Director Services
Agreement
This DIRECTOR SERVICES AGREEMENT (this “
Agreement ”) is entered into on March ___, 2007, with
an effective date of January 1, 2007 (the “ Effective
Date ”), by and between Penn Octane Corporation, a
Delaware corporation (the “ Company ”), and
___an individual residing in the State of ___(“
Director ”). The Company and Director are each a
“ party ” and together are the “
parties ” to this Agreement.
WHEREAS , Director is to serve as a member of the Board
of Directors of the Company and the Company desires to compensate
Director for his service (“Board Services”) as a
director and for his service (“Committee Services”) as
a member of such committees of the Board of Directors of the
Company as the board may determine from time to time.
NOW THEREFORE , in consideration of the mutual benefits to be
derived and the representations and warranties, conditions and
promises herein contained, and other good and valuable
consideration, the sufficiency of which are hereby acknowledged,
and intending to be legally bound hereby, the parties hereto agree
as follows:
1.
Services to be Provided . The Company hereby engages
Director to provide, and Director hereby agrees to provide to the
Company, the Board Services and the Committee Services during the
Term (as defined below).
2.
Director Compensation .
a. As compensation for serving as a
director and as a board committee member, the Company shall pay to
Director an annual fee of Twenty Thousand Dollars (US $20,000.00)
(the “Director Fee" ) and shall grant an annual option
valued at approximately Five Thousand Dollars (US $5,000.00) (the "
Director Option ”), such option value determined in
accordance with the Company’s usual accounting procedures,
providing Director the right, but not the obligation, to buy shares
of the Company’s common stock at an exercise price equal to
not less than one hundred percent (100%) of the fair market value
of such shares on the day of the grant, for a period of not more
than five (5) years. Fair market value shall be determined in
accordance with the stock plan under which the Director Option is
granted and otherwise in accordance with applicable law and
regulation. In lieu of calculating the number of shares subject to
the Director Option based on a fixed dollar valuation, the Board of
Directors may, in its sole discretion, grant the Director Option
based solely on a fixed number of shares. As a condition to the
exercise of the Director Option, the Board of Directors may, in its
sole discretion, impose a condition of continued services for a
period of not more than one (1) year following the date of
grant.
b. As compensation for performance of
additional Board Services and Committee Services, the Company shall
pay to Director an additional fee of One Thousand Dollars (US
$1,000.00) per Working Day (the “ Additional Fees
”) except as otherwise set forth herein. “ Working
Day ” means a calendar day during which Director provides
significant Board Services or Committee Services to the Company,
including without limitation the attendance of meetings of the
Board of Directors and any committees of the Board of Directors,
and specifically including days spent solely or primarily in travel
to or from locations at which Director provides Board Services or
Committee Services. Director shall not receive any Additional Fees
for preparing for and attending on an annual basis four
(4) quarterly meetings of the Board of Directors, four
(4) quarterly meetings of any committee of the Board of
Directors of which Director is a member and one (1) annual
meeting of stockholders, if any. Each payment of Additional Fees is
subject to review and approval by the Board of Directors. No
Additional Fees shall be paid to Director if, under any applicable
law, regulation or rule, such payment would disqualify Director
from membership on the Board of Directors or any board committee on
which Director serves.
a. The Director Fee shall be paid in equal
quarterly installments beginning January 1, 2007. The Director
Fee shall be pro-rated for any period of less than one full year of
Board Services, including a pro-rated amount for the period
November 1 — December 31, 2006.
b. The Director Option shall be granted on
the date of the first quarterly meeting of the Board of Directors
in each year beginning January 1, 2007, unless otherwise
determined by the Board of Directors.
c. The Additional Fees shall be payable
within thirty (30) days following receipt from Director of a
written statement setting forth the specific dates during which
Director provided the additional Board Services or Committee
Services and reasonable detail regarding the nature of such
services; provided, however, that the Company shall not be required
to pay Additional Fees more frequently than once per calendar
quarter, and that the Company shall be entitled to defer payment
accordingly on any services set forth in a services
statement.
4.
Insurance . As additional consideration for Director
agreement to serve as a director of the Company, the Company agrees
to provide, and maintain thereafter, a directors’ and
officers’ insurance policy with an aggregate coverage limit
of at least $5 million dollars with an insurance carrier
having at least an A.M. Best rating of “A” or its
equivalent.
5.
Reimbursable Expenses . Director shall be entitled to
reimbursement for reasonable expenses incurred by or on behalf of
Director for the benefit of the Company and attributable to the
Board Services or the Committee Se
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