PACIFIC ETHANOL, INC. RESTRICTED STOCK AGREEMENT
Exhibit 10.5
THIS RESTRICTED STOCK AGREEMENT (this “Agreement”) dated and effective as of __________ (the “Grant Date”) by and between Pacific Ethanol, Inc., a Delaware corporation (the “Company”), and «First_Name» «Last_Name» (“Employee”) is entered into as follows:
WHEREAS, the Company has established the Pacific Ethanol, Inc. 2016 Stock Incentive Plan (the “Plan”), a copy of which has previously been provided to Employee or is provided with this Agreement; and
Capitalized terms used but not otherwise defined herein shall have the respective meanings ascribed to them in the Plan. References herein to the Company shall also include, where and as applicable, any Parent or Subsidiary of the Company in the same manner used in the Plan.
NOW, THEREFORE, the parties hereby agree as follows:
(a) The interest of Employee in the Restricted Stock shall vest as follows: 33% of the shares of Restricted Stock shall vest on ______, 20__, 33% of the shares of Restricted Stock shall vest on ______, 20__ and 34% of the shares of Restricted Stock shall vest on ______, 20__; provided, that Employee remains continuously employed by the Company on a full-time basis from the Grant Date through the applicable vesting date. If a vesting date falls on a weekend or any other day on which the NASDAQ Stock Market (“NASDAQ”) is not open, vesting of the corresponding Restricted Stock shall occur on the next following NASDAQ trading day. Notwithstanding the foregoing, the interest of Employee in the Restricted Stock may vest as to one hundred percent (100%) of the then unvested shares of Restricted Stock upon a Change in Control but only in accordance with the Plan.
1
(b) Upon termination of the Restriction Period, the Company shall, as soon as practicable thereafter, deliver instructions to American Stock Transfer (“AST”) to deposit and make available the number of shares of Restricted Stock with respect to which such restrictions have lapsed into the Employee’s Managed Shares account at AST or a brokerage company selected from time to time by the Company. Employee may instruct AST to deliver vested shares of Restricted Stock to Employee, or Employee’s broker or other designee; provided, that Employee communicates such instruction through the AST site not less than five (5) business days prior to the applicable vesting date. Employee may thereafter request delivery of the vested shares of Restricted Stock to Employee, or Employee’s broker or other designee in accordance with the terms and conditions applicable to Employee’s Managed Shares account.
(a) No portion of the Restricted Stock or rights granted hereunder may be sold, transferred, assigned, pledged or otherwise encumbered or disposed of by Employee until such portion of the Restricted Stock becomes vested in accordance with Section 2 of this Agreement. The period of time between the date hereof and the date shares of Restricted Stock vest is referred to herein as the “Restriction Period” as to those shares of Restricted Stock. In addition, none of the Restricted Stock, even if vested, may be sold or transferred in contravention of (i) any market blackout periods the Company may impose from time to time, or (ii) the Company’s xxxxxxx xxxxxxx policies to the extent applicable to Employee from time to time.
(b) The vesting schedule requires Employee’s continued service as a full-time employee of the Company during the applicable vesting periods as a condition to the vesting of the Restricted Stock and the rights and benefits under this Agreement. If Employee’s employment with the Company is terminated for any reason, whether voluntarily or involuntarily, the balance of the Restricted Stock subject to the provisions of this Agreement which has not vested at the time of Employee’s termination of employment shall be forfeited by Employee without payment of any consideration by the Company and neither Employee nor any successor, heir, assign or personal representative of Employee shall have any right, title or interest in or to the forfeited shares of Restricted Stock or the certificates evidencing them, and the Company shall direct its transfer agent of the Common Stock to make the appropriate entries in its records showing the cancellation of the certificate or certificates for such Restricted Stock. Service as an employee for only a portion of a vesting period, even if a substantial portion, will not entitle Employee to any proportionate vesting of the Restricted Stock allocated to that period or avoid or mitigate the forfeiture of Employee’s Restricted Stock that will occur upon the cessation of Employee’s service as an employee of the Company. Notwithstanding the foregoing, the Company may, by written agreement with the Employee, expressly agree to provisions different from those set forth above with respect to severance benefits as to the Restricted Stock.
2
(a) Employee will recognize ordinary income for federal income tax purposes on each date the Restricted Stock subject to Employee’s award vests, whether pursuant to the normal vesting schedule above, the acceleration provisions of this Agreement that may apply or otherwise. The amount of Employee’s taxable income on each such vesting date will equal the fair market value per share of Common Stock on the date of vesting times the number of shares of Restricted Stock which vest on that date.
(b) Employee shall be liable for any and all taxes, including any withholding taxes, arising out of this grant or the vesting of Restricted Stock hereunder. Employee may elect to satisfy such withholding tax obligation by (i) having the Company retain Restricted Stock having a fair market value equal to the Company’s minimum withholding obligation, or (ii) making a cash payment to the Company in an amount equal to the Company’s minimum withholding obligation; provided, that Employee make and communicate such election through the AST site as to the applicable vesting amount not less than five (5) business days prior to the applicable vesting date. If Employee elects to pay the applicable minimum withholding amount in cash, then Employee shall make such payment within two (2) business days following the applicable vesting date. If Employee (A) fails to make and communicate such election through the AST site within the applicable time period, or (B) elects to make a cash payment of the minimum withholding amount and Employee fails to make such payment within two (2) business days following the applicable vesting date, then the Company’s minimum withholding tax obligations shall be satisfied by the Company withholding a number of shares of Restricted Stock that would otherwise vest and be delivered to Employee under this Agreement that the Company determines has a fair market value sufficient to meet such obligations. The Company shall not be required to deliver any Restricted Stock or to recognize any purported transfer of shares of the Restricted Stock until such withholding obligations are satisfied. Employee is ultimately liable and responsible for all taxes owed by Employee in connection with Employee’s Restricted Stock, regardless of any action the Company takes with respect to any tax withholding obligations that arise in connection with the Restricted Stock. The Company makes no representation or undertaking regarding the treatment of any tax withholding in connection with the grant, issuance, vesting or settlement of the Restricted Stock or the subsequent sale of any of the shares of Restricted Stock. The Company does not commit and is under no obligation to structure the Restricted Stock award or program to reduce or eliminate Employee’s tax liability. The Company shall not be required to issue or deliver to Employee fractional shares of Restricted Stock upon withholding of any shares of Restricted Stock to cover the minimum withholding tax, or otherwise, and any fractional share amounts shall be paid to Employee by the Company solely in cash based on the pro rata fair market value of such fractional share amounts on the date of vesting.
3
(a) The grant of Restricted Stock or another award to Employee in any one year, or at any time, does not obligate the Company to make a grant in any future year or in any given amount and should not create an expectation that the Company might make a grant in any future year or in any given amount.
(b) The Company shall not be required (i) to transfer on its books any shares of Restricted Stock which shall have been sold or transferred in violation of any of the provisions set forth in this Agreement, or (ii) to treat as owner of such shares or to accord the right to vote as such owner or to pay dividends to any transferee to whom such shares shall have been so transferred.
(c) The parties agree to execute such further instruments and to take such action as may reasonably be necessary to carry out the intent of this Agreement.
(d) Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon delivery to Employee at Employee’s address then on file with the Company.
(e) This Agreement shall not be construed so as to grant Employee any right to remain in the employ of the Company.
4
(f) The parties agree that neither the Company nor any of its affiliates shall have any further obligation to Employee relating to the grant of stock or other incentive compensation except as stated herein.
(g) This Agreement and the Plan constitute the entire agreement of the parties with respect to the subject matter hereof. This Agreement may not be amended except with the consent of the Committee and by a written instrument duly executed by the Company and Employee.
(h) This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and to their heirs, personal representatives, successors and assigns. The terms of this Agreement shall in all respects be subject to the terms of the Plan. Employee hereby agrees to accept as binding, conclusive and final all decisions and interpretations of the Committee upon any questions arising under the Plan or this Agreement.
(i) The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of Delaware without resort to that State’s conflicts-of-laws rules.
(j) This Agreement shall not in any way affect the right of the Company to adjust, reclassify, reorganize or otherwise make changes in its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.
5
(Signature Page Follows)
6
| COMPANY: | PACIFIC ETHANOL, INC., | |
| a Delaware corporation | ||
| By: | ||
I, the undersigned Employee, hereby acknowledge receiving, reading and understanding the General Plan Description, which is the official prospectus summarizing the principal features of the Plan, this Agreement and the Plan itself. I further acknowledge and accept the foregoing terms and conditions of the Restricted Stock award evidenced hereby. I also acknowledge and agree that the foregoing sets forth the entire understanding between the Company and me regarding my entitlement to receive the shares of the Company’s Common Stock subject to such award and supersedes all prior oral and written agreements on that subject.
| EMPLOYEE: | |
| «First_Name» «Last_Name» |
7
NOTICE OF ELECTION
Chief Financial Officer
Re: Notice of Election as to Manner of Payment of Minimum Withholding Tax
1. The undersigned Employee has been granted shares of Restricted Stock of Pacific Ethanol, Inc., a Delaware corporation (the “Company”).
2. The undersigned Employee hereby elects to (check one):
_____ pay the minimum withholding tax in cash with respect to shares of Restricted Stock; or
_____ have shares of Restricted Stock withheld by the Company to cover the minimum withholding tax.
3. The foregoing election is with respect to the following Grant Date or vesting date(check one):
_____ ________, 20__
_____ ________, 20__
_____ ________, 20__
4. If the undersigned Employee has elected to pay to the Company the minimum withholding tax in cash with respect to shares of Restricted Stock, the undersigned Employee shall make such payment to the Company within two (2) business days following the applicable vesting date. If the undersigned Employee fails to make payment within such period, then the Company’s minimum withholding tax obligations may be satisfied by the Company withholding a number of shares of Restricted Stock that would otherwise vest and be delivered to Employee that the Company determines has a fair market value sufficient to meet such obligations.
5. The terms and conditions of Company’s grant of Restricted Stock are governed solely by the Restricted Stock Agreement and the Plan.
| Dated: | EMPLOYEE | ||
| «First_Name» «Last_Name» | |||
8