Pacific Ethanol, Inc. Sacramento, CA 95814 March 27, 2008
Exhibit 10.5
000
Xxxxxxx Xxxx, Xxxxx 0000
Xxxxxxxxxx,
XX 00000
March 27,
2008
Xxxxx
United, LLC
0000 Xxxx
Xxxxx Xxxxxx
Xxxxxx,
XX 00000
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Re:
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Dividend
Rights
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Ladies
and Gentlemen:
This side
letter agreement (the “Letter
Agreement”) is provided with reference to that certain Securities
Purchase Agreement (the “Securities Purchase
Agreement”) dated March 18,
2008, by and between Pacific Ethanol, Inc., a Delaware corporation (the
“Company”), and Xxxxx United, LLC, a Delaware
limited liability company (the “Purchaser”), with reference to the Company’s
Certificate of Designations, Powers, Preferences, and Rights of the Series B
Cumulative Convertible Preferred Stock (the “Series B Certificate
of Designations”) with
respect to its Series B Cumulative Convertible Preferred Stock, $.001 par value
per share (the “Series B Preferred
Stock”), and with reference
to the Company’s Certificate of Designations, Powers, Preferences, and Rights of
the Series A Cumulative Redeemable Convertible Preferred Stock (the “Series A Certificate
of Designations”) with
respect to its Series A Cumulative Redeemable Convertible Preferred Stock, $.001
par value per share (the “Series A Preferred
Stock”). Capitalized terms not
defined herein shall have the respective meanings given to such terms in
the Securities Purchase
Agreement.
In
connection with the closing of the transactions contemplated by the Securities
Purchase Agreement and in furtherance thereof, the Company desires to waive
certain rights held by the Company and set forth in the Series B Certificate of
Designations in favor of the Purchaser, in its capacity as the sole holder of
all of the Company’s outstanding shares of Series B Preferred
Stock.
In
consideration of the mutual covenants herein contained, and for other valuable
consideration the receipt and sufficiency of which is hereby acknowledged, the
parties hereby agree as follows:
1. Waiver of
Series B PIK Right. The Company hereby expressly waives its
right under Section 3(a) of the Series B Certificate of Designations to pay any
dividends due and payable to the Purchaser as a holder of Series B Preferred Stock in
shares of Series B Preferred Stock (the “Series B PIK
Right”). The
Company hereby covenants that it shall not, without the prior written consent of
the Purchaser, exercise or attempt to exercise the Series B PIK Right provided
for in Section 3(a) of the Series B Certificate of Designations at any time
following the date of this Letter Agreement. In connection with
waiving its Series B PIK Right, the Company hereby acknowledges to the Purchaser
that the Company has, concurrently with the execution of this Letter Agreement,
entered into that certain Series A Preferred Stockholder Consent and Waiver
dated the date hereof with Cascade Investment, L.L.C., a Washington limited
liability company (“Cascade”), whereby the Company has agreed, among
other things, to waive its right under Section 3(a) of the Series A
Certificate of Designations to pay any dividends due and payable to Cascade as a
holder of Series A Preferred Stock
in shares of Series A Preferred Stock.
Xxxxx United, LLC
March 27,
2008
Page
2
2. Full
Force and Effect. Except as otherwise provided herein, the
Series B Certificate of Designations shall remain unchanged and in full force
and effect. Except as expressly set forth above, nothing in this
Letter Agreement shall be construed as a waiver of any rights of any of the
parties to this Letter Agreement under the Series B Certificate of
Designations.
In
witness whereof, the parties have executed this Letter Agreement as of March 27,
2008.
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By: /s/
XXXX X.
XXXXXXX
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Xxxx X. Xxxxxxx,
President and CEO
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XXXXX UNITED,
LLC
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By:
/s/
XXXXXXX X. XXXXX
XX
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Xxxxxxx X. Xxxxx
XX, Vice President
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