PACIFIC ETHANOL, INC. AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT for JOHN T. MILLER
Exhibit
10.4
AMENDED
AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT
for
▇▇▇▇
▇. ▇▇▇▇▇▇
This
Amended and Restated Executive Employment Agreement (“Agreement”) by and between
▇▇▇▇ ▇. ▇▇▇▇▇▇ (“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 June
26,
2006, 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 Chief Operating 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”) and Chief Executive
Officer. Executive shall report to the Company’s Chief Executive
Officer. 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.
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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 $250,000.00, paid bi-weekly in the amount of $9,615.38 (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 fifty percent (50%) 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 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.
2.4 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.
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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 Chief
Executive Officer (in consultation with the General Counsel), 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:
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(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 the employment termination date shall be
accelerated and deemed fully vested as of Executive’s last day of employment;
provided, however, that in the event, and without the
requirement that Executive be employed for one full year or longer, 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 will accelerate the vesting of any equity awards granted to
Executive prior to Executive’s employment termination such that one hundred
percent (100%) of all shares or options subject to such awards which are
unvested as of the employment termination date shall be accelerated and deemed
fully vested as of Executive’s last day of employment.
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5.3 Termination
for Cause; Resignation Without Good Reason. If the Company
terminates Executive’s employment with the Company for Cause, or Executive
resigns without Good Reason, then Executive will not be entitled to any further
compensation from the Company (other than accrued salary, and accrued and
unused
vacation, through Executive’s last day of employment), including severance pay,
pay in lieu of notice or any other such compensation.
5.4 Termination
Due to Death or Disability.
(a) Death. This
Agreement shall terminate immediately upon Executive’s death and Executive’s
estate shall not be entitled to any further compensation from the Company
(other
than accrued salary, and accrued and unused vacation, through Executive’s last
day of employment), including severance pay, pay in lieu of notice or any
other
such compensation.
(b) Disability. If
Executive is incapacitated by accident, sickness or otherwise such that
Executive is incapable of performing the services set forth in Section 1.1
herein, and such incapacity is certified by a qualified medical doctor, then
this Agreement shall terminate. In such an event, and if Executive or
someone authorized to act on his behalf 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; provided, however, that these severance
benefits shall be reduced by any amounts provided to Executive by any federal
or
state disability insurance payments or benefits, and any private insurance
disability payments or benefits, provided to Executive:
(i) 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.
(ii) 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.
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(iii) 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 the employment termination date shall be
accelerated and deemed fully vested as of Executive’s last day of
employment.
5.5 Deferred
Compensation. If the Company determines that any of the
severance benefit payments fail to satisfy the distribution requirement of
Section 409A(a)(2)(A) of the Internal Revenue Code as a result of Section
409A(a)(2)(B)(i) of the Internal Revenue Code, the payment of such benefit
shall
be accelerated to the minimum extent necessary so that the benefit is not
subject to the provisions of Section 409A(a)(1) of the Internal Revenue
Code. (It is the intention of the preceding sentence to apply the
short-term deferral provisions of Section 409A of the Internal Revenue Code,
and
the regulations and other guidance thereunder, to the severance benefit
payments, and the payment schedule as revised after the application of the
preceding sentence shall be referred to as the “Revised Payment
Schedule.”) However, if there is no Revised Payment Schedule that
would avoid the application of Section 409A(a)(1) of the Internal Revenue
Code,
the payment of such benefits shall not be paid pursuant to a Revised Payment
Schedule and instead shall be delayed to the minimum extent necessary so
that
such benefits are not subject to the provisions of Section 409A(a)(1) of
the
Internal Revenue Code. The Board may attach conditions to or adjust
the amounts paid pursuant to this Section 5.5 to preserve, as closely as
possible, the economic consequences that would have applied in the absence
of
this Section 5.5; provided, however, that no such condition or
adjustment shall result in the payments being subject to Section 409A(a)(1)
of
the Internal Revenue Code.
5.6 Limitation
on Payments. In the event that the payments or other
benefits provided for in this Agreement or otherwise payable to Executive
(i)
constitute “parachute payments” within the meaning of Section 280G of the Code,
and (ii) would be subject to the excise tax imposed by Section 4999 of the
Code
(the “Excise Tax”), then Executive’s benefits under this Agreement shall be
either (a) delivered in full, or (b) delivered to such lesser extent which
would
result in no portion of such benefits being subject to the Excise Tax, whichever
of the foregoing amounts, taking into account the applicable federal, state
and
local income taxes and the Excise Tax, results in the receipt by Executive
on an
after-tax basis, of the greatest amount of benefits, notwithstanding that
all or
some portion of such benefits may be taxable under Section 4999 of the
Code. If a reduction in payments or benefits constituting “parachute
payments” is necessary pursuant to the foregoing provision, reduction shall
occur in the following order unless the Executive elects in writing a different
order (provided, however, that such election shall be subject
to Company approval if made on or after the date on which the event that
triggers the parachute payment occurs): reduction of cash payments; cancellation
of accelerated vesting of stock awards; reduction of employee
benefits. If acceleration of vesting of stock award compensation is
to be reduced, such acceleration of vesting shall be cancelled in the reverse
order of the date of grant of the Executive’s stock awards unless the Executive
elects in writing a different order for cancellation.
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Unless
the Company and Executive otherwise agree in writing, any determination required
under this Section 5.6 shall be made in writing by the Company’s independent
public accountants (the “Accountants”), whose determination shall be conclusive
and binding upon Executive and the Company for all purposes and may be relied
upon by the Company. For purposes of making the calculations required
by this Section 5.6, the Accountants may make reasonable assumptions and
approximations concerning applicable taxes and may rely on reasonable, good
faith interpretations concerning the application of Section 280G and 4999
of the
Code. The Company and Executive shall further to the Accountants such
information and documents as the Accountants may reasonably request in order
to
make a determination under this Section 5.6. The Company shall bear
all costs the Accountants may reasonably incur in connection with any
calculations contemplated by this Section 5.6.
5.7 No
Mitigation. Executive shall not be required to mitigate
damages or the amount of any payment provided for under this Agreement by
seeking other employment or otherwise, nor shall the amount of any payment
provided for under this Agreement be reduced by any compensation earned by
Executive as the result of employment by another employer after the date
of
termination, or otherwise, except for health insurance benefits as set forth
herein.
5.8 Definitions.
(a) For
purposes of this Agreement, “Cause” shall mean any one or more
of the following:
(i) Executive’s
indictment or conviction of any felony or of any crime involving
dishonesty;
(ii) Executive’s
participation in any fraud or other act of willful misconduct against the
Company (including any material breach of Company policy that causes or
reasonably could cause harm to the Company);
(iii) Executive’s
refusal to comply with any lawful directive of the Company;
(iv) Executive’s
material breach of Executive’s fiduciary, statutory, contractual, or common law
duties to the Company (including any material breach of this Agreement or
the
Confidential Information and Inventions Agreement); or
(v) Conduct
by Executive which in the good faith and reasonable determination of the
Board
demonstrates gross unfitness to serve.
Provided,
however, that in the event that any of the foregoing events is
reasonably capable of being cured, the Company shall, within twenty (20)
days
after the discovery of such event, provide written notice to the Executive
describing the nature of such event and Executive shall thereafter have ten
(10)
business days to cure such event.
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(b) For
purposes of this Agreement, Executive shall have “Good Reason”
for Executive’s resignation if: (w) any of the following occurs without
Executive’s consent; (x) Executive notifies the Company in writing, within
twenty (20) days after the occurrence of one of the following events that
Executive intends to terminate his employment no earlier than thirty (30)
days
after providing such notice; (y) the Company does not cure such condition
within thirty (30) days following its receipt of such notice or states
unequivocally in writing that it does not intend to attempt to cure such
condition, and (z) the Executive resigns from employment within thirty (30)
days
following the end of the period within which the Company was entitled to
remedy
the condition constituting Good Reason but failed to do so:
(i) the
assignment to Executive of any duties or responsibilities which result in
the
material diminution of Executive’s authority, duties or responsibility;
provided, however, that the acquisition of the Company and
subsequent conversion of the Company to a division or unit of the acquiring
corporation will not by itself result in a material diminution of Executive’s
authority, duties or responsibility;
(ii) a
material reduction by the Company in Executive’s annual base salary, except to
the extent the base salaries of all other executive officers of the Company
are
accordingly reduced;
(iii) a
relocation of Executive’s place of work, or the Company’s principal executive
offices if Executive’s principal office is at such offices, to a location that
increases Executive’s daily one-way commute by more than thirty-five (35) miles;
or
(iv) any
material breach by the Company of any material provision of this Agreement,
including but not limited to Section 7.7.
(c) For
purposes of this Agreement, “Change in Control” shall be deemed
to have occurred if, in a single transaction or series of related transactions:
(i) any person (as such term is used in Section 13(d) and 14(d) of the
Securities Exchange Act of 1934 (“Exchange Act”)), or persons acting as a group,
other than a trustee or fiduciary holding securities under an employment
benefit
program, is or becomes a “beneficial owner” (as defined in Rule 13-3 under the
Exchange Act), directly or indirectly of securities of the Company representing
a majority (e.g., 50% plus one share) of the combined voting power of
the Company, (ii) there is a merger, consolidation or other business combination
transaction of the Company with or into another corporation, entity or person,
other than a transaction in which the holders of at least a majority of the
shares of voting capital stock of the Company outstanding immediately prior
to
such transaction continue to hold (either by such shares remaining outstanding
or by their being converted into shares of voting capital stock of the surviving
entity) a majority of the total voting power represented by the shares of
voting
capital stock of the Company (or the surviving entity) outstanding immediately
after such transaction, or (iii) all or substantially all of the Company’s
assets are sold.
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6. ARBITRATION.
To
ensure
the timely and economical resolution of disputes that may arise in connection
with Executive’s employment with the Company, Executive and the Company agree
that any and all disputes, claims, or causes of action arising from or relating
to the enforcement, breach, performance, negotiation, execution, or
interpretation of this Agreement, Executive’s employment, or the termination of
Executive’s employment, shall be resolved to the fullest extent permitted by law
by final, binding and confidential arbitration, by a single arbitrator, in
Sacramento, California, conducted by JAMS under the then applicable JAMS
rules.
By agreeing to this arbitration procedure, both Executive and the
Company waive the right to resolve any such dispute through a trial by jury
or
judge or administrative proceeding. The arbitrator
shall: (a) have the authority to compel adequate discovery for the
resolution of the dispute and to award such relief as would otherwise be
permitted by law; and (b) issue a written arbitration decision, to include
the
arbitrator’s essential findings and conclusions and a statement of the
award. The arbitrator shall be authorized to award any or all
remedies that Executive or the Company would be entitled to seek in a court
of
law. The Company shall pay all JAMS’ arbitration fees in excess of
the amount of court fees that would be required if the dispute were decided
in a
court of law. Nothing in this Agreement is intended to prevent either
Executive or the Company from obtaining injunctive relief in court to prevent
irreparable harm pending the conclusion of any such arbitration.
7. GENERAL
PROVISIONS.
7.1 Notices. Any
notices provided hereunder must be in writing and shall be deemed effective
upon
the earlier of personal delivery (including personal delivery by fax) or
the
next day after sending by overnight carrier, to the Company at its primary
office location and to Executive at his address as listed on the Company
payroll.
7.2 Severability. Whenever
possible, each provision of this Agreement will be interpreted in such manner
as
to be effective and valid under applicable law, but if any provision of this
Agreement is held to be invalid, illegal or unenforceable in any respect
under
any applicable law or rule in any jurisdiction, such invalidity, illegality
or
unenforceability will not affect any other provision or any other jurisdiction,
but this Agreement will be reformed, construed and enforced in such jurisdiction
to the extent possible in keeping with the intent of the parties.
7.3 Waiver. Any
waiver of any breach of any provisions of this Agreement must be in writing
to
be effective, and it shall not thereby be deemed to have waived any preceding
or
succeeding breach of the same or any other provision of this
Agreement.
7.4 Complete
Agreement. This Agreement, including Exhibit A, constitutes
the entire agreement between Executive and the Company and it is the complete,
final, and exclusive embodiment of their agreement with regard to this subject
matter. This Agreement supersedes and replaces the Original
Employment Agreement in its entirety and the Original Employment Agreement
shall
have no further force or effect. It is entered into without reliance
on any promise or representation other than those expressly contained herein,
and it cannot be modified or amended except in a writing signed by the Executive
and a duly authorized officer of the Company.
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7.5 Counterparts. This
Agreement may be executed in separate counterparts, any one of which need
not
contain signatures of more than one party, but all of which taken together
will
constitute one and the same Agreement.
7.6 Headings. The
headings of the sections hereof are inserted for convenience only and shall
not
be deemed to constitute a part hereof nor to affect the meaning
thereof.
7.7 Successors
and Assigns. This Agreement is intended to bind and inure to
the benefit of and be enforceable by Executive and the Company, and their
respective successors, assigns, heirs, executors and administrators, except
that
Executive may not assign any of his duties hereunder and he may not assign
any
of his rights hereunder without the written consent of the Company, which
shall
not be withheld unreasonably. The Company shall obtain the assumption
of this Agreement by any successor or assign of the Company.
7.8 Choice
of Law. All questions concerning the construction, validity
and interpretation of this Agreement will be governed by the law of the State
of
California.
IN
WITNESS WHEREOF, the parties have executed this Agreement.
| Pacific Ethanol, Inc. | |||
|
|
By:
|
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | |
| ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | |||
|
President
and Chief Executive Officer
|
|||
| Date: | 12/11/2007 | ||
Understood
and Agreed:
Executive
By:
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇
▇. ▇▇▇▇▇▇
Date:
12/11/2007
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