KINERGY MARKETING LLC
Exhibit
10.3
000
Xxxxxxx Xxxx, Xxxxx 0000
Xxxxxxxxxx,
Xxxxxxxxxx 00000
November
5, 2009
Wachovia
Capital Finance Corporation (Western),
as
Agent for and on behalf of the
Lenders
as referred to below
000 X.
Xxx Xxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxx,
Xxxxxxxxxx 00000-0000
Re: Amendment No. 2 to Loan and
Security Agreement, Consent and Waiver
Ladies
and Gentlemen:
Wachovia
Capital Finance Corporation (Western) (“Wachovia”), in its capacity as agent
(“Agent”) for the Lenders from time to time party to the Loan Agreement referred
to below, the Lenders and Kinergy Marketing LLC, an Oregon limited liability
company (“Borrower”), have entered into certain financing arrangements pursuant
to the Loan and Security Agreement, dated as of July 28, 2008, by and among
Agent, Lenders and Borrower (the “Loan Agreement”), and the other agreements,
documents and instruments referred to therein or at any time executed and/or
delivered in connection therewith or related thereto, including, but not limited
to, the Letter re: Amendment and Forbearance Agreement, dated February 13, 2009
(the “Forbearance Agreement”), the Amendment No. 1 to Letter re: Amendment and
Forbearance Agreement, dated as of February 26, 2009 (the “Amendment No. 1 to
Forbearance Agreement”), the Amendment No. 2 to Letter re: Amendment and
Forbearance Agreement, dated as of March 27, 2009 (the “Amendment No. 2 to
Forbearance Agreement”), the Letter re: Amendment and Waiver Agreement, dated
May 17, 2009 (the “Agreement and Waiver”), and this Letter re: Amendment No. 2
to Loan and Security Agreement, Consent and Waiver (this “Amendment No. 2”) (all
of the foregoing, together with the Loan Agreement, as the same now exist or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced, being collectively referred to herein as the “Financing
Agreements”). Wachovia is currently both the Agent and the sole
Lender under the Loan Agreement and is hereinafter referred to in this Amendment
No. 2 in both such capacities, as “Wachovia”.
Borrower
and Pacific Ethanol, Inc., a Delaware corporation, as Guarantor (“Parent”) have
requested that Wachovia (a) waive the Event of Default under Section 10.1(a)(i)
of the Loan Agreement resulting from the failure of Borrower to maintain EBITDA
in the amount required by Section 9.17 for the four (4) consecutive month period
ending August 31, 2009, (b) waive the Event of Default under Section 10.1(a)(iv)
of the Loan Agreement resulting from the failure of Borrower to deliver to Agent
copies of the financing agreements among Parent, certain of its subsidiaries and
Xxxxx United, LLC within the time period specified in, and in accordance with,
Section 6(g) of the Agreement and Waiver (the Events of Default identified in
clauses (a) and (b) hereof, collectively, the “Existing Defaults”), (c) consent
to the making by Borrower of a distribution to Parent in an amount not to exceed
$971,000 (the “Parent Distribution”), and (d) make certain amendments to the
Loan Agreement and other Financing Agreements as set forth herein, which
Wachovia is willing to do subject to the terms and conditions set forth in this
Amendment No. 2.
In
consideration of the foregoing, the mutual agreements and covenants contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as
follows:
1.
Interpretation.
All
capitalized terms used in this Amendment No. 2 shall have the meanings assigned
thereto in the Loan Agreement and the other Financing Agreements, unless
otherwise defined herein.
2. Amendments to Loan
Agreement.
(a) Additional
Definition. As used herein, the following term shall have the
meaning given to it below, and the Loan Agreement and the other Financing
Agreements are hereby amended to include, in addition and not in limitation, the
following definition:
“Amendment
No. 2 to Loan Agreement” shall mean the Letter re: Amendment No. 2 to Loan and
Security Agreement, Consent and Waiver, dated November 5, 2009, by and among
Borrower, Parent, Agent and the Lenders, as the same now exists or may hereafter
be amended, modified, supplemented, extended, renewed, restated or
replaced.
(b) Availability
Block. The definition of “Availability Block” as set forth in
the Loan Agreement is hereby amended and restated in its entirety as
follows:
““Availability
Block” shall mean $1,000,000.”
(c) EBITDA. The
definition of “EBITDA” in Section 1.29 of the Loan Agreement is hereby amended
and restated in its entirety as follows:
“1.29 “EBITDA”
shall mean, as to any Person, with respect to any period, an amount equal to:
(a) the Consolidated Net Income of such Person and its Subsidiaries for such
period, plus
(b) depreciation and amortization (including amortization of deferred financing
fees), non-cash impairment charges, imputed interest, deferred compensation,
non-cash inventory valuation adjustments and bank fees for such period (all to
the extent deducted in the computation of Consolidated Net Income of such
Person), all in accordance with GAAP, plus (c) Interest
Expense for such period (to the extent deducted in the computation of
Consolidated Net Income of such Person), plus (d) the
Provision for Taxes for such period (to the extent deducted in the computation
of Consolidated Net Income of such Person), plus (e) any costs
and expenses incurred, and any amounts paid in cash (whether pursuant to
settlement or a final order of a court of competent jurisdiction), in connection
with any litigation or judgment, to the extent of the amount received by
Borrower (whether by contribution or loan) from Parent to finance such costs,
expenses and payments, plus (f) charges
incurred in connection with the termination of the lease agreement with General
Electric Railcar Services Corporation in an amount not to exceed $550,000, plus (g) payments
made in connection with the consummation of the Western Ethanol Agreement and
the transactions thereunder in an amount not to exceed $956,323, minus (h) cash
proceeds received in connection with the consummation of the Assignment of Claim
between Borrower, as assignor, and Hain Capital Holdings, LLC, as assignee, and
the Assignment of Claim between Borrower, as assignor, and Hain Capital
Holdings, Ltd., as assignee, and the transactions thereunder in an amount not to
exceed $971,056.”
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(d) Notices. Section
13.3 of the Loan Agreement is hereby amended by deleting the address for Agent,
Lenders and Issuing Bank set forth therein and replacing it with the
following:
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“If
to Agent, Lenders or Issuing
Bank:
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Wachovia
Capital Finance Corporation
(Western)
(a Xxxxx Fargo Company)
000
X. Xxx Xxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxx,
Xxxxxxxxxx 00000-0000
Attention: Portfolio
Manager
Telephone
No.: 000-000-0000
Telecopy
No.: 000-000-0000”
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3. Waiver of Existing
Defaults.
(a) Pursuant
to Borrower’s request, subject to the terms and conditions contained herein,
Wachovia hereby waives the Existing Defaults.
(b) Wachovia
has not waived and is not by this Amendment No. 2 waiving, and has no present
intention of waiving, any Default or Event of Default other than the Existing
Defaults, which may have occurred prior to the date hereof, or may be continuing
on the date hereof or any Event of Default which may occur after the date
hereof, other than the Existing Defaults, whether the same or similar to the
Existing Defaults or otherwise. Wachovia reserves the right, in its
discretion, to exercise any or all of its rights and remedies arising under the
Financing Agreements, applicable law or otherwise, as a result of any other
Events of Default which may have occurred prior to the date hereof, or are
continuing on the date hereof, or any Event of Default which may occur after the
date hereof, whether the same or similar to the Existing Defaults or otherwise
upon or after the rescission and termination of the waiver provided for in
Section 3(a) above. Nothing contained herein shall be construed as a
waiver of the failure of Borrower to comply with the terms of the Loan Agreement
and the other Financing Agreements after such time.
4. Consent to Parent
Distribution.
Pursuant
to Borrower’s and Parent’s request, subject to the terms and conditions
contained herein, as a one-time accommodation to Borrower and Parent, Wachovia
hereby consents to the Parent Distribution; provided, that, each of the
following conditions shall have been satisfied:
(a) On or
before Xxxxx 00, 0000, Xxxxxxxx shall have received evidence, in form and
substance satisfactory to Wachovia, that the Parent Distribution shall have been
made, and
(b) immediately
prior, and immediately after giving effect to the Parent Distribution, there
shall exist no Default or Event of Default.
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5. Acknowledgment of
Obligations, Security Interests and Financing Agreements.
(a) Acknowledgment of
Obligations. Borrower and Parent hereby acknowledge, confirm
and agree that Borrower is unconditionally indebted to Wachovia as of the close
of business on November 4, 2009, in respect of the Loans and all other
Obligations in the aggregate principal amount of not less than $4,644,297.89,
together with interest accrued and accruing thereon, and all fees, costs,
expenses and other sums and charges now or hereafter payable by Borrower to
Wachovia pursuant to the Loan Agreement and the other Financing Agreements, all
of which are unconditionally owing by Borrower to Wachovia pursuant to the
Financing Agreements, in each case without offset, defense or counterclaim of
any kind, nature or description whatsoever.
(b) Acknowledgment of Security
Interests. Borrower and Parent hereby acknowledge, confirm and
agree that Wachovia has, and shall continue to have, valid, enforceable and
perfected security interests in and liens upon the Collateral heretofore granted
by Borrower to Wachovia pursuant to the Financing Agreements or otherwise
granted to or held by Wachovia.
(c) Binding Effect of Financing
Agreements. Borrower and Parent hereby acknowledge, confirm
and agree that: (i) each of the Financing Agreements to which Borrower and
Parent (as applicable) are a party has been duly executed and delivered to
Wachovia by Borrower and Parent (as applicable), and each is in full force and
effect as of the date hereof, (ii) the agreements and obligations of Borrower
and Parent (as applicable) contained in such Financing Agreements to which they
are a party and in this Amendment No. 2 constitute the legal, valid and binding
Obligations of Borrower and Parent (as applicable), enforceable against them in
accordance with its terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
limiting creditors’ rights generally or by equitable principles relating to
enforceability, and Borrower and Parent (as applicable) have no valid defense to
the enforcement of such Obligations, and (iii) Wachovia is and shall be entitled
to the rights, remedies and benefits provided for in the Financing Agreements
and pursuant to applicable law, but subject to the terms and conditions of this
Amendment No. 2.
6. Representations, Warranties
and Covenants.
Borrower
and Parent hereby represent, warrant and covenant to Wachovia the following
(which shall survive the execution and delivery of this Amendment No. 2), the
truth and accuracy of which are a continuing condition of the making of Loans to
Borrower:
(a) this
Amendment No. 2 and each other agreement or instrument to be executed and/or
delivered in connection herewith (collectively, together with this Amendment No.
2, the “Amendment Documents”) have been duly authorized, executed and delivered
by all necessary action on the part of Borrower and Parent and, if necessary,
their respective stockholders and/or members, as the case may be, and the
agreements and obligations of Borrower and Parent contained herein and therein
constitute the legal, valid and binding obligations of Borrower and Parent,
enforceable against them in accordance with their terms, except as
enforceability is limited by bankruptcy, insolvency, reorganization, moratorium
or other laws relating to or affecting generally the enforcement of creditors’
rights and except to the extent that availability of the remedy of specific
performance or injunctive relief is subject to the discretion of the court
before which any proceeding therefor may be brought;
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(b) the
execution, delivery and performance of the Amendment Documents (a) are all
within Borrower’s and Guarantor’s corporate or limited liability company powers
(as applicable), (b) are not in contravention of law or the terms of Borrower’s
or Guarantor’s certificate or articles of organization or formation, operating
agreement, by-laws or other organizational documentation, or any indenture,
agreement or undertaking to which Borrower or Guarantor is a party or by which
Borrower, Guarantor or its or their property is bound and (c) shall not result
in the creation or imposition of any lien, claim, charge or encumbrance upon any
of the Collateral, except in favor of Wachovia pursuant to the Loan Agreement
and the Financing Agreements as amended hereby;
(c) all of
the representations and warranties set forth in the Loan Agreement and the other
Financing Agreements, each as amended hereby, are true and correct in all
material respects on and as of the date hereof, as if made on the date hereof,
except to the extent any such representation or warranty is made as of a
specified date, in which case such representation or warranty shall have been
true and correct as of such date;
(d) after
giving effect to this Amendment No. 2, no Default or Event of Default exists as
of the date of this Amendment No. 2; and
(e) no action
of, or filing with, or consent of any governmental or public body or authority,
including, without limitation, any filing with the U.S. Patent and Trademark
Office, and no approval or consent of any other party, is required to authorize,
or is otherwise required in connection with, the execution, delivery and
performance of this Amendment No. 2.
7. Amendment and Consent
Fee.
In
addition to all other fees, charges, interest and expenses payable by Borrower
to Wachovia under the Loan Agreement and the other Financing Agreements,
Borrower shall pay to Wachovia an amendment and consent fee in the amount of
$25,000, which fee shall be fully earned as of and payable in advance on the
date hereof. The foregoing fee may be charged to any loan account of
Borrower maintained by Wachovia.
8. Conditions
Precedent.
This
Amendment No. 2 shall not become effective unless all of the following
conditions precedent have been satisfied in full, as determined by
Wachovia:
(i) the
receipt by Wachovia of an original (or faxed or electronic copy) of this
Amendment No. 2, duly authorized, executed and delivered by Borrower and
Parent;
(ii) the
receipt by Wachovia of the amendment fee set forth in Section 7 above;
and
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(iii) no
Default or Event of Default shall exist or have occurred (after giving effect to
the waivers and amendments made by Wachovia pursuant to this Amendment No.
2).
9. Effect of this Amendment No.
2.
Except
as modified pursuant hereto, no other changes or modifications to the Loan
Agreement and the other Financing Agreements are intended or implied and in all
other respects the Loan Agreement and the other Financing Agreements are hereby
specifically ratified, restated and confirmed by all parties hereto as of the
effective date hereof. To the extent of any conflict between the
terms of this Amendment No. 2 and the Loan Agreement or any of the other
Financing Agreements, the terms of this Amendment No. 2 shall
control. The Loan Agreement and this Amendment No. 2 shall be read
and construed as one agreement.
10. Further
Assurances.
At
Wachovia’s request, Borrower and Parent shall execute and deliver such
additional documents and take such additional actions as Wachovia requests to
effectuate the provisions and purposes of this Amendment No. 2 and to protect
and/or maintain perfection of Wachovia’s security interests in and liens upon
the Collateral.
11. Governing
Law.
The
validity, interpretation and enforcement of this Amendment No. 2 in any dispute
arising out of the relationship between the parties hereto, whether in contract,
tort, equity or otherwise shall be governed by the internal laws of the State of
California (without giving effect to principles of conflicts of
law).
12. Binding
Effect.
This
Amendment No. 2 shall be binding upon and inure to the benefit of each of the
parties hereto and their respective successors and assigns
13. Counterparts.
This
Amendment No. 2 may be executed in any number of counterparts, but all of such
counterparts when executed shall together constitute one and the same
Agreement. In making proof of this Amendment No. 2, it shall not be
necessary to produce or account for more than one counterpart thereof signed by
each of the parties hereto.
[SIGNATURE
PAGE FOLLOWS]
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Very
truly yours,
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KINERGY MARKETING
LLC,
as
Borrower
By: /s/ XXXXX
XXXXXXXX
Name: Xxxxx
XxXxxxxx
Title: Interim
CFO
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PACIFIC ETHANOL,
INC,
as
Parent
By: /s/ XXXXX
XXXXXXXX
Name: Xxxxx
XxXxxxxx
Title: Interim
CFO
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AGREED
TO:
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WACHOVIA CAPITAL FINANCE
CORPORATION (WESTERN),
as
Agent and sole Lender
By: /s/ XXXXXX
XXXXXX
Name: Xxxxxx
Xxxxxx
Title: Director
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[Signature
Page to Amendment No 2 to Loan and Security Agreement and
Consent]
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