Document:

Ex-10.2

 

EXHIBIT 10.2

FORM OF

FIRST COMMUNITY BANCSHARES, INC.

2004 OMNIBUS STOCK OPTION PLAN

STOCK AWARD AGREEMENT

First Community Bancshares, Inc. (the “Company”), pursuant to its 2004 Omnibus
Stock Option Plan (the “Plan”), hereby grants to Grantee an Award to purchase
the number of shares of the Company’s Common Stock set forth below. This Award
is subject to all of the terms and conditions as set forth herein and in this
Stock Award Agreement, and the Plan and the Notice of Exercise, each of which
are attached hereto and incorporated herein in their entirety. Acceptance of
this Award is conditioned upon the Grantee’s acceptance of the terms of the
Non-Competition and Non-Solicitation Agreement (the “Non-Compete”) an executed
copy of which also is attached hereto and incorporated herein in its entirety.

	 	 	 
	Grantee:

	 	«Name»
	Date of Award Grant:

	 	«GrantDate»
	Vesting Commencement Date:

	 	«VestingDate»
	Number of Shares Subject to Award:

	 	«Shares»
	Exercise Price (Per Share):

	 	«Price»
	Total Exercise Price:
	 	 
	

	 	

	Expiration Date:
	 	 
	

	 	

	 	 	 	 	 
	Type of Grant:

	 	o
Incentive Stock Option1
	 	o Nonqualified Stock Option
	

	 	o Restricted Stock
	 	o Performance Award
	 
	 	 	 	 
	Exercise Schedule:

	 	o Vesting Schedule
	 	o Alternate Vesting Schedule
	 
	 	 	 	 
	Vesting Schedule:
	 	25% of the shares vest on the date of the Award Grant. Thereafter, 25% of the shares vest on each
succeeding one year anniversary of the date of the Award Grant, so that 100% of the Award shall be vested
as of the third anniversary of the date of the Award Grant.
	 
	 	 	 	 
	Alternate Vesting Schedule:
	 	 	 	 
	 
	 	 	 	 
	 
	 	[insert alternate/accelerated vesting schedule here, if applicable]
	 
	 	 	 	 
	Payment:
	 	By one or, as checked off, a combination of the following items:
	 
	 	 	 	 
	 
	 	o Cash or check
	 
	 	o By a Broker-assisted transfer
	 
	 	o By delivery of already-owned shares to Company (cashless exercise)

	1	 	If this is an incentive stock option, it (plus your other outstanding
incentive stock options) cannot be first exercisable for more than $100,000 in
any calendar year. Any excess over $100,000 is a nonqualified stock option.

 

 

	 	 	The details of your Award are as follows:

1. Whole Shares – Option Awards. You may exercise your option Award for whole
shares of Common Stock.

2. Securities Law – Compliance. The exercise of your Award must comply with
applicable laws and regulations governing your Award, and you may not exercise
your Award, nor do so in any particular manner if the Company determines that
such exercise or the manner of exercise would not be in material compliance
with such laws and regulations.

3. Term. The term of your Award commences on the Date of Grant and expires
upon the earliest of the following:

	•	 	three (3) months after the termination of your employment or service with the Company for any reason other than your
Disability, death or retirement, provided that if during any part of such three (3) month period your Award is not
exercisable solely because of the condition set forth in the preceding paragraph relating to “Securities Law Compliance,”
your Award shall not expire until the earlier of the Expiration Date or until it shall have been exercisable for an
aggregate period of three (3) months after the termination of your Continuous Service;
	 
	•	 	twelve (12) months after the termination of your employment or service with the Company due to your death, Disability or
Retirement;
	 
	•	 	the Expiration Date indicated in this Stock Award Agreement;
	 
	•	 	the date you violated the terms of any Other Agreement (identified below); or
	 
	•	 	the tenth (10th) anniversary of the Date of Grant.

If your Award is an incentive stock option, note that, to obtain the federal
income tax advantages associated with an “incentive stock option,” the Internal
Revenue Code requires that at all times beginning on the date of grant of your
Award and ending on the day three (3) months before the date of your option’s
exercise, you must be an employee of the Company or an Affiliate, except in the
event of your death, Disability or Retirement. The Company has provided for
extended exercisability of your Award under certain circumstances for your
benefit but cannot guarantee that your Award will necessarily be treated as an
“incentive stock option” if you continue to provide services to the Company or
an Affiliate as a Consultant or Director after your employment terminates or if
you otherwise exercise your Award more than three (3) months after the date
your employment terminates.

4. Exercise. You may exercise the vested portion of your Award during its term
by delivering a Notice of Exercise (in a form designated by the Company)
together with the exercise price to the Secretary of the Company, or to such
other person as the Company may designate, during regular business hours,
together with such additional documents as the Company may then require.

By exercising your Award you agree that, as a condition to any exercise of your
Award, the Company may require you to enter into an arrangement providing for
the payment by you to the Company of any tax withholding obligation of the
Company arising by reason of (1) the exercise of your Award, (2) the lapse of
any substantial risk of forfeiture to which the shares of Common

 

 

Stock issued pursuant to a Restricted Stock Award are subject at the time of
exercise, or (3) the disposition of shares of Common Stock acquired upon such
exercise.

If your Award is an incentive stock option, by exercising your Award you agree
that you will notify the Company in writing within fifteen (15) days after the
date of any disposition of any of the shares of the Common Stock issued upon
exercise of your Award that occurs within two (2) years after the date of your
Award grant or within one (1) year after such shares of Common Stock are
transferred upon exercise of your Award.

By exercising your Award you agree that the Company may require that you not
sell, dispose of, transfer, make any short sale of, grant any option for the
purchase of, or enter into any hedging or similar transaction with the same
economic effect as a sale, any shares of Common Stock or other securities of
the Company held by you, for the period of time to which you are or remain
subject to obligations or other restrictive covenants pursuant to the terms of
one or more Additional Agreements (identified below). You further agree to
execute and deliver such other agreements as may be reasonably requested by the
Company that are consistent with the foregoing or that are necessary to give
further effect thereto. In order to enforce the foregoing covenant, the
Company may impose stop-transfer instructions with respect to your shares of
Common Stock until the end of such period.

5. Transferability. Your Award is not transferable, except by will or by the
laws of descent and distribution, and is exercisable during your life only by
you. Notwithstanding the foregoing, by delivering written notice to the
Company, in a form satisfactory to the Company, you may designate a third party
who, in the event of your death, shall thereafter be entitled to exercise your
Award.

6. Company Buyback of Award Shares. In the event the Company, in its sole and
reasonable discretion, determines that you have violated the terms of one or
more Additional Agreements (identified below), then the Company shall have the
right to repurchase from you all or any part of the shares of Common Stock you
have acquired pursuant to the exercise of your Awards under the Plan and such
repurchase shall be at the price you paid for such shares.

7. Award Not a Service Contract. Your Award is not an employment or service
contract, and nothing in your Award shall be deemed to create in any way
whatsoever any obligation on your part to continue in the employ of the Company
or an affiliate, or of the Company or an affiliate to continue your employment.
In addition, nothing in your Award shall obligate the Company or an affiliate,
their respective shareholders, Boards of Directors, Officers or Employees to
continue any relationship that you might have as a Director or Consultant for
the Company or an affiliate.

8. Withholding Obligations. At the time you exercise your Award, in whole or
in part, or at any time thereafter as requested by the Company, you hereby
authorize withholding from payroll and any other amounts payable to you, and
otherwise agree to make adequate provision for (including by means of a
“cashless exercise” to the extent permitted by the Company and as memorialized
hereunder), any sums required to satisfy the federal, state, local and foreign
tax withholding obligations of the Company or an affiliate, if any, which arise
in connection with your Award.

Upon your request and subject to approval by the Company, in its sole
discretion, and compliance with any applicable conditions or restrictions of
law, the Company may withhold from fully vested shares of Common Stock
otherwise issuable to you upon the exercise of your

 

 

Award a number of whole shares of Common Stock having a Fair Market Value,
determined by the Company as of the date of exercise, not in excess of the
minimum amount of tax required to be withheld by law. If the date of
determination of any tax withholding obligation is deferred to a date later
than the date of exercise of your Award, share withholding pursuant to the
preceding sentence shall not be permitted unless you make a proper and timely
election under Section 83(b) of the Code, covering the aggregate number of
shares of Common Stock acquired upon such exercise with respect to which such
determination is otherwise deferred, to accelerate the determination of such
tax withholding obligation to the date of exercise of your Award.
Notwithstanding the filing of such election, shares of Common Stock shall be
withheld solely from fully vested shares of Common Stock determined as of the
date of exercise of your Award that are otherwise issuable to you upon such
exercise. Any adverse consequences to you arising in connection with such
share withholding procedure shall be your sole responsibility.
You may not exercise your Award unless the tax withholding obligations of the
Company and/or any affiliate are satisfied. Accordingly, you may not be able
to exercise your Award when desired even though your Award is vested, and the
Company shall have no obligation to issue a certificate for such shares of
Common Stock or release such shares of Common Stock from any escrow provided
for herein.

9. Notices. Any notices provided for in your Award or the Plan shall be given
in writing and shall be deemed effectively given upon receipt or, in the case
of notices delivered by mail by the Company to you, five (5) days after deposit
in the United States mail, postage prepaid, addressed to you at the last
address you provided to the Company.

10. Governing Plan Document. Your Award is subject to all the provisions of
the Plan, the provisions of which are hereby made a part of your Award, and is
further subject to all interpretations, amendments, rules and regulations which
may from time to time be promulgated and adopted pursuant to the Plan. In the
event of any conflict between the provisions of your Award and those of the
Plan, the provisions of the Plan shall control.

11. Additional Terms/Acknowledgements: The undersigned Grantee acknowledges
receipt of, and understands and agrees to, this Stock Award Agreement and the
Plan. Grantee further acknowledges that as of the Date of Award, this Stock
Award Agreement and the Plan set forth the entire understanding between Grantee
and the Company regarding the acquisition of stock in the Company and supersede
all prior oral and written agreements on that subject with the exception of (i)
Awards previously granted and delivered to Grantee under the Plan, and (ii) the
following agreements only:

	 	 	 
	Other Agreements:

	 	[insert name and date of Non-compete here]
	

	 	

	 
	 	 
	

	 	

	 	 	 	 	 	 	 
	First Community Bancshares, Inc.

	 	Grantee:
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 
	 	
	 	

	

	 	Signature
	 	 	 	Signature
	 
	 	 	 	 	 	 
	Title:

	 	 	 	Date:	 	 
	

	 	

	 	 	 	

	 
	 	 	 	 	 	 
	Date:
	 	 	 	 	 	 
	

	 	
	 	 	 	 

Attachments: Plan, Non-Competition and Non-Solicitation Agreement and Notice of ExerciseDISPUTES  RELATING  TO  THIS  AGREEMENT  ARE  REQUIRED TO BE SETTLED PURSUANT TO
CERTAIN DISPUTE RESOLUTION PROCEDURES AS PROVIDED IN ARTICLE 7 AND APPENDIX A OF
THIS  AGREEMENT.

                              EMPLOYMENT AGREEMENT
                              --------------------

     This  Employment  Agreement (this "Agreement") is entered into effective as
                                        --------
of  the 13th day of May, 2003, between Richard Shore, Jr. ("Employee"), and Penn
                                                            --------
Octane  Corporation,  a  Delaware  corporation  (the "Company"), whose principal
                                                      -------
executive  offices  are  located  in  Palm  Desert,  California.

     WHEREAS, the Company desires to employ Employee, and Employee desires to be
employed  by  the  Company,  on  terms  hereinafter  set  forth;

     WHEREAS,  Shore  Capital  LLC  ("Shore Capital"), an entity wholly owned by
                                      -------------
Employee,  and  Penn  Octane Corporation are parties to a letter agreement dated
November  29,  2002  (the  "Shore  Agreement");  and
                            ----------------

     WHEREAS,  Shore  Capital,  Employee and the Company desire to terminate the
Shore  Agreement  and  release  and  terminate  their  respective  rights  and
obligations  thereunder  as  provided  in  this  Agreement;

     NOW,  THEREFORE, in consideration for the mutual covenants contained herein
and  other good and valuable consideration, the receipt and sufficiency of which
are  hereby  acknowledged,  the  parties  hereto  agree  as  follows:

                                    ARTICLE 1
                                     DUTIES
                                     ------

     1.1  Employment.  During  the term of this Agreement, the Company agrees to
          ----------
employ  Employee  in  the  capacity  as  President,  and  Employee  accepts such
employment,  on  the  terms  and  conditions  set  forth  in  this  Agreement.

     1.2  Extent  of  Service. During the term of this Agreement, Employee shall
          -------------------
devote  his  full-time  business  time,  energy  and skill to the affairs of the
Company  and  its affiliated companies, including, without limitation, Rio Vista
Energy Partners L.P., a Delaware limited partnership to be formed by the Company
("Rio  Vista").  The  provisions  of this Section 1.2 shall not prevent Employee
  ----------                              -----------
from making monetary investments in businesses so long as such business does not
directly  compete  with the Company, Rio Vista or any other entity controlled by
Rio  Vista;  provided,  however, the foregoing shall not, in any event, prohibit
Employee  from purchasing and holding as an investment not more than one percent
(1%)  of  any  class of publicly-traded securities of any entity (other than the
Company or Rio Vista) which conducts a business in competition with the business
of  the  Company  or Rio Vista or any entity controlled by Rio Vista, so long as
Employee  does  not  participate  in  any  way with the management, operation or
control  of  such  entity.

<PAGE>
     1.3 Duties. Employee's duties hereunder shall include such duties as may be
         ------
prescribed  from time to time by the Board. Employee shall also perform, without
additional  compensation,  such  duties  for the Company's affiliated companies.

                                    ARTICLE 2
                               TERM OF EMPLOYMENT
                               ------------------

     The  term  of this Agreement shall commence on the date hereof and continue
for  a  period  of  two  years  unless  earlier terminated pursuant to Article 4
                                                                       ---------
hereof.

                                    ARTICLE 3
                                  COMPENSATION
                                  ------------

     3.1 Monthly Base Salary and Per Annum Payment. As compensation for services
         -----------------------------------------
rendered  under  this  Agreement, Employee shall be entitled to receive from the
Company  a  monthly  base  salary (before standard deductions) equal to $30,000,
subject  to  periodic  review  and  upward  adjustment  by the Board in its sole
discretion (downward adjustment shall not be permitted). Employee's monthly base
salary  shall  be  payable  at  regular  intervals  (at  least  semi-monthly) in
accordance  with  the  prevailing  practice  and  policy  of  the  Company.

     3.2  Stock  Options. As additional compensation for services rendered under
          --------------
this Agreement, Employee or his designees shall receive options (the "Options"),
exercisable  after  the date of the distribution of common units of Rio Vista to
the stockholders of the Company, to purchase 97,415 common units of Rio Vista at
a  per  unit exercise price of $8.47, to purchase 763,737 shares of common stock
of the Company at a per share exercise price of $1.14 and to purchase 25% of the
limited  liability  company  interests  of  Rio Vista GP LLC, a Delaware limited
liability  company  to  be  formed  by the Company as the general partner of Rio
Vista,  at  an  exercise  price  equal  to the pro rata portion of the tax basis
capital  of  Rio Vista immediately after the distribution of common units of Rio
Vista  to  the  stockholders of the Company pursuant to the option agreements in
the  forms  attached  hereto as Exhibit A, Exhibit B and Exhibit C, respectively
                                ---------  ---------     ---------
(collectively,  the  "Option  Agreements").
                      ------------------

     3.3  Benefits.  Employee shall, in addition to the compensation provided
           --------
for  herein,  be  entitled  to  the  following  additional  benefits:

          (a)  Medical,  Health  and  Disability  Benefits.  Employee  shall  be
               -------------------------------------------
entitled  to  receive all medical, health and disability benefits that may, from
time  to  time,  be provided by the Company to all employees of the Company as a
group.

          (b)  Other  Benefits.  Employee  shall also be entitled to receive any
               ---------------
other  benefits  that  may, from time to time, be provided by the Company to all
employees  of  Company  as  a  group.

          (c)  Vacation.  Employee  shall  be  entitled to an annual vacation as
               --------
determined in accordance with the prevailing practice and policy of the Company.

          (d)  Holidays.  Employee  shall  be entitled to holidays in accordance
               --------
with the  prevailing  practice  and  policy  of  the  Company.

                                        2
<PAGE>
          (e)  Reimbursement  of  Expenses. The Company shall reimburse Employee
               ---------------------------
for  all  expenses  reasonably  incurred  by  Employee  in  conjunction with the
rendering  of services at the Company's request, provided that such expenses are
incurred  in  accordance  with the prevailing practice and policy of the Company
and are properly deductible by the Company for federal income tax purposes. As a
condition to such reimbursement, Employee shall submit an itemized accounting of
such  expenses  in  reasonable  detail,  including receipts where required under
federal  income  tax  laws.

                                    ARTICLE 4
                                   TERMINATION
                                   -----------

     4.1  Termination by the Company Without Cause. Subject to the provisions of
          ----------------------------------------
this  Article  4,  this Agreement may be terminated by the Company without cause
      ----------
upon  30  days  prior  written notice thereof given to Employee. In the event of
such  termination,  the  Company  shall  pay  Employee  his  monthly base salary
(subject  to  standard  deductions)  and  per annum payment (subject to standard
deductions)  through  the  remainder  of the term of this Agreement and Employee
shall  be  entitled  to  continue to be covered under the Company's group health
insurance  program  pursuant to benefit continuation as prescribed in the COBRA.
Such  COBRA  benefits  shall commence on the date of termination and the Company
shall  pay,  on  Employee's  behalf, any and all costs associated with extending
such  group  health benefits under COBRA for a period of 12 months following the
termination  date. Payment or performance by the Company in accordance with this
Article  4  shall  constitute  Employee's  full  severance  pay
----------
and the Company shall have no further obligation to Employee arising out of such
termination.

     4.2  Termination For Cause. This Agreement may be terminated by the Company
          ---------------------
for "Cause" (as defined in Section 8.2 herein) upon written notice thereof given
                           -----------
by the Company to Employee. In the event of termination pursuant to this Section
                                                                         -------
4.2, the Company shall pay Employee his monthly base salary (subject to standard
---
deductions)  earned  pro  rata  to  the date of such termination and the Company
shall  have  no  further  obligations  to  Employee  hereunder.

     4.3  Termination Upon Death or Disability. In the event that Employee dies,
          ------------------------------------
this  Agreement  shall  terminate  upon  Employee's death. Likewise, if Employee
becomes  unable to perform the essential functions of his duties hereunder, with
or  without reasonable accommodation, on account of illness, disability or other
reason  whatsoever  for  a period of more than 180 consecutive or nonconsecutive
days in any 12-month period, the Company may, upon notice to Employee, terminate
this  Agreement.  In  the  event  of  termination  pursuant to this Section 4.3,
                                                                    ------------
Employee  (or  his  legal representatives) shall be entitled only to his monthly
base  salary earned pro rata for services actually rendered prior to the date of
such  termination;  provided,  however,  to  the  extent  to  which Employee has
received  short-term  or  long-term  disability  benefits under employee benefit
plans  maintained  from  time  to  time  by  the Company, such benefits shall be
deducted  from  his  monthly  base  salary.

     4.4  Voluntary Termination by Employee for Good Reason. Employee may at any
          -------------------------------------------------
time  voluntarily  terminate his employment for "good reason" (as defined below)
upon  30  days  prior  written notice thereof to the Company. In such event, the
Company  shall  pay  Employee  his  monthly  base  salary  (subject  to standard
deductions)  and  per  annum  payment  (subject  to  standard

                                        3
<PAGE>
deductions)  through  the remainder of the term of this Agreement.  For purposes
of  this  Agreement,  "good  reason"  shall  mean  the  occurrence of any of the
following  events:

          (a)  Removal  from  the  offices  Employee  holds  on the date of this
Agreement or a material reduction in Employee's authority or responsibility, but
not  including  termination  of  Employee for "cause," as defined in Section 8.2
                                                                     -----------
herein;  or

          (b) The Company otherwise commits a material breach of this Agreement.

     4.5  Termination by Employee. This Agreement may be terminated by Employee,
          -----------------------
without  cause,  upon 30 days' prior written notice thereof given by Employee to
the  Company.  In  the  event  of  termination pursuant to this Section 4.5, the
                                                                -----------
Company  shall  pay  Employee  his  monthly  base  salary  (subject  to standard
deductions)  earned  pro  rata  to  the date of such termination and the Company
shall  have  no  further  obligations  to  Employee  hereunder.

     4.6  Survival  of Provisions. The covenants and provisions of Articles 5, 6
          ------------------------                                 -------------
and  7  hereof  shall survive any termination of this Agreement and continue for
-----
the  periods indicated, regardless of how such termination may be brought about.

     4.7  Options.  Termination under this Article 4 shall affect the Options in
          -------                          ---------
accordance  with  the  provisions  of  the  Option  Agreements.

                                    ARTICLE 5
                 PROPRIETARY PROPERTY; CONFIDENTIAL INFORMATION
                 ----------------------------------------------

     5.1  Proprietary  Property; Confidential Information. Employee acknowledges
          -----------------------------------------------
that  in  and  as  a result of Employee's employment hereunder, Employee will be
making  use  of,  acquiring  and/or  adding  to  Confidential  Information. As a
material  inducement  to  the Company to enter into this Agreement and to pay to
Employee  the  compensation  and  benefits stated herein, Employee covenants and
agrees  that  Employee  shall  not,  at any time during or following the term of
Employee's  employment,  directly  or  indirectly,  divulge  or disclose for any
purpose  whatsoever  any  Confidential Information or proprietary information of
the  Company.  Upon  termination  of  this  Agreement,  regardless  of  how such
termination  may be brought about, Employee shall deliver to the Company any and
all documents, instruments, notes, papers or other expressions or embodiments of
confidential  information  which  are  in  Employee's  possession  or  control.

     5.2  Publicity.  During  the term of this Agreement and for a period of ten
          ---------
years  thereafter,  Employee  shall  not,  directly  or indirectly, originate or
participate  in  the  origination of any publicity, news release or other public
announcements,  written  or  oral,  whether  to  the  public press or otherwise,
relating  to  this  Agreement, to any amendment hereto, to Employee's employment
hereunder  or to the Company, without the prior written approval of the Company.

                                    ARTICLE 6

                             [INTENTIONALLY OMITTED]
                             -----------------------

                                        4
<PAGE>
                                    ARTICLE 7
                                   ARBITRATION
                                   -----------

     Except  for  the  provisions  of  Article  5 of this Agreement dealing with
                                       ----------
proprietary  property  and  confidential  information, with respect to which the
Company expressly reserves the right to petition a court directly for injunctive
and  other  relief,  any claim, dispute or controversy of any nature whatsoever,
including  but  not  limited  to  tort  claims  or contract disputes between the
parties  to this Agreement or their respective heirs, executors, administrators,
legal  representatives, successors and assigns, as applicable, arising out of or
related  to Employee's employment or the terms and conditions of this Agreement,
including  the implementation, applicability or interpretation thereof, shall be
resolved  in  accordance  with  the  dispute  resolution procedures set forth in
Appendix  A  attached  hereto  and  made  a  part  hereof.
-----------

                                    ARTICLE 8
                                   DEFINITIONS
                                   -----------

     8.1  "Board"  shall  mean  the  Board  of  Directors  of  the  Company.
           -----

     8.2  "Cause"  shall  be  exclusively  limited  to  the  following,  as
           -----
determined by the Board in its sole judgment: (i) Employee breaches any material
terms  of this Agreement; (ii) Employee is convicted of a felony; (iii) Employee
fails,  after  at  least  one  warning,  to  perform  duties assigned under this
Agreement  (other than a failure due to death or physical or mental disability);
(iv)  Employee  intentionally  engages  in  conduct  which  is  demonstrably and
materially  injurious  to  the  Company;  (v) Employee commits fraud or theft of
personal  or  Company  property  from  Company premises; (vi) Employee falsifies
Company  documents  or  records;  (vii)  Employee  engages  in  acts  of  gross
carelessness  or  willful  negligence  to  endanger  life or property on Company
premises; (viii) Employee uses, distributes or is under the influence of illegal
drugs,  alcohol or other intoxicant on Company premises; (ix) Employee possesses
or  stores hand guns on Company premises; or (x) Employee intentionally violates
state,  federal  or  local  laws  and regulations in the course and scope of his
employment.

     8.3  "COBRA"  means  the  Consolidated  Omnibus  Budget Reconciliation Act.
           -----

     8.4  "Confidential  Information"  means  that  information  and proprietary
           -------------------------
property  belonging  to  the  Company  or its affiliates of a special and unique
nature  and  value  relating  to  such  matters  as the Company's trade secrets,
systems,  procedures  manuals,  financial  data,  confidential reports, business
strategies  and  list  of  customers.

                                    ARTICLE 9
                                  MISCELLANEOUS
                                  -------------

     9.1  Notices.  All  notices  and other communications hereunder shall be in
          -------
writing  and  shall  be  deemed to have been duly given if delivered personally,
mailed  by  certified  mail  (return  receipt requested) or sent by an overnight
delivery  service with tracking procedures or by facsimile to the parties at the
following  addresses  or  at  such  other addresses as shall be specified by the
parties  by like notice: If to Employee, at the address set forth below his name
on  the  signature  page  hereof; and if to the Company, at 77-530 Enfield Lane,
Building  D, Palm Desert, California 92211, Attention: Chairman of the Board and
Chief  Executive  Officer.

                                        5
<PAGE>
     9.2  Equitable  Relief.  In the event of a breach or a threatened breach by
          -----------------
Employee  of  any  of  the  provisions contained in Article 5 of this Agreement,
                                                    ---------
Employee  acknowledges that the Company will suffer irreparable injury not fully
compensable  by  money  damages and, therefore, will not have an adequate remedy
available  at  law.  Accordingly,  the  Company shall be entitled to obtain such
injunctive  relief  or  other  equitable  remedy  from  any  court  of competent
jurisdiction  as  may be necessary or appropriate to prevent or curtail any such
breach,  threatened or actual. The foregoing shall be in addition to and without
prejudice to any other rights that the Company may have under this Agreement, at
law  or  in equity, including, without limitation, the right to sue for damages.

     9.3 No Rights in Contracts. Employee acknowledges and agrees that he or she
         ----------------------
shall  not  have  any rights in or to any contracts entered into with clients or
customers  of  the  Company  in  connection  with  services provided by Employee
hereunder  (including those in which Employee may be specifically named with the
Company),  unless  otherwise  agreed  to  in  writing  by  the  Company.

     9.4  Assignment.  The  rights  and  obligations  of  the Company under this
          ----------
Agreement shall inure to the benefit of and shall be binding upon the successors
and  assigns  of  the  Company.  Employee's  rights under this Agreement are not
assignable  and  any  attempted  assignment  thereof  shall  be  null  and void.

     9.5  Governing  Law. This Agreement shall be subject to and governed by the
          --------------
laws  of  the  State  of  Texas.

     9.6  Entire  Agreement; Release; Amendments. This Agreement constitutes the
          --------------------------------------
entire agreement between the parties and supersedes all other agreements between
the  parties which may relate to the subject matter contained in this Agreement.
Without limiting the foregoing, the Shore Agreement is heareby terminated in its
entirety,  the  parties thereto hereby waive and release all of their respective
rights  and  obligations  under  the  Shore Agreement, and Shore Capital LLC and
Employee  hereby release the Company and its employees, directors and affiliates
from  any  and  all claims arising under or related to the Shore Agreement. This
Agreement may not be amended or modified except by an agreement in writing which
refers  to  this  Agreement  and  is  signed  by  both  parties.

     9.7  Headings.  The  headings of sections and subsections of this Agreement
          --------
are  for  convenience only and shall not in any way affect the interpretation of
any  provision  of  this  Agreement  or  of  the  Agreement  itself.

     9.8 Severability. Whenever possible, each provision of this Agreement shall
         ------------
be interpreted in such manner as to be effective and valid under applicable law.
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  or invalidity, without invalidating the remainder of such provision
or  the  remaining  provisions  of  this  Agreement.

     9.9  Waiver.  The  waiver  by any party of a breach of any provision hereof
          ------
shall  not  be deemed to constitute the waiver of any prior or subsequent breach
of  the  same  provision or any other provisions hereof. Further, the failure of
any  party  to  insist  upon  strict  adherence  to  any

                                        6
<PAGE>
term of this Agreement on one or more occasions shall not be considered a waiver
or deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement unless such party expressly waives
such  provision  pursuant to a written instrument which refers to this Agreement
and  is  signed  by  such  party.

                        (Signatures on following page.)

                                        7
<PAGE>
     IN WITNESS WHEREOF, the parties have executed this Employment Agreement as
of the day and year first above written.

                                PENN  OCTANE  CORPORATION

                                By: /s/ Jerome B. Richter
                                --------------------------
                                Jerome B. Richter,
                                Chief Executive Officer

                                EMPLOYEE:

                                /s/ Richard Shore, Jr.
                                -------------------------
                                Richard  Shore,  Jr.

                                Address:     12 Green Valley Dr.
                                             Lafayette,  CA  94549

ACCEPTED AND AGREED TO FOR
PURPOSES OF THE WAIVER AND
RELEASE UNDER SECTION 9.6:

SHORE CAPITAL LLC

By:/s/ Richard Shore, Jr.
   -----------------------------------
       Richard Shore, Jr., President

                                        8
<PAGE>
                                   APPENDIX A

                          DISPUTE RESOLUTION PROCEDURES
                          -----------------------------

     Re:  Employment Agreement effective May 13, 2003 (including any amendments,
the  "Agreement"),  between Penn Octane Corporation, a Delaware corporation (the
      ---------
"Company"),  and  Richard  Shore,  Jr. ("Employee"). Unless otherwise defined in
 -------                                 --------
this  Appendix  A, terms defined in the Agreement and used herein shall have the
meanings  set  forth  therein.

     A.  Negotiations. If any claim, dispute or controversy described in Article
         ------------                                                    -------
7  of  the  Agreement (collectively, the "Dispute") arises, either party may, by
-                                         -------
written notice to the party, have the Dispute referred to the persons designated
below  for  attempted resolution by good faith negotiations within 45 days after
such  written  notice  is  received.  Such  designated  persons  are as follows:

          1.  Company.  The Chairman of the Board and Chief Executive Officer or
              -------
his  designee;  and

          2.  Employee.  Employee  or  his  designee.
              --------

Any  settlement  reached  by  the  parties  under  this paragraph A shall not be
binding  until  reduced  to writing and signed by both parties.  When reduced to
writing, such settlement agreement shall supersede all other agreements, written
or  oral,  to  the extent such agreements specifically pertain to the matters so
settled.  If  the  above-designated  persons  are unable to resolve such dispute
within such 45-day period, either party may invoke the provisions of paragraph B
below.

     B.  Arbitration.  All  Disputes  shall  be settled by negotiation among the
         -----------
parties  as  described  in  paragraph  A  above  or,  if  such  negotiation  is
unsuccessful,  by binding arbitration in accordance with procedures set forth in
paragraphs  C  and  D  below.

     C.  Notice.  Notice of demand for binding arbitration by one party shall be
         ------
given in writing to the other party pursuant to the Agreement. In no event may a
notice  of demand of any kind be filed more than one (1) year after the date the
Dispute  is first asserted in writing to the other party pursuant to paragraph A
above,  and  if  such  demand is not timely filed, the Dispute referenced in the
notice  given  pursuant  to  paragraph A above shall be deemed released, waived,
barred  and  unenforceable  for  all  time,  and  barred  as  if  by  statute of
limitations.

     D.  Binding  Arbitration.  Upon  filing  of  a notice of demand for binding
         --------------------
arbitration  by  either  party,  arbitration shall be commenced and conducted as
follows:

          1.  Arbitrators. All Disputes and related matters in question shall be
              -----------
referred  to  and  decided  and  settled  by  a  panel of three arbitrators, one
selected  by the Company, one selected by Employee and the third selected by the
two  arbitrators so selected. Selection of the arbitrators to be selected by the
Company  and Employee shall be made within ten (10) business days after the date
of  giving  of  a  notice  of demand for arbitration, and the two arbitrators so
appointed  shall  appoint  the  third  within  10  business days following their
appointment.

<PAGE>
          2. Cost of Arbitration. The cost of arbitration proceedings, including
             -------------------
without  limitation  the  arbitrators'  compensation  and expenses, hearing room
charges,  court  reporter transcript charges etc., shall be borne by the parties
equally or otherwise as the arbitrators may determine. The arbitrators may award
the  prevailing  party  its  reasonable  attorneys'  fees  and costs incurred in
connection  with the arbitration. The arbitrators are specifically instructed to
award  attorneys'  fees  for  instances  of  abuse  in  the  discovery  process.

          3.  Location of Proceedings. The arbitration proceedings shall be held
              ------------------------
in  Houston,  Texas,  unless  the  parties  agree  otherwise.

          4.  Pre-hearing Discovery. The parties shall have the right to conduct
              ---------------------
and  enforce  pre-hearing  discovery in accordance with the then current Federal
Rules  of  Civil  Procedure,  subject  to  these  limitations:

               (a)  Each party may serve no more than one set of interrogatories
limited  to  30  questions,  including  sub-parts;

               (b)  Each party may depose the other party's expert witnesses who
will be called to testify at the hearing, plus two fact witnesses without regard
to  whether  they  will  be  called to testify (each party will be entitled to a
total  of  no  more  than  24  hours  of  deposition  time  of the other party's
witnesses),  provided  however,  that the arbitrators may provide for additional
depositions  upon  showing  of  good  cause;  and

               (c)  Document  discovery  and  other discovery shall be under the
control  of  and  enforceable  by  the  arbitrators.

          5.  Discovery disputes. All discovery disputes shall be decided by the
              ------------------
arbitrators.  The  arbitrators  are  empowered;

               (a)  to  issue  subpoenas  to  compel  pre-hearing  document  or
deposition  discovery;

               (b)  to  enforce  the  discovery  rights  and  obligations of the
parties;  and

               (c)  to  otherwise  to  control the scheduling and conduct of the
proceedings.

Notwithstanding  any  contrary  foregoing provisions, the arbitrators shall have
the  power  and  authority  to,  and  to  the  fullest extent practicable shall,
abbreviate  arbitration  discovery  in  a manner which is fair to all parties in
order  to  expedite  the  conclusion  of  each  alternative  dispute  resolution
proceeding.

          6. Pre-hearing Conference. Within fifteen (15) days after selection of
             ----------------------
the  third  arbitrator,  or  as soon thereafter as is mutually convenient to the
arbitrators,  the  arbitrators  shall hold a pre-hearing conference to establish
schedules  for  completion  of  discovery,  for  exchange of exhibit and witness
lists,  for  arbitration  briefs  and  for the hearing, and to decide procedural
matters  and  address  all  other  questions  that  may  be  presented.

<PAGE>
          7.  Hearing Procedures. The hearing shall be conducted to preserve its
              -------------------
privacy  and  to allow reasonable procedural due process. Rules of evidence need
not  be  strictly  followed,  and  the  hearing shall be streamlined as follows:

               (a)  Documents  shall  be  self-authenticating,  subject to valid
objection  by  the  opposing  party;

               (b)  Expert  reports,  witness  biographies,  depositions  and
affidavits  may  be  utilized,  subject  to  the  opponent's  right  of  a  live
cross-examination  of  the  witness  in  person;

               (c)  Charts,  graphs  and  summaries shall be utilized to present
voluminous  data, provided (i) that the underlying data is made available to the
opposing party thirty (30) days prior to the hearing, and (ii) that the preparer
of  each  chart,  graph  or  summary  is  available  for  explanation  and  live
cross-examination  in  person;

               (d)  The  hearing  should  be  held  on consecutive business days
without  interruption  to  the  maximum  extent  practicable;  and

               (e)  The  arbitrators  shall establish all other procedural rules
for  the  conduct of the arbitration in accordance with the rules of arbitration
of  the  Center  for  Public  Resources.

          8. Governing Law. This arbitration provision shall be governed by, and
             --------------
all  rights  and obligations specifically enforceable under and pursuant to, the
Federal  Arbitration  Act  (9  U.S.C.  Sec.  1,  et  seq.)

          9.  Consolidation.  No  arbitration  shall  include, by consolidation,
              -------------
joinder  or  in  any  other  manner,  any  additional  person not a party to the
Agreement,  except  by  written  consent  of  both parties containing a specific
reference  to  these  provisions.

          10. Award. The arbitrators are empowered to render an award of general
              -----
compensatory  damages  and  equitable  relief  (including,  without limitations,
injunctive  relief),  but  are  not  empowered  to  award  exemplary, special or
punitive  damages. The award rendered by the arbitrators (a) shall be final, (b)
shall  not  constitute  a  basis for collateral estoppel as to any issue and (c)
shall  not  be  subject  to  vacation  or  modification.

          11. Confidentiality. The parties hereto will maintain the substance of
              ---------------
any  proceedings  hereunder  in  confidence  and  the  arbitrators, prior to any
proceedings  hereunder,  will sign an agreement whereby the arbitrators agree to
keep  the  substance  of  any  proceedings  hereunder  in  confidence.

<PAGE>
                                    EXHIBIT A

                         RIO VISTA ENERGY PARTNERS L.P.
                         ------------------------------

                                     OPTION
                                     ------

<PAGE>
                                    EXHIBIT B

                             PENN OCTANE CORPORATION
                             -----------------------

                                     OPTION
                                     ------

<PAGE>
                                    EXHIBIT C

                                RIO VISTA GP LLC
                                ----------------

                                     OPTION
                                     ------

<PAGE>

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