Document:

Form of Non-Competition Agr dated October 17, 2006

    EXHIBIT
      10.6

     

    NON-COMPETITION
      AGREEMENT

     

    This
      Non-Competition Agreement
      (this
“Agreement”)
      is
      entered into as of the 17th
      day of
      October, 2006, by and among (i) Pacific Ethanol, Inc., a Delaware
      corporation (“Buyer”),
      (ii) Front Range Energy, LLC, a Colorado limited liability company (the
“Company”),
      and
      (iii)  _____________(the “Individual”).
      Capitalized terms not defined herein shall have the respective meanings ascribed
      to such terms in the Membership Interest Purchase Agreement, dated as of the
      date hereof, by and between Eagle Energy, LLC, a South Dakota limited liability
      company (“Seller”),
      and
      Buyer (the “Purchase
      Agreement”).

     

    Whereas,
      the
      Company is currently engaged in the business of the construction, operation
      and
      management of corn ethanol plants (the “Restricted
      Business”);

     

    Whereas,
      the
      Individual has served as a member, manager, director or officer of Seller and,
      as a result of his position with Seller, is in possession of confidential and
      proprietary information relating to the Restricted Business;

     

    Whereas,
      Buyer
      and Seller are parties to the Purchase Agreement, pursuant to which Buyer will
      purchase 10,094.595 Class B Voting Units of the Company, representing
      approximately 42% of the outstanding membership interests of the Company, from
      Seller;

     

    Whereas,
      Buyer
      and the Company desire to preserve and protect the assets of the Company,
      including, without limitation, its goodwill, staff resources, customers and
      trade secrets of which Individual has knowledge; and

     

    Whereas,
      as a
      condition to its willingness to enter into the Purchase Agreement, Buyer has
      required that the Individual enter into this Agreement.

     

    Now,
      Therefore,
      in
      consideration of the foregoing and the respective representations, warranties,
      covenants and agreements set forth in this Agreement, the parties, intending
      to
      be legally bound, hereby agree as follows:

     

    
      	
              1.

            	
              Certain
                Covenants.

            

    

     

    (a) Noncompetition.
      The
      Individual covenants and agrees that during the period commencing as of the
      date
      hereof and ending on the two (2) year anniversary of the Closing Date (the
      “Covenant
      Period”),
      except with the express prior written consent of the Chief Executive Officer
      of
      each of Buyer and the Company, the Individual shall not engage in or carry
      on,
      or permit his name to be used in connection with, any business either for
      himself or as a member, executive, employee, stockholder (other than as the
      holder of not more than one percent (1%) of the total outstanding stock of
      a
      publicly held company), investor, officer, manager or director of a corporation,
      partnership or other business association or as an agent, associate or
      consultant of any Person, in competition with the Restricted Business, as
      conducted by the Company, Buyer or any of their Affiliates, within a fifty
      (50)
      mile radius of the Company’s ethanol production facility located in Windsor,
      Colorado. The parties intend that the covenants contained in this Section
      1(a)
      shall be
      deemed to be a series of separate covenants, one for each county in Colorado
      within such radius and, except for geographic coverage, each such separate
      covenant shall be identical in terms to the covenant contained in this
Section
      1(a).
      For
      purposes of this Agreement, “Person”
shall
      be broadly interpreted to include any individual, corporation (including any
      non-profit corporation), general or limited partnership, limited liability
      company, joint venture, estate, trust, association, organization or other entity
      or governmental body. 

    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

    

    (b) Nondisclosure
      of Information.
      The
      Individual acknowledges that all Confidential Information (as defined below)
      known or obtained by him, whether before or after the date hereof, is the
      property of the Restricted Business. Therefore, the Individual agrees that
      he
      will not, during the Covenant Period, disclose to any Person or use for his
      own
      account, or for the benefit of any third party, any Confidential Information,
      whether in the Individual’s memory or embodied in writing or other physical
      form, without the written consent of the Chief Executive Officer of each of
      Buyer and the Company. This restriction shall not apply to the extent that
      such
      Confidential Information is or becomes generally known to and available for
      use
      by the public other than as a result of the Individual’s fault or the fault of
      any other Person bound by a duty of confidentiality to the Company, Buyer or
      any
      of their Affiliates or is made available to the Individual by a third party
      having a right to do so. Furthermore, this restriction shall not apply to the
      extent specific Confidential Information is required by Law or by the order
      of
      any Government Authority to be disclosed; provided that the Individual, prior
      to
      making such legally required or compelled disclosure, shall provide such
      notification as is reasonable in the circumstances to the Chief Executive
      Officer of each of Buyer and the Company and shall assist Buyer and the Company
      in obtaining an appropriate protective order.

     

    (c) Materials.
      The
      Individual agrees to deliver to Buyer at any time Buyer may request, all
      documents, memoranda, notes, plans, records, reports and other documentation,
      models, components, devices or computer software, whether embodied in a disk
      or
      in other form (and all copies of all of the foregoing), relating to the
      Restricted Business and any other Confidential Information that the Individual
      may then possess or have under his control.

     

    (d) Confidential
      Information.“Confidential
      Information”
means
      the following: (i) any and all trade secrets concerning the Restricted Business,
      including, without limitation, product specifications, data, know-how, formulae,
      compositions, processes, designs, sketches, photographs, graphs, drawings,
      samples, inventions and ideas, past, current and planned research and
      development, current and planned manufacturing and distribution methods and
      processes, customer lists, details of contracts with customers, consultants,
      suppliers or employees, current and anticipated customer requirements, price
      lists, market studies, business plans, computer software and programs (including
      object code and source code), computer software and database technologies,
      systems, structures and architectures; (ii) any and all information
      concerning the Restricted Business, including, without limitation, historical
      financial statements, financial projections and budgets, historical and
      projected sales, capital spending budgets and plans, the names and backgrounds
      of key personnel, personnel training and techniques and materials, however
      documented; and (iii) any and all notes, analysis, compilations, studies,
      summaries and other material prepared by or for the Restricted Business
      containing or based, in whole or in part, on any information included in the
      foregoing.

     

    (e) Nonservicing
      and Nonhiring.
      

     

    (i) The
      parties acknowledge and agree that the Individual, through his association
      with
      Seller, has acquired a considerable amount of knowledge and goodwill with
      respect to actual and prospective clients and customers of the Restricted
      Business, which knowledge and goodwill are extremely valuable to the Company
      and
      Buyer and which would be extremely detrimental to the Company and Buyer if
      used
      by the Individual in a manner adverse to the interests of the Company or Buyer.
      The parties acknowledge and agree that, because of the nature of the Restricted
      Business, it is necessary to afford fair protection to Buyer and the Company,
      as
      provided in this Section
      1(e).

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    (ii) As
      a
      material inducement to Buyer to enter into the Purchase Agreement, the
      Individual covenants and agrees that, during the Covenant Period, except if
      the
      Individual is acting as an employee, agent, or consultant of the Company or
      Buyer solely for the benefit of the Company or Buyer in connection with the
      Restricted Business and in accordance with the Company’s or Buyer’s business
      practices and employee policies, as determined from time to time by the
      Company’s or Buyer’s Board of Directors or Managers, as applicable, the
      Individual shall not, directly, indirectly or in concert with any other Person,
      divert business from or induce competition with the Restricted Business with
      any
      Person who (A) is on the date hereof, a client or customer of the Restricted
      Business, (B) becomes a client or customer of the Restricted Business
      during the Covenant Period, or (C) prior to or during the Covenant Period was
      or
      is being contacted by the Company, Buyer or any of their Affiliates in
      furtherance of the Restricted Business as a prospective client or customer,
      whether for or on behalf of the Individual or for any entity in which the
      Individual shall have a direct or indirect interest (or any subsidiary or
      Affiliate of any such entity), whether as a proprietor, partner, co-venturer,
      financier, investor, Individual, representative or otherwise.

     

    (iii) As
      a
      material inducement to Buyer to enter into the Purchase Agreement, the
      Individual further covenants and agrees that, during the Covenant Period, except
      if the Individual is acting as a consultant, employee or agent of the Company
      or
      Buyer solely for the benefit of the Company or Buyer in connection with the
      Restricted Business and in accordance with the Company’s or Buyer’s business
      practices and employee policies, as determined from time to time by the
      Company’s or Buyer’s Board of Directors or Managers, as applicable, the
      Individual shall not, directly or indirectly, hire or engage or attempt to
      hire
      or engage any individual who shall have been a consultant or employee of the
      Company, Buyer or any of their Affiliates at any time during the Covenant
      Period, or take any other action that is intended to induce any employee or
      consultant to terminate his or her relationship with Buyer, the Company or
      any
      of their Affiliates, whether for or on behalf of the Individual or for any
      entity in which the Individual shall have a direct or indirect interest (or
      any
      subsidiary or Affiliate of any such entity), whether as a proprietor, partner,
      co-venturer, financier, investor, Individual, representative or
      otherwise.

     

    (f) Publicity.
      As a
      material inducement to Buyer to enter into the Purchase Agreement, the
      Individual covenants and agrees that, during the Covenant Period, the Individual
      shall not, for any reason whatsoever, directly or indirectly, individually
      or in
      conjunction with any other Person, publish, or otherwise orally communicate
      under circumstances reasonably likely to become public, any statement that
      is
      factually inaccurate and materially detrimental to the Company, Buyer or any
      of
      their Affiliates.

     

    (g) Injunctive
      Relief.
      The
      Individual understands and agrees that the Company and Buyer shall suffer
      irreparable harm in the event that the Individual or any of his or her
      Affiliates breaches any of the provisions of this Section
      1,
      and
      that monetary damages shall be inadequate to compensate the Company and Buyer
      for such breach. Accordingly, the Individual agrees that, in the event of a
      breach by the Individual or any of his or her Affiliates of any of the
      provisions of this Section
      1,
      in
      addition to, and not in limitation of, any other rights, remedies or damages
      available to the Company and Buyer at law or in equity, the Company and Buyer
      shall be entitled to a temporary restraining order, preliminary injunction
      and
      permanent injunction in order to prevent or to restrain any such breach by
      the
      Individual or by any or all of the Individual’s Affiliates, partners,
      co-venturers, representatives and any and all persons directly or indirectly
      acting for, on behalf of or with the Individual.

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    (h) Reasonableness
      of Restrictions.

     

    (i) THIS
      AGREEMENT IS ENTERED INTO IN CONNECTION WITH THE PURCHASE AGREEMENT. THE
      COVENANTS OF THE INDIVIDUAL CONTAINED IN THIS AGREEMENT ARE A MATERIAL PART
      OF
      THAT TRANSACTION, AND BUYER WOULD NOT HAVE ENTERED INTO THE PURCHASE AGREEMENT
      WITHOUT THEM. THE INDIVIDUAL HAS CAREFULLY READ AND CONSIDERED THE PROVISIONS
      OF
      THIS SECTION 1 AND, HAVING DONE SO, AGREES THAT THE RESTRICTIONS SET FORTH
      HEREIN ARE FAIR AND REASONABLE AND ARE REASONABLY REQUIRED FOR THE PROTECTION
      OF
      THE INTERESTS OF THE COMPANY AND BUYER AND THEIR RESPECTIVE STOCKHOLDERS,
      MEMBERS, OFFICERS, DIRECTORS, EMPLOYEES AND EXECUTIVES.

     

    (ii) If,
      in
      any judicial proceeding, the court shall refuse to enforce all of the separate
      covenants contained in this Section
      1
      because
      the time limit is excessive, it is expressly understood and agreed between
      the
      parties hereto that for purposes of such proceeding such time limitation shall
      be deemed reduced to the extent necessary to permit enforcement of such
      covenants. If, in any judicial proceeding, the court shall refuse to enforce
      all
      of the covenants contained in this Section
      1
      because
      the court deems them to be more extensive (whether as to geographic area, scope
      of business or otherwise) than necessary to protect the business and goodwill
      of
      the Company and Buyer, it is expressly understood and agreed between the parties
      hereto that for purposes of such proceeding the geographic area, scope of
      business or other aspect shall be deemed reduced to the extent necessary to
      permit enforcement of such covenants.

     

    (iii) The
      term
      of the covenants contained in this Section
      1
      shall be
      tolled for the period commencing on the date any successful action is filed
      for
      injunctive relief or damages arising out of a breach of this Section
      1
      by the
      Individual and ending upon the successful enforcement of such injunctive
      relief.

     

    (iv) The
      parties acknowledge that the time, scope of business, geographic area and other
      provisions of this Agreement have been specifically negotiated by sophisticated
      commercial parties. This Agreement has been reviewed by counsel for Eagle,
      and
      the Individual has had the opportunity to consult independently with counsel
      and
      to be advised in all respects concerning the reasonableness and propriety of
      the
      covenants contained herein, with specific regard to the Restricted Business,
      and
      represents that the Agreement is intended to be, and shall be, fully enforceable
      and effective in accordance with its terms.

     

    2. No
      Conflicts.
      The
      Individual certifies that he has no outstanding agreement or obligation that
      is
      in conflict with any of the provisions of this Agreement, or that would preclude
      the Individual from complying with the provisions hereof, and further certifies
      that the Individual will not enter into any such conflicting agreement during
      the term of this Agreement.

     

    3. Governing
      Law. 
      This
      Agreement shall be governed by, and construed in accordance with, the Laws
      of
      the State of Colorado, without regard to its principles of conflicts-of-law
      or
      choice-of-law. Any legal action or proceeding against any party with respect
      to
      this Agreement or the transactions consummated hereunder shall be brought
      exclusively in the state or federal courts located in the County of Denver,
      State of Colorado, and by execution and delivery of this Agreement the parties
      hereby irrevocably accept the exclusive jurisdiction of such
      courts.

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

    4. Notices.
      All
      notices and other communications given or made pursuant hereto shall be in
      writing and shall be deemed to have been duly given or made as of the date
      delivered, mailed, dispatched or transmitted, and shall be effective upon
      receipt, if delivered personally, mailed by registered or certified mail
      (postage prepaid, return receipt requested) or dispatched by reputable overnight
      delivery service to the parties at the following addresses (or at such other
      address for a party as shall be specified by notice given pursuant to this
      Section
      4)
      or sent
      by electronic transmission to the facsimile number specified below (or to such
      other facsimile number for a party as shall be specified by notice given
      pursuant to this Section
      4):

     

    If
      to
      Buyer, addressed to it at:

     

    Pacific
      Ethanol, Inc.

    5711
      N.
      West Avenue

    Fresno,
      CA 93711

    Attn.:
      Neil Koehler

    Facsimile:
      (559) 435-1478

    

    With
      copies to:

    

    Pacific
      Ethanol, Inc.

    5711
      N.
      West Avenue

    Fresno,
      CA 93711

    Attn.:
      General Counsel

    Facsimile:
      (559) 435-1478

    

    Cooley
      Godward Kronish LLP

    380
      Interlocken Crescent, Suite 900

    Broomfield,
      Colorado 80021

    Attn:
      Francis Wheeler, Esq.

    Facsimile:
      (720) 566-4099

    

    If
      to the
      Company, addressed to it at:

    

    Front
      Range Energy, LLC

    Tel:
      (970) 674-2910

    Facsimile:
      (970) 674-2914

    

    With
      a
      copy to:

    

    

    

    

    

    

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

    If
      to the
      Individual, to him or her at the address listed on the signature page attached
      hereto;

     

    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

     

    5. Parties
      in Interest.
      This
      Agreement shall be binding upon and inure solely to the benefit of each party
      hereto and their respective successors and assigns, and nothing in this
      Agreement, express or implied, is intended to or shall confer upon any other
      person any right, benefit or remedy of any nature whatsoever under or by reason
      of this Agreement.

     

    6. Severability.
      If any
      term or other provision of this Agreement is invalid, illegal or incapable
      of
      being enforced by any rule of Law or public policy, all other conditions and
      provisions of this Agreement shall nevertheless remain in full force and effect
      so long as the economic or legal substance of the transactions contemplated
      hereby is not affected in any manner materially adverse to any party. Upon
      such
      determination that any term or other provision is invalid, illegal or incapable
      of being enforced, the parties hereto shall negotiate in good faith to modify
      this Agreement so as to effect the original intent of the parties as closely
      as
      possible in an acceptable manner to the end that transactions contemplated
      hereby are fulfilled to the extent possible.

     

    7. Modification;
      No Waiver.
      No
      change, modification or waiver hereof shall be valid or binding unless the
      same
      is in writing and signed by the party against whom such change, modification
      or
      waiver is sought to be enforced; moreover, no valid waiver of any provision
      of
      this Agreement at any time shall be deemed a waiver of any other provision
      of
      this Agreement at such time or will be deemed a valid waiver of such provision
      at any other time; provided, further, that nothing in this agreement may be
      changed, modified, waived or superceded by any agreement which does not
      specifically make reference to this Agreement (even if such agreement indicates
      that it supercedes all prior agreements relating to the subject matter
      hereof).

     

    8. Entire
      Agreement. This
      Agreement constitutes the entire agreement of the parties and supersedes all
      prior agreements and undertakings, both written and oral, between the parties,
      or any of them, with respect to the subject matter hereof and, except as
      otherwise expressly provided herein, are not intended to confer upon any other
      Person any rights or remedies hereunder.

     

    9. Headings.
      The
      headings contained in this Agreement are for reference purposes only and shall
      not affect in any way the meaning or interpretation of this
      Agreement.

     

    10. Assignment.
      Subject
      to the terms hereof, Buyer and the Company may expressly assign their rights
      under this Agreement to (i) any Affiliate at any time or (ii) any
      Person in connection with a merger, sale or transfer of all or substantially
      all
      of the assets of Buyer or the Company to such Person, without the consent of
      the
      Individual.

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

    11. Mutual
      Drafting.
      Each
      party hereto has participated in the drafting of this Agreement, which each
      party acknowledges is the result of extensive negotiations between the
      parties.

     

    12. Counterparts.
      This
      Agreement may be executed in one or more counterparts, and by the different
      parties hereto in separate counterparts, each of which when executed shall
      be
      deemed to be an original but all of which taken together shall constitute one
      and the same agreement.

     

    13. Expenses.
      The
      prevailing party in any controversy hereunder shall be entitled to reasonable
      attorneys’ fees and expenses.

     

    14. Indemnification.
      The
      Individual agrees to save and hold Buyer, the Company and their Affiliates
      harmless from and against all Losses whatsoever (including reasonable attorneys’
fees) arising out of the breach by the Individual of his obligations under
      Section
      1
      of this
      Agreement and the enforcement of such section of this Agreement by Buyer, the
      Company and any of their Affiliates. The foregoing shall be in addition to,
      and
      not in limitation of, any rights Buyer, the Company and any of their Affiliates
      may have against the Individual arising in connection with this
      Agreement.

     

    

    [Signature
      Page Follows.]

    

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF,
      Buyer,
      the Company and the Individual have executed this Non-Competition Agreement
      as
      of the date first written above.

     

    

    BUYER:

    

    PACIFIC
      ETHANOL, INC.

    

    

    By:__________________________________
      

    Name:________________________________
      

    Title:_________________________________
      

    

    

    THE
      COMPANY:

    

    FRONT
      RANGE ENERGY, LLC

    

    
 

    By:__________________________________
      

    Name:________________________________
      

    Title:_________________________________
      

    

    

    THE
      INDIVIDUAL:

    

    Name: 
      _______________________________ 

    Address:
       _____________________________ 

    Facsimile:
      _____________________________ 

    
 

    -8-Unassociated Document

     

    EXHIBIT
      10.7

     

    October
      17, 2006

     

    Front
      Range Energy, LLC 

    31375
      Great Western Drive

    Windsor,
      CO 80550

    

    Re:
      Amendment to Amended and Restated Ethanol Purchase and Sale
      Agreement

     

    Ladies
      and Gentlemen:

    

    Reference
      is hereby made to the Amended and Restated Ethanol Purchase and Sale
      Agreement (the“Agreement"), dated
      as
      of August 9, 2006, between Front Range
      Energy,
      LLC, a Colorado limited liability company (the "Company"), and
      Kinergy Marketing, LLC, an Oregon limited liability company.

    

    For
      good
      and valuable consideration, the receipt of which is hereby acknowledged,
      the undersigned hereby agrees that Section 4.1 of the Agreement
      shall
      be
      amended and restated in its entirety as follows:

    

    "Term.
      This
      Amended Agreement shall be effective on the date
      hereof and unless earlier terminated in accordance with
      its
      terms, shall continue in effect until May 31, 2013; provided,
      that the
      term of this Amended Agreement shall automatically renew and
      be
      extended for additional one-year periods thereafter unless a Party elects to
      terminate this Amended Agreement in a writing delivered to the other Party
      at
      least 60 days prior to the end of the original or renewal term."

    

    Except
      as
      expressly set forth herein, the Agreement shall remain unchanged and
      in full
      force and effect.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    This
      agreement shall be governed by and construed in accordance
      with the laws of
      the
      State of California. This agreement may be executed in two or more counterparts,
      each of which shall constitute an original but all of which when taken together
      shall constitute one agreement.

     

    Very
      truly yours,

    

    KNERGY
      MARKETING,
      LLC

    

    

    By: 
      /s/
      Neil
      M. Koehler                                        
      

    Name:
      Neil M. Koehler

    Title:
      President

     

    Accepted
      and agreed to

    as
      of the
      date first above written:

    

    FRONT
      RANGE ENERGY, LLC

    

    

    By: 
      /s/
      Daniel A.
      Sanders                               

    Name.
      Daniel A. Sanders

    Title:
      Manager

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