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EXHIBIT 10.2
  
 
  
KINERGY MARKETING LLC
400 Capitol Mall, Suite 2060
Sacramento, California 95814
 

    as of May 12, 2011

    

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. 7 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, the Letter re: Amendment No. 3 to Loan and
Security Agreement, dated September 22, 2010, the Letter re: Amendment No. 4 to
Loan and Security Agreement, dated October 27, 2010, the Letter re: Amendment
No. 5 to Loan and Security Agreement, dated December 15, 2010, the Letter re:
Amendment No. 6 to Loan and Security Agreement, dated as of April 8, 2011, and
this Letter re: Amendment No. 7 to Loan and Security Agreement (this “Amendment
No. 7”) (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. 7 in both such capacities, as
“Wells Fargo”.
 
Borrower and Pacific Ethanol, Inc., a Delaware corporation, as a 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. 7.
  
 
 

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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. 7 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. 7 to Loan Agreement” shall mean the Letter re: Amendment No. 7 to
Loan and Security Agreement, dated as of May __, 2011, 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” as set forth in Section
1.76 of the Loan Agreement is hereby amended and restated in its entirety as
follows:
 
“1.76           “Maximum Credit” shall mean (a) from the date of Amendment No. 6
to Loan Agreement through and including June 30, 2011, the amount of
$25,000,000, and (b) from and after July 1, 2011, the amount of $20,000,000.”

3. Acknowledgment of Obligations, Security Interests and Financing Agreements.
 
(a) Acknowledgment of Obligations.  Borrower and Parent hereby acknowledge,
confirm and agree that Borrower is unconditionally indebted to Wells Fargo as of
the close of business on May 12, 2011, in respect of the Loans and all other
Obligations in the aggregate principal amount of not less than $18,703,144.12
together with interest accrued and accruing thereon, and all fees, costs,
expenses and other sums and charges now or hereafter payable by Borrower to
Wells Fargo pursuant to the Loan Agreement and the other Financing Agreements,
all of which are unconditionally owing by Borrower to Wells Fargo pursuant to
the Financing Agreements, in each case without offset, defense or counterclaim
of any kind, nature or description whatsoever.
 
(b) Acknowledgment of Security Interests.  Borrower and Parent hereby
acknowledge, confirm and agree that Wells Fargo has, and shall continue to have,
valid, enforceable and perfected security interests in and liens upon the
Collateral heretofore granted by Borrower to Wells Fargo pursuant to the
Financing Agreements or otherwise granted to or held by Wells Fargo.
  
 
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(c) Binding Effect of Financing Agreements.  Borrower and Parent hereby
acknowledge, confirm and agree that: (i) each of the Financing Agreements to
which Borrower and Parent (as applicable) are a party has been duly executed and
delivered to Wells Fargo by Borrower and Parent (as applicable), and each is in
full force and effect as of the date hereof, (ii) the agreements and obligations
of Borrower and Parent (as applicable) contained in such Financing Agreements to
which they are a party and in this Agreement constitute the legal, valid and
binding Obligations of Borrower and Parent (as applicable), enforceable against
them in accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or limiting creditors’ rights generally or by equitable principles
relating to enforceability, and Borrower and Parent (as applicable) have no
valid defense to the enforcement of such Obligations, and (iii) Wells Fargo is
and shall be entitled to the rights, remedies and benefits provided for in the
Financing Agreements and pursuant to applicable law, but subject to the terms
and conditions of this Agreement.
   
4. 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.
7), the truth and accuracy of which are continuing conditions of the making of
Loans to Borrower:
 
(a) this Amendment No. 7 and each other agreement or instrument to be executed
and/or delivered in connection herewith (collectively, together with this
Amendment No. 7, 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 Parent’s corporate or limited liability company powers
(as applicable), (b) are not in contravention of law or the terms of Borrower’s
or Parent’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 Parent is a party or by which
Borrower, Parent 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;
 
(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. 7, no Default or Event of Default
exists as of the date of this Amendment No. 7; 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. 7.
  
 
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5. Conditions Precedent.
 
This Amendment No. 7 shall not become effective unless all of the following
conditions precedent have been satisfied in full, as determined by Wells Fargo:
 
(a) the receipt by Wells Fargo of an original (or faxed or electronic copy) of
this Amendment No. 7, duly authorized, executed and delivered by Borrower and
Parent; and
 
(b) immediately prior, and immediately after giving affect to the amendments and
agreements set forth herein, there shall exist no Default or Event of Default.
  
6. Effect of this Amendment No. 7.
 
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. 7 and the Loan Agreement or any of the other Financing
Agreements, the terms of this Amendment No. 7 shall control.  The Loan Agreement
and this Amendment No. 7 shall be read and construed as one agreement.
  
7. 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. 7 and to protect
and/or maintain perfection of Wells Fargo’s security interests in and liens upon
the Collateral.
   
8. Governing Law.
 
The validity, interpretation and enforcement of this Amendment No. 7 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).
  
9. Binding Effect.
 
This Amendment No. 7 shall be binding upon and inure to the benefit of each of
the parties hereto and their respective successors and assigns
  
10. Counterparts.
 
This Amendment No. 7 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. 7, 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. 7 by
telecopier or other method of electronic communication shall have the same force
and effect as delivery of an original executed counterpart of this Amendment No.
7.  Any party delivering an executed counterpart of this Amendment No. 7 by
telecopier or other method of electronic communication also shall deliver an
original executed counterpart of this Amendment No. 7, but the failure to
deliver an original executed counterpart shall not affect the validity,
enforceability, and binding effect of this Amendment No. 7 as to such party or
any other party.
 
[SIGNATURE PAGE FOLLOWS]
   

 
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IN WITNESS hereof, the parties have executed and delivered this Amendment No. 7
as of the day and year first above written.
  

 
Very truly yours,
     
KINERGY MARKETING LLC,
  as Borrower
 
By: /s/ Bryon McGregor

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Name: Bryon McGregor

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Title: CFO

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PACIFIC ETHANOL, INC,
  as Parent
 
By: /s/ Bryon McGregor

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Name: Bryon McGregor

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Title: CFO

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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

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Name: Carlos Valles

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Title: Vice President

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[Signature Page to Amendment No. 7 to Loan and Security Agreement]
 
 
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