EXHIBIT 10.51
DISBURSEMENT AGREEMENT
This DISBURSEMENT AGREEMENT, dated April 13, 2006 (as amended,
modified or supplemented, this "DISBURSEMENT AGREEMENT"), is by and among
PACIFIC ETHANOL MADERA LLC, a Delaware limited liability company ("BORROWER"),
XXXXXX 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, the "ADMINISTRATIVE AGENT"), COMERICA
BANK, a national banking association, as disbursement agent (together with its
successors and assigns, the "DISBURSEMENT AGENT"), WEALTH MANAGEMENT GROUP OF TD
BANKNORTH, N.A., a national banking association, as the debt service reserve
account agent (together with its successors and assigns, the "DSRA AGENT"), and
COMERICA BANK, a national banking association, and WEALTH MANAGEMENT GROUP OF TD
BANKNORTH, N.A., a national banking association, as securities intermediaries,
banks and depositary agents (together with their successors and assigns, each a
"SECURITIES INTERMEDIARY" and together the "SECURITIES INTERMEDIARIES").
RECITALS
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WHEREAS, Borrower has entered into the Construction and Term
Loan Agreement, dated April 10, 2006 (as amended, modified or supplemented, the
"LOAN AGREEMENT"), with the Administrative Agent and the Lenders pursuant to
which the Lenders have agreed to make certain loans to Borrower;
WHEREAS, it is a condition precedent to the obligation of the
Lenders to make such loans that Borrower have established the Security Accounts
(as defined below) with the Disbursement Agent and the DSRA Agent in accordance
with the terms of this Disbursement Agreement; and
WHEREAS, the Disbursement Agent, the DSRA Agent and the
Securities Intermediaries are willing to serve in such capacities on the terms
and subject to the conditions of this Disbursement Agreement;
NOW, THEREFORE, in consideration of the premises and the
mutual agreements 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
DEFINED TERMS AND RULES OF CONSTRUCTION
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Section 1.1 DEFINED TERMS AND RULES OF CONSTRUCTION.
Capitalized terms used and not otherwise defined in this Disbursement Agreement
have the meanings given to those terms in Schedule X to the Loan Agreement, and
the rules of construction set forth in Schedule X to the Loan Agreement govern
this Disbursement Agreement. In the event of any inconsistency expressed or
implied between this Disbursement Agreement and the Loan Agreement, the Loan
Agreement will govern the interpretation and implementation of this Agreement.
ARTICLE II
APPOINTMENT OF THE DISBURSEMENT AGENT AND THE DSRA AGENT;
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CREATION OF SECURITY ACCOUNTS
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Section 2.1 APPOINTMENT OF THE DISBURSEMENT AGENT AND THE DSRA
AGENT.
(a) Each of Borrower and the Administrative Agent appoints the
Disbursement Agent to act as disbursement agent hereunder and the Disbursement
Agent agrees to act as such, to accept all cash, payments and other amounts
delivered to or held by it pursuant to the terms of this Disbursement Agreement
or any other Loan Document and to distribute all such funds and perform all of
its other obligations in accordance with this Disbursement Agreement. The
Disbursement Agent will hold and safeguard its Security Accounts and will treat
the cash, instruments and securities in its Security Accounts as funds,
instruments and securities pledged by Borrower to the Administrative Agent to be
held in the custody of the Disbursement Agent, as agent solely for the benefit
of the Administrative Agent and the Lenders, in trust and in accordance with the
provisions of this Disbursement Agreement.
(b) Each of Borrower and the Administrative Agent appoints the
DSRA Agent to act as the agent with respect to the Debt Service Reserve Account
hereunder and the DSRA Agent agrees to act as such, to accept all cash, payments
and other amounts delivered to or held by it pursuant to the terms of this
Disbursement Agreement or any other Loan Document and to distribute all such
funds and perform all of its other obligations in accordance with this
Disbursement Agreement. The DSRA Agent will hold and safeguard the Debt Service
Reserve Account and will treat the cash, instruments and securities in the Debt
Service Reserve Account as funds, instruments and securities pledged by Borrower
to the Administrative Agent to be held in the custody of the DSRA Agent, as
agent solely for the benefit of the Administrative Agent and the Lenders, in
trust and in accordance with the provisions of this Disbursement Agreement.
Section 2.2 CREATION OF SECURITY ACCOUNTS.
(a) Borrower directs and authorizes the Disbursement Agent and
the DSRA Agent to establish, and the Disbursement Agent and the DSRA Agent
hereby establish, as described below, the following special and segregated
accounts (collectively, the "SECURITY ACCOUNTS"):
(i) an account entitled the Pacific Ethanol Madera
Construction Draw Account, with account number 1892639004 (the
"CONSTRUCTION DRAW ACCOUNT"), to be established by the Disbursement
Agent at its office in Fresno, California;
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(ii) an account entitled the Pacific Ethanol Madera
Project Revenues Account, with account number 1892639012 (the "PROJECT
REVENUES ACCOUNT"), to be established by the Disbursement Agent at its
office in Fresno, California;
(iii) an account entitled the Pacific Ethanol Madera
Debt Service Account, with account number 1892639020 (the "DEBT
SERVICE ACCOUNT"), to be established by the Disbursement Agent at its
office in Fresno, California;
(iv) an account entitled the Pacific Ethanol Madera
Cash Sweep Account, with account number 1892639038 (the "CASH SWEEP
ACCOUNT"), to be established by the Disbursement Agent at its office
in Fresno, California;
(v) an account entitled the Pacific Ethanol Madera
Loss Proceeds Account, with account number 1892630755 (the "LOSS
PROCEEDS ACCOUNT"), to be established by the Disbursement Agent at its
office in Fresno, California;
(vi) an account entitled the Pacific Ethanol Madera
Asset Sales Proceeds Account, with account number 1892630763 (the
"ASSET SALES PROCEEDS ACCOUNT"), to be established by the Disbursement
Agent at its office in Fresno, California; and
(vii) an account entitled the Pacific Ethanol Madera
Debt Service Reserve Account, with account number __________________
(the "DEBT SERVICE RESERVE ACCOUNT"), to be established by the DSRA
Agent at its trust office in Westport, Connecticut;
all such accounts to be held in trust for the benefit of Borrower, as
"entitlement holder" (as defined in Section 8--102(a)(7) of the UCC) subject to
the security interest of the Administrative Agent, and which accounts will be
maintained at all times as segregated accounts by the Disbursement Agent or the
DSRA Agent, as the case may be, as a custodian until the termination of this
Disbursement Agreement.
(b) All amounts from time to time held in each Security
Account shall be disbursed in accordance with the terms hereof, shall constitute
property of Borrower and shall be held in the sole custody and "control" (within
the meaning of Section 8-106(d) of the UCC) of the Administrative Agent for the
purposes and on the terms set forth herein. Each Security Account will be
subject to debit or withdrawal solely as provided in this Disbursement
Agreement, and no Person will have any control over or right of withdrawal from
the Security Accounts except as provided in this Disbursement Agreement. Each
Security Account constitutes a part of the Collateral and does not constitute
payment of the Obligations until applied or credited as provided in this
Disbursement Agreement or the Loan Agreement.
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Section 2.3 SECURITY INTEREST. As collateral security for the
prompt and complete payment and performance when due of all of the Obligations,
Borrower has granted to the Administrative Agent pursuant to the Security
Agreement First-Priority Liens and collateral security interests in and to (a)
the Security Accounts and (b) all cash, investments and securities at any time
on deposit in the Security Accounts, including all income or gain earned
thereon.
ARTICLE III
DEPOSITS INTO AND DISTRIBUTIONS FROM
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THE CONSTRUCTION DRAW ACCOUNT
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Section 3.1 DEPOSITS INTO THE CONSTRUCTION DRAW ACCOUNT.
(a) On or prior to the Construction Loan Closing Date,
Borrower will deposit, or will cause to be deposited for its benefit,
$17,690,125.00 into the Construction Draw Account.
(b) On each Construction Loan Funding Date after the
Construction Loan Closing Date and on each other date on which the Construction
Lenders make Construction Loans to or for the benefit of Borrower pursuant to
Section 2.2(a) of the Loan Agreement, the Administrative Agent will cause the
Construction Lenders to disburse their Pro Rata Shares of the requested
Construction Loans into the Construction Draw Account.
(c) If at any time after the Construction Loan Closing Date
Borrower makes available to the Administrative Agent and the Lenders cash or
cash equivalents (including letters of credit) in order to qualify a delay in
construction of the Project as a Permitted Construction Delay, such cash or cash
equivalents will be deposited into or made payable to the Construction Draw
Account.
Section 3.2 PERMITTED USES OF FUNDS ON DEPOSIT IN THE
CONSTRUCTION DRAW ACCOUNT. Funds on deposit in the Construction Draw Account may
be used only to pay (a) Qualified Project Construction Expenses and (b)
interest, fees and other expenses payable pursuant to Sections 2.3, 2.5, 2.10
and 8.11 of the Loan Agreement; PROVIDED, that amounts deposited in the
Construction Draw Account pursuant to Section 3.1(c) may be used only to pay
interest on the Construction Loans.
Section 3.3 WITHDRAWALS FROM THE CONSTRUCTION DRAW ACCOUNT.
(a) From and after the first disbursement of Construction
Loans and until the Construction Loans have been repaid in full, on the last
Business Day of each calendar month, the Disbursement Agent will pay from the
Construction Draw Account to the Lenders the amount of their respective accrued
and unpaid interest then due and payable on all then-outstanding Construction
Loans, as set forth in a Construction Draw Approval Notice or other written
instruction from the Administrative Agent to the Disbursement Agent.
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(b) Subject to the restrictions contained in Section 3.3(c),
on the Construction Loan Closing Date, on the last Business Day of each calendar
month thereafter until the Construction Loans have been repaid in full, and on
no more than one additional Business Day per calendar month as requested by
Borrower, the Disbursement Agent will pay from the Construction Draw Account to
Borrower, or to such other payees as are specified in the applicable
Construction Draw Approval Notice, the Qualified Project Construction Expenses
and all other fees and expenses payable by Borrower pursuant to Sections 2.3,
2.5, 2.10 and 8.11 of the Loan Agreement and set forth in the applicable
Construction Draw Approval Notice.
(c) No withdrawal from the Construction Draw Account pursuant
to Section 3.3(b) will be permitted unless:
(i) Borrower has delivered a Construction Draw
Request to the Administrative Agent at least (5) Business Days prior to
the date such withdrawal is scheduled to be made;
(ii) The Administrative Agent has confirmed the
accuracy or acceptability of the information set forth in such
Construction Draw Request (including the conformity of such Construction
Draw Request with the Construction and Draw Schedule) and, by the
Administrative Agent's delivery to the Disbursement Agent of such
Construction Draw Request and a written notice from the Administrative
Agent authorizing the Disbursement Agent to permit such withdrawal
(which may take the form of the Administrative Agent's countersignature
on the Construction Draw Request) (a "CONSTRUCTION DRAW APPROVAL
NOTICE") at least one (1) Business Day prior to the date such withdrawal
is scheduled to be made, confirms that Borrower is entitled to such
withdrawal; and
(iii) no Event of Default has occurred and is
continuing.
(d) No failure of Borrower to deliver a Construction Draw
Request to the Administrative Agent will restrict or otherwise affect the
Administrative Agent's right to cause the Disbursement Agent to withdraw and
transfer funds pursuant to Section 3.3(a).
(e) On the Term Loan Conversion Date, after making the
distributions described in Sections 3.3(a) and (b), if any, the Disbursement
Agent will, on the written direction of the Administrative Agent, either (i) pay
all amounts remaining in the Construction Draw Account (or such lesser amount as
the Administrative Agent may direct) to the Lenders in proportion to their Pro
Rata Shares of the outstanding Construction Loans and the Lenders will apply
such amounts in repayment of the outstanding Construction Loans or (ii) transfer
all amounts remaining in the Construction Draw Account (or such lesser amount as
the Administrative Agent may direct) to the Project Revenues Account and/or the
Debt Service Reserve Account.
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ARTICLE IV
DEPOSITS INTO AND DISTRIBUTIONS FROM
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THE OTHER SECURITY ACCOUNTS
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Section 4.1 DEPOSITS INTO THE PROJECT REVENUES ACCOUNT.
(a) Borrower agrees, and confirms to the Administrative Agent
that it has instructed (and will so instruct) the Project Parties, that all
payments due or to become due to Borrower on and after the Term Loan Conversion
Date under all Project Documents or in connection with the operation of the
Grain Facilities or otherwise in connection with the conduct of Borrower's
business (other than amounts that are required to or may be deposited into the
Assets Sales Proceeds Account or the Loss Proceeds Account in accordance with
Sections 4.5 and 4.6 of this Disbursement Agreement and Section 2.8 of the Loan
Agreement) will be paid directly to the Project Revenues Account. In the event
that, notwithstanding the foregoing, any such payment is remitted directly to
Borrower, Borrower will promptly (but in any event within three (3) Business
Days of receipt thereof) deliver such payment or other amount to the
Disbursement Agent for deposit in the Project Revenues Account.
(b) Borrower agrees, and confirms to the Administrative Agent
that it has instructed (and will so instruct) all insurers with which Borrower
maintains Required Insurance, that all insurance proceeds payable to Borrower in
connection with such insurance, and all condemnation proceeds, will be paid
directly to the Disbursement Agent, as agent for the Administrative Agent, as
loss payee, for deposit in the Project Revenues Account or the Loss Proceeds
Account as the case may be. In the event that, notwithstanding the foregoing,
any such proceeds are remitted directly to Borrower or any other Person, then
Borrower or such Person will promptly (but in any event within three (3)
Business Days of receipt thereof) deliver such proceeds to the Disbursement
Agent for deposit in the Project Revenues Account or the Loss Proceeds Account,
as the case may be.
(c) The Disbursement Agent will only be required to accept
such monies as are delivered to it for deposit in the Project Revenues Account
and will not be required to monitor the amount of such deposits or pursue the
collection of such sums from any Person.
Section 4.2 WITHDRAWALS FROM THE PROJECT REVENUES ACCOUNT.
(a) On the last Business Day of each calendar month following
the Term Loan Conversion Date, the Disbursement Agent will distribute funds from
the Project Revenues Account and pay the same at the times, in the amounts and
in the following priorities:
FIRST: subject to the restriction of Section 4.2(d), to Borrower an
amount equal to the amount of Qualified Project Expenses that the
then-effective Operating Plan and Budget (as amended or otherwise
modified in accordance with the provisions of Section 5.1(g) of the
Loan Agreement) indicates are expected to be paid by Borrower in the
next calendar month, as set forth in a Withdrawal Approval Notice (as
defined in Section 4.2(c) below);
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SECOND: to the Debt Service Account, to the extent available, an
amount equal to one-third (1/3) of the total of all next-payable
Scheduled Installments on the Term Loans, and interest expected to be
accrued thereon as of the next Payment Date, as set forth in a
Withdrawal Approval Notice; and
THIRD: so long as no Event of Default has occurred and is continuing,
to Borrower an amount in addition to the amount disbursed to Borrower
pursuant to priority FIRST above but within the limits set by Section
5.1(g) of the Loan Agreement, as requested by Borrower in its
Distribution Request and as set forth in a Withdrawal Approval Notice,
which amounts Borrower may use only to pay unbudgeted fees, costs and
other expenses payable pursuant to Sections 2.3, 2.5, 2.10 and 8.11 of
the Loan Agreement and Qualified Project Expenses then due and payable
(PROVIDED, that this priority THIRD shall not operate on any date on
which distributions will be made pursuant to Section 4.2(b)).
(b) On each March 31, June 30, September 30 or December 31
following the Term Loan Conversion Date (or, if such date is not a Business Day,
on the Business Day next preceding such date), the Disbursement Agent will
distribute funds from the Project Revenues Account (including all gains from
investments in Permitted Investments pursuant to Section 6.5) and apply the same
at the times, in the amounts and in the following priorities; PROVIDED, that the
Disbursement Agent will make the withdrawals specified in priorities FIRST and
SECOND of Section 4.2(a) prior to making any withdrawal specified in this
Section 4.2(b):
FIRST: withdraw and transfer to the Disbursement Agent and the DSRA
Agent the amount of any reasonable documented fee or expense then due
and owing to them (including in respect of the making of any Permitted
Investment) by Borrower, as set forth in a Withdrawal Approval Notice;
SECOND: after making the withdrawal, if any, specified in priority
FIRST above, withdraw and transfer to the Administrative Agent and the
Term Lenders the amount of all fees and expenses then owed to the
Administrative Agent and the Term Lenders, as set forth in a Withdrawal
Approval Notice;
THIRD: after making the withdrawal, if any, specified in priority
SECOND above, withdraw and transfer to the Term Lenders an aggregate
amount equal to the amount of interest then due on the Term Loans made
by them plus their Pro Rata Shares of the aggregate amount of principal
then due on the Term Loans, as set forth in a Withdrawal Approval
Notice; PROVIDED, that prior to making the withdrawal specified in this
priority THIRD, the Disbursement Agent will first withdraw from the
Debt Service Account and transfer to the Term Lenders, in accordance
with their Pro Rata Shares, all funds then on deposit in the Debt
Service Account, which funds the Term Lenders will apply to such
principal and interest amounts then due on the Term Loans;
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FOURTH: after making the withdrawal specified in priority THIRD above,
withdraw and transfer to the Term Lenders their Pro Rata Shares of the
amounts equal to (x) the principal, interest and prepayment penalty or
fee, if any, then due on the Term Loans in connection with any
mandatory prepayment required pursuant to clause (iv) or (v) of Section
2.8(a) of the Loan Agreement, in each case as set forth in a Withdrawal
Approval Notice;
FIFTH: after making the withdrawal, if any, specified in priority
FOURTH above, withdraw and transfer to the DSRA Agent for deposit into
the Debt Service Reserve Account the amount that is necessary for the
balance of the Debt Service Reserve Account to equal the amount
required by Section 4.3, as set forth in a Withdrawal Approval Notice
(PROVIDED, that if an Event of Default that is not caused solely by
Borrower's failure to comply with its obligation to maintain the
Minimum Coverage Ratio pursuant to Section 5.1(p) of the Loan Agreement
has occurred and is continuing, then the Disbursement Agent will
withdraw and transfer to the DSRA Agent for deposit into the Debt
Service Reserve Account all sums remaining in the Project Revenues
Account without regard to such required amount or the remaining
priorities of this Section 4.2(b));
SIXTH: after making the withdrawal specified in priority FIFTH above,
withdraw and transfer to the Term Lenders, in accordance with their Pro
Rata Shares, an amount equal to the SPP Payments then due in connection
with the Term Loans, as set forth in a Withdrawal Approval Notice, for
application to the principal amounts then due on the Term Loans in the
inverse order of maturity; and
SEVENTH: after making the withdrawal specified in priority SIXTH above,
and subject to the restrictions of Section 4.2(c) and Section 4.4,
withdraw and transfer to Borrower or as directed by Borrower all or (at
Borrower's option) a portion of any funds remaining in the Project
Revenues Account, as set forth in a Withdrawal Approval Notice.
(c) No withdrawal pursuant to priority FIRST or THIRD of
Section 4.2(a) or priority SEVENTH of Section 4.2(b) will be permitted unless:
(i) Borrower has delivered an appropriately completed
Distribution Request to the Disbursement Agent and the Administrative
Agent at least five (5) Business Days prior to the date such
withdrawal is scheduled to be made; and
(ii) The Administrative Agent has confirmed the
accuracy or acceptability of the information set forth in such
Distribution Request (including that no Event of Default has occurred
and is continuing) and, by the Administrative Agent's delivery to the
Disbursement Agent of such Distribution Request and a written notice
from the Administrative Agent authorizing the Disbursement Agent to
permit such withdrawal (which may take the form of the Administrative
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Agent's countersignature on a Distribution Request) (a "WITHDRAWAL
APPROVAL NOTICE") at least one (1) Business Day prior to the date such
withdrawal is scheduled to be made, confirms that Borrower is entitled
to such withdrawal.
(d) No failure of Borrower to deliver a Distribution Request
or other schedule to the Administrative Agent will restrict or otherwise affect
the Administrative Agent's right to cause the Disbursement Agent or the DSRA
Agent to withdraw and transfer funds pursuant to priorities FIRST through SIXTH
of Section 4.2(b).
Section 4.3 DEPOSITS INTO AND WITHDRAWALS FROM THE DEBT
SERVICE RESERVE ACCOUNT.
(a) On the Term Loan Conversion Date, Borrower will, with Term
Loan proceeds, amounts transferred from the Construction Draw Account or other
funds, fund the Debt Service Reserve Account in the aggregate amount of all
payments of principal and interest (but not SPP Payments) on the Term Loans
scheduled to be made on the first two Payment Dates following the Term Loan
Conversion Date, which amount will be notified by the Administrative Agent to
Borrower, the Disbursement Agent and the DSRA Agent in writing.
(b) On each of the first three Payment Dates after the Term
Loan Conversion Date, the Debt Service Reserve Account will be required to be
funded in the aggregate amount of all payments of principal and interest (but
not SPP Payments) on the Term Loans scheduled to be made on the next two Payment
Dates after the reference Payment Date, which amount will be notified by the
Administrative Agent to Borrower, the Disbursement Agent and the DSRA Agent in
writing.
(c) On the fourth and each subsequent Payment Date after the
Term Loan Conversion Date, the Debt Service Reserve Account will be required to
be funded in the aggregate amount of all payments of principal and interest (but
not SPP Payments) on the Term Loans scheduled to be made on the next four
Payment Dates after the reference Payment Date, which amount will be notified by
the Administrative Agent to Borrower, the Disbursement Agent and the DSRA Agent
in writing.
(d) Notwithstanding the provisions of Sections 4.3(a)-(c), if
an Event of Default has occurred and is continuing on any Payment Date after the
Term Loan Conversion Date, and if such Event of Default is caused solely by
Borrower's failure to comply with its obligation to maintain the Minimum
Coverage Ratio pursuant to Section 5.1(p) of the Loan Agreement, then the Debt
Service Reserve Account will be funded in the amount then required to be on
deposit in the Debt Service Reserve Account pursuant to Section 4.3(b) or (c)
(the "DSRA REQUIRED BALANCE") plus the DSRA Additional Required Balance. If
Borrower has deposited the DSRA Additional Required Balance in the Debt Service
Reserve Account then, upon Borrower's achieving a Minimum Coverage Ratio of not
less than 1.50 to 1 for the preceding twelve-month period (based on actual
results) and forecasting a Minimum Coverage Ratio of not less than 1.50 to 1 for
each of the next two succeeding twelve-month periods (which forecast will be
based on assumptions reasonably acceptable to the Administrative Agent), and so
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long as no Event of Default is continuing, the Administrative Agent will direct
the DSRA Agent in writing to release the funds constituting the DSRA Additional
Required Balance to Borrower on the first Payment Date following the date of
Borrower's achieving such Minimum Coverage Ratio or, at Borrower's option,
Borrower may instruct the DSRA Agent to pay the released DSRA Additional
Required Balance to the Term Lenders for application against the principal
amounts of the Term Loans in the inverse order of maturity and Borrower will
have no obligation to pay any prepayment penalty in connection with such
prepayments.
(e) On any Payment Date on which the balance of the Debt
Service Reserve Account equals or exceeds the outstanding balance of the Term
Loans (including all accrued interest) and all fees and other amounts then
payable under the Loan Documents, the Administrative Agent will instruct the
DSRA Agent in writing to withdraw and transfer to the Administrative Agent and
the Term Lenders the funds on deposit in the Debt Service Reserve Account, who
will apply such funds to pay the Term Loans and all other amounts then due to
them in full and will refund any excess funds to Borrower.
(f) In the event funds available in the Project Revenues
Account and the Debt Service Account are insufficient to make the payments set
forth in priorities THIRD, FOURTH and SIXTH of Section 4.2(b), the
Administrative Agent will direct the DSRA Agent in writing (with a copy
simultaneously delivered to Borrower and the Disbursement Agent) to withdraw
funds from the Debt Service Reserve Account and pay the same to the Term Lenders
for application towards the payment of such priorities THIRD, FOURTH and SIXTH
and thereafter the Debt Service Reserve Account will be replenished pursuant to
the operation of priority FIFTH of Section 4.2(b).
(g) On each date on which distributions are made to Borrower
pursuant to priority SEVENTH of Section 4.2(b), if the funds on deposit in the
Debt Service Reserve Account (including any gain realized from investments in
Permitted Investments pursuant to Section 6.5) exceed the amount required to be
on deposit in the Debt Service Reserve Account pursuant to this Section 4.3
(other than by operation of Section 4.3(d)) (which amount will be notified by
the Administrative Agent to the Disbursement Agent, the DSRA Agent and Borrower
in each Withdrawal Approval Notice or in another notice delivered in accordance
with Section 10.2), subject to the prior written approval of the Administrative
Agent (which will not be unreasonably withheld or delayed), Borrower may direct
the DSRA Agent in writing to withdraw and transfer to Borrower or as directed by
Borrower all or a portion of such excess funds.
Section 4.4 DEPOSITS INTO AND WITHDRAWALS FROM THE CASH SWEEP
ACCOUNT. No withdrawal pursuant to priority SEVENTH of Section 4.2(b) will be
permitted if an Event of Default has occurred and is continuing and if such
Event of Default is caused solely by Borrower's failure to comply with its
obligation to maintain the Minimum Coverage Ratio required by Section 5.1(p) of
the Loan Agreement. During the continuance of such Event of Default, all funds
remaining in the Project Revenues Account after the operation of priority SIXTH
of Section 4.2(b) will be deposited into the Cash Sweep Account and thereafter
applied as follows:
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(a) If such Event of Default continues for three or
more consecutive Payment Dates, then the Disbursement Agent, on each
such Payment Date, upon receiving written instructions from the
Administrative Agent (a copy of which will be provided to Borrower),
will withdraw from the Cash Sweep Account and transfer to the Term
Lenders all funds then on deposit in the Cash Sweep Account, which funds
the Term Lenders will apply as prepayments of the Term Loans in the
inverse order of maturity; PROVIDED, that the operation of this
paragraph will cease upon the operation of paragraph (b) below; and
(b) If such Event of Default is cured, and if Borrower
thereafter achieves as of any Payment Date a Minimum Coverage Ratio of
1.5 to 1 for the preceding twelve-month period, then the Disbursement
Agent, upon receiving written instructions from the Administrative Agent
(a copy of which will be provided to Borrower), will on such Payment
Date withdraw from the Cash Sweep Account and transfer to the Project
Revenues Account all funds then on deposit in the Cash Sweep Account and
such funds will be applied or paid pursuant to the operation of Section
4.2(b).
Section 4.5 DEPOSITS INTO AND WITHDRAWALS FROM THE LOSS
PROCEEDS ACCOUNT.
(a) Borrower will cause all proceeds received by it in
connection with a Loss other than a Loss that requires mandatory prepayment of
Loans pursuant to Section 2.8(a)(v)(A) of the Loan Agreement to be deposited in
the Loss Proceeds Account subject to disbursement for repair or replacement of
the assets affected, or otherwise, as follows:
(i) If Borrower certifies to the Administrative
Agent that the affected portion of the Project can be rebuilt,
repaired, restored or replaced in a manner that will permit operation
of the Project in accordance in all material respects with the terms
of the Project Documents and the Loan Documents (including without
limitation compliance with Section 5.1(p) of the Loan Agreement), and
if the Administrative agrees, in its reasonable discretion and
following consultation with the Engineer, with such certification of
Borrower, then promptly after receipt of such certificate the
Administrative Agent will instruct the Disbursement Agent to transfer
all proceeds then on deposit in the Loss Proceeds Account to Borrower
for application solely to the payment of the costs of rebuilding,
restoring or repairing the Project and Borrower will deposit any
amounts remaining from the Loss proceeds following completion of such
rebuilding, restoration or repairs in the Project Revenues Account.
(ii) If Borrower determines in accordance with the
terms hereof not to rebuild, repair, restore or replace the affected
portion of the Project, or if the Administrative Agent (following
consultation with the Engineer) reasonably determines that the
affected portion of the Project is not capable of being or cannot be
rebuilt, repaired, restored or replaced in all material respects in
accordance with the terms of the Project Documents and the Loan
Documents (including without limitation compliance with Section 5.1(p)
of the Loan Agreement), or if Borrower otherwise fails to provide a
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certification or other notice to the Administrative Agent pursuant to
Section 4.5(a)(i) or this Section 4.5(a)(ii) within ten (10) Business
Days after deposit of the Loss proceeds into the Loss Proceeds
Account, then the Administrative Agent will instruct the Disbursement
Agent to transfer all proceeds then on deposit in the Loss Proceeds
Account to the Lenders in accordance with their Pro Rata Shares of the
outstanding Loans for application as prepayments of the outstanding
Loans in the inverse order of maturity.
Section 4.6 DEPOSITS INTO AND WITHDRAWALS FROM THE ASSET SALES PROCEEDS
ACCOUNT. Borrower will deposit or cause to be deposited the proceeds of any
conveyance, sale, lease, transfer or other disposition of assets not required by
Section 2.8(a)(iv) of the Loan Agreement to be applied as mandatory repayments
of the Loans into the Asset Sales Proceeds Account upon receipt and such
proceeds may be used by Borrower to purchase or acquire other assets reasonably
associated with the conduct of Borrower's business within thirty (30) days of
such conveyance, sale, lease, transfer or disposition. Borrower may on any
Business Day (but not more frequently than once per calendar week) request in
writing (with a copy to the Administrative Agent) that the Disbursement Agent
withdraw and pay to or to the direction of Borrower funds from the Asset Sales
Proceeds Account for the purchase, lease or acquisition of such other assets and
the Disbursement Agent will pay such funds to or as requested by Borrower
following the Disbursement Agent's receipt of the Administrative Agent's
approval of such disbursement, which approval will not be unreasonably withheld
or delayed. On the thirtieth (30th) day after the date on which such proceeds
are deposited in the Asset Sales Proceeds Account, the Disbursement Agent will
transfer all amounts then remaining on deposit in the Asset Sales Proceeds
Account to the Project Revenue Account for subsequent application in accordance
with Sections 4.1 and 4.2 of this Disbursement Agreement.
ARTICLE V
CONTROL PROVISIONS
------------------
Section 5.1 ESTABLISHMENT OF SECURITIES ACCOUNTS. Each
Securities Intermediary hereby agrees and confirms that (i) it has established
the appropriate Security Accounts as set forth in Article II of this
Disbursement Agreement, (ii) each Security Account is and will be maintained as
a "securities account" (within the meaning of Section 8-501 of the UCC), (iii)
Borrower is the "entitlement holder" (within the meaning of Section 8-102(a)(7)
of the UCC) in the "security entitlements" (within the meaning of Section
8-102(a)(17) of the UCC) to the "financial assets" (within the meaning of
Section 8-102(a)(9) of the UCC) credited to the Security Accounts (subject to
the security interest of the Administrative Agent), (iv) all property delivered
to such Securities Intermediary pursuant to the Loan Documents or this
Disbursement Agreement will be held by such Securities Intermediary and promptly
credited to the applicable Security Account by an appropriate entry in its
records in accordance with the terms of this Disbursement Agreement, (v) all
"financial assets" (within the meaning of Section 8-102(a)(9) of the UCC) in
12
registered form or payable to or to the order of and credited to the Security
Accounts will be registered in the name of, payable to or to the order of, or
endorsed to, the applicable Securities Intermediary or in blank, or credited to
another securities account maintained in the name of the applicable Securities
Intermediary and if not so registered, payable, endorsed or credited, the
applicable Securities Intermediary agrees to hold such financial assets as a
bailee for the Administrative Agent, and in no case will any financial asset
credited to the Security Accounts be registered in the name of, payable to or to
the order of, or endorsed to, Borrower except to the extent the foregoing have
been subsequently endorsed by Borrower to the applicable Securities Intermediary
or in blank, and (vi) the Securities Intermediary will not change the name or
account number of any Security Account without the prior written consent of the
Administrative Agent and Borrower.
Section 5.2 SECURITIES INTERMEDIARY. Each Securities
Intermediary hereby represents and warrants that it is a "securities
intermediary" (within the meaning of Section 8-102(a)(14) of the UCC) and that
it will act in that capacity with respect to the applicable Security Accounts
and the financial assets contained therein. Each Securities Intermediary and the
other parties hereto agree that, for purposes of the UCC, the jurisdiction of
each such Securities Intermediary is the State of New York and the laws of the
State of New York govern the establishment of the Security Accounts.
Section 5.3 FINANCIAL ASSETS ELECTION. Each Securities
Intermediary agrees that each item of property (including any cash, security,
instrument or obligation, share, participation, interest or other property
whatsoever) credited to the applicable Security Accounts will be treated as a
"financial asset" (within the meaning of Section 8-102(a)(9) of the UCC).
Notwithstanding any provision in this Disbursement Agreement to the contrary,
any property contained in the Security Accounts that is not deemed to be a
financial asset under applicable law will be deemed to be deposited in a
"deposit account" (within the meaning of Section 9-102(29) of the UCC) and
subject to Section 5.9, or will be under the exclusive dominion and control of
the Disbursement Agent or the DSRA Agent, as the case may be.
Section 5.4 ENTITLEMENT ORDERS. If at any time a Securities
Intermediary receives any "entitlement order" (within the meaning of Section
8-102(a)(8) of the UCC) or any other order from the Administrative Agent
directing the transfer or redemption of any financial asset carried in any
Security Account or any instruction originated by the Administrative Agent
directing the disposition of any funds held in any Security Account, the
Securities Intermediary will comply with such entitlement order, instruction or
other order without further consent by Borrower or any other Person. The parties
hereto agree that the Administrative Agent has "control" (within the meaning of
Section 8-106(d) of the UCC) of the "security entitlements" (within the meaning
of Section 8-102(a)(17) of the UCC) and the financial assets carried in the
Security Accounts and Borrower hereby disclaims any "control" over such
"security entitlements" and financial assets. Borrower hereby irrevocably
directs, and each Securities Intermediary hereby agrees, that each Securities
Intermediary will comply with all instructions and orders (including entitlement
orders within the meaning of Section 8-102(8) of the UCC) regarding each
Security Account and financial asset therein originated by the Administrative
Agent without the further consent of Borrower or any other Person.
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Section 5.5 NOTICE OF ADVERSE CLAIMS. Except for the claims
and interest of the Disbursement Agent, the DSRA Agent, the Administrative
Agent, the Lenders and Borrower in the Security Accounts, each Securities
Intermediary does not, on the date of this Disbursement Agreement, know of any
claim to, or interest in, the Security Accounts or in any financial asset
credited thereto. If any Person asserts any lien, encumbrance or adverse claim
(including any writ, garnishment, judgment, warrant of attachment, execution or
similar process) against the Security Accounts or any financial asset credited
thereto, the Securities Intermediaries will promptly notify the Disbursement
Agent, the DSRA Agent, the Administrative Agent and Borrower in writing of such
assertion.
Section 5.6 NO OTHER AGREEMENTS. The Securities Intermediaries
have not entered into and will not enter into any agreement with Borrower or any
other Person with respect to the Security Accounts or any financial assets
credited to the Security Accounts other than this Disbursement Agreement. The
Securities Intermediaries have not entered into and will not enter into any
agreement with Borrower or any other Person purporting to limit or condition the
obligation of the Securities Intermediaries to comply with entitlement orders
originated by the Administrative Agent in accordance with Section 5.4.
Section 5.7 RIGHTS AND POWERS OF THE ADMINISTRATIVE AGENT. The
rights and powers granted herein to the Administrative Agent, the DSRA Agent and
the Disbursement Agent have been granted in order to perfect the Administrative
Agent's lien and security interests in the Security Accounts, are powers coupled
with an interest and will not be affected by the bankruptcy or insolvency of
Borrower or any other Person or the lapse of time.
Section 5.8 SUBORDINATION. The Securities Intermediaries
hereby subordinate to the security interests of the Administrative Agent under
the Loan Documents any and all security interests in, liens on, rights of
set-off against and claims to (whether by agreement or under law) the Security
Accounts, "security entitlements" carried in the Security Accounts and financial
assets or funds credited to the Security Accounts.
Section 5.9 ACCOUNT CHARACTERIZATION.
(a) In the event that a Security Account is not considered a
"securities account" (within the meaning of Section 8-501 of the UCC), such
Security Account will be deemed to be a "deposit account" (as defined in Section
9-102(a)(29) of the UCC) to the extent a security interest can be granted and
perfected under the UCC in the Security Account as a deposit account, which the
Administrative Agent will maintain with the applicable Securities Intermediary
acting not as a securities intermediary but as a "bank" (within the meaning of
Section 9-102(a)(8) of the UCC). The Administrative Agent will be deemed to be
the customer of the applicable Securities Intermediary for purposes of such
14
Security Account and as such will be entitled to all rights that customers of
banks have under law with respect to deposit accounts, including the right to
withdraw funds from, or close, such Security Account. The Securities
Intermediaries will not have title to the funds on deposit in any Security
Account and will credit the Security Accounts with all receipts of interest,
dividends and other income received on the property held in the Security
Accounts. The Securities Intermediaries will administer and manage the Security
Accounts in strict compliance with all terms applicable to the Security Accounts
pursuant to this Disbursement Agreement and will be subject to and comply with
all obligations that the Securities Intermediaries owe to the Administrative
Agent with respect to the Security Accounts, including all subordination
obligations, pursuant to the terms of this Disbursement Agreement. The
Securities Intermediaries hereby agree to comply with any and all instructions
originated by the Administrative Agent directing disposition of funds and all
other property in the Security Accounts without any further consent of Borrower
or any other Person. Borrower hereby agrees to indemnify and hold harmless the
Disbursement Agent, the DSRA Agent and the Administrative Agent from all taxes,
fees and expenses arising from or relating to the Administrative Agent's acting
as the customer of the Securities Intermediaries for purposes of the Security
Accounts, other than any such taxes, fees and expenses arising out of such
Person's breach of this Disbursement Agreement or its gross negligence or
willful misconduct.
(b) In the event that a Security Account is not considered a
"securities account" or "deposit account" (each as defined in the UCC) or a
security interest cannot be granted and perfected in a Security Account under
the UCC, then such Security Account and all property deposited therein shall be
deemed to be under the exclusive dominion and control of the Administrative
Agent, which the Administrative Agent maintains through the Securities
Intermediaries, the DSRA Agent and the Disbursement Agent, as its agents, for
such purpose, and the Disbursement Agent and the Securities Intermediaries will
act and be deemed to be acting as the Administrative Agent's agents in respect
of such Security Account for the purpose of maintaining such exclusive dominion
and control for the purpose of the creation and perfection of security interests
in favor of the Administrative Agent.
ARTICLE VI
SECURITY ACCOUNTS GENERALLY
---------------------------
Section 6.1 BENEFIT OF SECURITY ACCOUNTS. Subject to the
limitations on withdrawals set forth in this Disbursement Agreement and the
other provisions hereof, all right, title and interest in and to the Security
Accounts and the funds in the Security Accounts and any interest accrued on such
funds will be vested in Borrower in accordance with the terms of the Security
Documents until the payment in full of all Obligations. Funds will be
distributed from the Security Accounts only in accordance with this Disbursement
Agreement and funds deposited in the Security Accounts will be applied as
provided in this Disbursement Agreement and the other Loan Documents, as
applicable. Notwithstanding the foregoing, none of the Disbursement Agent, the
DSRA Agent or the Administrative Agent will be liable for any tax, assessment,
fee or other governmental or other charge or claim on or arising out of the
15
Security Accounts or any interest or earnings thereon (other than any such
taxes, assessments, fees or charges arising out of such Person's breach of this
Disbursement Agreement or its gross negligence or willful misconduct), all of
which will be for the account of Borrower.
Section 6.2 BOOKS OF ACCOUNT; STATEMENTS.
(a) The Disbursement Agent and the DSRA Agent will maintain
books of account on a cash basis and record therein all deposits into and
transfers to and from the Security Accounts and all investment transactions
effected by the Disbursement Agent or the DSRA Agent, as the case may be, all in
accordance with its normal record-keeping practices. The Disbursement Agent and
the DSRA Agent will make such books of account available during normal business
hours for inspection and audit by the Administrative Agent, Borrower and their
respective representatives.
(b) Not later than the tenth Business Day of each month during
the term of this Disbursement Agreement, the Disbursement Agent and the DSRA
Agent will deliver to each of the other parties hereto a statement setting forth
the transactions into and out of each applicable Security Account during the
preceding month and specifying the amounts held in each applicable Security
Account at the close of business on the last Business Day of such preceding
month. In addition, the Disbursement Agent will promptly notify Borrower in
writing of each deposit into the Project Revenues Account, including the payor
and the date and amount of each such deposit.
Section 6.3 SECURITY ACCOUNTS GENERALLY.
(a) Except as agreed with the Administrative Agent or as
specifically set forth in this Disbursement Agreement, Borrower has no right of
withdrawal in respect of any of the Security Accounts. Borrower will not make,
attempt to make or consent to the making of any withdrawal or transfer from any
Security Account except in strict adherence to this Disbursement Agreement.
(b) The Administrative Agent will have sole signatory
authority with respect to directing the Disbursement Agent and the DSRA Agent to
make withdrawals from the Security Accounts. Those persons at the Administrative
Agent who are authorized to sign with respect to the Security Accounts will be
designated by the Administrative Agent from time to time by written notice to
the Disbursement Agent, the DSRA Agent and Borrower.
(c) Subject to (i) the timely receipt of a Withdrawal Approval
Notice (which, for purposes of this Disbursement Agreement, means not later than
3:00 p.m. (New York City time) on the Business Day preceding the requested date
of payment), (ii) the availability of cash in the applicable Security Account,
(iii) the federal wire transfer system functioning in a normal fashion and (iv)
other unforeseeable circumstances beyond the reasonable control of the
Disbursement Agent, the Disbursement Agent will make any payment hereunder
required (except transfers between Security Accounts and between Security
Accounts and other accounts) by means of wire transfer of immediately available
funds to the address of the payee(s) set forth in such Withdrawal Approval
16
Notice prior to 11:00 a.m. (New York City time) on the date specified therein
for such payment, or by such other means of payment, to such other address or at
such later time as may be specified by Borrower, if applicable, or the
Administrative Agent.
Section 6.4 THE DISBURSEMENT AGENT'S AND THE DSRA AGENT'S
OBLIGATIONS. Neither the Disbursement Agent nor the DSRA Agent has any
obligation to Borrower or any other Person to make any payment (or authorize any
withdrawal with respect thereto) for which the appropriate Security Account does
not contain adequate funds.
Section 6.5 PERMITTED INVESTMENTS. All funds paid to or
retained by the Disbursement Agent or the DSRA Agent in the Security Accounts
(other than the Loss Proceeds Account and the Assets Sales Proceeds Account)
may, until paid or applied as provided herein, be invested by the Disbursement
Agent or the DSRA Agent, as the case may be, at the written authorization and
direction of Borrower from time to time and at the risk and expense of Borrower
in Permitted Investments (and in the absence of a written authorization and
direction from Borrower, to invest such money in U.S. Government obligations or
mutual funds, dollar to dollar stated, holding exclusively such obligations);
PROVIDED, that upon the occurrence and during the continuance of an Event of
Default, such funds will be invested in Permitted Investments at the
Administrative Agent's written direction and at the risk and expense of
Borrower. All gains (including interest received) realized as the result of any
such investment (net of all fees, commissions and other expenses, if any,
incurred in connection with such investment) will be deposited into the
respective Security Account. Neither the Disbursement Agent nor the DSRA Agent
will have any liability for any loss resulting from any Permitted Investment
other than by reason of its willful misconduct, gross negligence or bad faith.
The Disbursement Agent and the DSRA Agent may sell any Permitted Investment
(without regard to its maturity date) whenever it, in its reasonable discretion,
deems it necessary to make any distribution required by this Disbursement
Agreement and neither the Disbursement Agent nor the DSRA Agent will be liable
to any Person for any loss suffered because of any such sale. In the event that
an investment made at the written authorization and direction of Borrower
becomes non-negotiable by reason of a "call" of the security (the so-called
"frozen period"), during a period when payments are required to be made, and is
therefore illiquid and not available to make such payments, Borrower will
provide cash equal to the non-negotiable amount to the Disbursement Agent or the
DSRA Agent, as the case may be, immediately upon notice of the "frozen security"
status. Upon receipt of the proceeds of the "call," the Disbursement Agent or
the DSRA Agent will transfer the proceeds to Borrower without any liability to
either such Person.
Section 6.6 DEPOSITS IRREVOCABLE. All deposits made into any
Security Account, absent manifest error, will be irrevocable and such deposits
and all instruments or securities held in the Security Accounts and all interest
thereon will be held in trust by the Disbursement Agent or the DSRA Agent, as
the case may be, and applied solely as provided herein.
17
Section 6.7 INFORMATION TO ACCOMPANY AMOUNTS DELIVERED TO THE
DISBURSEMENT AGENT AND THE DSRA AGENT. All amounts delivered to the Disbursement
Agent and the DSRA Agent must be accompanied by information in reasonable detail
specifying the source and nature of the amounts.
Section 6.8 DEFAULTS; MANDATORY PREPAYMENTS. Notwithstanding
any other provision of this Disbursement Agreement, upon receipt by the
Disbursement Agent or the DSRA Agent of a written notice from the Administrative
Agent stating that an Event of Default has occurred and is continuing or that a
mandatory prepayment is required (upon which notice the Disbursement Agent and
the DSRA Agent will be entitled to rely without independent investigation), the
Disbursement Agent and the DSRA Agent will (i) in the case of an Event of
Default, thereafter distribute cash from the Security Accounts only upon the
express written instructions of, and in accordance with the priorities
established by, the Administrative Agent in its sole discretion, until notified
in writing by the Administrative Agent that such Event of Default has been
waived or cured, (ii) in the case of a mandatory prepayment, make such mandatory
prepayment to the Lenders, and (iii) in each case, notify Borrower prior to such
action except to the extent the Disbursement Agent and/or the DSRA Agent is
assured that such notice has been provided to Borrower by the Administrative
Agent.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
------------------------------
Section 7.1 REPRESENTATIONS AND WARRANTIES OF THE DISBURSEMENT
AGENT, THE DSRA AGENT AND THE SECURITIES INTERMEDIARIES. Each of the
Disbursement Agent, the DSRA Agent and the Securities Intermediaries represents
and warrants to the Administrative Agent and Borrower as follows:
(a) EXISTENCE. It is a national banking association, duly
organized, validly existing and in good standing under the federal laws of the
United States of America.
(b) POWER AND AUTHORIZATION; ENFORCEABLE OBLIGATIONS.
(i) It has full power and authority and the legal
right to conduct its business as now conducted and as proposed to be
conducted by it, to execute, deliver and perform this Disbursement
Agreement and to take all actions necessary to complete the
transactions contemplated by this Disbursement Agreement. It has taken
all necessary action to authorize the transactions contemplated hereby
on the terms and conditions of this Disbursement Agreement and to
authorize the execution, delivery and performance of this Disbursement
Agreement.
(ii) This Disbursement Agreement has been duly
executed and delivered by it and constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its
terms, except as enforcement hereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally or by limitation upon the
availability of equitable remedies.
18
(c) NO LEGAL BAR. The execution, delivery and performance of
this Disbursement Agreement by it will not (i) violate any Applicable Law
governing its banking and trust powers or (ii) result in a breach of any
provision of any security issued by it or of any indenture, mortgage, deed of
trust, lease, contract, undertaking, agreement or instrument to which it is a
party or by which it or any of its property is bound or to which it or any of
its property is subject. The execution, delivery and performance of this
Disbursement Agreement will not result in, or require the creation or imposition
of any lien on any of its properties or revenues pursuant to any Applicable Law
or any indenture, mortgage, deed of trust, lease, contract, undertaking,
agreement or instrument to which it is a party or by which it or any of its
property is bound or to which it or any of its property is subject. No approval
or consent of any Person is required in connection with the execution, delivery
and performance by it of this Disbursement Agreement, except such approvals or
consents as have been duly obtained and are in full force and effect.
(d) GOVERNMENTAL APPROVALS. No Approval of any Governmental
Instrumentality governing its banking and trust powers, except for such
Approvals as have been obtained and are in full force and effect and are not
subject to appeal or judicial or other governmental review, are required to be
obtained by it in connection with the execution, delivery and performance of
this Disbursement Agreement or the taking of any action by it contemplated
hereby.
ARTICLE VIII
DISBURSEMENT AGENT AND THE DSRA AGENT
-------------------------------------
Section 8.1 ACCEPTANCE. The acceptance by the Disbursement
Agent and the DSRA Agent of their duties hereunder is subject to the following
terms and conditions, which the parties to this Disbursement Agreement agree
govern and control with respect to the rights, duties, liabilities and
immunities of the Disbursement Agent and the DSRA Agent:
(a) Neither the Disbursement Agent nor the DSRA Agent will be
responsible or liable in any manner whatsoever for the sufficiency, correctness,
genuineness or validity of the amounts deposited with or held by it;
(b) Neither the Disbursement Agent nor the DSRA Agent will be
liable for any error of judgment or for any act done or step taken or omitted
except in the case of its gross negligence, willful misconduct or bad faith;
(c) The Disbursement Agent and the DSRA Agent may consult with
and obtain advice from qualified counsel and other skilled Persons (at the
expense of Borrower, but only to the extent such costs are reasonable and
documented) in the event of any dispute or question as to the construction of
any provision hereof and will be fully protected in taking or not taking any
action in good faith in reliance on such advice;
19
(d) Neither the Disbursement Agent nor the DSRA Agent, in its
respective capacity, will be charged with responsibilities under any agreement
other than this Disbursement Agreement, and has no duties other than those
expressly set forth herein and in any modification or amendment hereof;
PROVIDED, that no such modification or amendment will affect its duties unless
it has given its written consent thereto;
(e) The Disbursement Agent and the DSRA Agent may execute or
perform any duty hereunder either directly or through agents or attorneys;
(f) The Disbursement Agent and the DSRA Agent may engage or be
interested in any financial or other transaction with any party hereto and may
act on, or as depository, trustee or agent for, any committee or body of holders
of obligations of such persons as freely as if it were not the Disbursement
Agent or DSRA Agent, as the case may be;
(g) Neither the Disbursement Agent nor the DSRA Agent is
obligated to take any action that in its reasonable judgment would involve it in
expense or liability unless it has been furnished with reasonable indemnity (it
being understood and agreed that the general indemnity of the Administrative
Agent will constitute a reasonable indemnity);
(h) Neither the Disbursement Agent nor the DSRA Agent will
take instructions from any Person except those given in accordance with this
Disbursement Agreement; and
(i) The Disbursement Agent and the DSRA Agent will be
protected in acting upon any written notice, certificate, instruction, request
or other paper or document as to the due execution thereof and the validity and
effectiveness of the provisions thereof and as to the truth of any information
therein contained that the Disbursement Agent or the DSRA Agent, as the case may
be, in good faith believes to be genuine.
Section 8.2 REPLACEMENT OR RESIGNATION OF THE DISBURSEMENT
AGENT OR THE DSRA Agent.
(a) The Disbursement Agent and the DSRA Agent may at any time
resign by giving notice to each other party to this Disbursement Agreement, such
resignation to be effective upon the appointment of a successor Disbursement
Agent or DSRA Agent as hereinafter provided. If a successor is not appointed
within thirty (30) days after the giving of written notice of such resignation,
the Disbursement Agent or DSRA Agent, as the case may be, may apply to any court
of competent jurisdiction to appoint a successor to act until such time, if any,
as a successor is appointed as herein provided.
(b) The Administrative Agent may remove the Disbursement Agent
or the DSRA Agent at any time by giving notice to each other party to this
Disbursement Agreement, such removal to be effective upon the appointment of a
successor as hereinafter provided.
20
(c) In the event of any resignation or removal of the
Disbursement Agent or the DSRA Agent, a successor, which must be a bank or trust
company organized under the laws of the United States of America or of any state
thereof, will be appointed by the Administrative Agent and, unless an Event of
Default has occurred and is continuing, with the consent of Borrower, which
shall not be unreasonably withheld or delayed. Any such successor will deliver
to each party to this Disbursement Agreement a written instrument accepting such
appointment hereunder and thereupon such successor will succeed to all the
rights and duties of the Disbursement Agent or DSRA Agent, as the case may be,
hereunder and will be entitled to receive the Security Accounts from its
predecessor. The appointment of a successor will not result in any increased
fees or costs payable by Borrower.
(d) Any Person into which the Disbursement Agent or the DSRA
Agent may be merged or converted or with which it may be consolidated, or any
Person resulting from any merger, conversion or consolidation to which the
Disbursement Agent or the DSRA Agent is a party, or any Person to which
substantially all of the corporate trust business of the Disbursement Agent or
the DSRA Agent may be transferred, will be the Disbursement Agent or DSRA Agent,
as the case may be, under this Disbursement Agreement without further act.
Section 8.3 INDEMNITY BY BORROWER. Whether or not the
transactions contemplated hereby are consummated, Borrower will, subject to the
provisions of this Section 8.3, indemnify, pay and hold the Disbursement Agent
and the DSRA Agent, and their officers, directors, employees, agents, affiliates
and attorneys, (collectively, the "INDEMNITEES") harmless from and against any
and all out-of-pocket liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and disbursements of any kind
or nature whatsoever (including without limitation reasonable documented
attorneys' fees and costs of the Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not the Indemnitees are designated a party thereto) that are imposed
on, reasonably incurred by or asserted against any Indemnitee, in any manner
relating to or arising out of this Disbursement Agreement or the other Loan
Documents or the exercise of any right or remedy hereunder or under any other
Loan Document (collectively, the "INDEMNIFIED LIABILITIES"); PROVIDED, that
Borrower will have no obligation to any Indemnitee if a court of competent
jurisdiction renders a judgment, final and not subject to appeal or review, that
such Indemnified Liabilities arise from the gross negligence, willful misconduct
or bad faith of such Indemnitee. Borrower will arrange to pay or reimburse each
Indemnitee for all reasonable documented out-of-pocket costs and expenses
(including without limitation reasonable attorneys' fees and expenses)
reasonably incurred by such Indemnitee in the defense of any claim arising out
of any Indemnified Liability at the time such costs and expenses are incurred
and such Indemnitee has given Borrower written notice thereof and an opportunity
to consult or participate in such defense or otherwise mitigate such costs. The
foregoing indemnity will remain operative and in full force and effect for one
year from the earlier of (x) the termination of this Disbursement Agreement or
(y) the resignation or removal of the Disbursement Agent or the DSRA Agent by
the Administrative Agent. To the extent that the undertaking to indemnify, pay
and hold harmless set forth in this Section 8.3 may be unenforceable because it
21
is violative of any law or public policy, Borrower will contribute the maximum
portion that it is permitted to pay and satisfy under applicable laws to the
payment and satisfaction of all Indemnified Liabilities incurred by the
Indemnitees or any of them.
ARTICLE IX
DETERMINATIONS
--------------
Section 9.1 DISPUTES. In the event of any dispute as to any
amount to be transferred or paid pursuant to this Disbursement Agreement, the
Disbursement Agent and the DSRA Agent are authorized and directed to retain in
their possession, without liability to any Person, the disputed amount until
such dispute has been settled by agreement of the other parties hereto or by
legal proceedings, but the Disbursement Agent and the DSRA Agent are under no
duty whatsoever to institute or defend any such proceeding; PROVIDED, that
neither the Disbursement Agent nor the DSRA Agent has any right to retain any
amount necessary to pay principal, fees or interest payable to the Lenders in
accordance with this Disbursement Agreement (under the circumstances
contemplated by Section 4.2(b)). The Disbursement Agent and the DSRA Agent have
the right to interplead the parties to a dispute in any court of competent
jurisdiction and to ask such court to determine the respective rights of such
parties with respect to this Disbursement Agreement.
Section 9.2 CASH AVAILABLE. In determining the amount of funds
on deposit in a Security Account at any time, the Disbursement Agent and the
DSRA Agent will treat as cash available the net amount that the Disbursement
Agent or the DSRA Agent would receive on such day if it liquidated all the
securities then on deposit in such Security Account (at then-prevailing market
prices and assuming normal sales expenses). The Disbursement Agent and the DSRA
Agent will use their best efforts to sell securities as necessary in order that
actual cash is available on each date on which a transfer or payment is to be
made pursuant to this Disbursement Agreement.
ARTICLE X
MISCELLANEOUS
-------------
Section 10.1 AMENDMENTS; ETC. No amendment of this
Disbursement Agreement will be effective unless it is in writing and signed by
the parties hereto.
Section 10.2 NOTICES. All notices, consents, certificates,
waivers, documents and other communications required or permitted to be
delivered to any party under the terms of this Disbursement Agreement (a) must
be in writing, (b) must be personally delivered, transmitted by an
internationally recognized courier service or transmitted by facsimile and (c)
must be directed to such party at its address or facsimile number set forth
below. All notices will be deemed to have been duly given and received on the
Business Day of delivery if delivered personally, two (2) Business Days after
delivery to the courier if transmitted by courier, or the date of transmission
with telephone confirmation if transmitted by facsimile on a Business Day,
whichever occurs first. Any party may change its address or facsimile number for
purposes hereof by notice to all other parties.
22
For Borrower: 00000 Xxxxxx 00
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxxxxxxx
Telephone: (000) 000-0000
Facsimile No: (000) 000-0000
For the Administrative Agent:
Xxxxxx United Capital, a Division of
TD Banknorth N.A.
000 Xxxx Xxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xx. Xxxxxx X. Xxxxxx, Xx.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
For Disbursement Agent (and the associated Securities Intermediary):
Comerica Bank
0000 X. Xxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
For DSRA Agent (and the associated Securities Intermediary):
Wealth Management Group of
TD Banknorth N.A.
00 Xxxx Xxxx Xxxx
Xxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xx. Xxxxx X. Xxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Section 10.3 GOVERNING LAW. THIS DISBURSEMENT AGREEMENT WILL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO THE CONFLICT OF LAW PROVISIONS THEREOF (OTHER THAN
SECTION 5.1401 OF THE GENERAL OBLIGATIONS LAW AND ANY SUCCESSOR STATUTE
THERETO).
23
Section 10.4 NO WAIVER; REMEDIES CUMULATIVE. The waiver of any
right, breach or default under this Disbursement Agreement by the Administrative
Agent, Borrower, the DSRA Agent or the Disbursement Agent must be made
specifically and in writing. Subject to the foregoing, no failure on the part of
the Administrative Agent, Borrower, the DSRA Agent or the Disbursement Agent to
exercise, and no forbearance or delay in exercising, any right under this
Disbursement Agreement will operate as a waiver thereof; no single or partial
exercise of any right under this Disbursement Agreement will preclude any other
or further exercise thereof or the exercise of any other right; and no waiver of
any breach of or default under any provision of this Disbursement Agreement will
constitute or be construed as a waiver of any subsequent breach of or default
under this Disbursement Agreement. Except as otherwise provided in any Loan
Document, no notice to or demand upon Borrower will entitle it to any further,
subsequent or other notice or demand in similar or any other circumstances. Each
of the rights and remedies of the Administrative Agent, Borrower, the DSRA Agent
and the Disbursement Agent is cumulative and not exclusive of any other right or
remedy provided or existing by agreement or under Law.
Section 10.5 SEVERABILITY. Any provision of this Disbursement
Agreement that is invalid or prohibited in any jurisdiction will, as to such
jurisdiction, be ineffective and severable from the rest of this Disbursement
Agreement to the extent of such invalidity or prohibition, without impairing or
affecting in any way the validity of any other provision of this Disbursement
Agreement or of such provision in other jurisdictions. The parties agree to
replace any provision that is ineffective by operation of this Section 10.5 with
an effective provision that as closely as possible corresponds to the spirit and
purpose of such ineffective provision and this Disbursement Agreement as a
whole.
Section 10.6 COUNTERPARTS. This Disbursement Agreement may be
executed by facsimile and in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed will be deemed
to be an original and all of which taken together will constitute one and the
same instrument.
Section 10.7 SUCCESSORS AND ASSIGNS. This Disbursement
Agreement will be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns. Borrower has no right to
assign its rights hereunder or any interest herein without the prior written
consent of the Administrative Agent, which consent will not be unreasonably
withheld or delayed.
Section 10.8 TERMINATION. This Disbursement Agreement will
terminate upon the payment in full in cash of the Loans and all other
Obligations, including the principal of, premium, if any, and interest on the
Loans and all such other Obligations. Upon the termination of this Disbursement
Agreement in accordance with this Section 10.8, the Securities Intermediaries
will disburse all remaining funds in the Security Accounts to or as directed by
Borrower in a written request.
24
Section 10.9 WAIVER OF JURY TRIAL. EACH PARTY HERETO, AS AMONG
THEM, WAIVES ANY RIGHT IT MAY HAVE TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED ON OR ARISING FROM ANY LOAN DOCUMENT, ANY TRANSACTION CONTEMPLATED
THEREBY OR EFFECTED PURSUANT THERETO, ANY DEALING OR COURSE OF DEALING BETWEEN
OR AMONG THEM RELATING IN ANY WAY TO THE SUBJECT MATTER OF THE LOAN DOCUMENTS OR
ANY STATEMENT OR ACTION OF ANY OF THEM OR THEIR AFFILIATES. Each of the parties
acknowledges and agrees that this waiver is a material inducement to enter into
the business relationship contemplated by the Loan Documents and that each has
relied on this waiver in entering into the Loan Documents to which it is a party
and will continue to rely on this waiver in its future dealings with the other
parties. The scope of this waiver is intended to be all-encompassing and this
waiver will apply to all Claims of any nature whatsoever, whether deriving from
contract, arising by law, based on tort or otherwise. EACH PARTY HERETO HAS MADE
THIS WAIVER KNOWINGLY AND VOLUNTARILY AND THIS WAIVER IS IRREVOCABLE. THIS
WAIVER ALSO APPLIES TO ALL AMENDMENTS, SUPPLEMENTS, RESTATEMENTS, EXTENSIONS AND
MODIFICATIONS OF ANY LOAN DOCUMENT AS WELL AS TO ANY LOAN DOCUMENT ENTERED INTO
AFTER THE DATE OF THIS DISBURSEMENT AGREEMENT. In the event of litigation,
relevant portions of this Disbursement Agreement may be filed as a written
consent to a trial by the court.
Section 10.10 CONSENT TO JURISDICTION. Each party hereto
irrevocably submits to the jurisdiction of any New York state or United States
federal court sitting in the Borough of Manhattan over any action or proceeding
arising out of or relating to any Claim, and each party hereto irrevocably
agrees that all Claims in respect of such action or proceeding may be heard and
determined in such New York state or United States federal court. Each party
hereto irrevocably waives any objection that it may now or hereafter have to the
laying of venue in such forums and agrees not to plead or claim that any such
action or proceeding brought in any such New York state or United States federal
court has been brought in an inconvenient forum. Each party hereto irrevocably
consents to the service of any and all process in any such action or proceeding
by the mailing of copies of such process to it at its address set forth in
Section 10.2. Each party hereto agrees that a final judgment in any such action
or proceeding will be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by Law. Nothing in this
Section 10.10 affects the right of any party hereto to serve legal process in
any other manner permitted by Law or affects the right of any other party hereto
to bring any action or proceeding against any other party hereto or its property
in the courts of any other jurisdiction.
Section 10.11 INTEGRATION. The Loan Documents contain the
complete agreement among Borrower, the Administrative Agent, the Disbursement
Agent, the DSRA Agent, the Securities Intermediaries and the other parties
thereto with respect to the matters contained therein and supersede all prior
commitments, agreements and understandings, whether written or oral, with
respect to the matters contained therein.
[THE REMAINDER OF THIS PAGE WAS LEFT BLANK INTENTIONALLY.]
25
IN WITNESS WHEREOF, the parties hereto, intending to be
legally bound, have caused this Disbursement Agreement to be signed on the date
first above written.
PACIFIC ETHANOL MADERA LLC
By /S/ XXXX XXXXXX
-----------------------------------------
Name:
Title:
XXXXXX UNITED CAPITAL, A DIVISION OF TD BANKNORTH,
N.A.,
as the Administrative Agent
By /S/ XXXXXX X. XXXXXX, XX.
-----------------------------------------
Name: Xxxxxx X. Xxxxxx, Xx.
Title: Senior Vice President
COMERICA BANK,
as the Disbursement Agent
By /S/ XXXXXX X. XXXXXX
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
WEALTH MANAGEMENT GROUP OF TD BANKNORTH, N.A.,
as the DSRA Agent
By /S/ XXXXX X. XXXXXXXXX
-----------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Senior Vice President
26
WEALTH MANAGEMENT GROUP OF TD BANKNORTH, N.A.,
as Securities Intermediary
By /S/ XXXXX X. XXXXXXXXX
-----------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Senior Vice President
COMERICA BANK,
as Securities Intermediary
By /S/ XXXXXX X. XXXXXX
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
27
Exhibit 4.2(d)
to Disbursement Agreement
FORM OF DISTRIBUTION REQUEST
---------------------------------- ----------------- ------------------- ---------------- --------------- ------------
CONSTRUCTION PROJECT REVENUES DEBT SERVICE DEBT SERVICE CASH SWEEP
DRAW ACCOUNT ACCOUNT RESERVE ACCOUNT
ACCOUNT ACCOUNT
---------------------------------- ----------------- ------------------- ---------------- --------------- ------------
BALANCE PRIOR TO THIS REQUEST
---------------------------------- ----------------- ------------------- ---------------- --------------- ------------
1. Ethanol/DGS sales
---------------------------------- ----------------- ------------------- ---------------- --------------- ------------
2. Interest income
---------------------------------- ----------------- ------------------- ---------------- --------------- ------------
3. Other income
---------------------------------- ----------------- ------------------- ---------------- --------------- ------------
MONTHLY DISTRIBUTIONS:
---------------------------------- ----------------- ------------------- ---------------- --------------- ------------
Section 4.2(a) FIRST
---------------------------------- ----------------- ------------------- ---------------- --------------- ------------
4. Budgeted Qualified
Project Expenses
---------------------------------- ----------------- ------------------- ---------------- --------------- ------------
Section 4.2(a) SECOND
---------------------------------- ----------------- ------------------- ---------------- --------------- ------------
5. 1/3 next Scheduled
Installment
---------------------------------- ----------------- ------------------- ---------------- --------------- ------------
Section 4.2(a) THIRD
---------------------------------- ----------------- ------------------- ---------------- --------------- ------------
QUARTERLY DISTRIBUTIONS:
---------------------------------- ----------------- ------------------- ---------------- --------------- ------------
(First meet monthly distribution
requirements)
---------------------------------- ----------------- ------------------- ---------------- --------------- ------------
Section 4.2(b) FIRST
---------------------------------- ----------------- ------------------- ---------------- --------------- ------------
6. Agent Fees
---------------------------------- ----------------- ------------------- ---------------- --------------- ------------
Section 4.2(b) SECOND
---------------------------------- ----------------- ------------------- ---------------- --------------- ------------
7. Administrative Agent
and Lender fees/expenses
---------------------------------- ----------------- ------------------- ---------------- --------------- ------------
Section 4.2(b) THIRD
---------------------------------- ----------------- ------------------- ---------------- --------------- ------------
8. Scheduled principal installment and interest
---------------------------------- ----------------- ------------------- ---------------- --------------- ------------
Section 4.2(b) FOURTH
---------------------------------- ----------------- ------------------- ---------------- --------------- ------------
Mandatory Prepayments
---------------------------------- ----------------- ------------------- ---------------- --------------- ------------
Section 4.2(b) FIFTH
---------------------------------- ----------------- ------------------- ---------------- --------------- ------------
DSRA Funding
---------------------------------- ----------------- ------------------- ---------------- --------------- ------------
Section 4.2(b) SIXTH
---------------------------------- ----------------- ------------------- ---------------- --------------- ------------
10. SPP Payments
---------------------------------- ----------------- ------------------- ---------------- --------------- ------------
Section 4.2(b) SEVENTH
---------------------------------- ----------------- ------------------- ---------------- --------------- ------------
14. Payments to
Borrower/Other
---------------------------------- ----------------- ------------------- ---------------- --------------- ------------
TOTAL TRANSFERS IN/(OUT)
---------------------------------- ----------------- ------------------- ---------------- --------------- ------------
BALANCE SUBSEQUENT TO THIS
REQUEST
---------------------------------- ----------------- ------------------- ---------------- --------------- ------------
Exhibit 4.2(d)
Page 1 of 2
WIRE TO AGENT/LENDERS
WIRE TO DSRA AGENT
WIRE TO BORROWER
WIRE TO OTHER (specify below) Account detail subject to change.
Borrower hereby certifies to the Administrative Agent that no Default or Event
of Default has occurred and is continuing or will occur as a result of the
Disbursement Agent's or the DSRA Agent's making of any of the payments or
deposits requested herein.
Submitted by: Approved by:
Date of Submission: Date of Approval:
Exhibit 4.2(d)
Page 2 of 2
