggregate for Parent and the Subsidiaries. The foregoing limitation shall not
apply to expenditures made to repair, modify or replace any fixed asset or
improvement damaged or destroyed by or as a result of any insurable event or
condemnation to the extent that the aggregate amount of all such expenditures
does not exceed the net amount of the insurance and condemnation proceeds
payable to Borrowers and Subsidiaries with respect to such insurable event or
condemnation (including such proceeds applied to the reduction of the Revolving
Loans pursuant to the terms of any of the Loan Documents).
ARTICLE XI. EVENTS OF DEFAULT
11.1 EVENTS OF DEFAULT
The occurrence of any of the following shall constitute an "Event of
Default" under this Agreement:
(a) any Obligor shall fail to pay when due any amount payable under any
of the Loan Documents within five days after the due date therefor;
(b) any financial statement or certificate furnished to Administrative
Lender or any Lender in connection with, or any representation or warranty made
by any Obligor under any of the Loan Documents shall prove to be false or
misleading in any material respect when furnished or made;
(c) Borrowers or Borrowers' Agent shall fail to provide any certificate,
report or other information which it is required to provide pursuant to Section
8.3 or Section 8.9 on the date specified in Section 8.3 or Section 8.9; provided
that unless Borrowers and Borrowers'
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Agent have previously failed to provide any required certificate, report or
other information by the required date on two prior occasions within the
preceding 12 months such failure shall be considered an Event of Default only if
Borrowers and Borrowers' Agent fail to provide such certificate, report or other
information within five Business Days (two Business Days with respect to Section
8.9(a)) of the earlier of (i) the date Borrower has knowledge of the failure to
so provide such certificate, report or other information, or (ii) the date
Administrative Lender, at the request of a Lender, notifies Borrowers' Agent of
such failure;
(d) any default by Borrowers in the performance of or compliance with
any obligation, agreement or other provision contained in Sections 5.2(a), 8.5,
8.10, 8.11, 8.12, 8.14, 8.16, 8.17, 9.1, 9.2, 9.3, 9.4, 9.5, 9.6 and 9.12 and
contained in Article X;
(e) any default by any Obligor in the performance of or compliance with
any obligation, agreement or other provision contained in any Loan Document
(other than those referred to in subsections (a) through (d) above) for 30 days
after notice thereof has been given to Borrowers' Agent by Administrative
Lender;
(f) any breach(es) by any Obligor or Subsidiary in the payment or
performance of any other obligation(s) under the terms of any contract(s) or
instrument(s) (other than any of the Loan Documents) evidencing Indebtedness in
excess of $2,000,000 in the aggregate if such breach(es) has/have not been cured
to the satisfaction of the affected creditor(s) or waived by such creditor(s)
within any applicable cure period provided under the contract(s) or
instrument(s), or the occurrence of any "Event of Default" (as defined under
either of the Australian Facilities);
(g) any judgment(s) or order(s) for the payment of money in excess of
$2,000,000 in the aggregate shall be rendered against one or more Obligors and
Subsidiaries and either (i) enforcement proceedings shall have been commenced by
any creditor upon any such judgment or order; or (ii) there shall be any period
of 10 consecutive days during which a stay of enforcement of any such judgment
or order, by reason of a pending appeal or otherwise, shall not be in effect;
(h) any Obligor or Subsidiary shall become insolvent, or shall suffer or
consent to or apply for the appointment of a receiver, trustee, custodian or
liquidator of itself or any of its property, or shall generally be unable to or
fail to pay its debts as they become due, or shall make a general assignment for
the benefit of creditors; any Obligor or Subsidiary shall file a voluntary
petition in bankruptcy, or seek to effect a plan or other arrangement with
creditors or any other relief under the Bankruptcy Code, or under any state or
other Federal law granting relief to debtors, whether now or hereafter in
effect; or any involuntary petition or proceeding pursuant to the Bankruptcy
Code or any other applicable state or other Federal law relating to bankruptcy,
reorganization or other relief for debtors is filed or commenced against any
Obligor or Subsidiary and is not dismissed, stayed or vacated within 60 days
thereafter; any Obligor or Subsidiary shall file an answer admitting the
jurisdiction of the court and the material allegations of any involuntary
bankruptcy petition; any Obligor or Subsidiary shall be adjudicated a bankrupt,
or an order for relief shall be entered by any court
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of competent jurisdiction under the Bankruptcy Code or any other applicable
state or Federal law relating to bankruptcy, reorganization or other relief for
debtors; or any Obligor or Subsidiary shall take any corporate action
authorizing, or in furtherance of, any of the foregoing;
(i) if any of the following events occur: (1) any Plan incurs any
"accumulated funding deficiency" (as defined in ERISA) whether waived or not,
(2) Parent or any Affiliate of Parent engages in any "prohibited transaction"
(as defined in ERISA), (3) any Plan is terminated, (4) a trustee is appointed by
an appropriate United States district court to administer any Plan, or (5) the
PBGC institutes proceedings to terminate any Plan or to appoint a trustee to
administer any Plan;
(j) the dissolution or liquidation of any Obligor or Subsidiary, or any
Obligor or Subsidiary or its directors or stockholders shall take action seeking
to effect the dissolution or liquidation of any Obligor or Subsidiary;
(k) any Change in Control;
(l) any draw on a Letter of Credit; or
(m) any Loan Document, or any Lien granted thereunder, shall (except in
accordance with its terms), in whole or in part, terminate, cease to be
effective or cease to be the legally valid, binding and enforceable obligation
of any Obligor party thereto; any Obligor shall, directly or indirectly, contest
in any manner such effectiveness, validity, binding nature or enforceability; or
any Lien securing any Obligation shall, in whole or in part, cease to be a
perfected first priority Lien, subject only to those exceptions expressly
permitted by such Loan Document.
11.2 REMEDIES
(a) During the continuance of any Event of Default (other than an Event
of Default referred to in Section 11.1(h)), Administrative Lender may, with the
consent of the Required Lenders, or shall, upon instructions from the Required
Lenders, by notice to Borrowers' Agent, (i) terminate the obligations of Lenders
to extend any further credit under any of the Loan Documents, and (ii) declare
all or any part of the Obligations to be immediately due and payable without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived by Borrowers, and/or take such enforcement action as is
permitted under this Section 11.2. Upon the occurrence or existence of any Event
of Default described in Section 11.1(h), immediately and without notice, (A) the
obligations, if any, of Lenders to extend any further credit under any of the
Loan Documents shall automatically cease and terminate, and (B) all indebtedness
of Borrowers under the Loan Documents shall automatically become immediately due
and payable, without presentment, demand, protest or any other notice of any
kind, all of which are hereby expressly waived by Borrowers. Immediately after
taking any action under this Section 11.2, Administrative Lender shall notify
each Lender of such action.
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(b) During the continuance of an Event of Default, Administrative
Lender, in addition to any other rights and remedies contained in the Loan
Documents, shall have all of the rights and remedies of a secured party under
the Code and all other applicable law, all of which rights and remedies shall be
cumulative and nonexclusive to the extent permitted by law. Administrative
Lender may cause the Collateral to remain on Borrower's premises, at Borrowers'
expense, pending sale or other disposition thereof. Administrative Lender shall
have the right to conduct such sales on Borrower's premises or elsewhere, at
Borrowers' expense, on such occasion(s) as Administrative Lender may see fit,
and Borrowers, at Administrative Lender's request, will, at Borrowers' expense,
assemble the Collateral and make it available to Administrative Lender at such
place(s) as Administrative Lender may reasonably designate from time to time.
Any sale, lease or other disposition by Administrative Lender of the Collateral,
or any part thereof, may be for cash or other value. Borrowers shall execute and
deliver, or cause to be executed and delivered, such instruments, documents,
assignments, deeds, waivers, certificates and affidavits and take such further
action as Administrative Lender shall reasonably require in connection with such
sale, and Borrower hereby constitutes Administrative Lender as its
attorney-in-fact to execute any such instrument, document, assignment, deed,
waiver, certificate or affidavit on behalf of Borrower and in its name. At any
sale of the Collateral, the Collateral to be sold may be sold in one lot as an
entirety or in separate lots as Administrative Lender may determine.
Administrative Lender shall not be obligated to make any sale of any Collateral
if it determines not to do so, regardless of the fact that notice of sale was
given. Administrative Lender may, without notice or publication, adjourn any
public or private sale or cause the sale to be adjourned from time to time by
announcement at the time and place fixed for sale, and such sale may, without
further notice, be made at the time and place to which it is so adjourned. In
case any sale of Collateral is made on credit or for future delivery, the
Collateral so sold may be retained by Administrative Lender until the sale price
is paid, but Administrative Lender shall not incur any liability if any
purchaser fails to pay for any Collateral so sold and, in case of any such
failure, such Collateral may be sold again. At any public sale, any Lender (i)
may bid for or purchase the Collateral offered for sale free (to the extent
permitted by law) from any rights of redemption, stay or appraisal on the part
of Borrower with respect to the Collateral, (ii) make payment on account thereof
by using any claim then due and payable to such Lender from Borrower as a credit
against the purchase price, and (iii) upon compliance with the terms of sale,
hold, retain and dispose of such property without further accountability to
Borrower therefor. Borrowers acknowledge that portions of the Collateral may be
difficult to preserve and dispose of and may be subject to complex maintenance
and management; accordingly, Administrative Lender shall have the widest
possible latitude in the exercise of its rights and remedies hereunder.
(c) Administrative Lender is hereby granted a license and right to use,
without charge upon the occurrence and during the continuance of an Event of
Default and until the Obligations are fully and finally paid in cash, Borrowers'
labels, patents, copyrights, rights of use of any name, trade secrets, trade
names, trademarks, service marks, advertising material, General Intangibles and
any other property of a similar nature in completing the production, advertising
for sale and sale of any Collateral.
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(d) Any notice required to be given by Administrative Lender with
respect to any of the Collateral, which notice is given pursuant to Section 13.1
and deemed received pursuant to Section 13.1 at least five Business Days before
a sale, lease, disposition or other intended action by Administrative Lender
with respect to any of the Collateral, shall constitute fair and reasonable
notice to Borrowers of any such action. A public sale in the following fashion
shall be conclusively presumed to be reasonable: (i) the sale is held in a
county where any part of the Collateral is located or in which Borrower has a
place of business; (ii) the sale is conducted by auction, but it need not be by
a professional auctioneer; (iii) any Collateral is sold as is and without any
preparation for sale; and (iv) Borrowers' Agent is given notice of such public
sale pursuant to the preceding sentence.
(e) Upon the occurrence and during the continuance of an Event of
Default, Administrative Lender shall have, with respect to Rights to Payment,
all rights and powers to: (i) direct any and all account debtors to make all
payments in respect of the Rights to Payment directly to Administrative Lender
or otherwise demand payment of any or all of the Rights to Payment; (ii) enforce
payment of any or all of the Rights to Payment by legal proceedings or
otherwise; (iii) exercise Borrower's rights and remedies with respect to any
actions or proceedings brought to collect a Right to Payment; (iv) sell or
assign any Right to Payment upon such terms, for such amount and at such time or
times as Administrative Lender deems advisable; (v) settle, adjust, compromise,
extend or renew a Right to Payment; (vi) discharge or release any Right to
Payment; and (vii) prepare, file and sign Borrower's name on any proof of claim
in bankruptcy or any similar document against an account debtor, and to
otherwise exercise the rights granted herein.
(f) Administrative Lender shall have no obligation (i) to preserve any
rights to the Collateral against any Person, (ii) to make any demand upon or
pursue or exhaust any rights or remedies against Borrowers or others with
respect to payment of the Obligations, (iii) to pursue or exhaust any rights or
remedies with respect to any of the Collateral or any other security for the
Obligations, or (iv) to marshal any assets in favor of Borrower or any other
Person against or in payment of any or all of the Obligations.
(g) Borrowers recognize that federal and/or state securities and other
laws may limit the flexibility desired to achieve an otherwise commercially
reasonable disposition of Collateral, and in the event of potential conflict
between such laws and what in other circumstances might constitute commercial
reasonableness, it is intended that consideration of such laws will prevail over
attempts to achieve such commercial reasonableness. In connection with any sale
or other disposition of Collateral, compliance by Administrative Lender with the
written advice of its counsel concerning the potential effect of any such law
will not be cause for Borrower, or any other Person, to claim that such sale or
other disposition was not commercially reasonable.
(h) Borrowers shall pay to Administrative Lender (for distribution to
Lenders, as appropriate), on demand and as part of the Obligations, all costs
and expenses, including court costs and costs of sale, incurred by
Administrative Lender or any Lender in exercising
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any of its rights or remedies hereunder, and all costs and expenses incurred in
connection with any review of any part of the Collateral.
11.3 ADMINISTRATIVE LENDER AS BORROWERS' ATTORNEY
Borrower hereby appoints Administrative Lender or any other Person whom
Administrative Lender may designate, as Borrower's attorney, with power during
the continuation of an Event of Default: to indorse Borrower's name on any
checks, notes, acceptances, money orders, drafts or other forms of payment or
security that may come into Administrative Lender's possession; to sign
Borrower's name on any invoice or bill of lading relating to any Right to
Payment, on drafts against customers, on schedules and assignments of Rights to
Payment, on notices of assignment, financing statements and other public
records, and on notices to customers; to notify the post office authorities to
change the address for delivery of Borrower's mail to an address designated by
Administrative Lender; to receive, open and process all mail addressed to
Borrower; to ask for, demand, sue for, collect, receive, receipt and give
aquittance for any and all moneys due or to become due with respect to any
Collateral; to settle, compromise, prosecute or defend any action, claim or
proceeding with respect to Collateral; to sell, assign, pledge, transfer and
make any agreement with respect to or otherwise deal with the Collateral; and to
do all things necessary to perfect Administrative Lender's security interest in
the Collateral, to preserve and protect the Collateral and to otherwise carry
out this Agreement; provided, however, that nothing contained in this Section
11.3 will be construed as requiring or obligating Administrative Lender to take
any action. Provided Administrative Lender acts in a reasonable manner, Borrower
ratifies and approves all acts of such attorney, and neither Administrative
Lender nor the attorney will be liable for any acts or omissions nor for any
error of judgment or mistake of fact or law. This power being coupled with an
interest is irrevocable until the Obligations have been fully satisfied and
indefeasibly paid in cash or the financing arrangements between Administrative
Lender and Borrowers are terminated, whichever shall later occur.
ARTICLE XII. ADMINISTRATIVE LENDER
The Intercreditor Agreement sets forth certain provisions with respect
to the appointment and duties of the Administrative Lender and the
Administrative Lender's relationship with the Lenders. No Lender identified as a
"Syndication Lender" or "Documentation Lender" shall have any right, power,
obligation, liability, responsibility or duty under this Agreement in such
capacity. Each Lender acknowledges that it has not relied on and will not rely
on any Lender identified as a "Syndication Lender" or "Documentation Lender" in
deciding to enter into this Agreement or in taking or not taking any action
hereunder.
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ARTICLE XIII. MISCELLANEOUS
13.1 NOTICES
Except as specified otherwise herein, all notices, requests and demands
which any party is required or may desire to give to any other party under this
Agreement must be in writing. Each notice to be given to Administrative Lender
or any Lender shall be addressed to Administrative Lender and each Lender at its
address or fax number set forth as the "Address for Notices" for Administrative
Lender or such Lender in Schedule I hereto, or to such other address or fax
number as Administrative Lender or any Lender may designate for itself by notice
to all other parties. Each notice to be given to Borrowers' Agent or Borrower
shall be addressed to Borrowers' Agent at the following address or fax number:
To Borrowers' Agent: Penford Corporation
777 108th Avenue N.E.
Suite 2390
Bellevue, Washington 98004
Attn: Chief Executive Officer
Fax: (425) 462-2819
or to such other address or fax number as Borrowers' Agent may designate for
itself by notice to all other parties. Each such notice, request and demand
shall be deemed given or made as follows: (a) three Business Days following
deposit in the United States mails, with first class postage prepaid, (b) the
next Business Day after such notice was delivered to a regularly scheduled
overnight delivery, or (c) upon receipt of notice given by fax, mailgram,
telegram, telex, or personal delivery.
13.2 COSTS, EXPENSES, ATTORNEYS' FEES
Borrowers shall pay immediately upon demand the full amount of all
payments, advances, charges, costs and expenses, including reasonable attorneys'
fees (whether incurred at the trial or appellate level, in an arbitration or
administrative proceeding, in bankruptcy (including, without limitation, any
adversary proceeding, contested matter or motion) or otherwise), incurred by
Administrative Lender and/or any Lender in connection with (a) the negotiation
and preparation of the Loan Documents, (b) the enforcement, preservation or
protection (or attempted enforcement, preservation or protection) of
Administrative Lender's and/or any Lender's rights (except in a dispute solely
between Lenders), including, without limitation, periodic collateral
examinations, and/or the collection of any amounts which become due under any of
the Loan Documents, and (c) the prosecution or defense of any action in any way
related to any of the Loan Documents, including without limitation, any action
for declaratory relief, and including any of the foregoing incurred in
connection with any bankruptcy proceeding relating to Borrower. If legal action
is required to enforce the terms of any Loan Document, the prevailing party will
be entitled to reasonable attorneys' fees and costs incurred therein, whether
incurred at arbitration, trial, on appeal, in a bankruptcy proceeding, or
otherwise.
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13.3 INDEMNIFICATION
(a) To the fullest extent permitted by law, Borrowers hereby agree to
protect, indemnify, defend and hold harmless each of Administrative Lender and
Lenders and each of their respective officers, directors, shareholders,
employees, agents, attorneys and Affiliates (collectively, "Indemnitees") from
and against any liabilities, losses, damages or expenses of any kind or nature
and from any suits, claims or demands (including in respect of or for reasonable
attorneys' fees (whether incurred at the trial or appellate level, in an
arbitration or administrative proceeding, in bankruptcy (including, without
limitation, any adversary proceeding, contested matter or motion) or otherwise)
and other expenses, including the allocated costs and expenses of internal
counsel) arising on account of or in connection with any matter or thing or
action or failure to act by Indemnitees, or any of them, arising out of or
relating to any Loan Document, including without limitation any use by Borrower
of any proceeds of credit advanced, except to the extent such liability arises
from the willful misconduct or gross negligence of the Indemnitees
(collectively, the "Indemnified Liabilities").
(b) Upon receiving knowledge of any suit, claim or demand asserted by a
third party that Administrative Lender and/or any Lender believes is covered by
this indemnity, such Indemnitee shall give Borrowers' Agent notice of the matter
and an opportunity to defend it, at Borrowers' sole cost and expense, with legal
counsel satisfactory to such Lender. Such Lender may also require Borrowers to
defend the matter. Any failure or delay of such Lender to notify Borrowers'
Agent of any such suit, claim or demand shall not relieve Borrowers of their
obligations under this Section, but shall reduce such obligations to the extent
of any increase in those obligations caused solely by an unreasonable failure or
delay in providing such notice. Borrowers may not settle or otherwise compromise
any claim with respect to any Indemnified Liability unless the settlement
includes an unconditional release of the Indemnitee from all liability on claims
that are the subject of such settlement and may not settle or otherwise
compromise any claim with respect to any Indemnified Liability, other than a
claim for money damages, without the prior written consent of the Indemnitee,
which consent shall not be unreasonably withheld.
(c) If and to the extent that the foregoing undertaking may be
unenforceable for any reason Borrowers shall make the maximum contribution
permissible under applicable law to the payment and satisfaction of each of the
Indemnified Liabilities.
(d) This Section shall survive the payment in full and performance of
all of Borrowers' other Obligations.
13.4 WAIVERS, AMENDMENTS
Any term, covenant, agreement or condition of any Loan Document may be
amended or waived if such amendment or waiver is in writing and is signed by the
Required Lenders (or by Administrative Lender with written consent of the
Required Lenders), Borrowers' Agent and any other party thereto; provided,
however, that any amendment, waiver or
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consent which affects the rights or duties of Administrative Lender or L/C Bank
must be in writing and be signed also by the affected Administrative Lender or
L/C Bank; and provided further, that any amendment, waiver or consent which
effects any of the following changes must be in writing and signed by all
Lenders (or by Administrative Lender with the written consent of all Lenders):
(a) increases the maximum amount of credit available hereunder; (b) extends the
maturity date of any Loan; (c) reduces the principal of, or interest (including
default rate interest) on, any Loan or any fees or other amounts payable for the
account of Lenders hereunder; (d) postpones or conditions any date fixed for any
payment of the principal of, or interest on, any Loan or any fees or other
amounts payable for the account of Lenders hereunder; (e) waives or amends this
Section 13.4; (f) amends the definition of Required Lenders or any provision of
this Agreement requiring approval of the Required Lenders or some other
specified amount of Lenders; (g) increases or decreases the Commitment or the
Ratable Portion of any Lender (other than through an assignment under Section
13.5); (h) waives any of the conditions set forth in Article VII; (i) releases
any material Collateral; (j) amends any of the draw conditions of a Letter of
Credit set forth in Section 3.3(a) or (k) amends any guaranty of the Obligations
(or releases any guarantor of is obligations thereunder. Unless otherwise
specified in such waiver or consent, a waiver or consent given hereunder shall
be effective only in the specific instance and for the specific purpose for
which given.
13.5 SUCCESSORS AND ASSIGNS
(a) BINDING EFFECT. The Loan Documents shall be binding upon and inure
to the benefit of Borrowers, Administrative Lender, Lenders, all future holders
of the Notes and their respective successors and permitted assigns, except that
Borrower may not assign or transfer any of its rights or obligations under any
Loan Document without the prior written consent of Administrative Lender and
each Lender. All references in this Agreement to any Person shall be deemed to
include all successors and assigns of such Person.
(b) PARTICIPATIONS. Any Lender may, in the ordinary course of its
business and in accordance with applicable law, at any time sell to one or more
banks or other financial institutions ("Participants") participating interests
in any obligation owing to such Lender under the Loan Documents, provided Lender
does so in compliance with the terms of the Intercreditor Agreement. In the
event of any such sale, (i) such Lender's obligations under the Loan Documents
to the other parties to the Loan Documents shall remain unchanged, (ii) such
Lender shall remain solely responsible for the performance thereof, (iii) such
Lender shall remain the holder of all Notes for all purposes under this
Agreement, and (iv) Borrowers, Borrowers' Agent and Administrative Lender shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under the Loan Documents. Participants shall
have no rights under the Loan Documents except as provided below. No Lender
shall sell any participating interest under which the Participant shall have any
right to vote on any amendment, consent or waiver of any Loan Document;
provided, however, that any agreement under which any Lender sells a
participating interest to a Participant may require the selling Lender to obtain
the consent of such Participant in
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order for such Lender to agree or consent to any amendment of a type specified
in items (a)-(k) of Section 13.4. No agreement under which any Lender sells a
participating interest to a Participant may permit the Participant to transfer,
pledge, assign, sell participations in or otherwise encumber its participating
interest. If any amount outstanding under the Loan Documents is due and unpaid,
each Participant shall have all the rights of a "Lender" under Section 13.6 in
respect of its participating interest in amounts owing under the Loan Documents
to the same extent as if the amount of its participating interest were owing
directly to it as a Lender under the Loan Documents; provided, however, that
such rights of setoff shall be subject to the obligation of such Participant to
share with Lenders, and Lenders agree to share with such Participant, as
provided in Section 3.8(b). Borrowers also agree that any Lender which has
transferred all or part of its interests in the Obligations to one or more
Participants shall, notwithstanding any such transfer, be entitled to the full
benefits accorded such Lender under Section 3.9, as if such Lender had not made
such transfer. Without limiting the foregoing, no Participant shall be entitled
to costs, expenses or attorneys' fees under Section 13.2 or Section 13.3.
(c) ASSIGNMENTS. Any Lender may, in the ordinary course of its business
and in accordance with applicable law, at any time, sell and assign to any
Lender, any Affiliate of a Lender or any other bank or financial institution
(individually, an "Assignee") all or any portion of its rights and obligations
under the Loan Documents (such a sale and assignment to be referred to herein as
an "Assignment"), provided Lender does so in compliance with the terms of the
Intercreditor Agreement and provided that in the absence of a Default,
Borrowers' Agent has consented to any such Assignment which is not to a Lender
or an Affiliate of a Lender, which consent will not be unreasonably withheld.
Each assigning Lender ("Assignor") shall, notwithstanding an Assignment of all
of its rights and obligations under the Loan Documents, nevertheless be entitled
to the indemnification rights contained in Section 13.3 for any events, acts or
omissions occurring before the effective date of its Assignment. Each Assignment
shall be deemed to amend Schedule I hereto to the extent necessary to reflect
the addition of each Assignee and the resulting adjustment of Commitments. On or
prior to the effective date of any Assignment, Borrowers, at their own expense,
shall execute and deliver to Administrative Lender, in exchange for each
surrendered Note of the Assignor, a new Note to the order of the Assignee
thereunder (with each new Note to be in an amount equal to the applicable
Commitment assumed by such Assignee) and, if the Assignor has retained
Commitment(s) hereunder, new Note(s) to the order of the Assignor (with each new
Note to be in an amount equal to the applicable Commitment retained by the
Assignor). Any Note surrendered by the Assignor shall be returned by
Administrative Lender to Borrowers' Agent marked "Exchanged".
(d) REGISTER. Administrative Lender shall maintain at Administrative
Lender's Office a record of each Assignment and a register for the recordation
of the names and addresses of Lenders and the Commitments of each Lender from
time to time. The entries in the register shall be conclusive and binding for
all purposes, absent manifest error, and Borrowers, Administrative Lender and
Lenders may treat each entity whose name is recorded in the register as a Lender
hereunder for all purposes of this Agreement. The register shall be
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available for inspection by Borrowers' Agent or any Lender at any reasonable
time and from time to time upon reasonable prior notice.
(e) REGISTRATION. Upon its receipt of an executed Assignment Agreement
as contemplated by the Intercreditor Agreement executed by an Assignor and an
Assignee (and, in the case of an Assignee that is not then a Lender or an
Affiliate of a Lender, by Borrowers' Agent and Administrative Lender) together
with payment by such Assignee to Administrative Lender of a registration and
processing fee of $3,500, Administrative Lender shall (i) promptly accept such
Assignment Agreement and (ii) on the effective date of such Assignment record
the information contained therein in the Register and give notice of such
acceptance and recordation to Lenders and Borrowers' Agent. Administrative
Lender may, from time to time at its election, prepare and deliver to Lenders
and Borrowers' Agent a revised Schedule I reflecting the names, addresses and
respective Commitments of all Lenders then parties hereto.
(f) FEDERAL RESERVE BANK. Notwithstanding the foregoing provisions of
this Section, any Lender may at any time pledge or assign all or any portion of
such Lender's rights under this Agreement and the other Loan Documents to a
Federal Reserve Bank; provided, however, that no such pledge or assignment will
release such Lender from such Lender's obligations hereunder or under any other
Loan Document.
13.6 SETOFF
In addition to any rights and remedies of Lenders provided by law, each
Lender shall have the right, with the prior consent of Administrative Lender
(which consent will not be unreasonably withheld) but without prior notice to
Borrower, any such notice being expressly waived by Borrower to the extent
permitted by applicable law, during the continuance of an Event of Default to
setoff and apply against any indebtedness, whether matured or unmatured, of
Borrower to such Lender any amount owing from such Lender or any Affiliate
thereof to Borrower at any time during the continuation of an Event of Default.
This right of setoff may be exercised by such Lender against Borrower or against
any trustee in bankruptcy, debtor in possession, assignee for the benefit of
creditors, receiver or execution, judgment or attachment creditor of Borrower or
against anyone else claiming through or against Borrower or such trustee in
bankruptcy, debtor in possession, assignee for the benefit of creditors,
receiver, or execution, judgment or attachment creditor, notwithstanding the
fact that such right of setoff shall not have been exercised by such Lender
prior to the occurrence of an Event of Default. Each Lender agrees promptly to
notify Borrower after any such setoff and application made by such Lender,
provided that the failure to give such notice shall not affect the validity of
such setoff and application.
13.7 NO WAIVER; CUMULATIVE REMEDIES
No failure on the part of Administrative Lender or any Lender to
exercise, and no delay in exercising, any right, power, privilege or remedy
under any Loan Document shall operate as a waiver thereof; nor shall any single
or partial exercise of any such right, power,
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privilege or remedy preclude any other or further exercise thereof or the
exercise of any other right, power, privilege or remedy. The rights and remedies
under the Loan Documents are cumulative and not exclusive of any rights, powers,
privileges and remedies that may otherwise be available to Administrative Lender
or any Lender.
13.8 ENTIRE AGREEMENT
The Loan Documents constitute the entire agreement among Borrowers,
Administrative Lender and Lenders with respect to the Loans and the Letters of
Credit and supersede all prior negotiations, communications, discussions,
correspondence and agreements concerning the subject matter hereof.
13.9 NO THIRD PARTY BENEFICIARIES
This Agreement is made and entered into for the sole protection and
benefit of the parties hereto and their respective permitted successors and
assigns, and no other person or entity shall be a third party beneficiary of, or
have any direct or indirect cause of action or claim in connection with, this
Agreement or any other of the Loan Documents to which it is not a party.
13.10 TIME
Time is of the essence of each and every provision of this Agreement and
each other of the Loan Documents.
13.11 SEVERABILITY OF PROVISIONS
If any provision of this Agreement shall be prohibited by or invalid
under applicable law, such provision shall be ineffective only to the extent of
such prohibition or invalidity without invalidating the remainder of such
provision or any remaining provisions of this Agreement.
13.12 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of the State of Washington.
13.13 SUBMISSION TO JURISDICTION
EACH OF BORROWER, ADMINISTRATIVE LENDER AND LENDERS HEREBY: (A) SUBMITS
TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF WASHINGTON AND THE
FEDERAL COURTS OF THE UNITED STATES FOR THE WESTERN DISTRICT OF WASHINGTON FOR
THE PURPOSE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY OF THE
LOAN DOCUMENTS; (B) AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH
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COURTS; (C) IRREVOCABLY WAIVES (TO THE FULL EXTENT PERMITTED BY APPLICABLE LAW)
ANY OBJECTION WHICH IT NOW OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY
SUCH ACTION OR PROCEEDING BROUGHT IN ANY OF THE FOREGOING COURTS, AND ANY
OBJECTION ON THE GROUND THAT ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM; AND (D) AGREES THAT A FINAL JUDGMENT IN
ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PERMITTED BY LAW.
13.14 WAIVER OF JURY TRIAL
EACH OF BORROWER, ADMINISTRATIVE LENDER AND LENDERS, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A
TRIAL BY JURY IN ANY ACTION, PROCEEDING, COUNTERCLAIM OR OTHER LITIGATION IN ANY
WAY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER OF THE LOAN
DOCUMENTS OR ANY OF THE TRANSACTIONS OR EVENTS REFERENCED HEREIN OR THEREIN OR
CONTEMPLATED HEREBY OR THEREBY, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT
CLAIMS OR OTHERWISE. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND/OR ANY OTHER OF THE
LOAN DOCUMENTS. A COPY OF THIS SECTION MAY BE FILED WITH ANY COURT AS WRITTEN
EVIDENCE OF THE WAIVER OF THE RIGHT TO TRIAL BY JURY AND THE CONSENT TO TRIAL BY
COURT.
13.15 COUNTERPARTS
This Agreement may be executed in any number of identical counterparts,
any set of which signed by all the parties hereto shall be deemed to constitute
a complete, executed original for all purposes. Delivery of an executed
signature page of this Agreement by fax shall be effective as delivery of a
manually executed counterpart hereof.
13.16 CONFIDENTIALITY
Lenders shall hold all non-public information (which has been identified
as such by Borrowers' Agent) obtained pursuant to the requirements of this
Agreement in accordance with their customary procedures for handling
confidential information of this nature and in accordance with safe and sound
banking practices and in any event may make disclosure to any of their
examiners, Affiliates, outside auditors, counsel and other professional advisors
in connection with this Agreement or as reasonably required by any bona fide
transferee, participant or assignee or as required or requested by any
Governmental Authority or pursuant to legal process; provided, however, that (a)
unless specifically prohibited by applicable law or court order, each Lender
shall notify Borrowers' Agent of any request by any Governmental Authority
(other than any such request in connection with an examination
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of the financial condition of such Lender by such Governmental Authority) for
disclosure of any such non-public information prior to disclosure of such
information, (b) prior to any such disclosure pursuant to this Section, each
Lender shall require any such bona fide transferee, participant and assignee
receiving a disclosure of non-public information to agree in writing (i) to be
bound by this Section and (ii) to require such Person to require any other
Person to whom such Person discloses such non-public information to be similarly
bound by this Section, and (c) except as may be required by an order of a court
of competent jurisdiction and to the extent set forth therein, no Lender shall
be obligated or required to return any materials furnished by Borrower or any
Subsidiary.
13.17 OTHER TRANSACTIONS
Nothing contained herein shall preclude Administrative Lender or any
other Lender from engaging in any transaction, in addition to those contemplated
by this Agreement or any other Loan Document, with Borrower or any of its
Affiliates in which Borrower or such Affiliate is not restricted by any Loan
Document from engaging with any other Person.
13.18 WASHINGTON STATUTORY NOTICE
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR
FOREBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON
LAW.
[INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, this Credit Agreement has been duly executed as of
the date first written above.
PENFORD CORPORATION PENFORD PRODUCTS CO.
By: /s/ Keith T. Fujinaga By: /s/ Keith T. Fujinaga
Title: Assistant Secretary Title: Assistant Secretary
THE BANK OF NOVA SCOTIA U.S. BANK NATIONAL ASSOCIATION
By: /s/ Patrik G. Norris By: /s/ James R. Farmer
Title: Director Title: Vice President
KEYBANK NATIONAL ASSOCIATION
By: /s/ Thomas A. Crandell
Title: Senior Vice President
71
SCHEDULE I
THE BANK OF NOVA SCOTIA
REVOLVING LOAN COMMITMENT: $20,952,000 (38.0945455%)
TERM LOAN COMMITMENT $15,238,000 (38.0950000%)
L/C COMMITMENT $ 3,810,000 (38.1000000%)
-----------
TOTAL COMMITMENT $40,000,000
INITIAL RATABLE PERCENTAGE 38.0952381%
Applicable Lending Office:
- -------------------------
The Bank of Nova Scotia
Corporate Banking
888 S.W. 5th Avenue, Suite 750
Portland, Oregon 97204-2078
Attn: Patrik G. Norris
Telephone: (503) 222-3148
Fax: (503) 222-5502
Address for Notices:
- -------------------
The Bank of Nova Scotia
Atlanta Agency
600 Peachtree Street N.E., Suite 2700
Atlanta, Georgia 30308
Attn: Ms. Hilma Gabbidon
Telephone: (404) 877-1558
Fax: (404) 888-8998
Wiring Instructions:
- -------------------
The Bank of Nova Scotia, New York Agency
ABA#026002532, for further credit to
account # 0610232, Portland Loan Servicing,
Ref.: Penford Corporation
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KEYBANK NATIONAL ASSOCIATION
REVOLVING LOAN COMMITMENT: $17,024,000 (30.9527273%)
TERM LOAN COMMITMENT $12,381,000 (30.9525000%)
L/C COMMITMENT $ 3,095,000 (30.9500000%)
-----------
TOTAL COMMITMENT $32,500,000
INITIAL RATABLE PERCENTAGE 30.9523810%
Applicable Lending Office:
- -------------------------
KeyBank National Association
Large Corporate Group
601 108th Avenue NE, 5th Floor
Bellevue, Washington 98009
Attn: Ms. Mary K. Young
Telephone: (425) 709-4580
Fax: (425) 709-4587
Address for Notices:
- -------------------
KeyBank National Association
Large Corporate Group
601 108th Avenue NE, 5th Floor
Bellevue, Washington 98009
Attn: Ms. Mary K. Young
Telephone: (425) 709-4580
Fax: (425) 709-4587
Wiring Instructions:
- -------------------
KeyBank National Association
ABA#125000574
for further credit to
account #01500163, Seattle, Washington
Ref.: Penford Corporation
2
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U. S. BANK NATIONAL ASSOCIATION
REVOLVING LOAN COMMITMENT: $17,024,000 (30.9527273%)
TERM LOAN COMMITMENT $12,381,000 (30.9525000%)
L/C COMMITMENT $ 3,095,000 (30.9500000%)
-----------
TOTAL COMMITMENT $32,500,000
INITIAL RATABLE PERCENTAGE 30.9523810%
Applicable Lending Office:
- -------------------------
U.S. Bank National Association
1420 Fifth Avenue, Eleventh Floor
Seattle, Washington 98101
Attn: James Farmer
Telephone: (206) 587-5237
Fax: (206) 334-3654
Address for Notices:
- -------------------
U.S. Bank National Association
1420 Fifth Avenue, Eleventh Floor
Seattle, Washington 98101
Attn: James Farmer
Telephone: (206) 587-5237
Fax: (206) 334-3654
Wiring Instructions:
- -------------------
U.S. Bank National Association
ABA#125000105
for further credit to
account #00340012160600
Attn: Lynn Lawrence, Commercial Loan
Servicing Center -- West PL-7 CLSC
Customer: Penford Corporation
AFS Number: 6799589966
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SCHEDULE II
DISCLOSURE SCHEDULE
Existing Liens:
Exceptions to Representations and Warranties:
Subsidiaries:
Existing Debt and Indebtedness Incurred Outside Ordinary Course:
Locations:
Existing Investments:
Existing Plans:
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SCHEDULE III
PRICING SCHEDULE
Level I Level II Level III
------------------------------- ------------- -------------- -------------
Base Rate Margin 50bps 75bps 100bps
------------------------------- ------------- -------------- -------------
LIBOR Margin 175bps 200bps 225bps
------------------------------- ------------- -------------- -------------
Commitment Fee 30bps 35bps 40bps
------------------------------- ------------- -------------- -------------
For purposes of this Pricing Schedule, the following terms have the
following meanings:
"LEVEL I" applies on any day after the Reporting Date if, on such day,
the applicable Leverage Ratio is less than or equal to 2:1.
"LEVEL II" applies on any day after the Reporting Date if, on such day,
the applicable Leverage Ratio is greater than 2:1 and less than or equal to
2.5:1.
"LEVEL III" applies until the Reporting Date and on any day thereafter
if, on such day, the applicable Leverage Ratio is greater than 2.5:1.
"REPORTING DATE" means the first Business Day after the receipt by
Administrative Lender of the certificate required by Section 8.3(iii) for
Parent's fiscal quarter ending May 31, 2001.
For purposes of this Pricing Schedule, the Leverage Ratio shall be
calculated once every fiscal quarter based on the financial information most
recently reported pursuant to Section 8.3 of the Agreement; provided, however,
that the Leverage Ratio shall not be computed on the financial information most
recently reported pursuant to Section 8.3 until the later of the fifth day of
the month after receipt of such information or five Business Days after the
receipt thereof and if the most recent report required pursuant to Section 8.3
has not been delivered, or if Administrative Lender reasonably objects to the
accuracy of such report within five Business Days after the receipt thereof, the
next higher Level from the Level then in effect shall apply until such time as
the delinquent report is delivered or Administrative Lender's objections are
resolved to Administrative Lender's reasonable satisfaction.
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EXHIBIT A
TO
AMENDED AND RESTATED CREDIT AGREEMENT
FORMS OF PROMISSORY NOTES
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REVOLVING LOANS PROMISSORY NOTE
$_______________ November 15, 2000
FOR VALUE RECEIVED, the undersigned, PENFORD CORPORATION, a Washington
corporation, and PENFORD PRODUCTS CO., a Delaware corporation, (each
individually referred to as "Borrower" and both collectively referred to as
"Borrowers"), hereby jointly and severally promise to pay to the order of
__________________________ ("Lender") on the Revolver Maturity Date, or at such
earlier time as is provided in that certain Amended and Restated Credit
Agreement among Borrowers, The Bank of Nova Scotia (as Administrative Lender)
and the lenders named therein dated as of November 15, 2000, (as further
amended, modified or supplemented from time to time, the "Credit Agreement"),
the principal sum of _______________ Dollars ($_____________), or such lesser
amount as shall equal the aggregate outstanding principal balance of all
Revolving Loans made by Lender to Borrowers pursuant to the Credit Agreement.
This promissory note is one of the promissory notes referred to in, and
subject to the terms of, the Credit Agreement. Capitalized terms used herein
shall have the respective meanings assigned to them in the Credit Agreement.
Borrowers further promise to pay interest on the outstanding principal
balance hereof at the interest rates, and payable on the dates, set forth in the
Credit Agreement. All payments of principal and interest hereunder shall be made
to Administrative Lender in lawful money of the United States and in same day or
immediately available funds.
Lender is authorized but not required to record the date and amount of
each advance made hereunder, the date and amount of each payment of principal
and interest hereunder, and the resulting unpaid principal balance hereof, in
Lender's internal records, and any such recordation shall be prima facie
evidence of the accuracy of the information so recorded; provided however, that
Lender's failure to so record such amounts shall not limit or otherwise affect
Borrower's obligations hereunder and under the Credit Agreement to repay the
principal hereof and interest hereon.
Borrowers shall pay all costs of collection, including reasonable
attorneys' fees (whether incurred at the trial or appellate level, in an
arbitration or administrative proceeding, in bankruptcy (including, without
limitation, any adversary proceeding, contested matter or motion) or otherwise).
No delay or failure on the part of Lender to exercise any of its rights
hereunder shall be deemed a waiver of such rights or any other right of Lender
nor shall any delay, omission or waiver on any one occasion be deemed a bar to
or waiver of such rights or any other right on any future occasion. Borrowers
and every surety, indorser and guarantor
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of this Note waive presentment, demand, protest, notice of intention to
accelerate, notice of acceleration, notice of nonpayment and all other notices
of every kind, and agree that their liability under this Note shall not be
affected by any renewal, postponement or extension in the time of payment
hereof, by any indulgence granted by any holder hereof with respect hereto, or
by any release or change in any security for the payment of this Note, and they
hereby consent to any and all renewals, extensions, indulgences, releases or
changes, regardless of the number of such renewals, extensions, indulgences,
releases or changes.
The Credit Agreement provides, among other things, for acceleration
(which in certain cases shall be automatic) of the maturity hereof upon the
occurrence of certain stated events, in each case without presentment, demand,
protest or further notice of any kind, all of which are hereby expressly waived
by Borrowers.
Borrowers' obligations evidenced by this promissory note are secured by
the collateral described in the Loan Documents. The Loan Documents describe the
rights of Administrative Lender, Lender and any other holder hereof with respect
to the collateral.
In the event of any conflict between the terms of this promissory note
and the terms of the Credit Agreement, the terms of the Credit Agreement shall
control.
This promissory note shall be governed by and construed in accordance
with the laws of the State of Washington.
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR
FOREBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON
LAW.
PENFORD CORPORATION
By:
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Title:
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PENFORD PRODUCTS CO.
By:
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Title:
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TERM LOAN PROMISSORY NOTE
$_______________ November 15, 2000
FOR VALUE RECEIVED, the undersigned, PENFORD CORPORATION, a Washington
corporation, and PENFORD PRODUCTS CO., a Delaware corporation, (each
individually referred to as "Borrower" and both collectively referred to as
"Borrowers"), hereby jointly and severally promise to pay to the order of
__________________________ ("Lender") the principal sum of _______________
Dollars ($_____________) as follows: (A) on the last day of each February, May,
August and November beginning May 31, 2001 repay the outstanding principal
balance, or, if less, make a principal payment as follows: (i) before September
1, 2001, the amount of each payment shall be $_______; and (ii) after September
1, 2001, the amount of each payment shall be $________; (B) make additional
principal payments in the amounts and on the dates set forth in that certain
Amended and Restated Credit Agreement among Borrowers, The Bank of Nova Scotia
(as Administrative Lender) and the lenders named therein dated as of November
15, 2000, (as further amended, modified or supplemented from time to time, the
"Credit Agreement") and (C) the outstanding principal balance, together with all
accrued and unpaid interest and related fees, on the Maturity Date.
This promissory note is one of the promissory notes referred to in, and
subject to the terms of, the Credit Agreement. Capitalized terms used herein
shall have the respective meanings assigned to them in the Credit Agreement.
Borrowers further promise to pay interest on the outstanding principal
balance hereof at the interest rates, and payable on the dates, set forth in the
Credit Agreement. All payments of principal and interest hereunder shall be made
to Administrative Lender in lawful money of the United States and in same day or
immediately available funds.
Lender is authorized but not required to record the date and amount of
each advance made hereunder, the date and amount of each payment of principal
and interest hereunder, and the resulting unpaid principal balance hereof, in
Lender's internal records, and any such recordation shall be prima facie
evidence of the accuracy of the information so recorded; provided however, that
Lender's failure to so record such amounts shall not limit or otherwise affect
Borrower's obligations hereunder and under the Credit Agreement to repay the
principal hereof and interest hereon.
Borrowers shall pay all costs of collection, including reasonable
attorneys' fees (whether incurred at the trial or appellate level, in an
arbitration or administrative proceeding, in bankruptcy (including, without
limitation, any adversary proceeding, contested matter or
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motion) or otherwise). No delay or failure on the part of Lender to exercise any
of its rights hereunder shall be deemed a waiver of such rights or any other
right of Lender nor shall any delay, omission or waiver on any one occasion be
deemed a bar to or waiver of such rights or any other right on any future
occasion. Borrowers and every surety, indorser and guarantor of this Note waive
presentment, demand, protest, notice of intention to accelerate, notice of
acceleration, notice of nonpayment and all other notices of every kind, and
agree that their liability under this Note shall not be affected by any renewal,
postponement or extension in the time of payment hereof, by any indulgence
granted by any holder hereof with respect hereto, or by any release or change in
any security for the payment of this Note, and they hereby consent to any and
all renewals, extensions, indulgences, releases or changes, regardless of the
number of such renewals, extensions, indulgences, releases or changes.
The Credit Agreement provides, among other things, for acceleration
(which in certain cases shall be automatic) of the maturity hereof upon the
occurrence of certain stated events, in each case without presentment, demand,
protest or further notice of any kind, all of which are hereby expressly waived
by Borrowers.
Borrowers' obligations evidenced by this promissory note are secured by
the collateral described in the Loan Documents. The Loan Documents describe the
rights of Administrative Lender, Lender and any other holder hereof with respect
to the collateral.
In the event of any conflict between the terms of this promissory note
and the terms of the Credit Agreement, the terms of the Credit Agreement shall
control.
This promissory note shall be governed by and construed in accordance
with the laws of the State of Washington.
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR
FOREBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON
LAW.
PENFORD CORPORATION
By:
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Title:
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PENFORD PRODUCTS CO.
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By:
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Title:
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EXHIBIT B
TO
AMENDED AND RESTATED CREDIT AGREEMENT
NOTICE OF AUTHORIZED REPRESENTATIVES
The Bank of Nova Scotia
Atlanta Agency
600 Peachtree Street N.E., Suite 2700
Atlanta, Georgia 30308
Attn: Ms. Hilma Gabbidon
AND
The Bank of Nova Scotia
888 S.W. 5th Avenue, Suite 750
Portland, Oregon
Attn: Patrik G. Norris
Reference is made to that certain Amended and Restated Credit Agreement
among Penford Corporation, a Washington corporation, Penford Products Co., a
Delaware corporation, (each individually referred to as "Borrower" and both
collectively referred to as "Borrowers"), The Bank of Nova Scotia (as
Administrative Lender) and the lenders named therein dated as of November 15,
2000, (as further amended, modified or supplemented from time to time, the
"Credit Agreement"). Capitalized terms used herein shall have the respective
meanings assigned to them in the Credit Agreement.
Borrowers' Agent hereby represents to Administrative Lender that the
following persons are the Authorized Representatives, as defined in the Credit
Agreement, and that the signatures opposite their names are their true
signatures:
Name and Office Signature
--------------------- ----------------------------
--------------------- ----------------------------
--------------------- ----------------------------
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--------------------- ----------------------------
--------------------- ----------------------------
Administrative Lender is authorized to rely on this Notice of Authorized
Representatives until such time, if any, as Borrowers' Agent has delivered to
Administrative Lender, and Administrative Lender has received, a duly executed
Notice of Authorized Representatives in substitution hereof. This Notice of
Authorized Representatives cancels and supersedes any Notice of Authorized
Representatives at any time prior to the date hereof delivered by Borrowers'
Agent to Administrative Lender.
IN WITNESS WHEREOF, Borrowers' Agent hereby confirms that it has caused
this Notice of Authorized Representatives to be duly executed as of
______________.
PENFORD CORPORATION, Borrowers' Agent
By:
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Title:
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EXHIBIT C
TO
AMENDED AND RESTATED CREDIT AGREEMENT
NOTICE OF BORROWING
The Bank of Nova Scotia
Atlanta Agency
600 Peachtree Street N.E., Suite 2700
Atlanta, Georgia 30308
Attn: Ms. Hilma Gabbidon
AND
The Bank of Nova Scotia
888 S.W. 5th Avenue, Suite 750
Portland, Oregon
Attn: Patrik G. Norris
Reference is made to that certain Amended and Restated Credit Agreement
among Penford Corporation, a Washington corporation, Penford Products Co., a
Delaware corporation, (each individually referred to as "Borrower" and both
collectively referred to as "Borrowers"), The Bank of Nova Scotia (as
Administrative Lender) and the lenders named therein dated as of November 15,
2000, (as further amended, modified or supplemented from time to time, the
"Credit Agreement"). Capitalized terms used herein shall have the respective
meanings assigned to them in the Credit Agreement.
1. Pursuant to Section 3.1 of the Credit Agreement, Borrowers' Agent, on
behalf of Borrowers, hereby requests Revolving Loans upon the following terms:
(a) The aggregate principal amount is to be $___________.
(b) The date of borrowing is to be _________.
(c) $________ of the Loans are to be Base Rate Loans, and $________ of
the Loans are to be LIBOR Loans with a Fixed Rate Term of ______ month(s).
2. Borrowers' Agent, on behalf of Borrowers, hereby certifies to
Administrative Lender and Lenders that, on the date of this Notice of Borrowing
and after giving effect to the requested disbursement (including the use of the
proceeds thereof):
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(a) Borrowers' representations and warranties in the Loan Documents are
correct in all material respects as if made on the date hereof;
(b) no Default is continuing or would result from the requested Loans
being made; and
(c) no event or circumstance exists that could have a Material Adverse
Effect.
The party signing below on behalf of Borrowers' Agent is an Authorized
Representative and has caused this Notice of Borrowing to be duly executed on
behalf of Borrowers as of ______________.
PENFORD CORPORATION, Borrowers' Agent
By:
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Title:
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EXHIBIT D
TO
AMENDED AND RESTATED CREDIT AGREEMENT
NOTICE OF CONVERSION OR CONTINUATION
The Bank of Nova Scotia
Atlanta Agency
600 Peachtree Street N.E., Suite 2700
Atlanta, Georgia 30308
Attn: Ms. Hilma Gabbidon
AND
The Bank of Nova Scotia
888 S.W. 5th Avenue, Suite 750
Portland, Oregon
Attn: Patrik G. Norris
Reference is made to that certain Amended and Restated Credit Agreement
among Penford Corporation, a Washington corporation, Penford Products Co., a
Delaware corporation, (each individually referred to as "Borrower" and both
collectively referred to as "Borrowers"), The Bank of Nova Scotia (as
Administrative Lender) and the lenders named therein dated as of November 15,
2000, (as further amended, modified or supplemented from time to time, the
"Credit Agreement"). Capitalized terms used herein shall have the respective
meanings assigned to them in the Credit Agreement.
1. Pursuant to Section 3.5 of the Credit Agreement, Borrowers' Agent, on
behalf of Borrowers, hereby requests [the continuation of all or part of
outstanding LIBOR Loans with Fixed Rate Terms ending on ___________] [the
conversion of all or part of its outstanding Base Rate Loans], as follows:
(a) The Loans to which this Notice applies are $_______ of Revolving
Loans and $_________ of the Term Loan.
(b) The effective date of continuation and/or conversion is to be
_________ .
(c) The aggregate amount of [said outstanding LIBOR Loans that are
Revolving Loans to be continued as] [said outstanding Base Rate Loans that are
Revolving Loans to be converted to] LIBOR Loans, and each requested Fixed Rate
Term, are:
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Amount Fixed Rate Term
$ __________ months
--------------
$ __________ months
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(d) The aggregate amount of [said outstanding LIBOR Loans that are part
of the Term Loan to be continued as] [said outstanding Base Rate Loans that are
part of the Term Loan to be converted to] LIBOR Loans, and each requested Fixed
Rate Term, are:
Amount Fixed Rate Term
$ __________ months
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$ __________ months
--------------
(e) The aggregate amount of said outstanding LIBOR Loans that are
Revolving Loans to be continued as Base Rate Loans is $___________. The
aggregate amount of said outstanding LIBOR Loans that are part of the Term Loan
to be continued as Base Rate Loans is $___________.
2. Borrowers' Agent, on behalf of Borrowers, hereby certifies to
Administrative Lender and Lenders that, on the date of this Notice of Conversion
or Continuation, no Default has occurred and is continuing.
The party signing below on behalf of Borrowers' Agent is an Authorized
Representative and has caused this Notice of Conversion or Continuation to be
duly executed on behalf of Borrowers as of _____________.
PENFORD CORPORATION, Borrowers' Agent
By:
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Title:
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EXHIBIT E
TO
AMENDED AND RESTATED CREDIT AGREEMENT
OFFICER'S CERTIFICATE
The Bank of Nova Scotia
Atlanta Agency
600 Peachtree Street N.E., Suite 2700
Atlanta, Georgia 30308
Attn: Ms. Hilma Gabbidon
AND
The Bank of Nova Scotia
888 S.W. 5th Avenue, Suite 750
Portland, Oregon
Attn: Patrik G. Norris
This certificate is furnished pursuant to Section 8.3 of that certain
Amended and Restated Credit Agreement among Penford Corporation, a Washington
corporation, Penford Products Co., a Delaware corporation, (each individually
referred to as "Borrower" and both collectively referred to as "Borrowers"), The
Bank of Nova Scotia (as Administrative Lender) and the lenders named therein
dated as of November 15, 2000, (as further amended, modified or supplemented
from time to time, the "Credit Agreement"). Capitalized terms used herein shall
have the respective meanings assigned to them in the Credit Agreement.
The undersigned hereby certifies that:
(1) the financial statements of Parent attached hereto for the [quarter]
[year] ending _________________, ____ were prepared in accordance with GAAP and
fairly present in all material respects consolidated and consolidating balance
sheets of Parent and the Subsidiaries as of the end of such [quarter] [year] and
consolidated and consolidating statements of earnings and cash flow of Parent
and the Subsidiaries for such [quarter] [year] and year-to-date (subject to
normal year end adjustments and without notes);
(2) [no Default existed at any time during such [quarter] [year]] [no
Default existed at any time during such [quarter] [year] except for the events
described below and a
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detailed statement of the action which Borrowers [have taken] [propose to take]
with respect to each such event is set forth the description of such event
below]; and
(3) the calculation demonstrating Borrowers' compliance with the
covenants set forth in Article X is attached hereto.
Dated:__________, ____.
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Name:
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Title:
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EXHIBIT F
TO
AMENDED AND RESTATED CREDIT AGREEMENT
LIST OF EXCLUDED PATENTS
SEE ATTACHED LIST
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EXHIBIT G
TO
AMENDED AND RESTATED CREDIT AGREEMENT
[TYPE ON SCOTIABANK LETTERHEAD]
Irrevocable Standby Letter of Credit Date of Issue: _______________
No. ____________ -------------
Beneficiary: Applicants:
- ----------- ----------
Australia and New Zealand Banking Penford Corporation
Group Limited ACN 005 357 522 Penford Products Co.
20 Martin Place, 13th Floor Suite 2390
Sydney, NSW, Australia 2000 777 -- 108th Avenue NE
Attn: Michelle Burke Bellevue, WA 98004-5193
Expiry Date: ______________ Amount Available: USD 10,000,000.00
- ----------- ----------------
Ten Million and 00/100's US Dollars
Dear Sir(s) or Madam(s)
We hereby issue in your favor our Irrevocable Standby Letter of Credit which is
available by your draft drawn at sight on us and presented at our office at 888
SW Fifth Avenue, Suite 750 Portland, OR 97204-2021 Attn: Patrik G. Norris, not
later than the Expiry Date set forth above, unless this Letter of Credit is
terminated earlier in accordance with the provisions hereof or unless extended
in accordance with the terms hereof.
A draft drawn under this Letter of Credit must be marked "drawn under The Bank
of Nova Scotia Irrevocable Standby Letter of Credit No. ________ dated
_____________" and must be presented together the original of this Letter of
Credit and all amendments hereto together with either a Drawing Certificate
purportedly signed by your authorized officer and typed on your letterhead in
the form of Exhibit A attached hereto or the statement referenced below.
It is a condition of this Letter of Credit that it is deemed to be automatically
extended without amendment for a period of 364 days from the current expiry date
hereof, or any future expiry date, unless at least sixty days before any expiry
date we notify you at the above listed address that we elect not to consider
this Letter of Credit renewed for any such additional period. In no event shall
this Letter of Credit have an expiry date later than October 31, 2005. Any
claims received after such date will not be entertained by us.
If we send such a nonrenewal notice, you may draw at any time prior to the then
current expiry date, but not sooner than fifteen days before the then current
expiry date, up to the full amount then available hereunder, with presentation
of your draft drawn on us at sight and the original of this Letter of Credit and
all amendments thereto, accompanied by your statement, purportedly signed by
your authorized officer, on your letterhead stating:
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"Australia and New Zealand Banking Group Limited ACN 005 357 522 has
received The Bank of Nova Scotia's notice of nonrenewal under Letter of
Credit No.______ and has not, as of the date of our draft hereunder,
received an extension of said Letter of Credit or a replacement Letter
of Credit in a form acceptable to us."
We hereby engage with you that a draft drawn and presented in compliance with
the terms of this Letter of Credit will be duly honored upon presentation to us.
Multiple draws are not permitted.
Except so far as is otherwise expressly stated herein, this credit is subject to
the Uniform Customs and Practice for Documentary Credits (1993 Revision)
International Chamber of Commerce, Paris, Publication No. 500 and engages us in
accordance with the terms thereof.
The Bank of Nova Scotia
By:
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Title:
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EXHIBIT A TO LETTER OF CREDIT
DRAWING CERTIFICATE
This drawing certificate is delivered pursuant to that certain Irrevocable
Standby Irrevocable Letter of Credit No. _______ dated ________________ issued
by The Bank of Nova Scotia for the account of Penford Corporation and Penford
Products Co. ("Letter of Credit").
Australia and New Zealand Banking Group Limited ACN 005 357 522 ("ANZ")
hereby certifies to The Bank of Nova Scotia, as the issuer of the Letter of
Credit, that either:
(1) an "Event of Default" (as defined in one of the Australian
Facilities) other than a payment default exists and this Drawing
Certificate is being given with the consent of the "Required Lenders"
(as defined in the Intercreditor Agreement); or
(2) a payment default exists under one of the Australian Facilities.
Executed as of __________________.
Australia and New Zealand Banking
Group Limited ACN 005 357 522
By:
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Title:
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