PURCHASE AGREEMENT
Exhibit 99.1
This
Purchase Agreement ("Agreement") is
entered into as of March 15, 2010, by and between Socius XX XX, Ltd., a Bermuda
exempted company ("Purchaser"), and
Xxxxx United, LLC, a Delaware limited liability company ("Creditor"), and, as
to the Acknowledgment at the end of this Agreement, by Pacific Ethanol, Inc., a
Delaware corporation ("PEI").
RECITALS.
A.Purchaser and Creditor are parties to
(and PEI has executed the "Acknowledgment By PEI" with respect to) that certain
Purchase and Option Agreement dated as of March 2, 2010 (the "Master Agreement"); except
as otherwise expressly stated herein, all capitalized words and terms used
herein have the meanings ascribed to them in the Master Agreement;
B.PEI is indebted to Creditor pursuant to
the terms of that certain Amended and Restated Promissory Note, payable to
Creditor, dated November 7, 2008, in the original principal amount of
$30,000,000 (the "Note").
C.The obligations of PEI to Creditor
under the Note are secured and/or credit enhanced by the terms of (i) that
certain Security Agreement dated as of November 7, 2008 between Pacific Ag.
Products, LLC, a California limited liability company and indirectly
wholly-owned subsidiary of PEI, and Creditor (the "Security Agreement"),
(ii) that certain Irrevocable Joint Instruction Letter dated November 7, 2008
among PEI, Pacific Ethanol California, Inc., a California corporation and
wholly-owned subsidiary of PEI, and Creditor (the "Instruction Letter"),
(iii) that certain Unconditional Guaranty dated November 7, 2008 by Pacific Ag.
Products, LLC in favor of Creditor (the "PacAg Guaranty"), and
(iv) that certain Limited Recourse Guaranty dated November 7, 2008 by Pacific
Ethanol California, Inc. in favor of Creditor (the "PEC Guaranty") (the
Security Agreement, Instruction Letter, PacAg Guaranty and PEC Guaranty
hereinafter are collectively referred to as the "Credit Enhancement
Documents").
D.As of the date of this Agreement, PEI
is in default under the Note, and is indebted to Creditor for unpaid principal
in the amount of $25,000,000. PEI is also indebted to Creditor for accrued and
unpaid interest, late fees and costs, and reimbursable fees or expenses related
to the Note and the defaults thereunder, for a total amount due and payable by
PEI to Creditor of $28, 455,221 (consisting of $25,000,000 principal amount,
plus $3,055,221 in unpaid interest accrued through March 14, 2010, plus $400,000
in reimbursable fees or expenses as of the date hereof (such total amount, plus
all additional interest that accrues on the unpaid principal balance under the
Note on and after March 15, 2010, being collectively referred to herein as the
"Indebtedness").
E.Pursuant to Section 6 of the Master
Agreement, Creditor has exercised an Option to sell, transfer and assign to
Purchaser its right to receive payment on a portion of the Indebtedness, Which
portion is $5 million in principal amount as specified in the Option Exercise
Notice provided by Creditor to Purchaser herewith (such portion of the
Indebtedness being hereinafter referred to as the "Subject Claim").
Pursuant to such exercise by Creditor, Purchaser desires to purchase the Subject
Claim, all subject to the terms and conditions set forth below.
NOW,
THEREFORE, in consideration of the agreements contained herein and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
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1.
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Purchase
and Sale-of Subject Claim; Excluded Rights: Purchase
Price.
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(a) Upon
the terms of this Agreement and subject only to the conditions subsequent set
forth in Section 2 below, Purchaser hereby purchases from Creditor, and Creditor
hereby sells, transfers, conveys and assigns to Purchaser, for the consideration
specified below, all right, title and interest in and to the Subject Claim. It
is expressly understood and agreed by the parties that the Subject Claim does
not include, and the Purchaser under this Agreement is not purchasing or
otherwise obtaining, (i) any rights under the Credit Enhancement Documents,
which Creditor hereby expressly retains and preserves for its own benefit, (ii)
except to the extent (if at all) expressly made part of the Subject Claim
pursuant to the specific described components of the Subject Claim set forth in
the Option Exercise Notice, any and all claims for accrued and unpaid interest
owing to Creditor by PEI as of the date hereof under or in connection with the
Note, including, without limitation, all accrued and unpaid interest on the
Subject Claim as of the date hereof, all of which claims are expressly retained
and preserved by Creditor for its own benefit, and (iii) except to the extent
(if at all) expressly made part of the Subject Claim pursuant to the specific
described components of the Subject Claim set forth in the Option Exercise
Notice, any and all claims of Creditor against PEI for reimbursable fees or
expenses under or in connection with the Note, which are expressly retained and
preserved by Creditor for its own benefit.
(b) The
total consideration to be paid by Purchaser to Creditor for the Subject Claim
shall be Five Million Dollars ($5,000,000) (the "Purchase Price"). The
Purchase Price shall be due and payable by Purchaser to Creditor by wire
transfer on the date set forth in sub-paragraph (b) of Section 2
below.
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2.
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Conditions
Subsequent.
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(a) Notice of
Filing of Action and Settlement Motion. No later than close of
business on the third business day after the date of this Agreement, Purchaser
shall provide written notice to Creditor that (i) Purchaser has filed an action
(the "Action")
against PEI in the Superior Court of the State of California for the County of
Los Angeles (the "Court") for
collection of the Subject Claim, specifying the date that the Action was
commenced (the "Action
Commencement Date"), and (ii) a motion in the Action has been filed
seeking Court approval of the settlement of the Action on terms acceptable to
Purchaser and in accordance with Section 3(a)(10) of the Securities Act of 1933,
as amended (the "Settlement"). If such
written notice is not provided by Purchaser to Creditor by the close of business
on the third business day after the date of this Agreement, then this Agreement
(including, without limitation, the provisions in the remainder of this Section
2) shall be deemed void ab initio and of no
further force or effect, and no sale or assignment of the Subject Claim shall
have occurred or be deemed to have occurred.
(b) Court Approval
Notice. Purchaser shall provide written notice to Creditor
reasonably promptly after the Court has entered an order in form and substance
acceptable to Purchaser approving the Settlement (such written notice being
hereinafter referred to as the "Court
Approval Notice"). In all events and circumstances, if
Purchaser has not provided the Court Approval Notice by the close of business on
the tenth business day after the Action Commencement Date (regardless of whether
Purchaser has simply overlooked providing such notice by such tenth business
day, is not in a position to provide such notice by such tenth business day
because the Court has not entered an order approving the Settlement by such
tenth business day, or for any other reason in Purchaser's sole discretion
Purchase has failed to timely provide the Court Approval Notice), then Creditor
shall have the right to terminate and cancel this Agreement by providing written
notice of termination to Purchaser at any time prior to, receiving the Court Approval
Notice from Purchaser. If such termination is so effected by Creditor, then this
Agreement shall be deemed void ab initio and of no
further force or effect, and no sale or assignment of the Subject Claim shall
have occurred or be deemed to have occurred.
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(c)
Payment
of Purchase Price. If the Court Approval Notice is provided by
Purchaser to Creditor before Creditor has exercised any termination right set
forth in sub-paragraph (b) immediately above, then no later than close of
business on the second business day after the date the Court Approval Notice is
provided by Purchaser to Creditor, Purchaser shall pay the Purchase Price to
Creditor by wire transfer pursuant to the wire transfer instructions set forth
in sub-paragraph (c) of Section 2 of the Master Agreement, as the same may be
amended or superseded by Creditor from time to time by written notice pursuant
to Section 10 of the Master Agreement (the date upon which the Purchase Price
has been so timely paid by Purchaser to Creditor being hereinafter referred to
as the "Payment Date"). If payment of
the Purchase Price is not so timely made by Purchaser to Creditor on the Payment
Date, then Creditor shall have the right to terminate and cancel this Agreement
by providing written notice of termination to Purchaser at any time prior to
payment of the Purchase Price. If such termination is so effected by Creditor,
then this Agreement shall be deemed void ab initio and of no
further force or effect, and no sale or assignment of the Subject Claim shall
have occurred or be deemed to have occurred.
3.
Upon (and only upon) the occurrence of the following four conditions subsequent:
(i) the items specified in sub-paragraphs (i) and (ii) of subparagraph (c) of
Section 6 of the Master Agreement, as such items pertain to this Agreement,
having been timely provided by Purchaser to Creditor, (ii) written notice of the
Action Commencement Date and of the filing of the motion for Court approval of
the Settlement having been timely provided to Creditor by Purchaser pursuant to
sub-paragraph (a) of Section 2 above, (iii) the Court Approval Notice having
been provided by Purchaser to Creditor before Creditor has exercised any
termination right pursuant to sub-paragraph (b) of Section 2 above, and (iv) the
payment of the Purchase Price to Creditor before Creditor has exercised any
termination right pursuant to sub-paragraph (c) of Paragraph 2
above,
(a)
All conditions subsequent shall
have been satisfied' and the sale and assignment of the Subject Claim shall be
complete and indefeasible, and
(b)
Prior to the close of business on
the second business day after the occurrence of the four conditions subsequent
described above in this Section 3, Creditor shall take the actions set forth in
sub-paragraph (y) of sub-paragraph (f) of Section 6 of the Master Agreement with
respect to a New Allonge/Amendment that gives effect to the consummation of the
sale and assignment of the Subject Claim to Purchaser.
4.
Representations and
Warranties of Creditor. The
representations and warranties made by Creditor to Purchaser in Section 4 of the
Master Agreement shall apply to this Agreement as set forth in sub-paragraph (f)
of Section 4 of the Master Agreement.
5.
Representations and
Warranties of Purchaser. The
representations and warranties made by Purchaser to Creditor in Section 5 of the
Master Agreement shall apply to this Agreement as set forth in sub-paragraph (d)
of Section 5 of the Master Agreement.
6.
Fees and
Expenses. Each of Creditor
and Purchaser shall pay the fees and expenses of its own advisers, counsel,
accountants and other experts, if any, and all other expenses incurred by such
party incident to the negotiation, preparation, execution, delivery and
performance of this Agreement. Creditor understands that Purchaser shall not be
liable for any commissions, selling expenses, orders, purchases, contracts,
taxes, withholding, or obligations of any kind resulting from any of Creditor's
transactions. Creditor agrees to satisfy any and all of its tax withholding and
other obligations from the Purchase Price, and will indemnify, defend and hold
Purchaser and its affiliates harmless with respect to all such
obligations.
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7.
Choice
of Law. This Agreement shall be governed by and construed according to
the laws of the State of California, without giving effect to its choice of law
principles. Creditor agrees that all actions and proceedings arising out of or
relating directly or indirectly to this Agreement or any ancillary agreement or
any other obligations shall be litigated solely and exclusively in the state or
federal courts located in Los Angeles, California, that such courts are
convenient forums, and that Creditor submits to the personal jurisdiction of
such courts for purposes of any such actions or proceedings.
8.
Limitation
of Damages.
Each of the parties hereby waives any right which it may have to claim or
recover any incidental, special, exemplary, punitive or consequential damages or
any damages other than, or in addition to, actual damages. Purchaser shall have
no liability hereunder for any delay in or failure to obtain Court Approval or
for any other causes beyond Purchaser's control.
9.
Notices.
All notices and other communications under this Agreement shall be provided as
set forth in Section 10 of the Master Agreement.
10.
General.
The headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof. The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rules of strict
construction will be applied against any party. This Agreement is intended for
the benefit of Creditor and Purchaser and their respective successors and
permitted assigns and is not for the benefit of, nor may any provision hereof be
enforced by, any other person (except for the provision in sub-paragraph (b) of
Section 3 above that is expressly stated to be for the benefit of, and
enforceable by, PEI). The representations and warranties contained herein shall
survive the closing of the transaction contemplated herein and the assignment of
the Subject Claim. This Agreement may be executed in two or more counterparts,
by facsimile or electronic transmission, All of which when taken together shall
be considered one original.
11.
Amendments
and Waivers.
No provision of this Agreement may be waived or amended except in a written
instrument signed, in the case of an amendment, by both Creditor and Purchaser,
or, in the case of a waiver, by the party against whom enforcement of any such
waiver is sought. No waiver of any default with respect to any provision,
condition or requirement of this Agreement shall be deemed to be a continuing
waiver in the future or a waiver of any subsequent default or a waiver of any
other provision, condition or requirement hereof, nor shall any delay or
omission of either Creditor or Purchaser to exercise any right hereunder in any
manner impair the exercise of any such right.
12.
Entire
Agreement.
This Agreement and the Master Agreement, together with the exhibits hereto and
thereto, contain the entire agreement and understanding between Creditor and
Purchaser,, and supersede
all prior and contemporaneous agreements, term sheets, letters, discussions,
communications and understandings, both oral and written, between Creditor and
Purchaser concerning the sale and assignment of the Subject Claim, which
Creditor and Purchaser acknowledge have been merged herein and therein. (To
avoid any unintended ambiguity, the parties expressly acknowledge and agree that
this Agreement, although later in point in time than the Master Agreement, does
not supersede the Master Agreement.) No party, representative, attorney or agent
has relied upon any collateral contract, agreement, assurance, promise,
understanding or representation not expressly set forth hereinabove. The parties
hereby expressly waive all rights and remedies, at law and in equity, directly
or indirectly arising out of or relating to, or which may arise as a result of,
any person or entity's reliance on any such assurance.
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IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed on the day and year first above written.
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PURCHASER:
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SOCIUS
XX XX, LTD.,
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a
Bermuda exempted company
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By:
/s/
JSD
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Its:
Managing Director
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CREDITOR:
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XXXXX
UNITED, LLC,
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a
Delaware limited liability company
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By:
X. X. Xxxxx
XX
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Its:
V.P.
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ACKNOWLEDGMENT BY
PEI
PEI hereby acknowledges and
agrees as follows as of the Action Commencement Date (as defined
in the foregoing Agreement) and as of the Payment Date (as defined in the
foregoing Agreement):
(1) The
recitals in Recital Paragraphs A, B, C and D on the first page of the foregoing
Agreement are true and correct;
(2) The
sale and assignment of the Subject Claim only covers and includes $5,000,000 in
principal amount of the outstanding balance under the Note, Creditor reserves
and preserves all of its other claims and interests under or in connection with
the Note, and Creditor's sale and assignment of the Subject Claim does not and
shall not in any way prejudice or have any adverse effect on such other claims
and interests of Creditor under or in connection with the Note;
(3) The
execution, delivery and performance of the foregoing Agreement by Creditor and
Purchaser does not and will not (a) conflict with, violate or cause a breach or
default under the Note, any of the Credit Enhancement Documents, or any other
agreement or document related to the debt comprising the Subject Claim, or (b)
require any waiver, consent or other action of PEI or any affiliate of
PEI;
(4) The
Note is valid, outstanding and enforceable in accordance with its terms, and is
not subject to any defense or offset, and shall not become subject to any
defense or offset (other than reduction of the Indebtedness by the amount of the
Subject Claim when and as provided in sub-paragraph (b) of Paragraph 3 of the
foregoing Agreement) by virtue of the consummation of the sale and assignment
under the foregoing Agreement; and Creditor has, and shall continue to have
after the consummation of the sale and assignment under the foregoing Agreement,
a valid, enforceable and perfected security interest in and liens upon the
property of PEI or any of its affiliates in which Creditor has been granted a
security interest pursuant to any of the Credit Enhancement Documents to secure
all outstanding obligations under the Note or any of the Credit Enhancement
Documents; and
(5) Creditor
is relying on the foregoing acknowledgments and agreements by PEI in entering
into the foregoing Agreement and in selling and assigning the Subject Claim, and
Purchaser is relying on the foregoing acknowledgments and agreements by PEI in
entering into the foregoing Agreement and in purchasing and taking assignment of
the Subject Claim.
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a
Delaware corporation
By:
Xxxx
X.
Xxxxxxx
Its:
Chief Executive Officer
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