EXHIBIT
10.1
LOAN
RESTRUCTURING AGREEMENT
THIS LOAN
RESTRUCTURING AGREEMENT (this “Agreement”) is dated
as of November 7, 2008, by and among PACIFIC ETHANOL IMPERIAL, LLC, a Delaware
limited liability company (“PE Imperial”),
PACIFIC ETHANOL, INC., a Delaware corporation (the “Company”), PACIFIC
ETHANOL CALIFORNIA, INC. (“PECA”; together with
PE Imperial and the Company, the “PE Parties”) and
LYLES UNITED, LLC, a Delaware limited liability company (the “Lender”). PE
Imperial, the Company, PECA and Lender are sometimes referred to individually as
a “Party” and
collectively as the “Parties”
herein.
Witnesseth
WHEREAS,
pursuant to a Secured Promissory Note dated as of November 28, 2007, executed by
PE Imperial in favor of Lender as amended by that certain First Amendment to
Secured Promissory Note dated as of December 27, 2007 executed by PE Imperial
and Lender (collectively, the “First Note”), PE
Imperial borrowed Fifteen Million Dollars ($15,000,000) from Lender, which
amount was secured by certain assets of PE Imperial pursuant to a Security
Agreement dated as of November 28, 2007 by and between PE Imperial and Lender,
as amended by that certain Amendment No. 1 to Security Agreement dated as of
December 27, 2007 executed by PE Imperial and Lender (collectively, the “Security Agreement”);
and
WHEREAS,
pursuant to a Secured Promissory Note dated as of December 27, 2007, executed by
PE Imperial in favor of Lender (collectively, the “Second Note”),
PE Imperial borrowed an additional Fifteen Million Dollars ($15,000,000) from
Lender, which amount was secured by all assets of PE Imperial pursuant to the
Security Agreement; and
WHEREAS,
the obligations of PE Imperial under the First Note and the Security Agreement,
and all related obligations of PE Imperial to Lender, were guaranteed pursuant
to a certain Unconditional Guaranty dated as of November 28, 2007 executed by
the Company in favor of Lender (the “First Guaranty”);
and the obligations of PE Imperial under the Second Note and the Security
Agreement, and all related obligations of PE Imperial to Lender, were guaranteed
pursuant to a certain Unconditional Guaranty dated as of December 27, 2007
executed by the Company in favor of Lender (the “Second Guaranty”);
and
WHEREAS,
as partial consideration for permitting the extension of the maturity date of
the loan represented by the First Note, as contemplated therein, the Company
issued to Lender a Warrant dated March 27, 2008 permitting the
purchase by Lender of up to 100,000 shares of the Company’s common stock, $0.001
par value per share, at an exercise price equal to $8.00 per share (the “Warrant”);
and
WHEREAS,
as partial consideration for the loan represented by the First Note, PE Imperial
and Lender entered into a letter agreement dated November 28, 2007 concerning
the award to Lender (or an affiliate) of PE Imperial’s primary construction and
mechanical contract in connection with the construction of an ethanol production
facility at PE Imperial’s Imperial Valley site in Brawley, California (the
“Letter
Agreement”); and
WHEREAS,
the PE Parties have asked Lender to permit PE Imperial to assign its obligations
under the First Note and Second Note to the Company, to release PE Imperial as a
borrower and to release Lender’s security interest in the assets of PE
Imperial;
WHEREAS,
the Lender has agreed to such requests in consideration of various undertakings,
including the following:
(i) the
Company shall assume all obligations of PE Imperial under the First Note and
Second Note, and such First Note and Second Note shall be amended and restated
as a single new note (the “New Note”)
executed by the Company in favor of Lender, thereby causing the Company to
become the direct obligor as to the amounts originally borrowed by
PE Imperial from Lender;
(ii) in
consideration of Lender’s agreement to release its security interest in the
assets of PE Imperial and to release PE Imperial as a Borrower under the First
and Second Notes, which release benefitsPECA because PECA owns 100% of the
ownership interests of PE Imperial:
(A) PECA
shall enter into a Limited Recourse Guaranty pursuant to which PECA shall
guarantee the obligations of the Company under the New Note, but with recourse
only to cash distributions that PECA may receive from PE Imperial and from Front
Range Energy LLC, a Colorado limited liability company (“Front Range”);
and
(B) PECA
shall cause its wholly-owned subsidiary Pacific Ag. Products, LLC, a California
limited liability company (“PAP”), to guarantee
the obligations of the Company under the New Note and to enter into a Security
Agreement pledging its assets to Lender as collateral securing the obligations
of the Company under the New Note;
(iii) the
Company and Lender shall execute an irrevocable joint instruction letter,
acknowledged and agreed to by PECA, pursuant to which PECA shall be obligated to
immediately remit to Lender all cash distributions received on account of its
ownership interest in Front Range and PE Imperial.
Agreement
NOW,
THEREFORE, in consideration of the agreements herein contained and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties hereby agree as follows:
1. Payment of Interest As
Condition. Lender’s obligations under Section 2 shall be
subject to fulfillment of the following condition: PE Imperial shall
pay to Lender all accrued and unpaid interest on the First Note and the Second
Note through the day immediately prior to the date hereof, which aggregate
amount the Parties acknowledge and agree is $2,205,243.06.
2. Assignment and Assumption of
Notes; Delivery of New Note and other Documents; Termination of Notes, Security
Agreement and Guaranties.
(a) PE
Imperial hereby assigns, and the Company hereby assumes, all of the obligations
of PE Imperial under the First Note and the Second Note. Immediately
following such assignment and assumption, the First Note and Second Note shall
be amended and restated by the New Note. Lender acknowledges that,
upon fulfillment of all conditions precedent, PE Imperial shall be released from
all obligations to Lender under the First Note and Second
Note. Promptly following the execution of this Agreement and the
delivery of the New Note executed by the Company, Lender shall deliver to
PE Imperial the original First Note and a copy of the Second Note, each
marked “Superseded” and signed by Lender.
(b) Concurrently
herewith, the following documents shall be executed and delivered as set forth
below:
(i) The
Company shall execute the New Note in the form attached hereto as Exhibit A and
shall deliver the New Note to Lender;
(ii) the
Company and Lender shall execute and deliver to PECA, and PECA shall in turn
execute and deliver to the Company and Lender, an Irrevocable Joint Instruction
Letter in the form attached hereto as Exhibit B;
(iii) PECA
shall execute and deliver to Lender a Limited Recourse Guaranty in the form
attached hereto as Exhibit C;
(iv) PECA
shall cause PAP to execute and deliver to Lender an Unconditional Guaranty in
the form attached hereto as Exhibit D;
and
(v) PECA
shall cause PAP to execute and deliver to Lender a Security Agreement in the
form attached hereto as Exhibit E.
(c) PE
Imperial and Lender agree that the Security Agreement is hereby terminated
effective as of the date hereof and Lender does hereby release any and all
security interests in and to the assets of PE Imperial including, without
limitation, in any Collateral (as such term is defined in the Security
Agreement). Lender grants permission to PE Imperial to file UCC
termination statements effecting the release of said security interests in all
applicable jurisdictions.
(d) The
Company and Lender agree that the First Guaranty and the Second Guaranty are
hereby terminated effective as of the date hereof.
3. Effectiveness of Warrant and
Letter Agreement. The Parties hereby acknowledge and confirm that all of
the terms and conditions of the Warrant and the Letter Agreement are in full
force and effect and shall remain in full force and effect after giving effect
to the execution and effectiveness of this Agreement and the transactions
contemplated hereby.
4. Certain Representations,
Warranties and Covenants.
(a) Lender
hereby represents and warrants that it has not pledged or assigned either the
First Note or the Second Note or any of its rights thereunder or under the
Security Agreement or the First Guaranty or the Second Guaranty to any person or
entity.
(b) Each of
the Parties represents and warrants that it has not previously assigned any of
the claims released in this agreement, in whole or in part, or taken any other
steps which would adversely affect the rights which are the subject of this
Agreement.
(c) Each of
the Parties represents and warrants that it is authorized to enter into and
execute this Agreement and to perform its obligations contemplated
herein.
5. Notices. All
notices, requests, demands, approvals, consents, waivers and other
communications required or permitted to be given hereunder shall be in writing,
with copies to all the other Parties hereto, and shall be deemed to have been
duly given when (i) if delivered by hand, upon receipt, (ii) if sent by
nationally recognized overnight delivery service (receipt requested), the next
business day or (iii) if mailed by first-class registered or certified mail,
return receipt requested, postage prepaid, four days after posting in the U.S.
mails, in each case if delivered to the following addresses:
If to PE
Imperial, PECA
or the
Company: Pacific
Ethanol, Inc.
400 Capitol Mall, Suite
2060
Sacramento, California
95814
Attn: Chief
Financial Officer
AND
Attn: General
Counsel
If to
Lender: Lyles
United, LLC
1210 West Olive Ave.
Fresno, California 93728
Attn: Will
Lyles, Vice President
or such
other address or facsimile number as either Party may designate to the other
Parties hereto in accordance with the aforesaid procedure. Each Party shall
provide notice to the other Parties of any change in address or facsimile
number.
6. Miscellaneous.
(a) No
Waiver. No course of dealing between the Parties, nor any
failure to exercise, nor any delay in exercising, on the part of any Party, any
right, power or privilege hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, power or privilege hereunder or
thereunder preclude any other or further exercise thereof or the exercise of any
other right, power or privilege.
(b) Rights
Cumulative. All of the rights and remedies of the Parties
shall be cumulative and may be exercised singly or concurrently.
(c) Entire
Agreement. This Agreement constitutes the entire agreement of
the Parties with respect to the subject matter hereof and is intended to
supersede all prior negotiations, understandings and agreements with respect
thereto. No provision of this Agreement may be modified or amended
except by a written agreement specifically referring to this Agreement and
signed by the Parties hereto.
(d) Severability. In
the event that any provision of this Agreement is held to be invalid, prohibited
or unenforceable in any jurisdiction for any reason, unless such provision is
narrowed by judicial construction, this Agreement shall, as to such
jurisdiction, be construed as if such invalid, prohibited or unenforceable
provision had been more narrowly drawn so as not to be invalid, prohibited or
unenforceable. If, notwithstanding the foregoing, any provision of
this Agreement is held to be invalid, prohibited or unenforceable in any
jurisdiction, such provision, as to such jurisdiction, shall be ineffective to
the extent of such invalidity, prohibition or unenforceability without
invalidating the remaining portion of such provision or the other provisions of
this Agreement and without affecting the validity or enforceability of such
provision or the other provisions of this Agreement in any other
jurisdiction.
(e) Headings. The
headings of the Sections and subsections of this Agreement are inserted for
convenience only and shall not be deemed to constitute part of this Agreement or
to affect the construction hereof.
(f) Waiver of Breach or
Default. No waiver of any breach or default or any right under
this Agreement shall be considered valid unless in writing and signed by the
Party giving such waiver, and no such waiver shall be deemed a waiver of any
subsequent breach or default or right, whether of the same or similar nature or
otherwise.
(g) Binding on
Successors. This Agreement shall be binding upon and inure to
the benefit of each Party hereto and its successors and assigns.
(h) Best
Efforts. Each Party shall take such further action and execute
and deliver such further documents as may be necessary or appropriate in order
to carry out the provisions and purposes of this Agreement.
(i) Governing
Law. This Agreement shall be construed in accordance with the
laws of the State of California without reference to the conflicts of laws
principles thereof. Each of the Parties hereto irrevocably submit to
the exclusive jurisdiction of any California State or United States Federal
court sitting in Fresno County, California over any action or proceeding arising
out of or relating to this Agreement, and the Parties hereto hereby irrevocably
agree that all claims in respect of such action or proceeding may be heard and
determined in such California State or Federal court. The Parties
hereto agree that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. The Parties hereto further waive
any objection to venue in the State of California and any objection to an action
or proceeding in the State of California on the basis of forum non
conveniens. The Parties further agree that the successful or
prevailing Party in any proceeding shall be entitled to recover reasonable
attorneys’ fees and other costs incurred in such proceeding.
(j) Waiver of Jury
Trial. EACH PARTY HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS AGREEMENT. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL
ENCOMPASSING OF ANY DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO
THE SUBJECT MATER OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND
STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER IS
A MATERIAL INDUCEMENT FOR EACH PARTY TO ENTER INTO A BUSINESS RELATIONSHIP, THAT
EACH PARTY HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT AND
THAT EACH PARTY WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE
DEALINGS. EACH PARTY FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS
WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY HAS KNOWINGLY AND VOLUNTARILY
WAIVES ITS RIGHTS TO A JURY TRIAL FOLLOWING SUCH CONSULTATION. THIS
WAIVER IS IRREVOCABLE, MEANING THAT, NOTWITHSTANDING ANYTHING HEREIN TO THE
CONTRARY, IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS AND SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT. IN THE EVENT OF A LITIGATION, THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.
(k) 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.
(Signature
page follows.)
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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PE
IMPERIAL:
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PACIFIC
ETHANOL IMPERIAL, LLC,
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a
Delaware limited liability company
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By:
/s/ JOHN T. MILLER
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John
T. Miller, COO
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COMPANY:
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PACIFIC
ETHANOL, INC.,
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a
Delaware corporation
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By:
/s/ NEIL M.
KOEHLER
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Neil M. Koehler, CEO
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PECA:
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PACIFIC
ETHANOL CALIFORNIA, INC.,
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a
California corporation
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By:
/s/ JOHN T. MILLER
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John T. Miller, COO
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LENDER:
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LYLES
UNITED, LLC,
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a
Delaware limited liability company
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By:
/s/ WILL LYLES
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Will Lyles, Vice President
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EXHIBIT A
Form of New
Note
(attached
hereto)
EXHIBIT B
Form of Irrevocable Joint
Instruction Letter
(attached
hereto)
EXHIBIT C
Form of Limited Recourse
Guaranty
(attached
hereto)
EXHIBIT D
Form of Unconditional
Guaranty
(attached
hereto)
EXHIBIT E
Form of Security
Agreement
(attached
hereto)
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