PENN OCTANE CORPORATION
AGREEMENTFOR EXCHANGE OF WARRANTS FOR COMMON STOCK
1. Penn Octane Corporation (Penn Octane) hereby offers to exchange shares
of its Common Stock, $0.01 par value per share (Common Stock), for all (but
not less than all) outstanding warrants to purchase Common Stock held by
Xxxxxx X. Xxxxxxx (Xxxxxxx) (260,000 warrant) at an exchange rate of 4.4
warrants for each share of Common Stock, or an aggregate of 59,091 shares of
Common Stock.
2. Penn Octane agrees that the Common Stock so exchanged shall be included
in the next registration statement (other than with respect to an employee
benefit plan) filed by the Company, but in no event shall the Company fail to
file such a registration statement with the Securities and Exchange Commission
later than six months following the date hereof.
3. In the event that such Common Stock is registered as part of an
underwritten offering by the Company, Serleth agrees to be bound by the same
underwriters' conditions regarding sale of the registered stock and other
matters as the Company and all other sellers. Penn Octane shall use
reasonable efforts to limit Serleth's "lock up" period, if any, for any Common
Stock acquired in this exchange and not purchased by the underwriter to not
longer than ninety days, although the parties recognize that such decision is
solely that of the underwriter.
4. If the lock up period referred to in paragraph 3 exceeds ninety days,
Serleth may elect not to include his stock in the registration and the Company
shall, within a reasonable period of time but not later than six months
following the underwriting, file a separate registration for the sale of
Serleth's shares.
5. Serleth represents and warrants:
a) he is the record and beneficial owner of the warrants with full power
and authority to convey such warrants to Penn Octane free of any liens or
encumbrances or interests of third party;
b) he is familiar with the business and financial condition, properties,
operations and prospects of Penn Octane, has been given full access to all
material information with respect thereto, and has had an opportunity to ask
questions of and receive information from Penn Octane and persons acting on
its behalf;
c) he has made, either alone or with his advisors, such independent
investigation of Penn Octane, its operations and related matters as he and/or
his advisors have deemed necessary or advisable in connection with the
exchange referred to above, and has received all information and data deemed
necessary in order to reach an informed decision as to the advisability of
such exchange; and
d) he is acquiring the Common Stock in such exchange for his own account
for investment and with no intention of engaging in any distribution of such
shares, will not dispose of any of such shares except in compliance with
applicable securities laws, and agrees that any certificate(s) representing
such shares may contain an appropriate legend to such effect.
6. By his execution hereof, Serleth agrees to the above-described exchange
of Common Stock
for warrants on the terms herein set forth. The Closing on such exchange
shall take place
at the office of the Company, 0000 Xxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx
00000, at
10:00 A.M. Houston time on Friday, February 28, 1997. Promptly following
the Closing,
Serleth will file any required reports of ownership changes with the
Securities and
Exchange Commission.
Dated February 19, 1997 Penn Octane Corporation
By: /S/ XXX X. XXXXXXXX
____________________________
Xxx X. Xxxxxxxx, Vice President
