Exhibit
10.2
AMENDMENT
NO. 1
TO
CONSTRUCTION
AND TERM LOAN AGREEMENT
AND
AGREEMENT
AS TO FUTURE FINANCING TRANSACTIONS
This
AMENDMENT NO. 1 TO CONSTRUCTION AND TERM LOAN AGREEMENT AND AGREEMENT AS TO
FUTURE FINANCING TRANSACTIONS, dated September 29, 2006 (this “Amendment”),
is by
and among
PACIFIC ETHANOL MADERA LLC, a Delaware limited liability company (“Borrower”),
the
lenders named on the signature pages to this Amendment, TD BANKNORTH, N.A.,
a
national banking association, as administrative agent for the Lenders (as
defined below) (the “Administrative
Agent”),
and
PACIFIC ETHANOL, INC., a Delaware corporation (“PEI”),
and
amends to the extent stated herein the Construction and Term Loan Agreement,
dated April 10, 2006 (the “Original
Loan Agreement”),
among
Borrower, the Lenders and the Administrative Agent.
Capitalized terms used and not defined herein have the meanings ascribed to
them
in Schedule X of the Original Loan Agreement.
RECITALS:
WHEREAS,
Borrower, the Lenders and the Administrative Agent are all of the parties to
the
Original Loan Agreement;
WHEREAS,
the business requirements of Borrower have changed in a manner that has caused
Borrower to determine that it is not in its best interest to utilize certain
of
the Loans made available by the Lenders to Borrower pursuant to the Original
Loan Agreement;
WHEREAS,
the Administrative Agent and the Lenders are willing to amend the Original
Loan
Agreement (including Schedule X thereto) so as to enable Borrower to pursue
its
preferred financing arrangements; and
WHEREAS,
in consideration of the willingness of the Administrative Agent and the Lenders
to amend the Original Loan Agreement, PEI and Borrower are willing to grant
to
the Lenders the right to participate in certain future financing transactions
involving the Project;
NOW,
THEREFORE, in consideration of the premises and the mutual covenants contained
herein, and other good and valuable consideration, the receipt and adequacy
of
which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE
I
AMENDMENTS
AND CONSENTS TO THE
ORIGINAL
LOAN AGREEMENT AND OTHER LOAN DOCUMENTS
Section
1.1. Amendment
to Reflect No Obligation to Borrow Construction Loans.
Section
2.1 of the Original Loan Agreement is hereby amended to include the following
new subsection (c):
“(c) No
Obligation to Borrow Construction Loans.
Notwithstanding the foregoing or any other contrary provision of the Loan
Documents, Borrower will have no obligation to borrow any Construction Loan
at
any time.”
Section
1.2. Amendments
to Reflect Mandatory Term Loan Borrowing.
(a) Amendment
to Section 2.2(b) of the Original Loan Agreement.
Section
2.2(b)(i) of the Original Loan Agreement is hereby amended by adding the words
“(if any)” after the words “and the repayment in full of all Construction Loans”
in the third sentence thereof.
(b) Amendment
to Section 2.7(b) of the Original Loan Agreement.
Section
2.7(b) of the Original Loan Agreement is hereby amended to be and read in its
entirety as follows:
“(b) Term
Loans.
Proceeds of the Term Loans may be used only to (i) refinance the principal
of and accrued and unpaid interest on all Construction Loans outstanding on
the
Term Loan Conversion Date, if any, (ii) pay interest, fees and other
expenses payable pursuant to Section 2.3, Section 2.5, Section 2.10
and Section 8.11, if any, and (iii) after the payment in full of all amounts
described in the preceding clauses (i) and (ii), finance a distribution or
dividend (directly or indirectly) to PEI (it being acknowledged and agreed
that
the amount of such distribution or dividend shall not exceed the amount of
capital contributions made (directly or indirectly) by PEI to Borrower after
the
Closing Date in connection with or related to the development, construction,
installation, start-up or testing of the Project). To the extent that proceeds
of the Term Loans are not sufficient to pay in full all of the amounts described
in clauses (i), (ii) and (iii) of the preceding sentence, such proceeds will
be
applied first
to the
amounts described in clause (i) of the preceding sentence, second
to the
amounts described in clause (ii) of the preceding sentence and third
to the
amounts described in clause (iii) of the preceding sentence until all of such
proceeds have been disbursed. Any amount described in clauses (i) and (ii)
of
the first sentence of this paragraph not paid with the proceeds of the Term
Loans will be payable in full by or on behalf of Borrower on the date on which
the Term Loans are disbursed.”
(c) Amendment
to the Definition of Term Loan Conversion Date.
The
definition of “Term Loan Conversion Date” is hereby amended to be and read in
its entirety as follows:
“Term
Loan Conversion Date”
means
the date on which Borrower borrows Term Loans in the aggregate initial principal
amount equal to the maximum amount permitted pursuant to the definition of
“Aggregate Term Loan Commitment” following the delivery of a Notice of Borrowing
pursuant to Section 2.2(c) and the satisfaction of the conditions precedent
contained in Section 3.3, which date must occur on or prior to December 15,
2006.”
Section
1.3. Amendments
to Reflect Early Termination and Prepayment Provisions.
(a) Amendment
to Section 2.8(b) of the Original Loan Agreement.
Section
2.8(b) of the Original Loan Agreement is hereby amended to be and read in its
entirety as follows:
“(b) Optional
Prepayment.
Borrower may, on any Business Day following the Term Loan Conversion Date,
after
having given the Administrative Agent at least ten (10) Business Days’ prior
revocable notice and five (5) Business Days’ prior irrevocable notice, prepay in
full the Term Loans and all other amounts then-outstanding under the Loan
Documents (including amounts under Section 2.3, Section 2.5, Section 2.10
and Section 8.11). In connection with such prepayment, Borrower will pay to
the
Lenders the prepayment fee calculated in accordance with Section 2.8(c), if
any.”
(b) Addition
of New Section 2.11 to the Original Loan Agreement.
A new
Section 2.11 is hereby added to the Original Loan Agreement to be and read
in
its entirety as follows:
“Section
2.11 Early
Termination and Failure to Borrow Term Loans.
(a) If
the
Term Loan Conversion Date has not occurred on or prior to December 15, 2006,
Borrower may at its option terminate this Agreement and the other Loan Documents
by delivering a written notice of such termination to the Administrative Agent
and paying to the Administrative Agent, in immediately available funds for
distribution to the Lenders in proportion to their Pro Rata Shares of the
Aggregate Term Loan Commitment, a nonrefundable fee in the amount of
$1,020,000.00 (the “Early
Termination Fee”)
(which
shall be the sole fee required in connection with any such termination) and
all
other amounts then due and payable under Section 2.10, Section 8.11 and Section
8.12 of this Agreement and the other Loan Documents.
(b) Without
duplication of Borrower’s obligations under clause (a) above, if Borrower
has not borrowed Term Loans in the aggregate initial principal amount equal
to
at least $34,000,000 on or prior to December 15, 2006, and Borrower has not
exercised its rights under clause (a) above, then Borrower will pay to the
Administrative Agent, in immediately available funds for distribution to the
Lenders in proportion to their Pro Rata Shares of the Aggregate Term Loan
Commitment, a nonrefundable fee in the amount of the product of (i)
$1,020,000.00 and (ii) a fraction, the numerator of which is the aggregate
initial principal amount of Term Loans borrowed by Borrower on or prior to
December 15, 2006, and the denominator of which is 34,000,000, such fee being
payable to the Administrative Agent on December 15, 2006, and upon receipt
by the Administrative Agent of such fee and all other amounts then due and
payable under Section 2.10, Section 8.11 and Section 8.12 of this Agreement
and
the other Loan Documents, this Agreement and the other Loan Documents will
terminate.
(c) In
connection with any final prepayment of Term Loans (as notified by Borrower
to
the Administrative Agent) or in connection with any termination event described
in clauses (a) and (b) above, upon the prepayment of such Loans or the payment
of the Early Termination Fee (as applicable) and the other amounts provided
for
in Section 2.8 or this Section 2.11 (as applicable), this Agreement and the
other Loan Documents shall automatically terminate and all Liens granted by
the
PEIX Parties under the Loan Documents shall automatically be released and
terminate, in each case without further action of the parties. Without limiting
the foregoing, the Administrative Agent shall execute and deliver all customary
pay-off letters, UCC-3 Termination Statements and other documents and
instruments reasonably necessary to effectuate such release and termination,
as
well as return to Borrower or its designee any pledged Collateral in the
Administrative Agent’s possession or control.”
Section
1.4. Amendments
to Reflect Term Loan Borrowing.
(a) Section 3.2
of the Original Loan Agreement is hereby amended as follows:
(i) Each
of
Sections 3.2(a)(ix)-(xi) of the Original Loan Agreement is hereby deleted in
its
entirety and replaced with the words “[RESERVED]”.
(ii) Section
3.2 of the Original Loan Agreement is hereby amended by adding the following
at
the end of Section 3.2 of the Original Loan Agreement:
“Notwithstanding
anything to the contrary herein (including this Section 3.2, Section 2.2(a)
and
Section 3.3), the parties acknowledge and agree that Borrower’s election to pay
for Qualified Project Construction Expenses with the proceeds of capital or
equity contributions (rather than Construction Loans) shall not be a valid
basis
for any Lender to decline to make a Construction Loan or Term
Loan.”
(b) Section 3.3
of the Original Loan Agreement is hereby amended by adding the following at
the
end of Section 3.3 of the Original Loan Agreement:
“Notwithstanding
anything to the contrary herein (including this Section 3.3. and Section
2.2(b)), if Borrower requests that the Lenders make a Term Loan the proceeds
of
which will be applied in whole or in part in the manner contemplated by Section
2.7(b)(iii) (and not in the manner contemplated by Section 2.7(b)(i)), then
the
conditions precedent specified in Sections 3.3(a)(iv)-(v), Sections
3.3(a)(viii)(A)-(B) and Sections 3.3(i)-(k) shall not be required to be
satisfied until sixty (60) days after the date of disbursement of the Term
Loan
(and Borrower covenants with the Lenders that it will so satisfy such conditions
on or before the date that is sixty (60) days after the date of disbursement
of
the Term Loan); provided,
that it
shall be a condition precedent to disbursement of the Term Loan that the
Administrative Agent receive a certificate of the Engineer satisfactory to
the
Administrative Agent, certifying that as of the date of disbursement of the
Term
Loan the Project is capable of operating in a manner that will permit Borrower
to comply with its obligations contained in Section 5.1(p).”
Section
1.5. Amendment
to Distribution Covenant.
Section
5.2(i) of the Original Loan Agreement is hereby amended by adding “or as
contemplated by Section 2.7(b)” at the end of such Section.
Section
1.6. Consents
to Certain Change Orders and Agreements.
(a) The
Administrative Agent and each Lender hereby consent to and approve for all
purposes under the Loan Documents (including, without limitation, Sections
3.2,
4.1(k), 5.1(e) and 5.2(c) of the Original Loan Agreement) each of the change
orders listed on Schedule
I
hereto
(and amendments, modifications or supplements thereto made after the date
hereof) and any other change order executed by Borrower after the date hereof
or
any other expenditure which was not approved by the Lenders on the Closing
Date;
provided, that
the
payment obligations under such change orders and such expenditures are funded
with the proceeds of capital or equity contributions received by Borrower (and
not with the proceeds of Loans) and provided,
further,
that no
such change order not listed on Schedule
I
hereto
and no amendment, modification or supplement to any change order, and no other
expenditure, materially alters the character of the Project. Without limiting
the foregoing, the Administrative Agent and each Lender hereby acknowledge
that
Borrower may dispute any such change orders pursuant to the dispute procedures
set forth in the EPC Contract or otherwise.
(b) Notwithstanding
anything to the contrary in the Loan Documents, the Administrative Agent and
each Lender hereby agree that, for so long as no Loans are outstanding, (i)
Borrower will not be required to comply with Sections 4.1(k), 5.1(e)(i) (solely
with respect to compliance with the Construction Budget and Construction and
Draw Schedule), 5.1(e)(ii), 5.2(c)(ii)(solely with respect to the change orders
listed in Schedule I hereto), and 5.2(c)(iv) of the Original Loan Agreement
and
(ii) any breach of any representation, warranty or covenant contained in any
Loan Document resulting from any PEIX Party’s failure to perform under the EPC
Contract or develop, construct, install, test or start-up the Project in the
manner required by the Loan Documents shall not be deemed to be a Default or
Event of Default if such breach could not reasonably be expected to have a
Material Adverse Effect (taking into account the absence of any Loans made
to
Borrower).
(c) Notwithstanding
anything to the contrary in the Loan Documents, the Administrative Agent and
each Lender hereby agree that any PEIX Party may without restriction directly
or
indirectly pay for any Qualified Project Construction Expenses with funds other
than Loan proceeds, and such payments may be considered capital or equity
contributions to Borrower.
ARTICLE
II
RIGHT
TO PARTICIPATE IN FUTURE FINANCING TRANSACTIONS
Section
2.1. Right
of Participation.
In
consideration of the agreement of the Administrative Agent and the Lenders
to
amend the Original Loan Agreement in the manner described in Article I of this
Amendment, PEI hereby grants to each of the Lenders who are a party to the
Original Loan Agreement as of August 1, 2006, the right to participate as a
lender in any refinancing or multi-plant financing involving the Project that
closes on or before December 31, 2006. Each Lender’s right to participate in any
such refinancing or multi-plant financing will be in a proportion relative
to
such Lender’s Pro Rata Share of the Aggregate Term Loan Commitment (provided,
that
without PEI’s prior written consent, the Lenders will only have the right to
provide up to $34,000,000 (in the aggregate) in commitments in respect of such
refinancing or financing). If a Lender agrees to participate in such refinancing
or multi-plant financing, then (a) the prepayment fee pursuant to the Original
Loan Agreement (as amended by this Amendment) or Early Termination Fee due
to
that Lender in connection with such repayment shall be reduced by a fraction
the
numerator of which is the aggregate amount of such Lender’s commitment to
participate in such refinancing or multi-plant financing and the denominator
of
which is the product of (i) such Lender’s Pro Rata Share of the Aggregate
Term Loan Commitment and (ii) 34,000,000 or (b) if such Lender has
previously received a prepayment fee or Early Termination Fee pursuant to the
Original Loan Agreement, as amended by this Amendment, then such Lender will
refund to Borrower, on the date of such refinancing or financing, the difference
between the fee received by it and the amount that would otherwise be payable
to
such Lender pursuant to the preceding clause (a).
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES
Section
3.1. Representations
and Warranties.
Each of
PEI, Borrower, the Administrative Agent and the Lenders represents and warrants
to each other party to this Amendment on and as of the date hereof that (a)
it
is duly organized or formed, validly existing and in good standing under the
Laws of the United States of America or the state of its incorporation or
formation and is duly qualified to do business as a foreign corporation and
is
in good standing in each jurisdiction in which such qualification is necessary
or desirable in view of its current or proposed business and operations or
the
ownership of its properties, (b) it has all necessary rights, franchises and
privileges and full power and authority to execute, deliver and perform this
Amendment and to conduct its business as currently conducted and as proposed
to
be conducted, (c) it has taken all necessary action to execute, deliver and
perform this Amendment and (d) this Amendment has been duly executed and
delivered by it and constitutes the legally valid and binding obligation of
it,
enforceable in accordance with its terms, except as enforcement may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar Laws relating
to or limiting creditors’ rights generally or by general principles of
equity.
Section
3.2. No
Default or Event of Default.
Each of
the Administrative Agent and the Lenders acknowledges that, as of the date
of
this Amendment, no Default or Event of Default has occurred and is continuing
under the Original Loan Agreement. Each of PEI and Borrower acknowledges and
agrees that, as of the date of this Amendment, none of the Administrative Agent
and the Lenders is in default of its obligations under the Loan
Documents.
ARTICLE
IV
GENERAL
PROVISIONS
Section
4.1. Counterparts.
This
Amendment may
be
executed in any number of counterparts and by the different parties hereto
in
separate counterparts, each of which when so executed will be deemed to be
an
original and all of which taken together will constitute one and the same
instrument.
Section
4.2. Costs
and Expenses.
PEI and
Borrower agree to pay to the Administrative Agent and the Lenders on demand
all
reasonable, documented costs and expenses incurred or arising in connection
with
the preparation, documentation, negotiation, execution and delivery of this
Amendment.
Section
4.3. Continuing
Effect of Other Loan Documents.
Except
as set forth in Article I hereof, the terms and provisions of the Loan Documents
remain in full force and effect without change, amendment, waiver or
modification. This Amendment constitutes a Loan Document and, from and after
the
date hereof, the Original Loan Agreement shall be deemed to be amended as
provided in Article I hereof.
Section
4.4. Governing
Law.
THIS
AMENDMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE
STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAW PROVISIONS THEREOF
(OTHER THAN SECTION 5.1401 OF THE GENERAL OBLIGATIONS LAW AND ANY SUCCESSOR
STATUTE THERETO).
IN
WITNESS WHEREOF, the parties hereto, intending to be legally bound, have caused
this Amendment No. 1 to Construction and Term Loan Agreement and Agreement
as to
Future Financing Transactions to be executed on the date first above
written.
PACIFIC
ETHANOL MADERA LLC
By
/s/
John T. Miller
Name:
John T. Miller
Title:
President
TD
BANKNORTH, N.A.,
as
the
Administrative Agent, a Construction
Lender
and a Term Lender
By
/s/
Jerome P. Peters, Jr.
Name:
Jerome P. Peters, Jr.
Title:
Senior Vice President
COMERICA
BANK,
as
a
Construction Lender and a Term Lender
By
/s/
Robert J. Harlan
Name:
Robert J. Harlan
Title:
Vice President
PACIFIC
ETHANOL, INC.
By
/s/
John T. Miller
Name:
John T. Miller
Title:
COO
Schedule
I
Change
Orders
|
GMP
At Financial Close
|
|
|
50,635,346.62
|
|
|
Includes
Change Order 4's 1-6
|
|
| |
|
|
|
|
|
|
|
|
Approved
&
Agreed
Change Orders
Change
Order #7
|
|
|
158,469.92
|
|
|
Permits,
etc
|
|
|
Change
Order #8
|
|
|
1,576,326,64
|
|
|
CLS
system
|
|
|
Change
Order #9
|
|
|
(384,237.03
|
)
|
|
Emergency
Generator
|
|
|
Change
Order #10
|
|
|
270,236.72
|
|
|
Electrical
|
|
|
Change
Order #11
|
|
|
307,904.87
|
|
|
12kV
switchgear
|
|
|
Change
Order #12
|
|
|
352,358.22
|
|
|
Electrical,
water
|
|
|
Change
Order #13
|
|
|
412,646.02
|
|
|
Electrical
|
|
| |
|
|
2,693.705.36
|
|
|
Subtotal
CO's 7-13
|
|
| |
|
|
|
|
|
|
|
|
Total
Approved &
Agreed
GMP
|
|
|
53,329,051.98
|
|
|
|
|
|
Potential
Change Orders Signed (CO's
unsigned)
|
|
|
|
|
|
|
|
|
Change
Order #14
|
|
|
307,713.80
|
|
|
Design,
Acceleration
|
|
|
Change
Order #15
|
|
|
130,919.30
|
|
|
Permits
|
|
|
Change
Order #16
|
|
|
245,221.01
|
|
|
Acceleration
|
|
|
Change
Order #17
|
|
|
299,373,67
|
|
|
Acceleration
|
|
| |
|
|
983,227.78
|
|
|
Subtotal
CO's 14-17
|
|
| |
|
|
|
|
|
|
|
|
Total
GMP Post CO #'s 14-17
|
|
|
54,312,279.76
|
|
|
|
|