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<PAGE>
EXHIBIT 10.45
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CONSTRUCTION AND
TERM LOAN AGREEMENT
dated April
10, 2006
by and among
PACIFIC
ETHANOL MADERA LLC,
as
Borrower,
THE LENDERS NAMED ON
THE SIGNATURE PAGES
TO THIS
AGREEMENT,
as Lenders,
and
HUDSON
UNITED CAPITAL,
A DIVISION OF TD
BANKNORTH, N.A.,
as
Administrative Agent
--------------------------------------------------------------------------------
<PAGE>
<TABLE>
<S> <C>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS.............................................................................................2
ARTICLE II THE CONSTRUCTION AND TERM
LOANS........................................................................2
SECTION 2.1
COMMITMENTS..........................................................................2
SECTION 2.2 FUNDING OF THE
LOANS.................................................................3
SECTION 2.3
INTEREST.............................................................................4
SECTION 2.4 NOTES................................................................................6
SECTION 2.5
FEES.................................................................................7
SECTION 2.6 SECURITY.............................................................................7
SECTION 2.7 USE OF
PROCEEDS......................................................................7
SECTION 2.8 REPAYMENT OF
PRINCIPAL...............................................................7
SECTION 2.9
PAYMENTS............................................................................10
SECTION 2.10 INCREASED COSTS AND
UNAVAILABILITY..................................................11
ARTICLE III CONDITIONS
PRECEDENT.................................................................................16
SECTION 3.1 CONDITIONS PRECEDENT TO THE
CONSTRUCTION LOAN CLOSING DATE..........................16
SECTION 3.2 CONDITIONS PRECEDENT TO THE SECOND AND
EACH SUBSEQUENT CONSTRUCTION LOAN
FUNDING
DATE........................................................................22
SECTION 3.3 CONDITIONS PRECEDENT TO THE TERM LOAN
CONVERSION DATE...............................26
SECTION 3.4 NO
WAIVER...........................................................................29
SECTION 3.5 LOCATION OF
CLOSINGS................................................................29
ARTICLE IV REPRESENTATIONS AND
WARRANTIES........................................................................29
SECTION 4.1 REPRESENTATIONS AND
WARRANTIES......................................................29
SECTION 4.2
SURVIVAL............................................................................37
ARTICLE V
COVENANTS..............................................................................................37
SECTION 5.1 AFFIRMATIVE
COVENANTS...............................................................37
SECTION 5.2 NEGATIVE
COVENANTS..................................................................46
ARTICLE VI EVENTS OF DEFAULT.....................................................................................52
SECTION 6.1 EVENTS OF
DEFAULT...................................................................52
SECTION 6.2 REMEDIES............................................................................55
SECTION 6.3 RIGHT TO
COMPLETE...................................................................55
ARTICLE VII THE
AGENT............................................................................................57
SECTION 7.1 AUTHORIZATION AND
ACTION............................................................57
SECTION 7.2 DELEGATION OF
DUTIES................................................................57
SECTION 7.3 ADMINISTRATIVE AGENT'S
RELIANCE.....................................................57
SECTION 7.4 NOTICE OF
DEFAULT...................................................................58
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SECTION 7.5 ADMINISTRATIVE AGENT AS A
LENDER....................................................58
SECTION 7.6 CREDIT
DECISIONS....................................................................59
SECTION 7.7
INDEMNIFICATION.....................................................................59
SECTION 7.8 SUCCESSOR ADMINISTRATIVE
AGENT......................................................60
ARTICLE VIII GENERAL
PROVISIONS..................................................................................61
SECTION 8.1
COUNTERPARTS........................................................................61
SECTION 8.2
INTEGRATION.........................................................................61
SECTION 8.3
SEVERABILITY........................................................................61
SECTION 8.4 FURTHER ASSURANCES..................................................................61
SECTION 8.5 AMENDMENTS AND
WAIVERS..............................................................61
SECTION 8.6 NO WAIVER; REMEDIES CUMULATIVE......................................................61
SECTION 8.7 SUCCESSORS AND
ASSIGNS..............................................................62
SECTION 8.8 NO
AGENCY...........................................................................63
SECTION 8.9 NO THIRD-PARTY
BENEFICIARIES........................................................63
SECTION 8.10
NON-RECOURSE........................................................................64
SECTION 8.11 COSTS, EXPENSES AND
TAXES...........................................................64
SECTION 8.12
INDEMNITY...........................................................................65
SECTION 8.13 RIGHT OF
SET-OFF....................................................................65
SECTION 8.14 SHARING OF
PAYMENTS.................................................................66
SECTION 8.15 GOVERNING LAW.......................................................................66
SECTION 8.16 WAIVER OF PRESENTMENT, DEMAND, PROTEST
AND NOTICE...................................66
SECTION 8.17 WAIVER OF JURY TRIAL................................................................66
SECTION 8.18 CONSENT TO
JURISDICTION.............................................................67
SECTION 8.19
CONFIDENTIALITY.....................................................................67
SECTION 8.20
NOTICES.............................................................................68
SECTION 8.21 LEGAL REPRESENTATION OF THE
PARTIES.................................................68
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SCHEDULE X
Definitions and Rules of Construction
SCHEDULE 3.1(a)(ix)
Project Documents in Effect on the Construction Loan Closing Date
SCHEDULE 5.2(c)
Additional Project Costs
EXHIBIT 2.2 Form
of Notice of Borrowing
EXHIBIT 2.4(a) Form
of Construction Loan Note
EXHIBIT 2.4(b) Form
of Term Loan Note
EXHIBIT 5.1(k)(iii) Form
of Monthly Construction Report
EXHIBIT 5.1(n)
Required Insurance
EXHIBIT 8.7(c) Form
of Commitment Transfer Supplement
iii
</TABLE>
<PAGE>
CONSTRUCTION AND
TERM LOAN AGREEMENT
This CONSTRUCTION AND
TERM LOAN AGREEMENT, dated April 10,
2006 (as amended, modified or supplemented, this "AGREEMENT"), is by
and among
PACIFIC ETHANOL MADERA LLC, a Delaware limited liability company
("BORROWER"),
the lenders named from time to time on the signature pages to this Agreement,
and HUDSON UNITED CAPITAL, A DIVISION OF TD BANKNORTH, N.A., a national banking
association, as administrative agent for the Lenders (as defined below)
(together with its successors and assigns in such capacity, the
"ADMINISTRATIVE
Agent").
RECITALS:
---------
WHEREAS, Pacific
Ethanol, Inc., a Delaware corporation
("PEI"), is a developer of ethanol production facilities;
WHEREAS, PEI owns all
of the issued and outstanding shares of
Pacific Ethanol California, Inc., a California corporation ("PEC"),
and all of
the membership interests in Kinergy Marketing, LLC, an Oregon limited liability
company ("KINERGY");
WHEREAS, PEC owns all
of the membership interests in Pacific
Ethanol Holding Co. LLC, a Delaware limited liability company ("BORROWER
MEMBER"), and Pacific Ag. Products, LLC, a California limited liability
company
("PAP");
WHEREAS, Borrower
Member owns all of the membership interests
in Borrower;
WHEREAS, Borrower was
formed to develop, own and operate an
approximately 35 million gallon-per-year dry mill ethanol production facility
to
be located in Madera, California (the "PROJECT");
WHEREAS, Borrower also
owns grain processing and storage
facilities consisting of eight silos and two associated rail loops, which
facilities (the "GRAIN FACILITIES") will provide storage and grain
processing
services to the Project;
WHEREAS, W.M. Lyles,
Co., a California corporation ("LYLES"),
will design and build the Project pursuant to a guaranteed maximum price
design-build contract between Lyles and Borrower;
WHEREAS, Delta-T
Corporation, a Virginia corporation
("DELTA-T"), is licensing technology and providing certain design and
process
engineering services to Borrower pursuant to a License of Technology, dated
September 1, 2005, by and between Delta-T and Borrower;
WHEREAS, PAP will
provide grain origination services to
Borrower and Kinergy will provide ethanol marketing services to Borrower;
<PAGE>
WHEREAS, PEC will
provide operations and maintenance services
to Borrower in connection with the Project and PAP will provide operations and
maintenance services to Borrower in connection with the Grain Facilities;
WHEREAS, Western
Milling LLC, a California limited liability
company, will provide marketing services for the wet distillers' grains
produced
by the Project;
WHEREAS, Borrower
desires that the Lenders make available to
Borrower Construction Loans (as defined below) to finance a portion of the cost
of ownership, development, engineering, construction, testing and operation of
the Project;
WHEREAS, Borrower
further desires that, upon the satisfaction
of certain conditions, the Lenders convert the Construction Loans to Term Loans
(as defined below);
WHEREAS, the
Construction Loans and the Term Loans will be
secured by, among other collateral, pledges of all of Borrower's assets
(including the Project and the Grain Facilities) and all of the membership
interests in Borrower;
WHEREAS, the Lenders
are willing to make such loans available
to Borrower on the terms and subject to the conditions set forth in this
Agreement; and
WHEREAS, the Lenders
desire that the Administrative Agent
serve as their administrative agent in connection with the loans contemplated
by
this Agreement and the Administrative Agent is willing to serve in such
capacity;
NOW, THEREFORE, in
consideration of the premises and the
mutual covenants contained herein, and other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE
I
DEFINITIONS
-----------
Capitalized terms used
and not otherwise defined in this
Agreement have the meanings given to those terms in Schedule X hereto, and the
rules of construction set forth in Schedule X govern this Agreement.
ARTICLE II
THE CONSTRUCTION
LOANS AND TERM LOANS
-------------------------------------
Section 2.1
COMMITMENTS.
(a) CONSTRUCTION LOAN
COMMITMENTS AND TERM LOAN COMMITMENTS.
Commencing on the Construction Loan Closing Date, on the terms and subject to
the conditions of this Agreement and in reliance upon the representations,
warranties and covenants of Borrower contained herein, (i) each Construction
Lender agrees to make one or more Construction Loans to Borrower on one or more
Construction Loan Funding Dates in an aggregate amount equal to its Pro Rata
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Share of the Aggregate Construction Loan Commitment and (ii) each Term Lender
agrees to make a Term Loan to Borrower on the Term Loan Conversion Date in an
amount equal to its Pro Rata Share of the Aggregate Term Loan Commitment.
Notwithstanding the foregoing, (i) no Construction Lender will have any
obligation to make a Construction Loan after, and the Construction Loan
Commitments will expire on, the Construction Loan Commitment Termination Date
and (ii) no Term Lender will have any obligation to make a Term Loan after, and
the Term Loan Commitments will expire on, the Construction Loan Commitment
Termination Date, if the Term Loan Conversion Date has not occurred prior to
such date.
(b) SEPARATE OBLIGATIONS.
Each Lender will make its Loans to
Borrower simultaneously with the other Lenders at the times designated by the
Administrative Agent pursuant to Section 2.2(c); PROVIDED, that the failure of
any Lender to fund any Loan will not affect the obligation of any other Lender
to fund its Loans. No Lender will be responsible for a default by any other
Lender in funding a Loan nor will any Commitment of any Lender be increased or
decreased by reason of any such default.
Section 2.2 FUNDING OF THE
LOANS.
(a) THE CONSTRUCTION
LOANS.
(i) On each
Construction Loan Funding Date, each
Construction Lender will make a
Construction Loan to Borrower in the
amount of such Construction
Lender's Pro Rata Share of the amount
specified in the Notice of
Borrowing relating to such Construction Loan
Funding Date; PROVIDED, that no
Construction Lender will be required to
make Construction Loans that, in
the aggregate, exceed such
Construction Lender's Pro Rata
Share of the Aggregate Construction Loan
Commitment. After payment of all
fees, expenses and other amounts
required by the Loan Documents
to be paid by Borrower on such
Construction Loan Funding Date,
the aggregate net proceeds of such
Construction Loans will be
deposited into the Construction Draw Account
for disbursement in accordance
with the Disbursement Agreement and for
use in accordance with Section 2.7(a).
(ii) Each
Construction Loan will mature on the
Construction Loan Maturity Date
and must be refinanced with a Term Loan
on or prior to the Construction
Loan Maturity Date, unless payment of
such Construction Loan is due
prior to the Construction Loan Maturity
Date by acceleration, mandatory
prepayment or otherwise. No
Construction Loan, once repaid,
may be reborrowed.
(iii) On each
Business Day after the Construction
Loan Closing Date and on or
before the Term Loan Conversion Date on
which interest, fees or expenses
are due and payable and are not
otherwise paid or provided for,
Borrower hereby irrevocably authorizes
the Construction Lenders, in
their sole discretion, to make
Construction Loans to Borrower
in the aggregate amount of all interest,
fees and expenses then due and
payable. The proceeds of such
Construction Loans will be
deposited into the Construction Draw Account
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for disbursement in accordance
with the Disbursement Agreement. The
Construction Lenders have no
obligation to make any Construction Loan
for the purposes stated in this
Section 2.2(a)(iii) and no Construction
Loan will be made pursuant to
this Section 2.2(a)(iii) if an Event of
Default has occurred and is
continuing.
(b) THE TERM LOANS.
(i) On the Term Loan Conversion Date,
each Term
Lender will make a Term Loan to
Borrower in the amount of such Term
Lender's Pro Rata Share of the
amount specified in the Notice of
Borrowing relating to the Term
Loan Conversion Date. The initial
principal amount of each
Lender's Term Loan may not exceed such
Lender's Pro Rata Share of the
Aggregate Term Loan Commitment. After
payment of all fees, expenses
and other amounts required by the Loan
Documents to be paid by Borrower on the Term Loan Conversion Date and
the repayment in full of all
Construction Loans, including all accrued
and unpaid interest thereon, the
remaining aggregate net proceeds of
such Term Loans, if any, will be
paid to or for the account of Borrower
for use in accordance with
Section 2.7(b).
(ii) Each Term
Loan will mature on the Term Loan
Maturity Date, unless payment
thereof is due prior to such date by
acceleration, mandatory
prepayment or otherwise. No Term Loan, once
repaid, may be reborrowed.
(c) FUNDING PROCEDURE.
Whenever Borrower desires to borrow
Loans hereunder, it will submit a Notice of Borrowing to the Administrative
Agent prior to 1:00 p.m., New York City time, at least three (3) Business Days
prior to the proposed Construction Loan Funding Date or Term Loan Conversion
Date, as applicable. Each Notice of Borrowing will be irrevocable. Promptly
after receipt of a Notice of Borrowing, the Administrative Agent will notify
each Lender of the proposed Loans and of such Lender's Pro Rata Share thereof,
and each Lender will have available such Lender's Pro Rata Share of the
proposed
Loans in immediately available funds no later than 1:00 p.m., New York City
time, on the applicable Funding Date. Upon satisfaction or waiver of the
applicable conditions precedent set forth in Article III, the Administrative
Agent will notify each Lender to disburse its Pro Rata Share of the requested
Loans to or for the benefit of Borrower on the applicable Funding Date.
Section 2.3 INTEREST.
(a) INTEREST RATES.
(i) Each Loan
will bear interest on the unpaid
principal amount thereof from
the date made to but excluding the date
of repayment (whether at stated
maturity, by acceleration, because of
mandatory prepayment or
otherwise) at the following rates:
(A) the Construction Loans will bear
interest during each
Construction Loan Interest Period at a
rate per annum equal to
LIBOR as determined for such
Construction Loan
Interest Period plus three hundred
4
<PAGE>
seventy-five (375)
basis points, computed on each date on
which interest is due
on the Construction Loans on the basis
of a year of 360 days
for the actual number of days elapsed;
and
(B)
the Term Loans will bear interest during
each Term Loan Interest
Period at a rate per annum equal to
LIBOR as determined for
such Term Loan Interest Period plus
four hundred (400)
basis points, computed on each date on
which interest is due
on the Term Loans on the basis of a year
of 360 days for the
actual number of days elapsed.
(ii)
[RESERVED].
(b) INTEREST PERIODS.
(i) The
initial Construction Loan Interest Period
will commence on the initial
Construction Loan Funding Date and end on
the next Construction Loan
Funding Date. Each Construction Loan
Interest Period occurring
thereafter will commence on the day after the
date on which the immediately
preceding Construction Loan Interest
Period expires and end on the
next Construction Loan Funding Date or,
if no such Construction Loan
Funding Date occurs, on the last Business
Day of the next calendar month.
(ii) The
initial Term Loan Interest Period will
commence on the Term Loan
Conversion Date and end on the next Payment
Date. Each Term Loan Interest
Period occurring thereafter will commence
on the day after the date on
which the immediately preceding Term Loan
Interest Period expires and end
on the next Payment Date.
(iii) An
Interest Period that would otherwise end on
a day that is not a LIBOR
Business Day will end on the next succeeding
LIBOR Business Day, unless such
day falls in the next calendar month,
in which case such Interest
Period will end on the next preceding LIBOR
Business Day.
(iv) An
Interest Period that begins on the last LIBOR
Business Day of a calendar month
or on a day for which there is no
numerically corresponding day in
the calendar month at the end of such
Interest Period will end on the
last LIBOR Business Day of the calendar
month at the end of such
Interest Period.
(c) INTEREST PAYMENT DATES.
(i) All
accrued and unpaid interest on the
Construction Loans will be
payable on each Construction Loan Funding
Date (or, if no Construction
Loan Funding Date occurs during any
calendar month during which any
Construction Loans are outstanding, on
the last Business Day of such
calendar month) and on the date on which
the Construction Loans are
repaid in full, whether by mandatory
prepayment or refinancing with
Term Loans.
5
<PAGE>
(ii) All
accrued and unpaid interest on the Term
Loans will be payable in arrears
on each March 31, June 30, September
30 and December 31 following the Term Loan
Conversion Date and on the
date on which the Term Loans are
repaid in full, whether by mandatory
prepayment or on the Term Loan
Maturity Date.
(iii) After
maturity (whether at stated maturity, by
acceleration, because of
mandatory prepayment or otherwise), all
accrued and unpaid interest
(including Default Interest) due on any
Loan will be payable upon demand
by the Administrative Agent.
(d) DEFAULT INTEREST. Overdue
principal and overdue interest
in respect of any Loan and any other amount payable hereunder or under any
other
Loan Document by Borrower or any other Person that is overdue will bear
interest
at a rate per annum (the "DEFAULT RATE") equal to two percent (2%) in
excess of
the Interest Rate then-applicable to such Loan or other amount or, if no rate
of
interest is applicable to such overdue amount, the highest rate of interest
then-applicable to any outstanding Loan. Upon the occurrence and during the
continuation of an Event of Default (other than an Event of Default caused
solely by Borrower's failure to comply with Section 5.1(p)), all Loans and all
other amounts owing by Borrower and any other Person under a Loan Document will
bear interest at the Default Rate.
(e) INTEREST
LIMITATION. Notwithstanding any other provision
of the Loan Documents, if the rate of interest on any obligation of Borrower or
any other Person under any Loan Document at any time exceeds the highest rate
permitted by applicable Law, the rate of interest on such obligation will be
deemed to be the highest rate permitted by applicable Law.
Section 2.4 NOTES.
Borrower will execute and deliver to each
Construction Lender on the Construction Loan Closing Date a Construction Loan
Note substantially in the form of Exhibit 2.4(a) and to each Term Lender on the
Term Loan Conversion Date a Term Loan Note substantially in the form of Exhibit
2.4(b). Each Construction Loan Note will be dated the Construction Loan Closing
Date, will be in the principal amount of such Lender's Pro Rata Share of the
Aggregate Construction Loan Commitment and will evidence the Construction Loans
made by such Construction Lender. Each Term Loan Note will be dated the Term
Loan Conversion Date and will be in the principal amount of, and will evidence,
the Term Loan made by such Term Lender. On each Construction Loan Funding Date,
each Construction Lender is authorized to make a notation on the schedule
attached to its Construction Loan Note indicating the date and the principal
amount of the Construction Loan made by such Construction Lender on such date.
The information set forth in such schedules will, absent manifest error, be
prima facie evidence of the outstanding principal amount of such Construction
Loan Note. Any failure by a Construction Lender to make any such notation will
not limit or affect the obligations of Borrower under the Construction Loan
Notes or any other Loan Document. Each Note will be subject to and entitled to
the benefits of the Loan Documents.
6
<PAGE>
Section 2.5 FEES.
(a) CONSTRUCTION LOAN
FEE. On the Construction Loan Closing
Date, Borrower will pay to each Construction Lender a fee equal to one percent
(1%) of such Construction Lender's Pro Rata Share of the Aggregate Construction
Loan Commitment; PROVIDED, that the fee payable to Hudson United Capital, as a
Construction Lender, will be reduced by thirty thousand Dollars ($30,000) in
recognition of fees previously paid.
(b) TERM LOAN
CONVERSION FEE. On the Term Loan Conversion
Date, Borrower will pay to each Term Lender a fee equal to one percent (1%) of
the initial principal amount of such Term Lender's Term Loan.
(c) AGENCY FEE. On the
first anniversary of the Construction
Loan Closing Date, and on the Payment Date next following each subsequent
anniversary of the Construction Loan Closing Date for so long as any Loan
remains outstanding under this Agreement, Borrower will pay to the
Administrative Agent a fee equal to thirty-three thousand Dollars ($33,000).
Section 2.6 SECURITY.
The Loans and all other amounts payable
by Borrower or any other PEIX Party under this Agreement and the other Loan
Documents are secured by the Collateral and are entitled to the benefits of the
Security Documents.
Section 2.7 USE OF
PROCEEDS.
(a) CONSTRUCTION LOANS.
Proceeds of the Construction Loans may
be used only to pay (i) Qualified Project Construction Expenses and (ii)
interest, fees and other expenses payable pursuant to Section 2.3, Section 2.5,
Section 2.10 and Section 8.11.
(b) TERM LOANS.
Proceeds of the Term Loans may be used only to
(i) refinance the principal of and accrued and unpaid interest on all
Construction Loans outstanding on the Term Loan Conversion Date and (ii) pay
interest, fees and other expenses payable pursuant to Section 2.3, Section 2.5,
Section 2.10 and Section 8.11. To the extent that proceeds of the Term Loans
are
not sufficient to pay in full all of the amounts described in the preceding
sentence, such proceeds will be applied FIRST to the amounts described in clause
(i) of the preceding sentence and SECOND to the amounts described in clause
(ii)
of the preceding sentence until all of such proceeds have been disbursed. Any
amount described in the first sentence of this paragraph not paid with the
proceeds of the Term Loans will be payable in full by or on behalf of Borrower
on the date on which the Term Loans are disbursed.
Section 2.8 REPAYMENT
OF PRINCIPAL.
(a) MANDATORY REPAYMENTS.
(i) The Construction
Loans must be refinanced in full
with Term Loans on or before the
Construction Loan Commitment
Termination Date. Borrower will
repay all outstanding Term Loans on or
before the Term Loan Maturity
Date.
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(ii) On each
March 31, June 30, September 30 and
December 31 following the Term
Loan Conversion Date, Borrower will pay
to each Lender the amount of
principal of the Term Loans corresponding
to such Payment Date under the
heading "Scheduled Installment" on
Schedule I to each Term Loan
Note (each such payment, a "SCHEDULED
INSTALLMENT"). Exhibit
2.4(b) contains the Schedule I that will be
attached to each Term Loan Note
and applicable to the Term Loans if the
aggregate amount of Term Loans
made on the Term Loan Conversion Date is
equal to $34 million. If,
however, based upon the restrictions
contained in the definition of
Aggregate Term Loan Commitment, the
aggregate amount of Term Loans
made on the Term Loan Conversion Date is
less than $34 million, then the
Administrative Agent, in consultation
with Borrower and with the
approval of the Majority Lenders, will
prepare replacement amortization
schedules for the Term Loan Notes
based upon (A) the reduced
aggregate amount of Term Loans (calculated
in accordance with the
definition of Aggregate Term Loan Commitment)
being made on such Term Loan Conversion
Date, (B) the Project's
projected Net Operating Cash, as
reflected in the Closing Pro Forma and
adjusted by the actual
production capabilities of the Project (as
confirmed by the Engineer and
with any adjustment based solely upon the
Project's as-built production
capacity and efficiency levels) and (C)
the requirement that Borrower at
all times comply with its obligations
under Section 5.1(p). Each such
amortization schedule will list all
Scheduled Installments that will
be payable on the corresponding Term
Loan Note and all Scheduled
Installments, when aggregated together,
would result in the Term Loans
being paid in full on the Term Loan
Maturity Date. No amortization
schedule, once it is attached to an
executed Term Loan Note, may be
amended or otherwise modified except as
agreed by the Administrative
Agent, with the approval of the Majority
Lenders, and Borrower in their
respective sole discretion.
(iii) In
addition to the Scheduled Installments, on
each Payment Date after the Term
Loan Conversion Date, Borrower will
pay to each Lender an additional
amount of principal of the Term Loans
(each such payment, an "SPP
PAYMENT"). SPP Payments will be applied
against the outstanding balance
of the Term Loans in the inverse order
of maturity. The SPP Payment
amounts will be determined as follows:
(A)
Subject to the provisions of Section
2.8(a)(iii)(B), each
SPP Payment will be in the amount of each
Lender's Pro Rata Share
of the amount that is twenty-five
percent (25%) of the balance
remaining in the Project Revenues
Account following the
operation of priority FIFTH of Section
4.2(b) of the
Disbursement Agreement.
(B)
In the event that the Volumetric Ethanol
Excise Tax Credit is
either repealed or not extended beyond
2010 on or before
January 1, 2008, then each SPP Payment will
be in the amount of
each Lender's Pro Rata Share of the amount
8
<PAGE>
that is seventy-five
percent (75%) of the balance remaining in
the Project Revenues
Account following the operation of
priority FIFTH of
Section 4.2(b) of the Disbursement
Agreement; PROVIDED,
that if the Volumetric Ethanol Excise Tax
Credit is extended
beyond 2010 at any time after January 1,
2008, then this Section
2.8(a)(iii)(B) will cease to be in
effect and the SPP
Payment will be calculated pursuant to
Section 2.8(a)(iii)(A)
on the Payment Date next following the
effectiveness of such
extension.
(iv) All cash proceeds received by Borrower
as a
result of (A) any amendment or
termination of any Project Document or
(B) the sale of any material
asset of Borrower, in either case
prohibited by Section 5.2 of
this Agreement or otherwise without the
prior written consent of the
Majority Lenders (which will not be
unreasonably withheld), will
immediately be paid to the Lenders in
accordance with their Pro Rata
Shares of the outstanding Loans and
applied as prepayments of the Loans. In
connection with any such
prepayment, Borrower will pay to
the Lenders the prepayment fee
calculated in accordance with
Section 2.8(c), if any.
(v) Borrower
will immediately prepay in full the
Loans and all other amounts
then-outstanding under the Loan Documents:
(A)
in the event that substantially all of
the improvements
included in the Project are completely
destroyed by casualty
or are condemned, or in the event that
Net Insurance Proceeds
(together with such other funds as may
be available to
Borrower for the purposes of repairing the
Project) are insufficient in the reasonable
judgment of the
Administrative Agent to
pay for the repair of any casualty to
the Project
substantially to the pre-casualty condition of the
Project prior to the
expiration of the benefits of any
business interruption
insurance and without the occurrence of
any Event of Default
described in Section 6.1(a), (b), (f),
(g), (h), (j), (m), (o)
or (p) (in which case no prepayment
fee will be payable to
the Lenders); or
(B)
in the event that the interests of
Borrower in the Project
are sold or otherwise transferred or
PEI ceases to be the
majority direct or indirect owner of
Borrower or no longer
has direct or indirect operational
control over Borrower,
in any case without the Majority
Lenders' prior written
consent (in which case Borrower will
pay to the Lenders the
prepayment fee calculated in accordance
with Section 2.8(c), if
any).
(b) OPTIONAL
PREPAYMENTS. Borrower may, on any Payment Date
after the first anniversary of the Term Loan Conversion Date, after having
given
the Administrative Agent at least ten (10) Business Days' prior revocable
notice
and five (5) Business Days' prior irrevocable notice, prepay in full the Term
Loans and all other amounts then-outstanding under the Loan Documents. In
connection with any such prepayment, Borrower will pay to the Lenders the
prepayment fee calculated in accordance with Section 2.8(c), if any.
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<PAGE>
(c) PREPAYMENT FEE.
(i) In
connection with any prepayment or repayment of
the Construction Loans other
than with proceeds of Term Loans, Borrower
will pay to the Lenders a
prepayment fee in the amount of five percent
(5%) of the prepaid principal
amount of the Construction Loans, as
liquidated damages and
compensation for the costs of the Construction
Lenders.
(ii) In
connection with (i) any permitted optional
prepayment made pursuant to Section 2.8(b) or (ii) any mandatory
prepayment made pursuant to
Section 2.8(a)(iv) or Section 2.8(a)(v)(B),
Borrower will pay to the Lenders
a prepayment fee in the amount
determined pursuant to the
following table as liquidated damages and
compensation for the costs of
the Term Lenders:
<TABLE>
<S> <C>
Fee as a % of
Date of Prepayment Prepaid Principal
Amount
------------------
------------------------
From the Term Loan Conversion
Date until the
second anniversary of the Term
Loan
Conversion Date
3%
From the second to the third
anniversary of the
Term Loan Conversion Date
2%
From the third to the fourth
anniversary of the
Term Loan Conversion Date
1%
After the fourth anniversary of
the Term Loan
Conversion Date
0%
</TABLE>
Section 2.9 PAYMENTS.
(a) METHOD OF PAYMENT.
(i) All
payments by Borrower or any other Person
under any Loan Document will be
made in immediately available funds in
U.S. Dollars to the Lenders at
such office or to such account as each
Lender may notify to Borrower in
writing from time to time. All such
payments must be received no
later than 1:00 p.m., New York City time,
on the date due and must be made
in full without defense, set-off or
counterclaim of any kind and
without any requirement of presentment,
notice or demand. If any such
payment is made by Borrower or any other
Person after 1:00 p.m., New York
City time, such payment will be deemed
to have been made on the next
Business Day. Subject to the provisions
of Section 2.3(b), whenever any
payment to be made hereunder or under
10
<PAGE>
any other Loan Document is
stated to be due on a day that is not a
Business Day, the due date of
such payment will be accelerated to the
next preceding Business Day and
such reduction in time will be included
in the computation of such payment.
(ii)
Notwithstanding the provisions of Section
2.9(a)(i) to the contrary, for
so long as the Disbursement Agreement
remains in full force and effect
and PROVIDED, that sufficient funds
are available for application in
accordance with the terms and
conditions hereof and thereof,
Borrower authorizes and consents to
make, and the Administrative
Agent and the Lenders agree to receive,
any and all payments required to
be made hereunder through operation of
the relevant provisions of the
Disbursement Agreement.
(b) APPLICATION OF
PAYMENTS. Subject to the provisions of the
Disbursement Agreement and except to the extent expressly otherwise provided
herein or in any other Loan Document, all payments received by the
Administrative Agent and the Lenders hereunder will be applied in the following
order of priority:
(i) to the
payment of all accrued interest on the
Loans;
(ii) to the
payment or reimbursement of all costs,
expenses, Taxes and other
amounts payable pursuant to Sections 2.10,
8.11 and 8.12;
(iii) to the
payment of all fees payable pursuant to
Section 2.5;
(iv) to the
payment of the principal of the Loans in
the inverse order of maturity;
and
(v) to the
payment or reimbursement of all other
amounts due to the
Administrative Agent or any Lender hereunder or
under any other Loan Document.
All payments applied to interest on or principal of any Loan will be paid to
the
Lenders in proportion to their respective Pro Rata Shares of the Construction
Loans or the Term Loans, as applicable. All payments applied to any other
category of obligation set forth above will be paid to the various payees
within
such category in proportion to the respective amounts due to them.
Section 2.10 INCREASED
COSTS AND UNAVAILABILITY.
(a) TAXES.
(i) All
payments made by Borrower or any other Person
under the Loan Documents will be
made free and clear of, and without
deduction or withholding for,
any present or future Tax other than
Lender Income Taxes and United
States backup withholding Taxes
(collectively,
"REIMBURSABLE TAXES"), and Borrower will pay, either
directly (with respect to
Reimbursable Taxes of which Borrower has
independent knowledge) or
through reimbursement pursuant to Section
11
<PAGE>
2.10(a)(ii), all Reimbursable
Taxes in respect of payments under the
Loan Documents, and all costs
and liabilities incurred by the
Administrative Agent and the
Lenders (each, an "AFFECTED PARTY") in
connection therewith; PROVIDED,
that Borrower shall not be required to
reimburse any Lender pursuant to
this Section 2.10(a) for any Tax
incurred more than one year
prior to the date on which such Lender
notifies Borrower of such
Reimbursable Tax.
(ii) Borrower
will reimburse each Affected Party, on
demand given pursuant to Section
2.10(f)(i), for any Reimbursable Tax
paid by such Affected Party,
including for any Reimbursable Taxes
imposed on or attributable to
amounts payable under this Section
2.10(a)(ii) (subject to the
remaining provisions of this Section
2.10(a) and provided that this
Section 2.10(a)(ii) shall not apply to
the extent that any such amounts
are compensated for by an increased
payment under Section
2.10(a)(i)). Each Affected Party will have the
absolute right to arrange its
tax affairs in whatever manner it deems
appropriate and no Affected
Party will be obligated to claim any
particular deduction, credit or
other benefit.
(iii) If
Borrower is prohibited or prevented (by Law
or otherwise) from making any
payment to an Affected Party required
under Section 2.10(a)(ii), then
the amount of the payment due to such
Affected Party under the Loan
Documents will be increased by the amount
necessary to insure that such
Affected Party will receive the full
amount payable to it under the
Loan Documents.
(iv) Within
thirty (30) days after the date on which
any Reimbursable Tax (of which
Borrower has independent knowledge or
has become aware by a notice
from an Affected Party delivered in
accordance with Section
2.10(f)(i)) is due, Borrower will furnish to
the applicable Affected Parties
official receipts or notarized copies
thereof evidencing payment of
such Reimbursable Tax or, if such
receipts are not obtainable,
other evidence of such payment by Borrower
reasonably satisfactory to the
Administrative Agent.
(v) The Administrative Agent and the Lenders
agree to
deliver to Borrower on the date
hereof all forms and documents
necessary to establish any
exemption from withholding for Taxes to
which they are entitled, or any
other certification reasonably
requested by Borrower from time
to time. Any Person that becomes the
successor holder of a Note will
deliver the forms and documents
required under this Section
2.10(a)(v). In addition, each Lender will
deliver such forms promptly upon the
obsolescence, expiration or
invalidity of any form
previously delivered by such Lender. Each Lender
will promptly notify Borrower
and the Administrative Agent at any time
such Lender determines that it
is no longer in a position to provide
any previously delivered form or
certificate to Borrower.
12
<PAGE>
(vi) If the
Administrative Agent or a Lender
determines, in its reasonable
discretion, that it has received a refund
of any Reimbursable Taxes or a
Tax credit with respect to Reimbursable
Taxes from the jurisdiction
imposing such Reimbursable Taxes as to
which it has been indemnified by
Borrower or with respect to which
Borrower has paid additional
amounts pursuant to this Section 2.10(a),
it shall pay to Borrower an
amount equal to such refund or credit (but
only to the extent of indemnity
payments made, or additional amounts
paid, by Borrower under this
Section 2.10(a) with respect to the
Reimbursable Taxes giving rise
to such refund or credit), net of all
out-of-pocket expenses of the
Administrative Agent or such Lender and
without interest, provided that
Borrower, upon the request of the
Administrative Agent or such
Lender, agrees to repay the amount paid
over to Borrower (plus any
penalties, interest or other charges imposed
by the relevant Government
Instrumentality) to the Administrative Agent
or such Lender in the event the
Administrative Agent or such Lender is
required to repay such refund to
such Government Instrumentality. At
the reasonable request of Borrower,
each Lender who has been
indemnified by a Borrower and
the Administrative Agent shall take all
reasonable measures, at
Borrower's expense, to apply for, request or
otherwise seek a refund or
credit of any Reimbursable Taxes; provided
that taking such action, in the
reasonable discretion of such Lender or
the Administrative Agent, would
not be materially burdensome (taking
into account Borrower's
obligation to pay such Lender's or the
Administrative Agent's expenses
and other assistance that Borrower
offers to provide such Lender or
Administrative Agent) or result in
materially adverse consequences
to such Lender or the Administrative
Agent. This paragraph shall not
be construed to require the
Administrative Agent or any
Lender to make available its tax returns
(or any other information
relating to its taxes which it deems
confidential) to Borrower or any
other Person.
(b) CAPITAL ADEQUACY, RESERVE REQUIREMENTS
AND INCREASED
COSTS. If a Lender determines that any Law enacted or effective after the
Construction Loan Closing Date, any change in Law effective after the
Construction Loan Closing Date, any change in the interpretation or
administration of any Law effective after the Construction Loan Closing Date,
or
compliance with any directive, guideline or request from any Government
Instrumentality effective after the Construction Loan Closing Date (whether or
not having the force of Law), other than any Law or change in Law related to
Reimbursable Taxes, which shall be governed exclusively by Section 2.10(a), or
Lender Income Taxes, has the effect of (i) requiring an increase in the amount
of capital required or expected to be maintained by such Lender or any
corporation controlling such Lender; (ii) imposing or modifying any reserve,
special deposit, compulsory loan or similar requirement relating to any loan,
extension of credit or other asset of, or any deposit with or other liability
of, such Lender; or (iii) imposes any other cost or condition affecting the
cost
of making a Loan or maintaining a Commitment; PROVIDED, that Borrower's
obligation under this Section 2.10(b) will not affect the obligations of the
Affected Parties under Sections 2.10(f)(ii) and (iii), and such Lender
reasonably determines that such increase, imposition or modification is
material
and is based, in whole or in part, upon its obligations hereunder, Borrower
will
either (x) pay to such Lender the amount necessary to preserve the return on
equity originally anticipated to be realized by such Lender as a result of the
Loans made hereunder or (y) prepay the Loans made by such Lender in the
aggregate amount necessary to prevent such Lender from being subject to such
13
<PAGE>
increase, imposition or modification; PROVIDED, that Borrower shall not be
required to compensate a Lender pursuant to this Section 2.10(b) for any
capital
adequacy or reserve increase, imposition or modification incurred more than one
year prior to the date on which such Lender notifies Borrower of the change
giving rise to those increased costs or reductions and of such Lender's
intention to claim compensation for those circumstances; PROVIDED, further,
that, if the change giving rise to those increased costs or reductions is
retroactive, then the one-year period referred to above shall be extended to
include that period of retroactive effect. Any prepayment pursuant to this
Section 2.10(b) will not cause Borrower to owe a prepayment fee pursuant to
Section 2.8(c) or otherwise, but such prepayment will be applied in the manner
provided in Section 2.9(b).
(c) FUNDING LOSSES.
Borrower will compensate each Lender, upon
demand, for any out-of-pocket loss, cost or liability (including interest paid
by such Lender on funds borrowed to make, continue or convert a Loan and losses
sustained in liquidating deposits but excluding any consequential damages or
losses) incurred as a result of:
(i) repayment
(including repayment due to
acceleration) of a Loan on a
date other than the last day of an
Interest Period or the
Construction Loan Maturity Date or Term Loan
Maturity Date, as applicable;
(ii) failure
of Borrower to borrow a Loan on the
Funding Date notified to the
Administrative Agent in a Notice of
Borrowing; or
(iii) failure
of Borrower to repay a Loan when due
(whether at stated maturity, by
acceleration, because of mandatory
prepayment or otherwise) or on
the date specified therefor in a notice
delivered pursuant to Section
2.8(b).
(d) UNAVAILABILITY. In
the event that, on or before the start
of any Interest Period, the Administrative Agent determines that:
(i) U.S.
Dollar deposits are not being generally
offered in the London interbank
market;
(ii) adequate and fair means do not exist
for
ascertaining interest rates by
reference to LIBOR; or
(iii) any
Lender no longer provides LIBOR loans to
any of its borrowers;
then the Administrative Agent will give prompt notice of such fact to Borrower
and Borrower and the Administrative Agent will promptly enter into good-faith
discussions to determine an alternate reference interest rate and margin that
will as nearly as possible duplicate the economic terms of this Agreement and
the monetary benefit to the Lenders of the Loans made and to be made by the
Lenders hereunder. If Borrower and the Administrative Agent are unable to agree
on an alternate reference interest rate and margin, then the Lenders may suspend
their obligations to make Loans in their sole discretion.
14
<PAGE>
(e) ILLEGALITY. If a
Lender determines that any Law enacted or
effective after the Construction Loan Closing Date, any change in Law effective
after the Construction Loan Closing Date, any change in the interpretation or
administration of any Law effective after the Construction Loan Closing Date,
or
compliance by such Lender with any directive, guideline or request (whether or
not having the force of Law) of any Government Instrumentality effective after
the Construction Loan Closing Date makes it unlawful or impossible for such
Lender to fund or maintain Loans, then upon notice to Borrower by such Lender
the obligation of such Lender to fund Loans will be suspended. In addition, the
outstanding principal amount of such Lender's portion of all Loans, together
with interest accrued thereon and all other amounts payable with respect
thereto, will be repaid immediately upon demand of such Lender if it determines
that immediate repayment is required or, if it determines that immediate
repayment is not required, at the end of the next applicable Interest Period.
In
the event of a repayment of a Loan pursuant to this Section 2.10(e) prior to
the
end of its Interest Period, Borrower will compensate the Lenders for all
losses,
costs and liabilities described in Section 2.10(c). Any prepayment pursuant to
this Section 2.10(e) will not cause Borrower to owe a prepayment fee pursuant
to
Section 2.8(c) or otherwise and such prepayment will be applied in the manner
provided in Section 2.9(b). Notwithstanding the foregoing, prior to demanding
prepayment of a Loan pursuant to this Section 2.10(e), each Lender affected by
the conditions described in this Section 2.10(e) agrees to work in good faith
with Borrower to restructure their respective obligations under this Agreement
in such a manner as to preserve such Lender's economic return and to eliminate
or minimize the need for a Loan to be prepaid.
(f) NOTICE AND
MITIGATION.
(i) To claim
any amount under this Section 2.10, the
Affected Party must deliver to
Borrower a certificate setting forth in
reasonable detail any amount or
amounts that such Affected Party is
entitled to receive pursuant to
this Section 2.10 (including
calculations, in reasonable
detail, showing how such Affected Party
computed such amount or
amounts). Borrower shall pay such Affected
Party the amount due and payable
and set forth on any such certificate
within thirty (30) days after
its receipt.
(ii) Except as
specifically provided in this Section
2.10, each Affected Party will take
reasonable measures to avoid the
need for, or reduce the amount
of, compensation, reimbursement or
indemnification pursuant to this
Section 2.10; PROVIDED, that no
Affected Party will be required
to take any measure that, in its
reasonable judgment, would be
materially disadvantageous to it or
inconsistent with its legal and
regulatory position.
(iii) If any
material Tax or other charge of a type
not generally imposed on lenders
making loans of the types contemplated
by this Agreement is imposed on
payments to any Lender, or if any
Affected Party is entitled to
compensation, reimbursement or
indemnification pursuant to this
Section 2.10 in any material amount
and other lenders making loans
of the types contemplated by this
Agreement would not generally be
so entitled, and Borrower is obligated
15
<PAGE>
hereunder to compensate, reimburse
or indemnify such Lender for such
Tax or other charge, then (A)
Borrower may, within ten (10) days after
receipt of notice of such
obligation, request that such Lender assign
its portion of the affected Loan
or Loans to another Person reasonably
acceptable to the Administrative
Agent and such Lender, and such Lender
will use reasonable efforts to
negotiate such an assignment, and (B) if
Borrower identifies a
replacement lender that is reasonably acceptable
to the Administrative Agent and
the other Lenders (if any), then such
Lender will promptly assign its
portion of the affected Loan or Loans
to such replacement lender
pursuant to an assignment reasonably
acceptable to the assigning
Lender.
ARTICLE III
CONDITIONS
PRECEDENT
--------------------
Section 3.1 CONDITIONS
PRECEDENT TO THE AVAILABILITY OF
COMMITMENTS. The obligation of each Lender to make available its respective
Commitments is subject to the satisfaction of each of the following conditions
precedent:
(a) The Administrative
Agent has received each of the
following, in each case in form and substance satisfactory to the
Administrative
Agent:
(i) each Loan
Document required by the Administrative
Agent in its sole discretion to
be delivered on the Construction Loan
Closing Date, executed and
delivered by each of the parties thereto;
(ii)
[RESERVED];
(iii)
certified copies of:
(A)
the Organizational Documents of the PEIX
Parties;
(B) certificates of
existence with respect
to the PEIX Parties
dated no earlier than thirty (30) days
before the Construction
Loan Closing Date; and
(C)
incumbency certificates for the
signatories of the PEIX
Parties and resolutions (or other
authorizations) of the
PEIX Parties approving the Documents to
which they are a party
and the transactions contemplated
thereby;
(iv)
certificates of a manager or officer of each of
the PEIX Parties certifying
that:
(A)
all Documents executed by such Person on
or prior to the Construction Loan Closing
Date are in full
force and effect, such
Person and, to the best knowledge of
such Person, the other
Project Parties, are in material
compliance with all
covenants and provisions thereof, and no
breach or event of
default (or any event that would become a
16
<PAGE>
breach or event of
default with the giving of notice or
passage of time or both) has occurred and
is continuing under
any such Document,
except to the extent as could not
reasonably be expected
to result in a Material Adverse Effect;
(B)
all representations and warranties of
such Person contained
in the Loan Documents to which it is a
party are true, correct
and complete;
(C)
no act, event or circumstance has
occurred with respect to the
Project or such Person or, to the
best knowledge of such
Person, the other Project Parties which
has had or could
reasonably be expected to have a Material
Adverse Effect; and
(D)
no material adverse change in the
condition or operation,
financial or otherwise, of such Person
or, to the best of such
Person's knowledge, PEI has occurred
since January 23, 2006, and the
financial statements
(including any notes
thereto) provided to the Administrative
Agent disclose all
material liabilities, contingent or
otherwise, of such Person;
(v) the legal
opinion of Borrower's Counsel;
(vi) the legal
opinion of Lenders' Counsel;
(vii) audited
financial statements of PEI for the
fiscal year ended December 31,
2005 (which may be in the form of a
substantially final draft of
such audited financial statements if final
audited financial statements are
not available on the Construction Loan
Closing Date), and all
subsequent quarterly financial statements, if
any, available on the
Construction Loan Closing Date, and pro forma
balance sheets of Borrower as of
the Construction Loan Closing Date;
(viii)
judgment lien, tax lien and UCC searches, and
such other searches of the
records of Government Instrumentalities as
the Administrative Agent may
require, performed with respect to the
PEIX Parties in all relevant
jurisdictions;
(ix) a
certificate of an authorized officer of
Borrower certifying that each of
the Project Documents listed on
Schedule 3.1(a)(ix) (and
attached to such certificate) has been duly
authorized, executed and
delivered by the parties thereto, is in full
force and effect on the
Construction Loan Closing Date and is
enforceable against each of the
parties thereto;
(x) copies of
all Required Approvals obtained on or
prior to the Construction Loan
Closing Date by or on behalf of
Borrower;
(xi) the
Construction and Draw Schedule;
17
<PAGE>
(xii) a
written report of the Engineer, dated on or
prior to the Construction Loan
Closing Date, reporting favorably on the
relevant technical aspects of
the Project, including without
limitation;
(A)
existing environmental damage/liability
(if any);
(B)
the projected availability of the
Project;
(C)
the EPC Contract (including the
acceptance, completion
and performance test criteria) and EPC
Contractor's and
Delta-T's ability to perform their respective
obligations to
Borrower;
(D)
the cost and expenses of PEC for
performing operation
and maintenance services for the Project
and the Grain
Facilities pursuant to the applicable Project
Documents, the adequacy
of such services, that the provision
of such services by PEC
will be sufficient to provide Project
availabilities as
assumed in the Closing Pro Forma, and
confirmation that there
exist third-party operators capable of
performing such
services at comparable cost;
(E) the
Closing Pro Forma;
(F)
Borrower's and the Project's ability to
comply with the
requirements of all leases, easements,
Required Approvals and Project
Documents;
(G)
an opinion that the construction,
completion, operation
and revenues of the Project are
reasonably obtainable
within the cost and timeframe
anticipated;
(H)
an opinion that any Required Approvals
not yet possible to
obtain can be obtained as a matter of
administrative
application;
(I)
the ability of the Project as designed
and constructed to
produce the quantities of Products from the
quantities of corn,
natural gas, water, electricity and other
feedstocks at the cost
of production, as all are assumed in<