EXHIBIT
10.3
REGISTRATION
RIGHTS AGREEMENT
THIS
REGISTRATION RIGHTS AGREEMENT (this “Agreement”)
dated
as of October 17, 2006 is made by and between PACIFIC ETHANOL, INC., a
Delaware corporation (the “Company”),
and
EAGLE ENERGY, LLC, a South Dakota limited liability company (the “Seller”).
This
Agreement is being entered into pursuant to the Membership Interests Purchase
Agreement, dated as of the date hereof between the Company and the Seller (the
“Purchase
Agreement”).
The
Company and the Seller hereby agree as follows:
1. Definitions.
Capitalized terms used and not otherwise defined herein shall have the meanings
given such terms in the Purchase Agreement. Unless otherwise defined in the
Purchase Agreement, capitalized terms used in this Agreement are defined in
Exhibit A.
2. Mandatory
Registration.
On or
prior to the Filing Date, the Company shall prepare and file with the Commission
a Registration Statement covering all Registrable Securities for an offering
pursuant to Rule 415. The Registration Statement shall be on Form S-3 (except
if
the Company is not then eligible to register for resale the Registrable
Securities on Form S-3, in which case such registration shall be on another
appropriate form). The Company shall use its commercially reasonable efforts
to
cause the Registration Statement to be declared effective under the Securities
Act as promptly as reasonably possible after the filing thereof and to keep
such
Registration Statement continuously effective under the Securities Act until
such date as is the earlier of: (i) the date when all Registrable Securities
covered by such Registration Statement have been sold; and (ii) the date on
which all Registrable Securities may be sold during a period of 90 days without
any restriction pursuant to Rule 144 as determined by counsel to the Company
pursuant to a written opinion letter, addressed to the Company’s transfer agent
to such effect (the “Effectiveness
Period”).
3. Registration
Procedures.
In
connection with the Company’s registration obligations hereunder, the Company
shall:
(a) (i) Prepare
and file with the Commission on or prior to the Filing Date, a Registration
Statement on Form S-3 (or if the Company is not then eligible to register for
resale the Registrable Securities on Form S-3 such registration shall be on
another appropriate form) in accordance with the method or methods of
distribution thereof as specified by the Holders, and use its commercially
reasonable efforts to cause the Registration Statement to become effective
as
soon as possible and to remain effective as provided herein. The Company shall
provide a copy of the Registration Statement, and any amendments or supplements
thereto, to the Holder by facsimile, e-mail or other method of communication
acceptable to the Holder, at least two Business Days prior to filing the same
with the Commission and shall incorporate into the same any revisions or changes
therein regarding the Holder as the Holder shall reasonably request. The Company
shall promptly notify the Holders via facsimile of the effectiveness of the
Registration Statement by the third Business Day after the Company receives
notification of the effectiveness from the Commission.
(ii) If:
(A)
the Registration Statement is not filed on or prior to the Filing Date, (B)
the
Company fails to file with the Commission a request for acceleration in
accordance with Rule 461 promulgated under the Securities Act, within five
Business Days of the date that the Company is notified (orally or in writing,
whichever is earlier) by the Commission that the Registration Statement will
not
be “reviewed,” or is not subject to further review, (C) the Registration
Statement filed is not declared effective by the Commission on or before the
Effectiveness Date, (D) the Company fails to have the Registrable
Securities listed on an Eligible Market at any time during the Effectiveness
Period, (E) except as provided in subsection
3(n)
below,
after the Registration Statement is first declared effective by the Commission,
it ceases for any reason to remain continuously effective as to all Registrable
Securities for which it is required to be effective, or the Holders are not
permitted to utilize the Prospectus therein to resell such Registrable
Securities, for more than 10 Business Days, or (F) in the event the Holder
has
been notified in the circumstances and in accordance with subsection
3(n)
below,
after the Registration Statement is first declared effective by the Commission,
it ceases for any reason to remain continuously effective as to all Registrable
Securities for which it is required to be effective, or the Holders are not
permitted to utilize the Prospectus therein to resell such Registrable
Securities, for an aggregate of 45 days during any 12-month period (which need
not be consecutive days) (any such failure or breach being referred to as an
“Event,”
and
for purposes of clause (A), (C) or (D) the date on which such Event occurs,
or
for purposes of clause (B) or (E), the date on which such five Business Day
period is exceeded, or for purposes of clause (F) the date on which such 45
day-period plus is exceeded being referred to as “Event
Date”),
then
on each such Event Date and on each monthly anniversary of each such Event
Date
(if the applicable Event shall not have been cured by such date) until the
applicable Event is cured, the Company shall pay to each Holder an amount in
cash, as liquidated damages and not as a penalty, equal to 1.0% of (x) the
sum
of number of Registrable Securities held by the Holder plus the number of
Warrant Shares issuable upon exercise of the Warrants as of the Event Date,
multiplied by (y) the closing market price of the Company’s Common Stock on
the Event Date; provided,
however,
that
the total amount of payments pursuant to this Section
3(a)(ii)
shall
not exceed, when aggregated with all such payments paid to the Holder and all
other Holders, $3,000,000. The foregoing liquidated damages shall be calculated
as of each monthly anniversary of each such Event Date if the applicable Event
shall not have been cured by such date. If the Company fails to pay any
liquidated damages pursuant to this Section in full within seven days after
the
date payable, the Company will pay interest thereon at a rate of 8% per annum
(or such lesser maximum amount that is permitted to be paid by applicable law)
to the Holder, accruing daily from the date such liquidated damages are due
until such amounts, plus all such interest thereon, are paid in
full.
(b) Prepare
and file with the Commission such amendments, including post-effective
amendments, to the Registration Statement as may be necessary to keep the
Registration Statement continuously effective as to the applicable Registrable
Securities for the Effectiveness Period and prepare and file with the Commission
such additional Registration Statements necessary to register for resale under
the Securities Act all of the Registrable Securities; (ii) cause the related
Prospectus to be amended or supplemented by any required Prospectus supplement,
and as so supplemented or amended to be filed pursuant to Rule 424 (or any
similar provisions then in force) promulgated under the Securities Act; (iii)
respond as promptly as reasonably possible to any comments received from the
Commission, and in any event within 12 Business Days (except to the extent
that
the Company reasonably requires additional time to respond to accounting
comments), with respect to the Registration Statement or any amendment thereto;
and (iv) comply in all material respects with the provisions of the Securities
Act and the Exchange Act with respect to the disposition of all Registrable
Securities covered by the Registration Statement during the applicable period
in
accordance with the intended methods of disposition by the Holders thereof
set
forth in the Registration Statement, as amended, or in such Prospectus, as
supplemented.
(c) Notify
the Holders of Registrable Securities to be sold as promptly as reasonably
possible: (i) of any comments of the Commission with respect to, or any request
by the Commission or any other federal or state governmental authority for
amendments or supplements to, the Registration Statement or Prospectus; (ii)
of
the issuance by the Commission of any stop order suspending the effectiveness
of
the Registration Statement covering any or all of the Registrable Securities
or
the initiation of any Proceedings for that purpose; (iii) of the receipt by
the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of any of the Registrable Securities for sale
in
any jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; and (iv) of the occurrence of any event that makes any statement made
in the Registration Statement or Prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect
or
that requires any revisions to the Registration Statement, Prospectus or other
documents so that, in the case of the Registration Statement or the Prospectus,
as the case may be, it will not contain any untrue statement of a material
fact
or omit to state any material fact required to be stated therein or necessary
to
make the statements therein, in the light of the circumstances under which
they
were made, not misleading.
(d) Use
its
reasonable efforts to avoid the issuance of, or, if issued, obtain the
withdrawal of: (i) any order suspending the effectiveness of the Registration
Statement; or (ii) any suspension of the qualification (or exemption from
qualification) of any of the Registrable Securities for sale in any
jurisdiction, at the earliest practicable moment.
(e) Promptly
deliver to each Holder, without charge, to the extent requested by such Person,
at least one conformed copy of each Registration Statement and each amendment
thereto, including financial statements and schedules, all documents
incorporated or deemed to be incorporated therein by reference and all exhibits
(including those previously furnished or incorporated by reference) after the
filing of such documents with the Commission.
(f) On
the
effective date of the Registration Statement and any post-effective amendment
thereto, notify the Holder and promptly, but in any event within two Business
Days, deliver to each Holder, without charge, as many copies of the Prospectus
or Prospectuses (including each form of prospectus) and each amendment or
supplement thereto as such Person may reasonably request; and the Company hereby
consents to the use of such Prospectus and each amendment or supplement thereto,
during periods in which such Prospectus and each amendment or supplement thereto
are effective, by each Holder in connection with the offering and sale of the
Registrable Securities covered by such Prospectus and any amendment or
supplement thereto.
(g) Prior
to
any public offering of Registrable Securities, use its reasonable efforts to
register or qualify or cooperate with the Holders in connection with the
registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United States
as
any Holder requests in writing, to keep each such registration or qualification
(or exemption therefrom) effective during the Effectiveness Period and to do
any
and all other acts or things necessary or advisable to enable the disposition
in
such jurisdictions of the Registrable Securities covered by a Registration
Statement; provided,
however,
that
the Company shall not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take any action that would
subject it to general service of process in any such jurisdiction where it
is
not then so subject or subject the Company to any material tax in any such
jurisdiction where it is not then so subject.
(h) Cooperate
with the Holders to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold pursuant to a
Registration Statement.
(i) Upon
the
occurrence of any event contemplated by Section 3(c),
as
promptly as reasonably possible, prepare a supplement or amendment, including
a
post-effective amendment, to the Registration Statement or a supplement to
the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, and file any other required document so that, as
thereafter delivered, neither the Registration Statement nor such Prospectus
will contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading.
(j) During
the Effectiveness Period, maintain the listing of such Registrable Securities
on
the Trading Market or another Eligible Market;
(k) If
the
Registration Statement refers to any Holder by name or otherwise as the holder
of any securities of the Company, then such Holder shall have the right to
require (if such reference to such Holder by name or otherwise is not required
by the Securities Act or any similar federal statute then in force) the deletion
of the reference to such Holder in any amendment or supplement to the
Registration Statement filed or prepared subsequent to the time that such
reference ceases to be required.
Each
Holder covenants and agrees that: (i) it will not sell any Registrable
Securities pursuant to the Registration Statement until it has received copies
of the Prospectus as then amended or supplemented as contemplated in
Section 3(f)
and
written notice from the Company that such Registration Statement and any
post-effective amendments thereto have become effective as contemplated by
Section 3(f);
(ii) it
and its officers, directors or Affiliates, if any, will comply with the
prospectus delivery and all other requirements of the Securities Act as
applicable to them in connection with sales of Registrable Securities pursuant
to the Registration Statement; and (iii) it will furnish to the Company
information regarding such Holder and the distribution of such Registrable
Securities as is required by law to be disclosed in the Registration Statement,
and the Company may exclude from such registration the Registrable Securities
of
any such Holder who fails to furnish such information prior to the earlier
of
the time the Registration Statement is filed or a reasonable time after
receiving such request.
Each
Holder agrees by its acquisition of such Registrable Securities that, upon
receipt of a notice from the Company of the occurrence of any event of the
kind
described in Section 3(c)(i),
3(c)(ii),
3(c)(iii),
or
3(c)(iv),
such
Holder will forthwith discontinue disposition of such Registrable Securities
under the Registration Statement until such Holder’s receipt of the copies of
the supplemented Prospectus and/or amended Registration Statement contemplated
by Section 3(i),
or
until it is advised in writing (the “Advice”)
by the
Company that the use of the applicable Prospectus may be resumed, and, in either
case, has received copies of any additional or supplemental filings that are
incorporated or deemed to be incorporated by reference in such Prospectus or
Registration Statement.
(l) Not
sell,
offer for sale or solicit offers for sale or to buy, and shall use its best
efforts to ensure that no Affiliate of the Company shall, sell, offer for sale
or to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or
sale
of the Registrable Securities in a manner that would require the registration
under the Securities Act of the sale of the Securities to the Holders or that
would be integrated with the offer or sale of the Securities for purposes of
the
rules and regulations of any Trading Market.
(m) Not
permit any of its security holders (other than the Holder in such capacity
pursuant hereto) to include securities of the Company in the Registration
Statement other than the Registrable Securities, and the Company shall not
after
the date hereof enter into any agreement providing any such right to any of
its
security holders.
(n) Notwithstanding
anything to the contrary in this Section
3,
if
at
any
time after the date the Registration Statement is declared effective the Company
furnishes to the Holder a certificate signed by the Company’s chief executive
officer stating that in the good faith judgment of the Company’s Board of
Directors it would be materially detrimental to the Company and its stockholders
for such Registration Statement to remain effective for as long as such
Registration Statement otherwise would be required to remain effective, because
such action would (i) materially interfere with a significant acquisition,
corporate reorganization, or other similar transaction involving the Company;
(ii) require premature disclosure of material non-public information that the
Company has a bona fide business purpose for preserving as confidential; or
(iii) render the Company unable to comply with requirements under the
Securities Act or Exchange Act,
then the
Company shall have the right to suspend
effectiveness of a Registration Statement for a period not to exceed 15
consecutive Business Days; provided,
however,
that
the Company may not suspend its obligation under this Section 3(n)
for more
than 30 Business Days in the aggregate during any 12-month period; and
provided,
further,
that no
such postponement or suspension shall be permitted for consecutive 15 Business
Day periods arising out of the same set of facts, circumstances or
transactions.
4. Registration
Expenses.
All
fees and expenses incident to the performance of or compliance with this
Agreement by the Company, except as and to the extent specified in this
Section 4,
shall
be borne by the Company whether or not the Registration Statement is filed
or
becomes effective and whether or not any Registrable Securities are sold
pursuant to the Registration Statement. The fees and expenses referred to in
the
foregoing sentence shall include, without limitation: (i) all registration
and
filing fees; (ii) printing expenses (including, without limitation,
expenses of printing certificates for Registrable Securities and of printing
prospectuses if the printing of prospectuses is requested by the holders of
a
majority of the Registrable Securities included in the Registration Statement);
(iii) messenger, telephone and delivery expenses; (iv) fees and
disbursements of counsel for the Company; (v) Securities Act liability
insurance, if the Company so desires such insurance; and (vi) fees and expenses
of all other Persons retained by the Company in connection with the consummation
of the transactions contemplated by this Agreement, including, without
limitation, the Company’s independent public accountants (including the expenses
of any comfort letters or costs associated with the delivery by independent
public accountants of a comfort letter or comfort letters). In addition, the
Company shall be responsible for all of its internal expenses incurred in
connection with the consummation of the transactions contemplated by this
Agreement (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense
of
any annual audit, and the fees and expenses incurred in connection with the
listing of the Registrable Securities on any securities exchange as required
hereunder. Except as otherwise expressly provided in Section 5
below,
any fees or expenses incurred by Holder or its legal counsel or Holder’s other
advisors or consultants in connection with any review of the Registration
Statement or with respect to any other matters related to this Agreement shall
be borne solely by Holder.
5. Indemnification.
(a) Indemnification
by the Company.
The
Company shall, notwithstanding any termination of this Agreement, indemnify
and
hold harmless the Holder, the officers, directors, agents, brokers (including
brokers who offer and sell Registrable Securities as principal as a result
of a
pledge or any failure to perform under a margin call of Common Stock),
investment advisors and employees of each of them, each Person who controls
the
Holder (within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act) and the officers, directors, agents and
employees of each such controlling Person, to the fullest extent permitted
by
applicable law, from and against any and all losses, claims, damages,
liabilities, costs (including, without limitation, costs of preparation and
attorneys’ fees) and expenses (collectively, “Losses”)
(as
determined by a court of competent jurisdiction in a final judgment not subject
to appeal or review), as incurred, arising out of or based upon any untrue
or
alleged untrue statement of a material fact contained in the Registration
Statement, any Prospectus or any form of prospectus or in any amendment or
supplement thereto or in any preliminary prospectus, or arising solely out
of or
based upon any omission or alleged omission of a material fact required to
be
stated therein or necessary to make the statements therein (in the case of
any
Prospectus or form of prospectus or supplement thereto, in the light of the
circumstances under which they were made) not misleading, except to the extent,
but only to the extent, that such untrue statements or omissions are based
upon
information regarding the Holder furnished in writing to the Company by the
Holder expressly for use therein. The Company shall notify the Holder promptly
of the institution, threat or assertion of any Proceeding of which the Company
is aware in connection with the transactions contemplated by this
Agreement.
(b) Indemnification
by Holder.
The
Holder shall indemnify and hold harmless the Company, the directors, officers,
agents and employees, each Person who controls the Company (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange
Act), and the directors, officers, agents or employees of such controlling
Persons, to the fullest extent permitted by applicable law, from and against
all
Losses (as determined by a court of competent jurisdiction in a final judgment
not subject to appeal or review), as incurred, arising solely out of or based
solely upon any untrue statement or alleged untrue statement of a material
fact
contained in the Registration Statement, any Prospectus, or any form of
prospectus or form of prospectus or in any amendment or supplement thereto
or in
any preliminary prospectus, or arising solely out of or based solely upon any
omission of a material fact required to be stated therein or necessary to make
the statements therein (in the case of any Prospectus or supplement thereto,
in
the light of the circumstances under which they were made) not misleading,
to
the extent, but only to the extent, that such untrue statement or omission
or
alleged untrue statement or omission is contained in information so furnished
by
the Holder in writing to the Company expressly for inclusion in the Registration
Statement or such Prospectus. In no event shall the liability of any selling
Holder hereunder be greater in amount than the dollar amount of the net proceeds
received by such Holder upon the sale of the Registrable Securities giving
rise
to such indemnification obligation.
(c) Conduct
of Indemnification Proceedings.
If any
Proceeding shall be brought or asserted against any Person entitled to indemnity
hereunder (an “Indemnified
Party”),
such
Indemnified Party promptly shall notify the Person from whom indemnity is sought
(the “Indemnifying
Party”)
in
writing, and the Indemnifying Party shall assume the defense thereof, including
the employment of counsel reasonably satisfactory to the Indemnified Party
and
the payment of all fees and expenses incurred in connection with defense
thereof; provided,
however,
that
the failure of any Indemnified Party to give such notice shall not relieve
the
Indemnifying Party of its obligations or liabilities pursuant to this Agreement,
except to the extent that such failure shall have proximately and materially
adversely prejudiced the Indemnifying Party.
An
Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (1) the Indemnifying Party has agreed in writing to pay such fees and
expenses; or (2) the Indemnifying Party shall have failed promptly to assume
the
defense of such Proceeding and to employ counsel reasonably satisfactory to
such
Indemnified Party in any such Proceeding; or (3) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified
Party
and the Indemnifying Party, and such Indemnified Party shall have been advised
by counsel that a conflict of interest is likely to exist if the same counsel
were to represent such Indemnified Party and the Indemnifying Party (in which
case, if such Indemnified Party notifies the Indemnifying Party in writing
that
it elects to employ separate counsel at the expense of the Indemnifying Party,
the Indemnifying Party shall not have the right to assume the defense thereof
and such counsel shall be at the expense of the Indemnifying Party). The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld or delayed. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any pending
Proceeding in respect of which any Indemnified Party is a party, unless such
settlement includes an unconditional release of such Indemnified Party from
all
liability on claims that are the subject matter of such Proceeding.
All
fees
and expenses of the Indemnified Party (including reasonable fees and expenses
to
the extent incurred in connection with investigating or preparing to defend
such
Proceeding in a manner not inconsistent with this Section 5)
shall
be paid to the Indemnified Party, as incurred, within 10 Business Days of
written notice thereof to the Indemnifying Party (regardless of whether it
is
ultimately determined that an Indemnified Party is not entitled to
indemnification hereunder; provided,
however,
that
the Indemnifying Party may require such Indemnified Party to undertake to
reimburse all such fees and expenses to the extent it is finally judicially
determined that such Indemnified Party is not entitled to indemnification
hereunder).
(d) Contribution.
If a
claim for indemnification under Section 5(a)
or
Section 5(b)
is
unavailable to an Indemnified Party (by reason of public policy or otherwise),
then each Indemnifying Party, in lieu of indemnifying such Indemnified Party,
shall contribute to the amount paid or payable by such Indemnified Party as
a
result of such Losses, in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party and Indemnified Party in connection
with the actions, statements or omissions that resulted in such Losses as well
as any other relevant equitable considerations. The relative fault of such
Indemnifying Party and Indemnified Party shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission
of a
material fact, has been taken or made by, or relates to information supplied
by,
such Indemnifying, Party or Indemnified Party, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a result
of any Losses shall be deemed to include, subject to the limitations set forth
in Section 5(c),
any
reasonable attorneys’ or other reasonable fees or expenses incurred by such
party in connection with any Proceeding to the extent such party would have
been
indemnified for such fees or expenses if the indemnification provided for in
this Section was available to such party in accordance with its
terms.
The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 5(d)
were
determined by pro rata allocation or by any other method of allocation that
does
not take into account the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding
the provisions of this Section
5(d),
no
Holder shall be required to contribute, in the aggregate, any amount in excess
of the amount of the proceeds actually received by such Holder from the sale
of
the Registrable Securities subject to the proceeding. No
Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) shall be entitled to contribution from any Person who
was
not guilty of such fraudulent misrepresentation.
The
indemnity and contribution agreements contained in this Section are in addition
to any liability that the Indemnifying Parties may have to the Indemnified
Parties. Notwithstanding the foregoing, the obligations of the Holders herein
shall be the several, and not joint, obligation of each Holder as to itself
and
not as to any other Holder.
6. Miscellaneous.
(a) Remedies.
Except
as provided in Section
3(a)(ii)
with
respect to the occurrence of an Event (for which only liquidated damages apply
and which is the exclusive remedy upon the occurrence of an Event):
(i) In
the
event of a breach by the Company or by the Holder, of any of their obligations
under this Agreement, the Holder or the Company, as the case may be, in addition
to being entitled to exercise all rights granted by law and under this
Agreement, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement.
(ii) The
Company and the Holder agree that monetary damages would not provide adequate
compensation for any losses incurred by reason of a breach by it of any of
the
provisions of this Agreement and hereby further agrees that, in the event of
any
action for specific performance in respect of such breach, it shall waive the
defense that a remedy at law would be adequate.
(iii) The
remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
(b) No
Inconsistent Agreements.
Neither
the Company nor any of its subsidiaries has, as of the date hereof entered
into
and currently in effect, nor shall the Company or any of its subsidiaries,
on or
after the date of this Agreement, enter into any agreement with respect to
its
securities that is inconsistent with the rights granted to the Holder in this
Agreement or otherwise conflicts with the provisions hereof.
(c) Amendments
and Waivers.
The
provisions of this Agreement, including the provisions of this sentence, may
not
be amended, modified or supplemented, and waivers or consents to departures
from
the provisions hereof may not be given, unless the same shall be in writing
and
signed by the Company and each of the Holders.
(d) Notices.
Any and
all notices or other communications or deliveries required or permitted to
be
provided hereunder shall be in writing and shall be deemed given and effective
on the earlier of: (i) the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile telephone number specified for
notice prior to 5:00 p.m., California time, on a Business Day; (ii) the Business
Day after the date of transmission, if such notice or communication is delivered
via facsimile at the facsimile telephone number specified for notice later
than
5:00 p.m., California time, on any date and earlier than 11:59 p.m., California
time, on such date; (iii) the Business Day following the date of mailing, if
sent by nationally recognized overnight courier service; and (iv) actual receipt
by the party to whom such notice is required to be given. The addresses for
such
communications shall be:
If
to the
Company:
Pacific
Ethanol, Inc.
5711
N.
West Avenue
Fresno,
California 93711
Attention:
General Counsel
Telecopier:
(559) 435-1478
Telephone:
(559) 435-1771
If
to the
Holder:
Eagle
Energy LLC
2113
Pebble Beach Lane
Brandon,
South Dakota 57005
Attn.
President
Facsimile:_______________
Phone:_________________
with
a
copy to:
Robert
Hensley
Dorsey
& Whitney LLP
50
South
Sixth Street
Minneapolis,
MN 55402
Facsimile:
612-340-7800
Phone:
612-340-2655
or
to
such other address or addresses or facsimile number or numbers as any such
party
may most recently have designated in writing to the other parties hereto by
such
notice.
(e) Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns and shall inure to the benefit of the
Holder and its successors and permitted assigns. Holder may assign its rights
hereunder in the manner and to the Persons as permitted under this Agreement
and
the Purchase Agreement. The Company may assign its rights and obligations
hereunder in connection with a sale of all or substantially all of its assets
or
in connection with a merger, consolidation or other similar corporate
transaction.
(f) Assignment
of Registration Rights.
The
rights of the Holder hereunder, including the right to have the Company register
for resale Registrable Securities in accordance with the terms of this
Agreement, shall be automatically assignable by the Holder to any Person to
whom
the Holder transfers all or a portion of the Registrable Securities if: (i)
the
Holder agrees in writing with the transferee or assignee to assign such rights,
and a copy of such agreement is furnished to the Company within a reasonable
time after such assignment; (ii) the Company is, within a reasonable time after
such transfer or assignment, furnished with written notice of (x) the name
and
address of such transferee or assignee, and (y) the securities with respect
to
which such registration rights are being transferred or assigned; (iii)
following such transfer or assignment the further disposition of such securities
by the transferee or assignees is restricted under the Securities Act and
applicable state securities laws; (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this Section, the
transferee or assignee agrees in writing with the Company to be bound by all
of
the provisions of this Agreement through a joinder agreement or another form
of
agreement reasonably acceptable to the Company; (v) such transfer shall
have been made in accordance with the applicable requirements of the Purchase
Agreement and the Warrants; and, upon the Company’s request, Holder and any
proposed transferee shall provide the Company with such written representations,
warranties, assurances and information requested by the Company so as to allow
the Company to verify compliance with the Securities Act and qualification
under
such exemption in connection with such proposed transfer. In addition, each
Holder shall have the right to assign its rights hereunder to any other Person
with the prior written consent of the Company, which consent shall not be
unreasonably withheld. The rights to assignment shall apply to the Holders
(and
to subsequent) successors and assigns.
(g) Counterparts.
This
Agreement may be executed in any number of counterparts, each of which when
so
executed shall be deemed to be an original and, all of which taken together
shall constitute one and the same Agreement. In the event that any signature
is
delivered by facsimile transmission, such signature shall create a valid binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
were the original thereof.
(h) Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of California, without regard to principles of conflicts of law
thereof.
(i) Severability.
If any
term, provision, covenant or restriction of this Agreement is held to be
invalid, illegal, void or unenforceable in any respect, the remainder of the
terms, provisions, covenants and restrictions set forth herein shall remain
in
full force and effect and shall in no way be affected, impaired or invalidated,
and the parties hereto shall use their reasonable efforts to find and employ
an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would
have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void
or
unenforceable.
(j) Headings.
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.
(k) Independent
Nature of Holders’ Obligations and Rights.
The
obligations of each Holder hereunder are several and not joint with the
obligations of any other Holder hereunder, and no Holder shall be responsible
in
any way for the performance of the obligations of any other Holder hereunder.
Nothing contained herein or in any other agreement or document delivered at
any
closing, and no action taken by any Holder pursuant hereto or thereto, shall
be
deemed to constitute the Holders as a partnership, an association, a joint
venture or any other kind of entity, or create a presumption that the Holders
are in any way acting in concert with respect to such obligations or the
transactions contemplated by this Agreement. Each Holder shall be entitled
to
protect and enforce its rights, including without limitation the rights arising
out of this Agreement, and it shall not be necessary for any other Holder to
be
joined as an additional party in any proceeding for such purpose.
IN
WITNESS WHEREOF, the parties hereto have executed this Registration Rights
Agreement effective as of the date indicated above.
|
COMPANY:
|
PACIFIC
ETHANOL, INC. |
| |
|
|
| |
|
|
| |
By:
|
/s/
Neil M.
Koehler
|
| |
|
Neil
M. Koehler, CEO
|
| |
|
|
| |
|
|
SELLER:
|
EAGLE
ENERGY, LLC |
| |
|
|
| |
|
|
| |
By:
|
/s/
David M.
Fink
|
| |
|
David
M. Fink, President
|
| |
|
|
| |
|
|
| |
Address: |
| |
|
|
| |
2215
E. Redwood
Blvd.
|
| |
Street
Address |
| |
|
|
| |
Brandon,
SD
57005 |
| |
City,
State and Zip Code |
EXHIBIT
A
DEFINITIONS
As
used
in this Agreement, the following terms shall have the following
meanings:
“Advice”
shall
have meaning set forth in Section 3(k).
“Affiliate”
means,
with respect to any Person, any other Person that directly or indirectly
controls or is controlled by or under common control with such Person. For
the
purposes of this definition, “control,”
when
used with respect to any Person, means the possession, direct or indirect,
of
the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract
or
otherwise; and the terms of “affiliated,”
“controlling”
and
“controlled”
have
meanings correlative to the foregoing.
“Business
Day”
means
any day except Saturday, Sunday and any day which shall be a legal holiday
or a
day on which banking institutions in the State of California generally are
authorized or required by law or other government actions to close.
“Closing
Date”
means
the date of the closing under the Purchase Agreement.
“Closing
Shares”
means
the shares of Common Stock issued to the Seller on the Closing Date pursuant
to
the Purchase Agreement.
“Commission”
means
the Securities and Exchange Commission.
“Common
Stock”
means
the Company’s common stock, $.001 par value per share.
“Effectiveness
Date”
means
the 120th
calendar
day following the date of the Purchase Agreement.
“Effectiveness
Period”
shall
have the meaning set forth in Section 2.
“Eligible
Market”
means
the New
York Stock Exchange, the American Stock Exchange, the NASDAQ Global Select
Market, the NASDAQ Global Market or the NASDAQ Capital Market.
“Event”
shall
have the meaning set forth in Section
3(a)(ii).
“Event
Date”
shall
have the meaning set forth in Section
3(a)(ii).
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended.
“Filing
Date”
means
the tenth Business Day following the Closing Date.
“Holder”
or
“Holders”
means
the holder or holders, as the case may be, from time to time, whether direct
or
beneficially, of Registrable Securities pursuant to this Agreement, including,
without limitation, Seller and any of its permitted transferees.
“Indemnified
Party”
shall
have the meaning set forth in Section 5(c).
“Indemnifying
Party”
shall
have the meaning set forth in Section 5(c).
“Losses”
shall
have the meaning set forth in Section 5(a).
“Person”
means
an individual or a corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or political subdivision thereof) or
other entity of any kind.
“Proceeding”
means
an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.
“Prospectus”
means
the final prospectus filed with respect to the Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act),
as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by the
Registration Statement, and all other amendments and supplements to the
Prospectus, including one or more other final prospectuses filed with respect
to
post-effective amendments, and all material incorporated by reference in such
Prospectus.
“Registrable
Securities”
means:
(i) the Closing Shares; (ii) Warrant Shares; and (iii) any securities
issued or issuable with respect to such Warrant Shares by way of a stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization with respect
to
any of the securities referenced above.
“Registration
Statement”
means
the registration statements contemplated by Section 2,
including the Prospectus, amendments and supplements to such registration
statement or Prospectus, including pre- and post-effective amendments, all
exhibits thereto, and all material incorporated by reference in such
registration statement.
“Rule
144”
means
Rule 144 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such
Rule.
“Rule
415”
means
Rule 415 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such
Rule.
“Securities
Act”
means
the Securities Act of 1933, as amended.
“Trading
Market”
means
the
NASDAQ Global Market.
“Warrants”
means
the Warrant to Purchase Common Stock issued to the Seller (including any
Warrants subsequently held by any Holder).
“Warrant
Shares”
means
the shares of Common Stock issued or issuable upon exercise of the
Warrants.