SUPPLEMENT AND AMENDMENT TO
---------------------------
STOCK PURCHASE AND SEPARATION AGREEMENT
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This Supplement is executed this 12 day of September, 2003, and is intended
to supplement that certain Stock Purchase and Separation Agreement (hereafter
"Stock Purchase Agreement"), dated July 22, 2003, executed by and between Xxxxx
Xxxxxxxxxxx (hereafter "Employee") and Penn-Octane Corporation (hereafter
"Penn-Octane"); and
WHEREAS, pursuant to the Stock Purchase Agreement the parties had agreed
that Penn-Octane and its representatives be allowed to review certain documents
of the "Affiliates" in preparation for a Closing, wherein all of the formal
documents of transfer, or ratification of previous transfer, of Employee's
ownership interest in the Affiliates are executed and concluded; and
WHEREAS, subsequent to the execution of the Stock Purchase Agreement the
parties have agreed to certain clarifications and modifications of the Stock
Purchase Agreement; and
WHEREAS, the Closing of the transaction is scheduled for September 11,
2003, in Mexico City, Mexico, and the parties desire to formalize the
modifications and details pertaining to the Closing.
NOW, THEREFORE, in consideration of the mutual promises herein contained,
the parties agree as follows:
1. The parties intend by this modification to clarify that the Stock
Purchase and Separation Agreement constituted a compromise and settlement of
disputes as to true ownership of common shares in the Affiliates. The parties
hereby stipulate that Penn-Octane Corporation
had previously acquired from Employee all legal and equitable ownership of
shares which he held in Penn-Octane de Mexico, S.A. de C.V. and all shares in
Termatsal, S.A. de C.V., and that the Stock Purchase Agreement represents a
ratification of the previous transfer and sale of shares and an agreement to
finalize the transfer of such shares in such corporations by Employee. In
regards to Tergas, S.A. de C.V., the parties stipulate that there was a dispute
as to the true legal and equitable ownership of such shares held by Employee,
and that the Stock Purchase Agreement constitutes an agreement to compromise and
settle the issues of ownership by providing for a ratification of transfer of
legal and equitable ownership by Employee and a conclusion of such transfer.
2. The parties hereby agree to amend Section 5(d) of the Stock Purchase
Agreement to hereby read as follows:
If Penn-Octane or its Affiliates extend the current existing pipelines to
Monterrey, Mexico, and the net revenue generated by the extension of such
pipelines results in a (i) 17% net revenue generated return (the return being
projected on the earnings measured before the imposition of taxes, depreciation
and amortization, EBITDA, as computed under generally accepted accounting
principles; and (ii) provided that a minimum seven-year agreement is executed by
Penn-Octane with Pemex Gas and Petrochemical on or before March 31, 2004, for
the utilization of such pipelines at a rate that will generate a 17% capital
cost return, then Xxxxxxxxxxx shall be paid (a) a bonus of $250,000.00 on the
first day after the pipeline agreement has been executed by and between Pemex
Gas and Petrochemical and Penn-Octane Corporation, and (b) an additional
$250,000.00 bonus will be paid on the first day after full-time
commercial operation of the extended pipeline begin. In order to guarantee the
payment of the compensation described in this sub-paragraph (d), Xxxxxx X.
Xxxxxxx shall cause to be pledged 100,000 shares of his common shares of
Penn-Octane Corporation as collateral for the payment of such consideration.
3. A new Paragraph 5(e) is hereby added and incorporated into the terms
of the Stock Purchase Agreement as follows:
"Within sixty (60) days of Closing, Penn-Octane Corporation shall cause to
be issued to Employee 21,818 shares of newly issued and restricted common shares
of Penn-Octane Corporation. The parties agree that the shares being received by
Employee represent additional compensation received by Employee for (i)
severance compensation received by Employee related to any of his prior
positions or employment or affiliation with Termatsal, S.A. de C.V., Penn-Octane
de Mexico, S.A. de C.V., and Tergas, S.A. de C.V., and (ii) as additional
consideration for the purchase price of Tergas, S.A. de C.V. (and to the extent
of any previous or concurrent transfer of stock related to Penn-Octane de
Mexico, S.A. de C.V. and Termatsal, S.A. de C.V.
4. The parties acknowledge and agree that the documents listed or
identified on Exhibit "A" attached hereto will be executed at the Closing to be
held on September 11, 2003, at the law offices of Lic. Xxxxxxx Xxxx, Sierra
Nevada No. 712, Col. Xxxxx xx Xxxxxxxxxxx, X.X. 00000, Xxxxxx, D.F.
5. Additionally, at the Closing, Penn-Octane will deliver to Employee a
Satisfaction of Indebtedness related to (i) that promissory note in the amount
of $498,000.00 (U.S. dollars),
dated March 25, 2000, executed by Xxxxx X. Xxxxxxxxxxx, and (ii) that promissory
note in the amount of $46,603.00 (U.S. dollars), dated March 26, 2000, executed
by Xxxxx Xxxxxx Xxxxxx Cuesta. Said Satisfaction of Indebtedness shall release
the pledges and security agreements executed by the Makers of such notes. A copy
of the Satisfaction of Indebtedness is attached hereto as Exhibit "B."
6. Additionally, within sixty (60) days of Closing, Penn-Octane will
deliver to Employee a guaranty agreement, security agreement and escrow
agreement. The guaranty agreement will be executed by Xxxxxx X. Xxxxxxx to
guarantee the contractual obligation of Penn-Octane Corp. to Employee as
detailed in Paragraph 5(d) of the Stock Purchase Agreement, wherein, upon the
occurrence of certain events, Penn-Octane shall pay a bonus to Employee in the
amount of $250,000.00 upon the execution of a Pipeline Agreement between Pemex
Gas and Petrochemical and Penn-Octane Corporation, and an additional $250,000.00
bonus to be paid on the first day after full-time commercial operation of such
extended pipelines begins. The guaranty by Xxxxxx X. Xxxxxxx shall be secured
by a security interest in 100,000 shares of common stock of Penn-Octane Corp.
Such shares shall be delivered to Xxxxxx Xxxxxxx, in escrow, pursuant to an
Escrow Agreement. The form of the guaranty, security agreement and escrow
agreement are attached hereto as Exhibit "C."
IN WITNESS WHEREOF, the parties set their hands in agreement as of the date
first above written.
PENN OCTANE CORPORATION
By:____________________________________
XXX XXXXXXXX
By:____________________________________
XXXXX XXXXXXXXXXX
EXHIBIT "A"
(PENN OCTANE Documents to be Executed on Closing)
The documents that are going to be executed on the closing are:
a) Mexican documents prepared by CCN/Xxxx:
1. POM Annual Meeting Minutes removing and naming Board of Directors and
Inspectors
2. TERMATSAL Annual Meeting Minutes removing and naming Board of Directors
and Inspectors
3. TERGAS Annual Meeting Minutes removing and naming Board of Directors and
Inspectors
4. POM Meeting Minutes amending bylaws.
5. Transfer of POM's Stock Agreement
6. Endorsement of POM's Stock Certificates
7. Transfer of Termatsal's Stock Agreement
8. Endorsement of Termatsal's Stock Certificates
9. Transfer of Tergas' Stock Agreement
10. Endorsement of Tergas' Stock Certificates
11. Xxxxxxxxxxx' Affidavit
12. Option Agreement to buy Tergas' Stock
13. POM Meeting Minutes revoking and granting powers of attorney
14. TERMATSAL Meeting Minutes revoking and granting powers of attorney
15. TERGAS Meeting Minutes revoking and granting powers of attorney.
16. Letter Acknowledging Ttransfer Pricing
b) Xxxxxx Xxxxxxx'x documents:
16. Supplement and Amendment to Stock Purchase and Separation Agreement
(Exhibit A-C)
17. Satisfaction of Debt (Exhibit B)
18. Guaranty Agreement (Exhibit C)
19. Security Agreement (Exhibit C)
20. Escrow Agreement (Exhibit C)
EXHIBIT "B"
SATISFACTION OF DEBT
--------------------
Pursuant to the terms of a Stock Purchase and Satisfaction Agreement
executed on July 22, 2003, as amended pursuant to the supplement and amendment
to stock purchase and separation agreement dated September 12, 2003, Penn-Octane
Corporation does hereby declare that the following described indebtedness is
hereby declared as forgiven and discharged:
1. That certain Promissory Note in the amount of $498,000.00, dated
March 25, 2000, executed by Xxxxx Xxxxxxxxxxx in favor of Penn-Octane
Corporation. Furthermore, Penn-Octane Corporation hereby declares that certain
Pledge and Security Agreement dated March 25, 2000, and executed by Xxxxxxxxxxx,
as null and void, which security agreement was provided as collateral for the
repayment of the foregoing described promissory note.
2. That certain Promissory Note in the amount of $46,603.00, dated
March 26, 2000, executed by Xxxxx Xxxxxx Xxxxxx Cuesta in favor of Penn-Octane
Corporation. Furthermore, Penn-Octane Corporation hereby declares that certain
Pledge and Security Agreement dated March 26, 2000, executed by Xxxxxx Xxxxxx,
as null and void, which security agreement was provided as collateral for the
repayment of the foregoing described promissory note.
IN WITNESS WHEREOF, this Satisfaction is given on this 12 day of September,
2003.
PENN OCTANE CORPORATION
By:____________________________________
XXX XXXXXXXX
EXHIBIT "C"
GUARANTY
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IN CONSIDERATION OF certain business and financial accommodations attendant
thereto extended to PENN-OCTANE CORPORATION by XXXXX XXXXXXXXXXX and for other
good and valuable consideration, the receipt of which is hereby acknowledged,
the undersigned, XXXXXX XXXXXXX ("Guarantor,") hereby unconditionally and
absolutely guarantees to and for the benefit of XXXXX XXXXXXXXXXX the payment
when due of all compensation and the performance by PENN-OCTANE CORPORATION of
all of the obligations and conditions contained in that certain Stock Purchase
And Separation Agreement under Paragraph 5(d), dated July 22, 2003 entered into
by and between XXXXX XXXXXXXXXXX, as Employee, and PENN-OCTANE CORPORATION,
whether now existing or hereafter created or arising in connection therewith.
In order to guarantee the payment of the compensation due XXXXXXXXXXX as
described in Paragraph 5 (d) of the Stock Purchase And Separation Agreement,
Guarantor shall cause to be pledged 100,000 shares of his common stock in
PENN-OCTANE CORPORATION as collateral and shall execute a Security Agreement
("Contract Document")and Escrow Agreement of even date herewith giving and
granting unto XXXXXXXXXXX a security interest in and to said stock. For
purposes of this Guaranty, all indebtedness and obligations arising under
Paragraph 5(d) of the Stock Purchase and Separation Agreement referred to herein
are hereinafter collectively called (the "Indebtedness.")
1. RENEWALS AND EXTENSIONS. This Guaranty shall apply to the
-------------------------
Indebtedness and any renewals, extensions, refinancings or modifications
thereof.
2. OTHER REMEDIES. XXXXXXXXXXX shall not be required to pursue any
---------------
other remedies before invoking the benefits of this Guaranty; specifically,
XXXXXXXXXXX shall not be required to take any action against PENN-OCTANE
CORPORATION or any other entity or person, to exhaust his remedies against
endorsers, collateral and other security, or to resort to any balance of any
deposit account or credit on the books of XXXXXXXXXXX in favor of PENN-OCTANE
CORPORATION or any other person or entity.
3. OBLIGATIONS NOT IMPAIRED. The obligations of any Guarantor under
--------------------------
this Guaranty shall not be released or impaired without the express prior
written consent of XXXXXXXXXXX. The obligations of any Guarantor shall not be
released or impaired on account of the following events:
(a) the voluntary or involuntary liquidation, sale or other
disposition of all or substantially all of the assets of PENN-OCTANE
CORPORATION, or any receivership, insolvency, bankruptcy, reorganization or
other similar proceedings affecting PENN-OCTANE CORPORATION or any of its
assets;
(b) the addition of a new guarantor or guarantors;
(c) any impairment, modification, release or limitation of
liability of, or stay of lien enforcement proceedings against, PENN-OCTANE
CORPORATION, its property, or its estate in bankruptcy or any modification,
discharge or extension of the Indebtedness resulting from the operation of
any present or future provision of the Federal Bankruptcy Code or any other
similar federal or state statute, or from the decision of any court, it
being the intention hereof that Guarantor shall remain liable on the
Indebtedness, notwithstanding any act, omission or thing which might, but
for the provisions hereof, otherwise operate as a legal or equitable
discharge of Guarantor;
(d) XXXXXXXXXXX' failure to use diligence in preserving the
liability of any person on the Indebtedness, or in bringing suit to enforce
collection of the Indebtedness;
(e) the substitution or withdrawal of collateral or release of
security, and the exercise or failure to exercise by XXXXXXXXXXX of any
right conferred upon it herein or in any collateral agreement;
(f) if PENN-OCTANE CORPORATION is not liable because the act of
creating the Indebtedness is ultra xxxxx or the officers or persons
creating the Indebtedness acted in excess of their authority, or for any
reason the Indebtedness cannot be enforced against PENN-OCTANE CORPORATION;
(g) any payment by PENN-OCTANE CORPORATION to XXXXXXXXXXX if such
payment is held to constitute a preference under the bankruptcy laws, or if
for any other reason XXXXXXXXXXX is required to refund such payment to
PENN-OCTANE CORPORATION or pay the amount thereof to any other party;
4. BENEFIT TO GUARANTOR. Guarantor acknowledges and warrants that he
----------------------
derived or expects to derive financial and other advantage and benefit, directly
or indirectly, granted or to be made or granted by PENN-OCTANE CORPORATION to
XXXXXXXXXXX in an amount not less than the amount guaranteed hereunder.
5. GUARANTOR'S WARRANTIES AND REPRESENTATIONS.
---------------------------------------------
(a) All of the Contract Documents, if any, including, without
limitation, this Guaranty and any other documents referred to herein to
which Guarantor is a party, will, upon execution and delivery, constitute
duly authorized, valid and binding obligations of
Guarantor, enforceable in accordance with their respective terms except as
limited by applicable relief laws which may be granted to PENN-OCTANE
CORPORATION.
6. DEATH OF GUARANTOR. Upon the death of Guarantor, the obligation of
-------------------
the deceased shall continue against his estate and to all surviving Guarantors,
if any, as to all of the Indebtedness, including that portion of the
Indebtedness incurred after such death.
7. WAIVER OF NOTICE. Guarantor waives grace, presentment for payment,
-----------------
notice of dishonor or default, notice of intent to demand, and of demand, notice
of intention to accelerate and of acceleration, protest and notice of protest,
diligence in collecting and bringing suit against any party thereto, and all
other notices of every kind, and all renewals, extensions, refinancings and
modifications that may be granted to PENN-OCTANE CORPORATION. XXXXXXXXXXX shall
be under no obligation to notify Guarantor of its acceptance hereof, nor of any
advances made or credit extended on the faith hereof, nor of the failure of
PENN-OCTANE CORPORATION to pay the Indebtedness as it matures.
8. MODIFICATION OR CONSENT. No modification, consent or waiver of any
------------------------
provision of this Guaranty, or consent to any departure by any Guarantor
therefrom, shall be effective unless the same shall be in writing and signed by
an officer of XXXXXXXXXXX, and then shall be effective only in the specific
instance and for the purpose for which given. No notice to or demand on any
Guarantor in any case shall, of itself, entitle any Guarantor to any other or
further notice or demand in similar or other circumstances. No delay or
omission by XXXXXXXXXXX in exercising any power or right hereunder shall impair
any such right or power to be construed as a waiver thereof or any acquiescence
therein, nor shall any single or partial exercise of any such power preclude
other or further exercise thereof, or the exercise of any other right or power
hereunder. All rights and remedies of XXXXXXXXXXX hereunder are cumulative of
each other and of every other right or remedy which XXXXXXXXXXX may otherwise
have at law or in equity or under any other contract or document, and the
exercise of one or more rights or remedies shall not prejudice or impair the
concurrent or subsequent exercise of other rights or remedies.
9. COSTS OF COLLECTION. Guarantor agrees to pay all costs of
---------------------
collection, including attorney's fees and expenses, if this Guaranty is placed
in the hands of an attorney for collection or is collected through any court.
10. NOTICE OF LITIGATION, CLAIMS AND FINANCIAL CHANGE. Guarantor shall
-------------------------------------------------
promptly inform XXXXXXXXXXX of (a) any litigation against Guarantor or affecting
any security for the Indebtedness which, if determined adversely, might have a
material adverse effect upon the financial condition of Guarantor or upon such
security or might cause a default under any of the documents evidencing,
securing or governing the Indebtedness, (b) any claim or controversy which might
become the subject of such litigation, and (c) any material adverse change in
the financial condition of Guarantor.
11. SUCCESSORS AND ASSIGNS: This Guaranty is for the benefit of
------------------------
XXXXXXXXXXX, his heirs, legal representatives, successors and assigns, and, in
the event of an assignment by XXXXXXXXXXX, his heirs, legal representatives,
successors or assigns, of the Indebtedness, or any part thereof, the rights and
benefits hereunder, to the extent applicable to the Indebtedness so assigned,
may be transferred with such Indebtedness.
12. HEADINGS. THE paragraph headings hereof are inserted for
--------
convenience of reference only and shall not alter, define or be used in
construing the text of such paragraphs.
13. GOVERNING LAW AND PLACE OF PERFORMANCE. GUARANTOR AGREES THAT
------------------------------------------
THIS AGREEMENT IS GOVERNED BY THE LAWS OF THE STATE OF TEXAS. THIS AGREEMENT IS
PERFORMABLE IN CAMERON COUNTY, TEXAS.
IN WITNESS WHEREOF the undersigned Guarantor has executed this Guaranty as
of the 12 day of September, 2003.
GUARANTOR:
_________________________________
XXXXXX XXXXXXX
2267
Prepared by the State Bar of Texas for use by lawyers only.
Revised 10-85; 5-92
0 1985, 1992 by the State Bar of Texas
SECURITY AGREEMENT
Date: September 12, 2003
Debtor: PENN OCTANE CORPORATION
Debtor's Mailing Address (including county) 000 Xxxxxxxx Xxxx, Xxxxxxxxxxx, XX
00000
Cameron County:
Secured Party: XXXXX XXXXXXXXXXX
Secured Party's Mailing Address (including county): x/x Xxxxxxx Xxxx X.
Xxxxxx Xxxxxx Xx. 000
Col. Xxxxx xx Xxxxxxxxxxx
X.X. 00000, Xxxxxx D.F.
Classification of Collateral:
Collateral (including all accessions): One Hundred Thousand (100,000) shares
of common stock of PENN-OCTANE
CORPORATION, represented by Stock
Certificate No. _________, dated
________, registered to Xxxxxx Xxxxxxx
Obligation
Note CONTRACTUAL AGREEMENT
Date: July 22, 2003, AS AMENDED on September 12, 2003.
Amount: FIVE HUNDRED THOUSAND and NO/100 DOLLARS ($500,000.00)
DOLLARS
Maker: PENN-OCTANE CORPORATION
Payee: XXXXX XXXXXXXXXXX
Final Maturity Date: As therein provided.
Terms of Payment (optional): In accordance with the terms of Paragraph 5
(d) of that certain Stock Purchase And Separation Agreement dated July 22,
2003 as amended pursuant to the supplement and amendment to Stock Purchase
and Separation Agreement entered into by and between XXXXX XXXXXXXXXXX, as
Employee, and PENN-OCTANE CORPORATION, as Employer.
Other Obligation: None.
Debtor's Representation Concerning Location of Collateral (optional):
Subject to the terms of this agreement, Debtor grants to Secured Party a
security interest in the collateral and all its proceeds to secure payment and
performance of Debtor's obligation in this security agreement and all renewals
and extensions of any of the obligation.
DEBTOR'S WARRANTIES
1. Financing Statement. Except for that in favor of Secured Party, no
financing statement covering the collateral is filed in any public office.
2. Ownership. Debtor owns the collateral and has the authority to grant
this security interest. Ownership is free from any setoff, claim, restriction,
lien, security interest, or encumbrance except this security interest and liens
for taxes not yet due.
3. Fixtures and Accessions. None of the collateral is affixed to real
estate, is an accession to any goods, is commingled with other goods, or will
become a fixture, accession, or part of a product or mass with other goods
except as expressly provided in this agreement.
4. Financial Statements. All information about Debtor's financial
condition provided to Secured Party was accurate when submitted, as will be any
information subsequently provided.
DEBTOR'S COVENANTS
1. Protection of Collateral. Debtor will defend the collateral against all
claims and demands adverse to Secured Party's interest in it and will keep it
free from all liens except those for taxes not yet due and from all security
interests except this one. The collateral will remain in Debtor's possession or
control at all times, except as otherwise provided in this agreement. Debtor
will maintain the collateral in good condition and protect it against misuse,
abuse, waste, and deterioration except for ordinary wear and tear resulting from
its intended use.
2. Insurance. Debtor will insure the collateral in accord with Secured
Party's reasonable requirements regarding choice of carrier, casualties insured
against, and amount of coverage. Policies will be written in favor of Debtor and
Secured Party according to their respective interests or according to Secured
Party's other requirements. All policies will provide that Secured Party will
receive at least ten days' notice before cancellation, and the policies or
certificates evidencing them will be provided to Secured Party when issued.
Debtor assumes all risk of loss and damage to the collateral to the extent of
any deficiency in insurance coverage. Debtor irrevocably appoints Secured Party
as attomey-in-fact to collect any return, unearned premiums, and proceeds of any
insurance on the collateral and to endorse any draft or check deriving from the
policies and made payable to Debtor.
3. Secured Party's Costs. Debtor will pay all expenses incurred by Secured
Party in obtaining, preserving, perfecting, defending, and enforcing this
security interest or the collateral and in collecting or enforcing the note.
Expenses for which Debtor is liable include, but are not limited to, taxes,
assessments, reasonable attorney's fees, and other legal expenses. These
expenses will bear interest from the dates of payments at the highest rate
stated in notes that are part of the obligation, and Debtor will pay Secured
Party this interest on demand at a time and place reasonably specified by
Secured Party. These expenses and interest will be part of the obligation and
will be recoverable as such in all respects.
4. Additional Documents. Debtor will sign any papers that Secured Party
considers necessary to obtain, maintain, and perfect this security interest or
to comply with any relevant law.
5. Notice of Changes. Debtor will immediately notify Secured Party of any
material change in the collateral; change in Debtor's name, address, or
location; change in any matter warranted or represented in this agreement;
change that may affect this security interest; and any event of default.
6. Use and Removal of Collateral. Debtor will use the collateral primarily
according to the stated classification unless Secured Party consents otherwise
in writing. Debtor will not permit the collateral to be affixed to any real
estate, to become an accession to any goods, to be commingled with other goods,
or to become a fixture, accession, or part of a product or mass with other goods
except as expressly provided in this agreement.
7. Sale. Debtor will not sell, transfer, or encumber any of the collateral
without the prior written consent of Secured Party.
RIGHTS AND REMEDIES OF SECURED PARTY
1. Generally. Secured Party may exercise the following rights and remedies
either before or after default:
a. take control of any proceeds of the collateral;
b. release any collateral in Secured Party's possession to any
debtor, temporarily or otherwise;
c. take control of any funds generated by the collateral, such as
refunds from and proceeds of insurance, and reduce any part of
the obligation accordingly or permit Debtor to use such funds to
repair or replace damaged or destroyed collateral covered by
insurance; and
d. demand, collect, convert, redeem, settle, compromise, receipt
for, realize on, xxx for, and adjust the collateral either in
Secured Party's or Debtor's name, as Secured Party desires.
2. Insurance. If Debtor fails to maintain insurance as required by this
agreement or otherwise by Secured Party, then Secured Party may purchase
single-interest insurance coverage that will protect only Secured Party. If
Secured Party purchases this insurance, its premiums will become part of the
obligation.
EVENTS OF DEFAULT
Each of the following conditions is an event of default:
1. if Debtor defaults in timely payment or performance of any
obligation, covenant, or liability in any written agreement between Debtor and
Secured Party or in any other transaction secured by this agreement:
2. if any warranty, covenant, or representation made to Secured Party by
or on behalf of Debtor proved to have been false in any material respect when
made;
3. if a receiver is appointed for Debtor or any of the collateral;
4. if the collateral is assigned for the benefit of creditors or, to the
extent permitted by law, if bankruptcy or insolvency proceedings commence
against or by any of these parties: Debtor; any partnership of which Debtor is a
general partner; and any maker, drawer, acceptor, endorser, guarantor, surety,
accommodation party, or other person liable on or for any part of the
obligation;
5. if any financing statement regarding the collateral but not related
to this security interest and not favoring Secured Party is filed;
6. if any lien attaches to any of the collateral; and
7. if any of the collateral is lost, stolen, damaged, or destroyed,
unless it is promptly replaced with collateral of like quality or restored to
its former condition.
REMEDIES OF SECURED PARTY ON DEFAULT
During the existence of any event of default, Secured Party may declare the
unpaid principal and earned interest
of the obligation immediately due in whole or part, enforce the obligation, and
exercise any rights and remedies granted by chapter 9 of the Texas Business and
Commerce Code or by this agreement, including the following:
1. require Debtor to deliver to Secured Party all books and records
relating to the collateral;
2. require Debtor to assemble the collateral and make it available to
Secured Party at a place reasonably convenient to both parties;
3. take possession of any of the collateral and for this purpose enter any
premises where it is located if this can be done without breach of the peace;
4. sell, lease, or otherwise dispose of any of the collateral in accord
with the rights, remedies, and duties of a secured party under chapters 2 and 9
of the Texas Business and Commerce Code after giving notice as required by those
chapters; unless the collateral threatens to decline speedily in value, is
perishable, or would typically be sold on a recognized market, Secured Party
will give Debtor reasonable notice of any public sale of the collateral or of a
time after which it may be otherwise disposed of without further notice to
Debtor; in this event, notice will be deemed reasonable if it is mailed, postage
prepaid, to Debtor at the address specified in this agreement at least ten days
before any public sale or ten days before the time when the collateral may be
otherwise disposed of without further notice to Debtor;
5. surrender any insurance policies covering the collateral and receive the
unearned premium;
6. apply any proceeds from disposition of the collateral after default in
the manner specified in chapter 9 of the Texas Business and Commerce Code,
including payment of Secured Party's reasonable attorney's fees and court
expenses; and
7. if disposition of the collateral leaves the obligation unsatisfied,
collect the deficiency from Debtor.
GENERAL PROVISIONS
1. Parties Bound. Secured Party's rights under this agreement shall inure
to the benefit of its successors and assigns. Assignment of any part of the
obligation and delivery by Secured Party of any part of the collateral will
fully discharge Secured Party from responsibility for that part of the
collateral. If Debtor is more than one, all their representations, warranties,
and agreements are joint and several. Debtor's obligations under this agreement
shall bind Debtor's personal representatives, successors, and assigns.
2. Waiver. Neither delay in exercise nor partial exercise of any of Secured
Party's remedies or rights shall waive further exercise of those remedies or
rights. Secured Party's failure to exercise remedies or rights does not waive
subsequent exercise of those remedies or rights. Secured Party's waiver of any
default does not waive further default. Secured Party's waiver of any right in
this agreement or of any default is binding only if it is in writing. Secured
Party may remedy any default without waiving it.
3. Reimbursement. If Debtor fails to perform any of Debtor's obligations,
Secured Party may perform those obligations and be reimbursed by Debtor on
demand at the place where the note is payable for any sums so paid, including
attorney's fees and other legal expenses, plus interest on those sums from the
dates of payment at the rate stated in the note for matured, unpaid amounts. The
sum to be reimbursed shall be secured by this security agreement.
4. Interest Rate. Interest included in the obligation shall not exceed the
maximum amount of nonusurious interest that may be contracted for, taken,
reserved, charged, or received under law; any interest in excess of that maximum
amount shall be credited to the principal of the obligation or, if that has been
paid, refunded. On any acceleration or required or permitted prepayment of the
obligation, any such excess shall be canceled automatically as of the
acceleration or prepayment or, if already paid, credited on the principal amount
of the obligation or, if the principal amount has been paid, refunded. This
provision overrides other provisions in this and all other instruments
concerning the obligation.
5. Modifications. No provisions of this agreement shall be modified or
limited except by written agreement.
6. Severability. The unenforceability of any provision of this agreement
will not affect the enforceability or validity of any other provision.
7. After-Acquired Consumer Goods. This security interest shall attach to
after-acquired consumer goods only to the extent permitted by law. '
8. Applicable Law. This agreement will be construed according to Texas
laws.
9. Place of Performance. This agreement is to be performed in the county of
Secured Party's mailing address.
10. Financing Statement. A carbon, photographic, or other reproduction of
this agreement or any financing statement covering the collateral is sufficient
as a financing statement.
11. Presumption of Truth and Validity. If the collateral is sold after
default, recitals in the xxxx of sale or transfer will be prima facie evidence
of their truth, and all prerequisites to the sale specified by this agreement
and by chapter 9 of the Texas Business and Commerce Code will be presumed
satisfied.
12. Singular and Plural. When the context requires, singular nouns and
pronouns include the plural.
13. Priority of Security Interest. This security interest shall neither
affect nor be affected by any other security for any of the obligation. Neither
extensions of any of the obligation nor releases of any of the collateral will
affect the priority or validity of this security interest with reference to any
third person.
14. Cumulative Remedies. Foreclosure of this security interest by suit does
not limit Secured Party's remedies, including the right to sell the collateral
under the terms of this agreement. All remedies of Secured Party may be
exercised at the same or different times, and no remedy shall be a defense to
any other. Secured Party's rights and remedies include all those granted by law
or otherwise, in addition to those specified in this agreement.
15. Agency. Debtor's appointment of Secured Party as Debtor's agent is
coupled with an interest and will survive any disability of Debtor.
16. Attachments Incorporated. The addendum indicated below is attached to
this agreement and incorporated into it for all purposes:
( ) addendum relating to accounts, inventory, documents, chattel
paper, and general intangibles
( ) addendum relating to instruments
_______________________________ ____________________________
XXXXX XXXXXXXXXXX PENN OCTANE CORPORATION
Secured Party - Debtor -
_______________________________
XXXXXX XXXXXXX
Guarantor
ESCROW AGREEMENT
WITNESS THIS AGREEMENT made effective the 12 day of September, 2003, by and
between XXXXX XXXXXXXXXXX, PENN OCTANE CORPORATION, XXXXXX XXXXXXX, and XXXXXX
X. XXXXXXX, P.C. (hereinafter called "Trustee/Escrow Agent.")
By their signatures hereto the undersigned hereby agree that XXXXXX
XXXXXXX, P.C. shall act as Trustee/Escrow Agent from the date of closing of the
transaction described in the Stock Purchase And Separation Agreement of July 22,
2003. The Escrow Agent shall hold the 100,000 common shares of stock of
PENN-OCTANE CORPORATION delivered to him by XXXXXX XXXXXXX, together with a
Guaranty and Security Agreement executed by XXXXXX XXXXXXX and PENN OCTANE
CORPORATION.
The Escrow Agent shall hold such documents until such time as PENN-OCTANE
CORPORATION has either complied with or defaulted under the terms of Paragraph 5
(d) of the Stock Purchase and Separation Agreement. The terms of this Escrow
are as follows:
a) If PENN-OCTANE CORPORATION defaults under its obligations
described in paragraph 5 (d) of the Stock Purchase and Separation
Agreement, then the Escrow Agent shall deliver such documents to
XXXXXXXXXXX.
b) If PENN-OCTANE CORPORATION complies with its obligations
described in paragraph 5 (d) of the Stock Purchase and Separation
Agreement, then the Escrow Agent shall deliver such documents to
XXXXXX XXXXXXX.
EXECUTED this __________ day of September, 2003.
Penn Octane Corporation
______________________________
XXXXXX XXXXXXX
______________________________
XXXXX XXXXXXXXXXX
TRUSTEE/ESCROW AGENT:
XXXXXX X. XXXXXXX, P.C.
By:______________________________
XXXXXX XXXXXXX
