AMENDMENT OF THE
INTERIM OPERATING AGREEMENT
DATED: As of March 21, 1997
The parties agree that they will amend the Interim Operating Agreement between
Xxxxxx Technologies Incorporated and Xxxxxx Acquisition Corporation dated
March 7, 1997 in the following manner:
1. Xxxxxx Acquisition Corporation ("WAC") will purchase inventory and
other assets (excluding accounts receivable) of Xxxxxx Technologies
Incorporated ("WTI") at an agreed price of $394,000.00 to be paid to WTI in
cash in 7 equal $42,000.00 payments to be made per the following schedule:
Two payments at closing of the unamended agreement, and one payment on
each of the following dates:
March 20, 1997
April 5, 1997
April 20, 1997
May 5, 1997, and
May 20, 1997
The balance of $100,000.00 will be payable in the form of a note payable
20% per year with interest at the prime rate, with the first payment due June
5, 1998.
2. The Cessation Notice shall be effective without any further notice and
allow assumption of all S,G&A expenses by WAC on June 1, 1997 (including
selection of which WTI employees will be retained by WAC).
WAC will allow a single individual (SAFECO job manager, currently
anticipated to be Xxxx Xxxxxxxxx) to be selected by WTI to be used for the
purpose of completing all field related activity of SAFECO bonded jobs (WORK
to be directed by WTI). Salary and expenses of this individual will be
reimbursed to WAC by WTI. It is anticipated this SAFECO job manager will be
required on a full-time basis for 30 to 60 days after the Cessation Notice,
with a reduced activity period extending beyond this full-time period. Notice
will be given to WAC by WTI when the SAFECO job manager's full-time activity
is completed, and a sharing of his related expenses on a go forward basis will
be agreed to by the parties at this time.
Note there are no changes anticipated in the original agreement relating
to the 40 man hours per week to be made available to WTI on a cost free basis
(to be directed by the SAFECO job manager) except that it will continue for as
long as the SAFECO job manager is on his full-time basis. In addition, at the
conclusion of the SAFECO job manager's full-time basis, it is agreed this
ratio of time by the SAFECO job manager to free man-hours will continue during
the SAFECO job manager's reduced activity period, i.e., if the SAFECO job
manager is working 20 hours paid by WTI, WAC will furnish 20 hours of
additional man-hours before charging cost plus 10%.
WAC will have the right to hire any WTI employees effective June 1, 1997.
The parties are aware that WAC will assume 1 years vacation liability as of
May 31, 1997. The remaining amounts as of May 31, 1997, when paid to the
employees will be reimbursed by WTI or offset against the note or any
inventory or other assets purchased by WAC. In addition, Xx. Xxxx Xxxxxxxxx
will be the expense of WTI as the SAFECO job manager as set forth above.
WTI will be responsible for reimbursing WAC for any allocable employee
and material expenses (not including the free employee hours set forth above)
at a rate of cost plus 10% to finish warranty, SAFECO or other tasks which are
not related to Penn Wilson-CNG.
3. WAC will have the right to use the name Penn Wilson-CNG, or any name
which may include Xxxxxx, or any derivation thereof.
4. WAC shall have the right to carry on its CNG business.
5. WAC will have the right to assume, and have assigned, if desired, the
Service Contracts.
6. WTI will be entitled to receive royalties for a cumulative amount of $2
million, less any mutually agreed upon offsets. Thus far, the parties are
aware of several items, such as payments for the benefit of WTI to Xxx Xxxxx
and other "old Xxxxxx" payments which have been agreed upon to date. The
royalty will be calculated at 5% of Net Revenue as defined in and payable on
the terms set forth on Exhibit A to the Purchase Agreement.
7. All signatories (WTI, ZHI, WAC and POC) will exchange mutual general
releases as soon as practicable following the date hereof.
8. Except to the extent set forth herein and in Paragraph 15 of the
Purchase Agreement, the Interim Operating Agreement and the Purchase Agreement
referred to herein are hereby terminated.
Agreed to as of the date set forth above by:
BUYER COMPANY
Xxxxxx Acquisition Corporation Xxxxxx Technologies Incorporated
By: By: /s/ XXX X. XXXXXXXX /S/ XXXXX XXXXXX
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XXX X. XXXXXXXX XXXXX XXXXXX
Title: SECRETARY AND TREASURER Title: SENIOR VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
Penn Octane Corporation Xxxxxxxxx Holdings, Inc.
By: /s/ XXX X. XXXXXXXX By: /S/ XXXXX XXXXXX
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XXX X. XXXXXXXX XXXXX XXXXXX
Title: VICE PRESIDENT AND CHIEF FINANCIAL Title: SENIOR VICE PRESIDENT AND
OFFICER CHIEF FINANCIAL OFFICER
