Exhibit 10.1

Execution Version

AMENDMENT NO. 2 TO CREDIT AGREEMENT

THIS AMENDMENT NO. 2 TO CREDIT AGREEMENT, dated as of March 20, 2020 (this “Agreement”), is entered into by and between ILLINOIS CORN PROCESSING, LLC, a limited liability company organized and existing under the laws of Delaware (“Company”), COMPEER FINANCIAL, PCA, a federally-chartered instrumentality of the United States, successor by merger to 1^st Farm Credit Services, PCA (“Lender”), and COBANK, ACB, a federally-chartered instrumentality of the United States (“Agent”). Capitalized terms used but not defined herein shall have the meanings set forth in the Credit Agreement.

BACKGROUND:

WHEREAS, the Company, the Lender, and the Agent are parties to that certain Credit Agreement, dated as of September 15, 2017 (as amended, restated, modified, or otherwise supplemented from time to time, the “Credit Agreement”), and the other Loan Documents;

WHEREAS, on March 16, 2020, PEI appointed Winston Mar as its Chief Restructuring Officer;

WHEREAS, the Company has requested that, as of the Effective Date, the Credit Agreement and certain other Loan Documents be amended as herein provided; and

WHEREAS, the Agent and Lender are willing, subject to the terms and conditions hereinafter set forth, to make such amendments;

NOW, THEREFORE, in consideration of the agreements herein contained, the parties hereby agree as follows:

  ARTICLE 1 Amendments.

Effective on (and subject to the occurrence of) the Effective Date, the Credit Agreement is amended as follows:

1.1 Amendment to Section 2.1 of the Credit Agreement. Section 2.1 of the Credit Agreement is hereby amended by adding new Sections 2.1(c) and (d) as follows:

“(c) Deferred Principal Payments. If the Company provides the Agent with the Senior Noteholders’ written agreement to defer payments owed on account of the Senior Notes through May 20, 2020, payment of the principal installment payable under the Term Note on March 20, 2020 shall be deferred to (and shall be immediately due and payable upon) May 20, 2020. All other principal installments payable under the Term Note shall remain due and payable upon their respective payment dates as set forth in the Term Note.

(d) Deferred Interest Payments. If the Company provides the Agent with the Senior Noteholders’ written agreement to defer payments owed on account of the Senior Notes through May 20, 2020, payment of the interest payable under the Term Note on (i) March 20, 2020 and (ii) April 20, 2020 shall be deferred to (and shall be immediately due and payable upon) May 20, 2020. All other interest installments payable under the Term Note shall remain due and payable upon their respective payment dates as set forth in the Term Note.”

1.2 Amendment to Section 6.1(f) of the Credit Agreement. Section 6.1(f) of the Credit Agreement is hereby amended in its entirety to read as follows:

“(f) Rolling 13-Week Cash Flow Forecasts; Variance Report; Payable and Receivable Report. Until the Pekin Lenders and the ICP Lenders have received the Paydown Amount in full, by no later than 9:00 p.m. prevailing Mountain Time on the third Business Day of each week (each such day, a “Reporting Date”), the Company shall deliver to the Agent for each of the Company, PEI, and all wholly-owned and partially-owned subsidiaries of PEI:

(i) a rolling 13-week cash flow forecast prepared by the Company covering the 13-week period commencing with the immediately preceding week and detailing: (1) projected cash receipts; (2) projected disbursements; (3) net cash flow; and (4) such other items set forth therein and other information reasonably requested by Agent for such 13-week period (the “Budget”), in form and substance reasonably acceptable to the Agent.

(ii) a variance report tested as of the most recent Reporting Date for the immediately preceding one-week and four-week period then ended (each such period, a “Testing Period” and each such report, a “Variance Report”), in form and substance reasonably satisfactory to the Agent and the Lender, detailing the following: (i) the aggregate disbursements of the Loan Parties and aggregate receipts during the applicable Testing Period; (ii) any variance (whether positive or negative, expressed as a percentage) between the aggregate disbursements made during such Testing Period by the Loan Parties against the aggregate disbursements for the Testing Period, as set forth in the applicable Budget; and (iii) a management narrative explaining results of operations and any variances.

(iii) an accounts payable aging report and an accounts receivable aging report as of the last date of the Testing Period.”

1.3 Amendment to Section 6.2(b) of the Credit Agreement. Section 6.2(b) of the Credit Agreement is hereby amended in its entirety to read as follows:

“(b) Patronage.

(i) Each party hereto acknowledges that the bylaws and capital plan (as each may be amended from time to time) of each Farm Credit Lender shall govern (A) the rights and obligations of the parties with respect to the Lender Equities and any patronage refunds or other distributions made on account thereof or on account of the Company’s patronage with such Farm Credit Lender, (B) the Company’s eligibility for patronage distributions from each Farm Credit Lender (in the form of equities and cash) and (C) patronage distributions, if any, in the event of a sale of a participation interest. Each Farm Credit Lender reserves the right to assign or sell participations on a non-patronage basis in all or any part of its commitments or outstanding Loans and other financial accommodations made hereunder.

(ii) Notwithstanding anything to the contrary herein (including, for the avoidance of doubt, Section 6.2(c) hereof) and whether or not any Default or Event of Default has occurred or is continuing, until the Pekin Lenders and the ICP Lenders have received the Paydown Amount, any patronage refunds, patronage distributions, or any other distributions due to the Company shall instead be applied by the Agent (1) first, to pay the Amendment Fee, (2) second, to pay professional fees and expenses of the Agent and Lender related to negotiation and documentation of the Eighth Amendment, and (3) third, to pay any other current or future professional fees and expenses of the Agent and Lender (including any retainers, as applicable) related to the Company’s plan to address its balance sheet.”

1.4 New Section 6.14 of the Credit Agreement. The following new Section 6.14 is hereby added to the Credit Agreement:

“6.14. Milestones. The Loan Parties shall perform and deliver the following items, in form and substance satisfactory to the Agent and Lender, on or before the dates specified with respect to such items (the “Milestones”):

(a) On or before April 20, 2020, PEI and the Company shall have delivered to the Agent and Lender a term sheet outlining the terms of a comprehensive balance sheet plan.

(b) On or before April 20, 2020, the Company shall have provided the Agent and Lender with a detailed 13-week cash flow budget, outlining the Company’s capital needs.

1.5 New Section 6.15 of the Credit Agreement. The following new Section 6.15 is hereby added to the Credit Agreement:

“6.15. Access to CRO. PEI and the Company shall provide the Agent and Lender with access to the CRO, and the CRO shall provide the Agent and Lender with, at a minimum, weekly telephonic or in-person updates as to the Company’s operations and restructuring progress.”

1.6 Amendment to Section 9.1 of the Credit Agreement. Section 9.1 of the Credit Agreement is hereby amended by adding new Sections 9.1(n) and (p) as follows:

“(n) Removal of the CRO. PEI terminates, replaces, or reduces the authority of the CRO without the prior written consent of the Agent.

(p) Milestones. The Company fails to satisfy any of the Milestones in accordance with the terms relating to such Milestone.”

1.7 Amendments to Annex A to Credit Agreement.

(a)   Annex A to the Credit Agreement is hereby amended by adding or amending the following definitions, as applicable, in the correct alphabetical order:

“CRO” means Winston Mar, the chief restructuring officer of PEI.

“Pekin Amendment No. 8” means Amendment No. 8 to Credit Agreement, dated March 20, 2020, executed by the Company, the Agent, and the Lender.

“Farm Credit Lender” means a federally-chartered Farm Credit System lending institution organized under the Farm Credit Act of 1971, as the same may be amended or supplemented from time to time. When used in this Agreement in reference to the Lender Equities, “Farm Credit Lender” shall also include the affiliate of such Farm Credit Lender in which such Lender Equities are purchased or acquired, as applicable.

“Amendment No. 2” means that certain Amendment No. 2 to Credit Agreement, dated March 20, 2020, executed by ICP, the ICP Lenders, and the agent thereto.

“Senior Noteholders” means the holders of the Senior Notes.

“Senior Notes” means PEI’s senior secured notes due 2019, issued pursuant to that certain Note Purchase Agreement, dated December 12, 2016, in an aggregate principal amount of $68.9 million.

ARTICLE 2 Representations and Warranties; Acknowledgments.

2.1 In order to induce the Agent and the Lender to make the amendments provided for in Article 1, the Company hereby represents and warrants to the Agent and the Lender as of the Effective Date that:

(a)   the recitals set forth above are true, complete, accurate, and correct in all material respects (unless qualified by materiality, in which case they shall be true and correct in all respects) and are part of this Agreement, and such recitals are incorporated herein by this reference;

(b) all representations and warranties made and given by the Loan Parties in the Loan Documents are true, complete, accurate, and correct in all material respects (unless qualified by materiality, in which case they shall be true and correct in all respects), as if given on the Effective Date (or, as to representations and warranties that specifically refer to an earlier date, as of such earlier date) after giving effect to this Agreement;

(c)   the Loan Parties have no claims, offsets, rights of recoupment, counterclaims, or defenses (other than payment) with respect to: (a) the payment of any amount due under the Loans and the Loan Documents; (b) the performance of the Loan Parties’ obligations under the Loan Documents; or (c) the liability of the Loan Parties under the Loan Documents;

(d) the Agent and the Lending Parties: (i) have not breached any duty to the Loan Parties in connection with the Loans or the Loan Documents; and (ii) have fully performed all obligations they may have had or now have to the Loan Parties;

(e)   the Loan Parties have had the assistance of independent counsel of their own choice, or have had the opportunity to retain such independent counsel, in reviewing, discussing, and considering all the terms of this Agreement. Before execution of this Agreement, the Loan Parties have had adequate opportunity to make whatever investigation or inquiry it may deem necessary or desirable in connection with the subject matter of this Agreement;

(f)    the Loan Parties are not acting in reliance on any representation, understanding, or agreement from or with the Agent or the Lending Parties not expressly set forth herein. The Loan Parties acknowledge that none of the Agent or the Lending Parties has made any representation with respect to the subject of this Agreement except as expressly set forth herein. The Company has executed this Agreement as its free and voluntary act, without any duress, coercion, or undue influence exerted by or on behalf of any Person;

(g) all interest or other fees or charges which have been imposed, accrued or collected by Agent under the Loan Documents or in connection with the Loans through the date of this Agreement, and the method of computing the same, were and are proper and agreed to by the Loan Parties, and were properly computed and collected;

(h) this Agreement is not intended by the parties to be a novation of the Loan Documents and, except as expressly waived, deferred, or otherwise modified herein, all terms, conditions, rights, and obligations as set out in the Loan Documents are hereby reaffirmed and shall otherwise remain in full force and effect as originally written and agreed;

(i)    notwithstanding anything to the contrary in this Agreement, except as waived, deferred, or modified herein, the Loan Documents are in full force and effect in accordance with their respective terms, remain legal, valid and binding obligations of the Loan Parties that are enforceable in accordance with their respective terms, have not been modified or amended (except in written amendments executed by the parties), and are hereby reaffirmed and ratified by the Loan Parties;

(j)    all information provided by the Loan Parties (or any of its agents or representatives) to the Agent or the Lending Parties prior to the Effective Date is true, correct and complete in all material respects as of the date provided and does not contain any untrue statements of fact or omit to state a fact necessary to make the statements made not misleading in any material respect;

(k) all financial statements delivered by the Loan Parties (or any of its agents or representatives) to the Agent or the Lending Parties prior to the Effective Date are true and correct in all material respects and fairly present the financial condition of the Loan Parties;

(l)    as of the Effective Date, the Company has delivered to the Agent all statements, notices, certificates, projections, updates, and other information required under Article 6 of the Credit Agreement;

(m)    the execution and delivery of this Agreement and the performance by the Company of its obligations hereunder are within the corporate or company powers and authority of the Company, have been duly authorized by all necessary corporate action, and do not and will not contravene or conflict with the charter or by-laws of the Company;

(n) this Agreement has been duly executed and delivered by the Company and constitutes the legal, valid, and binding obligation of the Company, enforceable against the Company in accordance with its terms, covenants, and conditions;

(o) after giving effect to this Agreement, no Default or Event of Default (other than related to any Excluded Event) has occurred and is continuing; and

(p) the Company received and acknowledges the letter from counsel to the Agent, dated March 17, 2020, regarding the Agent’s reservation of rights as to the proposed sale of Pacific Aurora, LLC.

2.2 In order to induce the Agent and Lender to make the amendments provided for in Article 1, the Company hereby represents and warrants to the Agent and the Lending Parties that (a) as of the Effective Date, the Accounts Receivable Amount is not greater than $18,000,000, and (b) at no time shall the Company permit the Accounts Receivable Amount to exceed $18,000,000.

2.3 In order to induce the Agent and Lender to make the amendments provided for in Article 1, the Company hereby ratifies and confirms all of the terms, covenants and conditions set forth in the Loan Documents as modified herein and hereby agrees, acknowledges and reaffirms that (a) the Loan Documents, as modified herein, constitute legal, valid, and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, covenants, and conditions, (b) the Company remains unconditionally liable to the Agent and the Lending Parties in accordance with the respective terms, covenants, and conditions set forth in the Loan Documents, as modified herein, (c) the Agent and Lender have valid, duly perfected, fully enforceable Liens on the Collateral, (d) all Liens heretofore granted to the Agent and Lender in the Collateral continue in full force and effect and secure the Obligations, (e) the Company shall execute and deliver to the Agent and the Lending Parties any and all agreements and other documentation and to take any and all actions reasonably requested by the Agent and the Lending Parties at any time to assure the perfection, protection, priority, and enforcement of the Agent’s and the Lender’s rights under the Loan Documents (including this Agreement) with respect to all such Liens (but without any increase to the obligations or liabilities of the Company under the Loan Documents), and (f) as of the Effective Date, the amount of the Obligations owing under the Loan Documents (exclusive of attorneys’ fees and other fees, expenses, advances, and costs) totaled $30,255,516.70, consisting of (i) unpaid principal of $12,000,000.00 and accrued, unpaid interest of $102,206.66 on the Term Loan, and (ii) unpaid principal of $18,000,000.00 and accrued, unpaid interest of $153,310.00 on the Revolving Term Loan together with (iii) third party costs and expenses, including attorney and advisor fees and costs.

ARTICLE 3 Conditions to Effectiveness.

This Agreement shall become effective on such date (the “Effective Date”) when each of the following conditions has been satisfied:

3.1 Delivery of Closing Documents. The Agent shall have received each of the documents set forth on Schedule I hereto in form and content acceptable to the Agent.

3.2 Updated Schedules. The Agent shall have received updated schedules (as applicable) to the Credit Agreement in accordance with Section 6.11 of the Credit Agreement.

3.3 Reimbursement of Fees/Expenses. The Company shall have paid all fees and expenses of the Agent and the Lending Parties (including legal, advisory, consulting, audit, and other professional fees and expenses) that accrued in relation to the Loan Documents, including, without limitation, all out-of-pocket fees and expenses incurred in connection with the preparation, drafting, negotiation, and implementation of this Agreement.

3.4 Amendment Fee. The Company shall have paid the Lender a non-refundable amendment fee, in cash, in an amount equal to 0.25 percent of the current amount of the outstanding principal (the “Amendment Fee”).

3.5 Required Consents, etc. The Company shall have delivered to the Agent all consents, authorizations and amendments determined by the Agent to be necessary to ensure the enforceability of the Loan Documents, including a certificate of the secretary or other appropriate officer of each Loan Party certifying (i) that the execution, delivery and performance of this Agreement, the Credit Agreement as amended hereby and the other Loan Documents have been duly approved by all necessary action of the governing board of such Loan Party, and attaching true and correct copies of the applicable resolutions granting such approval; (ii) that the organizational document of such Loan Party, which were certified and delivered to the Agent pursuant to the most recent certificate of secretary or other appropriate officer of such Loan Party, continue in full force and effect and have not been amended or otherwise modified except as set forth in the certificate to be delivered as of the date hereof; and (iii) that the officers and agents of such Loan Party who have been certified to the Agent, pursuant to the most recent certificate of secretary or other appropriate officer given by such Loan Party, as being authorized to sign and to act on behalf of such Loan Party continue to be so authorized or setting forth the sample signatures of each of the officers and agents of such Loan Party authorized as of the date hereof to execute and deliver this Agreement, the other Loan Documents and all other documents, agreements and certificates on behalf of such Loan Party.

Upon the delivery by the Agent of a fully executed copy of this Agreement to the Company, the conditions set forth above shall be deemed satisfied and the Effective Date shall be deemed to have occurred as of the date so delivered.

ARTICLE 4 Release.

As a material part of the consideration for Agent and Lender entering into this Agreement, the Company agrees as follows (the “Release Provision”)

4.1 The Company hereby releases and forever discharges the Agent and the Lending Parties and each such parties’ respective predecessors, successors, assigns, participants, officers, managers, directors, shareholders, employees, agents, advisors, attorneys, representatives, parent corporations, subsidiaries, and affiliates (hereinafter all of the above collectively referred to as “Released Group”), jointly and severally, from any and all claims, counterclaims, demands, damages, debts, agreements, covenants, suits, contracts, obligations, liabilities, accounts, offsets, rights, actions, and causes of action of any nature whatsoever, including, without limitation, all claims, demands, and causes of action for contribution and indemnity, whether arising at law or in equity, whether presently possessed or possessed in the future, whether known or unknown, whether liability be direct or indirect, liquidated or unliquidated, whether presently accrued or to accrue hereafter, whether absolute or contingent, foreseen or unforeseen, and whether or not heretofore asserted, and including whether arising from the negligence (but not the gross negligence or willful misconduct) of any of the Released Group, which the Company may have or claim to have against any of the Released Group, in each case only to the extent arising or accruing prior to and including the Effective Date.

4.2 The Company agrees not to sue any of the Released Group or in any way assist any other person or entity in suing any of the Released Group with respect to any claim released herein. This Release Provision may be pleaded as a full and complete defense to, and may be used as the basis for an injunction against, any action, suit, or other proceeding which may be instituted, prosecuted, or attempted in breach of the release contained herein.

4.3 The Company is the sole owner of the claims released by the Release Provision, and the Company has not heretofore conveyed or assigned any interest in any such claims to any other person or entity. The Company understands that the Release Provision was a material consideration in the agreement of the Agent and Lender to enter into this Agreement.

4.4 It is the express intent of the Company that the release and discharge set forth in the Release Provision be construed as broadly as possible in favor of the Released Group so as to foreclose forever the assertion by the Company of any claims released hereby against any of the Released Group. If any term, provision, covenant, or condition of the Release Provision is held by a court of competent jurisdiction to be invalid, illegal, or unenforceable, the remainder of the provisions shall remain in full force and effect.

ARTICLE 5 Miscellaneous.

5.1 Loan Document Pursuant to Credit Agreement. This Agreement is a Loan Document executed pursuant to the Credit Agreement. Except as expressly amended hereby, all of the representations, warranties, terms, covenants, and conditions contained in the Credit Agreement and each other Loan Document shall remain unamended and otherwise unmodified and in full force and effect.

5.2 Limitation of Amendments. The amendments provided in Article 1 shall be limited precisely as provided for therein and shall not be deemed to be a waiver of, amendment of, consent to, or modification of any other term or provision of the Credit Agreement or any term or provision of any other Loan Document or of any transaction or further or future action on the part of the Loan Parties which would require the consent of the Agent or the Lending Parties under the Credit Agreement or any other Loan Document.

5.3 Collateral. To the extent any Collateral is personal property, the Loan Parties hereby renounce and waive all rights that are waivable under Article 9 of the Uniform Commercial Code (the “UCC”) of any jurisdiction in which any Collateral may now or hereafter be located. The Loan Parties also hereby acknowledge and agree that a public sale shall constitute a commercially reasonable manner for the disposition of the Collateral.

5.4 Counterparts; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement shall become effective when it shall have been executed by the Agent and when the Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature page of this Agreement by telecopy or email shall be as effective as delivery of a manually executed counterpart of this Agreement.

5.5 Incorporation of Credit Agreement Provisions. The provisions of Article 11 of the Credit Agreement shall apply to this Agreement, mutatis mutandis.

[Signature Pages Follow]

[SIGNATURE PAGE TO AMENDMENT NO. 2]

IN WITNESS WHEREOF, the parties hereto, by their Authorized Officers, have executed this Agreement as of the date first set forth above.

[SIGNATURE PAGE TO AMENDMENT NO. 2]

IN WITNESS WHEREOF, the parties hereto, by their Authorized Officers, have executed this Agreement as of the date first set forth above.

[SIGNATURE PAGE TO AMENDMENT NO. 2]

IN WITNESS WHEREOF, the parties hereto, by their Authorized Officers, have executed this Agreement as of the date first set forth above.

Schedule I

Closing Deliveries

Exhibit 10.2

Execution Version

AMENDMENT NO. 8 TO CREDIT AGREEMENT

THIS AMENDMENT NO. 8 TO CREDIT AGREEMENT, dated as of March 20, 2020 (this “Agreement”), is entered into by and between PACIFIC ETHANOL PEKIN, LLC, a limited liability company organized and existing under the laws of Delaware (“Company”), COMPEER FINANCIAL, PCA, a federally-chartered instrumentality of the United States, successor by merger to 1^st Farm Credit Services, PCA (“Lender”), and COBANK, ACB, a federally-chartered instrumentality of the United States (“Agent”). Capitalized terms used but not defined herein shall have the meanings set forth in the Credit Agreement.

BACKGROUND:

WHEREAS, the Company, the Lender, and the Agent are parties to that certain Credit Agreement, dated as of December 15, 2016 (as amended, restated, modified, or otherwise supplemented from time to time, the “Credit Agreement”), and the other Loan Documents;

WHEREAS, on March 16, 2020, PEI appointed Winston Mar as its Chief Restructuring Officer;

WHEREAS, the Company has requested that, as of the Effective Date, the Credit Agreement and certain other Loan Documents be amended as herein provided; and

WHEREAS, the Agent and Lender are willing, subject to the terms and conditions hereinafter set forth, to make such amendments;

NOW, THEREFORE, in consideration of the agreements herein contained, the parties hereby agree as follows:

ARTICLE 1 Amendments.

Effective on (and subject to the occurrence of) the Effective Date, the Credit Agreement is amended as follows:

1.1 Amendment to Section 2.1 of the Credit Agreement. Section 2.1 of the Credit Agreement is hereby amended by adding new Section 2.1(d) as follows:

“(d) Deferred Interest Payments. If the Company provides the Agent with the Senior Noteholders’ written agreement to defer payments owed on account of the Senior Notes through May 20, 2020, payment of the interest payable under the Term Note on (i) March 20, 2020 and (ii) April 20, 2020 shall be deferred to (and shall be immediately due and payable upon) May 20, 2020. All other interest installments payable under the Term Note shall remain due and payable upon their respective payment dates as set forth in the Term Note.”

1.2 Amendment to Section 6.1(g) of the Credit Agreement. Section 6.1(g) of the Credit Agreement is hereby amended in its entirety to read as follows:

“(g) Rolling 13-Week Cash Flow Forecasts; Variance Report; Payable and Receivable Report. Until the Pekin Lenders and the ICP Lenders have received the Paydown Amount in full, by no later than 9:00 p.m. prevailing Mountain Time on the third Business Day of each week (each such day, a “Reporting Date”), the Company shall deliver to the Agent for each of the Company, PEI, and all wholly-owned and partially-owned subsidiaries of PEI:

(i) a rolling 13-week cash flow forecast prepared by the Company covering the 13-week period commencing with the immediately preceding week and detailing: (1) projected cash receipts; (2) projected disbursements; (3) net cash flow; and (4) such other items set forth therein and other information reasonably requested by Agent for such 13-week period (the “Budget”), in form and substance reasonably acceptable to the Agent.

(ii) a variance report tested as of the most recent Reporting Date for the immediately preceding one-week and four-week period then ended (each such period, a “Testing Period” and each such report, a “Variance Report”), in form and substance reasonably satisfactory to the Agent and the Lender, detailing the following: (i) the aggregate disbursements of the Loan Parties and aggregate receipts during the applicable Testing Period; (ii) any variance (whether positive or negative, expressed as a percentage) between the aggregate disbursements made during such Testing Period by the Loan Parties against the aggregate disbursements for the Testing Period, as set forth in the applicable Budget; and (iii) a management narrative explaining results of operations and any variances.

(iii) an accounts payable aging report and an accounts receivable aging report as of the last date of the Testing Period.”

1.3 Amendment to Section 6.2(b) of the Credit Agreement. Section 6.2(b) of the Credit Agreement is hereby amended in its entirety to read as follows:

“(b) Patronage.

(i) Each party hereto acknowledges that the bylaws and capital plan (as each may be amended from time to time) of each Farm Credit Lender shall govern (A) the rights and obligations of the parties with respect to the Lender Equities and any patronage refunds or other distributions made on account thereof or on account of the Company’s patronage with such Farm Credit Lender, (B) the Company’s eligibility for patronage distributions from each Farm Credit Lender (in the form of equities and cash) and (C) patronage distributions, if any, in the event of a sale of a participation interest. Each Farm Credit Lender reserves the right to assign or sell participations on a non-patronage basis in all or any part of its commitments or outstanding Loans and other financial accommodations made hereunder.

(ii) Notwithstanding anything to the contrary herein (including, for the avoidance of doubt, Section 6.2(c) hereof) and whether or not any Default or Event of Default has occurred or is continuing, until the Pekin Lenders and the ICP Lenders have received the Paydown Amount, any patronage refunds, patronage distributions, or any other distributions due to the Company shall instead be applied by the Agent (1) first, to pay the Amendment Fee, (2) second, to pay professional fees and expenses of the Agent and Lender related to negotiation and documentation of the Eighth Amendment, and (3) third, to pay any other current or future professional fees and expenses of the Agent and Lender (including any retainers, as applicable) related to the Company’s plan to address its balance sheet.”

1.4 New Section 6.14 of the Credit Agreement. The following new Section 6.14 is hereby added to the Credit Agreement:

“6.14. Milestones. The Loan Parties shall perform and deliver the following items, in form and substance satisfactory to the Agent and Lender, on or before the dates specified with respect to such items (the “Milestones”):

(a) On or before April 20, 2020, PEI and the Company shall have delivered to the Agent and Lender a term sheet outlining the terms of a comprehensive balance sheet plan.

(b) On or before April 20, 2020, the Company shall have provided the Agent and Lender with a detailed 13-week cash flow budget, outlining the Company’s capital needs.

1.5 New Section 6.15 of the Credit Agreement. The following new Section 6.15 is hereby added to the Credit Agreement:

“6.15. Access to CRO. PEI and the Company shall provide the Agent and Lender with access to the CRO, and the CRO shall provide the Agent and Lender with, at a minimum, weekly telephonic or in-person updates as to the Company’s operations and restructuring progress.”

1.6 Amendment to Section 9.1 of the Credit Agreement. Section 9.1 of the Credit Agreement is hereby amended by adding new Sections 9.1(o) and (p) as follows:

“(o) Removal of the CRO. PEI terminates, replaces, or reduces the authority of the CRO without the prior written consent of the Agent.

(p) Milestones. The Company fails to satisfy any of the Milestones in accordance with the terms relating to such Milestone.”

1.7 Amendments to Annex A to Credit Agreement.

(a) Annex A to the Credit Agreement is hereby amended by adding or amending the following definitions, as applicable, in the correct alphabetical order:

“CRO” means Winston Mar, the chief restructuring officer of PEI.

“Eighth Amendment” means Amendment No. 8 to Credit Agreement, dated March 20, 2020, executed by the Company, the Agent, and the Lender.

“ICP Amendment No. 2” means that certain Amendment No. 2 to Credit Agreement, dated March 20, 2020, executed by ICP, the ICP Lenders, and the agent thereto.

“Senior Noteholders” means the holders of the Senior Notes.

“Senior Notes” means PEI’s senior secured notes due 2019, issued pursuant to that certain Note Purchase Agreement, dated December 12, 2016, in an aggregate principal amount of $68.9 million.

ARTICLE 2 Representations and Warranties; Acknowledgments.

2.1 In order to induce the Agent and the Lender to make the amendments provided for in Article 1, the Company hereby represents and warrants to the Agent and the Lender as of the Effective Date that:

(a) the recitals set forth above are true, complete, accurate, and correct in all material respects (unless qualified by materiality, in which case they shall be true and correct in all respects) and are part of this Agreement, and such recitals are incorporated herein by this reference;

(b) all representations and warranties made and given by the Loan Parties in the Loan Documents are true, complete, accurate, and correct in all material respects (unless qualified by materiality, in which case they shall be true and correct in all respects), as if given on the Effective Date (or, as to representations and warranties that specifically refer to an earlier date, as of such earlier date) after giving effect to this Agreement;

(c) the Loan Parties have no claims, offsets, rights of recoupment, counterclaims, or defenses (other than payment) with respect to: (a) the payment of any amount due under the Loans and the Loan Documents; (b) the performance of the Loan Parties’ obligations under the Loan Documents; or (c) the liability of the Loan Parties under the Loan Documents;

(d) the Agent and the Lending Parties: (i) have not breached any duty to the Loan Parties in connection with the Loans or the Loan Documents; and (ii) have fully performed all obligations they may have had or now have to the Loan Parties;

(e) the Loan Parties have had the assistance of independent counsel of their own choice, or have had the opportunity to retain such independent counsel, in reviewing, discussing, and considering all the terms of this Agreement. Before execution of this Agreement, the Loan Parties have had adequate opportunity to make whatever investigation or inquiry it may deem necessary or desirable in connection with the subject matter of this Agreement;

(f) the Loan Parties are not acting in reliance on any representation, understanding, or agreement from or with the Agent or the Lending Parties not expressly set forth herein. The Loan Parties acknowledge that none of the Agent or the Lending Parties has made any representation with respect to the subject of this Agreement except as expressly set forth herein. The Company has executed this Agreement as its free and voluntary act, without any duress, coercion, or undue influence exerted by or on behalf of any Person;

(g) all interest or other fees or charges which have been imposed, accrued or collected by Agent under the Loan Documents or in connection with the Loans through the date of this Agreement, and the method of computing the same, were and are proper and agreed to by the Loan Parties, and were properly computed and collected;

(h) this Agreement is not intended by the parties to be a novation of the Loan Documents and, except as expressly waived, deferred, or otherwise modified herein, all terms, conditions, rights, and obligations as set out in the Loan Documents are hereby reaffirmed and shall otherwise remain in full force and effect as originally written and agreed;

(i) notwithstanding anything to the contrary in this Agreement, except as waived, deferred, or modified herein, the Loan Documents are in full force and effect in accordance with their respective terms, remain legal, valid and binding obligations of the Loan Parties that are enforceable in accordance with their respective terms, have not been modified or amended (except in written amendments executed by the parties), and are hereby reaffirmed and ratified by the Loan Parties;

(j) all information provided by the Loan Parties (or any of its agents or representatives) to the Agent or the Lending Parties prior to the Effective Date is true, correct and complete in all material respects as of the date provided and does not contain any untrue statements of fact or omit to state a fact necessary to make the statements made not misleading in any material respect;

(k) all financial statements delivered by the Loan Parties (or any of its agents or representatives) to the Agent or the Lending Parties prior to the Effective Date are true and correct in all material respects and fairly present the financial condition of the Loan Parties;

(l) as of the Effective Date, the Company has delivered to the Agent all statements, notices, certificates, projections, updates, and other information required under Article 6 of the Credit Agreement;

(m) the execution and delivery of this Agreement and the performance by the Company of its obligations hereunder are within the corporate or company powers and authority of the Company, have been duly authorized by all necessary corporate action, and do not and will not contravene or conflict with the charter or by-laws of the Company;

(n) this Agreement has been duly executed and delivered by the Company and constitutes the legal, valid, and binding obligation of the Company, enforceable against the Company in accordance with its terms, covenants, and conditions;

(o) after giving effect to this Agreement, no Default or Event of Default (other than related to any Excluded Event) has occurred and is continuing; and

(p) the Company received and acknowledges the letter from counsel to the Agent, dated March 17, 2020, regarding the Agent’s reservation of rights as to the proposed sale of Pacific Aurora, LLC.

2.2 In order to induce the Agent and Lender to make the amendments provided for in Article 1, the Company hereby represents and warrants to the Agent and the Lending Parties that (a) as of the Effective Date, the Accounts Receivable Amount is not greater than $18,000,000, and (b) at no time shall the Company permit the Accounts Receivable Amount to exceed $18,000,000.

2.3 In order to induce the Agent and Lender to make the amendments provided for in Article 1, the Company hereby ratifies and confirms all of the terms, covenants and conditions set forth in the Loan Documents as modified herein and hereby agrees, acknowledges and reaffirms that (a) the Loan Documents, as modified herein, constitute legal, valid, and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, covenants, and conditions, (b) the Company remains unconditionally liable to the Agent and the Lending Parties in accordance with the respective terms, covenants, and conditions set forth in the Loan Documents, as modified herein, (c) the Agent and Lender have valid, duly perfected, fully enforceable Liens on the Collateral, (d) all Liens heretofore granted to the Agent and Lender in the Collateral continue in full force and effect and secure the Obligations, (e) the Company shall execute and deliver to the Agent and the Lending Parties any and all agreements and other documentation and to take any and all actions reasonably requested by the Agent and the Lending Parties at any time to assure the perfection, protection, priority, and enforcement of the Agent’s and the Lender’s rights under the Loan Documents (including this Agreement) with respect to all such Liens (but without any increase to the obligations or liabilities of the Company under the Loan Documents), and (f) as of the Effective Date, the amount of the Obligations owing under the Loan Documents (exclusive of attorneys’ fees and other fees, expenses, advances, and costs) totaled $72,292,874.70, consisting of (i) unpaid principal of $39,500,000.00 and accrued, unpaid interest of $441,763.61 on the Term Loan, and (ii) unpaid principal of $32,000,000.00 and accrued, unpaid interest of $351,111.12 on the Revolving Term Loan together with (iii) third party costs and expenses, including attorney and advisor fees and costs.

ARTICLE 3 Conditions to Effectiveness.

This Agreement shall become effective on such date (the “Effective Date”) when each of the following conditions has been satisfied:

3.1 Delivery of Closing Documents. The Agent shall have received each of the documents set forth on Schedule I hereto in form and content acceptable to the Agent.

3.2 Updated Schedules. The Agent shall have received updated schedules (as applicable) to the Credit Agreement in accordance with Section 6.11 of the Credit Agreement.

3.3 Reimbursement of Fees/Expenses. The Company shall have paid all fees and expenses of the Agent and the Lending Parties (including legal, advisory, consulting, audit, and other professional fees and expenses) that accrued in relation to the Loan Documents, including, without limitation, all out-of-pocket fees and expenses incurred in connection with the preparation, drafting, negotiation, and implementation of this Agreement.

3.4 Amendment Fee. The Company shall have paid the Lender a non-refundable amendment fee, in cash, in an amount equal to 0.25 percent of the current amount of the outstanding principal (the “Amendment Fee”).

3.5 Required Consents, etc. The Company shall have delivered to the Agent all consents, authorizations and amendments determined by the Agent to be necessary to ensure the enforceability of the Loan Documents, including a certificate of the secretary or other appropriate officer of each Loan Party certifying (i) that the execution, delivery and performance of this Agreement, the Credit Agreement as amended hereby and the other Loan Documents have been duly approved by all necessary action of the governing board of such Loan Party, and attaching true and correct copies of the applicable resolutions granting such approval; (ii) that the organizational document of such Loan Party, which were certified and delivered to the Agent pursuant to the most recent certificate of secretary or other appropriate officer of such Loan Party, continue in full force and effect and have not been amended or otherwise modified except as set forth in the certificate to be delivered as of the date hereof; and (iii) that the officers and agents of such Loan Party who have been certified to the Agent, pursuant to the most recent certificate of secretary or other appropriate officer given by such Loan Party, as being authorized to sign and to act on behalf of such Loan Party continue to be so authorized or setting forth the sample signatures of each of the officers and agents of such Loan Party authorized as of the date hereof to execute and deliver this Agreement, the other Loan Documents and all other documents, agreements and certificates on behalf of such Loan Party.

Upon the delivery by the Agent of a fully executed copy of this Agreement to the Company, the conditions set forth above shall be deemed satisfied and the Effective Date shall be deemed to have occurred as of the date so delivered.

ARTICLE 4 Release.

As a material part of the consideration for Agent and Lender entering into this Agreement, the Company agrees as follows (the “Release Provision”)

4.1 The Company hereby releases and forever discharges the Agent and the Lending Parties and each such parties’ respective predecessors, successors, assigns, participants, officers, managers, directors, shareholders, employees, agents, advisors, attorneys, representatives, parent corporations, subsidiaries, and affiliates (hereinafter all of the above collectively referred to as “Released Group”), jointly and severally, from any and all claims, counterclaims, demands, damages, debts, agreements, covenants, suits, contracts, obligations, liabilities, accounts, offsets, rights, actions, and causes of action of any nature whatsoever, including, without limitation, all claims, demands, and causes of action for contribution and indemnity, whether arising at law or in equity, whether presently possessed or possessed in the future, whether known or unknown, whether liability be direct or indirect, liquidated or unliquidated, whether presently accrued or to accrue hereafter, whether absolute or contingent, foreseen or unforeseen, and whether or not heretofore asserted, and including whether arising from the negligence (but not the gross negligence or willful misconduct) of any of the Released Group, which the Company may have or claim to have against any of the Released Group, in each case only to the extent arising or accruing prior to and including the Effective Date.

4.2 The Company agrees not to sue any of the Released Group or in any way assist any other person or entity in suing any of the Released Group with respect to any claim released herein. This Release Provision may be pleaded as a full and complete defense to, and may be used as the basis for an injunction against, any action, suit, or other proceeding which may be instituted, prosecuted, or attempted in breach of the release contained herein.

4.3 The Company is the sole owner of the claims released by the Release Provision, and the Company has not heretofore conveyed or assigned any interest in any such claims to any other person or entity. The Company understands that the Release Provision was a material consideration in the agreement of the Agent and Lender to enter into this Agreement.

4.4 It is the express intent of the Company that the release and discharge set forth in the Release Provision be construed as broadly as possible in favor of the Released Group so as to foreclose forever the assertion by the Company of any claims released hereby against any of the Released Group. If any term, provision, covenant, or condition of the Release Provision is held by a court of competent jurisdiction to be invalid, illegal, or unenforceable, the remainder of the provisions shall remain in full force and effect.

ARTICLE 5 Miscellaneous.

5.1 Loan Document Pursuant to Credit Agreement. This Agreement is a Loan Document executed pursuant to the Credit Agreement. Except as expressly amended hereby, all of the representations, warranties, terms, covenants, and conditions contained in the Credit Agreement and each other Loan Document shall remain unamended and otherwise unmodified and in full force and effect.

5.2 Limitation of Amendments. The amendments provided in Article 1 shall be limited precisely as provided for therein and shall not be deemed to be a waiver of, amendment of, consent to, or modification of any other term or provision of the Credit Agreement or any term or provision of any other Loan Document or of any transaction or further or future action on the part of the Loan Parties which would require the consent of the Agent or the Lending Parties under the Credit Agreement or any other Loan Document.

5.3 Collateral. To the extent any Collateral is personal property, the Loan Parties hereby renounce and waive all rights that are waivable under Article 9 of the Uniform Commercial Code (the “UCC”) of any jurisdiction in which any Collateral may now or hereafter be located. The Loan Parties also hereby acknowledge and agree that a public sale shall constitute a commercially reasonable manner for the disposition of the Collateral.

5.4 Counterparts; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement shall become effective when it shall have been executed by the Agent and when the Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature page of this Agreement by telecopy or email shall be as effective as delivery of a manually executed counterpart of this Agreement.

5.5 Incorporation of Credit Agreement Provisions. The provisions of Article 11 of the Credit Agreement shall apply to this Agreement, mutatis mutandis.

[Signature Pages Follow]

[SIGNATURE PAGE TO AMENDMENT NO. 8]

IN WITNESS WHEREOF, the parties hereto, by their Authorized Officers, have executed this Agreement as of the date first set forth above.

[SIGNATURE PAGE TO AMENDMENT NO. 8]

IN WITNESS WHEREOF, the parties hereto, by their Authorized Officers, have executed this Agreement as of the date first set forth above.

[SIGNATURE PAGE TO AMENDMENT NO. 8]

IN WITNESS WHEREOF, the parties hereto, by their Authorized Officers, have executed this Agreement as of the date first set forth above.

Schedule I

Closing Deliveries

Exhibit 10.3

Execution Version

NOTE AMENDMENT NO. 5

THIS NOTE AMENDMENT NO. 5 (this “Amendment”) is dated as of March 20, 2020 by and among Pacific Ethanol, Inc., a Delaware corporation (the “Company”) and the Noteholders. Capitalized terms used and not otherwise defined in this Amendment shall have the meanings attributed to them in the Amended Note Agreement and Notes (as defined below).

RECITALS:

WHEREAS, pursuant to that certain Senior Secured Note Amendment Agreement dated December 22, 2019 (the “Amended Note Agreement”) between the Company and the Noteholders, the Company has issued those certain Amended and Restated Senior Secured Notes with an Issuance Date of December 22, 2019 in the aggregate original principal amount of $65,649,177.91 (the “Notes”);

WHEREAS, the Company has requested, and the Noteholders have agreed to defer the due date of the March 15, 2020 interest payment to May 20, 2020; and

WHEREAS, the Company and the Noteholders desire to amend the Notes to extend the time for the payment of such interest payment, among other amendments as set forth herein.

AGREEMENT:

NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Noteholders agree as follows:

1. Amendments to the Notes.

(a) Section 2 of the Notes is hereby amended by amending and restating the first sentence of Section 2 to read as follows:

“Interest on this Note shall accrue at the applicable Interest Rate and shall commence accruing on the Issuance Date and Interest shall be computed on the basis of a 360-day year and twelve 30-day months and shall be payable in cash to the record Holder in arrears on March 15, June 15, September 15 and December 15 of each calendar year and ending on the repayment of the Note; provided, however, that notwithstanding the foregoing, Interest for the period ending March 15, 2020 shall not be payable until May 20, 2020 unless an Event of Default occurs in which case such Interest shall be payable on demand of the Holder.”

(b) A new Section 5.18 is hereby added to the Notes to read as follows:

“5.18 CoBank Reporting. If requested by Holder, the Company shall deliver a copy of each Budget, Variance Report (as such terms are defined in the CoBank Debt Documents) and any accounts payable aging reports and accounts receivable aging reports delivered to CoBank under the CoBank Debt Documents to the Holder within one (1) Business Day of the Holder’s request, or, if requested one (1) Business Day prior to the delivery thereof to CoBank, concurrently with the delivery thereof to CoBank. By requesting such information, Holder is deemed to have acknowledged that such Rolling 13-Week Cash Flow Forecasts, Variance Reports and Payable and Receivable Reports may contain material non-public information about the Company and its Subsidiaries and agrees that it will keep all such information confidential in accordance with the non-disclosure agreement between the Holder and the Company and, if no such non-disclosure agreement exists, the Holder and the Company shall first enter into such a non-disclosure agreement in form and substance reasonably satisfactory to the Company and the Holder.

(c) A new Section 5.19 is hereby added to the Notes to read as follows:

“5.19. Milestones. The Company shall deliver to the Holder (but only if the Holder has requested the same) the following items, on or before the dates specified with respect to such items (the “Milestones”):

(a) On or before April 20, 2020 (or such later date as CoBank may approve under the CoBank Debt Documents), a term sheet outlining the terms of a comprehensive balance sheet plan.

(b) On or before April 20, 2020 (or such later date as CoBank may approve under the CoBank Debt Documents), a detailed 13-week cash flow budget, outlining the Company’s capital needs.”

(d) A new Section 5.20 is hereby added to the Notes to read as follows:

“5.20. CRO.

(a) The Company shall provide the Holder and its agents and advisors with access to the chief restructuring officer (the “CRO”), and the CRO shall provide the Holder with a weekly telephonic update (provided that the Company shall only be required to provide one such update each week for all the “Noteholders” as defined in the Note Amendment Agreement at a time approved by the Required Holders) but only if the Holder has requested the same) as to the Company’s operations and restructuring progress. By requesting or participating in such updates, Holder shall be deemed to have acknowledged that such updates may disclose material non-public information about the Company and its Subsidiaries and agrees that it will keep all such information confidential in accordance with the non-disclosure agreement between the Holder and the Company and, if no such non-disclosure agreement exists, the Holder and the Company shall first enter into such a non-disclosure agreement in form and substance reasonably satisfactory to the Company and the Holder.

(b) The Company shall not terminate or replace Winston Mar as the CRO or reduce the authority of the CRO without the prior written consent of the Required Holders.”

(e) The following sub-sections of Section 3.1 of the Notes are hereby amended in full to read as follows:

“(a) (i) the Company’s failure to pay to the Holder on the Maturity Date all amounts then due and owing under the Note, including the outstanding Principal, all accrued but unpaid Interest and any other amounts which are then due and owing in accordance herewith, or (ii) the Company’s or any Subsidiary’s failure to pay to the Holder, or its agent, any amount of Principal, Interest and any other amounts required to be paid hereunder or under any other Transaction Document as and when due hereunder or thereunder and such failure remains uncured for a period of five (5) days;”

“(g) (i) any breach or failure in any respect by the Company to comply with any provision of Section 5.14, Section 5.19 or Section 5.20(b) of this Note, or (ii) any breach or failure in any respect by the Company or any Subsidiary to comply with any provision of this Note or any other Transaction Document for thirty (30) days after delivery to the Company of notice of such breach or failure by or on behalf of a Secured Party (as defined in the Security Agreement) or the Agent (as defined in the Security Agreement) or thirty (30) days after an officer of the Company or a Subsidiary has knowledge of such breach or failure, unless such default is capable of cure but cannot be cured within such time frame and the Company and such Subsidiary is using best efforts to cure the same in a timely manner;”

“(i) any provision of any Transaction Document shall at any time for any reason (other than pursuant to the express terms thereof) ceases to be valid and binding on or enforceable against the parties thereto, or the validity or enforceability thereof shall be contested by any party thereto, or a proceeding shall be commenced by the Company or any Subsidiary or any governmental authority having jurisdiction over any of them, seeking to establish the invalidity or unenforceability thereof, or the Company or any Subsidiary shall deny in writing that it has any liability or obligation purported to be created under any Transaction Document to which it is a party, or any Lien created by any Collateral Document ceases to be enforceable and of the same effect and priority purported to be created thereby, other than as expressly permitted thereunder or thereunder;”

“(n) any representation, warranty, certification or other statement of fact made or deemed made by or on behalf of the Company or any Subsidiary herein or in any other Transaction Document proves to have been false or misleading in any material respect on or as of the date made or deemed made; or”

(f)  The following definitions in Section 19 of the Notes are hereby amended in full to read as follows:

“Intercreditor Agreement” means that certain Intercreditor Agreement, dated as of March 20, 2020, made by any among Cortland Products Corp., as “Notes Agent”, CoBank, ACB, as “CoBank Agent”, the Company and each of the other grantors party thereto, as may be amended, restated, supplemented or otherwise modified from time to time.

“Subsidiary” means any Person in which the Company, directly or indirectly, (i) owns any of the outstanding capital stock or holds any equity or similar interest of such Person or (ii) controls or operates all or any part of the business, operations or administration of such Person.

“Transaction Documents” means the Notes, the Security Agreement, the Note Amendment Agreement and the schedules and exhibits attached thereto, the Purchase Agreement, the Warrants, the Registration Rights Agreement, the Transfer Agent Instructions, the Collateral Documents, and the Intercreditor Agreement, together with any amendments, restatements, extensions or other modifications thereto.

(g) Payment-in-Kind. Until evidenced by a new Note as described in Section 2(c) below, the aggregate principal amount of the Notes of each of the Noteholders listed in Section 2(c) below shall be increased by an amount equal to 0.25% of the aggregate principal amount of such Noteholder’s Notes on the date hereof, immediately prior to such increase, and such increased amount shall be deemed to be principal of such Notes for all purposes, including accrual of interest.

2.  Conditions Precedent to The Effectiveness of This Amendment. This Amendment will become effective on the date the following conditions are satisfied (the “Effective Date”):

(a) receipt by the Noteholders of the following documents, duly executed by each party thereto, each in form and substance reasonable satisfactory to the Noteholders: (i) this Amendment; (ii) the Collateral Documents as required to be delivered by the Noteholders; (iii) the Intercreditor Agreement; (iv) that certain Third Amendment to Security Agreement dated as of the date hereof by and among the Company, all Noteholders, Cortland Products Corp., as successor agent, and Cortland Capital Market Services LLC, as existing collateral agent; (v) that certain Agent Fee Letter dated as of the date hereof between the Company and Cortland Products Corp.; (vi) the mortgages, deeds of trust, pledge agreements, security agreements and other collateral documents with respect to the collateral of CoBank, together with all amendments to the debt instruments with CoBank; and (vii) certificates executed by a secretary or assistant secretary of the Company or its Subsidiaries party to the Collateral Documents, as applicable, certifying as to (A) the resolutions authorizing the transactions contained in the Collateral Documents, (B) their respective certificates of formation or articles of incorporation, and (C) their respective bylaws or operating agreements, as amended, each as in effect on the Effective Date.

(b) receipt by the Noteholders of evidence of the payment in full of all fees, costs and expenses of Morrison & Foerster LLP, such fees, costs and expenses due and payable to Morrison & Foerster LLP in an amount not to exceed $100,000, Cortland Products Corp. in an amount not to exceed $10,000, and Arnold & Porter Kaye Scholer LLP in an amount not to exceed $32,784.60;

(c) receipt by the following Noteholders of an amendment fee in the amount of 0.25% of the Principal amount of each of the following Noteholders’ Notes payable as compounded interest and added to the aggregate principal amount of each such Note (the amount of any such compounded interest being a “PIK Loan”) (the “Amendment Fee”), which PIK Loan, shall be evidenced, within three (3) Business Days after the date hereof, by a note substantially in the form of the PIK Notes (such notes to reflect further amendments made to the Notes since the issuance of the PIK Notes), in form and substance satisfactory to the following Noteholders and the Company: CIF-Income Parts (A), LLC, Orange 2015 Dislocredit Fund, L.P., Sainsbury’s Credit Opportunities Fund, Ltd., Co-Investment Income Fund, L.P. – US Taxable Series, Co-Investment Income Fund, L.P. – US Tax-Exempt Series, Corrum Capital Alternative Income Fund LP, Corrum Capital Global Credit Opportunities Co Investment Fund I LP, and Corrum Capital Global Credit Opportunities Fund LP; and

(d) the representations and warranties in Section 4 are true and correct.

All fees, costs and expenses paid hereunder (excluding the Amendment Fee) shall be paid in immediately available funds, and, including the Amendment Fee, nonrefundable and shall not be subject to reduction by way of setoff, counterclaim, or otherwise.

3. Post-Closing Obligations. The Company shall: (a) deliver to the title company within five (5) Business Days after the date hereof (or such other date as agreed to by the Required Holders in their discretion via electronic mail), (i) the deeds of trust with respect to the Western Assets, in each case providing for a first-priority, secured and perfected Lien on all of the Western Assets in favor of the Noteholders, (ii) the mortgages with respect to the collateral of CoBank in the real property assets of the Company and its Subsidiaries, (b) deliver to the Agent, within five (5) Business Days after the date hereof (or such other date as agreed to by the Required Holders in their discretion via electronic mail), title insurance policies and endorsements, or marked title commitments, with respect to the mortgages and deeds of trust reference in clauses (a)(i) and (a)(ii) above; (b) use commercially reasonable efforts to deliver to the Agent, on or before April 30, 2020 (or such other date as agreed to by the Required Holders in their discretion via electronic mail), a deposit account control agreement in favor of the Agent covering the deposit account held by Pacific Ethanol West, LLC, a Delaware limited liability company, in form and substance reasonably satisfactory to the Agent and the Required Holders; and (ii) customary legal opinions, subject to limitations, assumptions and qualifications which are either customary or appropriate for transactions of type contemplated by this Amendment, addressing the subjects set forth on Exhibit A attached hereto and incorporated herein by reference in connection with the Collateral Documents. If on the date the items in clause (a)(i) and (a)(ii) are due, the applicable title company cannot accept such deeds of trust or mortgages for recording as a result of a government-mandated closure, the due date for delivery of such items shall be deemed to be the next Business Day such title company accepts the deeds of trust or mortgages for recording.

4. Representations and Warranties. To induce the Noteholders to enter into this Amendment, the Company represents and warrants that

(a) the representations and warranties contained in the Note Amendment Agreement are true and correct in all material respects as of the date hereof, except to the extent any such representation or warranty is stated to relate solely to an earlier date, in which case such representation or warranty shall have been true and correct on and as of such earlier date (for purposes of this Section, each reference to Transaction Document therein shall be deemed to include a reference to this Amendment and each of the other Transaction Documents being entered into in connection with this Amendment); and

(b) both before and after giving effect to the transactions contemplated by this Amendment and the other Transaction Documents being entered into in connection with this Amendment, there exists no Default or Event of Default.

5.  Reaffirmation. The Company hereby affirms and agrees that: (a) the execution and delivery by the Company or any Subsidiary of and the performance of such Person’s obligations thereunder shall not in any way amend, impair, invalidate or otherwise affect any of such Person’s obligations under the Notes or any other Transaction Document, except as expressly amended hereby, (b) the Notes and the other Transaction Documents remain in full force and effect as written, except as expressly amended hereby, and (c) each Collateral Document remains in full force and effect to provide collateral security for the obligations under the Notes and the other Transaction Documents.

6. Release. To the extent that any offsets, defenses or claims that may exist arising out of or relating to this Amendment, the Notes or any of the other Transaction Documents and the transactions contemplated thereby against the Agent (as defined in the Security Agreement), any Noteholder or any of their respective subsidiaries, affiliates, officers, directors, employees, agents, attorneys, predecessors, successors or assigns, both present and former (collectively, the “Released Parties”) whether asserted or unasserted, by execution of this Amendment, the Company, for itself and its subsidiaries and affiliates and each of their respective successors, assigns, affiliates, subsidiaries, predecessors, employees, heirs and executors, as applicable (collectively, “Releasors”), jointly and severally, release and forever discharge each of the Released Parties of and from any and all manner of actions, causes of action, torts, suits, debts, controversies, damages, judgments, executions, claims and demands whatsoever, asserted or unasserted, in law or in equity, that exist or have occurred on or prior to the date of this Amendment, arising out of or relating to this Amendment, the Notes or any of the other Transaction Documents which any of the Releasors ever had or now have against any of the Released Parties, including, without limitation, any presently existing claim whether or not presently suspected, contemplated or anticipated.

7. Costs and Expenses, Indemnification, etc.

(a) Notwithstanding anything to the contrary in any other Transaction Document and in addition to all of the other obligations under the Transaction Documents, the Company shall pay all out of pocket expenses fees, expenses and disbursements of Morrison & Foerster LLP invoiced on or before the date hereof and Arnold & Porter Kaye Scholer LLP in connection with (i) the preparation, negotiation, execution and delivery of the Transaction Documents, including the post-closing obligations described in Section 3 above, which the parties acknowledge and agree, in the case of Morrison & Foerster LLP, is $215,000 (prior to the payment of $100,000 described in Section 2(b) above), (ii) any amendments, modifications or waivers of the provisions to the Transaction Documents (whether or not the transactions contemplated thereby shall be consummated) and (iii) the enforcement or protection of its rights in connection with the Transaction Documents, including its rights under this Section, as incurred during any workout, restructuring or negotiations in respect thereof and the fees, charges and disbursements of counsel (provided that in the case of clauses (ii) and (iii) and any financial advisor or law firm, such amounts shall be limited to one financial advisor or law firm for the Agent and one financial advisor or law firm for all “Noteholders” (other than, in the case of a law firm, any bona fide conflict of interest) plus one law firm of local counsel in each relevant jurisdiction). The payment required by sub-clause (i) above shall be paid as soon as possible and, in any case, no later than April 15, 2020 (it being understand that failure to pay such amount as so provided shall be an immediate Event of Default).

(b) Notwithstanding anything to the contrary in any other Transaction Document and in addition to all of the other obligations under the Transaction Documents, the Company shall defend, protect, indemnify and hold harmless the Agent (as defined in the Security Agreement), each Noteholder and all of their respective affiliates, stockholders, partners, members, officers, directors, employees and direct or indirect Noteholders and any of the foregoing Persons’ agents or other representatives and those retained in connection with the transactions contemplated by this Agreement) (collectively, the “Indemnitees”) from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys’ fees and disbursements (the “Indemnified Liabilities”), incurred by any Indemnitee as a result of, or arising out of, or relating to (a) any misrepresentation or breach of any representation or warranty made by the Company or any Subsidiary in the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby, (b) any breach of any covenant, agreement or obligation of the Company or any Subsidiary contained in the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby (c) any actual or alleged presence or release of hazardous materials on or from any property owned or operated by the Company or any Subsidiary, or any environmental liability related in any way to the Company or any Subsidiary, or (d) any cause of action, suit or claim brought or made against such Indemnitee by a third party (including for these purposes a derivative action brought on behalf of the Company or any Subsidiary) and arising out of or resulting from (i) the execution, delivery, performance or enforcement of the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby, or (ii) the status of such Noteholder as a Noteholder of the Company pursuant to the transactions contemplated by the Transaction Documents; provided, however, that no Noteholder will be entitled to indemnification hereunder for any Indemnified Liabilities resulting, as determined by a non-appealable judgement of a court of competent jurisdiction from (w) such Indemnitee’s material breach of applicable laws, rules or regulations, including, without limitation, any breach by such Indemnitee of any federal or state securities laws, rules or regulations with respect to short sales or other hedging activities, (x) such Indemnitee’s breach of any environmental laws, rules or regulations, (y) such Noteholder’s or Indemnitee’s material breach of any covenant, agreement or obligation of such Noteholder contained in the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby or (z) the gross negligence or willful misconduct of such Indemnitee. To the extent that the foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities that is permissible under applicable law.

(c) To the fullest extent permitted by applicable law, the Company hereby agrees on behalf of itself and each of its subsidiaries and affiliates that is shall not assert, and hereby waives, any claim against any of the Released Parties, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Amendment, any other Transaction Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Note, or the use of the proceeds thereof.

(d) All amounts due under this Section shall be payable within fifteen (15) days after demand therefor.

(e) Each party’s obligations under this Section shall survive the termination of the Transaction Documents and payment of the obligations thereunder.

8. No other Amendments; Counterparts; etc. Except as otherwise provided in this Amendment, no other amendments to the Notes are hereby made or intended and the Notes remain in full force and effect and legally binding on the Company. This Amendment may be executed in counterparts, all of which when taken together will constitute one and the same document. If any provision of this Amendment is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Amendment shall not in any way be affected or impaired thereby. This Amendment is a Transaction Document.

9. Governing Law. This Amendment shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Amendment shall be governed by, the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York.

[Signature Pages Follow]

IN WITNESS WHEREOF, the Company and the Noteholders have executed this Note Amendment No. 5 as of the date first set forth above.

[Noteholders’ Signature Pages Follow]

ACCEPTED AND AGREED:

NOTEHOLDERS:

CKP SOUTH LLC

[Holder Signature Page to Note Amendment No. 5]

[Holder Signature Page to Note Amendment No. 5]

[Holder Signature Page to Note Amendment No. 5]

[Holder Signature Page to Note Amendment No. 5]

[Holder Signature Page to Note Amendment No. 5]

[Holder Signature Page to Note Amendment No. 5]

[Holder Signature Page to Note Amendment No. 5]

[Holder Signature Page to Note Amendment No. 5]

[Holder Signature Page to Note Amendment No. 5]

[Holder Signature Page to Note Amendment No. 5]

[Holder Signature Page to Note Amendment No. 5]

[Holder Signature Page to Note Amendment No. 5]

[Holder Signature Page to Note Amendment No. 5]

[Holder Signature Page to Note Amendment No. 5]

Exhibit A

Legal Opinion Subjects

“Delaware Loan Party” means the following entities formed under Delaware law:

24

Exhibit 10.4

Execution Version

ALL LIENS AND SECURITY INTERESTS EVIDENCED BY THIS AGREEMENT SHALL AT ALL TIMES BE SUBORDINATE AND JUNIOR TO THE LIENS AND SECURITY INTERESTS GRANTED TO CoBank, ACB, a federally-chartered instrumentality of the United States, PURSUANT TO that certain Security Agreement dated as of SEPTEMBER 15, 2017 (AS AMENDED FROM TIME TO TIME) MADE BY Debtors (dEFINED BELOW) IN FAVOR OF SENIOR AGENT AND SUBJECT TO THE TERMS OF THAT CERTAIN INTERCREDITOR AGREEMENT EVEN DATED HEREWITH (AS AMENDED FROM TIME TO TIME) BY AND AMONG SENIOR AGENT, DEBTOR, AGENT (DEFINED BELOW) AND THE OTHER PARTIES PARTY THERETO.

SECURITY AGREEMENT
(ILLINOIS CORN PROCESSING)

THIS SECURITY AGREEMENT (the “Agreement”) is dated as of March 20, 2020, and is executed and delivered by ILLINOIS CORN PROCESSING, LLC (the “Debtor”), a Delaware limited liability company, having its place of business (or chief executive office if more than one place of business) located at 400 Capitol Mall, Suite 2060, Sacramento, California 95814 in favor of CORTLAND PRODUCTS CORP., as collateral agent for the benefit of the Noteholders party to the Initial Security Agreement (in such capacity, together with its successors and assigns, the “Agent”; together with the Noteholders, the “Secured Parties”). Capitalized terms not otherwise defined in this Agreement shall have the respective meanings ascribed to them in that certain Security Agreement, dated as of December 15, 2016, by and among Pacific Ethanol, Inc., a Delaware corporation (the “Company”), the noteholders party thereto, and the Agent, as amended by that certain First Amendment to Security Agreement, dated June 30, 2017, by and among the Company, the noteholders party thereto, and the Agent, that certain Second Amendment to Security Agreement, dated December 22, 2019, by and among the Company, the Noteholders party thereto, and the Agent, and that certain Third Amendment to Security Agreement, dated as of the date hereof, by and among the Company, the Noteholders party thereto, and the Agent (as the same may be further amended, restated, supplemented or otherwise modified from time to time, the “Initial Security Agreement”).

RECTIALS:

WHEREAS, Debtor and CoBank, ACB, a federally-chartered instrumentality of the United States (“Senior Agent”), are party to that certain Security Agreement dated as of September 15, 2017 (“Senior Agent Security Agreement”), wherein Debtor granted to Senior Agent a first priority lien in the Collateral, securing the payment and performance when due of the Obligations (as defined in the Senior Agent Security Agreement);

WHEREAS, the lien granted herein shall be junior and subordinate in priority to the lien granted to Senior Agent, as set forth in that certain Intercreditor Agreement dated as of the date hereof (“Intercreditor Agreement”) by and among Senior Agent, Agent, Pacific Ethanol, Inc. and the Grantors party thereto;

“Initial Noteholder Security Agreement” means that certain Security Agreement, dated as of December 15, 2016, by and among the Company, the Noteholders party thereto, and the Mortgagee, as amended by that certain First Amendment to Security Agreement, dated June 30, 2017, by and among the Company, the Noteholders party thereto, and the Mortgagee, that certain Second Amendment to Security Agreement, dated December 22, 2019, by and among the Company, the Noteholders party thereto, and the Mortgagee, and that certain Third Amendment to Security Agreement, dated as of the date hereof, by and among the Company, the Noteholders party thereto, and the Mortgagee, as the same may be further amended, restated, supplemented or otherwise modified from time to time.

“Noteholders” means (x) each Person that is (i) a signatory to the Amendment Agreement and identified as a “Noteholder” on Exhibit A to the Amendment Agreement, (ii) a holder of any of the Notes (as defined in the Amendment Agreement), and (iii) a “Secured Party” party to the Initial Noteholder Security Agreement and (y) any other Person that becomes (i) a holder of any of the Notes pursuant to any permitted assignment or transfer and (ii) a “Secured Party” under the Initial Noteholder Security Agreement pursuant to a Security Agreement Joinder, other than any such Person that ceases to be a party to such agreement pursuant to an assignment of all of its Notes and its rights and obligations under the Transaction Documents (as defined in the Initial Security Agreement).

SECTION 1. GRANT OF SECURITY INTEREST. For valuable consideration the receipt and sufficiency of which are hereby acknowledged, the Debtor hereby grants to the Agent, on behalf of each Secured Party, a security interest in all of the personal property of the Debtor, wherever located, together with all accessions and additions thereto, and all products and proceeds thereof, including:

All accounts; inventory (including without limitation, returned or repossessed goods); goods; as-extracted collateral; chattel paper; electronic chattel paper; instruments; investment property (including, without limitation, certificated and uncertificated securities, security entitlements, securities accounts, commodity contracts, and commodity accounts); letters of credit; letter-of-credit rights; documents; equipment; farm products; fixtures; general intangibles (including, without limitation, payment intangibles, choses or things in action, litigation rights and resulting judgments, goodwill, patents, trademarks and other intellectual property, tax refunds, miscellaneous rights to payment, investments and other interests in entities not included in the definition of investment property (including, without limitation, all equities and patronage rights in all cooperatives and all interests in partnerships and joint ventures), margin accounts, computer programs, software, invoices, books, records and other information relating to or arising out of the Debtor’s business); and, to the extent not covered by the above, all other personal property of the Debtor of every type and description, including without limitation, supporting obligations, interests or claims in or under any policy of insurance, commercial tort claims, deposit accounts, money, and judgments (the “Collateral”).

Where applicable, all terms used herein shall have the same meaning as presently and as hereafter defined in the Uniform Commercial Code of the State of New York (the “UCC”).

SECTION 2. THE OBLIGATIONS. The security interest granted hereunder shall secure the payment of all indebtedness and the performance of all obligations of the Company and the Debtor to the Secured Parties of every type and description, whether now existing or hereafter arising, fixed or contingent, as primary obligor or as guarantor or surety, acquired directly or by assignment or otherwise, liquidated or unliquidated, regardless of how they arise or by what agreement or instrument they may be evidenced, including without limitation all notes issuances, loans, advances and other extensions of credit and all covenants, agreements, and provisions contained in all loan and other agreements between the parties, including the Transaction Documents (the “Obligations”).

SECTION 3. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Debtor represents, warrants and covenants as follows:

A. Title to Collateral. Except as expressly permitted under the Amendment Agreement or by any other written agreement between the parties, and except for any security interest in favor of Senior Agent or the Agent on behalf of each Secured Party, the Debtor has clear title to all Collateral free of all adverse claims, interests, liens, or encumbrances. Without the prior written consent of the Required Holders, the Debtor shall not create or permit the existence of any adverse claims, interests, liens, or other encumbrances against any of the Collateral. The Debtor shall provide prompt written notice to the Agent of any future adverse claims, interests, liens, or encumbrances against all Collateral, and shall defend diligently the Debtor’s and the Agent’s interests in all Collateral.

B. Validity of Agreement; Authority. This Agreement is the valid and binding obligation of the Debtor, enforceable in accordance with its terms. The Debtor is duly formed, validly existing and in good standing under the laws of its jurisdiction of formation. The Debtor has the full power to execute, deliver and carry out the terms and provisions of this Agreement and all related documents and to grant to the Agent, on behalf of each Secured Party, a security interest in, and a lien on, the Collateral, has taken all necessary action to authorize the execution, delivery and performance of this Agreement and all related documents, and such execution, delivery and performance do not and will not (i) violate any of the terms or provisions of the organizational documents of the Debtor or any provision of any law, order, writ, judgment, injunction, decree, determination or award presently in effect having applicability to the Debtor, (ii) result in a breach of, or constitute a default under, any indenture or loan or credit agreement or any other agreement, document or instrument to which the Debtor is a party or by which the Debtor or any of the Debtor’s property may be bound or affected or (iii) result in or require the creation or imposition of any lien or other encumbrance of any nature upon or with respect to any of the property of the Debtor (except for any security interest in favor of the Agent on behalf of each Secured Party).

C. Location of the Debtor. The Debtor’s place of business (or chief executive office if more than one place of business) is located at the address shown above. The Debtor’s state of incorporation or formation is as shown above.

D. Location of Fixtures. All fixtures are now at the location or locations specified on Schedule A attached hereto and made a part hereof

E. Name, Identity, and Corporate Structure. The Debtor’s exact legal name is as set forth above. Except as set forth on Schedule B, the Debtor has not within the past one year changed its name, identity or corporate structure through incorporation, merger, consolidation, joint venture or otherwise.

F. Change in Name, State of Debtor’s Location, Location of Collateral, Etc. Without giving at least thirty days’ prior written notice to the Agent, the Debtor shall not change its name, identity or organizational structure, the location of its place of business (or chief executive office if more than one place of business), its state of incorporation or formation, or the location of the Collateral.

G. Further Assurances. Upon the reasonable request of the Agent or Required Holders, the Debtor shall do all acts and things as the Agent or Required Holders may from time to time reasonably deem necessary or advisable to enable it to perfect, maintain, and continue the perfection and priority of the security interest of the Agent in the Collateral, or to facilitate the exercise by the Agent of any rights or remedies granted to the Agent or any other Secured Party hereunder or provided by law. Without limiting the foregoing, the Debtor agrees to execute, in form and substance reasonably satisfactory to the Agent and Required Holders, such financing statements, amendments thereto, supplemental agreements, assignments, notices of assignments, and other instruments and documents as the Agent or Required Holders may from time to time reasonably request. In addition, in the event the Collateral or any part thereof consists of instruments, documents, chattel paper, or money (whether or not proceeds of the Collateral), the Debtor shall, upon the request of the Agent, deliver possession thereof to the Agent (or to a subagent of the Agent retained for that purpose), together with any appropriate endorsements and/or assignments, provided that such Collateral is not in the possession of Senior Agent and is subject to the terms of the Intercreditor Agreement. Where Collateral is in the possession of a third party, the Debtor will join with the Agent in notifying the third party of the Agent’s security interest and obtaining an acknowledgment from the third party that it is holding the Collateral for the benefit of the Agent. The Debtor will cooperate with the Agent in obtaining control with respect to Collateral consisting of deposit accounts (that are not held by the Agent as depositary institution), investment property, letter-of-credit rights and electronic chattel paper. The Agent shall use reasonable care in the custody and preservation of such Collateral in its possession (it being agreed that Agent shall be deemed to have exercised reasonable care in the custody and preservation of the Pledged Collateral in its possession if the Pledged Collateral is accorded treatment substantially equal to that which it accords its own property), but shall not be, required to take any steps necessary to preserve rights against prior parties. All costs and expenses incurred by the Agent to establish, perfect, maintain, determine the priority of, or release the security interest granted hereunder (including the cost of all filings, recordings, and taxes thereon and the fees and expenses of any subagent retained by Agent) shall become part of the Obligations secured hereby and be paid by the Debtor on demand.

H. Insurance. The Debtor shall maintain such property and casualty insurance as required under the Transaction Documents. All such policies shall provide for loss payable clauses or endorsements and other terms and conditions in form and content acceptable to the Required Holders. Upon the request of the Agent, all policies (or such other proof of compliance with this Section as may be satisfactory to the Agent) shall be delivered to the Agent. The Debtor shall pay all insurance premiums when due. In the event of loss, damage, or injury to any insured Collateral, the Agent shall have full power to collect any and all insurance proceeds due under any of such policies (and the Debtor hereby agrees, upon request by the Agent, to promptly forward to the Agent all such insurance proceeds received directly by the Debtor), and may, at its option, apply such proceeds to the payment of any of the Obligations secured hereby, or may apply such proceeds to the repair or replacement of such Collateral.

I. Taxes, Levies, Etc. The Debtor has paid and shall continue to pay when due all taxes, levies, assessments, or other charges which may become an enforceable lien against the Collateral.

J. Receivables. The Debtor shall preserve, enforce, and collect all accounts, chattel paper, electronic chattel paper, instruments, documents and general intangibles, whether now owned or hereafter acquired or arising (the “Receivables”), in a diligent fashion and, upon the request of the Agent or the Required Holders, the Debtor shall execute an agreement in form and substance satisfactory to the Agent and Required Holders by which the Debtor shall direct all account debtors and obligors on Receivables to make payment to a lock box deposit account under the exclusive control of the Agent, on behalf of each Secured Party.

K. Condition of Collateral. All tangible Collateral is now in good repair and condition (ordinary wear and tear excepted) and the Debtor shall at all times hereafter, at its own expense, maintain all such Collateral in good repair and condition (ordinary wear and tear excepted).

L. Condition of Books and Records. The Debtor has maintained and shall maintain complete, accurate and up-to-date books, records, accounts, and other information relating to all Collateral in such form and in such detail as may be satisfactory to the Required Holders, and shall allow the Agent, other Secured Parties or their representatives at any reasonable time to examine and copy such books, records, accounts, and other information.

M. Right of Inspection. At all reasonable times upon the request of the Agent or the Required Holders, the Debtor shall allow the Agent, the other Secured Parties or any of their respective representatives to visit any of the Debtor’s properties or locations so that such Secured Party or its representatives may confirm, inspect and appraise any of the Collateral.

SECTION 4. RIGHTS AND REMEDIES. If an Event of Default as defined under the Amended Notes (an “Event of Default”) shall have occurred and be continuing, the Agent may exercise any and all rights and remedies of the Secured Parties in the enforcement of its security interest under the UCC, this Agreement, the Transaction Documents or any other applicable law, subject to the terms of the Intercreditor Agreement. Without limiting the foregoing:

A. Disposition of Collateral. Upon and during the existence of an Event of Default, the Agent may sell, lease, or otherwise dispose of all or any part of the Collateral, in its then present condition or following any commercially reasonable preparation or processing thereof, whether by public or private sale or at any brokers’ board, in lots or in bulk, for cash, on credit or otherwise, with or without representations or warranties, and upon such other terms as may be acceptable to the Agent, and the Agent or any other Secured Party may purchase at any public sale. At any time when advance notice of sale is required, the Debtor agrees that ten days’ prior written notice shall be reasonable. In connection with the foregoing, the Secured Party may:

1. require the Debtor to assemble the Collateral and all records pertaining thereto and make such Collateral and records available to the Agent at a place to be designated by the Agent which is reasonably convenient to both parties;

2. enter the premises of the Debtor or premises under the Debtor’s control and take possession of the Collateral;

3. without charge, use or occupy the premises of the Debtor or premises under the Debtor’s control, including without limitation, warehouse and other storage facilities;

4. without charge, use any patent, trademark, tradename, or other intellectual property or technical process used by the Debtor in connection with any of the Collateral; and

5. rely conclusively upon the advice or instructions of any one or more brokers or other experts selected by the Agent to determine the method or manner of disposition of any of the Collateral and, in such event, any disposition of the Collateral by the Agent in accordance with such advice or instructions shall be deemed to be commercially reasonable.

B. Collection of Receivables. Upon and during the existence of an Event of Default, the Agent may, but shall not be obligated to, take all actions reasonable or necessary to preserve, enforce or collect the Receivables, including without limitation, the right to notify account debtors and obligors on Receivables to make direct payment to the Agent on behalf of each Secured Party, to permit any extension, compromise, or settlement of any of the Receivables for less than face value, or to sue on any Receivable, all without prior notice to the Debtor.

C. Proceeds. Upon and during the existence of an Event of Default, the Agent may collect and apply all proceeds of the Collateral, and may endorse the name of the Debtor in favor of the Agent on any and all checks, drafts, money orders, notes, acceptances, or other instruments of the same or a different nature, constituting, evidencing, or relating to the Collateral. The Agent may receive and open all mail addressed to the Debtor and remove therefrom any cash or non-cash items of payment constituting proceeds of the Collateral.

D. Insurance Adjustments. Upon and during the existence of an Event of Default, the Agent may adjust, settle, and cancel any and all insurance covering any Collateral, endorse the name of the Debtor on any and all checks or drafts drawn by any insurer, whether representing payment for a loss or a return of unearned premium, and execute any and all proofs of claim and other documents or instruments of every kind required by any insurer in connection with any payment by such insurer.

The net proceeds of any disposition of the Collateral may be applied by the Agent, after deducting its reasonable expenses incurred in such disposition, to the payment in whole or in part of the Obligations in such manner permitted by the Transaction Documents. The enumeration of the foregoing rights and remedies is not intended to be exhaustive, and the exercise of any right and/or remedy shall not preclude the exercise of any other rights or remedies, all of which are cumulative and non-exclusive.

SECTION 5. OTHER PROVISIONS.

A. Amendment, Modification, and Waiver. Without the prior written consent of the Required Holders, no amendment, modification, or waiver of, or consent to any departure by the Debtor from, any provision hereunder shall be effective. Any such amendment, modification, waiver, or consent shall be effective only in the specific instance and for the specific purpose for which given. No delay or failure by the Agent or any other Secured Party to exercise any remedy hereunder shall be deemed a waiver thereof or of any other remedy hereunder. A waiver on any one occasion shall not be construed as a bar to or waiver of any remedy on any subsequent occasion.

B. Costs and Attorneys’ Fees. Except as prohibited by law, if at any time any of the Secured Parties employs counsel in connection with the creation, perfection, preservation, or release of the Agent’s security interest in the Collateral or the enforcement of any of the Agent or any other Secured Party’s rights or remedies hereunder, all of each Secured Party’s reasonable attorneys’ fees arising from such services and all expenses, costs, or charges relating thereto shall become part of the Obligations secured hereby and be paid by the Debtor on demand.

C. No Obligation to Make Loans. Nothing contained herein or in any financing statement or other document executed or filed in connection herewith (other than the Amendment Agreement and the Amended Notes, to the extent obligations arise thereunder) shall be construed to obligate the Secured Parties to make any loans or advances to the Debtor or the Company, whether pursuant to a commitment or otherwise.

D. Revival of Obligations. To the extent the Debtor or any third party makes a payment or payments to the Agent or any other Secured Party or the Agent enforces its security interest or exercises any right of setoff, and such payment or payments or the proceeds thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, and/or required to be repaid to a trustee, receiver, or any other party under any bankruptcy, insolvency or other law or in equity, then, to the extent of such recovery, the Obligations or any part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment or payments had not been made, or such enforcement or setoff had not occurred.

E. Performance by the Secured Parties. In the event the Debtor shall at any time fail to pay or perform punctually any of its duties hereunder, upon ten (10) days after failure of the Debtor to pay or perform such duty (unless such failure may cause a material impairment to the value of the Collateral or the Agent’s Liens, in which case, immediately upon such failure of the Debtor), the Secured Parties may, at their option and without notice to or demand upon the Debtor, without obligation and without waiving or diminishing any of its other rights or remedies hereunder, fully perform or discharge any of such duties. All costs and expenses incurred by the Secured Parties in connection therewith, together with interest thereon at the Secured Parties’ “Interest Rate” plus two percent per annum, shall become part of the Obligations secured hereby and be paid by the Debtor upon demand. For purposes hereof, the Interest Rate shall mean the rate of interest established by the Secured Parties from time to time as its Interest Rate, which rate is intended by the Secured Parties to be a reference rate and not its lowest rate. For the avoidance of doubt, the Senior Agent has also been appointed Debtor’s attorney-in-fact as set forth in subsection G below and Agent’s rights to act as attorney-in-fact as set forth in subsection G and this subsection E are limited by the terms of the Intercreditor Agreement.

F. Indemnification, Etc. The Debtor hereby expressly indemnifies and holds the Agent and each Secured Party harmless from any and all claims, causes of action, or other proceedings, and from any and all liability, loss, damage, and expense of every nature, arising by reason of the Agent or such Secured Party’s enforcement of its rights and remedies hereunder, or by reason of the Debtor’s failure to comply with any environmental or other law or regulation. As to any action taken by the Agent or Secured Party hereunder, such Agent or Secured Party shall not be liable for any error of judgment or mistake of fact or law, absent gross negligence or willful misconduct on its part as determined by a court of compentent jurisdiction in a final and non-appealable judgment.

G. Power of Attorney. Subject to the terms of the Intercreditor Agreement, the Debtor hereby appoints the Agent or the Agent’s designee as its attorney-in-fact, which appointment is irrevocable, durable, and coupled with an interest, with full power of substitution, in the name of the Debtor or in the name of the Agent, upon and during the existence of an Event of Default, to take any action which the Debtor is obligated to perform hereunder or which the Agent may deem necessary or advisable to accomplish the purposes of this Agreement. In taking any action in accordance with this Section, the Agent shall not be deemed to be the agent of the Debtor. The powers conferred upon the Agent in this Section are solely to protect its and each other Secured Party’s interest in the Collateral and shall not impose any duty upon the Agent to exercise any such powers.

H. Continuing Effect. This Agreement, the Agent and each other Secured Party’s security interest in the Collateral, and all other documents or instruments contemplated hereby shall continue in full force and effect until all of the Obligations have been satisfied in full, the Secured Parties has no commitment to make any further advances to the Debtor, and the Debtor has sent a valid written demand to the Agent for termination of this Agreement.

I. Binding Effect. This Agreement shall be binding upon and inure to the benefit of the Debtor and the Secured Parties and their respective successors and assigns.

J. Security Agreement as Financing Statement and Authorization to File. A photographic copy or other reproduction of this Agreement may be used as a financing statement. In addition, the Debtor authorizes the Agent or its designees to prepare and file financing statements describing the Collateral, amendments thereto, and continuation statements and file any financing statement, amendment thereto or continuation statement electronically. In addition, the Debtor authorizes the Agent or its designees to file financing statements describing any agricultural liens or other statutory liens held by the Agent.

K. Governing Law; Waiver of Jury Trial. The laws of the State of New York will govern this Agreement and any claim, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Agreement and the transactions contemplated hereby and thereby.

1. Debtor irrevocably and unconditionally agrees that it will not commence any action, litigation or proceeding of any kind whatsoever, whether in law or equity, or whether in contract or tort or otherwise, against the Secured Parties in any way relating to this Agreement or the transactions contemplated hereby, in any forum other than the courts of the State of New York sitting in the city of New York, borough of Manhattan, and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, and each of the parties hereto irrevocably and unconditionally submits to the jurisdiction of such courts and agrees that any such action, litigation or proceeding may be brought in any such New York State court or, to the fullest extent permitted by applicable law, in such federal court. Each of the parties hereto agrees that a final judgment in any such action, litigation or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing herein shall affect any right that the Secured Parties may otherwise have to bring any action or proceeding relating to this Agreement against Debtor or its properties in the courts of any jurisdiction.

2. Debtor irrevocably and unconditionally waives, to the fullest extent permitted by applicable law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Agreement in any such court referred to in subsection K of this Section 5. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

3. Debtor irrevocably consents to the service of process in the manner provided for notices in subsection N of this Section 5 and agrees that nothing herein will affect the right of any party hereto to serve process in any other manner permitted by applicable law.

4. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY. EACH PARTY HERETO (A) CERTIFIES THAT NO AGENT, ATTORNEY, REPRESENTATIVE OR ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF LITIGATION, AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER NOTES AMENDMENT DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION

L. Headings. The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.

M. Counterparts; Integration; Effectiveness. This Agreement and any amendments, waivers, consents or supplements hereto may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all taken together shall constitute a single contract. This Agreement and the other Notes Amendment Documents constitute the entire contract among the parties with respect to the subject matter of the Notes Amendment Documents and supersede all previous agreements and understandings, oral or written, with respect thereto. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or in electronic (i.e., “pdf” or “tif”) format shall be effective as delivery of a manually executed counterpart of this Agreement.

N. Notices. All notices, requests, demands, or other communications required or permitted hereunder shall be given as provided in Section 6.5 of the Amendment Agreement, and if to Agent, pursuant to Agent’s notice information provided in the signature pages hereof.

O. Severability. The determination that any term or provision of this Agreement is unenforceable or invalid shall not affect the enforceability or validity of any other term or provision hereof.

P. Incorporation of Recitals. Each of the Recitals set forth above are true and correct and are incorporated herein and made a part of this Agreement.

Q. Inconsistency with Intercreditor Agreement. In the event of any conflict between the terms of this Agreement and the Intercreditor Agreement, the Intercreditor Agreement shall control.

[Signature pages follow]

IN WITNESS WHEREOF, the Debtor has executed this Agreement by its duly authorized officer as of the day and year first set forth above.

SCHEDULE A

To Security Agreement Dated March 20, 2020

Executed By: ILLINOIS CORN PROCESSING, LLC

Set forth below are the present locations (by county and state) of the Debtor’s fixtures.

SCHEDULE B

To Security Agreement Dated March 20, 2020

Executed By: ILLINOIS CORN PROCESSING, LLC

Set forth below is an explanation of any changes within the past one (1) year to the Debtor’s name, identity or corporate structure through incorporation, merger, consolidation, joint venture or otherwise.

Exhibit 10.5

Execution Version

ALL LIENS AND SECURITY INTERESTS EVIDENCED BY THIS AGREEMENT SHALL AT ALL TIMES BE SUBORDINATE AND JUNIOR TO THE LIENS AND SECURITY INTERESTS GRANTED TO CoBank, ACB, a federally-chartered instrumentality of the United States, PURSUANT TO that certain Security Agreement dated as of SEPTEMBER 15, 2017 (AS AMENDED FROM TIME TO TIME) MADE BY Debtors (dEFINED BELOW) IN FAVOR OF SENIOR AGENT AND SUBJECT TO THE TERMS OF THAT CERTAIN INTERCREDITOR AGREEMENT EVEN DATED HEREWITH (AS AMENDED FROM TIME TO TIME) BY AND AMONG SENIOR AGENT, DEBTOR, AGENT (DEFINED BELOW), AND THE OTHER PARTIES PARTY THERETO.

SECURITY AGREEMENT
(PACIFIC ETHANOL CENTRAL, LLC)

This Security Agreement, dated as of March 20, 2020 (as amended, supplemented or otherwise modified from time to time in accordance with the provisions hereof, this “Agreement”), made by and between PACIFIC ETHANOL CENTRAL, LLC, a limited liability company organized under the laws of Delaware (“Grantor”), and Cortland Products Corp., as collateral agent for the benefit of the Noteholders (in such capacity, together with its successors and assigns in such capacity, the “Agent”; together with the Noteholders, the “Secured Parties”).

RECITALS:

WHEREAS, Pacific Ethanol, Inc., a Delaware corporation (the “Company”) issued certain secured promissory notes in the aggregate original principal amount of $55,000,000 on December 15, 2016 (the “Initial Notes”) pursuant to a Note Purchase Agreement dated as of December 12, 2016 by and among the Company and the Investors identified therein (as amended, restated, supplemented or otherwise modified from time to time, including amendments and restatements thereof in its entirety, the “Initial Purchase Agreement”);

WHEREAS, the Company and certain Investors identified therein are parties to a Note Purchase Agreement dated as of June 26, 2017 (as amended, restated, supplemented or otherwise modified from time to time, including amendments and restatements thereof in its entirety, the “Additional Purchase Agreement”), pursuant to which the Company issued $13,948,078 in aggregate original principal amount of senior secured notes due December 15, 2019 (as amended, restated, supplemented or otherwise modified from time to time, the “Additional Notes”).

WHEREAS, the Noteholders are holders of the Initial Notes, the Additional Notes and certain other secured promissory notes issued by the Company on December 16, 2019 (the “Existing Notes”);

WHEREAS, pursuant to that certain Senior Secured Note Amendment Agreement dated as of December 22, 2019 between the Noteholders defined therein and the Company (as amended, restated, supplemented or otherwise modified from time to time, including amendments and restatements thereof in its entirety, the “Amendment Agreement”), the Existing Notes were amended and restated in their entirety (the “Amended Notes,” and together with the Amendment Agreement and the Transaction Documents (as defined in the Initial Noteholder Security Agreement (as defined below)), the “Notes Amendment Documents”);

WHEREAS, Cortland Products Corp. has been appointed by the Noteholders to act as collateral agent under the Notes Amendment Documents (and as successor to Cortland Capital Market Services LLC in such capacity) pursuant to that certain Security Agreement, dated as of December 15, 2016 (as amended, restated, supplemented or otherwise modified from time to time, including amendments and restatements thereof in its entirety), among the Company, the Agent and the other Secured Parties;

WHEREAS, Grantor and CoBank, ACB, a federally-chartered instrumentality of the United States (“Senior Agent”), are party to that certain Security Agreement dated as of March 20, 2019 (“Senior Agent Security Agreement”), wherein Grantor granted to Senior Agent a First Priority Lien in the Collateral, securing the payment and performance when due of the Secured Obligations (as defined in the Senior Agent Security Agreement);

WHEREAS, the Lien granted herein shall be junior and subordinate in priority to the Lien granted to Senior Agent, as set forth in that certain Intercreditor Agreement dated as of the date hereof (as amended, restated, supplemented or otherwise modified from time to time, the “Intercreditor Agreement”) by and among Senior Agent, Agent, Pacific Ethanol, Inc. and the Grantors party thereto; and

WHEREAS, to secure the obligations of the Company under the Notes Amendment Documents, pursuant to the Notes Amendment Documents, the Grantor is required to enter into this Agreement.

NOW, THEREFORE, for Ten Dollars ($10.00) in hand paid to Grantor and in consideration of the premises and mutual covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and to secure the timely payment and performance of the Secured Obligations (as hereinafter defined), the parties hereto agree as follows:

1. Definitions.

(a) Each capitalized term used herein, unless otherwise defined herein, shall have the meaning ascribed to such term in the Amendment Agreement or the Initial Noteholder Security Agreement, as applicable. As used herein, the following terms shall have the following meanings:

“Collateral” has the meaning set forth in Section 2.

“Existing Notes” has the meaning set forth in the Recitals.

“First Priority” means, with respect to any Lien purported to be created in any Collateral pursuant to this Agreement, such Lien is the most senior Lien to which such Collateral is subject (subject only to Permitted Liens).

“Initial Noteholder Security Agreement” means that certain Security Agreement, dated as of December 15, 2016, by and among the Company, the Noteholders party thereto, and the Agent, as amended by that certain First Amendment to Security Agreement, dated June 30, 2017, by and among the Company, the Noteholders party thereto, and the Agent, that certain Second Amendment to Security Agreement, dated December 22, 2019, by and among the Company, the Noteholders party thereto, and the Agent, and that certain Third Amendment to Security Agreement, dated as of the date hereof, by and among the Company, the Noteholders party thereto, and the Agent, as the same may be further amended, restated, supplemented or otherwise modified from time to time.

“Noteholders” means (x) each Person that is (i) a signatory to the Amendment Agreement and identified as a “Noteholder” on Exhibit A to the Amendment Agreement, (ii) a holder of any of the Notes (as defined in the Amendment Agreement), and (iii) a “Secured Party” party to the Initial Noteholder Security Agreement and (y) any other Person that becomes (i) a holder of any of the Notes pursuant to any permitted assignment or transfer and (ii) a “Secured Party” under the Initial Noteholder Security Agreement pursuant to a Security Agreement Joinder, other than any such Person that ceases to be a party to such agreement pursuant to an assignment of all of its Notes and its rights and obligations under the Transaction Documents (as defined in the Initial Security Agreement).

“Proceeds” means “proceeds” as such term is defined in section 9-102 of the UCC and, in any event, shall include all dividends or other income from the Collateral, collections thereon or distributions with respect thereto.

“Secured Obligations” has the meaning set forth in Section 3.

“UCC” means the Uniform Commercial Code as in effect from time to time in the State of New York or, when the laws of any other state govern the method or manner of the perfection or enforcement of any security interest in any of the Collateral, the Uniform Commercial Code as in effect from time to time in such state.

(b) Deposit Accounts. All of the Grantor’s deposit accounts are listed on Schedule 2 attached hereto and made a part hereof. Each of the deposit accounts listed on Schedule 2 shall be deemed to be a “deposit account” referenced in the definition of “Collateral” contained in Section 2 of this Agreement and shall be subject in all respects to the security interest granted by the Grantor to the Agent on behalf of each Secured Party pursuant to this Agreement. Upon establishing a deposit account that is not listed on Schedule 2 (to the extent that establishing such deposit account is otherwise permitted hereunder and under any other Notes Amendment Document), the Grantor shall promptly give notice to the Agent that such deposit account has been established and shall immediately execute or otherwise authenticate a supplement to Schedule 2 that includes such deposit account and take all action necessary to give the Agent on behalf of each Secured Party “control” (as such term is defined in the UCC) over such deposit account, including causing the applicable bank or financial institution to enter into a control agreement (in form and substance acceptable to the Agent) with the Agent for such deposit account.

2. Grant of Security Interest. Grantor hereby grants to the Agent, on behalf of each Secured Party a continuing security interest in all of its right, title and interest in and to the following, wherever located, whether now existing or hereafter arising or acquired (collectively, the “Collateral”):

(a) all accounts (including health-care-insurance receivables), goods (including inventory and equipment), goods (including inventory and equipment) currently or hereafter held on consignment, documents (including, if applicable, electronic documents), fixtures, instruments, promissory notes, chattel paper (whether tangible or electronic), letters of credit, letter-of-credit rights (whether or not the letter of credit is evidenced by a writing), securities and all other investment property, commercial tort claims described on Schedule 1 hereof as supplemented by any written notification given by Grantor to Agent pursuant to Section 4(e), general intangibles (including all payment intangibles), money, deposit accounts (including each of the deposit accounts listed on Schedule 2 attached hereto), and any other contract rights or rights to the payment of money; and

(b) all Proceeds and products of each of the foregoing, all books and records relating to the foregoing, all supporting obligations related thereto, and all accessions to, substitutions and replacements for, and rents, profits and products of, each of the foregoing, and any and all Proceeds of any insurance, indemnity, warranty or guaranty payable to Grantor from time to time with respect to any of the foregoing.

3. Secured Obligations. The Collateral secures the payment and performance of (a) all indebtedness and obligations of the Company and the Grantor under the Notes Amendment Documents and (b) and all indebtedness and obligations of the Company and the Grantor owed to the Secured Parties now or hereafter existing under this Agreement (collectively, “Secured Obligations”).

4. Perfection of Security Interest and Further Assurances.

(a) Grantor shall, from time to time, as may be required by Agent with respect to all Collateral, promptly take all actions as may be reasonably requested by Agent to perfect the Lien of Agent in the Collateral, including, with respect to all Collateral over which control may be obtained within the meaning of sections 8-106, 9-104, 9-105, 9-106 and 9-107 of the UCC, section 201 of the federal Electronic Signatures in Global and National Commerce Act and, as the case may be, section 16 of the Uniform Electronic Transactions Act, as applicable, Grantor shall promptly take all actions as may be reasonably requested from time to time by Agent so that control of such Collateral is obtained and at all times held by the Agent on behalf of each Secured Party. All of the foregoing shall be at Grantor’s sole cost and expense.

(b) Grantor hereby irrevocably authorizes Agent or its designees at any time and from time to time to file in any relevant jurisdiction any financing statements and amendments thereto that contain the information required by Article 9 of the UCC of each applicable jurisdiction for the filing of any financing statement or amendment relating to the Collateral, including any financing or continuation statements or other documents for the purpose of perfecting, confirming, continuing, enforcing or protecting the Lien granted by Grantor hereunder, without Grantor’s signature where permitted by law, including the filing of a financing statement describing the Collateral as all assets now owned or hereafter acquired by Grantor, or words of similar effect. Grantor agrees to provide all information required by Agent pursuant to this Section promptly to Agent upon request.

(c) Grantor hereby further authorizes Agent or its designees to file with the United States Patent and Trademark Office and the United States Copyright Office (and any successor office and any similar office in any state of the United States or in any other country) this Agreement and other documents for the purpose of perfecting, confirming, continuing, enforcing or protecting the Lien granted by Grantor hereunder, without Grantor’s signature where permitted by law.

(d) If Grantor shall at any time hold or acquire any certificated securities, promissory notes, tangible chattel paper, negotiable documents or warehouse receipts relating to the Collateral, Grantor shall promptly indorse, assign and deliver the same to Agent, accompanied by such instruments of transfer or assignment duly executed in blank as Agent may from time to time specify.

(e) If Grantor shall at any time hold or acquire a commercial tort claim, Grantor shall (a) promptly notify Agent in a writing signed by Grantor of the particulars thereof and grant to Agent on behalf of the Secured Parties in such writing a Lien therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance satisfactory to Agent and (b) deliver to Agent an updated Schedule 1.

(f) If any Collateral is at any time in the possession of a bailee, Grantor shall promptly notify Agent thereof and, at Agent’s request and option, shall promptly obtain an acknowledgment from the bailee, in form and substance satisfactory to Agent, that the bailee holds such Collateral for the benefit of the Secured Parties and the bailee agrees to comply, without Grantor’s further consent, at any time with instructions of Agent as to such Collateral.

(g) If Grantor is at any time a beneficiary under a letter of credit, Grantor will promptly notify Agent and, at Agent’s request, Grantor will, pursuant to an agreement in form and substance reasonably acceptable to Agent, either (a) arrange for the issuer and any confirmer or other nominated person of such letter of credit to consent to an assignment to Agent of the proceeds of the letter of credit or (b) arrange for Agent to become the transferee beneficiary of the letter of credit.

(h) Grantor agrees that at any time and from time to time, at Grantor’s expense, Grantor will promptly execute and deliver all further instruments and documents, obtain such agreements from third parties, and take all further action, that may be necessary or desirable, or that Agent may reasonably request, in order to perfect and protect any Lien granted hereby or to enable Agent to exercise and enforce its and the other Secured Parties’ rights and remedies hereunder or under any other agreement with respect to any Collateral.

5. Representations and Warranties. Grantor represents and warrants as follows:

(a) (i) Grantor’s exact legal name is that indicated on the signature page hereof and (ii) Grantor is an organization of the type, and is organized in the jurisdiction, set forth in the preamble hereof.

(b) The Collateral consisting of securities have been duly authorized and validly issued, and are fully paid and non-assessable and subject to no options to purchase or similar rights. Grantor holds no commercial tort claims except as indicated on Schedule 1. None of the Collateral constitutes, or is the proceeds of, “farm products” as defined in section 9-102(a)(34) of the UCC. None of the account debtors or other persons obligated on any of the Collateral is a governmental authority covered by the Federal Assignment of Claims Act or like federal, state or local statute or rule in respect of such Collateral. Grantor has at all times operated its business in compliance with all applicable provisions of the federal Fair Labor Standards Act, as amended, and with all applicable provisions of federal, state and local statutes and ordinances dealing with the control, shipment, storage or disposal of hazardous materials or substances.

(c) At the time the Collateral becomes subject to the Lien created by this Agreement, Grantor will be the sole, direct, legal and beneficial owner thereof, free and clear of any Lien, claim, option or right of others except for the Lien created by this Agreement and other Permitted Liens.

(d) The grant of security interest in the Collateral pursuant to this Agreement creates a valid and perfected Lien in the Collateral, securing the payment and performance when due of the Secured Obligations.

(e) Grantor has full power, authority and legal right to grant a security interest in the Collateral pursuant to this Agreement.

(f) This Agreement has been duly authorized, executed and delivered by Grantor and constitutes a legal, valid and binding obligation of Grantor enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and subject to equitable principles (regardless of whether enforcement is sought in equity or at law).

(g) No authorization, approval, or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the issuance of the Amended Notes and the grant of the security interest by Grantor of the Collateral pursuant to this Agreement or for the execution and delivery of this Agreement by Grantor or the performance by Grantor of its obligations thereunder, other than filings to perfect the security interest.

(h) The execution and delivery of this Agreement by Grantor and the performance by Grantor of its obligations hereunder, will not violate any provision of any applicable law or regulation or any order, judgment, writ, award or decree of any court, arbitrator or governmental authority, domestic or foreign, applicable to Grantor or any of its property, or the organizational or governing documents of Grantor or any agreement or instrument to which Grantor is party or by which it or its property is bound.

(i) Grantor has taken all action required on its part for control (as defined in sections 8-106, 9-104, 9-105, 9-106 and 9-107 of the UCC, section 201 of the federal Electronic Signatures in Global and National Commerce Act and, as the case may be, section 16 of the Uniform Electronic Transactions Act, as applicable) to have been obtained by Agent over all Collateral with respect to which such control may be obtained pursuant to the UCC. No person other than Senior Agent or Agent has control or possession of all or any part of the Collateral.

6. Accounts Receivable.

(a) Agent may at any time and from time to time send or require Grantor to send requests for verification of Accounts or notices of assignment to account debtors and other obligors. Agent may also at any time and from time to time telephone account debtors and other obligors to verify accounts.

(b) After the obligations of the Grantor under the CoBank Debt Documents are paid in full:

(i) the Agent may establish a collateral account for the deposit of checks, drafts and cash payments made by Grantor’s account debtors. If a collateral account is so established, Grantor shall promptly deliver to Agent, for deposit into said collateral account, all payments on Accounts and chattel paper received by it. All such payments shall be delivered to Agent in the form received (except for Grantor’s endorsement where necessary). Until so deposited, all payments on Accounts and chattel paper received by Grantor shall be held in trust by Grantor for and as the property of Agent on behalf of the Secured Parties and shall not be commingled with any funds or property of Grantor. All deposits in said collateral account shall constitute proceeds of Collateral and shall not constitute payment of any Secured Obligation. Unless otherwise agreed in writing, Grantor shall have no right to withdraw amounts on deposit in any collateral account.

(ii) Agent may, by notice to Grantor, require Grantor to direct each of its account debtors to make payment directly to a special lockbox to be under the control of Agent. Grantor hereby authorizes and directs Agent to deposit all checks, drafts and cash payments received in said lockbox into the collateral account established as set forth above.

(iii) Agent may notify any account debtor, or any other Person obligated to pay any amount due, that such chattel paper, general intangible, Account, or other right to payment has been assigned or transferred to Agent for security and shall be paid directly to Agent. At any time after Secured Party or Grantor gives such notice to an account debtor or other obligor, Agent, on behalf of the Secured Parties, may (but need not), in its own name or in Grantor’s name, demand, sue for, collect or receive any money or property at any time payable or receivable on account of, or securing, any such chattel paper, Account, or other right to payment, or grant any extension to, make any compromise or settlement with or otherwise agree to waive, modify, amend or change the obligations (including collateral obligations) of any such account debtor or other obligor.

7. Voting and Distributions.

(a) The Secured Parties agree that unless an Event of Default shall have occurred and be continuing, Grantor may, to the extent Grantor has such right as a holder of the Collateral consisting of securities, other equity interests or indebtedness owed by any obligor, vote and give consents, ratifications and waivers with respect thereto, except to the extent that, in Agent’s reasonable judgment, any such vote, consent, ratification or waiver would detract from the value thereof as Collateral or which would be inconsistent with or result in any violation of any provision of this Agreement or any other Notes Amendment Documents, and from time to time, upon request from Grantor, Agent shall deliver to Grantor suitable proxies so that Grantor may cast such votes, consents, ratifications and waivers.

(b) The Secured Parties agree that Grantor may, unless an Event of Default shall have occurred and be continuing, receive and retain all dividends and other distributions with respect to the Collateral consisting of securities, other equity interests or indebtedness owed by any obligor.

8. Covenants. Grantor covenants as follows:

(a) Grantor will not, without providing at least 30 days’ prior written notice to Agent, change its legal name, identity, type of organization, jurisdiction of organization, corporate structure, location of its chief executive office or its principal place of business or its organizational identification number. Grantor will, prior to any change described in the preceding sentence, take all actions reasonably requested by Agent to maintain the perfection and priority of Agent’s Lien in the Collateral.

(b) Grantor will keep the Collateral, to the extent not delivered to Agent pursuant to Section 4, at those locations listed on Schedule 3 attached hereto and Grantor will not remove the Collateral from such locations without providing at least 10 days’ prior written notice to Agent except for (a) vehicles and equipment out for repair or in service in the field, and (b) inventory in transit in the ordinary course of business.

(c) Grantor will, at its own cost and expense, defend title to the Collateral and the Lien of Agent therein against the claim of any person claiming against or through Grantor and shall maintain and preserve such perfected Lien for so long as this Agreement shall remain in effect.

(d) Grantor will not grant, create, permit or suffer to exist any Lien, option, right of first offer, encumbrance or other restriction or limitation of any nature whatsoever on, any of the Collateral or any interest therein except for Permitted Liens.

(e) Grantor will not sell, lease, or otherwise dispose of any of the Collateral except for in the ordinary course of business or as otherwise permitted by the Notes Amendment Documents.

(f) Grantor will keep the Collateral in good order and repair and will not use the same in violation of law or any policy of insurance thereon. Grantor will permit Agent, or its designee, to inspect the Collateral at any reasonable time, wherever located.

(g) Grantor will pay promptly when due all taxes, assessments, governmental charges, and levies upon the Collateral or incurred in connection with the use or operation of the Collateral or incurred in connection with this Agreement.

(h) Grantor will continue to operate its business in compliance with all applicable provisions of the federal Fair Labor Standards Act, as amended, and with all applicable provisions of federal, state and local statutes and ordinances dealing with the control, shipment, storage or disposal of hazardous materials or substances.

9. Agent Appointed Attorney-in-Fact. Subject to the terms of the Intercreditor Agreement, Grantor hereby appoints Agent as Grantor’s attorney-in-fact, with full authority in the place and stead of Grantor and in the name of Grantor or otherwise, from time to time during the continuance of an Event of Default in Agent’s discretion to take any action and to execute any instrument which Agent may deem necessary or advisable to accomplish the purposes of this Agreement (but Agent shall not be obligated to and shall have no liability to Grantor or any third party for failure to do so or take action). This appointment, being coupled with an interest, shall be irrevocable. Grantor hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof.

10. Agent May Perform. If Grantor fails to perform any obligation contained in this Agreement, upon ten (10) days after failure of the Grantor to perform such obligation (unless such failure may cause a material impairment to the value of the Collateral or the Agent’s Liens, in which case, immediately upon such failure of the Grantor), Agent may itself perform, or cause performance of, such obligation, and the expenses of Agent or any other Secured Party incurred in connection therewith shall be payable by Grantor; provided that Agent or any other Secured Party shall not be required to perform or discharge any obligation of Grantor. For the avoidance of doubt, the Senior Agent has also been appointed Grantor’s attorney-in-fact as set forth in Section 9 above and Agent’s rights to act as attorney-in-fact as set forth in Sections 9 and this Section 10 are limited by the terms of the Intercreditor Agreement.

11. Reasonable Care. Agent shall have no duty with respect to the care and preservation of the Collateral beyond the exercise of reasonable care. Agent shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession if the Collateral is accorded treatment substantially equal to that which Agent accords its own property, it being understood that Agent shall not have any responsibility for (a) ascertaining or taking action with respect to any claims, the nature or sufficiency of any payment or performance by any party under or pursuant to any agreement relating to the Collateral or other matters relative to any Collateral, whether or not Agent has or is deemed to have knowledge of such matters, or (b) taking any necessary steps to preserve rights against any parties with respect to any Collateral. Nothing set forth in this Agreement, nor the exercise by Agent, on behalf of the Secured Parties, of any of the rights and remedies hereunder, shall relieve Grantor from the performance of any obligation on Grantor’s part to be performed or observed in respect of any of the Collateral.

12. Remedies Upon Default. If any Event of Default shall have occurred and be continuing:

(a) Agent, without any other notice to or demand upon Grantor, may assert all rights and remedies of a secured party under the UCC or other applicable law, including the right to take possession of, hold, collect, sell, lease, deliver, grant options to purchase or otherwise retain, liquidate or dispose of all or any portion of the Collateral, subject to the terms of the Intercreditor Agreement. If notice prior to disposition of the Collateral or any portion thereof is necessary under applicable law, written notice mailed to Grantor at its notice address as provided in Section 19 hereof 10 days prior to the date of such disposition shall constitute reasonable notice, but notice given in any other reasonable manner shall be sufficient. So long as the sale of the Collateral is made in a commercially reasonable manner, Agent may sell such Collateral on such terms and to such purchaser(s) as Agent, on behalf of the Secured Parties, in its absolute discretion may choose, without assuming any credit risk and without any obligation to advertise or give notice of any kind other than that necessary under applicable law. Without precluding any other methods of sale, the sale of the Collateral or any portion thereof shall have been made in a commercially reasonable manner if conducted in conformity with reasonable commercial practices of creditors disposing of similar property. At any sale of the Collateral, if permitted by applicable law, Agent or any other Secured Party may be the purchaser, licensee, assignee or recipient of the Collateral or any part thereof and shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold, assigned or licensed at such sale, to use and apply any of the Secured Obligations as a credit on account of the purchase price of the Collateral or any part thereof payable at such sale. To the extent permitted by applicable law, Grantor waives all claims, damages and demands it may acquire against Agent or any other Secured Party arising out of the exercise by it of any rights hereunder. Grantor hereby waives and releases to the fullest extent permitted by law any right or equity of redemption with respect to the Collateral, whether before or after sale hereunder, and all rights, if any, of marshalling the Collateral and any other security for the Secured Obligations or otherwise. At any such sale, unless prohibited by applicable law, Agent or any other Secured Party or any custodian may bid for and purchase all or any part of the Collateral so sold free from any such right or equity of redemption. None of Agent, any other Secured Party or any custodian shall be liable for failure to collect or realize upon any or all of the Collateral or for any delay in so doing, nor shall it be under any obligation to take any action whatsoever with regard thereto.

(b) All rights of Grantor to (i) exercise the voting and other consensual rights it would otherwise be entitled to exercise pursuant to Section 7(a) and (ii) receive the dividends and other distributions which it would otherwise be entitled to receive and retain pursuant to Section 7(b), shall immediately cease, and all such rights shall thereupon become vested in Agent, on behalf of the Secured Parties, which shall have the sole right to exercise such voting and other consensual rights and receive and hold such dividends and other distributions as Collateral.

(c) Any cash held by Agent as Collateral and all cash Proceeds received by Agent in respect of any sale of, collection from, or other realization upon all or any part of the Collateral shall be applied in whole or in part by Agent to the payment of expenses incurred by Secured Party in connection with the foregoing, including reasonable attorneys’ fees, and the balance of such proceeds shall be applied or set off against all or any part of the Secured Obligations in such order set forth in the Transaction Documents. Any surplus of such cash or cash Proceeds held by Agent and remaining after payment in full of all the Secured Obligations shall be paid over to Grantor or to whomsoever may be lawfully entitled to receive such surplus. Grantor shall remain liable for any deficiency if such cash and the cash Proceeds of any sale or other realization of the Collateral are insufficient to pay the Secured Obligations and the fees and other charges of any attorneys employed by Agent or any other Secured Party to collect such deficiency.

(d) If Agent shall determine to exercise its rights to sell all or any of the Collateral pursuant to this Section, Grantor agrees that, upon request of Agent, Grantor will, at its own expense, do or cause to be done all such acts and things as may be necessary to make such sale of the Collateral or any part thereof valid and binding and in compliance with applicable law.

13. Standards for Exercising Rights and Remedies. To the extent that applicable law imposes duties on Agent to exercise remedies in a commercially reasonable manner, Grantor acknowledges and agrees that it is not commercially unreasonable for Agent (a) to fail to incur expenses reasonably deemed significant by Agent to prepare Collateral for disposition or otherwise to fail to complete raw material or work in process into finished goods or other finished products for disposition, (b) to fail to obtain third party consents for access to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to obtain governmental or third party consents for the collection or disposition of Collateral to be collected or disposed of, (c) to fail to exercise collection remedies against account debtors or other persons obligated on Collateral or to fail to remove liens or encumbrances on or any adverse claims against Collateral, (d) to exercise collection remedies against account debtors and other persons obligated on Collateral directly or through the use of collection agencies and other collection specialists, (e) to advertise dispositions of Collateral through publications or media of general circulation, whether or not the Collateral is of a specialized nature, (f) to contact other persons, whether or not in the same business as the Company, for expressions of interest in acquiring all or any portion of the Collateral, (g) to hire one or more professional auctioneers to assist in the disposition of Collateral, whether or not the collateral is of a specialized nature, (h) to dispose of Collateral by utilizing Internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capability of doing so, or that match buyers and sellers of assets, (i) to dispose of assets in wholesale rather than retail markets, (j) to decline to provide credit to any potential purchaser of the Collateral in connection with Agent’s disposition of the Collateral, (k) to disclaim disposition warranties, (l) to purchase insurance or credit enhancements to insure Agent against risks of loss, collection or disposition of Collateral or to provide to Agent a guaranteed return from the collection or disposition of Collateral, or (m) to the extent deemed appropriate by Agent, to obtain the services of other brokers, investment bankers, consultants and other professionals to assist Agent in the collection or disposition of any of the Collateral. Grantor acknowledges that the purpose of this Section is to provide non-exhaustive indications of what actions or omissions by Agent would satisfy Agent’s duties under the UCC in Agent’s exercise of remedies against the Collateral and that other actions or omissions by Agent shall not be deemed to fail to satisfy such duties solely on account of not being indicated in this Section. Without limitation upon the foregoing, nothing contained in this Section shall be construed to grant any rights to Grantor or to impose any duties on Agent that would not have been granted or imposed by this Agreement or by applicable law in the absence of this Section.

14. No Waiver and Cumulative Remedies. Agent or any other Secured Party shall not by any act (except by a written instrument pursuant to Section 18), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any default or Event of Default. All rights and remedies herein provided are cumulative and are not exclusive of any rights or remedies provided by law.

15. Security Interest Absolute. All rights of Agent, the other Secured Parties and Liens hereunder, and all Secured Obligations of Grantor hereunder, shall be absolute and unconditional irrespective of: (a) any illegality or lack of validity or enforceability of any Secured Obligation or any related agreement or instrument; (b) any change in the time, place or manner of payment of, or in any other term of, the Secured Obligations, or any rescission, waiver, amendment or other modification of the Notes Amendment Documents, including any increase in the Secured Obligations resulting from any extension of additional credit or otherwise; (c) any taking, exchange, substitution, release, impairment or non-perfection of any Collateral or any other collateral, or any taking, release, impairment, amendment, waiver or other modification of any guaranty, for all or any of the Secured Obligations; (d) any manner of sale, disposition or application of proceeds of any Collateral or any other collateral or other assets to all or part of the Secured Obligations; (e) any default, failure or delay, willful or otherwise, in the performance of the Secured Obligations; (f) any defense, set-off or counterclaim (other than a defense of payment or performance) that may at any time be available to, or be asserted by, Grantor against the Secured Parties; or (g) any other circumstance (including any statute of limitations) or manner of administering the Amended Notes or any existence of or reliance on any representation by Secured Parties that might vary the risk of Grantor or otherwise operate as a defense available to, or a legal or equitable discharge of, Grantor or any other grantor, guarantor or surety.

16. Continuing Security Interest; Further Actions. This Agreement creates a continuing Lien in the Collateral and shall (a) subject to Section 17, remain in full force and effect until payment and performance in full of the Secured Obligations, (b) be binding upon Grantor, its successors and assigns, and (c) inure to the benefit of Secured Parties and their successors, transferees and assigns; provided that Grantor may not assign or otherwise transfer any of its rights or obligations under this Agreement without Agent’s prior written consent.

17. Termination; Release. On the date on which all Principal, accrued Interest, and other amounts at any time owed on the Notes Amendment Documents have been paid in full, this Agreement will terminate automatically without any delivery of any instrument or performance of any act by any party, except that provisions that by their terms survive the termination of the Notes Amendment Documents will so survive. Upon such termination, Agent will, at the request and expense of Grantor, (a) duly assign, transfer and deliver to or at the direction of Grantor (without recourse and without any representation or warranty) such of the Collateral as may then remain in the possession of Agent, together with any monies at the time held by Agent hereunder, and (b) execute and deliver to Grantor a proper instrument or instruments acknowledging the satisfaction and termination of this Agreement.

18. Amendments. None of the terms or provisions of this Agreement may be amended, modified, supplemented, terminated or waived, and no consent to any departure by Grantor therefrom shall be effective unless the same shall be in writing and signed by Agent and Grantor, and then such amendment, modification, supplement, waiver or consent shall be effective only in the specific instance and for the specific purpose for which made or given.

19. Notices. All notices, requests and demands to or upon any party hereto shall be given in the manner and become effective as stipulated in the Amendment Agreement. Regardless of the manner in which notice is provided, notices may be sent to Agent at the Agent’s notice information set forth in the signature pages hereof and to Grantor at the Grantor’s notice information set forth in the signature pages hereof or to such other address or telephone number as any party may give to the other for such purpose in accordance with this paragraph.

20. Headings. The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.

21. Counterparts; Integration; Effectiveness. This Agreement and any amendments, waivers, consents or supplements hereto may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all taken together shall constitute a single contract. This Agreement and the other Notes Amendment Documents constitute the entire contract among the parties with respect to the subject matter of the Notes Amendment Documents and supersede all previous agreements and understandings, oral or written, with respect thereto. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or in electronic (i.e., “pdf” or “tif”) format shall be effective as delivery of a manually executed counterpart of this Agreement.

22. Governing Law; Jurisdiction; Etc.

(a) The laws of the State of New York will govern this Agreement and any claim, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Agreement and the transactions contemplated hereby and thereby.

(b) Grantor irrevocably and unconditionally agrees that it will not commence any action, litigation or proceeding of any kind whatsoever, whether in law or equity, or whether in contract or tort or otherwise, against the Secured Parties in any way relating to this Agreement or the transactions contemplated hereby, in any forum other than the courts of the State of New York sitting in the city of New York, borough of Manhattan, and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, and each of the parties hereto irrevocably and unconditionally submits to the jurisdiction of such courts and agrees that any such action, litigation or proceeding may be brought in any such New York State court or, to the fullest extent permitted by applicable law, in such federal court. Each of the parties hereto agrees that a final judgment in any such action, litigation or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing herein shall affect any right that the Secured Parties may otherwise have to bring any action or proceeding relating to this Agreement against Grantor or its properties in the courts of any jurisdiction.

(c) Grantor irrevocably and unconditionally waives, to the fullest extent permitted by applicable law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Agreement in any such court referred to in Section 22(b). Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(d) Grantor irrevocably consents to the service of process in the manner provided for notices in Section 19 and agrees that nothing herein will affect the right of any party hereto to serve process in any other manner permitted by applicable law.

23. Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY. EACH PARTY HERETO (A) CERTIFIES THAT NO AGENT, ATTORNEY, REPRESENTATIVE OR ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF LITIGATION, AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER NOTES AMENDMENT DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

24. Incorporation of Recitals. Each of the Recitals set forth above are true and correct and are incorporated herein and made a part of this Agreement.

25. Inconsistency with Intercreditor Agreement. In the event of any conflict between the terms of this Agreement and the Intercreditor Agreement, the Intercreditor Agreement shall control.

[signature page to follow] 

The parties have executed this Security Agreement as of the date set forth in the introductory paragraph.

Signature Page to Noteholder Security Agreement (Noteholders - PEC) 

SCHEDULE 1

COMMERCIAL TORT CLAIMS

None.

Schedule 1 to Security Agreement 

Schedule 2 to Security Agreement 

SCHEDULE 3

COLLATERAL LOCATIONS

400 Capitol Mall, Suite 2060, Sacramento, California 95814

Schedule 3 to Security Agreement

Exhibit 10.6

Execution Version

ALL LIENS AND SECURITY INTERESTS EVIDENCED BY THIS AGREEMENT SHALL AT ALL TIMES BE SUBORDINATE AND JUNIOR TO THE LIENS AND SECURITY INTERESTS GRANTED TO CoBank, ACB, a federally-chartered instrumentality of the United States, PURSUANT TO that certain Security Agreement dated as of March 20, 2019 (AS AMENDED FROM TIME TO TIME) MADE BY gRANTORS (dEFINED BELOW) IN FAVOR OF SENIOR AGENT (DEFINED BELOW) AND SUBJECT TO THE TERMS OF THAT CERTAIN INTERCREDITOR AGREEMENT EVEN DATED HEREWITH (AS AMENDED FROM TIME TO TIME) BY AND AMONG SENIOR AGENT, GRANTORS, AND AGENT (DEFINED BELOW), AND THE OTHER PARTIES PARTY THERETO.

PLEDGE AGREEMENT

THIS PLEDGE AGREEMENT (as amended, supplemented or otherwise modified from time to time in accordance with the provisions hereof, this “Agreement”) is made on March 20, 2020 by and among PACIFIC ETHANOL CENTRAL, LLC, a limited liability company organized under the laws of Delaware (“Pledgor”), ILLINOIS CORN PROCESSING, LLC, a limited liability company organized under the laws of Delaware (“ICP”), and CORTLAND PRODUCTS CORP., as collateral agent for the benefit of the Noteholders (in such capacity, together with its successors and assigns in such capacity, the “Agent”; together with the Noteholders, the “Secured Parties”).

RECITALS:

WHEREAS, Pacific Ethanol, Inc., a Delaware corporation (“PEI”), issued certain secured promissory notes in the aggregate original principal amount of $55,000,000 on December 15, 2016 (the “Initial Notes”) pursuant to a Note Purchase Agreement dated as of December 12, 2016 by and among PEI and the Investors identified therein (as amended, restated, supplemented or otherwise modified from time to time, including amendments and restatements thereof in its entirety, the “Initial Purchase Agreement”);

WHEREAS, PEI and certain Investors identified therein are parties to a Note Purchase Agreement dated as of June 26, 2017 (as amended, restated, supplemented or otherwise modified from time to time, including amendments and restatements thereof in its entirety, the “Additional Purchase Agreement”), pursuant to which PEI issued $13,948,078 in aggregate original principal amount of senior secured notes due December 15, 2019 (as amended, restated, supplemented or otherwise modified from time to time, the “Additional Notes”).

WHEREAS, the Noteholders are holders of the Initial Notes, the Additional Notes and certain other secured promissory notes issued by PEI on December 16, 2019 (the “Existing Notes”);

WHEREAS, pursuant to that certain Senior Secured Note Amendment Agreement dated as of December 22, 2019 between the Noteholders defined therein and PEI (as amended, restated, supplemented or otherwise modified from time to time, including amendments and restatements thereof in its entirety, the “Amendment Agreement”), the Existing Notes were amended and restated in their entirety (the “Amended Notes,” and together with the Amendment Agreement and the Transaction Documents (as defined in the Initial Noteholder Security Agreement (as defined below)), the “Notes Amendment Documents”);

WHEREAS, Cortland Products Corp. has been appointed by the Noteholders to act as collateral agent under the Notes Amendment Documents (and as successor to Cortland Capital Market Services LLC in such capacity) pursuant to the Initial Noteholder Security Agreement;

WHEREAS, Pledgor, ICP and CoBank, ACB, a federally-chartered instrumentality of the United States (“Senior Agent”), are party to that certain Pledge Agreement dated as of March 20, 2019 (“Senior Agent Pledge Agreement”), wherein Pledgor granted to Senior Agent a senior security interest in the Pledged Collateral, securing the payment and performance when due of the Secured Obligations (as defined in the Senior Agent Pledge Agreement);

WHEREAS, the Lien granted herein shall be junior in priority to the Lien granted to Senior Agent, as set forth in that certain Intercreditor Agreement dated as of the date hereof (as amended, restated, supplemented or otherwise modified from time to time, “Intercreditor Agreement”) by and among Senior Agent, Agent, PEI and the Grantors party thereto; and

WHEREAS, to secure the obligations of PEI under the Notes Amendment Documents, pursuant to the Notes Amendment Documents, the Pledgor is required to enter into this Agreement.

1. Definitions. Each capitalized term used herein, unless otherwise defined herein, shall have the meaning ascribed to such term in the Amendment Agreement or the Initial Noteholder Security Agreement, as applicable. As used herein, the following terms shall have the following meanings:

“Companies” shall mean each of the entities identified as an “Issuer” on Annex A hereto, and each such entity individually is referred to herein as a “Company”.

“Equity Interests” shall mean all shares of capital stock (whether denominated as common stock or preferred stock), equity interests, beneficial partnership or membership interests, joint venture interests, units, limited liability company interests, participations or other ownership or profit interests in or equivalents (regardless of how designated) of or in a Person (other than an individual), whether voting or non-voting.

“Existing Notes” has the meaning set forth in the Recitals.

“Initial Noteholder Security Agreement” means that certain Security Agreement, dated as of December 15, 2016, by and among the Company, the Noteholders party thereto, and the Agent, as amended by that certain First Amendment to Security Agreement, dated June 30, 2017, by and among the Company, the Noteholders party thereto, and the Agent, that certain Second Amendment to Security Agreement, dated December 22, 2019, by and among the Company, the Noteholders party thereto, and the Agent, and that certain Third Amendment to Security Agreement, dated as of the date hereof, by and among the Company, the Noteholders party thereto, and the Agent, as the same may be further amended, restated, supplemented or otherwise modified from time to time.

“Initial Noteholder Security Agreement” means that certain Security Agreement, dated as of December 15, 2016, by and among the Company, the Noteholders party thereto, and the Agent, as amended by that certain First Amendment to Security Agreement, dated June 30, 2017, by and among the Company, the Noteholders party thereto, and the Agent, that certain Second Amendment to Security Agreement, dated December 22, 2019, by and among the Company, the Noteholders party thereto, and the Agent, and that certain Third Amendment to Security Agreement, dated as of the date hereof, by and among the Company, the Noteholders party thereto, and the Agent, as the same may be further amended, restated, supplemented or otherwise modified from time to time.

“Noteholders” means (x) each Person that is (i) a signatory to the Amendment Agreement and identified as a “Noteholder” on Exhibit A to the Amendment Agreement, (ii) a holder of any of the Notes (as defined in the Amendment Agreement), and (iii) a “Secured Party” party to the Initial Noteholder Security Agreement and (y) any other Person that becomes (i) a holder of any of the Notes pursuant to any permitted assignment or transfer and (ii) a “Secured Party” under the Initial Noteholder Security Agreement pursuant to a Security Agreement Joinder, other than any such Person that ceases to be a party to such agreement pursuant to an assignment of all of its Notes and its rights and obligations under the Transaction Documents (as defined in the Initial Security Agreement).

“Pledged Collateral” shall have the meaning ascribed to it in Section 2 hereof.

“Power” shall have the meaning ascribed to it in Section 2 hereof.

“Secured Obligations” shall mean all obligations of PEI to the Noteholders now or hereafter existing under the Notes Amendment Documents.

2. Pledge; Agent’s Duties; Intercreditor Agreement.

(a) Pledgor hereby pledges, assigns, transfers, sets over and delivers to Agent, and hereby grants to Agent, for the benefit of the Secured Parties, a security interest in, all of the Equity Interests of the Companies now or hereafter held by Pledgor, including the Equity Interests more particularly described on Annex A hereto and all of Pledgor’s options, if any, for the purchase of any Equity Interests of any of the Companies, herewith delivered to Agent, and where certificated, accompanied by powers (“Powers”) duly executed in blank, and all proceeds thereof including, without limitation, all proceeds from the sale of any such Equity Interests and all dividends and distributions at any time payable in connection such Equity Interests (said Equity Interests, Powers, options, and proceeds hereinafter collectively called the “Pledged Collateral”) as security for the due and punctual payment and performance of the Secured Obligations.

(b) Agent shall have no duty with respect to any part or all of the Pledged Collateral of any nature or kind other than the duty to use reasonable care in the safe custody of any tangible items of the Pledged Collateral in its possession (it being agreed that Agent shall be deemed to have exercised reasonable care in the custody and preservation of the Pledged Collateral in its possession if the Pledged Collateral is accorded treatment substantially equal to that which it accords its own property). Without limiting the generality of the foregoing, Agent shall be under no obligation to sell any of the Pledged Collateral or otherwise to take any steps necessary to preserve the value of any of the Pledged Collateral or to preserve rights in the Pledged Collateral against any other Persons, but may do so at its option upon an Event of Default, and all expenses incurred in connection therewith shall be for the sole account of Pledgor.

(c) For the avoidance of doubt, all obligations of Pledgor, and all rights of Agent, hereunder shall be subject to the obligations of the Pledgor and the subordinated rights of Agent under the Intercreditor Agreement.

3. Voting Rights. During the term of this Agreement, and so long as no Event of Default shall have occurred, Pledgor shall have the right to vote all or any portion of the Equity Interests owned by such Pledgor on all corporate and other company questions for all purposes not inconsistent with the terms of this Agreement or any of the other Notes Amendment Documents. To that end, if Agent transfers all or any portion of the Pledged Collateral into its name or the name of its nominee, to the extent authorized to do so under this Agreement or any of the other Notes Amendment Documents, Agent shall, upon the request of a Pledgor, unless an Event of Default shall have occurred, execute and deliver or cause to be executed and delivered to Pledgor, proxies with respect to the applicable portion of the Pledged Collateral. Pledgor hereby grants to Agent, effective upon or after the occurrence of an Event of Default and pursuant to the terms of the Intercreditor Agreement, an IRREVOCABLE PROXY pursuant to which Agent shall be entitled (but shall not be obligated) to exercise all voting powers pertaining to the Pledged Collateral, including to call and attend all meetings of the shareholders, members or partners of the Companies to be held from time to time with full power to act and vote in the name, place and stead of Pledgor (whether or not the Equity Interests shall have been transferred into its name or the name of its nominee or nominees), give all consents, waivers and ratifications in respect of the Pledged Collateral and otherwise act with respect thereto as though it were the outright owner thereof, and any and all proxies theretofore executed by Pledgor shall terminate and thereafter be null and void and of no effect whatsoever.

4. Collection of Dividend Payments. During the term of this Agreement, and so long as there no Event of Default shall exist, Pledgor shall have the right to receive and retain any and all dividends and other distributions payable by any Company to Pledgor on account of any of the Pledged Collateral except as otherwise provided in the Notes Amendment Documents. Upon or after the occurrence of any Event of Default and pursuant to the terms of the Intercreditor Agreement, all dividends and other distributions payable by any Company on account of any of the Pledged Collateral shall be paid to Agent and any such sum received by Pledgor shall be deemed to be held by Pledgor in trust for the benefit of Agent and the other Secured Parties and shall be forthwith turned over to Agent for application by Agent to the Secured Obligations in the manner authorized by the Notes Amendment Documents.

5. Representations and Warranties of Pledgor. Pledgor hereby represents and warrants to Agent and the other Secured Parties as follows (which representations and warranties shall be deemed continuing): (a) Pledgor is the legal and beneficial owner of the Pledged Collateral identified on Annex A; (b) all of the Equity Interests have been duly and validly issued, are fully paid and nonassessable, and are owned by Pledgor free of any Liens except for Agent’s security interest hereunder and the Permitted Liens; (c) the Pledged Collateral constitutes the percentage of the issued and outstanding Equity Interests of each of the Companies identified on Annex A hereto; (d) there are no contractual or charter restrictions upon the voting rights or upon the transfer of any of the Pledged Collateral; (e) Except as required under the Intercreditor Agreement, Pledgor has the right to vote, pledge and grant a security interest in or otherwise transfer the Pledged Collateral without the consent of any other Person and free of any Liens and applicable restrictions imposed by any governmental authority, and without any restriction under the organizational documents of Pledgor or any Company or any agreement among Pledgor’s or any Company’s shareholders, partners or members; (f) this Agreement has been duly authorized, executed and delivered by Pledgor and constitutes a legal, valid and binding obligation of Pledgor, enforceable in accordance with its terms except to the extent that the enforceability thereof may be limited by bankruptcy, insolvency or other similar laws of general application affecting the enforcement of creditors’ rights; (g) the execution, delivery and performance by Pledgor of this Agreement and the exercise by Agent of its rights and remedies hereunder do not and will not result in the violation of any of the organizational documents of Pledgor, any agreement, indenture, instrument or law by which Pledgor or any Company is bound or to which Pledgor or any Company is subject (except that Pledgor makes no representation or warranty with respect to Agent’s prospective compliance with any federal or state laws or regulations governing the sale or exchange of securities); (h) no consent, filing, approval, registration or recording is required (1) for the pledge by Pledgor of its respective portion of the Pledged Collateral pursuant to this Agreement or (2) except for the filing of an appropriate UCC financing statement, to perfect the Lien created by this Agreement (to the extent that a Lien created by this Agreement can be perfected by filing a financing statement); (i) none of the Pledged Collateral is held or maintained in the form of a securities entitlement or credited to any securities account; and (j) if the Pledged Collateral is certificated, Pledgor shall cause such certificates or other documents evidencing or representing such Pledged Collateral, accompanied by Powers, all in form and substance satisfactory to Agent and Required Holders to be delivered to Agent.

6. Affirmative Covenants of Pledgor. Until all of the Secured Obligations are paid in full, Pledgor covenants that it will: (a) warrant and defend at its own expense Agent’s right, title and security interest in and to the Pledged Collateral against the claims of any Person; (b) promptly deliver to Agent all written notices with respect to the Pledged Collateral, and promptly give written notice to Agent of any other notices received by Pledgor with respect to the Pledged Collateral; (c) promptly deliver to Agent to hold under this Agreement any Equity Interests of any Company subsequently acquired by Pledgor, whether acquired by Pledgor by virtue of the exercise of any options included within the Pledged Collateral or otherwise (which Equity Interests, whether or not delivered, shall be deemed to be a part of the Pledged Collateral); (d) if any of the Pledged Collateral constituting membership interests in a limited liability company or general or limited partnership interests in a limited partnership or limited liability partnership is hereafter designated by the relevant Company as a “security” under (and as defined in) Article 8 of the UCC, cause such Pledged Collateral to be certificated and deliver to Agent all certificates evidencing such Pledged Collateral, accompanied by Powers, all in form and substance satisfactory to Agent and Required Holders; and (e) if at any time hereafter any of the Pledged Collateral that is not currently certificated becomes certificated, deliver all certificates or other documents evidencing or representing the Pledged Collateral to Agent, accompanied by Powers, all in form and substance satisfactory to Agent and Required Holders.

7. Negative Covenants of Pledgor. Until the Secured Obligations are paid in full, Pledgor covenants that it will not, without the prior written consent of Agent and Required Holders, (a) sell, convey or otherwise dispose of any of the Pledged Collateral or any interest therein other than as permitted under the Notes Amendment Documents; (b) grant or permit to exist any Lien whatsoever upon or with respect to any of the Pledged Collateral or the proceeds thereof, other than the security interest created hereby; (c) consent to the issuance by any Company of any new Equity Interests; (d) consent to any merger or other consolidation of any Company with or into any corporation or other entity other than as permitted under the Notes Amendment Documents; (e) cause any Pledged Collateral to be held or maintained in the form of a security entitlement or credited to any securities account; (f) designate, or cause any Company to designate, any of the Pledged Collateral constituting membership interests in a limited liability company or general or limited partnership interests in a limited partnership or limited liability partnership as a “security” under Article 8 of the UCC, unless such Company has caused such Pledged Collateral to become certificated and has complied with the requirements of Section 6(e) hereof with respect to such Pledged Collateral; (g) evidence, or permit any Company to evidence, any of the Pledged Collateral that is not currently certificated, with any certificates, instruments or other writings, unless such Company has complied with the provisions of Section 6(e) of this Agreement; or (h) consent to or permit any amendment of the organizational documents of any Company that would restrict Pledgor’s right to vote, pledge or grant a security interest in or otherwise transfer its respective portion of the Pledged Collateral.

8. Irrevocable Authorization and Instruction to Companies. To the extent that any portion of the Pledged Collateral might now or hereafter consist of uncertificated securities within the meaning of Article 8 of the UCC, Pledgor irrevocably authorizes and instructs each Company to comply with any instruction received by such Company from Agent with respect to such Pledged Collateral without any other or further instructions from or consent of Pledgor, and Pledgor agrees that each Company shall be fully protected in so complying; provided, however, that Agent agrees that Agent will not issue or deliver any such instructions to any Company except upon or after the occurrence of an Event of Default.

9. Subsequent Changes Affecting Pledged Collateral. Pledgor hereby represents to Agent that Pledgor has made its own arrangements for keeping informed of changes or potential changes affecting the Pledged Collateral (including rights to convert, rights to subscribe, payment of dividends and distributions, reorganization or other exchanges, tender offers and voting rights), and Pledgor hereby agrees that Agent shall have no responsibility or liability for informing Pledgor of any such changes or potential changes or for taking any action or omitting to take any action with respect thereto. Agent may, at any time that an Event of Default exists, at its option and without notice to Pledgor, transfer or register the Pledged Collateral or any portion thereof into its or its nominee’s name with or without any indication that such Pledged Collateral is subject to the security interest hereunder.

10. Equity Interest Adjustments. If during the term of this Agreement any dividend, reclassification, readjustment or other change is declared or made in the capital structure of any of the Companies, or any option included within the Pledged Collateral is exercised, or both, all new, substituted and additional Equity Interests or other securities issued by reason of any such change or exercise shall, if received by Pledgor, be held in trust for the Secured Parties’ benefit and shall be promptly delivered to and held by Agent under the terms of this Agreement in the same manner as the Pledged Collateral originally pledged hereunder.

11. Warrants, Options and Rights. If during the term of this Agreement subscription warrants or any other rights or options are issued or exercised by Pledgor in connection with the Pledged Collateral, then such warrants, rights and options shall be promptly assigned by Pledgor to Agent and all certificates evidencing new Equity Interests or other securities so acquired by Pledgor shall be promptly delivered to Agent to be held under the terms of this Agreement in the same manner as the Pledged Collateral originally pledged hereunder.

12. Registration. If Agent determines that it is required to register under or otherwise comply in any way with the Securities Act of 1933, as amended from time to time (the “Securities Act”) or any similar federal or state law with respect to the securities, if any, included in the Pledged Collateral prior to sale thereof by Agent, then upon or after the occurrence of any Event of Default, Pledgor will use its best efforts to cause any such registration to be effectively made, at no expense to Agent, and to continue such registration effective for such time as may be necessary in the reasonable opinion of Agent and Required Holders, and will reimburse Agent for any out-of-pocket expense incurred by Agent, including reasonable attorneys’ fees and accountants’ fees and expenses, in connection therewith.

13. Consent. Pledgor hereby consents that from time to time, before or after the occurrence or existence of any default or Event of Default, with or without notice to or assent from Pledgor, any other security at any time held by or available to Agent for any of the Secured Obligations may be exchanged, surrendered, or released, and any of the Secured Obligations may be changed, altered, renewed, extended, continued, surrendered, compromised, waived or released, in whole or in part, as Agent may see fit, and Pledgor shall remain bound under this Agreement and under the other Notes Amendment Documents notwithstanding any such exchange, surrender, release, alteration, renewal, extension, continuance, compromise, waiver or inaction, extension of further credit or other dealing.

14. Remedies Upon Default. Upon or after the occurrence of any Event of Default and subject to the terms of the Intercreditor Agreement, (i) Agent shall have, in addition to any other rights given by law or the rights given hereunder or under each of the other Notes Amendment Documents, all of the rights and remedies with respect to the Pledged Collateral of a secured party under the UCC and (ii) Agent may cause all or any part of the Equity Interests held by it to be transferred into its name or the name of its nominee or nominees. In addition, upon or at any time after the occurrence of an Event of Default, Agent may sell or cause the Pledged Collateral, or any part thereof, which shall then be or shall thereafter come into Agent’s possession or custody, to be sold at any broker’s board or at public or private sale, in one or more sales or lots, at such price as Agent may deem best, and for cash or on credit or for future delivery, and the purchaser of any or all of the Pledged Collateral so sold shall thereafter hold the same absolutely, free from any claim, encumbrance or right of any kind whatsoever of Pledgor or arising through Pledgor. If any of the Pledged Collateral is sold by Agent upon credit or for future delivery, Agent shall not be liable for the failure of the purchaser to pay the same and in such event Agent may resell such Pledged Collateral. Unless the Pledged Collateral threatens to decline speedily in value or is or becomes of a type sold on a recognized market, Agent will give the applicable Pledgor reasonable notice of the time and place of any public sale thereof, or of the time after which any private sale or other intended disposition is to be made. Any sale of the Pledged Collateral conducted in conformity with reasonable commercial practices of banks, insurance companies or other financial institutions disposing of property similar to the Pledged Collateral shall be deemed to be commercially reasonable. Any requirements of reasonable notice shall be met if such notice is mailed to the applicable Pledgor, as provided in Section 22 below, at least ten (10) days before the time of the sale or disposition. Any other requirement of notice, demand or advertisement for sale is, to the fullest extent permitted by applicable law, waived. Agent may, in its own name, or in the name of a designee or nominee, buy at any public sale of the Pledged Collateral and, if permitted by applicable law, buy at any private sale thereof. Pledgor will pay to Agent on demand all expenses (including court costs and reasonable attorneys’ fees and expenses) of, or incident to, the enforcement of any of the provisions hereof and all other charges due against the Pledged Collateral, including taxes, assessments or Liens upon the Pledged Collateral and any expenses, including transfer or other taxes, arising in connection with any sale, transfer or other disposition of Pledged Collateral. In connection with any sale of Pledged Collateral by Agent, Agent shall have the right to execute any document or form, in its name or in the name of Pledgor, that may be necessary or desirable in connection with such sale, including Form 144 promulgated by the Securities and Exchange Commission. In view of the fact that federal and state securities laws may impose certain restrictions on the method by which a sale of the Pledged Collateral may be effected after an Event of Default, Pledgor agrees that Agent may, from time to time, attempt to sell all or any part of the Pledged Collateral by means of a private placement restricting the bidders and prospective purchasers to those who will represent and agree that they are purchasing for investment only and not for distribution. Pledgor agrees that any such private sales may be at prices and other terms less favorable to the seller than if sold at public sales and that such private sales shall not by reason thereof be deemed not to have been made in a commercially reasonable manner. Agent shall be under no obligation to delay a sale of any of the Pledged Collateral for the period of time necessary to permit the issuer of such securities to register such securities for public sale under the Securities Act even if the issuer would agree to do so. Agent shall apply the cash proceeds actually received from any sale or other disposition to the reasonable expenses of retaking, holding, preparing for sale, selling and the like, to reasonable attorneys’ fees, and all legal expenses, travel and other expenses that might be incurred by Agent in attempting to collect the Secured Obligations or to enforce this Agreement or in the prosecution or defense of any action or proceeding related to the subject matter of this Agreement; and then to the Secured Obligations in the manner authorized by the Notes Amendment Documents.

15. Redemption; Marshaling. Pledgor hereby waives and releases to the fullest extent permitted by applicable law any right or equity of redemption with respect to the Pledged Collateral before or after a sale conducted pursuant to Section 14 hereof. Pledgor agrees that Agent shall not be required to marshal any present or future security (including this Agreement and the Pledged Collateral pledged hereunder) for, or guaranties of, the Secured Obligations or any of them, or to resort to such security or guaranties in any particular order; and all of Agent’s rights hereunder and in respect of such security and guaranties shall be cumulative and in addition to all other rights, however existing or arising. To the fullest extent that it lawfully may, Pledgor hereby agrees that it will not invoke any law relating to the marshaling of collateral that might cause delay in or impede the enforcement of Agent’s rights under this Agreement or under any other instrument evidencing any of the Secured Obligations or under which any of the Secured Obligations is outstanding or by which any of the Secured Obligations is secured or guaranteed, and to the fullest extent that it lawfully may, Pledgor hereby irrevocably waives the benefits of all such laws.

16. Term. This Agreement shall become effective only when accepted by Agent and, when so accepted, shall constitute a continuing agreement and shall remain in full force and effect until the Secured Obligations are paid in full, at which time this Agreement shall terminate and Agent shall deliver to the Pledgor, at Pledgor’s expense, such of the Pledged Collateral as shall not have been sold or otherwise applied pursuant to this Agreement. Notwithstanding the foregoing, in no event shall any termination of this Agreement terminate any indemnity set forth in this Agreement or any of the other Notes Amendment Documents, all of which indemnities shall survive any termination of this Agreement or any of the other Notes Amendment Documents.

17. Rules and Construction. The singular shall include the plural and vice versa, and any gender shall include any other gender as the text shall indicate. All references to “including” shall mean “including, without limitation.” Each reference in this Agreement to a “corporation” shall also be deemed to include a reference to a limited liability company, limited partnership or limited liability partnership and vice versa, each reference to “shareholders” of a Person shall also be deemed to include a reference to members or partners and vice versa and each reference to “certificate of incorporation” or “articles of incorporation” or “bylaws” shall also be deemed to include a reference to “certificate of formation” or “certificate of limited partnership” and “limited liability company operating agreement” or “limited partnership agreement” or other organizational documents of a limited liability company, limited partnership or limited liability partnership and vice versa.

18. Successors and Assigns. This Agreement shall be binding upon Pledgor and its respective successors and assigns, and shall inure to the benefit of Agent and the other Secured Parties and their respective successors and assigns. This Agreement is fully assignable by any Secured Party without the consent of Pledgor or ICP; provided that this Agreement may not be assigned by Pledgor or ICP without the prior written consent of the Agent.

19. Construction and Applicable Law. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but, if any provision of this Agreement shall be held to be prohibited or invalid under any applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. This Agreement shall be governed by and the rights and liabilities of the parties hereto determined and construed in accordance with the internal laws of the State of New York without regard to its conflicts of law provisions. This Agreement is intended to take effect as a document executed and delivered under seal.

20. Cooperation and Further Assurances. Pledgor agrees that it will cooperate with Agent and will, upon Agent’s request, execute and deliver, or cause to be executed and delivered, all such other powers, instruments, financing statements, certificates, legal opinions and other documents, and will take all such other action as Agent and Required Holders request from time to time, in order to carry out the provisions and purposes hereof, including delivering to Agent, if requested by Agent, irrevocable proxies with respect to the Equity Interests in form satisfactory to Agent and Required Holders. Until receipt thereof, this Agreement shall constitute Pledgor’s proxy to Agent or its nominee to vote all shares of the Equity Interests then registered in Pledgor’s name (subject to Pledgor’s voting rights under Section 3 hereof) upon or after the occurrence of an Event of Default.

21. Agent’s Exoneration. Under no circumstances shall Agent be deemed to assume any responsibility for or obligation or duty with respect to any part or all of the Pledged Collateral of any nature or kind, other than the physical custody thereof, or any matter or proceedings arising out of or relating thereto. Agent shall not be required to take any action of any kind to collect, preserve or protect its or Pledgor’s rights in the Pledged Collateral or against other parties thereto. Agent’s prior recourse to any part or all of the Pledged Collateral shall not constitute a condition of any demand, suit or proceeding for payment or collection of the Secured Obligations.

22. Notices. All notices, requests and demands to or upon any party hereto shall be given in the manner and become effective as stipulated in the Amendment Agreement. Regardless of the manner in which notice is provided, notices may be sent to Agent and Pledgor pursuant to the notice information set forth in the signature pages hereof or to such other address or telephone number as any party may give to the other for such purpose in accordance with this paragraph.

23. Pledgor’s Obligations Not Affected. The obligations of Pledgor hereunder shall remain in full force and effect without regard to, and shall not be impaired by (a) any bankruptcy, insolvency, reorganization, arrangement, readjustment, composition, liquidation or the like of Pledgor; (b) any exercise or nonexercise, or any waiver, by Agent of any right, remedy, power or privilege under or in respect of any of the Secured Obligations or any security thereof (including this Agreement); (c) any amendment to or modification of the Amendment Agreement, the other Notes Amendment Documents or any of the Secured Obligations; (d) any amendment to or modification of any instrument (other than this Agreement) securing any of the Secured Obligations; or (e) the taking of additional security for, or any guaranty of, any of the Secured Obligations or the release or discharge or termination of any security or guaranty for any of the Secured Obligations, regardless of whether or not Pledgor shall have notice or knowledge of any of the foregoing.

24. No Waiver, Etc. No act, failure or delay by Agent shall constitute a waiver of any of its rights and remedies hereunder or otherwise. No single or partial waiver by Agent of any default or Event of Default or right or remedy that Agent might have shall operate as a waiver of any other default, Event of Default, right or remedy or of the same default, Event of Default, right or remedy on a future occasion. Pledgor hereby waives presentment, notice of dishonor and protest of all instruments included in or evidencing any of the Secured Obligations or the Pledged Collateral, and any and all other notices and demands whatsoever (except as expressly provided herein).

25. Section Headings. The section headings herein are for convenience of reference only, and shall not affect in any way the interpretation of any of the provisions hereof.

26. Agent Appointed Attorney-In-Fact. Upon and after the occurrence of an Event of Default, Agent shall be deemed to be Pledgor’s attorney-in-fact, with full power of substitution, for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instrument that Agent reasonably deems necessary or advisable to accomplish the purposes hereof, which appointment is coupled with an interest and is irrevocable. Without limiting the generality of the foregoing, Agent shall have the power to arrange for the transfer, upon or at any time after the occurrence of an Event of Default, of any of the Pledged Collateral on the books of any or all of the Companies to the name of Agent or Agent’s nominee. Pledgor agrees to indemnify and save Agent harmless from and against any liability or damage that Agent might suffer or incur, in the exercise or performance of any of Agent’s powers and duties specifically set forth herein, except to the extent that such liability or damage arises from Agent’s gross negligence or willful misconduct.

27. Use of Proceeds. Pledgor hereby represents and warrants to Agent that none of the proceeds heretofore and hereafter received by it under the Amendment Agreement are for the purpose of purchasing any “margin stock” as that term is defined in either Regulation U promulgated by the Board of Governors of the Federal Reserve System, or refinancing any indebtedness originally incurred to purchase any such “margin stock.”

28. Waiver of Subrogation and Other Claims. Pledgor recognizes that Agent, in exercising its rights and remedies with respect to the Pledged Collateral, may likely be unable to find one or more purchasers thereof if, after the sale of the Pledged Collateral, the Company were, because of any claim based on subrogation or any other theory, liable to Pledgor on account of the sale by Agent of the Pledged Collateral in full or partial satisfaction of the Secured Obligations or liable to Pledgor on account of any indebtedness owing to Pledgor that is subordinated to any or all of the Secured Obligations. Pledgor hereby agrees, therefore, that if Agent sells any of the Pledged Collateral in full or partial satisfaction of the Secured Obligations, Pledgor shall in such case have no right or claim against any Company on account of any such subordinated indebtedness or on the theory that Pledgor has become subrogated to any claim or right of Agent against such Company or on any basis whatsoever, and Pledgor hereby expressly waives and relinquishes, to the fullest extent permitted by applicable law, all such rights and claims against Companies.

29. Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which counterparts taken together shall constitute but one and the same instrument. In proving this Agreement in any judicial proceeding, it shall not be necessary to produce or account for more than one such counterpart signed by the party against whom such enforcement is sought. Any manually-executed signature page delivered by a party by facsimile or other electronic transmission shall be deemed to be an original signature page hereto.

30. WAIVERS. PLEDGOR HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW: NOTICE OF AGENT’S ACCEPTANCE OF THIS AGREEMENT; NOTICE OF EXTENSIONS OF CREDIT, NOTICES ISSUANCES, LOANS, ADVANCES OR OTHER FINANCIAL ASSISTANCE BY SECURED PARTIES TO PLEDGOR; THE RIGHT TO TRIAL BY JURY (WHICH AGENT ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM CONCERNING THIS AGREEMENT OR ANY OF THE PLEDGED COLLATERAL; PRESENTMENT AND DEMAND FOR PAYMENT OF ANY OF THE SECURED OBLIGATIONS; PROTEST AND NOTICE OF DISHONOR OR DEFAULT WITH RESPECT TO ANY OF THE SECURED OBLIGATIONS; AND ALL OTHER NOTICES TO WHICH PLEDGOR MIGHT OTHERWISE BE ENTITLED EXCEPT AS HEREIN OTHERWISE EXPRESSLY PROVIDED.

31. Governing Law; Jurisdiction; Etc.

(a) The laws of the State of New York will govern this Agreement and any claim, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Agreement and the transactions contemplated hereby and thereby.

(b) Pledgor irrevocably and unconditionally agrees that it will not commence any action, litigation or proceeding of any kind whatsoever, whether in law or equity, or whether in contract or tort or otherwise, against any Secured Party in any way relating to this Agreement or the transactions contemplated hereby, in any forum other than the courts of the State of New York sitting in the city of New York, borough of Manhattan, and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, and each of the parties hereto irrevocably and unconditionally submits to the jurisdiction of such courts and agrees that any such action, litigation or proceeding may be brought in any such New York State court or, to the fullest extent permitted by applicable law, in such federal court. Each of the parties hereto agrees that a final judgment in any such action, litigation or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing herein shall affect any right that each Secured Party may otherwise have to bring any action or proceeding relating to this Agreement against Pledgor or its properties in the courts of any jurisdiction.

(c) Pledgor irrevocably and unconditionally waives, to the fullest extent permitted by applicable law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Agreement in any such court referred to in Section 31(b). Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(d) Pledgor irrevocably consents to the service of process in the manner provided for notices in Section 22 and agrees that nothing herein will affect the right of any party hereto to serve process in any other manner permitted by applicable law.

32. Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY. EACH PARTY HERETO (A) CERTIFIES THAT NO AGENT, ATTORNEY, REPRESENTATIVE OR ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF LITIGATION, AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER NOTES AMENDMENT DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION

33. Incorporation of Recitals. Each of the Recitals set forth above are true and correct and are incorporated herein and made a part of this Agreement.

34. Inconsistency with Intercreditor Agreement. In the event of any conflict between the terms of this Agreement and the Intercreditor Agreement, the Intercreditor Agreement shall control.

[Remainder of page intentionally left blank; signatures begin on following page.] 

IN WITNESS WHEREOF, Pledgor has caused this Agreement to be signed, sealed and delivered by its duly authorized representative on the day and year first above written.

Signature page to Noteholder Pledge Agreement (ICP) 

ACKNOWLEDGMENT AND AGREEMENT OF ISSUER

The undersigned (“Issuer”) hereby acknowledges, represents and agrees that: (i) such Issuer has received a true and correct copy of the within and foregoing Pledge Agreement (the “Agreement”) by and among PACIFIC ETHANOL CENTRAL, LLC, a limited liability company organized under the laws of Delaware (“Pledgor”), ILLINOIS CORN PROCESSING, LLC, a limited liability company organized under the laws of Delaware (“ICP”), and CORTLAND CAPITAL MARKET SERVICES LLC, as collateral agent for the benefit of the Noteholders (in such capacity, together with its successors and assigns in such capacity, the “Agent”; together with the Noteholders, the “Secured Parties”); (ii) the Agreement has been duly recorded and noted on the books and records of Issuer and will be maintained as part of such books and records; (iii) the Agreement does not violate any term, condition or covenant of the organizational documents of Issuer, or of any other agreement to which Issuer is a party; (iv) Issuer will comply with written instructions originated by Agent without further consent of Pledgor as the registered owner of Pledgor’s respective portion of the Pledged Collateral; (v) Issuer consents to the execution of the Agreement and to the assignment, transfer and pledge of the Pledged Collateral effected thereby; and (vi) upon and after the occurrence of an Event of Default, Issuer consents to a public or private sale or sales of all or any part of the Pledged Collateral by Agent in accordance with the terms of the Agreement and consents to each purchaser of all or any part of the Pledged Collateral at such sale or sales becoming a shareholder, member, partner or other owner, as applicable, of Issuer thereby entitled to the same rights and privileges and subject to the same duties as the owner of the applicable Pledged Collateral under the organizational documents of Issuer.

Each capitalized term used herein, unless otherwise defined herein, shall have the meaning ascribed to such term in the Agreement. Any manually-executed signature page delivered by a party by facsimile or other electronic transmission shall be deemed to be an original signature page hereto.

[Remainder of page intentionally left blank; signature appears on the following page.]

IN WITNESS WHEREOF, Issuer has executed this Acknowledgment and Agreement of Issuer under seal as of the date of the Agreement referenced above.

[Acknowledgment and Agreement of Issuer]

Exhibit 10.7

Execution Version

ALL LIENS AND SECURITY INTERESTS EVIDENCED BY THIS AGREEMENT SHALL AT ALL TIMES BE SUBORDINATE AND JUNIOR TO THE LIENS AND SECURITY INTERESTS GRANTED TO CoBank, ACB, a federally-chartered instrumentality of the United States, PURSUANT TO that certain Security Agreement dated as of March 20, 2019 (AS AMENDED FROM TIME TO TIME) MADE BY gRANTORS (dEFINED BELOW) IN FAVOR OF SENIOR AGENT (DEFINED BELOW) AND SUBJECT TO THE TERMS OF THAT CERTAIN INTERCREDITOR AGREEMENT DATED AS OF EVEN DATE HEREWITH (AS AMENDED FROM TIME TO TIME) BY AND AMONG SENIOR AGENT, GRANTORS, AGENT (DEFINED BELOW), AND THE OTHER PARTIES PARTY THERETO.

PLEDGE AGREEMENT

THIS PLEDGE AGREEMENT (as amended, supplemented or otherwise modified from time to time in accordance with the provisions hereof, this “Agreement”) is made on March 20, 2020 by and among PACIFIC ETHANOL CENTRAL, LLC, a limited liability company organized under the laws of Delaware (“Pledgor”), PACIFIC ETHANOL PEKIN, LLC, a limited liability company organized under the laws of Delaware (“Pekin”), and CORTLAND PRODUCTS CORP., as collateral agent for the benefit of the Noteholders (in such capacity, together with its successors and assigns in such capacity, the “Agent”; together with the Noteholders, the “Secured Parties”).

RECITALS:

WHEREAS, Pacific Ethanol, Inc., a Delaware corporation (“PEI”), issued certain secured promissory notes in the aggregate original principal amount of $55,000,000 on December 15, 2016 (the “Initial Notes”) pursuant to a Note Purchase Agreement dated as of December 12, 2016 by and among PEI and the Investors identified therein (as amended, restated, supplemented or otherwise modified from time to time, including amendments and restatements thereof in its entirety, the “Initial Purchase Agreement”);

WHEREAS, PEI and certain Investors identified therein are parties to a Note Purchase Agreement dated as of June 26, 2017 (as amended, restated, supplemented or otherwise modified from time to time, including amendments and restatements thereof in its entirety, the “Additional Purchase Agreement”), pursuant to which PEI issued $13,948,078 in aggregate original principal amount of senior secured notes due December 15, 2019 (as amended, restated, supplemented or otherwise modified from time to time, the “Additional Notes”).

WHEREAS, the Noteholders are holders of the Initial Notes, the Additional Notes and certain other secured promissory notes issued by PEI on December 16, 2019 (the “Existing Notes”);

WHEREAS, pursuant to that certain Senior Secured Note Amendment Agreement dated as of December 22, 2019 between the Noteholders defined therein and PEI (as amended, restated, supplemented or otherwise modified from time to time, including amendments and restatements thereof in its entirety, the “Amendment Agreement”), the Existing Notes were amended and restated in their entirety (the “Amended Notes,” and together with the Amendment Agreement and the Transaction Documents (as defined in the Initial Noteholder Security Agreement (as defined below)), the “Notes Amendment Documents”);

WHEREAS, Cortland Products Corp. has been appointed by the Noteholders to act as collateral agent under the Notes Amendment Documents (and as successor to Cortland Capital Market Services LLC in such capacity) pursuant to the Initial Noteholder Security Agreement;

WHEREAS, Pledgor, Pekin and CoBank, ACB, a federally-chartered instrumentality of the United States (“Senior Agent”), are party to that certain Pledge Agreement dated as of March 20, 2019 (“Senior Agent Pledge Agreement”), wherein Pledgor granted to Senior Agent a senior security interest in the Pledged Collateral, securing the payment and performance when due of the Secured Obligations (as defined in the Senior Agent Pledge Agreement);

WHEREAS, the Lien granted herein shall be junior in priority to the Lien granted to Senior Agent, as set forth in that certain Intercreditor Agreement dated as of the date hereof (as amended, restated, supplemented or otherwise modified from time to time, “Intercreditor Agreement”) by and among Senior Agent, Agent, PEI and the Grantors party thereto; and

WHEREAS, to secure the obligations of PEI under the Notes Amendment Documents, pursuant to the Notes Amendment Documents, the Pledgor is required to enter into this Agreement.

1. Definitions. Each capitalized term used herein, unless otherwise defined herein, shall have the meaning ascribed to such term in the Amendment Agreement or the Initial Noteholder Security Agreement, as applicable. As used herein, the following terms shall have the following meanings:

“Companies” shall mean each of the entities identified as an “Issuer” on Annex A hereto, and each such entity individually is referred to herein as a “Company”.

“Equity Interests” shall mean all shares of capital stock (whether denominated as common stock or preferred stock), equity interests, beneficial partnership or membership interests, joint venture interests, units, limited liability company interests, participations or other ownership or profit interests in or equivalents (regardless of how designated) of or in a Person (other than an individual), whether voting or non-voting.

“Existing Notes” has the meaning set forth in the Recitals.

“Initial Noteholder Security Agreement” means that certain Security Agreement, dated as of December 15, 2016, by and among the Company, the Noteholders party thereto, and the Agent, as amended by that certain First Amendment to Security Agreement, dated June 30, 2017, by and among the Company, the Noteholders party thereto, and the Agent, that certain Second Amendment to Security Agreement, dated December 22, 2019, by and among the Company, the Noteholders party thereto, and the Agent, and that certain Third Amendment to Security Agreement, dated as of the date hereof, by and among the Company, the Noteholders party thereto, and the Agent, as the same may be further amended, restated, supplemented or otherwise modified from time to time.

“Noteholders” means (x) each Person that is (i) a signatory to the Amendment Agreement and identified as a “Noteholder” on Exhibit A to the Amendment Agreement, (ii) a holder of any of the Notes (as defined in the Amendment Agreement), and (iii) a “Secured Party” party to the Initial Noteholder Security Agreement and (y) any other Person that becomes (i) a holder of any of the Notes pursuant to any permitted assignment or transfer and (ii) a “Secured Party” under the Initial Noteholder Security Agreement pursuant to a Security Agreement Joinder, other than any such Person that ceases to be a party to such agreement pursuant to an assignment of all of its Notes and its rights and obligations under the Transaction Documents (as defined in the Initial Security Agreement).

“Pledged Collateral” shall have the meaning ascribed to it in Section 2 hereof.

“Power” shall have the meaning ascribed to it in Section 2 hereof.

“Secured Obligations” shall mean all obligations of PEI to the Noteholders now or hereafter existing under the Notes Amendment Documents.

2. Pledge; Agent’s Duties; Intercreditor Agreement.

(a) Pledgor hereby pledges, assigns, transfers, sets over and delivers to Agent, and hereby grants to Agent, for the benefit of the Secured Parties, a security interest in, all of the Equity Interests of the Companies now or hereafter held by Pledgor, including the Equity Interests more particularly described on Annex A hereto and all of Pledgor’s options, if any, for the purchase of any Equity Interests of any of the Companies, herewith delivered to Agent, and where certificated, accompanied by powers (“Powers”) duly executed in blank, and all proceeds thereof including, without limitation, all proceeds from the sale of any such Equity Interests and all dividends and distributions at any time payable in connection such Equity Interests (said Equity Interests, Powers, options, and proceeds hereinafter collectively called the “Pledged Collateral”) as security for the due and punctual payment and performance of the Secured Obligations.

(b) Agent shall have no duty with respect to any part or all of the Pledged Collateral of any nature or kind other than the duty to use reasonable care in the safe custody of any tangible items of the Pledged Collateral in its possession (it being agreed that Agent shall be deemed to have exercised reasonable care in the custody and preservation of the Pledged Collateral in its possession if the Pledged Collateral is accorded treatment substantially equal to that which it accords its own property). Without limiting the generality of the foregoing, Agent shall be under no obligation to sell any of the Pledged Collateral or otherwise to take any steps necessary to preserve the value of any of the Pledged Collateral or to preserve rights in the Pledged Collateral against any other Persons, but may do so at its option upon an Event of Default, and all expenses incurred in connection therewith shall be for the sole account of Pledgor.

(c) For the avoidance of doubt, all obligations of Pledgor, and all rights of Agent, hereunder shall be subject to the obligations of the Pledgor and the subordinated rights of Agent under the Intercreditor Agreement.

3. Voting Rights. During the term of this Agreement, and so long as no Event of Default shall have occurred, Pledgor shall have the right to vote all or any portion of the Equity Interests owned by such Pledgor on all corporate and other company questions for all purposes not inconsistent with the terms of this Agreement or any of the other Notes Amendment Documents. To that end, if Agent transfers all or any portion of the Pledged Collateral into its name or the name of its nominee, to the extent authorized to do so under this Agreement or any of the other Notes Amendment Documents, Agent shall, upon the request of a Pledgor, unless an Event of Default shall have occurred, execute and deliver or cause to be executed and delivered to Pledgor, proxies with respect to the applicable portion of the Pledged Collateral. Pledgor hereby grants to Agent, effective upon or after the occurrence of an Event of Default and pursuant to the terms of the Intercreditor Agreement, an IRREVOCABLE PROXY pursuant to which Agent shall be entitled (but shall not be obligated) to exercise all voting powers pertaining to the Pledged Collateral, including to call and attend all meetings of the shareholders, members or partners of the Companies to be held from time to time with full power to act and vote in the name, place and stead of Pledgor (whether or not the Equity Interests shall have been transferred into its name or the name of its nominee or nominees), give all consents, waivers and ratifications in respect of the Pledged Collateral and otherwise act with respect thereto as though it were the outright owner thereof, and any and all proxies theretofore executed by Pledgor shall terminate and thereafter be null and void and of no effect whatsoever.

4. Collection of Dividend Payments. During the term of this Agreement, and so long as there no Event of Default shall exist, Pledgor shall have the right to receive and retain any and all dividends and other distributions payable by any Company to Pledgor on account of any of the Pledged Collateral except as otherwise provided in the Notes Amendment Documents. Upon or after the occurrence of any Event of Default and pursuant to the terms of the Intercreditor Agreement, all dividends and other distributions payable by any Company on account of any of the Pledged Collateral shall be paid to Agent and any such sum received by Pledgor shall be deemed to be held by Pledgor in trust for the benefit of Agent and the other Secured Parties and shall be forthwith turned over to Agent for application by Agent to the Secured Obligations in the manner authorized by the Notes Amendment Documents.

5. Representations and Warranties of Pledgor. Pledgor hereby represents and warrants to Agent and the other Secured Parties as follows (which representations and warranties shall be deemed continuing): (a) Pledgor is the legal and beneficial owner of the Pledged Collateral identified on Annex A; (b) all of the Equity Interests have been duly and validly issued, are fully paid and nonassessable, and are owned by Pledgor free of any Liens except for Agent’s security interest hereunder and the Permitted Liens; (c) the Pledged Collateral constitutes the percentage of the issued and outstanding Equity Interests of each of the Companies identified on Annex A hereto; (d) there are no contractual or charter restrictions upon the voting rights or upon the transfer of any of the Pledged Collateral; (e) Except as required under the Intercreditor Agreement, Pledgor has the right to vote, pledge and grant a security interest in or otherwise transfer the Pledged Collateral without the consent of any other Person and free of any Liens and applicable restrictions imposed by any governmental authority, and without any restriction under the organizational documents of Pledgor or any Company or any agreement among Pledgor’s or any Company’s shareholders, partners or members; (f) this Agreement has been duly authorized, executed and delivered by Pledgor and constitutes a legal, valid and binding obligation of Pledgor, enforceable in accordance with its terms except to the extent that the enforceability thereof may be limited by bankruptcy, insolvency or other similar laws of general application affecting the enforcement of creditors’ rights; (g) the execution, delivery and performance by Pledgor of this Agreement and the exercise by Agent of its rights and remedies hereunder do not and will not result in the violation of any of the organizational documents of Pledgor, any agreement, indenture, instrument or law by which Pledgor or any Company is bound or to which Pledgor or any Company is subject (except that Pledgor makes no representation or warranty with respect to Agent’s prospective compliance with any federal or state laws or regulations governing the sale or exchange of securities); (h) no consent, filing, approval, registration or recording is required (1) for the pledge by Pledgor of its respective portion of the Pledged Collateral pursuant to this Agreement or (2) except for the filing of an appropriate UCC financing statement, to perfect the Lien created by this Agreement (to the extent that a Lien created by this Agreement can be perfected by filing a financing statement); (i) none of the Pledged Collateral is held or maintained in the form of a securities entitlement or credited to any securities account; and (j) if the Pledged Collateral is certificated, Pledgor shall cause such certificates or other documents evidencing or representing such Pledged Collateral, accompanied by Powers, all in form and substance satisfactory to Agent and Required Holders to be delivered to Agent.

6. Affirmative Covenants of Pledgor. Until all of the Secured Obligations are paid in full, Pledgor covenants that it will: (a) warrant and defend at its own expense Agent’s right, title and security interest in and to the Pledged Collateral against the claims of any Person; (b) promptly deliver to Agent all written notices with respect to the Pledged Collateral, and promptly give written notice to Agent of any other notices received by Pledgor with respect to the Pledged Collateral; (c) promptly deliver to Agent to hold under this Agreement any Equity Interests of any Company subsequently acquired by Pledgor, whether acquired by Pledgor by virtue of the exercise of any options included within the Pledged Collateral or otherwise (which Equity Interests, whether or not delivered, shall be deemed to be a part of the Pledged Collateral); (d) if any of the Pledged Collateral constituting membership interests in a limited liability company or general or limited partnership interests in a limited partnership or limited liability partnership is hereafter designated by the relevant Company as a “security” under (and as defined in) Article 8 of the UCC, cause such Pledged Collateral to be certificated and deliver to Agent all certificates evidencing such Pledged Collateral, accompanied by Powers, all in form and substance satisfactory to Agent and Required Holders; and (e) if at any time hereafter any of the Pledged Collateral that is not currently certificated becomes certificated, deliver all certificates or other documents evidencing or representing the Pledged Collateral to Agent, accompanied by Powers, all in form and substance satisfactory to Agent and Required Holders.

7. Negative Covenants of Pledgor. Until the Secured Obligations are paid in full, Pledgor covenants that it will not, without the prior written consent of Agent and Required Holders, (a) sell, convey or otherwise dispose of any of the Pledged Collateral or any interest therein other than as permitted under the Notes Amendment Documents; (b) grant or permit to exist any Lien whatsoever upon or with respect to any of the Pledged Collateral or the proceeds thereof, other than the security interest created hereby; (c) consent to the issuance by any Company of any new Equity Interests; (d) consent to any merger or other consolidation of any Company with or into any corporation or other entity other than as permitted under the Notes Amendment Documents; (e) cause any Pledged Collateral to be held or maintained in the form of a security entitlement or credited to any securities account; (f) designate, or cause any Company to designate, any of the Pledged Collateral constituting membership interests in a limited liability company or general or limited partnership interests in a limited partnership or limited liability partnership as a “security” under Article 8 of the UCC, unless such Company has caused such Pledged Collateral to become certificated and has complied with the requirements of Section 6(e) hereof with respect to such Pledged Collateral; (g) evidence, or permit any Company to evidence, any of the Pledged Collateral that is not currently certificated, with any certificates, instruments or other writings, unless such Company has complied with the provisions of Section 6(e) of this Agreement; or (h) consent to or permit any amendment of the organizational documents of any Company that would restrict Pledgor’s right to vote, pledge or grant a security interest in or otherwise transfer its respective portion of the Pledged Collateral.

8. Irrevocable Authorization and Instruction to Companies. To the extent that any portion of the Pledged Collateral might now or hereafter consist of uncertificated securities within the meaning of Article 8 of the UCC, Pledgor irrevocably authorizes and instructs each Company to comply with any instruction received by such Company from Agent with respect to such Pledged Collateral without any other or further instructions from or consent of Pledgor, and Pledgor agrees that each Company shall be fully protected in so complying; provided, however, that Agent agrees that Agent will not issue or deliver any such instructions to any Company except upon or after the occurrence of an Event of Default.

9. Subsequent Changes Affecting Pledged Collateral. Pledgor hereby represents to Agent that Pledgor has made its own arrangements for keeping informed of changes or potential changes affecting the Pledged Collateral (including rights to convert, rights to subscribe, payment of dividends and distributions, reorganization or other exchanges, tender offers and voting rights), and Pledgor hereby agrees that Agent shall have no responsibility or liability for informing Pledgor of any such changes or potential changes or for taking any action or omitting to take any action with respect thereto. Agent may, at any time that an Event of Default exists, at its option and without notice to Pledgor, transfer or register the Pledged Collateral or any portion thereof into its or its nominee’s name with or without any indication that such Pledged Collateral is subject to the security interest hereunder.

10. Equity Interest Adjustments. If during the term of this Agreement any dividend, reclassification, readjustment or other change is declared or made in the capital structure of any of the Companies, or any option included within the Pledged Collateral is exercised, or both, all new, substituted and additional Equity Interests or other securities issued by reason of any such change or exercise shall, if received by Pledgor, be held in trust for the Secured Parties’ benefit and shall be promptly delivered to and held by Agent under the terms of this Agreement in the same manner as the Pledged Collateral originally pledged hereunder.

11. Warrants, Options and Rights. If during the term of this Agreement subscription warrants or any other rights or options are issued or exercised by Pledgor in connection with the Pledged Collateral, then such warrants, rights and options shall be promptly assigned by Pledgor to Agent and all certificates evidencing new Equity Interests or other securities so acquired by Pledgor shall be promptly delivered to Agent to be held under the terms of this Agreement in the same manner as the Pledged Collateral originally pledged hereunder.

12. Registration. If Agent determines that it is required to register under or otherwise comply in any way with the Securities Act of 1933, as amended from time to time (the “Securities Act”) or any similar federal or state law with respect to the securities, if any, included in the Pledged Collateral prior to sale thereof by Agent, then upon or after the occurrence of any Event of Default, Pledgor will use its best efforts to cause any such registration to be effectively made, at no expense to Agent, and to continue such registration effective for such time as may be necessary in the reasonable opinion of Agent and Required Holders, and will reimburse Agent for any out-of-pocket expense incurred by Agent, including reasonable attorneys’ fees and accountants’ fees and expenses, in connection therewith.

13. Consent. Pledgor hereby consents that from time to time, before or after the occurrence or existence of any default or Event of Default, with or without notice to or assent from Pledgor, any other security at any time held by or available to Agent for any of the Secured Obligations may be exchanged, surrendered, or released, and any of the Secured Obligations may be changed, altered, renewed, extended, continued, surrendered, compromised, waived or released, in whole or in part, as Agent may see fit, and Pledgor shall remain bound under this Agreement and under the other Notes Amendment Documents notwithstanding any such exchange, surrender, release, alteration, renewal, extension, continuance, compromise, waiver or inaction, extension of further credit or other dealing.

14. Remedies Upon Default. Upon or after the occurrence of any Event of Default and subject to the terms of the Intercreditor Agreement, (i) Agent shall have, in addition to any other rights given by law or the rights given hereunder or under each of the other Notes Amendment Documents, all of the rights and remedies with respect to the Pledged Collateral of a secured party under the UCC and (ii) Agent may cause all or any part of the Equity Interests held by it to be transferred into its name or the name of its nominee or nominees. In addition, upon or at any time after the occurrence of an Event of Default, Agent may sell or cause the Pledged Collateral, or any part thereof, which shall then be or shall thereafter come into Agent’s possession or custody, to be sold at any broker’s board or at public or private sale, in one or more sales or lots, at such price as Agent may deem best, and for cash or on credit or for future delivery, and the purchaser of any or all of the Pledged Collateral so sold shall thereafter hold the same absolutely, free from any claim, encumbrance or right of any kind whatsoever of Pledgor or arising through Pledgor. If any of the Pledged Collateral is sold by Agent upon credit or for future delivery, Agent shall not be liable for the failure of the purchaser to pay the same and in such event Agent may resell such Pledged Collateral. Unless the Pledged Collateral threatens to decline speedily in value or is or becomes of a type sold on a recognized market, Agent will give the applicable Pledgor reasonable notice of the time and place of any public sale thereof, or of the time after which any private sale or other intended disposition is to be made. Any sale of the Pledged Collateral conducted in conformity with reasonable commercial practices of banks, insurance companies or other financial institutions disposing of property similar to the Pledged Collateral shall be deemed to be commercially reasonable. Any requirements of reasonable notice shall be met if such notice is mailed to the applicable Pledgor, as provided in Section 22 below, at least ten (10) days before the time of the sale or disposition. Any other requirement of notice, demand or advertisement for sale is, to the fullest extent permitted by applicable law, waived. Agent may, in its own name, or in the name of a designee or nominee, buy at any public sale of the Pledged Collateral and, if permitted by applicable law, buy at any private sale thereof. Pledgor will pay to Agent on demand all expenses (including court costs and reasonable attorneys’ fees and expenses) of, or incident to, the enforcement of any of the provisions hereof and all other charges due against the Pledged Collateral, including taxes, assessments or Liens upon the Pledged Collateral and any expenses, including transfer or other taxes, arising in connection with any sale, transfer or other disposition of Pledged Collateral. In connection with any sale of Pledged Collateral by Agent, Agent shall have the right to execute any document or form, in its name or in the name of Pledgor, that may be necessary or desirable in connection with such sale, including Form 144 promulgated by the Securities and Exchange Commission. In view of the fact that federal and state securities laws may impose certain restrictions on the method by which a sale of the Pledged Collateral may be effected after an Event of Default, Pledgor agrees that Agent may, from time to time, attempt to sell all or any part of the Pledged Collateral by means of a private placement restricting the bidders and prospective purchasers to those who will represent and agree that they are purchasing for investment only and not for distribution. Pledgor agrees that any such private sales may be at prices and other terms less favorable to the seller than if sold at public sales and that such private sales shall not by reason thereof be deemed not to have been made in a commercially reasonable manner. Agent shall be under no obligation to delay a sale of any of the Pledged Collateral for the period of time necessary to permit the issuer of such securities to register such securities for public sale under the Securities Act even if the issuer would agree to do so. Agent shall apply the cash proceeds actually received from any sale or other disposition to the reasonable expenses of retaking, holding, preparing for sale, selling and the like, to reasonable attorneys’ fees, and all legal expenses, travel and other expenses that might be incurred by Agent in attempting to collect the Secured Obligations or to enforce this Agreement or in the prosecution or defense of any action or proceeding related to the subject matter of this Agreement; and then to the Secured Obligations in the manner authorized by the Notes Amendment Documents.

15. Redemption; Marshaling. Pledgor hereby waives and releases to the fullest extent permitted by applicable law any right or equity of redemption with respect to the Pledged Collateral before or after a sale conducted pursuant to Section 14 hereof. Pledgor agrees that Agent shall not be required to marshal any present or future security (including this Agreement and the Pledged Collateral pledged hereunder) for, or guaranties of, the Secured Obligations or any of them, or to resort to such security or guaranties in any particular order; and all of Agent’s rights hereunder and in respect of such security and guaranties shall be cumulative and in addition to all other rights, however existing or arising. To the fullest extent that it lawfully may, Pledgor hereby agrees that it will not invoke any law relating to the marshaling of collateral that might cause delay in or impede the enforcement of Agent’s rights under this Agreement or under any other instrument evidencing any of the Secured Obligations or under which any of the Secured Obligations is outstanding or by which any of the Secured Obligations is secured or guaranteed, and to the fullest extent that it lawfully may, Pledgor hereby irrevocably waives the benefits of all such laws.

16. Term. This Agreement shall become effective only when accepted by Agent and, when so accepted, shall constitute a continuing agreement and shall remain in full force and effect until the Secured Obligations are paid in full, at which time this Agreement shall terminate and Agent shall deliver to the Pledgor, at Pledgor’s expense, such of the Pledged Collateral as shall not have been sold or otherwise applied pursuant to this Agreement. Notwithstanding the foregoing, in no event shall any termination of this Agreement terminate any indemnity set forth in this Agreement or any of the other Notes Amendment Documents, all of which indemnities shall survive any termination of this Agreement or any of the other Notes Amendment Documents.

17. Rules and Construction. The singular shall include the plural and vice versa, and any gender shall include any other gender as the text shall indicate. All references to “including” shall mean “including, without limitation.” Each reference in this Agreement to a “corporation” shall also be deemed to include a reference to a limited liability company, limited partnership or limited liability partnership and vice versa, each reference to “shareholders” of a Person shall also be deemed to include a reference to members or partners and vice versa and each reference to “certificate of incorporation” or “articles of incorporation” or “bylaws” shall also be deemed to include a reference to “certificate of formation” or “certificate of limited partnership” and “limited liability company operating agreement” or “limited partnership agreement” or other organizational documents of a limited liability company, limited partnership or limited liability partnership and vice versa.

18. Successors and Assigns. This Agreement shall be binding upon Pledgor and its respective successors and assigns, and shall inure to the benefit of Agent and the other Secured Parties and their respective successors and assigns. This Agreement is fully assignable by any Secured Party without the consent of Pledgor or Pekin; provided that this Agreement may not be assigned by Pledgor or Pekin without the prior written consent of the Agent.

19. Construction and Applicable Law. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but, if any provision of this Agreement shall be held to be prohibited or invalid under any applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. This Agreement shall be governed by and the rights and liabilities of the parties hereto determined and construed in accordance with the internal laws of the State of New York without regard to its conflicts of law provisions. This Agreement is intended to take effect as a document executed and delivered under seal.

20. Cooperation and Further Assurances. Pledgor agrees that it will cooperate with Agent and will, upon Agent’s request, execute and deliver, or cause to be executed and delivered, all such other powers, instruments, financing statements, certificates, legal opinions and other documents, and will take all such other action as Agent and Required Holders request from time to time, in order to carry out the provisions and purposes hereof, including delivering to Agent, if requested by Agent, irrevocable proxies with respect to the Equity Interests in form satisfactory to Agent and Required Holders. Until receipt thereof, this Agreement shall constitute Pledgor’s proxy to Agent or its nominee to vote all shares of the Equity Interests then registered in Pledgor’s name (subject to Pledgor’s voting rights under Section 3 hereof) upon or after the occurrence of an Event of Default.

21. Agent’s Exoneration. Under no circumstances shall Agent be deemed to assume any responsibility for or obligation or duty with respect to any part or all of the Pledged Collateral of any nature or kind, other than the physical custody thereof, or any matter or proceedings arising out of or relating thereto. Agent shall not be required to take any action of any kind to collect, preserve or protect its or Pledgor’s rights in the Pledged Collateral or against other parties thereto. Agent’s prior recourse to any part or all of the Pledged Collateral shall not constitute a condition of any demand, suit or proceeding for payment or collection of the Secured Obligations.

22. Notices. All notices, requests and demands to or upon any party hereto shall be given in the manner and become effective as stipulated in the Amendment Agreement. Regardless of the manner in which notice is provided, notices may be sent to Agent and Pledgor pursuant to the notice information set forth in the signature pages hereof or to such other address or telephone number as any party may give to the other for such purpose in accordance with this paragraph.

23. Pledgor’s Obligations Not Affected. The obligations of Pledgor hereunder shall remain in full force and effect without regard to, and shall not be impaired by (a) any bankruptcy, insolvency, reorganization, arrangement, readjustment, composition, liquidation or the like of Pledgor; (b) any exercise or nonexercise, or any waiver, by Agent of any right, remedy, power or privilege under or in respect of any of the Secured Obligations or any security thereof (including this Agreement); (c) any amendment to or modification of the Amendment Agreement, the other Notes Amendment Documents or any of the Secured Obligations; (d) any amendment to or modification of any instrument (other than this Agreement) securing any of the Secured Obligations; or (e) the taking of additional security for, or any guaranty of, any of the Secured Obligations or the release or discharge or termination of any security or guaranty for any of the Secured Obligations, regardless of whether or not Pledgor shall have notice or knowledge of any of the foregoing.

24. No Waiver, Etc. No act, failure or delay by Agent shall constitute a waiver of any of its rights and remedies hereunder or otherwise. No single or partial waiver by Agent of any default or Event of Default or right or remedy that Agent might have shall operate as a waiver of any other default, Event of Default, right or remedy or of the same default, Event of Default, right or remedy on a future occasion. Pledgor hereby waives presentment, notice of dishonor and protest of all instruments included in or evidencing any of the Secured Obligations or the Pledged Collateral, and any and all other notices and demands whatsoever (except as expressly provided herein).

25. Section Headings. The section headings herein are for convenience of reference only, and shall not affect in any way the interpretation of any of the provisions hereof.

26. Agent Appointed Attorney-In-Fact. Upon and after the occurrence of an Event of Default, Agent shall be deemed to be Pledgor’s attorney-in-fact, with full power of substitution, for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instrument that Agent reasonably deems necessary or advisable to accomplish the purposes hereof, which appointment is coupled with an interest and is irrevocable. Without limiting the generality of the foregoing, Agent shall have the power to arrange for the transfer, upon or at any time after the occurrence of an Event of Default, of any of the Pledged Collateral on the books of any or all of the Companies to the name of Agent or Agent’s nominee. Pledgor agrees to indemnify and save Agent harmless from and against any liability or damage that Agent might suffer or incur, in the exercise or performance of any of Agent’s powers and duties specifically set forth herein, except to the extent that such liability or damage arises from Agent’s gross negligence or willful misconduct.

27. Use of Proceeds. Pledgor hereby represents and warrants to Agent that none of the proceeds heretofore and hereafter received by it under the Amendment Agreement are for the purpose of purchasing any “margin stock” as that term is defined in either Regulation U promulgated by the Board of Governors of the Federal Reserve System, or refinancing any indebtedness originally incurred to purchase any such “margin stock.”

28. Waiver of Subrogation and Other Claims. Pledgor recognizes that Agent, in exercising its rights and remedies with respect to the Pledged Collateral, may likely be unable to find one or more purchasers thereof if, after the sale of the Pledged Collateral, the Company were, because of any claim based on subrogation or any other theory, liable to Pledgor on account of the sale by Agent of the Pledged Collateral in full or partial satisfaction of the Secured Obligations or liable to Pledgor on account of any indebtedness owing to Pledgor that is subordinated to any or all of the Secured Obligations. Pledgor hereby agrees, therefore, that if Agent sells any of the Pledged Collateral in full or partial satisfaction of the Secured Obligations, Pledgor shall in such case have no right or claim against any Company on account of any such subordinated indebtedness or on the theory that Pledgor has become subrogated to any claim or right of Agent against such Company or on any basis whatsoever, and Pledgor hereby expressly waives and relinquishes, to the fullest extent permitted by applicable law, all such rights and claims against Companies.

29. Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which counterparts taken together shall constitute but one and the same instrument. In proving this Agreement in any judicial proceeding, it shall not be necessary to produce or account for more than one such counterpart signed by the party against whom such enforcement is sought. Any manually-executed signature page delivered by a party by facsimile or other electronic transmission shall be deemed to be an original signature page hereto.

30. WAIVERS. PLEDGOR HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW: NOTICE OF AGENT’S ACCEPTANCE OF THIS AGREEMENT; NOTICE OF EXTENSIONS OF CREDIT, NOTICES ISSUANCES, LOANS, ADVANCES OR OTHER FINANCIAL ASSISTANCE BY SECURED PARTIES TO PLEDGOR; THE RIGHT TO TRIAL BY JURY (WHICH AGENT ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM CONCERNING THIS AGREEMENT OR ANY OF THE PLEDGED COLLATERAL; PRESENTMENT AND DEMAND FOR PAYMENT OF ANY OF THE SECURED OBLIGATIONS; PROTEST AND NOTICE OF DISHONOR OR DEFAULT WITH RESPECT TO ANY OF THE SECURED OBLIGATIONS; AND ALL OTHER NOTICES TO WHICH PLEDGOR MIGHT OTHERWISE BE ENTITLED EXCEPT AS HEREIN OTHERWISE EXPRESSLY PROVIDED.

31. Governing Law; Jurisdiction; Etc.

(a) The laws of the State of New York will govern this Agreement and any claim, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Agreement and the transactions contemplated hereby and thereby.

(b) Pledgor irrevocably and unconditionally agrees that it will not commence any action, litigation or proceeding of any kind whatsoever, whether in law or equity, or whether in contract or tort or otherwise, against any Secured Party in any way relating to this Agreement or the transactions contemplated hereby, in any forum other than the courts of the State of New York sitting in the city of New York, borough of Manhattan, and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, and each of the parties hereto irrevocably and unconditionally submits to the jurisdiction of such courts and agrees that any such action, litigation or proceeding may be brought in any such New York State court or, to the fullest extent permitted by applicable law, in such federal court. Each of the parties hereto agrees that a final judgment in any such action, litigation or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing herein shall affect any right that each Secured Party may otherwise have to bring any action or proceeding relating to this Agreement against Pledgor or its properties in the courts of any jurisdiction.

(c) Pledgor irrevocably and unconditionally waives, to the fullest extent permitted by applicable law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Agreement in any such court referred to in Section 31(b). Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(d) Pledgor irrevocably consents to the service of process in the manner provided for notices in Section 22 and agrees that nothing herein will affect the right of any party hereto to serve process in any other manner permitted by applicable law.

32. Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY. EACH PARTY HERETO (A) CERTIFIES THAT NO AGENT, ATTORNEY, REPRESENTATIVE OR ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF LITIGATION, AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER NOTES AMENDMENT DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION

33. Incorporation of Recitals. Each of the Recitals set forth above are true and correct and are incorporated herein and made a part of this Agreement.

34. Inconsistency with Intercreditor Agreement. In the event of any conflict between the terms of this Agreement and the Intercreditor Agreement, the Intercreditor Agreement shall control.

[Remainder of page intentionally left blank; signatures begin on following page.] 

IN WITNESS WHEREOF, Pledgor has caused this Agreement to be signed, sealed and delivered by its duly authorized representative on the day and year first above written.

Signature page to Noteholder Pledge Agreement (Pekin) 

ACKNOWLEDGMENT AND AGREEMENT OF ISSUER

The undersigned (“Issuer”) hereby acknowledges, represents and agrees that: (i) such Issuer has received a true and correct copy of the within and foregoing Pledge Agreement (the “Agreement”) by and among PACIFIC ETHANOL CENTRAL, LLC, a limited liability company organized under the laws of Delaware (“Pledgor”), PACIFIC ETHANOL PEKIN, LLC, a limited liability company organized under the laws of Delaware (“Pekin”), and CORTLAND CAPITAL MARKET SERVICES LLC, as collateral agent for the benefit of the Noteholders (in such capacity, together with its successors and assigns in such capacity, the “Agent”; together with the Noteholders, the “Secured Parties”); (ii) the Agreement has been duly recorded and noted on the books and records of Issuer and will be maintained as part of such books and records; (iii) the Agreement does not violate any term, condition or covenant of the organizational documents of Issuer, or of any other agreement to which Issuer is a party; (iv) Issuer will comply with written instructions originated by Agent without further consent of Pledgor as the registered owner of Pledgor’s respective portion of the Pledged Collateral; (v) Issuer consents to the execution of the Agreement and to the assignment, transfer and pledge of the Pledged Collateral effected thereby; and (vi) upon and after the occurrence of an Event of Default, Issuer consents to a public or private sale or sales of all or any part of the Pledged Collateral by Agent in accordance with the terms of the Agreement and consents to each purchaser of all or any part of the Pledged Collateral at such sale or sales becoming a shareholder, member, partner or other owner, as applicable, of Issuer thereby entitled to the same rights and privileges and subject to the same duties as the owner of the applicable Pledged Collateral under the organizational documents of Issuer.

Each capitalized term used herein, unless otherwise defined herein, shall have the meaning ascribed to such term in the Agreement. Any manually-executed signature page delivered by a party by facsimile or other electronic transmission shall be deemed to be an original signature page hereto.

[Remainder of page intentionally left blank; signature appears on the following page.] 

IN WITNESS WHEREOF, Issuer has executed this Acknowledgment and Agreement of Issuer under seal as of the date of the Agreement referenced above.

[Acknowledgment and Agreement of Issuer]

Exhibit 10.8

Execution Version

ALL LIENS AND SECURITY INTERESTS EVIDENCED BY THIS AGREEMENT SHALL AT ALL TIMES BE SUBORDINATE AND JUNIOR TO THE LIENS AND SECURITY INTERESTS GRANTED TO CoBank, ACB, a federally-chartered instrumentality of the United States, PURSUANT TO that certain Security Agreement dated as of March 20, 2019 (AS AMENDED FROM TIME TO TIME) MADE BY gRANTORS (dEFINED BELOW) IN FAVOR OF SENIOR AGENT (DEFINED BELOW) AND SUBJECT TO THE TERMS OF THAT CERTAIN INTERCREDITOR AGREEMENT EVEN DATED HEREWITH (AS AMENDED FROM TIME TO TIME) BY AND AMONG SENIOR AGENT, GRANTORS, AGENT (DEFINED BELOW), AND THE OTHER PARTIES PARTY THERETO.

PLEDGE AGREEMENT

THIS PLEDGE AGREEMENT (as amended, supplemented or otherwise modified from time to time in accordance with the provisions hereof, this “Agreement”) is made on March 20, 2020 by and among PACIFIC ETHANOL CENTRAL, LLC, a limited liability company organized under the laws of Delaware (“Pledgor”), PACIFIC AURORA, LLC, a limited liability company organized under the laws of Delaware (“Aurora”), and CORTLAND PRODUCTS CORP., as collateral agent for the benefit of the Noteholders (in such capacity, together with its successors and assigns in such capacity, the “Agent”; together with the Noteholders, the “Secured Parties”).

RECITALS:

WHEREAS, Pacific Ethanol, Inc., a Delaware corporation (“PEI”), issued certain secured promissory notes in the aggregate original principal amount of $55,000,000 on December 15, 2016 (the “Initial Notes”) pursuant to a Note Purchase Agreement dated as of December 12, 2016 by and among PEI and the Investors identified therein (as amended, restated, supplemented or otherwise modified from time to time, including amendments and restatements thereof in its entirety, the “Initial Purchase Agreement”);

WHEREAS, PEI and certain Investors identified therein are parties to a Note Purchase Agreement dated as of June 26, 2017 (as amended, restated, supplemented or otherwise modified from time to time, including amendments and restatements thereof in its entirety, the “Additional Purchase Agreement”), pursuant to which PEI issued $13,948,078 in aggregate original principal amount of senior secured notes due December 15, 2019 (as amended, restated, supplemented or otherwise modified from time to time, the “Additional Notes”).

WHEREAS, the Noteholders are holders of the Initial Notes, the Additional Notes and certain other secured promissory notes issued by PEI on December 16, 2019 (the “Existing Notes”);

WHEREAS, pursuant to that certain Senior Secured Note Amendment Agreement dated as of December 22, 2019 between the Noteholders defined therein and PEI (as amended, restated, supplemented or otherwise modified from time to time, including amendments and restatements thereof in its entirety, the “Amendment Agreement”), the Existing Notes were amended and restated in their entirety (the “Amended Notes,” and together with the Amendment Agreement and the Transaction Documents (as defined in the Initial Noteholder Security Agreement (as defined below)), the “Notes Amendment Documents”);

WHEREAS, Cortland Products Corp. has been appointed by the Noteholders to act as collateral agent under the Notes Amendment Documents (and as successor to Cortland Capital Market Services LLC in such capacity) pursuant to the Initial Noteholder Security Agreement;

WHEREAS, Pledgor, Aurora and CoBank, ACB, a federally-chartered instrumentality of the United States (“Senior Agent”), are party to that certain Pledge Agreement dated as of March 20, 2019 (“Senior Agent Pledge Agreement”), wherein Pledgor granted to Senior Agent a senior security interest in the Pledged Collateral, securing the payment and performance when due of the Secured Obligations (as defined in the Senior Agent Pledge Agreement);

WHEREAS, the Lien granted herein shall be junior in priority to the Lien granted to Senior Agent, as set forth in that certain Intercreditor Agreement dated as of the date hereof (as amended, restated, supplemented or otherwise modified from time to time, “Intercreditor Agreement”) by and among Senior Agent, Agent, PEI and the Grantors party thereto; and

WHEREAS, to secure the obligations of PEI under the Notes Amendment Documents, pursuant to the Notes Amendment Documents, the Pledgor is required to enter into this Agreement.

1. Definitions. Each capitalized term used herein, unless otherwise defined herein, shall have the meaning ascribed to such term in the Amendment Agreement or the Initial Noteholder Security Agreement, as applicable. As used herein, the following terms shall have the following meanings:

“Companies” shall mean each of the entities identified as an “Issuer” on Annex A hereto, and each such entity individually is referred to herein as a “Company”.

“Equity Interests” shall mean all shares of capital stock (whether denominated as common stock or preferred stock), equity interests, beneficial partnership or membership interests, joint venture interests, units, limited liability company interests, participations or other ownership or profit interests in or equivalents (regardless of how designated) of or in a Person (other than an individual), whether voting or non-voting.

“Existing Notes” has the meaning set forth in the Recitals.

“Initial Noteholder Security Agreement” means that certain Security Agreement, dated as of December 15, 2016, by and among the Company, the Noteholders party thereto, and the Agent, as amended by that certain First Amendment to Security Agreement, dated June 30, 2017, by and among the Company, the Noteholders party thereto, and the Agent, that certain Second Amendment to Security Agreement, dated December 22, 2019, by and among the Company, the Noteholders party thereto, and the Agent, and that certain Third Amendment to Security Agreement, dated as of the date hereof, by and among the Company, the Noteholders party thereto, and the Agent, as the same may be further amended, restated, supplemented or otherwise modified from time to time.

“Noteholders” means (x) each Person that is (i) a signatory to the Amendment Agreement and identified as a “Noteholder” on Exhibit A to the Amendment Agreement, (ii) a holder of any of the Notes (as defined in the Amendment Agreement), and (iii) a “Secured Party” party to the Initial Noteholder Security Agreement and (y) any other Person that becomes (i) a holder of any of the Notes pursuant to any permitted assignment or transfer and (ii) a “Secured Party” under the Initial Noteholder Security Agreement pursuant to a Security Agreement Joinder, other than any such Person that ceases to be a party to such agreement pursuant to an assignment of all of its Notes and its rights and obligations under the Transaction Documents (as defined in the Initial Security Agreement).

“Operating Agreement” means that certain Amended and Restated Limited Liability Company Agreement of Pacific Aurora, LLC, dated December __, 2016 (the “Operating Agreement”) by and among Pledgor and Aurora Cooperative Elevator Company, a Nebraska cooperative corporation.

“Pledged Collateral” shall have the meaning ascribed to it in Section 2 hereof.

“Power” shall have the meaning ascribed to it in Section 2 hereof.

“Secured Obligations” shall mean all obligations of PEI to the Noteholders now or hereafter existing under the Notes Amendment Documents.

2. Pledge; Agent’s Duties; Intercreditor Agreement.

(a) Pledgor hereby pledges, assigns, transfers, sets over and delivers to Agent, and hereby grants to Agent, for the benefit of the Secured Parties, a security interest in, all of the Equity Interests of the Companies now or hereafter held by Pledgor, including the Equity Interests more particularly described on Annex A hereto and all of Pledgor’s options, if any, for the purchase of any Equity Interests of any of the Companies, herewith delivered to Agent, and where certificated, accompanied by powers (“Powers”) duly executed in blank, and all proceeds thereof including, without limitation, all proceeds from the sale of any such Equity Interests and all dividends and distributions at any time payable in connection such Equity Interests (said Equity Interests, Powers, options, and proceeds hereinafter collectively called the “Pledged Collateral”) as security for the due and punctual payment and performance of the Secured Obligations.

(b) Agent shall have no duty with respect to any part or all of the Pledged Collateral of any nature or kind other than the duty to use reasonable care in the safe custody of any tangible items of the Pledged Collateral in its possession (it being agreed that Agent shall be deemed to have exercised reasonable care in the custody and preservation of the Pledged Collateral in its possession if the Pledged Collateral is accorded treatment substantially equal to that which it accords its own property). Without limiting the generality of the foregoing, Agent shall be under no obligation to sell any of the Pledged Collateral or otherwise to take any steps necessary to preserve the value of any of the Pledged Collateral or to preserve rights in the Pledged Collateral against any other Persons, but may do so at its option upon an Event of Default, and all expenses incurred in connection therewith shall be for the sole account of Pledgor.

(c) For the avoidance of doubt, all obligations of Pledgor, and all rights of Agent, hereunder shall be subject to the obligations of the Pledgor and the subordinated rights of Agent under the Intercreditor Agreement.

3. Voting Rights. During the term of this Agreement, and so long as no Event of Default shall have occurred, Pledgor shall have the right to vote all or any portion of the Equity Interests owned by such Pledgor on all corporate and other company questions for all purposes not inconsistent with the terms of this Agreement or any of the other Notes Amendment Documents. To that end, if Agent transfers all or any portion of the Pledged Collateral into its name or the name of its nominee, to the extent authorized to do so under this Agreement or any of the other Notes Amendment Documents, Agent shall, upon the request of a Pledgor, unless an Event of Default shall have occurred, execute and deliver or cause to be executed and delivered to Pledgor, proxies with respect to the applicable portion of the Pledged Collateral. Pledgor hereby grants to Agent, effective upon or after the occurrence of an Event of Default and pursuant to the terms of the Intercreditor Agreement, an IRREVOCABLE PROXY pursuant to which Agent shall be entitled (but shall not be obligated) to exercise all voting powers pertaining to the Pledged Collateral, including to call and attend all meetings of the shareholders, members or partners of the Companies to be held from time to time with full power to act and vote in the name, place and stead of Pledgor (whether or not the Equity Interests shall have been transferred into its name or the name of its nominee or nominees), give all consents, waivers and ratifications in respect of the Pledged Collateral and otherwise act with respect thereto as though it were the outright owner thereof, and any and all proxies theretofore executed by Pledgor shall terminate and thereafter be null and void and of no effect whatsoever.

4. Collection of Dividend Payments. During the term of this Agreement, and so long as there no Event of Default shall exist, Pledgor shall have the right to receive and retain any and all dividends and other distributions payable by any Company to Pledgor on account of any of the Pledged Collateral except as otherwise provided in the Notes Amendment Documents. Upon or after the occurrence of any Event of Default and pursuant to the terms of the Intercreditor Agreement, all dividends and other distributions payable by any Company on account of any of the Pledged Collateral shall be paid to Agent and any such sum received by Pledgor shall be deemed to be held by Pledgor in trust for the benefit of Agent and the other Secured Parties and shall be forthwith turned over to Agent for application by Agent to the Secured Obligations in the manner authorized by the Notes Amendment Documents.

5. Representations and Warranties of Pledgor. Pledgor hereby represents and warrants to Agent and the other Secured Parties as follows (which representations and warranties shall be deemed continuing): (a) Pledgor is the legal and beneficial owner of the Pledged Collateral identified on Annex A; (b) all of the Equity Interests have been duly and validly issued, are fully paid and nonassessable, and are owned by Pledgor free of any Liens except for Agent’s security interest hereunder and the Permitted Liens; (c) the Pledged Collateral constitutes the percentage of the issued and outstanding Equity Interests of each of the Companies identified on Annex A hereto; (d) except as provided in Article 3 of the Operating Agreement, there are no contractual or charter restrictions upon the voting rights or upon the transfer of any of the Pledged Collateral; (e) except as required under the Intercreditor Agreement, Pledgor has the right to vote, pledge and grant a security interest in or otherwise transfer the Pledged Collateral without the consent of any other Person and free of any Liens and applicable restrictions imposed by any governmental authority, and without any restriction under the organizational documents of Pledgor or any Company or any agreement among Pledgor’s or any Company’s shareholders, partners or members; (f) this Agreement has been duly authorized, executed and delivered by Pledgor and constitutes a legal, valid and binding obligation of Pledgor, enforceable in accordance with its terms except to the extent that the enforceability thereof may be limited by bankruptcy, insolvency or other similar laws of general application affecting the enforcement of creditors’ rights; (g) the execution, delivery and performance by Pledgor of this Agreement and the exercise by Agent of its rights and remedies hereunder do not and will not result in the violation of any of the organizational documents of Pledgor, any agreement, indenture, instrument or law by which Pledgor or any Company is bound or to which Pledgor or any Company is subject (except that Pledgor makes no representation or warranty with respect to Agent’s prospective compliance with any federal or state laws or regulations governing the sale or exchange of securities); (h) no consent, filing, approval, registration or recording is required (1) for the pledge by Pledgor of its respective portion of the Pledged Collateral pursuant to this Agreement or (2) except for the filing of an appropriate UCC financing statement, to perfect the Lien created by this Agreement (to the extent that a Lien created by this Agreement can be perfected by filing a financing statement); (i) none of the Pledged Collateral is held or maintained in the form of a securities entitlement or credited to any securities account; and (j) if the Pledged Collateral is certificated, Pledgor shall cause such certificates or other documents evidencing or representing such Pledged Collateral, accompanied by Powers, all in form and substance satisfactory to Agent and Required Holders to be delivered to Agent.

6. Affirmative Covenants of Pledgor. Until all of the Secured Obligations are paid in full, Pledgor covenants that it will: (a) warrant and defend at its own expense Agent’s right, title and security interest in and to the Pledged Collateral against the claims of any Person; (b) promptly deliver to Agent all written notices with respect to the Pledged Collateral, and promptly give written notice to Agent of any other notices received by Pledgor with respect to the Pledged Collateral; (c) promptly deliver to Agent to hold under this Agreement any Equity Interests of any Company subsequently acquired by Pledgor, whether acquired by Pledgor by virtue of the exercise of any options included within the Pledged Collateral or otherwise (which Equity Interests, whether or not delivered, shall be deemed to be a part of the Pledged Collateral); (d) if any of the Pledged Collateral constituting membership interests in a limited liability company or general or limited partnership interests in a limited partnership or limited liability partnership is hereafter designated by the relevant Company as a “security” under (and as defined in) Article 8 of the UCC, cause such Pledged Collateral to be certificated and deliver to Agent all certificates evidencing such Pledged Collateral, accompanied by Powers, all in form and substance satisfactory to Agent and Required Holders; and (e) if at any time hereafter any of the Pledged Collateral that is not currently certificated becomes certificated, deliver all certificates or other documents evidencing or representing the Pledged Collateral to Agent, accompanied by Powers, all in form and substance satisfactory to Agent and Required Holders.

7. Negative Covenants of Pledgor. Until the Secured Obligations are paid in full, Pledgor covenants that it will not, without the prior written consent of Agent and Required Holders, (a) sell, convey or otherwise dispose of any of the Pledged Collateral or any interest therein other than as permitted under the Notes Amendment Documents; (b) grant or permit to exist any Lien whatsoever upon or with respect to any of the Pledged Collateral or the proceeds thereof, other than the security interest created hereby; (c) consent to the issuance by any Company of any new Equity Interests; (d) consent to any merger or other consolidation of any Company with or into any corporation or other entity other than as permitted under the Notes Amendment Documents; (e) cause any Pledged Collateral to be held or maintained in the form of a security entitlement or credited to any securities account; (f) designate, or cause any Company to designate, any of the Pledged Collateral constituting membership interests in a limited liability company or general or limited partnership interests in a limited partnership or limited liability partnership as a “security” under Article 8 of the UCC, unless such Company has caused such Pledged Collateral to become certificated and has complied with the requirements of Section 6(e) hereof with respect to such Pledged Collateral; (g) evidence, or permit any Company to evidence, any of the Pledged Collateral that is not currently certificated, with any certificates, instruments or other writings, unless such Company has complied with the provisions of Section 6(e) of this Agreement; or (h) consent to or permit any amendment of the organizational documents of any Company that would restrict Pledgor’s right to vote, pledge or grant a security interest in or otherwise transfer its respective portion of the Pledged Collateral.

8. Irrevocable Authorization and Instruction to Companies. To the extent that any portion of the Pledged Collateral might now or hereafter consist of uncertificated securities within the meaning of Article 8 of the UCC, Pledgor irrevocably authorizes and instructs each Company to comply with any instruction received by such Company from Agent with respect to such Pledged Collateral without any other or further instructions from or consent of Pledgor, and Pledgor agrees that each Company shall be fully protected in so complying; provided, however, that Agent agrees that Agent will not issue or deliver any such instructions to any Company except upon or after the occurrence of an Event of Default.

9. Subsequent Changes Affecting Pledged Collateral. Pledgor hereby represents to Agent that Pledgor has made its own arrangements for keeping informed of changes or potential changes affecting the Pledged Collateral (including rights to convert, rights to subscribe, payment of dividends and distributions, reorganization or other exchanges, tender offers and voting rights), and Pledgor hereby agrees that Agent shall have no responsibility or liability for informing Pledgor of any such changes or potential changes or for taking any action or omitting to take any action with respect thereto. Agent may, at any time that an Event of Default exists, at its option and without notice to Pledgor, transfer or register the Pledged Collateral or any portion thereof into its or its nominee’s name with or without any indication that such Pledged Collateral is subject to the security interest hereunder.

10. Equity Interest Adjustments. If during the term of this Agreement any dividend, reclassification, readjustment or other change is declared or made in the capital structure of any of the Companies, or any option included within the Pledged Collateral is exercised, or both, all new, substituted and additional Equity Interests or other securities issued by reason of any such change or exercise shall, if received by Pledgor, be held in trust for the Secured Parties’ benefit and shall be promptly delivered to and held by Agent under the terms of this Agreement in the same manner as the Pledged Collateral originally pledged hereunder.

11. Warrants, Options and Rights. If during the term of this Agreement subscription warrants or any other rights or options are issued or exercised by Pledgor in connection with the Pledged Collateral, then such warrants, rights and options shall be promptly assigned by Pledgor to Agent and all certificates evidencing new Equity Interests or other securities so acquired by Pledgor shall be promptly delivered to Agent to be held under the terms of this Agreement in the same manner as the Pledged Collateral originally pledged hereunder.

12. Registration. If Agent determines that it is required to register under or otherwise comply in any way with the Securities Act of 1933, as amended from time to time (the “Securities Act”) or any similar federal or state law with respect to the securities, if any, included in the Pledged Collateral prior to sale thereof by Agent, then upon or after the occurrence of any Event of Default, Pledgor will use its best efforts to cause any such registration to be effectively made, at no expense to Agent, and to continue such registration effective for such time as may be necessary in the reasonable opinion of Agent and Required Holders, and will reimburse Agent for any out-of-pocket expense incurred by Agent, including reasonable attorneys’ fees and accountants’ fees and expenses, in connection therewith.

13. Consent. Pledgor hereby consents that from time to time, before or after the occurrence or existence of any default or Event of Default, with or without notice to or assent from Pledgor, any other security at any time held by or available to Agent for any of the Secured Obligations may be exchanged, surrendered, or released, and any of the Secured Obligations may be changed, altered, renewed, extended, continued, surrendered, compromised, waived or released, in whole or in part, as Agent may see fit, and Pledgor shall remain bound under this Agreement and under the other Notes Amendment Documents notwithstanding any such exchange, surrender, release, alteration, renewal, extension, continuance, compromise, waiver or inaction, extension of further credit or other dealing.

14. Remedies Upon Default. Upon or after the occurrence of any Event of Default and subject to the terms of the Intercreditor Agreement, (i) Agent shall have, in addition to any other rights given by law or the rights given hereunder or under each of the other Notes Amendment Documents, all of the rights and remedies with respect to the Pledged Collateral of a secured party under the UCC and (ii) Agent may cause all or any part of the Equity Interests held by it to be transferred into its name or the name of its nominee or nominees. In addition, upon or at any time after the occurrence of an Event of Default, Agent may sell or cause the Pledged Collateral, or any part thereof, which shall then be or shall thereafter come into Agent’s possession or custody, to be sold at any broker’s board or at public or private sale, in one or more sales or lots, at such price as Agent may deem best, and for cash or on credit or for future delivery, and the purchaser of any or all of the Pledged Collateral so sold shall thereafter hold the same absolutely, free from any claim, encumbrance or right of any kind whatsoever of Pledgor or arising through Pledgor. If any of the Pledged Collateral is sold by Agent upon credit or for future delivery, Agent shall not be liable for the failure of the purchaser to pay the same and in such event Agent may resell such Pledged Collateral. Unless the Pledged Collateral threatens to decline speedily in value or is or becomes of a type sold on a recognized market, Agent will give the applicable Pledgor reasonable notice of the time and place of any public sale thereof, or of the time after which any private sale or other intended disposition is to be made. Any sale of the Pledged Collateral conducted in conformity with reasonable commercial practices of banks, insurance companies or other financial institutions disposing of property similar to the Pledged Collateral shall be deemed to be commercially reasonable. Any requirements of reasonable notice shall be met if such notice is mailed to the applicable Pledgor, as provided in Section 22 below, at least ten (10) days before the time of the sale or disposition. Any other requirement of notice, demand or advertisement for sale is, to the fullest extent permitted by applicable law, waived. Agent may, in its own name, or in the name of a designee or nominee, buy at any public sale of the Pledged Collateral and, if permitted by applicable law, buy at any private sale thereof. Pledgor will pay to Agent on demand all expenses (including court costs and reasonable attorneys’ fees and expenses) of, or incident to, the enforcement of any of the provisions hereof and all other charges due against the Pledged Collateral, including taxes, assessments or Liens upon the Pledged Collateral and any expenses, including transfer or other taxes, arising in connection with any sale, transfer or other disposition of Pledged Collateral. In connection with any sale of Pledged Collateral by Agent, Agent shall have the right to execute any document or form, in its name or in the name of Pledgor, that may be necessary or desirable in connection with such sale, including Form 144 promulgated by the Securities and Exchange Commission. In view of the fact that federal and state securities laws may impose certain restrictions on the method by which a sale of the Pledged Collateral may be effected after an Event of Default, Pledgor agrees that Agent may, from time to time, attempt to sell all or any part of the Pledged Collateral by means of a private placement restricting the bidders and prospective purchasers to those who will represent and agree that they are purchasing for investment only and not for distribution. Pledgor agrees that any such private sales may be at prices and other terms less favorable to the seller than if sold at public sales and that such private sales shall not by reason thereof be deemed not to have been made in a commercially reasonable manner. Agent shall be under no obligation to delay a sale of any of the Pledged Collateral for the period of time necessary to permit the issuer of such securities to register such securities for public sale under the Securities Act even if the issuer would agree to do so. Agent shall apply the cash proceeds actually received from any sale or other disposition to the reasonable expenses of retaking, holding, preparing for sale, selling and the like, to reasonable attorneys’ fees, and all legal expenses, travel and other expenses that might be incurred by Agent in attempting to collect the Secured Obligations or to enforce this Agreement or in the prosecution or defense of any action or proceeding related to the subject matter of this Agreement; and then to the Secured Obligations in the manner authorized by the Notes Amendment Documents.

15. Redemption; Marshaling. Pledgor hereby waives and releases to the fullest extent permitted by applicable law any right or equity of redemption with respect to the Pledged Collateral before or after a sale conducted pursuant to Section 14 hereof. Pledgor agrees that Agent shall not be required to marshal any present or future security (including this Agreement and the Pledged Collateral pledged hereunder) for, or guaranties of, the Secured Obligations or any of them, or to resort to such security or guaranties in any particular order; and all of Agent’s rights hereunder and in respect of such security and guaranties shall be cumulative and in addition to all other rights, however existing or arising. To the fullest extent that it lawfully may, Pledgor hereby agrees that it will not invoke any law relating to the marshaling of collateral that might cause delay in or impede the enforcement of Agent’s rights under this Agreement or under any other instrument evidencing any of the Secured Obligations or under which any of the Secured Obligations is outstanding or by which any of the Secured Obligations is secured or guaranteed, and to the fullest extent that it lawfully may, Pledgor hereby irrevocably waives the benefits of all such laws.

16. Term. This Agreement shall become effective only when accepted by Agent and, when so accepted, shall constitute a continuing agreement and shall remain in full force and effect until the Secured Obligations are paid in full, at which time this Agreement shall terminate and Agent shall deliver to the Pledgor, at Pledgor’s expense, such of the Pledged Collateral as shall not have been sold or otherwise applied pursuant to this Agreement. Notwithstanding the foregoing, in no event shall any termination of this Agreement terminate any indemnity set forth in this Agreement or any of the other Notes Amendment Documents, all of which indemnities shall survive any termination of this Agreement or any of the other Notes Amendment Documents.

17. Rules and Construction. The singular shall include the plural and vice versa, and any gender shall include any other gender as the text shall indicate. All references to “including” shall mean “including, without limitation.” Each reference in this Agreement to a “corporation” shall also be deemed to include a reference to a limited liability company, limited partnership or limited liability partnership and vice versa, each reference to “shareholders” of a Person shall also be deemed to include a reference to members or partners and vice versa and each reference to “certificate of incorporation” or “articles of incorporation” or “bylaws” shall also be deemed to include a reference to “certificate of formation” or “certificate of limited partnership” and “limited liability company operating agreement” or “limited partnership agreement” or other organizational documents of a limited liability company, limited partnership or limited liability partnership and vice versa.

18. Successors and Assigns. This Agreement shall be binding upon Pledgor and its respective successors and assigns, and shall inure to the benefit of Agent and the other Secured Parties and their respective successors and assigns. This Agreement is fully assignable by any Secured Party without the consent of Pledgor or Aurora; provided that this Agreement may not be assigned by Pledgor or Aurora without the prior written consent of the Agent.

19. Construction and Applicable Law. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but, if any provision of this Agreement shall be held to be prohibited or invalid under any applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. This Agreement shall be governed by and the rights and liabilities of the parties hereto determined and construed in accordance with the internal laws of the State of New York without regard to its conflicts of law provisions. This Agreement is intended to take effect as a document executed and delivered under seal.

20. Cooperation and Further Assurances. Pledgor agrees that it will cooperate with Agent and will, upon Agent’s request, execute and deliver, or cause to be executed and delivered, all such other powers, instruments, financing statements, certificates, legal opinions and other documents, and will take all such other action as Agent and Required Holders request from time to time, in order to carry out the provisions and purposes hereof, including delivering to Agent, if requested by Agent, irrevocable proxies with respect to the Equity Interests in form satisfactory to Agent and Required Holders. Until receipt thereof, this Agreement shall constitute Pledgor’s proxy to Agent or its nominee to vote all shares of the Equity Interests then registered in Pledgor’s name (subject to Pledgor’s voting rights under Section 3 hereof) upon or after the occurrence of an Event of Default.

21. Agent’s Exoneration. Under no circumstances shall Agent be deemed to assume any responsibility for or obligation or duty with respect to any part or all of the Pledged Collateral of any nature or kind, other than the physical custody thereof, or any matter or proceedings arising out of or relating thereto. Agent shall not be required to take any action of any kind to collect, preserve or protect its or Pledgor’s rights in the Pledged Collateral or against other parties thereto. Agent’s prior recourse to any part or all of the Pledged Collateral shall not constitute a condition of any demand, suit or proceeding for payment or collection of the Secured Obligations.

22. Notices. All notices, requests and demands to or upon any party hereto shall be given in the manner and become effective as stipulated in the Amendment Agreement. Regardless of the manner in which notice is provided, notices may be sent to Agent and Pledgor pursuant to the notice information set forth in the signature pages hereof or to such other address or telephone number as any party may give to the other for such purpose in accordance with this paragraph.

23. Pledgor’s Obligations Not Affected. The obligations of Pledgor hereunder shall remain in full force and effect without regard to, and shall not be impaired by (a) any bankruptcy, insolvency, reorganization, arrangement, readjustment, composition, liquidation or the like of Pledgor; (b) any exercise or nonexercise, or any waiver, by Agent of any right, remedy, power or privilege under or in respect of any of the Secured Obligations or any security thereof (including this Agreement); (c) any amendment to or modification of the Amendment Agreement, the other Notes Amendment Documents or any of the Secured Obligations; (d) any amendment to or modification of any instrument (other than this Agreement) securing any of the Secured Obligations; or (e) the taking of additional security for, or any guaranty of, any of the Secured Obligations or the release or discharge or termination of any security or guaranty for any of the Secured Obligations, regardless of whether or not Pledgor shall have notice or knowledge of any of the foregoing.

24. No Waiver, Etc. No act, failure or delay by Agent shall constitute a waiver of any of its rights and remedies hereunder or otherwise. No single or partial waiver by Agent of any default or Event of Default or right or remedy that Agent might have shall operate as a waiver of any other default, Event of Default, right or remedy or of the same default, Event of Default, right or remedy on a future occasion. Pledgor hereby waives presentment, notice of dishonor and protest of all instruments included in or evidencing any of the Secured Obligations or the Pledged Collateral, and any and all other notices and demands whatsoever (except as expressly provided herein).

25. Section Headings. The section headings herein are for convenience of reference only, and shall not affect in any way the interpretation of any of the provisions hereof.

26. Agent Appointed Attorney-In-Fact. Upon and after the occurrence of an Event of Default, Agent shall be deemed to be Pledgor’s attorney-in-fact, with full power of substitution, for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instrument that Agent reasonably deems necessary or advisable to accomplish the purposes hereof, which appointment is coupled with an interest and is irrevocable. Without limiting the generality of the foregoing, Agent shall have the power to arrange for the transfer, upon or at any time after the occurrence of an Event of Default, of any of the Pledged Collateral on the books of any or all of the Companies to the name of Agent or Agent’s nominee. Pledgor agrees to indemnify and save Agent harmless from and against any liability or damage that Agent might suffer or incur, in the exercise or performance of any of Agent’s powers and duties specifically set forth herein, except to the extent that such liability or damage arises from Agent’s gross negligence or willful misconduct.

27. Use of Proceeds. Pledgor hereby represents and warrants to Agent that none of the proceeds heretofore and hereafter received by it under the Amendment Agreement are for the purpose of purchasing any “margin stock” as that term is defined in either Regulation U promulgated by the Board of Governors of the Federal Reserve System, or refinancing any indebtedness originally incurred to purchase any such “margin stock.”

28. Waiver of Subrogation and Other Claims. Pledgor recognizes that Agent, in exercising its rights and remedies with respect to the Pledged Collateral, may likely be unable to find one or more purchasers thereof if, after the sale of the Pledged Collateral, the Company were, because of any claim based on subrogation or any other theory, liable to Pledgor on account of the sale by Agent of the Pledged Collateral in full or partial satisfaction of the Secured Obligations or liable to Pledgor on account of any indebtedness owing to Pledgor that is subordinated to any or all of the Secured Obligations. Pledgor hereby agrees, therefore, that if Agent sells any of the Pledged Collateral in full or partial satisfaction of the Secured Obligations, Pledgor shall in such case have no right or claim against any Company on account of any such subordinated indebtedness or on the theory that Pledgor has become subrogated to any claim or right of Agent against such Company or on any basis whatsoever, and Pledgor hereby expressly waives and relinquishes, to the fullest extent permitted by applicable law, all such rights and claims against Companies.

29. Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which counterparts taken together shall constitute but one and the same instrument. In proving this Agreement in any judicial proceeding, it shall not be necessary to produce or account for more than one such counterpart signed by the party against whom such enforcement is sought. Any manually-executed signature page delivered by a party by facsimile or other electronic transmission shall be deemed to be an original signature page hereto.

30. WAIVERS. PLEDGOR HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW: NOTICE OF AGENT’S ACCEPTANCE OF THIS AGREEMENT; NOTICE OF EXTENSIONS OF CREDIT, NOTICES ISSUANCES, LOANS, ADVANCES OR OTHER FINANCIAL ASSISTANCE BY SECURED PARTIES TO PLEDGOR; THE RIGHT TO TRIAL BY JURY (WHICH AGENT ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM CONCERNING THIS AGREEMENT OR ANY OF THE PLEDGED COLLATERAL; PRESENTMENT AND DEMAND FOR PAYMENT OF ANY OF THE SECURED OBLIGATIONS; PROTEST AND NOTICE OF DISHONOR OR DEFAULT WITH RESPECT TO ANY OF THE SECURED OBLIGATIONS; AND ALL OTHER NOTICES TO WHICH PLEDGOR MIGHT OTHERWISE BE ENTITLED EXCEPT AS HEREIN OTHERWISE EXPRESSLY PROVIDED.

31. Governing Law; Jurisdiction; Etc.

(a) The laws of the State of New York will govern this Agreement and any claim, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Agreement and the transactions contemplated hereby and thereby.

(b) Pledgor irrevocably and unconditionally agrees that it will not commence any action, litigation or proceeding of any kind whatsoever, whether in law or equity, or whether in contract or tort or otherwise, against any Secured Party in any way relating to this Agreement or the transactions contemplated hereby, in any forum other than the courts of the State of New York sitting in the city of New York, borough of Manhattan, and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, and each of the parties hereto irrevocably and unconditionally submits to the jurisdiction of such courts and agrees that any such action, litigation or proceeding may be brought in any such New York State court or, to the fullest extent permitted by applicable law, in such federal court. Each of the parties hereto agrees that a final judgment in any such action, litigation or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing herein shall affect any right that each Secured Party may otherwise have to bring any action or proceeding relating to this Agreement against Pledgor or its properties in the courts of any jurisdiction.

(c) Pledgor irrevocably and unconditionally waives, to the fullest extent permitted by applicable law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Agreement in any such court referred to in Section 31(b). Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(d) Pledgor irrevocably consents to the service of process in the manner provided for notices in Section 22 and agrees that nothing herein will affect the right of any party hereto to serve process in any other manner permitted by applicable law.

32. Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY. EACH PARTY HERETO (A) CERTIFIES THAT NO AGENT, ATTORNEY, REPRESENTATIVE OR ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF LITIGATION, AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER NOTES AMENDMENT DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION

33. Incorporation of Recitals. Each of the Recitals set forth above are true and correct and are incorporated herein and made a part of this Agreement.

34. Inconsistency with Intercreditor Agreement. In the event of any conflict between the terms of this Agreement and the Intercreditor Agreement, the Intercreditor Agreement shall control.

35. Rights Subject to Operating Agreement. Notwithstanding any other term to the contrary, the rights and remedies of the Agent and the Secured Parties hereunder are subject to the terms, conditions and restrictions set forth in the Operating Agreement, including, but not limited to, Section 3.6 thereof.

[Remainder of page intentionally left blank; signatures begin on following page.] 

IN WITNESS WHEREOF, Pledgor has caused this Agreement to be signed, sealed and delivered by its duly authorized representative on the day and year first above written.

Signature page to Noteholder Pledge Agreement (Aurora) 

ACKNOWLEDGMENT AND AGREEMENT OF ISSUER

The undersigned (“Issuer”) hereby acknowledges, represents and agrees that: (i) such Issuer has received a true and correct copy of the within and foregoing Pledge Agreement (the “Agreement”) by and among PACIFIC ETHANOL CENTRAL, LLC, a limited liability company organized under the laws of Delaware (“Pledgor”), PACIFIC AURORA, LLC, a limited liability company organized under the laws of Delaware (“Aurora”), and CORTLAND CAPITAL MARKET SERVICES LLC, as collateral agent for the benefit of the Noteholders (in such capacity, together with its successors and assigns in such capacity, the “Agent”; together with the Noteholders, the “Secured Parties”); (ii) the Agreement has been duly recorded and noted on the books and records of Issuer and will be maintained as part of such books and records; (iii) the Agreement does not violate any term, condition or covenant of the organizational documents of Issuer, or of any other agreement to which Issuer is a party; (iv) subject to the terms of the Operating Agreement, Issuer will comply with written instructions originated by Agent without further consent of Pledgor as the registered owner of Pledgor’s respective portion of the Pledged Collateral; (v) Issuer consents to the execution of the Agreement and to the assignment, transfer and pledge of the Pledged Collateral effected thereby; and (vi) upon and after the occurrence of an Event of Default, subject to the terms of the Operating Agreement, Issuer consents to a public or private sale or sales of all or any part of the Pledged Collateral by Agent in accordance with the terms of the Agreement and consents to each purchaser of all or any part of the Pledged Collateral at such sale or sales becoming a shareholder, member, partner or other owner, as applicable, of Issuer thereby entitled to the same rights and privileges and subject to the same duties as the owner of the applicable Pledged Collateral under the organizational documents of Issuer.

Each capitalized term used herein, unless otherwise defined herein, shall have the meaning ascribed to such term in the Agreement. Any manually-executed signature page delivered by a party by facsimile or other electronic transmission shall be deemed to be an original signature page hereto.

[Remainder of page intentionally left blank; signature appears on the following page.]

IN WITNESS WHEREOF, Issuer has executed this Acknowledgment and Agreement of Issuer under seal as of the date of the Agreement referenced above.

[Acknowledgment and Agreement of Issuer]

Exhibit 10.9

Execution Version

SECURITY AGREEMENT
(PACIFIC ETHANOL WEST, LLC)
(PE OP CO.)

This Security Agreement, dated as of March 20, 2020 (as amended, supplemented or otherwise modified from time to time in accordance with the provisions hereof, this “Agreement”), made by and among Pacific Ethanol West, LLC, a Delaware limited liability company (“PE West”), PE Op Co., a Delaware corporation (“PE Op Co.”; together with PE West, each, a “Grantor” and collectively, jointly and severally, the “Grantors”), and Cortland Products Corp., as collateral agent for the benefit of the Noteholders (in such capacity, together with its successors and assigns in such capacity, the “Agent”; together with the Noteholders, the “Secured Parties”).

RECITALS:

WHEREAS, Pacific Ethanol, Inc., a Delaware corporation (the “Company”) issued certain secured promissory notes in the aggregate original principal amount of $55,000,000 on December 15, 2016 (the “Initial Notes”) pursuant to a Note Purchase Agreement dated as of December 12, 2016 by and among the Company and the Investors identified therein (as amended, restated, supplemented or otherwise modified from time to time, including amendments and restatements thereof in its entirety, the “Initial Purchase Agreement”);

WHEREAS, the Company and certain Investors identified therein are parties to a Note Purchase Agreement dated as of June 26, 2017 (as amended, restated, supplemented or otherwise modified from time to time, including amendments and restatements thereof in its entirety, the “Additional Purchase Agreement”), pursuant to which the Company issued $13,948,078 in aggregate original principal amount of senior secured notes due December 15, 2019 (as amended, restated, supplemented or otherwise modified from time to time, the “Additional Notes”).

WHEREAS, the Noteholders are holders of the Initial Notes, the Additional Notes and certain other secured promissory notes issued by the Company on December 16, 2019 (the “Existing Notes”);

WHEREAS, pursuant to that certain Senior Secured Note Amendment Agreement dated as of December 22, 2019 between the Noteholders defined therein and the Company (as amended, restated, supplemented or otherwise modified from time to time, including amendments and restatements thereof in its entirety, the “Amendment Agreement”), the Existing Notes were amended and restated in their entirety (the “Amended Notes,” and together with the Amendment Agreement and the Transaction Documents, the “Notes Amendment Documents”);

WHEREAS, Cortland Products Corp. has been appointed by the Noteholders to act as collateral agent under the Notes Amendment Documents (and as successor to Cortland Capital Market Services LLC in such capacity) pursuant to that certain Security Agreement, dated as of December 15, 2016 (as amended, restated, supplemented or otherwise modified from time to time, including amendments and restatements thereof in its entirety), among the Company, the Agent and the other Secured Parties; and

WHEREAS, to secure the obligations of the Company under the Notes Amendment Documents, pursuant to the Notes Amendment Documents, the Grantors are required to enter into this Agreement;

NOW, THEREFORE, for Ten Dollars ($10.00) in hand paid to the Grantors and in consideration of the premises and mutual covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and to secure the timely payment and performance of the Secured Obligations (as hereinafter defined), the parties hereto agree as follows:

1. Definitions.

(a) Each capitalized term used herein, unless otherwise defined herein, shall have the meaning ascribed to such term in the Amendment Agreement or the Initial Noteholder Security Agreement, as applicable. As used herein, the following terms shall have the following meanings:

“Collateral” has the meaning set forth in Section 2.

“First Priority” means, with respect to any Lien purported to be created in any Collateral pursuant to this Agreement, such Lien is the most senior Lien to which such Collateral is subject (subject only to Permitted Liens).

“Initial Noteholder Security Agreement” means that certain Security Agreement, dated as of December 15, 2016, by and among the Company, the Noteholders party thereto, and the Agent, as amended by that certain First Amendment to Security Agreement, dated June 30, 2017, by and among the Company, the Noteholders party thereto, and the Agent, that certain Second Amendment to Security Agreement, dated December 22, 2019, by and among the Company, the Noteholders party thereto, and the Agent, and that certain Third Amendment to Security Agreement, dated as of the date hereof, by and among the Company, the Noteholders party thereto, and the Agent, as the same may be further amended, restated, supplemented or otherwise modified from time to time.

“Noteholders” means (x) each Person that is (i) a signatory to the Amendment Agreement and identified as a “Noteholder” on Exhibit A to the Amendment Agreement, (ii) a holder of any of the Notes (as defined in the Amendment Agreement), and (iii) a “Secured Party” party to the Initial Noteholder Security Agreement and (y) any other Person that becomes (i) a holder of any of the Notes pursuant to any permitted assignment or transfer and (ii) a “Secured Party” under the Initial Noteholder Security Agreement pursuant to a Security Agreement Joinder, other than any such Person that ceases to be a party to such agreement pursuant to an assignment of all of its Notes and its rights and obligations under the Transaction Documents (as defined in the Initial Security Agreement).

“Proceeds” means “proceeds” as such term is defined in section 9-102 of the UCC and, in any event, shall include all dividends or other income from the Collateral, collections thereon or distributions with respect thereto.

“Secured Obligations” has the meaning set forth in Section 3.

“UCC” means the Uniform Commercial Code as in effect from time to time in the State of New York or, when the laws of any other state govern the method or manner of the perfection or enforcement of any security interest in any of the Collateral, the Uniform Commercial Code as in effect from time to time in such state.

(b) Deposit Accounts. All of each Grantor’s deposit accounts are listed on Schedule 2 attached hereto and made a part hereof. Each of the deposit accounts listed on Schedule 2 shall be deemed to be a “deposit account” referenced in the definition of “Collateral” contained in Section 2 of this Agreement and shall be subject in all respects to the security interest granted by each Grantor to the Agent on behalf of each Secured Party pursuant to this Agreement. Upon establishing a deposit account that is not listed on Schedule 2 (to the extent that establishing such deposit account is otherwise permitted hereunder and under any other Notes Amendment Document), the applicable Grantor shall promptly give notice to the Agent that such deposit account has been established and shall immediately execute or otherwise authenticate, along with the other Grantors party hereto, a supplement to Schedule 2 that includes such deposit account and take all action necessary to give the Agent on behalf of each Secured Party “control” (as such term is defined in the UCC) over such deposit account, including causing the applicable bank or financial institution to enter into a control agreement (in form and substance acceptable to the Agent) with the Agent for such deposit account.

2. Grant of Security Interest. Each Grantor hereby grants to the Agent, on behalf of each Secured Party a continuing security interest in all of its right, title and interest in and to the following, wherever located, whether now existing or hereafter arising or acquired (collectively, the “Collateral”):

(a) all accounts (including health-care-insurance receivables), goods (including inventory and equipment), goods (including inventory and equipment) currently or hereafter held on consignment, documents (including, if applicable, electronic documents), fixtures, instruments, promissory notes, chattel paper (whether tangible or electronic), letters of credit, letter-of-credit rights (whether or not the letter of credit is evidenced by a writing), securities and all other investment property, commercial tort claims described on Schedule 1 hereof as supplemented by any written notification given by each applicable Grantor to Agent pursuant to Section 4(e), general intangibles (including all payment intangibles), money, deposit accounts (including each of the deposit accounts listed on Schedule 2 attached hereto), and any other contract rights or rights to the payment of money; and

(b) all Proceeds and products of each of the foregoing, all books and records relating to the foregoing, all supporting obligations related thereto, and all accessions to, substitutions and replacements for, and rents, profits and products of, each of the foregoing, and any and all Proceeds of any insurance, indemnity, warranty or guaranty payable to each Grantor from time to time with respect to any of the foregoing.

3. Secured Obligations. The Collateral secures the payment and performance of (a) all indebtedness and obligations of the Company and the Grantors under the Notes Amendment Documents; and (b) and all indebtedness and obligations of the Company and the Grantors owed to the Secured Parties now or hereafter existing under this Agreement (collectively, “Secured Obligations”).

4. Perfection of Security Interest and Further Assurances.

(a) Each Grantor shall, from time to time, as may be required by Agent with respect to all Collateral, promptly take all actions as may be reasonably requested by Agent to perfect the Lien of Agent in the Collateral, including, with respect to all Collateral over which control may be obtained within the meaning of sections 8-106, 9-104, 9-105, 9-106 and 9-107 of the UCC, section 201 of the federal Electronic Signatures in Global and National Commerce Act and, as the case may be, section 16 of the Uniform Electronic Transactions Act, as applicable, each Grantor shall promptly take all actions as may be reasonably requested from time to time by Agent so that control of such Collateral is obtained and at all times held by the Agent on behalf of each Secured Party. All of the foregoing shall be at the Grantors’ sole cost and expense.

(b) Each Grantor hereby irrevocably authorizes Agent or its designees at any time and from time to time to file in any relevant jurisdiction any financing statements and amendments thereto that contain the information required by Article 9 of the UCC of each applicable jurisdiction for the filing of any financing statement or amendment relating to the Collateral, including any financing or continuation statements or other documents for the purpose of perfecting, confirming, continuing, enforcing or protecting the Lien granted by each Grantor hereunder, without each Grantor’s signature where permitted by law, including the filing of a financing statement describing the Collateral as all assets now owned or hereafter acquired by each Grantor, or words of similar effect. Each Grantor agrees to provide all information required by Agent pursuant to this Section promptly to Agent upon request.

(c) Each Grantor hereby further authorizes Agent or its designees to file with the United States Patent and Trademark Office and the United States Copyright Office (and any successor office and any similar office in any state of the United States or in any other country) this Agreement and other documents for the purpose of perfecting, confirming, continuing, enforcing or protecting the Lien granted by each Grantor hereunder, without each such Grantor’s signature where permitted by law.

(d) If any Grantor shall at any time hold or acquire any certificated securities, promissory notes, tangible chattel paper, negotiable documents or warehouse receipts relating to the Collateral, any such Grantor shall promptly indorse, assign and deliver the same to Agent, accompanied by such instruments of transfer or assignment duly executed in blank as Agent may from time to time specify.

(e) If any Grantor shall at any time hold or acquire a commercial tort claim, such Grantor shall (a) promptly notify Agent in a writing signed by such Grantor of the particulars thereof and grant to Agent on behalf of the Secured Parties in such writing a Lien therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance satisfactory to Agent and (b) deliver to Agent an updated Schedule 1.

(f) If any Collateral is at any time in the possession of a bailee, any such Grantor shall promptly notify Agent thereof and, at Agent’s request and option, shall promptly obtain an acknowledgment from the bailee, in form and substance satisfactory to Agent, that the bailee holds such Collateral for the benefit of the Secured Parties and the bailee agrees to comply, without such Grantor’s further consent, at any time with instructions of Agent as to such Collateral.

(g) If any Grantor is at any time a beneficiary under a letter of credit, such Grantor will promptly notify Agent and, at Agent’s request, such Grantor will, pursuant to an agreement in form and substance reasonably acceptable to Agent, either (a) arrange for the issuer and any confirmer or other nominated person of such letter of credit to consent to an assignment to Agent of the proceeds of the letter of credit or (b) arrange for Agent to become the transferee beneficiary of the letter of credit.

(h) Each Grantor agrees that at any time and from time to time, at the Grantors’ expense, each Grantor will promptly execute and deliver all further instruments and documents, obtain such agreements from third parties, and take all further action, that may be necessary or desirable, or that Agent may reasonably request, in order to perfect and protect any Lien granted hereby or to enable Agent to exercise and enforce its and the other Secured Parties’ rights and remedies hereunder or under any other agreement with respect to any Collateral.

5. Representations and Warranties. Each Grantor represents and warrants as follows:

(a) (i) Each Grantor’s exact legal name is that indicated on the signature page hereof and (ii) each Grantor is an organization of the type, and is organized in the jurisdiction, set forth in the preamble hereof.

(b) The Collateral consisting of securities have been duly authorized and validly issued, and are fully paid and non-assessable and subject to no options to purchase or similar rights. Each Grantor holds no commercial tort claims except as indicated on Schedule 1. None of the Collateral constitutes, or is the proceeds of, “farm products” as defined in section 9-102(a)(34) of the UCC. None of the account debtors or other persons obligated on any of the Collateral is a governmental authority covered by the Federal Assignment of Claims Act or like federal, state or local statute or rule in respect of such Collateral. Each Grantor has at all times operated its business in compliance with all applicable provisions of the federal Fair Labor Standards Act, as amended, and with all applicable provisions of federal, state and local statutes and ordinances dealing with the control, shipment, storage or disposal of hazardous materials or substances.

(c) At the time the Collateral becomes subject to the Lien created by this Agreement, each Grantor will be the sole, direct, legal and beneficial owner thereof, free and clear of any Lien, claim, option or right of others except for the Lien created by this Agreement and other Permitted Liens.

(d) The grant of security interest in the Collateral pursuant to this Agreement creates a valid and perfected First Priority Lien in the Collateral, securing the payment and performance when due of the Secured Obligations.

(e) Each Grantor has full power, authority and legal right to grant a security interest in the Collateral pursuant to this Agreement.

(f) This Agreement has been duly authorized, executed and delivered by each Grantor and constitutes a legal, valid and binding obligation of each Grantor enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and subject to equitable principles (regardless of whether enforcement is sought in equity or at law).

(g) No authorization, approval, or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the issuance of the Amended Notes and the grant of the security interest by each Grantor of the Collateral pursuant to this Agreement or for the execution and delivery of this Agreement by each Grantor or the performance by each Grantor of its obligations thereunder, other than filings to perfect the security interest.

(h) The execution and delivery of this Agreement by each Grantor and the performance by each Grantor of its obligations hereunder, will not violate any provision of any applicable law or regulation or any order, judgment, writ, award or decree of any court, arbitrator or governmental authority, domestic or foreign, applicable to each Grantor or any of its property, or the organizational or governing documents of each Grantor or any agreement or instrument to which each Grantor is party or by which it or its property is bound.

(i) Each Grantor has taken all action required on its part for control (as defined in sections 8-106, 9-104, 9-105, 9-106 and 9-107 of the UCC, section 201 of the federal Electronic Signatures in Global and National Commerce Act and, as the case may be, section 16 of the Uniform Electronic Transactions Act, as applicable) to have been obtained by Agent over all Collateral with respect to which such control may be obtained pursuant to the UCC. No person other than Agent has control or possession of all or any part of the Collateral.

6. Accounts Receivable.

(a) Agent may at any time and from time to time send or require each or any Grantor to send requests for verification of Accounts or notices of assignment to account debtors and other obligors. Agent may also at any time and from time to time telephone account debtors and other obligors to verify accounts.

(b) Agent may establish a collateral account for the deposit of checks, drafts and cash payments made by each or any Grantor’s account debtors. If a collateral account is so established, each such Grantor shall promptly deliver to Agent, for deposit into said collateral account, all payments on Accounts and chattel paper received by it. All such payments shall be delivered to Agent in the form received (except for such Grantor’s endorsement where necessary). Until so deposited, all payments on Accounts and chattel paper received by such Grantor shall be held in trust by such Grantor for and as the property of Agent on behalf of the Secured Parties and shall not be commingled with any funds or property of such Grantor. All deposits in said collateral account shall constitute proceeds of Collateral and shall not constitute payment of any Secured Obligation. Unless otherwise agreed in writing, such Grantor shall have no right to withdraw amounts on deposit in any collateral account.

(c) Agent may, by notice to each Grantor, require each Grantor to direct each of its account debtors to make payment directly to a special lockbox to be under the control of Agent. Each Grantor hereby authorizes and directs Agent to deposit all checks, drafts and cash payments received in said lockbox into the collateral account established as set forth above.

(d) Agent may notify any account debtor, or any other Person obligated to pay any amount due, that such chattel paper, general intangible, Account, or other right to payment has been assigned or transferred to Agent for security and shall be paid directly to Agent. At any time after Secured Party or each or any Grantor gives such notice to an account debtor or other obligor, Agent, on behalf of the Secured Parties, may (but need not), in its own name or in such Grantor’s name, demand, sue for, collect or receive any money or property at any time payable or receivable on account of, or securing, any such chattel paper, Account, or other right to payment, or grant any extension to, make any compromise or settlement with or otherwise agree to waive, modify, amend or change the obligations (including collateral obligations) of any such account debtor or other obligor.

7. Voting and Distributions.

(a) The Secured Parties agree that unless an Event of Default shall have occurred and be continuing, each Grantor may, to the extent such Grantor has such right as a holder of the Collateral consisting of securities, other equity interests or indebtedness owed by any obligor, vote and give consents, ratifications and waivers with respect thereto, except to the extent that, in Agent’s reasonable judgment, any such vote, consent, ratification or waiver would have a material adverse effect on the value thereof as Collateral or which would be inconsistent with or result in any violation of any provision of this Agreement or any other Notes Amendment Documents in any material respect, and from time to time, upon request from any Grantor, Agent shall deliver to such Grantor suitable proxies so that such Grantor may cast such votes, consents, ratifications and waivers.

(b) The Secured Parties agree that each Grantor may, unless an Event of Default shall have occurred and be continuing, receive and retain all dividends and other distributions with respect to the Collateral consisting of securities, other equity interests or indebtedness owed by any obligor.

8. Covenants. Each Grantor covenants as follows:

(a) No Grantor will, without providing at least 30 days’ prior written notice to Agent, change its legal name, identity, type of organization, jurisdiction of organization, corporate structure, location of its chief executive office or its principal place of business or its organizational identification number. Grantors will, prior to any change described in the preceding sentence, take all actions reasonably requested by Agent to maintain the perfection and priority of Agent’s Lien in the Collateral.

(b) Grantors will keep the Collateral, to the extent not delivered to Agent pursuant to Section 4, at those locations listed on Schedule 3 attached hereto and no Grantor will remove the Collateral from such locations without providing at least 10 days’ prior written notice to Agent except for (a) vehicles and equipment out for repair or in service in the field, (b) inventory in transit in the ordinary course of business, and (c) Collateral that has been replaced, used and otherwise consumed in the ordinary course of business.

(c) Grantors will, at their sole cost and expense, defend title to the Collateral and the First Priority Lien of Agent therein against the claim of any person claiming against or through Grantors and shall maintain and preserve such perfected First Priority Lien for so long as this Agreement shall remain in effect.

(d) Grantors will not grant, create, permit or suffer to exist any Lien, option, right of first offer, encumbrance or other restriction or limitation of any nature whatsoever on, any of the Collateral or any interest therein except for Permitted Liens.

(e) Grantors will not sell, lease, or otherwise dispose of any of the Collateral except for in the ordinary course of business or as otherwise permitted by the Notes Amendment Documents.

(f) Grantors will keep the Collateral in good order and repair and will not use the same in violation of law or any policy of insurance thereon. Grantors will permit Agent, or its designee, to inspect the Collateral at any reasonable time, wherever located.

(g) Grantors will pay promptly when due all taxes, assessments, governmental charges, and levies upon the Collateral or incurred in connection with the use or operation of the Collateral or incurred in connection with this Agreement.

(h) Grantors will continue to operate their business in compliance with all applicable provisions of the federal Fair Labor Standards Act, as amended, and with all applicable provisions of federal, state and local statutes and ordinances dealing with the control, shipment, storage or disposal of hazardous materials or substances.

9. Agent Appointed Attorney-in-Fact. Each Grantor hereby appoints Agent as the Grantors’ attorney-in-fact, with full authority in the place and stead of the Grantors and in the name of each Grantor or otherwise, from time to time during the continuance of an Event of Default in Agent’s discretion to take any action and to execute any instrument which Agent may deem necessary or advisable to accomplish the purposes of this Agreement (but Agent shall not be obligated to and shall have no liability to any Grantor or any third party for failure to do so or take action). This appointment, being coupled with an interest, shall be irrevocable. Each Grantor hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof.

10. Agent May Perform. If any Grantor fails to perform any obligation contained in this Agreement, Agent may itself perform, or cause performance of, such obligation, and the expenses of Agent or any other Secured Party incurred in connection therewith shall be jointly and severally payable by the Grantors; provided that Agent or any other Secured Party shall not be required to perform or discharge any obligation of any Grantor.

11. Reasonable Care. Agent shall have no duty with respect to the care and preservation of the Collateral beyond the exercise of reasonable care. Agent shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession if the Collateral is accorded treatment substantially equal to that which Agent accords its own property, it being understood that Agent shall not have any responsibility for (a) ascertaining or taking action with respect to any claims, the nature or sufficiency of any payment or performance by any party under or pursuant to any agreement relating to the Collateral or other matters relative to any Collateral, whether or not Agent has or is deemed to have knowledge of such matters, or (b) taking any necessary steps to preserve rights against any parties with respect to any Collateral. Nothing set forth in this Agreement, nor the exercise by Agent, on behalf of the Secured Parties, of any of the rights and remedies hereunder, shall relieve any Grantor from the performance of any obligation on such Grantor’s part to be performed or observed in respect of any of the Collateral.

12. Remedies Upon Default. If any Event of Default shall have occurred and be continuing:

(a) Agent, without any other notice to or demand upon any Grantor, may assert all rights and remedies of a secured party under the UCC or other applicable law, including the right to take possession of, hold, collect, sell, lease, deliver, grant options to purchase or otherwise retain, liquidate or dispose of all or any portion of the Collateral. If notice prior to disposition of the Collateral or any portion thereof is necessary under applicable law, written notice mailed to applicable Grantor at its notice address as provided in Section 19 hereof 10 days prior to the date of such disposition shall constitute reasonable notice, but notice given in any other reasonable manner shall be sufficient. So long as the sale of the Collateral is made in a commercially reasonable manner, Agent may sell such Collateral on such terms and to such purchaser(s) as Agent, on behalf of the Secured Parties, in its absolute discretion may choose, without assuming any credit risk and without any obligation to advertise or give notice of any kind other than that necessary under applicable law. Without precluding any other methods of sale, the sale of the Collateral or any portion thereof shall have been made in a commercially reasonable manner if conducted in conformity with reasonable commercial practices of creditors disposing of similar property. At any sale of the Collateral, if permitted by applicable law, Agent or any other Secured Party may be the purchaser, licensee, assignee or recipient of the Collateral or any part thereof and shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold, assigned or licensed at such sale, to use and apply any of the Secured Obligations as a credit on account of the purchase price of the Collateral or any part thereof payable at such sale. To the extent permitted by applicable law, each Grantor waives all claims, damages and demands it may acquire against Agent or any other Secured Party arising out of the exercise by it of any rights hereunder. Each Grantor hereby waives and releases to the fullest extent permitted by law any right or equity of redemption with respect to the Collateral, whether before or after sale hereunder, and all rights, if any, of marshalling the Collateral and any other security for the Secured Obligations or otherwise. At any such sale, unless prohibited by applicable law, Agent or any other Secured Party or any custodian may bid for and purchase all or any part of the Collateral so sold free from any such right or equity of redemption. None of Agent, any other Secured Party or any custodian shall be liable for failure to collect or realize upon any or all of the Collateral or for any delay in so doing, nor shall it be under any obligation to take any action whatsoever with regard thereto.

(b) All rights of each Grantor to (i) exercise the voting and other consensual rights it would otherwise be entitled to exercise pursuant to Section 7(a) and (ii) receive the dividends and other distributions which it would otherwise be entitled to receive and retain pursuant to Section 7(b), shall immediately cease, and all such rights shall thereupon become vested in Agent, on behalf of the Secured Parties, which shall have the sole right to exercise such voting and other consensual rights and receive and hold such dividends and other distributions as Collateral.

(c) Any cash held by Agent as Collateral and all cash Proceeds received by Agent in respect of any sale of, collection from, or other realization upon all or any part of the Collateral shall be applied in whole or in part by Agent to the payment of expenses incurred by Secured Party in connection with the foregoing, including reasonable attorneys’ fees, and the balance of such proceeds shall be applied or set off against all or any part of the Secured Obligations in such order set forth in the Transaction Documents. Any surplus of such cash or cash Proceeds held by Agent and remaining after payment in full of all the Secured Obligations shall be paid over to the Grantors or to whomsoever may be lawfully entitled to receive such surplus. The Grantors shall remain jointly and severally liable for any deficiency if such cash and the cash Proceeds of any sale or other realization of the Collateral are insufficient to pay the Secured Obligations and the fees and other charges of any attorneys employed by Agent or any other Secured Party to collect such deficiency.

(d) If Agent shall determine to exercise its rights to sell all or any of the Collateral pursuant to this Section, each Grantor agrees that, upon request of Agent, each such Grantor will, at its own expense, be jointly and severally liable to do or cause to be done all such acts and things as may be necessary to make such sale of the Collateral or any part thereof valid and binding and in compliance with applicable law.

13. Standards for Exercising Rights and Remedies. To the extent that applicable law imposes duties on Agent to exercise remedies in a commercially reasonable manner, each Grantor acknowledges and agrees that it is not commercially unreasonable for Agent (a) to fail to incur expenses reasonably deemed significant by Agent to prepare Collateral for disposition or otherwise to fail to complete raw material or work in process into finished goods or other finished products for disposition, (b) to fail to obtain third party consents for access to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to obtain governmental or third party consents for the collection or disposition of Collateral to be collected or disposed of, (c) to fail to exercise collection remedies against account debtors or other persons obligated on Collateral or to fail to remove liens or encumbrances on or any adverse claims against Collateral, (d) to exercise collection remedies against account debtors and other persons obligated on Collateral directly or through the use of collection agencies and other collection specialists, (e) to advertise dispositions of Collateral through publications or media of general circulation, whether or not the Collateral is of a specialized nature, (f) to contact other persons, whether or not in the same business as the Company, for expressions of interest in acquiring all or any portion of the Collateral, (g) to hire one or more professional auctioneers to assist in the disposition of Collateral, whether or not the collateral is of a specialized nature, (h) to dispose of Collateral by utilizing Internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capability of doing so, or that match buyers and sellers of assets, (i) to dispose of assets in wholesale rather than retail markets, (j) to decline to provide credit to any potential purchaser of the Collateral in connection with Agent’s disposition of the Collateral, (k) to disclaim disposition warranties, (l) to purchase insurance or credit enhancements to insure Agent against risks of loss, collection or disposition of Collateral or to provide to Agent a guaranteed return from the collection or disposition of Collateral, or (m) to the extent deemed appropriate by Agent, to obtain the services of other brokers, investment bankers, consultants and other professionals to assist Agent in the collection or disposition of any of the Collateral. Each Grantor acknowledges that the purpose of this Section is to provide non-exhaustive indications of what actions or omissions by Agent would satisfy Agent’s duties under the UCC in Agent’s exercise of remedies against the Collateral and that other actions or omissions by Agent shall not be deemed to fail to satisfy such duties solely on account of not being indicated in this Section. Without limitation upon the foregoing, nothing contained in this Section shall be construed to grant any rights to any Grantor or to impose any duties on Agent that would not have been granted or imposed by this Agreement or by applicable law in the absence of this Section.

14. No Waiver and Cumulative Remedies. Agent or any other Secured Party shall not by any act (except by a written instrument pursuant to Section 18), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any default or Event of Default. All rights and remedies herein provided are cumulative and are not exclusive of any rights or remedies provided by law.

15. Security Interest Absolute. All rights of Agent, the other Secured Parties and Liens hereunder, and all Secured Obligations of the Grantors hereunder, shall be absolute and unconditional irrespective of: (a) any illegality or lack of validity or enforceability of any Secured Obligation or any related agreement or instrument; (b) any change in the time, place or manner of payment of, or in any other term of, the Secured Obligations, or any rescission, waiver, amendment or other modification of the Notes Amendment Documents, including any increase in the Secured Obligations resulting from any extension of additional credit or otherwise; (c) any taking, exchange, substitution, release, impairment or non-perfection of any Collateral or any other collateral, or any taking, release, impairment, amendment, waiver or other modification of any guaranty, for all or any of the Secured Obligations; (d) any manner of sale, disposition or application of proceeds of any Collateral or any other collateral or other assets to all or part of the Secured Obligations; (e) any default, failure or delay, willful or otherwise, in the performance of the Secured Obligations; (f) any defense, set-off or counterclaim (other than a defense of payment or performance) that may at any time be available to, or be asserted by, each or any Grantor against the Secured Parties; or (g) any other circumstance (including any statute of limitations) or manner of administering the Amended Notes or any existence of or reliance on any representation by Secured Parties that might vary the risk of each or any Grantor or otherwise operate as a defense available to, or a legal or equitable discharge of, such Grantor or any other grantor, guarantor or surety.

16. Continuing Security Interest; Further Actions. This Agreement creates a continuing First Priority Lien in the Collateral and shall (a) subject to Section 17, remain in full force and effect until payment and performance in full of the Secured Obligations, (b) be binding upon each Grantor, its successors and assigns, and (c) inure to the benefit of Secured Parties and their successors, transferees and assigns; provided that no Grantor may assign or otherwise transfer any of its rights or obligations under this Agreement without Agent’s prior written consent.

17. Termination; Release. On the date on which all Principal, accrued Interest, and other amounts at any time owed on the Notes Amendment Documents have been paid in full, this Agreement will terminate automatically without any delivery of any instrument or performance of any act by any party, except that provisions that by their terms survive the termination of the Notes Amendment Documents will so survive. Upon such termination, Agent will, at the request and expense of the Grantors, (a) duly assign, transfer and deliver to or at the direction of the Grantors (without recourse and without any representation or warranty) such of the Collateral as may then remain in the possession of Agent, together with any monies at the time held by Agent hereunder, and (b) execute and deliver to the Grantors a proper instrument or instruments acknowledging the satisfaction and termination of this Agreement.

18. Amendments. None of the terms or provisions of this Agreement may be amended, modified, supplemented, terminated or waived, and no consent to any departure by the Grantors therefrom shall be effective unless the same shall be in writing and signed by Agent and the Grantors, and then such amendment, modification, supplement, waiver or consent shall be effective only in the specific instance and for the specific purpose for which made or given.

19. Notices. All notices, requests and demands to or upon any party hereto shall be given in the manner and become effective as stipulated in the Amendment Agreement. Regardless of the manner in which notice is provided, notices may be sent to Agent at the Agent’s notice information set forth in the signature pages hereof and to each Grantor at each Grantor’s notice information set forth in the signature pages hereof or to such other address or telephone number as any party may give to the other for such purpose in accordance with this paragraph.

20. Headings. The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.

21. Counterparts; Integration; Effectiveness. This Agreement and any amendments, waivers, consents or supplements hereto may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all taken together shall constitute a single contract. This Agreement and the other Notes Amendment Documents constitute the entire contract among the parties with respect to the subject matter of the Notes Amendment Documents and supersede all previous agreements and understandings, oral or written, with respect thereto. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or in electronic (i.e., “pdf” or “tif”) format shall be effective as delivery of a manually executed counterpart of this Agreement.

22. Governing Law; Jurisdiction; Etc.

(a) The laws of the State of New York will govern this Agreement and any claim, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Agreement and the transactions contemplated hereby and thereby.

(b) Each Grantor irrevocably and unconditionally agrees that it will not commence any action, litigation or proceeding of any kind whatsoever, whether in law or equity, or whether in contract or tort or otherwise, against the Secured Parties in any way relating to this Agreement or the transactions contemplated hereby, in any forum other than the courts of the State of New York sitting in the city of New York, borough of Manhattan, and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, and each of the parties hereto irrevocably and unconditionally submits to the jurisdiction of such courts and agrees that any such action, litigation or proceeding may be brought in any such New York State court or, to the fullest extent permitted by applicable law, in such federal court. Each of the parties hereto agrees that a final judgment in any such action, litigation or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing herein shall affect any right that the Secured Parties may otherwise have to bring any action or proceeding relating to this Agreement against any Grantor or its properties in the courts of any jurisdiction.

(c) Each Grantor irrevocably and unconditionally waives, to the fullest extent permitted by applicable law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Agreement in any such court referred to in Section 22(b). Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(d) Each Grantor irrevocably consents to the service of process in the manner provided for notices in Section 19 and agrees that nothing herein will affect the right of any party hereto to serve process in any other manner permitted by applicable law.

23. Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY. EACH PARTY HERETO (A) CERTIFIES THAT NO AGENT, ATTORNEY, REPRESENTATIVE OR ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF LITIGATION, AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER NOTES AMENDMENT DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

24.  Inconsistency with Intercreditor Agreement. In the event of any conflict between the terms of this Agreement and the Intercreditor Agreement, the Intercreditor Agreement shall control.

[signature page to follow]

The parties have executed this Security Agreement as of the date set forth in the introductory paragraph.

Signature Page to Security Agreement (Western Assets)

SCHEDULE 1

COMMERCIAL TORT CLAIMS

None.

Schedule 1 to Security Agreement

SCHEDULE 2

DEPOSIT ACCOUNT

Schedule 2 to Security Agreement

SCHEDULE 3

COLLATERAL LOCATIONS

400 Capitol Mall, Suite 2060, Sacramento, California 95814

Schedule 3 to Security Agreement

Exhibit 10.10

Execution Version

THIRD AMENDMENT TO SECURITY AGREEMENT

THIS THIRD AMENDMENT TO SECURITY AGREEMENT (this “Amendment”) is entered into effective as of March 20, 2020 by and among Pacific Ethanol, Inc., a Delaware corporation (the “Company”), each of the Holders and the New Holders (as defined below), each in its capacity as a Holder and as a Secured Party, Cortland Products Corp. (“Cortland Corp.”), as Successor Agent (as defined below), and Cortland Capital Market Services LLC (“Cortland LLC”), as existing collateral agent for itself and the Secured Parties (in such capacity, the “Existing Agent”). All capitalized terms not otherwise defined herein or in the Security Agreement (as defined below) shall have the meanings attributed to them in that certain Senior Secured Note Amendment Agreement dated effective as of December 22, 2019 by and among the Company and each Holder (the “Amendment Agreement”).

RECITALS

WHEREAS, the Company and the Holders are party to the Amendment Agreement pursuant to which the Company issued the Amended Notes;

WHEREAS, to secure the Obligations under the Amended Notes, the Company, Existing Agent, and the other Secured Parties entered into that certain Security Agreement dated as of December 15, 2016 (as amended, restated, supplemented, or otherwise modified from time to time, the “Security Agreement”);

WHEREAS, the Existing Agent desires to resign as collateral agent under the Security Agreement and the Required Holders have agreed to appoint Cortland Corp. to act as successor Agent (in such capacity, together with its successors and assigns in such capacity, the “Successor Agent”) pursuant to Section 17(j) of the Security Agreement;

WHEREAS, the Company approves of the appointment of the Successor Agent as the successor collateral agent pursuant to Section 17(j) of the Security Agreement;

WHEREAS, the Successor Agent has agreed to accept the role of the collateral agent on behalf of itself and the Secured Parties in accordance with Section 17(j) of the Security Agreement;

WHEREAS, to secure the obligations of the Company under the Transaction Documents, pursuant to the Transaction Documents, certain affiliates of the Company are required to enter into certain additional Collateral Documents;

WHEREAS, in connection with the entry into such additional Collateral Documents, the parties hereto have further agreed to amend the Security Agreement as set forth herein,

AGREEMENT

NOW, THEREFORE, in consideration of the agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

1. Resignation and Appointment of Agent. Pursuant to Section 17(j) of the Security Agreement, in each case, effective as of the Effective Date (as defined below) (a) the Existing Agent hereby resigns from the performance of all its functions and duties under this Agreement and the other Transaction Documents, (b) each party hereto hereby waives the provisions of Section 17(j) of the Security Agreement requiring that the Company and the Secured Parties be provided with thirty (30) days’ advance written notice of the resignation of the Existing Agent, (c) the Existing Agent’s resignation shall be effective and each of the Company and the Required Holders accepts the resignation of Cortland LLC as the collateral agent under the Security Agreement, and Cortland LLC shall have no further obligations under the Transaction Documents or the Collateral Documents in its capacity as the Agent or the collateral agent under any Transaction Document (other than the obligations set forth herein), (d) the Required Holders appoint Cortland Corp. to act as the Agent (and as collateral agent under each Transaction Document to which it is party as successor to the Existing Agent or becomes party on or about the date hereof pursuant to any Transaction Document to be entered into on or about the date hereof) and (e) the Company consents to the appointment of Cortland Corp. to act as the Agent (and as collateral agent under each other Transaction Document to which it is or to be party as collateral agent). As of the Effective Date, Cortland Corp. accepts the appointment to act as the successor collateral agent under the Transaction Documents and the Collateral Documents. The Required Holders and the Company waive any inconsistency or conflict with the provisions of the Security Agreement and any other Transaction Document with respect to the resignation of Cortland LLC as Agent (and as collateral agent under any Transaction Document) and the appointment of Cortland Corp. as the successor Agent (and as collateral agent under each Transaction Document to which it is a party). Each of the parties hereto agrees, at the Company’s sole cost and expense, to execute all documents necessary to evidence and give effect to the appointment of Cortland Corp. as the successor Agent.

2. Rights, Duties and Obligations of Successor Agent. (a) Effective as of the Effective Date, the Successor Agent is hereby vested with all the rights, powers, discretion and privileges of the Agent, as described in the Security Agreement and the other Transaction Documents, and the Successor Agent assumes, from and after the Effective Date, the duties and obligations of the Agent in accordance with the terms of the Security Agreement and the other Transaction Documents, and, the Existing Agent is discharged from all of its duties and obligations as the Agent under the Transaction Documents. The Existing Agent shall bear no responsibility for any actions taken or omitted to be taken by the Successor Agent after the Existing Agent’s time serving as the Agent under the Security Agreement and the other Transaction Documents. Nothing in this Agreement shall be deemed a termination of the provisions of any Transaction Document (including, without limitation, Sections 12, 17(i), and 18(j) of the Security Agreement) that survive the Existing Agent’s resignation pertaining to Cortland LLC in its capacity as Agent. For the avoidance of doubt and without prejudice to any other provision of the Transaction Documents that is purported to survive the Existing Agent’s resignation, Sections 12, 17(i), and 18(j) of the Security Agreement shall continue in effect for the benefit of Cortland LLC and its affiliates and the respective directors, trustees, officers, employees, agents and advisors of Cortland LLC and its affiliates on and after the Effective Date. The Company and the Required Holders expressly agree and acknowledge that the Successor Agent is not assuming any liability (i) under or related to the Transaction Documents prior to the Effective Date, (ii) for any actions taken or omitted to be taken by Cortland LLC in its capacity as the Existing Agent or otherwise under this Amendment, the Security Agreement and the other Transaction Documents or the transactions contemplated thereby and (iii) for any and all claims under or related to the Transaction Documents that may have arisen or accrued prior to the Effective Date. Each of the Company and the Required Holders, with respect to their applicable indemnification obligations under the Transaction Documents, expressly agrees and confirms that the Successor Agent’s right to indemnification, as set forth in the Transaction Documents, shall apply with respect to any and all losses, claims, costs and expenses that the Successor Agent suffers or incurs relating to actions taken or omitted by any of the parties to this Amendment prior to the Effective Date.

(b) (i) The Existing Agent hereby assigns to the Successor Agent each of the Liens and security interests granted to, or in favor of, the Existing Agent for the benefit of the Secured Parties under the Transaction Documents. All of such liens and security interests shall in all respects be continuing and in effect and are hereby reaffirmed by the Company.

(ii) Each of the Existing Agent and the Company hereby agrees to execute and deliver, at the Company’s sole cost and expense, to the Successor Agent any UCC financing statements or similar documents, assignments or amendments that the Successor Agent or the Required Holders reasonably request to evidence the Successor Agent’s succession as Agent under the Security Agreement and the other Transaction Documents. Each of the Existing Agent, the Company and the Holders party hereto hereby authorizes the Successor Agent (or its designee) to file any UCC financing statements or similar documents, assignments or amendments that the Successor Agent deems necessary or desirable to evidence the Successor Agent’s succession as Agent under the Security Agreement and the other Transaction Documents; provided that the Existing Agent shall bear no responsibility for any actions taken or omitted to be taken by the Successor Agent (or its designee) with respect to the foregoing.

3. Notice Information. The address details listed on the Successor Agent’s signature page hereto are to be used for purposes of all communications to the Successor Agent pursuant to the Security Agreement and the other Transaction Documents.

4. Fees and Expenses. All fees and expenses incurred by the Existing Agent prior to the date hereof have been presented in an invoice and paid in full by the Company. Commencing on the Effective Date, (a) the Successor Agent shall be entitled to receive its agency fees and expenses set forth in that certain Agent Fee Letter, dated as of the date hereof, between the Company and the Successor Agent (the “New Agent Fee Letter”) and (b) the Existing Agent shall cease to be entitled to receive the “Collateral Agency Fees” payable to the Existing Agent pursuant to Section 12(i) of the Security Agreement and that certain Agent Fee Letter, dated as of December 15, 2016, by and between the Company and the Existing Agent. All other provisions of the Security Agreement and the other Transaction Documents providing for the payment of fees and expenses of, and providing indemnities for the benefit of, the Existing Agent shall remain in full force and effect for the benefit of the Successor Agent and its Related Parties (and, where applicable, the Existing Agent and its Related Parties). The Company, the Holders and the Successor Agent hereby acknowledge and agree that, effective as of the Effective Date, the New Agency Fee Letter shall constitute the “Agent Fee Letter” under the Security Agreement, and all fees, costs, expenses and compensation payable thereunder shall constitute Obligations secured equally and ratably by the collateral under each of the Collateral Documents.

5. Amendments to Security Agreement.

(c) Section 1 of the Security Agreement is hereby amended to insert the following defined terms therein in their appropriate alphabetical order as follows:

“Collateral Documents” shall mean all security agreements, mortgages, pledge agreements, documents, filings, certificates, and other agreements which grant the Holders, or the Agent as collateral agent for the Holders, a security interest to secure the Obligations.

“Intercreditor Agreement” means that certain Intercreditor Agreement, dated as of March 20, 2020, made by any among the Agent, as “Notes Agent”, CoBank, ACB, as “CoBank Agent”, the Company and each of the other grantors party thereto, as may be amended, restated, supplemented or otherwise modified from time to time.

“Transaction Documents” means this Agreement, the Amendment Agreement and the schedules and exhibits attached thereto, the Amended Notes, the Purchase Agreement, the Notes, the Warrants, the Registration Rights Agreement, the Transfer Agent Instructions, the Collateral Documents, and the Intercreditor Agreement, together with any amendments, restatements, extensions or other modifications thereto.

(d) Section 17 of the Security Agreement is amended and restated in its entirety to read as follows:

“17.  Agent.

(a) Appointment. The Secured Parties, by their acceptance of the benefits of the Agreement, hereby designate Cortland Products Corp. as the Agent to act as specified herein and in each other Collateral Document to which it is party as Agent. Each Secured Party shall be deemed irrevocably to authorize and direct the Agent to take such action on its behalf under the provisions of this Agreement and each other Collateral Document to which it is party and to exercise such powers and to perform such duties hereunder and thereunder as are specifically delegated to or required of the Agent by the terms hereof and thereof and such other powers as are reasonably incidental thereto. The Agent may perform any and all of its duties hereunder and exercise its rights and powers hereunder by or through any one or more sub-agents appointed by it, and will not be responsible for any misconduct or negligence on the part of any of them. The Agent and any such sub-agent may perform any and all of its duties hereunder and exercise its rights and powers hereunder by or through their respective Affiliates. The exculpatory and indemnification provisions of this Agreement shall apply to any such sub-agent and to the Affiliates of the Agent and any such sub-agent. All of the rights, benefits, and privileges (including the exculpatory and indemnification provisions) of this Agreement shall apply to any such sub-agent and to the Affiliates of any such sub-agent as if such sub-agent and Affiliates were named herein.

(b) Nature of Duties. The Agent shall have no duties or responsibilities except those expressly set forth in this Agreement and each of the other Collateral Documents to which it is a party. Without limiting the generality of the foregoing, (i) the Agent shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby that the Agent is instructed in writing to exercise by the Required Holders (or such greater number of Holders as may be expressly required herein); provided that the Agent shall not be required to take any action that, in its opinion or the opinion of its legal counsel, may expose the Agent to liability or that is contrary to this Agreement or any other Transaction Document or applicable law, including for the avoidance of doubt any action that may be in violation of the automatic stay under the Bankruptcy Code, and (ii) neither the Agent nor any of its partners, officers, directors, employees or agents shall be liable for any action taken or not taken by it as such under this Agreement or any other Collateral Document or hereunder or thereunder or in connection herewith or therewith, be responsible for the consequence of any oversight or error of judgment or answerable for any loss, unless caused solely by it or its gross negligence or willful misconduct as determined by a final judgment (not subject to further appeal) of a court of competent jurisdiction, and then only for direct damages to the extent provided by law and not for any lost profits or special, indirect or consequential damages or (to the fullest extent a claim for punitive damages may lawfully be waived) any punitive damages; provided, further, that neither the Agent nor any of its partners, officers, directors, employees or agents shall be liable for any action taken or not taken by it with the consent or at the request of the Required Holders (or such greater number of Holders as may be expressly required herein). The duties of the Agent shall be mechanical and administrative in nature; the Agent shall not have by reason of this Agreement, any other Collateral Document or any other related agreement a fiduciary relationship or other implied duties under this Agreement, any other Collateral Document or any other related agreement, or in respect of the Company or any Secured Party, regardless of whether an Event of Default has occurred and is continuing; and nothing in the Agreement, any other Collateral Document or any other related agreement, expressed or implied, is intended to or shall be so construed as to impose upon the Agent any obligations in respect of this Agreement, any other Collateral Document or any other related agreement except as expressly set forth herein and therein.

(c) Other Agreements. The Agent has accepted and is bound by this Agreement and each other Collateral Document executed by or in favor of the Agent. The Agent will not otherwise be bound by, or be held obligated by, the provisions of any note purchase agreement, indenture, note or other agreement (other than this Agreement and the other documents executed by the Agent in connection herewith).

(d) Lack of Reliance on the Agent. Independently and without reliance upon the Agent, each Secured Party, to the extent it deems appropriate, has made and shall continue to make (i) its own independent investigation of the financial condition and affairs of the Company and its subsidiaries in connection with such Secured Party’s purchase of Notes, the creation and continuance of the Obligations, the transactions contemplated by the Transaction Documents, and the taking or not taking of any action in connection therewith, and (ii) its own appraisal of the creditworthiness of the Company, and of the value of the Collateral (as defined in each Collateral Document) from time to time, and the Agent shall have no duty or responsibility, either initially or on a continuing basis, to provide any Secured Party with any credit, market or other information with respect thereto, whether coming into its possession before any Obligations are incurred or at any time or times thereafter. The Agent shall not be responsible to the Company or any Secured Party for any recitals, statements, information, financial statements, representations or warranties herein or in any document, certificate or other writing delivered in connection herewith, or for the execution, effectiveness, genuineness, validity, enforceability, perfection, collectability, priority or sufficiency of this Agreement, any other Collateral Document, or any other related agreement or any contracts or insurance policies, or for the financial condition of the Company or the value of any of the Collateral (as defined in any of the Collateral Documents), or have any duty to ascertain or be required to make any inquiry concerning either the performance or observance of any of the terms, provisions or conditions of this Agreement, any other Collateral Document, or any other related agreement, or the financial condition of the Company, or the value of any of the Collateral (as defined in any Collateral Document), or the existence or possible existence or absence of any default or Event of Default under this Agreement, Notes, any other Collateral Document, or any of the other related agreement, or the contents of any certificate, report or other document delivered under this Agreement, any other Collateral Document, Notes or any of the other related agreement or in connection therewith. It is acknowledged and agreed by the Secured Parties and the Company that the Agent (i) has undertaken no analysis of this Agreement, any other Collateral Document, or the Pledged Collateral or any “Collateral” under any other Collateral Document and (ii) has made no determination as to (x) the validity, enforceability, perfection, collectability, priority or sufficiency of any Liens granted or purported to be granted pursuant to this Agreement or any other Collateral Document or (y) the accuracy or sufficiency of the documents, filings, recordings and other actions taken, or to be taken, to create, perfect or maintain the existence, perfection or priority of the Liens granted or purported to be granted pursuant to this Agreement or any other Collateral Document. The Agent shall be entitled to assume that all Liens purported to be granted pursuant to this Agreement and pursuant to each other Collateral Document are valid and perfected Liens having the priority intended by the Secured Parties and this Agreement (or such other Collateral Document, as applicable).

(e) Certain Rights of the Agent. The Agent shall have the right to take any action with respect to the Collateral (as defined in the applicable Collateral Document), on behalf of itself and all of the Secured Parties. Whenever reference is made in this Agreement or any other Collateral Document to any action by, consent, designation, specification, requirement or approval of, notice, request or other communication from, or other direction given or action to be undertaken or to be (or not to be) suffered or omitted by the Agent to any amendment, waiver or other modification of this Agreement (or any other Collateral Document) to be executed (or not to be executed) by the Agent or to any election, decision, opinion, acceptance, use of judgment, expression of satisfaction or other exercise of discretion, rights or remedies to be made (or not to be made) by the Agent, it is understood that in all cases the Agent shall be fully justified in failing or refusing to take any such action under this Agreement or any other Collateral Document as it deems appropriate. This provision is intended solely for the benefit of the Agent and its successors and permitted assigns and is not intended to and will not entitle the other parties hereto to any defense, claim or counterclaim under or in relation to any Transaction Document, or confer any rights or benefits on any party hereto. The Agent shall be entitled to refrain from any act or the taking of any action (including the failure to take an action) in connection herewith or from the exercise of any power, discretion or authority vested in it hereunder or thereunder unless and until the Agent shall have received written instructions in respect thereof from the Required Holders (or such greater number of Holders as may be expressly required herein) and, upon receipt of such instructions from the Required Holders (or such greater number of Holders as may be expressly required herein), the Agent shall be entitled to act or (where so instructed) refrain from action, or to exercise such power, discretion or authority, in accordance with such instructions. The Agent may at any time solicit written confirmatory instructions from the Required Holders (or such greater number of Holders as may be expressly required herein) or request an order of a court of competent jurisdiction as to any action that it may be requested or required to take, or that it may propose to take, in the performance of any of its obligations under this Agreement and each other Collateral Document. If such instructions or order are not provided despite the Agent’s request therefor, the Agent shall be entitled to refrain from such act or taking such action and may suspend performance of such obligations as it determines to be appropriate until it receives such instructions or order, and if such action is taken, shall be entitled to appropriate indemnification from the Secured Parties in respect of actions to be taken by the Agent; and the Agent shall not incur liability to any person or entity by reason of so refraining. Without limiting the foregoing, (a) no Secured Party shall have any right of action whatsoever against the Agent as a result of the Agent acting or refraining from acting hereunder in accordance with the terms of the Agreement, any other Collateral Document, or any other related agreement, and the Company shall have no right to question or challenge the authority of, or the instructions given to, the Agent pursuant to the foregoing except in the case of the gross negligence or willful misconduct of the Agent as determined by a final judgment (not subject to further appeal) of a court of competent jurisdiction and (b) the Agent shall not be required to take any action which the Agent believes (i) could reasonably be expected to expose it to personal liability, or (ii) require it to expend or risk its own funds, or (iii) is contrary to this Agreement, the other Collateral Documents, the Notes, any other related agreement or applicable law.

(f) Reliance. The Agent shall be entitled to conclusively rely, and shall be fully protected in relying, upon any writing, facsimile, resolution, notice, statement, certificate, telex, teletype or telecopier message, cablegram, radiogram, order or other document, sent or made by the Company, any grantor under any other Collateral Document, or any Secured Party, without being required to determine the authenticity thereof or the correctness of any fact stated therein or the propriety or validity of service thereof, upon any judicial order or judgment pertaining to the Agreement, the Notes, the other Collateral Documents, the Agent Fee Letter and any other related agreement and the transactions contemplated thereunder, and, with respect to all legal matters pertaining to the Agreement, the Notes, the other Collateral Documents, the Agent Fee Letter and any other related agreement and its duties thereunder, upon any advice, opinion or statement of legal counsel selected by it and upon all other matters pertaining to this Agreement, the Notes, the other Collateral Documents, the Agent Fee Letter and any other related agreement and its duties thereunder, upon advice of independent consultants and other experts selected by it, and may assume that any Person purporting to give notice or receipt or advice or make any statement or execute any document in connection with the provisions hereof or the other Transaction Documents has been duly authorized to do so. Anything to the contrary notwithstanding, the Agent shall have no obligation whatsoever to any Secured Party to assure that the Collateral (as defined herein and in any other Collateral Document) exists or is owned by the Company (or any other grantor thereof, as applicable) or is cared for, protected or insured or that the liens granted pursuant to this Agreement (or pursuant to any other Collateral Document) have been properly or sufficiently or lawfully created, perfected, or enforced or are entitled to any particular priority.

(g) Limitations on Duty of Agent in Respect of Pledged Collateral.

(i) Beyond its obligations under Sections 4 and 6 hereof and the exercise of reasonable care in the custody of Pledged Collateral (or any other Collateral (as defined in any Collateral Document)) in its possession, the Agent will have no duty as to any such Pledged Collateral (or other Collateral (as defined in any Collateral Document)) in its possession or control or in the possession or control of any agent or bailee or any income thereon or as to preservation of rights against prior parties or any other rights pertaining or otherwise perfecting or maintaining the perfection of any Liens on the Pledged Collateral (or other Collateral (as defined in any Collateral Document)). The Agent will be deemed to have exercised reasonable care in the custody of the Pledged Collateral (and all other Collateral (as defined in any Collateral Document)) in its possession if such Pledged Collateral (or other Collateral (as defined in any Collateral Document)) is accorded treatment substantially equal to that which it accords its own property, and the Agent will not be liable or responsible for any loss or diminution in the value of any of the Pledged Collateral (or other Collateral (as defined in any Collateral Document)) by reason of the act or omission of any carrier, forwarding agency or other agent or bailee selected by the Agent in good faith.

(ii) The Agent will not be responsible for the existence, genuineness or value of any of the Pledged Collateral (or other Collateral (as defined in any Collateral Document)) or for the validity, perfection, priority or enforceability of the Liens in any of the Pledged Collateral (or other Collateral (as defined in any Collateral Document)), whether impaired by operation of law or by reason of any action or omission to act on its part hereunder, except to the extent such action or omission constitutes gross negligence or willful misconduct on the part of the Agent, for the validity or sufficiency of the Pledged Collateral (or other Collateral (as defined in any Collateral Document)) or any agreement or assignment contained therein, for the validity of the title of the Company to the Pledged Collateral (or other Collateral (as defined in any Collateral Document)), for insuring the Pledged Collateral (or other Collateral (as defined in any Collateral Document)) or for the payment of taxes, charges, assessments or Liens upon the Pledged Collateral (or other Collateral (as defined in any Collateral Document)) or otherwise as to the maintenance of the Pledged Collateral (or other Collateral (as defined in any Collateral Document)). The Agent hereby disclaims any representation or warranty to the present and future holders of the Obligations concerning the perfection of the Liens granted hereunder or in the value of any of the Pledged Collateral (or other Collateral (as defined in any Collateral Document)).

(h) Security or Indemnity in favor of the Agent. The Agent will not be required to advance or expend any funds or otherwise incur any financial liability in the performance of its duties or the exercise of its powers or rights hereunder unless it has been provided with security or indemnity reasonably satisfactory to it against any and all liability or expense which may be incurred by it by reason of taking or continuing to take such action.

(i) Indemnification. To the extent that the Agent is not reimbursed and indemnified by the Company, the Secured Parties, shall severally, and not jointly, reimburse and indemnify the Agent and its Affiliates, and each and all of their respective partners, members, shareholders, officers, directors, employees, trustees, attorneys and agents (and any other persons with other titles that have similar functions) and (in each case) their respective heirs, representatives, successors and assigns (each of the foregoing, an “Agent Indemnitee”), in proportion to the outstanding amount of their respective principal amounts of the Notes on the date on which indemnification is sought under this Section 17(i) (or, if indemnification is sought after the date upon which the Notes have been paid in full, in proportion to the outstanding amount of their respective principal amounts of the Notes immediately prior to such date), from and against any and all losses, claims, liabilities, obligations, damages, penalties, suits, actions, judgments, costs, taxes, disbursements and expenses of any kind or nature whatsoever which may be imposed on, incurred by or asserted against any Agent Indemnitee in performing its duties hereunder or under any other related agreement, or in any way relating to or arising out of this Agreement, any other Collateral Document and any other related agreement, IN ALL CASES, WHETHER OR NOT CAUSED BY OR ARISING, IN WHOLE OR IN PART, OUT OF THE COMPARATIVE, CONTRIBUTORY, OR SOLE NEGLIGENCE OF SUCH AGENT INDEMNITEE; provided, no Agent Indemnitee will be entitled to indemnification hereunder of any such losses, claims, liabilities, obligations, damages, penalties, suits, actions, judgments, costs, taxes, disbursements and expenses which result from the gross negligence or willful misconduct of such Agent Indemnitee as determined by a final, nonappealable decision of a court of competent jurisdiction. Prior to taking any action or further action hereunder as the Agent, the Agent may require each Secured Party to deposit with it sufficient sums as it determines in good faith is necessary to protect the Agent for costs and expenses associated with taking such action or further action; provided, in no event shall this sentence require any Secured Party to indemnify any Agent Indemnitee against any liability, obligation, loss, damage, penalty, action, judgment, suit, cost, expense or disbursement in excess of an amount in proportion to the outstanding amount of their respective principal amounts of the Notes on the date on which indemnification is sought under this Section 17(i) (or, if indemnification is sought after the date upon which the Notes have been paid in full, in proportion to the outstanding amount of their respective principal amounts of the Notes immediately prior to such date); and provided further, this sentence shall not be deemed to require any Secured Party to indemnify any Agent Indemnitee against any liability, obligation, loss, damage, penalty, action, judgment, suit, cost, expense or disbursement described in the proviso in the immediately preceding sentence. All of the agreements in this Section 17(i) will survive and remain operative and in full force and effect regardless of the repayment of the Obligations, the termination of this Agreement or any other Collateral Document or the resignation or removal of the Agent.

(j) Resignation or Removal of the Agent.

(i) The Agent may resign from the performance of all its functions and duties under this Agreement, the other Collateral Documents and the other Transaction Documents at any time by giving not less than 30 days’ prior written notice to the Company and the Secured Parties, and, subject to the appointment of a successor Agent and the acceptance of such appointment by the successor Agent, the Agent may be removed at any time by the Secured Parties. Such resignation or removal shall take effect upon the appointment of a successor Agent pursuant to clauses (ii) and (iii) below.

(ii) Upon any such notice of resignation or removal, the Required Holders shall appoint a successor Agent hereunder.

(iii) If a successor Agent shall not have been so appointed within 30 days after the retiring Agent gave notice of resignation or was removed, the retiring Agent may, at its option, (i) appoint a successor Agent who shall serve as successor Agent until such time, if any, as the Secured Parties appoint a successor Agent as provided above or (ii) petition any court of competent jurisdiction or may interplead the Company and the Secured Parties in a proceeding for the appointment of a successor Agent, and, in each cash, all fees, costs and expenses, including, but not limited to, extraordinary fees associated with the filing of interpleader and expenses associated therewith, shall be payable by the Company on demand; provided, that, notwithstanding the foregoing, in the case of a resignation by the Agent, if no successor Agent has been appointed by the 30th day after the date the Agent has given notice of its resignation in accordance with clause (i) above, the Agent’s resignation shall nevertheless become effective and the Secured Parties shall thereafter perform all of the duties of the Agent under this Agreement and each other Collateral Document until such time, if any, as the Secured Parties appoint a successor Agent.

(k) Rights with respect to Collateral. Each Secured Party agrees with all other Secured Parties and the Agent (i) that it shall not, and shall not attempt to, exercise any rights with respect to its security interest in the Collateral (as defined in any Collateral Document), whether pursuant to any other agreement or otherwise (other than pursuant to this Agreement and the other Collateral Documents), and (ii) that such Secured Party has no other rights with respect to the Collateral (as defined in any Collateral Document) other than as set forth in this Agreement, the other Collateral Documents, the Notes and any other related agreements. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent and the retiring Agent shall be discharged from its duties and obligations under this Agreement, the other Collateral Documents, and each other Transaction Document. The retiring Agent will (at the sole expense of the Company) promptly transfer all Liens and collateral security within its possession or control to the possession or control of the successor Agent and will execute such instruments and assignments as may be reasonably requested by the successor Agent to transfer to the successor Agent all Liens, interests, rights, powers and remedies of the predecessor Agent in respect of this agreement or the Pledged Collateral (or any other Collateral (as defined in any Collateral Document)). After any retiring Agent’s resignation or removal hereunder as collateral agent, the provisions of this Agreement, including without limitation the immunities granted to it in Sections 12, 17 and 18(j) hereof shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent hereunder and any actions taken in accordance with this clause (l).”

(e) The Security Agreement is hereby amended to add a new Section 19 to the end thereof that reads as follows:

“19 Intercreditor Agreement; Other Terms. Each Holder hereby (i) instructs and authorizes the Agent to execute and deliver the Intercreditor Agreement on its behalf, (ii) authorizes and directs the Administrative Agent to exercise all of the Agent’s rights and to comply with all of its obligations under the Intercreditor Agreement, (iii) agrees that the Agent may take actions on its behalf as is contemplated by the terms of the Intercreditor Agreement, and (iv) understands, acknowledges and agrees that at all times following the execution and delivery of the Intercreditor Agreement such Holder (and each of its successors and assigns) shall be bound by the terms thereof. Each Holder acknowledges that it has reviewed and is satisfied with the terms and provisions of the Intercreditor Agreement and acknowledges and agrees that such Holder is responsible for making its own analysis and review of the Intercreditor Agreement and the terms and provisions thereof, and neither Agent nor any of its Affiliates makes any representation to any Holder as to the sufficiency or advisability of the provisions contained in the Intercreditor Agreement. Each Holder further agrees that each reference in any Transaction Document to the “Intercreditor Agreement”, any “Collateral Documents” and any “Transaction Documents” shall be deemed to refer to the Intercreditor Agreement, the Collateral Documents, and the Transaction Documents, each as defined herein.”

6. Effectiveness. This Amendment will become effective upon the date on which the Agent has received a counterpart hereof duly executed by each party hereto (the “Effective Date”).

7. Representations and Warranties. In order to induce the Agent and the Holders to enter into this Amendment, the Company hereby remakes all of the representations and warranties contained in Section 6 of the Security Agreement as of the date of this Amendment (except to the extent such representation or warranty relates to an earlier date, in which case, it is true, correct and complete as of such earlier date). The Company’s representations and warranties in Sections 6(b) and (c) of the Security Agreement shall apply, mutatis mutandis, to this Amendment.

8. Interpretation. Except as expressly modified by this Amendment, all terms and provisions of the Security Agreement shall remain unchanged and in full force and effect and are ratified and affirmed on the date hereof. In the event of any inconsistency between the terms of this Amendment and the terms of the Security Agreement prior to its amendment, the terms of this Amendment shall control.

9. Reaffirmation. The Company hereby acknowledges and agrees that (i) to the extent any Transaction Document or Collateral Document purports to grant, assign or pledge to the Agent or any Holder a security interest or lien on any collateral as security for the Obligations, such grant, assignment or pledge is hereby ratified and confirmed in all respects and (ii) the obligations secured under the Transaction Documents and the Collateral Documents will include all Obligations, as amended by this Amendment and the Amendment Agreement, including the Amended Notes.

10. Counterparts. This Amendment may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument and either of the parties hereto may execute this Amendment by signing any such counterpart.

11. Governing Law. This Amendment shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Agreement shall be governed by, the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York.

12. Direction. The Holders party hereto (including, for the avoidance of doubt, the New Holders (as defined below) constituting all of the Holders hereby (a) authorize and direct the Agent to execute and deliver (i) this Amendment, (ii) the Intercreditor Agreement (as defined in the Security Agreement as amended hereby) and (iii) each of the other Transaction Documents to be entered into on or about the date hereof, including, for the avoidance of doubt (a) that certain Security Agreement (Illinois Corn Processing), to be made by Illinois Corn Processing, LLC in favor of the Agent, in substantially the form attached hereto as Exhibit A, (b) that certain Security Agreement (Pacific Ethanol Central, LLC), to be made by Pacific Ethanol Central, LLC in favor of the Agent, in substantially the form attached hereto as Exhibit B, (c) that certain Security Agreement (Pacific Ethanol West, LLC) (PE Op Co.), to be made by and among Pacific Ethanol West, LLC, PE Op Co. and the Agent, in substantially the form attached hereto as Exhibit C, (d) that certain Pledge Agreement by and among Pacific Ethanol Central, LLC, Pacific Aurora, LLC, and the Agent, in substantially the form attached hereto as Exhibit D, (e) that certain Pledge Agreement by and among Pacific Ethanol Central, LLC, Pacific Ethanol Pekin, LLC, and the Agent, in substantially the form attached hereto as Exhibit E, and (f) that certain Pledge Agreement by and among Pacific Ethanol Central, LLC, Illinois Corn Processing, LLC, and the Agent, in substantially the form attached hereto as Exhibit F, and each other Transaction Document as the Required Holders may request in writing (which may be by email, and may be requested through their counsel by email), (b) authorize and direct the Agent to take any and all actions as may be required or advisable to effectuate the amendments contemplated hereby and the agreements and transactions contemplated by each of the Transaction Documents to be entered into on or about the date hereof (including, without limitation, each of the Transaction Documents listed above and each of the mortgages and deeds of trust executed or to be executed by any grantor in favor of the Agent for the benefit of the Secured Parties), and (c) acknowledge and agree that (i) each of the directions in this Section 13 constitute a direction from all Holders under the provisions of Section 17 of the Security Agreement, and (ii) Section 17(i) of the Security Agreement shall apply to any and all actions taken by the Agent in accordance with such directions.

13. Joinder. Each of the Persons signatory hereto under the title “New Holders” (the “New Holders”) on the signature pages hereof constitute certain of the holders of the Amended Notes under the Amendment Agreement and each hereby agrees to be added as a party to the Security Agreement as a “Secured Party”. Each New Holder hereby unconditionally and irrevocably expressly assumse, confirms, and agrees to perform and observe as a Secured Party each of the covenants, agreements, terms, conditions, obligations, duties, promises and liabilities applicable to a “Secured Party” under the Secured Agreement (including, without limitation, those set forth in Section 17(f) of the Security Agreement, as amended hereby) as if they were an original signatory thereto. Each New Holder hereby agrees (i) to promptly execute and deliver any and all further documents and take such further action as the Agent may reasonably require to effect the purpose of this Section, and (ii) that their address for notices under the Security Agreement are as set forth under each New Holder’s signature hereof.

[Signature Pages Follow]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered as of the day and year first above written.

EXHIBIT A

[See Attached]

EXHIBIT B

[See Attached]

EXHIBIT C

[See Attached]

EXHIBIT D

[See Attached]

EXHIBIT E

[See Attached]

EXHIBIT F

[See Attached]

23

Exhibit 10.11

ALL LIENS AND SECURITY INTERESTS EVIDENCED BY THIS AGREEMENT SHALL AT ALL TIMES BE SUBORDINATE AND JUNIOR TO THE LIENS AND SECURITY INTERESTS GRANTED TO CORTLAND PRODUCTS CORP. (“SENIOR AGENT”), PURSUANT TO THAT CERTAIN SECURITY AGREEMENT DATED AS OF DECEMBER 15, 2016 (AS AMENDED FROM TIME TO TIME) MADE BY THE COMPANY (DEFINED BELOW) IN FAVOR OF SENIOR AGENT AND SUBJECT TO THE TERMS OF THAT CERTAIN INTERCREDITOR AGREEMENT EVEN DATED HEREWITH (AS AMENDED FROM TIME TO TIME) BY AND AMONG SENIOR AGENT, THE COMPANY AND THE OTHER PARTIES PARTY THERETO.

SECURITY AGREEMENT

THIS SECURITY AGREEMENT (as amended, restated, supplemented or otherwise modified from time to time, this “Agreement”), is made by and among Pacific Ethanol, Inc., a Delaware corporation (the “Company”), and COBANK, ACB, a federally-chartered instrumentality of the United States, as Agent for the benefit of the Lenders under the Credit Agreements (together with its successors and assigns, sometimes referred to herein as “Agent” and as “Secured Party”), effective as of March 20, 2020.

RECITALS:

A. WHEREAS, COMPEER FINANCIAL, PCA, a federally-chartered instrumentality of the United States, successor by merger to 1st Farm Credit Services, PCA (together with its successors and assigns, “Lender” and together with Agent, the “Lender Parties”), Agent and PACIFIC ETHANOL PEKIN, LLC, a limited liability company organized under the laws of Delaware (“Pekin”) are parties to that certain Credit Agreement dated as of December 15, 2016, as amended by that certain Amendment No. 1 to Credit Agreement dated as of March 1, 2017, as further amended by that certain Amendment No. 2 to Credit Agreement dated as of August 7, 2017, that certain Amendment No. 3 to Credit Agreement dated as of March 30, 2018, as further amended by that certain Amendment No. 4 to Credit Agreement dated March 20, 2019 (as further amended by that certain Amendment No. 5 to Credit Agreement dated July 15, 2019, as further amended by that certain Amendment No. 6 to Credit Agreement dated November 15, 2019, and as further amended by that certain Amendment No. 7 (the “Pekin Amendment No. 7”) dated as of December 20, 2019 (as may be amended, supplemented or restated from time to time, including as of the date hereof, collectively the “Pekin Credit Agreement”), pursuant to which the Lender Parties may make advances and extend other financial accommodations to Pekin.

B. WHEREAS, Lender, Agent and ILLINOIS CORN PROCESSING, LLC, a limited liability company organized under the laws of Delaware (“ICP” and together with Pekin, the “Borrowers”) are parties to that certain Credit Agreement dated as of September 15, 2017 and as amended by that certain Amendment No. 1 (the “ICP Amendment No. 1”) of dated as of December 20, 2019 (as may be amended, supplemented or restated from time to time including as of the date hereof, collectively the “ICP Credit Agreement” and together with the PEP Credit Agreement, the “Credit Agreements”), pursuant to which the Lender Parties may make advances and extend other financial accommodations to ICP.

C. WHEREAS, in connection with the Pekin Amendment No. 7 and the ICP Amendment No. 1, the Borrowers agreed to cause Pacific Ethanol, Inc., a Delaware corporation and the ultimate parent entity of each Borrower (the “Company”) to grant a security interest in all of the Company in PE OP CO., a Delaware corporation (the “Issuer”).

D. The Company owns one hundred percent of the issued and outstanding shares of common stock, $0.001 par value per share, of the Issuer as set forth on Schedule I attached hereto opposite the Company’s name, as such Schedule I may be updated or modified from time to time.

NOW, THEREFORE, in consideration of the agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

1. Certain Definitions. As used in this Agreement, the following terms shall have the meanings set forth in this Section 1. Terms used but not otherwise defined in this Agreement that are defined in Article 9 of the UCC (such as “control”, “investment property”, “proceeds” and “records”) shall have the respective meanings given such terms in Article 9 of the UCC. Capitalized terms used but not otherwise defined in this Agreement shall have the meanings ascribed to them in the Credit Agreements.

(a) “Collateral” means the Pledged Collateral.