Exhibit 10.2

 
PACIFIC ETHANOL, INC.
RESTRICTED STOCK AGREEMENT
 
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 __________ (“Employee”), is entered into as
follows:
 
WHEREAS, the Company has established the Pacific Ethanol, Inc. 2006 Stock
Incentive Plan (the “Plan”), a copy of which has previously been provided to
Employee or is provided with this Agreement; and
 
WHEREAS, the Compensation Committee of the Board of Directors of the Company
(the “Committee”) has determined that Employee be granted shares of the
Company’s $.001 par value per share Common Stock (the “Restricted Stock”)
subject to the restrictions stated below.
 
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:
 
1.  Grant of Restricted Stock. Subject to the terms and conditions of this
Agreement and of the Plan, the Company hereby grants to Employee
***__________*** shares of Restricted Stock. As soon as practicable, the Company
shall cause the shares of Restricted Stock to be issued in Employee’s name.
During the Restriction Period, the Restricted Stock shall be held in the custody
of the Company or its designee for Employee’s account. The Restricted Stock
shall be subject to, and shall bear appropriate legends with respect to, the
restrictions described herein.
 
2.  Vesting Schedule.
 
(a)  The interest of Employee in the Restricted Stock shall vest as to
***__________*** shares of Restricted Stock immediately on the Grant Date and,
provided Employee remains continuously employed by the Company on a full time
basis from the Grant Date through each subsequent vesting date, as to an
additional ***__________*** shares of such Restricted Stock on the first (1st)
anniversary of the Grant Date and on each succeeding anniversary date, so as to
be fully vested on the _____ (___) anniversary of the Grant 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 Restricted Stock upon a Change in Control
but only in accordance with the Plan.
 
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(b)  Upon termination of the Restriction Period, the Company shall, as soon as
practicable thereafter, deliver to Employee a certificate representing the
Restricted Stock with respect to which such restrictions have lapsed. Employee
may instruct the Company in writing to deliver vested shares of Restricted Stock
to Employee’s broker or other designee; provided, that (x) as to the Restricted
Stock that vests immediately on the Grant Date, Employee shall communicate such
instruction in writing to the Chief Financial Officer of the Company within two
(2) business days following the Grant Date, and (y) as to the Restricted Stock
that may vest following the Grant Date, Employee shall communicate such
instruction in writing to the Chief Financial Officer of the Company as to each
subsequent vesting amount not more than thirty (30) business days and not less
than five (5) business days prior to each subsequent vesting date. If Employee
does not timely provide such instructions, the vested shares of Restricted Stock
will be delivered to Employee personally or to Employee’s home or other address
as set forth in the Company’s books and records.
 
3.  Restrictions.
 
(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 Restricted Stock becomes vested is referred to herein as the
“Restriction Period.” 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 insider trading
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 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 and vesting in Employee’s Restricted Stock that will occur upon
the cessation of Employee’s service as an employee of the Company.
 
4.  Shareholder Rights. During the Restriction Period, Employee shall have all
the rights of a shareholder with respect to the Restricted Stock except for the
right to transfer the Restricted Stock, as set forth in Section 3 of this
Agreement. Accordingly, Employee shall have the right to vote the Restricted
Stock and to receive any cash dividends paid to or made with respect to the
Restricted Stock; provided, however, that dividends paid, if any, with respect
to that Restricted Stock which has not vested at the time of the dividend
payment shall be held in the custody of the Company and shall be subject to the
same restrictions that apply to the corresponding Restricted Stock.
 
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5.  Changes in Common Stock. If any change is made to the Common Stock by reason
of any stock split, stock dividend, recapitalization, combination of shares,
exchange of shares or other change affecting the outstanding Common Stock as a
class without the Company’s receipt of consideration, appropriate adjustments
shall be made by the Plan Administrator to (i) the maximum number and/or class
of securities issuable under the Plan, (ii) the maximum number and/or class of
securities for which any one person may be granted Awards under the Plan per
calendar year, (iii) the number and/or class of securities and the exercise or
base price per share (or any other cash consideration payable per share) in
effect under each outstanding Award under the Discretionary Grant Program, and
(iv) the number and/or class of securities subject to each outstanding Award
under the Stock Issuance Program and the cash consideration (if any) payable per
share thereunder. To the extent such adjustments are to be made to outstanding
Awards, those adjustments shall be effected in a manner that shall preclude the
enlargement or dilution of rights and benefits under those Awards. The
adjustments determined by the Plan Administrator shall be final, binding and
conclusive.
 
6.  Taxes.
 
(a)  Employee will recognize ordinary income for federal income tax purposes on
each date the Restricted Stock subject to Employee award vests, whether pursuant
to the normal vesting schedule above or the acceleration provisions of this
Agreement that may apply. The amount of Employee’s taxable income on each such
vesting date will be equal to 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 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 (x) as to the Restricted Stock that vests immediately on the
Grant Date, Employee shall make and communicate such election in writing in the
attached Notice of Election to the Chief Financial Officer of the Company within
two (2) business days following the Grant Date, and (y) as to the Restricted
Stock that may vest following the Grant Date, Employee shall make and
communicate such election in writing in the attached Notice of Election to the
Chief Financial Officer of the Company as to each subsequent vesting amount not
more than thirty (30) business days and not less than five (5) business days
prior to each subsequent 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 Grant Date or the applicable subsequent
vesting date. If Employee (A) fails to make and communicate such election in
writing in the attached Notice of Election to the Chief Financial Officer of the
Company 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 Grant Date or the applicable subsequent
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.
 
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7.  Securities Law Compliance. The Company will use its reasonable commercial
efforts to assure that all Restricted Stock issued pursuant to this Agreement is
registered under the federal securities laws. However, no Restricted Stock will
be issued pursuant to Employee’s award if such issuance would otherwise
constitute a violation of any applicable federal or state securities laws or
regulations or the requirements of The NASDAQ Global Market and any stock
exchange or other market on which the Common Stock is then quoted or listed for
trading. The inability of the Company to obtain approval from any regulatory
body having authority deemed by the Company to be necessary to the lawful
issuance of any Restricted Stock hereunder shall defer the Company’s obligation
with respect to the issuance of such Restricted Stock until such approval has
been obtained.
 
8.  Miscellaneous.
 
(a)  The grant of Restricted Stock or another award to an 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.
 
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(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 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.
 
9.  Mandatory Arbitration. ANY AND ALL DISPUTES OR CONTROVERSIES BETWEEN
EMPLOYEE AND THE COMPANY OR BETWEEN THE COMPANY AND EMPLOYEE ARISING OUT OF,
RELATING TO OR OTHERWISE CONNECTED WITH THIS AGREEMENT OR THE AWARD OF
RESTRICTED STOCK EVIDENCED HEREBY OR THE VALIDITY, CONSTRUCTION, PERFORMANCE OR
TERMINATION OF THIS AGREEMENT SHALL BE SETTLED EXCLUSIVELY BY BINDING
ARBITRATION TO BE HELD IN FRESNO COUNTY, CALIFORNIA. THE ARBITRATION PROCEEDINGS
SHALL BE GOVERNED BY (I) THE NATIONAL RULES FOR THE RESOLUTION OF EMPLOYMENT
DISPUTES THEN IN EFFECT OF THE AMERICAN ARBITRATION ASSOCIATION, AND (II) THE
FEDERAL ARBITRATION ACT. THE ARBITRATOR SHALL HAVE THE SAME, BUT NO GREATER,
REMEDIAL AUTHORITY AS WOULD A COURT HEARING THE SAME DISPUTE. THE DECISION OF
THE ARBITRATOR SHALL BE FINAL, CONCLUSIVE AND BINDING ON THE PARTIES TO THE
ARBITRATION AND SHALL BE IN LIEU OF THE RIGHTS THOSE PARTIES MAY OTHERWISE HAVE
TO A JURY TRIAL; PROVIDED, HOWEVER, THAT SUCH DECISION SHALL BE SUBJECT TO
CORRECTION, CONFIRMATION OR VACATION IN ACCORDANCE WITH THE PROVISIONS AND
STANDARDS OF APPLICABLE LAW GOVERNING THE JUDICIAL REVIEW OF ARBITRATION AWARDS.
THE ARBITRATOR SHALL ISSUE A WRITTEN DECISION THAT REVEALS THE ESSENTIAL
FINDINGS AND CONCLUSIONS ON WHICH THE DECISION IS BASED, AND THE ARBITRATOR’S
DECISION SHALL BE SUBJECT TO SUCH JUDICIAL REVIEW AS IS PROVIDED BY LAW. THE
COMPANY SHALL PAY ANY ARBITRATION FILING FEE, AND WILL BEAR ALL OTHER COSTS OF
ARBITRATION, INCLUDING FEES FOR THE SERVICES OF THE ARBITRATOR AND ANY COURT
REPORTER ORDERED BY THE ARBITRATOR. EACH PARTY SHALL BEAR ITS, HIS OR HER OWN
COSTS OF LEGAL REPRESENTATION; PROVIDED, HOWEVER, IF ANY PARTY PREVAILS ON A
CLAIM ENTITLING THE PREVAILING PARTY TO ATTORNEYS’ FEES AND/OR COSTS PURSUANT TO
ANY APPLICABLE EMPLOYMENT OR CIVIL RIGHTS STATUTE, THE ARBITRATOR MAY AWARD
REASONABLE FEES AND/OR COSTS TO THE PREVAILING PARTY IN ACCORDANCE WITH SUCH
CLAIM. JUDGMENT SHALL BE ENTERED ON THE ARBITRATOR’S DECISION IN ANY COURT
HAVING JURISDICTION OVER THE SUBJECT MATTER OF SUCH DISPUTE OR CONTROVERSY.
NOTWITHSTANDING THE FOREGOING, EITHER PARTY MAY IN AN APPROPRIATE MATTER APPLY
TO A COURT PURSUANT TO CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 1281.8, OR ANY
COMPARABLE STATUTORY PROVISION OR COMMON LAW PRINCIPLE, FOR PROVISIONAL RELIEF,
INCLUDING A TEMPORARY RESTRAINING ORDER OR A PRELIMINARY INJUNCTION. TO THE
EXTENT PERMITTED BY LAW, THE PROCEEDINGS AND RESULTS, INCLUDING THE ARBITRATOR’S
DECISION, SHALL BE KEPT CONFIDENTIAL TO THE EXTENT PERMITTED BY APPLICABLE LAW.
 
10.  Remaining Terms. The remaining terms and conditions of Employee’s award are
governed by the Plan, and Employee’s award is also subject to all
interpretations, amendments, rules, regulations and decisions that may from time
to time be adopted under the Plan. The General Plan Description, which is the
official prospectus summarizing the principal features of the Plan, has
previously been provided to Grantee or is provided with this Agreement.
 
(Signature page follows.)

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IN WITNESS WHEREOF, the undersigned have executed this Agreement effective on
the date first set above.
 
COMPANY:
 
PACIFIC ETHANOL, INC.,
a Delaware corporation
 
 
By:

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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:
 
 
 
 

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NOTICE OF ELECTION
 
Chief Financial Officer
Pacific Ethanol, Inc.
 
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):

 
_____ October 4, 2006 (Grant Date)
_____ October 4, 2007
_____ October 4, 2008
_____ October 4, 2009
_____ October 4, 2010
_____ October 4, 2011
 

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 Grant Date or the subsequent vesting date (as
applicable). If the undersigned Employee fails to make payment within such
period, 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 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
   ___________________________________  
 
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