pact_8k-ex1002.htm


    EXHIBIT 10.2

     

     

    
      GUARANTEE

       

      THIS
GUARANTEE (“Guarantee”), dated July 28, 2008, is by Pacific Ethanol, Inc., a
Delaware corporation (“Guarantor”), having an office at 400 Capital Mall, Suite
2060, Sacramento, California  95814, in favor of Wachovia Capital
Finance Corporation (Western), a California corporation, in its capacity as
agent pursuant to the Loan Agreement (as hereinafter defined) acting for and on
behalf of the parties thereto as lenders (in such capacity, “Agent”), having an
office at 251 South Lake Avenue, Pasadena, California 91101.

       

      W I T N E S S E T H
:

       

      WHEREAS,
Agent and the parties to the Loan Agreement as lenders (individually, each a
“Lender” and collectively, “Lenders”) have entered into financing arrangements
pursuant to which Lenders (or Agent on behalf of Lenders) may make loans and
advances and provide other financial accommodations to Kinergy Marketing LLC, an
Oregon limited liability company (“Borrower”), as set forth in the Loan and
Security Agreement, dated of even date herewith, by and among Borrower, Wachovia
Bank, National Association, as Issuing Bank, Agent and Lenders (as the same now
exists or 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, including, but not limited
to, this Guarantee (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”); and

       

      WHEREAS,
due to the close business and financial relationships between Borrower and
Guarantor, in consideration of the benefits which will accrue to Guarantor and
as an inducement for and in consideration of Lenders (or Agent on behalf of
Lenders) making loans and advances and providing other financial accommodations
to Borrower pursuant to the Loan Agreement and the other Financing
Agreements;

       

      NOW,
THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Guarantor hereby agrees in favor of Agent and Lenders as follows:

       

      1.           Guarantee.


       

      (a)           Guarantor
absolutely and unconditionally guarantees and agrees to be liable for the full
and indefeasible payment and performance when due of the following (all of which
are collectively referred to herein as the “Guaranteed
Obligations”):  all obligations, liabilities and indebtedness of any
kind, nature and description of Borrower to Agent and/or any Lender, including
principal, interest, charges, fees, costs and expenses, however evidenced,
whether as principal, surety, endorser, guarantor or otherwise, arising under
the Loan Agreement or any of the other Financing Agreements, whether now
existing or hereafter arising, whether arising before, during or after the
initial or any renewal term of the Loan Agreement or after the commencement of
any case with respect to Borrower under the United States Bankruptcy Code or any
similar statute (including, without limitation, the payment of interest and
other amounts, which would accrue and become due but for the commencement of
such case, whether or not such amounts are allowed or allowable in whole or in
part in any such case and including loans, interest, fees, charges and expenses
related thereto and all other obligations of Borrower or its successors to Agent
and any Lender arising after the commencement of such case), whether direct or
indirect, absolute or contingent, joint or several, due or not due, primary or
secondary, liquidated or unliquidated, secured or unsecured, and however
acquired by Agent or any Lender.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (b)           This
Guarantee is a guaranty of payment and not of collection.  Guarantor
agrees that Agent and Lenders need not attempt to collect any Guaranteed
Obligations from Borrower or any other Obligor (as hereinafter defined) or to
realize upon any collateral, but may require Guarantor to make immediate payment
of all of the Guaranteed Obligations to Agent when due, whether by maturity,
acceleration or otherwise, or at any time thereafter may apply any amounts
received in respect of the Guaranteed Obligations to any of the Guaranteed
Obligations, in whole or in part (including attorneys’ fees and legal expenses
incurred by Agent or any Lender with respect thereto or otherwise chargeable to
Borrower or Guarantor).

       

      (c)           Payment
by Guarantor shall be made to Agent at the office of Agent from time to time on
demand as Guaranteed Obligations become due.  Guarantor shall make all
payments to Agent on the Guaranteed Obligations free and clear of, and without
deduction or withholding for or on account of, any setoff, counterclaim,
defense, duties, taxes, levies, imposts, fees, deductions, withholding
restrictions or conditions of any kind.  One or more successive or
concurrent actions may be brought hereon against Guarantor either in the same
action in which Borrower or any other Obligor is sued or in separate
actions.  In the event any claim or action, or action on any judgment,
based on this Guarantee is brought against Guarantor, Guarantor agrees not to
deduct, set-off, or seek any counterclaim (other than compulsory counterclaims)
for or recoup any amounts which are or may be owed by Agent or any Lender to
Guarantor.

       

      (d)           Notwithstanding
anything to the contrary contained herein, the amount of the obligations payable
by Guarantor under this Guarantee shall be the aggregate amount of the
Guaranteed Obligations unless a court of competent jurisdiction adjudicates
Guarantor’s obligations to be invalid, avoidable or unenforceable for any reason
(including, without limitation, because of any applicable state, federal or
other law relating to fraudulent conveyances or transfers), in which case the
amount of the Guaranteed Obligations payable by Guarantor hereunder shall be
limited to the maximum amount that could be guaranteed by Guarantor without
rendering Guarantor’s Guaranteed Obligations under this Guarantee invalid,
avoidable or unenforceable under such applicable law.

       

      2.           Waivers and
Consents.

       

      (a)           Notice
of acceptance of this Guarantee, the making of loans and advances and providing
other financial accommodations to Borrower and presentment, demand, protest,
notice of protest, notice of nonpayment or default and all other notices to
which Borrower or Guarantor is entitled are hereby waived by
Guarantor.  Guarantor also waives notice of and hereby consents to,
(i) any amendment, modification, supplement, extension, renewal, or restatement
of the Loan Agreement and any of the other Financing Agreements, including,
without limitation, extensions of time of payment of or increase or decrease in
the amount of any of the Guaranteed Obligations, the interest rate, fees, other
charges, or any collateral, and the guarantee made herein shall apply to the
Loan Agreement and the other Financing Agreements and the Guaranteed Obligations
as so amended, modified, supplemented, renewed, restated or extended, increased
or decreased, (ii) the taking, exchange, surrender and releasing of collateral
or guarantees now or at any time held by or available to Agent for itself and
the benefit of Lenders for the obligations of Borrower or any other party at any
time liable on or in respect of the Guaranteed Obligations or who is the owner
of any property which is security for the Guaranteed Obligations (individually,
an “Obligor” and collectively, the “Obligors”), (iii) the exercise of, or
refraining from the exercise of any rights against Borrower or any other Obligor
or any collateral, (iv) the settlement, compromise or release of, or the waiver
of any default with respect to, any of the Guaranteed Obligations and (v) any
financing by Agent and/or any Lender of Borrower under Section 364 of the United
States Bankruptcy Code or consent to the use of cash collateral by Agent and/or
Lenders under Section 363 of the United States Bankruptcy
Code.  Guarantor agrees that the amount of the Guaranteed Obligations
shall not be diminished and the liability of Guarantor hereunder shall not be
otherwise impaired or affected by any of the foregoing.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (b)           No
invalidity, irregularity or unenforceability of all or any part of the
Guaranteed Obligations shall affect, impair or be a defense to this Guarantee,
nor shall any other circumstance which might otherwise constitute a defense
available to or legal or equitable discharge of Borrower in respect of any of
the Guaranteed Obligations, affect, impair or be a defense to this
Guarantee.  Without limitation of the foregoing, the liability of
Guarantor hereunder shall not be discharged or impaired in any respect by reason
of any failure by Agent or any Lender to perfect or continue perfection of any
lien or security interest in any collateral or any delay by Agent or any Lender
in perfecting any such lien or security interest.  As to interest,
fees and expenses, whether arising before or after the commencement of any case
with respect to Borrower under the United States Bankruptcy Code or any similar
statute, Guarantor shall be liable therefor, even if Borrower’s liability for
such amounts does not, or ceases to, exist by operation of
law.  Guarantor acknowledges that Agent and Lenders have not made any
representations to Guarantor with respect to Borrower, any other Obligor or
otherwise in connection with the execution and delivery by Guarantor of this
Guarantee and Guarantor is not in any respect relying upon Agent or any Lender
or any statements by Agent or any Lender in connection with this
Guarantee.

       

      (c)           Unless
and until the indefeasible payment and satisfaction in full of all of the
Guaranteed Obligations in immediately available funds and the termination of the
financing arrangements of Agent and Lenders with Borrower, Guarantor hereby
irrevocably and unconditionally waives and relinquishes (i) all statutory,
contractual, common law, equitable and all other claims against Borrower, any
collateral for the Guaranteed Obligations or other assets of Borrower or any
other Obligor, for subrogation, reimbursement, exoneration, contribution,
indemnification, setoff or other recourse in respect to sums paid or payable to
Agent or any Lender by Guarantor hereunder and (ii) any and all other benefits
which Guarantor might otherwise directly or indirectly receive or be entitled to
receive by reason of any amounts paid by or collected or due from Guarantor,
Borrower or any other Obligor upon the Guaranteed Obligations or realized from
their property, except as expressly provided for in the Loan
Agreement.

       

      3.           Additional Indebtedness;
Duty of Guarantor.  Guarantor acknowledges that Guaranteed
Obligations may arise from time to time at the request of Borrower or otherwise
as provided in the Loan Agreement without further authorization from, the
consent of or notice to, Guarantor, notwithstanding any adverse change in the
condition of the business, assets or prospects of Borrower or any other Obligor
after the date hereof.  In giving Agent this Guarantee, Guarantor is
not concerned with the condition of the business, assets or prospects of
Borrower or of any other Obligor and waives the right, if any, to require Agent
to disclose to Guarantor any information Agent may now have or hereafter acquire
concerning the business, assets or prospects of Borrower or any other
Obligor.  Guarantor has established adequate means to obtain from
Borrower on a continuing basis financial and other information pertaining to
Borrower’s business, assets and prospects, and assumes the responsibility for
being and keeping informed of the financial and other conditions of Borrower and
of all circumstances bearing upon the risk of nonpayment of the Guaranteed
Obligations which diligent inquiry would reveal.  Agent need not
inquire into the powers of Borrower or the authority of its officers, directors,
partners or agents acting or purporting to act on its behalf, and any Guaranteed
Obligations created in reliance upon the purported exercise of such power or
authority are and shall be included within the Guaranteed Obligations and
Guarantor shall be liable therefor.  All Guaranteed Obligations to
Agent heretofore, now or hereafter created shall be deemed to have been granted
at the specific authorization and request of Guarantor and in consideration of
and in reliance upon this Guarantee.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      4.           Subordination.  Except
for payment of amounts expressly permitted under the Loan Agreement, payment of
all amounts now or hereafter owed to Guarantor by Borrower or any other Obligor
is hereby subordinated in right of payment to the indefeasible payment in full
of the Guaranteed Obligations and all such amounts and any security and
guarantees therefor are hereby assigned to Agent as security for the Guaranteed
Obligations.

       

      5.           Account Stated. The
books and records of Lender showing the account between Lender and Borrower
shall be admissible in evidence in any action or proceeding against or involving
Guarantor as prima facie proof of the
items therein set forth, and the monthly statements of Lender rendered to
Borrower, to the extent to which no written objection is made within forty-five
(45) days from the date of sending thereof to Borrower, shall be deemed
conclusively correct and constitute an account stated between Lender and
Borrower and be binding on Guarantor.

       

      6.           Termination.  This
Guarantee is continuing, unlimited, absolute and unconditional.  All
Guaranteed Obligations shall be conclusively presumed to have been created in
reliance on this Guarantee.  Guarantor shall continue to be liable
hereunder until one of Agent’s officers actually receives a written termination
notice from Guarantor sent to Agent at its address set forth above by certified
mail, return receipt requested and thereafter as set forth
below.  Revocation or termination hereof by Guarantor shall not
affect, in any manner, the rights of Agent or any obligations or duties of
Guarantor under this Guarantee with respect to (a) Guaranteed Obligations which
have been created, contracted, assumed or incurred prior to the receipt by Agent
of such written notice of revocation or termination as provided herein,
including, without limitation, (i) all amendments, extensions, renewals and
modifications of such Guaranteed Obligations (whether or not evidenced by new or
additional agreements, documents or instruments executed on or after such notice
of revocation or termination), (ii) all interest, fees and similar charges
accruing or due on and after revocation or termination, and (iii) all attorneys’
fees and legal expenses, costs and other reasonable expenses paid or incurred on
or after such notice of revocation or termination in attempting to collect or
enforce any of the Guaranteed Obligations against Borrower, Guarantor or any
other Obligor (whether or not suit be brought), or (b) Guaranteed Obligations
which have been created, contracted, assumed or incurred after the receipt by
Agent of such written notice of revocation or termination as provided herein
pursuant to any contract entered into by Agent or any Lender prior to receipt of
such notice.  The sole effect of such revocation or termination by
Guarantor shall be to exclude from this Guarantee the liability of Guarantor for
those obligations arising after the date of receipt by Agent of such written
notice which are unrelated to Guaranteed Obligations arising or transactions
entered into prior to such date.  Without limiting the foregoing, this
Guarantee may not be terminated and shall continue so long as the Loan Agreement
shall be in effect (whether during its original term or any renewal,
substitution or extension thereof).

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      7.           Reinstatement.  If
after receipt of any payment of, or proceeds of collateral applied to the
payment of, any of the Guaranteed Obligations, Agent or any Lender is required
to surrender or return such payment or proceeds to any Person for any reason,
then the Guaranteed Obligations intended to be satisfied by such payment or
proceeds shall be reinstated and continue and this Guarantee shall continue in
full force and effect as if such payment or proceeds had not been received by
Agent or such Lender.  Guarantor shall be liable to pay to Agent and
each Lender, and does indemnify and hold Agent and such Lender harmless for the
amount of any payments or proceeds surrendered or returned.  This
Section 7 shall remain effective notwithstanding any contrary action which may
be taken by Agent or any Lender in reliance upon such payment or
proceeds.  This Section 7 shall survive the termination or revocation
of this Guarantee. 

       

      8.           Amendments and
Waivers.  Neither this Guarantee nor any provision hereof shall
be amended, modified, waived or discharged orally or by course of conduct, but
only by a written agreement signed by Agent and by the
Guarantor.  Agent shall not by any act, delay, omission or otherwise
be deemed to have expressly or impliedly waived any of its rights, powers and/or
remedies unless such waiver shall be in writing and signed by
Agent.  Any such waiver shall be enforceable only to the extent
specifically set forth therein.  A waiver by Agent of any right, power
and/or remedy on any one occasion shall not be construed as a bar to or waiver
of any such right, power and/or remedy which Agent would otherwise have on any
future occasion, whether similar in kind or otherwise.

       

      9.           Corporate Existence, Power
and Authority.  Guarantor is a corporation duly organized and
in good standing under the laws of its state or other jurisdiction of
incorporation and is duly qualified as a foreign corporation and in good
standing in all states or other jurisdictions where the nature and extent of the
business transacted by it or the ownership of assets makes such qualification
necessary, except for those jurisdictions in which the failure to so qualify
would not have a material adverse effect on the financial condition, results of
operation or businesses of Guarantor or the rights of Lender hereunder or under
any of the other Financing Agreements.  The execution, delivery and
performance of this Guarantee is within the corporate powers of Guarantor, have
been duly authorized and are not in contravention of law or the terms of the
certificates of incorporation, by laws, or other organizational documentation of
Guarantor, or any indenture, agreement or undertaking to which Guarantor is a
party or by which Guarantor or its property are bound.  This Guarantee
constitutes the legal, valid and binding obligation of Guarantor enforceable in
accordance with its terms.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      10.           Governing Law; Choice of
Forum; Service of Process; Jury Trial Waiver.

       

      (a)           The
validity, interpretation and enforcement of this Guarantee and any dispute
arising out of the relationship between Guarantor and Agent or any Lender,
whether in contract, tort, equity or otherwise, shall be governed by the
internal laws of the State of California, but excluding any principles of
conflicts of law or other rule of law that would cause the application of the
law of any jurisdiction other than the laws of the State of
California.

       

      (b)           Guarantor
hereby irrevocably consents and submits to the non-exclusive jurisdiction of the
Circuit Court of Los Angeles County, California and the United States District
Court for the Northern District of California, whichever Agent may elect, and
waives any objection based on venue or forum non conveniens with respect to any
action instituted therein arising under this Guarantee or any of the other
Financing Agreements or in any way connected with or related or incidental to
the dealings of Guarantor and Agent or any Lender in respect of this Guarantee
or any of the other Financing Agreements or the transactions related hereto or
thereto, in each case whether now existing or hereafter arising and whether in
contract, tort, equity or otherwise, and agrees that any dispute arising out of
the relationship between Guarantor or Borrower and Agent or any Lender or the
conduct of any such persons in connection with this Guarantee, the other
Financing Agreements or otherwise shall be heard only in the courts described
above (except that Agent and Lenders shall have the right to bring any action or
proceeding against Guarantor or its property in the courts of any other
jurisdiction which Agent deems necessary or appropriate in order to realize on
any collateral at any time granted by Borrower or Guarantor to Agent or any
Lender or to otherwise enforce its rights against Guarantor or its
property).

       

      (c)           Guarantor
hereby waives personal service of any and all process upon it and consents that
all such service of process may be made by certified mail (return receipt
requested) directed to its address set forth below and service so made shall be
deemed to be completed five (5) days after the same shall have been so deposited
in the U.S. mails, or, at Agent’s option, by service upon Guarantor in any other
manner provided under the rules of any such courts.  Within thirty
(30) days after such service, Guarantor so served shall appear in answer of such
process, failing which Guarantor shall be deemed in default and judgment may be
entered by Agent against Guarantor for the amount of the claim and other relief
requested.

       

      (d)           GUARANTOR
HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE
OF ACTION (i) ARISING UNDER THIS GUARANTEE OR ANY OF THE OTHER FINANCING
AGREEMENTS OR (ii) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
DEALINGS OF GUARANTOR AND AGENT OR ANY LENDER IN RESPECT OF THIS GUARANTEE OR
ANY OF THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS RELATED HERETO OR
THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN
CONTRACT, TORT, EQUITY OR OTHERWISE.  GUARANTOR HEREBY AGREES AND
CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED
BY COURT TRIAL WITHOUT A JURY AND THAT GUARANTOR, ANY LENDER OR AGENT MAY FILE
AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF GUARANTOR, LENDERS AND AGENT TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (e)           Agent
and Lenders shall not have any liability to Guarantor (whether in tort,
contract, equity or otherwise) for losses suffered by Guarantor in connection
with, arising out of, or in any way related to the transactions or relationships
contemplated by this Guarantee, or any act, omission or event occurring in
connection herewith, unless it is determined by a final and non-appealable
judgment or court order binding on Agent or such Lender that the losses were the
result of acts or omissions constituting gross negligence or willful
misconduct.

       

      11.           Notices.  All
notices, requests and demands hereunder shall be in writing and deemed to have
been given or made: if delivered in person, immediately upon delivery; if by
telex, telegram or facsimile transmission, immediately upon sending and upon
confirmation of receipt; if by nationally recognized overnight courier service
with instructions to deliver the next business day, one (1) business day after
sending; and if by certified mail, return receipt requested, five (5) days after
mailing.  All notices, requests and demands upon the parties are to be
given to the following addresses (or to such other address as any party may
designate by notice in accordance with this Section):

       

      
        	
              	
                If
      to Guarantor: 

              	
                Pacific
      Ethanol, Inc.

              


      

      400 Capital Mall, Suite
2060

      Sacramento,
California  95814

      Attention:  Chief Financial
Officer

      Telephone No.:  (916)
403-2123

      Telecopy No.:  (916)
446-3937

       

      
        	
              	
                with
      copy to: 

              	
                Pacific
      Ethanol, Inc.

              


      

      400 Capital Mall, Suite
2060

      Sacramento,
California  95814

      Attention:  General
Counsel

      Telephone No.:  (916)
403-2123

      Telecopy No.:  (916)
446-3936

       

      
        	
                 
      

              	
                If
      to Agent and Lender:

              	
                Wachovia
      Capital Finance Corporation (Western), as
Agent

              


      

      
        	
                 
      

              	
                251
      South Lake Avenue

              


      

      
        	
                 
      

              	
                Pasadena,
      California 91101

              


      

      
        	
                 
      

              	
                Attention:
      Portfolio Manager

              


      

      
        	
                 
      

              	
                Telephone
      No.:  (626) 304-4900

              


      

      
        	
                 
      

              	
                Telecopy
      No.:  (626) 304-4969

              


      

       

      12.           Partial
Invalidity.  If
any provision of this Guarantee is held to be invalid or unenforceable, such
invalidity or unenforceability shall not invalidate this Guarantee as a whole,
but this Guarantee shall be construed as though it did not contain the
particular provision held to be invalid or unenforceable and the rights and
obligations of the parties shall be construed and enforced only to such extent
as shall be permitted by applicable law.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      13.           Entire
Agreement.  This
Guarantee represents the entire agreement and understanding of the parties
concerning the subject matter hereof, and supersedes all other prior agreements,
understandings, negotiations and discussions, representations, warranties,
commitments, proposals, offers and contracts concerning the subject matter
hereof, whether oral or written.

       

      14.           Successors and
Assigns.  This
Guarantee, the other Financing Agreements and any other document referred to
herein or therein shall be binding upon Guarantor and their respective
successors and assigns and shall inure to the benefit of Agent and each Lender
and their respective successors, endorsees, transferees and
assigns.  The liquidation, dissolution or termination of Guarantor
shall not terminate this Guarantee as to Guarantor.

       

      15.           Construction.

       

      (a)           All
references to the term “Guarantor” wherever used herein shall mean Guarantor and
its respective successors and assigns (including, without limitation, any
receiver, trustee or custodian for Guarantor or any of its respective assets or
Guarantor in its capacity as debtor or debtor-in-possession under the United
States Bankruptcy Code).  All references to the term “Person” or
“person” wherever used herein shall mean any individual, sole proprietorship,
partnership, corporation (including, without limitation, any corporation which
elects subchapter S status under the Internal Revenue Code of 1986, as amended),
limited liability company, limited liability partnership, business trust,
unincorporated association, joint stock corporation, trust, joint venture or
other entity or any government or any agency or instrumentality of political
subdivision thereof.

       

      (b)           Capitalized
terms not otherwise defined herein shall have the respective meanings ascribed
thereto in the Loan Agreement.

       

      


       

      [Signature
Page Follows]

      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      IN
WITNESS WHEREOF, Guarantor has executed and delivered this Guarantee as of the
day and year first above written.

       

      PACIFIC
ETHANOL, INC.

      


      By:         /S/ NEIL M.
KOEHLER                                                                

      Name:    Neil M.
Koehler

      Title:      CEO

       

       

       

       

       

       

      
        [Signature
Page to Guarantee]