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UNITED STATES
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): September 17, 2023
ALTO INGREDIENTS, INC. |
(Exact Name of Registrant as Specified in Charter) |
Delaware
|
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000-21467
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41-2170618
|
(State
or Other Jurisdiction
of Incorporation) |
|
(Commission File Number) |
|
(IRS
Employer
Identification No.) |
1300 South Second Street
Pekin, Illinois |
|
61554 |
(Address of Principal Executive Offices) |
|
(Zip Code) |
Registrant’s Telephone Number, Including Area
Code: (916) 403-2123
|
(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)) |
Securities registered pursuant to Section 12(b)
of the Act:
Title of each class |
|
Trading Symbol(s) |
|
Name of each exchange on which registered |
Common Stock, $0.001 par value |
|
ALTO |
|
The Nasdaq Stock Market LLC
(Nasdaq Capital Market) |
Indicate by check mark whether the registrant
is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the
Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item
5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of
Certain Officers.
Employment Agreement with
Bryon T. McGregor
On August 24, 2023, the Compensation
Committee of the board of directors of Alto Ingredients, Inc. (the “Company”) approved, and effective on September 17, 2023,
the Company entered into, a Second Amended and Restated Employment Agreement with Bryon T. McGregor.
Mr. McGregor’s employment
agreement provides for at-will employment as the Company’s President and Chief Executive Officer. Mr. McGregor’s annual base
salary is approximately $525,000, retroactive to August 1, 2023. Mr. McGregor is eligible to participate in the Company’s 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 Company’s board of directors. Mr. McGregor is also entitled to participate in the Company’s long-term incentive plan
with a payout target of $700,000. In addition, upon effectiveness of his employment agreement, Mr. McGregor received a grant of 150,000
shares of the Company’s common stock which will vest 33% on April 1, 2024, 33% on April 1, 2025 and 34% on April 1, 2026.
Upon termination by the Company
without cause or resignation by Mr. McGregor for good reason, other than in anticipation of, or on or within twenty-four months after
a change-in-control, Mr. McGregor is entitled to receive (i) a cash severance payment equal to eighteen months of his base salary, (ii)
a cash severance payment equal to 150% of his total target short-term incentive plan award, (iii) on a monthly basis, an additional cash
severance payment equal to the portion of the insurance premiums the Company was paying prior to Mr. McGregor’s termination of employment
with respect to health insurance benefits coverage previously provided by the Company to Mr. McGregor for a period of eighteen months
after Mr. McGregor’s date of separation; provided, however, that no such additional cash severance payments shall be made following
the effective date of Mr. McGregor’s coverage by a medical, dental or vision insurance plan of a subsequent employer, and (iv) accelerated
vesting of 25% of all shares or options subject to any equity awards granted to Mr. McGregor prior to Mr. McGregor’s termination
which are unvested as of the date of termination.
However, if Mr. McGregor is
terminated without cause or resigns for good reason in anticipation of or twenty-four months after a change in control, Mr. McGregor is
entitled to (i) a cash severance payment equal to thirty-six months of base salary, (ii) a cash severance payment of 300% of his total
target short-term incentive plan award, (iii) on a monthly basis, an additional cash severance payment equal to the portion of the insurance
premiums the Company was paying prior to Mr. McGregor’s termination of employment with respect to health insurance benefits coverage
previously provided by the Company to Mr. McGregor for a period of thirty-six months after Mr. McGregor’s date of separation; provided,
however, that no such additional cash severance payments shall be made following the effective date of Mr. McGregor’s coverage by
a medical, dental or vision insurance plan of a subsequent employer, and (iv) accelerated vesting of 100% of all shares or options subject
to any equity awards granted to Mr. McGregor prior to Mr. McGregor’s termination that are unvested as of the date of termination.
If the Company terminates
Mr. McGregor’s employment upon his disability, Mr. McGregor is entitled to a cash severance payment equal to twelve months of base
salary. In addition, in the event of Mr. McGregor’s 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. McGregor 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. McGregor dies, the
Company agrees to accelerate the vesting of any equity awards granted to Mr. McGregor 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 Mr. McGregor’s employment agreement as (i) the assignment to Mr. McGregor of any duties or responsibilities that result
in the material diminution of Mr. McGregor’s authority, duties or responsibility, (ii) a material reduction by the Company in Mr.
McGregor’s annual base salary, except to the extent the base salaries of all of the Company’s other executive officers are
accordingly reduced, (iii) a relocation of Mr. McGregor’s place of work, or the Company’s principal executive offices if Mr.
McGregor’s principal office is at these offices, to a location that increases Mr. McGregor’s 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.
The term “cause”
is defined in Mr. McGregor’s employment agreement as (i) Mr. McGregor’s indictment or conviction of any felony or of any crime
involving dishonesty, (ii) Mr. McGregor’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) Mr. McGregor’s refusal to
comply with any of the Company’s lawful directives, (iv) Mr. McGregor’s material breach of his fiduciary, statutory, contractual,
or common law duties to the Company (including any material breach of his employment agreement), or (v) conduct by Mr. McGregor which,
in the good faith and reasonable determination of the Company’s 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. McGregor describing the nature of the event and Mr. McGregor shall thereafter
have ten business days to cure the event.
Under the terms of Mr. McGregor’s
employment agreement, the term “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 Company’s assets are sold.
The description of Mr. McGregor’s
employment agreement does not purport to be complete and is qualified in its entirety by reference to Mr. McGregor’s employment
agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by this reference.
Employment Agreement with
Michael D. Kandris
On August 24, 2023, the Compensation
Committee of the board of directors of the Company approved, and effective on September 18, 2023, the Company entered into, a Third Amended
and Restated Employment Agreement with Michael D. Kandris.
Mr. Kandris’s employment
agreement provides for at-will employment as the Company’s Interim Chief Operating Officer. Mr. Kandris’s annual base salary
is approximately $528,403. Mr. Kandris is eligible to participate in the Company’s 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 Company’s board of
directors. Mr. Kandris is also entitled to participate in the Company’s long-term incentive plan. If Mr. Kandris’s employment
relationship with the Company is not terminated by either Mr. Kandris or the Company, with or without cause, prior to July 31, 2024, Mr.
Kandris’s employment agreement will terminate on such date.
Upon termination by the Company
without cause or resignation by Mr. Kandris for good reason, other than in anticipation of, or on or within twenty-four months after a
change-in-control, Mr. Kandris is entitled to receive (i) a cash severance payment equal to twelve months of his base salary, (ii) a cash
severance payment equal to 100% of his total target short-term incentive plan award, (iii) on a monthly basis, an additional cash severance
payment equal to the portion of the insurance premiums the Company was paying prior to Mr. Kandris’s termination of employment with
respect to health insurance benefits coverage previously provided by the Company to Mr. Kandris for a period of twelve months after Mr.
Kandris’s date of separation; provided, however, that no such additional cash severance payments shall be made following the effective
date of Mr. Kandris’s coverage by a medical, dental or vision insurance plan of a subsequent employer, and (iv) accelerated vesting
of 25% of all shares or options subject to any equity awards granted to Mr. Kandris prior to Mr. Kandris’s 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) a cash severance payment equal to twenty-four months of base salary, (ii) a cash severance payment of 200% of his total
target short-term incentive plan award, (iii) on a monthly basis, an additional cash severance payment equal to the portion of the insurance
premiums the Company was paying prior to Mr. Kandris’s termination of employment with respect to health insurance benefits coverage
previously provided by the Company to Mr. Kandris for a period of twenty-four months after Mr. Kandris’s date of separation; provided,
however, that no such additional cash severance payments shall be made following the effective date of Mr. Kandris’s coverage by
a medical, dental or vision insurance plan of a subsequent employer, and (iv) accelerated vesting of 100% of all shares or options subject
to any equity awards granted to Mr. Kandris prior to Mr. Kandris’s termination that are unvested as of the date of termination.
All other terms and conditions
of Mr. Kandris’s employment agreement are substantially similar as those contained in Mr. McGregor’s employment agreement.
The description of Mr. Kandris’s
employment agreement does not purport to be complete and is qualified in its entirety by reference to Mr. Kandris’s employment agreement,
which is filed as Exhibit 10.2 to this Current Report on Form 8-K and is incorporated herein by this reference.
Employment Agreement with
Robert R. Olander
On August 24, 2023, the Compensation
Committee of the board of directors of the Company approved, and effective on September 17, 2023, the Company entered into, a Second Amended
and Restated Employment Agreement with Robert R. Olander.
Mr. Olander’s employment
agreement provides for at-will employment as the Company’s Chief Financial Officer. Mr. Olander’s annual base salary is approximately
$325,000, retroactively effective as of August 1, 2023. Mr. Olander is eligible to participate in the Company’s short-term incentive
plan with a pay-out target of 50% of his base salary, to be paid based upon performance criteria set by the Compensation Committee of
the Company’s board of directors. Mr. Olander is also entitled to participate in the Company’s long-term incentive plan with
a payout target of $250,000. In addition, upon effectiveness of his employment agreement, Mr. Olander received a grant of 58,500 shares
of the Company’s common stock which will vest 33% on April 1, 2024, 33% on April 1, 2025 and 34% on April 1, 2026.
Upon termination by the Company
without cause or resignation by Mr. Olander for good reason, other than in anticipation of, or on or within twenty-four months after a
change-in-control, Mr. Olander is entitled to receive (i) a cash severance payment equal to twelve months of his base salary, (ii) a cash
severance payment equal to 100% of his total target short-term incentive plan award, (iii) on a monthly basis, an additional cash severance
payment equal to the portion of the insurance premiums the Company was paying prior to Mr. Olander’s termination of employment with
respect to health insurance benefits coverage previously provided by the Company to Mr. Olander for a period of twelve months after Mr.
Olander’s date of separation; provided, however, that no such additional cash severance payments shall be made following the effective
date of Mr. Olander’s coverage by a medical, dental or vision insurance plan of a subsequent employer, and (iv) accelerated vesting
of 25% of all shares or options subject to any equity awards granted to Mr. Olander prior to Mr. Olander’s termination which are
unvested as of the date of termination.
However, if Mr. Olander is
terminated without cause or resigns for good reason in anticipation of or twenty-four months after a change in control, Mr. Olander is
entitled to (i) a cash severance payment equal to twenty-four months of base salary, (ii) a cash severance payment of 200% of his total
target short-term incentive plan award, (iii) on a monthly basis, an additional cash severance payment equal to the portion of the insurance
premiums the Company was paying prior to Mr. Olander’s termination of employment with respect to health insurance benefits coverage
previously provided by the Company to Mr. Olander for a period of twenty-four months after Mr. Olander’s date of separation; provided,
however, that no such additional cash severance payments shall be made following the effective date of Mr. Olander’s coverage by
a medical, dental or vision insurance plan of a subsequent employer, and (iv) accelerated vesting of 100% of all shares or options subject
to any equity awards granted to Mr. Olander prior to Mr. Olander’s termination that are unvested as of the date of termination.
All other terms and conditions
of Mr. Olander’s employment agreement are substantially similar as those contained in Mr. McGregor’s employment agreement.
The description of Mr. Olander’s
employment agreement does not purport to be complete and is qualified in its entirety by reference to Mr. Olander’s employment agreement,
which is filed as Exhibit 10.3 to this Current Report on Form 8-K and is incorporated herein by this reference.
Item
9.01. Financial Statements and Exhibits.
(d) Exhibits.
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: September 20, 2023 |
ALTO INGREDIENTS, INC. |
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By: |
/S/ AUSTE M. GRAHAM |
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Auste M. Graham, |
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Vice President, General Counsel & Secretary |
-6-
Exhibit 10.1
Alto
Ingredients, Inc.
SECOND AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
for
BRYON T. McGREGOR
This Second Amended and Restated
Employment Agreement (“Agreement”) by and between Bryon T. McGregor (“Executive”)
and Alto Ingredients, Inc. (formerly, 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
Whereas,
the Parties entered into an Amended and Restated Employment Agreement dated November 7, 2016 and an Amendment to Amended and Restated
Employment Agreement dated July 26, 2018 (together, the “Prior Agreement”) setting forth the terms of Executive’s
employment with the Company and now seek to supersede and replace the Prior Agreement with this Agreement.
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 the terms and conditions set forth herein, the Company agrees to employ Executive in the positions of President and Chief Executive
Officer and Executive hereby accepts such employment. Executive shall report to the Company’s board of directors (the “Board”).
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.
1.2 Duties
and Location. Executive shall perform such duties as are customarily associated with Executive’s then current title. Executive’s
primary office location shall be a location mutually 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.
2. Compensation.
2.1 Salary.
For services to be rendered hereunder, Executive shall receive a bi-weekly salary of $20,192.30, approximately $525,000 on an annualized
basis retroactive to August 1, 2023 (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 Company’s Board in its sole discretion.
2.2 Short
Term Incentive. Executive shall be entitled to participate in the Company’s Short Term Incentive plan (“STI”)
with a payout target of seventy percent (70%) of Executive’s Base Salary. The structure of the STI from time to time, whether any
STI payout will be awarded, and the amount of the STI awarded to Executive, shall be in the discretion of the Compensation Committee of
the Board. Since the STI award 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 STI award is paid in order to be entitled
to receive any such award, except as otherwise provided in Section 5.2. Executive will not be paid any STI award (including a prorated
award) if Executive’s employment terminates for any reason before the STI is paid to him, except as otherwise provided in Section
5.2. Any earned STI shall be paid, if at all, not later than March 15th of the year following the calendar year as to which
performance was measured.
2.3 Executive
Benefits, Stock Options, and Incentive Compensation, and Other Compensation Plans and Programs. Executive shall be entitled to participate
in such of the Company’s benefit and deferred compensation plans and programs as may be made available to employees of the Company,
including, without limitation, the Company’s Long Term Incentive Plan, subject in each case to: (i) the generally applicable terms
and conditions of the applicable plan or program and to the determinations of the Board or other person administering such plan or program,
(ii) determinations by the Board or any such person as to whether and to what extent Executive shall so participate or cease to participate,
and (iii) amendment, modification or termination of any such plan or program in the sole and absolute discretion of the Board. Executive’s
annual Long Term Incentive target is currently $700,000. In addition, upon effectiveness of this Agreement, Executive shall receive a
grant of 150,000 shares of the Company’s common stock which will vest 33% on April 1, 2024, 33% on April 1, 2025 and 34% on April
1, 2026.
3. Confidential Information Obligations.
3.1 Confidential
Information Agreement. As a condition of employment, Executive agrees to execute and abide by the Executive 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 Board (in consultation with the Company’s 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 also 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, within sixty (60) days after the Executive’s Separation
Date (as defined below), Executive executes and delivers the Separation Date Release of all claims set forth as Exhibit B hereto
and allows such release to become effective without revoking same, then the Company will provide Executive with the following severance
benefits (notwithstanding the foregoing, if any of the following severance benefits are subject to Section 409A (as defined below) and
the sixty (60)-day period for executing the release and it becoming effective spans more than one calendar year, none of such severance
benefits may be paid or delivered until the subsequent calendar year):
(a) Cash
Severance.
(i) Qualifying
Termination. Except as otherwise set forth in Section 5.2(a)(ii), in the event the Company terminates Executive’s employment
without Cause, or Executive resigns with Good Reason, other than in anticipation of, or on or within twenty-four (24) months after, a
Change in Control (as defined below), the Company shall pay Executive severance in an amount equal to the sum of (A) eighteen (18) months
of Executive’s Base Salary in effect on Executive’s last day of employment (the “Separation Date”);
and (B) 150% of the total target STI award contemplated by the Company’s STI in effect on the Separation Date.
(ii) Change
in Control. Notwithstanding Section 5.2(a)(i), in the event the Company terminates Executive’s employment without Cause,
or Executive resigns with Good Reason, in anticipation of, or on or within twenty-four (24) months after, a Change in Control, then the
Company shall pay Executive severance in an amount equal to the sum of (C) thirty-six (36) months of Executive’s Base Salary in
effect on the Separation Date; and (D) 300% of the total target STI award contemplated by the Company’s STI in effect on the Separation
Date. For purposes of this Agreement, the Company will be deemed to have terminated Executive’s employment, and Executive will be
deemed to have resigned for Good Reason, in each case “in anticipation of” a Change in Control if Executive’s employment
terminates (i) prior to the Change in Control and (ii) during any period in which the Company has (A) initiated a transaction process
or is engaged in substantive discussions with a third party about a specific transaction that, if consummated, would result in a Change
in Control (and before the complete abandonment of such discussions without the transaction being consummated), or (B) become a party
to a definitive agreement to consummate a transaction that would result in a Change in Control (and before the complete termination of
such agreement without the transaction being consummated).
(iii) Payment.
The cash severance shall be paid in a single lump sum as soon as administratively practicable after the effective date of the release
of claims described in Section 5.2 (except as otherwise set forth above) but in no event later than the 15th day of
the third month immediately following the end of the calendar year in which Executive’s Separation Date occurs (subject to standard
deductions and withholdings).
(b) Additional
Cash Severance Payments. In addition to the cash severance payable to Executive pursuant to the provisions of Section 5.2,
in the event the Company terminates Executive’s employment without Cause, or Executive resigns with Good Reason, other than in anticipation
of, or on or within twenty-four (24) months after, a Change in Control then the Company shall pay to Executive (subject to standard deductions
and withholdings), on a monthly basis, an additional cash severance payment equal to the portion of the insurance premiums the Company
was paying prior to Executive’s termination of Employment with respect to health insurance benefits coverage previously provided
by the Company to Executive for a period of eighteen (18) months after the Executive’s Separation Date; provided, however,
that no such additional cash severance 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, in anticipation of, or within twenty-four (24) months on or after, a
Change in Control, then (if eligible and coverage elected) the Company shall pay (subject to standard deductions and withholdings), on
a monthly basis, an additional cash severance payment equal to the portion of the insurance premiums the Company was paying prior to Executive’s
termination of Employment with respect to health insurance benefits coverage previously provided by the Company to Executive for a period
of thirty-six (36) months after the Executive’s Separation Date; provided, however, that no such additional cash severance
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. Notwithstanding the foregoing, Executive’s
receipt of any amounts under this subsection are contingent upon the release of claims described in Section 5.2, so Executive may
pay such amounts during these periods and the Company will reimburse such amounts as soon as administratively practicable after the effective
date of the release of claims described in Section 5.2 (except as otherwise set forth above) but in no event later than the 15th
day of the third month immediately following the end of the calendar year in which Executive’s Separation Date occurs.
(c) Accelerated
Vesting. If Executive has been employed by the Company as of the Separation Date for one full year or longer, and the Company terminates
Executive’s employment without Cause, or Executive resigns with Good Reason, other than in anticipation of, or on or within twenty-four
(24) months after, a Change in Control, then the Company will accelerate the vesting of any equity awards granted to Executive prior to
Executive’s Separation Date such that twenty-five percent (25%) of all shares or options subject to such awards which are unvested
as of the Executive’s Separation Date shall be accelerated and deemed fully vested as of the effective date of the release of claims
described in Section 5.2 (except as otherwise set forth above); 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, in anticipation of, or within twenty-four (24) months after, a Change in Control, 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 Executive’s Separation Date
shall be accelerated and deemed fully vested as of the effective date of the release of claims described in Section 5.2 (except
as otherwise set forth above).
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 through Executive’s last day of employment which will be paid in the ordinary course and any vested benefits under the Company’s
benefit plans in which Executive participated prior to the Separation Date in accordance with the terms of such plans), 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 and Employee’s employment shall terminate immediately upon Employee’s death and Employee’s estate
shall not be entitled to any further compensation from the Company (other than accrued salary through Employee’s last day of
employment which will be paid in the ordinary course and any vested benefits under the Company’s benefit plans in which
Employee participated prior to the Separation Date in accordance with the terms of such), including severance pay, pay in lieu of
notice or any other such compensation; provided, however, that upon Employee’s death, the Company will
accelerate the vesting of any equity awards granted to Employee prior to the Separation Date such that one hundred percent (100%) of
all shares or options subject to such awards which are unvested as of the Separation Date shall be accelerated and deemed fully
vested as of the Separation Date.
(b) Disability.
If Employee is prevented from performing his duties as described in Section 1.1 by reason of any physical or mental
incapacity, with or without reasonable accommodation, that results in Employee’s satisfaction of all requirements necessary to
receive benefits under the Company’s long-term disability plan due to a total disability
(“Disability”), then, to the extent permitted by law, the Company may terminate the employment of Employee
and this Agreement at such time. In such an event, and if Employee or someone authorized to act on his behalf executes and delivers
the Separation Date Release described in Section 5.2 and allows such release to become effective, within the timeframe set
forth above, then the Company shall pay Employee severance in a single lump sum equal to twelve (12) months of Employee’s Base
Salary in effect on Employee’s Separation Date. This severance shall be paid on the Company’s first regular payroll
schedule (subject to standard deductions and withholdings) after the effective date of the release of claims (or as otherwise set
forth above in connection with such release as described above) but in no event later than the 15th day of the third month
immediately following the end of the calendar year in which Employee’s Separation Date occurs. The severance benefits provided
for in this Section 5.4 shall be reduced by any amounts expected to be paid to Employee in connection with any federal or
state disability insurance payments or benefits, and any private insurance disability payments or benefits, to be provided to
Employee within the twelve (12) months following Employee’s Separation Date. In the event of Employee’s Disability and
if Employee or someone authorized to act on his behalf executes and delivers the Separation Date Release described in Section
5.2 and allows such release to become effective, within the timeframe set forth above, the Company will accelerate the vesting
of any equity awards granted to Employee prior to the Separation Date such that one hundred percent (100%) of all shares or options
subject to such awards which are unvested as of the Separation Date shall be accelerated and deemed fully vested as of the
effectiveness of the Separation Date Release described in Section 5.2.
5.5 Deferred
Compensation. Notwithstanding anything to the contrary set forth herein, any payments and benefits provided under this Agreement (the
“Severance Benefits”) that constitute “deferred compensation” within the meaning of Section 409A
of the Internal Revenue Code of 1986, as amended (the “Code”) and the regulations and other guidance thereunder
and any state law of similar effect (collectively “Section 409A”) shall not commence in connection with Executive’s
termination of employment unless and until Executive has also incurred a “separation from service” (as such term is defined
in Treasury Regulation Section 1.409A-1(h) (“Separation From Service”), unless the Company reasonably determines
that such amounts may be provided to Executive without causing Executive to incur the additional 20% tax under Section 409A.
It is intended that each installment
of the Severance Benefits payments provided for in this Agreement is a separate “payment” for purposes of Treasury Regulation
Section 1.409A-2(b)(2)(i). For the avoidance of doubt, it is intended that payments of the Severance Benefits set forth in this Agreement
satisfy, to the greatest extent possible, the exemptions from the application of Section 409A provided under Treasury Regulation Sections
1.409A-1(b)(4), 1.409A-1(b)(5) and 1.409A-1(b)(9).
If Employee is a “specified
employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code, no Severance Benefit payments that are nonqualified deferred
compensation subject to Section 409A and are triggered by a separation from service shall be paid until the later of six (6) months after
Employee’s Separation Date of, if earlier, Employee’s death. All such payments will be accumulated and paid within thirty
(30) days after the expiration of such delay period. However, it is intended that payments to Employee will be exempt from Section 409A
under the “short-term deferral” rule set forth in Section 1.409A-1(b)(4) of the Treasury Regulations and not likely to be
delayed pursuant to this provision.
Notwithstanding any other
payment schedule set forth in this Agreement, none of the Severance Benefits will be paid or otherwise delivered prior to the effective
date of the Separation Date Release of all claims set forth as Exhibit B hereto. All amounts payable under the Agreement will be
subject to standard payroll taxes and deductions. Notwithstanding any other provision of this Agreement, the Company shall not be liable
to Employee or any other person if payments under this Agreement fail to be exempt from, or compliant with, Section 409A. Employee is
solely responsible for the tax consequences of any payments hereunder.
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 pro rata in the following order:
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.
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.
(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,
as amended (“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.
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 and Exhibit B, 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. This Agreement
supersedes and replaces the Prior Agreement in its entirety and the Prior Agreement shall have no further force or effect. 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.
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.
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ALTO INGREDIENTS, INC. |
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By: |
/s/ Ed Baker |
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Ed Baker |
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Vice President, Human Resources |
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Date: 9/14/2023 |
Understood and Agreed: |
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EXECUTIVE |
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/s/ Bryon T. McGregor |
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Bryon T. McGregor |
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Date: 9/17/2023
Exhibit
A
Confidential
Information and Inventions Agreement
Exhibit
B
Separation
Date Release
(To be signed and become effective on or within
60 days after the employment termination date.)
In exchange for the severance
benefits to be provided to me by Alto Ingredients, Inc. (the “Company”) pursuant to the terms of my Employment
Agreement (the “Agreement”), I hereby provide the following General Release of Claims (the “Release”).
I understand that, on the last date of my employment with the Company, the Company will pay me any accrued salary to which I am entitled
by law, regardless of whether I sign this Release, but I am not entitled to any severance benefits unless I sign and return this Release
to the Company and I allow it to become effective.
I hereby generally and completely
release the Company and its directors, officers, employees, shareholders, partners, agents, attorneys, predecessors, successors, parent
and subsidiary entities, insurers, affiliates, and assigns (collectively the “Released Parties”) of and from
any and all claims, liabilities and obligations, both known and unknown, arising out of or in any way related to events, acts, conduct,
or omissions occurring at any time prior to or at the time that I sign this Release.
This general release includes,
but is not limited to: (1) all claims arising out of or in any way related to my employment with the Company or the termination of that
employment; (2) all claims related to my compensation or benefits from the Company, including salary, incentive awards, bonuses, commissions,
time-off pay, expense reimbursements, severance pay, fringe benefits, stock, stock options, or any other ownership or equity interests
in the Company; (3) all claims for breach of contract, wrongful termination, and breach of the implied covenant of good faith and
fair dealing (including claims based on or arising under the Agreement); (4) all tort claims, including claims for fraud, defamation,
emotional distress, and discharge in violation of public policy; and (5) all federal, state, and local statutory claims, including claims
for discrimination, harassment, retaliation, attorneys’ fees, or other claims arising under the federal Civil Rights Act of 1964
(as amended), the federal Americans with Disabilities Act of 1990, the federal Age Discrimination in Employment Act (as amended) (“ADEA”),
the federal Family and Medical Leave Act, the California Labor Code (as amended), the California Family Rights Act, and the California
Fair Employment and Housing Act (as amended).
I understand that notwithstanding
the foregoing, the following are not included in the Released Claims (the “Excluded Claims”): (i) any rights
or claims for indemnification I may have pursuant to any written indemnification agreement to which I am a party, the charter, bylaws,
or operating agreements of any of the Released Parties, or under applicable law; or (ii) any rights which are not waivable as a matter
of law. In addition, I understand that nothing in this release prevents me from filing, cooperating with, or participating in any proceeding
before the Equal Employment Opportunity Commission, the Department of Labor, or the California Department of Fair Employment and Housing,
except that I acknowledge and agree that I shall not recover any monetary benefits in connection with any such claim, charge or proceeding
with regard to any claim released herein. I hereby represent and warrant that, other than the Excluded Claims, I am not aware of any claims
I have or might have against any of the Released Parties that are not included in the Released Claims.
I acknowledge that I am knowingly
and voluntarily waiving and releasing any rights I may have under the ADEA, and that the consideration given for the waiver and release
in the preceding paragraph is in addition to anything of value to which I am already entitled. I further acknowledge that I have been
advised by this writing that: (1) my waiver and release do not apply to any rights or claims that may arise after the date I sign this
Release; (2) I should consult with an attorney prior to signing this Release (although I may choose voluntarily not to do so); (3) I have
forty-five (45) days to consider this Release (although I may choose voluntarily to sign it earlier); (4) I have seven (7) days following
the date I sign this Release to revoke it by providing written notice of revocation to the Company’s Board of Directors; and (5) this
Release will not be effective until the date upon which the revocation period has expired, which will be the eighth calendar day after
the date I sign it provided that I do not revoke it (the “Effective Date”).
I UNDERSTAND THAT THIS AGREEMENT
INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS. I acknowledge that I have read and understand Section 1542 of the California Civil
Code which reads as follows: “A general release does not extend to claims which the creditor does not know or suspect to exist
in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement
with the debtor.” I hereby expressly waive and relinquish all rights and benefits under that section and any law or legal principle
of similar effect in any jurisdiction with respect to my release of claims herein, including but not limited to the release of unknown
and unsuspected claims.
I hereby represent that I
have been paid all compensation owed and for all hours worked, I have received all the leave and leave benefits and protections for which
I am eligible, pursuant to the Family and Medical Leave Act, the California Family Rights Act, or otherwise, and I have not suffered any
on-the-job injury for which I have not already filed a workers’ compensation claim.
I further agree: (1) not to
disparage the Company, its parent, or its or their officers, directors, employees, shareholders, affiliates and agents, in any manner
likely to be harmful to its or their business, business reputation, or personal reputation (although I may respond accurately and fully
to any question, inquiry or request for information as required by legal process); (2) not to voluntarily (except in response to legal
compulsion) assist any third party in bringing or pursuing any proposed or pending litigation, arbitration, administrative claim or other
formal proceeding against the Company, its parent or subsidiary entities, affiliates, officers, directors, employees or agents; and (3)
to reasonably cooperate with the Company, by voluntarily (without legal compulsion) providing accurate and complete information, in connection
with the Company’s actual or contemplated defense, prosecution, or investigation of any claims or demands by or against third parties,
or other matters, arising from events, acts, or failures to act that occurred during the period of my employment by the Company.
By: |
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Bryon T. McGregor |
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Date |
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Exhibit B-2
Exhibit 10.2
Alto
Ingredients, Inc.
THIRD AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
for
MICHAEL D. KANDRIS
This Third Amended and Restated
Employment Agreement (“Agreement”) by and between Michael D. Kandris (“Executive”)
and Alto Ingredients, Inc. (formerly, 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
Whereas,
the Parties entered into an Amended and Restated Employment Agreement dated November 7, 2016, an Amendment to Amended and Restated Employment
Agreement dated July 26, 2018, and a Second Amended and Restated Employment Agreement dated August 6, 2020 (together, the “Prior
Agreement”) setting forth the terms of Executive’s employment with the Company and now seek to supersede and replace
the Prior Agreement with this Agreement.
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 the terms and conditions set forth herein, the Company agrees to employ Executive in the position of Interim Chief Operating
Officer and Executive hereby accepts such employment. Executive shall report to the Company’s President and Chief Executive Officer.
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.
1.2 Duties
and Location. Executive shall perform such duties as are customarily associated with Executive’s then current title. Executive’s
primary office location shall be a location mutually 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.
2. Compensation.
2.1 Salary.
For services to be rendered hereunder, Executive shall receive a bi-weekly salary of $22,323.19, approximately $528,403 on an annualized
basis (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 may be increased as approved by the Company’s Board
of Directors (the “Board”) in its sole discretion.
2.2 Short
Term Incentive. Executive shall be entitled to participate in the Company’s Short Term Incentive plan (“STI”)
with a payout target of seventy percent (70%) of Executive’s Base Salary. The structure of the STI from time to time, whether any
STI payout will be awarded, and the amount of the STI awarded to Executive, shall be in the discretion of the Compensation Committee of
the Board. Since the STI award 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 STI award is paid in order to be entitled
to receive any such award, except as otherwise provided in Section 5.2. Executive will not be paid any STI award (including a prorated
award) if Executive’s employment terminates for any reason before the STI is paid to him, except as otherwise provided in Section
5.2. Any earned STI shall be paid, if at all, not later than March 15th of the year following the calendar year as to which
performance was measured.
2.3 Executive
Benefits, Stock Options, and Incentive Compensation, and Other Compensation Plans and Programs. Executive shall be entitled to participate
in such of the Company’s benefit and deferred compensation plans and programs as may be made available to employees of the Company,
including, without limitation, the Company’s Long Term Incentive Plan, subject in each case to: (i) the generally applicable terms
and conditions of the applicable plan or program and to the determinations of the Board or other person administering such plan or program,
(ii) determinations by the Board or any such person as to whether and to what extent Executive shall so participate or cease to participate,
and (iii) amendment, modification or termination of any such plan or program in the sole and absolute discretion of the Board.
3. Confidential Information Obligations.
3.1 Confidential
Information Agreement. As a condition of employment, Executive agrees to execute and abide by the Executive 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 Board (in consultation with the Company’s 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 also 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; provided, however, that if the employment relationship is not terminated
as set forth above prior to July 31, 2024, this Agreement shall automatically terminate on such date.
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, within sixty (60) days after the Executive’s Separation
Date (as defined below), Executive executes and delivers the Separation Date Release of all claims set forth as Exhibit B hereto
and allows such release to become effective without revoking same, then the Company will provide Executive with the following severance
benefits (notwithstanding the foregoing, if any of the following severance benefits are subject to Section 409A (as defined below) and
the sixty (60)-day period for executing the release and it becoming effective spans more than one calendar year, none of such severance
benefits may be paid or delivered until the subsequent calendar year):
(a) Cash
Severance.
(i) Qualifying
Termination. Except as otherwise set forth in Section 5.2(a)(ii), in the event the Company terminates Executive’s employment
without Cause, or Executive resigns with Good Reason, other than in anticipation of, or on or within twenty-four (24) months after, a
Change in Control (as defined below), the Company shall pay Executive severance in an amount equal to the sum of (A) twelve (12) months
of Executive’s Base Salary in effect on Executive’s last day of employment (the “Separation Date”);
and (B) 100% of the total target STI award contemplated by the Company’s STI in effect on the Separation Date.
(ii) Change
in Control. Notwithstanding Section 5.2(a)(i), in the event the Company terminates Executive’s employment without Cause,
or Executive resigns with Good Reason, in anticipation of, or on or within twenty-four (24) months after, a Change in Control, then the
Company shall pay Executive severance in an amount equal to the sum of (C) twenty-four (24) months of Executive’s Base Salary in
effect on the Separation Date; and (D) 200% of the total target STI award contemplated by the Company’s STI in effect on the Separation
Date. For purposes of this Agreement, the Company will be deemed to have terminated Executive’s employment, and Executive will be
deemed to have resigned for Good Reason, in each case “in anticipation of” a Change in Control if Executive’s employment
terminates (i) prior to the Change in Control and (ii) during any period in which the Company has (A) initiated a transaction process
or is engaged in substantive discussions with a third party about a specific transaction that, if consummated, would result in a Change
in Control (and before the complete abandonment of such discussions without the transaction being consummated), or (B) become a party
to a definitive agreement to consummate a transaction that would result in a Change in Control (and before the complete termination of
such agreement without the transaction being consummated).
(iii) Payment.
The cash severance shall be paid in a single lump sum as soon as administratively practicable after the effective date of the release
of claims described in Section 5.2 (except as otherwise set forth above) but in no event later than the 15th day of
the third month immediately following the end of the calendar year in which Executive’s Separation Date occurs (subject to standard
deductions and withholdings).
(b) Additional
Cash Severance Payments. In addition to the cash severance payable to Executive pursuant to the provisions of Section 5.2,
in the event the Company terminates Executive’s employment without Cause, or Executive resigns with Good Reason, other than in anticipation
of, or on or within twenty-four (24) months after, a Change in Control then the Company shall pay to Executive (subject to standard deductions
and withholdings), on a monthly basis, an additional cash severance payment equal to the portion of the insurance premiums the Company
was paying prior to Executive’s termination of Employment with respect to health insurance benefits coverage previously provided
by the Company to Executive for a period of twelve (12) months after the Executive’s Separation Date; provided, however,
that no such additional cash severance 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, in anticipation of, or within twenty-four (24) months on or after, a
Change in Control, then (if eligible and coverage elected) the Company shall pay (subject to standard deductions and withholdings), on
a monthly basis, an additional cash severance payment equal to the portion of the insurance premiums the Company was paying prior to Executive’s
termination of Employment with respect to health insurance benefits coverage previously provided by the Company to Executive for a period
of twenty-four (24) months after the Executive’s Separation Date; provided, however, that no such additional cash
severance 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. Notwithstanding the foregoing, Executive’s
receipt of any amounts under this subsection are contingent upon the release of claims described in Section 5.2, so Executive may
pay such amounts during these periods and the Company will reimburse such amounts as soon as administratively practicable after the effective
date of the release of claims described in Section 5.2 (except as otherwise set forth above) but in no event later than the 15th
day of the third month immediately following the end of the calendar year in which Executive’s Separation Date occurs.
(c) Accelerated
Vesting. If Executive has been employed by the Company as of the Separation Date for one full year or longer, and the Company terminates
Executive’s employment without Cause, or Executive resigns with Good Reason, other than in anticipation of, or on or within twenty-four
(24) months after, a Change in Control, then the Company will accelerate the vesting of any equity awards granted to Executive prior to
Executive’s Separation Date such that twenty-five percent (25%) of all shares or options subject to such awards which are unvested
as of the Executive’s Separation Date shall be accelerated and deemed fully vested as of the effective date of the release of claims
described in Section 5.2 (except as otherwise set forth above); 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, in anticipation of, or within twenty-four (24) months after, a Change in Control, 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 Executive’s Separation Date
shall be accelerated and deemed fully vested as of the effective date of the release of claims described in Section 5.2 (except
as otherwise set forth above).
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 through Executive’s last day of employment which will be paid in the ordinary course and any vested benefits under the Company’s
benefit plans in which Executive participated prior to the Separation Date in accordance with the terms of such plans), 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 and Employee’s employment shall terminate immediately upon Employee’s death and Employee’s estate shall
not be entitled to any further compensation from the Company (other than accrued salary through Employee’s last day of employment
which will be paid in the ordinary course and any vested benefits under the Company’s benefit plans in which Employee participated
prior to the Separation Date in accordance with the terms of such), including severance pay, pay in lieu of notice or any other such compensation;
provided, however, that upon Employee’s death, the Company will accelerate the vesting of any equity awards granted
to Employee prior to the Separation Date such that one hundred percent (100%) of all shares or options subject to such awards which are
unvested as of the Separation Date shall be accelerated and deemed fully vested as of the Separation Date.
(b) Disability.
If Employee is prevented from performing his duties as described in Section 1.1 by reason of any physical or mental incapacity,
with or without reasonable accommodation, that results in Employee’s satisfaction of all requirements necessary to receive benefits
under the Company’s long-term disability plan due to a total disability (“Disability”), then, to the extent
permitted by law, the Company may terminate the employment of Employee and this Agreement at such time. In such an event, and if Employee
or someone authorized to act on his behalf executes and delivers the Separation Date Release described in Section 5.2 and allows
such release to become effective, within the timeframe set forth above, then the Company shall pay Employee severance in a single lump
sum equal to twelve (12) months of Employee’s Base Salary in effect on Employee’s Separation Date. This severance shall be
paid on the Company’s first regular payroll schedule (subject to standard deductions and withholdings) after the effective date
of the release of claims (or as otherwise set forth above in connection with such release as described above) but in no event later than
the 15th day of the third month immediately following the end of the calendar year in which Employee’s Separation Date
occurs. The severance benefits provided for in this Section 5.4 shall be reduced by any amounts expected to be paid to Employee
in connection with any federal or state disability insurance payments or benefits, and any private insurance disability payments or benefits,
to be provided to Employee within the twelve (12) months following Employee’s Separation Date. In the event of Employee’s
Disability and if Employee or someone authorized to act on his behalf executes and delivers the Separation Date Release described in Section
5.2 and allows such release to become effective, within the timeframe set forth above, the Company will accelerate the vesting of
any equity awards granted to Employee prior to the Separation Date such that one hundred percent (100%) of all shares or options subject
to such awards which are unvested as of the Separation Date shall be accelerated and deemed fully vested as of the effectiveness of the
Separation Date Release described in Section 5.2.
5.5 Deferred
Compensation. Notwithstanding anything to the contrary set forth herein, any payments and benefits provided under this Agreement (the
“Severance Benefits”) that constitute “deferred compensation” within the meaning of Section 409A
of the Internal Revenue Code of 1986, as amended (the “Code”) and the regulations and other guidance thereunder
and any state law of similar effect (collectively “Section 409A”) shall not commence in connection with Executive’s
termination of employment unless and until Executive has also incurred a “separation from service” (as such term is defined
in Treasury Regulation Section 1.409A-1(h) (“Separation From Service”), unless the Company reasonably determines
that such amounts may be provided to Executive without causing Executive to incur the additional 20% tax under Section 409A.
It is intended that each installment
of the Severance Benefits payments provided for in this Agreement is a separate “payment” for purposes of Treasury Regulation
Section 1.409A-2(b)(2)(i). For the avoidance of doubt, it is intended that payments of the Severance Benefits set forth in this Agreement
satisfy, to the greatest extent possible, the exemptions from the application of Section 409A provided under Treasury Regulation Sections
1.409A-1(b)(4), 1.409A-1(b)(5) and 1.409A-1(b)(9).
If Employee is a “specified
employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code, no Severance Benefit payments that are nonqualified deferred
compensation subject to Section 409A and are triggered by a separation from service shall be paid until the later of six (6) months after
Employee’s Separation Date of, if earlier, Employee’s death. All such payments will be accumulated and paid within thirty
(30) days after the expiration of such delay period. However, it is intended that payments to Employee will be exempt from Section 409A
under the “short-term deferral” rule set forth in Section 1.409A-1(b)(4) of the Treasury Regulations and not likely to be
delayed pursuant to this provision.
Notwithstanding any other
payment schedule set forth in this Agreement, none of the Severance Benefits will be paid or otherwise delivered prior to the effective
date of the Separation Date Release of all claims set forth as Exhibit B hereto. All amounts payable under the Agreement will be
subject to standard payroll taxes and deductions. Notwithstanding any other provision of this Agreement, the Company shall not be liable
to Employee or any other person if payments under this Agreement fail to be exempt from, or compliant with, Section 409A. Employee is
solely responsible for the tax consequences of any payments hereunder.
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 pro rata in the following order:
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.
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.
(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.
Executive acknowledges and
agrees that Executive’s decision to retire from Executive’s former positions as the Company’s President and Chief Operating
Officer effective August 1, 2023 and Executive’s decision to accept the position as Interim Chief Operating Officer rather than
Chief Operating Officer effective August 1, 2023 shall not constitute “Good Reason” under the terms of the Prior Agreement.
(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,
as amended (“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.
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 and Exhibit B, 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. This Agreement
supersedes and replaces the Prior Agreement in its entirety and the Prior Agreement shall have no further force or effect. 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.
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.
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ALTO INGREDIENTS, INC. |
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By: |
/s/ Ed Baker |
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Ed Baker |
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Vice President, Human Resources |
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Date: 9/14/2023 |
Understood and Agreed:
EXECUTIVE |
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/s/ Michael D. Kandris |
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Michael D. Kandris |
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Date: 9/18/2023 |
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Exhibit
A
Confidential
Information and Inventions Agreement
Exhibit
B
Separation
Date Release
(To be signed and become effective on or within
60 days after the employment termination date.)
In exchange for the severance
benefits to be provided to me by Alto Ingredients, Inc. (the “Company”) pursuant to the terms of my Employment
Agreement (the “Agreement”), I hereby provide the following General Release of Claims (the “Release”).
I understand that, on the last date of my employment with the Company, the Company will pay me any accrued salary to which I am entitled
by law, regardless of whether I sign this Release, but I am not entitled to any severance benefits unless I sign and return this Release
to the Company and I allow it to become effective.
I hereby generally and completely
release the Company and its directors, officers, employees, shareholders, partners, agents, attorneys, predecessors, successors, parent
and subsidiary entities, insurers, affiliates, and assigns (collectively the “Released Parties”) of and from
any and all claims, liabilities and obligations, both known and unknown, arising out of or in any way related to events, acts, conduct,
or omissions occurring at any time prior to or at the time that I sign this Release.
This general release includes,
but is not limited to: (1) all claims arising out of or in any way related to my employment with the Company or the termination of that
employment; (2) all claims related to my compensation or benefits from the Company, including salary, incentive awards, bonuses, commissions,
time-off pay, expense reimbursements, severance pay, fringe benefits, stock, stock options, or any other ownership or equity interests
in the Company; (3) all claims for breach of contract, wrongful termination, and breach of the implied covenant of good faith and
fair dealing (including claims based on or arising under the Agreement); (4) all tort claims, including claims for fraud, defamation,
emotional distress, and discharge in violation of public policy; and (5) all federal, state, and local statutory claims, including claims
for discrimination, harassment, retaliation, attorneys’ fees, or other claims arising under the federal Civil Rights Act of 1964
(as amended), the federal Americans with Disabilities Act of 1990, the federal Age Discrimination in Employment Act (as amended) (“ADEA”),
the federal Family and Medical Leave Act, the California Labor Code (as amended), the California Family Rights Act, and the California
Fair Employment and Housing Act (as amended).
I understand that notwithstanding
the foregoing, the following are not included in the Released Claims (the “Excluded Claims”): (i) any rights
or claims for indemnification I may have pursuant to any written indemnification agreement to which I am a party, the charter, bylaws,
or operating agreements of any of the Released Parties, or under applicable law; or (ii) any rights which are not waivable as a matter
of law. In addition, I understand that nothing in this release prevents me from filing, cooperating with, or participating in any proceeding
before the Equal Employment Opportunity Commission, the Department of Labor, or the California Department of Fair Employment and Housing,
except that I acknowledge and agree that I shall not recover any monetary benefits in connection with any such claim, charge or proceeding
with regard to any claim released herein. I hereby represent and warrant that, other than the Excluded Claims, I am not aware of any claims
I have or might have against any of the Released Parties that are not included in the Released Claims.
I acknowledge that I am knowingly
and voluntarily waiving and releasing any rights I may have under the ADEA, and that the consideration given for the waiver and release
in the preceding paragraph is in addition to anything of value to which I am already entitled. I further acknowledge that I have been
advised by this writing that: (1) my waiver and release do not apply to any rights or claims that may arise after the date I sign this
Release; (2) I should consult with an attorney prior to signing this Release (although I may choose voluntarily not to do so); (3) I have
forty-five (45) days to consider this Release (although I may choose voluntarily to sign it earlier); (4) I have seven (7) days following
the date I sign this Release to revoke it by providing written notice of revocation to the Company’s Chief Executive Officer; and
(5) this Release will not be effective until the date upon which the revocation period has expired, which will be the eighth calendar
day after the date I sign it provided that I do not revoke it (the “Effective Date”).
I UNDERSTAND THAT THIS AGREEMENT
INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS. I acknowledge that I have read and understand Section 1542 of the California Civil
Code which reads as follows: “A general release does not extend to claims which the creditor does not know or suspect to exist
in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement
with the debtor.” I hereby expressly waive and relinquish all rights and benefits under that section and any law or legal principle
of similar effect in any jurisdiction with respect to my release of claims herein, including but not limited to the release of unknown
and unsuspected claims.
I hereby represent that I
have been paid all compensation owed and for all hours worked, I have received all the leave and leave benefits and protections for which
I am eligible, pursuant to the Family and Medical Leave Act, the California Family Rights Act, or otherwise, and I have not suffered any
on-the-job injury for which I have not already filed a workers’ compensation claim.
I further agree: (1) not to
disparage the Company, its parent, or its or their officers, directors, employees, shareholders, affiliates and agents, in any manner
likely to be harmful to its or their business, business reputation, or personal reputation (although I may respond accurately and fully
to any question, inquiry or request for information as required by legal process); (2) not to voluntarily (except in response to legal
compulsion) assist any third party in bringing or pursuing any proposed or pending litigation, arbitration, administrative claim or other
formal proceeding against the Company, its parent or subsidiary entities, affiliates, officers, directors, employees or agents; and (3)
to reasonably cooperate with the Company, by voluntarily (without legal compulsion) providing accurate and complete information, in connection
with the Company’s actual or contemplated defense, prosecution, or investigation of any claims or demands by or against third parties,
or other matters, arising from events, acts, or failures to act that occurred during the period of my employment by the Company.
By: |
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Michael D. Kandris |
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Date |
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Exhibit B-2
Exhibit 10.3
Alto
Ingredients, Inc.
SECOND AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
for
ROBERT R. OLANDER
This Second Amended and Restated
Employment Agreement (“Agreement”) by and between Robert R. Olander (“Executive”)
and Alto Ingredients, Inc. (formerly, 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
Whereas,
the Parties entered into an Amended and Restated Employment Agreement dated November 3, 2016 and an Amendment to Amended and Restated
Employment Agreement dated July 26, 2018 (together, the “Prior Agreement”) setting forth the terms of Executive’s
employment with the Company and now seek to supersede and replace the Prior Agreement with this Agreement.
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 the 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. Executive shall report to the Company’s President and Chief Executive Officer. 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.
1.2 Duties
and Location. Executive shall perform such duties as are customarily associated with Executive’s then current title. Executive’s
primary office location shall be a location mutually 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.
2. Compensation.
2.1 Salary.
For services to be rendered hereunder, Executive shall receive a bi-weekly salary of $12,500, approximately $325,000 on an annualized
basis retroactive to August 1, 2023 (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 Company’s Board of Directors (the “Board”) in its sole discretion.
2.2 Short
Term Incentive. Executive shall be entitled to participate in the Company’s Short Term Incentive plan (“STI”)
with a payout target of fifty percent (50%) of Executive’s Base Salary. The structure of the STI from time to time, whether any
STI payout will be awarded, and the amount of the STI awarded to Executive, shall be in the discretion of the Compensation Committee of
the Board. Since the STI award 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 STI award is paid in order to be entitled
to receive any such award, except as otherwise provided in Section 5.2. Executive will not be paid any STI award (including a prorated
award) if Executive’s employment terminates for any reason before the STI is paid to him, except as otherwise provided in Section
5.2. Any earned STI shall be paid, if at all, not later than March 15th of the year following the calendar year as to which
performance was measured.
2.3 Executive
Benefits, Stock Options, and Incentive Compensation, and Other Compensation Plans and Programs. Executive shall be entitled to participate
in such of the Company’s benefit and deferred compensation plans and programs as may be made available to employees of the Company,
including, without limitation, the Company’s Long Term Incentive Plan, subject in each case to: (i) the generally applicable terms
and conditions of the applicable plan or program and to the determinations of the Board or other person administering such plan or program,
(ii) determinations by the Board or any such person as to whether and to what extent Executive shall so participate or cease to participate,
and (iii) amendment, modification or termination of any such plan or program in the sole and absolute discretion of the Board. Executive’s
annual Long Term Incentive target is currently $250,000. In addition, upon effectiveness of this Agreement, Executive shall receive a
grant of 58,500 shares of the Company’s common stock which will vest 33% on April 1, 2024, 33% on April 1, 2025 and 34% on April
1, 2026.
3. Confidential Information Obligations.
3.1 Confidential
Information Agreement. As a condition of employment, Executive agrees to execute and abide by the Executive 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 Board (in consultation with the Company’s 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 also 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, within sixty (60) days after the Executive’s Separation
Date (as defined below), Executive executes and delivers the Separation Date Release of all claims set forth as Exhibit B hereto
and allows such release to become effective without revoking same, then the Company will provide Executive with the following severance
benefits (notwithstanding the foregoing, if any of the following severance benefits are subject to Section 409A (as defined below) and
the sixty (60)-day period for executing the release and it becoming effective spans more than one calendar year, none of such severance
benefits may be paid or delivered until the subsequent calendar year):
(a) Cash
Severance.
(i) Qualifying
Termination. Except as otherwise set forth in Section 5.2(a)(ii), in the event the Company terminates Executive’s employment
without Cause, or Executive resigns with Good Reason, other than in anticipation of, or on or within twenty-four (24) months after, a
Change in Control (as defined below), the Company shall pay Executive severance in an amount equal to the sum of (A) twelve (12) months
of Executive’s Base Salary in effect on Executive’s last day of employment (the “Separation Date”);
and (B) 100% of the total target STI award contemplated by the Company’s STI in effect on the Separation Date.
(ii) Change
in Control. Notwithstanding Section 5.2(a)(i), in the event the Company terminates Executive’s employment without Cause,
or Executive resigns with Good Reason, in anticipation of, or on or within twenty-four (24) months after, a Change in Control, then the
Company shall pay Executive severance in an amount equal to the sum of (C) twenty-four (24) months of Executive’s Base Salary in
effect on the Separation Date; and (D) 200% of the total target STI award contemplated by the Company’s STI in effect on the Separation
Date. For purposes of this Agreement, the Company will be deemed to have terminated Executive’s employment, and Executive will be
deemed to have resigned for Good Reason, in each case “in anticipation of” a Change in Control if Executive’s employment
terminates (i) prior to the Change in Control and (ii) during any period in which the Company has (A) initiated a transaction process
or is engaged in substantive discussions with a third party about a specific transaction that, if consummated, would result in a Change
in Control (and before the complete abandonment of such discussions without the transaction being consummated), or (B) become a party
to a definitive agreement to consummate a transaction that would result in a Change in Control (and before the complete termination of
such agreement without the transaction being consummated).
(iii) Payment.
The cash severance shall be paid in a single lump sum as soon as administratively practicable after the effective date of the release
of claims described in Section 5.2 (except as otherwise set forth above) but in no event later than the 15th day of
the third month immediately following the end of the calendar year in which Executive’s Separation Date occurs (subject to standard
deductions and withholdings).
(b) Additional
Cash Severance Payments. In addition to the cash severance payable to Executive pursuant to the provisions of Section 5.2,
in the event the Company terminates Executive’s employment without Cause, or Executive resigns with Good Reason, other than in anticipation
of, or on or within twenty-four (24) months after, a Change in Control then the Company shall pay to Executive (subject to standard deductions
and withholdings), on a monthly basis, an additional cash severance payment equal to the portion of the insurance premiums the Company
was paying prior to Executive’s termination of Employment with respect to health insurance benefits coverage previously provided
by the Company to Executive for a period of twelve (12) months after the Executive’s Separation Date; provided, however,
that no such additional cash severance 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, in anticipation of, or within twenty-four (24) months on or after, a
Change in Control, then (if eligible and coverage elected) the Company shall pay (subject to standard deductions and withholdings), on
a monthly basis, an additional cash severance payment equal to the portion of the insurance premiums the Company was paying prior to Executive’s
termination of Employment with respect to health insurance benefits coverage previously provided by the Company to Executive for a period
of twenty-four (24) months after the Executive’s Separation Date; provided, however, that no such additional cash
severance 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. Notwithstanding the foregoing, Executive’s
receipt of any amounts under this subsection are contingent upon the release of claims described in Section 5.2, so Executive may
pay such amounts during these periods and the Company will reimburse such amounts as soon as administratively practicable after the effective
date of the release of claims described in Section 5.2 (except as otherwise set forth above) but in no event later than the 15th
day of the third month immediately following the end of the calendar year in which Executive’s Separation Date occurs.
(c) Accelerated
Vesting. If Executive has been employed by the Company as of the Separation Date for one full year or longer, and the Company terminates
Executive’s employment without Cause, or Executive resigns with Good Reason, other than in anticipation of, or on or within twenty-four
(24) months after, a Change in Control, then the Company will accelerate the vesting of any equity awards granted to Executive prior to
Executive’s Separation Date such that twenty-five percent (25%) of all shares or options subject to such awards which are unvested
as of the Executive’s Separation Date shall be accelerated and deemed fully vested as of the effective date of the release of claims
described in Section 5.2 (except as otherwise set forth above); 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, in anticipation of, or within twenty-four (24) months after, a Change in Control, 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 Executive’s Separation Date
shall be accelerated and deemed fully vested as of the effective date of the release of claims described in Section 5.2 (except
as otherwise set forth above).
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 through Executive’s last day of employment which will be paid in the ordinary course and any vested benefits under the Company’s
benefit plans in which Executive participated prior to the Separation Date in accordance with the terms of such plans), 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 and Employee’s employment shall terminate immediately upon Employee’s death and Employee’s estate shall
not be entitled to any further compensation from the Company (other than accrued salary through Employee’s last day of employment
which will be paid in the ordinary course and any vested benefits under the Company’s benefit plans in which Employee participated
prior to the Separation Date in accordance with the terms of such), including severance pay, pay in lieu of notice or any other such compensation;
provided, however, that upon Employee’s death, the Company will accelerate the vesting of any equity awards granted
to Employee prior to the Separation Date such that one hundred percent (100%) of all shares or options subject to such awards which are
unvested as of the Separation Date shall be accelerated and deemed fully vested as of the Separation Date.
(b) Disability.
If Employee is prevented from performing his duties as described in Section 1.1 by reason of any physical or mental incapacity,
with or without reasonable accommodation, that results in Employee’s satisfaction of all requirements necessary to receive benefits
under the Company’s long-term disability plan due to a total disability (“Disability”), then, to the extent
permitted by law, the Company may terminate the employment of Employee and this Agreement at such time. In such an event, and if Employee
or someone authorized to act on his behalf executes and delivers the Separation Date Release described in Section 5.2 and allows
such release to become effective, within the timeframe set forth above, then the Company shall pay Employee severance in a single lump
sum equal to twelve (12) months of Employee’s Base Salary in effect on Employee’s Separation Date. This severance shall be
paid on the Company’s first regular payroll schedule (subject to standard deductions and withholdings) after the effective date
of the release of claims (or as otherwise set forth above in connection with such release as described above) but in no event later than
the 15th day of the third month immediately following the end of the calendar year in which Employee’s Separation Date
occurs. The severance benefits provided for in this Section 5.4 shall be reduced by any amounts expected to be paid to Employee
in connection with any federal or state disability insurance payments or benefits, and any private insurance disability payments or benefits,
to be provided to Employee within the twelve (12) months following Employee’s Separation Date. In the event of Employee’s
Disability and if Employee or someone authorized to act on his behalf executes and delivers the Separation Date Release described in Section
5.2 and allows such release to become effective, within the timeframe set forth above, the Company will accelerate the vesting of
any equity awards granted to Employee prior to the Separation Date such that one hundred percent (100%) of all shares or options subject
to such awards which are unvested as of the Separation Date shall be accelerated and deemed fully vested as of the effectiveness of the
Separation Date Release described in Section 5.2.
5.5 Deferred
Compensation. Notwithstanding anything to the contrary set forth herein, any payments and benefits provided under this Agreement (the
“Severance Benefits”) that constitute “deferred compensation” within the meaning of Section 409A
of the Internal Revenue Code of 1986, as amended (the “Code”) and the regulations and other guidance thereunder
and any state law of similar effect (collectively “Section 409A”) shall not commence in connection with Executive’s
termination of employment unless and until Executive has also incurred a “separation from service” (as such term is defined
in Treasury Regulation Section 1.409A-1(h) (“Separation From Service”), unless the Company reasonably determines
that such amounts may be provided to Executive without causing Executive to incur the additional 20% tax under Section 409A.
It is intended that each installment
of the Severance Benefits payments provided for in this Agreement is a separate “payment” for purposes of Treasury Regulation
Section 1.409A-2(b)(2)(i). For the avoidance of doubt, it is intended that payments of the Severance Benefits set forth in this Agreement
satisfy, to the greatest extent possible, the exemptions from the application of Section 409A provided under Treasury Regulation Sections
1.409A-1(b)(4), 1.409A-1(b)(5) and 1.409A-1(b)(9).
If Employee is a “specified
employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code, no Severance Benefit payments that are nonqualified deferred
compensation subject to Section 409A and are triggered by a separation from service shall be paid until the later of six (6) months after
Employee’s Separation Date of, if earlier, Employee’s death. All such payments will be accumulated and paid within thirty
(30) days after the expiration of such delay period. However, it is intended that payments to Employee will be exempt from Section 409A
under the “short-term deferral” rule set forth in Section 1.409A-1(b)(4) of the Treasury Regulations and not likely to be
delayed pursuant to this provision.
Notwithstanding any other
payment schedule set forth in this Agreement, none of the Severance Benefits will be paid or otherwise delivered prior to the effective
date of the Separation Date Release of all claims set forth as Exhibit B hereto. All amounts payable under the Agreement will be
subject to standard payroll taxes and deductions. Notwithstanding any other provision of this Agreement, the Company shall not be liable
to Employee or any other person if payments under this Agreement fail to be exempt from, or compliant with, Section 409A. Employee is
solely responsible for the tax consequences of any payments hereunder.
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 pro rata in the following order:
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.
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.
(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,
as amended (“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.
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 and Exhibit B, 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. This Agreement
supersedes and replaces the Prior Agreement in its entirety and the Prior Agreement shall have no further force or effect. 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.
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.
|
ALTO INGREDIENTS, INC. |
|
|
|
By: |
/s/ Ed Baker |
|
|
Ed Baker |
|
|
Vice President, Human Resources |
|
|
|
Date: 9/14/2023 |
Understood and Agreed: |
|
|
|
EXECUTIVE |
|
|
|
/s/ Robert R. Olander |
|
Robert R. Olander |
|
|
|
Date: 9/17/2023 |
|
Exhibit
A
Confidential
Information and Inventions Agreement
Exhibit
B
Separation
Date Release
(To be signed and become effective on or within
60 days after the employment termination date.)
In exchange for the severance
benefits to be provided to me by Alto Ingredients, Inc. (the “Company”) pursuant to the terms of my Employment
Agreement (the “Agreement”), I hereby provide the following General Release of Claims (the “Release”).
I understand that, on the last date of my employment with the Company, the Company will pay me any accrued salary to which I am entitled
by law, regardless of whether I sign this Release, but I am not entitled to any severance benefits unless I sign and return this Release
to the Company and I allow it to become effective.
I hereby generally and completely
release the Company and its directors, officers, employees, shareholders, partners, agents, attorneys, predecessors, successors, parent
and subsidiary entities, insurers, affiliates, and assigns (collectively the “Released Parties”) of and from
any and all claims, liabilities and obligations, both known and unknown, arising out of or in any way related to events, acts, conduct,
or omissions occurring at any time prior to or at the time that I sign this Release.
This general release includes,
but is not limited to: (1) all claims arising out of or in any way related to my employment with the Company or the termination of that
employment; (2) all claims related to my compensation or benefits from the Company, including salary, incentive awards, bonuses, commissions,
time-off pay, expense reimbursements, severance pay, fringe benefits, stock, stock options, or any other ownership or equity interests
in the Company; (3) all claims for breach of contract, wrongful termination, and breach of the implied covenant of good faith and
fair dealing (including claims based on or arising under the Agreement); (4) all tort claims, including claims for fraud, defamation,
emotional distress, and discharge in violation of public policy; and (5) all federal, state, and local statutory claims, including claims
for discrimination, harassment, retaliation, attorneys’ fees, or other claims arising under the federal Civil Rights Act of 1964
(as amended), the federal Americans with Disabilities Act of 1990, the federal Age Discrimination in Employment Act (as amended) (“ADEA”),
the federal Family and Medical Leave Act, the California Labor Code (as amended), the California Family Rights Act, and the California
Fair Employment and Housing Act (as amended).
I understand that notwithstanding
the foregoing, the following are not included in the Released Claims (the “Excluded Claims”): (i) any rights
or claims for indemnification I may have pursuant to any written indemnification agreement to which I am a party, the charter, bylaws,
or operating agreements of any of the Released Parties, or under applicable law; or (ii) any rights which are not waivable as a matter
of law. In addition, I understand that nothing in this release prevents me from filing, cooperating with, or participating in any proceeding
before the Equal Employment Opportunity Commission, the Department of Labor, or the California Department of Fair Employment and Housing,
except that I acknowledge and agree that I shall not recover any monetary benefits in connection with any such claim, charge or proceeding
with regard to any claim released herein. I hereby represent and warrant that, other than the Excluded Claims, I am not aware of any claims
I have or might have against any of the Released Parties that are not included in the Released Claims.
I acknowledge that I am knowingly
and voluntarily waiving and releasing any rights I may have under the ADEA, and that the consideration given for the waiver and release
in the preceding paragraph is in addition to anything of value to which I am already entitled. I further acknowledge that I have been
advised by this writing that: (1) my waiver and release do not apply to any rights or claims that may arise after the date I sign this
Release; (2) I should consult with an attorney prior to signing this Release (although I may choose voluntarily not to do so); (3) I have
forty-five (45) days to consider this Release (although I may choose voluntarily to sign it earlier); (4) I have seven (7) days following
the date I sign this Release to revoke it by providing written notice of revocation to the Company’s Board of Directors; and (5) this
Release will not be effective until the date upon which the revocation period has expired, which will be the eighth calendar day after
the date I sign it provided that I do not revoke it (the “Effective Date”).
I UNDERSTAND THAT THIS AGREEMENT
INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS. I acknowledge that I have read and understand Section 1542 of the California Civil
Code which reads as follows: “A general release does not extend to claims which the creditor does not know or suspect to exist
in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement
with the debtor.” I hereby expressly waive and relinquish all rights and benefits under that section and any law or legal principle
of similar effect in any jurisdiction with respect to my release of claims herein, including but not limited to the release of unknown
and unsuspected claims.
I hereby represent that I
have been paid all compensation owed and for all hours worked, I have received all the leave and leave benefits and protections for which
I am eligible, pursuant to the Family and Medical Leave Act, the California Family Rights Act, or otherwise, and I have not suffered any
on-the-job injury for which I have not already filed a workers’ compensation claim.
I further agree: (1) not to
disparage the Company, its parent, or its or their officers, directors, employees, shareholders, affiliates and agents, in any manner
likely to be harmful to its or their business, business reputation, or personal reputation (although I may respond accurately and fully
to any question, inquiry or request for information as required by legal process); (2) not to voluntarily (except in response to legal
compulsion) assist any third party in bringing or pursuing any proposed or pending litigation, arbitration, administrative vclaim or other
formal proceeding against the Company, its parent or subsidiary entities, affiliates, officers, directors, employees or agents; and (3)
to reasonably cooperate with the Company, by voluntarily (without legal compulsion) providing accurate and complete information, in connection
with the Company’s actual or contemplated defense, prosecution, or investigation of any claims or demands by or against third parties,
or other matters, arising from events, acts, or failures to act that occurred during the period of my employment by the Company.
By: |
|
|
|
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Robert R. Olander |
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Date |
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Exhibit B-2
v3.23.3
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