EXHIBIT 10.42
DEPOSIT AGREEMENT
BETWEEN
PACIFIC ETHANOL, INC.
AND
COMERICA BANK
DATED APRIL 13, 2006
PACIFIC ETHANOL, INC.
DEPOSIT AGREEMENT
THIS DEPOSIT AGREEMENT is made on the 13th day of April, 2006 (the
"AGREEMENT"), by and between Pacific Ethanol, Inc., a Delaware corporation (the
"COMPANY"), and Comerica Bank, a Michigan banking corporation, in its capacity
as depository bank (the "Bank"). Certain capitalized terms used herein are
defined in Section 5.14 of this Agreement.
WHEREAS, the Company and Cascade Investment, L.L.C., a Washington
limited liability company (the "PURCHASER") have entered into a Purchase
Agreement, dated as of November 14, 2005 (the "PURCHASE AGREEMENT"), pursuant to
which the Purchaser has purchased from the Company, and the Company has sold to
the Purchaser, the Preferred Shares (as defined in the Purchase Agreement);
WHEREAS, pursuant to the terms of the Purchase Agreement, $80,000,000
of the purchase price paid by the Purchaser to the Company in consideration of
the Preferred Shares is to be deposited into a restricted cash account (the
"RESTRICTED CASH ACCOUNT") to be held by the Bank and applied in the manner
provided in this Agreement;
WHEREAS, to induce the Purchaser to acquire the Preferred Shares, the
Company has agreed to enter into this Agreement, establish the Restricted Cash
Account and utilize the amounts maintained in the Restricted Cash Account in
accordance with this Agreement; and
WHEREAS, the parties hereto desire to set forth the terms of the
Restricted Cash Account and to select Bank as the depository bank to act in
accordance with the terms of this Agreement.
NOW, THEREFORE, in consideration of the premises, representations,
warranties and the mutual covenants contained in this Agreement and the Purchase
Agreement, and for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:
ARTICLE I.
ESTABLISHMENT OF RESTRICTED CASH ACCOUNT
SECTION 1.01 Selection of depository bank. The Company hereby
selects Bank as the depository bank under this Agreement, and Bank agrees to
assume and perform the obligations of Bank under this Agreement.
SECTION 1.02 Establishment of Restricted Cash Account. Subject to
the terms and conditions set forth in this Agreement, on the date hereof the
Purchaser has deposited with Bank an amount equal to $80,000,000 (the "DEPOSIT
AMOUNT") by wire transfer of immediately available funds to the account of the
Bank referenced on EXHIBIT A attached hereto. The Deposit Amount, together with
any and all interest, income and other earnings thereon, is referred to as the
"DEPOSIT FUND." The Bank shall hold, invest, manage, administer, distribute and
dispose of the Deposit Fund in accordance with the terms and conditions of this
Agreement.
SECTION 1.03 Investment and Liquidation of Deposit Fund.
(a) Pending disbursement, the Bank shall invest and reinvest
the Deposit Fund in Permitted Investments, and liquidate such Permitted
Investments, pursuant to and in accordance with the written instructions of an
Authorized Officer of the Company as provided to the Bank from time to time.
Interest, income and other earnings, if any, earned on the investment of any
Deposit Fund moneys shall be credited to the Restricted Cash Account. The Bank
shall not be liable for any loss resulting from any investment made, or any sale
or redemption of any investment made, in accordance with instructions received
from an Authorized Officer of the Company or in accordance with paragraph (b) of
this Section 1.03.
(b) If and when cash is required to be disbursed in accordance
with this Agreement, and cash is not otherwise available in the Restricted Cash
Account, the Bank is authorized, without instructions from an Authorized Officer
of the Company, to cause Permitted Investments to be sold or otherwise
liquidated into cash (without regard to maturity) in such manner as the Bank
shall direct; provided that the Bank shall attempt to liquidate any and all
investments as so needed in such manner as will minimize, to the extent
reasonably practicable, the costs, penalties and losses associated with any such
liquidation.
ARTICLE II.
REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 2.01 Representations and Warranties of the Company. Each
submission of a requisition to the Bank shall constitute a representation and
warranty by the Company that all of the information contained in such
requisition is true and correct.
SECTION 2.02 Covenant of the Company. The Company covenants and agrees
that it shall not withdraw moneys from the Restricted Cash Account or utilize
any moneys that have been withdrawn from the Restricted Cash Account except in
accordance with the terms and provisions of this Agreement and the applicable
requisition under which such moneys are to be withdrawn.
ARTICLE III.
DISBURSEMENT FROM THE RESTRICTED CASH ACCOUNT
SECTION 3.01 Disbursements for Payment of Construction Costs. The Bank
is hereby authorized and directed to disburse moneys in the Restricted Cash
Account to or upon the order of the Company, from time to time, upon receipt by
it of a requisition signed by two Authorized Officers of the Company, which
requisition shall state with respect to each payment to be made: (1) the
requisition number, (2) identify the ethanol production facility in respect of
which such requisition is being made, (3) the name and address of the Person to
whom payment is due or has been made, (4) the aggregate amount paid or to be
paid to such Person, (5) an accurate description of the work performed, services
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rendered, materials, equipment or supplies delivered or any other purpose for
which such payment was or is to be made, with invoices with respect thereto
attached, (6) the proposed date of payment and the payment or wire instructions
for the payment or transfer of such amounts by the Bank to such Person, (7) that
each obligation, item of cost or expense mentioned therein has been properly
incurred and has been paid or is then due and payable (or is required to be
deposited at this time as equity in a Subsidiary project financing under a
binding agreement with a third party which is not an Affiliate) as an item of
the Cost of Construction, is a proper charge against the Restricted Cash
Account, and has not been the basis of any previous payment therefrom, (8) all
amounts previously drawn from the Restricted Cash Account under Construction
Cost Requisitions (i) have been applied to pay the Costs of Construction listed
on the applicable Construction Cost Requisition with respect to which such
amounts were drawn or (ii) have not yet been expended and are still available to
the Company or a Subsidiary of the Company for the payment of Costs of
Construction, (9) that the amount of such requisition, together with all amounts
previously drawn from the Restricted Cash Account under Construction Cost
Requisitions relating to the ethanol production facility in respect of which the
drawing is being made, does not exceed the Project Limit, and (10) that the
Purchaser shall have approved, in writing, the terms of the debt, if any,
incurred by the Company or a Subsidiary of the Company to finance a portion of
the Costs of Construction of the ethanol production facility in respect of which
the drawing is being made . A form of Construction Cost Requisition is attached
hereto as EXHIBIT B.
SECTION 3.02 Disbursements for Payment of Acquisition Costs. The Bank
is hereby authorized and directed to disburse moneys in the Restricted Cash
Account to or upon the order of the Company and consented to by the Purchaser,
from time to time, upon receipt by it of a requisition signed by two Authorized
Officers of the Company, with a consent thereto signed by an officer of the
Purchaser, which requisition shall state with respect to each payment to be
made: (1) the requisition number, (2) the name and address of the Person to whom
payment is due or has been made, (3) the aggregate amount paid or to be paid to
such Person, (4) the proposed date of payment and the payment or wire
instructions for the payment or transfer of such amounts by the Bank to such
Person, and (5) that such payment obligation has been incurred in connection
with the acquisition of an ethanol production facility by the Company or a
Subsidiary of the Company and is currently payable, is a proper charge against
the Restricted Cash Account, and has not been the basis of any previous payment
therefrom. A form of Acquisition Cost Requisition is attached hereto as EXHIBIT
C.
SECTION 3.03 Disbursements upon Redemption of Preferred Shares. The
Bank is hereby authorized and directed to disburse all moneys in the Restricted
Cash Account to or upon the order of the Company upon receipt by it of a written
requisition signed by two Authorized Officers of the Company, which instrument
shall state (1) the name and address of the Person to whom payment shall be
made, (2) the aggregate amount to be paid to such Person, (3) the proposed date
of payment and the payment or wire instructions for the payment or transfer of
such amounts by the Bank to such Person, and (4) that such payment is being made
to fund the payment of the redemption price of the Preferred Shares on the date
that the Preferred Shares are being redeemed in accordance with the terms and
provisions thereof, is a proper charge against the Restricted Cash Account, and
has not been the basis of any previous payment therefrom.
SECTION 3.04 Bank's Reliance on Requisitions. In paying any requisition
under this Article III, the Bank may rely as to the completeness and accuracy of
all statements in such requisition upon the approval of such requisition by an
Authorized Officer of the Company, execution thereof to be conclusive evidence
of such approval, and the Company hereby covenants and agrees to indemnify and
save harmless the Bank from any liability incurred in connection with the
payment of any requisition so executed by an Authorized Officer of the Company.
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SECTION 3.05 Records of Disbursements. The Bank shall keep and maintain
adequate records pertaining to all requisitions and disbursements from the
Restricted Cash Account and, if requested by the Company or the Purchaser, shall
promptly provide such requestor with a copy of each such requisition submitted
to the Bank for payment under this Article III.
ARTICLE IV.
RIGHTS AND DUTIES OF BANK; TERMINATION
SECTION 4.01 Rights and Duties of Bank. It is understood and agreed
that the Bank:
(a) undertakes to perform only those duties as are expressly
set forth in this Agreement;
(b) shall not be required to take any action which is contrary
to this Agreement or applicable law;
(c) shall not be liable for any action taken or omitted to be
taken in good faith by it hereunder, except to the extent that any loss or
damage results from the Bank's gross negligence or willful misconduct; and
(d) shall be protected in acting upon any document, instrument
or signature believed by it to be genuine, and it may be assumed that any person
purporting to give any notice or instructions in accordance with this Agreement
has been duly authorized to do so. The Bank may consult with legal counsel, and
the advice or opinion of such counsel shall be full and complete authorization
and protection in respect of any action taken or suffered by it hereunder and in
good faith in accordance therewith.
SECTION 4.02 Termination. The Bank may terminate this Agreement at
any time by giving thirty (30) days' written notice to the Company and the
Purchaser, and, in the event of such termination, the Company and the Purchaser
shall jointly select a successor depository bank. Company and Purchaser may
terminate Bank's obligations hereunder at any time with or without cause by
joint action of both the Company and the Purchaser. No such resignation or
removal shall become effective until a successor depository bank shall have
executed an instrument by which it shall have assumed all of the rights and
obligations of the Bank hereunder.
SECTION 4.03 Compensation of Bank. The Company shall pay to the
Bank compensation as shall be agreed to from time to time by the Company and the
Bank, and shall reimburse the Bank for reasonable fees, costs and expenses,
including reasonable attorneys' fees, incurred by the Bank in connection with
the performance of its duties and obligations under this Agreement.
SECTION 4.04 Indemnity. The Company agrees to indemnify, defend and
hold harmless the Bank, its Affiliates and their respective directors, managers,
officers, members, stockholders, employees, Affiliates, agents, trustees,
advisors (including, without limitation, attorneys, accountants and financial
advisors), attorneys-in-fact, successors and assigns (collectively, "Indemnified
Parties") from and against any and all losses, claims, liabilities, damages,
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deficiencies, costs or expenses (including, without limitation, interest,
penalties, reasonable attorneys' fees, disbursements and related charges and any
costs or expenses that an Indemnified Party incurs to enforce its right to
indemnification) (collectively, "Losses") based upon, arising out of or
otherwise in respect of the execution, delivery and performance of this
Agreement, except that the Company shall not be required to indemnify, defend
and hold harmless the Bank or any other Indemnified Party against any Losses
resulting from its own gross negligence or willful misconduct.
ARTICLE V.
MISCELLANEOUS
SECTION 5.01 No Assignment. No assignment of any rights or
delegation of any obligations provided for in this Agreement may be made by any
party without the express written consent of the Company, the Bank and the
Purchaser. This Agreement shall be binding upon the successors and permitted
assigns of the parties.
SECTION 5.02 Further Assurances. The Company and the Bank each
agree to execute and deliver such other documents or agreements as may be
necessary or desirable for the implementation of this Agreement and the
consummation of the transactions contemplated hereby.
SECTION 5.03 Notices. Any notice, request, demand or other
communication required or permitted to be given to the Company, the Bank or the
Purchaser pursuant to the provisions of this Agreement will be in writing and
will be effective and deemed given under this Agreement on the earliest of: (a)
the date of personal delivery, (b) the date of transmission by facsimile, with
confirmed transmission and receipt, (c) two (2) days after deposit with a
nationally-recognized courier or overnight service and (d) five (5) days after
mailing via first-class mail. All notices not delivered personally or by
facsimile will be sent with postage and other charges prepaid and properly
addressed to the Company, the Bank or the Purchaser, as applicable, at the
following address: (i) if to the Company, to Pacific Ethanol, Inc., 0000 X. Xxxx
Xxx., Xxxxxx, XX 00000, attention: Xxxx Xxxxxxx, with a copy to Xxxxx & Xxxxxx
LLP, 000 Xxxxx Xxxxxxxxx, 00xx Xxxxx, Xxxxx Xxxx, XX 00000, attention: Xxxxx X.
Xxxxxxx, facsimile (000) 000-0000, (ii) if to the Bank, to Comerica Bank,
attention: Xxxxxx Xxxxxx, Vice President, 0000 X. Xxxx Xxxxxx #000, Xxxxxx, XX
00000 with a copy to Comerica Bank, attention: Xxxx Xxxxx, Senior Counsel-Senior
Vice President, 00000 Xxxxxxx Xxxx, Xxxxxxx Xxxx, XX 00000 and (iii) (i) if to
the Purchaser, to Cascade Investment, L.L.C., 0000 Xxxxxxxx Xxxxx, Xxxxxxxx, XX
00000, attention: Xxxxxxx Xxxxxx, with a copy to Xxxxxx Xxxx & Priest LLP, 000
Xxxxx Xxxxxx, Xxx Xxxx, XX 00000, attention: Xxxx X. Xxxx, facsimile (212)
603-2001. The Company, the Bank and the Purchaser (and their permitted assigns)
may change such address for receipt of future notices hereunder by giving
written notice to the Company, the Bank and the Purchaser.
SECTION 5.04 Governing Law. This Agreement shall be governed by,
and construed, interpreted and enforced in accordance with, the laws of the
state in which the Deposit Fund is located, without giving effect to the
principles of conflicts of laws thereunder which would specify the application
of the law of another jurisdiction.
SECTION 5.05 Jury Trial Waiver; Reference Provision; Consent to
Service of Process.
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(a) THE PARTIES HERETO ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY
JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER
CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR
CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT, WAIVES ANY
RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR
ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS AGREEMENT OR THE SUBJECT MATTER
THEREOF.
(b) Reference Provision.
(i) In the event that the Jury Trial Waiver provision contained in
the Agreement is not enforceable, the parties elect to proceed
under this Reference Provision.
(ii)With the exception of the items specified in clause (iii),
below, any controversy, dispute or claim (each, a "Claim")
between the parties arising out of or relating to the Agreement
will be resolved by a reference proceeding in California in
accordance with the provisions of Section 638 ET SEQ. of the
California Code of Civil Procedure ("CCP"), or their successor
sections, which shall constitute the exclusive remedy for the
resolution of any Claim, including whether the Claim is subject
to the reference proceeding. Except as otherwise provided in
the Agreement, venue for the reference proceeding will be in
the state or federal court in the county or district where
venue is otherwise appropriate under applicable law (the
"Court").
(iii) The matters that shall not be subject to a reference are the
following: (i) non-judicial foreclosure of any security
interests in real or personal property, (ii) exercise of
self-help remedies (including, without limitation, set-off),
(iii) appointment of a receiver and (iv) temporary, provisional
or ancillary remedies (including, without limitation, writs of
attachment, writs of possession, temporary restraining orders
or preliminary injunctions). This Agreement does not limit the
right of any party to exercise or oppose any of the rights and
remedies described in clauses (i) and (ii) or to seek or oppose
from a court of competent jurisdiction any of the items
described in clauses (iii) and (iv). The exercise of, or
opposition to, any of those items does not waive the right of
any party to a reference pursuant to this Agreement.
(iv)The referee shall be a retired judge or justice selected by
mutual written agreement of the parties. If the parties do not
agree within ten (10) days of a written request to do so by any
party, then, upon request of any party, the referee shall be
selected by the Presiding Judge of the Court (or his or her
representative). A request for appointment of a referee may be
heard on an EX PARTE or expedited basis, and the parties agree
that irreparable harm would result if EX PARTE relief is not
granted. Pursuant to CCP ss. 170.6, each party shall have one
peremptory challenge to the referee selected by the Presiding
Judge of the Court (or his or her representative).
(v) The parties agree that time is of the essence in conducting the
reference proceedings. Accordingly, the referee shall be
requested, subject to change in the time periods specified
herein for good cause shown, to (a) set the matter for a status
and trial-setting conference within fifteen (15) days after the
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date of selection of the referee, (b) if practicable, try all
issues of law or fact within one hundred twenty (120) days
after the date of the conference and (c) report a statement of
decision within twenty (20) days after the matter has been
submitted for decision.
(vi)The referee will have power to expand or limit the amount and
duration of discovery. The referee may set or extend discovery
deadlines or cutoffs for good cause, including a party's
failure to provide requested discovery for any reason
whatsoever. Unless otherwise ordered, no party shall be
entitled to "priority" in conducting discovery, depositions may
be taken by either party upon seven (7) days written notice,
and all other discovery shall be responded to within fifteen
(15) days after service. All disputes relating to discovery
which cannot be resolved by the parties shall be submitted to
the referee whose decision shall be final and binding.
(vii) Except as expressly set forth in this Agreement, the referee
shall determine the manner in which the reference proceeding is
conducted including the time and place of hearings, the order
of presentation of evidence, and all other questions that arise
with respect to the course of the reference proceeding. All
proceedings and hearings conducted before the referee, except
for trial, shall be conducted without a court reporter, except
that when any party so requests, a court reporter will be used
at any hearing conducted before the referee, and the referee
will be provided a courtesy copy of the transcript. The party
making such a request shall have the obligation to arrange for
and pay the court reporter. Subject to the referee's power to
award costs to the prevailing party, the parties will equally
share the cost of the referee and the court reporter at trial.
(viii) The referee shall be required to determine all issues in
accordance with existing case law and the statutory laws of the
State of California. The rules of evidence applicable to
proceedings at law in the State of California will be
applicable to the reference proceeding. The referee shall be
empowered to enter equitable as well as legal relief, enter
equitable orders that will be binding on the parties and rule
on any motion which would be authorized in a trial, including
without limitation motions for summary judgment or summary
adjudication. The referee shall issue a decision at the close
of the reference proceeding which disposes of all claims of the
parties that are the subject of the reference. Pursuant to CCP
ss. 644, such decision shall be entered by the Court as a
judgment or an order in the same manner as if the action had
been tried by the Court and any such decision will be final,
binding and conclusive. The parties reserve the right to appeal
from the final judgment or order or from any appealable
decision or order entered by the referee. The parties reserve
the right to findings of fact, conclusions of laws, a written
statement of decision, and the right to move for a new trial or
a different judgment, which new trial, if granted, is also to
be a reference proceeding under this provision.
(ix)If the enabling legislation which provides for appointment of a
referee is repealed (and no successor statute is enacted), any
dispute between the parties that would otherwise be determined
by reference procedure will be resolved and determined by
arbitration. The arbitration will be conducted by a retired
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judge or Justice, in accordance with the California Arbitration
Act ss.1280 through ss.1294.2 of the CCP as amended from time
to time. The limitations with respect to discovery set forth
above shall apply to any such arbitration proceeding.
(x) THE PARTIES RECOGNIZE AND AGREE THAT ALL DISPUTES RESOLVED
UNDER THIS REFERENCE PROVISION WILL BE DECIDED BY A REFEREE AND
NOT BY A JURY. AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY
TO CONSULT) WITH COUNSEL OF THEIR OWN CHOICE, EACH PARTY
KNOWINGLY AND VOLUNTARILY, AND FOR THE MUTUAL BENEFIT OF ALL
PARTIES, AGREES THAT THIS REFERENCE PROVISION WILL APPLY TO ANY
CONTROVERSY, DISPUTE OR CLAIM BETWEEN OR AMONG THEM WHICH
ARISES OUT OF OR IS RELATED TO THE AGREEMENT.
SECTION 5.06 Third Party Beneficiary. The Purchaser shall be a
third party beneficiary of this Agreement.
SECTION 5.07 No Right of Set-Off. The Bank agrees that it shall
have no right, title or interest in the Deposit Fund. In addition, the Bank
irrevocably waives any banker's lien or right of set-off to which it may be
entitled, and any other right that it may have at law or otherwise to exercise
such banker's lien or right of set-off, and agrees that it shall not appropriate
or apply any moneys in the Restricted Cash Account to the payment of any
obligations of the Company or any of its subsidiaries to the Bank, any affiliate
of the Bank or any other third party. Notwithstanding the foregoing, the Bank
expressly reserves, all of its present and future rights (whether described as
rights of setoff, banker's lien, security interest, chargeback or otherwise, and
whether available to the Bank under the law or under any other agreement between
the Bank and Company concerning the Restricted Cash Account, or otherwise) with
respect to: (i) erroneous entries to the Restricted Cash Account and (ii) the
Bank's usual and customary charges for services rendered in connection with the
Restricted Cash Account.
SECTION 5.08 Entire Agreement. This Agreement, including the
Exhibits hereto, constitutes the sole and entire agreement of the parties with
respect to the subject matter hereof. All Exhibits hereto are hereby
incorporated herein by reference.
SECTION 5.09 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
SECTION 5.10 Amendments and Termination. This Agreement may not be
amended, supplemented, modified or terminated, and no provisions hereof may be
waived, without the written consent of the Company, the Bank, and the Purchaser.
No action taken pursuant to this Agreement, including without limitation, any
investigation by or on behalf of the Company, the Bank or the Purchaser, shall
be deemed to constitute a waiver of compliance with any representation,
warranty, covenant or agreement contained herein. The waiver by the Company, the
Bank or the Purchaser of a breach of any provision of this Agreement shall not
operate or be construed as a further or continuing waiver of such breach or as a
waiver of any other or subsequent breach. No failure on the part of any party to
exercise, and no delay in exercising, any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of such
right, power or remedy by such party preclude any other or further exercise
thereof or the exercise of any other right, power or remedy. All remedies
hereunder are cumulative and are not exclusive of any other remedies provided by
law.
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This Agreement shall terminate upon the disbursement of the entire
Deposit Fund in the Restricted Cash Account pursuant to Article III.
SECTION 5.11 Severability. If any provision of this Agreement shall
be declared void or unenforceable by any judicial or administrative authority,
the validity of any other provision and of the entire Agreement shall not be
affected thereby.
SECTION 5.12 Titles and Subtitles; Interpretive Matters. The titles
and subtitles used in this Agreement are for convenience of reference only and
are not to be considered in construing or interpreting any term or provision of
this Agreement. No provision of this Agreement will be interpreted in favor of,
or against, any of the parties hereto by reason of the extent to which any such
party or its counsel participated in the drafting thereof or by reason of the
extent to which any such provision is inconsistent with any prior draft hereof
or thereof.
SECTION 5.13 Facsimile Signatures. Any signature page delivered by
a fax machine shall be binding to the same extent as an original signature page,
with regard to any agreement subject to the terms hereof or any amendment
thereto. Any party who delivers such a signature page agrees to deliver promptly
an original counterpart to each party to whom the faxed signature page was sent.
SECTION 5.14 Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"AFFILIATE" means, with respect to any Person, (i) any other Person of
which securities or other ownership interests representing more than fifty
percent (50%) of the voting interests are, at the time such determination is
being made, owned, Controlled or held, directly or indirectly, by such Person,
or (ii) any other Person which, at the time such determination is being made, is
Controlling, Controlled by or under common Control with, such Person. As used
herein, "CONTROL", whether used as a noun or verb, refers to the possession,
directly or indirectly, of the power to direct, or cause the direction of, the
management or policies of a Person, whether through the ownership of voting
securities or otherwise.
"ACQUISITION COST REQUISITION" shall mean an Acquisition Cost
Requisition from the Company to the Bank, in the form attached hereto as Exhibit
C.
"AUTHORIZED OFFICER" shall mean the Chief Executive Officer, President,
Chief Financial Officer, Chief Operating Officer or Treasurer of the Company.
"CONSTRUCTION COST REQUISITION" shall mean a Construction Cost
Requisition from the Company to the Bank, in the form attached hereto as Exhibit
B.
"COST(S) OF CONSTRUCTION" shall mean the following costs and expenses
incurred by the Company or a Subsidiary of the Company in the construction of an
ethanol production facility prior to the commercial operation date of such
facility: (a) costs and expenses incurred by the Company or the Subsidiary under
engineering, procurement and construction contracts relating to the facility,
and other costs and expenses directly related to the design, engineering,
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construction, installation, start-up, and testing of the facility and operating
expenses with respect to the facility payable prior to the commercial operation
date of the facility; (b) fees and expenses incurred by or on behalf of the
Company or the Subsidiary in connection with the development of the facility,
including financial, accounting, legal, environmental site assessment, surveying
and consulting fees and the costs of preliminary engineering, (c) the costs of
obtaining governmental approvals, permits and licenses for the facility prior to
the commercial operation date of the facility; (d) interest on the loans
incurred to finance the construction of the facility which is payable prior to
the commercial operation date of the facility; (e) financing expenses, costs and
charges in connection with the facility, and the fees and expenses of the
counsel, independent engineers, consultants incurred in connection with the
financing of the cost of construction of the facility; (f) insurance premiums
with respect to the title insurance policy, title continuations and the
insurance relating to the facility; (g) all costs, fees and expenses incurred by
the Company or the Subsidiary in accordance with the construction budget and
other costs directly related to the design, engineering, construction,
installation, start-up and testing of the facility being constructed thereunder;
(h) amounts necessary to fund a debt service reserve account required under the
loan agreement or related financing agreements relating to the financing of the
facility and (i) all other costs and expenses included in the construction
budget for the facility.
"PERMITTED INVESTMENT" shall mean (a) obligations of or guaranteed by
the United States of America (or of any agency directly backed by the full faith
and credit of the United States of America), maturing not more than 12 months
after the acquisition thereof, (b) commercial paper rated "A-1" by Standard &
Poor's Rating Services ("S&P") or "P-1" by Xxxxx'x Investors Service, Inc.
("MOODY'S"), maturing not more than 180 days after the acquisition thereof, and
(c) bankers' acceptances, certificates of deposits, term deposits or Eurodollar
term deposits issued by a bank which is rated "AA" or better by S&P or "Aa" or
better by Moody's, maturing not more than 180 days after the acquisition
thereof.
"PROJECT LIMIT" shall mean (a)(i) with respect to the Madera ethanol
production facility, $20,000,000, and (ii) with respect to each other ethanol
production facility being constructed by the Company or a Subsidiary of the
Company, the product of (A) the Equity Portion, and (B) the total budgeted Costs
of Construction for such facility as determined in good faith by the Board of
Directors of the Company, or (b) such other amount in respect of an ethanol
production facility as shall have been consented to in writing by the Purchaser.
"EQUITY PORTION" shall mean 0.30 for the first ethanol production facility
(other than the Madera ethanol production facility) in respect of which a
Construction Cost Requisition is submitted to the Bank and 0.25 for each
subsequent ethanol production facility in respect of which a Construction Cost
Requisition is submitted.
"PERSON" shall mean an individual, corporation, trust, partnership,
limited liability company, joint venture, unincorporated organization,
government body or any agency or political subdivision thereof, or any other
entity.
"SUBSIDIARY(IES)" shall mean any other corporation, limited liability
company, association, joint stock company, joint venture or business trust or
which, as of the date hereof or hereafter, (i) more than fifty percent (50%) of
the outstanding voting stock, share capital or other equity interests is owned
either directly or indirectly by any Person or one or more of it Subsidiaries,
or (ii) the management of which is otherwise controlled, directly, or indirectly
through one or more intermediaries, or both, by any Person and/or its
Subsidiaries. Unless otherwise specified to the contrary herein, Subsidiary(ies)
shall refer to the Company's Subsidiary(ies).
[SIGNATURE PAGES FOLLOW]
10
IN WITNESS WHEREOF, the Company and the Bank have executed this Deposit
Agreement as of the day and year first above written.
PACIFIC ETHANOL, INC.
By: /S/ XXXX XXXXXX
Name:__________________________________
Title:_________________________________
COMERICA BANK
By: /S/ XXXXXX X. XXXXXX
Name: Xxxxxx X. Xxxxxx
Title: Vice President
11
EXHIBIT A to
Deposit Agreement
BANK WIRE INSTRUCTIONS
PACIFIC ETHANOL/CASCADE RESTRICTED ACCOUNT #1892630839
WIRE FUNDS VIA FEDERAL RESERVE SYSTEM TO:
COMERICA BANK - CALIFORNIA
ABA/ROUTING #: 000000000
000 X. Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
WIRE FUNDS VIA SWIFT TO:
Comerica Bank
SWIFT BIC Code: MNBD US 33
ORIGINATOR SHOULD INCLUDE THE FOLLOWING INFORMATION WHEN SENDING THE
WIRE TRANSFER TO YOUR ACCOUNT:
BENEFICIARY BANK NAME AND ADDRESS (INTERNATIONAL WIRE TRANSFERS)
BENEFICIARY NAME AND ADDRESS
BENEFICIARY ACCOUNT NUMBER
CONTACT/SPECIAL INSTRUCTIONS (OPTIONAL)
NOTE: TO INSURE PROPER CREDIT TO THE ACCOUNT, THE ACCOUNT NUMBER MUST BE
INCLUDED IN THE WIRE INSTRUCTIONS.
EXHIBIT B to
Deposit Agreement
CONSTRUCTION COST REQUISITION
NO. _______
[Date]
Comerica Bank
[Insert Bank Address]
[ ]
[ ]
Attention: [ ]
Re: Deposit Agreement dated [_________], 2006 (the "DEPOSIT
AGREEMENT") between Pacific Ethanol, Inc., a Delaware
corporation (the "COMPANY"), and Comerica Bank, a Michigan
banking corporation (the "Bank").
Ladies and Gentlemen:
This requisition (this "CONSTRUCTION COST REQUISITION") is
delivered to you pursuant to Section 3.01 of the Deposit Agreement. Each
capitalized term used herein and not otherwise defined herein shall have the
definition assigned to that term in the Deposit Agreement. The information
relating to this Construction Cost Requisition is as follows:
1. The aggregate amount to be withdrawn from the Restricted
Cash Account in accordance with this Construction Cost Requisition is
$___________.
2. This Construction Cost Requisition is to be used to pay
Costs of Construction relating to the ___________ ethanol production facility.
3. Set forth on Schedule 1 attached hereto is (i) the name and
address of each Person to whom any payment is to be made or has been made, (ii)
the aggregate amount to be paid to such Person on the disbursement date, or to
be paid to the Company on the disbursement date for amounts paid to such Person
which have not been the basis of any previous payment, (iii) an accurate
description of the work performed, services rendered, materials, equipment or
supplies delivered or any other purpose for which each payment was or is to be
made, with invoices with respect thereto attached, and (iv) the proposed date of
payment and the payment or wire instructions for the payment or transfer of such
amounts by the Bank to each such Person.
4. The proceeds of this Construction Cost Requisition
withdrawn from the Restricted Cash Account will be used to pay Costs of
Construction in accordance with the Deposit Agreement.
5. Each obligation, item of cost or expense covered by this
Construction Cost Requisition has been properly incurred and has been paid or is
now due and payable (or is required to be deposited at this time as equity in a
Subsidiary project financing under a binding agreement with a third party which
is not an Affiliate) as an item of the Costs of Construction, is a proper charge
against the Restricted Cash Account, and has not been the basis of any previous
payment from the Restricted Cash Account.
6. The proceeds of this Construction Cost Requisition,
together with all amounts previously drawn from the Restricted Cash Account
under Construction Cost Requisitions relating to the ethanol production facility
in respect of which this drawing is being made, does not exceed the Project
Limit.
Furthermore, (a) all amounts previously drawn from the
Restricted Cash Account under Construction Cost Requisitions (i) have been
applied to pay the Costs of Construction listed on the applicable Construction
Cost Requisition with respect to which such amounts were drawn or (ii) have not
yet been expended and are still available to the Company or a Subsidiary of the
Company for the payment of Costs of Construction and (b) the Purchaser has
approved, in writing, the terms of the debt, if any, incurred by the Company or
a Subsidiary of the Company to finance a portion of the Costs of Construction of
the ethanol production facility in respect of which the drawing is being made.
Very truly yours,
PACIFIC ETHANOL, INC.
By:
-------------------------------------
Name:
Title:
By:
-------------------------------------
Name:
Title:
Schedule 1 to EXHIBIT B
(Construction Cost Requisition)
Name Amount of Payment Purpose Date of Payment Instructions
---- ----------------- ------- --------------- ------------
EXHIBIT C to
Deposit Agreement
ACQUISITION COST REQUISITION
----------------------------
NO. _______
[Date]
Comerica Bank
[Insert Bank Address]
[ ]
[ ]
Attention: [ ]
Re: Deposit Agreement dated [____________], 2006 (the "DEPOSIT
AGREEMENT") between Pacific Ethanol, Inc., a Delaware
corporation (the "COMPANY"), and Comerica Bank, a Michigan
banking corporation (the "Bank").
Ladies and Gentlemen:
This requisition (this "ACQUISITION COST REQUISITION") is
delivered to you pursuant to Section 3.02 of the Deposit Agreement. Each
capitalized term used herein and not otherwise defined herein shall have the
definition assigned to that term in the Deposit Agreement. The information
relating to this Acquisition Cost Requisition is as follows:
1. The aggregate amount to be withdrawn from the Restricted
Cash Account in accordance with this Acquisition Cost Requisition is
$___________.
2. Set forth on Schedule 1 attached hereto is (i) the name and
address of each Person to whom any payment is to be made or has been made, (ii)
the aggregate amount to be paid to such Person on the disbursement date, or to
be paid to the Company on the disbursement date for amounts paid to such Person
which have not been the basis of any previous payment, and (iii) the proposed
date of payment and the payment or wire instructions for the payment or transfer
of such amounts by the Bank to each such Person.
3. The proceeds of this Acquisition Cost Requisition withdrawn
from the Restricted Cash Account will be used to pay obligations incurred in
connection with the acquisition of an ethanol production facility by the Company
or a Subsidiary of the Company and is currently payable in accordance with the
Deposit Agreement.
4. Each obligation, item of cost or expense covered by this
Acquisition Cost is a proper against the Restricted Cash Account and has not
been the basis of any previous payment from the Restricted Cash Account.
Very truly yours,
PACIFIC ETHANOL, INC.
By:
------------------------------------
Name:
Title:
By:
------------------------------------
Name:
Title:
CONSENTED TO BY:
CASCADE INVESTMENT, L.L.C.
By: _____________________________________
Name:
Title:
Schedule 1 to EXHIBIT C
(Acquisition Cost Requisition)
Name Amount of Payment Purpose Date of Payment Instructions
---- ----------------- ------- --------------- ------------
