paceth_8k-ex1001.htm


    Exhibit
      10.1

    PACIFIC
      ETHANOL, INC.

     

    EXECUTIVE
      EMPLOYMENT AGREEMENT

    for

    JOSEPH
      W. HANSEN

     

    This
      Executive Employment Agreement (“Agreement”) by and between Joseph W. Hansen
      (“Executive”) and Pacific Ethanol, Inc. (the “Company”) (collectively, the
“Parties”) is effective as of the last date signed by the Parties.

     

    Whereas,
      the Company desires to employ Executive to provide personal services to the
      Company, and wishes to provide Executive with certain compensation and benefits
      in return for his services;

     

    Whereas,
      Executive wishes to be employed by the Company and to provide personal services
      to the Company in return for certain compensation and benefits; and

     

    Now,
      Therefore, in consideration of the mutual promises and covenants
      contained herein, it is hereby agreed by and between the parties hereto as
      follows:

     

    1.           Employment
      by the Company.

     

    1.1           Position.  Subject
      to terms and conditions set forth herein, the Company agrees to employ Executive
      in the position of Chief Financial Officer and Executive hereby accepts such
      employment.  During the term of Executive’s employment with the
      Company, Executive will devote Executive’s best efforts and substantially all of
      Executive’s business time and attention to the business of the Company, except
      for vacation periods as set forth herein and reasonable periods of illness
      or
      other incapacities permitted by the Company’s general employment
      policies.  Executive’s first date of employment shall be January
      2,  2008.

     

    1.2           Duties
      and Location.  Executive shall serve in an executive capacity
      and shall perform such duties as are customarily associated with Executive’s
      then current title, consistent with the bylaws of the Company and as required
      by
      the Company’s Board of Directors (the “Board”) and Chief Executive
      Officer.  Executive shall report to the Company’s Chief Executive
      Officer.  Executive’s primary office location shall be in Sacramento,
      California, or such other location as is acceptable to both the Executive and
      the Company.  The Company reserves the right to reasonably require
      Executive to perform Executive’s duties at places other than Executive’s primary
      office location from time to time as agreed to by Executive, and to require
      reasonable business travel.

     

    1.3           Policies
      and Procedures.  The employment relationship between the
      parties shall be governed by the general employment policies and practices
      of
      the Company, except that when the terms of this Agreement differ from or are
      in
      conflict with the Company’s general employment policies or practices, this
      Agreement shall control.

     

    
      
         

      

      
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              2.

            	
              Compensation.

            


    

     

    2.1           Salary.  For
      services to be rendered hereunder, Executive shall receive an annual salary
      at
      the rate of $250,000.00, paid bi-weekly in the amount of $9,615.38 (the “Base
      Salary”), subject to standard payroll deductions and withholdings and payable in
      accordance with the Company’s regular payroll schedule.  Executive’s
      Base Salary shall be reviewed annually and may be increased as approved by
      the
      Board in its sole discretion.

     

    2.2           Annual
      Bonus.  Executive will be eligible for an annual
      discretionary bonus of up to fifty percent (50%) of his Base Salary (the “Annual
      Bonus”).  Whether any Annual Bonus will be awarded, and the amount of
      the Annual Bonus awarded to Executive, shall be determined by the Board in
      its
      sole discretion based upon its consideration of both the Company’s performance
      and Executive’s performance.  Since the Annual Bonus is intended both
      to reward past Company and Executive performance and to provide an incentive
      for
      Executive to remain with the Company, Executive must remain an active employee
      through the date that any such bonus is awarded to him in order to earn any
      such
      bonus.  Executive will not earn any Annual Bonus (including a prorated
      bonus) if Executive’s employment terminates for any reason before the Annual
      Bonus is awarded to him.  Any Annual Bonus awarded by the Board shall
      be paid within the first quarter after the end of the calendar
      year.

     

    2.3           Standard
      Company Benefits.  Executive shall be entitled to participate
      in all employee benefit programs for which Executive is eligible under the
      terms
      and conditions of the benefit plans which may be in effect from time to time
      and
      provided by the Company to its employees generally; provided,
      however, that Executive shall not be entitled to accrued vacation
      pay.

     

    2.4           Restricted
      Stock; Options.  Subject to the approval of the Board,
      Executive shall be granted 52,650 shares of restricted Company stock (the
“Restricted Stock”).  The Restricted Stock shall vest according to a
      vesting schedule set forth in the governing restricted stock purchase agreement
      which shall be: 10,530 shares shall vest on 90th day following
      Executive’s first date of employment, 10,530 shares shall vest on October 4,
      2008, 10,530 shares shall vest on October 4, 2009, 10,530 shares shall vest
      on
      October 4, 2010, and 10,530 shares shall vest on October 4, 2011;
provided that Executive remains employed by the
      Company.  Executive shall also be eligible for additional grants of
      restricted stock and/or stock options from time to time as shall be determined
      by the Compensation Committee of the Board in its sole discretion, and shall
      be
      subject to such vesting, exercisability, and other provisions as the Board
      may
      determine in its discretion, after reviewing the performance of both Executive
      and the Company.  Both the Restricted Stock and any stock options
      shall be governed in all respects by the terms of the applicable restricted
      stock purchase agreement, stock option agreement, grant notice and plan
      documents.

     

    2.5           Relocation
      Assistance.  Executive shall be entitled to participate in
      the Company’s executive relocation assistance to program, which will cover real
      estate fees up to 6% of the sale price of your Wisconsin residence, reasonable
      closing costs, moving expenses for usual and customary household goods from
      Wisconsin and/or Southern California to Sacramento, plus a $10,000 gross (not
      tax protected) lump sum payment for incidentals related to your
      move.

     

    
      
         

      

      
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              3.

            	
              Confidential
                Information Obligations.

            


    

     

    3.1           Confidential
      Information Agreement.  As a condition of employment,
      Executive agrees to execute and abide by the Employee
      Confidential  Information and Inventions Agreement attached hereto as
      Exhibit A.

     

    3.2           Third
      Party Agreements and Information.  Executive represents and
      warrants that Executive’s employment by the Company will not conflict with any
      prior employment or consulting agreement or other agreement with any third
      party, and that Executive will perform Executive’s duties to the Company without
      violating any such agreement.  Executive represents and warrants that
      Executive does not possess confidential information arising out of prior
      employment, consulting, or other third party relationships, which would be
      used
      in connection with Executive’s employment by the Company, except as expressly
      authorized by that third party.  During Executive’s employment by the
      Company, Executive will use in the performance of Executive’s duties only
      information which is generally known and used by persons with training and
      experience comparable to Executive’s own, common knowledge in the industry,
      otherwise legally in the public domain, or obtained or developed by the Company
      or by Executive in the course of Executive’s work for the Company.

     

    
      	
               

            	
              4.

            	
              Outside
                Activities During
                Employment.

            


    

     

    4.1           Non-Company
      Business.  Except with the prior written consent of the Chief
      Executive Officer (in consultation with the General Counsel), Executive will
      not
      during the term of Executive’s employment with the Company undertake or engage
      in any other employment, occupation or business enterprise, other than ones
      in
      which Executive is a passive investor.  Executive may engage in civic
      and not-for-profit activities so long as such activities do not materially
      interfere with the performance of Executive’s duties
      hereunder.

     

    4.2           No
      Adverse Interests. Executive agrees not to acquire, assume or
      participate in, directly or indirectly, any position, investment or interest
      known by him to be adverse or antagonistic to the Company, its business or
      prospects, financial or otherwise, except as a passive investor in mutual or
      exchange traded funds.

     

    
      	
               

            	
              5.

            	
              Termination
                Of Employment.

            


    

     

    5.1           At-Will
      Relationship.  Executive’s employment relationship is
      at-will.  Either Executive or the Company may terminate the employment
      relationship at any time, with or without Cause or advance notice.

     

    5.2           Termination
      without Cause; Resignation for Good Reason.  If, at any time,
      the Company terminates Executive’s employment without Cause (as defined herein),
      or Executive resigns with Good Reason (as defined herein), and Executive
      executes and delivers the Separation Date Release of all claims set forth as
      Exhibit B hereto and allows such release to become effective, then the Company
      will provide Executive with the following severance benefits:

     

    
      
         

      

      
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    (a)           Cash
      Severance.  The Company shall pay Executive severance in the
      form of continuation of Executive’s Base Salary in effect on Executive’s last
      day of employment for a period of twelve (12) months after Executive’s
      termination, subject to standard payroll deductions and withholdings and payable
      on the Company’s regular payroll schedule; provided, however,
      that in the event the Company terminates Executive’s employment without Cause,
      or Executive resigns with Good Reason, within three (3) months before or
      otherwise in anticipation of, or within twelve (12) months after, a Change
      in
      Control (as defined below), then the Company shall pay Executive severance
      in
      the form of continuation of Executive’s Base Salary in effect on Executive’s
      last day of employment for a period of eighteen (18) months after Executive’s
      termination, subject to standard payroll deductions and withholdings and payable
      on the Company’s regular payroll schedule.  Each payment made pursuant
      to this Section 5.2(a) is intended to be a separate payment (as defined in
      Treasury Regulations Section 1.409A-2(b)(2)) from any other payments made
      pursuant to this Section 5.2(a) for purposes of the “short term deferral rule”
under Treasury Regulations Section 1.409A-1(b)(4).

     

    (b)           Continued
      Health Insurance Coverage.  To the extent provided by the
      federal COBRA law or, if applicable, state insurance laws, and by the Company’s
      then-current group health insurance policies, Executive may be eligible to
      continue Executive’s then-current group health insurance benefits after
      termination of Employment.  If eligible and if Executive timely elects
      continued health insurance coverage, then the Company shall pay the Company’s
      portion of any premiums necessary to provide coverage for a period of twelve
      (12) months after the termination date; provided, however, that
      no such premium payments shall be made following the effective date of
      Executive’s coverage by a medical, dental or vision insurance plan of a
      subsequent employer.  Executive shall notify the Company immediately
      if he becomes covered by a medical, dental or vision insurance plan of a
      subsequent employer.  Notwithstanding the foregoing, in the event the
      Company terminates Executive’s employment without Cause, or Executive resigns
      with Good Reason, within three (3) months before or otherwise in anticipation
      of, or within twelve (12) months after, a Change in Control (as defined below),
      then (if eligible and coverage elected) the Company shall pay the Company’s
      portion of any premiums necessary to provide coverage for a period of eighteen
      (18) months after the termination date; provided, however, that
      no such premium payments shall be made following the effective date of
      Executive’s coverage by a medical, dental or vision insurance plan of a
      subsequent employer and Executive agrees to immediately notify the Company
      of
      any such coverage.

     

    (c)           Accelerated
      Vesting.  If Executive has been employed by the Company for
      one full year or longer, then the Company will accelerate the vesting of any
      equity awards granted to Executive prior to Executive’s employment termination
      such that twenty-five percent (25%) of all shares or options subject to such
      awards which are unvested as of the employment termination date shall be
      accelerated and deemed fully vested as of Executive’s last day of employment;
provided, however, that in the event, and without the
      requirement that Executive be employed for one full year or longer, the Company
      terminates Executive’s employment without Cause, or Executive resigns with Good
      Reason, within three (3) months before or otherwise in anticipation of, or
      within twelve (12) months after, a Change in Control (as defined below), then
      the Company will accelerate the vesting of any equity awards granted to
      Executive prior to Executive’s employment termination such that one hundred
      percent (100%) of all shares or options subject to such awards which are
      unvested as of the employment termination date shall be accelerated and deemed
      fully vested as of Executive’s last day of employment.

     

    
      
         

      

      
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    5.3           Termination
      for Cause; Resignation Without Good Reason.  If the Company
      terminates Executive’s employment with the Company for Cause, or Executive
      resigns without Good Reason, then Executive will not be entitled to any further
      compensation from the Company (other than accrued salary, and accrued and unused
      vacation, through Executive’s last day of employment), including severance pay,
      pay in lieu of notice or any other such compensation.

     

    5.4           Termination
      Due to Death or Disability.

     

    (a)           Death.  This
      Agreement shall terminate immediately upon Executive’s death and Executive’s
      estate shall not be entitled to any further compensation from the Company (other
      than accrued salary, and accrued and unused vacation, through Executive’s last
      day of employment), including severance pay, pay in lieu of notice or any other
      such compensation.

     

    (b)           Disability.   If
      Executive is incapacitated by accident, sickness or otherwise such that
      Executive is incapable of performing the services set forth in Section 1.1
      herein, and such incapacity is certified by a qualified medical doctor, then
      this Agreement shall terminate.  In such an event, and if Executive or
      someone authorized to act on his behalf executes and delivers the Separation
      Date Release of all claims set forth as Exhibit B hereto and allows such release
      to become effective, then the Company will provide Executive with the following
      severance benefits; provided, however, that these severance
      benefits shall be reduced by any amounts provided to Executive by any federal
      or
      state disability insurance payments or benefits, and any private insurance
      disability payments or benefits, provided to Executive:

     

    (i)           Cash
      Severance.  The Company shall pay Executive severance in the
      form of continuation of Executive’s Base Salary in effect on Executive’s last
      day of employment for a period of twelve (12) months after Executive’s
      termination, subject to standard payroll deductions and withholdings and payable
      on the Company’s regular payroll schedule.

     

    (ii)           Continued
      Health Insurance Coverage.  To the extent provided by the
      federal COBRA law or, if applicable, state insurance laws, and by the Company’s
      then-current group health insurance policies, Executive may be eligible to
      continue Executive’s then-current group health insurance benefits after
      termination of Employment.  If eligible and if Executive timely elects
      continued health insurance coverage, then the Company shall pay the Company’s
      portion of any premiums necessary to provide coverage for a period of twelve
      (12) months after the termination date; provided, however, that
      no such premium payments shall be made following the effective date of
      Executive’s coverage by a medical, dental or vision insurance plan of a
      subsequent employer.  Executive shall notify the Company immediately
      if he becomes covered by a medical, dental or vision insurance plan of a
      subsequent employer.

     

    
      
         

      

      
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    (iii)           Accelerated
      Vesting.  If Executive has been employed by the Company for
      one full year or longer, then the Company will accelerate the vesting of any
      equity awards granted to Executive prior to Executive’s employment termination
      such that twenty-five percent (25%) of all shares or options subject to such
      awards which are unvested as of the employment termination date shall be
      accelerated and deemed fully vested as of Executive’s last day of
      employment.

     

    5.5           Deferred
      Compensation.  If the Company determines that any of the
      severance benefit payments fail to satisfy the distribution requirement of
      Section 409A(a)(2)(A) of the Internal Revenue Code as a result of Section
      409A(a)(2)(B)(i) of the Internal Revenue Code, the payment of such benefit
      shall
      be accelerated to the minimum extent necessary so that the benefit is not
      subject to the provisions of Section 409A(a)(1) of the Internal Revenue
      Code.  (It is the intention of the preceding sentence to apply the
      short-term deferral provisions of Section 409A of the Internal Revenue Code,
      and
      the regulations and other guidance thereunder, to the severance benefit
      payments, and the payment schedule as revised after the application of the
      preceding sentence shall be referred to as the “Revised Payment
      Schedule.”)  However, if there is no Revised Payment Schedule that
      would avoid the application of Section 409A(a)(1) of the Internal Revenue Code,
      the payment of such benefits shall not be paid pursuant to a Revised Payment
      Schedule and instead shall be delayed to the minimum extent necessary so that
      such benefits are not subject to the provisions of Section 409A(a)(1) of the
      Internal Revenue Code.  The Board may attach conditions to or adjust
      the amounts paid pursuant to this Section 5.5 to preserve, as closely as
      possible, the economic consequences that would have applied in the absence
      of
      this Section 5.5; provided, however, that no such condition or
      adjustment shall result in the payments being subject to Section 409A(a)(1)
      of
      the Internal Revenue Code.

     

    5.6           Limitation
      on Payments.  In the event that the payments or other
      benefits provided for in this Agreement or otherwise payable to Executive (i)
      constitute “parachute payments” within the meaning of Section 280G of the Code,
      and (ii) would be subject to the excise tax imposed by Section 4999 of the
      Code
      (the “Excise Tax”), then Executive’s benefits under this Agreement shall be
      either (a) delivered in full, or (b) delivered to such lesser extent which
      would
      result in no portion of such benefits being subject to the Excise Tax, whichever
      of the foregoing amounts, taking into account the applicable federal, state
      and
      local income taxes and the Excise Tax, results in the receipt by Executive
      on an
      after-tax basis, of the greatest amount of benefits, notwithstanding that all
      or
      some portion of such benefits may be taxable under Section 4999 of the
      Code.  If a reduction in payments or benefits constituting “parachute
      payments” is necessary pursuant to the foregoing provision, reduction shall
      occur in the following order unless the Executive elects in writing a different
      order (provided, however, that such election shall be subject
      to Company approval if made on or after the date on which the event that
      triggers the parachute payment occurs): reduction of cash payments; cancellation
      of accelerated vesting of stock awards; reduction of employee
      benefits.  If acceleration of vesting of stock award compensation is
      to be reduced, such acceleration of vesting shall be cancelled in the reverse
      order of the date of grant of the Executive’s stock awards unless the Executive
      elects in writing a different order for cancellation.

     

    
      
         

      

      
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    Unless
      the Company and Executive otherwise agree in writing, any determination required
      under this Section 5.6 shall be made in writing by the Company’s independent
      public accountants (the “Accountants”), whose determination shall be conclusive
      and binding upon Executive and the Company for all purposes and may be relied
      upon by the Company.  For purposes of making the calculations required
      by this Section 5.6, the Accountants may make reasonable assumptions and
      approximations concerning applicable taxes and may rely on reasonable, good
      faith interpretations concerning the application of Section 280G and 4999 of
      the
      Code.  The Company and Executive shall further to the Accountants such
      information and documents as the Accountants may reasonably request in order
      to
      make a determination under this Section 5.6.  The Company shall bear
      all costs the Accountants may reasonably incur in connection with any
      calculations contemplated by this Section 5.6.

     

    5.7           No
      Mitigation.  Executive shall not be required to mitigate
      damages or the amount of any payment provided for under this Agreement by
      seeking other employment or otherwise, nor shall the amount of any payment
      provided for under this Agreement be reduced by any compensation earned by
      Executive as the result of employment by another employer after the date of
      termination, or otherwise, except for health insurance benefits as set forth
      herein.

     

    5.8           Definitions.

     

    (a)           For
      purposes of this Agreement, “Cause” shall mean any one or more
      of the following:

     

    (i)           Executive’s
      indictment or conviction of any felony or of any crime involving
      dishonesty;

     

    (ii)           Executive’s
      participation in any fraud or other act of willful misconduct against the
      Company (including any material breach of Company policy that causes or
      reasonably could cause harm to the Company);

     

    (iii)           Executive’s
      refusal to comply with any lawful directive of the Company;

     

    (iv)           Executive’s
      material breach of Executive’s fiduciary, statutory, contractual, or common law
      duties to the Company (including any material breach of this Agreement or the
      Confidential Information and Inventions Agreement); or

     

    (v)           Conduct
      by Executive which in the good faith and reasonable determination of the Board
      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 (20) days
      after the discovery of such event, provide written notice to the Executive
      describing the nature of such event and Executive shall thereafter have ten
      (10)
      business days to cure such event.

     

    
      
         

      

      
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    (b)           For
      purposes of this Agreement, Executive shall have “Good Reason”
      for Executive’s resignation if: (w) any of the following occurs without
      Executive’s consent; (x) Executive notifies the Company in writing, within
      twenty (20) days after the occurrence of one of the following events that
      Executive intends to terminate his employment no earlier than thirty (30) days
      after providing such notice; (y) the Company does not cure such condition
      within thirty (30) days following its receipt of such notice or states
      unequivocally in writing that it does not intend to attempt to cure such
      condition, and (z) the Executive resigns from employment within thirty (30)
      days
      following the end of the period within which the Company was entitled to remedy
      the condition constituting Good Reason but failed to do so:

     

    (i)           the
      assignment to Executive of any duties or responsibilities which result in the
      material diminution of Executive’s authority, duties or responsibility;
provided, however, that the acquisition of the Company and
      subsequent conversion of the Company to a division or unit of the acquiring
      corporation will not by itself result in a material diminution of Executive’s
      authority, duties or responsibility;

     

    (ii)           a
      material reduction by the Company in Executive’s annual base salary, except to
      the extent the base salaries of all other executive officers of the Company
      are
      accordingly reduced;

     

    (iii)           a
      relocation of Executive’s place of work, or the Company’s principal executive
      offices if Executive’s principal office is at such offices, to a location that
      increases Executive’s daily one-way commute by more than thirty-five (35) miles;
      or

     

    (iv)           any
      material breach by the Company of any material provision of this Agreement,
      including but not limited to Section 7.7.

     

    (c)           For
      purposes of this Agreement, “Change in Control” shall be 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”)), or persons acting as a group,
      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
      a majority (e.g., 50% plus one share) 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
      such transaction continue to hold (either by such 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 such transaction, or (iii) all or substantially all of the Company’s
      assets are sold.

     

    
      
         

      

      
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    6.           Arbitration.

     

    To
      ensure
      the timely and economical resolution of disputes that may arise in connection
      with Executive’s employment with the Company, Executive and the Company agree
      that any and all disputes, claims, or causes of action arising from or relating
      to the enforcement, breach, performance, negotiation, execution, or
      interpretation of this Agreement, Executive’s employment, or the termination of
      Executive’s employment, shall be resolved to the fullest extent permitted by law
      by final, binding and confidential arbitration, by a single arbitrator, in
      Sacramento, California, conducted by JAMS under the then applicable JAMS rules.
      By agreeing to this arbitration procedure, both Executive and the
      Company waive the right to resolve any such dispute through a trial by jury
      or
      judge or administrative proceeding.  The arbitrator
      shall:  (a) have the authority to compel adequate discovery for the
      resolution of the dispute and to award such relief as would otherwise be
      permitted by law; and (b) issue a written arbitration decision, to include
      the
      arbitrator’s essential findings and conclusions and a statement of the
      award.  The arbitrator shall be authorized to award any or all
      remedies that Executive or the Company would be entitled to seek in a court
      of
      law.  The Company shall pay all JAMS’ arbitration fees in excess of
      the amount of court fees that would be required if the dispute were decided
      in a
      court of law.  Nothing in this Agreement is intended to prevent either
      Executive or the Company from obtaining injunctive relief in court to prevent
      irreparable harm pending the conclusion of any such arbitration.

     

    7.           General
      Provisions.

     

    7.1           Notices.  Any
      notices provided hereunder must be in writing and shall be deemed effective
      upon
      the earlier of personal delivery (including personal delivery by fax) or the
      next day after sending by overnight carrier, to the Company at its primary
      office location and to Executive at his address as listed on the Company
      payroll.

     

    7.2           Severability.  Whenever
      possible, each provision of this Agreement will be interpreted in such manner
      as
      to be effective and valid under applicable law, but if any provision of this
      Agreement is held to be invalid, illegal or unenforceable in any respect under
      any applicable law or rule in any jurisdiction, such invalidity, illegality
      or
      unenforceability will not affect any other provision or any other jurisdiction,
      but this Agreement will be reformed, construed and enforced in such jurisdiction
      to the extent possible in keeping with the intent of the parties.

     

    7.3           Waiver.  Any
      waiver of any breach of any provisions of this Agreement must be in writing
      to
      be effective, and it shall not thereby be deemed to have waived any preceding
      or
      succeeding breach of the same or any other provision of this
      Agreement.

     

    7.4           Complete
      Agreement.  This Agreement, including Exhibit A, constitutes
      the entire agreement between Executive and the Company and it is the complete,
      final, and exclusive embodiment of their agreement with regard to this subject
      matter.  It is entered into without reliance on any promise or
      representation other than those expressly contained herein, and it cannot be
      modified or amended except in a writing signed by the Executive and a duly
      authorized officer of the Company.

     

    
      
         

      

      
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    7.5           Counterparts.  This
      Agreement may be executed in separate counterparts, any one of which need not
      contain signatures of more than one party, but all of which taken together
      will
      constitute one and the same Agreement.

     

    7.6           Headings.  The
      headings of the sections hereof are inserted for convenience only and shall
      not
      be deemed to constitute a part hereof nor to affect the meaning
      thereof.

     

    7.7           Successors
      and Assigns.  This Agreement is intended to bind and inure to
      the benefit of and be enforceable by Executive and the Company, and their
      respective successors, assigns, heirs, executors and administrators, except
      that
      Executive may not assign any of his duties hereunder and he may not assign
      any
      of his rights hereunder without the written consent of the Company, which shall
      not be withheld unreasonably.  The Company shall obtain the assumption
      of this Agreement by any successor or assign of the Company.

     

    7.8           Choice
      of Law.  All questions concerning the construction, validity
      and interpretation of this Agreement will be governed by the law of the State
      of
      California.

     

    In
      Witness Whereof, the parties have executed this Agreement.

     

    
      	 	Pacific
              Ethanol, Inc.	 
	 	 	 	 
	
               

            	
              By:
                

            	/s/ Neil
              M.
              Koehler	 
	 	 	Neil
              M.
              Koehler	 
	 	 	President
              and
              Chief Executive Officer	 
	 	 	 	 
	 	Date:	12/11/2007 	 
	 	 	 	 


    

     

     

     

    Understood
      and Agreed:

    


    Executive

    


    


    


    By:
      /s/ Joseph W.
      Hansen                                                           

    Joseph
      W. Hansen

    


    Date:
      12/11/2007                                                           

     

     

     

     

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