July
19, 2007
Douglas
Jeffries
Pacific
Ethanol, Inc.
400
Capitol Mall, Suite 2060
Sacramento,
CA 95814
Dear
Doug:
This
letter sets forth the terms and conditions of the separation agreement (the
“Agreement”)
that Pacific Ethanol, Inc. (the “Company”)
is offering to you to aid in your employment transition.
1. Separation
Date. Your
last
day of employment shall be July 19, 2007 (the “Separation
Date”).
2. Accrued
Salary and Vacation Pay.
On the
Separation Date, the Company will pay you all accrued salary and all accrued
and
unused vacation (if any) earned by you through the Separation Date, less
standard payroll deductions and withholdings. You are entitled to these payments
by law.
3. Severance
Health Insurance Benefits.
To the
extent provided by the federal COBRA law or, if applicable, state insurance
laws, and by the Company’s current group health insurance policies, you will be
eligible to continue your group health insurance benefits at your own expense.
Later, you may be able to convert to an individual policy through the provider
of the Company’s health insurance, if you wish. Although you are not entitled to
any severance compensation or benefits under your Executive Employment Agreement
with the Company (the “Employment
Agreement”),
if
you sign this Agreement and allow the Release contained herein to become
effective, and if you timely elect continued coverage under COBRA, then the
Company will pay your COBRA premiums necessary to continue your current group
health insurance coverage through September 30, 2007.
4. Return
of Restricted Stock.
Pursuant
to Section 2.4 of your Employment Agreement, you were granted 57,500 shares
of
restricted Company stock (the “Restricted Stock”), of which 7,500 shares were
deemed vested as of your first date of employment. As part of this Agreement,
you agree to return the 7,500 vested shares of Restricted Stock to the Company
and hereby relinquish and waive any and all rights you may have to the
Restricted Stock or any portion thereof. The Company shall reimburse you
for any
federal or state tax liability you incur as a direct result of your return
of
these vested shares of Restricted Stock, with the calculation of such
reimbursement to be performed by the public accounting firm engaged by the
Company for tax advisory purposes, whose calculations shall be final and
binding
in the absence of manifest error. You
acknowledge and agree that the vesting of any Restricted Stock shall cease
as of
your Separation Date.
5. No
Other Compensation or Benefits. You
acknowledge that, except as expressly provided in this Agreement, you have
not
earned and will not receive from the Company any additional compensation,
severance, or benefits relating to or arising from your employment with the
Company (or the termination thereof), after the Separation Date. You acknowledge
and agree that you are not and shall not be entitled to any severance
compensation or benefits set forth in your Employment Agreement, including
but
not limited to any compensation or benefits set forth in Section 5 of the
Employment Agreement.
6. Expense
Reimbursement.
You
agree that, within ten (10) days after the Separation Date, you will submit
your
final documented expense reimbursement statement reflecting all business
expenses you incurred through the last day of your employment, if any, for
which
you seek reimbursement. The Company will reimburse you for such expenses
pursuant to its regular business practice.
7. Return
of Company Property.
Within
ten (10) days after the Separation Date, you agree to return to the Company
all
Company documents (and all copies thereof) and other Company property in
your
possession or control. You agree that you will make a diligent search to
locate
any such documents, property and information. In addition, if you have used
any
personal computer, server, or e-mail system to receive, store, prepare or
transmit any Company confidential or proprietary data, materials or information,
you agree to immediately provide the Company with a computer-useable copy
of all
such information, and once you have done so you agree to permanently delete
and
expunge all Company confidential or proprietary information and data from
those
systems; and you agree to provide the Company access to your system as
reasonably requested to verify that the necessary copying and/or deletion
is
completed. Your timely return of all such Company documents and other property
is a precondition to your receipt of the benefits provided under this Agreement.
8. Proprietary
Information Obligations.
You
acknowledge that during your employment with the Company you had access to
and
obtained proprietary information and trade secrets of the Company. You
acknowledge and agree that you shall continue to be bound by the Proprietary
Information and Inventions Agreement attached hereto as Exhibit A.
9. Nondisparagement.
You
agree
not to disparage the Company or its officers, directors, employees, shareholders
and agents, in any manner likely to be harmful to them or their business,
business reputations or personal reputations; and the Company (through its
officers and directors) agrees not to disparage you in any manner likely
to be
harmful to you or your business, business reputation or personal reputation;
provided that you and the Company may respond accurately and fully to any
inquiry or request for information if required by legal process.
10. No
Voluntary Adverse Action.
You
agree that you will not voluntarily (except in response to legal compulsion)
assist any third party in bringing or pursuing any proposed or pending
litigation, arbitration, administrative claim or other formal proceeding
against
the Company, its parent or subsidiary entities, affiliates, officers, directors,
employees or agents.
11. Cooperation.
You
agree to cooperate fully with the Company in connection with its actual or
contemplated defense, prosecution, or investigation of any claims or demands
by
or against third parties, or other matters arising from events, acts, or
failures to act that occurred during the period of your employment by the
Company. Such cooperation includes, without limitation, making yourself
available to the Company upon reasonable notice, without subpoena, to provide
complete, truthful and accurate information in witness interviews, depositions
and trial testimony. The Company will reimburse you for reasonable out-of-pocket
expenses you incur in connection with any such cooperation (excluding forgone
wages, salary, or other compensation) and will make reasonable efforts to
accommodate your scheduling needs. In addition, you agree to execute all
documents (if any) necessary to carry out the terms of this
Agreement.
12. Release
of Claims.
(a) General
Release.
In
exchange for the consideration under this Agreement to which you would not
otherwise be entitled, you hereby generally and completely release the Company
and its parent, subsidiary, and affiliated entities (along with their
predecessors and successors) and their directors, officers, employees,
shareholders, partners, agents, attorneys, insurers, affiliates and assigns,
from any and all claims, liabilities and obligations, both known and unknown,
that arise from or are in any way related to events, acts, conduct, or omissions
occurring at any time prior to and including the date that you sign this
Agreement.
(b) Claims
Released.
This
general release includes, but is not limited to: (i) all claims arising out
of
or in any way related to your employment with the Company or the termination
of
that employment; (ii) all claims related to your compensation or benefits
from the Company, including salary, bonuses, commissions, vacation pay, expense
reimbursements, severance payments, fringe benefits, stock, stock options,
or
any other ownership or equity interests in the Company; (iii) all claims
for breach of contract, wrongful termination, and breach of the implied covenant
of good faith and fair dealing; (iv) all tort claims, including but not
limited to claims for fraud, defamation, emotional distress, and discharge
in
violation of public policy; and (v) all federal, state, and local statutory
claims, including but not limited to claims for discrimination, harassment,
retaliation, attorneys’ fees, or other claims arising under the federal Civil
Rights Act of 1964 (as amended), the federal Americans with Disabilities
Act of
1990 (as amended), the federal Age Discrimination in Employment Act of 1967
(as
amended) (the “ADEA”),
the
California Family Rights Act, the California Labor Code (as amended), and
the
California Fair Employment and Housing Act.
(c) Excluded
Claims. Notwithstanding
anything in this Section 12, you are not hereby releasing the Company from:
(i)
any obligation it may otherwise have to indemnify you for your acts within
the
course and scope of your employment with the Company (including any obligations
set forth in your May 29, 2007 Indemnity Agreement with the Company (the
“Indemnity
Agreement”));
(ii)
any obligations undertaken by the Company in this Agreement (including the
obligation to reimburse you for tax liabilities associated with your return
of
Restricted Stock as set forth in Section 4 herein); or (iii) any rights which
are not waivable as a matter of law. In addition, you understand that nothing
in
this release prevents you from filing, cooperating with, or participating
in any
proceeding before the Equal Employment Opportunity Commission, the Department
of
Labor, or the California Department of Fair Employment and Housing, except
that
you acknowledge and agree that you shall not recover any monetary benefits
in
connection with any such claim, charge or proceeding with regard to any claim
released herein. You represent that you have no lawsuits, claims or actions
pending in your name, or on behalf of any other person or entity, against
the
Company or any other person or entity subject to the release granted in this
paragraph.
13. ADEA
Waiver.
You
hereby acknowledge that you are knowingly and voluntarily waiving and releasing
any rights you may have under the ADEA and that the consideration given for
the
waiver and release in the preceding paragraph is in addition to anything
of
value to which you were already entitled. You further acknowledge that you
have
been advised, as required by the ADEA, that: (i) your waiver and release
do not
apply to any rights or claims that may arise after the date that you sign
this
Agreement; (ii) you should consult with an attorney prior to signing this
Agreement (although you may voluntarily decide not to do so); (iii) you have
twenty-one (21) days within which to consider this Agreement (although
you may choose voluntarily to sign this Agreement earlier);
(iv) you have seven (7) days following the date that you sign this
Agreement to
revoke
this Agreement (in a written revocation received by the Company’s Chief
Executive Officer); and (v) this Agreement will not be effective until the
eighth day after this Agreement has been signed both by you and by the Company
(the “Effective
Date”).
14. Section
1542 Waiver.
In
giving the releases set forth in this Agreement, which include claims which
may
be unknown to you at present, you acknowledge that you have read and understand
Section 1542 of the California Civil Code which reads as follows: “A
general release does not extend to claims which the creditor does not know
or
suspect to exist in his favor at the time of executing the release, which
if
known by him must have materially affected his settlement with the
debtor.”
You
hereby expressly waive and relinquish all rights and benefits under that
section
and any law or legal principle of similar effect in any jurisdiction with
respect to the releases granted herein, including but not limited to the
release
of unknown and unsuspected claims granted in this Agreement.
15. Representations.
You
hereby represent that, except for the payments required by this Agreement,
you
have been paid all compensation owed and for all hours worked, have received
all
the leave and leave benefits and protections for which you are eligible,
pursuant to the Family and Medical Leave Act or otherwise, and have not suffered
any on-the-job injury for which you have not already filed a claim.
16. Dispute
Resolution. To
aid in
the rapid and economical resolution of any disputes which may arise under
this
Agreement, you and the Company agree that any and all claims, disputes or
controversies of any nature whatsoever arising from or regarding the
interpretation, performance, negotiation, execution, enforcement or breach
of
this Agreement shall be resolved by confidential, final and binding arbitration
conducted before a single arbitrator with Judicial Arbitration and Mediation
Services, Inc. (“JAMS”) in Sacramento, California, under JAMS’ then-applicable
arbitration rules. The
parties acknowledge that by agreeing to this arbitration procedure, they
waive
the right to resolve any such dispute through a trial by jury, judge or
administrative proceeding. You
will
have the right to be represented by legal counsel at any arbitration proceeding.
The arbitrator shall: (i) have the authority to compel adequate discovery
for
the resolution of the dispute and to award such relief as would otherwise
be
available under applicable law in a court proceeding; and (ii) issue a written
statement signed by the arbitrator regarding the disposition of each claim
and
the relief, if any, awarded as to each claim, the reasons for the award,
and the
arbitrator’s essential findings and conclusions on which the award is based. The
Company shall bear the JAMS arbitration fees and administrative costs. Nothing
in this Agreement shall prevent either you or the Company from obtaining
injunctive relief in court to prevent irreparable harm pending the conclusion
of
any such arbitration.
17. Miscellaneous.
This
Agreement, including
Exhibit A, and your Indemnity Agreement constitutes the complete, final and
exclusive embodiment of the entire agreement between you and the Company
with
regard to this subject matter. It is entered into without reliance on any
promise or representation, written or oral, other than those expressly contained
herein, and it supersedes any other such promises, warranties or representations
(including but not limited to any promises set forth in the Employment
Agreement). This Agreement may not be modified or amended except in a writing
signed by both you and a duly authorized officer of the Company. This Agreement
will bind the heirs, personal representatives, successors and assigns of
both
you and the Company, and inure to the benefit of both you and the Company,
their
heirs, successors and assigns. If any provision of this Agreement is determined
to be invalid or unenforceable, in whole or in part, this determination will
not
affect any other provision of this Agreement and the provision in question
will
be modified by the court so as to be rendered enforceable. This Agreement
will
be deemed to have been entered into and will be construed and enforced in
accordance with the laws of the State of California without regard to conflicts
of law principles. This Agreement may be executed in counterparts, each of
which
shall be deemed to part of one original, and facsimile signatures shall be
equivalent to original signatures.
If
this Agreement is acceptable to you, please sign below on or within twenty-one
(21) days after the Separation Date and return the signed original to me.
If I
do not receive the fully executed Agreement from you by such date, the Company’s
offer contained herein will expire.
Sincerely,
Pacific
Ethanol, Inc.
By:
/s/
NEIL M. KOEHLER
Neil
M. Koehler
Chief
Executive Officer
Understood
and Agreed:
/s/
DOUGLAS JEFFRIES
Douglas
Jeffries
Date:
July
19, 2007
Exhibit
A -Proprietary Information and Inventions Agreement
-6-
