EXHIBIT 10.06
EQUIPMENT ACQUISITION AGREEMENT
-------------------------------
THIS EQUIPMENT ACQUISITION AGREEMENT (hereinafter referred to as the
"Agreement") is effective the 18th day of October, 2002 by and between PENN
OCTANE CORPORATION, INC., a Delaware corporation (hereinafter referred to as
"POC") and PENN WILSON CNG, INC., a California corporation, on the one hand, and
B&A ECO-HOLDINGS, INC., a Delaware corporation (hereinafter referred to as "B&A"
or "Buyer") and XXX X. XXXXXXXX (hereinafter referred to as "Xxxxxxxx"), on the
other hand.
RECITALS
--------
A. B&A desires to transfer, and POC desires to acquire, that certain
equipment set forth in this Agreement, on the terms and conditions provided
herein, as payment in full of the remaining balance on that promissory note in
the amount of $300,000 in which POC is the payee and B&A and Xxxxxxxx are the
makers (the "$300,000 Note") and payment in full of that promissory note in the
amount of $498,000 in which Xxxxxxxx is the maker and POC is the payee (the
"$498,000 Note").
B. The equipment, further described herein, is currently owned by B&A,
some which was acquired by B&A from POC and CNG pursuant to that asset
acquisition agreement dated April 15, 1999, as amended (the "1999 Purchase
Agreement"). The 1999 Purchase Agreement consisted of a sale of certain assets
to B&A in exchange for two promissory notes - the $300,000 Note and a promissory
note in the amount of $900,000 in which B&A was the maker and POC was the payee
(the "$900,000 Note"), a stock pledge and security agreement by Xxxxxxxx dated
April 15, 1999 (the "Security Agreement") and two (2) UCC-1 security filings in
the acquired assets.
C. B&A and Xxxxxxxx each have knowledge and experience related to the
industry and have determined that this transaction is in their respective best
interest.
D. POC and CNG each have knowledge and experience related to the
industry and have determined that this transaction is in their respective best
interest.
NOW, THEREFORE, IN CONSIDERATION OF the mutual covenants, representations,
and warranties contained in this Agreement, and other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the
parties hereto agree as follows:
AGREEMENT
---------
SECTION 1. SALE OF EQUIPMENT
-----------------
1.1 Agreement To Sell. Upon the terms and subject to all of the
-------------------
conditions contained herein, B&A hereby agrees to sell, assign, transfer, and
deliver to POC on October 18, 2002 (the "Closing Date"), and POC hereby agrees
to purchase and accept from B&A on the Closing Date, the Equipment (as described
in Section 1.2 herein). B&A shall deliver at the Closing Date appropriate bills
-----------
of sale, assignments, or other documents of conveyance necessary to effectuate
1
or perfect the transfer of title to the Equipment to POC, on and as of the
Closing Date, in form and substance reasonably satisfactory to POC and POC's
counsel.
1.2 Description of Equipment. For purposes of this Agreement, the term
------------------------
"Equipment" shall mean only that equipment described on the attached Exhibit A,
which is incorporated herein by this reference, and all of the right, title and
interest associated therewith, including any and all rights B&A may have to
designs, plans, inventions or technology associated with the equipment existing
on and as of the Closing Date.
SECTION 2. LIABILITIES ASSUMED AND LIABILITIES NOT ASSUMED
-----------------------------------------------
2.1 Liabilities Assumed. POC does not and will not assume or be obligated
-------------------
to satisfy any liabilities, or to perform any obligations or commitments of B&A,
associated with the Equipment.
SECTION 3. PURCHASE PRICE AND OTHER ISSUES
-------------------------------
3.1 Purchase Price. In return for the transfer of the Equipment by B&A
--------------
to POC, POC and CNG shall: (a) forgive and terminate the remaining balance of
the $300,000 Note; (b) forgive and terminate the UCC-1 filings filed as security
for the 1999 Purchase Agreement; (c) consider all of the obligations under the
Security Agreement satisfied and release the pledged assets and all other
collateral from Xxxxxxxx and B&A related to the 1999 Purchase Agreement; and (d)
forgive and terminate the $498,000 Note.
3.2 Promissory Note. POC and CNG acknowledge payment in full by B&A
----------------
of the $900,000 Note in late year 2000 and receipt of prior payments totaling
$100,000 on the $300,000 Note upon the completion of the transactions
contemplated in this Agreement. CNG acknowledges receipt of payment in full of
all amounts due to it pursuant to the 1999 Purchase Agreement and waives any
claim it may have against POC regarding the Equipment. In exchange for said
waiver, POC agrees to waive its right of reimbursement from CNG for those past
and future attorneys' fees and costs incurred by POC, on behalf of CNG, related
to the Omnitrans litigation and appeal(s).
3.3 Sales and Use Taxes, Personal Property Taxes. All sales and use
-----------------------------------------------
taxes imposed by California or any other state or taxing authority as a result
of the sale of the Equipment hereunder shall be paid by B&A at the Closing Date
to the proper taxing authorities. POC will assume responsibility for the
personal property taxes assessed on the Equipment beginning tax year 2003.
Xxxxxxxx acknowledges that POC has made no representation to him as to his tax
liability as a result of this transaction. Xxxxxxxx voluntarily hereby assumes
and agrees to pay any and all personal taxes imposed upon him as a result of
this transaction.
SECTION 4. SELLER'S REPRESENTATIONS AND WARRANTIES
---------------------------------------
B&A, as the Seller, and Xxxxxxxx hereby represents and warrants to POC and
CNG as follows:
4.1 Authority. B&A has full power and authority to enter into and execute
---------
this Agreement and to carry out the transactions contemplated hereby, and no
further action is required by B&A to make this Agreement binding upon it. At
2
the Closing, this Agreement shall be a valid and binding agreement of B&A,
enforceable in accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency, or similar laws affecting creditors' rights
generally or by the scope of equitable remedies which may be available.
4.2 Title To Acquired Assets. All Equipment is, and will be on the
---------------------------
Closing Date, owned by B&A, and will be eligible for transfer to POC. As of the
Closing Date, POC will obtain good title to the Equipment upon delivery of the
executed xxxx of sale, attached hereto as Exhibit B and incorporated herein by
reference, and the consummation of the transactions contemplated by this
Agreement, free of any and all encumbrances and liens. B&A and Xxxxxxxx
represent and warrant that the Equipment, that other than moving the Equipment
from its prior location at the time of the 1999 Purchase Agreement to the its
current location, the Equipment has not been altered or used since its purchase
from POC and CNG pursuant to the 1999 Purchase Agreement. B&A and Xxxxxxxx
represent and warrant that the Equipment is in that condition described in that
Appraisal dated October 17, 2002 performed and prepared by Xxxxxx Xxxxx, LLC
(the "Appraisal"), a copy of which is attached and incorporated herein as
Exhibit C, and is being delivered as-is, where-is.
4.3 No Consents. No consent, approval, or other action of any third party
-----------
is required to be obtained by B&A and Xxxxxxxx in connection with the
transactions contemplated by this Agreement. To the best of B&A's and
Xxxxxxxx'x knowledge, the consummation of the transactions contemplated by this
Agreement will not conflict with, or result in a breach of, or default (or an
event which, with or without due notice or lapse of time, or both, would
constitute a default) under the terms, conditions, or provisions of any
agreement to which B&A or Xxxxxxxx is a party or by which it and/or he may be
bound, or any judgment, order, injunction, decree, law, regulation, or rule of
any court, agency, or other governmental authority, or any debt, obligation,
lease, commitment, license, permit, contract, or other agreement to which Buyer
or Xxxxxxxx is a party or by which it and/or he may be bound.
4.4 No Options. No options to acquire the Equipment have been previously
-----------
granted by B&A to any other person or entity not a party to this Agreement.
4.5 Material Misstatements or Omissions. To the best of B&A's and Buyer's
-----------------------------------
knowledge, no representation or warranty by B&A or Xxxxxxxx contained in this
Agreement, and no document or certificate furnished or to be furnished to POC or
CNG in connection herewith or with the transactions contemplated by this
Agreement, taken as a whole, contains an untrue statement of a material fact or
omits to state a material fact necessary to make the statement of fact contained
herein or therein not misleading.
4.6 Continued Cooperation. B&A agrees to cooperate and execute and
----------------------
deliver such further instruments or documents as POC may reasonably require in
order to carry out the terms of this Agreement and consummate the transactions
contemplated herein.
4.7 Delivery. B&A and Xxxxxxxx agree that the Equipment will remain at
--------
its current location as set forth in the Appraisal.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF POC & CNG
-------------------------------------------
3
POC, as Buyer, and CNG hereby represent and warrant to B&A and Xxxxxxxx as
follows:
5.1 Authority. This Agreement has been duly authorized by the Board of
---------
Directors of POC and CNG, and no further action is necessary on the part of POC
or CNG to make this Agreement valid and binding upon them. At the Closing, this
Agreement shall be a valid and binding agreement of POC and CNG, enforceable in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency or similar laws affecting creditors' rights generally or
by the scope of equitable remedies which may be available.
5.2 No Violation by Buyer. To the best of POC's knowledge, neither the
------------------------
execution nor delivery of this Agreement, nor compliance with the terms and
provisions hereof by POC will breach any statute or regulation of any
governmental authority regulating or affecting POC's business which could
materially and adversely affect the transactions contemplated hereunder.
5.3. No Consents. To the best of POC's and CNG's knowledge, no consent,
------------
approval, or other action of any third party is required to be obtained by
either of them in connection with the transactions contemplated by this
Agreement.
SECTION 6. B&A'S INDEMNIFICATION
---------------------
B&A and Xxxxxxxx shall, jointly and severally, indemnify, defend and hold
harmless POC against and in respect to claims, demands, losses, costs, expenses,
obligations, liabilities, damages, recoveries and deficiencies including
penalties, interest and attorney fees that POC incurs or suffers that: (a) arise
from any breach of their representations, warranties, covenants or agreement set
forth in this Agreement; (b) relate to or arise from events, incidents,
occurrences, acts or omissions by B&A and/or Xxxxxxxx related to the Equipment
that began or occurred prior to the Closing Date; or (c) are debts and
obligations of B&A and/or Xxxxxxxx not assumed by POC.
SECTION 7. POC'S INDEMNIFICATION
---------------------
POC will indemnify, defend and hold harmless B&A against and in respect to
claims, demands, losses, costs, expenses, obligations, liabilities, damages,
recoveries and deficiencies including penalties, interest and attorney fees that
B&A incurs or suffers that arise from any material breach of, or failure by POC
to substantially perform, any of its representations, warranties, covenants or
agreement set forth in this Agreement or that relate to or arise from events,
incidents, occurrences, acts or omissions by POC relating to the Equipment after
the Closing Date.
SECTION 8. GENERAL PROVISIONS
------------------
8.1 Representation by Legal Counsel. The parties hereto agree and
----------------------------------
acknowledge that the Law Offices of Xxxxx X. Xxxxx have acted and shall continue
to act as counsel to POC and CNG at their discretion of the Company and that
such legal counsel has not provided representation on behalf of Xxxxxxxx or B&A.
in connection with this Agreement. In addition, the parties hereto acknowledge
that said legal counsel has not been asked to, nor has it attempted to, provide
tax advice regarding the proposed transaction.
4
Xxxxxxxx and B&A also acknowledges that he and it have had the opportunity to
consult with legal counsel to review this Agreement prior to its execution, and
by signature hereto have either done so or waived such right to do so. Each
party further acknowledges that he or it signs this Agreement freely and
voluntarily with full knowledge of the terms and effect of this Agreement.
8.2 Notices. All notices, requests, demands or other communications
-------
required or permitted under this Note shall be in writing and shall be deemed to
have duly given or made on the date of service if served personally on the party
to whom notice is to be given, on the date of transmission if sent by facsimile,
telex, telecopier or telegraph, or on the fifth (5th) day after mailing if
mailed to the party to whom notice is to be given, by first class mail,
registered or certified, postage prepaid, properly addressed as follows:
If to POC and/or CNG: Penn Octane Corporation, Inc.
c/o Xxxxxx Xxxxxxx, President
00000 Xxxxxxx Xxxx, Xxxxx X
Xxxx Xxxxxx, Xxxxxxxxxx 00000
With a copy to: Xxxxx X. Xxxxx, Esq.
Law Offices of Xxxxx X. Xxxxx
Two Embarcadero Center, Suite 1670
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
If to B&A: B&A Eco-Holdings, Inc.
000 Xxxxxx Xxxxxx, Xxxxx 000
Xx Xxxxxxx, Xxxxxxxxxx 00000
If to Xxxxxxxx: Xxx Xxxxxxxx
000 Xxxxxx Xxxxxx, Xxxxx 000
Xx Xxxxxxx, Xxxxxxxxxx 00000
8.3 Invalidity. Should any term of this Agreement or the application
----------
thereof to any person or circumstances be held to be invalid or unenforceable by
a court of competent jurisdiction, the remainder of this Agreement, or the
application of such term or provision to persons or circumstances other than
those as to which it is held invalid or unenforceable, shall not be affected
thereby, and each such remaining term and provision shall be valid and enforced
to the fullest extent permitted by law.
8.4 No Waiver. No waiver of any breach of any covenant or provision
----------
contained herein shall be deemed a waiver of any preceding or succeeding breach
thereof or of any other covenant or provision. No extension of time for
performance of any obligation or act shall be deemed an extension of the time
for performance of any other obligation or act.
8.5 Modifications. This Agreement, and the obligations contained
-------------
herein, may not be amended, altered, or modified except in writing signed by the
parties hereto.
8.6 Entire Agreement. This Agreement and, its Exhibits, constitute the
-----------------
entire agreement among the parties hereto with respect to the subject matter
hereof, and supersede all prior and contemporaneous agreements or negotiations
with respect to said subject matter, both written or oral, including the
5
$300,000 Note, the $498,000 Note, the $900,000 Note, the 1999 Purchase
Agreement, as amended and supplemented, the Security Agreement and the prior
Bills of Sale related thereto.
8.7 Successors. This Agreement shall be binding upon and shall inure
----------
to the benefit of permitted successors and assigns of the parties hereto.
8.8 Attorneys' Fees. In the event of the bringing of any action,
----------------
proceeding, arbitration or suit by a party hereto against another party
hereunder by reason of any breach of any of the covenants, agreements, or
provisions arising out of this Agreement, the prevailing party shall be entitled
to recover all costs and expenses of that action or suit, or at trial,
arbitration or on appeal, and in collection of judgment, including reasonable
attorneys' fees, accounting, and other professional fees resulting therefrom.
8.9 Authority. The undersigned signatories each warrants his authority
---------
to enter into and execute this Agreement on behalf of the party for whom he or
she is signing.
8.10 Construction. This Agreement has been entered into in the State
------------
of California and shall be governed by, interpreted under, and construed and
enforced in accordance with the laws of that State. All parties acknowledge that
they have had substantial input in the drafting of the final Agreement.
Consequently, the parties acknowledge that the statutory inferences referred to
in California Civil Code section 1654 shall have no effect in the event of
dispute upon interpretation.
8.11 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
6
IN WITNESS WHEREOF, this Agreement is effective on the date and year first
above written.
"POC"
PENN OCTANE CORPORATION, INC.,
a Delaware corporation
By: /s/ Xxxxxx Xxxxxxx
----------------------
Xxxxxx Xxxxxxx, President
By: /s/ Xxxxx Xxxxxxxxxxx
------------------------
Xxxxx Xxxxxxxxxxx
Executive Vice President/Secretary
"CNG"
PENN WILSON CNG, INC.
a California corporation
By: /s/ Xxxxxx Xxxxxxx
----------------------
Xxxxxx Xxxxxxx, President
By: /s/ Xxxxx Xxxxxxxxxxx
-------------------------
Xxxxx Xxxxxxxxxxx, Vice President
"B&A"
B&A ECO-HOLDINGS, INC.
a Delaware corporation
By: /s/ Xxx X. Xxxxxxxx
------------------------
Xxx X. Xxxxxxxx
Chief Executive Officer
By:________________________________
Print Name:________________________
Title: ____________________________
"Xxxxxxxx"
: /s/ Xxx X. Xxxxxxxx
----------------------
XXX X. XXXXXXXX
7
EXHIBIT A
---------
EQUIPMENT
1) Two Xxxxxxxxx Compressors (rebuilt), each of which have the following
equipment specifications:
[] a Sound Barrier(TM) Enclosure, including Skid Base
[] a Xxxxxxxxx Compressor Frame
- 20 PSIG Suction, 325 SCFM Capacity
- 4,000 PSIG Discharge
- Toshiba Motor: 200HP, Class 1, Div. 1 SF 115
- Energy Industries, Inc. Heat Exchanger-Compressor Driven
- Non-Lubricated Cylinders
- XEBC Suction Filter (optional)
- (2) Finite Discharge Filters
[] a Recovery System
- 200 PSIG, 160 Gallon Capacity
[] a Penn Wilson Control System
- Station Fault Dial-Out System
- Remote Monitoring 'Real-Time' Interface
- GE Fanuc 90-30 PLC Control System
- Operator Interface for Fault Detection, System Operating
Conditions,
- Pressure, Temperature, Flowrate and Hours
- Motor Starters
- Card Reader Interface System
- Panel Purge System (for Division 2 Requirements)
- Vortex Panel Cooling System
[] a Penn Wilson SMARTFILL(TM) Natural Gas Dispenser
- Two hoses each
- Temperature compensated to either 300 PSI @70oF or 3,600 PSI
@70oF
- Universal Epsco Model 33 Computer Display Heads
- Dispenser Pit (for added safety)
[] a Penn Wilson SMARTFILL(TM) Combination Buffer Cascade
Sequence Panel
2) One Gemini Compressor (new), which has the following equipment
specifications:
[] a Sound Barrier(TM) Enclosure, including Skid Base
[] two Gemini H302 Frame Natural Gas Compressors
- 300 PSIG Suction, 560 SCFM Capacity Each
- Total Package Capacity: 1,120 SCFM
- 4,500 PSIG Discharge
- General Electric Motors: 125HP, TEFC, SF 115
- GEA Xxxxxx Heat Exchangers
- Compressors Capable of Independent or Tandem Operations
- XEBC Suction Filter
- Nowatta Discharge Filter
[] a Recovery System
- 500 PSIG, 400 Gallon Capacity
EXHIBIT A (cont'd)
------------------
EQUIPMENT
[] a Penn Wilson Control System
- Station Fault Dial-Out System
- Remote Monitoring 'Real-Time' Interface
- GE Fanuc 90-30 PLC Control System
- Operator Interface for Fault Detection, System Operating
Conditions,
- Pressure, Temperature, Flowrate and Hours
- Motor Starters
- Card Reader Interface System
- Panel Purge System (for Division 2 Requirements)
[] two Penn Wilson SMARTFILL(TM) Natural Gas Dispensers
- Two hoses each
- Temperature compensated to either 300 PSI @70oF or 3,600 PSI
@70oF
- Universal Epsco Model 33 Computer Display Heads
- Dispenser Pit (for added safety)
[] a Penn Wilson SMARTFILL(TM) Combination Buffer Cascade
Sequence Panel
3) All rights, title and interest that B&A may have in and to the design, plans,
inventions or technology associated with the said equipment.
EXHIBIT B
---------
XXXX OF SALE
EXHIBIT C
APPRAISAL
