SECURITIES PURCHASE AGREEMENT
Exhibit 10.1
THIS
SECURITIES PURCHASE AGREEMENT is made on May 20, 2008 (the “Agreement”), by and between
Pacific Ethanol, Inc., a Delaware corporation (the “Company”), and each of the
investors identified on the signature page hereto (each, a “Purchaser” and collectively,
the “Purchasers”).
WHEREAS,
the Purchasers desire to purchase, and the Company desires to issue and sell,
upon the terms and conditions stated in this Agreement, (a) an aggregate of
294,870 shares (the “Preferred
Shares”) of the Company’s Series B Cumulative Convertible Preferred
Stock, par value $.001 per share (the “Series B Preferred Stock”),
and (b) warrants (the “Warrants”), each in the form
attached to this Agreement as Exhibit A, to acquire
up to an aggregate of 442,305 shares (the “Warrant Shares”) of the
Company’s common stock, par value $.001 per share (the “Common Stock”);
and
WHEREAS,
each Purchaser desires to purchase, upon the terms and conditions stated herein,
such number of Preferred Shares and a Warrant to purchase such number of Warrant
Shares as is set forth opposite his name on the signature page
hereto.
NOW,
THEREFORE, in consideration of the premises, representations, warranties and the
mutual covenants contained in this Agreement, and for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
ARTICLE
I
PURCHASE AND
SALE
1.1 Issuance,
Sale and Delivery of the Preferred Shares and Warrants. The Company
hereby agrees to issue and sells to each Purchaser, and each Purchaser hereby
agrees to purchase from the Company, in each case as set forth opposite his name
on the signature page hereto, (a) that number of Preferred Shares, and
(b) a Warrant to purchase that number of Warrant Shares, for the total
purchase price set forth opposite his name on the signature page
hereto.
1.2 Closing.
(a) Upon the
consummation of the transactions contemplated by this Agreement (the “Closing,” and the date
thereof, the “Closing
Date”), which shall be subject to satisfaction of the conditions set
forth in Section 1.2(b)
below, the Company shall issue and deliver to each Purchaser (a) a stock
certificate in definitive form, registered in the name of such Purchaser,
representing such Purchaser’s Preferred Shares, and (b) a Warrant in
definitive form, registered in the name of each Purchaser representing the right
to purchase such Purchaser’s Warrant Shares. As payment in full for
the Preferred Shares and the Warrant being purchased by each Purchaser under
this Agreement, and against delivery of the stock certificate therefor and
Warrant as aforesaid, on the Closing Date, each Purchaser shall pay to the
Company by wire transfer or by such other method as may be reasonably acceptable
to the Company, in immediately available funds, the amount set forth opposite
his name on the signature page hereto.
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(b) Each
Purchaser’s obligation to purchase and pay for the Preferred Shares and the
Warrant on the Closing Date is subject to the satisfaction, on or before the
Closing Date, of the following conditions:
(i) The
Company shall have received any and all consents, waivers or approvals from the
holder of the Company’s Series A Cumulative Redeemable Convertible Preferred
Stock, par value $.001 per share, necessary to issue and deliver the Preferred
Shares and the Warrants and to consummate the transactions contemplated under
this Agreement, the Warrants and under the Series A Certificate of Designations;
and
(ii) The
Company shall have received any and all consents, waivers or approvals from the
holder of the Company’s Series B Preferred Stock necessary to issue and deliver
the Preferred Shares and the Warrants and to consummate the transactions
contemplated under this Agreement, the Warrants and under the Series B
Certificate of Designations.
ARTICLE
II
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
The
Company represents and warrants to the Purchaser that:
2.1 Organization.
The Company is duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation and has the requisite power and
authority to own, lease and operate its assets, properties and business and to
carry on its business as it is now being conducted or proposed to be
conducted.
2.2 Certificate
of Incorporation. A true, correct and complete copy of the Company’s
certificate of incorporation, including all certificates of amendment and
certificates of designations including the Certificate of Designations, Powers,
Preferences and Rights of the Series A Cumulative Redeemable Convertible
Preferred Stock (the “Series A
Certificate of Designations”) and the Certificate of Designations,
Powers, Preferences and Rights of the Series B Cumulative Convertible Preferred
Stock (the “Series B
Certificate of Designations”) (collectively, the “Amended Charter”), is
attached hereto as Exhibit B.
2.3 Corporate
Power and Authority. The Company has all requisite power and
authority to execute and deliver this Agreement and each of the Warrants (the
“Transaction
Documents”). The Company has all requisite legal and corporate
power and authority to issue, sell and deliver the Preferred Shares and the
Warrants to the Purchasers hereunder, to issue and deliver shares of Series B Preferred Stock
as dividends in accordance with Section 3(a) of the Series B
Certificate of Designations (the “Dividend Shares”), to issue
and deliver the shares of Common Stock issuable upon conversion of the Series B
Preferred Stock (the “Conversion Shares”) and to
issue and deliver the Warrant Shares upon exercise of the
Warrants.
2
2.4 Authorization;
Validity. The Company’s: (a) execution and delivery of
the Transaction Documents and performance of its obligations thereunder,
(b) issuance, sale and delivery of the Preferred Shares and, when declared
as a dividend, the Dividend Shares, (c) issuance and delivery of the
Conversion Shares, (d) issuance and delivery of the Warrants, and
(e) issuance and delivery of the Warrant Shares have been duly authorized
by all requisite corporate action or will have been so authorized prior to the
Closing Date and, other than stockholder approval and approvals of or required
by The NASDAQ Stock Market, if any, no other corporate action on the part of the
Company or other approval or authorization is required on the part of the
Company, or any Person by Law or otherwise in order to make the Transaction
Documents the valid, binding and enforceable obligations of the Company. Each of
the Transaction Documents, when executed and delivered by the Company, will
constitute a legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its respective terms. For purposes of
this Agreement (i) “Person” shall mean an
individual, corporation, trust, partnership, limited liability company, joint
venture, unincorporated organization, government body or any agency or political
subdivision thereof, or any other entity, and (ii) “Law” with respect to any
Person, shall mean such Person’s certificate of incorporation or other
organizational documents, its by-laws and any foreign, federal, state or local
law, statute, rule, regulation, ordinance, code, directive, writ, injunction,
decree, judgment or order applicable to such Person.
2.5 Authorized
Capital Stock.
(a) The
Company’s authorized capital stock consists of 10,000,000 shares of Preferred
Stock, par value $.001 per share (the “Preferred Stock”), and
100,000,000 shares of Common Stock. Immediately prior to the Closing,
44,131,065 shares of Common Stock are outstanding, 3,750,000 shares of Series A
Cumulative Redeemable Convertible Preferred Stock (the “Series A Preferred Stock”)
are outstanding and 2,051,282 shares of Series B Preferred Stock are
outstanding.
(b) The
Preferred Shares have been duly authorized and the Preferred Shares, when issued
in accordance with this Agreement, and the Dividend Shares, when issued in
payment of any dividend, will be duly and validly issued, fully paid and
nonassessable shares of Series B Preferred Stock. The Conversion
Shares have been duly reserved for issuance upon conversion of the Preferred
Shares, if any Dividend Shares shall be issued, the Dividend Shares, and the
Warrant Shares shall have been duly reserved for issuance upon exercise of the
Warrants and, in each case, when so issued, will be duly authorized, validly
issued, fully paid and nonassessable shares of Common Stock.
ARTICLE
III
REPRESENTATIONS, WARRANTIES
AND COVENANTS OF THE PURCHASERS
3.1 Representations
and Warranties of the Purchaser. Each Purchaser represents and
warrants to the Company that:
(a) he is an
“accredited investor”
within the meaning of Rule 501 of Regulation D under the Securities Act of 1933,
as amended (the “Securities
Act”);
(b) his
Preferred Shares and Warrant being purchased by him are being acquired for his
own account for the purpose of investment and not with a view to, or for resale
in connection with, any distribution thereof within the meaning of the
Securities Act; and
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(c) he
understands that (i) his Preferred Shares, Dividend Shares, Conversion
Shares, Warrant and Warrant Shares have not been registered under the Securities
Act by reason of their issuance in a transaction exempt from the registration
requirements of the Securities Act pursuant to Section 4(2) thereof or Rule
505 or 506 promulgated under the Securities Act, (ii) his Preferred Shares,
Dividend Shares, Conversion Shares and Warrant Shares must be held indefinitely
unless a subsequent disposition thereof is registered under the Securities Act
or is exempt from such registration, and (iii) his Preferred Shares,
Dividend Shares, Conversion Shares, Warrant and Warrant Shares will bear the
legend to such effect set forth in Section 3.3.
3.2 Restricted
Securities. Each Purchaser agrees not to make any disposition
of all or any portion of his Preferred Shares, Dividend Shares, Conversion
Shares, Warrant or Warrant Shares unless and until such securities are
registered under the Securities Act and under any other applicable securities
laws or such sale or transfer is exempt from such registration.
3.3 Legend. Each
Purchaser acknowledges that the certificates or other instruments evidencing his
Preferred Shares, Dividend Shares, Conversion Shares, Warrant and Warrant Shares
will bear the legend set forth below:
THESE
SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS.
The
legend set forth above shall be removed by the Company from any certificate or
instrument evidencing Preferred Shares, the Dividend Shares, the Conversion
Shares, the Warrant or the Warrant Shares, and the Company shall issue a
certificate without such legend to the holder thereof, upon delivery to the
Company of an opinion by counsel (which may be counsel for the Company) that
such security can be freely transferred in a public sale without a registration
statement being in effect with respect to the legended security and the proposed
transaction and that such transfer will not jeopardize the exemption or
exemptions from registration pursuant to which the Company issued the Preferred
Shares, the Dividend Shares, the Conversion Shares, the Warrant or the Warrant
Shares; provided, however, that no opinion shall be required for dispositions
pursuant to Rule 144 under the Securities Act or in any transfer in compliance
with applicable securities laws where the transferee shall receive securities
bearing the legend above.
ARTICLE
IV
COVENANTS OF THE
COMPANY
The
Company covenants and agrees with the Purchasers that:
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4.1 Reserve
for Conversion Shares and Warrant Shares. The Company shall at
all times reserve and keep available out of its authorized but unissued shares
of Common Stock, for the purpose of effecting the conversion of the Preferred
Shares and effecting the exercise of the Warrants and otherwise complying with
the terms of this Agreement, such number of its duly authorized shares of Common
Stock as shall be sufficient to effect the conversion of the Preferred Shares
and the exercise of the Warrants from time to time outstanding or otherwise to
comply with the terms of this Agreement. If at any time the number of authorized
but unissued shares of Common Stock shall not be sufficient to effect the
conversion of the Preferred Shares and exercise of the Warrants or otherwise to
comply with the terms of this Agreement, the Company will forthwith take such
corporate action as may be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purposes. The Company will obtain any authorization, consent,
approval or other action by or make any filing with any court or governmental or
administrative body that may be required under applicable federal and state
securities laws in connection with the issuance of shares of Common Stock upon
conversion of the Preferred Shares and upon exercise of the
Warrants.
4.2 Indemnity.
(a) The
Company agrees to indemnify, defend and hold harmless each the Purchaser, and
his employees, agents, trustees, advisors (including, without limitation,
attorneys, accountants and financial advisors), attorneys-in-fact, successors
and assigns (collectively, “Indemnified Parties”) from
and against any and all losses, claims, liabilities, damages, deficiencies,
costs or expenses (including, without limitation, interest, penalties,
reasonable attorneys’ fees, disbursements and related charges and any costs or
expenses that an Indemnified Party incurs to enforce its right to
indemnification) (collectively, “Losses”) based upon, arising
out of or otherwise in respect of any material inaccuracy in or material breach
of any representations, warranties, covenants or agreements of the Company
contained in any of the Transaction Documents.
(b) The
provisions of this Section 4.2
shall not limit or impair any right or remedy arising from breach of any of the
Transaction Documents. In addition to any other remedy provided by
law, injunctive relief may be obtained to enjoin the breach, or threatened
breach, of any provision of this Agreement and each party shall be entitled to
specific performance by the others of their obligations hereunder and
thereunder. All remedies, either under this Agreement, by law or as
may otherwise be afforded to the Purchasers or the Company, as the case may be,
shall be cumulative.
ARTICLE
V
COVENANTS OF THE
PURCHASERS
The
Purchasers covenant and agree with the Company that:
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5.1 Conversion
Limitations. Notwithstanding the Conversion Price (as defined
in the Series B Certificate of Designations, the “Conversion Price”) adjustment
provisions of Section 5(d) of the Series B Certificate of Designations, the
Conversion Price applicable to the Preferred Shares shall not be adjusted to the
extent such adjustment would cause (a) the number of Conversion Shares issuable
upon conversion of all Preferred Shares issued and sold hereunder (including any
Dividend Shares issued subsequent to the date hereof in respect of such
Preferred Shares) to exceed 9.99% of the number of shares of the Company’s
Common Stock outstanding on the date hereof, or (b) the sum of (i) the number of
Conversion Shares issuable upon conversion of all Preferred Shares issued and
sold hereunder (including any Dividend Shares issued subsequent to the date
hereof in respect of such Preferred Shares), and (ii) the number of shares of
Common Stock plus the number of shares of Common Stock issuable upon conversion
or exercise of any other securities in each case issued in any transaction
deemed aggregated, or in the reasonable judgment of the Company on advice of
legal counsel, may be deemed aggregated, by The NASDAQ Stock Market for purposes
of NASDAQ Marketplace Rule 4350(i), to exceed 19.99% of the number of shares of
the Company’s Common Stock outstanding on the date hereof, or (c) the Conversion
Price applicable to the Preferred Shares to be lower than the sum of (i) the
closing price of a share of the Company’s Common Stock on The NASDAQ Global
Market on the date hereof, and (ii) $0.0625. The foregoing limitations shall be
applicable to all transferees of the Preferred Shares and, as a condition to the
Company’s obligation to effectuate a requested transfer of any Preferred Shares,
the transferring Purchaser shall cause its transferee to expressly acknowledge
and agree in writing to the foregoing limitations.
ARTICLE
VI
MISCELLANEOUS
6.1 Survival
of Agreements. All covenants, agreements, representations and warranties
made in any of the Transaction Documents or any certificate or instrument
delivered to the Purchasers pursuant to or in connection with any of the
Transaction Documents shall survive the execution and delivery of all of the
Transaction Documents, the issuance, sale and delivery of the Preferred Shares
and the Warrants, and the issuance and delivery of the Dividend Shares, the
Conversion Shares and the Warrant Shares, and all statements contained in any
certificate or other instrument delivered by the Company hereunder or thereunder
or in connection herewith or therewith shall be deemed to constitute
representations and warranties made by the Company.
6.2 Brokerage. Each
party hereto will indemnify and hold harmless the others against and in respect
of any claim for brokerage or other commissions relative to the Transaction
Documents or to the transactions contemplated thereby, based in any way on
agreements, arrangements or understandings made or claimed to have been made by
such party with any third party.
6.3 Parties
in Interest. All representations, warranties, covenants and
agreements contained in this Agreement by or on behalf of any of the parties
hereto shall bind and inure to the benefit of the respective successors and
assigns of the parties hereto whether so expressed or not. Without
limiting the generality of the foregoing, all representations, covenants and
agreements benefiting the Purchasers shall inure to the benefit of any and all
subsequent holders from time to time of the Preferred Shares, the Warrants, the
Dividend Shares, the Conversion Shares and the Warrant Shares, as the case may
be. Nothing in this Agreement shall create or be deemed to create any
third-party beneficiary rights in any Person other than the parties to this
Agreement or their respective successors and assigns except as expressly
provided in this Agreement.
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6.4 Specific
Performance. Each of the parties hereto acknowledges and
agrees that the breach of this Agreement would cause irreparable damage to the
other parties hereto and that the other parties hereto will not have an adequate
remedy at law. Therefore, the obligations of each of the parties
hereto under this Agreement shall be enforceable by a decree of specific
performance issued by any court of competent jurisdiction, and appropriate
injunctive relief may be applied for and granted in connection
therewith. Such remedies, however, shall be cumulative and not
exclusive and shall be in addition to any other remedies which any party may
have under this Agreement or otherwise.
6.5 Further
Assurances. The Company and each Purchaser agrees to execute
and deliver such other documents or agreements as may be necessary or desirable
for the implementation of the Transaction Documents and the consummation of the
transactions contemplated thereby.
6.6 Submission
to Jurisdiction; Consent to Service of Process.
(a) The
parties hereto hereby irrevocably submit to the exclusive jurisdiction of any
federal or state court located within Sacramento County, California, over any
dispute arising out of or relating to this Agreement or any of the transactions
contemplated hereby and each party hereby irrevocably agrees that all claims in
respect of such dispute or any suit, action or proceeding related thereto shall
be heard and determined in such courts. The parties hereby
irrevocably waive, to the fullest extent permitted by applicable law, any
objection which they may now or hereafter have to the laying of venue of any
such dispute brought in such court or any defense of inconvenient forum for the
maintenance of such dispute. Each of the parties hereto agrees that a
judgment in any such dispute may be enforced in other jurisdictions by suit on
the judgment or in any other manner provided by law.
(b) Each of
the parties hereto hereby consents to process being served by any party to this
Agreement in any suit, action or proceeding by the mailing of a copy thereof in
accordance with the provisions of Section 6.7.
6.7 Notices. Any
notice, request, demand or other communication required or permitted to be given
to a party pursuant to the provisions of this Agreement will be in writing and
will be effective and deemed given under this Agreement on the earliest
of: (a) the date of personal delivery, (b) the date of transmission
by facsimile, with confirmed transmission and receipt, (c) two (2) days after
deposit with a nationally-recognized courier or overnight service and (d) five
(5) days after mailing via first-class mail. All notices not
delivered personally or by facsimile will be sent with postage and other charges
prepaid and properly addressed to the party to be notified at the address set
forth for such party (i) if to a Purchaser, to the address set forth below his
name on the signature page hereto, and (ii) if to the Company, to Pacific
Ethanol, Inc., 000 Xxxxxxx Xxxx, Xxxxx 0000, Xxxxxxxxxx, XX 00000,
attention: General Counsel, with a copy to Xxxxx & Xxxxxx LLP,
000 Xxxxx Xxxxxxxxx, 00xx Xxxxx, Xxxxx Xxxx, XX 00000,
attention: Xxxxx X. Xxxxxxx, facsimile (000) 000-0000. Any
party hereto (and such party’s permitted assigns) may change such party’s
address for receipt of future notices hereunder by giving written notice to the
other parties.
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6.8 Governing
Law. This Agreement shall be governed by, and construed,
interpreted and enforced in accordance with, the laws of the State of
California, without giving effect to the principles of conflicts of laws
thereunder which would specify the application of the law of another
jurisdiction.
6.9 Entire
Agreement. The Transaction Documents, including the Exhibits
to this Agreement, constitute the sole and entire agreement of the parties with
respect to the subject matter thereof. All Exhibits hereto are hereby
incorporated herein by reference.
6.10 Counterparts. This
Agreement may be executed in counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
6.11 Amendments
and Waivers. This Agreement may not be amended or modified,
and no provisions hereof may be waived, without the written consent of the
Company and the Purchasers. No action taken pursuant to this
Agreement, including without limitation, any investigation by or on behalf of
any party, shall be deemed to constitute a waiver by the party taking such
action of compliance with any representation, warranty, covenant or agreement
contained herein. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a further or
continuing waiver of such breach or as a waiver of any other or subsequent
breach. No failure on the part of any party to exercise, and no delay
in exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of such right, power or remedy
by such party preclude any other or further exercise thereof or the exercise of
any other right, power or remedy. All remedies hereunder are
cumulative and are not exclusive of any other remedies provided by
law.
6.12 Severability. If
any provision of this Agreement shall be declared void or unenforceable by any
judicial or administrative authority, the validity of any other provision and of
the entire Agreement shall not be affected thereby.
6.13 Titles
and Subtitles; Interpretive Matters. The titles and subtitles
used in this Agreement are for convenience of reference only and are not to be
considered in construing or interpreting any term or provision of this
Agreement. No provision of this Agreement will be interpreted in
favor of, or against, any of the parties hereto by reason of the extent to which
any such party or its counsel participated in the drafting thereof or by reason
of the extent to which any such provision is inconsistent with any prior draft
hereof or thereof.
6.14 Facsimile
Signatures. Any signature page delivered by a fax machine
shall be binding to the same extent as an original signature page, with regard
to any agreement subject to the terms hereof or any amendment
thereto. Any party who delivers such a signature page agrees to
deliver promptly an original counterpart to each party to whom the faxed
signature page was sent.
6.15 Other
Remedies. In addition to those remedies specifically set forth
in the Transaction Documents, if any, each party may proceed to protect and
enforce its rights under the Transaction Documents either by suit in equity
and/or by action at law, including, but not limited to, an action for damages as
a result of any such breach and/or an action for specific performance of any
such covenant or agreement contained in the Transaction Documents. No
right or remedy conferred upon or reserved to any party under the Transaction
Documents is intended to be exclusive of any other right or remedy, and every
right and remedy shall be cumulative and in addition to every other right and
remedy given under the Transaction Documents or now and hereafter existing under
applicable law.
[SIGNATURE
PAGES FOLLOW]
8
IN
WITNESS WHEREOF, the Company and the Purchasers have executed this Purchase
Agreement as of the day and year first above written.
| COMPANY: | PACIFIC ETHANOL, INC. | ||
|
|
By:
|
/s/ XXXX X. XXXXXX | |
| Name: Xxxx X. Xxxxxx | |||
| Title: Chief Operating Officer | |||
[PURCHASERS’
SIGNATURE PAGES FOLLOW]
9
|
PURCHASER:
/S/ XXXX X.
XXXXXXX
|
SUBSCRIPTION
AMOUNT:
|
||
|
Xxxx
X. Xxxxxxx
Address: _________________________
_________________________________ Fax
(____) ________________________
|
Number
of Preferred Shares:
Number
of Warrant Shares:
Total
Purchase Price:
|
256,410
384,615
$5,000,000
|
|
|
PURCHASER:
|
|
||
|
/S/ XXXX XXXXX
|
SUBSCRIPTION
AMOUNT:
|
||
| Xxxx Xxxxx | |||
|
Address: _________________________
_________________________________ Fax
(____) ________________________
|
Number
of Preferred Shares:
Number
of Warrant Shares:
Total Purchase Price:
|
12,820
19,230
$ 250,000
|
|
|
PURCHASER:
/S/ XXXX X.
XXXXXXX
|
SUBSCRIPTION
AMOUNT:
|
||
| Xxxx X. Xxxxxxx | |||
|
Address: _________________________
________________________________
Fax (____) ________________________
|
Number of Preferred Shares:
Number of Warrant Shares:
Total Purchase Price:
|
12,820
19,230
$
250,000
|
|
|
PURCHASER:
/S/ XXXXXX X.
XXXXXXX
|
SUBSCRIPTION
AMOUNT:
|
||
| Xxxxxx X. Xxxxxxx | |||
|
Address:
________________________
________________________________
Fax (____) _______________________
|
Number
of Preferred Shares:
Number of Warrant Shares:
Total Purchase Price:
|
12,820
19,230
$
250,000
|
|
10
