Exhibit 10.3

 

AGREEMENT FOR PURCHASE AND SALE OF LOANS
AND ASSIGNMENT OF COMMITMENT

THIS AGREEMENT FOR PURCHASE AND SALE OF LOANS AND ASSIGNMENT OF COMMITMENT
(“Agreement”) dated as of June 6, 2014, is made by and among CANDLEWOOD CREDIT
VALUE MASTER FUND II, L.P. (“Seller”) and PACIFIC ETHANOL, INC., a Delaware
corporation (“Buyer”). Unless otherwise defined in this Agreement, capitalized
terms used in this Agreement are defined in Exhibit A or have the meanings given
to them in the Credit Agreement.

W I T N E S S E T H

WHEREAS, Seller is a lender under the Second Amended and Restated Credit
Agreement dated as of October 29, 2012 (as amended, the “Credit Amendment”),
among Pacific Ethanol Holding Co. LLC (“Pacific Holding”), Pacific Ethanol
Madera LLC, Pacific Ethanol Columbia, LLC, Pacific Ethanol Stockton LLC, and
Pacific Ethanol Magic Valley, LLC, a Delaware limited liability company
(collectively, the “Borrowers”), Pacific Holding, as Borrowers’ Agent, PE OP
Co., a Delaware corporation, as Pledgor, each of the Lenders whose signatures
appear on the signature pages thereto, Wells Fargo Bank, N.A., as administrative
agent for the Lenders, Wells Fargo Bank, N.A., as collateral agent for the
Senior Secured Parties and Amarillo National Bank, as accounts bank;

WHEREAS, Seller is a Revolving Lender and a Tranche A-1 Lender;

WHEREAS, currently there are no outstanding Revolving Loans and the amount of
Seller’s current Revolving Loan Commitment is $526,987.52 (the “Revolving
Commitment”);

WHEREAS, the outstanding principal amount of Tranche A-1 Closing Date Term Loans
held by Seller are in the current principal amount of $807,879.00 (the “A-1 Term
Loans”);

WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase and
assume from Seller, (a) the Revolving Commitment and any and all outstanding
Revolving Loans, each held by Seller and (b) the A-1 Term Loans held by Seller
((a) and (b), collectively, the “Assigned Interest”).

NOW, THEREFORE, in consideration of the agreements and mutual covenants and
based upon the representations and warranties set forth herein, the parties
agree as follows:

1.            Purchase and Sale of Assigned Interest.

(a)            Subject to the terms and conditions of this Agreement, Buyer
irrevocably purchases and assumes from Seller, and Seller irrevocably sells,
conveys, assigns, transfers and delivers to Buyer on the Closing Date all of (i)
the Assigned Interest and (ii) Seller’s obligations as a Lender under the Credit
Agreement and any other documents or instruments delivered pursuant thereto with
respect to the Assigned Interest (IN EACH CASE WITHOUT RECOURSE TO SELLER, AND
WITHOUT REPRESENTATION, COVENANT OR WARRANTY, EXCEPT AS EXPRESSLY PROVIDED IN
SECTION 3 OF THIS AGREEMENT AND THE LOAN ASSIGNMENT).

1

 

(b)            As consideration for the sale and assignment of the Assigned
Interest to Buyer at the Closing (hereinafter defined), Buyer shall pay to
Seller, in cash, a total of $882,879.00 plus $1999.27 representing the amount of
accrued and unpaid interest and fees (“Accrued Interest and Fees”) on the A-1
Term Loans as of the Closing Date (the “Cash Consideration”) by wire transfer to
Seller’s wire instructions set forth on Schedule I hereto. The Cash
Consideration includes $75,000, which the parties acknowledge represents a
payment to the Seller for any Make-Whole Amount that otherwise would have become
due pursuant to Section 3.15 of the Credit Agreement had the transaction
evidenced hereby been structured as a prepayment of the A-1 Term Loans rather
than a purchase. If from and after the date of this Agreement and prior to the
Closing (hereinafter defined), Borrowers request and receive any Revolving
Loans, as a further condition precedent to Seller’s obligations, upon the
Closing Date, Buyer will also purchase such Revolving Loans held by Seller at a
purchase rate of one-hundred percent (100%) of the outstanding principal amount
of the Revolving Loans together with accrued and unpaid interest and fees
thereon. For the avoidance of doubt, all accrued and unpaid interest and fees
allocable to the period prior to but excluding the Closing Date is for the
account of Seller, and all accrued and unpaid interest and fees allocable to the
period from and after Closing Date is for the account of Buyer.

2.            Conditions Precedent.

(a)            Buyer’s obligations to pay the Cash Consideration to Seller and
to acquire the Assigned Interest and to assume Seller’s obligations as a Lender
under the Credit Agreement and any other documents or instruments delivered
pursuant thereto with respect to the Assigned Interest shall be subject to
Buyer’s receipt of (i) this Agreement duly executed on behalf of the Seller and
(ii) the Loan Assignment duly completed and executed on behalf of the Seller and
any other entity the consent or acknowledgement of which is required pursuant to
the terms of the Credit Agreement.

(b)            Seller’s obligation to sell, transfer, assign, grant, and convey
the Assigned Interest to Buyer will be subject to the conditions that Seller
shall have received (i) this Agreement duly executed on behalf of Buyer, (ii)
the Assignment duly completed and executed on behalf of Buyer and any other
entity the consent or acknowledgement of which is specified required pursuant to
the terms of the Credit Agreement, (iii) the Commitment Cancellation Agreement
(hereinafter defined) duly executed on behalf of Buyer and any other entity the
consent or acknowledgement of which is required pursuant to the terms of the
Credit Agreement, and (iv) payment of the Cash Consideration from Buyer.

(c)            Buyer and Seller will cooperate to provide the Loan Assignment to
Administrative Agent for acceptance and recordation and designation of the
“Effective Date” therein.

2

 

3.            Seller Representations. Seller represents and warrants to Buyer
(as of the Closing Date) as follows:

(a)            Organization. Seller is an exempted limited partnership, duly
organized, validly existing and in good standing under the laws of the Cayman
Islands.

(b)            Due Authorization; Enforceability. The execution, delivery and
performance of this Agreement have been duly and validly authorized by Seller.
Assuming the due authorization, execution and delivery of the same by Buyer,
this Agreement and the Loan Assignment constitute the legal, valid and binding
obligation of Seller, enforceable against Seller in accordance with their
respective terms (except as may be limited by bankruptcy, insolvency,
reorganization and other similar laws and equitable principles relating to or
limiting creditors’ rights generally).

(c)            Non-Contravention; Consents. Seller is not required to give any
notice to, make any filing with, or obtain any authorization, consent, or
approval of, any government, governmental agency or other Person in order to
consummate the purchase and sale of the Assigned Interest (the “Transaction”).

(d)            Loan Balance; Prior Assignment; Authority. (i) As of the date of
this Agreement, the outstanding principal balance of the Revolving Loans held by
Seller is $0 and the outstanding principal balance of the Tranche A-1 Term Loans
held by Seller is as set forth in the Recitals, (ii) Seller has not previously
assigned or sold any of the Assigned Interest or any rights, title or interest
under the Credit Agreement, and (iii) Seller has full power and authority to
transfer and assign the Assigned Interest.

(e)            Ownership. Seller is the legal and beneficial owner of the
Assigned Interest free and clear of any Encumbrances.

(f)            Notes. Seller does not hold any Term Notes or Revolving Notes
evidencing the Assigned Interest.

(g)            Brokers. No broker, finder or other entity acting under the
authority of the Seller or any of its affiliates is entitled to any broker’s
commission or other fee in connection with the Transaction for which Buyer could
be responsible.

4.            Buyer Representations. Buyer represents and warrants to Seller (as
of the Closing Date) as follows:

(a)            Organization. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Buyer is
in good standing and qualified to do business as a foreign corporation in any
state in which it is doing business.

(b)            Due Authorization; Enforceability. The execution, delivery and
performance of this Agreement have been duly and validly authorized by Buyer.
Assuming the due authorization, execution and delivery of the same by Seller,
this Agreement and the Loan Assignment constitute the legal, valid and binding
obligation of Buyer, enforceable against Buyer in accordance with their
respective terms (except as may be limited by bankruptcy, insolvency,
reorganization and other similar laws and equitable principles relating to or
limiting creditors’ rights generally).

3

 

(c)            Non-Contravention; Consents. Buyer is not required to give any
notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order to consummate the
Transaction.

(d)            Permitted Transfer. Buyer is an Affiliated Lender as defined in
the Credit Agreement. Buyer acknowledges and agrees to the terms, conditions and
restrictions of Section 11.03(j) of the Credit Agreement pertaining to
assignments to Affiliated Lenders.

(e)            Brokers. No broker, finder or other entity acting under the
authority of Buyer or any of its affiliates is entitled to any broker’s
commission or other fee in connection with the Transaction for which Seller
could be responsible.

(f)            As-Is Sale. Buyer hereby acknowledges and agrees that the
Assigned Interest is being sold “as-is.” Buyer hereby acknowledges and agrees
that the Seller makes no representations, covenants or warranties other than as
expressly set forth in Section 3 and the Loan Assignment and specifically
acknowledges that Seller has made no representations, covenants or warranties
with regard to any Collateral (as defined in the Credit Agreement).

(g)            Credit Agreement. From and after the Closing Date, Buyer will be
bound by the provisions of the Credit Agreement as a Lender thereunder, and, to
the extent of the Assigned Interest, will have the obligations of a Lender
thereunder.

(h)            Sophisticated Buyer. Buyer is sophisticated with respect to
decisions to acquire assets of the type represented by the Assigned Interest and
either it, or the Person exercising discretion in making its decision to acquire
the Assigned Interest, is experienced in acquiring assets of such type.

(i)            Independence. Buyer has independently and without reliance upon
Seller (except for the representations and warranties of Seller herein and in
the Loan Assignment), and based on such information as Buyer has deemed
appropriate, made its own analysis and decision to enter into this Agreement.

5.            Survival of Representations and Covenants. The covenants and
agreements of each Party shall survive the Closing for the periods specified in
such covenants and agreements, or if no period is specified, until one-year
after the Closing Date. The representations and warranties of each Party shall
survive until one-year after the Closing Date.

6.            Additional Agreements.

(a)            Further Assurances. Each Party agrees to execute and deliver such
further documents and instruments and to take such further actions after the
Closing as may be necessary or desirable and reasonably requested by the other
Party to give effect to the Transaction.

4

 

(b)            Expenses; Attorneys’ Fees. Each Party shall bear and pay all
fees, costs and expenses that have been incurred or that are in the future
incurred by, on behalf of, such Party in connection with the negotiation,
preparation and review of this Agreement, the Loan Assignment and the other
documents and instruments contemplated hereby and all certificates and other
instruments and documents delivered or to be delivered in connection with the
Transaction, and the consummation and performance of the Transaction.

(c)            Seller’s Rights Under the Credit Agreement. Until the
consummation of the Transaction, Seller reserves all of its rights to exercise
and enforce its rights and remedies as a Lender under the Credit Agreement and
the other Loan Documents (as defined in the Credit Agreement), in each case,
without any obligation to notify, or seek the consent of, Buyer of such exercise
or enforcement and Buyer shall have no right to direct Seller in the exercise or
enforcement of such rights or remedies.

(d)            Post-Closing Obligations. Seller agrees that to the extent Seller
receives any principal, interest or fees with respect to the Assigned Interest
after the Closing that is (i) duplicative of the principal or Accrued Interest
and Fees paid by Buyer to Seller on the Closing Date or (ii) attributable to the
period from and after the Closing Date, Seller will hold such amounts for the
sole benefit of Buyer, and promptly transfer such amounts to Buyer in the form
received to Buyer’s wire instructions set forth on Schedule I hereto.

(e)            Payments. Any Party that has received funds to which the other
Party is entitled under this Agreement shall pay over such funds to the other
Party on or before the date that is two (2) business days after receipt, if such
funds were received after the Closing Date.

7.            Miscellaneous.

(a)            Notices. All notices, demands and other communications to be
given or delivered under or by reason of the provisions of this Agreement shall
be in writing and shall be deemed to have been given when personally delivered,
when mailed by certified mail, return receipt requested, when sent by facsimile
with confirmation of receipt received, upon receipt when sent by other means of
electronic transmission, or when delivered by overnight courier with executed
receipt. Notices, demands and communications to Seller or Buyer shall, unless
another address is specified in writing in accordance herewith, be sent to the
address indicated below:

Notices to Seller: Candlewood Credit Value Master Fund II, L.P.   49 W. Putnam
Avenue   Greenwich, CT 06830   Attn: Ryan Eckert   Tel: (212) 493-2265   Fax:
(646) 380-3563   E-mail: ryan.eckert@cvp7.com

 

5

 

 

    Notices to Buyer: Pacific Ethanol, Inc.   400 Capitol Mall   Suite 2060  
Sacramento, CA 95814   Attn: General Counsel   Tel: (916) 403-2123   Fax: (916)
403-2785   E-mail: cwright@pacificethanol.com

(b)            Amendment. No change in or modification of this Agreement shall
be valid unless the same shall be in writing and signed by Seller and Buyer.

(c)            Waiver. No failure or delay on the part of the parties or any of
them in exercising any right, power or privilege hereunder, nor any course of
dealing between the parties or any of them shall operate as a waiver of any such
right, power or privilege nor shall any single or partial exercise of any such
right, power or privilege preclude the simultaneous or later exercise of any
other right, power or privilege. The rights and remedies herein expressly
provided are cumulative and are not exclusive of any rights or remedies which
the parties or any of them would otherwise have.

(d)            Counterparts. This Agreement may be executed in any number of
counterparts with the same effect as if all of the parties hereto had signed the
same document. All counterparts shall be construed together and shall constitute
one agreement. This Agreement and any amendments hereto, to the extent signed
and delivered by means of a facsimile machine or electronic transmission
(including a PDF file), shall be treated in all manner and respects as an
original Agreement and shall be considered to have the same binding legal effect
as if it were the original signed version thereof delivered in person. No party
hereto shall raise the use of a facsimile machine or electronic transmission to
deliver a signature or the fact that any signature was transmitted or
communicated through the use of a facsimile machine or electronic transmission
as a defense to the formation of a contract and each such party forever waives
any such defense.

(e)            GOVERNING LAW. THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN THE
VALIDITY OF THIS AGREEMENT, THE CONSTRUCTION OF ITS TERMS, AND THE
INTERPRETATION OF THE RIGHTS AND DUTIES ARISING HEREUNDER, WITHOUT REGARD TO ITS
CONFLICTS OF LAWS PROVISIONS THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF
ANY OTHER JURISDICTION.

(f)            Benefit and Binding Effect. Except as otherwise provided in this
Agreement, no right under this Agreement shall be assignable and any attempted
assignment in violation of this provision shall be void. Every covenant, term,
and provision of this Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective executors, administrators, heirs,
successors, permitted transferees, and permitted assigns. It is understood and
agreed among the parties that this Agreement and the covenants made herein are
made expressly and solely for the benefit of the parties hereto, and that no
other Person, other than as expressly set forth in this, shall be entitled or be
deemed to be entitled to any benefits or rights hereunder, nor be authorized or
entitled to enforce any rights, claims or remedies hereunder or by reason
hereof.

6

 

(g)            Severability. Any provision of this Agreement which is
prohibited, unenforceable or not authorized in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or nonauthorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction. The parties hereto agree to negotiate in
good faith to replace any illegal, invalid or unenforceable provision of this
Agreement with a legal, valid and enforceable provision that, to the extent
possible, will preserve the economic bargain of this Agreement. If any time
period set forth herein is held by a court of competent jurisdiction to be
unenforceable, a different time period that is determined by the court to be
more reasonable shall replace the unenforceable time period.

(h)            Headings; Construction. Section and other headings contained in
this Agreement are for reference purposes only and are not intended to describe,
interpret, define, or limit the scope, extent, or intent of this Agreement or
any provision hereof. Every covenant, term, and provision of this Agreement
shall be construed simply according to its fair meaning and not strictly for or
against any party. Every schedule and other addendum attached to this Agreement
and referred to herein is incorporated in this Agreement by reference unless
this Agreement expressly otherwise provides. All terms and any variations
thereof shall be deemed to refer to masculine, feminine, or neuter, singular or
plural, as the identity of the Person or Persons may require.

(i)            Entire Agreement. This Agreement and the Loan Assignment contain
the entire understanding and agreement among the parties hereto with respect to
the subject matter hereof, and supersede all prior agreements and all
contemporaneous oral agreements.

 

 

 

 

 

 

 

 

7

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement for Purchase
and Sale of Loans and Assignment of Commitment as of the day and year first
above written.

BUYER

 

PACIFIC ETHANOL, INC.

 

By: /s/ Bryon McGregor

Name: Bryon McGregor

Title: CFO

 

SELLER

 

CANDLEWOOD CREDIT VALUE MASTER FUND II, L.P.

 

By:    Credit Value Partners, LP, as Investment Manager

 

By: /s/ Michael Geroux

Name: Michael Geroux

Title: Authorized Signatory

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8

 

 

SCHEDULE I

WIRE INSTRUCTIONS

 

Seller’s Wire Instructions:

 

JPMorgan Chase

ABA #: 021000021

DDA#: 066001633 JPMCC

FFC: Candlewood Credit Value Master Fund II LP

FFC Acct#: 102-40752-26

Reference: Pacific Ethanol/Pacific Ethanol Inc.

 

Buyer’s Wire Instructions:

 

Wells Fargo Bank

ABA # 121000248

Account # 4122203813

Credit to: Pacific Ethanol, Inc.

 

 

 

9

 

EXHIBIT A

DEFINITIONS

“Action” is defined in Section 6(b).

“Agreement” is defined in the preamble hereof.

“Assigned Interest” is defined in the recitals hereto.

“Borrowers” is defined in the recitals hereto.

“Buyer” is defined in the preamble hereof.

“Cash Consideration” is defined in Section 1(b).

“Closing” means the closing of the sale of the Assigned Interest to Buyer.

“Closing Date” means the date on which Seller receives the Cash Consideration.

“Commitment Cancellation Agreement” means that certain Commitment Cancellation
Agreement dated as of the Closing Date by and among by and among the Borrowers,
PACIFIC HOLDING, as Borrowers’ Agent, and PE OP CO., a Delaware corporation, as
Pledgor, pursuant to which Buyer cancels and terminates the Revolving Loans and
Revolving Loan Commitments it acquires from Seller pursuant to this Transaction.

“Credit Agreement” is defined in the recitals hereto.

“Encumbrance” means any (a) mortgage, pledge, lien, security interest, charge,
hypothecation, security agreement, security arrangement or encumbrance or other
adverse claim against title of any kind; (b) purchase, option, call or put
agreement or arrangement; (c) subordination agreement or arrangement other than
as specified in the Transaction Documents; (d) prior sale, transfer, assignment
or participation by Seller of the Assigned Interest; or (e) agreement or
arrangement to create or effect any of the foregoing.

“Loan Assignment” means an assignment of the Loan in the form attached as
Exhibit 11.03 to the Credit Agreement.

“Pacific Holding” is defined in the recitals hereto.

“Party” or “Parties” means any of Seller and Buyer.

“Person” means any individual, person, limited liability company, partnership,
trust, unincorporated organization, corporation, association, joint stock
company, business, group, government, government agency or authority or other
entity.

“Seller” is defined in the preamble hereof.

“Transaction” is defined in Section 3(c).

 

10