Exhibit 10.1
SECOND AMENDMENT TO FINANCING AGREEMENT
AND DEPOSITARY AND DISBURSEMENT AGREEMENT
     This SECOND AMENDMENT TO FINANCING AGREEMENT AND DEPOSITARY AND
DISBURSEMENT AGREEMENT (this “Amendment”), dated as of April 2, 2008, is made by
and among PANDA HEREFORD ETHANOL, L.P., as Borrower, SOCIÉTÉ GÉNÉRALE, as
Administrative Agent, Disbursement Agent and a Lender, and the LENDERS
(collectively, the “Parties”). Capitalized terms not defined in this Amendment
shall have the meanings given in the Financing Agreement, dated as of July 28,
2006 (as amended, the “Financing Agreement”), by and among Borrower, the Agents,
the Lenders from time to time party thereto, the LC Fronting Bank and the Lead
Arranger.
RECITALS
     WHEREAS, Borrower, the Lenders and Société Générale, as the Administrative
Agent (in such capacity, the “Administrative Agent”), have previously entered
into the Financing Agreement;
     WHEREAS, Borrower, the Lenders, the Administrative Agent and Société
Générale, as Disbursement Agent, have previously entered into the Depositary and
Disbursement Agreement, dated as of July 28, 2006 (as amended, the “Disbursement
Agreement”);
     WHEREAS, the Financing Agreement requires the Administrative Agent to
obtain the approval of the Majority Lenders with respect to the amendment of any
provision of any Financing Document;
     WHEREAS, in light of unforeseen delays in the construction of the Project,
the Project is not in compliance with the Construction and Draw Schedule and
Construction Budget and is not expected to meet the Substantial Completion date;
     WHEREAS, Borrower and the EPC Contractor have prepared a revised
Construction and Draw Schedule acceptable to the Administrative Agent, in
consultation with the Engineer, attached hereto as Exhibit A; and
     WHEREAS, in connection with the delays in the construction of the Project,
the Parties wish to amend the Financing Agreement, on the terms and conditions
set forth herein;
     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 is hereby acknowledged, the Parties agree as follows:

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     1. Amendment of Financing Agreement.
     (a) Section 3.5(g) is hereby deleted in its entirety and replaced with the
following:
     (g) If the Funding Date is not the first Funding Date for the Tranche A
Loans, and such Loan is a Term Loan, the Administrative Agent has received a
certificate of the Engineer, substantially in the form of Exhibit 3.5(g), dated
the applicable Term Loan Funding Date, certifying that (i) the progress of
construction of the Project is substantially in accordance with the Construction
and Draw Schedule and in conformity and compliance with the Construction Budget
and the Construction Contracts, (ii) the Project is reasonably expected to
achieve Substantial Completion by September 30, 2008, (iii) the Project is
reasonably expected to achieve Final Acceptance on or before February 15, 2009,
and (iv) Borrower has sufficient funds necessary to achieve Completion without
violating the Minimum Contingency Covenant.
     (b) Section 4.1(z) is hereby deleted in its entirety and replaced with the
following:
     (z) Scheduled Substantial Completion. As of the Closing Date, consistent
with the Construction Budget and the Construction and Draw Schedule, Substantial
Completion is achievable on or before September 30, 2008.
     (c) The first three sentences of Section 5.1(g) shall be deleted and
replaced with the following:
     (g) Operating Plan and Budget. Not later than July 31, 2008, and not later
than November 1 of each year thereafter, commencing November 1, 2009, Borrower
will submit to the Administrative Agent for approval, such approval not to be
unreasonably withheld or delayed, a proposed Operating Plan and Budget for the
next calendar year and a forecast of the operating profit of the Project for the
next three (3) calendar years. Each proposed Operating Plan and Budget shall be
subject to the reasonable approval of Administrative Agent acting in
consultation with the Engineer. Failure by the Administrative Agent to approve
or disapprove such proposed Operating Plan and Budget within sixty (60) days
after receipt thereof (or, in the case of the first Operating Plan and Budget,
thirty (30) days prior to the Completion Date) shall be deemed to be an approval
by the

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Administrative Agent of such proposed Operating Plan and Budget as the final
Operating Plan and Budget.
     (d) New clauses (x) and (y) shall be added to Section 5.1, as follows:
     (x) Construction Event Insurance Payment. On or before July 15, 2008,
Borrower shall have received proceeds of at least two million Dollars
($2,000,000) from Factory Mutual Insurance Company as a result of Borrower’s
claims under its insurance policy or policies in respect of the Construction
Event.
     (y) Setoff Rights. Borrower shall use its best commercial efforts to resist
any efforts (if any) by the EPC Contractor to render unenforceable Borrower’s
setoff rights under the EPC Contract, and such efforts may include defending
such rights in any litigation brought by the EPC Contractor.
     (e) Section 5.2(g)(ii) shall be deleted in its entirety and replaced with
the following: “(ii) Indebtedness not exceeding forty-five million Dollars
($45,000,000) owed to the Sub-Debt Provider and subject to the Intercreditor
Agreement;”
     (f) A new Section 5.2(s) shall be added, as follows:
     (s) Minimum Contingency Covenant. Borrower shall not, directly or
indirectly, cause or permit (through the submission of a Construction Draw
Request, the disbursement of a Construction Loan or otherwise) the amount in the
Budget Line Item labeled “Contingency” in the Construction Budget to be less
than one million Dollars ($1,000,000) at any time (the “Minimum Contingency
Covenant”).
     (g) Section 6.1(d) is hereby deleted in its entirety and replaced with the
following:
     (d) Borrower fails to observe the covenants set forth in Section 5.1(a),
(d), (l), (n), (r), (s) or (t), Section 5.2 or any covenant in the Disbursement
Agreement; provided, that Borrower shall have three (3) Business Days to cure
any failure to observe the Minimum Contingency Covenant in Section 5.2(s).
     (h) Section 6.1(r) is hereby deleted in its entirety and replaced with the
following: “(r) Completion has not occurred on or before November 15, 2008.”
     (i) New clauses (t), (u) and (v) shall be added to Section 6.1, as follows:

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     (t) Substantial Completion has not occurred on or before September 30,
2008.
     (u) Sponsor fails to perform or observe any term, covenant or agreement
contained in the Sponsor Support Agreement.
     (v) A final judgment or order not subject to appeal is rendered against
Borrower, ordering it to cease setting-off the liquidated damages owed by the
EPC Contractor to Borrower under the EPC Contract against Borrower’s payment
obligations to the EPC Contractor, or declaring that such setoffs are
unenforceable.
     (j) Paragraphs (D), (E) and (F) in Exhibit 3.5(g) of the Financing
Agreement are hereby deleted and replaced with the following (D), (E) and (F),
respectively:
     (D) We expect the Project to achieve Substantial Completion on or before
September 30, 2008.
     (E) We expect the Project to achieve Final Acceptance on or before February
15, 2009.
     (F) Borrower has sufficient funds to achieve Completion without violating
the Minimum Contingency Covenant.
     (k) Schedule X of the Financing Agreement is hereby amended as follows:
     (i) The following definitions shall be added, in alphabetical order, as
follows:
“Construction Event” means the sudden soil settling that has occurred under
certain Project tank foundations, the remediation of which has caused a
substantial delay in the completion and start-up of the Project.
“Minimum Contingency Covenant” has the meaning set forth in Section 5.2(s).
“Sponsor” means Panda Ethanol, Inc., a Nevada corporation.
“Sponsor Support Agreement” means the Sponsor Support Agreement, in the form
attached hereto as Exhibit B, by and among Sponsor, Borrower and the
Administrative Agent.
     (ii) The definition of “Panda Parties” is hereby deleted and the following
inserted in place thereof: “Panda Parties” means, collectively, Borrower,
Sponsor, the Borrower Partners and Operator.”

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     (iii) The definition of “Qualified Project Expenses” is hereby amended by
(A) inserting an “and” immediately prior to subclause “(ix)” therein and
inserting a period immediately after such subclause “(ix)” therein, (B) deleting
subclause “(x)” and the last sentence therein and replacing them with the
following: “None of the Arbitrage Bonus, the Benchmark Bonus or any bonuses paid
pursuant to the Construction Contracts are Qualified Project Expenses.”
     (iv) The definition of “Security Documents” is hereby amended by adding “,
Sponsor Support Agreement” immediately following the words “Retainage LC
Consent” therein.
     2. Amendment of Disbursement Agreement. The Disbursement Agreement is
hereby amended as follows:
     (a) Section 3.3(c) is amended by deleting the clause beginning with “FIRST”
therein and replacing such clause with the following:
“FIRST transfer, as requested by Borrower, to Borrower to pay the Construction
Fee to the Operator, an amount equal to the lesser of (i) $2,000,000 or (ii) the
difference of (A) the amount then remaining in the Construction Draw Account,
and (B) any amounts transferred by the Disbursement Agent from the Loss Proceeds
Account to the Construction Draw Account pursuant to Section 4.6(ii) and
     (b) Section 4.6(ii) is amended by adding the following at the end thereof:
Notwithstanding the foregoing, insurance proceeds from the Construction Event
shall be held in the Loss Proceeds Account or, upon the request of Borrower and
with the consent of the Administrative Agent (not to be unreasonably withheld),
certain amounts therein may be transferred by the Disbursement Agent to the
Construction Draw Account for the purpose of Borrower’s compliance with the
Minimum Contingency Covenant. Any remaining insurance proceeds from the
Construction Event shall be transferred to the Project Revenues Account at the
time the Construction Draw Account is closed pursuant to Section 3.3(c).
     (c) Paragraph C(8) of Exhibit 1.2(c) of the Disbursement Agreement is
hereby deleted and replaced with the following: “Borrower expects the Project to
achieve Substantial Completion by September 30, 2008 and Final Acceptance on or
before February 15, 2009.”
     3. No Other Changes. Except as explicitly amended by this Amendment, all of
the terms and conditions of the Financing Agreement, the Disbursement Agreement
and the Financing Documents remain unmodified and in full force and effect.

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     4. Representations and Warranties. Borrower hereby represents and warrants
to the Administrative Agent as follows:
     (a) Borrower has all the requisite power and authority to execute this
Amendment and to perform all of its respective obligations hereunder, and this
Amendment has been duly executed and delivered by Borrower and constitutes the
legal, valid and binding obligations of Borrower, enforceable in accordance with
its terms;
     (b) The execution, delivery and performance by Borrower of this Amendment
have been duly authorized by all necessary action and do not (i) require any
authorization, consent or approval by any governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign; (ii) violate any
provision of any law, rule or regulation or of any order, writ, injunction or
decree presently in effect, having applicability to Borrower or the
organizational documents of Borrower; or (iii) result in a breach or constitute
a default under any loan or credit agreement or any other agreement, lease or
instrument to which Borrower is a party or by which any of its respective
properties may be bound or effected;
     (c) No Default or Event of Default exists under the Financing Documents (as
amended hereby) on and as of the date hereof; and
     (d) Borrower hereby represents that all representations and warranties made
by it to the Senior Secured Parties in the Financing Agreement (as amended
hereby) and the other Financing Documents are true and correct in all material
respects with the same force and effect as if made on and as of the date hereof
(except to the extent such statements, representations and warranties made in
any such Financing Document or writing executed prior to the date hereof related
to a specific prior date).
     5. Effectiveness. This Amendment shall be deemed effective upon the receipt
by the Administrative Agent of the following:
     (a) this Amendment duly executed by Borrowers, the Administrative Agent and
the Majority Lenders;
     (b) the Sponsor Support Agreement duly executed by Borrower, Sponsor and
the Administrative Agent;
     (c) a favorable legal opinion addressed to the Lenders and the Agents, in
form and substance satisfactory to the Administrative Agent, from Chadbourne and
Parke LLP with respect to the enforceability of the Sponsor Support Agreement;
     (d) a certificate of the secretary of Sponsor, certifying as to (i) the
Organizational Documents of Sponsor; (ii) the incumbency of the signatories of

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Sponsor, and (iii) and resolutions of Sponsor, approving the Sponsor Support
Agreement and the transactions contemplated thereby;
     (e) a certificate of good standing of Sponsor issued by the State of
Nevada; and
     (f) such other instruments, documents and agreements as the Administrative
Agent may reasonably request, in form and substance reasonably satisfactory to
the Administrative Agent.
     6. Post Effective Date Condition. Borrower shall deliver to the
Administrative Agent not later than April 9, 2008, a favorable legal opinion
addressed to the Lenders and the Agents, in form and substance reasonably
satisfactory to the Administrative Agent and addressing customary corporate
opinions on corporate existence and authority, due authorization and no
conflicts with organizational documents, from Nevada counsel to Sponsor. Failure
to provide such opinion by such date will result in an immediate Event of
Default.
     7. Miscellaneous.
     (a) Each reference in the Financing Agreement to “this Agreement” and each
reference in each of the Financing Documents to the “Financing Agreement” shall
be deemed to refer to the Financing Agreement as amended by this Amendment.
     (b) Each reference in the Disbursement Agreement to “this Agreement” and
each reference in each of the Financing Documents to the “Disbursement
Agreement” shall be deemed to refer to the Disbursement Agreement as amended by
this Amendment.
     (c) This Amendment will be a Financing Document for all purposes of the
Financing Agreement.
     (d) This Amendment shall 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).
     (e) Except as expressly modified or amended herein, the Financing Agreement
and the Disbursement Agreement shall each continue in effect and shall continue
to bind the parties thereto.
     (f) This Amendment shall not constitute a waiver or modification of any of
the Lenders’ or Agents’ rights and remedies or of any of the terms, conditions,
warranties, representations, or covenants contained in the Financing Documents,
except as specifically set forth above, and the Lenders and the Agents hereby
reserve all of their rights and remedies pursuant to the Financing Documents and
applicable law.

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     (g) 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 and delivered will be deemed an original and all of which counterparts,
taken together, will constitute one and the same instrument.
[Signatures follow]

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IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to
Financing Agreement and Depositary and Disbursement Agreement to be duly
executed and delivered by their respective officers on the date first written
above.

            PANDA HEREFORD ETHANOL, L.P., as Borrower
      By:   PHE I, LLC, its sole general partner             By:   /s/ Darol
Lindloff         Name:   Darol Lindloff        Title:   President and CEO   

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IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to
Financing Agreement and Depositary and Disbursement Agreement to be duly
executed and delivered by their respective officers on the date first written
above.

            SOCIÉTÉ GÉNÉRALE, as Administrative Agent
      By:   /s/ Robert Preminger        Name:   Robert Preminger        Title:  
Managing Director   

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IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to
Financing Agreement and Depositary and Disbursement Agreement to be duly
executed and delivered by their respective officers on the date first written
above.

            AMMC CLO III, LIMITED, as Lender
      By:   American Money Management Corp.,
as Collateral Manager             By:   /s/ Kenneth J. Bushman         Name:  
Kenneth J. Bushman        Title:   Vice President   

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IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to
Financing Agreement and Depositary and Disbursement Agreement to be duly
executed and delivered by their respective officers on the date first written
above.

            AMMC CLO IV, LIMITED, as Lender
      By:   American Money Management Corp.,
as Collateral Manager             By:   /s/ Kenneth J. Bushman         Name:  
Kenneth J. Bushman        Title:   Vice President   

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IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to
Financing Agreement and Depositary and Disbursement Agreement to be duly
executed and delivered by their respective officers on the date first written
above.

            AMMC CLO V, LIMITED, as Lender
      By:   American Money Management Corp.,
as Collateral Manager             By:   /s/ Kenneth J. Bushman         Name:  
Kenneth J. Bushman        Title:   Vice President   

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IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to
Financing Agreement and Depositary and Disbursement Agreement to be duly
executed and delivered by their respective officers on the date first written
above.

            AMMC CLO VI, LIMITED, as Lender
      By:   American Money Management Corp.,
as Collateral Manager             By:   /s/ Kenneth J. Bushman         Name:  
Kenneth J. Bushman        Title:   Vice President   

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IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to
Financing Agreement and Depositary and Disbursement Agreement to be duly
executed and delivered by their respective officers on the date first written
above.

            BANCO BILBAO VIZCAYA ARGENTARIA S.A.,
as Lender
      By:   /s/ Rodolfo Hare         Name:   Rodolfo Hare        Title:   Vice
President
Global Corporate Banking              By:   /s/ John Martini         Name:  
John Martini        Title:   Vice President
Corporate Banking   

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IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to
Financing Agreement and Depositary and Disbursement Agreement to be duly
executed and delivered by their respective officers on the date first written
above.

            BANK OF AMERICA, N.A., as Lender
      By:   /s/Peter Sherman         Name:   Peter Sherman        Title:  
Managing Director   

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IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to
Financing Agreement and Depositary and Disbursement Agreement to be duly
executed and delivered by their respective officers on the date first written
above.

            GREAT AMERICAN INSURANCE COMPANY, as Lender
      By:   American Money Management Corp.,
as Collateral Manager             By:   /s/ Kenneth J. Bushman         Name:  
Kenneth J. Bushman        Title:   Vice President   

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IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to
Financing Agreement and Depositary and Disbursement Agreement to be duly
executed and delivered by their respective officers on the date first written
above.

            GREAT AMERICAN LIFE INSURANCE COMPANY, as Lender
      By:   American Money Management Corp.,
as Collateral Manager             By:   /s/ Kenneth J. Bushman         Name:  
Kenneth J. Bushman        Title:   Vice President   

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IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to
Financing Agreement and Depositary and Disbursement Agreement to be duly
executed and delivered by their respective officers on the date first written
above.

            GREENSTONE FARM CREDIT SERVICES ACA/FCLA, as Lender
      By:   /s/Alfred S. Compton, Jr.         Name:   Alfred S. Compton, Jr.   
    Title:   Vice President/Managing Director   

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IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to
Financing Agreement and Depositary and Disbursement Agreement to be duly
executed and delivered by their respective officers on the date first written
above.

            KFW IPEX-BANK GMBH, as Lender
      By:   /s/Friedrich Weigmann         Name:   Friedrich Weigmann       
Title:   Senior Project Manager              By:   /s/Matthias Krisch        
Name:   Matthias Krisch        Title:   Vice President   

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IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to
Financing Agreement and Depositary and Disbursement Agreement to be duly
executed and delivered by their respective officers on the date first written
above.

            NEDBANK LIMITED, as Lender
      By:   /s/Darren McDonnell         Name:   Darren McDonnell        Title:  
Authorized Officer              By:   /s/Stuart Orton         Name:   Stuart
Orton        Title:   Authorized Officer     

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