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

Exhibit 10.1

KINERGY MARKETING LLC
400 Capitol Mall, Suite 2060
Sacramento, California 95814

September 22, 2010                     

Wells Fargo Capital Finance, LLC,
  as Agent for and on behalf of the
  Lenders as referred to below
245 S. Los Robles Avenue, 7th Floor
Pasadena, California 91101-3638

 
Re: 
Amendment No. 3 to Loan and Security Agreement

Ladies and Gentlemen:

Wells Fargo Capital Finance, LLC, successor by merger to Wachovia Capital
Finance Corporation (Western) (“Wells Fargo”), in its capacity as agent
(“Agent”) for the Lenders from time to time party to the Loan Agreement referred
to below, the Lenders and Kinergy Marketing LLC, an Oregon limited liability
company (“Borrower”), have entered into certain financing arrangements pursuant
to the Loan and Security Agreement, dated as of July 28, 2008, by and among
Agent, Lenders and Borrower, as amended by the Letter re: Amendment and
Forbearance Agreement, dated February 13, 2009, the Amendment No. 1 to Letter
re: Amendment and Forbearance Agreement, dated as of February 26, 2009, the
Amendment No. 2 to Letter re: Amendment and Forbearance Agreement, dated as of
March 27, 2009, the Letter re: Amendment and Waiver Agreement, dated May 17,
2009, the Letter re: Amendment No. 2 to Loan and Security Agreement, Consent and
Waiver, dated November 5, 2009, and this Letter re: Amendment No. 3 to Loan and
Security Agreement (this “Amendment No. 3”) (as the same may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced the
“Loan Agreement”), and the other agreements, documents and instruments referred
to therein or at any time executed and/or delivered in connection therewith or
related thereto (all of the foregoing, together with the Loan Agreement, as the
same now exist or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced, being collectively referred to herein as the
“Financing Agreements”).  Wells Fargo is currently both the Agent and the sole
Lender under the Loan Agreement and is hereinafter referred to in this Amendment
No. 3 in both such capacities, as “Wells Fargo”.
 
Borrower and Pacific Ethanol, Inc., a Delaware corporation, as Guarantor
(“Parent”) have requested that Wells Fargo make certain amendments to the Loan
Agreement and other Financing Agreements as set forth herein, which Wells Fargo
is willing to do subject to the terms and conditions set forth in this Amendment
No. 3.
 
In consideration of the foregoing, the mutual agreements and covenants contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
 

 
 

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

 

 
1.           Interpretation.  All capitalized terms used in this Amendment No. 3
shall have the meanings assigned thereto in the Loan Agreement and the other
Financing Agreements, unless otherwise defined herein.
 
2.           Amendments to Loan Agreement.
 
(a)           Additional Definition.  As used herein, the following term shall
have the meaning given to it below, and the Loan Agreement and the other
Financing Agreements are hereby amended to include, in addition and not in
limitation, the following definition:
 
“Amendment No. 3 to Loan Agreement” shall mean the Letter re: Amendment No. 3 to
Loan and Security Agreement, dated September 22, 2010, by and among Borrower,
Parent, Agent and the Lenders, as the same now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced.

(b)           Maximum Credit.  The definition of “Maximum Credit” in Section
1.76 of the Loan Agreement is hereby amended and restated in its entirety as
follows:
 
“1.76   “Maximum Credit” shall mean the amount of $12,500,000 (subject to
increase as provided in Section 7 of the Forbearance Agreement).”

(c)           Maturity Date.  Section 13.1(a) of the Loan Agreement is hereby
amended and restated in its entirety as follows:
 
“(a)           This Agreement and the other Financing Agreements shall become
effective as of the date set forth on the first page hereof and shall continue
in full force and effect until December 31, 2010 (the “Maturity Date”), unless
sooner terminated pursuant to the terms hereof.  Borrower may terminate this
Agreement at any time upon ten (10) days prior written notice to Agent (which
notice shall be irrevocable) and Agent may, at its option, and shall at the
direction of Required Lenders, terminate this Agreement at any time on or after
an Event of Default has occurred and is continuing.  Upon the Maturity Date or
any other effective date of termination of the Financing Agreements, Borrower
shall pay to Agent all outstanding and unpaid Obligations and shall furnish cash
collateral to Agent (or at Agent’s option, a letter of credit issued for the
account of Borrower and at Borrower’s expense, in form and substance
satisfactory to Agent, by an issuer acceptable to Agent and payable to Agent as
beneficiary) in such amounts as Agent determines are reasonably necessary to
secure Agent, Lenders and Issuing Bank from loss, cost, damage or expense,
including attorneys’ fees and expenses, in connection with any contingent
Obligations, including issued and outstanding Letter of Credit Obligations and
checks or other payments provisionally credited to the Obligations and/or as to
which Agent or any Lender has not yet received final and indefeasible payment
and any continuing obligations of Agent or any Lender pursuant to any Deposit
Account Control Agreement and for any of the Obligations arising under or in
connection with any Bank Products in such amounts as the Bank Product Provider
providing such Bank Products may require (unless such Obligations arising under
or in connection with any Bank Products are paid in full in cash and terminated
in a manner satisfactory to such Bank Product Provider).  The amount of such
cash collateral (or letter of credit, as Agent may determine) as to any Letter
of Credit Obligations shall be in the amount equal to one hundred five (105%)
percent of the amount of the Letter of Credit Obligations plus the amount of any
fees and expenses payable in connection therewith through the end of the latest
expiration date of the Letters of Credit giving rise to such Letter of Credit
Obligations.  Such payments in respect of the Obligations and cash collateral
shall be remitted by wire transfer in Federal funds to the Agent Payment Account
or such other bank account of Agent, as Agent may, in its discretion, designate
in writing to Borrower for such purpose.  Interest shall be due until and
including the next Business Day, if the amounts so paid by Borrower to the Agent
Payment Account or other bank account designated by Agent are received in such
bank account later than 12:00 noon, Los Angeles, California time.”

 
2

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

 

3.           Representations, Warranties and Covenants.  Borrower and Parent
hereby represent, warrant and covenant to Wells Fargo the following (which shall
survive the execution and delivery of this Amendment No. 3), the truth and
accuracy of which are a continuing condition of the making of Loans to Borrower:
 
(a)           this Amendment No. 3 and each other agreement or instrument to be
executed and/or delivered in connection herewith (collectively, together with
this Amendment No. 3, the “Amendment Documents”) have been duly authorized,
executed and delivered by all necessary action on the part of Borrower and
Parent and, if necessary, their respective stockholders and/or members, as the
case may be, and the agreements and obligations of Borrower and Parent contained
herein and therein constitute the legal, valid and binding obligations of
Borrower and Parent, enforceable against them in accordance with their terms,
except as enforceability is limited by bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting generally the enforcement of
creditors’ rights and except to the extent that availability of the remedy of
specific performance or injunctive relief is subject to the discretion of the
court before which any proceeding therefor may be brought;
 
(b)           the execution, delivery and performance of the Amendment Documents
(a) are all within Borrower’s and Guarantor’s corporate or limited liability
company powers (as applicable), (b) are not in contravention of law or the terms
of Borrower’s or Guarantor’s certificate or articles of organization or
formation, operating agreement, by-laws or other organizational documentation,
or any indenture, agreement or undertaking to which Borrower or Guarantor is a
party or by which Borrower, Guarantor or its or their property is bound and (c)
shall not result in the creation or imposition of any lien, claim, charge or
encumbrance upon any of the Collateral, except in favor of Wells Fargo pursuant
to the Loan Agreement and the Financing Agreements as amended hereby;
 

 
3

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

 

(c)           all of the representations and warranties set forth in the Loan
Agreement and the other Financing Agreements, each as amended hereby, are true
and correct in all material respects on and as of the date hereof, as if made on
the date hereof, except to the extent any such representation or warranty is
made as of a specified date, in which case such representation or warranty shall
have been true and correct as of such date;
 
(d)           after giving effect to this Amendment No. 3, no Default or Event
of Default exists as of the date of this Amendment No. 3; and
 
(e)           no action of, or filing with, or consent of any governmental or
public body or authority, including, without limitation, any filing with the
U.S. Patent and Trademark Office, and no approval or consent of any other party,
is required to authorize, or is otherwise required in connection with, the
execution, delivery and performance of this Amendment No. 3.
 
4.           Conditions Precedent.  This Amendment No. 3 shall not become
effective unless all of the following conditions precedent have been satisfied
in full, as determined by Wells Fargo:
 
(i)           the receipt by Wells Fargo of an original (or faxed or electronic
copy) of this Amendment No. 3, duly authorized, executed and delivered by
Borrower and Parent; and
 
(ii)          immediately prior, and immediately after giving affect to the
amendments and agreements set forth herein, there shall exist no Event of
Default or event or condition which, with the giving of notice, passage of time,
or both, would constitute an Event of Default.
 
5.           Effect of this Amendment No. 3.  Except as modified pursuant
hereto, no other changes or modifications to the Loan Agreement and the other
Financing Agreements are intended or implied and in all other respects the Loan
Agreement and the other Financing Agreements are hereby specifically ratified,
restated and confirmed by all parties hereto as of the effective date
hereof.  To the extent of any conflict between the terms of this Amendment No. 3
and the Loan Agreement or any of the other Financing Agreements, the terms of
this Amendment No. 3 shall control.  The Loan Agreement and this Amendment No. 3
shall be read and construed as one agreement.
 
6.           Further Assurances.  At Wells Fargo’s request, Borrower and Parent
shall execute and deliver such additional documents and take such additional
actions as Wells Fargo requests to effectuate the provisions and purposes of
this Amendment No. 3 and to protect and/or maintain perfection of Wells Fargo’s
security interests in and liens upon the Collateral.
 
7.           Governing Law.  The validity, interpretation and enforcement of
this Amendment No. 3 in any dispute arising out of the relationship between the
parties hereto, whether in contract, tort, equity or otherwise shall be governed
by the internal laws of the State of California (without giving effect to
principles of conflicts of law).
 
8.           Binding Effect.  This Amendment No. 3 shall be binding upon and
inure to the benefit of each of the parties hereto and their respective
successors and assigns
 

 
4

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

 

9.           Counterparts.  This Amendment No. 3 may be executed in any number
of counterparts, but all of such counterparts shall together constitute but one
and the same agreement.  In making proof of this Amendment No. 3, it shall not
be necessary to produce or account for more than one counterpart thereof signed
by each of the parties hereto.  Delivery of an executed counterpart of this
Amendment No. 3 by telecopier shall have the same force and effect as delivery
of an original executed counterpart of this Amendment No. 3.  Any party
delivering an executed counterpart of this Amendment No. 3 by telecopier also
shall deliver an original executed counterpart of this Amendment No. 3, but the
failure to deliver an original executed counterpart shall not affect the
validity, enforceability, and binding effect of this Amendment No. 3 as to such
party or any other party.
 
[SIGNATURE PAGE FOLLOWS]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
5

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

 

 
Very truly yours,
     
KINERGY MARKETING LLC,
  as Borrower
 
By:  /s/ BRYON T.
MCGREGOR                                                                  
Name:  Bryon T.
McGregor                                                                  
Title:  Chief Financial
Officer                                                                  
     
PACIFIC ETHANOL, INC,
  as Parent
 
By:  /s/ BRYON T.
MCGREGOR                                                                  
Name:  Bryon T.
McGregor                                                                  
Title:  Chief Financial
Officer                                                                  
   
AGREED TO:
     
WELLS FARGO CAPITAL FINANCE,
LLC, successor by merger to Wachovia
Capital Finance Corporation (Western),
  as Agent and sole Lender
 
By:  /s/ CARLOS
VALLES                                                                  
Name:  Carlos
Valles                                                                  
Title:  Vice
President                                                                  
     

 
 
 

 
 
[Signature Page to Amendment No 3 to Loan and Security Agreement]
 
 

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