Exhibit 10.05
EMPLOYEE CONTRACT
THIS AGREEMENT the ("Agreement") entered into and effective this 29th Day
of July 2002, between Penn Octane Corporation, the ("Corporation"), and Xxxxxx
X. Xxxxxxx, ("Employee"), 000 Xxxxxxxx Xxxxx, Xxxx Xxxxxx, XX 00000.
WITNESETH
WHEREAS, Employee has indicated his interest in renewing his employment as
Chief Executive Officer of the Company and the Company has determined that
Employee has the requisite skills and experience and that it desires to engage
Employee for this purpose;
NOW, THEREFORE, for and in consideration of the compensation to be paid
Employee hereunder and the mutual promises, covenants, and undertakings herein
contained, Employee and Corporation hereby agree as follows:
SECTION 1. Term. The initial term of this Agreement shall be for the period
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commencing July 29, 2002 and continuing until July 29, 2005. Upon expiration of
the initial term, this Agreement will continue year to year.
SECTION 2. Responsibilities. During the term of this Agreement, Employee
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will, in the capacity of the Chief Executive Officer (CEO), remain as a member
of the Board of the Corporation (Chairman), as well as CEO of all of the
Corporation's existing and future subsidiaries. As CEO he will be responsible of
managing all existing and future investments of the Corporation, as well as
presiding over and implementing the corporations policies, direction and
administration.
SECTION 3. Employee Benefits.
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(a) It is understood and agreed that Employee shall act as an Employee
of the Corporation in the undertaking of this Agreement. With the execution of
this Agreement, it is expressly understood and stipulated that an
employer-employee relationship will exist between the Corporation and Employee.
With the exception of the duties created by this Agreement, it is agreed by
Employee and the Corporation that neither party is the agent of the other, and
neither has authority to bind or obligate the other party in any way not
beneficial to the Corporation and/or the Employee.
(b) Employee will be eligible for all employee benefits, and the
Corporation may make deductions from Contributions Act (F.I.C.A.), insurance,
bonds or other subscription of any kind. Additionally, the Corporation will be
responsible for collecting taxes and/or assessments which may be attributable
under Federal or California law to the compensation paid to Employee.
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(c) Employee will be granted, upon execution of this Agreement, a term
life insurance policy commensurate with the term of this agreement, equal to $5
million.
SECTION 4. Compensation.
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(a) Base Compensation. For providing his services, the Corporation shall
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pay Employee a monthly salary equal to $25,000 (Twenty Five Thousand
Dollars).
(b) Incentive Bonus Program. On an annual basis, Employee will be entitled
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to a minimum bonus payment equal to $100,000 plus five percent (5%) of
Net Income Before Taxes (but after required interest payments) of the
Corporation.
(c) Incentive Stock Options. Prior to December 31, 2002, the Compensation
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Committee of the Board of Directors shall recommend and the Board
shall approve an Employee stock option grant for an amount of options
terms of vesting and exercise that are commensurate with its prior
practices. In addition, the Corporation shall include Employee's stock
options in any re-pricing of stock options undertaken by the
Corporation.
(d) Forgiveness Of Interest On Stock Loan. Pursuant to the existing note
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with employee, dated April 11, 2000, as amended, during any fiscal
year of the Corporation, the Corporation shall forgive any interest
due from Employee pursuant to Employee's Stock Loan due to the
Corporation, provided that Employee guarantees at least $2 million of
the Corporation's indebtedness during any period of that fiscal year
of the Corporation.
(e) Forgiveness Of Stock Loan. Pursuant to the existing note with
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employee, dated April 11, 2000, as amended, the existing Employee
Stock Loan due to the Corporation shall be forgiven in the event that
either of the following two conditions are realized:
i. The share price of the Corporation's common stock trades for a
-- period of 90 days at a blended average price equal to 2x's the
closing price of the Corporation's common stock on the date of
this agreement, or
ii. The Corporation is sold for a price per share (or an asset sale
--- realizes revenues per share) equal to 2x's the closing price of
the Corporation's common stock on the date of this agreement.
(f) Unpaid prior compensation. In connection with Employee's services
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prior to the date of this Agreement, Employee shall be entitled to
receive unpaid compensation earned but not received as of July 28,
2002 consisting of:
i. A bonus of $100,000 plus five percent (5%) of Net Income Before
-- Taxes (but after required interest payments) of the Corporation
for the period August 1, 2001 through the date of this Agreement.
ii. The bonus above shall be partially paid through the offset of any
--- net advances made to Employee as of the date of this Agreement.
iii. Any remaining amounts due to Employee from (f)(i.) above shall
---- not be paid until Employee's $200,000 note to the Corporation has
been repaid.
iv. Any accrued but unpaid salary through the date of this Agreement.
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Employee is not entitled to any other compensation related to
services performed prior to the date of this Agreement
(g) Reimbursement of expenses. Employee shall be reimbursed for all
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expenses incurred in connection with performing services on behalf of
the Corporation. Employee shall be required to provide documentation
for such expenses in accordance with the Corporation's expense
reimbursement policies.
The Corporation further agrees that it will reimburse Employee for any
expenses related to the travel of Employee's wife to accompany
Employee during any period in which the proper care for Employee's
wife cannot be arranged.
SECTION 5. The Corporation and Employee hereby expressly stipulate and
agree that the post-contractual restraints agreed upon herein are reasonably
necessary to protect the business and goodwill of the Corporation upon the
termination of this Agreement.
SECTION 6. Covenant Against Competition: Court Ordered Modification.
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(a) Employee agrees that, until one year from the termination of this
agreement, he will not participate in any business venture that competes with
the Corporation without the expressed written permission of the Corporation.
(b) Confidentiality of Information. Employee acknowledges that, in the
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course of performing services for the Corporation, he may receive or be privy to
certain producer, end user or transporting pipeline client lists, trade secrets,
programs, lists of customer or trading accounts, business records or audits of
the Corporation, corporate insider information, proprietary financing
structures, and other confidential information and knowledge concerning the
business of the Corporation, its corporate parent, stockholders or subsidiaries
(herein collectively referred to as the "Confidential Information") which the
Corporation desires to protect. Employee understands that the Confidential
Information is confidential and he covenants and agrees not to reveal the
Confidential information to anyone, directly or indirectly, outside the
Corporation so long as the confidential or secret nature of the Confidential
information shall continue. Employee further agrees that he will at no time use
the Confidential information in competing with the Corporation. Upon
termination of this agreement, Employee shall surrender the Corporation all
papers, documents, writings, and other property produced by him or coming into
his possession by or through his relationship with the Corporation (including
computer programs or information derived form Corporation's computer database)
and Employee agrees that all such materials shall at all times remain the
property of the Corporation.
SECTION 7. Indemnity. Corporation hereby covenants and agrees to indemnify
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and hold harmless Employee, (hereinafter referred to as the "Indemnified Party")
from any and all suits, actions or claims of any character, type or description
made for or in account of any injuries, damages alleged, or amounts allegedly
owed as a result of claims, demands, costs or judgments against it arising out
of or relating to, whether directly or indirectly, the performance
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of services hereunder by Employee. Notwithstanding anything to they contrary
contained herein, this indemnity shall apply notwithstanding any negligence or
alleged negligence on the part of the Indemnified Party. Indemnified Party may,
at its option, conduct the defense in any such third party action arising as
described herein, and Corporation agrees to fully cooperate with such defense.
SECTION 8. Enforcement: Attorney's Fees. If Employee must resort to legal
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action in order to enforce any of the terms of this Agreement, Employee shall be
entitled to recover the costs of such action, including, but not limited to, all
legal fees any court costs associated with such legal proceedings.
SECTION 9. Notices. All notices, requests, consents, and other
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communications regarding this Agreement shall be in writing and shall be deemed
to have been delivered on the dated personally delivered or on the date mailed,
postage prepaid, by certified mail, return receipt requested, to the respective
parties as follows:
If to the Corporation:
Xx. Xxxxxx X. Xxxxxxx
Chairman of the Board
Penn Octane Corporation
00-000 Xxxxxxx Xxxx, Xxxx X
Xxxx Xxxxxx, XX 00000
Provided, however, that any party shall have the right to change such party's
address for notice hereunder to any location by the giving of notice to the
other party in the manner set forth above.
SECTION 10. Severability. Whenever possible, each provision of this
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Agreement shall be interpreted in such manner as to be effective and valid under
applicable law and if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition and invalidity, without invalidating the remainder of such
provision or the remaining provisions of the Agreement.
SECTION 11. Assignability. This Agreement is not assignable by Employee to
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any other person, partnership, firm, corporation or other recognized legal
entity, except with the written consent of the Corporation.
SECTION 12. Governing Law. This Agreement shall be construed and enforced
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in accordance with any governed by the laws of the State of California and the
United States of America.
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SECTION 13. Captions. The section and paragraph headings of this Agreement
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are for reference purposes only and shall not effect in any way the meaning and
interpretation of this Agreement.
SECTION 14. Entire Agreement Amendment. This Agreement constitutes the
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entire Agreement between the parties respecting the services of Employee and
there are not representations, warranties, Agreements, or commitments between
the parties hereto except as set forth herein. This Agreement may be amended
only by an instrument in writing executed by the Corporation and Employee.
SECTION 15. Execution. This Agreement may be executed in multiple original
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counterparts, each of which shall be deemed an original, but all of which
together shall constitute the same instruments.
SECTION 16. Binding Effect. This Agreement is for the benefit of the
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Corporation and Employee and shall be binding upon and enforceable by and
against their successors, assigns, respective heirs, donees, pledges, devisees,
transferees, and representatives.
SECTION 17. Waiver. The waiver of any condition or breach of any term or
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condition of this Agreement shall not be deemed to constitute the waiver of any
other condition or breach of the same or any other term or condition of this
agreement.
SECTION 18. Survival of Covenants and Conditions. The provisions of
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Sections 6, 7, 8 and 9 hereof shall survive the termination of this Agreement.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be executed by
its duly authorized officer, and Employee has executed this Agreement, in each
case as of the date first above written. This Agreement is to be executed in
duplicate counterparts, each of which shall be considered an original.
PENN OCTANE CORPORATION
By:/s/ Xxxxxx Xxxxxx /s/Xxxxxx Xxxxxxx
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EMPLOYEE
Name: Date
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Title:
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Dated:
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