Document:

pei_8k-ex1005.htm

    EXHIBIT
10.5

    
       

      UNCONDITIONAL
GUARANTY

       

      BORROWER:                                   PACIFIC
ETHANOL, INC.

       

      GUARANTOR:                                PACIFIC
AG. PRODUCTS, LLC

       

      LENDER:                                           LYLES
UNITED, LLC

       

      LOAN
AMOUNT:                           $30,000,000

       

      DATE:                                              NOVEMBER
7, 2008

       

      THIS
UNCONDITIONAL GUARANTY (“Guaranty”) is
executed by the above-named Guarantor in favor of LYLES UNITED, LLC, a Delaware
limited liability company (“Lender”), as of the
date set forth above.

       

      1. Lender
made a loan to Pacific Ethanol Imperial, LLC (“PE Imperial”) in the
Loan Amount set forth above (the “Loan”), which Loan
was guaranteed by the Borrower and secured by the assets of PE
Imperial.  Lender has agreed to release its security interest in the
assets of PE Imperial and to permit PE Imperial to assign its obligations under
the Loan to Borrower, in consideration of, among other things, the execution and
delivery of this Guaranty by Guarantor.  Guarantor is willing to enter
into this Guaranty because Borrower, through its subsidiary Pacific Ethanol
California, Inc., indirectly owns 100% of the ownership interests of Guarantor
and is benefited by the release of Lender’s security interest in the assets of
PE Imperial and by PE Imperial’s assignment of the Loan to
Borrower.  The Loan is to be evidenced by an Amended and Restated
Promissory Note in said principal sum (the “Note”).

       

      2. For and
in consideration of the recitations contained herein and to induce Lender to
consent to the assignment of the Loan by PE Imperial to Borrower and to release
its security interest in the assets of PE Imperial and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Guarantor hereby irrevocably and absolutely guarantees to and for
the benefit of Lender or order, the full and faithful payment and performance of
all of Borrower’s present and future indebtedness and obligations, direct or
indirect, to Lender arising under or with respect to the Note (collectively, the
“Obligations”).

       

      3. This
Guaranty is, and is intended to be, a guaranty of the Obligations, in addition
to any other guaranty, endorsement or collateral held by Lender therefor,
whether or not furnished by Guarantor.  Guarantor shall have no right
of subrogation with respect to any payments made by Guarantor hereunder until
all of the Obligations are paid or performed in full.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      4. Guarantor
authorizes Lender, without notice or demand and without affecting Guarantor’s
obligations hereunder, from time to time:  (i) to renew, extend,
increase, accelerate or otherwise change the time for payment of, the terms of
or the interest on the Obligations or any part thereof; (ii) to take from any
party and hold collateral for the payment and performance of the Obligations or
any part thereof; (iii) to accept and hold any endorsement or guaranty of
payment and performance of the Obligations or any part thereof and to release or
substitute any such endorser or guarantor, or any party who has given any
security interest in any collateral as security for the payment and performance
of the Obligations or any part thereof, or any other party in any way obligated
to pay or perform the Obligations or any part thereof; (iv) to direct the order
or manner of the disposition of any and all collateral and the enforcement of
any and all endorsements and guaranties relating to the Obligations or any part
thereof as Lender, in its sole discretion, may determine; and (v) to determine
how, when and what application of payments and credits, if any, shall be made on
the Obligations or any part thereof, and to apply the same upon principal or
interest or the portion thereof, if any, in excess of the amounts guaranteed
under this Guaranty.

       

      5. No delay
or omission by Lender in exercising any right or remedy hereunder shall operate
as a waiver thereof or of any other right or remedy, and no single or partial
exercise thereof shall preclude any other or further exercise thereof or the
exercise of any other right or remedy.  All rights and remedies of
Lender hereunder are cumulative.  No invalidity, illegality or
unenforceability of the Obligations shall release, diminish, or extinguish the
liability of Guarantor hereunder.  This Guaranty shall remain in full
force and effect until the date on which all Obligations shall be paid in
full.

       

      6. Guarantor
agrees that in the event all or any part of the liability of Borrower in respect
of the Obligations hereafter ceases as a result of a non-judicial foreclosure by
Lender of any or all of any collateral delivered to secure the Obligations,
Guarantor nevertheless expressly assumes liability for the Obligations,
notwithstanding that the effect of any applicable statutes or other governing
law, may limit or prohibit Guarantor’s right to proceed or pursue any remedies
against Borrower, and notwithstanding that Guarantor may not be permitted to
subrogate to Lender’s position.  Guarantor hereby waives any defense
to the obligations and liabilities of Guarantor hereunder and any and all rights
with respect thereto that Guarantor may otherwise have under the provisions of
applicable statutes or other governing law as a result of Lender’s election of
any remedy which impairs or alters the rights of Guarantor against Borrower or
any collateral held by Lender, and Guarantor expressly acknowledges and agrees
that Lender may, in its sole discretion, elect to foreclose upon any collateral
Lender holds by non-judicial foreclosure rather than by judicial foreclosure
without impairing or affecting in any way whatsoever Lender’s rights under this
Guaranty, including the right to proceed against Guarantor for any deficiency
following a non-judicial foreclosure sale.  Guarantor understands and
agrees that upon any foreclosure or assignment in lieu of foreclosure of any
security held by Lender:  (i) such security will no longer exist and
that any right that Guarantor might otherwise have, upon full payment and
performance of the Obligations to Lender by Guarantor, to participate in any
such security or to be subrogated to any rights of Lender with respect to any
such security, will be nonexistent; and (ii) Guarantor shall be deemed to have
waived any right, title, interest or claim under any circumstances in or to any
real or personal property held by Lender or any third party following any
foreclosure or assignment in lieu of foreclosure of any such
security.

      
        
           

        

        
          -2-

          
            

          

        

        
           

        

      

       

      7. Guarantor
waives all rights to exoneration from any and all of their liabilities hereunder
pursuant to the provisions of the California Civil Code and/or under any other
applicable statutes or other governing law.

       

      8. Guarantor
waives any right to require Lender to:  (i) proceed against Borrower;
(ii) proceed against or exhaust any security held from Borrower; or (iii) pursue
any other remedy Lender may have whatsoever.  Until all Obligations of
Borrower to Lender shall have been paid or performed in full, Guarantor shall
have no right of subrogation, and waives any right to enforce any remedy which
Lender now has or may hereinafter have against Borrower, and waives any benefit
of and any right to participate in any security now or hereinafter held by
Lender.  Guarantor waives all presentments, demands for performance,
notices of non-performance, protests, notices of protest, notices of dishonor
and notices of acceptance of this Guaranty and of the existence, creation or
incurring of new or additional Obligations.  Guarantor’s obligations
and liabilities hereunder shall be separate and distinct from those of
Borrower.  If Borrower defaults under any of the Obligations, Lender,
at its option, may proceed directly against Guarantor, without having commenced
any action or obtained any judgment against Borrower or any other guarantor, and
without applying any property of Borrower (or any other person) held as security
for the payment and performance of the Obligations.  The liability of
Guarantor hereunder shall not be released, diminished, or extinguished by
Lender’s failure or delay in enforcing any of its rights.

       

      9. It shall
not be necessary for Lender to inquire into the powers of Borrower or its
officers, directors, partners, or agent acting or purporting to act on its
behalf, and any indebtedness made or created in reliance upon the professed
exercise of such powers shall be guaranteed hereunder.

       

      10. Guarantor
further agrees to pay all reasonable costs and expenses, including, without
limitation, reasonable attorneys’ fees, at any time paid or incurred by Lender
in endeavoring to enforce this Guaranty.

       

      11. This
Guaranty is absolute and unconditional and shall not be affected by any act or
thing whatsoever, except as herein provided.  This Guaranty is not an
accommodation, but rather a material consideration bargained for by Lender in
agreeing to make the Loan.  No modification or amendment of any
provision of this Guaranty shall be effective unless in writing and subscribed
by a duly authorized officer of Lender.

       

      12. This
Guaranty and the transactions evidenced hereby shall be construed and
interpreted under the laws of the State of California, without regard to
conflicts of laws principles.  Guarantor 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 Guaranty, 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.  Guarantor 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.  Guarantor 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.

      
        
           

        

        
          -3-

          
            

          

        

        
           

        

      

       

      13. Nothing
herein shall be construed to constitute Guarantor as a maker, co-maker or
principal debtor.

       

      14. If any
provision of this Guaranty or portion of such provision, or the application
thereof to any person or circumstance, shall, to any extent, be held invalid or
unenforceable, the remainder of this Guaranty or the remainder of such provision
and the application thereof to other persons or circumstances, other than those
as to which it is held invalid or unenforceable, shall not be affected thereby,
and each term and provision of this Guaranty shall be valid and be enforced to
the fullest extent permitted by the law.  Unless the context otherwise
requires, the masculine, feminine and neuter genders and the singular and the
plural shall each be deemed to include one another, as appropriate.

       

      15. Lender
may, upon written notice to Guarantor, assign this Guaranty in whole or in
part.

       

      IN
WITNESS WHEREOF, this Guaranty has been executed by Guarantor at Sacramento,
California, as of the date first set forth above.

       

      
        	
                GUARANTOR:

              	
                PACIFIC
      AG. PRODUCTS, LLC

                 

                 

                 

                
                  By:
      /s/ JOHN T.
      MILLER    

                

              
	 	
                John
      T. Miller, COO 

              

      

       

      

       

      -4-pei_8k-ex1006.htm

    EXHIBIT
10.6

    

    IRREVOCABLE
JOINT INSTRUCTION LETTER

     

     

    November
7, 2008

     

    Pacific
Ethanol California, Inc.

    400
Capitol Mall, Suite 2060

    Sacramento,
California 95814

     

    Ladies
and Gentlemen:

     

    Pacific
Ethanol Imperial, LLC, a Delaware limited liability company (“PE Imperial”),
Pacific Ethanol, Inc., a Delaware corporation (the “Company”), you, and
Lyles United, LLC, a Delaware limited liability company (“Lender”) have entered
into a Loan Restructuring Agreement dated as of November 7, 2008 (the “Agreement”) which
contemplates the execution and delivery of this Irrevocable Joint Instruction
Letter.

     

    Until
such time as Lender has informed you in writing that the New Note (as defined in
the Agreement) has been repaid in full, you are hereby irrevocably authorized
and instructed to immediately remit directly to Lender all future cash
distributions received on account of your ownership interest in (i) PE Imperial,
and (ii) Front Range Energy, LLC, a Colorado limited liability company. All such
amounts remitted, despite being made directly by you to Lender, shall
nevertheless be considered a distribution to the Company and a payment by the
Company to Lender under the New Note.  By its execution hereof, Lender
hereby agrees to promptly inform you in writing at such time as the New Note has
been repaid in full.

     

    Lender is
a beneficiary hereof, and no amendment or modification to the authorization and
instructions set forth herein may be made without Lender’s written
consent.

     

    Very
truly yours,

    

    PACIFIC
ETHANOL, INC.

    

    

    By:/s/ NEIL M.
KOEHLER                                    

    Neil M.
Koehler, CEO

    

    LYLES
UNITED, LLC

    

    

    By:/s/ WILL
LYLES                                                 

    Will
Lyles, Vice President

     

    By its
execution hereof, Pacific Ethanol California, Inc. hereby represents and
warrants that it is authorized to enter into and execute this Irrevocable Joint
Instruction Letter and to perform its obligations contemplated herein and agrees
to perform all such obligations.

     

    ACKNOWLEDGED
AND AGREED:

     

    PACIFIC
ETHANOL CALIFORNIA, INC.

     

    

    By:/s/ JOHN T.
MILLER                                    

    John T.
Miller, COO

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