Departure of Directors or Certain


On August 4, 2020,
the Compensation Committee of the Board of Directors of Pacific Ethanol, Inc. (the Company) approved, and on August
7, 2020, the Company entered into, a Second Amended and Restated Employment Agreement with Michael D. Kandris (the Agreement).
The agreement is included as Exhibit 10.1 to this Current Report on Form 8-K.


The Agreement provides
for at-will employment as the Companys Co-President and Co-Chief Executive Officer; provided that upon the resignation of
Neil M. Koehler, Mr. Kandris will be the Companys sole President and Chief Executive Officer. Mr. Kandriss annual
base salary is $489,000. Mr. Kandris is eligible to participate in the Companys short-term incentive plan with a pay-out
target of 70% of his base salary, to be paid based upon performance criteria set by the Compensation Committee of the Companys
board of directors.


Upon termination
by the Company without cause or resignation by Mr. Kandris for good reason, Mr. Kandris is entitled to receive (i) severance equal
to eighteen months of his base salary, (ii) 150% of his total target short-term incentive plan award, (iii) continued health insurance
coverage for eighteen months or until the earlier effective date of coverage under a subsequent employers plan, and (iv)
accelerated vesting of 25% of all shares or options subject to any equity awards granted to Mr. Kandris prior to Mr. Kandriss
termination which are unvested as of the date of termination.


However, if Mr.
Kandris is terminated without cause or resigns for good reason in anticipation of or twenty-four months after a change in control,
Mr. Kandris is entitled to (i) severance equal to thirty-six months of base salary, (ii) 300% of his total target short-term incentive
plan award, (iii) continued health insurance coverage for thirty-six months or until the earlier effective date of coverage under
a subsequent employers plan, and (iv) accelerated vesting of 100% of all shares or options subject to any equity awards
granted to Mr. Kandris prior to Mr. Kandriss termination that are unvested as of the date of termination.


If the Company terminates
Mr. Kandriss employment upon his disability, Mr. Kandris is entitled to severance equal to twelve months of base salary.
In addition, the event of Mr. Kandriss disability and if he or someone authorized to act on his behalf executes and delivers
an agreed release agreement and allows the release to become effective, the Company agrees to accelerate the vesting of any equity
awards granted to Mr. Kandris prior to the termination of his employment such that 100% of all shares or options subject to such
awards which are unvested as of termination shall be accelerated and deemed fully vested as of the effectiveness of the release.


If Mr. Kandris dies,
the Company agrees to accelerate the vesting of any equity awards granted to Mr. Kandris prior to his death such that 100% of all
shares or options subject to such awards which are unvested as of his death will be accelerated and deemed fully vested.


The term for
good reason is defined in the Agreement as (i) the assignment to Mr. Kandris of any duties or responsibilities that result
in the material diminution of Mr. Kandriss authority, duties or responsibility, (ii) a material reduction by the Company
in Mr. Kandriss annual base salary, except to the extent the base salaries of all of the Companys other executive
officers are accordingly reduced, (iii) a relocation of Mr. Kandriss place of work, the Companys principal executive
offices if Mr. Kandriss principal office is at these offices, to a location that increases Mr. Kandriss daily one-way
commute by more than thirty-five miles, or (iv) any material breach by the Company of any material provision of the Agreement.



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The term cause
is defined in the Agreement as (i) Mr. Kandriss indictment or conviction of any felony or of any crime involving dishonesty,
(ii) Mr. Kandriss participation in any fraud or other act of willful misconduct against the Company, (iii) Mr. Kandriss
refusal to comply with any of the Companys lawful directives, (iv) Mr. Kandriss material breach of his fiduciary,
statutory, contractual, or common law duties to the Company, or (v) conduct by Mr. Kandris which, in the good faith and reasonable
determination of the Companys board of directors, 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 days after the discovery
of the event, provide written notice to Mr. Kandris describing the nature of the event and Mr. Kandris shall thereafter have ten
business days to cure the event.


A change
in control is deemed to have occurred if, in a single transaction or series of related transactions (i) any person (as the
term is used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the Exchange Act)), or
persons acting as a group, other than a trustee or fiduciary holding securities under an employee 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 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 the transaction
continue to hold (either by the 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 the transaction, or (iii) all or substantially all of the Companys assets
are sold.



Item 9.01.

Financial Statements and Exhibits.



(d)

Exhibits





Number

Description




10.1

Second Amended and Restated Employment Agreement dated August 7, 2020 between Pacific Ethanol, Inc. and Michael D. Kandris




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SIGNATURES



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 7, 2020


PACIFIC ETHANOL, INC.











By:


/S/ CHRISTOPHER W. WRIGHT





Christopher W. Wright,





Vice President, General Counsel & Secretary





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