Credit Agreement


    Exhibit
      10.1

     

    
      
        

      



     

    CREDIT
      AGREEMENT

     

    dated
      as of February 27, 2007

     

    among

     

    PACIFIC
      ETHANOL HOLDING CO. LLC,

    PACIFIC
      ETHANOL MADERA LLC, 

    PACIFIC
      ETHANOL COLUMBIA, LLC, 

    PACIFIC
      ETHANOL STOCKTON, LLC, 

    PACIFIC
      ETHANOL IMPERIAL, LLC, and

    PACIFIC
      ETHANOL MAGIC VALLEY, LLC,

    as
      Borrowers,

     

    PACIFIC
      ETHANOL HOLDING CO. LLC, 

    as
      Borrowers' 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,

     

    UNION
      BANK OF CALIFORNIA, N.A.,

    as
      Accounts Bank,

     

    WESTLB
      AG, NEW YORK BRANCH,

    as
      Lead
      Arranger and Sole Bookrunner, 

     

    MIZUHO
      CORPORATE BANK, LTD.,

    as
      Lead Arranger and Co-Syndication Agent,

     

    CIT
      SECURITIES LLC, 

    as
      Lead Arranger and Co-Syndication Agent,

     

    COÖPERATIEVE
      CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., 

    "RABOBANK
      NEDERLAND", NEW YORK BRANCH,

    as
      Lead Arranger and Co-Documentation Agent,

     

    and

     

    BANCO
      SANTANDER CENTRAL HISPANO S.A, NEW YORK BRANCH,

    as
      Lead Arranger and Co-Documentation Agent

     

     

     

    
      
        
          
             

          

          
          

        

        
          
          

          
            

          

        

        
          
          

          
          

        

      

    

    


    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

              	
                4

              
	 	 	 
	
                Section
                  2.01

              	
                Construction
                  Loans

              	
                4

              
	
                Section
                  2.02

              	
                Term
                  Loans

              	
                7

              
	
                Section
                  2.03

              	
                Working
                  Capital Loans

              	
                8

              
	
                Section
                  2.04

              	
                Letters
                  of Credit

              	
                9

              
	
                Section
                  2.05

              	
                Notice
                  of Fundings

              	
                11

              
	
                Section
                  2.06

              	
                Funding
                  of Loans

              	
                12

              
	
                Section
                  2.07

              	
                Evidence
                  of Indebtedness

              	
                15

              
	
                Section
                  2.08

              	
                Termination
                  or Reduction of Commitments

              	
                16

              
	
                Section
                  2.09

              	
                Tranche
                  Reallocation

              	
                17

              
	
                Section
                  2.10

              	
                Additional
                  Greenfield Plant

              	
                18

              
	 	 	 
	
                ARTICLE
                  III            
                  REPAYMENTS,
                  PREPAYMENTS, INTEREST AND FEES

              	
                19

              
	 	 	 
	
                Section
                  3.01

              	
                Repayment
                  of Construction Loan Fundings

              	
                19

              
	
                Section
                  3.02

              	
                Repayment
                  of Term Loan Fundings

              	
                19

              
	
                Section
                  3.03

              	
                Repayment
                  of Working Capital Loan Fundings

              	
                19

              
	
                Section
                  3.04

              	
                Interest
                  Payment Dates

              	
                20

              
	
                Section
                  3.05

              	
                Interest
                  Rates

              	
                20

              
	
                Section
                  3.06

              	
                Default
                  Interest Rate

              	
                21

              
	
                Section
                  3.07

              	
                Interest
                  Rate Determination

              	
                22

              
	
                Section
                  3.08

              	
                Computation
                  of Interest and Fees

              	
                22

              
	
                Section
                  3.09

              	
                Optional
                  Prepayment

              	
                22

              
	
                Section
                  3.10

              	
                Mandatory
                  Prepayment

              	
                24

              
	
                Section
                  3.11

              	
                Time
                  and Place of Payments

              	
                26

              
	
                Section
                  3.12

              	
                Fundings
                  and Payments Generally

              	
                27

              
	
                Section
                  3.13

              	
                Fees

              	
                27

              
	
                Section
                  3.14

              	
                Pro
                  Rata Treatment

              	
                28

              
	
                Section
                  3.15

              	
                Sharing
                  of Payments

              	
                29

              
	
                Section
                  3.16

              	
                Termination
                  of Interest Rate Protection Agreement in Connection with Any
                  Prepayment

              	
                30

              
	 	 	 


      

       

      
        
          
          

        

        
          ii

          
            

          

        

        
          
          

        

      

       

       

      
        	
                ARTICLE
                  IV            
                  EURODOLLAR
                  RATE AND TAX PROVISIONS

              	
                30

              
	 	 	 
	
                Section
                  4.01

              	
                Eurodollar
                  Rate Lending Unlawful

              	
                30

              
	
                Section
                  4.02

              	
                Inability
                  to Determine Eurodollar Rates

              	
                31

              
	
                Section
                  4.03

              	
                Increased
                  Eurodollar Loan Costs

              	
                31

              
	
                Section
                  4.04

              	
                Obligation
                  to Mitigate

              	
                32

              
	
                Section
                  4.05

              	
                Funding
                  Losses

              	
                33

              
	
                Section
                  4.06

              	
                Increased
                  Capital Costs

              	
                33

              
	
                Section
                  4.07

              	
                Taxes.

              	
                33

              
	 	 	 
	
                ARTICLE
                  V             
                  REPRESENTATIONS
                  AND WARRANTIES

              	
                35

              
	 	 	 
	
                Section
                  5.01

              	
                Organization;
                  Power and Compliance with Law

              	
                35

              
	
                Section
                  5.02

              	
                Due
                  Authorization; Non-Contravention

              	
                35

              
	
                Section
                  5.03

              	
                Governmental
                  Approvals

              	
                36

              
	
                Section
                  5.04

              	
                Investment
                  Company Act

              	
                38

              
	
                Section
                  5.05

              	
                Validity
                  of Financing Documents

              	
                38

              
	
                Section
                  5.06

              	
                Financial
                  Information

              	
                38

              
	
                Section
                  5.07

              	
                No
                  Material Adverse Effect

              	
                39

              
	
                Section
                  5.08

              	
                Project
                  Compliance

              	
                39

              
	
                Section
                  5.09

              	
                Litigation

              	
                39

              
	
                Section
                  5.10

              	
                Sole
                  Purpose Nature; Business

              	
                39

              
	
                Section
                  5.11

              	
                Contracts

              	
                39

              
	
                Section
                  5.12

              	
                Collateral

              	
                41

              
	
                Section
                  5.13

              	
                Ownership
                  of Properties

              	
                43

              
	
                Section
                  5.14

              	
                Taxes

              	
                44

              
	
                Section
                  5.15

              	
                Patents,
                  Trademarks, Etc

              	
                45

              
	
                Section
                  5.16

              	
                ERISA
                  Plans

              	
                45

              
	
                Section
                  5.17

              	
                Property
                  Rights, Utilities, Supplies Etc

              	
                45

              
	
                Section
                  5.18

              	
                No
                  Defaults

              	
                45

              
	
                Section
                  5.19

              	
                Environmental
                  Warranties

              	
                45

              
	
                Section
                  5.20

              	
                Regulations
                  T, U and X

              	
                47

              
	
                Section
                  5.21

              	
                Accuracy
                  of Information

              	
                47

              
	
                Section
                  5.22

              	
                Indebtedness

              	
                49

              
	
                Section
                  5.23

              	
                Separateness

              	
                49

              
	
                Section
                  5.24

              	
                Required
                  LLC Provisions

              	
                49

              
	
                Section
                  5.25

              	
                Subsidiaries

              	
                50

              
	
                Section
                  5.26

              	
                Foreign
                  Assets Control Regulations, Etc

              	
                50

              
	
                Section
                  5.27

              	
                Employment
                  Matters

              	
                51

              
	
                Section
                  5.28

              	
                Solvency

              	
                51

              
	
                Section
                  5.29

              	
                Legal
                  Name and Place of Business

              	
                51

              
	
                Section
                  5.30

              	
                No
                  Brokers

              	
                52

              
	
                Section
                  5.31

              	
                Insurance

              	
                52

              
	
                Section
                  5.32

              	
                Accounts

              	
                52

              


      

       

      
        
          
          

        

        
          iii

          
            

          

        

        
          
          

        

      

       

      
        	
                ARTICLE
                  VI            
                  CONDITIONS
                  PRECEDENT

              	
                52

              
	 	 	 
	
                Section
                  6.01

              	
                Conditions
                  to Closing

              	
                52

              
	
                Section
                  6.02

              	
                Conditions
                  to Madera Funding

              	
                61

              
	
                Section
                  6.03

              	
                Conditions
                  to Boardman Funding

              	
                64

              
	
                Section
                  6.04

              	
                Conditions
                  to First Funding for Each Greenfield Plant

              	
                68

              
	
                Section
                  6.05

              	
                Conditions
                  to All Greenfield Plant Construction Loan Fundings

              	
                76

              
	
                Section
                  6.06

              	
                Conditions
                  to Greenfield Plant Top-Up Funding

              	
                78

              
	
                Section
                  6.07

              	
                Conditions
                  to Term Loan Funding

              	
                79

              
	
                Section
                  6.08

              	
                Conditions
                  to All Fundings

              	
                80

              
	 	 	 
	
                ARTICLE
                  VII           
                  COVENANTS

              	
                83

              
	 	 	 
	
                Section
                  7.01

              	
                Affirmative
                  Covenants

              	
                83

              
	
                Section
                  7.02

              	
                Negative
                  Covenants

              	
                96

              
	
                Section
                  7.03

              	
                Reporting
                  Requirements

              	
                107

              
	
                Section
                  7.04

              	
                Release
                  of Borrower

              	
                113

              
	 	 	 
	
                ARTICLE
                  VIII          PROJECT
                  ACCOUNTS

              	
                114

              
	 	 	 
	
                Section
                  8.01

              	
                Establishment
                  of Project Accounts

              	
                114

              
	
                Section
                  8.02

              	
                Deposits
                  into and Withdrawals from Project Accounts

              	
                116

              
	
                Section
                  8.03

              	
                Escrow
                  Account

              	
                118

              
	
                Section
                  8.04

              	
                Construction
                  Holding Account

              	
                119

              
	
                Section
                  8.05

              	
                Stockton
                  Construction Account

              	
                120

              
	
                Section
                  8.06

              	
                Brawley
                  Construction Account

              	
                121

              
	
                Section
                  8.07

              	
                Burley
                  Construction Account

              	
                123

              
	
                Section
                  8.08

              	
                Revenue
                  Account

              	
                125

              
	
                Section
                  8.09

              	
                Operating
                  Account

              	
                132

              
	
                Section
                  8.10

              	
                Maintenance
                  Capital Expense Account

              	
                133

              
	
                Section
                  8.11

              	
                Working
                  Capital Reserve Account

              	
                133

              
	
                Section
                  8.12

              	
                Debt
                  Service Reserve Account

              	
                135

              
	
                Section
                  8.13

              	
                Prepayment
                  Holding Account

              	
                138

              
	
                Section
                  8.14

              	
                Insurance
                  and Condemnation Proceeds Accounts

              	
                138

              
	
                Section
                  8.15

              	
                Extraordinary
                  Proceeds Account

              	
                141

              
	
                Section
                  8.16

              	
                Warranty
                  Accounts

              	
                143

              
	
                Section
                  8.17

              	
                Representations,
                  Warranties and Covenants of Accounts Bank

              	
                143

              
	
                Section
                  8.18

              	
                Project
                  Accounts

              	
                146

              
	
                Section
                  8.19

              	
                Project
                  Accounts as Deposit Account

              	
                147

              
	
                Section
                  8.20

              	
                Duties
                  of Accounts Bank

              	
                147

              
	
                Section
                  8.21

              	
                Subordination

              	
                148

              
	
                Section
                  8.22

              	
                Borrower
                  Acknowledgments

              	
                149

              
	
                Section
                  8.23

              	
                Agreement
                  to Hold In Trust

              	
                149

              
	
                Section
                  8.24

              	
                Interest
                  and Investments

              	
                149

              
	
                Section
                  8.25

              	
                Accounts
                  Bank Information

              	
                151

              
	
                Section
                  8.26

              	
                Notices
                  of Suspension of Accounts

              	
                152

              
	 	 	 


      

       

      
        
          
          

        

        
          iv

          
            

          

        

        
          
          

        

      

       

      
        	
                ARTICLE
                  IX            
                  DEFAULT
                  AND ENFORCEMENT

              	
                153

              
	 	 	 
	
                Section
                  9.01

              	
                Events
                  of Default

              	
                153

              
	
                Section
                  9.02

              	
                Action
                  Upon Bankruptcy

              	
                161

              
	
                Section
                  9.03

              	
                Action
                  Upon Other Event of Default

              	
                161

              
	
                Section
                  9.04

              	
                Application
                  of Proceeds

              	
                162

              
	 	 	 
	
                ARTICLE
                  X             
                  THE
                  AGENTS

              	
                163

              
	 	 	 
	
                Section
                  10.01

              	
                Appointment
                  and Authority

              	
                163

              
	
                Section
                  10.02

              	
                Rights
                  as a Lender or Interest Rate Protection Provider

              	
                165

              
	
                Section
                  10.03

              	
                Exculpatory
                  Provisions

              	
                166

              
	
                Section
                  10.04

              	
                Reliance
                  by Agents

              	
                167

              
	
                Section
                  10.05

              	
                Delegation
                  of Duties

              	
                167

              
	
                Section
                  10.06

              	
                Resignation
                  or Removal of Agent

              	
                167

              
	
                Section
                  10.07

              	
                No
                  Amendment to Duties of Agent Without Consent

              	
                169

              
	
                Section
                  10.08

              	
                Non-Reliance
                  on Agent and Other Lenders

              	
                169

              
	
                Section
                  10.09

              	
                No
                  Lead Arranger, Syndication Agent, Bookrunner Duties

              	
                169

              
	
                Section
                  10.10

              	
                Collateral
                  Agent May File Proofs of Claim

              	
                169

              
	
                Section
                  10.11

              	
                Collateral
                  Matters

              	
                170

              
	
                Section
                  10.12

              	
                Copies

              	
                171

              
	 	 	 
	
                ARTICLE
                  XI            
                  MISCELLANEOUS
                  PROVISIONS

              	
                171

              
	 	 	 
	
                Section
                  11.01

              	
                Amendments,
                  Etc

              	
                171

              
	
                Section
                  11.02

              	
                Applicable
                  Law; Jurisdiction; Etc

              	
                173

              
	
                Section
                  11.03

              	
                Assignments

              	
                175

              
	
                Section
                  11.04

              	
                Benefits
                  of Agreement

              	
                180

              
	
                Section
                  11.05

              	
                Borrowers'
                  Agent

              	
                180

              
	
                Section
                  11.06

              	
                Consultants

              	
                180

              
	
                Section
                  11.07

              	
                Costs
                  and Expenses

              	
                181

              
	
                Section
                  11.08

              	
                Counterparts;
                  Effectiveness

              	
                181

              
	
                Section
                  11.09

              	
                Indemnification
                  by the Borrowers

              	
                182

              
	
                Section
                  11.10

              	
                Interest
                  Rate Limitation

              	
                183

              
	
                Section
                  11.11

              	
                No
                  Waiver; Cumulative Remedies

              	
                184

              
	
                Section
                  11.12

              	
                Notices
                  and Other Communications

              	
                184

              
	
                Section
                  11.13

              	
                Patriot
                  Act Notice

              	
                187

              
	
                Section
                  11.14

              	
                Payments
                  Set Aside

              	
                187

              
	
                Section
                  11.15

              	
                Right
                  of Setoff

              	
                188

              
	
                Section
                  11.16

              	
                Severability

              	
                188

              
	
                Section
                  11.17

              	
                Survival

              	
                188

              
	
                Section
                  11.18

              	
                Treatment
                  of Certain Information; Confidentiality

              	
                189

              
	
                Section
                  11.19

              	
                Waiver
                  of Consequential Damages, Etc

              	
                190

              
	
                Section
                  11.20

              	
                Waiver
                  of Litigation Payments

              	
                190

              


      

    

     

    
      
        
        

      

      
        v

        
          

        

      

      
        
        

      

    

    


    SCHEDULES

     

    Schedule
      1.01(a) - Commitments

    Schedule
      2.08(e) - Buy Down Calculation

    Schedule 2.09
      Tranche Reallocation Eligible Lenders and Commitments

    Schedule
      5.11 - Contracts 

    Part
      A -
      First Funding Contracts

    Part
      B -
      Deferred Contracts

    Schedule
      5.12 - UCC Filing Offices

    Schedule
      5.13(a) - Site Descriptions

    Schedule
      5.19(d)(iii) - Underground Storage Tanks

    Schedule
      5.23 - Separateness Provisions 

    Schedule
      5.29 - Legal Names and Places of Business 

    Schedule
      5.30 - Broker Fees

    Schedule
      6.01(g)(i) - Existing Liens

    Schedule
      6.01(q) - Drawdown Schedules

    Schedule
      6.02(e)(i) - Acceptable Project Parties 

    Schedule
      6.02(e)(iv) - Project Party Consents 

    Schedule
      7.01(h) - Insurance 

    Schedule
      7.01(k)-A - Performance Guarantee

    Schedule
      7.01(k)-B - Approved Performance Test Protocols

    Schedule
      7.02(f) - Storage Facilities

    Schedule
      7.02(t) - Construction Budgets

    Schedule
      8.08(c)(xiii) - Target Balance Amount

    Schedule
      11.12 - Notice Information

     

    EXHIBITS

     

    Exhibit
      A
      - Defined Terms 

    Exhibit
      2.04 - Issuance Request 

    Exhibit
      2.05-A - Form of Working Capital Funding Notice 

    Exhibit
      2.05-B - Form of Construction Funding Notice 

    Exhibit
      2.07 - Form of Note

    Exhibit 2.09
      - Form of Tranche Conversion Notice

    Exhibit
      3.05 - Form of Interest Period Notice 

    Exhibit
      4.07 - Form of Non-U.S. Lender Statement

    Exhibit
      6.01(k) - Form of Insurance Consultant's Certificate 

    Exhibit
      6.01(v) - Financial Model

    Exhibit
      6.02(a) - Form of Commercial Operation Date Certificate 

    Exhibit
      6.02(g) - Form of Title Endorsement

    Exhibit
      6.04(g)-A- Form of Deed of Trust

    Exhibit
      6.04(g)-B - Form of Pledge Agreement

    Exhibit
      6.04(g)-C -Form of Security Agreement

    Exhibit
      6.05(c) - Form of Independent Engineer's Certificate 

    Exhibit
      7.01(y) - Form of Final Completion Certificate 

    Exhibit
      7.02(i) - Form of Blocked Account Agreement 

    Exhibit
      7.02(s) - Form of Restricted Payment Certificate 

    Exhibit
      7.03(g) - Form of Monthly Progress Report

     

    
      
        
        

      

      
        vi

        
          

        

      

      
        
        

      

    

     

    Exhibit
      7.03(n) - Form of Borrowing Base Certificate 

    Exhibit
      7.03(p) - Form of Operating Statement 

    Exhibit
      8.04 - Form of Construction Holding Withdrawal Certificate 

    Exhibit
      8.05 - Form of Construction Withdrawal Certificate 

    Exhibit
      8.08-A - Form of Revenue Account Withdrawal Certificate (Before Conversion
      Date)

    Exhibit
      8.08-B - Form of Revenue Account Withdrawal Certificate (After Conversion
      Date)

    Exhibit
      8.09 - Form of Operating Account Withdrawal Certificate 

    Exhibit
      8.11 - Form of Working Capital Transfer Certificate 

    Exhibit
      8.12 - Form of Debt Service Reserve Letter of Credit 

    Exhibit
      8.14 - Form of Insurance and Condemnation Proceeds Request Certificate


    Exhibit
      8.15 - Form of Extraordinary Proceeds Release Notice 

    Exhibit
      8.16 - Form of Warranty Proceeds Request Certificate 

    Exhibit
      11.03 - Form of Lender Assignment Agreement

    


    


    
      
        
        

      

      
        vii

        
          

        

      

      
        
        

      

    

    
 

    This
      CREDIT AGREEMENT (this "Agreement"),
      dated
      as of February 27, 2007, is by and among Pacific Ethanol Holding Co. LLC, a
      Delaware limited liability company ("Pacific
      Holding"),
      Pacific Ethanol Madera LLC, a Delaware limited liability company ("Madera"),
      Pacific Ethanol Columbia, LLC, a Delaware limited liability company
      ("Boardman"),
      Pacific Ethanol Stockton, LLC, a Delaware limited liability company
      ("Stockton"),
      Pacific Ethanol Imperial, LLC, a Delaware limited liability company
      ("Brawley")
      and
      Pacific Ethanol Magic Valley, LLC, a Delaware limited liability company
      ("Burley"
      and,
      together with Pacific Holding, Madera, Boardman, Stockton, and Brawley, the
      "Borrowers"),
      Pacific Holding, as Borrowers' 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, UNION BANK OF CALIFORNIA, N.A., as accounts bank, WESTLB AG, NEW YORK
      BRANCH, as lead arranger and sole bookrunner, MIZUHO CORPORATE BANK, LTD.,
      as
      lead arranger and co-syndication agent, CIT CAPITAL SECURITIES LLC as lead
      arranger and co-syndication agent, COÖPERATIEVE CENTRALE
      RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH, as lead
      arranger and co-documentation agent, and BANCO SANTANDER CENTRAL HISPANO S.A,
      NEW YORK BRANCH, as lead arranger and co-documentation agent.

     

     

    RECITALS

     

    WHEREAS,
      the Borrowers have requested that the Lenders establish a credit facility the
      proceeds of which are to be used to (a) finance the ownership and operation
      of
      two (2) denatured ethanol production facilities located in or near Madera,
      California and Boardman, Oregon, each of which is expected to produce
      approximately forty (40) million gallons-per-year, and the ownership,
      development, engineering, construction, testing and operation of three
      (3) denatured ethanol production facilities to be located in or near
      Stockton, California, Brawley, California and Burley, Idaho, each with a design
      basis capacity of approximately fifty (50) million gallons-per-year, (b)
      fund certain reserves and (c) pay certain fees and expenses associated with
      this
      Agreement and the Loans, in each case as further described herein;
      and

     

    WHEREAS,
      the Lenders are willing to make such credit facility available to the Borrowers
      upon and subject to the terms and conditions hereinafter set forth;

     

    NOW,
      THEREFORE, the parties hereto agree as follows:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    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 the Borrowers, and any other similar expressions,
      shall mean knowledge of each of the Borrowers 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.

     

    
      
        
        

      

      
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    (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.

     

    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.
      (a)  Subject
      to Section 1.05(b),
      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.

     

    (b) Each
      of
      the Borrowers, the Administrative Agent and the Lenders hereby confirms that
      it
      is the intention of all such Persons that this Agreement and the other Financing
      Documents and the Obligations of each Borrower hereunder and thereunder not
      constitute a fraudulent transfer or conveyance for purposes of any Debtor Relief
      Laws, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer
      Act
      or any similar foreign, federal or state law, to the extent applicable to this
      Agreement or such other Financing Document and the Obligations of each Borrower
      hereunder and thereunder. To effectuate the foregoing intention, the
      Administrative Agent, the Lenders and the Borrowers hereby irrevocably agree
      that the Obligations of each Borrower at any time shall be limited to the
      maximum amount as will result in the Obligations of such Borrower not
      constituting a fraudulent transfer or conveyance. 

     

    
      
        
        

      

      
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    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 Construction
      Loans.
      (a) Each
      Tranche B Lender agrees, severally and not jointly, on the terms and
      conditions of this Agreement, to fund the full amount of such Tranche B
      Lender's Tranche B Construction Loan Commitment to the Escrow Account on or
      after the Closing Date and in accordance with Section 2.01(s).

     

    (b) On
      the
      terms and conditions of this Agreement, loans shall be released from the Escrow
      Account (each such loan, an "In-Progress
      Plant 1 Construction Loan")
      to the
      Borrowers, once on the Funding Date for In-Progress Plant 1, for transfer
      to the Construction Holding Account in an aggregate principal amount not in
      excess of the In-Progress Plant 1 Aggregate Construction Loan
      Commitment.

     

    (c) On
      the
      terms and conditions of this Agreement, (i) loans shall be released from
      the Escrow Account (each such loan, an "In-Progress
      Plant 2 Tranche B Construction Loan")
      to the
      Borrowers for transfer to the Construction Holding Account and (ii) each
      Tranche A Lender agrees, severally and not jointly, to make a loan (each such
      loan, an "In-Progress
      Plant 2 Tranche A Construction Loan")
      to the
      Borrowers, once on the Funding Date for In-Progress Plant 2, in an aggregate
      principal amount, when taken together, not in excess of the In-Progress Plant
      2
      Aggregate Construction Loan Commitment.

     

    (d) On
      the
      terms and conditions of this Agreement, (i) loans shall be released from
      the Escrow Account (each such loan, a "Greenfield
      Plant 1 Tranche B Construction Loan")
      to the
      Borrowers for transfer to the Construction Account for Greenfield Plant 1
      and (ii) and each Tranche A Lender agrees, severally and not jointly, on
      the terms and conditions of this Agreement, to make loans (each such loan,
      a
      "Greenfield
      Plant 1 Tranche A Construction Loan")
      to the
      Borrowers in each such case for Project Costs with respect to Greenfield Plant
      1
      or to make a Sponsor Support Reimbursement Funding or Greenfield Plant Top-Up
      Funding, from time to time, but not more frequently than once each calendar
      month (except for Loans made on the Conversion Date), until the Construction
      Loan Maturity Date; provided,
      however,
      that
      (i) the aggregate principal amount of the Greenfield Plant 1 Construction
      Loans shall not exceed the Greenfield Plant 1 Aggregate Construction Loan
      Commitment, (ii) the aggregate principal amount of Greenfield Plant 1
      Construction Loans disbursed prior to the Commercial Operation Date of
      Greenfield Plant 1 (taken together with the Working Capital Plant Commitment
      for
      Greenfield Plant 1) shall not exceed the lesser of (x) forty percent
      (40%) of budgeted Project Costs for Greenfield Plant 1 (as set forth in the
      then-current Construction Budget for such Plant) and (y) forty-five million
      Dollars ($45,000,000), (iii) the aggregate principal amount of all
      Greenfield Plant 1 Construction Loans disbursed on or prior to the Conversion
      Date (taken together with the Working Capital Plant Commitment for such Plant)
      shall not exceed sixty-five percent (65%) of the aggregate actual and
      documented Project Costs for Greenfield Plant 1 and (iv)  the aggregate
      principal amount of Greenfield Plant 1 Construction Loans disbursed as
      Greenfield Plant Top-Up Fundings shall not exceed the corresponding Excess
      Construction Loan Commitment.

     

    
      
        
        

      

      
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    (e) Each
      Tranche A Lender agrees, severally and not jointly, on the terms and conditions
      of this Agreement, to make loans (each such loan, a "Greenfield
      Plant 2 Construction Loan")
      to the
      Borrowers for Project Costs with respect to Greenfield Plant 2 or to make a
      Sponsor Support Reimbursement Funding or Greenfield Plant Top-Up Funding, from
      time to time but not more frequently than once each calendar month (except
      for
      Loans made on the Conversion Date), until the Construction Loan Maturity Date;
      provided,
      however,
      that
      (i) the aggregate principal amount of the Greenfield Plant 2 Construction
      Loans shall not exceed the Greenfield Plant 2 Aggregate Construction Loan
      Commitment, (ii) the aggregate principal amount of Greenfield Plant 2
      Construction Loans disbursed prior to the Commercial Operation Date of such
      Plant (taken together with the Working Capital Plant Commitment for such Plant)
      shall not exceed the lesser of (x) forty percent (40%) of budgeted
      Project Costs for Greenfield Plant 2 (as set forth in the then-current
      Construction Budget for such Plant and (y) forty-five million Dollars
      ($45,000,000), (iii) the aggregate principal amount of all Greenfield Plant
      2 Construction Loans disbursed on or prior to the Conversion Date (taken
      together with the Working Capital Plant Commitment for such Plant) shall not
      exceed sixty-five percent (65%) of the aggregate actual and documented
      Project Costs for Greenfield Plant 2 and (iv) the aggregate principal
      amount of Greenfield Plant 2 Construction Loans disbursed as Greenfield Plant
      Top-Up Fundings shall not exceed the corresponding Excess Construction Loan
      Commitment.

     

    (f) Each
      Tranche A Lender agrees, severally and not jointly, on the terms and conditions
      of this Agreement, to make loans (each such loan, a "Greenfield
      Plant 3 Construction Loan")
      to the
      Borrowers for Project Costs with respect to Greenfield Plant 3 or to make a
      Sponsor Support Reimbursement Funding or Greenfield Plant Top-Up Funding, from
      time to time but not more frequently than once each calendar month (except
      for
      Loans made on the Conversion Date), until the Construction Loan Maturity Date;
      provided,
      however,
      that
      (i) the aggregate principal amount of the Greenfield Plant 3 Construction
      Loans shall not exceed the Greenfield Plant 3 Aggregate Construction Loan
      Commitment, (ii) the aggregate principal amount of Greenfield Plant 3
      Construction Loans disbursed prior to the Commercial Operation Date of such
      Plant (taken together with the Working Capital Plant Commitment for such Plant)
      shall not exceed the lesser of (x) forty percent (40%) of budgeted
      Project Costs for Greenfield Plant 3 (as set forth in the then-current
      Construction Budget for such Plant) and (y) forty-five million Dollars
      ($45,000,000), (iii) the aggregate principal amount of all Greenfield Plant
      3 Construction Loans disbursed prior to the Conversion Date (taken together
      with
      the Working Capital Plant Commitment for such Plant) shall not exceed sixty-five
      percent (65%) of the aggregate actual and documented Project Costs for
      Greenfield Plant 3 and (iv) the aggregate principal amount of Greenfield
      Plant 3 Construction Loans disbursed as Greenfield Plant Top-Up Fundings shall
      not exceed the corresponding Excess Construction Loan Commitment.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (g) The
      aggregate principal amount of the Construction Loans shall not exceed the
      Aggregate Construction Loan Commitment. The aggregate principal amount of the
      Construction Loans made by each Lender shall not exceed the Construction Loan
      Commitment of such Lender.

     

    (h) There
      shall be no more than one (1) Greenfield Plant Top-Up Funding for each
      Greenfield Plant.

     

    (i) Sponsor
      Support Reimbursement Fundings may only be requested to the extent that payments
      by Pacific Ethanol under the Sponsor Support Agreement are eligible for
      reimbursement as described in Section 2.04(g) (Sponsor's
      Deficiency Funding Obligation)
      of the
      Sponsor Support Agreement.

     

    (j) Proceeds
      of each Tranche B Construction Loan shall be deposited into the Escrow
      Account for further release and application in accordance with this
      Agreement.

     

    (k) Proceeds
      of each In-Progress Plant 1 Construction Loan and each In-Progress
      Plant 2 Tranche B Construction Loan (if any) shall be released from the
      Escrow Account and transferred to the Construction Holding Account to be applied
      solely in accordance with this Agreement and shall be used solely for the
      payment of Project Costs (including the partial funding of the Debt Service
      Reserve Requirement).

     

    (l) Proceeds
      of each In-Progress Plant 2 Tranche A Construction Loan (if any) shall
      be deposited into the Construction Holding Account and applied solely in
      accordance with this Agreement and shall be used solely for the payment of
      Project Costs (including the partial funding of the Debt Service Reserve
      Requirement).

     

    (m) Proceeds
      of the Greenfield Plant 1 Tranche B Construction Loans (if any) shall be
      released from the Escrow Account and applied solely in accordance with this
      Agreement and shall be used solely for the payment of Project Costs for
      Greenfield Plant 1 (including, if applicable, for reimbursement of Project
      Costs
      pursuant to a Sponsor Support Reimbursement Funding).

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (n) Proceeds
      of the Greenfield Plant 1 Tranche A Construction Loans shall be applied
      solely in accordance with this Agreement and, other than in the case of
      Greenfield Plant Top-Up Fundings or Sponsor Support Reimbursement Fundings,
      shall be deposited into the Construction Account for Greenfield Plant 1 or
      applied directly to the payment of Debt Service and shall be used solely for
      the
      payment of Project Costs for Greenfield Plant 1.

     

    (o) Proceeds
      of the Greenfield Plant 2 Construction Loans shall be applied solely in
      accordance with this Agreement and, other than in the case of Greenfield Plant
      Top-Up Fundings or Sponsor Support Reimbursement Fundings, shall be deposited
      into the Construction Account for Greenfield Plant 2 or applied directly to
      the
      payment of Debt Service and shall be used solely for the payment of Project
      Costs for Greenfield Plant 2.

     

    (p) Proceeds
      of the Greenfield Plant 3 Construction Loans shall be applied solely in
      accordance with this Agreement and, other than in the case of Greenfield Plant
      Top-Up Fundings or Sponsor Support Reimbursement Fundings, deposited into the
      Construction Account for Greenfield Plant 3 or applied directly to the payment
      of Debt Service and shall be used solely for the payment of Project Costs for
      Greenfield Plant 3.

     

    (q) Proceeds
      of Greenfield Plant Top-Up Fundings shall be deposited into the Construction
      Holding Account and shall be used and applied solely in accordance with this
      Agreement.

     

    (r) Proceeds
      of Sponsor Support Reimbursement Fundings may be paid directly to the Sponsor
      in
      accordance with Section 2.04(g) (Sponsor's
      Deficiency Funding Obligation)
      of the
      Sponsor Support Agreement.

     

    (s) Each
      of
      the Tranche B Lenders shall fund their pro rata portion of the
      Tranche B Escrow Disbursement on or before March 7, 2007. Unless or
      until otherwise elected pursuant to a properly delivered Interest Period Notice,
      the Tranche B Loans made pursuant to the Tranche B Escrow Disbursement shall
      bear interest as Base Rate Loans.

     

    (t) Construction
      Loans repaid or prepaid may not be reborrowed.

     

    Section
      2.02 Term
      Loans.
      (a)  Each
      Tranche A Lender agrees, severally and not jointly, on the terms and conditions
      of this Agreement, to make loans (each such 

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    loan,
      a
      "Tranche
      A Term Loan")
      to the
      Borrowers for the repayment of the Tranche A Construction Loans, on the
      Conversion Date, in an aggregate principal amount not in excess of such Tranche
      A Lender's Tranche A Term Loan Commitment; provided,
      however,
      that
      the aggregate principal amount of the Tranche A Term Loans shall not exceed
      the
      Aggregate Tranche Commitment for Tranche A Term Loans or the aggregate
      outstanding Tranche A Construction Loans (including all Tranche A Construction
      Loans made on the Conversion Date).

     

    (b) Each
      Tranche B Lender agrees, severally and not jointly, on the terms and
      conditions of this Agreement, to make loans (each such loan, a "Tranche B
      Term Loan")
      to the
      Borrowers for the repayment of the Tranche B Construction Loans, on the
      Conversion Date, in an aggregate principal amount not in excess of such Tranche
      B Lender's Tranche B Term Loan Commitment; provided,
      however,
      that
      the aggregate principal amount of the Tranche B Term Loans shall not exceed
      the Aggregate Tranche Commitment for the Tranche B Term Loans or the
      aggregate outstanding Tranche B Construction Loans (including all Tranche B
      Construction Loans made on the Conversion Date).

     

    (c) Proceeds
      of the Tranche A Term Loans shall be used solely for the payment of amounts
      due in respect of the Tranche A Construction Loans made by the
      Tranche A Lenders (including all Tranche A Construction Loans made on the
      Conversion Date).

     

    (d) Proceeds
      of the Tranche B Term Loans shall be used solely for the payment of amounts
      due
      in respect of the Tranche B Construction Loans made by the Tranche B Lenders
      (including all Tranche B Construction Loans made on the Conversion
      Date).

     

    (e) Term
      Loans repaid or prepaid may not be reborrowed.

     

    Section
      2.03 Working
      Capital Loans.
      (a)
      Each
      Working Capital Lender agrees, severally and not jointly, on the terms and
      conditions of this Agreement, to make loans (each such loan, a "Working
      Capital Loan")
      to the
      Borrowers for Working Capital Expenses, from time to time but not more
      frequently than two (2) times each calendar month, until the Working Capital
      Maturity Date, in an aggregate principal amount from time to time outstanding
      not in excess of the Working Capital Loan Commitment of such Working Capital
      Lender; provided,
      however,
      that
      the aggregate principal amount of the Working Capital Loans at any one time
      outstanding, plus the aggregate Stated Amounts of all issued and outstanding
      Letters of Credit, shall not exceed the Aggregate Working Capital Loan
      Commitment or, subject to the grace period provided in Section 3.10(c)
      (Mandatory
      Prepayments),
      the
      then-applicable Working Capital Loan Availability.

     

    
      
        
        

      

      
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    (b) Each
      Funding of Working Capital Loans shall be in the aggregate minimum amount of
      five hundred thousand Dollars ($500,000) and in integral multiples of one
      hundred thousand Dollars ($100,000) in excess thereof. 

     

    (c) Proceeds
      of each Working Capital Loan for (i) Project Costs relating to the initial
      start-up and testing of a Plant shall be deposited into the Construction Account
      specified in the relevant Funding Notice, (ii) Operation and Maintenance
      Expense shall be deposited into the Operating Account, and
      (iii) Maintenance Capital Expenses shall be deposited into the Maintenance
      Capital Expense Account, and in each such case shall be applied solely in
      accordance with this Agreement and shall be used solely for the payment of
      Working Capital Expenses. Fundings of Working Capital Loans for Operation and
      Maintenance Expenses and for Maintenance Capital Expenses shall be subject
      to
      the Permitted Operating Budget Deviation Levels.

     

    (d) Within
      the limits set forth in Section 2.03(a),
      the
      Borrowers may pay or prepay and reborrow Working Capital Loans.

     

    Section
      2.04 Letters
      of Credit.
      (a)
      The
      Issuing Bank agrees at any time on or after the First Escrow Release Date,
      and
      from time to time on the terms and conditions of this Agreement, upon receipt
      from the Borrowers of an Issuance Request, to issue a Letter of Credit on behalf
      of any Borrower on the date and in the amount set forth in such Issuance
      Request; provided,
      that
      (i) Letters of Credit may only be for issued Plants with respect to which
      the initial Funding has been made (or will be made simultaneously with the
      issuance of such Letter of Credit), (ii) the aggregate Stated Amounts of
      all issued and outstanding Letters of Credit shall not exceed the LC Cap and
      (iii) the aggregate Stated Amount of all issued and outstanding Letters of
      Credit plus the aggregate outstanding principal amount of all Working Capital
      Loans at any one time outstanding shall not exceed the Aggregate Working Capital
      Loan Commitment or the then-applicable Working Capital Loan
      Availability.

     

    (b) The
      Borrower shall give the Administrative Agent at least five (5) Business
      Days irrevocable prior written notice (such notice, in substantially the form
      of
Exhibit 2.04,
      an
      "Issuance
      Request")
      (effective upon receipt) specifying the date (which shall be a day that is
      no
      later than thirty (30) days preceding the Working Capital Maturity Date) a
      Letter of Credit is requested to be issued, describing in reasonable detail
      the
      nature of the transactions or obligations proposed to be supported thereby
      (which shall be of the nature described in Section 2.04(i)(iii))
      and the
      Stated Amount of such Letter of Credit, which shall be no less than four hundred
      thousand Dollars ($400,000)). Upon receipt of an Issuance Request, the
      Administrative Agent shall promptly advise the Issuing Bank of the contents
      thereof. 

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (c) Each
      Working Capital Lender (other than the Issuing Bank) agrees that, upon the
      issuance of any Letter of Credit hereunder, it shall automatically acquire
      a
      participation in the Issuing Bank's liability thereunder in an amount equal
      to
      such Lender's Working Capital Loan Commitment Percentage of such liability,
      and
      each Working Capital Lender (other than the Issuing Bank) thereby shall
      absolutely, unconditionally and irrevocably assume, as primary obligor and
      not
      as surety, and shall be unconditionally obligated to the Issuing Bank to pay
      and
      discharge when due, its Working Capital Loan Commitment Percentage of the
      Issuing Bank's liability under each Letter of Credit.

     

    (d) Upon
      receipt from a beneficiary under a Letter of Credit of a demand for payment
      thereunder, in proper form to accomplish a draw in accordance with the terms
      thereof, the Issuing Bank (through the Administrative Agent) shall promptly
      notify each other Working Capital Lender and the Borrowers of the amount to
      be
      paid by the Issuing Bank as a result of such demand and the date on which
      payment is to be made by the Issuing Bank to such beneficiary in respect of
      such
      demand. Immediately following such demand by a beneficiary of payment under
      a
      Letter of Credit, the Administrative Agent shall give each Working Capital
      Lender prompt notice of the amount of the actual demand for payment, specifying
      such Lender's Working Capital Loan Commitment Percentage of the amount of such
      demand.

     

    (e) Upon
      receipt by the Issuing Bank of a demand as described in Section 2.04(d),
      each
      Working Capital Lender (other than the Issuing Bank) shall pay to the
      Administrative Agent for the account of the Issuing Bank in Dollars and in
      immediately available funds the amount of such Lender's Working Capital Loan
      Commitment Percentage of any payment under the Letter of Credit. Each Working
      Capital Lender's obligation to make such payments to the Administrative Agent
      for account of the Issuing Bank under this Section 2.04(e),
      and the
      Issuing Bank's right to receive the same, shall be absolute and unconditional
      and shall not be affected by any circumstance whatsoever, including (i) the
      failure of any other Working Capital Lender to make its payment under this
      Section 2.04(e),
      (ii) the financial condition of the Borrowers, (iii) the existence of
      any Default or Event of Default or (iv) the termination of the Commitments.
      Each such payment to the Issuing Bank shall be made without any offset,
      abatement, withholding or reduction whatsoever.

     

    (f) To
      the
      extent that any Working Capital Lender fails to pay any amount required to
      be
      paid pursuant to Section 2.04(e)
      on the
      date such amounts are due to be paid, such Lender shall pay interest to the
      Issuing Bank (through the Administrative Agent) on such amount from and
      including such due date to but excluding the date such payment is made at a
      rate
      per annum equal to 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 plus
      (in
      either such case) two percent (2%). 

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (g) Each
      drawing honored by the Issuing Bank under a Letter of Credit shall reduce the
      Maximum Available Amount under such Letter of Credit by the amount of such
      drawing.

     

    (h) Notwithstanding
      anything herein to the contrary (including Section 6.08 (Conditions
      to All Fundings)),
      any
      payments by the Issuing Bank under any Letter of Credit shall automatically
      be
      considered to be a Working Capital Loan to the Borrowers from the Issuing Bank
      and the other Working Capital Lenders making payments to the Issuing Bank in
      accordance with Section 2.04(e)
      in an
      amount equal to such Issuing Bank's and such other Working Capital Lenders'
      Working Capital Loan Commitment Percentage of the amount of the drawing on
      the
      Letter of Credit. All such Working Capital Loans shall be repaid or prepaid
      by
      the Borrower in accordance with the provisions of Article III
      (Repayments,
      Prepayments, Interest and Fees).
      Such
      Working Capital Loan shall initially be made as a Base Rate Loan. 

     

    (i) The
      issuance of each Letter of Credit shall, in addition to the conditions precedent
      set forth in Section 6.08
      (Conditions
      to All Fundings),
      be
      subject to the conditions precedent that (i) the First Escrow Release Date
      shall have occurred, (ii) such Letter of Credit shall be in such form and
      contain such terms as shall be reasonably satisfactory to the Issuing Bank
      consistent with its then-current practices and procedures with respect to
      letters of credit of the same type, (iii) such Letter of Credit shall be
      issued to satisfy a Borrower's obligation to provide a letter of credit under
      a
      Contractual Obligation or Necessary Project Approval, and (iv) the term of
      each Letter of Credit shall expire no later than the Working Capital Maturity
      Date.

     

    Section
      2.05 Notice
      of Fundings.
      (a)
      From
      time to time, but not more frequently than once per calendar month (except
      for
      the Loans made on the Conversion Date), 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. Each Funding Notice delivered pursuant
      to
      this Section 2.05
      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),
      (iii) the amount of such requested Funding, (iv) the Loan(s) with
      respect to which such Funding is requested (and, in the case of the Conversion
      Date Funding, shall include both Construction Loans and Term Loans), and
      (v) if applicable, whether such requested Funding includes a Greenfield
      Top-Up Funding or a Sponsor Support Reimbursement Funding; provided,
      that no
      Funding Notice shall be required in connection with the Tranche B Escrow
      Disbursement as
      provided in Section 2.01(s)
      (Construction
      Loans)

     

    (b) The
      Administrative Agent shall promptly advise (i) each Construction/Term
      Lender of any Construction Funding Notice (including the Conversion Date Funding
      Notice) and (ii) each Working Capital Lender of any Working Capital Funding
      Notice, in each case given pursuant to this Section 2.05,
      and of
      each such Lender's portion of the requested Funding.

     

    
      
        
        

      

      
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    Section
      2.06 Funding
      of Loans.
      (a)  Subject
      to Section 2.06(d)
      and
      except as otherwise provided in Section 2.09
      (Tranche
      Reallocation),
      each
      Funding (or the Tranche B Escrow Disbursement, as the case may be) shall
      consist of 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 2.05
      (Notice
      of Fundings)
      (or,
      with respect to the Tranche B Escrow Disbursement as provided in
Section 2.01(s)
      (Construction
      Loans));
      provided,
      however,
      that
      the failure of any Lender to make any 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
      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 Loan
      in
      accordance with the terms of this Agreement and the Notes) at its option fulfill
      its Commitment with respect to any such Loan by causing any domestic or foreign
      branch or Affiliate of such Lender to make such 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.

     

    (c) Subject
      to Section 2.06(d),
      (i) each Tranche A Lender shall make a Loan in the amount of its applicable
      Commitment Percentage of each Construction Loan Funding and Term Loan 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 in the case of (A) any
      Construction Loans, deposit the amounts so received (except to the extent
      applied directly to the payment of Debt Service as specified in the applicable
      Funding Notice) into (1) in the case of the Greenfield Plant 1 Construction
      Loans (other than Greenfield Plant Top-Up Fundings and Sponsor Support
      Reimbursement Fundings), the Construction Account for such Plant, (2) in
      the case of the Greenfield Plant 2 Construction Loans (other than Greenfield
      Plant Top-Up Fundings and Sponsor Support Reimbursement Fundings), the
      Construction Account for such Plant, (3) in the case of the Greenfield
      Plant 3 Construction Loans (other than Greenfield Plant Top-Up Fundings and
      Sponsor Support Reimbursement Fundings), the Construction Account for such
      Plant, (4) in the case of any Greenfield Plant Top-Up Fundings, the
      Construction Holding Account, (5) in the case of any Sponsor Support
      Reimbursement Fundings, directly to the Sponsor as provided for in the Sponsor
      Support Agreement, and (6) in the case of any In-Progress Plant 2
      Tranche A Construction Loans, the Construction Holding Account, (B) in
      the case of any Tranche A Term Loans, apply the proceeds of such
      Tranche A 

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    Term
      Loan
      solely to repay outstanding Tranche A Construction Loans (and the
      Tranche A Lenders shall not be obligated to pay the proceeds of any
      Tranche A Term Loan to, or upon the direction of, any Borrower, and the
      Borrowers shall not be entitled to receive such proceeds), (ii) each
      Tranche B Lender shall make a Loan in the amount of its applicable
      Commitment Percentage of the Aggregate Tranche Commitment for Tranche B
      Construction Loans hereunder in accordance with Section 2.01(s)
      (Construction
      Loans)
      (or, if
      later, on the Tranche Conversion Date) and on the Conversion 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,
      (A) in the case of any Tranche B Construction Loans, deposit the
      amounts so received into the Escrow Account and (B) in the case of any
      Tranche B Term Loans, apply the proceeds of such Tranche B Term Loan
      solely to repay outstanding Tranche B Construction Loans (and the
      Tranche B Lenders shall not be obligated to pay the proceeds of any
      Tranche B Term Loan to, or upon the direction of, the Borrowers, and the
      Borrowers shall not be entitled to receive such proceeds), and (iii) each
      Working Capital Lender shall make a Loan in the amount of its applicable
      Commitment Percentage of each Working Capital Loan 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 (except as otherwise provided in Section 2.04
      (Letters
      of Credit)
      deposit
      the amounts so received into the Account specified in the relevant Funding
      Notice; 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 (i) any Tranche A
      Lender prior to a proposed Funding Date that such Tranche A Lender will not
      make
      available to the Administrative Agent its portion of the Funding proposed to
      be
      made on such date, (ii) any Tranche B Lender prior to the date set
      forth in Section 2.01(s)
      (Construction
      Loans)
      or the
      Conversion Date (as applicable) that such Tranche B Lender will not make
      available to the Administrative Agent its portion of the Funding or the
      Tranche B Escrow Disbursement or any Tranche B Conversion
      Disbursement, as the case may be, proposed to be made on such date, or
      (iii) any Working Capital Lender prior to a proposed Funding Date that such
      Working Capital 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 

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    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 Loan included
      in
      such Funding (or the Tranche B Escrow Disbursement or Tranche B
      Conversion Disbursement, as the case may be). 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, subject to the rights of the other Senior Secured Parties under
      the
      Security Documents and 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 or the
      Tranche B Escrow Disbursement or any Tranche B Conversion
      Disbursement, as the case may be, hereunder. A notice of the Administrative
      Agent to any Lender or the Borrowers with respect to any amounts owing under
      this Section 2.06(d)
      shall be
      conclusive, absent manifest error.

     

    (e) On
      the
      Conversion Date, the Lenders shall, to the extent required to pay the amounts
      specified below (and in accordance with the Conversion Date Funding Notice),
      disburse any unused portion of the Aggregate Construction Loan Commitment,
      and
      any amounts on deposit in or standing to the credit of the Construction Accounts
      and the Escrow Account on the Conversion Date shall be applied, in the following
      order of priority:

     

    
      	 	
              (i)

            	
              first,
                for deposit into the Debt Service Reserve Account in an amount which,
                when
                taken together with all other amounts then on deposit in or credited
                to
                the Debt Service Reserve Account, equals fifty percent (50%) of the
                then-current Debt Service Reserve
                Requirement;

            


    

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (ii)

            	
              second,
                to the Borrowers for the payment of any remaining Project Costs;
                

            


    

     

    
      	 	
              (iii)

            	
              third,
                to Pacific Ethanol, the amount of any Sponsor Support Reimbursement
                Funding requested to be made on the Conversion
                Date;

            


    

     

    
      	 	
              (iv)

            	
              fourth,
                to Pacific Ethanol, an amount equal to the aggregate amount of
                (A) all Greenfield Plant Top-Up Fundings that have not been utilized
                to fund Required Equity Contributions or Project Costs plus
                (B) all undisbursed Excess Construction Loan Commitments;
                provided,
                that after giving effect to any Construction Loan Fundings made on
                the
                Conversion Date and any payments under this Section 2.06(e)(iii)
                the total aggregate amounts disbursed under the Construction Loans
                and the
                Aggregate Working Capital Loan Commitment does not exceed sixty-five
                percent (65%) of the aggregate actual and documented Project Costs
                for all Greenfield Plants that have achieved their respective Commercial
                Operation Dates and with respect to which any funding has been made;
                and

            


    

     

    
      	 	
              (v)

            	
              fifth,
                remaining amounts (if any) on deposit in or standing to the credit
                of any
                Construction Account, to the Revenue
                Account.

            


    

     

    Section
      2.07 Evidence
      of Indebtedness.
      (a) 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 and any other accounts and
      records maintained pursuant to Section 2.07(a),
      the
      Loans made by each 

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    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), in the case of the Construction Loans and the
      Working Capital Loans, and dated the Conversion Date (or, if later, the date
      of
      any such request), in the case of the Term Loans, payable to the order of such
      Lender in a principal amount equal to such Lender's Tranche B Construction
      Loan
      Commitment, Tranche A Construction Loan Commitment, Working Capital Loan
      Commitment, Tranche A Term Loan Commitment or Tranche B Term 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.

     

    Section
      2.08 Termination
      or Reduction of Commitments.
      (a)  Any
      unused Construction Loan Commitments shall be automatically and permanently
      terminated on the earlier to occur of the Conversion Date and the Conversion
      Date Certain, in each case after giving effect to all Construction Loans, if
      any, to be made on such day.

     

    (b) Any
      unused Term Loan Commitments shall be automatically and permanently terminated
      on the earlier to occur of the Conversion Date and the Conversion Date Certain,
      in each case after giving effect to all Term Loans, if any, to be made on such
      day.

     

    (c) The
      Construction Loan Commitments, the Term Loan Commitments and the Working Capital
      Loan Commitments shall be automatically and permanently terminated in full,
      and
      any amounts on deposit in or standing to the credit of the Escrow Account shall
      be released and reimbursed to the Tranche B Lenders, if the First Escrow Release
      Date has not occurred on or before December 31, 2007.

     

    (d) If
      each
      of the In-Progress Plant 1 Construction Loan Funding Date and the
      In-Progress Plant 2 Construction Loan Funding Date has not occurred on or
      before December 31, 2007 or, if earlier, either of Boardman or Madera is
      released pursuant to Section 7.04
      (Release
      of Borrower),
      all
      unused Construction Loan Commitments, all Term Loan Commitments (other than
      an
      amount of the Term Loan Commitments equal to any Construction Loans then
      outstanding) and all unused Working Capital Loan Commitments (other than the
      Working Capital Plant Commitment for any Plant whose Loans have been funded)
      shall be automatically and permanently terminated in full and all funds on
      deposit in or standing to the credit of the Escrow Account shall be released
      and
      reimbursed to the Tranche B Lenders.

     

    (e) In
      the
      event that any Plant achieves its Commercial Operation Date and fails to meet
      such Plant's Performance Guarantee, both the Construction Loan Commitments
      for
      such Plant and the Term Loan Commitments shall be automatically and permanently
      reduced on the Commercial Operation Date for such Plant in the amounts required
      in accordance with Schedule 2.08(e).
      

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    (f) The
      Working Capital Loan Commitments shall be automatically and permanently
      terminated on the applicable Working Capital Maturity Date (with respect to
      each
      applicable Working Capital Lender).

     

    (g) In
      the
      event of any prepayment of the Construction Loans pursuant to Section 3.09
      (Optional
      Prepayment)
      or
Section 3.10
      (Mandatory
      Prepayment),
      or any
      termination of Construction Loan Commitments pursuant to Section 2.08(j),
      the
      Term Loan Commitments shall be automatically and permanently reduced in an
      amount equal to such prepayment.

     

    (h) In
      the
      event that all Construction Loan Commitments and Term Loan Commitments have
      been
      cancelled or terminated in full and all outstanding Construction Loans and
      Term
      Loans have been repaid in full, the Working Capital Loan Commitments of each
      Working Capital Lender shall be automatically and permanently terminated in
      full
      upon written notice of such Working Capital Lender delivered to the
      Administrative Agent and the Borrowers' Agent within ninety (90) days following
      such occurrence.

     

    (i) Any
      unused Construction Loan Commitments, Term Loan Commitments and Working Capital
      Loan Commitments shall be terminated, and any amounts on deposit in or standing
      to the credit of the Escrow Account shall be released and reimbursed to the
      Tranche B Lenders, upon the occurrence of an Event of Default if and to the
      extent required pursuant to Section 9.02
      (Action
      upon Bankruptcy)
      or
Section 9.03
      (Action
      Upon Other Event of Default)
      in
      accordance with the terms thereof.

     

    (j) In
      the
      event of a release of any Borrower in accordance with Section 7.04
      (Release
      of Borrower),
      all
      Construction Loan Commitments with respect to such Borrower's Plant, and Working
      Capital Loan Commitments in the amount equal to the Working Capital Plant
      Commitment for each such Plant that has been released shall, on the date of
      such
      release, be automatically and permanently terminated in full. 

     

    (k) If,
      on
      the Conversion Date, any amounts are released and reimbursed to the
      Tranche B Lenders from the Escrow Account, the Tranche B Term Loan
      Commitments shall be automatically and permanently reduced in an amount equal
      to
      such reimbursement.

     

    Section
      2.09 Tranche
      Reallocation.
      (a) At
      any time, and from time to time, until the earlier to occur of (x) the date
      that
      is six (6) months from the date of this Agreement and (y) the Business Day
      immediately following the date of the Funding 

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    Notice
      for In-Progress Plant 2, any Tranche Reallocation Eligible Lender may, by
      delivery of a Tranche Conversion Notice to the Administrative Agent and the
      Borrowers' Agent, convert all or any of its Tranche Reallocation Eligible
      Commitments that are Tranche A Commitments to Tranche B Commitments. Any
      conversion of Tranche Reallocation Eligible Commitments made pursuant to this
      Section
      2.09
      shall be
      in a minimum amount of two million five hundred thousand Dollars ($2,500,000)
      (or, if less, the aggregate total amount of all Tranche Reallocation Eligible
      Commitments of any single Tranche Reallocation Eligible Lender).

     

    (b) Any
      conversion described in Section 2.09(a)
      shall
      become effective on the date that is five (5) Business Days from such notice
      (or, if earlier, the Funding Date for In-Progress Plant 2) (each such date,
      a "Tranche
      Conversion Date").

     

    (c) On
      the
      Tranche Conversion Date (provided that no Default or Event of Default has
      occurred and is continuing (and has not been waived by the Required Lenders)),
      the applicable Tranche Reallocation Eligible Lender shall fund such converted
      Loans to the Escrow Account in accordance with the funding procedures set forth
      in Section 2.06
      (Funding
      of Loans).
      If a
      Default or Event of Default has occurred and is continuing (and has not been
      waived by the Required Lenders) on such Tranche Conversion Date, the funding
      of
      such converted Loans described in this Section 2.09(c)
      shall
      occur on the fifth (5th)
      Business Day following receipt by the applicable Tranche Reallocation Eligible
      Lender of written notice confirming that no Default or Event of Default is
      then
      continuing.

     

    (d) Each
      Tranche B Construction Loan funded pursuant to this Section 2.09
      on a
      Funding Date shall bear interest as a Eurodollar Loan or Base Rate Loan, and
      have an initial Interest Period, in each such case as specified in the
      applicable Funding Notice. Each Tranche B Construction Loan funded pursuant
      to this Section 2.09
      on a
      date that is not a Funding Date shall bear interest as a Eurodollar Loan or
      Base
      Rate Loan, and have an initial Interest Period, in each such case as specified
      in an Interest Period Notice delivered with respect to such Tranche B
      Construction Loan in accordance with Section 3.05
      (Interest
      Periods)
      or, if
      no such Interest Period Notice is delivered, shall bear interest as a Base
      Rate
      Loan.

     

    (e) In
      the
      event that any Tranche Reallocation Eligible Lender has previously received
      a
      Note with respect to its Tranche Reallocation Eligible Commitment, on any
      Tranche Conversion Date applicable to such Commitments, at the request of such
      Lender, replacement Notes shall be issued reflecting such conversion.

     

    Section
      2.10 Additional
      Greenfield Plant.
      The
      Borrowers and the Lenders acknowledge that the Borrowers may (but shall not
      be
      obligated to), in the future, request that the Lenders consider making available
      an additional senior loan to 

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    finance
      the construction of an additional ethanol facility to be owned and operated
      by a
      wholly-owned Subsidiary of Pacific Holding subject to (a) the satisfaction
      of all due diligence inquiries of each Lender, (b) the prior written
      approval of all of the Lenders, and (c) the execution and delivery of all
      amendments to the then-existing Financing Documents and all additional financing
      documents as the Lenders may require. The Borrowers acknowledge and agree that
      this Section 2.10
      does not
      constitute a commitment or obligation on the part of any Lender to provide
      funding for any such additional ethanol facility.

     

    ARTICLE
      III

     

    REPAYMENTS,
      PREPAYMENTS, INTEREST AND FEES

     

    Section
      3.01 Repayment
      of Construction Loan Fundings.
      The
      Construction Loans shall be repaid in full on the Conversion Date with the
      proceeds of the Term Loans.

     

    Section
      3.02 Repayment
      of Term Loan Fundings.
      (a)  The
      Borrowers unconditionally and irrevocably promise to pay to the Administrative
      Agent for the ratable account of each applicable Construction/Term Lender the
      aggregate outstanding principal amount of the Term Loans on the Initial
      Quarterly Payment Date and on each Quarterly Payment Date thereafter, in an
      amount equal to (i) in the case of the Tranche A Term Loans, one and
      one-half percent (1.5%) of the aggregate total amount of the Tranche A Term
      Loans made on the Conversion Date and (ii) in the case of the
      Tranche B Term Loans, one and one-half percent (1.5%) of the aggregate
      total amount of the Tranche B Term Loans made on the Conversion Date (which
      amounts shall, in each such case, be reduced as a result of any prepayments
      of
      the Term Loans made in accordance with Section 3.09
      (Optional
      Prepayment)
      or
Section 3.10
      (Mandatory
      Prepayment)
      in
      accordance with the terms set forth therein and shall be reduced as a result
      of
      any reduction in the Term Loan Commitments pursuant to Section 2.08(b),
      (i) or
      (k) (Termination
      or Reduction of Commitments)
      on a
pro rata
      basis): 

     

    (b) Notwithstanding
      anything to the contrary set forth in Section 3.02(a),
      the
      final principal repayment installment on the Final Maturity Date shall in any
      event be in an amount equal to the aggregate principal amount of all Term Loans
      outstanding on such date.

     

    Section
      3.03 Repayment
      of Working Capital Loan Fundings.
      The
      Borrowers unconditionally and irrevocably promise to pay in full to the
      Administrative Agent, for the ratable account of each Working Capital Lender,
      the aggregate outstanding principal amount of the Working Capital Loans on
      the
      Working Capital Maturity Date.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    Section
      3.04 Interest
      Payment Dates.
      (a) Interest
      accrued on each Loan shall be payable, without duplication:

     

    
      	 	
              (i)

            	
              on
                the Maturity Date for such Loan;

            


    

     

    
      	 	
              (ii)

            	
              with
                respect to Eurodollar Loans, the last day of each applicable Interest
                Period (and, if such Interest Period exceeds three months, on the
                day
                three months after such Eurodollar Loan is made or continued) 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 Quarterly 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 Loan, on any date when such Loan is prepaid
                hereunder.

            


    

     

    (b) 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 Quarterly
      Payment Date, any Interest Payment Date, upon acceleration or otherwise) shall
      be payable upon demand.

     

    (c) 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 pendancy of
      an
      Insolvency Proceeding.

     

    Section
      3.05 Interest
      Rates.
      (a) Pursuant
      to each properly delivered Funding Notice and Interest Period 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 and (ii) each Base Rate
      Loan shall accrue interest at a rate per annum during each Quarterly Period
      equal to the sum of the Base Rate for such Quarterly Period plus the Applicable
      Margin.

     

    (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 Quarterly
      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 

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    Eurodollar
      Loan as (or convert any such Base Rate Loan to) a Eurodollar Loan and setting
      forth the Borrowers' election with respect to the duration of the next Interest
      Period applicable to such continued or converted Eurodollar Loan, which Interest
      Period shall be one (1), two (2), three (3) or six (6) months in length 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 3.05(b)
      with
      respect to any Eurodollar Loan, such Eurodollar Loan shall automatically
      continue as a Eurodollar Loan with an Interest Period of one
      (1) month.

     

    (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 seven (7) separate Eurodollar Loans outstanding at any one time prior
      to
      the Conversion Date or four (4) separate Eurodollar Loans outstanding at
      any one time after the Conversion Date. For purposes of the foregoing,
      (i) Eurodollar Loans having different Interest Periods, regardless of
      whether they commence on the same date, shall be considered separate Eurodollar
      Loans and (ii)  all Eurodollar Loans having the same Interest Period and
      commencing on the same date shall be considered to be a single Eurodollar Loan.
      

     

    (f) All
      Base
      Rate Loans shall bear interest from and including the first day of each
      Quarterly Period (or the day on which Eurodollar Loans are converted to Base
      Rate Loans as required under Section 3.05(b)
      or under
Article IV
      (Eurodollar
      Rate and Tax Provisions))
      to (and
      including) the next succeeding Quarterly Payment Date at the interest rate
      determined as applicable to such Base Rate Loan.

     

    Section
      3.06 Default
      Interest Rate.
      If all
      or a portion of (i) the principal amount of any Loan is not paid when due
      (whether on the Maturity Date for such Loan, by acceleration or otherwise),
      such
      overdue amount shall bear interest at a rate per annum 

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    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 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).

     

    Section
      3.07 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
      3.08 Computation
      of Interest and Fees.
      (a)  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
      3.09 Optional
      Prepayment.
      (a)  The
      Borrowers shall have the right at any time, and from time to time, to prepay
      the
      Loans, in whole or in part, upon not fewer than three (3) Business Days'
      prior written notice to the Administrative Agent; provided,
      that
      any optional prepayment prior to the Conversion Date shall be subject to receipt
      by the Administrative Agent of satisfactory evidence, certified by the Borrowers
      and confirmed by the Independent Engineer, that sufficient funds will be
      available to achieve the Commercial Operation Date for each Plant with respect
      to which Commitments remain outstanding.

     

    (b) Any
      partial prepayment of the Loans shall be in a minimum amount of five hundred
      thousand Dollars ($500,000) and in integral multiples of one hundred thousand
      Dollars ($100,000) in excess thereof.

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    (c) Each
      notice of prepayment given by the Borrowers under this Section 3.09
      shall
      specify the prepayment date, the portion of the principal amount of the Loans
      to
      be prepaid and whether such prepayment shall be applied to Construction Loans
      or
      Term Loans and/or Working Capital Loans. All prepayments under this Section 3.09
      shall be
      made by the Borrowers to the Administrative Agent for the account of the
      applicable 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).

     

    (d) Amounts
      of principal prepaid under this Section 3.09
      shall:

     

    
      	 	
              (i)

            	
              in
                the case of prepayments on the Construction Loans, be allocated by
                the
                Administrative Agent pro rata
                between the Tranche A Loans and the Tranche B Loans based on
                their respective outstanding principal amounts on the date of such
                prepayment (and then pro rata
                between the In-Progress Plant 1 Construction Loans, In-Progress
                Plant 2 Construction Loans, Greenfield Plant 1 Construction
                Loans, Greenfield Plant 2 Construction Loans and Greenfield
                Plant 3 Construction Loans of such Tranche then
                outstanding);

            


    

     

    
      	 	
              (ii)

            	
              in
                the case of partial prepayments on the Term Loans, be applied by
                the
                Administrative Agent pro rata
                between the Tranche A Loans and the Tranche B Loans based on
                their respective outstanding principal amounts on the date of such
                prepayment (and then on a pro rata
                basis to the remaining outstanding installments of principal of the
                Term
                Loans of each such Tranche); and

            


    

     

    
      	 	
              (iii)

            	
              in
                the case of any prepayment of the Working Capital Loans, shall be
                applied
                (A) first,
                to repay outstanding amounts of the Working Capital Loans and
                (B) second,
                at the Borrowers' option, to reduce the Working Capital Loan Commitment
                by
                depositing an amount equal to such reduction in the Working Capital
                Reserve Account.

            


    

     

    (e) Any
      optional prepayment of Tranche B Loans (i) on or prior to the first
      anniversary of the Conversion Date shall be made at one hundred two percent
      (102%) of the principal amount of the Tranche B Loans being prepaid at such
      time; (ii) after the first anniversary of the Conversion Date and until the
      second anniversary of the Conversion Date, shall be made at one hundred one
      percent (101%) of the principal amount of the Tranche B Loans being prepaid
      at such time; and (iii) thereafter, any optional prepayment of the
      Tranche B Loans shall be made without penalty or premium.

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    (f) Amounts
      prepaid pursuant to this Section 3.09
      (other
      than pursuant to Section 3.09(d)(iii)(A))
      may not
      be reborrowed.

     

    Section
      3.10 Mandatory
      Prepayment.
      (a)  The
      Borrowers shall be required to prepay the Loans:

     

    
      	 	
              (i)

            	
              upon
                receipt by any of the Borrowers of Insurance Proceeds, as required
                pursuant to Sections 8.14(d)(ii)
                and (e) (Insurance
                and Condemnation Proceeds Accounts);

            


    

     

    
      	 	
              (ii)

            	
              upon
                receipt by any of the Borrowers of Condemnation Proceeds, as required
                pursuant to Sections 8.14(d)(ii)
                and (e) (Insurance
                and Condemnation Proceeds Accounts);

            


    

     

    
      	 	
              (iii)

            	
              upon
                receipt of any Project Document Termination Payments, as required
                pursuant
                to Section 8.14(d)(ii)
                (Extraordinary
                Proceeds Account);
                and

            


    

     

    
      	 	
              (iv)

            	
              upon
                receipt of proceeds of any asset disposal (other than proceeds received
                from the sale of Products) that are not used for replacement in accordance
                with Section 7.02(f)
                (Negative
                Covenants - Asset Dispositions),
                as required pursuant to Section 8.14(c)(ii)
                (Extraordinary
                Proceeds Account).

            


    

     

    (b) The
      Borrowers shall be required to prepay the Term Loans and the Working Capital
      Loans:

     

    
      	 	
              (i)

            	
              on
                each Quarterly Payment Date, as required pursuant to Sections 8.08(c)(xi)
                and (xiii) (Revenue
                Account);
                provided,
                that such amounts will be applied first to the Tranche A Term Loans
                (until all amounts outstanding under the Tranche A Term Loans have
                been paid in full) and then to the Tranche B Term Loans;
                and

            


    

     

    
      	 	
              (ii)

            	
              on
                any Quarterly Payment Date, if the Historical Debt Service Coverage
                Ratio
                on such Quarterly Payment Date is less than 1.5:1, as required pursuant
                to
                Section 8.08(c)(xiv)
                (Revenue Account)
                and Section 8.13(b)(ii)
                (Prepayment
                Holding Account).

            


    

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    (c) If
      at any
      time after any Plant has achieved its Commercial Operation Date a Borrowing
      Base
      Certificate demonstrates that the then-outstanding principal amount of the
      Working Capital Loans exceeds the then-effective Aggregate Working Capital
      Commitment or the then-applicable Working Capital Loan Availability, then the
      Borrowers shall, within three (3) Business Days following the delivery of such
      Borrowing Base Certificate, prepay the Working Capital Loans in the amount
      of
      such excess. 

     

    (d) All
      prepayments under this Section 3.10
      shall be
      made by the Borrowers to the Administrative Agent for the account of the
      applicable 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).

     

    (e) Amounts
      of principal prepaid under this Section 3.10
      (other
      than pursuant to Section 3.10(c))
      shall
      be allocated by the Administrative Agent:

     

    
      	 	
              (i)

            	
              in
                the case only of prepayment made pursuant to Section 3.10(a)
                prior to the Conversion Date, first,
                pro rata
                between the Tranche A Loans and the Tranche B Loans based on
                their respective outstanding principal amounts on the date of such
                prepayment (and then pro rata
                between the In-Progress Plant 1 Construction Loans, the In-Progress
                Plant 2 Construction Loans, the Greenfield Plant 1 Construction
                Loans, the Greenfield Plant 2 Construction Loans and the Greenfield
                Plant 3 Construction Loans of each such Tranche then outstanding),
                second,
                in an amount equal to the Maximum Available Amounts under all Letters
                of
                Credit then outstanding, to a sub-account of the Working Capital
                Reserve
                Account as cash collateral to secure the repayment of any Working
                Capital
                Loans that may result from a draw on any such Letter of Credit,
                third,
                to the outstanding principal amount of the Working Capital Loans,
                and
                fourth,
                all remaining amounts shall be deposited into the Working Capital
                Reserve
                Account (up to an amount such that following such deposit, the Working
                Capital Reserve Account is fully funded to the then-current Working
                Capital Reserve Required Amount);
                or

            


    

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (ii)

            	
              in
                the case of a prepayment made after the Conversion Date, first,
                to the Term Loans (except as otherwise provided in Section 3.10(b)(i))
                pro rata
                between the Tranche A Loans and the Tranche B Loans based on
                their respective outstanding principal amounts on the date of such
                prepayment and, in the event of a partial prepayment of the Term
                Loans, to
                the remaining outstanding installments of principal of the Term Loans
                of
                each Tranche in inverse order of maturity, second,
                in an amount equal to the Maximum Available Amounts under all Letters
                of
                Credit then outstanding, to the Working Capital LC Collateral Sub-Account
                as cash collateral to secure the repayment of any Working Capital
                Loans
                that may result from a draw on any such Letter of Credit, third,
                to the outstanding principal amount of the Working Capital Loans,
                and
                fourth,
                all remaining amounts shall be deposited in the Working Capital Reserve
                Account (up to an amount such that following such deposit, the Working
                Capital Reserve Account is fully funded to the then-current Working
                Capital Reserve Required Amount).

            


    

     

    (f) Amounts
      prepaid pursuant to this Section 3.10
      (other
      than with respect to the Working Capital Loans) may not be
      reborrowed.

     

    Section
      3.11 Time
      and Place of Payments.
      (a)  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, 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 

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    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.

     

    Section
      3.12 Fundings
      and Payments Generally.
      (a) 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 3.12(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.

     

    (c) The
      Borrowers hereby authorize each Lender, if and to the extent payment owed to
      such Lender is not made when due under this Agreement or under the Notes held
      by
      such Lender, to charge from time to time against any or all of any Borrower's
      accounts with such Lender (other than, in the event that the Account Bank is
      also a Lender, any Project Account) any amount so due.

     

    Section
      3.13 Fees.
      (a)  From
      and including the date hereof until the Construction Loan Maturity Date, the
      Borrowers agree to pay to the Administrative Agent, for the account of the
      applicable Lenders, on each Quarterly Payment Date, a commitment fee (a
      "Commitment
      Fee")
      equal
      to one-half of one percent (0.50%) per annum on (i) the average daily
      amount by which the Aggregate Tranche Commitment for Tranche A Construction
      Loans exceeds the outstanding amount of the Tranche A Construction Loans
      and (ii) the average daily amount by which the Aggregate Working Capital
      Loan Commitment exceeds the sum of (x) the outstanding amount of Working
      Capital Loans plus
      (y) the Stated Amounts of all outstanding Letters of Credit, in each case,
      during the calendar quarter or portion thereof then ended. 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 quarter, as
      applicable.

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

    (b) Upon
      the
      issuance of each Letter of Credit pursuant to Section 2.04
      (Letters
      of Credit)
      and
      until the termination, cancellation or expiration of such Letter of Credit,
      the
      Borrowers agree to pay to the Administrative Agent, on each Quarterly Payment
      Date and on the date on which such Letter of Credit expires, is cancelled or
      terminates, (i) for the account of the Working Capital Lenders, an
      availability fee (the "Letter
      of Credit Availability Fee")
      at a
      rate per annum equal to the Working Capital Applicable Margin for Eurodollar
      Loans on the average daily Maximum Available Amount under such Letter of Credit
      during the calendar quarter or portion thereof then ended and (ii) for the
      account of the Issuing Bank, a fronting fee (the "Letter
      of Credit Fronting Fee")
      equal
      to the greater of (x) fifteen hundred Dollars ($1,500) or (y) an
      amount calculated at a rate per annum equal to fifteen-hundredths of one percent
      (0.15%) of the average daily Maximum Available Amount under such Letter of
      Credit during the calendar quarter or portion thereof then ended. All Letter
      of
      Credit Availability Fees and Letter of Credit Fronting Fees shall be computed
      on
      the basis of the actual number of days elapsed in a year of 360 days, as
      pro-rated for any partial quarter, as applicable.

     

    (c) Each
      Borrower agrees to pay to the Administrative Agent for the account of the Lead
      Arrangers, the Lenders and the Agents, additional fees in the amounts and at
      the
      times from time and time agreed to in writing by the Borrowers and the
      Administrative Agent, including pursuant to the Fee Letters.

     

    (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
      3.14 Pro
      Rata Treatment.
      (a) Except
      as otherwise expressly provided herein (including Section 4.01
      (Eurodollar
      Rate Lending Unlawful),
      Section
      2.08 (Termination
      or Reduction of Commitments)
      and
Section 2.09
      (Tranche
      Reallocation)),
      each
      Funding of Tranche A Loans and Tranche B Loans, each Tranche B Escrow
      Disbursement and each reduction of commitments of any type, shall be allocated
      by the Administrative Agent as set forth below:

     

    
      	 	
              (i)

            	
              first,
                (A) in the case of any Funding or the Tranche B Escrow
                Disbursement, to the Tranche B Loans (until such amounts have been
                fully funded) and then to the Tranche A Loans or (B) in the case
                of any reduction, pro rata
                between the Tranche A Loans and the Tranche B Loans related to such
                reduction; and

            


    

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (ii)

            	
              second,
                pro rata
                among the applicable Tranche A Lenders and Tranche B Lenders, as
                the case
                may be, in accordance with their respective applicable Commitment
                Percentages.

            


    

     

    (b) Except
      as
      required under Section 3.09
      (Optional
      Prepayment),
      Section 3.10
      (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 and/or the Letters
      of
      Credit 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 or the
      Tranche B Escrow Disbursement or any Tranche B Conversion Disbursement
      to be made hereunder, the Administrative Agent may, in its discretion, round
      each Lender's percentage of such Funding or the Tranche B Escrow
      Disbursement or Tranche B Conversion Disbursement, as the case may be, to
      the next higher or lower whole Dollar amount.

     

    Section
      3.15 Sharing
      of Payments.
      (a)  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 3.15
      may, to
      the fullest extent permitted by law, exercise all its rights of payment
      (including pursuant to Section 11.15
      (Rights
      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.

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

    (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 3.15
      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 3.15
      to share
      in the benefits of any recovery on such secured claim.

     

    Section
      3.16 Termination
      of Interest Rate Protection Agreement in Connection with Any
      Prepayment.
      The
      Borrowers shall, in connection with any prepayment made by the Borrowers
      pursuant to Section 3.09
      (Optional
      Prepayment)
      or
Section 3.10
      (Mandatory
      Prepayment),
      terminate an aggregate notional amount under the Interest Rate Protection
      Agreements equal to the amount (if any) by which the aggregate notional amount
      under the Interest Rate Protection Agreements would exceed the aggregate
      outstanding principal amount of the Construction Loans or Term Loans, as the
      case may be, immediately after giving effect to such prepayment; and in each
      case, such termination shall be made within five (5) Business Days of the date
      of such prepayment (or, to the extent that the aggregate notional amount under
      the Interest Rate Protection Agreements exceeds the aggregate outstanding
      principal of the Construction Loans or the Term Loans, as applicable, by no
      more
      than ten percent (10%), within thirty (30) days following such prepayment).
      The
      amount of any Swap Termination Value due in respect of the Interest Rate
      Protection Agreements terminated in accordance with the immediately foregoing
      sentence shall be made by the Borrowers from amounts available with which to
      make such prepayment.

     

    ARTICLE
      IV

     

    EURODOLLAR
      RATE AND TAX PROVISIONS

     

    Section
      4.01 Eurodollar
      Rate Lending Unlawful.
      (a) 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. 

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

     

    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.
      (a) 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 Quarterly Period in accordance with
      this Agreement.

     

    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 

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

     

    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.
      (a)  Each
      Lender agrees after it becomes aware of the occurrence of an event that would
      entitle it to give notice pursuant to Section 4.0l
      (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.

     

    
      
        
        

      

      
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    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 3.09
      (Optional
      Prepayment),
      3.10
      (Mandatory
      Prepayment),
      4.01(a)
      Eurodollar
      Rate Lending Unlawful)
      or
      otherwise or (b) the Borrowers failing to make a Funding or the
      Tranche B Escrow Disbursement 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.

     

    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.

     

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

     

    (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.

     

    (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 

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

     

    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 and the Borrowers' Agent) 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
      Issuance Request, on each Funding Date and on the Conversion 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)).

     

    Section
      5.01 Organization;
      Power and Compliance with Law.
      Each of
      the Borrowers (a) is a limited liability company duly formed, validly
      existing and in good standing under the laws of the State of Delaware,
      (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 as a foreign
      limited liability company 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) has all requisite limited liability company 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.
      The
      execution, delivery and performance by each of the Borrowers of each Transaction
      Document to which it is a party are within such Borrower's limited liability
      company powers, have been duly authorized by all necessary limited liability
      company action, and do not:

     

    (a) contravene
      such Borrower's Organic Documents (including its Borrower LLC
      Agreement);

     

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    

     

    (b) contravene
      in any material respect any Law binding on or affecting such
      Borrower;

     

    (c) with
      respect to Pacific Holding or any other Borrower with respect to whose Plant
      a
      Funding has been made or is being requested, (i) in the case of any
      Financing Document, contravene any Contractual Obligation binding on or
      affecting such Borrower or (ii) in the case of any Project Document,
      contravene any Contractual Obligation binding on or affecting such Borrower
      (other than in the case of this Section 5.02(c)(ii)
      any
      contravention which could not reasonably be expected to have a Material Adverse
      Effect);

     

    (d) require
      any consent or approval under such Borrower's Organic Documents that has not
      been obtained;

     

    (e) with
      respect to Pacific Holding or any other Borrower with respect to whose Plant
      a
      Funding has been made or is being requested, 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 (and, in the case only
      of the execution, delivery and performance of the Project Documents, any other
      approvals or consents the failure of which to obtain could not reasonably be
      expected to have a Material Adverse Effect); 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.
      The
      representations and warranties made in this Section 5.03
      shall
      apply only on and after the Closing Date and then only with respect to Pacific
      Holding and each other Borrower with respect to whose Plant a Funding has been
      made or is being requested.

     

    (a) 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 Borrowers and the Pledgor of the Liens granted under the Security
      Documents 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) As
      of the
      initial Funding Date for each Plant: 

     

    
      	 	
              (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 the applicable Plant as contemplated by the Transaction
                Documents (together with the Governmental Approvals described in
                Section
                5.03(a)
                the "Necessary
                Project Approvals"),
                are listed on the Governmental Approvals Update Schedule for such
                Plant;

            


    

     

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (ii)

            	
              the
                Necessary Project Approvals listed in Part
                A
                of
                each applicable Governmental Approvals Update Schedule have been
                obtained,
                are in full force and effect, are properly in the name of the appropriate
                Person, are final and
                Non-Appealable;

            


    

     

    
      	 	
              (iii)

            	
              the
                Necessary Project Approvals listed on Part
                B
                of
                each applicable Governmental Approvals Update Schedule are not required
                under applicable Laws to be obtained prior to the initial Funding
                Date for
                such Plant (collectively, the "Deferred
                Approvals")
                and have not yet been obtained; and

            


    

     

    
      	 	
              (iv)

            	
              Part
                B
                of
                each applicable Governmental Approvals Update Schedule specifies
                the date
                by which, or stage of construction or operation for which, each Deferred
                Approval included therein is required to be
                obtained.

            


    

     

    (c) On
      each
      Funding Date after the initial Funding Date of a Plant, (i) 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, and (ii) all Deferred
      Approvals which as of such Funding Date are required to be obtained, have been
      obtained, are in full force and effect, are properly in the name of the
      appropriate Person, and are final and Non-Appealable (except as set forth on
      Part C
      of each
      applicable Governmental Approvals Update Schedule).

     

    (d) For
      the
      avoidance of doubt, the Borrowers' right to provide Governmental Approvals
      Update Schedules includes the right to update such schedules to correct any
      reference to a Governmental Approval that has been replaced in accordance with
      applicable Law. 

     

    (e) 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 that has been obtained as of the date this
      representation is made or deemed repeated was accurate and complete in all
      material respects at the time of submission and continues to be accurate in
      all
      material 

     

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

    

     

    respects
      and complete in all respects to the extent required for the issuance or
      continued effectiveness of such Necessary Project Approval (except, with respect
      to continued effectiveness, for Necessary Project Approvals that are subject
      to
      a supplemental filing shown on Part
      B
      of any
      applicable Governmental Approvals Update Schedule that has not yet been filed),
      and none of the Borrowers has any knowledge of any event, act, condition or
      state of facts inconsistent with such information (except, in each case, for
      such inaccuracies and omissions as could not reasonably be expected to result
      in
      a material delay to the issuance of any Necessary Project Approval or as could
      not otherwise be expected to have a Material Adverse Effect with respect to
      the
      relevant Plant). 

     

    (f) The
      Borrowers reasonably believe that each Necessary Project Approval that remains
      to be obtained will be obtained in a final and Non-Appealable form in the
      ordinary course without undue delay or material expense and without
      unanticipated expensive or burdensome conditions prior to the time it is
      required to be obtained under applicable Law. 

     

    Section
      5.04 Investment
      Company Act.
      None of
      the Borrowers is, and after giving effect to the Loans and the application
      of
      the proceeds of the Loans as described herein none of the Borrowers 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, except as the enforceability hereof or thereof may be limited by
      (a) bankruptcy, insolvency, reorganization, or other similar laws affecting
      the enforcement of creditors' rights generally and (b) general equitable
      principles (whether considered in a proceeding in equity or at
      law).

     

    Section
      5.06 Financial
      Information.
      Each of
      the financial statements of Pacific Holding delivered pursuant to Section 6.01(h)
      (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).

     

    
      
        
        

      

      
        38

        
          

        

      

      
        
        

      

    

     

    Section
      5.07 No
      Material Adverse Effect.
      Since
      September 30, 2006 no Material Adverse Effect has occurred and is
      continuing.

     

    Section
      5.08 Project
      Compliance.
      (a)
      Each
      Plant with respect to which a Funding has been made or is being requested is
      and
      will continue to be owned, developed, constructed and maintained in material
      compliance with all applicable Laws and the requirements of all Necessary
      Project Approvals. 

     

    (b) Each
      Plant with respect to which a Funding has been made or is being requested is
      and
      will continue to be owned, developed, constructed 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 and the Borrower's right to replace Project
      Documents as set forth in Section 9.01(j)
      (Events
      of Default - Project Document Defaults; Termination))
      (except, 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). 

     

    Section
      5.09 Litigation.
      (a) No
      action, suit, proceeding or investigation has been instituted or threatened
      against any of Pacific Holding, the Pledgor, or any Plant or Borrower with
      respect to whose Plant any Funding has been made or is being requested
      (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 any Plant or Borrower; and

     

    (b) no
      action, suit, proceeding or investigation has been instituted or threatened
      against any Major Project Party that is party to any Project Document with
      Pacific Holding or that relates to any Borrower or Plant with respect to which
      a
      Funding has been made or is being requested that, individually or in the
      aggregate, has had or could reasonably be expected to have a Material Adverse
      Effect.

     

    Section
      5.10 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
      5.11 Contracts.
      The
      representations and warranties made in this Section 5.11
      shall
      apply only on and after the Closing Date and then only with respect to Pacific
      Holding and each other Borrower with respect to whose Plant a Funding has been
      made or is being requested. Each reference in this Section
      5.11
      to
Schedule
      5.11
      shall be
      deemed to be a reference to Schedule
      5.11,
      as
      updated from time to time by the delivery of any Contract Disclosure
      Updates.

     

    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

    

     

    (a) As
      of the
      Closing Date, 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 and any Subordinated Debt Agreements
      (including all documents amending, supplementing, interpreting or otherwise
      modifying or clarifying such agreements and instruments) are listed in
Schedule 5.11.

     

    (b) As
      of the
      initial Funding Date for each Plant: 

     

    
      	 	
              (i)

            	
              all
                material contracts, agreements, instruments, letters, understandings,
                or
                other documentation that are required under to be obtained by any
                Borrower
                in connection with the construction and operation of the applicable
                Plant
                as contemplated by the Transaction Documents (collectively for all
                Plants,
                the "Necessary
                Project Contracts"),
                are listed in Schedule 5.11;
                

            


    

     

    
      	 	
              (ii)

            	
              the
                Necessary Project Contracts listed in Part
                A
                of
                Schedule 5.11
                have been obtained and are in full force and
                effect;

            


    

     

    
      	 	
              (iii)

            	
              the
                Necessary Project Contracts listed on Part
                B
                of
                Schedule 5.11
                are not required to be obtained prior to the initial Funding Date
                for such
                Plant (collectively, the "Deferred
                Contracts")
                and have not yet been obtained; and

            


    

     

    
      	 	
              (iv)

            	
              Part
                B
                of
                Schedule 5.11
                specifies the date by which, or stage of construction or operation
                for
                which, each Deferred Contract included therein is required to be
                obtained.

            


    

     

    (c) On
      each
      Funding Date after the initial Funding Date of a Plant, (i) all Necessary
      Project Contracts are in full force and effect (other than any such failures
      which are not material to such Plant), and (ii) all Deferred Contracts which
      as
      of such Funding Date are required to be obtained, have been obtained and are
      in
      full force and effect (other than any such failures which are not material
      to
      such Plant).

     

    (d) Nothing
      herein shall limit the Borrowers' right to replace or substitute contracts,
      agreements, instruments, letters, understandings, or other documentation to
      the
      extent permitted by this Agreement (and Schedule
      5.11
      shall be
      automatically updated to reflect any such replacement or
      substitution).

     

    
      
        
        

      

      
        40

        
          

        

      

      
        
        

      

    

     

    (e) The
      following representations and warranties shall apply on and after the Closing
      Date and only with respect to Pacific Holding and each other Borrower with
      respect to whose Plant a Funding has been made or is being
      requested:

     

    
      	 	
              (i)

            	
              To
                the knowledge of each Borrower, all representations, warranties and
                other
                factual statements made by each Project Party in each of the Project
                Documents to which such Project Party is a party are true and correct
                as
                of the date(s) made or deemed repeated (other than any such inaccuracies
                that could not reasonably be expected to have a Material Adverse
                Effect on
                the relevant Plant).

            


    

     

    
      	 	
              (ii)

            	
              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 5.11,
                and (iii) any other agreements permitted by this
                Agreement.

            


    

     

    
      	 	
              (iii)

            	
              There
                have been no Change Orders under any Construction Contract for any
                Greenfield Plant with respect to which a Funding has been made or
                is being
                requested, other than in accordance with Section
                7.02(m)(ii) (Negative
                Covenants - Change Orders).

            


    

     

    
      	 	
              (iv)

            	
              All
                conditions precedent to the obligations of the respective parties
                under
                the Project Documents that have been executed as of the date this
                representation is made or deemed repeated have been satisfied or
                waived by
                the parties thereto except for such conditions precedent that do
                not and
                cannot be satisfied until a later stage of development of the relevant
                Plant, and each Borrower has no reason to believe that any such condition
                precedent (other than any condition precedent that can be waived
                by any
                Borrower without any material adverse result) cannot be satisfied
                on or
                prior to the commencement of the appropriate stage of development
                of such
                Plant.

            


    

     

    Section
      5.12 Collateral.
      (a)
      On and
      after the Closing Date, the Collateral includes all of the Equity Interests
      in
      and all of the tangible and intangible assets of each of Pacific Holding, Madera
      and Boardman (except, with respect to all 

     

    
      
        
        

      

      
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    assets,
      as otherwise provided in the applicable Security Agreement). On and after the
      date of the initial Stockton Funding, the Collateral includes all of the Equity
      Interests in and all of the tangible and intangible assets of Stockton (except,
      with respect to all assets, as otherwise provided in the applicable Security
      Agreement). On and after the date of the initial Burley Funding, the Collateral
      includes all of the Equity Interests in and all of the tangible and intangible
      assets of Burley (except, with respect to all assets, as otherwise provided
      in
      the applicable Security Agreement). On and after the date of the initial Brawley
      Funding, the Collateral includes all of the Equity Interests in and all of
      the
      tangible and intangible assets of Brawley (except, with respect to all assets,
      as otherwise provided in the applicable Security Agreement).

     

    (b) On
      and
      after the Closing Date (or, with respect to Local Accounts, the initial Funding
      Date), the respective Liens and security interests granted to the Collateral
      Agent (for the benefit of the Senior Secured Parties) pursuant to the Security
      Documents in effect on each date this representation is made or deemed repeated
      (i) constitute, as to personal property included in the Collateral, a valid
      first-priority security interest in such personal property and
      (ii) constitute, as to the Mortgaged Property included in the Collateral, a
      valid first-priority Lien of record in the Mortgaged Property, in each case
      subject only to Permitted Liens.

     

    (c) The
      security interest granted to the Collateral Agent (for the benefit of the Senior
      Secured Parties) pursuant to the Security Documents relating to assets of or
      equity in Pacific Holding or each other Borrower with respect to whose Plant
      a
      Funding has been made or is being requested in the Collateral consisting of
      personal property will be perfected (i) with respect to any property that
      can be perfected by filing, upon the filing of UCC financing statements in
      the
      filing offices identified in Schedule 5.12,
      (ii) with respect to any Project Account or Local Account Collateral that
      can be perfected solely by control, upon execution of this Agreement and the
      Blocked Account Agreements and (iii) with respect to any property (if any)
      that can be perfected solely by possession, upon the Collateral Agent receiving
      possession thereof, and in each case such security interest will be, as to
      Collateral perfected under the UCC or otherwise as aforesaid, superior and
      prior
      to the rights of all third Persons now existing or hereafter arising whether
      by
      way of mortgage, lien, security interests, encumbrance, assignment or otherwise,
      in each case subject only to Permitted Liens. On and after the Closing Date
      (or,
      with respect to Local Accounts, the initial Funding Date), all such action
      as is
      necessary has been taken to establish and perfect the Collateral Agent's rights
      in and to the Collateral covered by the Security Documents relating to assets
      of
      or equity in Pacific Holding or each other Borrower with respect to whose Plant
      a Funding has been made or is being requested in effect on the date this
      representation is made or deemed repeated to the extent the Collateral Agent's
      security interest can be perfected by filing, including any recordation, filing,
      registration, giving of notice or other similar action. No filing, recordation,
      re-filing or re-recording other than those listed on Schedule 5.12
      (as the


     

    
      
        
        

      

      
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    same
      may
      be updated at the written request of the Borrowers' Agent, with the written
      agreement of the Administrative Agent, following any change in applicable law)
      is necessary to perfect (or maintain the perfection of) the interest, title
      or
      Liens of the Security Documents (to the extent the Collateral Agent's security
      interest can be perfected by filing or recording), and on and as of each
      relevant date which this representation and warranty is made or deemed repeated,
      all such filings or recordings have been made with respect to each Security
      Document then in effect. On and after the Closing Date, the Borrowers and the
      Pledgor have properly delivered or caused to be delivered to the Collateral
      Agent, or provided the Collateral Agent control of, all Collateral relating
      to
      assets of or equity in Pacific Holding or each other Borrower with respect
      to
      whose Plant a Funding has been made or is being requested that requires
      perfection of the Liens and security interests described above by possession
      or
      control. On and after the Closing Date, all or substantially all of the
      Collateral relating to assets of or equity in Pacific Holding or each other
      Borrower with respect to whose Plant a Funding has been made or is being
      requested (other than the Project Account Collateral, the Local Account
      Collateral, certificates, securities, investments, chattel paper, books and
      records and general intangibles), including the Mortgaged Property, is or will
      (when acquired) be located on the Sites. 

     

    Section
      5.13 Ownership
      of Properties.
      (a)  Madera
      has a good and valid fee ownership interest in the Site for the Madera Plant
      (except as contemplated by Section 7.02(f)
      (Negative
      Covenants - Asset Dispositions)).
      Boardman has a good and valid leasehold interest or valid fee ownership in
      the
      Site for the Boardman Plant (except as contemplated by Section 7.02(f)).
      On and
      after the date of the initial Funding Notice for the Burley Plant, Burley has
      a
      good and valid fee ownership interest in the Site for the Burley Plant (except
      as contemplated by Section 7.02(f)).
      On and
      after the date of the initial Funding Notice for the Brawley Plant, Brawley
      has
      a good and valid fee ownership interest in the Site for the Brawley Plant
      (except as contemplated by Section 7.02(f)).
      On and
      after the date of the initial Funding Notice for the Stockton Plant, Stockton
      has a good and valid leasehold interest or valid fee ownership in the Site
      for
      the Stockton Plant (except as contemplated by Section 7.02(f)). 

     

    (b) On
      and
      after the Closing Date, (except as contemplated by Section 7.02(f)
      (Negative
      Covenants - Asset Dispositions))
      the
      Borrowers have a good and valid ownership interest, leasehold interest, license
      interest or other right of use in all other property and assets (tangible and
      intangible) included in the Collateral relating to assets of or equity in
      Pacific Holding and each other Borrower with respect to whose Plant a Funding
      has been made or is being requested (other than the collateral pledged pursuant
      to the Pacific Holding Pledge Agreement) under each Security Document that
      has
      been executed as of the date this representation is made or deemed repeated.
      Such ownership interests, leasehold interest, license interest or other rights
      of use are and will be, together with any other assets or interests contemplated
      to be acquired pursuant to the 

     

    
      
        
        

      

      
        43

        
          

        

      

      
        
        

      

    

     

    applicable
      Construction Budget, sufficient to permit construction and operation of the
      Plants with respect to which a Funding has been made or is being requested
      by
      the relevant Borrowers, substantially in accordance with the Project Documents
      applicable to each such Plant. None of said properties or assets of or equity
      in
      Pacific Holding or any other Borrower with respect to whose Plant a Funding
      has
      been made or is being requested 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 5.09(c)
      (Litigation).

     

    (c) All
      Equity Interests in each of Madera, Boardman, Stockton, Brawley and Burley
      are
      owned by Pacific Holding.

     

    (d) All
      Equity Interests in Pacific Holding are owned by the Pledgor.

     

    (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 (other
      than any Borrower) and are readily distinguishable from one another (except
      to
      the extent otherwise contemplated by the Transaction Documents).

     

    (f) None
      of
      Pacific Holding or any other Borrower with respect to whose Plant a Funding
      has
      been made or is being requested 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 with the prior written
      approval of the Administrative Agent.

     

    Section
      5.14 Taxes.
      (a)  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
      5.14(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) None
      of
      the Borrowers
      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 (including
      the
      Pledgor or any other Affiliate of any Borrower).

     

    
      
        
        

      

      
        44

        
          

        

      

      
        
        

      

    

     

    Section
      5.15 Patents,
      Trademarks, Etc.
      Pacific
      Holding and each other Borrower with respect to whose Plant a Funding has been
      made or is being requested 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, construction, operation and maintenance of the
      Project.

     

    Section
      5.16 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
      5.17 Property
      Rights, Utilities, Supplies Etc.
      (a) On
      and after the Closing Date, all material property interests, utility services,
      means of transportation, facilities and other materials necessary for the
      development, engineering, construction, testing, start-up, use and operation
      of
      the Project (including, as necessary, gas, roads, rail transport, electrical,
      water and sewage services and facilities) are, or will be when needed, available
      to each Plant with respect to which a Funding has been made or is being
      requested and arrangements in respect thereof have been made.

     

    (b) There
      are
      no material materials, supplies or equipment necessary for construction and,
      from and after the Commercial Operation Date for the respective Plant, operation
      or maintenance of each Plant with respect to which a Funding has been made
      or is
      being requested that are not expected to be available at the relevant Site
      on
      commercially reasonable terms consistent with the Construction Schedule and
      the Construction Budget, or the Operating Budget, for the respective Plant,
      as
      applicable.

     

    Section
      5.18 No
      Defaults.
      (a)
      No
      Funding Default has occurred and is continuing. 

     

    (b) None
      of
      Pacific Holding or any other Borrower with respect to whose Plant a Funding
      has
      been made or is being requested is in any breach of, or in any default under,
      any of such Borrower's Contractual Obligations (other than the Project
      Documents) that has had or could reasonably be expected to have a Material
      Adverse Effect with respect to such Borrower or Plant). 

     

    Section
      5.19 Environmental
      Warranties.
      The
      following representations and warranties shall apply on and after the Closing
      Date and only with respect to Pacific Holding, each other Borrower with respect
      to whose Plant a Funding has been made or is being requested and each such
      Plant:

     

    
      
        
        

      

      
        45

        
          

        

      

      
        
        

      

    

     

    (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 (other than
      any
      such communication that the Administrative Agent has agreed in writing is not
      materially adverse) 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 against any Borrower. No Environmental Affiliate
      has taken any action or violated any Environmental Law that to the knowledge
      of
      the Borrowers could reasonably be expected to result in an Environmental
      Claim.

     

    (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
      each
      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) none of the Borrowers
      knows of any underground storage tanks located or to be located on property
      owned or leased by any Borrower except as identified on Schedule
      5.19(d)(ii)
      (as the
      same may be updated in writing by the Borrowers' 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) None
      of
      the Borrowers has received any letter or request for information under
      Section 104 of the CERCLA, or comparable state laws, and to the


     

    
      
        
        

      

      
        46

        
          

        

      

      
        
        

      

    

     

    knowledge
      of the Borrowers, none of the operations of the Borrowers 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
      5.20 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 5.20
      with
      such meanings.

     

    Section
      5.21 Accuracy
      of Information.
      (a)
      As of
      the Closing Date, all factual information heretofore or contemporaneously
      furnished by or on behalf of Pacific Holding or any other Borrower with respect
      to whose Plant a Funding has been made or is being requested 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 that have been prepared on a reasonable basis and in good faith
      by
      the Borrowers) 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.

     

    (b) As
      of the
      date of the Madera Funding Notice and the Madera Funding Date, all factual
      information furnished from and after the Closing Date (including any information
      provided in connection with such Funding Notice) by or on behalf of the
      Borrowers with respect to Madera or the Madera Plant, in any 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 that have
      been
      prepared on a reasonable basis and in good faith by the Borrowers) 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. 

     

    
      
        
        

      

      
        47

        
          

        

      

      
        
        

      

    

     

    (c) As
      of the
      date of the Boardman Funding Notice and the Boardman Funding Date, all factual
      information furnished from and after the Closing Date (including any information
      provided in connection with such Funding Notice) by or on behalf of the
      Borrowers with respect to Boardman or the Boardman Plant, in any 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 that have
      been
      prepared on a reasonable basis and in good faith by the Borrowers) 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.

     

    (d) As
      of the
      date of the initial Funding Notice for each Greenfield Plant and the initial
      Funding Date for such Greenfield Plant, all factual information furnished from
      and after the Closing Date (including any information provided in connection
      with such Funding Notice) by or on behalf of the Borrowers with respect to
      such
      Greenfield Plant or the Borrower that owns such Greenfield Plant, in any
      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 that
      have been prepared on a reasonable basis and in good faith by the Borrowers)
      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.

     

    (e) The
      assumptions constituting the basis on which the Borrowers prepared each
      Construction Budget, Construction Schedule, Operating Budget and the Financial
      Model 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 the Borrowers' best
      judgment as of the date prepared as to the matters contained therein, based
      on
      all information known to the Borrowers.

     

    
      
        
        

      

      
        48

        
          

        

      

      
        
        

      

    

     

    (f) On
      and
      after the Closing Date, the Borrowers reasonably believe that the Conversion
      Date will occur on or before the Conversion Date Certain and that the cost
      to
      complete the Project will not exceed the funds available to the Borrowers
      (including funds available under this Agreement, the Required Equity
      Contributions and any Subordinated Debt Agreements).

     

    (g) On
      and
      after the Closing Date, the Borrowers reasonably believe that the development,
      engineering, construction, testing, start-up, use, ownership, operation and
      maintenance of the Project are economically feasible and technically
      feasible.

     

    Section
      5.22 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 rank at least
      pari passu
      with all
      other Indebtedness of any Borrower.

     

    Section
      5.23 Separateness.
      (a)
      Each
      Borrower maintains separate bank accounts and separate books of account from
      each other Borrower and from the Pledgor (other than the Project Accounts
      maintained in accordance with this Agreement). The separate liabilities of
      each
      Borrower are readily distinguishable from the liabilities of each Affiliate
      of
      the Borrowers, including the Pledgor (except to the extent otherwise
      contemplated by the Transaction Documents). 

     

    (b) Each
      Borrower conducts its business solely in its own name in a manner not misleading
      to other Persons as to its identity. 

     

    (c) Each
      Borrower is in compliance with the provisions set forth on Schedule 5.23.

     

    Section
      5.24 Required
      LLC Provisions.
      Each
      Borrower LLC Agreement includes each of the following terms (collectively,
      the
      "Required
      LLC Provisions"): 

     

    (a) in
      the
      case of Pacific Holding, requires that it have, at all times, one Independent
      Member or Independent Manager;

     

    (b) in
      the
      case of Pacific Holding, requires a one hundred percent (100%) affirmative
      vote or written consent of one hundred percent (100%) of all members or
      managers, as the case may be, including the Independent Member or the
      Independent Manager, as applicable, in connection with any of the following
      matters: in order to authorize (i) the filing of any insolvency or
      reorganization case or proceeding, instituting proceedings to have Pacific
      Holding adjudicated bankrupt or insolvent, instituting proceedings under any
      applicable insolvency Law, seeking any relief under 

     

    
      
        
        

      

      
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    any
      Law
      relating to relief from debts or the protection of debtors, consenting to the
      filing or institution of bankruptcy or insolvency proceedings against Pacific
      Holding, filing a petition seeking or consenting to reorganization, liquidation
      or relief with respect to Pacific Holding under any applicable federal or state
      law relating to bankruptcy, reorganization or insolvency, seeking or consenting
      to the appointment of a receiver, liquidator, assignee, trustee, sequestrator,
      custodian, or any similar official for Pacific Holding or a substantial part
      of
      its property, making any assignment for the benefit of creditors, admitting
      in
      writing Pacific Holding's inability to pay its debts as they become due, or
      taking action in furtherance of any of the foregoing, or (ii) merging,
      consolidating or combining Pacific Holding or any subsidiary of Pacific Holding
      with any other entity, dissolving or winding-up Pacific Holding, selling,
      transferring or otherwise disposing of all or substantially all of Pacific
      Holding's assets or approving any plan or agreement to engage in any of the
      foregoing actions;

     

    (c) includes
      a statement that the only Indebtedness such Borrower is allowed to incur is
      Permitted Indebtedness; 

     

    (d) includes
      a statement that all interests in such Borrower shall be securities governed
      by
      Article 8 of the Uniform Commercial Code and shall be evidenced by
      certificates. The certificated interests shall be in registered form within
      the
      meaning of Article 8 of the Uniform Commercial Code; and

     

    (e) includes
      each of the provisions set forth in Schedule 5.23.

     

    Section
      5.25 Subsidiaries.
      Madera,
      Boardman, Stockton, Brawley and Burley have no Subsidiaries. Pacific Holding
      has
      no Subsidiaries other than Madera, Boardman, Stockton, Brawley and Burley (or
      the owner of any Substitute Facility).

     

    Section
      5.26 Foreign
      Assets Control Regulations, Etc.
      (a)
      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) None
      of
      the Borrowers:

     

    
      	 	
              (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 none of the Borrowers engages in dealings
                or transactions with any such Persons or entities;
                or

            


    

     

     

    
      
        
        

      

      
        50

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (ii)

            	
              is
                in violation of the Patriot Act.

            


    

     

    Section
      5.27 Employment
      Matters.
      None of
      the Borrowers has or has had any employee or former employees.

     

    Section
      5.28 Solvency.
      Each of
      the Borrowers is and, upon the incurrence of any Obligations by the Borrowers
      and after giving effect to the transactions contemplated hereby, will be,
      Solvent.

     

    Section
      5.29 Legal
      Name and Place of Business.
      (a) The
      exact legal name and jurisdiction of formation of each Borrower is as set forth
      below, and none of the Borrowers has had any other legal names in the previous
      five (5) years except as set forth on Schedule 5.29:

     

    
      	 	
              (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;

            


    

     

    
      	 	
              (v)

            	
              Brawley:
                Pacific Ethanol Imperial, LLC, a limited liability company organized
                and
                existing under the laws of the State of Delaware;
                and

            


    

     

    
      	 	
              (vi)

            	
              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 5.29.

     

    The
      information set forth in Sections
      5.29(a)
      and
(b) and
      on
      Schedule 5.29
      may be
      changed from time to time by the Borrowers upon thirty (30) days' prior written
      notice to 

     

    
      
        
        

      

      
        51

        
          

        

      

      
        
        

      

    

     

    the
      Administrative Agent and the Collateral Agent, subject in each case to the
      Borrowers' obligations hereunder to provide the Collateral Agent with a
      perfected first-priority Lien on the Collateral (subject to Permitted
      Liens).

     

    Section
      5.30 No
      Brokers.
      None of
      the Borrowers has any obligation to pay any finder's, advisory, brokers or
      investment banking fee, except for the fees payable pursuant to Section 3.13
      (Fees)
      and
      those identified on Schedule 5.30.

     

    Section
      5.31 Insurance.
      All
      insurance required to be obtained and maintained pursuant to the Transaction
      Documents by Pacific Holding and each other Borrower with respect to whose
      Plant
      a Funding has been made or is being requested 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 with respect to any Plant with respect to which
      a
      Funding has been made or is being requested to protect, directly or indirectly,
      against loss or liability to any Borrower, any Plant or any Senior Secured
      Party
      (including in connection with construction obligations of such Major Project
      Party), as of the date this representation is made or deemed repeated, pursuant
      to any Project Document relating to any such Plant 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
      5.32 Accounts.
      On and
      after the Closing Date (with respect to Pacific Holding) or the initial Funding
      Date for its Plant (with respect to each other Borrower), no Borrower has,
      nor
      is the beneficiary of, any bank account other than the Project Accounts and
      any
      Local Account with respect to which a Blocked Account Agreement has been duly
      executed and delivered.

     

    ARTICLE
      VI

     

    CONDITIONS
      PRECEDENT

     

    Section
      6.01 Conditions
      to Closing.
      In
      addition to the conditions set forth in Section 6.08
      (Conditions
      to All Fundings),
      the
      occurrence of the Closing Date is subject to the satisfaction of each of the
      following conditions precedent.

     

    (a) Delivery
      of Financing Documents.
      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 (other than items (xiii) and (xiv)) in form and
      substance reasonably satisfactory to each Lender:

     

    
      
        
        

      

      
        52

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (i)

            	
              this
                Agreement;

            


    

     

    
      	 	
              (ii)

            	
              the
                original Construction Notes, duly executed and delivered by an Authorized
                Officer of each Borrower in favor of each requesting Construction/Term
                Lender;

            


    

     

    
      	 	
              (iii)

            	
              the
                original Working Capital Notes, duly executed and delivered by an
                Authorized Officer of each Borrower in favor of each requesting Working
                Capital Lender;

            


    

     

    
      	 	
              (iv)

            	
              the
                Sponsor Support Agreement;

            


    

     

    
      	 	
              (v)

            	
              the
                Pacific Holding Security Agreement;

            


    

     

    
      	 	
              (vi)

            	
              the
                Madera Security Agreement;

            


    

     

    
      	 	
              (vii)

            	
              the
                Boardman Security Agreement;

            


    

     

    
      	 	
              (viii)

            	
              the
                Pacific Holding Pledge Agreement;

            


    

     

    
      	 	
              (ix)

            	
              the
                Madera Pledge Agreement;

            


    

     

    
      	 	
              (x)

            	
              the
                Boardman Pledge Agreement;

            


    

     

    
      	 	
              (xi)

            	
              the
                Madera Deed of Trust;

            


    

     

    
      	 	
              (xii)

            	
              the
                Boardman Deed of Trust;

            


    

     

    
      	 	
              (xiii)

            	
              the
                Fee Letters; and 

            


    

     

    
      	 	
              (xiv)

            	
              the
                Interest Rate Protection Agreement(s) in respect of the In-Progress
                Plant 1 Construction Loans and the In-Progress Plant 2
                Construction Loans.

            


    

     

    (b) Delivery
      of Project Documents.
      The
      Administrative Agent shall have received true, correct and complete copies
      of
      (i) each Project Document in effect as of the Closing Date, each of which
      shall be in form and substance reasonably satisfactory to the Administrative
      Agent and the Independent Engineer and (ii) each Subordinated Debt
      Agreement, if any, in effect as of the Closing Date which, in the case of each
      of Sections 6.01(b)(i)
      and (ii),
      has
      been duly authorized, executed and delivered by the parties thereto and is
      in
      full force and effect, and (iii) a copy of each other agreement identified
      on Schedule 5.11-A
      reasonably requested by the Administrative Agent.

     

    
      
        
        

      

      
        53

        
          

        

      

      
        
        

      

    

     

    (c) Officer's
      Certificates.
      The
      Administrative Agent shall have received the following certificates, dated
      as of
      the Closing Date, upon which the Administrative Agent and each Lender may
      conclusively rely:

     

    
      	 	
              (i)

            	
              a
                duly executed certificate of an Authorized Officer of the Borrowers'
                Agent
                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, the Pledgor
                or
                Pacific Ethanol in this Agreement and each other Financing Document
                to
                which any Borrower, the Pledgor or Pacific Ethanol is a party are
                true and
                correct in all material respects on and as of the Closing Date;
                and

            


    

     

    
      	 	
              (ii)

            	
              a
                duly executed certificate of an Authorized Officer of the Borrowers'
                Agent
                certifying that (A) the copies of each document delivered pursuant to
                Section 6.01(b)
                are true, correct and complete copies of such documents, (B) such
                documents are in full force and effect and no term or condition of
                any
                such Project Document has been amended from the form thereof delivered
                to
                the Administrative Agent, (C) each of the conditions precedent set
                forth in each Project Document delivered pursuant to Section 6.01(b)(i)
                and (ii)
                (other than Project Documents relating to any of the Greenfield
                Facilities) that are required to be satisfied on or before the Closing
                Date have been satisfied or waived by the parties thereto and (D) no
                material breach, material default or material violation by any Borrower,
                or to the knowledge of each Borrower, any Project Party under any
                such
                Project Document (other than Project Documents relating to any of
                the
                Greenfield Facilities) has occurred and is continuing.
                

            


    

     

    (d) Resolutions,
      Incumbency, LLC Agreements.
      The
      Administrative Agent shall have received from each of the Borrowers, the Pledgor
      and Pacific Ethanol 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:

     

    
      
        
        

      

      
        54

        
          

        

      

      
        
        

      

    

     

     

    
      	 	
              (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 Transaction Document to which it
                is party
                and the consummation of the transactions contemplated therein (including,
                in the case of each Borrower, the appointment of the Borrowers'
                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, in the case of each Borrower, shall
                be
                in form and substance reasonably satisfactory to the Administrative
                Agent
                and shall include the Required LLC Provisions, 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:

     

    
      	 	
              (i)

            	
              each
                Borrower is duly authorized as a limited liability company to carry
                on its
                business, and is duly formed, validly existing and in good standing
                in
                each jurisdiction (including, in the case of Madera, Stockton and
                Brawley,
                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; and

            


    

     

    
      	 	
              (ii)

            	
              each
                of the Pledgor and Pacific Ethanol is duly authorized as a corporation
                to
                carry on its business, and is duly organized, validly existing and
                in good
                standing in each jurisdiction in which it is required to be so
                authorized.

            


    

     

    
      
        
        

      

      
        55

        
          

        

      

      
        
        

      

    

     

    (f) Opinions
      of Counsel.
      The
      Administrative Agent shall have received the following legal opinions, addressed
      to the Senior Secured Parties, and each in form and substance reasonably
      satisfactory to the Administrative Agent:

     

    
      	 	
              (i)

            	
              the
                opinion of Latham & Watkins LLP, New York and California counsel to
                the Loan Parties (and covering customary matters under Delaware law);
                and

            


    

     

    
      	 	
              (ii)

            	
              the
                opinion of Tonkon Torp LLP, Oregon
                counsel to the Loan Parties.

            


    

     

    (g) Lien
      Search; Perfection of Security.
      The
      Collateral Agent shall have been granted a first priority perfected security
      interest in all Collateral relating to Pacific Holding, Madera, Boardman, the
      Madera Plant and the Boardman Plant, and 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 Security:

     

    
      	 	
              (i)

            	
              completed
                requests for information or lien search reports, dated no more than
                eight
                (8) days (or such other time period reasonably acceptable to the
                Administrative Agent) before the Closing Date, listing all effective
                UCC
                financing statements, fixture filings or other filings evidencing
                a
                security interest filed in Delaware, California, Oregon, Idaho, and
                any
                other jurisdictions reasonably requested by the Administrative Agent
                that
                name any Borrower or the Pledgor as a debtor, together with copies
                of each
                such UCC financing statement, fixture filing or other filings, which
                shall
                show no Liens other than Permitted Liens and the Liens identified
                in
                Schedule
                6.01(g)(i),
                which (in the case of Liens identified on Schedule
                6.01(g)(i))
                will be released and terminated on or before the initial Funding
                Date;
                

            


    

     

    
      	 	
              (ii)

            	
              UCC
                financing statements and other filings and recordations (other than
                fixture filings or recordation of any Mortgage), in proper form for
                filing
                in all jurisdictions that the Administrative
                Agent may deem necessary or desirable in order to perfect and protect
                the
                first priority Liens and security interests created under the Security
                Documents covering the Collateral with respect to each of Madera,
                Boardman, Pacific Holding, the Madera Plant and the Boardman Plant,
                as
                described therein and each such UCC financing statement and other
                filing
                or recordation shall be duly filed on the Closing
                Date;

            


    

     

    
      
        
        

      

      
        56

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (iii)

            	
              the
                original certificates representing all Equity Interests in each of
                Madera,
                Boardman and Pacific Holding shall have been delivered to the Collateral
                Agent, in each case together with a duly executed transfer power
                in the
                form attached to the Pledge Agreement relating to such Equity Interests;
                and

            


    

     

    
      	 	
              (iv)

            	
              with
                respect to each of Madera, Boardman, Pacific Holding, the Madera
                Plant and
                the Boardman Plant, evidence of the making (which may be on the Closing
                Date) of all other actions, recordings and filings of or with respect
                to
                the Security Documents delivered pursuant to Section 6.01(a)
                (Conditions
                to Closing - Delivery of Financing Documents)
                that the Administrative Agent may deem necessary or desirable in
                order to
                perfect and protect the first-priority Liens created
                thereunder.

            


    

     

    (h) Financial
      Statements.
      The
      Administrative Agent shall have received accurate and complete copies of the
      audited annual financial statements of Pacific Ethanol for the most recent
      Fiscal Year then available and the unaudited quarterly financial statements
      of
      Pacific Ethanol for September 30, 2006. Such financial statements shall be
      on a consolidated basis.

     

    (i) 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.

     

    (j) Establishment
      of Project Accounts.
      Each of
      the Project Accounts shall have been established to the reasonable satisfaction
      of the Administrative Agent.

     

    (k) Insurance.
      The
      Administrative Agent shall have received:

     

    
      	 	
              (i)

            	
              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 Insurance Consultant
                and
                the Borrowers' insurance broker (or insurance carrier) certifying
                that all
                such insurance policies are in full force and effect;
                and

            


    

     

    
      
        
        

      

      
        57

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (ii)

            	
              a
                report of the Insurance Consultant in form and substance reasonably
                satisfactory to the Administrative Agent discussing, among other
                matters
                that the Administrative Agent may require, the adequacy of the insurance
                coverage for the Project, together with a duly executed certificate
                of the
                Insurance Consultant in the form of Exhibit 6.01(k),
                appropriately completed to the satisfaction of the Administrative
                Agent;

            


    

     

    provided,
      that
      with respect to Sections
      6.01(k)(i)
      and
(ii)
      if, on
      the Closing Date, the insurance coverage for any of the Plants does not satisfy
      the requirements set forth on Schedule
      7.01(h),
      any
      such deficiencies shall be satisfactorily resolved, as certified by the
      Insurance Consultant, as a condition precedent to the first Funding for such
      Plant.

     

    (l) Independent
      Engineer's Report.
      The
      Administrative Agent shall have received the report of the Independent Engineer,
      dated December 5, 2006. 

     

    (m) Environmental
      Site Assessments.
      The
      Administrative Agent shall have received an Environmental Site Assessment Report
      with respect to each Site, accompanied by a corresponding reliance letter (to
      the extent such report does not permit reliance thereon by the Lenders), each
      in
      form and substance reasonably satisfactory to the Administrative
      Agent.

     

    (n) Ethanol
      Market Report.
      The
      Administrative Agent shall have received the report of the Ethanol Market
      Consultant, dated December 1, 2006.

     

    (o) Agricultural
      Market Report.
      The
      Administrative Agent shall have received the report of the Agricultural Market
      Consultant, dated December 1, 2006.

     

    (p) Appraisal.
      The
      Administrative Agent shall have received an appraisal with respect to each
      of
      the Madera Plant and the Boardman Plant, each in form and substance reasonably
      satisfactory to the Administrative Agent.

     

    
      
        
        

      

      
        58

        
          

        

      

      
        
        

      

    

     

    (q) Budgets
      and Schedules.

     

    
      	 	
              (i)

            	
              The
                Administrative Agent shall have received the Construction Budget
                for each
                Plant (other than the Madera Plant), accompanied by a certificate
                of an
                Authorized Officer of the Borrowers' Agent, dated as of the Closing
                Date,
                certifying as to the reasonableness of the underlying assumptions
                and the
                conclusions on which each such Construction Budget is based, each
                in form
                and substance reasonably satisfactory to the Administrative Agent;
                provided,
                that any Construction Budget consistent with the Financial Model
                shall be
                deemed to be satisfactory. 

            


    

     

    
      	 	
              (ii)

            	
              The
                Administrative Agent shall have received a Drawdown Schedule for each
                Plant (other than the Madera Plant), each in form and substance reasonably
                satisfactory to the Administrative Agent; provided,
                that any Drawdown Schedule consistent with the Financial Model shall
                be
                deemed to be satisfactory.

            


    

     

    
      	 	
              (iii)

            	
              The
                Administrative Agent shall have a received an Operating Budget for
                the
                remaining months of the 2007 calendar year for the Madera Plant,
                accompanied by a certificate of an Authorized Officer of the Borrowers'
                Agent, dated as of the Closing Date, certifying as to the reasonableness
                of the underlying assumptions and the conclusions on which such Operating
                Budget is based, each in form and substance reasonably satisfactory
                to the
                Administrative Agent. 

            


    

     

    (r) Title Insurance.
      

     

    
      	 	
              (i)

            	
              The
                Administrative Agent shall have received a paid policy or policies
                of
                mortgage title insurance (the "Title Insurance
                Policy")
                with respect to the Madera Site and the Boardman Site, in an aggregate
                amount equal to ninety-two million Dollars ($92,000,000) on a
                Form 1992 extended coverage lender's policy, containing such
                endorsements (including an endorsement deleting the creditor's rights
                exception) as the Administrative Agent may request and otherwise
                in form
                and substance reasonably satisfactory to the Administrative Agent,
                from
                the Title Insurance Company, containing no


            


    

     

    
      
        
        

      

      
        59

        
          

        

      

      
        
        

      

    

     

    exception
      for mechanics' or materialmen's Liens and
      no other exceptions (printed or otherwise) other than those approved by the
      Administrative Agent (such approval not to be unreasonably withheld), and
      insuring that the Collateral Agent has a good, valid and enforceable first
      Lien
      of record on the corresponding Mortgaged Property free and clear of all defects
      and encumbrances (other than Permitted Liens); provided,
      that if
      the Title Insurance Policy with respect to either such Plant contains any
      survey exceptions, such exceptions shall be satisfactorily discharged as a
      condition to the first Funding for such Plant.

     

    
      	 	
              (ii)

            	
              The
                Title Insurance Policy shall confirm that (A) Madera has good,
                marketable title to the Madera Site subject to no Liens (other than
                Liens
                in favor of the Collateral Agent or other Permitted Liens) and
                (B) Boardman has a valid and subsisting leasehold estate in and to
                the Boardman Leased Premises subject to no Liens (other than Liens
                in
                favor of the Collateral Agent or other Permitted
                Liens).

            


    

     

    (s) Bank
      Regulatory Requirements.
      The
      Administrative Agent shall have received at least five (5) Business Days prior
      to the Closing Date 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.

     

    (t) Closing
      Fees; Expenses.
      The
      Administrative Agent shall have received for its own account, or for the account
      of each Lender, Lead Arranger and Agent entitled thereto, all fees due and
      payable pursuant to Section 3.13
      (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.

     

    (u) Process
      Agent.
      The
      Administrative Agent shall have received, in form and substance reasonably
      satisfactory to the Administrative Agent, acceptances from the Process Agent
      for
      the Borrowers, the Pledgor and Pacific Ethanol appointed under Section 11.02(d)
      (Applicable
      Law; Jurisdiction; Etc. - Appointment of Process Agent and Service of
      Process)
      and as
      required under each other Financing Document in effect on the Closing
      Date.

     

    
      
        
        

      

      
        60

        
          

        

      

      
        
        

      

    

     

    (v) Financial
      Model.
      The
      Administrative Agent shall have received a certificate of a Financial Officer
      of
      the Borrowers' Agent, dated as of the Closing Date, certifying that the
      Financial Model attached to Exhibit 6.01(v)
      has not
      been amended or modified (or, in the event of any amendment or modification
      thereto, such amendments or modification shall not, in the reasonable opinion
      of
      the Administrative Agent, reflect any adverse changes) and certifying as to
      the
      reasonableness of the underlying assumptions and the conclusions on which the
      Financial Model is based. 

     

    (w) Loan
      Pay-Off.
      The
      Administrative Agent shall have received satisfactory evidence of the
      termination of the United Capital Loan Facility and the release of the Liens
      granted in connection therewith.

     

    (x) Equator
      Principles.
      The
      Administrative Agent shall have received all documentation requested by the
      Administrative Agent that is necessary to evidence compliance, and otherwise
      required in connection, with the Equator Principles.

     

    Section
      6.02 Conditions
      to Madera Funding.
      In
      addition to the conditions set forth in Section 6.08
      (Conditions
      to All Fundings),
      the
      release of any Construction Loan funds deposited in or standing to the credit
      of
      the Escrow Account for the Madera Plant for transfer to the Construction Holding
      Account (which, in the event that the Madera Plant is In-Progress Plant 1,
      shall be the In-Progress Plant 1 Construction Loans or, in the event that
      the Madera Plant is In-Progress Plant 2, shall be the In-Progress
      Plant 2 Tranche B Construction Loans), and, in the event that the
      Madera Plant is In-Progress Plant 2, the obligation of the Tranche A
      Lenders to make available the Funding of the In-Progress Plant 2
      Tranche A Construction Loans, is subject to the satisfaction of each of the
      following conditions precedent. 

     

    (a) Madera
      Plant Completion.
      The
      Commercial Operation Date for the Madera Plant shall have occurred on or before
      December 31, 2007.

     

    (b) Lien
      Searches.
      The
      Administrative Agent shall have received completed requests for information
      or
      lien search reports, dated no more than eight (8) days (or such other time
      period reasonably acceptable to the Administrative Agent) before the date of
      such Funding, listing all effective UCC financing statements, fixture filings
      or
      other filings evidencing a security interest filed in Delaware or California,
      and any other jurisdictions reasonably requested by the Administrative Agent,
      that name Madera or the Pledgor as a debtor, together with copies of each such
      UCC financing statement, fixture filing or other filings, which shall show
      no
      Liens (other than Permitted Liens (or Liens that were Permitted Liens on or
      before the date of the applicable Funding Notice, in which case the
      Administrative Agent shall have received satisfactory evidence of the release
      and termination of all such Liens prior to the applicable Funding Date) and,
      in
      the event that the Madera Funding is the first Construction Loan Funding, Liens
      identified in Schedule
      6.01(g)(i)
      and in
      such case the Administrative Agent shall have received satisfactory evidence
      of
      the release and termination of all such Liens identified on Schedule
      6.01(g)(i)).

     

    
      
        
        

      

      
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    (c) Good
      Standing.
      The
      Administrative Agent shall have received satisfactory certificates of good
      standing from the Secretaries of State of each of Delaware and California,
      dated
      no more than eight (8) days (or such other time period reasonably
      acceptable to the Administrative Agent) prior to the requested Funding Date,
      with respect to Madera.

     

    (d) Madera
      Survey.
      The
      Administrative Agent shall have received a current Survey of the Madera Site
      showing all real property rights for the Madera Plant required hereunder, which
      shall be satisfactory to the Title Insurance Company insuring the Collateral
      Agent's interest in the Madera Mortgaged Property (and shall be sufficient
      to
      enable the Title Insurance Company to either (i) remove any survey
      exceptions from the Madera Title Insurance Policy or (ii) replace such
      survey exceptions with survey exceptions that do not identify any matters other
      than Permitted Liens), shall not show any encumbrances other than Permitted
      Liens, and shall be certified to the Collateral Agent, the Administrative Agent,
      the Lenders and such Title Insurance Company.

     

    (e) Madera
      Project Documents; Contracts; Consents.
      

     

    
      	 	
              (i)

            	
              The
                Administrative Agent shall have received a copy of each Project Document,
                or amendment thereto, for the Madera Facility that has been entered
                into
                after the Closing Date (which shall include the Pacific Ethanol Guarantees
                for the applicable Madera Project Documents), each of which shall
                be in
                full force and effect and shall have been approved by the required
                Project
                Document Approval Level.

            


    

     

    
      	 	
              (ii)

            	
              The
                Administrative Agent shall have received a true, correct and complete
                copy
                (certified as such by Madera) of each agreement evidencing Contractual
                Obligations of Madera or otherwise relating to the Madera Plant reasonably
                requested by, and not previously delivered to, the Administrative
                Agent.

            


    

     

    
      	 	
              (iii)

            	
              The
                Administrative Agent shall have received a duly executed certificate
                of an
                Authorized Officer of Madera certifying that (A) the copies of each
                document delivered pursuant to Section
                6.02(e)(i) and (ii) are
                true, correct and 

            


    

     

     

    
      
        
        

      

      
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    complete
      copies of such documents, (B) such
      documents are in full force and effect and no term or condition of any such
      Project Document has been amended from the form thereof delivered to the
      Administrative Agent, (C) each of the conditions precedent set forth in
      each Project Document delivered pursuant to Section
      6.02(e)(i)
      that are
      required to be satisfied on or before the date of such requested Funding, if
      any, have been satisfied, or waived by the parties thereto, and (D) no
      material breach, material default or material violation by any Borrower, or
      to
      the knowledge of each Borrower, any Major Project Party under any such Project
      Document has occurred and is continuing. 

     

    
      	 	
              (iv)

            	
              The
                Administrative Agent shall have received a Consent, in form and substance
                reasonably satisfactory to the Administrative Agent, with respect
                to each
                Madera Project Document identified on Schedule 6.02(e)(iv)
                (which, in the case of Consents from non-Affiliate Project Parties,
                may be
                delivered on or before the Funding
                Date).

            


    

     

    (f) Opinions
      of Counsel.
      The
      Administrative Agent shall have received (on or before the Madera Funding Date)
      the following legal opinions, addressed to the Senior Secured Parties, and
      each
      in form and substance reasonably satisfactory to the Administrative
      Agent:

     

    
      	 	
              (i)

            	
              the
                opinion of Latham & Watkins LLP, New York and California counsel to
                the Loan Parties (and covering customary matters under Delaware law
                and
                permitting matters relating to the Madera Plant) covering customary
                matters and matters reasonably requested by the Administrative Agent
                that
                in each such case were not addressed in the opinions delivered on
                the
                Closing Date; and 

            


    

     

    
      	 	
              (ii)

            	
              if
                reasonably requested by the Administrative Agent, opinions of reasonably
                acceptable counsel to the Major Project Parties that are parties
                to the
                Madera Project Documents identified on Schedule 6.02(e)(iv)
                with respect to which a Consent has been
                delivered.

            


    

     

    
      
        
        

      

      
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    (g) Title Insurance.
      The
      Administrative Agent shall have received (on or before the Madera Funding Date)
      an ALTA 122 Endorsement to the Title Insurance Policy with respect to the
      Madera Site.

     

    (h) Independent
      Engineer's Report.
      The
      Administrative Agent shall have received a supplemental report of the
      Independent Engineer, updating those matters relating to the Madera Plant
      addressed in the report of the Independent Engineer dated December 5, 2006
      as the Administrative Agent may reasonably request, which report shall be in
      form and substance reasonably satisfactory to the Administrative Agent and
      the
      Required Lenders (provided that any Lender who does not object to a request
      for
      approval of such report within fifteen (15) days following receipt by such
      Lender of such written request and a copy of such report shall be deemed to
      have
      approved such report).

     

    (i) Insurance.
      Any
      deficiencies with respect to the insurance for the Madera Plant identified
      in
      the report delivered pursuant to Section 6.01(k)
      (Conditions
      to Closing - Insurance)
      shall
      have been addressed in a manner reasonably satisfactory to the Administrative
      Agent and the Insurance Consultant and the Administrative Agent shall have
      received a reasonably satisfactorily completed certificate of the Insurance
      Consultant in substantially the form of Exhibit 6.01(k)
      confirming such matters.

     

    (j) Governmental
      Approvals.
      Madera
      shall have all Necessary Project Approvals required as of the date of such
      requested Funding to operate the Madera Plant, and the Administrative Agent
      shall have received a duly executed certificate of an Authorized Officer of
      Madera certifying that (i) attached to such certificate are true, correct
      and complete copies of each such Necessary Project Approval, (ii) each such
      Necessary Project Approval is in full force and effect and is final and
      Non-Appealable, (iii) all Necessary Project Approvals required for the
      Madera Plant at a later date will be obtained in due course prior to the time
      when needed, and (iv) each applicable Governmental Approvals Update
      Schedule accurately identifies all Necessary Project Approvals necessary for
      the
      Madera Plant.

     

    Section
      6.03 Conditions
      to Boardman Funding.
      In
      addition to the conditions set forth in Section 6.08
      (Conditions
      to All Fundings),
      the
      release of any Construction Loan funds deposited in or standing to the credit
      of
      the Escrow Account for the Boardman Plant for transfer to the Construction
      Holding Account (which, in the event that the Boardman Plant is In-Progress
      Plant 1, shall be the In-Progress Plant 1 Construction Loans or, in
      the event that the Boardman Plant is In-Progress Plant 2, shall be the
      In-Progress Plant 2 Tranche B Construction Loans), and, in the event
      that the Boardman Plant is In-Progress Plant 2, the obligation of the
      Tranche A Lenders to make available the Funding of the In-Progress
      Plant 2 Tranche A Construction Loans, is subject to the satisfaction
      of each of the following conditions precedent.

     

    
      
        
        

      

      
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    (a) Boardman
      Completion.

     

    
      	 	
              (i)

            	
              On
                or before December 31, 2007, the Commercial Operation Date for the
                Boardman Plant shall have occurred.

            


    

     

    
      	 	
              (ii)

            	
              The
                Administrative Agent shall have received an Operating Budget for
                the
                Boardman Plant for the remaining months of the 2007 calendar year, which
                budget shall be reasonably satisfactory to the Administrative Agent
                and
                the Independent Engineer. 

            


    

     

    (b) Lien
      Searches.
      The
      Administrative Agent shall have received completed requests for information
      or
      lien search reports, dated no more than eight (8) days (or such other time
      period reasonably acceptable to the Administrative Agent) before the date of
      such Funding, listing all effective UCC financing statements, fixture filings
      or
      other filings evidencing a security interest filed in Delaware or Oregon, and
      any other jurisdictions reasonably requested by the Administrative Agent that
      name Boardman or the Pledgor as a debtor, together with copies of each such
      UCC
      financing statement, fixture filing or other filings, which shall show no Liens
      (other than Permitted Liens (or Liens that were Permitted Liens prior to the
      date of the applicable Funding Notice, in which case the Administrative Agent
      shall have received satisfactory evidence of the release and termination of
      all
      such Liens on or before the applicable Funding Date) and, in the event that
      the
      Boardman Funding is the first Construction Loan Funding, other Liens identified
      in Schedule
      6.01(g)(i)
      and in
      such case the Administrative Agent shall have received satisfactory evidence
      of
      the release and termination of all such Liens identified as Schedule
      6.01(g)(i)).

     

    (c) Good
      Standing.
      The
      Administrative Agent shall have received satisfactory certificates of good
      standing from the Secretaries of State of each of Delaware and Oregon, dated
      no
      more than eight (8) days (or such other time period reasonably acceptable
      to the Administrative Agent) prior to the requested Funding Date, with respect
      to Boardman.

     

    (d) Boardman
      Survey.
      The
      Administrative Agent shall have received a current Survey of the Boardman Site,
      which shall be satisfactory to the Title Insurance Company insuring the
      Collateral Agent's interest in the Boardman Mortgaged Property and shall not
      show any encumbrances other than Permitted Liens (and shall be sufficient to
      enable the Title Insurance Company to either (i) remove any survey
      exceptions from the Boardman Title Insurance Policy or (ii) replace such
      survey exceptions with survey exceptions that do not identify any matters other
      than Permitted Liens), and certified to the Collateral Agent, the Administrative
      Agent, the Lenders and such Title Insurance Company.

     

    
      
        
        

      

      
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    (e) Boardman
      Project Documents; Contracts; Consents.
      

     

    
      	 	
              (i)

            	
              The
                Administrative Agent shall have received a copy of each Project Document,
                or amendment thereto, for the Boardman Facility that has been entered
                into
                after the Closing Date (which shall include the Pacific Ethanol Guarantees
                for the applicable Boardman Project Documents), each of which shall
                be in
                full force and effect and shall have been approved by the required
                Project
                Document Approval Level.

            


    

     

    
      	 	
              (ii)

            	
              The
                Administrative Agent shall have received a true, correct and complete
                copy
                (certified as such by Boardman) of each agreement evidencing Contractual
                Obligations of Boardman or otherwise relating to the Boardman Plant
                reasonably requested by, and not previously delivered to, the
                Administrative Agent.

            


    

     

    
      	 	
              (iii)

            	
              The
                Administrative Agent shall have received a duly executed certificate
                of an
                Authorized Officer of Boardman certifying that (A) the copies of each
                document delivered pursuant to Section
                6.03(e)(i) and (ii) are
                true, correct and complete copies of such documents, (B) 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, (C) each of the conditions precedent set forth in each Project
                Document delivered pursuant to Section
                6.03(e)(i)
                that are required to be satisfied on or before the date of such requested
                Funding, if any, have been satisfied, or waived by the parties thereto,
                and (D) no material breach, material default or material violation by
                any Borrower, or to the knowledge of each Borrower, any Major Project
                Party under any such Project Document has occurred and is continuing.
                

            


    

     

    
      	 	
              (iv)

            	
              The
                Administrative Agent shall have received a Consent, in form and substance
                reasonably satisfactory to the Administrative Agent, with respect
                to each
                Boardman Project Document identified on Schedule 6.02(e)(iv)
                (which, in the case of Consents from non-Affiliate Project Parties,
                may be
                delivered on or before the Funding
                Date).

            


    

     

    
      
        
        

      

      
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    (f) Opinions
      of Counsel.
      The
      Administrative Agent shall have received (on or before the Boardman Funding
      Date) the following legal opinions, addressed to the Senior Secured Parties,
      and
      each in form and substance reasonably satisfactory to the Administrative
      Agent:

     

    
      	 	
              (i)

            	
              the
                opinion of Latham & Watkins LLP (or such other legal counsel
                reasonably acceptable to the Administrative Agent), as New York and
                California counsel to the Loan Parties (and covering customary matters
                under Delaware law) covering customary matters and matters reasonably
                requested by the Administrative Agent that in each such case were
                not
                addressed in the opinions delivered on the Closing
                Date;

            


    

     

    
      	 	
              (ii)

            	
              the
                opinion of Tonkon Torp LLP (or such other legal counsel reasonably
                acceptable to the Administrative Agent), as Oregon counsel to the
                Loan
                Parties,
                covering customary matters and matters reasonably requested by the
                Administrative Agent (including permitting matters relating to the
                Boardman Plant), that in each such case were not addressed in the
                opinions
                delivered on the Closing Date; and

            


    

     

    
      	 	
              (iii)

            	
              if
                reasonably requested by the Administrative Agent, opinions of reasonably
                acceptable counsel to the Major Project Parties that are parties
                to the
                Boardman Project Documents identified on Schedule 6.02(e)(iv)
                with respect to which a Consent has been delivered.
                

            


    

     

    (g) Title Insurance.
      The
      Administrative Agent shall have received an ALTA 122 Endorsement to the
      Title Insurance Policy with respect to the Boardman Site.

     

    (h) Independent
      Engineer's Report.
      The
      Administrative Agent shall have received a supplemental report of the
      Independent Engineer, updating those matters relating to the Boardman Plant
      addressed in the report of the Independent Engineer dated December 5, 2006
      as the Administrative Agent may reasonably request, which report shall be in
      form and substance reasonably satisfactory to the Administrative Agent and
      the
      Required Lenders (provided that any Lender who does not object to a request
      for
      approval of such report within fifteen (15) days following receipt by such
      Lender of such written request and a copy of such report shall be deemed to
      have
      approved such report).

     

    
      
        
        

      

      
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    (i) Insurance.
      Any
      deficiencies with respect to the insurance for the Boardman Plant identified
      in
      the report delivered pursuant to Section 6.01(k)
      (Conditions
      to Closing - Insurance)
      shall
      have been addressed in a manner reasonably satisfactory to the Administrative
      Agent and the Insurance Consultant and the Administrative Agent shall have
      received a reasonably satisfactorily completed certificate of the Insurance
      Consultant in substantially the form of Exhibit 6.01(k)
      confirming such matters.

     

    (j) Governmental
      Approvals.
      Boardman shall have all Necessary Project Approvals required as of the date
      of
      such requested Funding to operate the Boardman Plant, and the Administrative
      Agent shall have received a duly executed certificate of an Authorized Officer
      of Boardman certifying that (i) attached to such certificate are true,
      correct and complete copies of each such Necessary Governmental Project
      Approval, (ii) each such Necessary Project Approval is in full force and
      effect and is final and Non-Appealable, (iii) all Necessary Project
      Approvals required for the Boardman Plant at a later date will be obtained
      in
      due course prior to the time when needed, and (iv) each applicable
      Governmental Approvals Update Schedule accurately identifies all Necessary
      Project Approvals necessary for the Boardman Plant.

     

    Section
      6.04 Conditions
      to First Funding for Each Greenfield Plant.
      In
      addition to the conditions set forth in Section 6.05
      (Conditions
      to All Greenfield Plant Construction Loan Fundings)
      and
Section 6.08
      (Conditions
      to All Fundings),
      the
      obligation of each Tranche A Lender to make available the first Funding of
      each of the Greenfield Plant 1 Construction Loans, the Greenfield
      Plant 2 Construction Loans and the Greenfield Plant 3 Construction
      Loans, and the initial release of any funds deposited in or standing to the
      credit of the Escrow Account for transfer to the applicable Greenfield Plant
      Construction Account, is subject to the satisfaction of each of the following
      conditions precedent.

     

    (a) Equity.
      The
      Administrative Agent shall have received reasonably satisfactory evidence that
      the relevant Required Equity Contributions have been made to Pacific Holding,
      contributed to the Borrower with respect to whose Plant such Funding is
      requested, and fully applied to pay Project Costs for such Plant (as verified
      by
      the Independent Engineer).

     

    (b) Lien
      Searches.
      The
      Administrative Agent shall have received completed requests for information
      or
      lien search reports, dated no more than eight (8) days (or such other time
      period reasonably acceptable to the Administrative Agent) prior to the requested
      Funding Date, listing all effective UCC financing statements, fixture filings
      or
      other filings evidencing a security interest filed in Delaware or the


     

    
      
        
        

      

      
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    jurisdiction
      where the Plant for which such Funding is requested is located, and any other
      jurisdictions reasonably requested by the Administrative Agent that name the
      relevant Borrower or the Pledgor as a debtor, together with copies of each
      such
      UCC financing statement, fixture filing or other filings, which shall show
      no
      Liens other than Permitted Liens (or Liens that were Permitted Liens prior
      to
      the date of the applicable Funding Notice, in which case the Administrative
      Agent shall have received satisfactory evidence of the release and termination
      of all such Liens prior to the applicable Funding Date). 

     

    (c) Good
      Standing.
      The
      Administrative Agent shall have received satisfactory certificates of good
      standing from the Secretaries of State of each of Delaware and the state where
      the relevant Plant is located, dated no more than eight (8) days (or such
      other time period reasonably acceptable to the Administrative Agent) prior
      to
      the requested Funding Date, with respect to the Borrower whose Plant is the
      subject of the requested Funding.

     

    (d) Resolutions.
      The
      Administrative Agent shall have received from the Borrower whose Plant is the
      subject of such requested Funding (and, if required, from the Pledgor and
      Pacific Ethanol) a certificate of an Authorized Officer dated as of the date
      of
      such requested Funding, upon which the Administrative Agent and each Lender
      may
      conclusively rely, as to 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 Transaction Document
      to which it is party and the consummation of the transactions contemplated
      therein to the extent that resolutions authorizing such Transaction Document
      or
      such transactions were not provided pursuant to Section 6.01(d)
      (Conditions
      to Closing - Resolutions, Incumbency, LLC Agreements).

     

    (e) Survey.
      The
      Administrative Agent shall have received a current Survey of the Site for the
      Plant with respect to which such Funding is being requested, which shall be
      satisfactory to the Title Insurance Company insuring the Collateral Agent's
      interest in the Mortgaged Property for such Plant and shall not show any
      encumbrances other than Permitted Liens, and shall be certified to the
      Collateral Agent, the Administrative Agent, the Lenders and such Title Insurance
      Company.

     

    (f) Title Insurance.

     

    
      	 	
              (i)

            	
              The
                Administrative Agent shall have received (on or before the date of
                such
                requested Funding) a paid Title Insurance Policy with respect to the
                Site for the Plant with respect to which such Funding is requested,
                in an
                aggregate amount equal to sixty-nine million Dollars ($69,000,000)
                on a
                Form 1992 extended coverage lender's policy, containing such
                endorsements (including an endorsement deleting the
                

            


    

     

     

    
      
        
        

      

      
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    creditor's
      rights exception) as the Administrative
      Agent may reasonably request and otherwise in form and substance reasonably
      satisfactory to the Administrative Agent from the Title Insurance Company,
      containing no exception for mechanics' or materialmen's Liens and no other
      exceptions (printed or otherwise) other than those approved by the
      Administrative Agent (such approval not to be unreasonably withheld), and
      insuring that the Collateral Agent has a good, valid and enforceable first
      Lien
      of record on the corresponding Mortgaged Property free and clear of all defects
      and encumbrances (other than Permitted Liens).

     

    
      	 	
              (ii)

            	
              In
                the case of Brawley or Burley, the Title Insurance Policy shall
                confirm that Brawley or Burley, as the case may be, has good, marketable
                title to the Brawley Site or Burley Site subject to no Liens (other
                than
                Permitted Liens).

            


    

     

    
      	 	
              (iii)

            	
              In
                the case of Stockton, the Title Insurance Policy shall confirm that
                Stockton has a valid and subsisting leasehold estate in and to the
                Stockton Leased Premises subject to no Liens (other than Permitted
                Liens).

            


    

     

    (g) Collateral.
      

     

    
      	 	
              (i)

            	
              The
                Mortgage, Pledge Agreement and Security Agreement for the Plant (and
                related Borrower) with respect to which such Funding has been requested
                shall have been duly executed and delivered (or will be delivered
                on the
                requested Funding Date prior to or simultaneously with the requested
                Funding), and the Collateral Agent shall have been granted (prior
                to or
                simultaneously with the requested Funding) a first priority perfected
                security interest in the Collateral described therein.
                

            


    

     

    
      	 	
              (ii)

            	
              The
                Collateral Agent shall have been designated as the payee under (or
                shall
                have received a dual obligee rider with respect to) each Performance
                Bond
                and each Payment Bond issued under any Construction Contract for
                the Plant
                with respect to which such Funding has been requested with a value
                greater
                than one million Dollars ($1,000,000).


            


    

     

     

    
      
        
        

      

      
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              (iii)

            	
              The
                Administrative Agent shall have
                received:

            


    

     

    
      
        	
              	(A)	
                UCC
                  financing statements and other filings and recordations (other
                  than
                  fixture filings or recordation of any Mortgage), in proper form
                  for filing
                  in all jurisdictions that the Administrative
                  Agent may deem necessary or desirable in order to perfect and protect
                  the
                  first priority Liens and security interests created under such
                  Security
                  Documents covering the Collateral described therein and each such
                  UCC
                  financing statement and other filing or recordation shall be duly
                  filed on
                  or before such Funding Date, prior to or simultaneously with the
                  requested
                  Construction Loan Funding; 

              


      

    

     

    
      
        	
              	(B)	
                the
                  original certificates representing all Equity Interests in the
                  Borrower
                  whose Plant is the subject of such requested Funding shall have
                  been
                  delivered (prior to or simultaneously with the requested Funding)
                  to the
                  Collateral Agent, in each case together with a duly executed transfer
                  power in the form attached to the Pledge Agreement relating to
                  such Equity
                  Interests; and

              


      

    

     

    
      
        	
              	(C)	
                satisfactory
                  evidence of the making (which may be simultaneous with such Funding)
                  of
                  all other actions, recordings and filings of or with respect to
                  the
                  Security Documents for such Plant and such Borrower that the
                  Administrative Agent may deem necessary or desirable in order to
                  perfect
                  and protect the first-priority Liens created
                  thereunder.

              


      

    

     

    (h) Construction
      Schedule and Updated Budget.
      

     

    
      	 	
              (i)

            	
              The
                Administrative Agent shall have received, for the Plant with respect
                to
                which such Funding is requested, a certificate of the Borrowers'
                Agent,
                together with a confirmation and approval in respect of thereof from
                the
                Independent Engineer, (A) that no changes need be made to the
                Construction Budget for such Plant delivered under Section 6.01(q)
                (Conditions
                to Closing -Budgets and Schedules)
                or
                (B) an updated Construction Budget for such
                

            


    

     

    
      
        
        

      

      
        71

        
          

        

      

      
        
        

      

    

     

    Plant,
      certified as to the reasonableness of the
      underlying assumptions and the conclusions on which such budget is based by
      an
      Authorized Officer of the relevant Borrower and demonstrating aggregate Project
      Costs for such Plant equal to or less than the amount provided for in the
      Construction Budget for such Plant delivered under Section 6.01(q)
      (Conditions
      to Closing -Budgets and Schedules);
      provided,
      that if
      there was an increase in costs between the Construction Budget provided on
      the
      Closing Date and such updated Construction Budget, an amount adequate to cover
      all such increased costs shall have been deposited in the Construction Account
      or previously applied to pay Project Costs with respect to such Plant (from
      sources other than the Loans, Cash Flow or the Sponsor Support Agreement),
      as
      verified by the Independent Engineer.

     

    
      	 	
              (ii)

            	
              The
                Administrative Agent shall have received a Construction Schedule
                for such
                Plant, which shall have been reasonably approved by the Independent
                Engineer and the Administrative
                Agent.

            


    

     

    (i) Independent
      Engineer's Report.
      

     

    
      	 	
              (i)

            	
              The
                Administrative Agent shall have received an updated report of the
                Independent Engineer, addressing the adequacy of utility arrangements
                and
                each of the other matters set forth below for the Plant with respect
                to
                which such Funding is being requested, identifying any material changes
                from the report of the Independent Engineer dated December 5, 2006 in
                costs, adequacy of contingency or other matters addressed therein,
                which
                updated report shall not include any materially adverse conclusions
                by the
                Independent Engineer, and a duly executed certificate of the Independent
                Engineer and shall be in form and substance reasonably satisfactory
                to the
                Administrative Agent and the Required Lenders (provided that any
                Lender
                who does not object to a request for approval of such report within
                fifteen (15) days following receipt by such Lender of such written
                request
                and a copy of such report shall be deemed to have approved such
                report).

            


    

     

     

    
      
        
        

      

      
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              (ii)

            	
              The
                Independent Engineer shall have certified to the Administrative Agent
                that
                the Independent Engineer believes that the Commercial Operation Date
                for
                the Plant with respect to which such Funding is requested will occur
                on or
                prior to the Conversion Date
                Certain.

            


    

     

    (j) Insurance.
      The
      Administrative Agent shall have received binders or certificates evidencing
      the
      commitment of insurers to provide the applicable insurance policies then
      required under by Section 7.01(h)
      (Affirmative
      Covenants - Insurance)
      with
      respect to the Borrowers for the Plant with respect to which such Funding is
      requested, together with evidence of the payment of all premiums then due and
      payable in respect of such insurance policies, a certificate of the Borrowers'
      insurance broker (or insurance carrier) certifying that all such insurance
      policies are in full force and effect and an updated report of the Insurance
      Consultant confirming compliance with the insurance requirements for such Plant
      set forth on Schedule 7.01(h)
      and
      material insurance requirements set forth in the Project Documents for such
      Plant (including the satisfaction of any deficiencies identified with respect
      to
      such Plant on the Closing Date), accompanied by a duly executed certificate
      of
      the Insurance Consultant in the form of Exhibit 6.01(k)
      appropriately completed to the reasonable satisfaction of the Administrative
      Agent.

     

    (k) Appraisal.
      The
      Administrative Agent shall have received an appraisal of the Site for the Plant
      with respect to which such Funding has been requested, in form and substance
      reasonably satisfactory to the Administrative Agent.

     

    (l) Opinions
      of Counsel.
      The
      Administrative Agent shall have received (on or before the date of such
      requested Funding) the following legal opinions, addressed to the Senior Secured
      Parties, and each in form and substance reasonably satisfactory to the
      Administrative Agent, covering customary matters and matters reasonably
      requested by the Administrative Agent that in each such case were not addressed
      in the opinions delivered on the Closing Date:

     

    
      	 	
              (i)

            	
              the
                opinion of Latham & Watkins LLP (or such other legal counsel
                reasonably acceptable to the Administrative Agent), as New York counsel
                to
                the Loan Parties (and covering customary matters under Delaware
                law);

            


    

     

    
      	 	
              (ii)

            	
              in
                the case of the initial Funding of the Construction Loans for the
                Stockton
                Plant or the Brawley Plant, the opinion of Latham & Watkins LLP (or
                such other legal counsel reasonably acceptable to the Administrative
                Agent), as California counsel to the Borrowers (covering, among other
                matters, the applicable Mortgage and customary permitting opinions
                for the
                applicable Plant); 

            


    

     

    
      
        
        

      

      
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              (iii)

            	
              in
                the case of the initial Funding of the Construction Loans for the
                Burley
                Plant, the opinion of Idaho counsel to the Loan Parties reasonably
                satisfactory to the Administrative Agent (covering, among other matters,
                the Burley Deed of Trust and customary permitting opinions for Burley);
                and

            


    

     

    
      	 	
              (iv)

            	
              if
                reasonably requested by the Administrative Agent, opinions of reasonably
                acceptable counsel to the Major Project Parties that are parties
                to the
                Project Documents identified on Schedule 6.02(e)(iv)
                relating to the Plant whose initial Funding has been requested and
                with
                respect to which a Consent has been
                delivered.

            


    

     

    (m) Project
      Documents; Contracts; Consents.
      

     

    
      	 	
              (i)

            	
              The
                Administrative Agent shall have received a copy of each Project Document,
                and each amendment thereto, for the Plant with respect to which such
                Funding is requested that has been entered into after the Closing
                Date
                (which shall include the Pacific Ethanol Guarantees for the applicable
                Project Documents for such Greenfield Plant), each of which shall
                be in
                full force and effect and shall have been approved by the required
                Project
                Document Approval Level.

            


    

     

    
      	 	
              (ii)

            	
              The
                Administrative Agent shall have received a true, correct and complete
                copy
                (certified as such by such Borrower) of each agreement evidencing
                Contractual Obligations of such Borrower or otherwise relating to
                such
                Plant reasonably requested by, and not previously delivered to, the
                Administrative Agent.

            


    

     

    
      	 	
              (iii)

            	
              The
                Administrative Agent shall have received a duly executed certificate
                of an
                Authorized Officer of such Borrower certifying that (A) the copies of
                each document delivered pursuant to Section
                6.04(m)(i) and (ii) are
                true, correct and complete copies of such documents, (B) such
                documents are in full force and effect and no term or condition of
                any
                such Project Document has been amended


            


    

     

     

    
      
        
        

      

      
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    from
      the form thereof delivered to the Administrative
      Agent, (C) each of the conditions precedent set forth in each Project
      Document delivered pursuant to Section 6.04(m)(i),
      and
      each other Project Document then in effect and relating to the Plant with
      respect to which such Funding is requested, that are required to be satisfied
      on
      or before the date of such requested Funding, if any, have been satisfied,
      or
      waived by the parties thereto, and (D) no material breach, material default
      or material violation by any Borrower, or to the knowledge of each Borrower,
      any
      Major Project Party under any such Project Document described in clause
      (C) has occurred and is continuing. 

     

    
      	 	
              (iv)

            	
              The
                Administrative Agent shall have received a Consent, in form and substance
                reasonably satisfactory to the Administrative Agent, with respect
                to each
                Project Document, for the Plant with respect to which such Funding
                is
                requested, identified on Schedule 6.02(e)(iv)
                (which, in the case of Consents from non-Affiliate Project Parties,
                may be
                delivered on or before the Funding
                Date).

            


    

     

    (n) Construction
      Contract Schedules.
      The
      Administrative Agent shall have received (i) a copy of each Work
      Schedule provided for in any Construction Contract for the Plant with
      respect to which such Funding is requested and (ii) a copy of each
      Schedule of Values provided for in any such Construction Contract, in each
      such case in form and substance reasonably satisfactory to the Independent
      Engineer and the Administrative Agent and certified by an Authorized Officer
      of
      the Borrowers' Agent.

     

    (o) Option.
      With
      respect to the Brawley Site or the Burley Site, the Administrative Agent shall
      have received satisfactory evidence from the Borrower whose Plant is the subject
      of such requested Funding that the option under the Brawley Option Agreement
      and/or the Burley Option Agreement, as the case may be, has been duly exercised
      and the Borrower owns good and marketable title to the Brawley Site and/or
      the
      Burley Site. 

     

    (p) Governmental
      Approvals.
      The
      Borrower whose Plant is the subject of such requested Funding shall have all
      Necessary Project Approvals required as of the date of such requested Funding
      for its Plant, and the Administrative Agent shall have received a duly executed
      certificate of an Authorized Officer of such Borrower certifying that
      (i) attached to such certificate are true, correct and complete copies of
      each such Necessary Project Approval, (ii) each such Necessary Project
      Approval is in full 

     

    
      
        
        

      

      
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    force
      and
      effect and is final and Non-Appealable, (iii) all Necessary Project
      Approvals required for such Plant at a later date will be obtained in due course
      prior to the time when needed, and (iv) each applicable Governmental
      Approvals Update Schedule accurately identifies all Necessary Project Approvals
      necessary for such Plant.

     

    (q) Process
      Agent.
      The
      Administrative Agent shall have received, in form and substance reasonably
      satisfactory to the Administrative Agent, acceptances from the Process Agent
      appointed under each additional Financing Document delivered as a condition
      to
      such requested Funding pursuant to which a Process Agent is required to be
      appointed. 

     

    (r) Burley
      Site Assessment.
      With
      respect to the first Funding for the Burley Plant, the Administrative Agent
      shall have received an Environmental Site Assessment Report for the Site for
      such Plant, accompanied by a corresponding reliance letter (to the extent such
      report does not permit reliance thereon by the Lenders), each in form and
      substance reasonably satisfactory to the Administrative Agent and the Lenders
      (provided that any Lender who does not object to a request for approval of
      such
      report and such reliance letter within fifteen (15) days following receipt
      by
      such Lender of such written request for approval and a copy of such report
      and
      such reliance letter shall be deemed to have given its approval, and provided
      that such written request specifies that any Lender who fails to respond within
      such time period shall be deemed to have approved such request).

     

    Section
      6.05 Conditions
      to All Greenfield Plant Construction Loan Fundings.
      In
      addition to the conditions set forth in Section 6.08
      (Conditions
      to All Fundings),
      the
      obligation of each Tranche A Lender to make available each Funding of its
      Construction Loans for the Greenfield Plants, and the release of any
      Construction Loan funds deposited in or standing to the credit of the Escrow
      Account for transfer to the applicable Greenfield Plant Construction Account,
      shall be subject to the fulfillment of the following conditions
      precedent.

     

    (a) Madera
      and Boardman Fundings.
      Each of
      the Madera Funding and the Boardman Funding shall have occurred.

     

    (b) Funding
      Notice.
      The
      Administrative Agent shall have received a Funding Notice, as required by and
      in
      accordance with Section 2.05
      (Notice
      of Fundings),
      together with each of the documents described below (for each Plant with respect
      to which a Funding is then being requested):

     

    
      	 	
              (i)

            	
              to
                the extent requested by the Independent Engineer, all invoices for
                Project
                Costs with respect to which such Funding is requested, each of which
                shall
                be certified as true, correct and complete by the Borrowers' Agent
                and the
                relevant Construction Contractor and substantiated by the Independent
                Engineer;

            


    

     

    
      
        
        

      

      
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            	(ii)	
              conditional
                sworn Lien waiver statements in form and substance reasonably satisfactory
                to the Administrative Agent and the Independent Engineer evidencing
                receipt of payment by each Construction Contractor, subcontractors,
                and
                all other Persons who were paid from the proceeds of the then-last
                preceding Funding for the relevant Plant (which may exclude Lien
                waiver
                statements for amounts less than one million Dollars ($1,000,000)
                on an
                aggregate basis); provided,
                that if there has been no such then-last preceding Funding, such
                Lien
                waiver statements shall evidence receipt of all payments made prior
                to the
                date thereof, or then due and payable, by the Borrowers to each
                Construction Contractor and all subcontractors and all other Persons
                (which may exclude Lien waiver statements for amounts less than one
                million Dollars ($1,000,000) on an aggregate basis). Such Lien waiver
                statements shall (A) be dated on or about the date of the Funding
                Notice (or, if earlier, on or about the date that the relevant
                construction work was completed) and (B) cover all work done and all
                sums received through the date of the then-last preceding Funding
                for the
                relevant Plant (or if there has been no such then last preceding
                Funding
                to make payments to a particular Construction Contractor or other
                payee,
                the date hereof). Each such Lien waiver statement shall be certified
                as
                true, correct and complete by the Borrowers' Agent and shall be verified
                by the Independent Engineer;

            


    

     

    
      	 	
              (iii)

            	
              a
                list of all Change Orders for such Plant to the date of such Funding
                Notice identifying those Change Orders for such Plant, identifying
                those
                Change Orders that were not previously submitted to the Administrative
                Agent, together with a statement by the Borrowers' Agent that copies
                of
                the same have been submitted to the Independent Engineer prior to
                the date
                of such Funding Notice and a list of all contemplated Change Orders
                for
                such Plant that have not yet been entered into, together with confirmation
                that each such Change Order (other than any contemplated Change Order
                which has not been agreed to by the relevant Borrower) is in compliance
                with Section 7.02(m)(iii)
                (Negative
                Covenants - Project Documents);
                and

            


    

     

    
      
        
        

      

      
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              (iv)

            	
              to
                the extent requested by the Independent Engineer or the Administrative
                Agent, evidence (which shall include the Lien waiver statements required
                under Section 6.05(b)(iii)
                and a detailed receipt for payments itemized by Line Item in the
                Construction Budget for such Plant) reasonably satisfactory to the
                Independent Engineer that the full amount of the proceeds of the
                then-last
                preceding Funding for such Plant has been paid out by the Borrowers
                or the
                Construction Contractors to the Persons with respect to whom such
                Funding
                proceeds were disbursed and otherwise in accordance with this Agreement;
                provided
                that if there has been no such then-last preceding Funding for such
                Plant,
                such evidence shall (if requested by the Administrative Agent or
                the
                Independent Engineer) confirm receipt of all payments due and payable
                with
                respect to such Plant by the Borrowers to the Construction Contractors,
                all subcontractors and all other Persons since the date hereof.
                

            


    

     

    (c) Independent
      Engineer's Certification.
      The
      Administrative Agent shall have received an Independent Engineer's Certificate
      in respect of such Funding Notice, reasonably satisfactorily completed and
      duly
      executed by the Independent Engineer, and confirming that (i) the
      Commercial Operation Date for such Plant is capable of being completed on or
      before the Conversion Date Certain and (ii) sufficient funds remain
      available to the Borrowers, including under this Agreement and under the Sponsor
      Support Agreement, to complete such Plant in accordance with the applicable
      Construction Schedule and the Transaction Documents, and any exceptions set
      forth on the Exhibits thereto shall be reasonably satisfactory to the
      Required Lenders.

     

    (d) Title Insurance.
      With
      respect to such Plant, the Administrative Agent shall have received (on or
      before the date of such requested Funding) an ALTA 122 Endorsement to the
      Title Insurance Policy relating to such Plant.

     

    Section
      6.06 Conditions
      to Greenfield Plant Top-Up Funding.
      In
      addition to the conditions set forth in Section 6.08
      (Conditions
      to All Fundings),
      the
      obligation of each Tranche A Lender to make available each Greenfield Plant
      Top-Up Funding shall be subject to the fulfillment of the following conditions
      precedent.

     

    
      
        
        

      

      
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    (a) Commercial
      Operations.
      The
      Commercial Operation Date for the relevant Plant shall have
      occurred.

     

    (b) Operating
      Budget.
      The
      Administrative Agent shall have received an Operating Budget for the relevant
      Plant for the remaining months of the then-current calendar year, which budget
      shall be reasonably satisfactory to the Administrative Agent and the Independent
      Engineer.

     

    (c) Title Insurance.
      With
      respect to the Greenfield Plant whose Excess Construction Loan Commitments
      are
      requested to be drawn, the Administrative Agent shall have received (on or
      before the date of the requested Funding) an ALTA 122 Endorsement to the
      Title Insurance Policy relating to such Plant.

     

    Section
      6.07 Conditions
      to Term Loan Funding.
      In
      addition to the conditions set forth in Section 6.08
      (Conditions
      to All Fundings),
      the
      obligation of each Lender to make its Term Loans shall be subject to the
      fulfillment of the following conditions precedent.

     

    (a) Term
      Notes.
      Each
      requesting Construction/Term Lender shall have received a Term Note payable
      to
      such Lender in the amount of such Lender's Term Loan Commitment, duly executed
      by each Borrower and otherwise complying with the provisions of Section 2.07
      (Evidence
      of Indebtedness).

     

    (b) Construction
      Loan Payoff.
      All of
      the Construction Loans shall have been or shall simultaneously be repaid with
      the proceeds of such Term Loans.

     

    (c) Commercial
      Operation Date.
      The
      Commercial Operation Date for each Plant whose owner has not been released
      pursuant to Section 7.04
      (Release
      of Borrower)
      shall
      have occurred.

     

    (d) Insurance.
      The
      Administrative Agent shall have received binders or certificates evidencing
      the
      commitment of insurers to provide the insurance policies required by
Section 7.01(h)
      (Affirmative
      Covenants - Insurance),
      together with evidence of the payment of all premiums then due and payable
      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, and the Administrative Agent shall have received a
      certificate of the Insurance Consultant in substantially the form of
Exhibit 6.01(k)
      with
      respect thereto.

     

    (e) Title Insurance.
      The
      Administrative Agent shall have received (on or before the date of the requested
      Funding) an ALTA 122 Endorsement to each Title Insurance
      Policy.

     

    
      
        
        

      

      
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    (f) Security.
      The
      Administrative Agent shall have received evidence that (i) the Collateral
      Agent continues to have a perfected first priority security interest in all
      right, title and interest of each Borrower and the Pledgor in and to the
      Collateral prior to all other Liens thereon and subject only to Permitted Liens,
      and (ii) all Governmental Approvals that are necessary or desirable in
      order to establish, protect, preserve and perfect the Collateral Agent's Liens
      have been duly made or taken and are in full force and effect.

     

    (g) Operating
      Budget and Plan.
      The
      Administrative Agent shall have received a copy of the then-current Operating
      Budget for the Project, which shall include all Plants which respect to which
      any Fundings have been disbursed, in form and substance reasonably satisfactory
      to the Administrative Agent.

     

    (h) Project
      Accounts.
      The
      Project Accounts shall continue to be maintained in accordance with this
      Agreement and shall contain all amounts, if any, required to be deposited
      therein as of the Conversion Date, including the amount on deposit in or
      standing to the credit of the Debt Service Reserve Account which shall be at,
      or
      shall be funded on the Conversion Date up to, a level no less than fifty percent
      (50%) of the Debt Service Reserve Requirement. 

     

    (i) Legal
      Opinions.
      The
      Administrative Agent shall have received (on or before the date of such
      requested Funding) legal opinions from counsel to the Loan Parties, each in
      form
      and substance reasonably satisfactory to the Administrative Agent, addressing
      those matters relating to the Project, the Transaction Documents and the
      transactions contemplated therein, and the Collateral as are customarily
      provided in connection with "term conversions" and as the Administrative Agent
      may reasonably request.

     

    Section
      6.08 Conditions
      to All Fundings.
      The
      obligation of each Lender to make available each Funding of its Loans (including
      the release of any Tranche B Construction Loan funds deposited into or
      standing to the credit of the Escrow Account for transfer to any Construction
      Account), the occurrence of the Closing Date and the issuance of any Letter
      of
      Credit, 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 (except
      in connection with the occurrence of the Closing Date or the issuance of a
      Letter of Credit), as required by and in accordance with Section 2.05
      (Notice
      of Fundings),
      which
      shall certify that:

     

    
      	 	
              (i)

            	
              the
                Borrowers are in compliance with all conditions set forth in this
                Section 6.08,
                and each other applicable Section 

            


    

     

    
      
        
        

      

      
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    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 the Borrowers' delivery 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
                Funding Representations and Warranties made by each of the Borrowers,
                the
                Pledgor and Pacific Ethanol 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)

            	
              since
                September 30, 2006, no Material Adverse Effect has occurred and is
                continuing.

            


    

     

    (b) Government
      Approvals.
      Pacific
      Holding and each other Borrower with respect to whose Plant a Funding is being
      requested shall have all Necessary Project Approvals required as of the date
      of
      such requested Funding for such Plant, and the Administrative Agent shall have
      received a duly executed certificate of an Authorized Officer of the relevant
      Borrowers certifying that (i) attached to such certificate are true,
      correct and complete copies of each such Necessary Project Approval not
      previously delivered to the Administrative Agent, (ii) each such Necessary
      Project Approval is in full force and effect and is final and Non-Appealable,
      (iii) all Necessary Project Approvals required for such Plant at a later
      date will be obtained in due course prior to the time when needed, and
      (iv) each applicable Governmental Approvals Update Schedule accurately
      identifies all Necessary Project Approvals necessary for such
      Plant.

     

    (c) No
      Default or Event of Default.
      No
      Event of Default or Funding Default has occurred and is continuing, or would
      result from such Funding.

     

    (d) No
      Litigation.
      

     

    
      	 	
              (i)

            	
              No
                action, suit, proceeding or investigation shall have been instituted
                or
                threatened against any of Pacific Holding, the Pledgor, or any Plant
                or
                Borrower with respect to whose Plant any Funding has been made or
                is being
                requested that, individually or in the aggregate, has had or could
                reasonably be expected to have a Material Adverse Effect;
                and

            


    

     

    
      
        
        

      

      
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              (ii)

            	
              no
                action, suit, proceeding or investigation shall have been instituted
                or
                threatened against any Project Party that is party to any Project
                Document
                with Pacific Holding or that relates to any Borrower or Plant with
                respect
                to which a Funding has been made or is being requested that, individually
                or in the aggregate, has had or could reasonably be expected to have
                a
                Material Adverse Effect.

            


    

     

    (e) 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 for which a Funding is
      being requested, (ii) no Event of Taking relating to any Equity Interests
      in Pacific Holding or any other Borrower with respect to which any Funding
      is
      being requested shall have occurred and be continuing, or (iii) no Event of
      Taking with respect to a material part of any Plant with respect to which any
      Funding is being requested shall have occurred.

     

    (f) 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 3.13
      (Fees),
      and all
      costs and expenses (including reasonable and documented costs, fees and expenses
      of legal counsel) for which invoices have been presented.

     

    (g) Working
      Capital Loan Fundings.
      With
      respect to the Funding of any Working Capital Loan (other than those resulting
      from a draw on a Letter of Credit):

     

    
      	 	
              (i)

            	
              The
                Administrative Agent shall have received a duly executed Funding
                Notice,
                as required by and in accordance with Section 2.05
                (Notice
                of Fundings),
                accompanied by certified evidence of the Working Capital Expenses
                with
                respect to which such Funding has been requested. For the purposes
                of this
                Section 6.08(g),
                on and after the Conversion Date (or, if earlier, the Conversion
                Date
                Certain) any reference in this Section 6.08
                to
                (i) "each Plant with respect to which such Funding is requested" (or
                any similar reference) shall be deemed to be a reference to all Plants
                with respect to which any Funding has (since the date hereof) been
                made or
                is being requested, (ii) a "Funding Default" shall be deemed to be a
                reference to a "Default", and (iii) a "Funding Representation and
                Warranty" shall be deemed to be a reference to a "representation
                and
                warranty".

            


    

     

    
      
        
        

      

      
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              (ii)

            	
              From
                and after Commercial Operation Date for the relevant Plant, the
                Administrative Agent shall have received the most recent Borrowing
                Base
                Certificate required to be delivered pursuant to Section
                7.03(n) (Reporting
                Requirements),
                executed by the Borrowers' Agent, together with supporting schedules,
                which certificate shall be in form and substance reasonably satisfactory
                to the Administrative Agent.

            


    

     

    ARTICLE
      VII

     

    COVENANTS

     

    Section
      7.01 Affirmative
      Covenants.
      Each
      Borrower agrees with each Agent and each Lender that, until the Discharge Date,
      each of the Borrowers 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.

            


    

     

    
      
        
        

      

      
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              (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.
      On and
      after the date of the initial Funding Notice with respect to any Plant, the
      applicable Borrower shall own, construct, operate and maintain (or cause to
      be
      operated and maintained) each such Plant in all material respects in accordance
      with (i) the terms and provisions of the Transaction Documents,
      (ii) all applicable Governmental Approvals and Laws and (iii) Prudent
      Ethanol Operating Practice.

     

    (d) Construction
      and Completion of Project; Maintenance of Properties.
      

     

    
      	 	
              (i)

            	
              On
                and after the date of the initial Funding Notice with respect to
                any
                Plant, the applicable 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 related to each such Plant that
                are
                necessary or useful in the proper conduct of its
                business.

            


    

     

    
      	 	
              (ii)

            	
              On
                and after the date of the initial Funding Notice with respect to
                each
                Plant, and except as required in connection with the construction
                of the
                Project, the Borrowers shall not permit any such 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)

            	
              On
                and after the date of the initial Funding Notice, Pacific Holding
                and each
                other Borrower with respect to whose Plant a Funding has been made
                or is
                being requested shall do or cause to be done all things necessary
                to
                preserve and keep in full force and effect (A) its limited liability
                company existence and (B) its material patents, trademarks, trade
                names,
                copyrights, franchises and similar
                rights.

            


    

     

    
      
        
        

      

      
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    (e) Payment
      of Obligations.
      Each
      Borrower shall pay and discharge as the same shall become due and payable
      (i) all tax liabilities, assessments and governmental charges or levies
      upon it or its properties or assets, (A) unless the same are subject to a
      Contest or (B) other than 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, (ii) all of its obligations
      and
      liabilities under its Contractual Obligations (other than any such failure
      that
      could not reasonably be expected to have a Material Adverse Effect and that
      would not otherwise result in an Event of Default) and (iii) all lawful
      claims that, if unpaid, would by law become a Lien upon its properties (other
      than Permitted Liens), unless the same are subject to a Contest.

     

    (f) Governmental
      Approvals.
      On and
      after the date of the initial Funding Notice, Pacific Holding and each other
      Borrower with respect to whose Plant a Funding has been made or is being
      requested shall maintain in full force and effect, in the name of the relevant
      Borrower, all Necessary Project Approvals and obtain all Deferred Approvals
      (all
      of which shall be reasonably satisfactory to the Administrative Agent) prior
      to
      the time it is required to be obtained hereunder, including as set forth on
      Part B
      of any
      Governmental Approvals Update Schedule, but in any event no later than the
      date
      required to be obtained under applicable Law (other than any such failure to
      maintain or obtain that could not reasonably be expected to have a Material
      Adverse Effect on the relevant Borrower or Plant). 

     

    (g) Use
      of
      Proceeds and Cash Flow.
      

     

    
      	 	
              (i)

            	
              Except
                in the case of Excess Construction Loan Commitments (A) all proceeds
                of the In-Progress Plant 1 Construction Loans and the In-Progress
                Plant 2 Construction Loans shall be applied to (1) fund that
                portion of the Debt Service Reserve Requirement required to be funded
                with
                such Loans (which amount shall be agreed upon by the Administrative
                Agent
                and the Borrowers' Agent, acting reasonably, prior to the Funding
                Date for
                such Plant and is intended to represent fifty percent (50%) of the
                Debt
                Service Reserve Requirement allocable to the Loans for such Plant
                following the Conversion Date) and (2) to Project Costs for the
                Greenfield Plants and (B) all proceeds of the Greenfield Plant
                Construction Loans shall be applied to Project Costs (or, in the
                case of
                Sponsor Support Reimbursement Fundings, for reimbursement of Project
                Costs) for the Greenfield Plant with respect to which such Funding
                was
                requested. All Loans proceeds shall be applied in accordance with
                the
                Funding Notice pursuant to which such Loans were
                funded.

            


    

     

    
      
        
        

      

      
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              (ii)

            	
              All
                proceeds of the Greenfield Plant Top-Up Fundings shall be applied
                to
                Project Costs, Required Equity Contributions or otherwise as permitted
                under this Agreement.

            


    

     

    
      	 	
              (iii)

            	
              All
                proceeds of the Term Loans shall be applied to repay the Construction
                Loans.

            


    

     

    
      	 	
              (iv)

            	
              All
                proceeds of Working Capital Loans (other than those resulting from
                a draw
                on a Letter of Credit) shall be applied to Working Capital
                Expenses.

            


    

     

    
      	 	
              (v)

            	
              All
                proceeds of the Required Equity Contributions shall be applied to
                Project
                Costs.

            


    

     

    
      	 	
              (vi)

            	
              The
                Borrowers shall cause all Cash Flow, Insurance Proceeds and Condemnation
                Proceeds to be applied in accordance with Article VIII
                (Project
                Accounts).

            


    

     

    (h) Insurance.
      Without
      cost to any Senior Secured Party, on and after the date of the initial Funding
      Notice for each Plant, 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. In the event 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 

     

    
      
        
        

      

      
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    Borrower
      shall keep books and records separate from the books and records of any other
      Person (including any Affiliates of the Borrowers) that accurately reflect
      all
      of its business affairs, transactions and the documents and other instruments
      that underlie or authorize all of its limited liability company actions. On
      and
      after the date of the initial Funding Notice (other than the Funding Notice
      requesting the Tranche B Escrow Disbursement), Pacific Holding and each
      other Borrower with respect to whose Plant a Funding has been made or is being
      requested 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 respective Plant), to examine its limited
      liability, 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 (provided that so long as no Default or Event of
      Default has occurred and is continuing, such visits or inspections shall be
      at
      the expense of the Borrowers only once per Quarterly Period for each such
      Person) and at such reasonable times during normal business hours and as often
      as may be reasonably desired, upon reasonable advance notice to such Borrower;
      provided
      that if
      a Default or Event of Default has occurred and is continuing, any Agent, or
      Consultant (or, in the case of any Event of Default, any Lender) (or any of
      their respective officers or designated representatives) may do any of the
      foregoing at the expense of the Borrowers at any time during normal business
      hours and without advance notice. 

     

    (j) Operating
      Budgets.
      

     

    
      	 	
              (i)

            	
              The
                Borrowers shall, not later than thirty (30) days before the
                Commercial Operation Date for any Plant, adopt an Operating Budget
                with
                respect to such Plant and an updated aggregate Operating Budget for
                the
                Project from such date to the conclusion of the calendar year immediately
                following the then-current calendar year and provide a copy of such
                operating plan and budget at such time to the Administrative Agent.
                

            


    

     

    
      	 	
              (ii)

            	
              No
                less than sixty (60) days in advance of the beginning of each
                calendar year with respect to each Plant that has achieved its Commercial
                Operation Date, the Borrowers shall similarly adopt an operating
                plan and
                a budget setting forth in reasonable detail the projected requirements
                for
                Operation and Maintenance Expenses and Maintenance Capital Expenses
                for
                the ensuing two (2) calendar years for each Plant that has achieved
                its Commercial Operation Date and an aggregate operating plan and
                budget
                for the Project and provide a copy of each such operating plan and
                budget
                at such time to the Administrative Agent. (Each such operating plan
                and
                budget is herein called an "Operating
                Budget").
                

            


    

     

    
      
        
        

      

      
        87

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (iii)

            	
              Each
                Operating Budget shall include the same items and detail as provided
                in
                the Financial Model and be prepared in accordance with a form similar
                to
                the Madera Operating Budget delivered on the Closing Date (or a form
                otherwise approved by the Administrative Agent) and shall become
                effective
                upon approval of the Administrative Agent (acting in consultation
                with the
                Consultants if the Administrative Agent reasonably determines that
                such
                consultation is necessary or desirable). The Administrative Agent's
                approval of such updated Operating Budgets shall not be unreasonably
                withheld or delayed.

            


    

     

    
      	 	
              (iv)

            	
              If
                the Borrowers have not adopted an annual Operating Budget covering
                the
                applicable two-year period for each Plant that has achieved its Commercial
                Operation Date and for the Project before the beginning of any calendar
                year following the Madera Funding or any Operating Budget adopted
                by the
                Borrowers has not been accepted by the Administrative Agent before
                the
                beginning of any upcoming calendar year, the Operating Budget for
                each
                relevant Plant for the preceding calendar year shall, until the adoption
                of an annual Operating Budget by the Borrowers and acceptance of
                such
                Operating Budget by the Administrative Agent, be deemed to be in
                force and
                effective as the annual Operating Budget for such Plant for such
                upcoming
                calendar year; provided
                that if the initial Operating Budget for any Plant is not approved
                by the
                Administrative Agent, the Borrowers may use a budget for such Plant
                that
                is consistent with the Financial Model until an initial Operating
                Budget
                is approved, and the Borrowers shall work diligently to prepare an
                initial
                Operating Budget for each Plant that is acceptable to the Administrative
                Agent. 

            


    

     

    
      	 	
              (v)

            	
              If
                either the actual Operation and Maintenance Expenses or Maintenance
                Capital Expenses for any Fiscal Quarter is in excess of the applicable
                Permitted Operating Budget 

            


    

     

    
      
        
        

      

      
        88

        
          

        

      

      
        
        

      

    

     

    Deviation
      Levels, the Borrowers may deliver to the
      Administrative Agent and the Consultants a proposed updated Operating Budget(s),
      which shall be subject to approval by the Administrative Agent. Such proposed
      updated Operating Budget(s) shall not become effective until approved by the
      Administrative Agent.

     

    
      	 	
              (vi)

            	
              Each
                Operating Budget delivered to the Administrative Agent pursuant to
                this
                Section 7.01(j)
                shall
                be accompanied by a memorandum addressing all material deviations
                from the
                Financial Model.

            


    

     

    (k) Performance
      Tests.
      

     

    
      	 	
              (i)

            	
              The
                Administrative Agent and the Independent Engineer have the right
                to
                witness and verify any Performance Tests. The Borrowers shall give
                the
                Administrative Agent and the Independent Engineer notice regarding
                each
                proposed Performance Test no less than five (5) Business Days prior
                to any
                Performance Test. If, upon completion of any Performance Tests, the
                Borrowers have decided to use such Performance Tests as the basis
                for
                declaring the Commercial Operation Date for any Plant, they shall
                so
                notify the Administrative Agent and the Independent Engineer and
                shall
                deliver a copy of all test results supporting the results of such
                Performance Test, accompanied by supporting data and calculations
                including a report that indicates the Borrowers' preliminary opinions
                as
                to results the Performance Tests (each a "Performance
                Test Report")
                and the Independent Engineer will, upon a thorough review of such
                Performance Test Report, certify in writing to the Administrative
                Agent,
                within five (5) Business Days of the receipt of such Performance Test
                Report, the results of the Performance Tests and confirming that
                such
                Performance Tests were performed in accordance with applicable ethanol
                industry standards or deliver a report to the Administrative Agent
                and the
                Borrowers' Agent setting forth in reasonable detail any objections
                of the
                Independent Engineer to such Performance Test Report. If any such
                valid
                objections are made, then the Borrowers shall be permitted to address
                such
                objections to the reasonable satisfaction of the Independent Engineer
                or
                conduct additional Performance Tests in accordance with this Section
                7.01(k).

            


    

     

    
      
        
        

      

      
        89

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (ii)

            	
              Each
                Performance Test shall be conducted in accordance with the Approved
                Performance Test Protocols.

            


    

     

    (l) Project
      Documents.
      

     

    
      	 	
              (i)

            	
              On
                and after the Closing Date, Pacific Holding and each other Borrower
                with
                respect to whose Plant a Funding has been made or is being requested
                shall
                maintain in full force and effect, shall defend their material rights
                and
                shall exercise all material rights, discretion and remedies under
                each
                Project Document to which it is a party, if any, in accordance with
                its
                terms and in a manner consistent with (and subject to) such Borrower's
                obligations under the Financing Agreements; provided,
                that the relevant Borrower(s) shall not be required to undertake
                any
                enforcement actions against any Project Party pursuant to this
                Section 7.01(l)(i)
                that, in the Borrowers' reasonable business judgment, is not necessary
                or
                advisable, unless otherwise instructed by the Administrative Agent,
                acting
                reasonably.

            


    

     

    
      	 	
              (ii)

            	
              On
                and after the Closing Date, promptly upon execution of any Project
                Document by Pacific Holding or any other Borrower with respect to
                whose
                Plant a Funding has been made or is being requested, the Borrowers
                shall
                deliver to the Administrative Agent certified copies of such Project
                Document and, if reasonably requested by the Administrative Agent,
                any
                Ancillary Documents related
                thereto.

            


    

     

    
      
        
        

      

      
        90

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (iii)

            	
              If,
                at any time, the Madera DG Offtake Agreement is scheduled to expire
                in
                accordance with its terms within ninety (90) days or less, the Borrower
                shall ensure that a replacement contract, on terms and conditions
                reasonably satisfactory to the Administrative Agent, is entered into
                with
                a counterparty reasonably acceptable to the Administrative Agent,
                no less
                than thirty (30) days prior to its expiration (it being acknowledged
                that
                an agreement with Pacific Ag Products on terms and conditions
                substantially similar to the DG Offtake Agreement for the Boardman
                Plant shall
                be deemed to be satisfactory).

            


    

     

    
      	 	
              (iv)

            	
              No
                Borrower shall, without the prior approval of the Administrative
                Agent,
                agree to extend the period of time provided for pick-up and taking
                of (A)
                ethanol provided for in Section 2.2 of each Ethanol Offtake Agreement
                with Kinergy or (B) Distillers Grains provided for in Section 2.2
                of each
                DG Offtake Agreement with Pacific Ag
                Products.

            


    

     

    
      
        
        

      

      
        91

        
          

        

      

      
        
        

      

    

     

    (m) Preservation
      of Title; Acquisition of Additional Property.
      

     

    
      	 	
              (i)

            	
              The
                provisions of this Section 7.01(m)(i)
                shall apply to Pacific Holding and to each other Borrower with respect
                to
                whose Plant a Funding has been made or is being requested. On and
                after
                the date of the initial Funding Notice (other than the Funding Notice
                requesting the Tranche B Escrow Disbursement), and subject to
                Section 7.02(f)(vii)
                (Negative
                Covenants - Asset Dispositions)
                with respect to the Storage Facilities, 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. If any Borrower shall at any time acquire
                any
                real property or leasehold or other interest in real property (including,
                to the extent reasonably requested by the Administrative Agent, with
                respect to any material easement or right-of-way not covered by any
                Mortgage), such Borrower shall promptly upon such acquisition, execute,
                deliver and record a supplement to the relevant Mortgage, reasonably
                satisfactory in form and substance to the Administrative Agent, subjecting
                such real property or leasehold or other interest to the Lien and
                security
                interest created by such Mortgage. If reasonably requested by the
                Administrative Agent, the Borrowers shall obtain an appropriate
                endorsement or supplement to, as applicable, the Title Insurance
                Policy insuring the Lien of the Security Documents in such additional
                property, subject only to Permitted
                Liens.

            


    

     

    
      	 	
              (ii)

            	
              Prior
                to the acquisition or lease of any such additional real property
                interests
                (other than easements that do not involve soil disturbance), the
                Borrowers
                shall deliver to the Administrative Agent an Environmental Site Assessment
                Report(s) with respect to such real property (if, in the reasonable
                determination of the Administrative Agent, acting in consultation
                with the
                Independent Engineer, such 

            


    

     

    
      
        
        

      

      
        92

        
          

        

      

      
        
        

      

    

     

    Environmental
      Site Assessment Report(s) with respect
      to such real property interests is warranted), in each case, along with a
      corresponding reliance letter from the consultant issuing such report(s) (to
      the
      extent such report(s) does not permit reliance thereon by the Lenders). Each
      such environmental report shall be in form and substance reasonably satisfactory
      to the Administrative Agent.

     

    (n) Maintenance
      of Liens; Creation of Liens on Newly Acquired Property.
      

     

    
      	 	
              (i)

            	
              On
                and after the date of the initial Funding Notice (other than the
                Funding
                Notice requesting the Tranche B Escrow Disbursement), the applicable
                Borrowers shall take or cause to be taken all action necessary or
                desirable to maintain and preserve the Lien of the Security Documents
                that
                have been executed as of such date and the first-ranking priority
                thereof.

            


    

     

    
      	 	
              (ii)

            	
              On
                and after the date of the initial Funding Notice for each Plant (or
                in the
                case of Pacific Holding, the initial Funding), the applicable Borrowers
                shall take all actions required to cause each Additional Project
                Document
                relating to such Plant (or to which Pacific Holding is a party) to
                be or
                become subject to the Lien of the Security Documents (whether by
                amendment
                to any Security Agreement or
                otherwise).

            


    

     

    
      	 	
              (iii)

            	
              Simultaneously
                with the making of any investment in Cash Equivalents, Pacific Holding
                (after the Closing Date) and each other Borrower (after the initial
                Funding Date for such Borrower's Plant) shall take or cause to be
                taken
                all actions to require such Cash Equivalent in the Project Accounts
                or any
                Local Account with respect to which a Blocked Account Agreement has
                been
                entered into to be or become subject to a first priority perfected
                the
                Lien in favor of the Senior Secured
                Parties.

            


    

     

    (o) Certificate
      of Formation.
      Each
      Borrower shall observe in all material respects all of the separateness and
      other provisions and procedures of its certificate of formation and Borrower
      LLC
      Agreement.

     

    
      
        
        

      

      
        93

        
          

        

      

      
        
        

      

    

     

    (p) Separateness.
      Each
      Borrower shall comply at all times with the separateness provisions set forth
      on
Schedule 5.23.

     

    (q) Further
      Assurances.
      Upon
      written request of the Administrative Agent, the Borrowers 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):

     

    
      	 	
              (i)

            	
              that
                are necessary or advisable for compliance with Section 7.01(n)(i)
                (Affirmative Covenants - Maintenance of Liens; Creation of Liens
                on Newly
                Acquired Property);

            


    

     

    
      	 	
              (ii)

            	
              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

            


    

     

    
      	 	
              (iii)

            	
              for
                the purposes of facilitating the proper exercise of rights and powers
                granted to the Lenders or the Agents under this Agreement or any
                other
                Financing Document.

            


    

     

    (r) First
      Priority Ranking.
      The
      Borrowers shall cause their payment obligations with respect to the Loans to
      constitute direct senior secured obligations of each Borrower and to rank no
      less than pari passu in priority of payment, in right of security and in all
      other respects to all other Indebtedness (other than as contemplated by
Sections 8.08(b)
      and
(c)
      (Revenue
      Account)
      with
      respect to payment priorities) of the Borrowers.

     

    (s) Quarterly
      Calculations.
      

     

    
      	 	
              (i)

            	
              Not
                more than three (3) Business Days prior to each Quarterly Payment
                Date, the Borrowers shall provide to the Administrative Agent a
                calculation of the Debt Service Reserve Requirement, certified by
                a
                Financial Officer of the Borrowers'
                Agent.

            


    

     

    
      	 	
              (ii)

            	
              Not
                more than three (3) Business Days prior to each Quarterly Payment
                Date on which there are funds standing to the credit of the Prepayment
                Holding Account, the Borrowers shall calculate the Historical Debt
                Service
                Coverage Ratio and the Prospective Debt Service Coverage Ratio, and
                shall
                provide written evidence to the Accounts Bank of such calculations
                certified by a Financial Officer of the Borrowers' Agent. Each such
                calculation shall be subject to review by the Administrative
                Agent.

            


    

     

    
      
        
        

      

      
        94

        
          

        

      

      
        
        

      

    

     

    (t) Interest
      Rate Protection Agreement.
      From
      the date of the initial Funding Notice for each Plant (other than the Funding
      Notice requesting the Tranche B Escrow Disbursement), the Borrowers shall
      have in place Interest Rate Protection Agreements with respect to at least
      fifty
      percent (50%) of the aggregate principal amount of all Loans projected to
      be outstanding with respect to each such Plant (or, after the Conversion Date,
      with respect to the Term Loans) from time to time; provided,
      that
      the Borrowers may not enter into Interest Rate Protection Agreements for
      notional amounts, in the aggregate at the time of the execution thereof, in
      excess of the aggregate principal amount of the Construction Loans or Term
      Loans, as applicable, outstanding on the date of such transaction. 

     

    (u) Surveys.
      The
      Borrowers shall deliver to the Administrative Agent a reasonably satisfactory
      as-built Survey for each Plant within ninety (90) days following Final
      Completion for such Plant, which Survey shall show that such Plant has all
      real
      property interests required by the Financing Documents and shall show no Liens
      other than Permitted Liens.

     

    (v) Commodity
      Hedging Programs.
      On or
      before the Closing Date, the Administrative Agent has received a master
      Commodity Risk Management Plan for the Project which has been approved by the
      Administrative Agent. The Borrowers may, from time to time, amend such Commodity
      Risk Management Plant; provided
      that any
      material changes thereto shall require the prior written approval of the
      Administrative Agent.

     

    (w) Debt
      Service Reserve.
      The
      Borrowers shall ensure that the Debt Service Reserve Account is fully funded
      to
      the required amount within one (1) year following the Conversion
      Date.

     

    (x) The
      Commercial Operation Date.
      The
      Borrowers shall cause the Commercial Operation Date for each Greenfield Plant
      with respect to which a Funding has been made to occur on or before the
      Conversion Date Certain.

     

    (y) Final
      Completion.
      The
      Borrowers shall cause Final Completion for each Plant with respect to which
      a
      Funding has been made to occur on or before the date that is (i) in the
      case of the Madera Plant and the Boardman Plant, one hundred twenty
      (120) days after such Plant has achieved its Commercial Operation Date and
      (ii) in the case of each of the Greenfield Plants, ninety (90) days
      after such Plant shall have achieved its Commercial Operation Date.

     

    
      
        
        

      

      
        95

        
          

        

      

      
        
        

      

    

     

    Section
      7.02 Negative
      Covenants.
      Each
      Borrower agrees with each Agent and each Lender that, until the Discharge Date,
      each of the Borrowers will perform the obligations set forth in this
Section 7.02
      applicable to it.

     

    (a) Restrictions
      on Indebtedness of the Borrowers.
      The
      Borrowers will not create, incur, assume or suffer to exist any Indebtedness
      except:

     

    
      	 	
              (i)

            	
              the
                Obligations;

            


    

     

    
      	 	
              (ii)

            	
              Indebtedness
                under the Permitted Commodity Hedging
                Arrangements;

            


    

     

    
      	 	
              (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 two million Dollars ($2,000,000)
                at any
                one time outstanding;

            


    

     

    
      	 	
              (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 or other cash management services 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 two million Dollars ($2,000,000) and, with respect to each
                Plant,
                in an aggregate amount not to exceed four hundred thousand Dollars
                ($400,000); 

            


    

     

    
      
        
        

      

      
        96

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (vi)

            	
              Indebtedness
                in the nature of any Guaranty of any Borrower made on behalf of any
                other
                Borrower, to the extent the underlying guaranteed obligation is permitted
                under the Financing Documents; and

            


    

     

    
      	 	
              (vii)

            	
              Project
                Company Subordinated Debt in an amount not to exceed, in the aggregate,
                fifty million Dollars ($50,000,000) and which shall, in all cases,
                be
                unsecured.

            


    

     

    (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 pursuant to
                the
                Security Documents;

            


    

     

    
      	 	
              (ii)

            	
              Liens
                for taxes, assessments and other governmental charges that are not
                yet due
                or the payment of which is the subject of a
                Contest;

            


    

     

    
      	 	
              (iii)

            	
              Liens
                of carriers, warehousemen, mechanics and materialmen incurred in
                the
                ordinary course of business (A) for sums not yet due or the payment
                of which is the subject of a Contest, (B) with respect to any Plant
                with
                respect to which no Funding has been made or is being requested,
                with
                respect only to sums that are not past due more than sixty (60) days
                or
                (C) otherwise during the construction period for any Plant, in
                amounts not in excess of one million Dollars ($1,000,000) in the
                aggregate
                for sums that are not more than sixty (60) days past due; provided
                that the applicable Title Insurance Policies remain free from mechanics'
                liens exceptions as contemplated by the ALTA 122 Endorsement;
                

            


    

     

    
      	 	
              (iv)

            	
              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 (including pursuant to the title commitment and survey conditions
                precedent set forth in Sections 6.01(r)
                (Conditions
                to Closing - Title Insurance)
                and 6.04(f)
                (Conditions
                to First Funding for Each Greenfield Plant - Title
                Insurance));

            


    

     

    
      
        
        

      

      
        97

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (v)

            	
              cash
                collateral for bonds permitted under Section
                7.02(a)(iii) (Negative
                Covenants - Restrictions on Indebtedness of the
                Borrowers)
                or
                otherwise, but only to the extent that the amount of such cash collateral
                is below the minimum issuance amount for Letters of Credit as provided
                in
                Section
                2.04(b) (Letters
                of Credit) and
                provided that such cash collateral does not exceed two million Dollars
                ($2,000,000) in the aggregate and, with respect to cash collateral
                other
                than in connection with such bonds, one million Dollars ($1,000,000)
                in
                the aggregate;

            


    

     

    
      	 	
              (vi)

            	
              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);

            


    

     

    
      	 	
              (vii)

            	
              easements
                granted by any Borrower to any utility serving such Borrower's Plant
                as
                required for the construction or operation of such Plant; provided,
                that in each such case:

            


    

     

    (A) such
      easement will not adversely affect the costs under any Construction Contract
      or
      any other Project Costs;

     

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

     

    (C) such
      easement has been approved by the Independent Engineer; 

     

    
      	 	
              (viii)

            	
              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 construction or operations of such Plant or
                its
                related transportation plans and facilities;
                and

            


    

     

    
      
        
        

      

      
        98

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (ix)

            	
              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.

            


    

     

    (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 in (i) Cash Equivalents, (ii)
      investments received 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) in the case of
      Pacific Holding, investments in the other Borrowers.

     

    (d) Change
      in Business.
      No
      Borrower shall (i) enter into or engage in any business other than the
      ownership, operation, maintenance, development, start-up, testing, 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 is contemplated 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 pursuant to the Pledge
      Agreements or, if necessary, a supplement thereto or a pledge and security
      agreement in substantially the form of the Pledge Agreements.

     

    (f) Asset
      Dispositions.
      Following the occurrence of the initial Funding Date with respect to each Plant
      (or, in the case of Pacific Holding, the initial Funding) the applicable
      Borrowers shall not sell, lease, assign, transfer or otherwise dispose of assets
      of such Plant or Borrower (other than Products), whether now owned or hereafter
      acquired, except:

     

    
      	 	
              (i)

            	
              disposal
                of assets that are promptly replaced in accordance with the then-current
                Operating Budgets;

            


    

     

    
      	 	
              (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; 

            


    

     

    
      
        
        

      

      
        99

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (iii)

            	
              the
                liquidation or use of Cash
                Equivalents;

            


    

     

    
      	 	
              (iv)

            	
              sales
                or discounts, excluding any such sale or discount to any Affiliate
                of the
                Borrowers (under any Affiliated Project Document or otherwise), without
                recourse of accounts receivable arising in the ordinary course of
                business
                in connection with the compromise or collection
                thereof;

            


    

     

    
      	 	
              (v)

            	
              disposal
                of assets with a fair market value, or at a disposal price, of less
                than
                one million Dollars ($1,000,000) in the aggregate per Plant during
                any
                Fiscal Year; provided,
                that such disposal does not, and would not reasonably be expected
                to,
                adversely affect the construction, operation or maintenance of such
                Plant;
                

            


    

     

    
      	 	
              (vi)

            	
              with
                the prior written approval of the Independent Engineer, the disposal
                or
                loss of an immaterial portion of the Site for any Plant; provided,
                that such disposal or loss could not reasonably be expected to have
                any
                adverse impact on the construction or operations of such Plant or
                its
                related transportation plans and facilities; or


            


    

     

    
      	 	
              (vii)

            	
              the
                Storage Facilities owned by the Borrowers may be transferred to an
                Affiliate of the Borrowers; provided,
                that each of the following conditions is
                satisfied:

            


    

     

    
      	
            	(A)	
              such
                Affiliate is Solvent; 

            


    

     

    
      	
            	(B)	
              the
                relevant Borrower and such Affiliate shall have entered into a lease
                agreement with respect to such Storage Facility, in form and substance
                reasonably satisfactory to the Administrative Agent, the Collateral
                Agent
                and the Independent Engineer; 

            


    

     

    
      	
            	(C)	
              the
                relevant Borrower shall have executed and delivered a leasehold mortgage
                for the benefit of the Collateral Agent, in form and substance reasonably
                satisfactory to the Collateral Agent and the Administrative Agent;
                

            


    

     

    
      	
            	(D)	
              the
                Administrative Agent shall have received: (1) completed requests for
                information or lien search 

            


    

     

     

    
      
        
        

      

      
        100

        
          

        

      

      
        
        

      

    

     

    reports,
      dated no more than eight (8) days (or
      such other period of time reasonably acceptable to the Administrative Agent)
      before the date of such leasehold mortgage, listing all effective UCC financing
      statements, fixture filings or other filings evidencing a security interest
      filed in Delaware, the location of such Storage Facility and any other
      jurisdictions reasonably requested by the Administrative Agent that name the
      relevant Borrower or the owner of such Storage Facility as a debtor, together
      with copies of each such UCC financing statement, fixture filing or other
      filings, which shall show no Liens other than Permitted Liens,
      (2) acknowledgement copies or stamped receipt copies of proper UCC
      financing statements (other than fixture filings or leasehold mortgage
      recordations), duly filed in all jurisdictions that the Administrative Agent
      may
      deem necessary or desirable in order to perfect and protect the first priority
      Liens and security interests created under such leasehold mortgage, and
      (3) evidence of the completion of all other actions, recordings and filings
      of or with respect to the leasehold mortgage that the Administrative Agent
      may
      deem necessary or desirable in order to perfect and protect the first priority
      lien created thereunder; 

     

    
      	
            	(E)	
              the
                Administrative Agent shall have received a paid Title Insurance Policy
                or
                Policies with respect such leasehold mortgage, in the aggregate amount
                reasonably requested by the Administrative Agent, on a Form 1992
                extended
                coverage lender's policy; 

            


    

     

    
      	
            	(F)	
              the
                Administrative Agent shall have received a current Survey with respect
                to
                such leasehold mortgage for the Storage Facilities which shall be
                reasonably satisfactory to the Title Insurance Company;
                

            


    

     

    
      	
            	(G)	
              the
                Administrative Agent shall have received reasonably satisfactory
                evidence
                that such leased premises have been legally and satisfactorily partitioned
                in accordance with all applicable State and local Laws, including,
                in the
                case of any Plant in California, the California Subdivision Map Act,
                and,
                in the case of any Plant in any other jurisdiction, all comparable
                statutes or other applicable Laws; and


            


    

     

     

    
      
        
        

      

      
        101

        
          

        

      

      
        
        

      

    

     

     

    
      	
            	(H)	
              the
                Administrative Agent shall have received reasonably satisfactory
                evidence
                that all requisite insurance identified on Schedule 7.01(h)
                with respect to any such leased premises is in
                place.

            


    

     

    (g) Consolidation,
      Merger.
      No
      Borrower will (i) directly or indirectly liquidate, wind up, terminate,
      reorganize or dissolve itself (or suffer any liquidation, winding up,
      termination, reorganization 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 any Borrower unless such arrangement or
      contract (i) is fair and reasonable to such Borrower and (ii) is an
      arrangement or contract that is on arm's-length basis and contains terms no
      less
      favorable than those that would be entered into by a prudent Person in the
      position of such Borrower with a Person that is not one of its Affiliates (it
      being acknowledged that (1) each of the Affiliate Project Documents are in
      compliance with this Section 7.02(h)
      and (2)
      the transactions contemplated by the Sponsor Support Agreement and the Security
      Documents are in compliance with this Section
      7.02(h)).

     

    (i) Accounts.
      i) In
      the case of Pacific Holding, from and after the Closing Date, and in the case
      of
      each other Borrower, from and after the initial Funding Date for such Borrower's
      Plant, 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 no more than five (5) Local
      Accounts, each of which shall be subject to a Blocked Account Agreement
      (provided that for any Local Account opened prior to the initial Funding Date,
      such Blocked Account Agreement may be executed on or before the initial Funding
      Date). (ii) 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, Brawley or Burley (or the owner of any Substitute Facility) nor enter
      into any partnership or joint venture. Each of Madera, Boardman, Stockton,
      Brawley and Burley shall not create or acquire any Subsidiary or enter into
      any
      partnership or joint venture. 

     

    
      
        
        

      

      
        102

        
          

        

      

      
        
        

      

    

     

    (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)).


     

    (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.
      

     

    
      	 	
              (i)

            	
              Subject
                to Section 7.02(m)(iii),
                on and after the date of the initial Funding Notice for the relevant
                Plant
                (or, in the case of Pacific Holding, the initial Funding), no Borrower
                shall direct or consent or agree to any amendment, modification,
                supplement, or waiver to or in respect of any provision of any Project
                Document to which it is a party (other than any Project Document
                that
                relates only to a Plant with respect to which no Funding has been
                made nor
                is being requested) without all applicable approvals at the relevant
                Project Document Approval Level.

            


    

     

    
      	 	
              (ii)

            	
              On
                and after the date of the initial Funding Notice for the relevant
                Plant
                (or, in the case of Pacific Holding, the initial Funding), and except
                for
                collateral assignments under the Security Documents, no Borrower
                shall
                assign any of its rights under any Project Document to which it is
                a party
                (other than any Project Document that relates only to a Plant with
                respect
                to which no funding has been made nor is being requested) to any
                Person,
                or consent to the assignment of any obligations under any such Project
                Document by any other party
                thereto.

            


    

     

    
      
        
        

      

      
        103

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (iii)

            	
              On
                and after the date of the initial Funding Notice for the relevant
                Plant,
                no Borrower shall enter into or approve any Change Orders for any
                such
                Plant without the approval of the Administrative Agent (acting in
                consultation with the Independent Engineer), such approval not to
                be
                unreasonably withheld or delayed, unless each of the following conditions
                is satisfied:

            


    

     

    
      	
            	(A)	
              the
                cost of such Change Order does not exceed one million Dollars ($1,000,000)
                or, when, taken together with all prior Change Orders for the same
                Plant
                that have not previously been approved by the Administrative Agent,
                does
                not exceed five million Dollars
                ($5,000,000);

            


    

     

    
      	
            	(B)	
              such
                Change Order would not reasonably be expected to prevent any Plant
                with
                respect to which a Funding has been made or is being requested from
                achieving its Commercial Operation Date on or before the Conversion
                Date
                Certain;

            


    

     

    
      	
            	(C)	
              such
                Change Order would not reasonably be expected to present a material
                risk
                of revocation or material modification of any Governmental
                Approval;

            


    

     

    
      	
            	(D)	
              such
                Change Order would not reasonably be expected to cause any Borrower
                or any
                Plant not to comply or lessen the ability of any Borrower or any
                Plant to
                comply in all material respects with any Law applicable to it;
                

            


    

     

    
      	
            	(E)	
              such
                Change Order could not reasonably be expected to result in a Default
                or an
                Event of Default; and 

            


    

     

    
      	
            	(F)	
              the
                Administrative Agent has received a certificate, duly executed by
                an
                Authorized Officer of the Borrowers' Agent, confirming that the proposed
                Change Order will comply with each of the conditions set forth in
                clauses (A)-(E) above .

            


    

     

    (n) Subordinated
      Debt Agreements.
      No
      Borrower shall enter into, except in connection with Indebtedness of such
      Borrower permitted by Section 7.02(a)
      (Negative
      Covenants-Permitted Indebtedness),
      any
      Subordinated Debt Agreement.

     

    
      
        
        

      

      
        104

        
          

        

      

      
        
        

      

    

     

    (o) Additional
      Project Documents.
      None of
      Pacific Holding or any other Borrower with respect to whose Plant a Funding
      has
      been made or is being requested shall enter into any Additional Project Document
      except with the prior written approval of the Administrative Agent.

     

    (p) Suspension
      or Abandonment.
      On and
      after the date of the initial Funding Notice for the relevant Plant, the
      applicable Borrower shall not ii) permit
      or suffer to exist an Event of Abandonment or iii)
      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 Funding)
      and
Section 7.01(g)
      (Affirmative
      Covenants - Use of Proceeds and Cash Flow).
      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 that the following could not reasonably be expected to result
      in
      an Environmental Claim (and provided that the following are done only 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 leased by any
      Borrower.

     

    (s) Restricted
      Payments.
      Except
      as otherwise permitted under Section 2.06(e)
      (Funding
      of Loans)
      the
      Borrowers shall not make any Restricted Payments unless each of the conditions
      set forth below has been satisfied.

     

    
      	 	
              (i)

            	
              the
                Conversion Date shall have
                occurred;

            


    

     

    
      
        
        

      

      
        105

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (ii)

            	
              such
                Restricted Payment is made on, or within thirty (30) days following,
                a Quarterly Payment Date (provided that such Restricted Payment is
                made
                only from funds on deposit in or standing to the credit of the Revenue
                Account or the Prepayment Holding Account, as the case may be, on
                such
                Quarterly Payment Date);

            


    

     

    
      	 	
              (iii)

            	
              no
                Default or Event of Default has occurred and is continuing or would
                occur
                as a result of such Restricted
                Payment;

            


    

     

    
      	 	
              (iv)

            	
              each
                of the Debt Service Reserve Account and the Working Capital Reserve
                Account is fully funded to any applicable required
                level;

            


    

     

    
      	 	
              (v)

            	
              each
                of the Historical Debt Service Coverage Ratio and the Prospective
                Debt
                Service Coverage Ratio, calculated as of such Quarterly Payment Date,
                are
                greater than or equal to 1.5:1;


            


    

     

    
      	 	
              (vi)

            	
              the
                most recent update of the Operating Budgets required pursuant to
                Section 7.01(j)
                (Affirmative
                Covenants - Operating Budget)
                shall have been approved by the Administrative Agent;
                and

            


    

     

    
      	 	
              (vii)

            	
              the
                Administrative Agent has received a Restricted Payment Certificate,
                duly
                executed by an Authorized Officer of the Borrowers' Agent, confirming
                that
                each of the conditions set forth in clauses (i) through (vi) of
                this Section 7.02(s)
                have been satisfied on and as of the date such Restricted Payment
                is
                requested to be made, and setting forth a detailed calculation of
                each of
                the Historical Debt Service Coverage Ratio and Prospective Debt Service
                Coverage Ratio.

            


    

     

    (t) Construction
      Budget.
      From
      and after the date of the initial Funding Notice for each Plant, the Borrowers,
      without the prior written approval of the Administrative Agent and the
      Independent Engineer, may not reallocate any portion of any Line Item of the
      Construction Budget for such Plant except to (i) reallocate the Contingency
      Line Item to pay for Change Orders permitted under this Agreement, (ii) pay
      for fees and expenses of advisors and consultants (including legal counsel)
      incurred in connection with the transactions contemplated by the Transaction
      Documents in excess of the amounts then budgeted, up to ten thousand Dollars
      ($10,000) in any calendar month or one hundred thousand Dollars ($100,000)
      in
      any calendar year, 

    
      
        
        

      

      
        106

        
          

        

      

      
        
        

      

    

     

    (iii) apply
      cost-savings from any completed Line
      Item (which completion has been confirmed by the Independent Engineer) to one
      or
      more other Line Items, (iv) reflect increased costs funded under the
      Sponsor Support Agreement or other documented voluntary equity contributions
      made to the Borrowers to pay for such increased costs, (v) reallocate no
      more than fifteen percent (15%) in the aggregate of the total value of any
      Line
      Item to one or more other Line Items, or (vi) in addition to the reallocation
      permitted pursuant to Sections 7.02(t)(i)-(v),
      reallocate amounts from the Contingency Line Item to other Line Items with
      the
      prior written consent of the Independent Engineer.

     

    (u) Commodity
      Hedging Arrangements.
      The
      Borrowers shall not enter into any Commodity Hedging Arrangements that:


     

    
      	 	
              (i)

            	
              are
                not in accordance with the Commodity Risk Management Plans;
                or

            


    

     

    
      	 	
              (ii)

            	
              are
                for speculative purposes.

            


    

     

    (v) 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.

     

    Section
      7.03 Reporting
      Requirements.
      The
      Borrowers will furnish to the Administrative Agent, who shall distribute copies
      of the following to each Lender:

     

    (a) as
      soon
      as available and in any event within forty-five (45) days
      after the end of the first three Fiscal Quarters of each Fiscal Year,
      consolidated balance sheets of Pacific Ethanol, consolidated and consolidating
      balance sheets of Pacific Holding, consolidated statements of income and cash
      flows of Pacific Ethanol and consolidated and consolidating statements of income
      and cash flows of Pacific Holding for such Fiscal Quarter and for the period
      commencing at the end of the previous Fiscal Year and ending with the end of
      such Fiscal Quarter; 

     

    (b) as
      soon
      as available and in any event within ninety (90) days after the end of each
      Fiscal Year, a copy of the annual audit report for such Fiscal Year for each
      of
      Pacific Ethanol and Pacific Holdings including therein balance sheets as of
      the
      end of such Fiscal Year and statements of income and cash flows of each of
      Pacific Ethanol (on a consolidated basis) and Pacific Holding (on a consolidated
      and consolidating basis) for such Fiscal Year, and accompanied by an unqualified
      opinion of the Auditors stating that all such financial statements present
      fairly in all material 

    
      
        
        

      

      
        107

        
          

        

      

      
        
        

      

    

     

    respects
      the financial position of Pacific Ethanol or
      each Borrower (as applicable) for the periods indicated in conformity with
      GAAP
      applied on a basis consistent with prior periods (except as otherwise
      contemplated by Section
      7.02(v) (Negative
      Covenants - Accounting Changes)),
      which
      report and opinion shall not be subject to any "going
      concern"
      or like
      qualification or exception or any qualification or exception as to the scope
      of
      such audit; 

     

    (c) concurrently
      with the delivery of the financial statements referred to in Sections 7.03(a)
      and
(b) a
      certificate, executed by a Financial Officer of the applicable Loan Party
      stating that:

     

    
      	 	
              (i)

            	
              such
                financial statements fairly present in all material respects the
                financial
                condition and results of operations of such Person on the dates and
                for
                the periods indicated in accordance with GAAP subject, in the case
                of
                interim financial statements, to the absence of notes and normally
                recurring year-end adjustments;

            


    

     

    
      	 	
              (ii)

            	
              such
                Financial Officer has reviewed the terms of the Financing Documents
                and
                has made, or caused to be made under his or her supervision, a review
                in
                reasonable detail of the business and financial condition of such
                Person
                during the accounting period covered by such financial statements;
                and

            


    

     

    
      	 	
              (iii)

            	
              as
                a result of such review such Financial Officer has concluded that
                no
                Default or Event of Default has occurred during the period covered
                by such
                financial statements through and including the date of such certificate
                or, if any Default or Event of Default has occurred, specifying the
                nature
                and extent thereof and, if continuing, the action that the Borrowers
                have
                taken and propose to take in respect
                thereof;

            


    

     

    (d) 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
      Borrowers' 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;

     

    (e) within
      five (5) days after any Borrower obtains knowledge thereof a statement of
      an Authorized Officer of the Borrowers' Agent setting forth details
      of:

     

    
      
        
        

      

      
        108

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (i)

            	
              any
                litigation or governmental proceeding pending or threatened in writing
                against any Borrower or the
                Pledgor;

            


    

     

    
      	 	
              (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;

            


    

     

    
      	 	
              (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 the Borrowers, result in increased costs of at least
                five
                hundred thousand Dollars ($500,000);
                or

            


    

     

    
      	 	
              (v)

            	
              notification
                of any other change in circumstances that could reasonably be expected
                to
                result in an increase of more than one million Dollars ($1,000,000)
                in
                Project Costs for any Plant;

            


    

     

    (f) promptly
      after delivery or receipt thereof, copies of all material notices or documents
      given or received by Pacific Holding or, from and after the initial Funding
      for
      such Borrower's Plant, each other Borrower, pursuant to any of the Project
      Documents or any Subordinated Debt Agreement including:

     

    
      	 	
              (i)

            	
              any
                Change Orders or any written requests for Change Orders that are
                anticipated to be accepted by the applicable
                Borrower;

            


    

     

    
      	 	
              (ii)

            	
              any
                written notice alleging any breach or default thereunder;
                and

            


    

     

    
      	 	
              (iii)

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

            


    

     

    (g) within
      five (5) days following the end of each calendar month until the Conversion
      Date, the Borrowers shall deliver a Monthly Progress Report to the
      Administrative Agent for each Plant with respect to which any Funding has been
      made and that has not yet achieved its Commercial Operation Date;

     

    
      
        
        

      

      
        109

        
          

        

      

      
        
        

      

    

     

    (h) within
      three (3) days following receipt thereof, the Borrowers shall deliver to
      the Administrative Agent any monthly or other periodic report provided to any
      Borrower under any Construction Contract related to any Plant with respect
      to
      which any Funding has been made, which shall be subject to review by the
      Independent Engineer;

     

    (i) 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
      Borrowers' 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;

            


    

     

    
      	 	
              (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;

            


    

     

    
      
        
        

      

      
        110

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (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;

            


    

     

    (j) 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; 

     

    (k) 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 Borrowers' Agent specifying in detail the nature of such
      condition and, if applicable, the Borrowers' proposed response
      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;

            


    

     

    
      	 	
              (ii)

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

            


    

     

    
      
        
        

      

      
        111

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (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 Borrowers' properties or any other
                property
                or any notice, claim or other information that any of the Borrowers
                might
                be subject to an Environmental
                Claim;

            


    

     

    (l) the
      Borrowers will maintain and make available for inspection by the Administrative
      Agent, the Consultants and, if an Event of Default has occurred and is
      continuing, the Lenders, and each of their respective agents and employees,
      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;

     

    (m) promptly
      after receipt thereof, copies of each Deferred Approval obtained by any
      Borrower, together with such documents relating thereto as any Lender may
      request through the Administrative Agent, certified as true, complete and
      correct by an Authorized Officer of the Borrowers' Agent;

     

    (n) as
      soon
      as available, but not later than fifteen (15) days after the end of each
      calendar month, the Borrowers shall deliver to the Administrative Agent a
      Borrowing Base Certificate as of the last Business Day of the immediately
      preceding calendar month; and

     

    (o) other
      information reasonably requested by the Administrative Agent or any Lender,
      through the Administrative Agent.

     

    (p) Operating
      Statements.
      After
      the Commercial Operation Date for each Plant, within forty-five (45) days
      after the end of each Fiscal Quarter, the Borrowers shall furnish to the
      Administrative Agent an Operating Statement regarding the operation


     

    
      
        
        

      

      
        112

        
          

        

      

      
        
        

      

    

     

    and
      performance of each such Plant for each monthly, quarterly and, in the case
      of
      the last quarterly Operating Statement for each year, annual period. Such
      Operating Statements shall contain (i) line items corresponding to each
      Operating Budget Category of the then-current Operating Budget for each Plant
      showing in reasonable detail by Operating Budget Category all actual expenses
      related to the operation and maintenance of each such Plant compared to the
      budgeted expenses for each such Operating Budget Category for such period,
      (ii) information showing the amount of ethanol and other Products produced
      by each such Plant during such period and (iii) information showing
      (A) the amount of ethanol sold by the Borrowers from each such Plant
      to pursuant
      to the Ethanol Offtake Agreements, (B) the amount of Distillers Grains sold
      by the Borrowers from each such 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. The Operating Statements shall be certified
      as
      complete and correct by an Authorized Officer of the Borrowers'
      Agent.

     

    Section
      7.04 Release
      of Borrower.
      (a) Upon
      the written request of the Borrowers' Agent, any Borrower that owns a Plant
      with
      respect to which no Fundings have been made may be released from its obligations
      under, and cease to be subject to the terms of, this Agreement and the other
      Financing Documents (i) on the Conversion Date or (ii) prior to the
      Conversion Date if the Administrative Agent and the Borrowers have determined
      and agree, in good faith, that the conditions to funding for such Plant will
      not
      be able to be satisfied. Notwithstanding anything to the contrary herein,
      (A) on the date of any such release, the Administrative Agent and the
      Collateral Agent, at the expense of the Borrowers, shall execute and deliver
      all
      acknowledgements, lien releases, amendments and other instruments necessary
      to
      effectuate such release as the Borrowers may reasonably request, (B) from
      and after the date of any such release, such released "Borrower" shall no longer
      be a "Borrower" or a "Loan Party" under the Financing Documents, (C) such
      released "Borrower's" Plant shall no longer be a Plant or part of the Project
      under the Financing Documents, (D) all provisions (including any representation,
      warranty, condition precedent, covenant and default) in any of the Financing
      Documents relating to such released "Borrower" or "Plant" shall no longer apply
      to such released "Borrower" or released "Plant", and (E) any existing Defaults
      or Events of Default which solely relate to such released "Borrower" or its
      "Plant" shall be deemed to be waived.

     

    (b) Following
      the occurrence of the Commercial Operation Date for each Plant whose owner
      has
      not been released as a Borrower pursuant to Section 7.04(a),
      the
      Borrowers shall use their best commercially reasonable efforts to cause the
      Conversion Date to occur as promptly as practicable thereafter.

     

    
      
        
        

      

      
        113

        
          

        

      

      
        
        

      

    

     

     

    ARTICLE
      VIII

     

    PROJECT
      ACCOUNTS

     

    Section
      8.01 Establishment
      of Project Accounts.
      On or
      prior to the Closing Date, the Accounts Bank shall establish and maintain,
      in
      the name of the Borrower's Agent and on the books and records of the Accounts
      Bank's offices located in Monterey Park, California the accounts set forth
      below:

     

    (a) a
      special, segregated, Dollar-denominated account entitled "UBOC Control - Pacific
      Ethanol Holding Co. LLC Escrow Account", Account
      No. 4430003491 (the
      "Escrow
      Account");

     

    (b) a
      special, segregated, Dollar-denominated account entitled "UBOC Control - Pacific
      Ethanol Holding Co. LLC Construction Holding Account", Account
      No. 4430003211 (the "Construction
      Holding Account");

     

    (c) a
      special, segregated, Dollar-denominated account entitled "UBOC Control - Pacific
      Ethanol Holding Co. LLC Stockton Construction Account", Account No. 4430003254
      (the "Stockton
      Construction Account");

     

    (d) a
      special, segregated, Dollar-denominated account entitled "UBOC Control - Pacific
      Ethanol Holding Co. LLC Brawley Construction Account", Account No. 4430003262
      (the "Brawley
      Construction Account");

     

    (e) a
      special, segregated, Dollar-denominated account entitled "UBOC Control - Pacific
      Ethanol Holding Co. LLC Burley Construction Account", Account
      No. 4430003270 (the "Burley
      Construction Account");

     

    (f) a
      special, segregated, Dollar-denominated account entitled "UBOC
      Control - Pacific Ethanol Holding Co. LLC Revenue Account", Account
      No. 4430003289 (the "Revenue
      Account");

     

    (g) a
      special, segregated, Dollar-denominated account entitled "UBOC Control - Pacific
      Ethanol Holding Co. LLC Operating Account", Account No. 4430003297 (the
      "Operating
      Account");

     

    (h) a
      special, segregated, Dollar-denominated account entitled "UBOC Control - Pacific
      Ethanol Holding Co. LLC Maintenance Capital Expense Account", Account
      No. 4430003300 (the "Maintenance
      Capital Expense Account");

     

    
      
        
        

      

      
        114

        
          

        

      

      
        
        

      

    

     

    (i) a
      special, segregated, Dollar-denominated account entitled "UBOC
      Control - Pacific Ethanol Holding Co. LLC Working Capital Reserve Account",
      Account No. 4430003319
      (the "Working
      Capital Reserve Account");

     

    (j) a
      special, segregated, Dollar-denominated account entitled "UBOC Control - Pacific
      Ethanol Holding Co. LLC Debt Service Reserve Account", Account
      No. 4430003327 (the "Debt
      Service Reserve Account");

     

    (k) a
      special, segregated, Dollar-denominated account entitled "UBOC Control - Pacific
      Ethanol Holding Co. LLC Prepayment Holding Account", Account No. 4430003335
      (the "Prepayment
      Holding Account");

     

    (l) a
      special, segregated, Dollar-denominated account entitled "UBOC Control - Pacific
      Ethanol Holding Co. LLC Madera Insurance and Condemnation Proceeds Account",
      Account No. 4430003343
      (the "Madera
      Insurance and Condemnation Proceeds Account");

     

    (m) a
      special, segregated, Dollar-denominated account entitled "UBOC Control - Pacific
      Ethanol Holding Co. LLC Boardman Insurance and Condemnation Proceeds Account",
      Account No. 4430003351
      (the "Boardman
      Insurance and Condemnation Proceeds Account");

     

    (n) a
      special, segregated, Dollar-denominated account entitled "UBOC Control - Pacific
      Ethanol Holding Co. LLC Stockton Insurance and Condemnation Proceeds Account",
      Account No. 4430003408
      (the "Stockton
      Insurance and Condemnation Proceeds Account");
      

     

    (o) a
      special, segregated, Dollar-denominated account entitled "UBOC Control - Pacific
      Ethanol Holding Co. LLC Brawley Insurance and Condemnation Proceeds Account",
      Account No. 4430003416
      (the
      "Brawley
      Insurance and Condemnation Proceeds Account");
      

     

    (p) a
      special, segregated, Dollar-denominated account entitled "UBOC Control - Pacific
      Ethanol Holding Co. LLC Burley Insurance and Condemnation Proceeds Account",
      Account No. 4430003424
      (the
      "Burley
      Insurance and Condemnation Proceeds Account");
      

     

    (q) a
      special, segregated, Dollar-denominated account entitled "UBOC Control - Pacific
      Ethanol Holding Co. LLC Extraordinary Proceeds Account", Account No. 4430003432
      (the "Extraordinary
      Proceeds Account");
      

     

    
      
        
        

      

      
        115

        
          

        

      

      
        
        

      

    

     

    (r) a
      special, segregated, Dollar-denominated account entitled "UBOC Control - Pacific
      Ethanol Holding Co. LLC Madera Warranty Account", Account No. 4430003440
      (the "Madera
      Warranty Account");
      

     

    (s) a
      special, segregated, Dollar-denominated account entitled "UBOC Control - Pacific
      Ethanol Holding Co. LLC Boardman Warranty Account", Account No. 4430003459
      (the "Boardman
      Warranty Account");
      

     

    (t) a
      special, segregated, Dollar-denominated account entitled "UBOC Control - Pacific
      Ethanol Holding Co. LLC Stockton Warranty Account", Account No. 4430003467
      (the "Stockton
      Warranty Account");
      

     

    (u) a
      special, segregated, Dollar-denominated account entitled "UBOC Control - Pacific
      Ethanol Holding Co. LLC Brawley Warranty Account", Account No. 4430003475
      (the "Brawley
      Warranty Account");
      and

     

    (v) a
      special, segregated, Dollar-denominated account entitled "UBOC Control - Pacific
      Ethanol Holding Co. LLC Burley Warranty Account", Account No. 4430003483
      (the "Burley
      Warranty Account").
      

     

    Section
      8.02 Deposits
      into and Withdrawals from Project Accounts.
      (a) Amounts
      shall be deposited into and withdrawn from the Project Accounts in strict
      accordance with this Article VIII.

     

    (b) The
      Accounts Bank will only be required to transfer funds hereunder on a "same
      day"
      basis if it has received written notice of such proposed transfer, together
      with
      all certificates, notices, directions and other documents required under this
      Agreement to be delivered to the Accounts Bank relating thereto, not later
      than 12:00 noon New York City time on the Business Day of such transfer
      and, if such notice or any such related document is received by the Accounts
      Bank after such time, such transfer will be undertaken prior to 12:00 noon
      New York City time on the next Business Day succeeding the date of receipt
      by
      Accounts Bank of all such documentation.

     

    (c) If
      any
      transfer, withdrawal, deposit, investment or payment of any funds by the
      Accounts Bank or any other action to be taken by the Accounts Bank under this
      Agreement is to be made or taken on a day other than a Business Day, such
      transfer, withdrawal, deposit, investment, payment or other action will be
      made
      or taken on the next succeeding Business Day.

     

    (d) Any
      instruction, direction, notice, certificate, request or requisition given to
      the
      Accounts Bank by any Borrower with respect to the transfer, withdrawal,


     

    
      
        
        

      

      
        116

        
          

        

      

      
        
        

      

    

     

    deposit,
      investment or payment of any funds under this Agreement or with respect to
      any
      other obligations to be performed by the Accounts Bank under this Agreement
      (i) must be in writing and signed by an Authorized Officer of the
      Borrowers' Agent, (ii) in referencing any of the Project Accounts, must
      refer to the specific Project Account name and number, (iii) shall
      constitute a representation by the Borrowers that all conditions set forth
      in
      this Agreement for such withdrawal have been satisfied, whether or not those
      conditions are explicitly stated to be so satisfied and (iv) shall be
      copied to the Administrative Agent and the Collateral Agent. Notwithstanding
      anything contained in this Agreement or any other Financing Document to the
      contrary, the Accounts Bank may rely and shall be protected in acting or
      refraining from acting upon any instruction, direction, notice, certificate,
      request or requisition of Borrowers' Agent, the Administrative Agent or the
      Collateral Agent.

     

    (e) None
      of
      the Project Accounts shall go into overdraft, and the Accounts Bank shall not
      comply with any request or direction to the extent that it would cause any
      of
      the Project Accounts to do so.

     

    (f) Each
      Borrower hereby acknowledges that it has (or will, prior to the initial Funding
      for the applicable Plant) irrevocably instructed each Project Party, and agrees
      that it shall so instruct each future Project Party, to make all payments due
      and payable to any Borrower under any Project Document, directly to the Accounts
      Bank for deposit in, or to be credited in the manner set forth in this
Article VIII.
      Each
      Borrower further agrees that it shall (or will, prior to the initial funding
      for
      the applicable Plant) irrevocably instruct each other Person from whom such
      Borrower is entitled to receive Cash Flow, Insurance Proceeds and Condemnation
      Proceeds, to make all payments due and payable to any Borrower from such Person
      directly to the Accounts Bank for deposit, and to be credited, in the manner
      set
      forth in this Article VIII.

     

    (g) The
      Accounts Bank shall not be charged with knowledge of any Notice of Suspension,
      Default or Event of Default unless the Accounts Bank has received such Notice
      of
      Suspension or other written notice of such Default or Event of Default from
      the
      Administrative Agent, the Collateral Agent or an Authorized Officer of the
      Borrowers' Agent or any Borrower. The Accounts Bank shall not be charged with
      the knowledge that the Conversion Date has occurred unless it has received
      written notice thereof from the Administrative Agent.

     

    (h) The
      Accounts Bank shall not be charged with the knowledge that any transfer or
      withdrawal from any Project Account would result in the occurrence of a Default
      or Event of Default, unless it has received written notice thereof from the
      Administrative Agent, the Collateral Agent or an Authorized Officer of the
      Borrowers' Agent or any Borrower.

     

    
      
        
        

      

      
        117

        
          

        

      

      
        
        

      

    

     

    (i) Notwithstanding
      anything contained in this Agreement or any other Financing Document to the
      contrary, the Accounts Bank shall have no obligation to (i) make any
      payment, transfer or withdrawal from any Project Account until it has received
      written direction to make such payment, transfer or withdrawal from the
      Collateral Agent, the Administrative Agent or, if this Agreement explicitly
      provides that any such direction may be made by the Borrowers' Agent, the
      Borrowers' Agent or (ii) determine whether any payment, transfer or
      withdrawal from any Project Account made in accordance with any written
      direction from the Collateral Agent, the Administrative Agent or the Borrowers'
      Agent complies with the terms of this Agreement. The Accounts Bank shall have
      no
      liability for, nor any responsibility or obligation to confirm, the use or
      application by any Borrower, Borrowers' Agent, Administrative Agent, Collateral
      Agent or any other recipient of amounts withdrawn or transferred from any
      Project Account.

     

    Section
      8.03 Escrow
      Account.
      (a)
      On the
      date of the Tranche B Escrow Disbursement and on any Tranche Conversion
      Date, the Administrative Agent shall cause all proceeds of the Tranche B
      Construction Loans received by the Administrative Agent from the Tranche B
      Lenders to be deposited in or credited to the Escrow Account.

     

    (b) Unless
      a
      Notice of Suspension is in effect or a Default or Event of Default would occur
      after giving effect to any application of funds contemplated hereby, the
      Administrative Agent shall, on each Funding Date and subject to the satisfaction
      of the conditions set forth in Section
      6.02 (Conditions
      to Madera Funding),
      Section 6.03
      (Conditions
      to Boardman Funding),
      Section 6.04
      (Conditions
      to First Funding for Each Greenfield Plant),
      Section 6.05
      (Conditions
      to All Greenfield Plant Construction Loan Fundings)
      and
Section 6.08
      (Conditions
      to All Fundings),
      as
      applicable, instruct the Accounts Bank in writing to release from the Escrow
      Account and transfer to the Debt Service Reserve Account, the Construction
      Holding Account or any other Construction Account, as applicable, on such
      Funding Date, the aggregate amount of Tranche B Construction Loans to be
      disbursed on such Funding Date, as requested by the Borrowers in the relevant
      Funding Notice; provided,
      that in
      the case of any Funding of In-Progress Plant 2 Construction Loans or Greenfield
      Plant 1 Construction Loans, all available amounts on deposit in or standing
      to the credit of the Escrow Account shall be released from the Escrow Account
      prior to any Funding of In-Progress Plant 2 Construction Loans or
      Greenfield Plant 1 Construction Loans from Tranche A Construction
      Loans. 

     

    (c) If
      at any
      time any outstanding Construction Loan Commitments and Term Loan Commitments
      are
      terminated or reduced in accordance with any of Sections 2.08(c),
      (d) , (i) or (k) (Termination
      or Reduction of Commitments),
      the
      Administrative Agent shall instruct the Accounts Bank in writing to release
      from
      the Escrow Account the amount required to be so released in accordance with
      such
      Sections to reimburse to the Tranche B Lenders such amounts pro rata in
      accordance with their respective Commitment Percentages. 

     

    
      
        
        

      

      
        118

        
          

        

      

      
        
        

      

    

     

    (d) On
      the
      Conversion Date, at the written instruction of the Administrative Agent, any
      amounts on deposit in or standing to the credit of the Escrow Account shall
      be
      released and reimbursed to the Tranche B Lenders pro rata
      in
      accordance with their respective Commitment Percentages.

     

    Section
      8.04 Construction
      Holding Account.
      (a)
      The
      Borrowers (or, with respect to Loan proceeds, the Administrative Agent) shall
      cause the following amounts to be paid into the Construction Holding
      Account:

     

    
      	 	
              (i)

            	
              all
                amounts required to be deposited into the Construction Holding Account
                pursuant to Section 8.03(b)
                (Escrow
                Account);
                

            


    

     

    
      	 	
              (ii)

            	
              all
                proceeds of the Greenfield Plant Top-Up Fundings;
                and

            


    

     

    
      	 	
              (iii)

            	
              all
                amounts required to be deposited into the Construction Holding Account
                pursuant to Section 4.01 (Acceleration
                of Senior Debt Obligations)
                of the Sponsor Support Agreement.

            


    

     

    (b) Unless
      a
      Notice of Suspension is in effect or a Default or Event of Default would occur
      after giving effect to any application of funds contemplated hereby, the
      Borrowers may direct the transfer or withdrawal of funds standing to the credit
      of the Construction Holding Account to the Stockton Construction Account, the
      Burley Construction Account and/or the Brawley Construction Account to be
      applied towards Required Equity Contributions and/or to pay Project Costs that
      are or will become due and payable during the immediately succeeding calendar
      month strictly in accordance with the relevant Construction Budget by delivering
      a Construction Holding Withdrawal Certificate to the Accounts Bank (with a
      copy
      to the Administrative Agent and the Independent Engineer). 

     

    (c) On
      the
      Conversion Date, all amounts on deposit in or standing to the credit of the
      Construction Holding Account shall be withdrawn at the written instruction
      of
      the Borrowers' Agent or the Administrative Agent and applied by the
      Administrative Agent in accordance with Section 2.06(e)
      (Funding
      of Loans)
      and the
      final Construction Loan Funding Notice (a copy of which shall be delivered
      to
      the Accounts Bank).

     

    
      
        
        

      

      
        119

        
          

        

      

      
        
        

      

    

     

    Section
      8.05 Stockton
      Construction Account.
      (a) From
      and after the initial Funding Date for the Stockton Plant and until (and
      including) the Conversion Date, the Borrowers (or, with respect to Loan
      proceeds, the Administrative Agent) shall cause the following amounts to be
      paid
      into the Stockton Construction Account:

     

    
      	 	
              (i)

            	
              all
                amounts required to be deposited into the Stockton Construction Account
                pursuant to Section 8.03(b)
                (Escrow
                Account);
                

            


    

     

    
      	 	
              (ii)

            	
              all
                amounts required to be deposited into the Stockton Construction Account
                pursuant to Section 8.04(b)
                (Construction
                Holding Account);

            


    

     

    
      	 	
              (iii)

            	
              all
                proceeds of the Construction Loans for the Stockton Plant (except
                for
                proceeds of Fundings of any Excess Construction Loan Commitment with
                respect to the Stockton Plant, any Sponsor Support Reimbursement
                Fundings,
                or any Fundings applied directly to the payment of Debt Service or
                as
                otherwise applied on the Conversion Date in accordance with Section 2.06(e)
                (Funding
                of Loans));

            


    

     

    
      	 	
              (iv)

            	
              all
                proceeds of Working Capital Loans for start-up costs for the Stockton
                Plant;

            


    

     

    
      	 	
              (v)

            	
              until
                the Conversion Date, all equity contributions received by Stockton
                (including the Required Equity Contribution for the Stockton
                Plant);

            


    

     

    
      	 	
              (vi)

            	
              all
                proceeds of any Stockton Performance
                Bond;

            


    

     

    
      	 	
              (vii)

            	
              all
                damages payable under any Stockton Construction Contract (other than
                performance liquidated damages permitted to be paid to Pacific Ethanol
                in
                accordance with Section
                4.02(d) (Adjustments
                to Warranty Funding Cap and Sponsor Funding Cap)
                of
                the Sponsor Support Agreement or in connection with any Buy-Down
                L.D.
                Reimbursement); 

            


    

     

    
      	 	
              (viii)

            	
              all
                amounts required to be deposited into the Stockton Construction Account
                pursuant to Section 8.08(b)(x)
                (Revenue
                Account);
                and

            


    

     

    
      
        
        

      

      
        120

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (ix)

            	
              all
                amounts required to be deposited into the Stockton Construction Account
                pursuant to Section 2.04 (Sponsor's
                Deficiency Funding Obligation)
                of the Sponsor Support Agreement.

            


    

     

    (b) Prior
      to
      the date of the first Funding of Stockton Construction Loans, the Borrowers
      may
      direct the transfer or withdrawal of funds standing to the credit of the
      Stockton Construction Account to pay Stockton Project Costs by delivering a
      Stockton Construction Withdrawal Certificate to the Accounts Bank (with a copy
      to the Administrative Agent and the Independent Engineer).

     

    (c) From
      and
      after the date of the first Funding of Stockton Construction Loans, unless
      a
      Notice of Suspension is in effect or a Default or Event of Default would occur
      after giving effect to any application of funds contemplated hereby, the
      Borrowers may direct the transfer or withdrawal of funds standing to the credit
      of the Stockton Construction Account to pay Stockton Project Costs then due
      and
      owing strictly in accordance with the Stockton Construction Budget by delivering
      a Stockton Construction Withdrawal Certificate to the Accounts Bank (with a
      copy
      to the Administrative Agent and the Independent Engineer) which, in the case
      of
      any Loan proceeds, shall be for application strictly in accordance with the
      relevant Funding Notice. All payments from the Stockton Construction Account
      shall be made by the Accounts Bank pursuant to instructions set forth in the
      relevant Stockton Construction Withdrawal Certificate directly to the payee.
      In
      the event that the Borrowers fail to deliver such a Stockton Construction
      Withdrawal Certificate, the Administrative Agent is hereby authorized to direct,
      in writing, the Accounts Bank to transfer or withdraw the amounts necessary
      to
      pay Stockton Project Costs that are, from time to time, due and
      payable.

     

    (d) On
      the
      Conversion Date, all amounts on deposit in or standing to the credit of the
      Stockton Construction Account shall be withdrawn and such account shall be
      terminated and closed at the written instruction of the Borrowers' Agent or
      the
      Administrative Agent and such amounts shall be applied by the Administrative
      Agent in accordance with Section 2.06(e)
      (Funding
      of Loans)
      and the
      final Construction Loan Funding Notice (a copy of which shall be delivered
      to
      the Accounts Bank).

     

    Section
      8.06 Brawley
      Construction Account.
      (a)
      From and
      after the initial Funding Date for the Brawley Plant and until (and including)
      the Conversion Date, the Borrowers shall cause the following amounts to be
      paid
      into the Brawley Construction Account:

     

    
      	 	
              (i)

            	
              all
                amounts required to be deposited into the Brawley Construction Account
                pursuant to Section 8.03(b)
                (Escrow
                Account);
                

            


    

     

    
      
        
        

      

      
        121

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (ii)

            	
              all
                amounts required to be deposited into the Brawley Construction Account
                pursuant to Section 8.04(b)
                (Construction
                Holding Account);

            


    

     

    
      	 	
              (iii)

            	
              all
                proceeds of the Construction Loans for the Brawley Plant (except
                for
                proceeds of Fundings of any Excess Construction Loan Commitment with
                respect to the Brawley Plant, any Sponsor Support Reimbursement Fundings,
                any Fundings applied directly to the payment of Debt Service or as
                otherwise applied on the Conversion Date in accordance with Section 2.06(e)
                (Funding
                of Loans));

            


    

     

    
      	 	
              (iv)

            	
              all
                proceeds of Working Capital Loans for start-up costs for the Brawley
                Plant;

            


    

     

    
      	 	
              (v)

            	
              until
                the Conversion Date, all equity contributions received by Brawley
                (including the Required Equity Contribution for the Brawley
                Plant);

            


    

     

    
      	 	
              (vi)

            	
              all
                proceeds of any Brawley Performance
                Bond;

            


    

     

    
      	 	
              (vii)

            	
              all
                damages payable under the Brawley Construction Contracts (other than
                performance liquidated damages permitted to be paid to Pacific Ethanol
                in
                accordance with Section
                4.02(d) (Adjustments
                to Warranty Funding Cap and Sponsor Funding Cap)
                of
                the Sponsor Support Agreement or in connection with any Buy-Down
                L.D.
                Reimbursement); 

            


    

     

    
      	 	
              (viii)

            	
              all
                amounts required to be deposited into the Brawley Construction Account
                pursuant to Section 8.08(b)(x)
                (Revenue
                Account);
                and

            


    

     

    
      	 	
              (ix)

            	
              all
                amounts required to be deposited into the Brawley Construction Account
                pursuant to Section 2.04 (Sponsor's
                Deficiency Funding Obligation) of
                the Sponsor Support Agreement.

            


    

     

    (b) Prior
      to
      the date of the first Funding of Brawley Construction Loans, the Borrowers
      may
      direct the transfer or withdrawal of funds standing to the credit of the Brawley
      Construction Account to pay Brawley Project Costs by delivering a Brawley
      Construction Withdrawal Certificate to the Accounts Bank (with a copy to the
      Administrative Agent and the Independent Engineer).

     

    
      
        
        

      

      
        122

        
          

        

      

      
        
        

      

    

     

    (c) From
      and
      after the date of the first Funding of Brawley Construction Loans, unless a
      Notice of Suspension is in effect or a Default or Event of Default would occur
      after giving effect to any application of funds contemplated hereby, the
      Borrowers may direct the transfer or withdrawal of funds standing to the credit
      of the Brawley Construction Account to pay Brawley Project Costs then due and
      owing strictly in accordance with the Brawley Construction Budget by delivering
      a Brawley Construction Withdrawal Certificate to the Accounts Bank (with a
      copy
      to the Administrative Agent and the Independent Engineer) which, in the case
      of
      any Loan proceeds, shall be for application strictly in accordance with the
      relevant Funding Notice. All payments from the Brawley Construction Account
      shall be made by the Accounts Bank pursuant to instructions set forth in the
      relevant Brawley Construction Withdrawal Certificate directly to the payee.
      In
      the event that the Borrowers fail to deliver such a Brawley Construction
      Withdrawal Certificate, the Administrative Agent is hereby authorized to direct,
      in writing, the Accounts Bank to transfer or withdraw the amounts necessary
      to
      pay Brawley Project Costs that are, from time to time, due and
      payable.

     

    (d) On
      the
      Conversion Date, all amounts on deposit in or standing to the credit of the
      Brawley Construction Account shall be withdrawn and such account shall be
      terminated and closed at the written instruction of the Borrowers' Agent or
      the
      Administrative Agent and such amounts shall be applied by the Administrative
      Agent in accordance with Section 2.06(e)
      (Funding
      of Loans)
      and the
      final Construction Loan Funding Notice (a copy of which shall be delivered
      to
      the Accounts Bank).

     

    Section
      8.07 Burley
      Construction Account.
      (a) From
      and after the initial Funding Date for the Burley Plant and until (and
      including) the Conversion Date, the Borrowers shall cause the following amounts
      to be paid into the Burley Construction Account:

     

    
      	 	
              (i)

            	
              all
                amounts required to be deposited into the Burley Construction Account
                pursuant to Section 8.03(b)
                (Escrow
                Account);
                

            


    

     

    
      	 	
              (ii)

            	
              all
                amounts required to be deposited into the Burley Construction Account
                pursuant to Section 8.04(b)
                (Construction
                Holding Account);

            


    

     

    
      	 	
              (iii)

            	
              all
                proceeds of the Construction Loans for the Burley Plant (except for
                proceeds of Fundings of any Excess Construction Loan Commitment with
                respect to the Burley Plant, any Sponsor Support Reimbursement Fundings,
                any Fundings applied directly to the payment of Debt Service or as
                otherwise applied on the Conversion Date in accordance with Section 2.06(e)
                (Funding
                of Loans));

            


    

     

    
      
        
        

      

      
        123

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (iv)

            	
              all
                proceeds of Working Capital Loans for start-up costs for the Brawley
                Plant;

            


    

     

    
      	 	
              (v)

            	
              until
                the Conversion Date, all equity contributions received by Burley
                (including the Required Equity Contribution for the Burley
                Plant);

            


    

     

    
      	 	
              (vi)

            	
              all
                proceeds of any Burley Performance
                Bond;

            


    

     

    
      	 	
              (vii)

            	
              all
                damages payable under the Burley Construction Contracts (other than
                performance liquidated damages permitted to be paid to Pacific Ethanol
                in
                accordance with Section
                4.02(d) (Adjustments
                to Warranty Funding Cap and Sponsor Funding Cap)
                of
                the Sponsor Support Agreement or in connection with any Buy-Down
                L.D.
                Reimbursement); 

            


    

     

    
      	 	
              (viii)

            	
              all
                amounts required to be deposited into the Burley Construction Account
                pursuant to Section 8.08(b)(x)
                (Revenue
                Account);
                and

            


    

     

    
      	 	
              (ix)

            	
              all
                amounts required to be deposited into the Burley Construction Account
                pursuant to Section 2.04 (Sponsor's
                Deficiency Funding Obligation) of
                the Sponsor Support Agreement.

            


    

     

    (b) Prior
      to
      the date of the first Funding of Burley Construction Loans, the Borrowers may
      direct the transfer or withdrawal of funds standing to the credit of the Burley
      Construction Account to pay Burley Project Costs by delivering a Burley
      Construction Withdrawal Certificate to the Accounts Bank (with a copy to the
      Administrative Agent and the Independent Engineer).

     

    (c) From
      and
      after the date of the first Funding of Burley Construction Loans, unless a
      Notice of Suspension is in effect or a Default or Event of Default would occur
      after giving effect to any application of funds contemplated hereby, the
      Borrowers may direct the transfer or withdrawal of funds standing to the credit
      of the Burley Construction Account to pay Burley Project Costs then due and
      owing strictly in 

     

    
      
        
        

      

      
        124

        
          

        

      

      
        
        

      

    

     

    accordance
      with the Burley Construction Budget by delivering a Burley Construction
      Withdrawal Certificate to the Accounts Bank (with a copy to the Administrative
      Agent and the Independent Engineer) which, in the case of any Loan proceeds,
      shall be for application strictly in accordance with the relevant Funding
      Notice. All payments from the Burley Construction Account shall be made by
      the
      Accounts Bank pursuant to instructions set forth in the relevant Burley
      Construction Withdrawal Certificate directly to the payee. In the event that
      the
      Borrowers fail to deliver such a Burley Construction Withdrawal Certificate,
      the
      Administrative Agent is hereby authorized to direct, in writing, the Accounts
      Bank to transfer or withdraw the amounts necessary to pay Burley Project Costs
      that are, from time to time, due and payable (unless such Burley Project Costs
      are in dispute).

     

    (d) On
      the
      Conversion Date, all amounts on deposit in or standing to the credit of the
      Burley Construction Account shall be withdrawn and such account shall be
      terminated and closed at the written instruction of the Borrowers' Agent or
      the
      Administrative Agent and such amounts shall be applied by the Administrative
      Agent in accordance with Section 2.06(e)
      (Funding
      of Loans)
      and the
      final Construction Loan Funding Notice.

     

    Section
      8.08 Revenue
      Account.
      (a) From
      and after the initial Construction Loan Funding Date, in the case of Pacific
      Holding and the Borrower whose Plant is being funded (and for such Plant),
      and
      from and after the initial Funding Date for each other Borrower and such
      Borrower's Plant, the applicable Borrower shall cause the following amounts
      to
      be paid into the Revenue Account:

     

    
      	 	
              (i)

            	
              all
                Cash Flow;

            


    

     

    
      	 	
              (ii)

            	
              except
                as set forth in Section 8.15(a)(i)
                (Extraordinary
                Proceeds Account),
                all proceeds from the sale or disposition of any assets of any Borrower;
                

            


    

     

    
      	 	
              (iii)

            	
              any
                other income received by or on behalf of any Borrower that is not
                required
                to be deposited in or credited to another Project Account, or applied
                directly to the Obligations, in accordance with this Agreement;
                and

            


    

     

    
      	 	
              (iv)

            	
              amounts
                transferred to the Revenue Account pursuant to Section
                2.06(e) (Funding
                of Loans),
                Section 8.11(c)
                (Working
                Capital Reserve Account),
                Section 8.12(d)
                (Debt
                Service Reserve Account)
                and Sections 8.15(b)(i)
                and (c)(i)
                (Extraordinary
                Proceeds Account).

            


    

     

    
      
        
        

      

      
        125

        
          

        

      

      
        
        

      

    

     

    (b) Until
      the
      Conversion Date, unless a Notice of Suspension is in effect or a Default or
      Event of Default would occur after giving effect to any application of funds
      contemplated hereby, upon receipt of a Revenue Account Withdrawal Certificate
      duly executed by a Financial Officer of the Borrowers' Agent, the Accounts
      Bank
      shall, in accordance with the directions set forth therein, cause funds held
      in
      the Revenue Account to be withdrawn or transferred to pay the following amounts
      on the dates and at the priorities indicated below:

     

    
      	 	
              (i)

            	
              first,
                on each Monthly Date, (A) to Pacific Ethanol as payment of any Sponsor
                Support Reimbursements then due and owing in accordance with the
                Sponsor
                Support Agreement and (B) to the Operating Account, the amount certified
                by the Borrowers' Agent in such Revenue Account Withdrawal Certificate
                as
                required to pay Operation and Maintenance Expenses that, in each
                such
                case, are or will become due and payable during the immediately succeeding
                calendar month; provided,
                that the amount of such transfer of funds pursuant to clause (B)
                (excluding any amounts transferred to the Operating Account to cover
                the
                cost of corn, natural gas, electricity, insurance premiums and Borrower
                Taxes) does not exceed the Permitted Operating Budget Deviation Levels;
                

            


    

     

    
      	 	
              (ii)

            	
              second,
                on each Monthly Date, to the Maintenance Capital Expense Account,
                in the
                amount certified by the Borrowers' Agent in such Revenue Account
                Withdrawal Certificate as necessary to pay Maintenance Capital Expenses
                that, in each such case, are or will become due and payable during
                the
                immediately succeeding calendar month; provided,
                that the amount of such transfer of funds does not exceed the Permitted
                Operating Budget Deviation Levels;

            


    

     

    
      	 	
              (iii)

            	
              third,
                on any date when due and payable, to the Administrative Agent, for
                the
                account of the Senior Secured Parties, in the amount certified by
                the
                Borrowers' Agent in such Revenue Account Withdrawal Certificate or
                otherwise instructed in writing to the Accounts Bank by the Administrative
                Agent as necessary to pay Fees, costs and expenses then due and payable
                under the Financing Documents;

            


    

     

    
      
        
        

      

      
        126

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (iv)

            	
              fourth,
                on any date when due and payable, to the Administrative Agent, for
                the
                account of the Senior Secured Parties, in the amount certified by
                the
                Borrowers' Agent in such Revenue Account Withdrawal Certificate or
                otherwise instructed in writing to the Accounts Bank by the Administrative
                Agent as necessary to pay any interest with then due and payable
                under the
                Financing Documents and any fees, expenses or Net Swap Payments owing
                to
                any Interest Rate Protection
                Provider;

            


    

     

    
      	 	
              (v)

            	
              fifth,
                on each Monthly Date when due and payable, to the Administrative
                Agent,
                for the account of the Interest Rate Protection Providers, on a
                pro rata
                basis, the amount certified by the Borrowers' Agent in such Revenue
                Account Withdrawal Certificate or otherwise instructed in writing
                to the
                Accounts Bank by the Administrative Agent as payments of Swap Termination
                Value then due and payable by the Borrowers with respect to any Interest
                Rate Protection Agreements;

            


    

     

    
      	 	
              (vi)

            	
              sixth,
                on each Monthly Date, to the Working Capital Reserve Account, in
                the
                amount certified by the Borrowers' Agent in such Revenue Account
                Withdrawal Certificate or otherwise instructed in writing to the
                Accounts
                Bank by the Administrative Agent as equal to the difference between
                (A) the Working Capital Reserve Required Amount and (B) the
                funds on deposit in or standing to the credit of the Working Capital
                Reserve Account on such Monthly Date;


            


    

     

    
      	 	
              (vii)

            	
              seventh,
                on any date when required pursuant to Section 3.10(c)
                (Mandatory
                Prepayment),
                or otherwise at the option of the Borrowers, to the Administrative
                Agent
                in the amount certified by the Borrowers' Agent in such Revenue Account
                Withdrawal Certificate or otherwise instructed in writing to the
                Accounts
                Bank by the Administrative Agent, for application as a prepayment
                of the
                Working Capital Loans;

            


    

     

    
      
        
        

      

      
        127

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (viii)

            	
              eighth,
                provided that no Default or Event of Default has occurred and is
                continuing, on each Quarterly Payment Date, in the amount certified
                by an
                Authorized Officer of the Borrowers' Agent in such Revenue Account
                Withdrawal Certificate to the Persons or accounts specified in such
                Revenue Account Withdrawal Certificate, as Current Priority Subordinated
                Interest for the Quarterly Period ending on such Quarterly Payment
                Date in
                an amount not to exceed, on any such Quarterly Payment Date, one
                million
                Dollars ($1,000,000); 

            


    

     

    
      	 	
              (ix)

            	
              ninth,
                provided that no Default or Event of Default has occurred and is
                continuing, on each Quarterly Payment Date, in an amount certified
                by the
                Borrowers' Agent in such Revenue Account Withdrawal Certificate,
                to the
                Persons or accounts specified in such Revenue Account Withdrawal
                Certificate (including, if required to be paid directly to any taxing
                authority, to such taxing authority), for payment of any Permitted
                Tax
                Distribution; and

            


    

     

    
      	 	
              (x)

            	
              tenth,
                on each Monthly Date, to any Construction Account, the amount certified
                by
                the Borrowers' Agent in such Revenue Account Withdrawal Certificate
                as
                required to pay Project Costs that, in each such case, are or will
                become
                due and payable during the immediately succeeding calendar month
                and with
                respect to which funds are not available in such Construction
                Account.

            


    

     

    (c) Commencing
      on the Conversion Date, unless a Notice of Suspension is in effect or a Default
      or Event of Default would occur after giving effect to any application of funds
      contemplated hereby, upon receipt of a Revenue Account Withdrawal Certificate
      duly executed by a Financial Officer of the Borrowers' Agent, the Accounts
      Bank
      shall, in accordance with the directions set forth therein, cause funds held
      in
      the Revenue Account to be withdrawn or transferred to pay the following amounts
      on the dates and at the priorities indicated below:

     

    
      	 	
              (i)

            	
              first,
                on each Monthly Date, (A) to Pacific Ethanol, as payment of any Sponsor
                Support Reimbursements then due and owing in accordance with the
                Sponsor
                Support Agreement and (B) to the Operating Account, the amount certified
                by the Borrowers' Agent in such Revenue Account Withdrawal Certificate
                as
                required to pay Operation and Maintenance Expenses that, in each
                such
                case, are or will become due and payable during the immediately succeeding
                calendar month; provided,
                that the amount of such transfer of funds pursuant to clause (B)
                (excluding any amounts transferred to the Operating Account to cover
                the
                cost of corn, natural gas, electricity, insurance premiums and Borrower
                Taxes) does not exceed the Permitted Operating Budget Deviation Levels;
                

            


    

     

    
      
        
        

      

      
        128

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (ii)

            	
              second,
                on each Monthly Date, to the Maintenance Capital Expense Account,
                in the
                amount certified by the Borrowers' Agent in such Revenue Account
                Withdrawal Certificate as necessary to pay Maintenance Capital Expenses
                that, in each such case, are or will become due and payable during
                the
                immediately succeeding calendar month; provided,
                that the amount of such transfer of funds does not exceed the Permitted
                Operating Budget Deviation Levels;

            


    

     

    
      	 	
              (iii)

            	
              third,
                on any date when due and payable, to the Administrative Agent, for
                the
                account of the Senior Secured Parties, in the amount certified by
                the
                Borrowers' Agent in such Revenue Account Withdrawal Certificate or
                otherwise instructed in writing to the Accounts Bank by the Administrative
                Agent as necessary to pay Fees, costs and expenses then due and payable
                under the Financing Documents;

            


    

     

    
      	 	
              (iv)

            	
              fourth,
                on any date when due and payable, to the Administrative Agent, for
                the
                account of the Senior Secured Parties, in the amount certified by
                the
                Borrowers' Agent in such Revenue Account Withdrawal Certificate or
                otherwise instructed in writing to the Accounts Bank by the Administrative
                Agent as necessary to pay any interest then due and payable under
                the
                Financing Documents and any fees, expenses or Net Swap Payments owing
                to
                any Interest Rate Protection Provider;


            


    

     

    
      	 	
              (v)

            	
              fifth,
                on any date when required pursuant to Section 3.10(c)
                (Mandatory
                Prepayment),
                to the Administrative Agent in the amount certified by the Borrowers'
                Agent in such Revenue Account Withdrawal Certificate or otherwise
                instructed in writing to the Accounts Bank by the Administrative
                Agent,
                for application as a prepayment of the Working Capital
                Loans;

            


    

     

    
      
        
        

      

      
        129

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (vi)

            	
              sixth,
                on each Monthly Date, to pay, to the Administrative Agent, for the
                account
                of the Senior Secured Parties, on a pro rata
                basis, the amount certified by the Borrowers' Agent in such Revenue
                Account Withdrawal Certificate or otherwise instructed in writing
                to the
                Accounts Bank by the Administrative Agent as (A) the principal
                amounts due and payable with respect to the Term Loans and (B) the
                payments of Swap Termination Value then due and payable by the Borrowers
                with respect to any Interest Rate Protection
                Agreements;

            


    

     

    
      	 	
              (vii)

            	
              seventh,
                on each Monthly Date, to the Working Capital Reserve Account, in
                the
                amount certified by the Borrowers' Agent in such Revenue Account
                Withdrawal Certificate or otherwise instructed in writing to the
                Accounts
                Bank by the Administrative Agent as equal to the difference between
                (A) the Working Capital Reserve Required Amount and (B) the
                funds on deposit in or standing to the credit of the Working Capital
                Reserve Account on such Monthly
                Date;

            


    

     

    
      	 	
              (viii)

            	
              eighth,
                on any Monthly Date and on the Working Capital Maturity Date, to
                pay to
                the Administrative Agent, for the account of the Working Capital
                Lenders,
                the amount certified by the Borrowers' Agent in such Revenue Account
                Withdrawal Certificate or otherwise instructed in writing to the
                Accounts
                Bank by the Administrative Agent as the aggregate principal amount
                due and
                payable with respect to the Working Capital Loans, or otherwise at
                the
                option of the Borrowers, to repay principal amounts with respect
                to the
                Working Capital Loans;

            


    

     

    
      	 	
              (ix)

            	
              ninth,
                on each Monthly Date, to the Debt Service Reserve Account, in the
                amount
                certified by the Borrowers' Agent in such Revenue Account Withdrawal
                Certificate or otherwise instructed in writing to the Accounts Bank
                by the
                Administrative Agent as equal to the difference between (A) the Debt
                Service Reserve Requirement and (B) the funds on deposit in or
                standing to the credit of the Debt Service Reserve Account (including
                the
                Stated Amount of any Debt Service Reserve Letter of Credit) on such
                Monthly Date;

            


    

     

    
      
        
        

      

      
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              (x)

            	
              tenth,
                provided that no Default or Event of Default has occurred and is
                continuing, on each Quarterly Payment Date, in the amount certified
                by an
                Authorized Officer of the Borrowers' Agent in such Revenue Account
                Withdrawal Certificate to the Persons or accounts specified in such
                Revenue Account Withdrawal Certificate, as Current Priority Subordinated
                Interest for the Quarterly Period ending on such Quarterly Payment
                Date in
                an amount not to exceed on any such Quarterly Payment Date, one million
                Dollars ($1,000,000); 

            


    

     

    
      	 	
              (xi)

            	
              eleventh,
                on each Quarterly Payment Date, to the Administrative Agent in the
                amount
                certified by the Borrowers in such Revenue Account Withdrawal Certificate
                or otherwise instructed in writing to the Accounts Bank by the
                Administrative Agent, for application as a prepayment of the Term
                Loans in
                accordance with Section 3.10
                (Mandatory
                Prepayment)
                in
                an amount equal to fifty percent (50%) of the cash remaining in the
                Revenue Account after the transfer required pursuant to priority
                tenth,
                if any; 

            


    

     

    
      	 	
              (xii)

            	
              twelfth,
                provided that no Default or Event of Default has occurred and is
                continuing, on each Quarterly Payment Date, in an amount certified
                by the
                Borrowers' Agent in such Revenue Account Withdrawal Certificate to
                the
                Persons or accounts specified in such Revenue Account Withdrawal
                Certificate (including, if required to be paid directly to any taxing
                authority, to such taxing authority) for payment of any Permitted
                Tax
                Distribution; 

            


    

     

    
      	 	
              (xiii)

            	
              thirteenth,
                on each Quarterly Payment Date, to the Administrative Agent, in the
                amount
                certified by the Borrowers in such Revenue Account Withdrawal Certificate
                or otherwise instructed in writing to the Accounts Bank by the
                Administrative Agent, for application as a prepayment of the Term
                Loans in
                accordance with Section 3.10
                (Mandatory
                Prepayment)
                in
                an amount equal to the greater of (x) an amount such that after such
                prepayment the then-outstanding principal amount of the Term Loans
                is
                equal to the Target Balance Amount for such Quarterly Payment Date
                and
                (y) on and after the second anniversary of the Conversion Date,
                twenty-five percent (25%) of the cash remaining in the Revenue
                Account after the transfer required pursuant to priority tenth,
                if any (in each case, to the extent funds are available at this priority
                thirteenth);

            


    

     

    
      
        
        

      

      
        131

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (xiv)

            	
              fourteenth,
                on each Quarterly Payment Date (A) if the Historical Debt Service
                Coverage Ratio as of such Quarterly Payment Date is less than 1.5:1,
                to
                the Administrative Agent, all amounts on deposit in or standing to
                the
                credit of the Revenue Account after the transfer required to be made
                pursuant to priority thirteenth,
                for application as a prepayment of the Term Loans in accordance with
                Section 3.10
                (Mandatory
                Prepayment)
                or
                (B) if the Historical Debt Service Coverage Ratio as of such
                Quarterly Payment Date is greater than or equal to 1.5:1 and the
                Prospective Debt Service Coverage Ratio as of such Quarterly Payment
                Date
                is less than 1.5:1, as certified by the Borrowers' Agent in such
                Revenue
                Account Withdrawal Certificate or instructed in writing to the Accounts
                Bank by the Administrative Agent, to the Prepayment Holding Account,
                all
                amounts on deposit in or standing to the credit of the Revenue Account
                after the transfer required pursuant to priority thirteenth;
                and

            


    

     

    
      	 	
              (xv)

            	
              fifteenth,
                subject to the satisfaction of the conditions set forth in Section 7.02(s)
                (Negative
                Covenants - Restricted Payments),
                (A) in the amount certified in the Restricted Payment Certificate by
                an Authorized Officer of the Borrowers' Agent, to the Persons or
                accounts
                specified in the Restricted Payment Certificate, for the payment
                of
                amounts then due and owing with respect to the Subordinated Loans
                and
                (B) thereafter, to the Pledgor in the amount certified by the
                Borrowers in a Restricted Payment Certificate by an Authorized Officer
                of
                the Borrowers' Agent and confirmed by the Administrative Agent in
                writing.

            


    

     

    Section
      8.09 Operating
      Account.
      (a) Funds
      shall be deposited into the Operating Account pursuant to Sections 8.08(b)(i)
      and (c)(i) (Revenue
      Account).

     

    
      
        
        

      

      
        132

        
          

        

      

      
        
        

      

    

     

    (b) Unless
      a
      Notice of Suspension is in effect or a Default or Event of Default would occur
      after giving effect to any application of funds contemplated hereby, and so
      long
      as adequate funds are then available in the Operating Account, the
      Borrowers:

     

    
      	 	
              (i)

            	
              may,
                by written instruction to the Accounts Bank (with a copy to the Collateral
                Agent), withdraw or transfer funds from the Operating Account from
                time to
                time as may be necessary to pay directly any amounts owed by the
                Borrowers
                for Operation and Maintenance Expenses;
                and

            


    

     

    
      	 	
              (ii)

            	
              may
                direct the transfer of funds to the Local Accounts from time to time,
                by
                delivery of an Operating Account Withdrawal Certificate to the Accounts
                Bank; provided,
                that the funds on deposit in and standing to the credit of all Local
                Accounts with respect to which a Blocked Account Agreement has been
                executed and is in full force and effect do not exceed, in the aggregate
                at any one time, two hundred thousand Dollars ($200,000) for each
                Plant
                that has achieved its Commercial Operation Date, as certified by
                the
                Borrowers' Agent in such Operating Account Withdrawal
                Certificate.

            


    

     

    Section
      8.10 Maintenance
      Capital Expense Account.
      (a) Funds
      shall be deposited into the Maintenance Capital Expense Account pursuant to
      Sections 8.08(b)(ii)
      and (c)(ii) (Revenue
      Account).

     

    (b) Unless
      a
      Notice of Suspension is in effect or a Default or Event of Default would occur
      after giving effect to any application of funds contemplated hereby, and so
      long
      as adequate funds are then available in the Maintenance Capital Expense Account,
      the Borrowers may, by written instruction to the Accounts Bank (with a copy
      to
      the Collateral Agent), withdraw or transfer funds from the Maintenance Capital
      Expense Account from time to time as may be necessary to pay directly any
      amounts owed by the Borrowers for Maintenance Capital Expenses in accordance
      with the most recent Revenue Account Withdrawal Certificate. 

     

    Section
      8.11 Working
      Capital Reserve Account.
      (a) Funds
      shall be deposited into the Working Capital Reserve Account in accordance with
      Sections 8.08(b)(vi)
      and (c)(viii) (Revenue
      Account),
      Section 3.09(d)(iii)(B)
      (Optional
      Prepayments)
      and
Section 3.10(e)
      (Mandatory
      Prepayments).
      Amounts
      deposited into the Working Capital Reserve Account pursuant to priority item
      second
      of
Sections 3.10(d)(e)(i)
      and (ii) shall
      be deposited into a sub-account (the "Working
      Capital LC Collateral Sub-Account").

     

    
      
        
        

      

      
        133

        
          

        

      

      
        
        

      

    

     

    (b) Unless
      a
      Notice of Suspension is in effect or a Default or Event of Default would occur
      after giving effect to any application of funds contemplated hereby, the
      Borrowers may direct, by delivery of a Working Capital Transfer Certificate
      to
      the Accounts Bank (with a copy to the Administrative Agent), the transfer or
      withdrawal of amounts standing to the credit of the Working Capital Reserve
      Account (other than amounts standing to the credit of the Working Capital LC
      Collateral Sub-Account) to pay directly:

     

    
      	 	
              (i)

            	
              amounts
                due and owing for Operation and Maintenance Expenses in accordance
                with
                the Operating Budget, but only to the extent that adequate funds
                are not
                available for the payment of such Operation and Maintenance Expenses
                in
                the Operating Account; provided,
                that the amount of such transfer of funds, when taken together with
                the
                amounts transferred to the Operating Account during such month pursuant
                to
                Section 8.08(b)(i)
                (Revenue
                Account)
                or
                Section 8.08(c)(i)
                (Revenue
                Account)
                (excluding any amounts transferred to the Operating Account to cover
                the
                cost of corn, natural gas, electricity, insurance premiums and Borrower
                Taxes), does not exceed the Permitted Operating Budget Deviation
                Levels;

            


    

     

    
      	 	
              (ii)

            	
              amounts
                due and owing for Maintenance Capital Expenses in accordance with
                the
                Operating Budget, but only to the extent that adequate funds are
                not
                available for the payment of such Maintenance Capital Expenses in
                the
                Maintenance Capital Expense Account; provided,
                that the amount of such transfer of funds, when taken together with
                the
                amounts transferred to the Maintenance Capital Expense Account during
                such
                month pursuant to Section 8.08(b)(ii)
                (Revenue
                Account)
                or
                Section 8.08(c)(ii)
                (Revenue
                Account),
                does not exceed the Permitted Operating Budget Deviation Levels;
                and

            


    

     

    
      	 	
              (iii)

            	
              amounts
                due and owing for start-up costs with respect to the Greenfield
                Plants.

            


    

     

    (c) If,
      on
      any Quarterly Payment Date, the funds on deposit in or standing to the credit
      of
      the Working Capital Reserve Account (other than amounts 

     

    
      
        
        

      

      
        134

        
          

        

      

      
        
        

      

    

     

    standing
      to the credit of the Working Capital LC Collateral Sub-Account) are in excess
      of
      the Working Capital Reserve Required Amount, unless a Notice of Suspension
      is in
      effect or a Default or Event of Default would occur after giving effect to
      such
      transfer, the Borrowers may direct, by delivery of a Working Capital Transfer
      Certificate to the Accounts Bank (with a copy to the Administrative Agent),
      the
      transfer to the Revenue Account of an amount equal to the difference between
      (x) the aggregate total amount of all funds on deposit in or standing to
      the credit of the Working Capital Reserve Account and (y) the Working
      Capital Reserve Required Amount, as certified by the Borrowers' Agent and
      confirmed by the Administrative Agent in such Working Capital Transfer
      Certificate.

     

    (d) Following
      the funding of the Working Capital LC Collateral Sub-Account, the Borrowers
      or
      the Administrative Agent may direct in writing, in the case of the Borrowers
      by
      delivery of a Working Capital Transfer Certificate to the Accounts Bank (with
      a
      copy to the Administrative Agent), the transfer of amounts standing to the
      credit of the Working Capital LC Collateral Sub-Account to pay to the
      Administrative Agent, for the account of the Working Capital Lenders, the amount
      of such Working Capital Loans then due and payable.

     

    (e) If
      at any
      time the amounts standing to the credit of the Working Capital LC Collateral
      Sub-Account are in excess of the aggregate Maximum Available Amounts under
      all
      Letters of Credit then outstanding, the Borrowers may direct, by delivery of
      a
      Working Capital Transfer Certificate to the Accounts Bank (with a copy to the
      Administrative Agent), the transfer to the Working Capital Reserve Account
      of an
      amount equal to the difference between (x) the aggregate total amount of
      all funds on deposit in or standing to the credit of the Working Capital LC
      Collateral Sub-Account and (y) the aggregate of all such Maximum Available
      Amounts, as certified by the Borrowers' Agent.

     

    Section
      8.12 Debt
      Service Reserve Account.
      (a) Funds
      shall be deposited into the Debt Service Reserve Account:

     

    
      	 	
              (i)

            	
              on
                the In-Progress Plant 1 Construction Loan Funding Date, from the
                Escrow
                Account as directed in writing pursuant to Section
                8.03(b) (Escrow
                Account),
                in the amount required pursuant to Section
                7.01(g) (Affirmative
                Covenants-Use of Proceeds)
                with respect to such Construction Loans to cover the required funding
                of
                fifty percent (50%) of the Debt Service Reserve
                Requirement;

            


    

     

    
      
        
        

      

      
        135

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (ii)

            	
              on
                the In-Progress Plant 2 Construction Loan Funding Date, from the
                Escrow
                Account as directed in writing pursuant to Section
                8.03(b) (Escrow
                Account),
                and the proceeds (if any) of In-Progress Plant 2 Tranche A Construction
                Loans, as applicable, in the amount required pursuant to Section 7.01(g)
                (Affirmative
                Covenants-Use of Proceeds)
                with respect to such Construction Loans to cover the required funding
                of
                fifty percent (50%) of the Debt Service Reserve
                Requirement;

            


    

     

    
      	 	
              (iii)

            	
              on
                the Conversion Date, pursuant to disbursement priority first
                as
                set forth in Section 2.06(e)
                (Funding
                of Loans);
                and

            


    

     

    
      	 	
              (iv)

            	
              pursuant
                to Section 8.08(c)(ix)
                (Revenue
                Account);
                

            


    

     

    provided
      that, notwithstanding the foregoing, in lieu of cash, the Borrowers may cause
      to
      be delivered to the Accounts Bank one or more Debt Service Reserve Letters
      of
      Credit (each of which shall be accompanied by a Debt Service LC Waiver Letter),
      the Stated Amounts of which shall be credited to the Debt Service Reserve
      Account.

     

    (b) On
      any
      date when the amounts available at priorities third
      through
      sixth as
      set
      forth in Section 8.08(c)
      (Revenue
      Account)
      are
      insufficient to pay Debt Service then due and owing, the Accounts Bank shall
      (upon written notification from the Borrowers' Agent or the Administrative
      Agent
      setting forth the amount of such shortfall) withdraw funds from the Debt Service
      Reserve Account to pay to the Administrative Agent, for the account of the
      Senior Secured Parties, the amount of such shortfall of the Debt Service then
      due and payable, which funds shall be applied in the order of priority set
      forth
      in priorities third
      through
sixth
      of
Section
      8.08(c) (Revenue
      Account).
      The
      Accounts Bank shall promptly notify the Administrative Agent and the Collateral
      Agent if, at any time, there are insufficient funds (without taking into account
      any Debt Service Reserve Letters of Credit) standing to the credit of the Debt
      Service Reserve Account to make the payments required under this Section 8.12(b).

     

    (c) Upon
      the
      written instruction of the Administrative Agent, the Collateral Agent shall
      make
      a demand in accordance with the provisions of each Debt Service Reserve Letter
      of Credit, drawdown all or a portion of the Stated Amount of any Debt Service
      Reserve Letter of Credit that has been delivered in accordance with this
      Agreement, and deposit the funds received into the Debt Service Reserve Account.
      The Administrative Agent shall instruct Collateral Agent to make such
      demand:

     

    
      
        
        

      

      
        136

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (i)

            	
              if
                amounts are required to be withdrawn from the Debt Service Reserve
                Account
                pursuant to Section 8.12(b),
                and the amounts to be so withdrawn exceed the funds, not including
                the
                aggregate Stated Amounts of the Debt Service Reserve Letters of Credit
                standing to the credit of the Debt Service Reserve Account, in the
                amount
                necessary to make the payments of Debt Service then due and
                payable;

            


    

     

    
      	 	
              (ii)

            	
              in
                full, if the commercial bank that issued such Debt Service Reserve
                Letter
                of Credit is no longer an Acceptable Bank;
                or

            


    

     

    
      	 	
              (iii)

            	
              in
                full, if (A) no less than thirty (30) days prior to the expiry
                date of each such Debt Service Reserve Letter of Credit, the Collateral
                Agent has not received notice from the issuing bank that it will
                extend
                such expiry date or renew such Debt Service Reserve Letter of Credit
                and
                no substitute or replacement letter of credit satisfying the requirements
                of a "Debt Service Reserve Letter of Credit" has been delivered to
                the
                Collateral Agent to replace the Stated Amount of such expiring Debt
                Service Reserve Letter of Credit and (B) excluding the Stated Amount
                of such Debt Service Reserve Letter of Credit and the Stated Amount
                of any
                other Debt Service Reserve Letter of Credit that similarly could
                be
                drawndown, an amount equal to the Debt Service Reserve Requirement
                is not
                on deposit in or standing to the credit of the Debt Service Reserve
                Account on the date of such
                drawdown.

            


    

     

    (d) If,
      on
      any Quarterly Payment Date, the funds on deposit in or standing to the credit
      of
      the Debt Service Reserve Account (taking into account the Stated Amounts of
      any
      Debt Service Reserve Letters of Credit standing to the credit of the Debt
      Service Reserve Account) are in excess of the Debt Service Reserve Requirement,
      unless a Notice of Suspension is in effect or a Default or Event of Default
      would occur after giving effect to such transfer, the Borrowers may direct,
      by
      delivery of a Debt Service Reserve Release Certificate to the Accounts Bank
      (with a copy to the Administrative Agent), the transfer to the Revenue Account
      of an amount equal to the difference between (x) the aggregate total amount
      of
      all funds on deposit in or standing to the credit of the Debt Service Reserve
      Account (taking into account the Stated Amounts of any Debt Service Reserve
      Letters of Credit standing to the credit of the Debt Service Reserve Account)
      and (y) the Debt Service Reserve Requirement, as certified by the Borrowers'
      Agent and confirmed by the Administrative Agent in such Debt Service Release
      Certificate; provided,
      that if
      such difference is positive due to the posting of a Debt 

     

    
      
        
        

      

      
        137

        
          

        

      

      
        
        

      

    

     

    Service
      Reserve Letter of Credit to the Debt Service Reserve Account to replace or
      substitute for cash then on deposit, such amount may be distributed directly
      to
      Pacific Ethanol or such other Affiliate of the Borrowers who provided such
      Debt
      Service Reserve Letter of Credit (and such distribution shall not be treated
      as
      a Restricted Payment for purposes of this Agreement).

     

    Section
      8.13 Prepayment
      Holding Account.
      (a) Funds
      shall be deposited into the Prepayment Holding Account pursuant to Section 8.08(c)(xiv)(B)
      (Revenue
      Account). 

     

    (b) The
      Accounts Bank shall withdraw funds from the Prepayment Holding Account upon
      receipt of written instructions from the Borrowers' Agent or the Administrative
      Agent in accordance with the terms set forth below.

     

    
      	 	
              (i)

            	
              If,
                on any such Quarterly Payment Date, each of the Historical Debt Service
                Coverage Ratio and the Prospective Debt Service Coverage Ratio are
                greater
                than or equal to 1.5:1 then, subject to the satisfaction of the conditions
                set forth in Section 7.02(s)
                (Negative
                Covenants - Restricted Payments),
                the Borrowers may submit a Restricted Payment Certificate to the
                Accounts
                Bank directing the transfer of amounts on deposit in and standing
                to the
                credit of the Prepayment Holding Account for Restricted Payments
                by the
                Borrowers.

            


    

     

    
      	 	
              (ii)

            	
              If,
                on any such Quarterly Payment Date, the Historical Debt Service Coverage
                Ratio is less than 1.5:1 then all amounts on deposit in and standing
                to
                the credit of the Prepayment Holding Account shall, upon the written
                instruction of the Borrowers' Agent or the Administrative Agent,
                be
                transferred to the Administrative Agent for application as a prepayment
                of
                the Term Loans in accordance with Section 3.10
                (Mandatory
                Prepayment).

            


    

     

    Section
      8.14 Insurance
      and Condemnation Proceeds Accounts.
      (a) From
      and after the Closing Date, in the case of Pacific Holding, and from and after
      the initial Funding Date for each other Borrower and such Borrower's Plant,
      the
      applicable Borrowers shall cause all Insurance Proceeds and all Condemnation
      Proceeds payable to each such Borrower, or otherwise relating to the each Plant,
      to be deposited in or credited to the Insurance and Condemnation Proceeds
      Account for such Plant.

     

    
      
        
        

      

      
        138

        
          

        

      

      
        
        

      

    

     

    (b) The
      Borrowers shall not make, direct, or request the Accounts Bank to make, any
      withdrawals from any Insurance and Condemnation Proceeds Account except as
      permitted by this Section 8.14,
      and
      provided that no Notice of Suspension has been delivered that has not been
      withdrawn and no Default or Event of Default would occur as a result of such
      transfer or withdrawal.

     

    (c) The
      Borrowers may apply any Insurance Proceeds and Condemnation Proceeds deposited
      into any Insurance and Condemnation Proceeds Account in amounts less than or
      equal to two million five hundred thousand Dollars ($2,500,000) arising from
      any
      one claim or any series of claims relating to the same occurrence with respect
      to the same Plant directly for the replacement or repair of damaged assets
      to
      which such Insurance Proceeds or Condemnation Proceeds. as the case may be,
      relate; provided,
      that
      the Borrowers deliver to the Administrative Agent and the Accounts Bank, no
      fewer than three (3) Business Days in advance of any such proposed
      transfers or withdrawals from such Insurance and Condemnation Proceeds Account,
      an Insurance and Condemnation Proceeds Request Certificate setting forth
      proposed instructions for such withdrawals or transfers. A Financial Officer
      of
      the Borrowers' Agent shall certify that each Insurance and Condemnation Proceeds
      Request Certificate is being delivered, and the withdrawals specified therein
      are being directed, in accordance with this Agreement and the other Transaction
      Documents, and shall also certify that the directed withdrawals or transfers
      will be used exclusively for repair or replacement of damaged assets to which
      such Insurance Proceeds or Condemnation Proceeds, as the case may be,
      relate.

     

    (d) Any
      Insurance Proceeds and Condemnation Proceeds deposited into any Insurance and
      Condemnation Proceeds Account in amounts greater than two million five hundred
      thousand Dollars ($2,500,000) but less than or equal to fifteen
      million Dollars
      ($15,000,000) arising from any one claim or any series of claims relating to
      the
      same occurrence with respect to the same Plant shall:

     

    
      	 	
              (i)

            	
              be
                applied for repair or replacement of damaged assets to which such
                Insurance Proceeds or Condemnation Proceeds, as the case may be,
                relate in
                accordance with the Borrowers' direction in an Insurance and Condemnation
                Proceeds Request Certificate delivered to the Administrative Agent
                and the
                Accounts Bank if, within sixty (60) days after the occurrence of the
                Casualty Event or Event of Taking giving rise to such proceeds, the
                Borrowers deliver a Restoration or Replacement Plan to the Administrative
                Agent and the Independent Engineer with respect to such Casualty
                Event or
                Event of Taking that is based upon, and accompanied by, each of the
                following:

            


    

     

    
      
        
        

      

      
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            	(A)	
              a
                description of the nature and extent of such Casualty Event or Event
                of
                Taking, as the case may be;

            


    

     

    
      	
            	(B)	
              a
                bona fide assessment (from a contractor reasonably acceptable to
                the
                Independent Engineer) of the estimated cost and time needed to restore
                or
                replace the relevant Plant to substantially the same value and general
                performance capability as prior to such
                event;

            


    

     

    
      	
            	(C)	
              reasonably
                satisfactory evidence that such Insurance Proceeds or Condemnation
                Proceeds, as the case may be, are sufficient to make the necessary
                restorations or replacements;

            


    

     

    
      	
            	(D)	
              a
                certificate of a Financial Officer of the Borrowers' Agent certifying
                that
                (1) all work contemplated to be done under the Restoration or
                Replacement Plan can be done within the time periods, if any, required
                under any Project Document relating to the relevant Plant; (2) all
                Governmental Approvals necessary to perform the work have been obtained
                (or are reasonably expected to be obtained without undue delay);
                and
                (3) the relevant Plant once repaired/restored will continue to
                perform at the levels set forth in the then-current Operating Budget
                for
                such Plant with respect to production volume, yield and utility
                consumption (or other levels approved by the Required Lenders);
                

            


    

     

    
      	
            	(E)	
              the
                Casualty Event or Event of Taking , as the case may be (including
                the
                non-operation of such Plant during any period of repair or restoration)
                has not resulted or would not reasonably be expected to result in
                a
                default giving rise to a termination of, or a materially adverse
                modification of, one or more of the Governmental Approvals or Project
                Documents;

            


    

     

    
      	
            	(F)	
              after
                taking into consideration the availability of such Insurance Proceeds
                or
                Condemnation Proceeds, as applicable, and Business Interruption Insurance
                Proceeds and any additional documented voluntary equity contributions
                for
                the purpose of covering such costs, there will be adequate amounts
                available to pay all ongoing expenses including Debt Service during
                the
                period of repair or restoration; 

            


    

     

    
      
        
        

      

      
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            	(G)	
              construction
                contractors and vendors of recognized skill, reputation and
                creditworthiness and reasonably acceptable to the Administrative
                Agent
                have executed reconstruction contracts, purchase orders or similar
                arrangements for the repair, rebuilding or restoration on terms and
                conditions reasonably acceptable to the Administrative Agent;
                and

            


    

     

    
      	
            	(H)	
              a
                confirmation by the Independent Engineer of its agreement with the
                matters
                set forth in Section 8.14(d)(i)(A)-(G)
                and its approval of such Restoration or Replacement Plan; or
                

            


    

     

    
      	 	
              (ii)

            	
              if
                (A) the Borrowers do not deliver such Restoration or Replacement Plan
                and the accompanying deliveries referred to in Section 8.14(d)(i)
                within such sixty (60) day period or (B) after the completion of
                such Restoration or Replacement Plan, there are excess Insurance
                Proceeds
                or Condemnation Proceeds, as the case may be, on deposit in or standing
                to
                the credit of such Insurance and Condemnation Proceeds Account, the
                Accounts Bank shall on the next succeeding Quarterly Payment Date
                thereafter, upon the written instruction of the Borrowers' Agent
                or the
                Administrative Agent, transfer to the Administrative Agent, for the
                account of the Lenders, an amount equal to such Insurance Proceeds
                or
                Condemnation Proceeds, as the case may be, for mandatory prepayment
                of the
                Loans in accordance with Section 3.10
                (Mandatory
                Prepayments).

            


    

     

    (e) Any
      Insurance Proceeds or Condemnation Proceeds deposited into any Insurance and
      Condemnation Proceeds Account in amounts greater than fifteen million Dollars
      ($15,000,000) arising from any one claim or any series of claims relating to
      the
      same occurrence with respect to the same Plant shall be applied, at the written
      instruction of the Administrative Agent, to prepay the Loans or for repair
      or
      replacement of damaged assets, as determined by the Required Lenders in their
      sole discretion.

     

    Section
      8.15 Extraordinary
      Proceeds Account.
      (a)
      From and
      after the Closing Date, in the case of Pacific Holding, and from and after
      the
      initial Funding Date for each other Borrower and such Borrower's Plant, the
      applicable Borrowers shall cause 

     

    
      
        
        

      

      
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    (i) all
      proceeds of asset disposals (other than proceeds from the sale of Products)
      that
      will not be used for replacement in accordance with Section 7.02(f)(i)
      (Negative
      Covenants - Asset Dispositions)
      and
      (ii) all Project Document Termination Payments, in each such case relating
      to Pacific Holding or a Plant or Borrower with respect to which a Funding has
      been made, to be deposited into the Extraordinary Proceeds Account.

     

    (b) If
      at any
      time proceeds of an asset disposal are deposited into the Extraordinary Proceeds
      Account, then on any Quarterly Payment Date:

     

    
      	 	
              (i)

            	
              if
                such proceeds are in an amount in the aggregate of less than two
                million
                five hundred thousand Dollars ($2,500,000) (taken together with any
                other
                proceeds of asset disposals deposited in the Extraordinary Proceeds
                Account during the then-current Fiscal Year) the Borrowers may submit
                an
                Extraordinary Proceeds Release Notice to the Accounts Bank, certified
                by
                an Authorized Officer of the Borrowers' Agent, directing the transfer
                of
                such funds to the Revenue Account;
                and

            


    

     

    
      	 	
              (ii)

            	
              if
                such proceeds are in an amount equal to or greater than two million
                five
                hundred thousand Dollars ($2,500,000) (taken together with any other
                proceeds of asset disposals deposited in the Extraordinary Proceeds
                Account during the then-current Fiscal Year), such amounts shall
                be
                transferred, upon the written instruction of the Borrowers' Agent
                or the
                Administrative Agent, to the Administrative Agent for application
                as a
                prepayment of the Loans in accordance with Section 3.10
                (Mandatory
                Prepayment).

            


    

     

    (c) If
      at any
      time Project Document Termination Payments are deposited into the Extraordinary
      Proceeds Account, then on any Quarterly Payment Date:

     

    
      	 	
              (i)

            	
              if
                such Project Document Termination Payments are in an amount in the
                aggregate of less than five million Dollars ($5,000,000) (taken together
                with any other Project Document Termination Payments received during
                the
                then-current Fiscal Year), the Borrowers may submit an Extraordinary
                Proceeds Release Notice to the Accounts Bank, certified by an Authorized
                Officer of the Borrowers' Agent, directing the transfer of such Project
                Document Termination Payments to the Revenue Account;
                and

            


    

     

    
      
        
        

      

      
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              (ii)

            	
              if
                such Project Document Termination Payments are in an amount equal
                to or
                greater than five million Dollars ($5,000,000) (taken together with
                any
                other Project Document Termination Proceeds received during the
                then-current Fiscal Year), such amounts shall be transferred, upon
                the
                written instruction of the Borrowers' Agent or the Administrative
                Agent,
                to the Administrative Agent for application as a prepayment of the
                Loans
                in accordance with Section 3.10
                (Mandatory
                Prepayment).

            


    

     

    Section
      8.16 Warranty
      Accounts.
      (a)  The
      Borrowers shall cause all Warranty Proceeds payable to each Borrower, or
      otherwise relating to each Plant, to be deposited in the Warranty Account for
      such Plant.

     

    (b) Unless
      a
      Notice of Suspension is in effect or a Default or Event of Default would occur
      after giving effect to any application of funds contemplated hereby, the
      Borrowers may direct the transfer or withdrawal of funds standing to the credit
      of the Warranty Accounts to pay any amounts necessary to cover costs and
      expenses incurred by the Borrowers in performing or causing to be performed
      any
      Warranty Work with respect to the Plant to which such Warranty Proceeds relate,
      by delivering a Warranty Proceeds Request Certificate to the Accounts Bank
      (with
      a copy to the Administrative Agent and the Independent Engineer), which shall
      be
      for application strictly in accordance with the relevant Warranty Notice. All
      payments from the Warranty Accounts shall be made by the Accounts Bank pursuant
      to instructions set forth in the relevant Warranty Proceeds Request Certificate.
      In the event that the Borrowers fail to deliver such a Warranty Proceeds Request
      Certificate, the Administrative Agent is hereby authorized to direct, in writing
      to the Accounts Bank to transfer or withdraw the funds necessary to pay any
      amounts necessary to cover costs and expenses incurred by the Borrowers in
      performing or causing to be performed any Warranty Work with respect to the
      Plant to which such Warranty Proceeds relate. 

     

    Section
      8.17 Representations,
      Warranties and Covenants of Accounts Bank.
      The
      Accounts Bank hereby represents and warrants, covenants and agrees with the
      Lenders, the Agents and the Borrowers (and the other parties hereto agree,
      to
      the extent set forth below) as follows:

     

    (a) it
      will
      act as depositary agent, as "securities intermediary" (within the meaning of
      Section 8-102(a)(14) of the UCC) with respect to each of the Project Accounts
      that is a "securities account" (within the meaning of Section 8-501 of the
      UCC)
      and the Financial Assets credited to such Project Accounts, and as "bank"
      (within the meaning of 9-102(a)(8) of the UCC) with respect to each of the
      Project Accounts as described in Section
      8.19 (Project
      Accounts as Deposit Accounts)
      and
      credit balances not 

     

    
      
        
        

      

      
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    constituting
      Financial Assets credited thereto and to accept all cash, payments, other
      amounts and Cash Equivalents to be delivered to or held by the Accounts Bank
      pursuant to the terms of this Agreement. The Borrowers, the Senior Secured
      Parties and the Accounts Bank agree that, for purposes of Articles 8 and 9
      of the UCC, notwithstanding anything to the contrary contained in any other
      agreement relating to the establishment and operation of the Project Accounts,
      the jurisdiction of the Accounts Bank (in its capacity as the securities
      intermediary and bank) is the State of New York;

     

    (b) the
      Accounts Bank hereby agrees and confirms that it has established and maintains
      the Project Accounts as set forth and defined in this Agreement. The Accounts
      Bank agrees that (i) each such Project Account established by the Accounts
      Bank
      is and will be maintained as a "securities account" (within the meaning of
      Section 8­501 of the UCC); (ii) the Borrowers' Agent is the "entitlement
      holder" (within the meaning of Section 8­102(a)(7) of the UCC) in respect of
      the "financial assets" (within the meaning of Section 8­102(a)(9) of the
      UCC, the "Financial
      Assets")
      credited to such Project Accounts that are "securities accounts"; (iii) all
      Financial Assets in registered form or payable to or to the order of and
      credited to any such Project Account shall be registered in the name of, payable
      to or to the order of, or specially endorsed to, the Accounts Bank or in blank,
      or credited to another securities account maintained in the name of the Accounts
      Bank ; and (iv) in no case will any Financial Asset credited to any such Project
      Account be registered in the name of, payable to or to the order of, or endorsed
      to, the Borrowers' Agent, Pacific Holding or any other Borrower except to the
      extent the foregoing have been subsequently endorsed by such Person to the
      Accounts Bank or in blank. Each item of property (including a security, security
      entitlement, investment property, instrument or obligation, share,
      participation, interest or other property whatsoever) credited to any Project
      Account shall to the fullest extent permitted by law be treated as a Financial
      Asset. Until the Discharge Date, this Agreement is intended to provide the
      Collateral Agent with "control" (within the meaning of Section 8­106(d)(2)
      or Section 9-104(a) (as applicable) of the UCC) of the Project Accounts and
      each
      Borrower's "security entitlements" (within the meaning of Section
      8­102(a)(17) of the UCC) with respect to the Financial Assets credited to
      the Project Accounts. The Borrowers' Agent hereby irrevocably directs, and
      the
      Accounts Bank (in its capacity as securities intermediary) hereby agrees, that
      the Accounts Bank will comply with all instructions and orders (including
      entitlement orders within the meaning of Section 8-102(a)(8) of the UCC)
      regarding each Project Account and any Financial Asset therein originated by
      the
      Collateral Agent without the further consent of the Borrowers' Agent or any
      other Person. In the case of a conflict between any instruction or order
      originated by the Collateral Agent and any instruction or order originated
      by
      the Borrowers' Agent or any other Person other than a court of competent
      jurisdiction, the instruction or order originated by the Collateral Agent shall
      prevail. The Accounts Bank shall not change the name or account number of any
      Project Account without the prior written consent of the Collateral Agent and
      at
      least five (5) Business Days' prior notice to the Borrowers' Agent, and shall
      not change the entitlement holder;

     

    
      
        
        

      

      
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    (c) it
      shall
      promptly perform all duties imposed upon a securities intermediary and a bank
      under the UCC and this Agreement. In this regard, (i) if the Accounts Bank
      has knowledge that an issuer of any Financial Asset is required to make a
      payment or distribution in respect of such Financial Asset, the Accounts Bank
      shall have fulfilled its duty under applicable Law to take action to obtain
      such
      payment or distribution if (A) it credits such payment or distribution to
      the Project Accounts in accordance with this Agreement if such payment or
      distribution is made or (B) it notifies the Borrowers' Agent, the
      Collateral Agent and the Administrative Agent that such payment or distribution
      has not been made, and (ii) if the Accounts Bank is required by applicable
      Law or this Agreement to credit to any Project Account any Financial Asset
      purported to be transferred or credited to the Accounts Bank pursuant to
      applicable Law, the Accounts Bank shall have fulfilled its duty to so credit
      any
      Project Account if it credits as a security entitlement to the applicable party
      whatever rights the Accounts Bank purportedly has, in its capacity as Accounts
      Bank, in the Financial Asset transferred or credited to the Accounts Bank,
      in
      its capacity as Accounts Bank, and the Accounts Bank shall have no duty to
      ensure that applicable Law has been complied with in respect of the transfer
      of
      the Financial Asset or to create a security interest in or Lien on any Financial
      Asset purported to be transferred or credited to the Accounts Bank and
      subsequently credited to any Project Account;

     

    (d) all
      Financial Assets acquired by or delivered to the Accounts Bank shall be held
      by
      the Accounts Bank and credited by book entry to the relevant Project Account
      or
      otherwise accepted by the Accounts Bank for credit to the relevant Project
      Account;

     

    (e) each
      item
      of property (including any cash, security, general intangible, document,
      instrument or obligation, share, participation, interest or other property
      whatsoever) deposited in or credited to any Project Account shall be treated
      as
      a Financial Asset for the purposes of Section 8-102(a)(9)(iii) of the UCC.
      Notwithstanding any provision herein contained to the contrary, any property
      contained in the Project Accounts that is not deemed to be a Financial Asset
      under applicable Law, to the extent permitted by applicable Law, will be deemed
      to be deposited in a deposit account and subject to Section 8.19
      (Project
      Accounts as Deposit Account);

     

    (f) The
      Collateral Agent shall have control of the security entitlements carried in
      the
      Project Accounts and of the Financial Assets carried in the Project Accounts,
      and each Borrower hereby disclaims any entitlement to claim control of such
      security entitlements;

     

    
      
        
        

      

      
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    (g) all
      property delivered to the Accounts Bank pursuant to this Agreement or the other
      Financing Documents will be promptly deposited in or credited to a Project
      Account by an appropriate entry in its records in accordance with this
      Agreement;

     

    (h) if
      any
      Person (other than Collateral Agent, on behalf and for the benefit of the Senior
      Secured Parties) asserts any lien, encumbrance or adverse claim (including
      any
      writ, garnishment, judgment, warrant of attachment, execution or similar
      process) against any Project Account or in any Financial Asset or other property
      deposited therein or credited thereto of which the Accounts Bank has actual
      knowledge, the Accounts Bank will promptly notify the Collateral Agent, the
      Administrative Agent and the Borrowers' Agent in writing thereof;
      and

     

    (i) the
      Accounts Bank has not entered into and will not enter into any agreement with
      respect to the Project Accounts or any Financial Assets or other property
      deposited in or credited to any Project Account other than this Agreement and
      its Fee Letter. The Accounts Bank has not entered into and will not enter into
      any agreement with any Borrower or any other Person purporting to limit or
      condition the obligation of the Accounts Bank to comply with entitlement orders
      or any other order originated by the Collateral Agent in accordance with
Sections 8.17(b) (Representations,
      Warranties and Covenants of Accounts Bank)
      or
Sections 8.19(b)
      or
(c) (Project
      Accounts as Deposit Account).

     

    Section
      8.18 Project
      Accounts.
      (a) The
      Accounts Property will not constitute repayment of the Obligations until so
      applied as payments in accordance with the terms of this Agreement and the
      other
      Financing Documents.

     

    (b) The
      Accounts Bank shall not have title to the funds on deposit in the Project
      Accounts, and shall credit the Project Accounts with all receipts of interest,
      dividends and other income received on the property held in the Project
      Accounts. The Accounts Bank shall administer and manage the Project Accounts
      in
      strict compliance with its duties with respect to the Project Accounts pursuant
      to this Agreement, and shall be subject to and comply with all of the
      obligations that the Accounts Bank owes to the Borrowers' Agent and the
      Collateral Agent, on behalf of the Senior Secured Parties, with respect to
      the
      Project Accounts, including all subordination obligations set forth in
Section 8.21
      (Subordination)
      with
      respect to the Accounts Bank's right of set-off or recoupment or right to obtain
      a Lien, pursuant to the terms of this Agreement. The Accounts Bank hereby agrees
      to comply with any and all instructions originated by the Collateral Agent
      directing the disbursement, deposit and/or transfer of any funds and all other
      property held in the Project Accounts without any further consent of any
      Borrower or any other Person and to comply with any and all instructions
      originated by the Borrowers' Agent directing the disbursement, deposit and/or
      transfer of any funds and all other property held in the Project Accounts
      subject to the terms of this Agreement.

     

    
      
        
        

      

      
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    Section
      8.19 Project
      Accounts as Deposit Account.
      (a)
      To the
      extent that the Project Accounts are not considered securities accounts, the
      Project Accounts shall be deemed to be deposit accounts in respect of any
      property deposited in or credited to the Project Accounts that is not deemed
      to
      be a Financial Asset under applicable Law. Such deposit accounts and such
      property shall be maintained with the Accounts Bank acting not as a securities
      intermediary, but as a bank.

     

    (b) The
      Borrowers' Agent shall be deemed the customer of the Accounts Bank for purposes
      of the Project Accounts and, as such, shall be entitled to all of the rights
      that customers of banks have under applicable Law with respect to deposit
      accounts, including the right to withdraw funds from, or close, the Project
      Accounts, in each such case subject to, and in accordance with, the terms of
      this Agreement. 

     

    (c) The
      parties hereto agree that, to the extent that the Project Accounts are not
      considered "securities accounts" (within the meaning of Section 8-501(a) of
      the
      UCC), the Project Accounts shall be deemed to be "deposit accounts" (as defined
      in Section 9-102(a)(29) of the UCC) to the extent a security interest can be
      granted and perfected under the UCC in the Project Accounts as deposit accounts,
      which the Borrowers shall maintain with the Accounts Bank acting not as a
      securities intermediary but as a "bank" (within the meaning of Section
      9-102(a)(8) of the UCC). The Accounts Bank shall not have title to the funds
      on
      deposit in the Project Accounts, and shall credit the Project Accounts with
      all
      receipts of interest, dividends and other income received on the property held
      in the Project Accounts. The Accounts Bank shall administer and manage the
      Project Accounts in strict compliance with all the terms applicable to the
      Project Accounts pursuant to this Agreement, and shall be subject to and comply
      with all the obligations that the Accounts Bank owes to the Collateral Agent
      with respect to the Project Accounts, including all subordination obligations,
      pursuant to the terms of this Agreement. The Accounts Bank hereby agrees to
      comply with any and all instructions originated by the Collateral Agent
      directing disposition of funds and all other property in the Project Accounts
      without any further consent of the Borrowers or any other Person and to comply
      with any and all instructions originated by the Borrowers' Agent directing
      the
      disbursement, deposit and/or transfer of any funds and all other property held
      in the Project Accounts, in each such case subject to, and in accordance with,
      the terms of this Agreement.

     

    Section
      8.20 Duties
      of Accounts Bank.
      (a) The
      Accounts Bank will also have those duties and responsibilities expressly set
      forth in this Agreement, and no additional duties, responsibilities, obligations
      or liabilities shall be inferred from the provisions of this Agreement or
      imposed on the Accounts Bank. The Accounts Bank will 

     

    
      
        
        

      

      
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    act
      at
      the written direction of the Collateral Agent, the Administrative Agent and,
      as
      expressly provided in this Agreement, Borrowers' Agent, but will not be required
      to take any action that is contrary to this Agreement or applicable Law or
      that,
      in its reasonable judgment, would involve it in expense or liability, unless
      it
      has been furnished with adequate indemnity against such expense or liability.
      The Accounts Bank will have no responsibility to ensure the performance by
      any
      other party of its duties and obligations hereunder. The Accounts Bank will
      use
      the same care with respect to the safekeeping and handling of property held
      in
      the Project Accounts as the Accounts Bank uses in respect of property held
      for
      its own sole benefit. 

     

    (b) In
      performing its functions and duties under this Agreement, the Accounts Bank
      will
      act solely as the depository agent and as securities intermediary
      or as a
      bank, as the case may be,
      with
      respect to the Project Accounts. None of the Senior Secured Parties or any
      Borrower will have any rights against the Accounts Bank hereunder, other than
      for the Accounts Bank's gross negligence or willful misconduct as determined
      by
      a court of competent jurisdiction by final and Non-Appealable judgment. Except
      as otherwise expressly provided in this Agreement, the Borrowers will not have
      any right to direct the Accounts Bank to distribute or allocate any funds,
      instruments, securities, Financial Assets or other assets in the Project
      Accounts or to withdraw or transfer any funds, instruments, securities,
      Financial Assets or other assets from the Project Accounts. Except as otherwise
      expressly provided in this Agreement, the Collateral Agent will have the sole
      right to issue directions and instructions to the Accounts Bank, acting as
      securities intermediary or bank, as the case may be, in accordance with this
      Agreement, and to issue entitlement orders with respect to the Project Accounts.
      It is expressly understood and agreed that any investment made with funds held
      in the Project Accounts may be made only in accordance with the express
      provisions of Section 8.24
      (Interest
      and Investments).
      The
      Accounts Bank shall not in any way whatsoever be liable for any loss or
      depreciation in the value of the investments made pursuant to the terms of
      this
      Agreement.

     

    Section
      8.21 Subordination.
      (a) The
      Accounts Bank hereby acknowledges the security interest granted hereby to the
      Collateral Agent, on behalf and for the benefit of the Senior Secured Parties,
      by the Borrowers. In the event that the Accounts Bank has or subsequently
      obtains by agreement, operation of applicable Law or otherwise a right of
      recoupment or set-off or any Lien in any of the Project Accounts or any
      Financial Asset or other property deposited therein or credited thereto or
      any
      security entitlement related thereto, the Accounts Bank hereby agrees that
      such
      right of recoupment or set-off and/or any such Lien shall be subordinate to
      the
      security interest of the Collateral Agent, on behalf of and for the benefit
      of
      the Senior Secured Parties. The Accounts Bank agrees that it shall not assert
      or
      enforce any such right of recoupment or set-off and/or any Lien until the
      Discharge Date.

     

    
      
        
        

      

      
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    (b) The
      Financial Assets and other items deposited in or credited to the Project
      Accounts and the Accounts Property will not be subject to deduction, set-off,
      banker's lien or any other right in favor of any Person other than the
      Collateral Agent, on behalf and for the benefit of the Senior Secured
      Parties.

     

    Section
      8.22 Borrower
      Acknowledgments.
      (a)
      Each
      Borrower acknowledges that neither any insufficiency of funds in the Project
      Accounts (or any of them), nor any inability to apply any funds in the Project
      Accounts (or any of them) against any or all amounts owing under any Financing
      Document, shall at any time limit, reduce or otherwise affect the Borrowers'
      obligations under any Financing Document.

     

    (b) Each
      party to this Agreement acknowledges that the Accounts Bank and the Collateral
      Agent shall not incur any obligation or liability in circumstances where there
      are insufficient funds deposited in or credited to any Project Account to make
      a
      payment in full that would otherwise have been made pursuant to the terms of
      this Agreement, except (i) in the case of the Accounts Bank to the extent
      that the loss arises directly from the Accounts Bank's gross negligence or
      willful misconduct as determined by a court of competent jurisdiction by final
      and Non-Appealable judgment, and (ii) in the case of the Collateral Agent,
      to the extent that the loss arises directly from the Collateral Agent's gross
      negligence or willful misconduct as determined by a court of competent
      jurisdiction by final and Non-Appealable judgment.

     

    Section
      8.23 Agreement
      to Hold In Trust.
      All
      payments received directly by any Borrower that are required to be deposited
      into the Project Accounts in accordance with the terms of this Agreement or
      any
      other Financing Document shall be held by such Borrower in trust for the
      Collateral Agent, on behalf and for the benefit of the Senior Secured Parties,
      shall be segregated from other funds of such Borrower and shall, forthwith
      upon
      receipt by such Borrower, be turned over to the Collateral Agent or its designee
      in the same form as received by such Borrower (duly endorsed by such Borrower
      to
      the Collateral Agent or the Accounts Bank, if requested) for deposit and
      disbursement in accordance with this Agreement.

     

    Section
      8.24 Interest
      and Investments.
      (a) Each
      amount deposited in or credited to a Project Account from time to time shall,
      from the time it is so deposited or credited until the time it is withdrawn
      from
      that Project Account (whether for the purpose of making an investment in Cash
      Equivalents or otherwise applied in accordance with the terms of this
      Agreement), earn interest at such rates as may be agreed from time to time
      by
      Pacific Holding and the Accounts Bank.

     

    (b) Prior
      to
      the receipt by the Accounts Bank of a Notice of Suspension, any amounts held
      by
      the Accounts Bank in the Project Accounts shall be invested by the Accounts
      Bank
      from time to time, at the risk and expense of the 

     

    
      
        
        

      

      
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    Borrowers,
      solely in such Cash Equivalents as the Borrowers' Agent shall direct in writing.
      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 to be made from the Project Accounts on such day in
      accordance with this Agreement, the other Financing Documents and the Project
      Documents. Upon delivery by the Collateral Agent to the Accounts Bank of a
      Notice of Suspension and until written revocation of such Notice of Suspension
      is delivered to the Accounts Bank by the Collateral Agent, any amounts held
      by
      the Accounts Bank in the Project Accounts shall be invested by the Accounts
      Bank
      from time to time, solely in such Cash Equivalents as the Collateral Agent
      may
      direct.

     

    (c) In
      the
      event that the cash balance in any of the Project Accounts is as of any day
      insufficient to cover the transfers to be made from such Project Account on
      such
      day, the Collateral Agent may direct the Accounts Bank to sell or liquidate
      the
      Cash Equivalents standing to the credit of such Project Account (without regard
      to maturity date) in such manner as the Collateral Agent may deem necessary
      in
      order to obtain cash at least sufficient to make such transfers and to pay
      any
      expenses and charges incurred in connection with effecting any such sale or
      liquidation, which expenses and charges the Accounts Bank shall be authorized
      to
      pay with cash on deposit in such Project Account. Neither the Accounts Bank
      nor
      any Senior Secured Party shall be liable to any Person for any loss suffered
      because of any such sale or liquidation.

     

    (d) All
      interest and other investment income earned from Cash Equivalents made from
      amounts in any Project Account shall remain in such Project Account until
      transferred from such Project Account in accordance with the terms of this
      Article VIII.

     

    (e) It
      is
      acknowledged by the parties hereto that all investment income earned on amounts
      on deposit in or credited to the Project Accounts for all Tax purposes shall
      be
      attributed to and be income of Pacific Holding. Pacific Holding shall be
      responsible for determining any requirements for paying Taxes or reporting
      or
      withholding any payments for Tax purposes hereunder. Pacific Holding shall
      prepare and file all Tax information required with respect to the Project
      Accounts. Each Borrower agrees to indemnify and hold each Senior Secured Party
      harmless against all liability for Tax withholding and/or reporting for any
      investment income earned on the Project Accounts and payments in respect
      thereof. Such indemnities shall survive the termination or discharge of this
      Agreement or resignation of the Accounts Bank. No Senior Secured Party shall
      have any obligation with respect to the making of or the reporting of any
      payments for Tax purposes. From time to time, and as reasonably requested by
      the
      Accounts Bank, Pacific Holding or any other Borrower shall provide to the
      Accounts Bank a United States Department of the Treasury Internal Revenue
      Service tax Form W-8 or W-8BEN or other appropriate form required with
      respect to the withholding or exemption from withholding of income tax on any
      investment income earned on the Project Accounts.

     

    
      
        
        

      

      
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    Section
      8.25 Accounts
      Bank Information.
      (a)
      The
      Accounts Bank will:

     

    
      	 	
              (i)

            	
              within
                five (5) Business Days after the end of the month in which the first
                deposit is made into any Project Account and within five (5) Business
                Days after the end of each month thereafter, provide the Borrowers'
                Agent,
                the Collateral Agent and the Administrative Agent a report with respect
                to
                the Project Accounts, setting forth in reasonable detail all deposits
                to
                and disbursements from each of the Project Accounts during such month,
                including the date on which made, and the balances of and any investments
                in each of the Project Accounts at the end of such month, including
                information regarding categories, amounts, maturities and issuers
                of Cash
                Equivalents; and

            


    

     

    
      	 	
              (ii)

            	
              within
                three (3) Business Days after receipt of any written request by the
                Borrowers' Agent, the Collateral Agent or the Administrative Agent,
                provide to the Borrowers' Agent, the Collateral Agent or the
                Administrative Agent, as the case may be, such other information
                as the
                Borrowers' Agent, the Collateral Agent or the Administrative Agent
                may
                specify regarding all Cash Equivalents and any other investments
                made by
                the Accounts Bank pursuant hereto and regarding amounts available
                in the
                Project Accounts. 

            


    

     

    Notwithstanding
      the foregoing, the Accounts Bank will provide the Borrowers' Agent, the
      Collateral Agent and the Administrative Agent such additional information
      regarding the Project Accounts and the balances and Cash Equivalents therein
      as
      any of them may reasonably request from time to time.

     

    (b) The
      Accounts Bank will maintain all of the Project Accounts and all books and
      records with respect thereto as may be necessary to record properly all
      transactions carried out by it under this Agreement.

     

    (c) If
      any
      Cash Equivalent ceases to be a Cash Equivalent, the Accounts Bank will, as
      soon
      as reasonably practicable after becoming aware of such cessation, notify the
      Collateral Agent and the Borrowers' Agent in writing of such cessation and,
      upon
      the written direction of the Borrowers' Agent or the Collateral Agent,


     

    
      
        
        

      

      
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    as
      the
      case may be, will cause the relevant investment to be replaced by a Cash
      Equivalent or by cash; provided
      that
      this Section 8.25(c)
      will not
      oblige the Accounts Bank to liquidate any investment earlier than its normal
      maturity date unless:

     

    
      	 	
              (i)

            	
              directed
                to do so under Section 8.24
                (Interest
                and Investments);
                or

            


    

     

    
      	 	
              (ii)

            	
              the
                maturity date of the relevant investment exceeds the maturity date
                that
                would enable it to continue to qualify as a Cash
                Equivalent.

            


    

     

    Section
      8.26 Notices
      of Suspension of Accounts.
      (a) The
      Collateral Agent may, but shall not be required to, suspend the right of the
      Accounts Bank and the Borrowers' Agent to withdraw or otherwise deal with any
      funds deposited in or credited to the Project Accounts at any time during the
      occurrence and continuance of an Event of Default by delivering a notice to
      the
      Accounts Bank (with a copy to the Borrowers' Agent and the Administrative Agent)
      (a "Notice
      of Suspension").

     

    (b) Notwithstanding
      any other provision of the Financing Documents, after the issuance by the
      Collateral Agent of a Notice of Suspension in accordance with Section 8.26(a)
      and
      until such time as the Collateral Agent advises the Accounts Bank and the
      Borrowers' Agent (with a copy to the Administrative Agent) that it has withdrawn
      such Notice of Suspension, (which it shall do if such Event of Default is no
      longer continuing) no amount may be withdrawn by the Accounts Bank from any
      Project Account, including for investment in Cash Equivalents, without the
      express prior written consent of the Collateral Agent.

     

    (c) Notwithstanding
      any other provision of the Financing Documents (but without limitation of
Sections
      8.02(g)
      or
(h)
      (Deposits
      into and Withdrawals from Project Accounts),
      without
      the express prior written consent of the Required Lenders, no amount may be
      withdrawn from any Project Account if a Default or Event of Default would occur
      as a result of such withdrawal.

     

    (d) On
      the
      date of each withdrawal by the Accounts Bank from a Project Account, the
      Borrowers' Agent shall be deemed to represent and warrant that no Notice of
      Suspension is in effect and that that no Default or Event of Default would
      occur
      as a result of such withdrawal, unless the Required Lenders have previously
      consented in writing to such withdrawal, notwithstanding that a Notice of
      Suspension is in effect or that a Default or Event of Default would occur as
      a
      result of such withdrawal.

     

    
      
        
        

      

      
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    ARTICLE
      IX

     

    DEFAULT
      AND ENFORCEMENT

     

    Section
      9.01 Events
      of Default.
      Each of
      the following events or occurrences described in this Section 9.01
      shall
      constitute an Event of Default.

     

    (a) Nonpayment.
      (i) Any Borrower fails to pay any amount of principal of any Loan when the
      same becomes due and payable or (ii) any Borrower fails to pay 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 Loan Party or any Major Project Party 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 Loan Party or Major Project Party, as the case may be, 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 Loan Party obtains, or should have
      obtained, knowledge thereof, and (v) 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(d)(i),
      (ii) and (iii)(A) (Affirmative
      Covenants - Construction and Completion of Project; Maintenance of
      Properties),
      7.01(g)
      (Affirmative
      Covenants - Use of Proceeds and Cash Flow),
      7.01(h)
      (Affirmative
      Covenants - Insurance),
      7.01(r)
      (Affirmative
      Covenants - First Priority Ranking),
      7.01
      (w) (Debt
      Service Reserve),
      7.02
      (Negative
      Covenants)
      and
7.03(e)
      (Reporting
      Requirements)
      of this
      Agreement, Sections 5.02 (Limitation
      of Liens)
      or 5.06
      (Name;
      Jurisdiction of Organization)
      of any
      Security Agreement, or any Borrower or the Pledgor defaults in the due
      performance and observance of any of its obligations under Sections 5.02
      (Limitation
      of Liens),
      5.03
      (No
      Sale of Collateral),
      5.04
      (No
      Impairment of Security),
      5.05
      (Filing
      of Bankruptcy Proceedings)
      or 5.08
      (Name;
      Jurisdiction of Organization)
      of any
      Pledge Agreement, or Pacific Ethanol defaults in the due performance and
      observance of any of its obligations under Section 2.04(a) (Sponsor's
      Deficiency Funding Obligation),
      Section 3.04(a) (Sponsor's
      Warranty Performance Obligations),
      Section 3.05(a) (Sponsor's
      Warranty Funding Obligation),
      Section 4.01(a) (Acceleration
      of Senior Debt Obligations)
      or
      Sections 5.05(b) or (c) (Accounting
      Matters)
      of the
      Sponsor Support Agreement.

     

    
      
        
        

      

      
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    (d) Non-Performance
      of Other Covenants and Obligations.
      Any
      Loan Party or any Major Project Party 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; provided,
      that
      any such default by any Major Project Party shall only constitute an Event
      of
      Default hereunder in the event that such default occurs on or after the date
      of
      the initial Funding Notice for the Plant to which such Project Document relates
      (or in the case of any Project Document that does not relate to a specific
      Plant, the date of the initial Funding Notice).

     

    (e) Project
      Completion.
      The
      Commercial Operation Date for each Plant with respect to which any Funding
      has
      been made does not occur on or before the Conversion Date Certain.

     

    (f) Cross
      Defaults.
      Any one
      of the following occurs with respect to any Borrower, the Pledgor, Pacific
      Ethanol, or any Major Project Party with respect to Indebtedness (other than
      the
      Obligations) (provided that if any such event has been cured in accordance
      with
      the terms of such Indebtedness, it shall serve as a cure of this Event of
      Default):

     

    
      	 	
              (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;
                and

            


    

     

    
      
        
        

      

      
        154

        
          

        

      

      
        
        

      

    

     

    
      	
            	(A)	
              in
                the case of the Borrowers, with respect to Indebtedness in an amount
                greater than or equal to two million Dollars ($2,000,000) in the
                aggregate; 

            


    

     

    
      	
            	(B)	
              in
                the case of either of the Pledgor or Kinergy, with respect to Indebtedness
                in an amount greater than or equal to two million five hundred thousand
                Dollars ($2,500,000) in the aggregate;


            


    

     

    
      	
            	(C)	
              in
                the case of Pacific Ethanol, with respect to Indebtedness in an amount
                in
                excess of five million Dollars ($5,000,000) in the aggregate; and
                

            


    

     

    
      	
            	(D)	
              in
                the case of any other Major Project Party only, has or could reasonably
                be
                expected to result in a Material Adverse
                Effect;

            


    

     

    provided,
      that
      such occurrence shall not constitute an Event of Default with respect to any
      Major Project Party if an agreement replacing each Project Document to which
      such Major Project Party is a party relating to each Plant with respect to
      which
      any Funding has been made or is being requested (and each Project Document
      to
      which such Major Project Party is a party that does not relate to a specific
      Plant), in form and substance reasonably satisfactory subject to the applicable
      Project Document Approval Level, is entered into (together will all applicable
      Ancillary Documents) within forty-five (45) days thereof.

     

    (g) Judgments.
      (i) Any
      judgment or order that has or could reasonably be expected to have a Material
      Adverse Effect is rendered against any Loan Party or any Major Project Party,
      or
      (ii) any judgment or order is rendered against (A) any or all of the Borrowers,
      in an amount in excess of two million Dollars ($2,000,000) in the aggregate,
      (B)
      either of the Pledgor or Kinergy in an amount in excess of two million five
      hundred thousand Dollars ($2,500,000) in the aggregate or (C) Pacific Ethanol
      in
      an amount in excess of five million Dollars ($5,000,000) in the aggregate and,
      in any such case, (x) enforcement proceedings are commenced by any creditor
      upon
      such judgment or order or 

     

    
      
        
        

      

      
        155

        
          

        

      

      
        
        

      

    

     

    (y)
      there
      is a period of sixty (60) consecutive days during which a stay of enforcement
      of
      such judgment is not in effect; provided,
      that
      such occurrence shall not constitute an Event of Default with respect to any
      Major Project Party if an agreement replacing each Project Document to which
      such Major Project Party is a party relating to each Plant with respect to
      which
      any Funding has been made or is being requested (and each Project Document
      to
      which such Major Project Party is a party that does not relate to a specific
      Plant), in form and substance reasonably satisfactory subject to the applicable
      Project Document Approval Level, is entered into (together will all applicable
      Ancillary Documents) within forty-five (45) days thereof.

     

    (h) 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.


     

    (i) Bankruptcy,
      Insolvency.
      Any
      Borrower, the Pledgor, Pacific Ethanol or any Major Project Party: 

     

    
      	 	
              (i)

            	
              generally
                fails to pay, or admits in writing its inability or unwillingness
                to pay,
                debts as they become due;

            


    

     

    
      	 	
              (ii)

            	
              applies
                for, consents to, or acquiesces in, the appointment of a trustee,
                receiver, sequestrator or other custodian for such Person or a substantial
                portion of its property, or makes a general assignment for the benefit
                of
                creditors;

            


    

     

     

    
      
        
        

      

      
        156

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (iii)

            	
              in
                the absence of such application, consent or acquiescence, permits
                or
                suffers to exist the appointment of a trustee, receiver, sequestrator
                or
                other custodian for such Person or for a substantial part of its
                property,
                and such trustee, receiver, sequestrator or other custodian is not
                discharged within sixty (60) days; provided
                that nothing in the Financing Documents shall prohibit or restrict
                any
                right any Senior Secured Party may have under applicable Law to appear
                in
                any court conducting any relevant proceeding during such sixty
                (60) day period to preserve, protect and defend its rights under the
                Financing Documents (and such Person shall not object to any such
                appearance);

            


    

     

    
      	 	
              (iv)

            	
              permit
                or suffer to exist the commencement of any bankruptcy, reorganization,
                debt arrangement or other case or proceeding under any bankruptcy
                or
                insolvency law, or any dissolution, winding up or liquidation proceeding,
                in respect of such Person and, if any such case or proceeding is
                not
                commenced by such Person, such case or proceeding is be consented
                to or
                acquiesced in by such Person or results in the entry of an order
                for
                relief or remains for sixty (60) days undismissed; provided
                that nothing in the Financing Documents shall prohibit or restrict
                any
                right any Senior Secured Party may have under applicable Law to appear
                in
                any court conducting any such case or proceeding during such sixty
                (60) day period to preserve, protect and defend its rights under the
                Financing Documents (and such Person shall not object to any such
                appearance); 

            


    

     

    
      	 	
              (v)

            	
              takes
                any action authorizing, or in furtherance of, any of the foregoing;
                or
                

            


    

     

    
      	 	
              (vi)

            	
              becomes
                insolvent;

            


    

     

    provided,
      that
      any such event or occurrence with respect to a Major Project Party shall only
      constitute an Event of Default hereunder on or after the date of the initial
      Funding Notice for any Plant with respect to which such Major Project Party
      is
      party to a Project Document (or in the case of a Project Document that does
      not
      relate to a specific Plant, the date of the initial Funding Notice);
provided,
      further,
      that
      such occurrence (A) shall only constitute an Event of Default with respect
      to a
      Major Project Party that is not an Affiliate of any Borrower if such occurrence
      has had or could reasonably be expected to have a Material Adverse Effect and
      (B) 

     

    
      
        
        

      

      
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    shall
      not
      constitute an Event of Default with respect to any Major Project Party if an
      agreement replacing each Project Document to which such Major Project Party
      is a
      party relating to each Plant with respect to which any Funding has been made
      or
      is being requested (and each Project Document to which such Major Project Party
      is a party that does not relate to a specific Plant), in form and substance
      reasonably satisfactory subject to the applicable Project Document Approval
      Level, is entered into (together will all applicable Ancillary Documents) within
      forty-five (45) days thereof (or, if such bankruptcy or insolvency could not
      reasonably be expected to result in a Material Adverse Effect, sixty (60)
      days).

     

    (j) 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 a
                Project Document relating exclusively to a Plant with respect to
                which no
                Funding has been made or is being requested) and such breach or default
                has continued beyond any applicable grace period expressly provided
                for in
                such Project Document (or, if no such cure period is provided, thirty
                (30) days), as the same may be extended pursuant to any Consent
                (which, in the case of any Major Project Party that is not an Affiliate
                of
                any Borrower (other than, prior to the Commercial Operation Date
                for the
                applicable Plant, any Construction Contractor) has had or could reasonably
                be expected to have a Material Adverse Effect with respect to such
                Plant
                or such Borrower); provided,
                that any such breach or default by any Major Project Party under
                any
                Project Document shall not constitute an Event of Default if an agreement
                replacing such Project Document, in form and substance reasonably
                satisfactory subject to the applicable Project Document Approval
                Level, is
                entered into (together will all applicable Ancillary Documents) within
                forty-five (45) days thereof (or, if such breach or default could not
                reasonably be expected to result in a Material Adverse Effect, sixty
                (60)
                days); provided,
                further,
                that if such material breach or material default on the part of such
                Major
                Project Party relates to the performance of Warranty Work that is
                being
                performed by Pacific Ethanol, or to a Project Completion Deficiency
                that
                is being funded by Pacific Ethanol, in either such case in accordance
                with
                the Sponsor Support Agreement, then such breach or default shall
                be deemed
                to be cured.

            


    

     

    
      
        
        

      

      
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              (ii)

            	
              Any
                Project Document (other than a Project Document relating exclusively
                to a
                Plant with respect to which no Funding has been made or is being
                requested) 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 Major Project
                Party
                thereto (which, in the case of any Major Project Party that is not
                an
                Affiliate of any Borrower (other than, prior to the Commercial Operation
                Date for the applicable Plant, any Construction Contractor) has had
                or
                could reasonably be expected to have a Material Adverse Effect with
                respect to such Plant or such Borrower); provided,
                that such occurrence shall not constitute an Event of Default with
                respect
                to any Project Document if an agreement replacing such Project Document,
                in form and substance reasonably satisfactory subject to the applicable
                Project Document Approval Level, is entered into (together will all
                applicable Ancillary Documents) within forty-five (45) days thereof
                (or, if such occurrence could not reasonably be expected to result
                in a
                Material Adverse Effect, sixty (60)
                days).

            


    

     

    (k) 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.

     

    (l) 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;

            


    

     

    
      
        
        

      

      
        159

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (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; 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 Loan Party, or any of
                the
                Security Documents ceases to provide the security intended to be
                created
                thereby with the priority purported to be created
                thereby.

            


    

     

    (m) Environmental
      Matters.
      This
Section 9.01(m)
      shall
      not apply to matters or occurrences related exclusively to a Plant with respect
      to which no Funding has been made or is being requested. (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 five hundred thousand Dollars
      ($500,000) for any single claim or one million Dollars ($1,000,000) for all
      such
      claims during any twelve (12) month period or could otherwise reasonably be
      expected to result in a Material Adverse Effect; provided
      that
      such occurrence shall not constitute an Event of Default if (A) the estimated
      liability associated therewith is reasonably expected to be less than five
      million Dollars ($5,000,000) (net of any Insurance Proceeds that have actually
      been paid to, and received by, the Borrowers or the Collateral Agent as loss
      payee in connection therewith, or as reduced by taking into account any amounts
      that the Borrowers demonstrate, to the reasonable satisfaction of the
      Administrative Agent, within ten (10) Business Days following such occurrence,
      will be available as and when needed, without conditions, from sources
      (including Insurance Proceeds and documented voluntary equity contributions
      made
      to the Borrowers for the purpose of covering such costs) other than Cash Flow
      or
      Loan proceeds, to cover such costs) (and such occurrence could not otherwise
      reasonably be expected to result in a Material Adverse Effect) and within


     

    
      
        
        

      

      
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    ninety
      (90) days of such occurrence, such liability is reduced below the threshold
      set
      forth above this proviso from sources other than Cash Flow or Loan proceeds,
      (B)
      there have been no more than two (2) occurrences of the nature described in
      this
Section 9.01(m)
      during
      the immediately preceding twelve (12) month period and (C) during such cure
      period, the Borrowers undertake any remedial or responsive actions then required
      to be undertaken under applicable Law.

     

    (n) 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 (i) in accordance with Section 8.14(d)(i)
      (Insurance
      and Condemnation Proceeds Accounts),
      or
      (ii) otherwise (provided that such approval is obtained within sixty (60)
      days hereafter) with the approval of the Required Lenders, in consultation
      with
      the Independent Engineer.

     

    (o) Event
      of Abandonment.
      An
      Event of Abandonment occurs.

     

    (p) Taking
      or Total Loss.
      An
      Event of Taking with respect to all or a material portion of any Plant or any
      Equity Interests in any Borrower occurs, or an Event of Total Loss
      occurs.

     

    (q) Change
      of Control.
      A
      Change of Control occurs.

     

    Section
      9.02 Action
      Upon Bankruptcy.
      If any
      Event of Default described in Section 9.01(i)
      (Events
      of Default - Bankruptcy; Insolvency)
      occurs
      with respect to any Borrower, any outstanding Construction Loan Commitments,
      Term Loan Commitments or Working Capital Loan Commitments (if not theretofore
      terminated) shall automatically terminate, and any amounts on deposit in or
      standing to the credit of the Escrow Account shall be released and reimbursed
      to
      the Tranche B Lenders. The outstanding principal amount of the outstanding
      Loans and all other Obligations shall automatically be and become immediately
      due and payable, without notice, demand or further act of the Administrative
      Agent, the Collateral Agent or any other Senior Secured Party.

     

    Section
      9.03 Action
      Upon Other Event of Default.
      (a)
      If any
      other Event of Default occurs and is continuing for any reason, whether
      voluntary or involuntary, and is continuing, the Administrative Agent may,
      or
      upon the direction of the Required Lenders shall, by written notice to the
      Borrowers declare all or any portion of the outstanding principal amount of
      the
      Loans and other Obligations to be due and payable and/or any outstanding
      Construction Loan Commitments, Term Loan Commitments or Working Capital Loan
      Commitments (if not theretofore terminated) to 

     

    
      
        
        

      

      
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    be
      terminated, whereupon the full unpaid amount of such Loans and other Obligations
      that has been declared due and payable shall be and become immediately due
      and
      payable, without further notice, demand or presentment and/or, as the case
      may
      be, any outstanding Construction Loan Commitments, Term Loan Commitments or
      Working Capital Loan Commitments shall terminate, and any amounts on deposit
      in
      or standing to the credit of the Escrow Account shall be released and reimbursed
      to the Tranche B Lenders. During the continuance of an Event of Default,
      the Administrative Agent may, or upon the direction of the Required Lenders
      shall, instruct the Collateral Agent to exercise any or all remedies provided
      for under this Agreement or the other Financing Documents.

     

    (b) Any
      declaration made pursuant to Section 9.03(a)
      may,
      should the Required Lenders in their sole and absolute discretion so elect,
      be
      rescinded by written notice to the Borrowers at any time after the principal
      of
      the Loans has become due and payable, but before any judgment or decree for
      the
      payment of the monies so due, or any part thereof, has been entered;
provided
      that no
      such rescission or annulment shall extend to or affect any subsequent Event
      of
      Default or impair any right consequent thereon.

     

    Section
      9.04 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 as
      Collateral and/or, at the direction of the Administrative Agent, may be applied
      in full or in part by the Collateral Agent against the Obligations in the
      following order of priority (but without prejudice to the right of the
      Collateral Agent to recover any shortfall from the Borrower):

     

    (a) first,
      to
      payment of that portion of the Obligations constituting fees, costs, expenses
      (and interest owing thereon (if any)) and any other amounts (including fees,
      costs and expenses of counsel and amounts payable under Article IV
      (Eurodollar
      Rate and Tax Provisions))
      payable
      to the Agents in their capacities as such ratably among them in proportion
      to
      the amounts described in this clause first;

     

    (b) second,
      to
      payment of that portion of the Obligations constituting fees, costs, expenses
      (and interest owing thereon (if any)) and any other amounts (including fees,
      costs and expenses of counsel and amounts payable under Article IV
      (Eurodollar
      Rate and Tax Provisions))
      but
      excluding principal of and accrued interest on the Loans or any Interest Rate
      Protection Agreement payable to the Lenders and the Interest Rate Protection
      Providers, ratably among the Lenders and the Interest Rate Protection Providers
      in proportion to the amounts described in this clause second
      payable
      to them;

     

    
      
        
        

      

      
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    (c) third,
      to
      payment of the portion of the Obligations constituting accrued and unpaid
      interest (including default interest) with respect to the Loans and Interest
      Rate Protection Agreement (other than any payments of Swap Termination Value),
      ratably among the Lenders and the Interest Rate Protection Providers in
      proportion to the respective amounts described in this clause third
      payable
      to them;

     

    (d) fourth,
      to the
      principal amount of the Loans and any Primary Swap Obligations payable by the
      Borrower to the Lenders and Interest Rate Protection Providers, ratably among
      the Lenders and the Interest Rate Protection Providers in proportion to the
      respective amounts described in this clause fourth
      held by
      them; and

     

    (e) last,
      the
      balance, if any, after all of the Obligations have been indefeasibly paid in
      full, to the Borrowers or as otherwise required by Applicable Law.

     

    ARTICLE
      X

     

    THE
      AGENTS

     

    Section
      10.01 Appointment
      and Authority.
      (a) Each
      of the Lenders (in its capacity as Lender and on behalf of itself and its
      Affiliates as a potential Interest Rate Protection Provider) 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 

     

    
      
        
        

      

      
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    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.

     

    (c) Each
      Lender (in its capacity as Lender and on behalf of itself and its Affiliates
      as
      a potential Interest Rate Protection Provider) 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 Senior Secured Parties 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
      of the Borrowers or the Pledgor 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) granted under the Security Documents, 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.

     

    
      
        
        

      

      
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    (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.

     

    Section
      10.02 Rights
      as a Lender or Interest Rate Protection Provider.
      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 or Interest Rate
      Protection Provider, as the case may be, as any other Lender or Interest Rate
      Protection Provider, as the case may be, 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, any other Agent or the Interest Rate Protection
      Provider.

     

    
      
        
        

      

      
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    Section
      10.03 Exculpatory
      Provisions.
      (a) 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 created
      or purported to be created by any Security Document, 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 the Borrowers), 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.
      (a)
      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 

     

    
      
        
        

      

      
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    Lenders.
      The Accounts Bank may be removed by the Administrative Agent within six (6)
      months of the date hereof if the Accounts Bank is not also a Lender under this
      Agreement (provided, that any successor Accounts Bank appointed following a
      removal of the Accounts Bank pursuant to this sentence shall be appointed by
      the
      Administrative Agent in consultation with the Borrowers' Agent (so long as
      no
      Default or Event of Default has occurred and is continuing)). Such resignation
      or removal shall take effect upon the appointment of a successor Agent, in
      accordance with this Section 10.06.

     

    (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 by the Required Lenders 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, and provided that no
      Default or Event of Default has occurred and is continuing, the Borrowers may
      appoint a replacement Agent (who shall be a commercial bank having a combined
      capital and surplus of at least two hundred fifty million Dollars
      ($250,000,000)) within the immediately succeeding fifteen (15) days.


     

    (d) If
      no
      successor Agent has been appointed within forty-five (45) days (or, if a Default
      or Event of Default has occurred and is continuing, 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.

     

    (e) 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.

     

    
      
        
        

      

      
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    (f) 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.

     

    (g) 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.

     

    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 No
      Lead Arranger, Syndication Agent, Bookrunner Duties.
      Anything herein to the contrary notwithstanding, no Lead Arranger, Syndication
      Agent or Sole Lead Bookrunner shall have any powers, duties or responsibilities
      under this Agreement or any of the other Financing Documents, except in its
      capacity, as applicable, as an Agent or a Lender hereunder.

     

    Section
      10.10 Collateral
      Agent May File Proofs of Claim.
      (a) In
      case of the pendency of any bankruptcy or insolvency proceeding relative to
      any
      Borrower or the Pledgor (including any event described in Section 9.01(i)
      (Events
      of Default - Bankruptcy; Insolvency),
      the
      Collateral Agent (irrespective of whether the principal of any Loan shall then
      be due and payable as herein expressed or by declaration or 

     

    
      
        
        

      

      
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    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 3.13
                (Fees),
                11.07
                (Costs
                and Expenses)
                and 11.09
                (Indemnification
                by the Borrowers))
                allowed in such judicial
                proceeding;

            


    

     

    
      	 	
              (ii)

            	
              to
                collect and receive any monies or other property payable or deliverable
                on
                any such claims and to distribute the same;
                and

            


    

     

    
      	 	
              (iii)

            	
              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 3.13
                (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.

     

    Section
      10.11 Collateral
      Matters.
      (a)
      The
      Lenders irrevocably authorize the Collateral Agent to release any Lien on any
      property granted to or held by the 

     

    
      
        
        

      

      
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    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)
      and
7.04
      (Release
      of Borrowers)).

     

    (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 10.11.
      In each
      case as specified in this Section 10.11,
      the
      Collateral Agent will, at the Borrowers' expense, execute and deliver to the
      applicable Borrower or the Pledgor, as the case may be, such documents as such
      Person may reasonably request to evidence the release of such item of Collateral
      from the assignment and security interest granted under the Security Documents
      in accordance with the terms of the Financing Documents and this Section 10.11.

     

    Section
      10.12 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 (other than instructions
      for the transfer of funds from Project Accounts pursuant to Article
      VIII (Project
      Accounts)
      or if
      otherwise 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, Borrowers' Agent
      or
      any other Loan Party 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, Borrowers' Agent or,
      as
      the case may be, the applicable Loan Party, 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:

     

    
      
        
        

      

      
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    (a) extend
      or
      increase the Commitment of any Lender (or reinstate any Commitment terminated
      pursuant to Section 9.03(a)
      (Action
      Upon Other Event of Default)
      without
      the prior written consent of such Lender (other than any Non-Voting
      Lender);

     

    (b) postpone
      any date scheduled for any payment of principal or interest under Section 3.01
      (Repayment
      of Construction Loan Fundings),
      3.02
      (Repayment
      of Term Loan Fundings),3.03
      (Repayment
      of Working Capital Loan Fundings)
      or
3.04
      (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);

     

    (c) reduce
      the principal of, or the rate of interest specified herein on, any Loan, or
      any
      Fees or other amounts (including the Required Cash Sweep or any other mandatory
      prepayments under Section 3.10
      (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;

     

    (d) 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 2.08
      (Termination
      or Reduction of Commitment),
      Section 3.09
      (Optional
      Prepayment)
      or
3.10
      (Mandatory
      Prepayment),
      respectively, in any manner without the prior written consent of each Lender
      affected thereby (other than any Non-Voting Lender);

     

    (e) 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

     

    (f) other
      than in accordance with Section
      7.04 (Release
      of Borrower),
      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);

     

    
      
        
        

      

      
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    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 Borrowers' 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; (iii) to make, complete or confirm any grant
      of Collateral permitted or required by this Agreement or any of the Security
      Documents or any release of any Collateral that is otherwise permitted under
      the
      terms of this Agreement and the Security Documents; or (iv) to update the
      Schedules in connection with the initial Funding for each Plant.

     

    Section
      11.02 Applicable
      Law; Jurisdiction; Etc. (a) 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) SUBMISSION
      TO JURISDICTION.
      EACH
      BORROWER AND THE BORROWERS' AGENT IRREVOCABLY AND UNCONDITIONALLY SUBMITS,
      FOR
      ITSELF AND ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF
      THE
      STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT
      COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY
      THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
      AGREEMENT OR ANY OTHER FINANCING DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT
      OF
      ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY
      AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD
      AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED
      BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES 

     

    
      
        
        

      

      
        173

        
          

        

      

      
        
        

      

    

     

    HERETO
      AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
      CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT
      OR
      IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER
      FINANCING DOCUMENT SHALL AFFECT ANY RIGHT THAT ANY SENIOR SECURED PARTY MAY
      OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT
      OR
      ANY OTHER FINANCING DOCUMENT AGAINST ANY BORROWER OR ITS PROPERTIES IN THE
      COURTS OF ANY JURISDICTION.

     

    (c) WAIVER
      OF VENUE.
      EACH
      BORROWER AND THE BORROWERS' 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.

     

    (d) Appointment
      of Process Agent and Service of Process.
      Each of
      the Borrowers and the Borrowers' Agent hereby irrevocably appoints CT
      Corporation System with an office on the date hereof at 111 Eighth Avenue,
      New
      York, New York 10011, as its agent to receive on behalf of itself services
      of
      copies of the summons and complaint and any other process that may be served
      in
      any such action or proceeding in the State of New York. If for any reason the
      Process Agent shall cease to act as such for any Person, such Person hereby
      agrees to designate a new agent in New York City on the terms and for the
      purposes of this Section 11.02
      reasonably satisfactory to the Administrative Agent. Such service may be made
      by
      mailing or delivering a copy of such process to such Person in care of the
      Process Agent at the Process Agent's above address, and each of the Borrowers
      and the Borrowers' Agent hereby irrevocably authorizes and directs the Process
      Agent to accept such service on its behalf. As an alternative method of service,
      each of the Borrowers and the Borrowers' Agent also irrevocably consents to
      the
      service of any and all process in any such action or proceeding by the air
      mailing of copies of such process to such Person at its then effective notice
      addresses pursuant to Section 11.12
      (Notices
      and Other Communications).
      Nothing
      in this Agreement shall affect any right that any party may otherwise have
      to
      bring any action or proceeding relating to this Agreement or any other Financing
      Document in the courts of any jurisdiction.

     

    
      
        
        

      

      
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    (e) Immunity.
      To the
      extent that any Borrower or the Borrowers' 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
      of the Borrowers and the Borrowers' 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.
      (a) 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 Borrowers' 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 three million Dollars ($3,000,000) and in integral multiples of one
      million Dollars ($1,000,000) in excess thereof, 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 Borrowers' 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
      

     

    
      
        
        

      

      
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    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.

     

    (d) Any
      Lender may at any time, without the consent of, or notice to, the Borrowers,
      the
      Borrowers' 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
      Borrowers' 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 3.15
      (Sharing
      of Payments)
      as
      though it were a Lender.

     

    
      
        
        

      

      
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    (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 Borrowers'
      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.

     

    (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 3.15
      (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 

     

    
      
        
        

      

      
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    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.

     

    (i) Following
      the occurrence of a Successful Syndication, the Borrowers will be permitted,
      with the approval of the Administrative Agent and the Issuing Bank, to replace
      (with one or more replacement Lenders) any Lender that (x) fails to approve
      a Substitute Facility upon the Borrowers' written request for such approval,
      (y) provides notice under Section
      4.01(a) (Eurodollar
      Rate Lending Unlawful)
      that it
      is unable to make, maintain or fund any Loan as a Eurodollar Loan or requests
      reimbursement for, or is otherwise entitled to, amounts owing pursuant to
Section
      4.03 (Increased
      Eurodollar Loan Costs),
      Section
      4.06 (Increased
      Capital Costs)
      or
Section
      4.07(c)
      (Taxes-Indemnification by Borrowers)
      or
      (z) fails to approve any request for a consent or waiver requested of the
      Lenders in writing by the Borrowers; provided,
      that
      (i) such replacement does not conflict with any Law or any determination of
      an arbitrator or a court or other Governmental Authority, in each case
      applicable to any Borrower or such Lender or to which any Borrower or such
      Lender or any of their respective property is subject, (ii) no Default or
      Event of Default shall have occurred and be continuing at the time of such
      replacement, (iii) the replacement Lender shall purchase, at par, the Loans
      and all other amounts owing to such replaced Lender prior to the date of
      replacement, (iv) the Borrowers shall be liable to such replaced Lender
      under Section 4.05
      (Funding
      Losses)
      if any
      Eurodollar Loan owing to such replaced Lender is be prepaid (or purchased)
      other
      than on the last day of the Interest Period relating thereto, (v) until
      such time as such replacement is consummated, the Borrowers shall pay all
      additional amounts (if any) required pursuant to Section
      4.03 (Increased
      Eurodollar Loan Costs),
      Section
      4.06 (Increased
      Capital Costs)
      or
Section
      4.07(c) (Taxes-Indemnification
      by Borrowers),
      as the
      case may be, (vi)the replacement Lender is an Eligible Assignee, (vii) such
      replacement is made in accordance with the provisions of Section 11.03(b)
      (provided,
      

     

    
      
        
        

      

      
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    that
      the
      Borrower shall be obligated to pay the registration and processing fee),
      (viii) any such replacement shall not be deemed to be a waiver of any
      rights that the Borrower, any Agent or any other Lender may have against the
      replaced Lender, and (ix) prior to any such replacement, (A) in the
      case of any replacement of a Lender that fails to approve a Substitute Facility,
      the Lender to be replaced shall have delivered a written notice indicating
      that
      it will not approve such request for a Substitute Facility, (B) in the case
      of any replacement of a Lender that has claimed increased costs, the Lender
      to
      be replaced shall not have delivered a notice to the Borrowers under
Section 4.01(b)
      (Eurodollar
      Rate Lending Unlawful)
      that it
      is no longer unable to make, maintain or fund any Loan as a Eurodollar Loan
      and
      shall have taken no action under Section
      4.04 (Obligation
      To Mitigate)
      so as to
      eliminate the need for payment of amounts owing pursuant to Section
      4.03 (Increased
      Eurodollar Loan Costs),
      Section
      4.06 (Increased
      Capital Costs)
      or
Section
      4.07(c) (Taxes-Indemnification
      by Borrowers),
      as the
      case may be or (C) in the case of any replacement of a Lender that fails to
      provide a consent or waiver requested by the Borrowers, the Lender to be
      replaced shall have delivered a written notice indicating that it will not
      grant
      such request.

     

    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 Borrowers'
      Agent.
      Each
      Borrower hereby appoints and authorizes Pacific Holding, and Pacific Holding
      hereby accepts such appointment, as such Borrower's Borrowers' 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 Borrowers' Agent. Each
      Borrower hereby acknowledges and agrees that it will be bound by any action
      or
      inaction taken by the Borrowers' Agent as if such action or inaction had been
      taken by such Borrower.

     

    Section
      11.06 Consultants.
      (a) 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.

     

    
      
        
        

      

      
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    (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 Borrowers' 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 Lead Arrangers and the Agents (including all reasonable fees,
      costs and expenses of counsel for any Agent), in connection with 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); (b) all reasonable and documented
      out-of-pocket expenses incurred by the Agents (including all reasonable fees,
      costs and expenses of counsel for any Agent), in connection with any amendments,
      modifications or waivers of the provisions of this Agreement and the other
      Financing Documents (whether or not the transactions contemplated hereby or
      thereby are consummated); (c) all reasonable and documented out-of-pocket
      expenses incurred by the Agents (including all reasonable fees, costs and
      expenses of counsel for any Agent), in connection with the administration of
      this Agreement and the other Financing Documents (whether or not the
      transactions contemplated hereby or thereby are consummated); and (d) 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.
      (a) 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 such Borrower's 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

            


    

     

    
      
        
        

      

      
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              (v)

            	
              any
                claim, demand or liability for broker's or finder's or placement
                fees or
                similar commissions, whether or not payable by the Borrowers, 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.

     

    (b) To
      the
      extent that any of the Borrowers 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 2.06(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, 

     

    
      
        
        

      

      
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    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.

     

    Section
      11.12 Notices
      and Other Communications.
      (a)  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 the Borrowers, the Borrowers' Agent or any Agent, to the address,
                telecopier number, electronic mail address or telephone number specified
                for such Person on Schedule 11.12;

            


    

     

    
      	 	
              (ii)

            	
              if
                to any Lender, to the address, telecopier number, electronic mail
                address
                or telephone number specified in its administrative questionnaire;
                and

            


    

     

    
      	 	
              (iii)

            	
              if
                to any Interest Rate Protection Provider, to the address, telecopier,
                number, electronic mail address or telephone number specified on
                Schedule 11.12.

            


    

     

    (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 Borrowers' Agent shall be deemed to have been given to all
      Borrowers.

     

    
      
        
        

      

      
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    (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 the Borrowers
      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
      of
      the Borrowers, the Borrowers' 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 and Interest Rate Protection
      Provider may change its address, telecopier or telephone number for notices
      and
      other communications hereunder by notice to the Borrowers, the Borrowers' Agent
      and each Agent.

     

    (f) The
      Senior Secured Parties shall be entitled to rely and act upon any written
      notices purportedly given by or on behalf of the Borrowers or the Borrowers'
      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. The Borrowers 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 the Borrowers or
      the
      Borrowers' Agent (or any one of the Borrowers). 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.

     

    
      
        
        

      

      
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    (g) So
      long
      as WestLB is the Administrative Agent, each Borrower and the Borrowers' 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 Agreements, 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 Borrowers' Agent agrees to continue to provide
      the Communications to the Administrative Agent in the manner specified in the
      Financing Agreements but only to the extent requested by the Administrative
      Agent.

     

    (h) So
      long
      as WestLB is the Administrative Agent, each Borrower and the Borrowers' 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 BORROWERS' AGENT, ANY LENDER OR ANY OTHER
      PERSON OR ENTITY FOR DAMAGES OF ANY KIND, INCLUDING DIRECT OR INDIRECT, SPECIAL,
      INCIDENTAL OR 

     

    
      
        
        

      

      
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    CONSEQUENTIAL
      DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING
      OUT
      OF THE BORROWER'S, THE BORROWERS' AGENTS' 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.

     

    (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 Agreements. 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 Agreements. 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 Payments
      Set Aside.
      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 

     

    
      
        
        

      

      
        187

        
          

        

      

      
        
        

      

    

     

    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.

     

    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 the Borrowers
      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 Borrowers' 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 

     

    
      
        
        

      

      
        188

        
          

        

      

      
        
        

      

    

     

    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.

     

    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 obligations of the Borrowers 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 the Borrowers;
      (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 the Borrowers received by it 

     

    
      
        
        

      

      
        189

        
          

        

      

      
        
        

      

    

     

    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 the Borrowers 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.

     

    Section
      11.19 Waiver
      of Consequential Damages, Etc.
      Except
      as otherwise provided in Section
      11.09
      (Indemnification
      by 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
      against any Indemnitee, 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 Borrowers' 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


     

    
      
        
        

      

      
        190

        
          

        

      

      
        
        

      

    

     

    laws
      of
      New York or, as the case may be, the jurisdiction in which such court is
      located.

     

    [Remainder
      of page intentionally blank. Next page is signature page.]

     

    


     

    
      
        
        

      

      
        191

        
          

        

      

      
        
        

      

    

    



    IN
      WITNESS WHEREOF, the parties hereto have caused this 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/
                  JEFFREY MANTERNACH

              
	 	
                 

              	
                Name:
                  Jeffrey Manternach

              
	 	
                 

              	
                Title:
                  Vice President Finance

              
	 	 
	 	 
	 	
                PACIFIC
                  ETHANOL MADERA LLC,

              
	 	
                as
                  Borrower

              
	 	 	 
	 	
                By:

              	
                /s/
                  JEFFREY MANTERNACH

              
	 	
                 

              	
                Name:
                  Jeffrey Manternach

              
	 	
                 

              	
                Title:
                  Vice President Finance

              
	 	 
	 	 
	 	
                PACIFIC
                  ETHANOL COLUMBIA, LLC,

              
	 	
                as
                  Borrower

              
	 	 	 
	 	
                By:

              	
                /s/
                  JEFFREY MANTERNACH

              
	 	
                 

              	
                Name:
                  Jeffrey Manternach

              
	 	
                 

              	
                Title:
                  Vice President Finance

              
	 	 
	 	 
	 	
                PACIFIC
                  ETHANOL STOCKTON, LLC,

              
	 	
                as
                  Borrower

              
	 	 	 
	 	
                By:

              	
                /s/
                  JEFFREY MANTERNACH

              
	 	
                 

              	
                Name:
                  Jeffrey Manternach

              
	 	
                 

              	
                Title:
                  Vice President Finance

              
	 	 
	 	 
	 	
                PACIFIC
                  ETHANOL IMPERIAL, LLC,

              
	 	
                as
                  Borrower

              
	 	 	 
	 	
                By:

              	
                /s/
                  JEFFREY MANTERNACH

              
	 	
                 

              	
                Name:
                  Jeffrey Manternach

              
	 	
                 

              	
                Title:
                  Vice President Finance

              
	 	 


      

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	 	 
	 	
                PACIFIC
                  ETHANOL MAGIC VALLEY, LLC,

              
	 	
                as
                  Borrower

              
	 	 	 
	 	
                By:
                  

              	
                /s/
                  JEFFREY MANTERNACH

              
	 	
                 

              	
                Name:
                  Jeffrey Manternach

              
	 	
                 

              	
                Title:
                  Vice President Finance

              
	 	 
	 	 
	 	
                PACIFIC
                  ETHANOL HOLDING CO. LLC,

              
	 	
                as
                  Borrowers' Agent

              
	 	 	 
	 	
                By:

              	
                /s/
                  JEFFREY MANTERNACH

              
	 	
                 

              	Name: Jeffrey
                Manternach
	 	
                 

              	
                Title:
                  Vice President Finance

              


      

    

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

      
        	 	
                WESTLB
                  AG, NEW YORK BRANCH,

              
	 	
                as
                  Lead Arranger and Sole Bookrunner

              
	 	 	 
	 	
                By:

              	
                /s/
                  PAUL VASTOLA

              
	 	
                 

              	
                Name:
                  Paul Vastola

              
	 	
                 

              	
                Title:
                  Director

              
	 	 	 
	 	
                By:

              	
                /s/
                  JAMES R. ANDERSON

              
	 	
                 

              	
                Name:
                  James R. Anderson

              
	 	
                 

              	
                Title:
                  Associate Director

              
	 	 	 
	 	 	 
	 	
                WESTLB
                  AG, NEW YORK BRANCH,

              
	 	
                as
                  Administrative Agent

              
	 	 	 
	 	
                By:

              	
                /s/
                  PAUL VASTOLA

              
	 	
                 

              	
                Name:
                  Paul Vastola

              
	 	
                 

              	
                Title:
                  Director

              
	 	 	 
	 	
                By:

              	
                /s/
                  JAMES R. ANDERSON

              
	 	
                 

              	
                Name:
                  James R. Anderson

              
	 	
                 

              	
                Title:
                  Associate Director

              


      



     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	 	
              WESTLB
                AG, NEW YORK BRANCH,

            
	 	
              as
                Lender

            
	 	 	 
	 	
              By:

            	
              /s/
                PAUL VASTOLA

            
	 	
               

            	
              Name:
                Paul Vastola

            
	 	
               

            	
              Title:
                Director

            
	 	 	 
	 	
              By:

            	
              /s/
                JAMES R. ANDERSON

            
	 	
               

            	
              Name:
                James R. Anderson

            
	 	
               

            	
              Title:
                Associate Director

            
	 	 	 
	 	 	 
	 	
              WESTLB
                AG, NEW YORK BRANCH,

            
	 	
              as Collateral
                Agent

            
	 	 	 
	 	
              By:

            	
              /s/
                PAUL VASTOLA

            
	 	
               

            	
              Name:
                Paul Vastola

            
	 	
               

            	
              Title:
                Director

            
	 	 	 
	 	
              By:

            	
              /s/
                JAMES R. ANDERSON

            
	 	
               

            	
              Name:
                James R. Anderson

            
	 	
               

            	
              Title:
                Associate Director

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	 	
              MIZUHO
                CORPORATE BANK, LTD.,

            
	 	
              as
                Lead Arranger and Co-Syndication Agent

            
	 	 	 
	 	
              By:

            	
              /s/
                AKIRA TAZUKA

            
	 	
               

            	
              Name:
                Akira Tazuka

            
	 	
               

            	
              Title:
                General Manager

            
	 	 	 
	 	 	 
	 	
              MIZUHO
                CORPORATE BANK, LTD.,

            
	 	
              as
                Lender

            
	 	 	 
	 	
              By:

            	
              /s/
                AKIRA TAZUKA

            
	 	
               

            	
              Name:
                Akira Tazuka

            
	 	
               

            	
              Title:
                General Manager

            
	 	 	 


    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    

      
        	 	
                CIT
                  CAPITAL SECURITIES LLC.

              
	 	
                as
                  Lead Arranger and Co-Syndication Agent

              
	 	 	 
	 	
                By:

              	
                /s/
                  ROBERT W. SEXTON

              
	 	
                 

              	
                Name:
                  Robert W. Sexton

              
	 	
                 

              	
                Title:
                  SVP

              
	 	 	 
	 	 	 
	 	
                CIT
                  CAPITAL USA INC.,

              
	 	
                as
                  Lender

              
	 	 	 
	 	
                By:

              	
                /s/
                  ROBERT W. SEXTON

              
	 	
                 

              	
                Name:
                  Robert W. Sexton

              
	 	
                 

              	
                Title:
                  Managing Director

              
	 	 	 


      



     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    


    
      	 	
              COÖPERATIEVE
                CENTRALE RAIFFEISEN-
                BOERENLEENBANK
                  B.A.,
                  "RABOBANK

                NEDERLAND",
                  NEW YORK
                  BRANCH,

              

            
	 	
              as
                Lead Arranger and Co-Documentation Agent

            
	 	 	 
	 	
              By:

            	
              /s/
                JEFF BLISS

            
	 	
               

            	
              Name:
                Jeff Bliss

            
	 	
               

            	
              Title:
                Vice President

            
	 	 	 
	 	
              By:

            	
              /s/
                NICK BAIKIE

            
	 	
               

            	
              Name:
                Nick Baikie

            
	 	
               

            	
              Title:
                Attorney-in-fact

            
	 	 	 
	 	 	 
	 	
              
                COÖPERATIEVE
                  CENTRALE RAIFFEISEN-
                  BOERENLEENBANK
                    B.A.,
                    "RABOBANK

                  NEDERLAND",
                    NEW YORK
                    BRANCH,

                

              

            
	 	
              as
                Lender

            
	 	 	 
	 	
              By:

            	
              /s/
                JEFF BLISS

            
	 	
               

            	
              Name:
                Jeff Bliss

            
	 	
               

            	
              Title:
                Vice President

            
	 	 	 
	 	
              By:

            	
              /s/
                NICK BAIKIE

            
	 	
               

            	
              Name:
                Nick Baikie

            
	 	
               

            	
              Title:
                Attorney-in-fact

            


    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

      


      
        	 	
                
                  BANCO
                    SANTANDER CENTRAL HISPANO S.A,
                    

                  NEW
                    YORK
                    BRANCH,

                

              
	 	
                as
                  Lead Arranger and Co-Documentation Agent

              
	 	 	 
	 	
                By:

              	
                /s/
                  J. RUBEN PEREZ-ROMO

              
	 	
                 

              	
                Name:
                  J. Ruben Perez-Romo

              
	 	
                 

              	
                Title:
                  Vice President

                Global
                  Corporate Banking

              
	 	 	 
	 	
                By:

              	
                /s/
                  JOSE CASTELLO

              
	 	
                 

              	
                Name:
                  Jose Castello

              
	 	
                 

              	
                Title:
                  Managing Director

                Head
                  of U.S. Global Corporate
                  Banking

              
	 	 	 
	 	 	 
	 	
                
                  
                    
                      
                        BANCO
                          SANTANDER CENTRAL HISPANO S.A,
                          

                        NEW
                          YORK
                          BRANCH,

                      

                    

                  

                

              
	 	
                as
                  Lender

              
	 	 	 
	 	
                By:

              	
                
                  /s/
                    J. RUBEN PEREZ-ROMO

                

              
	 	
                 

              	
                Name:
                  J. Ruben Perez-Rp,p

              
	 	
                 

              	
                Title:
                  Vice President

                
                  Global
                    Corporate
                    Banking

                

              
	 	 	 
	 	
                By:

              	
                /s/
                  JOSE CASTELLO

              
	 	
                 

              	
                Name:
                  Jose Castello

              
	 	
                 

              	
                
                  Title:
                    Managing Director

                  Head
                    of U.S. Global Corporate
                    Banking

                

              


      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      


      
        	 	
                
                  UNION
                    BANK OF CALIFORNIA,
                    N.A.,

                

              
	 	
                as
                  Accounts Bank

              
	 	 	 
	 	
                By:

              	
                /s/
                  JESUS SERRANO

              
	 	
                 

              	
                Name:
                  Jesus Serrano

              
	 	
                 

              	
                Title:
                  VP

              
	 	 	 
	 	 	 


      

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      


      
        	 	
                
                  NORTHWEST
                    FARM CREDIT SERVICE,
                    FLCA,

                

              
	 	
                as
                  Lender

              
	 	 	 
	 	
                By:

              	
                /s/
                  CASEY KINSER

              
	 	
                 

              	
                Name:
                  Casey Kinser

              
	 	
                 

              	
                Title:
                  Account Manager

              
	 	 	 
	 	 	 


      

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        


        
          	 	
                  
                    NORDKAP
                      BANK
                      AG,

                  

                
	 	
                  as
                    Lender

                
	 	 	 
	 	
                  By:

                	
                  /s/
                    J. OGRIG

                
	 	
                   

                	
                  Name:
                    J. Ogrig

                
	 	
                   

                	
                  Title:
                    VP

                
	 	 	 
	 	By:	/s/
                  B. GADOLA
	 	 	Name:
                  B. Gadola
	 	 	
                  Title:

                
	 	 	 
	 	 	 


        

         

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        


        
          	 	
                  
                    GREENSTONE
                      FARM CREDIT
                      SERVICES,

                  

                
	 	
                  as
                    Lender

                
	 	 	 
	 	
                  By:

                	
                  /s/
                    BEN MAHLICH

                
	 	
                   

                	
                  Name:
                    Ben Mahlich

                
	 	
                   

                	
                  Title:
                    Assistant Vice President/Lending Officer

                
	 	 	 
	 	 	 


        

         

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

       

      
        


        
          	 	
                  
                    SHOREBANK
                      PACIFIC,

                  

                
	 	
                  as
                    Lender

                
	 	 	 
	 	
                  By:

                	
                  /s/
                    RANDELL LEACH

                
	 	
                   

                	
                  Name:
                    Randell Leach

                
	 	
                   

                	
                  Title:
                    Chief Credit Officer

                
	 	 	 
	 	 	 


        

         

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

       

    

    


    
      	 	
              
                NORDDEUTSCHE
                  LANDESBANK

                GIROZENTRALE
                  NEW YORK
                  BRANCH,

              

            
	 	
              as
                Lender

            
	 	 	 
	 	
              By:

            	
              /s/
                BRUNO MEJEAN

            
	 	
               

            	
              Name:
                Bruno Mejean

            
	 	
               

            	
              Title:
                Senior Vice President

            


    

     

    
      
        	 	
                By:

              	
                /s/
                  MARCO BURMESTER

              
	 	
                 

              	
                Name:
                  Marco Burmester

              
	 	
                 

              	
                Title:
                  Analyst

              
	 	 	 
	 	 	 


      

       

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      


      
        	 	
                
                  METROPOLITAN
                    LIFE INSURANCE
                    COMPANY.

                

              
	 	
                as
                  Lender

              
	 	 	 
	 	
                By:

              	
                /s/
                  JUDITH A. GULOTTA

              
	 	
                 

              	
                Name:
                  Judith A. Gulotta

              
	 	
                 

              	
                Title:
                  Director

              
	 	 	 
	 	 	 


      

       

    

    


     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Exhibit
      A

     

    

      "Acceptable
        Bank"
        means a
        bank whose long-term unsecured and unguaranteed debt is rated at least "A-"
        (or
        the then-equivalent rating) by S&P or at least "A3" (or the then-equivalent
        rating) by Moody's.

       

      "Account
        Debtor"
        means
        the Person who is obligated on or under any Account owing to any Borrower.
        

       

      "Accounts"
        means
        all "accounts" as that term is defined in Section 9-102 of the UCC, now or
        hereafter owned by any Borrower. 

       

      "Accounts
        Bank"
        means
        Union Bank of California, N.A., 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 Pacific
        Holding or any Borrower with respect to whose Plant a Funding has been made
        or
        is being requested becomes a party after the date hereof, other than any
        document under which any Borrower (or, in the case of an agreement to which
        two
        or more Borrowers are party, such Borrowers on an aggregate basis) (a) would
        not
        reasonably be expected to have obligations or liabilities in the aggregate
        in
        excess of two million Dollars ($2,000,000), or be entitled to receive revenues
        in the aggregate in excess of three million Dollars ($3,000,000), in either
        case
        in value in any twelve (12) month period and (b) a termination of which
        would not reasonably be expected to result in a Material Adverse Effect;
        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).

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

      "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. 

       

      "Affiliated
        Project Documents"
        means
        those Project Documents listed in Schedule 5.11
        and
        identified as Affiliate agreements. 

       

      "Agents"
        means,
        collectively, the Administrative Agent, the Collateral Agent, and the Accounts
        Bank.

       

      "Aggregate
        Construction Loan Commitment"
        means,
        collectively, the aggregate of the In-Progress Plant 1 Aggregate
        Construction Loan Commitment, the In-Progress Plant 2 Aggregate
        Construction Loan Commitment, the Greenfield Plant 1 Aggregate Construction
        Loan
        Commitment, the Greenfield Plant 2 Aggregate Construction Loan Commitment,
        and
        the Greenfield Plant 3 Aggregate Construction Loan Commitment.

       

      "Aggregate
        Term Loan Commitment"
        means
        three hundred million Dollars ($300,000,000), as the same may be reduced
        in
        accordance with Section 2.08
        (Termination
        or Reduction of Commitments).

       

      "Aggregate
        Tranche Commitment"
        means,
        (a) with respect to Tranche B Lenders,  fifty million Dollars
        ($50,000,000) (as the same may be increased or reduced in accordance with
        Section 2.08
        (Termination
        or Reduction of Commitments)
        and
Section 2.09
        (Tranche
        Reallocation))
        and
        (b) with respect to Tranche A Lenders, two hundred fifty million
        Dollars ($250,000,000) (as the same may be reduced in accordance with
Section 2.08
        (Termination
        or Reduction of Commitments)
        and
Section 2.09
        (Tranche
        Reallocation).

       

      "Aggregate
        Working Capital Loan Commitment"
        means,
        as of any date of determination, the lesser of (a) the sum of the Borrowing
        Bases for each Plant (or, prior to the Commercial Operation Date of any Plant,
        five million Dollars ($5,000,000)) as of such date of determination, and
        (b) twenty-five million Dollars ($25,000,000), as the same may be reduced
        in accordance with Section 2.08
        (Termination
        or Reduction of Commitments).

       

      "Agreement"
        has the
        meaning set forth in the Preamble.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      "Agricultural
        Market Consultant"
        means
        Muse, Stancil & Co., or any replacement agricultural market consultant
        appointed by the Administrative Agent and, so long as no Default or Event
        of
        Default has occurred and is continuing, reasonably acceptable to the Borrower's
        Agent (which acceptance shall not be unreasonably withheld or
        delayed).

       

      "ALTA
        122 Endorsement"
        means
        an endorsement in substantially the form of Exhibit 6.02(g).

       

      "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,
                  each
                  applicable Security Document and Lien 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 thereto, 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(s)
                  to the
                  Collateral Agent and to a transferee in foreclosure, in each such
                  case
                  without any consent or approval of such Project Party;
                  and

              


      

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (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
        (i) with respect to the Tranche A Loans, the Tranche A Applicable Margin,
        (ii)
        with respect to the Tranche B Loans, the Tranche B Applicable Margin, and
        (iii)
        with respect to the Working Capital Loans, the Working Capital Loan Applicable
        Margin, as the context requires.

       

      "Appraiser"
        means
        Natwick & Associates or any replacement appraiser appointed by the
        Administrative Agent and, so long as no Default or Event of Default has occurred
        and is continuing, reasonably acceptable to the Borrowers' Agent (which
        acceptance shall not be unreasonably withheld or delayed).

       

      "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
        Performance Test Protocols"
        means
        the protocols for conducting Performance Tests set forth in Schedule 7.01(k)-B
        as the
        same may be updated or amended with the prior written consent of the Independent
        Engineer and Administrative Agent.

       

      "Auditors"
        means
        those nationally recognized independent auditors selected by the Borrowers
        (including Hein & Associates) and approved by the Administrative Agent,
        acting reasonably; provided,
        that
        approval of the Administrative Agent shall not be required for the appointment
        of any United States domiciled accounting firm that (i) ranks among the top
        sixty-seven (67) accounting firms in the United States by size and (ii) has
        total revenues of at least thirty million Dollars ($30,000,000), of which
        at
        least fifty percent (50%) of such revenues are derived from conducting audit
        work (in which case the Borrowers' Agent shall provide a written notice to
        the
        Administrative Agent of any such change in the Auditors).

       

      "Authorized
        Officer"
        means
        (i) with respect to any Person that is a corporation, the president, any
        vice president, the treasurer or the chief financial 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 or the chief financial officer of such Person, or
        an
        Authorized Officer 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.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      "Bankruptcy
        Code"
        means
        Title 11 of the United States Code entitled "Bankruptcy" or any successor
        statute, and all rules promulgated thereunder.

       

      "Base
        Rate"
        means,
        for any day, a fluctuating rate per
        annum
        equal to
        the higher of (i) the Federal Funds Effective Rate plus
        one-half
        of one percent (0.50%) and (ii) the rate of interest in effect for
        such day as publicly announced from time to time by WestLB as its "prime
        rate."
        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. 

       

      "Base
        Rate Loan"
        means
        any Loan bearing interest at a rate determined by reference to the Base Rate
        and
        the provisions of Article II
        (Commitments
        and Funding).

       

      "Blocked
        Account Agreement"
        means
        an agreement, in substantially the form attached hereto 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.

       

      "Boardman"
        has the
        meaning set forth in the Preamble.

       

      "Boardman
        Deed of Trust"
        means
        the Leasehold Trust Deed, Security Agreement, Financing Agreement, Fixture
        Filing and Assignment of Leases, Rents and Security Deposits, in form and
        substance reasonably satisfactory to the Lenders and the Collateral Agent,
        dated
        on or about the date hereof, be made by Boardman to Stewart Title Guaranty
        Company, as trustee, for the benefit of the Collateral Agent, as
        beneficiary.

       

      "Boardman
        Insurance and Condemnation Proceeds Account"
        has the
        meaning provided in Section 8.01(m)
        (Establishment
        of Project Accounts).

       

      "Boardman
        Lease"
        means
        the lease dated April 20, 2006 between the Port of Morrow and
        Boardman.

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      "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, in form and substance reasonably satisfactory
        to the Lenders and the Collateral Agent, dated on or about the date hereof,
        among Pacific Holding, Boardman and the Collateral Agent, pursuant to which
        Pacific Holding pledges one hundred percent (100%) of the Equity Interests
        in Boardman to the Collateral Agent.

       

      "Boardman
        Security Agreement"
        means
        the Assignment and Security Agreement, in form and substance reasonably
        satisfactory to the Lenders and the Collateral Agent, dated on or about the
        date
        hereof, made by Boardman in favor of the Collateral Agent.

       

      "Boardman
        Warranty Account"
        has the
        meaning provided in Section 8.01(s)
        (Establishment
        of Accounts).
        

       

      "Borrower
        LLC Agreements"
        means,
        collectively, the Pacific Holding LLC Agreement, the Madera LLC Agreement,
        the
        Boardman LLC Agreement, the Stockton LLC Agreement, the Brawley LLC Agreement,
        and the Burley LLC Agreement.

       

      "Borrowers"
        has the
        meaning set forth in the Preamble.

       

      "Borrowers'
        Agent"
        means
        Pacific Holding, in its capacity as agent for the Borrowers in accordance
        with
Section 11.05
        (Borrowers'
        Agent).

       

      "Borrowing
        Base"
        means,
        on any given date and with respect to each Borrower whose Plant has achieved
        its
        Commercial Operation Date, an amount equal to, eighty percent (80%) of the
        sum
        of, without duplication:

       

      
        	 	
                (i)

              	
                the
                  face amount (less reserves, maximum discounts, credits and allowances
                  that
                  may be taken by or granted to the Account Debtor thereof in connection
                  therewith) of all Eligible Accounts for such Plant that are set
                  forth in
                  the Borrowing Base Certificate then most recently delivered by
                  the
                  Borrowers' Agent to the Administrative Agent;
                  and

              


      

       

      
        	 	
                (ii)

              	
                the
                  Value of no more than sixty (60) days' Eligible Inventory for such
                  Plant
                  (less reserves, maximum discounts, credits and allowances that
                  may be
                  taken by or granted to the Account Debtor thereof in connection
                  therewith)
                  as set forth in the Borrowing Base Certificate then most recently
                  delivered by the Borrowers' Agent to the Administrative Agent.
                  

              


      

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      "Borrowing
        Base Certificate"
        means a
        certificate setting forth the Borrowing Base of each Borrower as of the date
        of
        such certificate, substantially in the form of Exhibit 7.03(n).
        

       

      "Brawley"
        has the
        meaning set forth in the Preamble.

       

      "Brawley
        Construction Account"
        has the
        meaning provided in Section 8.01(d)
        (Establishment
        of Project Accounts).

       

      "Brawley
        Construction Budget"
        means
        the budget attached hereto as Schedule 7.02(t)
        that
        sets forth all categories of costs and expenses required in connection with
        the
        development, construction, start-up, and testing of the Brawley Plant, including
        all construction costs and non-construction costs, all costs under the Brawley
        Construction Contracts, all interest, taxes and other carrying costs related
        to
        the Construction Loans for the Brawley Plant, and costs related to the
        construction of the facilities described under the Project Documents relating
        to
        the Brawley Plant, as updated from time to time in accordance with Section
        6.04(h) (Conditions
        to First Funding for Each Greenfield Plant -Construction Schedule and Updated
        Budget)
        and
Section 7.02(t)
        (Negative
        Covenants - Construction Budget).

       

      "Brawley
        Construction Withdrawal Certificate"
        means a
        certificate in substantially the form of Exhibit 8.05,
        duly
        executed by an Authorized Officer of the Borrowers' Agent, directing the
        transfer or withdrawal of funds from the Brawley Construction
        Account.

       

      "Brawley
        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
        (or with
        changes agreed to by the Borrowers, the Administrative Agent and the Collateral
        Agent, in each case acting reasonably), to be made by Brawley to Stewart
        Title
        Guaranty Company, as trustee, for the benefit of the Collateral Agent, as
        beneficiary.

       

      "Brawley
        Equity Contributions"
        means
        the aggregate total amount of (i) the Brawley Required Equity Contribution
        (following the contribution of such amounts to Brawley and their application
        to
        Brawley Project Costs) and (ii) all other equity contributed to Brawley and
        applied to Brawley Project Costs. 

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      "Brawley
        Insurance and Condemnation Proceeds Account"
        has the
        meaning provided in Section 8.01(o)
        (Establishment
        of Project Accounts).

       

      "Brawley
        Option Agreement"
        means
        that certain option agreement dated August 22, 2005, between Pacific
        Ethanol and American Grain, LLC for approximately sixty (60) acres in Imperial,
        California (which shall be assigned by Pacific Ethanol to Brawley prior to
        the
        initial Funding Date for the Brawley Plant).

       

      "Brawley
        Plant"
        means
        the ethanol production facility located at Brawley, 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.

       

      "Brawley
        Pledge Agreement"
        means
        the Pledge and Security Agreement, in substantially the form of Exhibit
        6.04(g)-B
        (or with
        changes agreed to by the Borrowers, the Administrative Agent and the Collateral
        Agent, in each case acting reasonably), to be entered into among Pacific
        Holding, Brawley and the Collateral Agent, pursuant to which Pacific Holding
        will pledge one hundred percent (100%) of the Equity Interests in Brawley
        to the Collateral Agent.

       

      "Brawley
        Project Costs"
        means
        the following costs and expenses incurred by the Borrowers in connection
        with
        the Brawley Plant prior to the Commercial Operation Date for the Brawley
        Plant
        and set forth in the then-current Brawley Construction Budget or otherwise
        approved in writing by the Administrative Agent (in consultation with the
        Independent Engineer):

       

      
        	 	
                (i)

              	
                costs
                  incurred by the Borrowers under the Brawley Construction Contracts,
                  and
                  other costs directly related to the acquisition, site preparation,
                  design,
                  engineering, construction, installation, start-up, and testing
                  of the
                  Brawley Plant;

              


      

       

      
        	 	
                (ii)

              	
                fees
                  and expenses incurred by or on behalf of the Borrowers and allocated
                  to
                  the Brawley Plant in connection with the development of the Project
                  and
                  the consummation of the transactions contemplated by this Agreement,
                  including financial, accounting, legal, surveying and consulting
                  fees, and
                  the costs of preliminary
                  engineering;

              


      

       

      
        	 	
                (iii)

              	
                interest
                  and Fees on the Construction Loans for the Brawley
                  Plant;

              


      

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (iv)

              	
                financing
                  fees and expenses in connection with the Loans and the fees, costs
                  and
                  expenses of the Agents' counsel, any Interest Rate Protection Provider's
                  counsel and the Consultants that are allocated to the Brawley
                  Plant;

              


      

       

      
        	 	
                (v)

              	
                insurance
                  premiums with respect to the Title Insurance Policy for the Brawley
                  Plant
                  and the insurance for the Brawley Plant required pursuant to Section 7.01(h)
                  (Affirmative
                  Covenants - Insurance);

              


      

       

      
        	 	
                (vi)

              	
                costs
                  of corn and natural gas utilized for commissioning, Performance
                  Tests for,
                  and operation of, the Brawley Plant prior to its Commercial Operation
                  Date; and

              


      

       

      
        	 	
                (vii)

              	
                all
                  other costs and expenses included in the then-current Brawley Construction
                  Budget.

              


      

       

      "Brawley
        Required Equity Contribution"
        means,
        as of the initial Funding Date for the Brawley Plant, an amount equal to
        the
        aggregate total amount of Project Costs in the Construction Budget for the
        Brawley Plant approved pursuant to Section 6.04(h)(i)
        (Conditions
        to First Funding for Each Greenfield Plant - Construction Schedule and Updated
        Budget) minus
        (x) five million Dollars ($5,000,000) and (y) the lesser of
        (A) forty-five million Dollars ($45,000,000) or (B) an amount equal to
        forty percent (40%) of such aggregate Project Costs.

       

      "Brawley
        Security Agreement"
        means
        the Assignment and Security Agreement, substantially the form of Exhibit 6.04(g)-C
        (or with
        changes agreed to by the Borrowers, the Administrative Agent and the Collateral
        Agent, in each case acting reasonably), to be made by Brawley in favor of
        the
        Collateral Agent.

       

      "Brawley
        Warranty Account"
        has the
        meaning provided in Section 8.01(u)
        (Establishment
        of Project Accounts).
        

       

      "Burley"
        has the
        meaning set forth in the Preamble.

       

      "Burley
        Construction Account"
        has the
        meaning provided in Section 8.01(e)
        (Establishment
        of Project Accounts).

       

      "Burley
        Construction Budget"
        means
        the budget attached hereto as Schedule 7.02(t)
        that
        sets forth all categories of costs and expenses required in connection with
        the
        development, construction, start-up, and testing of the Burley Plant, including
        all construction costs and non-construction costs, all costs under the Burley
        Construction Contract, all interest, taxes and other carrying costs related
        to
        the Construction Loans for the Burley Plant, and costs related to the
        construction of the facilities described under the Project Documents relating
        to
        the Burley Plant, as updated from time to time in accordance with Section
        6.04(h) (Conditions
        to First Funding for Each Greenfield Plant -Construction Schedule and Updated
        Budget)
        and
Section 7.02(t)
        (Negative
        Covenants - Construction Budget).

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      "Burley
        Construction Withdrawal Certificate"
        means a
        certificate in substantially the form of Exhibit 8.05,
        duly
        executed by an Authorized Officer of the Borrowers' Agent, directing the
        transfer or withdrawal of funds from the Burley Construction
        Account.

       

      "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
        (or with
        changes agreed to by the Borrowers, the Administrative Agent and the Collateral
        Agent, in each case acting reasonably), to be made by Burley to the Collateral
        Agent.

       

      "Burley
        Equity Contributions"
        means
        the aggregate total amount of (i) the Burley Required Equity Contribution
        (following the contribution of such amounts to Burley and their application
        to
        Burley Project Costs) and (ii) all other equity contributed to Burley and
        applied to Burley Project Costs. 

       

      "Burley
        Insurance and Condemnation Proceeds Account"
        has the
        meaning provided in Section 8.01(p)
        (Establishment
        of Project Accounts).

       

      "Burley
        Option Agreement"
        means
        that certain option agreement dated July 17, 2006 between Pacific Ethanol
        and Glen Larson and Carol Larson, as amended by first amendment dated
        September 15, 2006, for approximately one hundred sixty (160) acres in
        Cassia County, Idaho (which shall be assigned by Pacific Ethanol to Burley
        prior
        to the initial Funding Date for the Burley Plant).

       

      "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
        (or with
        changes agreed to by the Borrowers, the Administrative Agent and the Collateral
        Agent, in each case acting reasonably), to be entered into among Pacific
        Holding, Burley and the Collateral Agent, pursuant to which Pacific Holding
        will
        pledge one hundred percent (100%) of the Equity Interests in Burley to the
        Collateral Agent. 

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      "Burley
        Project Costs"
        means
        the following costs and expenses incurred by the Borrowers in connection
        with
        the Burley Plant prior to the Commercial Operation Date for the Burley Plant
        and
        set forth in the then-current Burley Construction Budget or otherwise approved
        in writing by the Administrative Agent (in consultation with the Independent
        Engineer):

       

      
        	 	
                (i)

              	
                costs
                  incurred by the Borrowers under the Burley Construction Contracts,
                  and
                  other costs directly related to the acquisition, site preparation,
                  design,
                  engineering, construction, installation, start-up, and testing
                  of the
                  Burley Plant;

              


      

       

      
        	 	
                (ii)

              	
                fees
                  and expenses incurred by or on behalf of the Borrowers and allocated
                  to
                  the Burley Plant in connection with the development of the Project
                  and the
                  consummation of the transactions contemplated by this Agreement,
                  including
                  financial, accounting, legal, surveying and consulting fees, and
                  the costs
                  of preliminary engineering;

              


      

       

      
        	 	
                (iii)

              	
                interest
                  and Fees on the Construction Loans for the Burley
                  Plant;

              


      

       

      
        	 	
                (iv)

              	
                financing
                  fees and expenses in connection with the Loans and the fees, costs
                  and
                  expenses of the Agents' counsel, any Interest Rate Protection Provider's
                  counsel and the Consultants that are allocated to the Burley
                  Plant;

              


      

       

      
        	 	
                (v)

              	
                insurance
                  premiums with respect to the Title Insurance Policy for the Burley
                  Plant
                  and the insurance for the Burley Plant required pursuant to Section 7.01(h)
                  (Affirmative
                  Covenants - Insurance);

              


      

       

      
        	 	
                (vi)

              	
                costs
                  of corn and natural gas utilized for commissioning, Performance
                  Tests for,
                  and operation of, the Burley Plant prior to its Commercial Operation
                  Date;
                  and

              


      

       

      
        	
              	(vii)	
                all
                  other costs and expenses included in the then-current Burley Construction
                  Budget.

              


      

       

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

    


    "Burley
      Required Equity Contribution"
      means,
      as of the initial Funding Date for the Burley Plant, an amount equal to the
      aggregate total amount of Project Costs in the Construction Budget for the
      Burley Plant approved pursuant to Section 6.04(h)(i)
      (Conditions
      to First Funding for Each Greenfield Plant - Construction Schedule and Updated
      Budget) minus
      (x) five million Dollars ($5,000,000) and (y) the lesser of
      (A) forty-five million Dollars ($45,000,000) or (B) an amount equal to
      forty percent (40%) of such aggregate Project Costs.

     

    "Burley
      Security Agreement"
      means
      the Assignment and Security Agreement, in substantially the form of Exhibit
      6.04(g)-C
      (or with
      changes agreed to by the Borrowers, the Administrative Agent and the Collateral
      Agent, in each case acting reasonably), to be made by Burley in favor of the
      Collateral Agent.

     

    "Burley
      Warranty Account"
      has the
      meaning provided in Section 8.01(v)
      (Establishment
      of Project Accounts).

     

    "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.

     

    "Buy-Down
      L.D. Reimbursement"
      means,
      in the event that the Commitments for any Plant are reduced on such Plant's
      Commercial Operation Date in accordance with Section 2.08(e)
      (Termination
      or Reduction of Commitments),
      any
      performance liquidated damages paid or payable to the Borrowers (up to, and
      not
      in excess of, any such reduction) with respect to such Plant may be paid or
      distributed to Pacific Ethanol.

     

    "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.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    "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.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    "Cash
      Flow"
      means,
      for any period, the sum (without duplication) of the following: (i) all
      cash paid to the Borrowers during such period in connection with the Ethanol
      Offtake Agreements, DG Offtake Agreements and any other sales of Products,
      (ii) all interest and investment earnings paid to the Borrowers or the
      Project Accounts during such period on amounts on deposit in the Project
      Accounts, (iii) all cash paid to the Borrowers during such period as
      Business Interruption Insurance Proceeds or liability insurance proceeds (but
      only to the extent that such liability insurance proceeds represent
      reimbursement of third party claims already paid by the Borrowers) and
      (iv) all other cash paid to the Borrowers during such period; provided,
      however,
      that
      Cash Flow shall not include any proceeds of the Loans or any other Indebtedness
      incurred by any Borrower (other than payments (excluding payments of Swap
      Termination Value) made to any Borrower pursuant to any Permitted Commodity
      Hedging Arrangements); Insurance Proceeds; Condemnation Proceeds; Required
      Equity Contributions; Required Subordinated Debt Disbursements; any amounts
      paid
      pursuant to the Sponsor Support Agreement; any amounts drawn under, or paid
      pursuant to, any Debt Service Reserve Letter of Credit; proceeds from any
      disposition of assets of any Plant or any Borrower (other than Products); tax
      refunds; amounts received, whether by way of a capital contribution or
      otherwise, from any holders of Equity Interests of any Borrower (other than
      payments made under the Affiliated Project Documents when due and payable in
      accordance with the terms thereof and the terms of the Financing Documents);
      and
      any other extraordinary or non-cash income or receipt of any Borrower under
      GAAP; provided,
      further,
      that
      any proceeds of Permitted Commodity Hedging Arrangements that are treated as
      Cash Flow shall be calculated on a net basis taking into account any related
      payments required to be made by the Borrowers.

     

    "Cash
      Flow Available for Debt Service"
      means,
      for any period, an amount equal to the amount of Cash Flow deposited in the
      Revenue Account during such period minus
      all
      amounts paid during such period (i) prior to the Conversion Date, pursuant
      to priorities first
      and
second
      of
      Section 8.08(b)
      (Revenue
      Account)
      and
      (ii) on and after the Conversion Date, pursuant to priorities first
      and
second
      of
      Section 8.08(c)
      (Revenue
      Account).

     

    "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) the result of which is that (i) Pacific Holding fails to
      maintain, directly, legally or beneficially, one hundred percent (100%) of
      the Equity Interests of any of Madera, Boardman, Stockton, Brawley, or Burley,
      (ii) the Pledgor  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, 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.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    "Change
      Order"
      means
      each "Change Order" (if any) as described in any Construction
      Contract.

     

    "Closing
      Date"
      means
      the date on which all the conditions set forth in Section 6.01
      (Conditions
      to Closing)
      have
      been satisfied or waived. 

     

    "Code"
      means
      the Internal Revenue Code of 1986, as amended.

     

    "Collateral"
      means
      all assets of and Equity Interests in the Borrowers, whether now owned or
      hereinafter acquired, upon which a Lien is purported to be created by any
      Security Document then in effect or contemplated to be in effect.

     

    "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).

     

    "Commercial
      Operation Date"
      means
      with respect to any Plant, the date (which for each Plant shall occur on or
      before the Conversion Date Certain) on which the following conditions have
      been
      satisfied for such Plant, as certified by the Borrowers' Agent and confirmed
      in
      writing by the Independent Engineer in a Commercial Operation Date Certificate
      completed to the reasonable satisfaction of the Administrative
      Agent:

     

    
      	 	
              (i)

            	
              construction
                of such Plant shall have been completed (other than punch list items)
                and
                such Plant shall be ready to grind corn and begin operation for its
                intended use as an ethanol production facility at its design basis
                capacity;

            


    

     

    
      	 	
              (ii)

            	
              the
                Performance Test, in accordance with the Approved Performance Test
                Protocols shall have been completed and shall have demonstrated that
                such
                Plant has achieved the Minimum Performance Criteria, while meeting
                air
                emissions requirements; 

            


    

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (iii)

            	
              training
                shall have been completed for all required Plant personnel in a manner
                that is reasonably satisfactory to the Independent Engineer;
                

            


    

     

    
      	 	
              (iv)

            	
              the
                Borrowers shall have received a plant operation manual and plant
                maintenance manual, associated documents, training manuals, final
                safety
                plans, and all materials and documents provided by the Construction
                Contractors and other manufacturers, suppliers and vendors for such
                Plant,
                and in each case, shall have been reviewed by the Independent Engineer;
                

            


    

     

    
      	 	
              (v)

            	
              the
                Borrowers shall have received preliminary construction drawings for
                such
                Plant; 

            


    

     

    
      	 	
              (vi)

            	
              all
                construction costs for such Plant, except in an aggregate amount
                not to
                exceed five million Dollars ($5,000,000) and with respect to which
                the
                full amount of such costs has been reserved, shall have been fully
                paid
                (other than amounts that are subject to a Contest) and the Administrative
                Agent shall have received reasonably satisfactory evidence (for example,
                an ALTA 122 Endorsement to the applicable Title Policy) that there
                are no
                mechanic's, workmen's, materialmen's or other similar Liens or other
                claims on any part of such Plant, Site, or other assets relating
                to the
                work or services of such Plant provided by the Construction Contractors
                or
                any of their subcontractors (other than Liens that are subject to
                a
                Contest); 

            


    

     

    
      	 	
              (vii)

            	
              each
                Construction Contractor and each subcontractor for such Plant shall
                have
                provided all satisfactory Lien waivers, other than with respect to
                punch
                list items and work done by the Construction Contractor and
                subcontractors, taken as a whole, with respect to which payments
                do not
                exceed, in the aggregate, one million Dollars ($1,000,000) (other
                than
                Liens that are subject to a Contest); and


            


    

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (viii)

            	
              all
                Necessary Project Approvals required to be obtained at such time
                with
                respect to such Plant shall have been
                obtained.

            


    

     

    "Commercial
      Operation Date Certificate"
      means a
      certificate of the Independent Engineer and the Borrowers' Agent, in
      substantially the form of Exhibit 6.02(a),
      confirming that the Commercial Operation Date has occurred. 

     

    "Commitment
      Fee"
      has the
      meaning provided in Section 3.13(a)
      (Fees).

     

    "Commitment
      Percentage"
      means,
      as to any Lender at any time, such Lender's Construction Loan Commitment
      Percentage, Term Loan Commitment Percentage, or Working Capital Loan Commitment
      Percentage, as the context may require.

     

    "Commitments"
      means,
      with respect to each Lender, as applicable, such Lender's Construction Loan
      Commitment, Term Loan Commitment or Working Capital Loan Commitment, as the
      context may require.

     

    "Commodity
      Hedging Arrangements"
      means
      any arrangement to hedge the price of corn purchases, ethanol sales, Distillers
      Grains sales or natural gas purchases.

     

    "Commodity
      Risk Management Plans"
      means
      risk management plans prepared by the Borrowers and approved by the
      Administrative Agent pursuant to Section 7.01(w)
      (Affirmative
      Covenants - Commodity Hedging Programs)
      setting
      forth terms and conditions relating to any Commodity Hedging Arrangements from
      time to time proposed to be entered into by the Borrowers, including any updates
      made to such risk management plans with the approval of the Administrative
      Agent.

     

    "Condemnation
      Proceeds"
      means
      any amounts and proceeds of any kind (including instruments) payable in respect
      of any Event of Taking.

     

    "Confidential
      Information Memorandum"
      means
      the information memorandum, dated December 2006, together with any updates
      related thereto, describing the Project.

     

    "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
      Accounts"
      means,
      collectively, the Construction Holding Account, the Stockton Construction
      Account, the Brawley Construction Account and the Burley Construction
      Account.

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    "Construction
      Budgets"
      means,
      collectively, the Stockton Construction Budget, the Brawley Construction Budget
      and the Burley Construction Budget.

     

    "Construction
      Contractors"
      means
      each party, other than the Borrowers, to each Construction
      Contract.

     

    "Construction
      Contracts"
      means
      collectively, (i) the construction contracts identified on Schedule 5.11
      to which
      any of Parsons and Delta-T are parties, (ii) each CMSA, (iii) all
      material contracts relating to construction of each of the Greenfield Plants
      that, individually or in the aggregate, address the same scope of construction
      requirements as the Boardman Plant construction contracts described in clause
      (i) of this definition, (iv) any additional contracts relating to the
      construction of any Greenfield Plant addressing matters that are critical to
      the
      construction of such Greenfield Plant and (v) any Additional Project
      Document related to construction matters.

     

    "Construction
      Holding Account"
      has the
      meaning set forth in Section 8.01(b)
      (Establishment
      of Project Accounts).

     

    "Construction
      Holding Withdrawal Certificate"
      means a
      certificate in substantially the form of Exhibit 8.04,
      duly
      executed by an Authorized Officer of the Borrowers' Agent, directing the
      transfer or withdrawal of funds from the Construction Holding
      Account.

     

    "Construction
      Loan Commitment"
      means,
      with respect to each Construction/Term Lender, such Lender's Tranche A
      Construction Loan Commitment and/or Tranche B Construction Loan Commitment,
      as applicable.

     

    "Construction
      Loan Commitment Percentage"
      means,
      as to any Lender at any time, the percentage that such Lender's Construction
      Loan Commitment then constitutes of the Aggregate Construction Loan
      Commitment.

     

    "Construction
      Loan Maturity Date"
      means
      the earlier of (a) the Conversion Date and (b) the Conversion Date
      Certain.

     

    "Construction
      Loans"
      means,
      collectively, the In-Progress Plant 1 Construction Loans, the In-Progress
      Plant 2 Construction Loans, the Greenfield Plant 1 Construction Loans, the
      Greenfield Plant 2 Construction Loans, and the Greenfield Plant 3
      Construction Loans.

     

    "Construction
      Manager"
      means
      the Pledgor or any successor pursuant to a CMSA (or any replacement
      thereof).

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    "CMSA"
      means
      each Construction Management Services Agreement between any Borrower and the
      Construction Manager.

     

    "Construction
      Notes"
      means
      the promissory notes of each Borrower, substantially in the form of Exhibit 2.07,
      evidencing Construction Loans.

     

    "Construction
      Schedule"
      means,
      with respect to each Greenfield Plant, the schedule for construction of such
      Plant, approved in writing by the Administrative Agent and the Independent
      Engineer in accordance with Section 6.04(h)
      (Conditions
      to First Funding for Each Greenfield Plant - Construction Schedule and Updated
      Budget),
      as the
      same may be amended from time to time with the prior written approval of the
      Administrative Agent and the Independent Engineer.

     

    "Construction/Term
      Lenders"
      means,
      collectively, the Tranche A Lenders and the Tranche B Lenders.

     

    "Construction
      Withdrawal Certificate"
      means a
      Construction Holding Withdrawal Certificate, Stockton Construction Withdrawal
      Certificate, Brawley Construction Withdrawal Certificate, and/or Burley
      Construction Withdrawal Certificate, as the case may be.

     

    "Consultants"
      means
      the Independent Engineer, the Insurance Consultant, the Ethanol Market
      Consultant, and the Agricultural Market Consultant.

     

    "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 (or, prior to the
      Commercial Operation Date for any Plant with respect to which a Funding has
      been
      made, the Borrowers have demonstrated to the reasonable satisfaction of the
      Administrative Agent that adequate Loan proceeds will be available to cover
      such
      claim relating to such Plant); (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.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    "Contingency
      Line Item"
      means
      the Line Item in each Construction Budget identified as "contingency" that
      is
      intended to cover the eventuality of unforeseen Project Costs for the relevant
      Plant. 

     

    "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.

     

    "Contract
      Disclosure Update"
      means a
      written notice delivered by the Borrowers' Agent to the Administrative Agent,
      providing any updates to Schedule 5.11
      with
      respect to any material contracts, agreements, instruments or other documents
      (other than the Financing Documents) to which any Borrower has become a party
      after the date hereof.

     

    "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.

     

    "Conversion
      Date"
      means,
      the Business Day upon which all the conditions precedent set forth in
Section 6.07
      (Conditions
      to Term Loan Funding)
      shall
      have been satisfied (or waived in accordance with the terms of this Agreement)
      and the Construction Loans are converted to Term Loans.

     

    "Conversion
      Date Certain"
      means
      the date that is twenty (20) months from the date hereof.

     

    "Corn
      Supplier"
      means
      Pacific Ag Products or any other counterparty to a Grain Supply
      Agreement.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    "Current
      Priority Subordinated Interest"
      means,
      with respect to any Quarterly Period, interest that has accrued, and is due
      and
      payable, on the Priority Subordinated Loans during such Quarterly Period, but
      expressly excluding any such interest that accrued on the Priority Subordinated
      Loans in any previous Quarterly Period.

     

    "DDG"
      means
      dried distillers grains (if any) produced by the Borrowers at the
      Project.

     

    "Debt
      Service"
      means,
      for any period, the sum of (i) all fees (including Fees) scheduled to
      become due and payable during such period to the Senior Secured Parties,
      (ii) interest on the Loans (taking into account any payments received under
      Interest Rate Protection Agreements) scheduled to become due and payable during
      such period to the Senior Secured Parties, (iii) principal payments of the
      Loans (excluding the Required Cash Sweep and any other mandatory prepayments)
      scheduled to become due and payable during such period to the Senior Secured
      Parties and (iv) all payments due by the Borrowers pursuant to Section 4.03
      (Increased
      Eurodollar Loan Costs)
      and
Section 4.07(a)
      (Taxes)
      with
      respect to such scheduled principal, interest and fees.

     

    "Debt
      Service LC Waiver Letter"
      means,
      with respect to any Debt Service Reserve Letter of Credit, a waiver letter
      from
      the issuer thereof in substantially the form of Annex E to Exhibit
      8.12.

     

    "Debt
      Service Reserve Account"
      has the
      meaning set forth in Section 8.01(j)
      (Establishment
      of Project Accounts).

     

    "Debt
      Service Reserve Letter of Credit"
      means
      an irrevocable, standby letter of credit in substantially the form of
Exhibit
      8.12,
      accompanied by a Debt Service LC Waiver Letter, issued by an Acceptable Bank
      in
      favor of the Collateral Agent which has the following minimum
      terms:

     

    
      	 	
              (i)

            	
              a
                term of not less than three hundred sixty-four (364) days (or, if
                the
                Final Maturity Date is less than three hundred sixty four (364) days
                from
                the date such Debt Service Reserve Letter of Credit is issued, a
                term
                ending no earlier than the date that is five (5) Business Days
                following the Final Maturity Date);

            


    

     

    
      	
            	(ii)	
              allows
                the Collateral Agent to make a drawdown of the Stated Amount in each
                of
                the circumstances described in Section
                8.12(c) (Debt
                Service Reserve Account);
                and

            


    

     

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    

      
        	 	
                (iii)

              	
                the
                  reimbursement and other payment obligations with respect to such
                  letter of
                  credit are not for the account of any Borrower, any Plant or the
                  Project.

              


      

       

      "Debt
        Service Reserve Requirement"
        means,
        as of any date, the amount equal to the projected scheduled Debt Service
        payable
        in respect of the succeeding six (6) months.

       

      "Debtor
        Relief Laws"
        means
        the Bankruptcy Code and all other liquidation, conservatorship, bankruptcy,
        assignment for the benefit of creditors, moratorium, rearrangement,
        receivership, insolvency, reorganization, or similar debtor relief laws of
        the
        United States or other applicable jurisdictions from time to time in effect
        and
        affecting the rights of creditors generally.

       

      "Default"
        means
        any condition, occurrence or event that, after notice or passage of time
        or
        both, would be an Event of Default.

       

      "Default
        Rate"
        has the
        meaning set forth in Section 3.06(b)
        (Post-Maturity
        Interest Rates; Default Interest Rates).

       

      "Deferred
        Approvals"
        has the
        meaning set forth in Section 5.03(a)
        (Governmental
        Approvals).

       

      "Deferred
        Contracts"
        has the
        meaning provided in Section
        5.11(b)(iii) (Contracts).

       

      "Delta-T"
        Delta-T
        Corporation, a Virginia corporation.

       

      "DG
        Offtake Agreements"
        means
        any agreement relating to the sale or Distillers Grains by any Borrower with
        a
        scheduled term in excess of one year and with payments thereunder expected
        to be
        in excess of three million Dollars ($3,000,000), including the Madera DG
        Agreement and each agreement between any Borrower and Pacific Ag Products
        relating to the sale or marketing of Distillers Grains.

       

      "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).

       

      "Distillers
        Grains"
        means
        DDG, WDG, and any other form of distillers grain products (including syrup)
        marketed by any Borrower from time to time.

       

      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

      

       

      "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(a)
        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
        Borrowers' Agent and the Administrative Agent.

       

      "Drawdown
        Schedule"
        means,
        with respect to each of the Construction Loans for the Madera Plant, the
        Construction Loans for the Boardman Plant, the Construction Loans for the
        Stockton Plant, the Construction Loans for the Brawley Plant, and the
        Construction Loans for the Burley Plant, the schedule set forth on Schedule 6.01(q),
        as the
        same may be amended from time to time with the approval of the Administrative
        Agent and the Independent Engineer.

       

      "Eligible
        Accounts"
        means,
        with respect to each Borrower, all Accounts of such Borrower that meet each
        of
        the following requirements:

       

      
        	 	
                (i)

              	
                it
                  arises from either (i) the delivery of Products or grain storage and
                  unloading services performed by such Borrower, which services have
                  been
                  fully performed and, if applicable, acknowledged and/or accepted
                  by the
                  Account Debtor with respect thereto or (ii) the sale or lease of
                  goods by such Borrower, and if it arises from the sale of goods,
                  such
                  goods have been shipped or delivered to the Account Debtor thereof;
                  

              


      

       

      
        	 	
                (ii)

              	
                it
                  is a valid, legally enforceable obligation of the Account Debtor
                  thereunder, and is not subject to any reserve, discount, credit,
                  allowance
                  (except any reserve, discount, credit or allowance that has been
                  deducted
                  in computing the net amount thereof), offset, counterclaim or other
                  defense on such Account Debtor's part or to any claim on such Account
                  Debtor's part denying liability thereunder in whole or in part;
                  

              


      

       

      
        	 	
                (iii)

              	
                it
                  is subject to a perfected Lien in the Collateral Agent's favor,
                  for the
                  benefit of the Senior Secured Parties, and is not subject to any
                  other
                  Lien, except for Permitted Liens; 

              


      

       

      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (iv)

              	
                it
                  is evidenced by an invoice (dated no later than the date of shipment
                  to
                  the Account Debtor or performance and having a due date not more
                  than
                  sixty (60) days after the date of such invoice) rendered to such
                  Account
                  Debtor, and is not evidenced by any instrument or chattel paper;
                  

              


      

       

      
        	 	
                (v)

              	
                it
                  is payable in Dollars; 

              


      

       

      
        	 	
                (vi)

              	
                it
                  is not owing by any Governmental Authority;


              


      

       

      
        	 	
                (vii)

              	
                it
                  is not owing by any Account Debtor residing, located or having
                  its
                  principal activities or place of business outside the United States,
                  unless the sale of goods giving rise to such Account is credit
                  enhanced by
                  means of a letter of credit, bankers' acceptance or other credit
                  support
                  that is satisfactory to the Administrative Agent and, if required
                  by the
                  Administrative Agent, has been delivered to the Administrative
                  Agent and
                  is directly drawable by the Administrative Agent;
                  

              


      

       

      
        	 	
                (viii)

              	
                it
                  is not owing by any Account Debtor involved in any Insolvency Proceeding
                  or with respect to which any Borrower has received notice of an
                  imminent
                  Insolvency Proceeding or a material impairment of the financial
                  condition
                  of such Account Debtor; 

              


      

       

      
        	 	
                (ix)

              	
                it
                  is not owing by any Affiliate of such Borrower, other than pursuant
                  to an
                  Affiliated Project Document;

              


      

       

      
        	 	
                (x)

              	
                it
                  is not unpaid more than sixty (60) days after the invoice date;
                  

              


      

       

      
        	 	
                (xi)

              	
                it
                  is not owing by an Account Debtor that has amounts outstanding
                  more than
                  sixty (60) days after the due date of any invoice;
                  

              


      

       

      
        	 	
                (xii)

              	
                it
                  is not an Account arising in a transaction where goods are sold
                  on
                  consignment or are sold pursuant to a sale on approval, a bill
                  and hold,
                  or any other terms by reason of which the payment by the Account
                  Debtor
                  may be conditional; and 

              


      

       

      
        
          
          

        

        
          24

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (xiii)

              	
                it
                  is not an Account as to which the Administrative Agent, at any
                  time or
                  times hereafter, determines, in its reasonable judgment and in
                  good faith,
                  that the prospect of payment or performance by the Account Debtor
                  thereof
                  is or will be impaired in any material
                  respect.

              


      

       

      An
        Account of such Borrower that is at any time an Eligible Account, but which
        subsequently fails to meet any of the foregoing requirements, shall immediately
        cease to be an Eligible Account; provided,
        that if
        such an ineligible Account subsequently meets all of the foregoing requirements,
        it shall again be deemed an Eligible Account. 

       

      "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 and, so long as no Default or Event of Default has
        occurred and is continuing (and any with respect only to Tranche A Lenders
        or
        Working Capital Lenders, in either such case following the occurrence of
        a
        Successful Syndication) the Borrower's Agent (each such approval not to be
        unreasonably withheld or delayed).

       

      "Eligible
        Inventory"
        means,
        with respect to each Borrower, the Inventory of such Borrower that meets
        each of
        the following requirements:

       

      
        	 	
                (i)

              	
                in
                  the case of Inventory consisting of corn or other grain feedstock,
                  or
                  denaturant, such corn, other grain feedstock or denaturant that
                  is readily
                  usable for the operation of the relevant Plant in the ordinary
                  course of
                  business; 

              


      

       

      
        	 	
                (ii)

              	
                in
                  the case of Inventory consisting of Products, such Products that
                  are
                  readily marketable by the relevant Plant in the ordinary course
                  of
                  business; 

              


      

       

      
        	 	
                (iii)

              	
                in
                  the case of goods held for sale, the value thereof is adjusted
                  to its
                  then-current market value; 

              


      

       

      
        	 	
                (iv)

              	
                it
                  is owned by the relevant Borrower and is subject to a perfected
                  Lien in
                  the Collateral Agent's favor, for the benefit of the Senior Secured
                  Parties, and is not subject to any other Lien, except for Permitted
                  Liens;
                  

              


      

       

      
        	 	
                (v)

              	
                it
                  is not consigned Inventory; 

              


      

       

      
        	 	
                (vi)

              	
                it
                  is located only at one of the Sites or at such other location as
                  is
                  approved in writing by the Administrative Agent;
                  and

              


      

       

      
        
          
          

        

        
          25

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (vii)

              	
                the
                  Administrative Agent, in its reasonable judgment and in good faith,
                  has
                  not determined that it is unacceptable or should be price-adjusted
                  in any
                  material respect due to age, type, quality, category and/or quantity.
                  

              


      

       

      Any
        of
        the Inventory of such Borrower that is at any time Eligible Inventory, but
        which
        subsequently fails to meet any of the foregoing requirements, shall immediately
        cease to be Eligible Inventory; provided,
        that if
        such ineligible Inventory subsequently meets all of the foregoing requirements,
        it shall again be deemed Eligible Inventory. 

       

      "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 of the Borrowers 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) on or prior to the Conversion Date, a material adverse effect on
        Pacific Holding or any other Borrower or Plant with respect to which a Funding
        has been made or is being requested, or (B) after the Conversion Date, 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.

       

      "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.

       

      
        
          
          

        

        
          26

          
            

          

        

        
          
          

        

      

       

      "Environmental
        Site Assessment Report"
        means,
        with respect to each Plant, a Phase I environmental site assessment report
        prepared by an environmental consulting firm reasonably acceptable to the
        Administrative Agent, which report shall comply with ASTM standard 1527-05
        (with
        such modifications thereto as may reasonably be requested by the Borrowers
        and
        are reasonably acceptable to the Administrative Agent), and a Phase II
        environmental site assessment reasonably acceptable to the Administrative
        Agent,
        addressing any recognized environmental conditions or other areas of concern
        identified in the relevant Phase I report if in the reasonable determination
        of
        the Administrative Agent, acting in consultation with the Independent Engineer,
        a Phase II assessment is warranted.

       

      "Equator
        Principles"
        means
        The Equator Principles - An Industry Framework for Financial Institutions
        to
        Manage Environmental and Social Issues in Project Financing (commonly referred
        to as "The Equator Principles").

       

      "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. 

       

      
        
          
          

        

        
          27

          
            

          

        

        
          
          

        

      

       

      "Escrow
        Account"
        has the
        meaning set forth in Section 8.01(a)
        (Establishment
        of Project Accounts).

       

      "Ethanol
        Market Consultant"
        means
        Muse, Stancil & Co., or any replacement ethanol market consultant appointed
        by the Administrative Agent and, so long as no Default or Event of Default
        has
        occurred and is continuing, reasonably acceptable to the Borrower's Agent
        (which
        acceptance shall not be unreasonably withheld or delayed).

       

      "Ethanol
        Offtake Agreements"
        means
        any agreement relating to the sale of ethanol by any Borrower with a scheduled
        term in excess of one year and with payments thereunder expected to be in
        excess
        of three million Dollars ($3,000,000), including each agreement between any
        Borrower and Kinergy relating to the sale or marketing of ethanol.

       

      "Eurodollar
        Loan"
        means
        any Loan bearing interest at a rate determined by reference to the Eurodollar
        Rate and the provisions of Article II
        (Commitments
        and Funding)
        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(a)
        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 Borrowers' 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.

       

      "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. 

       

      
        
          
          

        

        
          28

          
            

          

        

        
          
          

        

      

       

      "Event
        of Abandonment"
        means
        with respect to any Plant with respect to which any Funding has been made
        or is
        being requested, any of the following shall have occurred: (i) the
        abandonment by the applicable Borrower of the development, construction,
        operation or maintenance of any such Plant for a period of more than sixty
        (60) 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 any such Plant, other than
        as
        the result of a force majeure, Event of Taking or Casualty Event, for a period
        of more than sixty (60) consecutive days, or (iii) any written
        acknowledgement by any Borrower of a final decision to take any of the foregoing
        actions.

       

      "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 with respect
        to which any Funding has been made or is being requested, the Project, any
        Equity Interests of Pacific Holding or any Borrower that is the owner of
        a Plant
        with respect to which any Funding has been made or is being requested, or
        any
        other assets thereof.

       

      "Event
        of Total Loss"
        means
        the occurrence of a Casualty Event affecting all or substantially all of
        any
        Plant with respect to which any Funding has been made or is being requested,
        the
        Project or the assets of Pacific Holding or any Borrower that is the owner
        of a
        Plant with respect to which any Funding has been made or is being
        requested.

       

      "Excess
        Construction Loan Commitment"
        means,
        after the Commercial Operation Date for any Greenfield Plant, with respect
        to
        any such Greenfield Plant, the amount equal to (x) the Greenfield Plant 1
        Aggregate Construction Loan Commitment, the Greenfield Plant 2 Aggregate
        Construction Loan Commitment or the Greenfield Plant 3 Aggregate
        Construction Loan Commitment, as applicable, minus
        (y) the aggregate Construction Loans disbursed for such Greenfield Plant on
        or prior to such Commercial Operation Date and minus
        (z) the amount set forth in the Construction Budget for such Greenfield
        Plant to cover the required funding of fifty percent (50%) of the Debt Service
        Reserve Requirement on the Conversion Date.

       

      "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 of the Borrowers 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.

       

      
        
          
          

        

        
          29

          
            

          

        

        
          
          

        

      

       

      "Extraordinary
        Proceeds Account"
        has the
        meaning provided in Section 8.01(q)
        (Establishment
        of Project Accounts).

       

      "Extraordinary
        Proceeds Release Notice"
        means a
        certificate in substantially the form of Exhibit 8.15,
        duly
        executed by an Authorized Officer of the Borrowers' Agent.

       

      "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.

       

      "Fee
        Letters"
        means
        (i) that Fee Letter among the Administrative Agent, the Collateral Agent
        and the Borrowers, (ii) that Fee Letter among the Administrative Agent, the
        Accounts Bank and the Borrowers, and (iii) that Fee Letter among the
        Administrative Agent, WestLB and Mizuho Corporate Bank, Ltd., as lead arrangers
        and underwriters, and the Borrowers, each dated as of the date hereof, setting
        forth certain fees that will, from time to time, become due and payable with
        respect to the Loans and to the Agents.

       

      "Fees"
        means,
        collectively, each of the fees payable by the Borrowers for the account of
        any
        Lender or Agent pursuant to Section 3.13
        (Fees).

       

      
        
          
          

        

        
          30

          
            

          

        

        
          
          

        

      

       

      "Final
        Completion"
        means,
        with respect to each Plant, that each of the following conditions has been
        achieved as certified by the Borrowers' Agent and confirmed in writing by
        the
        Independent Engineer in a Final Completion Certificate completed to the
        reasonable satisfaction of the Administrative Agent:

       

      
        	 	
                (i)

              	
                the
                  Commercial Operation Date for such Plant shall have occurred;
                  

              


      

       

      
        	 	
                (ii)

              	
                the
                  Independent Engineer shall have confirmed that the final air emissions
                  test for such Plant has been satisfactorily
                  completed;

              


      

       

      
        	 	
                (iii)

              	
                insurance
                  required pursuant to Schedule 7.01(h)
                  and, with respect to the Borrowers, any Project Document shall
                  be in
                  place, as confirmed by the Insurance Consultant;
                  and

              


      

       

      
        	 	
                (iv)

              	
                all
                  construction costs for such Plant shall have been fully paid (other
                  than
                  amounts that are subject to a
                  Contest).

              


      

       

      "Final
        Completion Certificate"
        means a
        certificate of the Independent Engineer and the Borrowers' Agent, in
        substantially the form of Exhibit 7.01(y),
        confirming that Final Completion has occurred.

       

      "Final
        Completion Date"
        means,
        with respect to each Plant, the date on which such Plant has achieved Final
        Completion, as certified by the Borrowers' Agent and the Independent
        Engineer.

       

      "Final
        Maturity Date"
        means,
        with respect to the Term Loans the date that occurs eighty-four (84) months
        after the Conversion Date.

       

      "Financial
        Asset"
        has the
        meaning provided in Section 8.17(b) (Representations,
        Warranties and Covenants of the Accounts Bank).

       

      "Financial
        Model"
        means
        the pro forma financial statements and projections of revenue and expenses
        and
        cash flows with respect to the Borrowers and the Project for each of the
        calendar years 2007 through 2022, attached hereto as Exhibit 6.01(v),
        as the
        same may be updated by the Borrowers with the prior written approval of the
        Administrative Agent.

       

      "Financial
        Officer"
        means,
        with respect to any Person, the controller, treasurer or chief financial
        officer
        of such Person.

       

      
        
          
          

        

        
          31

          
            

          

        

        
          
          

        

      

       

      "Financing
        Documents"
        means:

       

      
        	 	
                (i)

              	
                this
                  Agreement;

              


      

       

      
        	 	
                (ii)

              	
                the
                  Notes;

              


      

       

      
        	 	
                (iii)

              	
                the
                  Sponsor Support Agreement;

              


      

       

      
        	 	
                (iv)

              	
                the
                  Security Documents;

              


      

       

      
        	 	
                (v)

              	
                the
                  Interest Rate Protection Agreement;

              


      

       

      
        	 	
                (vi)

              	
                the
                  Fee Letters;

              


      

       

      
        	 	
                (vii)

              	
                each
                  Blocked Account Agreement;

              


      

       

      
        	 	
                (viii)

              	
                the
                  other financing and security agreements, documents and instruments
                  delivered in connection with this Agreement;
                  and

              


      

       

      
        	 	
                (ix)

              	
                each
                  other document designated as a Financing Document by the Borrowers'
                  Agent
                  and the Administrative Agent.

              


      

       

      "First
        Escrow Release Date"
        means
        the date on which the first Funding of Tranche B Construction Loans is made
        from
        the Escrow Account.

       

      "Fiscal
        Quarter"
        means
        any quarter of a Fiscal Year.

       

      "Fiscal
        Year"
        means
        any period of twelve (12) consecutive calendar months ending on
        December 31.

       

      "Funding"
        means
        (a) with respect to the Tranche A Loans, the incurrence of each Tranche A
        Loan
        made by the Tranche A Lenders on a single date, (b) with respect to the Tranche
        B Loans, (i) the release to any Construction Account of Tranche B Construction
        Loan funds deposited into or standing to the credit of the Escrow Account
        on a
        single date and (ii) the incurrence of the Tranche B Term Loans on the
        Conversion Date, and (c) with respect to the Working Capital Loans, the
        incurrence of each Working Capital Loan made by the Working Capital Lenders
        on a
        single date, in each case, as the context may require. For the avoidance
        of
        doubt, this term Funding does not include the Tranche B Escrow Disbursement
        or any other disbursement of Tranche B Loans directly to the Escrow
        Account.

       

      
        
          
          

        

        
          32

          
            

          

        

        
          
          

        

      

       

      "Funding
        Date"
        means,
        with respect to each Funding, the date on which (a) with respect to the Tranche
        A Construction Loans, funds are disbursed by the Administrative Agent, on
        behalf
        of the Tranche A Lenders, to the Borrowers in accordance with Section 2.06
        (Funding
        of Loans),
        (b)
        with
        respect to the Tranche B Construction Loans, funds are released to the Borrowers
        from the Escrow Account, on behalf of the Tranche B Lenders, in accordance
        with
Section 2.06
        (Funding
        of Loans),
        (c)
        with
        respect to the Working Capital Loans, funds are disbursed by the Administrative
        Agent, on behalf of the Working Capital Lenders, to the Borrower in accordance
        with Section 2.06
        (Funding
        of Loans),
        and
        (d) with respect to the Term Loans, the Term Loans are disbursed in
        accordance with Section 2.06
        (Funding
        of Loans) in
        each
        case, as the context may require.

       

      "Funding
        Defaults"
        means,
        collectively, any Default related solely to Pacific Holding (and not, for
        the
        avoidance of doubt, in connection with any "Plant" or "Project" with respect
        to
        which no Funding has been made or is being requested) or related to any Borrower
        (or its Equity Interests or assets) or any Plant (or any Project Document
        or
        Project Party related to such Plant) with respect to which a Funding has
        been
        made or is being requested, and any Default pursuant to any of Sections 9.01(a)
        (Events
        of Default - Nonpayment),
        9.01(e)
        (Events
        of Default - Project Completion),
        9.01(h)
        (Events
        of Default - ERISA Events),
        9.01(i)
        (Events
        of Default - Bankruptcy - Insolvency)
        (other
        than with respect to Major Project Parties that are not parties to any Project
        Document to which Pacific Holding or any Borrower with respect to whose Plant
        a
        Funding has been made or is being requested (or otherwise related to any
        such
        Plant)), 9.01(l)
        (Events
        of Default - Unenforceability of Documentation)
        and
9.01(q)
        (Events
        of Default - Change of Control).

       

      "Funding
        Representation and Warranties"
        means,
        collectively, any representation and warranty (i) related solely to Pacific
        Holding (and not, for the avoidance of doubt, in connection with any "Plant"
        or
        "Project" with respect to which no Funding has been made or is being requested),
        (ii) related to any Borrower (or its equity interests or assets) or any
        Plant with respect to which a Funding, or any issuance of a Letter of Credit,
        is
        requested, and (iii) any representation and warranty made pursuant to any
        of Sections 5.01
        (Organization;
        Power and Compliance with Law),
        5.02
        (Due
        Authorization; Non-Contravention),
        5.04
        (Investment
        Company Act),
        5.05
        (Validity
        of Financing Documents),
        5.06
        (Financial
        Information),
        5.10
        (Sole
        Purpose Nature; Business),
        5.12
        (Collateral),
        5.14
        (Taxes),
        5.16
        (ERISA
        Plans),
        5.18(a)
        (No
        Defaults),
        5.20
        (Regulations
        T, U and X),
        5.21
        (Accuracy
        of Information),
        5.22
        (Indebtedness),
        5.23
        (Separateness),
        5.24
        (Required
        LLC Provisions),
        5.25
        (Subsidiaries),
        5.26
        (Foreign
        Assets Control Regulations, Etc),
        5.27
        (Employment
        Matters),
        5.28
        (Solvency),
        5.29
        (Legal
        Name and Place of Business),
        and
5.30
        (No
        Brokers).
        

       

      
        
          
          

        

        
          33

          
            

          

        

        
          
          

        

      

       

      "Funding
        Notice"
        means
        each request for Funding in the form of Exhibit 2.05-A
        or
Exhibit 2.05-B,
        as
        applicable, delivered in accordance with Section 2.05
        (Notice
        of Fundings).

       

      "GAAP"
        means
        generally accepted accounting principles in effect from time to time in the
        United States, applied on a consistent basis.

       

      "Governmental
        Approval"
        means
        any authorization, consent, approval, license, lease, ruling, permit,
        certification, exemption, filing for registration by or with any Governmental
        Authority.

       

      "Governmental
        Approvals Update Schedule"
        means a
        written notice delivered by the Borrowers' Agent to the Administrative Agent
        and
        the Independent Engineer, and accepted and agreed to in writing by the
        Administrative Agent and the Independent Engineer, setting forth all Necessary
        Project Approvals applicable to
        the
        Borrower or the Plant identified therein. Each Governmental Approvals Update
        Schedule may include a Part A (for current approvals), a Part B (for deferred
        approvals) and a Part C (for exceptions).

       

      "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 one year and with payments thereunder expected
        to be
        in excess of two million Dollars ($2,000,000), including the Corn Procurement
        and Handling Agreement between Pacific Holding and Pacific Ag Products, dated
        on
        or about the date hereof.

       

      "Granting
        Lender"
        has the
        meaning provided in Section 11.03(h)
        (Assignments).

       

      "Greenfield
        Plants"
        means,
        collectively, the Stockton Plant, the Brawley Plant and the Burley Plant
        (or, if
        approved by the Lenders in accordance with the terms hereof, any Substitute
        Facility).

       

      "Greenfield
        Plant 1"
        means
        the first Greenfield Plant with respect to which a Construction Loan Funding
        is
        made.

       

      "Greenfield
        Plant 1 Aggregate Construction Loan Commitment"
        means
        sixty-nine million two hundred thirty thousand seven hundred sixty-nine Dollars
        ($69,230,769.00), as the same may be reduced in accordance with Section 2.08
        (Termination
        or Reduction of Commitments).

       

      
        
          
          

        

        
          34

          
            

          

        

        
          
          

        

      

       

      "Greenfield
        Plant 1 Construction Loans"
        means,
        together, the Greenfield Plant 1 Tranche A Construction Loans and the
        Greenfield Plant 1 Tranche B Construction Loans.

       

      "Greenfield
        Plant 1 Tranche A Construction Loan"
        has the
        meaning provided in Section 2.01(d)
        (Construction
        Loans).

       

      "Greenfield
        Plant 1 Tranche B Construction Loan"
        has the
        meaning provided in Section 2.01(d)
        (Construction
        Loans).

       

      "Greenfield
        Plant 2"
        means
        the second Greenfield Plant with respect to which a Construction Loan Funding
        is
        made.

       

      "Greenfield
        Plant 2 Aggregate Construction Loan Commitment"
        means
        sixty-nine million two hundred thirty thousand seven hundred sixty-nine Dollars
        ($69,230,769.00), as the same may be reduced in accordance with Section 2.08
        (Termination
        or Reduction of Commitments).

       

      "Greenfield
        Plant 2 Construction Loan"
        has the
        meaning provided in Section 2.01(e)
        (Construction
        Loans).

       

      "Greenfield
        Plant 3"
        means
        the third Greenfield Plant with respect to which a Construction Loan Funding
        is
        made.

       

      "Greenfield
        Plant 3 Aggregate Construction Loan Commitment"
        means
        sixty-nine million two hundred thirty thousand seven hundred sixty-nine Dollars
        ($69,230,769.00), as the same may be reduced in accordance with Section 2.08
        (Termination
        or Reduction of Commitments).

       

      "Greenfield
        Plant 3 Construction Loan"
        has the
        meaning provided in Section 2.01(f)
        (Construction
        Loans).

       

      "Greenfield
        Plant Top-Up Funding"
        means,
        with respect to any Greenfield Plant that has achieved its Commercial Operation
        Date, a single Construction Loan Funding for such Greenfield Plant in an
        aggregate amount not to exceed the Excess Construction Loan Commitment for
        such
        Plant. 

       

      
        
          
          

        

        
          35

          
            

          

        

        
          
          

        

      

       

      "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).

       

      "Historical
        Debt Service Coverage Ratio"
        means,
        as of any Quarterly Payment Date, for the four (4) Fiscal Quarters
        immediately preceding (and not including the then-current Fiscal Quarter)
        such
        Quarterly Payment Date (or, if less than four (4) Fiscal Quarters have
        elapsed since the Conversion Date, for such number of full Fiscal Quarters
        that
        has elapsed since the Conversion Date), the ratio of (i) Cash Flow
        Available for Debt Service during such period to (ii) Debt Service during
        such period.

       

      "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);

       

      (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);

       

      
        
          
          

        

        
          36

          
            

          

        

        
          
          

        

      

       

      (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).

       

      "Independent
        Engineer"
        means
        Luminate, LLC, or any replacement independent engineer appointed by the
        Administrative Agent and, so long as no Default or Event of Default has occurred
        and is continuing, reasonably acceptable to the Borrower's Agent (which
        acceptance shall not be unreasonably withheld or delayed).

       

      "Independent
        Engineer's Certificate"
        means a
        certificate of the Independent Engineer in substantially the form of
Exhibit 6.05(c).

       

       

      
        
          
          

        

        
          37

          
            

          

        

        
          
          

        

      

    

     

     

    
      
        "Independent
          Manager"
          or
          "Independent
          Member"
          means a
          Person, who is not at the time of initial appointment as the Independent
          Manager
          or Independent Member or at any time while serving as the Independent Manager
          or
          Independent Member and has not been at any time during the five (5) years
          preceding such initial appointment: 

         

        
          	 	
                  (i)

                	
                  a
                    direct or indirect owner of any Equity Interest in, member (with
                    the
                    exception of serving as the Independent Member), officer, employee,
                    partner, director, manager (with the exception of serving as
                    the
                    Independent Manager) or contractor, bankruptcy trustee, attorney
                    or
                    counsel of any member of any Borrower, any Borrower or any Affiliate
                    of
                    any of them;

                


        

         

        
          	 	
                  (ii)

                	
                  a
                    creditor, customer, supplier, or other person (including each
                    Project
                    Party) who derives any of its purchases or revenues from its
                    activities
                    with any Borrower, any member of any Borrower or any Affiliate
                    of any of
                    them;

                


        

         

        
          	 	
                  (iii)

                	
                  a
                    Person controlling or under common control with any Borrower,
                    any member
                    of any Borrower or any Affiliate of any of them or any Person
                    excluded
                    from serving as Independent Manager or Independent Member under
                    clause (i) or (ii) of this
                    definition;

                


        

         

        
          	 	
                  (iv)

                	
                  a
                    member of the immediate family by blood or marriage of any Person
                    excluded
                    from being an Independent Manager or Independent Member under
                    clause (i) or (ii) of this definition;
                    or

                


        

         

        
          	 	
                  (v)

                	
                  a
                    Person who received, or a member or employee of a firm or business
                    that
                    received, fees or other income from any Borrower or any Affiliate
                    thereof
                    in the aggregate in excess of five percent (5%) of the gross income,
                    for any applicable year, of such
                    Person.

                


        

         

        "Information"
          has the
          meaning provided in Section 11.18
          (Treatment
          of Certain Information; Confidentiality).

         

        "Initial
          Quarterly Payment Date"
          means
          the first Quarterly Payment Date following the Conversion Date.

         

      

      
        
          
          

        

        
          38

          
            

          

        

        
          
          

        

      

    

     

    

      "In-Progress
        Plant 1"
        means
        the first In-Progress Plant with respect to which a Construction Loan Funding
        is
        made.

       

      "In-Progress
        Plant 1 Aggregate Construction Loan Commitment"
        means
        forty-six million one hundred fifty-three thousand eight hundred forty-six
        Dollars ($46,153,846.00), as the same may be reduced in accordance with
Section 2.08
        (Termination
        or Reduction of Commitments).

       

      "In-Progress
        Plant 1 Construction Loan"
        has the
        meaning provided in Section 2.01(b)
        (Construction
        Loans).

       

      "In-Progress
        Plant 2"
        means
        the second In-Progress Plant with respect to which a Construction Loan Funding
        is made.

       

      "In-Progress
        Plant 2 Aggregate Construction Loan Commitment"
        means
        forty-six million one hundred fifty-three thousand eight hundred forty-six
        Dollars ($46,153,846.00), as the same may be reduced in accordance with
Section 2.08
        (Termination
        or Reduction of Commitments).

       

      "In-Progress
        Plant 2 Construction Loans"
        means,
        together, the In-Progress Plant 2 Tranche A Construction Loans and the
        In-Progress Plant 2 Tranche B Construction Loans.

       

      "In-Progress
        Plant 2 Tranche A Construction Loan"
        has the
        meaning provided in Section 2.01(c)
        (Construction
        Loans).

       

      "In-Progress
        Plant 2 Tranche B Construction Loan"
        has the
        meaning provided in Section 2.01(c)
        (Construction
        Loans).

       

      "In-Progress
        Plants"
        means,
        collectively, the Madera Plant and the Boardman Plant.

       

      "Insolvency
        Proceeding"
        has the
        meaning provided in the Intercreditor Agreement.

       

      "Insurance
        Consultant"
        means
        Moore-McNeil, LLC, or any replacement insurance consultant appointed by the
        Administrative Agent and, so long as no Default or Event of Default has occurred
        and is continuing, reasonably acceptable to the Borrower's Agent (which
        acceptance shall not be unreasonably withheld or delayed).

       

      "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
        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).

       

      
        
          
          

        

        
          39

          
            

          

        

        
          
          

        

      

       

      "Insurance
        and Casualty Proceeds Accounts"
        means,
        collectively, the Madera Insurance and Casualty Proceeds Account, the Boardman
        Insurance and Casualty Proceeds Account, the Stockton Insurance and Casualty
        Proceeds Account, the Brawley Insurance and Casualty Proceeds Account, and
        the
        Burley Insurance and Casualty Proceeds Account.

       

      "Insurance
        and Condemnation Proceeds Request Certificate"
        means a
        certificate, in substantially the form of Exhibit 8.14,
        executed by an Authorized Officer of the Borrowers' Agent and setting forth
        proposed instructions for the transfer or withdrawal of Insurance Proceeds
        or
        Condemnation Proceeds, as the case may be, from an Insurance and Condemnation
        Proceeds Account.

       

      "Interest
        Payment Date"
        means,
        with respect to any Loan without duplication, the last day of each Interest
        Period applicable to each Funding of which such Loan is a part.

       

      "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 2.06
        (Funding
        of Loans) or
        the
        date on which each successive interest period for each such Eurodollar Loan
        is
        determined pursuant to Section 3.05
        (Interest
        Rates)
        and
        ending on (and including) the day that numerically corresponds to such date
        one
        (1), two (2), three (3)  or six (6) months thereafter, in either case as
        the Borrowers may select in the relevant Funding Notice or Interest Period
        Notice; 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) the Borrowers may not select any
        Interest Period that ends after any Quarterly Payment Date unless, after
        giving
        effect to such selection, the aggregate outstanding principal amount of
        Eurodollar Loans having Interest Periods which end on or prior to such Quarterly
        Payment Date shall be at least equal to the aggregate principal amount of
        Eurodollar Loans due and payable on or prior to such Quarterly 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 3.05,
        executed by an Authorized Officer of the Borrowers' Agent.

       

    

    
      
        
        

      

      
        40

        
          

        

      

      
        
        

      

    

     

    

      "Interest
        Rate Protection Agreement"
        means
        each interest rate swap, collar, put, or cap, or other interest rate protection
        arrangement, with a Qualified Counterparty, in each such case that is reasonably
        satisfactory to the Administrative Agent and is entered into in accordance
        with
Section 7.01(u)
        (Affirmative
        Covenants - Interest Rate Protection Agreement).

       

      "Interest
        Rate Protection Provider"
        means a
        Qualified Counterparty that is party to an Interest Rate Protection
        Agreement.

       

      "Inventory"
        means
        "inventory", as that term is defined in the UCC, now or hereafter owned by
        any
        Borrower, including all products, goods, materials and supplies produced,
        purchased or acquired by the such Borrower for the purpose of sale or use
        in
        such Borrower's operations in the ordinary course of business. 

       

      "Issuance
        Request"
        means
        has the meaning provided in Section
        2.04(b) (Letters
        of Credit).

       

      "Issuing
        Bank"
        means
        WestLB.

       

      "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.

       

      "LC
        Cap"
        means,
        with respect to each Plant, two million Dollars ($2,000,000).

       

      "Lead
        Arrangers"
        means,
        collectively, WestLB in its capacity as sole lead bookrunner and lead arranger,
        Mizuho Corporate Bank, Ltd. in its capacity as co-syndication agent and lead
        arranger, CIT Capital USA Inc., in its capacity as co-syndication agent and
        lead
        arranger, Cooperatieve Centrale Raiffeisen-Boerenleenbank BA., "Rabobank
        Nederland", New York Branch, in its capacity as co-documentation agent and
        lead
        arranger, and Banco Santander Central Hispano S.A, New York Branch, in its
        capacity as co-documentation agent and lead arranger.

       

    

    
      
        
        

      

      
        41

        
          

        

      

      
        
        

      

    

     

    

      "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).

       

      "Letter
        of Credit"
        means
        each letter of credit issued by the Issuing Bank pursuant to Section 2.04
        (Letters
        of Credit).

       

      "Letter
        of Credit Availability Fee"
        has the
        meaning provided in Section 3.13(b)
        (Fees).

       

      "Letter
        of Credit Fronting Fee"
        has the
        meaning provided in Section 3.13(b)
        (Fees).

       

      "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.

       

      
        
          
          

        

        
          42

          
            

          

        

        
          
          

        

      

       

      

        "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.

        


        "Line
          Item" means a line item of cost or expense set forth in any Construction
          Budget.

        

          "Loan
            Parties"
            means,
            collectively, each Borrower, Pledgor, Pacific Ethanol (until the termination
            of
            the Sponsor Support Agreement), and each and any Affiliates thereof that
            are
            party to any Financing Document.

           

          "Loans"
            means,
            collectively, the Construction Loans, the Term Loans and the Working
            Capital
            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, in form and substance
            reasonably satisfactory to the Lenders and the Collateral Agent, 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.

           

          "Madera
            DG Agreement"
            the WDG
            Marketing and Services Agreement, dated March 4, 2005, among Madera,
            Phoenix Bio
            Industries and Western Milling, LLC.

           

          "Madera
            Insurance and Condemnation Proceeds Account"
            has the
            meaning provided in Section 8.01(l)
            (Establishment
            of Project Accounts).

           

          "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.

           

          
            
              
              

            

            
              43

              
                

              

            

            
              
              

            

          

           

          "Madera
            Pledge Agreement"
            means
            the Pledge and Security Agreement, in form and substance reasonably satisfactory
            to the Lenders and the Collateral Agent, dated on or about the date hereof,
            among, Pacific Holding, Madera and the Collateral Agent, pursuant to
            which
            Pacific Holding pledges one hundred percent (100%) of the Equity Interests
            in Madera to the Collateral Agent.

           

          "Madera
            Security Agreement"
            means
            the Assignment and Security Agreement, in form and substance reasonably
            satisfactory to the Lenders and the Collateral Agent, dated on or about
            the date
            hereof, made by Madera in favor of the Collateral Agent.

           

          "Madera
            Warranty Account"
            has the
            meaning provided in Section 8.01(r)
            (Establishment
            of Project Accounts).

           

          "Maintenance
            Capital Expense Account"
            has the
            meaning set forth in Section 8.01(h)
            (Establishment
            of Project Accounts).

           

          "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,
            with respect to any Plant with respect to which a Funding has been made
            or is
            being requested, each of Parsons (until the Conversion Date), the Construction
            Manager (until the Conversion Date), Delta-T, each Offtaker, each Corn
            Supplier,
            the Operator, the landlord under each Lease, the guarantor under any
            Project
            Document Guarantee 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 Borrowers' Agent.

           

          "Mandatory
            Prepayment"
            means a
            prepayment in accordance with Section 3.10
            (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 on (i) the business, assets,
            property, condition (financial or otherwise), or construction or operations
            (as
            applicable) of the Borrowers or the Project, taken as a whole, (ii) the
            ability of Pacific Holding or any Borrower that is the owner of a Plant
            with
            respect to which any Funding has been made or is being requested, or
            any other
            Loan Party or any Project Party to perform its material obligations under
            any
            Transaction Document (other than Project Documents relating to Plants
            with
            respect to which no Funding has been made and no Funding is being requested)
            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 pursuant to the Security Documents or (iv) the rights or
            remedies of any Senior Secured Party under any Financing Document. For
            the
            avoidance of doubt, any reference to a Material Adverse Effect with respect
            to a
            Borrower or a Plant shall, with respect to clause (i) or (ii) of this
            definition, as the case may be, be deemed to refer to such Borrower or
            Plant on
            an individual basis (and not to the Borrowers or the Project, taken as
            a whole
            or to any other Borrower or Plant on an individual basis).

           

          
            
              
              

            

            
              44

              
                

              

            

            
              
              

            

          

           

          "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,
            as the context may require, (a) with respect to the Construction Loans, the
            Construction Loan Maturity Date, (b) with respect to the Term Loans, the
            Final Maturity Date, and (c) with respect to the Working Capital Loans,
            the
            Working Capital Maturity Date.

           

          "Maximum
            Available Amount"
            means,
            with respect to any Letter of Credit at any time, the maximum amount
            the
            beneficiary of such Letter of Credit may draw thereunder at such time,
            as such
            amount may be reduced from time to time pursuant to the terms of such
            Letter of
            Credit.

           

          "Maximum
            Rate"
            has the
            meaning provided in Section 11.10
            (Interest
            Rate Limitation).

           

          "Minimum
            Performance Criteria"
            means,
            with respect to each Plant, that such Plant achieved the following performance
            levels (as demonstrated in a Performance Test, completed in accordance
            with the
            Approved Performance Test Protocols, while meeting the permitted air
            emissions
            requirements as specified in the Approved Performance Test Protocols):
            

           

          (a)
            denatured fuel ethanol production rate of (i) in the case of each of
            the Madera
            Plant and the Boardman Plant, at least 35 million gallons per year and
            (ii) in
            the case of each Greenfield Plant, at least 50 million gallons per year,
            in each
            case based on 351 days of operation per year and on ethanol quality
            specifications set forth in the Approved Performance Test Protocols;
            

           

          
            
              
              

            

            
              45

              
                

              

            

            
              
              

            

          

           

          (b)
            undenatured fuel ethanol yield, process electrical consumption rate and
            process
            natural gas consumption rate that would result in an aggregate reduction
            (if
            any) of the Term Loan Commitment for such Plant pursuant to Section
            2.08(e) (Termination
            or Reduction of Commitments)
            solely
            due to such performance levels of not more than (i) in the case of the
            Madera
            Plant, three million seven hundred fourteen thousand two hundred ninety-eight
            Dollars ($3,714,298), (ii) in the case of the Boardman Plant, three million
            seven hundred seventy-nine thousand twenty-six Dollars ($3,779,026),
            (iii) in
            the case of the Stockton Plant, six million six hundred sixty-eight thousand
            six
            hundred eight Dollars ($6,668,608), (iv) in the case of the Brawley Plant,
            six
            million six hundred eighty-eight thousand eight hundred ninety-nine Dollars
            ($6,688,899) and (v) in the case of the Burley Plant, five million six
            hundred
            thirty-two thousand seven hundred twenty-nine Dollars ($5,632,729).

           

          "Monthly
            Date"
            means
            the last Business Day of each calendar month.

           

          "Monthly
            Progress Report"
            means,
            with respect to each Plant, a monthly report for such Plant in substantially
            the
            form of Exhibit
            7.03(g).

           

          "Moody's"
            means
            Moody's Investors Service Inc., and any successor thereto that is a nationally
            recognized rating agency.

           

          "Mortgaged
            Property"
            means all real property right, title and interest of each Borrower that
            is
            subject to the relevant 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 (when entered into), the Brawley Deed of Trust (when entered
            into), and the Burley Deed of Trust (when entered into).

           

          "Multiemployer
            Plan"
            means a
            Plan that is a "multiemployer plan" as defined in Section 4001(a)(3) of
            ERISA.

           

          "Necessary
            Project Approvals"
            has the
            meaning set forth in Section 5.03(a)
            (Governmental
            Approvals).

           

          "Net
            Swap Payment"
            means,
            with respect to any Interest Rate Protection Agreement and for any period,
            all
            scheduled Obligations due and payable by any Borrower under such Interest
            Rate
            Protection Agreement during such period, after giving effect to any netting
            applicable thereto.

           

          "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.

           

        

        
          
            
            

          

          
            46

            
              

            

          

          
            
            

          

        

      

    


    "Non-Voting
      Lender"
      means
      any Lender who (a) is also a Loan Party, a Project Party or any Affiliate
      or Subsidiary thereof or (b) 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).

     

    "Notes"
      means
      the Construction Notes, the Term Notes and the Working Capital 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 2.07,
      as they
      may be amended, restated, supplemented or otherwise modified from time to
      time.

     

    "Notice
      of Suspension"
      has the
      meaning provided in Section 8.26
      (Notices
      of Suspension of Accounts).

     

    "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, 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 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
      Account"
      has the
      meaning provided in Section 8.01(g)
      (Establishment
      of Project Accounts).

     

    "Operating
      Account Withdrawal Certificate"
      means a
      certificate in substantially the form of Exhibit 8.09,
      duly
      executed by an Authorized Officer of the Borrowers' Agent, directing the
      transfer or withdrawal of funds from the Operating Account.

     

    
      
        
        

      

      
        47

        
          

        

      

      
        
        

      

    

     

    

      "Operating
        Budget"
        has the
        meaning set forth in Section 7.01(j)
        (Affirmative
        Covenants - Operating Budgets).
        

       

      "Operating
        Budget Category"
        means,
        at any time with respect to each Operating Budget, each line item set forth
        in
        such Operating Budget in effect at such time.

       

      "Operating
        Statement"
        means
        an operating statement with respect to each Plant that has achieved its
        Commercial Operation Date, in substantially the form of Exhibit 7.03(p).

       

      "Operation
        and Maintenance Expenses"
        means
        (with respect to each Plant that has achieved its Commercial Operation Date),
        for any period on or after the Commercial Operation Date for each such Plant,
        the sum without duplication of all (i) reasonable and necessary expenses of
        administering, managing and operating, and generating Products for sale from,
        the Project and maintaining it in good repair and operating condition,
        (ii)  costs associated with the supply and transportation of all corn,
        natural gas, electricity and other supplies and raw materials to the Project
        and
        distribution and sale of Products from the Project that any Borrower is
        obligated to pay, (iii) all reasonable and necessary insurance costs (other
        than insurance premiums that are paid as Project Costs), (iv) property,
        sales and franchise taxes to the extent that any Borrower is liable to pay
        such
        taxes to the taxing authority (other than taxes imposed on or measured by
        income
        or receipts) to which the Project, may be subject (or payment in lieu of
        such
        taxes to which the Project may be subject), (v) reasonable and necessary
        costs and fees incurred in connection with obtaining and maintaining in effect
        Necessary Project Approvals for each Plant on or after the Commercial Operation
        Date for such Plant, (vi) reasonable and arm's-length legal, accounting and
        other professional fees attendant to any of the foregoing items during such
        period, (vii) the reasonable costs of administration and enforcement of the
        Transaction Documents, (viii) costs incurred pursuant to the Permitted
        Commodity Hedging Arrangements, and (ix) all other costs and expenses
        included in the then-current Operating Budget for such Plant. In no event
        shall
        Project Costs or Maintenance Capital Expenses be considered Operation and
        Maintenance Expenses.

       

      "Operator"
        means
        the Pledgor or any successor pursuant to an O&M Agreement (or any
        replacement thereof).

       

      "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.

       

    

    
      
        
        

      

      
        48

        
          

        

      

      
        
        

      

    

     

    

      "Pacific
        Ag Products"
        means
        Pacific Ag Products LLC, a California limited liability company.

       

      "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, in form and substance reasonably satisfactory
        to the Lenders and the Collateral Agent, dated on or about the date hereof,
        among Pacific Holding, Pledgor and the Collateral Agent, pursuant to which
        Pledgor pledges one hundred percent (100%) of the Equity Interests in Pacific
        Holding to the Collateral Agent.

       

      "Pacific
        Holding Security Agreement"
        means
        the Assignment and Security Agreement, in form and substance reasonably
        satisfactory to the Lenders and the Collateral Agent, dated on or about the
        date
        hereof, made by Pacific Holding in favor of the Collateral Agent.

       

      "Parsons"
        means
        Parsons RCIE Inc., a corporation organized under the laws of the State of
        Washington.

       

      "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.

       

      "Payment
        Bond"
        means
        any payment bond provided for the benefit of any Borrower under any Construction
        Contract.

       

      "PBGC"
        means
        the Pension Benefit Guaranty Corporation and any entity succeeding to any
        or all
        of its functions under ERISA.

       

      "Performance
        Bond"
        means
        any performance bond provided for the benefit of any Borrower under any
        Construction Contract.

       

      
        
          
          

        

        
          49

          
            

          

        

        
          
          

        

      

       

      "Performance
        Guarantee"
        means
        the guaranteed performance levels set forth on Schedule 7.01(k)-A.

       

      "Performance
        Test"
        means,
        with respect to each Plant, any performance test conducted by the Borrowers
        to
        determine satisfaction of the Minimum Performance Criteria and the Performance
        Guarantees.

       

      "Performance
        Test Report"
        has the
        meaning provided in Section 7.01(k)
        (Affirmative
        Covenants - Performance Tests).

       

      "Permitted
        Commodity Hedging Arrangements"
        means
        those Commodity Hedging Arrangements entered into by the Borrowers in accordance
        with Section 7.02(u)
        (Negative
        Covenants - Commodity Hedging Arrangements).

       

      "Permitted
        Indebtedness"
        means
        Indebtedness identified in Section 7.02(a)
        (Negative
        Covenants - Restrictions on Indebtedness of the Borrowers).

       

      "Permitted
        Liens"
        means
        Liens identified in Section 7.02(b)
        (Negative
        Covenants - Liens).

       

      "Permitted
        Operating Budget Deviation Levels"
        means,
        with respect to Operation and Maintenance Expenses (other than Operation
        and
        Maintenance Expenses for the cost of corn, natural gas, electricity, insurance
        premiums and Borrower Taxes) and with respect to Maintenance Capital Expenses,
        (a) (i) with respect to each Plant, fifteen percent (15%) of the
        amount projected for such expenses in the then-current Operating Budget for
        such
        Plant and (ii) for the Project, ten percent (10%) the amount projected for
        such expenses in the then-current Operating Budget for the Project; provided,
        that in
        the case of this clause (a),
        Operating Budget line items for annual expenses that are paid periodically
        (for
        example, insurance premiums) shall be treated on an annualized basis for
        the
        purposes of determining the amount of such permitted deviation);
        (b) increased costs that are paid for with documented voluntary equity
        contributions made to the Borrowers for the purpose of paying such increased
        costs, which may be paid without regard to any other restrictions in this
        definition of Permitted Operating Budget Deviation Levels; and (c) in the
        event that ethanol production levels for any Fiscal Quarter for any Plant
        or the
        Project, as reported in an Operating Statement delivered pursuant to
Section 7.03(p)
        (Reporting
        Requirements - Operating Statements),
        exceed
        the amounts projected in the then-current Operating Budgets for such Plant
        or
        the Project, as the case may be, for such Fiscal Quarter, by a variation
        greater
        than three percent (3%), then the permitted deviations for the immediately
        succeeding Fiscal Quarter shall be increased or decreased, as the case may
        be,
        in a percentage equal to the percentage increase in such ethanol production
        levels.

       

      
        
          
          

        

        
          50

          
            

          

        

        
          
          

        

      

       

      "Permitted
        Tax Distribution"
        means,
        with respect to any distributee that is required to pay tax as a result of
        its
        direct or indirect ownership of the Borrowers, an amount equal to (a) the
        Effective Tax Rate at such time multiplied by (b) such distributee's estimated
        share of the taxable income of Pacific Holding and the other Borrowers (after
        netting or otherwise taking account of a distributee's shares of the income,
        loss, deduction and credit associated with the distributee's interest in
        the
        Borrowers) that the distributee is reasonably expected to have to report
        for
        income tax purposes for the Fiscal Quarter distributed to the extent necessary
        to fund a distributee's timely payment to a Governmental Authority of tax
        liability (including estimated payments thereof) and subject to correction
        as
        described below. "Effective
        Tax Rate"
        means,
        as of any date of calculation, a percentage equal to the sum of (x) such
        distributee's then-current federal marginal income tax rate plus (y) such
        distributee's then-current applicable state marginal income tax rate, but
        only
        to the extent of the blended rate that would have applied to such income
        if each
        state in which a Borrower was located had imposed its income tax on the taxable
        earnings of that Borrower. Permitted Tax Distributions as estimated for purposes
        of a Quarterly Payment Date shall be subject to later correction to reflect
        amounts as actually reported on an income tax return by a distributee for
        federal and state income tax purposes. Thus, on any Quarterly Payment Date,
        the
        Permitted Tax Distribution means the amount calculated as the product of
        (a) and
        (b), above, adjusted by the difference, if any, between the Permitted Tax
        Distribution for the preceding Quarterly Payment Date as estimated for such
        date
        and the Permitted Tax Distribution for that preceding Quarterly Payment Date
        as
        finally determined. 

       

      "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.

       

      "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 and the Greenfield
        Plants.

       

      "Pledge
        Agreements"
        means,
        collectively, the Madera Pledge Agreement, the Boardman Pledge Agreement,
        the
        Stockton Pledge Agreement (when entered into), the Brawley Pledge Agreement
        (when entered into), the Burley Pledge Agreement (when entered into) and
        the
        Pacific Holding Pledge Agreement.

       

      "Pledgor"
        means
        Pacific Ethanol California, Inc. a California corporation.

       

      
        
          
          

        

        
          51

          
            

          

        

        
          
          

        

      

       

      "Prepayment
        Holding Account"
        has the
        meaning set forth in Section 8.01(k)
        (Establishment
        of Project Accounts).

       

      "Primary
        Swap Obligations"
        means,
        with respect to any Interest Rate Protection Agreement, all scheduled
        obligations due and payable by any Person party to such Interest Rate Protection
        Agreement (after giving effect to any netting applicable thereto) and all
        payments of Swap Termination Value due and payable by any Person party to
        such
        Interest Rate Protection Agreement, but excluding any amounts owed in respect
        of
        Taxes, expenses and indemnification obligation which do not constitute payments
        of Swap Termination Value.

       

      "Priority
        Subordinated Loans"
        means
        Subordinated Loans up to an initial aggregate principal amount of fifty million
        Dollars ($50,000,000).

       

      "Process
        Agent"
        means
        any Person appointed as agent by any Borrower or any Project Party, as required
        under the Financing Documents, to receive on behalf of itself and its property
        services of copies of summons and complaint or any other process which may
        be
        served in connection with any action or proceeding before any court arising
        out
        of or relating to this Agreement or any other Financing Document to which
        it is
        a party, including CT Corporation System.

       

      "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,
        at all times, each Plant with respect to which a Funding has been made or
        is
        being requested 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"
        means
        the Escrow Account, the Construction Accounts, Revenue Account, Operating
        Account, Prepayment Holding Account, Working Capital Reserve Account,
        Maintenance Capital Expense Account, Debt Service Reserve Account, Insurance
        and
        Condemnation Proceeds Accounts, Extraordinary Proceeds Account, and Warranty
        Accounts, including any sub-account within such accounts.

       

      "Project
        Company Subordinated Debt"
        means
        unsecured subordinated Indebtedness incurred or to be incurred by any of
        the
        Borrowers on terms and conditions satisfactory to the Administrative Agent
        in
        its sole discretion, or otherwise reasonably satisfactory to the Required
        Lenders, and in any such case subject to the maximum amount set forth in
        Section 7.02(a)(vii)
        (Negative
        Covenants - Restrictions on Indebtedness of the Borrowers).

       

      
        
          
          

        

        
          52

          
            

          

        

        
          
          

        

      

       

      "Project
        Completion Deficiency"
        has the
        meaning provided in the Sponsor Support Agreement.

       

      "Project
        Costs"
        means,
        collectively, the Stockton Project Costs, the Brawley Project Costs, and
        the
        Burley Project Costs. 

       

      "Project
        Document Approval Level"
        means
        (i) in the case of any Project Document entered into on or before the
        Closing Date and delivered pursuant to Section 6.01(b)(i)
        (Conditions
        to Closing - Delivery of Project Documents)
        and any
        other Project Document entered into after the Closing Date in the form of
        a
        comparable existing Project Document (in each such case together with any
        amendment or modification thereto that is in the form of a comparable existing
        Project Document), such Project Document, amendment or modification (and,
        in any
        event, any immaterial amendment or modification to any Project Document)
        shall
        be deemed to be approved, (ii) in the case of any Project Document or
        amendment or modification thereto entered into after the Closing Date that
        deviates from the form of a comparable existing Project Document, any material
        deviations (or, if no such comparable Project Document exists, the agreement
        itself) will require the approval of the Administrative Agent (in consultation
        with the Independent Engineer) and (iii) in the case of any Project
        Document entered into after the Closing Date with a counterparty other than
        an
        existing Project Party on the Closing Date, such counterparty shall (A) be
        subject to the approval requirements of Schedule 6.02(e)(i)
        or
        (B) otherwise be approved by the Required Lenders.

       

      "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
        Documents"
        means:

       

      
        	 	
                (i)

              	
                the
                  Construction Contracts;

              


      

       

      
        	 	
                (ii)

              	
                the
                  Leases;

              


      

       

      
        	 	
                (iii)

              	
                the
                  Grain Supply Agreements;

              


      

       

      
        
          
          

        

        
          53

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (iv)

              	
                the
                  Ethanol Offtake Agreements;

              


      

       

      
        	 	
                (v)

              	
                the
                  DG Offtake Agreements;

              


      

       

      
        	 	
                (vi)

              	
                the
                  O&M Agreements;

              


      

       

      
        	 	
                (vii)

              	
                the
                  Borrower LLC Agreements;

              


      

       

      
        	 	
                (viii)

              	
                the
                  Project Document Guarantees;

              


      

       

      
        	 	
                (ix)

              	
                any
                  other documents designated as a Project Document by the Borrowers'
                  Agent
                  and the Administrative Agent;

              


      

       

      
        	 	
                (x)

              	
                each
                  Additional Project Document; and

              


      

       

      
        	 	
                (xi)

              	
                any
                  replacement agreement for any of such
                  agreements.

              


      

       

      "Project
        Document Termination Payments"
        means
        all 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.

       

      "Project
        Party"
        means
        each Person (other than the Borrowers) who is a party to a Project
        Document.

       

      "Prospective
        Debt Service Coverage Ratio"
        means,
        for any Quarterly Payment Date, for the Fiscal Quarter including such Quarterly
        Payment Date and the three (3) Fiscal Quarters immediately following such
        Quarterly Payment Date, the ratio of (i) Cash Flow Available for Debt
        Service projected for such period to (ii) Debt Service projected for such
        period, in each case based on the then-current Operating Budget approved
        in
        accordance with Section 7.01(j)
        (Affirmative
        Covenants - Operating Budget),
        as the
        same has been updated (if necessary) to reflect the then-current projections
        for
        commodity prices, and approved by the Administrative Agent, acting
        reasonably.

       

      "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.

       

      
        
          
          

        

        
          54

          
            

          

        

        
          
          

        

      

       

      "Qualified
        Counterparty"
        means
        any of the following: (i) any Person who is a Lender, the Administrative
        Agent, or the Collateral Agent on the date the relevant Interest Rate Protection
        Agreement is entered into or (ii) any Affiliate of any Person listed in
        clause (i).

       

      "Quarterly
        Payment Date"
        means
        each of March 31, June 30, September 30 and
        December 31.

       

      "Quarterly
        Period"
        means
        each three (3) month period beginning on (and including) the day
        immediately following a Quarterly Payment Date and ending on (and including)
        the
        next Quarterly Payment Date.

       

      "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.

       

      "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.

       

      "Required
        Cash Sweep"
        means
        each mandatory prepayment of the Loans made pursuant to Section 3.10(b)(i)
        (Mandatory
        Prepayment).

       

      "Required
        Equity Contributions"
        means,
        collectively, the Stockton Required Equity Contribution, the Brawley Required
        Equity Contribution and the Burley Required Equity Contribution.

       

      
        
          
          

        

        
          55

          
            

          

        

        
          
          

        

      

       

      "Required
        Lenders"
        means
        (a) at any time prior to the Conversion Date, Lenders (excluding all
        Non-Voting Lenders) holding in excess of fifty percent (50.00%) of the
        Construction Loan Commitments and the Working Capital Loan Commitments
        (excluding the Construction Loan Commitments and the Working Capital Loan
        Commitments of all Non-Voting Lenders) and (b) at any time after the
        Conversion Date, 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 Working Capital Loan Commitment (excluding the principal
        amounts of any Loans made by, and any Working Capital Loan Commitments of,
        any
        Non-Voting Lenders).

       

      "Required
        LLC Provisions"
        has the
        meaning provided in Section 5.24
        (Required
        LLC Provisions).

       

      "Restoration
        or Replacement Plan"
        means a
        plan and time schedule, reasonably satisfactory to the Administrative Agent
        (in
        the case of amounts less than or equal to five million Dollars ($5,000,000)
        arising from any one claim or any series of claims relating to the same
        occurrence with respect to the same Plant) or the Required Lenders (in the
        case
        of amounts greater than five million Dollars ($5,000,000) arising from any
        one
        claim or any series of claims relating to the same occurrence with respect
        to
        the same Plant), and in either such case reasonably satisfactory to the
        Independent Engineer, for the application of Insurance Proceeds or Condemnation
        Proceeds arising from any Casualty Event or Event of Taking, as the case
        may be,
        and any other funds available to the Borrowers with which to restore or replace
        any Plant (or any portion thereof) affected by such Casualty Event or Event
        of
        Taking, as the case may be.

       

      "Restricted
        Payment Certificate"
        means a
        certificate in substantially the form of Exhibit 7.02(s),
        duly
        executed by an Authorized Officer of the Borrowers' Agent.

       

      "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, (b) any payment in respect to Subordinated
        Debt Obligations (other than the Current Priority Subordinated Interest),
        and
        (c) 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 (provided
        that (i) payments made under the Affiliated Project Documents when due and
        payable in accordance with the terms thereof and the terms of the Financing
        Documents, (ii) any Permitted Tax Distributions, (iii) any payment
        made to Pacific Ethanol pursuant to Section 3.01(c) (Sponsor's
        Warranty Undertaking)
        or 4.02
        (Adjustments
        to Warranty Funding Cap and Sponsor Funding Cap)
        of the
        Sponsor Support Agreement and (iv) any Sponsor Support Reimbursement
        Funding, any Sponsor Support Reimbursement, or any Buy-Down L.D. Reimbursement,
        shall each not constitute Restricted Payments).

       

      
        
          
          

        

        
          56

          
            

          

        

        
          
          

        

      

       

      "Revenue
        Account"
        has the
        meaning set forth in Section 8.01(f)
        (Establishment
        of Project Accounts).

       

      "Revenue
        Account Withdrawal Certificate"
        means a
        certificate in substantially the form of Exhibit 8.08-A
        (prior
        to the Conversion Date) or Exhibit 8.08-B
        (on and
        after the Conversion Date), in each such case duly executed by an Authorized
        Officer of the Borrowers' Agent, directing the transfer or withdrawal of
        funds
        from the Revenue Account.

       

      "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.

       

      "Schedule
        of Values"
        means,
        with respect to each Plant, any "schedule of values" provided in any
        Construction Contract for such Plant.

       

      "Security"
        means
        the security created in favor of the Collateral Agent pursuant to the Security
        Documents.

       

      "Security
        Agreements"
        means,
        collectively, the Madera Security Agreement, the Boardman Security Agreement,
        the Stockton Security Agreement (when entered into), the Brawley Security
        Agreement (when entered into), the Burley Security Agreement (when entered
        into)
        and the Pacific Holding Security Agreement. 

       

      "Security
        Documents"
        means:

       

      
        	 	
                (i)

              	
                each
                  Mortgage;

              


      

       

      
        	 	
                (ii)

              	
                this
                  Agreement (to the extent that it relates to the Project
                  Accounts);

              


      

       

      
        	 	
                (iii)

              	
                the
                  Consents;

              


      

       

      
        	 	
                (iv)

              	
                the
                  Pledge Agreements;

              


      

       

      
        	 	
                (v)

              	
                the
                  Security Agreements;

              


      

       

      
        
          
          

        

        
          57

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (vi)

              	
                any
                  other document designated as a Security Document by the Borrowers'
                  Agent
                  and the Administrative Agent; and

              


      

       

      
        	 	
                (vii)

              	
                any
                  fixture filings, financing statements, notices, authorization letters,
                  or
                  other certificates filed, recorded or delivered in connection with
                  the
                  foregoing.

              


      

       

      "Senior
        Secured Parties"
        means
        the Lenders, the Agents, any Interest Rate Protection Provider, 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)
        with
        respect to such Plant (as such Schedule may be updated with the prior written
        approval of the Administrative Agent).

       

      "Solvent"
        means,
        with respect to any Person, that as of the date of determination both (i)
        (A) the then fair saleable value of the property of such Person is
        (y) greater than the total amount of liabilities (including Contingent
        Liabilities but excluding amounts payable under intercompany loans or promissory
        notes) of such Person and (z) not less than the amount that will be
        required to pay the probable liabilities on such Person's then existing debts
        as
        they become absolute and matured considering all financing alternatives and
        potential asset sales reasonably available to such Person; (B) such
        Person's capital is not unreasonably small in relation to its business or
        any
        contemplated or undertaken transaction; and (C) such Person does not intend
        to incur, or reasonably believe that it will incur, debts beyond its ability
        to
        pay such debts as they become due; and (ii) such Person is "solvent" within
        the meaning given that term and similar terms under applicable Laws relating
        to
        fraudulent transfers and conveyances. For purposes of this definition, the
        amount of any Contingent Liability at any time shall be computed as the amount
        that, in light of all of the facts and circumstances existing at such time,
        represents the amount that can reasonably be expected to become an actual
        or
        matured liability.

       

      "Sponsor
        Support Agreement"
        means
        the Sponsor Support Agreement, dated on or about the date hereof, in form
        and
        substance reasonably satisfactory to the Lenders, pursuant to which Pacific
        Ethanol agrees to provide support for the Project on the terms and conditions
        set forth therein.

       

      "Sponsor
        Support Reimbursement Funding"
        means
        any Funding of Construction Loans for a Greenfield Plant that is applied
        to
        reimburse Pacific Ethanol for payments made under the Sponsor Support Agreement,
        as contemplated by Section 2.04(g)
        (Sponsor's
        Deficiency Funding Obligation)
        of the
        Sponsor Support Agreement.

       

      
        
          
          

        

        
          58

          
            

          

        

        
          
          

        

      

       

      "Sponsor
        Support Reimbursements"
        means
        any reimbursements for Sponsor Deficiency Payments and/or Sponsor Warranty
        Payments (each as defined in the Sponsor Support Agreement) that Pacific
        Ethanol
        is entitled to receive pursuant to Section
        2.04(g) (Sponsor's
        Deficiency Funding Obligation),
        Section
        4.02 (Adjustments
        to Warranty Funding Cap and Sponsor Funding Cap)
        and
Section
        3.01(c) (Sponsor's
        Warranty Undertaking)
        of the
        Sponsor Support Agreement.

       

      "SPV"
        has the
        meaning provided in Section 11.03(h)
        (Assignments).

       

      "Stated
        Amount"
        has the
        meaning specified for such term in any Letter of Credit or Debt Service Reserve
        Letter of Credit, as the case may be.

       

      "Stockton"
        has the
        meaning set forth in the Preamble.

       

      "Stockton
        Construction Account"
        has the
        meaning set forth in Section 8.01(c)
        (Establishment
        of Project Accounts).

       

      "Stockton
        Construction Budget"
        means
        the budget attached hereto as Schedule 7.02(t)
        that
        sets forth all categories of costs and expenses required in connection with
        the
        development, construction, start-up, and testing of the Stockton Plant,
        including all construction costs and non-construction costs, all costs under
        the
        Stockton Construction Contract, all interest, taxes and other carrying costs
        related to the Construction Loans for the Stockton Plant, and costs related
        to
        the construction of the facilities described under the Project Documents
        relating to the Stockton Plant, as updated from time to time in accordance
        with
Section
        6.04(h) (Conditions
        to First Funding for Each Greenfield Plant -Construction Schedule and Updated
        Budget)
        and
        Section 7.02(t) (Negative
        Covenants - Construction Budget).

       

      "Stockton
        Construction Withdrawal Certificate"
        means a
        certificate in substantially the form of Exhibit 8.05,
        duly
        executed by an Authorized Officer of the Borrowers' Agent, directing the
        transfer or withdrawal of funds from the Stockton Construction
        Account.

       

      "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
        (or with
        changes agreed to by the Borrowers, the Administrative Agent and the Collateral
        Agent, in each case acting reasonably), to be made by Stockton to Stewart
        Title
        Guaranty Company, as trustee, for the benefit of the Collateral Agent, as
        the
        beneficiary.

       

      "Stockton
        Equity Contributions"
        means
        the aggregate total amount of (i) the Stockton Required Equity Contribution
        (following the contribution of such amounts to Stockton and their application
        to
        Stockton Project Costs) and (ii) all other equity contributed to Stockton
        and
        applied to Stockton Project Costs. 

       

      
        
          
          

        

        
          59

          
            

          

        

        
          
          

        

      

       

      "Stockton
        Insurance and Condemnation Proceeds Account"
        has the
        meaning provided in Section 8.01(n)
        (Establishment
        of Project Accounts).

       

      "Stockton
        Lease"
        means
        the lease to be entered into 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
        (or with
        changes agreed to by the Borrowers, the Administrative Agent and the Collateral
        Agent, in each case acting reasonably), to be entered into among Pacific
        Holding, Stockton and the Collateral Agent, pursuant to which Pacific Holding
        will pledge one hundred percent (100%) of the Equity Interests in Stockton
        to the Collateral Agent.

       

      "Stockton
        Project Costs"
        means
        the following costs and expenses incurred by the Borrowers in connection
        with
        the Stockton Plant prior to the Commercial Operation Date for the Stockton
        Plant
        and set forth in the then-current Stockton Construction Budget or otherwise
        approved in writing by the Administrative Agent (in consultation with the
        Independent Engineer):

       

      
        	 	
                (i)

              	
                costs
                  incurred by the Borrowers under the Stockton Construction Contracts,
                  and
                  other costs directly related to the acquisition, site preparation,
                  design,
                  engineering, construction, installation, start-up, and testing
                  of the
                  Stockton Plant;

              


      

       

      
        	 	
                (ii)

              	
                fees
                  and expenses incurred by or on behalf of the Borrowers and allocated
                  to
                  the Stockton Plant in connection with the development of the Project
                  and
                  the consummation of the transactions contemplated by this Agreement,
                  including financial, accounting, legal, surveying and consulting
                  fees, and
                  the costs of preliminary
                  engineering;

              


      

       

      
        
          
          

        

        
          60

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (iii)

              	
                interest
                  and Fees on the Construction Loans for the Stockton Plant;
                  

              


      

       

      
        	 	
                (iv)

              	
                financing
                  fees and expenses in connection with the Loans and the fees, costs
                  and
                  expenses of the Agents' counsel, any Interest Rate Protection Provider's
                  counsel and the Consultants that are allocated to the Stockton
                  Plant;

              


      

       

      
        	 	
                (v)

              	
                insurance
                  premiums with respect to the Title Insurance Policy for the Stockton
                  Plant
                  and the insurance for the Stockton Plant required pursuant to Section 7.01(h)
                  (Affirmative
                  Covenants - Insurance);

              


      

       

      
        	 	
                (vi)

              	
                costs
                  of corn and natural gas utilized for commissioning, Performance
                  Tests for,
                  and operation of, the Stockton Plant prior to its Commercial Operation
                  Date; and

              


      

       

      
        	 	
                (vii)

              	
                all
                  other costs and expenses included in the then-current Stockton
                  Construction Budget.

              


      

       

      "Stockton
        Required Equity Contribution"
        means,
        as of the initial Funding Date for the Stockton Plant, an amount equal to
        the
        aggregate total amount of Project Costs in the Construction Budget for the
        Stockton Plant approved pursuant to Section 6.04(h)(i)
        (Conditions
        to First Funding for Each Greenfield Plant - Construction Schedule and Updated
        Budget) minus
        (x) five million Dollars ($5,000,000) and (y) the lesser of
        (A) forty-five million Dollars ($45,000,000) or (B) an amount equal to
        forty percent (40%) of such aggregate Project Costs.

       

      "Stockton
        Security Agreement"
        means
        the Assignment and Security Agreement, in substantially the form of Exhibit
        6.04(g)-C
        (or with
        changes agreed to by the Borrowers, the Administrative Agent and the Collateral
        Agent, in each case acting reasonably), to be made by Stockton in favor of
        the
        Collateral Agent.

       

      "Stockton
        Warranty Account"
        has the
        meaning provided in Section 8.01(t)
        (Establishment
        of Project Accounts).

       

      "Storage
        Facilities"
        means
        the facilities described on Schedule 7.02(f).

       

      "Subordinated
        Debt Agreements"
        means
        each agreement with respect to Project Company Subordinated Debt or Indebtedness
        of Affiliates of the Borrowers the proceeds of which will be used exclusively
        for the payment of Project Costs and transaction costs associated therewith,
        each of which shall be in form and substance satisfactory to the Administrative
        Agent in its sole discretion or otherwise reasonably satisfactory to the
        Required Lenders.

       

      
        
          
          

        

        
          61

          
            

          

        

        
          
          

        

      

       

      "Subordinated
        Lenders"
        means
        any lenders providing financing under any Subordinated Debt
        Agreement.

       

      "Subordinated
        Loans"
        means
        each loan (or similar funding) made pursuant to any Subordinated Debt
        Agreement.

       

      "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.

       

      "Substitute
        Facility"
        means,
        upon the written request of the Borrowers and approval by all of the Lenders
        (which approval shall be based on customary due diligence, and subject to
        execution and delivery of mutually satisfactory amendments to the Financing
        Documents and additional security documents) an ethanol production facility
        in
        development by a subsidiary of Pacific Holding that is substituted for one
        of
        the Greenfield Facilities (and related Borrowers); provided
        that if
        such proposed replacement facility is an ethanol facility to be located at
        Plymouth, Washington with a design basis capacity of approximately fifty
        (50)
        million gallons per year of denatured ethanol, together with wet and dried
        distiller's grains and carbon dioxide as described to the Lead Arrangers
        prior
        to the date hereof, the consent of Lenders holding eighty percent (80%) or
        more
        of the Commitments will be required for such approval.

       

      "Successful
        Syndication"
        has the
        meaning provided in the Commitment Letter among WestLB, Mizuho Corporate
        Bank,
        Ltd. and Pacific Ethanol, dated as of January 10, 2007.

       

      "Survey"
        means,
        with respect to any Site, a survey conforming with the ALTA/ACSM 2005 survey
        standards, including Table A items 6, 8, 10 and 11(a).

       

      "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, includes the Permitted Commodity Hedging Arrangements and any Interest
        Rate Protection Agreements and excludes any contract for the physical sale
        or
        purchase of any commodity.

       

      
        
          
          

        

        
          62

          
            

          

        

        
          
          

        

      

       

      "Swap
        Termination Value"
        means,
        in respect of any one or more Swap Contracts (including any Permitted Commodity
        Hedging Arrangements or any Interest Rate Protection Agreements), 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).

       

      "Target
        Balance Amount"
        means
        the aggregate of all principal payable under the Loans projected to be
        outstanding on each Quarterly Payment Date, as set forth on Schedule 8.08(c)(xiii). 

       

      "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.

       

      
        
          
          

        

        
          63

          
            

          

        

        
          
          

        

      

       

      "Term
        Loan Commitment"
        means
        the Tranche A Term Loan Commitment and the Tranche B Term Loan Commitment,
        as
        the context requires.

       

      "Term
        Loan Commitment Percentage"
        means,
        as to any Lender at any time, the percentage that such Lender's Term Loan
        Commitment then constitutes of the Aggregate Term Loan Commitment.

       

      "Term
        Loans"
        means,
        collectively, the Tranche A Term Loans and the Tranche B Term
        Loans.

       

      "Term
        Notes"
        means
        the promissory notes of each Borrower, substantially in the form of Exhibit 2.07,
        evidencing Term Loans.

       

      "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.

       

      "Title
        Insurance Company"
        means
        Stewart Title Guaranty Company or such other title insurance company or
        companies reasonably satisfactory to the Administrative Agent.

       

      "Title
        Insurance Policy"
        has the meaning provided in Section 6.01(q)
        (Conditions
        to Closing - Title Insurance).

       

      "Tranche"
        means,
        as the case may be, the Tranche A Construction Loans, the Tranche A Term
        Loans,
        the Tranche B Construction Loans or the Tranche B Term Loans.

       

      "Tranche A
        Applicable Margin"
        means
        (a) with respect to the Eurodollar Loans (i) prior to the Conversion
        Date, three and three-quarters percent (3.75%), and (ii) on and after the
        Conversion Date, three and one-quarter percent (3.25%), and (b) with
        respect to the Base Rate Loans (i) prior to the Conversion Date, two and
        three-quarters percent (2.75%), and (ii) on and after the Conversion Date,
        two and one-quarter percent (2.25%).

       

      
        
          
          

        

        
          64

          
            

          

        

        
          
          

        

      

       

      "Tranche
        A Construction Loan Commitment"
        means,
        with respect to each Tranche A Lender, the commitment of such Tranche A Lender
        to make Tranche A Construction Loans, as set forth opposite the name of such
        Tranche A Lender in Schedule 1.01(a),
        as the
        same may be reduced in accordance with Section 2.08
        (Termination
        or Reduction of Commitments) and
        Section
        2.09 (Tranche
        Reallocation).

       

      "Tranche
        A Construction Loans"
        means,
        collectively, the In-Progress Plant 2 Tranche A Construction Loans,
        the Greenfield Plant 1 Tranche A Construction Loans, the Greenfield Plant 2
        Construction Loans and the Greenfield Plant 3 Construction Loans.

       

      "Tranche
        A Lenders"
        means
        those Lenders of Tranche A Loans, as identified on Schedule 1.01(a)
        and each
        other Person that acquires the rights and obligations of any such Lender
        pursuant to Section 11.03
        (Assignments).
        

       

      "Tranche
        A Loans"
        means,
        collectively, the Tranche A Construction Loans and the Tranche A Term
        Loans.

       

      "Tranche
        A Term Loan Commitment"
        means,
        with respect to each Tranche A Lender, the commitment of such Tranche A Lender
        to make Tranche A Term Loans, as set forth opposite the name of such Tranche
        A
        Lender in Schedule 1.01(a),
        as the
        same may be reduced in accordance with Section 2.08
        (Termination
        or Reduction of Commitments) and
        Section
        2.09 (Tranche
        Reallocation).

       

      "Tranche
        A Term Loans"
        has the
        meaning provided in Section 2.02(a)
        (Term
        Loans).

       

      "Tranche B
        Applicable Margin"
        means
        (a) with respect to the Eurodollar Loans, four and thirty-five hundredths
        percent (4.35%), and (b) with respect to the Base Rate Loans, three and
        thirty-five hundredths percent (3.35%).

       

      "Tranche
        B Construction Loan Commitment"
        means,
        with respect to each Tranche B Lender, the commitment of such Tranche B Lender
        to make Tranche B Construction Loans, as set forth opposite the name of such
        Tranche B Lender in Schedule 1.01(a),
        as the
        same may be reduced or increased in accordance with Section 2.08
        (Termination
        or Reduction of Commitments)
        and Section
        2.09 (Tranche
        Reallocation).

       

      
        
          
          

        

        
          65

          
            

          

        

        
          
          

        

      

       

      "Tranche
        B Construction Loans"
        means,
        collectively, the In-Progress Plant 1 Construction Loans, the In-Progress
        Plant 2 Tranche B Construction Loans and the Greenfield Plant 1
        Tranche B Construction Loans.

       

      "Tranche
        B Conversion Disbursement"
        means
        any funding of Tranche B Loans in accordance with Section 2.09(c)
        (Tranche
        Reallocation).

       

      "Tranche
        B Escrow Disbursement"
        means
        the disbursement of the Tranche B Construction Loans to the Escrow Account
        following the occurrence of the Closing Date.

       

      "Tranche
        B Lenders"
        means
        those Lenders of Tranche B Loans, as identified on Schedule 1.01(a)
        and each
        other Person that acquires the rights and obligations of any such Lender
        pursuant to Section 11.03
        (Assignments).

       

      "Tranche
        B Loans"
        means,
        collectively, the Tranche B Construction Loans and the Tranche B Term
        Loans.

       

      "Tranche
        B Term Loan Commitment"
        means,
        with respect to each Tranche B Lender, the commitment of such Tranche B Lender
        to make Tranche B Term Loans, as set forth opposite the name of such Tranche
        B
        Lender in Schedule 1.01(a),
        as the
        same may be reduced or increased in accordance with Section 2.08
        (Termination or
        Reduction of
        Commitments)
        Section
        2.09 (Tranche
        Reallocation).

       

      "Tranche
        B Term Loans"
        has the
        meaning provided in Section 2.02(b)
        (Term
        Loans).

       

      "Tranche
        Commitment Percentage"
        means,
        as to any Lender at any time, the percentage that such Lender's Tranche B
        Construction Loan Commitment, Tranche B Term Loan Commitment,
        Tranche A Construction Loan Commitment or Tranche A Term Loan
        Commitment then constitutes of the Aggregate Tranche Commitment for the
        applicable Tranche.

       

      "Tranche
        Conversion Date"
        has the
        meaning provided in Section 2.09
        (Tranche
        Reallocation).

       

      "Tranche
        Conversion Notice"
        means a
        notice from a Tranche Reallocation Eligible Lender in substantially the form
        of
Exhibit 2.09.

       

      "Tranche
        Reallocation Eligible Commitments"
        means
        the Commitments of the Tranche Reallocation Eligible Lenders identified on
        Schedule 2.09,
        as the
        same may be increased or reduced in accordance with Section 2.08
        (Termination
        or Reduction of Commitments)
        and
Section 2.09
        (Tranche
        Reallocation).

       

      
        
          
          

        

        
          66

          
            

          

        

        
          
          

        

      

       

      "Tranche
        Reallocation Eligible Lenders"
        means
        the Lead Arrangers identified on Schedule 2.09,
        or any
        transferee or assignee of such Lead Arrangers (in their capacity as
        Lenders).

       

      "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.

       

      "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
        Capital Loan Facility"
        means
        the Construction and Term Loan Agreement, dated as of April 10, 2006, among
        Madera, the lenders party thereto from time to time, TD BankNorth, N.A.,
        as
        administrative agent, and the other parties thereto, and all agreements related
        thereto and all Indebtedness incurred by Madera thereunder.

       

      "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.

       

      "Value"
        means,
        with respect to any inventory or other goods, the cost thereof to any Borrower,
        calculated on a first-in-first-out basis in accordance with GAAP. 

       

      "Warranty
        Accounts"
        means,
        collectively, the Madera Warranty Account, the Boardman Warranty Account,
        the
        Stockton Warranty Account, the Brawley Warranty Account, and the Burley Warranty
        Account. 

       

      
        
          
          

        

        
          67

          
            

          

        

        
          
          

        

      

       

      "Warranty
        Notice"
        has the
        meaning set forth in the Sponsor Support Agreement. 

       

      "Warranty
        Proceeds"
        means
        all amounts required to be paid by Pacific Ethanol pursuant to
        Section 3.05(a) (Sponsor's
        Warranty Funding Obligations)
        of the
        Sponsor Support Agreement.

       

      "Warranty
        Proceeds Request Certificate"
        means a
        certificate in substantially the form of Exhibit 8.16,
        duly
        executed by an Authorized Officer of the Borrowers' Agent and setting forth
        proposed instructions for the transfer or withdrawal of Warranty Proceeds
        from a
        Warranty Account.

       

      "Warranty
        Work"
        has the
        meaning set forth in the Sponsor Support Agreement. 

       

      "WDG"
        means
        wet distillers grains produced by the Borrowers at the Plants.

       

      "WestLB"
        means
        WestLB AG, New York Branch.

       

      "Working
        Capital Applicable Margin"
        means
        (a) with respect to the Eurodollar Loans (i) prior to the Conversion
        Date, three and three-quarters percent (3.75%), and (ii) on and after the
        Conversion Date, three and one-quarter percent (3.25%), and (b) with
        respect to the Base Rate Loans (i) prior to the Conversion Date, two and
        three-quarters percent (2.75%), and (ii) on and after the Conversion Date,
        two and one-quarter percent (2.25%).

       

      "Working
        Capital Expenses"
        means,
        collectively, Project Costs relating to initial start-up and testing of a
        Plant,
        Operation and Maintenance Expenses and Maintenance Capital Expenses.


       

      "Working
        Capital Funding Notice"
        means
        each request for Funding of Working Capital Loans in the form of Exhibit 2.05-A
        delivered in accordance with Section 2.05
        (Notice
        of Fundings).

       

      "Working
        Capital LC Collateral Sub-Account"
        has the
        meaning provided in Section 8.11(a)
        (Working
        Capital Reserve Account).

       

      "Working
        Capital Lenders"
        means
        those Lenders of Working Capital Loans, as identified on Schedule 1.01(a),
        and
        each other Person that acquires the rights and obligations of any such Lender
        pursuant to Section 11.03
        (Assignments).

       

      "Working
        Capital Loan"
        has the
        meaning provided in Section 2.03
        (Working
        Capital Loans).

       

      
        
          
          

        

        
          68

          
            

          

        

        
          
          

        

      

       

      "Working
        Capital Loan Availability"
        means,
        on a cumulative basis:

       

      
        	 	
                (i)

              	
                on
                  or after the Funding of the In-Progress Plant 1 Construction Loans,
                  up to five million Dollars
                  ($5,000,000);

              


      

       

      
        	 	
                (ii)

              	
                on
                  or after the Funding of the In-Progress Plant 2 Construction Loans,
                  up to five million Dollars ($5,000,000);
                  and

              


      

       

      
        	 	
                (iii)

              	
                on
                  or after the Commercial Operation Date for each Greenfield Plant
                  (or,
                  prior to the Conversion Date, if needed for approved start-up costs
                  following the initial Funding of Construction Loans for such Plant),
                  up to
                  an additional five million Dollars ($5,000,000) per each Greenfield
                  Plant;

              


      

       

      provided,
        that,
        on and after the initial Commercial Operation Date, the Working Capital Loan
        Availability shall at no time exceed the Borrowing Base for the Project,
        as
        certified from time to time by the Borrowers' Agent.

       

      "Working
        Capital Loan Commitment"
        means,
        with respect to each Working Capital Lender, the commitment of such Working
        Capital Lender to make Working Capital Loans, as set forth opposite the name
        of
        such Working Capital Lender in Schedule 1.01(a),
        as the
        same may be reduced in accordance with Section 2.08
        (Termination
        or Reduction of Commitments).

       

      "Working
        Capital Loan Commitment Percentage"
        means,
        as to any Working Capital Lender at any time, the percentage that such Working
        Capital Lender's Working Capital Loan Commitment then constitutes of the
        Aggregate Working Capital Loan Commitment.

       

      "Working
        Capital Maturity Date"
        means
        (i) the date that occurs twelve (12) months after the Conversion Date,
        or (ii) to the extent that some or all of the Working Capital Lenders
        decide to extend or renew the Working Capital Loan Commitment, such date
        as
        shall be determined by such Working Capital Lenders.  

       

      "Working
        Capital Notes"
        means
        the promissory notes of the Borrower, substantially in the form of Exhibit 2.07,
        evidencing Working Capital Loans.

       

      
        
          
          

        

        
          69

          
            

          

        

        
          
          

        

      

       

      "Working
        Capital Plant Commitment"
        means,
        with respect to each Plant, five million Dollars ($5,000,000).

       

      "Working
        Capital Reserve Account"
        has the
        meaning set forth in Section 8.01(i)
        (Establishment
        of Project Accounts).

       

      "Working
        Capital Reserve Required Amount"
        means,
        following any termination or reduction in the Working Capital Loan Commitment
        in
        accordance with Section 2.08
        (Termination
        or Reduction of Commitments),
        an
        aggregate amount equal to all such terminations or reductions.

       

      "Working
        Capital Transfer Certificate"
        means a
        certificate in substantially the form of Exhibit 8.11,
        duly
        executed by an Authorized Officer of the Borrowers' Agent.

       

      "Work
        Schedule"
        means,
        with respect to each Plant, any "work schedule" identified in any Construction
        Contract for such Plant.

       

       

       

      70