Common use of Management Clause in Contracts

Management. (a) The General Partner shall conduct, direct and manage all activities of the Partnership. Except as otherwise expressly provided in this Agreement, all management powers over the business and affairs of the Partnership shall be exclusively vested in the General Partner, and no Limited Partner or Assignee shall have any management power over the business and affairs of the Partnership. In addition to the powers now or hereafter granted a general partner of a limited partnership under applicable law or which are granted to the General Partner under any other provision of this Agreement, the General Partner, subject to Section 7.3, shall have full power and authority to do all things and on such terms as it, in its sole discretion, may deem necessary or appropriate to conduct the business of the Partnership, to exercise all powers set forth in Section 2.5 and to effectuate the purposes set forth in Section 2.4, including the following: (i) the making of any expenditures, the lending or borrowing of money, the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtedness, including indebtedness that is convertible into Partnership Securities, and the incurring of any other obligations; (ii) the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Partnership; (iii) the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or exchange of any or all of the assets of the Partnership or the merger or other combination of the Partnership with or into another Person (the matters described in this clause (iii) being subject, however, to any prior approval that may be required by Section 7.3); (iv) the use of the assets of the Partnership (including cash on hand) for any purpose consistent with the terms of this Agreement, including the financing of the conduct of the operations of the Partnership Group; subject to Section 7.6(a), the lending of funds to other Persons (including other Group Members), the repayment or guarantee of obligations of the Partnership Group and the making of capital contributions to any member of the Partnership Group; (v) the negotiation, execution and performance of any contracts, conveyances or other instruments (including instruments that limit the liability of the Partnership under contractual arrangements to all or particular assets of the Partnership, with the other party to the contract to have no recourse against the General Partner or its assets other than its interest in the Partnership, even if same results in the terms of the transaction being less favorable to the Partnership than would otherwise be the case); (vi) the distribution of Partnership cash; (vii) the selection and dismissal of employees (including employees having titles such as "president," "vice president," "secretary" and "treasurer") and agents, outside attorneys, accountants, consultants and contractors and the determination of their compensation and other terms of employment or hiring; (viii) the maintenance of such insurance for the benefit of the Partnership Group and the Partners as it deems necessary or appropriate; (ix) the formation of, or acquisition of an interest in, and the contribution of property and the making of loans to, any other limited or general partnerships, joint ventures, corporations, limited liability companies or other relationships (including the acquisition of interests in, and the contributions of property to, any Group Member from time to time) subject to the restrictions set forth in Section 2.4; (x) the control of any matters affecting the rights and obligations of the Partnership, including the bringing and defending of actions at law or in equity and otherwise engaging in the conduct of litigation and the incurring of legal expense and the settlement of claims and litigation; (xi) the indemnification of any Person against liabilities and contingencies to the extent permitted by law; (xii) the entering into of listing agreements with any National Securities Exchange and the delisting of some or all of the Limited Partner Interests from, or requesting that trading be suspended on, any such exchange (subject to any prior approval that may be required under Section 4.8); (xiii) unless restricted or prohibited by Section 5.7, the purchase, sale or other acquisition or disposition of Partnership Securities, or the issuance of additional options, rights, warrants and appreciation rights relating to Partnership Securities; and (xiv) the undertaking of any action in connection with the Partnership's participation in the Operating Partnership or any other subsidiary of the Partnership as a member or partner. (b) Notwithstanding any other provision of this Agreement, the Operating Partnership Agreement, the Delaware Act or any applicable law, rule or regulation, each of the Partners and the Assignees and each other Person who may acquire an interest in Partnership Securities hereby (i) approves, ratifies and confirms the execution, delivery and performance by the parties thereto of the Operating Partnership Agreement, the Omnibus Agreement, the Contribution Agreement, the Distribution Agreement, and the Purchase Contract dated _________, 2004 between Penn Octane Corporation and the Operating Partnership and the other agreements described in or filed as exhibits to the Registration Statement that are related to the transactions contemplated by the Registration Statement; (ii) agrees that the General Partner (on its own or through any officer of the Partnership) is authorized to execute, deliver and perform the agreements referred to in clause (i) of this sentence and the other agreements, acts, transactions and matters described in or contemplated by the Registration Statement on behalf of the Partnership without any further act, approval or vote of the Partners or the Assignees or the other Persons who may acquire an interest in Partnership Securities; and (iii) agrees that the execution, delivery or performance by the General Partner, any Group Member or any Affiliate of any of them, of this Agreement or any agreement authorized or permitted under this Agreement (including the exercise by the General Partner or any Affiliate of the General Partner of the rights accorded pursuant to Article XV), shall not constitute a breach by the General Partner of any duty that the General Partner may owe the Partnership or the Limited Partners or any other Persons under this Agreement (or any other agreements) or of any duty stated or implied by law or equity.

Management. (a) The General Partner shall conduct, direct and manage all activities of the Partnership. Except as otherwise expressly provided in this Agreement, all management powers over the business and affairs of the Partnership are and shall be exclusively vested in the General Partner, and no Limited Partner or Assignee shall have any right to participate in or exercise control or management power over the business and affairs of the Partnership. The General Partner may not be removed by the Partners with or without cause, except with the Consent of the General Partner. In addition to the powers now or hereafter granted a general partner of a limited partnership under applicable law or which that are granted to the General Partner under any other provision of this Agreement, the General Partner, subject to the other provisions hereof including Section 7.3, shall have full power and authority to do all things and on such terms as it, in its sole discretion, may deem deemed necessary or appropriate desirable by it to conduct the business of the Partnership, to exercise all powers set forth in Section 2.5 3.2 hereof and to effectuate the purposes set forth in Section 2.43.1 hereof, including the followingincluding, without limitation: (i) the making of any expenditures, the lending or borrowing of moneymoney (including, without limitation, making prepayments on loans and borrowing money or selling assets to permit the Partnership to make distributions to its Partners in such amounts as will permit the Company (so long as the Company qualifies as a REIT) to avoid the payment of any federal income tax (including, for this purpose, any excise tax pursuant to Code Section 4981) and to make distributions to its stockholders sufficient to permit the Company to maintain REIT status or otherwise to satisfy the REIT Requirements), the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtednessindebtedness (including the securing of same by deed to secure debt, including indebtedness that is convertible into Partnership Securitiesmortgage, deed of trust or other lien or encumbrance on the Partnership’s assets) and the incurring of any other obligationsobligations that it deems necessary for the conduct of the activities of the Partnership; (ii) the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Partnership; (iii) the acquisition, dispositionsale, mortgagetransfer, pledgeexchange or other disposition of any, encumbrance, hypothecation all or exchange of any or substantially all of the assets of the Partnership (including, but not limited to, the exercise or grant of any conversion, option, privilege or subscription right or any other right available in connection with any assets at any time held by the Partnership) or the merger merger, consolidation, reorganization or other combination or conversion of the Partnership with or into another Person (the matters described in this clause (iii) being subject, however, to any prior approval that may be required by Section 7.3)entity; (iv) the mortgage, pledge, encumbrance or hypothecation of any assets of the Partnership, the use of the assets of the Partnership (including including, without limitation, cash on hand) for any purpose consistent with the terms of this AgreementAgreement and on any terms that it sees fit, including including, without limitation, the financing of the conduct operations and activities of the operations General Partner, the Partnership or any of the Partnership Group; subject to Section 7.6(a)Partnership’s Subsidiaries, the lending of funds to other Persons (including other Group Members)including, without limitation, the Partnership’s Subsidiaries) and the repayment or guarantee of obligations of the Partnership, its Subsidiaries and any other Person in which the Partnership Group has an equity investment, and the making of capital contributions to any member of and equity investments in the Partnership GroupPartnership’s Subsidiaries; (v) the management, operation, leasing, landscaping, repair, alteration, demolition, replacement or improvement of any Property, including, without limitation, any Contributed Property, or other asset of the Partnership or any Subsidiary; (vi) the negotiation, execution and performance of any contracts, leases, conveyances or other instruments (including instruments that limit the liability of General Partner considers useful or necessary to the Partnership under contractual arrangements to all or particular assets conduct of the Partnership, with ’s operations or the other party to the contract to have no recourse against implementation of the General Partner or its assets Partner’s powers under this Agreement, including contracting with contractors, developers, consultants, accountants, legal counsel, other than its interest in professional advisors and other agents and the payment of their expenses and compensation out of the Partnership, even if same results in the terms of the transaction being less favorable to the Partnership than would otherwise be the case); (vi) the distribution of Partnership cash’s assets; (vii) the selection distribution of Partnership cash or other Partnership assets in accordance with this Agreement, the holding, management, investment and dismissal reinvestment of employees (including employees having titles such as "president," "vice president," "secretary" cash and "treasurer") and agentsother assets of the Partnership, outside attorneys, accountants, consultants and contractors and the determination collection and receipt of their compensation revenues, rents and other terms income of employment or hiringthe Partnership; (viii) the maintenance of such insurance for the benefit of the Partnership Group and the Partners as it deems necessary or appropriate, including, without limitation, (i) casualty, liability and other insurance on the Properties of the Partnership and (ii) liability insurance for the Indemnitees hereunder; (ix) the formation of, or acquisition of an interest in, and the contribution of property and the making of loans to, any other further limited or general partnerships, joint ventures, corporations, limited liability companies companies, joint ventures or other relationships that it deems desirable (including including, without limitation, the acquisition of interests in, and the contributions of property to, any Group Member Subsidiary and any other Person in which it has an equity investment from time to time) subject ); provided, however, that, as long as the Company has determined to continue to qualify as a REIT, the restrictions set forth General Partner may not engage in any such formation, acquisition or contribution that would cause the Company to fail to qualify as a REIT within the meaning of Code Section 2.4856(a); (x) the control of any matters affecting the rights and obligations of the Partnership, including the bringing settlement, compromise, submission to arbitration or any other form of dispute resolution, or abandonment, of any claim, cause of action, liability, debt or damages, due or owing to or from the Partnership, the commencement or defense of suits, legal proceedings, administrative proceedings, arbitrations or other forms of dispute resolution, and defending the representation of actions at law the Partnership in all suits or in equity and otherwise engaging in the conduct legal proceedings, administrative proceedings, arbitrations or other forms of litigation and dispute resolution, the incurring of legal expense expense, and the settlement of claims and litigation; (xi) the indemnification of any Person against liabilities and contingencies to the extent permitted by law; (xii) the entering into of listing agreements with any National Securities Exchange and the delisting of some or all of the Limited Partner Interests from, or requesting that trading be suspended on, any such exchange (subject to any prior approval that may be required under Section 4.8); (xiii) unless restricted or prohibited by Section 5.7, the purchase, sale or other acquisition or disposition of Partnership Securities, or the issuance of additional options, rights, warrants and appreciation rights relating to Partnership Securities; and (xivxi) the undertaking of any action in connection with the Partnership's participation ’s direct or indirect investment in any Subsidiary or any other Person (including, without limitation, the Operating contribution or loan of funds by the Partnership to such Persons); (xii) except as otherwise specifically set forth in this Agreement, the determination of the fair market value of any Partnership property distributed in kind using such reasonable method of valuation as it may adopt; provided that such methods are otherwise consistent with the requirements of this Agreement; (xiii) the enforcement of any rights against any Partner pursuant to representations, warranties, covenants and indemnities relating to such Partner’s contribution of property or assets to the Partnership; (xiv) the exercise, directly or indirectly, through any attorney-in-fact acting under a general or limited power of attorney, of any right, including the right to vote, appurtenant to any asset or investment held by the Partnership; (xv) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of or in connection with any Subsidiary of the Partnership or any other subsidiary Person in which the Partnership has a direct or indirect interest, or jointly with any such Subsidiary or other Person; (xvi) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of any Person in which the Partnership does not have an interest, pursuant to contractual or other arrangements with such Person; (xvii) the making, execution and delivery of any and all deeds, leases, notes, deeds to secure debt, mortgages, deeds of trust, security agreements, conveyances, contracts, guarantees, warranties, indemnities, waivers, releases or legal instruments or agreements in writing necessary or appropriate in the judgment of the General Partner for the accomplishment of any of the powers of the General Partner enumerated in this Agreement; (xviii) the issuance of additional Partnership Units, as a member or partnerappropriate and in the General Partner’s sole and absolute discretion, in connection with Capital Contributions by Additional Limited Partners and additional Capital Contributions by Partners pursuant to Article IV hereof; (xix) the interpretation of the terms and provisions of this Agreement; and (xx) an election to dissolve the Partnership pursuant to Section 13.1(c) hereof. (b) Notwithstanding any other provision of this Agreement, the Operating Partnership Agreement, the Delaware Act or any applicable law, rule or regulation, each Each of the Limited Partners and the Assignees and each other Person who may acquire an interest agrees that, except as provided in Partnership Securities hereby (i) approvesSection 7.3 hereof, ratifies and confirms the execution, delivery and performance by the parties thereto of the Operating Partnership Agreement, the Omnibus Agreement, the Contribution Agreement, the Distribution Agreement, and the Purchase Contract dated _________, 2004 between Penn Octane Corporation and the Operating Partnership and the other agreements described in or filed as exhibits to the Registration Statement that are related to the transactions contemplated by the Registration Statement; (ii) agrees that the General Partner (on its own or through any officer of the Partnership) is authorized to execute, deliver and perform the above-mentioned agreements referred to in clause (i) of this sentence and the other agreements, acts, transactions and matters described in or contemplated by the Registration Statement on behalf of the Partnership without any further act, approval or vote of the Partners Partners, notwithstanding any other provision of this Agreement, the Act or the Assignees any applicable law, rule or the other Persons who may acquire an interest in Partnership Securities; and (iii) agrees that the regulation. The execution, delivery or performance by the General Partner, any Group Member Partner or any Affiliate the Partnership of any of them, of this Agreement or any agreement authorized or permitted under this Agreement (including the exercise by the General Partner or any Affiliate of the General Partner of the rights accorded pursuant to Article XV), shall not constitute a breach by the General Partner of any duty that the General Partner may owe the Partnership or the Limited Partners or any other Persons under this Agreement (or any other agreements) or of any duty stated or implied by law or equity. (c) At all times from and after the date hereof, the General Partner may cause the Partnership to establish and maintain working capital and other reserves in such amounts as the General Partner, in its sole and absolute discretion, deems appropriate and reasonable from time to time. (d) In exercising its authority under this Agreement, the General Partner may, but shall be under no obligation to, take into account the tax consequences to any Partner (including the General Partner) of any action taken by it. The General Partner and the Partnership shall not have liability to a Limited Partner under any circumstances as a result of an income tax liability incurred by such Limited Partner as a result of an action (or inaction) by the General Partner pursuant to its authority under this Agreement.

Management. (a) The General Partner shall conduct, direct and manage all activities of the Partnership. A. Except as otherwise expressly provided in this Agreement, all management powers over the business and affairs of the Partnership are and shall be exclusively vested in the General Partner, and no Limited Partner or Assignee shall have any right to participate in or exercise control or management power over the business and affairs of the Partnership. The General Partner may not be removed by the Partners with or without cause, except with the consent of the General Partner. In addition to the powers now or hereafter granted to a general partner of a limited partnership under applicable law or which that are granted to the General Partner under any other provision of this Agreement, the General Partner, subject to the other provisions hereof including Section 7.3, shall have full power and authority to do all things and on such terms as it, in its sole discretion, may deem deemed necessary or appropriate desirable by it to conduct the business of the Partnership, to exercise all powers set forth in Section 2.5 3.2 hereof and to effectuate the purposes set forth in Section 2.43.1 hereof, including the followingincluding, without limitation: (i1) the making of any expenditures, the lending or borrowing of moneymoney (including, without limitation, making prepayments on loans and borrowing money or selling assets to permit the Partnership to make distributions to its Partners in such amounts as will permit the General Partner (so long as the General Partner desires to maintain or restore its status as a REIT) to avoid the payment of any federal income tax (including, for this purpose, any excise tax pursuant to Code Section 4981) and to make distributions to its stockholders sufficient to permit the General Partner to maintain or restore REIT status or otherwise to satisfy the REIT Requirements), the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtednessindebtedness (including the securing of same by deed to secure debt, including indebtedness that is convertible into Partnership Securitiesmortgage, deed of trust or other lien or encumbrance on the Partnership’s assets) and the incurring of any other obligationsobligations that it deems necessary for the conduct of the activities of the Partnership; (ii2) the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Partnership; (iii3) the acquisition, dispositionsale, mortgagelease, pledgetransfer, encumbranceexchange or other disposition of any, hypothecation all or exchange of any or substantially all of the assets of the Partnership (including, but not limited to, the exercise or grant of any conversion, option, privilege or subscription right or any other right available in connection with any assets at any time held by the Partnership) or the merger merger, consolidation, reorganization or other combination of the Partnership with or into another Person (the matters described in this clause (iii) being subject, however, to any prior approval that may be required by Section 7.3)entity; (iv4) the mortgage, pledge, encumbrance or hypothecation of any assets of the Partnership, the use of the assets of the Partnership (including including, without limitation, cash on hand) for any purpose consistent with the terms of this AgreementAgreement and on any terms that it sees fit, including including, without limitation, the financing of the conduct operations and activities of the operations General Partner, the Partnership or any of the Partnership Group; subject to Section 7.6(a)Partnership’s Subsidiaries, the lending of funds to other Persons (including other Group Members)including, without limitation, the Partnership’s Subsidiaries) and the repayment or guarantee of obligations of the Partnership, its Subsidiaries and any other Person in which the Partnership Group has an equity investment, and the making of capital contributions to and equity investments in the Partnership’s Subsidiaries; (5) the management, operation, leasing, landscaping, repair, alteration, demolition, replacement or improvement of any member Property, including, without limitation, any Contributed Property, or other asset of the Partnership Groupor any Subsidiary, whether pursuant to a Services Agreement or otherwise; (v6) the negotiation, execution and performance of any contracts, leases, conveyances or other instruments (including instruments that limit the liability General Partner considers useful or necessary to the conduct of the Partnership’s operations or the implementation of the General Partner’s powers under this Agreement, including contracting with contractors, developers, consultants, accountants, legal counsel, other professional advisors and other agents and the payment of their expenses and compensation out of the Partnership’s assets; (7) the distribution of Partnership under contractual arrangements to all cash or particular other Partnership assets in accordance with this Agreement, the holding, management, investment and reinvestment of cash and other assets of the Partnership, with and the other party to the contract to have no recourse against the General Partner or its assets other than its interest in collection and receipt of revenues, rents and income of the Partnership, even if same results in the terms of the transaction being less favorable to the Partnership than would otherwise be the case); (vi) the distribution of Partnership cash; (vii) the selection and dismissal of employees (including employees having titles such as "president," "vice president," "secretary" and "treasurer") and agents, outside attorneys, accountants, consultants and contractors and the determination of their compensation and other terms of employment or hiring; (viii) 8) the maintenance of such insurance for the benefit of the Partnership Group and the Partners as it deems necessary or appropriate, including, without limitation, (i) casualty, liability and other insurance on the Properties and (ii) liability insurance for the Indemnitees hereunder; (ix9) the formation of, or acquisition of an interest in, and the contribution of property and the making of loans to, any other further limited or general partnerships, joint ventures, corporations, limited liability companies companies, joint ventures or other relationships that it deems desirable (including including, without limitation, the acquisition of interests in, and the contributions of property to, any Group Member Subsidiary and any other Person in which it has an equity investment from time to time) subject ); provided, however, that, as long as the General Partner has determined to continue to qualify as a REIT, the restrictions set forth General Partner may not engage in any such formation, acquisition or contribution that would cause the General Partner to fail to qualify as a REIT within the meaning of Code Section 2.4856(a); (x10) the control of any matters affecting the rights and obligations of the Partnership, including the bringing settlement, compromise, submission to arbitration or any other form of dispute resolution, or abandonment, of any claim, cause of action, liability, debt or damages, due or owing to or from the Partnership, the commencement or defense of suits, legal proceedings, administrative proceedings, arbitrations or other forms of dispute resolution, and defending the representation of actions at law the Partnership in all suits or in equity and otherwise engaging in the conduct legal proceedings, administrative proceedings, arbitrations or other forms of litigation and dispute resolution, the incurring of legal expense expense, and the settlement of claims and litigation; (xi) the indemnification of any Person against liabilities and contingencies to the extent permitted by law; (xii) the entering into of listing agreements with any National Securities Exchange and the delisting of some or all of the Limited Partner Interests from, or requesting that trading be suspended on, any such exchange (subject to any prior approval that may be required under Section 4.8); (xiii) unless restricted or prohibited by Section 5.7, the purchase, sale or other acquisition or disposition of Partnership Securities, or the issuance of additional options, rights, warrants and appreciation rights relating to Partnership Securities; and (xiv11) the undertaking of any action in connection with the Partnership's participation ’s direct or indirect investment in any Subsidiary or any other Person (including, without limitation, the Operating contribution or loan of funds by the Partnership to such Persons); (12) except as otherwise specifically set forth in this Agreement, the determination of the fair market value of any Partnership property distributed in kind using such reasonable method of valuation as it may adopt; provided that such methods are otherwise consistent with the requirements of this Agreement; (13) the enforcement of any rights against any Partner pursuant to representations, warranties, covenants and indemnities relating to such Partner’s contribution of property or assets to the Partnership; (14) the exercise, directly or indirectly, through any attorney-in-fact acting under a general or limited power of attorney, of any right, including the right to vote, appurtenant to any asset or investment held by the Partnership; (15) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of or in connection with any Subsidiary of the Partnership or any other subsidiary Person in which the Partnership has a direct or indirect interest, or jointly with any such Subsidiary or other Person; (16) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of any Person in which the Partnership does not have an interest, pursuant to contractual or other arrangements with such Person; (17) the making, execution and delivery of any and all deeds, leases, notes, deeds to secure debt, mortgages, deeds of trust, security agreements, conveyances, contracts, guarantees, warranties, indemnities, waivers, releases or legal instruments or agreements in writing necessary or appropriate in the judgment of the General Partner for the accomplishment of any of the powers of the General Partner enumerated in this Agreement; (18) the issuance of additional Partnership Units, as appropriate and in the General Partner’s sole and absolute discretion, in connection with Capital Contributions by Additional Limited Partners and additional Capital Contributions by Partners pursuant to Article 4 hereof; (19) the selection and dismissal of Company Employees (including, without limitation, employees having titles or offices such as president, vice president, secretary and treasurer), and agents, outside attorneys, accountants, consultants and contractors of the Partnership as a member or partner. (b) Notwithstanding the General Partner, the determination of their compensation and other terms of employment or hiring and the delegation to any other provision such Company Employee the authority to conduct the business of the Partnership in accordance with the terms of this Agreement, ; and (20) an election to dissolve the Operating Partnership Agreement, the Delaware Act or any applicable law, rule or regulation, each pursuant to Section 13.1.C hereof. B. Each of the Limited Partners and the Assignees and each other Person who may acquire an interest agrees that, except as provided in Partnership Securities hereby (i) approvesSection 7.3 hereof, ratifies and confirms the execution, delivery and performance by the parties thereto of the Operating Partnership Agreement, the Omnibus Agreement, the Contribution Agreement, the Distribution Agreement, and the Purchase Contract dated _________, 2004 between Penn Octane Corporation and the Operating Partnership and the other agreements described in or filed as exhibits to the Registration Statement that are related to the transactions contemplated by the Registration Statement; (ii) agrees that the General Partner (on its own or through any officer of the Partnership) is authorized to execute, deliver and perform the above-mentioned agreements referred to in clause (i) of this sentence and the other agreements, acts, transactions and matters described in or contemplated by the Registration Statement on behalf of the Partnership without any further act, approval or vote of the Partners Partners, notwithstanding any other provision of this Agreement, the Act or the Assignees any applicable law, rule or the other Persons who may acquire an interest in Partnership Securities; and (iii) agrees that the regulation. The execution, delivery or performance by the General Partner, any Group Member Partner or any Affiliate the Partnership of any of them, of this Agreement or any agreement authorized or permitted under this Agreement (including the exercise by the General Partner or any Affiliate of the General Partner of the rights accorded pursuant to Article XV), shall not constitute a breach by the General Partner of any duty that the General Partner may owe the Partnership or the Limited Partners or any other Persons under this Agreement (or any other agreements) or of any duty stated or implied by law or equity. C. At all times from and after the date hereof, the General Partner may cause the Partnership to establish and maintain working capital and other reserves in such amounts as the General Partner, in its sole and absolute discretion, deems appropriate and reasonable from time to time. D. In exercising its authority under this Agreement, the General Partner may, but shall be under no obligation to, take into account the tax consequences to any Partner (including the General Partner) of any action taken by it. The General Partner and the Partnership shall not have liability to a Limited Partner under any circumstances as a result of an income tax liability incurred by such Limited Partner as a result of an action (or inaction) by the General Partner pursuant to its authority under this Agreement.

Management. (a) The General Partner shall conduct, direct and manage all activities of the Partnership. A. Except as otherwise expressly provided in this Agreement, all management powers over the business and affairs of the Partnership are and shall be exclusively vested in the General Partner, and no Limited Partner or Assignee shall have any right to participate in or exercise control or management power over the business and affairs of the Partnership. The General Partner may not be removed by the Partners with or without cause, except with the Consent of the General Partner. In addition to the powers now or hereafter granted a general partner of a limited partnership under applicable law or which that are granted to the General Partner under any other provision of this Agreement, the General Partner, subject to the other provisions hereof including Section 7.3, shall have full power and authority to do all things and on such terms as it, in its sole discretion, may deem deemed necessary or appropriate desirable by it to conduct the business of the Partnership, to exercise all powers set forth in Section 2.5 3.2 hereof and to effectuate the purposes set forth in Section 2.43.1 hereof, including the followingincluding, without limitation: (i1) the making of any expenditures, the lending or borrowing of moneymoney (including, without limitation, making prepayments on loans and borrowing money to permit the Partnership to make distributions to its Partners in such amounts as will permit the Previous General Partner (so long as the Previous General Partner qualifies as a REIT) to avoid the payment of any federal income tax (including, for this purpose, any excise tax pursuant to Code Section 4981) and to make distributions to its shareholders sufficient to permit the Previous General Partner to maintain REIT status or otherwise to satisfy the REIT Requirements), the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtednessindebtedness (including the securing of same by deed to secure debt, including indebtedness that is convertible into Partnership Securitiesmortgage, deed of trust or other lien or encumbrance on the Partnership's assets) and the incurring of any other obligationsobligations that it deems necessary for the conduct of the activities of the Partnership; (ii2) the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Partnership; (iii3) the acquisition, dispositionsale, mortgagetransfer, pledge, encumbrance, hypothecation exchange or exchange other disposition of any or all of the assets of the Partnership (including, but not limited to, the exercise or grant of any conversion, option, privilege or subscription right or any other right available in connection with any assets at any time held by the Partnership) or the merger merger, consolidation, reorganization or other combination of the Partnership with or into another Person (the matters described in this clause (iii) being subject, however, to any prior approval that may be required by Section 7.3)entity; (iv4) the mortgage, pledge, encumbrance or hypothecation of any assets of the Partnership, the use of the assets of the Partnership (including including, without limitation, cash on hand) for any purpose consistent with the terms of this AgreementAgreement and on any terms that it sees fit, including including, without limitation, the financing of the conduct operations and activities of the operations General Partner, the Partnership or any of the Partnership Group; subject to Section 7.6(a)Partnership's Subsidiaries, the lending of funds to other Persons (including other Group Members)including, without limitation, the Partnership's Subsidiaries) and the repayment or guarantee of obligations of the Partnership Group Partnership, its Subsidiaries and any other Person in which it has an equity investment, and the making of capital contributions to and equity investments in the Partnership's Subsidiaries; (5) the management, operation, leasing, landscaping, repair, alteration, demolition, replacement or improvement of any member Property, including, without limitation, any Contributed Property, or other asset of the Partnership Groupor any Subsidiary; (v6) the negotiation, execution and performance of any contracts, leases, conveyances or other instruments (including instruments that limit the liability General Partner considers useful or necessary to the conduct of the Partnership's operations or the implementation of the General Partner's powers under this Agreement, including contracting with contractors, developers, consultants, accountants, legal counsel, other professional advisors and other agents and the payment of their expenses and compensation out of the Partner ship's assets; (7) the distribution of Partnership under contractual arrangements to all cash or particular other Partnership assets in accordance with this Agreement, the holding, management, investment and reinvestment of cash and other assets of the Partnership, with and the other party to the contract to have no recourse against the General Partner or its assets other than its interest in collection and receipt of revenues, rents and income of the Partnership, even if same results in the terms of the transaction being less favorable to the Partnership than would otherwise be the case); (vi) the distribution of Partnership cash; (vii) 8) the selection and dismissal of employees of the Partnership or the General Partner (including including, without limitation, employees having titles or offices such as "president," "vice president," "secretary" and "treasurer") ), and agents, outside attorneys, accountants, consultants and contractors of the Partnership or the General Partner and the determination of their compensation and other terms of employment or hiring; (viii9) the maintenance of such insurance for the benefit of the Partnership Group and the Partners as it deems necessary or appropriate; (ix10) the formation of, or acquisition of an interest in, and the contribution of property and the making of loans to, any other further limited or general partnerships, joint ventures, corporations, limited liability companies companies, joint ventures or other relationships that it deems desirable (including including, without limitation, the acquisition of interests in, and the contributions of property to, any Group Member Subsidiary and any other Person in which it has an equity investment from time to time) subject ); provided, however, that, as long as the Previous General Partner has determined to continue to qualify as a REIT, the restrictions set forth General Partner may not engage in any such formation, acquisition or contribution that would cause the Previous General Partner to fail to qualify as a REIT or the General Partner to fail to qualify as a "qualified REIT subsidiary" within the meaning of Code Section 2.4856(i)(2); (x11) the control of any matters affecting the rights and obligations of the Partnership, including the bringing settlement, compromise, submission to arbitration or any other form of dispute resolution, or abandonment, of any claim, cause of action, liability, debt or damages, due or owing to or from the Partnership, the commencement or defense of suits, legal proceedings, administrative proceedings, arbitrations or other forms of dispute resolution, and defending the representation of actions at law the Partnership in all suits or in equity and otherwise engaging in the conduct legal proceedings, administrative proceedings, arbitrations or other forms of litigation and dispute resolution, the incurring of legal expense expense, and the settlement of claims and litigation; (xi) the indemnification of any Person against liabilities and contingencies to the extent permitted by law; (xii) the entering into of listing agreements with any National Securities Exchange and the delisting of some or all of the Limited Partner Interests from, or requesting that trading be suspended on, any such exchange (subject to any prior approval that may be required under Section 4.8); (xiii) unless restricted or prohibited by Section 5.7, the purchase, sale or other acquisition or disposition of Partnership Securities, or the issuance of additional options, rights, warrants and appreciation rights relating to Partnership Securities; and (xiv12) the undertaking of any action in connection with the Partnership's participation direct or indirect investment in any Subsidiary or any other Person (including, without limitation, the Operating contribution or loan of funds by the Partnership to such Persons); (13) the determination of the fair market value of any Partnership property distributed in kind using such reasonable method of valuation as it may adopt; provided that such methods are otherwise consistent with the requirements of this Agreement; (14) the enforcement of any rights against any Partner pursuant to representations, warranties, covenants and indemnities relating to such Partner's contribution of property or assets to the Partnership; (15) the exercise, directly or indirectly, through any attorney- in-fact acting under a general or limited power of attorney, of any right, including the right to vote, appurtenant to any asset or investment held by the Partnership; (16) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of or in connection with any Subsidiary of the Partnership or any other subsidiary Person in which the Partnership has a direct or indirect interest, or jointly with any such Subsidiary or other Person; (17) the exercise of any of the Partnership as a member or partner. (b) Notwithstanding any other provision powers of this Agreement, the Operating Partnership Agreement, the Delaware Act or any applicable law, rule or regulation, each of the Partners and the Assignees and each other Person who may acquire an interest in Partnership Securities hereby (i) approves, ratifies and confirms the execution, delivery and performance by the parties thereto of the Operating Partnership Agreement, the Omnibus Agreement, the Contribution Agreement, the Distribution Agreement, and the Purchase Contract dated _________, 2004 between Penn Octane Corporation and the Operating Partnership and the other agreements described in or filed as exhibits to the Registration Statement that are related to the transactions contemplated by the Registration Statement; (ii) agrees that the General Partner enumerated in this Agreement on behalf of any Person in which the Partnership does not have an interest, pursuant to contractual or other arrangements with such Person; (on its own 18) the making, execution and delivery of any and all deeds, leases, notes, deeds to secure debt, mortgages, deeds of trust, security agreements, conveyances, contracts, guarantees, warranties, indemnities, waivers, releases or through any officer legal instruments or agreements in writing necessary or appropriate in the judgment of the PartnershipGeneral Partner for the accomplishment of any of the powers of the General Partner enumerated in this Agreement; (19) the issuance of additional Partnership Units, as appropriate and in the General Partner's sole and absolute discretion, in connection with Capital Contributions by Additional Limited Partners and additional Capital Contributions by Partners pursuant to Article 4 hereof; and (20) an election to dissolve the Partnership pursuant to Section 13.1.C hereof. B. Each of the Limited Partners agrees that, except as provided in Section 7.3 hereof, the General Partner is authorized to execute, deliver and perform the above-mentioned agreements referred to in clause (i) of this sentence and the other agreements, acts, transactions and matters described in or contemplated by the Registration Statement on behalf of the Partnership without any further act, approval or vote of the Partners Partners, notwithstanding any other provision of this Agreement (except as provided in Section 7.3 hereof), the Act or the Assignees any applicable law, rule or the other Persons who may acquire an interest in Partnership Securities; and (iii) agrees that the regulation. The execution, delivery or performance by the General Partner, any Group Member Partner or any Affiliate the Partnership of any of them, of this Agreement or any agreement authorized or permitted under this Agreement (including the exercise by the General Partner or any Affiliate of the General Partner of the rights accorded pursuant to Article XV), shall not constitute a breach by the General Partner of any duty that the General Partner may owe the Partnership or the Limited Partners or any other Persons under this Agreement (or any other agreements) or of any duty stated or implied by law or equity. C. At all times from and after the date hereof, the General Partner may cause the Partnership to obtain and maintain (i) casualty, liability and other insurance on the Properties of the Partnership and (ii) liability insurance for the Indemnitees hereunder. D. At all times from and after the date hereof, the General Partner may cause the Partnership to establish and maintain working capital and other reserves in such amounts as the General Partner, in its sole and absolute discretion, deems appropriate and reasonable from time to time. E. In exercising its authority under this Agreement, the General Partner may, but shall be under no obligation to, take into account the tax consequences to any Partner (including the General Partner) of any action taken by it. The General Partner and the Partnership shall not have liability to a Limited Partner under any circumstances as a result of an income tax liability incurred by such Limited Partner as a result of an action (or inaction) by the General Partner pursuant to its authority under this Agreement so long as the action or inaction is taken in good faith.

Management. (a) The Except as delegated to the Manager Group as set forth in the Management Services Agreement or as otherwise provided therein or in the NEE Partners Partnership Agreement, the General Partner shall conduct, direct and manage all activities of the Partnership. Except as otherwise expressly provided in this Agreement, but without limitation on the ability of the General Partner to delegate its rights and power to other Persons, all management powers over the business and affairs of the Partnership shall be exclusively vested in the General Partner, and no Limited Partner or Assignee in its capacity as such shall have any management power over the business and affairs of the Partnership. In addition to the powers now or hereafter granted to a general partner of a limited partnership under applicable law or which that are granted to the General Partner under any other provision of this Agreement, the General Partner, subject to Section 7.3, shall have full power and authority to do all things and on such terms as it, in its sole discretion, may deem it determines to be necessary or appropriate to conduct the business of the Partnership, to exercise all powers set forth in Section 2.5 and to effectuate the purposes set forth in Section 2.4, including the following: (i) the making of any expenditures, the lending or borrowing of money, the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtedness, including indebtedness that is convertible into or exchangeable for Partnership SecuritiesInterests, and the incurring of any other obligations; (ii) the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Partnership; (iii) the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or exchange of any or all of the assets of the Partnership or the merger or other combination of the Partnership with or into another Person (the matters described in this clause (iii) being subject, however, to any prior approval that may be required by Section 7.37.3 and Article XIV); (iv) the use of the assets of the Partnership (including cash on hand) for any purpose consistent with the terms of this Agreement, including (A) the financing of the conduct of the operations of the Partnership Group; (B) subject to Section 7.6(a), the lending of funds to other Persons (including other Group Members), ; (C) the repayment or guarantee of obligations of the Partnership any Group Member; and (D) the making of capital contributions to any member of the Partnership GroupGroup Member; (v) the negotiation, execution and performance of any contracts, conveyances or other instruments (including instruments that limit the liability of the Partnership under contractual arrangements to all or particular assets of the Partnership, with the other party to the contract to have having no recourse against the General Partner or its assets other than its interest in the Partnership, even if the same results in the terms of the transaction being are less favorable to the Partnership than would otherwise be the case); (vi) the distribution of Partnership cashcash held by the Partnership; (vii) the selection and dismissal of employees (including employees having titles such as "“president," "” “vice president," "” “secretary" ” and "“treasurer"”) and agents, internal and outside attorneys, accountants, consultants and contractors and the determination of their compensation and other terms of employment or hiring; (viii) the maintenance of such insurance for the benefit of the Partnership Group and Group, the Partners as it deems necessary or appropriateand Indemnitees; (ix) the formation of, or acquisition of an interest in, and the contribution of property and the making of loans to, any other further limited or general partnerships, joint ventures, corporations, limited liability companies or other relationships Persons (including the acquisition of interests in, and the contributions of property to, any Group Member from time to time) subject to the restrictions set forth in Section 2.4; (x) the control of any matters affecting the rights and obligations of the Partnership, including the bringing and defending of actions at law or in equity and otherwise engaging in the conduct of litigation litigation, arbitration or mediation and the incurring of legal expense and the settlement of claims and litigation; (xi) the indemnification of any Person against liabilities and contingencies to the extent permitted by law; (xii) the entering into of listing agreements with any National Securities Exchange and the delisting of some or all of the Limited Partner Interests from, or requesting that trading be suspended on, any such exchange (subject to any prior approval that may be required under Section 4.8); (xiii) unless restricted or prohibited by Section 5.7, the purchase, sale or other acquisition or disposition of Partnership SecuritiesInterests, or the issuance of additional options, rights, warrants and appreciation rights relating to Derivative Partnership Securities; andInterests; (xivxiii) the undertaking of any action in connection with the Partnership's ’s participation in the Operating Partnership management of any Group Member; and (xiv) the entering into of agreements with any of its Affiliates to render services to a Group Member or any other subsidiary to itself in the discharge of its duties as General Partner of the Partnership as a member or partnerPartnership. (b) Notwithstanding any other provision of this Agreement, the Operating Partnership any Group Member Agreement, the Delaware Act or any applicable law, rule or regulation, each of the Partners and the Assignees and each other Person who may acquire an interest in Partnership Securities Interests hereby (i) approves, ratifies and confirms the execution, delivery and performance by the parties thereto of the Operating Partnership Agreement, the Omnibus Agreement, the Contribution Agreement, the Distribution Agreement, and the Purchase Contract dated _________, 2004 between Penn Octane Corporation and the Operating Partnership and the other agreements described in or filed as exhibits to the Registration Statement that are related to the transactions contemplated by the Registration Statement; (ii) agrees that the General Partner (on its own or through any officer of the Partnership) is authorized to execute, deliver and perform the agreements referred to in clause (i) of this sentence and the other agreements, acts, transactions and matters described in or contemplated by the Registration Statement on behalf of the Partnership without any further act, approval or vote of the Partners or the Assignees or the other Persons who may acquire an interest in Partnership Securities; and (iii) agrees that the execution, delivery or performance by the General Partner, any Group Member or any Affiliate of any of them, them of this Agreement or any agreement authorized or permitted under this Agreement (including the exercise by the General Partner or any Affiliate of the General Partner of the rights accorded pursuant to Article XV), XVII) shall not constitute a breach by the General Partner of any duty or any other obligation of any type whatsoever that the General Partner may owe the Partnership or the Limited Partners or any other Persons under this Agreement (or any other agreements) or of any duty stated existing at law, in equity or implied otherwise. (c) Notwithstanding any other provision of this Agreement, the consent of the NEE Partners General Partner, which may be granted or withheld in its sole discretion, shall be required for the following actions: (i) Sale of all or substantially all assets of the Partnership Group as set forth in Section 7.3. (ii) Merger, consolidation, or conversion of the Partnership, as set forth in Section 14.2, or the merger, consolidation, or conversion of any other Group Member. (iii) Dissolution of the Partnership, as set forth in Section 12.1(b), or the dissolution of any other Group Member. (iv) Transfer by law the General Partner of all or equityany part of its General Partner Interest to another Person as set forth in Section 4.6. (v) Amendment of this Agreement.

Management. (a) The General Partner shall conduct, direct and manage all activities of the Partnership. A. Except as otherwise expressly provided in this Agreement, all management powers over the business and affairs of the Partnership are and shall be exclusively vested in the General Partner, and no Limited Partner or Assignee shall have any right to participate in or exercise control or management power over the business and affairs of the Partnership. The General Partner may not be removed by the Limited Partners with or without cause, except with the consent of the General Partner. In addition to the powers now or hereafter granted a general partner of a limited partnership under applicable law or which are granted to the General Partner under any other provision of this Agreement, the General Partner, subject to Section 7.37.3 hereof, shall have full power and authority to do all things and on such terms as it, in its sole discretion, may deem deemed necessary or appropriate desirable by it to conduct the business of the Partnership, to exercise all powers set forth in Section 2.5 3.2 hereof and to effectuate the purposes set forth in Section 2.43.1 hereof, including the followingincluding, without limitation: (i1) the making of any expenditures, the lending or borrowing of moneymoney (including, without limitation, making prepayments on loans), the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtednessindebtedness (including the securing of same by deed to secure debt, including indebtedness that is convertible into Partnership Securitiesmortgage, deed of trust or other lien or encumbrance on the Partnership's assets) and the incurring of any other obligationsobligations it deems necessary for the conduct of the activities of the Partnership; (ii2) the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Partnership; (iii3) the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or exchange of any or all of the assets of the Partnership (including the exercise or grant of any conversion, option, privilege, or subscription right or other right available in connection with any assets at any time held by the Partnership) or the merger or other combination of the Partnership with or into another Person (the matters described in this clause (iii) being subject, however, to any prior approval that may be required by Section 7.3)entity; (iv4) the use of the assets of the Partnership (including including, without limitation, cash on hand) for any purpose consistent with the terms of this AgreementAgreement and on any terms it sees fit, including including, without limitation, the financing of the conduct of the operations of the General Partner, the Partnership Group; subject to Section 7.6(a)or any of the Partnership's Subsidiaries, the lending of funds to other Persons (including other Group Members)including, without limitation, the Partnership's Subsidiaries) and the repayment or guarantee of obligations of the Partnership Group and its Subsidiaries and any other Person in which it has an equity investment and the making of capital contributions to any member of the Partnership Groupits Subsidiaries; (v5) the management, operation, leasing, landscaping, repair, alteration, demolition or improvement of any real property or improvements owned by the General Partner, the Partnership of any of the Partnership's Subsidiaries; (6) the negotiation, execution execution, and the performance of any contracts, conveyances or other instruments (including instruments that limit the liability of General Partner considers useful or necessary to the Partnership under contractual arrangements to all or particular assets conduct of the Partnership, with 's operations or the other party to the contract to have no recourse against implementation of the General Partner or its assets Partner's powers under this Agreement, including contracting with contractors, developers, consultants, accountants, legal counsel, other than its interest in professional advisors and other agents and the payment of their expenses and compensation out of the Partnership, even if same results in the terms of the transaction being less favorable to the Partnership than would otherwise be the case)'s assets; (vi7) the distribution of Partnership cashcash or other Partnership assets in accordance with this Agreement; (vii8) holding, managing, investing and reinvesting cash and other assets of the Partnership; (9) the collection and receipt of revenues and income of the Partnership; (10) the establishment of one or more divisions of the Partnership, the selection and dismissal of employees of the Partnership, any division of the Partnership, or the General Partner (including including, without limitation, employees having titles such as "president," "vice president," "secretary" and "treasurer") " of the Partnership, any division of the Partnership, or the General Partner), and agents, outside attorneys, accountants, consultants and contractors of the General Partner, the Partnership or any division of the Partnership, and the determination of their compensation and other terms of employment or hiring; (viii11) the maintenance of such insurance for the benefit of the Partnership Group and the Partners as it deems necessary or appropriate; (ix12) the formation of, or acquisition of an interest in, and the contribution of property and the making of loans to, any other further limited or general partnerships, joint ventures, corporations, limited liability companies ventures or other relationships that it deems desirable (including including, without limitation, the acquisition of interests in, and the contributions of property to, its Subsidiaries and any Group Member other Person in which it has an equity investment from time to time) subject to the restrictions set forth in Section 2.4); (x13) the control of any matters affecting the rights and obligations of the Partnership, including the bringing settlement, compromise, submission to arbitration or any other form of dispute resolution, or abandonment of any claim, cause of action, liability, debt or damages due or owing to or from the Partnership, the commencement or defense of suits, legal proceedings, administrative proceedings, arbitrations or other forms of dispute resolution, and defending the representation of actions at law the Partnership in all suits or in equity and otherwise engaging in the conduct legal proceedings, administrative proceedings, arbitrations or other forms of litigation and dispute resolution, the incurring of legal expense expense, and the settlement of claims and litigation; (xi) the indemnification of any Person against liabilities and contingencies to the extent permitted by law; (xii) the entering into of listing agreements with any National Securities Exchange and the delisting of some or all of the Limited Partner Interests from, or requesting that trading be suspended on, any such exchange (subject to any prior approval that may be required under Section 4.8); (xiii) unless restricted or prohibited by Section 5.7, the purchase, sale or other acquisition or disposition of Partnership Securities, or the issuance of additional options, rights, warrants and appreciation rights relating to Partnership Securities; and (xiv14) the undertaking of any action in connection with the Partnership's participation direct or indirect investment in its Subsidiaries or any other Person (including, without limitation, the Operating contribution or loan of funds by the Partnership to such Persons); (15) the determination of the fair market value of any Partnership property distributed in kind using such reasonable method of valuation as it may adopt; (16) the exercise, directly or indirectly through any attorney-in-fact acting under a general or limited power of attorney, of any right, including the right to vote, appurtenant to any asset or investment held by the Partnership; (17) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of or in connection with any Subsidiary of the Partnership or any other subsidiary Person in which the Partnership has a direct or indirect interest, or jointly with any such Subsidiary or other Person; (18) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of any Person in which the Partnership as does not have an interest pursuant to contractual or other arrangements with such Person; (19) the making, execution and delivery of any and all deeds, leases, notes, deeds to secure debt, mortgages, deeds of trust, security agreements, conveyances, contracts, guarantees, warranties, indemnities, waivers, releases or legal instruments or agreements in writing necessary or appropriate in the judgment of the General Partner for the accomplishment of any of the powers of the General Partner; and (20) the distribution of cash to acquire Partnership Units held by a member or partnerLimited Partner in connection with a Limited Partner's exercise of its Redemption Right under Section 8.6. (b) Notwithstanding any other provision of this Agreement, the Operating Partnership Agreement, the Delaware Act or any applicable law, rule or regulation, each B. Each of the Limited Partners and the Assignees and each other Person who may acquire an interest in Partnership Securities hereby (i) approves, ratifies and confirms the execution, delivery and performance by the parties thereto of the Operating Partnership Agreement, the Omnibus Agreement, the Contribution Agreement, the Distribution Agreement, and the Purchase Contract dated _________, 2004 between Penn Octane Corporation and the Operating Partnership and the other agreements described in or filed as exhibits to the Registration Statement that are related to the transactions contemplated by the Registration Statement; (ii) agrees that the General Partner (on its own or through any officer of the Partnership) is authorized to execute, deliver and perform the above-mentioned agreements referred to in clause (i) of this sentence and the other agreements, acts, transactions and matters described in or contemplated by the Registration Statement on behalf of the Partnership without any further act, approval or vote of the Partners Partners, notwithstanding any other provision of this Agreement, the Act or any applicable law, rule or regulation, to the Assignees fullest extent permitted under the Act or the other Persons who may acquire an interest in Partnership Securities; and (iii) agrees that the applicable law. The execution, delivery or performance by the General Partner, any Group Member Partner or any Affiliate the Partnership of any of them, of this Agreement or any agreement authorized or permitted under this Agreement (including the exercise by the General Partner or any Affiliate of the General Partner of the rights accorded pursuant to Article XV), shall not constitute a breach by the General Partner of any duty that the General Partner may owe the Partnership or the Limited Partners or any an other Persons under this Agreement (or any other agreements) or of any duty stated or implied by law or equity. C. At all times from and after the date hereof, the General Partner at the expense of the Partnership, may or may not, cause the Partnership to obtain and maintain (i) casualty, liability and other insurance on the properties of the Partnership and (ii) liability insurance for the Indemnitees hereunder. D. At all times from and after the date hereof, the General Partner may cause the Partnership to establish and maintain at any and all times working capital accounts and other cash or similar balances in such amounts as the General Partner, in its sole and absolute discretion, deems appropriate and reasonable from time to time. E. The General Partner shall have the full power and authority in the name and on behalf of the Partnership in its capacity as the General Partner, to take all such actions and to execute, deliver, and file all such agreements, instruments, reports and documents as may be necessary or advisable in connection with the formation of the General Partner, the issuance of Units in connection with a proposed transaction or any transactions described in or contemplated by the General Partner's Registration Statement on Form S-1 as may be filed with the Securities and Exchange Commission. F. Notwithstanding anything to the contrary contained in this Agreement, any agreement of merger or consolidation of the Partnership entered into in accordance with the provisions of this Agreement may, as provided in Section 17- 211(g) of the Delaware Revised Uniform Limited Partnership Act, (1) effect any amendment to this Agreement or (2) effect the adoption of a new partnership agreement for the Partnership if it is the surviving or resulting limited partnership in the merger or consolidation (provided that no such amendment shall be so effected if it would, under Section 7.3 hereof, require the consent of the Limited Partners (unless the requisite consent or consents shall be obtained), and no provision shall be included in any such new partnership agreement if such provision would, under Section 7.3 hereof, require the consent of the Limited Partners if it were being incorporated in this Agreement by amendment (unless the requisite consent shall be obtained).

Management. (a) The General Partner shall conduct, direct and manage all activities of the Partnership. Except as otherwise expressly provided in this Agreement, all management powers over the business and affairs of the Partnership are and shall be exclusively vested in the General Partner, and no Limited Partner or Assignee shall have any right to participate in or exercise control or management power over the business and affairs of the Partnership. The General Partner may not be removed by the Limited Partners with or without cause, except with the consent of the General Partner, which it may give or withhold at its sole and absolute discretion. In addition to the powers now or hereafter granted to a general partner of a limited partnership under applicable law or which are granted to the General Partner under any other provision of this Agreement, the General Partner, subject to Section 7.3Sections 7.3 and 7.12, shall have full power and authority to do all things and on such terms as it, in its sole discretion, may deem deemed necessary or appropriate desirable by it to conduct the business of the Partnership, to exercise all powers set forth in Section 2.5 3.2 and to effectuate the purposes set forth in Section 2.43.1, including the followingincluding: (i) the making of any expenditures, the lending or borrowing of moneymoney (including making prepayments on loans and borrowing money to permit the Partnership to make distributions to its Partners in such amounts as will permit the Company (so long as the Company desires to maintain its qualification as a REIT) to avoid the payment of any federal income tax (including, for this purpose, any excise tax pursuant to Code Section 4981) and to make distributions to its shareholders in amounts sufficient to permit the Company to maintain its REIT status), the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences evidence of indebtednessindebtedness (including the securing of the same by deed, including indebtedness that is convertible into Partnership Securitiesmortgage, deed of trust or other lien or encumbrance on the Partnership’s assets) and the incurring of any other obligationsobligations it deems necessary for the conduct of the activities of the Partnership; (ii) the making of tax, regulatory and other filingsfilings or elections, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Partnership; (iii) the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or exchange of any or all of the assets of the Partnership (including the exercise or grant of any conversion, option, privilege, or subscription right or other right available in connection with any assets at any time held by the Partnership) or the merger or other combination of the Partnership with or into another Person entity (all of the matters described in this clause (iii) being subject, however, foregoing subject to any prior approval that may be only to the extent required by Section 7.3); (iv) the mortgage, pledge, encumbrance or hypothecation of any assets of the Partnership, the use of the assets of the Partnership (including cash on hand) for any purpose consistent with the terms of this AgreementAgreement and on any terms that it sees fit, including the financing of the conduct of the operations of the Partnership Group; subject to Section 7.6(a)Partnership, the Company or any of the Partnership’s or the Company’s Subsidiaries, the lending of funds to other Persons (including other Group Members), the Subsidiaries of the Partnership and/or the Company) and the repayment or guarantee of obligations of the Partnership Group and its Subsidiaries and any other Person in which it has an equity investment, and the making of capital contributions to any member of the Partnership Groupits Subsidiaries; (v) the management, operation, leasing, landscaping, repair, alteration, demolition, disposition or improvement of any real property or improvements owned by the Partnership or any Subsidiary of the Partnership; (vi) the negotiation, execution execution, delivery and performance of any contracts, conveyances or other instruments (including instruments that limit the liability of General Partner considers useful or necessary or convenient to the Partnership under contractual arrangements to all or particular assets conduct of the Partnership, with ’s operations or the other party to the contract to have no recourse against implementation of the General Partner or its assets Partner’s powers under this Agreement, including contracting with consultants, accountants, legal counsel, other than its interest in professional advisors and other agents and the payment of their expenses and compensation out of the Partnership, even if same results in the terms of the transaction being less favorable to the Partnership than would otherwise be the case); (vi) the distribution of Partnership cash’s assets; (vii) the distribution of Partnership cash or other Partnership assets in accordance with this Agreement; (viii) holding, managing, investing and reinvesting cash and other assets of the Partnership; (ix) the collection and receipt of revenues and income of the Partnership; (x) the establishment of one or more divisions of the Partnership, the selection and dismissal of employees of the Partnership (including employees having who may be designated as officers with titles such as "“president," "” “vice president," "” “secretary" ” and "“treasurer") ” of the Partnership), and agents, outside attorneys, accountants, consultants and contractors of the Partnership, and the determination of their compensation and other terms of employment or hiring; (viiixi) the maintenance of such insurance for the benefit of the Partnership Group and the Partners as it deems necessary or appropriate; (ixxii) the formation of, or acquisition of an interest in, and the contribution of property and the making of loans to, any other further limited or general partnerships, joint ventureslimited liability companies, real estate investment trusts, corporations, limited liability companies entities that are treated as REITs, “taxable REIT subsidiaries” or as foreign corporations for federal income tax purposes, joint ventures or other relationships that it deems desirable (including the acquisition of interests in, and the contributions of property or the making of loans to, its or the Company’s Subsidiaries and any Group Member other Person in which it has an equity investment from time to time) subject time or the incurrence of indebtedness on behalf of such Persons or the guarantee of obligations of such Persons and the making of any tax, regulatory or other filing or election with respect to any of the restrictions set forth foregoing Persons); provided, that as long as the Company has determined to continue to qualify as a REIT, the Partnership may not engage in Section 2.4any such formation, acquisition or contribution that would cause the Company to fail to qualify as a REIT; (xxiii) the control of any matters affecting the rights and obligations of the Partnership, including the bringing and defending settlement, compromise, submission to arbitration or any other form of actions at law dispute resolution, or in equity and otherwise engaging in abandonment of, any claim, cause of action, liability, debt or damages, due or owing to or from the conduct Partnership, the commencement or defense of litigation suits, legal proceedings, administrative proceedings, arbitrations or other forms of dispute resolution, and the incurring representation of the Partnership in all suits or legal proceedings, administrative proceedings, arbitrations or other forms of dispute resolution, the incurrence of legal expense expense, and the settlement of claims and litigation; (xi) the indemnification of any Person against liabilities and contingencies to the extent permitted by law; (xii) the entering into of listing agreements with any National Securities Exchange and the delisting of some or all of the Limited Partner Interests from, or requesting that trading be suspended on, any such exchange (subject to any prior approval that may be required under Section 4.8); (xiii) unless restricted or prohibited by Section 5.7, the purchase, sale or other acquisition or disposition of Partnership Securities, or the issuance of additional options, rights, warrants and appreciation rights relating to Partnership Securities; and (xiv) the undertaking of any action in connection with the Partnership's participation ’s direct or indirect investment in any Subsidiary or any other Person (including the Operating contribution or loan of funds by the Partnership to such Persons); (xv) the determination of the fair market value of any Partnership property distributed in kind using such reasonable method of valuation as the General Partner may adopt; (xvi) the enforcement of any rights against any Partner pursuant to representations, warranties, covenants and indemnities relating to such Partner’s contribution of property or assets to the Partnership; (xvii) the exercise, directly or indirectly, through any attorney-in-fact acting under a general or limited power of attorney, of any right, including the right to vote, appurtenant to any asset or investment held by the Partnership; (xviii) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of or in connection with any Subsidiary of the Partnership or any other subsidiary Person in which the Partnership has a direct or indirect interest, or jointly with any such Subsidiary or other Person; (xix) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of any Person in which the Partnership does not have an interest pursuant to contractual or other arrangements with such Person; (xx) the making, execution, delivery and performance of any and all deeds, leases, notes, mortgages, deeds of trust, security agreements, conveyances, contracts, guarantees, warranties, indemnities, waivers, releases or legal instruments or agreements in writing necessary, appropriate or convenient, in the judgment of the General Partner, for the accomplishment of any of the powers of the General Partner enumerated in this Agreement; (xxi) the issuance of additional Partnership Units and other partnership interests, as appropriate, in connection with Capital Contributions by Additional Limited Partners and additional Capital Contributions by Partners pursuant to Article 4; and (xxii) the taking of any action necessary (or appropriate by the General Partner, in its discretion) to enable the Company to qualify as a member or partnerREIT. (b) Notwithstanding any other provision of this Agreement, the Operating Partnership Agreement, the Delaware Act or any applicable law, rule or regulation, each Each of the Limited Partners and the Assignees and each other Person who may acquire an interest in Partnership Securities hereby (i) approves, ratifies and confirms the execution, delivery and performance by the parties thereto of the Operating Partnership Agreement, the Omnibus Agreement, the Contribution Agreement, the Distribution Agreement, and the Purchase Contract dated _________, 2004 between Penn Octane Corporation and the Operating Partnership and the other agreements described in or filed as exhibits to the Registration Statement that are related to the transactions contemplated by the Registration Statement; (ii) agrees that the General Partner (on its own or through any officer of the Partnership) is authorized to execute, deliver and perform the above-mentioned agreements referred to in clause (i) of this sentence and the other agreements, acts, transactions and matters described in or contemplated by the Registration Statement on behalf of the Partnership without any further act, approval or vote of the Partners Partners, notwithstanding any other provision of this Agreement (except as provided in Section 7.3), the Act or any applicable law, rule or regulation, to the Assignees fullest extent permitted under the Act or the other Persons who may acquire an interest in Partnership Securities; and (iii) agrees that the applicable law, rule or regulation. The execution, delivery or performance by the General Partner, any Group Member Partner or any Affiliate the Partnership of any of them, of this Agreement or any agreement authorized or permitted under this Agreement (including the exercise by the General Partner or any Affiliate of the General Partner of the rights accorded pursuant to Article XV), shall not constitute a breach by the General Partner of any duty that the General Partner may owe the Partnership or the Limited Partners or any other Persons under this Agreement (or any other agreements) or of any duty stated or implied by law or equity. (c) At all times from and after the date hereof, the General Partner may cause the Partnership to establish and maintain at any and all times working capital accounts and other cash or similar balances in such amounts as the General Partner, in its sole and absolute discretion, deems appropriate and reasonable from time to time. (d) In exercising its authority under this Agreement, the General Partner may, but shall be under no obligation to (except as otherwise provided by this Agreement with respect to the qualification of the Company as a REIT), take into account the tax consequences to any Partner of any action taken by it. The General Partner and the Partnership shall not be liable to a Limited Partner under any circumstances as a result of an income tax liability incurred by such Limited Partner as a result of an action (or inaction) by the General Partner taken pursuant to its authority under this Agreement and in accordance with the terms of Section 7.3.

Management. (a) The General Partner shall conduct, direct and manage all activities of the Partnership. A. Except as otherwise expressly provided in this Agreement, all management powers over the business and affairs of the Partnership are and shall be exclusively vested in the General Partner, and no Limited Partner or Assignee shall have any right to participate in or exercise control or management power over the business and affairs of the Partnership. The General Partner may not be removed by the Partners with or without cause, except with the consent of the General Partner. In addition to the powers now or hereafter granted to a general partner of a limited partnership under applicable law or which that are granted to the General Partner under any other provision of this Agreement, the General Partner, subject to the other provisions hereof including Section 7.3, shall have full power and authority to do all things and on such terms as it, in its sole discretion, may deem deemed necessary or appropriate desirable by it to conduct the business of the Partnership, to exercise all powers set forth in Section 2.5 3.2 hereof and to effectuate the purposes set forth in Section 2.43.1 hereof, including the followingincluding, without limitation: (i) the making of any expenditures, the lending or borrowing of moneymoney (including, without limitation, making prepayments on loans and borrowing money or selling assets to permit the Partnership to make distributions to its Partners in such amounts as will permit the General Partner (so long as the General Partner desires to maintain or restore its status as a REIT) to avoid the payment of any federal income tax (including, for this purpose, any excise tax pursuant to Code Section 4981) and to make distributions to its stockholders sufficient to permit the General Partner to maintain or restore REIT status or otherwise to satisfy the REIT Requirements), the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtednessindebtedness (including the securing of same by deed to secure debt, including indebtedness that is convertible into Partnership Securitiesmortgage, deed of trust or other lien or encumbrance on the Partnership’s assets) and the incurring of any other obligationsobligations that it deems necessary for the conduct of the activities of the Partnership; (ii) the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Partnership, the registration of any class of securities of the Partnership under the Exchange Act and the listing of any debt securities of the Partnership on any exchange; (iii) the acquisition, dispositionsale, mortgagelease, pledgetransfer, encumbranceexchange or other disposition of any, hypothecation all or exchange of any or substantially all of the assets of the Partnership (including, but not limited to, the exercise or grant of any conversion, option, privilege or subscription right or any other right available in connection with any assets at any time held by the Partnership) or the merger merger, consolidation, reorganization or other combination of the Partnership with or into another Person (the matters described in this clause (iii) being subject, however, to any prior approval that may be required by Section 7.3)entity; (iv) the mortgage, pledge, encumbrance or hypothecation of any assets of the Partnership, the use of the assets of the Partnership (including including, without limitation, cash on hand) for any purpose consistent with the terms of this AgreementAgreement and on any terms that it sees fit, including including, without limitation, the financing of the conduct operations and activities of the operations General Partner, the Partnership or any of the Partnership Group; subject to Section 7.6(a)Partnership’s Subsidiaries, the lending of funds to other Persons (including other Group Members)including, without limitation, the Partnership’s Subsidiaries) and the repayment or guarantee of obligations of the Partnership, its Subsidiaries and any other Person in which the Partnership Group has an equity investment, and the making of capital contributions to any member of and equity investments in the Partnership GroupPartnership’s Subsidiaries; (v) the negotiation, execution and performance of any contracts, leases, conveyances or other instruments (including instruments that limit the liability of General Partner considers useful or necessary to the Partnership under contractual arrangements to all or particular assets conduct of the Partnership, with ’s operations or the other party to the contract to have no recourse against implementation of the General Partner or its assets Partner’s powers under this Agreement, including contracting with contractors, developers, consultants, accountants, legal counsel, other than its interest in professional advisors and other agents and the payment of their expenses and compensation out of the Partnership, even if same results in the terms of the transaction being less favorable to the Partnership than would otherwise be the case)’s assets; (vi) the distribution of Partnership cashcash or other Partnership assets in accordance with this Agreement, the holding, management, investment and reinvestment of cash and other assets of the Partnership and the collection and receipt of revenues and income of the Partnership; (vii) the selection and dismissal of employees (including employees having titles such as "president," "vice president," "secretary" and "treasurer") and agents, outside attorneys, accountants, consultants and contractors and the determination of their compensation and other terms of employment or hiring; (viii) the maintenance of such insurance for the benefit of the Partnership Group and the Partners as it deems necessary or appropriate, including, without limitation, (i) casualty, liability and other insurance on the Properties and (ii) liability insurance for the Indemnitees hereunder; (ixviii) the formation of, or acquisition of an interest in, and the contribution of property and the making of loans to, any other further limited or general partnerships, joint ventures, corporations, limited liability companies companies, joint ventures or other relationships that it deems desirable (including including, without limitation, the acquisition of interests in, and the contributions of property to, any Group Member Subsidiary and any other Person in which it has an equity investment from time to time) subject ); provided, however, that, as long as the General Partner has determined to continue to qualify as a REIT, the restrictions set forth General Partner may not engage in any such formation, acquisition or contribution that would cause the General Partner to fail to qualify as a REIT within the meaning of Code Section 2.4856(a); (xix) the control of any matters affecting the rights and obligations of the Partnership, including the bringing settlement, compromise, submission to arbitration or any other form of dispute resolution, or abandonment, of any claim, cause of action, liability, debt or damages, due or owing to or from the Partnership, the commencement or defense of suits, legal proceedings, administrative proceedings, arbitrations or other forms of dispute resolution, and defending the representation of actions at law the Partnership in all suits or in equity and otherwise engaging in the conduct legal proceedings, administrative proceedings, arbitrations or other forms of litigation and dispute resolution, the incurring of legal expense expense, and the settlement of claims and litigation; (xi) the indemnification of any Person against liabilities and contingencies to the extent permitted by law; (xii) the entering into of listing agreements with any National Securities Exchange and the delisting of some or all of the Limited Partner Interests from, or requesting that trading be suspended on, any such exchange (subject to any prior approval that may be required under Section 4.8); (xiii) unless restricted or prohibited by Section 5.7, the purchase, sale or other acquisition or disposition of Partnership Securities, or the issuance of additional options, rights, warrants and appreciation rights relating to Partnership Securities; and (xivx) the undertaking of any action in connection with the Partnership's participation ’s direct or indirect investment in any Subsidiary or any other Person (including, without limitation, the Operating contribution or loan of funds by the Partnership to such Persons); (xi) except as otherwise specifically set forth in this Agreement, the determination of the fair market value of any Partnership property distributed in-kind using such reasonable method of valuation as it may adopt; provided that such methods are otherwise consistent with the requirements of this Agreement; (xii) the enforcement of any rights against any Partner pursuant to representations, warranties, covenants and indemnities relating to such Partner’s contribution of property or assets to the Partnership; (xiii) the exercise, directly or indirectly, through any attorney-in-fact acting under a general or limited power-of-attorney, of any right, including the right to vote, appurtenant to any asset or investment held by the Partnership; (xiv) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of or in connection with any Subsidiary of the Partnership or any other subsidiary Person in which the Partnership has a direct or indirect interest, or jointly with any such Subsidiary or other Person; (xv) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of any Person in which the Partnership does not have an interest, pursuant to contractual or other arrangements with such Person; (xvi) the making, execution and delivery of any and all deeds, leases, notes, deeds to secure debt, mortgages, deeds of trust, security agreements, conveyances, contracts, guarantees, warranties, indemnities, waivers, releases or legal instruments or agreements in writing necessary or appropriate in the judgment of the General Partner for the accomplishment of any of the powers of the General Partner enumerated in this Agreement; (xvii) the issuance of additional Partnership Units, as appropriate and in the General Partner’s sole and absolute discretion, in connection with Capital Contributions by Additional Limited Partners and additional Capital Contributions by Partners pursuant to Article IV hereof; (xviii) the selection, designation of powers, authority and duties and dismissal of employees or personnel of the Partnership (including, without limitation, employees or personnel having titles such as a member “president,” “vice president,” “secretary” and “treasurer”) and agents, outside attorneys, accountants, consultants and contractors of the Partnership, the General Partner or partner. (b) Notwithstanding the Manager the determination of their compensation and other terms of employment or service or hiring, and the delegation to any other provision such Person the authority to conduct the business of the Partnership in accordance with the terms of this Agreement, ; (xix) the Operating distribution of cash to acquire Partnership Agreement, Units held by a Limited Partner in connection with a Limited Partner’s exercise of its Redemption under Section 8.6 hereof; (xx) the Delaware Act or any applicable law, rule or regulation, each amendment and restatement of Exhibit A hereto to reflect accurately at all times the Capital Contributions and Percentage Interests of the Partners as the same are adjusted from time to time to the extent necessary to reflect redemptions, Capital Contributions, the issuance of Partnership Units, the admission of any Additional Limited Partner or any Substituted Limited Partner or otherwise, which amendment and restatement, notwithstanding anything in this Agreement to the Assignees and each other Person who may acquire contrary, shall not be deemed an interest in Partnership Securities hereby (i) approves, ratifies and confirms the execution, delivery and performance by the parties thereto of the Operating Partnership amendment to this Agreement, as long as the Omnibus matter or event being reflected in Exhibit A hereto otherwise is authorized by this Agreement, ; (xxi) an election to dissolve the Contribution Agreement, Partnership pursuant to Section 13.1.D hereof; and (xxii) the Distribution Agreement, and the Purchase Contract dated _________, 2004 between Penn Octane Corporation and the Operating Partnership and the other agreements described in taking of any action necessary or filed as exhibits appropriate to the Registration Statement that are related to the transactions contemplated by the Registration Statement; (ii) agrees that enable the General Partner (on its own or through any officer to qualify as a REIT. B. Each of the Partnership) Limited Partners agrees that, except as provided in Section 7.3 hereof, the General Partner is authorized to execute, deliver and perform the above-mentioned agreements referred to in clause (i) of this sentence and the other agreements, acts, transactions and matters described in or contemplated by the Registration Statement on behalf of the Partnership without any further act, approval or vote of the Partners Partners, notwithstanding any other provision of this Agreement, the Act or any applicable law, rule or regulation, to the Assignees full extent permitted under the Act or the other Persons who may acquire an interest in Partnership Securities; and (iii) agrees that the applicable law. The execution, delivery or performance by the General Partner, any Group Member Partner or any Affiliate the Partnership of any of them, of this Agreement or any agreement authorized or permitted under this Agreement (including the exercise by the General Partner or any Affiliate of the General Partner of the rights accorded pursuant to Article XV), shall not constitute a breach by the General Partner of any duty that the General Partner may owe the Partnership or the Limited Partners or any other Persons under this Agreement (or any other agreements) or of any duty stated or implied by law or equity. C. At all times from and after the date hereof, the General Partner may cause the Partnership to establish and maintain working capital and other reserves in such amounts as the General Partner, in its sole and absolute discretion, deems appropriate and reasonable from time to time. D. In exercising its authority under this Agreement, the General Partner may, but shall be under no obligation to, take into account the tax consequences to any Partner (including the General Partner) of any action taken (or not taken) by it. The General Partner and the Partnership shall not have liability to a Limited Partner for monetary damages or otherwise for losses sustained, liabilities incurred or benefits not derived by such Limited Partner in connection with such decisions; provided that the General Partner has acted in good faith and pursuant to its authority under this Agreement.

Management. (a) The General Managing Partner shall conduct, direct and manage all activities of the Partnership. Except as otherwise expressly provided in this Agreement, all management powers over the business and affairs of the Partnership shall be exclusively vested in the General Managing Partner, and no Limited Partner or Assignee shall have any management power over the business and affairs of the Partnership. In addition to the powers now or hereafter granted a general partner of a limited partnership under applicable law or which that are granted to the General Managing Partner under any other provision of this Agreement, the General Managing Partner, subject to Section 7.3, shall have full power and authority to do all things and on such terms as itit determines, in its sole discretion, may deem to be necessary or appropriate to conduct the business of the Partnership, to exercise all powers set forth in Section 2.5 and to effectuate the purposes set forth in Section 2.4, including the following: (i) the making of any expenditures, the lending or borrowing of money, the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtedness, including indebtedness that is convertible or exchangeable into Partnership Securities or options, rights, warrants or appreciation rights relating to Partnership Securities, and the incurring of any other obligations; (ii) the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Partnership; (iii) the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or exchange of any or all of the assets of the Partnership or the merger or other combination of the Partnership with or into another Person (the matters described in this clause (iii) being subject, however, to any prior approval that may be required by Section 7.37.3 and Article XIV); (iv) the use of the assets of the Partnership (including cash on hand) for any purpose consistent with the terms of this Agreement, including the financing of the conduct of the operations of the Partnership Group; subject to Section 7.6(a), the lending of funds to other Persons (including other Group Members), Persons; the repayment or guarantee of obligations of the Partnership any Group Member and the making of capital contributions Capital Contributions to any member of the Partnership GroupGroup Member; (v) the negotiation, execution and performance of any contracts, conveyances or other instruments (including instruments that limit the liability of the Partnership under contractual arrangements to all or particular assets of the Partnership, with the other party to the contract to have no recourse against the General Managing Partner or its assets other than its their interest in the Partnership, even if same results in the terms of the transaction being less favorable to the Partnership than would otherwise be the case); (vi) the distribution of Partnership cash; (vii) the selection and dismissal of employees (including employees having titles such as "president," "vice president," "secretary" and "treasurer"titles as the Managing Partner may determine in its sole discretion) and agents, outside attorneys, accountants, consultants and contractors and the determination of their compensation and other terms of employment or hiring; (viii) the maintenance of such insurance for the benefit of the Partnership Group and Group, the Partners as it deems necessary or appropriateand Indemnitees; (ix) the formation of, or acquisition of an interest in, and the contribution of property and the making of loans to, any other further limited or general partnerships, joint ventures, corporations, limited liability companies companies, corporations or other relationships (including the acquisition of interests in, and the contributions of property to, any Group Member the Partnership’s Subsidiaries from time to time) subject to the restrictions set forth in Section 2.4; (x) the control of any matters affecting the rights and obligations of the Partnership, including the bringing and defending of actions at law or in equity and otherwise engaging in the conduct of litigation litigation, arbitration or mediation and the incurring of legal expense and the settlement of claims and litigation; (xi) the indemnification of any Person against liabilities and contingencies to the extent permitted by law; (xii) the entering into of listing agreements with any National Securities Exchange and the delisting of some or all of the Limited Partner Interests from, or requesting that trading be suspended on, any such exchange (subject to any prior approval that may be required under Section 4.84.7); (xiii) unless restricted or prohibited by Section 5.7, the purchase, sale or other acquisition or disposition of Partnership Securities, Securities or the issuance of additional options, rights, warrants and or appreciation rights relating to Partnership Securities; and; (xiv) the undertaking of any action in connection with the Partnership's ’s participation in the Operating Partnership or any other subsidiary management of the Partnership Group through its directors, officers or employees or the Partnership’s direct or indirect ownership of the Group Members, including all things described in or contemplated by the Registration Statement and the agreements described in or filed as a member exhibits to the Registration Statement; and (xv) cause to be registered for resale under the Securities Act and applicable state or partnernon-U.S. securities laws, any securities of, or any securities convertible or exchangeable into securities of, the Partnership held by any Person, including the Managing Partner or any Affiliate of the Managing Partner. (b) In exercising its authority under this Agreement, the Managing Partner may, but shall be under no obligation to, take into account the tax consequences to any Partner (including the Managing Partner) of any action taken (or not taken) by it. The Managing Partner and the Partnership shall not have any liability to a Limited Partner for monetary damages, equitable relief or otherwise for losses sustained, liabilities incurred or benefits not derived by such Limited Partner in connection with such decisions so long as the Managing Partner has acted pursuant to its authority under this Agreement. (c) Notwithstanding any other provision of this Agreement, the Operating Delaware Limited Partnership Agreement, the Delaware Act or any applicable law, rule or regulation, each of the Partners and the Assignees and each other Person who may acquire an interest in Partnership Securities hereby (i) approves, ratifies and confirms the execution, delivery and performance by the parties thereto of the Operating Partnership Purchase and Sale Agreement, the Omnibus Investment Agreement, the Contribution Amended and Restated Exchange Agreement, the Distribution Amended and Restated Tax Receivable Agreement, and the Purchase Contract dated _________, 2004 between Penn Octane Corporation and the Operating Group Partnership Agreements and the other agreements described in or filed as exhibits to the Registration Statement that are related to the transactions contemplated by the Registration Statement; (ii) agrees that the General Managing Partner (on its own or through its delegation of such authority to any officer of the Partnership) is authorized to execute, deliver and perform the agreements referred to in clause (i) of this sentence and the other agreements, acts, transactions and matters described in or contemplated by the Registration Statement on behalf of the Partnership Partnership, in each case in such form and with such terms as it in its sole discretion shall determine, without any further act, approval or vote of the Partners or the Assignees or the other Persons who may acquire an interest in Partnership Securities; and (iii) agrees that the execution, delivery or performance by the General Managing Partner, any Group Member or any Affiliate of any of them, of this Agreement or any agreement authorized or permitted under this Agreement (including the exercise by the General Managing Partner or any Affiliate of the General Managing Partner of the rights accorded pursuant to Article XV), shall not constitute a breach by the General Managing Partner of any duty that the General Managing Partner may owe the Partnership or the Limited Partners or any other Persons under this Agreement (or any other agreements) or of any duty stated existing at law, in equity or implied by law or equityotherwise.

Management. (a) The General Partner shall conduct, direct and manage all activities of the Partnership. A. Except as otherwise expressly provided in this Agreement, all management powers over the business and affairs of the Partnership are and shall be exclusively vested in the General Partner, and no Limited Partner or Assignee shall have any right to participate in or exercise control or management power over the business and affairs of the Partnership. The General Partner may not be removed by the Limited Partners with or without cause. In addition to the powers now or hereafter granted a general partner of a limited partnership under applicable law or which are granted to the General Partner under any other provision of this Agreement, the General Partner, subject to Section 7.37.3 hereof, shall have full power and authority to do all things and on such terms as it, in its sole discretion, may deem deemed necessary or appropriate desirable by it to conduct the business of the Partnership, to exercise all powers set forth in Section 2.5 3.2 hereof and to effectuate the purposes set forth in Section 2.43.1 hereof, including the followingincluding, without limitation: (i1) the making of any expenditures, the lending or borrowing of moneymoney (including, without limitation, making prepayments on loans and borrowing money to permit the Partnership to make distributions to its Partners in such amounts as will permit the General Partner (so long as the General Partner qualifies as a REIT) to avoid the payment of any federal income tax (including, for this purpose, any excise tax pursuant to Section 4981 of the Code) and to make distributions to the General Partner such that the General Partner can distribute to its shareholders amounts sufficient to permit the General Partner to maintain REIT status), the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtednessindebtedness (including the securing of same by deed to secure debt, including indebtedness that is convertible into Partnership Securitiesmortgage, deed of trust or other lien or encumbrance on the Partnership's assets) and the incurring of any other obligationsobligations it deems necessary for the conduct of the activities of the Partnership; (ii2) the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Partnership; (iii3) the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or exchange of any or all of the assets of the Partnership (including the exercise or grant of any conversion, option, privilege, or subscription right or other right available in connection with any assets at any time held by the Partnership) or the merger or other combination of the Partnership with or into another Person entity (all of the matters described in this clause (iii) being subject, however, foregoing subject to any prior approval that may be only to the extent required by Section 7.37.3 hereof); (iv4) the use of the assets of the Partnership (including including, without limitation, cash on hand) for any purpose consistent with the terms of this AgreementAgreement and on any terms it sees fit, including including, without limitation, the financing of the conduct of the operations of the General Partner, the Partnership Group; subject to Section 7.6(a)or any of the Partnership's Subsidiaries, the lending of funds to other Persons (including other Group Members)including, without limitation, the Subsidiaries of the Partnership and/or the General Partner) and the repayment or guarantee of obligations of the Partnership Group and its Subsidiaries and any other Person in which it has an equity investment, and the making of capital contributions to any member of the Partnership Groupits Subsidiaries; (v5) the management, operation, leasing, landscaping, repair, alteration, demolition or improvement of any real property or improvements owned by the Partnership or any Subsidiary of the Partnership; (6) the negotiation, execution execution, and performance of any contracts, conveyances or other instruments (including instruments that limit the liability of General Partner considers useful or necessary to the Partnership under contractual arrangements to all or particular assets conduct of the Partnership, with 's operations or the other party to the contract to have no recourse against implementation of the General Partner or its assets Partner's powers under this Agreement, including contracting with contractors, developers, consultants, accountants, legal counsel, other than its interest in professional advisors and other agents and the payment of their expenses and compensation out of the Partnership, even if same results in the terms of the transaction being less favorable to the Partnership than would otherwise be the case)'s assets; (vi7) the distribution of Partnership cashcash or other Partnership assets in accordance with this Agreement; (vii8) holding, managing, investing and reinvesting cash and other assets of the Partnership; (9) the collection and receipt of revenues and income of the Partnership; (10) the establishment of one or more divisions of the Partnership, the selection and dismissal of employees of the Partnership, any division of the Partnership, or the General Partner (including including, without limitation, employees having titles such as "president," "vice president," "secretary" and "treasurer") " of the Partnership, any division of the Partnership, or the General Partner), and agents, outside attorneys, accountants, consultants and contractors of the General Partner or the Partnership or any division of the Partnership, and the determination of their compensation and other terms of employment or hiring; (viii11) the maintenance of such insurance for the benefit of the Partnership Group and the Partners as it deems necessary or appropriate; (ix12) the formation of, or acquisition of an interest in, and the contribution of property and the making of loans to, any other further limited or general partnerships, joint ventures, corporations, limited liability companies ventures or other relationships that it deems desirable (including including, without limitation, the acquisition of interests in, and the contributions of property to, its Subsidiaries and any Group Member other Person in which it has an equity investment from time to time) subject to the restrictions set forth in Section 2.4); (x13) the control of any matters affecting the rights and obligations of the Partnership, including the bringing settlement, compromise, submission to arbitration or any other form of dispute resolution, or abandonment of, any claim, cause of action, liability, debt or damages, due or owing to or from the Partnership, the commencement or defense of suits, legal proceedings, administrative proceedings, arbitration or other forms of dispute, resolution, and defending the representation of actions at law the Partnership in all suits or in equity and otherwise engaging in the conduct legal proceedings, administrative proceedings, arbitrations or other forms of litigation and dispute resolution, the incurring of legal expense expense, and the settlement of claims and litigation; (xi) the indemnification of any Person against liabilities and contingencies to the extent permitted by law; (xii) the entering into of listing agreements with any National Securities Exchange and the delisting of some or all of the Limited Partner Interests from, or requesting that trading be suspended on, any such exchange (subject to any prior approval that may be required under Section 4.8); (xiii) unless restricted or prohibited by Section 5.7, the purchase, sale or other acquisition or disposition of Partnership Securities, or the issuance of additional options, rights, warrants and appreciation rights relating to Partnership Securities; and (xiv14) the undertaking of any action in connection with the Partnership's participation direct or indirect investment in its Subsidiaries or any other Person (including, without limitation, the Operating contribution or loan of funds by the Partnership to such Persons); (15) the determination of the fair market value of any Partnership property distributed in kind using such reasonable method of valuation as it may adopt; (16) the exercise, directly or indirectly, through any attorney-in-fact acting under a general or limited power of attorney, any right, including the right to vote, appurtenant to any asset or investment held by the Partnership; (17) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of or in connection with any Subsidiary of the Partnership or any other subsidiary Person in which the Partnership has a direct or indirect interest, or jointly with any such Subsidiary or other Person; (18) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of any Person in which the Partnership as a member does not have an interest pursuant to contractual or partnerother arrangements with such Person; and (19) the making, execution and delivery of any and all deeds, leases, notes, deeds to secure debt, mortgages, deeds of trust, security agreements, conveyances, contracts, guarantees, warranties, indemnities, waivers, releases or legal instruments or agreements in writing necessary or appropriate in the judgment of the General Partner for the accomplishment of any of the powers of the General Partner enumerated in this Agreement. (b) Notwithstanding any other provision of this Agreement, the Operating Partnership Agreement, the Delaware Act or any applicable law, rule or regulation, each B. Each of the Limited Partners and the Assignees and each other Person who may acquire an interest in Partnership Securities hereby (i) approves, ratifies and confirms the execution, delivery and performance by the parties thereto of the Operating Partnership Agreement, the Omnibus Agreement, the Contribution Agreement, the Distribution Agreement, and the Purchase Contract dated _________, 2004 between Penn Octane Corporation and the Operating Partnership and the other agreements described in or filed as exhibits to the Registration Statement that are related to the transactions contemplated by the Registration Statement; (ii) agrees that the General Partner (on its own or through any officer of the Partnership) is authorized to execute, deliver and perform the above-mentioned agreements referred to in clause (i) of this sentence and the other agreements, acts, transactions and matters described in or contemplated by the Registration Statement on behalf of the Partnership without any further act, approval or vote of the Partners Partners, notwithstanding any other provision of this Agreement (except as provided in Section 7.3), the Act or any applicable law, rule or regulation, to the Assignees fullest extent permitted under the Act or the other Persons who may acquire an interest in Partnership Securities; and (iii) agrees that the applicable law. The execution, delivery or performance by the General Partner, any Group Member Partner or any Affiliate the Partnership of any of them, of this Agreement or any agreement authorized or permitted under this Agreement (including the exercise by the General Partner or any Affiliate of the General Partner of the rights accorded pursuant to Article XV), shall not constitute a breach by the General Partner of any duty that the General Partner may owe the Partnership or the Limited Partners or any other Persons under this Agreement (or any other agreements) or of any duty stated or implied by law or equity. C. At all times from and after the date hereof, the General Partner may cause the Partnership to obtain and maintain (i) casualty, liability and other insurance on the properties of the Partnership and (ii) liability insurance for the Indemnitees hereunder. D. At all times from and after the date hereof, the General Partner may cause the Partnership to establish and maintain at any and all times working capital accounts and other cash or similar balances in such amounts as the General Partner, in its sole and absolute discretion, deems appropriate and reasonable from time to time. E. In exercising its authority under this Agreement, the General Partner may, but shall be under no obligation to, take into account the tax consequences to any Partner of any action taken by it; provided that, if the General Partner decides to refinance (directly or indirectly) any outstanding indebtedness of the Partnership, the General Partner shall use reasonable efforts to structure such refinancing in a manner that minimizes any adverse tax consequences therefrom to the Limited Partners, and provided further that, in deciding whether or not to dispose of any property that represents more than one percent of the Partnership's total assets, the General Partner shall consider in good faith the income tax consequences of such disposition for both the General Partners and the Limited Partners. The General Partner and the Partnership shall not have liability to a Limited Partner under any circumstances as a result of an income tax liability incurred by such Limited Partner as a result of an action (or inaction) by the General Partner pursuant to its authority under this Agreement.

Management. (a) The General Partner shall conduct, direct and manage all activities of the Partnership. Except as otherwise expressly provided in this Agreement, all management powers over the business and affairs of the Partnership are and shall be exclusively vested in the General Partner, and no Limited Partner or Assignee shall have any right to participate in or exercise control or management power over the business and affairs of the Partnership. The General Partner may not be removed by the Partners with or without cause, except with the consent of the General Partner. In addition to the powers now or hereafter granted to a general partner of a limited partnership under applicable law or which that are granted to the General Partner under any other provision of this Agreement, the General Partner, subject to the other provisions hereof including Section 7.37.03, shall have full power and authority to do all things and on such terms as it, in its sole discretion, may deem deemed necessary or appropriate desirable by it to conduct the business of the Partnership, to exercise all powers set forth in Section 2.5 3.02 hereof and to effectuate the purposes set forth in Section 2.43.01 hereof, including the followingincluding, without limitation: (i) the making of any expenditures, the lending or borrowing of moneymoney (including, without limitation, making prepayments on loans and borrowing money or selling assets to permit the Partnership to make distributions to its Partners in such amounts as will permit the General Partner (so long as the General Partner desires to maintain or restore its qualification as a REIT) to avoid the payment of any federal income tax (including, for this purpose, any excise tax pursuant to Code Section 4981) and to make distributions to its stockholders sufficient to permit the General Partner to maintain or restore REIT qualification or otherwise to satisfy the REIT Requirements), the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtednessindebtedness (including the securing of same by deed to secure debt, including indebtedness that is convertible into Partnership Securitiesmortgage, deed of trust or other lien or encumbrance on the Partnership’s assets) and the incurring of any other obligationsobligations that it deems necessary for the conduct of the activities of the Partnership; (ii) the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Partnership, the registration of any class of securities of the Partnership under the Exchange Act and the listing of any debt securities of the Partnership on any exchange; (iii) subject to Section 11.02 hereof, the acquisition, dispositionsale, mortgagelease, pledgetransfer, encumbranceexchange or other disposition of any, hypothecation all or exchange of any or substantially all of the assets of the Partnership (including, but not limited to, the exercise or grant of any conversion, option, privilege or subscription right or any other right available in connection with any assets at any time held by the Partnership) or the merger merger, consolidation, reorganization or other combination of the Partnership with or into another Person (the matters described in this clause (iii) being subject, however, to any prior approval that may be required by Section 7.3)entity; (iv) the mortgage, pledge, encumbrance or hypothecation of any assets of the Partnership, the use of the assets of the Partnership (including including, without limitation, cash on hand) for any purpose consistent with the terms of this AgreementAgreement and on any terms that it sees fit, including including, without limitation, the financing of the operations and activities of the General Partner, the Partnership or any of the Partnership’s Subsidiaries, the lending of funds to other Persons (including, without limitation, the Partnership’s Subsidiaries) and the repayment of obligations of the Partnership, its Subsidiaries and any other Person in which the Partnership has an equity investment, and the making of capital contributions to and equity investments in the Partnership’s Subsidiaries; (v) the use of the assets of the Partnership (including, without limitation, cash on hand) for any purpose consistent with the terms of this Agreement and on any terms it sees fit, including, without limitation, the financing of the conduct of the operations of the General Partner, the Partnership Group; subject to Section 7.6(a)or any of the Partnership’s Subsidiaries, the lending of funds to other Persons (including other Group Members)including, without limitation, the General Partner and its Subsidiaries and the Partnership’s Subsidiaries) and the repayment or guarantee of obligations of the Partnership Group and its Subsidiaries and any other Person in which the Partnership has an equity investment and the making of capital contributions to its Subsidiaries; (vi) the management, operation, leasing, landscaping, repair, alteration, demolition, replacement or improvement of any member Property, including, without limitation, any Contributed Property, or other asset of the Partnership Groupor any Subsidiary, whether pursuant to a Services Agreement or otherwise; (vvii) the negotiation, execution and performance of any contracts, leases, conveyances or other instruments (including instruments that limit the liability of General Partner considers useful or necessary to the Partnership under contractual arrangements to all or particular assets conduct of the Partnership, with ’s operations or the other party to the contract to have no recourse against implementation of the General Partner or its assets Partner’s powers under this Agreement, including contracting with contractors, developers, consultants, accountants, legal counsel, other than its interest in professional advisors and other agents and the payment of their expenses and compensation out of the Partnership, even if same results in the terms of the transaction being less favorable to the Partnership than would otherwise be the case)’s assets; (viviii) the distribution of Partnership cashcash or other Partnership assets in accordance with this Agreement, the holding, management, investment and reinvestment of cash and other assets of the Partnership and the collection and receipt of revenues, rents and income of the Partnership; (vii) the selection and dismissal of employees (including employees having titles such as "president," "vice president," "secretary" and "treasurer") and agents, outside attorneys, accountants, consultants and contractors and the determination of their compensation and other terms of employment or hiring; (viiiix) the maintenance of such insurance for the benefit of the Partnership Group and the Partners as it the General Partner deems necessary or appropriate, including, without limitation, (i) casualty, liability and other insurance on the Properties and (ii) liability insurance for the Indemnitees hereunder; (ixx) the formation of, or acquisition of an interest in, and the contribution of property and the making of loans to, any other further limited or general partnerships, joint ventures, corporations, limited liability companies companies, joint ventures or other relationships that the General Partner deems desirable (including including, without limitation, the acquisition of interests in, and the contributions of property to, any Group Member Subsidiary and any other Person in which it has an equity investment from time to time); provided, however, that as long as the General Partner has determined to continue to qualify as a REIT, the General Partner may not engage in any such formation, acquisition or contribution that would cause it to fail to qualify as a REIT within the meaning of Code Section 856(a) subject (so long as the General Partner desires to the restrictions set forth in Section 2.4maintain its qualification as a REIT); (xxi) the filing of applications, communicating and otherwise dealing with any and all governmental agencies having jurisdiction over, or in any way affecting, the Partnership’s assets or any other aspect of the Partnership business; (xii) the control of any matters affecting the rights and obligations of the Partnership, including the bringing settlement, compromise, submission to arbitration or any other form of dispute resolution, or abandonment, of any claim, cause of action, liability, debt or damages, due or owing to or from the Partnership, the commencement or defense of suits, legal proceedings, administrative proceedings, arbitrations or other forms of dispute resolution, and defending the representation of actions at law the Partnership in all suits or in equity and otherwise engaging in the conduct legal proceedings, administrative proceedings, arbitrations or other forms of litigation and dispute resolution, the incurring of legal expense expense, and the settlement of claims and litigation; (xi) the indemnification of any Person against liabilities and contingencies to the extent permitted by law; (xii) the entering into of listing agreements with any National Securities Exchange and the delisting of some or all of the Limited Partner Interests from, or requesting that trading be suspended on, any such exchange (subject to any prior approval that may be required under Section 4.8); (xiii) unless restricted or prohibited by Section 5.7, the purchase, sale or other acquisition or disposition of Partnership Securities, or the issuance of additional options, rights, warrants and appreciation rights relating to Partnership Securities; and (xiv) the undertaking of any action in connection with the Partnership's participation ’s direct or indirect investment in any Subsidiary or any other Person (including, without limitation, the Operating contribution or loan of funds by the Partnership to such Persons); (xiv) except as otherwise specifically set forth in this Agreement, the determination of the fair market value of any Partnership property distributed in-kind using such reasonable method of valuation as it may adopt; provided, that such methods are otherwise consistent with the requirements of this Agreement; (xv) the enforcement of any rights against any Partner pursuant to representations, warranties, covenants and indemnities relating to such Partner’s contribution of property or assets to the Partnership; (xvi) the exercise, directly or indirectly, through any attorney-in-fact acting under a general or limited power-of-attorney, of any right, including the right to vote, appurtenant to any asset or investment held by the Partnership; (xvii) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of or in connection with any Subsidiary of the Partnership or any other subsidiary Person in which the Partnership has a direct or indirect interest, or jointly with any such Subsidiary or other Person; (xviii) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of any Person in which the Partnership does not have an interest, pursuant to contractual or other arrangements with such Person; (xix) the making, execution and delivery of any and all deeds, leases, notes, deeds to secure Debt, mortgages, deeds of trust, security agreements, conveyances, contracts, guarantees, warranties, indemnities, waivers, releases or legal instruments or agreements in writing necessary or appropriate in the judgment of the General Partner for the accomplishment of any of the powers of the General Partner enumerated in this Agreement; (xx) the issuance of additional Partnership Units, as appropriate and in the General Partner’s sole and absolute discretion, in connection with Capital Contributions by Additional Limited Partners and additional Capital Contributions by Partners pursuant to Article IV hereof; (xxi) the selection and dismissal of General Partner Employees (including, without limitation, employees having titles or offices such as president, vice president, secretary and treasurer), and agents, outside attorneys, accountants, consultants and contractors of the Partnership or the General Partner, the determination of their compensation and other terms of employment or hiring and the delegation to any such General Partner Employee the authority to conduct the business of the Partnership in accordance with the terms of this Agreement; (xxii) the distribution of cash to acquire Partnership Units held by a Limited Partner in connection with a Limited Partner’s exercise of its Redemption right under Section 8.06 hereof; (xxiii) the amendment and restatement of Exhibit A hereto to reflect accurately at all times the Capital Contributions and Percentage Interests of the Partners as the same are adjusted from time to time to the extent necessary to reflect redemptions, Capital Contributions, the issuance of Partnership Units, the admission of any Additional Limited Partner or any Substituted Limited Partner or otherwise, which amendment and restatement, notwithstanding anything in this Agreement to the contrary, shall not be deemed an amendment to this Agreement, as long as the matter or event being reflected in Exhibit A hereto otherwise is authorized by this Agreement; (xxiv) the determination regarding whether a payment to a Partner who exercises its Redemption Right under Section 8.06 that is assumed by the General Partner will be paid in the form of the Cash Amount or the REIT Shares Amount, except as such determination may be limited by Section 8.06. (xxv) the collection and receipt of revenues and income of the Partnership; (xxvi) the registration of any class of securities of the Partnership under the Securities Act or the Exchange Act, and the listing of any debt securities of the Partnership on any exchange. (xxvii) an election to dissolve the Partnership pursuant to Section 13.01(d) hereof; and (xxviii) the taking of any action necessary or appropriate to enable the General Partner to qualify as a member or partnerREIT (so long as the General Partner desires to maintain its qualification as a REIT). (b) Notwithstanding any other provision of this Agreement, the Operating Partnership Agreement, the Delaware Act or any applicable law, rule or regulation, each Each of the Limited Partners and the Assignees and each other Person who may acquire an interest agrees that, except as provided in Partnership Securities hereby (i) approvesSection 7.03 hereof, ratifies and confirms the execution, delivery and performance by the parties thereto of the Operating Partnership Agreement, the Omnibus Agreement, the Contribution Agreement, the Distribution Agreement, and the Purchase Contract dated _________, 2004 between Penn Octane Corporation and the Operating Partnership and the other agreements described in or filed as exhibits to the Registration Statement that are related to the transactions contemplated by the Registration Statement; (ii) agrees that the General Partner (on its own or through any officer of the Partnership) is authorized to execute, deliver and perform the above-mentioned agreements referred to in clause (i) of this sentence and the other agreements, acts, transactions and matters described in or contemplated by the Registration Statement on behalf of the Partnership without any further act, approval or vote of the Partners Partners, notwithstanding any other provision of this Agreement, the Act or any applicable law, rule or regulation. (c) At all times from and after the Assignees or date hereof, the General Partner may cause the Partnership to establish and maintain working capital and other Persons who may acquire an interest reserves in Partnership Securities; and (iii) agrees that the execution, delivery or performance by such amounts as the General Partner, any Group Member or any Affiliate of any of themin its sole and absolute discretion, of this Agreement or any agreement authorized or permitted deems appropriate and reasonable from time to time. (d) In exercising its authority under this Agreement Agreement, the General Partner may, but shall be under no obligation to, take into account the tax consequences to any Partner (including the exercise General Partner) of any action taken (or not taken) by it. Except as may be provided in a separate written agreement between the Partnership and the Limited Partners, the General Partner and the Partnership shall not have liability to a Limited Partner under any circumstances as a result of an income tax liability incurred by such Limited Partner as a result of an action (or inaction) by the General Partner or any Affiliate of the General Partner of the rights accorded pursuant to Article XV)its authority under this Agreement provided, shall not constitute a breach by the General Partner of any duty that the General Partner may owe the Partnership or the Limited Partners or any other Persons has acted in good faith and pursuant to its authority under this Agreement (or any other agreements) or of any duty stated or implied by law or equityAgreement.

Management. (a) The General Partner shall conduct, direct and manage all activities of the Partnership. A. Except as otherwise expressly provided in this Agreement, all management powers over the business and affairs of the Partnership are and shall be exclusively vested in the General Partner, and no Limited Partner or Assignee shall have any right to participate in or exercise control or management power over the business and affairs of the Partnership. The General Partner may not be removed by the Limited Partners with or without cause. In addition to the powers now or hereafter granted a general partner of a limited partnership under applicable law or which are granted to the General Partner under any other provision of this Agreement, the General Partner, subject to Section 7.3the other provisions hereof including Sections 7.3 and 11.2, shall have full power and authority to do all things and on such terms as it, in its sole discretion, may deem deemed necessary or appropriate desirable by it to conduct the business of the PartnershipPartnership (including, without limitation, all actions consistent with allowing the General Partner at all times to qualify as a REIT unless the General Partner voluntarily terminates its REIT status), to exercise all powers set forth in Section 2.5 3.2 and to effectuate the purposes set forth in Section 2.43.1, including the followingincluding, without limitation: (i1) the making of any expenditures, the lending or borrowing of moneymoney (including, without limitation, making prepayments on loans and borrowing money to permit the Partnership to make distributions to its Partners in such amounts as will permit the General Partner (so long as the General Partner has determined to qualify as a REIT) to avoid the payment of any federal income tax (including, for this purpose, any excise tax pursuant to Section 4981 of the Code) and to make distributions to its stockholders sufficient to permit the General Partner to maintain REIT status), the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtednessindebtedness (including the securing of same by mortgage, including indebtedness that is convertible into Partnership Securities, deed of trust or other lien or encumbrance on the Partnership’s assets) and the incurring of any other obligationsobligations it deems necessary for the conduct of the activities of the Partnership; (ii2) the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Partnership, the registration of any class of securities of the Partnership under the Securities Exchange Act of 1934, as amended, and the listing of any debt securities of the Partnership on any exchange; (iii3) subject to the provisions of Section 11.2, the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or exchange of any or all of the assets of the Partnership or the merger or other combination of the Partnership with or into another Person (the matters described in this clause (iii) being subject, however, to any prior approval that may be required by Section 7.3)entity; (iv4) the acquisition, disposition, mortgage, pledge, encumbrance or hypothecation of any assets of the Partnership, and the use of the assets of the Partnership (including including, without limitation, cash on hand) for any purpose consistent with the terms of this AgreementAgreement and on any terms it sees fit, including including, without limitation, the financing of the conduct of or the operations of the Partnership Group; subject to Section 7.6(a)General Partner or the Partnership, the lending of funds to other Persons (including other Group Members)including, without limitation, the General Partner or any Subsidiaries of the Partnership) and the repayment or guarantee of obligations of the Partnership Group Partnership, any of its Subsidiaries and any other Person in which it has an equity investment, and the making of capital contributions to any member of the Partnership Groupits Subsidiaries; (v5) the management, operation, leasing, landscaping, repair, alteration, demolition or improvement of any real property or improvements owned by the Partnership or any Subsidiary of the Partnership; (6) the negotiation, execution execution, and performance of any contracts, leases, conveyances or other instruments (including instruments that limit the liability of General Partner considers useful or necessary to the Partnership under contractual arrangements to all or particular assets conduct of the Partnership, with ’s operations or the other party to the contract to have no recourse against implementation of the General Partner or its assets Partner’s powers under this Agreement, including contracting with contractors, developers, consultants, accountants, legal counsel, other than its interest in professional advisors and other agents and the payment of their expenses and compensation out of the Partnership, even if same results in the terms of the transaction being less favorable to the Partnership than would otherwise be the case)’s assets; (vi7) the distribution of Partnership cashcash or other Partnership assets in accordance with this Agreement; (vii) 8) the establishment of one or more divisions of the Partnership, the selection and dismissal of employees of the Partnership (including including, without limitation, employees having titles such as "“president," "” “vice president," "” “secretary" ” and "“treasurer") ”), and agents, outside attorneys, accountants, consultants and contractors and of the Partnership, the determination of their compensation and other terms of employment or hiring, including waivers of conflicts of interest and the payment of their expenses and compensation out of the Partnership’s assets; (viii9) the maintenance of such insurance for the benefit of the Partnership Group and the Partners and directors and officers of the Partnership or the General Partner as it deems necessary or appropriate; (ix10) the formation of, or acquisition of an interest in, and the contribution of property and the making of loans to, any other further limited or general partnerships, limited liability companies, joint ventures, corporations, limited liability companies corporations or other relationships that it deems desirable (including including, without limitation, the acquisition of interests in, and the contributions of property to, to any Group Member Subsidiary and any other Person in which it has an equity investment from time to time) subject ); provided, that, as long as the General Partner has determined to continue to qualify as a REIT, the restrictions set forth Partnership may not engage in Section 2.4any such formation, acquisition or contribution that could cause the General Partner to fail to qualify as a REIT; (x11) the control of any matters affecting the rights and obligations of the Partnership, including the bringing settlement, compromise, submission to arbitration or any other form of dispute resolution, or abandonment of, any claim, cause of action, liability, debt or damages, due or owing to or from the Partnership, the commencement or defense of suits, legal proceedings, administrative proceedings, arbitration or other forms of dispute resolution, and defending the representation of actions at law the Partnership in all suits or in equity and otherwise engaging in the conduct legal proceedings, administrative proceedings, arbitrations or other forms of litigation and dispute resolution, the incurring of legal expense expense, and the settlement of claims and litigation; (xi) the indemnification of any Person against liabilities and contingencies to the extent permitted by law; (xii) the entering into of listing agreements with any National Securities Exchange and the delisting of some or all of the Limited Partner Interests from, or requesting that trading be suspended on, any such exchange (subject to any prior approval that may be required under Section 4.8); (xiii) unless restricted or prohibited by Section 5.7, the purchase, sale or other acquisition or disposition of Partnership Securities, or the issuance of additional options, rights, warrants and appreciation rights relating to Partnership Securities; and (xiv12) the undertaking of any action in connection with the Partnership's participation ’s direct or indirect investment in any Person (including, without limitation, contributing or loaning Partnership funds to, incurring indebtedness on behalf of, or guarantying the Operating obligations of any such Persons); (13) subject to the other provisions in this Agreement, the determination of the fair market value of any Partnership property distributed in kind using such reasonable method of valuation as it may adopt, provided, that such methods are otherwise consistent with requirements of this Agreement; (14) the management, operation, leasing, landscaping, repair, alteration, demolition or improvement of any real property or improvements owned by the Partnership or any Subsidiary of the Partnership or any Person in which the Partnership has made a direct or indirect equity investment; (15) holding, managing, investing and reinvesting cash and other assets of the Partnership; (16) the collection and receipt of revenues and income of the Partnership; (17) the exercise, directly or indirectly through any attorney-in-fact acting under a general or limited power of attorney, of any right, including the right to vote, appurtenant to any asset or investment held by the Partnership; (18) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of or in connection with any Subsidiary of the Partnership or any other subsidiary Person in which the Partnership has a direct or indirect interest, or jointly with any such Subsidiary or other Person; (19) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of any Person in which the Partnership as a member does not have an interest pursuant to contractual or partner.other arrangements with such Person; (b20) Notwithstanding the making, execution and delivery of any other provision and all deeds, leases, notes, deeds to secure debt, mortgages, deeds of trust, security agreements, conveyances, contracts, guarantees, warranties, indemnities, waivers, releases or legal instruments or agreements in writing necessary or appropriate in the judgment of the General Partner for the accomplishment of any of the powers of the General Partner enumerated in this Agreement; (21) the issuance of additional Partnership Interests as provided in Sections 4.3, 4.4 or 4.5; (22) the distribution of cash to acquire Partnership Units held by a Limited Partner in connection with a Limited Partner’s exercise of its Redemption Right under Section 8.6 hereof; (23) the amendment and restatement of Exhibit A hereto to reflect accurately at all times the Capital Contributions and Percentage Interests of the Partners as the same are adjusted from time to time to the extent necessary to reflect redemptions, Capital Contributions, the issuance of Partnership Units, the admission of any Additional Limited Partner or any Substituted Limited Partner or otherwise, which amendment and restatement, notwithstanding anything in this Agreement to the contrary, shall not be deemed an amendment to this Agreement, as long as the Operating matter or event being reflected in Exhibit A hereto otherwise is authorized by this Agreement; (24) the taking of any and all acts and things necessary or prudent to ensure that the Partnership Agreement, the Delaware Act or any applicable law, rule or regulation, each will not be classified as a “publicly traded partnership” taxable as a corporation under Section 7704 of the Partners and Code; and (25) the Assignees and each other delegation to another Person who may acquire an interest in Partnership Securities hereby (i) approves, ratifies and confirms of any powers now or hereafter granted to the execution, delivery and performance by the parties thereto General Partner. B. Each of the Operating Partnership Agreement, the Omnibus Agreement, the Contribution Agreement, the Distribution Agreement, and the Purchase Contract dated _________, 2004 between Penn Octane Corporation and the Operating Partnership and the other agreements described in or filed as exhibits to the Registration Statement that are related to the transactions contemplated by the Registration Statement; (ii) Limited Partners agrees that the General Partner (on its own or through any officer of the Partnership) is authorized to execute, deliver and perform the above-mentioned agreements referred to in clause (i) of this sentence and the other agreements, acts, transactions and matters described in or contemplated by the Registration Statement on behalf of the Partnership without any further act, approval or vote of the Partners Partners, notwithstanding any other provisions of this Agreement (except as provided in Section 7.3 or 11.2), the Assignees Act or any applicable law, rule or regulation to the fullest extent permitted under the Act or other Persons who may acquire an interest in Partnership Securities; and (iii) agrees that the applicable law, rule or regulation. The execution, delivery or performance by the General Partner, any Group Member Partner or any Affiliate the Partnership of any of them, of this Agreement or any agreement authorized or permitted under this Agreement (including the exercise by the General Partner or any Affiliate of the General Partner of the rights accorded pursuant to Article XV), shall not constitute a breach by the General Partner of any duty that the General Partner may owe the Partnership or the Limited Partners or any other Persons under this Agreement (or any other agreements) or of any duty stated or implied by law or equity. C. At all times from and after the date hereof, the General Partner may cause the Partnership to obtain and maintain (i) casualty, liability and other insurance on the properties of the Partnership and (ii) liability insurance for the benefit of any or all Indemnitees. D. At all times from and after the date hereof, the General Partner may cause the Partnership to establish and maintain working capital reserves in such amounts as the General Partner, in its sole and absolute discretion, deems appropriate and reasonable from time to time. E. In exercising its authority under this Agreement, the General Partner may, but shall be under no obligation to, take into account the tax consequences to any Partner (including the General Partner) of any action taken (or not taken) by the General Partner. The General Partner and the Partnership shall not have liability to a Partner under this Agreement as a result of an income tax liability incurred by such Limited Partner as a result of an action (or inaction) by the General Partner pursuant to its authority under this Agreement. F. Except as otherwise provided herein, to the extent the duties of the General Partner require expenditures of funds to be paid to third parties, the General Partner shall not have any obligations hereunder except to the extent that Partnership funds are reasonably available to it for the performance of such duties, and nothing herein contained shall be deemed to authorize or require the General Partner, in its capacity as such, to expend its individual funds for payment to third parties or to undertake any individual liability or obligation on behalf of the Partnership.

Management. (a) The General Partner shall conduct, direct and manage all activities of the Partnership. A. Except as otherwise expressly provided in this Agreement, all management powers over the business and affairs of the Partnership shall be are exclusively vested in the General Partner, and no Limited Partner or Assignee shall have any right to participate in or exercise control or management power over the business and affairs of the Partnership. The General Partner may not be removed by the Limited Partners with or without cause, except with the consent of the General Partner. In addition to the powers now or hereafter granted a general partner of a limited partnership under the Act and other applicable law or which are granted to the General Partner under any other provision of this Agreement, the General Partner, subject to the other provisions hereof including Section 7.3, shall have full power and authority to do all things and on such terms as it, in its sole discretion, may deem deemed necessary or appropriate desirable by it to conduct the business of the Partnership, to exercise all powers set forth in Section 2.5 3.2 and to effectuate the purposes set forth in Section 2.43.1, including the followingincluding, without limitation: (i) the making of any expenditures, the lending or borrowing of moneymoney (including, without limitation, making prepayments on loans and borrowing money to permit the Partnership to make distributions to its Partners in such amounts as will permit the General Partner (for so long as the General Partner has determined to qualify as a REIT) to avoid the payment of any Federal income tax (including, for this purpose, any excise tax pursuant to Section 4981 of the Code) and to make distributions to its stockholders sufficient to permit the General Partner to maintain REIT status), the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtednessindebtedness (including the securing of same by mortgage, including indebtedness that is convertible into Partnership Securities, deed of trust or other lien or encumbrance on all or any of the Partnership's assets) and the incurring of any other obligationsobligations it deems necessary for the conduct of the activities of the Partnership; (ii) the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Partnership; (iii) subject to the provisions of Section 7.3.D, the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or exchange of any or all of the assets of the Partnership or the merger or other combination of the Partnership with or into another Person (the matters described in this clause (iii) being subject, however, to any prior approval that may be required by Section 7.3)entity; (iv) the mortgage, pledge, encumbrance or hypothecation of all or any assets of the Partnership, and the use of the assets of the Partnership (including including, without limitation, cash on hand) for any purpose consistent with the terms of this AgreementAgreement and on any terms it sees fit, including including, without limitation, the financing of the conduct of or the operations of the Partnership Group; subject to Section 7.6(a)General Partner or the Partnership, the lending of funds to other Persons (including other Group Members)including, without limitation, the General Partner (if necessary to permit the financing or capitalization of a subsidiary of the General Partner or the Partnership) and any Subsidiaries of the Partnership) and the repayment or guarantee of obligations of the Partnership Group Partnership, any of its Subsidiaries and the making of capital contributions to any member of the Partnership Groupother Person in which it has an equity investment; (v) the negotiation, execution execution, and performance of any contracts, leases, conveyances or other instruments (including instruments that limit the liability of General Partner considers useful or necessary to the Partnership under contractual arrangements to all or particular assets conduct of the Partnership, with 's operations or the other party to the contract to have no recourse against implementation of the General Partner or its assets other than its interest in the Partnership, even if same results in the terms of the transaction being less favorable to the Partnership than would otherwise be the case)Partner's powers under this Agreement; (vi) the distribution of Partnership cashcash or other Partnership assets in accordance with this Agreement; (vii) the selection and dismissal of employees of the Partnership (including including, without limitation, employees having titles such as "president," "vice president," "secretary" and "treasurer") ), and agents, outside attorneys, accountants, consultants and contractors and of the Partnership, the determination of their compensation and other terms of employment or hiring, including waivers of conflicts of interest and the payment of their expenses and compensation out of the Partnership's assets; (viii) the maintenance of such insurance for the benefit of the Partnership Group and the Partners as it deems necessary or appropriate; (ix) the formation of, or acquisition of an interest in, and the contribution of property and the making of loans to, any other further limited or general partnerships, joint ventures, corporations, limited liability companies ventures or other relationships that it deems desirable (including including, without limitation, the acquisition of interests in, and the contributions of property to, to any Group Member Subsidiary and any other Person in which it has an equity investment from time to time) subject ); provided that, as long as the General Partner has determined to continue to qualify as a REIT, the restrictions set forth Partnership may not engage in Section 2.4any such formation, acquisition or contribution that would cause the General Partner to fail to qualify as a REIT; (x) the control of any matters affecting the rights and obligations of the Partnership, including the bringing and defending of actions at law or in equity and otherwise engaging in the conduct of litigation and the incurring of legal expense and the settlement of claims and litigation; (xi) , and the indemnification of any Person against liabilities and contingencies to the extent permitted by law; (xii) the entering into of listing agreements with any National Securities Exchange and the delisting of some or all of the Limited Partner Interests from, or requesting that trading be suspended on, any such exchange (subject to any prior approval that may be required under Section 4.8); (xiii) unless restricted or prohibited by Section 5.7, the purchase, sale or other acquisition or disposition of Partnership Securities, or the issuance of additional options, rights, warrants and appreciation rights relating to Partnership Securities; and (xivxi) the undertaking of any action in connection with the Partnership's participation direct or indirect investment in any Person (including, without limitation, contributing or loaning Partnership funds to, incurring indebtedness on behalf of, or guarantying the Operating obligations of any such Persons); (xii) subject to the other provisions in this Agreement, the determination of the fair market value of any Partnership property distributed in kind using such reasonable method of valuation as it may adopt; provided that, such methods are otherwise consistent with requirements of this Agreement; (xiii) the management, operation, leasing, landscaping, repair, alteration, demolition or improvement of any real property or improvements owned by the Partnership or any Subsidiary of the Partnership or any Person in which the Partnership has made a direct or indirect equity investment; (xiv) holding, managing, investing and reinvesting cash and other assets of the Partnership; (xv) the collection and receipt of revenues and income of the Partnership; (xvi) the exercise, directly or indirectly through any attorney-in-fact acting under a general or limited power of attorney, of any right, including the right to vote, appurtenant to any asset or investment held by the Partnership; (xvii) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of or in connection with any Subsidiary of the Partnership or any other subsidiary Person in which the Partnership has a direct or indirect interest, or jointly with any such Subsidiary or other Person; (xviii) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of any Person in which the Partnership as a member does not have an interest, pursuant to contractual or partnerother arrangements with such Person; and (xix) the making, execution and delivery of any and all deeds, leases, notes, deeds to secure debt, mortgages, deeds of trust, security agreements, conveyances, contracts, guarantees, warranties, indemnities, waivers, releases or legal instruments or other agreements in writing necessary or appropriate in the judgment of the General Partner for the accomplishment of any of the powers of the General Partner enumerated in this Agreement. (b) Notwithstanding any other provision of this Agreement, the Operating Partnership Agreement, the Delaware Act or any applicable law, rule or regulation, each B. Each of the Limited Partners and the Assignees and each other Person who may acquire an interest in Partnership Securities hereby (i) approves, ratifies and confirms the execution, delivery and performance by the parties thereto of the Operating Partnership Agreement, the Omnibus Agreement, the Contribution Agreement, the Distribution Agreement, and the Purchase Contract dated _________, 2004 between Penn Octane Corporation and the Operating Partnership and the other agreements described in or filed as exhibits to the Registration Statement that are related to the transactions contemplated by the Registration Statement; (ii) agrees that the General Partner (on its own or through any officer of the Partnership) is authorized to execute, deliver and perform the above-mentioned agreements referred to in clause (i) of this sentence and the other agreements, acts, transactions and matters described in or contemplated by the Registration Statement on behalf of the Partnership without any further act, approval or vote of the Partners partners, notwithstanding any other provisions of this Agreement (except as provided in Section 7.3), the Act or the Assignees any applicable law, rule or the other Persons who may acquire an interest in Partnership Securities; and (iii) agrees that the regulation. The execution, delivery or performance by the General Partner, any Group Member or any Affiliate of any of them, of this Agreement or any agreement authorized or permitted under this Agreement (including the exercise by the General Partner or any Affiliate of the General Partner of the rights accorded pursuant to Article XV), shall not constitute a breach by the General Partner of any duty that the General Partner may owe the Partnership or the Limited Partners or any other Persons under this Agreement (or any other agreements) or of any duty stated or implied by law or equity.the

Management. (a) The General Partner shall conduct, direct and manage all activities of the Partnership. Except as otherwise expressly provided in this Agreement, all management powers over the business and affairs of the Partnership shall be exclusively vested in the General Partner, and no Limited Partner or Assignee shall have any management power over the business and affairs of the Partnership. In addition to the powers now or hereafter granted a general partner of a limited partnership under applicable law or which are granted to the General Partner under any other provision of this Agreement, the General Partner, subject to Section 7.3, shall have full power and authority to do all things and on such terms as it, in its sole discretion, may deem necessary or appropriate to conduct the business of the Partnership, to exercise all powers set forth in Section 2.5 and to effectuate the purposes set forth in Section 2.4, including the following: (i) the making of any expenditures, the lending or borrowing of money, the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtedness, including indebtedness that is convertible into Partnership Securities, and the incurring of any other obligations; (ii) the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Partnership; (iii) the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or exchange of any or all of the assets of the Partnership or the merger or other combination of the Partnership with or into another Person (the matters described in this clause (iii) being subject, however, to any prior approval that may be required by Section 7.3); (iv) the use of the assets of the Partnership (including cash on hand) for any purpose consistent with the terms of this Agreement, including the financing of the conduct of the operations of the Partnership Group; subject to Section 7.6(a), the lending of funds to other Persons (including other Group Membersthe Operating Company), ; the repayment or guarantee of obligations of the Partnership Group and the making of capital contributions to any member of the Partnership Group; (v) the negotiation, execution and performance of any contracts, conveyances or other instruments (including instruments that limit the liability of the Partnership under contractual arrangements to all or particular assets of the Partnership, with the other party to the contract to have no recourse against the General Partner or its assets other than its interest in the Partnership, even if same results in the terms of the transaction being less favorable to the Partnership than would otherwise be the case); (vi) the distribution of Partnership cash; (vii) the selection and dismissal of employees (including employees having titles such as "“president," "” “vice president," "” “secretary" ” and "“treasurer"”) and agents, outside attorneys, accountants, consultants and contractors and the determination of their compensation and other terms of employment or hiring; (viii) the maintenance of such insurance for the benefit of the Partnership Group and the Partners as it deems necessary or appropriate; (ix) the formation of, or acquisition of an interest in, and the contribution of property and the making of loans to, any other further limited or general partnerships, joint ventures, corporations, limited liability companies or other relationships (including the acquisition of interests in, and the contributions of property to, any Group Member the Operating Company from time to time) subject to the restrictions set forth in Section 2.4; (x) the control of any matters affecting the rights and obligations of the Partnership, including the bringing and defending of actions at law or in equity and otherwise engaging in the conduct of litigation and the incurring of legal expense and the settlement of claims and litigation; (xi) the indemnification of any Person against liabilities and contingencies to the extent permitted by law; (xii) the entering into of listing agreements with any National Securities Exchange and the delisting of some or all of the Limited Partner Interests from, or requesting that trading be suspended on, any such exchange (subject to any prior approval that may be required under Section 4.8); (xiii) unless restricted or prohibited by Section 5.7, the purchase, sale or other acquisition or disposition of Partnership Securities, or the issuance of additional options, rights, warrants and appreciation rights relating to Partnership Securities; and (xiv) the undertaking of any action in connection with the Partnership's ’s participation in the Operating Partnership Company or any other subsidiary of the Partnership as a member or partner. (b) Notwithstanding any other provision of this Agreement, the Operating Partnership Company Agreement, the Delaware Act or any applicable law, rule or regulation, each of the Partners and the Assignees and each other Person who may acquire an interest in Partnership Securities hereby (i) approves, ratifies and confirms the execution, delivery and performance by the parties thereto of the Operating Partnership Company Agreement, the Underwriting Agreement, the Omnibus Agreement, the First Contribution Agreement, the Distribution Closing Contribution Agreement, and the Purchase Contract dated _________, 2004 between Penn Octane Corporation and the Operating Partnership and the other agreements described in or filed as exhibits to the Registration Statement that are related to the transactions contemplated by the Registration Statement; (ii) agrees that the General Partner (on its own or through any officer of the Partnership) is authorized to execute, deliver and perform the agreements referred to in clause (i) of this sentence and the other agreements, acts, transactions and matters described in or contemplated by the Registration Statement on behalf of the Partnership without any further act, approval or vote of the Partners or the Assignees or the other Persons who may acquire an interest in Partnership Securities; and (iii) agrees that the execution, delivery or performance by the General Partner, any Group Member or any Affiliate of any of them, of this Agreement or any agreement authorized or permitted under this Agreement (including the exercise by the General Partner or any Affiliate of the General Partner of the rights accorded pursuant to Article XV), shall not constitute a breach by the General Partner of any duty that the General Partner may owe the Partnership or the Limited Partners or any other Persons under this Agreement (or any other agreements) or of any duty stated or implied by law or equity.

Management. (a) The General Partner shall conduct, direct and manage all activities of the Partnership. Except as otherwise expressly provided in this Agreement, all management powers over the business and affairs of the Partnership shall be exclusively vested in the General Partner, and no Limited Partner or Assignee shall have any management power over the business and affairs of the Partnership. In addition to the powers now or hereafter granted a general partner of a limited partnership under applicable law or which are granted to the General Partner under any other provision of this Agreement, the General Partner, subject to Section 7.3, shall have full power and authority to do all things and on such terms as it, in its sole discretion, may deem necessary or appropriate to conduct the business of the Partnership, to exercise all powers set forth in Section 2.5 and to effectuate the purposes set forth in Section 2.4, including the following:following:‌ (i) the making of any expenditures, the lending or borrowing of money, the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtedness, including indebtedness that is convertible into Partnership Securities, and the incurring of any other obligations; (ii) the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Partnership; (iii) the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or exchange of any or all of the assets of the Partnership or the merger or other combination of the Partnership with or into another Person (the matters described in this clause (iii) being subject, however, to any prior approval that may be required by Section 7.3); (iv) the use of the assets of the Partnership (including cash on hand) for any purpose consistent with the terms of this Agreement, including the financing of the conduct of the operations of the Partnership Group; subject to Section 7.6(a), the lending of funds to other Persons (including other Group Membersthe Operating Partnership), ; the repayment or guarantee of obligations of the Partnership Group Group; and the making of capital contributions to any member of the Partnership Group; (v) the negotiation, execution and performance of any contracts, conveyances or other instruments (including instruments that limit the liability of the Partnership under contractual arrangements to all or particular assets of the Partnership, with the other party to the contract to have no recourse against the General Partner or its assets other than its interest in the Partnership, even if same results in the terms of the transaction being less favorable to the Partnership than would otherwise be the case); (vi) the distribution of Partnership cash; (vii) the selection and dismissal of employees (including employees having titles such as "“president," "” “vice president," "” “secretary" ” and "“treasurer"”) and agents, outside attorneys, accountants, consultants and contractors and the determination of their compensation and other terms of employment or hiring; (viii) the maintenance of such insurance for the benefit of the Partnership Group and the Partners as it deems necessary or appropriateappropriate (if such insurance is not maintained pursuant to the Administrative Services Agreement); (ix) the formation of, or acquisition of an interest in, and the contribution of property and the making of loans to, any other further limited or general partnerships, joint ventures, corporations, limited liability companies companies, corporations or other relationships (including the acquisition of interests in, and the contributions of property to, any Group Member the Operating Partnership from time to time) subject to the restrictions set forth in Section 2.4; (x) the control of any matters affecting the rights and obligations of the Partnership, including the bringing and defending of actions at law or in equity and otherwise engaging in the conduct of litigation and the incurring of legal expense and the settlement of claims and litigation; (xi) the indemnification of any Person against liabilities and contingencies to the extent permitted by law; (xii) the entering into of listing agreements with any National Securities Exchange and the delisting of some or all of the Limited Partner Interests from, or requesting that trading be suspended on, any such exchange (subject to any prior approval that may be required under Section 4.8); (xiii) unless restricted or prohibited by Section 5.7, the purchase, sale or other acquisition or disposition of Partnership Securities, or the issuance of additional options, rights, warrants and appreciation rights relating to Partnership Securities; and (xiv) the undertaking of any action in connection with the Partnership's participation in ’s ownership or operation of any Group Member, including exercising, on behalf and for the benefit of the Partnership, the Partnership’s rights as the sole stockholder of the Operating Partnership or any other subsidiary of the Partnership as a member or partnerGeneral Partner. (b) Notwithstanding any other provision of this Agreement, the Operating Partnership Agreement, the Delaware Act or any applicable law, rule or regulation, each of the Partners and the Assignees and each other Person who may acquire an interest in Partnership Securities hereby (i) approves, ratifies and confirms the execution, delivery and performance by the parties thereto of the Operating Partnership Agreement, the Omnibus Agreement, the Contribution Agreement, the Distribution Agreement, and the Purchase Contract dated _________, 2004 between Penn Octane Corporation and the Operating Partnership and the other agreements described in or filed as exhibits to the Registration Statement that are related to the transactions contemplated by the Registration Statement; (ii) agrees that the General Partner (on its own or through any officer of the Partnership) is authorized to execute, deliver and perform the agreements referred to in clause (i) of this sentence and the other agreements, acts, transactions and matters described in or contemplated by the Registration Statement on behalf of the Partnership without any further act, approval or vote of the Partners or the Assignees or the other Persons who may acquire an interest in Partnership Securities; and (iii) agrees that the execution, delivery or performance by the General Partner, any Group Member or any Affiliate of any of them, of this Agreement or any agreement authorized or permitted under this Agreement (including the exercise by the General Partner or any Affiliate of the General Partner of the rights accorded pursuant to Article XV), shall not constitute a breach by the General Partner of any duty that the General Partner may owe the Partnership or the Limited Partners or any other Persons under this Agreement (or any other agreements) or of any duty stated or implied by law or equity.hereby

Management. (a) The General Partner shall conduct, direct and manage all activities of the Partnership. A. Except as otherwise expressly provided in this Agreement, all management powers over the business and affairs of the Partnership are and shall be exclusively vested in the General Partner, and no . The Limited Partner or Assignee Partners shall not have any right to participate in or exercise control or management power over the business and affairs of the Partnership. The General Partner may not be removed by the Limited Partners. In addition to the powers now or hereafter granted to a general partner of a limited partnership under applicable law or which are granted to the General Partner under any other provision of this Agreement, the General Partner, subject to Section 7.37.3 hereof, shall have full power and authority to do all things and on such terms as it, in its sole discretion, may deem deemed necessary or appropriate desirable by it to conduct the business of the Partnership, to exercise all powers set forth in Section 2.5 3.2 hereof and to effectuate the purposes set forth in Section 2.43.1 hereof, including, without limitation: (1) the execution, acknowledgement, verification, delivery, filing and recording, for and in the name of the Partnership, and, to the extent necessary, the General Partner and the Initial Limited Partner, of any and all documents and instruments, including the following:LCIF Merger Agreement and the performance of any and all acts required by applicable law or which GP-1 deems necessary or advisable in order to give effect to the consummation of the LCIF Merger; (i2) the making of any expenditures, the lending lending, borrowing or guarantee of money (including, without limitation, making prepayments on loans and borrowing money to permit the Partnership to make distributions to its Partners in such amounts as will permit LXP (so long as LXP qualifies as a REIT) in general, including, without limitation, to avoid the payment of moneyany federal income tax (including, for this purpose, any excise tax pursuant to Section 4981 of the Code), to make distributions to its stockholders sufficient to permit LXP to maintain REIT status), the incurrence of inter-company indebtedness and the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtedness, including indebtedness that is convertible into Partnership Securities, and the incurring of any other obligations; (ii) the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Partnership; (iii3) the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or exchange of any or all of the assets of the Partnership or the merger or other combination of the Partnership with or into another Person entity (all of the matters described in this clause (iii) being subject, however, foregoing subject to any prior approval that may be only to the extent required by Section 7.37.3 hereof); (iv4) the use of the assets of the Partnership (including cash on hand) for any purpose consistent with the terms of this AgreementAgreement and on any terms the General Partner sees fit, including the financing of the conduct of the operations of the Partnership Group; subject to Section 7.6(a), the lending of funds to other Persons (including other Group Members), the repayment or guarantee of obligations of the Partnership Group and the making of capital contributions or loans to any member of the Partnership Groupits Subsidiaries; (v5) the management, operation, leasing, landscaping, repair, alteration, demolition or improvement of any real property or improvements owned by the Partnership or any Subsidiary of the Partnership; (6) the negotiation, execution and performance of any contracts, conveyances or other instruments (including instruments that limit the liability of General Partner considers useful or necessary to the Partnership under contractual arrangements to all or particular assets conduct of the Partnership, with 's operations or the other party to the contract to have no recourse against implementation of the General Partner or its assets other than its interest in the Partnership, even if same results in the terms of the transaction being less favorable to the Partnership than would otherwise be the case)Partner's powers under this Agreement; (vi7) the distribution of Partnership cashcash or other Partnership assets in accordance with this Agreement; (vii) the selection and dismissal of employees (including employees having titles such as "president," "vice president," "secretary" and "treasurer") and agents, outside attorneys, accountants, consultants and contractors and the determination of their compensation and other terms of employment or hiring; (viii) the maintenance of such insurance for the benefit of the Partnership Group and the Partners as it deems necessary or appropriate; (ix) 8) the formation of, or acquisition of an interest in, and the contribution of property and the making of loans to, any other further limited or general partnerships, joint ventures, corporations, limited liability companies or other relationships (including joint ventures that the acquisition of interests in, and the contributions of property to, any Group Member from time to time) subject to the restrictions set forth in Section 2.4General Partner deems desirable; (x) the control of any matters affecting the rights and obligations of the Partnership, including the bringing and defending of actions at law or in equity and otherwise engaging in the conduct of litigation and the incurring of legal expense and the settlement of claims and litigation; (xi) the indemnification of any Person against liabilities and contingencies to the extent permitted by law; (xii) the entering into of listing agreements with any National Securities Exchange and the delisting of some or all of the Limited Partner Interests from, or requesting that trading be suspended on, any such exchange (subject to any prior approval that may be required under Section 4.8); (xiii) unless restricted or prohibited by Section 5.7, the purchase, sale or other acquisition or disposition of Partnership Securities, or the issuance of additional options, rights, warrants and appreciation rights relating to Partnership Securities; and (xiv9) the undertaking of any action in connection with the Partnership's participation direct or indirect investment in the Operating Partnership its Subsidiaries or any other subsidiary Person (including, without limitation, the contribution or loan of funds by the Partnership to such Persons); (10) the determination of the fair market value of any Partnership property distributed in kind using such reasonable method of valuation as the General Partner may adopt; (11) the exercise, directly or indirectly, through any attorney-in-fact acting under a general or limited power of attorney, of any right, including the right to vote, appurtenant to any asset or investment held by the Partnership; and (12) the making, execution and delivery of any and all deeds, leases, notes, deeds to secure debt, mortgages, deeds of trust, security agreements, conveyances, contracts, guarantees, warranties, indemnities, waivers, releases or legal instruments or agreements in writing necessary or appropriate in the judgment of the General Partner for the accomplishment of any of the powers of the General Partner enumerated in this Agreement. B. At all times from and after the date hereof, the General Partner may cause the Partnership to obtain and maintain (i) casualty, liability and other insurance on the properties of the Partnership as a member or partner. (b) Notwithstanding any other provision of this Agreement, the Operating Partnership Agreement, the Delaware Act or any applicable law, rule or regulation, each of the Partners and the Assignees and each other Person who may acquire an interest in Partnership Securities hereby (i) approves, ratifies and confirms the execution, delivery and performance by the parties thereto of the Operating Partnership Agreement, the Omnibus Agreement, the Contribution Agreement, the Distribution Agreement, and the Purchase Contract dated _________, 2004 between Penn Octane Corporation and the Operating Partnership and the other agreements described in or filed as exhibits to the Registration Statement that are related to the transactions contemplated by the Registration Statement; (ii) agrees that liability insurance for the Indemnitees hereunder. C. At all times from and after the date hereof, the General Partner (on its own or through any officer of the Partnership) is authorized to execute, deliver and perform the agreements referred to in clause (i) of this sentence and the other agreements, acts, transactions and matters described in or contemplated by the Registration Statement on behalf of may cause the Partnership without to establish and maintain any further actand all reserves, approval working capital accounts and other cash or vote of the Partners or the Assignees or the other Persons who may acquire an interest similar balances in Partnership Securities; and (iii) agrees that the execution, delivery or performance by such amounts as the General Partner, any Group Member or any Affiliate of any of themin its sole discretion, of this Agreement or any agreement authorized or permitted under this Agreement (including the exercise by the General Partner or any Affiliate of the General Partner of the rights accorded pursuant deems appropriate and reasonable from time to Article XV), shall not constitute a breach by the General Partner of any duty that the General Partner may owe the Partnership or the Limited Partners or any other Persons under this Agreement (or any other agreements) or of any duty stated or implied by law or equitytime.

Management. (a) The General Partner shall conduct, direct and manage all activities of the Partnership. Except as otherwise expressly provided in this Agreement, all management powers over the business and affairs of the Partnership are and shall be exclusively vested in the General Partner, and no Limited Partner or Assignee shall have any right to participate in or exercise control or management power over the business and affairs of the Partnership. The General Partner may not be removed by the Limited Partners, except with the consent of the General Partner. In addition to the powers now or hereafter granted to a general partner of a limited partnership under applicable law or which that are granted to the General Partner under any other provision of this Agreement, the General Partner, subject to the other provisions hereof including Section 7.37.03, shall have full power and authority to do all things and on such terms as it, in its sole discretion, may deem deemed necessary or appropriate desirable by it to conduct the business of the Partnership, to exercise all powers set forth in Section 2.5 3.02 hereof and to effectuate the purposes set forth in Section 2.43.01 hereof, including the followingincluding, without limitation: (i) the making of any expenditures, the lending or borrowing of moneymoney (including, without limitation, making prepayments on loans and borrowing money or selling assets to permit the Partnership to make distributions to its Partners in such amounts as will permit the General Partner (so long as the General Partner desires to maintain or restore its qualification as a REIT) to avoid the payment of any federal income tax (including, for this purpose, any excise tax pursuant to Code Section 4981) and to make distributions to its stockholders sufficient to permit the General Partner to maintain or restore REIT qualification or otherwise to satisfy the REIT Requirements), the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtednessindebtedness (including the securing of same by deed to secure debt, including indebtedness that is convertible into Partnership Securitiesmortgage, deed of trust or other lien or encumbrance on the Partnership’s assets) and the incurring of any other obligationsobligations that it deems necessary for the conduct of the activities of the Partnership; (ii) the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Partnership, the registration of any class of securities of the Partnership under the Exchange Act and the listing of any debt securities of the Partnership on any exchange; (iii) subject to Section 11.02 hereof, the acquisition, dispositionsale, mortgagelease, pledgetransfer, encumbranceexchange or other disposition of any, hypothecation all or exchange of any or substantially all of the assets of the Partnership (including, but not limited to, the exercise or grant of any conversion, option, privilege or subscription right or any other right available in connection with any assets at any time held by the Partnership) or the merger merger, consolidation, reorganization or other combination of the Partnership with or into another Person (the matters described in this clause (iii) being subject, however, to any prior approval that may be required by Section 7.3)entity; (iv) the mortgage, pledge, encumbrance or hypothecation of any assets of the Partnership, the use of the assets of the Partnership (including including, without limitation, cash on hand) for any purpose consistent with the terms of this AgreementAgreement and on any terms that it sees fit, including including, without limitation, the financing of the operations and activities of the General Partner, the Partnership or any of the Partnership’s Subsidiaries, the lending of funds to other Persons (including, without limitation, the Partnership’s Subsidiaries) and the repayment of obligations of the Partnership, its Subsidiaries and any other Person in which the Partnership has an equity investment, and the making of capital contributions to and equity investments in the Partnership’s Subsidiaries; (v) the use of the assets of the Partnership (including, without limitation, cash on hand) for any purpose consistent with the terms of this Agreement and on any terms it sees fit, including, without limitation, the financing of the conduct of the operations of the General Partner, the Partnership Group; subject to Section 7.6(a)or any of the Partnership’s Subsidiaries, the lending of funds to other Persons (including other Group Members)including, without limitation, the General Partner and its Subsidiaries and the Partnership’s Subsidiaries) and the repayment or guarantee of obligations of the Partnership Group and its Subsidiaries and any other Person in which the Partnership has an equity investment and the making of capital contributions to its Subsidiaries; (vi) the management, operation, leasing, landscaping, repair, alteration, demolition, replacement or improvement of any member Property, including, without limitation, any Contributed Property, or other asset of the Partnership Groupor any Subsidiary, whether pursuant to a Services Agreement or otherwise; (vvii) the negotiation, execution and performance of any contracts, leases, conveyances or other instruments (including instruments that limit the liability of General Partner considers useful or necessary to the Partnership under contractual arrangements to all or particular assets conduct of the Partnership, with ’s operations or the other party to the contract to have no recourse against implementation of the General Partner or its assets Partner’s powers under this Agreement, including contracting with contractors, developers, consultants, accountants, legal counsel, other than its interest in professional advisors and other agents and the payment of their expenses and compensation out of the Partnership, even if same results in the terms of the transaction being less favorable to the Partnership than would otherwise be the case)’s assets; (viviii) the distribution of Partnership cashcash or other Partnership assets in accordance with this Agreement, the holding, management, investment and reinvestment of cash and other assets of the Partnership and the collection and receipt of revenues, rents and income of the Partnership; (vii) the selection and dismissal of employees (including employees having titles such as "president," "vice president," "secretary" and "treasurer") and agents, outside attorneys, accountants, consultants and contractors and the determination of their compensation and other terms of employment or hiring; (viiiix) the maintenance of such insurance for the benefit of the Partnership Group and the Partners as it the General Partner deems necessary or appropriate, including, without limitation, (i) casualty, liability and other insurance on the Properties and (ii) liability insurance for the Indemnitees hereunder; (ixx) the formation of, or acquisition of an interest in, and the contribution of property and the making of loans to, any other further limited or general partnerships, joint ventures, corporations, limited liability companies companies, joint ventures or other relationships that the General Partner deems desirable (including including, without limitation, the acquisition of interests in, and the contributions of property to, any Group Member Subsidiary and any other Person in which it has an equity investment from time to time); provided, however, that as long as the General Partner has determined to continue to qualify as a REIT, the General Partner may not engage in any such formation, acquisition or contribution that would cause it to fail to qualify as a REIT within the meaning of Code Section 856(a) subject (so long as the General Partner desires to the restrictions set forth in Section 2.4maintain its qualification as a REIT); (xxi) the filing of applications, communicating and otherwise dealing with any and all governmental agencies having jurisdiction over, or in any way affecting, the Partnership’s assets or any other aspect of the Partnership business; (xii) the control of any matters affecting the rights and obligations of the Partnership, including the bringing settlement, compromise, submission to arbitration or any other form of dispute resolution, or abandonment, of any claim, cause of action, liability, debt or damages, due or owing to or from the Partnership, the commencement or defense of suits, legal proceedings, administrative proceedings, arbitrations or other forms of dispute resolution, and defending the representation of actions at law the Partnership in all suits or in equity and otherwise engaging in the conduct legal proceedings, administrative proceedings, arbitrations or other forms of litigation and dispute resolution, the incurring of legal expense expense, and the settlement of claims and litigation; (xi) the indemnification of any Person against liabilities and contingencies to the extent permitted by law; (xii) the entering into of listing agreements with any National Securities Exchange and the delisting of some or all of the Limited Partner Interests from, or requesting that trading be suspended on, any such exchange (subject to any prior approval that may be required under Section 4.8); (xiii) unless restricted or prohibited by Section 5.7, the purchase, sale or other acquisition or disposition of Partnership Securities, or the issuance of additional options, rights, warrants and appreciation rights relating to Partnership Securities; and (xiv) the undertaking of any action in connection with the Partnership's participation ’s direct or indirect investment in any Subsidiary or any other Person (including, without limitation, the Operating contribution or loan of funds by the Partnership to such Persons); (xiv) except as otherwise specifically set forth in this Agreement, the determination of the fair market value of any Partnership property distributed in-kind using such reasonable method of valuation as it may adopt; provided, that such methods are otherwise consistent with the requirements of this Agreement; (xv) the enforcement of any rights against any Partner pursuant to representations, warranties, covenants and indemnities relating to such Partner’s contribution of property or assets to the Partnership; (xvi) the exercise, directly or indirectly, through any attorney-in-fact acting under a general or limited power-of-attorney, of any right, including the right to vote, appurtenant to any asset or investment held by the Partnership; (xvii) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of or in connection with any Subsidiary of the Partnership or any other subsidiary Person in which the Partnership has a direct or indirect interest, or jointly with any such Subsidiary or other Person; (xviii) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of any Person in which the Partnership does not have an interest, pursuant to contractual or other arrangements with such Person; (xix) the making, execution and delivery of any and all deeds, leases, notes, deeds to secure Debt, mortgages, deeds of trust, security agreements, conveyances, contracts, guarantees, warranties, indemnities, waivers, releases or legal instruments or agreements in writing necessary or appropriate in the judgment of the General Partner for the accomplishment of any of the powers of the General Partner enumerated in this Agreement; (xx) the issuance of additional Partnership Units, as appropriate and in the General Partner’s sole and absolute discretion, in connection with Capital Contributions by Additional Limited Partners and additional Capital Contributions by Partners pursuant to Article IV hereof; (xxi) the selection and dismissal of employees (including, without limitation, employees having titles or offices such as president, vice president, secretary and treasurer), and agents, outside attorneys, accountants, consultants and contractors of the Partnership or the General Partner, the determination of their compensation and other terms of employment or hiring and the delegation to any such employees the authority to conduct the business of the Partnership in accordance with the terms of this Agreement; (xxii) the distribution of cash to acquire Partnership Units held by a Limited Partner in connection with a Limited Partner’s exercise of its Redemption right under Section 8.06 hereof; (xxiii) the amendment and restatement of Exhibit A hereto to reflect accurately at all times the Capital Contributions and Percentage Interests of the Partners as the same are adjusted from time to time to the extent necessary to reflect redemptions, Capital Contributions, the issuance of Partnership Units, the admission of any Additional Limited Partner or any Substituted Limited Partner or otherwise, which amendment and restatement, notwithstanding anything in this Agreement to the contrary, shall not be deemed an amendment to this Agreement, as long as the matter or event being reflected in Exhibit A hereto otherwise is authorized by this Agreement; (xxiv) the determination regarding whether a payment to a Partner who exercises its Redemption Right under Section 8.06 that is assumed by the General Partner will be paid in the form of the Cash Amount or the REIT Shares Amount, except as such determination may be limited by Section 8.06; (xxv) the collection and receipt of revenues and income of the Partnership; (xxvi) the registration of any class of securities of the Partnership under the Securities Act or the Exchange Act, and the listing of any debt securities of the Partnership on any exchange; (xxvii) an election to dissolve the Partnership pursuant to Section 13.01(b) hereof; and (xxviii) the taking of any action necessary or appropriate to enable the General Partner to qualify as a member or partnerREIT (so long as the General Partner desires to maintain its qualification as a REIT). (b) Notwithstanding any other provision of this Agreement, the Operating Partnership Agreement, the Delaware Act or any applicable law, rule or regulation, each Each of the Limited Partners and the Assignees and each other Person who may acquire an interest agrees that, except as provided in Partnership Securities hereby (i) approvesSection 7.03 hereof, ratifies and confirms the execution, delivery and performance by the parties thereto of the Operating Partnership Agreement, the Omnibus Agreement, the Contribution Agreement, the Distribution Agreement, and the Purchase Contract dated _________, 2004 between Penn Octane Corporation and the Operating Partnership and the other agreements described in or filed as exhibits to the Registration Statement that are related to the transactions contemplated by the Registration Statement; (ii) agrees that the General Partner (on its own or through any officer of the Partnership) is authorized to execute, deliver and perform the above-mentioned agreements referred to in clause (i) of this sentence and the other agreements, acts, transactions and matters described in or contemplated by the Registration Statement on behalf of the Partnership without any further act, approval or vote of the Partners Partners, notwithstanding any other provision of this Agreement, the Act or any applicable law, rule or regulation. (c) At all times from and after the Assignees or Effective Date, the General Partner may cause the Partnership to establish and maintain working capital and other Persons who may acquire an interest reserves in Partnership Securities; and (iii) agrees that the execution, delivery or performance by such amounts as the General Partner, any Group Member or any Affiliate of any of themin its sole and absolute discretion, of this Agreement or any agreement authorized or permitted deems appropriate and reasonable from time to time. (d) In exercising its authority under this Agreement Agreement, the General Partner may, but shall be under no obligation to, take into account the tax consequences to any Partner (including the exercise General Partner) of any action taken (or not taken) by it. Except as may be provided in a separate written agreement between the Partnership and the Limited Partners, the General Partner and the Partnership shall not have liability to a Limited Partner under any circumstances as a result of an income tax liability incurred by such Limited Partner as a result of an action (or inaction) by the General Partner or any Affiliate of the General Partner of the rights accorded pursuant to Article XV)its authority under this Agreement provided, shall not constitute a breach by the General Partner of any duty that the General Partner may owe the Partnership or the Limited Partners or any other Persons has acted in good faith and pursuant to its authority under this Agreement (or any other agreements) or of any duty stated or implied by law or equityAgreement.

Management. (a) The General Partner shall conduct, direct and manage all activities of the Partnership. Except as otherwise expressly provided in this Agreement, all A. All management powers over the business and affairs of the Partnership are and shall be exclusively vested in the General Partner; provided, however, as further described in Section 7.1.G, the General Partner shall have full, right, power and no authority to delegate its management powers over the business and affairs of the Partnership to officers of the Partnership designated by the General Partner or Federal Realty. No Limited Partner or Assignee shall have any right to participate in or exercise control or management power over the business and affairs of the PartnershipPartnership or Federal Realty. No General Partner may be removed by the Partners, with or without cause, except with the Consent of the General Partner. In addition to the powers now or hereafter granted a general partner of a limited partnership under applicable law or which that are granted to the General Partner under any other provision of this Agreement, subject only to the provisions of this Agreement, including, without limitation, Section 3.2 and Section 7.3, the General Partner shall have full and exclusive power and authority, in its sole and absolute discretion, without the consent or approval of any Limited Partner, to do or authorize all things deemed necessary or desirable by it to conduct the business and affairs of the Partnership and the General Partner, subject to Section 7.3, shall have full power and authority to do exercise or direct the exercise of all things and on such terms as it, in its sole discretion, may deem necessary or appropriate to conduct the business of the Partnership, to exercise all powers set forth in Section 2.5 of the Partnership under the Act and this Agreement and to effectuate the purposes set forth in Section 2.4of the Partnership including, including the followingwithout limitation: (i1) the making of any expenditures, the lending or borrowing of moneymoney or selling of assets (including, without limitation, making prepayments on loans and borrowing money to permit the Partnership to make distributions to the Holders in such amounts as will permit Federal Realty): (a) to prevent the imposition of any federal income tax on Federal Realty (including, for this purpose, any excise tax pursuant to Code Section 4981); (b) to make distributions to its shareholders and payments to any taxing authority sufficient to permit Federal Realty to maintain REIT status or otherwise to satisfy the REIT Requirements; (c) the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtednessindebtedness (including the securing of same by deed to secure debt, including indebtedness that is convertible into Partnership Securitiesmortgage, deed of trust or other lien or encumbrance on the Partnership’s assets); and (d) the incurring of any other obligationsobligations that the General Partner deems necessary for the conduct of the activities of the Partnership or Federal Realty; (ii2) the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Partnership; (iii3) the taking of any and all acts necessary or prudent to ensure that the Partnership will not be classified as a “publicly traded partnership” under Code Section 7704(b) or be taxed as a corporation under the Code; (4) subject to Section 11.2.B, the acquisition, dispositionsale, mortgagetransfer, pledgeexchange or other disposition of any, encumbrance, hypothecation all or exchange of any or substantially all of the assets (including the goodwill) of the Partnership (including, but not limited to, the exercise or grant of any conversion, option, privilege or subscription right or any other right available in connection with any assets at any time held by the merger Partnership) or other combination undertaking an Extraordinary Transaction with respect to the Partnership; (5) the mortgage, cross-collateralization, pledge, encumbrance or hypothecation of any assets of the Partnership, the assignment of any assets of the Partnership with in trust for creditors or into another Person (on the matters described in this clause (iii) being subjectpromise of the assignee to pay the debts of the Partnership, however, to any prior approval that may be required by Section 7.3); (iv) the use of the assets of the Partnership (including including, without limitation, cash on hand) for any purpose consistent with the terms of this AgreementAgreement and on any terms that the General Partner sees fit, including including, without limitation, the financing of the conduct operations and activities of the operations General Partner, Federal Realty, the Partnership or any of the Partnership Group; subject to Section 7.6(a)Partnership’s Subsidiaries, the lending of funds to other Persons (including other Group Members)including, without limitation, the General Partner, Federal Realty and/or the Partnership’s Subsidiaries) and the repayment or guarantee of obligations of the Partnership, Federal Realty, the Partnership’s Subsidiaries and any other Person in which the Partnership Group has an equity investment, and the making of capital contributions to any member of and equity investments in the Partnership GroupPartnership’s Subsidiaries; (v6) the management, operation, leasing, landscaping, repair, alteration, demolition, replacement or improvement of any Property; (7) the negotiation, execution and performance of any contracts, including leases, ground leases, easements, management agreements, consulting agreements, rights of way and other property-related agreements, conveyances or other instruments (including instruments that limit the liability General Partner considers useful or necessary to the conduct of the Partnership’s operations or the implementation of the General Partner’s powers under this Agreement, including contracting with contractors, developers, consultants, governmental authorities, accountants, legal counsel, other professional advisors and other agents (including, without limitation, contracting with Federal Realty and its Subsidiaries) and the payment of their expenses, fees and compensation out of the Partnership’s assets; (8) the distribution of Partnership under contractual arrangements to all cash or particular other Partnership assets in accordance with this Agreement, the holding, management, investment and reinvestment of cash and other assets of the Partnership, with and the other party to the contract to have no recourse against the General Partner or its assets other than its interest in collection and receipt of revenues, rents and income of the Partnership, even if same results in the terms of the transaction being less favorable to the Partnership than would otherwise be the case); (vi) the distribution of Partnership cash; (vii9) the selection and dismissal of employees of the Partnership (including if any) or the General Partner (if any) (including, without limitation, employees having titles or offices such as "“president," "” “vice president," "” “secretary" ” and "“treasurer") ”), and agents, outside attorneys, accountants, consultants and contractors of the Partnership or the General Partner and the determination of their compensation and other terms of employment or hiring; (viii10) the maintenance of such insurance (including, without limitation, directors and officers insurance) for the benefit of the Partnership Group and the Partners as it the General Partner deems necessary or appropriateappropriate (which may be provided through the blanket insurance coverages maintained by Federal Realty with an appropriate reimbursement by the Partnership for its appropriate share of the insurance premiums, as determined by the General Partner and Federal Realty); (ix11) the merger of the Partnership with or into, the consolidation of the Partnership with, the formation of, or acquisition of an interest in, and the contribution of property and the making of loans to, any other limited or general partnerships, joint ventures, corporations, limited liability companies companies, joint ventures or other relationships entities that it deems desirable (including including, without limitation, the acquisition of interests in, and the contributions of property to, any Group Member Affiliate, Subsidiary and any other Person in which the General Partner has an equity investment from time to time) subject ); provided, however, that the Partnership will not engage in any such formation, acquisition or contribution that would cause Federal Realty to fail to qualify as a REIT or to satisfy the restrictions set forth in Section 2.4REIT Requirements; (x12) the control of any matters affecting the rights and obligations of the Partnership, including the bringing settlement, compromise, submission to arbitration or any other form of dispute resolution, or abandonment, of any claim, cause of action, liability, debt or damages, due or owing to or from the Partnership, the commencement or defense of suits, legal proceedings, administrative proceedings, arbitrations or other forms of dispute resolution, and defending the representation of actions at law the Partnership in all suits or in equity and otherwise engaging in the conduct legal proceedings, administrative proceedings, arbitrations or other forms of litigation and dispute resolution, the incurring of legal expense expense, and the settlement of claims and litigation; (xi) the indemnification of any Person against liabilities and contingencies to the extent permitted by law; (xii) the entering into of listing agreements with any National Securities Exchange and the delisting of some or all of the Limited Partner Interests from, or requesting that trading be suspended on, any such exchange (subject to any prior approval that may be required under Section 4.8); (xiii) unless restricted or prohibited by Section 5.7, the purchase, sale or other acquisition or disposition of Partnership Securities, or the issuance of additional options, rights, warrants and appreciation rights relating to Partnership Securities; and (xiv13) the undertaking of any action in connection with the Partnership's participation ’s direct or indirect investment in any Subsidiary or any other Person (including, without limitation, the Operating contribution or loan of funds by the Partnership to such Persons); (14) the determination of the fair market value of any Partnership property distributed in kind using such reasonable method of valuation as the General Partner may adopt; provided, that such methods are otherwise consistent with the requirements of this Agreement; (15) the enforcement of any rights against any Partner pursuant to representations, warranties, covenants and indemnities relating to such Partner’s contribution of property or assets to the Partnership; (16) the exercise, directly or indirectly, through any attorney-in-fact acting under a general or limited power of attorney, of any right, including the right to vote, appurtenant to any asset or investment held by the Partnership; (17) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of or in connection with any Subsidiary of the Partnership or any other subsidiary Person in which the Partnership has a direct or indirect interest, or jointly with any such Subsidiary or other Person; (18) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of any Person in which the Partnership does not have an interest, pursuant to contractual or other arrangements with such Person; (19) the making, execution and delivery of any and all deeds, leases, notes, deeds to secure debt, mortgages, deeds of trust, security agreements, conveyances, contracts, guarantees, warranties, indemnities, waivers, releases, confessions of judgment or any other legal instruments or agreements in writing necessary or appropriate in the sole judgment of the General Partner for the accomplishment of any of the powers of the General Partner enumerated in this Agreement; (20) the issuance of additional Units in connection with Capital Contributions by Additional Limited Partners and additional Capital Contributions by Partners pursuant to Article 4; (21) an election to dissolve the Partnership pursuant to Section 13.1.B; (22) the distribution of cash to acquire Common Units held by a Limited Partner in connection with a Redemption under Section 8.6; (23) an election to require Federal Realty to acquire Tendered Units in exchange for REIT Shares; (24) any update to the books and records of the Partnership to reflect accurately at all times the Capital Contributions and Percentage Interests of the Partners as a member the same are adjusted from time to time to the extent necessary to reflect redemptions, Capital Contributions, the issuance of Units, the admission of any Additional Limited Partner or partner. (b) Notwithstanding any other provision of Substituted Limited Partner or otherwise, which update, notwithstanding anything in this Agreement to the contrary, shall not be deemed an amendment to this Agreement, as long as the Operating matter or event being reflected in the books and records of the Partnership otherwise is authorized by this Agreement, ; and (25) the Delaware registration of any offering or any class of securities of the Partnership under the Securities Act or the Exchange Act, and the listing of any applicable law, rule or regulationdebt securities of the Partnership on any exchange. B. Except as provided in Section 7.3, each of the Limited Partners and the Assignees and each other Person who may acquire an interest in Partnership Securities hereby (i) approves, ratifies and confirms the execution, delivery and performance by the parties thereto of the Operating Partnership Agreement, the Omnibus Agreement, the Contribution Agreement, the Distribution Agreement, and the Purchase Contract dated _________, 2004 between Penn Octane Corporation and the Operating Partnership and the other agreements described in or filed as exhibits to the Registration Statement that are related to the transactions contemplated by the Registration Statement; (ii) agrees that the General Partner (on Partner, in its own or through any officer of the Partnership) sole and absolute discretion, is authorized to execute, deliver and perform the above-mentioned agreements referred to in clause (i) of this sentence and the other agreements, acts, transactions and matters described in or contemplated by the Registration Statement on behalf of the Partnership Partnership, and otherwise to exercise any power of the General Partner under this Agreement and the Act, without any further act, approval or vote of the Partners or any other Persons, notwithstanding any other provision of the Assignees Act or the other Persons who may acquire an interest in Partnership Securities; and (iii) agrees that the any applicable law, rule or regulation. The execution, delivery or performance by the General Partner, any Group Member Partner or any Affiliate the Partnership of any of them, of this Agreement or any agreement authorized or permitted under this Agreement (including the exercise by the General Partner or any Affiliate of the General Partner of the rights accorded pursuant to Article XV), shall not constitute a breach by the General Partner of any duty that the General Partner may owe the Partnership or the Limited Partners or any other Persons under this Agreement (or any other agreements) or of any duty stated or implied by law or equity. C. At all times from and after the date hereof, the General Partner may cause the Partnership to obtain and maintain casualty, liability and other insurance on the Properties and liability insurance for the Indemnitees hereunder. D. At all times from and after the date hereof, the General Partner may cause the Partnership to establish and maintain working capital and other reserves in such amounts as the General Partner, in its sole and absolute discretion, deems appropriate and reasonable from time to time. E. In exercising its authority under this Agreement, except as may be required for Federal Realty to qualify as a REIT, the General Partner may, but shall be under no obligation to, take into account the tax consequences to any Partner of any action taken (or not taken) by it. None of the General Partner, Federal Realty, any Federal Realty Subsidiary, the Partnership or any Person within the definition of Indemnitee shall have liability to a Limited Partner under any circumstances as a result of any income tax liability incurred by such Limited Partner as a result of an action (or inaction) by the General Partner pursuant to its authority under this Agreement. F. The determination as to any matter relating to the business and affairs of the Partnership made by or at the direction of the General Partner consistent with this Agreement and the Act shall be final and conclusive and shall be binding upon the Partnership and every Limited Partner and shall not constitute a breach of this Agreement, of any agreement contemplated herein or therein, or of any fiduciary or other duty hereunder or otherwise existing at law, in equity or otherwise. The foregoing shall apply, without limitation, to the following: the amount of assets at any time available for distribution or the redemption of Common Units; the amount and timing of any distribution; the amount, purpose, time of creation, increase or decrease, alteration or cancellation of any reserves or charges and the propriety thereof (whether or not any obligation or liability for which such reserves or charges shall have been created shall have been paid or discharged); the amount of any Partner’s Capital Account; the amount of Profit or Loss for any period; the value of any Partnership asset; the Value of any REIT Share; the amount of the Adjustment Factor at any time; any election, or failure to elect, to require Federal Realty to acquire Tendered Units in exchange for REIT Shares; whether any acquisition of Tendered Units in exchange for REIT Shares would or might cause any Person to violate the REIT Shares Ownership Limit; the REIT Shares Amount at any time; whether the transfer of any Units would cause the Partnership to be classified as a “publicly traded partnership “ under Code Section 7704(b); any interpretation of this Agreement or the terms, preferences, conversion or other rights, voting powers or rights, restrictions, limitations as to dividends or distributions, qualifications or terms or conditions of redemption of any class or series of Partnership Interest; the fair value, or any sale, bid or asked price to be applied in determining the fair value, of any asset owned or held by the Partnership or of any Partnership Interest; the number of authorized or outstanding Units of any class or series; any matter relating to the acquisition, holding and disposition of any assets by the Partnership; or any other matter relating to the business and affairs of the Partnership or required or permitted by applicable law, this Agreement or otherwise to be determined by the General Partner. The foregoing shall not apply to any intentional or willful violation by the General Partner of any restriction contained in a Partner Schedule restricting the sale or disposition of specified Partnership property or requiring that the Partnership maintain a minimum amount of specified indebtedness of the Partnership. G. The General Partner shall have the authority to appoint, remove and replace such officers of the Partnership and to establish such titles, duties and authority for such officers as it shall determi

Management. (a) The General Partner shall conduct, direct and manage all activities of the Partnership. Except as otherwise expressly provided in this Agreement, all management powers over including the provisions of Section 8.02, the business and affairs of the Partnership shall be exclusively vested in and controlled by the General Partner, and no Limited Partner or Assignee shall have any management power over the business and affairs of the Partnership. In addition . (b) Subject to the powers now or hereafter granted a general partner provisions of a limited partnership under applicable law or which are granted to Section 8.02, the General Partner under any other provision of this Agreement, the General Partner, subject to Section 7.3, shall have full power and the sole authority to do all things authorize and on such terms as it, in its sole discretion, may deem necessary or appropriate approve any matters pertaining to conduct the Partnership's business and any matters pertaining to the business of any SPV, including, without limitation, the Partnership, to exercise all powers set forth in Section 2.5 and to effectuate the purposes set forth in Section 2.4, including the followingfollowing matters: (i) the The making of any expenditures, decision and the lending or borrowing implementing of money, the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtednessany decision to acquire any Property, including indebtedness that is convertible into Partnership Securities, any decision to admit (A) any additional Class B Interest Holders and/or any additional Class A Interest Holders and the incurring terms and conditions upon which such admission will occur (including any decision to accept Capital Contributions from any such additional Class A Interest Holder and/or any additional Class B Interest Holder and any valuation thereof) and/or (B) accept additional Capital Contributions from any existing Partners for the purpose of any other obligationsacquiring one or more additional Properties; (ii) the making of taxAny financing, regulatory and other filings, refinancing or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Partnership; (iii) the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or exchange securitization of any or all of the assets of the Partnership or the merger or other combination of the Partnership with or into another Person (the matters described in this clause (iii) being subject, however, to any prior approval that may be required by Section 7.3); (iv) Property and the use of the assets of the Partnership (including cash on hand) for any purpose consistent with the terms of this Agreementproceeds thereof, including the including, without limitation, construction, interim and permanent financing, and any other financing of the conduct or refinancing of the operations of the Partnership Group; subject or any SPV and the execution and delivery of any documents, agreements or instruments evidencing, securing or relating to any such financing or any amendment, modification, extension or termination of (or making any material decision, taking any material action, providing any material consent or approval or waiving any material right under) any such documents, agreements or instruments; (iii) Any restructuring, improvement, rehabilitation, alteration, repair, or completion of construction or reconstruction of all or any portion of any Property; (iv) The establishment of reserves reasonably required in light of anticipated operational needs, acquisitions and contingent and non-contingent liabilities (or reserves retained for purposes of implementing Section 7.6(a6.02 hereof), and the lending of funds to other Persons (including other Group Members), the repayment or guarantee of obligations determination of the Partnership Group amount of available Operating Cash Flow and Capital Proceeds and the making timing of capital contributions to any member distributions of the Partnership Groupavailable Operating Cash Flow and Capital Proceeds or reserves retained for purposes of implementing Section 6.02 hereof; (v) the negotiation, execution and performance The institution of any contracts, conveyances or other instruments (including instruments that limit legal proceedings in the liability name of the Partnership under contractual arrangements to all or particular assets any SPV, settlement of any legal proceedings against the Partnership or any SPV and confession of any judgment against the Partnership, with the other party to the contract to have no recourse against the General Partner any SPV or its assets other than its interest in the Partnership, even if same results in the terms any property of the transaction being less favorable to the Partnership than would otherwise be the case)or any SPV or making any decision, taking any action, providing any consent or approval or waiving any rights thereunder; (vi) All personnel matters involving the distribution Partnership and any SPV, including, without limitation, the hiring or discharge of employees and contractors of the Partnership cashor any SPV, delegation of authority to any employees or contractors, establishment or amendment of employment policies and benefit plans, etc.; (vii) Determining the selection amount of overhead and dismissal of employees (including employees having titles such as "president," "vice president," "secretary" and "treasurer") and agentsother reimbursements or any salary, outside attorneys, accountants, consultants and contractors and the determination compensation or other remuneration payable to any Partner or any of their compensation Affiliates pursuant to the terms hereof or any separate agreement between the Partnership or any SPV and other terms a Partner, or any of employment or hiringtheir Affiliates; (viii) The appointment of the maintenance Partnership Accountant or any change in the Partnership Accountant or the selection of such insurance any other auditor or independent accounting firm for the Partnership or any SPV, or the making of any decision to change any other auditor or independent accounting firm of the Partnership or any SPV; (A) The filing of any voluntary petition in bankruptcy on behalf of the Partnership or any SPV, (B) the consenting to the filing of any involuntary petition in bankruptcy against the Partnership or any SPV, (C) the filing of any petition seeking, or the consenting to, reorganization or relief under any applicable federal or state law relating to bankruptcy or insolvency by or on behalf of the Partnership or any SPV, (D) the consenting to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Partnership, any SPV or a substantial part of its or their property, (E) the making of any assignment for the benefit of creditors by or on behalf of the Partnership Group and the Partners as it deems necessary or appropriate; any SPV, (ixF) the formation of, admission in writing of the Partnership's or acquisition any SPV's inability to pay its debts generally as they become due or (G) the taking of an interest in, and any action by the contribution Partnership or any SPV in furtherance of property and the making of loans to, any other limited or general partnerships, joint ventures, corporations, limited liability companies or other relationships (including the acquisition of interests in, and the contributions of property to, any Group Member from time to time) subject to the restrictions set forth in Section 2.4such action; (x) The making of all material tax elections, determinations and other decisions under the control of Code and any matters affecting decision to settle or compromise any matter raised by the rights and obligations of the Partnership, including the bringing and defending of actions at law or in equity and otherwise engaging in the conduct of litigation and the incurring of legal expense and the settlement of claims and litigationInternal Revenue Service; (xi) the indemnification Any sale, exchange, transfer or other disposition of all or any part of any Person against liabilities Property, or any sale, transfer or other disposition of all or any part of the Partnership's interest in any SPV and contingencies to the extent permitted by lawexecution and delivery of any documents, agreements, contracts, binding letters of intent or other document or instrument relating thereto or any amendment, modification, extension or termination of (or making any material decision, taking any material action, providing any material consent or approval or waiving any material right under) any such agreement, contract, binding letter of intent or other document or instrument; (xii) the entering into The Partnership's or any SPV's incurrence of listing agreements any liabilities or obligations with regard to any National Securities Exchange and the delisting debt or loan guaranties, letters of some credit, hedge or all of the Limited Partner Interests fromhedging agreements, or requesting that trading be suspended on, any such exchange (subject to any prior approval that may be required under Section 4.8)similar contingent liabilities; (xiii) unless restricted The making of any decision and the implementing of any decision to form an SPV and to assign, transfer or prohibited by Section 5.7convey all or any portion of any Property or the rights to acquire any Property to such SPV and the execution and delivery of any documents, the purchaseagreements or instruments implementing, sale evidencing or relating to any such decision or action (including any organizational documents relating to any SPV) or amending, modifying, extending or terminating of (or making any material decision, taking any material action, providing any material consent or approval or waiving any material rights under) any such document, agreement or other acquisition instrument; (xiv) Any decision to dissolve, windup and terminate the Partnership or disposition any SPV and any decision to distribute all or any portion of any Property (or any other property of the Partnership Securities, or the issuance of additional options, rights, warrants and appreciation rights relating to Partnership Securitiesany SPV) in kind; and (xivxv) With regard to any SPV or any other Person in which the undertaking Partnership holds a direct or indirect equity interest, the making of any decision, taking any action or providing any consent or approval with regard to any matter which might otherwise require an action by the Partnership. (c) For matters requiring approval of the Management Board, the General Partner shall prepare and submit any necessary materials to the Management Board for its approval prior to taking any final action with respect to such matters. (d) Subject to the terms of this Agreement and the limitations imposed by law, the General Partner shall have all of the same powers as a general partner of a general partnership under the laws of the State of Delaware. (e) The Limited Partners shall not have any right or power to participate in connection with or have any control over the Partnership's participation in or any SPV's business affairs or operations or to act for or to bind the Operating Partnership or any other subsidiary of the Partnership as a member or partner. (b) Notwithstanding SPV in any other provision of this Agreementmanner whatsoever, the Operating Partnership Agreement, the Delaware Act or any applicable law, rule or regulation, each of the Partners and the Assignees and each other Person who may acquire an interest in Partnership Securities hereby (i) approves, ratifies and confirms the execution, delivery and performance by the parties thereto of the Operating Partnership Agreement, the Omnibus Agreement, the Contribution Agreement, the Distribution Agreement, and the Purchase Contract dated _________, 2004 between Penn Octane Corporation and the Operating Partnership and the other agreements described in or filed as exhibits to the Registration Statement that are related to the transactions contemplated by the Registration Statement; (ii) agrees that the General Partner (on its own or through any officer of the Partnership) is authorized to execute, deliver and perform the agreements referred to in clause (i) of this sentence and the other agreements, acts, transactions and matters described in or contemplated by the Registration Statement on behalf of the Partnership without any further act, approval or vote of the Partners or the Assignees or the other Persons who may acquire an interest in Partnership Securities; and (iii) agrees that the execution, delivery or performance by the General Partner, any Group Member or any Affiliate of any of them, of this Agreement or any agreement authorized nor shall they be required or permitted under this Agreement (including the exercise to consent to, acquiesce in, vote on or approve any action or act taken or decision made by the General Partner or any Affiliate of the General Partner of the rights accorded pursuant to Article XV), shall not constitute a breach by the General Partner of any duty that the General Partner may owe the Partnership or the Limited Partners or any other Persons under this Agreement (or any other agreements) or of any duty stated or implied by law or equityexcept as otherwise specifically provided herein.

Management. (a) The General Partner shall conduct, direct and manage all activities of the Partnership. Except as otherwise expressly provided in this Agreement, all management powers over the business and affairs of the Partnership shall be exclusively vested in the General Partner, and no the Limited Partner or Assignee shall have any no right of control or management power over the business and affairs of the Partnership. In addition to the powers now or hereafter granted a general partner of a limited partnership under applicable law or which are granted to the General Partner under any other provision of this Agreement, the General Partner, subject to Section 7.36.3, shall have full power and authority to do all things and on such terms as it, in its sole discretion, may deem necessary or appropriate to conduct the business of the Partnership, to exercise all powers set forth in Section 2.5 3.2 and to effectuate the purposes set forth in Section 2.43.1, including the following: (i) the making of any expenditures, the lending or borrowing of money, the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtedness, including indebtedness that is convertible into Partnership Securities, and the incurring of any other obligations; (ii) the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Partnership; (iii) the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or exchange of any or all of the assets of the Partnership or the merger or other combination of the Partnership with or into another Person (the matters described in this clause (iii) being subject, however, to any prior approval that may be required by Section 7.3)Person; (iv) the use of the assets of the Partnership (including cash on hand) for any purpose consistent with the terms of this Agreement, including the financing of the conduct of the operations of the Partnership Group; subject to Section 7.6(a)Partnership, the lending of funds to other Persons (including other Group Membersthe MLP, the General Partner and its Affiliates), the repayment or guarantee of obligations of the Partnership Group and the making of capital contributions to any member of the Partnership Groupa Subsidiary; (v) the negotiation, execution and performance of any contracts, conveyances or other instruments (including instruments that limit the liability of the Partnership under contractual arrangements to all or particular assets of the Partnership, with the other party to the contract to have no recourse against the General Partner or its assets other than its interest in the Partnership, even if same results in the terms of the transaction being less favorable to the Partnership than would otherwise be the case); (vi) the distribution of Partnership cash; (vii) the selection and dismissal of employees (including employees having titles such as "president," "vice president," "secretary" and "treasurer") and agents, outside attorneys, accountants, consultants and contractors and the determination of their compensation and other terms of employment or hiring; (viii) the maintenance of such insurance for the benefit of the Partnership Group and the Partners (including the assets of the Partnership) as it deems necessary or appropriate; (ix) the formation of, or acquisition of an interest in, and the contribution of property and the making of loans to, any other further limited or general partnerships, joint ventures, corporations, limited liability companies or other relationships (including the acquisition of interests in, and the contributions of property to, any Group Member from time to time) subject to the restrictions set forth in Section 2.4relationships; (x) the control of any matters affecting the rights and obligations of the Partnership, including the bringing and defending of actions at law or in equity and otherwise engaging in the conduct of litigation and the incurring of legal expense and the settlement of claims and litigation;; and (xi) the indemnification of any Person against liabilities and contingencies to the extent permitted by law; (xii) the entering into of listing agreements with any National Securities Exchange and the delisting of some or all of the Limited Partner Interests from, or requesting that trading be suspended on, any such exchange (subject to any prior approval that may be required under Section 4.8); (xiii) unless restricted or prohibited by Section 5.7, the purchase, sale or other acquisition or disposition of Partnership Securities, or the issuance of additional options, rights, warrants and appreciation rights relating to Partnership Securities; and (xiv) the undertaking of any action in connection with the Partnership's participation in the Operating Partnership or any other subsidiary of the Partnership as a member or partner. (b) Notwithstanding any other provision of this Agreement, the Operating Partnership MLP Agreement, the Delaware Act or any applicable law, rule or regulation, each of the Partners and the Assignees and each other Person who may acquire an interest in Partnership Securities hereby (i) approves, ratifies and confirms the execution, delivery and performance by the parties thereto of the Operating Partnership Underwriting Agreement, the Omnibus Agreement, the Conveyance and Contribution Agreement, the Distribution Merger and Contribution Agreement, the agreements and other documents filed as exhibits to the Purchase Contract dated _________Registration Statement, 2004 between Penn Octane Corporation and the Operating Partnership and the other agreements described in or filed as exhibits to the Registration Statement that are related to the transactions contemplated by a part of the Registration Statement; (ii) agrees that the General Partner (on its own or through any officer of the Partnership) is authorized to execute, deliver and perform the agreements referred to in clause (i) of this sentence and the other agreements, acts, transactions and matters described in or contemplated by the Registration Statement Statements on behalf of the Partnership without any further act, approval or vote of the Partners or the Assignees or the other Persons who may acquire an interest in Partnership SecuritiesPartners; and (iii) agrees that the execution, delivery or performance by the General Partner, the MLP, any Group Member or any Affiliate of any of them, of this Agreement or any agreement authorized or permitted under this Agreement (including the exercise by the General Partner or any Affiliate of the General Partner of the rights accorded pursuant to Article XV)Agreement, shall not constitute a breach by the General Partner of any duty that the General Partner may owe the Partnership or the Limited Partners Partner or any other Persons under this Agreement (or any other agreements) or of any duty stated or implied by law or equity.

Management. (a) The General Partner shall conduct, direct and manage all activities of the Partnership. Except as otherwise expressly provided in this Agreement, all management powers over the business and affairs of the Partnership are and shall be exclusively vested in the General Partner, and no Limited Partner or Assignee shall have any right to participate in or exercise control or management power over the business and affairs of the Partnership. The General Partner may not be removed by the Partners with or without cause, except with the consent of the General Partner. In addition to the powers now or hereafter granted to a general partner of a limited partnership under applicable law or which that are granted to the General Partner under any other provision of this Agreement, the General Partner, subject to the other provisions hereof including, without limitation, Section 7.37.03, shall have full power and authority to do all things and on such terms as it, in its sole discretion, may deem deemed necessary or appropriate desirable by it to conduct the business of the Partnership, to exercise all powers set forth in Section 2.5 3.02 hereof and to effectuate the purposes set forth in Section 2.43.01 hereof, including the followingincluding, without limitation: (i) the making of any expenditures, the lending or borrowing of moneymoney (including, without limitation, making prepayments on loans and borrowing money or selling assets to permit the Partnership to make distributions in such amounts as will permit the General Partner (so long as the General Partner desires to maintain or restore its qualification as a REIT) to avoid the payment of any income or excise tax under the Code and to make distributions to its stockholders sufficient to permit the General Partner to maintain or restore REIT qualification or otherwise to satisfy the REIT Requirements), the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtednessindebtedness (including the securing of same by deed to secure debt, including indebtedness that is convertible into Partnership Securitiesmortgage, deed of trust or other lien or encumbrance on the Partnership’s assets) and the incurring of any other obligationsobligations that it deems necessary for the conduct of the activities of the Partnership; (ii) the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Partnership, the registration of any class of securities of the Partnership under the Exchange Act and the listing of any debt securities of the Partnership on any exchange; (iii) subject to Section 11.02 hereof, the acquisition, dispositionsale, mortgagelease, pledgetransfer, encumbranceexchange or other disposition of any, hypothecation all or exchange of any or substantially all of the assets of the Partnership (including, but not limited to, the exercise or grant of any conversion, option, privilege or subscription right or any other right available in connection with any assets at any time held by the Partnership) or the merger merger, consolidation, reorganization or other combination of the Partnership with or into another Person (the matters described in this clause (iii) being subject, however, to any prior approval that may be required by Section 7.3)entity; (iv) the mortgage, pledge, encumbrance or hypothecation of any assets of the Partnership, the assignment of any assets of the Partnership in trust for creditors or on the promise of the assignee to pay the debts of the Partnership, the use of the assets of the Partnership (including including, without limitation, cash on hand) for any purpose consistent with the terms of this AgreementAgreement and on any terms that it sees fit, including including, without limitation, the financing of the operations and activities of the General Partner, the Partnership or any of the Partnership’s Subsidiaries, the lending of funds to other Persons (including, without limitation, the Partnership’s Subsidiaries) and the repayment of obligations of the Partnership, its Subsidiaries and any other Person in which the Partnership has an equity investment, and the making of capital contributions to and equity investments in the Partnership’s Subsidiaries; (v) the use of the assets of the Partnership (including, without limitation, cash on hand) for any purpose consistent with the terms of this Agreement and on any terms it sees fit, including, without limitation, the financing of the conduct of the operations of the General Partner, the Partnership Group; subject to Section 7.6(a)or any of the Partnership’s Subsidiaries, the lending of funds to other Persons (including other Group Members)including, without limitation, the General Partner and its Subsidiaries and the Partnership’s Subsidiaries) and the repayment or guarantee of obligations of the Partnership Group and its Subsidiaries and any other Person in which the Partnership has an equity investment and the making of capital contributions to its Subsidiaries; (vi) the management, operation, leasing, landscaping, repair, alteration, demolition, replacement or improvement of any member Property, including, without limitation, any Contributed Property, or other asset of the Partnership Groupor any Subsidiary, whether pursuant to a Services Agreement or otherwise; (vvii) the negotiation, execution and performance of any contracts, leases, conveyances or other instruments (including instruments that limit the liability of General Partner considers useful or necessary to the Partnership under contractual arrangements to all or particular assets conduct of the Partnership, with ’s operations or the other party to the contract to have no recourse against implementation of the General Partner or its assets other than its interest in the PartnershipPartner’s powers under this Agreement, even if same results in the terms of the transaction being less favorable to the Partnership than would otherwise be the case); (vi) the distribution of Partnership cash; (vii) the selection and dismissal of employees (including employees having titles such as "president," "vice president," "secretary" and "treasurer") and agentscontracting with contractors, outside attorneysdevelopers, consultants, government authorities, accountants, consultants legal counsel, other professional advisors and contractors other agents (including the Transfer Agent) and the determination payment of their expenses and compensation and other terms out of employment or hiringthe Partnership’s assets; (viii) the distribution of Partnership cash or other Partnership assets in accordance with this Agreement, the holding, management, investment and reinvestment of cash and other assets of the Partnership and the collection and receipt of revenues, rents and income of the Partnership; (ix) the maintenance of such insurance (including, without limitation, directors and officers insurance) for the benefit of the Partnership Group and the Partners (including, without limitation, the General Partner) as it the General Partner deems necessary or appropriate, including, without limitation, (i) casualty, liability and other insurance on the Properties and (ii) liability insurance for the Indemnitees hereunder; (ixx) the formation of, or acquisition of an interest in, and the contribution of property and the making of loans to, any other further limited or general partnerships, joint ventures, corporations, limited liability companies companies, joint ventures or other relationships that the General Partner deems desirable (including including, without limitation, the acquisition of interests in, and the contributions of property to, any Group Member Subsidiary and any other Person in which it has an equity investment from time to time) subject ); provided, however, that as long as the General Partner desires to maintain or restore its qualification as a REIT, the restrictions set forth General Partner may not engage in Section 2.4any such formation, acquisition or contribution that would cause it to fail to qualify as a REIT; (xxi) the filing of applications, communicating and otherwise dealing with any and all governmental agencies having jurisdiction over, or in any way affecting, the Partnership’s assets or any other aspect of the Partnership business; (xii) the taking of any action necessary or appropriate to comply with all regulatory requirements applicable to the Partnership in respect of its business, including preparing or causing to be prepared all financial statements required under applicable regulations and contractual undertakings and all reports, filings and documents, if any, required under the Exchange Act, the Securities Act, or by National Securities Exchange requirements; (xiii) the control of any matters affecting the rights and obligations of the Partnership, including the bringing settlement, compromise, submission to arbitration or any other form of dispute resolution, or abandonment, of any claim, cause of action, liability, debt or damages, due or owing to or from the Partnership, the commencement or defense of suits, legal proceedings, administrative proceedings, arbitrations or other forms of dispute resolution, and defending the representation of actions at law the Partnership in all suits or in equity and otherwise engaging in the conduct legal proceedings, administrative proceedings, arbitrations or other forms of litigation and dispute resolution, the incurring of legal expense expense, and the settlement of claims and litigation; (xi) the indemnification of any Person against liabilities and contingencies to the extent permitted by law; (xiixiv) the undertaking of any action in connection with the Partnership’s direct or indirect investment in any Subsidiary or any other Person (including, without limitation, the contribution or loan of funds by the Partnership to such Persons); (xv) except as otherwise specifically set forth in this Agreement, the determination of the fair market value of any Partnership property distributed in-kind using such reasonable method of valuation as it may adopt; provided, that such methods are otherwise consistent with the requirements of this Agreement; (xvi) the enforcement of any rights against any Partner pursuant to representations, warranties, covenants and indemnities relating to such Partner’s contribution of property or assets to the Partnership; (xvii) the exercise, directly or indirectly, through any attorney-in-fact acting under a general or limited power-of-attorney, of any right, including the right to vote, appurtenant to any asset or investment held by the Partnership; (xviii) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of or in connection with any Subsidiary of the Partnership or any other Person in which the Partnership has a direct or indirect interest, or jointly with any such Subsidiary or other Person; (xix) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of any Person in which the Partnership does not have an interest, pursuant to contractual or other arrangements with such Person; (xx) the making, execution and delivery of any and all deeds, leases, notes, deeds to secure Debt, mortgages, deeds of trust, security agreements, conveyances, contracts, guarantees, warranties, indemnities, waivers, releases or legal instruments or agreements in writing necessary or appropriate in the judgment of the General Partner for the accomplishment of any of the powers of the General Partner enumerated in this Agreement; (xxi) the issuance of additional Partnership Units, as appropriate and in the General Partner’s sole and absolute discretion, in connection with Capital Contributions by Additional Limited Partners and additional Capital Contributions by Partners pursuant to Article IV hereof; (xxii) the selection and dismissal of General Partner Employees (including, without limitation, employees having titles or offices such as president, vice president, secretary and treasurer), and agents, outside attorneys, accountants, consultants and contractors of the Partnership or the General Partner, the determination of their compensation and other terms of employment or hiring and the delegation to any such General Partner Employee the authority to conduct the business of the Partnership in accordance with the terms of this Agreement; (xxiii) the distribution of cash to acquire Partnership Units held by a Limited Partner in connection with a Limited Partner’s exercise of its Redemption right under Section 8.06 hereof; (xxiv) maintaining, or causing to be maintained, the books and records of the Partnership or the Transfer Agent to reflect accurately at all times the Capital Contributions and Percentage Interests of the Partners as the same are adjusted from time to time to the extent necessary to reflect redemptions, Capital Contributions, the number of Partnership Units (including any issuance thereof), the admission of any Additional Limited Partner or any Substituted Limited Partner or otherwise; (xxv) the determination regarding whether a payment to a Partner who exercises its Redemption Right under Section 8.06 that is assumed by the General Partner will be paid in the form of the Cash Amount or the REIT Shares Amount, except as such determination may be limited by Section 8.06. (xxvi) the collection and receipt of revenues and income of the Partnership; (xxvii) the registration of any class of securities of the Partnership under the Securities Act or the Exchange Act; (xxviii) the entering into of listing agreements with any National Securities Exchange and the listing of any securities of the Partnership on any such exchange; (xxix) the delisting of some or all of the Limited Partner Interests Partnership Units from, or requesting that trading be suspended on, any such exchange (subject to any prior approval that may be required under Section 4.8)National Securities Exchange; (xiiixxx) unless restricted or prohibited by an election to dissolve the Partnership pursuant to Section 5.7, the purchase, sale or other acquisition or disposition of Partnership Securities, or the issuance of additional options, rights, warrants and appreciation rights relating to Partnership Securities13.01(d) hereof; and (xivxxxi) the undertaking taking of any action in connection with necessary or appropriate to enable the Partnership's participation in the Operating Partnership or any other subsidiary of the Partnership General Partner to qualify as a member REIT (so long as the General Partner desires to maintain or partnerrestore its qualification as a REIT). (b) Notwithstanding any other provision of this Agreement, the Operating Partnership Agreement, the Delaware Act or any applicable law, rule or regulation, each Each of the Limited Partners and the Assignees and each other Person who may acquire an interest agrees that, except as provided in Partnership Securities hereby (i) approvesSection 7.03 hereof, ratifies and confirms the execution, delivery and performance by the parties thereto of the Operating Partnership Agreement, the Omnibus Agreement, the Contribution Agreement, the Distribution Agreement, and the Purchase Contract dated _________, 2004 between Penn Octane Corporation and the Operating Partnership and the other agreements described in or filed as exhibits to the Registration Statement that are related to the transactions contemplated by the Registration Statement; (ii) agrees that the General Partner (on its own or through any officer of the Partnership) is authorized to execute, deliver and perform the above-mentioned agreements referred to in clause (i) of this sentence and the other agreements, acts, transactions and matters described in or contemplated by the Registration Statement on behalf of the Partnership without any further act, approval or vote of the Partners Partners, notwithstanding any other provision of this Agreement, the Act or any applicable law, rule or regulation and, in the absence of any specific corporate action on the part of the General Partner to the contrary, the taking of any action or the Assignees execution of any such document or writing by an officer of the other Persons who may acquire an interest General Partner, in Partnership Securities; the name and on behalf of the General Partner, in its capacity as the general partner of the Partnership, shall conclusively evidence (iii1) agrees that the execution, delivery or performance approval thereof by the General Partner, any Group Member in its capacity as the general partner of the Partnership, (2) the General Partner’s determination that such action, document or any Affiliate writing is necessary or desirable to conduct the business and affairs of any the Partnership, exercise the powers of them, of this Agreement or any agreement authorized or permitted the Partnership under this Agreement (including and the exercise Act or effectuate the purposes of the Partnership, or any other determination by the General Partner required by this Agreement in connection with the taking of such action or any Affiliate execution of such document or writing, and (3) the authority of such officer with respect thereto. (c) At all times from and after the date hereof, the General Partner may cause the Partnership to obtain and maintain (i) casualty, liability and other insurance on the Properties and (ii) liability insurance for the Indemnitees hereunder. (d) At all times from and after the date hereof, the General Partner may cause the Partnership to establish and maintain working capital and other reserves in such amounts as the General Partner, in its sole and absolute discretion, deems appropriate and reasonable from time to time. (e) In exercising its authority under this Agreement, the General Partner may, but shall be under no obligation to, take into account the tax consequences to any Partner (including the General Partner) of any action taken (or not taken) by it. Except as may be provided in a separate written agreement between the rights accorded pursuant to Article XV)Partnership and the Limited Partners, the General Partner and the Partnership shall not constitute have liability to a breach Limited Partner under any circumstances as a result of a tax liability incurred by such Limited Partner as a result of an action (or inaction) by the General Partner of any duty pursuant to its authority under this Agreement provided, that the General Partner may owe the Partnership or the Limited Partners or any other Persons has acted in good faith and pursuant to its authority under this Agreement (or any other agreements) or of any duty stated or implied by law or equityAgreement.

Management. (a) The General Partner shall conduct, direct and manage all activities of the Partnership. A. Except as otherwise expressly provided in this Agreement, all management powers over the business and affairs of the Partnership are and shall be exclusively vested in the General Partner, and no Limited Partner or Assignee shall have any right to participate in or exercise control or management power over the business and affairs of the Partnership. The General Partner may not be removed by the Partners with or without cause, except with the consent of the General Partner. In addition to the powers now or hereafter granted to a general partner of a limited partnership under applicable law or which that are granted to the General Partner under any other provision of this Agreement, the General Partner, subject to the other provisions hereof including Section 7.3, shall have full power and authority to do all things and on such terms as it, in its sole discretion, may deem deemed necessary or appropriate desirable by it to conduct the business of the Partnership, to exercise all powers set forth in Section 2.5 3.2 hereof and to effectuate the purposes set forth in Section 2.43.1 hereof, including the followingincluding, without limitation: (i) the making of any expenditures, the lending or borrowing of moneymoney (including, without limitation, making prepayments on loans and borrowing money or selling assets to permit the Partnership to make distributions to its Partners in such amounts as will permit the Parent (so long as the Parent desires to maintain or restore its status as a REIT) to avoid the payment of any federal income tax (including, for this purpose, any excise tax pursuant to Code Section 4981) and to make distributions to its stockholders sufficient to permit the Parent to maintain or restore REIT status or otherwise to satisfy the REIT Requirements), the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtednessindebtedness (including the securing of same by deed to secure debt, including indebtedness that is convertible into Partnership Securitiesmortgage, deed of trust or other lien or encumbrance on the Partnership's assets) and the incurring of any other obligationsobligations that it deems necessary for the conduct of the activities of the Partnership; (ii) the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Partnership, the registration of any class of securities of the Partnership under the Exchange Act and the listing of any debt securities of the Partnership on any exchange; (iii) the acquisition, dispositionsale, mortgagelease, pledgetransfer, encumbranceexchange or other disposition of any, hypothecation all or exchange of any or substantially all of the assets of the Partnership (including, but not limited to, the exercise or grant of any conversion, option, privilege or subscription right or any other right available in connection with any assets at any time held by the Partnership) or the merger merger, consolidation, reorganization or other combination of the Partnership with or into another Person (the matters described in this clause (iii) being subject, however, to any prior approval that may be required by Section 7.3)entity; (iv) the mortgage, pledge, encumbrance or hypothecation of any assets of the Partnership, the use of the assets of the Partnership (including including, without limitation, cash on hand) for any purpose consistent with the terms of this AgreementAgreement and on any terms that it sees fit, including including, without limitation, the financing of the conduct operations and activities of the operations General Partner, the Partnership or any of the Partnership Group; subject to Section 7.6(a)Partnership's Subsidiaries, the lending of funds to other Persons (including other Group Members)including, without limitation, the Partnership's Subsidiaries) and the repayment or guarantee of obligations of the Partnership, its Subsidiaries and any other Person in which the Partnership Group has an equity investment, and the making of capital contributions to any member of and equity investments in the Partnership GroupPartnership's Subsidiaries; (v) the management, operation, leasing, landscaping, repair, alteration, demolition, replacement or improvement of any Property, including, without limitation, any Contributed Property, or other asset of the Partnership or any Subsidiary, whether pursuant to a Services Agreement or otherwise; (vi) the negotiation, execution and performance of any contracts, leases, conveyances or other instruments (including instruments that limit the liability of General Partner considers useful or necessary to the Partnership under contractual arrangements to all or particular assets conduct of the Partnership, with 's operations or the other party to the contract to have no recourse against implementation of the General Partner or its assets Partner's powers under this Agreement, including contracting with contractors, developers, consultants, accountants, legal counsel, other than its interest in professional advisors and other agents and the payment of their expenses and compensation out of the Partnership, even if same results in the terms of the transaction being less favorable to the Partnership than would otherwise be the case); (vi) the distribution of Partnership cash's assets; (vii) the selection distribution of Partnership cash or other Partnership assets in accordance with this Agreement, the holding, management, investment and dismissal reinvestment of employees (including employees having titles such as "president," "vice president," "secretary" cash and "treasurer") and agents, outside attorneys, accountants, consultants and contractors other assets of the Partnership and the determination collection and receipt of their compensation revenues, rents and other terms income of employment or hiringthe Partnership; (viii) the maintenance of such insurance for the benefit of the Partnership Group and the Partners as it deems necessary or appropriate, including, without limitation, (i) casualty, liability and other insurance on the Properties and (ii) liability insurance for the Indemnitees hereunder; (ix) the formation of, or acquisition of an interest in, and the contribution of property and the making of loans to, any other further limited or general partnerships, joint ventures, corporations, limited liability companies companies, joint ventures or other relationships that it deems desirable (including including, without limitation, the acquisition of interests in, and the contributions of property to, any Group Member Subsidiary and any other Person in which it has an equity investment from time to time) subject ); provided, however, that, as long as the Parent has determined to continue to qualify as a REIT, the restrictions set forth General Partner may not engage in any such formation, acquisition or contribution that would cause the Parent to fail to qualify as a REIT within the meaning of Code Section 2.4856(a); (x) the control of any matters affecting the rights and obligations of the Partnership, including the bringing settlement, compromise, submission to arbitration or any other form of dispute resolution, or abandonment, of any claim, cause of action, liability, debt or damages, due or owing to or from the Partnership, the commencement or defense of suits, legal proceedings, administrative proceedings, arbitrations or other forms of dispute resolution, and defending the representation of actions at law the Partnership in all suits or in equity and otherwise engaging in the conduct legal proceedings, administrative proceedings, arbitrations or other forms of litigation and dispute resolution, the incurring of legal expense expense, and the settlement of claims and litigation; (xi) the indemnification of any Person against liabilities and contingencies to the extent permitted by law; (xii) the entering into of listing agreements with any National Securities Exchange and the delisting of some or all of the Limited Partner Interests from, or requesting that trading be suspended on, any such exchange (subject to any prior approval that may be required under Section 4.8); (xiii) unless restricted or prohibited by Section 5.7, the purchase, sale or other acquisition or disposition of Partnership Securities, or the issuance of additional options, rights, warrants and appreciation rights relating to Partnership Securities; and (xivxi) the undertaking of any action in connection with the Partnership's participation direct or indirect investment in any Subsidiary or any other Person (including, without limitation, the Operating contribution or loan of funds by the Partnership to such Persons); (xii) except as otherwise specifically set forth in this Agreement, the determination of the fair market value of any Partnership property distributed in-kind using such reasonable method of valuation as it may adopt; provided that such methods are otherwise consistent with the requirements of this Agreement; (xiii) the enforcement of any rights against any Partner pursuant to representations, warranties, covenants and indemnities relating to such Partner's contribution of property or assets to the Partnership; (xiv) the exercise, directly or indirectly, through any attorney-in-fact acting under a general or limited power-of-attorney, of any right, including the right to vote, appurtenant to any asset or investment held by the Partnership; (xv) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of or in connection with any Subsidiary of the Partnership or any other subsidiary Person in which the Partnership has a direct or indirect interest, or jointly with any such Subsidiary or other Person; (xvi) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of any Person in which the Partnership does not have an interest, pursuant to contractual or other arrangements with such Person; (xvii) the making, execution and delivery of any and all deeds, leases, notes, deeds to secure debt, mortgages, deeds of trust, security agreements, conveyances, contracts, guarantees, warranties, indemnities, waivers, releases or legal instruments or agreements in writing necessary or appropriate in the judgment of the General Partner for the accomplishment of any of the powers of the General Partner enumerated in this Agreement; (xviii) the issuance of additional Partnership Units, as appropriate and in the General Partner's sole and absolute discretion, in connection with Capital Contributions by Additional Limited Partners and additional Capital Contributions by Partners pursuant to Article IV hereof; (xix) the selection and dismissal of Company Employees (including, without limitation, employees having titles or offices such as president, vice president, secretary and treasurer), and agents, outside attorneys, accountants, consultants and contractors of the Partnership as a member or partner. (b) Notwithstanding the General Partner, the determination of their compensation and other terms of employment or hiring and the delegation to any other provision such Company Employee the authority to conduct the business of the Partnership in accordance with the terms of this Agreement, ; (xx) the Operating distribution of cash to acquire Partnership Agreement, Units held by a Limited Partner in connection with a Limited Partner's exercise of its Redemption Right under Section 8.6 hereof; (xxi) the Delaware Act or any applicable law, rule or regulation, each amendment and restatement of Exhibit A hereto to reflect accurately at all times the Capital Contributions and Percentage Interests of the Partners as the same are adjusted from time to time to the extent necessary to reflect redemptions, conversion of Earnout Units, Capital Contributions, the issuance of Partnership Units, the admission of any Additional Limited Partner or any Substituted Limited Partner or otherwise, which amendment and restatement, notwithstanding anything in this Agreement to the Assignees contrary, shall not be deemed an amendment to this Agreement, as long as the matter or event being reflected in Exhibit A hereto otherwise is authorized by this Agreement; (xxii) the collection and each other Person who may acquire an interest in Partnership Securities hereby (i) approves, ratifies receipt of revenues and confirms the execution, delivery and performance by the parties thereto income of the Operating Partnership; and (xxiii) an election to dissolve the Partnership Agreementpursuant to Section 13.1.D hereof. B. Each of the Limited Partners agrees that, the Omnibus Agreementexcept as provided in Section 7.3 hereof, the Contribution Agreement, the Distribution Agreement, and the Purchase Contract dated _________, 2004 between Penn Octane Corporation and the Operating Partnership and the other agreements described in or filed as exhibits to the Registration Statement that are related to the transactions contemplated by the Registration Statement; (ii) agrees that the General Partner (on its own or through any officer of the Partnership) is authorized to execute, deliver and perform the above-mentioned agreements referred to in clause (i) of this sentence and the other agreements, acts, transactions and matters described in or contemplated by the Registration Statement on behalf of the Partnership without any further act, approval or vote of the Partners Partners, notwithstanding any other provision of this Agreement, the Act or any applicable law, rule or regulation. C. At all times from and after the Assignees or date hereof, the General Partner may cause the Partnership to establish and maintain working capital and other Persons who may acquire an interest reserves in Partnership Securities; and (iii) agrees that the execution, delivery or performance by such amounts as the General Partner, any Group Member or any Affiliate of any of themin its sole and absolute discretion, of this Agreement or any agreement authorized or permitted deems appropriate and reasonable from time to time. D. In exercising its authority under this Agreement Agreement, the General Partner may, but shall be under no obligation to, take into account the tax consequences to any Partner (including the exercise General Partner) of any action taken (or not taken) by it. Except as may be provided in a separate written agreement between the Partnership and the Limited Partners, the General Partner and the Partnership shall not have liability to a Limited Partner under any circumstances as a result of an income tax liability incurred by such Limited Partner as a result of an action (or inaction) by the General Partner or any Affiliate of the General Partner of the rights accorded pursuant to Article XV), shall not constitute a breach by the General Partner of any duty its authority under this Agreement; provided that the General Partner may owe the Partnership or the Limited Partners or any other Persons has acted in good faith and pursuant to its authority under this Agreement (or any other agreements) or of any duty stated or implied by law or equityAgreement.

Management. (a) The General Partner shall conduct, direct and manage all activities of the Partnership. Except as otherwise expressly provided in this Agreement, all management powers over the business and affairs of the Partnership are and shall be exclusively vested in the General Partner, and no Limited Partner or Assignee shall have any right to participate in or exercise control or management power over the business and affairs of the Partnership. The General Partner may not be removed by the Limited Partners with or without cause, except with the consent of the General Partner. In addition to the powers now or hereafter granted to a general partner of a limited partnership under applicable law the Act or which that are granted to the General Partner under any other provision of this Agreement, the General Partner, subject to the other provisions hereof including, without limitation, Section 7.315.15, shall have full power and authority to do all things and on such terms as it, in its sole discretion, may deem deemed necessary or appropriate desirable by it to conduct the business of the Partnership, to exercise all powers set forth in Section 2.5 3.02 hereof and to effectuate the purposes set forth in Section 2.43.01 hereof, including the followingincluding, without limitation: (i) the making of any expenditures, the lending or borrowing of moneymoney (including, without limitation, making prepayments on loans and borrowing money or selling assets to permit the Partnership to make distributions in such amounts as will permit the Parent (so long as the Parent desires to qualify as a REIT) to avoid the payment of any income or excise tax under the Code and to make distributions to its stockholders sufficient to permit the Parent to qualify as a REIT or otherwise to satisfy the REIT Requirements), the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtednessindebtedness (including the securing of same by deed to secure debt, including indebtedness that is convertible into Partnership Securitiesmortgage, deed of trust or other lien or encumbrance on the Partnership’s assets) and the incurring of any other obligationsobligations that it deems necessary for the conduct of the activities of the Partnership; (ii) the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Partnership; (iii) subject to Section 11.02 hereof, the acquisition, dispositionsale, mortgagelease, pledgetransfer, encumbranceexchange or other disposition of any, hypothecation all or exchange of any or substantially all of the assets of the Partnership (including, but not limited to, the exercise or grant of any conversion, option, privilege or subscription right or any other right available in connection with any assets at any time held by the Partnership) or the merger merger, consolidation, reorganization or other combination of the Partnership with or into another Person (the matters described in this clause (iii) being subject, however, to any prior approval that may be required by Section 7.3)entity; (iv) the mortgage, pledge, encumbrance or hypothecation of any assets of the Partnership, the assignment of any assets of the Partnership in trust for creditors or on the promise of the assignee to pay the debts of the Partnership, the use of the assets of the Partnership (including including, without limitation, cash on hand) for any purpose consistent with the terms of this AgreementAgreement and on any terms that it sees fit, including including, without limitation, the financing of the operations and activities of the General Partner, the Parent, the Partnership or any of the Partnership’s Subsidiaries, the lending of funds to other Persons (including, without limitation, the Partnership’s Subsidiaries) and the repayment of obligations of the Partnership, its Subsidiaries and any other Person in which the Partnership has an equity investment, and the making of capital contributions to and equity investments in the Partnership’s Subsidiaries; (v) the use of the assets of the Partnership (including, without limitation, cash on hand) for any purpose consistent with the terms of this Agreement and on any terms it sees fit, including, without limitation, the financing of the conduct of the operations of the Parent, the General Partner, the Partnership Group; subject to Section 7.6(a)or any of the Partnership’s Subsidiaries, the lending of funds to other Persons (including other Group Members)including, without limitation, the Parent, the General Partner and its Subsidiaries and the Partnership’s Subsidiaries) and the repayment or guarantee of obligations of the Partnership Group and its Subsidiaries and any other Person in which the Partnership has an equity investment and the making of capital contributions to its Subsidiaries; (vi) the management, operation, leasing, maintenance, repair, alteration, demolition, replacement or improvement of any member Property, including, without limitation, any Contributed Property, or other asset of the Partnership Groupor any Subsidiary, whether pursuant to a Services Agreement or otherwise; (vvii) the negotiation, execution and performance of any contracts, leases, conveyances or other instruments (including instruments that limit the liability of General Partner considers useful or necessary to the Partnership under contractual arrangements to all or particular assets conduct of the Partnership, with ’s operations or the other party to the contract to have no recourse against implementation of the General Partner or its assets other than its interest in the PartnershipPartner’s powers under this Agreement, even if same results in the terms of the transaction being less favorable to the Partnership than would otherwise be the case); (vi) the distribution of Partnership cash; (vii) the selection and dismissal of employees (including employees having titles such as "president," "vice president," "secretary" and "treasurer") and agentscontracting with contractors, outside attorneysdevelopers, consultants, government authorities, accountants, consultants legal counsel, other professional advisors and contractors other agents (including the Transfer Agent) and the determination payment of their expenses and compensation and other terms out of employment or hiringthe Partnership’s assets; (viii) the distribution of Partnership cash or other Partnership assets in accordance with this Agreement, the holding, management, investment and reinvestment of cash and other assets of the Partnership and the collection and receipt of revenues, rents and income of the Partnership; (ix) the maintenance of such insurance (including, without limitation, directors and officers insurance) for the benefit of the Partnership Group and the Partners (including, without limitation, the Parent and the General Partner) as it the General Partner deems necessary or appropriate, including, without limitation, (i) casualty, liability and other insurance on the Properties and (ii) liability insurance for the Indemnitees hereunder; (ixx) the formation of, or acquisition of an interest in, and the contribution of property and the making of loans to, any other further limited or general partnerships, joint ventures, corporations, limited liability companies companies, joint ventures or other relationships that the General Partner deems desirable (including including, without limitation, the acquisition of interests in, and the contributions of property to, any Group Member Subsidiary and any other Person in which it has an equity investment from time to time) subject ); provided, however, that as long as the Parent desires to qualify as a REIT, the restrictions set forth General Partner may not engage in Section 2.4any such formation, acquisition or contribution that would cause the Parent not to qualify as a REIT; (xxi) the filing of applications, communicating and otherwise dealing with any and all governmental agencies having jurisdiction over, or in any way affecting, the Partnership’s assets or any other aspect of the Partnership business; (xii) the control of any matters affecting the rights and obligations of the Partnership, including the bringing settlement, compromise, submission to arbitration or any other form of dispute resolution, or abandonment, of any claim, cause of action, liability, debt or damages, due or owing to or from the Partnership, the commencement or defense of suits, legal proceedings, administrative proceedings, arbitrations or other forms of dispute resolution, and defending the representation of actions at law the Partnership in all suits or in equity and otherwise engaging in the conduct legal proceedings, administrative proceedings, arbitrations or other forms of litigation and dispute resolution, the incurring of legal expense expense, and the settlement of claims and litigation; (xi) the indemnification of any Person against liabilities and contingencies to the extent permitted by law; (xii) the entering into of listing agreements with any National Securities Exchange and the delisting of some or all of the Limited Partner Interests from, or requesting that trading be suspended on, any such exchange (subject to any prior approval that may be required under Section 4.8); (xiii) unless restricted or prohibited by Section 5.7, the purchase, sale or other acquisition or disposition of Partnership Securities, or the issuance of additional options, rights, warrants and appreciation rights relating to Partnership Securities; and (xiv) the undertaking of any action in connection with the Partnership's participation ’s direct or indirect investment in any Subsidiary or any other Person (including, without limitation, the Operating contribution or loan of funds by the Partnership to such Persons); (xiv) except as otherwise specifically set forth in this Agreement, the determination of the fair market value of any Partnership property distributed in-kind using such reasonable method of valuation as it may adopt; provided, that such methods are otherwise consistent with the requirements of this Agreement; (xv) the enforcement of any rights against any Partner pursuant to representations, warranties, covenants and indemnities relating to such Partner’s contribution of property or assets to the Partnership; (xvi) the exercise, directly or indirectly, through any attorney-in-fact acting under a general or limited power-of-attorney, of any right, including the right to vote, appurtenant to any asset or investment held by the Partnership; (xvii) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of or in connection with any Subsidiary of the Partnership or any other subsidiary Person in which the Partnership has a direct or indirect interest, or jointly with any such Subsidiary or other Person; (xviii) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of any Person in which the Partnership does not have an interest, pursuant to contractual or other arrangements with such Person; (xix) the making, execution and delivery of any and all deeds, leases, notes, deeds to secure Debt, mortgages, deeds of trust, security agreements, conveyances, contracts, guarantees, warranties, indemnities, waivers, releases or legal instruments or agreements in writing necessary or appropriate in the judgment of the General Partner for the accomplishment of any of the powers of the General Partner enumerated in this Agreement; (xx) the issuance of additional Partnership Units in connection with Capital Contributions by Additional Limited Partners and additional Capital Contributions by Partners pursuant to Article IV hereof; (xxi) the selection and dismissal of Parent Employees (including, without limitation, employees having titles or offices such as president, vice president, secretary and treasurer), and agents, outside attorneys, investment and other advisers, managers, accountants, consultants and contractors of the Partnership, the Parent or the General Partner, the determination of their compensation and other terms of employment or hiring and the delegation to any such Parent Employee the authority to conduct the business of the Partnership in accordance with the terms of this Agreement; (xxii) the distribution of cash to acquire Partnership Units held by a Limited Partner in connection with a Limited Partner’s exercise of its Redemption right under Section 8.06 hereof; (xxiii) maintaining, or causing to be maintained, the books and records of the Partnership or the Transfer Agent to reflect accurately at all times the Capital Contributions and Partnership Interests of the Holders as the same are adjusted from time to time to the extent necessary to reflect redemptions, Capital Contributions, the number of Partnership Units (including any issuance thereof), the admission of any Additional Limited Partner or any Substituted Limited Partner or otherwise; (xxiv) the determination regarding whether a payment to a Limited Partner who exercises its Redemption right under Section 8.06 that is assumed by the General Partner will be paid in the form of the Cash Amount or the Common REIT Shares Amount, except as such determination may be limited by Section 8.06. (xxv) the collection and receipt of revenues and income of the Partnership; (xxvi) the registration of any class of securities of the Partnership under the Securities Act or the Exchange Act, and the listing of any securities of the Partnership on any exchange. (xxvii) an election to dissolve the Partnership pursuant to Section 13.01(b) hereof; and (xxviii) the taking of any action necessary or appropriate to enable the Parent to qualify as a member or partnerREIT (so long as the Parent desires to qualify as a REIT). (b) Notwithstanding any other provision of this Agreement, the Operating Partnership Agreement, the Delaware Act or any applicable law, rule or regulation, each Each of the Limited Partners and the Assignees and each other Person who may acquire an interest agrees that, except as provided in Partnership Securities hereby (i) approvesSection 15.15 hereof, ratifies and confirms the execution, delivery and performance by the parties thereto of the Operating Partnership Agreement, the Omnibus Agreement, the Contribution Agreement, the Distribution Agreement, and the Purchase Contract dated _________, 2004 between Penn Octane Corporation and the Operating Partnership and the other agreements described in or filed as exhibits to the Registration Statement that are related to the transactions contemplated by the Registration Statement; (ii) agrees that the General Partner (on its own or through any officer of the Partnership) is authorized to execute, deliver and perform the above-mentioned agreements referred to in clause (i) of this sentence and the other agreements, acts, transactions and matters described in or contemplated by the Registration Statement on behalf of the Partnership without any further act, approval or vote of the Partners Limited Partners, notwithstanding any other provision of this Agreement, the Act or any applicable law, rule or regulation and, in the absence of any specific corporate action on the part of the General Partner to the contrary, the taking of any action or the Assignees execution of any such document or writing by an officer of the other Persons who may acquire an interest General Partner, in Partnership Securities; the name and on behalf of the General Partner, in its capacity as the general partner of the Partnership, shall conclusively evidence (iii1) agrees that the execution, delivery or performance approval thereof by the General Partner, any Group Member in its capacity as the general partner of the Partnership, (2) the General Partner’s determination that such action, document or any Affiliate writing is necessary or desirable to conduct the business and affairs of any the Partnership, exercise the powers of them, of this Agreement or any agreement authorized or permitted the Partnership under this Agreement (including and the exercise Act or effectuate the purposes of the Partnership, or any other determination by the General Partner required by this Agreement in connection with the taking of such action or any Affiliate execution of such document or writing, and (3) the authority of such officer with respect thereto. (c) The General Partner may cause the Partnership to obtain and maintain (i) casualty, liability and other insurance on the Properties and (ii) liability insurance for the Indemnitees hereunder. (d) The General Partner may cause the Partnership to establish and maintain working capital and other reserves in such amounts as the General Partner deems appropriate and reasonable from time to time. (e) In exercising its authority under this Agreement, the General Partner may, but shall be under no obligation to, take into account the tax consequences to any Partner (including the General Partner) of any action taken (or not taken) by it. Except as may be provided in a separate written agreement between the rights accorded pursuant to Article XV)Partnership and the Limited Partners, the General Partner and the Partnership shall not constitute have liability to a breach Limited Partner under any circumstances as a result of a tax liability incurred by such Limited Partner as a result of an action (or inaction) by the General Partner of any duty pursuant to its authority under this Agreement provided, that the General Partner may owe the Partnership or the Limited Partners or any other Persons has acted pursuant to its authority under this Agreement (or any other agreements) or of any duty stated or implied by law or equityAgreement.

Management. (a) The Managing General Partner of the Partnership generally shall conduct, direct and manage all activities of the PartnershipPartnership generally, and the Managing General Partner of each Series shall conduct, direct and manage all activities of the Series for which it serves as Managing General Partner. Except as otherwise expressly provided in this Agreement, (i) all management powers over the business and affairs of the Partnership generally shall be exclusively vested in the Managing General PartnerPartner of the Partnership generally, and no Limited Partner or Assignee other General Partner shall have any management power over the business and affairs of (or authority to bind) the PartnershipPartnership generally and (ii) all management powers over the business and affairs of each Series shall be exclusively vested in the Managing General Partner of such Series, and no Limited Partner or other General Partner shall have any management power over the business and affairs of (or authority to bind) such Series. In addition to the powers now or hereafter granted a general partner of a limited partnership under applicable law or which that are granted to the a Managing General Partner under any other provision of this Agreement, the each Managing General Partner, subject to any approval required by Section 7.37.3 or any other provision of this Agreement, shall have full power and authority to do all things and on such terms as it, in its sole discretion, may deem it determines to be necessary or appropriate to conduct the business of the PartnershipPartnership generally or the applicable Series, as the case may be, to exercise all powers set forth in Section 2.5 and to effectuate the purposes set forth in Section 2.4, including the following: (i) the making of any expenditures, the lending or borrowing of money, the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtedness, including indebtedness that is convertible into Partnership Securities, and the incurring of any other obligations; (ii) the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the PartnershipPartnership and each Series (other than in connection with the matters set forth in Section 9.3); (iii) the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or exchange of any or all of the assets of the Partnership applicable Series or the merger or other combination of the Partnership with or into another Person (the matters described in this clause (iii) being subject, however, to any prior approval that may be required by Section 7.3)Person; (iv) the use of the assets of the Partnership applicable Series (including cash on hand) for any purpose consistent with the terms of this Agreement, including the financing of the conduct of the operations of the Partnership Group; subject to Section 7.6(a), the lending of funds to other Persons (including other Group Members), the repayment or guarantee of obligations of the Partnership Group and the making of capital contributions to any member of the Partnership Group; (v) the negotiation, execution and performance of any contracts, conveyances or other instruments (including instruments that limit the liability on behalf of the Partnership under contractual arrangements to all generally or particular assets of the Partnership, with the other party to the contract to have no recourse against the General Partner or its assets other than its interest in the Partnership, even if same results in the terms of the transaction being less favorable to the Partnership than would otherwise be the case)applicable Series; (vi) the distribution of Partnership cashcash or property of the applicable Series; (vii) the selection and dismissal of employees (including employees having titles such as "president," "vice president," "secretary" and "treasurer") and agents, outside attorneys, accountants, consultants and contractors and the determination of their compensation and other terms of employment or hiring; (viii) the maintenance of such separate or joint insurance policies for the benefit of the Partnership Group and the Partnership, any Series, any Partners as it deems necessary or appropriateany Indemnitees; (ixviii) the formation of, or acquisition of an interest in, and the contribution of property and the making of loans to, any other further limited or general partnerships, joint ventures, corporations, limited liability companies or other relationships (including the acquisition of interests in, and the contributions of property to, any Group Member from time to time) subject to the restrictions set forth in Section 2.4; (xix) the control of any matters affecting the rights and obligations of the PartnershipPartnership or the applicable Series, including the bringing and defending of actions at law or in equity and otherwise engaging in the conduct of litigation litigation, arbitration or mediation and the incurring of legal expense and the settlement of claims and litigation;; and (xix) the indemnification of any Person against liabilities and contingencies to the extent permitted by law; (xii) the entering into of listing agreements with any National Securities Exchange and the delisting of some or all of the Limited Partner Interests from, or requesting that trading be suspended on, any such exchange (subject to any prior approval that may be required under Section 4.8); (xiii) unless restricted or prohibited by Section 5.7, the purchase, sale or other acquisition or disposition of Partnership Securities, or the issuance of additional options, rights, warrants and appreciation rights relating to Partnership Securities; and (xiv) the undertaking of any action in connection with the Partnership's participation in the Operating Partnership or any other subsidiary of the Partnership as a member or partner. (b) Notwithstanding any other provision of this Agreement, the Operating Partnership Agreement, the Delaware Act or any applicable law, rule or regulation, each of the Partners and the Assignees and each other Person who may acquire an interest in Partnership Securities hereby (i) approves, ratifies and confirms the execution, delivery and performance by the parties thereto of the Operating Partnership Agreement, the Omnibus Agreement, the Contribution Agreement, the Distribution Agreement, and the Purchase Contract dated _________, 2004 between Penn Octane Corporation and the Operating Partnership and the other agreements described in or filed as exhibits to the Registration Statement that are related to the transactions contemplated by the Registration Statement; (ii) agrees that the General Partner (on its own or through any officer of the Partnership) is authorized to execute, deliver and perform the agreements referred to in clause (i) of this sentence and the other agreements, acts, transactions and matters described in or contemplated by the Registration Statement on behalf of the Partnership without any further act, approval or vote of the Partners or the Assignees or the other Persons who may acquire an interest in Partnership Securities; and (iii) agrees that the execution, delivery or performance by the General Partner, any Group Member or any Affiliate of any of them, of this Agreement or any agreement authorized or permitted under this Agreement (including the exercise by the General Partner or any Affiliate of the General Partner of the rights accorded pursuant to Article XV), shall not constitute a breach by the General Partner of any duty that the General Partner may owe the Partnership or the Limited Partners or any other Persons under this Agreement (or any other agreements) or of any duty stated or implied by law or equity.

Management. (a) The General Partner shall conduct, direct and manage all activities of the Partnership. Except as otherwise expressly provided in this Agreement, all management powers over the business and affairs of the Partnership are and shall be exclusively vested in the General Partner, and no Limited Partner or Assignee shall have any right to participate in or exercise control or management power over the business and affairs of the Partnership. The General Partner may not be removed by the Limited Partners, except with the consent of the General Partner. In addition to the powers now or hereafter granted to a general partner of a limited partnership under applicable law or which that are granted to the General Partner under any other provision of this Agreement, the General Partner, subject to the other provisions hereof including Section 7.37.03, shall have full power and authority to do all things and on such terms as it, in its sole discretion, may deem deemed necessary or appropriate desirable by it to conduct the business of the Partnership, to exercise all powers set forth in Section 2.5 3.02 hereof and to effectuate the purposes set forth in Section 2.43.01 hereof, including the followingincluding, without limitation: (i) the making of any expenditures, the lending or borrowing of moneymoney (including, without limitation, making prepayments on loans and borrowing money or selling assets to permit the Partnership to make distributions to its Partners in such amounts as will permit the General Partner (so long as the General Partner desires to maintain or restore its qualification as a REIT) to avoid the payment of any federal income tax (including, for this purpose, any excise tax pursuant to Code Section 4981) and to make distributions to its stockholders sufficient to permit the General Partner to maintain or restore REIT qualification or otherwise to satisfy the REIT Requirements), the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtednessindebtedness (including the securing of same by deed to secure debt, including indebtedness that is convertible into Partnership Securitiesmortgage, deed of trust or other lien or encumbrance on the Partnership’s assets) and the incurring of any other obligationsobligations that it deems necessary for the conduct of the activities of the Partnership; (ii) the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Partnership, the registration of any class of securities of the Partnership under the Exchange Act and the listing of any debt securities of the Partnership on any exchange; (iii) subject to Section 11.02 hereof, the acquisition, dispositionsale, mortgagelease, pledgetransfer, encumbranceexchange or other disposition of any, hypothecation all or exchange of any or substantially all of the assets of the Partnership (including, but not limited to, the exercise or grant of any conversion, option, privilege or subscription right or any other right available in connection with any assets at any time held by the Partnership) or the merger merger, consolidation, reorganization or other combination of the Partnership with or into another Person (the matters described in this clause (iii) being subject, however, to any prior approval that may be required by Section 7.3)entity; (iv) the mortgage, pledge, encumbrance or hypothecation of any assets of the Partnership, the use of the assets of the Partnership (including including, without limitation, cash on hand) for any purpose consistent with the terms of this AgreementAgreement and on any terms that it sees fit, including including, without limitation, the financing of the operations and activities of the General Partner, the Partnership or any of the Partnership’s Subsidiaries, the lending of funds to other Persons (including, without limitation, the Partnership’s Subsidiaries) and the repayment of obligations of the Partnership, its Subsidiaries and any other Person in which the Partnership has an equity investment, and the making of capital contributions to and equity investments in the Partnership’s Subsidiaries; (v) the use of the assets of the Partnership (including, without limitation, cash on hand) for any purpose consistent with the terms of this Agreement and on any terms it sees fit, including, without limitation, the financing of the conduct of the operations of the General Partner, the Partnership Group; subject to Section 7.6(a)or any of the Partnership’s Subsidiaries, the lending of funds to other Persons (including other Group Members)including, without limitation, the General Partner and its Subsidiaries and the Partnership’s Subsidiaries) and the repayment or guarantee of obligations of the Partnership Group and its Subsidiaries and any other Person in which the Partnership has an equity investment and the making of capital contributions to its Subsidiaries; (vi) the management, operation, leasing, landscaping, repair, alteration, demolition, replacement or improvement of any member Property, including, without limitation, any Contributed Property, or other asset of the Partnership Groupor any Subsidiary, whether pursuant to a Services Agreement or otherwise; (vvii) the negotiation, execution and performance of any contracts, leases, conveyances or other instruments (including instruments that limit the liability of General Partner considers useful or necessary to the Partnership under contractual arrangements to all or particular assets conduct of the Partnership, with ’s operations or the other party to the contract to have no recourse against implementation of the General Partner or its assets Partner’s powers under this Agreement, including contracting with contractors, developers, consultants, accountants, legal counsel, other than its interest in professional advisors and other agents and the payment of their expenses and compensation out of the Partnership, even if same results in the terms of the transaction being less favorable to the Partnership than would otherwise be the case)’s assets; (viviii) the distribution of Partnership cashcash or other Partnership assets in accordance with this Agreement, the holding, management, investment and reinvestment of cash and other assets of the Partnership and the collection and receipt of revenues, rents and income of the Partnership; (vii) the selection and dismissal of employees (including employees having titles such as "president," "vice president," "secretary" and "treasurer") and agents, outside attorneys, accountants, consultants and contractors and the determination of their compensation and other terms of employment or hiring; (viiiix) the maintenance of such insurance for the benefit of the Partnership Group and the Partners as it the General Partner deems necessary or appropriate, including, without limitation, (i) casualty, liability and other insurance on the Properties and (ii) liability insurance for the Indemnitees hereunder; (ixx) the formation of, or acquisition of an interest in, and the contribution of property and the making of loans to, any other further limited or general partnerships, joint ventures, corporations, limited liability companies companies, joint ventures or other relationships that the General Partner deems desirable (including including, without limitation, the acquisition of interests in, and the contributions of property to, any Group Member Subsidiary and any other Person in which it has an equity investment from time to time); provided, however, that as long as the General Partner has determined to continue to qualify as a REIT, the General Partner may not engage in any such formation, acquisition or contribution that would cause it to fail to qualify as a REIT within the meaning of Code Section 856(a) subject (so long as the General Partner desires to the restrictions set forth in Section 2.4maintain its qualification as a REIT); (xxi) the filing of applications, communicating and otherwise dealing with any and all governmental agencies having jurisdiction over, or in any way affecting, the Partnership’s assets or any other aspect of the Partnership business; (xii) the control of any matters affecting the rights and obligations of the Partnership, including the bringing settlement, compromise, submission to arbitration or any other form of dispute resolution, or abandonment, of any claim, cause of action, liability, debt or damages, due or owing to or from the Partnership, the commencement or defense of suits, legal proceedings, administrative proceedings, arbitrations or other forms of dispute resolution, and defending the representation of actions at law the Partnership in all suits or in equity and otherwise engaging in the conduct legal proceedings, administrative proceedings, arbitrations or other forms of litigation and dispute resolution, the incurring of legal expense expense, and the settlement of claims and litigation; (xi) the indemnification of any Person against liabilities and contingencies to the extent permitted by law; (xii) the entering into of listing agreements with any National Securities Exchange and the delisting of some or all of the Limited Partner Interests from, or requesting that trading be suspended on, any such exchange (subject to any prior approval that may be required under Section 4.8); (xiii) unless restricted or prohibited by Section 5.7, the purchase, sale or other acquisition or disposition of Partnership Securities, or the issuance of additional options, rights, warrants and appreciation rights relating to Partnership Securities; and (xiv) the undertaking of any action in connection with the Partnership's participation ’s direct or indirect investment in any Subsidiary or any other Person (including, without limitation, the Operating contribution or loan of funds by the Partnership to such Persons); (xiv) except as otherwise specifically set forth in this Agreement, the determination of the fair market value of any Partnership property distributed in-kind using such reasonable method of valuation as it may adopt; provided, that such methods are otherwise consistent with the requirements of this Agreement; (xv) the enforcement of any rights against any Partner pursuant to representations, warranties, covenants and indemnities relating to such Partner’s contribution of property or assets to the Partnership; (xvi) the exercise, directly or indirectly, through any attorney-in-fact acting under a general or limited power-of-attorney, of any right, including the right to vote, appurtenant to any asset or investment held by the Partnership; (xvii) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of or in connection with any Subsidiary of the Partnership or any other subsidiary Person in which the Partnership has a direct or indirect interest, or jointly with any such Subsidiary or other Person; (xviii) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of any Person in which the Partnership does not have an interest, pursuant to contractual or other arrangements with such Person; (xix) the making, execution and delivery of any and all deeds, leases, notes, deeds to secure Debt, mortgages, deeds of trust, security agreements, conveyances, contracts, guarantees, warranties, indemnities, waivers, releases or legal instruments or agreements in writing necessary or appropriate in the judgment of the General Partner for the accomplishment of any of the powers of the General Partner enumerated in this Agreement; (xx) the issuance of additional Partnership Units, as appropriate and in the General Partner’s sole and absolute discretion, in connection with Capital Contributions by Additional Limited Partners and additional Capital Contributions by Partners pursuant to Article IV hereof; (xxi) the selection and dismissal of employees (including, without limitation, employees having titles or offices such as president, vice president, secretary and treasurer), and agents, outside attorneys, accountants, consultants and contractors of the Partnership or the General Partner, the determination of their compensation and other terms of employment or hiring and the delegation to any such employees the authority to conduct the business of the Partnership in accordance with the terms of this Agreement; (xxii) the distribution of cash to acquire Partnership Units held by a Limited Partner in connection with a Limited Partner’s exercise of its Redemption right under Section 8.06 hereof; (xxiii) the amendment and restatement of Exhibit A hereto to reflect accurately at all times the Capital Contributions and Percentage Interests of the Partners as the same are adjusted from time to time to the extent necessary to reflect redemptions, Capital Contributions, the issuance of Partnership Units, the admission of any Additional Limited Partner or any Substituted Limited Partner or otherwise, which amendment and restatement, notwithstanding anything in this Agreement to the contrary, shall not be deemed an amendment to this Agreement, as long as the matter or event being reflected in Exhibit A hereto otherwise is authorized by this Agreement; (xxiv) the determination regarding whether a payment to a Partner who exercises its Redemption Right under Section 8.06 that is assumed by the General Partner will be paid in the form of the Cash Amount or the REIT Shares Amount, except as such determination may be limited by Section 8.06; (xxv) the collection and receipt of revenues and income of the Partnership; (xxvi) the registration of any class of securities of the Partnership under the Securities Act or the Exchange Act, and the listing of any debt securities of the Partnership on any exchange; (xxvii) an election to dissolve the Partnership pursuant to Section 13.01(b) hereof; and (xxviii) the taking of any action necessary or appropriate to enable the General Partner to qualify as a member or partnerREIT (so long as the General Partner desires to maintain its qualification as a REIT). (b) Notwithstanding any other provision of this Agreement, the Operating Partnership Agreement, the Delaware Act or any applicable law, rule or regulation, each Each of the Limited Partners and the Assignees and each other Person who may acquire an interest agrees that, except as provided in Partnership Securities hereby (i) approvesSection 7.03 hereof, ratifies and confirms the execution, delivery and performance by the parties thereto of the Operating Partnership Agreement, the Omnibus Agreement, the Contribution Agreement, the Distribution Agreement, and the Purchase Contract dated _________, 2004 between Penn Octane Corporation and the Operating Partnership and the other agreements described in or filed as exhibits to the Registration Statement that are related to the transactions contemplated by the Registration Statement; (ii) agrees that the General Partner (on its own or through any officer of the Partnership) is authorized to execute, deliver and perform the above- mentioned agreements referred to in clause (i) of this sentence and the other agreements, acts, transactions and matters described in or contemplated by the Registration Statement on behalf of the Partnership without any further act, approval or vote of the Partners Partners, notwithstanding any other provision of this Agreement, the Act or any applicable law, rule or regulation. (c) At all times from and after the Assignees or Effective Date, the General Partner may cause the Partnership to establish and maintain working capital and other Persons who may acquire an interest reserves in Partnership Securities; and (iii) agrees that the execution, delivery or performance by such amounts as the General Partner, any Group Member or any Affiliate of any of themin its sole and absolute discretion, of this Agreement or any agreement authorized or permitted deems appropriate and reasonable from time to time. (d) In exercising its authority under this Agreement Agreement, the General Partner may, but shall be under no obligation to, take into account the tax consequences to any Partner (including the exercise General Partner) of any action taken (or not taken) by it. Except as may be provided in a separate written agreement between the Partnership and the Limited Partners, the General Partner and the Partnership shall not have liability to a Limited Partner under any circumstances as a result of an income tax liability incurred by such Limited Partner as a result of an action (or inaction) by the General Partner or any Affiliate of the General Partner of the rights accorded pursuant to Article XV)its authority under this Agreement provided, shall not constitute a breach by the General Partner of any duty that the General Partner may owe the Partnership or the Limited Partners or any other Persons has acted in good faith and pursuant to its authority under this Agreement (or any other agreements) or of any duty stated or implied by law or equityAgreement.

Management. (ai) The General Partner shall conduct, direct and manage all activities of the Partnership. Except as otherwise expressly provided in this Agreement, all management powers over full, complete and exclusive discretion to manage and control the business and affairs of the Partnership are and shall be exclusively vested in the General Partner, and no Limited Partner or Assignee shall have any right to participate in or exercise control or management power over the business and affairs of the Partnership. . (ii) The General Partner may not be removed by the Associate General Partner or the Limited Partners with or without cause. (iii) In addition to the powers now or hereafter granted a general partner of a limited partnership under applicable law or which are granted to the General Partner under any other provision of this Agreement, the General Partner, subject to Section 7.3, Partner shall have full power and authority to do all things and on such terms as it, in its sole discretion, may deem deemed necessary or appropriate desirable by it to conduct the business of the Partnership, to exercise all powers set forth in Section 2.5 3.2 hereof and to effectuate the purposes set forth in Section 2.43.1 hereof, including the followingincluding, without limitation: (i1) the making of any expenditures, the lending or borrowing of money, including, without limitation, making prepayments on loans and borrowing money to permit the Partnership to make distributions to its Partners in such amounts as will permit the General Partner (so long as the General Partner qualifies as a REIT) to avoid the payment of any federal income tax (including, for this purpose, any excise tax pursuant to Section 4981 of the Code) and to make distributions to its stockholders in amounts sufficient to permit the General Partner to maintain REIT status, (2) the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, , (3) the issuance of evidences evidence of indebtednessindebtedness (including the securing of the same by deed, including indebtedness that is convertible into Partnership Securitiesmortgage, and deed of trust or other lien or encumbrance on the Partnership’s assets) and (4) the incurring of any other obligationsobligations it deems necessary for the conduct of the activities of the Partnership, including the payment of all expenses associated with the General Partner; (iiB) the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the PartnershipPartnership or the General Partner; (iiiC) the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or exchange of any all or substantially all of the assets of the Partnership (including the exercise or grant of any conversion, option, privilege, or subscription right or other right available in connection with any assets at any time held by the Partnership) or the merger merger, consolidation or other combination (a “ Business Combination”) of the Partnership with or into another Person (Entity on such terms as the matters described in this clause (iii) being subjectGeneral Partner deems proper, however, to any prior approval provided that may the General Partner shall be required by Section 7.3)to send to the Associate General Partner and each Limited Partner a notice of such proposed Business Combination no less than 15 days prior to the record date for the vote of the General Partner’s stockholders on such Business Combination, if any; (ivD) the use of the assets of the Partnership (including including, without limitation, cash on hand) for any purpose consistent with the terms of this AgreementAgreement and on any terms it sees fit, including including, without limitation, (1) the financing of the conduct of the operations of the General Partner, the Partnership Group; subject to Section 7.6(a), or any of the Partnership’s Subsidiaries, (2) the lending of funds to other Persons (including other Group Members)including, without limitation, the Subsidiaries of the Partnership and/or the General Partner) and the repayment or guarantee of obligations of the Partnership Group and its Subsidiaries and any other Person in which it has an equity investment, and (3) the making of capital contributions to its Subsidiaries; (E) the expansion, development, construction, leasing, repair, alteration, demolition or improvement of any member property in which the Partnership or any Subsidiary of the Partnership Groupowns an interest; (vF) the negotiation, execution execution, and performance of any contracts, conveyances or other instruments (including instruments that limit the liability of General Partner considers useful or necessary to the Partnership under contractual arrangements to all or particular assets conduct of the Partnership, with ’s operations or the other party to the contract to have no recourse against implementation of the General Partner or its assets Partner’s powers under this Agreement, including contracting with contractors, developers, consultants, accountants, legal counsel, other than its interest in professional advisors and other agents and the payment of their expenses and compensation out of the Partnership, even if same results in the terms of the transaction being less favorable to the Partnership than would otherwise be the case)’s assets; (viG) the distribution of Partnership cashcash or other Partnership assets in accordance with this Agreement; (viiH) holding, managing, investing and reinvesting cash and other assets of the Partnership; (I) the collection and receipt of revenues and income of the Partnership; (J) the establishment of one or more divisions of the Partnership, the selection and dismissal of employees of the Partnership (including including, without limitation, employees having titles such as "“president," "” “vice president," "” “secretary" ” and "“treasurer") ” of the Partnership), and agents, outside attorneys, accountants, consultants and contractors of the Partnership, and the determination of their compensation and other terms of employment or hiringengagement; (viiiK) the maintenance of such insurance for the benefit of the Partnership Group and the Partners and directors and officers thereof as it deems necessary or appropriate; (ixL) the formation of, or acquisition of an interest (including non-voting interests in entities controlled by Affiliates of the Partnership or third parties) in, and the contribution of property and the making of loans to, any other limited or general partnerships, joint ventures, corporations, limited liability companies further Entities or other relationships (including that it deems desirable, including, without limitation, the acquisition of interests in, and the contributions of funds or property to, or making of loans to, its Subsidiaries and any Group Member other Person from time to time) subject , or the incurrence of indebtedness on behalf of such Persons or the guarantee of the obligations of such Persons; provided that, as long as the General Partner has determined to elect to qualify as a REIT or to continue to qualify as a REIT, the restrictions set forth Partnership may not engage in Section 2.4any such formation, acquisition or contribution that would cause the General Partner to fail to qualify as a REIT; (xM) the control of any matters affecting the rights and obligations of the Partnership, including including (1) the bringing and defending settlement, compromise, submission to arbitration or any other form of actions at law dispute resolution, or abandonment of, any claim, cause of action, liability, debt or damages, due or owing to or from the Partnership, (2) the commencement or defense of suits, legal proceedings, administrative proceedings, arbitration or other forms of dispute resolution, and (3) the representation of the Partnership in equity and otherwise engaging in the conduct all suits or legal proceedings, administrative proceedings, arbitrations or other forms of litigation and dispute resolution, the incurring of legal expense expenses, and the settlement of claims and litigation; (xi) the indemnification of any Person against liabilities and contingencies to the extent permitted by law; (xii) the entering into of listing agreements with any National Securities Exchange and the delisting of some or all of the Limited Partner Interests from, or requesting that trading be suspended on, any such exchange (subject to any prior approval that may be required under Section 4.8); (xiii) unless restricted or prohibited by Section 5.7, the purchase, sale or other acquisition or disposition of Partnership Securities, or the issuance of additional options, rights, warrants and appreciation rights relating to Partnership Securities; and (xivN) the undertaking of any action in connection with the Partnership's participation ’s direct or indirect investment in its Subsidiaries or any other Person (including, without limitation, the Operating contribution or loan of funds by the Partnership to such Persons); (O) the determination of the fair market value of any Partnership property distributed in kind using such reasonable method of valuation as the General Partner, in its sole discretion, may adopt; (P) the exercise, directly or indirectly, through any attorney-in-fact acting under a general or limited power of attorney, of any right, including the right to vote, appurtenant to any asset or investment held by the Partnership; (Q) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of or in connection with any Subsidiary of the Partnership or any other subsidiary Person in which the Partnership has a direct or indirect interest, or jointly with any such Subsidiary or other Person; (R) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of any Person in which the Partnership as a member does not have an interest pursuant to contractual or partner.other arrangements with such Person; (bS) Notwithstanding the making, execution and delivery of any other provision and all deeds, leases, notes, mortgages, deeds of trust, security agreements, conveyances, contracts, guarantees, warranties, indemnities, waivers, releases or legal instruments or agreements in writing necessary or appropriate, in the judgment of the General Partner, for the accomplishment of any of the foregoing; (T) the issuance of additional Partnership Units in connection with Capital Contributions by Additional Limited Partners and additional Capital Contributions by Partners pursuant to Article 4 hereof; (U) the opening of bank accounts on behalf of, and in the name of, the Partnership and its Subsidiaries; and (V) the amendment and restatement of Exhibit A to reflect accurately at all times the Capital Contributions and Percentage Interests of the Partners as the same are adjusted from time to time to the extent necessary to reflect redemptions, Capital Contributions, the issuance of Partnership Units, the admission of any Additional Limited Partner or any Substituted Limited Partner or otherwise, which amendment and restatement, notwithstanding anything in this Agreement to the contrary, shall not be deemed an amendment of this Agreement, as long as the Operating Partnership matter or event being reflected in Exhibit A otherwise is authorized by this Agreement, the Delaware Act or any applicable law, rule or regulation, . (i) The Associate General Partner and each of the Limited Partners and the Assignees and each other Person who may acquire an interest in Partnership Securities hereby (i) approves, ratifies and confirms the execution, delivery and performance by the parties thereto of the Operating Partnership Agreement, the Omnibus Agreement, the Contribution Agreement, the Distribution Agreement, and the Purchase Contract dated _________, 2004 between Penn Octane Corporation and the Operating Partnership and the other agreements described in or filed as exhibits to the Registration Statement that are related to the transactions contemplated by the Registration Statement; (ii) agrees agree that the General Partner (on its own or through any officer of the Partnership) is authorized to execute, deliver and perform the above-mentioned agreements referred to in clause (i) of this sentence and the other agreements, acts, transactions and matters described in or contemplated by the Registration Statement on behalf of the Partnership without any further act, approval or vote of the Partners Partners, notwithstanding any other provision of this Agreement to the fullest extent permitted under the Act or the Assignees other applicable law, rule or the other Persons who may acquire an interest in Partnership Securities; and regulation. (iiiii) agrees that the The execution, delivery or performance by the General Partner, any Group Member Partner or any Affiliate the Partnership of any of them, of this Agreement or any agreement authorized or permitted under this Agreement (including the exercise by the General Partner or any Affiliate of the General Partner of the rights accorded pursuant to Article XV), shall not constitute a breach by the General Partner of any duty that the General Partner may owe the Partnership or the Limited Partners or any other Persons under this Agreement (or any other agreements) or of any duty stated or implied by law or equity. (c) At all times from and after the date hereof, the General Partner at the expense of the Partnership, may or may not, cause the Partnership to obtain and maintain (i) casualty, liability and other insurance on the properties of the Partnership; (ii) liability insurance for the Indemnitees hereunder; and (iii) such other insurance as the General Partner, in its sole and absolute discretion, determines to be appropriate and reasonable. (d) At all times from and after the date hereof, the General Partner may cause the Partnership to establish and maintain at any and all times working capital accounts and other cash or similar balances in such amount as the General Partner, in its sole and absolute discretion, deems appropriate and reasonable from time to time. (i) In exercising its authority under this Agreement, the General Partner may, but shall be under no obligation to, take into account the tax consequences to any Partner (including the General Partner) of any action taken (or not taken) by it. The General Partner and the Partnership shall not have liability to the Associate General Partner or any Limited Partner for monetary damages or otherwise for losses sustained, liabilities incurred or benefits not delivered by the Associate General Partner or such Limited Partner in connection with such decisions, provided that the General Partner has acted in good faith pursuant to its authority under this Agreement. The Limited Partners expressly acknowledge that the General Partner is acting on behalf of the Partnership, the General Partner, and the General Partner’s stockholders, collectively. (ii) The General Partner and the Partnership shall not have liability to the Associate General Partner or any Limited Partner under any circumstances as a result of an income tax liability incurred by the Associate General Partner or such Limited Partner as a result of an action (or inaction) by the General Partner taken pursuant to its authority under and in accordance with this Agreement.

Management. (a) The General Partner shall conduct, direct and manage all activities of the Partnership. A. Except as otherwise expressly provided in this Agreement, all management powers over the business and affairs of the Partnership are and shall be exclusively vested in the General Partner, and no Limited Partner or Assignee shall have any right to participate in or exercise control or management power over the business and affairs of the Partnership. The General Partner may not be removed by the Limited Partners with or without cause. In addition to the powers now or hereafter granted a general partner of a limited partnership under applicable law or which are granted to the General Partner under any other provision of this Agreement, the General Partner, subject to Section 7.3the other provisions hereof including Sections 7.3 and 11.2, shall have full power and authority to do all things and on such terms as it, in its sole discretion, may deem deemed necessary or appropriate desirable by it to conduct the business of the Partnership, to exercise all powers set forth in Section 2.5 3.2 and to effectuate the purposes set forth in Section 2.43.1, including the followingincluding, without limitation: (i1) the making of any expenditures, the lending or borrowing of moneymoney (including, without limitation, making prepayments on loans and borrowing money to permit the Partnership to make distributions to its Partners in such amounts as will permit the General Partner (so long as the General Partner has determined to qualify as a REIT) to avoid the payment of any federal income tax (including, for this purpose, any excise tax pursuant to Section 4981 of the Code) and to make distributions to its stockholders sufficient to permit the General Partner to maintain REIT status), the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtednessindebtedness (including the securing of same by mortgage, including indebtedness that is convertible into Partnership Securities, deed of trust or other lien or encumbrance on the Partnership's assets) and the incurring of any other obligationsobligations it deems necessary for the conduct of the activities of the Partnership; (ii2) the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Partnership, the registration of any class of securities of the Partnership under the Securities Exchange Act of 1934, as amended, and the listing of any debt securities of the Partnership on any exchange; (iii3) subject to the provisions of Section 11.2, the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or exchange of any or all of the assets of the Partnership or the merger or other combination of the Partnership with or into another Person (the matters described in this clause (iii) being subject, however, to any prior approval that may be required by Section 7.3)entity; (iv4) the acquisition, disposition, mortgage, pledge, encumbrance or hypothecation of any assets of the Partnership, and the use of the assets of the Partnership (including including, without limitation, cash on hand) for any purpose consistent with the terms of this AgreementAgreement and on any terms it sees fit, including including, without limitation, the financing of the conduct of or the operations of the Partnership Group; subject to Section 7.6(a)General Partner or the Partnership, the lending of funds to other Persons (including other Group Members)including, without limitation, the General Partner or any Subsidiaries of the Partnership) and the repayment or guarantee of obligations of the Partnership Group Partnership, any of its Subsidiaries and any other Person in which it has an equity investment, and the making of capital contributions to any member of the Partnership Groupits Subsidiaries; (v5) the management, operation, leasing, landscaping, repair, alteration, demolition or improvement of any real property or improvements owned by the Partnership or any Subsidiary of the Partnership; (6) the negotiation, execution execution, and performance of any contracts, leases, conveyances or other instruments (including instruments that limit the liability of General Partner considers useful or necessary to the Partnership under contractual arrangements to all or particular assets conduct of the Partnership, with 's operations or the other party to the contract to have no recourse against implementation of the General Partner or its assets Partner's powers under this Agreement, including contracting with contractors, developers, consultants, accountants, legal counsel, other than its interest in professional advisors and other agents and the payment of their expenses and compensation out of the Partnership, even if same results in the terms of the transaction being less favorable to the Partnership than would otherwise be the case)'s assets; (vi7) the distribution of Partnership cashcash or other Partnership assets in accordance with this Agreement; (vii) 8) the establishment of one or more divisions of the Partnership, the selection and dismissal of employees of the Partnership (including including, without limitation, employees having titles such as "president," "vice president," "secretary" and "treasurer") ), and agents, outside attorneys, accountants, consultants and contractors and of the Partnership, the determination of their compensation and other terms of employment or hiring, including waivers of conflicts of interest and the payment of their expenses and compensation out of the Partnership's assets; (viii9) the maintenance of such insurance for the benefit of the Partnership Group and the Partners and directors and officers of the Partnership or the General Partner as it deems necessary or appropriate; (ix10) the formation of, or acquisition of an interest in, and the contribution of property and the making of loans to, any other further limited or general partnerships, joint ventures, corporations, limited liability companies ventures or other relationships that it deems desirable (including including, without limitation, the acquisition of interests in, and the contributions of property to, to any Group Member Subsidiary and any other Person in which it has an equity investment from time to time) subject ); provided, that, as long as the General Partner has determined to continue to qualify as a REIT, the restrictions set forth Partnership may not engage in Section 2.4any such formation, acquisition or contribution that could cause the General Partner to fail to qualify as a REIT; (x11) the control of any matters affecting the rights and obligations of the Partnership, including the bringing settlement, compromise, submission to arbitration or any other form of dispute resolution, or abandonment of, any claim, cause of action, liability, debt or damages, due or owing to or from the Partnership, the commencement or defense of suits, legal proceedings, administrative proceedings, arbitration or other forms of dispute resolution, and defending the representation of actions at law the Partnership in all suits or in equity and otherwise engaging in the conduct legal proceedings, administrative proceedings, arbitrations or other forms of litigation and dispute resolution, the incurring of legal expense expense, and the settlement of claims and litigation; (xi) the indemnification of any Person against liabilities and contingencies to the extent permitted by law; (xii) the entering into of listing agreements with any National Securities Exchange and the delisting of some or all of the Limited Partner Interests from, or requesting that trading be suspended on, any such exchange (subject to any prior approval that may be required under Section 4.8); (xiii) unless restricted or prohibited by Section 5.7, the purchase, sale or other acquisition or disposition of Partnership Securities, or the issuance of additional options, rights, warrants and appreciation rights relating to Partnership Securities; and (xiv12) the undertaking of any action in connection with the Partnership's participation direct or indirect investment in any Person (including, without limitation, contributing or loaning Partnership funds to, incurring indebtedness on behalf of, or guarantying the Operating obligations of any such Persons); (13) subject to the other provisions in this Agreement, the determination of the fair market value of any Partnership property distributed in kind using such reasonable method of valuation as it may adopt, provided, that such methods are otherwise consistent with requirements of this Agreement; (14) the management, operation, leasing, landscaping, repair, alteration, demolition or improvement of any real property or improvements owned by the Partnership or any Subsidiary of the Partnership or any Person in which the Partnership has made a direct or indirect equity investment; (15) holding, managing, investing and reinvesting cash and other assets of the Partnership; (16) the collection and receipt of revenues and income of the Partnership; (17) the exercise, directly or indirectly through any attorney-in-fact acting under a general or limited power of attorney, of any right, including the right to vote, appurtenant to any asset or investment held by the Partnership; (18) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of or in connection with any Subsidiary of the Partnership or any other subsidiary Person in which the Partnership has a direct or indirect interest, or jointly with any such Subsidiary or other Person; (19) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of any Person in which the Partnership as a member does not have an interest pursuant to contractual or partner.other arrangements with such Person; (b20) Notwithstanding the making, execution and delivery of any other provision and all deeds, leases, notes, deeds to secure debt, mortgages, deeds of trust, security agreements, conveyances, contracts, guarantees, warranties, indemnities, waivers, releases or legal instruments or agreements in writing necessary or appropriate in the judgment of the General Partner for the accomplishment of any of the powers of the General Partner enumerated in this Agreement; (21) the issuance of additional Partnership interests, as appropriate, in connection with the contribution of Additional Funds pursuant to Section 4.3; (22) the distribution of cash to acquire Partnership Units held by a Limited Partner in connection with a Limited Partner's exercise of its Redemption Right under Section 8.6 hereof; and (23) the amendment and restatement of Exhibit A hereto to reflect accurately at all times the Capital Contributions and Percentage Interests of the Partners as the same are adjusted from time to time to the extent necessary to reflect redemptions, Capital Contributions, the issuance of Partnership Units, the admission of any Additional Limited Partner or any Substituted Limited Partner or otherwise, which amendment and restatement, notwithstanding anything in this Agreement to the contrary, shall not be deemed an amendment to this Agreement, as long as the Operating Partnership matter or event being reflected in Exhibit A hereto otherwise is authorized by this Agreement, the Delaware Act or any applicable law, rule or regulation, each . B. Each of the Limited Partners and the Assignees and each other Person who may acquire an interest in Partnership Securities hereby (i) approves, ratifies and confirms the execution, delivery and performance by the parties thereto of the Operating Partnership Agreement, the Omnibus Agreement, the Contribution Agreement, the Distribution Agreement, and the Purchase Contract dated _________, 2004 between Penn Octane Corporation and the Operating Partnership and the other agreements described in or filed as exhibits to the Registration Statement that are related to the transactions contemplated by the Registration Statement; (ii) agrees that the General Partner (on its own or through any officer of the Partnership) is authorized to execute, deliver and perform the above-mentioned agreements referred to in clause (i) of this sentence and the other agreements, acts, transactions and matters described in or contemplated by the Registration Statement on behalf of the Partnership without any further act, approval or vote of the Partners Partners, notwithstanding any other provisions of this Agreement (except as provided in Section 7.3 or 11.2), the Assignees Act or any applicable law, rule or regulation to the fullest extent permitted under the Act or other Persons who may acquire an interest in Partnership Securities; and (iii) agrees that the applicable law, rule or regulation. The execution, delivery or performance by the General Partner, any Group Member Partner or any Affiliate the Partnership of any of them, of this Agreement or any agreement authorized or permitted under this Agreement (including the exercise by the General Partner or any Affiliate of the General Partner of the rights accorded pursuant to Article XV), shall not constitute a breach by the General Partner of any duty that the General Partner may owe the Partnership or the Limited Partners or any other Persons under this Agreement (or any other agreements) or of any duty stated or implied by law or equity. C. At all times from and after the date hereof, the General Partner may cause the Partnership to obtain and maintain (i) casualty, liability and other insurance on the properties of the Partnership and (ii) liability insurance for the Indemnities hereunder. D. At all times from and after the date hereof, the General Partner may cause the Partnership to establish and maintain working capital reserves in such amounts as the General Partner, in its sole and absolute discretion, deems appropriate and reasonable from time to time. E. In exercising its authority under this Agreement, the General Partner may, but shall be under no obligation to, take into account the tax consequences to any Partner (including the General Partner) of any action taken (or not taken) by the General Partner. The General Partner and the Partnership shall not have liability to a Partner under this Agreement as a result of an income tax liability incurred by such Limited Partner as a result of an action (or inaction) by the General Partner pursuant to its authority under this Agreement. F. Except as otherwise provided herein, to the extent the duties of the General Partner require expenditures of funds to be paid to third parties, the General Partner shall not have any obligations hereunder except to the extent that Partnership funds are reasonably available to it for the performance of such duties, and nothing herein contained shall be deemed to authorize or require the General Partner, in its capacity as such, to expend its individual funds for payment to third parties or to undertake any individual liability or obligation on behalf of the Partnership.

Management. (a) The General Partner shall conduct, direct and manage all activities of the Partnership. Except as otherwise expressly provided in this Agreement, all management powers over the business and affairs of the Partnership are and shall be exclusively vested in the General Partner, and no Limited Partner or Assignee shall have any right to participate in or exercise control or management power over the business and affairs of the Partnership. The General Partner may not be removed by the Limited Partners, with or without cause, except with the consent of the General Partner. In addition to the powers now or hereafter granted to a general partner of a limited partnership under applicable law or which are granted to the General Partner under any other provision of this Agreement, the General Partner, subject to Section 7.37.3 hereof, shall have full power and authority to do all things and on such terms as itdeemed necessary, in its sole discretion, may deem necessary desirable or appropriate convenient by it to conduct the business of the Partnership, to exercise all powers set forth in Section 2.5 3.2 hereof and to effectuate the purposes set forth in Section 2.43.1 hereof, including the followingincluding, without limitation: (i) the making of any expenditures, the lending or borrowing of moneymoney (including, without limitation, making prepayments on loans and borrowing money to permit the Partnership to make distributions to its Partners in such amounts as will permit STAG REIT (so long as STAG REIT desires to maintain its qualification as a REIT) to avoid the payment of any federal income tax (including, for this purpose, any excise tax pursuant to Section 4981 of the Code) and to make distributions to its stockholders in amounts sufficient to permit STAG REIT to maintain its qualification as a REIT), the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences evidence of indebtednessindebtedness (including the securing of the same by deed, including indebtedness that is convertible into Partnership Securitiesmortgage, deed of trust or other lien or encumbrance on the Partnership’s assets) and the incurring of any other obligationsobligations it deems necessary for the conduct of the activities of the Partnership; (ii) the making of tax, regulatory and other filingsfilings or elections, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Partnership; (iii) the acquisition, dispositionsale, mortgagelease, pledgetransfer, encumbrance, hypothecation exchange or exchange other disposition of any or all of the assets of the Partnership (including the exercise or grant of any conversion, option, privilege, or subscription right or other right available in connection with any assets at any time held by the Partnership) or the merger or other combination of the Partnership with or into another Person entity (all of the matters described in this clause (iii) being subject, however, foregoing subject to any prior approval that may be only to the extent required by Section 7.37.3 or 8.9 hereof); (iv) the mortgage, pledge, encumbrance or hypothecation of any assets of the Partnership, the use of the assets of the Partnership (including including, without limitation, cash on hand) for any purpose consistent with the terms of this AgreementAgreement and on any terms that it sees fit, including including, without limitation, the financing of the conduct of the operations of the Partnership Group; subject to Section 7.6(a)Partnership, the General Partner, STAG REIT or any of the Partnership’s, the General Partner’s or STAG REIT’s Subsidiaries, the lending of funds to other Persons (including other Group Members)including, without limitation, the Subsidiaries of the Partnership, the General Partner and/or STAG REIT) and the repayment or guarantee of obligations of the Partnership Group and its Subsidiaries and any other Person in which it has an equity investment, and the making of capital contributions to any member of the Partnership Groupits Subsidiaries; (v) the negotiation, execution execution, delivery and performance of any contracts, conveyances or other instruments (including instruments that limit the liability of General Partner considers useful or necessary or convenient to the Partnership under contractual arrangements to all or particular assets conduct of the Partnership, with ’s operations or the other party to the contract to have no recourse against implementation of the General Partner or its assets Partner’s powers under this Agreement, including, without limitation, contracting with consultants, accountants, legal counsel, other than its interest in professional advisors and other agents and the payment of their expenses and compensation out of the Partnership, even if same results in the terms of the transaction being less favorable to the Partnership than would otherwise be the case)’s assets; (vi) the distribution of Partnership cashcash or other Partnership assets in accordance with this Agreement; (vii) holding, managing, investing and reinvesting cash and other assets of the Partnership; (viii) the collection and receipt of revenues and income of the Partnership; (ix) the establishment of one or more divisions of the Partnership, the selection and dismissal of employees of the Partnership (including including, without limitation, employees having who may be designated as officers with titles such as "“president," "” “vice president," "” “secretary" ” and "“treasurer") ” of the Partnership), and agents, outside attorneys, accountants, consultants and contractors of the Partnership, and the determination of their compensation and other terms of employment or hiring; (viiix) the maintenance of such insurance for the benefit of the Partnership Group and the Partners as it deems necessary or appropriate; (ixxi) the formation of, or acquisition of an interest in, and the contribution of property and the making of loans to, any other further limited or general partnerships, joint ventureslimited liability companies, real estate investment trusts, corporations, limited liability companies entities that are treated as REITs, “taxable REIT subsidiaries” or foreign corporations for federal income tax purposes, joint ventures or other relationships that it deems desirable (including including, without limitation, the acquisition of interests in, and the contributions of property or the making of loans to, its, STAG REIT’s or the General Partner’s Subsidiaries and any Group Member other Person in which it has an equity investment from time to time) subject time or the incurrence of indebtedness on behalf of such Persons or the guarantee of obligations of such Persons and the making of any tax, regulatory or other filing or election with respect to any of the restrictions set forth foregoing Persons); provided, that as long as STAG REIT has determined to continue to qualify as a REIT, the Partnership may not engage in Section 2.4any such formation, acquisition or contribution that would cause STAG REIT to fail to qualify as a REIT; (xxii) the control of any matters affecting the rights and obligations of the Partnership, including the bringing and defending settlement, compromise, submission to arbitration or any other form of actions at law dispute resolution, or in equity and otherwise engaging in abandonment of, any claim, cause of action, liability, debt or damages, due or owing to or from the conduct Partnership, the commencement or defense of litigation suits, legal proceedings, administrative proceedings, arbitrations or other forms of dispute resolution, and the incurring representation of the Partnership in all suits or legal proceedings, administrative proceedings, arbitrations or other forms of dispute resolution, the incurrence of legal expense expense, and the settlement of claims and litigation; (xi) the indemnification of any Person against liabilities and contingencies to the extent permitted by law; (xii) the entering into of listing agreements with any National Securities Exchange and the delisting of some or all of the Limited Partner Interests from, or requesting that trading be suspended on, any such exchange (subject to any prior approval that may be required under Section 4.8); (xiii) unless restricted or prohibited by Section 5.7, the purchase, sale or other acquisition or disposition of Partnership Securities, or the issuance of additional options, rights, warrants and appreciation rights relating to Partnership Securities; and (xiv) the undertaking of any action in connection with the Partnership's participation ’s direct or indirect investment in any Subsidiary or any other Person (including, without limitation, the Operating contribution or loan of funds by the Partnership to such Persons); (xiv) except as otherwise specifically set forth in this Agreement, the determination of the fair market value of any Partnership property distributed in kind using such reasonable method of valuation as the General Partner may adopt; (xv) the enforcement of any rights against any Partner pursuant to representations, warranties, covenants and indemnities relating to such Partner’s contribution of property or assets to the Partnership; (xvi) the exercise, directly or indirectly, through any attorney-in-fact acting under a general or limited power of attorney, of any right, including the right to vote, appurtenant to any asset or investment held by the Partnership; (xvii) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of or in connection with any Subsidiary of the Partnership or any other subsidiary Person in which the Partnership has a direct or indirect interest, or jointly with any such Subsidiary or other Person; (xviii) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of any Person in which the Partnership does not have an interest pursuant to contractual or other arrangements with such Person; (xix) the making, execution, delivery and performance of any and all deeds, leases, notes, mortgages, deeds of trust, security agreements, conveyances, contracts, guarantees, warranties, indemnities, waivers, releases or legal instruments or agreements in writing necessary, appropriate or convenient, in the judgment of the General Partner, for the accomplishment of any of the powers of the General Partner enumerated in this Agreement; (xx) the issuance of additional OP Units and other partnership interests, as appropriate, in connection with Capital Contributions by Additional Limited Partners and additional Capital Contributions by Partners pursuant to Article 4 hereof; (xxi) the taking of any action necessary or appropriate to enable STAG REIT to qualify as a REIT; (xxii) the management, operation, leasing, landscaping, repair, alteration, demolition, replacement or improvement of any Property; (xxiii) an election to dissolve the Partnership pursuant to Section 13.1(c) hereof; (xxiv) the amendment and restatement of Exhibit A hereto to reflect accurately at all times the Capital Contributions and Percentage Interests of the Partners as the same are adjusted from time to time to the extent necessary to reflect redemptions, Capital Contributions, the issuance of OP Units, the admission of any Additional Limited Partner or any Substituted Limited Partner or otherwise; (xxv) the registration of any class of securities of the Partnership under the Securities Act or the Exchange Act, and the listing of any debt securities of the Partnership on any exchange; and (xxvi) the taking of any and all acts necessary or prudent to ensure that the Partnership will not be classified as a member or partner“publicly traded partnership” under Code Section 7704. (b) Notwithstanding any other provision of this Agreement, the Operating Partnership Agreement, the Delaware Act or any applicable law, rule or regulation, each Each of the Limited Partners and the Assignees and each other Person who may acquire an interest in Partnership Securities hereby (i) approves, ratifies and confirms the execution, delivery and performance by the parties thereto of the Operating Partnership Agreement, the Omnibus Agreement, the Contribution Agreement, the Distribution Agreement, and the Purchase Contract dated _________, 2004 between Penn Octane Corporation and the Operating Partnership and the other agreements described in or filed as exhibits to the Registration Statement that are related to the transactions contemplated by the Registration Statement; (ii) agrees that the General Partner (on its own or through any officer of the Partnership) is authorized to execute, deliver and perform the above-mentioned agreements referred to in clause (i) of this sentence and the other agreements, acts, transactions and matters described in or contemplated by the Registration Statement on behalf of the Partnership without any further act, approval or vote of the Partners Partners, notwithstanding any other provision of this Agreement (except as provided in Section 7.3), the Act or any applicable law, rule or regulation, to the Assignees fullest extent permitted under the Act or the other Persons who may acquire an interest in Partnership Securities; and (iii) agrees that the applicable law, rule or regulation. The execution, delivery or performance by the General Partner, any Group Member Partner or any Affiliate the Partnership of any of them, of this Agreement or any agreement authorized or permitted under this Agreement (including the exercise by the General Partner or any Affiliate of the General Partner of the rights accorded pursuant to Article XV), shall not constitute a breach by the General Partner of any duty that the General Partner may owe the Partnership or the Limited Partners or any other Persons under this Agreement (or any other agreements) or of any duty stated or implied by law or equity. (c) At all times from and after the date hereof, the General Partner may cause the Partnership to establish and maintain working capital accounts and other cash or similar balances in such amounts as the General Partner, in its sole and absolute discretion, deems appropriate and reasonable from time to time. (d) In exercising its authority under this Agreement, the General Partner may, but shall be under no obligation to, take into account the tax consequences to any Partner of any action taken by it. The General Partner and the Partnership shall not be liable to a Limited Partner under any circumstances as a result of an income tax liability incurred by such Limited Partner as a result of an action (or inaction) by the General Partner taken pursuant to its authority under this Agreement and in accordance with the terms of Section 7.3.

Management. (a) The General Partner shall conduct, direct and manage all activities of the Partnership. A. Except as otherwise expressly provided in this Agreement, all management powers over the business and affairs of the Partnership are and shall be exclusively vested in the General Partner, and no Limited Partner or Assignee shall have any right to participate in or exercise control or management power over the business and affairs of the Partnership. The General Partner may not be removed by the Limited Partners with or without cause. In addition to the powers now or hereafter granted to a general partner of a limited partnership under applicable law or which are granted to the General Partner under any other provision of this Agreement, the General Partner, subject to Section 7.37.3 hereof, shall have full power and authority to do all things and on such terms as itdeemed necessary, in its sole discretion, may deem necessary desirable or appropriate convenient by it to conduct the business of the Partnership, to exercise all powers set forth in Section 2.5 3.2 hereof and to effectuate the purposes set forth in Section 2.43.1 hereof, including the followingincluding, without limitation: (i1) the making of any expenditures, the lending or borrowing of moneymoney (including, without limitation, making prepayments on loans and borrowing money to permit the Partnership to make distributions to its Partners in such amounts as will permit the Company (so long as the Company desires to maintain its qualification as a REIT) to avoid the payment of any federal income tax (including, for this purpose, any excise tax pursuant to Section 4981 of the Code) and to make distributions to its shareholders in amounts sufficient to permit the Company to maintain its REIT status), the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences evidence of indebtednessindebtedness (including the securing of the same by deed, including indebtedness that is convertible into Partnership Securitiesmortgage, deed of trust or other lien or encumbrance on the Partnership’s assets) and the incurring of any other obligationsobligations it deems necessary for the conduct of the activities of the Partnership; (ii2) the making of tax, regulatory and other filingsfilings or elections, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Partnership; (iii3) the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or exchange of any or all of the assets of the Partnership (including the exercise or grant of any conversion, option, privilege, or subscription right or other right available in connection with any assets at any time held by the Partnership) or the merger or other combination of the Partnership with or into another Person entity (all of the matters described in this clause (iii) being subject, however, foregoing subject to any prior approval that may be only to the extent required by Section 7.37.3 hereof); (iv4) the mortgage, pledge, encumbrance or hypothecation of any assets of the Partnership, the use of the assets of the Partnership (including including, without limitation, cash on hand) for any purpose consistent with the terms of this AgreementAgreement and on any terms that it sees fit, including including, without limitation, the financing of the conduct of the operations of the Partnership Group; subject to Section 7.6(a)Partnership, the Company or any of the Partnership’s or the Company’s Subsidiaries, the lending of funds to other Persons (including other Group Members)including, without limitation, the Subsidiaries of the Partnership and/or the Company) and the repayment or guarantee of obligations of the Partnership Group and its Subsidiaries and any other Person in which it has an equity investment, and the making of capital contributions to any member of the Partnership Groupits Subsidiaries; (v5) the management, operation, leasing, landscaping, repair, alteration, demolition, disposition or improvement of any real property or improvements owned by the Partnership or any Subsidiary of the Partnership; (6) the negotiation, execution execution, delivery and performance of any contracts, conveyances or other instruments (including instruments that limit the liability of General Partner considers useful or necessary or convenient to the Partnership under contractual arrangements to all or particular assets conduct of the Partnership, with ’s operations or the other party to the contract to have no recourse against implementation of the General Partner or its assets Partner’s powers under this Agreement, including, without limitation, contracting with consultants, accountants, legal counsel, other than its interest in professional advisors and other agents and the payment of their expenses and compensation out of the Partnership, even if same results in the terms of the transaction being less favorable to the Partnership than would otherwise be the case)’s assets; (vi7) the distribution of Partnership cashcash or other Partnership assets in accordance with this Agreement; (vii8) holding, managing, investing and reinvesting cash and other assets of the Partnership; (9) the collection and receipt of revenues and income of the Partnership; (10) the establishment of one or more divisions of the Partnership, the selection and dismissal of employees of the Partnership (including including, without limitation, employees having who may be designated as officers with titles such as "“president," "” “vice president," "” “secretary" ” and "“treasurer") ” of the Partnership), and agents, outside attorneys, accountants, consultants and contractors of the Partnership, and the determination of their compensation and other terms of employment or hiring; (viii11) the maintenance of such insurance for the benefit of the Partnership Group and the Partners as it deems necessary or appropriate; (ix12) the formation of, or acquisition of an interest in, and the contribution of property and the making of loans to, any other further limited or general partnerships, joint ventureslimited liability companies, real estate investment trusts, corporations, limited liability companies entities that are treated as REITs, “taxable REIT subsidiaries” or as foreign corporations for federal income tax purposes, joint ventures or other relationships that it deems desirable (including including, without limitation, the acquisition of interests in, and the contributions of property or the making of loans to, its or the Company’s Subsidiaries and any Group Member other Person in which it has an equity investment from time to time) subject time or the incurrence of indebtedness on behalf of such Persons or the guarantee of obligations of such Persons and the making of any tax, regulatory or other filing or election with respect to any of the restrictions set forth foregoing Persons); provided, that as long as the Company has determined to continue to qualify as a REIT, the Partnership may not engage in Section 2.4any such formation, acquisition or contribution that would cause the Company to fail to qualify as a REIT; (x13) the control of any matters affecting the rights and obligations of the Partnership, including the bringing and defending settlement, compromise, submission to arbitration or any other form of actions at law dispute resolution, or in equity and otherwise engaging in abandonment of, any claim, cause of action, liability, debt or damages, due or owing to or from the conduct Partnership, the commencement or defense of litigation suits, legal proceedings, administrative proceedings, arbitrations or other forms of dispute resolution, and the incurring representation of the Partnership in all suits or legal proceedings, administrative proceedings, arbitrations or other forms of dispute resolution, the incurrence of legal expense expense, and the settlement of claims and litigation; (xi) the indemnification of any Person against liabilities and contingencies to the extent permitted by law; (xii) the entering into of listing agreements with any National Securities Exchange and the delisting of some or all of the Limited Partner Interests from, or requesting that trading be suspended on, any such exchange (subject to any prior approval that may be required under Section 4.8); (xiii) unless restricted or prohibited by Section 5.7, the purchase, sale or other acquisition or disposition of Partnership Securities, or the issuance of additional options, rights, warrants and appreciation rights relating to Partnership Securities; and (xiv14) the undertaking of any action in connection with the Partnership's participation ’s direct or indirect investment in any Subsidiary or any other Person (including, without limitation, the Operating contribution or loan of funds by the Partnership to such Persons); (15) the determination of the fair market value of any Partnership property distributed in kind using such reasonable method of valuation as the General Partner may adopt; (16) the enforcement of any rights against any Partner pursuant to representations, warranties, covenants and indemnities relating to such Partner’s contribution of property or assets to the Partnership; (17) the exercise, directly or indirectly, through any attorney-in-fact acting under a general or limited power of attorney, of any right, including the right to vote, appurtenant to any asset or investment held by the Partnership; (18) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of or in connection with any Subsidiary of the Partnership or any other subsidiary Person in which the Partnership has a direct or indirect interest, or jointly with any such Subsidiary or other Person; (19) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of any Person in which the Partnership as a member does not have an interest pursuant to contractual or partner.other arrangements with such Person; (b20) Notwithstanding any other provision of this Agreementthe making, the Operating Partnership Agreement, the Delaware Act or any applicable law, rule or regulation, each of the Partners and the Assignees and each other Person who may acquire an interest in Partnership Securities hereby (i) approves, ratifies and confirms the execution, delivery and performance by of any and all deeds, leases, notes, mortgages, deeds of trust, security agreements, conveyances, contracts, guarantees, warranties, indemnities, waivers, releases or legal instruments or agreements in writing necessary, appropriate or convenient, in the parties thereto judgment of the Operating General Partner, for the accomplishment of any of the powers of the General Partner enumerated in this Agreement; (21) the issuance of additional Partnership AgreementUnits and other partnership interests, as appropriate, in connection with Capital Contributions by Additional Limited Partners and additional Capital Contributions by Partners pursuant to Article 4 hereof; and (22) the Omnibus Agreement, taking of any action necessary or appropriate to enable the Contribution Agreement, Company to qualify as a REIT. B. Each of the Distribution Agreement, and the Purchase Contract dated _________, 2004 between Penn Octane Corporation and the Operating Partnership and the other agreements described in or filed as exhibits to the Registration Statement that are related to the transactions contemplated by the Registration Statement; (ii) Limited Partners agrees that the General Partner (on its own or through any officer of the Partnership) is authorized to execute, deliver and perform the above-mentioned agreements referred to in clause (i) of this sentence and the other agreements, acts, transactions and matters described in or contemplated by the Registration Statement on behalf of the Partnership without any further act, approval or vote of the Partners Partners, notwithstanding any other provision of this Agreement (except as provided in Section 7.3), the Act or any applicable law, rule or regulation, to the Assignees fullest extent permitted under the Act or the other Persons who may acquire an interest in Partnership Securities; and (iii) agrees that the applicable law, rule or regulation. The execution, delivery or performance by the General Partner, any Group Member Partner or any Affiliate the Partnership of any of them, of this Agreement or any agreement authorized or permitted under this Agreement (including the exercise by the General Partner or any Affiliate of the General Partner of the rights accorded pursuant to Article XV), shall not constitute a breach by the General Partner of any duty that the General Partner may owe the Partnership or the Limited Partners or any other Persons under this Agreement (or any other agreements) or of any duty stated or implied by law or equity. C. At all times from and after the date hereof, the General Partner may cause the Partnership to establish and maintain at any and all times working capital accounts and other cash or similar balances in such amounts as the General Partner, in its sole and absolute discretion, deems appropriate and reasonable from time to time. D. In exercising its authority under this Agreement, the General Partner may, but shall be under no obligation to, take into account the tax consequences to any Partner of any action taken by it. The General Partner and the Partnership shall not be liable to a Limited Partner under any circumstances as a result of an income tax liability incurred by such Limited Partner as a result of an action (or inaction) by the General Partner taken pursuant to its authority under this Agreement and in accordance with the terms of Section 7.3.

Management. (a) The General Partner shall conduct, direct and manage all activities of the Partnership. 7.1.1 Except as otherwise expressly provided in this Agreement, all management powers over the business and affairs of the Partnership are and shall be exclusively vested in the General Partner, and no Limited Partner or Assignee shall have any right to participate in or exercise control or management power over the business and affairs of the Partnership. The General Partner may not be removed by the Partners with or without cause, except with the consent of the General Partner. In addition to the powers now or hereafter granted to a general partner of a limited partnership under applicable law or which that are granted to the General Partner under any other provision of this Agreement, the General Partner, subject to Section 7.3the other provisions hereof, shall have full power and authority to do all things and on such terms as it, in its sole discretion, may deem deemed necessary or appropriate desirable by it to conduct the business of the Partnership, to exercise all powers set forth in Section 2.5 3.2 hereof and to effectuate the purposes set forth in Section 2.43.1 hereof, including the followingincluding, without limitation: (ia) the making of any expenditures, the lending or borrowing of moneymoney (including making prepayments on loans and borrowing money or selling assets to permit the Partnership to make distributions to its Partners in such amounts as will permit the General Partner (so long as the General Partner desires to maintain or restore its status as a REIT) to avoid the payment of any federal income tax (including, for this purpose, any excise tax pursuant to Code Section 4981) and to make distributions sufficient to permit the General Partner to maintain or restore REIT status or otherwise to satisfy the REIT Requirements), the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtednessindebtedness (including the securing of same by deed to secure debt, including indebtedness that is convertible into Partnership Securitiesmortgage, deed of trust or other lien or encumbrance on the Partnership’s assets) and the incurring of any other obligationsobligations that it deems necessary for the conduct of the activities of the Partnership; (iib) the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Partnership; (iiic) the acquisition, dispositionsale, mortgagelease, pledgetransfer, encumbranceexchange or other disposition of any, hypothecation all or exchange of any or substantially all of the assets of the Partnership (including, but not limited to, the exercise or grant of any conversion, option, privilege or subscription right or any other right available in connection with any assets at any time held by the merger Partnership) or, subject to Section 8.6, the merger, consolidation, reorganization or other combination of the Partnership with or into another Person (the matters described in this clause (iii) being subject, however, to any prior approval that may be required by Section 7.3)entity; (ivd) the mortgage, pledge, encumbrance or hypothecation of any assets of the Partnership, the use of the assets of the Partnership (including cash on hand) for any purpose consistent with the terms of this AgreementAgreement and on any terms that it sees fit, including the financing of the conduct operations and activities of the operations General Partner, the Partnership or any of the Partnership Group; subject to Section 7.6(a)Partnership’s Subsidiaries, the lending of funds to other Persons (including other Group Members), the Partnership’s Subsidiaries) and the repayment or guarantee of obligations of the Partnership, its Subsidiaries and any other Person in which the Partnership Group has an equity investment, and the making of capital contributions to and equity investments in the Partnership’s Subsidiaries; (e) the management, operation, leasing, landscaping, repair, alteration, demolition, replacement or improvement of any member Property, including any Contributed Property, or other asset of the Partnership Groupor any Subsidiary, whether pursuant to a Services Agreement or otherwise; (vf) the negotiation, execution and performance of any contracts, leases, conveyances or other instruments (including instruments that limit the liability General Partner considers useful or necessary to the conduct of the Partnership’s operations or the implementation of the General Partner’s powers under this Agreement, including contracting with contractors, developers, consultants, accountants, legal counsel, the Advisor’s other professional advisors and other agents and the payment of their expenses and compensation out of the Partnership’s assets; provided, however, that the Advisory Agreement must contain a provision (the “Voting Direction Provision”) that requires the Advisor to vote the shares of Proportionate Voting Preferred Stock in proportion to the votes (the “LP Direction Votes”) that the Advisor receives from the holders of Partnership under contractual arrangements Units (other than the General Partner), that are issued pursuant to all the Master Agreement or particular pursuant to any option delivered pursuant thereto or in connection with the consummation of the transactions contemplated thereby. The Advisor shall not cast any votes with respect to the share of Proportionate Voting Preferred Stock unless it receives LP Direction Votes with respect thereto. (g) the distribution of Partnership cash or other Partnership assets in accordance with this Agreement, the holding, management, investment and reinvestment of cash and other assets of the Partnership, with and the other party to the contract to have no recourse against the General Partner or its assets other than its interest in collection and receipt of revenues, rents and income of the Partnership, even if same results in the terms of the transaction being less favorable to the Partnership than would otherwise be the case); (vi) the distribution of Partnership cash; (vii) the selection and dismissal of employees (including employees having titles such as "president," "vice president," "secretary" and "treasurer") and agents, outside attorneys, accountants, consultants and contractors and the determination of their compensation and other terms of employment or hiring; (viiih) the maintenance of such insurance for the benefit of the Partnership Group and the Partners as it deems necessary or appropriate, including (i) casualty, liability and other insurance on the Properties and (ii) liability insurance for the Indemnitees hereunder; (ixi) the formation of, or acquisition of an interest in, and the contribution of property and the making of loans to, any other further limited or general partnerships, joint ventures, corporations, limited liability companies companies, joint ventures or other relationships that it deems desirable (including the acquisition of interests in, and the contributions of property to, any Group Member Subsidiary and any other Person in which it has an equity investment from time to time) subject to the restrictions set forth in Section 2.4); (xj) the control of any matters affecting the rights and obligations of the Partnership, including the bringing settlement, compromise, submission to arbitration or any other form of dispute resolution, or abandonment, of any claim, cause of action, liability, debt or damages, due or owing to or from the Partnership, the commencement or defense of suits, legal proceedings, administrative proceedings, arbitrations or other forms of dispute resolution, and defending the representation of actions at law the Partnership in all suits or in equity and otherwise engaging in the conduct legal proceedings, administrative proceedings, arbitrations or other forms of litigation and dispute resolution, the incurring of legal expense expense, and the settlement of claims and litigation; (xi) the indemnification of any Person against liabilities and contingencies to the extent permitted by law; (xii) the entering into of listing agreements with any National Securities Exchange and the delisting of some or all of the Limited Partner Interests from, or requesting that trading be suspended on, any such exchange (subject to any prior approval that may be required under Section 4.8); (xiii) unless restricted or prohibited by Section 5.7, the purchase, sale or other acquisition or disposition of Partnership Securities, or the issuance of additional options, rights, warrants and appreciation rights relating to Partnership Securities; and (xivk) the undertaking of any action in connection with the Partnership's participation ’s direct or indirect investment in any Subsidiary or any other Person (including the Operating contribution of Property or contribution or loan of funds by the Partnership to such Persons); (l) except as otherwise specifically set forth in this Agreement, the determination of the fair market value of any Partnership property distributed in kind using such method of valuation as it may reasonably adopt as long as such method is otherwise consistent with the requirements of this Agreement; (m) the enforcement of any rights against any Partner pursuant to representations, warranties, covenants and indemnities relating to such Partner’s contribution of property or assets to the Partnership; (n) the exercise, directly or indirectly, through any attorney-in-fact acting under a general or limited power of attorney, of any right, including the right to vote, appurtenant to any asset or investment held by the Partnership; (o) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of or in connection with any Subsidiary of the Partnership or any other subsidiary Person in which the Partnership has a direct or indirect interest, or jointly with any such Subsidiary or other Person; (p) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of any Person in which the Partnership does not have an interest, pursuant to contractual or other arrangements with such Person; (q) the making, execution and delivery of any and all deeds, leases, notes, deeds to secure debt, mortgages, deeds of trust, security agreements, conveyances, contracts, guarantees, warranties, indemnities, waivers, releases or legal instruments or agreements in writing necessary or appropriate in the judgment of the General Partner for the accomplishment of any of the powers of the General Partner enumerated in this Agreement; (r) the issuance of additional Partnership Units, as appropriate and in the General Partner’s sole and absolute discretion, in connection with Capital Contributions by Additional Limited Partners and additional Capital Contributions by Partners pursuant to Section 4 hereof; (s) the selection and dismissal of Partnership Employees (including employees having titles or offices such as president, vice president, secretary and treasurer), and agents, outside attorneys, accountants, consultants and contractors of the Partnership as a member or partner. (b) Notwithstanding the General Partner, the determination of their compensation and other terms of employment or hiring and the delegation to any other provision such Partnership Employee the authority to conduct the business of the Partnership in accordance with the terms of this Agreement; and (t) an election to dissolve the Partnership pursuant to Section 13.1.2 hereof. 7.1.2 Except as provided in Section 14.2 hereof, the Operating Partnership Agreement, the Delaware Act or any applicable law, rule or regulation, each of the Partners and the Assignees and each other Person who may acquire an interest in Partnership Securities hereby (i) approves, ratifies and confirms the execution, delivery and performance by the parties thereto of the Operating Partnership Agreement, the Omnibus Agreement, the Contribution Agreement, the Distribution Agreement, and the Purchase Contract dated _________, 2004 between Penn Octane Corporation and the Operating Partnership and the other agreements described in or filed as exhibits to the Registration Statement that are related to the transactions contemplated by the Registration Statement; (ii) agrees that the General Partner (on its own or through any officer of the Partnership) is authorized to execute, deliver and perform the above-mentioned agreements referred to in clause (i) of this sentence and the other agreements, acts, transactions and matters described in or contemplated by the Registration Statement on behalf of the Partnership without any further act, approval or vote of the Partners Partners, notwithstanding any other provision of this Agreement, the Act or the Assignees any applicable law, rule or the other Persons who may acquire an interest in Partnership Securities; and (iii) agrees that the regulation. The execution, delivery or performance by the General Partner, any Group Member Partner or any Affiliate the Partnership of any of them, of this Agreement or any agreement authorized or permitted under this Agreement (including the exercise by the General Partner or any Affiliate of the General Partner of the rights accorded pursuant to Article XV), shall not constitute a breach by the General Partner of any duty that the General Partner may owe the Partnership or the Limited Partners or any other Persons under this Agreement (or any other agreements) or of any duty stated or implied by law or equity. 7.1.3 At all times from and after the date hereof, the General Partner may cause the Partnership to establish and maintain working capital and other reserves in such amounts as the General Partner, in its sole and absolute discretion, deems appropriate and reasonable from time to time. 7.1.4 In exercising its authority under this Agreement, the General Partner may, but shall be under no obligation to, take into account the tax consequences to any Partner (including the General Partner) of any action taken by it. The General Partner and the Partnership shall not have liability to a Limited Partner under any circumstances as a result of an income tax liability incurred by such Limited Partner as a result of an action (or inaction) by the General Partner pursuant to its authority under this Agreement. 7.1.5 The General Partner may not take any action in contravention of this Agreement, including, without limitation: (a) taking any action that would make it impossible to carry on the ordinary business of the Partnership, except as otherwise provided in this Agreement; (b) possessing Property, or assigning any rights in specific Property, for other than a Partnership purpose except as otherwise provided in this Agreement, including Section 7.9; (c) admitting a Person as a Partner, except as otherwise provided in this Agreement; (d) performing any act that would subject a Limited Partner to liability as a general partner in any jurisdiction or any other liability except as otherwise provided in this Agreement or under the Act; or (e) entering into any contract, mortgage, loan or other agreement that prohibits or restricts the ability of (a) the General Partner or the Partnership from satisfying its obligations under Section 8.5 hereof in full or (b) a Limited Partner from exercising its rights under Section 8.5 hereof to effect a Redemption in full, except, in either case, with the written consent of such Limited Partner adversely affected by the prohibition or restriction.

Management. (a) The General Partner shall conduct, direct and manage all activities of the Partnership. A. Except as otherwise expressly provided in this Agreement, all management powers over the business and affairs of the Partnership are and shall be exclusively vested in the General Partner, and no Limited Partner or Assignee shall have any right to participate in or exercise control or management power over the business and affairs of the Partnership. The General Partner may not be removed by the Limited Partners with or without cause. In addition to the powers now or hereafter granted a general partner of a limited partnership under applicable law or which are granted to the General Partner under any other provision of this Agreement, the General Partner, subject to Section 7.3, Partner shall have full power and authority to do all things and on such terms as it, in its sole discretion, may deem deemed necessary or appropriate desirable by it to conduct the business of the Partnership, to exercise all powers set forth in Section 2.5 3.2 hereof, and to effectuate the purposes set forth in Section 2.43.1 hereof, including the followingincluding, without limitation: (ia) the making of any expenditures, the lending or borrowing of money, including, without limitation, making prepayments on loans and borrowing money to permit the Partnership to make distributions to its Partners in such amounts as will enable the General Partner to make distributions to Kramont OP sufficient to permit Kramont OP to make distributions to the Company sufficient to permit the Company (so long as the Company qualifies as a REIT) to avoid the payment of any Federal income tax (including, for this purpose, any excise tax pursuant to section 4981 of the Code) and to make distributions to its shareholders in amounts sufficient to permit the Company to maintain REIT status, (b) the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, (c) the issuance of evidences of indebtednessindebtedness (including the securing of the same by deed, including indebtedness that is convertible into Partnership Securitiesmortgage, and deed of trust, or other lien or encumbrance on the Partnership's assets), (d) the incurring of any other obligationsobligations it deems necessary for the conduct of the activities of the Partnership, and (e) the execution and delivery, on the Partnership's behalf, of evidences of indebtedness and documents granting security for the payment thereof (with or without warrant of attorney to confess judgment against the Partnership upon default) and, without limiting the generality of the foregoing, the granting of a warrant of attorney to confess judgment against the Partnership; (ii2) the making of tax, regulatory regulatory, and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Partnership; (iii3) the acquisition, disposition, transfer, mortgage, pledge, encumbrance, hypothecation hypothecation, or exchange of any or all of the assets of the Partnership (including the exercise or grant of any conversion, option, privilege, or subscription right or other right available in connection with any assets at any time held by the Partnership), or the merger or other combination or conversion of the Partnership with or into another entity; provided that (a) no disposition of an interest in a property listed on Exhibit E (whether by disposition of such property or by disposition of the Partnership's interest in an Entity owning such property) may be made prior to the date listed with respect to such property on Exhibit E (but only to the extent the Person identified with reference to the property on Exhibit E is a Limited Partner hereunder), without the consent of each individual listed with respect to such property on Exhibit E (b) (x) prior to August 1, 2000, except with the matters consent or at the request of Meshon and ▇▇▇▇ ▇▇▇▇▇ (but only to the extent each is a Limited Partner hereunder), in the case of the Woodbourne Square Shopping Center shopping center, (y) prior to August 1, 1998, except with the consent or at the request of Meshon, in the case of the Rio Grande Plaza shopping center, or (z) prior to July 31, 2002, except with the consent or at the request of Meshon and ▇▇▇▇ ▇▇▇▇▇ (but only to the extent each is a Limited Partner hereunder), in the case of the Chesterbrook Shopping Center Plaza shopping center, or, notwithstanding clauses (x), (y),and (z), except as required under the Master Agreement, the Partnership shall take no action (other than making capital improvements to the property involved, causing a sale not otherwise prohibited hereunder of the property involved or the Partnership's interest therein, making the principal amortization payments scheduled under the respective loan documents in effect on the date hereof, or issuing additional Partnership Interests under Section 4.3) which, of itself, would cause a reduction in the share of Meshon or ▇▇▇▇ ▇▇▇▇▇, (but only to the extent each is a Limited Partner hereunder) of the liabilities to which the Rio Grande Plaza, Woodbourne Square Shopping Center and Chesterbrook Shopping Center Plaza shopping centers are subject, if such reduction would, of itself, cause a realization or recognition of income to Meshon or ▇▇▇▇ ▇▇▇▇▇ (to the extent a party hereto); provided that the consent of any individual described in this clause (iiiSection 7.1A(3) being subject, however, to any prior approval that may shall not be required by Section 7.3)after such individual's death; (iv) the use of the assets of the Partnership (including cash on hand) for any purpose consistent with the terms of this Agreement, including the financing of the conduct of the operations of the Partnership Group; subject to Section 7.6(a), the lending of funds to other Persons (including other Group Members), the repayment or guarantee of obligations of the Partnership Group and the making of capital contributions to any member of the Partnership Group; (v) the negotiation, execution and performance of any contracts, conveyances or other instruments (including instruments that limit the liability of the Partnership under contractual arrangements to all or particular assets of the Partnership, with the other party to the contract to have no recourse against the General Partner or its assets other than its interest in the Partnership, even if same results in the terms of the transaction being less favorable to the Partnership than would otherwise be the case); (vi) the distribution of Partnership cash; (vii) the selection and dismissal of employees (including employees having titles such as "president," "vice president," "secretary" and "treasurer") and agents, outside attorneys, accountants, consultants and contractors and the determination of their compensation and other terms of employment or hiring; (viii) the maintenance of such insurance for the benefit of the Partnership Group and the Partners as it deems necessary or appropriate; (ix) the formation of, or acquisition of an interest in, and the contribution of property and the making of loans to, any other limited or general partnerships, joint ventures, corporations, limited liability companies or other relationships (including the acquisition of interests in, and the contributions of property to, any Group Member from time to time) subject to the restrictions set forth in Section 2.4; (x) the control of any matters affecting the rights and obligations of the Partnership, including the bringing and defending of actions at law or in equity and otherwise engaging in the conduct of litigation and the incurring of legal expense and the settlement of claims and litigation; (xi) the indemnification of any Person against liabilities and contingencies to the extent permitted by law; (xii) the entering into of listing agreements with any National Securities Exchange and the delisting of some or all of the Limited Partner Interests from, or requesting that trading be suspended on, any such exchange (subject to any prior approval that may be required under Section 4.8); (xiii) unless restricted or prohibited by Section 5.7, the purchase, sale or other acquisition or disposition of Partnership Securities, or the issuance of additional options, rights, warrants and appreciation rights relating to Partnership Securities; and (xiv) the undertaking of any action in connection with the Partnership's participation in the Operating Partnership or any other subsidiary of the Partnership as a member or partner. (b) Notwithstanding any other provision of this Agreement, the Operating Partnership Agreement, the Delaware Act or any applicable law, rule or regulation, each of the Partners and the Assignees and each other Person who may acquire an interest in Partnership Securities hereby (i) approves, ratifies and confirms the execution, delivery and performance by the parties thereto of the Operating Partnership Agreement, the Omnibus Agreement, the Contribution Agreement, the Distribution Agreement, and the Purchase Contract dated _________, 2004 between Penn Octane Corporation and the Operating Partnership and the other agreements described in or filed as exhibits to the Registration Statement that are related to the transactions contemplated by the Registration Statement; (ii) agrees that the General Partner (on its own or through any officer of the Partnership) is authorized to execute, deliver and perform the agreements referred to in clause (i) of this sentence and the other agreements, acts, transactions and matters described in or contemplated by the Registration Statement on behalf of the Partnership without any further act, approval or vote of the Partners or the Assignees or the other Persons who may acquire an interest in Partnership Securities; and (iii) agrees that the execution, delivery or performance by the General Partner, any Group Member or any Affiliate of any of them, of this Agreement or any agreement authorized or permitted under this Agreement (including the exercise by the General Partner or any Affiliate of the General Partner of the rights accorded pursuant to Article XV), shall not constitute a breach by the General Partner of any duty that the General Partner may owe the Partnership or the Limited Partners or any other Persons under this Agreement (or any other agreements) or of any duty stated or implied by law or equity.

Management. (a) The Management by the General Partner shall conduct, direct and manage all activities of the PartnershipPartner. Except as otherwise expressly provided in this Agreement, all management powers over full, complete and exclusive discretion to manage and control the business and affairs of the Partnership are and shall be exclusively vested in the General Partner, and no Limited Partner or Assignee shall have any right to participate in or exercise control or management power over the business and affairs of the Partnership. The General Partner may not be removed by the Limited Partners with or without cause. (b) Power and Authority of the General Partner. In addition to the powers now or hereafter granted a general partner of a limited partnership under applicable law or which are granted to the General Partner under any other provision of this Agreement, the General Partner, subject to Section 7.3, Partner shall have full power and authority to do all things and on such terms as it, in its sole discretion, may deem deemed necessary or appropriate desirable by it to conduct the business of the Partnership, to exercise all powers set forth in Section 2.5 3.2 hereof and to effectuate the purposes set forth in Section 2.43.1 hereof, including the followingincluding, without limitation: (i) (A) the making of any expenditures, the lending or borrowing of moneymoney (including, without limitation, making prepayments on loans and borrowing money to permit the Partnership to make distributions to its Partners in such amounts as will permit the General Partner (so long as the General Partner qualifies as a REIT) to (1) avoid the payment of any Federal income or excise tax (including any excise tax pursuant to Section 4981 of the Code) and (2) make distributions to its stockholders in amounts sufficient to permit the General Partner to maintain REIT status), (B) the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, (C) the issuance of evidences any evidence of indebtednessindebtedness (including the securing of the same by deed, including indebtedness that is convertible into Partnership Securitiesmortgage, deed of trust or other lien or encumbrance on the Partnership’s assets), and (D) the incurring of any other obligationsobligations it deems necessary for the conduct of the activities of the Partnership, including the payment of all expenses associated with the General Partner; (iii) the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the PartnershipPartnership or the General Partner; (iiiii) the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or exchange of any or all of the assets assets, including Real Estate Assets, of the Partnership (including the exercise or grant of any conversion, option, privilege, or subscription right or other right available in connection with any assets at any time held by the Partnership) or the merger or other combination of the Partnership with or into another Person (entity on such terms as the matters described in this clause (iii) being subject, however, to any prior approval that may be required by Section 7.3)General Partner deems proper; (iviii) the use of the assets of the Partnership (including including, without limitation, cash on hand) for any purpose consistent with the terms of this AgreementAgreement and on any terms the General Partner sees fit, including including, without limitation, (A) the financing of the conduct of the operations of the General Partner, the Partnership Group; subject to Section 7.6(a), or any of the Partnership’s Subsidiaries, (B) the lending of funds to other Persons (including other Group Members)including, without limitation, the Subsidiaries of the Partnership and/or the General Partner) and the repayment or guarantee of obligations of the Partnership Group and its Subsidiaries and any other Person in which it has an equity investment, and (C) the making of capital contributions to the Partnership’s Subsidiaries; (iv) the development, expansion, construction, management, operation, leasing, repair, alteration, demolition or improvement of any member real property in which the Partnership or any Subsidiary of the Partnership Groupowns a direct or indirect interest; (v) the negotiation, execution execution, and performance of any contracts, conveyances or other instruments (including instruments that limit the liability of General Partner considers useful or necessary to the Partnership under contractual arrangements to all or particular assets conduct of the Partnership, with ’s operations or the other party to the contract to have no recourse against implementation of the General Partner or its assets Partner’s powers under this Agreement, including contracting with contractors, developers, consultants, accountants, legal counsel, other than its interest in professional advisors and other agents and the payment of their expenses and compensation out of the Partnership, even if same results in the terms of the transaction being less favorable to the Partnership than would otherwise be the case)’s assets; (vi) the distribution of Partnership cashcash or other Partnership assets in accordance with this Agreement; (vii) the holding, management, investment and reinvestment of cash and other assets of the Partnership; (viii) the collection and receipt of revenues and income of the Partnership; (ix) the establishment of one or more divisions of the Partnership, the selection and dismissal of employees of the Partnership (including including, without limitation, employees having titles such as "“president," "” “vice president," "” “secretary" ” and "“treasurer") ” of the Partnership), and agents, outside attorneys, accountants, consultants and contractors of the Partnership, and the determination of their compensation and other terms of employment or hiringengagement; (viii) the maintenance of such insurance for the benefit of the Partnership Group and the Partners as it deems necessary or appropriate; (ixx) the formation of, or acquisition of an interest (including non-voting interests in entities controlled by Affiliates of the Partnership or third parties) in, and the contribution of property and the making of loans to, any other limited or general partnershipsEntities that the General Partner deems desirable (including, joint ventureswithout limitation, corporations, limited liability companies or other relationships (including the acquisition of interests in, and the contributions of funds or property to, or making of loans to, Subsidiaries of the Partnership and any Group Member other Person from time to time) subject ), or the incurrence of indebtedness on behalf of such Persons or the guarantee of the obligations of such Persons; provided that, as long as the General Partner has determined to elect to qualify as a REIT or to continue to qualify as a REIT, the restrictions set forth Partnership may not engage in Section 2.4any such formation, acquisition or contribution that would cause the General Partner to fail to qualify as a REIT; (xxi) the control of any matters affecting the rights and obligations of the Partnership, including including: (A) the bringing and defending settlement, compromise, submission to arbitration or any other form of actions at law dispute resolution, or abandonment of, any claim, cause of action, liability, debt or damages, due or owing to or from the Partnership, (B) the commencement or defense of suits, legal proceedings, administrative proceedings, arbitration or other forms of dispute resolution, and (C) the representation of the Partnership in equity and otherwise engaging in the conduct all suits or legal proceedings, administrative proceedings, arbitrations or other forms of litigation and dispute resolution, the incurring of legal expense expenses, and the settlement of claims and litigation; (xi) the indemnification of any Person against liabilities and contingencies to the extent permitted by law; (xii) the entering into of listing agreements with any National Securities Exchange and the delisting of some or all of the Limited Partner Interests from, or requesting that trading be suspended on, any such exchange (subject to any prior approval that may be required under Section 4.8); (xiii) unless restricted or prohibited by Section 5.7, the purchase, sale or other acquisition or disposition of Partnership Securities, or the issuance of additional options, rights, warrants and appreciation rights relating to Partnership Securities; and (xiv) the undertaking of any action in connection with the Partnership's participation ’s direct or indirect investment in its Subsidiaries or any other Person (including, without limitation, the Operating contribution or loan of funds by the Partnership to such Persons); (xiii) the determination of the fair market value of any Partnership Assets distributed in kind using such reasonable method of valuation as the General Partner, in its sole discretion, may adopt; (xiv) the exercise, directly or indirectly, through any attorney-in-fact acting under a general or limited power of attorney, of any right, including the right to vote, appurtenant to any asset or investment held by the Partnership; (xv) the exercise of any of the powers of the General Partner enumerated in this Agreement or the undertaking of any action on behalf of or in connection with any Subsidiary of the Partnership or any other subsidiary Person in which the Partnership has a direct or indirect interest, or jointly with any such Subsidiary or other Person; (xvi) the making, execution and delivery of any and all deeds, leases, notes, mortgages, deeds of trust, security agreements, conveyances, contracts, guarantees, warranties, indemnities, waivers, releases or legal instruments or agreements in writing necessary or appropriate, in the judgment of the Partnership as a member or partner.General Partner, for the accomplishment of any of the foregoing; (bxvii) Notwithstanding the issuance of additional Partnership Interests in connection with Capital Contributions by Additional Limited Partners and additional Capital Contributions by Partners pursuant to Article 4 hereof; (xviii) the opening of bank accounts on behalf of, and in the name of, the Partnership and its Subsidiaries; and (xix) the amendment and restatement of Exhibit A to reflect accurately at all times the Capital Contributions of, Partnership Units held by and Percentage Interests of the Partners as the same are adjusted from time to time to the extent necessary to reflect any other provision Capital Contributions, redemptions, issuance of Partnership Units, admission of any Additional Limited Partner or any Substituted Limited Partner or otherwise, which amendment and restatement, notwithstanding anything in this Agreement to the contrary, shall not be deemed an amendment of this Agreement, as long as the Operating Partnership Agreement, the Delaware Act matter or any applicable law, rule or regulation, each of the Partners and the Assignees and each other Person who may acquire an interest event being reflected in Partnership Securities hereby (i) approves, ratifies and confirms the execution, delivery and performance by the parties thereto of the Operating Partnership Agreement, the Omnibus Agreement, the Contribution Agreement, the Distribution Agreement, and the Purchase Contract dated _________, 2004 between Penn Octane Corporation and the Operating Partnership and the other agreements described in or filed as exhibits to the Registration Statement that are related to the transactions contemplated by the Registration Statement; (ii) agrees that the General Partner (on its own or through any officer of the Partnership) Exhibit A otherwise is authorized to execute, deliver and perform the agreements referred to in clause (i) of by this sentence and the other agreements, acts, transactions and matters described in or contemplated by the Registration Statement on behalf of the Partnership without any further act, approval or vote of the Partners or the Assignees or the other Persons who may acquire an interest in Partnership Securities; and (iii) agrees that the execution, delivery or performance by the General Partner, any Group Member or any Affiliate of any of them, of this Agreement or any agreement authorized or permitted under this Agreement (including the exercise by the General Partner or any Affiliate of the General Partner of the rights accorded pursuant to Article XV), shall not constitute a breach by the General Partner of any duty that the General Partner may owe the Partnership or the Limited Partners or any other Persons under this Agreement (or any other agreements) or of any duty stated or implied by law or equityAgreement.

Management. (a) The General Partner shall conduct, direct and manage all activities of the Partnership. 7.1.1 Except as otherwise expressly provided in this Agreement, all management powers over the business and affairs of the Partnership are and shall be exclusively vested in the General Partner, and no Limited Partner or Assignee shall have any right to participate in or exercise control or management power over the business and affairs of the Partnership. The General Partner may not be removed by the Partners with or without cause, except with the consent of the General Partner. In addition to the powers now or hereafter granted to a general partner of a limited partnership under applicable law or which that are granted to the General Partner under any other provision of this Agreement, the General Partner, subject to Section 7.3the other provisions hereof, shall have full power and authority to do all things and on such terms as it, in its sole discretion, may deem deemed necessary or appropriate desirable by it to conduct the business of the Partnership, to exercise all powers set forth in Section 2.5 3.2 hereof and to effectuate the purposes set forth in Section 2.43.1 hereof, including the followingincluding, without limitation: (ia) the making of any expenditures, the lending or borrowing of moneymoney (including making prepayments on loans and borrowing money or selling assets to permit the Partnership to make distributions to its Partners in such amounts as will permit the General Partner (so long as the General Partner desires to maintain or restore its status as a REIT) to avoid the payment of any federal income tax (including, for this purpose, any excise tax pursuant to Code Section 4981) and to make distributions sufficient to permit the General Partner to maintain or restore REIT status or otherwise to satisfy the REIT Requirements), the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtednessindebtedness (including the securing of same by deed to secure debt, including indebtedness that is convertible into Partnership Securitiesmortgage, deed of trust or other lien or encumbrance on the Partnership’s assets) and the incurring of any other obligationsobligations that it deems necessary for the conduct of the activities of the Partnership; (iib) the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Partnership; (iiic) the acquisition, dispositionsale, mortgagelease, pledgetransfer, encumbranceexchange or other disposition of any, hypothecation all or exchange of any or substantially all of the assets of the Partnership (including, but not limited to, the exercise or grant of any conversion, option, privilege or subscription right or any other right available in connection with any assets at any time held by the merger Partnership) or, subject to Section 8.6, the merger, consolidation, reorganization or other combination of the Partnership with or into another Person (the matters described in this clause (iii) being subject, however, to any prior approval that may be required by Section 7.3)entity; (ivd) the mortgage, pledge, encumbrance or hypothecation of any assets of the Partnership, the use of the assets of the Partnership (including cash on hand) for any purpose consistent with the terms of this AgreementAgreement and on any terms that it sees fit, including the financing of the conduct operations and activities of the operations General Partner, the Partnership or any of the Partnership Group; subject to Section 7.6(a)Partnership’s Subsidiaries, the lending of funds to other Persons (including other Group Members), the Partnership’s Subsidiaries) and the repayment or guarantee of obligations of the Partnership, its Subsidiaries and any other Person in which the Partnership Group has an equity investment, and the making of capital contributions to and equity investments in the Partnership’s Subsidiaries; (e) the management, operation, leasing, landscaping, repair, alteration, demolition, replacement or improvement of any member Property, including any Contributed Property, or other asset of the Partnership Groupor any Subsidiary, whether pursuant to a Services Agreement or otherwise; (vf) the negotiation, execution and performance of any contracts, leases, conveyances or other instruments (including instruments that limit the liability General Partner considers useful or necessary to the conduct of the Partnership’s operations or the implementation of the General Partner’s powers under this Agreement, including contracting with contractors, developers, consultants, accountants, legal counsel, the Advisor’s other professional advisors and other agents and the payment of their expenses and compensation out of the Partnership’s assets; provided, however, that the Advisory Agreement must contain a provision (the “Voting Direction Provision”) that requires the Advisor to vote its shares of Proportionate Voting Preferred Stock in proportion to the votes (the “LP Direction Votes”) that the Advisor receives from the holders of Partnership under contractual arrangements Units (other than the General Partner), that are issued pursuant to all the Master Agreement or particular pursuant to any option delivered pursuant thereto or in connection with the consummation of the transactions contemplated thereby. The Advisor shall not cast any votes with respect to the share of Proportionate Voting Preferred Stock unless it receives LP Direction Votes with respect thereto. (g) the distribution of Partnership cash or other Partnership assets in accordance with this Agreement, the holding, management, investment and reinvestment of cash and other assets of the Partnership, with and the other party to the contract to have no recourse against the General Partner or its assets other than its interest in collection and receipt of revenues, rents and income of the Partnership, even if same results in the terms of the transaction being less favorable to the Partnership than would otherwise be the case); (vi) the distribution of Partnership cash; (vii) the selection and dismissal of employees (including employees having titles such as "president," "vice president," "secretary" and "treasurer") and agents, outside attorneys, accountants, consultants and contractors and the determination of their compensation and other terms of employment or hiring; (viiih) the maintenance of such insurance for the benefit of the Partnership Group and the Partners as it deems necessary or appropriate, including (i) casualty, liability and other insurance on the Properties and (ii) liability insurance for the Indemnitees hereunder; (ixi) the formation of, or acquisition of an interest in, and the contribution of property and the making of loans to, any other further limited or general partnerships, joint ventures, corporations, limited liability companies companies, joint ventures or other relationships that it deems desirable (including the acquisition of interests in, and the contributions of property to, any Group Member Subsidiary and any other Person in which it has an equity investment from time to time) subject to the restrictions set forth in Section 2.4); (xj) the control of any matters affecting the rights and obligations of the Partnership, including the bringing settlement, compromise, submission to arbitration or any other form of dispute resolution, or abandonment, of any claim, cause of action, liability, debt or damages, due or owing to or from the Partnership, the commencement or defense of suits, legal proceedings, administrative proceedings, arbitrations or other forms of dispute resolution, and defending the representation of actions at law the Partnership in all suits or in equity and otherwise engaging in the conduct legal proceedings, administrative proceedings, arbitrations or other forms of litigation and dispute resolution, the incurring of legal expense expense, and the settlement of claims and litigation; (xi) the indemnification of any Person against liabilities and contingencies to the extent permitted by law; (xii) the entering into of listing agreements with any National Securities Exchange and the delisting of some or all of the Limited Partner Interests from, or requesting that trading be suspended on, any such exchange (subject to any prior approval that may be required under Section 4.8); (xiii) unless restricted or prohibited by Section 5.7, the purchase, sale or other acquisition or disposition of Partnership Securities, or the issuance of additional options, rights, warrants and appreciation rights relating to Partnership Securities; and (xivk) the undertaking of any action in connection with the Partnership's participation ’s direct or indirect investment in any Subsidiary or any other Person (including the Operating contribution of Property or contribution or loan of funds by the Partnership to such Persons); (l) except as otherwise specifically set forth in this Agreement, the determination of the fair market value of any Partnership property distributed in kind using such method of valuation as it may reasonably adopt as long as such method is otherwise consistent with the requirements of this Agreement; (m) the enforcement of any rights against any Partner pursuant to representations, warranties, covenants and indemnities relating to such Partner’s contribution of property or assets to the Partnership; (n) the exercise, directly or indirectly, through any attorney-in-fact acting under a general or limited power of attorney, of any right, including the right to vote, appurtenant to any asset or investment held by the Partnership; (o) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of or in connection with any Subsidiary of the Partnership or any other subsidiary Person in which the Partnership has a direct or indirect interest, or jointly with any such Subsidiary or other Person; (p) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of any Person in which the Partnership does not have an interest, pursuant to contractual or other arrangements with such Person; (q) the making, execution and delivery of any and all deeds, leases, notes, deeds to secure debt, mortgages, deeds of trust, security agreements, conveyances, contracts, guarantees, warranties, indemnities, waivers, releases or legal instruments or agreements in writing necessary or appropriate in the judgment of the General Partner for the accomplishment of any of the powers of the General Partner enumerated in this Agreement; (r) the issuance of additional Partnership Units, as appropriate and in the General Partner’s sole and absolute discretion, in connection with Capital Contributions by Additional Limited Partners and additional Capital Contributions by Partners pursuant to Section 4 hereof; (s) the selection and dismissal of Partnership Employees (including employees having titles or offices such as president, vice president, secretary and treasurer), and agents, outside attorneys, accountants, consultants and contractors of the Partnership as a member or partner. (b) Notwithstanding the General Partner, the determination of their compensation and other terms of employment or hiring and the delegation to any other provision such Partnership Employee the authority to conduct the business of the Partnership in accordance with the terms of this Agreement; and (t) an election to dissolve the Partnership pursuant to Section 13.1.2 hereof. 7.1.2 Except as provided in Section 14.2 hereof, the Operating Partnership Agreement, the Delaware Act or any applicable law, rule or regulation, each of the Partners and the Assignees and each other Person who may acquire an interest in Partnership Securities hereby (i) approves, ratifies and confirms the execution, delivery and performance by the parties thereto of the Operating Partnership Agreement, the Omnibus Agreement, the Contribution Agreement, the Distribution Agreement, and the Purchase Contract dated _________, 2004 between Penn Octane Corporation and the Operating Partnership and the other agreements described in or filed as exhibits to the Registration Statement that are related to the transactions contemplated by the Registration Statement; (ii) agrees that the General Partner (on its own or through any officer of the Partnership) is authorized to execute, deliver and perform the above-mentioned agreements referred to in clause (i) of this sentence and the other agreements, acts, transactions and matters described in or contemplated by the Registration Statement on behalf of the Partnership without any further act, approval or vote of the Partners Partners, notwithstanding any other provision of this Agreement, the Act or any applicable law, rule or regulation. To the Assignees or the other Persons who may acquire an interest in Partnership Securities; and (iii) agrees that fullest extent permitted by law, the execution, delivery or performance by the General Partner, any Group Member Partner or any Affiliate the Partnership of any of them, of this Agreement or any agreement authorized or permitted under this Agreement (including the exercise by the General Partner or any Affiliate of the General Partner of the rights accorded pursuant to Article XV), shall not constitute a breach by the General Partner of any duty that the General Partner may owe the Partnership or the Limited Partners or any other Persons under this Agreement (or any other agreements) or of any duty stated or implied by law or equity. 7.1.3 At all times from and after the date hereof, the General Partner may cause the Partnership to establish and maintain working capital and other reserves in such amounts as the General Partner, in its sole and absolute discretion, deems appropriate and reasonable from time to time. 7.1.4 In exercising its authority under this Agreement, the General Partner may, but shall be under no obligation to, take into account the tax consequences to any Partner (including the General Partner) of any action taken by it. The General Partner and the Partnership shall not have liability to a Limited Partner under any circumstances as a result of an income tax liability incurred by such Limited Partner as a result of an action (or inaction) by the General Partner pursuant to its authority under this Agreement. 7.1.5 The General Partner may not take any action in contravention of this Agreement, including, without limitation: (a) taking any action that would make it impossible to carry on the ordinary business of the Partnership, except as otherwise provided in this Agreement; (b) possessing Property, or assigning any rights in specific Property, for other than a Partnership purpose except as otherwise provided in this Agreement, including Section 7.9; (c) admitting a Person as a Partner, except as otherwise provided in this Agreement; (d) performing any act that would subject a Limited Partner to liability as a general partner in any jurisdiction or any other liability except as otherwise provided in this Agreement or under the Act; or (e) entering into any contract, mortgage, loan or other agreement that prohibits or restricts the ability of (a) the General Partner or the Partnership from satisfying its obligations under Section 8.5 hereof in full or (b) a Limited Partner from exercising its rights under Section 8.5 hereof to effect a Redemption in full, except, in either case, with the written consent of such Limited Partner adversely affected by the prohibition or restriction.

Management. (a) The General Partner shall conduct, direct and manage all activities of the Partnership. A. Except as otherwise expressly provided in this Agreement, all management powers over the business and affairs of the Partnership shall be are exclusively vested in the General Partner, and no Limited Partner or Assignee shall have any right to participate in or exercise control or management power over the business and affairs of the Partnership. The General Partner may not be removed by the Limited Partners with or without cause, except with the consent of the General Partner. In addition to the powers now or hereafter granted a general partner of a limited partnership under applicable law or which are granted to the General Partner under any other provision of this Agreement, the General Partner, subject to the other provisions of this Agreement, including without limitation Section 7.3, shall have full power and authority to do all things and on such terms as it, in its sole discretion, may deem deemed necessary or appropriate desirable by it to conduct the business of the Partnership, to exercise all powers set forth in Section 2.5 3.2 and to effectuate the purposes set forth in Section 2.43.1, including the followingincluding, without limitation: (i1) the making of any expenditures, the lending or borrowing of moneymoney (including, without limitation, making prepayments on loans and borrowing money to permit the Partnership to make distributions to its Partners in such amounts as will permit the General Partner (so long as the General Partner has determined to qualify as a REIT) to avoid the incurrence of any federal income tax (including, for this purpose, any excise tax pursuant to Section 4981 of the Code) and to make distributions to its shareholders sufficient to permit the General Partner to maintain REIT status), the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtednessindebtedness (including the securing of same by mortgage, including indebtedness that is convertible into Partnership Securities, deed of trust or other lien or encumbrance on the Partnership’s assets) and the incurring of any other obligationsobligations it deems necessary for the conduct of the activities of the Partnership; (ii2) the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Partnership; (iii3) the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or exchange of any or all of the assets of the Partnership or the merger or other combination of the Partnership with or into another Person (the matters described in this clause (iii) being subject, however, to any prior approval that may be required by Section 7.3)entity; (iv4) the mortgage, pledge, encumbrance or hypothecation of any assets of the Partnership, and the use of the assets of the Partnership (including including, without limitation, cash on hand) for any purpose consistent with the terms of this AgreementAgreement and on any terms it sees fit, including including, without limitation, the financing of the conduct of or the operations of the Partnership Group; subject to Section 7.6(a)General Partner or the Partnership, the lending of funds to other Persons (including other Group Members)including, without limitation, the General Partner (if necessary to permit the financing or capitalization of a Subsidiary of the Partnership) or any Subsidiaries of the Partnership) and the repayment or guarantee of obligations of the Partnership Group Partnership, any of its Subsidiaries and the making of capital contributions to any member of the Partnership Groupother Person in which it has an equity investment; (v5) the negotiation, execution execution, and performance of any contracts, leases, conveyances or other instruments (including instruments that limit the liability of General Partner considers useful or necessary to the Partnership under contractual arrangements to all or particular assets conduct of the Partnership, with ’s operations or the other party to the contract to have no recourse against implementation of the General Partner or its assets other than its interest in the Partnership, even if same results in the terms of the transaction being less favorable to the Partnership than would otherwise be the case)Partner’s powers under this Agreement; (vi6) the distribution of Partnership cashcash or other Partnership assets in accordance with this Agreement; (vii7) the selection and dismissal of employees of the Partnership (including including, without limitation, employees having titles such as "“president," "” “vice president," "” “secretary" ” and "“treasurer") ”), and agents, outside attorneys, accountants, consultants and contractors and of the Partnership, the determination of their compensation and other terms of employment or hiring, including waivers of conflicts of interest and the payment of their expenses and compensation out of the Partnership’s assets; (viii) 8) the maintenance of such insurance (including, without limitation, directors and officers insurance) for the benefit of the Partnership Group and the Partners as it deems necessary or appropriate; (ix9) the formation of, or acquisition of an interest in, and the contribution of property and the making of loans to, any other further limited or general partnerships, joint ventures, corporations, limited liability companies ventures or other relationships that it deems desirable (including including, without limitation, the acquisition of interests in, and the contributions of property to, to any Group Member Subsidiary and any other Person in which it has an equity investment from time to time) subject ); provided that, as long as the General Partner has determined to continue to qualify as a REIT, the restrictions set forth Partnership may not engage in Section 2.4any such formation, acquisition or contribution that would cause the General Partner to fail to qualify as a REIT; (x10) the control of any matters affecting the rights and obligations of the Partnership, including the bringing and defending of actions at law or in equity and otherwise engaging in the conduct of litigation and the incurring of legal expense and the settlement of claims and litigation; (xi) , and the indemnification of any Person against liabilities and contingencies to the extent permitted by law; (xii) the entering into of listing agreements with any National Securities Exchange and the delisting of some or all of the Limited Partner Interests from, or requesting that trading be suspended on, any such exchange (subject to any prior approval that may be required under Section 4.8); (xiii) unless restricted or prohibited by Section 5.7, the purchase, sale or other acquisition or disposition of Partnership Securities, or the issuance of additional options, rights, warrants and appreciation rights relating to Partnership Securities; and (xiv11) the undertaking of any action in connection with the Partnership's participation ’s direct or indirect investment in any Person (including, without limitation, contributing or loaning Partnership funds to, incurring indebtedness on behalf of, or guarantying the Operating obligations of any such Persons); (12) subject to the other provisions in this Agreement, the determination of the fair market value of any Partnership property distributed in kind using such reasonable method of valuation as it may adopt, provided that such methods are otherwise consistent with requirements of this Agreement; (13) the management, operation, leasing, landscaping, repair, alteration, demolition or improvement of any real property or improvements owned by the Partnership or any Subsidiary of the Partnership or any Person in which the Partnership has made a direct or indirect equity investment; (14) holding, managing, investing and reinvesting cash and other assets of the Partnership; (15) the collection and receipt of revenues and income of the Partnership; (16) the exercise, directly or indirectly through any attorney-in-fact acting under a general or limited power of attorney, of any right, including the right to vote, appurtenant to any asset or investment held by the Partnership; (17) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of or in connection with any Subsidiary of the Partnership or any other subsidiary Person in which the Partnership has a direct or indirect interest, or jointly with any such Subsidiary or other Person; (18) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of any Person in which the Partnership as a member does not have an interest pursuant to contractual or partnerother arrangements with such Person; (19) the maintenance of the Partnership’s books and records; and (20) the making, execution and delivery of any and all deeds, leases, notes, deeds to secure debt, mortgages, deeds of trust, security agreements, conveyances, contracts, guarantees, warranties, indemnities, waivers, releases or legal instruments or agreements in writing necessary or appropriate in the judgment of the General Partner for the accomplishment of any of the powers of the General Partner enumerated in this Agreement. (b) Notwithstanding any other provision of this Agreement, the Operating Partnership Agreement, the Delaware Act or any applicable law, rule or regulation, each B. Each of the Limited Partners and the Assignees and each other Person who may acquire an interest in Partnership Securities hereby (i) approves, ratifies and confirms the execution, delivery and performance by the parties thereto of the Operating Partnership Agreement, the Omnibus Agreement, the Contribution Agreement, the Distribution Agreement, and the Purchase Contract dated _________, 2004 between Penn Octane Corporation and the Operating Partnership and the other agreements described in or filed as exhibits to the Registration Statement that are related to the transactions contemplated by the Registration Statement; (ii) agrees that the General Partner (on its own or through any officer of the Partnership) is authorized to execute, deliver and perform the above-mentioned agreements referred to in clause (i) of this sentence and the other agreements, acts, transactions and matters described in or contemplated by the Registration Statement on behalf of the Partnership without any further act, approval or vote of the Partners Partners, notwithstanding any other provisions of this Agreement (except as provided in Section 7.3), the Act or the Assignees any applicable law, rule or the other Persons who may acquire an interest in Partnership Securities; and (iii) agrees that the regulation. The execution, delivery or performance by the General Partner, any Group Member Partner or any Affiliate the Partnership of any of them, of this Agreement or any agreement authorized or permitted under this Agreement (including the exercise by the General Partner or any Affiliate of the General Partner of the rights accorded pursuant to Article XV), shall not constitute a breach by the General Partner of any duty that the General Partner may owe the Partnership or the Limited Partners or any other Persons under this Agreement (or any other agreements) or of any duty stated or implied by law or equity. C. At all times from and after the date hereof, the General Partner may cause the Partnership to obtain and maintain (i) casualty, liability and other insurance on the properties of the Partnership and (ii) liability insurance for the Indemnities hereunder. D. At all times from and after the date hereof, the General Partner may cause the Partnership to establish and maintain working capital reserves in such amounts as the General Partner, in its sole and absolute discretion, deems appropriate and reasonable from time to time. E. Except as provided in this Agreement with respect to the qualification of the General Partner as a REIT and as may be provided in a separate written agreement between the Partnership and a Limited Partner, in exercising its authority under this Agreement, the General Partner may, but shall be under no obligation to, take into account the tax consequences to any Partner (including the General Partner) of any action taken by the General Partner. Except as provided in this Agreement with respect to the qualification of the General Partner as a REIT and as may be provided in a separate written agreement between the Partnership and a Limited Partner, the General Partner and the Partnership shall not have liability to a Partner under any circumstances as a result of an income tax liability incurred by such Limited Partner as a result of an action (or inaction) by the General Partner pursuant to its authority under this Agreement.

Management. (a) The General Partner shall conduct, direct and manage all activities of the Partnership. Except as otherwise expressly provided in this Agreement, all management powers over the business and affairs of the Partnership shall be exclusively vested in the General Partner, and no Limited Partner or Assignee shall have any management power over the business and affairs of the Partnership. In addition to the powers now or hereafter granted a general partner of a limited partnership under applicable law or which are granted to the General Partner under any other provision of this Agreement, the General Partner, subject to Section 7.36.3, shall have full power and authority to do all things and on such terms as it, in its sole discretion, may deem necessary or appropriate to conduct the business of the Partnership, to exercise all powers set forth in Section 2.5 3.2 and to effectuate the purposes set forth in Section 2.43.1, including the following: (i) the making of any expenditures, the lending or borrowing of money, the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtedness, including indebtedness that is convertible into Partnership Securities, and the incurring of any other obligations; (ii) the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Partnership; (iii) the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or exchange of any or all of the assets of the Partnership or the merger or other combination of the Partnership with or into another Person (the matters described in this clause (iii) being subject, however, to any prior approval that may be required by Section 7.3)Person; (iv) the use of the assets of the Partnership (including cash on hand) for any purpose consistent with the terms of this Agreement, including the financing of the conduct of the operations of the Partnership Group; subject to Section 7.6(a)or the Operating Partnership, the lending of funds to other Persons (including other Group Membersthe Operating Partnership, the General Partner and its Affiliates), the repayment or guarantee of obligations of the Partnership Group and the Operating Partnership and the making of capital contributions to any member of the Partnership GroupOperating Partnership; (v) the negotiation, execution and performance of any contracts, conveyances or other instruments (including instruments that limit the liability of the Partnership under contractual arrangements to all or particular assets of the Partnership, with the other party to the contract to have no recourse against the General Partner or its assets other than its interest in the Partnership, even if same results in the terms of the transaction being less favorable to the Partnership than would otherwise be the case); (vi) the distribution of Partnership cash; (vii) the selection and dismissal of employees (including employees having titles such as "president," "vice president," "secretary" and "treasurer") and agents, outside attorneys, accountants, consultants and contractors and the determination of their compensation and other terms of employment or hiring; (viii) the maintenance of such insurance for the benefit of the Partnership Group and the Partners as it deems necessary or appropriate; (ix) the formation of, or acquisition of an interest in, and the contribution of property and the making of loans to, any other further limited or general partnerships, joint ventures, corporations, limited liability companies corporations or other relationships (including the acquisition of interests in, and the contributions of property to, any Group Member the Operating Partnership from time to time) subject to the restrictions set forth in Section 2.4); (x) the control of any matters affecting the rights and obligations of the Partnership, including the bringing and defending of actions at law or in equity and otherwise engaging in the conduct of litigation and the incurring of legal expense and the settlement of claims and litigation; (xi) the indemnification of any Person against liabilities and contingencies to the extent permitted by law; (xii) the entering into of listing agreements with The New York Stock Exchange, Inc. and any other National Securities Exchange and the delisting of some or all of the Limited Partner Interests Units from, or requesting that trading be suspended on, any such exchange (subject to any prior approval that may be required under Section 4.81.6); (xiii) unless restricted or prohibited by Section 5.7, the purchase, sale or other acquisition or disposition of Partnership Securities, or the issuance of additional options, rights, warrants and appreciation rights relating to Partnership SecuritiesUnits; and (xiv) the undertaking of any action in connection with the Partnership's participation in the Operating Partnership or any other subsidiary of as the Partnership as a member or limited partner. (b) Notwithstanding any other provision of this Agreement, the Operating Partnership Agreement, the Delaware Act or any applicable law, rule or regulation, each of the Partners and the Assignees and each other Person who may acquire an interest in Partnership Securities Units hereby (i) approves, ratifies and confirms the execution, delivery and performance by the parties thereto of the Operating Partnership Agreement, the Omnibus Underwriting Agreement, the Conveyance and Contribution Agreement, the Distribution Merger and Contribution Agreement, the agreements and other documents filed as exhibits to the Purchase Contract dated _________Registration Statement, 2004 between Penn Octane Corporation and the Operating Partnership and the other agreements described in or filed as exhibits to the Registration Statement that are related to the transactions contemplated by a part of the Registration Statement; (ii) agrees that the General Partner (on its own or through any officer of the Partnership) is authorized to execute, deliver and perform the agreements referred to in clause (i) of this sentence and the other agreements, acts, transactions and matters described in or contemplated by the Registration Statement on behalf of the Partnership without any further act, approval or vote of the Partners or the Assignees or the other Persons who may acquire an interest in Partnership SecuritiesUnits; and (iii) agrees that the execution, delivery or performance by the General Partner, any Group Member or any Affiliate of any of them, of this Agreement or any agreement authorized or permitted under this Agreement (including the exercise by the General Partner or any Affiliate of the General Partner of the rights accorded pursuant to Article XVXVII), shall not constitute a breach by the General Partner of any duty that the General Partner may owe the Partnership or the Limited Partners or the Assignees or any other Persons under this Agreement (or any other agreements) or of any duty stated or implied by law or equity.

Management. (ai) The General Partner shall conduct, direct and manage all activities of the Partnership. Except as otherwise expressly provided in this Agreement, all management powers over full, complete and exclusive discretion to manage and control the business and affairs of the Partnership are and shall be exclusively vested in the General Partner, and no Limited Partner or Assignee shall have any right to participate in or exercise control or management power over the business and affairs of the Partnership. . (ii) The General Partner may not be removed by the Limited Partners with or without cause. (iii) In addition to the powers now or hereafter granted a general partner of a limited partnership under applicable law or which are granted to the General Partner under any other provision of this Agreement, the General Partner, subject to Section 7.37.11, shall have full power and authority to do all things and on such terms as it, in its sole discretion, may deem deemed necessary or appropriate desirable by it to conduct the business of the Partnership, to exercise all powers set forth in Section 2.5 3.2 hereof and to effectuate the purposes set forth in Section 2.43.1 hereof, including the followingincluding: (i1) the making of any expenditures, the lending or borrowing of money, including making prepayments on loans and borrowing money to permit the Partnership to make distributions to its Partners in such amounts as will permit the Initial Limited Partner (so long as the Initial Limited Partner qualifies as a REIT) to avoid the payment of any federal income tax (including, for this purpose, any excise tax pursuant to Section 4981 of the Code) and to make distributions to its Stockholders in amounts sufficient to permit the Initial Limited Partner to maintain REIT status, (2) the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, , (3) the issuance of evidences evidence of indebtednessindebtedness (including the securing of the same by deed, including indebtedness that is convertible into Partnership Securitiesmortgage, and deed of trust or other lien or encumbrance on the Partnership’s assets) and (4) the incurring of any other obligationsobligations it deems necessary for the conduct of the activities of the Partnership, including the payment of all expenses associated with the General Partner; (iiB) the acquisition, purchase, ownership, operating, leasing and disposition of any real property and any other property or assets, including mortgages and real estate-related notes, whether directly or indirectly; (C) the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the PartnershipPartnership or the Initial Limited Partner; (iiiD) the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or exchange of any all or substantially all of the assets of the Partnership (including the exercise or grant of any conversion, option, privilege, or subscription right or other right available in connection with any assets at any time held by the Partnership) or the merger merger, consolidation or other combination (each a “Business Combination”) of the Partnership with or into another Person (Entity on such terms as the matters described in this clause (iii) being subjectGeneral Partner deems proper, provided, however, to any prior approval that may the General Partner shall be required by Section 7.3)to send to each Limited Partner a notice of such proposed Business Combination no less than 15 days prior to the record date for the vote of the Initial Limited Partner’s Stockholders on such Business Combination, if any; (ivE) the use of the assets of the Partnership (including cash on hand) for any purpose consistent with the terms of this AgreementAgreement and on any terms it sees fit, including including, (1) the financing of the conduct of the operations of the Initial Limited Partner, the Partnership Group; subject to Section 7.6(a), or any of the Partnership’s Subsidiaries, (2) the lending of funds to other Persons (including other Group Members), the Subsidiaries of the Partnership and/or the Initial Limited Partner) and the repayment or guarantee of obligations of the Partnership Group and its Subsidiaries and any other Person in which it has an equity investment, and (3) the making of capital contributions to its Subsidiaries; (F) the expansion, development, redevelopment, construction, leasing, repair, rehabilitation, repositioning, alteration, demolition or improvement of any member property in which the Partnership or any Subsidiary of the Partnership Groupowns an interest; (vG) the negotiation, execution execution, and performance of any contracts, conveyances or other instruments (including instruments that limit the liability of General Partner considers useful or necessary to the Partnership under contractual arrangements to all or particular assets conduct of the Partnership, with ’s operations or the other party to the contract to have no recourse against implementation of the General Partner or its assets Partner’s powers under this Agreement, including contracting with contractors, developers, consultants, accountants, legal counsel, other than its interest in professional advisors and other agents and the payment of their expenses and compensation out of the Partnership, even if same results in the terms of the transaction being less favorable to the Partnership than would otherwise be the case)’s assets; (viH) the distribution of Partnership cashcash or other Partnership assets in accordance with this Agreement; (viiI) holding, managing, investing and reinvesting cash and other assets of the Partnership; (J) the collection and receipt of revenues and income of the Partnership; (K) the establishment of one or more divisions of the Partnership, the selection and dismissal of employees of the Partnership (including employees having titles such as "“president," "”, “vice president," "”, “secretary" ” and "“treasurer") ” of the Partnership), and agents, outside attorneys, accountants, consultants and contractors of the Partnership, and the determination of their compensation and other terms of employment or hiringengagement; (viiiL) the maintenance of such insurance for the benefit of the Partnership Group and the Partners and directors and officers thereof as it deems necessary or appropriate; (ixM) the formation of, or acquisition of an interest (including non-voting interests in entities controlled by Affiliates of the Partnership or third parties) in, and the contribution of property and the making of loans to, any other limited or general partnerships, joint ventures, corporations, limited liability companies further Entities or other relationships (that it deems desirable, including the acquisition of interests in, and the contributions of funds or property to, or making of loans to, its Subsidiaries and any Group Member other Person from time to time) subject , or the incurrence of indebtedness on behalf of such Persons or the guarantee of the obligations of such Persons; provided, however, that as long as the Initial Limited Partner has determined to elect to qualify as a REIT or to continue to qualify as a REIT, the restrictions set forth Partnership may not engage in Section 2.4any such formation, acquisition or contribution that would cause the Initial Limited Partner to fail to qualify as a REIT; (xN) the control of any matters affecting the rights and obligations of the Partnership, including including (1) the bringing and defending settlement, compromise, submission to arbitration or any other form of actions at law dispute resolution, or abandonment of, any claim, cause of action, liability, debt or damages, due or owing to or from the Partnership, (2) the commencement or defense of suits, legal proceedings, administrative proceedings, arbitration or other forms of dispute resolution, and (3) the representation of the Partnership in equity and otherwise engaging in the conduct all suits or legal proceedings, administrative proceedings, arbitrations or other forms of litigation and dispute resolution, the incurring of legal expense expenses, and the settlement of claims and litigation; (xi) the indemnification of any Person against liabilities and contingencies to the extent permitted by law; (xii) the entering into of listing agreements with any National Securities Exchange and the delisting of some or all of the Limited Partner Interests from, or requesting that trading be suspended on, any such exchange (subject to any prior approval that may be required under Section 4.8); (xiii) unless restricted or prohibited by Section 5.7, the purchase, sale or other acquisition or disposition of Partnership Securities, or the issuance of additional options, rights, warrants and appreciation rights relating to Partnership Securities; and (xivO) the undertaking of any action in connection with the Partnership's participation ’s direct or indirect investment in its Subsidiaries or any other Person (including the Operating contribution or loan of funds by the Partnership to such Persons); (P) the determination of the fair market value of any Partnership property distributed in kind using such reasonable method of valuation as the General Partner, in its sole discretion, may adopt; (Q) the exercise, directly or indirectly, through any attorney-in-fact acting under a general or limited power of attorney, of any right, including the right to vote, appurtenant to any asset or investment held by the Partnership; (R) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of or in connection with any Subsidiary of the Partnership or any other subsidiary Person in which the Partnership has a direct or indirect interest, or jointly with any such Subsidiary or other Person; (S) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of any Person in which the Partnership as a member does not have an interest pursuant to contractual or partner.other arrangements with such Person; (bT) Notwithstanding the making, execution and delivery of any other provision and all deeds, leases, notes, mortgages, deeds of trust, security agreements, conveyances, contracts, guarantees, warranties, indemnities, waivers, releases or legal instruments or agreements in writing necessary or appropriate, in the judgment of the General Partner, for the accomplishment of any of the foregoing; (U) the issuance of additional Partnership Units in connection with Capital Contributions by Additional Limited Partners and additional Capital Contributions by Partners pursuant to Article 4 hereof; (V) the authorization, issuance, sale, redemption or purchase of any Partnership Units or any securities of the Partnership; (W) the opening of bank accounts on behalf of, and in the name of, the Partnership and its Subsidiaries; and (X) the amendment and restatement of Exhibit A to reflect accurately at all times the Capital Contributions and Percentage Interests of the Partners as the same are adjusted from time to time to the extent necessary to reflect redemptions, Capital Contributions, the issuance of Partnership Units, the admission of any Additional Limited Partner or any Substituted Limited Partner or otherwise, which amendment and restatement, notwithstanding anything in this Agreement to the contrary, shall not be deemed an amendment of this Agreement, as long as the Operating Partnership matter or event being reflected in Exhibit A otherwise is authorized by this Agreement, the Delaware Act or any applicable law, rule or regulation, each of the Partners and the Assignees and each other Person who may acquire an interest in Partnership Securities hereby . (i) approves, ratifies and confirms the execution, delivery and performance by the parties thereto Each of the Operating Partnership Agreement, the Omnibus Agreement, the Contribution Agreement, the Distribution Agreement, and the Purchase Contract dated _________, 2004 between Penn Octane Corporation and the Operating Partnership and the other agreements described in or filed as exhibits to the Registration Statement that are related to the transactions contemplated by the Registration Statement; (ii) agrees Limited Partners agree that the General Partner (on its own or through any officer of the Partnership) is authorized to execute, deliver and perform the above-mentioned agreements referred to in clause (i) of this sentence and the other agreements, acts, transactions and matters described in or contemplated by the Registration Statement on behalf of the Partnership without any further act, approval or vote of the Partners Partners, notwithstanding any other provision of this Agreement to the fullest extent permitted under the Act or the Assignees other applicable law, rule or the other Persons who may acquire an interest in Partnership Securities; and regulation. (iiiii) agrees that the The execution, delivery or performance by the General Partner, any Group Member Partner or any Affiliate the Partnership of any of them, of this Agreement or any agreement authorized or permitted under this Agreement (including the exercise by the General Partner or any Affiliate of the General Partner of the rights accorded pursuant to Article XV), shall not constitute a breach by the General Partner of any duty that the General Partner may owe the Partnership or the Limited Partners or any other Persons under this Agreement (or any other agreements) or of any duty stated or implied by law or equity. (c) At all times from and after the date hereof, the General Partner at the expense of the Partnership, may or may not, cause the Partnership to obtain and maintain (i) casualty, liability and other insurance on the properties of the Partnership; (ii) liability insurance for the Indemnitees hereunder; and (iii) such other insurance as the General Partner, in its sole and absolute discretion, determines to be appropriate and reasonable. (d) At all times from and after the date hereof, the General Partner may cause the Partnership to establish and maintain at any and all times working capital accounts and other cash or similar balances in such amount as the General Partner, in its sole and absolute discretion, deems appropriate and reasonable from time to time. (i) In exercising its authority under this Agreement, the General Partner may, but shall be under no obligation to, take into account the tax consequences to any Partner (including the General Partner) of any action taken (or not taken) by it. The General Partner and the Partnership shall not have liability to any Limited Partner for monetary damages or otherwise for losses sustained, liabilities incurred or benefits not derived by such Limited Partner in connection with such decisions; provided, that the General Partner has acted in good faith pursuant to its authority under this Agreement. The Limited Partners expressly acknowledge that the General Partner is acting on behalf of the Partnership, the General Partner, the Initial Limited Partner and the Initial Limited Partner’s Stockholders, collectively. (ii) The General Partner and the Partnership shall not have liability to any Limited Partner or the Special Limited Partner under any circumstances as a result of an income tax liability incurred by such Limited Partner or the Special Limited Partner as a result of an action (or inaction) by the General Partner taken pursuant to its authority under and in accordance with this Agreement.

Management. (a) The General Partner shall conduct, direct and manage all activities of the Partnership. A. Except as otherwise expressly provided in this Agreement, all management powers over the business and affairs of the Partnership are and shall be exclusively vested in the General Partner, and no Limited Partner or Assignee shall have any right to participate in or exercise control or management power over the business and affairs of the Partnership. The General Partner may not be removed by the Limited Partners with or without cause. In addition to the powers now or hereafter granted a general partner of a limited partnership under applicable law or which are granted to the General Partner under any other provision of this Agreement, the General Partner, subject to Section 7.3, Partner shall have full power and authority to do all things and on such terms as it, in its sole discretion, may deem deemed necessary or appropriate desirable by it to conduct the business of the Partnership, to exercise all powers set forth in Section 2.5 3.2 hereof and to effectuate the purposes set forth in Section 2.43.1 hereof, including including, without limitation (but in all cases subject to the following:terms of this Agreement): (i1) the making of any expenditures, the lending or borrowing of moneymoney (including, without limitation, money to be used to pay off a portion of the existing debt encumbering the Partnership's assets) and making prepayments on loans and borrowing money to permit the Partnership to make distributions to its Partners in such amounts as will permit PGP (so long as PGP qualifies as a REIT) to avoid the payment of any federal income tax (including, for this purpose, any excise tax pursuant to Section 4981 of the Code) and to make distributions to its shareholders in amounts sufficient to permit PGP to maintain REIT status), the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences evidence of indebtednessindebtedness (including the securing of the same by deed, including indebtedness that is convertible into Partnership Securitiesmortgage, deed of trust or other lien or encumbrance on the Partnership's assets) and the incurring of any other obligationsobligations it deems necessary for the conduct of the activities of the Partnership; (ii2) the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Partnership; (iii) the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or exchange of any or all of the assets of the Partnership or the merger or other combination of the Partnership with or into another Person (the matters described in this clause (iii) being subject, however, to any prior approval that may be required by Section 7.3); (iv) the use of the assets of the Partnership (including cash on hand) for any purpose consistent with the terms of this Agreement, including the financing of the conduct of the operations of the Partnership Group; subject to Section 7.6(a), the lending of funds to other Persons (including other Group Members), the repayment or guarantee of obligations of the Partnership Group and the making of capital contributions to any member of the Partnership Group; (v) the negotiation, execution and performance of any contracts, conveyances or other instruments (including instruments that limit the liability of the Partnership under contractual arrangements to all or particular assets of the Partnership, with the other party to the contract to have no recourse against the General Partner or its assets other than its interest in the Partnership, even if same results in the terms of the transaction being less favorable to the Partnership than would otherwise be the case); (vi) the distribution of Partnership cash; (vii) the selection and dismissal of employees (including employees having titles such as "president," "vice president," "secretary" and "treasurer") and agents, outside attorneys, accountants, consultants and contractors and the determination of their compensation and other terms of employment or hiring; (viii) the maintenance of such insurance for the benefit of the Partnership Group and the Partners as it deems necessary or appropriate; (ix) the formation of, or acquisition of an interest in, and the contribution of property and the making of loans to, any other limited or general partnerships, joint ventures, corporations, limited liability companies or other relationships (including the acquisition of interests in, and the contributions of property to, any Group Member from time to time) subject to the restrictions set forth in Section 2.4; (x) the control of any matters affecting the rights and obligations of the Partnership, including the bringing and defending of actions at law or in equity and otherwise engaging in the conduct of litigation and the incurring of legal expense and the settlement of claims and litigation; (xi) the indemnification of any Person against liabilities and contingencies to the extent permitted by law; (xii) the entering into of listing agreements with any National Securities Exchange and the delisting of some or all of the Limited Partner Interests from, or requesting that trading be suspended on, any such exchange (subject to any prior approval that may be required under Section 4.8); (xiii) unless restricted or prohibited by Section 5.7, the purchase, sale or other acquisition or disposition of Partnership Securities, or the issuance of additional options, rights, warrants and appreciation rights relating to Partnership Securities; and (xiv) the undertaking of any action in connection with the Partnership's participation in the Operating Partnership or any other subsidiary of the Partnership as a member or partner. (b) Notwithstanding any other provision of this Agreement, the Operating Partnership Agreement, the Delaware Act or any applicable law, rule or regulation, each of the Partners and the Assignees and each other Person who may acquire an interest in Partnership Securities hereby (i) approves, ratifies and confirms the execution, delivery and performance by the parties thereto of the Operating Partnership Agreement, the Omnibus Agreement, the Contribution Agreement, the Distribution Agreement, and the Purchase Contract dated _________, 2004 between Penn Octane Corporation and the Operating Partnership and the other agreements described in or filed as exhibits to the Registration Statement that are related to the transactions contemplated by the Registration Statement; (ii) agrees that the General Partner (on its own or through any officer of the Partnership) is authorized to execute, deliver and perform the agreements referred to in clause (i) of this sentence and the other agreements, acts, transactions and matters described in or contemplated by the Registration Statement on behalf of the Partnership without any further act, approval or vote of the Partners or the Assignees or the other Persons who may acquire an interest in Partnership Securities; and (iii) agrees that the execution, delivery or performance by the General Partner, any Group Member or any Affiliate of any of them, of this Agreement or any agreement authorized or permitted under this Agreement (including the exercise by the General Partner or any Affiliate of the General Partner of the rights accorded pursuant to Article XV), shall not constitute a breach by the General Partner of any duty that the General Partner may owe the Partnership or the Limited Partners or any other Persons under this Agreement (or any other agreements) or of any duty stated or implied by law or equity.

Management. (a) The General Partner shall conduct, direct and manage all activities of the Partnership. A0 Except as otherwise expressly provided in this Agreement, all management powers over full, complete and exclusive discretion to manage and control the business and affairs of the Partnership are and shall be exclusively vested in the General Partner, and no Limited Partner or Assignee shall have any right to participate in or exercise control or management power over the business and affairs of the Partnership. The General Partner may not be removed by the Limited Partners with or without cause. In addition to the powers now or hereafter granted a general partner of a limited partnership under applicable law or which are granted to the General Partner under any other provision of this Agreement, the General Partner, subject to Section 7.3, Partner shall have full power and authority to do all things and on such terms as it, in its sole discretion, may deem deemed necessary or appropriate desirable by it to conduct the business of the Partnership, to exercise all powers set forth in Section 2.5 3.2 hereof and to effectuate the purposes set forth in Section 2.43.1 hereof, including the followingincluding, without limitation: (ia) the making of any expenditures, the lending or borrowing of money, including, without limitation, making prepayments on loans and borrowing money to permit the Partnership to make distributions to its Partners in such amounts as will permit the Company (so long as the Company qualifies as a REIT) to avoid the payment of any federal income tax (including, for this purpose, any excise tax pursuant to Section 4981 of the Code) and to make distributions to its stockholders in amounts sufficient to permit the Company to maintain REIT status, (b) the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, (c) the issuance of evidences evidence of indebtednessindebtedness (including the securing of the same by deed, including indebtedness that is convertible into Partnership Securitiesmortgage, deed of trust or other lien or encumbrance on the Partnership's assets) and (d) the incurring of any other obligationsobligations it deems necessary for the conduct of the activities of the Partnership, including the payment of all expenses associated with the Company; (ii2) the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the PartnershipPartnership or the Company; (iii3) the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or exchange of any or all of the assets of the Partnership (including the exercise or grant of any conversion, option, privilege, or subscription right or other right available in connection with any assets at any time held by the Partnership) or the merger or other combination of the Partnership with or into another Person (the matters described in this clause (iii) being subject, however, to any prior approval that may be required by Section 7.3)entity; (iv4) the use of the assets of the Partnership (including including, without limitation, cash on hand) for any purpose consistent with the terms of this AgreementAgreement and on any terms it sees fit, including including, without limitation, the financing of the conduct of the operations of the Company, the Partnership Group; subject to Section 7.6(a)or any of the Partnership's Subsidiaries, the lending of funds to other Persons (including other Group Members)including, without limitation, the Subsidiaries of the Partnership and/or the Company) and the repayment or guarantee of obligations of the Partnership Group and its Subsidiaries and any other Person in which it has an equity investment, and the making of capital contributions to its Subsidiaries; (5) the expansion, development, construction, leasing, repair, alteration, demolition or improvement of any member Hotel owned by the Partnership or any Subsidiary of the Partnership Group; Partnership; (v6) the negotiation, execution execution, and performance of any contractscontracts (including, without limitation, the Participating Leases), conveyances or other instruments (including instruments that limit the liability of General Partner considers useful or necessary to the Partnership under contractual arrangements to all or particular assets conduct of the Partnership, with 's operations or the other party to the contract to have no recourse against implementation of the General Partner or its assets Partner's powers under this Agreement, including contracting with contractors, developers, consultants, accountants, legal counsel, other than its interest in professional advisors and other agents and the payment of their expenses and compensation out of the Partnership, even if same results in the terms of the transaction being less favorable to the Partnership than would otherwise be the case); 's assets; (vi7) the distribution of Partnership cash; (vii) the selection and dismissal of employees (including employees having titles such as "president," "vice president," "secretary" and "treasurer") and agents, outside attorneys, accountants, consultants and contractors and the determination of their compensation and other terms of employment or hiring; (viii) the maintenance of such insurance for the benefit of the Partnership Group and the Partners as it deems necessary or appropriate; (ix) the formation of, or acquisition of an interest in, and the contribution of property and the making of loans to, any other limited or general partnerships, joint ventures, corporations, limited liability companies cash or other relationships (including the acquisition of interests in, and the contributions of property to, any Group Member from time to time) subject to the restrictions set forth Partnership assets in Section 2.4; (x) the control of any matters affecting the rights and obligations of the Partnership, including the bringing and defending of actions at law or in equity and otherwise engaging in the conduct of litigation and the incurring of legal expense and the settlement of claims and litigation; (xi) the indemnification of any Person against liabilities and contingencies to the extent permitted by law; (xii) the entering into of listing agreements accordance with any National Securities Exchange and the delisting of some or all of the Limited Partner Interests from, or requesting that trading be suspended on, any such exchange (subject to any prior approval that may be required under Section 4.8); (xiii) unless restricted or prohibited by Section 5.7, the purchase, sale or other acquisition or disposition of Partnership Securities, or the issuance of additional options, rights, warrants and appreciation rights relating to Partnership Securities; and (xiv) the undertaking of any action in connection with the Partnership's participation in the Operating Partnership or any other subsidiary of the Partnership as a member or partner. (b) Notwithstanding any other provision of this Agreement, the Operating Partnership Agreement, the Delaware Act or any applicable law, rule or regulation, each of the Partners and the Assignees and each other Person who may acquire an interest in Partnership Securities hereby (i) approves, ratifies and confirms the execution, delivery and performance by the parties thereto of the Operating Partnership Agreement, the Omnibus Agreement, the Contribution Agreement, the Distribution Agreement, and the Purchase Contract dated _________, 2004 between Penn Octane Corporation and the Operating Partnership and the other agreements described in or filed as exhibits to the Registration Statement that are related to the transactions contemplated by the Registration Statement; (ii) agrees that the General Partner (on its own or through any officer of the Partnership) is authorized to execute, deliver and perform the agreements referred to in clause (i) of this sentence and the other agreements, acts, transactions and matters described in or contemplated by the Registration Statement on behalf of the Partnership without any further act, approval or vote of the Partners or the Assignees or the other Persons who may acquire an interest in Partnership Securities; and (iii) agrees that the execution, delivery or performance by the General Partner, any Group Member or any Affiliate of any of them, of this Agreement or any agreement authorized or permitted under this Agreement (including the exercise by the General Partner or any Affiliate of the General Partner of the rights accorded pursuant to Article XV), shall not constitute a breach by the General Partner of any duty that the General Partner may owe the Partnership or the Limited Partners or any other Persons under this Agreement (or any other agreements) or of any duty stated or implied by law or equity.;

Management. (a) The General Partner shall conduct, direct and manage all activities of the Partnership. A. Except as otherwise expressly provided in this Agreement, all management powers over the business and affairs of the Partnership are and shall be exclusively vested in the General Partner, and no Limited Partner or Assignee shall have any right to participate in or exercise control or management power over the business and affairs of the Partnership. The General Partner may not be removed by the Partners with or without cause, except with the consent of the General Partner. In addition to the powers now or hereafter granted a general partner of a limited partnership under applicable law or which that are granted to the General Partner under any other provision of this Agreement, the General Partner, subject to Section 7.3the other provisions hereof, including Sections 7.3 and 7.4 hereof, shall have full power and authority to do all things and on such terms as it, in its sole discretion, may deem deemed necessary or appropriate desirable by it to conduct the business of the Partnership, to exercise all powers set forth in Section 2.5 3.2 hereof and to effectuate the purposes set forth in Section 2.43.1 hereof, including the followingincluding, without limitation: (i1) the making of any expenditures, the lending or borrowing of moneymoney (including making prepayments on loans and borrowing money to permit the Partnership to make distributions to its Partners in such amounts as will permit the General Partner (so long as the General Partner qualifies as a REIT) to avoid the payment of any federal income tax (including, for this purpose, any excise tax pursuant to Code Section 4981) and to make distributions to its shareholders sufficient to permit the General Partner to maintain REIT status or otherwise to satisfy the REIT Requirements), the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtednessindebtedness (including the securing of same by mortgage, including indebtedness that is convertible into Partnership Securities, deed of trust or other lien or encumbrance on the Partnership's assets) and the incurring of any other obligationsobligations that it deems necessary for the conduct of the activities of the Partnership; (ii2) the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Partnership; (iii3) the acquisition, dispositionsale, transfer, exchange or other disposition of any assets of the Partnership; (4) the mortgage, pledge, encumbrance, encumbrance or hypothecation or exchange of any or all of the assets of the Partnership or (including the merger or other combination of the Partnership with or into another Person (the matters described in this clause (iii) being subjectReal Property), however, to any prior approval that may be required by Section 7.3); (iv) the use of the assets of the Partnership (including cash on hand) for any purpose consistent with the terms of this AgreementAgreement and on any terms that it sees fit, including the financing of the conduct operations and activities of the operations of the Partnership Group; subject to Section 7.6(a)Partnership, the lending of funds to other Persons (including other Group Members), and the repayment or guarantee of obligations of the Partnership Group and the making of capital contributions to any member of the Partnership GroupPartnership; (v5) the management, operation, leasing, landscaping, repair, alteration, demolition, replacement or improvement of any property, including the Real Property, or other asset of the Partnership; (6) the negotiation, execution and performance of any contracts, Leases, conveyances or other instruments (including instruments that limit the liability of General Partner considers useful or necessary to the Partnership under contractual arrangements to all or particular assets conduct of the Partnership's operations or the implementation of the General Partner's powers under this Agreement, including contracting with property managers (including as to the Real Property or other property, contracting with the contributing or any other party to Limited Partner or its Affiliates for property management services), contractors, developers, consultants, accountants, legal counsel, other professional advisors and other agents and the contract to have payment of their expenses and compensation out of the Partnership's assets; provided, however, that in no recourse against event shall the General Partner enter into any such contract or its assets other than its interest lease for any consideration in the Partnership, even if same results in the terms excess of the transaction being less favorable amount an independent third party would charge and expect to the Partnership than would otherwise be the case)receive as reimbursable expenses or compensation for comparable goods or services; (vi7) the establishment and maintenance of working capital and other reserves in such amounts as the General Partner, in its sole and absolute discretion, deems appropriate from time to time; (8) the distribution of Partnership cashcash or other Partnership assets in accordance with this Agreement, the holding, management, investment and reinvestment of cash and other assets of the Partnership and the collection and receipt of revenues, rents and income of the Partnership; (vii9) the selection and dismissal of employees (including employees having titles such as "president," "vice president," "secretary" and "treasurer") and agents, outside attorneys, accountants, consultants and contractors of the Partnership or the General Partner and the determination of their compensation and other terms of employment or hiring; (viii10) the maintenance of such insurance for the benefit of the Partnership Group and the Partners as it deems necessary or appropriate, including casualty insurance on the Real Property to the same extent as maintained on the General Partner's properties held outside the Partnership; (ix) the formation of, or acquisition of an interest in, and the contribution of property and the making of loans to, any other limited or general partnerships, joint ventures, corporations, limited liability companies or other relationships (including the acquisition of interests in, and the contributions of property to, any Group Member from time to time) subject to the restrictions set forth in Section 2.4; (x11) the control of any matters affecting the rights and obligations of the Partnership, including the bringing settlement, compromise, submission to arbitration or any other form of dispute resolution, or abandonment, of any claim, cause of action, liability, debt or damages, due or owing to or from the Partnership, the commencement or defense of suits, legal proceedings, administrative proceedings, arbitrations or other forms of dispute resolution, and defending the representation of actions at law the Partnership in all suits or in equity and otherwise engaging in the conduct legal proceedings, administrative proceedings, arbitrations or other forms of litigation and dispute resolution, the incurring of legal expense expense, and the settlement of claims and litigation; (xi) the indemnification of any Person against liabilities and contingencies to the extent permitted by law; (xii12) the entering into enforcement of listing agreements with any National Securities Exchange rights against any Partner pursuant to representations, warranties, covenants and indemnities relating to such Partner's contribution of property or assets to the delisting of some or all of the Limited Partner Interests from, or requesting that trading be suspended on, any such exchange (subject to any prior approval that may be required under Section 4.8)Partnership; (xiii13) unless restricted the exercise, directly or prohibited indirectly, through any attorney-in-fact acting under a general or limited power of attorney, of any right, including the right to vote, appurtenant to any asset or investment held by Section 5.7the Partnership; (14) the making, execution and delivery of any and all deeds, leases, notes, mortgages, deeds of trust, security agreements, conveyances, contracts, guarantees, warranties, indemnities, waivers, releases or legal instruments or agreements in writing necessary or appropriate in the purchase, sale or other acquisition or disposition judgment of Partnership Securities, or the General Partner for the accomplishment of any of the powers of the General Partner enumerated in this Agreement; and (15) the issuance of additional options, rights, warrants and appreciation rights relating to Partnership Securities; and (xiv) the undertaking of any action Units in connection with the Partnership's participation in the Operating Partnership or any other subsidiary Capital Contributions by Additional Limited Partners and additional Capital Contributions by Partners pursuant to Article 4 hereof. B. Each of the Partnership as a member or partner. (b) Notwithstanding Limited Partners agrees that, notwithstanding any other provision of this Agreement, the Operating Partnership Agreement, the Delaware Act or any applicable law, rule or regulation, each of the Partners and the Assignees and each other Person who may acquire an interest except as provided in Partnership Securities hereby (i) approvesSection 7.3 hereof, ratifies and confirms the execution, delivery and performance by the parties thereto of the Operating Partnership Agreement, the Omnibus Agreement, the Contribution Agreement, the Distribution Agreement, and the Purchase Contract dated _________, 2004 between Penn Octane Corporation and the Operating Partnership and the other agreements described in or filed as exhibits to the Registration Statement that are related to the transactions contemplated by the Registration Statement; (ii) agrees that the General Partner (on its own or through any officer of the Partnership) is authorized to execute, deliver and perform the above-mentioned agreements referred to in clause (i) of this sentence and the other agreements, acts, transactions and matters described in or contemplated by the Registration Statement on behalf of the Partnership without any further act, approval or vote of the Partners or the Assignees or the other Persons who may acquire an interest in Partnership Securities; and (iii) agrees that the execution, delivery or performance by the General Partner, any Group Member or any Affiliate of any of them, of this Agreement or any agreement authorized or permitted under this Agreement (including the exercise by the General Partner or any Affiliate of the General Partner of the rights accorded pursuant to Article XV), shall not constitute a breach by the General Partner of any duty that the General Partner may owe the Partnership or the Limited Partners or any other Persons under this Agreement (or any other agreements) or of any duty stated or implied by law or equityPartners.

Management. (a) The General Partner shall conduct, direct and manage all activities of the Partnership. 7.1.1 Except as otherwise expressly provided in this Agreement, all management powers over the business and affairs of the Partnership are and shall be exclusively vested in the General Partner, and no Limited Partner or Assignee shall have any right to participate in or exercise control or management power over the business and affairs of the Partnership. The General Partner may not be removed by the Partners with or without cause, except with the consent of the General Partner. In addition to the powers now or hereafter granted to a general partner of a limited partnership under applicable law or which that are granted to the General Partner under any other provision of this Agreement, the General Partner, subject to Section 7.3the other provisions hereof, shall have full power and authority to do all things and on such terms as it, in its sole discretion, may deem deemed necessary or appropriate desirable by it to conduct the business of the Partnership, to exercise all powers set forth in Section 2.5 3.2 hereof and to effectuate the purposes set forth in Section 2.43.1 hereof, including the followingincluding, without limitation: (ia) the making of any expenditures, the lending or borrowing of moneymoney (including making prepayments on loans and borrowing money or selling assets to permit the Partnership to make distributions to its Partners in such amounts as will permit the General Partner (so long as the General Partner desires to maintain or restore its status as a REIT) to avoid the payment of any federal income tax (including, for this purpose, any excise tax pursuant to Code Section 4981) and to make distributions sufficient to permit the General Partner to maintain or restore REIT status or otherwise to satisfy the REIT Requirements), the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtednessindebtedness (including the securing of same by deed to secure debt, including indebtedness that is convertible into Partnership Securitiesmortgage, deed of trust or other lien or encumbrance on the Partnership’s assets) and the incurring of any other obligationsobligations that it deems necessary for the conduct of the activities of the Partnership; (iib) the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Partnership; (iiic) the acquisition, dispositionsale, mortgagelease, pledgetransfer, encumbranceexchange or other disposition of any, hypothecation all or exchange of any or substantially all of the assets of the Partnership (including, but not limited to, the exercise or grant of any conversion, option, privilege or subscription right or any other right available in connection with any assets at any time held by the merger Partnership) or, subject to Section 8.6, the merger, consolidation, reorganization or other combination of the Partnership with or into another Person (the matters described in this clause (iii) being subject, however, to any prior approval that may be required by Section 7.3)entity; (ivd) the mortgage, pledge, encumbrance or hypothecation of any assets of the Partnership, the use of the assets of the Partnership (including cash on hand) for any purpose consistent with the terms of this AgreementAgreement and on any terms that it sees fit, including the financing of the conduct operations and activities of the operations General Partner, the Partnership or any of the Partnership Group; subject to Section 7.6(a)Partnership’s Subsidiaries, the lending of funds to other Persons (including other Group Members), the Partnership’s Subsidiaries) and the repayment or guarantee of obligations of the Partnership, its Subsidiaries and any other Person in which the Partnership Group has an equity investment, and the making of capital contributions to and equity investments in the Partnership’s Subsidiaries; (e) the management, operation, leasing, landscaping, repair, alteration, demolition, replacement or improvement of any member Property, including any Contributed Property, or other asset of the Partnership Groupor any Subsidiary, whether pursuant to a Services Agreement or otherwise; (vf) the negotiation, execution and performance of any contracts, leases, conveyances or other instruments (including instruments that limit the liability General Partner considers useful or necessary to the conduct of the Partnership’s operations or the implementation of the General Partner’s powers under this Agreement, including contracting with contractors, developers, consultants, accountants, legal counsel, the Advisor’s other professional advisors and other agents and the payment of their expenses and compensation out of the Partnership’s assets; (g) the distribution of Partnership under contractual arrangements to all cash or particular other Partnership assets in accordance with this Agreement, the holding, management, investment and reinvestment of cash and other assets of the Partnership, with and the other party to the contract to have no recourse against the General Partner or its assets other than its interest in collection and receipt of revenues, rents and income of the Partnership, even if same results in the terms of the transaction being less favorable to the Partnership than would otherwise be the case); (vi) the distribution of Partnership cash; (vii) the selection and dismissal of employees (including employees having titles such as "president," "vice president," "secretary" and "treasurer") and agents, outside attorneys, accountants, consultants and contractors and the determination of their compensation and other terms of employment or hiring; (viiih) the maintenance of such insurance for the benefit of the Partnership Group and the Partners as it deems necessary or appropriate, including (i) casualty, liability and other insurance on the Properties and (ii) liability insurance for the Indemnitees hereunder; (ixi) the formation of, or acquisition of an interest in, and the contribution of property and the making of loans to, any other further limited or general partnerships, joint ventures, corporations, limited liability companies companies, joint ventures or other relationships that it deems desirable (including the acquisition of interests in, and the contributions of property to, any Group Member Subsidiary and any other Person in which it has an equity investment from time to time) subject to the restrictions set forth in Section 2.4); (xj) the control of any matters affecting the rights and obligations of the Partnership, including the bringing settlement, compromise, submission to arbitration or any other form of dispute resolution, or abandonment, of any claim, cause of action, liability, debt or damages, due or owing to or from the Partnership, the commencement or defense of suits, legal proceedings, administrative proceedings, arbitrations or other forms of dispute resolution, and defending the representation of actions at law the Partnership in all suits or in equity and otherwise engaging in the conduct legal proceedings, administrative proceedings, arbitrations or other forms of litigation and dispute resolution, the incurring of legal expense expense, and the settlement of claims and litigation; (xi) the indemnification of any Person against liabilities and contingencies to the extent permitted by law; (xii) the entering into of listing agreements with any National Securities Exchange and the delisting of some or all of the Limited Partner Interests from, or requesting that trading be suspended on, any such exchange (subject to any prior approval that may be required under Section 4.8); (xiii) unless restricted or prohibited by Section 5.7, the purchase, sale or other acquisition or disposition of Partnership Securities, or the issuance of additional options, rights, warrants and appreciation rights relating to Partnership Securities; and (xivk) the undertaking of any action in connection with the Partnership's participation ’s direct or indirect investment in any Subsidiary or any other Person (including the Operating contribution of Property or contribution or loan of funds by the Partnership to such Persons); (l) except as otherwise specifically set forth in this Agreement, the determination of the fair market value of any Partnership property distributed in kind using such method of valuation as it may reasonably adopt as long as such method is otherwise consistent with the requirements of this Agreement; (m) the enforcement of any rights against any Partner pursuant to representations, warranties, covenants and indemnities relating to such Partner’s contribution of property or assets to the Partnership; (n) the exercise, directly or indirectly, through any attorney-in-fact acting under a general or limited power of attorney, of any right, including the right to vote, appurtenant to any asset or investment held by the Partnership; (o) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of or in connection with any Subsidiary of the Partnership or any other subsidiary Person in which the Partnership has a direct or indirect interest, or jointly with any such Subsidiary or other Person; (p) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of any Person in which the Partnership does not have an interest, pursuant to contractual or other arrangements with such Person; (q) the making, execution and delivery of any and all deeds, leases, notes, deeds to secure debt, mortgages, deeds of trust, security agreements, conveyances, contracts, guarantees, warranties, indemnities, waivers, releases or legal instruments or agreements in writing necessary or appropriate in the judgment of the General Partner for the accomplishment of any of the powers of the General Partner enumerated in this Agreement; (r) the issuance of additional Partnership Units, as appropriate and in the General Partner’s sole and absolute discretion, in connection with Capital Contributions by Additional Limited Partners and additional Capital Contributions by Partners pursuant to Section 4 hereof; (s) the selection and dismissal of Partnership Employees (including employees having titles or offices such as president, vice president, secretary and treasurer), and agents, outside attorneys, accountants, consultants and contractors of the Partnership as a member or partner. (b) Notwithstanding the General Partner, the determination of their compensation and other terms of employment or hiring and the delegation to any other provision such Partnership Employee the authority to conduct the business of the Partnership in accordance with the terms of this Agreement; and (t) an election to dissolve the Partnership pursuant to Section 13.1.2 hereof. 7.1.2 Except as provided in Section 14.2 hereof, the Operating Partnership Agreement, the Delaware Act or any applicable law, rule or regulation, each of the Partners and the Assignees and each other Person who may acquire an interest in Partnership Securities hereby (i) approves, ratifies and confirms the execution, delivery and performance by the parties thereto of the Operating Partnership Agreement, the Omnibus Agreement, the Contribution Agreement, the Distribution Agreement, and the Purchase Contract dated _________, 2004 between Penn Octane Corporation and the Operating Partnership and the other agreements described in or filed as exhibits to the Registration Statement that are related to the transactions contemplated by the Registration Statement; (ii) agrees that the General Partner (on its own or through any officer of the Partnership) is authorized to execute, deliver and perform the above-mentioned agreements referred to in clause (i) of this sentence and the other agreements, acts, transactions and matters described in or contemplated by the Registration Statement on behalf of the Partnership without any further act, approval or vote of the Partners Partners, notwithstanding any other provision of this Agreement, the Act or any applicable law, rule or regulation. To the Assignees or the other Persons who may acquire an interest in Partnership Securities; and (iii) agrees that fullest extent permitted by law, the execution, delivery or performance by the General Partner, any Group Member Partner or any Affiliate the Partnership of any of them, of this Agreement or any agreement authorized or permitted under this Agreement (including the exercise by the General Partner or any Affiliate of the General Partner of the rights accorded pursuant to Article XV), shall not constitute a breach by the General Partner of any duty that the General Partner may owe the Partnership or the Limited Partners or any other Persons under this Agreement (or any other agreements) or of any duty stated or implied by law or equity. 7.1.3 At all times from and after the date hereof, the General Partner may cause the Partnership to establish and maintain working capital and other reserves in such amounts as the General Partner, in its sole and absolute discretion, deems appropriate and reasonable from time to time. 7.1.4 In exercising its authority under this Agreement, the General Partner may, but shall be under no obligation to, take into account the tax consequences to any Partner (including the General Partner) of any action taken by it. The General Partner and the Partnership shall not have liability to a Limited Partner under any circumstances as a result of an income tax liability incurred by such Limited Partner as a result of an action (or inaction) by the General Partner pursuant to its authority under this Agreement. 7.1.5 The General Partner may not take any action in contravention of this Agreement, including, without limitation: (a) taking any action that would make it impossible to carry on the ordinary business of the Partnership, except as otherwise provided in this Agreement; (b) possessing Property, or assigning any rights in specific Property, for other than a Partnership purpose except as otherwise provided in this Agreement, including Section 7.9; (c) admitting a Person as a Partner, except as otherwise provided in this Agreement; (d) performing any act that would subject a Limited Partner to liability as a general partner in any jurisdiction or any other liability except as otherwise provided in this Agreement or under the Act; or (e) entering into any contract, mortgage, loan or other agreement that prohibits or restricts the ability of (a) the General Partner or the Partnership from satisfying its obligations under Section 8.5 hereof in full or (b) a Limited Partner from exercising its rights under Section 8.5 hereof to effect a Redemption in full, except, in either case, with the written consent of such Limited Partner adversely affected by the prohibition or restriction.

Management. (a) The General Partner shall conduct, direct and manage all activities of the Partnership. A. Except as otherwise expressly provided in this Agreement, all management powers over the business and affairs of the Partnership are and shall be exclusively vested in the General Partner, and no Limited Partner or Assignee shall have any right to participate in or exercise control or management power over the business and affairs of the Partnership. The General Partner may not be removed by the Partners with or without cause, except with the consent of the General Partner. In addition to the powers now or hereafter granted to a general partner of a limited partnership under applicable law or which that are granted to the General Partner under any other provision of this Agreement, the General Partner, subject to the other provisions hereof including Section 7.3, shall have full power and authority to do all things and on such terms as it, in its sole discretion, may deem deemed necessary or appropriate desirable by it to conduct the business of the Partnership, to exercise all powers set forth in Section 2.5 3.2 hereof and to effectuate the purposes set forth in Section 2.43.1 hereof, including the followingincluding, without limitation: (i1) the making of any expenditures, the lending or borrowing of moneymoney (including, without limitation, making prepayments on loans and borrowing money or selling assets to permit the Partnership to make distributions to its Partners in such amounts as will permit the General Partner (so long as the General Partner desires to maintain or restore its status as a REIT) to avoid the payment of any federal income tax (including, for this purpose, any excise tax pursuant to Code Section 4981) and to make distributions to its stockholders sufficient to permit the General Partner to maintain or restore REIT status or otherwise to satisfy the REIT Requirements), the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtednessindebtedness (including the securing of same by deed to secure debt, including indebtedness that is convertible into Partnership Securitiesmortgage, deed of trust or other lien or encumbrance on the Partnership's assets) and the incurring of any other obligationsobligations that it deems necessary for the conduct of the activities of the Partnership; (ii2) the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Partnership; (iii3) the acquisition, dispositionsale, mortgagelease, pledgetransfer, encumbranceexchange or other disposition of any, hypothecation all or exchange of any or substantially all of the assets of the Partnership (including, but not limited to, the exercise or grant of any conversion, option, privilege or subscription right or any other right available in connection with any assets at any time held by the Partnership) or the merger merger, consolidation, reorganization or other combination of the Partnership with or into another Person (the matters described in this clause (iii) being subject, however, to any prior approval that may be required by Section 7.3)entity; (iv4) the mortgage, pledge, encumbrance or hypothecation of any assets of the Partnership, the use of the assets of the Partnership (including including, without limitation, cash on hand) for any purpose consistent with the terms of this AgreementAgreement and on any terms that it sees fit, including including, without limitation, the financing of the conduct operations and activities of the operations General Partner, the Partnership or any of the Partnership Group; subject to Section 7.6(a)Partnership's Subsidiaries, the lending of funds to other Persons (including other Group Members)including, without limitation, the Partnership's Subsidiaries) and the repayment or guarantee of obligations of the Partnership, its Subsidiaries and any other Person in which the Partnership Group has an equity investment, and the making of capital contributions to and equity investments in the Partnership's Subsidiaries; (5) the management, operation, leasing, landscaping, repair, alteration, demolition, replacement or improvement of any member Property, including, without limitation, any Contributed Property, or other asset of the Partnership Groupor any Subsidiary, whether pursuant to a Services Agreement or otherwise; (v6) the negotiation, execution and performance of any contracts, leases, conveyances or other instruments (including instruments that limit the liability General Partner considers useful or necessary to the conduct of the Partnership's operations or the implementation of the General Partner's powers under this Agreement, including contracting with contractors, developers, consultants, accountants, legal counsel, other professional advisors and other agents and the payment of their expenses and compensation out of the Partnership's assets; (7) the distribution of Partnership under contractual arrangements to all cash or particular other Partnership assets in accordance with this Agreement, the holding, management, investment and reinvestment of cash and other assets of the Partnership, with and the other party to the contract to have no recourse against the General Partner or its assets other than its interest in collection and receipt of revenues, rents and income of the Partnership, even if same results in the terms of the transaction being less favorable to the Partnership than would otherwise be the case); (vi) the distribution of Partnership cash; (vii) the selection and dismissal of employees (including employees having titles such as "president," "vice president," "secretary" and "treasurer") and agents, outside attorneys, accountants, consultants and contractors and the determination of their compensation and other terms of employment or hiring; (viii) 8) the maintenance of such insurance for the benefit of the Partnership Group and the Partners as it deems necessary or appropriate, including, without limitation, (i) casualty, liability and other insurance on the Properties and (ii) liability insurance for the Indemnitees hereunder; (ix9) the formation of, or acquisition of an interest in, and the contribution of property and the making of loans to, any other further limited or general partnerships, joint ventures, corporations, limited liability companies companies, joint ventures or other relationships that it deems desirable (including including, without limitation, the acquisition of interests in, and the contributions of property to, any Group Member Subsidiary and any other Person in which it has an equity investment from time to time) subject ); provided, however, that, as long as the General Partner has determined to continue to qualify as a REIT, the restrictions set forth General Partner may not engage in any such formation, acquisition or contribution that would cause the General Partner to fail to qualify as a REIT within the meaning of Code Section 2.4856(a); (x10) the control of any matters affecting the rights and obligations of the Partnership, including the bringing settlement, compromise, submission to arbitration or any other form of dispute resolution, or abandonment, of any claim, cause of action, liability, debt or damages, due or owing to or from the Partnership, the commencement or defense of suits, legal proceedings, administrative proceedings, arbitrations or other forms of dispute resolution, and defending the representation of actions at law the Partnership in all suits or in equity and otherwise engaging in the conduct legal proceedings, administrative proceedings, arbitrations or other forms of litigation and dispute resolution, the incurring of legal expense expense, and the settlement of claims and litigation; (xi) the indemnification of any Person against liabilities and contingencies to the extent permitted by law; (xii) the entering into of listing agreements with any National Securities Exchange and the delisting of some or all of the Limited Partner Interests from, or requesting that trading be suspended on, any such exchange (subject to any prior approval that may be required under Section 4.8); (xiii) unless restricted or prohibited by Section 5.7, the purchase, sale or other acquisition or disposition of Partnership Securities, or the issuance of additional options, rights, warrants and appreciation rights relating to Partnership Securities; and (xiv11) the undertaking of any action in connection with the Partnership's participation direct or indirect investment in any Subsidiary or any other Person (including, without limitation, the Operating contribution or loan of funds by the Partnership to such Persons); (12) except as otherwise specifically set forth in this Agreement, the determination of the fair market value of any Partnership property distributed in kind using such reasonable method of valuation as it may adopt; provided that such methods are otherwise consistent with the requirements of this Agreement; (13) the enforcement of any rights against any Partner pursuant to representa tions, warranties, covenants and indemnities relating to such Partner's contribution of property or assets to the Partnership; (14) the exercise, directly or indirectly, through any attorney-in-fact acting under a general or limited power of attorney, of any right, including the right to vote, appurtenant to any asset or investment held by the Partnership; (15) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of or in connection with any Subsidiary of the Partnership or any other subsidiary Person in which the Partnership has a direct or indirect interest, or jointly with any such Subsidiary or other Person; (16) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of any Person in which the Partnership does not have an interest, pursuant to contractual or other arrangements with such Person; (17) the making, execution and delivery of any and all deeds, leases, notes, deeds to secure debt, mortgages, deeds of trust, security agreements, conveyances, contracts, guarantees, warranties, indemnities, waivers, releases or legal instruments or agreements in writing necessary or appropriate in the judgment of the General Partner for the accomplishment of any of the powers of the General Partner enumerated in this Agreement; (18) the issuance of additional Partnership Units, as appropriate and in the General Partner's sole and absolute discretion, in connection with Capital Contributions by Additional Limited Partners and additional Capital Contributions by Partners pursuant to Article 4 hereof; (19) the selection and dismissal of Company Employees (including, without limitation, employees having titles or offices such as president, vice president, secretary and treasurer), and agents, outside attorneys, accountants, consultants and contractors of the Partnership as a member or partner. (b) Notwithstanding the General Partner, the determination of their compensation and other terms of employment or hiring and the delegation to any other provision such Company Employee the authority to conduct the business of the Partnership in accordance with the terms of this Agreement, ; and (20) an election to dissolve the Operating Partnership Agreement, the Delaware Act or any applicable law, rule or regulation, each pursuant to Section 13.1.C hereof. B. Each of the Limited Partners and the Assignees and each other Person who may acquire an interest agrees that, except as provided in Partnership Securities hereby (i) approvesSection 7.3 hereof, ratifies and confirms the execution, delivery and performance by the parties thereto of the Operating Partnership Agreement, the Omnibus Agreement, the Contribution Agreement, the Distribution Agreement, and the Purchase Contract dated _________, 2004 between Penn Octane Corporation and the Operating Partnership and the other agreements described in or filed as exhibits to the Registration Statement that are related to the transactions contemplated by the Registration Statement; (ii) agrees that the General Partner (on its own or through any officer of the Partnership) is authorized to execute, deliver and perform the above-mentioned agreements referred to in clause (i) of this sentence and the other agreements, acts, transactions and matters described in or contemplated by the Registration Statement on behalf of the Partnership without any further act, approval or vote of the Partners Partners, notwithstanding any other provision of this Agreement, the Act or the Assignees any applicable law, rule or the other Persons who may acquire an interest in Partnership Securities; and (iii) agrees that the regulation. The execution, delivery or performance by the General Partner, any Group Member Partner or any Affiliate the Partnership of any of them, of this Agreement or any agreement authorized or permitted under this Agreement (including the exercise by the General Partner or any Affiliate of the General Partner of the rights accorded pursuant to Article XV), shall not constitute a breach by the General Partner of any duty that the General Partner may owe the Partnership or the Limited Partners or any other Persons under this Agreement (or any other agreements) or of any duty stated or implied by law or equity. C. At all times from and after the date hereof, the General Partner may cause the Partnership to establish and maintain working capital and other reserves in such amounts as the General Partner, in its sole and absolute discretion, deems appropriate and reasonable from time to time. D. In exercising its authority under this Agreement, the General Partner may, but shall be under no obligation to, take into account the tax consequences to any Partner (including the General Partner) of any action taken by it. The General Partner and the Partnership shall not have liability to a Limited Partner under any circumstances as a result of an income tax liability incurred by such Limited Partner as a result of an action (or inaction) by the General Partner pursuant to its authority under this Agreement.

Management. (a) The General Partner shall conduct, direct and manage all activities of the Partnership. A. Except as otherwise expressly provided in this Agreement, all management powers over the business and affairs of the Partnership are and shall be exclusively vested in the General Partner, and no Limited Partner or Assignee shall have any right to participate in or exercise control or management power over the business and affairs of the Partnership. The General Partner may not be removed by the Limited Partners with or without cause, except with the consent of the General Partner. In addition to the powers now or hereafter granted a general partner of a limited partnership under applicable law or which are granted to the General Partner under any other provision of this Agreement, the General Partner, subject to the other provisions hereof including Section 7.37.3 and Section 11.2, shall have full power and authority to do all things and on such terms as it, in its sole discretion, may deem deemed necessary or appropriate desirable by it to conduct the business of the Partnership, to exercise all powers set forth in Section 2.5 3.2 and to effectuate the purposes set forth in Section 2.43.1 (subject to the proviso in Section 3.2), including the followingincluding, without limitation: (i1) the making of any expenditures, the lending or borrowing of moneymoney (including, without limitation, making prepayments on loans and borrowing money to permit the Partnership to make distributions to its Partners in such amounts as will permit the Company (so long as the Company has determined to qualify as a REIT) to avoid the payment of any federal income tax (including, for this purpose, any excise tax pursuant to Section 4981 of the Code) and to make distributions to its stockholders sufficient to permit the Company to maintain REIT status), the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtednessindebtedness (including the securing of same by deed, including indebtedness that is convertible into Partnership Securitiesmortgage, deed of trust or other lien or encumbrance on the Partnership’s assets) and the incurring of any other obligationsobligations it deems necessary for the conduct of the activities of the Partnership; (ii2) the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Partnership, the registration of any class of securities of the Partnership under Exchange Act and the listing of any debt securities of the Partnership on any exchange; (iii3) subject to Section 11.2, the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or exchange of any or all of the assets of the Partnership (including the exercise or grant of any conversion, option, privilege, or subscription right or other right available in connection with any assets at any time held by the Partnership) or the merger or other combination of the Partnership with or into another Person entity on such terms as the General Partner deems proper (all of the matters described in this clause (iii) being subject, however, foregoing subject to any prior approval that may be only to the extent required by Section 7.3); (iv4) the acquisition, disposition, mortgage, pledge, encumbrance or hypothecation of any or all of the assets of the Partnership, and the use of the assets of the Partnership (including including, without limitation, cash on hand) for any purpose consistent with the terms of this AgreementAgreement and on any terms the General Partner deems proper, including including, without limitation, the financing of the conduct of the operations of the Company, the Partnership Group; subject to Section 7.6(a)or any Subsidiary of the Company and/or the Partnership, the lending of funds to other Persons (including other Group Members)including, without limitation, the Company or any Subsidiary of the Company and/or the Partnership) and the repayment or guarantee of obligations of the Partnership Group and its Subsidiaries and any other Person in which it has an equity investment, and the making of capital contributions to its Subsidiaries; (5) the management, operation, leasing, landscaping, repair, alteration, demolition or improvement of any member real property or improvements owned by the Partnership or any Subsidiary of the Partnership Groupor any Person in which the Partnership has made a direct or indirect equity investment; (v6) the negotiation, execution execution, and performance of any contracts, leases, conveyances or other instruments (including instruments that limit the liability of General Partner considers useful or necessary to the Partnership under contractual arrangements to all or particular assets conduct of the Partnership, with ’s operations or the other party to the contract to have no recourse against implementation of the General Partner or its assets Partner’s powers under this Agreement, including contracting with contractors, developers, consultants, accountants, legal counsel, other than its interest in professional advisors and other agents and the payment of their expenses and compensation out of the Partnership, even if same results in the terms of the transaction being less favorable to the Partnership than would otherwise be the case)’s assets; (vi7) the distribution of Partnership cashcash or other Partnership assets in accordance with this Agreement; (vii8) the holding, managing, investing and reinvesting of cash and other assets of the Partnership; (9) the collection and receipt of revenues and income of the Partnership; (10) the establishment of one or more divisions of the Partnership, the selection and dismissal of employees of the Partnership (including including, without limitation, employees having titles such as "“president," "” “vice president," "” “secretary" ” and "“treasurer") ” of the Partnership), and agents, outside attorneys, accountants, consultants and contractors of the Partnership, and the determination of their compensation and other terms of employment or hiringhiring including waivers of conflicts of interest and the payment of their expenses and compensation out of the Partnership’s assets; (viii11) the maintenance of such insurance for the benefit of the Partnership Group and Partnership, the Partners and directors and officers thereof as it deems necessary or appropriate; (ix12) the formation of, or acquisition of an interest in, and the contribution of property and the making of loans to, any other further limited or general partnerships, joint ventures, corporations, limited liability companies corporations or other relationships that it deems desirable (including including, without limitation, the acquisition of interests in, and the contributions of property to, any Group Member Subsidiary and any other Person in which it has an equity investment from time to time) subject ); provided, that, as long as the Company has determined to continue to qualify as a REIT, the restrictions set forth Partnership may not engage in Section 2.4any such formation, acquisition or contribution that would cause the Company to fail to qualify as a REIT; (x13) the control of any matters affecting the rights and obligations of the Partnership, including the bringing settlement, compromise, submission to arbitration or any other form of dispute resolution, or abandonment of, any claim, cause of action, liability, debt or damages, due or owing to or from the Partnership, the commencement or defense of suits, legal proceedings, administrative proceedings, arbitration or other forms of dispute resolution, and defending the representation of actions at law the Partnership in all suits or in equity and otherwise engaging in the conduct legal proceedings, administrative proceedings, arbitrations or other forms of litigation and dispute resolution, the incurring of legal expense expense, and the settlement of claims and litigation; (xi) the indemnification of any Person against liabilities and contingencies to the extent permitted by law; (xii) the entering into of listing agreements with any National Securities Exchange and the delisting of some or all of the Limited Partner Interests from, or requesting that trading be suspended on, any such exchange (subject to any prior approval that may be required under Section 4.8); (xiii) unless restricted or prohibited by Section 5.7, the purchase, sale or other acquisition or disposition of Partnership Securities, or the issuance of additional options, rights, warrants and appreciation rights relating to Partnership Securities; and (xiv14) the undertaking of any action in connection with the Partnership's participation ’s direct or indirect investment in any Subsidiary or any other Person (including, without limitation, the Operating contribution or loan of funds by the Partnership to such Persons, incurring indebtedness on behalf of, or guarantying the obligations of, any such Persons); (15) the determination of the fair market value of any Partnership property distributed in kind using such reasonable method of valuation as the General Partner may adopt; (16) the exercise, directly or indirectly, through any attorney-in-fact acting under a general or limited power of attorney, of any right, including the right to vote, appurtenant to any asset or investment held by the Partnership; (17) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of or in connection with any Subsidiary of the Partnership or any other subsidiary Person in which the Partnership has a direct or indirect interest, or jointly with any such Subsidiary or other Person; (18) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of any Person in which the Partnership does not have an interest pursuant to contractual or other arrangements with such Person; (19) the making, execution and delivery of any and all deeds, leases, notes, mortgages, deeds of trust, security agreements, conveyances, contracts, guarantees, warranties, indemnities, waivers, releases or legal instruments or agreements in writing necessary or appropriate, in the judgment of the General Partner, for the accomplishment of any of the powers of the General Partner enumerated in this Agreement; (20) the maintenance of the Partnership’s books and records; (21) the issuance of additional Partnership Units, as appropriate and in the General Partner’s sole and absolute discretion, in connection with capital contributions by Additional Limited Partners and additional capital contributions by Partners pursuant to Article 4 hereof; (22) the distribution of cash to acquire Partnership Units held by a Limited Partner in connection with a Limited Partner’s exercise of its Redemption Right under Section 8.5 hereof; (23) the amendment and restatement of Exhibit A hereto to reflect at all times the capital contributions and Percentage Interests of the Partners as the same are adjusted from time to time to the extent necessary to reflect redemptions, Capital Contributions, the issuance of Partnership Units, the admission of any Additional Limited Partner or Substituted Limited Partner or otherwise, which amendment and restatement, notwithstanding anything in this Agreement to the contrary, shall not be deemed an amendment to this Agreement, as long as the matter or event being reflected in Exhibit A hereto otherwise is authorized by this Agreement; (24) the taking of any and all acts and things necessary or prudent to ensure that the Partnership will not be classified as a “publicly traded partnership” for purposes of Section 7704 of the Code, including but not limited to imposing restrictions on transfers and restrictions on redemptions; and (25) to take such other action, execute, acknowledge, swear to or deliver such other documents and instruments, and perform any and all other acts that the General Partner deems necessary or appropriate for the formation, continuation and conduct of the business and affairs of the Partnership (including, without limitation, all actions consistent with allowing the Company at all times to qualify as a member or partnerREIT unless the Company voluntarily terminates its REIT status) and to possess and enjoy all the rights and powers of a general partner as provided by the Act. (b) Notwithstanding any other provision of this Agreement, the Operating Partnership Agreement, the Delaware Act or any applicable law, rule or regulation, each B. Each of the Limited Partners and the Assignees and each other Person who may acquire an interest in Partnership Securities hereby (i) approves, ratifies and confirms the execution, delivery and performance by the parties thereto of the Operating Partnership Agreement, the Omnibus Agreement, the Contribution Agreement, the Distribution Agreement, and the Purchase Contract dated _________, 2004 between Penn Octane Corporation and the Operating Partnership and the other agreements described in or filed as exhibits to the Registration Statement that are related to the transactions contemplated by the Registration Statement; (ii) agrees that the General Partner (on its own or through any officer of the Partnership) is authorized to execute, deliver and perform the above-mentioned agreements referred to in clause (i) of this sentence and the other agreements, acts, transactions and matters described in or contemplated by the Registration Statement on behalf of the Partnership without any further act, approval or vote of the Partners Partners, notwithstanding any other provision of this Agreement (except as provided in Section 7.3), the Act or any applicable law, rule or regulation, to the Assignees fullest extent permitted under the Act or the other Persons who may acquire an interest in Partnership Securities; and (iii) agrees that the applicable law, rule or regulation. The execution, delivery or performance by the General Partner, any Group Member Partner or any Affiliate the Partnership of any of them, of this Agreement or any agreement authorized or permitted under this Agreement (including the exercise by the General Partner or any Affiliate of the General Partner of the rights accorded pursuant to Article XV), shall not constitute a breach by the General Partner of any duty that the General Partner may owe the Partnership or the Limited Partners or any other Persons under this Agreement (or any other agreements) or of any duty stated or implied by law or equity. C. At all times from and after the date hereof, the General Partner may cause the Partnership to establish and maintain working capital and other reserves in such amounts as the General Partner, in its sole and absolute discretion, deems appropriate and reasonable from time to time. D. At all times from and after the date hereof, the General Partner may cause the Partnership to obtain and maintain (i) casualty, liability and other insurance on the properties of the Partnership, (ii) liability insurance for the Indemnities hereunder and (iii) such other insurance as the General Partner, in its sole and absolute discretion, determines to be necessary. E. In exercising its authority under this Agreement, the General Partner may, but shall be under no obligation to, take into account the tax consequences to any Partner (including the General Partner) of any action taken (or not taken) by it. The General Partner and the Partnership shall not have liability to a Limited Partner under any circumstances as a result of an income tax liability incurred by such Limited Partner as a result of an action (or inaction) by the General Partner pursuant to its authority under this Agreement.