EXHIBIT
10.2
Execution
Copy
PLEDGE
AND SECURITY AGREEMENT
among
PACIFIC
ETHANOL CALIFORNIA, INC.,
as
Pledgor
PACIFIC
ETHANOL HOLDING CO. LLC,
as
Company
and
WESTLB
AG, NEW YORK BRANCH,
as
Collateral Agent
Dated
as of May 19, 2009
TABLE
OF CONTENTS
Page
|
ARTICLE
I
|
DEFINITIONS
|
1
|
|
Section
1.01
|
Defined
Terms
|
1
|
|
Section
1.02
|
Credit
Agreement and UCC Definitions
|
2
|
|
Section
1.03
|
Rules
of Interpretation
|
2
|
|
ARTICLE
II
|
PLEDGE
AND GRANT OF SECURITY INTEREST
|
2
|
|
Section
2.01
|
Granting
Clause
|
2
|
|
Section
2.02
|
Delivery
of Collateral.
|
3
|
|
Section
2.03
|
Retention
of Certain Rights
|
3
|
|
Section
2.04
|
Obligations
Unconditional
|
4
|
|
Section
2.05
|
Waiver
|
5
|
|
ARTICLE
III
|
EVENTS
OF DEFAULT
|
6
|
|
Section
3.01
|
Events
of Default
|
6
|
|
ARTICLE
IV
|
REPRESENTATIONS
AND WARRANTIES
|
6
|
|
Section
4.01
|
Organization;
Power; Compliance with Law and Contractual Obligations
|
6
|
|
Section
4.02
|
Due
Authorization; Non-Contravention.
|
6
|
|
Section
4.03
|
Validity
|
7
|
|
Section
4.04
|
Beneficial
Ownership; Pledged Equity Interests
|
7
|
|
Section
4.05
|
Name
|
7
|
|
Section
4.06
|
Organizational
Number
|
7
|
|
Section
4.07
|
Capital
Adequacy: Etc.
|
7
|
|
ARTICLE
V
|
COVENANTS
OF PLEDGOR
|
7
|
|
Section
5.01
|
Defense
of Collateral
|
7
|
|
Section
5.02
|
Limitation
of Liens
|
8
|
|
Section
5.03
|
No
Sale of Collateral
|
8
|
|
Section
5.04
|
No
Impairment of Security
|
8
|
|
Section
5.05
|
Filing
of Bankruptcy Proceedings
|
8
|
|
Section
5.06
|
Distributions
|
8
|
|
Section
5.07
|
Maintenance
of Records
|
8
|
|
Section
5.08
|
Name;
Jurisdiction of Organization
|
8
|
|
Section
5.09
|
Amendments
to Organizational Documents
|
9
|
|
Section
5.10
|
Perfection.
|
9
|
|
Section
5.11
|
Information
Concerning Collateral
|
9
|
|
Section
5.12
|
Payment
of Taxes
|
9
|
|
ARTICLE
VI
|
REMEDIES
UPON AN EVENT OF DEFAULT
|
10
|
|
Section
6.01
|
Remedies
Upon an Event of Default
|
10
|
|
Section
6.02
|
Minimum
Notice Period
|
11
|
|
Section
6.03
|
Sale
of Collateral
|
11
|
|
Section
6.04
|
Actions
Taken by Collateral Agent
|
12
|
|
Section
6.05
|
Private
Sales
|
12
|
|
Section
6.06
|
Compliance
With Limitations and Restrictions
|
12
|
|
Section
6.07
|
No
Impairment of Remedies
|
12
|
|
ARTICLE
VII
|
FURTHER
ASSURANCES
|
13
|
|
Section
7.01
|
Attorney-in-Fact.
|
13
|
|
Section
7.02
|
Delivery
of Collateral; Proxy
|
13
|
|
Section
7.03
|
Place
of Business; Location of Records
|
13
|
|
Section
7.04
|
Waiver
of Transfer Restrictions
|
14
|
|
Section
7.05
|
The
Company’s Consent and Covenant
|
14
|
|
Section
7.06
|
Foreclosure
|
14
|
|
Section
7.07
|
Waiver
of Rights of Subrogation
|
14
|
|
Section
7.08
|
Application
of Proceeds
|
14
|
|
Section
7.09
|
Collateral
Agent May Perform
|
14
|
|
Section
7.10
|
Limitation
on Duty of Collateral Agent with Respect to the Collateral
|
15
|
|
Section
7.11
|
Termination
of Security Interest
|
15
|
|
ARTICLE
VIII
|
MISCELLANEOUS
|
15
|
|
Section
8.01
|
Amendments,
Etc
|
15
|
|
Section
8.02
|
Applicable
Law; Jurisdiction; Etc.
|
15
|
|
Section
8.03
|
Counterparts;
Effectiveness
|
17
|
|
Section
8.04
|
Delay
Not Waiver; Separate Causes of Action
|
17
|
|
Section
8.05
|
Entire
Agreement
|
18
|
|
Section
8.06
|
Expenses
|
18
|
|
Section
8.07
|
Headings
Descriptive
|
18
|
|
Section
8.08
|
Interest
|
18
|
|
Section
8.09
|
Notices.
|
18
|
|
Section
8.10
|
No
Waiver; Cumulative Remedies
|
19
|
|
Section
8.11
|
Reinstatement
|
20
|
|
Section
8.12
|
Remedies
Cumulative
|
20
|
|
Section
8.13
|
Rights
of Collateral Agent
|
20
|
|
Section
8.14
|
Severability
|
20
|
|
Section
8.15
|
Successions
and Assignments
|
20
|
|
Section
8.16
|
Survival
of Provisions
|
21
|
|
Section
8.17
|
Third
Party Rights
|
21
|
|
Section
8.18
|
Time
|
21
|
|
Section
8.19
|
Waiver
of Consequential Damages, Etc
|
21
|
|
Section
8.20
|
Waiver
of Litigation Payments
|
21
|
|
Section
8.21
|
Scope
of Liability
|
21
|
EXHIBITS
Exhibit
A - Irrevocable
Proxy
Exhibit
B - Transfer
Document
Schedule
I - Description
of Pledged Equity Interests
PLEDGE AND SECURITY
AGREEMENT
This
PLEDGE AND SECURITY AGREEMENT, dated as of May 19, 2009, (this “Agreement”) is
entered into by and among Pacific Ethanol California, Inc, a corporation
organized and existing under the Laws of the State of California (the “Pledgor”), Pacific
Ethanol Holding Co. LLC, a limited liability company organized and existing
under the Laws of the State of Delaware (the “Company”), and WestLB
AG, New York Branch, in its capacity as collateral agent (together with its
successors, designees and assigns in such capacity, the “Collateral Agent”)
for the Senior Secured Parties.
RECITALS
WHEREAS,
the Company has entered into that certain Debtor-in-Possession Credit Agreement,
dated as of May 19, 2009 (as amended, amended and restated, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”)
among the Company, Pacific Ethanol Madera LLC, a Delaware limited liability
company (“Madera”), Pacific
Ethanol Stockton, LLC, a Delaware limited liability company (“Stockton”), Pacific
Ethanol Columbia, LLC, a Delaware limited liability company (“Boardman”), and
Pacific Ethanol Magic Valley, LLC, a Delaware limited liability company (“Burley” and, together
with the Company, Madera, Stockton and Boardman, the “Borrowers”), the
Company as the Borrower Agent, each of the Lenders from time to time party
thereto, WestLB AG, New York Branch, as Administrative Agent for the Lenders,
the Collateral Agent and Amarillo National Bank, as accounts bank, pursuant to
which, among other things, the Lenders have agreed to make loans to, and for the
benefit of, the Borrowers; and
WHEREAS,
as of the date hereof, the Pledgor is the sole member and owns one hundred
(100%) of the Equity Interests of the Company and will obtain benefits as a
result of the Loans, and it is a requirement under the Credit Agreement that the
Pledgor execute and deliver this Agreement.
AGREEMENT
NOW,
THEREFORE, in consideration of the promises contained herein, and to induce the
Lenders to enter into the Credit Agreement and to make the advances of credit to
the Borrowers contemplated thereby, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged,
intending to be legally bound, the Company and the Pledgor hereby agree with the
Collateral Agent, for the benefit of the Senior Secured Parties, as
follows:
ARTICLE
I
DEFINITIONS
Section
1.01 Defined
Terms. The following terms (whether or not underscored) when
used in this Agreement, including its preamble and recitals, shall have the
following meanings:
“Collateral Agent” has
the meaning given in the preamble to this
Agreement.
“Collateral” has the
meaning given in Section 2.01 (Granting
Clause).
“Company” has the
meaning given in the preamble to this
Agreement.
“Credit Agreement” has
the meaning given in the recitals to this
Agreement.
“Non-Recourse Party”
has the meaning given in Section 8.21 (Scope of
Liability).
“Pledged Equity
Interests” has the meaning given in Section 2.01 (Granting
Clause).
“Pledgor” has the
meaning given in the preamble to this
Agreement.
Section
1.02 Credit Agreement and UCC
Definitions. Unless otherwise defined herein or unless the
context otherwise requires, terms used in this Agreement, including its preamble
and recitals, have the meanings provided in the Credit Agreement or, if not
defined therein, the UCC.
Section
1.03 Rules of
Interpretation. The rules of interpretation set forth in Section 1.02 (Principles
of Interpretation) of the Credit
Agreement shall apply to this Agreement, including its preamble and
recitals.
ARTICLE
II
PLEDGE
AND GRANT OF SECURITY INTEREST
Section
2.01 Granting
Clause. To secure the timely payment in full when due (whether
at stated maturity, by acceleration or otherwise) in cash and performance in
full of the Obligations, the Pledgor hereby collaterally assigns, grants and
pledges to the Collateral Agent, for the benefit of the Senior Secured Parties,
a continuing security interest and Lien in all the estate, right, title and
interest of the Pledgor, now owned or hereafter existing or acquired, and
howsoever its interest therein may arise or appear (whether by ownership,
security interest, Lien, claim or otherwise), including all the estate, right,
title and interest of the Pledgor in, to and under the following (the “Collateral”):
(a) Any and
all of the Pledgor’s right(s), title(s) and interest(s), whether now owned or
hereafter existing or acquired, in the Company, and all of the Equity Interests
of the Company related thereto, whether or not evidenced or represented by any
certificated security or other instrument, (the “Pledged Equity
Interests”), including the membership interests described on Schedule I hereto and
the Pledgor’s share of:
|
(i)
|
all
rights to receive income, gain, profit, dividends and other distributions
allocated or distributed to the Pledgor in respect of or in exchange for
all or any portion of the Pledged Equity
Interests;
|
|
(ii)
|
all
of the Pledgor’s capital or ownership interest or other Equity Interest,
including capital accounts, in the
Company;
|
|
(iii)
|
all
of the Pledgor’s voting rights in or rights to control or direct the
affairs of the Company;
|
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(iv)
|
all
other rights, title and interest in or to the Company derived from the
Pledged Equity Interests;
|
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(v)
|
all
indebtedness or other obligations of the Company owed to the
Pledgor;
|
|
(vi)
|
all
claims of the Pledgor for damages arising out of, or for any breach or
default relating to, the Pledged Equity
Interests;
|
|
(vii)
|
all
securities, notes, certificates and other instruments representing or
evidencing any of the foregoing rights and interests or the ownership
thereof and any interest of the Pledgor reflected in the books of any
financial intermediary pertaining to such rights and
interests;
|
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(viii)
|
all
distributions, non-cash dividends, cash, options, warrants, stock splits,
reclassifications, rights, instruments or other investment property and
other property or proceeds from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such
rights and interests; and
|
|
(ix)
|
all
security entitlements of the Pledgor in any and all of the foregoing;
and
|
(b) all
proceeds (including proceeds of proceeds) of the foregoing Collateral, whether
cash or non-cash; provided, however, that
“Collateral” shall not include any cash or other property distributed to the
Pledgor following a distribution made in accordance with Section 7.02(s)
(Negative
Covenants — Restricted Payments) of the Credit
Agreement.
Section
2.02 Delivery of
Collateral.
(a) All
certificates, notes and other instruments representing or evidencing any
Collateral shall be delivered to and held by or on behalf of, and, in the case
of notes, endorsed to the order of, the Collateral Agent, or its designee
pursuant hereto, in the manner set forth in Section 7.02 (Delivery
of Collateral; Proxy).
(b) If any
Collateral consists of security entitlements, the Pledgor shall transfer such
security entitlements to the Collateral Agent (or its custodian, nominee or
other designee) or cause the applicable securities intermediary to agree that it
will comply with entitlement orders by the Collateral Agent without further
consent by the Pledgor.
Section
2.03 Retention of Certain
Rights. So long as the Collateral Agent has not elected to
exercise remedies under this Agreement in connection with an Event of Default
that has occurred and is continuing, the Pledgor reserves the right to exercise
all voting and other rights, title and interest with respect to the Collateral
(except as limited by the Financing Documents) and, to the extent permitted
under the Credit Agreement, to receive all income, gains, profits, dividends and
other distributions from the Collateral whether non-cash dividends, cash,
options, warrants, stock splits, reclassifications, rights, instruments or other
investment property or other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such rights and interests.
Section
2.04 Obligations
Unconditional. The obligations of the Pledgor in this
Agreement shall be continuing, irrevocable, primary, absolute and unconditional
irrespective of the value, genuineness, validity, regularity or enforceability
of any Financing Document or any other agreement or instrument referred to
therein, or any substitution, release or exchange of any guarantee of or
security for any of the Obligations and, to the fullest extent permitted by
applicable Law, irrespective of any other circumstance whatsoever that might
otherwise constitute a legal or equitable discharge or defense of a surety or
guarantor, other than the occurrence of the Discharge Date and other than any
defense that the underlying obligation has been satisfied in accordance with the
terms of the Financing Documents, it being the intent of this Section 2.04 that the
obligations of the Pledgor hereunder shall be absolute and unconditional under
any and all circumstances. Without limiting the generality of the foregoing, it
is agreed that the occurrence of any one or more of the following shall not
alter or impair the liability of the Pledgor hereunder, which shall remain
absolute and unconditional as described above without regard to and not be
released, discharged or in any way affected (whether in full or in part)
by:
(a) at any
time or from time to time, without notice to the Pledgor, the time for any
performance of or compliance with any of the Obligations is extended, or such
performance or compliance is waived;
(b) any
Financing Document is amended or modified or there is a departure from, or
waiver of, any of the terms of any Financing Document;
(c) the
maturity of any of the Obligations is accelerated, or any of the Obligations is
modified, supplemented and/or amended in any respect, or any right under any
Financing Document or any other agreement or instrument referred to therein is
waived or any guarantee of any of the Obligations or any security therefore is
released or exchanged in whole or in part or otherwise dealt with;
(d) any lien
granted to, or in favor of, the Collateral Agent as security for any of the
Obligations fails to be perfected; or
(e) any
proceeding, voluntary or involuntary, involving the bankruptcy, insolvency,
receivership, reorganization, liquidation or arrangement of the Pledgor or by
any defense which the Pledgor may have by reason of the order, decree or
decision of any court or administrative body resulting from any such proceeding.
The Pledgor acknowledges and agrees that the Obligations include interest on the
Obligations at the applicable rate therefor under the Financing Documents which
accrues after the commencement of any such proceeding (or, if interest on any
portion of the Obligations ceases to accrue by operation of Law by reason of the
commencement of said proceeding, such Obligations include the interest which
would have accrued on such portion of the Obligations if said proceedings had
not been commenced), since it is the intention of the parties that the amount of
the Obligations secured pursuant to this Agreement should be determined without
regard to any rule of Law or order which may relieve the Pledgor of any portion
of the Obligations. The Pledgor will permit any trustee in bankruptcy, receiver,
debtor in possession, assignee for the benefit of creditors or similar person to
pay the Collateral Agent, or allow the claim of the Collateral Agent in respect
of, interest which would have accrued after the date on which such proceeding is
commenced.
Section
2.05 Waiver. The
enforceability and effectiveness of this Agreement and the liability of the
Pledgor, and the rights, remedies, powers and privileges of the Collateral
Agent, under this Agreement shall not be affected, limited, reduced, discharged
or terminated, and the Pledgor hereby expressly waives, to the extent permitted
by applicable Laws, to the fullest extent permitted by Law any defense now or in
the future arising, by reason of:
(a) the
illegality, invalidity or unenforceability of all or any part of the
Obligations, any Financing Document or any agreement, security document,
guarantee or other instrument relating to all or any part of the
Obligations;
(b) the
illegality, invalidity or unenforceability of any security or guarantee for all
or any part of the Obligations or the lack of perfection or continuing
perfection or failure of the priority of any lien or encumbrance on any
collateral for all or any part of the Obligations;
(c) the
cessation, for any cause whatsoever, of the liability of any Person that is a
guarantor of all or any part of the Obligations (other than by the occurrence of
the Discharge Date);
(d) any
judicial or nonjudicial foreclosure or sale of, or other election of remedies
with respect to, any interest in real property or other Collateral serving as
security for all or any part of the Obligations, even though such foreclosure,
sale or election of remedies may impair the subrogation rights of either the
other Borrowers, or the Pledgor or may preclude the other Borrowers or the
Pledgor from obtaining reimbursement, contribution, indemnification or other
recovery from the other Borrowers or any other Person and even though the other
Borrowers or the Pledgor may not, as a result of such foreclosure, sale or
election of remedies, be liable for any deficiency;
(e) any act
or omission of the Collateral Agent or any other Person that directly or
indirectly results in or aids the discharge or release of the Pledgor or any
part of the Obligations or any security or guarantee (including any letter of
credit) for all or any part of the Obligations by operation of Law or otherwise
(other than the occurrence of the Discharge Date);
(f) any Law
which provides that the obligation of a surety or the Pledgor must neither be
larger in amount nor in other respects more burdensome than that of the
principal or which reduces a surety’s or the Pledgor’s obligation in proportion
to the principal obligation;
(g) any
bankruptcy, insolvency, reorganization, arrangement, readjustment of debt,
liquidation or dissolution proceeding commenced by or against any Person,
including any discharge of, or bar or stay against collecting, all or any part
of the Obligations (or any interest on all or any part of the Obligations) in or
as a result of any such proceeding, any failure of the Collateral Agent to file
a claim in any such proceeding, or the occurrence of any of the following: (i)
the election by the Collateral Agent, in any bankruptcy proceeding of any
Person, of the application or non-application of Section 1111(b)(2) of the
Bankruptcy Code, (ii) any extension of credit or the grant of any lien or
encumbrance under Section 364 of the Bankruptcy Code, (iii) any use of cash
collateral under Section 363 of the Bankruptcy Code, or (iv) any agreement or
stipulation with respect to the provision of adequate protection in any
bankruptcy proceeding of any Person; or
(h) any
action taken by the Collateral Agent that is authorized by this Section 2.05 or
otherwise in this Agreement or by any other provision of any Financing Document
or any omission to take any such action.
ARTICLE
III
EVENTS OF
DEFAULT
Section
3.01 Events of
Default. The occurrence of an Event of Default, whatever the
reason for such Event of Default and whether it is voluntary or involuntary or
is effected by operation of Law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any Governmental Authority, shall
constitute a default hereunder. Any such Event of Default shall be considered
cured or waived for the purposes of this Agreement when it has been cured or
waived in accordance with the Credit Agreement.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES
The
Pledgor represents and warrants to and in favor of the Collateral Agent and the
Senior Secured Parties, as of the date hereof, as of the Closing Date and as of
each Funding Date, as follows:
Section
4.01 Organization; Power;
Compliance with Law and Contractual Obligations. The Pledgor
(a) is a corporation validly organized and existing and in good standing under
the Laws of the State of California, (b) is duly qualified to do business as is
now being conducted and as is proposed to be conducted and is in good standing
as a corporation in each jurisdiction where the nature of its business requires
such qualification (other than any such failure to be so qualified or in good
standing that could not reasonably be expected to have a Material Adverse
Effect) and (c) has all requisite corporate power and authority and holds all
Governmental Approvals required as of the date of this representation is made or
deemed repeated to enter into and perform its obligations under this
Agreement.
Section
4.02 Due Authorization;
Non-Contravention.
(a) The
execution, delivery and performance by the Pledgor of this Agreement are within
the Pledgor’s corporate powers, have been duly authorized by all necessary
corporate action, and do not contravene in any material respect (i) the
Pledgor’s Organic Documents, or (ii) any applicable Law or any Contractual
Obligation binding on or affecting the Pledgor.
(b) The
exercise by the Collateral Agent of any of its rights and remedies with respect
to the Collateral in accordance with the terms of this Agreement will not
contravene in any material respect any applicable Law or any Contractual
Obligation binding on or affecting the Pledgor or any of the properties of the
Pledgor and will not result in or require the creation of any Lien (other than
Permitted Liens) upon or with respect to any of the Collateral other than
pursuant to this Agreement.
Section
4.03 Validity. This
Agreement constitutes the legal, valid and binding obligations of the Pledgor
enforceable in accordance with its terms, except as the enforceability hereof
may be limited by (a) bankruptcy, insolvency, reorganization, or other similar
Laws affecting the enforcement of creditors’ rights generally and (b) general
equitable principles (whether considered in a proceeding in equity or at
Law).
Section
4.04 Beneficial Ownership;
Pledged Equity Interests. The Pledgor is the lawful and
beneficial owner of and has full right, title and interest in, to and under all
rights and interests comprising the Collateral, subject to no Liens, no prior
assignments, no effective UCC financing statements, no security agreements and
no other instruments similar in effect (other than this Agreement, the Liens
created hereunder and other Permitted Liens). The Pledged Equity Interests (a)
have been duly authorized and validly issued, (b) are fully paid and
non-assessable and (c) constitute one hundred percent (100%) of the outstanding
Equity Interests of the Company.
Section
4.05 Name. The
name of the Pledgor is Pacific Ethanol California, Inc., as indicated in the
public records of the State of California, and it has not had any other names
within the past five (5) years other than Pacific Ethanol, Inc.
Section
4.06 Organizational
Number. The Pledgor’s federal employee identification number
is 71-0938840 and Pledgor’s organizational number is CA 2487125.
Section
4.07 Capital Adequacy;
Etc.
(a) The
Pledgor is, and after giving effect to the transactions contemplated hereby will
be, Solvent.
(b) The
Pledgor is not executing this Agreement with any intention to hinder, delay or
defraud any present or future creditor or creditors of the Pledgor.
ARTICLE
V
COVENANTS
OF PLEDGOR
The
Pledgor covenants to and in favor of the Collateral Agent and the Senior Secured
Parties as follows:
Section
5.01 Defense of
Collateral. The Pledgor shall, until the Discharge Date,
defend its title to the Collateral and the interest of the Collateral Agent (for
the benefit of itself and the other Senior Secured Parties) in the Collateral
pledged hereunder against the claims and demands of all other Persons, provided that nothing
in this Section
5.01 shall limit the Pledgor’s right to dispose of the Collateral in
accordance with the Financing Documents.
Section
5.02 Limitation of
Liens. The Pledgor shall not create, incur, assume or suffer
to exist any Liens (including authorizing the filing of any financing statements
under the UCC or any like statement relating to the Collateral) on or with
respect to all or any part of the Collateral (other than Permitted Liens). The
Pledgor shall at its own cost and expense promptly take such action as may be
necessary to discharge any such Liens (other than Permitted Liens).
Section
5.03 No Sale of
Collateral. Except as permitted by the terms of the Financing
Documents, the Pledgor shall not cause, suffer or permit the sale, assignment,
conveyance, pledge or other transfer of all or any portion of the Pledgor’s
Equity Interest in the Company or any other portion of the
Collateral.
Section
5.04 No Impairment of
Security. Except for the commencement of the Cases, the
Pledgor shall not take any action that, or fail to take any action if such
failure would, impair in any manner the enforceability of the Collateral Agent’s
security interest in and Lien on any Collateral.
Section
5.05 [INTENTIONALLY
OMITTED].
Section
5.06 Distributions. If
the Pledgor in its capacity as an owner of the Company receives any income,
dividend or other distribution of money or property of any kind from the Company
(other than in accordance with the Financing Documents), the Pledgor shall hold
such income or distribution as trustee for and shall promptly deliver the same
to the Collateral Agent in the exact form received by the Pledgor (or duly
endorsed by the Pledgor to the Collateral Agent, if required). To the extent
that any such income, dividend or other distribution is made in compliance with
the terms of the Financing Documents, then the further distribution or payment
of such monies shall not give rise to any claims or cause of action on the part
of any of the Senior Secured Parties against the Company or the Pledgor seeking
the return or disgorgement of any such distributions or other payments unless
the distributions or payments involve or result from the fraud or willful
misconduct of the Company or the Pledgor.
Section
5.07 Maintenance of
Records. The Pledgor shall, at all times, keep accurate and
complete records of the Collateral. The Pledgor shall permit officers and
designated representatives of the Collateral Agent to examine the Pledgor’s
books and records pertaining to the Collateral, and make copies thereof or
abstracts therefrom, all at the expense of the Pledgor and at such reasonable
times during normal business hours and as often as may be reasonably desired,
upon reasonable advance notice to the Pledgor; provided, that if a
Default or an Event of Default has occurred and is continuing, the Collateral
Agent (or any of its officers or designated representatives) may do any of the
foregoing at any time during normal business hours and without advance notice.
Upon the occurrence and during the continuation of any Event of Default, at the
Collateral Agent’s request, the Pledgor shall promptly deliver to the Collateral
Agent copies of any and all of the records mentioned above.
Section
5.08 Name; Jurisdiction of
Organization. The Pledgor shall not change its name, its
jurisdiction of organization, the location of its principal place of business or
its organization identification number without written notice to the Collateral
Agent at least thirty (30) days prior to such change. In the event of such
change, the Pledgor shall (at its expense) execute and deliver such instruments
and documents as may be required by the Collateral Agent or applicable Law to
maintain a first priority perfected security interest in the
Collateral.
Section
5.09 Amendments to Organizational
Documents. Except as expressly permitted by this Agreement or
the other Financing Documents, the Pledgor shall not (a) terminate or cancel the
Organic Documents of the Company or (b) in any material respect, amend,
supplement or otherwise modify the Organic Documents of the
Company.
Section
5.10 Perfection.
(a) The
Pledgor agrees that from time to time, at the expense of the Pledgor, the
Pledgor shall promptly execute and deliver all further instruments and
documents, and take all further action, that may be reasonably necessary or
desirable in order to perfect, to ensure the continued perfection of, and to
protect the assignment and security interest granted or intended to be granted
hereby or to enable the Collateral Agent to exercise and enforce its rights and
remedies hereunder with respect to any Collateral. Without limiting the
generality of the foregoing, the Pledgor shall (i) deliver any of the Collateral
represented by a certificate or other instrument to the Collateral Agent,
accompanied by such duly executed instruments of transfer or assignment as the
Collateral Agent may reasonably request, and (ii) authorize, execute and file
such financing or continuation statements, or amendments thereto, and such other
instruments, endorsements or notices, as may be reasonably necessary or
desirable in order to perfect and preserve, the assignments and security
interests granted or purported to be granted hereby.
(b) The
Pledgor hereby authorizes the filing of any financing statements or continuation
statements, and amendments to financing statements, or any similar document in
any jurisdictions and with any filing offices as the Collateral Agent may
reasonably determine are necessary or advisable to perfect the security interest
granted to the Collateral Agent, for the benefit of the Senior Secured Parties,
herein. Such financing statements may describe the Collateral in the same or
similar and consistent manner as described herein.
Section
5.11 Information Concerning
Collateral. The Pledgor shall, promptly upon request and at
its own expense, provide to the Collateral Agent all information and evidence
the Collateral Agent may reasonably request concerning the Collateral to enable
the Collateral Agent to enforce the provisions of this Agreement.
Section
5.12 Payment of
Taxes. The Pledgor shall pay or cause to be paid, before any
fine, penalty, interest or cost attaches thereto, all Taxes and other
non-governmental charges or levies (other than those Taxes or levies that are
subject to a Contest and immaterial Taxes in an aggregate amount not in excess
of twenty-five thousand Dollars ($25,000) at any one time outstanding (taking
into account any interest and penalties that could accrue or be applicable to
such past-due Taxes), and provided that such
Taxes are no more than forty-five (45) days past due)) now or hereafter assessed
or levied against the Collateral pledged by it hereunder and shall retain copies
of and, upon request, permit the Collateral Agent or any Senior Secured Party to
examine receipts showing payment of any of the foregoing.
ARTICLE
VI
REMEDIES
UPON AN EVENT OF DEFAULT
Section
6.01 Remedies Upon an Event of
Default. Upon the occurrence and during the continuation of an
Event of Default, the Collateral Agent shall have the right, but not the
obligation, to do any of the following:
(a) vote or
exercise any and all of the Pledgor’s rights or powers incident to its ownership
of the Pledged Equity Interests, including any rights or powers to manage or
control the Company and receive dividends or distributions;
(b) demand,
sue for, collect or receive any money or property at any time payable to or
receivable by the Pledgor on account of or in exchange for all or any part of
the Collateral;
(c) cause any
action at Law or suit in equity or other proceeding to be instituted and
prosecuted to collect or enforce any obligation or exercise any right hereunder
or included in the Collateral, including specific enforcement of any covenant or
agreement contained herein, or to foreclose or enforce the security interest in
all or any part of the Collateral granted herein, or to enforce any other legal
or equitable right vested in it by this Agreement or by applicable
Law;
(d) amend,
terminate, supplement or modify all or any of the Company’s Organic
Documents;
(e) incur
expenses, including attorneys’ fees, consultants’ fees, and other costs in
connection with the exercise of any right or power under this
Agreement;
(f) perform
any obligation of the Pledgor hereunder;
(g) secure
the appointment of a receiver of the Collateral or any part thereof, whether
incidental to a proposed sale of the Collateral or otherwise, and all
disbursements made by such receiver and the expenses of such receivership shall
be added to and be made a part of the Obligations, and, whether or not the
principal sum of the Obligations, including such disbursements and expenses,
exceeds the indebtedness originally intended to be secured hereby, the entire
amount of said sum, including such disbursements and expenses, shall be secured
by this Agreement and shall be due and payable upon demand therefor and
thereafter shall bear interest at the Default Rate or the maximum rate permitted
by applicable Law, whichever is less;
(h) transfer
the Collateral, or any part thereof, to the name of the Collateral Agent or to
the name of any nominee of the Collateral Agent;
(i) exercise
any other or additional rights or remedies granted to the Collateral Agent under
any other provision of this Agreement or any other Financing Document, or
exercisable by a secured party under the UCC or under any other applicable Law
and, without limiting the generality of the foregoing and without notice except
as specified below, sell the Collateral or any part thereof in one or more
parcels at public or private sale, at any exchange or broker’s board or
elsewhere, at such price or prices and on such other terms as the Collateral
Agent may deem commercially reasonable in accordance with the UCC;
(j) take any
other lawful action that the Collateral Agent deems necessary or desirable to
protect or realize upon its security interest in the Collateral or any part
thereof; and/or
(k) appoint
another Person (who may be an employee, officer or other representative of the
Collateral Agent) to do any of the foregoing, or take any other action permitted
hereunder, on behalf of the Collateral Agent.
Section
6.02 Minimum Notice
Period. If, pursuant to applicable Law requirements, prior
notice of any action described in Section 6.01 (Remedies
Upon an Event of Default)), including the
sale of the Collateral pursuant to Section 6.03 (Sale of
Collateral), is required to be
given to the Pledgor or the Company, the Pledgor and the Company hereby
acknowledge and agree that the minimum time required by such applicable Law, or
if no minimum time is specified, ten (10) days, shall be deemed a reasonable
notice period under such applicable Law.
Section
6.03 Sale of
Collateral. In addition to exercising the foregoing rights,
the Collateral Agent may, to the extent permitted by applicable Law, arrange for
and conduct a sale of the Collateral at a public or private sale (as the
Collateral Agent may elect) which sale may be conducted by an employee or
representative of the Collateral Agent, and any such sale shall be conducted in
a commercially reasonable manner. The Collateral Agent may release, temporarily
or otherwise, to the Pledgor any item of the Collateral of which the Collateral
Agent has taken possession pursuant to any right granted to the Collateral Agent
by this Agreement without waiving any rights granted to the Collateral Agent
under this Agreement, the Credit Agreement or the other Financing Documents or
any other agreement related hereto or thereto. The Pledgor, in dealing with or
disposing of the Collateral or any part thereof, hereby waives all rights, legal
and equitable, it may now or hereafter have to require marshaling of assets or
to require, upon foreclosure, sales of assets in a particular order. The Pledgor
also waives its right to challenge the reasonableness of any disclaimer of
warranties, title and the like made by the Collateral Agent in connection with a
sale of the Collateral. Each successor of the Pledgor under the Financing
Documents shall be deemed to have agreed, by virtue of its succession thereto,
that it shall be bound by the above waiver, to the same extent as if such
successor gave such waiver itself. The Pledgor also hereby waives, to the full
extent it may lawfully do so, the benefit of all Laws providing for rights of
appraisal, valuation, stay or extension or of redemption after foreclosure now
or hereafter in force. If the Collateral Agent sells any of the Collateral upon
credit, the Pledgor will be credited only with payments actually made by the
purchaser and received by the Collateral Agent. In the event the purchaser fails
to pay for the Collateral, the Collateral Agent may resell the Collateral and
the Pledgor shall be credited with the proceeds of any such sales or resales
only in excess of the amounts required to pay the Obligations in full. In the
event the Collateral Agent bids at any foreclosure or trustee’s sale or at any
private sale permitted by Law and this Agreement or any other Financing
Document, the Collateral Agent may bid all or less than the amount of the
Obligations. The Collateral Agent shall not be obligated to make any sale of the
Collateral regardless of whether or not notice of sale has been given. The
Collateral Agent may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned. The
Pledgor further acknowledges and agrees that any offer to sell any part of the
Collateral that has been (i) publicly advertised on a bona fide basis in a
newspaper or other publication of general circulation or (ii) made privately in
the manner described herein to not less than fifteen (15) bona fide offerees
shall be deemed to involve a “public disposition” for the purposes of Section 9
610(c) of the UCC.
Section
6.04 Actions Taken by Collateral
Agent. Any action or proceeding to enforce this Agreement may
be taken by the Collateral Agent either in the Pledgor’s name or in the
Collateral Agent’s name, as the Collateral Agent may deem
necessary.
Section
6.05 Private
Sales. The Collateral Agent shall incur no liability as a
result of the sale of the Collateral, or any part thereof, at any private sale
made in good faith by the Collateral Agent pursuant to this Article VI conducted
in a commercially reasonable manner and in accordance with the requirements of
applicable Laws. The Pledgor hereby waives any claims against the Collateral
Agent and the Senior Secured Parties arising by reason of the fact that the
price at which the Collateral may have been sold at such a private sale was less
than the price that might have been obtained at a public sale or was less than
the aggregate amount of the Obligations, even if the Collateral Agent accepts
the first offer received and does not offer the Collateral to more than one
offeree, provided that such
private sale is conducted in a commercially reasonable manner and in accordance
with applicable Laws.
Section
6.06 Compliance With Limitations
and Restrictions. The Pledgor hereby agrees that in respect of
any sale of any of the Collateral pursuant to the terms hereof, the Collateral
Agent is hereby authorized to comply with any limitation or restriction in
connection with such sale as the Collateral Agent may be advised by counsel is
necessary in order to avoid any violation of applicable Law, or in order to
obtain any required approval of the sale or of the purchaser by any Governmental
Authority or official, and the Pledgor further agrees that such compliance shall
not result in such sale being considered or deemed not to have been made in a
commercially reasonable manner, nor shall the Collateral Agent be liable or
accountable to the Pledgor for any discount allowed by reason of the fact that
such Collateral is sold in compliance with any such limitation or
restriction.
Section
6.07 No Impairment of
Remedies. If, in the exercise of any of its rights and
remedies under this Agreement, the Collateral Agent forfeits any of its rights
or remedies, including any right to enter a deficiency judgment against the
Pledgor or any other Person, whether because of any applicable Law pertaining to
“election of remedies” or otherwise, the Pledgor hereby consents to such action
by the Collateral Agent and, to the extent permitted by applicable Law, waives
any claim based upon such action, even if such action by the Collateral Agent
would result in a full or partial loss of any rights of subrogation,
indemnification or reimbursement that the Pledgor might otherwise have had but
for such action by the Collateral Agent or the terms herein. Any election of
remedies that results in the denial or impairment of the right of the Collateral
Agent to seek a deficiency judgment against any of the parties to any of the
Financing Documents shall not, to the extent permitted by applicable Law, impair
the Pledgor’s obligations hereunder.
ARTICLE
VII
FURTHER
ASSURANCES
Section
7.01 Attorney-in-Fact.
(a) The
Pledgor hereby constitutes and appoints the Collateral Agent, acting for and on
behalf of itself and the Senior Secured Parties and each successor or permitted
assign of the Collateral Agent and the Senior Secured Parties, the true and
lawful attorney-in-fact of the Pledgor, with full power and authority in the
place and stead of the Pledgor and in the name of the Pledgor, the Collateral
Agent or otherwise, to enforce all rights, interests and remedies of the Pledgor
with respect to the Collateral or enforce all rights, interests and remedies of
the Collateral Agent under this Agreement (including the rights set forth in
Article VI
(Remedies
Upon an Event of Default)); provided, however, that the
Collateral Agent shall not exercise any of the aforementioned rights unless an
Event of Default has occurred and is continuing and has not been waived or cured
in accordance with the Financing Documents. This power of attorney is a power
coupled with an interest and shall be irrevocable; provided, however, that nothing
in this Agreement shall prevent the Pledgor from, prior to the exercise by the
Collateral Agent of any of the aforementioned rights, undertaking the Pledgor’s
operations in the ordinary course of business with respect to the Collateral, in
accordance with the Financing Documents.
(b) In
addition to the provisions of Section 7.01(g), if the Pledgor fails to perform
any agreement or obligation contained herein to protect or preserve the
Collateral, and such failure continues for ten (10) days following delivery of
written notice by the Collateral Agent to the Pledgor, the Collateral Agent
itself may perform, or cause performance of, such agreement or obligation, and
the reasonable expenses of the Collateral Agent incurred in connection therewith
shall be payable by the Pledgor and shall be secured by the
Collateral.
Section
7.02 Delivery of Collateral;
Proxy. All certificates or instruments representing or
evidencing the Collateral shall be delivered to and held by or on behalf of the
Collateral Agent pursuant hereto. All such certificates or instruments shall be
in suitable form for transfer by delivery, or shall be accompanied by duly
executed instruments of transfer or assignment in blank, all in form and
substance reasonably acceptable to the Collateral Agent. The Collateral Agent
shall have the right, at any time in its discretion and without prior notice to
the Pledgor or the Company, following the occurrence and during the continuation
of an Event of Default, to transfer to or to register in the name of the
Collateral Agent or any of its nominees any or all of the Collateral and to
exchange certificates or instruments representing or evidencing the Collateral
for certificates or instruments of smaller or larger denominations. In
furtherance of the foregoing, the Pledgor shall further execute and deliver to
the Collateral Agent a proxy in the form of Exhibit A and an
irrevocable power in the form of Exhibit B with
respect to the ownership interests of the Company owned by the
Pledgor.
Section
7.03 Place of Business; Location
of Records. Unless the Pledgor provides notice to the
Collateral Agent in accordance with Section 5.08 (Name;
Jurisdiction of Organization), the chief executive office and principal
place of business of the Pledgor is, and all records of the Pledgor concerning
the Collateral are and will be, located at the address set forth in Section 8.09 (Notices).
Section
7.04 Waiver of Transfer
Restrictions. Notwithstanding anything to the contrary
contained in the Company’s Organic Documents, the Pledgor hereby waives any
requirement contained in the Company’s Organic Documents that it consent to a
transfer of any Equity Interest in the Company in connection with a foreclosure
on such Equity Interest under the Financing Documents.
Section
7.05 The Company’s Consent and
Covenant. The Company hereby consents to the assignment of and
grant of a security interest in the Collateral to the Collateral Agent (for the
benefit of the Senior Secured Parties) and to the exercise by the Collateral
Agent of all rights and powers assigned or delegated to the Collateral Agent by
the Pledgor hereunder, including the rights upon and during the continuation of
an Event of Default to exercise the Pledgor’s voting rights and other rights to
manage or control the Company, all in accordance with the Financing
Documents.
Section
7.06 Foreclosure. The
Pledgor agrees that upon the occurrence and during the continuation of an Event
of Default, the Collateral Agent may elect to nonjudicially or judicially
foreclose against any real or personal property security it holds for the
Obligations or any part thereof, or to exercise any other remedy against the
Company or any other Person, any security or any guarantor, even if the effect
of that action is to deprive the Pledgor of the right to collect reimbursement
from the Company or any other Person for any sums paid by the Pledgor to the
Collateral Agent or any Senior Secured Party.
Section
7.07 Waiver of Rights of
Subrogation. Until the Discharge Date, (a) the Pledgor shall
not exercise any right of subrogation and shall not enforce any remedy that the
Senior Secured Parties now have or may hereafter have against the Company, and
waives the benefit of, and all rights to participate in, any security now or
hereafter held by the Collateral Agent or any Senior Secured Party from the
Company and (b) the Pledgor agrees not to exercise any claim, right or remedy
that the Pledgor may now have or hereafter acquire against the Company that
arises hereunder and/or from the performance by the Pledgor hereunder, including
any claim, remedy or right of subrogation, reimbursement, exoneration,
contribution, indemnification, or participation in any claim, right or remedy of
the Senior Secured Parties against the Company, or any security that the Senior
Secured Parties now have or hereafter acquire, whether or not such claim, right
or remedy arises in equity, under contract, by statute, under common Law or
otherwise. Any amount paid to the Pledgor on account of any such subrogation
rights prior to the Discharge Date shall be held in trust for the benefit of the
Collateral Agent and shall immediately thereafter be paid to the Collateral
Agent, for the benefit of the Senior Secured Parties.
Section
7.08 Application of
Proceeds. Upon the occurrence and during the continuation of
an Event of Default, the proceeds of any sale of or other realization upon all
or any part of the Collateral shall be applied in accordance with Section 9.12 (Application of Proceeds) of
the Credit Agreement.
Section
7.09 Collateral Agent May
Perform. Upon the occurrence and during the continuance of an
Event of Default, if the Pledgor fails to perform any agreement contained
herein, the Collateral Agent may itself perform, or cause performance of, such
agreement, and the reasonable expenses of the Collateral Agent incurred in
connection therewith shall be part of the Obligations.
Section
7.10 Limitation on Duty of
Collateral Agent with Respect to the Collateral. The powers
conferred on the Collateral Agent hereunder are solely to protect its interest
and the interests of the Senior Secured Parties in the Collateral and shall not
impose any duty on the Collateral Agent or any of its designated agents to
exercise any such powers. Except for (a) the safe custody of any Collateral in
its possession, (b) the accounting for monies actually received by it hereunder,
(c) the exercise of reasonable care in the custody and preservation of the
Collateral in its possession, and (d) any duty expressly imposed on the
Collateral Agent by applicable Law with respect to any Collateral that has not
been waived hereunder, the Collateral Agent shall have no duty with respect to
any Collateral and no implied duties or obligations shall be read into this
Agreement against the Collateral Agent. The Collateral Agent shall be deemed to
have exercised reasonable care in the custody and preservation of the Collateral
in its possession if the Collateral is accorded treatment that is substantially
equivalent to that which the Collateral Agent accords its own property, it being
expressly agreed, to the maximum extent permitted by applicable Law, that the
Collateral Agent shall have no responsibility for (i) taking any necessary steps
to preserve rights against any parties with respect to any Collateral, or
(ii) taking any action to protect against any diminution in value of the
Collateral, but in each case, the Collateral Agent may do so and all expenses
reasonably incurred in connection therewith shall be part of the
Obligations.
Section
7.11 Termination of Security
Interest. Upon the Discharge Date, this Agreement and the
security interest and all other rights granted hereby shall terminate and all
rights to the Collateral shall revert to the Pledgor. Upon any such termination,
the Collateral Agent will, at the Pledgor’s sole expense and upon its written
direction, promptly return all certificates and other instruments previously
delivered to the Collateral Agent representing the Pledged Equity Interests or
any other Collateral and, execute and, subject to Section 8.11 (Reinstatement), deliver to the
Pledgor such documents (including UCC-3 termination statements) as the Company
or the Pledgor shall reasonably request to evidence such termination, to release
all security interest on the Collateral and to return such Collateral to the
Pledgor.
ARTICLE
VIII
MISCELLANEOUS
Section
8.01 Amendments,
Etc. This Agreement may not be amended, modified or
supplemented, except in a writing signed by each of the parties hereto and
otherwise in accordance with the provisions of Section 11.01 (Amendments,
Etc.) of the Credit Agreement.
Section
8.02 Applicable Law;
Jurisdiction; Etc.
(a) GOVERNING
LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA
WITHOUT REFERENCE TO CONFLICTS OF LAWS (OTHER THAN SECTION 5-1401 OF THE NEW
YORK GENERAL OBLIGATIONS LAW).
(b) SUBMISSION TO
JURISDICTION. EACH OF THE PLEDGOR AND THE COMPANY IRREVOCABLY
AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY
AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK,
AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER FINANCING DOCUMENT, OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO
IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT
OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT.
EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS
AGREEMENT OR IN ANY OTHER FINANCING DOCUMENT SHALL AFFECT ANY RIGHT THAT THE
COLLATERAL AGENT OR ANY OTHER SENIOR SECURED PARTY MAY OTHERWISE HAVE TO BRING
ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER FINANCING
DOCUMENT AGAINST THE PLEDGOR, THE COMPANY OR ANY OTHER LOAN PARTY OR ITS
PROPERTIES IN THE COURTS OF ANY JURISDICTION.
(c) WAIVER OF
VENUE. EACH OF THE PLEDGOR AND THE COMPANY IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER
FINANCING DOCUMENT IN ANY COURT REFERRED TO IN SECTION 8.02(b). EACH
OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF
SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
(d) Appointment of Process Agent
and Service of Process. Each of the Pledgor and the Company
hereby irrevocably appoints CT Corporation System with an office on the date
hereof at 111 Eighth Avenue, New York, New York 10011, as its agent to receive
on behalf of itself services of copies of the summons and complaint and any
other process that may be served in any such action or proceeding in the State
of New York. If for any reason the Process Agent shall cease to act
as such for either of the Pledgor or the Company, the Pledgor or the Company, as
the case may be, hereby agrees to designate a new agent in New York City on the
terms and for the purposes of this Section 8.02
reasonably satisfactory to the Collateral Agent. Such service may be made by
mailing or delivering a copy of such process to the Pledgor or the Company, as
the case may be, in care of the Process Agent at the Process Agent’s above
address, and each of the Pledgor and the Company hereby irrevocably authorizes
and directs the Process Agent to accept such service on its behalf. As an
alternative method of service, each of the Pledgor and the Company also
irrevocably consents to the service of any and all process in any such action or
proceeding by the airmailing of copies of such process to the Pledgor or the
Company, as the case may be, at its then effective notice addresses pursuant to
Section 8.09
(Notices).
(e) Immunity. To
the extent that either the Pledgor or the Company has or hereafter may acquire
any immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property, each
of the Pledgor and the Company hereby irrevocably and unconditionally waives
such immunity in respect of its obligations under the Financing Documents and,
without limiting the generality of the foregoing, agrees that the waivers set
forth in this Section
8.02(e) shall have the fullest scope permitted under the Foreign
Sovereign Immunities Act of 1976 of the United States and are intended to be
irrevocable for purposes of such Act.
(f) WAIVER OF JURY
TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (i) CERTIFIES THAT
NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (ii) ACKNOWLEDGES THAT IT
AND THE OTHER PARTY HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND
THE OTHER FINANCING DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION
8.02(f).
Section
8.03 Counterparts;
Effectiveness. This Agreement may be executed in counterparts
(and by different parties hereto in different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. This Agreement shall become effective when it has been executed
by the Collateral Agent and when the Collateral Agent has received counterparts
hereof that bear the signatures of the each of the Pledgor and the Company.
Delivery of an executed counterpart of a signature page of this Agreement by
telecopy or portable document format (“pdf”) shall be effective as delivery of a
manually executed counterpart of this Agreement.
Section
8.04 Delay Not Waiver; Separate
Causes of Action. No delay or omission to exercise any right,
power or remedy accruing to the Collateral Agent upon the occurrence of any
Event of Default shall impair any such right, power or remedy of the Collateral
Agent, nor shall it be construed to be a waiver of any such Event of Default, or
an acquiescence therein, or of or in any other breach or default thereafter
occurring, nor shall any waiver of any other breach or default under this
Agreement or any other Financing Document be deemed a waiver of any other breach
or default theretofore or thereafter occurring. Any waiver, permit, consent or
approval of any kind or character on the part of the Collateral Agent of any
breach or default under this Agreement, or any waiver on the part of the Senior
Secured Parties or the Collateral Agent of any provision or condition of this
Agreement, must be in writing and shall be effective only to the extent
specifically set forth in such writing. Each and every default by the Pledgor or
the Company in payment hereunder shall give rise to a separate cause of action
hereunder, and separate suits may be brought hereunder as each cause of action
arises.
Section
8.05 Entire
Agreement. This Agreement, together with the other Financing
Documents, is intended by the parties as a final expression of their agreement
and is intended as a complete and exclusive statement of the terms and
conditions thereof.
Section
8.06 Expenses. Each
of the Pledgor and the Company agrees to pay on demand to the Collateral Agent
all costs and expenses incurred by the Collateral Agent (including fees,
expenses and disbursements of counsel) incident to its enforcement, exercise,
protection or preservation of any of its rights, remedies or claims (or the
rights or claims of any Senior Secured Party) under this Agreement.
Section
8.07 Headings
Descriptive. Article and Section headings have been inserted
in this Agreement as a matter of convenience for reference only and it is agreed
that such article and section headings are not a part of this Agreement and
shall not be used in the interpretation of any provision of this
Agreement.
Section
8.08 Interest. Any
amount required to be paid by the Pledgor or the Company pursuant to the terms
hereof that is not paid when due shall bear interest at the Default Rate or the
maximum rate permitted by Law, whichever is less, from the date due until paid
in full in cash.
Section
8.09 Notices.
(a) All
notices, requests, demands or other communications provided for herein
(including, without limitation, any modifications of, or waivers or consents
under, this Agreement) shall be given or made in writing in the manner set out
in Section 11.12
(Notices
and Other Communications) of the Credit
Agreement and to the addresses set forth below:
If to the
Pledgor: Pacific
Ethanol California, Inc.
c/o Pacific Ethanol, Inc.
400 Capitol Mall, Suite
2060
Sacramento, CA 95814
Attention: Chief Operating
Officer
Facsimile: (916)
446-3936
With a copy
to: Pacific
Ethanol California, Inc.
c/o Pacific Ethanol, Inc.
400 Capitol Mall, Suite
2060
Sacramento, CA 95814
Attention: General
Counsel
Facsimile: (916)
446-3936
And a copy
to: Cooley
Godward Kronish LLC
1114
Avenue of the Americas
New York,
NY 10036
Attn:
Richard S. Kanowitz, Esq.
Telephone:
(212) 479-6000
Facsimile:
(212) 479-6275
If to the
Company: Pacific
Ethanol Holding Co. LLC
c/o Pacific Ethanol, Inc.
400 Capitol Mall, Suite
2060
Sacramento, CA 95814
Attention: Chief Operating
Officer
Facsimile: (916)
446-3936
With a copy
to: Pacific
Ethanol Holding Co. LLC
c/o Pacific Ethanol, Inc.
400 Capitol Mall, Suite
2060
Sacramento, CA 95814
Attention: General
Counsel
Facsimile: (916)
446-3936
And a copy
to: Cooley
Godward Kronish LLC
1114
Avenue of the Americas
New York,
NY 10036
Attn:
Richard S. Kanowitz, Esq.
Telephone:
(212) 479-6000
Facsimile: (212) 479-6275
If to the Collateral Agent:
WestLB AG, New York Branch
Attn: CRM Americas-
Documentation/Agency
1211 Avenue of the
Americas
New York, New York 10036
Attention: Richard
Garbarino
Telephone: (212)
597-1307
Facsimile: (212)
597-1490
Email: Richard_Garbarino@west1b.com
(b) Each of
the parties hereto may change its address, telecopier or telephone number or
e-mail address for notices and other communications hereunder by notice to the
other parties hereto.
Section
8.10 No Waiver; Cumulative
Remedies. No failure by the Collateral Agent to exercise, and
no delay by the Collateral Agent in exercising, any right, remedy, power or
privilege hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege.
Section
8.11 Reinstatement. This
Agreement and the obligations of the Pledgor and the Company hereunder shall
automatically be reinstated if and to the extent that for any reason any payment
made pursuant to this Agreement is rescinded or must otherwise be restored or
returned, whether as a result of any proceedings in bankruptcy or reorganization
or otherwise with respect to the Pledgor, the Company or any other Person or as
a result of any settlement or compromise with any Person (including the Pledgor
or the Company) in respect of such payment, and the Pledgor or the Company shall
pay the Collateral Agent on demand all of its reasonable costs and expenses
(including reasonable fees, expenses and disbursements of counsel) incurred by
the Collateral Agent in connection with such rescission or
restoration.
Section
8.12 Remedies
Cumulative. No right, power or remedy herein conferred upon or
reserved to the Collateral Agent hereunder is intended to be exclusive of any
other right, power or remedy, and every such right, power and remedy shall, to
the extent permitted by applicable Law, be cumulative and in addition to every
other right, power and remedy given hereunder or under any other Financing
Document now or hereafter existing at Law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy. Resort to any or all security now or hereafter held by the
Collateral Agent or any other Senior Secured Party, may be taken concurrently or
successively and in one or several consolidated or independent judicial actions
or lawfully taken nonjudicial proceedings, or both.
Section
8.13 Rights of Collateral
Agent. The Collateral Agent shall be entitled to the rights,
protections, immunities and indemnities set forth in the Credit Agreement as if
specifically set forth herein. With respect to the duties, obligations and
rights of the Collateral Agent, if any conflict between the terms of this
Agreement and the terms of the Credit Agreement arises, the terms of the Credit
Agreement shall govern and control.
Section
8.14 Severability. If
any provision of this Agreement is held to be illegal, invalid or unenforceable,
(a) the legality, validity and enforceability of the remaining provisions of
this Agreement shall not be affected or impaired thereby and (b) the parties
shall endeavor in good faith negotiations to replace the illegal, invalid or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the illegal, invalid or unenforceable
provisions. The invalidity of a provision in a particular jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
Section
8.15 Successions and
Assignments. This Agreement shall create a continuing pledge
and assignment of and security interest in the Collateral and shall (a) remain
in full force and effect until the Discharge Date and as otherwise provided in
Section 8.16
(Survival
of Provisions); (b) be binding
upon the Company, the Pledgor, and their respective successors and assigns; and
(c) inure, together with the rights and remedies of the Collateral Agent, to the
benefit of the Collateral Agent, the Senior Secured Parties and their respective
successors and permitted assigns. The release of the security interest in any of
the Collateral, the taking or acceptance of additional security, or the resort
by the Collateral Agent to any security it may have in any order it may deem
appropriate, shall not affect the liability of any Person on the indebtedness
secured hereby, except for release of the Collateral upon the Discharge Date.
The Pledgor is not entitled to assign its obligations hereunder to any other
Person without the written consent of the Collateral Agent, and any purported
assignment in violation of this provision shall be void.
Section
8.16 Survival of
Provisions. All agreements, representations and warranties
made herein shall survive the execution and delivery of this Agreement and the
Financing Documents and the making of the Loans and extensions of credit under
the Credit Agreement. Notwithstanding anything in this Agreement or implied by
Law to the contrary, the agreements of each of the Pledgor and the Company set
forth herein shall terminate at the same time as the security interest and other
rights granted hereunder shall terminate pursuant to Section 7.11 (Termination
of Security Interest).
Section
8.17 Third-Party
Rights. Nothing in this Agreement, expressed or implied, is
intended or shall be construed to confer upon, or give to any Person, other than
the Pledgor, the Collateral Agent and the Senior Secured Parties, any security,
rights, remedies or claims, legal or equitable, under or by reason hereof, or
any covenant or condition hereof; and this Agreement and the covenants and
agreements herein contained are and shall be held to be for the sole and
exclusive benefit of the Pledgor, the Collateral Agent and the Senior Secured
Parties.
Section
8.18 Time. Time
is of the essence of this Agreement.
Section
8.19 Waiver of Consequential
Damages, Etc. To the fullest extent permitted by applicable
Law, neither the Pledgor or the Company shall assert, and each of the Pledgor
and the Company hereby waives, any claim against any Indemnitee, on any theory
of liability, for special, indirect, consequential or punitive damages (as
opposed to direct or actual damages) arising out of, in connection with, or as a
result of, this Agreement, any other Financing Document or any agreement or
instrument contemplated hereby, the transactions contemplated hereby or thereby,
any Loan or the use of the proceeds thereof. No Indemnitee shall be liable for
any damages arising from the use by unintended recipients of any information or
other materials distributed by it through telecommunications, electronic or
other information transmission systems in connection with this Agreement or the
other Financing Documents or the transactions contemplated hereby or
thereby.
Section
8.20 Waiver of Litigation
Payments. To the extent that the Pledgor or the Company may,
in any action, suit or proceeding brought in any of the courts referred to in
Section 8.02
(Applicable
Law; Jurisdiction; Etc.) or elsewhere
arising out of or in connection with this Agreement or any other Financing
Document to which it is a party, be entitled to the benefit of any provision of
Law requiring the Collateral Agent or any Senior Secured Party in such action,
suit or proceeding to post security for the costs of such Pledgor or Company or
to post a bond or to take similar action, each of the Pledgor and the Company
hereby irrevocably waives such benefit, in each case to the fullest extent now
or in the future permitted under the Laws of New York or, as the case may be,
the jurisdiction in which such court is located.
Section
8.21 Scope of
Liability. Except as provided herein and in any other
Transaction Document to which any Non-Recourse Party is a party, there shall be
no recourse against the Pledgor or any of its Affiliates (except the Borrowers),
or the stockholders or other owners, officers, directors or employees of any of
them (each, a “Non-Recourse Party”),
for any liability to the Lenders arising in connection with any breach or
default under this Agreement, and the Lenders shall look solely to the Borrowers
(but not to any Non-Recourse Party or to any distribution received by any
Non-Recourse Party in compliance with the terms of the Financing Documents), the
Collateral and the rents, issues, profits, proceeds and products of the
Collateral, in enforcing rights and obligations under and in connection with the
Financing Documents; provided that (a) the
foregoing provisions of this Section 8.21 shall
not constitute a waiver, release or discharge of any of the indebtedness, or of
any of the terms, covenants, conditions, or provisions of this Agreement, the
Notes any other Financing Document (but without personal liability to the
Non-Recourse Parties except as provided herein and therein), and the same shall
continue until the Discharge Date; (b) the foregoing provisions of this Section 8.21 shall
not limit or restrict the right of any Senior Secured Party to name any Borrower
or any other Person (including any Non-Recourse Party) as a defendant in any
action or suit for a judicial foreclosure or for the exercise of any other
remedy under or with respect to this Agreement or any other Financing Document,
or otherwise, or for injunction or specific performance, so long as (subject to
the last sentence of this Section 8.21) no
judgment in the nature of a deficiency judgment shall be enforced against any
Non-Recourse Party out of any property, assets or funds other than the
Collateral and the rents, issues, profits, proceeds or products of the
Collateral, and any other property or assets of any Borrower; (c) the foregoing
provisions of this Section 8.21
(including this proviso) shall not affect or diminish or constitute a waiver,
release or discharge of any specific written obligation, covenant, or agreement
made by any of the Non-Recourse Parties or any security granted by any of the
Non-Recourse Parties in support of the obligations of such Persons under any
guarantee or similar undertaking or as security for the obligations of any
Borrower; and (d) the foregoing provisions of this Section 8.21 shall
not constitute a waiver of any of the terms, covenants, conditions, or
provisions of any Project Document (but without personal liability to the
Non-Recourse Parties except as provided herein and therein), and shall not limit
or restrict the right of any Senior Secured Party under any Project Document, to
the extent provided therein or in any other Transaction Document, to name any
Borrower or any other Person (including any Non-Recourse Party) party to such
Project Document as a defendant in any action or suit for the exercise of
remedies under or with respect to any such Project Document, or for injunction
or specific performance thereunder. Notwithstanding the foregoing, it is
expressly understood and agreed that nothing contained in this Section 8.21 shall be
deemed to (i) limit or restrict any right or remedy of the Senior Secured
Parties (or any assignee or beneficiary thereof or successor thereto) with
respect to (and the Pledgor shall remain fully liable for) any
breach, default, fraud or willful misconduct by the Pledgor; or (ii) limit in
any respect the enforceability against the Pledgor of this Agreement in
accordance with its terms.
[The
remainder of this page is intentionally blank. The next page is the signature
page.]
IN
WITNESS WHEREOF, the parties hereto, by their officers duly authorized,
intending to be legally bound, have caused this Pledge and Security Agreement to
be duly executed and delivered as of the date first above written.
| |
Pacific
Ethanol California, Inc.,
as
Pledgor
Name: John
T. Miller
Title: COO
Pacific
Ethanol Holding Co. LLC,
as
Company
Name: John
T. Miller
Title: COO
WestLB
AG, New York Branch, as Collateral Agent
Name: Ronald
Spitzer
Title: Executive
Director
By:
/s/ DOMINICK
D’ASCOLI
Name:
Dominick
D’Ascoli
Title:
Director
|
EXHIBIT
A
IRREVOCABLE
PROXY
The
undersigned hereby appoints WestLB AG, New York Branch, not in its individual
capacity but solely as “Collateral Agent” under the Credit Agreement (the “Collateral Agent”),
as Proxy with full power of substitution, and hereby authorizes the Collateral
Agent to represent and vote all of the membership interests of Pacific Ethanol
Holding Co. LLC, a limited liability company organized and existing under the
Laws of the State of Delaware, owned by the undersigned on the date of exercise
hereof during the continuance of an Event of Default under, and as defined in,
the Pledge and Security Agreement, dated as of May __, 2009 among Pacific
Ethanol California, Inc., Pacific Ethanol Holding Co. LLC and the Collateral
Agent at any meeting or at any other time chosen by the Collateral Agent in its
sole discretion.
|
Date: ________________________________
|
Pacific
Ethanol California, Inc.
|
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|
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By:
_________________________________________
Name:
Title:
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EXHIBIT
B
TRANSFER
DOCUMENT
FOR VALUE
RECEIVED, Pacific Ethanol California, Inc. hereby sells, assigns and transfers
unto ___________________ all of its ownership interests in Pacific Ethanol
Holding Co. LLC, a limited liability company organized and existing under the
Laws of the State of Delaware, standing in its name on the books of Pacific
Ethanol Holding Co. LLC, represented by the following
certificate(s): ___________, and irrevocably appoints
__________________ as attorney to transfer the ownership interests with full
power of substitution in the premises.
|
Date: ________________________________
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Pacific
Ethanol California, Inc.
|
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By:
______________________________________________
Name:
Title:
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In the
presence of:
_________________________
SCHEDULE
I
DESCRIPTION
OF PLEDGED EQUITY INTERESTS
|
Description:
|
|
100%
of the membership interests of Pacific Ethanol Holding Co. LLC,
represented by Certificate No. 1
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Schedule I-1