paceth_8k-ex1001.htm


    Exhibit 10.1


    
      


      


      


       

      
        	 	 


      

       

      


      


      


      SUPERIOR
COURT OF THE STATE OF CALIFORNIA

       

      FOR THE
COUNTY OF LOS ANGELES, CENTRAL DISTRICT

       

      


       

      
        	
                Socius
      CG II, Ltd.,

                 

                Plaintiff,

                 

                v.

                 

                Pacific
      Ethanol, Inc. and Does 1-10 Inclusive,

                 

                Defendants.

                 

              	 
      	
                

              


      

      


      The Joint
Ex Parte Application For Court Order Approving Stipulation for Settlement of
Claim (“Application”), jointly filed by Plaintiff Socius CG II, Ltd. (“Socius”)
and Defendant Pacific Ethanol, Inc. ( “PEI”), came on for hearing on April 13,
2010 at 8:30 a.m. in Department 38 of the above-entitled court, the Honorable
Maureen Duffy-Lewis, Judge presiding.

       

      The
Court, having reviewed the Application, having been presented with a Stipulation
for Settlement of Claim (the “Stipulation”), a copy of which is attached as
Exhibit A to
the Application, and after a hearing upon the fairness, adequacy and
reasonableness of the terms and conditions of the issuance of shares of the
common stock of PEI (the “Common Stock”) to Socius in exchange for the
extinguishment of said claims, IT IS THEREFORE ORDERED AS
FOLLOWS:

       

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      [PROPOSED]
ORDER APPROVING SETTLEMENT OF CLAIM

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

       

      1.           The
Stipulation is approved in it entirety.

       

      2.           In
full and final settlement of Socius’ claim against PEI in the total amount of
$4,000,000 (the “Claim”), which Claim Socius purchased from a creditor of PEI,
Lyles United, LLC (“Lyles United”) pursuant to a Purchase and Option Agreement
between Socius and Lyles United, dated April 10, 2010 (the “Purchase
Agreement”), and which Claim comprises a portion of the principal amount due and
payable under a loan made from Lyles United to PEI with an aggregate principal
balance of $20,000,000, PEI will issue and deliver to Socius or its designee
3,750,000 shares of Common Stock, being approximately equal to 5% (but under no
circumstance whatsoever more than 9.99%) of the total number of shares of Common
Stock outstanding on the date of the Stipulation (the “Settlement Shares”),
subject to adjustment as set forth in paragraph 4 below to reflect the intention
of the parties that the total number of shares issued be based upon an average
trading price of the Common Stock for a specified period of time subsequent to
entry of this Order.

       

      3.           No
later than the first business day following the date that the Court enters this
Order approving the Stipulation, PEI shall: (i) immediately issue the number of
shares of Common Stock required by paragraph 2 above to Socius’ or its
designee’s balance account with The Depository Trust Company (DTC) through the
Fast Automated Securities Transfer (FAST) Program of DTC’s Deposit/Withdrawal
Agent Commission (DWAC) system, without any restriction on transfer, time being
of the essence, by transmitting by facsimile and overnight delivery such
irrevocable and unconditional instruction to PEI’s stock transfer agent, and
(ii) cause its legal counsel to issue an opinion to PEI’s transfer agent, in
form and substance acceptable to both parties and such transfer agent, that the
shares may be so issued.

       

      4.           The
total number of shares of Common Stock to be issued to Socius or its designee in
connection with the Stipulation and this Order shall be adjusted on the 6th
trading day following the date on which the Settlement Shares are delivered to
Socius or its designee as DWAC shares in compliance with paragraph 3 above, as
follows: (i) if the number of VWAP Shares (as defined below) exceeds the number
of Settlement Shares initially issued, then PEI will issue and deliver to Socius
or its designee, as DWAC shares in accordance with paragraph 3 above, additional
shares of Common Stock equal to the difference between the number of VWAP Shares
and the number of Settlement Shares, and (ii) if the number of VWAP Shares is
less than the number of Settlement Shares, then Socius or its designee will
return to PEI for cancellation of that number of shares as equals the difference
between the number of VWAP Shares and the number of Settlement Shares issued
pursuant to paragraph 2 above or, in the alternative at the option of Socius, a
book entry credit may be entered by PEI or its transfer agent reflecting that
such shares are owed from Socius to PEI.  

       

      
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        [PROPOSED]
ORDER APPROVING SETTLEMENT OF CLAIM

      

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

       

      a.           The
number of VWAP Shares is equal to (i) $4,000,000  divided by 80% of
the trading volume weighted average price as reported by Bloomberg LP (the
“VWAP”) of the Common Stock over the 5-day trading period immediately following
the date on which the Settlement Shares are delivered to Socius or its designee
as DWAC shares in compliance with paragraph 3 above, plus (ii) $30,213 for
Socius’ legal fees, expenses and costs incurred through March 29, 2010, plus an
amount equal to Socius’ reasonable legal fees, expenses and costs incurred after
March 29, 2010, with the total divided by the VWAP of the Common Stock over the
5-day trading period immediately following the date on which the Settlement
Shares are delivered to Socius or its designee as DWAC shares in compliance with
paragraph 3 above.

       

      b.           In
no event shall the number of shares of Common Stock issued to Socius or its
designee in connection with the settlement of the Claim, aggregated with all
shares of Common Stock then owned or beneficially owned or controlled by,
collectively, Socius and its affiliates, at any time exceed (i) 9.99% of the
total number of shares of Common Stock then outstanding, or (ii) without the
prior written consent of PEI, that number of shares of Common Stock that would
trigger a new limitation under IRS Code Section 382.

       

      c.           In
no event shall the aggregate number of shares of Common Stock issued to Socius
or its designee in connection with the settlement of the Claim, aggregated with
any other shares of Common Stock issued to Socius and/or its designees by PEI,
at any time exceed 19.99% of the total number of shares of Common Stock
outstanding immediately preceding the date the Court enters the Order approving
this stipulation unless PEI has obtained either (i) stockholder approval for the
issuance of more than such number of shares of Common Stock pursuant to NASDAQ
Marketplace Rule 5635(d) or (ii) a waiver from NASDAQ of compliance with Rule
5635(d).

       

      
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        [PROPOSED]
ORDER APPROVING SETTLEMENT OF CLAIM

      

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

       

      5.           For
so long as Socius or any of its affiliates holds any shares of Common Stock of
PEI, neither Socius nor any of its affiliates will: (i) vote any shares of
Common Stock owned or controlled by it, or solicit any proxies or seek to advise
or influence any person with respect to any voting securities of PEI; or (ii)
engage or participate in any actions, plans or proposals which relate to or
would result in (a) Socius or any of its affiliates acquiring additional
securities of PEI, alone or together with any other person, which would result
in Socius and its affiliates collectively beneficially owning or controlling
more than 9.99% of the total outstanding Common Stock or other voting securities
of PEI, (b) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving PEI or any of its subsidiaries, (c) a
sale or transfer of a material amount of assets of PEI or any of its
subsidiaries, (d) any change in the present board of directors or management of
PEI, including any plans or proposals to change the number or term of directors
or to fill any existing vacancies on the board, (e) any material change in the
present capitalization or dividend policy of PEI, (f) any other material change
in PEI’s business or corporate structure, including but not limited to, if PEI
is a registered closed-end investment company, any plans or proposals to make
any changes in its investment policy for which a vote is required by Section 13
of the Investment Company Act of 1940, (g) changes in PEI’s charter, bylaws or
instruments corresponding thereto or other actions which may impede the
acquisition of control of PEI by any Person, (h) causing a class of securities
of PEI to be delisted from a national securities exchange or to cease to be
authorized to be quoted in an inter-dealer quotation system of a registered
national securities association, (i) causing a class of equity securities of PEI
to become eligible for termination of registration pursuant to Section 12(g)(4)
of the Act, or (j) taking any action, intention, plan or arrangement similar to
any of those enumerated above.  The provisions of this paragraph 5 may
not be modified or waived without further order of the Court.

       

      6.           For
the period of one year from the date that the final number of Settlement Shares
are delivered to Socius or its designee as DWAC shares in compliance with
paragraph 3 above, and regardless of whether Socius or its affiliates then hold
any debt or equity securities of PEI, Socius and its affiliates shall have the
exclusive right to enter into transactions with PEI whereby PEI directly or
indirectly issues common stock or common stock equivalents to a party (including
without limitation Lyles United or its affiliates) in exchange for outstanding
securities, claims or property interests, or partly in such exchange and partly
for cash, including without limitation any such financing or transaction carried
out pursuant to Section 3(a)(9) or Section 3(a)(10) of the Securities Act of
1933, as amended; provided, however, that the
foregoing exclusivity provision shall not apply to (i) such transactions between
PEI and any entity that is a creditor of any PEI subsidiary on the date hereof,
or (ii) a convertible note financing (including later conversion of the notes to
common stock) in a maximum amount of $5 million with the creditor with whom PEI
is currently in negotiations regarding such financing, or (iii) such
transactions between PEI and two of its directors in respect of an aggregate of
$2 million in principal amount of notes issued by PEI to such directors provided
that the securities issued in exchange for such notes cannot be sold by such
directors for at least six months subsequent to the issuance date.

       

      
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        [PROPOSED]
ORDER APPROVING SETTLEMENT OF CLAIM

      

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

       

      2.           This
Order ends, finally and forever (i) any claims to payment or compensation of any
kind or nature which Socius had, now has, or may assert in the future against
PEI arising out of the Claim, and (ii) any claims, including without limitation
for offset or counterclaim, which PEI had, now has, or may assert in the future
against Socius arising out of the Claim.  In this regard, and subject
to compliance with this Order, effective upon the execution of this Order, each
party hereby releases and forever discharges the other party, including all of
the other party’s employees, officers, directors, affiliates and attorneys, from
any and all claims, demands, obligations (fiduciary or otherwise), and causes of
action, whether known or unknown, suspected or unsuspected, arising out of,
connected with, or incidental to the Claim.

       

      7.           This
action is hereby dismissed with prejudice, provided that the court shall retain
jurisdiction with regard to the Claim to enforce the terms of this
Order.

       

      8.           The
Stipulation and this Order may be enforced by any party to the Stipulation by a
motion under California Code of Civil Procedure section 664.6, or by any
procedure permitted by law in the Superior Court of Los Angeles
County.  Pursuant to the Stipulation, each party thereto further
waives a
statement of decision, and the right to appeal from this Order after
entry.  Except as expressly provided in Paragraph 4 above, each party
shall bear its own attorney’s fees, expenses and costs with regard to the
Stipulation and this Order.

       

      
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        [PROPOSED]
ORDER APPROVING SETTLEMENT OF CLAIM

      

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

       

       

      

       

       

       

      6

        
          

        

      

      [PROPOSED]
ORDER APPROVING SETTLEMENT OF CLAIM