EXHIBIT 10.10
PACIFIC ETHANOL, INC.
0000 X. Xxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
March 23, 2005
Xx. Xxxx X. Xxxxxxx
0000 X. Xxxx Xxxxxx
Xxxxxx, XX 00000
Dear Xx. Xxxxxxx:
This Letter Agreement memorializes the terms of an agreement between
you and Pacific Ethanol, Inc., a Delaware corporation (the "COMPANY"), regarding
the indemnification obligations of the Company with respect to that certain
Guaranty made by you in favor of Comerica Bank under which you guarantee the
payment by Kinergy Marketing, LLC, an Oregon limited liability company
("KINERGY") of any existing or future indebtedness to Comerica Bank. This
Guaranty was made in connection with Kinergy's execution of the (i) Master
Revolving Note in favor of Comerica Bank, dated September 24, 2004 ("NOTE");
(ii) Security Agreement in favor of Comerica Bank dated September 24, 2004
("SECURITY AGREEMENT"); (iii) letter agreement with Comerica Bank dated
September 24, 2004 ("LETTER AGREEMENT"); (iv) Irrevocable Standby Letter of
Credit No. 595744-41 issued by Comerica Bank dated as of October 1, 2004, as
amended on March 3, 2005 ("LETTER OF CREDIT NO. 1"); and (v) Irrevocable Standby
Letter of Credit No. 595743-41 issued by Comerica Bank dated as of October 1,
2004, as amended on March 3, 2005 ("LETTER OF CREDIT NO. 2"). The Note, Security
Agreement, Letter Agreement, Letter of Credit No. 1 and Letter of Credit No. 2
are collectively referred to herein as the "LOAN AGREEMENTS." The effective date
of this Letter Agreement shall be as of the date first set forth above.
Kinergy is a party to that certain Share Exchange Agreement (the "SHARE
EXCHANGE AGREEMENT") dated as of May 14, 2004, as amended on July 29, 2004,
October 1, 2004, January 7, 2005, February 16, 2005 and March 3, 2005, by and
among Accessity Corp., a New York Corporation ("ACCESSITY"), Pacific Ethanol,
Inc., a California corporation ("PEI"), Kinergy, ReEnergy, LLC, a California
limited liability company ("REENERGY"), each of the shareholders and holders of
options or warrants to acquire shares of common stock of the Corporation, and
each of the limited liability company members of each of ReEnergy and Kinergy.
Pursuant to such Share Exchange Agreement, each of PEI, Kinergy and ReEnergy
will become a wholly-owned subsidiary of the Company following a reincorporation
merger of Accessity with and into the Company. The transactions contemplated by
the Share Exchange Agreement shall be referred to herein as the "SHARE EXCHANGE
TRANSACTION."
Kinergy has obtained the written consent of Comerica Bank to the Share
Exchange Transaction and the resulting change in control of Kinergy. Because you
will no longer be the member or manager of Kinergy after the close of the Share
Exchange Transaction, the Company has agreed to replace you as guarantor under
the Guaranty. Such replacement is to occur as soon as reasonably practicable
after the closing of the Share Exchange Transaction.
Prior to the date that you are effectively replaced as guarantor under
the Guaranty, the Company shall indemnify, defend and hold harmless you, your
agents and representatives for all losses, claims, liabilities and damages
caused or arising from out of (a) the Company's failure to pay its indebtedness
under the Loan Agreements such that you are required to pay such amounts to
Comerica Bank pursuant to the Guaranty, or (b) a breach of the Company's duties
to indemnify and defend as set forth in this paragraph.
If the foregoing terms are consistent with our understanding and
agreement, please sign the additional copy of this Letter Agreement. By
executing this Letter Agreement, the undersigned person represents and warrants
that he has been duly authorized to execute this Letter Agreement on his
company's behalf.
Sincerely,
PACIFIC ETHANOL, INC.,
a Delaware corporation
By: /S/ XXXX XXXXXX
---------------------------
Xxxx Xxxxxx
Chief Operating Officer
ACCEPTED AND AGREED TO:
/S/ XXXX X. XXXXXXX
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XXXX X. XXXXXXX
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