EXHIBIT 10.5
VOTING AGREEMENT
THIS VOTING AGREEMENT (this "Agreement"), dated as of November 14,
2005, is by and among Pacific Ethanol, Inc., a Delaware corporation (the
"Company"), Cascade Investment, L. L. C., a Washington limited liability company
(the "Purchaser") and the persons listed on SCHEDULE I hereto (each a
"Stockholder", and, collectively, the "Stockholders").
WHEREAS, the Purchaser and the Company propose to enter into a Purchase
Agreement of even date herewith (the "Purchase Agreement") providing for the
purchase by the Purchaser of certain cumulative redeemable convertible preferred
stock of the Company (the "Preferred Shares") (the transactions contemplated by
the Purchase Agreement, including without limitation the issuance of securities
thereunder, the "Transactions");
WHEREAS, as a condition to the execution and delivery of the Purchase
Agreement, the Purchaser has requested that the Stockholders enter into this
Agreement;
WHEREAS, the Stockholders believe that the execution, delivery and
performance of the Purchase Agreement and the consummation of the transactions
contemplated thereby is in the best interests of the Company and its
stockholders; and
WHEREAS, each Stockholder is the record and beneficial owner, or the
trustee of a trust whose beneficiaries are the beneficial owners, of such number
of shares of Common Stock of the Company set forth opposite such Stockholder's
name on SCHEDULE I hereto (such shares of Common Stock, as such shares may be
adjusted by stock dividend, stock split, recapitalization, combination or
exchange of shares, merger, consolidation, reorganization or other change or
transaction, together with shares of Common Stock that may be acquired after the
date hereof by such Stockholder, including shares of Common Stock issued upon
the exercise of options or warrants to purchase Common Stock (as the same may be
adjusted as aforesaid), being collectively referred to herein as the "Shares").
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements contained herein, the Stockholders
agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS. Each Stockholder
hereby, severally and not jointly, represents and warrants as follows:
(a) AUTHORITY. The Stockholder has all requisite power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by the Stockholder. This Agreement has been duly executed and
delivered by the Stockholder and constitutes a valid and binding obligation of
the Stockholder enforceable against the Stockholder in accordance with its
terms. Except as set forth on SCHEDULE II hereto, neither the execution,
delivery or performance of this Agreement by the Stockholder nor the
consummation by the Stockholder of the transactions contemplated hereby will (i)
require any filing with, or permit, authorization, consent or approval of, any
federal, state, local or municipal foreign or other government or subdivision,
branch, department or agency thereof or any governmental or quasi-governmental
authority of any nature, including any court or other tribunal, (a "Governmental
Entity"), (ii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default under, or give rise to
any right of termination, amendment, cancellation or acceleration under, or
result in the creation of any pledge, claim, lien, option, charge, encumbrance
or security interest of any kind or nature whatsoever (a "Lien") upon any of the
properties or assets of the Stockholder under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, license, permit,
concession, franchise, contract, agreement or other instrument or obligation (a
"Contract") to which the Stockholder is a party or by which the Stockholder or
any of the Stockholder's properties or assets, including the Stockholder's
Shares, may be bound or (iii) violate any judgment, order, writ, preliminary or
permanent injunction or decree (an "Order") or any statute, law, ordinance, rule
or regulation of any Governmental Entity (a "Law") applicable to the Stockholder
or any of the Stockholder's properties or assets, including the Stockholder's
Shares.
(b) THE SHARES. Subject to the terms of this Agreement, the
Stockholder's Shares and the certificates representing such Shares are now, and
at all times during the term hereof will be, held by such Stockholder, or by a
nominee or custodian for the benefit of such Stockholder. The Stockholder has
good and marketable title to such Shares, free and clear of any Liens, proxies,
voting trusts or agreements, understandings or arrangements, except, in the case
of certain of the Stockholders, as set forth in SCHEDULE I hereto. The
Stockholder owns of record or beneficially no Common Stock or other voting
interest in the Company other than such Stockholder's Shares and shares of
Company Common Stock issuable upon the exercise of options and warrants, in each
case as set forth on SCHEDULE I hereto.
(c) PURCHASE AGREEMENT. Each Stockholder understands and acknowledges
that the Purchaser is entering into the Purchase Agreement in reliance upon such
Stockholder's execution and delivery of this Agreement.
2. BOARD APPROVAL. Each Stockholder understands and acknowledges that
the Board of Directors of the Company has, to the extent required by applicable
law, duly and validly authorized and approved, this Agreement, the Purchase
Agreement and the transactions contemplated hereby and thereby.
3. AGREEMENTS OF ALL STOCKHOLDERS. Each Stockholder, severally and not
jointly, agrees as follows:
(a) Until the Transactions are consummated or the Purchase Agreement is
terminated in accordance with its terms, the Stockholder shall not, (i) except
as otherwise expressly provided herein, sell, transfer, pledge, assign or
otherwise dispose of, or enter into any contract, option or other arrangement
(including any profit sharing arrangement) or understanding with respect to the
sale, transfer, pledge, assignment or other disposition of, the Shares to any
person, (ii) enter into or exercise its rights under any voting arrangement,
whether by proxy, voting agreement, voting trust, power-of-attorney or
otherwise, with respect to the Shares or (iii) take any other action that would
in any way restrict, limit or interfere with the performance of its obligations
hereunder or the transactions contemplated hereby.
2
(b) At any meeting of Stockholders of the Company called to vote upon
the Transactions and the Purchase Agreement or at any adjournment thereof or in
any other circumstances upon which a vote, consent or other approval (including
by written consent) with respect to the Transactions and the Purchase Agreement
or which is necessary to consummate the Transactions or for the Company to
perform its obligations under the Purchase Agreement is sought, each Stockholder
shall, including by executing a written consent if requested by the Company,
vote (or cause to be voted) such Stockholder's Shares in favor of the
Transactions and the adoption by the Company of the Purchase Agreement.
(c) The Stockholders understand and acknowledge that the Purchaser is
entering into the Purchase Agreement in reliance upon the agreements of the
Stockholders herein.
4. GRANT OF IRREVOCABLE PROXY COUPLED WITH AN INTEREST; APPOINTMENT OF
PROXY.
(a) Each Stockholder hereby irrevocably grants to, and appoints Neil
Koehler, and any other individual who shall hereafter be designated by the
Stockholders, and each of them, as such Stockholder's proxy and attorney-in-fact
(with full power of substitution), for and in the name, place and stead of such
Stockholder, to vote such Stockholder's Shares, or grant a consent or approval
in respect of such Shares, at any meeting of stockholders of the Company or at
any adjournment thereof or in any other circumstances upon which their vote,
consent or other approval is sought in favor of the Transaction, the adoption by
the Company of the Purchase Agreement and the approval of the other transactions
contemplated by the Purchase Agreement; including, without limitation, the
authorization and issuance of the Preferred Shares and the issuance of any
Common Stock issuable upon conversion or exercise of the Preferred Shares.
(b) Each Stockholder represents that any prior proxies heretofore given
in respect of such Stockholder's Shares are not irrevocable, and that any such
prior proxies are hereby revoked.
(c) EACH STOCKHOLDER HEREBY AFFIRMS THAT THE PROXY SET FORTH IN THIS
SECTION 4 IS COUPLED WITH AN INTEREST AND IS IRREVOCABLE UNTIL SUCH TIME AS THIS
AGREEMENT TERMINATES IN ACCORDANCE WITH ITS TERMS. Such Stockholder hereby
further affirms that the irrevocable proxy is given in connection with the
execution of the Purchase Agreement, and that such irrevocable proxy is given to
secure the performance of the duties of such Stockholder under this Agreement.
Such Stockholder hereby ratifies and confirms all that such irrevocable proxy
may lawfully do or cause to be done by virtue hereof. Such irrevocable proxy is
executed and intended to be irrevocable in accordance with the provisions of
Section 218 of the Delaware General Corporation Law.
5. TRANSFERS OF SHARES. During the term of this Agreement, no
Stockholder shall Transfer any Shares unless the Person receiving Transfer of
such Shares executes an Instrument of Accession in the form attached hereto as
EXHIBIT A agreeing to be bound by the terms of this Agreement. As used herein,
"Transfer" shall mean and include any sale, assignment, encumbrance,
hypothecation, pledge, conveyance in trust, gift, transfer by request, devise or
descent, or other transfer or disposition of any kind, including, but not
limited to, transfers to receivers, levying creditors, trustees or receivers in
bankruptcy proceedings or general assignees for the benefit of creditors,
whether voluntary or by operation of law, directly or indirectly, of any of the
Shares.
3
6. FURTHER ASSURANCES. Each Stockholder will, from time to time,
execute and deliver, or cause to be executed and delivered, such additional or
further transfers, assignments, endorsements, consents and other instruments as
the Company or the Purchaser may reasonably request for the purpose of
effectively carrying out the transactions contemplated by this Agreement and to
vest the power to vote such Stockholder's Shares as contemplated by Section 4.
7. TERMINATION. This Agreement, and all rights and obligations of the
parties hereunder, shall terminate upon the earlier of (i) the approval of the
Transactions and the adoption by the Company of the Purchase Agreement at any
meeting of the stockholders of the Company or at any adjournment thereof and
(ii) the termination of the Purchase Agreement in accordance with its terms.
Nothing in this Section 7 shall relieve any Stockholder from liability for
willful breach of this Agreement.
8. GENERAL.
(a) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
(b) DEFINITIONS. Capitalized terms used herein and not otherwise
defined shall have the meanings ascribed to such terms in the Purchase
Agreement.
(c) ENTIRE AGREEMENT; THIRD-PARTY BENEFICIARIES. Each party hereby
acknowledges that no other party or any other person or entity has made any
promises, warranties, understandings or representations whatsoever, express or
implied, not contained in this Agreement and acknowledges that it has not
executed this Agreement in reliance upon any such promises, representations,
understandings or warranties not contained herein and that this Agreement
supersedes all prior agreements and understandings between the parties with
respect thereto. There are no promises, covenants or undertakings other than
those expressly set forth or provided for in this Agreement.
(d) GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware without regard to any
applicable conflicts of law.
(e) TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
(f) NOTICES. All notices and other communications required or permitted
hereunder shall be in writing. Notices shall be delivered personally, via
recognized overnight courier (such as Federal Express, DHL or Airborne Express)
or via certified or registered mail. Notices may be delivered via facsimile or
e-mail, provided that by no later than two days thereafter such notice is
confirmed in writing and sent via one of the methods described in the previous
sentence. Notices shall be addressed to the address of each Stockholder as is
set forth on the books and records of the Company, or at such other address or
facsimile number as such Stockholder shall have furnished in writing to the
other parties hereto. All notices shall be effective upon receipt.
4
(g) SEVERABILITY Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction to the greatest extent
possible to carry out the intentions of the parties hereto.
(h) DELAYS OR OMISSIONS. No delay or omission to exercise any right,
power or remedy accruing to any party under this Agreement, upon any breach or
default of any other party under this Agreement, shall impair any such right,
power or remedy of such nonbreaching or nondefaulting party nor shall it be
construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring.
(i) 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.
(j) AMENDMENT AND WAIVER. This Agreement may be amended by the parties
hereto by execution of an instrument in writing signed on behalf of the
Stockholders holding a majority of Shares held by all of the Stockholders and
the written consent of the Company and the Purchaser. Any amendment signed by
the Stockholders holding a majority of Shares held by all of the Stockholders
shall bind all of the Stockholders. Any action, extension or waiver by any party
of any provision hereto shall be valid only if set forth in an instrument in
writing signed on behalf of such party. An action, extension or waiver signed by
the Stockholder holding a majority of Shares held by all of the Stockholders
shall bind all of the Stockholders.
9. ENFORCEMENT. The parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in a court of the United States. This
being in addition to any other remedy to which they are entitled at law or in
equity. In addition, each of the parties hereto waives any right to trial by
jury with respect to any claim or proceeding related to or arising out of this
Agreement or any of the transactions contemplated hereby.
10. NOTIFICATION REQUIREMENT. Each Stockholder hereby agrees, while
this Agreement is in effect, to promptly notify the Company and the Purchaser of
the number of Shares acquired by such Stockholder, if any, after the date
hereof.
5
IN WITNESS WHEREOF, each party hereto has signed this Agreement as of
the date first written above.
Counterpart Signatures Follow
6
Execution of Voting Agreement by Counterpart Signatures
The undersigned hereby executes the Voting Agreement, dated as of November
14, 2005 by and among Pacific Ethanol, Inc., Cascade Investment, L.L.C.
and the Stockholders listed on Schedule I hereto.
PACIFIC ETHANOL, INC.
By: /s/ Ryan W. Turner
--------------------------------
Name: Ryan W. Turner
Title: Chief Operating Officer
7
Execution of Voting Agreement by Counterpart Signatures
The undersigned hereby executes the Voting Agreement, dated as of November
14, 2005 by and among Pacific Ethanol, Inc., Cascade Investment, L.L.C.
and the Stockholders listed on Schedule I hereto.
CASCADE INVESTMENT, L.L.C.
By: /s/ Michael Larson
--------------------------------
Name: Michael Larson
Title: Business Manager
8
Execution of Voting Agreement by Counterpart Signatures
The undersigned hereby executes the Voting Agreement, dated as of November
14, 2005 by and among Pacific Ethanol, Inc., Cascade Investment, L.L.C.
and the Stockholders listed on Schedule I hereto.
STOCKHOLDERS
By: /s/ William L. Jones
--------------------------------
William L. Jones
By: /s/ Neil M. Koehler
--------------------------------
Neil M. Koehler
By: /s/ Ryan W. Turner
--------------------------------
Ryan W. Turner
By: /s/ Kenneth J. Friedman
--------------------------------
Kenneth J. Friedman
By: /s/ Frank P. Greinke
--------------------------------
Frank P. Greinke
9
SCHEDULE I
----------
- -------------------------------- --------------------- ------------------------
STOCKHOLDER COMMON STOCK OPTIONS/WARRANTS
- -------------------------------- --------------------- ------------------------
William L. Jones(1) 2,500,000 50,000
- -------------------------------- --------------------- ------------------------
Neil M. Koehler 4,188,139 __
- -------------------------------- --------------------- ------------------------
Ryan W. Turner(1) 914,166 __
- -------------------------------- --------------------- ------------------------
Kenneth J. Friedman 60,399 33,000
- -------------------------------- --------------------- ------------------------
Frank P. Greinke(1) 1,500,000 15,000
- -------------------------------- --------------------- ------------------------
TOTAL 9,162,704 98,000
- -------------------------------- --------------------- ------------------------
- ----------------------------------
(1) See Voting Agreement, dated as of October 27, 2003, among
Southern Counties Oil Co., William C. Jones and Maurine Jones,
Ryan W. Turner and Wendy Turner and Andrea Jones.
10
SCHEDULE II
-----------
REQUIRED FILINGS:
- -----------------
Filings with the Securities and Exchange Commission pursuant to the requirements
of the Securities Exchange Act of 1934, as amended.
11
EXHIBIT A
---------
FORM OF INSTRUMENT OF ACCESSION
-------------------------------
INSTRUMENT OF ACCESSION
-----------------------
Reference is made to that certain Voting Agreement, dated as of
November 14, 2005, a copy of which attached hereto (as amended and in effect
from time to time, the "Voting Agreement"), among Pacific Ethanol, Inc., a
Delaware corporation (the "Company"), Cascade Investment, L. L. C., a Washington
limited liability company, and the Stockholders (as defined therein).
The undersigned, ____________________________________, in order to
become the owner or holder of [identify Securities being Transferred] (the
"Securities") of the Company hereby agrees that by his, her or its execution
hereof the undersigned is a Stockholder party to the Voting Agreement subject to
all of the restrictions and conditions applicable to Stockholders set forth in
such Voting Agreement, and all of the Shares purchased by the undersigned in
connection herewith (and any and all debt and equity of the Company issued in
respect hereof) are subject to all the restrictions and conditions applicable to
such Shares as set forth in the Voting Agreement. This Instrument of Accession
shall take effect and shall become a part of said Voting Agreement immediately
upon execution.
Executed as of the date set forth below under the laws of the State of
Delaware.
Signature
--------------------------------------------
Address
----------------------------------------------
----------------------------------------------
----------------------------------------------
Date:
-----------------------
12