SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) AUGUST 10, 2005
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PACIFIC ETHANOL, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 41-2170618
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(State or other jurisdiction (IRS Employer
of incorporation) Identification No.)
000-21467
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(Commission File Number)
5711 N. WEST AVENUE, FRESNO, CALIFORNIA 93711
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (559) 435-1771
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(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (SEE General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
INDEMNIFICATION AGREEMENT DATED AUGUST 10, 2005 BETWEEN THE COMPANY AND WILLIAM
G. LANGLEY
The Company entered into an Indemnification Agreement with William G.
Langley ("Indemnitee").
Under the Indemnification Agreement, the Company has agreed to
indemnify the Indemnitee in connection with any third-party proceeding or
threatened proceeding against the Indemnitee or in connection with a proceeding
or threatened proceeding by or in the right of the Company, such as a
stockholder derivative suit, by reason of the fact that the Indemnitee is or was
an officer and/or 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,
against all expenses, damages, judgments, amounts paid in settlement, fines,
penalties and ERISA excise taxes actually and reasonably incurred by the
Indemnitee in connection with the defense or settlement of any such proceeding,
to the fullest extent permitted by the Delaware General Corporation Law, whether
or not the Indemnitee was the successful party in any such proceeding; provided,
however, that any settlement of a third-party proceeding must be approved in
writing by the Company, and any settlement of a proceeding by or in the right of
the Company is settled with the approval of a court of competent jurisdiction or
indemnification of such amounts is otherwise ordered by a court of competent
jurisdiction in connection with such proceeding.
In addition, the Company is required to advance expenses on behalf of
the Indemnitee in connection with Indemnitee's defense in any such proceeding;
provided, that the Indemnitee undertakes in writing to repay such amounts to the
extent that it is ultimately determined that the Indemnitee is not entitled to
indemnification by the Company.
No indemnification payments or payments for expenses may be made by the
Company under the agreements (i) to indemnify or advance expenses to the
Indemnitee with respect to actions initiated or brought voluntarily by the
Indemnitee and not by way of defense, except with respect to actions brought to
establish or enforce a right to indemnification or advancement of expenses under
the agreement or any other statute or law or otherwise as required under the
Delaware General Corporation Law, but such indemnification or advancement of
expenses may be provided by the Company in specific cases if approved by the
Board of Directors by a majority vote of a quorum thereof consisting of
directors who are not parties to such action, (ii) to indemnify the Indemnitee
for any expenses, damages, judgments, amounts paid in settlement, fines,
penalties or ERISA excise taxes for which payment is actually made to the
Indemnitee under a valid and collectible insurance policy, except in respect of
any excess beyond the amount paid under such insurance, (iii) to indemnify the
Indemnitee for any expenses, damages, judgments, amounts paid in settlement,
fines, penalties or ERISA excise taxes for which the Indemnitee has been or is
indemnified by the Company or any other party otherwise than pursuant to the
agreement, or (iv) to indemnify the Indemnitee for any expenses, damages,
judgments, fines or penalties sustained in any proceeding for an accounting of
profits made from the purchase or sale by Indemnitee of securities of the
Company pursuant to the provisions of Section 16(b) of the Securities Exchange
Act of 1934 and the rules and regulations promulgated thereunder or similar
provisions of any federal, state or local statutory law.
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The Company is also required under the agreement, at the Indemnitee's
request, to maintain in full force and effect, at its sole cost and expense,
directors' and officers' liability insurance by an insurer, in an amount and
with a deductible reasonably acceptable to the Indemnitee covering the period
during which the Indemnitee is serving in any one or more of the capacities
covered by the agreement and for so long thereafter as the Indemnitee shall be
subject to any possible claim or threatened, pending or completed proceeding by
reason of the fact that the Indemnitee is serving in any of the capacities
covered by the agreement; provided, that the Company shall have no obligation to
maintain such insurance if the Company determines, in good faith, that (i) such
insurance cannot be obtained on terms which are commercially reasonable, (ii)
the premium costs for such insurance is significantly disproportionate to the
amount of coverage provided, (iii) the coverage provided by such insurance is
limited by exclusions so as to provide an insufficient benefit, or (iv) the
Company, after using best efforts, is otherwise unable to obtain such insurance.
EXECUTIVE EMPLOYMENT AGREEMENT DATED AUGUST 10, 2005 BETWEEN THE COMPANY AND
WILLIAM G. LANGLEY
The Executive Employment Agreement with Mr. Langley provides for a
four-year term and automatic one-year renewals thereafter, unless either the
employee or the Company provides written notice to the other at least 90 days
prior to the expiration of the then-current term.
Mr. Langley is to receive a base salary of $185,000 per year and is
entitled to receive a cash bonus of up to 50% of his base salary to be paid
based upon performance criteria set by the board of directors. Mr. Langley is
entitled to reimbursement of all reasonable costs for relocating to Fresno,
California and is required to relocate to Fresno within six months of August 10,
2005.
The Company is also required to provide an office and administrative
support to Mr. Langley and certain benefits, including medical insurance (or, if
inadequate due to location of permanent residence, reimbursement of up to $1,000
per month for obtaining health insurance coverage), three weeks of paid vacation
per year, participation in the stock option plan to be developed in relative
proportion to the position in the organization, and participation in benefit
plans on the same basis and to the same extent as other executives or employees.
Mr. Langley is also entitled to reimbursement for all reasonable
business expenses incurred in promoting or on behalf of the business of the
Company, including expenditures for entertainment, gifts and travel. Upon
termination or resignation for good reason, the employee is entitled to receive
severance equal to six months of base salary, unless he is terminated for cause
or in the event of death or disability, voluntarily terminates his employment
without providing the required written notice or his agreement is not renewed.
The term "for good reason" is defined in the Executive Employment
Agreement as (i) a general assignment by the Company for the benefit of
creditors or filing by the Company of a voluntary bankruptcy petition or the
filing against the Company of any involuntary bankruptcy which remains
undismissed for 30 days or more or if a trustee, receiver or liquidator is
appointed, (ii) any material changes in the employee's titles, duties or
responsibilities without his express written consent, or (iii) the employee is
not paid the compensation and benefits required under the Employment Agreement.
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The term "for cause" is defined in the Executive Employment Agreement
as (i) any intentional misapplication by the employee of the Company's funds or
other material assets, or any other act of dishonesty injurious to the Company
committed by the employee; or (ii) the employee's conviction of (a) a felony or
(b) a crime involving moral turpitude; or (iii) the employee's use or possession
of any controlled substance or chronic abuse of alcoholic beverages, which use
or possession the board reasonably determines renders the employee unfit to
serve in his capacity as a senior executive of the Company; or (iv) the
employee's breach, nonperformance or nonobservance of any of the terms of his
employment agreement with the Company, including but not limited to the
employee's failure to adequately perform his duties or comply with the
reasonable directions of the board; but notwithstanding anything in the
foregoing subsections (iii) or (iv) to the contrary, the Company shall not
terminate the employee unless the board first provides the employee with a
written memorandum describing in detail how his performance thereunder is not
satisfactory and the employee is given a reasonable period of time (not less
than 30 days) to remedy the unsatisfactory performance related by the board to
the employee in that memorandum. A determination of whether the employee has
satisfactorily remedied the unsatisfactory performance shall be promptly made by
a majority of the disinterested directors of the board (or the entire board, but
not including the employee, if there are no disinterested directors) at the end
of the period provided to the employee for remedy, and the board's determination
shall be final.
A "change in control" of the Company is 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")), 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 51% or more of the combined voting power of the Company,
(ii) there is a merger (other than a reincorporation merger) or consolidation in
which the Company does not survive as an independent company, or (iii) the
business of the Company is disposed of pursuant to a sale of assets.
INCENTIVE STOCK OPTION GRANT FROM THE COMPANY TO WILLIAM G. LANGLEY
On August 10, 2005, William G. Langley was granted an option to
purchase 425,000 shares of common stock of the Company. The option vests
immediately as to 85,000 shares and vests as to an additional 85,000 shares on
each of the first, second, third and fourth anniversaries of the date of grant.
The option has a per share exercise price of $8.03 per share and expires ten
years from the date of grant. The option was granted under the Company's 2004
Stock Option Plan, a copy of which is incorporated by reference as Exhibit 10.3
of this Form 8-K.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
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None.
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(b) Pro Forma Financial Information.
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None.
(c) Exhibits.
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Number Description
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10.1 Form of Indemnification Agreement between
the Company and each of its Executive
Officers and Directors (1)
10.2 Executive Employment Agreement dated August
10, 2005 between the Company and William G.
Langley
10.3 2004 Stock Option Plan (2)
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(1) Filed with the Securities and Exchange
Commission on March 29, 2005 as an exhibit
to the Company's Report on Form 8-K and
incorporated herein by reference.
(2) Filed as an exhibit to the Registrants
Registration Statement on Form S-8 (Reg.
No. 333-123538) filed with the Securities
and Exchange Commission on March 24, 2005
and incorporated herein by reference.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: August 16, 2005 PACIFIC ETHANOL, INC.
By: /s/ RYAN TURNER
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Ryan Turner, Chief Operating Officer
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EXHIBITS FILED WITH THIS REPORT
Number Description
10.2 Executive Employment Agreement dated August 10, 2005
between the Company and William G. Langley
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