EXHIBIT
10.6
NON-COMPETITION
AGREEMENT
This Non-Competition Agreement
(this “
Agreement ”) is entered into as of the 17
th day of October, 2006, by and among (i) Pacific
Ethanol, Inc., a Delaware corporation (“
Buyer ”), (ii) Front Range Energy, LLC,
a Colorado limited liability company (the “
Company ”), and (iii) _____________(the
“ Individual ”). Capitalized terms not
defined herein shall have the respective meanings ascribed to such
terms in the Membership Interest Purchase Agreement, dated as of
the date hereof, by and between Eagle Energy, LLC, a South Dakota
limited liability company (“ Seller ”),
and Buyer (the “ Purchase Agreement
”).
Whereas , the Company is currently engaged in the
business of the construction, operation and management of corn
ethanol plants (the “ Restricted Business
”);
Whereas , the Individual has served as a member,
manager, director or officer of Seller and, as a result of his
position with Seller, is in possession of confidential and
proprietary information relating to the Restricted
Business;
Whereas , Buyer and Seller are parties to the Purchase
Agreement, pursuant to which Buyer will purchase 10,094.595 Class B
Voting Units of the Company, representing approximately 42% of the
outstanding membership interests of the Company, from
Seller;
Whereas , Buyer and the Company desire to preserve and
protect the assets of the Company, including, without limitation,
its goodwill, staff resources, customers and trade secrets of which
Individual has knowledge; and
Whereas , as a condition to its willingness to enter
into the Purchase Agreement, Buyer has required that the Individual
enter into this Agreement.
Now, Therefore , in consideration of the foregoing and the
respective representations, warranties, covenants and agreements
set forth in this Agreement, the parties, intending to be legally
bound, hereby agree as follows:
(a)
Noncompetition. The Individual covenants and agrees that during
the period commencing as of the date hereof and ending on the two
(2) year anniversary of the Closing Date (the “
Covenant Period ”), except with the express
prior written consent of the Chief Executive Officer of each of
Buyer and the Company, the Individual shall not engage in or carry
on, or permit his name to be used in connection with, any business
either for himself or as a member, executive, employee, stockholder
(other than as the holder of not more than one percent (1%) of the
total outstanding stock of a publicly held company), investor,
officer, manager or director of a corporation, partnership or other
business association or as an agent, associate or consultant of any
Person, in competition with the Restricted Business, as conducted
by the Company, Buyer or any of their Affiliates, within a fifty
(50) mile radius of the Company’s ethanol production facility
located in Windsor, Colorado. The parties intend that the covenants
contained in this Section 1(a) shall be deemed to
be a series of separate covenants, one for each county in Colorado
within such radius and, except for geographic coverage, each such
separate covenant shall be identical in terms to the covenant
contained in this Section 1(a) . For purposes of
this Agreement, “ Person ” shall be
broadly interpreted to include any individual, corporation
(including any non-profit corporation), general or limited
partnership, limited liability company, joint venture, estate,
trust, association, organization or other entity or governmental
body.
(b)
Nondisclosure of
Information. The
Individual acknowledges that all Confidential Information (as
defined below) known or obtained by him, whether before or after
the date hereof, is the property of the Restricted Business.
Therefore, the Individual agrees that he will not, during the
Covenant Period, disclose to any Person or use for his own account,
or for the benefit of any third party, any Confidential
Information, whether in the Individual’s memory or embodied
in writing or other physical form, without the written consent of
the Chief Executive Officer of each of Buyer and the Company. This
restriction shall not apply to the extent that such Confidential
Information is or becomes generally known to and available for use
by the public other than as a result of the Individual’s
fault or the fault of any other Person bound by a duty of
confidentiality to the Company, Buyer or any of their Affiliates or
is made available to the Individual by a third party having a right
to do so. Furthermore, this restriction shall not apply to the
extent specific Confidential Information is required by Law or by
the order of any Government Authority to be disclosed; provided
that the Individual, prior to making such legally required or
compelled disclosure, shall provide such notification as is
reasonable in the circumstances to the Chief Executive Officer of
each of Buyer and the Company and shall assist Buyer and the
Company in obtaining an appropriate protective order.
(c)
Materials
. The Individual agrees to deliver
to Buyer at any time Buyer may request, all documents, memoranda,
notes, plans, records, reports and other documentation, models,
components, devices or computer software, whether embodied in a
disk or in other form (and all copies of all of the foregoing),
relating to the Restricted Business and any other Confidential
Information that the Individual may then possess or have under his
control.
(d)
Confidential
Information. “
Confidential Information ” means the
following: (i) any and all trade secrets concerning the Restricted
Business, including, without limitation, product specifications,
data, know-how, formulae, compositions, processes, designs,
sketches, photographs, graphs, drawings, samples, inventions and
ideas, past, current and planned research and development, current
and planned manufacturing and distribution methods and processes,
customer lists, details of contracts with customers, consultants,
suppliers or employees, current and anticipated customer
requirements, price lists, market studies, business plans, computer
software and programs (including object code and source code),
computer software and database technologies, systems, structures
and architectures; (ii) any and all information concerning the
Restricted Business, including, without limitation, historical
financial statements, financial projections and budgets, historical
and projected sales, capital spending budgets and plans, the names
and backgrounds of key personnel, personnel training and techniques
and materials, however documented; and (iii) any and all
notes, analysis, compilations, studies, summaries and other
material prepared by or for the Restricted Business containing or
based, in whole or in part, on any information included in the
foregoing.
(e)
Nonservicing and
Nonhiring .
(i) The parties acknowledge and agree that the
Individual, through his association with Seller, has acquired a
considerable amount of knowledge and goodwill with respect to
actual and prospective clients and customers of the Restricted
Business, which knowledge and goodwill are extremely valuable to
the Company and Buyer and which would be extremely detrimental to
the Company and Buyer if used by the Individual in a manner adverse
to the interests of the Company or Buyer. The parties acknowledge
and agree that, because of the nature of the Restricted Business,
it is necessary to afford fair protection to Buyer and the Company,
as provided in this Section 1(e) .
(ii) As a material inducement to Buyer to enter into
the Purchase Agreement, the Individual covenants and agrees that,
during the Covenant Period, except if the Individual is acting as
an employee, agent, or consultant of the Company or Buyer solely
for the benefit of the Company or Buyer in connection with the
Restricted Business and in accordance with the Company’s or
Buyer’s business practices and employee policies, as
determined from time to time by the Company’s or
Buyer’s Board of Directors or Managers, as applicable, the
Individual shall not, directly, indirectly or in concert with any
other Person, divert business from or induce competition with the
Restricted Business with any Person who (A) is on the date hereof,
a client or customer of the Restricted Business, (B) becomes a
client or customer of the Restricted Business during the Covenant
Period,
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