January 7, 1999
Xx. Xxxxxx X. Xxxxxxx
Chairman of the Board
Penn Octane Corp.
000 Xxxxxxxx Xxxx., Xxxxx 000
Xxxxxxx Xxxx, XX 00000
REFERENCE: AMENDMENT NO. 1 TO THE LEASE/INSTALLMENT PURCHASE AGREEMENT DATED
NOV. 24, 1998 BY AND BETWEEN PENN OCTANE CORPORATION AND CPSC INTERNATIONAL.
Dear Xx. Xxxxxxx:
In reference to said Lease/Installment Purchase Agreement dated November
24, 1998, this letter agreement shall serve as Amendment No. 1 and the agreement
shall be amended effective January 1, 1999 as follows:
1. The language in SECTION 1.1.1 (Definitions) shall be deleted in its
entirety and replaced with the following:
1.1.1. "PIPELINES" MEANS THOSE TWO (2) PIPELINES, APPROXIMATELY EIGHTEEN
(18) MILES IN LENGTH AND WITH A NOMINAL 8.625 INCH OUTSIDE DIAMETER (8.625"
O.D.) AND A NOMINAL 625 INCH OUTSIDE DIAMETER (6.625" O.D.) TO BE CONSTRUCTED
IN CAMERON COUNTY, TEXAS, AS MORE PARTICULARLY DESCRIBED IN EXHIBIT "A" ATTACHED
HERETO AND MADE A PART HEREOF.
2. The language in SECTION 3.2 (Rental) shall be deleted in its entirety and
replaced with the following:
3.2. RENTAL. FOR THE DURATION OF THE LEASE TERM (AS HEREIN DEFINED), POC
-------
SHALL PAY TO CPSC AS RENTAL THE SUM OF ONE MILLION SEVENTY-TWO THOUSAND EIGHT
HUNDRED DOLLARS ($1,072,800.00) PER LEASE YEAR (THE "RENTAL"), SUBJECT TO
FOLLOWING PROVISIONS OF THIS SECTION 3.2. THE RENTAL FOR EACH LEASE YEAR IS
PAYABLE IN TWELVE (12) EQUAL MONTHLY INSTALLMENTS OF EIGHTY NINE THOUSAND FOUR
HUNDRED DOLLARS ($89,400.00) EACH, DUE AND PAYABLE ON OR BEFORE THE LAST DAY OF
EACH MONTH PROVIDED, HOWEVER, IF THE SUBSTANTIAL COMPLETION DATE DOES NOT OCCUR
ON THE FIRST DAY OF THE MONTH, THEN SOLELY WITH RESPECT TO THE INSTALLMENT OF
RENTAL PAYABLE OF THE INITIAL MONTH OF THE INITIAL LEASE YEAR. POC SHALL MAKE
AN ENTIRE MONTHLY INSTALLMENT. SUCH PAYMENT SHALL BE CONSIDERED A PREPAYMENT
FOR THE PARTIAL MONTH'S RENTAL AT THE END OF THE LEASE TERM. POC SHALL REQUIRE
ITS CUSTOMER TO MAKE ALL PAYMENTS TO AN ESCROW ACCOUNT IN THE NAME OF CPSC. AN
ESCROW AGENT (RZB) WILL DEDUCT THE LEASE PAYMENT AND ANY OTHER FUNDS DUE CPSC
FROM THE ESCROW ACCOUNT AND REMIT THE REMAINDER TO POC. A SAMPLE ESCROW
AGREEMENT IS ATTACHED AS EXHIBIT "F".
3. The language in SECTION 3.3 (Letter of Credit) shall be deleted in its
entirety and replaced with the following:
January 7, 1999
Xx. Xxxxxxx
Page 2 of 2
3.3 LETTER OF CREDIT. POC SHALL PROVIDE, AT CLOSING OF THE
-------------------
LEASE/INSTALLMENT AGREEMENT, AN IRREVOCABLE STANDBY LETTER OF CREDIT TO
GUARANTEE PAYMENTS TO CPSC IN THE AMOUNT OF FIVE HUNDRED THIRTY-FOUR THOUSAND
DOLLARS ($534,000.00). IF THERE IS A DEFAULT IN PAYMENT, CPSC CAN CALL ON THE
LETTER OF CREDIT FOR PAYMENT. THE IRREVOCABLE LETTER OF CREDIT WILL BE OBTAINED
FROM A FIRST RATED BANK ACCEPTABLE TO CPSC.
Except as set forth above, all other terms and conditions of the Agreement
shall remain unchanged and in full force and effect. If the foregoing is
acceptable to you, please indicate your acceptance thereof by signing in the
space provided below and returning both original copies to us. A fully executed
copy will be returned to you for your files.
Submitted by:
CPSC INTERNATIONAL
Accepted by: Accepted by:
CPSC INTERNATIONAL PENN OCTANE CORPORATION
By: ______________________________ By: _______________________________
Title: ___________________________ Title: ____________________________
Date: ____________________________ Date: _____________________________
Acd/presentaion
