AMENDED AND RESTATED
ETHANOL PURCHASE AND SALE AGREEMENT

 
 
by and between
 
 
FRONT RANGE ENERGY, LLC
 
 
and
 
 
KINERGY MARKETING, LLC
 

 
 
Dated as of August 9, 2006
 

--------------------------------------------------------------------------------

TABLE OF CONTENTS
 

  Page 
ARTICLE I DEFINITIONS; INTERPRETATION
1
    1.1
Definitions
1
    1.2
Interpretation
4
ARTICLE II MARKETING ACTIVITIES
5
    2.1
Marketing and Purchase of Ethanol
5
    2.2
Direct Purchases
6
    2.3
Bilateral Transactions
6
    2.4
Storage
8
    2.5
Obligations of the Project Company
8
    2.6
Title; Delivery Point; Nominations; Measurement
9
ARTICLE III PAYMENTS
9
    3.1
Fees and Payments
9
    3.2
Overdue Payments; Indemnity Payments
10
    3.3
Billing Dispute
10
    3.4
Audit
10
ARTICLE IV TERM; TERMINATION
11
    4.1
Term.
11
    4.2
Termination by Kinergy
11
    4.3
Termination by the Project Company
11
    4.4
Change of Control
12
    4.5
Effect of Termination
12
ARTICLE V LIMITATIONS ON LIABILITY
13
    5.1
Maximum Liability of Kinergy
13
    5.2
No Consequential or Punitive Damages
13
ARTICLE VI INDEMNIFICATION
13
    6.1
The Project Company’s Indemnity
13
    6.2
Kinergy’s Indemnity
14
ARTICLE VII REPRESENTATIONS AND WARRANTIES
14
    7.1
Kinergy’s Representations and Warranties
14
    7.2
The Project Company’s Representations and Warranties
15
ARTICLE VIII FORCE MAJEURE
16
    8.1
Definition
16
    8.2
Effect
16
    8.3
Limitations
16

--------------------------------------------------------------------------------

ARTICLE IX DISPUTE RESOLUTION
17
    9.1
Attempts to Settle
17
    9.2
Resolution by Expert
17
    9.3
Arbitration
17
    9.4
Consequential and Punitive Damages
18
    9.5
Finality and Enforcement of Decision
18
    9.6
Costs
18
    9.7
Continuing Performance Obligations
18
ARTICLE X CONFIDENTIALITY
18
ARTICLE XI ASSIGNMENT AND TRANSFER
19
ARTICLE XII FURTHER ASSURANCES; REQUESTS OF FINANCING PARTIES
19
    12.1
Further Assurances
19
    12.2
Requests of Financing Parties
19
ARTICLE XIII MISCELLANEOUS
19
    13.1
Amended Agreement; Entire Agreement
19
    13.2
Counterparts
19
    13.3
Survival
20
    13.4
Severability
20
    13.5
Governing Law
20
    13.6
Binding Effect
20
    13.7
Notices
20
    13.8
Amendment
22
    13.9
No Implied Waiver
22

--------------------------------------------------------------------------------

AMENDED AND RESTATED
 
ETHANOL PURCHASE AND SALE AGREEMENT
 
This AMENDED AND RESTATED ETHANOL PURCHASE AND SALE AGREEMENT (“Amended
Agreement”) is entered into by and between FRONT RANGE ENERGY, LLC, a Colorado
limited liability company (the “Project Company”), and KINERGY MARKETING, LLC,
an Oregon limited liability company (“Kinergy”), as of this 9th day of August,
2006. The Project Company and Kinergy are each individually referred to herein
as a “Party”, and collectively are referred to herein as the “Parties”.
 
RECITALS
 
A. The Project Company has completed the development of an approximately 40
million gallon-per-year denatured fuel ethanol production facility in Windsor,
Colorado (the “Facility”).
 
B. On July 31, the Parties entered into that certain Ethanol Marketing Agreement
(the “Agreement”) pursuant to which Kinergy agreed to provide denatured fuel
ethanol marketing services for the Facility.
 
C. Subsequent to the signing of the Agreement, and prior to the date on which
the Facility commenced operations, the Parties agreed upon certain modifications
to their business arrangements as represented by the Agreement, and agreed to
amend the Agreement to conform to their new arrangements.
 
B. Kinergy desires purchase and sell ethanol in accordance with and subject to
the terms and conditions of this Amended Agreement and has done so since prior
to the time that the Facility commenced operations.
 
AGREEMENT
 
NOW, THEREFORE, in consideration of the agreements and covenants hereinafter set
forth, and intending to be legally bound, the Parties hereto covenant and agree
as follows:
 
ARTICLE I
 
DEFINITIONS; INTERPRETATION
 
1.1  Definitions.
 
The following terms shall have the meanings set forth below when used in this
Amended Agreement:

1

--------------------------------------------------------------------------------

 
“Account” has the meaning given to such term in Section 2.1(d).
 
“Act of Insolvency” means, with respect to any Person, any of the following:
(a) commencement by such Person of a voluntary proceeding under any
jurisdiction’s bankruptcy, insolvency or reorganization law; (b) the filing of
an involuntary proceeding against such Person under any jurisdiction’s
bankruptcy, insolvency or reorganization law which is not vacated within 60 days
after such filing; (c) the admission by such Person of the material allegations
of any petition filed against it in any proceeding under any jurisdiction’s
bankruptcy, insolvency or reorganization law; (d) the adjudication of such
Person as bankrupt or insolvent or the winding up or dissolution of such Person;
(e) the making by such Person of a general assignment for the benefit of its
creditors (assignments for a solvent financing excluded); (f) such Person fails
or admits in writing its inability to pay its debts generally as they become
due; (g) the appointment of a receiver or an administrator for all or a
substantial portion of such Person’s assets, which receiver or administrator, if
appointed without the consent of such Person, is not discharged within 60 days
after its appointment; or (h) the occurrence of any event analogous to any of
the foregoing with respect to such Person occurring in any jurisdiction.
 
“Affiliate” means, with respect to any Person, any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such Person. For purposes of this definition, “control”, when used
with respect to any Person, means the power to direct or cause the direction of
the management and policies of such Person, directly or indirectly, whether
through the ownership or voting securities, by contract or otherwise.
 
“Agreement” has the meaning given to such term in the preamble hereto.
 
“Amended Agreement” has the meaning given to such term in the preamble hereto.
 
“Bilateral Transaction” means, with respect to each sale of Ethanol produced at
the Facility by Project Company, a transaction entered into by Kinergy with one
or more Third Parties consisting of one or more forward sales of Ethanol.
 
“Business Day” means any day other than a Saturday, Sunday or a day on which
commercial banks in Denver, Colorado are required or authorized to be closed.
 
“Commercial Operations Date” means the date of “Substantial Completion” under
and as defined in the Construction Agreement.
 
“Construction Agreement” means the Design-Build Agreement, dated March 24th
2005, by and between Project Company and Contractor, including all amendments
thereto and all other agreements by and between Project Company and Contractor
for the engineering, procurement and construction of the Facility.
 
“Contractor” means ICM, a Kansas LLC.
 
“Direct Purchase” has the meaning given to such term in Section 2.1(b).

2

--------------------------------------------------------------------------------

 
“Dispute” means a dispute, controversy or claim.
 
“Ethanol” means denatured fuel ethanol produced by the Facility satisfying the
American Society for Testing and Materials (ASTM) D4806 specifications for
denatured fuel ethanol.
 
“Expert” means an expert having sufficient technical expertise to address the
matter subject to a Dispute.
 
“Facility” has the meaning given to such term in the recitals hereto.
 
“Financing Documents” means any and all loan agreements, credit agreements,
reimbursement agreements, notes, indentures, bonds, security agreements, pledge
agreements, mortgages, guarantee documents, intercreditor agreements,
subscription agreements, equity contribution agreements and other agreements and
instruments relating to the financing (or refinancing) of the development,
engineering, design, construction, operation, ownership and maintenance of the
Facility.
 
“Financing Parties” means the banks, lenders, noteholders and/or other financial
institutions (or an agent or trustee thereof) party to the Financing Documents.
 
“Force Majeure Event” has the meaning set forth in Section 8.1.
 
“Good Industry Practice” means any of the practices, methods and acts engaged in
or approved by a significant portion of the ethanol production or marketing (as
the case may be) industry during the relevant time period, or any of the
practices, methods and acts which, in the exercise of reasonable judgment in
light of the facts known at the time the decision was made, could have been
expected to accomplish the desired result at a reasonable cost consistent with
good business practices, reliability, safety and expedition. Good Industry
Practice is not limited to a single, optimum practice, method or act to the
exclusion of others, but rather is intended to include acceptable practices,
methods or acts generally accepted in the region.
 
“Governmental Authority” means any United States federal, state, municipal,
local, territorial, or other governmental department, commission, board, bureau,
agency, regulatory authority, instrumentality, judicial or administrative body.
 
“Incentive Fee” means, for each Payment Period and with respect to Kinergy, the
product of (a) 1.0% multiplied by (b) the difference between (i) the aggregate
amount of the Purchase Price associated with all Bilateral Transactions for such
Payment Period minus (ii) the aggregate amount of Transaction Costs associated
with all Bilateral Transactions for such Payment Period.
 
“Kinergy” has the meaning given to such term in the preamble hereto.
 
“Kinergy Indemnified Person” has the meaning given to such term in Section 6.2.

3

--------------------------------------------------------------------------------

 
“Law” means any law, statute, act, legislation, bill, enactment, policy, treaty,
international agreement, ordinance, judgment, injunction, award, decree, rule,
regulation, interpretation, determination, requirement, writ or order of any
Governmental Authority.
 
“Liabilities” has the meaning given to such term in Section 6.1.
 
“Material Bilateral Transaction” means any Bilateral Transaction having a term
in excess of one-year or pursuant to which the aggregate gross payments
reasonably anticipated to be made by the applicable Third Party to Kinergy
thereunder exceed $10,000,000 per calendar year.
 
“Monthly Date” means the last Business Day of each calendar month.
 
“Party” or “Parties” has the meaning given to such term in the preamble hereto.
 
“Payment Period” has the meaning given to such term in Section 3.1(a).
 
“PEI” has the meaning given to such term in the recitals hereto.
 
“Permits” means all permits, authorizations, registrations, consents, approvals,
waivers, exceptions, variances, orders, judgments, written interpretations,
decrees, licenses, exemptions, publications, filings, notices to and
declarations of or with, or required by, any Governmental Authority, or required
by any Law, and shall include all environmental and operating permits and
licenses that are required for the full use, occupancy, zoning and operation of
the Facility.
 
“Person” means and includes natural persons, corporations, limited liability
companies, limited partnerships, general partnerships, joint stock companies,
joint ventures, associations, companies, trusts, banks, trust companies and
other organizations, whether or not legal entities, Governmental Authorities and
any other entity.
 
“Prime Rate” means the rate per annum listed as the “Prime Rate” in the “Money
Rates” section of The Wall Street Journal from time to time.
 
“Project Company” has the meaning given to such term in the preamble hereto.
 
“Project Company Indemnified Person” has the meaning given to such term in
Section 6.1.
 
“Purchase Price” means, subject to Section 3.1(a), the aggregate amount of gross
payments received (or deemed received) by Kinergy during such Payment Period
from the applicable Third Parties in respect of such Bilateral Transactions.
 
“Third Party” means any Person (other than PEI or a subsidiary thereof) that
enters into a Bilateral Transaction with Kinergy.

4

--------------------------------------------------------------------------------

 
“Transaction Costs” means, for each Payment Period and with respect to Kinergy,
all reasonable, out-of-pocket and documented costs and expenses (other than
taxes on net income, business taxes paid by Kinergy, or tax on the sale of
Ethanol (such sales taxes to be paid directly by the Project Company), but
including all other taxes and governmental charges and assessments) incurred by
or on behalf of Kinergy in connection with all Bilateral Transactions pursuant
to this Amended Agreement during such Payment Period, including truck, rail and
terminal costs for the transportation and storage of the applicable Ethanol to
the applicable Third Party and reasonable, documented out-of-pocket expenses
incurred in connection with the negotiation and documentation of the applicable
sales agreement between Kinergy and the applicable Third Parties.
 
1.2  Interpretation
 
The following interpretations and rules of construction shall apply to this
Amended Agreement:
 
(a)  titles and headings are for convenience only and will not be deemed part of
this Amended Agreement for purposes of interpretation;
 
(b)  unless otherwise stated, references in this Amended Agreement to “Sections”
or “Articles” refer, respectively, to Sections or Articles of this Amended
Agreement;
 
(c)  “including” means “including, but not limited to”, and “include” or
“includes” means “include, without limitation” or “includes, without
limitation”;
 
(d)  “hereunder”, “herein”, “hereto” and “hereof”, when used in this Amended
Agreement, refer to this Amended Agreement as a whole and not to a particular
Section or clause of this Amended Agreement;
 
(e)  in the case of defined terms, the singular includes the plural and vice
versa;
 
(f)  unless otherwise indicated, all accounting terms not specifically defined
shall be construed in accordance with generally accepted accounting practices in
the United States;
 
(g)  unless otherwise indicated, each reference to a particular Law is a
reference to such Law as it may be amended, modified, extended, restated or
supplemented from time to time, as well as to any successor Law thereto;
 
(h)  unless otherwise indicated, references to agreements shall be deemed to
include all subsequent amendments, supplements and other modifications thereto;
and
 
(i)  unless otherwise indicated, each reference to any Person shall include such
Person’s successors and permitted assigns.
 

5

--------------------------------------------------------------------------------

 
ARTICLE II
 
PURCHASE TRANSACTIONS AND MARKETING ACTIVITIES
 
2.1  Marketing and Purchase of Ethanol
 
(a)  Subject to the terms hereof, the Project Company hereby grants Kinergy the
exclusive right to market and sell, or to purchase for Kinergy’s own account,
all of the Project Company’s Ethanol (which, as of the date hereof, is estimated
to be approximately 35 million gallons-per-year). The Project Company hereby
grants Kinergy the power and authority necessary to perform its obligations and
exercise its rights hereunder.
 
(b)  All purchases and sales of Ethanol pursuant to this Amended Agreement shall
take place in one of the two following ways:
 
(i)  Direct purchases for the account of Kinergy, in accordance with Section 2.2
(each, a “Direct Purchase”); and
 
(ii)  Sales to Third Parties pursuant to a Bilateral Transactions, in accordance
with Section 2.3 (each, a “Bilateral Purchase”).
 
(c)  The Parties shall confirm in writing in advance of every purchase and sale
of Ethanol pursuant to this Amended Agreement whether such purchase and sale
shall be treated as a Direct Purchase or a Bilateral Purchase. Each of the
Parties agrees that Kinergy shall not request that the Project Company deliver
Ethanol to Kinergy (or any Third Party designated by Kinergy) unless, as of the
scheduled date of delivery, Kinergy has entered into a Direct Purchase or a
Bilateral Transaction with respect to such Ethanol.
 
2.2  Direct Purchases
 
Kinergy may from time to time offer to purchase Ethanol from Project Company for
its own account. An offer for a Direct Purchase shall include the quantity that
Kinergy proposes to purchase, the price at which Kinergy proposes to purchase,
the proposed timing of delivery, and such other terms as Kinergy desires to
include. If the offer is in connection with an arbitrage opportunity, the offer
shall so state and shall also include a description of the specific arbitrage
opportunity, including a statement of the anticipated arbitrage profit. If
Project Company accepts Kinergy’s offer, then the purchase and sale of Ethanol
pursuant to such offer shall be deemed a Direct Purchase under this Amended
Agreement. Kinergy shall assume the market risk associated with all Direct
Purchases, and shall be entitled to retain all profits on the resale of Ethanol
purchased from Project Company pursuant to Direct Purchases. Notwithstanding the
foregoing, with respect to specific identified arbitrage opportunities, Kinergy
shall be entitled to retain fifty percent (50%) of the identified arbitrage
profit and shall remit fifty percent (50%) of the arbitrage profit to Project
Company, unless the parties agree in writing to a different arrangement.

6

--------------------------------------------------------------------------------

 
2.3  Bilateral Transactions
 
(a)  Kinergy shall use its reasonable commercial efforts to solicit, negotiate
and enter into, and Kinergy shall perform, Bilateral Transactions with Third
Parties, and such Bilateral Transactions shall be served by the Facility. Other
than as set forth in Sections 2.3(d) and 2.6 below, Kinergy shall have absolute
discretion in the solicitation, negotiation, administration (including the
collection of payments) and execution of Bilateral Transactions. Project Company
shall operate the Facility as required to allow Kinergy to perform such
Bilateral Transactions.
 
(b)  In the event of a breach or default by a Third Party under any Bilateral
Transaction, Kinergy shall (i) promptly notify the Project Company of any such
breach and default and provide the Project Company from time to time with
reasonably detailed information in respect of the same (including copies of all
written communications in respect thereof) and (ii) at the Project Company’s
sole cost and expense and at the direction of the Project Company, use
reasonable commercial efforts to exercise all rights and remedies available to
it (including the commencement of litigation) with respect to such breach or
default.
 
(c)  Kinergy shall perform its obligations hereunder and under Bilateral
Transactions in accordance with this Amended Agreement, applicable Laws,
applicable Permits and Good Industry Practice and with the intent to maximize
the proceeds generated from Bilateral Transactions.
 
(d)  Notwithstanding anything to the contrary herein, Kinergy shall (i) not
enter into any Bilateral Transaction with any Third Party that is the subject of
an Act of Insolvency, (ii) not enter into any Bilateral Transaction that permits
the applicable Third Party to pay for the Ethanol purchased under such Bilateral
Transaction on a date which is more than 30 days after the Monthly Date in which
such Ethanol is delivered to such Third Party, (iii) not enter into any Material
Bilateral Transaction without the prior consent of the Project Company, (iv) not
enter into any Bilateral Transactions which provide for the provision of Ethanol
in excess of the amount of Ethanol available from the Facility (after giving
effect to the Project Company’s or Kinergy’s existing contractual obligations
and the scheduling provisions set forth in Section 2.6(b) below), (v) not enter
into any Bilateral Transaction which does not excuse Kinergy from performing its
obligations thereunder as a result of a Force Majeure Event (vi) not enter into
any Bilateral Transaction during such time as the Facility cannot provide
Ethanol due to a mechanical breakdown (including forced outage of the Facility),
(vii) enter into Bilateral Transactions in its name (and not the name of the
Project Company) and (viii) require that each Third Party make all payments
under the applicable Bilateral Transaction to a segregated bank-account in the
name of Kinergy (the “Account”) and Kinergy shall cause the proceeds of all such
Bilateral Transactions received by it to be deposited into the Account.

7

--------------------------------------------------------------------------------

 
(e)  Transaction Reports
 
(i)  Within thirty days after each Monthly Date occurring after the Commercial
Operations Date, Kinergy shall deliver to the Project Company a written summary
of the Bilateral Transactions which were entered into or performed, in whole or
in part, during the month ending on such Monthly Date. Such summary shall
specify, among other things, (i) the amount of Ethanol sold by Kinergy under
Bilateral Transactions during such month, (ii) the Third Parties which entered
into such Bilateral Transactions and the amount of Ethanol purchased thereby,
and (iii) whether and to the extent any such Third Parties or Kinergy breached
its obligations under any such Bilateral Transactions.
 
(ii)  In addition, Kinergy shall provide to the Project Company on a monthly
basis a customary bank account statement with respect to the Account (which
statement shall reflect, among other things, (i) deposits into and withdrawals
from the Account during the applicable monthly period and (ii) the balance of
funds in the Account).
 
(f)  Back-to-Back Transactions. Each Bilateral Transaction undertaken by Kinergy
shall immediately and automatically, without necessity of further documentation
or any action whatsoever by any of the Parties, create and cause to be
undertaken according to the terms of this Amended Agreement an equivalent
transaction in terms of the obligation to deliver Ethanol, the quantity of
Ethanol sold and the timing for the delivery of such Ethanol by the Project
Company with Kinergy (as if Kinergy were the Third Party).

 
2.4  Storage
 
Kinergy acknowledges that the Project Company has only limited storage capacity
and Kinergy agrees that it shall take any Ethanol requested by Kinergy pursuant
to the operating protocol established pursuant to Section 2.6(b) within seven
days of the time that the Project Company has made such Ethanol available to
Kinergy. In the event that stored Ethanol exceeds storage capacity more than two
times in any 60-day period or for longer than 24 hours at any given time, the
Project Company shall have the right, in addition to any other claims available
to the Project Company under applicable Laws, to terminate for cause this
Amended Agreement. A default under this Section shall be communicated to
Kinergy’s designated representative by facsimile or email.
 
2.5  Obligations of the Project Company
 
(a)  The Project Company shall provide Kinergy with all information reasonably
requested by Kinergy, and the Project Company shall assist Kinergy as reasonably
requested in the solicitation, negotiation and performance of Direct Purchases
and Bilateral Transactions.

8

--------------------------------------------------------------------------------

 
(b)  Notwithstanding anything to the contrary herein, the Project Company shall
not be responsible for the delivery of any Ethanol to Kinergy during any periods
of scheduled Facility maintenance (unless and to the extent the applicable
Ethanol is available to be delivered to Kinergy from the Project Company’s
storage facilities); provided, that (i) Kinergy shall have received at least ten
Business Days prior notice of such scheduled maintenance, (ii) such maintenance
shall have been scheduled in accordance with the operating protocol referred to
in Section 2.6(b) below and (iii) Kinergy has not, prior to the receipt of any
such notice, entered into binding Direct Purchases or Bilateral Transactions
which require Project Company supply Ethanol to Kinergy or Third Parties during
such scheduled maintenance periods.
 
(c) If on any day, the Project Company is unable to perform its obligations to
deliver Ethanol under this Amended Agreement due to a mechanical breakdown
(including a forced outage of the Facility) that is not a Force Majeure Event
and such mechanical breakdown has continued for more than five consecutive days,
the Project Company shall, at its option and provided that the Project Company
provides Kinergy with prompt notice of its intent to exercise such option,
procure replacement denatured fuel ethanol to be delivered to Kinergy or the
Third Party, as applicable. In such event, if and only if the Parties reach
agreement as to an alternative delivery point, the Project Company shall deliver
to Kinergy replacement denatured fuel ethanol in a quantity sufficient to meet
the contract quantity of such Bilateral Transaction at such alternate point (and
the Project Company shall be responsible for all transportation costs associated
therewith). In all other instances, the Project Company shall be responsible for
any damages incurred by Kinergy in connection with Project Company’s failure to
perform under the applicable Direct Purchase, or Kinergy’s failure to perform
under the applicable Bilateral Transaction, as a result of such mechanical
breakdown (it being acknowledged and agreed that Kinergy shall use commercially
reasonable efforts to mitigate the effects of any such mechanical breakdown and
the Project Company’s resulting inability to deliver Ethanol including the
identification and procurement (at the Project Company’s cost) of potential
replacement denatured fuel ethanol).
 
2.6  Title; Delivery Point; Nominations; Measurement
 
(a)  The Project Company shall deliver Ethanol to Kinergy at the inlet flange of
the applicable receiving truck that will remove such Ethanol from the Facility.
Title to, risk of loss with respect to and the obligation to transport such
Ethanol shall pass from the Project Company to Kinergy at such delivery point.
The Parties acknowledge that the quality and quantity of Ethanol may degrade or
shrink after such Ethanol is delivered by the Project Company to Kinergy at such
delivery point, and the Parties acknowledge that the risk of such degradation or
shrinkage and all other risk of loss shall be borne by Kinergy.

9

--------------------------------------------------------------------------------

 
(b)  Prior to the Commercial Operations Date, Kinergy and the Project Company
shall agree on an operating protocol with respect to the mechanics, timing and
process for (i) determining how much Ethanol is available to be sold on any
particular day, (ii) Kinergy to communicate to the Project Company its Ethanol
requirements on a monthly, weekly and daily basis, (iii) determining the
quantity of Ethanol to be stored by the Project Company in its storage
facilities, (iv) identifying Persons to transport the Ethanol to Third Parties
and (v) implementing the Ethanol sales contemplated by this Amended Agreement.
By mutual agreement, such operating protocol shall be updated from time to time
thereafter.
 
(c)  On or before the date that is fifteen days prior to the end of a calendar
month, the Project Company shall provide Kinergy with a forecast of its
projected monthly Ethanol production for the following month.
 
(d)  The Project Company agrees to collect samples of each shipment of Ethanol
it delivers to Kinergy hereunder. The Project Company shall label each sample to
include the customer order number and any other information reasonably necessary
to identify such Ethanol and the applicable shipment. Kinergy shall have the
right, upon reasonable notice and at reasonable times and at its expense, to
test such samples to confirm that the Ethanol delivered to it hereunder meets
the requirements of this Amended Agreement. The Parties agree that the amount of
Ethanol delivered hereunder (whether measured as net gallons, net liters or
otherwise) shall be corrected to and correspondingly adjusted by a reference
temperature of 60 degrees Fahrenheit or 15.56 degrees Celsius.
 
(e)  As further described in Sections 2.3, and 2.6 and except as otherwise
provided herein, the Project Company shall provide Ethanol to Kinergy free and
clear of all liens and encumbrances.
 
ARTICLE III
PAYMENTS
 
3.1  Fees and Payments
 
(a)  On the fifth Business Day and the twentieth Business Day of each calendar
month (the period of time between such dates being referred to herein as a
“Payment Period”), Kinergy shall pay to the Project Company an amount equal to
(a) the Purchase Price for such Payment Period minus (b) the aggregate amount of
Transaction Costs for such Payment Period minus (c) the aggregate amount of the
Incentive Fee for such Payment Period (it being acknowledged that Kinergy shall
retain for its own account the amount of such Transaction Costs and Incentive
Fee). In connection with each such payment, Kinergy shall deliver to the Project
Company a statement detailing its calculations of the applicable Purchase Price,
the applicable Transaction Costs and the applicable Incentive Fee. During the
first 90 days of production at FRE, Kinergy will pay FRE each Friday for the
previous week’s shipments of ethanol.

10

--------------------------------------------------------------------------------

 
(b)  On the fifth Business Day and the twentieth Business Day of each calendar
month, Kinergy shall pay to the Project Company the aggregate purchase price in
respect of Direct Purchases of Ethanol that shipped during the Payment Period,
plus any arbitrage profit owing to the Project Company on account of specific
identified arbitrage opportunities during such period. In connection with each
such payment, Kinergy shall deliver to the Project Company a statement detailing
its calculations of the applicable purchase price and arbitrage profit.
 
3.2  Overdue Payments; Indemnity Payments
 
(a)  If any Party shall fail to make any payment when due hereunder, such
overdue payment shall accrue interest at the Prime Rate plus 5% from the date
originally due until the date paid.
 
(b)  Any indemnification payments received by Kinergy from a Third Party in
respect of a Bilateral Transaction (net of Kinergy’s expenses related to the
matter for which such indemnification payments were received) shall be paid to
the Project Company on or before the next payment date as determined in
accordance with Section 3.1(a).
 
3.3  Billing Dispute
 
If the Project Company or Kinergy, in good faith, disputes the amount of any
payment received by it or to be paid by it or set-off pursuant to Section 3.1
above, the disputing Party shall immediately notify the other Party of the basis
for the dispute. The Parties will then meet and use their best efforts to
resolve any such dispute. If any amount is ultimately determined to be due to or
permitted to be set-off by the Project Company or Kinergy (as the case may be),
to the extent not previously paid or set-off, (a) Kinergy shall pay such amount
to the Project Company within five Business Days of such determination or (b)
Kinergy may then set-off such amount (as the case may be).
 
3.4  Audit
 
Notwithstanding the payment of any amount pursuant to this Article III, the
Project Company shall remain entitled (upon reasonable prior notice, at
reasonable times and at Kinergy’s corporate offices) to conduct a subsequent
audit and review of (a) all Bilateral Transactions and related records to verify
the amount of gross payments, Incentive Fees, Transaction Costs and damage
payments and (b) the determination and calculation of the Purchase Price, in
each case for a period of two years from and after the end of the applicable
Payment Period. If, pursuant to such audit and review, it is determined that any
amount previously paid by Kinergy to the Project Company did not constitute all
of the amounts which should have been paid to the Project Company, the Project
Company shall advise Kinergy indicating such amount and reason the amount should
have been paid to the Project Company and, subject to the next two sentences,
Kinergy shall pay such amount to the Project Company within five Business Days
of such request along with interest accrued at the Prime Rate plus 5% from the
date originally due until the date paid. If there is not agreement of any item
so noted, the Parties will then meet and use their best efforts to resolve the
dispute. If Parties are not able to resolve issues raised by such an audit and
review, any disputed items will be resolved in accordance with the provisions of
Article IX.

11

--------------------------------------------------------------------------------

 
ARTICLE IV
TERM; TERMINATION
 
4.1  Term. 
 
This Amended Agreement shall be effective on the date hereof and, unless earlier
terminated in accordance with its terms, shall continue in effect until June 9,
2009; provided, that the term of this Amended Agreement shall automatically
renew and be extended for additional one-year periods thereafter unless a Party
elects to terminate this Amended Agreement in a writing delivered to the other
Party at least 60-days prior to the end of the original or renewal term.
 
4.2  Termination by Kinergy
 
Kinergy may terminate this Amended Agreement by written notice to the Project
Company, upon the occurrence of any of the following events, provided, that no
such notice shall be required for a termination pursuant to clause (c) of this
Section 4.2:
 
(a)  the failure by the Project Company to make any payment, deposit or transfer
required hereunder within 30 Business Days after the date such payment, deposit
or transfer is required to be made;
 
(b)  the failure of any statement, representation or warranty made by the
Project Company in this Amended Agreement to have been correct in any material
respect when made if such failure could reasonably be expected to have a
material adverse effect on the Project Company’s ability to perform its
obligations under this Amended Agreement;
 
(c)  the occurrence of an Act of Insolvency with respect to the Project Company;
or
 
(d)  the failure of the Project Company to perform any of its material
obligations under this Amended Agreement and such failure continues for 30 days
after receipt of written notice from Kinergy of such failure; provided, that
such 30-day period shall be extended for up to an aggregate of 90 days so long
as the Project Company is diligently attempting to cure such failure.
 
4.3  Termination by the Project Company
 
The Project Company may terminate this Amended Agreement by written notice to
Kinergy, upon the occurrence of any of the following events, provided, that no
such notice shall be required for a termination pursuant to clause (c) of this
Section 4.3:
 
(a)  the failure by Kinergy to make any payment, deposit or transfer required
hereunder within fifteen Business Days after the date such payment, deposit or
transfer is required to be made;

12

--------------------------------------------------------------------------------

 
(b)  the failure of any statement, representation or warranty made by Kinergy in
this Amended Agreement to have been correct in any material respect when made if
such failure could reasonably be expected to have a material adverse effect on
Kinergy’s ability to perform its obligations under this Amended Agreement;
 
(c)  the occurrence of an Act of Insolvency with respect to Kinergy;
 
(d)  the failure of Kinergy to perform any of its material obligations under
this Amended Agreement and such failure continues for 30 days after receipt of
written notice from the Project Company of such failure; provided, that such
30-day period shall be extended for up to an aggregate of 90 days so long as
Kinergy is diligently attempting to cure such failure; or
 
(e)  the occurrence of any termination event under Section 2.4.
 
4.4  Change of Control
 
(a)  Either Party shall have the option to terminate this Amended Agreement for
convenience upon thirty days written notice to the other Party from and after
the occurrence of any transfer, assignment, sale or other disposition (exclusive
of any transfers, assignments, sales or other dispositions in connection with a
foreclosure or exercise of remedies by the Financing Parties, which shall be
governed exclusively by clause (b) below) of (i) all or substantially all of the
assets comprising the Facility or (ii) more than a majority of the membership
interests of the Project Company or Kinergy to any Person which is not an
Affiliate of PEI. Any termination pursuant to this Section 4.4(a) shall be
effective 30 days after written notice is provided by the terminating Party to
the other Party.
 
(b)  If as a result of a foreclosure on or similar exercise of remedies in
respect of the Project Company or the Facility the collateral agent under the
Financing Documents (or its designee or transferee) becomes a party to this
Amended Agreement or directly or indirectly controls all or substantially all of
the assets of, or a majority of the membership interests in, the Project
Company, the Project Company shall have the right to terminate this Amended
Agreement for convenience upon thirty days written notice to Kinergy.
 
4.5  Effect of Termination
 
No termination under this Article IV shall release any of the Parties from any
obligations arising hereunder prior to such termination, including obligations
under any Bilateral Transaction (or such Bilateral Transaction’s corresponding
back-to-back transaction arising under Section 2.3(f)) that is not fully
performed as of the date of such termination. The exercise of the right of a
Party to terminate this Amended Agreement, as provided herein, does not preclude
such Party from exercising other remedies that are provided herein or are
available at law or in equity; provided, however, that no Party shall have a
right to terminate, revoke or treat this Amended Agreement as repudiated other
than in accordance with the other provisions of this Amended Agreement; and
provided, further, that the Parties’ respective rights upon termination shall be
subject to the liability limitations of Article V. Except as otherwise set forth
in this Amended Agreement, remedies are cumulative, and the exercise of, or the
failure to exercise, one or more remedies by a Party shall not, to the extent
provided by Law, limit or preclude the exercise of, or constitute a waiver of,
other remedies by such Party.

13

--------------------------------------------------------------------------------

 
ARTICLE V
LIMITATIONS ON LIABILITY
 
5.1  Maximum Liability of Kinergy
 
The total aggregate liability of Kinergy to the Project Company under this
Amended Agreement during the term of this Amended Agreement shall not exceed the
aggregate amount of Incentive Fees received by Kinergy. The liability of Kinergy
to the Project Company under this Amended Agreement during any calendar year
shall not exceed the aggregate amount of Incentive Fees received by Kinergy
during such year. Notwithstanding the foregoing, such limitations on liability
shall not apply with respect to any net loss, damage or liability resulting from
or arising out of the gross negligence or willful misconduct of Kinergy.
 
5.2  No Consequential or Punitive Damages
 
In no event shall either Party be liable to any other Party by way of indemnity
or by reason of any breach of contract or of statutory duty or by reason of tort
(including negligence or strict liability) or otherwise for any loss of profits,
loss of revenue, loss of use, loss of production, loss of contracts or for any
incidental, indirect, special or consequential or punitive damages of any other
kind or nature whatsoever that may be suffered by such other Party, including
any losses for which such other Party has insurance to the extent proceeds of
insurance have been recovered for such losses.
 
ARTICLE VI
INDEMNIFICATION
 
6.1  The Project Company’s Indemnity
 
The Project Company shall defend, indemnify and hold harmless Kinergy and its
Affiliates (and each officer, director, employee, shareholder, partner, member
or agent of Kinergy and its Affiliates) (each, a “Project Company Indemnified
Person”) from and against any and all third party claims, actions, damages,
expenses (including reasonable and documented attorneys’ fees and expenses),
losses, settlements or liabilities (collectively, “Liabilities”) incurred or
asserted against any Project Company Indemnified Person (a) as a result of any
failure on the part of the Project Company to perform the Project Company’s
obligations under this Amended Agreement (including with respect to any
back-to-back transaction under Section 2.3(f)), or (b) arising out of or in any
way connected with the grossly negligent acts or omissions of the Project
Company or its Affiliates (other than Kinergy).

14

--------------------------------------------------------------------------------

 
6.2  Kinergy’s Indemnity
 
Kinergy shall defend, indemnify and hold harmless the Project Company and its
Affiliates (and each officer, director, employee, shareholder, partner, member
or agent of the Project Company and their Affiliates) (each, a “Kinergy
Indemnified Person”) from and against any and all third party Liabilities
incurred or asserted against any Kinergy Indemnified Person (a) as a result of
any failure on the part of Kinergy to perform its obligations under this Amended
Agreement (including with respect to any Bilateral Transaction), or (b) arising
out of or in any way connected with the grossly negligent acts or omissions of
Kinergy or its Affiliates (other than the Project Company).
 
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
 
7.1  Kinergy’s Representations and Warranties
 
Kinergy represents and warrants to the Project Company, as of the date hereof,
as follows:
 
(a)  Due Formation. Kinergy (i) is a limited liability company duly formed and
validly existing under the laws of the State of Oregon, (ii) has the requisite
power and authority to own its properties and carry on its business as now being
conducted and currently proposed to be conducted and to execute, deliver and
perform its obligations under this Amended Agreement, and (iii) is qualified to
do business in the State of California and in every other jurisdiction in which
failure so to qualify could be reasonably be expected to have a material adverse
effect on Kinergy’s ability to perform its obligations hereunder.
 
(b)  Authorization; Enforceability. Kinergy has taken all action necessary to
authorize it to execute, deliver and perform its obligations under this Amended
Agreement. This Amended Agreement constitutes a legal, valid and binding
obligation of Kinergy enforceable in accordance with its terms, subject to
bankruptcy, reorganization, moratorium or other similar laws affecting the
enforcement of the rights of creditors generally and subject to general
principles of equity.
 
(c)  No Conflict. The execution, delivery and performance by Kinergy of this
Amended Agreement does not and will not (i) violate any Law applicable to
Kinergy, (ii) result in any breach of Kinergy’s constituent documents or (iii)
conflict with, violate or result in a breach of or constitute a default under
any agreement or instrument to which Kinergy or any of its properties or assets
is bound or result in the imposition or creation of any lien or security
interest in or with respect to any of Kinergy’s property or assets, other than
in each case any such violations, conflicts, breaches or impositions which could
not be reasonably be expected to have a material adverse effect on Kinergy’s
ability to perform its obligations hereunder.

15

--------------------------------------------------------------------------------

 
(d)  No Authorization. No authorization or approval or other action by, and no
notice to or filing with, any Governmental Authority (other than those which
have been obtained) is required for the due execution, delivery and performance
by Kinergy of this Amended Agreement, other than any such authorizations,
approvals or actions the failure of which to obtain could not be reasonably be
expected to have a material adverse effect on Kinergy’s ability to perform its
obligations hereunder.
 
(e)  Litigation. Kinergy is not a party to any legal, administrative,
arbitration or other proceeding, and, to Kinergy’s knowledge, no such proceeding
is threatened, which could be reasonably be expected to have a material adverse
effect on Kinergy’s ability to perform its obligations hereunder.
 
7.2  The Project Company’s Representations and Warranties
 
The Project Company represents and warrants to Kinergy, as of the date hereof,
as follows:
 
(a)  Due Formation. The Project Company (i) is a limited liability company duly
formed and validly existing under the laws of the State of Delaware, (ii) has
the requisite power and authority to own its properties and carry on its
business as now being conducted and currently proposed to be conducted and to
execute, deliver and perform its obligations under this Amended Agreement, and
(iii) is qualified to do business in the State of California and in every other
jurisdiction in which failure so to qualify could be reasonably be expected to
have a material adverse effect on the Project Company’s ability to perform its
obligations hereunder.
 
(b)  Authorization; Enforceability. The Project Company has taken all action
necessary to authorize it to execute, deliver and perform its obligations under
this Amended Agreement. This Amended Agreement constitutes a legal, valid and
binding obligation of the Project Company enforceable in accordance with its
terms, subject to bankruptcy, reorganization, moratorium or other similar laws
affecting the enforcement of the rights of creditors generally and subject to
general principles of equity.
 
(c)  No Conflict. The execution, delivery and performance by the Project Company
of this Amended Agreement does not and will not (i) violate any Law applicable
to the Project Company, (ii) result in any breach of the Project Company’s
constituent documents or (iii) conflict with, violate or result in a breach of
or constitute a default under any agreement or instrument to which the Project
Company or any of its properties or assets is bound or result in the imposition
or creation of any lien or security interest in or with respect to any of the
Project Company’s property or assets, other than in each case any such
violations, conflicts, breaches or impositions which could not be reasonably be
expected to have a material adverse effect on the Project Company’s ability to
perform its obligations hereunder.

16

--------------------------------------------------------------------------------

 
(d)  No Authorization. No authorization or approval or other action by, and no
notice to or filing with, any Governmental Authority (other than those which
have been obtained) is required for the due execution, delivery and performance
by the Project Company of this Amended Agreement, other than any such
authorizations, approvals or actions the failure of which to obtain could not be
reasonably be expected to have a material adverse effect on the Project
Company’s ability to perform its obligations hereunder.

 
(e)  Litigation. The Project Company is not a party to any legal,
administrative, arbitration or other proceeding, and, to the Project Company’s
knowledge, no such proceeding is threatened, which could be reasonably be
expected to have a material adverse effect on the Project Company’s ability to
perform its obligations hereunder.
 
ARTICLE VIII
FORCE MAJEURE
 
8.1  Definition
 
As used herein, “Force Majeure Event” means any cause(s) which render(s) a Party
wholly or partly unable to perform its obligations under this Amended Agreement
(other than obligations to make payments when due), and which are neither
reasonably within the control of such Party nor the result of the fault or
negligence of such Party, and which occur despite all reasonable attempts to
avoid, mitigate or remedy, and shall include acts of God, war, riots, civil
insurrections, cyclones, hurricanes, floods, fires, explosions, earthquakes,
lightning, storms, chemical contamination, epidemics or plagues, acts or
campaigns of terrorism or sabotage, blockades, embargoes, accidents or
interruptions to transportation, trade restrictions, acts of any Governmental
Authority after the date of this Amended Agreement, strikes and other labor
difficulties, and other events or circumstances beyond the reasonable control of
such Party. Mechanical breakdown (including a forced outage of the Facility)
that continues for more than five consecutive days shall be deemed not to be
“Force Majeure Event” unless such mechanical breakdown resulted from or was
caused by a separate “Force Majeure Event.”
 
8.2  Effect
 
A Party claiming relief as a result of a Force Majeure Event shall give the
other Parties written notice within five Business Days of becoming aware of the
occurrence of the Force Majeure Event, or as soon thereafter as practicable,
describing the particulars of the Force Majeure Event, and will use reasonable
efforts to remedy its inability to perform as soon as possible. If the Force
Majeure Event (including the effects thereof) continues for fifteen consecutive
days, the affected Party shall report to the other Parties the status of its
efforts to resume performance and the estimated date thereof. If the Force
Majeure Event (including the effects thereof) continues for 180 consecutive
days, the affected Party may terminate this Amended Agreement for convenience.
If the affected Party was not able to resume performance prior to or at the time
of the report to the other Parties of the onset of the Force Majeure Event, then
it will report in writing to the other Parties when it is again able to perform.
If a Party fails to give timely notice, the excuse for its non-performance shall
not begin until notice is given.

17

--------------------------------------------------------------------------------

 
8.3  Limitations
 
Any obligation(s) of a Party (other than an obligation to make payments when
due) may be temporarily suspended during any period such Party is unable to
perform such obligation(s) by reason of the occurrence of a Force Majeure Event,
but only to the extent of such inability to perform, provided, that:

 
(a)  the suspension of performance is of no greater scope and of no longer
duration than is reasonably required by the Force Majeure Event; and
 
(b)  the Party claiming the occurrence of the Force Majeure Event bears the
burden of proof.
 
ARTICLE IX
DISPUTE RESOLUTION
 
9.1  Attempts to Settle
 
In the event that a Dispute among the Parties arises under, out of or in
relation to, this Amended Agreement, the Parties shall attempt in good faith to
settle such Dispute by mutual discussions within fifteen Business Days after the
date that an aggrieved Party gives written notice of the Dispute to the other
Parties. In the event that a Dispute is not resolved by discussion in accordance
with the preceding sentence within the time period set forth therein, the
Parties shall refer the Dispute to their respective senior officers for further
consideration and attempted resolution within fifteen Business Days after the
Dispute has been referred to such individuals (or such longer period as the
Parties may agree).
 
9.2  Resolution by Expert
 
If the Parties shall have failed to resolve the Dispute within fifteen Business
Days after the date that the Parties referred the Dispute to their senior
officers, then, provided the Parties shall so agree, the Dispute may be
submitted for resolution by an Expert, such Expert to be appointed by the mutual
agreement of the Parties. Proceedings before an Expert shall be held in Fresno,
California (or any other location agreed to by the Parties). The Expert shall
apply to such proceedings the substantive law of the State of California in
effect at the time of such proceedings. The decision of the Expert shall be
final and binding upon the Parties. In the event that (a) the Parties cannot
agree on the appointment of an Expert within ten Business Days after the date
that the Parties agreed to submit the Dispute for resolution by the Expert or
(b) the Expert fails to resolve such Dispute within 60 days after the Parties
have submitted such Dispute to the Expert, then any Party may file a demand for
arbitration in writing in accordance with Section 9.3.

18

--------------------------------------------------------------------------------

 
9.3  Arbitration
 
Any Dispute that has not been resolved following the procedures set forth in
Section 9.1 or 9.2 shall be settled by binding arbitration in Fresno, California
(or any other location agreed to by the Parties) before a panel of three
arbitrators. Such arbitration shall be conducted in accordance with the
Commercial Arbitration Rules of the American Arbitration Association as in
effect on the date of execution of this Amended Agreement. Such arbitration
shall be governed by the laws of the State of California. If arbitration
proceedings have been initiated pursuant to this Section 9.3 and raise issues of
fact or law which, in whole or in part, are substantially the same as issues of
fact or law already pending in arbitration proceedings involving the applicable
Parties, such issues shall be consolidated with the issues in the ongoing
proceedings. THE PARTIES HEREBY AGREE THAT THE PROCEDURES SET FORTH IN THIS
ARTICLE IX SHALL BE THE EXCLUSIVE DISPUTE RESOLUTION PROCEDURES APPLICABLE TO
ANY DISPUTE, CONTROVERSY OR CLAIM UNDER THIS AMENDED AGREEMENT AND, EXCEPT AS
SET FORTH IN SECTION 9.5, THE PARTIES HEREBY WAIVE ALL RIGHTS TO A COURT TRIAL
OR TRIAL BY JURY WITH RESPECT TO ANY DISPUTE, CONTROVERSY OR CLAIM UNDER THIS
AMENDED AGREEMENT.
 
9.4  Consequential and Punitive Damages
 
Awards of Experts and arbitral panels shall be subject to the provisions of
Article V.
 
9.5  Finality and Enforcement of Decision
 
Any decision or award of an Expert or a majority of an arbitral panel, as
applicable, shall be final and binding upon the Parties. Each of the Parties
agrees that the arbitral award may be enforced against it or its assets wherever
they may be found and that a judgment upon the arbitral award may be entered in
any court having jurisdiction thereof. The Parties hereby waive any right to
appeal or to review the decision or award of an Expert or an arbitral panel by
any court or tribunal and also waive any objections to the enforcement of such
decision or award.
 
9.6  Costs
 
The costs of submitting a Dispute to an Expert shall be shared equally among the
Parties involved in the Dispute, unless the arbitral panel or the Expert
determines otherwise. The costs of arbitration shall be paid in accordance with
the decision of the arbitral panel pursuant to the Commercial Arbitration Rules
of the American Arbitration Association as in effect on the date of execution of
this Amended Agreement.
 
9.7  Continuing Performance Obligations
 
While a Dispute is pending, each Party shall continue to perform its obligations
under this Amended Agreement, unless such Party is otherwise entitled to suspend
its performance hereunder or terminate this Amended Agreement in accordance with
the terms hereof.

19

--------------------------------------------------------------------------------

 
ARTICLE X
CONFIDENTIALITY
 
Each Party and its Affiliates shall treat as confidential the data and
information in their possession regarding the Facility, the other Parties or any
Affiliate of any other Party, unless: (a) the applicable other Party agrees in
writing to the release of such data or information; (b) such data or information
becomes publicly available other than through the wrongful actions of the
disclosing Party or the disclosing Party’s Affiliate; (c) such data or
information was in the possession of the receiving Party or the receiving
Party’s Affiliate prior to receipt thereof from the disclosing Party with no
corresponding confidentiality obligation; or (d) such data or information is
required by Law to be disclosed. Notwithstanding the generality of the
foregoing, any Party may disclose data and information to (i) the officers,
directors, managers, partners, members, employees and Affiliates of such Party,
(ii) any successors in interest and permitted assigns of such Party, (iii) any
actual or potential Financing Parties or actual or potential lenders to PEI or
any subsidiary thereof, and (iv) any potential equity investors in PEI or any
subsidiary thereof; provided, that any Person who receives confidential data and
information pursuant to an exception contained in clauses (ii) - (iv) of this
Article agrees to similar confidentiality provisions.
 
ARTICLE XI
ASSIGNMENT AND TRANSFER
 
No Party shall assign this Amended Agreement or any of its rights or obligations
hereunder without first obtaining the prior written consent of (a) in the case
of the Project Company, Kinergy, or (b) in the case of Kinergy, the Project
Company, provided, that any Party shall be entitled to assign its rights
hereunder (as collateral security or otherwise) for financing purposes
(including a collateral assignment to any Financing Parties) without the consent
of any other Party.
 
ARTICLE XII
FURTHER ASSURANCES; REQUESTS OF FINANCING PARTIES
 
12.1  Further Assurances
 
Each Party shall from time to time execute and deliver all such further
documents and instruments as any other Party may reasonably require to
effectively carry out or better evidence or perfect the full intent and meaning
of this Amended Agreement.
 
12.2  Requests of Financing Parties
 
Kinergy shall use its reasonable efforts to execute, acknowledge and deliver any
and all further documents and instruments, and to take any other actions, which
may be necessary to satisfy the reasonable requests of any Financing Party or
prospective Financing Party in connection with the financing of the Facility,
including delivering to an agent or trustee for the Financing Parties a
customary consent to the assignment by the Project Company of its rights under
this Amended Agreement to the Financing Parties.

20

--------------------------------------------------------------------------------

 
ARTICLE XIII
MISCELLANEOUS
 
13.1  Amended Agreement; Entire Agreement
 
This Amended Agreement amends and restates in its entirety the Ethanol Marketing
Agreement between the Parties dated August 31, 2005. This Amended Agreement
contains the entire agreement between the Parties with respect to the subject
matter hereof and supersedes all prior agreements, negotiations and
understandings among the Parties with respect to such subject matter. Nothing in
this Amended Agreement shall be construed as creating a partnership or joint
venture between the Parties.
 
13.2  Counterparts
 
This Amended Agreement may be executed in any number of counterparts and each
such counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute one and the same agreement.
 
13.3  Survival
 
Cancellation, expiration or earlier termination of this Amended Agreement shall
not relieve the Parties of obligations that by their nature should survive such
cancellation, expiration or termination, including remedies, limitations on
liability, promises of indemnity and payment, and confidentiality. Without
limiting the generality of the foregoing, the following provisions of this
Amended Agreement shall survive: Articles III, V, VI, IX and X.
 
13.4  Severability
 
In the event any one or more of the provisions contained in this Amended
Agreement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby. The Parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions, the economic and practical
effect of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
 
13.5  Governing Law
 
This Amended Agreement shall be governed by and construed in accordance with the
internal laws of the State of California, as applied to contracts made and
performed within the State of California, without regard to its conflicts of law
principles.
 
13.6  Binding Effect
 
This Amended Agreement shall be binding upon and shall inure to the benefit of
the Parties hereto and their respective successors and permitted assigns. This
Amended Agreement is not made for the benefit of any Person or entity not a
party hereto, and nothing in this Amended Agreement shall be construed as giving
any Person or entity, other than the Parties and their respective successors and
permitted assigns, any right, remedy or claim under or in respect of this
Amended Agreement or any provision hereof.

21

--------------------------------------------------------------------------------

 
13.7  Notices
 
All notices or other communications which are required or permitted hereunder
shall be in writing and shall be deemed sufficiently given (a) upon delivery, if
delivered personally, (b) the day the notice is received, if it is delivered by
overnight courier or certified or registered mail, postage prepaid, or (c) upon
the effective receipt of electronic transmission, facsimile, telex or telegram
(with effective receipt being deemed to occur upon the sender’s receipt of
confirmation of successful transmission of such notice or communication), to the
addresses set forth below or such other address as the addressee may have
specified in a notice duly given to sender as provided herein:
 
If to Kinergy:
     
Kinergy Marketing, LLC
 
1260 Lake Boulevard, Suite 225
 
Davis, California 95616 
 
Attention:  
Mr. Neil Koehler
 
Telephone:
(530) 750-3017
 
Facsimile:
(530) 309-4172
With a copy to:
      Pacific Ethanol, Inc.   5711 N. West Avenue
 
 Fresno, CA 93711  
Attention:
General Counsel 
 
Telephone:
(559) 435-1771
 
Facsimile:
(559) 435-1478
If to the Project Company:
   
 
Front Range Energy, LLC 
 
PO Box 581
 
Windsor, CO 80550
 
Attn: Dan Sanders Sr.

 
22

--------------------------------------------------------------------------------

13.8   Amendment
 
No Party hereto shall be bound by any termination, amendment, supplement, waiver
or modification of any term hereof unless such Party shall have consented
thereto in writing.
 
13.9  No Implied Waiver
 
No delay or failure on the part of any Party in exercising any rights hereunder,
and no partial or single exercise thereof, shall constitute a waiver of such
rights or of any other rights hereunder.
 
[THE REMAINDER OF THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY]

23

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, this Amended and Restated Ethanol Purchase and Sale
Agreement has been duly executed by the Parties hereto as of the date first
written above.
 
 
FRONT RANGE ENERGY, LLC
 

By: /s/ Daniel A. Sanders              
     Daniel A. Sanders
       Manager

 
KINERGY MARKETING, LLC

By: /s/ John T. Miller                 
     John T. Miller
       COO

24

--------------------------------------------------------------------------------