Document:

Exhibit 10.5

 

 

 

 

 

 

 

PACIFIC ETHANOL, INC.

TO

 

U.S. BANK NATIONAL ASSOCIATION, as Trustee

 

 

 

 

 

 

[FIRST][SECOND] SUPPLEMENTAL INDENTURE TO

INDENTURE DATED [           ], 2013

(SUBORDINATED DEBT SECURITIES)

 

Dated as of [         ], 2013

 

 

 

Series [A][B] Subordinated Convertible Notes

 

 

 

 

 

 

 

 

 

 

 

    	 

    	 

    

 

PACIFIC ETHANOL, INC.

 

[FIRST][SECOND] SUPPLEMENTAL
INDENTURE TO

INDENTURE DATED [             ], 2013

(SUBORDINATED DEBT SECURITIES)

 

SERIES [A][B] SUBORDINATED
CONVERTIBLE NOTES

 

[FIRST][SECOND] SUPPLEMENTAL
INDENTURE, dated as of [________], 2013 (this “[First][Second] Supplemental Indenture”), between PACIFIC ETHANOL,
INC., a Delaware corporation (the “Company”), and U.S. BANK NATIONAL ASSOCIATION, a national banking association
organized under the laws of the United States, as Trustee (the “Trustee”).

 

RECITALS

 

A.               
The Company has
heretofore executed and delivered to the Trustee an Indenture, dated as of March __, 2013, (the “Indenture”),
providing for the issuance from time to time of Securities (as defined in the Indenture) by the Company.

 

B.               
Section 3.1 of
the Indenture provides for various matters with respect to any series of Securities issued under the Indenture to be established
in an indenture supplemental to the Indenture.

 

C.               
Section 9.1(k)
of the Indenture provides for the Company and the Trustee to enter into an indenture supplemental to the Indenture to establish
the form or terms of Securities of any series as provided by Sections 2.1 and 3.1 of the Indenture.

 

D.               
In accordance with
that certain Securities Purchase Agreement, dated [             2013] (the “Securities Purchase Agreement”), by and
among the Company and the investors party thereto (the “Investors”), the Company has agreed to sell to the Investors,
and the Investors have agreed to purchase, subject to the satisfaction of certain terms and conditions set forth therein), pursuant
to (i) the Indenture, (ii) this [First][Second] Supplemental Indenture or the [Second][First] Supplemental Indenture, as applicable,
(iii) the Securities Purchase Agreement and (iv) the Company’s Registration
Statement on Form S-3 (File number 333-180731) (the “Registration Statement”),
(x) at the Series A Closing (as defined in the Securities Purchase Agreement), $6 million in aggregate principal amount of Series
A Notes (as defined in the Securities Purchase Agreement) together with related Series A Warrants (as defined in the Securities
Purchase Agreement) and Series B Warrants (as defined in the Securities Purchase Agreement) and (y) at the Series B Closing (as
defined in the Securities Purchase Agreement), $8 million in aggregate principal amount of Series B Notes (as defined in the Securities
Purchase Agreement). [INSERT IN SECOND SUPPLEMENTAL INDENTURE ONLY: On [                2013], the Company issued $6 million in aggregate principal
amount of the Series A Notes to the Investors in accordance therewith.]

 

    	1

    	 

    

 

E.               
The Company hereby
desires to supplement the Indenture pursuant to this [First][Second] Supplemental Indenture to set forth the terms and conditions
of the Series [A][B] to be issued in accordance herewith.

 

NOW, THEREFORE, THIS
[FIRST][SECOND] SUPPLEMENTAL INDENTURE WITNESSETH, for and in consideration of the premises and the issuance of the series of Securities
provided for herein, it is mutually agreed, for the equal and proportionate benefit of all Holders of the Securities of such series,
as follows:

 

ARTICLE
I

Relation to Indenture; Definitions

 

Section 1.1.         
RELATION TO INDENTURE. This [First][Second] Supplemental Indenture constitutes an integral part of the Indenture.

 

Section 1.2.         
DEFINITIONS. For all purposes of this [First][Second] Supplemental Indenture:

 

(a)               
Capitalized terms used herein without definition shall have the meanings specified in the Indenture or in the Securities,
as applicable;

 

(b)              
All references herein to Articles and Sections, unless otherwise specified, refer to the corresponding Articles and Sections
of this [First][Second] Supplemental Indenture; and

 

(c)               
The terms “herein,” “hereof,” “hereunder” and other words of similar import refer to
this [First][Second] Supplemental Indenture.

 

ARTICLE
II

The Series of Securities

 

Section 2.1.         
TITLE. There shall be a series of Securities designated the “Series [A][B] Subordinated Convertible Notes” (the
“Series [A][B] Notes”).

 

Section 2.2.         
LIMITATION ON AGGREGATE PRINCIPAL AMOUNT. The aggregate principal amount of the Securities shall initially be limited to
[INSERT IN SEREIS A SUPPLEMENTAL INDENTURE ONLY: $6 million. The Company may, without the consent of the holders of the Series
[A][B] Notes, in accordance with the terms of the Securities Purchase Agreement and the related Indenture supplement, issue up
to $8 million in aggregate principal amount of additional Securities designated as “Series B Subordinated Convertible Notes”
(the “Series [B][A] Notes”) in the form attached as Exhibit A-3 to the Securities Purchase Agreement
and the related indenture supplement.][INSERT IN SERIES B SUPPLEMENTAL INDENTURE ONLY: $8 million. Prior to the date hereof, the
Company has issued, in accordance with the terms of the Securities Purchase Agreement and the related Indenture supplement, $6
million in aggregate principal amount of additional Securities designated as “Series A Subordinated Convertible Notes”
(the “Series [B][A] Notes”) in the form attached as Exhibit A-2 to the Securities Purchase Agreement
and the related indenture supplement.] The Series [A][B] Notes, together with the Series [B][A] Notes offered by the related indenture
supplement, will constitute two separate series of Securities under the Indenture.

 

    	2

    	 

    

 

Section 2.3.         
RANK. The Series [A][B] Notes and the Series [B][A] Notes shall rank pari passu in right of payment.

 

Section 2.4.         
PRINCIPAL PAYMENT DATE. The principal amount of the Series [A][B] Notes outstanding (together with any accrued and unpaid
interest and other amounts) shall be payable in accordance with the terms and conditions set forth in the Series [A][B] Notes on
each Installment Date, Conversion Date, Redemption Date and on the Maturity Date, in each case as defined in the Series [A][B]
Notes.

 

Section 2.5.         
INTEREST AND INTEREST RATES. The rate of interest on each Security shall be 5% per annum, subject to adjustment as provided
in the Series [A][B] Notes, accruing from [ ,] 2013, and shall be payable at such times and in the manner set forth in the Series
[A][B] Notes. Any interest to be paid with respect to any Series [A][B] Note will, as provided in the Indenture and the Series
[A][B] Notes, be paid to the person in whose name such Security (or one or more Predecessor Securities) is registered at the close
of business on the Installment Notice Date unless otherwise specified in a writing by the holder of such Series [A][B] Note to
the Trustee and the Company.

 

Section 2.6.         
PLACE OF PAYMENT. Except as otherwise provided by the Series [A][B] Notes, the Place of Payment where the Series [A][B]
Notes may be presented or surrendered for payment, where the Series [A][B] Notes may be surrendered for registration of transfer
or exchange (to the extent required or permitted, as applicable, by the terms of the Series [A][B] Notes) and where notices and
demand to or upon the Trustee in respect of the Series [A][B] Notes and the Indenture may be served shall be the [Insert Corporate
Trust Office of the Trustee].

 

Section 2.7.         
REDEMPTION. The Company may redeem the Series [A][B] Notes, in whole or in part, at such times and in the manner set forth
in the Series [A][B] Notes.

 

Section 2.8.         
DENOMINATION. The Securities of this series shall be issuable only in registered form without coupons and in denominations
of $1,000 and integral multiples thereof.

 

Section 2.9.         
CURRENCY. Principal and interest and any other amounts payable, from time to time, on the Series [A][B] Notes shall be payable
in such coin or currency of the United States of America that at the time of payment is legal tender for payment of public and
private debts in accordance with Section [24] of the Series [A][B] Notes.

 

    	3

    	 

    

 

Section 2.10.     
FORM OF SECURITIES. In lieu of the Form of Security provided in Article II of the Indenture, the Series [A][B] Notes shall
be issued in the form attached hereto as Exhibit A. The Company has elected to issue only Definitive Securities and
shall not issue any Global Securities hereunder.

 

Section 2.11.     
CONVERTIBLE SECURITIES. The Series [A][B] Notes are convertible into the Common Stock, par value $0.001 per share, of the
Company upon the terms and conditions set forth in the Series [A][B] Notes.

 

Section 2.12.     
SECURITIES REGISTRAR. The Trustee shall serve initially as Securities Registrar.

 

Section 2.13.     
SINKING FUND OBLIGATIONS. The Company has no obligation to redeem or purchase any Series [A][B] Notes pursuant to any sinking
fund or analogous requirement or upon the happening of a specified event or at the option of a Holder thereof.

 

Section 2.14.     
EXCLUDED PROVISIONS. The Company has elected that none of the following provisions of the Indenture shall be applicable
to the Series [A][B] Notes and any analogous provisions (including definitions related thereto) of this [First][Second] Supplemental
Indenture and/or the Series [A][B] Notes shall govern in lieu thereof:

 

		·	Definition of “Senior Debt” in Section 1.1;

 

		·	Section 1.14 (Legal Holidays);

 

		·	Section 3.7 (Payment of Interest; Interest Rights Preserved);

 

		·	Section 4.1 (Satisfaction and Discharge of Indenture);

 

		·	Section 4.2 (Application of Trust Money);

 

		·	Section 5.2 (Acceleration of Maturity; Rescission and Annulment);

 

		·	Section 5.7 (Limitation on Suits);

 

		·	Section 5.12 (Control by Holders);

 

		·	Section 5.13 (Waiver of Past Defaults);

 

		·	Section 6.2 (Notice of Defaults);

 

    	4

    	 

    

 

 

		·	Section 9.1 (Without Consent of Holders);

 

		·	Article VIII (Consolidation, Amalgamation, Merger and Sale);

 

		·	Article XI (Redemption of Securities); and

 

		·	Article XIII (Defeasance).

 

Section 2.15         EVENTS OF
DEFAULT. In accordance with Section 3.1(n) of the Indenture, only the Events of Default set forth in Section 4.1 of the
Series [A][B] Notes shall be applicable to the Series [A][B] Notes.

 

Section 2.16.     
COVENANTS. In addition to the covenants set forth in Article Ten of the Indenture, the Company shall comply with the additional
covenants set forth in Section 13 of the Series [A][B] Notes.

 

Section 2.17.     
IMMEDIATELY AVAILABLE FUNDS. All cash payments of principal and interest shall be made in U.S. dollars and immediately available
funds.

 

Section 2.18.     
SUBORDINATION. The Company and the holders of Senior Debt as of the date hereof have agreed that the subordination provisions
of the Indenture with respect to the Series [A][B] Notes shall be qualified in their entirety by this Section 2.18 (and, to the
extent necessary, any provision of the Indenture contrary to this Section 2.18, and for the benefit of such holders of Senior Debt,
shall be deemed waived by such holders of Senior Debt solely to the limited extent of the terms and conditions of this Section
2.18 and solely with respect to the Series [A][B] Notes issued hereunder).

 

(a)               
Senior Debt. In lieu of the definition of “Senior Debt” in Section 1.1 of the Indenture, the Company
and the holders of Senior Debt as of the date hereof have elected to have the following definition apply throughout both the Indenture
and this [First][Second Supplemental Indenture, in each case, solely with respect to the Series [A][B] Notes:

 

“Senior Debt” means
the Senior Unsecured Notes (as defined in the Series [A][B] Notes) and any other (a) Debt of the Company issued to any affiliate
of any holder of Senior Unsecured Notes, whether currently outstanding or hereafter issued, unless, by the terms of the instrument
creating or evidencing such Debt, it is provided that such Debt is not superior in right of payment to the Securities, and (b)
any modifications, refunding, deferrals, renewals or extensions of any such Debt or securities, notes or other evidence of Debt
issued in exchange for such Debt; provided, that the aggregate principal amount of such Senior Debt outstanding shall not exceed
$22.2 million without the prior written consent of the Required Holders (as defined in the Notes), not to be unreasonably withheld.

 

    	5

    	 

    

 

(b)              
Designated Senior Debt. For the avoidance of doubt, “Designated Senior Debt” in Section 1.1 of the Indenture
shall always include the Senior Debt to the extent a default or event of default has occurred with respect thereto.

 

(c)               
Permitted Cash Payments.

 
 

(i)                  Restrictions
on Cash Redemptions. Notwithstanding anything in the Indenture to the contrary, including, without limitation Article Fourteen
thereof, while the Senior Debt remains outstanding (x) there shall be no restrictions on the right of a holder of Series [A][B]
Notes to deliver any Redemption Notice (as defined in the Series [A][B] Notes) to the Company and (y) the Company shall be prohibited
from paying any holder of Series [A][B] Notes in cash, and each holder of Series [A][B] Notes shall be prohibited from accepting
any cash amount from the Company, in satisfaction of any Redemption Price (as defined in the Series [A][B] Notes) with respect
thereto. 
  

(ii)                Payments
of Interest and Other Amounts. Notwithstanding anything in the Indenture to the contrary, including, without limitation Article
Fourteen thereof, the Company shall be permitted to pay, and each holder of Series [A][B] Notes shall be permitted to receive,
with respect to any Series [A][B] Notes of such holder, any (i) Interest (as defined in the Series [A][B] Notes), (ii) Late Charges
(as defined in the Series [A][B] Notes, (iii) Buy-In Price (as defined in each of the Securities Purchase Agreement and the Notes,
(iv) Allocation Share Cancellation Amount (as defined in each of the Series [A][B] Notes), or (v) Exchange Cap Share Cancellation
Amount (as defined in each of the Series [A][B] Notes), in each case, due and payable from time to time, in accordance therewith;
provided, however, that, while the Senior Debt remains outstanding, the Company shall only be permitted to pay the amounts
set forth in (i) through (v) above in shares of Common Stock (as defined in the Series [A][B] Notes) and/or any other securities
of the Company or any of its Subsidiaries (or any successor entities) that are not senior in rank or payment to the Senior Debt. 

 
 

(d)               
No Limitation on Payment in Securities. Notwithstanding anything in the Indenture to the contrary, including, without limitation
Article Fourteen thereof, there shall be no restrictions on the Company’s right, at any time, to deliver, and the right
of a holder of Series [A][B] Notes, at any time, to receive, shares of Common Stock and/or any other securities of the Company
or any of its Subsidiaries (or any successor entities), as applicable, in satisfaction of all, or any part, of any amounts outstanding
or other obligations under such Series [A][B] Notes or any other Transaction Document (as defined in the Securities Purchase Agreement),
whether upon conversion of any Notes (as defined in the Securities Purchase Agreement), exercise of any Warrants ( as defined
in the Securities Purchase Agreement) or otherwise, provided that, so long as any Senior Debt is outstanding, any such
securities delivered to the holders of Series [A][B] Notes may not be senior in rank or payment to the Senior Debt.

 

    	6

    	 

    

 

(e)               
No Limitation on Actions to Enforce Payment in Securities. Notwithstanding anything in the Indenture to the contrary,
including, without limitation Article Fourteen thereof, there shall be no restrictions on the rights of a holder of Series [A][B]
Notes to, at any time, take any actions, in law or equity, in any court or other Governmental Entity (as defined in the Securities
Purchase Agreement) to enforce such holder’s right to receive payment in shares of Common Stock or and/or any other securities
of the Company or any of its Subsidiaries, as applicable, in satisfaction of all, or any part, of any amounts outstanding or other
obligations under such Series [A][B] Notes or any other Transaction Document, whether in connection with a proposed conversion
of any Notes, exercise of any Warrants or otherwise; provided that, so long as any Senior Debt is outstanding, (x) any
such securities delivered to the holders of Series [A][B] Notes may not be senior in rank or payment to the Senior Debt and (y)
no holder of Series [A][B] Notes shall institute any action, in law or equity, to commence bankruptcy, insolvency, reorganization
or liquidation proceedings or other proceedings for the relief of debtors against the Company or any of its Subsidiaries or consent
to the filing of such petition or to the appointment of a custodian, receiver, liquidator, assignee, trustee, sequestrator or
other similar official with respect to the Company or any of its Subsidiaries without the prior written consent of the holders
of at least 80% of the aggregate principal amount of Senior Debt then outstanding (the “Required Senior Debt Holders”). 

 

(f)               
No Rights to Proceeds from Sale of Securities. Notwithstanding anything in the Indenture to the contrary, including,
without limitation Article Fourteen thereof, no holder of Senior Debt shall have any rights pursuant to the Indenture or this [First][Second]
Supplemental Indenture to any proceeds received by any holder of Series [A][B] Notes from any sale of Series [A][B] Notes or Common
Stock or any other securities of the Company or any of its Subsidiaries, as applicable, delivered to any holder of Series [A][B]
Notes in satisfaction of all, or any part, of any amounts outstanding or other obligations under such Series [A][B] Notes or any
other Transaction Document, whether in connection with a proposed conversion of any Notes, exercise of any Warrants or otherwise,
provided that, so long as any Senior Debt is outstanding, any such securities delivered to the holders of Series [A][B]
Notes may not be senior in rank or payment to the Senior Debt.

 

(g)              
No Subordination Rights with Respect to Other Securities or Agreements. Notwithstanding anything in the Indenture
to the contrary, including, without limitation Article Fourteen thereof, nothing in the Indenture or this [First][Second] Supplemental
Indenture shall be deemed to subordinate any amounts or other obligations due and payable, from time to time, under the Warrants
or any other Transaction Document (other than the Notes).

 

(h)               Amendments
Related to Equity. Notwithstanding anything in the Indenture to the contrary, including, without limitation Article
Fourteen thereof, there shall be no restrictions on the rights of a holder of Series [A][B] Notes, at any time, to amend,
waive, reset or otherwise adjust (whether pursuant to the terms thereof or otherwise) any provision of this [First][Second]
Supplemental Indenture or the Series [A][B] Notes or any other Transaction Document; provided, that nothing in any such
amendments, waivers, resets or other adjustments may amend or waive any provision of this Indenture or of the [First][Second]
Supplemental Indenture, including without limitation, Article Fourteen of the Indenture or this Section 2.18 or Section 2.20
in any manner materially adverse to the holders of Senior Debt then outstanding (solely in their capacity as holders of
outstanding indebtedness of the Company or any of its Subsidiaries and not in their capacity as a holder of Common Stock,
Convertible Securities (as defined in the Series [A][B] Notes) and/or Options (as defined in the Series [A][B] Notes) and/or
other equity securities of the Company or any of its Subsidiaries), without the written consent of the Required Senior Debt
Holders.

 

    	7

    	 

    

 

 

(i)                
No Paying Agent. The Company has elected not to have the Trustee act as Paying Agent (as defined in the Indenture)
in connection with any payments in accordance with Article Fourteen of the Indenture. 

 

Section 2.19.     
TRUSTEE MATTERS.

 

(a)               
Duties of Trustee. Notwithstanding anything in the Indenture to the contrary:

 

(i)                
 the sole duty of the Trustee is to act as the Security Registrar unless otherwise agreed to by the Required Holders, the
Trustee and the Company in an additional supplemental Indenture (other than the First Supplemental Indenture or the Second Supplemental
Indenture) or as separately agreed to in a writing by the Trustee and the Required Holders;

 

(ii)              
the Trustee may conclusively rely and shall be fully protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence
of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party
or parties, and the Trustee need not investigate any fact or matter contained therein;

 

(iii)            
the Trustee shall not be liable for any action it takes or omits to take in good faith without negligence or willful misconduct
which it believes to be authorized or within its discretion, rights or powers;

 

(iv)            
the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness
or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled
to examine the books, records and premises of the Company, personally or by agent or attorney and the reasonable expenses of every
such examination shall be paid by the Company or, if paid by the Trustee or any predecessor Trustee, shall be reimbursed by the
Company upon demand;

 

    	8

    	 

    

 

(v)              
the permissive rights of the Trustee to do things enumerated in the Indenture shall not be construed as a duty and the Trustee
shall not be answerable for other than its negligence or willful misconduct;

 

(vi)            
the rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right
to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder (including as
Security Registrar or, if applicable, Paying Agent), and to each agent, custodian, and any other such Persons employed to act
hereunder; 

 

(vii)          
in no event shall the Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder
arising out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages,
accidents, acts or war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions,
loss or malfunctions of utilities, communications or computer (software and hardware) services (it being understood that the Trustee
shall use reasonable efforts which are consistent with accepted practices in the banking industry to avoid and mitigate the effects
of such occurrences and to resume performance as soon as practicable under the circumstances);

 

(viii)        
in no event shall the Trustee be responsible or liable for special, indirect, or consequential loss or damage of any kind
whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of the likelihood
of such loss or damage and regardless of the form of action; and

 

(ix)            
except during the continuance of an Event of Default, in the absence of bad faith on its part, the Trustee may conclusively
rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished
to the Trustee and conforming to the requirements of the Indenture; but in the case of any such certificates or opinions which
by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine
the same to determine whether they conform to the requirements of the Indenture but shall have no obligation or liability for confirming
or investigating the accuracy of mathematical calculations or other facts purported to be stated therein.

 

(b)              
Additional Indemnification. In addition to any indemnification rights set forth in the Indenture, the Company agrees
to indemnify each of the Trustee, or any successor Trustee, and its officers, directors, agents and employees, for, and to hold
it harmless against, any and all loss, liability, damage, claim or expense, including taxes (other than taxes based upon, measured
by or determined by the income of the Trustee), incurred without negligence or willful misconduct on its part, as determined by
a final order of a court or competent jurisdiction, arising out of or in connection with the acceptance or administration of the
trust or trusts hereunder, including the reasonable costs and expenses of defending itself against any claim (whether asserted
by the Company, or any Holder or any other person) or liability in connection with the exercise or performance of any of its powers
or duties hereunder or in connection with enforcing the provisions of this Section. The Trustee shall notify the Company promptly
of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Company shall not relieve the Company of
its obligations hereunder. The Company shall defend the claim with counsel who shall be reasonably satisfactory to the Trustee,
and the Trustee shall cooperate in the defense. In addition, the Trustee may retain one separate counsel on behalf of itself and
the Holders (and in the case of an actual or perceived conflict of interest, one additional separate counsel on behalf of the Holders)
and, if deemed advisable by such counsel, local counsel, and the Company shall pay the reasonable fees and expenses of such separate
counsel and local counsel. The indemnification herein also extends to a settlement.

 

    	9

    	 

    

 

 

(c)               
Successor Trustee Petition Right. If an instrument of acceptance by a successor Trustee required by Section 6.11
of the Indenture has not been delivered to the Trustee within 30 days after the giving of a notice of removal, the Trustee being
removed, at the expense of the Company, may petition any court of competent jurisdiction for the appointment of a successor Trustee
with respect to the Securities of such series. 

 

(d)              
Trustee as Creditor. If and when the Trustee shall be or become a creditor of the Company (or any other obligor upon
the Securities), the Trustee shall be subject to the provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).

 

(e)               
Reports by the Company. In addition to the Company’s obligations pursuant to Section 7.4 of the Indenture,
the Company shall:

 

(i)                
file with the Trustee (unless filed with the SEC through the EDGAR system or any successor system), within 15 days after
the Company files the same with the SEC, copies of the annual and quarterly reports and of the information, documents and other
reports (or copies of such portions of any of the foregoing as the SEC may from time to time by rules and regulations prescribe)
which the Company may be required to file with the SEC pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if the
Company is not required to file information, documents or reports pursuant to either of said Sections, then it shall file with
the Trustee and the SEC, in accordance with rules and regulations prescribed from time to time by the SEC, such of the supplementary
and periodic information, documents and reports which may be required pursuant to Section 13 of the Exchange Act in respect of
a security listed and registered on a national securities exchange as may be prescribed from time to time in such rules and regulations;
and

 

    	10

    	 

    

 

(ii)              
whether or not required under the Exchange Act, so long as any Securities are Outstanding, the Company shall file a copy
of all of the information and reports referred to in clauses (i) above with the SEC for public availability within the time periods
specified in the SEC rules and regulations (unless the SEC will not accept such a filing) and make such information available to
Holders, securities analysts and prospective investors upon request.

 

The parties hereto acknowledge and agree
that delivery of such reports, information, and documents to the Trustee pursuant to the provisions of Section 7.04 of the Indenture
and this Section 2.19(e) is for informational purposes only and the Trustee’s receipt of such shall not constitute constructive
notice of any information contained therein or determinable from information contained therein, including the Company’s compliance
with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers’ Certificates).

 

(f)               
Execution of Supplemental Indentures. Notwithstanding anything in the Indenture to the contrary, the Trustee may,
but shall not be obligated to, enter into any such supplemental indenture which affects the Trustee’s own rights, duties,
liabilities or immunities under the Indenture or otherwise. 

 

(g)              
Statements by Officers as to Default. In addition to the Company’s obligations pursuant to Section 10.5 of
the Indenture, the Company agrees as follows:

 

(i)                
Annually, within 90 days after the close of each fiscal year beginning with the first fiscal year during which one or more
series of Securities are Outstanding, the Company will deliver to the Trustee an Officer's Certificate (which need not include
the statements set forth in Section 1.3 of the Indenture) from the principal executive officer, principal financial officer or
principal accounting officer of the Company as to his or her knowledge of the Company’s compliance (without regard to any
period of grace or requirement of notice provided herein) with all conditions and covenants under the Indenture and, if the Company
shall be in Default, specifying all such Defaults and the nature and status thereof of which such officer has knowledge.

 

(ii)              
The Company shall, so long as any of the Securities are Outstanding, deliver to the Trustee, as soon as practicable and
in any event within 30 days after the Company becomes aware of any Default, an Officers’ Certificate specifying such Default,
its status and the actions that the Company is taking or proposes to take in respect thereof.

 

(iii)            
The Company shall deliver to the Trustee within 90 days after the end of each fiscal year of the Company, an Opinion of
Counsel to the extent required under the Trust Indenture Act.

 

(h)              
No Global Security. Notwithstanding anything in the Indenture to the contrary, none of the Securities shall be represented
by a Global Security.

 

    	11

    	 

    

 

(i)                
Payment of Taxes and Other Claims. The Company shall pay or discharge or cause to be paid or discharged, before the
same shall become delinquent, (1) all taxes, assessments and governmental charges (including withholding taxes and any penalties,
interest and additions to taxes) levied or imposed upon the Company or any Subsidiary or upon the income, profits or property of
the Company or any Subsidiary, and (2) all material lawful claims for labor, materials and supplies which, if unpaid, might by
law become a lien upon the property of the Company or any Subsidiary; provided, however, that the Company shall not be required
to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or
validity is being contested in good faith by appropriate proceedings and for which disputed amounts adequate reserves have been
made.

 

(j)                
Further Instruments and Acts. Upon request of the Trustee, the Company will execute and deliver such further instruments
and perform such further acts as may be reasonably necessary or proper to carry out more effectively the purposes of the Indenture.

 

(k)              
Expense. Notwithstanding anything in the Indenture to the contrary, any actions taken by the Trustee in its capacity
as the Security Registrar shall be at the Company’s reasonable expense. 

 

(l)                
Authenticating Agent. The Trustee may appoint an Authenticating Agent acceptable authenticate Securities in accordance
with Section 6.14 of the Indenture. Each reference in the Indenture to authentication by the Trustee includes authentication by
such agent.

 

(m)            
Officer’s Certificate. In lieu of the definition of “Officer’s Certificate” in Section 1.1
of the Indenture, the Company and the holders of Senior Debt as of the date hereof have elected to have the following definition
apply throughout both the Indenture and this [First][Second Supplemental Indenture, in each case, solely with respect to the Series
[A][B] Notes:

 

“Officer’s Certificate”
means, in the case of the Company, a certificate signed by two officers, such as the Chairman of the Board, the Chief Executive
Officer, the Chief Financial Officer, the Chief Operating Officer, the President, any Vice President or any other duly authorized
officer of the Company, or a person duly authorized by any of them, and delivered to the Trustee.

 

(n)              
Responsible Officer. In lieu of the definition of “Responsible Officer” in Section 1.1 of the Indenture,
the Company and the holders of Senior Debt as of the date hereof have elected to have the following definition apply throughout
both the Indenture and this [First][Second Supplemental Indenture, in each case, solely with respect to the Series [A][B] Notes:

 

“Responsible
Officer” when used with respect to the Trustee, means any officer within the Global Corporate Trust Services division
of the Trustee (or any successor group of the Trustee) or any other officer of the Trustee customarily performing functions similar
to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject.

 

    	12

    	 

    

 

(o)              
Subsidiary. In lieu of the definition of “Subsidiary” in Section 1.1 of the Indenture, the Company and
the holders of Senior Debt as of the date hereof have elected to have the following definition apply throughout both the Indenture
and this [First][Second Supplemental Indenture, in each case, solely with respect to the Series [A][B] Notes:

 

“Subsidiary”
means (a) a corporation of which more than 50% of the outstanding voting stock of which is owned, directly or indirectly, by the
Company or by one or more other Subsidiaries, or by the Company and one or more other Subsidiaries or (b) any partnership or similar
business organization of which more than 50% of the ownership interests having ordinary voting power shall at the time be so owned.
For the purposes of this definition, “voting stock” means capital stock or equity interests which ordinarily have
voting power for the election of directors, whether at all times or only so long as no senior class of stock has such voting power
by reason of any contingency.

 

Section 2.20.       AMENDMENTS
AND WAIVERS. In lieu of Section 9.2 of the Indenture, the Company and the holders of Senior Debt as of the date hereof have elected
to have this Section 2.20 apply throughout both the Indenture and this [First][Second] Supplemental Indenture, in each case, solely
with respect to the Series [A][B] Notes Section 9.2 of the Indenture:

 

The Company and the Trustee may amend, waive or supplement this
Indenture with the consent of each Holder of the Series [A][B] Notes then outstanding (excluding any the Series [A][B] Notes held
by the Company or any of its Subsidiaries); provided, that nothing in any such amendments, waivers or supplements may amend or
waive any provision of this Indenture or of the [First][Second] Supplemental Indenture, including without limitation, Article Fourteen
of this Indenture or Section 2.18 or Section 2.20 of the [First][Second] Supplemental Indenture in any manner materially adverse
to the holders of Senior Debt then outstanding (solely in their capacity as holders of outstanding indebtedness of the Company
or any of its Subsidiaries and not in their capacity as a holder of Common Stock, Convertible Securities (as defined in the Series
[A][B] Notes) and/or Options (as defined in the Series [A][B] Notes) and/or other equity securities of the Company or any of its
Subsidiaries), without the written consent of the Required Senior Debt Holders (as defined in the [First][Second] Supplemental
Indenture).

 

    	13

    	 

    

 

 

ARTICLE
III

Expenses

 

Section 3.1.         
PAYMENT OF EXPENSES. In connection with the offering, sale and issuance of the Series [A][B] Notes, the Company, in its
capacity as borrower with respect to the Series [A][B] Notes, shall pay all costs and expenses relating to the offering, sale and
issuance of the Series [A][B] Notes and compensation and expenses of the Trustee under the Indenture in accordance with the provisions
of Section 6.7 of the Indenture.

 

Section 3.2.         
PAYMENT UPON RESIGNATION OR REMOVAL. Upon termination of this [First][Second] Supplemental Indenture or the Indenture or
the removal or resignation of the Trustee, unless otherwise stated, the Company shall pay to the Trustee all amounts accrued to
the date of such termination, removal or resignation.

 

ARTICLE
IV

Miscellaneous Provisions

 

Section 4.1.         
TRUSTEE NOT RESPONSIBLE FOR RECITALS. The recitals herein contained are made by the Company and not by the Trustee, and
the Trustee assumes no responsibility for the correctness thereof. The Trustee makes no representation as to the validity or sufficiency
of this [First][Second] Supplemental Indenture.

 

    	14

    	 

    

 

 

Section 4.2.         
ADOPTION, RATIFICATION AND CONFIRMATION. The Indenture, as supplemented and amended by this [First][Second] Supplemental
Indenture, is in all respects hereby adopted, ratified and confirmed.

 

Section 4.3.         
CONFLICT WITH INDENTURE; TRUST INDENTURE ACT. Notwithstanding anything to the contrary in the Indenture, if any conflict
arises between the terms and conditions of this [First][Second] Supplemental Indenture (including, without limitation, the terms
and conditions of the Series [A][B] Notes attached hereto as Exhibit A) and the Indenture, the terms and conditions
of this [First][Second] Supplemental Indenture (including the Series [A][B] Notes) shall control; provided, however, that if any
provision of this [First][Second] Supplemental Indenture or the Series [A][B] Notes limits, qualifies or conflicts with a provision
of the Trust Indenture Act that is required under such Act to be a part of and govern this [First][Second] Supplemental Indenture,
the latter provisions shall control. If any provision of this [First][Second] Supplemental Indenture modifies or excludes any provision
of the Trust Indenture Act that may be so modified or excluded, the latter provisions shall be deemed to apply to the Indenture
as so modified or excluded, as the case may be.

 

Section 4.4.         
AMENDMENTS; WAIVER. Subject to Section 2.18(h) and the rights of the holders of the Senior Debt, this [First][Second] Supplemental
Indenture may be amended by the written consent of the Company and the Required Holders (as defined in the Series [A][B] Notes).
Subject to Section 2.18(h) and the rights of the holders of the Senior Debt, no provision hereof may be waived other than by an
instrument in writing signed by the party against whom enforcement is sought. 

 

Section 4.5.         
SUCCESSORS. This [First][Second] Supplemental Indenture shall be binding upon and inure to the benefit of the parties and
their respective successors and assigns, including any purchasers of the Series [A][B] Notes.

 

Section 4.6.         
SEVERABILITY. If any provision of this First][Second] Supplemental Indenture shall be invalid or unenforceable in any jurisdiction,
such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this First][Second] Supplemental
Indenture in that jurisdiction or the validity or enforceability of any provision of this First][Second] Supplemental Indenture
in any other jurisdiction.

 

Section 4.7.         
COUNTERPARTS. This [First][Second] Supplemental Indenture may be executed in any number of counterparts, each of which shall
be an original, but such counterparts shall together constitute but one and the same instrument.

 

Section 4.8.         
GOVERNING LAW. THIS FIRST SUPPLEMENTAL INDENTURE AND EACH SECURITY SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS
OF THE STATE OF NEW YORK AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES THEREOF.

 

[The remainder of the page is intentionally
left blank]

 

 

    	15

    	 

    

 

IN WITNESS WHEREOF, the
parties hereto have caused this [First][Second] Supplemental Indenture to be duly executed, and their respective corporate seals
to be hereunto affixed and attested, on the date or dates indicated in the acknowledgments and as of the day and year first above
written.

 

	 	 	
        PACIFIC ETHANOL, INC.

         

        By:___________________________

        Name:

        Title:

	 	 	 
	
        ATTEST:

         

        By:___________________________

        Name:

        Title:
	 	 
	 	 	 

 

 

 

    	16

    	 

    

 

	Acknowledged and Agreed, as of this _____ of _____ by:	 	 
	 	 	 
	
        [SENIOR NOTEHOLDERS]

         

         

         

        By:___________________________

        Name:

        Title:
	 	
        [SENIOR NOTEHOLDERS]

         

         

         

        By:___________________________

        Name:

        Title:

	 	 	 
	
        [SENIOR NOTEHOLDERS]

         

         

         

        By:___________________________

        Name:

        Title:
	 	
        [SENIOR NOTEHOLDERS]

         

         

         

        By:___________________________

        Name:

        Title:

	 	 	 
	
        [SENIOR NOTEHOLDERS]

         

         

         

        By:___________________________

        Name:

        Title:
	 	
        [SENIOR NOTEHOLDERS]

         

         

         

        By:___________________________

        Name:

        Title:

 

    	17

    	 

    

 

	 	 	
        U.S. Bank National Association, as Trustee

         

         

         

        By:___________________________

        Name:

        Title:

 

    	18

    	 

    

 

EXHIBIT A

 

(FORM OF SECURITY)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

A-1Exhibit 10.6

 

AMENDMENT AGREEMENT

 

This Amendment Agreement
(the “Agreement”), dated as of March 28, 2013, is by and between Pacific Ethanol, Inc., a Delaware corporation
with offices located at 400 Capitol Mall, Suite 2060, Sacramento, CA 95814 (the “Company”), and the holder identified
on the signature page hereto (“Holder”).

 

R E C I T A L S

 

A.                 
On or about January
11, 2013, the Company issued (i) $22,192,490.64 in aggregate principal amount of its senior unsecured notes (the “Notes”)
and (ii) a warrant (the “Warrant”) to purchase the Company’s common stock, $0.001 par value per share
(the “Common Stock”), pursuant to a Securities Purchase Agreement dated as of December 19, 2012 (the “Securities
Purchase Agreement”) to the Holder and certain other investors signatory thereto (collectively, the “Investors”).
Capitalized terms not defined herein shall have the meaning as set forth in the Securities Purchase Agreement as amended hereby.

 

B.                 
In connection
with the execution and delivery of the Securities Purchase Agreement, the Company entered into that certain Registration Rights
Agreement, dated as of January 11, 2013 (the “Registration Rights Agreement”), by and between the Company and
the Investors, pursuant to which the Company agreed to provide certain registration rights with respect to the Registrable Securities
(as defined in the Registration Rights Agreement) under the Securities Act of 1933, as amended (the “Securities Act”),
and the rules and regulations promulgated thereunder, and applicable state securities laws.

 

C.                 
Pursuant to the
terms of the Registration Rights Agreement, the Company filed with the SEC a registration statement on Form S-1 (Registration No.
333-186551) (the “Filed Registration Statement”) covering the Registrable Securities (as defined in the Registration
Rights Agreement).

 

D.                 
The Company and
the Holder desire to enter into this Agreement, pursuant to which, among other things, the Company and the Holder shall amend the
Securities Purchase Agreement, the Registration Rights Agreement, the Note and the Warrant (collectively, the “Offering
Documents”).

 

E.                 
As a closing
condition to the transactions contemplated hereby, each of the holders of Notes and Warrants and signatories to the Securities
Purchase Agreement and the Registration Rights Agreement as of the date hereof other than the Holder (the “Other Holders”)
are executing agreements identical to this Agreement (the “Other Agreements”, and together with this Agreement,
the “Agreements”).

 

A G R E E M E N T

 

1.                 
Closing. Upon confirmation that the conditions to closing specified in this Agreement have been satisfied
or duly waived by the Holder or the Company, as applicable, the closing of the amendments contemplated by this Agreement (the “Closing”)
shall occur on March 28, 2013 or such other date as is mutually acceptable to the Holder and the Company (the “Closing
Date”).

 

    	1

    	 

    

 

2.                 
Amendments to Offering Documents.

 

2.1             
Ratifications. Except as otherwise expressly provided herein, each of the Securities Purchase Agreement, the Registration
Rights Agreement, the Warrant and the Note, is, and shall continue to be, in full force and effect and is hereby ratified and confirmed
in all respects, except that on and after the date of this Agreement: (i) all references in the Securities Purchase Agreement to
“this Agreement”, “hereto”, “hereof”, “hereunder” or words of like import referring
to the Securities Purchase Agreement shall mean the Securities Purchase Agreement as amended by this Agreement, (ii) all references
in the other Transaction Documents (as defined in the Securities Purchase Agreement) to “the Securities Purchase Agreement”,
“thereto”, “thereof”, “thereunder” or words of like import referring to the Securities Purchase
Agreement shall mean the Securities Purchase Agreement as amended by this Agreement, (iii) all references in the Registration Rights
Agreement to “this Agreement”, “hereto”, “hereof”, “hereunder” or words of like
import referring to the Registration Rights Agreement shall mean the Registration Rights Agreement as amended by this Agreement,
(iv) all references in the other Transaction Documents to the “Registration Rights Agreement”, “thereto”,
“thereof”, “thereunder” or words of like import referring to the Registration Rights Agreement shall mean
the Registration Rights Agreement as amended by this Agreement, (v) all references in the Warrant to “this Warrant”,
“hereto”, “hereof”, “hereunder” or words of like import referring to the Warrant shall mean
the Warrant as amended by this Agreement, (vi) all references in the other Transaction Documents to “the Warrant”,
“thereto”, “thereof”, “thereunder” or words of like import referring to the Warrant shall mean
the Warrant as amended by this Agreement, (vii) all references in the Note to “this Note”, “hereto”, “hereof”,
“hereunder” or words of like import referring to the Note shall mean the Note as amended by this Agreement, and (viii)
all references in the other Transaction Documents to “the Note”, “thereto”, “thereof”, “thereunder”
or words of like import referring to the Note shall mean the Note as amended by this Agreement.

 

2.2             
Amendment to Registration Rights Agreement. The Registration Rights Agreement is hereby amended as follows:

 

A.               
The defined term “Filing Deadline” is hereby amended and restated as follows:

 

““Filing Deadline”
means (i) with respect to the initial Registration Statement required to be filed pursuant to Section 2(a), June 30, 2013 and (ii)
with respect to any additional Registration Statements that may be required to be filed by the Company pursuant to this Agreement,
the date on which the Company was required to file such additional Registration Statement pursuant to the terms of this Agreement.”

 

2.3             
Amendment to Securities Purchase Agreement. The Securities Purchase Agreement is hereby amended as follows:

 

A.         
Section 3.1(f) of the Securities Purchase Agreement is hereby amended and restated as follows:

 

    	2

    	 

    

 

“(f)The Securities.
The Securities (including the Warrant Shares and an aggregate of 3,289,727 shares of Common Stock that may be issued as Interest
Shares) are duly authorized and, when issued and paid for in accordance with the Transaction Documents, will be duly and validly
issued, fully paid and nonassessable, free and clear of all Liens and will not be subject to preemptive or similar rights of stockholders
(except for rights that have been waived or complied with). By no later than the Filing Deadline (as defined in the Registration
Rights Agreement), the Company will have reserved from its duly authorized capital stock all 25,630,286 shares of Common Stock
issuable upon exercise of the Warrants. Any Interest Shares issued pursuant to the terms of the Notes, when and if issued, will
be duly authorized, duly and validly issued, fully paid and nonassessable, free and clear of all Liens and will not be subject
to preemptive or similar rights of stockholders (except for rights that have been waived or complied with). The offer, issuance
and sale of the Notes, the Interest Shares, the Warrants and the Warrant Shares to the Investors pursuant to the Agreement, and
in the case of the Warrant Shares and Interest Shares, pursuant to the Warrants and Notes, respectively, are exempt from the registration
requirements of the 1933 Act.”

 

2.4             
Amendments to Warrants. The Warrant is hereby amended as follows:

 

A.         
The following clause in the introductory paragraph to the Warrant, “at any time or times on or after the date hereof
(the “Issuance Date”)”, is hereby amended and restated to read as follows: “at any time or times
on or after June 30, 2013 (the “Initial Exercisability Date”)”.

 

B.          
The references to “Issuance Date” in Sections 1(a) and (h) of the Warrant are hereby amended and restated to
read as follows: “Initial Exercisability Date”.

 

C.          
Subclause (iii) of Section 5 of the Warrant is hereby amended and restated to read as follows:

 

“(iii) shall,
commencing on the Initial Exercisability Date and for so long as this Warrant is outstanding after the Initial Exercisability Date,
take all action necessary to reserve and keep available out of its authorized and unissued shares of Common Stock, solely for the
purpose of effecting the exercise of this Warrant, 100% of the number of shares of Common Stock issuable upon exercise of this
Warrant then outstanding (without regard to any limitations on exercise).”

 

D.         
The Warrant is amended to include a new Section 1(h) as follows:

 

    	3

    	 

    

 

“(h)              
Principal
Market Regulation. This Warrant may not be exercised if (a) any of the Convertible Notes (as defined in the Note), Series
A Warrants (as defined in the Note) or Series B Warrants (as defined in the Note) issued in the Convertible Note Transaction (as
defined in the Note) are outstanding and the Company has not obtained stockholder approval pursuant to NASDAQ Listing Rule 5635(d)
for the issuance of more than 19.99% of the total number of shares of Common Stock outstanding on December 19, 2012 pursuant to
the Convertible Notes, Series A Warrants and Series B Warrants issued in the Convertible Note Transaction, or (b) none of the
Convertible Notes, Series A Warrants or Series B Warrants issued in the Convertible Note Transaction are outstanding and
the Company has not obtained stockholder approval pursuant to NASDAQ Listing Rule 5635(d) for the issuance of more than 19.99%
of the total number of shares of Common Stock outstanding on December 19, 2012 pursuant to the Convertible Notes, Series A Warrants
and Series B Warrants issued in the Convertible Note Transaction and the sum of (A) the aggregate number of Warrants
Shares contemplated to be issued pursuant to the exercise, (B) the aggregate number of Warrant Shares previously issued pursuant
to the terms of this Warrant and the other Warrants, and (C) the aggregate number of shares issued pursuant to the Convertible
Notes, Series A Warrants and Series B Warrants issued in the Convertible Note Transaction will be more than 19.99% of the total
number of shares of Common Stock outstanding on December 19, 2012 unless the Company has obtained either (x) stockholder
approval for the issuance of more than such number of shares of Common Stock pursuant to NASDAQ Listing Rule 5635(d) or (y) a
waiver from NASDAQ of compliance with Rule 5635(d).”

 

2.5             
Amendments to Note. The Note is hereby amended as follows:

 

A.         
Section 1.3 of the Note is amended and restated to read in its entirety as follows:

 

“1.3Until
such time as the outstanding balance of the Note and the Other Notes are paid in full, within three Business Days of the receipt
by the Company of any Net Cash Proceeds or any distributions to which the Company is entitled to with respect to Net Cash Proceeds
received by any Subsidiary arising from any (i) Asset Sale (other than Asset Sales made pursuant to Section 5.6), (ii) Equity
Issuance, (iii) Debt Issuance, or (iv) Property Loss Event, the Company shall prepay the Note and the Other Notes, ratably
in accordance with their respective principal amounts, in an amount equal to 100% of such Net Cash Proceeds (or that amount necessary
to pay the Note and the Other Notes in full); provided, that:

 

(a)               
any such Net Cash Proceeds (or distributions with respect to Net Cash Proceeds) arising from any Equity Linked Issuance
(other than the Convertible Note Transaction) shall, notwithstanding anything to the contrary in this Section 1.3, be applied
as follows:

 

(i)                         
until such time as the Company has made prepayments in accordance with this clause (a) in an aggregate amount equal
to $653,895, to the prepayment of the Notes and Other Notes, ratably in accordance with their respective principal amounts;

 

    	4

    	 

    

 

(ii)                       
after the Company has made all payments required by the foregoing clause (a) and until such time as all 2013 Pacific
Holding Debt is owned by the Company or no 2013 Pacific Holding Debt remains outstanding, 100% of such Net Cash Proceeds shall
be applied, as elected by the Company, to either (x) the purchase by the Company of the 2013 Pacific Holding Debt (to the
extent the same is permitted by the terms of the Pacific Holding Credit Facilities) or (y) the prepayment of the Notes and
Other Notes, ratably in accordance with their respective principal amounts; and

 

(iii)                     
after such time as all 2013 Pacific Holding Debt is owned by the Company or no 2013 Pacific Holding Debt remains outstanding,
the Reduced Percentage of such Net Cash Proceeds shall be applied to the prepayment of the Notes and Other Notes, ratably in accordance
with their respective principal amounts; provided, that no such Net Cash Proceeds shall be applied to make capital contributions
or investments in, or otherwise purchase any Indebtedness, equity interests or Convertible Securities of any Subsidiary of the
Company (provided however, that for purposes of this clause (iii), the proviso in the definition of “Subsidiary”
will be disregarded). For the purposes of this Note, the “Reduced Percentage” means 75% until the occurrence
of a Threshold Balance Reduction, and 50% thereafter.

 

(b)              
any such Net Cash Proceeds (or distributions with respect to Net Cash Proceeds) arising from the issuance of the Series
A Notes, the Series A Warrants and the Series B Warrants in the Convertible Note Transaction shall, notwithstanding anything to
the contrary in this Section 1.3, be applied as follows:

 

(i)                         
the Company shall use that portion of such Net Cash Proceeds determined by the Company to purchase a portion of the June
Indebtedness and limited liability company interests of New PE Holdco LLC, a Delaware limited liability company, held by the holder(s)
of the June Indebtedness; and

 

(ii)                       
the Company shall use an aggregate of $3.5 million of such Net Cash Proceeds to purchase from the Revolving Lenders the
Revolving Loans (as such terms are defined in the Pacific Holdings Restated Credit Facility), ratably in accordance with their
additional priming facility commitments.

 

(c)               
any such Net Cash Proceeds (or distributions with respect to Net Cash Proceeds) arising from the issuance of the Series
B Notes in the Convertible Note Transaction shall, notwithstanding anything to the contrary in this Section 1.3, be applied
as follows:

 

(i)                         
the Company shall use that portion of such Net Cash Proceeds determined by the Company to purchase the remaining portion
of the June Indebtedness and limited liability company interests of New PE Holdco LLC, a Delaware limited liability company, held
by the holder(s) of the June Indebtedness;

 

    	5

    	 

    

 

(ii)                       
next, the Company shall place $2.0 million of such Net Cash Proceeds into a reserve account to service subordinated debt
obligations of the Company; and

 

(iii)                     
the balance of such Net Cash Proceeds, if any, to pay down the Note, the Other Notes and/or the Revolving Loans (as such
term is defined in the Pacific Holding Restated Credit Facility).

 

Until such
time as the outstanding balance of the Note and the Other Notes has been paid in full, within three (3) Business Days of the receipt
by the Company of any payment of principal or interest on the Specified A-2 Debt (collectively, “Debt Repayment Amounts”),
the Company shall prepay the Note and the Other Notes, pro rata in accordance with the respective Principal amounts thereof,
in an amount equal to such Debt Repayment Amounts.”

 

B.                
Section 19.9(x) of the Note is amended and restated to read in its entirety as follows:

 

“(x) either (a) the Company has
obtained stockholder approval pursuant to NASDAQ Listing Rule 5635(d) for the issuance of more than 19.99% of the total number
of shares of Common Stock outstanding on December 19, 2012 pursuant to the Convertible Notes, Series A Warrants and Series B Warrants
issued in the Convertible Note Transaction and the sum of (A) the aggregate number of Interest Shares contemplated
to be issued as Interest Shares under this Note and all Other Notes, (B) any Interest Shares previously issued pursuant to
the terms of this Note and the Other Notes, and (C) the aggregate number of Warrant Shares (as defined in the Purchase Agreement)
that have been or may be issued pursuant to the exercise of all Warrants (as defined in the Purchase Agreement) purchased pursuant
to the Purchase Agreement is less than 19.99% of the total number of shares of Common Stock outstanding on December 19, 2012 unless
the Company has obtained either (1) stockholder approval for the issuance of more than such number of shares of Common Stock
pursuant to NASDAQ Listing Rule 5635(d) or (2) a waiver from NASDAQ of compliance with Rule 5635(d), or (b) the
Company has not obtained stockholder approval pursuant to NASDAQ Listing Rule 5635(d) for the issuance of more than 19.99%
of the total number of shares of Common Stock outstanding on December 19, 2012 pursuant to the Convertible Notes, Series A Warrants
and Series B Warrants issued in the Convertible Note Transaction and none of the Convertible Notes, Series A Warrants or
Series B Warrants issued in the Convertible Note Transaction are outstanding and the sum of (A) the aggregate number
of Interest Shares contemplated to be issued as Interest Shares under this Note and all Other Notes, (B) any Interest Shares
previously issued pursuant to the terms of this Note and the Other Notes, (C) the aggregate number of Warrant Shares (as defined
in the Purchase Agreement) that have been or may be issued pursuant to the exercise of all Warrants (as defined in the Purchase
Agreement) purchased pursuant to the Purchase Agreement and (D) the aggregate number of shares issued pursuant to the Convertible
Notes, Series A Warrants and Series B Warrants issued in the Convertible Note Transaction is less than 19.99% of the total number
of shares of Common Stock outstanding on December 19, 2012 unless the Company has obtained either (1) stockholder approval
for the issuance of more than such number of shares of Common Stock pursuant to NASDAQ Listing Rule 5635(d) or (2) a
waiver from NASDAQ of compliance with Rule 5635(d), and”.

 

    	6

    	 

    

 

C.                
Section 19.39 of the Note is amended and restated to read in its entirety as follows:

 

“19.39“Specified
A-2 Debt” shall mean the Tranche A-2 Term Loans (as defined in the Pacific Holdings Restated Credit Facility) acquired
by the Company (a) on the Issuance Date with the proceeds of the issuance of the Note and the Other Notes, and (b) with the proceeds
of the issuance of the Convertible Notes and the Convertible Note Warrants.”

 

D.               
Section 19.41 of the Note is amended and restated to read in its entirety as follows:

 

“19.41“Threshold
Balance Reduction” means, the aggregate outstanding principal balance of the Note and all Other Notes shall be less
than the sum of (i) $10,769,297.82  plus (ii) the aggregate amount of all payments made by the Company against the Revolving
Loans pursuant to Section 1.3(b)(ii) and/or Section 1.3(c)(iii) hereof.”

 

E.                
The Note is amended to include a new Section 19.47 as follows:

 

“19.47“Convertible
Note Transaction” means the transaction entered into on or about the date of the first amendment to this Note
for the issuance and sale by the Company of (i) one or more amortizing subordinated notes in the aggregate principal amount
of up to $6 million (the “Series A Notes”), warrants to purchase up to  11,826,000 shares of Common Stock
(the “Series A Warrants”) and warrants to purchase up to  15,768,000 shares of Common Stock (the
“Series B Warrants”), and (ii) one or more additional amortizing subordinated notes in the aggregate
principal amount of up to $8 million (the “Series B Notes,” and together with the Initial Notes, the
“Convertible Notes”), such Series B Notes to be issued and sold by the Company following approval by the
Company’s stockholders of the Convertible Note Transaction and the satisfaction of certain equity and other
conditions.”

 

F.           
The Note is amended to include a new Section 19.48 as follows:

 

“19.48“June
Indebtedness” means amounts due and owning on June 25, 2013 under the Pacific Holding Restated Credit Facility.”

 

2.6             
Other Agreements of the Company and the Holder. The Company and the Holder hereby agree as follows:

 

    	7

    	 

    

 

A.               
For the avoidance of doubt, payment pursuant to the Convertible Notes or the Convertible Note Warrants of any portion of
the Buy-In Price in connection with a Conversion Failure or a Delivery Failure (as such terms are defined in the Convertible Notes
or the Convertible Note Warrants) shall not constitute a violation of the covenants in Section 5.5 of Note.

 

B.                
All information provided to the Holder through the date of this Agreement with respect to the Convertible Note Transaction
is deemed Consented Information and Privately Posted Information.

 

C.                
The Indebtedness evidenced by the Convertible Notes shall be deemed Subordinated Indebtedness.

 

D.               
Any use of Net Cash Proceeds in accordance with Section 1.3 of the Note shall be deemed to be a Permitted Investment.

 

2.7             
Withdrawal of Filed Registration Statement. Holder hereby consents to the Company withdrawing the Filed Registration
Statement with the SEC. Nowithstanding Section 1 hereof, the provisions of this Section 2.7 shall take effect immediately
upon the execution if this Agreement by the Company, the Holder and the Other Holders.

 

3.                 
Company’s Representations and Warranties.

 

3.1             
Validity; Enforcement. This Agreement has been duly and validly authorized, executed and delivered on behalf of the
Company and shall constitute the legal, valid and binding obligations of the Company enforceable against the Company in accordance
with their respective terms, except as such enforceability may be limited by general principles of equity or to applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement
of applicable creditors’ rights and remedies.

 

3.2             
No Conflicts. The execution, delivery and performance by the Company of this Agreement and the consummation by the
Company of the transactions contemplated hereby will not (i) result in a violation of the organizational documents of the Company
or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument
to which the Company is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including
federal and state securities laws) applicable to the Company, except in the case of clauses (ii) and (iii) above, for such conflicts,
defaults, rights or violations which would not, individually or in the aggregate, reasonably be expected to have a material adverse
effect on the ability of the Company to perform its obligations hereunder.

 

4.                 
Holder’s Representations and Warranties.

 

4.1             
Ownership of Note and Warrant. The Holder owns the Note and the Warrant free and clear of any liens (other than the
obligations pursuant to this Agreement and applicable securities laws).

 

    	8

    	 

    

 

4.2             
Validity; Enforcement. This Agreement has been duly and validly authorized, executed and delivered on behalf of the
Holder and shall constitute the legal, valid and binding obligations of the Holder enforceable against the Holder in accordance
with their respective terms, except as such enforceability may be limited by general principles of equity or to applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement
of applicable creditors’ rights and remedies.

 

4.3             
No Conflicts. The execution, delivery and performance by the Holder of this Agreement and the consummation by the
Holder of the transactions contemplated hereby will not (i) result in a violation of the organizational documents of the Holder
or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument
to which the Holder is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including
federal and state securities laws) applicable to the Holder, except in the case of clauses (ii) and (iii) above, for such conflicts,
defaults, rights or violations which would not, individually or in the aggregate, reasonably be expected to have a material adverse
effect on the ability of the Holder to perform its obligations hereunder.

 

5.                 
Covenants.

 

5.1             
Reasonable Best Efforts. The Company shall use its reasonable best efforts to timely satisfy each of the conditions
to be satisfied by it as provided in Section 6 of this Agreement. The Holder shall use its reasonable best efforts to timely satisfy
each of the conditions to be satisfied by it as provided in Section 7 of this Agreement.

 

5.2             
Disclosure of Transactions and Other Material Information. On or before 9:30 a.m., New York time, on the first
(1st) Business Day following the date of this Agreement, the Company shall file a Current Report on Form 8-K describing all the
material terms of the transactions contemplated by this Agreement in the form required by the 1934 Act and attaching this Agreement
(the “8-K Filing”). From and after the issuance of the 8-K Filing, the Company shall have disclosed all material,
non-public information (if any) delivered to any of the Buyers by the Company or any of its Subsidiaries, or any of their respective
officers, directors, employees or agents in connection with the transactions contemplated by the Agreements.

 

5.3             
Fees. The Company shall be responsible for all costs and expenses incurred by it in connection with preparing and
delivering this Agreement (including, without limitation, all legal fees and disbursements in connection therewith.

 

    	9

    	 

    

 

6.                 
Conditions to Company’s Obligations Hereunder. The obligations of the Company to the Holder hereunder
are subject to the satisfaction of each of the following conditions, provided that these conditions are for the Company's sole
benefit and may be waived by the Company at any time in its sole discretion by providing the Holder with prior written notice thereof:

 

6.1             
The Holder shall have duly executed this Agreement and delivered the same to the Company.

 

6.2             
Each of the Other Holders shall have duly executed the Other Agreement of such Other Holder and delivered the same to the
Company.

 

6.3             
The representations and warranties of the Holder shall be true and correct in all material respects as of the date when
made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific
date which shall be true and correct as of such specified date), and the Holder shall have performed, satisfied and complied in
all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied
with by the Holder at or prior to the Closing Date.

 

6.4             
The Convertible Note Transaction (as defined in the Note, as amended), shall close concurrent with the Closing.

 

7.                 
Conditions to Holder’s Obligations Hereunder. The obligations of the Holder hereunder are subject to
the satisfaction of each of the following conditions, provided that these conditions are for the Holder's sole benefit and may
be waived by the Holder at any time in its sole discretion by providing the Company with prior written notice thereof:

 

7.1             
The Company shall have duly executed and delivered this Agreement to the Holder.

 

7.2             
The Company shall have delivered to the Holder a copy of each Other Agreement, duly executed and delivered by the Company
and each Other Holder party thereto.

 

7.3             
The Company shall have delivered to the Holder a certificate, in the form acceptable to the Holder, duly executed by the
Secretary of the Company and dated as of the Closing Date, as to (i) the resolutions authorizing the transactions contemplated
hereby as adopted by the Company’s board of directors, in a form reasonably acceptable to the Holder, (ii) the Certificate
of Incorporation of the Company and (iii) the Bylaws of the Company, each as in effect at the Closing.

 

7.4             
Each and every representation and warranty of the Company contained herein shall be true and correct in all material respects
as of the date when made and as of the Closing Date as though originally made at that time (except for representations and warranties
that speak as of a specific date, which shall be true and correct as of such date) and the Company shall have performed, satisfied
and complied in all material respects with the covenants, agreements and conditions required to be performed, satisfied or complied
with by the Company at or prior to the Closing Date. The Holder shall have received a certificate, duly executed by the Chief Executive
Officer of the Company, dated as of the Closing Date, to the foregoing effect and as to such other matters as may be reasonably
requested by the Holder in the form acceptable to the Holder.

 

    	10

    	 

    

 

7.5             
No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated
or endorsed by any court or governmental authority of competent jurisdiction that prohibits the consummation of any of the transactions
contemplated by the Agreements.

 

7.6             
The Company shall have delivered to the Holder such other documents relating to the transactions contemplated by this Agreement
as the Holder or its counsel may reasonably request.

 

8.                 
Termination. In the event that the Closing does not occur on or before five (5) Business Days from the date
hereof due to the Company's or the Holder's failure to satisfy the conditions set forth in Sections 6 and 7 hereof (and the nonbreaching
party's failure to waive such unsatisfied conditions(s)), the nonbreaching party shall have the option to terminate this Agreement
with respect to such breaching party at the close of business on such date without liability of any party to any other party. Upon
such termination, the terms hereof shall be null and void and the parties shall continue to comply with all terms and conditions
of the Agreements, as in effect prior to the execution of this Agreement.

 

[The remainder of the page is intentionally
left blank]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	11

    	 

    

 

IN WITNESS WHEREOF,
the parties hereto have executed this Agreement as of the day and year first above written.

 

PACIFIC ETHANOL, INC.

 

By:
/s/ Bryon T. McGregor                        

Name:
Bryon T. McGregor

Title:
Chief Financial Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	12

    	 

    

 

IN WITNESS WHEREOF,
the parties hereto have executed this Agreement as of the day and year first above written.

 

 

	 	HOLDER:
	 	 	 	 
	 	[_______________]

 

 

 

 

 

    	13

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00215-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00215-of-00352.parquet"}]]