EXHIBIT 10.01
AMENDMENT NO. 2
TO
LETTER RE: AMENDMENT AND FORBEARANCE AGREEMENT

THIS AMENDMENT NO. 2 TO LETTER RE: AMENDMENT AND FORBEARANCE AGREEMENT (this
“Amendment”), dated as of March 27, 2009, is by and among WACHOVIA CAPITAL
FINANCE CORPORATION (WESTERN), in its capacity as agent and sole lender
(“Wachovia”), KINERGY MARKETING LLC (“Borrower”) and PACIFIC ETHANOL, INC.
(“Parent”).
 
W I T N E S S E T H:

WHEREAS, Wachovia, Borrower and Parent have previously entered into and executed
that certain Letter re: Amendment and Forbearance Agreement, dated February 13,
2009, as amended by that certain Amendment No. 1 to Letter re: Amendment and
Forbearance Agreement, dated as of February 26, 2009 (the “Forbearance
Agreement”);
 
WHEREAS, it has come to the attention of Wachovia that, in addition to the
Specified Defaults (as defined in the Forbearance Agreement), (a) Borrower has
failed to comply with Section 9.17 of the Loan Agreement as a result of the
failure of Borrower to maintain EBITDA in the amount required by such Section
for the two (2) consecutive month period ending February 28, 2009, which
constitutes an Event of Default under Section 10.1(a)(i) of the Loan Agreement,
(b) Borrower will not be in compliance with Section 9.17 of the Loan Agreement
as a result of the anticipated failure of Borrower to maintain EBITDA in the
amount required by such Section for the three (3) consecutive month period
ending March 31, 2009, which constitutes a Default under the Loan Agreement
(together with the Specified Defaults, collectively, the “Currently Existing
Defaults”).
 
WHEREAS, Borrower and Parent have requested that Wachovia extend the Forbearance
Period, which Wachovia is willing to do subject to the terms and provisions
hereof; and
 
WHEREAS, by this Amendment, Wachovia, Borrower and Parent wish to evidence the
extension of the Forbearance Period.
 
NOW THEREFORE, in consideration of the mutual benefits accruing to Wachovia,
Borrower and Parent hereunder and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto do
hereby agree as follows:
 
1.           Existing Definitions.  As used above and in this Amendment, all
capitalized terms used herein and not otherwise defined herein shall have their
respective meanings as set forth in the Forbearance Agreement.
 
2.           Amendment to Definition of Applicable Margin.  The definition of
“Applicable Margin” in Section 1.6 of the Loan Agreement is hereby amended and
restated in its entirety as follows:
 
“Applicable Margin” shall mean, as to the Interest Rate for Revolving
 
 
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Loans which are Prime Rate Loans, three and one-half (3.50%) percent.”
 
3.           Prime Rate Loans.  Notwithstanding anything to the contrary
contained in the Loan Agreement or the other Financing Agreements, effective as
of March 1, 2009, Borrower shall have no right to request, and Wachovia shall
have no obligation to make whatsoever, Eurodollar Rate Loans to Borrower.
 
4.           Extension of Forbearance Period.  At Borrower’s and Parent’s
request and in reliance upon Borrower’s and Parent’s representations, warranties
and covenants contained herein and in the Forbearance Agreement (as amended), as
a one-time accommodation to Borrower and Parent, Wachovia hereby agrees to
extend the Forbearance Period set forth in Section 4(a)(i) of the Forbearance
Agreement from March 31, 2009 to April 30, 2009.  The agreement of Wachovia to
forbear from exercising any of its rights and remedies during the Forbearance
Period shall apply to all of the Currently Existing Defaults.
 
5.           Conditions Precedent. This Amendment shall not become effective
unless all of the following conditions precedent have been satisfied in full, as
determined by Wachovia:
 
(a)           The receipt by Wachovia of an original (or faxed or electronic
copy) of this Amendment, duly authorized, executed and delivered by Borrower and
Parent;
 
(b)           The receipt by Wachovia of an updated thirteen (13) week budget
with respect to the Projected Information, in form and substance satisfactory to
Wachovia;
 
(c)           The receipt by Wachovia of one or more unsecured promissory notes,
in form and substance satisfactory to Wachovia, pursuant to which Parent has
received from Persons proceeds of unsecured loans made to Parent in an aggregate
amount of not less than $2,000,000;
 
(d)           The receipt by Wachovia of an amendment, in form and substance
satisfactory to Wachovia, to the existing limited forbearance agreement among,
West LB, as agent, the other lenders party thereto, Parent and certain of its
subsidiaries party thereto, pursuant to which the limited forbearance period
contained in such agreement is extended to April 30, 2009;
 
(e)           The receipt by Wachovia of an amendment, in form and substance
satisfactory to Wachovia, to the existing forbearance agreement among Lyles
United, LLC, Parent and certain of its subsidiaries party thereto, pursuant to
which the limited forbearance period contained in such agreement is extended to
April 30, 2009; and
 
(f)           As of the date of this Amendment, other than the Currently
Existing Defaults, no Default or Event of Default shall have occurred and be
continuing.
 
6.           Amendment Fee.  In addition to all other fees, charges, interest
and expenses payable by Borrower to Wachovia under the Loan Agreement and the
other Financing Agreements, Borrower shall pay to Wachovia an amendment and
extension fee in the amount of $50,000, which fee shall be fully earned as of
and payable in advance on the date hereof.
 
 
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7.           Effect of this Amendment.  Except as modified pursuant hereto, no
other changes or modifications to the Forbearance Agreement are intended or
implied, and in all other respects the Forbearance Agreement is expressly
ratified, restated and confirmed by all parties hereto as of the date hereof,
except that, in the event of any conflict between any term or provision of this
Amendment and any term or provision of the Forbearance Agreement, such term or
provision of this Amendment shall control.
 
8.           Further Assurances.  The parties hereto shall execute and deliver
such additional documents and take such additional actions as Wachovia requests
to effectuate the provisions and purposes of this Amendment and to protect
and/or maintain perfection of Wachovia’s security interests in and liens upon
the Collateral.
 
9.           Counterparts.  This Amendment may be executed in any number of
counterparts, but all such counterparts shall together constitute but one and
the same Amendment.
 
[SIGNATURE PAGE FOLLOWS]
 
 
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IN WITNESS WHEREOF, the parties have caused this Amendment to be duly executed
as of the day and year first above written.
 

 
BORROWER:
 
       
KINERGY MARKETING LLC,
  as Borrower
 
 
By:
/s/ BRYON MCGREGOR
 
Name:
Bryon McGregor
 
Title:
VP Finance
             
PARENT:
 
       
PACIFIC ETHANOL, INC,
  as Parent
 
 
By:
/s/ BRYON MCGREGOR
 
Name:
Bryon McGregor
 
Title:
VP Finance
             
WACHOVIA:
 
       
WACHOVIA CAPITAL FINANCE
CORPORATION (WESTERN),
  as Agent and sole Lender
 
 
By:

/s/ CARLOS VALLES                                                      
 
Name:
Carlos Valles
 
Title:
Director

 
 
[Signature Page to Amendment No. 2 to Forbearance Agreement]
 
 
 
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