<PAGE>
EXHIBIT 10.4
EXHIBIT G
PACIFIC ETHANOL, INC.
REGISTRATION RIGHTS AND STOCKHOLDERS AGREEMENT
THIS REGISTRATION RIGHTS AND STOCKHOLDERS AGREEMENT (the
"Agreement")
dated as of _________, 200_, is by and
among PACIFIC ETHANOL, INC., a Delaware
corporation (the "Company") and CASCADE
INVESTMENT, L.L.C., a Washington limited
liability company (the "Investor").
WHEREAS, the Company and the Investor have entered into a
Purchase
Agreement, dated November 14, 2005 and as
amended from time to time (the
"Purchase Agreement"), providing for the
purchase by the Investor of shares of
the Company's Series A Cumulative
Redeemable Convertible Preferred Stock (such
shares, together with any additional shares
of the Company's Series A Cumulative
Redeemable Convertible Preferred Stock
issued as a dividend thereon, the
"Shares") which are convertible into shares
of the Company's common stock, $.001
par value per share (the "Common Stock"),
subject to the terms and provisions of
the Purchase Agreement;
WHEREAS, simultaneously with, and as a condition to, the closing of
the
transactions contemplated in the Purchase
Agreement, the Company and the
Investor desire to enter into this
Agreement to provide certain registration and
other rights with respect to the Common
Stock and the Shares held by or issuable
to the Investor and to establish certain
corporate governance and other rights
of the Investor; and
NOW, THEREFORE, in consideration of the mutual covenants and
agreements
contained in this Agreement and the
Purchase Agreement, and intending to be
legally bound, the parties hereto agree as
follows:
SECTION 1 . DEFINITIONS. As used in this
Agreement, the following terms have the
meanings indicated below or in the
referenced sections of this Agreement:
"Adjustment Provisions." As defined in SECTION 3(A).
"Affiliate." As
defined in the Purchase Agreement.
"Agreement." As
defined in the recitals hereof.
"Applicable Boards."
As defined in SECTION 10(a)(iii).
"Capital Stock." With respect to any Person at any time, means any
and
all shares, interests, participations or
other equivalents (however designated,
whether voting or non-voting) of capital
stock, partnership interests (whether
general or limited), member interests or
equivalent ownership interests in or
issued by such Person, including, in the
case of the Company, any and all shares
of Common Stock and Shares.
"Closing." As defined
in the Purchase Agreement.
<PAGE>
"Common Stock." As
defined in the recitals hereof.
"Company."
As defined in the
recitals hereof.
"Company Board." The
board of directors of the Company.
"Demand Registration." As defined in SECTION
3(A).
"Director." Any member
or any of the Applicable Boards.
"Equity Securities."
Any and all shares of Capital Stock of the
Company, securities of the Company
convertible into, or exchangeable or
exerciseable for, such shares, and options,
warrants or other rights to acquire
such shares.
"Exchange Act." The Securities Exchange Act of 1934, as amended,
and
the rules and regulations thereunder.
"GAAP." Generally accepted accounting principals, as in effect in
the
United States of America from time to time
applied on a consistent basis.
"Investor." As defined in the recitals hereof, and its
successors,
assigns and transferees.
"Investor Designees."
As defined in SECTION 10(a)(iii).
"Investor Directors."
As defined in SECTION 10(a)(i) hereof.
"Investor Securities." The Shares issued pursuant to the
Purchase
Agreement and the Common Stock issued upon
the conversion thereof.
"Majority of the Registrable Securities." As defined in SECTION 2(b).
"NASD." The National
Association of Securities Dealers, Inc.
"Person." An individual, a partnership, a corporation, a
limited
liability company or partnership, an
association, a joint stock company, a
trust, a business trust, a joint venture,
an unincorporated organization or a
government entity or any department,
agency, or political subdivision thereof.
"Piggyback Registration." As defined in SECTION 4(a)
hereof.
"Proportional." When used to determine the number of individuals
that
the Investor is entitled to nominate to any
board of directors at any particular
time, means the number (rounded to the
nearest whole number) determined by
multiplying the aggregate number of members
of such board by a fraction, the
numerator of which shall be the number of
Investor Directors that the Investor
is entitled to designate to the Company
Board pursuant to subsection (a) of
SECTION 10 at such time and the denominator
of which shall be the total number
of directors constituting the entire
Company Board at such time; PROVIDED,
HOWEVER, that, notwithstanding the
foregoing, in no event shall such number be
less than one (1).
2
<PAGE>
"Purchase Agreement." As defined in the recitals hereof.
"Registrable Securities." Any Common Stock issued or issuable
upon
conversion or exercise of the Shares or
deriving therefrom, and all other shares
of Common Stock of the Company or any
successor owned from time to time by the
Investor; PROVIDED, that a Registrable
Security ceases to be a Registrable
Security when (i) it is registered under
the Securities Act and disposed of in
accordance with the registration statement
covering it or (ii) it is sold or
transferred in accordance with the
requirements of Rule 144 (or similar
provisions then in effect) promulgated by
the SEC under the Securities Act
("Rule 144").
"Registration Expenses." As defined in SECTION 6(a)
hereof.
"Registration Statement." Registration Statement shall mean any
registration statements contemplated by
SECTION 3 and any additional
registration statements contemplated by
SECTION 4, including (in each case) the
prospectus, amendments and supplements to
such registration statement or
prospectus, all exhibits attached thereto,
and all material incorporated by
reference or deemed to be incorporated by
reference in such registration
statement.
"Representatives." Of a Person means the officers, employees,
independent accountants, independent legal
counsel and other representatives of
such Person.
"Rule
415." Rule 415 (or similar provisions then in effect)
promulgated
by the SEC under the Securities Act.
"SEC." The United
States Securities and Exchange Commission.
"Securities Act." The Securities Act of 1933, as amended, and the
rules
and regulations thereunder.
"Shares." As defined
in the recitals hereof.
"Stockholder." As
defined in the recitals hereof.
"Subsequent Shares."
As defined in SECTION 3(A).
"Subsidiary." Of a Person means any corporation or other entity
(including a limited liability company,
partnership or other business entity) in
which such Person, directly or indirectly,
owns outstanding Capital Stock or
other Voting Securities having the power,
under ordinary circumstances, to elect
a majority of the directors or members of
the governing body of such corporation
or other entity or with respect to which
such Person otherwise has the power to
direct the management and policies of such
corporation or other entity.
"Subsidiary
Boards." As defined in
SECTION 10(a)(iii).
3
<PAGE>
"Termination Date." The date that the Investor and its Affiliates,
as a
group, own less than 10% of the Investor
Securities. For purposes of calculating
such percentage of ownership, each Share
shall be deemed to be equivalent to the
number of shares of Common Stock into which
they are convertible.
"Voting Letter." As
defined in SECTION 10(a)(vi).
"Voting Securities." At any time, shares of any class of Equity
Securities that are ordinarily entitled to
vote (without regard to the
occurrence of any additional event or
contingency) generally in the election of
directors.
SECTION 2. Securities Subject to this Agreement.
(a) HOLDERS OF REGISTRABLE SECURITIES. A Person is deemed to be
a
holder of Registrable Securities whenever
that Person owns, directly or
beneficially, or has the right to acquire,
Registrable Securities, disregarding
any legal restrictions upon the exercise of
that right.
(b) MAJORITY OF REGISTRABLE SECURITIES. As used in this Agreement,
the
term "Majority of the Registrable
Securities" means more than 50% of the
Registrable Securities being registered or,
where the context requires, a
majority in interest of the Registrable
Securities.
SECTION 3. DEMAND REGISTRATION.
(a) REQUEST FOR REGISTRATION. Subject to the provisions of
SECTION
3(B), at any time after the first
anniversary of the Closing, (A) one or more
holders of Shares or Common Stock
representing a Majority of the Registrable
Securities may demand that the Company
register all or part of its Registrable
Securities under the Securities Act (a
"DEMAND REGISTRATION") on Form S-1 (or a
similar form then in effect) promulgated by
the SEC under the Securities Act,
provided that the Company shall not be
obligated to effect a Demand Registration
(i) during the one hundred eighty (180)
days period commencing with the date of
any secondary public offering or (ii) if
the Company delivers notice to the
holders of Registrable Securities within
thirty (30) days of any registration
request of its intent to file a
registration statement for a secondary public
offering within sixty (60) days and (B) one
or more holders Shares or Common
Stock representing a Majority of the
Registrable Securities may request a Demand
Registration on Form S-3 (or a similar form
then in effect), provided that the
Registrable Securities to be covered by any
such Form S-3 shall be expected to
result in aggregate gross proceeds of not
less than $1,000,000. Within ten (10)
days after receipt of a demand, the Company
will notify in writing all holders
of Registrable Securities of the demand.
Any holder who wants to include its
Registrable Securities in the Demand
Registration must notify the Company within
ten (10) business days of receiving the
notice of the Demand Registration.
Except as provided in this SECTION 3, the
Company will include in all Demand
Registrations all Registrable Securities
for which the Company receives the
timely written requests for inclusion. Any
such request to be included in a
Demand Registration shall not be counted as
a Demand Registration under this
SECTION 3. All demands or requests made
pursuant to this SECTION 3(A) must
specify the number of Registrable
Securities to be registered and the intended
method of disposing of the Registrable
Securities. The Company acknowledges that
the plan of distribution contemplated by
any such Registration Statement shall
include offers and sales through
underwriters or agents, offers and sales
4
<PAGE>
directly to investors, block trades and
such other methods of offer and sale and
that offers and sales may be on a continued
or delayed basis under Rule 415. The
Company will cause such Registration
Statement to remain effective until such
time as all of the shares of Common Stock
designated thereunder are sold or the
holders thereof are entitled to rely on
Rule 144(k) for sales of Registrable
Securities without registration under the
Securities Act and without compliance
with the public information, sales volume,
manner of sale or notice requirements
of Rule 144(c), (e), (f) or (h). The
Company acknowledges that at the time the
Company files any Registration Statement
pursuant to this SECTION 3 the number
of Registrable Securities may not be fixed
due to the antidilution and other
provisions related to the Shares
("Adjustment Provisions") and due to possible
future issuances of Shares as dividends on
the Shares ("Subsequent Shares").
Accordingly, the Company agrees that it
will register the number of shares of
Common Stock issuable upon conversion of
Shares held by or issuable to the
Investor as of the date of the filing of
the Registration Statement and, to the
extent permitted under the applicable rules
under the Securities Act, the
additional number of shares of Common Stock
issuable pursuant to the Adjustment
Provisions. The Company agrees that,
thereafter, it will file, as soon as
practicable but in no event later than
thirty (30) days after the issuance of
additional Registrable Securities that are
not covered by such Registration
Statement (due to the effect of the
Adjustment Provisions and the Subsequent
Shares) such amendments and/or supplements
to the Registration Statement, and
such additional Registration Statements as
are necessary in order to ensure that
at least 100% of the number of shares of
Common Stock issuable on conversion of
the Shares held by or issuable to the
Investor are included in a Registration
Statement, and the Company will use its
reasonable best efforts to cause such
amendments, supplements and additional
Registration Statements to be declared
effective within ninety (90) days following
the issuance of such additional
Registrable Securities that are not
otherwise covered by an effective
Registration Statement.
(b) NUMBER OF DEMANDS. The holders of Registrable Securities shall
have
the right to three (3) Demand Registrations
on Form S-1 (or a similar form then
in effect) and shall have the right to an
unlimited number of Demand
Registrations on Form S-3 (or a similar
form then in effect); PROVIDED, that the
Company shall not be obligated to effect
more than two (2) Demand Registrations
on Form S-3 in any twelve (12) month
period.
(c) REGISTRATION EXPENSES. The Company shall pay or reimburse to
the
holders of the Registrable Securities
included in a Demand Registration all
Registration Expenses of those holders in
connection with any Demand
Registration (including the reasonable fees
and disbursements of one counsel for
such holders in connection with each such
Demand Registration not to exceed
$25,000 per registration, as described in
SECTION 6).
(d) SELECTION OF UNDERWRITERS. The holders of the Registrable
Securities initiating a Demand Registration
shall, after consultation with the
Company, select the investment banker(s)
and manager(s) that will administer the
offering; PROVIDED, that the Company shall
have given its prior written consent
to such selection. The Company and the
holders of Registrable Securities whose
shares are being registered shall enter
into a customary underwriting agreement
with such investment banker(s) and
manager(s).
(e) PRIORITY ON DEMAND RESTRICTIONS. If the managing underwriter
shall
advise the Company, in writing or
otherwise, that an underwriters'
over-allotment option, not in excess of
fifteen percent (15%) of the total
offering to be so effected, is necessary or
desirable for the marketing of such
5
<PAGE>
offering, all Registrable Securities which
are to be included in such offering
pursuant to this SECTION 3(E) and any other
securities shall be allocated pro
rata to the primary portion of such
offering and the underwriters'
over-allotment portion on the basis of the
total number of Registrable
Securities and other securities requested
to be included in the registration. If
any holder of Registrable Securities (other
than the holder making the demand)
disapproves of the terms of the
underwriting, such holder may withdraw therefrom
by giving written notice to the Company and
the managing underwriter.
(f) DELAY IN FILING. Notwithstanding the foregoing, the Company
may
delay in filing a registration statement in
connection with a Demand
Registration and may withhold efforts to
cause the registration statement to
become effective, if the Company determines
in good faith that such registration
might involve initial or continuing
disclosure obligations that the Board of
Directors of the Company determines, in
good faith, will not be in the best
interest of the Company's stockholders. The
Company may exercise such right to
delay or withhold efforts not more than
once in any twelve (12) month period and
for not more than ninety (90) days at a
time. If, after a registration statement
becomes effective, the Company advises the
holders of registered shares that the
Company considers it appropriate for the
registration statement to be amended,
the Company shall use its best efforts to
amend such registration statement, and
the holders of such shares shall suspend
any further sales of their registered
shares until the Company advises them that
the amended registration statement
has been declared effective.
(g) EFFECTIVE DEMAND
REGISTRATION. A registration shall not constitute
a Demand Registration until it has become
effective and remains continuously
effective for the lesser of (i) the period
during which all Registrable
Securities registered in the Demand
Registration are sold and (ii) three hundred
sixty (360) days; PROVIDED, HOWEVER, that a
registration shall not constitute a
Demand Registration if (x) after such
Demand Registration has become effective,
such registration or the related offer,
sale or distribution of Registrable
Securities thereunder is interfered with by
any stop order, injunction or other
order or requirement of the SEC or other
governmental agency or court for any
reason not attributable to the holder
requesting the Demand Registration and
such interference is not thereafter
eliminated, or (y) the conditions specified
in the underwriting agreement, if any,
entered into in connection with such
Demand Registration are not satisfied or
waived, other than by reason of a
failure on the part of the holder
requesting the Demand Registration.
SECTION 4. PIGGYBACK REGISTRATIONS.
(a) RIGHT TO PIGGYBACK. Whenever the Company proposes to register
any
of its securities in an underwritten
offering under the Securities Act, whether
for its own account or for the account of
another stockholder (except for the
registration of securities to be offered
pursuant to an employee benefit plan on
Form S-8, pursuant to a registration made
on Form S-4 or any successor forms
then in effect) at any time other than
pursuant to a Demand Registration and the
registration form to be used may be used
for the registration of the Registrable
Securities (a "Piggyback Registration"), it
will so notify in writing all
holders of Registrable Securities no later
than the earlier to occur of (i) the
tenth (10th) day following the Company's
receipt of notice of exercise of other
demand registration rights, or (ii)
forty-five (45) days prior to the
anticipated filing date. Subject to the
provisions of SECTION 4(c), the Company
will include in the Piggyback Registration
all Registrable Securities with
respect to which the Company has received
written requests for inclusion within
6
<PAGE>
fifteen (15) days after the issuance of the
Company's notice. Such Registrable
Securities may be made subject to an
underwriters' over-allotment option, if so
requested by the managing underwriter. The
holders of Registrable Securities may
withdraw all or any part of the Registrable
Securities from a Piggyback
Registration at any time before ten (10)
business days prior to the effective
date of the Piggyback Registration. In any
Piggyback Registration, the Company,
the holders of Registrable Securities and
any Person who hereafter becomes
entitled to register its securities in a
registration initiated by the Company
must sell their securities on the same
terms and conditions. A registration of
Registrable Securities pursuant to this
SECTION 4 shall not be counted as a
Demand Registration pursuant to SECTION
3.
(b) PIGGYBACK EXPENSES. The Company shall pay or reimburse to
the
holders of the Registrable Securities
included in a Piggyback Registration all
Registration Expenses of those holders in
connection with the Piggyback
Registration (including the reasonable fees
and disbursements of one counsel for
such holders in connection with each such
Piggyback Registration not to exceed
$25,000 per Piggyback Registration, as
described in SECTION 6).
(c) UNDERWRITING; PRIORITY ON PIGGYBACK REGISTRATIONS. The right of
any
such holder to be included in an
underwritten registration pursuant to this
SECTION 4 shall be conditioned upon such
holder's participation in such
underwriting and the inclusion of such
holder's Registrable Securities in the
underwriting to the extent provided herein.
All holders proposing to distribute
their Registrable Securities through such
underwriting shall enter into an
underwriting agreement in customary form
with the underwriter or underwriters
selected for such underwriting by the
Company. If the managing underwriter gives
the Company its written opinion that the
total number or dollar amount of
securities requested to be included in the
registration exceeds the number or
dollar amount of securities that can be
sold, the Company will include the
securities in the registration in the
following order of priority: (i) first,
subject to the first proviso below, all
securities the Company or the
stockholder, if any, on whose account
securities are being registered proposes
to sell; (ii) second, subject to the first
proviso below, up to the full number
or dollar amount of Registrable Securities
requested to be included in the
registration (allocated pro rata among the
holders of Registrable Securities
requested to be included in the
registration, on the basis of the dollar amount
or number of Registrable Securities
requested to be included, as the case may
be); and (iii) third, any other securities
(provided they are of the same class
as the securities sold by the Company)
requested to be included, allocated among
the holders of such securities in such
proportions as the Company and those
holders may agree; PROVIDED, that at least
twenty-five percent (25%) of the
Registrable Securities requested to be
included in such registration shall be
included in the offering; PROVIDED,
FURTHER, that, (i) the holders of
Registrable Securities shall not be subject
to any cutback in the amount of
Registrable Securities requested to be
included in the registration unless all
other holders of securities requesting to
be included in such registration other
than the stockholder, if any, on whose
account securities are being registered
have been excluded from such registration.
In the event that the managing
underwriter advises the Company that an
underwriters' over-allotment option is
necessary or advisable, the allocation
provided for in this SECTION 4(C) shall
apply to the determination of which
securities are to be included in the
registration of such shares. Except with
the prior written consent of each
holder of Registrable Securities, the
Company shall not grant to any holder of
the Company's securities any right to
Piggyback Registration which would reduce
the amount of Registrable Securities
includable in such registration.
7
<PAGE>
(d) SELECTION OF UNDERWRITERS. If any Piggyback Registration is
an
underwritten offering, the Company will
select as the investment banker(s) and
manager(s) that will administer the
offering a nationally recognized investment
banker(s) and manager(s) with demonstrable
industry-specific expertise and
experience. The Company and the holders of
Registrable Securities whose shares
are being registered shall enter into a
customary underwriting agreement with
such investment banker(s) and manager(s),
PROVIDED, that the liability of any
holder of Registrable Securities shall be
limited to such holder's net proceeds
received from the sale of its Registrable
Securities in such offering and such
limitation shall not be amended by an
underwriting agreement or arrangement.
(e) RIGHT TO TERMINATE REGISTRATION. The Company shall have the
right
to terminate or withdraw any registration
initiated by it under this SECTION 4
prior to the effectiveness of such
registration whether or not any holder has
elected to include securities in such
registration. The Registration Expenses of
such withdrawn registration shall be borne
by the Company in accordance with
SECTION 7 hereof.
(f) OTHER REGISTRATIONS. The Company agrees that after filing a
registration statement with respect to
Registrable Securities pursuant to
SECTION 3 or this SECTION 4 that has not
been withdrawn or abandoned, the
Company will not register any of its equity
securities or securities convertible
or exchangeable into or exercisable for its
equity securities under the
Securities Act, whether on its own behalf
or at the request of any holder of
those securities until the earlier of (i)
the sale of all such Registrable
Securities subject to such registration
statement and (ii) one hundred eighty
(180) days from the effective date of the
previous registration, and the parties
hereto agree that the Company will not be
required to effect any such
registration notwithstanding the other
provisions of this Agreement. This
180-day hiatus does not apply to
registrations of securities (i) to be issued in
connection with employee benefit plans,
(ii) to permit exercise or conversions
of previously issued options, warrants, or
other convertible securities, (iii)
in connection with a Demand Registration or
(iv) made on Form S-4 (or any
successor form).
SECTION 5. REGISTRATION PROCEDURES.
(a) OBLIGATIONS OF THE COMPANY. Whenever required to register
any
Registrable Securities, the Company shall
as expeditiously as practicable:
(1) prepare and file with the SEC to permit a public offering
and resale of the Registrable Securities under the Securities Act
which
offering may, if so requested, be on a delayed or continuous
basis
under Rule 415 a registration statement on the appropriate form and
use
best efforts to cause the registration statement to become
effective.
At least ten (10) days before filing a registration statement
or
prospectus or at least three (3) business days before filing
any
amendments or supplements thereto, the Company will furnish to
the
counsel of the holders of a Majority of the Registrable
Securities
being registered copies of all documents proposed to be filed for
that
counsel's review and approval, which approval shall not be
unreasonably
withheld or delayed;
(2) immediately notify each seller of Registrable Securities
of any stop order threatened or issued by the SEC and take all
actions
reasonably required to prevent the entry of a stop order or if
entered
to have it rescinded or otherwise removed;
8
&l
