KINERGY MARKETING LLC Sacramento, California 95814
EXHIBIT 10.1
KINERGY
MARKETING LLC
000
Xxxxxxx Xxxx, Xxxxx 0000
Xxxxxxxxxx,
Xxxxxxxxxx 00000
May 17,
2009
Wachovia
Capital Finance Corporation (Western),
as
Agent for and on behalf of the
Lenders
as referred to below
000 Xxxxx
Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxx,
Xxxxxxxxxx 00000
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”), and this Letter re: Amendment and Waiver Agreement
(this “Agreement”) (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 Agreement in both such capacities, as “Wachovia”.
Borrower
and Pacific Ethanol, Inc., a Delaware corporation, as Guarantor (“Parent”) have
requested that Wachovia (a) waive the Specified Defaults (as defined in the
Forbearance Agreement), (b) 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 two (2) consecutive month period
ending February 28, 2009, (c) 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 three (3)
consecutive month period ending Xxxxx 00, 0000, (x) 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 April 30, 2009, (e) waive the Event of
Default under Section 10.1(a)(i) of the Loan Agreement resulting from the
failure of Borrower to deliver certified financial statements of Borrower and
its Subsidiaries for the fiscal month ended March 31, 2009 within the time
period specified in, and in accordance with, Section 9.6(a)(i), (f) waive the
Event of Default under Section 10.1(a)(i) of the Loan Agreement resulting from
the failure of Borrower to deliver audited financial statements of Borrower and
its Subsidiaries and Parent and its Subsidiaries for the fiscal year ended
December 31, 2008 (together with an unqualified opinion of independent certified
public accountants with respect thereto) within the time period specified in,
and in accordance with, Section 9.6(a)(iii), (g) waive the Events of Default
under Section 10.1(a)(i) of the Loan Agreement resulting from various liens
filed, and pre-judgment writs of attachment ordered, against Borrower and its
assets in connection with the action filed on January 9, 2009 by Western Ethanol
Company, LLC against Borrower in the Superior Court of California, County of
Orange (the Events of Default identified in clauses (b) through (g) hereof,
together with the Specified Defaults, collectively, the “Existing Defaults”),
(h) consent to an amendment to the Parent/Borrower Operating Agreement
substantially in the form attached hereto as Exhibit A, and (i)
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 Agreement.
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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 Agreement 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
Definitions. As used herein, the following terms shall have
the meanings given to them below, and the Loan Agreement and the other Financing
Agreements are hereby amended to include, in addition and not in limitation, the
following definitions:
“Agreement
and Waiver” shall mean the Letter re: Amendment and Waiver Agreement, dated as
of May 17, 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.
“PE
Holding Debtors” shall mean, collectively, Pacific Ethanol Holding Company, LLC
and each of its subsidiaries that have commenced, or will commence, a case under
Chapter 11 of Title 11 of the United States Code in the United States Bankruptcy
Court for the District of Delaware.
“Western
Ethanol Agreement” shall mean the Agreement, dated as of May 14, 2009, by and
among Borrower, Agent and Western Ethanol Company, LLC.
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(b) 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.”
(c) Material Adverse
Effect. The definition of “Material Adverse Effect” in Section
1.73 of the Loan Agreement is hereby amended and restated in its entirety as
follows:
“1.73 “Material
Adverse Effect” shall mean any condition, change, effect or circumstance that,
individually or when taken together with all such conditions, changes, effects
or circumstances, has or would reasonably be expected to have an adverse effect
on the financial condition, assets, properties, business, operations or results
of operations of the Borrower which is material to the Borrower, excluding (a)
any changes or effects that are not unique to the Borrower and do not adversely
affect the Borrower disproportionately compared to its competitors, directly
resulting from general changes in economic, financial or capital market,
regulatory, political or national security conditions (including acts of war or
terrorism), (b) any changes in conditions generally applicable to the industries
in which the Borrower is involved, (c) any changes that result from the
announcement or the consummation of the transactions contemplated hereby, (d)
any changes or effects, individually or when taken together with all such
changes or effects, that result from or could reasonably be expected to result
from the Chapter 11 cases filed, or to be filed, by the PE Holding Debtors, so
long as such changes or effects do not, in fact, have an adverse effect on the
financial condition, assets, properties, business, operations or results of
operations of the Borrower which is material to the Borrower; provided, that, the mere filing
by the PE Holding Debtors of the Chapter 11 cases shall not be deemed to have a
Material Adverse Effect as to Borrower, (e) any “going concern” or similar
qualification to the opinion of Borrower’s or Parent’s independent certified
public accountants with respect to the financial statements of Borrower or
Parent, unless such “going concern” or similar qualification to any such opinion
relates solely to Borrower (independent of Parent), and (f) any changes or
effects that have been disclosed to Agent and Lenders as of the date of the
Agreement and Waiver that has or could reasonably be expected to have a material
adverse effect on the financial condition, assets, properties, business,
operations or results of operations of Borrower (the foregoing exclusion in this
clause (f) shall not apply to any changes or effects that have not been
disclosed to Agent and Lenders as of the date of the Waiver and Amendment or any
changes or affects arising after the date of the Waiver and
Amendment).”
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(d) Unused Line
Fee. Section 3.2(a) of the Loan Agreement is hereby amended
and restated in its entirety as follows:
“(a) Effective
as of the date of the Amendment and Waiver, Borrower shall pay to Agent, for the
account of Lenders, monthly an unused line fee at a rate equal to one-half of
one (0.50%) percent per annum calculated upon the amount by which the Maximum
Credit exceeds the average daily principal balance of the outstanding Revolving
Loans and Letters of Credit during the immediately preceding month (or part
thereof) while this Agreement is in effect and for so long thereafter as any of
the Obligations are outstanding, which fee shall be payable on the first day of
each month in arrears.”
(e) Servicing
Fee. Section 3.2 of the Loan Agreement is hereby amended by
adding the following new Section 3.2(e) at the end thereof:
“(e) Effective
as of the date of the Amendment and Waiver, Borrower shall pay to Agent, for its
own account, a servicing fee in an amount equal to $5,000 per month in respect
of the services of Agent for each month (or part thereof) while the Loan
Agreement remains in effect and for so long thereafter as any of the Obligations
are outstanding. Such fee shall be fully earned as of and payable in
advance on the date of the Amendment and Waiver and on the first day of each
month thereafter for so long as any of the Obligations are
outstanding.”
(f) Collateral
Reporting. Section 7.1(a)(ii) of the Loan Agreement is hereby
amended and restated in its entirety as follows:
“(ii) within
fifteen (15) Business Days after the end of each fiscal month, on a monthly
basis or more frequently as Agent may reasonably request: (A)
perpetual inventory reports, (B) agings of accounts receivable (together with a
reconciliation to the previous month’s aging and general ledger), (C) agings of
accounts payable (and including information indicating the amounts owing to
owners and lessors of leased premises, warehouses, processors and other third
parties from time to time in possession of any Collateral) and (D) a schedule of
all ethanol purchase and sale contracts or agreements constituting a Material
Contract entered into, amended or terminated during the previous
month;”
(g) Encumbrances. Section
9.8 of the Loan Agreement is hereby amended by deleting the “and” from the end
of clause (i) thereof, replacing the period at the end of clause (j) with “;
and” and adding the following new clause (k):
“(k) liens
expressly permitted pursuant to the terms of the Western Ethanol
Agreement.”
(h) Payments to
Parent. Section 9.12(b) of the Loan Agreement is hereby
amended and restated in its entirety as follows:
“(b) make
any payments (whether by dividend, loan or otherwise) of management, consulting
or other fees for management or similar services, or of any Indebtedness owing
to any officer, employee, shareholder, director or any other Affiliate of
Borrower, except (i) reasonable
compensation to officers, employees and directors of Borrower and its affiliates
for any services rendered to Borrower in the ordinary course of business, (ii)
payment by Borrower to Parent on the date hereof of an amount not to exceed
$6,000,000 on account of intercompany Indebtedness due and owing by Borrower to
Parent as of the date hereof, and (iii) payments by Borrower to Parent for those
services provided by Parent to Borrower pursuant to the Parent/Borrower
Operating Agreement as in effect on the date hereof; provided, that, (A) such
payments (other than payments expressly provided for in clause (iii)(B) below)
under this clause (iii) shall not exceed $600,000 in the aggregate during any
three (3) consecutive month period and $2,400,000 in the aggregate during any
twelve (12) consecutive month period, and (B) with respect to any reimbursement
payment by Borrower to Parent on account of any margin call due in connection
with any hedging position created by Parent for or on behalf of Borrower
pursuant to the Parent/Borrower Operating Agreement, Borrower shall have Excess
Availability of not less than $1,000,000 after giving effect to such
payment.
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(i) Event of
Default. Section 10.1 of the Loan Agreement is hereby amended
as follows:
(i) Section
10.1(d) of the Loan Agreement is hereby amended and restated in its entirety as
follows:
“(d) (i)
any judgment for the payment of money is rendered against Borrower or any
Obligor (other than Parent) in excess of $100,000 in any one case or in excess
of $250,000 in the aggregate (to the extent not covered by insurance where the
insurer has assumed responsibility in writing for such judgment) and shall
remain undischarged or unvacated for a period in excess of thirty (30) days or
execution shall at any time not be effectively stayed, or any judgment other
than for the payment of money, or injunction, attachment, garnishment or
execution is rendered against Borrower or any Obligor (other than Parent) or any
of the Collateral having a value in excess of $100,000 or (ii) any judgment for
the payment of money is rendered against Parent or any of its subsidiaries
(other than Borrower, Pacific Ethanol Imperial LLC or the PE Holding Debtors) in
excess of $500,000 in any one case or in excess of $1,000,000 in the aggregate
(to the extent not covered by insurance where the insurer has assumed
responsibility in writing for such judgment) and shall remain undischarged or
unvacated for a period in excess of thirty (30) days or execution shall at any
time not be effectively stayed, or any judgment other than for the payment of
money, or injunction, attachment, garnishment or execution is rendered against
Parent or any of its subsidiaries (other than Borrower, Pacific Ethanol Imperial
LLC or the PE Holding Debtors) or any of the Collateral having a value in excess
of $500,000;”
(ii) Section
10.1(f) of the Loan Agreement is hereby amended and restated in its entirety as
follows:
“(f) (i)
Borrower, Parent, any Obligor or any of their respective subsidiaries (other
than Pacific Ethanol Imperial LLC and the PE Holding Debtors) makes an
assignment for the benefit of creditors or makes or sends notice of a bulk
transfer, (ii) Borrower or any Obligor (other than Parent) calls a meeting of
its creditors or principal creditors in connection with a moratorium or
adjustment of the Indebtedness due to them, or (iii) from and after the date
of the Amendment and Waiver, Parent or any of its subsidiaries (other than
Borrower, any Obligor, Pacific Ethanol Imperial LLC or the PE Holding Debtors)
calls a meeting of its creditors or principal creditors in connection with a
moratorium or adjustment of the Indebtedness due to them.”
(iii) Section
10.1(g) of the Loan Agreement is hereby amended and restated in its entirety as
follows:
“(g)
a case or proceeding under the bankruptcy laws of the United States of America
now or hereafter in effect or under any insolvency, reorganization,
receivership, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction now or hereafter in effect (whether at law or in equity) is
filed against Borrower, Parent, any Obligor or any of their respective
subsidiaries (other than the PE Holding Debtors) or all or any part of its
properties (other than with respect to any interest in the PE Holding Debtors)
and such petition or application is not dismissed within forty-five (45) days
after the date of its filing, or Borrower, Parent, any Obligor or any of their
respective subsidiaries (other than the PE Holding Debtors) shall file any
answer admitting or not contesting such petition or application or indicates its
consent to, acquiescence in or approval of, any such action or proceeding or the
relief requested is granted sooner;”
(iv) Section
10.1(h) of the Loan Agreement is hereby amended and restated in its entirety as
follows:
“(h) a
case or proceeding under the bankruptcy laws of the United States of America now
or hereafter in effect or under any insolvency, reorganization, receivership,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction now or hereafter in effect (whether at a law or equity) is filed by
Borrower, Parent, any Obligor or any of their respective subsidiaries (other
than the PE Holding Debtors) or for all or any part of its property (other than
with respect to any interest in the PE Holding Debtors);”
(v) Section
10.1(i) of the Loan Agreement is hereby amended and restated in its entirety as
follows:
“(i) (i)
any default in respect of any Indebtedness of Borrower or any Obligor (other
than Parent) (other than Indebtedness owing to Agent and Lenders hereunder), in
any case in an amount in excess of $100,000, which default continues for more
than the applicable cure period, if any, with respect thereto or any default by
Borrower or any Obligor (other than Parent) under any Material Contract, which
default continues for more than the applicable cure period, if any, with respect
thereto and/or is not waived in writing by the other parties thereto or (ii) any
default in respect of any Indebtedness of Parent or any of its subsidiaries
(other than Borrower and the PE Holding Debtors) (other than in connection with
the Master Lease Agreement, dated June 9, 2008, between Parent and Varilease
Finance, Inc.), in any case in an amount in excess of $500,000, which default
continues for more than the applicable cure period, if any, with respect thereto
or any default by Parent or any of its subsidiaries (other than Borrower) under
any material contract, which default continues for more than the applicable cure
period, if any, with respect thereto and/or is not waived in writing by the
other parties thereto;”
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(vi) Section
10.1(m) of the Loan Agreement is hereby amended and restated in its entirety as
follows:
“(m) the
indictment by any Governmental Authority, or as Agent may reasonably determine,
the threatened indictment by any Governmental Authority of Borrower, Parent, any
Obligor or any of their respective subsidiaries (other than the PE Holding
Debtors) of which Borrower, Parent, any Obligor, any of their respective
subsidiaries (other than the PE Holding Debtors) or Agent receives notice, in
either case, as to which there is a reasonable possibility of an adverse
determination, in the reasonable determination of Agent, under any criminal
statute, or commencement or threatened commencement of criminal or civil
proceedings against Borrower, Parent, any Obligor or any of their respective
subsidiaries (other than the PE Holding Debtors), pursuant to which statute or
proceedings the penalties or remedies sought or available include forfeiture of
(i) any of the Collateral having a value in excess of $250,000 or (ii) any other
property of Borrower, Parent, any Obligor or any of their respective
subsidiaries (other than the PE Holding Debtors) which is necessary or material
to the conduct of its business (other than with respect to any interest in the
PE Holding Debtors);”
(vii) Section
10.1(o) of the Loan Agreement is hereby amended and restated in its entirety as
follows:
“(o) there
shall have occurred a Material Adverse Effect as to Borrower, Parent, any
Obligor or any of their respective subsidiaries (other than the PE Holding
Debtors); or”
(j) Maturity
Date. Section 13.1(a) of the Loan Agreement is hereby amended
and restated in its entirety as follows:
“(a) This
Agreement and the other Financing Agreements shall become effective as of the
date set forth on the first page hereof and shall continue in full force and
effect until October 31, 2010 (the “Maturity Date”), unless sooner terminated
pursuant to the terms hereof. Borrower may terminate this Agreement
at any time upon ten (10) days prior written notice to Agent (which notice shall
be irrevocable) and Agent may, at its option, and shall at the direction of
Required Lenders, terminate this Agreement at any time on or after an Event of
Default has occurred and is continuing. Upon the Maturity Date or any
other effective date of termination of the Financing Agreements, Borrower shall
pay to Agent all outstanding and unpaid Obligations and shall furnish cash
collateral to Agent (or at Agent’s option, a letter of credit issued for the
account of Borrower and at Borrower’s expense, in form and substance
satisfactory to Agent, by an issuer acceptable to Agent and payable to Agent as
beneficiary) in such amounts as Agent determines are reasonably necessary to
secure Agent, Lenders and Issuing Bank from loss, cost, damage or expense,
including attorneys’ fees and expenses, in connection with any contingent
Obligations, including issued and outstanding Letter of Credit Obligations and
checks or other payments provisionally credited to the Obligations and/or as to
which Agent or any Lender has not yet received final and indefeasible payment
and any continuing obligations of Agent or any Lender pursuant to any Deposit
Account Control Agreement and for any of the Obligations arising under or in
connection with any Bank Products in such amounts as the Bank Product Provider
providing such Bank Products may require (unless such Obligations arising under
or in connection with any Bank Products are paid in full in cash and terminated
in a manner satisfactory to such Bank Product Provider). The amount
of such cash collateral (or letter of credit, as Agent may determine) as to any
Letter of Credit Obligations shall be in the amount equal to one hundred five
(105%) percent of the amount of the Letter of Credit Obligations plus the amount
of any fees and expenses payable in connection therewith through the end of the
latest expiration date of the Letters of Credit giving rise to such Letter of
Credit Obligations. Such payments in respect of the Obligations and
cash collateral shall be remitted by wire transfer in Federal funds to the Agent
Payment Account or such other bank account of Agent, as Agent may, in its
discretion, designate in writing to Borrower for such
purpose. Interest shall be due until and including the next Business
Day, if the amounts so paid by Borrower to the Agent Payment Account or other
bank account designated by Agent are received in such bank account later than
12:00 noon, Los Angeles, California time.”
(k) Early Termination
Fee. Section 13.1(c) of the Loan Agreement is hereby deleted
in its entirety.
(l) Schedule
9.17. Schedule 9.17 to the Loan Agreement is hereby amended
and restated in its entirety as set forth on Exhibit B attached
hereto.
(m) No Additional
Indebtedness. From and after the date of this Agreement,
notwithstanding anything to the contrary contained in the Loan Agreement or
otherwise, Borrower shall not incur any additional Indebtedness, except for (i)
Indebtedness expressly permitted under Section 9.9(e) of the Loan Agreement and
(ii) unsecured Indebtedness to Parent in connection with any loan made by Parent
to Borrower to finance the payment by Borrower of 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; provided, that, with respect to
such unsecured Indebtedness to Parent, Borrower shall not repay or make any
other payment on account of such unsecured Indebtedness without the prior
written consent of Agent.
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(n) Limitation on Capital
Expenditures. From and after the date of this Agreement,
notwithstanding anything to the contrary contained in the Loan Agreement or
otherwise, Borrower shall not make nor contract for any Capital Expenditures in
excess of $100,000 during any twelve (12) consecutive month period without the
prior written consent of Agent.
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 agreement 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 Amendment to
Parent/Borrower Operating Agreement.
Pursuant
to Borrower’s request, subject to the terms and conditions contained herein,
Wachovia hereby consents to the amendment to the Parent/Borrower Operating
Agreement substantially in the form attached hereto as Exhibit
A.
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 May 15, 2009, in respect of the Loans and all other Obligations
in the aggregate principal amount of not less than $5,143,868.42, 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 Agreement 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
Agreement.
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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 Agreement), the truth
and accuracy of which are a continuing condition of the making of Loans to
Borrower:
(a) this
Agreement and each other agreement or instrument to be executed and/or delivered
in connection herewith (collectively, together with this Agreement, 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;
(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 Agreement, no Default or Event of Default exists as of the
date of this Agreement;
(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 Agreement;
(f) Borrower
shall not amend or otherwise modify that certain Ethanol Marketing Agreement
(Xxxxxxxx Project), dated as of February 27, 2007, between Borrower and Pacific
Ethanol Columbia LLC, as in effect on the date hereof; and
(i) on
or before May 31, 2009, Wachovia shall have received copies of the financing
agreements, in form and substance reasonably satisfactory to Wachovia, among
Parent, certain of its subsidiaries and Xxxxx United, LLC (“Xxxxx”), which
agreements shall provide, among other things, for (A) a credit facility
available to Parent of up to $2,500,000 over a term of eighteen (18) months (or
such shorter term but in no event prior to the Maturity Date of the Loan
Agreement (as amended hereby)), (B) the grant by Parent to Xxxxx of a security
interest in substantially all of Parent’s assets, including a pledge by Parent
to Xxxxx of the equity interest of Parent in Borrower, and (C) the use by Parent
of borrowings thereunder for general corporate and other purposes in accordance
with the terms thereof.
7. Conditions
Precedent.
This
Agreement 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
Agreement, duly authorized, executed and delivered by Borrower and
Parent;
(ii) the
receipt by Wachovia of a copy of that certain Asset Management Agreement, dated
on or about the date hereof, by and among Parent and the PE Holding Debtors,
which agreement shall be in form and substance reasonably satisfactory to
Wachovia and shall provide that Parent will provide various management services
to the PE Holding Debtors during and in connection with the Chapter 11 cases to
be filed by the PE Holding Debtors; and
(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
Agreement).
Notwithstanding
anything to the contrary herein, the documents and agreements delivered to
Wachovia pursuant to clauses (ii), (iii) and (iv) of this Section 6 shall not be
deemed to be “Financing Agreements” under the Loan Agreement.
8
8. Amendment
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 waiver fee in the amount of
$200,000, 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.
9. Effect of this
Agreement.
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 Agreement and the Loan Agreement or any of the other Financing
Agreements, the terms of this Agreement shall control. The Loan
Agreement and this Agreement 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 Agreement 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 Agreement 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
Agreement shall be binding upon and inure to the benefit of each of the parties
hereto and their respective successors and assigns
13. Counterparts.
This
Agreement 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 Agreement, 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]
9
|
Very
truly yours,
|
|
|
KINERGY MARKETING
LLC,
as
Borrower
By: /s/ XXXXX
XXXXXXXX
Name: Xxxxx
XxXxxxxx
Title: Interim
CFO
|
|
|
PACIFIC ETHANOL,
INC,
as
Parent
By: /s/ XXXXX
XXXXXXXX
Name: Xxxxx
XxXxxxxx
Title: Interim
CFO
|
|
|
AGREED
TO:
|
|
|
WACHOVIA CAPITAL FINANCE
CORPORATION (WESTERN),
as
Agent and sole Lender
By: /s/ XXXXXX XXXXXX
Name: Xxxxxx
Xxxxxx
Title: Director
|
|
10
EXHIBIT
A
TO
LETTER
RE: AMENDMENT AND WAIVER
Amendment to Parent/Borrower
Operating Agreement
[see
attached]
11
EXHIBIT
B
TO
LETTER
RE: AMENDMENT AND WAIVER
Schedule
9.17
to
LOAN AND
SECURITY AGREEMENT
Minimum
EBITDA
|
Fiscal Period
|
Minimum EBITDA
|
|
one
(1) month period ending May 31, 2009
|
No
Test
|
|
two
(2) consecutive month period ending June 30, 2009
|
No
Test
|
|
three
(3) consecutive month period ending July 31, 2009
|
$0
|
|
four
(4) consecutive month period ending August 31, 2009
|
$30,000
|
|
five
(5) consecutive month period ending September 30, 2009
|
$80,000
|
|
six
(6) consecutive month period ending October 31, 2009
|
$130,000
|
|
seven
(7) consecutive month period ending November 30, 2009
|
$180,000
|
|
eight
(8) consecutive month period ending December 31, 2009
|
$230,000
|
|
one
(1) month period ending January 31, 2010
|
$50,000
|
|
two
(2) consecutive month period ending February 28, 2010
|
$100,000
|
|
three
(3) consecutive month period ending March 31, 2010
|
$150,000
|
|
four
(4) consecutive month period ending April 30, 2010
|
$200,000
|
|
five
(5) consecutive month period ending May 31, 2010
|
$250,000
|
|
six
(6) consecutive month period ending June 30, 2010
|
$325,000
|
|
seven
(7) consecutive month period ending July 31, 2010
|
$400,000
|
|
eight
(8) consecutive month period ending August 31, 2010
|
$475,000
|
|
nine
(9) consecutive month period ending September 30, 2010
|
$550,000
|
|
ten
(10) consecutive month period ending October 31, 2010
|
$625,000
|
12
