Document:

Amendment 5 to Macromedia Agr

    

     Exhibit
      10.3

    

    [Certain
      portions of this exhibit have been omitted pursuant to Rule 24b-2
      and

    are
      subject to a confidential treatment request. Copies of this exhibit containing
      

    the
      omitted information have been filed separately with the Securities and
      Exchange

    Commission.
      The omitted portions of this document are marked with a
      ***.]

    

    AMENDMENT
      NO. 5 TO MACROMEDIA FLASH COMMUNICATION 

    SERVER
      LICENSE AGREEMENT

    

    This
      Amendment No. 5 (“Amendment”) to the Macromedia Flash Communication Server
      License Agreement by and between VitalStream, Inc., a Delaware corporation
      with
      its principal place of business at One Jenner, Suite 100, Irvine, California
      92618 (“Licensee”) and Adobe Systems, Incorporated (“Adobe”) (as successor to
      Macromedia, Inc.), a Delaware corporation, with its principal place of business
      at 345 Park Avenue, San Jose, CA 95110, is effective as of December 30, 2005
      (the “Amendment Effective Date”).

    

    WHEREAS,
      the parties entered into the Macromedia Flash Communication Server License
      Agreement dated as of November 17, 2003 (the “Original Agreement”), as amended
      by Amendment No. 1 to the Original Agreement dated as of April 28, 2004
      (“Amendment 1”), Amendment No. 2 to Original Agreement dated as of April 28,
      2004 (“Amendment 2”), Amendment
      No. 3 to the Original Agreement dated as of August 6, 2004 (“Amendment
      3),
      and
      Amendment No. 4 to the Original Agreement dated as of March 1, 2005 (“Amendment
      4). Amendment 1, Amendment 2, Amendment 3, and Amendment 4 together with the
      Original Agreement, shall be referred to herein as the “Agreement”;
      and

    

    WHEREAS,
      the parties desire to expand their business relationship; 

    

    NOW,
      THEREFORE, in consideration of the foregoing and other valuable consideration,
      the receipt and adequacy of which are hereby acknowledged, the parties agree
      as
      follows:

    

    Except
      as
      expressly provided herein, all defined terms shall have the meanings ascribed
      to
      them in the Agreement.

    

    1.
      Term
      Extension.
      The
      Term of the Agreement shall be extended to December 30, 2006. Thereafter,
      Licensee has the option to renew this Agreement for two additional one year
      terms by providing 30 days written notice to Adobe. In Section 7 of the Original
      Agreement, the following words shall be deleted from the second sentence
      thereof: “...,however, after the initial term of the Agreement, either party may
      terminate the Agreement with at least ninety (90) days prior written
      notice.”

    

    2.
      Fees.
       Section
      2
      of the Original Agreement (Fees) and Section 1 of Amendment 4 shall be replaced
      in their entirety with the following.

    

    A.
      License Fees.

    

    At
      the
      beginning of each Term, Licensee shall pay Adobe a non-cancelable and
      non-refundable fee (the “Prepayment Fee”). The rate for the license fees due
      under the Agreement (the “License Fees”) for the Term shall be calculated based
      upon the amount of the Prepayment Fee as follows:

    

    Prepayment
      Fee  License
      Fee   Minimum
      Transfer Fee

     

    $[***]                         
      [***]%     $[***]

    $[***]         
[***]%     $[***]

    $[***]         
[***]%     $[***]

    $[***]         
[***]%     $[***]

    $[***]         
[***]%     $[***]

    

    The
      Licensee Fee shall equal the percentage of all fees that Licensee receives
      from
      Customers for the set-up and use of the Service and the Additional Service,
      subject to the Minimum Transfer Fees (as defined below) or the Minimum
      Additional Service Fees (as defined below), as the case may be. If during the
      Term, Licensee advises Adobe in writing that it elects to make additional
      Prepayment Fees above the commitment in Paragraph B of this Section (“Additional
      Prepayment Fee”) specifying the USD amount of such Additional Prepayment Fee,
      subject to the payment provisions of Section 2.B. below, then the License Fees
      and Minimum Transfer Fees subsequent to Adobe’s receipt of notice from Licensee
      of Additional Prepayment Fee shall be adjusted to reflect the License Fee and
      Minimum Transfer Fee rate applicable to the amount of the Prepayment Fee plus
      the Additional Prepayment Fee. 

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    
 

    The
      pricing of the Service and the Additional Service (as defined in Amendment
      3)
      shall be at the sole discretion of Licensee, as the same may be changed from
      time to time.

    

    B.
      Prepayment Fee.

    

    The
      Prepayment Fee is non-cancelable and non-refundable, except that if this
      Agreement is terminated by Licensee for Cause (as defined in Section 7 of the
      Agreement, as amended by Section 5 hereof) prior to the Prepayment Fee and,
      if
      applicable, any Additional Prepayment Fee, having been fully expended, then
      Licensee shall be entitled to receive a refund in the amount of that portion
      of
      the Prepayment Fee and, if applicable, any Additional Prepayment Fee, that
      had
      not been expended as of the date of such termination, which refund payment
      shall
      be made by Adobe to Licensee within 15 days of the date of termination, and
      any
      portion of the refund not paid within such 15 days shall be subject to a late
      charge of one and one-half percent (1.5 %) per month or the maximum rate allowed
      by applicable law, whichever is less, on the overdue balance. Notwithstanding
      any refund of the Prepayment Fee and any Additional Prepayment Fee as described
      in the preceding sentence, Licensee shall continue to pay License Fees if and
      as
      Licensee continues to use the Software to provide the Service to Customers
      in
      accordance with Section 7 of the Agreement. Licensee shall pay the Prepayment
      Fee for the next Term in accordance with the following schedule:

    

    USD$[***]
      due on or before February 5, 2006; and

    USD$[***]
      due on or before August 7, 2006. 

    

    Licensee
      shall pay any Additional Prepayment Fee in accordance with the following
      schedule:

    

    [***]

    

    [***]
      

    

    C. Minimum
      Transfer Fees.

    

    Licensee
      shall meter the amount of video transferred by the Software for the Service
      and
      the Additional Service in Gigabytes (GB). The minimum transfer fees payable,
      per
      Customer, to Adobe for use of the Software for the Service and the Additional
      Service (the “Minimum Transfer Fees”) are reflected in Section 2.A and shall be
      based on the Prepayment Fee made during the Term. Eighty-five percent (85%)
      of
      the Minimum Transfer Fees 

    

    

    shall
      be
      deemed allocated for license fees and fifteen percent (15%) shall be allocated
      to Support and Maintenance.

    

    
      	D.  	
              Unexpended
                Prepayment Fees at the End of the
                Term

            

    

    

    At
      the
      end of the Term, if Licensee renews the Agreement for an additional one year
      term pursuant to Section one of Amendment 5, Licensee shall have an additional
      one year to use any Prepayment Fees not expended during the Term (at the License
      Fee and Minimum Transfer Fee rates existing at the end of the Term); provided
      however, the unexpended Prepayment Fees, shall not be considered in determining
      the License Fees or Minimum Transfer Fees for the renewal Term. For example,
      if
      Licensee made Prepayment Fees of $[***] during the Term, but only expended
      $[***] during the Term, in the next renewal term, Licensee would have 12 months
      to use the unexpended $[***] at the License Fee rate of [***] % and the Minimum
      Transfer Fee rate of $.12. 

     

    E. Support
      and Maintenance Fees.

    

    Licensee
      has elected to purchase Support and Maintenance for the Software for [***]
      year
      following the Amendment Effective Date. The annual fee for such Support and
      Maintenance is included in the License Fees set forth under Section A above,
      and
      is equal to [***]% of the License Fees for the Service or the Additional
      Service, as the case may be.

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    
 

    F.
      Trials. 

    

    Licensee
      is permitted to offer one trial (or pilot program, as applicable) per Customer
      for the Service or the Additional Service (each, a “Trial”). During a Trial,
      neither Customer nor Licensee shall owe Adobe any fees for use of the Software
      provided that such Trial does not last more than [***] and no more than [***]
      GB
      of total video is transferred during the Trial. Notwithstanding the foregoing,
      Licensee may request an additional amount of video transfer for a Trial, and
      such request may be granted at Adobe’s discretion. In the event that a Trial for
      the Service exceeds the GB limits set forth above, Licensee shall owe Adobe
      the
      Minimum Transfer Fees for each GB transferred in excess of the [***] GB. In
      the
      event that a Trial for the Additional Service exceeds the GB limits set forth
      above, Licensee shall owe Adobe the Minimum Additional Service Fee as set forth
      below for each such Trial as a flat fee and in lieu of a fee based upon GB
      transferred in such Trial.

    

    3. The
      following shall be added to Section 2 (d) of Exhibit C of the Original
      Agreement:

    

    “For
      each
      incident escalated pursuant to this section, a response will be made before
      the
      end of the next business day. 

    

    4. Licensee
      will be invited to participate in the beta testing programs for Flash Media
      Server, Premiere Pro, Flash Professional and any newly developed Adobe Products
      in the digital video field subject to the terms of each product’s Beta
      EULA.

    

    5.
      VIP
      Customer Pricing Program. Exhibit
      E
      (VIP Customer Pricing Program) attached hereto shall be added to the
      Agreement.

    

    6.
      Support
      Levels.
      If
      during the Term, Adobe offers a higher level of support than the Gold Level
      Support currently received by Licensee, than Licensee shall be eligible to
      receive said higher level of support at no additional cost.

    

    

    

    

    7.
      Effect
      of Amendment. Except as otherwise modified herein, the Agreement (and each
      amendment thereto) shall continue in full force and effect until expiration
      or
      termination in accordance with its terms. 

    

    The
      parties have caused this amendment to be executed by their respective duly
      authorized representatives as of the Amendment Effective Date.

    

    

      
        	
                ADOBE
                  SYSTEMS INCORPORATED

              	 	
                VITALSTREAM,
                  INC.

              	 
	 	 	 	 
	
                By:
                  /s/
                  Barbara Hill

              	 	
                By:
                  /s/
                  Philip N. Kaplan

              	 
	
                (signature)

              	 	
                (signature)

              	 
	
                Name:/s/
                  Barbara Hill

              	 	
                Name:
                  /s/
                  Philip N. Kaplan

              	 
	 	 	 	 
	
                Title:
                  VP
                  Treasury

              	 	
                Title:
                  President
                  & COO

              	 

      

    

     

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    

    

    EXHIBIT
      E

    

    [***]

     

     

     

    4Membership Interest Purchase Agr - October 17, 2006

    EXHIBIT
      10.1

     

    

      MEMBERSHIP
        INTEREST PURCHASE AGREEMENT

       

      This
        Membership Interest Purchase Agreement
        (together with the exhibits and schedules hereto, this “Agreement”)
        is
        dated as of October 17, 2006 by and among Eagle
        Energy, LLC,
        a South
        Dakota limited liability company (“Seller”),
        Pacific
        Ethanol California, Inc.,
        a
        California corporation (“Buyer”),
        and
Pacific
        Ethanol, Inc., a
        Delaware corporation (“Parent”).
        Unless otherwise defined in this Agreement, capitalized terms used in this
        Agreement are defined in Exhibit
        A.

       

      Recitals

       

      Whereas,
        Seller
        owns 10,094.595 Class B Voting Units (the “Membership
        Interests”)
        of
        Front Range Energy, LLC, a Colorado limited liability company (the “Company”),
        which
        represents approximately 42% of the outstanding membership interests of the
        Company.

       

      Whereas,
        the
        Company is engaged in the business (the “Business”)
        of
        operating an approximate 40 million gallon per year corn ethanol plant,
        providing management services to operate the corn ethanol plant and such
        other
        activities related to the foregoing.

       

      Whereas,
        the
        Buyer
        desires to acquire from Seller, and Seller desires to sell and transfer to
        Buyer, all of the Membership Interests on the terms and subject to the
        conditions set forth herein. 

       

      Agreement

       

      Therefore,
        in
        consideration of the foregoing and the mutual agreements and covenants set
        forth
        below, the Parties hereby agree as follows:

       

      ARTICLE
        1

       

      Purchase
        And Sale of Membership Interests

       

      1.1 Acquisition.
        Subject
        to the terms and conditions of this Agreement, Buyer agrees to purchase,
        and
        Seller agrees to sell, convey, assign, transfer and deliver to Buyer, the
        Membership Interests, free and clear of all Encumbrances, on the Closing
        Date.

       

      ARTICLE
        2

       

      Purchase
        Price

       

      2.1 Purchase
        Price. As
        consideration for the sale of the Membership Interests to Buyer:

       

      (a) at
        the
        Closing, Buyer shall pay to Seller, in cash, a total of $29,750,000 (the
        “Cash
        Consideration”)
        by
        wire transfer to the Account; 

      
        
           

        

        
          -1-

          
            

          

        

        
           

        

      

      (b) at
        the
        Closing, Buyer shall deposit the sum of $250,000 in an escrow account to
        be
        established as of the Closing Date pursuant to an Escrow Agreement among
        Buyer,
        Seller and Wells Fargo Bank, N.A., as Escrow Agent, in substantially the
        form of
Exhibit
        B
        (the
“Escrow
        Agreement”);
        

       

      (c) at
        the
        Closing, Parent shall issue to Seller a warrant
        to
        purchase 693,963 shares of Parent Common Stock at an exercise price of $14.41
        per share, substantially in the form attached hereto as Exhibit
        C
        (the
“Warrant”);
        and

       

      (d) at
        the
        Closing, Parent shall issue 2,081,888 shares of Parent Common Stock to Seller
        (the “Shares”).

       

      2.2 Sales
        Taxes. Seller
        shall bear and pay, and shall reimburse Buyer and Buyer’s affiliates for, any
        sales taxes, use taxes, transfer taxes, documentary charges, recording fees
        or
        similar taxes, charges, fees or expenses, if any, that become due and payable
        as
        a result of the consummation of the Transactions.

       

      2.3 Closing.
        The
        closing of the sale of the Membership Interests to Buyer (the “Closing”)
        shall
        take place at the offices of Cooley Godward llp
        in
        Broomfield, Colorado at 10:00 a.m. on the date hereof. The date on which
        the
        Closing takes place shall be referred to as the “Closing
        Date.”

       

      ARTICLE
        3

       

      Seller’s
        Representations and Warranties

       

      Seller
        represents and warrants to and for the benefit of the Indemnified Parties
        that:

       

      3.1 Organization.
        Seller
        is
        a limited liability company duly organized, validly existing and in good
        standing under the laws of the State of South Dakota. Seller is in good standing
        and qualified to do business as a foreign corporation in any state in which
        it
        is doing business. Seller has provided to Buyer complete and correct copies
        of
        the Charter Documents of Seller as currently in effect.
        All
        managers, members and officers of Seller are identified on Exhibit
        D.

       

      3.2 Due
        Authorization; Enforceability. The
        execution, delivery and performance of this Agreement and the other Transaction
        Documents to which Seller is a party has been duly and validly authorized
        by
        Seller. Assuming the due authorization, execution and delivery of the same
        by
        Buyer, this Agreement and each of the other Transaction Documents to which
        Seller is a party constitutes the legal, valid and binding obligation of
        Seller,
        enforceable against Seller in accordance with their respective terms (except
        as
        may be limited by bankruptcy, insolvency, reorganization and other similar
        laws
        and equitable principles relating to or limiting creditors’ rights
        generally).

      
        
           

        

        
          -2-

          
            

          

        

        
           

        

      

      3.3 Non-Contravention;
        Consents.
        Seller
        need not give any notice to, make any filing with, or obtain any authorization,
        consent, or approval of any government or governmental agency in order to
        consummate the Transactions. Neither the execution and delivery of this
        Agreement and the other Transaction Documents, nor the consummation of the
        Transactions, will directly or indirectly (with or without notice or lapse
        of
        time): (i) conflict with or result in a violation or breach of any of the
        terms,
        conditions or provisions of the Charter Documents of Seller; (ii) conflict
        with
        or violate any statute, regulation, rule, injunction, judgment, order, decree,
        ruling, charge, or other restriction of any government, governmental agency,
        or
        court to which Seller is subject; (iii) conflict with, result in a breach
        of,
        constitute a default under, result in the acceleration of, create in any
        party
        the right to accelerate, terminate, modify or cancel, or require any notice
        under any agreement, contract, lease, license, instrument or other arrangement
        to which Seller is a party or by which it is bound; or (iv) result in the
        imposition or creation of an Encumbrance upon the Membership
        Interests.

       

      3.4 Ownership
        of Membership Interests. Seller
        is
        the unconditional and sole legal, beneficial, record and equitable owner
        of the
        Membership Interests, and Seller has full power and authority to sell and
        transfer the Membership Interests, free and clear of any restrictions on
        transfer or any other Encumbrances. Seller has not ever sold, assigned
        transferred or otherwise disposed of all or any portion of the Membership
        Interests. Seller’s ownership of the Membership Interests has been at all times
        conducted in accordance with applicable Law. Seller is not a party to any
        option, warrant, purchase right, or other contract or commitment (other than
        this Agreement) that could require Seller to sell, transfer, or otherwise
        dispose of any membership interests, or any voting or economic right therein,
        of
        the Company. Seller is not a party to any voting trust, proxy, or other
        agreement or understanding with respect to the voting of any membership
        interests of the Company.
        The
        Membership Interest Certificates represent all the Membership
        Interests.

       

      3.5 Distributions.
        Seller
        has no current outstanding obligation to return to the Company all or any
        portion of any distribution previously received from the Company in respect
        of
        the Membership Interests.

       

      3.6 No
        Material Adverse Change. Since
        June 30, 2006, Seller has not received any notice that could lead it to believe
        that the Company has suffered a Material Adverse Change. 

       

      3.7 Operating
        Agreement. The
        Operating Agreement is a valid and binding obligation of Seller, enforceable
        against Seller in accordance with its terms (except as may be limited by
        bankruptcy, insolvency, reorganization and other similar laws and equitable
        principles relating to or limiting creditors’ rights generally). 

       

      3.8 Securities
        Representations. 

       

      (a) Seller
        is
        an “accredited investor” as defined in Rule 501(a) under the Securities Act of
        1933, as amended (the “Securities
        Act”,
        and
        each member of Seller is an accredited investor.

       

      (b) Seller
        understands that the Shares, the Warrant and the Exercise Shares are “restricted
        securities” and that the sale of the Shares and the Warrant to Seller has not
        been registered under the Securities Act.

      
        
           

        

        
          -3-

          
            

          

        

        
           

        

      

      (c) Seller
        is
        acquiring the Shares and the Warrant for its own account for investment only,
        has no present intention of distributing the Shares or the Warrant and has
        no
        arrangement or understanding with any other person regarding the distribution
        of
        the Shares or the Warrant (this representation and warranty not limiting
        Seller’s right to sell the Shares pursuant to an effective registration
        statement under the Act or the Shares or the Warrant otherwise in accordance
        with an exemption from registration under the Securities Act).

       

      (d) Seller
        recognizes that the Shares, the Warrant and the Exercise Shares cannot be
        resold
        unless they are subsequently registered under the Act or an exemption from
        such
        registration is available.

       

      (e) Seller
        understands and agrees that the Warrant and all certificates evidencing the
        Shares to be issued to Seller and that the Exercise Shares will bear the
        following legend:

       

      THESE
        SECURITIES HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT
        OF
        1933, AS AMENDED (THE “ACT”) OR APPLICABLE STATE SECURITIES LAWS. THEY MAY NOT
        BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
        EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR LAWS OR, IF REASONABLY
        REQUESTED BY THE COMPANY, AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
        THE
        COMPANY THAT SUCH REGISTRATION OR QUALIFICATION IS NOT REQUIRED.

       

      3.9 Brokers.
        Seller
        has not agreed or become obligated to pay, or has taken any action that might
        result in any person, entity or governmental body claiming to be entitled
        to
        receive, any brokerage commission, finder’s fee or similar commission or fee in
        connection with any of the Transactions.

       

      3.10 Disclosure.
        None
        of
        the representations or warranties made by Seller herein or in any other
        Transaction Document or in any certificate furnished by Seller pursuant to
        this
        Agreement or any other Transaction Document, when all such documents are
        read
        together in their entirety, contains any untrue statement of a material fact
        or
        omits to state any material fact necessary to make the statements contained
        herein or therein, in light of the circumstances under which they were made,
        not
        misleading. There is no fact within the knowledge of Seller that may have
        an
        adverse effect on Seller or may have the effect of interfering with any of
        the
        Transactions.

       

      ARTICLE
        4

       

      Buyer’s
        Representations and Warranties

       

      Buyer
        represents and warrants to Seller that:

       

      4.1 Organization.
        Buyer
        is
        a corporation duly organized, validly existing and in good standing under
        the
        Laws of the State of California.

      
        
           

        

        
          -4-

          
            

          

        

        
           

        

      

      4.2 Due
        Authorization; Enforceability. The
        execution, delivery and performance of this Agreement and the other Transaction
        Documents to which Buyer is a party has been duly and validly authorized
        by
        Buyer. Assuming the due authorization, execution and delivery of the same
        by
        Seller, this Agreement and each of the other Transaction Documents to which
        Buyer is a party constitutes the legal, valid and binding obligation of Buyer,
        enforceable against Buyer in accordance with their respective terms (except
        as
        may be limited by bankruptcy, insolvency, reorganization and other similar
        laws
        and equitable principles relating to or limiting creditors’ rights
        generally).

       

      4.3 Brokers.
        Buyer
        has
        not agreed or become obligated to pay, or has taken any action that might
        result
        in any person, entity or governmental body claiming to be entitled to receive,
        any brokerage commission, finder’s fee or similar commission or fee in
        connection with any of the Transactions.

       

      ARTICLE
        5

       

      Parent’s
        Representations and Warranties

       

      Parent
        represents and warrants to Seller that:

       

      5.1 Organization.
        Parent
        is
        a corporation duly organized, validly existing and in good standing under
        the
        Laws of the State of Delaware.

       

      5.2 Due
        Authorization; Enforceability. The
        execution, delivery and performance of this Agreement and the other Transaction
        Documents to which Parent is a party has been duly and validly authorized
        by
        Parent. Assuming the due authorization, execution and delivery of the same
        by
        Seller, this Agreement and each of the other Transaction Documents to which
        Parent is a party constitutes the legal, valid and binding obligation of
        Parent,
        enforceable against Parent in accordance with their respective terms (except
        as
        may be limited by bankruptcy, insolvency, reorganization and other similar
        laws
        and equitable principles relating to or limiting creditors’ rights
        generally).

       

      5.3 Capitalization.
        The
        authorized share capital of Parent, as of the date of this Agreement, consists
        of (a) 100,000,000 shares of Parent Common Stock and (b) 10,000,000 shares
        of
        preferred stock, $0.001 par value per share, of which 7,000,000 shares are
        designated as Series A Cumulative Redeemable Convertible Preferred Stock,
        of
        which 5,250,000 shares are issued and outstanding. According to a certificate
        from Parent’s transfer agent, 31,229,236 shares of Parent Common Stock were
        issued and outstanding as of July 21, 2006.

       

      5.4 Valid
        Issuance. The
        Shares will, when issued in accordance with the provisions of this Agreement,
        and the Exercise Shares will, when issued in accordance with the provisions
        of
        the Warrant, be validly issued, fully paid and nonassessable and will be
        free of
        any liens or Encumbrances; provided,
        however,
        that the
        Shares and Exercise Shares may be subject to restrictions on transfer under
        state and/or federal securities laws as set forth herein or as otherwise
        required by such laws at the time the transfer is proposed. 

      
        
           

        

        
          -5-

          
            

          

        

        
           

        

      

      5.5 Nasdaq.
        As
        of the
        date of this Agreement, the Parent Common Stock is registered pursuant to
        the
        Exchange Act and is listed on the Nasdaq Global Market (“Nasdaq”).
        Parent has taken no action designed to, or likely to have the effect of,
        terminating the registration of the Parent Common Stock under the Exchange
        Act
        or delisting or disqualifying such Parent Common Stock from Nasdaq, nor has
        Parent received any notification that the SEC or Nasdaq is contemplating
        terminating such registration or admission for quotation.

       

      5.6 Brokers.
        Parent
        has not agreed or become obligated to pay, or has taken any action that might
        result in any person, entity or governmental body claiming to be entitled
        to
        receive, any brokerage commission, finder’s fee or similar commission or fee in
        connection with any of the Transactions.

       

      ARTICLE
        6

       

      Closing
        Deliverables

       

      6.1 Deliverables
        by Seller. At
        the
        Closing, Seller shall deliver the following to Buyer:

       

      (a) a
        certificate from Seller certifying that (i) each of the representations and
        warranties made by Seller in this Agreement is true and correct as of the
        date
        of this Agreement and (ii) each of the covenants and agreement that Seller
        is
        required to have complied with or performed pursuant to this Agreement at
        or
        prior to the Closing has been duly complied with and performed in all
        respects;

       

      (b) a
        certificate, validly executed by the Secretary of Seller, certifying as to
        (i)
        the Charter Documents of Seller; (ii) resolutions or instruments of each
        of the
        managers and members of Seller authorizing the execution, delivery and
        performance by Seller of this Agreement and the Transactions; and (iii) an
        incumbency certificate evidencing the authority and specimen signature of
        each
        authorized person of Seller executing this Agreement and any other certificate
        provided pursuant to this Section
        6.1.
        Such
        certificate shall state that such Charter Documents and resolutions (or other
        authorizing actions or instruments) have not been amended, modified, revoked
        or
        rescinded and are in full force and effect on and as of the Closing Date
        and
        that all proceedings required to be taken on the part of Seller in connection
        with the Transactions have been duly authorized and taken;

       

      (c) a
        certificate from Seller certifying that attached thereto are (i) true and
        complete copies of the minutes and other records of all meetings and other
        proceedings (including any actions taken by written consent or otherwise
        without
        a meeting) of the managers or members of Seller since its formation and (ii)
        true and complete copies of each material contract, agreement or commitment
        to
        which Seller is party or by which it is bound as of the date thereof, including
        all amendments or modifications thereto. Such certificate shall state that
        there
        have been no meetings or other proceedings of the managers or members of
        Seller
        that are not fully reflected in such minutes or other records;

       

      (d) the
        Membership Interest Certificates, duly endorsed (or accompanied by duly executed
        stock powers) with a medallion signature guarantee provided by an eligible
        guarantor institution;

      
        
           

        

        
          -6-

          
            

          

        

        
           

        

      

      (e) the
        assignment and assumption agreement, in the form attached hereto as Exhibit
        E
        (the
“Assignment
        and Assumption”),
        executed by Seller;

       

      (f) the
        Escrow Agreement, executed by Seller;

       

      (g) the
        registration rights agreement, in the form attached hereto as Exhibit
        F (the
        “Registration
        Rights Agreement”),
        executed by Seller; and

       

      (h) the
        non-competition agreement, in the form attached hereto as Exhibit
        G (the
        “Non-Competition
        Agreement”),
        executed by Seller and each of the members, managers, directors and management
        of Seller;

       

      (i) such
        instruments of assumption and other documents or instruments as Buyer reasonably
        may request to effect the Transactions; 

       

      (j) an
        opinion of counsel to Seller substantially in the form attached hereto as
        Exhibit
        H;

       

      (k) a
        non-foreign affidavit dated as of the Closing Date, in form and substance
        required under the Treasury Regulations issued pursuant to Code §1445 stating
        that Seller is not a “Foreign Person” as defined in Code §1445; and

       

      (l) a
        good
        standing certificate from the State of South Dakota and from any other State
        in
        which Seller is qualified to do business, dated as of a recent date prior
        to the
        Closing.

       

      6.2 Closing
        Deliverables by Buyer. At
        the
        Closing, Buyer shall deliver the following to Seller: 

       

      (a) a
        certificate from Buyer certifying that (i) each of the representations and
        warranties made by Buyer in this Agreement is true and correct as of the
        date of
        this Agreement and (ii) each of the covenants and obligations that Buyer
        is
        required to have complied with or performed pursuant to this Agreement at
        or
        prior to the Closing has been duly complied with and performed in all
        respects; 

       

      (b) the
        Cash
        Consideration;

       

      (c) the
        Escrow Agreement, executed by Buyer and the Escrow Agent;

       

      (d) the
        Assignment and Assumption, executed by Buyer;

       

      (e) the
        Registration Rights Agreement, executed by Buyer; and

       

      (f) the
        Non-Competition Agreement, executed by the Company and Buyer.

      
        
           

        

        
          -7-

          
            

          

        

        
           

        

      

      6.3 Closing
        Deliverables by Parent. At
        the
        Closing, Parent shall deliver the following to Seller:

       

      (a) a
        certificate from Parent certifying that (i) each of the representations and
        warranties made by Parent in this Agreement is true and correct as of the
        date
        of this Agreement and (ii) each of the covenants and obligations that Parent
        is
        required to have complied with or performed pursuant to this Agreement at
        or
        prior to the Closing has been duly complied with and performed in all respects;
        

       

      (b) the
        Common Shares;

       

      (c) the
        Warrant.

       

       

      ARTICLE
        7

       

      Indemnification

       

      7.1 Survival
        of Representations and Covenants. 

       

      (a) The
        covenants and agreements of each Party shall survive the Closing as of the
        Transactions for the periods specified in such covenants and agreements,
        or if
        no period is specified, until the fourth anniversary of the
        Closing.

       

      (b) The
        representations, warranties, covenants and obligations of Seller and the
        rights
        and remedies that may be exercised by any Indemnified Party shall not be
        limited
        or otherwise affected by or as a result of any information furnished to,
        or any
        investigation made by or any knowledge of, any of the Indemnified Parties
        or any
        of their Representatives.

       

      (c) The
        representations and warranties of Seller contained in this Agreement shall
        remain in full force and effect and shall expire on the six month anniversary
        of
        the Closing; provided,
        however,
        that the
        foregoing expiration date shall not apply to (i) claims based on fraud,
        intentional misrepresentation or willful breach which shall survive for the
        applicable statute of limitations and (ii) claims related to breaches of
        the
        representations and warranties contained in Section 3.1
        (Organization), Section 3.2
        (Due
        Authorization; Enforceability) and Section
        3.4
        (Ownership of Membership Interests), which shall survive until the fourth
        anniversary of the Closing;
        provided
        further, however, that
        if
Buyer
        notifies Seller of a claim specifying the factual basis of that claim in
        reasonable detail to the extent then known by Buyer
        on or
        prior to the applicable expiration date, then such representation or warranty
        shall not so expire, but rather shall remain in full force and effect until
        such
        time as such claim has been fully and finally resolved, either by means of
        a
        written settlement agreement or by means of a final, non-appealable judgment
        issued by a court of competent jurisdiction.

       

      (d) The
        representations and warranties of Buyer contained in this Agreement shall
        survive until the fourth anniversary of the Closing.

      
        
           

        

        
          -8-

          
            

          

        

        
           

        

      

      7.2 Indemnification
        by Seller. Seller
        shall hold harmless and indemnify each of the Indemnified Parties from and
        against, and shall compensate and reimburse each of the Indemnified Parties
        for,
        any Losses that are directly or indirectly suffered or incurred by any of
        the
        Indemnified Parties or to which any of the Indemnified Parties may otherwise
        become subject at any time (regardless of whether or not such Losses relate
        to
        any third-party claim) and that arise directly or indirectly from or as a
        direct
        or indirect result of, or are directly or indirectly connected
        with:

       

      (a) any
        breach by Seller or of any representation or warranty of Seller contained
        in
        this Agreement, any other Transaction Document or in any certificate delivered
        by pursuant to any provision of this Agreement or any other Transaction
        Document;

       

      (b) any
        breach of any covenant or agreement of Seller contained in this Agreement
        or any
        other Transaction Document; or

       

      (c) any
        liability of Seller.

       

      ARTICLE
        8

       

      Additional
        Agreements

       

      8.1 Further
        Assurances. Each
        Party agrees to execute and deliver such further documents and instruments
        and
        to take such further actions after the Closing as may be necessary or desirable
        and reasonably requested by the other Party to give effect to the Transactions.
        

       

      8.2 Expenses;
        Attorneys’ Fees. Each
        Party shall bear and pay all fees, costs and expenses that have been incurred
        or
        that are in the future incurred by, on behalf of, such Party in connection
        with
        the negotiation, preparation and review of this Agreement, the other Transaction
        Documents and all certificates, opinions and other instruments and documents
        delivered or to be delivered in connection with the Transactions, and the
        consummation and performance of the Transactions. If a Party shall bring
        any
        action, suit, counterclaim, appeal, arbitration, or mediation for any relief
        against the other Party, declaratory or otherwise, to enforce the terms hereof
        or to declare rights hereunder (referred to herein as an “Action”),
        the
        non-prevailing party in such Action shall pay to the prevailing party in
        such
        Action a reasonable sum for the prevailing party’s attorneys’ fees and
        expenses.

      
        
           

        

        
          -9-

          
            

          

        

        
           

        

      

      8.3 Confidentiality. Seller
        shall treat and hold as confidential any information concerning the business
        and
        affairs of the Company that is not already generally available to the public
        (the “Confidential
        Information”)
        and
        refrain from using any of the Confidential Information except in connection
        with
        this Agreement. In the event that Seller is requested or required (by oral
        question or request for information or documents in any legal proceeding,
        interrogatory, subpoena, civil investigative demand, or similar process)
        to
        disclose any Confidential Information, it shall notify Buyer promptly of
        the
        request or requirement so that Buyer may seek an appropriate protective order
        or
        waive compliance with the provisions of this Section 8.3.
        If, in
        the absence of a protective order or the receipt of a waiver hereunder, Seller
        is, on the advice of counsel, compelled to disclose any Confidential Information
        to any tribunal or else stand liable for contempt, it may disclose the
        Confidential Information to the tribunal; provided that it shall use its
        best
        efforts to obtain, at the request and expense of Buyer, an order or other
        assurance that confidential treatment shall be accorded to such portion of
        the
        Confidential Information required to be disclosed as Buyer shall designate.
        Seller acknowledges and agrees that in the event of a breach of any of the
        provisions of this Section 8.3,
        monetary damages may not constitute a sufficient remedy. Consequently, in
        the
        event of any such breach, the Company, Buyer and/or their respective successors
        or assigns may, in addition to other rights and remedies existing in their
        favor, apply to any court of law or equity of competent jurisdiction for
        specific performance and/or injunctive or other relief in order to enforce
        or
        prevent any violations of the provisions hereof, in each case without the
        requirement of posting a bond or proving actual damages.

       

      8.4 Tax
        Matters.

       

      (a) Allocation
        of Company Tax Items.
        Buyer
        and Seller shall request that the Company allocate all items of Company income,
        gain, loss and deduction attributable to the Membership Interests for the
        taxable year of the Closing based on a closing of the Company’s books as of the
        close of business on the Closing Date; provided that Buyer and Seller shall
        request that any Company tax credits attributable to the Membership Interests
        for the taxable year of the Closing (including, without limitation, any small
        ethanol producer credit described in Section 40(b)(4) of the Code) be allocated
        ratably to each day in the entire 365-day taxable year of the Closing, so
        that
        Buyer and Seller both share in a ratable portion of such credits for the
        entire
        365-day taxable year, based on the number of days in such taxable year (i)
        up to
        and including the Closing Date, in the case of Seller, and (ii) after the
        Closing Date, in the case of Buyer. Notwithstanding the foregoing, if it
        is
        determined that ratable allocation of tax credits cannot be effectuated in
        tandem with a closing of the Company’s books as of the Closing Date as
        contemplated in the preceding sentence, then Seller shall pay to Buyer a
        dollar
        amount equal to the dollar amount of such credits which would have been
        allocated to the period after the Closing Date (in accordance with the preceding
        sentence) had such ratable allocation been effectuated.

       

      (b) Tax
        Information. Promptly
        upon request, Seller will provide to Buyer the amount of Seller’s taxable loss,
        if any, recognized with respect to the sale of the Membership
        Interests.

      
        
           

        

        
          -10-

          
            

          

        

        
           

        

      

      (c) Distributions
        Attributable to Pre-Closing Income. Buyer
        shall request that the Company provide Buyer and Seller (as soon as reasonably
        practicable after the closing of the books set forth in Section
        8.4(a))
        with a
        calculation of (i) the net taxable income (net of cumulative losses) of the
        Company allocated to Seller through the Closing Date in accordance with
Section
        8.4(a)
        above
        (“Pre-Closing
        Net Income”),
        and
        (ii) the aggregate distributions paid to Seller by the Company through the
        Closing Date (“Pre-Closing
        Distributions”).
        In
        the event that the Pre-Closing Net Income exceeds the Pre-Closing Distributions,
        Buyer shall direct that the Company pay over to Seller all distributions
        otherwise payable by the Company to Buyer with respect to the Membership
        Interests until the amount of such distributions paid to Seller after the
        Closing Date equals the amount of such excess. Either Buyer or Seller may
        challenge the calculation of Pre-Closing Net Income or Pre-Closing Distributions
        by giving notice of such challenge to the Company and to the other within
        ten
        (10) business days after the Company’s calculation is provided to such party. If
        Buyer and Seller shall not have reached agreement as to the amount of
        Pre-Closing Net Income and Pre-Closing Distributions within ten (10) business
        days of the date of such notice, determination of the amount of Pre-Closing
        Net
        Income and Pre-Closing Distributions shall be referred promptly to Ehrhardt
        Keefe Steiner & Hottman PC (or other auditing firm reasonably acceptable to
        Buyer and Seller) (the “Auditor”),
        which
        shall be engaged by Buyer and Seller to make such termination. In connection
        with such engagement, Buyer and Seller each shall propose an amount of
        distributions to be paid by the Company to Seller after the Closing Date.
        The
        determination of the Auditor shall be binding on Buyer and Seller as to the
        amount of distributions to be paid by the Company to Buyer after the Closing
        Date in the absence of manifest error. During the period that any challenge
        to
        the calculation of Pre-Closing Net Income or Pre-Closing Distributions is
        pending, distributions to Buyer by the Company of any amount in dispute shall
        be
        withheld by the Company and paid to Buyer or Seller, as appropriate, only
        upon
        final determination of the amount of Pre-Closing Net Income or Pre-Closing
        Distributions. The costs incurred in connection with the determination made
        by
        the Auditor shall be paid by the Party who proposed an amount of distributions
        to be paid by the Company to Buyer after the Closing Date that varied by
        a
        greater amount from the amount finally determined by the Auditor than the
        amount
        proposed by the other Party or shall be shared equally if the amounts proposed
        by Buyer and Seller varied by an equal amount.

       

      (d) Capital
        Account.
        Except
        as set forth in Section
        8.7(c),
        Seller
        shall receive no further distributions from the Company. Buyer shall succeed
        to
        the entire Capital Account of Seller attributable to the Membership
        Interests.

       

      8.5 Disposition
        of Shares, Warrant and Warrant Shares.
        Seller
        agrees not to make any disposition of all or any part of the Shares, the
        Warrant
        or the Warrant Shares unless and until:

       

      (a) There
        is
        then in effect a registration statement under the Securities Act covering
        such
        proposed disposition, such disposition is made in accordance with such
        registration statement and Seller shall have provided to Buyer reasonable
        evidence of the manner of disposition and compliance with any applicable
        prospectus delivery requirements; or

       

      (b) Seller
        shall have notified Buyer of the proposed disposition and shall have furnished
        Buyer with a statement of the circumstances surrounding the proposed
        disposition, and if reasonably requested by Buyer, Seller shall have furnished
        Buyer with an opinion of counsel, reasonably satisfactory to Buyer, for Seller
        to the effect that such disposition will not require registration of the
        Shares,
        the Warrants or the Exercise Shares under the Securities Act or applicable
        state
        securities laws.

      
        
           

        

        
          -11-

          
            

          

        

        
           

        

      

      ARTICLE
        9

       

      Miscellaneous

       

      9.1 Amendment
        and Waiver. This
        Agreement may not be amended, modified, altered or supplemented other than
        by
        means of a written instrument duly executed and delivered on behalf of Buyer
        and
        Seller. 

       

      9.2 Notices.
        All
        notices, demands and other communications to be given or delivered under
        or by
        reason of the provisions of this Agreement shall be in writing and shall
        be
        deemed to have been given when personally delivered, when mailed by certified
        mail, return receipt requested, when sent by facsimile with confirmation
        of
        receipt received, or when delivered by overnight courier with executed receipt.
        Notices, demands and communications to Seller or Buyer shall, unless another
        address is specified in writing in accordance herewith, be sent to the address
        indicated below:

       

      Notices
        to Seller:                 
Eagle
        Energy, LLC

      c/o
        David
        Fick, President

      2113
        Pebble Beach Lane

      Brandon,
        SD  57005

      Tel:
        605-201-1087

      Fax: 
        605-582-8850

      

      with
        a
        copy to:                     
        Dorsey
        & Whitney LLP

      50
        South
        Sixth Street, Suite 1500

      Minneapolis,
        MN 55402

      Attn:
        Robert G. Hensley

      Tel:
        (612) 340-2655

      Fax:
        (612) 340-7800

       

      Notices
        to Buyer:                
Pacific
        Ethanol California, Inc.

      5711
        N.
        West Avenue

      Fresno,
        CA 93711

      Attn:
        Neil Koehler

      Tel:
        (559) 435-1771

      Fax:
        (559) 435-1478

      
        
           

        

        
          -12-

          
            

          

        

        
           

        

      

      with
        copies to:                  Pacific
        Ethanol, Inc.

      5711
        N.
        West Avenue

      Fresno,
        CA 93711

      Attn:
        General Counsel

      Tel:
        (559) 435-1771

      Fax:
        (559) 435-1478

      

      and
        to:                           
        Cooley
        Godward LLP

      380
        Interlocken Crescent, Suite 900

      Broomfield,
        CO 80021

      Attn:
        Francis R. Wheeler, Esq.

      Tel:
        (720) 566-4231

      Fax:
        (720) 566-4099

       

      9.3 Assignment.
        This
        Agreement and all of the provisions hereof shall be binding upon and inure
        to
        the benefit of the Parties and their respective successors and assigns. Neither
        this Agreement nor any of the rights, interests or obligations hereunder
        shall
        be assignable by either Party without the prior written consent of the other
        Party; provided,
        however,
        that
        Buyer may assign in whole its right, title and interest under this Agreement
        to
        any Affiliate.

       

      9.4 Captions.
        The
        captions used in this Agreement are for convenience of reference only and
        do not
        constitute a part of this Agreement and shall not be deemed to limit,
        characterize or in any way affect any provision of this Agreement, and all
        provisions of this Agreement shall be enforced and construed as if no caption
        had been used in this Agreement.

       

      9.5 Complete
        Agreement; Schedules And Exhibits. Each
        schedule and exhibit delivered pursuant to the terms of this Agreement shall
        be
        in writing and shall constitute a part of this Agreement, although schedules
        need not be attached to each copy of this Agreement. This Agreement, together
        with such schedules and exhibits, and the documents referred to herein contain
        the complete agreement between the Parties and supersede any prior
        understandings, agreements or representations by or between the Parties,
        written
        or oral, which may have related to the subject matter hereof in any
        way.

       

      9.6 Governing
        Law; Venue. 

       

      (a) The
        laws
        of the State of Colorado, without regard to conflict of law doctrines, govern
        all questions concerning the construction, validity and interpretation of
        this
        Agreement and the performance of the obligations imposed by this
        Agreement.

       

      (b) Any
        legal
        action or other legal proceeding relating to this Agreement or the enforcement
        of any provision of this Agreement may be brought or otherwise commenced
        in any
        state or federal court located in the County of Denver, Colorado. Each party
        to
        this Agreement:

      
        
           

        

        
          -13-

          
            

          

        

        
           

        

      

      (i) expressly
        and irrevocably consents and submits to the jurisdiction of each state and
        federal court located in the County of Denver, Colorado (and each appellate
        court located in the State of Colorado) in connection with any such legal
        proceeding; 

       

      (ii) agrees
        that each state and federal court located in the County of Denver, Colorado
        shall be deemed to be a convenient forum; and

       

      (iii) agrees
        not to assert (by way of motion, as a defense or otherwise), in any such
        legal
        proceeding commenced in any state or federal court located in the County
        of
        Denver, Colorado, any claim that such party is not subject personally to
        the
        jurisdiction of such court, that such legal proceeding has been brought in
        an
        inconvenient forum, that the venue of such proceeding is improper or that
        this
        Agreement or the subject matter of this Agreement may not be enforced in
        or by
        such court.

       

      9.7 Counterparts.
        This
        Agreement may be executed in two or more counterparts, each of which shall
        be
        deemed an original, but all of which together shall constitute one and the
        same
        instrument. Documents will be deemed as originals if received by facsimile
        copy.

       

      9.8 Third
        Party Beneficiaries. Nothing
        in this Agreement is intended or will be construed to entitle any person
        or
        entity, other than Buyer and Seller or their respective permitted transferees
        and assigns, to any claim, cause of action, remedy or right of any
        kind.

       

      9.9 Severability.
        The
        validity, legality or enforceability of the remainder of this Agreement will
        not
        be affected even if one or more of the provisions of this Agreement will
        be held
        to be invalid, illegal or unenforceable in any respect.

       

      [Signatures
        Follow]

       

      
        
           

        

        
          -14-

          
            

          

        

        
           

        

      

      In
        Witness Whereof,
        each of
        the parties has caused this Agreement to be duly executed by duly authorized
        individuals as of the date hereof.

       

      Buyer

       

      Pacific
        Ethanol California, Inc.,

      a
        California corporation

       

      By: 
        /s/Neil
        M.
        Koehler                                 
 

      Name:
        Neil M. Koehler

      Title:
        CEO

      
 

       

      Seller

       

      Eagle
        Energy, LLC,

      a
        South
        Dakota limited liability company

       

      By: 
        /s/David
        M.
        Fink                                     

      Name:
        David M. Fink

      Title:
        President

      

      

      Parent

       

      Pacific
        Ethanol, Inc.,

      a
        Delaware corporation

       

      By:
         /s/Neil
        M.
        Koehler                                  
 

      Name:
        Neil M. Koehler

      Title:
        CEO

      
        
           

        

        
          -15-

          
            

          

        

        
           

        

      

      Exhibit
        A

       

      Definitions

       

      “Account”
means
        account number 4581024865 held by Seller at First Farmers & Merchants
        National Bank, 303 East Main, Luverne, Minnesota 56156, Attn: Cliff Boom
        (telephone: 507 283 4463) (ABA# 091216007).

       

      “Affiliate”
means
        an individual or entity that directly or indirectly, through one or more
        intermediaries, controls, or is controlled by, or is under common control
        with,
        a specified individual or entity. For purposes of this definition, “control”
shall include, without limitation, the exertion of significant influence
        over an
        individual or entity and shall be conclusively presumed as to any fifty percent
        (50%) or greater equity interest.

       

      “Assignment
        and Assumption”
is
        defined in Section
        7.1.

       

      “Business”
is
        defined in the recitals hereto.

       

      “Buyer”
is
        defined in the preamble hereof and shall also include any Affiliate of Buyer
        that becomes an assignee of the Agreement pursuant to the terms of Section 9.3.

       

      “Charter
        Documents”
shall
        mean, as applicable, the specified entity’s (i) certificate of incorporation or
        formation or other charter or organizational documents, and (ii) bylaws or
        operating agreement, each as from time to time in effect.

       

      “Closing”
is
        defined in Section 2.3.

       

      “Closing
        Date”
is
        defined in Section 2.3.

       

      “Code”
means
        the Internal Revenue Code of 1986, as amended.

       

      “Company”
is
        defined in the recitals hereto.

       

      “Confidential
        Information”
is
        defined in Section
        8.3.

       

      “Encumbrance”
means
        any
        lien,
        pledge, hypothecation, charge, mortgage, security interest, encumbrance,
        equity,
        trust, equitable interest, claim, preference, right of possession, lease,
        tenancy, license, encroachment, covenant, infringement, interference, Order,
        proxy, option, right of first refusal, preemptive right, community property
        interest, legend, defect, impediment, exception, reservation, limitation,
        impairment, imperfection of title, condition or restriction of any nature
        (including any restriction on the transfer of an asset, any restriction on
        the
        receipt of any income derived from an asset, any restriction on the use of
        any
        asset and any restriction on the possession, exercise or transfer of any
        other
        attribute of ownership of an asset).

       

      “Escrow
        Agreement”
is
        defined in Section
        2.1.

       

      “Exercise
        Shares”
means
        the shares of Parent Common Stock issuable upon exercise of the
        Warrant.

      
        
           

        

        
          A-1

          
            

          

        

        
           

        

      

      “Indemnified
        Party”
means
        (a) Buyer, (b) the Company; (c) Buyer’s and the Company’s current and future
        Affiliates; (d) the respective Representatives of the persons referred to
        in
        clauses (a), (b) and (c); and the respective successors and assigns of the
        persons referred to in clauses (a), (b), (c) and (d) above.

       

      “Loss”
        shall
        include any loss, damage, injury, decline in value, Liability, claim, demand,
        settlement, judgment, award, fine, penalty, Tax, fee (including any legal
        fee,
        expert fee, accounting fee or advisory fee), charge, cost (including court
        costs
        and any cost of investigation) or expense of any nature.

       

      “Material
        Adverse Change”
means
        any change or changes that are material and adverse to the Business, properties,
        prospects, working capital, financial condition or results of operations
        of the
        Company.

       

      “Membership
        Interests”
is
        defined in the recitals hereto.

       

      “Membership
        Interest Certificates”
means
        collectively (i) Certificate of Membership of Front Range Energy, LLC #2,
        representing 4,094.595 Class B Voting Units of the Company and (ii) Certificate
        of Membership of Front Range Energy, LLC #3, representing 6,000 Class B Voting
        Units of the Company.

       

      “Operating
        Agreement”
        means
        the Second Amended and Restated Operating Agreement of Front Range Energy,
        LLC,
        dated as of October 20, 2005.

       

      “Parent”
        is
        defined in
        the
        preamble hereof.

       

      “Parent
        Common Stock”
        means
        the
        common stock, par value $0.001 per share, of Parent. 

       

      “Party”
or
        “Parties”
means
        any of Seller and Buyer.

       

      “Person”
means
        any individual, person, limited liability company, partnership, trust,
        unincorporated organization, corporation, association, joint stock company,
        business, group, government, government agency or authority or other
        entity.

       

      “Registration
        Rights Agreement”
        is
        defined in Section
        6.1.

       

      “Representatives”
shall
        mean officers, directors, employees, agents, attorneys, accountants, advisors
        and representatives.

       

      “SEC”
means
        the Securities and Exchange Commission.

       

      “Securities
        Act”
means
        the Securities Act of 1933, as amended.

       

      “Securities
        Exchange Act”
means
        the Securities Exchange Act of 1934, as amended.

       

      “Seller”
is
        defined in the preamble hereof.

       

      “Shares”
is
        defined in Section
        2.1(d).

      
        
           

        

        
          A-2

          
            

          

        

        
           

        

      

      “Tax”
means
        any foreign, federal, state, county or local income, sales and use, excise,
        franchise, real and personal property, transfer, gross receipt, capital stock,
        production, business and occupation, disability, employment, payroll, severance
        or withholding tax or charge imposed by any governmental entity, any interest
        and penalties (civil or criminal) related thereto or to the nonpayment thereof,
        and any Loss in connection with the determination, settlement or litigation
        of
        any Tax liability.

       

      “Transactions”
shall
        mean (a) the execution and delivery of the respective Transaction Documents;
        and
        (b) all of the transactions contemplated by the respective Transaction
        Documents, including (i) the sale of the Membership Interests by Seller to
        Buyer
        in accordance with this Agreement; (ii) the issuance of the Shares and Warrant
        to Seller by Parent; and (iii) the performance by Seller and Buyer of their
        respective obligations under the Transaction Documents and the exercise by
        Seller and Buyer of their respective rights under the Transaction
        Documents.

       

      “Transaction
        Documents”
shall
        mean (a) the Agreement; (b) the Escrow Agreement; (c) the Registration Rights
        Agreement; (c) the Non-Competition Agreement; (d) the Warrant; and (e) the
        certificates referred to in Sections
        6.1(a),
        (b)
        and
(c).

       

      “Warrant”
is
        defined in Section
        2.1(c).

       

       

      A-3

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