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EXHIBIT 4.2
CONFIDENTIALITY, NON-COMPETITION, NON-SOLICITATION
AND CONSULTING AGREEMENT
CONFIDENTIALITY, NON-COMPETITION, NON-SOLICITATION AND
CONSULTING
AGREEMENT dated March 23, 2005 ("AGREEMENT") by and between,
Pacific Ethanol,
Inc., a Delaware corporation (the "COMPANY") and Philip B. Kart
(the
"CONSULTANT").
RECITALS
WHEREAS, Accessity Corp., an New York corporation ("ACCESSITY")
has
entered into a Share Exchange Agreement (the "SHARE EXCHANGE
AGREEMENT") by and
among Accessity; Pacific Ethanol, Inc., a California corporation
("PEI");
Kinergy Marketing, LLC, an Oregon limited liability company
("KINERGY");
ReEnergy, LLC, a California limited liability company ("REENERGY,"
and together
with PEI and Kinergy, the "ACQUIRED COMPANIES"); each of the
shareholders of PEI
(collectively, the "PEI SHAREHOLDERS"); each of the holders of
options or
warrants to acquire shares of common stock of PEI (collectively,
the "PEI
WARRANTHOLDERS"); each of the limited liability company members of
Kinergy
identified on the signature pages hereof (collectively, the
"KINERGY Members");
each of the limited liability company members of ReEnergy
identified on the
signature pages hereof (collectively, the "REENERGY MEMBERS");
and
WHEREAS, immediately prior to the closing of the Share Exchange
Agreement, Accessity will merge with and into the Company; and
WHEREAS, the Consultant, pursuant to the Share Exchange Agreement,
is
resigning from Accessity and the Company and relinquishing certain
rights to
receive cash and benefits pursuant to his employment agreement with
Accessity;
and whereas, the Consultant has the ability and background to
effectively
compete in this area subsequent to his resignation, having spent
extensive time,
encompassing more than 10 years, in the agricultural and corn
industry which
provides the basic feedstock for ethanol and nearly all ethanol
businesses are
currently owned by agricultural companies, and the Consultant has
held executive
positions in agricultural corn companies that grew through
acquisition with
Consultant as a key financial officer engaged in the acquisition
and operational
control of such companies, having direct access to both equity and
bank lending
sources, and has retained those contacts, and the Company has
defined a key
strategy to acquire ethanol businesses from agricultural and other
entities; and
WHEREAS, the Company is a defendant in a certain law suit which
have
been brought by Gerald M. Zutler in connection with Mr. Zutler's
previous
employment with Accessity (the "ZUTLER ACTION") and the events that
occurred
during Consultant's period of employment with Accessity and of
which the
Consultant has certain direct knowledge; and
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WHEREAS, Accessity has filed suit against Mercator Group LLC,
Global
Taurus LLC, et al, for in excess of $100 million (the "MERCATOR
ACTION") related
to a transaction that was contemplated by Accessity during the
period of the
Consultant's employment with Accessity with the Consultant holding
unique
knowledge that may be key to the successful prosecution of this
suit; and
WHEREAS, the Company and the Consultant desire to enter into
this
Agreement under which the Consultant will provide consulting
services and
cooperation in connection with the Zutler Action and Mercator
Action and any
other related litigation or disputes that may subsequently be
brought arising
out of events that occurred during the period that the Consultant
was employed
by Accessity; and
WHEREAS, the Consultant has many years of experience as chief
financial
officer of a public company and by using this experience can assist
in the
transition of the new management following the closing of the Share
Exchange
Agreement by assisting with review and advice regarding press
releases,
discussions with the new senior management regarding Nasdaq listing
matters,
advice for structuring financings and fund raising issues, broker
communications
and investor relations matters, transition and information related
to the
Company's 401(k) pension plan and related procedures, issues and
problems which
have occurred, information regarding the transferred account
balances and
details related thereto, information and advice related to
disclosure
requirements of the Securities Exchange Commission ("SEC"),
Accessity's prior
SEC filings as required under the Securities Exchange Act of 1934,
as amended
(the "EXCHANGE ACT") and advice regarding cash management and
investments
including the strategies regarding the current invested funds;
and
WHEREAS, the Company wishes to protect the confidential information
of
the Company and to protect against the Consultant's skills,
knowledge,
experience, ideas and influence being used for the benefit of a
competitor of
the Company. Consultant is willing to enter into an agreement to
provide such
protection to the Company upon the terms and conditions set forth
in this
Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
mutual
agreements herein contained, the parties agree as follows.
1.
CONFIDENTIALITY, NON-COMPETITION AND NON-SOLICITATION.
(a) Consultant acknowledges that: the business of acquiring
manufacturing, distributing, reselling and brokering Ethanol and/or
other
alternative fuels (the "BUSINESS") is intensely competitive and
Consultant's
former and current position with Accessity and the Company has
exposed the
Consultant to knowledge of confidential information of the Company;
the direct
and indirect disclosure of any such confidential information to
existing or
potential competitors of the Company would place the Company at a
competitive
disadvantage and would do damage, monetary or otherwise, to the
Company's
Business; and the engaging by Consultant in any of the activities
prohibited by
this Agreement may constitute improper appropriation and/or use of
such
information and trade secrets. Consultant expressly acknowledges
the trade
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secret status of the confidential information and that the
confidential
information constitutes a protectable business interest of the
Company.
Confidential information and trade secrets include, but are not
limited to,
customer and client lists, price lists, marketing and sales
strategies and
procedures, operational and equipment techniques, business plans
and systems,
quality control procedures and systems, special projects and
technological
research, including projects, research and reports for any entity
or client or
any project, research, report or the like concerning sales or
manufacturing or
new technology, employee compensation plans and any other
information relating
thereto, and any other records, files, drawings, inventions,
discoveries,
applications or processes which are not in the public domain (all
the foregoing
shall be referred to herein as the "CONFIDENTIAL INFORMATION").
(b) For purposes of this Agreement, the term "COMPANY" shall
be construed to include the Company and its current and future
subsidiaries and
affiliates engaged in the Business.
(c) From and after the Closing of the Share Exchange Agreement
(the "EFFECTIVE TIME"), Consultant shall not, directly or
indirectly, whether
individually, as a director, stockholder, owner, partner, employee,
principal or
agent of any business, or in any other capacity, make known,
disclose, furnish,
make available or utilize any of the confidential information of
the Company
other than in the proper performance of the duties contemplated
thereafter, or
as required by a court of competent jurisdiction or other
administrative or
legislative body; PROVIDED THAT, prior to disclosing any of the
confidential
information to a court or other administrative or legislative body,
Consultant
shall promptly notify the Company so that it may seek a protective
order or
other appropriate remedy. Consultant agrees to return all
confidential
information, including all photocopies, extracts and summaries
thereof, and any
such information stored electronically on tapes, computer disks or
in any other
manner to the C
