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Exhibit 10.2
 
[FORM OF]
 
AMENDED AND RESTATED
ETHANOL MARKETING AGREEMENT
([__________] PROJECT)
 
by and between
 
PACIFIC ETHANOL [__________], LLC
 
and
 
KINERGY MARKETING, LLC
 
 
 
Dated as of June 30, 2011
 
 
 
 

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TABLE OF CONTENTS
 

 
 
 
Page
Article I
DEFINITIONS; INTERPRETATION
1
       
1.1
Definitions
1
 
1.2
Interpretation
5
     
Article II
MARKETING ACTIVITIES
5
       
2.1
Bilateral Transactions.
5
 
2.2
Storage
6
 
2.3
Obligations of Project Company.
6
 
2.4
Back-to-Back Transactions
7
 
2.5
Netting
7
 
2.6
Title; Delivery Point; Nominations; Measurement.
7
 
2.7
Benchmarking
8
     
Article III
PAYMENTS
8
       
3.1
Fees and Payments.
8
 
3.2
Overdue Payments; Billing Dispute
9
 
3.3
Audit
10
     
Article IV
TERM; TERMINATION
10
       
4.1
Term
10
 
4.2
Project Company Defaults and Kinergy Remedies
10
 
4.3
Kinergy Defaults and Project Company Remedies
11
 
4.4
Change of Control.
11
 
4.5
Effect of Termination
11
     
Article V
INSURANCE
12
       
5.1
Kinergy Insurance
12
 
5.2
Kinergy Insurance Premiums and Deductibles
13
     
Article VI
LIMITATIONS ON LIABILITY
13
       
6.1
No Consequential or Punitive Damages
13
       
Article VII
 
INDEMNIFICATION
13
         
7.1
Project Company’s Indemnity
13
 
7.2
Kinergy’s Indemnity
14
     
Article VIII
REPRESENTATIONS AND WARRANTIES
14

 
 
 
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Article IX
FORCE MAJEURE
14
         
9.1
Definition
14
 
9.2
Effect
15
 
9.3
Limitations
15
     
Article X
DISPUTE RESOLUTION
15
       
10.1
Attempts to Settle
15
 
10.2
Resolution by Expert
15
 
10.3
Arbitration
16
 
10.4
Consequential and Punitive Damages
16
 
10.5
Finality and Enforcement of Decision
16
 
10.6
Costs
16
 
10.7
Continuing Performance Obligations
16
     
Article XI
CONFIDENTIALITY
16
     
Article XII
ASSIGNMENT AND TRANSFER
17
     
Article XIII
MISCELLANEOUS
17
       
13.1
Entire Agreement
17
 
13.2
Counterparts
17
 
13.3
Survival
17
 
13.4
Severability
17
 
13.5
Governing Law
18
 
13.6
Binding Effect
18
 
13.7
Notices
18
 
13.8
Amendment
19
 
13.9
No Implied Waiver
19
 
13.10
Lines of Credit
19
       
Exhibit A
Form of PEI Guaranty
 
Exhibit B
Operating Protocol
 
Exhibit C
Certain Customers
 
Exhibit D
Benchmarking
 

 
 
 
 
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This AMENDED AND RESTATED ETHANOL MARKETING AGREEMENT (as amended, amended and
restated, supplemented or otherwise modified from time to time, this
“Agreement”) is entered into by and between PACIFIC ETHANOL [__________], LLC, a
Delaware limited liability company (“Project Company”), and KINERGY MARKETING,
LLC, an Oregon limited liability company (“Kinergy”), as of June 30,
2011.  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 Parties hereto were previously party to that certain Ethanol
Marketing Agreement, dated as of [_______], 2010 (the “Prior Agreement”),
pursuant to which Kinergy provided certain services to Project Company.
 
B.           Kinergy provides marketing services for denatured fuel ethanol
production facilities.
 
C.           Project Company is the owner of an approximately [___] million
gallons-per-year denatured fuel ethanol production facility in [__________],
[__________] (the “Facility”) and Project Company has requested that Kinergy
provide denatured fuel ethanol marketing services for the Facility and maintain
lines of credit available of not less than $5,000,000.
 
D.           The Parties desire to amend and restate in its entirety the Prior
Agreement and enter into this Amended and Restated Ethanol Marketing Agreement
pursuant to which Kinergy will provide such marketing services.
 
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 Agreement:
 
“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.
 
 
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“Affiliate” of a specified Person means any corporation, partnership, sole
proprietorship or other Person which directly or indirectly through one or more
intermediaries controls, is controlled by or is under common control with the
Person specified.  The term “control” means the ownership, either direct or
indirect, of twenty-five percent (25%) or more of the voting securities (or
comparable equity interests) or other ownership interests of a Person, or the
possession, either direct or indirect, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or any other means whatsoever.
 
“Agreement” has the meaning given to such term in the preamble hereto.
 
“Asset Management Agreement” means that certain Second Amended and Restated
Asset Management Agreement by and among PEI, as Manager, Pacific Ethanol
Stockton, LLC, Pacific Ethanol Holding Co. LLC, Pacific Ethanol Madera LLC,
Pacific Ethanol Columbia, LLC and Pacific Ethanol Magic Valley, LLC, dated as of
June 30, 2011, as the same may be amended, supplemented or otherwise modified
from time to time.
 
 “Bilateral Transaction” means a transaction entered into by Kinergy with one or
more Third Parties consisting of one or more forward sales of Ethanol, with
respect to which Ethanol produced at the Facility by Project Company is sold to
such Third Party or Third Parties.
 
“Business Day” means any day other than a Saturday, Sunday or a day on which
commercial banks in Sacramento, California or New York, New York are required or
authorized to be closed.
 
“Change of Control” has the meaning ascribed thereto in the Credit Agreement.
 
“Credit Agreement” means the Credit Agreement, dated as of June 25, 2010, by and
among Pacific Ethanol Holding Co. LLC, Pacific Ethanol Madera LLC, Pacific
Ethanol Stockton, LLC, Pacific Ethanol Magic Valley, LLC, and Pacific Ethanol
Columbia, LLC, as Borrowers, Pacific Ethanol Holding Co. LLC, as Borrowers’
Agent, WestLB AG, New York Branch, as the administrative agent and the
collateral agent, and the lenders parties thereto from time to time, as the same
may be amended, supplemented or otherwise modified from time to time.
 
“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.
 
“Extension Notice” has the meaning assigned to such term in Section 4.1.
 
 
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“Facility” has the meaning given to such term in the recitals hereto.
 
“Financing Documents” means any and all loan agreements, credit agreements
(including the Credit Agreement), 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 ownership, operation 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 9.1.
 
“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 Bilateral Transaction, the product of 1.0%
multiplied by the aggregate amount of the Purchase Price for such Bilateral
Transaction; provided, however, that in no event shall the Incentive Fee for any
Bilateral Transaction be less than $.015 per gallon nor greater than $.0225 per
gallon.
 
“Incentive Fee (Estimated)” means, for each Bilateral Transaction, the product
of 1.0% multiplied by the aggregate amount of the Purchase Price (Estimated) for
such Bilateral Transaction; provided, however, that in no event shall the
Incentive Fee (Estimated) for any Bilateral Transaction be less than $.015 per
gallon nor greater than $.0225 per gallon.
 
“Kinergy” has the meaning given to such term in the preamble hereto.
 
“Kinergy Indemnified Person” has the meaning given to such term in Section 7.2.
 
“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 7.1.
 
 
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“Minimum Rating Criteria”, with respect to any Person, means such Person has a
senior unsecured debt rating of at least “Baa2” by Moody’s or “BBB” by S&P or an
equivalent rating from another nationally recognized rating agency, provided
that each Person set forth on Exhibit C hereto shall be deemed to satisfy the
Minimum Rating Criteria.
 
“Monthly Date” means the last Business Day of each calendar month.
 
“Moody’s” means Moody’s Investors Service Inc., and any successor thereto that
is a nationally recognized rating agency.
 
“NewCo” means New PE Holdco LLC, a Delaware limited liability company and the
indirect owner on the date hereof of all the equity interests in Project
Company.
 
“Party” or “Parties” has the meaning given to such term in the preamble hereto.
 
“Payment Adjustment Date” has the meaning given to such term in Section 3.1(b).
 
“PEI” means Pacific Ethanol, Inc., a Delaware corporation.
 
“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.
 
“Prior Agreement” has the meaning assigned to such term in the Recitals.
 
 “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 7.1.
 
“Purchase Price” means, subject to Section 3.1(a), (a) for each Bilateral
Transaction that is part of a “pooling” arrangement by Kinergy among Affiliate
Persons that are “Borrowers” under and as defined in the Credit Agreement, the
product of (i) the weighted average delivered price of denatured fuel ethanol
attributable to sales of denatured fuel ethanol which were brokered by Kinergy
for such Persons during the applicable calendar month multiplied by (ii) the
amount (expressed in gallons) of Ethanol delivered by Project Company to Kinergy
hereunder during such calendar month in respect of such Bilateral Transactions
or (b) for each Bilateral Transaction that is not part of any such arrangement,
the aggregate gross payments received by Kinergy (or, if the applicable Third
Party defaults in its payment obligations to Kinergy in respect of such
Bilateral Transaction, the aggregate amount of gross payments which Kinergy was
entitled to receive) for such Bilateral Transaction from the applicable Third
Party; provided that, in any event, Kinergy shall elect, in its sole discretion
at the time of entering into any Bilateral Transaction (and by notice to Project
Company), whether such Bilateral Transaction is part of any such “pooling”
arrangement.
 
 
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“Purchase Price (Estimated)” means, with respect to each Bilateral Transaction,
the anticipated aggregate payments of Purchase Price with respect to such
Bilateral Transaction (as reasonably determined by Kinergy).
 
“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc., and any successor thereto that is a nationally recognized
rating agency.
 
“Third Party” means any Person (other than PEI or a subsidiary thereof) that
enters into a Bilateral Transaction with Kinergy.
 
“Transportation Costs” means, for each Bilateral Transaction, all actual,
out-of-pocket and documented costs and other expenses incurred by or on behalf
of Kinergy in connection with the transportation of Ethanol to the applicable
Third Party, including truck, rail, barge and/or terminal costs.
 
“Transportation Costs (Estimated)” means, for each Bilateral Transaction, the
aggregate amount of Transportation Costs anticipated to be incurred by Kinergy
in connection with such Bilateral Transaction (as reasonably determined by
Kinergy).
 
1.2           Interpretation.  The following interpretations and rules of
construction shall apply to this Agreement:  (a) titles and headings are for
convenience only and will not be deemed part of this Agreement for purposes of
interpretation; (b) unless otherwise stated, references in this Agreement to
“Sections” or “Articles” refer, respectively, to Sections or Articles of this
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
Agreement, refer to this Agreement as a whole and not to a particular Section or
clause of this Agreement; (e) in the case of defined terms, the singular
includes the plural and vice versa; (f) 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; (g) unless otherwise indicated, references to
agreements shall be deemed to include all subsequent amendments, supplements and
other modifications thereto; and (h) unless otherwise indicated, each reference
to any Person shall include such Person’s successors and permitted assigns.
 
ARTICLE II
MARKETING ACTIVITIES
 
2.1           Bilateral Transactions.
 
(a)           Subject to the terms hereof, Project Company hereby grants Kinergy
the exclusive right to market, purchase and sell all of Project Company’s
Ethanol commencing on June 30, 2011 and continuing through the expiration or
early termination of this Agreement, provided, that during the continuance of
any default by Kinergy that would allow Project Company to terminate this
Agreement pursuant to Section 4.3 or during the 30-day cure period provided in
Section 4.3(c) (notwithstanding such cure period), if Kinergy is not performing
its obligations with respect to marketing Project Company’s Ethanol or during
the continuance of any Force Majeure Event (including the effects thereof) that
renders Kinergy unable to perform its obligations under this Agreement, then
Project Company shall have the right to engage any other Person to market,
purchase and sell Project Company’s Ethanol and Kinergy shall not be entitled to
any compensation (including Incentive Fees) with respect to any replacement
services provided by such Person.  Kinergy shall use its reasonable commercial
efforts to solicit, negotiate and enter into, and Kinergy shall perform,
Bilateral Transactions with Third Parties.  Kinergy shall have absolute
discretion in the solicitation, negotiation, administration (including the
collection of payments), enforcement and execution of Bilateral Transactions and
all sales of Ethanol produced by the Facility shall be effectuated by Bilateral
Transactions.  Kinergy shall not enter into any transaction in respect of
Project Company’s Ethanol that (i) is not a Bilateral Transaction; (ii) requires
deliveries of ethanol more than one hundred eighty (180) days after the date of
execution of such transaction or (iii) is with a counterparty that does not
satisfy the Minimum Rating Criteria, in each case without the prior written
consent of Project Company, which consent may be withheld by Project Company in
its discretion.  Project Company hereby grants Kinergy the power and authority
necessary to perform its obligations and exercise its rights hereunder.
 
 
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(b)           As further described in Sections 2.3, 2.4 and 2.6 below and except
as otherwise provided herein, Project Company shall provide Ethanol to Kinergy
free and clear of all liens and encumbrances.
 
(c)           Kinergy shall perform its obligations hereunder and under
Bilateral Transactions in accordance with this Agreement, applicable Laws and
Good Industry Practice and shall use commercially reasonable efforts to maximize
the proceeds generated from the sale of Ethanol.
 
(d)           Kinergy shall at all times maintain available lines of credit of
not less than $5,000,000.
 
2.2           Storage.  Kinergy acknowledges that Project Company has only
limited storage capacity and Kinergy agrees that it shall take any Ethanol
requested by Kinergy within seven days (or such longer period of time as may
reasonably be agreed by Project Company) of the time that Project Company has
made such Ethanol available to Kinergy.
 
2.3           Obligations of Project Company.
 
(a)           Project Company shall provide Kinergy with all information
reasonably requested by Kinergy, and Project Company shall assist Kinergy as
reasonably requested in the solicitation, negotiation and performance of
Bilateral Transactions.
 
(b)           Notwithstanding anything to the contrary herein, 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 Project
Company’s storage facilities); provided, that, at any time that PEI or one of
its Affiliates is not the asset manager pursuant to the Asset Management
Agreement (or any successor agreement), Kinergy shall have received at least ten
Business Days prior notice of such scheduled maintenance (it being acknowledged
and agreed that if Kinergy does not receive at least ten Business Days prior
notice, then such maintenance activity shall be deemed to be a mechanical
breakdown and covered by clause (c) below for purposes hereof).
 
 
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(c)           If on any day, Project Company is unable to perform its
obligations to deliver Ethanol under this 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 three
consecutive days, Kinergy shall, at Project Company’s option and at Project
Company’s expense, and provided that,  at any time that PEI or one of its
Affiliates is not the asset manager pursuant to the Asset Management Agreement
(or any successor agreement), Project Company provides Kinergy with prompt
notice of its intent to exercise such option, use commercially reasonable
efforts to identify and procure replacement Ethanol to be delivered to the Third
Party under the applicable Bilateral Transaction.  In such event, if and only if
the Parties reach agreement as to an alternative delivery point, Kinergy shall
acquire and deliver replacement Ethanol in a quantity sufficient to meet the
contract quantity of such Bilateral Transaction at such alternate point (and
Project Company shall be responsible for all transportation costs associated
therewith).  In all other instances, Project Company shall be responsible for
any damages incurred by Kinergy in connection with 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
Project Company’s resulting inability to deliver Ethanol).
 
(d)           At the request of Project Company, Kinergy will cause PEI to
execute and deliver and maintain in full force and effect a guaranty in the form
of Exhibit A hereto.
 
2.4           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 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 Project Company
with Kinergy (as if Kinergy were the Third Party).
 
2.5           Netting.  Netting of amounts due in respect of Bilateral
Transactions between Kinergy and a Third Party may arise in circumstances in
which Kinergy owes amounts to such Third Party in respect of Bilateral
Transactions and, at the same time, such Third Party owes amounts to Kinergy in
respect of Bilateral Transactions.  In such circumstances, the party owing the
greater amount may pay such amount to the other party as reduced by the amount
owed to it and both parties will be deemed to have satisfied their obligations
thereby.  When such netting occurs, for purposes of this Agreement, for all
Bilateral Transactions that have been subject to such netting arrangements,
Kinergy shall be deemed to have paid amounts owed by it and to have received
amounts owed to it.
 
2.6           Title; Delivery Point; Nominations; Measurement.
 
(a)           Project Company shall deliver Ethanol to Kinergy in respect of
Bilateral Transactions (or corresponding back-to-back transactions under Section
2.4) at the inlet flange of the applicable receiving truck, barge or railcar
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 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 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.
 
 
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(b)           Kinergy and Project Company shall utilize the previously agreed
upon operating protocol, with respect to the mechanics, timing and process for
(i) Kinergy to communicate to Project Company its Ethanol requirements on a
monthly, weekly and daily basis, (ii) determining the quantity of Ethanol to be
stored by Project Company in its storage facilities, and (iii) implementing the
Ethanol sales contemplated by this Agreement.  A copy of such operating protocol
is attached hereto as Exhibit B.  By mutual agreement, such operating protocol
shall be updated from time to time thereafter.
 
(c)           Project Company agrees to collect samples of each shipment of
Ethanol it delivers to Kinergy hereunder and keep such samples for 30
days.  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 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.
 
2.7           Benchmarking.  Kinergy shall furnish on a monthly basis a report
benchmarking its performance in accordance with Exhibit D.
 
ARTICLE III
PAYMENTS
 
3.1           Fees and Payments.
 
(a)           Within ten days after the date Project Company delivers Ethanol to
Kinergy in accordance with Section 2.6(a), Kinergy shall pay to Project Company
an amount equal to (i) the Purchase Price (Estimated) with respect to the
Bilateral Transaction to which such delivery of Ethanol relates minus (ii) the
aggregate amount of Transportation Costs (Estimated) with respect to such
Bilateral Transaction minus (iii) the aggregate amount of the Incentive Fee
(Estimated) with respect to such Bilateral Transaction (it being acknowledged
that Kinergy shall retain for its own account the amount of such Transportation
Costs (Estimated) and Incentive Fee (Estimated), and that such amount represents
an estimate of the net amounts to be paid to Project Company in connection with
such Bilateral Transaction).  In connection with each such payment, Kinergy
shall deliver to Project Company a statement detailing its calculations of the
applicable Purchase Price (Estimated), the applicable Transportation Costs
(Estimated) and the applicable Incentive Fee (Estimated).
 
(b)           Within the first five Business Days of each calendar month (each
such date, a “Payment Adjustment Date”), the Parties shall reconcile and
“true-up” the actual Purchase Price, Transportation Costs and Incentive Fees for
all Bilateral Transactions entered into since the previous Payment Adjustment
Date, with the intent of the Parties being that Kinergy shall make up the
difference of any “under estimations” and Project Company shall refund any “over
estimations”.  For example, if there are “under estimations” then Kinergy shall
pay to Project Company an amount equal to:
 
 
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(i)           (A) the Purchase Price with respect to such Bilateral Transaction
minus (B) the Purchase Price (Estimated) with respect to such Bilateral
Transaction (to the extent actually paid by Kinergy to Project Company pursuant
to Section 3.1(a)), minus
 
(ii)           (A) the Transportation Costs with respect to each such Bilateral
Transaction minus (B) the Transportation Costs (Estimated) with respect to such
Bilateral Transaction, minus
 
(iii)           (A) the Incentive Fee with respect to each such Bilateral
Transaction minus (B) the Incentive Fee (Estimated) with respect to such
Bilateral Transaction.
 
Each such monthly reconciliation or “true-up” payment shall be paid by Kinergy
or Project Company (as applicable) no later than five Business Days after the
applicable Payment Adjustment Date.  Each Party acknowledges that Kinergy (and
not Project Company) bears the risk of non-payment by (a) a Third Party in
connection with a Bilateral Transaction with respect to any Third Party (or an
Affiliate thereof) that does not satisfy the Minimum Rating Criteria and (b) PEI
or any Affiliate thereof that purchases Ethanol from Project Company; provided
that Project Company and Kinergy acknowledge and agree that any risk of
non-payment not borne by Kinergy shall be shared on a pro rata basis among
Project Company and each other Person with respect to which sales are brokered
by Kinergy (with such pro rata calculations based upon the amount (expressed in
gallons) of Ethanol delivered by, or on behalf of, each such Person during the
applicable period in respect of which nonpayment has occurred), all as
reasonably determined by Kinergy.
 
(c)           Notwithstanding anything to the contrary in clause (a) or (b)
above, if Project Company defaults in its obligation to provide Ethanol to
Kinergy in accordance with the terms of this Agreement (including, without
limitation, as contemplated by Section 2.3(c)), then Kinergy shall be entitled
to set-off and deduct from current and/or future payments owed to Kinergy by
Project Company (including the estimated payments pursuant to clause (a) above
and the reconciliation and “true-up” payments pursuant to clause (b) above) an
amount equal to, as applicable (i) the amount of damage payments owed by Kinergy
to the applicable Third Party for failure to provide such Ethanol or (ii) the
cost of any replacement Ethanol procured by Kinergy to satisfy the requirements
of any Bilateral Transaction, each as a result of Project Company’s failure to
perform hereunder net of any revenues received in respect of such Bilateral
Transaction.
 
3.2           Overdue Payments; Billing Dispute.  If 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
Project Company or Kinergy (as the case may be), to the extent not previously
paid or set-off, (a) Kinergy (or Project Company, as the case may be) shall pay
such amount to Project Company (or Kinergy, as the case may be) within five
Business Days of such determination or (b) Kinergy (or Project Company, as the
case may be) may then set-off such amount (as the case may be).  If any Party
shall fail to make any payment when due hereunder, such overdue payment shall
accrue interest at the Prime Rate plus 2% from the date originally due until the
date paid.
 
 
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3.3           Audit.  Notwithstanding the payment of any amount pursuant to this
Article III, Project Company shall remain entitled (upon reasonable prior
notice, at reasonable times and at Kinergy’s corporate offices) and the
administrative agent under the Credit Agreement (and its consultants, as
directed by the administrative agent) shall be entitled (upon reasonable prior
notice, not more than once per calendar quarter 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, Transportation 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 applicable Payment Adjustment Date.  If,
pursuant to such audit and review, it is determined that any amount previously
paid by Kinergy to Project Company did not constitute all of the amounts which
should have been paid to Project Company, Project Company shall advise Kinergy
indicating such amount and the reason the amount should have been paid to
Project Company and, subject to the next two sentences, Kinergy shall pay such
amount to Project Company within five Business Days of such request along with
interest accrued at the Prime Rate plus 2% from the date originally due until
the date paid.  If the Parties do not agree with respect to 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 X.
 
ARTICLE IV
TERM; TERMINATION
 
4.1           Term.  This Agreement shall be effective on the date hereof and,
unless earlier terminated in accordance with its terms, shall continue in effect
until and including June 30, 2012; provided, either Kinergy or Project Company
may extend this Agreement for additional one year periods, in each case by
written notice to the other (an “Extension Notice”) delivered not less than
ninety (90) days prior to the end of the original or renewal term, provided
further that this Agreement shall nonetheless terminate if the recipient of any
such Extension Notice rejects such Extension Notice not more than fifteen (15)
days after receipt of the Extension Notice.
 
4.2           Project Company Defaults and Kinergy Remedies.  Upon the
occurrence of any of the following events, Kinergy may exercise such rights and
remedies as may be available to it at law or in equity, including the right to
terminate this Agreement, by written notice to Project Company, provided, that
no such notice shall be required for a termination pursuant to clause (b) of
this Section 4.2:
 
(a)           the failure by Project Company to make any payment, deposit or
transfer required hereunder within thirty (30) Business Days after the date such
payment, deposit or transfer is due, and such failure continues for fifteen (15)
Business Days after receipt of written notice from Kinergy of such failure;
 
 
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(b)           the occurrence of an Act of Insolvency with respect to Project
Company; or
 
(c)           the failure of Project Company to perform any of its material
obligations under this 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
Project Company is diligently attempting to cure such failure.
 
4.3           Kinergy Defaults and Project Company Remedies.  Upon the
occurrence of any of the following events, Project Company may exercise such
rights and remedies as may be available to it at law or in equity, including the
right to terminate this Agreement, by written notice to Kinergy, provided, that
no such notice shall be required for a termination pursuant to clause (b) of
this Section 4.3:
 
(a)           the failure by Kinergy to make any payment, deposit or transfer
required hereunder within fifteen (15) Business Days after the date such
payment, deposit or transfer is due, and such failure continues for fifteen (15)
Business Days after receipt of written notice from Project Company of such
failure;
 
(b)           the occurrence of an Act of Insolvency with respect to Kinergy; or
 
(c)           the failure of Kinergy to perform any of its material obligations
under this Agreement and such failure continues for 30 days after receipt of
written notice from 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.
 
4.4           Change of Control.
 
(a)           This Agreement shall terminate 45 days after the occurrence of (i)
any Change of Control with respect to Project Company or any transfer,
assignment, sale or other disposition of more than a  majority of the membership
interests in Kinergy to any Person which is not an Affiliate of PEI or (ii) any
transfer, assignment, sale or other disposition of all or substantially all of
the assets comprising the Facility, unless in each case the Parties mutually
agree to the contrary.
 
(b)           In the event that this Agreement (i) terminates pursuant to
Section 4.4(a)(i) as a result of a Change of Control of Project Company or (ii)
shall be terminated by Project Company pursuant to Section 4.3 above, Kinergy
shall, if requested by Project Company, use its best efforts to assign to
Project Company its interests in the rail car lease or leases (or the applicable
portions thereof) to which Kinergy is a party and in respect of which are
dedicated to the transportation of Ethanol purchased pursuant to this Agreement.
 
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 payment and obligations under any Bilateral Transaction
(or such Bilateral Transaction’s corresponding back-to-back transaction arising
under Section 2.4), that are not fully performed as of the date of such
termination.  The exercise of the right of a Party to terminate this 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
Agreement as repudiated other than in accordance with the other provisions of
this Agreement; and provided, further, that the Parties’ respective rights upon
termination shall be subject to the liability limitations of Article IV. Except
as otherwise set forth in this 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.
 
 
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ARTICLE V
INSURANCE
 
5.1           Kinergy Insurance.  Without limiting any of the other obligations
or liabilities of Kinergy under this Agreement, Kinergy shall at all times carry
and maintain or cause to be carried and maintained, the minimum insurance
coverage set forth in this Section:
 
(a)           Kinergy shall maintain or cause to be maintained (i) Workers’
Compensation insurance in compliance with the workers’ compensation laws of the
states in which Kinergy provides services hereunder as extended by the Broad
Form All States Endorsements, the United States Longshoreman’s and Harbor
Workers’ Coverage Endorsements on an if-any-exposure basis and the Voluntary
Compensation Coverage Endorsement, and (ii) Employer’s Liability (including
Occupational Disease) coverage with limits of not less than $1,000,000, which
shall cover all of Kinergy’s employees engaged in providing services hereunder.
 
(b)           Kinergy shall maintain or cause to be maintained automobile
liability insurance for owned (if any), non-owned and hired vehicles with
combined single limits for bodily injury/property damage not less than
$1,000,000 per occurrence and containing appropriate no-fault insurance
provisions wherever applicable.
 
(c)           Kinergy will maintain or cause to be maintained commercial general
liability insurance with a limit for bodily injury/property damage of not less
than $1,000,000 per occurrence and $2,000,000 in the annual aggregate.  Such
coverage shall include premises/operations, explosion, collapse and underground
property damage, broad form contractual, independent contractors,
products/completed operations (including operator errors and omissions), broad
form property damage, personal injury and incidental professional liability (if
not covered under product/completed operations and if commercially available).
 
(d)           Kinergy shall maintain or cause to be maintained umbrella
liability insurance providing coverage limits in excess of those set forth in
Section (a), (b) and (c) above.  The limits of this umbrella coverage shall not
be less than $10,000,000 per occurrence and in the annual aggregate.
 
(e)           Kinergy shall maintain or cause to be maintained pollution legal
liability for sudden and accidental pollution for physical damage and bodily
injury to third parties in an amount of $3,000,000 per occurrence and in the
annual aggregate.
 
 
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The terms and conditions of all insurance policies (including the amount, scope
of coverage, deductibles, and self-insured retentions) shall be acceptable in
all respects as of the effective date of this Agreement.  All insurance carried
pursuant to this Section shall conform to the relevant provisions of this
Agreement and be with insurance companies which are rated “A-, X” or better by
Best’s Insurance Guide and Key Ratings, or other insurance companies of
recognized responsibility satisfactory to Project Company.  Project Company
shall be furnished with satisfactory evidence that the foregoing insurance is in
effect and Project Company shall be notified 30 calendar days prior to the
cancellation or material change of any such coverage.  Coverage for the
insurance under Section (c) and (d) above shall be written on a claims made
basis provided that if the policy is not renewed, Kinergy shall obtain for the
benefit of Project Company an extended reporting period coverage or “tail” of at
least three years past the final day of coverage of such policy.  Kinergy shall
provide Project Company with evidence that such extended reporting period
coverage or “tail” has been obtained.  Kinergy agrees to ensure that the
insurance policies outlined in this Section require the insurer to waive
subrogation against Project Company, the Financing Parties and their respective
Affiliates together with their respective officers, directors, Affiliates and
employees and all such Persons shall be an additional insured as their interests
may appear with respect to all policies procured by Kinergy.
 
5.2           Kinergy Insurance Premiums and Deductibles.  All premiums for
insurance coverage procured by Kinergy pursuant to Section 5.1 shall be
reimbursed by Project Company upon demand.  Kinergy shall be liable for the
payment of all deductibles on insurance policies obtained pursuant to Section
5.1, which amounts shall not be reimbursed by Project Company, provided that, to
the extent that a claim under a policy described in Section 5.1 is attributable
to Project Company’s (including its employees’ or agents’) gross negligence or
willful misconduct, Project Company shall be liable for the entire amount of
such deductible.  In no event shall any premiums, deductibles or any losses in
excess of insurance coverage be reimbursed by Project Company hereunder.
 
ARTICLE VI
LIMITATIONS ON LIABILITY
 
6.1           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.
 
6.2           Breach. Notwithstanding anything to the contrary herein, any
failure, breach or default by Project Company under this Agreement that is
caused by or is a result of a failure, breach or default by PEI under the Asset
Management Agreement will not be a breach of this Agreement.
 
ARTICLE VII
INDEMNIFICATION
 
7.1           Project Company’s Indemnity.  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 Project Company
to perform Project Company’s obligations under this Agreement (including with
respect to any back-to-back transaction under Section 2.4), or (b) arising out
of or in any way connected with the grossly negligent acts or omissions of
Project Company or its Affiliates.
 
 
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7.2           Kinergy’s Indemnity.  Kinergy shall defend, indemnify and hold
harmless Project Company and its Affiliates (and each officer, director,
employee, shareholder, partner, member or agent of 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 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.
 
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
 
Each Party represents that (i) it is duly organized under its jurisdiction of
formation and in good standing in each jurisdiction where its failure to so
qualify could have a material adverse effect on its ability to perform its
obligations hereunder, (ii) it has all necessary power and authority to enter
into this Agreement, (iii) it has duly authorized, executed and delivered this
Agreement and (iv) this Agreement constitutes a legal, valid and binding
obligation of such Party 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.
 
ARTICLE IX
FORCE MAJEURE
 
9.1           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 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 Agreement, strikes and other labor
difficulties (other than with respect to its own employees), 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.”
 
 
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9.2           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, either Party may terminate this 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 Party of the onset of the Force
Majeure Event, then it will report in writing to the other Party 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.
 
9.3           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 X
DISPUTE RESOLUTION
 
10.1           Attempts to Settle.  In the event that a Dispute between the
Parties arises under, out of or in relation to, this 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 Party.  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).
 
10.2           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 Sacramento, California (or any other location agreed to
by the Parties).  The Expert shall apply to such proceedings the substantive law
of the State of New York 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 10.3.
 
 
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10.3           Arbitration.  Any Dispute that has not been resolved following
the procedures set forth in Section 10.1 or 10.2 shall be settled by binding
arbitration in Sacramento, 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
Agreement.  Such arbitration shall be governed by the laws of the State of New
York.  If arbitration proceedings have been initiated pursuant to this Section
10.3 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 X SHALL BE THE EXCLUSIVE DISPUTE RESOLUTION
PROCEDURES APPLICABLE TO ANY DISPUTE, CONTROVERSY OR CLAIM UNDER THIS AGREEMENT
AND, EXCEPT AS SET FORTH IN SECTION 10.5, THE PARTIES HEREBY WAIVE ALL RIGHTS TO
A COURT TRIAL OR TRIAL BY JURY WITH RESPECT TO ANY DISPUTE, CONTROVERSY OR CLAIM
UNDER THIS AGREEMENT.
 
10.4           Consequential and Punitive Damages.  Awards of Experts and
arbitral panels shall be subject to the provisions of Article VI.
 
10.5           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.
 
10.6           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 Agreement.
 
10.7           Continuing Performance Obligations.  While a Dispute is pending,
each Party shall continue to perform its obligations under this Agreement,
unless such Party is otherwise entitled to suspend its performance hereunder or
terminate this Agreement in accordance with the terms hereof.
 
ARTICLE XI
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,
but only to the extent such Persons have a need to know such information for
purposes of permitting such Party to perform its obligations hereunder, (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 such Party or its
Affiliates or acquirer or potential acquirer of the Project or all or any of the
equity interests in Newco or any subsidiary thereof; provided, that any Person
who receives confidential data and information pursuant to an exception
contained in clauses (ii) through (iv) of this Article agrees to confidentiality
provisions at least as restrictive as the provisions set forth herein.
 
 
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ARTICLE XII
ASSIGNMENT AND TRANSFER
 
No Party shall assign this Agreement or any of its rights or obligations
hereunder without first obtaining the prior written consent of (a) in the case
of Project Company, Kinergy, or (b) in the case of Kinergy, 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 XIII
MISCELLANEOUS
 
13.1           Entire Agreement.  This 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 Agreement shall be construed as
creating a partnership or joint venture between the Parties.
 
13.2           Counterparts.  This 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 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 Agreement shall survive:  Articles III, VI, VII,
X and XI, and Sections 13.3, 13.4, 13.5, 13.6, 13.8 and 13.9.
 
13.4           Severability.  In the event any one or more of the provisions
contained in this 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.
 
 
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13.5           Governing Law.  This Agreement shall be governed by and construed
in accordance with the laws of the State of New York without regard to the
principles of conflicts of laws thereof.
 
13.6           Binding Effect.  This Agreement shall be binding upon and shall
inure to the benefit of the Parties hereto and their respective successors and
permitted assigns.  This Agreement is not made for the benefit of any Person or
entity not a party hereto, and nothing in this 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 Agreement or any provision hereof.
 
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

 
400 Capitol Mall

 
Suite 2060

 
Sacramento, California  95814

 
Attention:  Neil Koehler
Telephone:  (916) 403-2123
Facsimile:  (916) 446-3936

 
 
with a copy to:

 
 
Kinergy Marketing, LLC

 
c/o Pacific Ethanol, Inc.

 
400 Capital Mall

 
Suite 2060

 
Sacramento, CA 95814

 
Attn:  General Counsel

 
Telephone:  (916) 403-2130

 
Facsimile:  (916) 403-2785

 
 
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If to Project Company:

 
 
Pacific Ethanol [__________], LLC

 
c/o JT Miller Group LLC

 
777 Campus Commons Road #200

 
Sacramento, CA 95825

 
Attn:  John Miller

 
Telephone:  (916) 565-7422

 
Facsimile:   (916) 565-7423

 
 
 
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.
 
13.10           Lines of Credit.  Kinergy shall promptly notify Project Company
if at any time during the term of this Agreement it does not have lines of
credit available to it in an amount of not less than $5,000,000 or if an event
of default shall occur and be continuing under any agreement evidencing such
lines of credit.
 
[THE REMAINDER OF THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY]
 
 
 
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IN WITNESS WHEREOF, this Amended and Restated Ethanol Marketing Agreement has
been duly executed by the Parties hereto as of the date first written above.
 
 
 
PACIFIC ETHANOL [__________], LLC

 
 
 
By:
                                                                      

 
Name:

 
Title:

 
 
 
 
 
 
KINERGY MARKETING, LLC

 
 
 
By:
/s/ Neil M. Koehler                            
 

 
Name:  Neil M. Koehler

 
Title: Chief Executive Officer

 
 
 
[Signature Page to Ethanol Marketing Agreement] 

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Exhibit A
 
Form of PEI Guaranty
 
[Please see attached.]
 
 
 

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Form of Parent Guaranty (Amended and Restated Ethanol Marketing Agreement)
 
[DATE]
 
Pacific Ethanol [__________], LLC
c/o JT Miller Group LLC
777 Campus Commons Road # 200
Sacramento, CA 95825
Attention: John Miller
 
Re:           Guaranty of Affiliate Project Party Obligations under Amended and
Restated Ethanol Marketing Agreement
 
Ladies and Gentlemen:
 
1.           The Guaranty.  For value received, Pacific Ethanol, Inc., a
corporation organized under the laws  of Delaware (the “Guarantor”), hereby
unconditionally and absolutely guarantees the prompt and complete payment and
performance when due, whether by acceleration or otherwise, of all obligations
and liabilities, whether now in existence or hereafter arising (the
“Obligations”), of Kinergy Marketing, LLC, an Oregon limited liability company
(“Affiliate Project Party”), to Pacific Ethanol [__________], LLC, a Delaware
limited liability company (“Project Owner”), under the Amended and Restated
Ethanol Marketing Agreement, dated as of ________ ___, 2011 (the “Agreement”);
provided that the Guarantor’s maximum aggregate liability under this Guaranty
shall not exceed the maximum amount which Affiliate Project Party owes Project
Owner under the Agreement.
 
Following any demand by Project Owner for payment hereunder, the Guarantor shall
pay, or cause to be paid, such Obligations within five (5) business days of
receipt of such demand.  Such payments shall be made to:  [Insert Revenue
Account Wire Instructions]
 
The Guarantor’s obligations hereunder are primary obligations of the Guarantor
and are an absolute, unconditional, continuing and irrevocable guaranty of
payment and performance and not of collectability, and are in no way conditioned
on or contingent upon any attempt to enforce in whole or in part any liabilities
and obligations of Affiliate Project Party or any other person.  Each failure by
the Guarantor to pay or perform, as the case may be, any amounts due or any
obligations under this Guaranty shall give rise to a separate cause of action
hereunder, and separate suits may be brought hereunder as each cause of action
arises.
 
2.           Waivers; Absolute Obligations.  The Guarantor hereby waives notice
of acceptance of this Guaranty and notice of any obligation or liability to
which it may apply, and waives presentment, demand for payment, protest, notice
of dishonor or non-payment of any such obligation or liability, suit or the
taking of other action by Project Owner against, and any other notice to,
Affiliate Project Party, the Guarantor or others, notice of entry into the
Agreement between Affiliate Project Party and Project Owner and of any
amendments, supplements or modifications thereto; or any waiver of consent under
the Agreement, including waivers of the payment and performance of the
obligations thereunder; and any requirement that suit be brought against, or any
other action by Project Owner be taken against, or any notice of default or
other notice be given to, or any demand be made on Project Owner or any other
person, or that any other action be taken or not taken as a condition to the
Guarantor’s liability for the Obligations under this Guaranty or as a condition
to the enforcement of this Guaranty against the Guarantor.
 
 
 

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

 
 
Project Owner may at any time and from time to time without notice to or consent
of the Guarantor and without impairing or releasing the obligations of the
Guarantor hereunder:  (1) agree with Affiliate Project Party to make any change
in the terms of any obligation or liability of Affiliate Project Party to
Project Owner, (2) take or fail to take any action of any kind in respect of any
security for any obligation or liability of Affiliate Project Party to Project
Owner, (3) exercise or refrain from exercising any rights against Affiliate
Project Party or others, or (4) compromise or subordinate any obligation or
liability of Affiliate Project Party to Project Owner including any security
therefor.
 
The liability of the Guarantor under this Guaranty shall be absolute and
unconditional irrespective of:
 
 
(a)
any lack of validity or enforceability of or defect or deficiency applicable to
Affiliate Project Party in the Agreement or any other documents executed in
connection with the Agreement; or

 
 
(b)
any modification, extension or waiver of any of the terms of the Agreement; or

 
 
(c)
any change in the time, manner, terms or place of payment of or in any other
term of, all or any of the Obligations, or any other amendment or waiver of or
any consent to departure from the Agreement or any other agreement or instrument
executed in connection therewith; or

 
 
(d)
failure, omission, delay, waiver or refusal by Project Owner to exercise, in
whole or in part, any tight or remedy held by Project Owner with respect to the
Agreement or any transaction under the Agreement; or

 
 
(e)
any change in the existence, structure or ownership of the Guarantor or
Affiliate Project Party or Project Owner, or any insolvency, bankruptcy,
reorganization or other similar proceeding affecting Affiliate Project Party or
its assets; or

 
 
(f)
any defense arising by reason of any bankruptcy, insolvency, reorganization,
arrangement, readjustment of debt, liquidation or dissolution proceeding
commenced by or against any person, including any discharge of, or bar or stay
against collecting, all or any part of the amounts due under this Guaranty (or
any interest on all or any part of the amounts due under this Guaranty) in or as
a result of any such proceeding, any failure of Project Owner to file a claim in
any such proceeding, or the occurrence of any of the following:  (i) the
election by Project Owner, in any bankruptcy proceeding of any person, of the
application or non-application of Section 1111(b)(2) of Title 11 of the United
States Code entitled “Bankruptcy” (together with any successor statute, and all
rules promulgated thereunder, the “Bankruptcy Code”), (ii) any extension of
credit or the grant of any lien or encumbrance under Section 364 of the
Bankruptcy Code, (iii) any use of cash collateral under Section 363 of the
Bankruptcy Code, or (iv) any agreement or stipulation with respect to the
provision of adequate protection in any bankruptcy proceeding of any person; or

 
 
 

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

 
 
 
(g)
any duty on the part of Project Owner to disclose to the Guarantor any facts
Project Owner may now or hereafter know about Affiliate Project Party,
regardless of whether Project Owner has reason to believe that any such facts
materially increase the risk beyond that which the Guarantor intends to assume,
or have reason to believe that such facts are unknown to the Guarantor, or have
a reasonable opportunity to communicate such facts to the Guarantor, since the
Guarantor acknowledges that the Guarantor is fully responsible for being and
keeping informed of the financial condition of Affiliate Project Party and of
all circumstances beating on the risk of non-payment of any amounts due or
non-performance of any obligations under this Guarantor.

 
Without limiting the-foregoing, the Guarantor hereby unconditionally and
irrevocably waives and relinquishes, to the maximum extent permitted by
applicable laws, all rights and remedies accorded to sureties or guarantors and
agrees not to assert or take advantage of any such rights or remedies.
 
3.           Bankruptcy Waivers.  The Guarantor hereby irrevocably waives, to
the extent it may do so under applicable laws, any protection to which it may be
entitled under Sections 365(c)(1), 365(c)(2) and 365(e)(2) of the Bankruptcy
Code or equivalent provisions of the laws or regulations of any other
jurisdiction with respect to any proceedings, or any successor provision of law
of similar import, in the event of any Act of Insolvency (as defined in the
Agreement)with respect to Project Owner or Affiliate Project Party or any other
guarantor or surety.  Specifically, in the event that the trustee (or similar
official) in an Act of Insolvency with respect to Affiliate Project Party or any
other guarantor or surety or the debtor-in-possession takes any action
(including the institution of any action, suit or other proceeding for the
purpose of enforcing the rights of the relevant Borrower(s), or any other
guarantor or surety under this Guaranty), the Guarantor shall, to the fullest
extent it may do so under applicable law, not assert any defense, claim or
counterclaim denying liability hereunder on the basis that this Guaranty is an
executory contract or a “financial accommodation” that cannot be assumed,
assigned or enforced or on any other theory directly or indirectly based on
Sections 365(c)(1), 365(c)(2) or 365(e)(2) of the Bankruptcy Code, or equivalent
provisions of the law or regulations of any other jurisdiction with respect to
any proceedings or any successor provision of law of similar import.  If an Act
of Insolvency with respect to Affiliate Project Party or any other guarantor or
surety shall occur, the Guarantor agrees, after the occurrence of such Act of
Insolvency, to reconfirm in writing, to the extent permitted by applicable laws,
its pre-petition waiver of any protection to which it may be entitled under
Sections 365(c)(1), 365(c)(2) and 365(e)(2) of the Bankruptcy Code or equivalent
provisions of the laws or regulations of any other jurisdiction with respect to
proceedings and, to give effect to such waiver, the Guarantor consents, to the
fullest extent it may do so under applicable law, to the assumption and
enforcement of each provision of this Guaranty by the debtor-in-possession or
the trustee in bankruptcy of Affiliate Project Party or of any other guarantor
or surety, as the case may be.
 
4.           No Assignment.  The Guarantor may not assign its rights nor
delegate its obligations under this Guaranty, in whole or in part, without prior
written consent of Project Owner, and any purported assignment or delegation
absent such consent is void, except for an assignment and delegation of all of
the Guarantor’s rights and obligations hereunder in whatever form the Guarantor
determines may be appropriate to a partnership, corporation, trust or other
organization in whatever form that succeeds to all or substantially all of the
Guarantor’s assets and business and that assumes such obligations by contract,
operation of law or otherwise.  Upon any such delegation and assumption of
obligations, the Guarantor shall be relieved of and fully discharged from all
obligations hereunder, whether such obligations arose before or after such
delegation and assumption.  Project Owner may, upon notice to the Guarantor,
assign its rights hereunder (including any collateral assignment) without the
consent of Guarantor to any person to which it assigns its interests in the
Agreement.
 
 
 

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

 
 
5.           Representations and Warranties.  The Guarantor hereby represents
and warrants for itself, as of the date hereof, that:
 
 
(a)
it is duly organized and validly existing under the laws of its jurisdiction of
incorporation, has the corporate power and has obtained all required
governmental approvals to comply with and perform its respective obligations
under and enter into this Guaranty;

 
 
(b)
this Guaranty has been duly authorized and executed by it and constitutes its
valid and legally binding obligation enforceable in accordance with its terms,
except as enforceability hereof may be limited by bankruptcy, moratorium,
insolvency or other similar laws affecting the enforcement of creditor’s rights
generally;

 
 
(c)
neither the execution and delivery of this Guaranty nor the compliance with its
terms will conflict with or result in a breach of any of the terms, conditions
or provisions of, or constitute a default or require any consent which has not
been obtained under, any indenture, mortgage, agreement or other instrument or
arrangement to which it is a party or by which it or any of its properties or
assets are bound, or violate any of the terms or provisions of its
organizational documents (including its bylaws) or any governmental approval,
judgment, decree or order or any other applicable law;

 
 
(d)
it is, and after giving effect to the transactions contemplated under this
Guaranty will be, solvent; and

 
 
(e)
it is not executing this Guaranty with any intention to hinder, delay or defraud
any of its present or future creditor or creditors.

 
6.           Subrogation.  Notwithstanding any payment or payments made by the
Guarantor or the exercise by Project Owner of any of the remedies provided under
this Guaranty or any set-off or application of funds of the Guarantor by Project
Owner, the Guarantor hereby waives all rights of subrogation with respect to
payments made under this Guaranty until all of the Obligations have been paid in
full.  Notwithstanding the foregoing, if any amount shall be paid to the
Guarantor on account of such subrogation, such amount shall be held by the
Guarantor in trust for Project Owner, segregated from other funds of the
Guarantor, and shall be turned over to Project Owner, in the exact form received
by the Guarantor (or duly endorsed by the Guarantor to Project Owner, if
required) to be applied against such amounts in such order as Project Owner may
elect.
 
 
 

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

 
 
7.           Notices.  All demands, notices and other communications provided
for hereunder shall, unless otherwise specifically provided herein, (a) be in
writing addressed to the party receiving the notice at the address set forth
below or at such other address as may be designated by written notice, from time
to time, to the other party, and (b) be effective upon receipt, when mailed by
U.S. mail, registered or certified, return receipt requested, postage prepaid,
facsimile or personally delivered.  Notices shall be sent to the following
addresses:
 
 
If to Project Owner:

 
 
Pacific Ethanol [__________], LLC

 
c/o JT Miller Group LLC

 
777 Campus Commons Road # 200

 
Sacramento, CA 95825Attention: John Miller

 
 
 
If to Guarantor:

 
 
Pacific Ethanol, Inc.

 
400 Capitol Mall, Suite 2060

 
Sacramento, California 95814

 
Attn: Neil Koehler

 
Phone:
(916) 403-2123

 
Fax:
(916) 446-3937

 
 
with a copy to

 
 
Pacific Ethanol, Inc.

 
400 Capital Mall, Suite 2060

 
Sacramento, CA 95814

 
Attn:
General Counsel

 
Fax:
(916) 446-3936

 
8.           Cumulative Remedies; Benefits.  No failure by Project Owner to
exercise, and no delay by Project Owner in exercising, any right, remedy, power
or privilege hereunder shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, remedy, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right,
remedy, power or privilege.  The rights, remedies, powers and privileges herein
provided are cumulative and not exclusive of any rights, remedies, powers and
privileges provided by law.  The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.  Nothing in this Guaranty, express or
implied, shall give to any person, other than the parties hereto, and each of
their successors and permitted assigns under this Guaranty, any benefit or any
legal or equitable right or remedy under this Guaranty.
 
9.           Reinstatement.  This Guaranty shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the
Obligations are annulled, set aside, invalidated, declared to be fraudulent or
preferential, rescinded or must otherwise be returned, refunded or repaid by
Project Owner upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of Affiliate Project Party or any other guarantor, or upon or as
a result of the appointment of a receiver or conservator of, or trustee for
Affiliate Project Party or any other guarantor or any substantial part of its
property or otherwise, all as though such payment or payments had not been made.
 
 
 

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

 
 
10.           Governing Law, etc.  (A) THIS GUARANTY SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
 
(B) EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND
ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF
NEW YORK SITTING IN OR NEAR NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY
THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY
OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES
HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY
SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH STATE OR, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT.  EACH OF THE
PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING
SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE
JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.  NOTHING IN THIS GUARANTY SHALL
AFFECT ANY RIGHT THAT ANY OF THE PARTIES HERETO MAY OTHERWISE HAVE TO BRING ANY
ACTION OR PROCEEDING RELATING TO THIS GUARANTY IN THE COURTS OF ANY
JURISDICTION.
 
(C) EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS GUARANTY.  EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
 
11.           Termination.  This Guaranty shall terminate on the earlier of (i)
date the Agreement terminates in accordance with the terms thereof and (ii) the
date on which the Affiliate Project Party ceases to be an Affiliate of
Guarantor.
 
12.           Survivability.  If any provision of this Guaranty is held to be
illegal, invalid or unenforceable, (a) the legality, validity and enforceability
of the remaining provisions of this Guaranty shall not be affected or impaired
thereby and (b) the parties shall endeavor in good faith negotiations to replace
the illegal, invalid or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the illegal,
invalid or unenforceable provisions.  The invalidity of a provision in a
particular jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
 
 
 

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

 
 
13.           Counterparts.  This Guaranty may be executed in counterparts (and
by different parties hereto in different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract.  This Guaranty shall become effective when it has been executed
by each of the parties hereto.  Delivery of an executed counterpart of a
signature page of this Guaranty by telecopy or portable document format (“pdf”)
shall be effective as delivery of a manually executed counterpart of this
Guaranty.
 
[Signature Page Follows]
 
 
 

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

 
 
 
Very truly yours,

 
 
PACIFIC ETHANOL, INC.

 
 
By:
__________________________________________  

 
 
Name: Neil M. Koehler

 
Title: Chief Executive Officer

 
Acknowledged and Accepted by:
 
PACIFIC ETHANOL [__________], LLC
 
By:
_____________________________________  

 
Name:

 
Title

 
 
 
 

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

 
Exhibit B
 
Operating Protocol
 
 
Pacific Ethanol [__________], LLC ([___]) will by the end of day Monday each
week submit to Kinergy Marketing, LLC (Kinergy) a 12 week production forecast,
(see attached example) that includes weekly production and scheduled maintenance
downtime. [___] will promptly notify Kinergy of any unscheduled downtime or
other event or circumstance that will affect forecasted production.
 
Kinergy will by end of day Tuesday each week submit to [___] a 12 week sales
forecast in a format similar to the production forecast. Kinergy will by end of
day Friday each week submit to [___] a weekly Truck and Barge schedule for the
following week. Changes to the weekly truck and barge schedule will be
communicated to [____] as the changes are identified.
 
 
 

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

 
 
Exhibit C
 
Certain Customers
 
 
Name
Address
Address 2
City
State
ZIP Code
ABI Motor Sports
P.O. Box 3151
 
Clovis
CA
93613
Archer Daniels Midland Co
P.O. Box 1470
 
Decatur
IL
62525
Arizona Petroleum
DBA:  Colorado Petroleum
4080 Globeville Road
Denver
CO
80216
ArmorStruxx LLC
PO Box 2060
 
Lodi
CA
95241
Apex Oil Co Inc
23901 Calabasas Road  Ste 2090
 
Calabasas
CA
91302
BP West Coast Products LLC
6 Centerpointe Drive
 
La Palma
CA
90623-2502
BioUrja Trading LLC
757 N. Eldridge Pkwy Ste 620
 
Houston
Tx
77079
Big West Oil LLC
P.O. Box 150310
 
Ogden
UT
84415
Stan Boyett and Son Inc
DBA:  Boyett Petroleum
601 McHenry Ave
Modesto
CA
95350
CAF LLC
P.O. Box 1121
 
Maple Valley
WA
98038
Chevron Products
6000 Bollinger Canyon Rd
 
San Ramon
CA
94583
CHS Inc.
5500 Cenex Dr
 
Inner Grove Heights
MN
55077
Conoco Phillips
600 North Dairy Ashford
 
Houston
TX
77079
Coast Oil Company
4250 Williams Rd
 
San Jose
CA
95129
DAT's Trucking Inc
321 N Old Hwy 91
 
Hurricane
UT
84737
ECO Energy
730 Cool Springs Blvd, Ste 130
 
Franklin
TN
37067
ExxonMobil Oil Corporation
3225 Gallows Rd  RM 3B1417
 
Fairfax
VA
22037-00004
Gavilon Group LLC - Conagra
11 ConAgra Dr Ste 5021
 
Omaha
NE
68102
Holly Refining and Marketing
Company, LLC
100 Crescent Court, Suite 1600
Dallas
TX
75201
Hunt & Sons, Inc.
5750 S Watt Ave
 
Sacramento
CA
95829
Idemitsu Apollo Corporation
1831 16th Street
 
Sacramento
CA
95814
IPC  (USA) Inc.
20 Pacifica Ste 650
 
Irvine
CA
92618
Jaco Oil Co.
P O Box 82515
 
Bakersfield
CA
93380-2515
Kempler & Co Inc
233 Broadway Ste 2705
 
New York
New York
10279
Kern Oil & Refining Co.
Attn:  Gloria Gutierrez
7724 East Panama Lane
Bakersfield
CA
93307
Lansing Ethanol Services
9900 W 109th St
Ste 400
Overland Park
KS
66210
LiquidTitan LLC
139 South Marina Street
 
Prescott
AZ
86303
Maverik Inc
P.O. Box 8008
1014 S Washington
Afton
WY
83110-8008
Mieco Inc
301 East Ocean Blvd Ste 1100
 
Long Beach
CA
90802

 
 
 
 

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

 
 
Mansfield Oil Company of
Gainesville Inc
1025 Airport Pkwy SW
Gainesville
Georgia
30501-6813
Montana Refining Company Inc
1900 10th  St NE
 
Great Falls
MT
59404
Murex N.A. LTD
5057 Keller Springs Rd
Suite 150
Addison
TX
75001
Noble Americas Corp
333 Ludlow St Suite 1230
 
Stamford
CT
6902
Nella Oil Co., LLC
2360 Lindbergh Street
 
Auburn
CA
95602
Navajo Refining Company LLC
100 Crescent Court
Suite 1600
Dallas
TX
75201
New West Petroleum
1831 16Th Street
 
Sacramento
CA
95811
Propel Biofuels Inc
2317 Broadway Ste 350
 
Redwood City
CA
94063
Petro Diamond Inc.
18401 Von Karman Ave
Suite 300
Irvine
Ca
92612
Pro Petroleum Inc.
Attn Lisa Owens
P O Box 10128
Lubbock
TX
79416
QuikTrip Corp.
PO Box 3475
 
Tulsa
OK
74101
River City Petroleum
P O Box 235
840 Delta Lane
West Sacramento
CA
95691
Rebel Oil
2200 South Highland
 
Las Vegas
NV
89102
Renova Energy LLC
950 W Bannock St Ste 500
 
Boise
Idaho
83702
R.H. Smith Distributing Co
315 E. Wine Country Road
 
Grandview
WA
98930
Robinson Oil
955 Martin Avenue
 
Santa Clara
CA
95050
RPMG Inc
1157 Valley Park Dr #100
 
Shakopee
MN
55379
Southern Counties Oil Co.
P O Box 4159
 
Orange
CA
92863-4159
Silver Eagle Refining Inc
2355 So 1100 West
 
Woods Cross
Utah
84087
Shell Oil Products U.S.
909 Fannin
Plaza Level1
Houston
TX
77010
Sinclair Oil Corporation
550 E South Temple
 
Salt Lake City
UT
84102
SolJet LLC
DBA DealJet
125 N 53rd Ave
Phoenix
AZ
85043
Space Age Fuel Inc.
P.O. Box 1429
 
Clackamas
OR
97015
Self-Serve Petroleum
1045 Airport Blvd
 
South San Francisco
CA
94080
Stinker Stores Inc.
PO Box 7627
 
Boise
ID
83707
Supreme Oil Co.
PO Box 84717
 
San Diego
CA
92138
Tesoro Refining and Marketing
19100 Ridgewood Pkwy
 
San Antonio
TX
78259
Tower Energy Group
1983 West 190th St.
Suite 100
Torrance
CA
90504
Valero Marketing
P O Box 696000
 
San Antonio
TX
78269-6000
Vitol Incorporated
1100 Louisana Suite 5500
 
Houston
Texas
77002
Wilcox & Flegel Oil Co
PO Box 69
 
Longview
WA
98632
Western Ethanol Company LLC
1075 Yorba Place #101
 
Placentia
CA
92870
Western Refining Co LP
123 W Mills Ave Ste 200
 
El Paso
Texas
79901
Western Energetix
2360 Lindbergh Street
 
Auburn
CA
95602

 
 
 

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

 
 
Exhibit D
 
Benchmarking
 
 
 
 

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

 
 

  PEHC Commodity Price Benchmark Example   June 10, 2011

 
BENCHMARK
 
We propose the following example benchmarks and monitor criteria. Modifications
to the benchmarks are expected to be made periodically as appropriate to reflect
with changes in commodity market environments and in company purchase/sales
contract pricing mechanisms.     
 
Commodity/Facility
PEHC actual data
Benchmark
Market Data Provider
 
Possible  Discrepancy Reasons/Noises
ETHANOL
         
  PECOL
Netback ethanol
OPIS Pacific Northwest
Posting as provided by
a)
Fixed price contracts
  sales price   Oil Price b) 
Other Price index
  PEMV
Netback ethanol
OPIS Chicago
Information Service c)
Shipments distribution in a highly volatile market
  sales price   (OPIS)   d)  Other accounting adjustments items 
  PES
Netback ethanol
OPIS LA CI-90
   
 
  sales price        
CORN
         
  ALL
Corn CBOT
Delivered basis = FOB
Trade West report
a)
Fixed futures as a result of hedge  
  equivalent Midwest + freight   b)
Contracts based on corn futures other than nearby futures (Usually, this happens
a couple of weeks before current future contract expires
        c)
Uneven distribution of corn consumptions (such as shut down) in a highly
volatile market
WDG/Syrup
         
  ALL
Plant co-product
WDG Value as a % of
FC Stone Co-product
a)
Fixed price contracts
  netback Plant delivered corn on report
b)
Hedge activities     DDG equivalent basis   c)
WDG freight

 
 
 

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

 
 

  PEHC Commodity Price Benchmark Example   June 10, 2011

 
ETHANOL  
 

             
Plant Sales
Netback
 
Basis
(netback)
Benchmark
Actual vs.
Benchmark
PECOL
 
OPIS PNW
     
Jan-11
2.42
2.42
(0.04)
2.38
1.4%
Feb-11
2.45
2.50
(0.04)
2.46
-0.2%
Mar-11
2.60
2.63
(0.04)
2.59
0.5%
Apr-11
2.73
2.76
(0.04)
2.72
0.2%
           
PEMV
 
OPIS Chicago
     
Jan-11
2.38
2.32
0.01
2.33
2.1%
Feb-11
2.47
2.43
0.01
2.44
1.5%
Mar-11
2.54
2.50
0.01
2.51
1.2%
Apr-11
2.65
2.65
0.01
2.66
-0.2%
           
PES
 
OPISLA CI-90
     
Jan-11
2.47
2.46
(0.01)
2.45
1.0%
Feb-11
2.57
2.53
(0.01)
2.52
2.1%
Mar-11
2.68
2.66
(0.01)
2.65
0.9%
Apr-11
2.80
2.80
(0.01)
2.79
0.1%

 
 
 

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

 
  

  PEHC Commodity Price Benchmark Example   June 10, 2011

 
CORN

             
Plant CBOT
Equivalent
Plant basis
Plant Actual Corn
dlvd $/bu
Market
Actual vs.
Market
PECOL
         
Jan-11
6.27
0.563
6.83
7.18
(0.35)
Feb-11
6.56
0.595
7.15
7.74
(0.59)
Mar-11
6.68
0.519
7.20
7.64
(0.44)
Apr-11
7.22
0.496
7.71
8.35
(0.64)
           
PEMV
         
Jan-11
6.34
0.650
6.99
7.04
(0.06)
Feb-11
6.87
0.650
7.52
7.60
(0.08)
Mar-11
6.90
0.563
7.46
7.50
(0.04)
Apr-11
7.38
0.639
8.02
8.20
(0.18)
           
PES
         
Jan-11
6.22
0.656
6.88
7.18
(0.30)
Feb-11
6.76
0.663
7.42
7.74
(0.32)
Mar-11
6.74
0.619
7.36
7.65
(0.28)
Apr-11
7.21
0.687
7.90
8.36
(0.46)

 
 
 

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  PEHC Commodity Price Benchmark Example   June 10, 2011

 
CO PRODUCTS  

             
Plant Co-product
$/ton Netback
Plant Co-product
DM
Plant Actual Corn
dlvd $/bu
Plant Actual Corn
dlvd $/ton
WDG Value
% of Corn (1)
PECOL
         
Jan-11
56.62
30%
6.83
243.91
69.2%
Feb-11
56.85
30%
7.15
255.37
66.4%
Mar-11
60.80
31%
7.20
257.06
68.0%
Apr-11
61.97
31%
7.71
275.44
65.3%
           
PEMV
         
Jan-11
61.90
32%
6.99
249.48
70.5%
Feb-11
67.04
32%
7.52
268.48
71.0%
Mar-11
69.53
32%
7.46
266.45
74.3%
Apr-11
71.74
32%
8.02
286.40
70.5%
           
PES
         
Jan-11
59.21
33%
6.88
245.68
65.4%
Feb-11
59.94
33%
7.42
264.98
61.4%
Mar-11
67.17
33%
7.36
262.95
70.3%
Apr-11
71.47
32%
7.90
282.00
70.5%

 
(1)DDG equivalent, adjusted to standard 90% dry matter

 

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