PACIFIC ETHANOL, INC.
AMENDED AND RESTATED EXECUTIVE EMPLOYMENT
AGREEMENT
for
NEIL M. KOEHLER
This
Amended and Restated Executive Employment Agreement
(“Agreement”) by and between Neil M. Koehler
(“Executive”) and Pacific Ethanol, Inc. (the
“Company”) (collectively, the
“Parties”) is effective as of the last date signed
by the Parties.
WHEREAS , the Company desires to employ Executive to
provide personal services to the Company, and wishes to provide
Executive with certain compensation and benefits in return for his
services;
WHEREAS , Executive wishes to be employed by the Company
and to provide personal services to the Company in return for
certain compensation and benefits;
WHEREAS , the Parties entered into an Executive Employment
Agreement on or about March 25, 2005, setting forth certain terms
of Executive’s employment with the Company (the
“Original Employment Agreement”) and now seek to
supersede and replace the Original Employment Agreement with this
Agreement;
WHEREAS , once this Agreement is effective, the parties
agree that the Original Employment Agreement shall have no further
force or effect;
NOW, THEREFORE , in consideration of the mutual promises
and covenants contained herein, it is hereby agreed by and between
the parties hereto as follows:
1.
EMPLOYMENT BY THE COMPANY.
1.1
Position. Subject to terms and conditions set
forth herein, the Company agrees to employ Executive in the
position of President and Chief Executive Officer and Executive
hereby accepts such employment. During the term of
Executive’s employment with the Company, Executive will
devote Executive’s best efforts and substantially all of
Executive’s business time and attention to the business of
the Company, except for vacation periods as set forth herein and
reasonable periods of illness or other incapacities permitted by
the Company’s general employment policies.
1.2
Duties and Location. Executive shall serve in
an executive capacity and shall perform such duties as are
customarily associated with Executive’s then current title,
consistent with the bylaws of the Company and as required by the
Company’s Board of Directors (the
“Board”). Executive shall report to the
Board. Executive’s primary office location shall
be a location mutually acceptable to both the Executive and the
Company. The Company reserves the right to reasonably
require Executive to perform Executive’s duties at places
other than Executive’s primary office location from time to
time as agreed to by Executive, and to require reasonable business
travel.
1.3
Policies and Procedures. The employment
relationship between the parties shall be governed by the general
employment policies and practices of the Company, except that when
the terms of this Agreement differ from or are in conflict with the
Company’s general employment policies or practices, this
Agreement shall control.
2.
COMPENSATION.
2.1
Salary. For services to be rendered hereunder,
Executive shall receive an annual salary at the rate of
$300,000.00, paid bi-weekly in the amount of $11,538.46 (the
“Base Salary”), subject to standard payroll deductions
and withholdings and payable in accordance with the Company’s
regular payroll schedule. Executive’s Base Salary
shall be reviewed annually and may be increased as approved by the
Board in its sole discretion.
2.2
Annual Bonus. Executive will be eligible for
an annual discretionary bonus of up to seventy percent (70%) of his
Base Salary (the “Annual Bonus”). Whether
any Annual Bonus will be awarded, and the amount of the Annual
Bonus awarded to Executive, shall be determined by the Board in its
sole discretion based upon its consideration of both the
Company’s performance and Executive’s
performance. Since the Annual Bonus is intended both to
reward past Company and Executive performance and to provide an
incentive for Executive to remain with the Company, Executive must
remain an active employee through the date that any such bonus is
awarded to him in order to earn any such
bonus. Executive will not earn any Annual Bonus
(including a prorated bonus) if Executive’s employment
terminates for any reason before the Annual Bonus is awarded to
him. Any Annual Bonus awarded by the Board shall be paid
within the first quarter after the end of the calendar
year.
2.3
Additional Cash Bonus. In addition to the
Annual Bonus provided for in Section 2.2 above, Executive will be
eligible for an additional cash bonus not to exceed 50% of the net
free cash flow (defined as revenues of Kinergy Marketing, LLC, less
Executive’s salary and Annual Bonus, less capital
expenditures and all expenses incurred specific to Kinergy
Marketing, LLC), subject to a maximum of $300,000 in any given
year; provided , however , that
such percentage will be reduced by ten percentage points each year,
commencing in 2005, such that 2009 will be the final year of such
bonus as 10% of net free cash flow.
2.4
Standard Company Benefits. Executive shall be
entitled to participate in all employee benefit programs for which
Executive is eligible under the terms and conditions of the benefit
plans which may be in effect from time to time and provided by the
Company to its employees generally; provided,
however, that Executive shall not be entitled to accrued
vacation pay.
2.5
Restricted Stock; Options. Executive has been
granted certain shares of restricted Company stock (the
“Restricted Stock”). Executive shall also be
eligible for additional grants of restricted stock and/or stock
options from time to time as shall be determined by the
Compensation Committee of the Board in its sole discretion, and
shall be subject to such vesting, exercisability, and other
provisions as the Board may determine in its discretion, after
reviewing the performance of both Executive and the
Company. Both the Restricted Stock and any stock options
shall be governed in all respects by the terms of the applicable
restricted stock purchase agreement, stock option agreement, grant
notice and plan documents.
3.
CONFIDENTIAL INFORMATION OBLIGATIONS.
3.1
Confidential Information Agreement. As a
condition of employment, Executive agrees to execute and abide by
the Employee Confidential Information and Inventions
Agreement attached hereto as Exhibit A.
3.2
Third Party Agreements and Information.
Executive represents and warrants that
Executive’s employment by the Company will not conflict with
any prior employment or consulting agreement or other agreement
with any third party, and that Executive will perform
Executive’s duties to the Company without violating any such
agreement. Executive represents and warrants that
Executive does not possess confidential information arising out of
prior employment, consulting, or other third party relationships,
which would be used in connection with Executive’s employment
by the Company, except as expressly authorized by that third
party. During Executive’s employment by the
Company, Executive will use in the performance of Executive’s
duties only information which is generally known and used by
persons with training and experience comparable to
Executive’s own, common knowledge in the industry, otherwise
legally in the public domain, or obtained or developed by the
Company or by Executive in the course of Executive’s work for
the Company.
4.
OUTSIDE ACTIVITIES DURING EMPLOYMENT.
4.1
Non-Company Business. Except with the prior
written consent of the Board, Executive will not during the term of
Executive’s employment with the Company undertake or engage
in any other employment, occupation or business enterprise, other
than ones in which Executive is a passive
investor. Executive may engage in civic and
not-for-profit activities so long as such activities do not
materially interfere with the performance of Executive’s
duties hereunder.
4.2
No Adverse Interests. Executive agrees not to
acquire, assume or participate in, directly or indirectly, any
position, investment or interest known by him to be adverse or
antagonistic to the Company, its business or prospects, financial
or otherwise, except as a passive investor in mutual or exchange
traded funds.
5.
TERMINATION OF EMPLOYMENT.
5.1
At-Will Relationship. Executive’s
employment relationship is at-will. Either Executive or
the Company may terminate the employment relationship at any time,
with or without Cause or advance notice.
5.2
Termination without Cause; Resignation for Good
Reason. If, at any time, the Company
terminates Executive’s employment without Cause (as defined
herein), or Executive resigns with Good Reason (as defined herein),
and Executive executes and delivers the Separation Date Release of
all claims set forth as Exhibit B hereto and allows such release to
become effective, then the Company will provide Executive with the
following severance benefits:
(a)
Cash Severance. The Company shall pay
Executive severance in the form of continuation of
Executive’s Base Salary in effect on Executive’s last
day of employment for a period of twelve (12) months after
Executive’s termination, subject to standard payroll
deductions and withholdings and payable on the Company’s
regular payroll schedule; provided, however , that
in the event the Company terminates Executive’s employment
without Cause, or Executive resigns with Good Reason, within three
(3) months before or otherwise in anticipation of, or within twelve
(12) months after, a Change in Control (as defined below), then the
Company shall pay Executive severance in the form of continuation
of Executive’s Base Salary in effect on Executive’s
last day of employment for a period of eighteen (18) months after
Executive’s termination, subject to standard payroll
deductions and withholdings and payable on the Company’s
regular payroll schedule. Each payment made pursuant to
this Section 5.2(a) is intended to be a separate payment (as
defined in Treasury Regulations Section 1.409A-2(b)(2)) from any
other payments made pursuant to this Section 5.2(a) for purposes of
the “short term deferral rule” under Treasury
Regulations Section 1.409A-1(b)(4).
(b)
Continued Health Insurance Coverage . To the
extent provided by the federal COBRA law or, if applicable, state
insurance laws, and by the Company’s then-current group
health insurance policies, Executive may be eligible to continue
Executive’s then-current group health insurance benefits
after termination of Employment. If eligible and if
Executive timely elects continued health insurance coverage, then
the Company shall pay the Company’s portion of any premiums
necessary to provide coverage for a period of twelve (12) months
after the termination date; provided, however,
that no such premium payments shall be made following the effective
date of Executive’s coverage by a medical, dental or vision
insurance plan of a subsequent employer. Executive shall
notify the Company immediately if he becomes covered by a medical,
dental or vision insurance plan of a subsequent
employer. Notwithstanding the foregoing, in the event
the Company terminates Executive’s employment without Cause,
or Executive resigns with Good Reason, within three (3) months
before or otherwise in anticipation of, or within twelve (12)
months after, a Change in Control (as defined below), then (if
eligible and coverage elected) the Company shall pay the
Company’s portion of any premiums necessary to provide
coverage for a period of eighteen (18) months after the termination
date; provided, however, that no such premium
payments shall be made following the effective date of
Executive’s coverage by a medical, dental or vision insurance
plan of a subsequent employer and Executive agrees to immediately
notify the Company of any such coverage.
(c)
Accelerated Vesting. If Executive has been
employed by the Company for one full year or longer, then the
Company will accelerate the vesting of any equity awards granted to
Executive prior to Executive’s employment termination such
that twenty-five percent (25%) of all shares or options subject to
such awards which are unvested as of
