This Consulting Services Agreement involves
Title: Penn Octane Corporation
Director Services Agreement
Industry: Oil and Gas Operations Sector: Energy
Penn Octane Corporation
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.
3. Payment of Fees .
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 Services that are documented in accordance with Company’s expense reimbursement policies. The reimbursement payment for any such expense shall be due and payable within thirty (30) days following the receipt by the Company of a written notice from Director of the date and nature of such expense and reasonable evidence (consistent with the requirements of taxation or other governmental regulations applicable to the Company) of such expense.
6. Indemnification . In addition to the other remedies specified hereunder, the Company agrees to hold harmless, defend and indemnify Director in connection with his service as a director and a board committee member in accordance with the Company’s Certificate of Incorp