THIRD AMENDMENT TO CONSTRUCTION AND TERM LOAN AGREEMENT
EXHIBIT
10.1
THIRD AMENDMENT
TO
THIS THIRD AMENDMENT TO CONSTRUCTION
AND TERM LOAN AGREEMENT (“Third Amendment”) dated as of the 31st day of
March, 2009 (the “Effective Date”), is entered into by and between SHOW ME ETHANOL, LLC, a
Missouri limited liability company (the “Borrower”) and FCS FINANCIAL, PCA, as agent
(the “Agent”) for itself and on behalf of the other Banks.
WITNESSETH:
WHEREAS, that as of March 1, 2007, the
parties hereto, along with the Banks, entered into that certain Construction and
Term Loan Agreement (the “Loan Agreement”), wherein, among other things the
Agent provided funds to Borrower in connection with the construction
of the Project; and
WHEREAS, that as of June 2, 2008, the
parties hereto entered into that certain First Amendment to Construction and
Term Loan Agreement (the “First Amendment”), and on or about December 30, 2008,
the parties entered into that certain Second Amendment to Construction and Term
Loan Agreement (the “Second Amendment”); and
WHEREAS, Borrower and Agent hereby
desire to further amend the Loan Agreement as hereinafter set
forth;
NOW,
THEREFORE, in consideration of the foregoing and of the terms and conditions
contained in this Amendment, and of any loans or extensions of credit or other
financial accommodations at any time made to or for the benefit of Borrower by
the Banks, the Borrower, the Banks and Agent agree as follows:
1. Certain Defined
Terms. The parties hereto acknowledge and agree that the
following items of Section 1.01 “Certain
Defined Terms” shall be deleted in their entirety and amended as
follows:
““EBITDA” shall mean
Borrower’s earnings before interest, taxes, depreciation, and
amortization.
“Equity Drive” shall
mean Borrower’s voluntary request of its members for the contribution of a
minimum of $5,700,000.00 in cash or other form of equity on or before April 1,
2009.
“Fixed Charge Coverage
Ratio” shall mean the ratio of the Borrower’s EBITDA to the Borrower’s
current portion of long term debt, interest expense, tax distributions,
dividends and capital expenditures.
“Hedging Policy” shall
mean the Borrower’s policy regarding the purchase and sale of corn, DGS, ethanol
and/or natural gas, as approved by Borrower’s board of managers.
“Minimum Equity
Percentage” shall mean the percentage value of Borrower’s equity divided
by Borrower’s total assets.
“Railroad Spur
Easement” shall mean that certain Railroad Spur Easement dated January 9,
2007, by and between Xxx-Xxxxxxx and Borrower.
“Xxx-Xxxxxxx Subordinated
Loan” shall mean a loan in the amount of approximately $12,000,000
evidenced by a Subordinated Secured Promissory Note due in March of 2014 between
Xxx-Xxxxxxx and Borrower to settle the Existing Corn Contracts.
“Subordinated Debt”
means any and all Debt of Borrower held by any Person other than Agent, and
Bank, or the Revolving Credit Lender pursuant to either this Agreement or the
Revolving Credit Agreement, including, without limitation the Member Loan and
the Xxx-Xxxxxxx Subordinated Loan.
“Working Capital”
means current assets of the Borrower less current liabilities (excluding the
then current portion of the Long Term Debt) of the Borrower; provided, however,
the Member Loan and the Xxx-Xxxxxxx Subordinated Loan shall each be excluded as
a Debt in the determination of Working Capital until such time as the Member
Loan or the Xxx-Xxxxxxx Subordinated Loan is then currently due and
owing.”
2. Payment of Term
Loan. The parties hereto acknowledge and agree that the last
sentence of Section 2.03(c) “Payment of Term Loan” shall be deleted in its
entirety and replaced with the following:
“During
the term of the Term Loan, the Borrower may, upon prior written notice to the
Agent, defer up to four (4) quarterly principal payments to the Term Maturity
Date. One of the four deferrals shall include the February 1, 2009
principal payment deferment.”
3. Excess
Cash Flow. The parties hereto acknowledge and agree that the first
sentence of Section 2.03(d) “Excess Cash Flow” shall be deleted in its entirety
and replaced with the following:
“Beginning
with January 1, 2011, and in addition to all other payments of principal and
interest required under this Agreement or the Notes, the Borrower shall annually
remit to the Agent an amount equal to fifty percent (50%) of the Borrower’s
Excess Cash Flow on or before that certain date which is one hundred fifty (150)
days after the completion of Borrower’s immediately preceding fiscal
year.”
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4. Revolving Credit
Facility. The parties hereto acknowledge and agree that
Section 2.11(f)
“Revolving Credit Facility” shall be deleted in its entirety and replaced with
the following:
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“Revolving Credit
Facility. The parties
acknowledge and agree effective as of November 6, 2007, Revolving Credit
Lender and Borrower entered into the Revolving Credit Facility to provide
Borrower with funds for use in the operation of the Project, as amended,
in the maximum principal amount of Five Million Dollars
($5,000,000.00). Additionally, the Banks agree and acknowledge
that all or a portion of the Collateral shall be secured equally and
ratably with the Revolving Credit Facility on the same lien priority
basis.”
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5. Reporting
Requirements. The parties acknowledge and agree that
Subsections 5.01(c)(xiii)-(xv) shall be amended to read as follows:
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“(xiii)
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as
soon as reasonably available, Borrower's updated weekly rolling thirteen
(13) week cash flow analysis in a form and substance reasonably acceptable
to Agent.
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(xiv)
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as
soon as reasonably available, Borrower’s updated weekly detailed report of
Borrower’s hedging positions and a certificate of compliance with the
Hedging Policy from an authorized officer of
Borrower.”
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6. Affirmative
Covenants. The Parties hereto acknowledge and agree that a new
Section 5.01
“Affirmative Covenants” shall be amended as set forth below and read as
follows:
“(a) Net
Worth. Maintain as of the Closing Date Net Worth not less than
$31,995,000.00. Thereafter, from the Closing Date until September 29,
2008, maintain at all times Net Worth measured on a quarterly basis at the end
of each quarter of not less than $28,000,000.00, and for the period between
September 30, 2008 and March 31, 2009, Net Worth not less than
$14,000,000.00 as measured on a monthly basis. Following April 1,
2009 through the Term Maturity Date, Borrower shall not be required to maintain
a minimum Net Worth.
(b) Minimum Fixed Charge
Coverage Ratio. Maintain a minimum Fixed
Charge Coverage Ratio of (a) not less than .70:1.00 for the period of January 1,
2009 through December 31, 2009; (b) not less than 1.05:1:00 for the period of
January 1, 2010 through December 31, 2010; and (c) not less than 1:10:1.00 from
January 1, 2011 through the Term Maturity Date.
(c) Minimum Working
Capital. Maintain Working Capital
in an amount not less than (a) $3,000,000.00 for the period from April 1, 2009
through and including December 31, 2009; (b) $3,500,000.00 from January 1, 2010
through and including December 31, 2010; and (c) $4,000,000.00 from January 1,
2011 through the Term Maturity Date.
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(d) Minimum Equity
Percentage. Maintain a Minimum Equity Percentage of greater
than thirty-five percent (35%) for those periods measured between the Closing
Date and September 29, 2008, and for the period September 30, 2008 through March
31, 2009, maintain a Minimum Equity Percentage of no less than seventeen percent
(17%), as measured on a monthly basis. Following April 1, 2009
through the Term Maturity Date, Borrower shall not be required to maintain a
Minimum Equity Percentage.
(e) Financing/Equity
Opportunities. On or before December 31, 2010, Borrower shall
retain a financial advisor to assist the Borrower in evaluating potential
financing or sale transactions.
(f) Plant
Manager. On or before May 1, 2009, Borrower must either (i)
retain a plant manager to operate the Project; or (ii) enter into a consulting
agreement with an individual or company to provide ongoing assistance with the
operation of the Project.
(g) Risk
Management. On or before May 1, 2009, Borrower must retain a
risk manager to assist the Borrower in managing the Borrower’s commodity risk
and assist in compliance with the Hedging Policy.
(h) Amendment to Air
Permit. On or before December 31, 2009, Borrower shall prepare
a report outlining the feasibility obtaining an individual and permanent air
permit with the State of Missouri on terms and conditions as shall be reasonably
acceptable Lender.”
7. Negative
Covenants. The Parties hereto acknowledge and agree that a new
Section 6.01(v) and
(vi) shall be added to the Agreement and shall read as
follows:
“(v) Engage
in any activity which materially violates the Hedging Policy, including, but not
limited to entering into any forward contracts with Xxx-Xxxxxxx, without proper
risk management authorization; provided, however, the failure
of Borrower to maintain compliance with the Hedging Policy, as reported to Agent
on a weekly basis, shall only be an Event of Default in the event Borrower fails
to maintain compliance in three (3) consecutive weeks or in more than seven (7)
weeks in a given twelve (12) month period.
(vi) Suspend,
eliminate or materially modify or amend the Hedging Policy without Agent’s prior
written consent; provided, however, on or before
July 1, 2009, the Borrower, with the mutual agreement of the Agent and the
advice of Borrower’s risk manager shall prepare an updated Hedging Policy which
shall take into account Borrower’s increased capacity and current
efficiencies. Following completion of the updated Hedging Policy and
notwithstanding the foregoing, upon delivery of advanced written notice to
Agent, Borrower may temporarily suspend, modify or amend the Hedging Policy for
a period of not to exceed fifteen (15) days for a business reason in the sole
judgment of the Borrower’s Board of Managers and following the temporary
suspension, modification or amendment of the Hedging Policy the Borrower and
Agent shall, if required, mutually agree upon provisions implementing the
temporary suspension, modification or amendment.”
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8. Conditions Precedent to this
Third Amendment. The Parties hereto acknowledge and agree that
following shall be condition precedent to the execution and delivery of this
Amendment by Agent:
8.1 Updated Borrower’s Cash Flow
Analysis. Borrower shall have delivered to Agent Borrower’s
updated weekly rolling thirteen (13) week cash flow analysis in a form
acceptable to Agent.
8.2 Current Hedging Report;
Hedging Policy. Borrower shall have delivered to Agent,
Borrower’s current report on its hedging positions in a form and substance
reasonably acceptable to Agent and a copy of the Hedging Policy.
8.3 Completion of Equity
Drive. Completion of the Equity Drive and the placement of all
contributed funds in a designated Borrower bank account.
8.4 Settlement of Existing Corn
Contracts. Borrower and Xxx-Xxxxxxx shall have entered into an
agreement, on terms reasonably acceptable to Agent and the Term Loan Lender, for
the settlement of the amounts owed and the delivery of all remaining bushels of
corn under the Existing Corn Contracts.
8.5 Intercreditor Agreement with
Xxx-Xxxxxxx. Agent, Borrower and Xxx-Xxxxxxx shall have
entered into an intercreditor agreement, acceptable to Lender and the Revolving
Loan Lender.
8.6 Financial
Forecasts. Borrower shall have delivered to Lender Borrower’s
revised twelve (12) month financial forecast and Borrower’s five (5) year
financial forecast, both of which shall be acceptable to Agent, in its sole
discretion.”
9. CONSENT TO
JURISDICTION. The parties hereto acknowledge and agree that
Section 8.08(a)
shall be deleted in its entirety and the following inserted in its
place:
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“(a) THE
BORROWER CONSENTS TO THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT
LOCATED WITHIN THE COUNTY OF SAINT LOUIS, MISSOURI AND WAIVES ANY OBJECTION
WHICH THE BORROWER MAY HAVE BASED ON IMPROPER VENUE OR FORUM NON CONVENIENS
TO THE CONDUCT OF ANY PROCEEDING IN ANY SUCH COURT. THE BORROWER
FURTHER AGREES THAT AT ALL TIMES THE BORROWER SHALL HAVE AT LEAST ONE REGISTERED
AGENT WITHIN THE CONTINENTAL UNITED STATES OF AMERICA, WHICH AGENT SHALL ACCEPT
ANY AND ALL SERVICE OF PROCESS UPON THE BORROWER, AND THAT IN THE EVENT THE
BORROWER FAILS AT ANY TIME TO HAVE SUCH A REGISTERED AGENT, OR SUCH REGISTERED
AGENT REFUSES SUCH SERVICE OF PROCESS FOR ANY REASON WHATSOEVER, THEN SERVICE OF
ANY AND ALL SUCH PROCESS UPON THE BORROWER MAY BE MADE BY MAIL OR MESSENGER
DIRECTED TO THE BORROWER AT THE ADDRESS SET FORTH IN SECTION
8.02. SERVICE SO MADE SHALL BE DEEMED TO CONSTITUTE PERSONAL
SERVICE UPON THE BORROWER, AND SHALL BE DEEMED COMPLETED UPON THE EARLIER OF
ACTUAL RECEIPT OR THREE DAYS AFTER THE SAME SHALL HAVE BEEN POSTED TO THE
BORROWER’S ADDRESS. AT THE OPTION OF THE AGENT, THE BORROWER WAIVES,
TO THE EXTENT PERMITTED BY LAW, TRIAL BY JURY, AND WAIVES ANY BOND OR SURETY OR
SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF THE
AGENT. NOTHING IN THIS PARAGRAPH SHALL AFFECT THE RIGHT OF THE AGENT TO SERVE
LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF THE
AGENT TO BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWER OR THE BORROWER’S
PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION.”
10. Additional
Indebtedness. By execution of this Third Amendment, Agent
hereby consents to Borrower incurring additional Indebtedness in the form of the
Xxx-Xxxxxxx Subordinated Loan.
11. Multiple
Counterparts. This Amendment may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute one and the same instrument.
12. Reaffirmation of Previous
Terms and Conditions. All of the remaining terms and
conditions of the Agreement, as amended, where not inconsistent with the above,
shall remain the same and are hereby republished, reaffirmed and restated as of
the date hereof.
13. Statutory Notice Pursuant to
RSMO § 432.047.3(1).
“Oral
agreements or commitments to loan money, extend credit or to forbear from
enforcing repayment of a debt including promises to extend or renew such debt
are not enforceable, regardless of the legal theory upon which it is based that
is in any way related to the credit agreement. To protect you
(borrower(s)) and us (creditor) from misunderstanding or disappointment, any
agreements we reach covering such matters are contained in this writing, which
is the complete and exclusive statement of the agreement between us, except as
we may later agree in writing to modify it.”
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IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by
their respective officers and duly authorized, as of the date first above
written.
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a
Missouri limited liability company
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By:
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Title:
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AGENT,
for itself and on behalf of the Banks:
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FCS
FINANCIAL, PCA
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By:
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Title:
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