Exhibit 10.2
 

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DEBTOR-IN-POSSESSION CREDIT AGREEMENT

dated as of May 19, 2009
 
among
 
PACIFIC ETHANOL HOLDING CO. LLC,
PACIFIC ETHANOL MADERA LLC,
PACIFIC ETHANOL COLUMBIA, LLC,
PACIFIC ETHANOL STOCKTON, LLC, and
PACIFIC ETHANOL MAGIC VALLEY, LLC,
as Borrowers,
 
PACIFIC ETHANOL HOLDING CO. LLC,
as Borrower Agent,
 
THE LENDERS REFERRED TO HEREIN,
 
WESTLB AG, NEW YORK BRANCH,
as Administrative Agent for the Lenders,
 
WESTLB AG, NEW YORK BRANCH,
as Collateral Agent for the Senior Secured Parties,
 
and
 
AMARILLO NATIONAL BANK,
as Accounts Bank
 

 

 
 
 

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TABLE OF CONTENTS
 

     
Page
       
ARTICLE I
DEFINITIONS AND INTERPRETATION
2
       
Section 1.01
 
Defined Terms
2
Section 1.02
 
Principles of Interpretation
2
Section 1.03
 
UCC Terms
3
Section 1.04
 
Accounting and Financial Determinations
3
Section 1.05
 
Joint and Several
3
       
ARTICLE II
COMMITMENTS AND BORROWING
3
       
Section 2.01
 
Revolving Loans
3
Section 2.02
 
Roll Up Loans
4
Section 2.03
 
Notice of Fundings
4
Section 2.04
 
Funding of Loans
4
Section 2.05
 
Evidence of Indebtedness
5
Section 2.06
 
Termination or Reduction of Commitments
6
Section 2.07
 
Defaulting Lenders
6
Section 2.08
 
Security Interest
7
Section 2.09
 
Super-Priority Nature of Obligations.
7
Section 2.10
 
Payment of Obligations.
8
Section 2.11
 
Liens.
8
Section 2.12
 
No Discharge; Survival of Claims.
8
Section 2.13
 
Release.
9
Section 2.14
 
Waiver of Priming Rights.
9
Section 2.15
 
Priority of Claim.
9
       
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
10
       
Section 3.01
 
Repayment of Loans
10
Section 3.02
 
Interest Payment Dates
10
Section 3.03
 
Interest Rates
10
Section 3.04
 
Default Interest Rate
11
Section 3.05
 
Interest Rate Determination
12
Section 3.06
 
Computation of Interest and Fees
12
Section 3.07
 
Optional Prepayment
12
Section 3.08
 
Mandatory Prepayment
13
Section 3.09
 
Time and Place of Payments
14
Section 3.10
 
Fundings and Payments Generally
15
Section 3.11
 
Fees
15
Section 3.12
 
Pro rata Treatment
15
Section 3.13
 
Sharing of Payments
16

 
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ARTICLE IV
EURODOLLAR RATE AND TAX PROVISIONS
17
       
Section 4.01
 
Eurodollar Rate Lending Unlawful
17
Section 4.02
 
Inability to Determine Eurodollar Rates
17
Section 4.03
 
Increased Eurodollar Loan Costs
18
Section 4.04
 
Obligation to Mitigate
18
Section 4.05
 
Funding Losses
18
Section 4.06
 
Increased Capital Costs
19
Section 4.07
 
Taxes.
19
       
ARTICLE V
REPRESENTATIONS AND WARRANTIES
20
       
Section 5.01
 
Organization; Power and Compliance with Law
21
Section 5.02
 
Due Authorization; Non-Contravention
21
Section 5.03
 
Governmental Approvals.
21
Section 5.04
 
Investment Company Act
22
Section 5.05
 
Validity of Financing Documents
22
Section 5.06
 
Financial Information
22
Section 5.07
 
Project Compliance
22
Section 5.08
 
Litigation
22
Section 5.09
 
Sole Purpose Nature; Business
23
Section 5.10
 
Contracts.
23
Section 5.11
 
Collateral
23
Section 5.12
 
Ownership of Properties
24
Section 5.13
 
Taxes
24
Section 5.14
 
Patents, Trademarks, Etc
25
Section 5.15
 
ERISA Plans
25
Section 5.16
 
Property Rights, Utilities, Supplies Etc
25
Section 5.17
 
No Defaults
25
Section 5.18
 
Environmental Warranties.
25
Section 5.19
 
Regulations T, U and X
26
Section 5.20
 
Accuracy of Information
26
Section 5.21
 
Indebtedness
27
Section 5.22
 
Required LLC Provisions
27
Section 5.23
 
Subsidiaries
27
Section 5.24
 
Foreign Assets Control Regulations, Etc
27
Section 5.25
 
Employment Matters
27
Section 5.26
 
Legal Name and Place of Business
28
Section 5.27
 
No Brokers
28
Section 5.28
 
Insurance
28
Section 5.29
 
Accounts
28
Section 5.30
 
SEC Compliance
29
Section 5.31
 
Reorganization Matters.
29
       
ARTICLE VI
CONDITIONS PRECEDENT
30
       
Section 6.01
 
Conditions to Closing
30
Section 6.02
 
Conditions to All Fundings
33
       
ARTICLE VII
 
COVENANTS
35
       
Section 7.01
 
Affirmative Covenants
35
Section 7.02
 
Negative Covenants
40
Section 7.03
 
Reporting Requirements
47

 
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ARTICLE VIII
[INTENTIONALLY OMITTED]
51
       
ARTICLE IX
DEFAULT AND ENFORCEMENT
51
       
Section 9.01
 
Events of Default
51
Section 9.02
 
Action Upon Event of Default.
57
Section 9.03
 
Remedies
58
Section 9.04
 
Minimum Notice Period
60
Section 9.05
 
Sale of Collateral
60
Section 9.06
 
Actions Taken by Collateral Agent
61
Section 9.07
 
Private Sales
61
Section 9.08
 
Access to Land
61
Section 9.09
 
Compliance With Limitations and Restrictions
61
Section 9.10
 
No Impairment of Remedies
62
Section 9.11
 
Attorney-In-Fact
62
Section 9.12
 
Application of Proceeds
62
       
ARTICLE X
THE AGENTS
63
       
Section 10.01
 
Appointment and Authority
63
Section 10.02
 
Rights as a Lender
65
Section 10.03
 
Exculpatory Provisions
65
Section 10.04
 
Reliance by Agents
66
Section 10.05
 
Delegation of Duties
66
Section 10.06
 
Resignation or Removal of Agent
66
Section 10.07
 
No Amendment to Duties of Agent Without Consent
67
Section 10.08
 
Non-Reliance on Agent and Other Lenders
68
Section 10.09
 
Collateral Agent May File Proofs of Claim
68
Section 10.10
 
Collateral Matters
69
Section 10.11
 
Copies
69
       
ARTICLE XI
MISCELLANEOUS PROVISIONS
69
       
Section 11.01
 
Amendments, Etc
69
Section 11.02
 
Applicable Law; Jurisdiction; Etc
71
Section 11.03
 
Assignments
72
Section 11.04
 
Benefits of Agreement
75
Section 11.05
 
Borrower Agent
75
Section 11.06
 
Consultants
76
Section 11.07
 
Costs and Expenses
76
Section 11.08
 
Counterparts; Effectiveness
76
Section 11.09
 
Indemnification by the Borrowers
77
Section 11.10
 
Interest Rate Limitation
78
Section 11.11
 
No Waiver; Cumulative Remedies
78
Section 11.12
 
Notices and Other Communications
79
Section 11.13
 
Patriot Act Notice
81
Section 11.14
 
Marshalling; Payments Set Aside
81
Section 11.15
 
Right of Setoff
82
Section 11.16
 
Severability
82
Section 11.17
 
Survival
82
Section 11.18
 
Treatment of Certain Information; Confidentiality
83
Section 11.19
 
Waiver of Consequential Damages, Etc
84
Section 11.20
 
Waiver of Litigation Payments
84
Section 11.21
 
Section 552(b)
84

iii

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SCHEDULES
     
Schedule 1.01
 Commitments
Schedule 2.01
 Form of Interim Order
Schedule 5.07
 Project Compliance
Schedule 5.08
 Litigation
Schedule 5.10
 Contracts
Schedule 5.18(a)(i)
 Environmental Warranties
Schedule 5.18(d)(ii)
 Underground Storage Tanks
Schedule 5.26
 Legal Names and Places of Business
Schedule 5.27
 Broker Fees
Schedule 5.29
 Local Accounts
Schedule 6.01(n)
 Initial DIP Budget
Schedule 7.01(h)
 Insurance
Schedule 11.12
 Notice Information
   

EXHIBITS
     
Exhibit A
 Defined Terms
Exhibit 2.03
 Form of Funding Notice
Exhibit 2.05
 Form of Note
Exhibit 3.03
 Form of Interest Period Notice
Exhibit 4.07
 Form of Non-U.S. Lender Statement
Exhibit 11.03
 Form of Lender Assignment Agreement

 
 
iv

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This DEBTOR-IN-POSSESSION CREDIT AGREEMENT (this “Agreement”), dated as of May
19, 2009, is by and among Pacific Ethanol Holding Co. LLC, a Delaware limited
liability company and a debtor-in-possession under Chapter 11 of the Bankruptcy
Code (as defined below) (“Pacific Holding”), Pacific Ethanol Madera LLC, a
Delaware limited liability company and a debtor-in-possession under Chapter 11
of the Bankruptcy Code (“Madera”), Pacific Ethanol Columbia, LLC, a Delaware
limited liability company and a debtor-in-possession under Chapter 11 of the
Bankruptcy Code (“Boardman”), Pacific Ethanol Stockton, LLC, a Delaware limited
liability company and a debtor-in-possession under Chapter 11 of the Bankruptcy
Code (“Stockton”), and Pacific Ethanol Magic Valley, LLC, a Delaware limited
liability company and a debtor-in-possession under Chapter 11 of the Bankruptcy
Code (“Burley” and, together with Pacific Holding, Madera, Boardman and
Stockton, the “Borrowers”), Pacific Holding, as Borrower Agent, each of the
Lenders from time to time party hereto, WESTLB AG, NEW YORK BRANCH, as
administrative agent for the Lenders, WESTLB AG, NEW YORK BRANCH as collateral
agent for the Senior Secured Parties and AMARILLO NATIONAL BANK, as accounts
bank.
 
RECITALS
 
WHEREAS, on May 17, 2009 (the “Petition Date”), each Borrower (collectively, the
“Debtors”) commenced Chapter 11 Case Nos. 09-11713 through 09-11717 (each a
“Chapter 11 Case” or a “Case” and collectively, the “Chapter 11 Cases” or the
“Cases”) by filing voluntary petitions for reorganization under the Bankruptcy
Code with the United States Bankruptcy Court for the District of Delaware (the
“Bankruptcy Court”).  The Borrowers continue to operate their businesses and
manage their properties as debtors and debtors-in-possession pursuant to
Sections 1107(a) and 1108 of the Bankruptcy Code;
 
WHEREAS, prior to the Petition Date, certain Lenders provided financing to each
Borrower pursuant to the Credit Agreement, dated as of February 27, 2007, among
each Borrower, the other parties signatory thereto, and each such Lender (as
amended, modified or supplemented through the Petition Date, the “Pre-Petition
Credit Agreement”);
 
WHEREAS, each Borrower has requested that the Lenders provide a senior secured,
superpriority credit facility to the Borrowers to fund the working capital
requirements of the Borrowers and for other purposes permitted under this
Agreement during the pendency of the Chapter 11 Cases;
 
WHEREAS, each Lender is willing to make certain Post-Petition (as defined below)
loans and other extensions of credit to each Borrower of up to such amount upon
the terms and conditions set forth herein;
 
WHEREAS, each Debtor has agreed to secure all the Obligations by granting to the
Collateral Agent a security interest in and Lien upon substantially all its
existing and after-acquired personal and real property; and
 
WHEREAS, each Borrower acknowledges that they each will receive substantial
direct and indirect benefits by reason of the making of loans and other
financial accommodations to the Borrowers as provided in this Agreement;
 
NOW, THEREFORE, the parties hereto agree as follows:
 
 

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ARTICLE I

 
DEFINITIONS AND INTERPRETATION
 
Section 1.01  Defined Terms.  Capitalized terms used in this Agreement,
including its preamble and recitals, shall, except as otherwise defined herein
or where the context otherwise requires, have the meanings provided in Exhibit
A.
 
Section 1.02  Principles of Interpretation.  a)  Unless otherwise defined or the
context otherwise requires, terms for which meanings are provided in this
Agreement shall have the same meanings when used in each Financing Document,
notice and other communication delivered from time to time in connection with
any Financing Document.
 
(b)            Unless the context requires otherwise, any reference in this
Agreement to any Transaction Document shall mean such Transaction Document and
all schedules, exhibits and attachments thereto.
 
(c)            All the agreements, contracts or documents defined or referred to
herein shall mean such agreements, contracts or documents as the same may from
time to time be supplemented or amended or the terms thereof waived or modified
to the extent permitted by, and in accordance with, the terms thereof and this
Agreement, and shall disregard any supplement, amendment or waiver made in
breach of this Agreement.
 
(d)            Any reference in any Financing Document relating to a Default or
an Event of Default that has occurred and is continuing (or words of similar
effect) shall be understood to mean that (i) in the case of a Default only, such
Default has not been cured or remedied, or has not been waived by the Required
Lenders, before becoming an Event of Default and (ii) in the case of an Event of
Default, such Event of Default has not been cured or remedied or has not been
waived by the Required Lenders.
 
(e)            The term “knowledge” in relation to a Borrower, and any other
similar expressions, shall mean knowledge of such Borrower after due inquiry.
 
(f)             Defined terms in this Agreement shall include in the singular
number the plural and in the plural number the singular.
 
(g)            The words “herein,” “hereof” and “hereunder” and words of similar
import when used in this Agreement shall, unless otherwise expressly specified,
refer to this Agreement as a whole and not to any particular provision of this
Agreement and all references to Articles, Sections, Exhibits and Schedules shall
be references to Articles, Sections, Exhibits and Schedules of this Agreement,
unless otherwise specified.
 
(h)            The words “include,” “includes” and “including” are not limiting.
 
(i)             The word “or” is not exclusive.
 
(j)             Any reference to any Person shall include its permitted
successors and permitted assigns in the capacity indicated, and in the case of
any Governmental Authority, any Person succeeding to its functions and
capacities.
 
 
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Section 1.03  UCC Terms.  Unless otherwise defined herein, terms used herein
that are defined in the UCC shall have the respective meanings given to those
terms in the UCC.
 
Section 1.04  Accounting and Financial Determinations.  Unless otherwise
specified, all accounting terms used in any Financing Document shall be
interpreted, all accounting determinations and computations hereunder or
thereunder shall be made, and all financial statements required to be delivered
hereunder or thereunder shall be prepared, in accordance with GAAP.
 
Section 1.05  Joint and Several.    The Obligations of each Borrower under this
Agreement and each other Financing Document to which any Borrower is a party
shall constitute the joint and several obligations of all Borrowers. All
representations, warranties, undertakings, agreements and obligations of each
Borrower expressed or implied in this Agreement or any other Financing Document
shall, unless the context requires otherwise, be deemed to be made, given or
assumed by the Borrowers jointly and severally.
 
ARTICLE II

 
COMMITMENTS AND BORROWING
 
On the terms, subject to the conditions and relying upon the representations and
warranties herein set forth:
 
Section 2.01  Revolving Loans.  i)  Each Revolving Lender agrees, severally and
not jointly, on the terms and conditions of this Agreement, to make loans (each
such loan, a “Revolving Loan”) to the Borrowers, from time to time but not more
frequently than six (6) times each calendar month, until the last Business Day
immediately preceding the Maturity Date, in an aggregate principal amount from
time to time outstanding not in excess of (i) during the period from the date of
entry of the Interim Order by the Bankruptcy Court through the date of entry of
the Final Order by the Bankruptcy Court, the product of (A) seven million
Dollars ($7,000,000) and (B) the Revolving Loan Commitment Percentage of such
Revolving Lender and (ii) from the date of entry of the Final Order by the
Bankruptcy Court to the Maturity Date, the Revolving Loan Commitment of such
Revolving Lender.
 
(b)            Each Funding of Revolving Loans shall be in the minimum amount of
one hundred thousand Dollars ($100,000).
 
(c)           Proceeds of each Revolving Loan shall be deposited into the
Revenue Account (or as otherwise agreed by the Administrative Agent and
specified in the relevant Funding Notice) and applied solely in accordance with
this Agreement and shall be used solely in accordance with the then-current DIP
Budget.
 
(d)            Within the limits set forth in Section 2.01(a), the Borrowers may
pay or prepay and reborrow Revolving Loans.
 
 
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Section 2.02  Roll Up Loans.  ii)  Concurrent with the funding by a Revolving
Lender of a Revolving Loan, an amount of such Lender's (or an Affiliate of such
Lender) Pre-Petition Term Loan equal to 150% of the amount of such Revolving
Loan will be converted into a roll up loan (each  a “Roll Up Loan”); provided
that (i) repayment of a Revolving Loan will not reduce the amount of the
outstanding Roll Up Loans and (ii) the aggregate Roll Up Loans will not exceed
the Aggregate Roll Up Commitment.
 
(b)           Each party hereto acknowledges that pursuant to Section 2.02(b)
the amount of Pre-Petition Term Loans held by each Roll Up Lender (or Affiliate
of such Roll Up Lender) shall be reduced by an amount equal to the amount of
Roll Up Loans made by such Roll Up Lender.
 
(c)            All Roll Up Loans shall have the benefit of Section 364(e) of the
Bankruptcy Code.
 
(d)           Roll Up Loans paid or prepaid may not be reborrowed.
 
Section 2.03  Notice of Fundings.  iii)  From time to time, but not more
frequently than six (6) times each calendar month, the Borrowers may propose a
Funding by delivering to the Administrative Agent a properly completed Funding
Notice not later than 12:00 noon, New York City time, five (5) Business Days
prior to the proposed Funding Date; provided, however, that such prior notice
period shall not apply to the initial Funding.  Each Funding Notice delivered
pursuant to this Section 2.03 shall be irrevocable and shall refer to this
Agreement and specify (i) whether such Funding is requested to be of Eurodollar
Loans and/or Base Rate Loans, (ii) the requested Funding Date (which shall be a
Business Day), and (iii) the amount of such requested Funding.
 
(b)          The Administrative Agent shall promptly advise each Lender of any
Funding Notice given pursuant to this Section 2.03, and of each such Lender’s
portion of the requested Funding.
 
Section 2.04  Funding of Loans.  iv)  Subject to Section 2.04(d), each Funding
shall consist of Revolving Loans made by the Lenders ratably in accordance with
their respective applicable Commitment Percentages and shall consist of
Eurodollar Loans or Base Rate Loans as the Borrowers may request pursuant to
Section 2.03 (Notice of Fundings); provided, however, that the failure of any
Lender to make any Revolving Loan shall not in itself relieve any other Lender
of its obligation to lend hereunder (it being understood, however, that no
Lender shall be responsible for the failure of any other Lender to make any
Revolving Loan required to be made by such other Lender).
 
(b)           Subject to Section 4.04 (Obligation to Mitigate), each Lender may
(without relieving any Borrower of its obligation to repay a Revolving Loan in
accordance with the terms of this Agreement and the Notes) at its option fulfill
its Commitment with respect to any such Revolving Loan by causing any domestic
or foreign branch or Affiliate of such Lender to make such Revolving Loan;
provided that the use of such domestic or foreign branch does not result in any
increased costs payable by any of the Borrowers hereunder.
 
 
4

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(c)           Subject to Section 2.04(d), each Lender shall make a Revolving
Loan in the amount of its applicable Commitment Percentage of each Funding
hereunder on the proposed Funding Date by wire transfer of immediately available
funds to the Administrative Agent, not later than 11:00 a.m. New York City time,
and the Administrative Agent shall deposit the amounts so received into the
Revenue Account; provided, that if a Funding does not occur on the proposed
Funding Date because any condition precedent to such requested Funding herein
specified has not been met, the Administrative Agent shall return the amounts so
received to the respective Lenders without interest.
 
(d)           Unless the Administrative Agent has been notified in writing by
any Lender prior to a proposed Funding Date that such Lender will not make
available to the Administrative Agent its portion of the Funding proposed to be
made on such date, the Administrative Agent may assume that such Lender has made
such amounts available to the Administrative Agent on such date and the
Administrative Agent in its sole discretion may, in reliance upon such
assumption, make available to the Borrowers a corresponding amount.  If such
corresponding amount is not in fact made available to the Administrative Agent
by such Lender and the Administrative Agent has made such amount available to
the Borrowers, the Administrative Agent shall be entitled to recover such
corresponding amount on demand from such Lender and, if such Lender pays such
amount (together with the interest noted below), then the amount so paid shall
constitute such Lender’s Revolving Loan included in such Funding.  If such
Lender does not pay such corresponding amount forthwith upon the Administrative
Agent’s demand, the Administrative Agent shall promptly notify the Borrowers and
the Borrowers shall immediately repay such corresponding amount to the
Administrative Agent.  The Administrative Agent shall also be entitled to
recover from such Lender or the Borrowers, as the case may be, interest on such
corresponding amount in respect of each day from the date such corresponding
amount was made available by the Administrative Agent to the Borrowers to the
date such corresponding amount is recovered by the Administrative Agent, at an
interest rate per annum equal to (i) in the case of a payment made by such
Lender, the greater of the Federal Funds Effective Rate and a rate determined by
the Administrative Agent in accordance with banking industry rules on interbank
compensation and (ii) in the case of a payment made by the Borrowers, the Base
Rate plus the Applicable Margin.  Nothing herein shall be deemed to relieve any
Lender from its obligation to fulfill its commitment hereunder.  Notwithstanding
anything to the contrary in this Agreement or any other Financing Document, the
Administrative Agent may, with prior notice to the Borrowers, apply all funds
and proceeds of Collateral available for the payment of any Obligation to repay
any amount owing by any Lender to the Administrative Agent as a result of such
Lender’s failure to fund its applicable share of any Funding hereunder.  A
notice of the Administrative Agent to any Lender or the Borrowers with respect
to any amounts owing under this Section 2.04(d) shall be conclusive, absent
manifest error.
 
Section 2.05  Evidence of Indebtedness.  v)  Each Loan made by each Lender shall
be evidenced by one or more accounts or records maintained by such Lender and by
the Administrative Agent in the ordinary course of business, including the
Register for the recordation of the Loans maintained by the Administrative Agent
in accordance with the provisions of Section 11.03(c) (Assignments).  The
accounts or records maintained by the Administrative Agent and each Lender shall
be conclusive evidence, absent manifest error, of the amount of the Loans made
by the Lenders to the Borrowers and the interest and payments thereon.  Any
failure to so record or any error in doing so shall not, however, limit or
otherwise affect the obligation of the Borrowers hereunder to pay any amount
owing with respect to the Obligations.  In the event of any conflict between the
accounts and records maintained by any Lender and the accounts and records of
the Administrative Agent in respect of such matters, the accounts and records of
the Administrative Agent shall control in the absence of manifest error.
 
(b)           The Borrowers agree that in addition to the Register, the Loans
made by each Lender shall be evidenced, in each case when requested by a Lender,
by a Note or Notes duly executed on behalf of each Borrower, dated the Closing
Date (or, if later, the date of any such request) payable to the order of such
Lender in a principal amount equal to such Lender’s Revolving Loan Commitment or
Roll Up Loan Commitment, as applicable.  Each Lender may attach schedules to its
Note and endorse thereon the date, amount and maturity of its Loan and payments
with respect thereto.
 
 
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Section 2.06  Termination or Reduction of Commitments.  vi)  Any Commitments
shall be automatically and permanently terminated on the Maturity Date.
 
(b)           Any unused Commitments shall be terminated upon the occurrence of
an Event of Default if and to the extent required pursuant to Section 9.02
(Action Upon Event of Default) in accordance with the terms thereof.
 
(c)           The Aggregate Commitment shall be automatically reduced to the
extent and in the amount of any prepayment of the Loans pursuant to Section 3.08
(Mandatory Prepayment) . 
 
Section 2.07  Defaulting Lenders.  Anything contained herein to the contrary
notwithstanding, in the event that any Lender, other than at the direction or
request of any regulatory agency or authority or due to a temporary disruption
in the financial markets generally, defaults (a “Defaulting Lender”) in its
obligation to fund (a “Funding Default”) any Loan (in each case, a “Defaulted
Loan”), then (i) during any Default Period with respect to such Defaulting
Lender, such Defaulting Lender shall be a Non-Voting Lender; and (ii) to the
extent permitted by applicable law, during any Default Period and until such
time as the Default Excess with respect to such Defaulting Lender shall have
been reduced to zero, (A) any voluntary prepayment of the Loans shall be applied
to the outstanding Loans of Lenders other than Defaulting Lenders prior to the
outstanding Loans of the Defaulting Lenders, (B) any mandatory prepayment of the
Loans shall be applied to the outstanding Loans of Lenders other than Defaulting
Lenders prior to the outstanding Loans of the Defaulting Lenders, (C) such
Defaulting Lender shall not be entitled to receive any Commitment Fee pursuant
to Section 3.11 (Fees) with respect to such Defaulting Lender’s Commitment; and
(D) availability of Loans pursuant to Section 2.01(a) (Loans) shall, as at any
date of determination, be calculated as if such Defaulting Lender had funded all
Defaulted Loans of such Defaulting Lender. No Commitment of any Lender shall be
increased or otherwise affected, and, except as otherwise expressly provided in
this Section 2.07, performance by the Borrowers of their obligations hereunder
and the other Financing Documents shall not be excused or otherwise modified as
a result of any Funding Default or the operation of this Section 2.07. The
rights and remedies against a Defaulting Lender under this Section 2.07 are in
addition to other rights and remedies which the Borrowers may have against such
Defaulting Lender with respect to any Funding Default and which the
Administrative Agent or any Lender may have against such Defaulting Lender with
respect to any Funding Default.
 
 
6

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Section 2.08  Security Interest.  b)  In order to supplement the Orders without
in any way diminishing or limiting the effect of the Orders or the security
interest, pledge, lien, mortgage or deed of trust granted thereunder, to secure
the timely payment in full when due (whether at stated maturity, upon
acceleration or optional or mandatory prepayment) in cash and performance in
full of all the Obligations, each Debtor does hereby collaterally assign, grant
and pledge to the Collateral Agent, for the benefit of the Collateral Agent,
each other Agent and each Lender, all the estate, right, title and interest of
such Debtor in, to and under, whether now owned or hereafter existing or
acquired, and howsoever its interest therein may arise or appear, the
Collateral.
 
(b)           The Liens and security interests granted hereunder shall continue
to be valid and perfected and with the specified priority without the necessity
that financing statements be filed or that any other action be taken or document
or instrument registered or delivered, under applicable non-bankruptcy law.
 
(c)           Notwithstanding any failure on the part of any Debtor or the
Collateral Agent to perfect, maintain, protect or enforce the Liens and security
interests in the Collateral granted hereunder, the Orders shall automatically,
and without further action by any Person, perfect such Liens and security
interests against the Collateral.
 
Section 2.09  Super-Priority Nature of Obligations.
 
(a)           All Obligations shall constitute administrative expenses of the
Borrowers in the Chapter 11 Cases, with administrative priority and senior
secured status under Sections 364(c) and 364(d) of the Bankruptcy Code.  Subject
to the Carve-Out, such administrative claim shall have priority over all other
costs and expenses of the kinds specified in, or ordered pursuant to,
Sections 105, 326, 328, 330, 331, 503(b), 506(c), 507(a), 507(b), 546(c), 726,
1113, 1114 or any other provision of the Bankruptcy Code or otherwise, and shall
at all times be senior to the rights of the Borrowers, the estates of the
Borrowers, and any successor trustee or estate representative in the Chapter 11
Cases or any subsequent proceeding or case under the Bankruptcy Code.
 
(b)           All Obligations shall at all times, subject to the Carve-Out, (i)
subject to Section 364(d)(1) of the Bankruptcy Code, be secured by fully
perfected first priority, valid, binding, enforceable, non-avoidable and
automatically perfected priming security interest in and Liens upon (the
“Priming Liens”) the Collateral (as such term is defined in the Pre-Petition
Credit Agreement) and (ii) pursuant to Section 364(c)(2) of the Bankruptcy Code,
be secured by fully perfected first priority, valid, binding, enforceable,
non-avoidable and automatically perfected security interest in and liens upon
the Collateral (other than Collateral referenced in clause (i)) whether created,
existing or acquired prior or subsequent to the commencement of the Cases (the
“First Liens” and, together with the Priming Liens, the “DIP Liens”).  The DIP
Liens, and the priorities accorded to the Obligations, shall have the priority
and senior secured status afforded by Sections 364(c) and 364(d)(l) of the
Bankruptcy Code, all as more fully set forth in the Interim Order and Final
Order.
 
 
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(c)           The DIP Liens under Sections 364(c)(2),(c)(3) and (d) of the
Bankruptcy Code, and the administrative claims under Section 364(c)(1) of the
Bankruptcy Code, in each case afforded the Obligations, shall also have priority
over any claims arising under Section 506(c) of the Bankruptcy Code subject and
subordinate only to the Carve-Out.
 
Section 2.10  Payment of Obligations.
 
On the Maturity Date, the Senior Secured Parties shall be entitled to immediate
payment of all outstanding Obligations without further application to or order
of the Bankruptcy Court.
 
Section 2.11  Liens.
 
(a)           The Debtors covenant and agree that the DIP Facility and all
Obligations will at all times be secured by the DIP Liens as set forth in the
Interim Order and the Final Order, as applicable.
 
(b)           The DIP Liens on Collateral of the Debtors will not be subject to
challenge and will attach and become valid and perfected upon entry of the
Interim Order without any requirement of any further action by the Collateral
Agent.  Other than the DIP Liens, the Collateral will be free and clear of all
Liens, claims and encumbrances other than Permitted Liens.
 
(c)           The Orders are sufficient and conclusive evidence of the creation,
validity, perfection and priority of the DIP Liens without the necessity of
filing, recording or delivering any financing statement or other instrument or
document that may otherwise be required under the law of any jurisdiction or the
taking of any action (including entering into any deposit control agreement or
delivering original certificates representing pledged Equity Interests that
constitute “Certificated Securities” under the UCC) to validate or perfect the
DIP Liens or to entitle the Collateral Agent to the priorities granted by or
pursuant to this Agreement, any Financing Document or any of the
Orders.  Notwithstanding the foregoing, the Collateral Agent may take any and
all actions without further order of the Bankruptcy Court, and shall be granted
relief from the automatic stay, to evidence, confirm, validate or perfect or to
insure the contemplated priority of, the DIP Liens granted to the Collateral
Agent for the benefit of the Senior Secured Parties and each Debtor shall
execute and deliver to the Collateral Agent all such financing statements,
mortgages, notices or other documents and instruments as the Collateral Agent
may request in connection therewith.
 
Section 2.12  No Discharge; Survival of Claims.
 
The Borrowers agree that (i) the Obligations hereunder shall not be discharged
by the entry of an order confirming a plan of reorganization in any Chapter 11
Case (and the Borrowers, pursuant to Section 1141(d)(4) of the Bankruptcy Code,
hereby waive any such discharge) and (ii) the super-priority administrative
claim granted pursuant to the Interim Order and Final Order and described in
Section 2.09 (Super-Priority Nature of Obligations) and the Liens granted to the
Collateral Agent pursuant to the Interim Order and Final Order and described in
Section 2.09 (Super-Priority Nature of Obligations) shall not be affected in any
manner by the entry of an order confirming a plan of reorganization in any
Chapter 11 Case.
 
 
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Section 2.13  Release.
 
The Borrowers hereby acknowledge, effective upon entry of the Interim Order and
subject to the terms thereof, that the Borrowers have no defense, counterclaim,
offset, recoupment, cross-complaint, claim or demand of any kind or nature
whatsoever that can be asserted to reduce or eliminate all or any part of the
Borrowers’ liability to repay the Senior Secured Parties as provided in this
Agreement or any other Financing Document or to seek affirmative relief or
damages of any kind or nature from any Senior Secured Party.  Subject to the
Orders, the Borrowers, each in their own right on behalf of their bankruptcy
estates, and on behalf of all their successors, assigns, and any Affiliates and
any Person acting for and on behalf of, or claiming through them, (collectively,
the “Releasing Parties”), hereby fully, finally and forever release and
discharge  each Senior Secured Party, its Affiliates, and their respective past
and present officers, directors, servants, agents, attorneys, assigns, heirs,
parents, subsidiaries, and each Person acting for or on behalf of any of them
(collectively, the “Released Parties”) of and from any and all past and present
actions, causes of action, demands, suits, claims, liabilities, Liens, lawsuits,
adverse consequences, amounts paid in settlement, costs, damages, debts,
deficiencies, diminution in value, disbursements, expenses, losses and other
obligations of any kind or nature whatsoever (the “Released Claims”), whether in
law, equity or otherwise (including, without limitation, those arising under
Sections 541 through 550 of the Bankruptcy Code and interest or other carrying
costs, penalties, legal, accounting and other professional fees and expenses,
and incidental, consequential and punitive damages, including, without
limitation, those payable to third parties), whether known or unknown, fixed or
contingent, direct, indirect, or derivative, asserted or unasserted, foreseen or
unforeseen, suspected or unsuspected, now existing or which may heretofore
accrue against any of the Released Parties, whether held in a personal or
representative capacity, and which are based on any act, fact, event or omission
or other matter, cause or thing occurring at or from any time prior to and
including the date hereof in any way, directly or indirectly arising out of,
connected with or relating to this Agreement, any other Financing Document, the
Interim Order, the Final Order or the transactions contemplated hereby, and all
other agreements, certificates, instruments and other documents and statements
(whether written or oral) related to any of the foregoing.
 
Section 2.14  Waiver of Priming Rights.
 
Upon the Closing Date, and on behalf of themselves and their estates, and for so
long as any Obligations shall be outstanding, the Borrowers hereby irrevocably
waive any right, pursuant to Sections 364(c) and 364(d) of the Bankruptcy Code
or otherwise, to grant any Lien of equal or greater priority than the Liens
securing the Obligations, or to approve a claim of equal or greater priority
than the Obligations, other than with respect to adequate protection Liens
approved by order of the Bankruptcy Court in the Interim Order or the Final
Order.
 
Section 2.15  Priority of Claim.
 
The Debtors covenant and agree that the Obligations at all times will constitute
DIP Administrative Claims, subject only to the Carve-Out.
 
 
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ARTICLE III

 
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
 
Section 3.01  Repayment of Loans.  The Borrowers unconditionally and irrevocably
promise to pay in full to the Administrative Agent, for the ratable account of
each Lender, the aggregate outstanding principal amount of the Loans on the
Maturity Date; provided, that upon the effectiveness of an Approved Plan the
aggregate outstanding principal amount of the Roll Up Loans shall be payable in
accordance with the terms of such Approved Plan.
 
Section 3.02  Interest Payment Dates.  i)  Interest accrued on each Revolving
Loan shall be payable, without duplication:
 
 
(i)
on the Maturity Date;

 
 
(ii)
with respect to Eurodollar Loans, the last day of each applicable Interest
Period or, if applicable, any date on which such Eurodollar Loan is converted to
a Base Rate Loan;

 
 
(iii)
with respect to Base Rate Loans, on each Monthly Payment Date or, if applicable,
any date on which such Base Rate Loan is converted to a Eurodollar Loan; and

 
 
(iv)
with respect to any Revolving Loan, on any date when such Revolving Loan is
prepaid hereunder.

 
(b)           Interest accrued on each Roll Up Loan shall be payable on the
Maturity Date; provided, however, that upon the effectiveness of an Approved
Plan the interest accrued on each Roll Up Loan shall be payable in accordance
with the terms of such Approved Plan.
 
(c)           Interest accrued on the Loans or other monetary Obligations after
the date such amount is due and payable (whether on the Maturity Date for such
Loan, any Monthly Payment Date, any Interest Payment Date, upon acceleration or
otherwise) shall be payable upon demand.
 
(d)           Interest hereunder shall be due and payable in accordance with the
terms hereof, before and after judgment, regardless of whether an insolvency
proceeding exists in respect of any Borrower, and to the fullest extent
permitted by law, the Lenders shall be entitled to receive post-petition
interest during the pendency of an insolvency proceeding.
 
Section 3.03  Interest Rates.  ii)  Pursuant to each properly delivered Funding
Notice, (i) the Eurodollar Loans shall accrue interest at a rate per annum
during each Interest Period applicable thereto equal to the sum of the
Eurodollar Rate for such Interest Period plus the Applicable Margin, (ii) each
Base Rate Loan shall accrue interest at a rate per annum during each Monthly
Period equal to the sum of the Base Rate for such Monthly Period plus the
Applicable Margin and (iii) the Roll Up Loans shall accrue interest in
accordance with the terms of the Pre-Petition Credit Agreement applicable to the
Pre-Petition Term Loans that are Base Rate Loans (as such term is defined
therein) without giving effect to any Event of Default (as such term is defined
therein).
 
 
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(b)           On or before 12:00 noon, New York City time, at least four (4)
Business Days prior to the end of each Interest Period for each Eurodollar Loan,
the Borrowers shall, and at least four (4) Business Days prior to the end of any
Monthly Period for any Base Rate Loans, the Borrowers may, deliver to the
Administrative Agent an Interest Period Notice setting forth the Borrowers’
election (i) to continue any such Eurodollar Loan as (or convert any such Base
Rate Loan to) a Eurodollar Loan or (ii) to convert any such Eurodollar Loan to a
Base Rate Loan at the end of the then-current Interest Period; provided, that if
an Event of Default has occurred and is continuing, all Eurodollar Loans shall
automatically convert into Base Rate Loans at the end of the then-current
Interest Periods.  Upon the waiver or cure of such Event of Default, the
Borrowers shall have the option to continue such Loans as Base Rate Loans and/or
to convert such Loans to Eurodollar Loans (by delivery of an Interest Period
Notice), subject to the notice periods set forth above.  Notwithstanding
anything to the contrary, any portion of the Loans maturing in less than one
month may not be continued as, or converted to, Eurodollar Loans and will
automatically convert to Base Rate Loans at the end of the then-current Interest
Period.
 
(c)           If the Borrowers fail to deliver an Interest Period Notice in
accordance with Section 3.03(b) with respect to any Eurodollar Loan, such
Eurodollar Loan shall automatically continue as a Eurodollar Loan.
 
(d)           All Eurodollar Loans shall bear interest from and including the
first day of the applicable Interest Period to (and excluding) the last day of
such Interest Period at the interest rate determined as applicable to such
Eurodollar Loan.
 
(e)           Notwithstanding anything to the contrary, the Borrowers shall
have, in the aggregate, no more than  eight (8) separate Eurodollar Loans
outstanding at any one time.  For purposes of the foregoing, all Eurodollar
Loans commencing on the same day of a month (notwithstanding that such
Eurodollar Loans commence in different months) shall be considered a single
Eurodollar Loan.
 
(f)           All Base Rate Loans shall bear interest from and including the
first day of each Monthly Period (or the day on which Eurodollar Loans are
converted to Base Rate Loans as required under Section 3.03(b) or under Article
IV (Eurodollar Rate and Tax Provisions)) to (and including) the next succeeding
Monthly Payment Date at the interest rate determined as applicable to such Base
Rate Loan.
 
Section 3.04  Default Interest Rate.  (a) If all or a portion of (i) the
principal amount of any Loan is not paid when due (whether on the Maturity Date,
by acceleration or otherwise), such overdue amount shall bear interest at a rate
per annum equal to the rate that would otherwise be applicable thereto plus two
percent (2%) or (ii) any Obligation (other than principal on the Loans) is not
paid when due (whether on the Maturity Date, by acceleration or otherwise), such
overdue amount shall bear interest at a rate per annum equal to the rate then
applicable to Base Rate Loans plus two percent (2%) (the applicable rate in
effect plus such two percent (2%) per annum, the “Default Rate”), in each case,
with respect to clauses (i) and (ii) above, from the date of such non-payment
until such amount is paid in full (after as well as before judgment).
 
(b) Upon the occurrence and during the continuance of any Event of Default
(other than an Event of Default specified in Section 3.04(a)), the Borrowers
shall pay interest (after as well as before judgment) on the Loans at a rate per
annum equal to the rate then applicable to Base Rate Loans plus two percent (2%)
until such Event of Default is cured or waived.
 
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Section 3.05  Interest Rate Determination.  The Administrative Agent shall
determine the interest rate applicable to the Loans in accordance with the terms
of this Agreement, and shall give prompt notice to the Borrowers and the Lenders
of such determination, and its determination thereof shall be conclusive in the
absence of manifest error.
 
Section 3.06  Computation of Interest and Fees.  iii)  All computations of
interest for Base Rate Loans when the Base Rate is determined by WestLB’s “prime
rate” shall be made on the basis of a year of 365 or 366 days, as the case may
be, and actual days elapsed.  All computations of interest for Eurodollar Loans
and for Base Rate Loans when the Base Rate is determined by the Federal Funds
Effective Rate shall be made on the basis of a 360-day year and actual days
elapsed.
 
(b)           Interest shall accrue on each Loan for the day on which the Loan
is made, and shall not accrue on a Loan, or any portion thereof, for the day on
which the Loan or such portion is paid; provided, that any Loan that is repaid
on the same day on which it is made shall bear interest for one (1) day.
 
(c)           Each determination by the Administrative Agent of an interest rate
or fee hereunder shall be conclusive and binding for all purposes, absent
manifest error.
 
Section 3.07  Optional Prepayment.  iv)  The Borrowers shall have the right at
any time, and from time to time, to prepay the Revolving Loans, in whole or in
part, upon not fewer than three (3) Business Days’ prior written notice to the
Administrative Agent.
 
(b)           Each notice of prepayment given by the Borrowers under this
Section 3.07 shall specify the prepayment date and the portion of the principal
amount of the Revolving Loans to be prepaid.  All prepayments under this Section
3.07 shall be made by the Borrowers to the Administrative Agent for the account
of the applicable Revolving Lenders and shall be accompanied by accrued interest
on the principal amount being prepaid to but excluding the date of payment and
by any additional amounts required to be paid under Section 4.05 (Funding
Losses).
 
(c)           Amounts of principal prepaid under this Section 3.07 shall be
allocated by the Administrative Agent first, to the payment of all costs, fees,
expenses and indemnities then due and payable to the Senior Secured Parties,
including fees and expenses of attorneys and Consultants reimbursable hereunder;
second, to the payment of all accrued and unpaid interest then due and payable
on the Revolving Loans pro rata among the Lenders (other than any Defaulting
Lender) based on their respective outstanding principal amounts on the date of
such prepayment; third, to the payment of principal of Revolving Loans pro rata
among the Lenders (other than any Defaulting Lender) based on their respective
outstanding principal amounts on the date of such prepayment but without a
reduction in the Commitments; fourth, to the payment of all accrued and unpaid
interest then due and payable on the Revolving Loans pro rata among the
Defaulting Lenders based on their respective outstanding principal amounts on
the date of such prepayment; and fifth, to the payment of principal of Revolving
Loans pro rata among the Defaulting Lenders based on their respective
outstanding principal amounts on the date of such prepayment.
 
 
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(d)           Subject to Section 3.7 (c) first, amounts prepaid pursuant to this
Section 3.07  may be reborrowed.
 
Section 3.08  Mandatory Prepayment.  v)  The Borrowers shall be required to
prepay the Loans:
 
 
(i)
within three (3) Business Days of  receipt by any Borrower of any Project
Document Termination Payments, an amount equal to such Project Document
Termination Payments;

 
 
(ii)
within three (3) Business Days of receipt by any Borrower of any Condemnation
Proceeds, an amount equal to such Condemnation Proceeds;

 
 
(iii)
within three (3) Business Days of receipt by any Borrower of any Insurance
Proceeds,  an amount equal to such Insurance Proceeds;

 
 
(iv)
within three (3) Business Days of receipt by any Borrower of any Net Cash
Proceeds (not constituting Insurance Proceeds or Condemnation Proceeds) of any
Disposition (including the sale of all or substantially all the assets of the
Debtors) an amount equal to such Net Cash Proceeds; and

 
 
(v)
within one (1) Business Day of receipt of the Net Cash Proceeds derived  from
the following occurrence, if at any time prior to the repayment in full of all
Obligations, including subsequent to the confirmation of any reorganization
plan, any of the Debtors, any trustee, any examiner with enlarged powers or any
responsible officer subsequently appointed, shall incur Indebtedness in
violation of the terms of the Interim Order, the Final Order or this Agreement.

 
(b)           All prepayments under this Section 3.08 shall be made by the
Borrowers to the Administrative Agent for the account of the Lenders and shall
be accompanied by accrued interest on the principal amount being prepaid to but
excluding the date of payment and by any additional amounts required to be paid
under Section 4.05 (Funding Losses).
 
 
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(c)           Amounts of principal prepaid under this Section 3.08  shall be
allocated by the Administrative Agent first, to the payment of all costs, fees,
expenses and indemnities then due and payable to the Senior Secured Parties,
including fees and expenses of attorneys and Consultants reimbursable hereunder;
second, to the payment of all accrued and unpaid interest then due and payable
on the Revolving Loans pro rata among the Lenders (other than any Defaulting
Lender) based on their respective outstanding principal amounts on the date of
such prepayment; third, to the payment of principal of Revolving Loans pro rata
among the Lenders (other than any Defaulting Lender) based on their respective
outstanding principal amounts on the date of such prepayment and a corresponding
reduction in the Revolving Loan Commitments; fourth, to the payment of all
accrued and unpaid interest then due and payable on the Revolving Loans pro rata
among the Defaulting Lenders based on their respective outstanding principal
amounts on the date of such prepayment; fifth, to the payment of principal of
Revolving Loans pro rata among the Defaulting Lenders based on their respective
outstanding principal amounts on the date of such prepayment; sixth, to the
payment of all accrued and unpaid interest then due and payable on the Roll Up
Loans pro rata among the Lenders (other than any Defaulting Lender) based on
their respective outstanding principal amounts on the date of such prepayment;
seventh, to the payment of principal of the Roll Up Loans pro rata among the
Lenders (other than any Defaulting Lender) based on their respective outstanding
principal amounts on the date of such prepayment and a corresponding reduction
in the Roll Up Loan Commitments; eighth, to the payment of all accrued and
unpaid interest then due and payable on the Roll Up Loans pro rata among the
Defaulting Lenders based on their respective outstanding principal amounts on
the date of such prepayment; and ninth, to the payment of principal of the Roll
Up Loans pro rata among the Defaulting Lenders based on their respective
outstanding principal amounts on the date of such prepayment.
 
(d)           Amounts prepaid pursuant to this Section 3.08  may not be
reborrowed.
 
Section 3.09  Time and Place of Payments.  vi)  The Borrowers shall make each
payment (including any payment of principal of or interest on any Loan or any
Fees or other Obligations) hereunder and under any other Financing Document
without setoff, deduction or counterclaim not later than 12:00 noon New York
City time on the date when due in Dollars in immediately available funds to the
Administrative Agent at the following account:  JPMorgan Chase Bank - NY, Acct.
#920-1-060663, for the Account of WestLB AG-NY Branch, ABA #021-000-021, Ref:
Pacific Ethanol DIP Loan, Attention: Andrea Bailey, or at such other office or
account as may from time to time be specified by the Administrative Agent to the
Borrowers.  Funds received after 12:00 noon New York City time shall be deemed
to have been received by the Administrative Agent on the next succeeding
Business Day.
 
(b)           The Administrative Agent shall promptly remit in immediately
available funds to each Senior Secured Party its share, if any, of any payments
received by the Administrative Agent for the account of such Senior Secured
Party.
 
(c)           Whenever any payment (including any payment of principal of or
interest on any Loan or any Fees or other Obligations) hereunder or under any
other Financing Document shall become due, or otherwise would occur, on a day
that is not a Business Day, such payment shall (except as otherwise required by
the proviso to the definition of “Interest Period” with respect to Eurodollar
Loans) be made on the immediately succeeding Business Day, and such increase of
time shall in such case be included in the computation of interest or Fees, if
applicable.
 
 
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Section 3.10  Fundings and Payments Generally.  vii)  Unless the Administrative
Agent has received notice from the Borrowers prior to the date on which any
payment is due to the Administrative Agent for the account of the Lenders
hereunder that the Borrowers will not make such payment, the Administrative
Agent may assume that the Borrowers have made such payment on such date in
accordance with this Agreement and may, in reliance upon such assumption,
distribute to the Lenders the amount due.  If the Borrowers have not in fact
made such payment, then each of the Lenders severally agrees to repay to the
Administrative Agent forthwith on demand the amount so distributed to such
Lender in immediately available funds with interest thereon, for each day from
and including the date such amount is distributed to it to but excluding the
date of payment to the Administrative Agent, at the greater of (i) the Federal
Funds Effective Rate and (ii) a rate determined by the Administrative Agent in
accordance with banking industry rules on interbank compensation.  A notice of
the Administrative Agent to any Lender with respect to any amount owing under
this Section 3.10(a) shall be conclusive, absent manifest error.
 
(b)           Nothing herein shall be deemed to obligate any Lender to obtain
funds for any Loan in any particular place or manner or to constitute a
representation by any Lender that it has obtained or will obtain funds for any
Loan in any particular place or manner.
 
Section 3.11  Fees.  viii)  On the date of the first Funding, the Borrowers
shall pay to the Administrative Agent, for the account of the Lenders, a
facility fee equal to two percent (2.0%) of the Aggregate Revolving Loan
Commitment.
 
(b)           On the date of the first Funding, the Borrowers shall pay to the
Administrative Agent, for the account of the Administrative Agent, a structuring
fee equal to one percent (1.0%) of the Aggregate Revolving Loan Commitment.
 
(c)           From and including the date hereof until the Maturity Date, the
Borrowers agree to pay to the Administrative Agent, for the account of the
Lenders, on each Monthly Payment Date, a commitment fee (the “Commitment Fee”)
equal to two percent (2.0%) per annum on the average daily amount by which the
Aggregate Revolving Loan Commitment exceeds the outstanding amount of the
Revolving Loans during the immediately preceding month.  All Commitment Fees
shall be computed on the basis of the actual number of days elapsed in a year of
365 or 366 days, as pro-rated for any partial month, as applicable.
 
(d)           All Fees shall be paid on the dates due, in immediately available
funds.  Once paid, none of the Fees shall be refundable under any circumstances.
 
Section 3.12  Pro rata Treatment.  ix)  Except as otherwise expressly provided
herein (including Section 4.01 (Eurodollar Rate Lending Unlawful) and Section
2.07 (Defaulting Lenders)), each Funding of Revolving Loans, making of Roll Up
Loans and reduction of commitments of any type shall be allocated by the
Administrative Agent pro rata among the Lenders in accordance with their
respective applicable Commitment Percentages.
 
 
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(b)           Except as required under Section 2.07 (Defaulting Lenders),
Section 3.07 (Optional Prepayment), Section 3.08 (Mandatory Prepayment) or
Article IV (Eurodollar Rate and Tax Provisions), each payment or prepayment of
principal of the Loans shall be allocated by the Administrative Agent pro rata
among the applicable Lenders in accordance with the respective principal amounts
of their outstanding Loans of the type being repaid, each payment of interest on
the Loans shall be allocated by the Administrative Agent pro rata among the
applicable Lenders in accordance with the respective interest amounts
outstanding on their outstanding Loans of the type in respect of which interest
is being paid, and each payment of fees on the Commitments shall be allocated by
the Administrative Agent pro rata among the applicable Lenders in accordance
with their respective Commitments of the type to which such fees relate.
 
(c)           Each Lender agrees that in computing such Lender’s portion of any
Funding to be made hereunder, the Administrative Agent may, in its discretion,
round each Lender’s percentage of such Funding to the next higher or lower whole
Dollar amount.
 
Section 3.13  Sharing of Payments.  x)  If any Lender shall obtain any payment
or other recovery (whether voluntary, involuntary, by application of setoff or
otherwise) on account of any Loan (other than pursuant to the terms of Article
IV (Eurodollar Rate and Tax Provisions)) in excess of its pro rata share of
payments then or therewith obtained by all Lenders holding Loans of such type,
such Lender shall purchase from the other Lenders such participations in Loans
made by them as shall be necessary to cause such purchasing Lender to share the
excess payment or other recovery ratably with each of them; provided, however,
that if all or any portion of the excess payment or other recovery is thereafter
recovered from such purchasing Lender, the purchase shall be rescinded and each
Lender that has sold a participation to the purchasing Lender shall repay to the
purchasing Lender the purchase price to the ratable extent of such recovery
together with an amount equal to such selling Lender’s ratable share (according
to the proportion of (x) the amount of such selling Lender’s required repayment
to the purchasing Lender to (y) the total amount so recovered from the
purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered.  Each Borrower
agrees that any Lender so purchasing a participation from another Lender
pursuant to this Section 3.13 may, to the fullest extent permitted by law,
exercise all its rights of payment (including pursuant to Section 11.15 (Right
of Setoff)) with respect to such participation as fully as if such Lender were
the direct creditor of the Borrowers in the amount of such participation.
 
(b)           If under any applicable bankruptcy, insolvency or other similar
law, any Lender receives a secured claim in lieu of a setoff to which this
Section 3.13 applies, such Lender shall, to the extent practicable, exercise its
rights in respect of such secured claim in a manner consistent with the rights
of the Lenders entitled under this Section 3.13 to share in the benefits of any
recovery on such secured claim.
 

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ARTICLE IV

 
EURODOLLAR RATE AND TAX PROVISIONS
 
Section 4.01  Eurodollar Rate Lending Unlawful.  xi)  If any Lender reasonably
determines (which determination shall, upon notice thereof to the Borrowers and
the Administrative Agent, be conclusive and binding on the Borrowers absent
manifest error) that the introduction of or any change in or in the
interpretation of any Law after the date hereof makes it unlawful, or any
central bank or other Governmental Authority asserts after the date hereof that
it is unlawful, for such Lender to make, maintain or fund any Loan as a
Eurodollar Loan, the obligations of such Lender to make, maintain or fund any
Loan as a Eurodollar Loan shall, upon such determination, forthwith be suspended
until such Lender shall notify the Administrative Agent that the circumstances
causing such suspension no longer exist, and all Eurodollar Loans of such Lender
shall automatically convert into Base Rate Loans at the end of the then-current
Interest Periods with respect thereto or sooner, if required by such Law or
assertion.  Upon any such conversion the Borrowers shall pay any accrued
interest on the amount so converted and, if such conversion occurs on a day
other than the last day of the then-current Interest Period for such affected
Eurodollar Loans, such Lender shall be entitled to make a request for, and the
Borrowers shall pay, compensation for breakage costs under Section 4.05 (Funding
Losses).
 
(b)           If such Lender notifies the Borrowers that the circumstances
giving rise to the suspension described in Section 4.01(a) no longer apply, the
Borrowers may elect (by delivering an Interest Period Notice) to convert the
principal amount of any such Base Rate Loan to a Eurodollar Loans in accordance
with this Agreement.
 
Section 4.02  Inability to Determine Eurodollar Rates.  xii)  In the event, and
on each occasion, that on or before the day that is three (3) Business Days
prior to the commencement of any Interest Period for any Eurodollar Loan, the
Administrative Agent shall have determined in good faith that (i) Dollar
deposits in the amount of such Loan and with an Interest Period similar to such
Interest Period are not generally available in the London interbank market, or
(ii) the rate at which such Dollar deposits are being offered will not
adequately and fairly reflect the cost to any Lender of making, maintaining or
funding the principal amount of such Loan during such Interest Period, or (iii)
adequate and reasonable means do not exist for ascertaining LIBOR, the
Administrative Agent shall forthwith notify the Borrowers and the Lenders of
such determination, whereupon each such Eurodollar Loan will automatically, on
the last day of the then-existing Interest Period for such Eurodollar Loan,
convert into a Base Rate Loan.  In the event of any such determination pursuant
to Section 4.02(a)(i) or (iii), any Funding Notice delivered by the Borrowers
shall be deemed to be a request for a Base Rate Loan until the Administrative
Agent determines that the circumstances giving rise to such notice no longer
exist.  In the event of any determination pursuant to Section 4.02(a)(ii), each
affected Lender shall, and is hereby authorized by the Borrowers to, fund its
portion of the Loans as a Base Rate Loan.  Each determination by the
Administrative Agent hereunder shall be conclusive absent manifest error.
 
(b)           Upon the Administrative Agent’s determination that the condition
that was the subject of a notice under Section 4.02(a) has ceased, the
Administrative Agent shall forthwith notify the Borrower and the Lenders of such
determination, whereupon the Borrowers may elect (by delivering an Interest
Period Notice) to convert any such Base Rate Loan to a Eurodollar Loan on the
last day of the then-current Monthly Period in accordance with this Agreement.
 
 
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Section 4.03  Increased Eurodollar Loan Costs.  If after the date hereof, the
adoption of any applicable Law or any change therein, or any change in the
interpretation or administration thereof by any Governmental Authority charged
with the interpretation or administration thereof, or compliance by any Lender
(or its Eurodollar Office) with any request or directive (whether or not having
the force of law) of any Governmental Authority would increase the cost (other
than with respect to Taxes, which are addressed in Section 4.07 (Taxes)) to such
Lender of, or result in any reduction in the amount of any sum receivable by
such Lender (whether of principal, interest or any other amount) in respect of,
making, maintaining or funding (or of its obligation to make, maintain or fund)
the Loans as Eurodollar Loans, then the Borrowers agree to pay to the
Administrative Agent for the account of such Lender the amount of any such
increase or reduction.  Such Lender shall promptly notify the Administrative
Agent and the Borrowers in writing of the occurrence of any such event, such
notice to state in reasonable detail the reasons (including the basis for
determination) therefor and the additional amount required to compensate fully
such Lender for such increased cost or reduced amount.  Such additional amounts
shall be payable by the Borrowers directly to such Lender within thirty (30)
days of delivery of such notice, and such notice shall be binding on the
Borrowers absent manifest error.
 
Section 4.04  Obligation to Mitigate.  xiii)  Each Lender agrees after it
becomes aware of the occurrence of an event that would entitle it to give notice
pursuant to Section 4.01 (Eurodollar Rate Lending Unlawful), 4.03 (Increased
Eurodollar Loan Costs), or 4.06 (Increased Capital Costs) or to receive
additional amounts pursuant to Section 4.07 (Taxes), such Lender shall use
reasonable efforts to make, fund or maintain its affected Loan through another
lending office if as a result thereof the increased costs would be avoided or
materially reduced or the illegality would thereby cease to exist and if, in the
opinion of such Lender, the making, funding or maintaining of such Loan through
such other lending office would not be disadvantageous to such Lender, contrary
to such Lender’s normal banking practices or violate any applicable Law.
 
(b)           No change by a Lender in its Domestic Office or Eurodollar Office
made for such Lender’s convenience shall result in any increased cost to the
Borrowers.
 
(c)           If any Lender demands compensation pursuant to Section 4.03
(Increased Eurodollar Loan Costs) or 4.06 (Increased Capital Costs) with respect
to any Eurodollar Loan, the Borrowers may, at any time upon at least three (3)
Business Day’s prior notice to such Lender through the Administrative Agent,
elect to convert such Loan into a Base Rate Loan.  Thereafter, unless and until
such Lender notifies the Borrowers that the circumstances giving rise to such
notice no longer apply, all such Eurodollar Loans by such Lender shall bear
interest as Base Rate Loans.  If such Lender notifies the Borrowers that the
circumstances giving rise to such notice no longer apply, the Borrowers may
elect (by delivering an Interest Period Notice) to convert the principal amount
of each such Base Rate Loan to a Eurodollar Loans in accordance with this
Agreement.
 
Section 4.05  Funding Losses.  In the event that any Lender incurs any loss or
expense (including any loss or expense incurred by reason of the liquidation or
redeployment of deposits or other funds acquired by such Lender to make,
continue or maintain any portion of the principal amount of any Loan as a
Eurodollar Loan, and any customary administrative fees charged by such Lender in
connection with the foregoing, but excluding any lost profits) as a result of
(a) any conversion or repayment or prepayment of the principal amount of any
Loans on a date other than the scheduled last day of the Interest Period
applicable thereto, whether pursuant to Section 3.07 (Optional Prepayment), 3.08
(Mandatory Prepayment), 4.01(a) (Eurodollar Rate Lending Unlawful) or otherwise
or (b) the Borrowers failing to make a Funding in accordance with any Funding
Notice; then, upon the written notice (including the basis for determination) of
such Lender to the Borrowers (with a copy to the Administrative Agent), the
Borrowers shall, within thirty (30) days of receipt thereof, pay to the
Administrative Agent for the account of such Lender such amount as will (in the
reasonable determination of such Lender) reimburse such Lender for such loss or
expense.  Such written notice shall be binding on the Borrowers absent manifest
error.
 
 
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Section 4.06  Increased Capital Costs.  If after the date hereof any change in,
or the introduction, adoption, effectiveness, interpretation, reinterpretation
or phase-in of, any applicable Law or guideline, or request (whether or not
having the force of law) of any Governmental Authority affects the amount of
capital required to be maintained by any Lender, and such Lender reasonably
determines that the rate of return on its capital as a consequence of its Loan
is reduced to a level below that which such Lender could have achieved but for
the occurrence of any such circumstance then, in any such case upon notice from
time to time by such Lender to the Borrowers, the Borrowers shall pay within
thirty (30) days after such demand directly to such Lender additional amounts
sufficient to compensate such Lender for such reduction in rate of return.  A
statement of such Lender as to any such additional amount or amounts (including
the basis for determination) shall be binding on the Borrowers absent manifest
error.
 
Section 4.07  Taxes.
 
(a)           Payments Free of Taxes.  Any and all payments by or on account of
any Obligations shall be made free and clear of, and without deduction for, any
Taxes, unless required by Law; provided that if any Borrower shall be required
to deduct any Indemnified Taxes from any such payment, then (i) the sum payable
shall be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
4.07) the Agent or Lender (as the case may be) receives an amount equal to the
sum it would have received had no such deductions been made, (ii) the Borrowers
shall make such deductions and (iii) the Borrowers shall pay the full amount
deducted to the relevant Governmental Authority in accordance with applicable
Law.
 
(b)           Payment of Other Taxes by the Borrowers.  In addition, the
Borrowers shall timely pay any Indemnified Taxes arising from any payment made
under any Financing Document or from the execution, delivery or enforcement of,
or otherwise with respect to, any Financing Document and not collected by
withholding at the source as contemplated by Section 4.07(a) to the relevant
Governmental Authority in accordance with applicable Law.
 
(c)           Indemnification by the Borrowers.  The Borrowers shall indemnify
each Agent and each Lender, within thirty (30) days after written demand
therefor, for the full amount of any Indemnified Taxes (including Indemnified
Taxes imposed or asserted on or attributable to amounts payable under this
Section 4.07) paid by such Agent or Lender, as the case may be, and any
penalties, interest, additions to tax and reasonable expenses arising therefrom
or with respect thereto (other than those resulting from the gross negligence or
willful misconduct of such Agent or Lender), whether or not such Indemnified
Taxes were correctly or legally imposed or asserted by the relevant Governmental
Authority.  A certificate as to the amount of such payment or liability
(including the basis of determination) delivered to the Borrowers by a Lender or
Agent, as the case may be, shall be conclusive absent manifest error.
 
 
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(d)           Evidence of Payments.  As soon as reasonably practicable after any
payment of Indemnified Taxes by any Borrower to a Governmental Authority, such
Borrower shall deliver to the Administrative Agent the original or a certified
copy of a receipt issued by such Governmental Authority evidencing such payment,
a copy of the return reporting such payment or other evidence of such payment
reasonably satisfactory to the Administrative Agent.
 
(e)           Foreign Lenders.  Each Lender (including any Participant and any
other Person to which any Lender transfers its interests in this Agreement as
provided under Section 11.03 (Assignments)) that is not a United States Person
(a “Non-U.S. Lender”) shall deliver to the Borrowers and the Administrative
Agent two (2) copies of U.S. Internal Revenue Service Form W-8ECI, Form W-8BEN
or Form W 8IMY (with supporting documentation), or any subsequent versions
thereof or successors thereto, properly completed and duly executed by such
Non-U.S. Lender claiming complete exemption from, or a reduced rate of, U.S.
federal withholding tax on all payments of interest by the Borrowers under the
Financing Documents, together with, in the case of a Non-U.S. Lender that is
relying on an exemption pursuant to Section 871(h) or 881(c) of the Code, a
statement substantially in the form of Exhibit 4.07 certifying that such Lender
is not a bank described in Section 881(c)(3)(A) of the Code.  Such forms shall
be delivered by each Non-U.S. Lender on or before the date it becomes a party to
this Agreement.  In addition, each Non-U.S. Lender shall deliver such forms
promptly upon the obsolescence or invalidity of any form previously delivered by
such Non-U.S. Lender.  Each Non-U.S. Lender shall promptly notify the Borrowers
and the Administrative Agent at any time it determines that it is no longer in a
position to provide any previously delivered certificate to the Borrowers (or
any other form of certification adopted by U.S. taxing authorities for such
purpose).  The Borrowers shall not be obligated to pay any additional amounts in
respect of U.S. federal income taxes pursuant to this Section 4.07 (or make an
indemnification payment pursuant to this Section 4.07) to any Lender (or any
Participant or other Person to which any Lender transfers its interests in this
Agreement as provided under Section 11.03 (Assignments)) if the obligation to
pay such additional amounts (or such indemnification) would not have arisen but
for a failure by such Lender to comply with this Section 4.07(e).
 
ARTICLE V

 
REPRESENTATIONS AND WARRANTIES
 
In order to induce each Agent, each Lender and each other party hereto (other
than the Borrowers) to enter into this Agreement and to induce each Lender to
make the Loans hereunder, each Borrower represents and warrants to each Agent
and each Lender as set forth in this Article V on the date hereof, on the
Closing Date, on the date of each Funding Notice and on each Funding Date (in
each case, except to the extent such representations and warranties expressly
relate to a future date or as otherwise provided in Article VI (Conditions
Precedent)).
 
 
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Section 5.01  Organization; Power and Compliance with Law.  Each Borrower (a) is
a duly formed, validly existing and in good standing under the laws of its
jurisdiction of organization, (b) is duly qualified to do business as is now
being conducted and as is proposed to be conducted by such Borrower and is in
good standing in each jurisdiction where the nature of its business requires
such qualification (other than any such failure to be so qualified or in good
standing that could not reasonably be expected to have a Material Adverse
Effect) and (c) subject to the entry of the Orders, has all requisite entity
power and authority required as of the date this representation is made or
deemed repeated to enter into and perform its obligations under each Transaction
Document to which it is a party and to conduct its business as currently
conducted by it.
 
Section 5.02  Due Authorization; Non-Contravention.  Subject to the entry of the
Orders, the execution, delivery and performance by each Borrower of each
Transaction Document to which it is a party are within such Borrower’s
organizational powers, have been duly authorized by all necessary action, and do
not:
 
(a)           contravene such Borrower’s Organic Documents;
 
(b)           contravene in any material respect any Law binding on or affecting
such Borrower;
 
(c)           contravene any Contractual Obligation binding on or affecting such
Borrower;
 
(d)           require any consent or approval under such Borrower’s Organic
Documents that has not been obtained;
 
(e)           require any consent or approval under any Contractual Obligations
binding on or affecting such Borrower other than any approvals or consents which
have been obtained; or
 
(f)           result in, or require the creation or imposition of, any Lien on
any of such Borrower’s properties other than Permitted Liens.
 
Section 5.03  Governmental Approvals.
 
(a)           Subject to the entry of the Orders, all material Governmental
Approvals that are required to be obtained by any Borrower in connection with
(i) the due execution, delivery and performance by such Borrower of the
Financing Documents to which it is a party and (ii) the grant by the Debtors of
the DIP Liens and the validity, perfection and enforceability thereof have been
obtained, are in full force and effect, are properly in the name of the
appropriate Person, and are final and Non-Appealable.
 
(b)           All Necessary Project Approvals are in full force and effect, are
properly in the name of the appropriate Person, and are final and Non-Appealable
except as a result of the Cold Shutdown of the Madera Plant, the Magic Valley
Plant, the Stockton Plant and, after the Boardman CS Date, the Boardman
Plant.  There is no action, suit, investigation or proceeding pending or to the
knowledge of each Borrower, threatened that could reasonably be expected to
result in the modification, rescission, termination or suspension of any
Necessary Project Approval that could reasonably be expected to have a Material
Adverse Effect.
 
(c)           The information set forth in each application (including any
updates or supplements thereto) submitted by or on behalf of any Borrower in
connection with each Necessary Project Approval was accurate and complete in all
material respects at the time of submission and continues to be accurate in all
material respects and complete in all respects to the extent required for the
continued effectiveness of such Necessary Project Approval.
 
 
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Section 5.04  Investment Company Act.  No Borrower is, and after giving effect
to the Loans and the application of the proceeds of the Loans as described
herein no Borrower will be, an “investment company” or a company “controlled” by
an “investment company,” within the meaning of the Investment Company Act of
1940, as amended.
 
Section 5.05  Validity of Financing Documents.  Each Financing Document to which
any Borrower is a party has been duly authorized, validly executed and
delivered, and constitutes the legal, valid and binding obligations of such
Borrower enforceable in accordance with its respective terms.
 
Section 5.06  Financial Information.  Each of the financial statements of
Pacific Ethanol delivered pursuant to Section 6.01(g) (Conditions to Closing –
Financial Statements) and Sections 7.03(a) and (b) (Reporting Requirements) has
been prepared in accordance with GAAP, and fairly presents in all material
respects the consolidated financial condition of the Borrowers as at the dates
thereof and the results of their operations for the period then ended (subject,
in the case of unaudited financial statements, to changes resulting from audit
and normal year-end adjustments and the absence of footnotes).
 
Section 5.07  Project Compliance.  xiv)  Except as set forth on Schedule 5.07,
Each Plant conforms in all material respects to and complies in material
respects with all federal, state and local zoning, environmental, land use and
other applicable Laws and the requirements of all Necessary Project
Approvals.  Each Plant is and will continue to be owned and maintained in
material compliance  with all applicable Laws and the requirements of all
Necessary Project Approvals.
 
(b)           Each Plant is and will continue to be owned and maintained in
compliance in all material respects with all of the Borrowers’ Contractual
Obligations (including the Project Documents applicable to such Plant, taking
into account any cure or grace periods thereunder) (except, (i) in the case of
Contractual Obligations other than Project Documents, to the extent such failure
to comply could not reasonably be expected to result in a Material Adverse
Effect with respect to such Plant or Borrower and (ii) the cessation of
operations and Cold Shutdown of the Madera Plant, the Magic Valley Plant, the
Stockton Plant and, after the Boardman CS Date, the Boardman Plant).
 
Section 5.08  Litigation.  xv)   Except as set forth on Schedule 5.08, no
action, suit, proceeding or investigation has been instituted and not stayed
pursuant to the Bankruptcy Code or threatened against any Borrower (including in
connection with any Necessary Project Approval) that, individually or in the
aggregate, has had or could reasonably be expected to have a Material Adverse
Effect on any Plant or any Borrower;
 
(b)           Except as set forth on Schedule 5.08, no action, suit, proceeding
or investigation has been instituted and not stayed pursuant to the Bankruptcy
Code or threatened against any Major Project Party that is an Affiliate of a
Borrower and that is party to any Project Document with Pacific Holding or that
relates to any Borrower or Plant that, individually or in the aggregate, has had
or could reasonably be expected to have a Material Adverse Effect; and
 
 
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(c)           to the knowledge of each Borrower, no action, suit, proceeding or
investigation has been instituted and not stayed pursuant to the Bankruptcy Code
or threatened against any Major Project Party that is not an Affiliate of a
Borrower and that is party to any Project Document with Pacific Holding or that
relates to any Borrower or Plant that, individually or in the aggregate, has had
or could reasonably be expected to have a Material Adverse Effect.
 
Section 5.09  Sole Purpose Nature; Business.  None of the Borrowers has
conducted nor is conducting any business or activities other than businesses and
activities relating to the ownership, development, testing, financing,
construction, operation and maintenance of the Project as contemplated by the
Transaction Documents.
 
Section 5.10  Contracts.
 
(a)           All contracts, agreements, instruments, letters, understandings,
or other documentation to which any Borrower is a party or by which it or any of
its properties is bound as of the date hereof (other than the Financing
Documents), including the Project Documents (including all documents amending,
supplementing, interpreting or otherwise modifying or clarifying such agreements
and instruments) are listed in Schedule 5.10.
 
(b)           All Necessary Project Contracts are in full force and effect
except such Necessary Projects Contracts the invalidity of which could not
reasonably be expected to have a Material Adverse Effect.
 
(c)           As of any date (after the date hereof) on which this
representation is made or deemed repeated, there are no material contracts,
agreements, instruments, or documents between any Borrower and any other Person
relating to any Borrower or the Project other than (i) the Transaction
Documents, (ii) the agreements listed in Schedule 5.10, and (iii) any other
agreements permitted by this Agreement.
 
Section 5.11  Collateral.  xvi)  The Collateral includes all of the Equity
Interests owned by and all of the tangible and intangible assets of each Debtor
(except as otherwise provided in this Agreement).
 
(b)           The respective Liens and security interests (i) granted to the
Collateral Agent (for the benefit of the Senior Secured Parties) pursuant to the
Bankruptcy Code constitute, as to personal property included in the Collateral,
a valid first-priority security interest in such personal property and (ii) as
to the Mortgaged Property, constitute a valid first-priority Lien of record in
the Mortgaged Property, in each case subject only to Permitted Liens.
 
 
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(c)           The security interest granted to the Collateral Agent (for the
benefit of the Senior Secured Parties) pursuant hereto will be perfected upon
entry of the Interim Order without any requirement of any further action by the
Collateral Agent.
 
Section 5.12  Ownership of Properties.  xvii)  Madera has a good and valid fee
ownership interest in the Site for the Madera Plant.  Boardman has a good and
valid leasehold interest or valid fee ownership in the Site for the Boardman
Plant.  Burley has a good and valid fee ownership interest in the Site for the
Burley Plant.  Stockton has a good and valid leasehold interest or valid fee
ownership in the Site for the Stockton Plant.
 
(b)           The Borrowers have a good and valid ownership interest, leasehold
interest, license interest or other right of use in all their property and
assets (tangible and intangible) included in the Collateral except for any such
rights the absence of which in the aggregate would not be material.  Such
ownership interests, leasehold interest, license interest or other rights of
use  are and will be sufficient to permit operation of the Plants substantially
in accordance with the Project Documents applicable to each such Plant.  None of
said properties or assets are subject to any Liens or, to the knowledge of each
Borrower, any other claims of any Person, including any easements, rights of way
or similar agreements affecting the use or occupancy of the Project, any Plant
or any Site, other than Permitted Liens and, with respect to claims, to the
extent permitted by Section 5.08 (Litigation).
 
(c)           All Equity Interests in each of Madera, Boardman, Stockton and
Burley are owned by Pacific Holding.
 
(d)           All Equity Interests in Pacific Holding are owned by PEC.
 
(e)           The properties and assets of each of the Borrowers are separately
identifiable and are not commingled with the properties and assets of any other
Person and are readily distinguishable from one another.
 
(f)           None of Pacific Holding or any other Borrower has any leasehold
interest in, and none of the Borrowers is lessee of, any real property other
than the Leased Premises or other leasehold interests acquired by the Borrowers
in accordance with the Pre-Petition Credit Agreement.
 
Section 5.13  Taxes.  xviii)  Each Borrower has (i) filed all Tax Returns
required by law to have been filed by it and (ii) has paid all Taxes thereby
shown to be owing, as and when the same are due and payable, other than in the
case of this Section 5.13(a)(ii), (A) Taxes that are subject to a Contest or (B)
the nonpayment of immaterial Taxes in an aggregate amount not in excess of
twenty-five thousand Dollars ($25,000) at any one time outstanding (taking into
account any interest and penalties that could accrue or be applicable to such
past-due Taxes), and provided that such Taxes are no more than forty-five (45)
days past due.
 
(b)           No Borrower is or will be taxable as a corporation for federal,
state or local tax purposes.
 
(c)           No Borrower is a party to any tax sharing agreement with any
Person.
 
 
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Section 5.14  Patents, Trademarks, Etc.  Pacific Holding and each other Borrower
has obtained and holds in full force and effect all material patents,
trademarks, copyrights and other such material rights or adequate licenses
therein, free from unduly burdensome restrictions, that are necessary for the
ownership, operation and maintenance of the Project.
 
Section 5.15  ERISA Plans.  None of the Borrowers nor any ERISA Affiliate has
(or within the five year period immediately preceding the date hereof had) any
liability in respect of any Plan or Multiemployer Plan.  None of the Borrowers
has any contingent liability with respect to any post-retirement benefit under
any “welfare plan” (as defined in Section 3(1) of ERISA), other than liability
for continuation coverage under Part 6 of Title I of ERISA.
 
Section 5.16  Property Rights, Utilities, Supplies Etc.  xix)  All material
property interests, utility services, means of transportation, facilities and
other materials necessary for the use and operation of the Project (including,
as necessary, gas, roads, rail transport, electrical, water and sewage services
and facilities) are available to each Plant.
 
(b)           There are no material materials, supplies or equipment necessary
for operation or maintenance of each Plant that are not available at the
relevant Site on commercially reasonable terms consistent with the DIP Budget.
 
Section 5.17  No Defaults.  xx)  No Event of Default has occurred and is
continuing.
 
(b)           None of Pacific Holding or any other Borrower is in any breach of,
or in any default under, any of such Borrower’s Contractual Obligations (other
than a breach resulting from the Cases or the Cold Shutdown of the Madera Plant,
the Magic Valley Plant, the Stockton Plant and, after the Boardman CS Date, the
Boardman Plant) that has had or could reasonably be expected to have a Material
Adverse Effect with respect to such Borrower, in each case with respect to which
enforcement of remedies is not stayed by means of the Chapter 11 Cases.
 
Section 5.18  Environmental Warranties.
 
(a)           (i) Except as set forth on Schedule 5.18(a)(i), each Borrower is
in compliance in all material respects with all applicable Environmental Laws,
(ii) each Borrower has all Environmental Approvals required to operate its
business as presently conducted or as reasonably anticipated to be conducted and
is in compliance in all material respects with the terms and conditions thereof,
(iii) no Borrower nor any of its Environmental Affiliates has received any
written communication from a Governmental Authority that alleges that any
Borrower or any Environmental Affiliate is not in compliance in all material
respects with all Environmental Laws and Environmental Approvals, and (iv) there
are no circumstances that may prevent or interfere in the future with any
Borrower’s compliance in all material respects with all applicable Environmental
Laws and Environmental Approvals.
 
(b)           There is no Environmental Claim pending, or to the knowledge of
each Borrower, threatened  against any Borrower.  No Environmental Affiliate has
taken any action or violated any Environmental Law that to the knowledge of a
Borrower could reasonably be expected to result in an Environmental Claim.
 
 
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(c)           There are no present or past actions, activities, circumstances,
conditions, events or incidents, including the release, emission, discharge,
presence or disposal of any Material of Environmental Concern, that could
reasonably be expected to form the basis of any Environmental Claim against any
Borrower or any Environmental Affiliate.
 
(d)           Without in any way limiting the generality of the foregoing, (i)
there are no on-site or off-site locations in which any Borrower or, to the
knowledge of a Borrower, any Environmental Affiliate has stored, disposed or
arranged for the disposal of Materials of Environmental Concern that could
reasonably be expected to form the basis of an Environmental Claim, (ii) no
Borrower knows of any underground storage tanks located or to be located on
property owned or leased by any Borrower except as identified on
Schedule 5.18(d)(ii) (as the same may be updated in writing by the Borrower
Agent with the written approval of the Administrative Agent), (iii) there is no
asbestos or lead paint contained in or forming part of any building, building
component, structure or office space owned or leased by any Borrower except in
such form, condition and quantity as could not reasonably be expected to result
in an Environmental Claim, and (iv) no polychlorinated biphenyls (PCBs) are or
will be used or stored at any property owned or leased by any Borrower, except
in such form, condition and quantity as could not reasonably be expected to
result in an Environmental Claim.
 
(e)           No Borrower has received any letter or request for information
under Section 104 of the CERCLA, or comparable state laws, and to the knowledge
of each Borrower, none of the operations of each Borrower is the subject of any
investigation by a Governmental Authority evaluating whether any remedial action
is needed to respond to a release or threatened release of any Material of
Environmental Concern at any Plant or Site or at any other location, including
any location to which any Borrower has transported, or arranged for the
transportation of, any Material of Environmental Concern with respect to the
Project.
 
Section 5.19  Regulations T, U and X.  None of the Borrowers is engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock, and no proceeds of any Loan will be used for any purpose that violates,
or would be inconsistent with, F.R.S. Board Regulation T, U or X.  Terms for
which meanings are provided in F.R.S. Board Regulation T, U or X or any
regulations substituted therefore, as from time to time in effect, are used in
this Section 5.22 with such meanings.
 
Section 5.20  Accuracy of Information.  xxi)  All factual information heretofore
or contemporaneously furnished by or on behalf of any Borrower in this
Agreement, in any other Transaction Document or otherwise in writing to any
Senior Secured Party, any Consultant, or counsel for purposes of or in
connection with this Agreement and the other Financing Documents or any
transaction contemplated hereby or thereby (other than projections, budgets and
other “forward-looking” information all of which has been prepared on a
reasonable basis and in good faith) was, as of the date furnished, when taken as
a whole (and after giving effect to any supplement of such information) (i) true
and accurate in every material respect and (ii) not incomplete by omitting to
state any material fact necessary to make such information not misleading in any
material respect.
 
(b)           The assumptions constituting the basis on which the Borrowers
prepared the DIP Budget that is in effect on each date this representation is
made or deemed repeated and the numbers set forth therein were developed and
consistently utilized in good faith and are reasonable and represent each
Borrower’s best judgment as of the date prepared as to the matters contained
therein, based on all information known to the Borrowers.
 
 
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(c)           The Borrowers reasonably believe that the use, ownership,
operation and maintenance of the Project are technically feasible and, except
for factors effecting the ethanol industry in general and not relating
specifically to the Project, economically feasible.
 
Section 5.21  Indebtedness.  The Obligations are, after giving effect to the
Financing Documents and the transactions contemplated thereby, the only
outstanding Indebtedness of the Borrowers other than Permitted
Indebtedness.  The Obligations have the ranking given to them in Section 2.09
(Super-Priority Nature of Objectives).
 
Section 5.22  Required LLC Provisions.  Each limited liability company interest
of each Borrower that is a limited liability company is a security governed by
Article 8 of the Uniform Commercial Code and is evidenced by a certificate.  The
certificated interests are in registered form within the meaning of Article 8 of
the Uniform Commercial Code
 
Section 5.23  Subsidiaries.  Madera, Boardman, Stockton and Burley have no
Subsidiaries.  Pacific Holding has no Subsidiaries other than Madera, Boardman,
Stockton and Burley.
 
Section 5.24  Foreign Assets Control Regulations, Etc.  xxii)  The use of the
proceeds of the Loan by the Borrowers will not violate the Trading with the
Enemy Act, as amended, or any of the foreign assets control regulations of the
United States Treasury Department (31 C.F.R., Subtitle B, Chapter V, as amended)
or any enabling legislation or executive order relating thereto.
 
(b)           No Borrower:
 
 
(i)
is or will become a Person or entity described by section 1 of Executive Order
13224 of September 24, 2001 Blocking Property and Prohibiting Transactions With
Persons Who Commit, Threaten to Commit, or Support Terrorism (12 C.F.R. 595),
and no Borrower engages in dealings or transactions with any such Persons or
entities; or

 
 
(ii)
is in violation of the Patriot Act.

 
Section 5.25  Employment Matters.  None of the Borrowers has or has had any
employee or former employees.
 
 
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Section 5.26  Legal Name and Place of Business.  xxiii)  The exact legal name
and jurisdiction of formation of each Borrower is as set forth below, and no
Borrower has had any other legal names in the previous five (5) years except as
set forth on Schedule 5.26:
 
 
(i)
Pacific Holding:  Pacific Ethanol Holding Co. LLC, a limited liability company
organized and existing under the laws of the State of Delaware;

 
 
(ii)
Madera:  Pacific Ethanol Madera LLC, a limited liability company organized and
existing under the laws of the State of Delaware;

 
 
(iii)
Boardman:  Pacific Ethanol Columbia, LLC, a limited liability company organized
and existing under the laws of the State of Delaware;

 
 
(iv)
Stockton:  Pacific Ethanol Stockton, LLC, a limited liability company organized
and existing under the laws of the State of Delaware; and

 
 
(v)
Burley:  Pacific Ethanol Magic Valley, LLC, a limited liability company
organized and existing under the laws of the State of Delaware.

 
(b)           The sole place of business and chief executive office of each
Borrower is as set forth on Schedule 5.26.
 
The information set forth in Sections 5.26(a) and (b) and on Schedule 5.26 may
be changed from time to time by the Borrowers upon thirty (30) days’ prior
written notice to the Administrative Agent and the Collateral Agent, subject in
each case to the obligations of the Borrowers hereunder to provide the
Collateral Agent with a perfected first-priority Lien on the Collateral (subject
to Permitted Liens).
 
Section 5.27  No Brokers.  No Borrower has any obligation to pay any finder’s,
advisory, brokers or investment banking fee, except for the fees payable
pursuant to Section 3.11 (Fees) and those identified on Schedule 5.27.
 
Section 5.28  Insurance.  All insurance required to be obtained and maintained
pursuant to the Transaction Documents by Pacific Holding and each other Borrower
is in full force and effect as of each date this representation is made or
deemed repeated and complies with the insurance requirements set forth on
Schedule 7.01(h).  All premiums then due and payable on all such insurance have
been paid.  To the knowledge of each Borrower, all insurance required to be
obtained and maintained by any Major Project Party, to protect, directly or
indirectly, against loss or liability to any Borrower, any Plant or any Senior
Secured Party, as of the date this representation is made or deemed repeated,
pursuant to any Project Document has been obtained, is in full force and effect
and complies with the insurance requirements set forth on Schedule 7.01(h)
(where applicable) and is otherwise in all material respects in accordance with
such Project Document.
 
Section 5.29  Accounts.  The Project Accounts exist at the Account Bank in
accordance with the terms of the Pre-Petition Credit Agreement.  No Borrower
has, nor is the beneficiary of, any bank account other than the Project Accounts
and any Local Account set forth on Schedule 5.29 with respect to which a Blocked
Account Agreement has been duly executed and delivered.
 
 
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Section 5.30  SEC Compliance.  Pacific Ethanol has made all filings required to
be made by Pacific Ethanol pursuant to the Securities Exchange Act of 1934 and
all factual information heretofore or contemporaneously furnished by Pacific
Ethanol in any such filing (other than projections, budgets and other
“forward-looking” information all of which has been prepared on a reasonable
basis and in good faith by Pacific Ethanol) is, when taken as a whole (and after
giving effect to any supplement of such information) and as of the date
furnished, true and accurate in every material respect and such information is
not, when taken as a whole (and after giving effect to any supplement of such
information) as of the date furnished, incomplete by omitting to state any
material fact necessary to make such information not misleading in any material
respect.
 
Section 5.31  Reorganization Matters.
 
(a)           The Chapter 11 Cases were commenced on the Petition Date in
accordance with applicable law and proper notice thereof and the proper notice
for (i) the motion seeking approval of the Financing Documents and the Interim
Order and Final Order, (ii) the hearing for the approval of the Interim Order,
and (iii) the hearing for the approval of the Final Order.
 
(b)           After the entry of the Interim Order, and pursuant to and solely
to the extent permitted in the Interim Order and the Final Order, the
Obligations will constitute allowed administrative expense claims in the
Chapter 11 Cases having priority over all administrative expense claims and
unsecured claims against the Borrowers now existing or hereafter arising, of any
kind whatsoever, including, without limitation, all administrative expense
claims of the kind specified in Sections 105, 326, 330, 331, 503(b), 506(c),
507(a), 507(b), 546(c), 726, 1113, 1114 or any other provision of the Bankruptcy
Code or otherwise, as provided under Section 364(c)(l) of the Bankruptcy Code,
subject, as to priority only, to the Carve-Out.
 
(c)           After the entry of the Interim Order and pursuant to and to the
extent provided in the Interim Order and the Final Order, the Obligations will
be secured by a valid and perfected Lien having the priority described in the
Orders.
 
(d)           The Interim Order (with respect to the period prior to entry of
the Final Order) or the Final Order (with respect to the period on and after
entry of the Final Order), as the case may be, is in full force and effect and
has not been modified or amended without the consent of the Administrative Agent
and the Lenders, or reversed or stayed.
 
 
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ARTICLE VI

 
CONDITIONS PRECEDENT
 
Section 6.01  Conditions to Closing.  The occurrence of the Closing Date is
subject to the satisfaction of each of the following conditions precedent.
 
(a)           Delivery of Financing Documents and Orders.  The Administrative
Agent shall have received each of the following fully executed documents, each
of which shall be originals, portable document format (“pdf”) or facsimiles
(followed promptly by originals), duly executed and delivered by each party
thereto and each in form and substance satisfactory to each Lender:
 
 
(i)
this Agreement;

 
 
(ii)
the New Mortgages;

 
 
(iii)
the PEC Pledge Agreement;

 
 
(iv)
the Asset Management Agreement;

 
 
(v)
the AMA Consent;

 
 
(vi)
the original Revolving Notes, duly executed and delivered by an Authorized
Officer of each Borrower in favor of each requesting Lender;

 
 
(vii)
the original Roll Up Notes, duly executed and delivered by an Authorized Officer
of each Borrower in favor of each requesting Lender;

 
 
(viii)
the Interim Order; and

 
 
(ix)
a document setting forth a cash management system for the Debtors consistent
with the existing cash management system of the Debtors and subject to the
existing account control agreements to which the Debtors are party.

 
(b)           Delivery of Other Documents.  The Administrative Agent shall have
received true, correct and complete copies of each agreement identified on
Schedule 5.10  reasonably requested by the Administrative Agent.
 
(c)           Officer’s Certificates.  The Administrative Agent shall have
received a duly executed certificate of an Authorized Officer of the Borrower
Agent, dated as of the Closing Date, upon which the Administrative Agent and
each Lender may conclusively rely certifying that (A) all conditions set forth
in this Section 6.01 have been satisfied on and as of the Closing Date and (B)
all representations and warranties made by any Borrower in this Agreement and
each other Financing Document to which any Borrower is a party are true and
correct in all material respects on and as of the Closing Date
 
 
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(d)           Resolutions, Incumbency, Organic Documents.  The Administrative
Agent shall have received from each Borrower a certificate of an Authorized
Officer dated as of the Closing Date, upon which the Administrative Agent and
each Lender may conclusively rely, as to:
 
 
(i)
reasonably satisfactory resolutions of its members, managers or directors, as
the case may be, then in full force and effect authorizing the execution,
delivery and performance of each Financing Document to which it is party and the
consummation of the transactions contemplated therein (including the appointment
of the Borrower Agent);

 
 
(ii)
the incumbency and signatures of those of its officers and representatives duly
authorized to execute and otherwise act with respect to each Financing Document
to which it is party; and

 
 
(iii)
such Person’s Organic Documents which shall be in form and substance reasonably
satisfactory to the Administrative Agent and in every case certifying that (A)
such documents are in full force and effect and no term or condition thereof has
been amended from the form thereof delivered to the Administrative Agent and (B)
no material breach, material default or material violation thereunder has
occurred and is continuing.

 
(e)           Authority to Conduct Business.  The Administrative Agent shall
have received satisfactory evidence, including certificates of good standing
from the Secretaries of State of each relevant jurisdiction, dated no more than
eight (8) days (or such other time period reasonably acceptable to the
Administrative Agent) prior to the Closing Date, that each Borrower is duly
authorized to carry on its business, and is duly formed, validly existing and in
good standing in each jurisdiction (including, in the case of Madera and
Stockton, the State of California, in the case of Boardman, the State of Oregon,
and in the case of Burley, the State of Idaho) in which it is required to be so
authorized.
 
(f)           Lien Search; Protection of Security.  The Administrative Agent
shall have received satisfactory copies or evidence, as the case may be, of the
following actions in connection with the perfection of the DIP Liens:
 
 
(i)
completed requests for information or lien search reports, dated no more than
five (5) Business Days before the date of such Funding or such longer period
satisfactory to the Administrative Agent, listing all effective UCC financing
statements, fixture filings or other filings evidencing a security interest
filed in such jurisdictions reasonably requested by the Administrative Agent
that name any Borrower as a debtor, together with copies of each such UCC
financing statement, fixture filing or other filings; and

 
 
(ii)
acknowledgment copies or stamped receipt copies or confirmation of submission
for filing of proper UCC financing statements, fixture filings and other filings
and recordations, each in form and substance satisfactory to the Administrative
Agent and the Collateral Agent, duly filed in all jurisdictions that the
Administrative Agent and the Collateral Agent may deem necessary, or that are
reasonably requested by the Collateral Agent or the Administrative Agent, in
order to perfect or protect the DIP Liens created hereunder and pursuant to the
Orders and the priority thereof.

 
 
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(g)           Financial Statements.  The Administrative Agent shall have
received accurate and complete copies of the audited annual financial statements
of Pacific Ethanol for the 2008 Fiscal Year.  Such financial statements shall be
on a consolidated basis.
 
(h)           Third Party Approvals.  The Administrative Agent shall have
received reasonably satisfactory documentation of any approval by any Person
required in connection with any transaction contemplated by this Agreement or
any other Financing Document that the Administrative Agent has reasonably
requested in connection herewith.
 
(i)            Insurance.  The Administrative Agent shall have received
reasonably satisfactory evidence that the insurance requirements set forth on
Schedule 7.01(h) with respect to the Borrowers and the Plants have been
satisfied, including binders or certificates evidencing the commitment of
insurers to provide each insurance policy required by Schedule 7.01(h), evidence
of the payment of all premiums then due and owing in respect of such insurance
policies and a certificate of the Borrowers’ insurance broker (or insurance
carrier) certifying that all such insurance policies are in full force and
effect.
 
(j)            Bank Regulatory Requirements.  The Administrative Agent shall
have received all documentation and other information required by bank
regulatory authorities under applicable “know your customer” and
anti-money-laundering rules and regulations, including the Patriot Act.
 
(k)           Closing Fees; Expenses.  The Administrative Agent shall have
received for its own account, or for the account of each Lender and Agent
entitled thereto, all fees due and payable pursuant to Section 3.11 (Fees) and
all reasonable costs and expenses (including reasonable and documented legal
fees and expenses) for which invoices have been presented, in each case,
required to be paid on or before the Closing Date.  The Pre-Petition
Administrative Agent shall have received all fees due and payable to it pursuant
to the Pre-Petition Credit Agreement and all reasonable costs and expenses
(including reasonable and documented legal fees and expenses) for which invoices
have been presented, in each case, required to be paid on or before the Closing
Date.
 
(l)            Certain Orders.   The entry of all “first day orders,” including
all employee-related orders and critical vendor orders entered at or about the
time of the commencements of the Chapter 11 Cases each in form and substance
reasonably satisfactory to the Administrative Agent and each Lender.
 
(m)           Rating.  The Borrowers shall have obtained a rating of the Loans
from S&P or Moody’s.
 
(n)           Other Information.  The Lenders shall have received the Initial
DIP Budget and all other information reasonably requested from the Borrowers.
 
 
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Section 6.02  Conditions to All Fundings.  The obligation of each Lender to make
available each Funding of its Revolving Loans shall be subject to the
fulfillment of the following conditions precedent.
 
(a)           Funding Notice.  The Administrative Agent shall have received a
duly executed Funding Notice as required by and in accordance with Section 2.03
(Notice of Fundings), which shall certify that:
 
 
(i)
the Borrowers are in compliance with all conditions set forth in this Section
6.02, and each other applicable Section of this Article VI, on and as of the
proposed Funding Date, before and after giving effect to such Funding and to the
application of the proceeds therefrom (provided that, to the extent reasonably
acceptable to the Administrative Agent, such compliance may be demonstrated by
delivery of evidence of satisfaction of certain conditions to the relevant
Funding, as identified in such Funding Notice, to the Administrative Agent to be
held in escrow until the Funding Date);

 
 
(ii)
all representations and warranties made by each Borrower in this Agreement and
each of the Financing Documents to which it is a party are true and correct in
all material respects on and as of such Funding Date (except with respect to
representations and warranties that expressly refer to an earlier date), before
and after giving effect to such Funding and to the application of the proceeds
therefrom; and

 
 
(iii)
no Default or Event of Default has occurred and is continuing or would result
from such Borrowing.

 
(b)           Certain Orders.
 
 
(i)
The Interim Order shall be entered and in full force and effect and shall not
have been appealed, stayed, reversed, vacated or otherwise modified without the
consent of the Administrative Agent and the Lenders; or

 
 
(ii)
If (x) the date of such requested Funding is more than 45 days after the Closing
Date or (y) the amount of such requested Funding, together with the outstanding
principal amount of the Revolving Loans, shall exceed the maximum amount
authorized pursuant to the Interim Order, the Final Order shall be entered and
in full force and effect and shall not have been appealed, stayed, reversed,
vacated or otherwise modified without the consent of the Administrative Agent
and the Lenders.

 
(c)           Government Approvals.  Each Borrower shall have all Necessary
Project Approvals required as of the date of such requested Funding, and the
Administrative Agent shall have received a duly executed certificate of an
Authorized Officer of the relevant Borrowers certifying that each such Necessary
Project Approval is in full force and effect and is final and Non-Appealable.
 
 
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(d)           No Default or Event of Default.  No Default or Event of Default
has occurred and is continuing, or would result from such Funding.
 
(e)           No Litigation.
 
 
(i)
Except as set forth on Schedule 5.08, no action, suit, proceeding or
investigation shall have been instituted and not stayed pursuant to the
Bankruptcy Code or threatened against any Borrower that, individually or in the
aggregate, has had or could reasonably be expected to have a Material Adverse
Effect; and

 
 
(ii)
Except as set forth on Schedule 5.08, no action, suit, proceeding or
investigation shall have been instituted or threatened against any Project Party
that, individually or in the aggregate, has had or could reasonably be expected
to have a Material Adverse Effect.

 
(f)           Abandonment, Taking, Total Loss.  (i) No Event of Abandonment or
Event of Total Loss shall have occurred and be continuing with respect to any
Plant, (ii) no Event of Taking relating to any Equity Interests comprising
Collateral shall have occurred and be continuing, or (iii) no Event of Taking
with respect to a material part of any Plant shall have occurred.
 
(g)           Closing Date.  The Closing Date shall have occurred.
 
(h)           Representations and Warranties.   Each representation and warranty
made by each Borrower in this Agreement and each of the Financing Documents to
which it is a party shall be true and correct in all material respects on and as
of such Funding Date (except with respect to representations and warranties that
expressly refer to an earlier date), before and after giving effect to such
Funding and to the application of the proceeds therefrom.
 
(i)            Fees; Expenses.  The Administrative Agent shall have received for
its own account, or for the account of each Lender and Agent entitled thereto,
all fees due and payable as of the date of such Funding pursuant to Section 3.11
(Fees), and all costs and expenses (including reasonable and documented costs,
fees and expenses of legal counsel) for which invoices have been presented.  The
Pre-Petition Administrative Agent shall have received all fees due and payable
to it pursuant to the Pre-Petition Credit Agreement and all reasonable costs and
expenses (including reasonable and documented legal fees and expenses) for which
invoices have been presented.
 
(j)            Additional Information.  The Lenders shall have received all
information reasonably requested from the Borrowers.
 
 
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ARTICLE VII
 
COVENANTS
 
Section 7.01  Affirmative Covenants.  Each Borrower agrees with each Agent and
each Lender that, until the Discharge Date, each Borrower will perform the
obligations set forth in this Section 7.01 applicable to it.
 
(a)           Compliance with Laws.  Each Borrower shall comply in all material
respects with all Laws (other than Environmental Laws) applicable to it or to
its business or property.
 
(b)           Environmental Matters.
 
 
(i)
The Borrowers shall (A) comply in all material respects with all Environmental
Laws, (B) keep the Project free of any Lien imposed pursuant to any
Environmental Law, (C) pay or cause to be paid when due and payable by any
Borrower any and all costs required in connection with any Environmental Laws,
including the cost of identifying the nature and extent of the presence of any
Materials of Environmental Concern in, on or about the Project or on any real
property owned or leased by any Borrower or on the Mortgaged Property, and the
cost of delineation, management, remediation, removal, treatment and disposal of
any such Materials of Environmental Concern, and (D) use their best efforts to
ensure that no Environmental Affiliate takes any action or violates any
Environmental Law that could reasonably be expected to result in an
Environmental Claim.

 
 
(ii)
The Borrowers shall not use or allow the Project to generate, manufacture,
refine, produce, treat, store, handle, dispose of, transfer, process or
transport Materials of Environmental Concern other than in compliance in all
material respects with Environmental Laws.

 
(c)           Operations and Maintenance; Conduct of Business.  Each Borrower
owing a Plant shall own, operate and maintain (or cause to be operated and
maintained) such Plant in all material respects in accordance with (i) the terms
and provisions of the Transaction Documents except as a result of the Cases, the
Cold Shutdown of the Madera Plant, the Magic Valley Plant, the Stockton Plant
and, after the Boardman CS Date, the Boardman Plant, (ii) all applicable
Governmental Approvals and Laws and (iii) Prudent Ethanol Operating
Practice.  Pacific Holding shall conduct its business in all material respects
in accordance with all applicable Governmental Approvals and Laws.
 
(d)           Maintenance of Properties.
 
 
(i)
Each Borrower shall keep, or cause to be kept, in good working order and
condition, ordinary wear and tear excepted, all of its material properties and
equipment that are necessary or useful in the proper conduct of its business.

 
 
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(ii)
The Borrowers shall not permit any Plant or any material portion thereof to be
removed, demolished or materially altered, unless such material portion that has
been removed, demolished or materially altered has been replaced or repaired as
permitted under this Agreement.

 
 
(iii)
Each Borrower shall do or cause to be done all things necessary to preserve and
keep in full force and effect (A) its existence and (B) its material patents,
trademarks, trade names, copyrights, franchises and similar rights.

 
(e)           Payment of Obligations.  Each Borrower shall pay and discharge as
the same shall become due and payable all its Post-Petition obligations and
liabilities of whatever nature except (i) where such payment, discharge or
satisfaction is prohibited by the Bankruptcy Code, the Bankruptcy Rules or an
order of the Bankruptcy Court, or by this Agreement or the then-current DIP
Budget, (ii) where any such failure could not reasonably be expected to have a
Material Adverse Effect and would not otherwise result in an Event of Default or
(iii) where the amount or validity is subject to a Contest.
 
(f)           Governmental Approvals.  Pacific Holding and each other Borrower
shall maintain in full force and effect, in the name of the relevant Borrower,
all Necessary Project Approvals (other than any such failure to maintain that
could not reasonably be expected to have a Material Adverse Effect on the
relevant Borrower or Plant).
 
(g)           Use of Proceeds.
 
 
(i)
All proceeds of the Loans shall be used solely to fund, in each case only to the
extent specified in the DIP Budget (subject to the Permitted Variance), (a)
operating expenses, limited capital expenditures and other amounts for general
and ordinary course purposes of the Debtors, (b) current interest and fees
payable pursuant to the Financing Documents and (c) such other administrative
payments, including the budgeted professional fees, as may be authorized and
approved by the Administrative Agent and the Lenders under the Interim Order,
the Final Order or any subsequent order of the Bankruptcy Court.

 
 
(ii)
No portion of the proceeds of the Loans, the Collateral or the Carve-Out shall
be used to (a) challenge the validity, perfection, priority, extent or
enforceability of the DIP Facility, the Pre-Petition Obligations, or the Liens
on the assets of the Debtors securing the DIP Facility or the Pre-Petition
Obligations or (b) assert any claim against the Administrative Agent, the
Lenders or the Pre-Petition Senior Secured Parties; provided, however, that (x)
the proceeds of the Loans may be used to seek a Section 506(a) Determination and
(y) up to $15,000 of the proceeds of the Loans may be used by the Committee to
investigate potential claims arising out of, or in connection with, the
Pre-Petition Credit Agreement or the security interests and liens securing the
Pre-Petition Obligations.  The Carve-Out shall be reduced by an amount equal to
all proceeds of the Loans used pursuant to the foregoing proviso.

 
 
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(iii)
Prior to the Carve-Out Date, subject to entry of an appropriate order of the
Bankruptcy Court (in form and substance acceptable to the Administrative Agent
and the Lenders), proceeds of the Loans may be used to pay professional fees and
expenses of the Debtors and of the Committee allowed and payable under sections
330 and 331 of the Bankruptcy Code in accordance with the DIP Budget and the
Carve-Out shall not be reduced by the amount of any such compensation and
reimbursement of expenses paid or incurred (to the extent ultimately allowed by
the Bankruptcy Court) prior to the occurrence of the Carve-Out Date.

 
 
(iv)
On and after the Carve-Out Date, any amounts paid to professionals of the
Debtors and of the Committee by any means will reduce the Carve-Out on a
dollar-for-dollar basis and the Carve-Out will be limited to the maximum amount
of $250,000; provided, that nothing herein shall be construed to impair the
ability of any party to object to any of the fees, expenses, reimbursement, or
compensation sought by the professionals retained by the Debtors or any
statutory committee in the Chapter 11 Cases.

 
(h)           Insurance.  Without cost to any Senior Secured Party, the
applicable Borrower shall at all times obtain and maintain, or cause to be
obtained and maintained, the types and amounts of insurance listed and described
on Schedule 7.01(h), in accordance with the terms and provisions set forth
therein for each such Plant and the applicable Borrower, and shall obtain and
maintain in all material respects such other insurance as may be required
pursuant to the terms of any Transaction Document.   If the Borrowers fail to
take out or maintain the full insurance coverage required by this Section
7.01(h), the Administrative Agent may (but shall not be obligated to) take out
the required policies of insurance and pay the premiums on the same.  All
amounts so advanced by the Administrative Agent shall become an Obligation and
the Borrowers shall forthwith pay such amounts to the Administrative Agent,
together with interest from the date of payment by the Administrative Agent at
the Default Rate.
 
(i)           Books and Records; Inspections.  Each Borrower shall keep proper
books of record and account in which complete, true and accurate entries in
conformity with GAAP and all requirements of Law shall be made of all financial
transactions and matters involving the assets and business of such Borrower, and
shall maintain such books of record and account in material conformity with
applicable requirements of any Governmental Authority having regulatory
jurisdiction over such Borrower.  Each Borrower shall keep books and records
separate from the books and records of any other Person (including any
Affiliates of such Borrower) that accurately reflect all of its business
affairs, transactions and the documents and other instruments that underlie or
authorize all of its actions. Each Borrower shall permit officers and designated
representatives of the Administrative Agent or Consultant to visit and inspect
any of the properties of such Borrower (including the Plants), to examine its
financial and operating records, and make copies thereof or abstracts therefrom,
and to discuss its affairs, finances and accounts with its members, managers,
directors, officers and independent public accountants, all at the expense of
the Borrowers at any time during normal business hours and without advance
notice.
 
 
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(j)           Project Documents.  Each Borrower shall use its reasonable best
efforts to preserve, protect and defend its rights under each Project Document
to which it is a party except where the failure to do so (i) results from the
Effect of Bankruptcy, the Cold Shutdown of the Madera Plant, the Magic Valley
Plant, the Stockton Plant and, after the Boardman CS Date, the Boardman Plant or
(ii) could not reasonably be expected to have a Material Adverse Effect. Each
Borrower shall use its reasonable best efforts to exercise all material rights,
discretion and remedies under each Project Document in accordance with its terms
and in a manner consistent with and subject to such Borrower’s obligations under
the Financing Documents except where the failure to do so exercise such rights,
discretion or remedies results from the Cases, the Cold Shutdown of the Madera
Plant, the Magic Valley Plant, the Stockton Plant and, after the Boardman CS
Date, the Boardman Plant.
 
(k)           Maintenance of Existence. Each Borrower will continue to preserve,
renew and keep in full force and effect its entity status in the jurisdiction of
its formation and take all actions to maintain its rights, privileges and
franchises necessary or desirable in the normal course of its business.
 
(l)           DIP Budgets.
 
 
(i)
The Borrowers, not later than seven (7) days before the date that is the first
day of the fifth week covered by the DIP budget and each date falling every
twenty-eighth (28th) day thereafter (each such date, a “Period Start Date”),
shall adopt a budget containing, among other things, rolling cash flow forecast,
setting forth in reasonable detail the projected cash flow for each Plant and on
an aggregate basis for the Project for the period starting on the then current
Period Start Date and ending on the earlier of (A) thirteen (13) weeks after the
then current Period Start Date and (B) the scheduled Maturity Date, and provide
a copy of such forecast at such time to the Administrative Agent.  Each such
forecast shall become effective upon approval of the Administrative Agent and
the Required Lenders (acting in consultation with the Financial Advisor) (each
such approved forecast, and the Initial DIP Budget, a “DIP Budget).”

 
 
(ii)
Each DIP budget delivered to the Administrative Agent pursuant to this Section
7.01(l) shall be accompanied by a memorandum or worksheet detailing all changes
in material assumptions used in the preparation of such Budget, shall contain a
line item for each expense category reasonably requested by the Administrative
Agent or the Required Lenders (provided that items on the DIP Budget that are
subject to Bankruptcy Court approval shall not be funded until approved by the
Bankruptcy Court, and inclusion and acceptance of any such item is not a waiver
of any party’s objection thereto), shall specify for each week and for each such
expense category the amount budgeted for such category for such week.

 
 
(iii)
Subject to Section 7.02(w), the Borrowers shall comply with the DIP Budget
subject to the Permitted Variance.

 
 
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(m)           Preservation of Title; Acquisition of Additional Property.
 
 
(i)
The Borrowers shall preserve and maintain (A) good, marketable and insurable fee
interest in each Site (excluding the Leased Premises) and valid easement
interest to its easement interest in each Site (excluding the Leased Premises),
(B) a good, legal and valid leasehold interest in the Leased Premises, and (C)
good, legal and valid title to all of its other respective material properties
and assets, in each case free and clear of all Liens other than Permitted Liens.

 
 
(ii)
No Borrower shall acquire or commence to lease any real property interests
without the prior written consent of the Lenders and the Administrative Agent.

 
(n)           Maintenance of Liens; Creation of Liens. (i) The Borrowers shall
take or cause to be taken all actions necessary or reasonably requested by the
Administrative Agent for the Collateral Agent to maintain and preserve the DIP
Liens and the priority thereof.
 
(ii) The Borrowers shall take promptly all actions reasonably requested by the
Administrative Agent to cause each Additional Project Document to become subject
to the DIP Liens, shall deliver certified copies of such Additional Project
Document to the Administrative Agent and, if requested by the Administrative
Agent, shall deliver any Ancillary Documents related thereto.
 
(o)           Reorganization Matters.  The Borrowers shall give, on a timely
basis as specified in the Interim Order or the Final Order all notices required
to be given to all parties specified in the Interim Order or Final Order.  The
Borrowers shall provide to the Administrative Agent copies of all pleadings,
motions, applications and other documents or information (i) filed by or on
behalf of any Borrower with the Bankruptcy Court or (ii) provided to any
creditors’ committee appointed in the Chapter 11 Cases.  The Borrowers shall
provide the Administrative Agent with drafts of all pleadings, motions and
applications to be filed by or on behalf of any Borrower at least three (3)
Business Days in advance of such filing.
 
(p)           Professional Fees.  Promptly following receipt thereof, the
Borrowers shall deliver to the Administrative Agent all monthly fee statements
detailing the fees of all its professionals (including counsel and financial
advisors) for such month delivered in accordance with the interim compensation
procedures approved by the Bankruptcy Court.
 
 
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(q)           Bank Accounts.  Each bank account of a Borrower shall at all times
be (i) held as Collateral to secure the repayment and/or performance of the
Obligations, (ii) held at a financial institution at which such Borrower
maintains its bank accounts on the Petition Date under the terms of the
Pre-Petition Financing Documents, or otherwise as selected by such Borrower from
a list of approved financial institutions approved by the Required Lenders and
(iii) subject to a perfected Priming Lien in favor of the Collateral Agent on
behalf of the Senior Secured Parties, with all rights and remedies in respect
thereto as set forth in the Orders and the other Financing Documents. No
Borrower may open a new bank account or any other account at a financial
institution without the prior written consent of the Required Lenders, which
approval may be withheld in their sole discretion.
 
(r)           Monthly Meetings.  At least once per calendar month, upon request
of the Administrative Agent, at mutually acceptable times (and with telephonic
conferences being acceptable), the Borrower Agent shall, and shall procure that
representatives of the Borrower’s professionals (including counsel and financial
advisors) as may be requested by the Administrative Agent, meet together with
the Administrative Agent to update the Administrative Agent on the status of the
Cases and to discuss any other issues in connection therewith as may be
requested by the Administrative Agent.
 
(s)           Further Assurances.  Upon written request of the Administrative
Agent, each Borrower shall promptly perform or cause to be performed any and all
acts and execute or cause to be executed any and all documents (including UCC
financing statements and UCC continuation statements) reasonably requested by
the Administrative Agent for the purposes of ensuring the validity and legality
of this Agreement or any other Financing Document and the rights of the Lenders
and the Agents hereunder or thereunder and facilitating the proper exercise of
rights and powers granted to the Lenders or the Agents under this Agreement or
any other Financing Document.
 
Section 7.02  Negative Covenants.  Each Borrower agrees with each Agent and each
Lender that, until the Discharge Date, each Borrower will perform the
obligations set forth in this Section 7.02 applicable to it.
 
(a)           Restrictions on Indebtedness.  The Borrowers will not create,
incur, assume or suffer to exist any Indebtedness except:
 
 
(i)
the Obligations;

 
 
(ii)
the Pre-Petition Obligations;

 
 
(iii)
to the extent constituting Indebtedness, contingent obligations under or in
respect of performance bonds, bid bonds, appeal bonds, indemnification
obligations, obligations to pay insurance premiums, take or pay obligations and
similar obligations in each case incurred in the ordinary course of business and
otherwise permitted under this Agreement and not in connection with Indebtedness
for borrowed money, with respect to bonds, in an aggregate amount not to exceed
$50,000 at any one time outstanding;

 
 
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(iv)
to the extent constituting Indebtedness, Indebtedness arising from the honoring
by a bank or other financial institution of a check, draft or similar instrument
drawn against insufficient funds in the ordinary course of business; provided
that such Indebtedness is extinguished within ten (10) Business Days of its
incurrence and the aggregate amount of all such Indebtedness does not exceed, at
any time, one hundred thousand Dollars ($100,000);

 
 
(v)
Capitalized Lease Liabilities with respect to office equipment with payments in
any Fiscal Year, taken in the aggregate for the Project, in an amount not to
exceed one hundred thousand Dollars ($100,000);

 
 
(vi)
the PE Imperial Leases; and

 
 
(vii)
Pre-Petition Indebtedness existing on the Petition Date to the extent not
prohibited by the Pre-Petition Credit Agreement.

 
(b)           Liens.  No Borrower shall create, incur, assume or suffer to exist
any Lien upon any of its property, revenues or assets (including its Equity
Interests), whether now owned or hereafter acquired, except:
 
 
(i)
Liens in favor, or for the benefit, of the Collateral Agent and the Senior
Secured Parties;

 
 
(ii)
Liens in favor, or for the benefit, of the Pre-Petition Collateral Agent and the
Pre-Petition Senior Secured Parties;

 
 
(iii)
Liens for taxes, assessments and other governmental charges that are not yet due
or the payment of which is the subject of a Contest or taxes that are otherwise
not yet delinquent or for taxes as to which payment and enforcement is stayed
under the Bankruptcy Code or pursuant to orders of the Bankruptcy Court;

 
 
(iv)
Liens of carriers, warehousemen, mechanics and materialmen incurred in the
ordinary course of business for sums not yet due or the payment of which is the
subject of a Contest or for amounts as to which payment and enforcement is
stayed under the Bankruptcy Code or pursuant to orders of the Bankruptcy Court;

 
 
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(v)
minor defects or irregularities in title and similar matters if the same do not
materially detract from the operation or use of such property in the ordinary
conduct of the business of the applicable Borrower, including any such
exceptions and encumbrances which are approved by the Administrative Agent;

 
 
(vi)
cash collateral for bonds permitted under Section 7.02(a)(iii) (Negative
Covenants – Restrictions on Indebtedness) or otherwise provided that such cash
collateral does not exceed $50,000 in the aggregate;

 
 
(vii)
Liens arising with respect to a Local Account for which a Blocked Account
Agreement has been entered into or otherwise arising by virtue of any statutory
or common law provisions relating to banker’s liens, rights of set-off or
similar rights; provided that such Liens either (A) are subordinated to the
Liens of the Senior Secured Parties or (B) with respect only to Local Accounts
for which a Blocked Account Agreement has been entered into, are in an aggregate
total amount not in excess of one hundred thousand Dollars ($100,000);

 
 
(viii)
easements existing on the date hereof and previously disclosed to the
Pre-Petition Administrative Agent or granted by any Borrower to any utility
serving such Borrower’s Plant as required for the operation of such Plant;
provided, that in each such case:

 
 
(A)
such easement will not adversely affect the costs under the then-current DIP
Budget

 
 
(B)
such easement will not adversely affect the operations of any Plant; and

 
 
(C)
such easement has been approved by the Administrative Agent;

 
 
(ix)
with the prior written approval of the Independent Engineer and the
Administrative Agent, licenses or leases of a portion of the Site for any Plant;
provided, that such license or lease could not reasonably be expected to have
any adverse impact on the operations of such Plant or its related transportation
plans and facilities;

 
 
(x)
Liens in respect of Capitalized Lease Liabilities with respect to office
equipment permitted by Section 7.02(a)(v)(Negative Covenants-Restrictions on
Indebtedness);

 
 
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(xi)
purported Liens evidenced by the filing of precautionary UCC financing
statements relating solely to operating leases of personal property entered into
in the ordinary course of business and otherwise permitted under this Agreement;
and

 
 
(xii)
Liens in respect of Pre-Petition Indebtedness existing on the Petition Date to
the extent not prohibited by the Pre-Petition Credit Agreement.

 
(c)           Permitted Investments.  The Borrowers shall not make any
investments, loans or advances (whether by purchase of stocks, bonds, notes or
other securities, loans, extensions of credit, advances or otherwise) except for
investments (i) in Cash Equivalents, (ii) in connection with the bankruptcy of
suppliers or customers of the Borrowers (provided that such investments are
subject to a first priority perfected Lien in favor of the Collateral Agent) and
(iii) existing on the date hereof in Subsidiaries. The Borrowers shall select
Cash Equivalents having such maturities as shall cause the Project Accounts to
have a cash balance as of any day sufficient to cover the transfers made from
the Project Accounts on such day in accordance with this Agreement, the other
Financing Documents, the Project Documents and any Additional Project Documents.
 
(d)           Change in Business.  No Borrower shall (i) enter into or engage in
any business other than the ownership, operation (including the Cold Shutdown of
the Madera Plant, the Magic Valley Plant, the Stockton Plant and, after the
Boardman CS Date, the Boardman Plant), maintenance, use and financing of the
Plants or the Project and all activities related thereto or (ii) change in any
material respect the scope of any Plant or the Project from that which exists as
of the date hereof.
 
(e)           Equity Issuances.  No Borrower shall issue any Equity Interests
unless such Equity Interests are immediately pledged to the Collateral Agent
(for the benefit of the Senior Secured Parties) on a first priority perfected
basis.
 
(f)           Asset Dispositions.   No Borrower shall sell, lease, assign,
transfer or otherwise dispose of any assets (other than Products), whether now
owned or hereafter acquired, except:
 
 
(i)
disposal of assets that are promptly replaced in accordance with the
then-current DIP Budget;

 
 
(ii)
to the extent that such assets are uneconomical, obsolete or no longer useful or
no longer usable in connection with the operation or maintenance of the Project;

 
 
(iii)
disposal of assets with a fair market value of, or, if greater, at a disposal
price of, less than fifty thousand Dollars ($50,000) in the aggregate during any
Fiscal year; provided, that such disposal does not, and would not reasonably be
expected to, adversely effect the operation or maintenance of any Plant;

 
 
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(iv)
transfers of assets among the Plants; provided, that (A) the aggregate total
fair market value of all such transferred assets does not exceed five hundred
thousand Dollars ($500,000) in any Fiscal Year, and (B) each such transfer does
not, and would not reasonably be expected to, adversely affect the operations of
the Plant from which such assets are transferred;

 
 
(v)
the transfer or other Disposition by any Borrower in settlement of any amount
owed by such Borrower effected in the ordinary course of business and approved
by the Bankruptcy Court; or

 
 
(vi)
as permitted by Section 7.02(c) (Negative Covenants-Permitted Investments).

 
(g)           Consolidation, Merger.  No Borrower will (i) directly or
indirectly liquidate, wind up, terminate, reorganize (except for the Cases or
pursuant to an order of the Bankruptcy Court) or dissolve (or suffer any
liquidation, winding up, termination, reorganization (except for the Cases or
pursuant to an order of the Bankruptcy Court) or dissolution) or otherwise wind
up; or (ii) acquire (in one transaction or a series of related transactions) all
or any substantial part of the assets, property or business of, or any assets
that constitute a division or operating unit of, the business of any Person or
otherwise merge or consolidate with or into any other Person.
 
(h)           Transactions with Affiliates.  No Borrower shall enter into or
cause, suffer or permit to exist any arrangement or contract with any of its
Affiliates or any other Person that owns, directly or indirectly, any Equity
Interest in such Borrower except Affiliated Project Documents.
 
(i)            Accounts.  The Borrowers shall not maintain, establish or use any
deposit account, securities account (as each such term is defined in the UCC) or
other banking account other than the Project Accounts and any Local Account set
forth on Schedule 5.29, each of which shall be subject to a Blocked Account
Agreement.  The Borrowers shall not change the name or account number of any of
the Project Accounts or Local Accounts without the prior written consent of the
Administrative Agent.
 
(j)            Subsidiaries.  Pacific Holding shall not create or acquire any
Subsidiary other than Madera, Boardman, Stockton or Burley nor enter into any
partnership or joint venture.  Each of Madera, Boardman, Stockton and Burley
shall not create or acquire any Subsidiary or enter into any partnership or
joint venture.
 
(k)           ERISA.  No Borrower will engage in any prohibited transactions
under Section 406 of ERISA or under Section 4975 of the Code.  No Borrower will
incur any obligation or liability in respect of any Plan, Multiemployer Plan or
employee welfare benefit plan providing post-retirement welfare benefits (other
than a plan providing continue coverage under Part 6 of Title I of ERISA) in
each such case without the prior written consent of the Administrative Agent
(unless the aggregate total obligations or liabilities of the Borrowers that
could reasonably be expected to arise, due to no fault of the Borrowers, in
connection therewith would not exceed five hundred thousand Dollars ($500,000)).
 
 
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(l)            Taxes.  No Borrower shall make any election to be treated as an
association taxable as a corporation for federal, state or local tax purposes.
 
(m)           Project Documents.  Other than changes that individually and in
the aggregate could not reasonably be expected to have a Material Adverse
Effect, no Borrower shall direct or consent or agree to (i) any amendment,
modification, supplement, or waiver to, or (ii) any termination, repudiation,
cancellation or rejection of, any Project Document to which it is a party and
that is contemplated by the then-current DIP Budget without the prior written
consent of the Required Lenders.  Except for collateral assignments to the
Collateral Agent, no Borrower shall assign any of its rights under any Project
Document to which it is a party to any Person, or consent to the assignment of
any obligations under any such Project Document by any other party thereto.
 
(n)           Accounting Changes.  No Borrower shall make any change in (i) its
accounting policies or reporting practices, except as required by GAAP or as
otherwise notified to the Administrative Agent in writing (provided that the
Borrowers shall provide an historical reconciliation for the prior audited
period addressing any such change in accounting practices), or (ii) its Fiscal
Year without the prior written consent of the Administrative Agent.
 
(o)           Additional Project Documents.  None of Pacific Holding or any
other Borrower shall enter into any Additional Project Document that is not
contemplated by the then-current DIP Budget except with the prior written
approval of the Administrative Agent.
 
(p)           Suspension or Abandonment.  No Borrower owning a Plant shall (i)
permit or suffer to exist an Event of Abandonment relating to such Plant or (ii)
order or consent to any suspension of work in excess of sixty (60) days under
any Project Document relating to such Plant, in each such case without the prior
written approval of the Required Lenders.
 
(q)           Use of Proceeds; Margin Regulations.  No Borrower shall use any
proceeds of any Loan other than in accordance with the provisions of Article II
(Commitments and Borrowing) and Section 7.01(g) (Affirmative Covenants – Use of
Proceeds).  No Borrower shall use any part of the proceeds of any Loan to
purchase or carry any Margin Stock (as defined in Regulation U) or to extend
credit to others for the purpose of purchasing or carrying any Margin Stock.  No
Borrower shall use the proceeds of any Loan in a manner that could violate or be
inconsistent with the provisions of Regulations T, U or X.
 
(r)            Environmental Matters.  Except to the extent not reasonably
expected to result in an Environmental Claim and in compliance with all
applicable Laws, the Borrowers shall not permit (i) any underground storage
tanks to be located on any property owned or leased by any Borrower, (ii) any
asbestos to be contained in or form part of any building, building component,
structure or office space owned by any Borrower, (iii) any polychlorinated
biphenyls (PCBs) to be used or stored at any property owned by any Borrower,
(iv) any other Materials of Environmental Concern to be used, stored or
otherwise be present at any property owned by any Borrower, other than Materials
of Environmental Concern necessary for the operation of the Project and used in
accordance with Prudent Ethanol Operating Practice or (v) any other Materials of
Environmental Concern to be used, stored or otherwise be present at any property
owned or leased by any Borrower.
 
 
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(s)           Restricted Payments.  The Borrowers shall not make any Restricted
Payments except for Restricted Payments (i) among Debtors solely in accordance
with the then-current DIP Budget or (ii) with the prior consent of the Required
Lenders.
 
(t)            Commodity Hedging Arrangements.  The Borrowers shall not enter
into any Commodity Hedging Arrangements.
 
(u)           Chapter 11 Claims.  Except for the Carve-Out, no Debtor shall
incur, create, assume, suffer to exist or permit any super-priority
administrative claim against such Debtor which is pari passu with or senior to
the claims of the Senior Secured Parties against the Debtors, except as set
forth in Section 2.09 (Super-Priority Nature of Obligations).
 
(v)           DIP Budgets.  No Borrower shall make any change in the DIP Budget
without the prior written consent of the Administrative Agent and the Required
Lenders.
 
(w)          Financial Covenants.
 
 
(i)
The Borrowers shall not permit amounts disbursed pursuant to the category in the
DIP Budget entitled “Asset Management Agreement” (excluding the line item
entitled “Asset Management Fee”) in any Monthly Budget Period to exceed the
amounts set forth in the line item entitled “Total Asset Management Agreement”
(excluding “Asset Management Fee”) for such Monthly Budget Period in the Initial
DIP Budget by more than ten percent (10%).

 
 
(ii)
The Borrowers shall not permit professional fees (other than the fees and
expenses of the advisors and consultants working on behalf of the Senior Secured
Parties) in any period of time measured from the Petition Date to exceed the
amounts set forth in the line item entitled “Total Professional Fees &
Administrative Expenses” (excluding “Legal Advisors – DIP Lenders” and
“Financial Advisors – DIP Lenders”) for such period of time in the Initial DIP
Budget by more than three hundred thousand Dollars ($300,000).

 
 
(iii)
The Borrowers shall not permit amounts disbursed pursuant to the category in the
DIP Budget entitled “Operating Disbursements” in any Monthly Budget Period to
exceed the amounts set forth in the line item entitled “Total Operating
Disbursements” for such Monthly Budget Period in the then applicable DIP Budget
by more than ten percent (10%).

 
 
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Section 7.03  Reporting Requirements.  The Borrowers will furnish to the
Administrative Agent, who shall distribute copies of the following to each
Lender:
 
(a)           on the second Business Day of each week after the date of this
Agreement, an updated rolling cash flow forecast ending on the earlier of (i)
thirteen (13) weeks after the week in which such cash flow forecast is delivered
and (ii) the scheduled Maturity Date (each such forecast, a “Weekly Cash Flow
Forecast”), in the same form and with the same level of detail as the
then-current DIP Budget (it being understood, however, that approval of the DIP
Budget by the Required Lenders shall only be required once a month in accordance
with Section 7.01(l) (Affirmative Covenants – DIP Budgets));
 
(b)           on the second Business Day of each week following the date hereof,
a report setting forth, in a form and in sufficient detail satisfactory to the
Administrative Agent, a comparison of actual receipts and expenses to budgeted
receipts and expenses in the then-current DIP Budget for the preceding week;
 
(c)           as soon as available and in any event within twenty-five (25) days
after the end of each calendar month, a report setting forth, in each case in a
form and in sufficient detail satisfactory to the Administrative Agent, (x)
balance sheets of each Borrower as of the end of such month, (y) statements of
income and cash flows of each Borrower for such month, and for the period
commencing at the end of the previous Fiscal Year and ending with the end of
such month and (z) profit and loss statements of each Borrower for such month
and for the period commencing at the end of the previous Fiscal Year and ending
with the end of such month, in each case, prepared in accordance with GAAP
(subject to the absence of footnote disclosures and to normal year-end
adjustments). Such report shall be certified as complete and correct by an
Authorized Officer of the Borrower Agent, who also shall certify for each
financial covenant set forth in Section 7.02(w) (Negative Covenants - Financial
Covenants) that the Borrowers are in full compliance with each such covenant or,
if any of such certifications cannot be given, stating in reasonable detail the
necessary qualifications to such certifications;
 
(d)           promptly upon receipt, copies of any detailed audit reports,
management letters or recommendations submitted to any Borrower (or the audit or
finance committee of any Borrower) by the Auditors in connection with the
accounts or books of any Borrower, or any audit of any Borrower;
 
(e)           as soon as possible and in any event within five (5) days after
the occurrence of any Default or Event of Default, a statement of an Authorized
Officer of the Borrower Agent setting forth details of such Default or Event of
Default and the action that the Borrowers have taken and propose to take with
respect thereto;
 
(f)           within five (5) days after any Borrower obtains knowledge thereof
a statement of an Authorized Officer of the Borrower Agent setting forth details
of:
 
 
(i)
any litigation or governmental proceeding pending or threatened in writing
against any Borrower;

 
 
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(ii)
any litigation or governmental proceeding pending or threatened in writing
against any Project Party that has or could reasonably be expected to have a
Material Adverse Effect;

 
 
(iii)
any other event, act or condition that has or could reasonably be expected to
have a Material Adverse Effect; or

 
 
(iv)
notification of any event of force majeure or similar event under a Project
Document which is expected to continue for more than five (5) days or, to the
knowledge of a Borrower, result in increased costs of at least one hundred
thousand Dollars ($100,000);

 
(g)           promptly after delivery or receipt thereof, copies of all material
notices or documents given or received by any Borrower, pursuant to any of the
Project Documents including:
 
 
(i)
any written notice alleging any breach or default thereunder; and

 
 
(ii)
any written notice regarding, or request for consent to, any assignment,
termination, modification, waiver or variation thereof;

 
(h)           as soon as possible and in any event within five (5) Business Days
after any Borrower knows, or has reason to know, that any of the events
described below have occurred, a duly executed certificate of an Authorized
Officer of the Borrower Agent setting forth the details of each such event and
the action that the Borrowers propose to take with respect thereto, together
with a copy of any notice or filing from the PBGC, Internal Revenue Service,
Department of Labor or that may be required by the PBGC or other U.S.
Governmental Authority with respect to each such event:
 
 
(i)
any Termination Event with respect to an ERISA Plan or a Multiemployer Plan has
occurred or will occur that could reasonably be expected to result in any
material liability to any Borrower;

 
 
(ii)
any condition exists with respect to a Plan that presents a material risk of
termination of a Plan (other than a standard termination under Section 4041(b)
of ERISA) or imposition of an excise tax or other material liability on any
Borrower;

 
 
(iii)
an application has been filed for a waiver of the minimum funding standard under
Section 412 of the Code or Section 302 of ERISA under any Plan;

 
 
(iv)
any Borrower or any Plan fiduciary has engaged in a “prohibited transaction,” as
defined in Section 4975 of the Code or as described in Section 406 of ERISA,
that is not exempt under Section 4975 of the Code and Section 408 of ERISA that
could reasonably be expected to result in material liability to any Borrower;

 
 
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(v)
there exists any Unfunded Benefit Liabilities under any ERISA Plan;

 
 
(vi)
any condition exists with respect to a Multiemployer Plan that presents a risk
of a partial or complete withdrawal (as described in Section 4203 or 4205 of
ERISA) from a Multiemployer Plan that could reasonably be expected to result in
any liability to any Borrower;

 
 
(vii)
a “default” (as defined in Section 4219(c)(5) of ERISA) occurs with respect to
payments to a Multiemployer Plan and such default could reasonably be expected
to result in any liability to any Borrower;

 
 
(viii)
a Multiemployer Plan is in “reorganization” (as defined in Section 418 of the
Code or Section 4241 of ERISA) or is “insolvent” (as defined in Section 4245 of
ERISA);

 
 
(ix)
any Borrower and/or any ERISA Affiliate has incurred any potential withdrawal
liability (as defined in accordance with Title IV of ERISA); or

 
 
(x)
there is an action brought against any Borrower or any ERISA Affiliate under
Section 502 of ERISA with respect to its failure to comply with Section 515 of
ERISA;

 
(i)           as soon as possible and in any event within five (5) Business Days
after the receipt by any Borrower of a demand letter from the PBGC notifying
such Borrower of its final decision finding liability and the date by which such
liability must be paid, a copy of such letter, together with a duly executed
certificate of the president or chief financial officer of such Borrower setting
forth the action that such Borrower proposes to take with respect thereto;
 
(j)           promptly and in any event within five (5) Business Days after the
existence of any of the following conditions, a duly executed certificate of an
Authorized Officer of the Borrower Agent specifying in detail the nature of such
condition and, if applicable, the proposed response of the Borrowers thereto:
 
 
(i)
receipt by any Borrower of any written communication from a Governmental
Authority or any written communication from any other Person or other source of
written information, including (to the extent not privileged) reports prepared
by any Borrower, that alleges or indicates that any Borrower or an Environmental
Affiliate is not in compliance in all material respects with applicable
Environmental Laws or Environmental Approvals;

 
 
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(ii)
any Borrower obtains knowledge that there exists any Environmental Claim pending
or threatened in writing against any Borrower or an Environmental Affiliate;

 
 
(iii)
any Borrower obtains knowledge of any release, threatened release, emission,
discharge or disposal of any Material of Environmental Concern or obtains
knowledge of any material non-compliance with any Environmental Law that, in
either such case, could reasonably be expected to form the basis of an
Environmental Claim against any Borrower or any Environmental Affiliate; or

 
 
(iv)
any Removal, Remedial or Response action taken by any Borrower or any other
person in response to any Material of Environmental Concern in, at, on or under,
a part of or about the  properties of a Borrower or any other property or any
notice, claim or other information that any Borrower might be subject to an
Environmental Claim;

 
(k)           on reasonable notice during regular business hours, accurate and
complete records of all non-privileged correspondence, investigations, studies,
sampling and testing conducted, and any and all remedial actions taken, by any
Borrower or, to the best of any Borrower’s knowledge and to the extent obtained
by any Borrower, by any Governmental Authority or other Person in respect of
Materials of Environmental Concern that could reasonably be expected to form the
basis of an Environmental Claim on or affecting any Plant or the Project;
 
(l)            within twenty-five (25) days after the end of each calendar
month, an Operating Statement certified as complete and correct by an Authorized
Officer of the Borrower Agent regarding the operation and performance of each
Plant for such month.  Such Operating Statements shall contain (i) line items
corresponding to the DIP Budget showing in reasonable detail all actual expenses
related to the operation and maintenance of each Plant compared to the budgeted
expenses for such period, (ii) information showing the amount of ethanol and
other Products produced by each Plant during such period and (iii) information
showing (A) the amount of ethanol sold by the Borrowers from each Plant to
pursuant to the Ethanol Offtake Agreements, (B) the amount of Distillers Grains
sold by the Borrowers from each Plant pursuant to the DG Offtake Agreements, and
(C) the amount, if any, of other sales of ethanol and/or Distillers Grains,
together with an explanation of any such sale and identification of the
purchaser, and (D) the amount, if any, of other Products sold by the Borrowers
from the Plants, together with an explanation of any such sale and
identification of the purchaser; and
 
(m)           other information reasonably requested by the Administrative Agent
or any Lender, through the Administrative Agent.
 

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ARTICLE VIII
 
[INTENTIONALLY OMITTED]
 

 
ARTICLE IX

 
DEFAULT AND ENFORCEMENT
 
Section 9.01  Events of Default.  Notwithstanding the provisions of Section 362
of the Bankruptcy Code and without notice, application or motion to, hearing
before, or order of the Bankruptcy Court or any notice to any Borrower, each of
the following events or occurrences described in this Section 9.01 shall
constitute an Event of Default.
 
(a)           Nonpayment.  Any Borrower fails to pay (i) any amount of principal
of any Loan when the same becomes due and payable or (ii) any interest on any
Loan or any fee or other Obligation or amount payable hereunder or under any
other Financing Document within three (3) Business Days after the same becomes
due and payable.
 
(b)           Breach of Warranty.  Any representation or warranty of any
Borrower made or deemed to be restated or remade in any Financing Document is or
shall be incorrect or misleading in any material respect when made or deemed
made; provided that (i) if such Borrower was not aware that such representation
or warranty was incorrect or misleading at the time such representation or
warranty was made or deemed repeated, (ii) the fact, event or circumstance
resulting in such incorrect or misleading representation or warranty is capable
of being cured, corrected or otherwise remedied, (iii) such fact, event or
circumstance resulting in such incorrect or misleading representation or
warranty is cured, corrected or otherwise remedied within thirty (30) days from
the date any Borrower obtains, or should have obtained, knowledge thereof, and
(iv) no Material Adverse Effect shall have occurred as a result of such
representation or warranty being incorrect or misleading, then such incorrect
representation or warranty shall not constitute an Event of Default.
 
(c)           Non-Performance of Certain Covenants and Obligations.  Any
Borrower defaults in the due performance and observance of any of its
obligations under any of Sections 7.01(g) (Affirmative Covenants – Use of
Proceeds), 7.01(h) (Affirmative Covenants – Insurance), 7.02 (Negative
Covenants) and 7.03 (Reporting Requirements) of this Agreement.
 
(d)           Non-Performance of Other Covenants and Obligations.  Any Borrower
defaults in the due performance and observance of any covenant or agreement
(other than covenants and agreements referred to in Section 9.01(a) or 9.01(c))
contained in any Financing Document, and such default shall continue unremedied
for a period of thirty (30) days after any Borrower obtains, or should have
obtained, knowledge thereof.
 
 
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(e)           Cross Defaults.  Any one of the following occurs with respect to
any Borrower (with respect to any Indebtedness entered into (x) Pre-Petition and
which is assumed after the Petition Date or is not subject to the automatic stay
provisions of Section 362 of the Bankruptcy Code or (y) Post-Petition) in the
amount greater than $100,000:
 
 
(i)
a default occurs in the payment when due (subject to any applicable grace period
and notice requirements), whether by acceleration or otherwise, of such
Indebtedness; or

 
 
(ii)
such Person fails to observe or perform (subject to any applicable grace periods
and notice requirements) any other agreement or condition relating to any such
Indebtedness or contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event occurs, the effect of which default or
other event is to cause, or to permit the holder or holders of such Indebtedness
or the beneficiary or beneficiaries of any Guarantee (or a trustee or agent on
behalf of such holder or holders or beneficiary or beneficiaries) to cause, with
the giving of notice if required, such Indebtedness to be demanded or to become
due or to be repurchased, prepaid, defeased or redeemed (automatically or
otherwise), or an offer to repurchase, prepay, defease or redeem such
Indebtedness to be made, prior to its stated maturity, or such Guarantee to
become payable or cash collateral in respect thereof to be demanded;

 
(f)           Judgments.  (i) Any judgment or order that has or could reasonably
be expected to have a Material Adverse Effect is rendered against any Borrower
or any Major Project Party, or (ii) any judgment or order is rendered against
any or all of the Borrowers, in an amount in excess of two hundred and fifty
thousand Dollars ($250,000) in the aggregate.
 
(g)           ERISA Events.  (i) Any Termination Event occurs, (ii) any Plan
incurs an “accumulated funding deficiency” (as defined in Section 412 of the
Code or Section 302 of ERISA), (iii) any Borrower or member of any Borrower’s
ERISA Controlled Group engages in a transaction that is prohibited under Section
4975 of the Code or Section 406 of ERISA, (iv) any Borrower or any ERISA
Affiliate fails to pay when due any amount it has become liable to pay to the
PBGC, any Plan or a trust established under Title IV of ERISA, (v) a condition
exists by reason of which the PBGC would be entitled to obtain a decree
adjudicating that an ERISA Plan must be terminated or have a trustee appointed
to administer it, (vi) any Borrower or any ERISA Affiliate suffers a partial or
complete withdrawal from a Multiemployer Plan or is in “default” (as defined in
Section 4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan,
(vii) a proceeding is instituted against any Borrower to enforce Section 515 of
ERISA, (viii) the aggregate amount of the then “current liability” (as defined
in Section 412(l)(7) of the Code, as amended) of all accrued benefits under such
Plan or Plans exceeds the then current value of the assets allocable to such
benefits by more than two million Dollars ($2,000,000) at such time, or (ix) any
other event or condition occurs or exists with respect to any Plan that would
subject any Borrower to any tax, penalty or other liability.
 
(h)           Project Document Defaults; Termination.
 
 
(i)
Any Borrower or any other Major Project Party shall be in material breach of or
otherwise in material default under any Project Document (other than as a result
of the Cases, the Cold Shutdown of the Madera Plant, the Magic Valley Plant, the
Stockton Plant and, after the Boardman CS Date, the Boardman Plant or any breach
or default that has not had and could not reasonably be expected to have a
Material Adverse Effect) and such breach or default has continued beyond any
applicable grace period expressly provided for in such Project Document (or if
no cure period is provided, thirty (30) days).

 
 
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(ii)
Any Project Document ceases to be in full force and effect prior to its
scheduled expiration, is repudiated, or its enforceability is challenged or
disaffirmed by or on behalf of any Borrower or any Project Party thereto, except
for any Project Document the invalidity of which could not reasonably be
expected to have a Material Adverse Effect.

 
(i)           Governmental Approvals.  Any Borrower fails to obtain, renew,
maintain or comply in all material respects with any Necessary Project Approval
or any Necessary Project Approval is revoked, canceled, terminated, withdrawn or
otherwise ceases to be in full force and effect, or any Necessary Project
Approval is modified without the consent of the Required Lenders in a manner
that, in each case, has, or could reasonably be expected to result in, a
Material Adverse Effect on such Borrower or its Plant.
 
(j)           Unenforceability of Pre-Petition Documentation.  Except as a
result of an Effect of Bankruptcy:
 
 
(i)
any material provision of any Pre-Petition Financing Document shall cease to be
in full force and effect;

 
 
(ii)
any Pre-Petition Financing Document is revoked or terminated, becomes unlawful
or is declared null and void by a Governmental Authority of competent
jurisdiction; and

 
 
(iii)
any Pre-Petition Financing Document becomes unenforceable, is repudiated or the
enforceability thereof is contested or disaffirmed by or on behalf of any party
thereto other than the Pre-Petition Senior Secured Parties.

 
(k)          Unenforceability of Documentation.  At any time after the execution
and delivery thereof:
 
 
(i)
any material provision of any Financing Document shall cease to be in full force
and effect;

 
 
(ii)
any Financing Document is revoked or terminated, becomes unlawful or is declared
null and void by a Governmental Authority of competent jurisdiction;

 
 
(iii)
any Financing Document becomes unenforceable, is repudiated or the
enforceability thereof is contested or disaffirmed by or on behalf of any party
thereto other than the Senior Secured Parties or the Pre-Petition Senior Secured
Parties; and

 
 
(iv)
any Liens against any of the Collateral cease to be a first priority, perfected
security interest in favor of the Collateral Agent, or the enforceability
thereof is contested by any Borrower, or any of this Agreement or the Orders
ceases to provide the security intended to be created thereby with the priority
purported to be created thereby.

 
 
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(l)           Environmental Matters.  (i) Any Environmental Claim has occurred
with respect to any Borrower, any Plant or any Environmental Affiliate, (ii) any
release, emission, discharge or disposal of any Material of Environmental
Concern occurs, and such event could reasonably be expected to form the basis of
an Environmental Claim against any Borrower, any Plant or any Environmental
Affiliate, or (iii) any violation or alleged violation of any Environmental Law
or Environmental Approval occurs that would reasonably result in an
Environmental Claim against any Borrower or any Plant or, to the extent any
Borrower may have liability, any Environmental Affiliate, that, in the case of
any of Sections 9.01(m)(i), (ii) or (iii), could reasonably be expected to
result in liability for any Borrower (or the Borrowers on an aggregate basis) in
an amount greater than two hundred thousand Dollars ($200,000) for any single
claim or two hundred and fifty thousand Dollars ($250,000) for all such claims
during  any twelve (12) month period or could otherwise reasonably be expected
to result in a Material Adverse Effect.
 
(m)           Loss of Collateral.  Any portion of the Collateral (other than a
portion that is immaterial) is damaged, seized or appropriated; provided, that
such an occurrence shall not constitute an Event of Default if the applicable
Borrowers repair, replace, rebuild or refurbish such damaged, seized or
appropriated Collateral with the approval of the Required Lenders, in
consultation with the Independent Engineer.
 
(n)           Event of Abandonment.  An Event of Abandonment occurs.
 
(o)           Taking or Total Loss.  An Event of Taking with respect to all or a
material portion of any Plant or any Equity Interests comprising the Collateral
occurs, or an Event of Total Loss occurs.
 
(p)           Reorganization Matters.  Any of the following occurs in any
Chapter 11 Case:
 
 
(i)
the bringing of a motion or taking of any action by a Debtor:  (w) to obtain
additional financing under Section 364(c) or (d) of the Bankruptcy Code not
otherwise permitted pursuant to this Agreement; (x) to grant any Lien other than
Permitted Lien upon or affecting any Collateral; (y) except as provided in the
Interim Order, Final Order or DIP Budget, as the case may be, to use cash
collateral under Section 363(c) of the Bankruptcy Code without the prior written
consent of the Administrative Agent and the Lenders; or

 
 
(ii)
the entry of an order in any of the Chapter 11 Cases confirming a plan or plans
of reorganization that does not contain a provision for termination of the DIP
Facility and repayment in full in cash of all the Obligations on or before the
effective date of such plan or plans; or

 
 
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(iii)
the entry of an order amending, supplementing, staying, vacating or otherwise
modifying the Financing Documents or the Interim Order or the Final Order
without the written consent of the Administrative Agent and the Lenders or the
filing by a Debtor of a motion for reconsideration with respect to the Interim
Order or the Final Order; or

 
 
(iv)
the Interim Order is not entered on or before the date that is 10 days after the
Petition Date; or

 
 
(v)
the Final Order is not entered on or before the date that is 45 days after the
date of entry of the Interim Order; or

 
 
(vi)
the payment of any Pre-Petition claim unless (i) reflected in the DIP Budget or
(ii) authorized pursuant to an order approved by the Bankruptcy Court and made
with the written consent of the Administrative Agent and the Lenders; or

 
 
(vii)
the allowance of any claim or claims under Sections 506(c) or 552(b) of the
Bankruptcy Code or otherwise against the Collateral; or

 
 
(viii)
the appointment of an interim or permanent trustee in any Chapter 11 Case or the
appointment of a receiver or an examiner in any Chapter 11 Case with expanded
powers to operate or manage the financial affairs, the business, or
reorganization of a Debtor; or

 
 
(ix)
the sale, without the written consent of the Administrative Agent and the
Lenders, of all or substantially all of a Debtor’s assets either through a sale
under Section 363 of the Bankruptcy Code, through a confirmed plan of
reorganization in the Chapter 11 Cases, or otherwise that does not provide for
payment in full in cash of the Obligations; or

 
 
(x)
the dismissal of any Chapter 11 Case, or the conversion of any Chapter 11 Case
from one under Chapter 11 to one under Chapter 7 of the Bankruptcy Code or a
Debtor shall file a motion or other pleading seeking the dismissal of any
Chapter 11 Case under Section 1112 of the Bankruptcy Code or otherwise; or

 
 
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(xi)
the entry of an order by the Bankruptcy Court granting relief from or modifying
the automatic stay of Section 362 of the Bankruptcy Code to allow any creditor
other than a Senior Secured Party to proceed against any material asset of a
Debtor; or

 
 
(xii)
the entry of an order in any Chapter 11 Case avoiding or requiring repayment of
any portion of the payments made on account of the Obligations; or

 
 
(xiii)
the failure of a Debtor to perform any of its obligations under the Interim
Order or the Final Order; or

 
 
(xiv)
the entry of an order in any of the Chapter 11 Cases granting any other
super-priority claim or Lien equal or superior to the Lien of the Collateral
Agent other than adequate protection Liens approved by the Bankruptcy Court in
the Interim Order or the Final Order; or

 
 
(xv)
a Debtor engages in or supports any challenge to the validity, perfection,
priority, extent or enforceability of the DIP Facility or the Pre-Petition
Obligations or the liens on or security interests in the assets of such Debtor
securing the DIP Facility or the Pre-Petition Obligations, including seeking to
equitably subordinate or avoid the liens securing the Pre-Petition Obligations;
or

 
 
(xvi)
a Debtor engages in or supports any investigation or asserts any claim or cause
of action (or supports the assertion of the same) against the Administrative
Agent, the  Lenders, the Pre-Petition Administrative Agent or the Pre-Petition
Senior Secured Parties; provided, however, it shall not constitute an Event of
Default if a Debtor provides basic loan information with respect to the
Pre-Petition Obligations to a party in interest or pursuant to an order of the
Bankruptcy Court and provides prior written notice to the Administrative Agent
and the Lenders of its intention or obligation to do so; or

 
 
(xvii)
any Person shall seek a Section 506(a) Determination with respect to the
Pre-Petition Obligations that is unacceptable to the Pre-Petition Administrative
Agent and the Pre-Petition Senior Secured Parties; or

 
 
(xviii)
the entry of an order extending any exclusive right that any Debtor may have to
propose a plan more than 120 days after the Petition Date, or to solicit votes
or to seek confirmation of plan on a date more than 180 days after the Petition
Date, in either case without the written consent of the Administrative Agent and
the Lenders; or

 
 
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(xix)
Lyles United, LLC (or any Affiliate thereof) or Pacific Ethanol (or any
Affiliate thereof) shall assert any claim (actual or contingent) (except any
claim asserted by Pacific Ethanol arising out of the Asset Management Agreement)
in any Case or shall challenge, contest or interfere, directly or indirectly,
with any claim of any Senior Secured Party or any Pre-Petition Senior Secured
Party in any Case; or

 
 
(xx)
any Project Document is rejected in any of the Cases without the prior consent
of the Required Lenders.

 
(q)           Asset Management Agreement.  The Asset Management Agreement shall
be terminated as a result of a breach thereunder by Pacific Ethanol or Pacific
Ethanol or any Affiliate of Pacific Ethanol shall challenge the validity or
enforceability of any performance guaranty of the obligations of Pacific Ethanol
under the Asset Management Agreement.
 
(r)           Change of Control.  A Change of Control occurs.
 
Section 9.02  Action Upon Event of Default.
 
(a)           If any Event of Default has occurred and is continuing, the
Administrative Agent shall, upon the direction of the Required Lenders,
notwithstanding the provisions of Section 362 of the Bankruptcy Code (the
automatic stay of Section 362 of the Bankruptcy Code shall be deemed modified
and vacated to permit the Senior Secured Parties to exercise their remedies
under this Agreement and the Financing Documents), without any application,
motion or notice to, hearing before, or order from, the Bankruptcy Court:
(i) terminate the DIP Facility; (ii) reduce the Commitment from time to time;
(iii) declare all or any portion of the Obligations due and payable;
(iv) increase the rate of interest applicable to the Obligations to the Default
Rate; (v) direct any or all of the Borrowers to sell or otherwise dispose of any
or all of the Collateral on terms and conditions acceptable to the
Administrative Agent and the Lenders pursuant to Sections 363, 365 and other
applicable provisions of the Bankruptcy Code (and, without limiting the
foregoing, direct any Borrower to assume and assign any lease or executory
contract included in the Collateral to the Collateral Agent’s designees in
accordance with and subject to Section 365 of the Bankruptcy Code), (vi) enter
onto the premises of any Borrower in connection with an orderly liquidation of
the Collateral, and (vii) exercise any rights and remedies provided to the
Senior Secured Parties under the Financing Documents or at law or equity,
including all remedies provided under the UCC and pursuant to the Interim Order
and the Final Order.
 
(b)           Notwithstanding anything to the contrary contained herein, the
Senior Secured Parties shall not be permitted to exercise any remedy (other than
those described in clauses (i), (ii), (iii) and (iv) of Section 9.02(a) (Action
Upon Event of Default))  unless the Administrative Agent shall have given three
(3) Business Days written notice (the “Notice Period”) to the Debtors, counsel
to the Committee and the Office of the U.S. Trustee during which Notice Period
the Debtors and the Committee may seek relief from the Bankruptcy Court to
re-impose or continue the automatic stay with respect to any remedy other than
those described in clauses (i), (ii), (iii) and (iv) of Section 9.02(a) (Action
Upon Event of Default); provided, that in any hearing after the giving of the
aforementioned notice, the only issue that may be raised by the Debtors and the
Committee being whether, in fact, an Event of Default has occurred and is
continuing.
 
 
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Section 9.03  Remedies.  Upon the occurrence and during the continuation of an
Event of Default, the Collateral Agent shall have the right, but not the
obligation, subject to the Orders, to do any of the following:
 
(a)           vote or exercise any and all of any Borrower's rights or powers
incident to its ownership of Equity Interests in any Borrower, including any
rights or powers to manage or control such Borrower;
 
(b)           demand, sue for, collect or receive any money or property at any
time payable to or receivable by any Borrower on account of or in exchange for
all or part of the Equity Interests pledged by it pursuant to the Orders;
 
(c)           amend, terminate, supplement or modify all or any of the Organic
Documents of the Borrowers;
 
(d)           proceed to protect and enforce the rights vested in it hereunder
and under the UCC;
 
(e)           cause all revenues and all other moneys and other property forming
part of the Collateral to be paid and/or delivered directly to it, and demand,
sue for, collect and receive any such moneys and property;
 
(f)           cause any action at law or in equity or other proceeding to be
instituted and prosecuted to collect or enforce any of the Obligations, or
rights hereunder or included in the Collateral, or for specific enforcement of
any covenant or agreement contained herein or in any Project Documents or other
agreements forming part of the Collateral, or in aid of the exercise of any
power herein or therein granted, or for any foreclosure hereunder and sale under
a judgment or decree in any judicial proceeding, or to enforce any other legal
or equitable right vested in it by this Agreement or by Law;
 
(g)           foreclose or enforce any other agreement or other instrument by or
under or pursuant to which the Obligations are issued or secured;
 
(h)           incur expenses, including attorneys' fees, consultants' fees, and
other costs in connection with the exercise of any right or power under this
Agreement or any other Financing Document;
 
(i)           perform any obligation of any Borrower hereunder or under any
other Financing Document or any Project Document or other agreement forming part
of the Collateral, submit renewal notices or exercise any purchase options under
leases, and make payments, purchase, contest or compromise any encumbrance,
charge, or lien, and pay taxes and expenses and insure, process and preserve the
Collateral without, however, any obligation to do so;
 
 
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(j)           take possession of the Collateral and of any and all books of
account and records of the Borrowers relating to any of the Collateral and
render it usable and repair and renovate the same without, however, any
obligation to do so, and enter upon, or authorize its designated agent to enter
upon, any location where the same may be located for that purpose (including the
right of the Collateral Agent to exclude the Borrowers and all Persons claiming
access through any of the Borrowers from any access to the Collateral or to any
part thereof) and the Collateral Agent and its representatives are hereby
granted an irrevocable license to enter upon such premises for such purpose,
control, manage, operate, rent and lease the Collateral, either separately or in
conjunction with the Project, collect all rents and income from the Collateral
and apply the same to reimburse the Senior Secured Parties for any reasonable
cost or expenses incurred hereunder or under any of the Financing Documents and
to the payment or performance of any of the Obligations, and apply the balance
to the Obligations as provided herein and any remaining excess balance to
whomsoever is legally entitled thereto;
 
(k)           make any reasonable compromise or settlement deemed desirable with
respect to any of the Collateral and extend the time of payment, arrange for
payment installments, or otherwise modify the terms of, any Collateral;
 
(1)           secure the appointment of a receiver of the Collateral or any part
thereof, whether incidental to a proposed sale of the Collateral or otherwise,
and all disbursements made by such receiver and the expenses of such
receivership shall be added to and be made a part of the Obligations and,
whether or not said principal sum, including such disbursements and expenses,
exceeds the indebtedness originally intended to be secured hereby, the entire
amount of said sum, including such disbursements and expenses, shall be secured
by the DIP Liens and shall be due and payable upon demand therefor and
thereafter shall bear interest at the Default Rate or the maximum rate permitted
by applicable Law, whichever is less;
 
(m)           enter into any extension, reorganization, deposit, merger,
consolidation or other agreement pertaining to, or deposit, surrender, accept,
hold or apply other property in exchange for, the Collateral or any part
thereof;
 
(n)           transfer the Collateral or any part thereof to the name of the
Collateral Agent or to the name of a Collateral Agent's nominee;
 
(o)           take possession of and endorse in the name of any Borrower or in
the name of the Collateral Agent, for the account of any Borrower, any bills of
exchange, checks, drafts, money orders, notes or any other chattel paper,
documents or instruments constituting all or any part of the Collateral or
received as interest, rent or other payment on or on account of the Collateral
or any part thereof or on account of its sale or lease;
 
(p)           appoint another Person (who may be an employee, officer or other
representative of the Collateral Agent) to do any of the foregoing, or take any
other action permitted hereunder, on behalf of the Collateral Agent;
 
 
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(q)           execute (in the name, place and stead of any Borrower)
endorsements, assignments and other instruments of conveyance or transfer with
respect to all or any of the Collateral;
 
(r)           take any other action which the Collateral Agent deems necessary
or desirable to protect or realize upon its security interest in the Collateral
or any part thereof;
 
(s)           require each Borrower to assemble the Collateral or any part
thereof and to make the same (to the extent the same is reasonably moveable)
available to the Collateral Agent at a place to be designated by the Collateral
Agent which is reasonably convenient to the Borrowers and the Collateral Agent;
 
(t)           make formal application for the transfer of all or any
Governmental Approvals of any Borrower to the Collateral Agent or to any
assignee of the Collateral Agent or to any purchaser of any of the Collateral to
the extent the same are assignable in accordance with their terms and applicable
Laws;
 
(u)           bring an action or proceeding to foreclose or proceed to sell any
real property pursuant to a power of sale; and/or
 
(v)           exercise any other or additional rights or remedies granted to the
Collateral Agent under any other provision of this Agreement or any other
Financing Document, or exercisable by a secured party under the UCC or under any
other applicable Law and without limiting the generality of the foregoing and
without notice except as specified below, sell the Collateral or any part
thereof in one or more parcels at public or private sale, at any exchange or
broker's board or elsewhere, at such price or prices and on such other terms as
the Collateral Agent may deem commercially reasonable in accordance with the
UCC.
 
Section 9.04  Minimum Notice Period.  If, pursuant to applicable Laws, prior
notice of any action described in Section 9.03 (Remedies) is required to be
given to any Borrower, each Borrower hereby acknowledges that the minimum time
required by such applicable Laws, or, if no minimum time is specified, ten (10)
days shall be deemed a reasonable notice period.
 
Section 9.05  Sale of Collateral.  In addition to exercising the foregoing
rights, the Collateral Agent may, to the extent permitted by applicable Laws and
subject to the Orders, arrange for and conduct the sale of the Collateral at a
public or private sale (as the Collateral Agent may elect) which sale may be
conducted by an employee or representative of the Collateral Agent, and any such
sale shall be conducted in a commercially reasonable manner.  The Collateral
Agent may release, temporarily or otherwise, to the applicable Borrower any item
of Collateral of which the Collateral Agent has taken possession pursuant to any
right granted to the Collateral Agent by this Agreement without waiving any
rights granted to the Collateral Agent under this Agreement, the other Financing
Documents or any other agreement related hereto or thereto.  Each Borrower, in
dealing with or disposing of the Collateral or any part thereof, hereby waives
all rights, legal and equitable, it may now or hereafter have to require
marshaling of assets or to require, upon foreclosure, sales of assets in a
particular order.  Each successor of any Borrower under the Financing Documents
agrees that it shall be bound by the above waiver, to the same extent as if such
successor gave the waiver itself.  Each Borrower also hereby waives, to the full
extent it may lawfully do so, the benefit of all laws providing for rights of
appraisal, valuation, stay, extension or redemption after foreclosure now or
hereafter in force.  If the Collateral Agent sells any of the Collateral upon
credit, the Borrower in respect of such Collateral will be credited only with
payments actually made by the purchaser and received by the Collateral
Agent.  In the event the purchaser fails to pay for the Collateral, the
Collateral Agent may resell the Collateral and the relevant Borrower shall be
credited with the proceeds of the sale in excess of the amounts required to pay
the Obligations in full.  In the event the Collateral Agent bids at any
foreclosure or trustee's sale or at any private sale permitted by Law and this
Agreement or any other Financing Document, the Collateral Agent may bid all or
less than the amount of the Obligations.  The Collateral Agent shall not be
obligated to make any sale of Collateral regardless of whether or not notice of
sale has been given.  The Collateral Agent may adjourn any public or private
sale from time to time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and place to which it
was so adjourned.  Each Borrower further acknowledges and agrees that any offer
to sell any part of the Collateral that has been (i) publicly advertised on a
bona fide basis in a newspaper or other publication of general circulation or
(ii) made privately in the manner described herein to not less than fifteen (15)
bona fide offerees shall be deemed to involve a "public disposition" for the
purposes of Section 9-610(c) of the UCC.
 
 
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Section 9.06  Actions Taken by Collateral Agent.  Any action or proceeding to
enforce this Agreement or any Project Document or other agreement forming part
of the Collateral may be taken by the Collateral Agent either in the name of the
applicable Borrower or in the Collateral Agent's name, as the Collateral Agent
may deem necessary.
 
Section 9.07  Private Sales.  The Collateral Agent shall incur no liability as a
result of the sale of the Collateral, or any part thereof, at any private sale
made in good faith by Collateral Agent pursuant to Section 9.03 (Remedies) or
Section 9.05 (Sale of Collateral) conducted in a commercially reasonable manner
and in accordance with the requirements of applicable Laws.  Each Borrower
hereby waives any claims against the Collateral Agent and the other Senior
Secured Parties arising by reason of the fact that the price at which the
Collateral may have been sold at such a private sale was less than the price
that might have been obtained at a public sale or was less than the aggregate
amount of the Obligations, even if the Collateral Agent accepts the first offer
received and does not offer the Collateral to more than one offeree, provided
that such private sale is conducted in a commercially reasonable manner and in
accordance with applicable Laws.
 
Section 9.08  Access to Land.  In exercising its right to take possession of the
Collateral upon the occurrence and during the continuation of an Event of
Default hereunder, the Collateral Agent, personally or by its agents or
attorneys, and subject to the rights of any tenant under any lease or sublease
of the Collateral and subject to the Orders, to the fullest extent permitted by
Law, may enter upon any land owned or leased by any Borrower without being
guilty of trespass or any wrongdoing, and without liability to such Borrower for
damages thereby occasioned.
 
Section 9.09  Compliance With Limitations and Restrictions.  Each Borrower
hereby agrees that in respect of any sale of any of the Collateral pursuant to
the terms hereof, the Collateral Agent is hereby authorized to comply with any
limitation or restriction in connection with such sale as it may be advised by
counsel is necessary in order to avoid any violation of applicable Laws, or in
order to obtain any required approval of the sale or of the purchaser by any
Governmental Authority or official, and each Borrower further agrees that such
compliance shall not result in such sale being considered or deemed not to have
been made in a commercially reasonable manner, nor shall the Collateral Agent be
liable or accountable to such Borrower for any discount allowed by reason of the
fact that such Collateral is sold in compliance with any such limitation or
restriction.
 
 
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Section 9.10  No Impairment of Remedies.  If, in the exercise of any of its
rights and remedies hereunder, the Collateral Agent forfeits any of its rights
or remedies, including any right to enter a deficiency judgment against any
Borrower or any other Person, whether because of any applicable Law pertaining
to "election of remedies" or otherwise, each Borrower hereby consents to such
action by the Collateral Agent and, to the extent permitted by applicable Law,
waives any claim based upon such action, even if such action by the Collateral
Agent would result in a full or partial loss of any rights of subrogation,
indemnification or reimbursement which such Borrower might otherwise have had
but for such action by the Collateral Agent or the terms herein.  Any election
of remedies which results in the denial or impairment of the right of the
Collateral Agent to seek a deficiency judgment against any of the parties to any
of the Financing Documents shall not, to the extent permitted by applicable
Laws, impair any Borrower's obligations hereunder.
 
Section 9.11  Attorney-In-Fact.  (a) Each Borrower hereby constitutes and
appoints the Collateral Agent, acting for and on behalf of itself and the other
Senior Secured Parties and each successor or permitted assign of the Collateral
Agent and the other Senior Secured Parties, the true and lawful attorney-in-fact
of such Borrower, with full power and authority in the place and stead of such
Borrower and in the name of such Borrower, Collateral Agent or otherwise to
enforce all rights, interests and remedies of such Borrower with respect to the
Collateral or enforce all rights, interests and remedies of the Collateral Agent
under this Agreement (including the rights set forth in this Article IX);
provided, however, that Collateral Agent shall not exercise any of the
aforementioned rights unless an Event of Default has occurred and is continuing
and has not been waived or cured in accordance with this Agreement and the other
Financing Documents and delivery of notice as set forth in Section 9.02(b) and
the Orders.  This power of attorney is a power coupled with an interest and
shall be irrevocable; provided further, however, that nothing in this Agreement
shall prevent any Borrower from, prior to the exercise by Collateral Agent of
any of the aforementioned rights, undertaking such Borrower's operations in the
ordinary course of business in accordance with the Collateral and the Financing
Documents.
 
(b)           If any Borrower fails to perform any agreement or obligation
contained herein, and such failure continues for ten (10) days following
delivery of written notice by the Collateral Agent to such Borrower, and subject
to the Orders, the Collateral Agent itself may perform, or cause performance of,
such agreement or obligation, and the reasonable expenses of the Collateral
Agent incurred in connection therewith shall be payable by such Borrower and
shall be secured by the Collateral.
 
Section 9.12  Application of Proceeds.  Any moneys received by the Collateral
Agent after the occurrence and during the continuance of an Event of Default may
be held by the Collateral Agent on account of the Obligations without prejudice
to any claim by any Senior Secured Party for any deficiency after such moneys
are received by the Senior Secured Parties, and each Debtor shall remain liable
for any such deficiency.  All such moneys may be applied to such part of the
Obligations as the Senior Secured Parties may direct.  The Senior Secured
Parties may at any time change any such appropriation of any such moneys
received by the Senior Secured Parties and may reapply the same to any other
part of the Obligations as the Senior Secured Parties may from time to time see
fit, notwithstanding any previous application.
 

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ARTICLE X

 
THE AGENTS
 
Section 10.01  Appointment and Authority.  xxiv)  Each of the Lenders hereby
irrevocably appoints, designates and authorizes each Agent to take such action
on its behalf under the provisions of this Agreement and each other Financing
Document and to exercise such powers and perform such duties as are expressly
delegated to such Agent by the terms of this Agreement or any other Financing
Document, together with such actions as are reasonably incidental thereto.  The
provisions of this Article X are solely for the benefit of the Agents and the
Lenders, and neither the Borrowers nor any other Person shall have rights as a
third party beneficiary of any of such provisions.
 
(b)           Each Lender hereby appoints WestLB as its Administrative Agent
under and for purposes of each Financing Document to which it is a
party.  WestLB hereby accepts this appointment and agrees to act as the
Administrative Agent for the Lenders in accordance with the terms of this
Agreement.  Each Lender appoints and authorizes the Administrative Agent to act
on behalf of such Lender under each Financing Document to which it is a party
and, in the absence of other written instructions from the Required Lenders
received from time to time by the Administrative Agent (with respect to which
the Administrative Agent agrees that it will comply, except as otherwise
provided in this Section 10.01 or as otherwise advised by counsel), to exercise
such powers hereunder and thereunder as are specifically delegated to or
required of the Administrative Agent by the terms hereof and thereof, together
with such powers as may be reasonably incidental thereto.  Notwithstanding any
provision to the contrary contained elsewhere in any Financing Document, the
Administrative Agent shall not have any duties or responsibilities, except those
expressly set forth herein, nor shall the Administrative Agent have or be deemed
to have any fiduciary relationship with any Lender, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into any Financing Document or otherwise exist against the Administrative
Agent.  Without limiting the generality of the foregoing sentence, the use of
the term “agent” in this Agreement with reference to the Administrative Agent is
not intended to connote any fiduciary or other implied (or express) obligations
arising under agency doctrine of any applicable Law.  Instead, such term is used
merely as a matter of market custom, and is intended to create or reflect only
an administrative relationship between independent contracting parties.
 
 
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(c)           Each Lender hereby appoints WestLB as its Collateral Agent under
and for purposes of each Financing Document to which it is a party.  WestLB
hereby accepts this appointment and agrees to act as the Collateral Agent for
the Lenders in accordance with the terms of this Agreement.  Each of the Lenders
hereby irrevocably appoints and authorizes the Collateral Agent to act as the
agent of such Lender for purposes of acquiring, holding and enforcing any and
all Liens on Collateral granted by any Borrower to the Collateral Agent in order
to secure any of the Obligations, together with such powers and discretion as
are reasonably incidental thereto.  In this connection the Collateral Agent, and
any co-agents, sub-agents and attorneys-in-fact appointed by the Collateral
Agent, as the case may be, pursuant to Section 10.05 (Delegation of Duties) for
purposes of holding or enforcing any Lien on the Collateral (or any portion
thereof), or for exercising any rights and remedies thereunder at the direction
of the Collateral Agent, as the case may be, shall be entitled to the benefits
of all provisions of this Article X and Article XI (Miscellaneous Provisions)
(including Section 11.09 (Indemnification by the Borrowers), as though such
co-agents, sub-agents and attorneys-in-fact were the Collateral Agent under the
Financing Documents) as if set forth in full herein with respect
thereto.  Notwithstanding any provision to the contrary contained elsewhere in
any Financing Document, the Collateral Agent shall not have any duties or
responsibilities, except those expressly set forth herein or in the other
Financing Documents, nor shall the Collateral Agent have or be deemed to have
any fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into any
Financing Document or otherwise exist against the Collateral Agent.  Without
limiting the generality of the foregoing sentence, the use of the term “agent”
in this Agreement with reference to the Collateral Agent is not intended to
connote any fiduciary or other implied (or express) obligations arising under
agency doctrine of any applicable Law.  Instead, such term is used merely as a
matter of market custom, and is intended to create or reflect only an
administrative relationship between independent contracting parties.
 
(d)           Each Lender hereby appoints and authorizes the Accounts Bank to
act as depository for the Collateral Agent, on behalf of the Senior Secured
Parties, and as the securities intermediary or bank with respect to the Project
Accounts for the benefit of the Collateral Agent, on behalf of the Senior
Secured Parties, with such powers as are expressly delegated to the Accounts
Bank by the terms of this Agreement, together with such other powers as are
reasonably incidental thereto.  The Accounts Bank hereby accepts this
appointment and agrees to act as the depository for the Collateral Agent, on
behalf of the Senior Secured Parties, and as the securities intermediary or bank
with respect to the Project Accounts, for the benefit of the Collateral Agent,
on behalf of the Senior Secured Parties, in accordance with the terms of this
Agreement.  The Accounts Bank further agrees to accept and hold, as securities
intermediary or as a bank, in its custody and in accordance with the terms of
this Agreement, for the Collateral Agent, on behalf of the Senior Secured
Parties, the Project Accounts and the Accounts Property.  Each Lender also
appoints and authorizes the Accounts Bank to act on its behalf for the purpose
of the creation and perfection of a first priority security interest in favor of
the Collateral Agent, on behalf of the Senior Secured Parties, in the Project
Accounts to the extent that they are deemed under applicable Law not to
constitute securities accounts or deposit accounts and in any Accounts Property
that is deemed under applicable Law not to constitute a Financial Asset.  The
Accounts Bank accepts this appointment and agrees to act as the Accounts Bank
for the Collateral Agent, on behalf and for the benefit of the Senior Secured
Parties, for such purpose and to hold and maintain exclusive dominion and
control over the Project Accounts and any such Accounts Property on behalf of
the Collateral Agent, acting on behalf of the Senior Secured
Parties.  Notwithstanding any provision to the contrary contained elsewhere in
any Financing Document, the Accounts Bank shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall the
Accounts Bank have or be deemed to have any fiduciary relationship with any
Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into any Financing Document or
otherwise exist against the Accounts Bank.  Without limiting the generality of
the foregoing sentence, the use of the term “agent” in this Agreement with
reference to the Accounts Bank is not intended to connote any fiduciary or other
implied (or express) obligations arising under agency doctrine of any applicable
Law.  Instead, such term is used merely as a matter of market custom, and is
intended to create or reflect only an administrative relationship between
independent contracting parties.
 
 
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Section 10.02  Rights as a Lender.  Each Person serving as Agent hereunder or
under any other Financing Document shall have the same rights and powers in its
capacity as a Lender as any other Lender and may exercise the same as though it
were not an Agent.  Each such Person and its Affiliates may accept deposits
from, lend money to, act as the financial advisor or in any other advisory
capacity for and generally engage in any kind of business with any Borrower or
Affiliate thereof as if such Person were not an Agent hereunder and without any
duty to account therefor to the Lenders or any other Agent.
 
Section 10.03  Exculpatory Provisions.  xxv)  No Agent shall have any duties or
obligations except those expressly set forth herein and in the other Financing
Documents.  Without limiting the generality of the foregoing, no Agent shall:
 
 
(i)
be subject to any fiduciary or other implied duties, regardless of whether a
Default or Event of Default has occurred and is continuing;

 
 
(ii)
have any duty to take any discretionary action or exercise any discretionary
powers, except discretionary rights and powers expressly contemplated hereby or
by the other Financing Documents that such Agent is required to exercise as
directed in writing by the Required Lenders (or such other number or percentage
of the Lenders as shall be expressly provided for herein or in the other
Financing Documents); provided that such Agent shall not be required to take any
action that, in its opinion or the opinion of its counsel, may expose the Agent
to liability or that is contrary to any Financing Document or applicable Law; or

 
 
(iii)
except as expressly set forth herein and in the other Financing Documents, have
any duty to disclose, nor shall any Agent be liable for any failure to disclose,
any information relating to any Borrower or any of its Affiliates that is
communicated to or obtained by the Person serving as an Agent or any of its
Affiliates in any capacity.

 
(b)           No Agent shall be liable for any action taken or not taken by it
(i) with the prior written consent or at the request of the Required Lenders (or
such other number or percentage of the Lenders as may be necessary, or as such
Agent may believe in good faith to be necessary, under the circumstances as
provided in Section 10.01 (Appointment and Authority)), (ii) in connection with
any amendment, consent, approval or waiver which it is permitted under the
Financing Documents to enter into, agree to or grant or (iii) in the absence of
its own gross negligence or willful misconduct.  Each Agent shall be deemed not
to have knowledge of any Default or Event of Default unless and until notice
describing such Default or Event of Default is given to such Agent in writing by
a Borrower or a Lender.
 
 
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(c)           No Agent shall be responsible for or have any duty to ascertain or
inquire into (i) any statement, warranty or representation made in or in
connection with this Agreement or any other Financing Document, (ii) the
contents of any certificate, report or other document delivered hereunder or
thereunder or in connection herewith or therewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth herein or therein or the occurrence or continuance of any Default or Event
of Default, (iv) the validity, enforceability, effectiveness or genuineness of
this Agreement, any other Financing Document or any other agreement, instrument
or document, or the perfection or priority of any Lien or security interest, or
(v) the satisfaction of any condition set forth in Article VI (Conditions
Precedent) or elsewhere herein, other than to confirm receipt of items expressly
required to be delivered to any such Agent.
 
Section 10.04  Reliance by Agents.  Each Agent shall be entitled to rely upon,
and shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing
(including any electronic message, internet or intranet website posting or other
distribution) believed by it to be genuine and to have been signed, sent or
otherwise authenticated by the proper Person.  Each Agent also may rely upon any
statement made to it orally or by telephone and believed by it to have been made
by the proper Person, and shall not incur any liability for relying thereon.  In
determining compliance with any condition hereunder to the making of a Loan that
by its terms must be fulfilled to the satisfaction of a Lender, each Agent may
presume that such condition is satisfactory to such Lender unless such Agent
shall have received notice to the contrary from such Lender prior to the making
of such Loan.  Each Agent may consult with legal counsel (who may be counsel for
a Borrower), independent accountants and other experts selected by it, and shall
not be liable for any action taken or not taken by it in accordance with the
advice of any such counsel, accountants or experts.
 
Section 10.05  Delegation of Duties.  Each Agent may perform any and all of its
duties and exercise any and all its rights and powers hereunder or under any
other Financing Document by or through any one or more sub agents appointed by
such Agent.  Each Agent and any such sub agent may perform any and all of its
duties and exercise its rights and powers by or through their respective Related
Parties.  The exculpatory provisions of this Article X shall apply to any such
sub agent and to the Related Parties of such Agent and any such sub agent, and
shall apply to their respective activities in connection with their acting as
Agent.
 
Section 10.06  Resignation or Removal of Agent.  xxvi)  Any Agent may resign
from the performance of all its functions and duties hereunder and/or under the
other Financing Documents at any time by giving thirty (30) days’ prior notice
to the Borrowers and the Lenders.  Any Agent may be removed at any time by the
Required Lenders.  Such resignation or removal shall take effect upon the
appointment of a successor Agent, in accordance with this Section 10.06.
 
 
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(b)           Upon any notice of resignation by any Agent or upon the removal of
any Agent by the Required Lenders, the Required Lenders shall appoint a
successor Agent hereunder and under each other Financing Document who shall be a
commercial bank having a combined capital and surplus of at least two hundred
fifty million Dollars ($250,000,000).
 
(c)           If no successor Agent has been appointed within thirty (30) days
after the date such notice of resignation was given by such Agent or the
Required Lenders elected to remove such Agent, any Senior Secured Party may
petition any court of competent jurisdiction for the appointment of a successor
Agent.  Such court may thereupon, after such notice, if any, as it may deem
proper, appoint a successor Agent, as applicable, who shall serve as Agent,
hereunder and under each other Financing Document until such time, if any, as
the Required Lenders appoint a successor Agent, as provided above.
 
(d)           Upon the acceptance of a successor’s appointment as Agent
hereunder, such successor shall succeed to and become vested with all of the
rights, powers, privileges and duties of the retiring (or removed) Agent, and
the retiring (or removed) Agent shall be discharged from all of its duties and
obligations hereunder or under the other Financing Documents.  After the
retirement or removal of any Agent hereunder and under the other Financing
Documents, the provisions of this Article X shall continue in effect for the
benefit of such retiring (or removed) Agent, its sub agents and their respective
Related Parties in respect of any actions taken or omitted to be taken by any of
them while the retiring Agent was acting as Agent.
 
(e)           If a retiring or removed Agent is the Accounts Bank, such Accounts
Bank will promptly transfer all of the Project Accounts and the Accounts
Property to the possession or control of the successor Accounts Bank and will
execute and deliver such notices, instructions and assignments as may be
reasonably necessary or desirable to transfer the rights of the Accounts Bank
with respect to the Project Accounts and the Accounts Property to the successor
Accounts Bank.
 
(f)           If a retiring or removed Agent is the Collateral Agent, such
Collateral Agent will promptly transfer any Collateral in the possession or
control of such Collateral Agent to the successor Collateral Agent and will
execute and deliver such notices, instructions and assignments as may be
reasonably necessary or desirable to transfer the rights of the Collateral Agent
with respect to such Collateral property to the successor Collateral Agent.
 
Section 10.07  No Amendment to Duties of Agent Without Consent.  No Agent shall
be bound by any waiver, amendment, supplement or modification of this Agreement
or any other Financing Document that affects its rights or duties hereunder or
thereunder unless such Agent shall have given its prior written consent, in its
capacity as Agent, thereto.
 
 
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Section 10.08  Non-Reliance on Agent and Other Lenders.  Each Lender
acknowledges that it has, independently and without reliance upon any Agent or
any other Lender or any of their Related Parties and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement and make its Loans.  Each Lender also
acknowledges that it will, independently and without reliance upon any Agent or
any other Lender or any of their Related Parties and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any other Financing Document or any related agreement or any document furnished
hereunder or thereunder.
 
Section 10.09  Collateral Agent May File Proofs of Claim.  xxvii)  In case of
the pendency of any bankruptcy or insolvency proceeding relative to any
Borrower, the Collateral Agent (irrespective of whether the principal of any
Loan shall then be due and payable as herein expressed or by declaration or
otherwise and irrespective of whether the Collateral Agent or any other Senior
Secured Party shall have made any demand on any Borrower) shall be entitled and
empowered, but shall not be obligated to, by intervention in such proceeding or
otherwise:
 
 
(i)
to file and prove a claim for the whole amount of the principal and interest
owing and unpaid in respect of the Loans and all other Obligations that are
owing and unpaid and to file such other documents as may be necessary or
advisable in order to have the claims of the Senior Secured Parties (including
any claim for the reasonable compensation, expenses, disbursements and advances
of the Senior Secured Parties and their respective agents and counsel and all
other amounts due the Senior Secured Parties under Sections 3.11 (Fees), 11.07
(Costs and Expenses) and 11.09 (Indemnification by the Borrowers)) allowed in
such judicial proceeding; and

 
 
(ii)
to collect and receive any monies or other property payable or deliverable on
any such claims and to distribute the same.

 
Any custodian, receiver, assignee, trustee, liquidator, sequestrator or other
similar official in any such judicial proceeding is hereby authorized by each
Lender to make such payments to the Collateral Agent and, in the event that the
Collateral Agent may consent to the making of such payments directly to the
Lenders, to pay to the Collateral Agent any amount due for the reasonable
compensation, expenses, disbursements and advances of the Agents and their
respective agents and counsel, and any other amounts due the Agents under
Sections 3.11 (Fees), 11.07 (Costs and Expenses) and 11.09 (Indemnification by
the Borrowers).
 
(b)           Nothing contained herein shall be deemed to authorize the
Collateral Agent to authorize or consent to or accept or adopt on behalf of any
Lender any plan of reorganization, arrangement, adjustment or composition
affecting the Obligations or the rights of any Lender or to authorize the
Collateral Agent to vote in respect of the claim of any Lender in any such
proceeding.
 
 
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Section 10.10  Collateral Matters.  xxviii)  The Lenders irrevocably authorize
the Collateral Agent to release any Lien on any property granted to or held by
the Collateral Agent under any Financing Document (i) upon the occurrence of the
Discharge Date, (ii) if approved, authorized or ratified in writing in
accordance with Section 11.01 (Amendments, Etc.) or (iii) as permitted pursuant
to the terms of the Financing Documents (including as contemplated by Sections
7.02(f) (Negative Covenants-Asset Dispositions).
 
(b)           Upon request by the Collateral Agent at any time, the Lenders will
confirm in writing the Collateral Agent’s authority to release its interest in
particular types or items of property pursuant to this Section 10.10.  In each
case as specified in this Section 10.10, the Collateral Agent will, at the
Borrowers’ expense, execute and deliver to the applicable Borrower such
documents as such Person may reasonably request to evidence the release of such
item of Collateral in accordance with the terms of the Financing Documents and
this Section 10.10.
 
Section 10.11  Copies.  Each Agent shall give prompt notice to each Lender of
each material notice or request required or permitted to be given to such Agent
by the Borrowers pursuant to the terms of this Agreement or any other Financing
Document (unless concurrently delivered to the Lenders by the Borrowers).  Each
Agent will distribute to each Lender each document or instrument (including each
document or instrument delivered by any Borrower to such Agent pursuant to
Article V (Representations and Warranties), Article VI (Conditions Precedent)
and Article VII (Covenants)) received for its account and copies of all other
communications received by such Agent from the Borrowers for distribution to the
Lenders by such Agent in accordance with the terms of this Agreement or any
other Financing Document.
 
ARTICLE XI

 
MISCELLANEOUS PROVISIONS
 
Section 11.01  Amendments, Etc.  No amendment or waiver of any provision of this
Agreement or any other Financing Document, and no consent to any departure by
any Borrower or Borrower Agent therefrom, shall be effective unless in writing
signed by the Required Lenders (or, if expressly contemplated hereby, the
Administrative Agent) and, in the case of an amendment, the Borrowers and
Borrower Agent, and in each such case acknowledged by the Administrative Agent,
and each such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given; provided that no such amendment,
waiver or consent shall:
 
(a)           waive any condition set forth in Section 6.01 (Conditions to
Closing) without the prior consent of all the Lenders (other than the Non-Voting
Lenders);
 
(b)           extend or increase the Commitment of any Lender (or reinstate any
Commitment terminated pursuant to Section 9.02 (Action Upon Event of Default)
without the prior written consent of such Lender (other than any Non-Voting
Lender);
 
(c)           postpone any date scheduled for any payment of principal or
interest under Section 3.01 (Repayment of Loans) or 3.02 (Interest Payment
Dates), or any date fixed by the Administrative Agent for the payment of fees or
other amounts due to the Lenders (or any of them) hereunder or under any other
Financing Document without the prior written consent of each Lender affected
thereby (other than any Non-Voting Lender);
 
 
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(d)           reduce the principal of, or the rate of interest specified herein
on, any Loan, or any Fees or other amounts (including any mandatory prepayments
under Section 3.08 (Mandatory Prepayment) payable hereunder or under any other
Financing Document to any Lender without the prior written consent of each
Lender directly affected thereby (other than any Non-Voting Lender); provided
that only the prior written consent of the Required Lenders shall be necessary
to amend the definition of Default Rate or to waive any obligation of the
Borrowers to pay interest at the Default Rate;
 
(e)           change the order of application of any reduction in the
Commitments or any prepayment of Loans from the application thereof set forth in
the applicable provisions of Section 2.06 (Termination or Reduction of
Commitment), Section 3.07 (Optional Prepayment) or 3.08 (Mandatory Prepayment),
respectively, in any manner without the prior written consent of each Lender
affected thereby (other than any Non-Voting Lender);
 
(f)           change any provision of this Section 11.01, the definition of
Required Lenders or any other provision of any Financing Document specifying the
number or percentage of Lenders required to amend, waive or otherwise modify any
rights under any Financing Document (including any such provision specifying the
number or percentage of Lenders required to waive any Event of Default or
forbear from taking any action or pursuing any remedy with respect to any Event
of Default), or make any determination or grant any consent under any Financing
Document, without the prior written consent of each Lender (other than any
Non-Voting Lender); or
 
(g)           release (i) any Borrower from all or substantially all of its
obligations under any Financing Document, or (ii) all or substantially all of
the Collateral in any transaction or series of related transactions, without the
prior written consent of each Lender (other than any Non-Voting Lender);
 
and provided further that (i) no amendment, waiver or consent shall, unless in
writing and signed by an Agent in addition to the Lenders required above, affect
the rights or duties of, or any fees or other amounts payable to, such Agent
under this Agreement or any other Financing Document; and (ii) Section 11.03(h)
(Assignments) may not be amended, waived or otherwise modified without the prior
written consent of each Granting Lender all or any part of whose Loan is being
funded by an SPV at the time of such amendment, waiver or other modification.
 
Notwithstanding the other provisions of this Section 11.01, the Borrowers, the
Borrower Agent, the Collateral Agent and the Administrative Agent may (but shall
have no obligation to) amend or supplement the Financing Documents without the
consent of any Lender: (i) to cure any ambiguity, defect or inconsistency; (ii)
to make any change that would provide any additional rights or benefits to the
Lenders; or (iii) to make, complete or confirm any grant of Collateral permitted
or required by this Agreement or any release of any Collateral that is otherwise
permitted under the terms of this Agreement or the Orders.  Notwithstanding
anything to the contrary herein, no Defaulting Lender shall have any right to
approve or disapprove any amendment, waiver or consent hereunder, except that
the Commitment of such Lender may not be increased or extended without the
consent of such Lender.
 
 
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Section 11.02  Applicable Law; Jurisdiction; Etc.  xxix)  GOVERNING LAW.  THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK, UNITED STATES OF AMERICA, WITHOUT REFERENCE TO CONFLICTS
OF LAWS (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).
 
(b)           All judicial proceedings brought against any Borrower or Borrower
Agent arising out of or relating to this Agreement or any other Financing
Document, or nay Obligations hereunder or thereunder, must be brought in the
Bankruptcy Court and, if the Bankruptcy Court does not have (or abstains
from)jurisdiction, such proceeding may be brought in the courts of the State of
New York, the courts of the Unites States of America for the Southern District
of New York and appellate court of any thereof.
 
(c)           SUBMISSION TO JURISDICTION.  EACH BORROWER AND THE BORROWER AGENT
IRREVOCABLY AND UNCONDITIONALLY CONSENTS AND AGREES THAT THE BANKRUPTCY COURT
SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES
BETWEEN EACH BORROWER AND THE BORROWER AGENT, ON THE ONE HAND, AND EACH LENDER
AND EACH AGENT, ON THE OTHER HAND, PERTAINING TO THIS AGREEMENT OR ANY OF THE
OTHER FINANCING DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OF THE OTHER FINANCING DOCUMENTS; PROVIDED, THAT EACH BORROWER
AND THE BORROWER AGENT ACKNOWLEDGE THAT ANY APPEALS FROM THE BANKRUPTCY COURT
MAY HAVE TO BE HEARD BY A COURT OTHER THAN THE BANKRUPTCY COURT; PROVIDED,
FURTHER, THAT, SUBJECT TO RECEIVING PRIOR APPROVAL FROM THE BANKRUPTCY COURT
AUTHORIZING SUCH ACTION, NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO
PRECLUDE EACH LENDER AND EACH AGENT BRINGING SUIT OR TAKING OTHER LEGAL ACTION
IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR
THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER.
 
(d)           WAIVER OF VENUE.  EACH BORROWER AND THE BORROWER AGENT IRREVOCABLY
AND UNCONDITIONALLY WAIVES, 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 AGREEMENT OR ANY OTHER
FINANCING DOCUMENT IN ANY COURT REFERRED TO IN SECTION 11.02(b).  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.
 
 
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(e)           Immunity.  To the extent that any Borrower or the Borrower Agent
has or hereafter may acquire any immunity from jurisdiction of any court or from
any legal process (whether through service or notice, attachment prior to
judgment, attachment in aid of execution, execution or otherwise) with respect
to itself or its property, each Borrower and the Borrower Agent hereby
irrevocably and unconditionally waives such immunity in respect of its
obligations under the Financing Documents and, without limiting the generality
of the foregoing, agrees that the waivers set forth in this Section 11.02(e)
shall have the fullest scope permitted under the Foreign Sovereign Immunities
Act of 1976 of the United States and are intended to be irrevocable for purposes
of such Act.
 
(f)           WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY OTHER FINANCING DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR
ANY OTHER THEORY).  EACH PARTY HERETO (i) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE
THE FOREGOING WAIVER AND (ii) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO
HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER FINANCING DOCUMENTS
BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION
11.02.
 
Section 11.03  Assignments.  xxx)   The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns permitted hereby, except that neither any Borrower nor
the Borrower Agent may assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of each Agent and
Lender, and no Lender may assign or otherwise transfer any of its rights or
obligations hereunder except (i) to an Eligible Assignee in accordance with
Section 11.03(b), (ii) by way of participation in accordance with Section
11.03(d), (iii) by way of pledge or assignment of a security interest subject to
the restrictions of Section 11.03(f), or (iv) to an SPV in accordance with the
provisions of Section 11.03(h) (and any other attempted assignment or transfer
by any party hereto shall be null and void).  Nothing in this Agreement, express
or implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby, Participants
to the extent provided in this Section 11.03 and, to the extent expressly
contemplated hereby, the Related Parties of each Agent and Lender) any legal or
equitable right, remedy or claim under or by reason of this Agreement.
 
 
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(b)           Any Lender may at any time after the date hereof assign to one or
more Eligible Assignees all or a portion of its rights and obligations under
this Agreement (including all or a portion of its Commitment and the Loans at
the time owing to it); provided that (i) except in the case of an assignment of
the entire remaining amount of the assigning Lender’s Commitment and the Loans
at the time owing to it or in the case of an assignment to a Lender or an
Affiliate of a Lender or an Approved Fund with respect to a Lender, the
Commitment (which for this purpose includes the Loans outstanding thereunder)
or, if the applicable Commitment is not then in effect, the principal
outstanding balance of the Loans of the assigning Lender subject to each such
assignment, determined as of the date the Lender Assignment Agreement with
respect to such assignment is delivered to the Administrative Agent or, if
“Trade Date” is specified in the Lender Assignment Agreement, as of the Trade
Date, shall not be less than one million Dollars ($1,000,000) and such assigning
Lender’s entire Commitment, unless the Administrative Agent otherwise consents
in writing; (ii) each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender’s rights and obligations under
this Agreement with respect to the Loan or the Commitment assigned; (iii) the
parties to each assignment shall execute and deliver to the Administrative Agent
a Lender Assignment Agreement, together with a processing and recordation fee of
two thousand five hundred Dollars ($2,500); provided that (A) no such fee shall
be payable in the case of an assignment to a Lender, an Affiliate of a Lender or
an Approved Fund with respect to a Lender and (B) in the case of contemporaneous
assignments by a Lender to one or more Funds managed by the same investment
advisor (which Funds are not then Lenders hereunder), only a single such two
thousand five hundred Dollars ($2,500) fee shall be payable for all such
contemporaneous assignments; (iv) the Eligible Assignee, if it is not a Lender
prior to such assignment, shall deliver to the Administrative Agent an
administrative questionnaire and (v) the assignor shall provide notice of such
assignment to the Borrower Agent.  Subject to acceptance and recording thereof
by the Administrative Agent pursuant to Section 11.03(c), on and after the
effective date specified in each Lender Assignment Agreement, the Eligible
Assignee thereunder shall be a party to this Agreement and, to the extent of the
interest assigned by such Lender Assignment Agreement, have the rights and
obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Lender
Assignment Agreement, be released from its obligations under this Agreement
(and, in the case of a Lender Assignment Agreement covering all of the assigning
Lender’s rights and obligations under this Agreement, such Lender shall cease to
be a party hereto but shall continue to be entitled to the benefits of Sections
4.01 (Eurodollar Rate Lending Unlawful), 4.03 (Increased Eurodollar Loan Costs),
4.05 (Funding Losses), 11.07 (Costs and Expenses) and 11.09 (Indemnification by
the Borrowers) with respect to facts and circumstances occurring prior to the
effective date of such assignment).  Upon request, the Borrowers (at their
expense) shall execute and deliver a Note to the assignee Lender.  Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this Section 11.03(b) shall be treated for purposes of
this Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with Section 11.03(d).
 
(c)           The Administrative Agent, acting solely for this purpose as an
agent of the Borrowers, shall maintain at the Administrative Agent’s office a
copy of each Lender Assignment Agreement delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans owing to, each Lender pursuant to the terms
hereof from time to time (the “Register”).  The entries in the Register shall be
conclusive, and the Borrowers, the Agents and the Lenders may treat each Person
whose name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement, notwithstanding notice to the
contrary.  The Register shall be available for inspection by the Borrowers at
any reasonable time and from time to time upon reasonable prior notice.  In
addition, at any time that a request for a consent for a material or other
substantive change to the Financing Documents is pending, any Lender may request
and receive from the Administrative Agent a copy of the Register.
 
 
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(d)           Any Lender may at any time, without the consent of, or notice to,
the Borrowers, the Borrower Agent or any Agent, sell participations to any
Person (each, a “Participant”) in all or a portion of such Lender’s rights
and/or obligations under this Agreement (including all or a portion of its
Commitment and/or the Loans owing to it); provided that (i) such Lender’s
obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations and (iii) the Borrowers, the Borrower Agent, the Agents and the
other Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement.  Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce this
Agreement and to approve any amendment, modification or waiver of any provision
of this Agreement; provided that such agreement or instrument may provide that
such Lender will not, without the consent of the Participant, agree to any
amendment, waiver or other modification described in the first proviso to
Section 11.01 (Amendments, Etc.) that directly affects such
Participant.  Subject to Section 11.03(e), the Borrowers agree that each
Participant shall be entitled to the benefits of Sections 4.01 (Eurodollar Rate
Lending Unlawful), 4.03 (Increased Eurodollar Loan Costs) and 4.05 (Funding
Losses), to the same extent as if it were a Lender and had acquired its interest
by assignment pursuant to Section 11.03(b).  To the extent permitted by law,
each Participant also shall be entitled to the benefits of Section 11.15 (Right
of Setoff) as though it were a Lender; provided such Participant agrees to be
subject to Section 3.13 (Sharing of Payments) as though it were a Lender.
 
(e)           A Participant shall not be entitled to receive any greater payment
under Section 4.01 (Eurodollar Rate Lending Unlawful) or 4.03 (Increased
Eurodollar Loan Costs) than the applicable Lender would have been entitled to
receive with respect to the participation sold to such Participant, unless the
sale of the participation to such Participant is made with the prior written
consent of the Borrower Agent.
 
(f)           Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement (including under its
Notes, if any) to secure obligations of such Lender, including any pledge or
assignment to secure obligations to a Federal Reserve Bank; provided that no
such pledge or assignment shall release such Lender from any of its obligations
hereunder or substitute any such pledgee or assignee for such Lender as a party
hereto.
 
(g)           The words “execution,” “signed,” “signature,” and words of like
import in any Lender Assignment Agreement shall be deemed to include electronic
signatures or the keeping of records in electronic form, each of which shall be
of the same legal effect, validity or enforceability as a manually executed
signature or the use of a paper-based recordkeeping system, as the case may be,
to the extent and as provided for in any applicable Law, including the Federal
Electronic Signatures in Global and National Commerce Act, the New York State
Electronic Signatures and Records Act, or any other similar state laws based on
the Uniform Electronic Transactions Act.
 
 
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(h)           Notwithstanding anything to the contrary contained herein, any
Lender (a “Granting Lender”) may grant to a special purpose funding vehicle
identified as such in writing from time to time by the Granting Lender to the
Administrative Agent and the Borrowers (an “SPV”) the option to provide all or
any part of any Loan that such Granting Lender would otherwise be obligated to
make pursuant to this Agreement; provided that (i) nothing herein shall
constitute a commitment by any SPV to fund any Loan, and (ii) if an SPV elects
not to exercise such option or otherwise fails to make all or any part of such
Loan, the Granting Lender shall be obligated to make such Loan pursuant to the
terms hereof or, if it fails to do so, to make such payment to the
Administrative Agent as is required under Section 3.13 (Sharing of
Payments).  Each party hereto hereby agrees that (A) neither the grant to any
SPV nor the exercise by any SPV of such option shall increase the costs or
expenses or otherwise increase or change the obligations of the Borrowers under
this Agreement (including their obligations under Section 4.03 (Increased
Eurodollar Loan Costs), (B) no SPV shall be liable for any indemnity or similar
payment obligation under this Agreement for which a Lender would be liable, and
(C) the Granting Lender shall for all purposes, including the approval of any
amendment, waiver or other modification of any provision of any Financing
Document, remain the lender of record hereunder.  The making of a Loan by an SPV
hereunder shall utilize the Commitment of the Granting Lender to the same
extent, and as if, such Loan were made by such Granting Lender.  In furtherance
of the foregoing, each party hereto hereby agrees (which agreement shall survive
the termination of this Agreement) that, prior to the date that is one (1) year
and one (1) day after the payment in full of all outstanding commercial paper or
other senior debt of any SPV, it will not institute against, or join any other
Person in instituting against, such SPV any bankruptcy, reorganization,
arrangement, insolvency, or liquidation proceeding under the laws of the United
States or any State thereof.  Notwithstanding anything to the contrary contained
herein, any SPV may (1) with notice to, but without prior consent of the
Borrowers and the Administrative Agent and without paying any processing fee
therefor, assign all or any portion of its right to receive payment with respect
to any Loan to the Granting Lender and (2) disclose on a confidential basis any
non-public information relating to its funding of any Loan to any rating agency,
commercial paper dealer or provider of any surety or Guarantee or credit or
liquidity enhancement to such SPV.
 
Section 11.04  Benefits of Agreement.  Nothing in this Agreement or any other
Financing Document, express or implied, shall give to any Person, other than the
parties hereto, and each of their successors and permitted assigns under this
Agreement or any other Financing Document, any benefit or any legal or equitable
right or remedy under this Agreement.
 
Section 11.05  Borrower Agent.  Each Borrower hereby appoints and authorizes
Pacific Holding, and Pacific Holding hereby accepts such appointment, as such
Borrower’s Borrower Agent to act as agent on such Borrower’s behalf and to make
any representations or certifications, deliver and receive any notices or other
communications, and otherwise represent and act on behalf of such Borrower under
the Financing Documents, and to comply with all covenants, conditions and other
provisions of the Financing Documents required to be satisfied by the Borrower
Agent.  Each Borrower hereby acknowledges and agrees that it will be bound by
any action or inaction taken by the Borrower Agent as if such action or inaction
had been taken by such Borrower.
 
 
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Section 11.06  Consultants.  xxxi)  The Required Lenders or the Administrative
Agent may, in their sole discretion, appoint any Consultant for the purposes
specified herein.  If any of the Consultants is removed or resigns and thereby
ceases to act for purposes of this Agreement and the other Financing Documents,
the Required Lenders or the Administrative Agent, as the case may be, shall
designate a Consultant in replacement.
 
(b)           The Borrowers shall reimburse each Consultant appointed hereunder
for the reasonable fees and reasonable and documented out-of-pocket expenses of
such Consultant retained on behalf of the Lenders pursuant to this Section
11.06.
 
(c)           In all cases in which this Agreement provides for any Consultant
to “agree,” “approve,” “certify” or “confirm” any report or other document or
any fact or circumstance, such Consultant may make the determinations and
evaluations required in connection therewith based upon information provided by
the Borrowers, the Borrower Agent or other sources reasonably believed by such
Consultant to be knowledgeable and responsible, without independently verifying
such information; provided that, notwithstanding the foregoing, such Consultant
shall engage in such independent investigations or findings as it may from time
to time deem necessary in its reasonable discretion to support the
determinations and evaluations required of it.
 
Section 11.07  Costs and Expenses.  Each Borrower shall pay (a) all reasonable
and documented out of pocket expenses incurred by the Agents or any Lender
(including all reasonable fees, costs and expenses of counsel for any Senior
Secured Party and a financial advisor for the Administrative Agent), in
connection with (i) the preparation, negotiation, syndication, execution and
delivery of this Agreement and the other Financing Documents (whether or not the
transactions contemplated hereby or thereby are consummated), (ii) the
negotiation, preparation and filing and recordation of the Financing Documents,
the Interim Order and the Final Order, (iii) any amendments, modifications or
waivers of the provisions of this Agreement, the other Financing Documents, the
Interim Order and the Final Order, (iv) the administration of this Agreement,
the other Financing Documents, the Interim Order and the Final Order, (v) the
obtaining of approval of the Financing Documents by the Bankruptcy Court, (vi)
the preparation and review of pleadings, documents and reports related to any
Chapter 11 Case or any subsequent case under Chapter 7 of the Bankruptcy Code,
attendance at meetings, court hearings or conferences related to any Chapter 11
Case or any subsequent case under Chapter 7 of the Bankruptcy Code and (vii)
general monitoring of any Chapter 11 Case or any subsequent case under Chapter 7
of the Bankruptcy Code and (b) all out-of-pocket expenses incurred by the Agents
or any Lender (including all fees, costs and expenses of counsel for any Senior
Secured Party), in connection with the enforcement or protection of its rights
in connection with this Agreement and the other Financing Documents, including
its rights under this Section 11.07, including in connection with any workout,
restructuring or negotiations in respect of the Obligations.
 
Section 11.08  Counterparts; Effectiveness.  This Agreement may be executed in
counterparts (and by different parties hereto in different counterparts), each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract.  This Agreement shall become effective when
it has been executed by the Administrative Agent and when the Administrative
Agent has received counterparts hereof that, when taken together, bear the
signatures of each of the other parties hereto.  Delivery of an executed
counterpart of a signature page of this Agreement by telecopy or portable
document format (“pdf”) shall be effective as delivery of a manually executed
counterpart of this Agreement.
 
 
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Section 11.09  Indemnification by the Borrowers.  xxxii)  Each Borrower hereby
agrees to indemnify each Agent (and any sub-agent thereof), each Lender and each
Related Party of any of the foregoing Persons (each such Person being called an
“Indemnitee”) against, and hold each Indemnitee harmless from, any and all
losses, claims, damages, liabilities and related expenses (including all
reasonable and documented fees, costs and out-of-pocket expenses of counsel for
any Indemnitee), incurred by any Indemnitee or asserted against any Indemnitee
by any third party or by any Borrower arising out of, in connection with, or as
a result of:
 
 
(i)
the execution or delivery of this Agreement, any other Transaction Document or
any agreement or instrument contemplated hereby or thereby, the performance by
the parties hereto or thereto of their respective obligations hereunder or
thereunder or the consummation of the transactions contemplated hereby or
thereby;

 
 
(ii)
any Loan or the use or proposed use of the proceeds therefrom;

 
 
(iii)
any actual or alleged presence, release or threatened release of Materials of
Environmental Concern on or from any Plant or any property owned, leased or
operated by any Borrower, or any liability pursuant to an Environmental Law
related in any way to any Plant, any Site or the Borrowers;

 
 
(iv)
any actual or prospective claim, litigation, investigation or proceeding
relating to any of the foregoing, whether based on contract, tort or any other
theory, whether brought by a third party or by any Borrower or any of its
shareholders, members, managers or creditors, and regardless of whether any
Indemnitee is a party thereto and whether or not any of the transactions
contemplated hereunder or under any of the other Financing Documents is
consummated, in all cases, whether or not caused by or arising, in whole or in
part, out of the comparative, contributory or sole negligence of the Indemnitee;
and/or

 
 
(v)
any claim, demand or liability for broker’s or finder’s or placement fees or
similar commissions, whether or not payable by a Borrower, alleged to have been
incurred in connection with such transactions, other than any broker’s or
finder’s fees payable to Persons engaged by the Lenders or the Agents without
the knowledge of the Borrowers;

 
provided that such indemnity shall not, as to any Indemnitee, be available to
the extent that such losses, claims, damages, liabilities or related expenses
are determined by a court of competent jurisdiction by final and Non-Appealable
judgment to have resulted from the gross negligence or willful misconduct of
such Indemnitee.
 
 
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(b)           To the extent that any Borrower for any reason fails to
indefeasibly pay any amount required under Section 11.09(a) to be paid by it to
any Agent (or any sub-agent thereof) or any Related Party of any of the
foregoing, each Lender severally agrees to pay to such Agent (or any such
sub-agent), or such Related Party, as the case may be, such Lender’s ratable
share (determined as of the time that the applicable unreimbursed expense or
indemnity payment is sought) of such unpaid amount; provided that the
unreimbursed expense or indemnified loss, claim, damage, liability or related
expense, as the case may be, was incurred by or asserted against such Agent (or
any sub-agent thereof) in its capacity as such, or against any Related Party of
any of the foregoing acting for such Agent (or any sub-agent thereof) in
connection with such capacity.  The obligations of the Lenders under this
Section 11.09(b) are subject to the provisions of Section 2.04(d) (Funding of
Loans).  The obligations of the Lenders to make payments pursuant to this
Section 11.09(b) are several and not joint and shall survive the payment in full
of the Obligations and the termination of this Agreement.  The failure of any
Lender to make payments on any date required hereunder shall not relieve any
other Lender of its corresponding obligation to do so on such date, and no
Lender shall be responsible for the failure of any other Lender to do so.
 
(c)           Except as otherwise provided in Article VI (Conditions Precedent),
all amounts due under this Section 11.09 shall be payable not later than ten
(10) Business Days after demand therefor.
 
Section 11.10  Interest Rate Limitation.  Notwithstanding anything to the
contrary contained in any Financing Document, the interest paid or agreed to be
paid under the Financing Documents shall not exceed the maximum rate of
non-usurious interest permitted by applicable Law (the “Maximum Rate”).  If any
Agent or any Lender shall receive interest in an amount that exceeds the Maximum
Rate, the excess interest shall be applied to the principal of the Loans or, if
it exceeds such unpaid principal, refunded to the Borrowers.  In determining
whether the interest contracted for, charged, or received by any Senior Secured
Party exceeds the Maximum Rate, such Person may, to the extent permitted by
applicable Law, (a) characterize any payment that is not principal as an
expense, fee, or premium rather than interest, (b) exclude prepayments and the
effects thereof, and (c) amortize, prorate, allocate, and spread in equal or
unequal parts the total amount of interest throughout the contemplated term of
the Obligations hereunder.
 
Section 11.11  No Waiver; Cumulative Remedies.  No failure by any Senior Secured
Party to exercise, and no delay by any such Person in exercising, any right,
remedy, power or privilege hereunder or under any other Financing Document shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or
privilege.  The rights, remedies, powers and privileges herein provided, and
provided under each other Financing Document, are cumulative and not exclusive
of any rights, remedies, powers and privileges provided by law.
 
 
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Section 11.12  Notices and Other Communications.  xxxiii)  Except in the case of
notices and other communications expressly permitted to be given by telephone
(and except as provided in Section 11.12(b)), all notices and other
communications provided for herein shall be in writing and shall be delivered by
hand or overnight courier service, mailed by certified or registered mail or
sent by telecopier or electronic mail as follows, and all notices and other
communications expressly permitted hereunder to be given by telephone shall be
made to the applicable telephone number, as follows:
 
 
(i)
if to a Borrower, the Borrower Agent or any Agent, to the address, telecopier
number, electronic mail address or telephone number specified for such Person on
Schedule 11.12; and

 
 
(ii)
if to any Lender, to the address, telecopier number, electronic mail address or
telephone number specified in its administrative questionnaire.

 
(b)           Notices sent by hand or overnight courier service, or mailed by
certified or registered mail, shall be deemed to have been given when received;
notices sent by telecopier shall be deemed to have been given when sent (except
that, if not given during normal business hours for the recipient, shall be
deemed to have been given at the opening of business on the next Business Day
for the recipient).  Notices delivered through electronic communications to the
extent provided in Section 11.12(d) shall be effective as provided in Section
11.12(d).  Any notice sent to the Borrower Agent shall be deemed to have been
given to each Borrower.
 
(c)           Notices and other communications to the Senior Secured Parties
hereunder may be delivered or furnished by electronic communication (including e
mail and internet or intranet websites) pursuant to procedures approved by the
Administrative Agent; provided that the foregoing shall not apply to notices to
any Lender pursuant to Article II (Commitments and Funding) if such Lender has
notified the Administrative Agent that it is incapable of receiving notices
under such Article II (Commitments and Funding) by electronic
communication.  Each of the Administrative Agent or a Borrower may, in its
discretion, agree to accept notices and other communications to it hereunder by
electronic communications pursuant to procedures approved by it; provided that
approval of such procedures may be limited to particular notices or
communications.
 
(d)           Unless the Administrative Agent otherwise prescribes, (i) notices
and other communications sent to an e-mail address shall be deemed received upon
the sender’s receipt of an acknowledgement from the intended recipient (such as
by the “return receipt requested” function, as available, return e-mail or other
written acknowledgement); provided that if such notice or other communication is
not received during the normal business hours of the recipient, such notice or
communication shall be deemed to have been received at the opening of business
on the next Business Day for the recipient, and (ii) notices or communications
posted to an internet or intranet website shall be deemed received upon the
deemed receipt by the intended recipient at its e-mail address as described in
Section 11.12(d)(i) of notification that such notice or communication is
available and identifying the website address therefor.
 
(e)           Each Borrower, the Borrower Agent and the Agents may change its
address, telecopier or telephone number for notices and other communications
hereunder by notice to the other parties hereto.  Each Lender may change its
address, telecopier or telephone number for notices and other communications
hereunder by notice to the Borrowers, the Borrower Agent and each Agent.
 
 
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(f)           The Senior Secured Parties shall be entitled to rely and act upon
any written notices purportedly given by or on behalf of a Borrower or the
Borrower Agent even if (i) such notices were not made in a manner specified
herein, were incomplete or were not preceded or followed by any other form of
notice specified herein, or (ii) the terms thereof, as understood by the
recipient, varied from any confirmation thereof.  Each Borrower shall indemnify
each Senior Secured Party and the Related Parties of each of them from all
losses, costs, expenses and liabilities resulting from the reliance by such
Person on each notice purportedly given by or on behalf of a Borrower or the
Borrower Agent.  All telephonic notices to and other telephonic communications
with any Agent may be recorded by such Agent, and each of the parties hereto
hereby consents to such recording.
 
(g)           So long as WestLB is the Administrative Agent, each Borrower and
the Borrower Agent hereby agrees that it will provide to the Administrative
Agent all information, documents and other materials that it is obligated to
furnish to the Administrative Agent pursuant to the Financing Documents,
including all notices, requests, financial statements, financial and other
reports, certificates and other information materials, but excluding any such
communication that (i) relates to the Funding, (ii) relates to the payment of
any principal or other amount due under this Agreement prior to the scheduled
date therefor, (iii) provides notice of any Default or Event of Default or (iv)
is required to be delivered to satisfy any condition precedent to Funding (all
such non-excluded communications being referred to herein collectively as
“Communications”), by transmitting the Communications in an electronic/soft
medium in a format acceptable to the Administrative Agent to ny_agency
services@westlb.com.  In addition, each Borrower and the Borrower Agent agrees
to continue to provide the Communications to the Administrative Agent in the
manner specified in the Financing Documents but only to the extent requested by
the Administrative Agent.
 
(h)           So long as WestLB is the Administrative Agent, each Borrower and
the Borrower Agent further agrees that the Administrative Agent may make the
Communications available to the Lenders by posting the Communications on http:
www.intralinks.com (or any replacement or successor thereto) or a substantially
similar electronic transmission systems (the “Platform”).
 
(i)            THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE”.  THE AGENTS
DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE COMMUNICATIONS, OR THE
ADEQUACY OF THE PLATFORM AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS OR
OMISSIONS IN THE COMMUNICATIONS.  NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR
STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER
CODE DEFECTS, IS MADE BY THE AGENTS IN CONNECTION WITH THE COMMUNICATIONS OR THE
PLATFORM.  IN NO EVENT SHALL THE ADMINISTRATIVE AGENT OR ANY OF ITS AFFILIATES
OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ADVISORS OR
REPRESENTATIVES (COLLECTIVELY, “AGENT PARTIES”) HAVE ANY LIABILITY TO ANY
BORROWER, THE BORROWER AGENT, ANY LENDER OR ANY OTHER PERSON OR ENTITY FOR
DAMAGES OF ANY KIND, INCLUDING DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR
CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR
OTHERWISE) ARISING OUT OF THE BORROWER’S, THE BORROWER AGENT’S OR THE
ADMINISTRATIVE AGENT’S TRANSMISSION OF COMMUNICATIONS THROUGH THE INTERNET,
EXCEPT TO THE EXTENT THE LIABILITY OF ANY AGENT PARTY IS FOUND IN A FINAL
NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED
PRIMARILY FROM SUCH AGENT PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
 
 
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(j)           The Administrative Agent agrees that the receipt of the
Communications by the Administrative Agent at its e-mail address set forth in
Schedule 11.12 shall constitute effective delivery of the Communications to the
Administrative Agent for purposes of the Financing Documents.  Each Lender
agrees that notice to it (as provided in the next sentence) specifying that the
Communications have been posted to the Platform shall constitute effective
delivery of the Communications to such Lender for purposes of the Financing
Documents.  Each Lender agrees to notify the Administrative Agent in writing
(including by electronic communication) from time to time of such Lender’s
e-mail address to which the foregoing notice may be sent by electronic
transmission and that the foregoing notice may be sent to such e-mail address.
 
(k)           Notwithstanding clauses (g) to (j) above, nothing herein shall
prejudice the right of any Senior Secured Party to give any notice or other
communication pursuant to any Financing Document in any other manner specified
in such Financing Document.
 
Section 11.13  Patriot Act Notice.  Each Senior Secured Party (for itself and
not on behalf of any Lender) hereby notifies the Borrowers that pursuant to the
requirements of the Patriot Act, it is required to obtain, verify and record
information that identifies the Borrowers, which information includes the name
and address of the Borrowers and other information that will allow such Senior
Secured Party to identify the Borrowers in accordance with the Patriot Act.
 
Section 11.14  Marshalling; Payments Set Aside.  Neither any Agent nor any
Lender shall be under any obligation to marshal any assets in favor of any
Borrower or any other Person or against or in payment of any or all the
Obligations. To the extent that any payment by or on behalf of any Borrower is
made to any Agent or Lender, or any Agent or Lender exercises its right of
setoff, and such payment or the proceeds of such setoff or any part thereof is
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required (including pursuant to any settlement entered into by such Agent or
Lender in its discretion) to be repaid to a trustee, receiver or any other
party, in connection with any bankruptcy or insolvency proceeding or otherwise,
then (a) to the extent of such recovery, the Obligation or part thereof
originally intended to be satisfied shall be revived and continued in full force
and effect as if such payment had not been made or such setoff had not occurred,
and (b) each Lender severally agrees to pay to each Agent upon demand its
applicable share (without duplication) of any amount so recovered from or repaid
by such Agent, plus interest thereon from the date of such demand to the date
such payment is made at a rate per annum equal to the Federal Funds Effective
Rate from time to time in effect.  The obligations of the Lenders under
Section 11.14(b) shall survive the payment in full of the Obligations and the
termination of this Agreement.
 
 
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Section 11.15  Right of Setoff.  Each Lender and each of its respective
Affiliates is hereby authorized at any time and from time to time during the
continuance of an Event of Default, to the fullest extent permitted by
applicable Law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final, in whatever currency) at any time held and
other obligations (in whatever currency) at any time owing by such Lender or any
such Affiliate to or for the credit or the account of any Borrower against any
and all of the obligations of each Borrower now or hereafter existing under this
Agreement or any other Financing Document to such Lender, irrespective of
whether or not such Lender shall have made any demand under this Agreement or
any other Financing Document and although such obligations of the Borrowers may
be contingent or unmatured or are owed to a branch or office of such Lender
different from the branch or office holding such deposit or obligated on such
indebtedness.  The rights of each Lender and their respective Affiliates under
this Section 11.15 are in addition to other rights and remedies (including other
rights of setoff) that such Lender or their respective Affiliates may
have.  Each Lender agrees to notify the Borrower Agent and the Administrative
Agent promptly after any such setoff and application; provided that the failure
to give such notice shall not affect the validity of such setoff and
application.
 
Section 11.16  Severability.  If any provision of this Agreement or any other
Financing Document is held to be illegal, invalid or unenforceable, (a) the
legality, validity and enforceability of the remaining provisions of this
Agreement and the other Financing Documents shall not be affected or impaired
thereby and (b) the parties shall endeavor in good faith negotiations to replace
the illegal, invalid or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the illegal,
invalid or unenforceable provisions.  The invalidity of a provision in a
particular jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
 
Section 11.17  Survival.  Notwithstanding anything in this Agreement to the
contrary, Section 11.07 (Costs and Expenses) and 11.09 (Indemnification by the
Borrowers) shall survive any termination of this Agreement.  In addition, each
representation and warranty made hereunder and in any other Financing Document
or other document delivered pursuant hereto or thereto or in connection herewith
or therewith shall survive the execution and delivery hereof and thereof.  Such
representations and warranties have been or will be relied upon by each Senior
Secured Party, regardless of any investigation made by any Senior Secured Party
or on their behalf and notwithstanding that any Senior Secured Party may have
had notice or knowledge of any Default or Event of Default at the time of the
Funding, and shall continue in full force and effect as long as any Loan or any
other Obligation hereunder or under any other Financing Document shall remain
unpaid or unsatisfied.
 
 
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Section 11.18  Treatment of Certain Information; Confidentiality.  Each of the
Agents and the Lenders agrees to maintain the confidentiality of the
Information, except that Information may be disclosed (a) to its Affiliates and
to its Affiliates’ respective partners, directors, officers, employees, agents,
advisors and representatives (it being understood that the Persons to whom such
disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential); (b) to the
extent requested or required by any regulatory authority purporting to have
jurisdiction over it; (c) to the extent required by applicable Law or
regulations or by any subpoena or similar legal process; (d) to any other party
to this Agreement; (e) in connection with the exercise of any remedies hereunder
or any suit, action or proceeding relating to this Agreement or the enforcement
of rights hereunder (including any actual or prospective purchaser of
Collateral); (f) subject to an agreement containing provisions substantially the
same as those of this Section 11.18, to (i) any Eligible Assignee of or
Participant in, or any prospective Eligible Assignee of or Participant in, any
of its rights or obligations under this Agreement, (ii) any direct or indirect
contractual counterparty or prospective counterparty (or such contractual
counterparty’s or prospective counterparty’s professional advisor) to any credit
derivative transaction relating to the Obligations or (iii) any Person (and any
of its officers, directors, employees, agents or advisors) that may enter into
or support, directly or indirectly, or that may be considering entering into or
supporting, directly or indirectly, either (A) contractual arrangements with
such Agent or Lender, or any Affiliates thereof, pursuant to which all or any
portion of the risks, rights, benefits or obligations under or with respect to
any Loan or Financing Document is transferred to such Person or (B) an actual or
proposed securitization or collateralization of, or similar transaction relating
to, all or a part of any amounts payable to or for the benefit of any Lender
under any Financing Document (including any rating agency); (g) with the consent
of any Borrower; (h) to the extent such Information (i) becomes publicly
available other than as a result of a breach of this Section 11.18 or (ii)
becomes available to any Agent, any Lender or any of their respective Affiliates
on a nonconfidential basis from a source other than a Borrower; (i) to any
state, federal or foreign authority or examiner (including the National
Association of Insurance Commissioners or any other similar organization)
regulating any Lender; or (j) to any rating agency when required by it (it being
understood that, prior to any such disclosure, such rating agency shall
undertake to preserve the confidentiality of any Information relating to a
Borrower received by it from such Lender).  In addition, any Agent and the
Lenders may disclose the existence of this Agreement and information about this
Agreement to market data collectors, similar service providers to the lending
industry, and service providers to the Agents and the Lenders in connection with
the administration and management of this Agreement, the other Financing
Documents, the Commitments, and the Funding.  For the purposes of this Section
11.18, “Information” means written information that any Borrower furnishes to
any Agent or Lender after the date hereof (and designated at the time of
delivery thereof in writing as confidential) pursuant to or in connection with
any Financing Document, relating to the assets and business of such Borrower,
but does not include any such information that (i) is or becomes generally
available to the public other than as a result of a breach by such Agent or
Lender of its obligations hereunder, (ii) is or becomes available to such Agent
or Lender from a source other than a Borrower that is not, to the knowledge of
such Agent or Lender, acting in violation of a confidentiality obligation with
such Borrower or (iii) is independently compiled by any Agent or Lender, as
evidenced by their records, without the use of the Information.  Any Person
required to maintain the confidentiality of Information as provided in this
Section 11.18 shall be considered to have complied with its obligation to do so
if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information.
 
 
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Section 11.19  Waiver of Consequential Damages, Etc.  Except as otherwise
provided in Section 11.09 (Indemnification by the Borrowers) for the benefit of
any Indemnitee, to the fullest extent permitted by applicable Law, no party
hereto shall assert, and each party hereto hereby waives, any claim, on any
theory of liability, for special, indirect, consequential or punitive damages
(as opposed to direct or actual damages) arising out of, in connection with, or
as a result of, this Agreement, any other Financing Document or any agreement or
instrument contemplated hereby, the transactions contemplated hereby or thereby,
any Loan or the use of the proceeds thereof.  No Indemnitee shall be liable for
any damages arising from the use by unintended recipients of any information or
other materials distributed by it through telecommunications, electronic or
other information transmission systems in connection with this Agreement or the
other Financing Documents or the transactions contemplated hereby or thereby.
 
Section 11.20  Waiver of Litigation Payments.  To the extent that any Borrower
or the Borrower Agent may, in any action, suit or proceeding brought in any of
the courts referred to in Section 11.02(b) (Applicable Law; Jurisdiction) or
elsewhere arising out of or in connection with this Agreement or any other
Financing Document to which it is a party, be entitled to the benefit of any
provision of law requiring any Senior Secured Party in such action, suit or
proceeding to post security for the costs of such Person or to post a bond or to
take similar action, each such Person hereby irrevocably waives such benefit, in
each case to the fullest extent now or in the future permitted under the laws of
New York or, as the case may be, the jurisdiction in which such court is
located.
 
Section 11.21  Section 552(b).  The Lenders and the Agents shall be entitled to
all of the rights and benefits of section 552(b) of the Bankruptcy Code, and the
“equities of the case” exception under section 552(b) of the Bankruptcy Code
shall not apply to the Lenders or the Agents with respect to proceeds, products,
offspring or profits of any of the Collateral.
 
[Remainder of page intentionally blank.  Next page is signature page.]
 
 
 
 
 

 
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IN WITNESS WHEREOF, the parties hereto have caused this Debtor-In-Possession
Credit Agreement to be executed by their respective officers as of the day and
year first above written.
 

 
PACIFIC ETHANOL HOLDING CO. LLC,
as Borrower
         
By:
/s/ JOHN T. MILLER      
Name:  John T. Miller
     
Title:  COO
         

 

 
PACIFIC ETHANOL MADERA LLC,
as Borrower
         
 
By:
/s/ JOHN T. MILLER      
Name:  John T. Miller
     
Title:  COO
         

 

 
PACIFIC ETHANOL COLUMBIA, LLC,
as Borrower
         
 
By:
/s/ JOHN T. MILLER      
Name:  John T. Miller
     
Title:  COO
         

 

 
PACIFIC ETHANOL STOCKTON, LLC,
as Borrower
         
 
By:
/s/ JOHN T. MILLER      
Name:  John T. Miller
     
Title:  COO
         

 

 
PACIFIC ETHANOL MAGIC VALLEY, LLC,
as Borrower
         
 
By:
/s/ JOHN T. MILLER      
Name:  John T. Miller
     
Title:  COO
         

 

 
PACIFIC ETHANOL HOLDING CO. LLC,
as Borrower Agent
         
 
By:
/s/ JOHN T. MILLER      
Name:  John T. Miller
     
Title:  COO
         

 
 
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WESTLB AG, NEW YORK BRANCH,
as Administrative Agent
         
 
By:
/s/ RONALD SPITZER       Name:  Ronald Spitzer       Title:  Executive Director
         

       
 
By:
/s/ DOMINICK D’ASCOLI       Name:  Dominick D’Ascoli       Title:  Director    
     

 
 
 

 
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WESTLB AG, NEW YORK BRANCH,
as Lender
         
 
By:
/s/ RONALD SPITZER       Name:  Ronald Spitzer       Title:  Executive Director
         

       
 
By:
/s/ DOMINICK D’ASCOLI       Name:  Dominick D’Ascoli       Title:  Director    
     

 

 
WESTLB AG, NEW YORK BRANCH,
as Collateral Agent
         
 
By:
/s/ RONALD SPITZER       Name:  Ronald Spitzer       Title:  Executive Director
         

       
 
By:
/s/ DOMINICK D’ASCOLI       Name:  Dominick D’Ascoli       Title:  Director    
     

 
 

 
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AMARILLO NATIONAL BANK,
as Accounts Bank
         
 
By:
/s/ CRAIG L. SANDERS       Name:  Craig L. Sanders       Title:  Executive Vice
President          

 

 
AMARILLO NATIONAL BANK,
as Senior Secured Party
         
 
By:
/s/ CRAIG L. SANDERS       Name:  Craig L. Sanders       Title:  Executive Vice
President          

 

 
 
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CIFC FUNDING 2007-III LTD.,
as Senior Secured Party
         
 
By:
Signature Illegible       Name        Title           

 

 
CIFC FUNDING 2007-IV LTD.,
as Senior Secured Party
         
 
By:
Signature Illegible       Name        Title           

 
 
 

 
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CIT CAPITAL SECURITIES LLC,
as Lead Arranger and Co-Syndication Agent Senior Secured Party
         
 
By:
/s/ DREW CARLETON       Name: Drew Carleton       Title:  Vice President        
 

 

 
CIT CAPITAL USA INC.,
as Senior Secured Party
         
 
By:
/s/ JASON B. STEWART       Name: Jason B. Stewart       Title:  Managing
Director          

 
 
 

 
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CREDIT SUISSE CANDLEWOOD SPECIAL SITUATIONS MASTER FUND, LTD.
By: Credit Suisse Alternative Capital, Inc. as investment manager
         
 
By:
/s/ DAVID KOENIG      
Name: David Koenig
      Title:  Authorized Signatory          

 
 
 

 
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GREENSTONE FARM CREDIT SERVICES, ACA/FLCA,
as Senior Secured Party
         
 
By:
/s/ ALFRED S. COMPTON, JR.      
Name: Alfred S. Compton, Jr.
      Title:  Sr. Vice President/Managing Director          

 
 
 

 
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METROPOLITAN LIFE INSURANCE COMPANY,
as Senior Secured Party
         
 
By:
/s/ DAVID YU      
Name: David Yu
      Title:            

 
 
 

 
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NORDKAP BANK AG,
as Senior Secured Party
         
 
By:
/s/ ERIC W. SIEVERS      
Name: Eric W. Sievers
     
Title:  SVP
                   
By:
/s/ STEFAN GERIG       Name: Stefan GERIG       Title:  CIO          

 
 

 
 
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NORDDEUTSCHE LANDESBANK
GIROZENTRALE NEW YORK BRANCH,
as Senior Secured Party
         
 
By:
/s/ JOSEF HAAS       
Name: Josef Haas
     
Title:  Senior Director
                   
By:
/s/ STEFANIE SCHOLZ      
Name: Stefanie Scholz
      Title:  Managing Director          

 
 
 

 
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NORTHWEST FARM CREDIT SERVICES, FLCA,
as Senior Secured Party
         
 
By:
/s/ CASEY KINZER      
Name: Casey Kinzer
     
Title:  Account Manager
         

 
 
 
 
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COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A.,
“RABOBANK NEDERLAND”, NEW YORK BRANCH,
as Senior Secured Party
         
 
By:
/s/ ANDREW SHERMAN      
Name: Andrew Sherman
     
Title:  Executive Director
                   
By:
/s/ JOHN MCMAHON        
Name: John McMahon
     
Title:  Managing Director
         

 
 
 

 
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SHOREBANK PACIFIC,
as Senior Secured Party
         
 
By:
/s/ MATTHEW MYLET        
Name: Matthew Mylet
     
Title:  Assistant Vice President
         

 
 

 
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SCHEDULE 1.01
to DIP Credit Agreement
 
LENDERS, LOAN COMMITMENTS AND OFFICES
 
I. REVOLVING AND ROLL UP LOANS

         
REVOLVING LENDER
REVOLVING LOAN COMMITMENT
ROLL UP LOAN COMMITMENT
DOMESTIC OFFICE
EURODOLLAR OFFICE
WestLB AG, New York Branch
$1,485,606.38
$2,228,409.53
WestLB AG, New York Branch
1211 Avenue of the Americas
New York, NY 10036
 
Attention: Cheryl Wilson
Telephone: 212-852-6152
Facsimile: 212-302-7946
WestLB AG, New York Branch
1211 Avenue of the Americas
New York, NY 10036
 
Attention: Cheryl Wilson
Telephone: 212-852-6152
Facsimile: 212-302-7946
Amarillo National Bank
$805,589.60
$1,208,384.41
Amarillo National Bank
410 South Taylor Street
Amarillo, TX 79101
 
Attention: Nelda Fox
Telephone: 806-378-8185
Facsimile: 806-345-1663
Amarillo National Bank
410 South Taylor Street
Amarillo, TX 79101
 
Attention: Nelda Fox
Telephone: 806-378-8185
Facsimile: 806-345-1663
CIFC Funding 2007-III Ltd.
$391,677.47
$587,516.21
CIFC Funding 2007-III, Ltd.
250 Park Avenue, 5th Floor
New York, NY 10177
 
Attention: Maxum Tomaszewski
Telephone: 312-992-5351
Facsimile: 312-276-8816
Email: cifc.funding.clo5@abnamro.com
 

 

 
1.01 - 1

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REVOLVING LENDER
REVOLVING LOAN COMMITMENT
ROLL UP LOAN COMMITMENT
DOMESTIC OFFICE
EURODOLLAR OFFICE
CIFC Funding 2007-IV, Ltd.
$652,795.68
$979,193.52
CIFC Funding 2007-IV, Ltd.
250 Park Avenue, 5th Floor
New York, NY 10177
 
Attention: Marcum Tomaszewski
Telephone: 312-992-5351
Facsimile: 312-276-8816
Email: cifc.funding.clo5@abnamro.com
 
CIT Capital USA Inc.
$3,300,137.73
$4,950,206.60
CIT Capital USA Inc.
1 CIT Drive
Livingston NJ 07039
 
Attention: Gary Conza
Telephone: 212-461-7829
Facsimile: 212-461-7825
CIT Capital USA Inc.
1 CIT Drive
Livingston NJ 07039
 
Attention: Gary Conza
Telephone: 212-461-7829
Facsimile: 212-461-7825
Credit Suisse
Candlewood Special Situations Master Fund, Ltd.
$4,864,148.59
$7,296,222.89
Credit Suisse Candlewood
Special Situations Master Fund, Ltd.
C/o Credit Suisse Alternative Capital, Inc.
Eleven Madison Avenue,
New York, NY 10010
 
Attention: Peter Dowling
Telephone: 212-538-5198
Facsimile: 646-935-8749
 

 

 
1.01 - 2

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REVOLVING LENDER
REVOLVING LOAN COMMITMENT
ROLL UP LOAN COMMITMENT
DOMESTIC OFFICE
EURODOLLAR OFFICE
Coöperatieve Centrale Raiffeisen-
Boerenleenbank B.A., “Rabobank Nederland,”  New York Branch
$1,989,529.19
$2,984,293.78
Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A., “Rabobank Nederland,”
245 Park Avenue
New York, NY 10167
 
Attention: Siu Chu
Telephone: 201-499-5496
Facsimile: 888-506-1179
Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A.,  “Rabobank Nederland,”
245 Park Avenue
New York, NY 10167
 
Attention: Siu Chu
Telephone: 201-499-5496
Facsimile: 888-506-1179
Metropolitan Life Insurance Company
$1,701,944.26
$2,552,916.40
Metropolitan Life Insurance Company
10 Park Avenue
Morristown, NJ 07962
Attention: Neil Fredricks
Telephone: 813-983-4455
Facsimile: 212-251-1604
n/a
Norddeutsche
Landesbank
Girozentrale New York Branch
$1,871,279.73
$2,806,919.60
Nord/LB New York Branch
1114 Avenue of the Americas, 37th Floor
New York, NY 10036
 
Credit Issues
Attention: Josef Haas
Telephone: 212-812-6805
Facsimile: 212-812-6860
 
Funding Notices
Attention: Arcadio Diaz
Telephone: 212-812-6809
Facsimile: 212-812-6860
Nord/LB Cayman Island Branch
1114 Ave. of the Americas, 37th Floor
New York, NY 10036
 
Credit Issues
Attention: Josef Haas
Telephone: 212-812-6805
Facsimile: 212-812-6860
 
Funding Notices
Attention: Arcadio Diaz
Telephone: 212-812-6809
Facsimile: 212-812-6860

 

 
1.01 - 3

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REVOLVING LENDER
REVOLVING LOAN COMMITMENT
ROLL UP LOAN COMMITMENT
DOMESTIC OFFICE
EURODOLLAR OFFICE
GreenStone Farm Credit Services, ACA/FLCA
$547,061.33
$820,591.99
GreenStone Farm Credit Services,
ACA/FLCA
1760 Abbey Road, Ste. 320
East Lansing, MI 48823
 
Attention: Nichole Ross
Telephone: 517-324-0273
Facsimile: 517-324-0211
 
Attention: Amber Selle
Telephone: 517-324-0211
Facsimile: 517-318-1240
GreenStone Farm Credit Services, ACA/FLCA
1760 Abbey Road, Ste. 320
East Lansing, MI 48823
 
Attention: Nichole Ross
Telephone: 517-324-0273
Facsimile: 517-324-0211
 
Attention: Amber Selle
Telephone: 517-324-0211
Facsimile: 517-318-1240
 
Nordkap Bank AG
$1,588,972.09
$2,383,458.14
n/a
Nordkap Bank AG
Thurgauerstrasse 54
8050 Zurich, Switzerland-CH
 
Attention: Isabelle Scherer
Telephone: 011-41-1-3 06-4922
Facsimile: 011-41-44-306-4911
Email: isabelle.scherer@nordkapbank.com
 
Northwest Farm Credit Services, FLCA
$547,061.33
$820,591.99
Northwest Farm Credit Services, FLCA
1700 South Assembly St.
Spokane, WA 99224
 
Attention: Sophia Conley
Telephone: 800-216-4535
Facsimile 509-340-5508
Email: tech_acctg@farm- credit.com
Northwest Farm Credit Services, FLCA
1700 South Assembly St.
Spokane, WA 99224
 
Attention: Sophia Conley
Telephone: 800-216-4535
Facsimile 509-340-5508
Email: tech_acctg@farm­credit.com
 

 

 
1.01 - 4

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REVOLVING LENDER
REVOLVING LOAN COMMITMENT
ROLL UP LOAN COMMITMENT
DOMESTIC OFFICE
EURODOLLAR OFFICE
ShoreBank Pacific
$254,196.62
$381,294.94
ShoreBank Pacific
203 Howerton Way SE,
PO Box 400
Ilwaco, WA 98624
 
Attention: Susan Day
Telephone: 503-916-1552
Facsimile: 503-827-5003
 
Attention: Rebecca Tuccio
Telephone: 503-916-1552
Facsimile: 503-827-5003
n/a

 

 
1.01 - 5

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SCHEDULE 2.01
to DIP Credit Agreement
 
 
UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
 
In re:
 
PACIFIC ETHANOL HOLDING CO. LLC, et al.,1
 
Debtors.
 
Chapter 11
 
Case No. 09- (_____)
 
Joint Administration Requested

 
INTERIM ORDER (I) AUTHORIZING THE DEBTORS TO (A) OBTAIN
POSTPETITION FINANCING PURSUANT TO 11 U.S.C. §§ 105, 361, 362, 363(c),
363(e), 364(c), 364(d)(1) AND 364(e) AND (B) UTILIZE CASH COLLATERAL
OF PREPETITION SECURED ENTITIES, (II) GRANTING
ADEQUATE PROTECTION TO PREPETITION SECURED ENTITIES,
(III) SCHEDULING A FINAL HEARING PURSUANT TO BANKRUPTCY
RULES 4001(b) AND 4001(c), AND (IV) GRANTING RELATED RELIEF
 
This matter is before the Court on the motion dated May __, 2009 (the “Motion”)2
of Pacific Ethanol Holding Co. LLC (“Holding”) and its affiliated debtors, as
debtors-in­possession (collectively, the “Debtors”) in the above-referenced
chapter 11 cases (collectively, the “Chapter 11 Cases”), for entry of an interim
order (this “Interim Order”) and a final order (“Final Order”), under sections
105, 361, 362, 363(c), 363(e), 364(c), 364(d)(1) and 364(e) of title 11 of the
United States Code, 11 U.S.C. §§ 101-1532 (as amended, the “Bankruptcy Code”),
and Rules 2002, 4001 and 9014 of the Federal Rules of Bankruptcy Procedure (as
amended, the “Bankruptcy Rules”) and Rule 4001-2 of the Local Rules of
Bankruptcy Practice and Procedure
 

--------------------------------------------------------------------------------

1
The Debtors are: Pacific Ethanol Holding Co. LLC (Tax ID No. XX-XXX6981),
Pacific Ethanol Stockton, LLC (Tax ID No. XX-XXX8349), Pacific Ethanol Columbia,
LLC (Tax ID No. XX-XXX9392), Pacific Ethanol Madera, LLC (Tax ID. No.
XX-XXX3339), Pacific Ethanol Magic Valley, LLC (Tax ID. No. XX­XXX7391),. The
mailing address for Pacific Ethanol Holding Co., LLC. is 400 Capitol Mall, Suite
2060, Sacramento, CA 95814.
   
2
All defined terms shall have the meaning ascribed to them in the Motion or DIP
Documents (as defined below) unless otherwise defined herein.

 
2.01 - 1

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of the United States Bankruptcy Court for the District of Delaware (the “Local
Rules”), seeking, among other things:
(1)            authorization for Holding, Pacific Ethanol Stockton, LLC
(“Stockton”), Pacific Ethanol Columbia, LLC (“Columbia”), Pacific Ethanol
Madera, LLC (“Madera”), and Pacific Ethanol Magic Valley, LLC (“Magic Valley”
and together with Holding, Stockton, Columbia and Madera, each as a Debtor, the
“Borrowers”) to obtain post-petition financing (the “DIP Facility”) consisting
of: (a) a super priority non- amortizing revolving credit facility (the “DIP
Revolving Loans”) in an aggregate principal amount not to exceed $20 million
(the “DIP Revolving Commitment”), of which up to $10 million shall be available
upon entry of this Interim Order (“DIP Revolving Interim Commitment”), and (b) a
1.50:1.00 dollar conversion (calculated on the basis of a one and one-half
dollar of DIP Roll-Up Loans (as defined below) for each dollar of DIP Revolving
Loans provided by the DIP Lenders) in respect of the outstanding term loans
under the Prepetition Credit Facility beneficially owned by each applicable DIP
Lender (as defined below) (or an affiliate) at 5 p.m. (prevailing Eastern time)
on May 15, 2009 (the “DIP Roll-Up Loans”) in an aggregate principal amount not
to exceed $30 million (the “DIP Roll-Up Amount”) of which up to $15 million
shall convert concurrently with the funding of the DIP Revolving Interim
Commitment upon entry of this Interim Order, each subject to the terms and
conditions of the DIP Facility Documents (as defined below), with WestLB AG, New
York Branch (“WestLB”), as administrative agent and collateral agent
(collectively, the “DIP Agent”) for itself and a syndicate of financial
institutions (together with WestLB, the “DIP Lenders”) and Amarillo National
Bank (“DIP Accounts Bank”), pursuant to the terms of this Interim
 

 
2.01 - 2

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Order and that certain Debtor-in-Possession Credit Agreement, by and among the
Borrowers, DIP Agent and DIP Lenders (as the same may be amended, restated,
supplemented or otherwise modified from time to time pursuant to the terms
thereof, the “DIP Agreement,” and together with any related documents and
instruments delivered pursuant to or in connection therewith (including the
“Financing Documents” referenced therein), the “DIP Documents”), as generally
summarized by the Debtor-In-Possession Credit Facility Term Sheet, attached
hereto as Exhibit A (the “DIP Term Sheet”);
(2)            authorization for the Debtors to execute and enter into the DIP
Documents (which shall be in form and substance acceptable to the DIP Agent and
the DIP Lenders) and to perform such other and further acts as may be required
in connection with the DIP Documents;
(3)            authorization for the Debtors to grant (i) security interests and
liens (including liens pursuant to sections 364(c)(2) and 364(c)(3) of the
Bankruptcy Code and limited priming liens pursuant to section 364(d) of the
Bankruptcy Code) to the DIP Agent, for the benefit of the DIP Agent and the DIP
Lenders, to secure all obligations of the Debtors under and with respect to the
DIP Facility (collectively, the “DIP Obligations”), and (ii) superpriority
claims (including a superpriority administrative claim pursuant to section
364(c)(1) of the Bankruptcy Code) to the DIP Agent and the DIP Lenders, with
respect to the DIP Obligations, as more fully set forth in this Interim Order;
(4)            authorization for the Debtors’ use of cash collateral, as such
term is defined in section 363(a) of the Bankruptcy Code (as so defined, “Cash
Collateral”), on the terms and conditions set forth in this Interim Order;
 

 
2.01 - 3

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(5)            authorization to provide adequate protection of the liens and
security interests (such liens and security interests, the “Prepetition Liens”)
granted for the benefit of the prepetition senior secured lenders (such lenders
in such capacities, the “Prepetition Lenders”) under that certain Credit
Agreement, dated as of February 27, 2007 (as amended, restated, supplemented or
otherwise modified from time to time and in effect on the date hereof, the
“Prepetition Credit Agreement”), among the Borrowers, the Prepetition Lenders,
WestLB, as Administrative Agent (in such capacity and in the capacity of
Collateral Agent under the security documents for the Prepetition Obligations
(as defined herein) on behalf of the Prepetition Lenders, the “Prepetition
Agent”) and as a Prepetition Lender, and Amarillo National Bank, as accounts
bank (the “Prepetition Accounts Bank”), securing the Borrowers’ obligations (the
“Prepetition Obligations”) under the Prepetition Credit Agreement, the
Prepetition Security Documents (as defined below) and all collateral and
ancillary documents executed or delivered in connection therewith (the
“Prepetition Facility Documents”), as more fully set forth in this Interim
Order;
(6)            an emergency interim hearing (the “Interim Hearing”) on the
Motion for this Court to consider entry of this Interim Order, which, among
other things, (i) authorizes the Debtors, on an interim basis, to obtain from
the DIP Lenders under the DIP Facility up to an aggregate principal amount not
to exceed $20 million (of which $10 million shall be available upon the entry of
this Interim Order) in DIP Revolving Commitments and convert up to an aggregate
principal amount of $30 million in DIP Roll-Up Amounts (of which $15 million
shall convert upon entry of this Interim Order), pursuant to the terms of, and
on the conditions contained in, the DIP Agreement and this
 

 
2.01 - 4

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Interim Order; (ii) authorizes each Borrower to guarantee the DIP Obligations of
each other Borrower; (iii) authorizes the Debtors’ use of the Cash Collateral;
and (iv) grants the adequate protection described herein;
(7)            the scheduling of a final hearing (the “Final Hearing”) on the
Motion no later than July 1, 2009 to consider entry of a Final Order authorizing
the borrowings under the DIP Documents on a final basis and approve the form of
notice procedures with respect thereto; and
(8)            modification of the automatic stay imposed under section 362 of
the Bankruptcy Code to the extent necessary to permit the (a) Debtors, (b) DIP
Agent and DIP Lenders, and (c) Prepetition Lenders and Prepetition Agent
(together, the “Prepetition Secured Entities,” and collectively with the DIP
Agent and the DIP Lenders, the “Secured Lending Entities”) to implement the
terms of this Interim Order.
This Court having found that, under the circumstances, due and sufficient notice
of the Motion and Interim Hearing was provided by the Debtors as set forth in
Paragraph K below, and having held the Interim Hearing on May __, 2009 after
considering all the pleadings filed with this Court; and having overruled all
unresolved objections to the relief requested in the Motion; and upon the record
made by the Debtors at the Interim Hearing and the Affidavit of Christopher W.
Wright, Vice President of Pacific Ethanol Holding Co. LLC, in Support of First
Day Motions, and after due deliberation and consideration and good and
sufficient cause appearing therefore:
THE COURT HEREBY FINDS AND CONCLUDES AS FOLLOWS:
A. Filing of Petition. On May 17, 2009 (the “Petition Date”), each Debtor filed
a voluntary petition (collectively, the “Petitions”) with this Court commencing
a case under
 

 
2.01 - 5

--------------------------------------------------------------------------------

 

chapter 11 of the Bankruptcy Code. The Debtors are continuing to operate their
respective businesses and manage their respective properties as debtors in
possession pursuant to sections 1107 and 1108 of the Bankruptcy Code.
 
B.            Jurisdiction; Venue. This Court has subject matter jurisdiction to
consider this matter pursuant to 28 U.S.C. §§ 157 and 1334. This is a core
proceeding pursuant to 28 U.S.C. § 157(b). The statutory predicates for the
relief sought herein are sections 105, 361, 362, 363 and 364 of the Bankruptcy
Code and Bankruptcy Rules 2002, 4001(b) and 9014. Venue of the Chapter 11 Cases
and the Motion in this District is proper pursuant to 28 U.S.C. §§ 1408 and
1409.
 
C.            Debtors’ Stipulations. Subject to the limitations thereon
described below in Paragraph 15, the Debtors hereby agree and stipulate that:
 
(i)            as of the Petition Date, Holding, Stockton, Columbia, Madera and
Magic Valley (collectively, the “Prepetition Credit Parties”) were truly and
justly indebted to the Prepetition Lenders pursuant to the Prepetition Facility
Documents in the aggregate principal amount of $247,307,091, plus accrued and
unpaid interest with respect thereto and any additional fees, costs and expenses
as provided under the Prepetition Facility Documents (the “Prepetition
Indebtedness”) 3;
 
(ii)            pursuant to certain security agreements, blocked account,
lockbox and pledged account control agreements, mortgages, deeds of trust,
assignments, and other collateral documents and agreements (as amended,
restated, supplemented or otherwise modified from time to time and in effect on
the date hereof, collectively, the
 
 
 

--------------------------------------------------------------------------------

3 Pacific Ethanol California, Inc. (“PECA”), the intermediate holding company
for Holding, is not included as a Borrower or Guarantor under the Prepetition
Credit Agreement but has provided a secured accommodation pledge of its
ownership interest in Holding pursuant to the terms of the Prepetition Credit
Agreement. PECA is not a debtor in these proceedings.
 

 
2.01 - 6

--------------------------------------------------------------------------------

 

“Prepetition Security Documents”), and the other Prepetition Facility Documents,
the Prepetition Credit Parties granted to and/or for the benefit of the
Prepetition Secured Entities a first priority valid, perfected and enforceable
security interest in certain real and personal property of the Prepetition
Credit Parties (the “Prepetition Collateral”); and
(iii) (a) the Prepetition Obligations constitute legal, valid and binding
Obligations (as defined in the Prepetition Credit Agreement) of each of the
Prepetition Credit Parties; (b) no offsets, defenses or counterclaims to the
Prepetition Obligations exist; (c) no portion of the Prepetition Obligations is
subject to avoidance, disallowance, reduction or subordination pursuant to the
Bankruptcy Code or applicable non- bankruptcy law; (d) the Prepetition Facility
Documents are valid and enforceable by the Prepetition Secured Entities against
each of the applicable Prepetition Credit Parties; (e) the Prepetition Liens
constitute valid, binding, enforceable and perfected liens in and to the
Prepetition Collateral, having the priority set forth in the Prepetition
Facility Documents and subject only to the liens described in the Prepetition
Facility Documents, and are not subject to avoidance, reduction, disallowance,
disgorgement, counterclaim, surcharge or subordination pursuant to the
Bankruptcy Code or applicable non- bankruptcy law; (f) the Prepetition
Obligations constitute allowed secured claims against the applicable Debtors’
estates; and (g) no claim of or cause of action held by the Debtors exists
against the Prepetition Agent, Prepetition Lenders or their agents, whether
arising under applicable state or federal law (including, without limitation,
any recharacterization, subordination, avoidance or other claims arising under
or pursuant to sections 105, 510 or 542 through 553 of the Bankruptcy Code), or
whether arising under or in connection with any of the Prepetition Facility
Documents (or the transactions
 
 

 
2.01 - 7

--------------------------------------------------------------------------------

 

contemplated thereunder), Prepetition Obligations or Prepetition Liens,
including without limitation, any right to assert any disgorgement or recovery.
 
D.      Budget for DIP Facility. Attached hereto as Exhibit B is a rolling
13-week cashflow budget setting forth all projected cash receipts and cash
disbursements (by line item) on a weekly basis for the time period from May 17,
2009 through and including July 1, 2009 (the “Initial Approved Budget”). The
Initial Approved Budget may be modified or supplemented from time to time by
additional budgets (covering any time period covered by a prior budget or
covering additional time periods) prepared by the Debtors, without subsequent
notice to or order of the Court (each such additional budget, a “Supplemental
Approved Budget” and together with the Initial Approved Budget, the
“Approved Budget”). The Initial Approved Budget is an integral part of this
Interim Order and has been relied upon by the DIP Agent and the DIP Lenders in
deciding to agree to this Interim Order, to provide the DIP Facility and to
permit the use of the Cash Collateral. The Debtors represent and warrant to the
DIP Agent, the DIP Lenders and this Court that the Approved Budget includes and
contains the Debtors’ best estimate of all operational receipts and all
operational disbursements, fees, costs and other expenses that will be payable,
incurred and/or accrued by any of the Debtors during the period covered by the
Approved Budget and that such operational disbursements, fees, costs and other
expenses will be timely paid in the ordinary course of business pursuant to and
in accordance with the Approved Budget unless such operational disbursements,
fees, costs and other expenses are not incurred or otherwise payable. The
Debtors shall be permitted a variance between the aggregate actual cash receipts
and disbursements on a consolidated basis and the amounts projected in the
Approved Budget of 10% in the aggregate, measured on a rolling four-week basis.
 
 

 
2.01 - 8

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E.            Immediate Need for Funding. Based upon the pleadings and
proceedings of record in the Chapter 11 Cases, the Debtors do not have
sufficient available sources of working capital and financing to carry on the
operation of their businesses without the DIP Facility. As a result of the
Debtors’ financial condition, the use of Cash Collateral alone would be
insufficient to meet the Debtors’ immediate postpetition liquidity needs. The
Debtors’ ability to maintain business relationships with their vendors,
suppliers and customers, pay their employees, purchase and supply new inventory
and otherwise finance their operations is essential to the Debtors’ continued
viability. In addition, (i) the Debtors’ critical need for financing is
immediate; (ii) in the absence of the DIP Facility, the continued maintenance
and limited operation of the Debtors’ businesses would not be possible and
serious and irreparable harm to the Debtors and their estates would occur; and
(iii) the preservation, maintenance and enhancement of the going concern value
of the Debtors are of the utmost significance and importance to a successful
reorganization of the Debtors.
F.            No Alternate Financing. The Debtors are unable to obtain
sufficient interim and long-term financing from sources other than the DIP
Lenders on terms more favorable than under the DIP Facility and the DIP
Documents, and are not able to obtain unsecured credit allowable as an
administrative expense under section 503(b)(1) of the Bankruptcy Code. The
Debtors are also unable to obtain secured credit allowable under sections
364(c)(1), 364(c)(2) and 364(c)(3) of the Bankruptcy Code for the purposes set
forth in the DIP Agreement without the Debtors (i) granting to the DIP Agent and
the DIP Lenders, subject to the Carve-Out as provided herein, (x) the DIP
Superpriority Claims (as defined below) and (y) the DIP Liens (as defined below)
in the DIP Collateral (as defined below), as provided herein and in the DIP
Documents and (ii) allowing any DIP Lender to convert its respective pro rata
share of
 

 
2.01 - 9

--------------------------------------------------------------------------------

 

outstanding Prepetition Indebtedness into DIP Roll-Up Loans on a basis of one
and one-half dollar of DIP Roll-Up Loans for each dollar of DIP Revolving Loans
provided by such DIP Lender.
G.            Reasonable; Good Faith. Based upon the pleadings and proceedings
of record in the Chapter 11 Cases, (i) the terms and conditions of the DIP
Facility are fair and reasonable, reflect the Debtors’ exercise of prudent
business judgment consistent with their fiduciary duty and are supported by
reasonably equivalent value and fair consideration, (ii) the DIP Facility has
been negotiated in good faith and at arm’s length among the Debtors, the DIP
Agent and the DIP Lenders and (iii) any credit extended, loans made and other
financial accommodations extended to the Debtors by the DIP Lenders have been
extended, issued or made, as the case may be, in “good faith” within the meaning
of section 364(e) of the Bankruptcy Code.
H.            Use of Cash Collateral. An immediate and critical need exists for
the Debtors to use the Cash Collateral (in addition to the DIP Facility) to
continue to operate their businesses in the ordinary course, pay wages, maintain
business relationship with vendors, suppliers and customers, make capital
expenditures, make adequate protection payments, generally conduct their
business affairs so as to avoid immediate and irreparable harm to their estates
and the value of their assets, and afford the Debtors adequate time to finalize
and execute documents under the DIP Facility (subject to and within the limits
imposed by the terms of this Interim Order).
I.     Consent by Prepetition Lenders. The Prepetition Lenders have consented to
(i) the financing arrangements contemplated by this Interim Order and the DIP
Documents and (ii) Debtors’ proposed use of their Cash Collateral, on the terms
and conditions set forth in this
 

 
2.01 - 10

--------------------------------------------------------------------------------

 

Interim Order. The consent of the Prepetition Lenders is expressly limited to
the postpetition financing being provided by the DIP Lenders (as contemplated by
this Interim Order and the DIP Documents) and the provision of adequate
protection herein, and shall not extend to any other postpetition financing or
to any modified version of the DIP Facility.
J.            Adequate Protection. The adequate protection provided to the
Prepetition Agent and the Prepetition Lenders for any diminution in the value of
such parties’ respective interest in the Prepetition Collateral from and after
the Petition Date, including, without limitation, from the DIP Facility and use
of the Cash Collateral, pursuant to the provisions of this Interim Order, is
consistent with and authorized by the Bankruptcy Code and is offered by the
Debtors to protect such parties’ interests in the Prepetition Collateral in
accordance with sections 361, 362 and 363 of the Bankruptcy Code. The consent of
the Prepetition Agent and the Prepetition Lenders to the priming of their liens
by the DIP Liens does not constitute, and shall not be construed as
constituting, an acknowledgment or stipulation by the Prepetition Agent or the
Prepetition Lenders that their respective interests in the Prepetition
Collateral are adequately protected pursuant to this Interim Order or otherwise.
The adequate protection provided herein and other benefits and privileges
contained herein are necessary in order to obtain the foregoing consents and
agreements and the non-objection of such parties.
K.            Notice. Notice of the Interim Hearing and the entry of this
Interim Order has been provided to: (i) the largest unsecured creditors on a
consolidated basis, as listed and filed with the Petition; (ii) the Office of
the United States Trustee for the District of Delaware (the “U.S. Trustee”);
(iii) the Securities and Exchange Commission; (iv) counsel to the DIP Agent; (v)
counsel to the Prepetition Agent; (vi) the Internal Revenue Service; (vii) the
Prepetition Lenders; and (x) any other parties requesting such notice
(collectively, the “Notice
 
 
 

 
2.01 - 11

--------------------------------------------------------------------------------

 
 

Parties”). Requisite notice of the Motion and the relief requested thereby and
this Interim Order has been provided in accordance with Bankruptcy Rule 4001,
and no other notice need be provided for entry of this Interim Order.
L.            Good Cause Shown; Best Interest. The Debtors have requested
immediate entry of this Interim Order pursuant to Bankruptcy Rules 4001(b)(2)
and 4001(c)(2). Absent entry of this Interim Order, the Debtors’ businesses,
properties and estates will be immediately and irreparably harmed. This Court
concludes that good cause has been shown and that entry of this Interim Order is
in the best interest of the Debtors’ respective estates and creditors as its
implementation will, among other things, allow for the continued operation of
the Debtors’ existing businesses and enhance the Debtors’ prospects for
successful reorganization.
M.            No Liability to Third Parties. The Debtors stipulate and the Court
finds that in making decisions to advance loans to the Debtors, in administering
any loans, in permitting the Debtors to use Cash Collateral, in accepting the
Interim Approved Budget or any future Supplemental Approved Budget or in taking
any other actions permitted by this Interim Order or the DIP Documents, none of
the DIP Agent nor DIP Lenders shall be deemed to be in control of the operations
of the Debtors or to be acting as a “responsible person” or “owner or operator”
with respect to the operation or management of the Debtors.
Based on the foregoing, and upon the record made before this Court at the
Interim Hearing, and good and sufficient cause appearing therefore,
IT IS HEREBY ORDERED, ADJUDGED AND DECREED THAT:
1.            Approval of Interim Order. The Motion is approved on the terms and
conditions set forth in this Interim Order. Any objections that have not
previously been
 
 

 
2.01 - 12

--------------------------------------------------------------------------------

 
 
 
withdrawn are hereby overruled. This Interim Order shall become effective
immediately upon its entry.
2.            Approval of DIP Documents; Authority Thereunder. The Debtors are
hereby authorized to enter into the DIP Documents, including the DIP Agreement,
and such additional documents, instruments and agreements as may be required or
requested by the DIP Agent and the DIP Lenders to implement the terms or
effectuate the purposes of this Interim Order. The terms and conditions of the
DIP Documents are hereby approved and (i) the Borrowers are authorized to comply
with and perform all of the terms and conditions contained therein, and (ii)
each Borrower is directed to repay amounts borrowed, together with interest and
premiums (as applicable) thereon and any other outstanding DIP Obligations to
the DIP Lenders in accordance with and subject to the terms and conditions set
forth in the DIP Documents and this Interim Order.
3.            Authorization to Borrow/Use of Cash Collateral. Upon finalizing
and executing the DIP Agreement and the other DIP Documents, the Debtors are
immediately authorized (a) to borrow from the DIP Lenders under the DIP Facility
up to an aggregate principal amount not to exceed $20 million (with up to $10
million available upon the entry of this Interim Order) under the DIP Revolving
Loans and (b) to effectuate a 1.50:1.00 dollar conversion (calculated on the
basis of a one and one-half dollars of DIP Roll-Up Loans for each dollar of DIP
Revolving Loans provided by the DIP Lenders) in respect of the outstanding term
loans under the Prepetition Credit Facility beneficially owned by the applicable
DIP Lender (or an affiliate) at 5 p.m. (prevailing Eastern time) on May 15,
2009, in an aggregate principal amount not to exceed $30 million (of which up to
$15 million shall convert concurrently with the funding of the DIP Revolving
Interim Commitment upon entry of this Interim Order), each
 

 
2.01 - 13

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subject to the terms and conditions of the DIP Documents, provided, however,
that if any DIP Agent and/or DIP Lender in its sole discretion advances funds in
excess of these limitations or any other limitations or restrictions set forth
herein, such advances shall constitute DIP Obligations and shall be entitled to
the benefits of the DIP Documents and this Interim Order. The Debtors are
authorized to use the proceeds of the DIP Revolving Loans and the Cash
Collateral in the operation of the Debtors’ businesses, provided, that any
proposed DIP Revolving Loan or use of Cash Collateral is consistent with the
terms of the DIP Documents, the Approved Budget and this Interim Order.
4.            Payment of Adequate Protection. Upon finalizing and executing the
DIP Agreement and the other DIP Documents, the Debtors are authorized to use the
proceeds of the DIP Revolving Loans, in part, to make certain limited adequate
protection payments to the Prepetition Lenders in accordance with the terms and
conditions of the DIP Agreement, the Approved Budget and this Interim Order
(including Paragraph 12 of this Interim Order).
5.            Interest on DIP Loans. The rate of interest to be charged for the
DIP Revolving Loans, the DIP Roll-Up Loans and other extensions of credit to the
Debtors pursuant to the DIP Agreement shall be the rates set forth in the DIP
Agreement and shall be payable at the times set forth in the DIP Agreement.
6.            Payment of DIP Fees and Expenses. Subject to and in accordance
with the Approved Budget, the Debtors are hereby authorized and directed to pay
upon demand all reasonable fees, costs, expenses and other amounts payable under
the terms of the DIP Documents and all other reasonable, out-of-pocket costs and
expenses of the DIP Agent, the DIP Lenders, the Prepetition Agent and the
Prepetition Lenders in accordance with the terms of the DIP Documents
(including, without limitation, the reasonable, out-of-pocket prepetition and
 

 
 
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postpetition fees, costs and expenses of legal counsel, financial advisors and
third-party appraisers, advisors and consultants advising the DIP Agent, the DIP
Lenders, the Prepetition Agent or the Prepetition Lenders); provided, however,
the Debtors shall only be required to pay to the Prepetition Agent and the
Prepetition Lenders such amounts that have accrued and are outstanding on or
prior to the Petition Date, except as otherwise permitted in Paragraph 12(i).
None of such fees, costs and expenses shall be subject to Court approval or U.S.
Trustee guidelines, and no recipient of any such payment shall be required to
file with respect thereto any interim or final fee application with this Court.
In addition, the Debtors are hereby authorized and directed to indemnify the DIP
Agent and DIP Lenders (and each of their respective directors, officers,
employees, agents, representatives, attorneys, consultants, advisors and
controlling persons) against any liability arising in connection with the DIP
Documents, to the extent set forth in the DIP Documents. All such unpaid fees,
costs and expenses and indemnities of the DIP Agent and DIP Lenders shall be
secured by the DIP Collateral and afforded all of the priorities and protections
afforded to the DIP Obligations under this Interim Order and the DIP Documents.
7.            Validity of DIP Documents. Upon execution and delivery of the DIP
Documents, the DIP Documents shall constitute, and are hereby deemed to be the
legal, valid and binding obligations of the Debtors party thereto, enforceable
against each such Debtor in accordance with the terms of the DIP Documents. Any
DIP Revolving Loans advanced under the DIP Agreement until the Final Hearing
will be made only to fund the Debtors’ working capital and general corporate
needs, in each case in the ordinary course of business to the extent permitted
under the DIP Agreement, and to pay such other amounts as are required or
permitted to be paid pursuant to the DIP Agreement, this Interim Order and any
other orders of this Court,
 
 
 
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all subject to and in accordance with the Approved Budget. No obligation,
payment, transfer or grant of security under the DIP Documents or this Interim
Order shall be stayed, restrained, voided, voidable or recoverable under the
Bankruptcy Code or under any applicable non- bankruptcy law, or subject to any
defense, reduction, setoff, recoupment or counterclaim.
8.            Perfection in Debtors’ Cash. From the Petition Date until the DIP
Obligations have been paid in full in cash, all cash receipts, Cash Collateral
and all proceeds from the sale or other disposition of the DIP Collateral or
Prepetition Collateral and all other proceeds of such collateral of any kind
which is now or shall come into the possession or control of any of the Debtors,
or to which any of the Debtors is now or shall become entitled, shall be
promptly deposited only into accounts upon which the Prepetition Agent has
perfected Prepetition Liens and such collections and proceeds shall remain
subject to all of the security interests and liens of the DIP Agent and DIP
Lenders (subject to any further orders of the Court) and shall be treated in
accordance with this Interim Order. Subject to the Carve-Out and other
provisions of this Interim Order, all financial institutions in which the
Debtors’ accounts are located are authorized and directed to comply with any
request of the DIP Agent to turn over to the DIP Agent all funds therein without
offset or deduction of any kind to the extent necessary to pay the outstanding
indebtedness in full under the DIP Facility, and the Debtors are authorized and
directed to enter into such blocked account agreements with cash dominion with
the DIP Agent and such financial institutions as the DIP Agent may require.
9.            DIP Superpriority Claims. In accordance with Bankruptcy Code
sections 364(c)(1) and 364(d), the DIP Obligations shall constitute
superpriority administrative expense claims (the “DIP Superpriority Claims”)
against each of the Debtors with priority in payment over any and all
administrative expenses, adequate protection claims, diminution claims and all
 

 
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other claims of against the Debtors, now existing or hereafter arising, of any
kind whatsoever, including, without limitation, all administrative expenses of
the kind specified in sections 503(b) and 507(b) of the Bankruptcy Code, and
over any and all administrative expenses or other claims of the kinds specified
or ordered pursuant to any provision of the Bankruptcy Code, including, but not
limited to, Bankruptcy Code sections 105, 326, 328, 330, 331, 503(b), 506(c),
507(a), 507(b), 546, 726, 1113 and 1114 or otherwise, including those resulting
from the conversion of any of the Chapter 11 Cases pursuant to section 1112 of
the Bankruptcy Code, whether or not such expenses or claims may become secured
by a judgment lien or other non-consensual lien, levy or attachment; provided,
however, that the DIP Superpriority Claims shall be subject to the Carve-Out (as
defined below).
10.           DIP Liens. As security for the DIP Obligations, the DIP Agent and
the DIP Lenders are hereby granted (effective upon the date of this Interim
Order, without the necessity of the execution by the Debtors or the filing or
recordation of mortgages, security agreements, lock box or control agreements,
financing statements, or any other instruments or otherwise) valid, binding and
fully perfected, security interests in, and liens upon (the “DIP Liens”), all
present and after-acquired property of the Debtors of any nature whatsoever,
including, without limitation, all cash and cash equivalents contained in any
account maintained by any of the Debtors, and all Avoidance Actions (as defined
below) of the Debtors or their estates (collectively with all proceeds and
products of any or all of the foregoing, the “DIP Collateral”), subject only to
the payment of the Carve-Out, which shall consist of:
(a)           First Lien on Cash Balances and Unencumbered Property.  Pursuant
to section 364(c)(2) of the Bankruptcy Code, a continuing, enforceable, first
priority, fully-perfected lien and security interest upon all of the Debtors’
right, title and
 

 
 
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interest in, to and under all DIP Collateral that is not otherwise encumbered by
a validly perfected security interest or lien on the Petition Date as permitted
by the Prepetition Credit Agreement (collectively, the “Unencumbered Property”).
Subject only to and effective upon entry of the Final Order, Unencumbered
Property shall also include the Debtors’ claims and causes of action under
sections 502(d), 544, 545, 547, 548, 549, 550, and 553 of the Bankruptcy Code
and any other avoidance actions under the Bankruptcy Code and the proceeds
thereof and property received thereby whether by judgment, settlement or
otherwise, whether pursuant to federal law or applicable state law
(collectively, “Avoidance Actions”).
(b)           Liens Junior to Certain Other Liens. Pursuant to section 364(c)(3)
of the Bankruptcy Code, a junior, perfected lien and security interest (other
than as set forth in clause (c) below) upon all of the Debtors’ right, title and
interest in, to and under all DIP Collateral which is subject to (A) any validly
perfected security interest or lien in existence as of the Petition Date that is
not subject to section 552(a) of the Bankruptcy Code, or (B) any valid security
interest or lien perfected (but not granted) after the Petition Date (to the
extent such perfection in respect of a pre-Petition Date claim is expressly
permitted under the Bankruptcy Code) that is not subject to section 552(a) of
the Bankruptcy Code.
(c)           Liens Priming Prepetition Secured Entities’ Liens. Pursuant to
section 364(d)(1) of the Bankruptcy Code, a first priority, senior, priming,
perfected lien and security interest upon all of the Debtors’ right, title and
interest in, to and under the DIP Collateral, subject only to a valid perfected
lien that is a “Permitted Lien” (as defined in the DIP Agreement) and expressly
permitted in the DIP Agreement to be senior to the
 
2.01 - 18

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DIP Liens granted to the DIP Agent and the DIP Lenders in this Interim Order to
secure the DIP Obligations. Such security interest shall be senior to and prime
the Prepetition Liens and the Adequate Protection Liens (as defined below), but
shall be junior to any valid, perfected, enforceable and unavoidable security
interests and liens of other parties, if any, on such property existing
immediately prior to the Petition Date otherwise permitted by the Prepetition
Credit Agreement.
(d)          Liens Senior to Certain Other Liens. The DIP Liens and the Adequate
Protection Liens shall not be subject or subordinate to (i) any lien or security
interest that is avoided and preserved for the benefit of the Debtors and their
estates under section 551 of the Bankruptcy Code, (ii) any liens arising after
the Petition Date including, without limitation, any liens or security interests
granted in favor of any federal, state, municipal or other governmental unit,
commission, board or court for any liability of the Debtors, or (iii) any
intercompany or affiliate liens of the Debtors.
11.            Priority of DIP Liens. Notwithstanding anything to the contrary
herein, the DIP Liens granted hereunder to the DIP Lenders under the DIP Roll-Up
Loans shall be pari passu to the DIP Liens granted hereunder to the DIP Lenders
under the DIP Revolving Loans in respect of the DIP Collateral.
12.            Prepetition Credit Facility Adequate Protection. As adequate
protection for the interests of the Prepetition Agent and the Prepetition
Lenders on account of the Prepetition Liens as a result of (a) the provisions of
this Interim Order granting first priority and/or priming liens on such
Prepetition Collateral to the DIP Agent and DIP Lenders; (b) authorizing the use
of Cash Collateral; (c) the imposition of the automatic stay pursuant to section
362 of the Bankruptcy Code; or (d) otherwise, pursuant to sections 361(a),
363(c) and
 

 
 
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364(d)(1) of the Bankruptcy Code, the Prepetition Agent and Prepetition Lenders
are hereby granted, solely to the extent of the diminution in value of the
Prepetition Liens in the Prepetition Collateral from and after the Petition
Date, the following (collectively, the “Adequate Protection Obligations”):
(i)            Fees and Expenses. Subject to and in accordance with the Approved
Budget, the Prepetition Agent, on behalf of the Prepetition Lenders, is hereby
granted payments in cash from the Debtors on a current basis of all fees, costs
and expenses of payable to the Prepetition Agent under the Prepetition Credit
Agreement as in effect on the Petition Date, including but not limited to, the
reasonable fees and disbursements of counsel, financial and other third party
advisors, appraisers and consultants for the Prepetition Agent promptly upon
receipt of invoices therefor (subject in all respects to applicable privilege or
work product doctrines) and without the necessity of filing motions or fee
applications, including such amounts arising (A) before the Petition Date and
(B) after the Petition Date to the extent such amounts arise in connection with
the enforcement of the protections granted to the Prepetition Lenders pursuant
to this Order; provided, however, if and to the extent that any payment(s) is
challenged by a party in interest under section 506(b) of the Bankruptcy Code
and ultimately not allowed under such provision, such payment(s) may be
recharacterized as a payment of principal on the Prepetition Obligations.;
(ii)           Adequate Protection Liens. The Prepetition Agent, on behalf of
the Prepetition Lenders, is hereby granted valid, enforceable, unavoidable and
fully perfected replacement liens and security interests, subject to the
Carve-Out, in the collateral of the same nature and type as the Prepetition
Collateral, on the same basis and
 
 

 
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in the same relative priority as the Prepetition Liens, which, with respect to
the Prepetition Collateral and the DIP Collateral, shall be junior in all
respects to the DIP Liens (the “Adequate Protection Liens”). The Adequate
Protection Liens shall be deemed to be legal, valid, binding, enforceable,
perfected liens, not subject to subordination or avoidance, for all purposes in
the Chapter 11 Cases. Except as otherwise set forth in this Paragraph 12 or
otherwise in this Interim Order, the Adequate Protection Liens shall not be
subordinated or be made pari passu with any other lien under section 364(d) of
the Bankruptcy Code or otherwise. The Adequate Protection Liens shall be deemed
to be perfected automatically upon the entry of this Interim Order, without the
necessity of filing of any UCC-1 financing statement, state or federal notice,
mortgage or other similar instrument or document in any state or public record
or office and without the necessity of taking possession or control of any DIP
Collateral.
(iii)         503 and 507 Claims. The Prepetition Agent, on behalf of the
Prepetition Lenders, is hereby granted, subject to the payment of the Carve-Out,
superpriority administrative expense claims (the “Prepetition Superpriority
Claims”) under sections 503 and 507 of the Bankruptcy Code against the Debtors’
estates to the extent that the Adequate Protection Liens do not adequately
protect against the diminution in value of the Prepetition Liens, which
Prepetition Superpriority Claims, if any, shall have priority in payment over
any and all administrative expenses of the kinds specified or ordered pursuant
to any provision of the Bankruptcy Code, including, but not limited to,
Bankruptcy Code sections 105, 326, 328, 330, 331, 503(b), 506(c), 507(a),
507(b), 726, 1113 and 1114, or otherwise and including those resulting from the
conversion of any of the Chapter 11 Cases pursuant to section 1112 of the
Bankruptcy
 
 

 
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Code; provided that at all times while such claim is in full force and effect
pursuant to this Interim Order, the Prepetition Superpriority Claims shall be
junior in all respects to the DIP Superpriority Claims;
(iv)          Monitoring of Collateral. The Prepetition Agent shall be permitted
to retain expert consultants and financial advisors at the expense of the
Debtors, which consultants and advisors shall be given reasonable access for
purposes of monitoring the business of the Debtors and the value of the DIP
Collateral; and
(v)           Financial Reporting. The Debtors shall provide the Prepetition
Agent with financial and other reporting as described in the Prepetition Credit
Agreement; provided, however, that this Interim Order is without prejudice to,
and does not constitute a waiver of, expressly or implicitly, the rights of the
Prepetition Agent or the Prepetition Lenders to seek additional forms of
adequate protection at any time.
13.          No Waiver of Prepetition Credit Agreement Provisions; Reservation
of Rights. Except as otherwise specifically provided in this Interim Order,
nothing contained in this Interim Order shall be deemed a waiver or constitute a
consent to the modification of any provision contained in the Prepetition Credit
Agreement by the Prepetition Agent or the Prepetition Lenders, including, but
not limited to, the incurrence or issuance of any indebtedness by the Debtors,
the incurrence of any lien in connection therewith or the making of any payment
by the Debtors. Under the circumstances and given that the above-described
adequate protection is consistent with the Bankruptcy Code, including section
506(b) thereof, the Court finds that the adequate protection provided herein is
reasonable and sufficient to protect the interests of the Prepetition Agent and
Prepetition Lenders.
 
 

 
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14.          Carve-Out. Upon the occurrence of the earlier of (the “Carve-Out
Event”) (i) an Event of Default (as such term is defined in the DIP Agreement)
and continuance thereof and (ii) the Maturity Date (as defined in the Credit
Agreement), to the extent unencumbered funds are not available to pay
administrative expenses in full, the DIP Liens, DIP Superpriority Claims,
Prepetition Superpriority Claims, Adequate Protection Liens, and Prepetition
Liens, shall be subject to the payment of (x) the aggregate amount of any
budgeted and unpaid fees, costs and expenses that were accrued or incurred prior
to the Carve-Out Event by the professionals retained by the Debtors or any
professionals retained by any official unsecured creditors’ committee (the
“Committee”) (collectively, the “Professionals”) to the extent allowed by an
order of this Court, plus (y) those fees, costs and expenses incurred by
Professionals after the Carve-Out Event and subsequently allowed by order of
this Court and in compliance with the DIP Budget in an amount not to exceed
$250,000 in the aggregate, plus (z) fees required to be paid to the Clerk of the
Court and to the U.S. Trustee pursuant to 28 U.S.C. § 1930 (collectively, the
“Carve-Out”); providedfurther that following a Carve-Out Event any amounts paid
to Professionals by any means will reduce the Carve-Out on a dollar-for-dollar
basis; and provided, further, that no portion of the Carve-Out, DIP Facility,
DIP Collateral, Prepetition Collateral or Cash Collateral shall include, apply
to, or be available for any fees, costs or expenses incurred by any party,
including the Debtors or the Committee, in connection with (i) the initiation or
prosecution of any claims, causes of action, adversary proceedings, or other
litigation against any of the Secured Lending Entities, including, without
limitation, (a) challenging the amount, validity, extent, perfection, priority,
or enforceability of, or asserting any defense, counterclaim, or offset to the
DIP Obligations, DIP Superpriority Claims or security interests and liens of the
DIP Agent or DIP Lenders in respect thereof, (b) challenging the amount,
validity, extent,
 

 
2.01 - 23

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perfection, priority, or enforceability of, or asserting any defense,
counterclaim, or offset to the Prepetition Obligations, Prepetition
Superpriority Claims or security interests and liens of the Prepetition Agent or
Prepetition Lenders in respect thereof or (ii) asserting any claims or causes of
action, including, without limitation, claims or actions to hinder or delay the
DIP Agent’s or DIP Lenders’ assertion, enforcement or realization on the DIP
Collateral in accordance with the DIP Facility Documents or this Interim Order;
provided, further, however, that no more than $15,000 of the proceeds of the DIP
Facility or any proceeds of the DIP Collateral may be used to fund a reasonable
investigation by the Committee into the existence of any causes of action or
other type of litigation against the Prepetition Secured Entities with respect
to the Prepetition Obligations. Notwithstanding the foregoing, so long as a
Carve-Out Event has not occurred: (i) the Debtors shall be permitted to pay,
subject to and in accordance with the Approved Budget, administrative expenses
allowed and payable under sections 330 and 331 of the Bankruptcy Code, as the
same may become due and payable; and (ii) such payments shall not be applied to
reduce the Carve-Out (to the extent such payments are ultimately permitted by
the Court). Nothing contained herein is intended to constitute, nor should be
construed as consent to, the allowance of any Professional’s fees, costs or
expenses by any party and shall not affect the right of the Debtors, DIP Agent,
DIP Lenders, Prepetition Agent, Prepetition Lenders, Committee, U.S. Trustee, or
any other party-in-interest to object to the allowance and payment or any
amounts incurred or requested.
15.   Investigation Rights. The Committee shall have a maximum of sixty (60)
days from the date of its appointment, but in no event later than seventy-five
(75) days from the Petition Date, and in the event no Committee is appointed,
all non-debtor parties-in-interest (including a trustee, if appointed or elected
prior to the Investigation Termination Date, as
 

 
 
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defined herein) shall have seventy-five (75) days from the Petition Date (the
“Investigation  Termination Date”) to investigate the validity, perfection and
enforceability of the Prepetition Liens and the Prepetition Obligations, or to
assert any other claims or causes of action against the Prepetition Secured
Entities. If any Committee, or any non-debtor party-in-interest hereafter vested
with authority by this Court, determines that there may be a challenge to the
Prepetition Secured Entities by the Investigation Termination Date, then upon
three (3) days’ written notice to the Debtors and the Prepetition Secured
Entities, such Committee or other non-debtor party­in-interest hereafter vested
with authority by this Court shall be permitted to file and prosecute an
objection or claim related thereto (each, a “Challenge”), and shall have only
until the Investigation Termination Date to file such objection or otherwise
initiate an appropriate action on behalf of the Debtors’ estates setting forth
the basis of any such challenge, claim or cause of action. If a Challenge is not
filed on or before the Investigation Termination Date: (a) the agreements,
acknowledgements and stipulations contained in Paragraph C of this Interim
Order, shall be irrevocably binding on the Debtors, the Committee and all
parties-in-interest and any and all successors-in-interest as to any of the
foregoing, without further action by any party or this Court, and any Committee
and any other party-in-interest and any and all successors-in­interest as to any
of the foregoing, shall thereafter be forever barred from bringing any
Challenge; (b) the liens and security interests of the Prepetition Agent and
Prepetition Lenders shall be deemed to constitute valid, binding, enforceable
and perfected liens and security interests not subject to avoidance or
disallowance pursuant to the Bankruptcy Code or applicable non-bankruptcy law;
(c) the Prepetition Indebtedness shall be deemed to be finally allowed claims
for all purposes in the Chapter 11 Cases and any subsequent chapter 7 cases, in
the amounts set forth in Paragraph C and shall not be subject to challenge by
any party-in-interest as
 
 

 
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to validity, priority or otherwise; and (d) the Debtors shall be deemed to have
released, waived and discharged the Prepetition Secured Entities (whether in
their prepetition or postpetition capacity), together with their respective
officers, directors, employees, agents, attorneys, professionals, affiliates,
subsidiaries, assigns and/or successors, from any and all claims and causes of
action arising out of, based upon or related to, in whole or in part, the
Prepetition Obligations. The Prepetition Agent shall cooperate in all reasonable
requests for information in order to assist the Committee in its investigation
under this Paragraph 15. Notwithstanding anything to the contrary herein: (a) if
any such Challenge is timely commenced, the stipulations contained in Paragraph
C of this Interim Order shall nonetheless remain binding on all
parties-in­interest and preclusive except to the extent that such stipulations
are expressly and successfully challenged in such Challenge; and (b) the
Prepetition Secured Entities reserve all of their rights to contest on any
grounds any Challenge.
16.          Protection of DIP Lenders’ Rights. So long as there are any DIP
Revolving Loans, DIP Roll-Up Loans or other amounts outstanding, the DIP Lenders
have any Commitment (as defined in the DIP Agreement) under the DIP Agreement or
any other DIP Obligations are outstanding, the Prepetition Secured Entities (i)
shall not take any action to foreclose upon or recover in connection with their
respective liens and security interests, other agreements, or operation of law
of this Interim Order, or otherwise exercise remedies against any DIP
Collateral, except to the extent authorized by an order of this Court, (ii)
shall be deemed to have consented to any release of DIP Collateral authorized
under the DIP Facility Documents, (iii) shall not file any further financing
statements, trademark filings, copyright filings, patent filings, mortgages,
notices of lien or similar instruments, enter into any control agreement, or
otherwise take any action to perfect their security interests in the DIP
Collateral unless, solely as
 

 
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to this clause (iii), the DIP Agent files financing statements or other
documents to perfect the liens granted pursuant to this Interim Order, or as may
be required by applicable state law to continue the perfection of valid and
unavoidable liens or security interests as of the Petition Date and (iv) not
seek to terminate or modify the use of Cash Collateral.
17.           Asset Dispositions. The Debtors shall immediately pay, or cause to
be paid to, the DIP Agent for application to the DIP Obligations, to the extent
required by and in the order set forth in the DIP Agreement, all of the proceeds
of any sale, lease or other disposition of any DIP Collateral outside of the
ordinary course of business (an “Asset Disposition”) and shall comply with all
other provisions in the DIP Facility Documents and this Interim Order in
connection with any such Asset Disposition. Except to the extent otherwise
expressly provided in the DIP Facility Documents, the Debtors shall not sell or
otherwise dispose of any DIP Collateral outside the ordinary course of business
without the prior written consent of the DIP Agent and the number and/or
percentage of DIP Lenders required pursuant to the DIP Agreement and order of
the Court after notice and a hearing. The rights of the DIP Agent, the DIP
Lenders, the Prepetition Agent and the Prepetition Lenders to credit bid all or
any portion of their Indebtedness in connection with any proposed Asset
Disposition of DIP Collateral (other than the sale of the Debtors’ inventory in
the ordinary course of Debtors’ business) shall be preserved through the closing
of such sale. All proceeds of any Asset Disposition shall be applied in
accordance with the terms and conditions of the DIP Agreement.
18.           Further Assurances. The Debtors shall execute and deliver to the
DIP Agent, DIP Lenders, Prepetition Agent and the Prepetition Lenders all such
agreements, financing statements, instruments and other documents as the DIP
Agent, DIP Lenders Prepetition Agent or the Prepetition Lenders may reasonably
request to evidence, confirm,
 
 
 
 
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validate or perfect the DIP Liens or the Adequate Protection Liens granted
pursuant hereto. Further, the Debtors are authorized and directed to do and
perform all acts, to make, execute and deliver all instruments and documents
(including, without limitation, the execution of additional security agreements,
pledge agreements, control agreements, mortgages and financing statements), and
shall pay fees and expenses that may be required or necessary for the Debtors’
performance under the DIP Facility Documents, including, without limitation, (i)
the execution of the DIP Facility Documents and (ii) the payment of the fees,
costs and other expenses described in the DIP Facility Documents as such become
due. None of the reasonable attorneys’, financial advisers’ and accountants’
fees and disbursements incurred by the DIP Agent or DIP Lenders and reimbursable
by the Debtors shall be subject to the approval of this Court or the U.S.
Trustee guidelines, and no recipient of any such payment shall be required to
file with respect thereto any interim or final fee application with this Court.
Notwithstanding the foregoing, the Debtors shall, promptly after payment of
invoices for any such fees and disbursements, provide copies of same to counsel
for the Prepetition Agent. In addition, the Debtors are hereby authorized and
directed to indemnify the DIP Agent and DIP Lenders against any liability
arising in connection with the DIP Facility Documents to the extent provided in
the DIP Facility Documents. All such fees, expenses and indemnities of the DIP
Agent and DIP Lenders shall constitute DIP Obligations and shall be secured by
the DIP Liens and afforded all of the priorities and protections afforded to the
DIP Obligations under this Interim Order and the other DIP Facility Documents.
19.           506(c) Waiver. Upon the entry of the Final Order, the Debtors
shall irrevocably waive and shall be prohibited from asserting any surcharge
claim, under section 506(c) of the Bankruptcy Code or otherwise, for any costs
and expenses incurred in connection
 

 
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with the preservation, protection or enhancement of, or realization by the
Secured Lending Entities upon the DIP Collateral or the Prepetition Collateral
(as applicable). In no event shall the Secured Lending Entities be subject to
the equitable doctrine of “marshaling” or any other similar doctrine with
respect to the DIP Collateral or the Prepetition Collateral (as applicable).
20.           Restrictions on Granting Post-Petition Liens. Other than the
Carve-Out, or as otherwise provided in this Interim Order, no claim having a
priority superior or pari passu with those granted by this Interim Order to the
Secured Lending Entities shall be granted or permitted by any order of this
Court heretofore or hereafter entered in the Chapter 11 Cases, while (i) any
portion of the DIP Facility (or refinancing thereof), any DIP Revolving Loan,
any DIP Roll-Up Loan or any other DIP Facility Obligations are outstanding or
(ii) the DIP Lenders have any Commitment (as defined in the DIP Agreement) under
the DIP Agreement. Except as expressly permitted by the DIP Facility Documents,
the Debtors will not, at any time during the Chapter 11 Cases, grant mortgages,
security interests or liens in the DIP Collateral (or any portion thereof) to
any other parties pursuant to section 364(d) of the Bankruptcy Code or
otherwise.
21.           Return of Inventory. The Debtors shall not, without the consent of
the DIP Agent, DIP Lenders, Prepetition Agent and Prepetition Lenders: (i) enter
into any agreement to return any inventory to any of their creditors for
application against any prepetition indebtedness under section 546(h) of the
Bankruptcy Code; or (ii) consent to any creditor taking any set-off against any
of its prepetition indebtedness based upon any such return pursuant to section
553(b)(1) of the Bankruptcy Code or otherwise.
22.           Automatic Effectiveness of Liens. The DIP Liens and Adequate
Protection Liens shall not be subject to challenge and shall attach and become
valid, perfected,
 

 
 
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enforceable, non-avoidable and effective by operation of law as of the Petition
Date without any further action by the Debtors, the Secured Lending Entities and
without the necessity of execution by the Debtors, or the filing or recordation,
of any financing statements, security agreements, vehicle lien applications,
mortgages, filings with the U.S. Patent and Trademark Office or the Library of
Congress, or other documents or the taking of any other actions. All DIP
Collateral shall be free and clear of other liens, claims and encumbrances,
except as provided in the DIP Facility Documents and this Interim Order. If the
DIP Agent or the Prepetition Agent hereafter requests that the Debtors execute
and deliver to the DIP Agent or the Prepetition Agent financing statements,
security agreements, collateral assignments, mortgages, or other instruments and
documents considered by such agent to be reasonably necessary or desirable to
further evidence the perfection of the DIP Liens or the Adequate Protection
Liens, as applicable, the Debtors are hereby authorized and directed to execute
and deliver such financing statements, security agreements, mortgages,
collateral assignments, instruments, and documents, and the DIP Agent or the
Prepetition Agent is hereby authorized to file or record such documents in its
discretion without seeking modification of the automatic stay under section 362
of the Bankruptcy Code, in which event all such documents shall be deemed to
have been filed or recorded at the time and on the date of entry of this Interim
Order.
23.          Automatic Stay. As provided herein, subject only to the provisions
of the DIP Agreement and without further order from this Court, the automatic
stay provisions of section 362 of the Bankruptcy Code are vacated and modified
to the extent necessary to permit the DIP Agent and DIP Lenders to exercise,
upon the occurrence and during the continuance of any Event of Default, all
rights and remedies provided for in the DIP Facility Documents, and to take any
or all of the following actions, so long as the DIP Agent has provided three (3)
business
 
 
 
2.01 - 30

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days prior written notice to the Debtors, their bankruptcy counsel, counsel to
the Committee, counsel to the respective Secured Lender Entities and the U.S.
Trustee as provided for in Section 11.12 of the DIP Agreement: (a) immediately
terminate the Debtors’ use of Cash Collateral and cease making any advances
under the DIP Revolving Loans to the Debtors; (b) declare all DIP Obligations to
be immediately due and payable; (c) charge the default rate of interest provided
for under the DIP Agreement; (d) freeze monies or balances in the Debtors’
accounts; (e) immediately set off any and all amounts in accounts maintained by
the Debtors with the DIP Agent or any of the DIP Lenders against the DIP
Obligations, or otherwise enforce rights against the DIP Collateral in the
possession of any of the DIP Lenders for application towards the DIP
Obligations; and (f) take any other actions or exercise any other rights or
remedies permitted under this Interim Order, the DIP Facility Documents or
applicable law to effect the repayment of the DIP Obligations. Following the
giving of written notice by the DIP Agents of the occurrence of an Event of
Default, the Debtors and any Committee in the Cases shall be entitled to an
emergency hearing before this court solely for the purpose of contesting whether
an Event of Default has occurred. Upon entry of this Interim Order, no
party-in-interest shall have the right to contest the enforcement of the
remedies set forth in this Interim Order and the DIP Facility Documents on any
basis other than an assertion that no Event of Default has occurred, and, except
with respect to such an assertion, no party-in-interest shall have the right to
enjoin any such enforcement under section 105 of the Bankruptcy Code or
otherwise, or to seek any injunctive relief inconsistent with the provisions of
this Interim Order or the DIP Facility Documents. The rights and remedies of the
DIP Agent and DIP Lenders specified herein are cumulative and not exclusive of
any rights or remedies that the DIP Agent and DIP Lenders may have under the DIP
Facility Documents or otherwise. The Debtors shall cooperate fully with the
 
 
 
2.01 - 31

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DIP Agent and DIP Lenders in their exercise of rights and remedies, whether
against the DIP Collateral or otherwise. This Court shall retain exclusive
jurisdiction to hear and resolve any disputes and enter any orders required by
the provisions of this paragraph and relating to the application, re-imposition
or continuance of the automatic stay as provided hereunder.
24.            Limitations in Respect of the DIP Roll-Up Loans. The DIP Roll-Up
Loans may not be required to be repaid in cash on the Maturity Date (as defined
in the DIP Agreement), provided that the Debtors shall use reasonable endeavors
to procure the same. Any repayment of a DIP Revolving Loan will not reduce the
amount of the outstanding DIP Roll-Up Loans. Upon the vote of the DIP Roll-Up
Loan class to accept a chapter 11 plan in accordance with section 1126 of the
Bankruptcy Code or, failing to obtain same, pursuant to section 1 129(b) of the
Bankruptcy Code, the Debtors’ chapter 11 plan of reorganization may require that
the DIP Roll-Up Loans be refinanced or otherwise replaced with other securities
or financial instruments with a present value equal to the accrued principal and
interest due in respect of the DIP Roll-Up Loans as of the effective date of the
plan; provided that the relative lien position of the DIP Lenders under the DIP
Revolving Loans in respect of the DIP Roll-Up Loans is maintained; and provided
further, the relative position of the DIP Lenders under the DIP Roll-Up Loans in
respect of the Prepetition Obligations is maintained. Upon conversion of the DIP
Roll-Up Loans in connection with the funding of the Revolving Loans, the DIP
Roll-Up Loans shall cease to be Prepetition Indebtedness and shall be deemed DIP
Obligations in all respects including for purposes of having the benefit of
Section 364(e) of the Bankruptcy Code.
25.            Binding Effect. The provisions of this Interim Order shall be
binding upon and inure to the benefit of the Secured Lending Entities, the
Debtors, any Committee appointed in these Cases, and their respective successors
and assigns (including any chapter 7 or
 
 

 
2.01 - 32

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chapter 11 trustee hereinafter appointed or elected for the estate of the
Debtors, an examiner appointed pursuant to section 1104 of the Bankruptcy Code
or any other fiduciary appointed as a legal representative of any of the Debtors
or with respect to the property of the estate of any of the Debtors). To the
extent permitted by applicable law, this Interim Order shall bind any trustee
hereafter appointed for the estate of any of the Debtors, whether in these
Chapter 11 Cases or in the event of the conversion of any of the Chapter 11
Cases to a liquidation under chapter 7 of the Bankruptcy Code. Such binding
effect is an integral part of this Interim Order.
26.            Survival. The provisions of this Interim Order and any actions
taken pursuant hereto shall survive the entry of any order: (i) confirming any
plan of reorganization in any of the Chapter 11 Cases (and, to the extent not
satisfied in full in cash, the DIP Obligations shall not be discharged by the
entry of any such order, pursuant to section 1141(d)(4) of the Bankruptcy Code,
each of the Debtors having hereby waived such discharge); (ii) converting any of
the Chapter 11 Cases to a chapter 7 case; or (iii) dismissing any of the Chapter
11 Cases, and the terms and provisions of this Interim Order as well as the DIP
Superpriority Claims and the DIP Liens in the DIP Collateral granted pursuant to
this Interim Order and the DIP Facility Documents (and with respect to the entry
of any order as set forth in (ii) or (iii) herein, the Adequate Protection Liens
and Prepetition Superpriority Claims) shall continue in full force and effect
notwithstanding the entry of any such order. Such claims and liens shall
maintain their priority as provided by this Interim Order and the DIP Facility
Documents, and to the maximum extent permitted by law, until all of the DIP
Obligations are indefeasibly paid in full and discharged. In no event shall any
plan of reorganization be allowed to alter the terms of repayment of any of the
DIP Obligations from those set forth in the DIP Facility Documents.
 

 
2.01 - 33

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27.            Modifications of DIP Facility Documents. The Debtors, DIP Agent
and DIP Lenders are hereby authorized to implement, in accordance with the terms
of the DIP Facility Documents, any non-material modifications (including without
limitation, any change in the number or composition of the DIP Lenders) of the
DIP Facility Documents without further Order of this Court, or any other
modifications to the DIP Facility Documents; provided, however, that notice of
any material modification or amendment to the DIP Facility Documents shall be
provided to counsel to any Committee, to the U.S. Trustee, Prepetition Agent,
each of whom shall have three (3) days from the date of such notice within which
to object in writing to such modification or amendment. If any Committee or the
U.S. Trustee timely objects to any material modification or amendment to the DIP
Facility Documents, such modification or amendment shall only be permitted
pursuant to an order of this Court.
28.            Insurance Policies. Upon entry of this Interim Order, the DIP
Agent and DIP Lenders shall be, and shall be deemed to be, without any further
action or notice, named as additional insureds and loss payees, as applicable,
on each insurance policy maintained by the Debtors which in any way relates to
the DIP Collateral. The Debtors are authorized and directed to take any actions
necessary to have the DIP Agent, on behalf of the DIP Lenders, be added as an
additional insured and loss payee on each insurance policy.
29.           Restriction on Use of DIP Lenders’ Funds. None of the Debtors
shall be permitted to use the proceeds of the DIP Revolving Loans: (a) for the
payment of interest and principal with respect to any indebtedness that is
subordinated to the DIP Facility except as expressly set forth herein, (b) to
finance in any way any adversary action, suit, arbitration, proceeding,
application, motion, other litigation, examination or investigation of any type
relating to or in connection with the DIP Facility Documents, including, without
limitation, any
 

 
2.01 - 34

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challenges to the Prepetition Obligations, or the validity, perfection,
priority, or enforceability of any Prepetition Lien securing such claims or any
payment made thereunder, (c) to finance in any way any action, suit,
arbitration, proceeding, application, motion, other litigation, examination or
investigation of any type adverse to the interests of the DIP Agents and the DIP
Lenders or their rights and remedies under the DIP Agreement, the other DIP
Facility Documents, this Interim Order or the Final Order without the prior
written consent of the DIP Agent, (d) to make any distribution under a plan of
reorganization in any Chapter 11 Case, and (e) to make any payment in settlement
of any claim, action or proceeding, before any court, arbitrator or other
governmental body without the prior written consent of the DIP Agent.
Notwithstanding anything herein to the contrary, for so long as the Debtors are
authorized to use the Prepetition Lenders’ Cash Collateral with the consent of
the Prepetition Lenders, no Cash Collateral of the Prepetition Lenders may be
used directly or indirectly by any of the Debtors, any Committee or any other
person or entity to object to or contest in any manner the Prepetition
Obligations or Prepetition Liens, or to assert or prosecute any actions, claims
or causes of action against any of the Prepetition Agents or Prepetition Lenders
without the consent of the applicable Prepetition Agents and Prepetition
Lenders.
30.           Release of Claims and Defenses. Each Debtor hereby releases and
discharges the DIP Agent, the DIP Lenders, the Prepetition Agent and the
Prepetition Lenders, together with their respective affiliates, agents,
attorneys, officers, directors and employees (collectively, the “Released
Parties”), from any and all claims and causes of action arising out of, based
upon or related to, in whole or in part, any of the Prepetition Facility
Documents or the DIP Facility Documents, any aspect of the prepetition
relationship between the Debtors, on the one hand, and any or all of the
Released Parties, on the other hand, relating to any of the
 
 
 
 
2.01 - 35

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Prepetition Facility Documents or the DIP Facility Documents or any transaction
contemplated thereby or any other acts or omissions by any or all of the
Released Parties in connection with any of the Prepetition Facility Documents or
the DIP Facility Documents or their pre-petition relationship with such Debtor
or any Affiliate thereof relating to any of the Prepetition Facility Documents
or the Postpetition Facility or any transaction contemplated thereby, including,
without limitation, any claims or defenses as to the extent, validity, priority,
or enforceability of the Prepetition Liens or the Prepetition Obligations, any
claims or defenses under chapter 5 of the Bankruptcy Code or any other causes of
action (collectively, the “Claims and Defenses”).
31.           Protection Under Section 364(e). If any or all of the provisions
of this Interim Order are hereafter reversed, modified, vacated or stayed, such
reversal, modification, vacation or stay shall not affect the (i) validity of
any DIP Obligations, or Adequate Protection Obligations owing to the Prepetition
Secured Entities incurred prior to the actual receipt by the DIP Agent or
Prepetition Agent, as applicable, of written notice of the effective date of
such reversal, modification, vacation or stay, or (ii) validity or
enforceability of any claim, lien, security interest or priority authorized or
created hereby or pursuant to the DIP Facility Documents with respect to any DIP
Obligations, or Adequate Protection Obligations owing to the Prepetition Secured
Entities. Notwithstanding any such reversal, modification, vacation or stay, any
use of Cash Collateral or the incurrence of DIP Obligations, or Adequate
Protection Obligations owing to the Prepetition Secured Entities by the Debtors
prior to the actual receipt by the DIP Agent or Prepetition Agent, as
applicable, of written notice of the effective date of such reversal,
modification, vacation or stay, shall be governed in all respects by the
provisions of this Interim Order, and the Secured Lending Entities shall be
entitled to all of the rights, remedies, protections and benefits granted under
section 364(e) of the Bankruptcy Code, this
 

 
2.01 - 36

--------------------------------------------------------------------------------

 

Interim Order, and the DIP Facility Documents with respect to all uses of Cash
Collateral and the incurrence of DIP Obligations, and Adequate Protection
Obligations owing to the Prepetition Secured Entities.
32.           Effect of Dismissal of Chapter 11 Cases. If the Chapter 11 Cases
are dismissed, converted or substantively consolidated, then neither the entry
of this Interim Order nor the dismissal, conversion or substantive consolidation
of these Chapter 11 Cases shall affect the rights of the Secured Lending
Entities under their respective DIP Facility Documents, Prepetition Facility
Documents or this Interim Order, and all of the respective rights and remedies
thereunder of the Secured Lending Entities shall remain in full force and effect
as if the Chapter 11 Cases had not been dismissed, converted, or substantively
consolidated. If an order dismissing any of the Chapter 11 Cases is at any time
entered, such order shall provide (in accordance with Sections 105 and 349 of
the Bankruptcy Code) that: (i) the DIP Liens and DIP Superpriority Claims
granted to and conferred upon the DIP Agent and DIP Lenders and the protections
afforded to the DIP Agent and/or the DIP Lenders pursuant to this Interim Order
and the DIP Facility Documents shall continue in full force and effect and shall
maintain their priorities as provided in this Interim Order until all DIP
Obligations shall have been paid and satisfied in full (and that such DIP Liens,
DIP Superpriority Claims and other protections shall, notwithstanding such
dismissal, remain binding on all interested parties); (ii) those primed or
unprimed (as the case may be) Prepetition Liens, Adequate Protection Liens and
Prepetition Superpriority Claims granted to and conferred upon the Prepetition
Agent and Prepetition Lenders shall continue in full force and effect and shall
maintain their priorities as provided in this Interim Order until all
Prepetition Indebtedness shall have been paid and satisfied in full (and that
such Prepetition Superpriority Claims shall, notwithstanding such dismissal,
remain
 

 
2.01 - 37

--------------------------------------------------------------------------------

 

binding on all interested parties); (iii) this Court shall retain jurisdiction,
notwithstanding such dismissal, for the purpose of enforcing the DIP Liens,
Prepetition Liens, DIP Superpriority Claims and Prepetition Superpriority Claims
referred to herein; and (iv) the effectiveness of any order dismissing the
Chapter 11 Cases shall not occur until sixty (60) days after it is entered in
order to give the Secured Lending Entities the opportunity to perfect their
respective security interests and liens in the collateral under non-bankruptcy
law, including, without limitation, the filing or recording of financing
statements, mortgages, deeds of trust, security deeds, leasehold mortgages,
notices of lien or similar instruments in any jurisdiction (including trademark,
copyright, tradename or patent assignment filings with the United States Patent
and Trademark Office, Copyright Office or any similar United States entity) and
the procurement of waivers from any landlord, tenant, mortgagee, bailee or
warehouseman and consents from any licensor or similar party-in-interest.
33.            Findings of Fact and Conclusions of Law. This Interim Order
constitutes, where applicable, findings of fact and conclusions of law and shall
take effect and be fully enforceable immediately upon the execution thereof.
34.            Choice of Law; Jurisdiction. The DIP Facility and the DIP
Facility Documents (and the rights and obligations of the parties thereto) shall
be governed by, and construed and interpreted in accordance with, the laws of
the State of New York, including, without limitation, Sections 5-1401 and 5-1402
of the New York General Obligations Law, and, to the extent applicable, the
Bankruptcy Code. The Bankruptcy Court shall have exclusive jurisdiction with
respect to any and all disputes or matters under, or arising out of or in
connection with, either the DIP Facility or the DIP Facility Documents.
 

 
 
2.01 - 38

--------------------------------------------------------------------------------

 

35.            Authorized Signatories. The signature of any Authorized Officer
(as defined in the Debtor’s corporate resolutions filed with the Petition) or
Debtors’ attorneys, appearing on any one or more of the DIP Facility Documents
shall be sufficient to bind the Debtors. No board of directors or other approval
shall be necessary.
36.            Order Effective. This Interim Order shall be effective as of the
date of the signature by the Court.
37.            No Requirement to Accept Title to Collateral. The Prepetition
Agent, the Prepetition Lenders, the DIP Agent and the DIP Lenders shall not be
obligated to accept title to any portion of the Prepetition Collateral or DIP
Collateral in payment of the indebtedness owed to such party by the Debtors, in
lieu of payment in cash or cash equivalents, nor shall any of the Prepetition
Agent, Prepetition Lenders, DIP Agent or DIP Lenders be obligated to accept
payment in cash or cash equivalents that is encumbered by any interest of any
person or entity other than the Prepetition Agent, Prepetition Lenders, DIP
Agent or DIP Lenders.
38.            Controlling Effect of Interim Order. To the extent any provision
of this Interim Order conflicts with any provision of the Motion, any
prepetition agreement or any DIP Facility Document, the provisions of this
Interim Order shall control.
39.            Final Hearing. A final hearing on the Motion shall be heard
before this Court on July __, 2009 at a.m. in Courtroom ____ at the United
States Bankruptcy Court, 824 Market Street, Wilmington, DE 19801.
 
Dated: May ___, 2009.
 
 

 
 

--------------------------------------------------------------------------------

   
 

--------------------------------------------------------------------------------

United States Bankruptcy Judge
 

 

 
2.01 - 39

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SCHEDULE 5.07
to DIP Credit Agreement
 
PROJECT COMPLIANCE EXCEPTION SCHEDULE
 
Pacific Ethanol Stockton, LLC has not completed the following permits:
 
#07-352: Wet Cake Building
#08-545: Fire Alarm System
#08-546: Fire Sprinklers
#08-547: Foam Fire System for Truck Load Out
#08-215: Ammonia Detection System
 
These permits will be required prior to restarting the facility.
 
 
 
 

--------------------------------------------------------------------------------

 

SCHEDULE 5.08
to DIP Credit Agreement
 
LITIGATION
 

         
Claimant
Defendants
Date of
Complaint
Nature of Claim
$ amount sought
(if applicable)
Barry Spiegel
Former directors of PEI's predecessor company
12/23/2005
Breach of fiduciary duty, fraud,
securities violations
Unspecified
Shaw Group
PEIMP, PEI
5/9/2008
Collection
$ 426,215
OneSource Distributors, LLC
PEIMP, PEI
5/9/2008
Collection
$ 131,486
Delta-T Corp.
PEI, PES, PEIMP, PECOL, PEMV, and PEM
8/18/2008
Breach of contract
$6.5 million of claims in total; $2,163,504 against PES; $4,174,247 against
PEIMP.
Delta-T Corp.
PEIMP, PEI
 
Cross-Complaint (G EAWestphalia)
 
Delta-T Corp.
PEIMP, PEI
 
Cross-Complaint (One Source)
 
Campbell Sevey, Inc.
PEIMP, PEI
12/8/2008
Collection
$ 1,638,478
Western Ethanol Company LLC
Kinergy
1/9/2009
Breach of contract, anticipatory repudiation
$ 3,684,750
Creditors Bureau USA
(Assignee of Basic Chemical Solutions claim)
PECA
4/24/2009
Breach of Contract
$ 83,517

 

 
5.08 - 1

--------------------------------------------------------------------------------

 

HR Related claims
 

       
Claimant
Defendants
Case #
Agency
Chris Chase
Pacific Ethanol, Inc.
113000444
California JAMS
Lee Penn
Pacific Ethanol, Inc.
State Case No.
8691-SJRCI
California Labor Commission
Lee Penn
Pacific Ethanol, Inc.
485-2008-00230
EEOC
Ron Vick
Pacific Ethanol, Inc. and Liberty Mutual Ins. Co.
Currently Unassigned
Workers Compensation Appeals Board

 
 
5.08 - 2

--------------------------------------------------------------------------------

 
SCHEDULE 5.10
to DIP Credit Agreement
 
CONTRACTS

             
Counterparty(ies)
PE Contracting Entity
Document Type
Title
Subject Matter / Notes
Date of Execution
Date Effective

Pacific Ethanol, Inc.
Pacific Ethanol Holding Co. LLC;
Pacific Ethanol Madera LLC;
Pacific Ethanol Columbia LLC;
Pacific Ethanol Stockton LLC;
Pacific Ethnaol Magic Valley LLC
Asset Management Agreement
Asset Management Agreement
Subsidiaries engage PEI to provide certain management services.
5/14/2009
5/14/2009
Pacific Ethanol, Inc.
Pacific Ethanol Holding Co. LLC;
Pacific Ethanol Madera LLC;
Pacific Ethanol Columbia LLC;
Pacific Ethanol Stockton LLC;
Pacific Ethnaol Magic Valley LLC
Reimbursement Agreement
PEI entitled to reimbursement
Reimbursement of Professional Fees Paid by Pacific Ethanol, Inc.
5/14/2009
5/14/2009
Stewart Management Company
PEHC = Pacific Ethanol Holding Co. LLC (DE)
Corporate Agreement
Indemnity and Fee Agreement
Agreement for independent Director services for Michael C. Doyle
2/27/2007
2/27/2007
Pacific Ag. Products, LLC
PEHC = Pacific Ethanol Holding Co. LLC (DE)
Amendment
Amendment to Corn Procurement and Handling Agreement
Amendment to Corn Procurement & Handling Agmt. adding Grain Handling Fee
definition
2/27/2007
2/27/2007
Pacific Ag. Products, LLC
PEHC = Pacific Ethanol Holding Co. LLC (DE)
Commodity Agreement
Corn Procurement and Handling Agreement
Provides grain services for denatured fuel ethanol production
2/27/2007
2/27/2007
Pacific Ag. Products, LLC
PEHC = Pacific Ethanol Holding Co. LLC (DE)
Services Agreement
Distillers Grains Marketing Agreement (Boardman Project)
Provide marketing services for Distillers Grain
2/27/2007
2/27/2007
Pacific Ag. Products, LLC
PEHC = Pacific Ethanol Holding Co. LLC (DE)
Services Agreement
Distillers Grains Marketing Agreement (Brawley Project)
Provide marketing services for Distillers Grain
2/27/2007
2/27/2007
Pacific Ag. Products, LLC
PEHC = Pacific Ethanol Holding Co. LLC (DE)
Services Agreement
Distillers Grains Marketing Agreement (Burley Project)
Provide marketing services for Distillers Grain
2/27/2007
2/27/2007
Pacific Ag. Products, LLC
PEHC = Pacific Ethanol Holding Co. LLC (DE)
Services Agreement
Distillers Grains Marketing Agreement (Stockton Project)
Provide Distillers Grain marketing services
2/27/2007
2/27/2007
West LB
PEHC = Pacific Ethanol Holding Co. LLC (DE)
Finance Agreement
Letter Request for Administrative Agent Approval of Amendment to Corn
Procurement and Handling Agreement
Request for creditors' approval of Administrative Agent to enter into Amendment
to Corn Procurement & Handling Agreement
3/20/2007
3/20/2007
West LB
PEHC = Pacific Ethanol Holding Co. LLC (DE)
Finance Agreement
Assignment and Security Agreement
Assignment and security agreement to Credit Agreement
2/27/2007
2/27/2007
West LB
PEHC = Pacific Ethanol Holding Co. LLC (DE)
Finance Agreement
Closing Certificate for Pacific Ethanol Holding Co., LLC
Closing Certificate in relation to Credit Agreement
2/27/2007
2/27/2007

 
 
5.10 - 1

--------------------------------------------------------------------------------

 
SCHEDULE 5.10
to DIP Credit Agreement
 
CONTRACTS

             
West LB
PEHC = Pacific Ethanol Holding Co. LLC (DE)
Finance Agreement
ISDA Master Agreement
Master agreement for transactions entered into concerning Credit Agreement
2/26/2007
2/26/2007
West LB
PEHC = Pacific Ethanol Holding Co. LLC (DE)
Finance Agreement
Pledge and Security Agreement
Pledge and Security Agreement re Credit Agreement
2/27/2007
2/27/2007
West LB
PEHC = Pacific Ethanol Holding Co. LLC (DE)
Finance Agreement
Schedule to the Master Agreement
Schedule to Master Agreement re Credit Agreement
2/26/2007
2/26/2007
West LB
PEHC = Pacific Ethanol Holding Co. LLC (DE)
Finance Agreement
Pledge and Security Agreement
Pledge and Security Agreement
8/7/2008
8/7/2008
West LB
PEHC = Pacific Ethanol Holding Co. LLC (DE)
Proxy Agreement
Irrevocable Proxy
Irrevocable Proxy
 
8/31/2008
West LB
PEHC = Pacific Ethanol Holding Co. LLC (DE)
Proxy Agreement
Irrevocable Proxy
Irrevocable Proxy appointing WestLB as Proxy for PE Stockton for continuance of
an Event of Default under the Pledge and Security Agreement
 
8/1/2008

Air Liquide
PEM = Pacific Ethanol Madera LLC (DE)
Commodity Agreement
Carbon Dioxide Sales Agreement
Sale of crude gaseous carbon dioxide to Air Liquide
4/4/2007
 
4/4/2007
 
Counterparty(ies)
PE Contracting Entity
Document Type
Title
Subject Matter / Notes
Date of Execution
Date Effective

Air Liquide
PEM = Pacific Ethanol Madera LLC (DE)
Services Agreement
License Agreement
PEM grants license to use and occupy the property described on Ex. A
4/4/2007
4/4/2007
Comerica Bank
PEM = Pacific Ethanol Madera LLC (DE)
Letter Agreement
Letter Agreement
Interest rate cap 5.50 percent
5/22/2006
5/31/2006
Comerica Bank
PEM = Pacific Ethanol Madera LLC (DE)
Letter Agreement
Letter Agreement
Interest rate cap 6.00 percent
5/22/2006
5/31/2006
Brand Energy Services
of CA, Inc.
PEM = Pacific Ethanol Madera LLC (DE)
Operations Contract
Brand Scaffolding
Provide supervision, labor and materials to build and dismantle scaffolding for
three evaporators
3/25/2009
3/17/2009
Inergy Propane LLC
PEM = Pacific Ethanol Madera LLC (DE)
Guarantee Agreement
Guarantee
PEI guarantees liability of PE Madera for up to $190,000.
6/11/2008
6/11/2008
Delta-T
PEM = Pacific Ethanol Madera LLC (DE)
Construction Contract
License of Technology Between Delta-T Corporation and Pacific Ethanol
Madera LLC
Provide engineering and related services related to construction of the Plant
based on Delta-T's proprietary technology under sub. w/Lyles, but only on
condition that PEM enter into a license agreement w/Delta T for use of
technology embodied therein.
9/1/2005
9/1/2005
U.S. Department of Agriculture
PEM = Pacific Ethanol Madera LLC (DE)
Indemnity Agreement
Agreement to Indemnify
Agreement to Indemnify
6/3/2008
6/3/2008

 
5.10 - 2

--------------------------------------------------------------------------------

 

             
Novozymes North America, Inc.
PEM = Pacific Ethanol Madera LLC (DE)
Operations Contract
Enzyme Supply Agreement
Enzyme Supply Agreement
 
5/1/2008
Envent Corporation
PEM = Pacific Ethanol Madera LLC (DE)
Operations Contract
Envent MPSA
Degassing Ethanol Storage Tanks
3/3/2009
3/2/2009
Atlas Copco
PEM = Pacific Ethanol Madera LLC (DE)
Operations Contract
Compressor Maintenance
Compressor maintenance contract
5/1/2008
5/1/2008
Pacific Ethanol Imperial, LLC
PEM = Pacific Ethanol Madera LLC (DE)
Lease Agreement: Equipment
Intercompany equipment lease agreement. PE Madera leasing certain PE Imperial
equipment.
Equipment Lease Agreement
11/4/2008
2/1/2008
Kinergy Marketing, LLC
PEM = Pacific Ethanol Madera LLC (DE)
Services Agreement
Ethanol Marketing Agreement (Madera Project)
Provide marketing services for Distillers Grain
11/4/2005
11/4/2005
Pacific Ag. Products, LLC
PEM = Pacific Ethanol Madera LLC (DE)
Commodity Agreement
Corn Procurement and Processing Agreement (Madera Project)
PAP to solicit, negotiate, enter into and administer in the name of PEM corn
supply arrangements necessary and sufficient to allow PEM to procure corn
necessary to operate the Facility.
11/7/2005
11/7/2005
Kinergy Marketing, LLC
PEM = Pacific Ethanol Madera LLC (DE)
Commodity Agreement
Second Amended and Restated Ethanol Marketing Agreement (Madera
Project)
Amends and restates in its entirety that certain Amended and Restated Ethanol
Marketing Agreement, dated March 16, 2006.
2/27/2007
 
Port of Morrow
PECOL = Pacific Ethanol Columbia, LLC (DE)
Lease Agreement: Ground
Lease
Lease of land consisting of 25 acres
4/20/2006
5/1/2006
Umatilla Electric Cooperative
PECOL = Pacific Ethanol Columbia, LLC (DE)
Operations Contract
Agreement for Electric Service and Purchase of Power
Agreement to deliver electric power and energy to Boardman Plant
3/29/2007
3/29/2007
Tidewater Barge Lines, Inc.
PECOL = Pacific Ethanol Columbia, LLC (DE)
Services Agreement
Transportation and Dock Services Agreement
Barging and transporting ethanol on Columbia river
2/15/2007
2/15/2007
City of Boardman Oregon
PECOL = Pacific Ethanol Columbia, LLC (DE)
Governmental/Permitting
Oregon Enterprise Zone Authorization Application
Application for property tax exemption for years 2007-2011
5/15/2006
5/15/2006
City of Boardman Oregon
PECOL = Pacific Ethanol Columbia, LLC (DE)
Governmental/Permitting
Enterprise Zone Abatement Agreement
Property tax exemption agreement
4/26/2006
4/19/2006
Northstar Chemical Inc.
PECOL = Pacific Ethanol Columbia, LLC (DE)
Operations Contract
Sodium Hypochlorite Product and Tank
Product and Equipment Agreement for 12.5% Sodium Hypochlorite and tank
11/17/2008
 
11/17/2008
 
PPI Technology Services L.P.
PECOL = Pacific Ethanol Columbia, LLC (DE)
Operations Contract
PPI Technology Agreement
Control System Technical Support
12/10/2008
 
11/3/2008
 
Port of Morrow
PECOL = Pacific Ethanol Columbia, LLC (DE)
Easement Agreement
Easement for Roadway Purposes
Grants Port of Morrow an easement onto PEI leased property.
12/21/2007
 
12/21/2007
 

 
 
5.10 - 3

--------------------------------------------------------------------------------

 
 
SCHEDULE 5.10
to DIP Credit Agreement
 
CONTRACTS

             
Port of Morrow
PECOL = Pacific Ethanol Columbia, LLC (DE)
Finance Agreement
Estoppel Certificate
Estoppel Certificate for appeasement of lenders West LB AG, NY Branch
12/21/2007
12/21/2007
U.S. Department of Agriculture
PECOL = Pacific Ethanol Columbia, LLC (DE)
Indemnity Agreement
Agreement to Indemnify
Agreement to Indemnify
6/3/2008
6/3/2008
Port of Morrow
PECOL = Pacific Ethanol Columbia, LLC (DE)
Lease Agreement: Ground
Pipeline Easement Agreement
Port of Morrow Pipeline Easement Agreement
2/1/2007
2/1/2007
Port of Morrow
PECOL = Pacific Ethanol Columbia, LLC (DE)
Lease Agreement: Ground
Easement for Roadway Purposes
PEI grants to Port a 10 foot easement across the Leased Property.
 
12/21/2007
Tidewater Barge Lines, Inc.
PECOL = Pacific Ethanol Columbia, LLC (DE)
Letter Agreement
Deposit Escrow Agreement
Deposit Escrow Agreement
2/15/2007
2/15/2007
PPM Energy Inc.
PECOL = Pacific Ethanol Columbia, LLC (DE)
Operations Contract
Base Contract for Sale and Purchase of Natural Gas
Base Contract for Sale and Purchase of Natural Gas
6/7/2007
6/7/2007
Novozymes North America, Inc.
PECOL = Pacific Ethanol Columbia, LLC (DE)
Operations Contract
Enzyme Supply Agreement
Enzyme Supply Agreement
 
5/1/2008
Cascade Natural Gas Corporation
PECOL = Pacific Ethanol Columbia, LLC (DE)
Services Agreement
Agreement for ServicePlus Program Services
gas piping and installation at Boardman
4/13/2007
3/27/2007
Tidewater Barge Lines, Inc.
PECOL = Pacific Ethanol Columbia, LLC (DE)
Services Agreement
Environmental Services Agreement
Agreement that covers emergency spill services.
7/20/2007
7/20/2007
US Energy
PECOL = Pacific Ethanol Columbia, LLC (DE)
Services Agreement
Energy Management Agreement
Provision of Energy Management Services
4/4/2006
4/1/2006
Union Pacific Railroad
PECOL = Pacific Ethanol Columbia, LLC (DE)
Services Agreement
Agreement and Consent to Joint Use of Track
UP consents to grant rail service on the track to PECOL and Port of Morrow
2/22/2006
2/22/2006
Pacific Ethanol Imperial, LLC
PECOL = Pacific Ethanol Columbia, LLC (DE)
Lease Agreement: Equipment
Intercompany equipment lease agreement. PE Columbia leasing certain PE Imperial
equipment.
Equipment Lease Agreement
11/4/2008
7/22/2008
Pacific Ethanol California, Inc.
PECOL = Pacific Ethanol Columbia, LLC (DE)
Construction Contract
Provide construction management services
Construction Management Agreement (Boardman Project)
2/27/2007
2/27/2007
Kinergy Marketing, LLC
PECOL = Pacific Ethanol Columbia, LLC (DE)
Services Agreement
Ethanol Marketing Agreement (Boardman Project)
Provide denatured fuel ethanol production
2/27/2007
2/27/2007
Pacific Ethanol California, Inc.
PECOL = Pacific Ethanol Columbia, LLC (DE)
Operations Contract
Operation and Maintenance Agreement (Boardman Project)
Perform all tasks to operate and maintain facility
2/27/2007
2/27/2007
City of Burley
PEMV = Pacific Ethanol Magic Valley, LLC (DE
Services Agreement
Municipal Water and Sewer Services Contract
City to sell and deliver all water required to project site and provide sole
source of water supply; in addition City will provide all wastewater service.
2/5/2008
2/5/2008
Intermountain Gas
PEMV = Pacific Ethanol Magic Valley, LLC (DE
Commodity Agreement
Intermountain Gas Company T-4 Natural Gas Service Contract
Transportation (T-4) Firm Distribution Only Transportation Service for a Maximum
Daily Firm Quantity (MDFQ) of 50,000 therms per day during the Agreement period.
10/1/2007
   10/1/2007
Basic Chemical Solutions LLC
PEMV = Pacific Ethanol Magic Valley, LLC (DE
Operations Contract
BCS - Sulfuric Acid Sales Agreement
Sulfuric Acid, Technical Grade 93% solution
3/31/2008
 
3/15/2008
 

 
 
5.10 - 4

--------------------------------------------------------------------------------

 

SCHEDULE 5.10
to DIP Credit Agreement
 
CONTRACTS

             
Basic Chemical Solutions LLC
PEMV = Pacific Ethanol Magic Valley, LLC (DE
Operations Contract
BCS - Sodium Hypochlorite Product Agreement
Sodium HypoChlorite, Technical Grade 12.5% solution
3/17/2008
 
3/17/2008
PPI Technology Services L.P.
PEMV = Pacific Ethanol Magic Valley, LLC (DE
Operations Contract
PPI Technology Agreement
Control System Technical Support
12/10/2008
 
11/3/2008
 
Basic Chemical Solutions LLC
PEMV = Pacific Ethanol Magic Valley, LLC (DE
Operations Contract
BCS - Phosphoric Acid Product Agreement
Phosphoric Acid, Technical Grade 75% solution
3/17/2008
 
3/17/2008
 
Counterparty(ies)
PE Contracting Entity
Document Type
Title
Subject Matter / Notes
Date of Execution
Date Effective

PPM Energy Inc.
PEMV = Pacific Ethanol Magic Valley, LLC (DE)
Commodity Agreement
Base Contract for Sale and Purchase of Natural Gas
Base Contract for Sale and Purchase of Natural Gas
3/31/2008
3/31/2008
PPM Energy Inc.
PEMV = Pacific Ethanol Magic Valley, LLC (DE)
Commodity Agreement
Special Provisions to the Base Contract
Special Provisions to the PEMV Base Contract
3/31/2008
3/31/2008
US Water Services
PEMV = Pacific Ethanol Magic Valley, LLC (DE)
Construction Contract
Engineered Equipment Purchase Order
Agreement covering the design, manufacture, supply, and installation of Water
Treatment Equipment and Supplies for Burley Plant.
9/19/2007
9/19/2007
Burley Development Authority
PEMV = Pacific Ethanol Magic Valley, LLC (DE)
Construction Contract
Development Agreement For The Use of Tax Increment Financing
agreement sets forth the terms concerning the installation of certain
infrastructure for the Burley project and to agree upon other matters with
regards to the Project
6/21/2007
6/11/2007
U.S. Department of Agriculture
PEMV = Pacific Ethanol Magic Valley, LLC (DE)
Indemnity Agreement
Agreement to Indemnify
Agreement to Indemnify
6/3/2008
6/3/2008
United Electric Co-Op, Inc.
PEMV = Pacific Ethanol Magic Valley, LLC (DE)
Lease Agreement: Ground
Right of Way and Access Easement
PEMV grants to UEC a non-exclusive perpetual right of way and easement to
property located in Burley, ID (see Ex. A and B) for the purpose of vehicle
access from UEC's substation and the erection of utility lines.
10/2/2007
10/2/2007
Novozymes North America, Inc.
PEMV = Pacific Ethanol Magic Valley, LLC (DE)
Operations Contract
Enzyme Supply Agreement
Enzyme Supply Agreement
 
5/1/2008
United Electric Co-Op, Inc.
PEMV = Pacific Ethanol Magic Valley, LLC (DE)
Services Agreement
Substation Agreement
Agreement for construction of electrical substation at Burley plant by UEC.
Substation to be paid by Burley Development Authority but PEMV is primary
obligor backed by payment Guarantee by PEI.
3/21/2008
3/21/2008
United Electric Co-Op, Inc.
PEMV = Pacific Ethanol Magic Valley, LLC (DE)
Services Agreement
Revised Memorandum
Intended to replace and supersede version executed on Feb 27, 2008. This version
lays out the 8 year payment plan for Substation costs.
3/28/2008
3/28/2008
Pacific Ethanol California, Inc.
PEMV = Pacific Ethanol Magic Valley, LLC (DE)
Construction Contract
Construction Management Agreement
(Burley Project)
Provide construction management services
2/27/2007
2/27/2007
Kinergy Marketing, LLC
PEMV = Pacific Ethanol Magic Valley, LLC (DE)
Services Agreement
Ethanol Marketing Agreement (Burley Project)
Provide marketing services for Distillers Grain
2/27/2007
2/27/2007

 
 
 
5.10 - 5

--------------------------------------------------------------------------------

 

SCHEDULE 5.10
to DIP Credit Agreement
 
CONTRACTS
 

Pacific Ethanol California, Inc.
PEMV = Pacific Ethanol Magic Valley, LLC (DE)
Operations Contract Operation and Maintenance Agreement
(Burley Project)
Perform all tasks to operate and maintain facility
2/27/2007
 
2/27/2007
  Pacific Ethanol Imperial, LLC
PEMV = Pacific Ethanol Magic Valley, LLC (DE)
 Lease Agreement: Equipment Intercompany equipment lease agreement. PE Magic
Valley leasing certain PE Imperial equipment. Equipment Lease Agreement
11/4/2008
 
10/1/2007
 
Stockton Port District
PES = Pacific Ethanol Stockton, LLC (DE)
Lease Agreement: Ground
Memorandum of Lease
Memorandum of Lease
 
8/1/2008
 
Stockton Port District
PES = Pacific Ethanol Stockton, LLC (DE)
Lease Agreement: Ground
Lease by the Stockton Port District
Approx. 30 acres for the use of construction, operation and maintenance of the
Facility.
 
2/6/2007
   
Stockton Port District
 
PES = Pacific Ethanol Stockton, LLC (DE)
 
Easement Agreement
 
Rail and Access Easement Agreement
 
Port grants to PES easement for construction, maintenance and operation of Rail
Improvements.
8/1/2008
 
8/1/2008
 
Stockton Port District
PES = Pacific Ethanol Stockton, LLC (DE)
Easement Agreement
Pipeline Easement Agreement
Port grants to PES easement for construction, maintenance and operation of the
Pipeline Improvements.
8/1/2008
8/1/2008
Stockton Port District
PES = Pacific Ethanol Stockton, LLC (DE)
Guarantee Agreement
Guaranty of Lease
PEI guaranty of PES liability related to lease of Port of Stockton
2/5/2007
2/5/2007
Stockton Port District
PES = Pacific Ethanol Stockton, LLC (DE)
Lease Agreement: Ground
Lease by the Stockton Port District to Pacific Ethanol Stockton, LLC
Lease Agreement
2/5/2007
2/5/2007
North American Bioproducts Corporation
PES = Pacific Ethanol Stockton, LLC (DE)
Operations Contract
NABC Product Supply Agreement
Yeast and antimicrobial product purchase
7/16/2008
8/5/2008
PPI Technology Services L.P.
PES = Pacific Ethanol Stockton, LLC (DE)
Operations Contract
PPI Technology Agreement
Control System Technical Support
12/10/2008
11/3/2008
Iberdrola Renewables, Inc.
PES = Pacific Ethanol Stockton, LLC (DE)
Commodity Agreement
Base Contract for Sale and Purchase of Natural Gas
Base Contract for Sale and Purchase of Natural Gas for Stockton plant
9/18/2008
9/18/2008
Stockton Port District
PES = Pacific Ethanol Stockton, LLC (DE)
Lease Agreement: Ground
Right of Entry
Right of Entry Agreement
1/16/2007
1/16/2007
Port of Stockton
PES = Pacific Ethanol Stockton, LLC (DE)
Lease Agreement: Ground
First Addendum to Lease (Ordinance No. 218)
First Addendum to Lease (Ordinance No. 218)
8/1/2008
8/1/2008
Novozymes North America, Inc.
PES = Pacific Ethanol Stockton, LLC (DE)
Operations Contract
Enzyme Supply Agreement
Enzyme Supply Agreement
 
5/1/2008
HJ Heinz Company, L.P.
PES = Pacific Ethanol Stockton, LLC (DE)
Sewer Capacity Credits Purchase Agreement
Sewer Capacity Credits Purchase Agreement
Purchase of 4.5 million gallons per month of Sewer Capacity and 1,130 / Pounds
of B.O.D. and 1,130 / Pounds of T.S.S. from Heinz to the City of Stockton.
7/31/2008
8/11/2008
The Ken Bratney Company
PES = Pacific Ethanol Stockton, LLC (DE)
System Design and Equipment Supply
Grain Handling System design and equipment supply
Grain Handling System Design and Grain Handling Equipment Supply
 
3/31/2008

 
 
5.10 - 6

--------------------------------------------------------------------------------

 
 

 
SCHEDULE 5.18(a)(i)
to DIP Credit Agreement
 
ENVIRONMENTAL WARRANTIES
 
Pacific Ethanol Magic Valley, LLC (“Magic Valley”) is in the process of entering
into consent order with the Idaho Department of Environmental Quality with
respect to its Air Emission Permit. Specifically Magic Valley performance test
report indicated combined formaldehyde emissions in excess of its air permit
limits. Magic Valley is making equipment modifications and testing plans to
demonstrate compliance with the air permit upon restart of the facility.
 
 
 
 

--------------------------------------------------------------------------------

 
SCHEDULE 5.18(d)(ii) 
to DIP Credit Agreement
 
UNDERGROUND STORAGE TANKS
 
None.
 
 
 

 
 

--------------------------------------------------------------------------------

 
 
 SCHEDULE 5.26
to DIP Credit Agreement
 
LEGAL NAMES AND PLACE OF BUSINESS
 
Legal Names
 
Pacific Holding:
Pacific Ethanol Holding Co. LLC, a Delaware limited liability company.
    Madera: Pacific Ethanol Madera LLC, a Delaware limited liability company.  
 
Boardman:
Pacific Ethanol Columbia, LLC, a Delaware limited liability company. This entity
was known as PE Columbia Ethanol, LLC from its formation until March 2006.
   
Stockton:
Pacific Ethanol Stockton, LLC, a Delaware limited liability company. This entity
was known as Pacific Ethanol Visalia LLC from its formation until June 2006.
   
Burley:
Pacific Ethanol Magic Valley, LLC, a Delaware limited liability company.

 
Sole Place of Business and Chief Executive Office of Each Borrower
 
400 Capitol Mall, Suite 2060 Sacramento, California 95814
 
 

--------------------------------------------------------------------------------

 
 
SCHEDULE 5.27
to DIP Credit Agreement
 
BROKER FEES
 
None.
 

 

--------------------------------------------------------------------------------

 
 
SCHEDULE 5.29
Project Accounts and

Local Accounts

         
Amarillo National Bank
PEHC
Operating Account
xxx872
Active
Address:
410 S. Taylor
PEHC
Revenue Account
xxx864
Active
 
PO Box 1
         
Amarillo, TX 79105
       
Contacts:
Darren Jenks, VP (806) 378-8339
         
Sally Frierson, (806) 378-8230
                   
US Bank
 
PECOL
Escrow Account
xxxx60000
Active
Address:
111 SW Fifth Avenue, Sixth Floor
Note Acct Title per statement:
     
Portland, OR 97204
Pacific Ethanol Columbia LLC/Tidewater Barge Lines Inc/Tidewater Terminal
Company Inc Escrow
Contacts:
Cheryl K Nelson (503) 275-5708
           

 

 
 
 

--------------------------------------------------------------------------------

 

Pacific Ethanol Holdco
Debtor In Possession Financing Budget
May 18, 2009
SCHEDULE 6.01(n) to
DIP Credit Agreement

 

         
INITIAL DIP BUDGET
           
MAY
    JUNE     JULY      
Filing
                                                                 
week 1
05/18 -
05/22
   
week 2
05/25 -05/29
   
week 3
06/01-06/05
   
week 4
06/08-06/12
   
week 5
06/15-06/19
   
week 6
06/22-06/26
   
week 7
06/29-07/03
   
week 8
07/06-07/10
   
week 9
07/13-07/17
   
week 10
07/20-07/24
   
week 11
07/27-07/31
 
Beginning Cash Balance
  $ 2,235     $ 500,000     $ 500,000     $ 500,000     $ 500,000     $ 500,000
    $ 1,134,664     $ 500,000     $ 500,000     $ 1,257,037     $ 500,000      
                                                                               
     
Cash Inflows
                                                                               
       
Revenue - Ethanol (Kinergy)
    449,709       949,709       949,709       1,202,965       1,202,965      
1,202,965       1,202,965       1,202,965       1,202,965       1,202,965      
1,202,965  
Revenue - WDG (PAP)
    324,745       324,745       392,569       392,569       392,569      
392,569       392,569       392,569       392,569       392,569       392,569  
Total Cash Inflows
    774,454       1,274,454       1,342,278       1,595,534       1,595,534    
  1,595,534       1,595,534       1,595,534       1,595,534       1,595,534    
  1,595,534                                                                    
                       
Disbursements
                                                                               
                                                                               
                 
Operating Disbursements
                                                                               
       
Corn
    (2,081,000 )     (1,919,700 )     -       (1,919,700 )     (1,919,700 )    
-       (1,896,000 )     (1,896,000 )     -       (1,896,000 )     (1,896,000 )
Natural Gas
    -       (183,144 )     -       -       -       (145,145 )     -       -    
  -       (163,660 )     (15,730 )
Lease Payments
    -       (106,470 )     -       -       -       -       (17,745 )     -      
-       -       (17,745 )
Insurance
    -       -       (190,000 )     -       -       -       -       -       -    
  -       -  
Property Tax
    -       -       (658,329 )     -       -       -       -       -       -    
  -       -  
Electricity
    (18,000 )     (127,294 )     -       -       (18,000 )     (12,000 )    
(89,706 )     -       -       (27,000 )     (112,294 )
Ethanol freight
    (24,528 )     (24,528 )     (31,068 )     (31,068 )     (31,068 )    
(31,068 )     (31,068 )     (31,068 )     (31,068 )     (31,068 )     (31,068 )
Co-product freight
    (49,639 )     (49,639 )     (62,877 )     (62,877 )     (62,877 )    
(62,877 )     (62,877 )     (62,877 )     (62,877 )     (62,877 )     (62,877 )
Grain procurement and handling w/ PAP
    -       (47,972 )     -       -       -       -       (60,765 )     -      
-       -       (60,765 )
One time shutdown costs
    (59,325 )     (59,325 )     (59,325 )     (59,325 )     (59,325 )    
(59,325 )     (59,325 )     (20,663 )     -       -       -  
Plant Supplies & Maintenance
    (216,653 )     (223,881 )     (215,041 )     (215,041 )     (215,241 )    
(218,719 )     (218,791 )     (209,997 )     (210,865 )     (214,743 )    
(214,615 )
Total Operating Disbursements
    (2,449,145 )     (2,741,953 )     (1,216,641 )     (2,288,011 )    
(2,306,211 )     (529,135 )     (2,436,277 )     (2,220,605 )     (304,810 )    
(2,395,347 )     (2,411,094 )                                                  
                                       
Asset Management Agreement
                                                                               
       
Direct Reimbursement
                                                                               
       
Payroll & Benefits - Plants & Plant Operations
    (186,133 )     -       (199,243 )     -       (173,082 )     -      
(131,351 )     (26,160 )     (173,861 )     -       (173,861 )
Leases
    -       -       (101,990 )     -       -       -       -       (101,990 )  
  -       -       -  
Other Direct Expenses
    (8,300 )             (31,300 )                                     (31,300 )
                       
Bankrupcy Preparation Fees
            (1,020,000 )                                                        
               
Asset Management Fee
    (97,500 )     -       (195,000 )     -       -       -       -      
(195,000 )     -       -       -  
Total Asset Management Agreement
    (291,933 )     (1,020,000 )     (527,533 )     -       (173,082 )     -    
  (131,351 )     (354,451 )     (173,861 )     -       (173,861 )              
                                                                           
Disbursements Related to Prepetition Debts - First Day Motions
                                                                               
 
Goods Sold in Last 20 Days
    (118,569 )     -       -       -       -       -       -       -       -    
  -       -  
Shippers & Warehouseman
    (98,500 )     -       -       -       -       -       -       -       -    
  -       -  
Prepetition Priority Taxes
    (382,147 )     -       -       -       -       -       -       -       -    
  -       -  
Utility Deposit
    -       (692,644 )     -       -       -       -       -       -       -    
  -       -  
Total Disbursements Related to Prepetition Debts
    (599,216 )     (692,644 )     -       -       -       -       -       -    
  -       -       -                                                            
                               
Professional Fees & Administrative Expenses
                                                                               
       
Legal Advisors - Debtor
    (93,750 )     (93,750 )     (82,500 )     (82,500 )     (82,500 )    
(82,500 )     (82,500 )     (107,500 )     (107,500 )     (107,500 )    
(107,500 )
Legal Advisors - DIP Lenders
    (50,000 )     (50,000 )     (50,000 )     (50,000 )     (50,000 )    
(50,000 )     (50,000 )     (50,000 )     (50,000 )     (50,000 )     (50,000 )
Financial Advisor Debtor
    (75,000 )     (75,000 )     (75,000 )     (75,000 )     (75,000 )    
(75,000 )     (75,000 )     (100,000 )     (100,000 )     (100,000 )    
(100,000 )
Financial Advisors - DIP Lenders
    (50,000 )     (50,000 )     (50,000 )     (50,000 )     (50,000 )    
(50,000 )     (50,000 )     (50,000 )     (50,000 )     (50,000 )     (50,000 )
Creditors Committee Legal & Financial Advisors
    (52,326 )     (52,326 )     (52,326 )     (52,326 )     (52,326 )    
(52,326 )     (52,326 )     (52,326 )     (52,326 )     (52,326 )     (52,326 )
Claims Agent
    (50,000 )     -       (50,000 )     -       -       -       -       -      
-       -       (50,000 )
Trustee Fees
    -       -       -       -       -       -       -       -       -       -  
    (30,000 )
Total Professional Fees & Administrative Expenses
    (371,076 )     (321,076 )     (359,826 )     (309,826 )     (309,826 )    
(309,826 )     (309,826 )     (359,826 )     (359,826 )     (359,826 )    
(439,826 )                                                                      
                   
DIP Interest & Fees
    (600,000 )     (52,490 )     -       -       -       (121,909 )     -      
-       -       -       (151,796 )
Total Disbursements
    (4,311,369 )     (4,828,162 )     (2,103,999 )     (2,597,837 )    
(2,789,119 )     (960,869 )     (2,877,453 )     (2,934,881 )     (838,497 )    
(2,755,173 )     (3,176,576 )                                                  
                                       
DIP Funding
    4,034,680       3,553,709       761,721       1,002,303       1,193,586    
  -       647,255       1,339,348       -       402,603       1,581,043  
Ending Cash Balance
  $ 500,000     $ 500,000     $ 500,000     $ 500,000     $ 500,000     $
1,134,664     $ 500,000     $ 500,000     $ 1,257,037     $ 500,000     $
500,000  

Draft - Subject to Review 6.01(n) - 1
6.01(n) - 1

--------------------------------------------------------------------------------

 
Pacific Ethanol Holdco
Debtor In Possession Financing Budget
May 18, 2009
SCHEDULE 6.01(n)
to DIP Credit Agreement

 
INITIAL DIP BUDGET

    AUGUST     SEPTEMBER     OCTOBER                                            
                                         
week 12
08/03-08/07
   
week 13
08/10-
08/14
   
week 14
08/17-
08/21
   
week 15
08/24-
08/28
   
week 16
08/31-
09/04
   
week 17
09/07-
09/11
   
week 18
09/14-
09/18
   
week 19
09/21-
09/25
   
week 20
09/28-
10/02
   
week 21
10/05-
10/09
   
week 22
10/12-
10/16
   
week 23
10/19-
10/23
   
week 24
10/26-
10/30
 
Beginning Cash Balance
  $ 500,000     $ 1,131,503     $ 500,000     $ 500,000     $ 829,038     $
500,000     $ 500,000     $ 758,233     $ 1,312,623     $ 1,934,069     $
1,504,772     $ 1,034,428     $ 500,000                                        
                                                                   
Cash Inflows
                                                                               
                       
Revenue - Ethanol (Kinergy)
    1,202,965       1,202,965       1,293,188       1,293,188       1,293,188  
    1,202,965       1,202,965       1,202,965       1,202,965       2,248,405  
    -       -       -  
Revenue - WDG (PAP)
    392,569       392,569       392,569       392,569       392,569      
392,569       392,569       392,569       392,569       -       -       -      
-  
Total Cash Inflows
    1,595,534       1,595,534       1,685,756       1,685,756       1,685,756  
    1,595,534       1,595,534       1,595,534       1,595,534       2,248,405  
    -       -       -                                                          
                                                 
Disbursements
                                                                               
                                                                               
                                                 
Operating Disburse-ments
                                                                               
                       
Corn
    -       (1,896,000 )     (1,919,700 )     -       (1,919,700 )    
(1,919,700 )     (729,000 )     -       -       -       -       -       -  
Natural Gas
    -       -       -       (179,390 )     -       -       -       (179,390 )  
  -       -       -       -       (179,390 )
Lease Payments
    -       -       -       (17,745 )     -       -       -       (1,494 )    
(16,251 )     -       -       -       (17,745 )
Insurance
    -       -       -       -       -       -       -       -       -       -  
    -       -       -  
Property Tax
    -       -       -       -       -       -       -       -       -      
(1,600,000 )     -       -       (370,000 )
Electricity
    -       -       (15,000 )     (124,294 )     -       -       -       (25,000
)     (112,294 )     -       -       (15,000 )     (124,794 )
Ethanol freight
    (31,068 )     (33,398 )     (33,398 )     (33,398 )     (31,068 )    
(31,068 )     (31,068 )     (31,068 )     (58,068 )     -       -       -      
-  
Co-product freight
    (62,877 )     (62,877 )     (62,877 )     (62,877 )     (62,877 )    
(62,877 )     (62,877 )     (62,877 )     (62,877 )     -       -       -      
-  
Grain procure-ment and handling w/ PAP
    -       -       -       (60,765 )     -       -       -       -      
(60,765 )     -       -       -       -  
One time shutdown costs
    -       -       -       -       -       -       -       -       -      
(17,442 )     (17,442 )     (17,442 )     (17,442 )
Plant Supplies & Main-tenance
    (205,810 )     (206,010 )     (206,210 )     (213,438 )     (204,530 )    
(204,530 )     (204,530 )     (208,408 )     (208,280 )     (143,077 )    
(143,077 )     (143,277 )     (150,505 )
Total Operating Disburse-ments
    (299,755 )     (2,198,285 )     (2,237,185 )     (691,907 )     (2,218,175 )
    (2,218,175 )     (1,027,475 )     (508,236 )     (518,534 )     (1,760,519 )
    (160,519 )     (175,719 )     (859,875 )                                    
                                                                     
Asset Management Agreement
                                                                               
                       
Direct Reimburse-ment
                                                                               
                       
Payroll & Benefits - Plants & Plant Operat-ions
    (26,160 )     (173,082 )     -       (173,082 )     (26,160 )     (173,082 )
    -       (173,082 )     78,481       (279,067 )     -       (252,907 )     -
 
Leases
    (101,990 )     -       -       -       (101,990 )     -       -       -    
  -       (101,990 )     -       -       -  
Other Direct Expenses
    (31,300 )     -       -       -       (31,300 )                            
        (31,300 )                        
Bankrupcy Prepara-tion Fees
                                                                               
                       
Asset Manage-ment Fee
    (195,000 )     -       -       -       (195,000 )     -       -       -    
  -       (195,000 )     -       -       -  
Total Asset Management Agreement
    (354,451 )     (173,082 )     -       (173,082 )     (354,451 )     (173,082
)     -       (173,082 )     78,481       (607,358 )     -       (252,907 )    
-                                                                              
                             
Disbursements Related to Prepetition Debts - First Day M
                                                                               
                       
Goods Sold in Last 20 Days
    -       -       -       -       -       -       -       -       -       -  
    -       -       -  
Shippers & Ware-house-man
    -       -       -       -       -       -       -       -       -       -  
    -       -       -  
Prepetition Priority Taxes
    -       -       -       -       -       -       -       -       -       -  
    -       -       -  
Utility Deposit
                                                                               
                       
Total Disburse-ments Related to Prepetition Debts
    -       -       -       -       -       -       -       -       -       -  
    -       -       -                                                          
                                                 
Professional Fees & Adminis-trative Expenses
                                                                               
                       
Legal Advisors - Debtor
    (82,500 )     (82,500 )     (82,500 )     (82,500 )     (82,500 )    
(82,500 )     (82,500 )     (82,500 )     (82,500 )     (82,500 )     (82,500 )
    (82,500 )     (82,500 )
Legal Advisors - DIP Lenders
    (50,000 )     (50,000 )     (50,000 )     (50,000 )     (50,000 )    
(50,000 )     (50,000 )     (50,000 )     (50,000 )     (50,000 )     (50,000 )
    (50,000 )     (50,000 )
Financial Advisor Debtor
    (75,000 )     (75,000 )     (75,000 )     (75,000 )     (75,000 )    
(75,000 )     (75,000 )     (75,000 )     (75,000 )     (75,000 )     (75,000 )
    (75,000 )     (75,000 )
Financial Advisors - DIP Lenders
    (50,000 )     (50,000 )     (50,000 )     (50,000 )     (50,000 )    
(50,000 )     (50,000 )     (50,000 )     (50,000 )     (50,000 )     (50,000 )
    (50,000 )     (50,000 )
Creditors Comm-ittee Legal & Financial Advisors
    (52,326 )     (52,326 )     (52,326 )     (52,326 )     (52,326 )    
(52,326 )     (52,326 )     (52,326 )     (52,326 )     (52,326 )     (52,326 )
    (52,326 )     (52,326 )
Claims Agent
    -       -       -       -       -       -       -       (50,000 )     -    
  -       -       -       -  
Trustee Fees
    -       -       -       -       -       -       -       -       (20,000 )  
  -       -       -       -  
Total Profession-al Fees & Admini-strative Expenses
    (309,826 )     (309,826 )     (309,826 )     (309,826 )     (309,826 )    
(309,826 )     (309,826 )     (359,826 )     (329,826 )     (309,826 )    
(309,826 )     (309,826 )     (309,826 )                                        
                                                                 
DIP Interest & Fees
    -       -       -       (181,903 )     -       -       -       -      
(204,208 )     -       -       -       (210,875 )
Total Disburse-ments
    (964,031 )     (2,681,193 )     (2,547,011 )     (1,356,718 )     (2,882,451
)     (2,701,083 )     (1,337,300 )     (1,041,144 )     (974,087 )    
(2,677,702 )     (470,345 )     (738,452 )     (1,380,576 )                    
                                                                               
     
DIP Funding
    -       454,157       861,255       -       867,656       1,105,549       -
      -       -       -       -       204,024       1,380,576                  
                                                                               
         
Ending Cash Balance
  $ 1,131,503     $ 500,000     $ 500,000     $ 829,038     $ 500,000     $
500,000     $ 758,233     $ 1,312,623     $ 1,934,069     $ 1,504,772     $
1,034,428     $ 500,000     $ 500,000  

Draft - Subject to Review
 
6.01(n) - 2

--------------------------------------------------------------------------------

 

SCHEDULE 7.01(h)
to DIP Credit Agreement
 
INSURANCE
 
Note: the requirements of this Insurance Schedule apply to each Plant (and the
Borrower that owns such Plant) from and after the date of the initial Funding
Notice with respect to such Plant, and apply to Pacific Holding from and after
the date of the initial Funding Notice. Notwithstanding the above, the report of
the Insurance Consultant delivered on the Closing Date shall address these
requirements of this Insurance Schedule as they apply to each Plant and each
Borrower.
 
1.             GENERAL PROVISIONS
 
1.1           The Borrowers shall at all times carry and maintain or cause to be
carried and maintained, at their own expense, the minimum insurance coverage set
forth in this Schedule 7.01(h). The terms and conditions of all insurance
policies (including the amount, scope of coverage, deductibles, and self-insured
retentions) shall be reasonably acceptable to the Administrative Agent (in
consultation with the Insurance Consultant) in all respects as of the date of
the initial Funding. After the date of the initial Funding and until the
Discharge Date, the terms and conditions of all insurance policies (including
the amount, scope of coverage, deductibles, and self-insured retentions) shall
be acceptable in all respects in the reasonable judgment of the Administrative
Agent (acting in consultation with the Insurance Consultant), and the
Administrative Agent (acting in consultation with the Insurance Consultant) may
require that such terms be modified if (i) a state of facts or circumstances
exists with respect to any Plant or the Project that was not foreseen by the
Administrative Agent on the date of this Agreement and which, in the reasonable
judgment of the Administrative Agent (acting in consultation with the Insurance
Consultant), renders such coverage inadequate, and (ii) the requested coverage
is available on commercially reasonable terms taking into account the DIP
Budget. All insurance carried pursuant to this Schedule 7.01(h) shall conform to
the relevant provisions of the respective Project Documents and be with
insurance companies that are rated “A-, X” or better by Best’s Insurance Guide
and Key Ratings, or other insurance companies of recognized responsibility
satisfactory to the Administrative Agent (acting in consultation with the
Insurance Consultant). None of the Agents or the other Senior Secured Parties
shall have any obligation or liability for premiums, commissions, assessments or
calls in connection with any insurance policy required under this Schedule 7.01
(h).
 
Capitalized terms used in this Schedule 7.01(h) not otherwise defined herein
shall have the meanings set forth in this Agreement, or if not defined therein,
as such terms are used in the common practice of the insurance industry.
 
The insurance carried in accordance with this Schedule 7.01(h) shall be endorsed
as follows: The Collateral Agent shall be sole loss payee with respect to all
First Party policies using a Standard Lenders Loss Payable Clause reasonably
acceptable to the Administrative Agent (acting in consultation with the
Insurance Consultant). The Administrative Agent, in its capacity and on behalf
of the Lenders, and the Collateral Agent, on behalf of the Senior Secured
 

 

--------------------------------------------------------------------------------

 

Parties, shall be additional insureds with respect to all of the Borrowers’
insurance (where legally allowed);
 
(a)            The insurance polices provided by the Borrowers shall allow that
theinterest of the Administrative Agent, Collateral Agent and the other Senior
Secured Parties shall not be invalidated by any action or inaction of any of the
Borrowers or the Insureds and shall insure the Administrative Agent, Collateral
Agent and the other Senior Secured Parties regardless of any breach or violation
by the any of the Borrowers or the Insured of any warranties, declarations or
conditions in such policies or any foreclosure or change in ownership of any
Plant or the Project;
 
(b)            The insurer thereunder shall waive all rights or subrogation
against the Administrative Agent, Collateral Agent and the other Senior Secured
Parties and their respective officers, employees, agents, successors and assigns
and shall waive any right of setoff and counterclaim and any other right to
deduction whether by attachment or otherwise;
 
(c)            Such insurance shall be primary without right of contribution of
any other insurance carried by or on behalf of any of Administrative Agent,
Collateral Agent and the other Senior Secured Parties with respect to its
interest as such in the Project and each policy insuring against liability to
third parties shall contain a severability of interests or cross liability
provision; and
 
(d)            Any insurance carried under this Schedule 7.01(h) that is written
to cover more than one insured shall provide that all terms, conditions,
insuring agreements and endorsements, with the exception of limits of liability
(which shall be applicable to all insureds as a group) and liability for
premiums (which shall be solely a liability of the Borrowers), shall operate in
the same manner as if there were a separate policy covering such insured.
 
1.2            Adjustment of Losses.
 
(a)            The loss, if any, under any insurance required to be carried
hereunder shall be adjusted with the insurance companies or otherwise collected,
including the filing in a timely manner of appropriate proceedings, by the
Borrowers, subject to the reasonable approval of the Administrative Agent
(acting in consultation with the Insurance Consultant) as it pertains to losses
under the party policies only. In addition, the Borrowers shall take all other
steps necessary or reasonably requested by the Administrative Agent to collect
from insurers any loss covered by any of the insurance policies herein. All such
policies shall provide that the loss, if any, and coverage afforded under such
insurance shall be adjusted and paid as provided in this Schedule 7.01(h).
 
(b)            The Borrowers shall promptly notify the Administrative Agent of
any property damage loss covered by any insurance. The Borrowers shall cooperate
and consult with the Administrative Agent in all matters pertaining to the
settlement or adjustment of any and all claims and demands for damages on
account of any taking or condemnation of any Plant or the Project or pertaining
to the settlement, compromising or arbitration of any claim on account of any
damage or destruction of any Plant or the Project or any portion thereof.
Without the prior written consent of the Administrative Agent (acting in
consultation with the Insurance
 

 
7.01(h) - 2

--------------------------------------------------------------------------------

 

Consultant), no Borrower will settle, or consent to the settlement of, any
proceeding arising out of any damage, destruction or condemnation of any Plant
or the Project or any portion thereof.
 
1.3            Application of Payments. All payments with respect to the
insurance policies required by this Schedule 7.01(h) shall promptly be deposited
in the Revenue Account for application in accordance with the provisions of this
Agreement.
 
1.4            Evidence of Insurance. On the Closing Date, on an annual basis no
more than ten (10) days following each policy anniversary, and otherwise as
required under the Credit Agreement, the Borrowers shall furnish to the
Administrative Agent with approved certification of all required insurance. An
authorized representative of each insurer shall execute such certificates. Such
certificates shall identify underwriters, the type of insurance, the insurance
limits, the risks covered thereby and the policy term, and the insurance broker
or insurance carrier providing such certificates shall specifically state
(either in such certificate or otherwise) that the special provisions enumerated
for such insurance herein are provided by such insurance. The Borrowers shall
certify that the premiums on all such policies have been paid in full for the
current year or will be paid when due. Upon request, the Borrowers will promptly
furnish to the Administrative Agent copies of all insurance policies, binders
and cover notes or other evidence of such insurance relating to the Project.
 
1.5            No Duty to Verify. No provision of this Schedule 7.01(h) or any
provision of any Transaction Document shall impose on the Administrative Agent,
Collateral Agent or any Senior Secured Party any duty or obligation to verify
the existence or adequacy of the insurance coverage maintained by the Borrowers,
nor shall the Administrative Agent, Collateral Agent or any Senior Secured Party
be responsible for any representations or warranties made by or on behalf of any
Borrower to any insurance company or underwriter.
 
2. OPERATING PERIOD INSURANCE
 
2.1            Coverage. The following coverages shall be placed into effect for
the benefit of each Plant, including grain elevators and shall be maintained in
effect at all times until the Discharge Date.
 
(a) Commercial General Liability.
 
Commercial general liability insurance for such Plant, written on “occurrence”
policy forms, including coverage for premises/operations, products/completed
operations, broad form property damage, blanket contractual liability, and
personal injury, with no exclusions for explosion, collapse and underground
perils, and fire with primary coverage limits of no less than one million
Dollars ($1,000,000) per occurrence and two million Dollars ($2,000,000) in the
annual aggregate for injuries or death to one or more persons or damage to
property resulting from any one occurrence, and a products and completed
operations liability aggregate limit of not less than one million Dollars
($1,000,000). The commercial general liability policy shall also include a
severability of interest clause and a cross liability clause in the event more
than one entity is “named insured” under the liability policy. Deductibles in
excess of two hundred fifty thousand Dollars ($250,000) shall be subject to
review and reasonable approval by the Administrative Agent (in consultation with
the Insurance Consultant).
 
 
 
7.01(h) - 3

--------------------------------------------------------------------------------

 

(b)            Automobile Liability.
 
Automobile liability insurance, including coverage for owned, non-owned and
hired automobiles for both bodily injury and property damage in accordance with
statutory legal requirements, with combined single limits of no less than one
million Dollars ($1,000,000) per accident with respect to bodily injury,
property damage or death. Automobile insurance shall include the Motor Carrier
Act Endorsement encompassing Hazardous Materials Cleanup (MCS­90), if
applicable.
 
(c)            Workers Compensation.
 
Workers compensation insurance to statutory limits and employer’s liability with
a limit of not less than one million Dollars ($1,000,000) per occurrence and in
the aggregate such other forms of insurance required by law with respect to any
Plant or the Project, providing statutory benefits and covering loss resulting
from injury, sickness, disability or death of employees (if any) of any
Borrower. To the extent applicable, insurance shall cover Jones Act, Longshore
and Harbor Workers Act and Continental Shelf Land Act.
 
(d)            Property / Machinery Breakdown.
 
Property “all risk” insurance, as such term is used in the common practice of
the insurance industry on the date of this Agreement, including machinery
breakdown, the perils of flood and earthquake, strike, vandalism and malicious
mischief subject to terms that are consistent with current industry practice
insuring all real and personal property of the Project at each Plant for an
amount of not less than full replacement cost of such Plant. Sub limits are
permitted as respects to the following perils: (i) debris removal (the greater
of $5,000,000 or 25% of loss), (ii) expediting or extra expense ($5,000,000),
(iii) increased costs due to orders by law and demolition costs of undamaged
portion due to enforcement of by law ($2,000,000), flood (25% of replacement
cost) and earthquake (25% of replacement cost) and (iv) such other coverages
customarily sub-limited in reasonable amounts consistent with current industry
practice with respect to similar risks and reasonably acceptable to the
Administrative Agent (acting in consultation with the Insurance Consultant).
 
Such policy shall include: (i) an automatic reinstatement of limits following
each loss (except for the perils of earthquake and flood) and (ii) a replacement
cost endorsement with no deduction for depreciation. Unless provided under the
all risk policy, boiler and machinery coverage (including consequence of design,
workmanship or material defect) on a “comprehensive” basis including breakdown
and repair on a replacement cost basis with limits not less than the full
replacement cost of the insured objects. In the event all risk property cover
and the boiler and machinery cover is not written in the same policy, each
policy shall contain a joint loss agreement.
 
All such policies may have deductibles of not greater than two hundred fifty
thousand Dollars ($250,000) and two percent (2%) of values at risk, five percent
(5%) for California Earthquake for natural hazard perils (such as flood and
earthquake).
 
(e)            Business Interruption.
 
 
 
7.01(h) - 4

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Borrowers shall also maintain or caused to be maintained, with respect to each
Plant, business interruption insurance on all “all risk” basis (as such term is
used in common practice of the insurance industry on the date of this
Agreement), including machinery breakage, in an amount necessary to satisfy
policy coinsurance conditions, but with limits not less than the equivalent of
twelve (12) months projected scheduled debt service, continuing expenses and an
amount equivalent to the principal payments necessary for the Borrowers to reach
the Target Balance Amount at the end of the twelve (12)-month period as
indicated in this Agreement or in other amounts reasonably acceptable to the
Administrative Agent (acting in consultation with the Insurance Consultant). The
deductible or waiting period shall not exceed thirty (30) days. Borrowers shall
also maintain or cause to be maintained contingent business interruption as
respects the suppliers and vendors in an amount of not less than six (6) months
projected scheduled Debt Service, continuing expenses and replacement ethanol
extra expense in amounts acceptable to the Lenders, where the exposure exists.
 
(f)            Umbrella or Excess.
 
Umbrella or excess liability insurance of not less than twenty million Dollars
($20,000,000) per occurrence and annual aggregate during operations. Such
coverages shall be on a per occurrence or claims made basis and over and above
coverage provided by the policies described in Sections 3.1(a), (b) and, with
respect to employer’s liability, (c) of this Schedule  7.01(h), whose limits
shall apply toward the twenty million Dollars ($20,000,000) limit set forth in
this Section 2.1(f). If the policy or policies provided under this Section
2.1(f) contain(s) aggregate limits applying to other operations other than the
Project, and such limits are diminished below fifteen million Dollars
($15,000,000) by any incident, occurrence, claim, settlement or judgment against
such insurance that has caused the insurer to establish a reserve, Borrowers,
within five (5) Business Days after obtaining knowledge of such event shall
inform the Administrative Agent, and within thirty (30) Business Days after the
occurrence of such event shall purchase an additional umbrella/excess liability
insurance policy satisfying the requirements of this Section 2.1(f).
 
(g)            Aircraft Liability.
 
Aircraft liability, (to the extent exposure exists) in an amount not less than
ten million Dollars ($10,000,000) for all owned, non-owned and hired aircraft,
fixed wing or rotary, used in connection with the operation of the Project.
 
(h) Pollution Legal Liability.
 
Including Onsite Cleanup and sudden and accidental pollution legal liability
insurance on a named perils basis with a limit commensurate (in the reasonable
opinion of the Insurance Consultant) with industry practice for like projects,
sufficient to meet contractual requirements but not less than three million
Dollars ($3,000,000). Such coverage can be included in the commercial general
liability and umbrella or excess liability covers or provided separately. Claims
made coverage forms and deductibles of up to two hundred fifty thousand Dollars
($250,000) are acceptable.
 
 
 
7.01(h) - 5

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3.             LEASEHOLD INTEREST INSURE
 
Unless otherwise covered under the operational Property All Risk Insurance
described above or otherwise maintained by Pacific Ethanol, until the Discharge
Date, each Borrower shall also insure, or cause to be insured its leasehold
interests in the Leased Premises and provide Property Damage, Business
Interruption/Extra Expense and Liability insurance in amounts reasonably
satisfactory to the Administrative Agent (acting in consultation with the
Insurance Consultant).
 
4.             DIRECTORS AND OFFICERS INSURANCE (to the extent exposure exists)
 
Until the Discharge Date, the Borrowers shall maintain, or cause to be
maintained, Directors and Officers Insurance (including Employment Practices
Liability) with limits in accordance with industry practice.
 
5.             GENERAL CONDITIONS APPLYING TO ALL INSURANCE
 
5.1            The Borrowers shall promptly notify the Administrative Agent of
any loss in excess of two hundred fifty thousand Dollars ($250,000) covered by
any insurance maintained pursuant to Sections 2.1(f), (g) and (h) and Sections
3.1(e) and (f) of this Schedule 7.01(h).
 
5.2            All policies of insurance required to be maintained pursuant to
Sections 2.1(d) and (e) of this Schedule 7.01(h), shall provide that the
proceeds of such policies shall be payable solely to the Collateral Agent
pursuant to a standard first mortgage endorsement substantially equivalent to
the Lenders Loss Payable Endorsement 438BFU or New York Standard Mortgage
Endorsement without contribution. All policies (where allowed by law) shall
insure the interests of the Senior Secured Parties regardless of any breach or
violation by any Borrower of warranties, declarations or conditions contained in
such policies, any action or inaction of any Borrower or any other Person, or
any foreclosure relating to any Plant or any change in ownership of all or any
portion of any Plant (the foregoing may be accomplished by the use of the Lender
Loss Payable Endorsement 438BFU required above).
 
5.3            A loss under any insurance required to be carried under Sections
2.1(d) and (e) of this Schedule 7.01(h), shall be adjusted with the insurance
companies, including the filing in a timely manner of appropriate proceedings,
by the Borrowers, together with the Administrative Agent. In addition the
Borrowers may, in their reasonable judgment, consent to the settlement of any
loss; provided that in the event that the amount of any such loss exceeds two
hundred fifty thousand Dollars ($250,000) the terms of such settlement are
concurred with by the Administrative Agent (acting in consultation with the
Insurance Consultant).
 
5.4            All policies of insurance required to be maintained pursuant to
this Schedule 7.01(h) shall be endorsed so that if at any time any such policy
should be cancelled, or coverage under any such policy should be reduced, such
cancellation or reduction in coverage shall not be effective for thirty (30)
days following delivery of written notice thereof to the Administrative Agent,
except for cancellation or reduction in coverage due to non-payment of premium,
which shall not be for effective for ten (10) days following delivery of written
notice thereof to the Administrative Agent.
 

 
7.01(h) - 6

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6.             REPORT
 
6.1            On the initial Funding Date and annually thereafter, the
Borrowers shall furnish the Administrative Agent with a report of an independent
insurance broker, signed by an officer of such broker, stating that all premiums
then due have been paid and that, in the opinion of such broker, the insurance
then carried or to be renewed is in accordance with the terms of this Schedule
7.01(h). In addition the Borrowers will advise the Administrative Agent in
writing promptly of any default in the payment of any premium and of any other
act or omission on the part of any Borrower that may invalidate or render
unenforceable, in whole or in part, any insurance being maintained by any
Borrower pursuant to this Schedule 7.01(h).
 
7.            “CLAIMS MADE” POLICIES FOR CERTAIN TYPES OF INSURANCE
 
7.1            If any liability insurance required under the provisions of this
Schedule 7.01(h) is allowed to be written on a “claims made” basis, then such
insurance shall include the following:
 
(a)            The retroactive date (as such term is specified in each of such
policies) shall be no later than the commercial operations date for the relevant
Plant.
 
(b)            Each time any policy written on a “claims made” basis is not
renewed or the retroactive date of such policy is to be changed, the Borrowers
shall obtain or cause to be obtained for each such policy or policies the
broadest extended reporting period coverage, or “tail”, reasonably available in
the commercial insurance market for each such policy or policies.
 
8. UNAVAILABILITY OF INSURANCE
 
If any insurance (including the limits or deductibles thereof) hereby required
to be maintained is not reasonably available and commercially feasible in the
commercial insurance market, the Administrative Agent (acting in consultation
with the Insurance Consultant) shall not unreasonably withhold their agreement
to waive such requirement to the extent the maintenance thereof is not so
available; provided, however, that the Borrowers shall first request any such
waiver in writing to the Administrative Agent, which request shall be
accompanied by a written report prepared by an insurance broker of nationally
recognized standing, certifying that such insurance required is not reasonably
available and commercially feasible (and, in any case where the required amount
is not so available, certifying as to the maximum amount which is so available)
and explaining in detail the basis for such conclusions. If after reviewing such
evidence with the Insurance Consultant, the Administrative Agent concurs with
such report, the Borrowers shall not be required to maintain such insurance
until such time as such insurance is again available on commercially reasonable
terms. At any time after the granting of any such waiver, but not more often
than once a year, the Administrative Agent or the Lenders may request, and the
Borrowers shall furnish to the Administrative Agent within fifteen (15) days
after such request, supplemental reports reasonably acceptable to the
Administrative Agent from such independent insurance broker or the Insurance
Consultant updating their prior reports and reaffirming such conclusion. It is
understood that the failure of the Borrowers to timely furnish any such
supplemental report shall be conclusive evidence that such waiver is no longer
effective because such condition no longer exists, but that such failure is not
the only way to establish such non-existence. For the purposes of this Section
8, insurance will be considered “not
 
 
 
7.01(h) - 7

--------------------------------------------------------------------------------

 
 
 
reasonably available and commercially feasible” when it is obtainable only at
excessive costs that are not justified in terms of the risk to be insured and is
generally not being carried by or applicable to projects or operations similar
to the relevant Plant because of such excessive costs.
 
9.          EROSION OF LIMIT
 
In the event that the insurance program evidenced for the benefit of any Plant
is being provided through an insurance policy that also insures other assets
owned by the Borrowers and the limits or sub limits are eroded or exhausted due
to a loss at another Plant or location the Borrowers will immediately cause
limits to be reinstated (where applicable) or replaced for the benefit of such
Plant.
 
 
 
 
 
7.01(h) - 8

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SCHEDULE 11.12
 to DIP Credit Agreement
 
NOTICE INFORMATION
 
I. BORROWERS
 
PACIFIC ETHANOL HOLDING CO. LLC
400 Capitol Mall, Suite 2060
Sacramento, California 95814
Attn: General Counsel and Chief Operating Officer
Telephone: (916) 403-2130
Facsimile: (916) 446-3937
 
and a copy to:
 
Cooley Godward Kronish LLC
1114 Avenue of the Americas
New York, NY 10036
Attn: Richard S. Kanowitz, Esq.
and
Attn: Lawrence C. Gottlieb, Esq.
Telephone: (212) 479-6000
 
Telephone: (212) 479-6000
Facsimile: (212) 479-6275
 
Facsimile: (212) 479-6275

PACIFIC ETHANOL MADERA LLC
400 Capitol Mall, Suite 2060
Sacramento, California 95814
Attn: General Counsel and Chief Operating Officer
Telephone: (916) 403-2130
Facsimile: (916) 446-3937
 
and a copy to:
 
Cooley Godward Kronish LLC
1114 Avenue of the Americas
New York, NY 10036
Attn: Richard S. Kanowitz, Esq
and
Attn: Lawrence C. Gottlieb, Esq.
Telephone: (212) 479-6000
 
Telephone: (212) 479-6000
Facsimile: (212) 479-6275
 
Facsimile: (212) 479-6275

 
PACIFIC ETHANOL COLUMBIA, LLC
400 Capitol Mall, Suite 2060
Sacramento, California 95814
Attn: General Counsel and Chief Operating Officer
Telephone: (916) 403-2130
Facsimile: (916) 446-3937
 
and a copy to:
 
 
11.12 - 1

--------------------------------------------------------------------------------

 

Cooley Godward Kronish LLC
1114 Avenue of the Americas
New York, NY 10036
Attn: Richard S. Kanowitz, Esq
and
Attn: Lawrence C. Gottlieb, Esq.
Telephone: (212) 479-6000
 
Telephone: (212) 479-6000
Facsimile: (212) 479-6275
 
Facsimile: (212) 479-6275

 
PACIFIC ETHANOL STOCKTON, LLC
400 Capitol Mall, Suite 2060
Sacramento, California 95814
Attn: General Counsel and Chief Operating Officer
Telephone: (916) 403-2130
Facsimile: (916) 446-3937
 
and a copy to:
 
Cooley Godward Kronish LLC
1114 Avenue of the Americas
New York, NY 10036
Attn: Richard S. Kanowitz, Esq
and
Attn: Lawrence C. Gottlieb, Esq.
Telephone: (212) 479-6000
 
Telephone: (212) 479-6000
Facsimile: (212) 479-6275
 
Facsimile: (212) 479-6275

 
PACIFIC ETHANOL MAGIC VALLEY, LLC
400 Capitol Mall, Suite 2060
Sacramento, California 95814
Attn: General Counsel and Chief Operating Officer
Telephone: (916) 403-2130
Facsimile: (916) 446-3937
 
and a copy to:
 
Cooley Godward Kronish LLC
1114 Avenue of the Americas
New York, NY 10036
Attn: Richard S. Kanowitz, Esq
and
Attn: Lawrence C. Gottlieb, Esq.
Telephone: (212) 479-6000
 
Telephone: (212) 479-6000
Facsimile: (212) 479-6275
 
Facsimile: (212) 479-6275

 
 
 
11.12 - 2

--------------------------------------------------------------------------------

 

II. BORROWER AGENT
 
PACIFIC ETHANOL HOLDING CO. LLC
400 Capitol Mall, Suite 2060
Sacramento, California 95814
Attn: General Counsel and Chief Operating Officer
Telephone: (916) 403-2130
Facsimile: (916) 446-3937
 
and a copy to:
 
Cooley Godward Kronish LLC
1114 Avenue of the Americas
New York, NY 10036
Attn: Richard S. Kanowitz, Esq
and
Attn: Lawrence C. Gottlieb, Esq.
Telephone: (212) 479-6000
 
Telephone: (212) 479-6000
Facsimile: (212) 479-6275
 
Facsimile: (212) 479-6275

 
III. ADMINISTRATIVE AGENT
 
WESTLB AG, NEW YORK BRANCH
1211 Avenue of the Americas
New York, NY 10036
Attention: Yolette Salnave / Andrea Bailey
Telephone: (212) 852-5994 / (212) 597-1158
Facsimile: (212) 302-7946
E-mail Address: NYC—Agency—Services@WestLB.com
 
IV. COLLATERAL AGENT
 
WESTLB AG, NEW YORK BRANCH
1211 Avenue of the Americas
New York, NY 10036
Attention: Richard Garbarino
Telephone: (212) 852-5994
Facsimile: (212) 597-1490
 
 
11.12 - 3

--------------------------------------------------------------------------------

 
V. ACCOUNTS BANK
 
AMARILLO NATIONAL BANK
P.O. Box 1
Amarillo, Texas 79105
Attn: Craig Sanders, Executive Vice President
Telephone: (806) 378-8244
Facsimile: (806) 345-1663
E-mail Address: craig.sanders@anb.com
 
For overnight delivery:
 
Amarillo National Bank
410 S. Taylor
Amarillo, Texas 79101
Attn: Craig Sanders, Executive Vice President
Telephone: (806) 378-8244
Facsimile: (806) 345-1663
E-mail Address: craig.sanders@anb.com

 
11.12 - 4

--------------------------------------------------------------------------------

 

EXHIBIT A

“Accounts” has the meaning set forth in Section 9-102 of the UCC.
 
“Accounts Bank” means Amarillo National Bank, not in its individual capacity,
but solely as depositary bank, bank and securities intermediary hereunder, and
each other Person that may, from time to time, be appointed as successor
Accounts Bank pursuant to Section 10.06 (Resignation or Removal of Agent).
 
“Accounts Property” means any funds, instruments, securities, financial assets
or other assets from time to time held in any of the Project Accounts or
credited thereto or otherwise in possession or control of the Accounts Bank
pursuant to this Agreement.
 
“Additional Project Document” means each contract, agreement, letter agreement
or other instrument to which any Borrower becomes a party after the date hereof,
other than (a) any document which does not extend beyond the six-month
anniversary of the date hereof (i) under which any Borrower would not reasonably
be expected to have obligations or liabilities in the aggregate in excess of
five hundred thousand Dollars ($500,000), or be entitled to receive revenues in
the aggregate in excess of one million Dollars ($1,000,000), in either case in
value during such period and (ii) a termination of which would not reasonably be
expected to result in a Material Adverse Effect, or (b) any agreement for the
sale of all or substantially all the assets of the Borrowers entered into in
connection with the sale process set forth in Section 7.02(f) (Sale of
Substantially All Assets); provided, that for the purposes of this definition,
(i) (A) purchase orders under existing Project Documents relating to the sale of
Products or the purchase of corn and (B) purchases of natural gas, water or
electricity pursuant to standard user agreements, shall not constitute
Additional Project Documents and (ii) any series of related transactions (other
than transactions, including hedging transactions, relating to the sale of
Products or the purchase of corn and natural gas) shall be considered as one
transaction, and all contracts, agreements, letter agreements or other
instruments in respect of such transactions shall be considered as one contract,
agreement, letter agreement or other instrument, as applicable.
 
“Administrative Agent” means WestLB, in its capacity as administrative agent for
the Lenders hereunder, and includes each other Person that may, from time to
time, be appointed as successor Administrative Agent pursuant to Section 10.06
(Resignation or Removal of Agent).
 
“Affiliate” of any Person means any other Person that, directly or indirectly,
controls, is controlled by or is under common control with such Person.  A
Person shall be deemed to be “controlled by” any other Person if such other
Person (a) possesses, directly or indirectly, power to direct or cause the
direction of the management and policies of such Person whether by contract or
otherwise or (b) owns at least ten percent (10%) of the Equity Interests in such
Person.  Notwithstanding the foregoing, Pacific Ethanol Imperial LLC shall not
be an Affiliate of any Borrower.
 
“Affiliated Project Documents” means those Project Documents listed in
Schedule 5.10 and identified as Affiliate agreements.
 
“Agents” means, collectively, the Administrative Agent, the Collateral Agent,
and the Accounts Bank.
 

 
Exhibit A - 1

--------------------------------------------------------------------------------

 

 
“Aggregate Commitment” means fifty million Dollars ($50,000,000), as the same
may be reduced in accordance with Section 2.06 (Termination or Reduction of
Commitments).
 
“Aggregate Revolving Loan Commitment” means twenty million Dollars
($20,000,000), as the same may be reduced in accordance with Section 2.06
(Termination or Reduction of Commitments).
 
“Aggregate Roll Up Loan Commitment” means thirty million Dollars ($30,000,000),
as the same may be reduced in accordance with Section 2.06 (Termination or
Reduction of Commitments).
 
“AMA Consent” means a Consent and Agreement regarding the Asset Management
Agreement entered into among Pacific Ethanol, the Borrowers, and the
Pre-Petition Collateral Agent, in form and substance reasonably satisfactory to
the Administrative Agent and the Collateral Agent.
 
“Agreement” has the meaning set forth in the Preamble.
 
“Ancillary Documents” means, with respect to each Additional Project Document,
the following, each of which shall be in form and substance reasonably
satisfactory to the Administrative Agent and, in the case of items (i), (ii) and
(iv), the Collateral Agent:
 
 
(i)
each security instrument and agreement necessary or desirable to grant to the
Collateral Agent a first priority perfected Lien (subject only to Permitted
Liens) in such Additional Project Document and all property interests received
by any Borrower in connection therewith;

 
 
(ii)
all recorded UCC financing statements and other filings required to perfect such
Lien;

 
 
(iii)
if reasonably requested by the Administrative Agent, opinions of counsel for the
Borrowers addressing such matters relating to such document, as the
Administrative Agent may reasonably request;

 
 
(iv)
if reasonably requested by the Administrative Agent, the Borrowers shall use
their best efforts to obtain a Consent with respect to such Additional Project
Document from each Project Party, and shall use their best efforts to obtain an
opinion of counsel to such Project Party addressing matters relating to such
Additional Project Document and such Consent as the Administrative Agent may
reasonably request; provided, that if such Consent cannot be obtained, the
relevant Additional Project Document shall be freely assignable by the
applicable Borrower to the Collateral Agent and to a transferee in foreclosure,
in each such case without any consent or approval of such Project Party; and

 

 
Exhibit A - 2

--------------------------------------------------------------------------------

 

 
(v)
if reasonably requested by the Administrative Agent, certified evidence of the
authorization of such Additional Project Document by each Borrower that is a
party thereto.

 
“Applicable Margin” means ten percent (10%).
 
“Approved Fund” means, with respect to any Lender that is a fund that invests in
commercial loans, any other fund that invests in commercial loans and is managed
or advised by the same investment advisor as such Lender or by an Affiliate of
such investment advisor.
 
“Approved Plan” means a plan of reorganization of the Debtors approved by the
Roll Up Lenders in accordance with section 1126 of the Bankruptcy Code providing
that the Roll Up Loans be refinanced or otherwise replaced with other securities
or financial instruments with a present value equal to the accrued principal and
interest due in respect of the Roll Up Loans as of the effective date of such
plan; provided that under such plan (i) the relative lien position of the
Revolving Lenders in respect of the Roll Up Loans is maintained and (ii) the
relative lien position of the Roll Up Lenders in respect of the Pre-Petition
Obligations is maintained.
 
“Asset Management Agreement” means the Asset Management Agreement, dated on or
about the date hereof, among Pacific Ethanol and the Borrowers.
 
“Auditors” means those nationally recognized independent auditors selected by
the Borrowers (including Hein & Associates) and approved by the Administrative
Agent.
 
“Authorized Officer” means (i) with respect to any Person that is a corporation,
the president, any vice president, the treasurer, the chief financial officer or
chief restructuring officer of such Person, (ii) with respect to any Person that
is a partnership, an Authorized Officer of a general partner of such Person,
(iii) with respect to any Person that is a limited liability company, any
manager, the president, any vice president, the treasurer, the chief financial
officer or chief restructuring officer of such Person, or any person who serves
in such capacity in respect of the managing member of such Person, or (iv) with
respect to any Person, such other representative of such Person that is approved
by the Administrative Agent in writing who, in each such case, has been named as
an “Authorized Officer” on a certificate of incumbency of such Person delivered
to the Administrative Agent and the Accounts Bank on or after the date hereof.
 
“Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy”
or any successor statute, and all rules promulgated thereunder.
 
“Bankruptcy Court” has the meaning set forth in the Recitals.
 
“Bankruptcy Rules” means the Federal Rules of Bankruptcy Procedure and local
rules of the Bankruptcy Court, each as amended, and applicable to the Cases.
 
“Base Rate” means, for any day, a fluctuating rate per annum equal to the
highest of (i) the Federal Funds Effective Rate plus one-half of one percent
(0.50%), (ii) the rate of interest in effect for such day as publicly announced
from time to time by WestLB as its “prime rate” and (iii) LIBOR plus one percent
(1%). The “prime rate” is a rate set by WestLB based upon various factors
including WestLB’s costs and desired return, general economic conditions and
other factors, and is used as a reference point for pricing some loans, which
may be priced at, above, or below such announced rate.  Any change in such rate
announced by WestLB shall take effect at the opening of business on the day
specified in the public announcement of such change.
 

 
Exhibit A - 3

--------------------------------------------------------------------------------

 

 
“Base Rate Loan” means any Revolving Loan bearing interest at a rate determined
by reference to the Base Rate and the provisions of Article II (Commitments and
Borrowing).
 
“Blocked Account Agreement” means an agreement, in substantially the form
attached to the Pre-Petition Credit Agreement as Exhibit 7.02(i) (or, if
requested by the Borrowers, such other form reasonably satisfactory to the
Administrative Agent and the Collateral Agent), with respect to a Local Account
among the Borrower in whose name such Local Account has been opened, the bank
with whom such Local Account was opened and the Collateral Agent or the
Pre-Petition Collateral Agent.
 
“Boardman” has the meaning set forth in the Preamble.
 
“Boardman CS Date” means the first to occur of (i) September 30, 2009 and (ii)
such earlier date as may be agreed to by Boardman and the Administrative Agent.
 
“Boardman Deed of Trust” means the Leasehold Trust Deed, Security Agreement,
Financing Agreement, Fixture Filing and Assignment of Leases, Rents and Security
Deposits made by Boardman to Stewart Title Guaranty Company, as trustee, for the
benefit of the Pre-Petition Collateral Agent, as beneficiary.
 
“Boardman Lease” means the lease dated April 20, 2006 between the Port of Morrow
and Boardman.
 
“Boardman Plant” means the ethanol production facility located at Boardman,
Oregon, with an expected capacity of approximately forty (40) million
gallons-per-year of denatured ethanol, including the Site on which such facility
is located, and all buildings, structures, improvements, easements and other
property related thereto.
 
“Boardman Pledge Agreement” means the Pledge and Security Agreement, dated on or
about the date of the Pre-Petition Credit Agreement, among Pacific Holding,
Boardman and the Pre-Petition Collateral Agent.
 
“Boardman Security Agreement” means the Assignment and Security
Agreement,  dated on or about the date of the Pre-Petition Credit Agreement,
made by Boardman in favor of the Pre-Petition Collateral Agent.
 
“Borrower Agent” means Pacific Holding, in its capacity as agent for the
Borrowers in accordance with Section 11.05 (Borrower Party Agent).
 
“Borrower LLC Agreements” means, collectively, the Pacific Holding LLC
Agreement, the Madera LLC Agreement, the Boardman LLC Agreement, the Stockton
LLC Agreement and the Burley LLC Agreement.
 
“Borrowers” has the meaning set forth in the Preamble.
 
“Burley” has the meaning set forth in the Preamble.
 

 
Exhibit A - 4

--------------------------------------------------------------------------------

 

 
“Burley Deed of Trust” means the Mortgage, Security Agreement, Financing
Statement, Fixture Filing and Assignment of Leases, Rents and Security Deposits,
in substantially the form of Exhibit 6.04(g)-A to the Pre-Petition Credit
Agreement.
 
“Burley Plant” means the ethanol production facility located at Burley, Idaho,
with a design basis capacity of approximately fifty (50) million
gallons-per-year of denatured ethanol, including the Site on which such facility
is located, and all buildings, structures, improvements, easements and other
property related thereto.
 
“Burley Pledge Agreement” means the Pledge and Security Agreement, in
substantially the form of Exhibit 6.04(g)-B to the Pre-Petition Credit
Agreement.
 
“Burley Security Agreement” means the Assignment and Security Agreement, in
substantially the form of Exhibit 6.04(g)-C to the Pre-Petition Credit
Agreement.
 
“Business Day” means:
 
 
(i)
any day that is neither a Saturday or Sunday nor a day on which commercial banks
are authorized or required to be closed in Sacramento, California or New York,
New York; and

 
 
(ii)
relative to the making, continuing, prepaying or repaying of any Eurodollar
Loans, any day on which dealings in Dollars are carried on in the London
interbank market.

 
“Business Interruption Insurance Proceeds” means all proceeds of any insurance
policies required pursuant to this Agreement or otherwise obtained with respect
to any Borrower, any Plant or the Project relating to business interruption or
delayed start-up.
 
“Capitalized Lease Liabilities” of any Person means all monetary obligations of
such Person under any leasing or similar arrangement that, in accordance with
GAAP, would be classified as capitalized leases on a balance sheet of such
Person or otherwise disclosed as such in a note to such balance sheet and, for
purposes of the Financing Documents, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with GAAP.
 
“Carve-Out” means the sum of (i) the aggregate amount of any budgeted and unpaid
fees, costs and expenses that were accrued or incurred prior to the Carve-Out
Date by the professionals retained by the Debtors or any professionals retained
by the Committee (collectively, the “Professionals”) to the extent allowed by an
order of the Bankruptcy Court, plus (ii) those fees, costs and expenses incurred
by Professionals after the Carve-Out Date and subsequently allowed by order of
the Bankruptcy Court and in compliance with the DIP Budget in an amount not to
exceed $250,000 in the aggregate, plus (iii) fees required to be paid to the
Clerk of the Bankruptcy Court and to the U.S. Trustee pursuant to 28 U.S.C.
§ 1930; provided that following the Carve-Out Date any amounts paid to
Professionals by any means will reduce the Carve-Out on a dollar-for-dollar
basis.
 
“Carve-Out Date” means the earlier of (i) the date on which any Event of Default
occurs and (ii) the Maturity Date.
 

 
Exhibit A - 5

--------------------------------------------------------------------------------

 

 
“Cash Equivalents” means:
 
(a)           readily marketable direct obligations of the government of the
United States or any agency or instrumentality thereof, or obligations
unconditionally guaranteed by the full faith and credit of the government of the
United States, in each case maturing within one (1) year from the date of
acquisition thereof;
 
(b)           securities issued by any state of the United States of America or
any political subdivision of any such state or any public instrumentality
thereof having maturities of not more than one (1) year from the date of
acquisition thereof and, at the time of acquisition, having a rating of AA- or
higher from S&P or Aa3 or higher from Moody’s (or, if at any time neither S&P
nor Moody’s shall be rating such obligations, an equivalent rating from another
nationally recognized rating service);
 
(c)           investments in commercial paper maturing within 270 days from the
date of acquisition thereof and having, at such date of acquisition, a rating of
at least A-1 or P-1 from either S&P or Moody’s (or, if at any time neither S&P
nor Moody’s shall be rating such obligations, an equivalent rating from another
nationally recognized rating service);
 
(d)           investments in certificates of deposit, banker’s acceptances and
time deposits maturing within 270 days from the date of acquisition thereof
issued or guaranteed by or placed with, and money market deposit accounts issued
or offered by, the Administrative Agent or any domestic office of any commercial
bank organized under the laws of the United States of America, any State
thereof, any country that is a member of the Organisation for Economic
Co-Operation and Development or any political subdivision thereof, that has a
combined capital and surplus and undivided profits of not less than
$500,000,000;
 
(e)           fully collateralized repurchase agreements with a term of not more
than 30 days for securities described in clause (a) above and entered into with
a financial institution satisfying the criteria of clause (d) of this
definition; and
 
(f)           investments in “money market funds” within the meaning of Rule
2a-7 of the Investment Company Act of 1940, as amended, substantially all of
whose assets are invested in investments of the type described in clauses (a)
through (e) of this definition.
 
“Casualty Event” means an event that causes any Plant, or any material portion
thereof, to be damaged, destroyed or rendered unfit for normal use for any
reason whatsoever.
 
“CERCLA” means the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. § 9604, et seq.), as amended, and rules, regulations,
standards guidelines and publications issued thereunder.
 
“Change of Control” means any transaction or series of related transactions
(including any merger or consolidation) consummated without the prior written
consent of the Administrative Agent the result of which is that:
 

 
Exhibit A - 6

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(A)           (i) Pacific Holding fails to maintain, directly, legally or
beneficially, one hundred percent (100%) of the Equity Interests of any of
Madera, Boardman, Stockton, or Burley, (ii) PEC fails to maintain directly,
legally or beneficially, one hundred percent (100%) of the Equity Interests of
Pacific Holding (other than any Equity Interest held by an Independent Member),
(iii) Pacific Ethanol fails to maintain, directly or indirectly, legally or
beneficially, one hundred percent (100%) of the Equity Interests of PEC or
fifty-one percent (51%) of the Equity Interests of each of the Borrowers, or
(iv) twenty percent (20%) or more of the Equity Interests of any Borrower are
indirectly, legally or beneficially owned by, or under common control of, any
Person other than those identified in clauses (i) through (iii) above; or
 
(B)           any Person becomes a member of the board of directors of Pacific
Ethanol.
 
“Chapter 11 Case” or “Case” has the meaning set forth in the Recitals.
 
“Chattel Paper” has the meaning set forth in Section 9-102 of the UCC.
 
“Closing Date” means the date on which all the conditions set forth in
Section 6.01 (Conditions to Closing)  and Section 6.02 (Conditions to All
Fundings) have been satisfied or waived.
 
“CMSA” means each Construction Management Services Agreement between any
Borrower and the Construction Manager.
 
“Code” means the Internal Revenue Code of 1986, as amended.
 
“Cold Shutdown” means, in respect of a Plant, the maintenance of such Plant in a
state in which the Plant facilities are not producing ethanol, ethanol work in
process has been completed, and wherein (i) Plant systems and equipment
preservation are being managed in accordance with manufacturer recommendations
and (ii) Plant facilities operate with a reduced headcount.  “Cold Shutdown”
contemplates minimized usage of a Plant’s utility systems but does not
contemplate any cessation of compliance monitoring with respect to Necessary
Project Approvals.
 
“Collateral” means all Accounts, Chattel Paper, Commercial Tort Claims,
Documents, Equipment, Fixtures, Goods, General Intangibles, Instruments,
Inventory, Investment Property (including Equity Interests in Subsidiaries),
Pledged Deposits, Supporting Obligations, collateral referenced in the Interim
Order, all rights, claims and other causes of action of each Debtor’s estate and
any other avoidance actions under Chapter 5 of the Bankruptcy Code and the
property received thereby whether by judgment, settlement or otherwise and Other
Collateral, wherever located, in which a Debtor now has or hereafter acquires
any right or interest, and the proceeds (including Stock Rights), insurance
proceeds and products thereof, together with all books and records, customer
lists, credit files, computer files, programs, printouts and other computer
materials and records related thereto.  Notwithstanding anything to the contrary
contained in this definition, Collateral shall not include (i) rights under
governmental licenses, authorizations or any other asset of a Debtor to the
extent and for so long as the grant of a security interest therein is prohibited
by applicable Law and (ii) any intent-to-use trademark or service mark
application prior to the filing of a statement or use or amendment to allege
use, or any other intellectual property, to the extent that applicable Law
prohibits the creation of a security interest or would otherwise result in the
loss of rights from the creation of such security interest or from the
assignment of such rights upon the occurrence and continuance of an Event of
Default.
 

 
Exhibit A - 7

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“Commercial Tort Claims” means any currently existing commercial tort claims of
a Debtor.
 
“Collateral Agent” means WestLB AG, New York Branch, in its capacity as
collateral agent for the Senior Secured Parties under the Financing Documents,
and includes each other Person that may, from time to time be appointed as
successor Collateral Agent pursuant to Section 10.06 (Resignation or Removal of
Agent).
 
“Commitment Fee” has the meaning provided in Section 3.11 (Fees).
 
“Commitment Percentage” means, as to any Lender at any time, such Lender’s
Revolving Loan Commitment Percentage or Roll Up Loan Commitment Percentage, as
the context may require.
 
“Commitment” means, with respect to each Lender, as applicable, such Lender’s
Revolving Loan Commitment or Roll Up Loan Commitment, as the context may
require.
 
“Committee” means the statutory committee appointed in the Chapter 11 Cases.
 
“Commodity Hedging Arrangements” means any arrangement to hedge the price of
corn purchases, ethanol sales, Distillers Grains sales or natural gas purchases.
 
“Condemnation Proceeds” means any Net Cash Proceeds payable in respect of any
Event of Taking.
 
“Consents” means each Consent and Agreement entered into among a Project Party,
the Borrowers, and the Collateral Agent, each in form and substance reasonably
satisfactory to the Administrative Agent and the Collateral Agent.
 
“Construction Contracts” means collectively, (i) the construction contracts
identified on Schedule 5.10 and (ii) each CMSA.
 
“Construction Manager” means PEC or any successor pursuant to a CMSA (or any
replacement thereof).
 
 “Consultants” means the Financial Advisor and any other consultants appointed
by or on behalf of the Lenders.
 
“Contest” means, with respect to any matter or claim involving any Person, that
such Person is contesting such matter or claim in good faith and by appropriate
proceedings timely instituted; provided, that the following conditions are
satisfied:  (a) such Person has posted a bond or other security (which may
include funds reserved in an appropriate Project Account) reasonably acceptable
to the Administrative Agent; (b) during the period of such contest, the
enforcement of any contested item is effectively stayed; (c) none of such Person
or any of its officers, directors or employees, or any Senior Secured Party or
its respective officers, directors or employees, is or could reasonably be
expected to become subject to any criminal liability or sanction in connection
with such contested items; and (d) such contest and any resultant failure to pay
or discharge the claimed or assessed amount does not, and would not reasonably
be expected to (i) result in a Material Adverse Effect or (ii) involve a
material risk of the sale, forfeiture or loss of, or the creation, existence or
imposition of any Lien (other than a Permitted Lien) on, any of the Collateral.
 

 
Exhibit A - 8

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“Contingent Liabilities” means any agreement, undertaking or arrangement by
which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to, or otherwise to invest in, a
debtor, or otherwise to assure a creditor against loss) the indebtedness,
obligation or any other liability of any other Person (other than by
endorsements of instruments in the course of collection), or guarantees the
payment of dividends or other distributions upon the shares of any other
Person.  The amount of any Person’s obligation under any contingent liabilities
shall (subject to any limitation set forth therein) be deemed for purposes of
this Agreement to be the outstanding principal amount of the debt, obligation or
other liability guaranteed thereby; provided, however, that if the maximum
amount of the debt, obligation or other liability guaranteed thereby has not
been established, the amount of such contingent liability shall be the maximum
reasonably anticipated amount of the debt, obligation or other liability;
provided, further, that any agreement to limit the maximum amount of such
Person’s obligation under such contingent liability shall not, of and by itself,
be deemed to establish the maximum reasonably anticipated amount of such debt,
obligation or other liability.
 
“Contractual Obligation” means, as to any Person, any provision of any security
issued by such Person or of any agreement, instrument or other undertaking to
which such Person is a party or by which it or any of its property is bound.
 
“Corn Supplier” means Pacific Ag Products or any other counterparty to a Grain
Supply Agreement.
 
“DDG” means dried distillers grains (if any) produced by the Borrowers at the
Project.
 
“Debtors” has the meaning set forth in the Recitals.
 
“Default” means any condition, occurrence or event that, after notice or passage
of time or both, would be an Event of Default.
 
“Default Excess” means, with respect to any Defaulting Lender, the excess, if
any, of such Defaulting Lender’s pro rata share of the aggregate outstanding
principal amount of all Loans of all Lenders (calculated as if all Defaulting
Lenders (including such Defaulting Lender) had funded all of their respective
Defaulted Loans) over the aggregate outstanding principal amount of all Loans of
such Defaulting Lender.
 
“Default Period” means, with respect to any Defaulting Lender, the period
commencing on the date of the applicable Funding Default and ending on the
earliest of the following dates:  (i) the date on which all Commitments are
cancelled or terminated and/or the Obligations are declared or become
immediately due and payable, (ii) the date on which (a) the Default Excess with
respect to such Defaulting Lender shall have been reduced to zero (whether by
the funding by such Defaulting Lender of any Defaulted Loans of such Defaulting
Lender or by the non pro rata application of any voluntary or mandatory
prepayments of the Loans pursuant to the terms hereof) and (b) such Defaulting
Lender shall have delivered to the Borrowers and the Administrative Agent a
written reaffirmation of its intention to honor its obligations hereunder with
respect to its Commitments, and (iii) the date on which the Borrowers, the
Administrative Agent and Required Lenders waive all Funding Defaults of such
Defaulting Lender in writing.
 

 
Exhibit A - 9

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“Default Rate” has the meaning set forth in Section 3.04 (Default Interest
Rate).
 
“Defaulted Loan” has the meaning provided in Section 2.07 (Defaulting Lenders).
 
“Defaulting Lender” has the meaning provided in Section 2.07 (Defaulting
Lenders).
 
“Delta-T” Delta-T Corporation, a Virginia corporation.
 
“Deposit Accounts” has the meaning set forth in Section 9-102 of the UCC.
 
“DG Offtake Agreements” means any agreement relating to the sale or Distillers
Grains by any Borrower with a scheduled term in excess of six months and with
payments thereunder expected to be in excess of one million Dollars
($1,000,000), including the Madera DG Agreement and each agreement between any
Borrower and Pacific Ag Products relating to the sale or marketing of Distillers
Grains.
 
“DIP Administrative Claim” means an allowed superpriority administrative expense
claim under Section 364(c)(1) of the Bankruptcy Code, having priority over all
administrative expenses of the kind specified in, or ordered pursuant to,
Sections 105, 326, 328, 330, 331, 503(b), 506(c), 507(a), 507(b), 726, 1113,
1114 or any other provisions of the Bankruptcy Code.
 
“DIP Budget” has the meaning set forth in Section 7.01 (l) (Affirmative
Covenants-DIP Budget).
 
“DIP Facility” means the credit facility provided to the Debtors pursuant to the
Financing Documents.
 
“DIP Liens” has the meaning set forth in Section 2.09(b) (Super-Priority Nature
of Obligations) and shall include Interim DIP Liens under and as defined in the
Interim Order.
 
“Discharge Date” means the date on which (a) all outstanding Commitments have
been terminated and (b) all amounts payable in respect of the Obligations have
been irrevocably paid in full in cash (other than obligations under the
Financing Documents that by their terms survive and with respect to which no
claim has been made by the Senior Secured Parties).
 
“Disposition” means, with respect to any Property, any sale, lease (or
sublease), sale and leaseback, assignment, conveyance, transfer or other
dispositions thereof (other than a Recovery Event); and the terms “Dispose” and
“Disposed of” shall have correlative meanings, excluding any sales or
dispositions of Products or Cash Equivalents, in each case, in the ordinary
course of business.
 
“Distillers Grains” means DDG, WDG, and any other form of distillers grain
products (including syrup) marketed by any Borrower from time to time.
 
“Documents” has the meaning set forth in Section 9-102 of the UCC.
 

 
Exhibit A - 10

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“Dollar” and the sign “$” mean lawful money of the United States.
 
“Domestic Office” means, relative to any Lender, the office of such Lender
designated on Schedule 1.01 or designated in the Lender Assignment Agreement
pursuant to which such Lender became a Lender hereunder or such other office of
a Lender (or any successor or assign of such Lender) within the United States as
may be designated from time to time by written notice from such Lender, as the
case may be, to the Borrower Agent and the Administrative Agent.
 
“Effect of Bankruptcy” means, with respect to any contractual obligation,
contract, lease or agreement to which a Debtor is a party, any default or other
legal consequences arising on account of the commencement or the filing of the
Chapter 11 Cases, as applicable (including the implementation of any stay), or
the rejection of any such contractual obligation, contract or agreement with the
approval of the Bankruptcy Court if required under applicable Law.
 
“Eligible Assignee” means (a) any Lender, (b) an Affiliate of any Lender, (c) an
Approved Fund, and (d) any other Person (other than a natural person) approved
by the Administrative Agent.
 
“Environmental Affiliate” means any Person, only to the extent of, and only with
respect to matters or actions of such Person for which, any Borrower could
reasonably be expected to have liability as a result of such Borrower retaining,
assuming, accepting or otherwise being subject to liability for Environmental
Claims relating to such Person, whether the source of such Borrower’s obligation
is by contract or operation of Law.
 
“Environmental Approvals” means any Governmental Approvals required under
applicable Environmental Laws.
 
“Environmental Claim” means any written notice, claim, demand or similar written
communication by any Person alleging potential liability or requiring or
demanding remedial or responsive measures (including potential liability for
investigatory costs, cleanup, remediation and mitigation costs, governmental
response costs, natural resources damages, property damages, personal injuries,
fines or penalties) in each such case (x) either (i) with respect to
environmental contamination-related liabilities or obligations with respect to
which any Borrower could reasonably be expected to be responsible that are, or
could reasonably be expected to be, in excess of two hundred thousand Dollars
($200,000) in the aggregate, or (ii) that has or could reasonably be expected to
result in a Material Adverse Effect and (y) arising out of, based on or
resulting from (i) the presence, release or threatened release into the
environment, of any Materials of Environmental Concern at any location, whether
or not owned by such Person; (ii) circumstances forming the basis of any
violation, or alleged violation, of any Environmental Laws or Environmental
Approvals; or (iii) exposure to Materials of Environmental Concern.
 

 
Exhibit A - 11

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“Environmental Laws” means all Laws applicable to the Project relating to
pollution or protection of human health, safety or the environment (including
ambient air, surface water, ground water, land surface or subsurface strata),
including Laws relating to emissions, discharges, releases or threatened
releases of Materials of Environmental Concern, or otherwise applicable to the
Project relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Materials of Environmental Concern.
 
“Equipment” has the meaning set forth in Section 9-102 of the UCC.
 
“Equity Interests” means, with respect to any Person, all of the shares of
capital stock of (or other ownership or profit interests in) such Person, all of
the warrants, options or other rights for the purchase or acquisition from such
Person of shares of capital stock of (or other ownership or profit interests in)
such Person, all of the securities convertible into or exchangeable for shares
of capital stock of (or other ownership or profit interests in) such Person or
warrants, rights or options for the purchase or acquisition from such Person of
such shares (or such other interests), and all of the other ownership or profit
interests in such Person (including partnership, member or trust interests
therein), whether voting or nonvoting, and whether or not such shares, warrants,
options, rights or other interests are outstanding on any date of determination,
in each such case including all voting rights and economic rights related
thereto.
 
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and any successor statute of similar import, together with the regulations
thereunder, in each case as in effect from time to time.  References to sections
of ERISA also refer to any successor sections.
 
“ERISA Affiliate” means any Person, trade or business that, together with any
Borrower, is or was treated as a single employer under Section 414 of the Code
or Section 4001 of ERISA.
 
“ERISA Plan” means any Plan that is not a Multiemployer Plan.
 
“Ethanol Offtake Agreements” means any agreement relating to the sale of ethanol
by any Borrower with a scheduled term in excess of six months and with payments
thereunder expected to be in excess of one million Dollars ($1,000,000),
including each agreement between any Borrower and Kinergy relating to the sale
or marketing of ethanol.
 
“Eurodollar Loan” means any Revolving Loan bearing interest at a rate determined
by reference to the Eurodollar Rate and the provisions of Article II
(Commitments and Borrowing) and Article III (Repayments, Prepayments, Interest
and Fees).
 
“Eurodollar Office” means, relative to any Lender, the office of such Lender
designated as such on Schedule 1.01 or designated in the Lender Assignment
Agreement pursuant to which such Lender became a Lender hereunder or such other
office of a Lender as designated from time to time by notice from such Lender to
the Borrower Agent and the Administrative Agent pursuant to Section 4.04
(Obligation to Mitigate) that shall be making or maintaining Eurodollar Loans of
such Lender hereunder.
 

 
Exhibit A - 12

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“Eurodollar Rate” means, for any Interest Period with respect to any Eurodollar
Loan, an interest rate per annum equal to the rate per annum obtained by
dividing (x) LIBOR for such Interest Period and such Eurodollar Loan, by (y) a
percentage equal to (i) 100% minus (ii) the Eurodollar Reserve Percentage for
such Interest Period.
 
“Eurodollar Reserve Percentage” means, for any day during any Interest Period,
the reserve percentage (expressed as a decimal, carried out to five decimal
places) in effect on such day, whether or not applicable to any Lender, under
regulations issued from time to time by the F.R.S. Board for determining the
maximum reserve requirement (including any emergency, supplemental or other
marginal reserve requirement) with respect to eurocurrency funding (currently
referred to as “Eurocurrency Liabilities”).  The Eurodollar Rate for each
outstanding Eurodollar Loan shall be adjusted automatically as of the effective
date of any change in the Eurodollar Reserve Percentage.
 
“Event of Abandonment” means with respect to any Plant any of the following
shall have occurred: (i) the abandonment by the applicable Borrower of the
development, operation or maintenance of such Plant for a period of more than
ten (10) consecutive days (other than as a result of force majeure, an Event of
Taking or a Casualty Event), (ii) the suspension of all or substantially all of
any Borrower’s activities with respect to such Plant, other than as the result
of a force majeure, Event of Taking or Casualty Event, for a period of more than
ten (10) consecutive days, or (iii) any written acknowledgement by any Borrower
of a final decision to take any of the foregoing actions; provided that Cold
Shutdown shall not constitute an Event of Abandonment under any of clauses (i),
(ii) or (iii).
 
“Event of Default” means any one of the events specified in Section 9.01 (Events
of Default).
 
“Event of Taking” means any taking, exercise of rights of eminent domain, public
improvement, inverse condemnation, condemnation or similar action of or
proceeding by any Governmental Authority relating to any material part of any
Plant, the Project, any Equity Interests of any Borrower or any other assets
thereof.
 
“Event of Total Loss” means the occurrence of a Casualty Event affecting all or
substantially all of any Plant, the Project or the assets of Pacific Holding or
any Borrower.
 
“Excluded Taxes” means, with respect to any Agent or any Lender or any other
recipient of any payment to be made by or on account of any Obligation
hereunder, (a) income or franchise Taxes imposed on (or measured by) its net
income levied as a result of a present or former connection between such Agent,
such Lender or such other recipient and the jurisdiction of the Governmental
Authority imposing such Tax or any political subdivision or taxing Authority
thereof or their (other than such Agent’s, such Lender’s or such other
recipient’s having executed, delivered or preformed its obligations or recovered
a payment under, or enforced, this Agreement), (b) any branch profits Tax
imposed by the United States, or any similar Tax imposed by any other
jurisdiction described in clause (a) above, or (c) any United States withholding
Tax to the extent that is imposed on amounts payable to such Agent or such
Lender at the time such Agent or such Lender becomes a party to this Agreement.
 

 
Exhibit A - 13

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“F.R.S. Board” means the Board of Governors of the Federal Reserve System or any
successor thereto.
 
“Federal Funds Effective Rate” means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average
of the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers on such day, as published on
the next succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day that is a Business Day, the average of
the quotations for such day for such transactions received by the Administrative
Agent from three federal funds brokers of recognized standing selected by the
Administrative Agent.
 
“Fees” means, collectively, each of the fees payable by the Borrowers for the
account of any Lender or Agent pursuant to Section 3.11 (Fees).
 
“Final Order” means the order of the Bankruptcy Court entered in the Chapter 11
Cases after a final hearing under Bankruptcy Rule 4001(c)(2) or such other
procedures as approved by the Bankruptcy Court, which order shall be
substantially in the form of the Interim Order or otherwise satisfactory in form
and substance to the Lenders and the Administrative Agent, and from which no
appeal or motion to reconsider has been timely filed, or if timely filed, such
appeal has been stayed, dismissed or denied unless the Lenders and the
Administrative Agent waive such requirement, together with all extensions,
modifications and amendments thereto, in form and substance satisfactory to the
Lenders and the Administrative Agent.  The Final Order shall authorize and
approve the transactions contemplated by the Financing Documents and find that
the Lenders are extending credit to the Debtors in good faith within the meaning
of Bankruptcy Code section 364(e) and shall set forth provisions (i) approving
in all respects the Financing Documents, and authorizing and directing the
Debtors to execute and become bound by the Financing Documents; (ii) modifying
the automatic stay to the extent necessary to permit or effectuate the terms of
the Final Order and the Financing Documents, including to permit the creation
and perfection of the Collateral Agent’s Liens on the Collateral; (iii)
providing for the automatic relief of such stay to permit the enforcement of the
Administrative Agent’s and the Lenders’ remedies under the DIP Facility, subject
to the right of the Debtors and/or the Committee to re-impose or continue the
automatic stay; and (iv) providing that the Debtors acknowledge (a) the validity
and enforceability of the Pre-Petition Obligations, without defense, offset or
counterclaim of any kind, (b) the validity, perfection and priority of the Liens
securing the Pre-Petition Obligations, and that the Debtors waive any right to
challenge or contest such claims and liens and (c) that the Debtors have no
valid claims or causes of action, whether based in contract, tort or otherwise
against the Pre-Petition Administrative Agent or any Pre-Petition Senior Secured
Party with respect to the Pre-Petition Credit Agreement or the related documents
or transactions.
 
“Financial Asset” has the meaning set forth in Section 8-102(9) of the UCC.
 
“Financial Officer” means, with respect to any Person, the controller, treasurer
or chief financial officer of such Person.
 

 
Exhibit A - 14

--------------------------------------------------------------------------------

 

“Financial Advisor” means Capstone or a replacement appointed by the Required
Lenders.
 
“Financing Documents” means:
 
 
(i)
this Agreement;

 
 
(ii)
the Notes;

 
 
(iii)
the New Mortgages;

 
 
(iv)
the PEC Pledge Agreement;

 
 
(v)
the AMA Consent;

 
 
(vi)
the Sponsor Support Agreement;

 
 
(vii)
the other financing and security agreements, documents and instruments delivered
by the Borrowers or PEC in connection with this Agreement; and

 
 
(viii)
each other document entered into by a Borrower after the date hereof in
accordance with the terms hereof and designated as a Financing Document by the
Administrative Agent.

 
“First Liens” has the meaning set forth in Section 2.09 (b) (Super-Priority
Nature of Obligations).
 
“Fiscal Quarter” means any quarter of a Fiscal Year.
 
“Fiscal Year” means any period of twelve (12) consecutive calendar months ending
on December 31.
 
“Fixtures” has the meaning set forth in Section 9-102 of the UCC.
 
“Funding” means the incurrence of each Revolving Loan made by the Lenders on a
single date.
 
“Funding Date” means, with respect to each Revolving Loan, the date on which
funds are disbursed by the Administrative Agent, on behalf of the Lenders, to
the Borrowers in accordance with Section 2.04 (Funding of Loans).
 
“Funding Default” has the meaning specified in Section 2.07 (Defaulting
Lenders).
 
“Funding Notice” means each request for Funding in the form of Exhibit 2.03
delivered in accordance with Section 2.03 (Notice of Fundings).
 

 
Exhibit A - 15

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“GAAP” means generally accepted accounting principles in effect from time to
time in the United States, applied on a consistent basis.
 
“General Intangibles” has the meaning set forth in Section 9-102 of the UCC.
 
“Goods” has the meaning set forth in Section 9-102 of the UCC.
 
“Governmental Approval” means any authorization, consent, approval, license,
lease, ruling, permit, certification, exemption, filing for registration by or
with any Governmental Authority.
 
“Governmental Authority” means any nation, state, sovereign, or government, any
federal, regional, state, local or political subdivision and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
 
“Grain Supply Agreements” means any agreement relating to the purchase or supply
of grain to any Borrower with a scheduled term in excess of six months and with
payments thereunder expected to be in excess of five hundred thousand Dollars
($500,000), including the Corn Procurement and Handling Agreement between
Pacific Holding and Pacific Ag Products, dated on or about the date of the
Pre-Petition Credit Agreement.
 
“Granting Lender” has the meaning provided in Section 11.03(h) (Assignments).
 
 “Guarantee” means, as to any Person, (a) any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation payable or performable by
another Person (the “primary obligor”) in any manner, whether directly or
indirectly, and including any obligation of such Person, direct or indirect, (i)
to purchase or pay (or advance or supply funds for the purchase or payment of)
such Indebtedness or other obligation, (ii) to purchase or lease property,
securities or services for the purpose of assuring the obligee in respect of
such Indebtedness or other obligation of the payment or performance of such
Indebtedness or other obligation, (iii) to maintain working capital, equity
capital or any other financial statement condition or liquidity or level of
income or cash flow of the primary obligor so as to enable the primary obligor
to pay such Indebtedness or other obligation, or (iv) entered into for the
purpose of assuring in any other manner the obligee in respect of such
Indebtedness or other obligation of the payment or performance thereof or to
protect such obligee against loss in respect thereof (in whole or in part), or
(b) any Lien on any assets of such Person securing any Indebtedness or other
obligation of any other Person, whether or not such Indebtedness or other
obligation is assumed by such Person (or any right, contingent or otherwise, of
any holder of such Indebtedness to obtain any such Lien).
 
“Indebtedness” means, as to any Person at a particular time, without
duplication, all of the following, whether or not included as indebtedness or
liabilities in accordance with GAAP:
 
(a)           all obligations of such Person for or in respect of moneys
borrowed or raised, whether or not for cash by whatever means (including
acceptances, deposits, discounting, letters of credit, factoring, and any other
form of financing which is recognized in accordance with GAAP in such Person’s
financial statements as being in the nature of a borrowing or is treated as
“off-balance sheet” financing);
 

 
Exhibit A - 16

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(b)           all obligations of such Person evidenced by bonds, debentures,
notes, loan agreements or other similar instruments;
 
(c)           all obligations of such Person for the deferred purchase price of
property or services;
 
(d)           all obligations of such Person under conditional sale or other
title retention agreements relating to property or assets acquired by such
Person (even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property or are otherwise limited in recourse);
 
(e)           the maximum amount of all direct or contingent obligations of such
Person arising under letters of credit (including standby and commercial),
bankers’ acceptances, bank guaranties, surety bonds and similar instruments;
 
(f)           all Capitalized Lease Liabilities;
 
(g)           net obligations of such Person under any Swap Contract;
 
(h)           all obligations of such Person to purchase, redeem, retire,
defease or otherwise make any payment in respect of any Equity Interests in such
Person or any other Person or any warrants, rights or options to acquire such
Equity Interests, valued, in the case of redeemable preferred interests, at the
greater of its voluntary or involuntary liquidation preference plus accrued and
unpaid dividends; and
 
(i)           all Guarantees of such Person in respect of any of the foregoing.
 
For all purposes hereof, the Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture (other than a joint venture
that is itself a corporation or limited liability company) in which such Person
is a general partner or a joint venturer, unless such Indebtedness is expressly
made non-recourse to such Person.  The amount of any net obligation under any
Swap Contract on any date shall be deemed to be the Swap Termination Value
thereof as of such date.
 
“Indemnified Taxes” means Taxes other than Excluded Taxes.
 
“Indemnitee” has the meaning provided in Section 11.09 (Indemnification by the
Borrowers).
 
“Information” has the meaning provided in Section 11.18 (Treatment of Certain
Information; Confidentiality).
 
“Initial DIP Budget” means the initial budget reflecting projected cash flow ,
operating disbursements, payroll disbursements, non-operating disbursements and
cash balances, prepared by the Borrowers and attached hereto as Schedule
6.01(n).
 
“Instruments” has the meaning set forth in Section 9-102 of the UCC.
 

 
Exhibit A - 17

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“Insurance Consultant” means Moore-McNeil, LLC, or any replacement insurance
consultant appointed by the Administrative Agent with the prior consent of the
Required Lenders.
 
 “Insurance Proceeds” means all Net Cash Proceeds of any insurance policies
required pursuant to this Agreement or otherwise obtained with respect to any
Borrower, any Plant or the Project that are paid or payable to or for the
account of any Borrower, or the Collateral Agent as loss payee, or additional
insured (other than Business Interruption Insurance Proceeds and proceeds of
insurance policies relating to third party liability).
 
“Interest Payment Date” means, with respect to a Revolving Loan, the last day of
each Interest Period applicable to such Revolving Loan.
 
“Interest Period” means, with respect to any Eurodollar Loan, the period
beginning on (and including) the date on which such Eurodollar Loan is made
pursuant to Section 2.04 (Funding of Loans) or the date on which each successive
interest period for each such Eurodollar Loan is determined pursuant to
Section 3.03 (Interest Rates) and ending on (and including) the day that
numerically corresponds to such date one (1) month thereafter; provided,
however, that (i) if such Interest Period would otherwise end on a day that is
not a Business Day, such Interest Period shall end on the next following
Business Day (unless such next following Business Day is in a different a
calendar month, in which case such Interest Period shall end on the next
preceding Business Day), (ii) any Interest Period that begins on the last
Business Day of a month (or on a day for which there is no numerically
corresponding day in the month at the end of such Interest Period) shall end on
the last Business Day of the month at the end of such Interest Period, (iii) no
Interest Period shall end after any Monthly Payment Date unless the aggregate
outstanding principal amount of Eurodollar Loans having Interest Periods which
end on or prior to such Monthly Payment Date shall be at least equal to the
aggregate principal amount of Eurodollar Loans due and payable on or prior to
such Monthly Payment Date, and (iv) no Interest Period may end later than the
Maturity Date.
 
“Interest Period Notice” means a notice in substantially the form attached
hereto as Exhibit 3.03, executed by an Authorized Officer of the Borrower Agent.
 
 “Interim Order” means the order of the Bankruptcy Court entered in the
Chapter 11 Cases after an interim hearing, substantially in the form attached
hereto as Schedule 2.01 or such other form satisfactory to the Lenders and the
Administrative Agent together with all extensions, modifications, and amendments
thereto that are satisfactory to the Lenders and the Administrative Agent. The
Interim Order shall authorize and approve the transactions contemplated by the
Financing Documents and find that the Lenders are extending credit to the
Debtors in good faith within the meaning of Bankruptcy Code section 364(e) and
shall set forth provisions (i) approving in all respects the Financing
Documents, and authorizing and directing the Debtors to execute and become bound
by the Financing Documents; (ii) modifying the automatic stay to the extent
necessary to permit or effectuate the terms of the Interim Order and the
Financing Documents, including to permit the creation and perfection of the
Collateral Agent’s Liens on the Collateral; (iii) providing for the automatic
relief of such stay to permit the enforcement of the Administrative Agent’s and
the Lenders’ remedies under the DIP Facility, subject to the right of the
Debtors and/or the Committee to re-impose or continue the automatic stay; and
(iv) providing that the Debtors acknowledge (a) the validity and enforceability
of the Pre-Petition Obligations, without defense, offset or counterclaim of any
kind, (b) the validity, perfection and priority of the Liens securing the
Pre-Petition Obligations, and that the Debtors waive any right to challenge or
contest such claims and liens and (c) that the Debtors have no valid claims or
causes of action, whether based in contract, tort or otherwise against the
Pre-Petition Administrative Agent or any Pre-Petition Senior Secured Party with
respect to the Pre-Petition Credit Agreement or the related documents or
transactions.
 

 
Exhibit A - 18

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“Inventory” has the meaning set forth in Section 9-102 of the UCC.
 
“Investment Property” has the meaning set forth in Section 9-102 of the UCC.
 
“Kinergy” means Kinergy Marketing, LLC, an Oregon limited liability company.
 
“Law” means, with respect to any Governmental Authority, any constitutional
provision, law, statute, rule, regulation, ordinance, treaty, order, decree,
judgment, decision, common law, holding, injunction, Governmental Approval or
requirement of such Governmental Authority.  Unless the context clearly requires
otherwise, the term “Law” shall include each of the foregoing (and each
provision thereof) as in effect at the time in question, including any
amendments, supplements, replacements, or other modifications thereto or
thereof, and whether or not in effect as of the date of this Agreement.
 
“Leased Premises” means, with respect to the Boardman Plant, the Premises, as
defined in the Boardman Lease and, with respect to the Stockton Plant, the
Premises, as defined in the Stockton Lease.
 
“Leases” means, collectively, the Boardman Lease and the Stockton Lease.
 
“Lender Assignment Agreement” means a Lender Assignment Agreement, substantially
in the form of Exhibit 11.03.
 
“Lenders” means the persons identified as “Lenders” and listed on the signature
pages of this Agreement and each other Person that acquires the rights and
obligations of a Lender hereunder pursuant to Section 11.03 (Assignments).
 
“LIBOR” means, for any Interest Period for any Eurodollar Loan:
 
(a)           the rate per annum equal to the rate determined by the
Administrative Agent to be the offered rate that appears on the page of the
Telerate Screen (or any successor thereto) that displays an average British
Bankers Association Interest Settlement Rate for deposits in Dollars (for
delivery on the first day of such Interest Period) with a term equivalent to
such Interest Period, determined as of approximately 11:00 a.m. (London time)
two (2) Business Days prior to the first day of such Interest Period; or
 
(b)           if the rate referenced in the preceding clause (a) does not appear
on such page or service or such page or service is not available, the rate per
annum equal to the rate determined by the Administrative Agent to be the offered
rate on such other page or other service that displays an average British
Bankers Association Interest Settlement Rate for deposits in Dollars (for
delivery on the first day of such Interest Period) with a term equivalent to
such Interest Period, determined as of approximately 11:00 a.m. (London time)
two (2) Business Days prior to the first day of such Interest Period; or
 
(c)           if the rates referenced in the preceding clauses (a) and (b) are
not available, the rate per annum determined by the Administrative Agent as the
rate of interest at which deposits in Dollars for delivery on the first day of
such Interest Period in same day funds in the approximate amount of the
Eurodollar Loan being made, continued or converted and with a term equivalent to
such Interest Period would be offered by WestLB to major banks in the London
interbank eurodollar market at their request at approximately 4:00 p.m. (London
time) two (2) Business Days prior to the first day of such Interest Period.
 

 
Exhibit A - 19

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Notwithstanding the foregoing, in no event shall LIBOR be less than a rate per
annum equal to four percent (4%).
 
“Lien” means any security interest, mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, bailment, conditional sales or title retention
agreement, lien (statutory or otherwise), charge against or interest in
property, in each case of any kind, to secure payment of a debt or performance
of an obligation.
 
“Loans” means, collectively, the Revolving Loans and the Roll Up Loans.
 
“Local Account” means any local bank account (other than the Project Accounts)
in the name of any Borrower.
 
“Madera” has the meaning set forth in the Preamble.
 
“Madera Deed of Trust” means the Deed of Trust, Security Agreement, Financing
Statement, Fixture Filing and Assignment of Leases, Rents and Security Deposits,
dated on or about the date of the Pre-Petition Credit Agreement, made by Madera
to Stewart Title Guaranty Company, as trustee, for the benefit of the
Pre-Petition Collateral Agent, as beneficiary.
 
“Madera DG Agreement” the WDG Marketing and Services Agreement, dated March 4,
2005, among Madera, Phoenix Bio Industries and Western Milling, LLC.
 
“Madera Plant” means the ethanol production facility located at Madera,
California, with an expected capacity of approximately forty (40) million
gallons-per-year of denatured ethanol, including the Site on which such facility
is located, and all buildings, structures, improvements, easements and other
property related thereto.
 
“Madera Pledge Agreement” means the Pledge and Security Agreement, dated on or
about the date of the Pre-Petition Credit Agreement, among, Pacific Holding,
Madera and the Pre-Petition Collateral Agent, pursuant to which Pacific Holding
pledges one hundred percent (100%) of the Equity Interests in Madera to the
Pre-Petition Collateral Agent.
 
“Madera Security Agreement” means the Assignment and Security Agreement, dated
on or about the date of the Pre-Petition Credit Agreement, made by Madera in
favor of the Pre-Petition Collateral Agent.
 
“Maintenance Capital Expenses” means all expenditures by the Borrowers for
regularly scheduled (or reasonably anticipated) major maintenance of the
Project, Prudent Ethanol Operating Practice and vendor and supplier requirements
constituting major maintenance (including teardowns, overhauls, capital
improvements, replacements and/or refurbishments of major components of the
Project).
 
“Major Project Party” means each of Delta-T, Pacific Ethanol, the Operator, the
landlord under each Lease, the guarantor guarantying the obligations of any
other Major Project Party and any other Project Party designated as a Major
Project Party by the Administrative Agent and the Borrower Agent.
 

 
Exhibit A - 20

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“Mandatory Prepayment” means a prepayment in accordance with Section 3.08
(Mandatory Prepayment).
 
“Material Adverse Effect” means any event, development or circumstance that has
had or could reasonably be expected to have a material adverse effect in respect
of any Plant or the Project on (i) the business, assets, property, condition
(financial or otherwise) or operations (as applicable) of any Debtor, (ii) the
ability of Pacific Holding or any other Borrower or any Project Party to perform
its material obligations under any Transaction Document to which it is a party,
(iii) creation, perfection or priority of the Liens granted, or purported to be
granted, in favor, or for the benefit, of the Collateral Agent or (iv) the
rights or remedies of any Senior Secured Party under any Financing Document;
provided that clauses (i) or (ii) of this definition shall not be a Material
Adverse Effect with respect to any Borrower if such event, development or
circumstance is an Effect of Bankruptcy or results from the Cold Shutdown of a
Plant.
 
“Materials of Environmental Concern” means chemicals, pollutants, contaminants,
wastes, toxic substances and hazardous substances, any toxic mold, radon gas or
other naturally occurring toxic or hazardous substance or organism and any
material that is regulated in any way, or for which liability is imposed,
pursuant to an Environmental Law.
 
“Maturity Date” means the earliest of (i) six (6) months after the Closing Date;
(ii) the acceleration of all or any portion of the Obligations; (iii) the first
Business Day on which the Interim Order expires by its terms or is terminated,
unless the Final Order shall have been entered and become effective prior
thereto; (iv) the conversion of any of the Chapter 11 Cases to a case under
chapter 7 of the Bankruptcy Code unless otherwise consented to in writing by the
Administrative Agent and the Lenders; (v) the dismissal of any of the Chapter 11
Cases unless otherwise consented to in writing by the Administrative Agent and
the Lenders; and (vi) the effective date of any Debtor’s plan of reorganization
confirmed in the Chapter 11 Cases.
 
“Maximum Rate” has the meaning provided in Section 11.10 (Interest Rate
Limitation).
 
“Monthly Budget Period” means the period of four (4) consecutive weeks starting
on the first day of the period covered by the Initial DIP Budget in effect as of
the date hereof, and each successive period of four (4) consecutive weeks
thereafter starting on the 2nd week of the initial (4) consecutive week period.
 
“Monthly Date” means the last Business Day of each calendar month.
 
“Monthly Payment Date” means the first Business Day of each calendar month.
 
“Monthly Period” means each one (1) month period beginning on (and including)
the day immediately following a Monthly Payment Date and ending on (and
including) the next Monthly Payment Date.
 
“Moody’s” means Moody’s Investors Service Inc., and any successor thereto that
is a nationally recognized rating agency.
 

 
Exhibit A - 21

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“Mortgaged Property” means all real property right, title and interest of each
Borrower that is subject to the relevant New Mortgage in favor of the Collateral
Agent.
 
“Mortgages” means, together, the Madera Deed of Trust, the Boardman Deed of
Trust, the Stockton Deed of Trust and the Burley Deed of Trust.
 
“Multiemployer Plan” means a Plan that is a “multiemployer plan” as defined in
Section 4001(a)(3) of ERISA.
 
“Necessary Project Approvals”  means (i) all material Governmental Approvals
that are required under applicable Law to be obtained by any Borrower in
connection with the construction and operation of a Plant at its full nameplate
capacity as contemplated by the Transaction Documents and (ii) the Governmental
Approvals described in Section 5.03(a) (Governmental Approvals).
 
“Necessary Project Contracts”  means all material contracts, agreements,
instruments, letters, understandings, or other documentation that are required
under to be obtained by any Borrower in connection with the operation of the
applicable Plant as contemplated by the Transaction Documents.
 
“Net Cash Proceeds” means with respect to any receipt of Insurance Proceeds,
Condemnation Proceeds, or Project Document Termination Payments, or any
Disposition of any Property or assets, or the incurrence of any Indebtedness,
including pursuant to section 364(b), 364(c) or 364(d) of the Bankruptcy Code in
violation of the terms of the Final Order or this Agreement, as the case may be,
the aggregate amount of cash received from time to time (whether as initial
consideration or through payment or disposition of deferred consideration) by or
on behalf of such Person for its own account in connection with any such
transaction, after deducting therefrom only:
 
(a)           related expenses, including reasonable and customary brokerage
commissions, underwriting fees and discounts, legal fees, finder’s fees and
other fees, costs and commissions that, in each case, are actually paid or
required to be paid to a Person that is not a Subsidiary or Affiliate of any of
the Borrowers or any of their respective Subsidiaries or Affiliates;
 
(b)           the amount of taxes payable in connection with or as a result of
such transaction that, in each case, are actually paid at the time of receipt of
such cash to the applicable taxation authority or other Governmental Authority
or, so long as such Person is not otherwise indemnified therefor, are reserved
for in accordance with GAAP, as in effect at the time of receipt of such cash,
based upon such Person’s reasonable estimate of such taxes payable. to the
applicable taxation authority or other Governmental Authority; and
 

 
Exhibit A - 22

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(c)           reasonable amounts (without duplication) provided as a reserve, in
accordance with GAAP, against (i) any liabilities under any indemnification
obligations associated with such transaction or (ii) in the case of any
Disposition of any Property or asset, any other liabilities retained by any
Borrower associated with the Property or assets sold in such Disposition;
 
provided that, any and all amounts so deducted by any such Person pursuant to
clauses (a) through (c) of this definition shall be properly attributable to
such transaction or to the Property or asset that is the subject thereof;
provided, further, that if, at the time any of the amounts referred to in
clauses (b) or (c) are actually paid or otherwise satisfied, the reserve
therefor exceeds the amount paid or otherwise satisfied, then the amount of such
excess reserve shall constitute “Net Cash Proceeds” on and as of the date of
such payment or other satisfaction for all purposes of this Agreement and, to
the extent required under Section 3.08 (Mandatory Prepayment), the Borrowers
shall, within three (3) Business Days of such date, prepay the Loans in
accordance with the terms of Section 3.08 (Mandatory Prepayment), in an amount
equal to the amount of such excess reserve.
 
“New Boardman Deed of Trust” means the Leasehold Trust Deed, Security Agreement,
Financing Agreement, Fixture Filing and Assignment of Leases, Rents and Security
Deposits, dated on or about the date hereof, made by Boardman to Stewart Title
Guaranty Company, as trustee, for the benefit of the Collateral Agent, as
beneficiary.
 
“New Burley Deed of Trust” means the Mortgage, Security Agreement, Financing
Statement, Fixture Filing and Assignment of Leases, Rents and Security Deposits,
dated on or about the date hereof, made by Burley to Stewart Title Guaranty
Company, as trustee, for the benefit of the Collateral Agent, as beneficiary.
 
“New Madera Deed of Trust” means the Deed of Trust, Security Agreement,
Financing Statement, Fixture Filing and Assignment of Leases, Rents and Security
Deposits, dated on or about the date hereof, made by Madera to Stewart Title
Guaranty Company, as trustee, for the benefit of the Collateral Agent, as
beneficiary.
 
“New Stockton Deed of Trust” means the Deed of Trust, Security Agreement,
Financing Statement, Fixture Filing and Assignment of Leases, Rents and Security
Deposits, dated on or about the date hereof, made by Stockton to Stewart Title
Guaranty Company, as trustee, for the benefit of the Collateral Agent, as
beneficiary.
 
“Non-Appealable” means, with respect to any specified time period allowing an
appeal of any ruling under any constitutional provision, Law, statute, rule,
regulation, ordinance, treaty, order, decree, judgment, decision, certificate,
holding or injunction that such specified time period has elapsed without an
appeal having been brought.
 
“Non-Voting Lender” means any Lender who (a) is a Defaulting Lender, (b) is also
a Borrower, a Project Party or any Affiliate or Subsidiary thereof or (c) has
sold a participation in the Loan held by it to any such Person.
 
“Non-U.S. Lender” has the meaning set forth in Section 4.07(e) (Taxes - Foreign
Lenders).
 

 
Exhibit A - 23

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“Notes” means the Revolving Notes and the Roll Up Notes, including any
promissory notes issued by any Borrower in connection with assignments of any
Loan of a Lender, in each case substantially in the form of Exhibit 2.05, as
they may be amended, restated, supplemented or otherwise modified from time to
time.
 
“O&M Agreements” means each Operation and Maintenance Agreement between any
Borrower and the Operator.
 
“Obligations” means and includes all loans, advances, debts, liabilities,
Indebtedness and obligations of the Borrowers and PEC, howsoever arising, owed
to the Agents, the Lenders or any other Senior Secured Party of every kind and
description (whether or not evidenced by any note or instrument and whether or
not for the payment of money), direct or indirect (including those acquired by
assumption), absolute or contingent, due or to become due, now existing or
hereafter arising, including the Revolving Loans and the Roll Up Loans and
including interest and fees that accrue after the commencement by or against any
Borrower of any insolvency proceeding naming such Borrower as the debtor in such
proceeding, regardless of whether such interest and fees are allowed claims in
such proceeding, pursuant to the terms of this Agreement or any of the other
Financing Documents, including all principal, interest, fees, charges, expenses,
attorneys’ fees, costs and expenses, accountants’ fees and Consultants’ fees
payable by the Borrowers hereunder or thereunder.
 
“Offtaker” means each counterparty to each DG Offtake Agreement and each Ethanol
Offtake Agreement.
 
“Operating Statement” means an operating statement with respect to each
Plant  substantially in the form of Exhibit 7.03(p) to the Pre-Petition Credit
Agreement.
 
“Operator” means PEC or any successor pursuant to an O&M Agreement (or any
replacement thereof).
 
“Orders” means, collectively, the Final Order and the Interim Order.
 
“Organic Documents” means, with respect to any Person that is a corporation, its
certificate of incorporation, its by-laws and all shareholder agreements, voting
trusts and similar arrangements applicable to any of its authorized shares of
capital stock and, with respect to any Person that is a limited liability
company, its certificate of formation or articles of organization and its
limited liability agreement.
 
“Other Collateral” means any property of a Debtor not (i) included within the
defined terms Accounts, Chattel Paper, Commercial Tort Claims, Documents,
Equipment, Fixtures, General Intangibles, Instruments, Inventory, Investment
Property and Pledged Deposits, including all cash on hand, letter-of-credit
rights, letters of credit, Stock Rights and Deposit Accounts or other deposits
(general or special, time or demand, provisional or final) with any bank or
other financial institution and (ii) excluded from the defined term Collateral.
 
“Pacific Ag Products” means Pacific Ag Products, LLC, a California limited
liability company.
 

 
Exhibit A - 24

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“Pacific Ethanol” means Pacific Ethanol, Inc., a Delaware corporation.
 
“Pacific Ethanol Guarantees” means each guaranty to be made by Pacific Ethanol,
guaranteeing the performance and payment of the obligations of Kinergy or
Pacific Ag Products, as the case may be, under each of the Ethanol Offtake
Agreements, DG Offtake Agreements, and Grain Supply Agreements to which Kinergy
or Pacific Ag Products are party.
 
“Pacific Holding” has the meaning set forth in the Preamble.
 
“Pacific Holding Pledge Agreement” means the Pledge and Security Agreement,
dated on or about the date of the Pre-Petition Credit Agreement, among Pacific
Holding, PEC and the Pre-Petition Collateral Agent.
 
“Pacific Holding Security Agreement” means the Assignment and Security
Agreement, dated on or about the date of the Pre-Petition Credit Agreement, made
by Pacific Holding in favor of the Pre-Petition Collateral Agent.
 
“Participant” has the meaning provided in Section 11.03(d) (Assignments).
 
“Patriot Act” means United States Public Law 107-56, Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism (USA PATRIOT ACT) of 2001, and the rules and regulations promulgated
thereunder from time to time in effect.
 
“PBGC” means the Pension Benefit Guaranty Corporation and any entity succeeding
to any or all of its functions under ERISA.
 
“PE Leases” means, in each case as in effect on the date hereof, (i) the
Equipment Lease Agreement, dated as of October 1, 2007, between Pacific Ethanol
Imperial, LLC and Burley, (ii) the Equipment Lease Agreement, dated as of July
22, 2008, between Pacific Ethanol Imperial, LLC and Boardman, (iii) the
Equipment Lease Agreement, dated as of February 1, 2008, between Pacific Ethanol
Imperial, LLC and Madera and (iv) the Equipment Lease Agreement, dated as of
April 15, 2008, between Pacific Ethanol Imperial, LLC and Stockton.
 
“PEC” means Pacific Ethanol California, Inc., a California corporation.
 
“PEC Pledge Agreement” means the Pledge and Security Agreement, dated on or
about the date hereof, among PEC, Pacific Holding and the Collateral Agent.
 
 “Period Start Date” has the meaning set forth in Section 7.01(l) (DIP Budget).
 
“Permitted Indebtedness” means Indebtedness identified in Section 7.02(a)
(Negative Covenants - Restrictions on Indebtedness).
 
“Permitted Liens” means Liens identified in Section 7.02(b) (Negative Covenants
- Liens).
 

 
Exhibit A - 25

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“Permitted Variance” means, for each Monthly Budget Period, the product of
(x) the aggregate amount of the DIP Budget for such Monthly Budget Period and
(y) 10%.
 
“Person” means any natural person, corporation, partnership, limited liability
company, firm, association, trust, government, governmental agency or any other
entity, whether acting in an individual, fiduciary or other capacity.
 
“Petition Date” has the meaning set forth in the Recitals.
 
“Plan” means an employee pension benefit plan (as defined in Section 3(3) of
ERISA) subject to Title IV of ERISA or Section 412 of the Code that is sponsored
or maintained by any Borrower or any ERISA Affiliate, or in respect of which any
Borrower or any ERISA Affiliate has any obligation to contribution or Liability.
 
“Plants” means, collectively, the Madera Plant, the Boardman Plant, the Stockton
Plant and the Burley Plant.
 
“Pledge Agreements” means, collectively, the Madera Pledge Agreement, the
Boardman Pledge Agreement, the Stockton Pledge Agreement, the Burley Pledge
Agreement  and the Pacific Holding Pledge Agreement.
 
“Pledged Deposits” means all time deposits of money (other than Deposit Accounts
and Instruments), whether or not evidenced by certificates, pledged by any
Debtor as security for any Obligations, and all rights to receive interest on
such deposits.
 
“Post-Petition” means the time period beginning immediately upon the filing of
the Chapter 11 Cases.
 
“Pre-Petition” means the time period ending immediately prior to the filing of
the Chapter 11 Cases.
 
“Pre-Petition Administrative Agent” has the meaning assigned to the term
“Administrative Agent” in the Pre-Petition Credit Agreement.
 
“Pre-Petition Collateral Agent” has the meaning assigned to the term “Collateral
Agent” in the Pre-Petition Credit Agreement.
 
“Pre-Petition Credit Agreement” has the meaning set forth in the Recitals.
 
“Pre-Petition Financing Documents” has the meaning assigned to the term
“Financing Documents” in the Pre-Petition Credit Agreement.
 
“Pre-Petition Obligations” has the meaning assigned to the term “Obligations” in
the Pre-Petition Credit Agreement.
 
“Pre-Petition Senior Secured Parties” has the meaning assigned to the term
“Senior Secured Parties” in the Pre-Petition Credit Agreement.
 

 
Exhibit A - 26

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“Pre-Petition Term Loans” has the meaning assigned to the term “Term Loans” in
the Pre-Petition Credit Agreement.
 
“Priming Liens” has the meaning set forth in Section 2.09 (b) (Super-Priority
Nature of Obligations).
 
“Products” means ethanol, Distillers Grains, carbon dioxide, and any other co
product or by-product produced in connection with the production of ethanol at
the Plants.
 
“Project” means each Plant and all auxiliary and other facilities constructed or
to be constructed by or on behalf of the applicable Borrowers pursuant to the
Project Documents relating to each such Plant or otherwise, together with all
fixtures and improvements thereto and each Site and all other real property,
easements and rights-of-way held by or on behalf of the applicable Borrowers and
all rights to use easements and rights-of-way of others.
 
“Project Accounts” has the meaning provided in the Pre-Petition Credit
Agreement.
 
 “Project Document Guarantees” means each guarantee (by an Affiliate or
otherwise) of the performance of any Project Party’s obligations under a Project
Document, including the Pacific Ethanol Guarantees and any other such guarantee
required as a condition to approval of any Project Document in accordance with
this Agreement.
 
“Project Document Termination Payments” means all Net Cash Proceeds of payments
that are required to be paid to or for the account of any Borrower as a result
of the termination of any Project Document or any Additional Project Document.
 
“Project Documents” means:
 
 
(i)
the Construction Contracts;

 
 
(ii)
the Leases;

 
 
(iii)
the Grain Supply Agreements;

 
 
(iv)
the Asset Management Agreement;

 
 
(v)
the Ethanol Offtake Agreements;

 
 
(vi)
the DG Offtake Agreements;

 
 
(vii)
the O&M Agreements;

 
 
(viii)
the Borrower LLC Agreements;

 
 
(ix)
the Project Document Guarantees;

 
 
(x)
each Additional Project Document; and

 
 
(xi)
any replacement agreement for any of such agreements.

 

 
Exhibit A - 27

--------------------------------------------------------------------------------

 

 
“Project Party” means each Person (other than the Borrowers) who is a party to a
Project Document.
 
“Property” means any right or interest in or to property of any kind whatsoever,
whether real, personal or mixed and whether tangible or intangible, including
without limitation, Equity Interests.
 
“Prudent Ethanol Operating Practice” means those reasonable practices, methods
and acts that (i) are commonly used in the regions where the Plants are located
to manage, operate and maintain ethanol production, distribution, equipment and
associated facilities of the size and type that comprise the Project safely,
reliably, and efficiently and in compliance with applicable Laws, manufacturers’
warranties and manufacturers’ and licensor’s recommendations and guidelines, and
(ii) in the exercise of reasonable judgment, skill, diligence, foresight and
care are expected of an ethanol plant operator, in order to efficiently
accomplish the desired result consistent with safety standards, applicable Laws,
manufacturers’ warranties, manufacturers’ recommendations and, in the case of
the Project, the Project Documents.  Prudent Ethanol Operating Practice does not
necessarily mean one particular practice, method, equipment specifications or
standard in all cases, but is instead intended to encompass a broad range of
acceptable practices, methods, equipment specifications and standards.
 
“RCRA” means the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et
seq.), as amended, and all rules, regulations, standards, guidelines, and
publications issued thereunder.
 
“Recovery Event” means (i) any settlement of or payments in respect of any
insurance policies required pursuant to the Transaction Documents or otherwise
obtained with respect to any Borrower, any Plant or the Project or (ii) any
Event of Taking.
 
“Register” has the meaning set forth in Section 11.03(c) (Assignments).
 
“Related Parties” means, with respect to any Person, such Person’s Affiliates
and the partners, directors, officers, employees, agents and advisors of such
Person and of such Person’s Affiliates.
 
“Removal,” “Remedial” and “Response” actions shall include the types of
activities covered by CERCLA, RCRA, and other comparable Environmental Laws, and
whether the activities are those which might be taken by a Governmental
Authority or those which a Governmental Authority or any other Person might seek
to require of waste generators, handlers, distributors, processors, users,
storers, treaters, owners, operators, transporters, recyclers, reusers,
disposers, or other Persons under “removal,” “remedial,” or other “response”
actions.
 
“Reportable Event” means a “reportable event” within the meaning of
Section 4043(c) of ERISA.
 

 
Exhibit A - 28

--------------------------------------------------------------------------------

 

“Required Lenders” means Lenders (excluding all Non-Voting Lenders) holding in
excess of fifty percent (50.00%) of an amount equal to (x) the then aggregate
outstanding principal amount of the Loans plus (y) the undisbursed amount of the
Aggregate Revolving Loan Commitment plus (z) the undisbursed amount of the
Aggregate Roll Up Loan Commitment (excluding the principal amounts of any Loans
made by, and any Revolving Loan Commitments and Roll Up Loan Commitments of, any
Non-Voting Lenders); provided that the undisbursed Revolving Loan Commitment and
Roll Up Loan Commitment of, and the portion of the outstanding principal amount
of the Loans held by, any Defaulting Lender shall be excluded for purposes of
making a determination of Required Lenders.
 
“Restricted Payments” means any (a) dividend or other distribution (whether in
cash, securities or other property), or any payment (whether in cash, securities
or other property), including any sinking fund or similar deposit, on account of
the purchase, redemption, retirement, defeasance, acquisition, cancellation or
termination of any Equity Interests of any Borrower, or on account of any return
of capital to any holder of any such Equity Interest in, or any other Affiliate
of, any Borrower, or any option, warrant or other right to acquire any such
dividend or other distribution or payment and (b) any payment of any management,
consultancy, administrative, services, or other similar payments to any Person
who owns, directly or indirectly, any Equity Interest in any Borrower, or any
Affiliate of any such Person except to the extent provided in the then-current
DIP Budget.
 
“Revenue Account” means a special, segregated, Dollar-denominated account
established at the Accounts Bank entitled “Amarillo Control - Pacific Ethanol
Holding Co. LLC Revenue Account”, Account No. 128864.
 
“Revolving Lenders” means those Lenders of Revolving Loans, as identified on
Schedule 1.01, and each other Person that acquires the rights and obligations of
any such Lender pursuant to Section 11.03 (Assignments).
 
“Revolving Loan Commitment” means, with respect to each Lender, the commitment
of such Lender to make Revolving Loans, as set forth opposite the name of
such  Lender in Schedule 1.01, as the same may be reduced in accordance with
Section 2.06 (Termination of Commitments).
 
“Revolving Loan Commitment Percentage” means, as to any Lender at any time, the
percentage that such Lender’s Revolving Loan Commitment then constitutes of the
Aggregate Revolving Loan Commitment.
 
“Revolving Loans” has the meaning provided in Section 2.01(a) (Revolving Loans).
 
“Revolving Notes” means the promissory notes of each Borrower evidencing
Revolving Loans.
 
“Roll Up Lenders” means those Lenders of Roll Up Loans, as identified on
Schedule 1.01, and each other Person that acquires the rights and obligations of
any such Lender pursuant to Section 11.03 (Assignments).
 

 
Exhibit A - 29

--------------------------------------------------------------------------------

 

“Roll Up Loan Commitment” means, with respect to each Lender, the commitment of
such Lender to make Roll Up Loans, as set forth opposite the name of
such  Lender in Schedule 1.01, as the same may be reduced in accordance with
Section 2.06 (Termination of Commitments).
 
“Roll Up Loan Commitment Percentage” means, as to any Lender at any time, the
percentage that such Lender’s Roll Up Loan Commitment then constitutes of the
Aggregate Roll Up Loan Commitment.
 
“Roll Up Loans” has the meaning provided in Section 2.02(a) (Roll Up Loans).
 
“Roll Up Notes” means the promissory notes of each Borrower evidencing Roll Up
Loans.
 
“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw Hill
Companies, Inc., and any successor thereto that is a nationally recognized
rating agency.
 
“Section 506(a) Determination”  means a determination under Section 506(a) of
the Bankruptcy Code.
 
“Security Agreements” means, collectively, the Madera Security Agreement, the
Boardman Security Agreement, the Stockton Security Agreement, the Burley
Security Agreement and the Pacific Holding Security Agreement.
 
“Senior Secured Parties” means the Lenders, the Agents and each of their
respective successors, transferees and assigns.
 
“Site” means, with respect to each Plant, those certain parcels described on
Schedule 5.13(a) to the Pre-Petition Credit Agreement with respect to such
Plant.
 
“Sponsor Support Agreement” means the Sponsor Support Agreement, dated on or
about the date of the Pre-Petition Credit Agreement, pursuant to which Pacific
Ethanol agrees to provide support for the Project on the terms and conditions
set forth therein.
 
“SPV” has the meaning provided in Section 11.03(h) (Assignments).
 
“Stock Rights” means any securities, dividends or other distributions and any
other right or property which a Debtor shall receive or shall become entitled to
receive for any reason whatsoever with respect to, in substitution for or in
exchange for any securities or other ownership interests in a corporation,
partnership, joint venture or limited liability company constituting Collateral
and any securities, any right to receive securities and any right to receive
earnings, in which a Debtor now has or hereafter acquires any right, issued by
an issuer of such securities.
 
“Stockton” has the meaning set forth in the Preamble.
 

 
Exhibit A - 30

--------------------------------------------------------------------------------

 

“Stockton Deed of Trust” means the Deed of Trust, Security Agreement, Financing
Statement, Fixture Filing and Assignment of Leases, Rents and Security Deposits,
in substantially the form of Exhibit 6.04(g)-A to the Pre-Petition Credit
Agreement.
 
“Stockton Lease” means the lease between the Stockton Port District and
Stockton.
 
“Stockton Plant” means the ethanol production facility located at Stockton,
California, with a design basis capacity of approximately fifty (50) million
gallons-per-year of denatured ethanol, including the Site on which such facility
is located, and all buildings, structures, improvements, easements and other
property related thereto.
 
“Stockton Pledge Agreement” means the Pledge and Security Agreement, in
substantially the form of Exhibit 6.04(g)-B to the Pre-Petition Credit
Agreement, entered into among Pacific Holding, Stockton and the Pre-Petition
Collateral Agent.
 
“Stockton Security Agreement” means the Assignment and Security Agreement, in
substantially the form of Exhibit 6.04(g)-C to the Pre-Petition Credit Agreement
entered into by Stockton in favor of the Pre-Petition Collateral Agent.
 
“Subsidiary” of any Person means a corporation, partnership, joint venture,
limited liability company or other business entity of which a majority of the
shares of securities or other Equity Interests having ordinary voting power for
the election of directors or other governing body (other than securities or
interests having such power only by reason of the happening of a contingency)
are at the time beneficially owned, or the management of which is otherwise
controlled, directly, or indirectly through one or more intermediaries, or both,
by such Person.
 
“Supporting Obligation” has the meaning set forth in Section 9-102 of the UCC.
 
“Swap Contract” means (a) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions, commodity swaps,
commodity options, forward commodity contracts, equity or equity index swaps or
options, bond or bond price or bond index swaps or options or forward bond or
forward bond price or forward bond index transactions, interest rate options,
forward foreign exchange transactions, cap transactions, floor transactions,
collar transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, (b) any and all transactions of
any kind, and the related confirmations, which are subject to the terms and
conditions of, or governed by, any form of master agreement published by the
International Swaps and Derivatives Association, Inc., any International Foreign
Exchange Master Agreement, or any other master agreement, including any such
obligations or liabilities under any such master agreement and (c) for the
avoidance of doubt, excludes any contract for the physical sale or purchase of
any commodity.
 

 
Exhibit A - 31

--------------------------------------------------------------------------------

 

“Swap Termination Value” means, in respect of any one or more Swap Contracts,
after taking into account the effect of any legally enforceable netting
agreement relating to such Swap Contracts, (a) for any date on or after the date
such Swap Contracts have been closed out and termination value(s) determined in
accordance therewith, such termination value(s), and (b) for any date prior to
the date referenced in clause (a), the amount(s) determined as the
mark-to-market value(s) for such Swap Contracts, in accordance with the terms of
the applicable Swap Contract, or, if no provision is made therein, as determined
based upon one or more mid-market or other readily available quotations provided
by any recognized dealer in such Swap Contracts (which may include a Lender or
any Affiliate of a Lender).
 
“Tax” or “Taxes” means any present or future taxes (including income, gross
receipts, license, payroll, employment, excise, severance, stamp, documentary,
occupation, premium, windfall profits, environmental, capital stock, franchise,
profits, withholding, social security (or similar), unemployment, disability,
real property, personal property, sales, use, transfer, registration,
value-added, ad valorem, alternative or add-on minimum, estimated, or other tax
of any kind whatsoever), levies, imposts, duties, fees or charges (including any
interest, penalty, or addition thereof) imposed by any government or any
governmental agency or instrumentality or any international or multinational
agency or commission.
 
“Tax Return” means all returns, declarations, reports, claims for refund and
information returns and statements of any Person required to be filed with
respect to, or in respect of, any Taxes, including any schedule or attachment
thereto and any amendment thereof.
 
“Termination Event” means (i) a Reportable Event with respect to any ERISA Plan,
(ii) the initiation of any action by any Borrower, any ERISA Affiliate or any
ERISA Plan fiduciary to terminate an ERISA Plan (other than a standard
termination under Section 4041(b) of ERISA) or the treatment of an amendment to
an ERISA Plan as a termination under Section 4041(e) of ERISA, (iii) the
institution of proceedings by the PBGC under Section 4042 of ERISA to terminate
an ERISA Plan or to appoint a trustee to administer any ERISA Plan, (iv) the
withdrawal of any Borrower or any ERISA Affiliate from a Multiemployer Plan
during a plan year in which such Borrower or such ERISA Affiliate was a
“substantial employer” as defined in Section 4001(a)(2) of ERISA or the
cessation of operations which results in the termination of employment of twenty
percent (20%) of Multiemployer Plan participants who are employees of any
Borrower or any ERISA Affiliate, (v) the partial or complete withdrawal of any
Borrower or any ERISA Affiliate from a Multiemployer Plan, or (vi) any Borrower
or any ERISA Affiliate is in default (as defined in Section 4219(c)(5) of ERISA)
with respect to payments to a Multiemployer Plan.
 
“Transaction Documents” means, collectively, the Financing Documents and the
Project Documents.
 
“Unfunded Benefit Liabilities” means, with respect to any ERISA Plan at any
time, the amount (if any) by which (i) the present value of all accrued benefits
calculated on an accumulated benefit obligation basis and based upon the
actuarial assumptions used for accounting purposes (i.e., those determined in
accordance with FASB statement No. 35 and used in preparing the ERISA Plan’s
financial statements) exceeds (ii) the fair market value of all ERISA Plan
assets allocable to such benefits, determined as of the then most recent
actuarial valuation report for such ERISA Plan.
 

 
Exhibit A - 32

--------------------------------------------------------------------------------

 

“Uniform Commercial Code” or “UCC” means the Uniform Commercial Code as in
effect from time to time in the State of New York; provided, however, in the
event that, by reason of mandatory provisions of law, any or all of the
perfection or priority of the security interest in any Collateral is governed by
the Uniform Commercial Code as in effect in a jurisdiction other than the State
of New York, the term “UCC” shall mean the Uniform Commercial Code as in effect
in such other jurisdiction for purposes of provisions relating to such
perfection or priority and for purposes of definitions related to such
provisions.
 
“United States” or “U.S.” means the United States of America, its fifty States
and the District of Columbia.
 
“United States Person” means a “United States person” as defined in
Section 7701(a)(30) of the Code.
 
“WDG” means wet distillers grains produced by the Borrowers at the Plants.
 
“WestLB” means WestLB AG, New York Branch.
 

 
Exhibit A - 33

--------------------------------------------------------------------------------

 

 
 
EXHIBIT 2.03
to DIP Credit Agreement
 
[FORM OF]
FUNDING NOTICE
 
This funding notice (this “Funding Notice”), dated as of
[                                                                           ],
200[ ], is delivered to WESTLB AG, NEW YORK BRANCH, as administrative agent (the
"Administrative Agent”), pursuant to Section 2.03 of the Debtor-In-Possession
Credit Agreement, dated as of May , 2009 (as amended, restated, supplemented or
otherwise modified from time to time, the “DIP Credit Agreement”), by and among
PACIFIC ETHANOL HOLDING CO. LLC, a Delaware limited liability company, PACIFIC
ETHANOL MADERA LLC, a Delaware limited liability company, PACIFIC ETHANOL
COLUMBIA, LLC, a Delaware limited liability company, PACIFIC ETHANOL STOCKTON,
LLC, a Delaware limited liability company and PACIFIC ETHANOL MAGIC VALLEY, LLC,
a Delaware limited liability company, as Borrowers, PACIFIC ETHANOL HOLDING CO.
LLC, as Borrower Agent, each of the Lenders from time to time party hereto,
WESTLB AG, NEW YORK BRANCH, as Administrative Agent for the Lenders, WESTLB AG,
NEW YORK BRANCH, as Collateral Agent for the Senior Secured Parties, and
AMARILLO NATIONAL BANK, as Accounts Bank. This Funding Notice sets forth certain
undertakings of the Borrowers with respect to the transactions contemplated by
the DIP Credit Agreement. Capitalized terms used herein but not otherwise
defined herein shall have the respective meanings set forth in the DIP Credit
Agreement.
 
WHEREAS, the Borrowers wish to propose a Funding under the DIP Credit Agreement
in accordance with Section 2.03 of the DIP Credit Agreement and on the terms and
conditions set forth therein and herein.
 
WHEREAS, to induce the Lenders to extend credit under the DIP Credit Agreement,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Borrowers hereby agree as follows:
 
Section 1. Funding Request. The Borrowers hereby irrevocably propose a Funding
(the “Proposed Funding”) of [ ] Dollars ($[]) requested to be funded as
[Eurodollar Loans] [and [                                             ] Dollars
($[           ]) requested to be funded as] [Base Rate Loans].
 
The Funding Date proposed for such Proposed Funding is [                ],
200[_] (the “Proposed Funding Date”). The Borrowers hereby certify that this
Funding Notice is being delivered to the Administrative Agent not later than
12:00 Noon New York City time five (5) Business Days prior to the Proposed
Funding Date, and that the Proposed Funding Date is a Business Day.
 
[The duration of the initial Interest Period for the Eurodollar Loans requested
as [part of] the Proposed Funding is [                  ] ([          ])
months.]

 
 
2.03 - 1

--------------------------------------------------------------------------------

 

The Borrowers hereby request that on the Proposed Funding Date the
Administrative Agent deliver by wire transfer, in immediately available funds,
the proceeds of such Proposed Funding to the Revenue Account.
 
Section 2. Certifications. The Borrowers certify that as of the Proposed Funding
Date:
 
(i)           each of the conditions to the Proposed Funding set forth in
Article VI of the DIP Credit Agreement have been satisfied;
 
(ii)           the Borrowers are in compliance with all applicable conditions
set forth in Article VI of the DIP Credit Agreement, on and as of the Proposed
Funding Date, before and after giving effect to such Proposed Funding and to the
application of the proceeds therefrom;
 
(iii)           each of the representations and warranties made by each of the
Borrowers in the Financing Documents is true and correct in all material
respects (except with respect to representations and warranties that expressly
refer to an earlier date), before and after giving effect to the Proposed
Funding and to the application of the proceeds of such Proposed Funding;
 
(iv)           no Default or Event of Default has occurred and is continuing or
would occur as a result of the Proposed Funding;
 
(v)           after giving effect to the Loans requested hereunder, the
aggregate principal amount of the Loans will not exceed the Aggregate Commitment
as of the Proposed Funding Date;
 
(vi)           each Borrower has all Necessary Project Approvals required under
the DIP Credit Agreement as of the date of this Funding Notice, and the same are
(i) properly in the name of the appropriate Person, (ii) in full force and
effect and (iii) final and Non-Appealable, except as a result of the Cold
Shutdown of the Madera Plant, the Magic Valley Plant, the Stockton Plant and,
after the Boardman CS Date, the Boardman Plant; and
 
(vii)         all and each of the statements contained in this Funding Notice
are true and
correct.
 
Section 3. Governing Law. This Funding Notice, and the rights and obligations of
the parties under this Agreement shall be governed by, and construed and
interpreted in accordance with, the laws of the State of New York.
 
Section 4. Execution in Counterparts. This Funding Notice may be executed by the
parties hereto in counterparts (and by different parties hereto in different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single document.
 
The undersigned are executing this Funding Notice not in their individual
capacities but in their respective capacities as Authorized Officers of the
Borrowers.
 
[The remainder of this page is intentionally blank. The next page is the
signature page.]
 
 
 

 
2.03 - 2

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the undersigned have caused this Funding Notice to be duly
executed and delivered as of the day and year first written above.
 

 
PACIFIC ETHANOL HOLDING CO, LLC
         
 
By:
/s/ Byron McGregor      
Name: Byron McGregor
     
Title: Vice President
         

 

  PACIFIC ETHANOL MADERA LLC          
 
By:
/s/        Name        Title           

 

 
PACIFIC ETHANOL COLUMBIA, LLC
         
 
By:
/s/        Name        Title           

 

 
PACIFIC ETHANOL STOCKTON, LLC
         
 
By:
/s/        Name        Title           

 

 
PACIFIC ETHANOL MAGIC VALLEY, LLC
         
 
By:
/s/        Name        Title           

 
 
 
2.03 - 3

--------------------------------------------------------------------------------

 

EXHIBIT 2.05
to DIP Credit Agreement
 
 
[FORM OF NOTE]
$[__________]
[__________________]

 
[__________], [____]
 
FOR VALUE RECEIVED, PACIFIC ETHANOL HOLDING CO. LLC, PACIFIC ETHANOL MADERA LLC,
PACIFIC ETHANOL COLUMBIA, LLC, PACIFIC ETHANOL STOCKTON, LLC, AND PACIFIC
ETHANOL MAGIC VALLEY, LLC (collectively, the “Borrowers”), HEREBY JOINTLY AND
SEVERALLY PROMISE TO PAY to the order of [], a [] (the “Lender”), at its offices
located at [                                                ], the principal sum
of [                                                    ] Dollars
($[                                    ]) or, if less, the aggregate unpaid
principal amount of the [Revolving] [Roll Up] Loans made by the Lender to the
Borrowers under the Debtor-In-Possession Credit Agreement, dated as of May ___,
2009 (as amended, restated, supplemented or otherwise modified from time to
time, the “DIP Credit Agreement”) among the Borrowers, jointly and severally,
Pacific Ethanol Holding Co. LLC, as Borrower Agent, each of the Lenders from
time to time party thereto, WESTLB AG, NEW YORK BRANCH, as Administrative Agent
for the Lenders, WESTLB AG, NEW YORK BRANCH, as Collateral Agent for the Senior
Secured Parties, and AMARILLO NATIONAL BANK, as Accounts Bank. Capitalized terms
used herein but not otherwise defined herein shall have the respective meanings
set forth in the DIP Credit Agreement.
 
The Borrowers also jointly and severally promise to pay (i) interest on the
unpaid principal amount hereof from the date hereof until paid in full at the
rates and at the times provided in the DIP Credit Agreement and (ii) fees at
such times and at such rates and amounts as specified in the DIP Credit
Agreement.
 
Principal, interest and fees are payable in lawful money of the United States of
America and in immediately available funds, at the times and in the amounts
provided in the DIP Credit Agreement.
 
This [Revolving][Roll Up] Note is entitled to the benefits and is subject to the
terms and conditions of the DIP Credit Agreement, and is entitled to the
benefits of the security contemplated by the Financing Documents. As provided in
the DIP Credit Agreement, this [Revolving] [Roll Up] Note is subject to
mandatory prepayment and voluntary prepayment, in whole or in part. The
Borrowers jointly and severally agree to make prepayment of principal on the
dates and in the amounts specified in the DIP Credit Agreement.
 
 
 

 
2.05 - 1

--------------------------------------------------------------------------------

 

 
The DIP Credit Agreement, among other things, contains provisions for
acceleration of the maturity hereof upon the happening of certain stated events.
 
The Lender is hereby authorized, at its option, either (i) to endorse on the
schedule attached hereto (or on a continuation of such schedule attached to this
[Revolving] [Roll Up] Note and made a part hereof) an appropriate notation
evidencing the date and amount of the [Revolving] [Roll Up] Loans evidenced
hereby and the date and amount of each principal payment in respect thereof, or
(ii) to record such [Revolving] [Roll Up] Loans and such payments in its books
and records. Such schedule or such books and records, as the case may be, shall
constitute prima facie evidence of the accuracy of the information contained
therein, but in no event shall any failure by the Lender to endorse or record
pursuant to clauses (i) and (ii) be deemed to relieve any Borrower from any of
its obligations.
 
To the extent provided under the DIP Credit Agreement and to the maximum extent
permitted by Law, each Borrower hereby waives presentment, demand, protest or
notice of any kind in connection with this [Revolving] [Roll Up] Note. All
amounts payable under this [Revolving] [Roll Up] Note are payable without relief
from valuation and appraisement Laws.
 
The Borrowers jointly and severally agree to pay all costs and expenses,
including without limitation attorneys' fees, incurred in connection with the
interpretation or enforcement of this [Revolving] [Roll Up] Note, in accordance
with and to the extent provided by the DIP Credit Agreement.

 
 
 
2.05 - 2

--------------------------------------------------------------------------------

 

THIS [REVOLVING][ROLL UP] NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA, WITHOUT
REFERENCE TO CONFLICTS OF LAWS (OTHER THAN SECTION 5-1401 OF THE NEW YORK
GENERAL OBLIGATIONS LAW).
 

 
PACIFIC ETHANOL HOLDING CO. LLC, a Delaware limited liability company
         
 
By:
/s/        Name        Title           

 

 
PACIFIC ETHANOL MADERA LLC, a Delaware limited liability company
         
 
By:
/s/        Name        Title           

 

 
PACIFIC ETHANOL COLUMBIA, LLC, a Delaware limited liability company
         
 
By:
/s/        Name        Title           

 

 
PACIFIC ETHANOL STOCKTON, LLC, a Delaware limited liability company
         
 
By:
/s/        Name        Title           

 

 
PACIFIC ETHANOL MAGIC VALLEY, LLC, a Delaware limited liability company
         
 
By:
/s/        Name        Title           

 

 
2.05 - 3

--------------------------------------------------------------------------------

 

Schedule to
[ Revolving] [Roll Up] Note

LOANS, MATURITIES AND PAYMENTS OF PRINCIPAL

 
 
Date
 
Amount of
Loan
 
 
Maturity of Loan
Amount of
Principal Paid
or Prepaid
 
 
Unpaid Principal Balance
Notation Made By
           

 
 

 
2.05 - 4

--------------------------------------------------------------------------------

 

EXHIBIT 3.03
to DIP Credit Agreement
 
[FORM OF]
INTEREST PERIOD NOTICE
 
WestLB AG, New York Branch,
as Administrative Agent for the Lenders
1211 Avenue of the Americas
NY, New York 10036
Attention: Yolette Salnave / Andrea Bailey
Facsimile: 212-302-7946
Email: ny_agencyservices@westlb.com
 
 
Re:
PACIFIC ETHANOL HOLDING CO. LLC, PACIFIC ETHANOL MADERA LLC, PACIFIC ETHANOL
COLUMBIA, LLC,
PACIFIC ETHANOL STOCKTON, LLC AND PACIFIC ETHANOL MAGIC VALLEY, LLC

 
Ladies and Gentlemen:
 
The undersigned, PACIFIC ETHANOL HOLDING CO. LLC, PACIFIC ETHANOL MADERA LLC,
PACIFIC ETHANOL COLUMBIA, LLC, PACIFIC ETHANOL STOCKTON, LLC, and PACIFIC
ETHANOL MAGIC VALLEY, LLC (collectively, the “Borrowers”), refer to the
Debtor-In-Possession Credit Agreement, dated as of May __, 2009 (as amended,
restated, supplemented or otherwise modified from time to time, the “DIP
Credit Agreement”), by and among the Borrowers, PACIFIC ETHANOL HOLDING CO. LLC,
as Borrower Agent, each of the Lenders from time to time party thereto, WESTLB
AG, NEW YORK BRANCH, as Administrative Agent for the Lenders, WESTLB AG, NEW
YORK BRANCH, as Collateral Agent for the Senior Secured Parties, and AMARILLO
NATIONAL BANK, as Accounts Bank. Capitalized terms used herein but not otherwise
defined herein shall have the respective meanings set forth in the DIP Credit
Agreement.
 
The Borrowers hereby deliver to the Administrative Agent this irrevocable notice
pursuant to Section 3.03 of the DIP Credit Agreement and irrevocably request the
duration set forth below for the immediately succeeding Interest Period for the
Loans identified herein.
 
[The Borrowers hereby elect to continue Eurodollar Loans as Eurodollar Loans for
the next Interest Period applicable to such continued Eurodollar Loans] [[,] to
convert Base Rate Loans to Eurodollar Loans at the end of the current Monthly
Period [and] [to convert Eurodollar Loans to Base Rate Loans at the end of the
current Interest Period for such Eurodollar Loans], in each case as set forth on
Schedule 1 hereto.
 
The Borrowers hereby certify that after giving effect to the immediately
succeeding Interest Periods set forth on Schedule 1, there will be no more than
eight (8) separate Eurodollar Loans outstanding.
 
In connection herewith, the Borrowers hereby further certify that no Event of
Default has occurred and is continuing. This Interest Period Notice is being
delivered on or before 12:00 noon, New York City time at least four (4) Business
Days prior to the end of each Interest Period set forth on Schedule 1 hereto.

 
The remainder of this page is intentionally blank. The next page is the
signature page.]

 

 
 

 
 

 
3.03 - 1

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IN WITNESS WHEREOF, the undersigned have caused this Interest Period Notice to
be duly executed by an Authorized Officer as of the date first above written.
 

 
PACIFIC ETHANOL HOLDING CO, LLC
         
 
By:
/s/        Name        Title           

 

 
PACIFIC ETHANOL MADERA, LLC
         
 
By:
/s/        Name        Title           

 

 
PACIFIC ETHANOL COLUMBIA, LLC
         
 
By:
/s/        Name        Title           

 

 
PACIFIC ETHANOL MAGIC VALLEY, LLC
         
 
By:
/s/        Name        Title           

 
 
 
 
 
3.03 - 2

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Schedule 1
to Interest Period Notice
 
LOAN
(specify loan type, including whether loan is Base Rate Loan or Eurodollar Loan,
and tranche)
PRINCIPAL
AMOUNT
CURRENT INTEREST
PERIOD
DURATION
(for Eurodollar
Loans only)
CURRENT
INTEREST
PERIOD OR
MONTHLY
PERIOD ENDS ON
DURATION OF
IMMEDIATELY
SUCCEEDING
INTEREST
PERIOD1
(for Eurodollar
Loans only)
 
$
       
$
     

 
 
 
 
 
 
 

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1  The duration of such Interest Period shall be one (1) month.
 
 

 
3.03 - 3

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EXHIBIT 4.07
to DIP Credit Agreement
 
FORM OF NON-U.S. LENDER STATEMENT
 
Reference is made to the Debtor-In-Possession Credit Agreement (as amended,
modified or otherwise supplemented from time to time in accordance with its
terms, the “DIP Credit Agreement”), dated as of May [  ], 2009, by and among
PACIFIC ETHANOL HOLDING CO. LLC, a Delaware limited liability company, PACIFIC
ETHANOL MADERA LLC, a Delaware limited liability company, PACIFIC ETHANOL
COLUMBIA, LLC, a Delaware limited liability company, PACIFIC ETHANOL STOCKTON,
LLC, a Delaware limited liability company and PACIFIC ETHANOL MAGIC VALLEY, LLC,
a Delaware limited liability company, as Borrowers, PACIFIC ETHANOL HOLDING CO.
LLC, as Borrower Agent, each of the Lenders from time to time party thereto,
WESTLB AG, NEW YORK BRANCH, as Administrative Agent for the Lenders, WESTLB AG,
NEW YORK BRANCH, as Collateral Agent for the Senior Secured Parties, and
AMARILLO NATIONAL BANK, as Accounts Bank. Capitalized terms used herein but not
otherwise defined herein shall have the respective meanings set forth in the DIP
Credit Agreement.
 
The undersigned Non-U.S. Lender hereby certifies as follows:
 
1.      The Non-U.S. Lender is the beneficial owner of any and all interests in
the Obligations that it holds.
 
2.      The Non-U.S. Lender is not a “United States person” as defined in Code
Section 7701(a)(30). Code Section 7701(a)(30) defines a United States person as
a citizen or resident of the United States; a domestic partnership; a domestic
corporation; an estate (other than a foreign estate); and a trust if a court
within the United States is able to exercise primary supervision over the
administration of the trust and one or more United States persons have the
authority to control all substantial decisions of the trust.
 
3.      The Non-U.S. Lender is not a “bank” described in Section 881(c)(3)(A) of
the Code.
 
4.      The Non-U.S. Lender undertakes to notify the Borrowers and
Administrative Agent promptly upon the obsolescence or invalidity of this
Non-U.S. Lender Statement if, following the execution date hereof, any statement
herein ceases to be true at any time while the Non-U.S. Lender is entitled to
payments of interest, principal or any other amounts payable by the Borrowers
under the Financing Documents.
 
The undersigned Non-U.S. Lender acknowledges that this Non-U.S. Lender Statement
is executed and delivered in order to substantiate its entitlement to an
exemption from U.S. withholding tax under the Code. Further, the undersigned
individual certifies that it has the requisite authority to execute and deliver
this document for the Non-U.S. Lender.
 

 
[NAME OF NON-U.S. LENDER]
         
By:
/s/       
Print Name:
     
Title:
      Date:  

 
4.07 - 1

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EXHIBIT 11.03
to DIP Credit Agreement
[FORM OF]
LENDER ASSIGNMENT AGREEMENT
 
This LENDER ASSIGNMENT AGREEMENT (this “Agreement”), dated as of
[                  ], is by and between [                ] (the “Assignor”) and
[____________] (the “Assignee”).
 
RECITALS
 
WHEREAS, the Assignor is party to the Debtor-In-Possession Credit Agreement (as
amended, restated, supplemented or otherwise modified from time to time, the
“DIP Credit  Agreement”), dated as of May ___, 2009, by and among PACIFIC
ETHANOL HOLDING CO. LLC, a Delaware limited liability company, PACIFIC ETHANOL
MADERA LLC, a Delaware limited liability company, PACIFIC ETHANOL COLUMBIA, LLC,
a Delaware limited liability company, PACIFIC ETHANOL STOCKTON, LLC, a Delaware
limited liability company and PACIFIC ETHANOL MAGIC VALLEY, LLC, a Delaware
limited liability company, as Borrowers, PACIFIC ETHANOL HOLDING CO. LLC, as
Borrower Agent, each of the Lenders from time to time party hereto, WESTLB AG,
NEW YORK BRANCH, as Administrative Agent for the Lenders, WESTLB AG, NEW YORK
BRANCH, as Collateral Agent for the Senior Secured Parties, and AMARILLO
NATIONAL BANK, as Accounts Bank;
 
WHEREAS, Assignor desires to assign certain of its interests under the DIP
Credit Agreement to Assignee in accordance with Section 11.03 thereof;
 
WHEREAS, as provided under the DIP Credit Agreement, Assignor is a Lender of
[Revolving Loans] [Roll Up Loans] and, as such, as of the date hereof has the
outstanding Commitments and has disbursed the outstanding Loans as set forth in
Annex A hereto;
 
WHEREAS, Assignor proposes to sell, assign and transfer to the Assignee, and the
Assignee proposes to accept and assume from the Assignor, a [   ] percent ([    
 ]%) interest in all of the rights and obligations of the Assignor under the DIP
Credit Agreement and the other Financing Documents (which includes the
outstanding Loans disbursed by and owing to, and the undisbursed commitments of,
Assignor), all on the terms and subject to the conditions of this Agreement
(such interest in such rights and obligations being hereinafter referred to as
the “Assigned Interest”); and
 
WHEREAS, after giving effect to the assignment and assumption under this
agreement, the respective Loans and Commitments of Assignor and Assignee shall
be in the amounts set forth on Annex A.
 
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

 
 
11.03 - 1

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Section 1.  Definitions. All capitalized terms not otherwise defined herein
shall have the respective meanings set forth in the DIP Credit Agreement.
 
Section 2.  Assignment.
 
(a)       As of the effective date set forth on the signature page to this
Agreement (the “Effective Date”), subject to and in accordance with the DIP
Credit Agreement, the Assignor irrevocably sells, transfers, conveys and
assigns, without recourse, representation or warranty (except as expressly set
forth herein), to Assignee, and the Assignee irrevocably purchases from the
Assignor, the Assigned Interest, which shall include (i) all of Assignor’s
rights and obligations in its capacity as a Lender with respect to the Assigned
Interest under the DIP Credit Agreement, each other Financing Document, and any
other documents or instruments delivered pursuant thereto or in connection
therewith to the extent related to the Assigned Interest and (ii) to the extent
permitted to be assigned under applicable Law, all claims, suits, causes of
action and any other right of the Assignor (in its capacity as a Lender), to the
extent related to the Assigned Interest, against any Person, whether known or
unknown, arising under or in connection with the DIP Credit Agreement, each
other Financing Document, and any other documents or instruments delivered
pursuant thereto or the loan transactions governed thereby or in any way based
on or related to any of the foregoing, including, but not limited to, contract
claims, tort claims, malpractice claims, statutory claims and all other claims
at law or in equity (the foregoing rights, obligations and interests,
collectively, the “Assigned Rights”).
 
(b)       Upon acceptance and recording of the assignment and assumption made
pursuant to this Agreement by the Administrative Agent, from and after the
Effective Date, the Administrative Agent shall make all payments in respect of
the Assigned Interest and the Assigned Rights (including all payments of
principal, interest, fees and other amounts) to the Assignor for amounts that
have accrued prior to the Effective Date and to the Assignee for amounts that
have accrued from and including the Effective Date. The Assignor and the
Assignee shall make all appropriate adjustments in payments by the
Administrative Agent for periods prior to the Effective Date or with respect to
the making of this assignment directly between themselves. Each of the Assignor
and the Assignee agrees that if it receives any amount under the DIP Credit
Agreement or any other Financing Document that is for the account of the other,
it shall hold the same for the other to the extent of the other’s interest
therein and shall pay promptly the same to the other.
 
Section 3. Payments. [(a) ] As consideration for the sale, assignment and
transfer contemplated in Section 2 hereof, the Assignee shall pay to the
Assignor, on the Effective Date, in the lawful currency of the United States and
in immediately available funds, an amount equal to
[                               ] Dollars ($[                ]), without
set-off, counterclaim or deduction of any kind. [(b) As a condition to the
Effective Date, Assignee shall pay to the Administrative Agent in the lawful
currency of the United States and in immediately available funds the processing
and recordation fee of two thousand five hundred Dollars ($2,500), without
set-off, counterclaim or deduction of any kind.]
 

 
11.03 - 2

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Section 4. Representations, Warranties and Undertakings.
 
(a)       The Assignor (i) represents and warrants that (A) it is the legal and
beneficial owner of the Assigned Interest and such Assigned Interest is free and
clear of any Lien or adverse claim and (B) it has full power and authority, and
has taken all action necessary, to execute and deliver this Agreement and to
consummate the transactions contemplated hereby; and (ii) makes no
representation or warranty and assumes no responsibility with respect to (A) any
statements, warranties or representations made in or in connection with the DIP
Credit Agreement or the other Financing Documents or the execution, legality,
validity, enforceability or genuineness, or sufficiency of value of the DIP
Credit Agreement, the other Financing Documents, or any other instrument or
document furnished pursuant thereto or in connection therewith or (B) the
financial condition of any Borrower or the performance or observance by any
Borrower or any other Person of any of its obligations under the DIP Credit
Agreement, any other Financing Document, or any other instrument or document
furnished pursuant thereto or in connection therewith.
 
(b)       The Assignee (i) represents and warrants that it (A) has full power
and authority, and has taken all action necessary, to execute and deliver this
Agreement and to consummate the transactions contemplated hereby and to become a
Lender under the DIP Credit Agreement and the other Financing Documents, and (B)
meets all requirements of an Eligible Assignee, (ii) acknowledges and confirms
that it has received a copy of the DIP Credit Agreement, each other Financing
Document and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into this Agreement and to
purchase the Assigned Interest and assume the Assigned Rights, on the basis of
which it has made such analysis and decision independently and without reliance
on the Administrative Agent or any other Senior Secured Party, (iii) agrees that
it will, independently and without reliance upon the Administrative Agent, any
Borrower, or any other Senior Secured Party and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the DIP Credit Agreement
or any other Financing Document, (iv) appoints and authorizes each Agent to take
such action as agent on its behalf and to exercise such powers under the DIP
Credit Agreement or the other Financing Documents as are delegated to such Agent
by the terms thereof, together with such powers as are reasonably incidental
thereto and (v) will perform in accordance with their terms all of the
obligations that by the terms of the Financing Documents are required to be
performed by it as a Lender. The Assignee further confirms and agrees that in
becoming a Lender and in making its Loans under the DIP Credit Agreement, such
actions have and will be made without recourse to, or representation or
warranty, by any Senior Secured Party.
 
(c)       The Assignee further agrees to furnish the tax form required by
Section 4.07(e) (if so required) of the DIP Credit Agreement no later than the
Effective Date.
 
Section 5. Effectiveness.
 
(a)       The effectiveness of the sale, assignment and transfer hereunder is
subject to (i) the due execution and delivery of this Agreement by the Assignor
and the Assignee, (ii) the receipt by the Assignor of the payment provided for
in Section 3(a) hereof, (iii) consent by the Administrative Agent to this
Agreement and the assignment contemplated hereby, (iv) the receipt by the
Administrative Agent of the processing and recordation fee provided for in
Section 3(b) hereof, and (v) the registration of such assignment by the
Administrative Agent in the Register in accordance with Section 11.03 of the DIP
Credit Agreement.
 

 
11.03 - 3

--------------------------------------------------------------------------------

 

 
(b)       Simultaneously with the execution and delivery by the parties hereto
of this Agreement to the Administrative Agent for its recording in the Register,
the Assignor shall deliver its Note (if any) to the Administrative Agent and may
request that new Notes be executed and delivered to [the Assignor and] the
Assignee and reflecting [the respective amounts of the reduced undisbursed
Commitment and outstanding principal of Assignor and] the assigned and assumed
outstanding principal and undisbursed Commitment of the Assignee (plus, if the
Assignee is already a Lender, the amount of its outstanding principal and
undisbursed Commitment immediately prior to the assignment effected hereby). Any
such new Note shall carry the rights to unpaid accrued interest that were
carried by any applicable superseded Note(s) such that no loss of interest shall
result therefrom. Any applicable new Note executed and delivered in accordance
with the foregoing shall have set forth thereon a legend substantially in the
following form:
 
“This Note is issued in replacement of [describe replaced note]  and,
notwithstanding the date of this Note, this Note carries all of the
rights to unpaid interest that were carried by such replaced Note, such that no
loss of interest shall result from any such replacement.”
 
If the Assignee is already a Lender, it shall (promptly following its receipt of
such new Note payable to it) return to the Borrower the prior Note, if any, held
by it.
 
(c)       Except as otherwise provided in the DIP Credit Agreement, effective as
of the Effective Date:
 
(i)      the Assignee shall be deemed automatically to have become a party to,
and the Assignee agrees that it will be bound by the terms and conditions set
forth in, the DIP Credit Agreement, and shall have all the rights and
obligations of a “Lender” under the DIP Credit Agreement and the other Financing
Documents as if it were an original signatory thereto or an original Lender
thereunder with respect to the Assigned Interest and the Assigned Rights; and
 
(ii)       the Assignor shall relinquish its rights (but shall continue to be
entitled to the benefits of Sections 11.07 (Costs and Expenses) and 11.09
(Indemnification by the Borrowers) of the DIP Credit Agreement) and be released
from its obligations under the DIP Credit Agreement and the other Financing
Documents to the extent specified herein.
 
Section 6. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, United States of America.
 
Section 7. Counterparts. This Agreement 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 to be an original and all
of which taken together shall constitute one and the same agreement. Delivery of
an executed counterpart of this Agreement by telecopy or portable document
format (“pdf”) shall be effective as delivery of a manually executed counterpart
of this Agreement.
 

 
11.03 - 4

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Section 8. Further Assurances. The Assignor and the Assignee hereby agree to
execute and deliver such other instruments, and take such other action, as
either party or the Administrative Agent may reasonably request in connection
with the transactions contemplated by this Agreement including, without
limitation, the delivery of any notices to the Borrowers or the Agents that may
be required in connection with the assignment contemplated hereby.
 
Section 9. Binding Effect; Amendment. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns,
subject, however, to the provisions of the DIP Credit Agreement. No provision of
this Agreement may be amended, waived or otherwise modified except by an
instrument in writing signed by each party hereto and by the Administrative
Agent.
 
Section 10. Administrative Agent Enforcement. The Administrative Agent shall be
entitled to rely upon and enforce this Agreement against the Assignor and the
Assignee in all respects.
 
[The remainder of this page is intentionally blank. The next page is the
signature page.]

 
 
 

 
11.03 - 5

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IN WITNESS WHEREOF, the Assignor and the Assignee have caused this Lender
Assignment Agreement to be executed by their duly authorized officers.
 
The effective date for this Agreement is [the date this Agreement is
acknowledged and accepted by the Administrative Agent] [ , 20[ ] (the
“Trade Date”)].
 

 
[ASSIGNOR]
         
 
By:
/s/        Name        Title           

 

 
[ASSIGNEE]
         
 
By:
/s/        Name        Title           

 
Accepted and Acknowledged this ___ day of , 20___
 
WESTLB AG, NEW YORK BRANCH,
  as Administrative Agent
 
By:
/s/      Name      Title         

 
By:
/s/      Name      Title         

 

 
11.03 - 6

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Annex A
to Lender Assignment Agreement
 
[Note: Include only those Loans that Assignor has an interest in.]
 
 
 
 
Loan
Assignor’s
Undisbursed
Commitment
Pre-Assignment
Assignor’s
Outstanding
Loans
Pre-Assignment
Percentage
(of Assignor’s
interests)
Assigned
Assignor’s
Undisbursed
Commitment
Post-Assignment
Assignor’s
Outstanding
Loans
Post-Assignment
Assignee’s
Undisbursed
Commitment
Post-Assignment*
Assignee’s
Outstanding
Loans
Post-Assignment*
Revolving Loans
$
$
%
$
$
$
$
Roll Up Loans
$
$
%
$
$
$
$

 
 

--------------------------------------------------------------------------------

* If Assignee is already a Lender, this number should be calculated taking into
account only the Commitments and Loans assumed by Assignee pursuant to this
Agreement.

 
Annex A 

--------------------------------------------------------------------------------