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EXHIBIT 10.5
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT ("AGREEMENT") is made as of the
date set forth on the signature page to this Agreement, by and
between Pacific
Ethanol, Inc., a Delaware corporation ("COMPANY"), and the
individual named on
the signature page to this Agreement ("INDEMNITEE"), [an officer
and/or] a
director of the Company.
R E C I T A L S
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A. The Indemnitee is concerned about serving, or continuing to
serve, the Company as [an officer and/or] a director without
assurance that
indemnities available to him are, and will be, adequate to protect
him against
the risks associated with his service to the Company;
B. The Company has investigated whether additional protective
measures are warranted to adequately protect its directors and
officers against
various legal risks and potential liabilities to which such
individuals are
subject due to their position with the Company and has concluded
that additional
protective measures are warranted.
C. In order to induce and encourage highly experienced and
capable persons such as the Indemnitee to serve, or to continue to
serve, [an
officer and/or] a director, the Board of Directors of the Company
has
determined, after due consideration, that this Agreement is not
only reasonable
and prudent, but necessary to promote and ensure the best interests
of the
Company and its stockholders.
D. The Company wishes to provide in this Agreement for the
indemnification of and the advancing of expenses to the Indemnitee
to the
fullest extent permitted by law and as provided for in this
Agreement.
E. The Company's execution of this Agreement has been approved
by the Board of Directors of the Company.
F. Indemnitee has indicated to the Company that but for the
Company's agreement to enter into this Agreement, Indemnitee would
decline to
serve, or to continue to serve, [an officer and/or] a director of
the Company.
A G R E E M E N T
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NOW, THEREFORE, in consideration of the recital set forth
above and the continued services of the Indemnitee, and as an
inducement to the
Indemnitee to serve, or to continue to serve, [an officer and/or] a
director of
the Company, the Company and the Indemnitee do hereby agree as
follows:
1. DEFINITIONS. As used in this Agreement, the following terms
shall have the meanings set forth below:
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(a) "PROCEEDING" shall mean any threatened, pending
or completed action, suit or proceeding, whether brought in the
name of the
Company or otherwise and whether of a civil, criminal,
administrative or
investigative nature, by reason of the fact that the Indemnitee is
or was [an
officer and/or] a director of the Company, or is or was serving at
the request
of the Company as a director, officer, employee or agent of another
enterprise,
whether or not he is serving in such capacity at the time any
liability, Expense
(as defined in subparagraph (b) below) or Loss (as defined in
subparagraph (c)
below) is incurred for which indemnification or advancement of
Expenses or
Losses is to be provided under this Agreement.
(b) "EXPENSES" means all costs, charges and expenses
incurred in connection with a Proceeding, including, without
limitation,
attorneys' fees, disbursements and retainers, accounting and
witness fees,
travel and deposition costs, expenses of investigations, judicial
or
administrative proceedings or appeals, and any expenses of
establishing a right
to indemnification pursuant to this Agreement or otherwise,
including reasonable
compensation for time spent by the Indemnitee in connection with
the
investigation, defense or appeal of a Proceeding or action for
indemnification
for which he is not otherwise compensated by the Company or any
third party;
PROVIDED, HOWEVER, that the term "EXPENSES" does not include
Losses.
(c) "LOSSES" means any amount which Indemnitee pays
or is obligated to pay in connection with a Proceeding, including,
without
limitation, (i) the amount of damages, judgments, amounts paid in
settlement,
fines or penalties relating to any Proceeding, (ii) sums paid in
respect of any
deductible under any applicable D&O Insurance (as defined in
Section 12(a)
below) or (iii) excise taxes under the Employee Retirement Income
Security Act
of 1974, as amended ("ERISA"), relating to any Proceeding, either
of which are
actually levied against the Indemnitee or paid by or on behalf of
the
Indemnitee; PROVIDED, HOWEVER, that the term "LOSSES" does not
include Expenses.
2. AGREEMENT TO SERVE. The Indemnitee agrees to continue to
serve as [an officer and/or] a director of the Company at the will
of the
Company for so long as Indemnitee is duly elected or appointed or
until such
time as Indemnitee tenders a resignation in writing or is
[terminated as an
officer and/or] removed as a director by the Company. Nothing in
this Agreement
shall be construed to create any right in Indemnitee to continued
employment
with the Company or any subsidiary or affiliate of the Company.
Nothing in this
Agreement shall affect or alter any of the terms of any otherwise
valid
[employment agreement or other] agreement between Indemnitee and
the Company
relating to Indemnitee's conditions and/or terms of [employment or]
service.
3. INDEMNIFICATION IN THIRD PARTY ACTIONS. The Company shall
indemnify the Indemnitee in accordance with the provisions of this
Section 3 if
the Indemnitee is a party to or threatened to be made a party to or
is otherwise
involved in any Proceeding (other than a Proceeding by or in the
right of the
Company to procure a judgment in its favor), by reason of the fact
that the
Indemnitee is or was [an officer and/or] a director of the Company,
or is or was
serving at the request of the Company as a director, officer,
employee or agent
of another enterprise, or by reason of anything done or not done by
Indemnitee
in any such capacity, against all Expenses and Losses actually and
reasonably
incurred by the Indemnitee in connection with the defense or
settlement of such
Proceeding, to the fullest extent permitted by the Delaware General
Corporation
Law ("DGCL"), whether or not the Indemnitee was the successful
party in any such
Proceeding; PROVIDED, HOWEVER, that any settlement shall be
approved in writing
by the Company.
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4. INDEMNIFICATION IN PROCEEDINGS BY OR IN THE RIGHT OF THE
COMPANY. The Company shall indemnify the Indemnitee in accordance
with the
provisions of this Section 4 if the Indemnitee is a party to or
threatened to be
made a party to or is otherwise involved in any Proceeding by or in
the right of
the Company to procure a judgment in its favor by reason of the
fact that the
Indemnitee is or was an officer and/or a director of the Company,
or is or was
serving at the request of the Company as a director, officer,
employee or agent
of another enterprise, or by reason of anything done or not done by
Indemnitee
in any such capacity, against all Expenses actually and reasonably
incurred by
Indemnitee in connection with the defense or settlement of such
Proceeding, to
the fullest extent permitted by the DGCL, whether or not the
Indemnitee is the
successful party in any such Proceeding. The Company shall further
indemnify the
Indemnitee for any Losses actually and reasonably incurred by the
Indemnitee in
any such Proceeding described in the immediately preceding
sentence, provided
that either (i) the Proceeding is settled with the approval of a
court of
competent jurisdiction, or (ii) indemnification of such amounts is
otherwise
ordered by a court of competent jurisdiction in connection with
such Proceeding.
5. CONCLUSIVE PRESUMPTION REGARDING STANDARD OF CONDUCT. The
Indemnitee shall be conclusively presumed to have met the relevant
standards of
conduct required by the DGCL for indemnification pursuant to this
Agreement,
unless a determination is made that the Indemnitee has not met such
standards
(i) by the Board of Directors of the Company by a majority vote of
a quorum
thereof consisting of directors who were not parties to such
Proceeding, (ii) by
the stockholders of the Company by a majority vote, or (iii) in a
written
opinion of the Company's independent legal counsel. Further, the
termination of
any Proceeding by judgment, order, settlement, conviction or upon a
plea of nolo
contendere or its equivalent, shall not, of itself, rebut such
presumption that
the Indemnitee met the relevant standards of conduct required
for
indemnification pursuant to this Agreement.
6. INDEMNIFICATION OF EXPENSES OF SUCCESSFUL PARTY.
Notwithstanding any other provision of this Agreement, to the
extent that the
Indemnitee has been successful on the merits or otherwise in
defense of any
Proceeding or in defense of any claim, issue or matter therein, the
Indemnitee
shall be indemnified against all Expenses incurred in connection
therewith to
the fullest extent permitted by the DGCL. For purposes of this
paragraph, the
Indemnitee will be deemed to have been successful on the merits if
the
Proceeding is terminated by settlement or is dismissed with
prejudice.
7. ADVANCES OF EXPENSES. The Expenses incurred by the
Indemnitee in connection with any Proceeding shall be paid by the
Company in
advance of the final disposition of the Proceeding at the written
request of the
Indemnitee, and within ten (10) business days of such request, to
the fullest
extent permitted by the DGCL; provided that the Indemnitee shall
undertake in
writing to repay such amount to the extent that it is ultimately
determined that
the Indemnitee is not entitled to indemnification by the
Company.
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8. PARTIAL INDEMNIFICATION. If the Indemnitee is entitled
under any provision of this Agreement to indemnification by the
Company for some
or a portion of the Expenses or Losses actually and reasonably
incurred by
Indemnitee in the investigation, defense, appeal or settlement of
any Proceeding
but not, however, for the total amount thereof, the Company shall
nevertheless
indemnify the Indemnitee for the portion of such Expenses and
Losses to which
the Indemnitee is entitled.
9. INDEMNIFICATION PROCEDURE; DETERMINATION OF RIGHT TO
INDEMNIFICATION.
(a) Promptly after receipt by the Indemnitee of
notice of the comme
