EXHIBIT 10.45
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CONSTRUCTION AND TERM LOAN AGREEMENT
dated April 10, 2006
by and among
PACIFIC ETHANOL MADERA LLC,
as Borrower,
THE LENDERS NAMED ON THE SIGNATURE PAGES
TO THIS AGREEMENT,
as Lenders,
and
HUDSON UNITED CAPITAL,
A DIVISION OF TD BANKNORTH, N.A.,
as Administrative Agent
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TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS.............................................................................................2
ARTICLE II THE CONSTRUCTION AND TERM LOANS........................................................................2
SECTION 2.1 COMMITMENTS..........................................................................2
SECTION 2.2 FUNDING OF THE LOANS.................................................................3
SECTION 2.3 INTEREST.............................................................................4
SECTION 2.4 NOTES................................................................................6
SECTION 2.5 FEES.................................................................................7
SECTION 2.6 SECURITY.............................................................................7
SECTION 2.7 USE OF PROCEEDS......................................................................7
SECTION 2.8 REPAYMENT OF PRINCIPAL...............................................................7
SECTION 2.9 PAYMENTS............................................................................10
SECTION 2.10 INCREASED COSTS AND UNAVAILABILITY..................................................11
ARTICLE III CONDITIONS PRECEDENT.................................................................................16
SECTION 3.1 CONDITIONS PRECEDENT TO THE CONSTRUCTION LOAN CLOSING DATE..........................16
SECTION 3.2 CONDITIONS PRECEDENT TO THE SECOND AND EACH SUBSEQUENT CONSTRUCTION LOAN
FUNDING DATE........................................................................22
SECTION 3.3 CONDITIONS PRECEDENT TO THE TERM LOAN CONVERSION DATE...............................26
SECTION 3.4 NO WAIVER...........................................................................29
SECTION 3.5 LOCATION OF CLOSINGS................................................................29
ARTICLE IV REPRESENTATIONS AND WARRANTIES........................................................................29
SECTION 4.1 REPRESENTATIONS AND WARRANTIES......................................................29
SECTION 4.2 SURVIVAL............................................................................37
ARTICLE V COVENANTS..............................................................................................37
SECTION 5.1 AFFIRMATIVE COVENANTS...............................................................37
SECTION 5.2 NEGATIVE COVENANTS..................................................................46
ARTICLE VI EVENTS OF DEFAULT.....................................................................................52
SECTION 6.1 EVENTS OF DEFAULT...................................................................52
SECTION 6.2 REMEDIES............................................................................55
SECTION 6.3 RIGHT TO COMPLETE...................................................................55
ARTICLE VII THE AGENT............................................................................................57
SECTION 7.1 AUTHORIZATION AND ACTION............................................................57
SECTION 7.2 DELEGATION OF DUTIES................................................................57
SECTION 7.3 ADMINISTRATIVE AGENT'S RELIANCE.....................................................57
SECTION 7.4 NOTICE OF DEFAULT...................................................................58
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SECTION 7.5 ADMINISTRATIVE AGENT AS A LENDER....................................................58
SECTION 7.6 CREDIT DECISIONS....................................................................59
SECTION 7.7 INDEMNIFICATION.....................................................................59
SECTION 7.8 SUCCESSOR ADMINISTRATIVE AGENT......................................................60
ARTICLE VIII GENERAL PROVISIONS..................................................................................61
SECTION 8.1 COUNTERPARTS........................................................................61
SECTION 8.2 INTEGRATION.........................................................................61
SECTION 8.3 SEVERABILITY........................................................................61
SECTION 8.4 FURTHER ASSURANCES..................................................................61
SECTION 8.5 AMENDMENTS AND WAIVERS..............................................................61
SECTION 8.6 NO WAIVER; REMEDIES CUMULATIVE......................................................61
SECTION 8.7 SUCCESSORS AND ASSIGNS..............................................................62
SECTION 8.8 NO AGENCY...........................................................................63
SECTION 8.9 NO THIRD-PARTY BENEFICIARIES........................................................63
SECTION 8.10 NON-RECOURSE........................................................................64
SECTION 8.11 COSTS, EXPENSES AND TAXES...........................................................64
SECTION 8.12 INDEMNITY...........................................................................65
SECTION 8.13 RIGHT OF SET-OFF....................................................................65
SECTION 8.14 SHARING OF PAYMENTS.................................................................66
SECTION 8.15 GOVERNING LAW.......................................................................66
SECTION 8.16 WAIVER OF PRESENTMENT, DEMAND, PROTEST AND NOTICE...................................66
SECTION 8.17 WAIVER OF JURY TRIAL................................................................66
SECTION 8.18 CONSENT TO JURISDICTION.............................................................67
SECTION 8.19 CONFIDENTIALITY.....................................................................67
SECTION 8.20 NOTICES.............................................................................68
SECTION 8.21 LEGAL REPRESENTATION OF THE PARTIES.................................................68
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SCHEDULE X Definitions and Rules of Construction
SCHEDULE 3.1(a)(ix) Project Documents in Effect on the Construction Loan Closing Date
SCHEDULE 5.2(c) Additional Project Costs
EXHIBIT 2.2 Form of Notice of Borrowing
EXHIBIT 2.4(a) Form of Construction Loan Note
EXHIBIT 2.4(b) Form of Term Loan Note
EXHIBIT 5.1(k)(iii) Form of Monthly Construction Report
EXHIBIT 5.1(n) Required Insurance
EXHIBIT 8.7(c) Form of Commitment Transfer Supplement
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CONSTRUCTION AND TERM LOAN AGREEMENT
This CONSTRUCTION AND TERM LOAN AGREEMENT, dated April 10,
2006 (as amended, modified or supplemented, this "AGREEMENT"), is by and among
PACIFIC ETHANOL MADERA LLC, a Delaware limited liability company ("BORROWER"),
the lenders named from time to time on the signature pages to this Agreement,
and HUDSON UNITED CAPITAL, A DIVISION OF TD BANKNORTH, N.A., a national banking
association, as administrative agent for the Lenders (as defined below)
(together with its successors and assigns in such capacity, the "ADMINISTRATIVE
Agent").
RECITALS:
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WHEREAS, Pacific Ethanol, Inc., a Delaware corporation
("PEI"), is a developer of ethanol production facilities;
WHEREAS, PEI owns all of the issued and outstanding shares of
Pacific Ethanol California, Inc., a California corporation ("PEC"), and all of
the membership interests in Kinergy Marketing, LLC, an Oregon limited liability
company ("KINERGY");
WHEREAS, PEC owns all of the membership interests in Pacific
Ethanol Holding Co. LLC, a Delaware limited liability company ("BORROWER
MEMBER"), and Pacific Ag. Products, LLC, a California limited liability company
("PAP");
WHEREAS, Borrower Member owns all of the membership interests
in Borrower;
WHEREAS, Borrower was formed to develop, own and operate an
approximately 35 million gallon-per-year dry mill ethanol production facility to
be located in Madera, California (the "PROJECT");
WHEREAS, Borrower also owns grain processing and storage
facilities consisting of eight silos and two associated rail loops, which
facilities (the "GRAIN FACILITIES") will provide storage and grain processing
services to the Project;
WHEREAS, W.M. Lyles, Co., a California corporation ("LYLES"),
will design and build the Project pursuant to a guaranteed maximum price
design-build contract between Lyles and Borrower;
WHEREAS, Delta-T Corporation, a Virginia corporation
("DELTA-T"), is licensing technology and providing certain design and process
engineering services to Borrower pursuant to a License of Technology, dated
September 1, 2005, by and between Delta-T and Borrower;
WHEREAS, PAP will provide grain origination services to
Borrower and Kinergy will provide ethanol marketing services to Borrower;
WHEREAS, PEC will provide operations and maintenance services
to Borrower in connection with the Project and PAP will provide operations and
maintenance services to Borrower in connection with the Grain Facilities;
WHEREAS, Western Milling LLC, a California limited liability
company, will provide marketing services for the wet distillers' grains produced
by the Project;
WHEREAS, Borrower desires that the Lenders make available to
Borrower Construction Loans (as defined below) to finance a portion of the cost
of ownership, development, engineering, construction, testing and operation of
the Project;
WHEREAS, Borrower further desires that, upon the satisfaction
of certain conditions, the Lenders convert the Construction Loans to Term Loans
(as defined below);
WHEREAS, the Construction Loans and the Term Loans will be
secured by, among other collateral, pledges of all of Borrower's assets
(including the Project and the Grain Facilities) and all of the membership
interests in Borrower;
WHEREAS, the Lenders are willing to make such loans available
to Borrower on the terms and subject to the conditions set forth in this
Agreement; and
WHEREAS, the Lenders desire that the Administrative Agent
serve as their administrative agent in connection with the loans contemplated by
this Agreement and the Administrative Agent is willing to serve in such
capacity;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants contained herein, and other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
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Capitalized terms used and not otherwise defined in this
Agreement have the meanings given to those terms in Schedule X hereto, and the
rules of construction set forth in Schedule X govern this Agreement.
ARTICLE II
THE CONSTRUCTION LOANS AND TERM LOANS
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Section 2.1 COMMITMENTS.
(a) CONSTRUCTION LOAN COMMITMENTS AND TERM LOAN COMMITMENTS.
Commencing on the Construction Loan Closing Date, on the terms and subject to
the conditions of this Agreement and in reliance upon the representations,
warranties and covenants of Borrower contained herein, (i) each Construction
Lender agrees to make one or more Construction Loans to Borrower on one or more
Construction Loan Funding Dates in an aggregate amount equal to its Pro Rata
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Share of the Aggregate Construction Loan Commitment and (ii) each Term Lender
agrees to make a Term Loan to Borrower on the Term Loan Conversion Date in an
amount equal to its Pro Rata Share of the Aggregate Term Loan Commitment.
Notwithstanding the foregoing, (i) no Construction Lender will have any
obligation to make a Construction Loan after, and the Construction Loan
Commitments will expire on, the Construction Loan Commitment Termination Date
and (ii) no Term Lender will have any obligation to make a Term Loan after, and
the Term Loan Commitments will expire on, the Construction Loan Commitment
Termination Date, if the Term Loan Conversion Date has not occurred prior to
such date.
(b) SEPARATE OBLIGATIONS. Each Lender will make its Loans to
Borrower simultaneously with the other Lenders at the times designated by the
Administrative Agent pursuant to Section 2.2(c); PROVIDED, that the failure of
any Lender to fund any Loan will not affect the obligation of any other Lender
to fund its Loans. No Lender will be responsible for a default by any other
Lender in funding a Loan nor will any Commitment of any Lender be increased or
decreased by reason of any such default.
Section 2.2 FUNDING OF THE LOANS.
(a) THE CONSTRUCTION LOANS.
(i) On each Construction Loan Funding Date, each
Construction Lender will make a Construction Loan to Borrower in the
amount of such Construction Lender's Pro Rata Share of the amount
specified in the Notice of Borrowing relating to such Construction Loan
Funding Date; PROVIDED, that no Construction Lender will be required to
make Construction Loans that, in the aggregate, exceed such
Construction Lender's Pro Rata Share of the Aggregate Construction Loan
Commitment. After payment of all fees, expenses and other amounts
required by the Loan Documents to be paid by Borrower on such
Construction Loan Funding Date, the aggregate net proceeds of such
Construction Loans will be deposited into the Construction Draw Account
for disbursement in accordance with the Disbursement Agreement and for
use in accordance with Section 2.7(a).
(ii) Each Construction Loan will mature on the
Construction Loan Maturity Date and must be refinanced with a Term Loan
on or prior to the Construction Loan Maturity Date, unless payment of
such Construction Loan is due prior to the Construction Loan Maturity
Date by acceleration, mandatory prepayment or otherwise. No
Construction Loan, once repaid, may be reborrowed.
(iii) On each Business Day after the Construction
Loan Closing Date and on or before the Term Loan Conversion Date on
which interest, fees or expenses are due and payable and are not
otherwise paid or provided for, Borrower hereby irrevocably authorizes
the Construction Lenders, in their sole discretion, to make
Construction Loans to Borrower in the aggregate amount of all interest,
fees and expenses then due and payable. The proceeds of such
Construction Loans will be deposited into the Construction Draw Account
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for disbursement in accordance with the Disbursement Agreement. The
Construction Lenders have no obligation to make any Construction Loan
for the purposes stated in this Section 2.2(a)(iii) and no Construction
Loan will be made pursuant to this Section 2.2(a)(iii) if an Event of
Default has occurred and is continuing.
(b) THE TERM LOANS.
(i) On the Term Loan Conversion Date, each Term
Lender will make a Term Loan to Borrower in the amount of such Term
Lender's Pro Rata Share of the amount specified in the Notice of
Borrowing relating to the Term Loan Conversion Date. The initial
principal amount of each Lender's Term Loan may not exceed such
Lender's Pro Rata Share of the Aggregate Term Loan Commitment. After
payment of all fees, expenses and other amounts required by the Loan
Documents to be paid by Borrower on the Term Loan Conversion Date and
the repayment in full of all Construction Loans, including all accrued
and unpaid interest thereon, the remaining aggregate net proceeds of
such Term Loans, if any, will be paid to or for the account of Borrower
for use in accordance with Section 2.7(b).
(ii) Each Term Loan will mature on the Term Loan
Maturity Date, unless payment thereof is due prior to such date by
acceleration, mandatory prepayment or otherwise. No Term Loan, once
repaid, may be reborrowed.
(c) FUNDING PROCEDURE. Whenever Borrower desires to borrow
Loans hereunder, it will submit a Notice of Borrowing to the Administrative
Agent prior to 1:00 p.m., New York City time, at least three (3) Business Days
prior to the proposed Construction Loan Funding Date or Term Loan Conversion
Date, as applicable. Each Notice of Borrowing will be irrevocable. Promptly
after receipt of a Notice of Borrowing, the Administrative Agent will notify
each Lender of the proposed Loans and of such Lender's Pro Rata Share thereof,
and each Lender will have available such Lender's Pro Rata Share of the proposed
Loans in immediately available funds no later than 1:00 p.m., New York City
time, on the applicable Funding Date. Upon satisfaction or waiver of the
applicable conditions precedent set forth in Article III, the Administrative
Agent will notify each Lender to disburse its Pro Rata Share of the requested
Loans to or for the benefit of Borrower on the applicable Funding Date.
Section 2.3 INTEREST.
(a) INTEREST RATES.
(i) Each Loan will bear interest on the unpaid
principal amount thereof from the date made to but excluding the date
of repayment (whether at stated maturity, by acceleration, because of
mandatory prepayment or otherwise) at the following rates:
(A) the Construction Loans will bear
interest during each Construction Loan Interest Period at a
rate per annum equal to LIBOR as determined for such
Construction Loan Interest Period plus three hundred
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seventy-five (375) basis points, computed on each date on
which interest is due on the Construction Loans on the basis
of a year of 360 days for the actual number of days elapsed;
and
(B) the Term Loans will bear interest during
each Term Loan Interest Period at a rate per annum equal to
LIBOR as determined for such Term Loan Interest Period plus
four hundred (400) basis points, computed on each date on
which interest is due on the Term Loans on the basis of a year
of 360 days for the actual number of days elapsed.
(ii) [RESERVED].
(b) INTEREST PERIODS.
(i) The initial Construction Loan Interest Period
will commence on the initial Construction Loan Funding Date and end on
the next Construction Loan Funding Date. Each Construction Loan
Interest Period occurring thereafter will commence on the day after the
date on which the immediately preceding Construction Loan Interest
Period expires and end on the next Construction Loan Funding Date or,
if no such Construction Loan Funding Date occurs, on the last Business
Day of the next calendar month.
(ii) The initial Term Loan Interest Period will
commence on the Term Loan Conversion Date and end on the next Payment
Date. Each Term Loan Interest Period occurring thereafter will commence
on the day after the date on which the immediately preceding Term Loan
Interest Period expires and end on the next Payment Date.
(iii) An Interest Period that would otherwise end on
a day that is not a LIBOR Business Day will end on the next succeeding
LIBOR Business Day, unless such day falls in the next calendar month,
in which case such Interest Period will end on the next preceding LIBOR
Business Day.
(iv) An Interest Period that begins on the last LIBOR
Business Day of a calendar month or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period will end on the last LIBOR Business Day of the calendar
month at the end of such Interest Period.
(c) INTEREST PAYMENT DATES.
(i) All accrued and unpaid interest on the
Construction Loans will be payable on each Construction Loan Funding
Date (or, if no Construction Loan Funding Date occurs during any
calendar month during which any Construction Loans are outstanding, on
the last Business Day of such calendar month) and on the date on which
the Construction Loans are repaid in full, whether by mandatory
prepayment or refinancing with Term Loans.
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(ii) All accrued and unpaid interest on the Term
Loans will be payable in arrears on each March 31, June 30, September
30 and December 31 following the Term Loan Conversion Date and on the
date on which the Term Loans are repaid in full, whether by mandatory
prepayment or on the Term Loan Maturity Date.
(iii) After maturity (whether at stated maturity, by
acceleration, because of mandatory prepayment or otherwise), all
accrued and unpaid interest (including Default Interest) due on any
Loan will be payable upon demand by the Administrative Agent.
(d) DEFAULT INTEREST. Overdue principal and overdue interest
in respect of any Loan and any other amount payable hereunder or under any other
Loan Document by Borrower or any other Person that is overdue will bear interest
at a rate per annum (the "DEFAULT RATE") equal to two percent (2%) in excess of
the Interest Rate then-applicable to such Loan or other amount or, if no rate of
interest is applicable to such overdue amount, the highest rate of interest
then-applicable to any outstanding Loan. Upon the occurrence and during the
continuation of an Event of Default (other than an Event of Default caused
solely by Borrower's failure to comply with Section 5.1(p)), all Loans and all
other amounts owing by Borrower and any other Person under a Loan Document will
bear interest at the Default Rate.
(e) INTEREST LIMITATION. Notwithstanding any other provision
of the Loan Documents, if the rate of interest on any obligation of Borrower or
any other Person under any Loan Document at any time exceeds the highest rate
permitted by applicable Law, the rate of interest on such obligation will be
deemed to be the highest rate permitted by applicable Law.
Section 2.4 NOTES. Borrower will execute and deliver to each
Construction Lender on the Construction Loan Closing Date a Construction Loan
Note substantially in the form of Exhibit 2.4(a) and to each Term Lender on the
Term Loan Conversion Date a Term Loan Note substantially in the form of Exhibit
2.4(b). Each Construction Loan Note will be dated the Construction Loan Closing
Date, will be in the principal amount of such Lender's Pro Rata Share of the
Aggregate Construction Loan Commitment and will evidence the Construction Loans
made by such Construction Lender. Each Term Loan Note will be dated the Term
Loan Conversion Date and will be in the principal amount of, and will evidence,
the Term Loan made by such Term Lender. On each Construction Loan Funding Date,
each Construction Lender is authorized to make a notation on the schedule
attached to its Construction Loan Note indicating the date and the principal
amount of the Construction Loan made by such Construction Lender on such date.
The information set forth in such schedules will, absent manifest error, be
prima facie evidence of the outstanding principal amount of such Construction
Loan Note. Any failure by a Construction Lender to make any such notation will
not limit or affect the obligations of Borrower under the Construction Loan
Notes or any other Loan Document. Each Note will be subject to and entitled to
the benefits of the Loan Documents.
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Section 2.5 FEES.
(a) CONSTRUCTION LOAN FEE. On the Construction Loan Closing
Date, Borrower will pay to each Construction Lender a fee equal to one percent
(1%) of such Construction Lender's Pro Rata Share of the Aggregate Construction
Loan Commitment; PROVIDED, that the fee payable to Hudson United Capital, as a
Construction Lender, will be reduced by thirty thousand Dollars ($30,000) in
recognition of fees previously paid.
(b) TERM LOAN CONVERSION FEE. On the Term Loan Conversion
Date, Borrower will pay to each Term Lender a fee equal to one percent (1%) of
the initial principal amount of such Term Lender's Term Loan.
(c) AGENCY FEE. On the first anniversary of the Construction
Loan Closing Date, and on the Payment Date next following each subsequent
anniversary of the Construction Loan Closing Date for so long as any Loan
remains outstanding under this Agreement, Borrower will pay to the
Administrative Agent a fee equal to thirty-three thousand Dollars ($33,000).
Section 2.6 SECURITY. The Loans and all other amounts payable
by Borrower or any other PEIX Party under this Agreement and the other Loan
Documents are secured by the Collateral and are entitled to the benefits of the
Security Documents.
Section 2.7 USE OF PROCEEDS.
(a) CONSTRUCTION LOANS. Proceeds of the Construction Loans may
be used only to pay (i) Qualified Project Construction Expenses and (ii)
interest, fees and other expenses payable pursuant to Section 2.3, Section 2.5,
Section 2.10 and Section 8.11.
(b) TERM LOANS. Proceeds of the Term Loans may be used only to
(i) refinance the principal of and accrued and unpaid interest on all
Construction Loans outstanding on the Term Loan Conversion Date and (ii) pay
interest, fees and other expenses payable pursuant to Section 2.3, Section 2.5,
Section 2.10 and Section 8.11. To the extent that proceeds of the Term Loans are
not sufficient to pay in full all of the amounts described in the preceding
sentence, such proceeds will be applied FIRST to the amounts described in clause
(i) of the preceding sentence and SECOND to the amounts described in clause (ii)
of the preceding sentence until all of such proceeds have been disbursed. Any
amount described in the first sentence of this paragraph not paid with the
proceeds of the Term Loans will be payable in full by or on behalf of Borrower
on the date on which the Term Loans are disbursed.
Section 2.8 REPAYMENT OF PRINCIPAL.
(a) MANDATORY REPAYMENTS.
(i) The Construction Loans must be refinanced in full
with Term Loans on or before the Construction Loan Commitment
Termination Date. Borrower will repay all outstanding Term Loans on or
before the Term Loan Maturity Date.
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(ii) On each March 31, June 30, September 30 and
December 31 following the Term Loan Conversion Date, Borrower will pay
to each Lender the amount of principal of the Term Loans corresponding
to such Payment Date under the heading "Scheduled Installment" on
Schedule I to each Term Loan Note (each such payment, a "SCHEDULED
INSTALLMENT"). Exhibit 2.4(b) contains the Schedule I that will be
attached to each Term Loan Note and applicable to the Term Loans if the
aggregate amount of Term Loans made on the Term Loan Conversion Date is
equal to $34 million. If, however, based upon the restrictions
contained in the definition of Aggregate Term Loan Commitment, the
aggregate amount of Term Loans made on the Term Loan Conversion Date is
less than $34 million, then the Administrative Agent, in consultation
with Borrower and with the approval of the Majority Lenders, will
prepare replacement amortization schedules for the Term Loan Notes
based upon (A) the reduced aggregate amount of Term Loans (calculated
in accordance with the definition of Aggregate Term Loan Commitment)
being made on such Term Loan Conversion Date, (B) the Project's
projected Net Operating Cash, as reflected in the Closing Pro Forma and
adjusted by the actual production capabilities of the Project (as
confirmed by the Engineer and with any adjustment based solely upon the
Project's as-built production capacity and efficiency levels) and (C)
the requirement that Borrower at all times comply with its obligations
under Section 5.1(p). Each such amortization schedule will list all
Scheduled Installments that will be payable on the corresponding Term
Loan Note and all Scheduled Installments, when aggregated together,
would result in the Term Loans being paid in full on the Term Loan
Maturity Date. No amortization schedule, once it is attached to an
executed Term Loan Note, may be amended or otherwise modified except as
agreed by the Administrative Agent, with the approval of the Majority
Lenders, and Borrower in their respective sole discretion.
(iii) In addition to the Scheduled Installments, on
each Payment Date after the Term Loan Conversion Date, Borrower will
pay to each Lender an additional amount of principal of the Term Loans
(each such payment, an "SPP PAYMENT"). SPP Payments will be applied
against the outstanding balance of the Term Loans in the inverse order
of maturity. The SPP Payment amounts will be determined as follows:
(A) Subject to the provisions of Section
2.8(a)(iii)(B), each SPP Payment will be in the amount of each
Lender's Pro Rata Share of the amount that is twenty-five
percent (25%) of the balance remaining in the Project Revenues
Account following the operation of priority FIFTH of Section
4.2(b) of the Disbursement Agreement.
(B) In the event that the Volumetric Ethanol
Excise Tax Credit is either repealed or not extended beyond
2010 on or before January 1, 2008, then each SPP Payment will
be in the amount of each Lender's Pro Rata Share of the amount
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that is seventy-five percent (75%) of the balance remaining in
the Project Revenues Account following the operation of
priority FIFTH of Section 4.2(b) of the Disbursement
Agreement; PROVIDED, that if the Volumetric Ethanol Excise Tax
Credit is extended beyond 2010 at any time after January 1,
2008, then this Section 2.8(a)(iii)(B) will cease to be in
effect and the SPP Payment will be calculated pursuant to
Section 2.8(a)(iii)(A) on the Payment Date next following the
effectiveness of such extension.
(iv) All cash proceeds received by Borrower as a
result of (A) any amendment or termination of any Project Document or
(B) the sale of any material asset of Borrower, in either case
prohibited by Section 5.2 of this Agreement or otherwise without the
prior written consent of the Majority Lenders (which will not be
unreasonably withheld), will immediately be paid to the Lenders in
accordance with their Pro Rata Shares of the outstanding Loans and
applied as prepayments of the Loans. In connection with any such
prepayment, Borrower will pay to the Lenders the prepayment fee
calculated in accordance with Section 2.8(c), if any.
(v) Borrower will immediately prepay in full the
Loans and all other amounts then-outstanding under the Loan Documents:
(A) in the event that substantially all of
the improvements included in the Project are completely
destroyed by casualty or are condemned, or in the event that
Net Insurance Proceeds (together with such other funds as may
be available to Borrower for the purposes of repairing the
Project) are insufficient in the reasonable judgment of the
Administrative Agent to pay for the repair of any casualty to
the Project substantially to the pre-casualty condition of the
Project prior to the expiration of the benefits of any
business interruption insurance and without the occurrence of
any Event of Default described in Section 6.1(a), (b), (f),
(g), (h), (j), (m), (o) or (p) (in which case no prepayment
fee will be payable to the Lenders); or
(B) in the event that the interests of
Borrower in the Project are sold or otherwise transferred or
PEI ceases to be the majority direct or indirect owner of
Borrower or no longer has direct or indirect operational
control over Borrower, in any case without the Majority
Lenders' prior written consent (in which case Borrower will
pay to the Lenders the prepayment fee calculated in accordance
with Section 2.8(c), if any).
(b) OPTIONAL PREPAYMENTS. Borrower may, on any Payment Date
after the first anniversary of the Term Loan Conversion Date, after having given
the Administrative Agent at least ten (10) Business Days' prior revocable notice
and five (5) Business Days' prior irrevocable notice, prepay in full the Term
Loans and all other amounts then-outstanding under the Loan Documents. In
connection with any such prepayment, Borrower will pay to the Lenders the
prepayment fee calculated in accordance with Section 2.8(c), if any.
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(c) PREPAYMENT FEE.
(i) In connection with any prepayment or repayment of
the Construction Loans other than with proceeds of Term Loans, Borrower
will pay to the Lenders a prepayment fee in the amount of five percent
(5%) of the prepaid principal amount of the Construction Loans, as
liquidated damages and compensation for the costs of the Construction
Lenders.
(ii) In connection with (i) any permitted optional
prepayment made pursuant to Section 2.8(b) or (ii) any mandatory
prepayment made pursuant to Section 2.8(a)(iv) or Section 2.8(a)(v)(B),
Borrower will pay to the Lenders a prepayment fee in the amount
determined pursuant to the following table as liquidated damages and
compensation for the costs of the Term Lenders:
Fee as a % of
Date of Prepayment Prepaid Principal Amount
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From the Term Loan Conversion Date until the
second anniversary of the Term Loan
Conversion Date 3%
From the second to the third anniversary of the
Term Loan Conversion Date 2%
From the third to the fourth anniversary of the
Term Loan Conversion Date 1%
After the fourth anniversary of the Term Loan
Conversion Date 0%
Section 2.9 PAYMENTS.
(a) METHOD OF PAYMENT.
(i) All payments by Borrower or any other Person
under any Loan Document will be made in immediately available funds in
U.S. Dollars to the Lenders at such office or to such account as each
Lender may notify to Borrower in writing from time to time. All such
payments must be received no later than 1:00 p.m., New York City time,
on the date due and must be made in full without defense, set-off or
counterclaim of any kind and without any requirement of presentment,
notice or demand. If any such payment is made by Borrower or any other
Person after 1:00 p.m., New York City time, such payment will be deemed
to have been made on the next Business Day. Subject to the provisions
of Section 2.3(b), whenever any payment to be made hereunder or under
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any other Loan Document is stated to be due on a day that is not a
Business Day, the due date of such payment will be accelerated to the
next preceding Business Day and such reduction in time will be included
in the computation of such payment.
(ii) Notwithstanding the provisions of Section
2.9(a)(i) to the contrary, for so long as the Disbursement Agreement
remains in full force and effect and PROVIDED, that sufficient funds
are available for application in accordance with the terms and
conditions hereof and thereof, Borrower authorizes and consents to
make, and the Administrative Agent and the Lenders agree to receive,
any and all payments required to be made hereunder through operation of
the relevant provisions of the Disbursement Agreement.
(b) APPLICATION OF PAYMENTS. Subject to the provisions of the
Disbursement Agreement and except to the extent expressly otherwise provided
herein or in any other Loan Document, all payments received by the
Administrative Agent and the Lenders hereunder will be applied in the following
order of priority:
(i) to the payment of all accrued interest on the
Loans;
(ii) to the payment or reimbursement of all costs,
expenses, Taxes and other amounts payable pursuant to Sections 2.10,
8.11 and 8.12;
(iii) to the payment of all fees payable pursuant to
Section 2.5;
(iv) to the payment of the principal of the Loans in
the inverse order of maturity; and
(v) to the payment or reimbursement of all other
amounts due to the Administrative Agent or any Lender hereunder or
under any other Loan Document.
All payments applied to interest on or principal of any Loan will be paid to the
Lenders in proportion to their respective Pro Rata Shares of the Construction
Loans or the Term Loans, as applicable. All payments applied to any other
category of obligation set forth above will be paid to the various payees within
such category in proportion to the respective amounts due to them.
Section 2.10 INCREASED COSTS AND UNAVAILABILITY.
(a) TAXES.
(i) All payments made by Borrower or any other Person
under the Loan Documents will be made free and clear of, and without
deduction or withholding for, any present or future Tax other than
Lender Income Taxes and United States backup withholding Taxes
(collectively, "REIMBURSABLE TAXES"), and Borrower will pay, either
directly (with respect to Reimbursable Taxes of which Borrower has
independent knowledge) or through reimbursement pursuant to Section
11
2.10(a)(ii), all Reimbursable Taxes in respect of payments under the
Loan Documents, and all costs and liabilities incurred by the
Administrative Agent and the Lenders (each, an "AFFECTED PARTY") in
connection therewith; PROVIDED, that Borrower shall not be required to
reimburse any Lender pursuant to this Section 2.10(a) for any Tax
incurred more than one year prior to the date on which such Lender
notifies Borrower of such Reimbursable Tax.
(ii) Borrower will reimburse each Affected Party, on
demand given pursuant to Section 2.10(f)(i), for any Reimbursable Tax
paid by such Affected Party, including for any Reimbursable Taxes
imposed on or attributable to amounts payable under this Section
2.10(a)(ii) (subject to the remaining provisions of this Section
2.10(a) and provided that this Section 2.10(a)(ii) shall not apply to
the extent that any such amounts are compensated for by an increased
payment under Section 2.10(a)(i)). Each Affected Party will have the
absolute right to arrange its tax affairs in whatever manner it deems
appropriate and no Affected Party will be obligated to claim any
particular deduction, credit or other benefit.
(iii) If Borrower is prohibited or prevented (by Law
or otherwise) from making any payment to an Affected Party required
under Section 2.10(a)(ii), then the amount of the payment due to such
Affected Party under the Loan Documents will be increased by the amount
necessary to insure that such Affected Party will receive the full
amount payable to it under the Loan Documents.
(iv) Within thirty (30) days after the date on which
any Reimbursable Tax (of which Borrower has independent knowledge or
has become aware by a notice from an Affected Party delivered in
accordance with Section 2.10(f)(i)) is due, Borrower will furnish to
the applicable Affected Parties official receipts or notarized copies
thereof evidencing payment of such Reimbursable Tax or, if such
receipts are not obtainable, other evidence of such payment by Borrower
reasonably satisfactory to the Administrative Agent.
(v) The Administrative Agent and the Lenders agree to
deliver to Borrower on the date hereof all forms and documents
necessary to establish any exemption from withholding for Taxes to
which they are entitled, or any other certification reasonably
requested by Borrower from time to time. Any Person that becomes the
successor holder of a Note will deliver the forms and documents
required under this Section 2.10(a)(v). In addition, each Lender will
deliver such forms promptly upon the obsolescence, expiration or
invalidity of any form previously delivered by such Lender. Each Lender
will promptly notify Borrower and the Administrative Agent at any time
such Lender determines that it is no longer in a position to provide
any previously delivered form or certificate to Borrower.
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(vi) If the Administrative Agent or a Lender
determines, in its reasonable discretion, that it has received a refund
of any Reimbursable Taxes or a Tax credit with respect to Reimbursable
Taxes from the jurisdiction imposing such Reimbursable Taxes as to
which it has been indemnified by Borrower or with respect to which
Borrower has paid additional amounts pursuant to this Section 2.10(a),
it shall pay to Borrower an amount equal to such refund or credit (but
only to the extent of indemnity payments made, or additional amounts
paid, by Borrower under this Section 2.10(a) with respect to the
Reimbursable Taxes giving rise to such refund or credit), net of all
out-of-pocket expenses of the Administrative Agent or such Lender and
without interest, provided that Borrower, upon the request of the
Administrative Agent or such Lender, agrees to repay the amount paid
over to Borrower (plus any penalties, interest or other charges imposed
by the relevant Government Instrumentality) to the Administrative Agent
or such Lender in the event the Administrative Agent or such Lender is
required to repay such refund to such Government Instrumentality. At
the reasonable request of Borrower, each Lender who has been
indemnified by a Borrower and the Administrative Agent shall take all
reasonable measures, at Borrower's expense, to apply for, request or
otherwise seek a refund or credit of any Reimbursable Taxes; provided
that taking such action, in the reasonable discretion of such Lender or
the Administrative Agent, would not be materially burdensome (taking
into account Borrower's obligation to pay such Lender's or the
Administrative Agent's expenses and other assistance that Borrower
offers to provide such Lender or Administrative Agent) or result in
materially adverse consequences to such Lender or the Administrative
Agent. This paragraph shall not be construed to require the
Administrative Agent or any Lender to make available its tax returns
(or any other information relating to its taxes which it deems
confidential) to Borrower or any other Person.
(b) CAPITAL ADEQUACY, RESERVE REQUIREMENTS AND INCREASED
COSTS. If a Lender determines that any Law enacted or effective after the
Construction Loan Closing Date, any change in Law effective after the
Construction Loan Closing Date, any change in the interpretation or
administration of any Law effective after the Construction Loan Closing Date, or
compliance with any directive, guideline or request from any Government
Instrumentality effective after the Construction Loan Closing Date (whether or
not having the force of Law), other than any Law or change in Law related to
Reimbursable Taxes, which shall be governed exclusively by Section 2.10(a), or
Lender Income Taxes, has the effect of (i) requiring an increase in the amount
of capital required or expected to be maintained by such Lender or any
corporation controlling such Lender; (ii) imposing or modifying any reserve,
special deposit, compulsory loan or similar requirement relating to any loan,
extension of credit or other asset of, or any deposit with or other liability
of, such Lender; or (iii) imposes any other cost or condition affecting the cost
of making a Loan or maintaining a Commitment; PROVIDED, that Borrower's
obligation under this Section 2.10(b) will not affect the obligations of the
Affected Parties under Sections 2.10(f)(ii) and (iii), and such Lender
reasonably determines that such increase, imposition or modification is material
and is based, in whole or in part, upon its obligations hereunder, Borrower will
either (x) pay to such Lender the amount necessary to preserve the return on
equity originally anticipated to be realized by such Lender as a result of the
Loans made hereunder or (y) prepay the Loans made by such Lender in the
aggregate amount necessary to prevent such Lender from being subject to such
13
increase, imposition or modification; PROVIDED, that Borrower shall not be
required to compensate a Lender pursuant to this Section 2.10(b) for any capital
adequacy or reserve increase, imposition or modification incurred more than one
year prior to the date on which such Lender notifies Borrower of the change
giving rise to those increased costs or reductions and of such Lender's
intention to claim compensation for those circumstances; PROVIDED, further,
that, if the change giving rise to those increased costs or reductions is
retroactive, then the one-year period referred to above shall be extended to
include that period of retroactive effect. Any prepayment pursuant to this
Section 2.10(b) will not cause Borrower to owe a prepayment fee pursuant to
Section 2.8(c) or otherwise, but such prepayment will be applied in the manner
provided in Section 2.9(b).
(c) FUNDING LOSSES. Borrower will compensate each Lender, upon
demand, for any out-of-pocket loss, cost or liability (including interest paid
by such Lender on funds borrowed to make, continue or convert a Loan and losses
sustained in liquidating deposits but excluding any consequential damages or
losses) incurred as a result of:
(i) repayment (including repayment due to
acceleration) of a Loan on a date other than the last day of an
Interest Period or the Construction Loan Maturity Date or Term Loan
Maturity Date, as applicable;
(ii) failure of Borrower to borrow a Loan on the
Funding Date notified to the Administrative Agent in a Notice of
Borrowing; or
(iii) failure of Borrower to repay a Loan when due
(whether at stated maturity, by acceleration, because of mandatory
prepayment or otherwise) or on the date specified therefor in a notice
delivered pursuant to Section 2.8(b).
(d) UNAVAILABILITY. In the event that, on or before the start
of any Interest Period, the Administrative Agent determines that:
(i) U.S. Dollar deposits are not being generally
offered in the London interbank market;
(ii) adequate and fair means do not exist for
ascertaining interest rates by reference to LIBOR; or
(iii) any Lender no longer provides LIBOR loans to
any of its borrowers;
then the Administrative Agent will give prompt notice of such fact to Borrower
and Borrower and the Administrative Agent will promptly enter into good-faith
discussions to determine an alternate reference interest rate and margin that
will as nearly as possible duplicate the economic terms of this Agreement and
the monetary benefit to the Lenders of the Loans made and to be made by the
Lenders hereunder. If Borrower and the Administrative Agent are unable to agree
on an alternate reference interest rate and margin, then the Lenders may suspend
their obligations to make Loans in their sole discretion.
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(e) ILLEGALITY. If a Lender determines that any Law enacted or
effective after the Construction Loan Closing Date, any change in Law effective
after the Construction Loan Closing Date, any change in the interpretation or
administration of any Law effective after the Construction Loan Closing Date, or
compliance by such Lender with any directive, guideline or request (whether or
not having the force of Law) of any Government Instrumentality effective after
the Construction Loan Closing Date makes it unlawful or impossible for such
Lender to fund or maintain Loans, then upon notice to Borrower by such Lender
the obligation of such Lender to fund Loans will be suspended. In addition, the
outstanding principal amount of such Lender's portion of all Loans, together
with interest accrued thereon and all other amounts payable with respect
thereto, will be repaid immediately upon demand of such Lender if it determines
that immediate repayment is required or, if it determines that immediate
repayment is not required, at the end of the next applicable Interest Period. In
the event of a repayment of a Loan pursuant to this Section 2.10(e) prior to the
end of its Interest Period, Borrower will compensate the Lenders for all losses,
costs and liabilities described in Section 2.10(c). Any prepayment pursuant to
this Section 2.10(e) will not cause Borrower to owe a prepayment fee pursuant to
Section 2.8(c) or otherwise and such prepayment will be applied in the manner
provided in Section 2.9(b). Notwithstanding the foregoing, prior to demanding
prepayment of a Loan pursuant to this Section 2.10(e), each Lender affected by
the conditions described in this Section 2.10(e) agrees to work in good faith
with Borrower to restructure their respective obligations under this Agreement
in such a manner as to preserve such Lender's economic return and to eliminate
or minimize the need for a Loan to be prepaid.
(f) NOTICE AND MITIGATION.
(i) To claim any amount under this Section 2.10, the
Affected Party must deliver to Borrower a certificate setting forth in
reasonable detail any amount or amounts that such Affected Party is
entitled to receive pursuant to this Section 2.10 (including
calculations, in reasonable detail, showing how such Affected Party
computed such amount or amounts). Borrower shall pay such Affected
Party the amount due and payable and set forth on any such certificate
within thirty (30) days after its receipt.
(ii) Except as specifically provided in this Section
2.10, each Affected Party will take reasonable measures to avoid the
need for, or reduce the amount of, compensation, reimbursement or
indemnification pursuant to this Section 2.10; PROVIDED, that no
Affected Party will be required to take any measure that, in its
reasonable judgment, would be materially disadvantageous to it or
inconsistent with its legal and regulatory position.
(iii) If any material Tax or other charge of a type
not generally imposed on lenders making loans of the types contemplated
by this Agreement is imposed on payments to any Lender, or if any
Affected Party is entitled to compensation, reimbursement or
indemnification pursuant to this Section 2.10 in any material amount
and other lenders making loans of the types contemplated by this
Agreement would not generally be so entitled, and Borrower is obligated
15
hereunder to compensate, reimburse or indemnify such Lender for such
Tax or other charge, then (A) Borrower may, within ten (10) days after
receipt of notice of such obligation, request that such Lender assign
its portion of the affected Loan or Loans to another Person reasonably
acceptable to the Administrative Agent and such Lender, and such Lender
will use reasonable efforts to negotiate such an assignment, and (B) if
Borrower identifies a replacement lender that is reasonably acceptable
to the Administrative Agent and the other Lenders (if any), then such
Lender will promptly assign its portion of the affected Loan or Loans
to such replacement lender pursuant to an assignment reasonably
acceptable to the assigning Lender.
ARTICLE III
CONDITIONS PRECEDENT
--------------------
Section 3.1 CONDITIONS PRECEDENT TO THE AVAILABILITY OF
COMMITMENTS. The obligation of each Lender to make available its respective
Commitments is subject to the satisfaction of each of the following conditions
precedent:
(a) The Administrative Agent has received each of the
following, in each case in form and substance satisfactory to the Administrative
Agent:
(i) each Loan Document required by the Administrative
Agent in its sole discretion to be delivered on the Construction Loan
Closing Date, executed and delivered by each of the parties thereto;
(ii) [RESERVED];
(iii) certified copies of:
(A) the Organizational Documents of the PEIX
Parties;
(B) certificates of existence with respect
to the PEIX Parties dated no earlier than thirty (30) days
before the Construction Loan Closing Date; and
(C) incumbency certificates for the
signatories of the PEIX Parties and resolutions (or other
authorizations) of the PEIX Parties approving the Documents to
which they are a party and the transactions contemplated
thereby;
(iv) certificates of a manager or officer of each of
the PEIX Parties certifying that:
(A) all Documents executed by such Person on
or prior to the Construction Loan Closing Date are in full
force and effect, such Person and, to the best knowledge of
such Person, the other Project Parties, are in material
compliance with all covenants and provisions thereof, and no
breach or event of default (or any event that would become a
16
breach or event of default with the giving of notice or
passage of time or both) has occurred and is continuing under
any such Document, except to the extent as could not
reasonably be expected to result in a Material Adverse Effect;
(B) all representations and warranties of
such Person contained in the Loan Documents to which it is a
party are true, correct and complete;
(C) no act, event or circumstance has
occurred with respect to the Project or such Person or, to the
best knowledge of such Person, the other Project Parties which
has had or could reasonably be expected to have a Material
Adverse Effect; and
(D) no material adverse change in the
condition or operation, financial or otherwise, of such Person
or, to the best of such Person's knowledge, PEI has occurred
since January 23, 2006, and the financial statements
(including any notes thereto) provided to the Administrative
Agent disclose all material liabilities, contingent or
otherwise, of such Person;
(v) the legal opinion of Borrower's Counsel;
(vi) the legal opinion of Lenders' Counsel;
(vii) audited financial statements of PEI for the
fiscal year ended December 31, 2005 (which may be in the form of a
substantially final draft of such audited financial statements if final
audited financial statements are not available on the Construction Loan
Closing Date), and all subsequent quarterly financial statements, if
any, available on the Construction Loan Closing Date, and pro forma
balance sheets of Borrower as of the Construction Loan Closing Date;
(viii) judgment lien, tax lien and UCC searches, and
such other searches of the records of Government Instrumentalities as
the Administrative Agent may require, performed with respect to the
PEIX Parties in all relevant jurisdictions;
(ix) a certificate of an authorized officer of
Borrower certifying that each of the Project Documents listed on
Schedule 3.1(a)(ix) (and attached to such certificate) has been duly
authorized, executed and delivered by the parties thereto, is in full
force and effect on the Construction Loan Closing Date and is
enforceable against each of the parties thereto;
(x) copies of all Required Approvals obtained on or
prior to the Construction Loan Closing Date by or on behalf of
Borrower;
(xi) the Construction and Draw Schedule;
17
(xii) a written report of the Engineer, dated on or
prior to the Construction Loan Closing Date, reporting favorably on the
relevant technical aspects of the Project, including without
limitation;
(A) existing environmental damage/liability
(if any);
(B) the projected availability of the
Project;
(C) the EPC Contract (including the
acceptance, completion and performance test criteria) and EPC
Contractor's and Delta-T's ability to perform their respective
obligations to Borrower;
(D) the cost and expenses of PEC for
performing operation and maintenance services for the Project
and the Grain Facilities pursuant to the applicable Project
Documents, the adequacy of such services, that the provision
of such services by PEC will be sufficient to provide Project
availabilities as assumed in the Closing Pro Forma, and
confirmation that there exist third-party operators capable of
performing such services at comparable cost;
(E) the Closing Pro Forma;
(F) Borrower's and the Project's ability to
comply with the requirements of all leases, easements,
Required Approvals and Project Documents;
(G) an opinion that the construction,
completion, operation and revenues of the Project are
reasonably obtainable within the cost and timeframe
anticipated;
(H) an opinion that any Required Approvals
not yet possible to obtain can be obtained as a matter of
administrative application;
(I) the ability of the Project as designed
and constructed to produce the quantities of Products from the
quantities of corn, natural gas, water, electricity and other
feedstocks at the cost of production, as all are assumed in
the Closing Pro Forma;
(J) the capability of the Grain Facilities
and PEC, as operator of the Grain Facilities, to service the
requirements of the Project as intended;
(K) the capability of the deep water wells
to provide sufficient quantities of make-up water;
(L) that Phase I Completion has been
achieved; and
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(M) any other technical or environmental
issues that the Administrative Agent may reasonably request.
(xiii) evidence that Borrower has employed a
construction manager reasonably acceptable to the Administrative Agent
who will oversee the performance by the EPC Contractor of its
performance under the EPC Contract;
(xiv) a Phase I Environmental Audit or other
acceptable environmental due diligence of the Site, prepared by the
Environmental Consultant and dated not more than sixty (60) days prior
to the Construction Loan Closing Date, confirming, among other things,
that (i) the operations of Borrower and the Project are not subject to
any current (and would not trigger any future) federal or state
investigation evaluating whether remedial action, involving any
expenditure deemed material by the Administrative Agent, is needed to
respond to any release of any Hazardous Substance, and (ii) Borrower
has and will have no contingent liabilities deemed material by the
Administrative Agent in connection with the release of any Hazardous
Substance;
(xv) a written report of the Insurance Consultant,
dated on or prior to the Construction Loan Closing Date, confirming
compliance by Borrower and the Project Parties with all requirements
relating to Required Insurance contained in this Agreement (except as
noted in such report) and attaching binders or certificates of
insurance and other documents sufficient, to the extent appropriate as
of the Construction Loan Closing Date and as otherwise reflected in
such report) to indicate that Borrower and the Project Parties have
obtained all Required Insurance, that all Required Insurance is in full
force and effect and is not subject to pending cancellation, and that
(A) the Administrative Agent has been named as loss payee with respect
to the property insurance and business interruption insurance policies
relating to the Project and (B) the Administrative Agent and the
Lenders have been named as additional insureds on the general and
umbrella liability insurance policies maintained by Borrower;
(xvi) one or more reports of qualified consultants
acceptable to the Administrative Agent and dated on or prior to the
Construction Loan Closing Date commenting favorably on:
(A) the historical and projected
availability and price of the Project's anticipated corn,
natural gas and electrical requirements;
(B) the historical and projected markets and
prices for the Products;
(C) the agreements and/or arrangements for
the purchase and supply of natural gas, electricity and other
materials utilized by the Project;
(D) the agreements and/or arrangements for
the sale of the Products; and
19
(E) the Project's risk management policies
and procedures and their adequacy to reasonably protect the
Project's operating margin.
(xvii) written confirmation from the Disbursement
Agent that the Contributed Capital has been deposited by or on behalf
of Borrower into the Construction Draw Account for application in
accordance with this Agreement and the Disbursement Agreement;
(xviii) evidence that Borrower and Borrower Member
have appointed the Process Agent to serve as a designated agent to
accept service of legal process until the scheduled Term Loan Maturity
Date and that the Process Agent has accepted such appointment;
(xix) the Closing Pro Forma incorporating, to the
Administrative Agent's satisfaction, the results of the Administrative
Agent's due diligence based on information provided by Borrower, the
reports of Lenders' Counsel, the Engineer and other consultants and the
terms and conditions imposed by the Project Documents, showing annual
Net Operating Cash for the ten years following the Construction Loan
Closing Date and available for debt service on the Term Loans
sufficient (in the Administrative Agent's sole determination) to
produce an annual Debt Service Coverage Ratio of at least 2.29 to 1 and
for Borrower to comply with the financial covenants of this Agreement,
including maintenance of the Minimum Coverage Ratio;
(xx) copies of documentation pursuant to which (1)
Borrower has instructed the EPC Contractor to proceed with "Phase II"
construction, and the EPC Contractor has acknowledged such
instructions, in accordance with the EPC Contract and (2) the EPC
Contractor has released, on or prior to the Construction Loan Closing
Date, all Liens relating to "Phase I" construction;
(xxi) the Completion Bond;
(xxii) an appraisal of the Project, the Grain
Facilities and all other improvements constructed on the Site, prepared
by an appraiser, and in form and substance, acceptable to the Lenders,
and dated not more than sixty (60) days prior to the Construction Loan
Closing Date; and
(xxiii) such other assurances, instruments or
undertakings as the Administrative Agent, the Disbursement Agent and
the DSRA Agent may reasonably request, including in connection with
"know your customer" and USA PATRIOT Act information requirements.
(b) Since January 23, 2006, no act, event or circumstance has
occurred with respect to the Project, any PEIX Party or any other Project Party
which has had or could reasonably be expected to have a Material Adverse Effect
or a material adverse effect on the availability or pricing of financing for the
Project.
20
(c) All Taxes, fees and expenses required to be paid by
Borrower on or before the Construction Loan Closing Date have been paid.
(d) The Organizational Documents of Borrower contain
provisions satisfactory to the Administrative Agent relating to bankruptcy and
"separateness" matters and restricting the ability of Borrower to sell some or
all of its assets.
(e) All Documents executed by Borrower and the PEIX Parties on
or prior to the Construction Loan Closing Date are in full force and effect, the
PEIX Parties and the other Project Parties are in full compliance with all
covenants and provisions thereof, and no breach or event of default (or any
event that could become a breach or event of default with the giving of notice
or passage of time or both) has occurred and is continuing under any such
Document except to the extent as could not reasonably be expected to result in a
Material Adverse Effect.
(f) All representations and warranties of the PEIX Parties
contained in the Loan Documents are true, correct and complete.
(g) The Project Documents executed by Borrower on or prior to
the Construction Loan Closing Date or to which Borrower is otherwise a party
include all agreements required for the development, construction, ownership and
operation of the Project, other than those agreements that the Administrative
Agent does not require to be in place on the Construction Loan Closing Date and
that the Administrative Agent is satisfied, on the basis of evidence provided by
Borrower, will be obtainable and entered into in the ordinary course of business
prior to the time required, and such Project Documents conform in all material
respects with the Closing Pro Forma and are sufficient to permit the Project to
operate in a manner that will not violate the Required Approvals or the
manufacturer's normal operating parameters and such that the Project will be
capable of achieving the financial results projected in the Closing Pro Forma.
(h) All Required Approvals necessary for the construction and
operation of the Project and the performance by Borrower and the Project Parties
of all of their obligations under the Project Documents in effect on the
Construction Loan Closing Date have been obtained except for those that are
obtainable only at a later stage and which the Administrative Agent is
satisfied, on the basis of evidence provided by Borrower, will be obtainable in
the ordinary course of business prior to the time required, and all obtained
Required Approvals are in full force and effect, not subject to any onerous or
unusual condition and are satisfactory to the Administrative Agent in its sole
discretion.
(i) There is no action, suit, proceeding or investigation
pending or, to Borrower's knowledge, threatened against any PEIX Party that,
individually or in the aggregate, has had or could reasonably be expected to
have a Material Adverse Effect, and, to Borrower's knowledge, no action, suit,
proceeding or investigation has been instituted or threatened against any
Project Party (other than Borrower or another PEIX Party) relating to the
Project that, individually or in the aggregate, has had or could reasonably be
expected to have a Material Adverse Effect.
21
(j) The Project has not suffered a material Loss, the Grain
Facilities have not suffered a material Loss other than the fire damage
disclosed to the Administrative Agent and no material portion of the Project,
the Grain Facilities or the Site is subject to pending or, to Borrower's best
knowledge, threatened condemnation or appropriation proceedings.
(k) No order, judgment or decree of any Government
Instrumentality enjoins or restrains the Administrative Agent or any Lender from
entering into and performing its obligations under this Agreement.
(l) All Required Insurance has been obtained, is in full force
and effect and is not subject to cancellation and no Person other than Borrower,
the Administrative Agent and the Lenders has any right or interest in, to or
under any Required Insurance other than pursuant to the Project Documents.
(m) The Security Documents and all financing statements or
other instruments with respect thereto, as may be necessary, have been filed,
registered or recorded in such manner and in such places as are required by any
Law to establish and perfect First-Priority Liens in favor of the Administrative
Agent as granted or purported to be granted pursuant to the Security Documents
in respect of the Collateral to the extent permitted under applicable Law, and
any other action required in the judgment of the Administrative Agent to perfect
such security interests as First-Priority Liens has been taken, including
without limitation delivery to the Administrative Agent of the certificates
evidencing all of the membership interests in Borrower and the related transfer
powers, and all Taxes, fees and other charges in connection with such recording,
publishing, registration and filing of such Security Documents or any memoranda
thereof have been paid, or caused to be paid, by Borrower.
Section 3.2 CONDITIONS PRECEDENT TO THE SECOND AND EACH
SUBSEQUENT CONSTRUCTION LOAN FUNDING DATE. The obligation of the Construction
Lenders to make Construction Loans in accordance with Section 2.2(a) is subject
to the satisfaction of each of the following conditions precedent on the first
Construction Loan Funding Date after the Construction Loan Closing Date and on
each subsequent Construction Loan Funding Date:
(a) The Administrative Agent has received each of the
following, in each case in form and substance satisfactory to the Administrative
Agent:
(i) [RESERVED];
(ii) a Notice of Borrowing, with all attachments
thereto, delivered in compliance with Section 2.2(c) and signed by
Borrower;
(iii) a certificate of the manager of Borrower
certifying that:
(A) all Documents executed by Borrower on or
prior to the applicable Construction Loan Funding Date are in
full force and effect, Borrower and, to the best knowledge of
Borrower, the Project Parties are in compliance with all
22
covenants and provisions thereof, and no breach or event of
default (including any Event of Default)(or any event that
would become a breach or event of default, or an Event of
Default, with the giving of notice or the passage of time or
both) has occurred and is continuing under any such Document,
except to the extent as could not reasonably be expected to
result in a Material Adverse Effect;
(B) all representations and warranties of
Borrower contained in the Loan Documents to which it is a
party are true, correct and complete in all material respects
(except with respect to representations and warranties made as
of a prior specific date); and
(C) no act, event or circumstance has
occurred with respect to the Project or Borrower or, to the
best knowledge of Borrower, the Project Parties which has had
or could reasonably be expected to have a Material Adverse
Effect.
(iv) certified copies of all Project Documents in
effect on the applicable Construction Loan Funding Date that have not
previously been provided to the Administrative Agent;
(v) copies of all Required Approvals obtained on or
prior to the applicable Construction Loan Funding Date by or on behalf
of Borrower that have not previously been provided to the
Administrative Agent;
(vi) a certificate of the Engineer, dated the
applicable Construction Loan Funding Date, (1) attaching copies of the
Construction Budget and the Construction and Draw Schedule and (2)
certifying that, to the best of its knowledge after due inquiry and
review:
(A) construction of the Project is being
accomplished in all material respects in conformity and
compliance with the Construction Budget, the Plans and
Specifications, the EPC Contract and the Construction and Draw
Schedule (subject to any "PERMITTED CONSTRUCTION DELAY," which
for purposes of this Agreement means any delay in construction
that is expected, in the Engineer's reasonable opinion
following consultation with Borrower and the EPC Contractor,
to delay the Project achieving "Final Construction Completion"
(as defined in the EPC Contract) until not later than January
15, 2007; PROVIDED, that if the Engineer reasonably believes
that construction of the Project will be delayed beyond
January 15, 2007, then such delay will also be considered a
Permitted Construction Delay if Borrower has posted a letter
of credit or other cash or cash-equivalent collateral, in form
and substance reasonably acceptable to the Administrative
Agent, and for the benefit of the Administrative Agent and the
Construction Lenders, in the amount of the aggregate amount of
interest on the Construction Loans that is expected to accrue
from January 15, 2007, until the new expected date for Final
Construction Completion of the Project);
23
(B) all Required Approvals capable of being
obtained as of the applicable Construction Loan Funding Date
have been obtained and all other Required Approvals that are
not possible to obtain as of such date will be obtained as and
when needed in the ordinary course of business; and
(C) the Engineer is not aware of any event
that has occurred or is anticipated to occur that could cause
the Project not to be completed on or before the Construction
Loan Commitment Termination Date;
(vii) written confirmation, dated on or before the
first Construction Loan Funding Date after the Construction Loan
Closing Date, from the Engineer, that the full amount of the
Contributed Capital has been used by Borrower to pay Qualified Project
Construction Expenses;
(viii) [RESERVED];
(ix) a title commitment (with copies of all documents
and instruments affecting title to Borrower's interest in the Site) and
a Policy of Title Insurance in California standard form for Borrower's
interest in the Site, each dated on or prior to the first Construction
Loan Funding Date after the Construction Loan Closing Date, insuring
the Mortgage as a First-Priority Lien on Borrower's interest in the
Site in an amount no less than one hundred percent (100%) of the
maximum possible Aggregate Term Loan Commitment (the "TITLE POLICY"),
marked "premium paid" and containing such modifications to the standard
exceptions and affirmative insurance and endorsements as are available
in the State of California, including, without limitation, access to a
public road and mechanic's lien coverage, as the Administrative Agent
may require;
(x) an ALTA/ASCM "boundary" survey of the Site
showing all easements, encroachments and other survey matters shown on
the Title Policy or otherwise required by the Administrative Agent,
such survey to be dated within sixty (60) days of the first
Construction Loan Funding Date after the Construction Loan Closing Date
and otherwise in form and substance satisfactory to the Administrative
Agent, prepared by licensed surveyors acceptable to the Administrative
Agent, and certified to the Administrative Agent and the Title Insurer;
(xi) an interest rate cap agreement from a provider
reasonably acceptable to the Administrative Agent, in form and
substance acceptable to the Administrative Agent, which agreement caps
LIBOR at no more than five and one-half percent (5.5%) on seventy
percent (70%) of the principal projected to be outstanding on any
Payment Date from the first Construction Loan Funding Date after the
Construction Loan Closing Date through the fifth anniversary of the
Term Loan Conversion Date; and
24
(xii) such other assurances, instruments or
undertakings as the Administrative Agent may reasonably request.
(b) The Project Documents to which Borrower is a party include
all agreements required for the development, construction, ownership and
operation of the Project, other than those agreements that the Administrative
Agent does not require to be in place on the applicable Construction Loan
Funding Date and that the Administrative Agent is satisfied, on the basis of
evidence provided by Borrower, will be obtainable in the ordinary course of
business prior to the time required, and such Project Documents conform in all
material respects with the Closing Pro Forma and are sufficient to permit the
Project to operate in a manner that will not violate the Required Approvals or
the manufacturer's normal operating parameters and such that the Project will be
able to achieve the financial results projected in the Closing Pro Forma.
(c) All Documents executed by the PEIX Parties on or prior to
the applicable Construction Loan Funding Date are in full force and effect, the
PEIX Parties and the other Project Parties are in full compliance with all
covenants and provisions thereof, and no breach or event of default (or any
event that could become a breach or event of default with the giving of notice
or passage of time or both) has occurred and is continuing under any such
Document except to the extent as could not reasonably be expected to result in a
Material Adverse Effect.
(d) All representations and warranties of the PEIX Parties
contained in the Loan Documents are true, correct and complete in all material
respects (except with respect to representations and warranties made as of a
prior specific date).
(e) No Default or Event of Default has occurred and is
continuing.
(f) All Required Approvals necessary for the construction and
operation of the Project and the performance by Borrower and the Project Parties
of all of their obligations under the Project Documents in effect on the
applicable Construction Loan Funding Date have been obtained except for those
that are obtainable only at a later stage and which the Administrative Agent is
satisfied, on the basis of evidence provided by Borrower, will be obtainable in
the ordinary course of business prior to the time required, and all obtained
Required Approvals are in full force and effect, not subject to any onerous or
unusual condition and are satisfactory to the Administrative Agent in its sole
discretion.
(g) No order, judgment or decree of any Government
Instrumentality enjoins or restrains any Construction Lender from making the
requested Loan.
(h) All Taxes, fees and expenses required to be paid by
Borrower on or before the applicable Construction Loan Funding Date have been
paid or will be paid on such Construction Loan Funding Date with proceeds of
Construction Loans.
25
(i) On or prior to the date that is 425 days after the
Construction Loan Closing Date, the Grain Facilities have been modified so as to
meet the operational requirements of the Project, including without limitation
the availability to the Project of fifteen (15) days of dedicated grain storage.
Section 3.3 CONDITIONS PRECEDENT TO THE TERM LOAN CONVERSION
DATE. The obligation of the Term Lenders to make Term Loans in accordance with
Section 2.2(b) is subject to the satisfaction of each of the following
conditions precedent:
(a) The Administrative Agent has received each of the
following, in each case in form and substance satisfactory to the Administrative
Agent:
(i) a Notice of Borrowing, with all attachments
thereto, delivered in compliance with Section 2.2(c) and executed by
Borrower;
(ii) the Term Loan Notes, executed by Borrower;
(iii) [RESERVED];
(iv) an ALTA/ASCM "as-built" survey of the Site
showing (A) the location of the Project and the Grain Facilities, (B)
that the Project and the Grain Facilities are located within the
boundaries of the Site (without encroachments on any right-of-way,
easement or other interest that could adversely affect the continued
operation of the Project or the Grain Facilities), (C) that the Site is
not located in a flood zone (or, to the extent that any portion of the
Site is in a flood zone, delineating the portions thereof in such flood
zone, in which case flood hazard insurance may be required by the
Administrative Agent), and (D) all easements, encroachments and other
survey matters shown on the Title Policy (as updated to the Term Loan
Conversion Date) or otherwise reasonably required by the Administrative
Agent, such survey to be dated within thirty (30) days of the Term Loan
Conversion Date and prepared by licensed surveyors acceptable to the
Administrative Agent, and certified to the Administrative Agent and the
Title Insurer;
(v) such legal opinions of Borrower's Counsel and
Lenders' Counsel as the Administrative Agent may reasonably request;
(vi) a certificate of existence with respect to each
PEIX Party dated no earlier than thirty (30) days before the Term Loan
Conversion Date;
(vii) a certificate of a manager or officer of each
PEIX Party certifying that:
(A) all Documents executed by such Person on
or prior to the Term Loan Conversion Date are in full force
and effect, such Person and, to the best knowledge of such
Person, the other Project Parties, are in compliance with all
covenants and provisions thereof, and no breach or event of
default (including any Event of Default or any event that
would become a breach or event of default, or an Event of
26
Default, with the giving of notice or the passage of time or
both) has occurred and is continuing under any such Document,
except to the extent as could not reasonably be expected to
result in a Material Adverse Effect;
(B) all representations and warranties of
such Person contained in the Loan Documents are true, correct
and complete in all material respects (except with respect to
representations and warranties made as of a prior specific
date); and
(C) no act, event or circumstance has
occurred with respect to the Project or such Person or, to the
best knowledge of such Person, the other Project Parties which
has had or could reasonably be expected to have a Material
Adverse Effect;
(viii) a completion certificate of the Engineer
certifying that:
(A) the Project has been completed in all
material respects in accordance with the EPC Contract;
(B) "Final Construction Completion" (as
defined in the EPC Contract) has occurred;
(C) the Project is available for commercial
operation; and
(D) all Required Approvals required to
operate the Project are in full force and effect;
(ix) an Operating Plan and Budget for the Project for
the current and subsequent calendar year;
(x) certified copies of all Project Documents in
effect on the Term Loan Conversion Date that have not previously been
provided to the Administrative Agent;
(xi) copies of all Required Approvals obtained on or
prior to the Term Loan Conversion Date that have not previously been
provided to the Administrative Agent;
(xii) an overhaul, maintenance and repair plan with
respect to the Project for the period from the Term Loan Conversion
Date through the Term Loan Maturity Date, as approved by the Engineer;
(xiii) evidence satisfactory to the Administrative
Agent in its sole discretion that all existing Indebtedness of Borrower
(including, without limitation, the Sub-Debt but excluding Indebtedness
of Borrower permitted to be outstanding pursuant to Section 5.2(g))
27
will be repaid in full on the Term Loan Conversion Date with proceeds
of the Term Loans or otherwise assumed in full by a Person other than
Borrower and that liens securing such indebtedness on the equity
interests in Borrower and Borrower's assets will be released upon such
repayment; and
(xiv) such other assurances, instruments or
undertakings as the Administrative Agent may reasonably request.
(b) The Project Documents to which Borrower is a party include
all agreements required for the development, construction, ownership and
operation of the Project and the Grain Facilities, other than those agreements
that the Administrative Agent does not require to be in place on the Term Loan
Conversion Date and that the Administrative Agent is satisfied, on the basis of
evidence provided by Borrower, will be obtainable in the ordinary course of
business prior to the time required, and such Project Documents are sufficient
to permit the Project and the Grain Facilities to operate in a manner that will
not violate the Required Approvals or the manufacturer's normal operating
parameters and such that the Project will be able to achieve the financial
results projected in the Closing Pro Forma.
(c) All Documents executed by the PEIX Parties on or prior to
the Term Loan Conversion Date are in full force and effect, the PEIX Parties and
the other Project Parties are in full compliance with all covenants and
provisions thereof, and no breach or event of default (or any event that could
become a breach or event of default with the giving of notice or passage of time
or both) has occurred and is continuing under any such Document except to the
extent as could not reasonably be expected to result in a Material Adverse
Effect.
(d) All representations and warranties of the PEIX Parties
contained in the Loan Documents are true, correct and complete in all material
respects (except with respect to representations and warranties made as of a
prior specific date).
(e) No Default or Event of Default has occurred and is
continuing.
(f) All Required Approvals necessary for the construction and
operation of the Project and the performance by Borrower and the Project Parties
of all of their obligations under the Project Documents in effect on the Term
Loan Conversion Date have been obtained except for those that are obtainable
only at a later stage and which the Administrative Agent is satisfied, on the
basis of evidence provided by Borrower, will be obtainable in the ordinary
course of business prior to the time required, and all obtained Required
Approvals are in full force and effect, not subject to any onerous or unusual
condition and are satisfactory to the Administrative Agent in its sole
discretion.
(g) All Required Insurance has been obtained, is in full force
and effect and is not subject to cancellation and no Person other than Borrower,
the Administrative Agent and the Lenders has any right or interest in, to or
under any Required Insurance other than pursuant to the Project Documents.
28
(h) The Security Documents and all financing statements or
other instruments with respect thereto, as may be necessary, have been filed,
registered or recorded in such manner and in such places as are required by any
Law to establish and perfect First-Priority Liens in favor of the Administrative
Agent as granted or purported to be granted pursuant to the Security Documents
in respect of the Collateral to the extent permitted under applicable Law, and
any other action required in the judgment of the Administrative Agent to perfect
such security interests as First-Priority Liens has been taken, including
without limitation delivery to the Administrative Agent of the certificates
evidencing all of the membership interests in Borrower and the related transfer
powers, and all stamp, recording or other documentary taxes (collectively,
"TRANSFER TAXES"), fees and other charges in connection with such recording,
publishing, registration and filing of such Security Documents or any memoranda
thereof have been paid, or cause to be paid, by Borrower.
(i) All Construction Loans, together with all accrued and
unpaid interest thereon and all other amounts due and payable under the Loan
Documents will be paid in full concurrently with the funding of the Term Loans.
(j) All Qualified Project Construction Expenses have been paid
in full, or an amount deemed sufficient by the Engineer to pay all unpaid costs
(including with respect to outstanding punch list items) has been deposited in
an account under the control of the Administrative Agent for such purpose.
(k) The Project has achieved Final Construction Completion
under the EPC Contract and commenced Commercial Operations.
(l) No order, judgment or decree of any Government
Instrumentality enjoins or restrains any Term Lender from making the requested
Term Loan.
Section 3.4 NO WAIVER. The failure of the Administrative Agent
to require satisfaction of any condition precedent set forth in this Article
III, or the funding of any Loan despite the failure of Borrower to satisfy any
such condition precedent, will not constitute a waiver of such condition
precedent unless the Administrative Agent so states in writing. A waiver by the
Administrative Agent of any condition precedent in connection with the funding
of any Loan will not affect the applicability of such condition precedent to the
funding of subsequent Loans.
Section 3.5 LOCATION OF CLOSINGS. The various closings of the
loan transactions contemplated hereunder will take place at the office of the
Lenders' Counsel in New York, New York, or the offices of the Administrative
Agent in Westport, Connecticut, at the election of the Administrative Agent.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
------------------------------
Section 4.1 REPRESENTATIONS AND WARRANTIES. Borrower
represents and warrants to the Administrative Agent and the Lenders on and as of
each date on which such representations and warranties are required to be made
pursuant to Article III as follows:
29
(a) EXISTENCE; AUTHORITY. It is a limited liability company
duly formed, validly existing and in good standing under the Laws of the State
of Delaware and is duly qualified to do business as a foreign limited liability
company and is in good standing in each jurisdiction in which such qualification
is necessary or desirable in view of its current or proposed business and
operations or the ownership of its properties. It has all necessary rights,
franchises and privileges and full power and authority to execute, deliver and
perform the Documents to which it is a party, to design, construct, own and
operate the Project and to conduct its business as currently conducted and as
proposed to be conducted. It has taken all necessary action to execute, deliver
and perform the Documents to which it is a party and such Documents have been
duly executed and delivered by it and constitute the legally valid and binding
obligations of it, enforceable in accordance with their respective terms, except
as enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar Laws relating to or limiting creditors' rights generally
or by general principles of equity.
(b) CAPITALIZATION. The ownership interests in Borrower are as
set forth in the Organizational Documents provided to the Administrative Agent
pursuant to Article III. All of such ownership interests are duly and validly
issued and are subject to no Liens other than the Liens in favor of the
Administrative Agent created by the Pledge Agreement. There are no other
ownership or equity interests in Borrower, rights to acquire or subscribe for
any such interests or securities or instruments convertible into or exchangeable
or exercisable for any such interests.
(c) BUSINESS AND CONTRACTUAL OBLIGATIONS. Borrower is a
single-purpose entity formed for the sole purpose of designing, constructing,
owning and operating the Project and the Grain Facilities and performing its
obligations under the Documents. Borrower has engaged in no business or activity
and incurred no liability or expense to any Person except for those contemplated
by the Documents and the Sub-Debt. Except for the Documents and in connection
with the Sub-Debt, Borrower is not a party or subject to any Contractual
Obligation with respect to any of the Collateral. Borrower has not assumed,
guaranteed, endorsed or otherwise become directly or contingently liable for
(including, without limitation, liable by way of agreement, contingent or
otherwise, to purchase, to provide funds for payment, to supply funds to or
otherwise invest in the debtor or otherwise to assure the creditor against loss)
the indebtedness or obligations of any other Person except pursuant to a Loan
Document. Borrower has not made any loan or advance to any Person and does not
own or hold capital stock, securities, debt, assets or obligations of, or any
interest in, any Person.
(d) NAME, ADDRESS AND RECORDS. The name of Borrower set forth
in the first paragraph of this Agreement is the true, correct and complete name
of Borrower, and Borrower does not conduct business under any other name or
tradestyle. The legal address of Borrower and the address of the principal place
of business and chief executive office of Borrower is 31470 Avenue 12, Madera,
California 93628. Borrower keeps all of its records and all documents evidencing
30
or relating to its Contractual Obligations at such address or at 5611 N. West
Avenue, Fresno, California 93711. Borrower has no property or other assets at
any other address other than as listed in the Security Agreements.
(e) NO VIOLATIONS, DEFAULTS OR LIENS.
(i) Borrower is not (A) in violation of any Law
(including Environmental Laws), (B) in violation of or default under
its Organizational Documents and (C) in violation of or default under
any Document or other Contractual Obligation, except to the extent as
could not reasonably be expected to have a Material Adverse Effect.
Borrower is not a party to or affected by any charter, bylaw, operating
agreement or other constituent document or any Contractual Obligation
that could reasonably be expected to have a Material Adverse Effect.
(ii) To the best knowledge of Borrower, no Project
Party (A) is in violation of any Law (including Environmental Laws),
(B) is in violation of or default under its charter, bylaws,
partnership agreement or other organizational documents or (C) is in
violation of or default under any Project Document or any other
Contractual Obligation, in each case except to the extent as could not
reasonably be expected to have a Material Adverse Effect.
(iii) No Event of Default has occurred and is
continuing.
(iv) Borrower is the legal and beneficial owner of,
and has good, marketable and valid title to, the Collateral (except for
the Collateral pledged pursuant to the Pledge Agreement). None of the
Collateral is subject to any Lien other than Permitted Liens. No
effective mortgage, deed of trust, financing statement, security
agreement or other similar instrument which is not a Security Document
is on file or of record in the office of any Government Instrumentality
with respect to any Collateral other than with respect to Permitted
Liens.
(v) The execution, delivery and performance of the
Loan Documents and Major Project Documents to which the PEIX Parties
are parties do not and will not (A) violate any Law (including
Environmental Laws), (B) violate, or result in a default under, the
Organizational Documents of any such Person, (C) violate, or result in
a default under, any Loan Document or any other material Contractual
Obligation of any such Person, (D) result in or require the creation or
imposition of any Lien (other than Permitted Liens) on the Collateral
or other property of any such Person or (E) require an Approval from
any Person that has not been obtained or that will not be obtained in
due course.
(f) REQUIRED APPROVALS. Borrower has obtained and is in
compliance with all Required Approvals required to be obtained at or prior to
the time this representation is made and in order for the Project, the Grain
Facilities, Borrower, the Administrative Agent and the Lenders and their
respective activities to be in compliance with Applicable Law (except to the
31
extent the failure to obtain such Approvals could not reasonably be expected to
have a Material Adverse Effect). Borrower has no reason to believe that any
Required Approval not yet obtained cannot or will not be obtained in the normal
course of business as and when required and without significant expense.
Borrower has provided the Administrative Agent with a true, correct and complete
copy of each Required Approval required to be obtained at or prior to the time
this representation and warranty is made. All Required Approvals obtained by
Borrower (i) are validly issued, (ii) are in full force and effect, (iii) are
free from any condition or requirement that cannot be met or that could
reasonably be expected to have or result in a Material Adverse Effect and (iv)
are not the subject of a current challenge and are not subject to any onerous or
unusual conditions. No adverse proceeding or other action is pending or to
Borrower's knowledge threatened with respect to any Required Approval and all
information provided in connection with each Required Approval was on the date
provided and is on the date hereof true, correct and complete in all material
respects. The Administrative Agent will be entitled, without undue expense or
delay, to the benefit of each Required Approval upon the exercise of its
remedies under the Security Documents.
(g) PROJECT DOCUMENTS.
(i) As of the Construction Loan Closing Date, the
Project Documents listed in Schedule 3.1(a)(ix) include all agreements
required for the design, construction, ownership, operation and
maintenance of the Project and the Grain Facilities as contemplated by
the Documents and the Closing Pro Forma. All such Project Documents
have been duly and validly executed and delivered by the parties
thereto, are in full force and effect and have not been amended,
modified, supplemented or terminated. The copies of all Project
Documents provided to the Administrative Agent by Borrower are true,
correct and complete. Borrower has or will have enforceable agreements
or other satisfactory arrangements that ensure the availability, on
commercially reasonable terms, of all feedstock, utilities,
transportation, facilities, infrastructure, interconnections, materials
and services necessary for the design, construction, ownership,
operation and maintenance of the Project and the Grain Facilities as
contemplated by the Documents.
(ii) The Project, when constructed and operated in
accordance with the Project Documents, will comply in all material
respects with all applicable Laws, all Required Approvals and prudent
practices of the ethanol production industry.
(iii) The legal description of the Site set forth in
the Mortgage is true and correct. Borrower has good and marketable
title to all easements and other property interests necessary for the
construction, ownership, operation and maintenance of the Project as
contemplated by the Documents, including all rights of access, ingress,
egress and interconnection.
(iv) Borrower is not aware of any existing fact or
circumstance that would prevent the conversion of the Construction
Loans to Term Loans in accordance with this Agreement on or before the
Construction Loan Commitment Termination Date.
32
(h) INTELLECTUAL PROPERTY. Borrower owns, or is licensed to
use, or will own or license to use, all patents, trademarks, service marks,
licenses, franchises, trade names, tradestyles, copyrights, technology,
formulas, know-how and processes used in, to be used in or necessary for the
construction, ownership or operation of the Project or for the current or
proposed conduct of its business, other than that intellectual property for
which the failure to so obtain and maintain could not reasonably be expected to
have a Material Adverse Effect. The use of such patents, trademarks, trade
names, tradestyles, copyrights, technology, know-how and processes by Borrower
does not and will not injure or infringe upon the rights of any Person in any
material respects.
(i) TAXES.
(i) There is no, and to the knowledge of Borrower
there are no pending changes in Law that would create any, Tax payable
by or imposed on Borrower by virtue of the execution, delivery,
performance or enforcement of the Documents other than normal and
customary Transfer Taxes and income taxes payable by Borrower on its
income in the jurisdictions in which such income is earned.
(ii) Borrower has filed in a timely manner all Tax
returns required by Law and has paid all Taxes shown to be due and
payable on such returns or on any material assessments made on
Borrower's properties, other than Taxes being contested in good faith
by appropriate proceedings with proper reserves established in
accordance with GAAP.
(j) FINANCIAL STATEMENTS.
(i) All financial statements of PEI (as well as all
notes and schedules thereto) furnished to the Administrative Agent are
true, complete and correct in all material respects (subject, as to
interim statements, to changes resulting from audits and year-end
adjustments), have been prepared in accordance with GAAP (except as
otherwise stated therein). Except with respect to matters previously
disclosed to the Administrative Agent, there has been no material
adverse change in the business, condition or operations (financial or
otherwise) of any of the PEIX Parties since January 23, 2006, and
Borrower knows of no reasonable basis for the assertion against it or
the other PEIX Parties of any obligation or liability that is not fully
reflected in the financial statements furnished to the Administrative
Agent.
(ii) The Pro Forma Balance Sheet for Borrower is
true, correct and complete in all material respects and fairly presents
the information contained therein as at the Construction Loan Closing
Date and Borrower's good-faith estimate of the information contained
therein as at the date of such Balance Sheet. Borrower has no material
liability, contingent or otherwise, including any material liability
33
for Taxes, or any unusual forward or long-term commitment which is not
disclosed by, or reserved against in, the Pro Forma Balance Sheet or in
the notes thereto which under GAAP is of a nature and an amount
required to be so disclosed or reserved. There are no unrealized or
anticipated losses from any unfavorable commitments of Borrower that
could reasonably be expected to have a material adverse effect on the
business, condition or operations (financial or otherwise) of Borrower.
(k) CONSTRUCTION BUDGET. As of the Construction Loan Closing
Date, the Construction Budget (i) has been prepared with due care, (ii) is
complete in all material respects and fairly presents Borrower's good faith
expectations as at the date of such document as to the matters covered thereby,
(iii) is based on reasonable assumptions as to the factual and legal matters
material to the estimates therein and (iv) is consistent with the Documents. The
Construction Budget accurately specifies and describes all material Qualified
Project Construction Expenses.
(l) NO PROCEEDINGS. There is no pending or, to the best of
Borrower's knowledge, threatened action, suit, litigation, investigation,
arbitration or other proceeding involving or affecting Borrower or its
properties or assets or, to the best knowledge of Borrower, any Project Party or
any of their respective properties or assets, before any Government
Instrumentality which could reasonably be expected to result in a Material
Adverse Effect. None of Borrower or its properties or assets or, to the best
knowledge of Borrower after due inquiry, any Project Party or any of their
respective properties or assets, is subject to any order, writ or injunction
which prohibits, enjoins or limits any aspect of the transactions contemplated
by the Documents or which could reasonably be expected to result in a Material
Adverse Effect.
(m) NO BROKER'S FEES. Borrower has no obligation (direct,
indirect, contingent or otherwise) to pay any fee, commission or compensation to
any broker, finder or intermediary with respect to or as a result of any
transaction contemplated by the Documents except as has been previously
disclosed to the Administrative Agent.
(n) ENVIRONMENTAL MATTERS. Except as set forth in the reports
delivered to the Administrative Agent pursuant to Section 3.1(a)(xiv):
(i) To Borrower's best knowledge, no Hazardous
Substance exists on, under or about the Project, the Grain Facilities
or the Site in violation of any Environmental Law, and the Project, the
Grain Facilities, the Site, Borrower and the Project Parties (in such
respects as relate to the Project) are in compliance with all
Environmental Laws except to the extent that such noncompliance could
not reasonably be expected to result in a Material Adverse Effect.
(ii) To Borrower's best knowledge, no Hazardous
Substance has at any time been transported to or from the Site or used,
generated, manufactured, handled, processed, stored, released,
transported, removed, disposed of or cleaned up on, from, under or
about the Site in violation of any Environmental Law except to the
extent that could not reasonably be expected to result in a Material
Adverse Effect.
34
(iii) To Borrower's best knowledge, there has
occurred no release or threatened release of any Hazardous Substance
on, under, onto, adjacent to or from the Site except to the extent that
such release could not reasonably be expected to result in a Material
Adverse Effect.
(iv) There are no past, current, pending or
threatened Environmental Claims in writing in any way relating to
Borrower, any Project Party (to Borrower's best knowledge and in such
respects as relate to the Project, the Grain Facilities or the Site) or
the Project, the Grain Facilities or the Site except to the extent that
such Environmental Claims could not reasonably be expected to result in
a Material Adverse Effect.
(v) There are no facts, circumstances, conditions or
occurrences known to Borrower regarding the Project, the Grain
Facilities or the Site that could reasonably be expected to form the
basis of an Environmental Claim or cause the Project, the Grain
Facilities or the Site to be subject to any restrictions on ownership,
occupancy, use or transferability under any Environmental Law
applicable to the Project, the Grain Facilities or the Site or require
the filing or recording of any notice, Approval or disclosure document
under any Environmental Law, except to the extent that could not
reasonably be expected to result in a Material Adverse Effect.
(vi) The Site is not listed on or proposed for
listing on the National Priority List promulgated pursuant to the
Comprehensive Environmental Response, Compensation and Liability Act of
1980 and the regulations promulgated pursuant thereto or any state
priority list promulgated pursuant to any comparable state law. To
Borrower's best knowledge, no Hazardous Substances have been generated
at or transported from the Project, the Grain Facilities or the Site or
been disposed at any location that is listed or proposed for listing on
the National Priority List or any state priority list or any location
that is or has been the subject of a clean-up or remedial action
pursuant to any Environmental Law, except to the extent that could not
reasonably be expected to result in a Material Adverse Effect.
(vii) Borrower and, to Borrower's best knowledge, the
Project Parties have not received any written or other notice, mandate,
order, lien or request which remains pending under an Environmental Law
relating to a violation or an alleged violation of any Environmental
Law or potential Environmental Claim, except to the extent that could
not reasonably be expected to result in a Material Adverse Effect.
(viii) Borrower has obtained all necessary Approvals
to operate the Project and such approvals are: (i) in full force and
effect; and (ii) allow the Project to produce 35 million gallons per
year of ethanol without exceeding any emission limits or requiring any
offsets to be acquired.
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(o) NO ADVERSE EVENTS.
(i) No material Loss has occurred.
(ii) To Borrower's knowledge, no portion of the
Project, the Grain Facilities or the Site is subject to a pending or
threatened (in writing) condemnation or appropriation proceeding.
(iii) No PEIX Party is party to or affected by any
charter, certificate of incorporation, bylaw, certificate of formation,
limited liability company agreement, partnership agreement or other
constituent document or any Contractual Obligation that could
reasonably be expected to result in a Material Adverse Effect.
(p) ERISA. None of Borrower or the ERISA Affiliates of
Borrower sponsors, maintains, administers, contributes to, participates in or
has any obligation to contribute to or any liability under any Plan.
(q) LABOR MATTERS. There are no collective bargaining
agreements or Multiemployer Plans covering any employees of Borrower and none of
Borrower or, to the best knowledge of Borrower, any Major Project Party has
experienced any strike, walkout, work stoppage or other labor action or
disturbance during the past five years.
(r) INVESTMENT COMPANY ACT. Borrower is not an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended.
(s) USE OF PROCEEDS.
(i) The proceeds of the Loans have been and will be
used only for the purposes described in Section 2.7 and in accordance
with the requirements and conditions of this Agreement.
(ii) Borrower is not engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock
(within the meaning of Regulation G, T, U or X issued by the Board of
Governors of the Federal Reserve System) and no proceeds of any Loan
will be used, directly or indirectly, to purchase or carry margin stock
or to extend credit to others for the purpose of purchasing or carrying
margin stock.
(iii) No proceeds of any Loan will be used to acquire
any security in any transaction which is subject to Section 13 or 14 of
the Securities Exchange Act of 1934, as amended.
36
(t) BANK ACCOUNTS. Borrower does not maintain any account or
deposit with any bank or other depository institution other than the accounts
created under the Disbursement Agreement, except for standard operations and
payroll accounts.
(u) ENFORCEABILITY; NO IMMUNITY. The descriptions of the
Collateral contained in the Security Documents are true, correct and complete
and are sufficient to describe the Collateral and to create, attach and perfect
the Liens intended to be created by the Security Documents. All necessary and
appropriate deliveries, notices, recordings, filings and registrations have been
effected to perfect First-Priority Liens on the Collateral in favor of the
Administrative Agent in all relevant jurisdictions, and the Administrative Agent
has duly and validly created, attached, perfected and enforceable First-Priority
Liens on the Collateral in all relevant jurisdictions.
(v) FULL DISCLOSURE. No written information, exhibit or report
furnished to the Administrative Agent by PEI or any PEIX Party in connection
with the transactions contemplated by this Agreement (other than projections and
other "forward-looking" information prepared on a reasonable basis in good faith
by Borrower), when taken as a whole and taking into account updates of
previously provided information, contains any material misstatement of fact or
omits to state a material fact or any fact necessary to make the statements
contained therein not misleading.
(w) INSURANCE. Borrower is in compliance, to the extent
applicable to it, with all requirements set forth in the Loan Documents and the
Major Project Documents to maintain insurance, including Required Insurance.
Section 4.2 SURVIVAL. The representations and warranties of
the PEIX Parties contained in the Loan Documents or made by the PEIX Parties in
any certificate, notice or report delivered pursuant to any Loan Document will
speak only as of each date on which the PEIX Parties make such representations
and warranties pursuant to the Loan Documents and will survive the Construction
Loan Closing Date, the making and repayment of the Loans and any transfer or
assignment of any Note, but will terminate upon the payment in full of the Loans
and all other amounts due and payable under the Loan Documents.
ARTICLE V
COVENANTS
---------
Section 5.1 AFFIRMATIVE COVENANTS. Borrower covenants and
agrees that, for so long as any Lender has any Commitment outstanding hereunder
and until the payment in full of the Notes and all amounts payable by Borrower
and any other Person under the Loan Documents, it will perform and observe each
of the following covenants, unless (and then only to the extent) compliance with
such covenant has been waived pursuant to Section 8.5:
(a) EXISTENCE. It will preserve and maintain its limited
liability company existence, rights, franchises and privileges and remain in
good standing in the jurisdiction of its formation, and qualify and remain
qualified as a foreign limited liability company in good standing in each
37
jurisdiction in which such qualification is necessary or desirable in view of
its current or proposed business and operations or the ownership of its
properties except to the extent that any non-qualification could not reasonably
be expected to have a Material Adverse Effect.
(b) COMPLIANCE WITH LAWS, APPROVALS AND OBLIGATIONS. It will
comply with, and will cause the Project and the Grain Facilities to be
constructed and operated safely and in compliance in all material respects with,
all applicable Laws, all Required Approvals, the Documents, its other
Contractual Obligations and prudent operating practices followed by the ethanol
production and grain handling industries. It will perform its obligations under
the Documents and each of its other Contractual Obligations and will diligently
enforce all of its rights under the Project Documents and under all guarantees,
warranties and indemnities in its favor or relating to the Project or any
component thereof, except to the extent that any failure to perform or enforce
could not reasonably be expected to have a Material Adverse Effect. It will
satisfy before the same become delinquent all Claims (including all Claims for
labor, services, materials and supplies and other amounts due under its
Contractual Obligations) other than Claims being contested in good faith by
appropriate proceedings with proper reserves established which do not result in
the imposition of a Lien prohibited by Section 5.2(f). It will obtain and
maintain in full force and effect all Required Approvals required from time to
time and at any time for the execution, delivery, performance, admission into
evidence or enforcement of the Documents or the development, construction,
ownership or operation of the Project and the Grain Facilities as contemplated
under the Documents. It will furnish the Administrative Agent with true, correct
and complete copies of all Required Approvals upon receipt thereof.
(c) TITLE. Except as may be otherwise permitted in this
Agreement, Borrower will maintain good and marketable title to its interest in
the Site and to its interests in the Project, the Grain Facilities and the other
Collateral in which it has an interest and warrant and defend its interest in
the Site and its title or other interest in the Project, the Grain Facilities
and the other Collateral against all Claims that do not constitute Permitted
Liens.
(d) COLLATERAL. Borrower will take all actions necessary to
insure that, on and after the Construction Loan Closing Date, the Administrative
Agent has and continues to have in all relevant jurisdictions duly and validly
created, attached, perfected and enforceable First-Priority Liens on the
Collateral (including after-acquired Collateral). It will deliver possession of
any Collateral to the Administrative Agent or its designated agent immediately
upon acquiring rights therein to the extent the Administrative Agent is required
to perfect its security interest in such Collateral by taking possession
thereof. It will also maintain the title insurance policies delivered to the
Administrative Agent pursuant to Article III.
(e) CONSTRUCTION.
(i) Borrower will use commercially reasonable efforts
to cause the Project to be constructed and completed substantially in
accordance with the Plans and Specifications, the Construction Budget
38
and the Construction and Draw Schedule. Only new, first-quality
components will be used in constructing and equipping the Project
except as may be otherwise agreed by the Administrative Agent in
consultation with the Engineer. The Project will be constructed
entirely on the Site and in a manner so as not to injure or encroach
upon the property or rights of any other Person except for those
portions of the Project that are located on the property of others
pursuant to easements granted to Borrower by such Persons.
(ii) Borrower will give the Administrative Agent and
the Engineer at least seven (7) Business Days' prior written notice of
each performance test to be conducted under the EPC Contract and the
Administrative Agent, the Engineer and their respective agents and
representatives will be afforded the opportunity to observe and verify
each such test. Completion will not be deemed to have been achieved
until the Engineer determines that it has been achieved. Borrower will
give the Administrative Agent and the Engineer at least five (5)
Business Days' prior written notice of the occurrence of Commercial
Operation.
(f) MAINTENANCE AND OPERATION. Borrower will maintain and
preserve the Project, the Grain Facilities and all of its other material assets
and properties in good working order and condition, ordinary wear and tear
excepted. Prior to the Term Loan Conversion Date, it will develop an overhaul,
maintenance and repair plan with respect to the Project for the period from the
Term Loan Conversion Date through the Term Loan Maturity Date, which must be
approved by the Administrative Agent in consultation with the Engineer. Borrower
will comply in all material respects with such overhaul, maintenance and repair
plan, comply with all warranties and maintenance recommendations and
requirements of manufacturers and vendors of component parts of the Project and
make all repairs, alterations, additions and replacements necessary for the
Project (i) to operate safely and to meet, in all material respects, the
requirements of all applicable Laws, all Required Approvals, the Documents, the
other Contractual Obligations of Borrower and prudent practices followed by the
ethanol production industry and (ii) to operate at or exceed the operating
levels set forth in the Closing Pro Forma. Borrower will promptly correct any
material structural or other defect in the Project or any material deviation
from the Plans and Specifications and will maintain appropriate spare parts,
inventories and redundancies.
(g) OPERATING PLAN AND BUDGET. Not later than each November 30
occurring after the Term Loan Conversion Date, Borrower will submit to the
Administrative Agent for approval a proposed Operating Plan and Budget for the
next calendar year and a forecast of the Net Operating Cash of the Project for
the next three (3) calendar years. The Administrative Agent will have the right
to request, and if so requested by the Majority Lenders shall request, revisions
to each proposed Operating Plan and Budget and, after an Operating Plan and
Budget has been finalized and approved by the Administrative Agent, Borrower
will follow and comply with such Operating Plan and Budget in all particulars
except that (i) on an annualized basis, taking into account cost savings on
other line items, Borrower may exceed by no more than 10% the budget for fixed
39
costs and no more than 15% the budget for variable costs, and (ii) to the extent
that Borrower exceeds its budget by amounts greater than the margins described
in the preceding clause (i), Borrower will be permitted to do so to the extent
Borrower pays for any such excess overages with amounts available to it other
than funds on deposit in the Security Accounts or otherwise disbursed to
Borrower pursuant to the Disbursement Agreement. Borrower will have the right to
revise any Operating Plan and Budget based on cost fluctuations for any Budget
Line Items related to the pricing of corn, natural gas, Products and operations
and maintenance costs, to the extent that the Net Operating Cash under the
revised Operating Plan and Budget (and taking into account such increased costs)
is equal to or greater than the Net Operating Cash contemplated in the Operating
Plan and Budget prior to such revision. Once approved by the Administrative
Agent, an Operating Plan and Budget or a revised Operating Plan and Budget will
supersede all prior Operating Plans and Budgets and will continue in effect
until a subsequent Operating Plan and Budget has been approved by the
Administrative Agent.
(h) INTELLECTUAL PROPERTY. Borrower will obtain and maintain
in full force and effect all patents, trademarks, service marks, licenses,
franchises, trade names, tradestyles, copyrights, technology, formulas, know-how
and processes to be used in or necessary for the construction, ownership and
operation of the Project and for the current and proposed conduct of its
business other than that intellectual property for which the failure to so
obtain and maintain could not reasonably be expected to have a Material Adverse
Effect, and in its use thereof it will obtain all required licenses and consents
and not injure or infringe upon the property or rights of any Person in any
material respect.
(i) TAXES. Borrower will file all Tax returns required by Law
in a timely manner and will pay before the same become delinquent all Taxes
shown to be due and payable on such returns or on any material assessments made
on Borrower's properties, other than Taxes being contested in good faith by
appropriate proceedings with proper reserves established which do not result in
the imposition of a Lien prohibited by Section 5.2(f).
(j) RECORDS AND INSPECTION RIGHTS. Borrower will keep and
maintain, and will use commercially reasonable efforts to cause the EPC
Contractor to keep and maintain in respect of its involvement in the Project,
true, correct and complete records and books of account, in which complete
entries will be made in accordance with GAAP and applicable Law, reflecting all
financial transactions of the Project, the Grain Facilities, Borrower and the
EPC Contractor. Borrower will also keep and maintain true, correct and complete
inventories of all Collateral in which it has an interest and records of all
transactions relating thereto. All such records, books of account and
inventories will be kept and maintained at its principal place of business or at
the Site. At any reasonable time and from time to time during normal business
hours and upon at least seven (7) days' advance notice to Borrower by the
Administrative Agent (except during the continuance of an Event of Default, when
no advance notice will be required), it agrees to permit, and to cause the EPC
Contractor to permit, the Administrative Agent, the Engineer and any agent or
representative thereof, to examine and make copies of and abstracts from such
records, books of account and inventories, to visit the Project and to discuss
40
the affairs, finances and accounts of Borrower and the Project directly with its
auditors and with any of its officers or managers. Borrower will at all times
maintain at the Site or at its principal place of business a complete set of the
current and as-built plans and specifications for the Project, which will be
available for inspection by the Administrative Agent, the Engineer and their
respective agents and representatives; PROVIDED, that for so long as no Default
or Event of Default has occurred and is continuing, Borrower will only be
required to reimburse the Administrative Agent for its or Engineer's or its
agent's or representative's costs with respect to one visit or inspection per
calendar year and shall not be required to reimburse the Lenders for costs with
respect to visits or inspections.
(k) REPORTING REQUIREMENTS. Borrower will furnish to the
Administrative Agent:
(i) as soon as available and in any event within
fifty (50) days after the end of each of the first three quarters of
each fiscal year of Borrower, complete unaudited financial statements
of Borrower, including the balance sheet of Borrower as of the end of
such quarter, and profit and loss statements and statements of cash
flows of Borrower for such quarter and for the elapsed portion of such
fiscal year, in each case prepared in accordance with GAAP (subject to
normal year-end adjustments and the absence of footnote disclosures)
and setting forth in comparative form the figures for the corresponding
period of Borrower's previous fiscal year, certified in a manner
reasonably acceptable to the Administrative Agent by Borrower's chief
financial officer;
(ii) as soon as available and in any event within one
hundred twenty (120) days after the end of each fiscal year of
Borrower, complete audited financial statements of Borrower, including
the balance sheet of Borrower as of the end of such fiscal year, and
profit and loss statements and statements of cash flows of Borrower for
such fiscal year, in each case prepared in accordance with GAAP and
setting forth in comparative form the figures for Borrower's previous
fiscal year, certified in a manner reasonably acceptable to the
Administrative Agent by the chief financial officer of Borrower and by
independent certified public accountants reasonably acceptable to the
Administrative Agent (it being understood that Borrower's current
independent certified public accountants, Hein & Associates, are
acceptable to the Administrative Agent;
(iii) within ten (10) days after the last day of each
calendar month during which a Construction Loan is outstanding, a
Monthly Construction Report substantially in the form of Exhibit
5.1(k)(iii);
(iv) within ten (10) days after the last day of each
calendar month during which the Term Loans are outstanding, a monthly
operations report in form and substance reasonably acceptable to the
Administrative Agent;
41
(v) promptly after the sending, filing or receipt
thereof, a copy of each material report, notice, certificate,
application, demand, request or other communication that Borrower sends
to, files with or receives from any Government Instrumentality or
Project Party or sends or receives pursuant to any Document that
relates to any matter that could reasonably be expected to have a
Material Adverse Effect;
(vi) promptly after receipt thereof, copies of each
Required Approval;
(vii) copies (or notification of their availability
on PEI's website) of all reports on Forms 8-K, 10-K and 10-Q filed by
PEI with the United States Securities and Exchange Commission; and
(viii) such other information respecting the
operations or condition (financial or otherwise) of Borrower or the
Project, the Grain Facilities or the other Collateral as the
Administrative Agent may from time to time reasonably request.
(l) NOTICE REQUIREMENTS. Promptly and in any event within
three (3) Business Days after Borrower obtains knowledge thereof, Borrower will
give the Administrative Agent written notice of the occurrence of any of the
following:
(i) any Default or Event of Default;
(ii) any actual, proposed or threatened (in writing)
termination, rescission or amendment of, waiver under or Claim with
respect to any Project Document that could reasonably be expected to
have a Material Adverse Effect;
(iii) any Loss that could reasonably be expected to
reduce by more than ten percent (10%) the Project's Net Operating Cash
for the then-current calendar quarter;
(iv) any Material Adverse Effect or any event or
circumstance that could reasonably be expected to have a Material
Adverse Effect;
(v) any pending or threatened (in writing) Claim,
action, attachment, proceeding, suit, litigation, investigation or
arbitration involving or affecting Borrower, any Project Party or any
of their respective properties or assets (including without limitation
the Project, the Grain Facilities and the other Collateral) by any
Person or before any Government Instrumentality that could reasonably
be expected to have a Material Adverse Effect;
(vi) any termination, revocation, suspension or
modification of any Required Approval or any action or proceeding that
could reasonably be expected to result in any of the foregoing;
(vii) the receipt of any management letter or similar
communication from Borrower's auditors, or the resignation, discharge
or change of Borrower's auditors;
42
(viii) any Environmental Claim or any fact,
circumstance or condition (including any release or spill of any
Hazardous Substance) that could reasonably be expected to form the
basis of an Environmental Claim with respect to Borrower, any Project
Party (in connection with its obligations under the Documents) or the
Project or the Grain Facilities or any portion thereof or that could
reasonably be expected to have a Material Adverse Effect;
(ix) any pending or threatened (in writing)
condemnation or appropriation proceeding affecting the Project or the
Grain Facilities or any material portion thereof;
(x) any material dispute involving Borrower or any
Project Party on the one hand and any Government Instrumentality or
Project Party on the other hand (PROVIDED, that no notice need be given
of a dispute between a Project Party and a Government Instrumentality
unless such dispute could reasonably be expected to result in a
Material Adverse Effect);
(xi) any event or claim of force majeure under any
Major Project Document;
(xii) any forced outage (such as loss of electrical
power for an extended period of time) with respect to the Project if
such forced outage lasts for more than three (3) days; or
(xiii) Borrower's or any ERISA Affiliate's adoption
of or participation in any Plan, or intention to adopt or participate
in any Plan.
Each notice delivered pursuant to this Section 5.1(l) must include reasonable
details concerning the occurrence that is the subject of such notice as well as
Borrower's proposed course of action, if any. Delivery of a notice pursuant to
this Section 5.1(l) will not affect Borrower's obligations under any other
provision of the Loan Documents.
(m) SECURITY ACCOUNTS. Borrower will establish and maintain
the Security Accounts required by the Disbursement Agreement.
(n) INSURANCE.
(i) Borrower will maintain, and will use commercially
reasonable efforts to cause the EPC Contractor to maintain, all
Required Insurance and, on each anniversary of the Construction Loan
Closing Date, if there has been any change in coverage, will cause the
Insurance Consultant to provide a letter to the Administrative Agent
certifying that the insurance maintained by Borrower is adequate and
consistent with industry standards. All Required Insurance will be
provided by financially sound and reputable insurance companies or
associations rated "A" or better (and a minimum size rating of X) by
Best's Insurance Guide and Key Ratings (or an equivalent rating by
another nationally recognized insurance rating agency of similar
standing if Best's Insurance Guide and Key Ratings is no longer
43
published) or other insurance companies of recognized responsibility
satisfactory to the Administrative Agent. Borrower may fulfill its
obligations under this Section 5.1(n) under a corporate ("master")
program or through EPC Contractor programs of insurance, subject to the
prior approval of the Administrative Agent.
(ii) All Required Insurance will provide for waivers
of subrogation in favor of the Administrative Agent, will not be
cancelable without at least sixty (60) days' prior written notice to
the Administrative Agent (except for 10 days' notice for non-payment of
premium), and all third-party liability policies will name the
Administrative Agent and the Lenders as additional insureds (except in
the case of worker's compensation insurances). Insurance protecting
Project assets and revenues (property, equipment, business
interruption, etc.) will contain a standard Lender's Loss Payable
endorsement, acceptable to the Administrative Agent, and name the
Lenders or their assignee as first loss payee/mortgagee.
Property-related policies will provide that any payment thereunder for
loss or damage with respect to the mortgaged property will be made to
the Project Revenue Account. Insurance supplied by Borrower will be
primary as respects any other insurance carried by or on behalf of the
Administrative Agent or the Lenders. The interests of the
Administrative Agent and the Lenders will not be invalidated by any
action or inaction of any Person or by any breach or violation by any
Person of any warranties, declarations or conditions in such policies.
All liability insurance will provide a severability of interest or
cross-liability clause.
(iii) All Required Insurance maintained by the EPC
Contractor will provide for waivers of subrogation in favor of
Borrower, the Administrative Agent and the Lenders, will not be
cancelable without at least sixty (60) days' prior written notice to
the Administrative Agent (except for 10 days' notice for non-payment of
premium), and all third party liability policies will name Borrower,
the Administrative Agent and the Lenders as additional insureds (except
in the case of worker's compensation insurance). Insurance protecting
Project assets and revenues (property, equipment, business
interruption, etc.) will name the Administrative Agent as the first
loss payee/mortgagee. All liability insurance maintained by the EPC
Contractor will provide a severability of interest or cross-liability
clause and will be primary and not excess to or contributing with any
insurance or self-insurance maintained by Borrower, the Administrative
Agent or the Lenders.
(iv) On each anniversary of the Construction Loan
Closing Date, Borrower will furnish to the Administrative Agent
evidence of insurance, in the form of binders, cover notes or
certificates of insurance evidencing all coverages in place and certify
(A) that all premiums are paid or current to date and (B) that Borrower
is in compliance with all provisions in this Agreement relating to
Required Insurance. Borrower will provide the Administrative Agent with
copies of all insurance policies and certificates and other information
that the Administrative Agent may reasonably request in writing with
respect to the Required Insurance or the providers thereof and, without
44
any requirement of request by the Administrative Agent, will provide
the Administrative Agent with copies of all replacement policies within
15 days of receipt of such policies by Borrower.
(v) Borrower will collaterally assign to the
Administrative Agent and grant the Administrative Agent a Lien upon all
insurance proceeds from the Project obtained by Borrower or in which
Borrower has any right or interest (whether or not complying with or
described by this Section 5.1(n)). Borrower will deposit, or cause to
be deposited, all insurance proceeds not required by Section
2.8(a)(v)(A) to be applied as prepayments of the Loans into the Loss
Proceeds Account for application in accordance with Section 4.5 of the
Disbursement Agreement. Borrower will have the right to make, settle,
compromise and liquidate any and all Claims for amounts less than $1
million and the Administrative Agent will have the right to make,
settle, compromise and liquidate any and all Claims in excess of such
amount and without prejudice to the other rights and remedies of the
Administrative Agent under the Documents, the Required Insurance or
Applicable Law.
(vi) In the event that any policy is written on a
"claims made" basis and is approved by the Administrative Agent and
such policy is not renewed or the retroactive date of such policy is
changed, Borrower will obtain for each such policy or policies the
broadest basic and supplemental extended reporting period coverage or
"tail" reasonably available in the commercial insurance market for each
such policy or policies and will provide the Administrative Agent with
proof that such basic and supplemental extended reporting period
coverage or "tail" has been obtained.
(o) LITIGATION. In any action, suit, litigation,
investigation, arbitration or other proceeding involving Borrower or the
Project, Borrower will make all filings and responses in a timely manner, pursue
all remedies and appeals, defend its rights and properties with diligence and
take all lawful action to avoid a Material Adverse Effect. Borrower will
promptly pay any valid, final judgment (after all appeal rights have been
exhausted) rendered against it or the Project.
(p) MINIMUM COVERAGE RATIO. Borrower will maintain a Minimum
Coverage Ratio of not less than 1.25 to 1, calculated quarterly on each Payment
Date after the Term Loan Conversion Date. For each of the first three Payment
Dates after the Term Loan Conversion Date, the Minimum Coverage Ratio will be
calculated from the Term Loan Conversion Date until the date of calculation.
From and after the fourth Payment Date after the Term Loan Conversion Date, the
Minimum Coverage Ratio will be calculated for the preceding twelve (12) month
period.
(q) OPERATING MARGIN PROTECTION. Borrower will employ
long-term hedging and price-management strategies customary and usual in the
ethanol production industry for (i) the procurement of feedstocks, energy and
fuel for the Project and (ii) the sale of the Products produced by the Project.
Such hedging and price management strategies will be employed to minimize any
reductions in (i) the Project's operating margin and (ii) the Project's ability
to repay the Loans in accordance with this Agreement.
45
Section 5.2 NEGATIVE COVENANTS. Borrower covenants and agrees
that, for so long as any Lender has any Commitment outstanding hereunder and
until the payment in full of the Notes and all amounts payable by Borrower and
any other Person under the Loan Documents, it will perform and observe each of
the following covenants, unless (and then only to the extent) compliance with
such covenant has been waived pursuant to Section 8.5:
(a) BUSINESS. Borrower will not make any material change in
the nature of its business or engage in any business or activity not
contemplated by the Documents. It will not form or have any subsidiaries and
will not own or hold the capital stock, securities, debt, assets or obligations
of, or any interest in, any Person. It will not enter into any partnership,
joint venture, royalty agreement or profit-sharing or similar arrangement.
(b) MERGERS AND SALES OF ASSETS. Borrower will not merge or
consolidate with any Person or liquidate or dissolve. It will not sell, assign,
lease or otherwise dispose of (whether in one transaction or in a series of
transactions) any asset except (i) in the ordinary course of business (including
the sale of obsolete or no longer useful or usable assets and sales of unneeded
environmental credits or allowances), (ii) in connection with the replacement of
such asset with a replacement that is appropriate and complies with all
requirements of the Documents or (iii) in an instance in which the proceeds of
such sale, assignment, lease or other disposition do not exceed two hundred
fifty thousand Dollars ($250,000) in each instance and one percent (1%) of the
total Qualified Project Construction Expenses of the Project in the aggregate
and, in every instance, such sale, assignment, lease or other disposition has no
material impact on the Net Operating Cash of the Project. The sale of Products
by Borrower will not violate this Section 5.2(b). All proceeds of activities
permitted by this Section 5.2(b) will be deposited into the Asset Sales Proceeds
Account and disbursed therefrom in accordance with Section 4.6 of the
Disbursement Agreement.
(c) CONTRACTUAL OBLIGATIONS.
(i) Borrower will not enter into any material
Contractual Obligation other than the Documents and other documents or
agreements relating to the items and actions described in Schedule
5.2(c). If requested by the Administrative Agent, it will collaterally
assign any material Contractual Obligation to the Administrative Agent
and, if such Contractual Obligation is a Major Project Document, will
deliver to the Administrative Agent the written consent to assignment
of the other party or parties to such material Contractual Obligation
and a satisfactory opinion of Borrower's Counsel confirming the
validity and enforceability of such assignment and consent. It will not
pledge or assign any Contractual Obligation to any Person other than
the Administrative Agent. Notwithstanding the foregoing, or any other
provision of this Agreement to the contrary, Borrower will be permitted
to enter into new or replacement plant operations and maintenance
46
agreements and Product marketing agreements without the prior approval
of the Majority Lenders; PROVIDED, that such agreements, either
individually or taken together, could not reasonably be expected to
result in a Material Adverse Effect.
(ii) Borrower will not amend, suspend, terminate or
grant a waiver under any Project Document in a manner that could
reasonably be expected to result in a Material Adverse Effect, or take,
or fail to take, any action that could result in the termination of, or
the impairment of any right of Borrower, the Administrative Agent or
any Lender under, any Project Document or any other contract,
arrangement or agreement material to the Project. Notwithstanding the
foregoing, Borrower may approve change orders under the EPC Contract
without the Administrative Agent's consent if the work covered by such
change orders does not exceed fifty thousand Dollars ($50,000) in the
case of any single change order or two hundred thousand Dollars
($200,000) in the aggregate over any twelve-month period or if the cost
of such change orders will be paid with new equity contributions made
by Borrower Member to Borrower; PROVIDED, that none of such change
orders materially affects the character of the Project or the ability
of Borrower to fulfill its obligations under the Documents. In
addition, the Administrative Agent and the Lenders acknowledge and
agree that they have approved Borrower entering into documents and
agreements relating to, and expending funds toward, the items and
actions described in Schedule 5.2(c) and no further approval of or
consent to such items will be required, including without limitation
with respect to the approval of change orders related to such items and
actions.
(iii) The Organizational Documents of Borrower may
not be amended or any provision thereof waived in any material respect.
(iv) Borrower will not declare Final Performance
Acceptance or Completion without the approval of the Majority Lenders
(in consultation with the Engineer), which will not be unreasonably
withheld or delayed.
(v) Borrower will promptly deliver to the
Administrative Agent copies of (A) all material Contractual
Obligations, (B) all amendments, suspensions, terminations and waivers
of any material Contractual Obligation and (C) all change orders
approved or entered into after the date of this Agreement.
(d) RESERVED.
(e) INVESTMENTS. Borrower will not make any loan or advance to
any Person other than accounts receivable incurred in commercially reasonable
amounts in the normal course of Borrower's business. Except for Permitted
Investments made in compliance with the Disbursement Agreement, Borrower will
not purchase or otherwise acquire the capital stock, securities, debt, assets or
obligations of, or any interest in, any Person.
47
(f) LIENS. Borrower will not, and will not permit any other
Person to, create, incur, assume or suffer to exist, any Lien upon or with
respect to any of the Collateral or any of the other property of Borrower, now
owned or hereafter acquired, or assign or otherwise convey, or permit any Person
to assign or otherwise convey, any right to receive income or revenues from or
of the Project, except that the foregoing restrictions will not apply to the
following (collectively, "PERMITTED LIENS"):
(i) the Security Document Liens;
(ii) Liens for Taxes, if such Taxes (A) are not at
the time delinquent and thereafter can be paid without penalty or (B)
are being contested in good faith by appropriate proceedings with
reserves established in accordance with GAAP and such Liens have been
bonded over or do not involve any risk that a significant interest in
or right to any Collateral may be sold, lost or forfeited or that any
Security Document Lien may be impaired;
(iii) carriers', warehousemen's, materialmen's and
mechanics' Liens and other similar Liens imposed by Law and arising in
the ordinary course of business in connection with the construction or
operation of the Project and the Grain Facilities, if such Liens have
been bonded over and either (A) are not filed of record and are not
delinquent or (B) are being contested in good faith by appropriate
proceedings with proper reserves established, have not proceeded to
judgment and do not involve any risk that a significant interest in or
right to any Collateral may be sold, lost or forfeited or that any
Security Document Lien may be impaired;
(iv) Liens arising out of pledges or deposits under
workmen's compensation laws, unemployment insurance, old age pensions,
or other social security or retirement benefits or similar legislation
(other than Liens imposed by ERISA);
(v) purchase money security interests in discrete
items of equipment not comprising an integral part of the Project, the
Grain Facilities or other Collateral when the obligation secured is
incurred for the purchase of such equipment and does not exceed one
hundred percent (100%) of the lesser of cost or fair market value
thereof at the time of acquisition, and the security interest does not
extend beyond the equipment involved and any proceeds therefrom;
PROVIDED, that such Liens and the amount of materials, equipment and
fixtures supplied or purchased pursuant to this clause (v) will not,
taken together, at any time exceed the maximum aggregate amount of two
hundred fifty thousand Dollars ($250,000);
(vi) the exceptions to the title of the Site set
forth in the title policies delivered pursuant to Article III;
(vii) Liens arising from Indebtedness permitted
pursuant to Section 5.2(g);
48
(viii) Liens in respect of matters disclosed by the
ALTA/ASCM surveys delivered to the Administrative Agent pursuant to
Article III; and
(ix) Non-monetary encumbrances incurred in the
ordinary course of business which could not reasonably be expected to
have a Material Adverse Effect and other minor involuntary encumbrances
and minor defects on title reasonably acceptable to the Administrative
Agent.
If foreclosure or enforcement of any Lien upon the Project, any part thereof or
any other Collateral is at any time initiated, the Administrative Agent will
have the right, but not the obligation, to take any action it deems appropriate,
including payment of the obligation secured by such Lien, and Borrower will
immediately upon demand reimburse the Administrative Agent for all sums expended
by the Administrative Agent in taking any such action. Any amount not reimbursed
upon demand will bear interest at the Default Rate and will be an obligation
secured by the Security Document Liens.
(g) INDEBTEDNESS. Borrower will not, without Administrative
Agent's prior written consent, which will not be unreasonably withheld, create,
incur, assume or suffer to exist any Indebtedness, except:
(i) Indebtedness under the Notes and the other Loan
Documents;
(ii) Indebtedness owed to the Sub-Debt Provider and
subject to the Intercreditor Agreement, which Indebtedness must be
repaid in full or assumed in full by a Person other than Borrower on or
prior to the Term Loan Conversion Date;
(iii) Indebtedness not to exceed, in the aggregate,
two hundred fifty thousand Dollars ($250,000) at any one time
outstanding, secured by Liens permitted by Section 5.2(f)(v);
(iv) accounts payable incurred in commercially
reasonable amounts in the normal course of Borrower's business,
including guaranties by endorsement of negotiable instruments for
deposit or collection or similar transactions;
(v) Indebtedness under interest rate and commodity
price hedge agreements entered into by Borrower in the normal course of
its business;
(vi) Indebtedness relating to capital lease
transactions entered into by Borrower in the ordinary course of its
business relating to assets the fair market value of which does not
exceed one hundred thousand Dollars ($100,000) individually and five
hundred thousand Dollars ($500,000) in the aggregate;
(vii) unsecured subordinated Indebtedness in the
aggregate amount not to exceed two hundred fifty thousand Dollars
($250,000); and
49
(viii) other contingent liabilities incurred by
Borrower in the ordinary course of its business in accordance with the
Project Documents but not in connection with obtaining or guaranteeing
any Indebtedness of Persons other than Borrower.
(h) LEASE OBLIGATIONS. Borrower will not create or suffer to
exist any obligation for the payment of rental for any property under leases or
agreements to lease having a term of three years or more, other than the Project
Documents.
(i) DISTRIBUTIONS. Borrower will not make, declare or pay any
distribution, dividend or return of capital, or purchase, redeem or otherwise
acquire for value any ownership interest now or hereafter outstanding, or make
any distribution of assets or property to any other Person except for
distributions made in compliance with the Disbursement Agreement.
(j) CHANGES IN CONTROL. Borrower will not effect or permit any
change of control of Borrower; PROVIDED, that Borrower may affect or permit one
or a series of transactions pursuant to which PEI sells less than fifty percent
(50%) of its direct or indirect equity interests in Borrower so long as PEI
retains operational control over Borrower and Borrower and the other PEIX
Parties comply with the provisions of the second sentence of this Section
5.2(j). No sale, transfer or other encumbrance of any ownership interest in
Borrower may occur without appropriate Security Documents being entered into
between the Administrative Agent and the new Borrower Members.
(k) TRANSACTIONS WITH AFFILIATES AND THIRD PARTIES. Borrower
will not enter into, or cause, suffer or permit to exist, any arrangement or
contract with any of its Affiliates (other than the Project Documents in effect
on the Construction Loan Closing Date or the Term Loan Conversion Date, as
applicable) EXCEPT (i) any arrangement or contract that contains provisions that
are fair and reasonable to Borrower and no less favorable than those which would
be included in an arm's-length transaction entered into by a prudent Person in
the position of Borrower with a Person which is not one of its Affiliates, (ii)
any employment, non-competition, management or confidentiality agreement entered
into by Borrower with any of its employees, officers or directors in the
ordinary course of business that contains fair and reasonable terms no less
favorable to Borrower than those which would be included in an arm's-length
transaction entered into by a prudent Person in the position of Borrower with a
non-affiliated third party and (iii) as otherwise expressly permitted by the
Loan Documents or approved in advance by the Majority Lenders.
(l) ENVIRONMENTAL COMPLIANCE.
(i) Borrower will not, and will not knowingly permit
any other Person to, use, generate, discharge, emit, manufacture,
handle, process, store, release, transport, remove, dispose of or clean
up any Hazardous Substance on, under or from the Project, the Grain
Facilities or the Site in violation of any Environmental Law or in a
manner that could reasonably be expected to lead to any material
Environmental Claim or pose a material risk to human health, safety or
50
the environment. Borrower will comply, and will use commercially
reasonable efforts to cause all other Persons occupying, using or
present at the Project, the Grain Facilities or the Site to comply,
with all Environmental Laws in all material respects.
(ii) Borrower will promptly take all actions and pay
or arrange to pay all costs necessary for it and the Project and the
Grain Facilities to comply with all Environmental Laws and all Required
Approvals, including actions to remove and dispose of all Hazardous
Substances and to clean-up the Project, the Grain Facilities, the Site
and any other property to the extent affected by the Project, the Grain
Facilities or the activities of Borrower, the Project Parties or their
respective agents or for which Borrower is otherwise responsible. If
Borrower fails to take the actions or pay or arrange to pay the costs
required under this Section 5.2(l), the Administrative Agent may, but
will have no obligation to, take such actions or pay such costs, and
all amounts so expended will be obligations of Borrower to the
Administrative Agent under the Loan Documents payable upon demand and
secured by the Liens of the Security Documents. Nothing in this Section
5.2(l) will impose any obligation or liability whatsoever on the
Administrative Agent or any Lender or require Borrower to undertake or
assure compliance for which it is not responsible or respecting
property that it does not own or control.
(iii) From time to time and at any reasonable time
and frequency, upon the occurrence of an event or omission that, in the
reasonable opinion of the Administrative Agent, could reasonably be
expected to result in a Material Adverse Effect, the Administrative
Agent may cause an environmental audit of the Project, the Grain
Facilities or the Site or the location of any Collateral to be
conducted to confirm Borrower's compliance with this Section 5.2(l).
Borrower agrees to cooperate fully with the Administrative Agent and
its agents in connection with each such audit and to pay the reasonable
documented cost thereof.
(m) ERISA. None of Borrower or any ERISA Affiliate will adopt,
maintain, sponsor, participate in or incur any liability or obligation under or
to any Plan or incur any obligation to provide post-retirement benefits to any
Person.
(n) USE OF PROCEEDS. Borrower will use the proceeds of the
Loans only for the purposes described in Section 2.7 and in accordance with the
requirements and conditions of the Loan Documents. Borrower will not engage in
the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulation G, T, U or X issued by the Board
of Governors of the Federal Reserve System) and no proceeds of any Loan will be
used, directly or indirectly, to purchase or carry margin stock or to extend
credit to others for the purpose of purchasing or carrying margin stock. No
proceeds of any Loan will be used to acquire any security in any transaction
which is subject to Section 13 or 14 of the Securities Exchange Act of 1934, as
amended.
51
(o) BANK ACCOUNTS. Borrower will not maintain any account or
deposit with any bank or other depository institution other than (i) the
accounts created under the Disbursement Agreement and standard operations and
payroll accounts and (ii) such other accounts as the Administrative Agent may
approve in writing and in which the Administrative Agent has a perfected, valid
and enforceable First-Priority Lien. It will not deposit funds into any account
other than the accounts described in the preceding sentence except as may be
otherwise expressly permitted by the Loan Documents.
(p) AUDITORS. Borrower will not discharge or change its
auditors to an auditing firm that is not also providing audit services to PEI or
change its fiscal year without the prior written consent of the Administrative
Agent.
(q) PUBLICITY. Borrower will not, and will not permit any
Affiliate to, issue, or consent to the issuance of, any press release,
announcement or advertisement that refers to the financing contemplated by the
Loan Documents without the prior written consent of the Administrative Agent,
which will not be unreasonably withheld or delayed; PROVIDED, that Borrower and
PEI will be permitted, without obtaining the prior written consent of the
Administrative Agent, to make such filings with Government Instrumentalities as
may be required by applicable Law.
(r) ABANDONMENT. Borrower will not abandon the Project or
cease to operate the Project for any period of thirty (30) consecutive days (it
being acknowledged that the cessation of operations on account of a force
majeure event or maintenance shall not be deemed to be an abandonment for so
long as Borrower continues to comply with all of its other obligations under
this Agreement).
ARTICLE VI
EVENTS OF DEFAULT
-----------------
Section 6.1 EVENTS OF DEFAULT. Each of the following
constitutes an "EVENT OF DEFAULT" under this Agreement:
(a) Any principal of any Loan is not paid within five (5) days
after such principal is due.
(b) Any interest on any Loan or any fee or other amount
payable under any Loan Document (other than amounts described in paragraph (a)
above) is not paid within five (5) days after such interest, fee or other amount
is due.
(c) Any representation or warranty made by any PEIX Party or
any other Project Party (or any of their respective officers or representatives)
in any Loan Document or in any certificate, financial statement or other
document furnished pursuant to or in connection with any Loan Document proves to
have been incorrect or misleading in any material respect at the time it was
made, deemed to have been made, or confirmed.
(d) Borrower or any other PEIX Party fails to perform or
observe any term, covenant or agreement contained in any Loan Document (other
than any term, covenant or agreement that is the basis of another Event of
Default) to be performed or observed by it and such failure remains unremedied
52
for thirty (30) days after the occurrence thereof; PROVIDED, that, if Borrower
or such other PEIX Party has diligently attempted to cure such default
throughout the initial 30-day grace period but such default has not been cured
at the expiration of the initial 30-day grace period, and if such default is
likely to be cured during the thirty (30) days following the expiration of the
initial 30-day grace period, then Borrower may request in writing that the
Administrative Agent grant one additional 30-day grace period within which to
cure such default (such request to contain all relevant facts and circumstances
necessary for the Administrative Agent to make an informed decision as to
whether to grant an additional grace period) and the Administrative Agent, in
its sole discretion, may grant one additional 30-day grace period within which
Borrower or such other PEIX Party must cure the default.
(e) Any Project Party fails to perform or observe any term,
covenant or agreement contained in any Major Project Document (other than any
term, covenant or agreement that is the basis of another Event of Default) to be
performed or observed by it and such failure is not remedied within any
applicable grace period specifically provided for in such Major Project Document
and could reasonably be expected to have a Material Adverse Effect; PROVIDED,
that, if such Project Party has diligently attempted to cure such default
throughout the initial grace period provided for in the Major Project Document
but such default has not been cured at the expiration of such initial grace
period, and if (1) the applicable Major Project Document provides for one or
more subsequent grace periods and (2) such default is likely to be cured during
the next subsequent grace period provided for in the Major Project Document,
then Borrower may request in writing that the Administrative Agent grant one
additional grace period of the same length as the Project Party has received
pursuant to the Major Project Document (but not to exceed thirty (30) days)
within which the Project Party may cure such default (such request to contain
all relevant facts and circumstances necessary for the Administrative Agent to
make an informed decision as to whether to grant an additional grace period) and
the Administrative Agent, in its sole discretion, may grant one additional grace
period of up to thirty (30) days within which the Project Party must cure the
default under the Major Project Document; PROVIDED, FURTHER, that Borrower may
also cure this Event of Default by entering into, within thirty (30) days after
the initial occurrence of such Event of Default, a replacement agreement with a
new counterparty reasonably acceptable to the Administrative Agent, which
replacement agreement will be on terms and conditions at least as favorable to
Borrower as the original Major Project Document being replaced.
(f) The Security Documents for any reason cease to create
perfected, valid and enforceable First-Priority Liens on the Collateral, or
Borrower or Borrower Member so states in writing.
(g) Any provision of any Document (i) is terminated,
repudiated or declared to be invalid by any party thereto or by any Government
Instrumentality or (ii) for any reason ceases to be valid and binding and of
full force and effect except as permitted by Section 5.2(c) and, in either case,
could reasonably be expected to have a Material Adverse Effect.
53
(h) Borrower fails to pay any Indebtedness (other than
Indebtedness evidenced by the Notes or arising under the Loan Documents) or any
interest or premium thereon when due, or any other default under any agreement
or instrument relating to any such Indebtedness, or any other event, occurs and
continues after the applicable grace period, if any, specified in such agreement
or instrument, if the effect of such default or event is to accelerate the
maturity of Indebtedness in an amount greater than two hundred fifty thousand
Dollars ($250,000) or to cause the holders of Indebtedness in an amount greater
than two hundred fifty thousand Dollars ($250,000) to exercise any remedy
against Borrower or any of its properties; or any Indebtedness in an amount
greater than two hundred fifty thousand Dollars ($250,000) is declared to be due
and payable, or required to be prepaid (other than by a regularly scheduled
required prepayment), prior to the stated maturity thereof.
(i) A final judgment or order for the payment of money in
excess of five hundred thousand Dollars ($500,000) is rendered against Borrower
and is not covered by insurance or otherwise covered to the satisfaction of the
Administrative Agent and either (i) enforcement proceedings are commenced by any
creditor upon such judgment or order or (ii) a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, is not in effect
for any period of ten (10) consecutive days.
(j) A Bankruptcy Event occurs with respect to Borrower,
Borrower Member or any Project Party and, in the case of a Project Party, such
event could reasonably be expected to have a Material Adverse Effect.
(k) (i) Any Law is enacted, (ii) any change in Law or any
change in the interpretation or administration of any Law (having the force of
Law) occurs (other than with respect to the Volumetric Ethanol Excise Tax
Credit), or (iii) any Claim is asserted against Borrower, the Project or any
Project Party, in each case that (a) has a material adverse effect on the
validity, enforceability or priority of the Liens granted in favor of the
Administrative Agent pursuant to the Security Documents or (b) would reasonably
be expected (after taking into account all insurance, defenses and any other
mitigating factors available to Borrower) to result in the inability of Borrower
to pay its Obligations at the times and in the amounts required by this
Agreement and the Notes.
(l) A Major Loss occurs without the relevant insurer agreeing
to pay insurance proceeds in the full amount of such Major Loss (subject to the
underlying deductible) within ninety (90) days of the occurrence of the Major
Loss so as to allow replacement of such Collateral and PROVIDED, that Borrower
continues to satisfy its obligations hereunder and under the other Major Project
Documents.
(m) Any Government Instrumentality or any Person acting or
purporting to act under the authority of any Government Instrumentality takes
any action to condemn, seize or appropriate, or to assume custody or control of,
all or any substantial part of the Site or the Project, or takes any action to
displace or curtail the authority of the management of Borrower and such action
could reasonably be expected to have a Material Adverse Effect.
54
(n) The Engineer, at any time during the period between the
Construction Loan Closing Date and the Term Loan Conversion Date, reports that
construction of the Project lags more than thirty (30) days behind the schedule
detailed in the Construction and Draw Schedule for reasons other than Permitted
Construction Delays and thereafter, within sixty (60) days of the date of the
Engineer's report, construction of the Project has not been restored to conform
with the schedule detailed in the Construction and Draw Schedule.
(o) Substantial Completion does not occur on or prior to 425
days after Construction Loan Closing Date and (i) such delay in reaching
Substantial Completion, taking into account the obligations of the EPC
Contractor to pay scheduled liquidated damages under the EPC Contract, could
reasonably be expected to have a Material Adverse Effect or (ii) the
Administrative Agent, in its reasonable discretion, determines that such delay
in reaching Substantial Completion makes it more likely than not that Completion
will not occur on or prior to the Construction Loan Commitment Termination Date.
(p) Completion does not occur on or prior to the Construction
Loan Commitment Termination Date.
Section 6.2 REMEDIES. Upon the occurrence of an Event of
Default described in Section 6.1(j), the Commitments of the Lenders will
terminate and the Loans, all interest thereon and all other amounts payable
under the Loan Documents will become and be immediately due and payable, without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by Borrower. Notwithstanding any other provision of this
Agreement or any other Loan Document, upon the occurrence of an Event of Default
described in Section 6.1(d) that is caused solely by Borrower's failure to
comply with its obligations pursuant to Section 5.1(p), the sole remedy of the
Administrative Agent and the Lenders will be as provided in Sections 4.3 and 4.4
of the Disbursement Agreement. Upon the occurrence and during the continuance of
any other Event of Default, the Administrative Agent will at the request, or may
with the consent, of the Majority Lenders, by notice to Borrower, (i) declare
the Commitment of each Lender to be terminated, whereupon the same will
forthwith terminate and (ii) declare the Loans, all interest thereon and all
other amounts payable under the Loan Documents to be due and payable, whereupon
the Loans, all such advances, all such interest and all such amounts will become
and be immediately due and payable, without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived by
Borrower.
Section 6.3 RIGHT TO COMPLETE.
(a) Upon the occurrence and during the continuance of an Event
of Default, and following the acceleration by the Lenders of the outstanding
Loans and the commencement by the Administrative Agent of any exercise of
remedies available to it pursuant to the Security Documents or applicable Law,
the Administrative Agent and the Lenders, in addition to any other remedy that
they may have under the Loan Documents or by Law, will have the right (but not
the obligation) in their sole and absolute discretion:
55
(i) to enter the Site, the Project and other property
owned or leased by Borrower and complete the construction of the
Project at the risk, cost and expense of Borrower;
(ii) at any and all times to discontinue any work
commenced by them in respect of the Project or to change any course of
action undertaken by them; and
(iii) to take over and use all or any part of the
labor, materials, supplies and equipment contracted for by or on behalf
of Borrower, whether or not previously incorporated into the Project.
In no event will the actions of the Administrative Agent or the Lenders while
exercising their rights pursuant to this Section 6.3 constitute the
Administrative Agent or any Lender a mortgagee-in-possession, and Borrower
hereby indemnifies the Administrative Agent and the Lenders from and against any
and all costs and liabilities resulting from any such characterization or from
their actions or omissions to act pursuant to this Section 6.3; PROVIDED, that
Borrower has no obligation to indemnify the Administrative Agent and the Lenders
for costs and liabilities resulting from the gross negligence or willful
misconduct of the Administrative Agent or any Lender.
(b) In connection with any construction of the Project
undertaken by the Administrative Agent and the Lenders pursuant to this Section
6.3, the Administrative Agent and the Lenders may:
(i) engage builders, contractors, architects,
engineers, security services and others for the purpose of furnishing
labor, material, equipment and security in connection with any
construction of the Project;
(ii) pay, settle or compromise, or cause to be paid,
settled or compromised, all claims or bills that may become Liens
against Borrower's interest in the Site or the Project, or that have
been or may be incurred in any manner in connection with the
construction of the Project or for the discharge of Liens or defects in
the title of Borrower's interest in the Site or the Project; and
(iii) take such other action or refrain from acting
under this Agreement as the Administrative Agent and the Lenders may in
their sole and absolute discretion from time to time determine.
(c) Borrower will be liable to the Administrative Agent and
the Lenders for all sums paid or incurred for the construction of the Project
and all payments made or liabilities incurred by the Administrative Agent and
the Lenders under this Agreement of any kind whatsoever (other than liabilities
incurred due to the gross negligence or willful misconduct of the Administrative
56
Agent or any Lender) will be paid by Borrower to the Administrative Agent and
the Lenders upon demand with interest to the date of payment to the
Administrative Agent and the Lenders at the Default Rate.
(d) For the purpose of carrying out the provisions and
exercising the rights, powers and privileges granted by this Section 6.3,
Borrower irrevocably constitutes and appoints the Administrative Agent, with
full power of substitution, as its true and lawful attorney-in-fact, in its name
and on its behalf, and at its expense, at any time after the occurrence and
during the continuance of an Event of Default, to execute, acknowledge and
deliver any document and instrument and to do and perform any act such as those
referred to in this Section 6.3, without notice to or the consent of Borrower.
This power of attorney is coupled with an interest and is not revocable.
ARTICLE VII
THE AGENT
---------
Section 7.1 AUTHORIZATION AND ACTION. Each Lender hereby
appoints and authorizes the Administrative Agent to take such actions as
administrative agent on its behalf and to exercise such powers under this Loan
Agreement and the other Loan Documents as are delegated to the Administrative
Agent by the terms hereof and thereof, together with such powers as are
reasonably incidental thereto. The Administrative Agent will have no duties,
responsibilities, obligations or liabilities other than those expressly set
forth in the Loan Documents, and no additional duties, responsibilities,
obligations or liabilities will be inferred from the provisions of the Loan
Documents or imposed on the Administrative Agent. As to matters not expressly
provided for by this Loan Agreement or the other Loan Documents (including
enforcement or collection of the Notes), the Administrative Agent will not be
required to exercise any discretion or take any action, but will be required to
act or to refrain from acting (and will be fully protected in so acting or
refraining from acting) upon the instructions of the Majority Lenders, and such
instructions will be binding upon all the Lenders and all holders of Notes;
PROVIDED, that the Administrative Agent will in no event be required to take any
action which exposes it to personal liability, which is contrary to the Loan
Documents or Law or with respect to which the Administrative Agent does not
receive adequate instructions or full indemnification from the Lenders. The
provisions of this Article VII are solely for the benefit of the Administrative
Agent, its agents and Affiliates and the Lenders. The Administrative Agent has
no duties or relationships, of trust or agency, with or to Borrower, Borrower
Member, the Project Parties or their respective Affiliates.
Section 7.2 DELEGATION OF DUTIES. The Administrative Agent may
delegate any of its responsibilities or duties under the Loan Documents to one
or more agents and will not be liable for the negligence or misconduct of any
agent selected by it with reasonable care.
Section 7.3 ADMINISTRATIVE AGENT'S RELIANCE. None of the
Administrative Agent, its agents or any of its respective affiliates will be
liable for any action taken or omitted to be taken by any of them under or in
connection with the Documents, except that each will be liable for its own gross
negligence or willful misconduct as finally determined by a Government
Instrumentality. Without limiting the generality of the foregoing, the
Administrative Agent:
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(a) may treat the payee of any Note as the holder
thereof until the Administrative Agent receives written notice of the
assignment or transfer thereof signed by such payee and in a form
satisfactory to the Administrative Agent;
(b) may consult with qualified legal counsel
(including Borrower's Counsel), independent public accountants and
other experts selected by it and will not be liable for any action
taken or omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants or experts;
(c) makes no representation or warranty to any Lender
and will not be responsible to any Lender for any statement,
representation or warranty made in or in connection with the Documents;
(d) will not have any duty to ascertain or to inquire
as to the performance or observance of any of the terms, covenants or
conditions of the Documents or to inspect the Project or the books and
records or any other property of Borrower, any PEIX Party, any other
Project Party or any Affiliate thereof;
(e) will not be responsible to any Lender for the due
execution, legality, validity, enforceability, genuineness, sufficiency
or value of any Document or any other document or instrument furnished
pursuant thereto, or for the failure of any Person to perform its
obligations under any Document; and
(f) will incur no liability under or in respect of
this Agreement or any other Document or otherwise by acting upon any
notice, consent, waiver, certificate or other writing or instrument
(including facsimiles, telexes, telegrams and cables) believed by it to
be genuine and signed or sent by the proper Person or Persons.
Section 7.4 NOTICE OF DEFAULT. The Administrative Agent will
not be deemed to have knowledge or notice of any Default or Event of Default
unless and until written notice has been provided as set forth in Section 8.20
from a Lender or Borrower referring to this Agreement, describing the Default or
Event of Default and stating that such notice is a "notice of default."
Section 7.5 ADMINISTRATIVE AGENT AS A LENDER. With respect to
its Commitments, the Pro Rata Share of the Loans funded by it and the Notes
issued to it, Hudson United Capital will have the same rights and powers under
the Loan Documents as any other Lender and may exercise the same as though it
were not the Administrative Agent and, unless otherwise expressly indicated, the
term "Lender" or "Lenders" will include Hudson United Capital in its individual
capacity. Hudson United Capital and its Affiliates may accept deposits from,
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lend money to, act as trustee under indentures of and generally engage in any
kind of business with the PEIX Parties and any of their Affiliates and any
Person who may do business with or own securities of the PEIX Parties or any of
their Affiliates, all as if Hudson United Capital were not the Administrative
Agent and without any duty to account therefor to the Lenders. The
Administrative Agent is designated as an administrative agent for the Lenders
and each of the Lenders and Borrower may rely on authorizations and directions
by the Administrative Agent as if given by each Lender.
Section 7.6 CREDIT DECISIONS. Each Lender acknowledges that
neither the Administrative Agent nor any of its Affiliates has made any
representation or warranty with respect to the PEIX Parties, any of their
Affiliates, the Project or any other matter, and agrees that no review or other
action by the Administrative Agent or any of its Affiliates will be deemed to
constitute any such representation or warranty. Each Lender acknowledges that it
has, independently and without reliance upon the Administrative Agent or any
other Lender, and based on the financial statements referred to in Section
4.1(j) and such other documents and information as it has deemed appropriate,
made its own credit analysis and decision to enter into this Agreement and the
other Loan Documents to which it is party. Each Lender also acknowledges and
agrees that it will, independently and without reliance upon the Administrative
Agent or any other Lender, and based on such documents and information as it
deems appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Loan Documents. The Administrative Agent
will have no obligation to provide to any Lender any information or document
concerning or relating to the Project, the PEIX Parties, the other Project
Parties or any Affiliate thereof or any other Person or matter that may come
into the Administrative Agent's possession or to obtain any such information or
documents; PROVIDED, that the Administrative Agent will deliver to the Lenders
all notices, information and documents actually received by the Administrative
Agent from the PEIX Parties, the other Project Parties or any Affiliate thereof
pursuant to the Loan Documents for distribution to the Lenders.
Section 7.7 INDEMNIFICATION. The Lenders agree to indemnify
the Administrative Agent, its agents and its respective Affiliates (to the
extent not reimbursed by Borrower), ratably according to the respective
principal amounts of the Notes then held by each of the Lenders, from and
against any and all Claims, liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses and disbursements of any
kind or nature whatsoever that may be imposed on, incurred by or asserted
against the Administrative Agent, its agents or its respective Affiliates by any
Person (including any Lender) in any way relating to or arising out of:
(a) the Project;
(b) any Document;
(c) any action taken or omitted by the Administrative
Agent or any Lender;
(d) any claim for brokerage fees or commissions in
connection with any transaction contemplated by the Documents;
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(e) any Claim based on any misstatement or inaccuracy
in or omission from any disclosure provided by the PEIX Parties, the
other Project Parties or any Affiliate thereof or their representatives
in connection with the syndication of the Loans;
(f) the actual or alleged presence, release or
discharge of any Hazardous Substance on, from or under the Project or
the existence, use, generation, manufacture, handling, processing,
discharge, emission, storage, release, transportation, removal,
disposal or clean-up thereof of any Hazardous Substance on or at the
Project or by Borrower, any Project Party or any Affiliate thereof; or
(g) any Environmental Claim asserted against or
relating to the Project, Borrower, any Project Party or any Affiliate
thereof or any actual or alleged violation of any Environmental Law by
any of such Persons; PROVIDED, that no Lender will be liable to any
Person for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from such Person's gross negligence or willful
misconduct as finally determined by a Government Instrumentality.
Without limiting the generality of the foregoing, each Lender
agrees to reimburse the Administrative Agent promptly upon demand for such
Lender's ratable share of any cost, expense or Tax described in Section 8.11
incurred by or imposed on the Administrative Agent for which the Administrative
Agent does not receive reimbursement from Borrower. Payment by an indemnified
party will not be a condition precedent to the obligations of the Lenders under
this indemnity. This Section 7.7 will survive the Construction Loan Closing
Date, the making and repayment of the Loans and any transfer or assignment of
the Notes.
Section 7.8 SUCCESSOR ADMINISTRATIVE AGENT. The Administrative
Agent may resign at any time by giving at least sixty (60) days' prior written
notice thereof to the Lenders and Borrower and may be removed at any time with
or without cause by the Majority Lenders. Upon any such resignation or removal,
the Majority Lenders will have the right to appoint a successor Administrative
Agent, which shall also be acceptable to Borrower in its reasonable discretion.
If within thirty (30) days after the resignation or removal of the retiring
Administrative Agent no successor Administrative Agent accepts appointment by
the Majority Lenders, the retiring Administrative Agent may, on behalf of the
Lenders, appoint a successor Administrative Agent, which will be a commercial
bank organized under the Laws of the United States or of any State thereof and
will have a combined capital and surplus of at least two hundred fifty million
Dollars ($250,000,000). Upon the acceptance of its appointment as Administrative
Agent, the successor Administrative Agent will thereupon succeed to and be
vested with all the rights, powers, privileges and duties of the retiring
Administrative Agent and the retiring Administrative Agent will be discharged
from its duties and obligations under the Loan Documents. After any retiring
Administrative Agent's resignation or removal, the provisions of this Article
VII will inure to its benefit as to any action taken or omitted to be taken by
it while it was Administrative Agent.
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ARTICLE VIII
GENERAL PROVISIONS
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Section 8.1 COUNTERPARTS. Each of the Loan Documents may be
executed in any number of counterparts and by the different parties thereto in
separate counterparts, each of which when so executed will be deemed to be an
original and all of which taken together will constitute one and the same
instrument.
Section 8.2 INTEGRATION. The Loan Documents contain the
complete agreement among the PEIX Parties, the Lenders and the Administrative
Agent with respect to the matters contained therein and supersede all prior
commitments, agreements and understandings, whether written or oral, with
respect to the matters contained therein.
Section 8.3 SEVERABILITY. Any provision of any Loan Document
that is invalid or prohibited in any jurisdiction will, as to such jurisdiction,
be ineffective and severable from the rest of such Loan Document to the extent
of such invalidity or prohibition, without impairing or affecting in any way the
validity of any other provision of such Loan Document or of any other Loan
Document, or of such provision in other jurisdictions. The parties agree to
replace any provision that is ineffective by operation of this Section 8.3 with
an effective provision which as closely as possible corresponds to the spirit
and purpose of such ineffective provision and the affected Loan Document as a
whole.
Section 8.4 FURTHER ASSURANCES. At any time and from time to
time upon the request of the Administrative Agent, Borrower will execute and
deliver such further documents and instruments and do such other acts as the
Administrative Agent may reasonably request in accordance with the Loan
Documents in order to effect fully the purposes of the Loan Documents, to
create, perfect, maintain and preserve First-Priority Liens on the Collateral in
favor of the Administrative Agent and to provide for the payment of the Loans
and the other obligations of Borrower and Borrower Member in accordance with the
terms of the Loan Documents.
Section 8.5 AMENDMENTS AND WAIVERS. No amendment or waiver of
any provision of any Loan Document, or consent to any departure by Borrower
therefrom, will be effective unless it is in writing and signed by the
Administrative Agent with the consent of the Majority Lenders; PROVIDED, that no
such amendment, waiver or consent that could reasonably be expected to affect
the principal amount, amortization or maturity of, the interest rate applicable
to, or the collateral securing, the Loans will be effective without the consent
of all of the Lenders. A waiver or consent granted pursuant to this Section 8.5
will be effective only in the specific instance and for the specific purpose for
which it is given.
Section 8.6 NO WAIVER; REMEDIES CUMULATIVE. The waiver of any
right, breach or default under any Loan Document by the Administrative Agent
must be made specifically and in writing. No failure on the part of the
Administrative Agent or any Lender to exercise, and no forbearance or delay in
exercising, any right under any Loan Document will operate as a waiver thereof,
no single or partial exercise of any right under any Loan Document will preclude
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any other or further exercise thereof or the exercise of any other right, and no
waiver of any breach of or default under any provision of any Loan Document will
constitute or be construed as a waiver of any subsequent breach of or default
under that or any other provision of any Loan Document. No notice to or demand
upon Borrower will entitle Borrower to any further, subsequent or other notice
or demand in similar or any other circumstances. Each of the rights and remedies
of the Administrative Agent and the Lenders under the Loan Documents is
cumulative and not exclusive of any other right or remedy provided or existing
by agreement or under Law.
Section 8.7 SUCCESSORS AND ASSIGNS.
(a) Each Loan Document will be binding upon and inure to the
benefit of the parties thereto and all future holders of Notes and their
respective successors and permitted assigns.
(b) Borrower has no right to assign its rights or interests,
or delegate its duties or obligations, under any Loan Document without the prior
written consent of the Administrative Agent.
(c) The Lenders may not syndicate or transfer all or any part
of their respective Commitments or Loans to other financial institutions without
the prior written consent of the Administrative Agent and Borrower; PROVIDED,
that if the proposed transferee is a financial institution has a reasonable
amount of experience as a lender in project-finance transactions or as a lender
to ethanol production facilities, then Borrower's consent to such transfer will
not be required. In addition, no Person that is not an original signatory to
this Agreement will become a Lender unless such Person does not have any
then-existing borrower-lender or other current, significant financial
relationship with the PEIX Parties, any other Project Party or any Affiliate of
the PEIX Parties or any other Project Party, or with any other Lender. In
connection with each such transfer, the transferring Lender and its transferee
will execute and deliver a supplement to this Agreement in the form of Exhibit
8.7(c). Upon delivery of such supplement to the Administrative Agent, the
transferee will become a "Lender" under the Loan Documents with all of the
attendant rights, benefits and obligations, the respective Pro Rata Shares of
the transferring Lender and its transferee will be appropriately adjusted, and
Borrower will execute and deliver to the transferring Lender and its transferee
replacement Notes reflecting their respective Loans. The Note or Notes being
replaced will be canceled and returned to Borrower. Each replacement Note will
have endorsed thereon the disbursements, payments and amount outstanding
thereunder. After any such transfer, the transferring Lender will have no
obligation with respect to the portion of its Commitments transferred. The
Administrative Agent shall maintain at its address referred to in its signature
block a copy of each Commitment Transfer Supplement delivered to it and a
register (the "REGISTER") for the recordation of the names and addresses of the
Lenders and the Commitment of, and principal amount of the Loans owing to, each
Lender from time to time. The entries in the Register shall be conclusive, in
the absence of manifest error, and Borrower, the Administrative Agent and the
Lenders shall treat each Person whose name is recorded in the Register as the
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owner of the Loans and any Notes evidencing such Loans recorded therein for all
purposes of this Agreement. Any assignment of any Loan, whether or not evidenced
by a Note, shall be effective only upon appropriate entries with respect thereto
being made in the Register. The Register shall be available for inspection by
Borrower or any Lender (with respect to any entry relating to such Lender's
Loans) at any reasonable time and from time to time upon reasonable prior
notice. An assignee shall not be entitled to receive any greater payment under
Section 2.10 than the assigning Lender would have been entitled to receive with
respect to the Loan or portion of the Loan assigned to such assignee, unless the
grant to such assignee is made with Borrower's prior written consent or unless
at the time of such assignment both the assigning Lender and the assignee Lender
would have been entitled to the same payment under Section 2.10 under the
circumstances that later give rise to the assignee Lender's claim for payment
under Section 2.10, and subject to compliance by such assignee with Section
2.10(a).
(d) The holder of any Note or Commitment will have the right
to grant participations in such Note or Commitment to any Person on such terms
and conditions as are determined by such holder in its sole and absolute
discretion; PROVIDED, that no such grant of participations will release any
Lender from its obligations hereunder or create any additional obligation on
Borrower. A participant shall not be entitled to receive any greater payment
under Section 2.10 than the applicable Lender would have been entitled to
receive with respect to the participation sold to such participant, unless the
sale of the participation to such participant is made with Borrower's prior
written consent or unless at the time of such assignment both the assigning
Lender and the assignee Lender would have been entitled to the same payment
under Section 2.10 under the circumstances that later give rise to the assignee
Lender's claim for payment under Section 2.10, and subject to compliance by such
assignee with Section 2.10(a).
(e) The Lenders have the right to assign and pledge all or any
portion of the obligations owing to them under the Loan Documents to any Federal
Reserve Bank or to the United States Department of the Treasury as collateral
security pursuant to Regulation A of the Board of Governors of the Federal
Reserve System and any Operating Circular issued by the Federal Reserve System;
PROVIDED, that no such collateral assignment will release any Lender from its
obligations hereunder.
(f) Each Lender represents and warrants to the Administrative
Agent and each other party to this Loan Agreement that in making Loans hereunder
such Lender will be acquiring the Notes issued to it for the purpose of
investment and not with the view to, or for sale in connection with, any
distribution in violation of the Securities Act of 1933, as amended.
Section 8.8 NO AGENCY. None of the PEIX Parties is the agent
or representative of the Administrative Agent or any Lender or is authorized to
act on behalf of or bind the Administrative Agent or any Lender in any way.
Section 8.9 NO THIRD-PARTY BENEFICIARIES. Except as otherwise
expressly stated therein, each Loan Document is intended to be solely for the
benefit of the parties thereto and their respective successors and permitted
assigns and is not intended to and does not confer any right or benefit on any
third party.
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Section 8.10 NON-RECOURSE. The Loans are the obligations
solely of Borrower, and the Administrative Agent and the Lenders will have
access only to the Collateral for repayment. The Obligations of the PEIX Parties
other than Borrower are limited to those specifically stated in the Security
Documents to which such PEIX Parties are parties and no PEIX Party other than
Borrower has any direct obligation with respect to the payment of the Loans.
Section 8.11 COSTS AND EXPENSES. Borrower agrees to pay to the
Administrative Agent and the Lenders on demand all reasonable, documented costs,
and expenses incurred or arising in connection with the preparation,
documentation, negotiation, execution, delivery, funding, administration or
enforcement of the Loan Documents or the transactions contemplated thereby or
effected pursuant thereto; PROVIDED, that Borrower will have no liability to pay
the costs and expenses of the Lenders (in such capacity) arising after the
Construction Loan Closing Date unless there shall occur and be continuing an
Event of Default. Such costs and expenses will include (a) all reasonable fees
of, and expenses incurred by, the Engineer, Lenders' Counsel, the Process Agent,
the Title Insurer, the Insurance Consultant, the Environmental Consultant and
all other advisers and consultants engaged by the Administrative Agent pursuant
to the Loan Documents, (b) all Transfer Taxes, charges and similar levies,
filing and recordation fees and expenses payable in order to create, attach,
perfect, continue and enforce the Liens of the Security Documents, and the cost
of the Title Policies and all endorsements thereto, (c) all fees, costs,
expenses, Taxes and insurance premiums incurred in connection the protection,
maintenance, preservation, collection, liquidation or sale of, or foreclosure or
realization upon, any Collateral, and (d) all reasonable attorneys' fees and
expenses and other costs incurred in connection with (i) complying with any
subpoena or similar legal process relating in any way to the Project, any
Document, any PEIX Party or any other Project Party, (ii) determining the rights
and responsibilities of the Administrative Agent or the Lenders under the Loan
Documents when questioned or otherwise requiring clarification as a result of
any action or inaction by any PEIX Party or any other Project Party, (iii) any
enforcement, amendment or restructuring of, or waiver or consent requested by
any PEIX Party or any other Project Party under, any Loan Document, (iv)
foreclosure or realization upon any Collateral or (v) any bankruptcy,
insolvency, receivership, reorganization, liquidation or similar proceeding or
any appellate proceeding involving the Project, any PEIX Party or any other
Project Party. Borrower agrees to make the payments required under this Section
8.11 regardless of whether a Construction Loan Funding Date or the Term Loan
Conversion Date occurs and hereby indemnifies the Administrative Agent and the
Lenders for all liabilities resulting from any failure or delay in making any
payment required under this Section 8.11. Borrower's obligations under this
Section 8.11 constitute Obligations secured by the Security Document Liens. The
Administrative Agent will provide to Borrower copies of all invoices, receipts
and other documentation relating to any amount payable pursuant to this Section
8.11 reasonably requested by Borrower.
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Section 8.12 INDEMNITY. Borrower hereby indemnifies the
Administrative Agent, the Lenders and their Affiliates from and against any and
all Claims, liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses and disbursements of any kind or nature
whatsoever that may be imposed on, incurred by or asserted against any one or
more of them by any Person in any way relating to or arising out of (a) the
Project or the Grain Facilities, (b) any Document, (c) any action taken or
omitted by any of them pursuant to any Loan Document, (d) any claim for
brokerage fees or commissions in connection with any transaction contemplated by
the Documents, (e) any claim based on any misstatement or inaccuracy in or
omission from any disclosure provided by Borrower or its representatives in
connection with the Loans, (f) the actual or alleged presence, release or
discharge of any Hazardous Substance on, from or under the Project or the Grain
Facilities or the existence, use, generation, manufacture, handling, processing,
discharge, emission, storage, release, transportation, removal, disposal or
clean-up thereof of any Hazardous Substance on or at the Project or the Grain
Facilities or by Borrower, any Project Party (in connection with such Project
Party's obligations under the Project Documents) or any of their Affiliates or
(g) any Environmental Claim asserted against or relating to the Project, the
Grain Facilities, Borrower, any Project Party (in connection with such Project
Party's obligations under the Project Documents) or any of their Affiliates or
any actual or alleged violation of any Environmental Law by any of such Persons;
PROVIDED, that Borrower will not be liable to any Person for any portion of such
Claims, liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from such Person's
gross negligence or willful misconduct as finally determined by a Government
Instrumentality of competent jurisdiction or occurring subsequent to foreclosure
on the Collateral in full satisfaction of the Obligations or delivery by
Borrower of a deed in lieu of foreclosure with respect to the Collateral in full
satisfaction of the Obligations. Payment by an indemnified party will not be a
condition precedent to the obligations of Borrower under this indemnity. This
Section 8.12 will survive the Construction Loan Closing Date, the making and
repayment of the Loans and any transfer or assignment of any Note but will
expire three (3) years after the payment in full of the Loans and all other
amounts due and payable under the Loan Documents.
Section 8.13 RIGHT OF SET-OFF. Upon the occurrence and during
the continuance of an Event of Default, the Administrative Agent and each Lender
are hereby authorized at any time and from time to time, without notice to
Borrower (any such notice being expressly waived by Borrower), to set off and
apply any and all deposits (general or special, time or demand) at any time held
and other indebtedness at any time owing by the Administrative Agent or such
Lender (at any of its offices, branches or agencies, wherever located) to or for
the credit or the account of Borrower against any and all of the Obligations,
irrespective of whether or not the Administrative Agent or such Lender has made
any demand under any Note or any other Loan Document, and although such
obligations may be continuing or unmatured. The Administrative Agent and the
Lenders agree to notify Borrower promptly after any such set-off and
application; PROVIDED, that the failure to give such notice will not affect the
validity of such set-off and application. The rights of the Administrative Agent
and the Lenders under this Section 8.13 are in addition to all other rights and
remedies (including other rights of set-off) the Administrative Agent and the
Lenders may have.
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Section 8.14 SHARING OF PAYMENTS. Each Lender agrees that if
as of any date it obtains any payment (whether by voluntary payment, realization
upon security, exercise of the right of set-off or banker's lien, counterclaim
or cross action or otherwise) on account of the Loans made by it in excess of
its Pro Rata Share of all payments on account of the Loans obtained by the
Lenders, it will purchase for cash without recourse or warranty from the other
Lenders interests in their Notes in such amounts as will result in a
proportional participation by all of the Lenders in such excess payment. If any
of such excess payment is subsequently recovered from such purchasing Lender,
any purchases of interests in Notes will be rescinded and the purchase prices
restored to the extent of such recovery, in each case without interest. Borrower
agrees that any Lender purchasing an interest in a Note pursuant to this Section
8.14 may exercise its rights of payment (including the right of set-off) with
respect to such interest as fully as if such Lender were the direct creditor of
Borrower in the amount of such interest. This Section 8.14 is for the sole
benefit of the Lenders and does not confer any right upon Borrower.
Section 8.15 GOVERNING LAW. EACH LOAN DOCUMENT, EXCEPT TO THE
EXTENT EXPRESSLY PROVIDED OTHERWISE THEREIN, WILL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW PROVISIONS THEREOF (OTHER THAN SECTION 5.1401 OF THE GENERAL
OBLIGATIONS LAW AND ANY SUCCESSOR STATUTE THERETO).
Section 8.16 WAIVER OF PRESENTMENT, DEMAND, PROTEST AND
NOTICE. Except as specifically stated herein or therein, Borrower irrevocably
waives presentment, demand, protest and notice of any kind in connection with
any Loan Document or any Collateral.
Section 8.17 WAIVER OF JURY TRIAL. BORROWER, THE
ADMINISTRATIVE AGENT AND THE LENDERS, AS AMONG THEM, WAIVE ANY RIGHTS THEY MAY
HAVE TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED ON OR ARISING FROM
ANY LOAN DOCUMENT, ANY TRANSACTION CONTEMPLATED THEREBY OR EFFECTED PURSUANT
THERETO, ANY DEALINGS OR COURSE OF DEALING AMONG THEM RELATING IN ANY WAY TO THE
SUBJECT MATTER OF THE LOAN DOCUMENTS OR ANY STATEMENTS OR ACTIONS OF ANY OF THEM
OR THEIR AFFILIATES. Each of the parties acknowledges and agrees that this
waiver is a material inducement to enter into the business relationship
contemplated by the Loan Documents and that each has relied on this waiver in
entering into the Loan Documents to which it is a party and will continue to
rely on this waiver in its future dealings with the other parties. The scope of
this waiver is intended to be all-encompassing, and this waiver will apply to
all Claims, of any nature whatsoever, whether deriving from contract, arising by
Law, based on tort or otherwise. BORROWER, THE ADMINISTRATIVE AGENT AND THE
LENDERS HAVE MADE THIS WAIVER KNOWINGLY AND VOLUNTARILY, AND THIS WAIVER WILL BE
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IRREVOCABLE. THIS WAIVER WILL ALSO APPLY TO ALL AMENDMENTS, SUPPLEMENTS,
RESTATEMENTS, EXTENSIONS AND MODIFICATIONS OF ANY LOAN DOCUMENT AS WELL AS TO
ANY LOAN DOCUMENT ENTERED INTO AFTER THE DATE OF THIS AGREEMENT. In the event of
litigation, the relevant portions of this Agreement may be filed as a written
consent to a trial by the court.
Section 8.18 CONSENT TO JURISDICTION. Each of Borrower, the
Administrative Agent and the Lenders hereby irrevocably submits to the
jurisdiction of any New York state or United States federal court sitting in the
Borough of Manhattan over any action or proceeding arising out of or relating to
any Claim, and hereby irrevocably agrees that all Claims in respect of such
action or proceeding may be heard and determined in such New York state or
United States federal court. Each of Borrower, the Administrative Agent and the
Lenders irrevocably waives any objection that it may now or hereafter have to
the laying of venue in such forums and agrees not to plead or claim that any
such action or proceeding brought in any such New York state or United States
federal court has been brought in an inconvenient forum. Borrower hereby
irrevocably appoints the Process Agent as its agent to receive on behalf of
Borrower and its property service of copies of the summons and complaint and any
other process that may be served in any such action or proceeding. Such service
may be made by mailing or delivering a copy of such process to Borrower at the
address of the Process Agent and Borrower hereby irrevocably authorizes and
directs the Process Agent to accept such service on its behalf. In addition and
as an alternative method of service, Borrower also irrevocably consents to the
service of any and all process in any such action or proceeding by the mailing
of copies of such process to Borrower at its address set forth on the signature
pages to this Agreement. Borrower agrees that a final judgment in any such
action or proceeding will be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by Law.
Nothing in this Section 8.18 will affect the right of the Administrative Agent
or the Lenders to serve legal process in any other manner permitted by Law or
affect the right of the Administrative Agent or the Lenders to bring any action
or proceeding against Borrower or its property in the courts of any other
jurisdiction. If for any reason the Process Agent ceases to be available to act
as Process Agent, Borrower agrees immediately to appoint a replacement Process
Agent satisfactory to the Administrative Agent.
Section 8.19 CONFIDENTIALITY. Borrower, the Administrative
Agent and the Lenders agree to keep confidential the Documents and each document
and all non-public information delivered to them by another party to this
Agreement. Notwithstanding the foregoing, each party will be permitted to
disclose confidential documents and information (a) to another party to this
Agreement, (b) to its Affiliates, advisers and consultants, (c) to prospective
participants or prospective purchasers or transferees of interests in Notes and
their respective affiliates, advisers and consultants, (d) to any Government
Instrumentality having jurisdiction over such party, (e) in response to any
subpoena or other legal process or to comply with Law, (f) to the extent
reasonably required in connection with any litigation to which such party is a
party, (g) to the extent reasonably required in connection with the exercise of
its rights or remedies under any Loan Document or (h) to the extent such
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documents or information already have been publicly disclosed by another Person.
Each prospective participant, purchaser and transferee and each adviser and
consultant to which confidential documents or information is disclosed will be
required to execute a confidentiality agreement containing the provisions of
this Section 8.19.
Section 8.20 NOTICES. All notices, consents, certificates,
waivers, documents and other communications required or permitted to be
delivered to any party under the terms of any Loan Document (a) must be in
writing, (b) must be personally delivered, transmitted by a recognized courier
service or transmitted by facsimile, and (c) must be directed to such party at
its address or facsimile number set forth on the signature pages to this
Agreement. All notices will be deemed to have been duly given and received on
the date of delivery if delivered personally, three (3) days after delivery to
the courier if transmitted by courier, or the date of transmission with
confirmation if transmitted by facsimile, whichever occurs first; PROVIDED, that
notices to the Administrative Agent will not be effective until actually
received by the Administrative Agent. Any party may change its address or
facsimile number for purposes hereof by notice to all other parties.
Section 8.21 LEGAL REPRESENTATION OF THE PARTIES. This
Agreement and the other Loan Documents were negotiated by the parties with the
benefits of legal representation and any rule of construction or interpretation
otherwise requiring this Agreement or any Loan Document to be construed or
interpreted against any party will not apply to any construction or
interpretation hereof or thereof.
68
IN WITNESS WHEREOF, the parties hereto, intending to be
legally bound, have caused this Construction and Term Loan Agreement to be
signed on the date first above written.
PACIFIC ETHANOL MADERA LLC
By /S/ RYAN TURNER
------------------------------------------------
Name:
Title:
Address: 31470 Avenue 12
Madera, California 93637
Facsimile No.: (559) 435-1478
With a copy to:
Address: 885 Third Avenue
New York, New York 10022
Facsimile No.: (212) 751-4864
Attention: Jeffrey B. Greenberg, Esq.
HUDSON UNITED CAPITAL, A DIVISION OF
TD BANKNORTH, N.A., as the Administrative Agent
By /S/ JEROME P. PETERS, JR.
------------------------------------------------
Name: Jerome P. Peters, Jr.
Title: Senior Vice President
Address: 101 Post Road East
Westport, Connecticut 06880
Facsimile No.: (203) 291-6652
69
CONSTRUCTION LENDER:
HUDSON UNITED CAPITAL, A DIVISION OF
TD BANKNORTH, N.A., as a Construction Lender
By /S/ JEROME P. PETERS, JR.
------------------------------------------------
Name: Jerome P. Peters, Jr.
Title: Senior Vice President
Address: 101 Post Road East
Westport, Connecticut 06880
Facsimile No.: (203) 291-6652
Pro Rata Share of Aggregate
Construction Loan Commitment: 65%
70
CONSTRUCTION LENDER:
COMERICA BANK,
as a Construction Lender
By /S/ ROBERT J. HARLAN
------------------------------------------------
Name: Robert J. Harlan
Title: Vice President
Address: MC 4330
5200 N. Palm Ave., Suite 320
Fresno, California 93704
Facsimile No.: (559) 244-3909
Pro Rata Share of Aggregate
Construction Loan Commitment: 35%
71
TERM LENDER:
HUDSON UNITED CAPITAL, A DIVISION OF
TD BANKNORTH, N.A., as a Term Lender
By /S/ JEROME P. PETERS, JR.
------------------------------------------------
Name: Jerome P. Peters, Jr.
Title: Senior Vice President
Address: 101 Post Road East
Westport, Connecticut 06880
Facsimile No.: (203) 291-6652
Pro Rata Share of Aggregate
Term Loan Commitment: 65%
72
TERM LENDER:
COMERICA BANK,
as a Term Lender
By /S/ ROBERT J. HARLAN
------------------------------------------------
Name: Robert J. Harlan
Title: Vice President
Address: MC 4330
5200 N. Palm Ave., Suite 320
Fresno, California 93704
Facsimile No.: (559) 244-3909
Pro Rata Share of Aggregate
Term Loan Commitment: 35%
73
Schedule 3.1(a)(ix) to
Construction and Term Loan Agreement
------------------------------------
Project Documents in Effect On the Construction Loan Closing Date
-----------------------------------------------------------------
Amended and Restated Corn Procurement Agreement, dated March 30, 2006, between
Borrower and Pacific Ag. Products, LLC, a California limited liability company
("PAP").
Amended and Restated Ethanol Marketing Agreement, dated March 16, 2006, between
Kinergy Marketing LLC, an Oregon limited liability company, and Borrower.
Amended and Restated Operation and Maintenance Services Agreement, dated March
16, 2006, between Pacific Ethanol California, Inc., a California corporation
("PECA"), and Borrower.
Amended and Restated Phase I Design-Build Contract, dated November 2, 2005,
between Borrower and W.M. Lyles Co., a California corporation ("LYLES").
Assignment and Assumption Agreement, dated November 4, 2005, between PECA and
Borrower.
1st Amendment to the Assignment and Assumption Agreement, dated November 11,
2005, between PECA and Borrower.
2nd Amendment to the Assignment and Assumption Agreement, dated November 11,
2005, between PECA and Borrower.
Construction Performance and Completion Bond, dated November 4, 2005, issued by
Travelers Casualty and Surety Company of America, with Dual-Obligee Rider, dated
February 24, 2006, issued by Travelers Casualty and Surety Company.
Grain Mill Operation and Maintenance Agreement, dated March 30, 2006, between
Borrower and PAP.
License of Technology, dated September 1, 2005, between Delta-T Corporation, a
Virginia corporation, and Borrower.
Phase II Design-Build Contract, dated November, 2, 2005, between Borrower and
Lyles, and change orders 1.0 through 7.0 pursuant thereto.
WDG Marketing and Services Agreement, dated March 4, 2005, between Western
Milling LLC, a California limited liability company, and Borrower, as assignee
of PECA.
Schedule 5.2(c) to
Construction and Term Loan Agreement
------------------------------------
Additional Project Costs
------------------------
The following items are recognized construction costs that are not included in
the scope of work of the EPC Contract, as modified by change orders 1-7.
Expenditures in these areas up to the amounts listed below, whether as separate
contracts with third parties or as change orders to the EPC Contract do not
require the approval of the Administrative Agent or Independent Engineer.
- ------------------------------------- -----------------
Technology License 500,000
- ------------------------------------- -----------------
Substation/Switchgear
110,000
- ------------------------------------- -----------------
Cold Lime Softener Water Treatment 1,149,398
- ------------------------------------- -----------------
New Well 84,786
- ------------------------------------- -----------------
Regenerative Thermal Oxidizer 530,000
- ------------------------------------- -----------------
Permits 39,251
- ------------------------------------- -----------------
Prof Liability Insurance 40,000
- ------------------------------------- -----------------
PGE Fees/Pole Relocation/Gas Line 511,755
- ------------------------------------- -----------------
Telephone Service Relocation 20,000
- ------------------------------------- -----------------
Lab Equipment & Supplies 150,000
- ------------------------------------- -----------------
Office Furniture 20,000
- ------------------------------------- -----------------
Entrance Sign 20,000
- ------------------------------------- -----------------
Grain R/S/H (GR) / WDG H/L (DG) 1,285,000
- ------------------------------------- -----------------
SUBTOTAL 4,460,191
- ------------------------------------- -----------------
Exhibit 2.2 to
Construction and Term Loan Agreement
------------------------------------
Form of Notice of Borrowing
---------------------------
TO: Hudson United Capital, A Division of TD Banknorth, N.A.
FROM: Pacific Ethanol Madera LLC
RE: Notice of Borrowing
DATE: ________________________
Reference is made to the Construction and Term Loan Agreement,
dated April __, 2006 (as amended, modified or supplemented from time to time,
the "LOAN AGREEMENT"), among Pacific Ethanol Madera LLC ("BORROWER"), the
lenders named on the signature pages thereto, and Hudson United Capital, a
Division of TD Banknorth, N.A., as administrative agent (the "ADMINISTRATIVE
AGENT"). Capitalized terms used in this Notice of Borrowing and not otherwise
defined herein have the meanings assigned to them in the Loan Agreement.
This Notice of Borrowing is given pursuant to Section 2.2 of
the Loan Agreement, and in connection therewith, set forth below is the
information relating to the proposed [Construction/Term] Loans as required by
Section 2.2.
1. The proposed Funding Date is: ________________.
2. The aggregate amount of the [Construction/Term] Loans is:
$______________.
Borrower hereby certifies as follows:
1. (i) There exists no Default or Event of Default, (ii) all
representations and warranties made to the Administrative Agent contained in the
Loan Agreement or any other Loan Document or in any writing delivered to the
Administrative Agent by Borrower pursuant to the Loan Agreement or other Loan
Document are true and correct in all material respects with the same force and
effect as if made on and as of the date hereof (except to the extent such
statements, representations and warranties made in any such Loan Document or
writing executed prior to the date hereof related to a specific prior date), and
(iii) no material Loss has occurred.
2. All conditions precedent to the making of the
[Construction/Term] Loans have been satisfied in full or waived in writing by
the Administrative Agent or waived in writing by the Administrative Agent and
all amounts received in connection with the Loans made in connection with this
Notice of Borrowing will be used in accordance with Section 2.7 of the Loan
Agreement.
[3. All amounts borrowed pursuant to previous Notice(s) of
Borrowing have been applied in accordance therewith and with Section 2.7 of the
Loan Agreement.]
[4. Borrower has no reason to believe that (i) the aggregate
amount of the Construction Loans, when taken together with all other funds
available to construct the Project, is insufficient to complete the Project on
or prior to the Construction Loan Commitment Termination Date or (ii) the
Closing Pro Forma is no longer reasonable in all material respects or the
conclusions demonstrated therein are no longer valid in all material respects.
Construction of the Project is progressing in a satisfactory manner in
accordance with the Construction Budget and the Construction and Draw Schedule,
subject to any Permitted Construction Delay.]
5. Borrower has no knowledge of, and has not received any
notice of, Liens or claims of Lien (other than Permitted Liens) filed or
threatened against the Project or any Collateral.
6. Borrower is not aware of any event, circumstance or
condition, or lack thereof, which could reasonably be expected to cause an Event
of Default.
PACIFIC ETHANOL MADERA LLC
By________________________________
Name:
Title:
Exhibit 2.4(a) to
Construction and Term Loan Agreement
------------------------------------
Form of Construction Loan Note
------------------------------
PACIFIC ETHANOL MADERA LLC
Senior Construction Loan Note Due [______________]
No. __
Amount: US$___________ Date: ______________
FOR VALUE RECEIVED, PACIFIC ETHANOL MADERA LLC, a Delaware
limited liability company ("PAYOR"), hereby unconditionally promises to pay to
the order of ________________________ (herein called "NOTE HOLDER"), or its
permitted assigns, the principal sum of _________ _______ ($____________), or so
much thereof as may be advanced pursuant to the Loan Agreement (as defined
below), on the Construction Loan Maturity Date, or such earlier date as the same
may become due and payable hereunder or under the Loan Agreement, payable as set
forth below and in the Loan Agreement.
All payments under this Construction Loan Note will be payable
without setoff, counterclaim or deduction of any kind in lawful money of the
United States of America and in immediately available funds not later than 1:00
p.m., New York City time, on the date when due to Note Holder.
This Construction Loan Note is one of the Construction Loan
Notes referred to in and issued subject to the Construction and Term Loan
Agreement, dated April __, 2006 (as amended, modified or supplemented from time
to time, the "LOAN AGREEMENT"), among Payor and Note Holder, as a Construction
Lender, and the other parties thereto. Except as otherwise defined herein, each
capitalized term used herein has the meaning set forth for such term in the Loan
Agreement.
On each Construction Loan Funding Date and on each other day
on which Note Holder makes a Construction Loan to Payor in accordance with the
Loan Agreement, Note Holder is hereby authorized to make a notation on Schedule
I hereto as to the date and the amount of each Construction Loan evidenced by
this Construction Loan Note. Failure to make any such notation will not limit or
otherwise affect the obligations of Payor hereunder or under the Loan Agreement.
Payor agrees that this Construction Loan Note, upon each entry being duly made
and absent manifest error, constitutes PRIMA FACIE evidence of the indebtedness
of Payor and is enforceable against Payor with the same force and effect as if
such amounts were set forth in separate Construction Loan Notes executed by
Payor.
1
This Construction Loan Note is subject to mandatory prepayment
in whole or in part and optional prepayment (in connection with a refinancing of
the Construction Loans by Term Loans) in whole or in part as provided in the
Loan Agreement.
Payor will pay interest on the unpaid principal amount hereof
at the applicable interest rate per annum as determined pursuant to Section 2.3
of the Loan Agreement. Interest will be computed on the actual number of days
elapsed over a 360-day year. Interest will be payable (i) in accordance with
Section 2.3 of the Loan Agreement and (ii) concurrently with any prepayment, at
maturity (by acceleration or otherwise) and, after such maturity, on demand.
This Construction Loan Note is hereby expressly limited so that in no
contingency or event whatsoever, whether by reason of acceleration of the
maturity of any indebtedness evidenced hereby or otherwise, will the interest
contracted for or charged or received by Note Holder exceed the maximum amount
permissible under applicable Law. If, under any circumstance whatsoever,
interest would otherwise be payable to Note Holder in excess of the maximum
lawful amount, the interest payable to Note Holder will be reduced to the
maximum amount permitted under applicable Law, and the amount of interest for
any subsequent period to the extent less than that permitted by applicable Law,
will to that extent be increased by the amount of such reduction.
Payor hereby irrevocably authorizes Note Holder to calculate
the amount of each interest payment to be evidenced by this Construction Loan
Note in accordance with the provisions of the Loan Agreement.
Upon the occurrence and during the continuance of an Event of
Default (other than an Event of Default caused solely by Borrower's failure to
comply with Section 5.1(p) of the Loan Agreement), Payor will pay, pursuant to
the terms of the Loan Agreement, interest on all amounts outstanding hereunder
(whether or not past due) at a rate per annum equal to 2% plus the Construction
Loan Interest Rate; otherwise the principal hereof and accrued interest hereon
will become, or may be declared to be, forthwith due and payable in the manner,
on the conditions and with the effect provided in the Loan Agreement.
Payor will pay the costs and expenses, including attorneys'
fees, incurred by Note Holder in enforcing any of its rights under the Loan
Agreement, this Construction Loan Note, the Security Documents or any other Loan
Document or in complying with any subpoena or other legal process served upon
Note Holder in connection with the Loan Agreement, the Notes, the Security
Documents or any other Loan Document, or the transactions contemplated thereby,
including without limitation costs and expenses incurred in any bankruptcy case,
in accordance with the provisions of the Loan Agreement.
2
This Construction Loan Note is secured by the Collateral
described in the Security Documents and any other agreement which by its terms
provides security for this Construction Loan Note. This Construction Loan Note
is the obligation solely of Payor and Note Holder will have access only to the
Collateral for repayment. This Construction Loan Note will be binding upon Payor
and its successors and will inure to the benefit of Note Holder and its
successors and permitted assigns.
Payor hereby waives presentment, demand, notice, protest and
all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Construction Loan Note except as
specifically provided in the Loan Agreement.
Any provision of this Construction Loan Note which is
prohibited or unenforceable in any jurisdiction will, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof and without affecting the validity
or enforceability of such or any other provision in any other jurisdiction.
THIS CONSTRUCTION LOAN NOTE WILL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW PROVISIONS THEREOF (OTHER THAN SECTION 5.1401 OF THE GENERAL
OBLIGATIONS LAW AND ANY SUCCESSOR STATUTE THERETO). Payor hereby knowingly,
voluntarily and intentionally waives any right it may have to a trial by jury in
any litigation or claim which is based hereon, or arises out of, under, or in
connection with, this Construction Loan Note. Any legal action or proceeding
with respect to this Construction Loan Note may be brought in the courts of the
State of New York or the United States of America sitting in the Borough of
Manhattan, and Payor hereby accepts for itself and in respect of its property,
generally and unconditionally, the exclusive jurisdiction of the aforesaid
courts. Further, Payor hereby irrevocably waives any objection, including
without limitation any objection to the laying of venue or based on the grounds
of forum non conveniens, which it may now or hereafter have to the bringing of
any such action or proceeding in such jurisdictions.
PAYOR:
PACIFIC ETHANOL MADERA LLC
By ______________________________
Name:
Title:
3
SCHEDULE I
Amount of Unpaid Aggregate Principal Amount of Notation
Date Construction Loan Construction Loans Made By
---- ----------------- ------------------ -------
1
Exhibit 2.4(b) to
Construction and Term Loan Agreement
------------------------------------
Form of Term Loan Note
----------------------
PACIFIC ETHANOL MADERA LLC
Senior Term Loan Note Due _____
No. __
Amount: US$ Date:____________, ____
FOR VALUE RECEIVED, PACIFIC ETHANOL MADERA LLC, a Delaware
limited liability company ("PAYOR"), hereby unconditionally promises to pay to
the order of ______________________ (herein called "NOTE HOLDER"), or its
permitted assigns, the principal sum of ________________ Dollars ($____________)
on the Term Loan Maturity Date or such earlier date as the same may become due
and payable hereunder or under the Loan Agreement (as defined below), payable as
set forth below and in the Loan Agreement.
All payments under this Term Loan Note will be payable without
setoff, counterclaim or deduction of any kind in lawful money of the United
States of America and in immediately available funds not later than 1:00 p.m.,
New York City time, on the date when due to Note Holder.
This Term Loan Note is one of the Term Loan Notes referred to
in and issued subject to the Construction and Term Loan Agreement, dated April
__, 2006 (as amended, modified or supplemented from time to time, the "LOAN
AGREEMENT"), among Payor and Note Holder, as a Term Lender, and the other
parties thereto. Except as otherwise defined herein, each capitalized term used
herein has the meaning set forth for such term in the Loan Agreement.
The principal amount of this Term Loan Note will be due and
payable in the amounts and on the dates set forth in the Amortization Schedule
attached hereto as Schedule I, together with accrued interest hereon from and
after the date hereof and continuing to and including the earlier of
________________ and the date on which all Obligations are paid in full. This
Term Loan Note is subject to mandatory prepayment in whole or in part and
optional prepayment in whole or in part as provided in the Loan Agreement.
Payor will pay interest on the unpaid principal amount hereof
at the applicable interest rate per annum determined pursuant to Section 2.3 of
the Loan Agreement. Interest will be computed on the actual number of days
elapsed over a 360-day year. Interest will be payable (i) quarterly in arrears
on each March 31, June 30, September 30 and December 31, and (ii) concurrently
with any prepayment, at maturity (by acceleration or otherwise) and, after such
maturity, on demand. This Term Loan Note is hereby expressly limited so that in
no contingency or event whatsoever, whether by reason of acceleration of the
maturity of any indebtedness evidenced hereby or otherwise, will the interest
contracted for or charged or received by Note Holder exceed the maximum amount
permissible under applicable Law. If, under any circumstance whatsoever,
interest would otherwise be payable to Note Holder in excess of the maximum
lawful amount, the interest payable to Note Holder will be reduced to the
maximum amount permitted under applicable Law, and the amount of interest for
any subsequent period to the extent less than that permitted by applicable Law
will, to that extent, be increased by the amount of such reduction.
Payor hereby irrevocably authorizes Note Holder to calculate
the amount of each interest payment to be evidenced by this Term Loan Note in
accordance with the provisions of the Loan Agreement.
Upon the occurrence and during the continuance of an Event of
Default (other than an Event of Default caused solely by Borrower's failure to
comply with Section 5.1(p) of the Loan Agreement), Payor will pay, pursuant to
the terms of the Loan Agreement, interest on all amounts outstanding hereunder
(whether or not past due) at a rate per annum equal to 2% plus the Term Loan
Interest Rate; otherwise the principal hereof and accrued interest hereon will
become, or may be declared to be, forthwith due and payable in the manner, on
the conditions and with the effect provided in the Loan Agreement.
Payor will pay the costs and expenses, including attorneys'
fees, incurred by Note Holder in enforcing any of its rights under the Loan
Agreement, this Term Loan Note, the Security Documents or any other Loan
Document or in complying with any subpoena or other legal process served upon
Note Holder in connection with the Loan Agreement, the Notes, the Security
Documents or any other Loan Document, or the transactions contemplated thereby,
including without limitation costs and expenses incurred in any bankruptcy case,
in accordance with the provisions of the Loan Agreement.
This Term Loan Note is secured, on a parity basis with all
other Notes, by the Collateral described in the Security Documents and any other
agreement which by its terms provides security for this Term Loan Note. This
Term Loan Note is the obligation solely of Payor and Note Holder will have
access only to the Collateral for repayment. This Term Loan Note will be binding
upon Payor and its successors and will inure to the benefit of Note Holder and
its successors and permitted assigns.
2
This Term Loan Note evidences indebtedness heretofore
evidenced by a Construction Loan Note and is not intended to extinguish the
indebtedness evidenced by the Construction Loan Note.
Payor hereby waives presentment, demand, notice, protest and
all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Term Loan Note, except as
specifically provided in the Loan Agreement.
Any provision of this Term Loan Note which is prohibited or
unenforceable in any jurisdiction will, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof and without affecting the validity or enforceability
of such or any other provision in any other jurisdiction.
THIS TERM LOAN NOTE WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW PROVISIONS THEREOF (OTHER THAN SECTION 5.1401 OF THE GENERAL
OBLIGATIONS LAW AND ANY SUCCESSOR STATUTE THERETO). Payor hereby knowingly,
voluntarily and intentionally waives any right it may have to a trial by jury in
any litigation or claim which is based hereon, or arises out of, under, or in
connection with, this Term Loan Note. Any legal action or proceeding with
respect to this Term Loan Note may be brought in the courts of the State of New
York or the United States of America sitting in the Borough of Manhattan, and
Payor hereby accepts for itself and in respect of its property, generally and
unconditionally, the exclusive jurisdiction of the aforesaid courts. Further,
Payor hereby irrevocably waives any objection, including without limitation any
objection to the laying of venue or based on the grounds of forum non
conveniens, which it may now or hereafter have to the bringing of any such
action or proceeding in such jurisdictions.
PAYOR:
PACIFIC ETHANOL MADERA LLC
By ______________________________
Name:
Title:
3
SCHEDULE I
- ----------------------- -----------------------------------------------------
PAYMENT DATE PERCENTAGE OF INITIAL PRINCIPAL AMOUNT
- ----------------------- -----------------------------------------------------
2.27%
- ----------------------- -----------------------------------------------------
2.33%
- ----------------------- -----------------------------------------------------
2.38%
- ----------------------- -----------------------------------------------------
2.44%
- ----------------------- -----------------------------------------------------
2.60%
- ----------------------- -----------------------------------------------------
2.67%
- ----------------------- -----------------------------------------------------
2.73%
- ----------------------- -----------------------------------------------------
2.79%
- ----------------------- -----------------------------------------------------
2.97%
- ----------------------- -----------------------------------------------------
3.04%
- ----------------------- -----------------------------------------------------
3.11%
- ----------------------- -----------------------------------------------------
3.18%
- ----------------------- -----------------------------------------------------
3.37%
- ----------------------- -----------------------------------------------------
3.45%
- ----------------------- -----------------------------------------------------
3.53%
- ----------------------- -----------------------------------------------------
3.61%
- ----------------------- -----------------------------------------------------
3.81%
- ----------------------- -----------------------------------------------------
3.90%
- ----------------------- -----------------------------------------------------
3.99%
- ----------------------- -----------------------------------------------------
4.08%
- ----------------------- -----------------------------------------------------
4.29%
- ----------------------- -----------------------------------------------------
4.39%
- ----------------------- -----------------------------------------------------
4.50%
- ----------------------- -----------------------------------------------------
4.60%
- ----------------------- -----------------------------------------------------
- ----------------------- -----------------------------------------------------
4.82%
- ----------------------- -----------------------------------------------------
4.93%
- ----------------------- -----------------------------------------------------
5.05%
- ----------------------- -----------------------------------------------------
5.17%
- ----------------------- -----------------------------------------------------
2
Exhibit 5.1(n) to
Construction and Term Loan Agreement
------------------------------------
Required Insurance
------------------
1. Commercial general liability insurance for the Project on an
occurrence policy form, including coverage for premises/operations, explosion,
collapse and underground hazards, products/completed operations, broad form
property damage, blanket contractual liability for both oral and written
contracts, independent contractors, personal injury, advertising injury, TRIA
for Borrower and for operators and contractors, with primary coverage limits of
no less than $1,000,000 per occurrence and in the aggregate for injuries or
death to one or more persons or damage to property.
The comprehensive or commercial general liability policy shall also
include a severability of interest clause (separation of insureds) and a cross
liability clause in the event more than one entity is named as an insured under
the liability policy. The policy will not contain any exclusion for the
operation of any railroad siding. The policy will include a landlord protective
liability clause. The policy territory is to be worldwide, including coverage
for products liability.
2. Automobile liability insurance providing coverage for owned,
non-owned and hired automobiles and containing appropriate no-fault insurance
provisions or other endorsements in accordance with state legal requirements,
with limits of no less than $1,000,000 per accident with respect to bodily
injury, property damage or death. The policy is to be endorsed to provide for
TRIA coverage to the extent it is available.
3. Employers' liability insurance with limits of not less than
$1,000,000 and workers' compensation insurance providing Other States coverage,
USL&H Act coverage and Jones Act coverage, if applicable, disability benefits
insurance, and such other forms of insurance that Borrower is required by law to
provide to cover loss resulting from injury, sickness, disability or death of
its employees. There shall be no "sunset clause" or similar provision.
4. Umbrella/excess liability insurance providing limits of not less
than $20,000,000 per occurrence and in the aggregate. Such coverage shall be
written on an occurrence policy form and shall provide coverage limits over and
above those provided by the policies described in paragraphs (a), (b) and (c)
above (except with respect to workers' compensation insurance). The umbrella
and/or excess policies shall not contain provisions that restrict coverage as
set forth in paragraphs (a), (b) and (c) above and that are provided in the
underlying policies. If the policy or policies provided under this paragraph (d)
contain(s) aggregate limits applying to operations of Borrower and such limits
are diminished below $10,000,000 by incidents, occurrences, claims, settlements
or judgments against such insurance that have caused the carrier to establish a
reserve, Borrower shall take commercially reasonable efforts to promptly restore
such aggregate limits or provide other equivalent insurance protection for such
aggregate limits, and such limits shall be restored within no later than thirty
(30) days. Any aggregate is to apply to this project and location solely.
1
5. Environmental Pollution Liability Insurance for sudden pollution
events will not be less than $2,000,000 per occurrence and $2,000,000 in the
aggregate.
6. Pollution Liability Insurance for nonsudden pollution events will
not be less than $3,000,000 per occurrence and $6,000,000 in the aggregate.
7. Such policies shall include pollution and contamination coverage for
bodily injury and property damage arising from the ownership, operation,
transportation, handling, storage, disposal, dumping, processing and treatment
of waste and will provide for control, monitoring, remediation and clean up
costs due to seepage, pollution, contamination of environmental liabilities of
any kind whether on land or water. Time Element Pollution Coverage is also to be
provided.
8. Upon completion, "All Risk" property insurance coverage in an amount
not less than the replacement value of the Project, including a full replacement
cost endorsement with no deduction for depreciation, and without any coinsurance
provision with sub-limits as are typical for insurance for similar exposures.
The Property insurance policy will provide, without limitation, (i) coverage
against loss or damage by fire, lightning, windstorm, hail, explosion, riot,
civil commotion, aircraft, vehicles, smoke, and other risks from time to time
included under "all risk" or "extended coverage" policies, earthquake, flood,
collapse, sinkhole, subsidence, service interruption, ingress/egress, terrorism
(TRIA) and such other perils as the Administrative Agent, after consultation
with Borrower, may from time to time reasonably require to be insured, with a
sub-limit of not less than $500,000 for on-site clean-up of land and water from
pollutants and/or contaminants following loss or damage by an insured peril,
(ii) off-site coverage with a limit sufficient to cover such off-site equipment,
(iii) transit coverage (including ocean cargo if and when such transit will be
required) with a per occurrence limit of not less than $250,000 or such higher
amount as is sufficient to cover property in transit, (iv) boiler and machinery
coverage on a "comprehensive" basis, including breakdown and repair, with limits
not less than the full replacement cost of the insured objects. If boiler and
machinery insurance is provided by an insurer other than Borrower's property
insurer, then a Joint Loss Agreement is to be obtained on both policies.
Borrower shall also maintain or cause to be maintained on its behalf with
respect to the Project, business interruption insurance on an "all risk" basis
as set forth in clause (i) above, in an amount not less than the sum of 12 month
period of indemnification plus debt service (principal and interest) and other
fixed costs. Borrower shall also maintain, or cause to be maintained on its
behalf, expediting and extra expense coverage in an amount not less than
$1,000,000. Borrower shall also maintain, or cause to be maintained on its
behalf with respect to the Project, contingent business interruption/extra
expense insurance on a named and identified basis in an amount not less than
$5,000,000. The policy/policies shall include debris removal in an amount of 25%
of the replacement cost value, not to exceed $5,000,000, and building ordinance
coverage to pay for loss of undamaged property which may be required to be
replaced due to enforcement of local, state, or federal ordinances, subject to a
sub-limit of not less than $1,000,000. The policies are also to provide for loss
2
of Rental Value in an amount of not less than the full annual value. All such
policies may have deductibles of not greater than $250,000 per loss with respect
to property damage, and business interruption coverage shall have a waiting
period of not greater than sixty (60) days. All insurance coverage described in
this paragraph shall be written on a replacement cost basis, shall not be
subject to coinsurance provisions, and shall be in such form (including the form
of the loss payable clauses) as shall be reasonably acceptable to the
Administrative Agent (which acceptance shall not be unreasonably withheld or
delayed).
9. Earthquake coverage, for a minimum amount equal to 50% of the
replacement cost of the Project, shall include coverage for movement,
earthquakes, shocks, tremors, landslides, subsidence, volcanic activity,
sinkhole coverage, mud-flow or rockfall, or any other earth movement, all
whether direct or indirect, approximate or remote or in whole or in part caused
by, contributed to or aggravated by any physical damage insured against by such
policy regardless of any other cause or event that contributes, concurrently or
in sequence, to the loss.
10. Flood coverage, for a minimum amount equal to 50% of the
replacement cost of the project, shall include, but not be limited to, coverage
for waves, tide or tidal water, inundation, rainfall and/or resulting runoff or
the rising (including the overflowing or breaking of boundaries) of lakes,
ponds, reservoirs, rivers, harbors, streams, or other bodies of water, whether
or not driven by wind.
11. "All Risks" coverage for personal property of Borrower, including
coverage for raw material and inventory including loss to stored ethanol, DDGS
and WDGS and other raw material at replacement cost valuation. In addition,
coverage is to be provided for the property of others for which Borrower is
responsible for full replacement cost valuation without depreciation.
12. Such other or additional insurance (as to risks covered, policy
amounts, policy provisions or otherwise) as, under prudent ethanol production
practices, are from time to time insured against for property and facilities
similar in nature, use and location to the Project which the Administrative
Agent may reasonably require and which is obtainable at commercially reasonable
rates.
13. Title Insurance in the form approved by the Administrative Agent on
the Construction Loan Closing Date.
14. To the extent not described above, from and after the time that the
Project commences Commercial Operation, the insurance described in the schedule
entitled "Schedule of Insurance to Satisfy Requirements for Operating Period,"
attached to the report of the Insurance Consultant dated March 24, 2006, and
delivered to the Administrative Agent and Borrower in connection with the
Construction Loan Closing Date.
3
15. This Exhibit 5.1(n) describes the "Required Insurance" as agreed
between the Administrative Agent and Borrower as of the Construction Loan
Closing Date. If at any time after the Construction Loan Closing Date any of the
insurances described above, or any required element of any insurance described
above, is not, in the reasonable opinion of Borrower (as confirmed to the
Administrative Agent by the Insurance Consultant), obtainable at commercially
reasonable rates, then the Administrative Agent and Borrower will negotiate in
good faith and in consultation with the Insurance Consultant to amend or waive
the applicable provisions of this Exhibit 5.1(n) (and, therefore, the definition
of "Required Insurance") so as to reflect the insurances then-available to
Borrower at commercially reasonable rates.
4
Exhibit 5.1(k)(iii) to
Construction and Term Loan Agreement
------------------------------------
Form of Monthly Construction Report
-----------------------------------
The Monthly Construction Report will include:
Detailed description of progress of construction, percent
completion of engineering, procurement, construction and
start-up tasks, with photos
Report of potential problems and resolution of previous issues
reported
Milestones completed
Milestones not completed by deadline
Anticipated completion dates for remaining Milestones
Permit status (give details)
Total funds disbursed, broken down monthly by Construction
Budget category (actual and scheduled)
Current schedule for performance testing (give details)
Current anticipated date of Completion (give details)
Number of days of Force Majeure (give details)
Detailed description of accidents, other unanticipated events
1
Exhibit 8.7(c) to
Construction and Term Loan Agreement
------------------------------------
Form of Commitment Transfer Supplement
--------------------------------------
This COMMITMENT TRANSFER SUPPLEMENT, dated as of the date set
forth in Schedule 1 hereto, is by and among the Transferring Lender and the
Purchasing Lender set forth in Schedule 1 hereto.
RECITALS
--------
WHEREAS, this Commitment Transfer Supplement is being executed
and delivered in accordance with Section 8.7(c) of the Construction and Term
Loan Agreement, dated April __, 2006 (as amended, modified or supplemented, the
"LOAN AGREEMENT"; terms defined therein being used herein as therein defined),
by and among Pacific Ethanol Madera LLC ("BORROWER"), the Transferring Lender,
Hudson United Capital, a division of TD Banknorth, N.A., as Administrative
Agent, and the other parties thereto; and
WHEREAS, the Transferring Lender proposes to sell and assign
to the Purchasing Lender its rights, obligations and commitments under the Loan
Agreement to the extent provided herein;
NOW, THEREFORE, the Transferring Lender and the Purchasing
Lender hereby agree as follows:
Section 1. The Transferring Lender hereby sells and assigns to
the Purchasing Lender, without recourse, representation or warranty of any kind
except as set forth in Section 2, and the Purchasing Lender hereby purchases and
assumes from the Transferring Lender, that Pro Rata Share of the Transferring
Lender's rights and obligations under the Loan Agreement as of the date hereof
specified in Part A of Schedule 1.
Section 2. The Transferring Lender (i) represents and warrants
that as of the date hereof its Pro Rata Shares of the Aggregate Construction
Loan Commitment and of the Aggregate Term Loan Commitment are the percentages
specified as the Transferring Lender's Construction Loan Commitment Pro Rata
Share and Term Loan Commitment Pro Rata Share in Part B-1 of Schedule 1 and the
aggregate outstanding principal amounts of the Loans owing to it are the dollar
amounts specified as the aggregate outstanding principal amounts of Loans owing
to the Transferring Lender in Part C-1 of Schedule 1 hereto; (ii) represents and
warrants that it is the legal and beneficial owner of the interest being
assigned by it hereunder and that such interest is free and clear of any adverse
claim; (iii) makes no representation or warranty and assumes no responsibility
with respect to any statement, warranty or representation made in or in
connection with the Loan Agreement or any other instrument or document furnished
pursuant thereto; (iv) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of Borrower or any other
party to any Loan Document or the performance or observation by Borrower or such
party of any of its obligations under the Loan Agreement, any other Loan
1
Document, or any other instrument or document furnished pursuant thereto; and
(v) attaches the Notes referred to in Part D of Schedule l and requests that the
Administrative Agent exchange such Notes for new Notes payable to the order of
the Purchasing Lender and to the order of the Transferring Lender in amounts as
specified in Part E of Schedule 1, all pursuant to Section 8.7(c) of the Loan
Agreement.
Section 3. The Purchasing Lender (i) confirms that it has
received a copy of the Loan Agreement, together with such documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Commitment Transfer Supplement; (ii) agrees that it
will, independently and without reliance upon the Administrative Agent, the
Transferring Lender or any other Lender and based on such documents and
information as it deems appropriate at the time, continue to make its own credit
decisions in taking or not taking action under the Loan Agreement and related
documents; (iii) appoints and authorizes the Administrative Agent to take such
actions as administrative agent on its behalf and to exercise such powers under
the Loan Agreement, the Security Documents and related documents as are
delegated to the Administrative Agent by the terms thereof, together with such
powers as are reasonably incidental thereto; (iv) agrees that (A) it will
perform in accordance with their terms all of the obligations which by the terms
of the Loan Agreement, the other Loan Documents and related documents are
required to be performed by it as a Lender and (B) it hereby makes the
agreements set forth in Article VII of the Loan Agreement; (v) represents and
warrants to the Administrative Agent, each other Lender and Borrower that it is
acquiring the Notes issued to it for the purpose of investment and not with the
view to, or for sale in connection with, any distribution in violation of the
Securities Act of 1933, as amended; and (vi) has attached hereto all forms and
documents necessary to establish that payments to it under the Loan Documents
are exempt from withholding for Taxes and agrees to deliver to Borrower updated
and revised copies of such forms and documents as appropriate.
Section 4. Following the execution of this Commitment Transfer
Supplement by the Transferring Lender and the Purchasing Lender, and upon the
making of the payments separately agreed to be paid in connection herewith, this
Commitment Transfer Supplement will be delivered to Borrower and to the
Administrative Agent for recording by the Administrative Agent. The effective
date of this Commitment Transfer Supplement will be the date of acceptance
hereof by the Administrative Agent (the "EFFECTIVE DATE"), as set forth in
Schedule 1.
Section 5. As of the Effective Date, (i) the Purchasing Lender
will be a party to the Loan Agreement and, to the extent provided in this
Commitment Transfer Supplement, have the rights and obligations of a Lender
thereunder and (ii) the Transferring Lender will, to the extent provided in this
Commitment Transfer Supplement, relinquish its rights and be released from its
obligations under the Loan Agreement.
2
Section 6. Upon such receipt and recording by the
Administrative Agent, from and after the Effective Date, the Administrative
Agent will make all payments under the Loan Agreement and the Notes in respect
of the interest assigned hereby (including, without limitation, all payments of
principal, interest, fees and other charges with respect thereto) to the
Purchasing Lender. The Transferring Lender and Purchasing Lender will make all
appropriate adjustments in payments under the Loan Agreement and the Notes for
periods prior to the Effective Date directly between themselves.
Section 7. THIS COMMITMENT TRANSFER SUPPLEMENT WILL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO THE CONFLICT OF LAW PROVISIONS THEREOF (OTHER THAN SECTION
5.1401 OF THE GENERAL OBLIGATIONS LAW AND ANY SUCCESSOR STATUTE THERETO).
IN WITNESS WHEREOF, the parties hereto have caused this
Commitment Transfer Supplement to be executed by their respective officers
thereunto duly authorized, as of the date first above written, such execution
being made on Schedule 1.
3
SCHEDULE 1
to
COMMITMENT TRANSFER SUPPLEMENT
Dated ______________ , ________,
between
________________________ ("Transferring Lender")
and
_________________________ ("Purchasing Lender")
- ---------------------------------------------------------------------------------------------- --------------
PART A. PRO RATA SHARE OF TRANSFERRING LENDER'S INTEREST BEING SOLD.
- ---------------------------------------------------------------------------------------------- --------------
Pro Rata Share of all of Transferring Lender's outstanding rights and
obligations under the _____% Loan Agreement transferred to the Purchasing Lender
- ---------------------------------------------------------------------------------------------- --------------
PART B. PRO RATA SHARES.
- ---------------------------------------------------------------------------------------------- --------------
B-1. Prior to transfer:
- ---------------------------------------------------------------------------------------------- --------------
Transferring Lender's Pro Rata Share of the Aggregate Construction Loan Commitment: _____%
- ---------------------------------------------------------------------------------------------- --------------
Transferring Lender's Pro Rata Share of the Aggregate Term Loan Commitment: _____%
- ---------------------------------------------------------------------------------------------- --------------
B-2. Following transfer:
- ---------------------------------------------------------------------------------------------- --------------
Transferring Lender's Pro Rata Share of the Aggregate Construction Loan Commitment: _____%
- ---------------------------------------------------------------------------------------------- --------------
Transferring Lender's Pro Rata Share of the Aggregate Term Loan Commitment: _____%
- ---------------------------------------------------------------------------------------------- --------------
Purchasing Lender's Pro Rata Share of the Aggregate Construction Loan Commitment: _____%
- ---------------------------------------------------------------------------------------------- --------------
Purchasing Lender's Pro Rata Share of the Aggregate Term Loan Commitment: _____%
- ---------------------------------------------------------------------------------------------- --------------
1
- ---------------------------------------------------------------------------------------------- --------------
PART C. PRINCIPAL OUTSTANDING. _____%
- ---------------------------------------------------------------------------------------------- --------------
C-1. PRIOR TO TRANSFER:
- ---------------------------------------------------------------------------------------------- --------------
Aggregate Outstanding Principal Amount of Construction Loans owing to the Transferring _____%
Lender:
- ---------------------------------------------------------------------------------------------- --------------
or
- ---------------------------------------------------------------------------------------------- --------------
Aggregate Outstanding Principal Amount of Term Loans owing to the Transferring Lender: _____%
- ---------------------------------------------------------------------------------------------- --------------
C-2. FOLLOWING TRANSFER:
- ---------------------------------------------------------------------------------------------- --------------
Aggregate Outstanding Principal Amount of Construction Loans owing to the Transferring _____%
Lender:
- ---------------------------------------------------------------------------------------------- --------------
or
- ---------------------------------------------------------------------------------------------- --------------
Aggregate Outstanding Principal Amount of Term Loans owing to the Transferring Lender: _____%
- ---------------------------------------------------------------------------------------------- --------------
Aggregate Outstanding Principal Amount of Construction Loans owing to the Purchasing Lender: _____%
- ---------------------------------------------------------------------------------------------- --------------
or
- ---------------------------------------------------------------------------------------------- --------------
Aggregate Outstanding Principal Amount of Term Loans owing to the Purchasing Lender: _____%
- ---------------------------------------------------------------------------------------------- --------------
- ---------------------------------------------------------- --------------------------------------------------
PART D. DESCRIPTION OF NOTES ATTACHED HERETO.
- ---------------------------------------------------------- --------------------------------------------------
Construction Loan Note payable to the order of the Dated: _______________, _____
Transferring Lender: Principal amount: ______________
- -------------------------------------------------------------------------------------------------------------
or
- -------------------------------------------------------------------------------------------------------------
Term Loan Note payable to the order of the Transferring Dated: _______________, _____
Lender: Principal amount: ______________
- ---------------------------------------------------------- --------------------------------------------------
2
- ---------------------------------------------------------- --------------------------------------------------
PART E. DESCRIPTION OF NOTES REQUESTED.
- ---------------------------------------------------------- --------------------------------------------------
Construction Loan Note payable to the order of the Dated: _______________, _____
Transferring Lender: Principal amount: ______________
- ---------------------------------------------------------- --------------------------------------------------
Or
- -------------------------------------------------------------------------------------------------------------
Term Loan Note payable to the order of the Transferring Dated: _______________, _____
Lender: Principal amount: ______________
- ---------------------------------------------------------- --------------------------------------------------
Construction Loan Note payable to the order of the Dated: _______________, _____
Transferring Lender: Principal amount: ______________
- ---------------------------------------------------------- --------------------------------------------------
Term Loan Note payable to the order of the Transferring Dated: _______________, _____
Lender: Principal amount: ______________
- ---------------------------------------------------------- --------------------------------------------------
[TRANSFERRING LENDER]
By
------------------------------------------------------
Name:
Title
[PURCHASING LENDER]
By
------------------------------------------------------
Name:
Title
ACCEPTED this _______ day
of ____________, __
(the "Effective Date")
[ADMINISTRATIVE AGENT], as ____________ Administrative
Agent
By
------------------------------------------------------
Name:
Title:
3
SCHEDULE X
I. DEFINITIONS.
When used in the Loan Documents, the following capitalized
defined terms have the meanings set forth below:
"ACCOUNTS" means all "accounts" as that term is defined in
Section 9-102 of the UCC, now or hereafter owned by Borrower under the Security
Agreement, including without limitation the Security Accounts.
"ADJUSTED LOAN" means the hypothetical loan, with a term from
the date of determination until the scheduled Term Loan Maturity Date, in the
principal amount calculated with reference to an adjusted proforma forecast,
based on the same methodology as the Closing Pro Forma, that reflects the event
or events that resulted in Borrower not complying with the requirements of
Section 5.1(p) of the Loan Agreement. The principal amount of the Adjusted Loan
will be the principal amount that would be amortized in full by an amortization
schedule, based on the adjusted proforma forecast, that would result in Borrower
maintaining the Minimum Coverage Ratio required by Section 5.1(p) of the Loan
Agreement.
"AFFECTED PARTY" has the meaning set forth in Section
2.10(a)(i) of the Loan Agreement.
"AFFILIATE" means, with respect to any Person, any other
Person (excluding any Person that may otherwise be deemed an Affiliate solely
because it is a trustee under, or a committee with responsibility for
administering, any Plan) (a) directly or indirectly controlling, controlled by,
or under common control with, such Person, (b) directly or indirectly owning or
holding or receiving any equity interest or other economic interest or benefit
in such Person in excess of fifty percent (50%) or (c) in which such Person
directly or indirectly controls any voting stock or other equity interest in
excess of fifty percent (50%). For purposes of this definition, "control"
(including with correlative meanings the terms "controlling," "controlled by"
and "under common control with") means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
a Person, whether through the ownership of voting securities, by contract or
otherwise; PROVIDED, that Cascade Investments, LLC and any other direct or
indirect owner of PEI will not be deemed to be Affiliates of the PEIX Parties.
"ADMINISTRATIVE AGENT" means Hudson United Capital, a division
of TD Banknorth, N.A., as administrative agent for the Lenders, or any successor
thereto appointed pursuant to Section 7.8 of the Loan Agreement.
"AGGREGATE CONSTRUCTION LOAN COMMITMENT" means thirty-four
million Dollars ($34,000,000).
X-1
"AGGREGATE TERM LOAN COMMITMENT" means the least of (i)
thirty-four million Dollars ($34,000,000), (ii) 52.25% of the total Project cost
as of the Term Loan Conversion Date and (iii) an amount equal to the present
value (discounted at an interest rate of 9.5% per annum) of 43.67% of the Net
Operating Cash predicted by the Closing Pro Forma from the Term Loan Conversion
Date to the seventh anniversary thereof.
"APPROVALS" means any and all approvals, permits, permissions,
licenses, authorizations, consents, certifications, actions, orders, waivers,
exemptions, variances, franchises, filings, declarations, rulings, registrations
and applications from or issued by any Government Instrumentality.
"ASSETS SALES PROCEEDS ACCOUNT" has the meaning set forth in
Section 2.2(a) of the Disbursement Agreement.
"ASSIGNED APPROVALS" means all Approvals obtained by Borrower
at any time during the term of the Loans.
"ASSIGNED CONTRACTS" means all Project Documents to which
Borrower is a party at any time during the term of the Loans, including without
limitation the Project Documents listed in Schedule A to the Security Agreement.
"BANKRUPTCY EVENT" means, with respect to a Person:
(a) a general assignment by it for the benefit of its
creditors;
(b) any action by which a court takes jurisdiction of its
assets or revenues that remains undismissed or undischarged for a
period of thirty (30) days;
(c) any action taken or initiated by it for its winding-up or
liquidation or for the appointment of a receiver, trustee, custodian or
similar officer for it or for any of its assets or revenues;
(d) any corporate, limited liability company, partnership or
other action taken or initiated by it authorizing, approving,
consenting to or indicating acquiescence in any case, action or
proceeding described in clause (a), (b), (c), (f) or (g);
(e) its insolvency, inability to pay its debts as they become
due or admission in writing of its inability to pay its debts as they
become due;
(f) the commencement against it by any Person of a case,
action or proceeding described in clause (b) or (c) or similar in
effect that remains undismissed or undischarged for a period of thirty
(30) days; PROVIDED, that if such Person is diligently pursuing, and is
reasonably likely to obtain, a dismissal or discharge of such an action
or proceeding, then the applicable period will be ninety (90) days; or
X-2
(g) the commencement by it of any bankruptcy, insolvency,
reorganization or liquidation case, action or proceeding or any other
proceeding for relief under any bankruptcy Law or any other Law for the
relief of debtors or affecting the rights of creditors generally.
"BORROWER" means Pacific Ethanol Madera LLC, a Delaware
limited liability company.
"BORROWER LLC AGREEMENT" means the Second Amended and Restated
Limited Liability Company Agreement, dated as of March 28, 2006, by and between
Borrower Member and the independent director of Borrower.
"BORROWER MEMBER" means Pacific Ethanol Holding Co. LLC, a
Delaware limited liability company.
"BORROWER'S COUNSEL" means Latham & Watkins LLP.
"BUDGET LINE ITEM" means a line item in a Construction Budget
or in an Operating Plan and Budget, as applicable.
"BUSINESS DAY" means any day other than a Saturday, Sunday or
day on which commercial banks in New York, New York, Fresno, California, or
Westport, Connecticut, are required or authorized to be closed.
"CLAIM" means any claim, suit, demand, proceeding, complaint,
assessment, lien, injunction, order, judgment, notice of non-compliance or
violation, investigation or other action by or before any Government
Instrumentality or any other Person.
"CLOSING COSTS" means all amounts payable by Borrower pursuant
to Section 8.11 of the Loan Agreement in connection with the transactions
contemplated by the Loan Documents (i) on the Construction Loan Closing Date,
(ii) on each Construction Loan Funding Date, (iii) on the Term Loan Conversion
Date and (iv) on any other date on which such amounts are payable pursuant to
Section 8.11 of the Loan Agreement.
"CLOSING PRO FORMA" means the projections of construction
costs of the Project and the ten-year projections of the Net Operating Cash to
be produced by the Project, prepared by the Administrative Agent and
incorporating the results of the Engineer's report. The Closing Pro Forma will
be updated prior to the Term Loan Conversion Date to reflect actual production
capabilities of the Project as confirmed by the Engineer and with any adjustment
based solely upon the Project's as-built production capacity and efficiency
levels.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLATERAL" means, collectively, the "Collateral," as such
term is defined in the Security Agreement, the "Pledged Collateral," as such
term is defined in the Pledge Agreement and the "Trust Property," as such term
is defined in the Mortgage, together with all other property, rights and
interests from time to time subject, or purported to be subject, to the Security
Document Liens.
X-3
"COMMERCIAL OPERATION" means commercial operation of the
Project in accordance with the performance guarantee criteria and other
applicable provisions contained in the EPC Contract.
"COMMITMENT" means any Lender's respective Construction Loan
Commitment or Term Loan Commitment.
"COMPLETION" means completion of construction of the Project,
which will be deemed to occur when (i) Final Performance Acceptance has
occurred, (ii) the Project is in Commercial Operation and in compliance with the
Required Approvals, applicable Laws and prudent ethanol industry practices, and
(iii) Borrower has obtained all Required Approvals and such Required Approvals
are in full force and effect, final and not subject to adverse proceedings.
"COMPLETION BOND" means the completion bond provided by the
EPC Contractor to the Administrative Agent, securing the performance of the EPC
Contractor's "Phase I" and "Phase II" obligations under the EPC Contract.
"CONSENTS TO ASSIGNMENT" means the consent and agreements
entered into among Borrower, the Administrative Agent and each of Kinergy, PAP,
Delta-T, the EPC Contractor and PEC and relating to the collateral assignment of
certain Project Documents by Borrower to the Administrative Agent, in form and
substance satisfactory to the Administrative Agent.
"CONSTRUCTION AND DRAW SCHEDULE" means the schedule for the
construction of the Project, as prepared by Borrower and as the same may be
revised by Borrower from time to time with the prior written approval of the
Administrative Agent.
"CONSTRUCTION BUDGET" means the budget for the construction of
the Project prepared by Borrower, as such budget may be revised by Borrower from
time to time with the prior written approval of the Administrative Agent.
"CONSTRUCTION DRAW ACCOUNT" has the meaning set forth in
Section 2.2(a) of the Disbursement Agreement.
"CONSTRUCTION DRAW APPROVAL NOTICE" has the meaning set forth
in Section 3.3(c)(ii) of the Disbursement Agreement.
"CONSTRUCTION DRAW REQUEST" means a written request delivered
by Borrower to the Administrative Agent pursuant to Section 3.3(c) of the
Disbursement Agreement.
"CONSTRUCTION LENDERS" means each Person identified as a
Construction Lender on the signature pages of the Loan Agreement.
"CONSTRUCTION LOAN" means each loan made by the Construction
Lenders to Borrower pursuant to Section 2.2(a) of the Loan Agreement.
X-4
"CONSTRUCTION LOAN CLOSING DATE" means April __, 2006.
"CONSTRUCTION LOAN COMMITMENT" means the commitment of each
Construction Lender to make the Construction Loans set forth in Section 2.1(a)
of the Loan Agreement.
"CONSTRUCTION LOAN COMMITMENT TERMINATION DATE" means the date
that is 545 calendar days after the Construction Loan Closing Date.
"CONSTRUCTION LOAN FUNDING DATE" means the Construction Loan
Closing Date, and, thereafter, the last Business Day of each calendar month
falling between the Construction Loan Closing Date and the Term Loan Conversion
Date on which all conditions precedent set forth in Section 3.2 of the Loan
Agreement have been satisfied and Construction Loans are funded pursuant to
Section 2.2 of the Loan Agreement. No Construction Loan Funding Date may occur
after the Construction Loan Commitment Termination Date.
"CONSTRUCTION LOAN INTEREST PERIOD" means each period,
determined in accordance with Section 2.3(b) of the Loan Agreement, at the end
of which interest is payable on the Construction Loans.
"CONSTRUCTION LOAN INTEREST RATE" means the rate of interest
applicable to the Construction Loans, as calculated in accordance with Section
2.3(a) of the Loan Agreement.
"CONSTRUCTION LOAN MATURITY DATE" means the earlier to occur
of (i) the Term Loan Conversion Date and (ii) the Construction Loan Commitment
Termination Date.
"CONSTRUCTION LOAN NOTE" means a promissory note, in the form
of Exhibit 2.4(a) to the Loan Agreement, executed and delivered by Borrower,
payable to the order of a Construction Lender and evidencing such Lender's
Construction Loan.
"CONTRACTUAL OBLIGATION," as applied to any Person, means any
provision of any security issued by such Person or of any indenture, mortgage,
deed of trust, lease, contract, undertaking, agreement or instrument to which
such Person is a party or by which it or any of its property is bound or to
which it or any of its property is subject.
"CONTRIBUTED CAPITAL" means the cash equity in the amount of
seventeen million six hundred ninety thousand one hundred twenty-five Dollars
($17,690,125), to be arranged by or on behalf of Borrower, the full amount of
which is to be deposited into the Construction Draw Account on the Construction
Loan Closing Date and thereafter made available to Borrower pursuant to the
provisions of the Disbursement Agreement to pay Qualified Project Construction
Expenses prior to the making of any Construction Loans the proceeds of which are
to be used to pay Qualified Project Construction Expenses.
X-5
"CORN PROCUREMENT AGREEMENT" means the Amended and Restated
Corn Procurement Agreement (Madera Project), dated as of March 30, 2006, by and
between Borrower and PAP.
"DDGS" means dried distillers' grains solubles.
"DEBT SERVICE ACCOUNT" has the meaning set forth in Section
2.2(a) of the Disbursement Agreement.
"DEBT SERVICE RESERVE ACCOUNT" has the meaning set forth in
Section 2.2(a) of the Disbursement Agreement.
"DEFAULT" means any event which, with the passage of time or
the giving of notice or both, would be an Event of Default.
"DEFAULT RATE" has the meaning set forth in Section 2.3(d) of
the Loan Agreement.
"DELTA-T" means Delta-T Corporation, a Virginia corporation.
"DISBURSEMENT AGENT" means Comerica Bank, a national banking
association, or such other Person as may from time to time be the "Disbursement
Agent" under the Disbursement Agreement.
"DISBURSEMENT AGREEMENT" means the Disbursement Agreement,
dated the Construction Loan Closing Date, by and among Borrower, the
Administrative Agent, the Disbursement Agent, the DSRA Agent and the Securities
Intermediaries, providing for the establishment and maintenance of and the flow
of funds among and from the Security Accounts.
"DISTRIBUTION REQUEST" means a distribution request,
substantially in the form of Exhibit 4.2(d) to the Disbursement Agreement,
delivered by Borrower to the Administrative Agent pursuant to Section 4.2(d) of
the Disbursement Agreement.
"DOCUMENTS" means, collectively, the Loan Documents and the
Project Documents.
"DOLLAR" and the sign "$" mean the lawful currency of the
United States of America.
"DSRA AGENT" means the Wealth Management Group of TD
Banknorth, N.A., or such other Person as may from time to time be the "DSRA
Agent" under the Disbursement Agreement.
"DSRA ADDITIONAL REQUIRED BALANCE" means the amount that is
the difference between the present value of all future payments of principal and
interest on the Term Loans, discounted at the then-applicable Interest Rate,
LESS the present value of all payments of principal and interest that would be
payable on the Adjusted Loan, discounted at the then-applicable Interest Rate.
X-6
"DSRA REQUIRED BALANCE" has the meaning set forth in Section
4.3(d) of the Disbursement Agreement.
"ENGINEER" means Harris Group, Inc., or any successor thereto
appointed by the Administrative Agent.
"ENVIRONMENTAL CLAIM" means any Claim relating to a release,
discharge or emission of any Hazardous Substance or violation of an
Environmental Law and includes any Claim asserted by a Government
Instrumentality or any other Person for damages, injury, clean-up, remediation,
contribution or indemnity or a violation of or noncompliance with any
Environmental Law.
"ENVIRONMENTAL CONSULTANT" means Kleinfelder, Inc.
"ENVIRONMENTAL LAWS" means any and all applicable
international, federal, state, or local laws, statutes, ordinances, regulations,
rules, Approvals, orders, court decisions or rule of common law which (i)
regulate or relate to the protection or clean up of the environment; the use,
discharge, emission, treatment, storage, transportation, handling, disposal or
release of Hazardous Substances, the preservation or protection of waterways,
groundwater, drinking water, air, wildlife, plants or other natural resources;
or the health and safety of persons or property, including without limitation
protection of the health and safety of employees; or (ii) impose liability or
responsibility with respect to any of the foregoing, including without
limitation the Comprehensive Environmental Response, Compensation and Liability
Act (42 U.S.C. ss. 9601 et seq.), or any other law of similar effect.
"EPC CONTRACT" means (a) the Amended and Restated Phase I
Design Build Agreement, dated November 2, 2005, by and between Borrower and the
EPC Contractor and (b) the Phase 2 Design-Build Agreement, dated November 2,
2005, by and between Borrower and the EPC Contractor.
"EPC CONTRACTOR" means Lyles, or any successor thereto
appointed by the Construction Lenders.
"EQUIPMENT" means all "equipment" or "fixtures," as those
terms are defined in the UCC, now or hereafter owned by Borrower, including
without limitation all machinery, equipment, furnishings, fixtures, vehicles,
tools, supplies and other equipment of any kind and nature, wherever situated,
used in connection with the construction, operation and maintenance of the
Project and the Grain Facilities and any and all additions, substitutions and
replacements of any of the foregoing, wherever located, together with all
attachments, components, parts, equipment and accessories, improvements,
upgrades and accessories installed thereon or affixed thereto.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
X-7
"ERISA AFFILIATE," with respect to any Person, means any
member (whether or not incorporated) of a group that is under common control
(within the meaning of the regulations under Section 414 of the Internal Revenue
Code of 1986, as amended) and of which such Person is a member.
"ETHANOL MARKETING AGREEMENT" means the Amended and Restated
Ethanol Marketing Agreement, dated as of March 16, 2006, by and between Borrower
and Kinergy.
"EVENT OF DEFAULT" has the meaning set forth in Section 6.1 of
the Loan Agreement.
"FINAL PERFORMANCE ACCEPTANCE" means that the Project has
achieved "Final Construction Completion" under the EPC Contract.
"FINANCING STATEMENTS" means all financing statements on Form
UCC-1 and all similar documents and instruments executed, filed or recorded for
the purpose of perfecting Liens on the Collateral.
"FIRST-PRIORITY," when used with respect to any Security
Document Lien on Collateral, means that such Collateral is subject to no Liens
other than Permitted Liens and that such Security Document Lien is subordinate
to no Liens other than Permitted Liens and then only to the extent permitted
under Section 5.2(f) of the Loan Agreement.
"FUNDING DATE" means a Construction Loan Funding Date or the
Term Loan Conversion Date, as applicable.
"GAAP" means generally accepted accounting principles,
consistently applied, as in effect from time to time in the United States.
"GENERAL INTANGIBLES" means all "general intangibles," as that
term is defined in the UCC, now or hereafter owned by Borrower, including
without limitation equipment leases, partnership interests, limited liability
company interests, member interests, joint venture interests, all patent rights,
trademarks, copyrights, trade names, goodwill, registrations, license rights,
rights in intellectual property, licenses, permits, business records, customer
and subscriber lists, computer programs, tapes, disks and related data
processing software owned by or in which such Person has an interest, rights to
refunds or indemnification, the right to receive any Net Insurance Proceeds and
all other intangible personal property of such Person of every kind and nature.
"GOVERNMENT INSTRUMENTALITY" means any nation, government,
province, state or arbitral tribunal or organization, or any political
subdivision, instrumentality, ministry, department, agency, court, tribunal,
authority, corporation, commission or other body or entity of, or under the
direct or indirect control of, any of the foregoing, including any central bank
or other fiscal, monetary or other authority.
X-8
"GRAIN FACILITIES" means the grain processing and storage
facilities located on the Site and owned by Borrower and operated by Grain
Operator, including two rail loops serviced directly by the adjacent Burlington
Northern Santa Fe Railroad.
"GRAIN OPERATOR" means Pacific Ag. Products, LLC, a California
limited liability company.
"HAZARDOUS SUBSTANCE" means any pollutant, chemical, substance
and any toxic, infectious, carcinogenic, reactive, corrosive, ignitable or
flammable chemical, or chemical compound, or hazardous substance, material or
waste, whether solid, liquid or gas, that is subject to regulation, control or
remediation under any Environmental Laws, including without limitation,
asbestos, PCBs, radon gas, crude oil or any fraction thereof, all forms of
natural gas, petroleum products or by-products or derivatives.
"HUDSON UNITED CAPITAL" means Hudson United Capital, a
division of TD Banknorth, N.A.
"INDEBTEDNESS" means (i) indebtedness for borrowed money or
for the deferred purchase price of property or services, (ii) obligations as
lessee under leases which have been or should be, in accordance with GAAP,
recorded as capital leases, and (iii) obligations under direct or indirect
guaranties in respect of, and obligations (contingent or otherwise) to purchase
or otherwise acquire, or otherwise to assure a creditor against loss in respect
of, indebtedness or obligations of others of the kinds referred to in clause (i)
or (ii) above.
"INSURANCE CONSULTANT" means Bollinger Insurance or another
insurance consultant selected by Administrative Agent.
"INTERCREDITOR AGREEMENT" means the Intercreditor and
Collateral Sharing Agreement, dated the Construction Loan Closing Date, among
the Administrative Agent, Sub-Debt Provider and Borrower.
"INTEREST PERIOD" means a Construction Loan Interest Period or
a Term Loan Interest Period, as applicable.
"INTEREST RATE" means any rate of interest applicable to a
Loan or any other obligation of a party to a Loan Document to the Administrative
Agent or the Lenders.
"INVENTORY" means "inventory," as that term is defined in the
UCC, now or hereafter owned by Borrower, including without limitation (a) all
products, goods, materials and supplies produced, purchased or acquired by
Borrower for the purpose of sale in the ordinary course of its business, (b)
maintenance materials inventory and (c) goods in which such Person has an
interest in mass or a joint or other interest or right of any kind.
"KINERGY" means Kinergy Marketing, LLC, an Oregon limited
liability company.
X-9
"LAW" means any law, statute, act, legislation, bill,
enactment, policy, treaty, international agreement, ordinance, judgment,
injunction, award, decree, rule, regulation, interpretation, determination,
requirement, writ or order of any Government Instrumentality.
"LENDER INCOME TAXES" means all net income, franchise or
similar Taxes (including branch profits Taxes or alternative minimum Tax)
imposed on the Administrative Agent or any Lender by (i) the United States or
any other country in which the Administrative Agent or such Lender is based,
(ii) the jurisdiction in which the Administrative Agent or such Lender is
organized or has its principal office, (iii) the jurisdiction in which the
Administrative Agent performs its services hereunder or in which such Lender
books its portion of the Loans, (iv) any other jurisdiction as a result of a
present or former connection between the Administrative Agent or any Lender and
the jurisdiction of the Government Instrumentality imposing such Tax or (v) a
political subdivision of any of the foregoing (including any State of the United
States).
"LENDERS" means the Construction Lenders and the Term Lenders.
"LENDERS' COUNSEL" means Baker & McKenzie LLP.
"LIBOR" means, with respect to each Interest Period, (i) the
per annum rate for deposits in U.S. Dollars for a period of thirty (30) days (in
the case of a Construction Loan) or ninety (90) days (in the case of a Term
Loan) that appears on the Telerate Page 3750 Screen as of 11:00 a.m., New York
time, on the day that is two (2) Business Days prior to the first day of an
Interest Period (rounded upwards, if necessary, to the nearest 1/100,000 of 1%);
or (ii) if such rate does not appear on the Telerate Page 3750 Screen, the
reserve adjusted rate per annum equal to the 30-day or 90-day (as applicable)
London Interbank Offered Rate that appears in the "Money Rates" section of THE
WALL STREET JOURNAL on the first day of such Interest Period; or (iii) if THE
WALL STREET JOURNAL no longer publishes such London Interbank Offered Rate, the
per annum rate will be determined by the Administrative Agent by reference to
the Reuters Screen ISDA Page as of 11:00 a.m., New York time, on the day that is
two (2) Business Days prior to the first day of an Interest Period. As used in
this definition, "TELERATE PAGE 3750 SCREEN" means the display designated as
"Page 3750" on that service or such other service as may be nominated by the
British Bankers' Association as the information vendor for the purpose of
displaying British Bankers' Association Interest Settlement Rates for U.S.
Dollar deposits.
"LIBOR BUSINESS DAY" means any Business Day that is also a day
for trading by and between banks in U.S. Dollar deposits in the London interbank
market.
"LIEN" means any lien, mortgage, pledge, security interest,
charge or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof and any agreement to give
any security interest).
"LOAN" means a Construction Loan or a Term Loan.
X-10
"LOAN AGREEMENT" means the Construction and Term Loan
Agreement, dated the Construction Loan Closing Date, by and among Borrower, the
Administrative Agent and the Lenders from time to time party thereto.
"LOAN DOCUMENTS" means the Loan Agreement (including this
Schedule X), the Notes, the Security Documents and all other letters,
agreements, guaranties and instruments delivered by any PEIX Party in connection
with the Loan Agreement.
"LOSS" means any loss, theft, destruction, damage, casualty,
title defect or failure, zoning change, taking, condemnation, seizure,
confiscation or requisition of or with respect to the Project or the Grain
Facilities or any part thereof.
"LOSS PROCEEDS ACCOUNT" has the meaning set forth in Section
2.2(a) of the Disbursement Agreement.
"LYLES" means W.M. Lyles, Co., a California corporation.
"MAJOR LOSS" means any loss, theft, destruction, damage,
casualty, title defect or failure, zoning change, taking, condemnation, seizure,
confiscation or requisition of or with respect to the Project or the Grain
Facilities or any part thereof that, in the reasonable judgment of the
Administrative Agent, makes construction or operation of the Project or the
Grain Facilities uneconomical or unfeasible.
"MAJOR PROJECT DOCUMENTS" means the EPC Contract, the Ethanol
Marketing Agreement, the Operations and Maintenance Agreements, the Technology
License and the Corn Procurement Agreement.
"MAJORITY LENDERS" means, at any time, the holders of at least
fifty-one percent (51%) in principal amount of the Notes then outstanding or, if
no Notes are then outstanding, Lenders having at least fifty-one percent (51%)
of the Aggregate Construction Loan Commitment; PROVIDED, that if any one Lender
and its Affiliates hold more than fifty-one percent (51%) in principal amount of
the Notes then outstanding, then "Majority Lenders" will mean all Lenders.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on
(a) the rights or interests of the Administrative Agent, the Disbursement Agent,
the DSRA Agent or any Lender under any Loan Document, (b) the business, assets,
property or condition (financial or otherwise) or operations of Borrower since
the Construction Loan Closing Date, (c) the ability of Borrower, any other PEIX
Party or the EPC Contractor to perform its obligations under any Loan Document
or Major Project Document to which it is a party, or (d) the validity,
enforceability or priority of the Liens granted in favor of the Administrative
Agent pursuant to the Security Documents.
"MINIMUM COVERAGE RATIO" means (a) with respect to any date of
calculation on or after the fourth Payment Date after the Term Loan Conversion
Date, the ratio of (w) the Net Operating Cash from the Project for the preceding
12 months to (x) all scheduled payments of principal and interest (excluding the
SPP Payments) on the Term Loans for the next twelve (12) month period and (b)
with respect to any date of calculation on any of the first, second or third
X-11
Payment Date after the Term Loan Conversion Date, the ratio of (y) the Net
Operating Cash from the Project since the Term Loan Conversion Date to (z) all
scheduled payments of principal and interest (excluding the SPP Payments) on the
Term Loans for the next one, two or three Payment Dates, calculated such that
(1) the Minimum Coverage Ratio as calculated on the first Payment Date after the
Term Loan Conversion Date will be the ratio of the Net Operating Cash from the
Project since the Term Loan Conversion Date to the amount of the scheduled
payments of principal and interest on the Term Loans payable on the second
Payment Date after the Term Loan Conversion Date, (2) the Minimum Coverage Ratio
as calculated on the second Payment Date after the Term Loan Conversion Date
will be the ratio of the Net Operating Cash from the Project since the Term Loan
Conversion Date to the aggregate amount of the scheduled payments of principal
and interest on the Term Loans payable on the third and fourth Payment Dates
after the Term Loan Conversion Date and (3) the Minimum Coverage Ratio as
calculated on the third Payment Date after the Term Loan Conversion Date will be
the ratio of the Net Operating Cash from the Project since the Term Loan
Conversion Date to the aggregate amount of the scheduled payments of principal
and interest on the Term Loans payable on the fourth, fifth and sixth Payment
Dates after the Term Loan Conversion Date.
"MONTHLY CONSTRUCTION REPORT" means a report, substantially in
the form of Exhibit 5.1(k)(iii) to the Loan Agreement, prepared by Borrower in
good faith and with due care with respect to the construction of the Project
which (i) reports and describes any delay, projected delay or event of force
majeure and (ii) sets forth such other information as may be reasonably
requested by the Administrative Agent.
"MORTGAGE" means the Deed of Trust, Assignment of Leases and
Rents, Security Agreement and Fixture Filing, dated the Construction Loan
Closing Date, by Borrower to Chicago Title Insurance Company, as trustee, for
the benefit of the Administrative Agent.
"MULTIEMPLOYER PLAN" means a Plan that is a multiemployer plan
as defined in Section 4001(a)(3) of ERISA.
"NET INSURANCE PROCEEDS" means all amounts payable to, on
behalf of or on account of the interest of Borrower under any Required Insurance
or in respect of any Loss.
"NET OPERATING CASH" means the Project's revenues less
Qualified Project Expenses.
"NOTE" means a Construction Loan Note or a Term Loan Note.
"NOTICE OF BORROWING" means a notice in the form of Exhibit
2.2 to the Loan Agreement.
"OBLIGATIONS" means all principal, premium, interest
(including interest which would accrue but for the filing of a petition in
bankruptcy), reimbursement obligations, indemnities, fees, expenses, liabilities
X-12
and obligations of any kind, whether monetary or nonmonetary, owing from
Borrower or Borrower Member to the Administrative Agent or any Lender or due to
be performed by Borrower or Borrower Member for the benefit of the
Administrative Agent or any Lender under or in connection with any Loan
Document.
"OPERATION AND MAINTENANCE AGREEMENTS" means (a) the Amended
and Restated Operation and Maintenance Services Agreement, dated as of March 16,
2006, by and between Borrower and PEC and (b) the Grain Mill Operation and
Maintenance Agreement, dated as of March 30, 2006, by and between Borrower and
PAP.
"OPERATING PLAN AND BUDGET," for any period, means an
operating plan and budget for the Project with respect to such period prepared
by Borrower in good faith and with due care that sets forth in reasonable detail
(i) the projected levels of operation of the Project on a monthly basis, (ii)
the projected revenues and expenses (including all scheduled payments of
principal and interest on the Term Loans) of the Project on a monthly basis,
(iii) the overhaul, maintenance and repair schedule for the Project, (iv) the
amount and timing of expected capital expenditures, (v) cash flow projections
and working capital needs and (vi) such other information as the Administrative
Agent may reasonably request prior to the adoption thereof.
"ORGANIZATIONAL DOCUMENTS" means the certificates or articles
of incorporation, by-laws, limited liability company agreements, operating
agreements, certificates and agreements of limited partnership and other
formative and governing documents relating to a Person.
"PAP" means Pacific Ag. Products, LLC, a California limited
liability company.
"PAYMENT DATE" means any date on which a payment of principal
of or interest on any Loan is due under the Loan Agreement.
"PEC" means Pacific Ethanol California, Inc., a California
corporation.
"PEI" means Pacific Ethanol, Inc., a Delaware corporation.
"PEIX PARTIES" means, collectively, Borrower, Kinergy, PEC,
Borrower Member and Grain Operator.
"PERMITTED CONSTRUCTION DELAY" has the meaning set forth in
Section 3.2(a)(vi)(A) of the Loan Agreement.
"PERMITTED INVESTMENTS" means (i) securities issued or
guaranteed or insured by the United States of America or any agency or
instrumentality thereof maturing within one (1) year from the date of
acquisition thereof, (ii) commercial paper maturing no more than ninety (90)
days from the date of creation thereof and as at any date of determination rated
"A-1" or better by Standard & Poor's Ratings Services and "P-1" or better by
Moody's Investors Service, Inc., (iii) bankers acceptances or certificates of
deposit maturing within ninety (90) days from the date of acquisition thereof
X-13
issued by any bank the short-term obligations of which are rated "A-1" or better
by Standard & Poor's Rating Services and "P-1" or better by Moody's Investors
Service, Inc. and (iv) any fund that invests in any of the investments described
in the preceding clauses (i) through (iii); PROVIDED, that with respect to the
credit ratings specified above, if neither Moody's Investors Service, Inc. nor
Standard & Poor's Rating Services is in the business of rating the relevant
Permitted Investment, such Permitted Investment shall have received a rating
equivalent to that specified above for such Permitted Investment by another
nationally recognized credit rating agency of similar standing; PROVIDED,
FURTHER, that Permitted Investments purchased with funds from any Security
Account shall have a scheduled maturity no later than the Business Day
immediately preceding the next anticipated cash withdrawal or transfer from such
Security Account; PROVIDED, FURTHER, that "Permitted Investments" also includes
fully secured repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clause (i) above entered into
with any bank meeting the qualifications established in clause (ii) above.
"PERMITTED LIENS" has the meaning set forth in Section 5.2(f)
of the Loan Agreement.
"PERSON" means and includes natural persons, corporations,
limited partnerships, general partnerships, limited liability companies, joint
stock companies, joint ventures, associations, companies, trusts, banks, trust
companies and other organizations, whether or not legal entities, and
governments and agencies and political subdivisions thereof.
"PHASE I COMPLETION" means "Completion" as such term is
defined in the Amended and Restated Phase I Design-Build Agreement, dated
November 2, 2005, by and between Borrower and the EPC Contractor.
"PLAN" means a pension plan providing benefits for employees
of a Person covered by Title IV of ERISA.
"PLANS AND SPECIFICATIONS" means the plans and specifications
for the Project.
"PLEDGE AGREEMENT" means the Membership Interest Pledge
Agreement, dated the Construction Loan Closing Date, between Borrower Member, on
the one hand, and the Administrative Agent, on the other hand.
"PRO FORMA BALANCE SHEET" means the estimated balance sheet of
Borrower as of the Construction Loan Closing Date.
"PRO RATA SHARE" means, with respect to each Lender, such
Lender's pro rata share (expressed as a percentage) of the Aggregate
Construction Loan Commitment or the Aggregate Term Loan Commitment, as
applicable, in each case as set forth on the signature pages to the Loan
Agreement.
X-14
"PROCESS AGENT" means a process agent reasonably acceptable to
the Administrative Agent, or any successor thereto approved by the
Administrative Agent.
"PRODUCTS" means ethanol, WDGS, DDGS, carbon dioxide and any
other co-product or by-product produced in connection with the production of
ethanol at the Project and all whole and processed grains handled by Borrower
(or by the Grain Operator on behalf of Borrower) at the Grain Facilities.
"PROJECT" means Borrower's ethanol production facility located
in Madera, California.
"PROJECT DOCUMENTS" means the agreements and documents to
which Borrower is or becomes a party during the term of the Loans, relating to
the development, design, ownership, construction and operation of the Project
and the Grain Facilities, including Major Project Documents, all agreements
relating to the Site, all agreements relating to the supply of water, natural
gas, corn and electricity to the Project, all other agreements relating to the
operations and maintenance of the Project and the Grain Facilities and all other
documents listed on Schedule A to the Security Agreement or as may be reasonably
required by the Administrative Agent.
"PROJECT PARTIES" means all parties to the Project Documents
other than Borrower.
"PROJECT REVENUES ACCOUNT" has the meaning set forth in
Section 2.2 of the Disbursement Agreement.
"QUALIFIED PROJECT CONSTRUCTION EXPENSES" means (a) the
following costs and expenses incurred by Borrower from the Construction Loan
Closing Date to the Term Loan Conversion Date: (i) costs and expenses incurred
by Borrower during such period under the EPC Contract and other costs and
expenses incurred by Borrower during such period directly related to the design,
engineering, construction, installation, start-up, and testing of the Project
and Qualified Project Expenses payable prior to Commercial Operation; (ii)
Closing Costs and other fees and expenses incurred during such period by or on
behalf of Borrower in connection with the development of the Project and the
consummation of the transactions contemplated by the Loan Documents (and the
interest rate protection agreements), including financial, accounting, legal,
environmental site assessment, surveying and consulting fees, all fees payable
to the Administrative Agent or the Lenders in connection with the Loan Documents
(and the interest rate protection agreements); (iii) the costs of obtaining
Approvals for the Project prior to Commercial Operation; (iv) interest on the
Construction Loans payable prior to Commercial Operation; (v) financing
expenses, costs and charges in connection with this Agreement and the fees and
expenses of Lenders' Counsel and the consultants; (vi) insurance premiums with
respect to the title insurance policy and the Required Insurance incurred during
such period; and (vii) all costs, fees and expenses incurred by Borrower in
accordance with the construction budget and other costs directly related to the
design, engineering, construction, installation, start-up and testing of the
facilities being constructed thereunder incurred during such period; and (b) all
other costs and expenses included in the construction budget and incurred by
Borrower during such period.
X-15
"QUALIFIED PROJECT EXPENSES" means, with respect to the
Project, (i) reasonable fees and expenses of accounting, legal, insurance,
engineering or other professional advisors to Borrower for services relating to
the Project, (ii) reasonable expenses relating to equipment rental, utility
charges, administration, routine operation and maintenance of the Project and
statutory representation, (iii) reasonable insurance premiums, (iv) property and
other taxes and regulatory fees, (v) reasonable expenses of testing and
calibration and permitting, in each case in amounts not to exceed amounts deemed
reasonable by the Administrative Agent, (vi) reasonable expenses for corn,
natural gas and electricity necessary to operate the Project in accordance with
the Operating Plan and Budget, and (vii) out-of-pocket expenses incurred by the
managers of Borrower in connection with their duties as managers of Borrower,
including travel, lodging other expenses, that are either included in the
then-current Operating Plan and Budget or otherwise approved in advance by the
Administrative Agent, which approval will not be unreasonably withheld or
delayed. Management fees and similar payments paid to any PEIX Party other than
Borrower for work performed as Borrower's manager or otherwise relating to the
management of Borrower or the Project (other than expenses described in clause
(vii) of the preceding sentence) are not Qualified Project Expenses.
"REIMBURSABLE TAXES" has the meaning set forth in Section
2.10(a)(i) of the Loan Agreement.
"REQUIRED APPROVALS" means all Approvals required in
connection with the execution, delivery, performance, admission into evidence or
enforcement of the Documents or the development, construction, ownership or
operation of the Project and the Grain Facilities as contemplated under the
Documents, including without limitation all Approvals required for the Project
to operate at the levels projected in the Closing Pro Forma.
"REQUIRED INSURANCE" means the insurance to be obtained and
maintained by Borrower and the EPC Contractor, as described in Exhibit 5.1(n) to
the Loan Agreement.
"SCHEDULED INSTALLMENT" has the meaning set forth in Section
2.8(a)(ii) of the Loan Agreement.
"SECURITIES INTERMEDIARIES" means Comerica Bank, a national
banking association, and Hudson United Capital, and such other Persons as may
from time to time be a "Securities Intermediary" under the Disbursement
Agreement.
"SECURITY ACCOUNTS" means the Construction Draw Account, the
Project Revenues Account, the Debt Service Account, the Debt Service Reserve
Account, the Cash Sweep Account, the Asset Sales Proceeds Account and the Loss
Proceeds Account.
X-16
"SECURITY AGREEMENT" means the Assignment and Security
Agreement, dated the Construction Loan Closing Date, between Borrower and the
Administrative Agent.
"SECURITY DOCUMENT LIENS" means the Liens created, or
purported to be created, pursuant to the Security Documents.
"SECURITY DOCUMENTS" means the Mortgage, the Security
Agreement, the Disbursement Agreement, the Financing Statements, the Consents to
Assignment, the Pledge Agreement (including the membership interest certificates
and transfer instruments delivered pursuant thereto), the Intercreditor
Agreement, and all other agreements and instruments executed by the PEIX Parties
or any other Person to provide security for the repayment of the Loans and the
payment of all other obligations of Borrower and Borrower Member under the Loan
Documents.
"SITE" means the real property on which the Project and the
Grain Facilities are or are to be located and all related easements,
rights-of-way and other rights and interests.
"SPP PAYMENT" has the meaning set forth in Section 2.8(a)(iii)
of the Loan Agreement.
"SUB-DEBT" means the loans made to Borrower by the Sub-Debt
Provider pursuant to the Sub-Debt Documents.
"SUB-DEBT DOCUMENTS" means (a) the Amended and Restated Term
Loan Agreement, dated as of _________ ___, 2006, by and between Sub-Debt
Provider and Borrower and (b) the Deed of Trust (Non-Construction) Security
Agreement and Fixture Filing with Assignment of Rents, effective as of
__________ __, 2006, by and among Borrower, Chicago Title Company and Sub-Debt
Provider.
"SUB-DEBT PROVIDER" means Lyles Diversified, Inc., a
California corporation.
"SUBSTANTIAL COMPLETION" means "Substantial Construction
Completion" as such term is defined in the Phase 2 Design-Build Agreement, dated
November 2, 2005, by and between Borrower and the EPC Contractor.
"SUPPLIES AND RAW MATERIALS" means all fuel, materials,
stores, spare parts and supplies and other personal property which are
consumable (other than by ordinary wear and tear) in the operation of the
business of Borrower or in the production of Products by the Project.
"TAX" means all taxes, charges, duties, fees, levies and other
assessments of a similar nature (whether federal, state, local or foreign) based
upon or measured by income and any other tax whatsoever, including gross
receipts, capital gains, license, profits, windfall profits, sales, use,
occupation, value added, AD VALOREM, transfer, franchise, withholding, payroll,
employment, excise, stamp, premium, capital stock, production, business and
X-17
occupation, disability, severance, or real or personal property taxes, fees, or
assessments of any kind whatsoever imposed by any Government Instrumentality,
together with any interest, additions to tax or penalties imposed with respect
thereto.
"TECHNOLOGY LICENSE" means the License of Technology, dated
September 1, 2005, between Delta-T and Borrower.
"TERM LENDERS" means each Person identified as a Term Lender
on the signature pages of the Loan Agreement.
"TERM LOAN" means a term loan made to Borrower pursuant to
Section 2.2(b) of the Loan Agreement.
"TERM LOAN COMMITMENT" means the commitment of each Term
Lender to make Term Loans set forth in Section 2.1(a) of the Loan Agreement.
"TERM LOAN CONVERSION DATE" means the date on which all
conditions precedent set forth in Section 3.3 of the Loan Agreement have been
satisfied and the Term Loans are funded pursuant to Section 2.2(b) of the Loan
Agreement. The Term Loan Conversion Date may not occur after the Construction
Loan Commitment Termination Date.
"TERM LOAN INTEREST PERIOD" means each period, determined in
accordance with Section 2.3(b) of the Loan Agreement, at the end of which
interest is payable on the Term Loans.
"TERM LOAN INTEREST RATE" means the rate of interest payable
on a Term Loan in accordance with Section 2.3 of the Loan Agreement.
"TERM LOAN MATURITY DATE" means the seventh anniversary of the
first March 31, June 30, September 30 or December 31 following the Term Loan
Conversion Date.
"TERM LOAN NOTE" means a promissory note, in the form of
Exhibit 2.4(b) to the Loan Agreement, executed and delivered by Borrower,
payable to the order of a Term Lender and evidencing such Term Lender's Term
Loan.
"TITLE INSURER" means a national title insurance company
agreed upon by Borrower and the Administrative Agent.
"TITLE POLICY" has the meaning set forth in Section 3.1 of the
Loan Agreement.
"TRANSFER TAXES" has the meaning set forth in Section 3.3(h)
of the Loan Agreement.
X-18
"UCC" means the Uniform Commercial Code in effect in the State
of New York; PROVIDED, in the event that, by reason of mandatory provisions of
Law, any or all of the perfection or priority of the security interest in any
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of New York, the term "UCC" shall mean the
Uniform Commercial Code as in effect in such other jurisdiction for purposes of
the provisions hereof and of the other Loan Documents relating to such
perfection or priority and for purposes of definitions related to such
provisions.
"WDGS" means wet distiller's grain solubles, which is a
product of the Project.
"WDGS MARKETING AGREEMENT" means the WDG Marketing and
Services Agreement, dated March 4, 2005, by and among Borrower (as assignee of
PEC), Phoenix Bio Industries and Western Milling LLC.
"WITHDRAWAL APPROVAL NOTICE" has the meaning set forth in
Section 3.2(d) of the Disbursement Agreement.
X-19
II. RULES OF CONSTRUCTION.
The following rules of construction will apply in the Loan
Documents:
(i) titles and headings are for convenience only and
will not be deemed part of the Loan Documents for purposes of
interpretation;
(ii) unless otherwise stated, references in a Loan
Document to "Sections," "Exhibits" and "Appendices" refer,
respectively, to Sections of, and Exhibits and Appendices to, such Loan
Document;
(iii) "including" means "including, but not limited
to" and "include" or "includes" means "include, without limitation" or
"includes, without limitation";
(iv) "month" means "calendar month";
(v) "hereunder," "herein," "hereto" and "hereof,"
when used in a Loan Document, refer to such Loan Document and not to a
particular Section or clause of such Loan Document;
(vi) in the case of defined terms, the singular
includes the plural and vice versa;
(vii) unless otherwise indicated, all accounting
terms not specifically defined will be construed in accordance with
GAAP;
(viii) unless otherwise indicated, each reference to
a particular Law is a reference to such Law as it may be amended,
modified, extended, restated or supplemented from time to time, as well
as to any successor Law thereto; and
(ix) unless otherwise indicated, each reference to a
particular agreement is a reference to such agreement as it may be
amended, modified, extended, restated or supplemented from time to time
in compliance with Section 5.2(c) of the Loan Agreement (if
applicable), as well as to any successor agreement thereto entered into
in compliance with Section 5.2(c) of the Loan Agreement (if
applicable).
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