Exhibit 10.6

 

Execution Version

 

ASSIGNMENT OF Notes and Deeds of trust

 

THIS ASSIGNMENT OF NOTES AND DEEDS OF TRUST (this “Assignment”) is made and
entered into as April 15, 2020, by and among PACIFIC ETHANOL CENTRAL, LLC , a
Delaware limited liability company (“PEC”), PACIFIC AURORA, LLC, a Delaware
limited liability company (“PAL”), and COBANK, ACB, a federally-chartered
instrumentality of the United States, as administrative agent (in such capacity,
“Administrative Agent”) for the Pekin Lenders (defined below) and the ICP Lender
(defined below).

 

R E C I T A L S:

 

A. WHEREAS, PACIFIC ETHANOL PEKIN, LLC, a Delaware limited liability company
(“Pekin”), COMPEER FINANCIAL, PCA, a federally-chartered instrumentality of the
United States, successor by merger to 1st Farm Credit Services, PCA, as a
Lender, and COBANK, ACB, a federally-chartered instrumentality of the United
States, as Agent, are parties to a Credit Agreement dated as of December 15,
2016, (as amended, restated, supplemented or otherwise modified from time to
time, the “Pekin Credit Agreement”) pursuant to which the Pekin Lenders have
made and may make advances and extend other financial accommodations to Pekin
(the “Pekin Loan”). The lenders from time to time as parties to the Pekin Credit
Agreement are referred to herein as the “Pekin Lenders.”

 

B. WHEREAS, ILLINOIS CORN PROCESSING, LLC, a Delaware limited liability company
(“ICP” and together with Pekin collectively, the “Borrowers”), COMPEER
FINANCIAL, PCA, a federally-chartered instrumentality of the United States, as a
Lender, and COBANK, ACB, a federally-chartered instrumentality of the United
States, as Cash Management Provider and Agent, are parties to a Credit Agreement
dated as of September 15, 2017 (as amended, restated, supplemented or otherwise
modified from time to time, including as of the date hereof, the “ICP Credit
Agreement” and together with the Pekin Credit Agreement, the “Credit
Agreements”) pursuant to which the ICP Lenders have made and may make advances
and extend other financial accommodations to ICP (the “ICP Loan” and together
with the Pekin Loan, the “Loans”). The lenders from time to time as parties to
the ICP Credit Agreement are referred to herein as the “ICP Lenders,” and the
Pekin Lenders and the ICP Lenders are sometime referred to herein as the
“Lenders.”

 

C. WHEREAS, to secure the satisfaction of the Borrowers’ obligations under the
Credit Agreements, PEC pledged to the Administrative Agent, for the benefit of
the Lenders, the entirety of its issued and outstanding membership interests
(the “Pledged Equity”) in Pacific Aurora, LLC, a Delaware limited liability
company (“PAL”)

 

D. WHEREAS, in connection with that certain Membership Interest Purchase
Agreement dated as of February 28, 2020 (as amended, restated, supplemented or
otherwise modified from time to time, “Purchase Agreement”), PEC agreed to sell
the entirety of the Pledged Equity to Aurora Cooperative Elevator Company, a
Nebraska cooperative company.

 

E. WHEREAS, $16,500,000 of the purchase price under the Purchase Agreement is in
the form of two promissory notes: (i) in the amount of $7,920,000 (the
“Non-Negotiable Note,” a copy of which is attached here to as Exhibit A) and
(ii) in the amount of $8,580,000 (the “Negotiable Note” a copy of which is
attached here to as Exhibit B. collectively, the “Notes”).

 

F. WHEREAS, as security for payment of the Notes, PAL has granted a lien on the
real property of PAL in the form of two Deeds of Trust (the “Deeds of Trust”).

 

 

 

 

G. WHEREAS, a condition precedent to Administrative Agent’s agreement to release
its security interest in the Pledged Equity,

 

(i) PEC is required to execute and deliver this Assignment which (a) assigns to
the Administrative Agent, for the benefit of the Lenders, all of PEC’s rights
under the Notes and the Deeds of Trust, and (a) directs PAL to make payments due
under the Notes directly to the Administrative Agent, for the benefit of the
Lenders, and

 

(ii) PAL is required to execute and deliver (a) this Assignment, acknowledging
such assignment and payment direction, and (b) each of the collateral
assignments of the Deeds of Trust in the forms attached hereto as Exhibit C and
Exhibit D (together, the “Deeds of Trust Collateral Assignments”).

 

NOW, THEREFORE, in consideration of the Administrative Agent agreeing to release
its security interests in the Pledged Equity and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

 

1. Definitions. Capitalized terms used herein but not otherwise defined shall
have the meanings given to such terms in the Credit Agreements. Notwithstanding
the foregoing, the term “Event of Default” shall mean and Event of Default under
either of the Credit Agreements (as such term is defined therein) or any failure
of PEC or PAL to satisfy its respective obligations hereunder.

 

2. Assignment and Direction of Payment.

 

(a) PEC hereby assigns, sells, conveys, sets over and otherwise transfers to
Administrative Agent, for the benefit of the Lenders, the Notes and the Deeds of
Trust, including without limitation, all of PEC’s rights in and to the principal
and interest payments payable thereunder, subject to the terms and provisions
hereof. This Assignment is and for all purposes shall be a present assignment
vesting in Administrative Agent all of PEC’s right, title and interest in, to
and under the Notes and the Deeds of Trust, upon and subject to the terms and
provisions hereof.

 

(b) PEC hereby directs, and PAL hereby acknowledges, that all payments due to
PEC under the Notes and the Deeds of Trust, whether scheduled or due upon
maturity or acceleration, shall be paid directly to the Administrative Agent.
The Administrative Agent shall apply eighty percent (80%) of each payment under
the Notes (whether principal, interest or otherwise) as repayment of the Loans,
and so long as no Event of Default has occurred and is continuing, the
Administrative Agent shall transfer the remaining twenty percent (20%) of each
such payment to PEC . PAL specifically acknowledges and agrees that if it makes
any payment, directly or indirectly, to PEC pursuant to either of the Notes or
the Deeds of Trust in violation of this Agreement, PAL shall continue to be
liable to PEC for such payment unless and until PEC transfers such payment to
Administrative Agent.

 

(c) Upon repayment in full of the Paydown Amount, or upon the earlier payment in
full by PAL of the outstanding principal of the Notes and all accrued but unpaid
interest thereon, Administrative Agent shall reassign (the “Reassignment”) to
PEC the Notes and the Deeds of Trust assigned to Administrative Agent hereby;
provided, however, that all reasonable out-of-pocket costs and expenses incurred
by Administrative Agent in the ordinary course of business as a result of or in
connection with the Reassignment shall be reimbursed to Administrative Agent by
PEC; and further provided that the Reassignment shall be made without recourse,
warranty or any other obligation to or liability incurred by Administrative
Agent, other than to the extent of gross negligence or willful misconduct on the
part of the Administrative Agent as such is determined by a final,
non-appealable judgment by a court of competent jurisdiction . The Reassignment
shall be effectuated by execution of documents reasonably acceptable to
Administrative Agent and PEC in both form and substance.

 

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3. Delivery of Notes. As a condition to effectiveness of this Assignment, within
three (3) Business Days following the date hereof, the executed original Notes
shall be delivered to Administrative Agent and endorsed to Administrative Agent
in a manner reasonably acceptable to Administrative Agent. Concurrently with the
Reassignment, the Note shall be returned to PEC with an endorsement by
Administrative Agent to PEC without recourse, other than to the extent of gross
negligence or willful misconduct on the part of the Administrative Agent as such
is determined by a final, non-appealable judgment by a court of competent
jurisdiction; provided, however, that Administrative Agent shall not be
responsible for returning the Note if Administrative Agent has transferred such
Note to a third party pursuant to Administrative Agent’s remedies hereunder
following an Event of Default.

 

4. Delivery of Collateral Assignment. As a condition to effectiveness of this
Assignment, within three (3) Business Days following the date hereof, the
executed and notarized original Deeds of Trust Collateral Assignments shall be
delivered to Administrative Agent. PEC and PAL hereby authorize, instruct and
direct the Administrative Agent to record each of the Deeds of Trust Collateral
Assignments with the office of the recorder of deeds for Hamilton County,
Nebraska, or such other recording office as the Administrative Agent shall deem
appropriate and to take such other action as is necessary to perfect the
security interest in the Deeds of Trust in favor of the Administrative Agent.

 

5. Representations and Warranties.

 

(a) PEC hereby represents and warrants to Administrative Agent that:

 

(i) The assignment of the Note made hereby is valid and enforceable and does not
violate any provision of any mortgage, deed of trust, security agreement, loan
agreement or any other document or instrument of any kind executed by PEC, Pekin
or ICP.

 

(ii) The Notes and the Deeds of Trust are genuine, valid and legally enforceable
in accordance with their terms. To PEC’s knowledge, other than as set forth in
the Purchase Agreement with respect to the Non-Negotiable Note, PAL does not
have any claim, counterclaim, right of offset, defense (including, without
limitation, usury) or any other similar right with respect to or in connection
with any of their respective obligations under said Notes or the Deeds of Trust.

 

(iii) No default exists by any party under the Notes or the Deeds of Trust nor
does any circumstance exist that with the passage of time or the giving of
notice or both could become such a default.

 

(iv) PEC owns and holds all right, title and interest in and to the Notes and
the Deeds of Trust free and clear of any liens, security interest or other
encumbrances, other than a security interest in favor of Cortland Products
Corp., as collateral agent, which security interest is subordinated in favor of
the Administrative Agent, and PEC has the absolute right and power to assign and
transfer such right, title and interest.

 

(v) The Notes and the Deeds of Trust are in compliance with all applicable state
laws, rules, regulations and other governmental requirements.

 

(b) PAL hereby represents and warrants to Administrative Agent that:

 

(i) The assignment of the Note made hereby is valid and enforceable. The Notes
and the Deeds of Trust are genuine, valid and legally enforceable in accordance
with their terms. No default exists by PAL under the Notes or the Deeds of Trust
nor does any circumstance exist that with the passage of time or the giving of
notice or both could become such a default. To PAL’s knowledge, no default
exists by PEC under the Notes or the Deeds of Trust nor does any circumstance
exist that with the passage of time or the giving of notice or both could become
such a default.

 

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(ii) Other than as set forth in the Purchase Agreement with respect to the
Non-Negotiable Note PAL does not have any claim, counterclaim, right of offset,
defense (including, without limitation, usury) or any other similar right with
respect to or in connection with any of their respective obligations under said
Notes or the Deeds of Trust.

 

6. Covenants. PEC covenants and agrees, that so long as this Assignment is in
effect:

 

(a) shall use its best efforts to cause PAL to observe and perform all of the
covenants, terms, conditions and agreements contained in the Notes and the Deeds
of Trust. Other than in connection with (i) the repayment in full of the Notes
or (ii) the satisfaction of the Paydown Amount, without the express written
consent of Administrative Agent, PEC shall not release or excuse the liability
of any of the obligations under the Notes and the Deeds of Trust;

 

(b) other than a security interest in favor of Cortland Products Corp., as
collateral agent, which security interest is subordinated in favor of the
Administrative Agent, has not and shall not make any other assignment of all or
any part of their interest in, to or under the Notes or the Deeds of Trust;

 

(c) other than as set forth in Section 7(a) below, shall not alter, modify or
change the terms and provisions of the Notes or the Deeds of Trust, or give any
consent or approval required or permitted under the Notes or the Deeds of Trust
without the prior written consent of Administrative Agent;

 

(d) shall enforce the Notes and the Deeds of Trust and all rights and remedies
thereunder in case of default thereunder; provided, however, that PEC shall not
exercise any of its rights and remedies under the Notes or the Deeds of Trust
without first obtaining the prior written consent of Administrative Agent;

 

(e) shall, at its sole cost and expense, appear in and prosecute or defend, as
the case may be, any and all actions and proceedings arising under, relating to
or in any manner connected with the Notes or the Deeds of Trust or its rights
thereunder, and shall pay all costs and expenses of Administrative Agent,
including court costs and reasonable attorneys’ fees, in any such action or
proceeding in which Administrative Agent may appear;

 

(f) shall give prompt notice to Administrative Agent of any notice of any
default under or with respect to the Note;

 

(g) shall provide written notice to the Administrative Agent promptly upon any
change in the principal amount of the Non-Negotiable Note, together with an
explanation, calculation and appropriate documentation justifying the basis of
such change.

 

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7. Provisions Specific to Non-Negotiable Note. Administrative Agent acknowledges
and agrees that:

 

(a) the Non-Negotiable Note and the unpaid principal amount outstanding
thereunder shall be subject to reduction from time to time in accordance with
the terms of Sections 2.5(c) and 10.2(e) of the Purchase Agreement, which are
incorporated herein by this reference.

 

(b) the Non-Negotiable Note is non-negotiable such that (A) other than to
Administrative Agent as provided hereunder PEC may not assign or otherwise
transfer Non-Negotiable Note without the consent of PAL and (B) in the event
that Administrative Agent exercises its remedies hereunder or otherwise under
the Credit Agreements and forecloses on the Non-Negotiable Note Administrative
Agent may not assign or otherwise transfer the Non-Negotiable Note without the
consent of PAL.

 

8. Remedies. If an Event of Default occurs hereunder, Administrative Agent, at
Administrative Agent’s option and sole discretion, may (subject in all respects
to the terms of Section 7 above) take any and all of the following actions:

 

(a) Exercise any and all rights of collection, conversion or exchange, and any
and all other rights, remedies, privileges and powers pertaining or relating to
the Notes or the Deeds of Trust which are available to PEC or Administrative
Agent under this Assignment, under the Notes, the Deeds of Trust or otherwise
provided by law.

 

(b) Negotiate and retain the proceeds from the Notes or the Deeds of Trust
and/or sell, assign and deliver the whole or, from time to time, any part
thereof at any broker’s board or at any private sale or public auction, with or
without demand or advertisement of the time or place of sale or adjournment
thereof or otherwise, for cash, credit or other property, for such price and on
such terms as Administrative Agent, in its sole discretion, may determine, free
from any right of equity or redemption on the part of PEC (all said rights
hereby being waived and released). Administrative Agent, without notice or
publication, may (i) adjourn any such sale or cause the same to be so adjourned
from time to time, and (ii) make such sale or cause such sale to be made at any
time or place to which the same may be so adjourned.

 

(c) Exercise any and all rights and remedies afforded to a secured party under
the Uniform Commercial Code and any and all other applicable provisions of law.

 

(d) Exercise any and all rights and remedies afforded to Administrative Agent
under the Credit Agreements.

 

Administrative Agent shall not incur any liability as a result of the sale or
negotiation of the Notes, the Deeds of Trust, or any part thereof, at any
private, public or other sale. PEC hereby waives any claims against
Administrative Agent arising by reason of the fact that the price at which any
Note is sold at such a private sale may be less than the aggregate amount of the
obligations, even if Administrative Agent accepts the first offer received and
does not offer the Notes or the Deeds of Trust to more than one possible
purchaser. The net proceeds of any amounts collected by virtue of the exercise
by Administrative Agent of the remedies set forth hereunder may be applied by
Administrative Agent to the payment of the obligations under the Loans in any
order thereof that Administrative Agent may elect, with the balance, if any,
returned to PEC.

 

9. Rights and Remedies. The rights and remedies of Administrative Agent
hereunder and under the Credit Agreements shall be cumulative and concurrent and
may be pursued separately, successively or together, at the sole discretion of
Administrative Agent, and may be exercised as often as the occasion therefor may
arise. The failure to exercise any such right or remedy shall in no event be
construed as a waiver or release thereof.

 

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10. Stay or Extension Laws. PEC covenants that it will not at any time claim,
take, insist upon or invoke the benefit or advantage of or from any law now or
hereafter in force providing for the valuation or appraisement of the Notes or
the Deeds of Trust prior to any sale or sales thereof to be made pursuant to the
provisions hereof or pursuant to the decree, judgment, or order of any court of
competent jurisdiction; nor, after such sale or sales, shall PEC claim or
exercise any right under any statute now or hereafter enacted by any state to
redeem the property so sold or any part thereof, and PEC hereby expressly
waives, on behalf of itself and each and every person claiming by, through or
under PEC, all benefit and advantage of any such law or laws, and PEC covenants
that it will not invoke or utilize any such law or laws or otherwise hinder,
delay or impede the execution of any power, right or remedy herein or hereby
granted to Administrative Agent, but will authorize, allow and permit the
execution of every such power, right and remedy as though no such law or laws
had been made or enacted.

 

11. Partial Invalidity. The unenforceability or invalidity of any portion of any
provision or provisions of this Assignment shall not render any other portion of
such provision or provisions herein contained unenforceable or invalid.

 

12. Successors and Assigns. This Assignment shall be binding upon and shall
inure to the benefit of PEC and Administrative Agent and their respective
successors, assigns and legal representatives.

 

13. Miscellaneous.

 

(a) Recitals. The recitals set forth above are true and correct, and each
recital is hereby incorporated into this Assignment by reference.

 

(b) Notices. Except as otherwise specified herein, any notice, consent, request
or other communication required or permitted to be given hereunder shall be in
writing, addressed to the other party as set forth below such party’s signature
to this Assignment or below for the Lender Parties (or to such other address or
person as either party or person entitled to notice may by notice to the other
party specify), and shall be: (a) personally delivered; (b) delivered by Federal
Express or other comparable overnight delivery service; or (c) transmitted by
United States certified mail, return receipt requested with postage prepaid.

 

If to Administrative Agent: CoBank, ACB   6340 S. Fiddlers Green Grove  
Greenwood Village, Colorado 80111-1914   Attention: Credit Information Services
      With a copy to:   Bryan Cave Leighton Paisner LLP   161 North Clark, Suite
4300   Chicago, IL 60601   Attention: Eric S. Prezant, Esq.

 

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If to the PEC: Pacific Ethanol Central, LLC   c/o Pacific Ethanol, Inc.   400
Capitol Mall, Suite 2060   Sacramento, California 95814   Attn: Christopher W.
Wright       With a copy to:   Troutman Sanders   5 Park Plaza, Suite 1400  
Irvine, CA 92614   Attn: Larry Cerutti     If to the PAL: Aurora Cooperative
Elevator Company   225 Q Street   Aurora, NE 68818   Attention: Kara J. Ronnau,
Executive General Counsel       With a copy to:   Kutak Rock LLP   1650 Farnam
Street   Omaha, NE 68102   Attention: Joel Wiegert and Lisa Peters

 

All such notices and communications shall have been duly given and shall be
effective: (i) when delivered; (ii) the Business Day following the day on which
the same has been delivered prepaid (or pursuant to an invoice arrangement) to
Federal Express or other comparable overnight delivery service; or (iii) the
third Business Day following the day on which the same is sent by certified
mail, postage prepaid.

 

(c) No Oral Amendments. This Assignment may not be modified, amended, waived,
extended, changed, discharged, revoked or terminated orally or by any act or
failure to act on the part of any party, but only by an agreement in writing
signed by the party against whom enforcement of any modification, amendment,
waiver, extension, change, discharge, revocation or termination is sought.

 

(d) Counterparts; Integration; Effectiveness. This Assignment and any
amendments, waivers, consents or supplements may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which, when so executed and delivered, shall be deemed an original, but all of
which counterparts together shall constitute but one agreement. This Assignment
and the Deeds of Trust Collateral Assignment constitute the entire contract
among the parties with respect to the subject matter hereof and supersede all
previous agreements and understandings, oral or written, with respect thereto.
Delivery of an executed counterpart of a signature page to this Assignment by
facsimile or in electronic (i.e., “pdf” or “tif”) format shall be effective as
delivery of a manually executed counterpart signature page.

 

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(e) Governing Law; Jurisdiction; Etc.

 

(i) Governing Law. The laws of the State of Colorado will govern this Assignment
and any claim, controversy, dispute or cause of action (whether in contract or
tort or otherwise) based upon, arising out of or relating to this Assignment and
the transactions contemplated hereby and thereby.

 

(ii) Submission to Jurisdiction. Each of the parties hereto irrevocably and
unconditionally agrees that it will not commence any action, litigation or
proceeding of any kind whatsoever, whether in law or equity, or whether in
contract or tort or otherwise, in any way relating to this Assignment or the
transactions contemplated hereby, in any forum other than the courts of the
State of Colorado sitting in Denver County, and of the United States District
Court of Colorado, and any appellate court from any thereof, and each of the
parties hereto irrevocably and unconditionally submits to the jurisdiction of
such courts and agrees that any such action, litigation or proceeding may be
brought in any such Colorado State court or, to the fullest extent permitted by
applicable law, in such federal court. Each of the parties hereto agrees that a
final judgment in any such action, litigation 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.

 

(iii) Waiver of Venue. Each of the parties hereto irrevocably and
unconditionally waive, to the fullest extent permitted by applicable law, any
objection that it may now or hereafter have to the laying of venue of any action
or proceeding arising out of or relating to this Assignment in any such court
referred to in Section 12 hereof. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by applicable law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court.

 

(iv) Service of Process. Each of the parties hereto irrevocably consents to the
service of process in the manner provided for notices in Section 12 hereof and
agrees that nothing herein will affect the right of any party hereto to serve
process in any other manner permitted by applicable law.

 

(v) Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION BASED ON OR ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS ASSIGNMENT. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE
ADMINISTRATIVE AGENT ENTERING INTO THIS ASSIGNMENT.

 

14. Further Assurances. PEC and PAL each for itself agree, upon Administrative
Agent’s request from time to time, to execute and deliver to Administrative
Agent or any other party designated by Administrative Agent, any other
agreements, notices or other documents or instruments that Administrative Agent
deems are reasonably necessary or appropriate to confirm unto Administrative
Agent the assignment hereunder of the Notes, the Deeds of Trust or to enable
Administrative Agent to exercise the rights and remedies provided herein or
otherwise; provided that any such actions on the part of PAL shall be at the
sole cost and expense of PEC.

 

[Signature Pages Follow]

 

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IN WITNESS WHEREOF, the undersigned have executed this Assignment as of the date
first written above.

 

  PACIFIC ETHANOL CENTRAL, LLC         By: /s/ Bryon T. McGregor   Name: Bryon
T. McGregor   Title: Chief Financial Officer         PACIFIC AURORA, LLC        
By: /s/ Carl R. Smith   Name: Carl Smith   Title: Chief Financial Officer      
  COBANK, ACB         By: /s/ Janet Downs   Name: Janet Downs   Title: Vice
President

 

Signature page to Assignment of Notes and Deeds of Trust

  

 

 

 

Exhibit A

 

Non-Negotiable Note

 

 

 

 

Exhibit B

 

Negotiable Note

 

 

 

 

Exhibit C

 

Collateral Assignment of Deed of Trust

(Non-Negotiable Note)

 

 

 

 

Exhibit D

 

Collateral Assignment of Deed of Trust

(Negotiable Note)