Exhibit 10.6

 

Execution Version

 

ALL LIENS AND SECURITY INTERESTS EVIDENCED BY THIS AGREEMENT SHALL AT ALL TIMES
BE SUBORDINATE AND JUNIOR TO THE LIENS AND SECURITY INTERESTS GRANTED TO CoBank,
ACB, a federally-chartered instrumentality of the United States, PURSUANT TO
that certain Security Agreement dated as of March 20, 2019 (AS AMENDED FROM TIME
TO TIME) MADE BY gRANTORS (dEFINED BELOW) IN FAVOR OF SENIOR AGENT (DEFINED
BELOW) AND SUBJECT TO THE TERMS OF THAT CERTAIN INTERCREDITOR AGREEMENT EVEN
DATED HEREWITH (AS AMENDED FROM TIME TO TIME) BY AND AMONG SENIOR AGENT,
GRANTORS, AND AGENT (DEFINED BELOW), AND THE OTHER PARTIES PARTY THERETO.

 

PLEDGE AGREEMENT

 

THIS PLEDGE AGREEMENT (as amended, supplemented or otherwise modified from time
to time in accordance with the provisions hereof, this “Agreement”) is made on
March 20, 2020 by and among PACIFIC ETHANOL CENTRAL, LLC, a limited liability
company organized under the laws of Delaware (“Pledgor”), ILLINOIS CORN
PROCESSING, LLC, a limited liability company organized under the laws of
Delaware (“ICP”), and CORTLAND PRODUCTS CORP., as collateral agent for the
benefit of the Noteholders (in such capacity, together with its successors and
assigns in such capacity, the “Agent”; together with the Noteholders, the
“Secured Parties”).

 

RECITALS:

 

WHEREAS, Pacific Ethanol, Inc., a Delaware corporation (“PEI”), issued certain
secured promissory notes in the aggregate original principal amount of
$55,000,000 on December 15, 2016 (the “Initial Notes”) pursuant to a Note
Purchase Agreement dated as of December 12, 2016 by and among PEI and the
Investors identified therein (as amended, restated, supplemented or otherwise
modified from time to time, including amendments and restatements thereof in its
entirety, the “Initial Purchase Agreement”);

 

WHEREAS, PEI and certain Investors identified therein are parties to a Note
Purchase Agreement dated as of June 26, 2017 (as amended, restated, supplemented
or otherwise modified from time to time, including amendments and restatements
thereof in its entirety, the “Additional Purchase Agreement”), pursuant to which
PEI issued $13,948,078 in aggregate original principal amount of senior secured
notes due December 15, 2019 (as amended, restated, supplemented or otherwise
modified from time to time, the “Additional Notes”).

 

WHEREAS, the Noteholders are holders of the Initial Notes, the Additional Notes
and certain other secured promissory notes issued by PEI on December 16, 2019
(the “Existing Notes”);

 

WHEREAS, pursuant to that certain Senior Secured Note Amendment Agreement dated
as of December 22, 2019 between the Noteholders defined therein and PEI (as
amended, restated, supplemented or otherwise modified from time to time,
including amendments and restatements thereof in its entirety, the “Amendment
Agreement”), the Existing Notes were amended and restated in their entirety (the
“Amended Notes,” and together with the Amendment Agreement and the Transaction
Documents (as defined in the Initial Noteholder Security Agreement (as defined
below)), the “Notes Amendment Documents”);

 

 

 

  

WHEREAS, Cortland Products Corp. has been appointed by the Noteholders to act as
collateral agent under the Notes Amendment Documents (and as successor to
Cortland Capital Market Services LLC in such capacity) pursuant to the Initial
Noteholder Security Agreement;

 

WHEREAS, Pledgor, ICP and CoBank, ACB, a federally-chartered instrumentality of
the United States (“Senior Agent”), are party to that certain Pledge Agreement
dated as of March 20, 2019 (“Senior Agent Pledge Agreement”), wherein Pledgor
granted to Senior Agent a senior security interest in the Pledged Collateral,
securing the payment and performance when due of the Secured Obligations (as
defined in the Senior Agent Pledge Agreement);

 

WHEREAS, the Lien granted herein shall be junior in priority to the Lien granted
to Senior Agent, as set forth in that certain Intercreditor Agreement dated as
of the date hereof (as amended, restated, supplemented or otherwise modified
from time to time, “Intercreditor Agreement”) by and among Senior Agent, Agent,
PEI and the Grantors party thereto; and

 

WHEREAS, to secure the obligations of PEI under the Notes Amendment Documents,
pursuant to the Notes Amendment Documents, the Pledgor is required to enter into
this Agreement.

 

1. Definitions. Each capitalized term used herein, unless otherwise defined
herein, shall have the meaning ascribed to such term in the Amendment Agreement
or the Initial Noteholder Security Agreement, as applicable. As used herein, the
following terms shall have the following meanings:

 

“Companies” shall mean each of the entities identified as an “Issuer” on Annex A
hereto, and each such entity individually is referred to herein as a “Company”.

 

“Equity Interests” shall mean all shares of capital stock (whether denominated
as common stock or preferred stock), equity interests, beneficial partnership or
membership interests, joint venture interests, units, limited liability company
interests, participations or other ownership or profit interests in or
equivalents (regardless of how designated) of or in a Person (other than an
individual), whether voting or non-voting.

 

“Existing Notes” has the meaning set forth in the Recitals.

 

“Initial Noteholder Security Agreement” means that certain Security Agreement,
dated as of December 15, 2016, by and among the Company, the Noteholders party
thereto, and the Agent, as amended by that certain First Amendment to Security
Agreement, dated June 30, 2017, by and among the Company, the Noteholders party
thereto, and the Agent, that certain Second Amendment to Security Agreement,
dated December 22, 2019, by and among the Company, the Noteholders party
thereto, and the Agent, and that certain Third Amendment to Security Agreement,
dated as of the date hereof, by and among the Company, the Noteholders party
thereto, and the Agent, as the same may be further amended, restated,
supplemented or otherwise modified from time to time.

 

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“Initial Noteholder Security Agreement” means that certain Security Agreement,
dated as of December 15, 2016, by and among the Company, the Noteholders party
thereto, and the Agent, as amended by that certain First Amendment to Security
Agreement, dated June 30, 2017, by and among the Company, the Noteholders party
thereto, and the Agent, that certain Second Amendment to Security Agreement,
dated December 22, 2019, by and among the Company, the Noteholders party
thereto, and the Agent, and that certain Third Amendment to Security Agreement,
dated as of the date hereof, by and among the Company, the Noteholders party
thereto, and the Agent, as the same may be further amended, restated,
supplemented or otherwise modified from time to time.

 

“Noteholders” means (x) each Person that is (i) a signatory to the Amendment
Agreement and identified as a “Noteholder” on Exhibit A to the Amendment
Agreement, (ii) a holder of any of the Notes (as defined in the Amendment
Agreement), and (iii) a “Secured Party” party to the Initial Noteholder Security
Agreement and (y) any other Person that becomes (i) a holder of any of the Notes
pursuant to any permitted assignment or transfer and (ii) a “Secured Party”
under the Initial Noteholder Security Agreement pursuant to a Security Agreement
Joinder, other than any such Person that ceases to be a party to such agreement
pursuant to an assignment of all of its Notes and its rights and obligations
under the Transaction Documents (as defined in the Initial Security Agreement).

 

“Pledged Collateral” shall have the meaning ascribed to it in Section 2 hereof.

 

“Power” shall have the meaning ascribed to it in Section 2 hereof.

 

“Secured Obligations” shall mean all obligations of PEI to the Noteholders now
or hereafter existing under the Notes Amendment Documents.

 

2. Pledge; Agent’s Duties; Intercreditor Agreement.

 

(a) Pledgor hereby pledges, assigns, transfers, sets over and delivers to Agent,
and hereby grants to Agent, for the benefit of the Secured Parties, a security
interest in, all of the Equity Interests of the Companies now or hereafter held
by Pledgor, including the Equity Interests more particularly described on Annex
A hereto and all of Pledgor’s options, if any, for the purchase of any Equity
Interests of any of the Companies, herewith delivered to Agent, and where
certificated, accompanied by powers (“Powers”) duly executed in blank, and all
proceeds thereof including, without limitation, all proceeds from the sale of
any such Equity Interests and all dividends and distributions at any time
payable in connection such Equity Interests (said Equity Interests, Powers,
options, and proceeds hereinafter collectively called the “Pledged Collateral”)
as security for the due and punctual payment and performance of the Secured
Obligations.

 

(b) Agent shall have no duty with respect to any part or all of the Pledged
Collateral of any nature or kind other than the duty to use reasonable care in
the safe custody of any tangible items of the Pledged Collateral in its
possession (it being agreed that Agent shall be deemed to have exercised
reasonable care in the custody and preservation of the Pledged Collateral in its
possession if the Pledged Collateral is accorded treatment substantially equal
to that which it accords its own property). Without limiting the generality of
the foregoing, Agent shall be under no obligation to sell any of the Pledged
Collateral or otherwise to take any steps necessary to preserve the value of any
of the Pledged Collateral or to preserve rights in the Pledged Collateral
against any other Persons, but may do so at its option upon an Event of Default,
and all expenses incurred in connection therewith shall be for the sole account
of Pledgor.

 

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(c) For the avoidance of doubt, all obligations of Pledgor, and all rights of
Agent, hereunder shall be subject to the obligations of the Pledgor and the
subordinated rights of Agent under the Intercreditor Agreement.

 

3. Voting Rights. During the term of this Agreement, and so long as no Event of
Default shall have occurred, Pledgor shall have the right to vote all or any
portion of the Equity Interests owned by such Pledgor on all corporate and other
company questions for all purposes not inconsistent with the terms of this
Agreement or any of the other Notes Amendment Documents. To that end, if Agent
transfers all or any portion of the Pledged Collateral into its name or the name
of its nominee, to the extent authorized to do so under this Agreement or any of
the other Notes Amendment Documents, Agent shall, upon the request of a Pledgor,
unless an Event of Default shall have occurred, execute and deliver or cause to
be executed and delivered to Pledgor, proxies with respect to the applicable
portion of the Pledged Collateral. Pledgor hereby grants to Agent, effective
upon or after the occurrence of an Event of Default and pursuant to the terms of
the Intercreditor Agreement, an IRREVOCABLE PROXY pursuant to which Agent shall
be entitled (but shall not be obligated) to exercise all voting powers
pertaining to the Pledged Collateral, including to call and attend all meetings
of the shareholders, members or partners of the Companies to be held from time
to time with full power to act and vote in the name, place and stead of Pledgor
(whether or not the Equity Interests shall have been transferred into its name
or the name of its nominee or nominees), give all consents, waivers and
ratifications in respect of the Pledged Collateral and otherwise act with
respect thereto as though it were the outright owner thereof, and any and all
proxies theretofore executed by Pledgor shall terminate and thereafter be null
and void and of no effect whatsoever.

 

4. Collection of Dividend Payments. During the term of this Agreement, and so
long as there no Event of Default shall exist, Pledgor shall have the right to
receive and retain any and all dividends and other distributions payable by any
Company to Pledgor on account of any of the Pledged Collateral except as
otherwise provided in the Notes Amendment Documents. Upon or after the
occurrence of any Event of Default and pursuant to the terms of the
Intercreditor Agreement, all dividends and other distributions payable by any
Company on account of any of the Pledged Collateral shall be paid to Agent and
any such sum received by Pledgor shall be deemed to be held by Pledgor in trust
for the benefit of Agent and the other Secured Parties and shall be forthwith
turned over to Agent for application by Agent to the Secured Obligations in the
manner authorized by the Notes Amendment Documents.

 

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5. Representations and Warranties of Pledgor. Pledgor hereby represents and
warrants to Agent and the other Secured Parties as follows (which
representations and warranties shall be deemed continuing): (a) Pledgor is the
legal and beneficial owner of the Pledged Collateral identified on Annex A; (b)
all of the Equity Interests have been duly and validly issued, are fully paid
and nonassessable, and are owned by Pledgor free of any Liens except for Agent’s
security interest hereunder and the Permitted Liens; (c) the Pledged Collateral
constitutes the percentage of the issued and outstanding Equity Interests of
each of the Companies identified on Annex A hereto; (d) there are no contractual
or charter restrictions upon the voting rights or upon the transfer of any of
the Pledged Collateral; (e) Except as required under the Intercreditor
Agreement, Pledgor has the right to vote, pledge and grant a security interest
in or otherwise transfer the Pledged Collateral without the consent of any other
Person and free of any Liens and applicable restrictions imposed by any
governmental authority, and without any restriction under the organizational
documents of Pledgor or any Company or any agreement among Pledgor’s or any
Company’s shareholders, partners or members; (f) this Agreement has been duly
authorized, executed and delivered by Pledgor and constitutes a legal, valid and
binding obligation of Pledgor, enforceable in accordance with its terms except
to the extent that the enforceability thereof may be limited by bankruptcy,
insolvency or other similar laws of general application affecting the
enforcement of creditors’ rights; (g) the execution, delivery and performance by
Pledgor of this Agreement and the exercise by Agent of its rights and remedies
hereunder do not and will not result in the violation of any of the
organizational documents of Pledgor, any agreement, indenture, instrument or law
by which Pledgor or any Company is bound or to which Pledgor or any Company is
subject (except that Pledgor makes no representation or warranty with respect to
Agent’s prospective compliance with any federal or state laws or regulations
governing the sale or exchange of securities); (h) no consent, filing, approval,
registration or recording is required (1) for the pledge by Pledgor of its
respective portion of the Pledged Collateral pursuant to this Agreement or (2)
except for the filing of an appropriate UCC financing statement, to perfect the
Lien created by this Agreement (to the extent that a Lien created by this
Agreement can be perfected by filing a financing statement); (i) none of the
Pledged Collateral is held or maintained in the form of a securities entitlement
or credited to any securities account; and (j) if the Pledged Collateral is
certificated, Pledgor shall cause such certificates or other documents
evidencing or representing such Pledged Collateral, accompanied by Powers, all
in form and substance satisfactory to Agent and Required Holders to be delivered
to Agent.

 

6. Affirmative Covenants of Pledgor. Until all of the Secured Obligations are
paid in full, Pledgor covenants that it will: (a) warrant and defend at its own
expense Agent’s right, title and security interest in and to the Pledged
Collateral against the claims of any Person; (b) promptly deliver to Agent all
written notices with respect to the Pledged Collateral, and promptly give
written notice to Agent of any other notices received by Pledgor with respect to
the Pledged Collateral; (c) promptly deliver to Agent to hold under this
Agreement any Equity Interests of any Company subsequently acquired by Pledgor,
whether acquired by Pledgor by virtue of the exercise of any options included
within the Pledged Collateral or otherwise (which Equity Interests, whether or
not delivered, shall be deemed to be a part of the Pledged Collateral); (d) if
any of the Pledged Collateral constituting membership interests in a limited
liability company or general or limited partnership interests in a limited
partnership or limited liability partnership is hereafter designated by the
relevant Company as a “security” under (and as defined in) Article 8 of the UCC,
cause such Pledged Collateral to be certificated and deliver to Agent all
certificates evidencing such Pledged Collateral, accompanied by Powers, all in
form and substance satisfactory to Agent and Required Holders; and (e) if at any
time hereafter any of the Pledged Collateral that is not currently certificated
becomes certificated, deliver all certificates or other documents evidencing or
representing the Pledged Collateral to Agent, accompanied by Powers, all in form
and substance satisfactory to Agent and Required Holders.

 

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7. Negative Covenants of Pledgor. Until the Secured Obligations are paid in
full, Pledgor covenants that it will not, without the prior written consent of
Agent and Required Holders, (a) sell, convey or otherwise dispose of any of the
Pledged Collateral or any interest therein other than as permitted under the
Notes Amendment Documents; (b) grant or permit to exist any Lien whatsoever upon
or with respect to any of the Pledged Collateral or the proceeds thereof, other
than the security interest created hereby; (c) consent to the issuance by any
Company of any new Equity Interests; (d) consent to any merger or other
consolidation of any Company with or into any corporation or other entity other
than as permitted under the Notes Amendment Documents; (e) cause any Pledged
Collateral to be held or maintained in the form of a security entitlement or
credited to any securities account; (f) designate, or cause any Company to
designate, any of the Pledged Collateral constituting membership interests in a
limited liability company or general or limited partnership interests in a
limited partnership or limited liability partnership as a “security” under
Article 8 of the UCC, unless such Company has caused such Pledged Collateral to
become certificated and has complied with the requirements of Section 6(e)
hereof with respect to such Pledged Collateral; (g) evidence, or permit any
Company to evidence, any of the Pledged Collateral that is not currently
certificated, with any certificates, instruments or other writings, unless such
Company has complied with the provisions of Section 6(e) of this Agreement; or
(h) consent to or permit any amendment of the organizational documents of any
Company that would restrict Pledgor’s right to vote, pledge or grant a security
interest in or otherwise transfer its respective portion of the Pledged
Collateral.

 

8. Irrevocable Authorization and Instruction to Companies. To the extent that
any portion of the Pledged Collateral might now or hereafter consist of
uncertificated securities within the meaning of Article 8 of the UCC, Pledgor
irrevocably authorizes and instructs each Company to comply with any instruction
received by such Company from Agent with respect to such Pledged Collateral
without any other or further instructions from or consent of Pledgor, and
Pledgor agrees that each Company shall be fully protected in so complying;
provided, however, that Agent agrees that Agent will not issue or deliver any
such instructions to any Company except upon or after the occurrence of an Event
of Default.

 

9. Subsequent Changes Affecting Pledged Collateral. Pledgor hereby represents to
Agent that Pledgor has made its own arrangements for keeping informed of changes
or potential changes affecting the Pledged Collateral (including rights to
convert, rights to subscribe, payment of dividends and distributions,
reorganization or other exchanges, tender offers and voting rights), and Pledgor
hereby agrees that Agent shall have no responsibility or liability for informing
Pledgor of any such changes or potential changes or for taking any action or
omitting to take any action with respect thereto. Agent may, at any time that an
Event of Default exists, at its option and without notice to Pledgor, transfer
or register the Pledged Collateral or any portion thereof into its or its
nominee’s name with or without any indication that such Pledged Collateral is
subject to the security interest hereunder.

 

10. Equity Interest Adjustments. If during the term of this Agreement any
dividend, reclassification, readjustment or other change is declared or made in
the capital structure of any of the Companies, or any option included within the
Pledged Collateral is exercised, or both, all new, substituted and additional
Equity Interests or other securities issued by reason of any such change or
exercise shall, if received by Pledgor, be held in trust for the Secured
Parties’ benefit and shall be promptly delivered to and held by Agent under the
terms of this Agreement in the same manner as the Pledged Collateral originally
pledged hereunder.

 

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11. Warrants, Options and Rights. If during the term of this Agreement
subscription warrants or any other rights or options are issued or exercised by
Pledgor in connection with the Pledged Collateral, then such warrants, rights
and options shall be promptly assigned by Pledgor to Agent and all certificates
evidencing new Equity Interests or other securities so acquired by Pledgor shall
be promptly delivered to Agent to be held under the terms of this Agreement in
the same manner as the Pledged Collateral originally pledged hereunder.

 

12. Registration. If Agent determines that it is required to register under or
otherwise comply in any way with the Securities Act of 1933, as amended from
time to time (the “Securities Act”) or any similar federal or state law with
respect to the securities, if any, included in the Pledged Collateral prior to
sale thereof by Agent, then upon or after the occurrence of any Event of
Default, Pledgor will use its best efforts to cause any such registration to be
effectively made, at no expense to Agent, and to continue such registration
effective for such time as may be necessary in the reasonable opinion of Agent
and Required Holders, and will reimburse Agent for any out-of-pocket expense
incurred by Agent, including reasonable attorneys’ fees and accountants’ fees
and expenses, in connection therewith.

 

13. Consent. Pledgor hereby consents that from time to time, before or after the
occurrence or existence of any default or Event of Default, with or without
notice to or assent from Pledgor, any other security at any time held by or
available to Agent for any of the Secured Obligations may be exchanged,
surrendered, or released, and any of the Secured Obligations may be changed,
altered, renewed, extended, continued, surrendered, compromised, waived or
released, in whole or in part, as Agent may see fit, and Pledgor shall remain
bound under this Agreement and under the other Notes Amendment Documents
notwithstanding any such exchange, surrender, release, alteration, renewal,
extension, continuance, compromise, waiver or inaction, extension of further
credit or other dealing.

 

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14. Remedies Upon Default. Upon or after the occurrence of any Event of Default
and subject to the terms of the Intercreditor Agreement, (i) Agent shall have,
in addition to any other rights given by law or the rights given hereunder or
under each of the other Notes Amendment Documents, all of the rights and
remedies with respect to the Pledged Collateral of a secured party under the UCC
and (ii) Agent may cause all or any part of the Equity Interests held by it to
be transferred into its name or the name of its nominee or nominees. In
addition, upon or at any time after the occurrence of an Event of Default, Agent
may sell or cause the Pledged Collateral, or any part thereof, which shall then
be or shall thereafter come into Agent’s possession or custody, to be sold at
any broker’s board or at public or private sale, in one or more sales or lots,
at such price as Agent may deem best, and for cash or on credit or for future
delivery, and the purchaser of any or all of the Pledged Collateral so sold
shall thereafter hold the same absolutely, free from any claim, encumbrance or
right of any kind whatsoever of Pledgor or arising through Pledgor. If any of
the Pledged Collateral is sold by Agent upon credit or for future delivery,
Agent shall not be liable for the failure of the purchaser to pay the same and
in such event Agent may resell such Pledged Collateral. Unless the Pledged
Collateral threatens to decline speedily in value or is or becomes of a type
sold on a recognized market, Agent will give the applicable Pledgor reasonable
notice of the time and place of any public sale thereof, or of the time after
which any private sale or other intended disposition is to be made. Any sale of
the Pledged Collateral conducted in conformity with reasonable commercial
practices of banks, insurance companies or other financial institutions
disposing of property similar to the Pledged Collateral shall be deemed to be
commercially reasonable. Any requirements of reasonable notice shall be met if
such notice is mailed to the applicable Pledgor, as provided in Section 22
below, at least ten (10) days before the time of the sale or disposition. Any
other requirement of notice, demand or advertisement for sale is, to the fullest
extent permitted by applicable law, waived. Agent may, in its own name, or in
the name of a designee or nominee, buy at any public sale of the Pledged
Collateral and, if permitted by applicable law, buy at any private sale thereof.
Pledgor will pay to Agent on demand all expenses (including court costs and
reasonable attorneys’ fees and expenses) of, or incident to, the enforcement of
any of the provisions hereof and all other charges due against the Pledged
Collateral, including taxes, assessments or Liens upon the Pledged Collateral
and any expenses, including transfer or other taxes, arising in connection with
any sale, transfer or other disposition of Pledged Collateral. In connection
with any sale of Pledged Collateral by Agent, Agent shall have the right to
execute any document or form, in its name or in the name of Pledgor, that may be
necessary or desirable in connection with such sale, including Form 144
promulgated by the Securities and Exchange Commission. In view of the fact that
federal and state securities laws may impose certain restrictions on the method
by which a sale of the Pledged Collateral may be effected after an Event of
Default, Pledgor agrees that Agent may, from time to time, attempt to sell all
or any part of the Pledged Collateral by means of a private placement
restricting the bidders and prospective purchasers to those who will represent
and agree that they are purchasing for investment only and not for distribution.
Pledgor agrees that any such private sales may be at prices and other terms less
favorable to the seller than if sold at public sales and that such private sales
shall not by reason thereof be deemed not to have been made in a commercially
reasonable manner. Agent shall be under no obligation to delay a sale of any of
the Pledged Collateral for the period of time necessary to permit the issuer of
such securities to register such securities for public sale under the Securities
Act even if the issuer would agree to do so. Agent shall apply the cash proceeds
actually received from any sale or other disposition to the reasonable expenses
of retaking, holding, preparing for sale, selling and the like, to reasonable
attorneys’ fees, and all legal expenses, travel and other expenses that might be
incurred by Agent in attempting to collect the Secured Obligations or to enforce
this Agreement or in the prosecution or defense of any action or proceeding
related to the subject matter of this Agreement; and then to the Secured
Obligations in the manner authorized by the Notes Amendment Documents.

 

15. Redemption; Marshaling. Pledgor hereby waives and releases to the fullest
extent permitted by applicable law any right or equity of redemption with
respect to the Pledged Collateral before or after a sale conducted pursuant to
Section 14 hereof. Pledgor agrees that Agent shall not be required to marshal
any present or future security (including this Agreement and the Pledged
Collateral pledged hereunder) for, or guaranties of, the Secured Obligations or
any of them, or to resort to such security or guaranties in any particular
order; and all of Agent’s rights hereunder and in respect of such security and
guaranties shall be cumulative and in addition to all other rights, however
existing or arising. To the fullest extent that it lawfully may, Pledgor hereby
agrees that it will not invoke any law relating to the marshaling of collateral
that might cause delay in or impede the enforcement of Agent’s rights under this
Agreement or under any other instrument evidencing any of the Secured
Obligations or under which any of the Secured Obligations is outstanding or by
which any of the Secured Obligations is secured or guaranteed, and to the
fullest extent that it lawfully may, Pledgor hereby irrevocably waives the
benefits of all such laws.

 

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16. Term. This Agreement shall become effective only when accepted by Agent and,
when so accepted, shall constitute a continuing agreement and shall remain in
full force and effect until the Secured Obligations are paid in full, at which
time this Agreement shall terminate and Agent shall deliver to the Pledgor, at
Pledgor’s expense, such of the Pledged Collateral as shall not have been sold or
otherwise applied pursuant to this Agreement. Notwithstanding the foregoing, in
no event shall any termination of this Agreement terminate any indemnity set
forth in this Agreement or any of the other Notes Amendment Documents, all of
which indemnities shall survive any termination of this Agreement or any of the
other Notes Amendment Documents.

 

17. Rules and Construction. The singular shall include the plural and vice
versa, and any gender shall include any other gender as the text shall indicate.
All references to “including” shall mean “including, without limitation.” Each
reference in this Agreement to a “corporation” shall also be deemed to include a
reference to a limited liability company, limited partnership or limited
liability partnership and vice versa, each reference to “shareholders” of a
Person shall also be deemed to include a reference to members or partners and
vice versa and each reference to “certificate of incorporation” or “articles of
incorporation” or “bylaws” shall also be deemed to include a reference to
“certificate of formation” or “certificate of limited partnership” and “limited
liability company operating agreement” or “limited partnership agreement” or
other organizational documents of a limited liability company, limited
partnership or limited liability partnership and vice versa.

 

18. Successors and Assigns. This Agreement shall be binding upon Pledgor and its
respective successors and assigns, and shall inure to the benefit of Agent and
the other Secured Parties and their respective successors and assigns. This
Agreement is fully assignable by any Secured Party without the consent of
Pledgor or ICP; provided that this Agreement may not be assigned by Pledgor or
ICP without the prior written consent of the Agent.

 

19. Construction and Applicable Law. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but, if any provision of this Agreement shall be held to be
prohibited or invalid under any applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement. This Agreement shall be governed by and the rights and liabilities of
the parties hereto determined and construed in accordance with the internal laws
of the State of New York without regard to its conflicts of law provisions. This
Agreement is intended to take effect as a document executed and delivered under
seal.

 

20. Cooperation and Further Assurances. Pledgor agrees that it will cooperate
with Agent and will, upon Agent’s request, execute and deliver, or cause to be
executed and delivered, all such other powers, instruments, financing
statements, certificates, legal opinions and other documents, and will take all
such other action as Agent and Required Holders request from time to time, in
order to carry out the provisions and purposes hereof, including delivering to
Agent, if requested by Agent, irrevocable proxies with respect to the Equity
Interests in form satisfactory to Agent and Required Holders. Until receipt
thereof, this Agreement shall constitute Pledgor’s proxy to Agent or its nominee
to vote all shares of the Equity Interests then registered in Pledgor’s name
(subject to Pledgor’s voting rights under Section 3 hereof) upon or after the
occurrence of an Event of Default.

 

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21. Agent’s Exoneration. Under no circumstances shall Agent be deemed to assume
any responsibility for or obligation or duty with respect to any part or all of
the Pledged Collateral of any nature or kind, other than the physical custody
thereof, or any matter or proceedings arising out of or relating thereto. Agent
shall not be required to take any action of any kind to collect, preserve or
protect its or Pledgor’s rights in the Pledged Collateral or against other
parties thereto. Agent’s prior recourse to any part or all of the Pledged
Collateral shall not constitute a condition of any demand, suit or proceeding
for payment or collection of the Secured Obligations.

 

22. Notices. All notices, requests and demands to or upon any party hereto shall
be given in the manner and become effective as stipulated in the Amendment
Agreement. Regardless of the manner in which notice is provided, notices may be
sent to Agent and Pledgor pursuant to the notice information set forth in the
signature pages hereof or to such other address or telephone number as any party
may give to the other for such purpose in accordance with this paragraph.

 

23. Pledgor’s Obligations Not Affected. The obligations of Pledgor hereunder
shall remain in full force and effect without regard to, and shall not be
impaired by (a) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of Pledgor; (b) any exercise
or nonexercise, or any waiver, by Agent of any right, remedy, power or privilege
under or in respect of any of the Secured Obligations or any security thereof
(including this Agreement); (c) any amendment to or modification of the
Amendment Agreement, the other Notes Amendment Documents or any of the Secured
Obligations; (d) any amendment to or modification of any instrument (other than
this Agreement) securing any of the Secured Obligations; or (e) the taking of
additional security for, or any guaranty of, any of the Secured Obligations or
the release or discharge or termination of any security or guaranty for any of
the Secured Obligations, regardless of whether or not Pledgor shall have notice
or knowledge of any of the foregoing.

 

24. No Waiver, Etc. No act, failure or delay by Agent shall constitute a waiver
of any of its rights and remedies hereunder or otherwise. No single or partial
waiver by Agent of any default or Event of Default or right or remedy that Agent
might have shall operate as a waiver of any other default, Event of Default,
right or remedy or of the same default, Event of Default, right or remedy on a
future occasion. Pledgor hereby waives presentment, notice of dishonor and
protest of all instruments included in or evidencing any of the Secured
Obligations or the Pledged Collateral, and any and all other notices and demands
whatsoever (except as expressly provided herein).

 

25. Section Headings. The section headings herein are for convenience of
reference only, and shall not affect in any way the interpretation of any of the
provisions hereof.

 

26. Agent Appointed Attorney-In-Fact. Upon and after the occurrence of an Event
of Default, Agent shall be deemed to be Pledgor’s attorney-in-fact, with full
power of substitution, for the purpose of carrying out the provisions of this
Agreement and taking any action and executing any instrument that Agent
reasonably deems necessary or advisable to accomplish the purposes hereof, which
appointment is coupled with an interest and is irrevocable. Without limiting the
generality of the foregoing, Agent shall have the power to arrange for the
transfer, upon or at any time after the occurrence of an Event of Default, of
any of the Pledged Collateral on the books of any or all of the Companies to the
name of Agent or Agent’s nominee. Pledgor agrees to indemnify and save Agent
harmless from and against any liability or damage that Agent might suffer or
incur, in the exercise or performance of any of Agent’s powers and duties
specifically set forth herein, except to the extent that such liability or
damage arises from Agent’s gross negligence or willful misconduct.

 

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27. Use of Proceeds. Pledgor hereby represents and warrants to Agent that none
of the proceeds heretofore and hereafter received by it under the Amendment
Agreement are for the purpose of purchasing any “margin stock” as that term is
defined in either Regulation U promulgated by the Board of Governors of the
Federal Reserve System, or refinancing any indebtedness originally incurred to
purchase any such “margin stock.”

 

28. Waiver of Subrogation and Other Claims. Pledgor recognizes that Agent, in
exercising its rights and remedies with respect to the Pledged Collateral, may
likely be unable to find one or more purchasers thereof if, after the sale of
the Pledged Collateral, the Company were, because of any claim based on
subrogation or any other theory, liable to Pledgor on account of the sale by
Agent of the Pledged Collateral in full or partial satisfaction of the Secured
Obligations or liable to Pledgor on account of any indebtedness owing to Pledgor
that is subordinated to any or all of the Secured Obligations. Pledgor hereby
agrees, therefore, that if Agent sells any of the Pledged Collateral in full or
partial satisfaction of the Secured Obligations, Pledgor shall in such case have
no right or claim against any Company on account of any such subordinated
indebtedness or on the theory that Pledgor has become subrogated to any claim or
right of Agent against such Company or on any basis whatsoever, and Pledgor
hereby expressly waives and relinquishes, to the fullest extent permitted by
applicable law, all such rights and claims against Companies.

 

29. Execution in Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original and all
of which counterparts taken together shall constitute but one and the same
instrument. In proving this Agreement in any judicial proceeding, it shall not
be necessary to produce or account for more than one such counterpart signed by
the party against whom such enforcement is sought. Any manually-executed
signature page delivered by a party by facsimile or other electronic
transmission shall be deemed to be an original signature page hereto.

 

30. WAIVERS. PLEDGOR HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW: NOTICE OF AGENT’S ACCEPTANCE OF THIS AGREEMENT; NOTICE OF
EXTENSIONS OF CREDIT, NOTICES ISSUANCES, LOANS, ADVANCES OR OTHER FINANCIAL
ASSISTANCE BY SECURED PARTIES TO PLEDGOR; THE RIGHT TO TRIAL BY JURY (WHICH
AGENT ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM CONCERNING
THIS AGREEMENT OR ANY OF THE PLEDGED COLLATERAL; PRESENTMENT AND DEMAND FOR
PAYMENT OF ANY OF THE SECURED OBLIGATIONS; PROTEST AND NOTICE OF DISHONOR OR
DEFAULT WITH RESPECT TO ANY OF THE SECURED OBLIGATIONS; AND ALL OTHER NOTICES TO
WHICH PLEDGOR MIGHT OTHERWISE BE ENTITLED EXCEPT AS HEREIN OTHERWISE EXPRESSLY
PROVIDED.

 

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31. Governing Law; Jurisdiction; Etc.

 

(a) The laws of the State of New York will govern this Agreement and any claim,
controversy, dispute or cause of action (whether in contract or tort or
otherwise) based upon, arising out of or relating to this Agreement and the
transactions contemplated hereby and thereby.

 

(b) Pledgor irrevocably and unconditionally agrees that it will not commence any
action, litigation or proceeding of any kind whatsoever, whether in law or
equity, or whether in contract or tort or otherwise, against any Secured Party
in any way relating to this Agreement or the transactions contemplated hereby,
in any forum other than the courts of the State of New York sitting in the city
of New York, borough of Manhattan, and of the United States District Court of
the Southern District of New York, and any appellate court from any thereof, and
each of the parties hereto irrevocably and unconditionally submits to the
jurisdiction of such courts and agrees that any such action, litigation or
proceeding may be brought in any such New York State court 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, litigation 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 herein shall affect any
right that each Secured Party may otherwise have to bring any action or
proceeding relating to this Agreement against Pledgor or its properties in the
courts of any jurisdiction.

 

(c) Pledgor 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 Agreement in any such court referred to in Section 31(b). Each of the
parties hereto hereby 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.

 

(d) Pledgor irrevocably consents to the service of process in the manner
provided for notices in Section 22 and agrees that nothing herein will affect
the right of any party hereto to serve process in any other manner permitted by
applicable law.

 

32. Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY RELATING TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY WHETHER BASED ON CONTRACT,
TORT OR ANY OTHER THEORY. EACH PARTY HERETO (A) CERTIFIES THAT NO AGENT,
ATTORNEY, REPRESENTATIVE OR ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER
IN THE EVENT OF LITIGATION, AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES
HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER NOTES
AMENDMENT DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION

 

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33. Incorporation of Recitals. Each of the Recitals set forth above are true and
correct and are incorporated herein and made a part of this Agreement.

 

34. Inconsistency with Intercreditor Agreement. In the event of any conflict
between the terms of this Agreement and the Intercreditor Agreement, the
Intercreditor Agreement shall control.

 

[Remainder of page intentionally left blank; signatures begin on following
page.] 

 

13

 

 

IN WITNESS WHEREOF, Pledgor has caused this Agreement to be signed, sealed and
delivered by its duly authorized representative on the day and year first above
written.

 

  PLEDGOR:       PACIFIC ETHANOL CENTRAL, LLC         By: /s/ Neil M. Koehler  
Name: Neil M. Koehler   Title: President and Chief Executive Officer         c/o
Pacific Ethanol, Inc.   400 Capital Mall, Suite 2060   Sacramento, California
95814         Accepted:           AGENT:       CORTLAND PRODUCTS CORP.       By:
/s/ Matthew Trybula   Name: Matthew Trybula   Title: Associate Counsel        
225 W Washington Street, 9th Floor   Chicago, IL 60606

 

Signature page to Noteholder Pledge Agreement (ICP) 

 

 

 

 

ANNEX A

 

to Pledge Agreement

 

Pledgor   Issuer   Type and Class of Equity Interests   Number of Pledged Shares
  Certificate Number   Percentage of Outstanding Equity Interests Pacific
Ethanol Central, LLC   ILLINOIS CORN PROCESSING, LLC   Membership Interest   N/A
  N/A   100%

 

 

 

 

 

ACKNOWLEDGMENT AND AGREEMENT OF ISSUER

 

The undersigned (“Issuer”) hereby acknowledges, represents and agrees that: (i)
such Issuer has received a true and correct copy of the within and foregoing
Pledge Agreement (the “Agreement”) by and among PACIFIC ETHANOL CENTRAL, LLC, a
limited liability company organized under the laws of Delaware (“Pledgor”),
ILLINOIS CORN PROCESSING, LLC, a limited liability company organized under the
laws of Delaware (“ICP”), and CORTLAND CAPITAL MARKET SERVICES LLC, as
collateral agent for the benefit of the Noteholders (in such capacity, together
with its successors and assigns in such capacity, the “Agent”; together with the
Noteholders, the “Secured Parties”); (ii) the Agreement has been duly recorded
and noted on the books and records of Issuer and will be maintained as part of
such books and records; (iii) the Agreement does not violate any term, condition
or covenant of the organizational documents of Issuer, or of any other agreement
to which Issuer is a party; (iv) Issuer will comply with written instructions
originated by Agent without further consent of Pledgor as the registered owner
of Pledgor’s respective portion of the Pledged Collateral; (v) Issuer consents
to the execution of the Agreement and to the assignment, transfer and pledge of
the Pledged Collateral effected thereby; and (vi) upon and after the occurrence
of an Event of Default, Issuer consents to a public or private sale or sales of
all or any part of the Pledged Collateral by Agent in accordance with the terms
of the Agreement and consents to each purchaser of all or any part of the
Pledged Collateral at such sale or sales becoming a shareholder, member, partner
or other owner, as applicable, of Issuer thereby entitled to the same rights and
privileges and subject to the same duties as the owner of the applicable Pledged
Collateral under the organizational documents of Issuer.

 

Each capitalized term used herein, unless otherwise defined herein, shall have
the meaning ascribed to such term in the Agreement. Any manually-executed
signature page delivered by a party by facsimile or other electronic
transmission shall be deemed to be an original signature page hereto.

 

[Remainder of page intentionally left blank; signature appears on the following
page.]

 

 

 

 

IN WITNESS WHEREOF, Issuer has executed this Acknowledgment and Agreement of
Issuer under seal as of the date of the Agreement referenced above.

 

  ISSUER:       ILLINOIS CORN PROCESSING, LLC         By: /s/ Neil M. Koehler  
Name:  Neil M. Koehler   Title: President and Chief Executive Officer

 

[Acknowledgment and Agreement of Issuer]