Exhibit 10.3

 

KINERGY MARKETING LLC
400 Capitol Mall, Suite 2060
Sacramento, California 95814

 

December 4, 2013          

 

WELLS FARGO CAPITAL FINANCE, LLC,

as Agent for and on behalf of the

Lenders as referred to below

2450 Colorado Avenue

Suite 3000W

Santa Monica, CA 90404

 

Re:          Amendment No. 1 to Amended and Restated Loan and Security Agreement

 

Ladies and Gentlemen:

 

Wells Fargo Capital Finance, LLC ("WFCF"), in its capacity as agent ("Agent")
for the Lenders from time to time party to the Loan Agreement referred to below,
the Lenders, Kinergy Marketing LLC, an Oregon limited liability company
("Kinergy"), and Pacific Ag. Products, LLC, a California limited liability
company ("Pacific Ag", and together with Kinergy, each individually a
"Borrowers" and collectively, "Borrowers"), have entered into certain financing
arrangements pursuant to the Amended and Restated Loan and Security Agreement,
dated as of May 4, 2012, by and among Agent, Lenders and Borrowers (as amended
hereby and as the same may hereafter be further amended, modified, supplemented,
extended, renewed, restated or replaced, the "Loan Agreement"), and the other
Financing Agreements (as defined in the Loan Agreement). WFCF is currently both
the Agent and the sole Lender under the Loan Agreement and is hereinafter
referred to in this Amendment No. 1 to Amended and Restated Loan and Security
Agreement (this "Amendment"), in both such capacities, as "WFCF".

 

Borrowers and Parent have requested that WFCF agree to (a) eliminate the
Availability Block from the Borrowing Base, and (b) decrease the Applicable
Margin effective from and after December 1, 2014, and WFCF has agreed to make
such amendments to the Loan Agreement, on and subject to the terms and
conditions set forth herein.

 

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:

 

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1.       Interpretation. All initially capitalized terms used in this Amendment
shall have the meanings assigned thereto in the Loan Agreement and the other
Financing Agreements, unless otherwise defined herein.

 

2.       Additional Definitions. As used herein, the following terms shall have
the meanings given to them below, and Section 1 of the Loan Agreement is hereby
amended to include in appropriate alphabetical order, in addition and not in
limitation, the following definitions:

 

"Amendment No. 1" shall mean the Letter Agreement re: Amendment No. 1 to Amended
and Restated Loan and Security Agreement, dated as of December 4, 2013, by and
among Borrowers, Parent, Agent and the Lenders, as the same now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.

 

3.       Elimination of Availability Block from Borrowing Base.

 

(a)       The definition of "Borrowing Base" set forth in Section 1.13 of the
Loan Agreement is hereby amended by deleting clause (b) currently set forth
therein in its entirety and re-designating clause "(c)" currently set forth
therein as clause "(b)" thereof.

 

(b)       Notwithstanding the elimination of the Availability Block provided for
in Section 3(a) immediately above, WFCF shall have the right, in its sole
discretion, to establish a Reserve against the Borrowing Base at any time, and
from time to time, in an amount equal to the Availability Block. Such Reserve,
if established, will be in addition to, and not in limitation of, any other
Reserves then maintained by WFCF.

 

4.       Reduction of Applicable Margin. Effective from and after December 1,
2013, the definition of "Applicable Margin" set forth in Section 1.6(a) of the
Loan Agreement is hereby amended by amending and restating clause (a) thereof in
its entirety as follows (it being understood that the definition of Applicable
Margin as set forth in such Section 1.6(a) as of the date hereof shall remain in
effect at all times through and including November 30, 2103):

 

"1.6 "Applicable Margin" shall mean:

 

Subject to clause (b) below, at any time, as to the Interest Rate for all Loans,
the applicable percentage (on a per annum basis) set forth below if the
Quarterly Average Excess Availability is at or within the amounts indicated for
such percentage:

 

 

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Tier Quarterly Average
Excess Availability Applicable Margin 1 Greater than $6,000,000 2.25% 2 Less
than or equal to $6,000,000 and greater than or equal to $3,000,000 2.75% 3 Less
than $3,000,000 3.25%"

 

5.       Amendment of EBITDA Financial Covenant. Section 9.17(a) of the Loan
Agreement is hereby amended and restated in its entirety as follows:

 

"(a) EBITDA. As of the end of each fiscal month, commencing with the fiscal
month ending September 30, 2013 and for each fiscal month thereafter, Borrowers
shall maintain EBITDA of not less than (i) for the fiscal month ending September
30, 2013 and for each fiscal month thereafter through and including the fiscal
month ending December 31, 2013, for the three (3) fiscal months then ended
$450,000, (ii) for each respective fiscal month commencing with the fiscal month
ending September 30, 2013 through and including the fiscal month ending December
31, 2013, for the six (6) fiscal months then ended, $1,100,000, (iii) for the
fiscal month ending January 31, 2014 and for each fiscal month thereafter, for
the three (3) fiscal months then ended, $500,000, and (iv) for each respective
fiscal month commencing with the fiscal month ending January 31, 2014 and for
each fiscal month thereafter, for the six (6) fiscal months then ended,
$1,300,000."

 

6.       Representations, Warranties and Covenants. Borrowers and Parent hereby
represent, warrant and covenant to WFCF the following (which shall survive the
execution and delivery of this Amendment), the truth and accuracy of which are
continuing conditions of the making of Loans to Borrowers:

 

(a)       this Amendment has been duly authorized, executed and delivered by all
necessary action on the part of Borrowers and Parent and, if necessary, their
respective stockholders and/or members, as the case may be, and the agreements
and obligations of Borrowers and Parent contained herein and therein constitute
the legal, valid and binding obligations of Borrowers 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 this Amendment (a) are all
within Borrowers' and Parent's corporate or limited liability company powers (as
applicable), (b) are not in contravention of law or the terms of Borrowers' or
Parent's certificate or articles of organization or formation, operating
agreement, by-laws or other organizational documentation, or any indenture,
agreement or undertaking to which Borrowers or Parent is a party or by which
Borrowers, Parent 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 WFCF pursuant to the Loan Agreement and the
Financing Agreements as amended hereby;

 

 

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(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 Default or Event of Default
exists as of the date of this Amendment; and

 

(e)       no action of, or filing with, or consent of any governmental or public
body or authority 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.

 

7.      Conditions Precedent. This Amendment shall not become effective unless:

 

(a)       WFCF shall have received an original (or faxed or electronic copy) of
this Amendment, duly authorized, executed and delivered by Borrowers and Parent;
and

 

(b)       No Default or Event of Default shall have occurred and be continuing
on the date hereof and after giving effect to the amendments to the Loan
Agreement set forth herein.

 

8.       Effect of this Amendment. 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 and the Loan
Agreement or any of the other Financing Agreements, the terms of this Amendment
shall control. The Loan Agreement and this Amendment shall be read and construed
as one agreement.

 

9.       Further Assurances. At WFCF's request, Borrowers and Parent shall
execute and deliver such additional documents and take such additional actions
as WFCF requests to effectuate the provisions and purposes of this Amendment and
to protect and/or maintain perfection of WFCF's security interests in and liens
upon the Collateral.

 

10.       Governing Law. The validity, interpretation and enforcement of this
Amendment 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).

 

11.       Binding Effect. This Amendment shall be binding upon and inure to the
benefit of each of the parties hereto and their respective successors and
assigns

 

 

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12.       Counterparts. This Amendment may be executed in any number of
counterparts, but all of such counterparts shall together constitute but one and
the same agreement. In making proof of this Amendment, it shall not be necessary
to produce or account for more than one counterpart thereof signed by each of
the parties hereto. Delivery of an executed counterpart of this Amendment by
telecopier or other method of electronic communication shall have the same force
and effect as delivery of an original executed counterpart of this Amendment.
Any party delivering an executed counterpart of this Amendment by telecopier or
other method of electronic communication also shall deliver an original executed
counterpart of this Amendment, but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Amendment as to such party or any other party.

 

[SIGNATURE PAGE FOLLOWS]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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IN WITNESS hereof, the parties have executed and delivered this Amendment as of
the day and year first above written.

 

 

  Very truly yours,       KINERGY MARKETING LLC,     as a Borrower      
By:  /s/ Bryon T. McGregor   Name: Bryon T. McGregor   Title:  CFO       PACIFIC
AG. PRODUCTS, LLC,     as a Borrower       By:  /s/ Bryon T. McGregor   Name:
Bryon T. McGregor   Title:  CFO

 

 

AGREED TO:       WELLS FARGO CAPITAL FINANCE, LLC, PACIFIC ETHANOL, INC.,  as
Agent and sole Lender   as Parent     By: /s/ Carlos Valles By: /s/ Bryon T.
McGregor Name: Carlos  Valles Name: Bryon T. McGregor Title:  VP Title:  CFO

 

[Signature Page to Amendment No. 1 to A&R Loan and Security Agreement]

 

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