AGREEMENT
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This Agreement is entered into on September 16, 1999 by and between CPSC
INTERNATIONAL, INC., a Texas corporation ("CPSC") and PENN OCTANE CORPORATION, a
Delaware corporation ("POC") on the terms and conditions set forth below.
1. POC hereby agrees to purchase from CPSC at a purchase price of Three
Million Dollars ($3,000,000.00), a thirty percent (30%) interest in those two
(2) certain Lease/Installment Purchase Agreements (including all amendments,
modifications, extensions and revisions thereof) between POC and CPSC (hereafter
referred to as "CPSC Pipeline Agreements") involving the construction and
leasing of two (2) fifteen (15) mile and two (2) seven (7) mile pipelines in
South Texas and Mexico respectively which are subject to a preexisting agreement
between the Parties. Said Purchase Price will be due and payable the later of
ten (10) days after the Substantial Completion Date as defined in by CPSC
Pipeline Agreements or January 3, 2000. Said payment date is hereinafter
referred to as the "Closing Date." In no event shall POC have any obligation to
contribute to CPSC's expenses in reaching the Substantial Completion Date. CPSC
warrants and represents that POC's purchase of at thirty percent (30%) interest
shall generate a minimum of Fifty-Four Thousand Dollars ($54,000.00) per month
in POC income provided that the lessee is not in default under the lease. The
purchase of a fifty percent (50%) interest will generate a guaranteed minimum
income to POC of Ninety Thousand Dollars ($90,000.00) provided that the lessee
is not in default under the lease.
2. To secure payment of the Three Million Dollar ($3,000,000.00) Purchase
Price, POC will assign its rights to the proceeds (subject to a preexisting
attorney's lien) of the pending Judgment in International Energy Development
Corporation vs. International Bank of Commerce-Brownsville entered on February
28th 1996 by the 197th Judicial District of Cameron County, Texas Civil Action #
94-08-4008-C (the "Judgment"). To the extent POC's interest in the Judgment is
less than the full Purchase Price, POC will make up the difference on the
Closing Date. In the event POC's interest in the Judgment is of a value in
excess of the Purchase Price, the excess will be paid to POC. In the event the
Judgment is not paid by the Closing Date, at the election of CPSC, POC will make
immediate payment of the Purchase Price within five days of CPSC's election and
the assignment of the Judgment will be returned to POC. At CPSC's election,
which shall be made within ten (10) days of the Substantial Completion Date,
CPSC may instead keep the Judgment and apply it to the Purchase Price rather
than demand payment, provided, however, any Judgment amount in excess of Three
Million Dollars ($3,000,000.00) will remain the property of POC. Upon said
election, CPSC shall be entitled to any and all interest accumulating on the
first Three Million Dollars ($3,000,000.00) of the Judgment.
3. In return for an immediate payment of Fifty Thousand Dollars
($50,000.00), POC shall have the option for ninety (90) days after the Closing
Date to purchase an additional twenty percent (20%) interest in the CPSC
Pipeline Agreements from CPSC for an additional payment of Two Million Dollars
($2,000,000.00). POC shall have a second, separate and additional option to
purchase an additional fifty percent (50%) interest in the CPSC pipeline from
CPSC within ninety (90) days after the Closing Date for an additional payment
of Seven Million Dollars ($7,000,000.00). In the event POC exercises both of
these options, CPSC's entire interest in the CPSC Pipeline Agreements will have
been purchased by POC.
4. POC shall retain all other options to purchase CPSC's interest in the
CPSC Pipeline Agreements as set forth in said agreements, provided that the
Purchase Price of those options will be adjusted to reflect POC's purchase(s) of
CPSC's interest on a percentile basis.
5. Although the Parties intend to negotiate in good faith to reach a more
definitive agreement, in the absence of a further written agreement, this
agreement shall be binding and controlling.
6. In the event of bringing any action or suit by a party hereto by reason
of any breach of this agreement, the prevailing party shall be entitled to
recover all costs and expenses of that action or suit, arbitration, trial and on
appeal as well as in collection of Judgment, including reasonable attorney's
fees, accounting, and other professional fees resulting there from.
"POC" "CPSC"
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Penn Octane Corporation CPSC International, Inc.
By: Xxxxx Xxxxxxx By: Xxxx XxXxxx
Title: President Title: President
