Document:

paceth_8k-ex1001.htm

    Exhibit 10.1

     

    
      

       

      SECURITIES
PURCHASE AGREEMENT

       

      THIS
SECURITIES PURCHASE AGREEMENT is made on May 20, 2008 (the “Agreement”), by and between
Pacific Ethanol, Inc., a Delaware corporation (the “Company”), and each of the
investors identified on the signature page hereto (each, a “Purchaser” and collectively,
the “Purchasers”).

       

      WHEREAS,
the Purchasers desire to purchase, and the Company desires to issue and sell,
upon the terms and conditions stated in this Agreement, (a) an aggregate of
294,870 shares (the “Preferred
Shares”) of the Company’s Series B Cumulative Convertible Preferred
Stock, par value $.001 per share (the “Series B Preferred Stock”),
and (b) warrants (the “Warrants”), each in the form
attached to this Agreement as Exhibit A, to acquire
up to an aggregate of 442,305 shares (the “Warrant Shares”) of the
Company’s common stock, par value $.001 per share (the “Common Stock”);
and

       

      WHEREAS,
each Purchaser desires to purchase, upon the terms and conditions stated herein,
such number of Preferred Shares and a Warrant to purchase such number of Warrant
Shares as is set forth opposite his name on the signature page
hereto.

       

      NOW,
THEREFORE, in consideration of the premises, representations, warranties and the
mutual covenants contained in this Agreement, and for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:

       

      ARTICLE
I

      PURCHASE AND
SALE

       

      1.1 Issuance,
Sale and Delivery of the Preferred Shares and Warrants. The Company
hereby agrees to issue and sells to each Purchaser, and each Purchaser hereby
agrees to purchase from the Company, in each case as set forth opposite his name
on the signature page hereto, (a) that number of Preferred Shares, and
(b) a Warrant to purchase that number of Warrant Shares, for the total
purchase price set forth opposite his name on the signature page
hereto.

       

      1.2 Closing.

       

      (a) Upon the
consummation of the transactions contemplated by this Agreement (the “Closing,” and the date
thereof, the “Closing
Date”), which shall be subject to satisfaction of the conditions set
forth in Section 1.2(b)
below, the Company shall issue and deliver to each Purchaser (a) a stock
certificate in definitive form, registered in the name of such Purchaser,
representing such Purchaser’s Preferred Shares, and (b) a Warrant in
definitive form, registered in the name of each Purchaser representing the right
to purchase such Purchaser’s Warrant Shares.  As payment in full for
the Preferred Shares and the Warrant being purchased by each Purchaser under
this Agreement, and against delivery of the stock certificate therefor and
Warrant as aforesaid, on the Closing Date, each Purchaser shall pay to the
Company by wire transfer or by such other method as may be reasonably acceptable
to the Company, in immediately available funds, the amount set forth opposite
his name on the signature page hereto.

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

      (b) Each
Purchaser’s obligation to purchase and pay for the Preferred Shares and the
Warrant on the Closing Date is subject to the satisfaction, on or before the
Closing Date, of the following conditions:

       

      (i) The
Company shall have received any and all consents, waivers or approvals from the
holder of the Company’s Series A Cumulative Redeemable Convertible Preferred
Stock, par value $.001 per share, necessary to issue and deliver the Preferred
Shares and the Warrants and to consummate the transactions contemplated under
this Agreement, the Warrants and under the Series A Certificate of Designations;
and

       

      (ii) The
Company shall have received any and all consents, waivers or approvals from the
holder of the Company’s Series B Preferred Stock necessary to issue and deliver
the Preferred Shares and the Warrants and to consummate the transactions
contemplated under this Agreement, the Warrants and under the Series B
Certificate of Designations.

       

      ARTICLE
II

      REPRESENTATIONS AND
WARRANTIES OF THE COMPANY

       

      The
Company represents and warrants to the Purchaser that:

       

      2.1 Organization.
The Company is duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation and has the requisite power and
authority to own, lease and operate its assets, properties and business and to
carry on its business as it is now being conducted or proposed to be
conducted.

       

      2.2 Certificate
of Incorporation. A true, correct and complete copy of the Company’s
certificate of incorporation, including all certificates of amendment and
certificates of designations including the Certificate of Designations, Powers,
Preferences and Rights of the Series A Cumulative Redeemable Convertible
Preferred Stock (the “Series A
Certificate of Designations”) and the Certificate of Designations,
Powers, Preferences and Rights of the Series B Cumulative Convertible Preferred
Stock (the “Series B
Certificate of Designations”) (collectively, the “Amended Charter”), is
attached hereto as Exhibit B.

       

      2.3 Corporate
Power and Authority.  The Company has all requisite power and
authority to execute and deliver this Agreement and each of the Warrants (the
“Transaction
Documents”).  The Company has all requisite legal and corporate
power and authority to issue, sell and deliver the Preferred Shares and the
Warrants to the Purchasers hereunder, to issue and deliver shares of Series B Preferred Stock
as dividends in accordance with Section 3(a) of the Series B
Certificate of Designations (the “Dividend Shares”), to issue
and deliver the shares of Common Stock issuable upon conversion of the Series B
Preferred Stock (the “Conversion Shares”) and to
issue and deliver the Warrant Shares upon exercise of the
Warrants.  

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      2.4 Authorization;
Validity.  The Company’s: (a) execution and delivery of
the Transaction Documents and performance of its obligations thereunder,
(b) issuance, sale and delivery of the Preferred Shares and, when declared
as a dividend, the Dividend Shares, (c) issuance and delivery of the
Conversion Shares, (d) issuance and delivery of the Warrants, and
(e) issuance and delivery of the Warrant Shares have been duly authorized
by all requisite corporate action or will have been so authorized prior to the
Closing Date and, other than stockholder approval and approvals of or required
by The NASDAQ Stock Market, if any, no other corporate action on the part of the
Company or other approval or authorization is required on the part of the
Company, or any Person by Law or otherwise in order to make the Transaction
Documents the valid, binding and enforceable obligations of the Company. Each of
the Transaction Documents, when executed and delivered by the Company, will
constitute a legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its respective terms. For purposes of
this Agreement (i) “Person” shall mean an
individual, corporation, trust, partnership, limited liability company, joint
venture, unincorporated organization, government body or any agency or political
subdivision thereof, or any other entity, and (ii) “Law” with respect to any
Person, shall mean such Person’s certificate of incorporation or other
organizational documents, its by-laws and any foreign, federal, state or local
law, statute, rule, regulation, ordinance, code, directive, writ, injunction,
decree, judgment or order applicable to such Person.

       

      2.5 Authorized
Capital Stock.

       

      (a) The
Company’s authorized capital stock consists of 10,000,000 shares of Preferred
Stock, par value $.001 per share (the “Preferred Stock”), and
100,000,000 shares of Common Stock.  Immediately prior to the Closing,
44,131,065 shares of Common Stock are outstanding, 3,750,000 shares of Series A
Cumulative Redeemable Convertible Preferred Stock (the “Series A Preferred Stock”)
are outstanding and 2,051,282 shares of Series B Preferred Stock are
outstanding.

       

      (b) The
Preferred Shares have been duly authorized and the Preferred Shares, when issued
in accordance with this Agreement, and the Dividend Shares, when issued in
payment of any dividend, will be duly and validly issued, fully paid and
nonassessable shares of Series B Preferred Stock.  The Conversion
Shares have been duly reserved for issuance upon conversion of the Preferred
Shares, if any Dividend Shares shall be issued, the Dividend Shares, and the
Warrant Shares shall have been duly reserved for issuance upon exercise of the
Warrants and, in each case, when so issued, will be duly authorized, validly
issued, fully paid and nonassessable shares of Common Stock.

       

      ARTICLE
III

      REPRESENTATIONS, WARRANTIES
AND COVENANTS OF THE PURCHASERS

       

      3.1 Representations
and Warranties of the Purchaser.  Each Purchaser represents and
warrants to the Company that:

       

      (a) he is an
“accredited investor”
within the meaning of Rule 501 of Regulation D under the Securities Act of 1933,
as amended (the “Securities
Act”);

       

      (b) his
Preferred Shares and Warrant being purchased by him are being acquired for his
own account for the purpose of investment and not with a view to, or for resale
in connection with, any distribution thereof within the meaning of the
Securities Act; and

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      (c) he
understands that (i) his Preferred Shares, Dividend Shares, Conversion
Shares, Warrant and Warrant Shares have not been registered under the Securities
Act by reason of their issuance in a transaction exempt from the registration
requirements of the Securities Act pursuant to Section 4(2) thereof or Rule
505 or 506 promulgated under the Securities Act, (ii) his Preferred Shares,
Dividend Shares, Conversion Shares and Warrant Shares must be held indefinitely
unless a subsequent disposition thereof is registered under the Securities Act
or is exempt from such registration, and (iii) his Preferred Shares,
Dividend Shares, Conversion Shares, Warrant and Warrant Shares will bear the
legend to such effect set forth in Section 3.3.

       

      3.2 Restricted
Securities.  Each Purchaser agrees not to make any disposition
of all or any portion of his Preferred Shares, Dividend Shares, Conversion
Shares, Warrant or Warrant Shares unless and until such securities are
registered under the Securities Act and under any other applicable securities
laws or such sale or transfer is exempt from such registration.

       

      3.3 Legend.  Each
Purchaser acknowledges that the certificates or other instruments evidencing his
Preferred Shares, Dividend Shares, Conversion Shares, Warrant and Warrant Shares
will bear the legend set forth below:

       

      THESE
SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS.

       

      The
legend set forth above shall be removed by the Company from any certificate or
instrument evidencing Preferred Shares, the Dividend Shares, the Conversion
Shares, the Warrant or the Warrant Shares, and the Company shall issue a
certificate without such legend to the holder thereof, upon delivery to the
Company of an opinion by counsel (which may be counsel for the Company) that
such security can be freely transferred in a public sale without a registration
statement being in effect with respect to the legended security and the proposed
transaction and that such transfer will not jeopardize the exemption or
exemptions from registration pursuant to which the Company issued the Preferred
Shares, the Dividend Shares, the Conversion Shares, the Warrant or the Warrant
Shares; provided, however, that no opinion shall be required for dispositions
pursuant to Rule 144 under the Securities Act or in any transfer in compliance
with applicable securities laws where the transferee shall receive securities
bearing the legend above.

       

      ARTICLE
IV

      COVENANTS OF THE
COMPANY

       

      The
Company covenants and agrees with the Purchasers that:

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      4.1 Reserve
for Conversion Shares and Warrant Shares.  The Company shall at
all times reserve and keep available out of its authorized but unissued shares
of Common Stock, for the purpose of effecting the conversion of the Preferred
Shares and effecting the exercise of the Warrants and otherwise complying with
the terms of this Agreement, such number of its duly authorized shares of Common
Stock as shall be sufficient to effect the conversion of the Preferred Shares
and the exercise of the Warrants from time to time outstanding or otherwise to
comply with the terms of this Agreement. If at any time the number of authorized
but unissued shares of Common Stock shall not be sufficient to effect the
conversion of the Preferred Shares and exercise of the Warrants or otherwise to
comply with the terms of this Agreement, the Company will forthwith take such
corporate action as may be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purposes.  The Company will obtain any authorization, consent,
approval or other action by or make any filing with any court or governmental or
administrative body that may be required under applicable federal and state
securities laws in connection with the issuance of shares of Common Stock upon
conversion of the Preferred Shares and upon exercise of the
Warrants.

       

      4.2 Indemnity.

       

      (a) The
Company agrees to indemnify, defend and hold harmless each the Purchaser, and
his employees, agents, trustees, advisors (including, without limitation,
attorneys, accountants and financial advisors), attorneys-in-fact, successors
and assigns (collectively, “Indemnified Parties”) from
and against any and all losses, claims, liabilities, damages, deficiencies,
costs or expenses (including, without limitation, interest, penalties,
reasonable attorneys’ fees, disbursements and related charges and any costs or
expenses that an Indemnified Party incurs to enforce its right to
indemnification) (collectively, “Losses”) based upon, arising
out of or otherwise in respect of any material inaccuracy in or material breach
of any representations, warranties, covenants or agreements of the Company
contained in any of the Transaction Documents.

       

      (b) The
provisions of this Section 4.2
shall not limit or impair any right or remedy arising from breach of any of the
Transaction Documents.  In addition to any other remedy provided by
law, injunctive relief may be obtained to enjoin the breach, or threatened
breach, of any provision of this Agreement and each party shall be entitled to
specific performance by the others of their obligations hereunder and
thereunder.  All remedies, either under this Agreement, by law or as
may otherwise be afforded to the Purchasers or the Company, as the case may be,
shall be cumulative.

       

      ARTICLE
V

      COVENANTS OF THE
PURCHASERS

       

      The
Purchasers covenant and agree with the Company that:

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      5.1 Conversion
Limitations.  Notwithstanding the Conversion Price (as defined
in the Series B Certificate of Designations, the “Conversion Price”) adjustment
provisions of Section 5(d) of the Series B Certificate of Designations, the
Conversion Price applicable to the Preferred Shares shall not be adjusted to the
extent such adjustment would cause (a) the number of Conversion Shares issuable
upon conversion of all Preferred Shares issued and sold hereunder (including any
Dividend Shares issued subsequent to the date hereof in respect of such
Preferred Shares) to exceed 9.99% of the number of shares of the Company’s
Common Stock outstanding on the date hereof, or (b) the sum of (i) the number of
Conversion Shares issuable upon conversion of all Preferred Shares issued and
sold hereunder (including any Dividend Shares issued subsequent to the date
hereof in respect of such Preferred Shares), and (ii) the number of shares of
Common Stock plus the number of shares of Common Stock issuable upon conversion
or exercise of any other securities in each case issued in any transaction
deemed aggregated, or in the reasonable judgment of the Company on advice of
legal counsel, may be deemed aggregated, by The NASDAQ Stock Market for purposes
of NASDAQ Marketplace Rule 4350(i), to exceed 19.99% of the number of shares of
the Company’s Common Stock outstanding on the date hereof, or (c) the Conversion
Price applicable to the Preferred Shares to be lower than the sum of (i) the
closing price of a share of the Company’s Common Stock on The NASDAQ Global
Market on the date hereof, and (ii) $0.0625. The foregoing limitations shall be
applicable to all transferees of the Preferred Shares and, as a condition to the
Company’s obligation to effectuate a requested transfer of any Preferred Shares,
the transferring Purchaser shall cause its transferee to expressly acknowledge
and agree in writing to the foregoing limitations.

       

      ARTICLE
VI

      MISCELLANEOUS

       

      6.1 Survival
of Agreements. All covenants, agreements, representations and warranties
made in any of the Transaction Documents or any certificate or instrument
delivered to the Purchasers pursuant to or in connection with any of the
Transaction Documents shall survive the execution and delivery of all of the
Transaction Documents, the issuance, sale and delivery of the Preferred Shares
and the Warrants, and the issuance and delivery of the Dividend Shares, the
Conversion Shares and the Warrant Shares, and all statements contained in any
certificate or other instrument delivered by the Company hereunder or thereunder
or in connection herewith or therewith shall be deemed to constitute
representations and warranties made by the Company.

       

      6.2 Brokerage.  Each
party hereto will indemnify and hold harmless the others against and in respect
of any claim for brokerage or other commissions relative to the Transaction
Documents or to the transactions contemplated thereby, based in any way on
agreements, arrangements or understandings made or claimed to have been made by
such party with any third party.

       

      6.3 Parties
in Interest.  All representations, warranties, covenants and
agreements contained in this Agreement by or on behalf of any of the parties
hereto shall bind and inure to the benefit of the respective successors and
assigns of the parties hereto whether so expressed or not.  Without
limiting the generality of the foregoing, all representations, covenants and
agreements benefiting the Purchasers shall inure to the benefit of any and all
subsequent holders from time to time of the Preferred Shares, the Warrants, the
Dividend Shares, the Conversion Shares and the Warrant Shares, as the case may
be.  Nothing in this Agreement shall create or be deemed to create any
third-party beneficiary rights in any Person other than the parties to this
Agreement or their respective successors and assigns except as expressly
provided in this Agreement.

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      6.4 Specific
Performance.  Each of the parties hereto acknowledges and
agrees that the breach of this Agreement would cause irreparable damage to the
other parties hereto and that the other parties hereto will not have an adequate
remedy at law.  Therefore, the obligations of each of the parties
hereto under this Agreement shall be enforceable by a decree of specific
performance issued by any court of competent jurisdiction, and appropriate
injunctive relief may be applied for and granted in connection
therewith.  Such remedies, however, shall be cumulative and not
exclusive and shall be in addition to any other remedies which any party may
have under this Agreement or otherwise.

       

      6.5 Further
Assurances.  The Company and each Purchaser agrees to execute
and deliver such other documents or agreements as may be necessary or desirable
for the implementation of the Transaction Documents and the consummation of the
transactions contemplated thereby.

       

      6.6 Submission
to Jurisdiction; Consent to Service of Process.

       

      (a) The
parties hereto hereby irrevocably submit to the exclusive jurisdiction of any
federal or state court located within Sacramento County, California, over any
dispute arising out of or relating to this Agreement or any of the transactions
contemplated hereby and each party hereby irrevocably agrees that all claims in
respect of such dispute or any suit, action or proceeding related thereto shall
be heard and determined in such courts.  The parties hereby
irrevocably waive, to the fullest extent permitted by applicable law, any
objection which they may now or hereafter have to the laying of venue of any
such dispute brought in such court or any defense of inconvenient forum for the
maintenance of such dispute.  Each of the parties hereto agrees that a
judgment in any such dispute may be enforced in other jurisdictions by suit on
the judgment or in any other manner provided by law.

       

      (b) Each of
the parties hereto hereby consents to process being served by any party to this
Agreement in any suit, action or proceeding by the mailing of a copy thereof in
accordance with the provisions of Section 6.7.

       

      6.7 Notices.  Any
notice, request, demand or other communication required or permitted to be given
to a party pursuant to the provisions of this Agreement will be in writing and
will be effective and deemed given under this Agreement on the earliest
of:  (a) the date of personal delivery, (b) the date of transmission
by facsimile, with confirmed transmission and receipt, (c) two (2) days after
deposit with a nationally-recognized courier or overnight service and (d) five
(5) days after mailing via first-class mail.  All notices not
delivered personally or by facsimile will be sent with postage and other charges
prepaid and properly addressed to the party to be notified at the address set
forth for such party (i) if to a Purchaser, to the address set forth below his
name on the signature page hereto, and (ii) if to the Company, to Pacific
Ethanol, Inc., 400 Capitol Mall, Suite 2060, Sacramento, CA 95814,
attention:  General Counsel, with a copy to Rutan & Tucker LLP,
611 Anton Boulevard, 14th Floor, Costa Mesa, CA 92626,
attention:  Larry A. Cerutti, facsimile (714) 546-9035.  Any
party hereto (and such party’s permitted assigns) may change such party’s
address for receipt of future notices hereunder by giving written notice to the
other parties.

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      6.8 Governing
Law.  This Agreement shall be governed by, and construed,
interpreted and enforced in accordance with, the laws of the State of
California, without giving effect to the principles of conflicts of laws
thereunder which would specify the application of the law of another
jurisdiction.

       

      6.9 Entire
Agreement.  The Transaction Documents, including the Exhibits
to this Agreement, constitute the sole and entire agreement of the parties with
respect to the subject matter thereof.  All Exhibits hereto are hereby
incorporated herein by reference.

       

      6.10 Counterparts.  This
Agreement may be executed in counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.

       

      6.11 Amendments
and Waivers.  This Agreement may not be amended or modified,
and no provisions hereof may be waived, without the written consent of the
Company and the Purchasers.  No action taken pursuant to this
Agreement, including without limitation, any investigation by or on behalf of
any party, shall be deemed to constitute a waiver by the party taking such
action of compliance with any representation, warranty, covenant or agreement
contained herein.  The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a further or
continuing waiver of such breach or as a waiver of any other or subsequent
breach.  No failure on the part of any party to exercise, and no delay
in exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of such right, power or remedy
by such party preclude any other or further exercise thereof or the exercise of
any other right, power or remedy.  All remedies hereunder are
cumulative and are not exclusive of any other remedies provided by
law.

       

      6.12 Severability.  If
any provision of this Agreement shall be declared void or unenforceable by any
judicial or administrative authority, the validity of any other provision and of
the entire Agreement shall not be affected thereby.

       

      6.13 Titles
and Subtitles; Interpretive Matters.  The titles and subtitles
used in this Agreement are for convenience of reference only and are not to be
considered in construing or interpreting any term or provision of this
Agreement.  No provision of this Agreement will be interpreted in
favor of, or against, any of the parties hereto by reason of the extent to which
any such party or its counsel participated in the drafting thereof or by reason
of the extent to which any such provision is inconsistent with any prior draft
hereof or thereof.

       

      6.14 Facsimile
Signatures.  Any signature page delivered by a fax machine
shall be binding to the same extent as an original signature page, with regard
to any agreement subject to the terms hereof or any amendment
thereto.  Any party who delivers such a signature page agrees to
deliver promptly an original counterpart to each party to whom the faxed
signature page was sent.

       

      6.15 Other
Remedies.  In addition to those remedies specifically set forth
in the Transaction Documents, if any, each party may proceed to protect and
enforce its rights under the Transaction Documents either by suit in equity
and/or by action at law, including, but not limited to, an action for damages as
a result of any such breach and/or an action for specific performance of any
such covenant or agreement contained in the Transaction Documents.  No
right or remedy conferred upon or reserved to any party under the Transaction
Documents is intended to be exclusive of any other right or remedy, and every
right and remedy shall be cumulative and in addition to every other right and
remedy given under the Transaction Documents or now and hereafter existing under
applicable law.

       

      [SIGNATURE
PAGES FOLLOW]

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      IN
WITNESS WHEREOF, the Company and the Purchasers have executed this Purchase
Agreement as of the day and year first above written.

       

       

      
        
          	 COMPANY:	 PACIFIC
      ETHANOL, INC.	 
	 	 	 	 
	
                   

                	
                  By:
      

                	/s/ JOHN
      T. MILLER	 
	 	 	Name:
      John T. Miller 	 
	 	 	Title:
      Chief Operating Officer 	 
	 	 	 	 

        

      

       

       

       

      

       

      [PURCHASERS’
SIGNATURE PAGES FOLLOW]

       

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

      

      
        	
                PURCHASER:

                 

                /S/ NEIL M.
      KOEHLER            

              	
                 

                 

                SUBSCRIPTION
      AMOUNT:

              	 
	
                Neil
      M. Koehler

                 

                Address:  _________________________

                
_________________________________

                 

                Fax
      (____) ________________________

              	
                 

                Number
      of Preferred Shares:

                 

                Number
      of Warrant Shares:

                 

                Total
      Purchase Price:

              	
                 

                256,410

                 

                 384,615

                 

                $5,000,000

              	 
	 
      	 
      	 

      

      
        	
                PURCHASER:

                 

              	
                 

              	 
	

                /S/ BILL JONES                   
      

              	

                SUBSCRIPTION
      AMOUNT:

              	 	 
	 Bill
      Jones	 	 	 
	
                

                   

                  Address:  _________________________

                  
_________________________________

                   

                  Fax
      (____) ________________________

                

                 

              	
                Number
      of Preferred Shares:

                 

                Number
      of Warrant Shares:

                 

                Total Purchase Price:

              	
                 12,820

                 

                 19,230

                 

                $  250,000

              	 
	 	 	 	 
	 	 	 	 
	
                 PURCHASER:

                 

                /S/ PAUL P.
      KOEHLER            

              	
                 

                 

                SUBSCRIPTION
      AMOUNT:

              	 	 
	Paul
      P. Koehler	 	 	 
	
                 

                Address: _________________________

                 

                ________________________________

                 

                Fax (____) ________________________

              	
                Number of Preferred Shares:

                 

                Number of Warrant Shares:

                 

                Total Purchase Price:

              	
                 12,820

                 

                 19,230

                 

                $ 
250,000

              	 
	 	 	 	 
	 	 	 	 
	
                PURCHASER:

                 

                /S/ THOMAS D.
      KOEHLER        

              	
                 

                 

                SUBSCRIPTION
      AMOUNT:

              	 	 
	Thomas
      D. Koehler	 	 	 
	
                 

                Address:
      ________________________

                 

                ________________________________

                 

                Fax (____) _______________________

              	
                Number
      of Preferred Shares:

                 

                Number of Warrant Shares:

                 

                Total Purchase Price:

              	
                 12,820

                 

                19,230

                 

                $ 
250,000

              	 

      

      
      

       

      

       

       

      10paceth_8k-ex1002.htm

    Exhibit 10.2

     

    
      

      NEITHER
THESE SECURITIES NOR THE SECURITIES FOR WHICH THESE SECURITIES ARE EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS.

       

      PACIFIC
ETHANOL, INC.

       

      WARRANT

      
        	
                Warrant
      No. W7-___

              	
                Dated:  May ___,
      2008

              

      

       

      Pacific
Ethanol, Inc., a Delaware corporation (the “Company”), hereby certifies
that, for value received, _______________ or his registered assigns (the “Holder”), is entitled to
purchase from the Company up to a total of __________ shares of common stock,
$.001 par value per share (the “Common Stock”), of the Company
(each such share, a “Warrant
Share” and all such shares, the “Warrant Shares”) at an
exercise price equal to $7.00 per share (as adjusted from time to time as
provided in Section 8, the
“Exercise Price”),
subject to the terms and conditions contained herein. This Warrant (this “Warrant”) is issued in
connection with the purchase by _______________ of shares of the Company’s
Series B Cumulative Convertible Preferred Stock (the “Series B Preferred Stock”)
pursuant to the terms and conditions of that certain Securities Purchase
Agreement dated May ___, 2008 between the Company and _______________ (the
“Purchase
Agreement”).  Capitalized terms not otherwise defined herein
shall have their respective meanings as set forth in the Purchase
Agreement.

       

      1. Registration
of Warrant.  The Company shall register this Warrant, upon
records to be maintained by the Company for that purpose (the “Warrant Register”), in the
name of the record Holder hereof from time to time.  The Company may
deem and treat the registered Holder of this Warrant as the absolute owner
hereof for the purpose of any exercise hereof or any distribution to the Holder,
and for all other purposes, absent actual notice to the contrary.

       

      2. Registration
of Transfers.  The Company shall register the transfer of any
portion of this Warrant in the Warrant Register, upon surrender of this Warrant,
with the Form of Assignment attached hereto duly completed and signed, to the
Company at its address specified herein.  Upon any such registration
or transfer, a new warrant to purchase Common Stock, in substantially the form
of this Warrant (any such new warrant, a “New Warrant”), evidencing the
portion of this Warrant so transferred shall be issued to the transferee and a
New Warrant evidencing the remaining portion of this Warrant not so transferred,
if any, shall be issued to the transferring Holder.  The acceptance of
the New Warrant by the transferee thereof shall be deemed the acceptance by such
transferee of all of the rights and obligations of a holder of a
Warrant.

       

      
        
           

        

        
          -1-

          
            

          

        

        
           

        

      

       

      3. Exercise
and Duration of Warrants.

       

      (a) This
Warrant shall be exercisable by the registered Holder from time to time during
the term commencing on the date that is six (6) months and one (1) day from the
date hereof and ending on the date that is ten (10) years from the date hereof
(the “Expiration Date”).
At 5:00 P.M., California time on the Expiration Date, the portion of this
Warrant not exercised prior thereto shall be and become void and of no
value.

       

      (b) A Holder
may exercise this Warrant by delivering to the Company (i) an exercise notice,
in the form attached hereto (the “Exercise Notice”),
appropriately completed and duly signed, and (ii) payment of the Exercise
Price for the number of Warrant Shares as to which this Warrant is being
exercised, and the date such items are delivered to the Company (as determined
in accordance with the notice provisions hereof) is an “Exercise Date.”  The
Holder shall not be required to deliver the original Warrant in order to effect
an exercise hereunder.  Execution and delivery of the Exercise Notice
shall have the same effect as cancellation of the original Warrant and issuance
of a New Warrant evidencing the right to purchase the remaining number of
Warrant Shares.

       

      4. Delivery
of Warrant Shares.

       

      (a) Upon
exercise of this Warrant, the Company shall promptly (but in no event later than
five (5) Business Days after the Exercise Date) issue or cause to be issued and
cause to be delivered to or upon the written order of the Holder and in such
name or names as the Holder may designate, a certificate for the Warrant Shares
issuable upon such exercise.  For purposes of this Warrant, “Business Day” means any day
other than Saturday, Sunday or other day on which commercial banks in the State
of California are authorized or required by law to remain closed.  The
Holder, or any person so designated by the Holder to receive Warrant Shares,
shall be deemed to have become holder of record of such Warrant Shares as of the
Exercise Date.  It is acknowledged and agreed that certificates
evidencing such Warrant Shares may bear a restrictive legend in substantially
the following form:

       

      THESE
SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS.

       

      
        
           

        

        
          -2-

          
            

          

        

        
           

        

      

      (b) This
Warrant is exercisable, either in its entirety or, from time to time, for a
portion of the number of Warrant Shares.  Upon surrender of this
Warrant following one or more partial exercises, the Company shall issue or
cause to be issued, at its expense, a New Warrant evidencing the right to
purchase the remaining number of Warrant Shares.

       

      5. Charges,
Taxes and Expenses.  Issuance and delivery of certificates for
shares of Common Stock upon exercise of this Warrant shall be made without
charge to the Holder for any issue or transfer tax, transfer agent fee or other
incidental tax or expense in respect of the issuance of such certificates, all
of which taxes and expenses shall be paid by the Company; provided, however,
that the Company shall not be required to pay any tax which may be payable in
respect of any transfer involved in the registration of any certificates for
Warrant Shares or Warrants in a name other than that of the
Holder.  The Holder shall be responsible for all other tax liability
that may arise as a result of holding or transferring this Warrant or receiving
Warrant Shares upon exercise hereof.

       

      6. Replacement
of Warrant.  If this Warrant is mutilated, lost, stolen or
destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation hereof, or in lieu of and substitution
for this Warrant, a New Warrant, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and customary and
reasonable bond or indemnity, if requested.  Applicants for a New
Warrant under such circumstances shall also comply with such other reasonable
regulations and procedures and pay such other reasonable third-party costs as
the Company may prescribe.

       

      7. Reservation
of Warrant Shares.  The Company covenants that it will at all
times reserve and keep available out of the aggregate of its authorized but
unissued and otherwise unreserved Common Stock, solely for the purpose of
enabling it to issue Warrant Shares upon exercise of this Warrant as herein
provided, the number of Warrant Shares which are then issuable and deliverable
upon the exercise of this entire Warrant, free from preemptive rights or any
other contingent purchase rights of persons other than the Holder (after giving
effect to the adjustments and restrictions of Section 8, if
any). The Company covenants that all Warrant Shares so issuable and deliverable
shall, upon the due exercise of this Warrant, and upon issuance of such Warrant
Shares and the payment of the applicable Exercise Price in accordance with the
terms hereof, be duly and validly authorized, issued and fully paid and
nonassessable.

       

      8. Certain
Adjustments.  The Exercise Price and number of Warrant Shares
issuable upon exercise of this Warrant are subject to adjustment from time to
time as set forth in this Section 8.

       

      (a) Stock
Dividends and Splits.  If the Company, at any time while this
Warrant is outstanding, (i) pays a stock dividend on its Common Stock or
otherwise makes a distribution on any class of capital stock that is payable in
shares of Common Stock, (ii) subdivides outstanding shares of Common Stock into
a larger number of shares, or (iii) combines outstanding shares of Common Stock
into a smaller number of shares, then in each such case the Exercise Price shall
be multiplied by a fraction of which the numerator shall be the number of shares
of Common Stock outstanding immediately before such event and of which the
denominator shall be the number of shares of Common Stock outstanding
immediately after such event.  Any adjustment made pursuant to clause
(i) of this subsection shall become effective immediately after the record date
for the determination of stockholders entitled to receive such dividend or
distribution, and any adjustment pursuant to clause (ii) or (iii) of this
subsection shall become effective immediately after the effective date of such
subdivision or combination.

       

      
        
           

        

        
          -3-

          
            

          

        

        
           

        

      

       

      (b) Number of
Warrant Shares.  Simultaneously with any adjustment to the
Exercise Price pursuant to subsection (a) of this Section 8, the
number of Warrant Shares that may be purchased upon exercise of this Warrant
shall be adjusted proportionately, so that after such adjustment the aggregate
Exercise Price payable hereunder for the adjusted number of Warrant Shares shall
be the same as the aggregate Exercise Price in effect immediately prior to such
adjustment.

       

      (c) Reclassification,
Reorganization and Consolidation.  In case of any merger,
consolidation, share exchange, reclassification, reorganization, or change in
the capital stock of the Company (other than as a result of a subdivision,
combination, or stock dividend provided for in Section 8(a)
above) (each, a “Change of
Control”), then the Company shall make appropriate provisions so that the
Holder of this Warrant shall have the right at any time prior to the expiration
of this Warrant to purchase, at a total price equal to that payable upon the
exercise of this Warrant, the kind and amount of shares of stock and other
securities and property receivable in connection with such Change of Control by
a holder of the same number of Warrant Shares as were purchasable by the Holder
of this Warrant immediately prior to such Change of Control.  In any
such case appropriate provisions shall be made with respect to the rights and
interest of the Holder of this Warrant so that the provisions hereof shall
thereafter be applicable with respect to any shares of stock or other securities
and property deliverable upon exercise hereof, and appropriate adjustments shall
be made to the purchase price per share payable hereunder, provided the
aggregate purchase price shall remain the same.  The Company will use
commercially best efforts, upon the consummation of any such Change of Control,
to ensure that the successor entity, if any (if other than the Company),
resulting from such Change of Control agrees by written instrument, executed and
mailed or delivered to the registered Holder hereof at the last address of such
Holder appearing on the books of the Company, to assume the obligations of the
Company under this Warrant.

       

      (d) Calculations.  All
calculations under this Section 8 shall
be made to the nearest cent or the nearest 1/100th of a share, as
applicable.  The number of shares of Common Stock outstanding at any
given time shall not include shares owned or held by or for the account of the
Company, and the disposition of any such shares shall be considered an issue or
sale of Common Stock.

       

      (e) Notice of
Adjustment.  When any adjustment is required to be made in the
number or kind of shares purchasable upon exercise of this Warrant, or in the
Exercise Price, the Company shall promptly notify the Holder of such event and
of the number of Warrant Shares or other securities or property thereafter
purchasable upon exercise of this Warrant.

       

      9. Payment
of Exercise Price.  The Holder shall pay the Exercise Price in
immediately available funds.

       

      
        
           

        

        
          -4-

          
            

          

        

        
           

        

      

       

      10. Fractional
Shares.  The Company shall not be required to issue or cause to
be issued fractional Warrant Shares on the exercise of this
Warrant.  If any fraction of a Warrant Share would, except for the
provisions of this Section 10, be
issuable upon exercise of this Warrant, the number of Warrant Shares to be
issued will be rounded up to the nearest whole share.

       

      11. Notices.  Any
and all notices or other communications or deliveries hereunder (including
without limitation any Exercise Notice) shall be in writing and shall be deemed
given and effective on the earliest of (i) the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number
specified below prior to 5:00 p.m. (California time) on a Business Day, (ii) the
next Business Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified below
on a day that is not a Business Day or later than 5:00 p.m. (California time) on
any Business Day, (iii) the Business Day following the date of mailing, if sent
by nationally recognized overnight courier service, or (iv) upon actual receipt
by the party to whom such notice is required to be given.  The address
and facsimile number for such notices or communications shall be as
follows:

       

      
        	
                 
      

              	
                If
      to the Company:

              	
                Pacific
      Ethanol, Inc.

              

      

      
        	
                 
      

              	
                400
      Capitol Mall, Suite 2060

              

      

      
        	
                 
      

              	
                Sacramento,
      California 95814

              

      

      
        	
                 
      

              	
                Fax
      (916) 446-3937

              

      

      
        	
                 
      

              	
                Attn:  Chief
      Financial Officer

              

      

      
        	
                 
      

              	
                AND

              

      

      
        	
                 
      

              	
                Attn:
      General Counsel

              

      

       

      
        	
                 
      

              	
                If
      to Holder:

              	
                _______________________

              

      

      
        	
                 
      

              	
                _______________________

              

      

      
        	
                 
      

              	
                Fax
      (___) ___-____

              

      

       

      or such
other address or facsimile number as either party may designate to the other
party hereto in accordance with the aforesaid procedure. Each party shall
provide notice to the other party of any change in address or facsimile
number.

       

      12. Warrant
Agent.  The Company shall serve as warrant agent under this
Warrant.  Upon thirty (30) days’ prior notice to the Holder, the
Company may appoint a new warrant agent.  Any corporation into which
the Company or any new warrant agent may be merged or any corporation resulting
from any consolidation to which the Company or any new warrant agent shall be a
party or any corporation to which the Company or any new warrant agent transfers
substantially all of its corporate trust or stockholders services business shall
be a successor warrant agent under this Warrant without any further
act.  Any such successor warrant agent shall promptly cause notice of
its succession as warrant agent to be mailed (by first class mail, postage
prepaid) to the Holder at the Holder's last address as shown on the Warrant
Register.

       

      
        
           

        

        
          -5-

          
            

          

        

        
           

        

      

       

      13. Miscellaneous.

       

      (a) Subject
to the restrictions on transfer set forth on the first page hereof, this Warrant
may be assigned by the Holder.  This Warrant may not be assigned by
the Company except to a successor.  This Warrant shall be binding on
and inure to the benefit of the parties hereto and their respective successors
and assigns.  Subject to the preceding sentence, nothing in this
Warrant shall be construed to give to any person other than the Company and the
Holder any legal or equitable right, remedy or cause of action under this
Warrant.  This Warrant may be amended only in writing signed by the
Company and the Holder and their successors and assigns.

       

      (b) The
Company will not, by amendment of its governing documents or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the Holder against impairment.

       

      (c) Governing Law; Venue; Waiver
Of Jury Trial.  ALL QUESTIONS CONCERNING THE CONSTRUCTION,
VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS WARRANT SHALL BE GOVERNED BY
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
CALIFORNIA.  EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE COUNTY OF FRESNO,
CALIFORNIA, FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION
HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN
(INCLUDING WITH RESPECT TO THE ENFORCEMENT OF ANY OF THE TRANSACTION DOCUMENTS),
AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT IN ANY SUIT, ACTION OR
PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF
ANY SUCH COURT, THAT SUCH SUIT, ACTION OR PROCEEDING IS
IMPROPER.  EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF
PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR
PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR
OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE ADDRESS IN
EFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL
CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING
CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS
IN ANY MANNER PERMITTED BY LAW.  THE COMPANY HEREBY WAIVES ALL RIGHTS
TO A TRIAL BY JURY.

       

      (d) The
headings herein are for convenience only, do not constitute a part of this
Warrant and shall not be deemed to limit or affect any of the provisions
hereof.

       

      
        
           

        

        
          -6-

          
            

          

        

        
           

        

      

       

      (e) In case
any one or more of the provisions of this Warrant shall be invalid or
unenforceable in any respect, the validity and enforceability of the remaining
terms and provisions of this Warrant shall not in any way be affected or
impaired thereby and the parties will attempt in good faith to agree upon a
valid and enforceable provision which shall be a commercially reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.

       

      IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its
authorized officer as of the date first indicated above.

       

      
        
          	 	 	 	 
	
                   

                	
                   

                	By:
      _______________________________________	 
	 	 	Name:
      _____________________________________	 
	 	 	Title: ______________________________________	 
	 	 	 	 

        

      

      
 

      
        
           

        

        
          -7-

          
            

          

        

        
           

        

      

       

      FORM OF
EXERCISE NOTICE

       

       

      (To be
executed by the Holder to exercise the right to purchase shares of Common Stock
under the foregoing Warrant)

       

      To:           PACIFIC
ETHANOL, INC.

       

      The
undersigned is the Holder of Warrant No. W7-___ (the “Warrant”) issued by Pacific
Ethanol, Inc., a Delaware corporation (the “Company”).  Capitalized
terms used herein and not otherwise defined have the respective meanings set
forth in the Warrant.

       

      
        	
                1.  

              	
                The
      Warrant is currently exercisable to purchase a total of __________ Warrant
      Shares.

              

      

       

      
        	
                2.  

              	
                The
      undersigned Holder hereby exercises its right to purchase __________
      Warrant Shares pursuant to the
Warrant.

              

      

       

      
        	
                3.  

              	
                The
      Holder shall pay the sum of $__________ to the Company in accordance with
      the terms of the Warrant.

              

      

       

      
        	
                4.  

              	
                Pursuant
      to this exercise, the Company shall deliver to the holder __________
      Warrant Shares in accordance with the terms of the
  Warrant.

              

      

       

      
        	
                5.  

              	
                Following
      this exercise, the Warrant shall be exercisable to purchase a total of
      __________ Warrant Shares.

              

      

      

       

      
        	
                Dated:
      _____________________

              	
                Name
      of Holder:

              
	 	 
	 	 
	 	(Print)
      _________________________________
	 	 
	 	 
	 	By:
      ___________________________________
	 	Name:
      _________________________________
	 	Title:
      __________________________________
	 	 
	 	      
                (Signature
      must conform in all respects to name of holder as specified on the face of
      the Warrant)

              
	 	 

      

       

       

      
        
           

        

        
          -8-

          
            

          

        

        
           

        

      

       

      FORM OF
ASSIGNMENT

       

      [To be
completed and signed only upon transfer of Warrant]

       

      FOR VALUE
RECEIVED, the undersigned hereby sells, assigns and transfers unto __________
the right represented by the within Warrant to purchase __________ shares of
Common Stock of Pacific Ethanol, Inc. to which the within Warrant relates and
appoints __________ attorney to transfer said right on the books of Pacific
Ethanol, Inc. with full power of substitution in the premises.

       

      
        	
                Dated:
      ___________, ____

              	 	 _____________________________________
	 	 	 
	 	 	 By:
      ___________________________________
	 	 	      
                (Signature
      must conform in all respects to name of holder as specified on the face of
      the Warrant)

              
	 	 	 
	 	 	 Print:
      __________________________________
	 	 	 
	 	 	 Address of
      transferee:
	 	 	 
	 	 	 ______________________________________
	 	 	 ______________________________________
	 	 	 Fax: (__)
      _______________________________
	 	 	 Attn:
      _________________________________
	 	 	 
	 	 	 In the
      presence of:
	 	 	 
	 	 	 ______________________________________
	 	 	 
	 	 	 Print:
      _________________________________

      

       

       

       

      -9-

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