EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as of
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October 20, 1997 (the "Effective Date"), by and between PENN OCTANE CORPORATION,
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a Delaware corporation (the "Company") or the "Employer") and XXXXXXX XXXXXXX
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(the "Officer"), with reference to the following:
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RECITALS
Employer desires to employ the Officer as Vice President of the Company and
the Officer is willing to accept such employment by the Company on the terms and
subject to the conditions set forth in this Agreement.
AGREEMENT
1. EMPLOYMENT, AUTHORITY AND DUTIES.
1.1 EMPLOYMENT. During the term of this Agreement, the Officer
agrees to be employed by and to serve as a Vice President of the Company, and
the Company agrees to employ, retain and elect the Officer in such capacity.
1.2 POSITION. The Officer shall serve as a Vice President of the Company
and will be responsible for the duties as outlined in Schedule A.
1.3 PLACE OF EMPLOYMENT; WORKING FACILITIES. The Officer's
principal place of business with respect to his services to the Employer
initially shall be located in Mexico City, Mexico. Employer will provide the
Officer with an office and such other facilities and equipment at such location
as is suitable to the Officer's position and necessary for the performance of
his duties.
2. TERMS OF EMPLOYMENT.
2.1 DEFINITIONS. For purposes of this Agreement, the following
terms shall have the following meanings:
(a) "Termination for Cause" shall mean termination by
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Employer of the Officer's employment hereunder by reason of (i) the Officer's
willful and continued failure to substantially perform his duties hereunder
(other than any such failure resulting from the Officer's incapacity due to
physical or mental illness), (ii) the Officer's act or acts of personal
dishonesty or moral turpitude, (iii) the Officer's conviction of a felony, or
(iv) the Officer's willful breach of a material provision of this Agreement.
For purposes of this Agreement, no act or failure to act, on the Officer's part
will be considered "willful" unless done, or omitted to be done, by the Officer
in bad faith without reasonable belief that such actions or omissions were in
the best interest of Employer.
(b) "Termination for Good Reason" shall mean the election of
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the Officer to terminate his employment hereunder following a determination in
good faith by the Officer that any of the following has occurred: (i) the
assignment of the Officer to any duties or position which results in any
diminution of the Officer's authority, duties or responsibilities under this
Agreement, as determined in good faith by the Officer, (ii) a reduction in the
Officer's Base Salary or other benefits under this Agreement, (iii) the transfer
or forced relocation of the principal place of business of the officer to any
geographic location outside Mexico City, or (iv) the breach or assertion of the
invalidity or unenforceability of this Agreement or any provision thereof by
Employer or a Successor Entity (as defined in Section 7.7).
(c) "Termination Without Cause" shall mean termination by
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Employer of the Officer's employment hereunder other than pursuant to (i) a
Termination for Cause, (ii) a termination by reason of the Officer's disability
(as described in Section 2.5), or (iii) a termination by reason of the Officer's
death (as described in Section 2.6).
(d) "Voluntary Termination" shall mean a termination by the
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Officer of the Officer's employment hereunder, other than (i) a termination by
reason of the Officer's disability (as described in Section 2.5), (ii) a
termination by reason of the Officer's death (as described in Section 2.6), or
(iii) a Termination for Good Reason.
2.2 TERM OF EMPLOYMENT. The term of employment of the Officer by
Employer hereunder shall be from November 1, 1997 (the "Effective Date") through
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December 31, 1999, unless the Officer's employment hereunder is terminated
earlier pursuant to this Agreement. Upon expiration of the stated term of the
Agreement on December 31, 1999, this Agreement shall continue for another year
until terminated in accordance with its terms.
2.3 TERMINATION FOR CAUSE. A Termination for Cause may be
effected by Employer at any time during the term of this Agreement. Upon a
Termination for Cause, the Officer shall be paid all accrued salary and benefits
to the date of termination and any bonus compensation to the extent earned under
Section 3.2 and/or Section 3.3 and/or Section 3.4, but the Officer shall not be
paid any other compensation or reimbursement of any kind (including, without
limitation, severance compensation pursuant to Section 6) and all rights and
obligations hereunder shall terminate, except as specifically provided herein or
required by law.
2.4 TERMINATION WITHOUT CAUSE. Notwithstanding anything else in
this Agreement, Employer shall have the right to effect a Termination without
Cause at any time during the term of this Agreement. Upon any Termination
Without Cause, the Officer shall be paid all accrued salary and benefits to the
date of termination, bonus compensation to the extent earned under Section 3.2
and/or Section 3.3 and/or Section 3.4, and severance compensation as provided in
Section 6, but shall be paid no other compensation or reimbursement of any kind,
and all other rights and obligations hereunder shall terminate, except as
specifically provided herein or required by law.
2.5 TERMINATION BY REASON OF DISABILITY. If, during the term of
the Officer's employment by the Company, the Officer has been substantially
unable to perform his duties under this Agreement on a full-time basis due to
illness or physical or mental incapacity for thirty (30) consecutive calendar
days, and within thirty (30) days after notice to the Officer of the Company's
intention to terminate his employment by reason of such disability (which notice
may only be given after the end of the initial thirty (30) day period), the
Officer has not reasonably demonstrated the ability to perform his duties
hereunder on a full-time basis, Employer shall have the right to terminate the
Officer's employment hereunder. Upon any such termination the Officer shall be
paid all accrued salary and benefits, including, without limitation, disability
benefits payable to the Officer pursuant to the terms of any long-term
disability insurance policy or program obtained by Employer for the benefit of
its executives and bonus compensation to the extent earned under Section 3.2
and/or Section 3.3 and/or Section 3.4, but no other compensation or
reimbursement of any kind (including, without limitation, severance compensation
pursuant to Section 6) and all rights and obligations hereunder shall terminate,
except as specifically provided herein or required by law.
2.6 DEATH. The Officer's employment hereunder shall terminate
upon the Officer's death and Employer shall pay to his estate all accrued salary
and benefits (including, without limitation, any life insurance benefits) to the
date of termination and bonus compensation to the extent earned under Section
3.2 and/or Section 3.3 and/or Section 3.4, but no other compensation or
reimbursement of any kind, including, without limitation, severance compensation
pursuant to Section 6, and all other rights and obligations hereunder shall
terminate, except as specifically provided herein or required by law.
2.7 VOLUNTARY TERMINATION. A Voluntary Termination may be
effected by the Officer during the term of this Agreement upon thirty (30) days'
prior written notice to Employer. In the event of a Voluntary Termination, the
Officer shall immediately be paid all accrued salary and benefits to the date of
termination and bonus compensation to the extent earned under Section 3.2 and/or
Section 3.3 and/or Section 3.4, but no other compensation or reimbursement of
any kind (including, without limitation, severance compensation pursuant to
Section 6) and all other rights and obligations hereunder shall terminate,
except as specifically provided herein or required by law.
2.8 TERMINATION FOR GOOD REASON. Upon any Termination for Good
Reason, the Officer shall be paid all accrued salary and benefits to the date of
termination, bonus compensation to the extent earned under Section 3.2 and/or
Section 3.3 and/or Section 3.4 and severance compensation as provided in Section
6, but shall be paid no other compensation or reimbursement of any kind, and all
other rights and obligations hereunder shall terminate, except as specifically
provided herein or required by law.
3. BASE SALARY; BONUSES.
3.1 BASE SALARY. In consideration for the Officer's agreement to
be employed by and serve the Company pursuant to the terms of this Agreement,
Employer will pay the Officer a base salary (the "Base Salary") during each
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calendar year payable bi-monthly, in accordance with Employer's normal payment
practices. The Officer's Base Salary shall be reviewed annually at the end of
each calendar year, commencing with calendar year 1997.
3.2 INCENTIVE BONUS. The Company is in the process of approving
the performance standards for the Company's incentive bonus program and the
Company shall adopt such standards by no later than January 31, 1998. The
Officer shall participate in the Company's incentive bonus program and shall be
eligible to receive an incentive bonus as set forth by the terms in Schedule A.
The Officer shall be eligible to participate in any additional bonus and
incentive programs for which the Company may maintain or establish from time to
time for the Company's executives, subject to and on a basis consistent with the
terms, conditions and overall administration of any such plan or arrangement by
the Company.
3.3 FINANCING BONUS. Each Financing Bonus shall be due and
payable on the pay period immediately succeeding the date the commitment for the
applicable financing is consummated.
3.4 SPECIAL BONUS. As set forth in Schedule A.
4. BUSINESS EXPENSE.
4.1 GENERAL EXPENSES. During the term of the Officer's employment
by Employer, the Officer will be entitled to receive prompt reimbursement for
all reasonable expenses incurred by him (in accordance with the policies and
procedures of Employer for its senior executive officers) in performing the
services hereunder, including reasonable expenses for entertainment, travel and
similar items, provided that the Officer properly accounts for such expenses in
accordance with the policies and procedures of Employer.
4.2 HEALTH BENEFITS. The Officer will be entitled to participate
in or receive benefits under any employee group health, medical, dental, life,
disability and any other similar benefit plan or arrangement which the Company
may maintain or establish from time to time for the Company's executives,
subject to and on a basis consistent with the terms, conditions and overall
administration of any such plan or arrangement by the Company and on terms and
conditions at least as favorable to the Officer as the terms and conditions to
which each of the other senior executive officers of the Company are subject.
Nothing paid to the Officer under any such plan or arrangement will be deemed to
be in lieu of the compensation otherwise payable to the Officer hereunder. Any
payments or benefits payable to the officer with respect to a fiscal year will
be prorated based on the number of days during the fiscal year the Officer is
actually employed by Employer.
5. WARRANTS. So long as this Agreement has not been earlier terminated
in accordance with its terms, Employer shall grant to the Officer Twenty-five
Thousand (25,000) of the Company's $6.00 Class A Warrants (the "Class A
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Warrants") on each of the first, second and third anniversaries of the Effective
Date.
6. SEVERANCE; PAYMENTS. Upon the occurrence of a Termination Without
Cause or a Termination for Good Reason, in addition to any other amounts payable
to the Officer hereunder, the Officer shall be paid severance compensation in
the amount of three (3) months of Base Salary (measured by the monthly Base
Salary in effect immediately prior to such termination) plus all accrued but
unpaid salary, bonus compensation to the extent earned under Section 3.2 and/or
Section 3.3 and/or Section 3.4, and/or Section 3.5 and other benefits due and
payable to the Officer on and as of the date of any such termination. Any
severance compensation payable under this Section 6 shall be payable to the
Officer in immediately available funds within ten (10) business days of any
Termination Without Cause or Termination for Good Reason, as the case may be.
7. MISCELLANEOUS.
7.1 CONFIDENTIAL INFORMATION. The Officer acknowledges that, in
the course of performing services on behalf of the Company, he may receive or be
privy to certain producer, end user or transporting pipeline client lists, trade
secrets, programs, lists of customers or trading accounts, business records or
audits of the Company, corporate insider information, proprietary financing
structures and other confidential information and knowledge concerning the
business of the Company, its corporate parent, stockholders or subsidiaries
(herein collectively referred to as the "Confidential Information") which the
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Company desires to protect. The Officer understands that the Confidential
Information is confidential and the Officer covenants and agrees not to reveal
the Confidential Information to any person or entity, directly or indirectly,
outside the Company so long as the confidential or secret nature of the
Confidential Information shall continue, unless the Officer is legally compelled
to disclose such Confidential Information. The Officer further agrees that he
will at no time use the Confidential Information in competing with the Company.
Upon termination of this Agreement, the Officer shall surrender to the Company
all papers, documents, writings, and other property produced by him or in his
possession by or through his relationship with the Company (including computer
programs or information derived from the Company's computer database) and the
Officer agrees that all such materials shall at all times remain the property of
the Company. This Section 7.1 shall be inoperative as to any Confidential
Information which (a) becomes generally available to the public on or after the
Effective Date hereof other than as a result of a disclosure in violation of
this Section 7.1, or (b) was available to the Officer on a non-confidential
basis prior to its disclosure to the Officer, or (c) becomes available to the
Officer on a non-confidential basis from a source other than the Company, which
source is not itself bound by a confidentiality obligation to the Company.
7.2 WAIVER. The waiver of the breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent breach
of the same or other provision thereof.
7.3 ENTIRE AGREEMENT; MODIFICATIONS. Except as otherwise provided
herein, this Agreement represents the entire understanding among the parties
with respect to the subject matter hereof, and this Agreement supersedes any and
all prior understandings, agreements and negotiations, whether written or oral,
with respect to the subject matter hereof, including, without limitation, any
understandings, agreements or obligations respecting any past or future
compensation, bonuses, reimbursements or other payments to the Officer from
Employer. All modifications to the Agreement must be in writing and signed by
the party against whom enforcement of such modification is sought.
7.4 NOTICES. All notices and other communications under this
Agreement shall be in writing and shall be given by hand delivery or first class
mail, certified or registered with return receipt requested, to the respective
persons named below. Each notice under this Section 7.4 shall be deemed to have
duly given upon receipt or, if sent by first class mail, three (3) days after
mailing, or if sent by certified or registered mail, on the date of the return
receipt, in each case, to the address or telecopier number of the intended
recipient set forth below:
If to the Company: Penn Octane Corporation
000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxx Xxxx, Xxxxxxxxxx 00000
Attention: President
If to the Officer: Xx. Xxxxxxx Xxxxxxx
Diagonal San Antonio 938
Col. Del Xxxxx
Mexico, D.F. 03100
Any party may change such party's address for notices by notice duly given
pursuant to this Section 7.4.
7.5 HEADINGS. The Section headings herein are intended for
reference and shall not by themselves determine the construction or
interpretation of this Agreement.
7.6 SEVERABILITY. Should a court or other body of competent
jurisdiction determine that any provision of this Agreement is excessive in
scope or otherwise invalid or unenforceable, such provision shall be adjusted
rather than voided, if possible, so that it is enforceable to the maximum extent
possible, and all other provisions of this Agreement shall be deemed valid and
enforceable to the fullest extent possible.
7.7 SUCCESSORS AND ASSIGNS. This Agreement shall (a) not be
assignable either by the Officer or by Employer, (b) be binding upon and inure
to the benefit of and shall be enforceable by, the parties hereto and their
respective successors and permitted assigns, and (c) be binding upon and fully
enforceable by the Officer against any entity which succeeds to the Company by
merger, consolidation, reorganization, sale of all or substantially all of the
Company's assets or other similar transaction or series of transactions or which
acquires substantially all of the assets of the Company (any such entity a
"Successor Entity").
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7.8 WITHHOLDINGS. All compensation and benefits to the Officer
hereunder, including, without limitation, severance compensation, shall be
reduced by all federal, state, local and other withholdings and similar taxes
and payments required by applicable law.
7.9 INDEMNIFICATION. The Officer shall be entitled to
indemnification by the Company to the same extent that any other officer or
director of the Company is entitled to indemnification under the charter
documents of or by contract with, the Company.
7.10 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original and all of which taken
together shall constitute one and the same Agreement.
7.11 ATTORNEYS' FEES. In the event of litigation related to this
Agreement, the prevailing party will be entitled to recover reasonable
attorneys' fees and other costs.
7.12 GOVERNING LAW; CONSENT TO JURISDICTION. this Agreement shall
be governed by and construed in accordance with the laws of the State of
California. Each party to this Agreement hereby submits to the exclusive
jurisdiction and venue of the Superior Court of the State of California for the
County of San Mateo or the United States District Court for the Northern
District of California for purposes of any legal action which may arise in
connection with this Agreement. Each party agrees that service upon such party
in any such action may made by first class mail, certified or registered, in the
manner provided for delivery of notices in Section 7.4.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
EMPLOYER: PENN OCTANE CORPORATION
By: ___________________________
Name: _________________________
Title: ___________________________
OFFICER: _______________________________
Xxxxxxx Xxxxxxx
