EMPLOYMENT AGREEMENT
XXXXX X. XXXXXXX
This EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as of
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November 17, 1997 (the "Effective Date"), by and between PENN OCTANE
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CORPORATION, a Delaware corporation (the "Company") or the "Employer") and Xxxxx
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X. Xxxxxxx (the "Officer"), with reference to the following:
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 and retain 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 marketing and purchasing of liquid
gases.
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 Houston, TX. 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) failure to pay any
or all of 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 the Houston, Texas area, 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 17, 1997 (the "Effective Date")
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through November 30, 1998, unless the Officer's employment hereunder is
terminated earlier pursuant to this Agreement. Upon expiration of the stated
term of the Agreement on November 30, 1998, this Agreement shall continue for
another year until terminated in accordance with its terms, unless notified by
either party sixty (60) days in advance.
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 3.1
and/or Section 3.2, and severance compensation as provided in Section 6, but
shall be paid no other compensation or reimbursement of any kind except as
modified below, and all other rights and obligations hereunder shall terminate,
except as specifically provided herein or required by law. If such termination
without cause is effected by Employer at any time after may 17, 1998 (i.e. on or
after the 6th month of employment), then Officer shall be entitled to the grant
of fifty thousand (50,000) of the Company's $5.00 Class E Warrants (the "Class E
Warrants") as specified in Article 5.
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 3.1
and/or Section 3.2, but no other compensation or reimbursement of any kind
except as specified below (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. If such Termination
by reason of Disability is effected by Employer at any time after May 17, 1998
(i.e. on or after the 6th month of employment), then Officer shall be entitled
to the grant of fifty thousand (50,000) of the Company's $5.00 Class E Warrants
(the "Class E Warrants") as specified in Article 5.
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
3.1 and/or Section 3.2, 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. If such Termination by Death
is effected by Employer at any time after May 17, 1998 (i.e. on or after the 6th
month of employment), then Officer's Estate shall be entitled to the grant of
fifty thousand (50,000) of the Company's $5.00 Class E Warrants (the "Class E
Warrants") as specified in Article 5.
2.7 VOLUNTARY TERMINATION. A Voluntary Termination may be
effected by the Officer during the term of this Agreement upon sixty (60) 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 3.1 and/or
Section 3.2, 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 3.1 and/or
Section 3.2 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. If such Termination for Good Reason is effected by
Employer at any time after August 17, 1998 (i.e. on or after the 9th month of
employment), then Officer shall be entitled to the grant of fifty thousand
(50,000) of the Company's $5.00 Class E Warrants (the "Class E Warrants") as
specified in Article 5.
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 of One Hundred Twenty Thousand Hundred Dollars ($120,000) 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. Further, an additional $1,000 pre
month shall be paid to Officer for automobile expenses over and above
reimbursement of other expenses incurred by Officer as specified in Article 4.1.
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 each year which is equivalent to the
maximum bonus payable to any other senior executive officer of the Company for
such year. 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 VACATION PAY. Officer shall be entitled to an annual vacation
leave of fifteen (15) business days at full pay. The time for such vacation
shall be selected by the Officer. In lieu of the vacation leave specified, the
Officer may elect to receive payment for the whole or any portion of the
vacation time to which the Officer is entitled, such vacation timer to be valued
at the amount of the regular salary earned by the Officer during an equivalent
period of time.
3.4 HOLIDAYS. During each calendar year, the Officer shall be
entitled to a holiday with full pay on the days designated by the corporation
set out above as being paid holidays.
3.5 PAID SICK LEAVE. The Officer shall be entitled to twelve
(12) days per year as sick leave with full pay. 'Sick Leave" is defined as
short-term absences from employment that are necessary due to illness or injury.
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, except to the extent provided in Articles 2.4,
2.5, 2.6 and 2.8, Employer shall grant to the Officer Fifty Thousand (50,000) of
the Company's $5.00 Class E Warrants on each of the first anniversary of the
effective date, i.e. 11/17/98, and an additional Fifty Thousand (50,000) Class E
Warrants on the second anniversary of the effective date if this Agreement is
still in effect, at an exercise price per warrant equal to the average bid price
for the seven day trading period prior to such anniversary.
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 for
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
Xxxxxxx Xxxx, Xxxxxxxxxx 00000
Attention: President
If to the Officer: Xx. Xxxxx X. Xxxxxxx
0000 Xxxxxx Xxxxx Xxxxx
Xxxxxxxx, XX 00000
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: /s/ X.X. Xxxxxxx
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Name: X.X. Xxxxxxx
Title: President & CEO
OFFICER: /s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx
