Sponsor Support Agreement among PACIFIC ETHANOL HOLDING CO. LLC, as the Borrowers' Agent, PACIFIC ETHANOL, INC., as the Sponsor, and WESTLB AG, NEW YORK BRACH as the Administrative Agent Dated as of February 27, 2007
Exhibit
10.2
among
PACIFIC
ETHANOL HOLDING CO. LLC,
as
the
Borrowers' Agent,
as
the
Sponsor,
and
WESTLB
AG, NEW YORK ▇▇▇▇▇
as
the
Administrative Agent
Dated
as of February 27, 2007
TABLE
OF CONTENTS
| Page | ||
| ARTICLE I DEFINITIONS AND INTERPRETATION | 2 | |
|
Section
1.01.
|
Definitions
|
2
|
|
Section
1.02.
|
Credit
Agreement Definitions
|
5
|
|
Section
1.03.
|
Rules
of Interpretation
|
5
|
|
Section
1.04.
|
Release
|
5
|
|
ARTICLE
II
PROJECT
COMPLETION DEFICIENCY
|
6
|
|
|
Section
2.01.
|
Sponsor's
Completion Undertaking
|
6
|
|
Section
2.02.
|
Action
to be Taken by the Borrowers
|
6
|
|
Section
2.03.
|
Deficiency
Notices
|
6
|
|
Section
2.04.
|
Sponsor's
Deficiency Funding Obligation
|
7
|
|
Section
2.05.
|
No
Obligation of the Administrative Agent
|
8
|
|
Section
2.06.
|
Termination
of Sponsor's Funding Obligations
|
8
|
|
ARTICLE
III
WARRANTY
OBLIGATIONS
|
8
|
|
|
Section
3.01.
|
Sponsor's
Warranty Undertaking
|
8
|
|
Section
3.02.
|
Action
to be Taken by the Borrowers
|
9
|
|
Section
3.03.
|
Warranty
Notices
|
9
|
|
Section
3.04.
|
Sponsor's
Warranty Performance Obligations
|
10
|
|
Section
3.05.
|
Sponsor's
Warranty Funding Obligations
|
10
|
|
Section
3.06.
|
Independent
Obligations
|
11
|
|
Section
3.07.
|
No
Obligation of the Administrative Agent
|
11
|
|
Section
3.08.
|
Termination
of Sponsor's Warranty Obligations; Cap
|
11
|
|
ARTICLE
IV
PROVISIONS
APPLICABLE TO ALL FUNDINGS
|
11
|
|
|
Section
4.01.
|
Acceleration
of Senior Debt Obligations
|
11
|
|
Section
4.02.
|
Adjustments
to Warranty Funding Cap and Sponsor Funding Cap
|
12
|
|
ARTICLE
V
REPRESENTATIONS,
WARRANTIES AND COVENANTS
|
13
|
|
|
Section
5.01.
|
Sponsor's
Representations and Warranties
|
13
|
|
Section
5.02.
|
Survival
and Administrative Agent Reliance
|
14
|
|
Section
5.03.
|
Rights
and Remedies not Limited
|
14
|
|
Section
5.04.
|
Sponsor
Obligations
|
14
|
|
Section
5.05.
|
Accounting
Matters
|
14
|
i
| Page | ||
|
ARTICLE
VI
SAVING
PROVISIONS
|
15
|
|
|
Section
6.01.
|
Additional
Security
|
15
|
|
Section
6.02.
|
Taxes
|
15
|
|
Section
6.03.
|
Subrogation
|
15
|
|
Section
6.04.
|
Waiver
of Defenses
|
16
|
|
Section
6.05.
|
Continuing
and Unconditional Obligations
|
18
|
|
Section
6.06.
|
Bankruptcy
|
19
|
|
ARTICLE
VII
MISCELLANEOUS
|
20
|
|
|
Section
7.01.
|
Amendments,
Etc
|
20
|
|
Section
7.02.
|
Applicable
Law; Jurisdiction; Etc
|
20
|
|
Section
7.03.
|
Benefits
of Agreement
|
22
|
|
Section
7.04.
|
Expenses
|
22
|
|
Section
7.05.
|
Interest
|
22
|
|
Section
7.06.
|
Counterparts;
Effectiveness
|
22
|
|
Section
7.07.
|
Entire
Agreement
|
23
|
|
Section
7.08.
|
No
Waiver; Cumulative Remedies
|
23
|
|
Section
7.09.
|
Notices
and Other Communications
|
23
|
|
Section
7.10.
|
Reinstatement
|
24
|
|
Section
7.11.
|
Rights
of the Administrative Agent
|
25
|
|
Section
7.12.
|
Severability
|
25
|
|
Section
7.13.
|
Successions
and Assignments
|
25
|
|
Section
7.14.
|
Survival
|
25
|
|
Section
7.15.
|
Time
|
25
|
|
Section
7.16.
|
Waiver
of Litigation Payments
|
25
|
|
Section
7.17.
|
Term
of Agreement
|
25
|
Exhibit A-1 Form
of
Deficiency Notice Issued by the Administrative Agent
Exhibit
A-2 Form
of
Deficiency Notice Issued by Borrower
Exhibit B-1 Form
of
Warranty Notice Issued by the Administrative Agent
Exhibit
B-2 Form
of
Warranty Notice Issued by Borrower
ii
This
SPONSOR
SUPPORT AGREEMENT,
dated
as of February 27, 2007 (this "Agreement"),
is
entered into by and among PACIFIC ETHANOL HOLDING CO. LLC, a Delaware limited
liability company (the "Borrowers'
Agent"),
PACIFIC ETHANOL, INC., a Delaware corporation (the "Sponsor")
and
WESTLB AG, NEW YORK BRANCH, in its capacity as administrative agent for the
Lenders (together with its successors, designees and assigns in such capacity,
the "Administrative
Agent").
RECITALS
WHEREAS,
the Borrowers' Agent, Pacific Ethanol Madera LLC, a Delaware limited liability
company ("Madera"),
Pacific Ethanol Columbia, LLC, a Delaware limited liability company
("▇▇▇▇▇▇▇▇"),
Pacific Ethanol Stockton, LLC, a Delaware limited liability company
("Stockton"),
Pacific Ethanol Imperial, LLC, a Delaware limited liability company
("▇▇▇▇▇▇▇")
and
Pacific Ethanol Magic Valley, LLC, a Delaware limited liability company
("Burley"
and,
together with the Borrowers' Agent, Madera, Boardman, Stockton, and ▇▇▇▇▇▇▇,
the
"Borrowers")
have
entered into that certain Credit Agreement, dated as of the date hereof (as
amended, amended and restated, restated, supplemented or otherwise modified
from
time to time, the "Credit
Agreement"),
among
the Borrowers, the Borrowers' Agent, each of the Lenders from time to time
party
thereto, the Administrative Agent, WESTLB AG, NEW YORK BRANCH, as collateral
agent for the Lenders, UNION BANK OF CALIFORNIA, N.A., as accounts bank, WESTLB
AG, NEW YORK BRANCH, as lead arranger and sole bookrunner, MIZUHO CORPORATE
BANK, LTD., as lead arranger and co-syndication agent, CIT CAPITAL SECURITIES
LLC, as lead arranger and co-syndication agent, CÖÖPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH, as lead
arranger and co-documentation agent, and BANCO SANTANDER CENTRAL HISPANO S.A,
NEW YORK BRANCH, as lead arranger and co-documentation agent, pursuant to which,
among other things, the Lenders have made loans to, and for the benefit of,
the
Borrowers;
WHEREAS,
as of the date hereof, the Sponsor indirectly owns one hundred percent (100%)
of
all issued and outstanding membership interests in the Borrowers;
and
WHEREAS,
it is a requirement under the Credit Agreement that the parties hereto 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, and intending to
be
legally bound, the Borrowers' Agent and the Sponsor hereby agree with the
Administrative Agent, for the benefit of the Lenders, as follows:
ARTICLE
I
Definitions
and Interpretation
Section
1.01. Definitions.
The
following terms when used in this Agreement, including its preamble and
recitals, shall have the following meanings:
"Administrative
Agent"
has the
meaning provided in the preamble
to this
Agreement.
"▇▇▇▇▇▇▇▇"
has the
meaning provided in the recitals
to this
Agreement.
"Borrowers"
has the
meaning provided in the recitals
to this
Agreement.
"Borrowers'
Agent"
has the
meaning provided in the recitals
to this
Agreement.
"▇▇▇▇▇▇▇"
has the
meaning provided in the recitals
to this
Agreement.
"▇▇▇▇▇▇"
has the
meaning provided in the recitals
to this
Agreement.
"Completion
Adjustment"
means,
with respect to each Greenfield Plant, on the Commercial Operation Date for
such
Greenfield Plant, an amount equal to twenty-five percent (25%) of any difference
(whether positive or negative) between (x) the aggregate total amount of
Construction Project Costs set forth for such Greenfield Plant in the
Construction Budget for such Greenfield Plant delivered and approved pursuant
to
Section 6.04(h) (Conditions
to First Funding for Each Greenfield Plant)
of the
Credit Agreement minus
(y) the aggregate total amount of actual and documented Construction
Project Costs for such Greenfield Plant through and including the Commercial
Operation Date (after taking into account any Construction Project Costs
reserved for in accordance with clause (vi) of the definition of Commercial
Operation Date).
"Closing
Construction Budget"
means,
with respect to each Greenfield Plant, the Construction Budget for such
Greenfield Plant delivered to, and approved by, the Administrative Agent on
the
Closing Date.
"Construction
Funding Adjustment"
means,
with respect to each Greenfield Plant, an amount equal to twenty-five percent
(25%) of any positive difference between (x) the aggregate total amount of
Construction Project Costs set forth for such Greenfield Plant in the
Construction Budget for such Greenfield Plant delivered and approved pursuant
to
Section 6.04(h) (Conditions
to First Funding for Each Greenfield Plant)
of the
Credit Agreement minus
(y) the aggregate total amount of Construction Project Costs set forth for
such Greenfield Plant in the Closing Construction Budget for such Greenfield
Plant.
"Construction
Project Costs"
means,
with respect to any Greenfield Plant, Project Costs corresponding to the
following Line Items in the applicable Construction Budget: Engineering /
Procurement / Land & Sitework ; Site Utilities / Buildings / Other
Improvements; Grain Systems & Rail Infrastruacture; Concrete Earthwork /
Foundations; Structural Steel / Piping Materials; Pipe Installation / Valves;
Equipment & Installation; Field & Shop Fabricated Tanks; Evaporators /
Vessels / Columns; Electrical / Control Systems / Instrumentation; Final Product
Handling / Fire Safety / Other.
"Credit
Agreement"
has the
meaning provided in the recitals
to this
Agreement.
"Deficiency
Notice"
means a
notice delivered by the Administrative Agent and/or a Borrower to the Sponsor
substantially in the form of Exhibit A-1
or
Exhibit A-2,
as the
case may be, with respect to any Project Completion Deficiency which, in the
case of a Borrower, shall be subject to any approval required of the Independent
Engineer pursuant to Section 2.03(a)
(Deficiency
Notices).
"Deficiency
Support Availability Period"
means,
with respect to each Greenfield Plant, the period commencing on the initial
Funding Date for such Greenfield Plant and terminating on the earlier to occur
of (a) the Commercial Operation Date for such Greenfield Plant and
(b) the date on which (i) the aggregate amount of all Sponsor
Deficiency Payments made with respect to such Greenfield Plant equal the Sponsor
Funding Cap for such Greenfield Plant and (ii) if such Greenfield Plant is
an
Eligible Plant, no Excess Amount remains available for funding Sponsor
Deficiency Payments for such Eligible Plant.
"Eligible
Plant"
means,
on the Commercial Operation Date for any Greenfield Plant (or as otherwise
provided in Section 4.02
(Adjustments
to Warranty Funding Cap and Sponsor Funding Cap)),
any
other Greenfield Plant (a) that has not achieved its Commercial Operation
Date and (b) that has drawn and applied fifty percent (50%) or more of the
aggregate total amount available under (i) the Contingency Line Item in the
Closing Construction Budget for such Greenfield Plant and (ii) the Sponsor
Funding Cap for such Greenfield Plant on the Closing Date.
"Excess
Amount"
means,
with respect to any Greenfield Plant, on the Commercial Operation Date for
such
Greenfield Plant, the difference between (a) the Sponsor Funding Cap for
such Greenfield Plant and (b) the aggregate total amount of all Sponsor
Deficiency Payments made with respect to such Greenfield Plant (which Excess
Amounts will be applied in accordance with this Agreement without
duplication).
"Madera"
has the
meaning provided in the recitals
to this
Agreement.
"PECA"
means
the Pledgor.
"Project
Completion Deficiency"
means,
with respect to any Greenfield Plant, any shortfall of funds required by the
Borrowers to:
|
(i)
|
achieve
the Commercial Operation Date for such Greenfield Plant by the Conversion
Date Certain; or
|
|
(ii)
|
pay
Project Costs (other than Debt Service) for such Greenfield Plant
as and
when they become due and payable.
|
"Sponsor"
has the
meaning provided in the preamble
to this
Agreement.
"Sponsor
Deficiency Payments "
means a
dollar amount paid by the Sponsor for the purpose of funding a Project
Completion Deficiency in accordance with a Deficiency Notice.
"Sponsor
Funding Cap"
means:
(a) with
respect to the Stockton Plant, fourteen million six hundred thirty-three
thousand seven hundred sixty-six Dollars ($14,633,766);
(b) with
respect to the ▇▇▇▇▇▇▇ Plant, fourteen million three hundred thirty-one thousand
one hundred forty-four Dollars ($14,331,144); and
(c) with
respect to the ▇▇▇▇▇▇ Plant, thirteen million four hundred forty-nine thousand
two hundred seven Dollars ($13,449,207);
in
each
such case subject to the following adjustments:
(x) on
the
date of the initial Funding for the relevant Plant, by adding to such amount
the
Construction Funding Adjustment for such Plant;
(y) on
the
Commercial Operation Date for the relevant Plant, (i) in the event that the
Completion Adjustment for such Plant is a positive amount, by subtracting from
such amount such Completion Adjustment or (ii) in the event that the Completion
Adjustment for such Plant is a negative amount, by adding to such amount the
absolute value of such Completion Adjustment; and
(z) such
other adjustments required pursuant to Section 4.02
(Adjustments
to Warranty Funding Cap and Sponsor Funding Cap).
"Sponsor
Payment"
means
any Sponsor Warranty Payment or any Sponsor Deficiency Payment.
"Sponsor
Warranty Payments"
means,
as the context requires, (a) a dollar amount paid by the Sponsor for the purpose
of funding a Warranty Payment Claim in accordance with a Warranty Notice or
(b)
costs and expenses incurred by the Sponsor (or any of its Affiliates other
than
the Borrowers or, in the case of PECA, other than as required pursuant to any
Construction Management Services Agreement or any Operation and Maintenance
Agreement) to satisfy any Warranty Performance Claim.
"Stockton"
has the
meaning provided in the recitals
to this
Agreement.
"Warranty
Availability Period"
means,
with respect to each Warranty Plant, the period commencing on the Commercial
Operation Date for such Warranty Plant and terminating on the date that is
twelve (12) months from the Commercial Operation Date for such Warranty Plant;
provided,
that if
any Warranty Work is performed on such Warranty Plant, then the "Warranty
Availability Period" with respect to such Warranty Work shall extend until
the
later of (i) twelve (12) months from the date of completion of such
Warranty Work and (ii) the expiration of the original Warranty Availability
Period, but in no event shall such Warranty Availability Period extend beyond
twenty-four (24) months after the Commercial Operation Date of such
Warranty Plant.
"Warranty
Claim"
means
any Warranty Performance Claim or any Warranty Payment Claim.
"Warranty
Funding Cap"
means
(a) with respect to the Greenfield Plants, the aggregate of all Excess Amounts
and (b) with respect to the ▇▇▇▇▇▇▇▇ Plant, ten million Dollars ($10,000,000)
or, if less, the aggregate Sponsor Funding Cap, in each case as adjusted
pursuant to Section 4.02
(Adjustments
to Warranty Funding Cap and Sponsor Funding Cap).
"Warranty
Notice"
means a
notice delivered by the Administrative Agent and/or a Borrower to the Sponsor
substantially in the form of Exhibit
B-1
or
Exhibit
B-2,
as the
case may be, with respect to any Warranty Claim which, in the case of a
Borrower, shall be subject to any approval required of the Independent Engineer
pursuant to Section
3.03(a) (Warranty
Notices).
"Warranty
Payment Claim"
has the
meaning provided in Section
3.04(b) (Sponsor's
Warranty Performance Obligations).
"Warranty
Performance Claim"
means,
with respect to any Warranty Plant, a claim under and in accordance with the
warranty provided in Section
3.01(c) (Sponsor's
Warranty Undertaking)
for the
repair, replacement or correction for any failure, defect or deficiency related
to such Warranty Plant.
"Warranty
Plants"
means,
collectively, the ▇▇▇▇▇▇▇▇ Plant and the Greenfield Plants.
"Warranty
Work"
means
any work required to be performed, or caused to be performed, in respect of
a
Warranty Performance Claim.
Section
1.02. Credit
Agreement Definitions.
Unless
otherwise defined herein or unless the context requires, terms used in this
Agreement, including its preamble and recitals, have the meanings provided
in
the Credit Agreement.
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.
Section
1.04. Release.
If a
Borrower is released from its obligations under the Financing Documents pursuant
to Section 7.04 (Release
of Borrower)
of the
Credit Agreement, then (a) the Sponsor shall be released of all of its
obligations hereunder with respect to such Borrower and the Plant owned by
such
Borrower, and (b) such Borrower and Plant shall be disregarded for all purposes
hereunder, including for the purpose of calculating the Sponsor Funding Cap,
the
Warranty Funding Cap and Excess Amounts.
ARTICLE
II
PROJECT
COMPLETION DEFICIENCY
Section
2.01. Sponsor's
Completion Undertaking.
Subject
to Section
2.04(f) (Sponsor's
Deficiency Funding Obligation),
the
Sponsor hereby agrees, for the benefit of each Borrower that owns a Greenfield
Plant and the Administrative Agent (on behalf and for the benefit of the
Lenders), to pay, or cause to be paid, at any time and from time to time during
the Deficiency Support Availability Period, all Projects Costs (other than
Debt
Service) relating to each Greenfield Plant, if and to the extent that there
are
insufficient funds available to the Borrower that owns any such Greenfield
Plant
(taking into account the Construction Loan Commitments that would be able to
be
funded for such Greenfield Plant in accordance with the Credit Agreement,
Required Equity Contributions for such Greenfield Plant, liquidated damage
proceeds for such Greenfield Plant, Business Interruption Insurance Proceeds
for
such Greenfield Plant, and funds on deposit in the Construction Account for
such
Greenfield Plant) to cover any Project Completion Deficiency.
Section
2.02. Action
to be Taken by the Borrowers.
At any
time during the Deficiency Support Availability Period, if any Borrower at
any
time, and from time to time, determines that a Project Completion Deficiency
exists or has reasonable cause to believe that a Project Completion Deficiency
may exist, such Borrowers shall promptly notify the Administrative Agent in
writing of such Project Completion Deficiency and of the Borrowers' opinion
as
to the reason for such Project Completion Deficiency.
Section
2.03. Deficiency
Notices.
(a) Each
Borrower may, from time to time during the Deficiency Support Availability
Period, issue a Deficiency Notice, to the Sponsor (with a copy to the
Administrative Agent) if any of the Borrowers determines that a Project
Completion Deficiency exists or is likely to exist within twenty (20)
Business Days immediately following the date of such Deficiency Notice which
Deficiency Notice shall describe in reasonable detail the extent and nature
of
such Project Completion Deficiency; provided,
that
any such Deficiency Notice shall be subject to the reasonable approval of the
Independent Engineer for any request (or series of requests related to the
same
Project Completion Deficiency) in an amount greater than one million Dollars
($1,000,000) or if, after taking into account the Sponsor Deficiency Payment
requested pursuant to such Deficiency Notice, the aggregate amount of all
Sponsor Deficiency Payments not previously approved by the Independent Engineer
would exceed five million Dollars ($5,000,000).
(b) The
Administrative Agent may, from time to time during the Deficiency Support
Availability Period, issue a Deficiency Notice to the Sponsor if the
Administrative Agent determines (after consultation with the Independent
Engineer and the Sponsor) that a Project Completion Deficiency exists or is
reasonably expected to exist within fifteen (15) Business Days immediately
following the date of such Deficiency Notice.
(c) In
the
event of any conflict between any Deficiency Notice delivered by a Borrower
under Section 2.03(a)
and any
Deficiency Notice delivered by the Administrative Agent under Section 2.03(b),
the
Deficiency Notice (and the terms thereof) delivered by the Administrative Agent
shall prevail.
Section
2.04. Sponsor's
Deficiency Funding Obligation.
(a) Upon
receipt of a Deficiency Notice from the Administrative Agent and/or from a
Borrower, the Sponsor shall, no later than 1:00 p.m. New York City time on
the
later of (i) the date that is three (3) Business Days following receipt of
such
Deficiency Notice and (ii) the Business Day immediately following the date
on
which such Deficiency Notice has been approved by the Independent Engineer
(if
such approval is required under Section
2.03(a) (Deficiency
Notices)),
provide
or cause to be provided a Sponsor Deficiency Payment in an amount equal to
the
total Project Completion Deficiency specified in such Deficiency
Notice.
(b) At
the
time that any Sponsor Deficiency Payment is provided, the Sponsor shall provide
the Administrative Agent and the Borrowers' Agent with a written notice setting
forth the amount of such funding that has been provided.
(c) The
proceeds of each Sponsor Deficiency Payment for any Project Completion
Deficiency shall be deposited into the Construction Account for the Greenfield
Plant with respect to which it was provided.
(d) Any
determination of the existence of a Project Completion Deficiency and any
calculation of the amount of such Project Completion Deficiency made by the
Administrative Agent shall, in the absence of manifest error, be conclusive
and
binding on the Sponsor, the Borrowers and the Borrowers' Agent.
(e) The
obligations of the Sponsor to provide any Sponsor Deficiency Payment required
under this Article II
are
separate and distinct from, and in addition to, (i) any Required Equity
Contributions required to be made in accordance with the Credit Agreement and
the other Financing Documents, (ii) the Sponsor's obligations under Article III
(Warranty
Obligations),
and
(iii) any other equity contributions made to any Borrower.
(f) The
Sponsor's obligation to provide Sponsor Deficiency Payments with respect to
Project Completion Deficiencies hereunder shall not exceed, in the aggregate
with respect to any Greenfield Plant, the Sponsor Funding Cap for such
Greenfield Plant plus,
in the
case of any Eligible Plant, any Excess Amounts not otherwise depleted in
accordance with this Agreement.
(g) If,
during any period when Construction Loans are not available to the Borrowers
as
a result of a failure to meet any of the applicable conditions to funding set
forth in Article VI (Conditions
Precedent)
of the
Credit Agreement, the Sponsor makes Sponsor Deficiency Payments, then, at such
later date when such conditions to funding are satisfied and Construction Loans
for the Greenfield Plant with respect to which such Sponsor Deficiency Payments
were made are available for funding to the Borrowers, the Borrowers shall be
entitled to request (subject to and in accordance with the provisions of the
Credit Agreement) a Funding of Construction Loans for such Greenfield Plant
in
the amount of such Sponsor Deficiency Payments (but in no event in excess of
the
applicable undisbursed Construction Loan Commitment) and the proceeds of such
Funding may be paid to the Sponsor to reimburse such Sponsor Deficiency Payment.
Section
2.05. No
Obligation of the Administrative Agent.
The
Administrative Agent may call for the provision of funds to meet a Project
Completion Deficiency in accordance with Section 2.03(b)
(Deficiency
Notices),
but
shall have no obligation to do so, nor shall the Administrative Agent be liable
to any Person for any action taken or not taken by the Administrative Agent
or
any other party under this Agreement.
Section
2.06. Termination
of Sponsor's Funding Obligations.
Subject
to Section 4.02
(Adjustments
to Warranty Funding Cap and Sponsor Funding Cap)
and
Section 7.10
(Reinstatement),
the
Sponsor's obligations under this Article II
with
respect to Project Completion Deficiencies for each Greenfield Plant shall
remain in full force and effect until the termination of the Deficiency Support
Availability Period for such Greenfield Plant.
ARTICLE
III
WARRANTY
obligations
Section
3.01. Sponsor's
Warranty Undertaking.
(a)
During
the Warranty Availability Period, the Sponsor warrants to each Borrower that
owns a Warranty Plant and to the Administrative Agent (on behalf and for the
benefit of the Lenders) that:
|
(i)
|
all
equipment and materials installed in a Warranty Plant will be (A) new
(other than specific items of equipment or materials that the Independent
Engineer has agreed may be refurbished) and of good quality and (B)
free
from defect or improper workmanship; and
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(ii)
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all
design, construction, procurement and engineering work related to
each
Warranty Plant will (A) conform with professional standards and
skill, expertise and diligence of design, construction, procurement
or
engineering (as the case may be) professionals regularly involved
in major
ethanol projects similar to such Warranty Plant and (B) be free from
any
defect or improper workmanship;
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provided,
that
the Sponsor's warranty obligations hereunder (i) shall not extend to
Warranty Work that the Sponsor or any Borrower determines, and the Independent
Engineer verifies in writing, is immaterial to the operation of the relevant
Warranty Plant (based on the operating levels contemplated by the then-current
Operating Budget) and (ii) in the event that the Borrowers are no longer in
control of any Plant as a direct result of a foreclosure or related action
pursuant to which the Senior Secured Parties (or any of them, or any transferee
in foreclosure or such related action) are controlling such Plant, shall not
apply to the extent that Warranty Work arises directly from a failure of such
Senior Secured Parties (or such transferee) to maintain and operate such Plant
in accordance with Prudent Ethanol Operating Practices.
(b) OTHER
THAN AS SET FORTH IN THIS ARTICLE
III,
THE SPONSOR MAKES NO OTHER WARRANTIES EXPRESS OR IMPLIED OR GUARANTEES EXPRESS
OR IMPLIED RELATING TO THE WORK, MACHINERY, EQUIPMENT, MATERIALS, SYSTEMS,
SUPPLIES OR OTHER ITEMS AND THE SPONSOR DISCLAIMS ANY IMPLIED WARRANTIES OR
WARRANTIES IMPOSED BY LAW (INCLUDING WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE). PERFORMANCE BY THE SPONSOR OF ITS OBLIGATIONS UNDER
THIS ARTICLE
III
SHALL BE THE BORROWERS' AND THE LENDERS' EXCLUSIVE REMEDY AGAINST THE SPONSOR
AND THE SPONSOR'S SOLE LIABILITY FOR ANY DEFECTS OR DEFICIENCIES IN THE DESIGN,
WORK, MACHINERY, EQUIPMENT, MATERIALS SYSTEMS, SUPPLIES OR OTHER ITEMS RELATED
TO THE PROJECT.
(c) Notwithstanding
anything to the contrary herein or in any other Financing Document, (i) if
and
to the extent the Sponsor makes any Sponsor Warranty Payments and any Borrower,
any Secured Party or any Affiliate thereof receives any payments or
reimbursements from any Project Party in respect thereof, then such Borrower,
Secured Party or Affiliate (as applicable) shall promptly turn over any such
payments or reimbursements to the Sponsor (and any such turn over shall be
deemed to not be a Restricted Payment), (ii) if a Borrower fails to pursue
any
warranty claims against any Project Party, then such Borrower shall assign
all
of its rights to pursue such claims to the Sponsor and the Sponsor may pursue
such claims (and related damage payments and expense reimbursements) and the
Sponsor shall be entitled to keep all proceeds therefrom, and (iii) for the
avoidance of doubt, the Sponsor is not guaranteeing or warranting to the
continued satisfaction or maintenance of the Minimum Performance Criteria or
Performance Guarantees.
Section
3.02. Action
to be Taken by the Borrowers.
At any
time during the Warranty Availability Period, if any Borrower at any time,
and
from time to time, determines that a Warranty Claim exists or has reasonable
cause to believe that a Warranty Claim may exist, such Borrower shall promptly
notify the Administrative Agent in writing of such Warranty Claim and of the
Borrowers' opinion as to the reason for such Warranty Claim and the status
of
the Borrowers' request for such Warranty Claim to be addressed by any relevant
Construction Contractor.
Section
3.03. Warranty
Notices.
(a) Each
Borrower may, from time to time during the Warranty Availability Period, issue
a
Warranty Notice to the Sponsor (with a copy to the Administrative Agent) if
such
Borrower determines that a Warranty Claim exists and will not be addressed
in a
timely manner by any relevant Construction Contractor and shall describe in
reasonable detail the extent and nature of such Warranty Claim; provided,
that
any such Warranty Notice shall be subject to the reasonable approval of the
Independent Engineer for any request (or series of requests related to the
same
Warranty Work) greater than one million Dollars ($1,000,000) or if, after taking
into account the Sponsor Warranty Payment requested pursuant to such Warranty
Notice, the aggregate amount of all Sponsor Warranty Payments not previously
approved by the Independent Engineer would exceed five million Dollars
($5,000,000).
(b) The
Administrative Agent may, from time to time during the Warranty Availability
Period, issue a Warranty Notice to the Sponsor if the Administrative Agent
determines (after consultation with the Independent Engineer and the relevant
Borrower) that a Warranty Claim exists.
(c) In
the
event of any conflict between any Warranty Notice delivered by any Borrower
under Section 3.03(a)
and any
Warranty Notice delivered by the Administrative Agent under Section 3.03(b),
the
Warranty Notice (and the terms thereof) delivered by the Administrative Agent
shall prevail.
(d) Any
determination of the existence of a Warranty Claim, and any calculation of
the
amount of any Warranty Payment Claim, made by the Administrative Agent shall,
in
the absence of manifest error, be conclusive and binding on the Sponsor, the
Borrowers and the Borrowers' Agent.
Section
3.04. Sponsor's
Warranty Performance Obligations.
(a) Upon
receipt of a Warranty Notice relating to any Warranty Performance Claim from
the
Administrative Agent and/or from any Borrower, the Sponsor shall promptly
commence, or cause to be commenced, any required Warranty Work within seven
(7)
days after delivery of such Warranty Notice (except in the case of an emergency,
in which event such Warranty Work shall be completed immediately). All such
Warranty Work shall be completed as promptly as practicable thereafter, and
the
Sponsor shall provide the Administrative Agent and the Borrowers' Agent with
a
written notice immediately upon completion of such Warranty Work (or upon
completion of any Warranty Work undertaken by the Sponsor with respect to which
no Warranty Notice was delivered to the Sponsor), together with evidence of
all
costs and expenses incurred by the Sponsor in connection therewith (which costs
and expenses shall be subject to review and the reasonable approval of the
Independent Engineer for amounts greater than one million Dollars ($1,000,000)
with respect to any related Warranty Work or if, after taking into account
the
cost of such Warranty Work, the aggregate amount of all prior Sponsor Warranty
Payments not previously approved by the Independent Engineer would exceed five
million Dollars ($5,000,000)). The amount of all such costs and expenses (which,
if required, have been approved by the Independent Engineer in writing) shall
be
deemed to be a Sponsor Warranty Payment.
(b) If
the
Sponsor fails to diligently commence the necessary steps within the time period
set forth in Section 3.04(a)
or fails
to continue to perform such steps through completion, any Borrowers or the
Administrative Agent may provide the Sponsor with written notice that the
applicable Borrower will commence or assume correction of such Warranty Work.
If, following any such written notice, any Borrower performs, or causes to
be
performed, such Warranty Work, the Sponsor shall be responsible for payment
or
reimbursement of all costs and expenses (all such amounts, a "Warranty
Payment Claim")
incurred by the Borrowers in performing, or causing to be performed, such
Warranty Claim, in accordance with Section 3.05
(Sponsor's
Warranty Funding Obligations).
Section
3.05. Sponsor's
Warranty Funding Obligations.
(a) Upon
receipt of a Warranty Notice relating to any Warranty Payment Claim from the
Administrative Agent and/or from any Borrower, the Sponsor shall, no later
than
1:00p.m. New York City time on the later of (i) the date that is three (3)
Business Days following receipt of such Warranty Notice or (ii) the Business
Day
immediately following the date on which such Warranty Notice has been approved
by the Independent Engineer (if such approval is required pursuant to
Section
3.04(a) (Sponsor's
Warranty Performance Obligations),
provide
or cause to be provided a Sponsor Warranty Payment in an amount equal to the
total Warranty Payment Claim set forth in such Warranty Notice. At the time
that
any Sponsor Warranty Payment is provided, the Sponsor shall provide the
Administrative Agent and the Borrowers' Agent with a written notice setting
forth the amount of such funding that has been provided.
(b) The
proceeds of each Sponsor Warranty Payment for any Warranty Payment Claim shall
be deposited into the Warranty Account for the Warranty Plant with respect
to
which it was provided.
Section
3.06. Independent
Obligations.
The
obligations of the Sponsor to perform, or cause to be performed, any Warranty
Work required under this Article III
(or, if
applicable, the obligation of the Sponsor to make any Sponsor Warranty Payments)
are separate and distinct from, and in addition to, (a) any Required Equity
Contributions required to be made in accordance with the Credit Agreement and
the other Financing Documents, (b) the Sponsor's obligations under
Article II
(Project
Completion Deficiency),
(c) any other equity contributions made to any Borrower and (d) any
work performed or to be performed by PECA under any Construction Management
Services Agreement or any Operation and Maintenance Agreement.
Section
3.07. No
Obligation of the Administrative Agent.
The
Administrative Agent may call for the performance or payment of Warranty Work
or
the making of any Sponsor Warranty Payment in accordance with Section 3.03(b)
(Warranty
Notices)
but
shall have no obligation to do so, nor shall the Administrative Agent be liable
to any Person for any action taken or not taken by the Administrative Agent
or
any other party under this Agreement.
Section
3.08. Termination
of Sponsor's Warranty Obligations; Cap.
(a)
Subject
to Section 4.02
(Adjustments
to Warranty Funding Cap and Sponsor Funding Cap),
the
Sponsor's obligation to provide Sponsor Warranty Payments hereunder shall not
exceed, in the aggregate, the Warranty Funding Cap.
(b) Subject
to Section 7.10
(Reinstatement),
the
Sponsor's obligations under this Article III
with
respect to Warranty Claims for each Warranty Plant shall remain in full force
and effect until the termination of the Warranty Availability Period for such
Warranty Plant.
ARTICLE
IV
Section
4.01. Acceleration
of Senior Debt Obligations.
(a)
In the
event that the Obligations have been, and continue to be, accelerated as
provided under the Credit Agreement, within three (3) Business Days following
delivery of a written notice from the Administrative Agent to the Sponsor,
the
Sponsor shall (i) deposit into the Construction Holding Account an amount
equal the aggregate amount of the Sponsor Funding Cap that has not yet been
funded in accordance with this Agreement or (ii) provide to the
Administrative Agent a letter of credit from an Acceptable Bank in form and
substance reasonably satisfactory to the Administrative Agent, or other credit
support acceptable to the Administrative Agent, in either such case, in an
amount equal to the aggregate amount of the Sponsor Funding Cap that has not
yet
been funded in accordance with this Agreement; provided,
that,
if such acceleration occurred following an Event of Default under
Section 9.01(e) (Event
of Default - Project Completion)
of the
Credit Agreement, the Sponsor shall be required to make the cash deposit
described in Section 4.01(a)(i).
(b) The
Administrative Agent may call for the deposit of funds or provisions of credit
support in accordance with Section 4.01(a)
but
shall have no obligation to do so, nor shall the Administrative Agent be liable
to any Person for any action taken or not taken by the Administrative Agent
or
any other party under this Agreement.
Section
4.02. Adjustments
to Warranty Funding Cap and Sponsor Funding Cap.
(a) Any
Sponsor Warranty Payments made with respect to the ▇▇▇▇▇▇▇▇ Plant shall reduce
the Sponsor Funding Cap for each Greenfield Plant on a pro rata
basis
based on the undisbursed amounts available under each such Sponsor Funding
Cap
on the date of such calculation (and, if the Commercial Operation Date for
any
such Greenfield Plant has occurred before such Sponsor Warranty Payment is
made,
the portion allocated to such Greenfield Plant shall reduce
(i) first,
the
Excess Amount for such Greenfield Plant, (ii) second,
if such
Excess Amount is reduced to or otherwise equals zero, then the portion allocated
to such Greenfield Plant shall further reduce the Sponsor Funding Cap for each
other Greenfield Plant on a pro rata
basis
based on the undisbursed amounts available under each such Sponsor Funding
Cap
on the date of such calculation and (iii) third,
thereafter reduce the Excess Amount available for all other Eligible
Plants).
(b) In
the
event that the Sponsor is reimbursed by any Construction Contractor or any
other
third party for any Sponsor Warranty Payments or any Sponsor Deficiency Payments
made pursuant to this Agreement, the Sponsor Funding Cap and/or the Excess
Amounts, as the case may be, shall be reinstated in an amount equal to such
reimbursement.
(c) Following
any reimbursement of a Sponsor Deficiency Payment in accordance with
Section
2.04(g) (Sponsor's
Deficiency Funding Obligation),
the
Sponsor Funding Cap and/or the Excess Amounts, as the case may be, shall be
reinstated in an amount equal to such reimbursement.
(d) In
the
event that any Borrower or the Sponsor receives any liquidated damages payments
from any Construction Contractor, and the reason for the payment of such
liquidated damages corresponds directly to the reason for the making of any
Sponsor Payments pursuant to this Agreement, such liquidated damages proceeds
shall be paid over to the Sponsor and the Sponsor Funding Cap and/or the Excess
Amounts, as the case may be, shall be reinstated in an amount equal to such
reimbursement. The Borrowers and the Sponsor shall provide a written accounting
of any such liquidated damages and corresponding Sponsor Payments to the
Administrative Agent and the Independent Engineer (which, in the case of amounts
in excess of one million Dollars ($1,000,000) with respect to any such event
or
liquidated damages under this Section 4.02(d)
in the
aggregate in excess of five million Dollars ($5,000,000), shall be subject
to
the reasonable approval of the Independent Engineer prior to any such
reimbursement).
(e) On
the
Conversion Date, if amounts are paid to the Sponsor pursuant to Section 2.06(e)
(Funding
of Loans)
of the
Credit Agreement, the Excess Amounts shall be reinstated in an amount equal
to
the aggregate total value of the unutilized amounts of the Contingency Line
Item
for all of the Greenfield Plants that are paid to the Sponsors pursuant to
such
Section 2.06(e).
(f) The
Sponsor shall promptly provide notice to the Administrative Agent and the
Borrowers' Agent of the Sponsor's receipt of any reimbursement described in
this
Section 4.02.
In the
event of any reinstatement pursuant to this Section 4.02
following the Commercial Operation Date for any Greenfield Plant (as used in
this Section 4.02,
a
"Completed
Plant"),
the
Excess Amount for such Completed Plant shall be increased accordingly and any
Greenfield Plant that would have been an Eligible Plant if such reinstatement
had occurred on or before the Commercial Operation Date for such Completed
Plant
shall be deemed to be an Eligible Plant with respect to such reinstated
amounts.
ARTICLE
V
Representations,
Warranties AND COVENANTS
Section
5.01. Sponsor's
Representations and Warranties.
The
Sponsor hereby represents and warrants for itself, as of the date hereof, as
of
each Funding Date and as of the date of any Deficiency Notice, any Warranty
Notice and any Sponsor Payment delivered or made under this Agreement,
that:
(a) it is
duly
organized and validly existing under the laws of its jurisdiction of
incorporation, has the corporate power and has obtained all required
Governmental Approvals (each of which is in full force and effect and is not
subject to review by any Governmental Authority) to comply with and perform
its
respective obligations under and enter into this Agreement;
(b) this
Agreement has been duly authorized and executed by it and constitutes its valid
and legally binding obligation enforceable in accordance with its terms, except
as enforceability hereof may be limited by bankruptcy, moratorium, insolvency
or
other similar laws affecting the enforcement of creditor's rights
generally;
(c) neither
the execution and delivery of this Agreement nor the compliance with its terms
will conflict with or result in a breach of any of the terms, conditions or
provisions of, or constitute a default or require any consent which has not
been
obtained under, any indenture, mortgage, agreement or other instrument or
arrangement to which it is a party or by which it or any of its properties
or
assets are bound, or violate any of the terms or provisions of its Organic
Documents or any Governmental Approval, judgment, decree or order or any other
applicable Law;
(d) it
is,
and after giving effect to the transactions contemplated under this Agreement
will be, Solvent; and
(e) it
is not
executing this Agreement with any intention to hinder, delay or defraud any
of
its present or future creditor or creditors.
Section
5.02. Survival
and Administrative Agent Reliance.
(a) All
representations, warranties and indemnities made in this Agreement are deemed
material and shall survive the execution and delivery of this
Agreement.
(b) The
Sponsor acknowledges that it makes the representations and warranties in
Section 5.01
(Sponsor's
Representations and Warranties),
with
the intention of inducing the Administrative Agent to enter into this Agreement
and the Lenders to make the investment in the Borrowers under the Credit
Agreement and that the Administrative Agent enters into this Agreement and
the
other Financing Documents (and the Senior Secured Parties will enter into the
Financing Documents) on the basis of, and in full reliance on, each of such
representations.
Section
5.03. Rights
and Remedies not Limited.
The
rights and remedies of the Administrative Agent, on behalf and for the benefit
of the Senior Secured Parties, in relation to any misrepresentation or breach
of
warranty on the part of the Sponsor are not prejudiced by:
(a) any
investigation by or on behalf of the Administrative Agent or any other Senior
Secured Party into the affairs of any such party;
(b) the
execution or the performance of this Agreement; or
(c) any
other
act or thing that may be done by or on behalf of the Administrative Agent or
any
other Senior Secured Party in connection with this Agreement and that might,
apart from this Section 5.03,
prejudice such rights or remedies.
Section
5.04. Sponsor
Obligations.
(a)
Subject
to Section 5.04(b),
the
Sponsor shall not create or grant any Liens on any of its assets for the benefit
of third parties or enter into any secured credit enhancement arrangements
with
respect to obligations owed to third parties, unless the Sponsor simultaneously
creates or grants such Liens for the benefit of, or enters into such credit
enhancement arrangement with, the Senior Secured Parties, in each case, on
terms
no less favorable that those extended to such third parties (it being
acknowledged and agreed that the amount secured by any such Liens in favor
of
the Senior Secured Parties, or the amount of any such secured credit
enhancements made for the benefit of the Senior Secured Parties, shall not
be
any greater than the amounts so secured or provided to such third
parties).
(b) The
Sponsor may provide Liens to secure obligations to third parties and/or provide
secured credit enhancements for the benefit of third parties, up to an aggregate
total amount that is less than ten million Dollars ($10,000,000) without being
required to grant such Liens, or provide such the secured credit enhancements,
to the Senior Secured Parties pursuant to Section 5.04(a).
Section
5.05. Accounting
Matters.
Except
as otherwise agreed in writing by Lenders (other than any Non-Voting Lender)
holding (x) at any time prior to the Conversion Date, an amount in excess
of sixty-six and two-thirds percent (66.66%) of the Construction Loan
Commitments and the Working Capital Loan Commitments (excluding the Construction
Loan Commitments and the Working Capital Loan Commitments of all Non-Voting
Lenders) and (y) at any time after the Conversion Date, an amount in excess
of sixty-six and two-thirds percent (66.66%) of an amount equal to (x) the
then
aggregate outstanding principal amount of the Loans plus (y) the undisbursed
amount of the Aggregate Working Capital Loan Commitment (excluding the principal
amounts of any Loans made by, and any Working Capital Loan Commitments of,
any
Non-Voting Lenders):
(a) on
or
before May 15, 2007, the Sponsor shall hire a Chief Financial Officer and a
Controller, and the person(s) hired as Chief Financial Officer and Controller
shall have customary duties and responsibilities for chief financial officers
or
controllers (as applicable) of public-companies similar to the Sponsor;
(b) the
Sponsor agrees that in connection with its regular quarterly report on Form
10-Q
filed with the Securities and Exchange Commission in respect of the calendar
quarter ending June 30, 2007, such report, or any certification delivered by
the
Sponsor or any of its officers in connection therewith (including Section 302(a)
of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002), shall contain a statement by the Sponsor
to
the effect that it is unaware of any "material weaknesses in its internal
controls"; and
(c) the
Sponsor agrees that in connection with its regular annual report on Form 10-K
filed with the Securities and Exchange Commission in respect of the calendar
year ending December 31, 2007, (i) such report, or any certification delivered
by the Sponsor or any of its officers in connection therewith (including Section
302(a) of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002), shall contain a statement by the
Sponsor to the effect that it is unaware of any "material weaknesses in its
internal controls" and (ii) the Sponsor's auditors shall have confirmed in
writing such statement (subject to any customary qualifications).
ARTICLE
VI
Saving
Provisions
Section
6.01. Additional
Security.
This
Agreement is in addition to, and is not in any way prejudiced by, any Security
now or hereafter held by the Collateral Agent for the benefit of the Senior
Secured Parties, nor shall such Security held by the Collateral Agent for the
benefit of the Senior Secured Parties or the liability of any Person for all
or
any part of the Obligations be in any manner prejudiced or affected by this
Agreement.
Section
6.02. Taxes.
Any and
all payments by or on account of any obligations under this Agreement shall
be
made free and clear of, and without deduction for, any Taxes, unless required
by
Law; provided,
that if
the Sponsor is required to deduct any Indemnified Taxes from any such payment,
then (i) the sum payable shall be increased as necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section 6.02)
any
Senior Secured Party or any other Person (as the case may be) receives an amount
equal to the sum it would have received had no such deductions been made,
(ii) the Sponsor shall make such deductions and (iii) the Sponsor
shall pay the full amount deducted to the relevant Governmental Authority in
accordance with applicable Law.
Section
6.03. Subrogation.
Notwithstanding any payment or payments made by the Sponsor or the exercise
by
the Administrative Agent of any of the remedies provided under this Agreement
or
any set-off or application of funds of the Sponsor by the Administrative Agent,
the Sponsor hereby waives all rights of subrogation until all of the Obligations
have been paid in full. Notwithstanding the foregoing, if any amount shall
be
paid to the Sponsor on account of such subrogation, such amount shall be held
by
the Sponsor in trust
for
the
Administrative Agent, segregated from other funds of the Sponsor, and shall
be
turned over to the Administrative Agent, in the exact form received by the
Sponsor (or duly endorsed by the Sponsor to the Administrative Agent, if
required) to be applied against such amounts in such order as the Administrative
Agent may elect. Nothing in this Section 6.03
shall
limit the Sponsor's express rights hereunder to receive reimbursements for
Sponsor Deficiency Payments and/or Sponsor Warranty Payments as provided for
in
Section
2.04(g) (Sponsor's
Deficiency Funding Obligation),
Section 4.02
(Adjustments
to Warranty Funding Cap and Sponsor Funding Cap)
and
Section
3.01(c) (Sponsor's
Warranty Undertaking).
Section
6.04. Waiver
of Defenses.
The
Sponsor hereby unconditionally and irrevocably waives and relinquishes, to
the
maximum extent permitted by applicable Laws, all rights and remedies accorded
to
sureties or guarantors and agrees not to assert or take advantage of any such
rights or remedies, including:
(a) any
right
to require the Administrative Agent or the Senior Secured Parties to proceed
against any Borrower, any guarantor or any other Person or to proceed against
or
exhaust any security or collateral held by the Collateral Agent or any other
Senior Secured Party at any time or to pursue any other remedy in the
Administrative Agent's or any other Senior Secured Party's power before
proceeding against the Sponsor;
(b) any
defense that may arise by reason of the incapacity, lack of power or authority,
death, dissolution, merger, termination or disability of the Sponsor, any
guarantor, any Borrower, or any other Person or the failure of the
Administrative Agent or any other Senior Secured Party to file or enforce a
claim against the estate (in administration, bankruptcy or any other proceeding)
of the Sponsor, any guarantor, any Borrower, or any other Person;
(c) promptness,
diligence, demand, presentment, protest and notice of any kind (other than
any
notices required hereby), including notice of the existence, creation or
incurring of any new or additional indebtedness or obligation or of any action
or non-action on the part of any Borrower, the Administrative Agent, the Senior
Secured Parties, any endorser or creditor of the foregoing, any guarantor or
on
the part of any other Person under this or any other instrument in connection
with any obligation or evidence of indebtedness held by the Administrative
Agent
or the Senior Secured Parties as collateral or in connection with any amounts
due under this Agreement or any other Financing Document;
(d) any
defense based upon 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 amounts due under
any
Financing Document, even though such foreclosure, sale or election of remedies
may impair the subrogation rights of the Sponsor or may preclude the Sponsor
from obtaining reimbursement, contribution, indemnification or other recovery
from any Borrower or any other Person and even though the Sponsor may not,
as a
result of such foreclosure, sale or election of remedies, be liable for any
deficiency;
(e) any
defense based on any offset against any amounts which may be owed by any Person
to the Sponsor for any reason whatsoever;
(f) any
defense based on any act, failure to act, delay or omission whatsoever on the
part of any Borrower or any of the Affiliates of any Borrower or the failure
by
any Borrower or any of the Affiliates of any Borrower to do any act or thing
or
to observe or perform any covenant, condition or agreement to be observed or
performed by it under any Financing Document;
(g) any
defense based upon any statute or rule of law which provides that the obligation
of a surety or guarantor must be neither larger in amount nor in other respects
more burdensome than that of the principal;
(h) any
defense of setoff or counterclaim which may at any time be available to or
asserted by any Borrower or any of the Affiliates of any Borrower against the
Administrative Agent, the Senior Secured Parties or any other Person under
any
Financing Document;
(i) any
duty
on the part of the Administrative Agent or any Senior Secured Party to disclose
to the Sponsor any facts any Senior Secured Party may now or hereafter know
about any Borrower or any of the Greenfield Plants, regardless of whether the
Administrative Agent or any Senior Secured Party has reason to believe that
any
such facts materially increase the risk beyond that which the Sponsor intends
to
assume, or have reason to believe that such facts are unknown to the Sponsor,
or
have a reasonable opportunity to communicate such facts to the Sponsor, since
the Sponsor acknowledges that the Sponsor is fully responsible for being and
keeping informed of the financial condition of all Borrowers and the Greenfield
Plants and of all circumstances bearing on the risk of non-payment of any
amounts due or non-performance of any obligations under this Agreement or any
other Financing Document;
(j) any
defense based on any change in the time, manner or place of any payment or
performance under, or in any other term of, any Financing Document, or any
other
amendment, renewal, extension, acceleration, compromise or waiver of or any
consent or departure from the terms of any Financing Document;
(k) any
defense arising by reason of 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 amounts due under this Agreement
or
any other Financing Document (or any interest on all or any part of the amounts
due under this Agreement or any other Financing Document) in or as a result
of
any such proceeding, any failure of the Administrative Agent to file a claim
in
any such proceeding, or the occurrence of any of the following: (i) the
election by the Administrative 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; and
(l) any
other
circumstance (including any statute of limitations), any act or omission by
any
Borrower or any existence of or reliance on any representation by the
Administrative Agent, any Borrower, or any Senior Secured Party that might
otherwise constitute a defense available to, or discharge of, any guarantor
or
surety, defense of payment or performance of the applicable amounts due under
this Agreement or any other Financing Document) (other than the defense that
the
Sponsor has performed its obligations hereunder or that the underlying
obligation has been performed).
Section
6.05. Continuing
and Unconditional Obligations.
(a) The
Sponsor's obligations hereunder are primary obligations of the Sponsor and
are
an absolute, unconditional, continuing and irrevocable guaranty of payment
and
performance of the obligations of any and all Borrowers hereunder and not of
collectibility, and are in no way conditioned on or contingent upon any attempt
to enforce in whole or in part any liabilities and obligations of any Borrower
or any liabilities and obligations of any of the Affiliates of any Borrower
to
the Senior Secured Parties. Each failure by the Sponsor to pay or perform,
as
the case may be, any amounts due or any obligations under this Agreement shall
give rise to a separate cause of action hereunder, and separate suits may be
brought hereunder as each cause of action arises.
(b) The
Senior Secured Parties may, at any time and from time to time (whether or not
after revocation or termination of this Agreement) without the consent of or
notice to the Sponsor, except such notice as may be required by the Financing
Documents or applicable law which cannot be waived, without incurring
responsibility to the Sponsor, without impairing or releasing the obligations
of
the Sponsor hereunder, upon or without any terms or conditions and in whole
or
in part:
(i) change
the manner, place and terms of payment or performance of, or renew or alter,
any
obligations and liabilities (including any of those hereunder) incurred directly
or indirectly in respect thereof or hereof, or in any manner modify, amend
or
supplement the terms of the Financing Documents or any documents, instruments
or
agreements executed in connection therewith, in each case with the consent
of
the relevant Borrower(s), the Sponsor (in each case, only as and to the extent
expressly required by the applicable Financing Document), and the agreements
herein made shall apply to such obligations as changed, extended, renewed,
modified, amended, supplemented or altered in any manner;
(ii) exercise
or refrain from exercising any rights against any Borrower or others (including
the Sponsor) or otherwise act or refrain from acting;
(iii) add
or
release any other guarantor or surety from its obligations without affecting
or
impairing the obligations of the Sponsor hereunder;
(iv) settle
or
compromise any amounts, obligations or liabilities (including any of those
hereunder) incurred directly or indirectly in respect thereof or hereof, and
may
subordinate the payment or performance of all or any part thereof to the payment
or performance of any amounts, obligations or liabilities which may be due
to
the Senior Secured Parties or others;
(v) sell,
exchange, release, surrender, realize upon or otherwise deal with in any manner
or in any order any property by whomsoever pledged or mortgaged to secure or
securing any amounts, liabilities or obligations (including any of those
hereunder) incurred directly or indirectly in respect thereof or hereof and/or
any offset thereagainst;
(vi) apply
any
sums by whomsoever paid or howsoever realized to any obligations and liabilities
of any Borrower or any guarantor or surety to the Senior Secured Parties under
the Financing Documents in the manner provided therein regardless of what
obligations and liabilities remain unpaid, except that sums paid by the Sponsor
hereunder shall be deemed to have been paid in respect of the applicable
obligation of the Sponsor hereunder;
(vii) consent
to or waive any breach of, or any act, omission or default under, the Financing
Documents or otherwise amend, modify or supplement (with the consent of the
Sponsor, any Borrower and any other guarantor or surety, only as and to the
extent expressly required by the Financing Documents) the Financing Documents
or
any of such other instruments or agreements; and/or
(ix) act
or
fail to act in any manner referred to in this Agreement which may deprive the
Sponsor of its right to subrogation against any Borrower or any other guarantor
or surety to recover full indemnity for any payments or performances made
pursuant to this Agreement or of its right of contribution against any other
party.
(c) No
invalidity, irregularity or unenforceability of any obligations and liabilities
Financing Document or invalidity, irregularity, unenforceability or
non-perfection of any collateral therefor, shall affect, impair or be a defense
to this Agreement, which is a primary obligation of the Sponsor.
(d) This
is a
continuing guaranty and all obligations to which it applies or may apply under
the terms hereof shall be conclusively presumed to have been created in reliance
hereon. In the event that, notwithstanding the provisions of this Section 6.05,
this
Agreement shall be deemed revocable in accordance with applicable law, then,
to
the fullest extent permitted by applicable law, any such revocation shall become
effective only upon receipt by the Collateral Agent of written notice of
revocation signed by the Sponsor. To the extent permitted by applicable law,
no
revocation or termination hereof shall affect, in any manner, rights arising
under this Agreement with respect to obligations and liabilities arising prior
to receipt by the Collateral Agent of written notice of such revocation or
termination. Any such revocation or termination shall be deemed to be an Event
of Default.
Section
6.06. Bankruptcy.
The
Sponsor hereby irrevocably waives, to the extent it may do so under applicable
Laws, any protection to which it may be entitled under Sections 365(c)(1),
365(c)(2) and 365(e)(2) of the Bankruptcy Code or equivalent provisions of
the
laws or regulations of any other jurisdiction with respect to any proceedings,
or any successor provision of law of similar import, in the event of any
Bankruptcy Event with respect to any Borrower or any other guarantor or surety.
Specifically, in the event that the trustee (or similar official) in a
Bankruptcy Event with respect to the relevant Borrower(s) or any other guarantor
or surety or the debtor-in-possession takes any action (including the
institution of any action, suit or other proceeding for the purpose of enforcing
the rights of the relevant Borrower(s), or any other guarantor or surety under
this Agreement or any other Financing Document), the Sponsor shall,
to
the fullest extent it may do so under applicable law, not assert any defense,
claim or counterclaim denying liability hereunder on the basis that this
Agreement or any other Financing Document is an executory contract or a
"financial accommodation" that cannot be assumed, assigned or enforced or on
any
other theory directly or indirectly based on Sections 365(c)(1), 365(c)(2)
or 365(e)(2) of the Bankruptcy Code, or equivalent provisions of the law or
regulations of any other jurisdiction with respect to any proceedings or any
successor provision of law of similar import. If a Bankruptcy Event with respect
to any Borrower or any other guarantor or surety shall occur, the Sponsor
agrees, after the occurrence of such Bankruptcy Event, to reconfirm in writing,
to the extent permitted by applicable Laws, its pre-petition waiver of any
protection to which it may be entitled under Sections 365(c)(1), 365(c)(2)
and 365(e)(2) of the Bankruptcy Code or equivalent provisions of the laws or
regulations of any other jurisdiction with respect to proceedings and, to give
effect to such waiver, the Sponsor consents, to the fullest extent it may do
so
under applicable law, to the assumption and enforcement of each provision of
this Agreement and any other Financing Document by the debtor-in-possession
or
the trustee in bankruptcy of the relevant Borrower(s) or of any other guarantor
or surety, as the case may be; and
ARTICLE
VII
Miscellaneous
Section
7.01. Amendments,
Etc.
No
amendment or waiver of any provision of this Agreement, and no consent to any
departure by any of the Sponsor or the Borrowers' Agent from this Agreement,
shall be effective unless in writing signed by the Administrative Agent, the
Sponsor and the Borrowers' Agent, and each such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
Section
7.02. 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 BORROWERS' AGENT AND THE SPONSOR 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, ANY OTHER FINANCING DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT
OF
ANY JUDGMENT, AND EACH OF THE BORROWERS' AGENT AND THE SPONSOR IRREVOCABLY
AND
UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH STATE OR, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE BORROWERS'
AGENT
AND THE SPONSOR 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 ANY OF THE BORROWERS'
AGENT, THE SPONSOR, THE ADMINISTRATIVE 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 BORROWERS' AGENT, THE SPONSOR OR
ANY
OTHER LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY
JURISDICTION.
(c) WAIVER
OF VENUE.
EACH OF
THE BORROWERS' AGENT AND THE SPONSOR 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, ANY OTHER FINANCING DOCUMENT IN ANY COURT
REFERRED TO IN SECTION 7.02(b).
EACH OF
THE BORROWERS' AGENT AND THE SPONSOR 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 Borrowers' Agent and the Sponsor hereby irrevocably appoints CT Corporation
System with an office on the date hereof at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, 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 the Borrowers' Agent or the
Sponsor, each of the Borrowers' Agent and the Sponsor, as the case may be,
hereby agrees to designate a new agent in the State of New York on the terms
and
for the purposes of this Section 7.02
reasonably satisfactory to the Administrative Agent. Such service may be made
by
mailing or delivering a copy of such process to the Borrowers' Agent or the
Sponsor in care of the Process Agent at the Process Agent's above address,
and
the each of the Borrowers' Agent and the Sponsor, as the case may be, hereby
irrevocably authorizes and directs the Process Agent to accept such service
on
its behalf. As an alternative method of service, each of the Borrowers' Agent
and the Sponsor, as the case may be, also irrevocably consents to the service
of
any and all process in any such action or proceeding by the air mailing of
copies of such process to the Borrowers' Agent or the Sponsor at its then
effective notice address pursuant to Section 7.09
(Notices
and Other Communications).
(e) Immunity.
To the
extent that either the Borrowers' Agent or the Sponsor 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 Borrowers' Agent and the Sponsor 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 7.02(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, ANY OTHER
FINANCING DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (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 PARTIES HERETO HAVE BEEN INDUCED TO
ENTER INTO THIS AGREEMENT, THE OTHER FINANCING DOCUMENTS BY, AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 7.02(f).
Section
7.03. Benefits
of Agreement.
Nothing
in this Agreement or any other Financing Document, express or implied, shall
give to any Person, other than the parties hereto and the Senior Secured
Parties, and each of their successors and permitted assigns under this Agreement
or any other Financing Document, any benefit or any legal or equitable right
or
remedy under this Agreement.
Section
7.04. Expenses.
Each of
the Borrowers and the Sponsor agree to pay on demand to the Administrative
Agent
(a) all reasonable costs and reasonable and documented expenses incurred by
the
Administrative Agent (including the reasonable and documented fees, expenses
and
disbursements of counsel) incident to its exercise of any of its rights (or
the
rights of any other Senior Secured Party) under this Agreement and (b) all
costs
and expenses incurred by the Administrative Agent (including the fees, expenses
and disbursements of counsel) incident to its enforcement, protection or
preservation of any of its rights, remedies or claims (or the rights or claims
of any other Senior Secured Party) under this Agreement.
Section
7.05. Interest.
Any
amount required to be paid by the Borrowers or the Sponsor 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
7.06. 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 each of the parties hereto.
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
7.07. Entire
Agreement.
This
Agreement, together with each other Financing Document, 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
7.08. No
Waiver; Cumulative Remedies.
No
failure by the Administrative Agent to exercise, and no delay by the
Administrative 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. The rights, remedies, powers and privileges herein provided, and
provided under each other Financing Document, are cumulative and not exclusive
of any rights, remedies, powers and privileges provided by law.
Section
7.09. Notices
and Other Communications.
(a) Except
as provided in Section 7.09(b),
all
notices and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service, mailed by certified
or
registered mail or sent by telecopier or electronic mail as
follows:
If
to the
Administrative Agent:
WestLB
AG, New York Branch
▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ / ▇▇▇▇▇▇ ▇▇▇▇▇▇
Phone:
▇▇▇-▇▇▇-▇▇▇▇ / ▇▇▇-▇▇▇-▇▇▇▇
Facsimile:
▇▇▇-▇▇▇-▇▇▇▇
E-
mail
Address: ▇▇▇_▇▇▇▇▇▇_▇▇▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇
If
to the
Borrowers' Agent:
Pacific
Ethanol Holding Co. LLC
▇▇▇▇
▇.
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Telephone:
(▇▇▇) ▇▇▇-▇▇▇▇
Facsimile:
(▇▇▇)
▇▇▇-▇▇▇▇
with
a
copy to:
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention:
General Counsel
Telephone:
(▇▇▇) ▇▇▇-▇▇▇▇
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
If
to the
Sponsor:
▇▇▇▇
▇.
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Telephone:
(▇▇▇) ▇▇▇-▇▇▇▇
Facsimile:
(▇▇▇)
▇▇▇-▇▇▇▇
with
a
copy to:
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention:
General Counsel
Telephone:
(▇▇▇) ▇▇▇-▇▇▇▇
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
(b) Notices
sent by hand or overnight courier service, or mailed by certified or registered
mail, shall be deemed to have been given when received; notices sent by
telecopier shall be deemed to have been given when sent (except that, if not
given during normal business hours for the recipient, shall be deemed to have
been given at the opening of business on the next Business Day for the
recipient).
(c) Each
of
the parties hereto may change its address, telecopier or telephone number for
notices and other communications hereunder by notice to the other parties
hereto.
Section
7.10. Reinstatement.
This
Agreement and the Sponsor's obligations hereunder shall continue to be effective
or be automatically reinstated, as the case may be, if at any time (a) any
payment pursuant to this Agreement or (b) in the event that this Agreement
or any obligations hereunder were terminated as a result of the repayment in
full of the Loans, any amount of such payment, in either such case is rescinded,
invalidated, declared to be fraudulent or preferential, set aside or must
otherwise be restored or returned upon the insolvency, bankruptcy,
reorganization, liquidation of any of the Borrowers, the Sponsor or any other
Person party to a Financing Document or upon the dissolution of, or appointment
of any intervenor or conservator of, or trustee or similar official for, any
of
the Borrowers, the Sponsor any other Person party to a Financing Document or
any
substantial part of any of any Borrower's, the Sponsor's or any other such
Person's assets, or otherwise, all as though such payments had not been made,
and the Borrowers' Agent and the Sponsor shall pay the Administrative Agent
on
demand all reasonable costs and out-of-pocket expenses (including reasonable
fees, expenses and disbursements of counsel) incurred by the Administrative
Agent in connection with such rescission or restoration.
Section
7.11. Rights
of the Administrative Agent.
The
Administrative Agent shall be entitled to the rights, protections, immunities
and indemnities set forth in the Credit Agreement, and the Financing Documents,
as if specifically set forth herein.
Section
7.12. Severability.
If any
provision of this Agreement or any other Financing Document is held to be
illegal, invalid or unenforceable, (a) the legality, validity and
enforceability of the remaining provisions of this Agreement and the other
Financing Documents 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
7.13. Successions
and Assignments.
This
Agreement shall (a) be binding upon the Borrowers, the Borrowers' Agent,
the Sponsor, the Administrative Agent and their respective successors and
assigns; and (b) inure, together with the rights and remedies of the
Administrative Agent, to the benefit of the Administrative Agent, the Senior
Secured Parties and their respective successors and permitted
assigns.
Section
7.14. Survival.
Notwithstanding anything in this Agreement to the contrary, Section 7.04
(Expenses)
and
Section 7.05
(Interest)
shall
survive the termination of this Agreement.
Section
7.15. Time.
Time is
of the essence of this Agreement.
Section
7.16. Waiver
of Litigation Payments.
To the
extent that the Borrowers' Agent or the Sponsor may, in any action, suit or
proceeding brought in any of the courts referred to in Section 7.02(b)
(Applicable
Law; Jurisdiction; Etc.)
or
elsewhere arising out of or in connection with this Agreement or any other
Financing Document, be entitled to the benefit of any provision of law requiring
the Administrative Agent or any other Senior Secured Party in such action,
suit
or proceeding to post security for the costs of the Borrowers' Agent or the
Sponsor or to post a bond or to take similar action, each of the Borrowers'
Agent and the Sponsor hereby irrevocably waives such benefit, in each case
to
the fullest extent now or in the future permitted under the laws of the State
of
New York or, as the case may be, the jurisdiction in which such court is
located.
Section
7.17. Term
of Agreement.
Subject
to Section 7.10
(Reinstatement)
and as
otherwise provided in Section 7.14
(Survival),
this
Agreement shall remain in effect until the earliest to occur of (a) the
Discharge Date, (b) the expiration of the final Warranty Period for the
Warranty Plants and (c) the date on which the Sponsor's obligations under
Article
II
have
terminated in accordance with Section 2.06
(Termination
of Sponsor's Funding Obligations)
(subject
to any reinstatement as described in such Section 2.06)
and the
aggregate amount of all Sponsor Warranty Payments equals the Warranty Funding
Cap (subject to any reinstatement of the Warranty Funding Cap in accordance
with
Section 4.02
(Adjustments
to Warranty Funding Cap and Sponsor Funding Cap)).
(remainder
of this page intentionally left blank)
IN
WITNESS WHEREOF, the parties, acting through their duly authorized
representatives, have caused this Sponsor Support Agreement to be executed
in
their respective names as of the day and year first written above.
|
PACIFIC
ETHANOL HOLDING CO. LLC,
|
|
|
as
the Borrowers' Agent,
|
|
|
By:
/s/
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
|
|
|
Name:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
|
|
|
Title:
Vice President Finance
|
|
|
as
the Sponsor
|
|
|
By:
/s/
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
|
|
|
Name:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
|
|
|
Title:
Vice President Finance
|
|
|
WESTLB
AG, NEW YORK BRANCH,
|
|
|
as
the Administrative Agent
|
|
|
By:
/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
|
|
|
Name:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
|
|
|
Title:
Associate Director
|
|
|
By:
/s/
▇▇▇▇ ▇▇▇▇▇▇▇
|
|
|
Name:
▇▇▇▇ ▇▇▇▇▇▇▇
|
|
|
Title:
Director
|
Exhibit
A-1
[FORM
OF]
DEFICIENCY
NOTICE
[Administrative
Agent Letterhead]
[Date]
▇▇▇▇
▇.
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
with
a
copy to:
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention:
General Counsel
|
Re:
|
Deficiency
Notice
|
Ladies
and Gentlemen:
Reference
is made to the Sponsor Support Agreement, dated as of [_________],
2007
(the "Agreement"),
among
PACIFIC ETHANOL HOLDING CO. LLC, a Delaware limited liability company (the
"Borrowers'
Agent"),
PACIFIC ETHANOL, INC., a Delaware corporation (the "Sponsor")
and
WESTLB AG, NEW YORK BRANCH, in its capacity as administrative agent for the
Lenders (together with its successors, designees and assigns in such capacity,
the "Administrative
Agent").
Capitalized terms used and not otherwise defined in this Deficiency Notice
have
the meanings provided in the Agreement.
In
accordance with Section 2.03(b) of the Agreement, the Administrative Agent
has determined that [that
a
Project Completion Deficiency exists]
[that
specified amounts will become due and payable by or on behalf of one or more
of
the Borrowers within the fifteen (15) Business Days immediately following
the date hereof and, if not paid when due, such failure to pay could result
in a
Project Completion Deficiency, and the Administrative Agent reasonably believes
that the Borrowers will not have funds available to pay such amounts when
due].
The
Project Completion Deficiency relates to [Project
Costs or other costs associated with the [Stockton
Plant] [▇▇▇▇▇▇▇
Plant] [▇▇▇▇▇▇
Plant]].
The
Administrative Agent has determined that such Project Completion Deficiency
amounts to [____]
Dollars
($[_____])
(the
"Project
Completion Deficiency Amount").
The
Sponsor is hereby instructed to fund the Project Completion Deficiency Amount
in
the form of a Sponsor Deficiency Payment directly to the [Stockton] [▇▇▇▇▇▇▇] [▇▇▇▇▇▇]
Construction Account on or before [insert
date that is three (3) Business Days from the date of this
notice]
in
accordance with Section 2.04(a) of the Agreement.
(remainder
of this page intentionally left blank)
A1-1
IN
WITNESS WHEREOF, the undersigned has caused this Deficiency Notice to be
executed and delivered as of the day and year first above written.
|
WESTLB
AG, NEW YORK BRANCH,
|
||
|
as
the Administrative Agent
|
||
|
By:
|
||
|
Name:
|
||
|
Title:
|
||
|
By:
|
||
|
Name:
|
||
|
Title:
|
||
▇▇-▇
▇▇▇▇▇▇▇
▇-▇
[FORM
OF]
DEFICIENCY
NOTICE
[Borrower's
Letterhead]
[Date]
Pacific
Ethanol, Inc.
▇▇▇▇
▇.
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
with
a
copy to:
Pacific
Ethanol, Inc.
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention:
General Counsel
|
Re:
|
Deficiency
Notice
|
Ladies
and Gentlemen:
Reference
is made to the Sponsor Support Agreement, dated as of [_________],
2007
(the "Agreement"),
among
PACIFIC ETHANOL HOLDING CO. LLC, a Delaware limited liability company (the
"Borrowers'
Agent"),
PACIFIC ETHANOL, INC., a Delaware corporation (the "Sponsor")
and
WESTLB AG, NEW YORK BRANCH, in
its
capacity as administrative agent for the Lenders (together with its successors,
designees and assigns in such capacity, the "Administrative
Agent").
Capitalized terms used and not otherwise defined in this Deficiency Notice
have
the meanings provided in the Agreement.
In
accordance with Section 2.03(a) of the Agreement, the undersigned Borrower
has determined that [a
Project
Completion Deficiency exists]
[specified
amounts will become due and payable by or on behalf of one or more of the
Borrowers within the twenty (20) Business Days immediately following the
date hereof and, if not paid when due, such failure to pay could result in
a
Project Completion Deficiency, and the undersigned Borrower reasonably believes
that it will not have funds available to pay such amounts when due].
The
Project Completion Deficiency relates to [Project
Costs or other costs associated with the [Stockton
Plant] [▇▇▇▇▇▇▇
Plant] [▇▇▇▇▇▇
Plant]
and
[insert
more detailed description]].
The
undersigned Borrower has determined that such Project Completion Deficiency
amounts to [____]
Dollars
($[_____])
(the
"Project
Completion Deficiency Amount").
The
Sponsor is hereby instructed to fund the Project Completion Deficiency Amount
in
the form of a Sponsor Deficiency Payment directly to the [Stockton] [▇▇▇▇▇▇▇] [▇▇▇▇▇▇]
Construction Account on or before [insert
date that is three (3) Business Days from the date of this
notice]
(or, if
later, the Business Day immediately following the Independent Engineer's
approval of this Deficiency Notice) in accordance with Section 2.04(a) of
the Agreement.
(remainder
of this page intentionally left blank)
A2-1
IN
WITNESS WHEREOF, the undersigned has caused this Deficiency Notice to be
executed and delivered as of the day and year first above written.
|
[_____________________],
|
||
|
as
Borrower
|
||
|
By:
|
||
|
|
Name:
|
|
|
|
Title:
|
|
[Accepted
and Approved as of
___________.
20___ by:
[_____________________________],
as
the
Independent Engineer
By:
_____________________
Name:
Title:
By:
_____________________
Name:
Title:]
[Note:
IE Signature block to be included if required pursuant to Section
2.03(a)]
A2-2
Exhibit
B-1
[FORM
OF]
WARRANTY
NOTICE
[Administrative
Agent Letterhead]
[Date]
Pacific
Ethanol, Inc.
▇▇▇▇
▇.
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
with
a
copy to:
Pacific
Ethanol, Inc.
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention:
General Counsel
|
Re:
|
Warranty
Notice
|
Ladies
and Gentlemen:
Reference
is made to the Sponsor Support Agreement, dated as of [_________],
2007
(the "Agreement"),
among
PACIFIC ETHANOL HOLDING CO. LLC, a Delaware limited liability company (the
"Borrowers'
Agent"),
PACIFIC ETHANOL, INC., a Delaware corporation (the "Sponsor")
and
WESTLB AG, NEW YORK BRANCH, in its capacity as administrative agent for the
Lenders (together with its successors, designees and assigns in such capacity,
the "Administrative
Agent").
Capitalized terms used and not otherwise defined in this Warranty Notice have
the meanings provided in the Agreement.
In
accordance with Section 3.03(b) of the Agreement, the Administrative Agent
has determined that a Warranty Claim exists with respect to the [▇▇▇▇▇▇▇▇
Plant] [Stockton
Plant] [▇▇▇▇▇▇▇
Plant] [▇▇▇▇▇▇
Plant].
[Such
Warranty Claim is a Warranty Performance Claim and relates to
[insert description]. The
Sponsor is hereby instructed to perform, or cause to be performed, all Warranty
Work related to this Warranty Claim in accordance with Section 3.04(a) of the
Agreement.] [To
be included for Warranty Performance Claims.]
[Such
Warranty Claim is a Warranty Payment Claim in the amount of [____]
Dollars
($[_____])
(the
"Warranty
Payment Amount")
and
relates to
[insert description]. The
Sponsor is hereby instructed to fund the Warranty Payment Amount in the form
of
a Sponsor Warranty Payment directly to the [▇▇▇▇▇▇▇▇] [Stockton] [▇▇▇▇▇▇▇] [▇▇▇▇▇▇]
Warranty
Account on or before [insert
date that is three (3) Business Days from the date of this
notice]
in
accordance with Section 3.05(a) of the Agreement.] [To
be included for Warranty Payment Claims.]
(remainder
of this page intentionally left blank)
B1-1
IN
WITNESS WHEREOF, the undersigned has caused this Warranty Notice to be executed
and delivered as of the day and year first above written.
|
WESTLB
AG, NEW YORK BRANCH,
|
||
|
as
the Administrative Agent
|
||
|
By:
|
||
|
Name:
|
||
|
Title:
|
||
|
By:
|
||
|
Name:
|
||
|
Title:
|
||
B1-2
Exhibit B-2
[FORM
OF]
WARRANTY
NOTICE
[Borrower's
Letterhead]
[Date]
Pacific
Ethanol, Inc.
▇▇▇▇
▇.
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
with
a
copy to:
Pacific
Ethanol, Inc.
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention:
General Counsel
|
Re:
|
Warranty
Notice
|
Ladies
and Gentlemen:
Reference
is made to the Sponsor Support Agreement, dated as of [_________],
2007
(the "Agreement"),
among
PACIFIC ETHANOL HOLDING CO. LLC, a Delaware limited liability company (the
"Borrowers'
Agent"),
PACIFIC ETHANOL, INC., a Delaware corporation (the "Sponsor")
and
WESTLB AG, NEW YORK BRANCH, in
its
capacity as administrative agent for the Lenders (together with its successors,
designees and assigns in such capacity, the "Administrative
Agent").
Capitalized terms used and not otherwise defined in this Warranty Notice have
the meanings provided in the Agreement.
In
accordance with Section 3.03(a) of the Agreement, the undersigned Borrower
has determined that a Warranty Claim exists with respect to the [▇▇▇▇▇▇▇▇
Plant] [Stockton
Plant] [▇▇▇▇▇▇▇
Plant] [▇▇▇▇▇▇
Plant].
[Such
Warranty Claim is a Warranty Performance Claim and relates to
[insert description]. The
Sponsor is hereby instructed to perform, or cause to be performed, all Warranty
Work related to this Warranty Claim in accordance with Section 3.04(a) of the
Agreement.] [To
be included for Warranty Performance Claims.]
[Such
Warranty Claim is a Warranty Payment Claim in the amount of [____]
Dollars
($[_____])
(the
"Warranty
Payment Amount")
and
relates to
[insert description]. The
Sponsor is hereby instructed to fund the Warranty Payment Amount in the form
of
a Sponsor Warranty Payment directly to the [▇▇▇▇▇▇▇▇] [Stockton] [▇▇▇▇▇▇▇] [▇▇▇▇▇▇]
Warranty
Account on or before [insert
date that is three (3) Business Days from the date of this
notice]
(or, if
later, the Business Day immediately following the Independent Engineer's
approval of this Warranty Notice) in accordance with Section 3.05(a) of the
Agreement.] [To
be included for Warranty Payment Claims.]
(remainder
of this page intentionally left blank)
B2-1
IN
WITNESS WHEREOF, the undersigned has caused this Warranty Notice to be executed
and delivered as of the day and year first above written.
|
[_____________________],
|
||
|
as
Borrower
|
||
|
By:
|
||
|
|
Name:
|
|
|
|
Title:
|
|
[Accepted
and Approved as of
___________.
20___ by:
[_____________________________],
as
the
Independent Engineer
By:
_____________________
Name:
Title:
By:
_____________________
Name:
Title:]
[Note:
IE Signature block to be included if required pursuant to Section
3.03(a)]
B2-2