AMENDMENT NO. 1 TO CONSTRUCTION AND TERM LOAN AGREEMENT AND AGREEMENT AS TO FUTURE FINANCING TRANSACTIONSConstruction Loan Agreement |
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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.
