peix_8k-ex1004.htm


    EXHIBIT
10.4 

    PROMISSORY
NOTE

    (Final
Payment)

    


    
      	
              $1,500,000

            	
              Sacramento,
      California

            


    

    October
20, 2008

    


    FOR VALUE
RECEIVED, the undersigned, PACIFIC ETHANOL, INC, a Delaware corporation, with
its principal place of business at 400 Capitol Mall, Suite 2060, Sacramento,
California 95814 (“PEI”),
hereby promises to pay to LYLES MECHANICAL CO., a California corporation, with
its principal place of business at 1210 West Olive Ave., Fresno, California
93728 or its assigns  (“Contractor”)
the principal sum of One Million, Five Hundred
Thousand, and 00/100 Dollars ($1,500,000.00), together with interest thereon as
hereinafter provided until this Note is paid in full.

    


    1.       
    Principal
and Interest Payments. The principal amount of this Note represents the
final payment due to Contractor under the Construction Agreement for the
Stockton Project dated March 6, 2008, as amended (the "Construction Agreement").
The principal amount and all accrued interest shall be paid to Contractor on
March 31, 2009. Interest on the unpaid principal amount hereof shall accrue at a
rate per annum equal to the Prime Rate of interest as reported from time to time
in The Wall
Street Journal, plus two percent (2.00%), computed on the basis of a
360-day year of twelve 30-day months. All payments under this Note shall be
applied first to late fees and costs, if any, second to interest then due, if
any, and then to the remaining principal balance under this Note.

    


    2.         
  Payments
and Computations. All payments on account of indebtedness evidenced by
this Note shall be made not later than 5:00 p.m., California time, on the day
when due in lawful money of the United States. Payments are to be made at such
place as Contractor may, from time to time, in writing appoint, and in the
absence of such appointment, then at the principal place of business of
Contractor as set forth above.

    


    3.          
  Events of
Default. The occurrence of any of the following shall constitute an
"Event of Default" under this Note:

    


    (a)           Failure to Pay.
Borrower shall fail to pay (i) when due any principal payment on the date
due hereunder, or (ii) any interest or other payment required under the terms of
this Note on the date due or

    


    (b)           Voluntary
Bankruptcy or Insolvency Proceedings. Borrower shall (i) apply for or
consent to the appointment of a receiver, trustee, liquidator or custodian of
itself or of all or a substantial part of its property, (ii) be unable, or admit
in writing its inability, to pay its debts generally as they mature, (iii) make
a general assignment for the benefit of its or any of its creditors, (iv) be
dissolved or liquidated, (v) become insolvent (as such term may be defined or
interpreted under any applicable statute), (vi) commence a voluntary case or
other proceeding seeking liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy, insolvency or other similar
law now or hereafter in effect or consent to any such relief or to the
appointment of or taking possession of its property by any official in an
involuntary case or other proceeding commenced against it, or (vii) take any
action for the purpose of effecting any of the foregoing; or

     

    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

    


    (c)           
Involuntary Bankruptcy or
Insolvency Proceedings. Proceedings for the appointment of a receiver,
trustee, liquidator or custodian of Borrower or of all or a substantial part of
the property thereof, or an involuntary case or other proceedings seeking
liquidation, reorganization or other relief with respect to Borrower or the
debts thereof under any bankruptcy, insolvency or other similar law now or
hereafter in effect shall be commenced and an order for relief entered or such
proceeding shall not be dismissed or discharged within sixty (60) days of
commencement.

    


    4.            Rights of
Contractor upon Default. Upon the occurrence or existence of any Event of
Default and at any time thereafter during the continuance of such Event of
Default, Lender may, by written notice to Borrower, immediately declare all
outstanding obligations payable by Borrower hereunder to be immediately due and
payable. Upon the occurrence of an Event of Default, the interest rate on this
Note shall increase to a rate per annum equal to the Prime Rate of interest as
reported from time to time in The Wall Street Journal, plus six percent (6.00%),
simple interest, per annum until such default is cured, and is payable together
with the principal amount hereof in accordance with the payment terms set forth
herein. In addition to the foregoing remedies, upon the occurrence or existence
of any Event of Default, Contractor may exercise any other right, power or
remedy permitted by law, either by suit in equity or by action at law, or
both.

    


    5.            Presentment,
etc. PEI expressly waives demand and presentment for payment, notice of
nonpayment, protest, notice of protest, notice of dishonor, bringing of suit and
diligence in taking any action to collect amounts called for hereunder and in
the handling of securities at any time existing in connection herewith; and
shall be liable for the payment of all sums owing and to be owing hereon,
regardless of and without any notice, diligence, act or omission as or with
respect to the collection of any amount called for hereunder or in connection
with any rights, lien, interest or property at any and all times had or existing
as security for any amount called for hereunder.

    


    6.            Notices.
All notices to be given under this Note shall be given and shall be deemed
served in the same manner as under the Construction Agreement.

    


    7.            Applicable
Law. This Note shall be construed in accordance with the laws of the
State of California, without regard to conflicts of laws principles. PEI
irrevocably submits to the exclusive jurisdiction of any California State or
United States Federal court sitting in Fresno County, California over any action
or proceeding arising out of or relating to this Note, and irrevocably agrees
that all claims in respect of such action or proceeding may be heard and
determined in such California State or Federal court. PEI 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. PEI waives any objection to venue in the State of California
and any objection to an action or proceeding in the State of California on the
basis of forum non conveniens.

     

    
      
        
           


        

        
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    8.            Severability.
The parties hereto intend and believe that each provision in this Note comports
with all applicable local, state and federal laws and judicial decisions.
However, if any provision or provisions, or if any portion of any provision or
provisions, of this Note is found by a court of law to be in violation of any
applicable local, state or federal ordinance, statute, law, administrative or
judicial decision, or public policy, and if the court should declare that
portion, provision or provisions to be illegal, invalid, unlawful, void or
unenforceable as written, then it is the intent of PEI and Contractor that such
portion, provision or provisions be given force to the fullest possible extent
that they are legal, valid and enforceable, that the remainder of this Note
shall be construed as if the illegal, invalid, unlawful, void or unenforceable
portion, provision or provisions were not contained herein, and that the rights,
obligations and interest of PEI and Contractor under the remainder of this Note
shall continue in full force and effect.

    


    9.            Usury.
In the event any interest is paid on this Note which is deemed to be in excess
of the then legal maximum rate, then that portion of the interest payment
representing an amount in excess of the then legal maximum rate shall be deemed
a payment of principal and applied against the principal of this
Note.

    


    10.          Expenses;
Waiver. If action is instituted to collect this Note, the PEI shall pay
all costs and expenses, including, without limitation, reasonable attorneys'
fees and costs, incurred in connection with such action. In addition, the
successful or prevailing party in any proceeding shall be entitled to recover
reasonable attorneys' fees and other costs incurred in such proceeding. PEI and
all parties now or hereafter liable for the payment hereof, whether as endorser,
guarantor, surety or otherwise, generally waive demand, presentment for payment,
notice of dishonor, protest and notice of protest, notice of intent to
accelerate and notice of acceleration, diligence in collecting or bringing suit
against any party hereto, and all other notices, and agree to all extensions,
renewals, indulgences, releases or changes which from time to time may be
granted by the Contractor hereof and to all partial payments hereon, with or
without notice before or after maturity.

    


    11.          Successors
and Assigns. The rights and obligations hereunder of PEI and Contractor
shall be binding upon and benefit the permitted successors, assigns, heirs,
administrators and transferees of the parties.

    


    12.          Waiver
and Amendment. Any provision of this Note may be amended, waived or
modified only upon the prior written consent of PEI and Contractor.

    


    13.          Headings.
The headings of the Paragraphs of this Note are inserted for convenience only
and shall not be deemed to constitute part of this Note or to affect the
construction hereof.


    


    
      
        
           


        

        
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    14.          Time of
the Essence. Time is of the essence as to all dates set forth herein. PEI
and Contractor have executed and delivered this Note as of the day and year
first set forth above.

    


    
      	 
      	
              PACIFIC
      ETHANOL, INC.,

              a
      Delaware corporation

            
	 
      	 
      	 
      
	 
      	
              By:

            	/s/
      Neil M. Koehler
	 
      	 
      	
              Neil
      M. Koehler, Chief Executive Officer

            


    

     

    
 

     

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