Exhibit 10.4

 

SECURED PROMISSORY NOTE

(Negotiable)

 

$8,580,000.00 April 15, 2020

 

FOR VALUE RECEIVED, PACIFIC AURORA, LLC, a Delaware limited liability company
(“Borrower”) hereby irrevocably and unconditionally promises to pay to the order
of PACIFIC ETHANOL CENTRAL, LLC, a Delaware limited liability company (“PEC” and
collectively with any subsequent holder hereof by assignment, succession or
transfer, “Lender”), the principal amount of Eight Million, Five Hundred Eighty
Thousand and 00/100 Dollars ($8,580,000.00) (the “Loan”), together with accrued
interest thereon, plus all other fees, costs, expenses and charges and on the
terms and conditions set forth below (the “Note”). Borrower and Lender are
sometimes referred to individually as “Party” and collectively, “Parties”.

 

1. Loan Purpose; Negotiable Instrument. The purpose of the Loan is to finance in
part Aurora Cooperative Elevator Company’s (“ACEC”) acquisition of PEC’s
membership interests in Borrower pursuant to that certain Membership Interest
Purchase Agreement dated as of February 28, 2020 (as amended, the “Purchase
Agreement”) by and among PEC, ACEC and Borrower. Notwithstanding anything to the
contrary set forth elsewhere in this Note, the Loan is not a revolving loan and
no amounts which have been advanced and subsequently repaid may be re-borrowed.
It is the express intent and agreement of the Parties that this Note constitutes
a negotiable instrument under applicable law, including Section 3-106(a) of the
Uniform Commercial Code as adopted by the State of Nebraska.

 

2. Interest; Repayment Terms.

 

(a) Interest Rate. Interest will accrue on the outstanding principal balance of
the Loan at a rate per annum equal to 5.00% (the “Interest Rate”). Interest will
be calculated on the basis of a 365-day year and shall be computed for the
actual number of days elapsed in the period for which interest is charged.

 

(b) Payments.

 

(i) Quarterly Interest Payments. Commencing on June 1, 2020 and continuing until
the Maturity Date, Borrower shall make quarterly payments of interest to Lender
on the first day of each calendar quarter, with the amount of each such
quarterly payment being equal to all accrued and unpaid interest through the
last day of the immediately preceding calendar quarter.

 

(ii) Scheduled Principal Payments. In addition to the interest payments required
to be made pursuant to Section 2(c)(i), commencing on June 1, 2021 and
continuing until the Maturity Date, Borrower shall make quarterly principal
payments to Lender on the first day of each calendar quarter, with the amount of
each such quarterly payment being equal to $429,000.00.

 

(c) Maturity Date. The unpaid principal balance hereof, together with all unpaid
interest accrued thereon, and all other amounts payable by Borrower under the
terms set forth below, shall be due and payable in full on the earliest of (i)
April 15, 2025 or (ii) that date upon which any Acceleration Event pursuant to
Section 3 below or an Event of Default under Section 4 below has occurred
(hereinafter, the "Maturity Date").

 

 

 

 

(d) Place of Payment; Application. All payments required under this Note shall
be paid to Lender at the address designated by Lender in writing from time to
time and shall be applied by Lender first, to accrued, unpaid interest, and
second, to the outstanding principal balance of the Note; provided however,
after an Event of Default, Lender may apply any amounts paid by Borrower first
to costs of collection. All amounts payable hereunder are payable in lawful
money of the United States of America.

 

(e) Timing of Payments. Notwithstanding anything to the contrary set forth
elsewhere herein, if any payment date falls on a day that is not a business day,
payment must be made on the next succeeding business day and, as to any
principal payment, such extension of time will be included in computing any
interest in respect of such payment. All payments of principal and interest due
hereunder must be made without deduction of any present and future taxes,
levies, imposts, deductions, charges or withholdings, which amounts must be paid
by Borrower, except for income taxes, franchise taxes, branch profit taxes or
other taxes based upon the income of Lender, which shall be paid by Lender.

 

(f) Prepayments. Borrower may prepay this Note, in full or in part, at any time
without additional fee or penalty. All prepayments shall be applied as directed
by Borrower.

 

3. Secured Obligation; Acceleration of Maturity Date. This Note and the
obligations of Borrower hereunder are secured by that certain DEED OF TRUST,
ASSIGNMENT OF LEASES AND RENTS, FIXTURE FILING AND SECURITY AGREEMENT dated as
of as of even date herewith executed by Borrower as the grantor thereunder in
favor of Fidelity National Title Company, as the trustee thereunder for the
benefit of Lender as the beneficiary thereunder (the “Deed of Trust”). In the
event of (a) any transfer or assignment by Borrower which is prohibited by this
Note or the Deed of Trust, or (b) the creation of any Lien which does not
constitute a Permitted Encumbrance under the Deed of Trust and the failure of
Borrower to release or cause the release of such Lien within thirty (30) days
after written notice from Lender of such Lien, the obligations of Borrower
hereunder shall automatically and without any further notice, become immediately
due and payable in full, with the Maturity Date being deemed to have occurred
(each an “Acceleration Event”).

 

4. Event of Default; Remedies and Costs of Collection. The (a) failure by
Borrower to pay any principal, interest or any other amounts as and when due in
accordance with this Note, and the continuance of such failure for a period of
ten (10) calendar days after Borrower’s receipt of written notice from Lender
specifying such failure (provided however, no such notice shall be required at
maturity); (b) occurrence of an Acceleration Event, or (c) occurrence of any
Event of Default as defined in the Deed of Trust shall, automatically and
without further notice, constitute an immediate event of default (each an “Event
of Default”) hereunder and this Note, shall become immediately due and payable
in full, with the Maturity Date being deemed to have occurred. Upon the
occurrence of an Event of Default, Lender may exercise any and all rights and
remedies it may have hereunder, under the Deed of Trust, and/or under any
applicable law or in equity. No delay or omission on the part of Lender in
exercising any right or remedy under this Note or the Deed of Trust will operate
as a waiver of such right or remedy. If this Note is not paid when due or if any
Event of Default occurs, Borrower promises to pay all reasonable out-of-pocket
costs of enforcement and collection, including, without limitation, reasonable
attorneys’ fees and costs of Lender, whether or not any action or proceeding is
brought to enforce the provisions hereof.

 

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5. General Provisions.

 

(a) Notices. Any and all notices or other communications or deliveries required
or permitted to be provided hereunder shall be in writing and shall be deemed to
have been duly given and effective: (a) when received, if sent by nationally
recognized overnight courier service; or (b) upon actual receipt, if personally
delivered, by the Party to whom such notice is required or permitted to be
given. The address for such notices and communications (unless changed by the
applicable Party by like notice) shall be as follows:

 

If to Borrower:

 

Aurora Cooperative Elevator Company

2225 Q Street

Aurora, NE 68818

Attention: Kara J. Ronnau, Executive General Counsel

Telephone: (402) 694-7617

 

with a copy (which shall not constitute notice) to:

 

Kutak Rock LLP

1650 Farnam Street

Omaha, NE 68102

Attention: Joel Wiegert and Lisa Peters

Telephone: (402) 346-6000

 

If to Lender:

 

Pacific Ethanol Central, LLC

c/o Pacific Ethanol, Inc.

400 Capital Mall, Suite 2060

Sacramento, CA 95814

Attention: Christopher W. Wright, General Counsel

Telephone: (916) 403-2130

 

with copies (which shall not constitute notice) to:

 

Troutman Sanders LLP

4 Park Plaza, 14th Floor

Irvine, CA 92614

Attention: Larry A. Cerutti

Telephone: (949) 622-2710

 

(b) Successors and Assigns. The provisions of this Note shall be binding upon
and inure to the benefit of the Parties hereto. Notwithstanding anything to the
contrary elsewhere herein or in the Deed of Trust, (i) Borrower may not assign
or otherwise transfer any of its rights or obligations hereunder without the
prior written consent of Lender (and any attempted assignment or transfer by
Borrower without such consent shall be null and void and shall constitute an
immediate Event of Default) and (ii) Lender may assign or otherwise transfer
this Note, and its rights or obligations hereunder, at any time without notice
to or the consent of Borrower (other than to a Prohibited Person (as defined
below)) and, upon any such assignment or transfer, such assignee or transferee
shall be the Lender hereunder and the Lender under the Deed of Trust and all
references to Lender herein or as Lender under the Deed of Trust shall be deemed
to mean such transferee or assignee. Nothing in this Note, expressed or implied,
shall be construed to confer upon any person (other than the parties hereto, and
any permitted successors and assigns) any legal or equitable right, remedy or
claim under or by reason of this Note. “Prohibited Person” means any of the
following: (a) a person or entity owned or controlled, directly or indirectly,
by a person or entity with whom a citizen of the United States is prohibited
from engaging in transactions by any trade embargo, economic sanction, or other
prohibition of U.S. law, regulation, or executive order; or (b) any person or
entity (i) owning, directly or indirectly, more than 10% of the voting
securities or other ownership interests in, or (ii) having, directly or
indirectly, the power to direct or cause the direction of the management and
policies of, whether through the ownership of voting securities, by contract, or
otherwise, any ethanol plant or agricultural cooperative.

 

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(c) Borrower Representations. Borrower hereby represents and warrants to Lender
that (i) the execution, delivery and performance of this Note and the Deed of
Trust shall not conflict with any laws, orders, judgments, decrees, agreements,
indentures or other obligations and duties of Borrower, and (ii) Borrower is
represented by separate counsel and, prior to its execution of this Note,
Borrower has read this Note, has reviewed this Note with its counsel and has a
full understanding of each of the terms, conditions and obligations set forth
herein.

 

(d) Waiver. Borrower hereby waives diligence, presentment, protest and demand,
notice of protest, dishonor and nonpayment of this Note.

 

(e) Severability. Every provision of this Note is intended to be severable. If
any term or provision hereof is declared by a court of competent jurisdiction to
be illegal or invalid for any reason whatsoever, such illegality or invalidity
will not affect the balance of the terms and provisions hereof, which terms and
provisions will remain binding and enforceable.

 

(f) Usury Savings Clause. It is the intent of Borrower and Lender (by its
acceptance of this Note and as the holder thereof) in the execution of this Note
and all other instruments securing this Note that the loan evidenced hereby be
exempt from the restrictions of any applicable usury laws, whether local, state
or federal, including, without limitation, the laws of the State of Nebraska. In
the event that, for any reason, it should be determined that any usury law is
applicable to the Loan, Lender and Borrower stipulate and agree that none of the
terms and provisions contained herein shall ever be construed to create a
contract for the use, forbearance or detention of money requiring payment of
interest at a rate in excess of the maximum interest rate permitted to be
charged by any such applicable usury law. In such event, if any holder of this
Note collects monies which are deemed to constitute interest which would
otherwise increase the effective interest rate on this Note to a rate in excess
of the maximum rate permitted to be charged by such applicable usury law, all
such sums deemed to constitute interest in excess of such maximum rate will, at
the option of Lender, be credited to the payment of the sums due hereunder or
returned to Borrower without penalty, interest or charge.

 

(g) Independent; Integration; Controlling Document; No Offset. This Note and the
Deed of Trust contain the complete understanding and agreement of the Parties
with respect to the Loan and supersede all prior representations, warranties,
agreements, arrangements, understandings, and negotiations with respect to the
Loan. In the event of any inconsistencies between any terms of this Note and any
terms of the Deed of Trust, the terms of this Note shall govern and prevail. It
is the intent of the Parties hereto that this Note, once issued in favor of
Lender and the Deed of Trust once recorded, constitute separate and independent
obligations of Borrower without regard to the Purchase Agreement and this Note
and the Deed of Trust shall be enforceable against Borrower in accordance with
their respective terms and shall not be subject to any claims or defenses by
Borrower arising out of or relating to the Purchase Agreement, including any
claims or defenses of offset, credit or reduction liability based on any breach
by PEC under the Purchase Agreements.

 

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(h) Amendment. This Note and the Deed of Trust may be amended or modified in
whole or in part only by an agreement in writing that is signed by each Party.

 

(i) Further Documents. Borrower agrees to reasonably cooperate with Lender and
to execute further documents as required to further the objectives of this Note
and the Deed of Trust.

 

(j) Time is of the Essence. Time is of the essence of this Note and the Deed of
Trust.

 

(k) Execution. This Note may be delivered by personal delivery, overnight mail,
electronically or some combination thereof, whether in the form of a photocopy,
facsimile, or scanned document, each of which shall have the same legal force
and effect as delivery of an original.

 

(l) Governing Law. This Note, and the Deed of Trust to the fullest extent
permitted by applicable law, shall be governed by and construed in accordance
with the laws of the State of Nebraska (including in respect of the statute of
limitations or other limitations period applicable to any state law claim,
controversy or dispute) that apply to agreements made and performed entirely
within the State of Nebraska, without regard to the conflicts of law provisions
thereof or of any other jurisdiction. In furtherance thereof, each Party hereby
(i) agrees and acknowledges that the application of the laws of the State of
Nebraska is reasonable and appropriate based upon each of their respective
interests and contacts with the State of Nebraska, (ii) waives any right or
interest in having the laws of any other state, including specifically, state
law regarding the statute of limitation or other limitations period, apply to
any state law claim, controversy or dispute which in any way arises out of or
relates to this Note or the transactions contemplated hereby.

 

(m) Submission To Jurisdiction; Waiver of Jury Trial.

 

(1) The Parties hereby agree that any action seeking to enforce any provision
of, or based on any matter arising out of or in connection with this Note and,
to the fullest extent permitted by applicable law, the Deed of Trust, or the
transactions contemplated hereby or thereby shall be exclusively brought in the
courts in Douglas County, Nebraska, or, in the event (but only in the event)
that such court does not have subject matter jurisdiction over such action, the
United States District Court of the District of Nebraska, and that any cause of
action arising out of this Note or, to the fullest extent permitted by
applicable law, the Deed of Trust, shall be deemed to have arisen from a
transaction of business in the State of Nebraska, and each of the Parties hereby
irrevocably consents to the exclusive jurisdiction of such courts (and of the
appropriate appellate courts therefrom) in any such action and irrevocably
waives, to the fullest extent permitted by law, any objection that it may now or
hereafter have to the laying of the venue of any such action in any such court
or that any such action which is brought in any such court has been brought in
an inconvenient forum, and the Parties irrevocably agree that all claims with
respect to such action shall be heard and determined exclusively in such court.
Process in any such action may be served on any Party anywhere in the world,
whether within or without the jurisdiction of such court. Without limiting the
foregoing, each Party agrees that delivery of notice to such Party as provided
in Section 5(a) shall be deemed effective service of process on such Party;
provided, however, notwithstanding anything contained herein, the foregoing
service of process will only be deemed effective if all copy party(ies)
designated in Section 5(a) for the Party being served also receive such notice.

 

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(2) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER THIS NOTE AND THE DEED OF TRUST IS LIKELY TO INVOLVE COMPLICATED AND
DIFFICULT ISSUES AND, THEREFORE, EACH PARTY IRREVOCABLY AND UNCONDITIONALLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY ACTION ARISING OUT OF OR RELATING TO THIS
NOTE AND/OR THE DEED OF TRUST OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.
EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT: (I) NO REPRESENTATIVE OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT
SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF ANY SUCH ACTION; (II) SUCH
PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER; (III) SUCH PARTY MAKES
THIS WAIVER VOLUNTARILY; AND (IV) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS
NOTE AND THE DEED OF TRUST BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.

 

A CREDIT AGREEMENT MUST BE IN WRITING TO BE ENFORCEABLE UNDER NEBRASKA LAW. TO
PROTECT YOU AND US FROM ANY MISUNDERSTANDINGS OR DISAPPOINTMENTS, ANY CONTRACT,
PROMISE, UNDERTAKING, OR OFFER TO FOREBEAR REPAYMENT OF MONEY OR TO MAKE ANY
OTHER FINANCIAL ACCOMMODATION IN CONNECTION WITH THIS LOAN OF MONEY OR GRANT OR
EXTENSION OF CREDIT, OR ANY AMENDMENT OF, CANCELLATION OF, WAIVER OF, OR
SUBSTITUTION FOR ANY OR ALL OF THE TERMS OR PROVISIONS OF ANY INSTRUMENT OR
DOCUMENT EXECUTED IN CONNECTION WITH THIS LOAN OF MONEY OR GRANT OR EXTENSION OF
CREDIT, MUST BE IN WRITING TO BE EFFECTIVE.

 

[Execution Page Follows]

 

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IN WITNESS WHEREOF, Borrower has signed this Note in favor of Lender as of the
date first written above.

 

BORROWER: PACIFIC AURORA, LLC,   a Delaware limited liability company

 

  By: /s/ Carl Smith   Name:  Carl Smith   Title: Chief Financial Officer

 

 

[Execution Page of $8,580,000 Secured Promissory Note (Negotiable)]