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Exhibit 10.18
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INTERCREDITOR AGREEMENT
Dated as of August 1, 1998
Re:
Penford Corporation
and Subsidiaries
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TABLE OF CONTENTS
SECTION HEADING PAGE
Parties....................................................................................................................1
Recitals...................................................................................................................1
SECTION 1. DEFINITIONS...........................................................................................2
SECTION 2. SHARING OF RECOVERIES.................................................................................4
SECTION 3. AGREEMENTS AMONG THE CREDITORS........................................................................5
Section 3.1. Independent Actions by Creditors..................................................................5
Section 3.2. Relation of Creditors.............................................................................5
Section 3.3. Acknowledgment of Guaranties......................................................................5
SECTION 4. MISCELLANEOUS.........................................................................................5
Section 4.1. Entire Agreement..................................................................................5
Section 4.2. Notices...........................................................................................6
Section 4.3. Successors and Assigns............................................................................6
Section 4.4. Consents, Amendment, Waivers......................................................................6
Section 4.5. Governing Law.....................................................................................6
Section 4.6. Counterparts......................................................................................6
Section 4.7. Sale of Interest..................................................................................6
Section 4.8. Severability......................................................................................6
Section 4.9. Expenses..........................................................................................6
Section 4.10. Term of Agreement.................................................................................6
Signatures.................................................................................................................7
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Penford Products Co. Intercreditor Agreement
INTERCREDITOR AGREEMENT
INTERCREDITOR AGREEMENT dated as of August 1, 1998 among the Creditors
(as defined below) of PENFORD PRODUCTS CO., a Delaware corporation ("Penford
Products"), a wholly-owned subsidiary of Penford Corporation, a Washington
corporation (the "Company").
R E C I T A L S:
A. Under and pursuant to (i) separate and several Restatement and
Exchange Agreements, each dated as of August 1, 1998 (the "Restatement of the
1992 Agreements"), between the Company and the purchasers named on Schedule I
attached to the Restatement of the 1992 Agreements, the Company proposes to
issue and deliver $14,285,600 aggregate principal amount of its Adjustable Rate
Senior Notes due November 30, 2002 (the "2002 Notes"), and (ii) separate and
several Restatement and Exchange Agreements, each dated as of August 1, 1998
(the "Restatement of the 1994 Agreements"), between the Company and the
purchasers named on Schedule I attached to the Restatement of the 1994
Agreements, the Company proposes to issue and deliver $10,000,000 aggregate
principal amount of its Adjustable Rate Series A Senior Notes due December 15,
1998 and $10,000,000 aggregate principal amount of its Adjustable Rate Series B
Senior Notes due December 15, 2006 (respectively the "1998 Notes" and the "2006
Notes"). The Restatement of the 1992 Agreements and the Restatement of the 1994
Agreements are hereinafter referred to collectively as the "Restatement and
Exchange Agreements"; the 1998 Notes, the 2002 Notes and the 2006 Notes are
hereinafter referred to collectively as the "Notes"; and the purchasers of the
Notes are hereinafter referred to individually as a "Noteholder" and
collectively as the "Noteholders".
B. The Noteholders have required as a condition of their acquisition of
the Notes that Penford Products enter into guaranties of the Notes and
accordingly Penford Products has agreed to provide such guaranties. Penford
Products proposes to execute and deliver Guaranty Agreements (the "Noteholders'
Guaranties") dated as of August 1, 1998,
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Penford Products Co. Intercreditor Agreement
pursuant to which Penford Products will irrevocably, absolutely and
unconditionally guarantee to the Noteholders the payment of the principal of,
premium, if any, and interest on the Notes and the payment and performance of
all other obligations of the Company under the Restatement and Exchange
Agreements.
C. Under and pursuant to that certain Credit Agreement dated as of July
2, 1998 (as such agreement may be modified, amended, renewed or replaced,
including any increase in the amount thereof, the "Credit Agreement") among the
Company, Penford Products, various lending institutions and The Bank of Nova
Scotia (the "Bank"), as Agent (individually a "Credit Agreement Lender" and
collectively the "Credit Agreement Lenders"), the Credit Agreement Lenders have
made available to the Company and Penford Products, jointly and severally,
certain credit facilities in a current aggregate principal amount up to
$75,000,000 (all amounts outstanding in respect of said credit facilities being
hereinafter collectively referred to as the "Penford Loans").
D. In connection with the execution and delivery of a loan agreement
dated as of July 2, 1998 (as such agreement may be modified, amended, renewed or
replaced, including any increase in the amount thereof, the "Penwest Loan
Agreement"), between Penwest Pharmaceuticals Co., a Washington corporation
("Penwest"), pursuant to which the Bank has made available to Penwest certain
credit facilities in a current aggregate principal amount up to $15,000,000 (all
amounts outstanding in respect of such credit facilities being hereinafter
collectively referred to as the "Penwest Loan"), Penford Products has guaranteed
to the Bank the payment of the Penwest Loan and all other obligations of Penwest
under the Penwest Loan Agreement under that certain Specific Guaranty dated July
2, 1998 (as such agreement may be modified, amended, renewed or replaced,
including any increase in the amount thereof, the "Penwest Guaranty").
E. The Noteholders' Guaranties, the Penwest Guaranty and the payment
obligations of Penford Products under the Credit Agreement are each hereinafter
individually referred to as a "Penford Products Obligation" and collectively
referred to as the "Penford Products Obligations".
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Penford Products Co. Intercreditor Agreement
F. Pursuant to the requirements of the Restatement and Exchange
Agreements, the Company has requested and the Lenders have agreed to enter into
this Agreement.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the sufficiency and receipt of which are hereby
acknowledged, the parties hereto hereby agree a follows:
SECTION 1. DEFINITIONS.
The following terms shall have the meanings assigned to them below in
this SECTION 1 or in the provisions of this Agreement referred to below:
"Bank" shall have the meaning assigned thereto in the Recitals hereof.
"Bankruptcy Proceeding" shall mean, with respect to any Person, a
general assignment of such Person for the benefit of its creditors, or the
institution by or against such Person of any proceeding seeking relief as
debtor, or seeking to adjudicate such Person as bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment or composition of such Person or
its debts, under any law relating to bankruptcy, insolvency, reorganization or
relief of debtors, or seeking appointment of a receiver, trustee, custodian or
other similar official for such Person or for any substantial part of its
property.
"Company" shall have the meaning assigned thereto in the Recitals
hereof.
"Credit Agreement" shall have the meaning assigned thereto in the
Recitals hereof.
"Credit Agreement Lender" and "Credit Agreement Lenders" shall have the
meanings assigned thereto in the Recitals hereof.
"Creditor" shall individually mean any Lender or Noteholder and
"Creditors" shall mean all of the Lenders and the Noteholders.
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Penford Products Co. Intercreditor Agreement
"Excess Penford Products Payment" shall mean as to any Creditor an
amount equal to the Penford Products Payment received by such Creditor less the
Pro Rata Share of Penford Products Payments to which such Creditor is then
entitled.
"Lender" shall mean any Credit Agreement Lender or the Bank under the
Penwest Guaranty, and "Lenders" shall mean all of the Credit Agreement Lenders
and the Bank under the Penwest Guaranty.
"Noteholder" and "Noteholders" shall have the meanings assigned thereto
in the Recitals hereof.
"Noteholders' Guaranties" shall have the meaning assigned thereto in
the Recitals hereof.
"Notes" shall have the meaning assigned thereto in the Recitals hereof.
"Penford Loans" shall have the meaning assigned thereto in the Recitals
hereof.
"Penford Products" shall have the meaning assigned thereto in the
Recitals hereof.
"Penford Products Obligation" and "Penford Products Obligations" shall
have the meanings assigned thereto in the Recitals hereof.
"Penford Products Payment" shall have the meaning assigned thereto in
SECTION 2.
"Penwest" shall have the meaning assigned thereto in the Recitals
hereof.
"Penwest Guaranty" shall have the meaning assigned thereto in the
Recitals hereof.
"Penwest Loan" shall have the meaning assigned thereto in the Recitals
hereof.
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Penford Products Co. Intercreditor Agreement
"Penwest Loan Agreement" shall have the meaning assigned thereto in the
Recitals hereto.
"Person" shall mean an individual, partnership, limited liability
company, corporation, trust or unincorporated organization, and a government or
agency or political subdivision thereof.
"Pro Rata Share of Penford Products Payments" shall mean as of the date
of any Penford Products Payment to a Creditor in respect to a Penford Products
Obligation an amount equal to the product obtained by multiplying (a) the amount
of all Penford Products Payments made by Penford Products to all Creditors on
such date less all reasonable costs incurred by such Creditors in connection
with the collection of such Penford Products Payments by (b) a fraction, the
numerator of which shall be the Specified Amount owing to such Creditor, and the
denominator of which is the aggregate amount of all outstanding Subject
Obligations (without giving effect in the denominator to the application of any
such Penford Products Payments).
"Receiving Creditor" shall have the meaning assigned thereto in SECTION
2.
"Restatement and Exchange Agreements" shall have the meaning assigned
thereto in the Recitals hereof.
"Specified Amount" shall mean as to any Creditor the aggregate amount
of the Subject Obligations owed to such Creditor.
"Subject Obligations" shall mean all principal of, Make-Whole Amount,
if any, and interest on, the Notes, the Penford Loans and the Penwest Loan and
all other obligations of the Company under or in respect of the Notes, the
Penford Loans and the Penwest Loan and under the Restatement and Exchange
Agreements, the Credit Agreement or the Penwest Loan Agreement and any other
obligations of the Company to the Lenders which are the subject of a Penford
Products Obligation; provided, however, that obligations in respect of the
Penwest Loan and the Penwest Loan Agreement shall be excluded from "Subject
Obligations" until such time as the Bank makes a demand under the Penwest
Guaranty for payment of all or part of the Penwest Loan.
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Penford Products Co. Intercreditor Agreement
SECTION 2. SHARING OF RECOVERIES.
Each Creditor hereby agrees with each other Creditor that payments
(including payments made through setoff of deposit balances or otherwise or
payments or recoveries from any security interest granted to any Creditor) made
pursuant to the terms of any Penford Products Obligation (a "Penford Products
Payment") (a) within 90 days prior to the commencement of a Bankruptcy
Proceeding with respect to Penford Products or the Company or (b) following the
acceleration of the Notes or the Penford Loans or the acceleration of any other
Subject Obligation (other than the Penwest Loan) or (c) at a time when the Bank
has made a demand under the Penwest Guaranty for payment of all or part of the
Penwest Loan and an Event of Default, as defined in the Restatement and Exchange
Agreements, shall have occurred and be continuing (including any such Event of
Default which arises as a result of any payment by Penford Products under the
Penwest Guaranty), shall be shared so that each Creditor shall receive its Pro
Rata Share of Penford Products Payments. Accordingly, each Creditor hereby
agrees that in the event (i) an event described in clauses (a), (b) or (c) above
shall have occurred, (ii) any Creditor shall receive a Penford Products Payment
(a "Receiving Creditor"), and (iii) any other Creditor shall not concurrently
receive its Pro Rata Share of Penford Products Payments from Penford Products,
then the Receiving Creditor shall promptly remit the Excess Penford Products
Payment to each other Creditor who shall then be entitled thereto so that after
giving effect to such payment (and any other payments then being made by any
other Receiving Creditor pursuant to this SECTION 2) each Creditor shall have
received its Pro Rata Share of Penford Products Payments.
Any such payments shall be deemed to be and shall be made in
consideration of the purchase for cash at face value, but without recourse,
ratably from the other Creditors such amount of Notes, Penford Loans or Penwest
Loan (or interest therein), as the case may be, to the extent necessary to cause
such Receiving Creditor to share such Excess Penford Products Payment with the
other Creditors as hereinabove provided; provided, however, that if any such
purchase or payment is made by any Receiving Creditor and if such Excess Penford
Products Payment or part thereof is thereafter recovered from such Receiving
Creditor by Penford Products (including, without limitation, by any trustee in
bankruptcy of
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Penford Products Co. Intercreditor Agreement
Penford Products or any creditor thereof), the related purchase from the other
Creditors shall be rescinded ratably and the purchase price restored as to the
portion of such Excess Penford Products Payment so recovered, but without
interest; and provided further nothing herein contained shall obligate any
Creditor to resort to any setoff, application of deposit balance or other means
of payment under any Penford Products Obligation or avail itself of any recourse
by resort to any property of the Company, Penford Products or Penwest, the
taking of any such action to remain within the absolute discretion of such
Creditor without obligation of any kind to the other Creditors to take any such
action.
SECTION 3. AGREEMENTS AMONG THE CREDITORS.
Section 3.1. Independent Actions by Creditors. Nothing contained in
this Agreement shall prohibit any Creditor from accelerating the maturity of, or
demanding payment from Penford Products on, any Subject Obligation to such
Creditor or from instituting legal action against the Company, Penford Products
or Penwest to obtain a judgment or other legal process in respect of such
Subject Obligation, but any funds received from Penford Products in connection
with any recovery therefrom shall be subject to the terms of this Agreement.
Section 3.2. Relation of Creditors. This Agreement is entered into
solely for the purposes set forth herein, and no Creditor assumes any
responsibility to any other party hereto to advise such other party of
information known to such other party regarding the financial condition of the
Company, Penford Products or Penwest or of any other circumstances bearing upon
the risk of nonpayment of the Subject Obligation. Each Creditor specifically
acknowledges and agrees that nothing contained in this Agreement is or is
intended to be for the benefit of the Company, Penford Products or Penwest and
nothing contained herein shall limit or in any way modify any of the obligations
of the Company, Penford Products or Penwest to any Creditor.
Section 3.3. Acknowledgment of Guaranties. The Lenders and the
Noteholders hereby expressly acknowledge the existence of the Penford Products
Obligations.
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Penford Products Co. Intercreditor Agreement
SECTION 4. MISCELLANEOUS.
Section 4.1. Entire Agreement. This Agreement represents the entire
Agreement among the Creditors and, except as otherwise provided, this Agreement
may not be altered, amended or modified except in a writing executed by all the
parties to this Agreement.
Section 4.2. Notices. Notices hereunder shall be given to the Creditors
at their addresses as set forth in the Restatement and Exchange Agreements or
the Credit Agreement, as the case may be, or at such other address as may be
designated by each in a written notice to the other parties hereto.
Section 4.3. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of each of the Creditors and their respective
successors and assigns, whether so expressed or not, and, in particular, shall
inure to the benefit of and be enforceable by any future holder or holders of
any Subject Obligations, and the term "Creditor" shall include any such
subsequent holder of Subject Obligations, wherever the context permits.
Section 4.4. Consents, Amendment, Waivers. All amendments, waivers or
consents of any provision of this Agreement shall be effective only if the same
shall be in writing and signed by all of the Creditors.
Section 4.5. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Washington.
Section 4.6. Counterparts. This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one Agreement, and
any of the parties hereto may execute this Agreement by signing any such
counterpart.
Section 4.7. Sale of Interest. No Creditor will sell, transfer or
otherwise dispose of any interest in the Subject Obligations unless such
purchaser or transferee shall agree, in writing, to be bound by the terms of
this Agreement.
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Penford Products Co. Intercreditor Agreement
Section 4.8. Severability. In case any one or more of the provisions
contained in this Agreement shall be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
of this Agreement shall not in any way be affected or impaired thereby.
Section 4.9. Expenses. In the event of any litigation to enforce this
Agreement, the prevailing party shall, if not reimbursed by the Company, be
entitled to its reasonable attorney's fees.
Section 4.10. Term of Agreement. This Agreement shall terminate when
all Subject Obligations are paid in full and such payments are not subject to
any possibility of revocation or rescission or until all of the parties hereto
mutually agree in a writing to terminate this Agreement.
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Penford Products Co. Intercreditor Agreement
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed as of the date first above written.
PRINCIPAL LIFE INSURANCE COMPANY
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Counsel
By /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Counsel
TMG LIFE INSURANCE COMPANY
By: THE MUTUAL GROUP, its Agent
By /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Director, Private
Placements
By ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice
President
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Penford Products Co. Intercreditor Agreement
UNITED OF OMAHA LIFE INSURANCE COMPANY
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇.
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇.
Title: First Vice President
MUTUAL OF OMAHA INSURANCE COMPANY
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇.
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇.
Title: First Vice President
UNITED WORLD LIFE INSURANCE COMPANY
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇.
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇.
Title: Authorized Signer
COMPANION LIFE INSURANCE COMPANY
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇.
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇.
Title: Assistant Treasurer
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Assistant Treasurer
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Penford Products Co. Intercreditor Agreement
AMERICAN REPUBLIC INSURANCE COMPANY
By /s/ ▇. ▇. ▇▇▇▇▇▇▇
---------------------------------
Name: ▇. ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President,
Investments
FARMERS AND TRADERS LIFE INSURANCE
COMPANY
By /s/ ▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇▇, ▇▇.
---------------------------------
Name: ▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇▇, ▇▇.
Title: Vice President-Investments
THE BANK OF NOVA SCOTIA
By /s/ ▇. ▇▇▇▇▇
---------------------------------
Name: ▇. ▇▇▇▇▇
Title: Officer
KEYBANK NATIONAL ASSOCIATION
By /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
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Penford Products Co. Intercreditor Agreement
U.S. BANK NATIONAL ASSOCIATION
By /s/ ▇. ▇. ▇▇▇▇▇▇
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Name: ▇. ▇. ▇▇▇▇▇▇
Title: Senior Vice President
The undersigned hereby acknowledge and agree to the foregoing
Agreement.
PENFORD PRODUCTS CO.
By /s/ ▇▇▇▇▇▇ ▇. BREED
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Name: ▇▇▇▇▇▇ ▇. Breed
Title: Vice President
PENFORD CORPORATION
By /s/ ▇▇▇▇▇▇ ▇. BREED
--------------------------------
Name: ▇▇▇▇▇▇ ▇. Breed
Title: Corporate Director of
Finance
PENWEST PHARMACEUTICALS CO.
By /s/ ▇▇▇▇▇▇▇▇ ▇. GOOD
--------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. Good
Title: Vice President Finance and
Chief Financial Officer
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