MEMBERSHIP INTEREST PURCHASE AGREEMENT

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

3.8   Securities Representations.

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

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

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

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

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

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

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

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

Buyer represents and warrants to Seller that:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(f)   the Escrow Agreement, executed by Seller;

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

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