EMPLOYMENT AGREEMENT

        THIS EMPLOYMENT AGREEMENT (the "Employment Agreement") is made this 21^st day of October, 2002, by and between PNG CORPORATION, a Delaware corporation (hereinafter referred to as "the Company"), and WILLIAM G. JANACEK, an individual residing at 47 W. Rock Wing Place, The Woodlands, TX 77381 (hereinafter referred to as the "Executive").

W I T N E S S E T H:

        WHEREAS, the Executive presently serves as an officer of the Company and possesses skills and knowledge in the field of business of the Company, and is familiar with the business affairs, concerns, personnel and customers and potential customers of the Company; and

        WHEREAS, the Company desires to secure the continued employment and assistance of the Executive and is willing to provide to the Executive the compensation and benefits described herein; and

        WHEREAS, the Executive is willing to continue employment with the Company pursuant to the terms and conditions of this Employment Agreement;

        NOW THEREFORE, in consideration of the agreements and covenants set forth herein, the Company and the Executive hereby agree as follows:

ARTICLE ONE
EMPLOYMENT, TITLE AND DUTIES

        SECTION 1.1    Employment and Title.    The Executive hereby agrees to perform services in the employ of the Company during the Employment Term (as such term in hereinafter defined) of this Employment Agreement and the Company hereby employs the Executive during such Employment Term, in accordance with the provisions of this Employment Agreement. During the Employment Term, the Executive's title will be President and Chief Operating Officer of the Company. In his capacity as President and Chief Operating Officer, the Executive shall report to the Board of Directors of the Company.

        SECTION 1.2    Duties.    The Executive shall have those duties and responsibilities that are assigned to him from time to time by the Board of Directors during the Employment Term of this Employment Agreement. The Executive shall exercise due diligence and reasonable care, and use his best efforts, in the performance of his duties and responsibilities and to maintain and enhance the business and reputation of the Company.

ARTICLE TWO
EXCLUSIVITY OF SERVICE

        SECTION 2.1    Exclusive Service.    The Executive agrees to devote substantially all of his business time, efforts and attention to the business and affairs of the Company on an exclusive basis, and not to engage in any other business activities for any person or entity, other than as expressly provided in this Section 2.1. The Executive may engage in personal investment activities that do not materially affect the performance of the Executive's duties hereunder. The Executive may also expend reasonable time as determined by the Board of Directors of the Company (the "Board"), in its sole discretion, in charitable or civic activities.

ARTICLE THREE
TERM

        SECTION 3.1    Employment Term.    Unless earlier terminated as contemplated herein, the term of this Employment Agreement will begin on September 1, 2002 and end on March 1, 2004 (hereinafter referred to as the "Employment Term"), unless sooner terminated pursuant to Section 3.2.

        SECTION 3.2    Early Termination.    Notwithstanding the provisions of Section 3.1 hereinabove, the Employment Term of this Employment Agreement shall cease upon the first to occur of the events described below in this Section 3.2.

        (a)    Death or Disability.    If the Executive shall die or become "Disabled" (as hereinafter defined), this Employment Agreement shall terminate, except for the provisions of Articles Six and Seven. In such event, notwithstanding the termination of this Employment Agreement, the Executive (or his estate, as the case may be) shall be entitled to (i) the Base Salary described in Section 4.1 to the date of death or Disability and (ii) project bonuses, if any, accrued under Section 4.2 to the date of death or Disability. For purposes of this Employment Agreement, the Executive shall be "Disabled" on the date the Executive is determined to be physically or mentally incapable, with or without accommodation, of performing the usual and normal functions of his position, and has been so for a consecutive period of 3 months (or 120 days out of a 180 day period) as evidenced by a physician's certification that is acceptable to the Company in good faith.

        (b)    Voluntary Resignation.    In the event that the Executive shall resign from employment with the company other than due to Constructive Termination (as hereinafter defined), then, as of the effective date of such resignation or as of any earlier date determined by the Board following receipt of such resignation, this Employment Agreement shall terminate except for the provisions of Articles Six and Seven. The effective date of any resignation submitted by the Executive shall not be less than 30 days from the date of the giving of such notice. In such event, the Executive shall be entitled to (i) his Base Salary through the date upon which the Executive's employment shall terminate and (ii) project bonuses, if any, accrued under Section 4.2 prior to the effective date of such resignation. After the payment of such Base Salary, no further compensation or benefits shall be due under this Employment Agreement. The Executive agrees that the amounts the Executive has received before resignation are sufficient consideration to support the provisions of Articles Six and Seven.


 

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