Installment Purchase Agreement

LEASE/INSTALLMENT PURCHASE AGREEMENT



                      LEASE/INSTALLMENT PURCHASE AGREEMENT
               FOR TWO (2) 7-MILE PIPELINES AND TRANSFER TERMINAL

THIS  AGREEMENT ("Agreement") is made and entered into as of _________ ___, 1999
by and between PENN OCTANE CORPORATION, a Delaware corporation ("POC"), and CPSC
INTERNATIONAL,  a  Texas  corporation  ("CPSC") (collectively referred to as the
"Parties"  and  individually  referred  to as a "Party" where either POC or CPSC
could  apply).

WHEREAS,  CPSC  has  agreed  to design, construct and own two (2) "Pipelines and
Transfer  Terminal"  (as  hereinafter  defined)  and  to lease the Pipelines and
Transfer Terminal to POC, and POC has agreed to lease the Pipelines and Transfer
Terminal from CPSC and to pay the Rental (as hereinafter defined), all under the
terms  and  conditions  hereinafter  set  forth;

NOW,  THEREFORE,  in  consideration of the mutual promises contained herein, the
benefits  to  be  derived  by  each  Party hereunder and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties  agree  as  follows:

1.     DEFINITIONS

1.1.     Definitions.  The  following terms as used in this Agreement shall have
the  respective  meanings  assigned  to  them  below:

1.1.1.     "Pipelines"  means  those  two (2) Pipelines, approximately seven (7)
miles in length and with a nominal 8.625 inch outside diameter (8.625" O.D.) and
with  a  nominal 6.625 inch outside diameter (6.625" O.D.), to be constructed in
Matamoros,  Tamaulipas,  Mexico,  as  more particularly described in Exhibit "A"
attached  hereto  and  made  a  part  hereof.

1.1.2.     "Transfer  Terminal"  means  the  affixed  to or installed equipment,
tanks,  etc.,  regarding  the  final  destination for the receiving of liquefied
petroleum  gas and/or the storage plant for re-distribution and re-delivery of a
similar  amount  of  said  product.

1.1.3.     "Facilities"  means  the  vents, casings, valves, cathodic protection
devices,  and other items of personal property which are constructed on, affixed
to  or  installed on the Pipelines inlet flange to inlet flange and equipment or
facilities  used  in  the  operation  or  monitoring  of  the  Pipelines.

1.1.4.     "Easements"  means those Pipelines and Transfer Terminal right-of-way
permits,  licenses  and  easements  which  are  to be physically occupied by the
Pipelines,  Transfer Terminal and the Facilities and or necessary to operate the
Pipelines,  Transfer Terminal and the Facilities as set out in the final design.


1.1.5.     "Operator"  means  CPSC  or  its  designee.

1.1.6.     "Pipeline  and  Transfer  Terminal  Assets"  means  the Pipelines and
Transfer  Terminal  together  with  the  Facilities  and  the  Easements.

1.1.7.     "Operating  Requirements"  means  the  general  description  of  the
Pipelines,  Transfer  Terminal  and Facilities to be constructed by CPSC and the
expected operating requirements as determined by POC and as set forth in Exhibit
"B"  hereto.

1.1.8.     "Substantial  Completion  Date"  is  defined  in  Section  3.6.

1.1.9.     "Lease Anniversary Date" means twelve (12) months after the first day
of  the  month  during  which  the  "Substantial  Completion  Date"  occurs.

1.1.10.      "Month"  means  a  calendar  month.

1.1.10.  "Lease  Effective  Date"  means the first day of the Month in which the
Substantial  Completion  Date  occurs.

1.1.11  "Initial  Lease Year" means the period commencing on the Lease Effective
Date  and  ending  on  the  first  Lease  Anniversary  Date  thereafter.

1.1.12. "Lease Year" means the Initial Lease Year or any subsequent twelve-month
period commencing on a Lease Anniversary Date during the term of this Agreement.

1.1.13.  "Lease  Term"  is  defined  in  Section  3.8.

1.2.     Other  Definitions.  Terms  defined in other portions of this Agreement
         ------------------
shall  have  the  respective  meanings  so  assigned  to them in this Agreement.

2.     DESIGN  AND  CONSTRUCTION

2.1.     Design  and  Specifications.  CPSC  shall proceed promptly and with due
         ---------------------------
diligence to prepare the engineering design and specifications of the Pipelines,
Transfer  Terminal  and  the  Facilities  in  order to comply with the Operating
Requirements.  CPSC shall complete and provide POC with a copy of such design in
accordance  with  Exhibit  "B", which POC shall expeditiously review. CPSC shall
receive  POC's  written  approval  of  such  design  of  the Pipelines, Transfer
Terminal and the Facilities prior to commencement of construction.  Such design,
which  may  be  subsequently  altered, will be described in words and mapped and
shall  become  Exhibit  "A".

                                        2

2.2.     Construction.  Following  POC's  approval  of  the  design,  CPSC  will
         ------------
proceed  promptly  and  with  due  diligence  to  acquire  the  Easements and to
construct the Pipelines, Transfer Terminal and the Facilities in accordance with
Exhibit  "B"  and  approved  design  and  specifications.

2.3.     Design  and  Construction  Costs.  CPSC  shall  bear  and pay the costs
         --------------------------------
incurred  in  connection  with  the  design  and  construction of the Pipelines,
Transfer  Terminal  and  the  Facilities  and  the acquisition of the Easements.

2.4.     Ownership.  Except  as  otherwise provided in Section 5, and unless and
         ---------
until  the option to purchase provided for in Section 5 is exercised, CPSC shall
be  the  owner  of  the  Pipelines and Transfer Terminal, the Facilities and the
Easements.

2.5.     Inspection  of  Materials  and  Work.
         -------------------------------------

2.5.1.     The  plans and specifications for the Pipelines and Transfer Terminal
are referred to in this Agreement as "the Design and Specifications" which shall
be  included  in  Exhibit  "A".

2.5.2.     In accordance with the following provisions, prior to the Substantial
Completion  Date,  POC  shall have the right to  inspect the Pipelines, Transfer
Terminal  and  the  Facilities  and  satisfy  itself  as  to their condition and
compliance  with  the  Design  and  Specifications.  In  this regard, CPSC shall
furnish to POC access at all reasonable times to all pipe and other materials to
be  used  in the construction of the Pipelines, Transfer Terminal and Facilities
and  to  the  work  of  construction  of  the  Pipelines,  Transfer Terminal and
Facilities  whenever  work  is  in  progress,  in order that POC may examine and
inspect  the pipe and other materials and observe the work and may assure itself
that  the  terms of the Design and Specifications are being met.  POC shall have
the  right  to  conduct  such  inspections of the pipe and other materials to be
used  in the construction of the Pipelines, Transfer Terminal and Facilities and
of  the  work at its sole cost, risk and expense.  POC and CPSC contemplate that
POC  will  be  given the opportunity to conduct thorough inspections of all work
and  all pipe and other materials in the construction of the Pipelines, Transfer
Terminal and Facilities, and that POC will at its discretion conduct inspections
of  and  will  observe  certain  pipe and materials and certain work as the work
progresses  and  segments  are  being  constructed.  In  this  connection,

                                        3

2.5.2.1.     POC  shall  designate  a  representative  of  POC  ("POC's
Representative")  in  order  to  perform  inspections  on behalf of POC at POC's
discretion  and  who  shall communicate with CPSC on behalf of POC regarding any
such  inspections,  notify  CPSC  of  any  defective pipe or other equipment and
defects  in  work  or  failure  to  comply  with  the  Design and Specifications
discovered  during  such  inspections, and shall communicate with CPSC regarding
the  curing of any discovered defects and repairs to or replacements of any such
defective  work  and  materials.

2.5.2.2.     CPSC  shall  designate  a  representative  of  CPSC  ("CPSC's
Representative")  who  shall  be  responsible  for  communicating  with  POC's
Representative on behalf of CPSC for purposes of this Section 2.5.2.2. and shall
be physically present or available by telephone or telefax during inspections by
POC's  Representative;

2.5.2.2.1.     POC's  Representative  shall coordinate such inspections to avoid
unnecessarily  delaying  the progress of work and shall conduct such inspections
of  pipe,  coating  and  welding  when  pipe  and  workmanship are available for
inspection  (that is, before being lowered into the ditch and covered), and CPSC
shall not be obligated to subsequently uncover pipe for inspection which was not
conducted  when  POC  had  the reasonable opportunity to do so when the pipe and
workmanship  were  available  for  inspection;  and

2.5.2.2.2.     If,  in  the  reasonable  judgment  of POC, work or pipe or other
materials  are  defective  or  fail  to  comply  with  the Specifications, POC's
Representative  shall  notify  CPSC's  Representative  at  the  time  of  POC's
Representative's  discovery  of  such defect or failure or as soon thereafter as
possible,  and CPSC shall repair or replace the defective work or materials in a
manner  complying  with  the Design and Specifications (in this regard, any such
notification  by  POC's  Representative  which  is not initially made in writing
shall  be  confirmed in writing by POC's Representative within twenty-four hours
after the applicable inspection). The scope of such inspections shall be limited
to  determining  whether the inspected pipe and materials and the results of the
work  comply  with  the  Design  and  Specifications.

                                        4

3.     PIPELINE  AND  TRANSFER  TERMINAL  LEASE  AND  RENTAL

3.1.     Pipeline  and  Transfer  Terminal  Lease.  For  and in consideration of
         ----------------------------------------
POC's  payment  of  the rentals herein provided, CPSC hereby agrees to lease and
let  unto POC, effective as of the Lease Effective Date, the Pipelines, Transfer
Terminal and the Facilities for the Lease Term (as herein defined), on the terms
set forth herein.  During the Lease Term, the Pipelines and the Facilities shall
be  operated  by  the  Operator  in  accordance  with the terms of the Operating
Agreement  attached  hereto  as  Exhibit  "C".

3.2.     Rental.  For  the  duration  of the Lease Term (as herein defined), POC
         ------
shall  pay  to  CPSC as rental the sum of Eight Hundred Sixteen Thousand Dollars
($816,000.00)  per Lease Year (the "Rental"), subject to following provisions of
this  Section  3.2.  The  Rental  for  each Lease Year is payable in twelve (12)
equal  monthly  installments  of Sixty-Eight Thousand Dollars ($68,000.00) each,
due  and  payable  on or before the last day of each Month provided, however, if
the  Substantial  Completion  Date does not occur on the first day of the Month,
then,  solely  with respect to the installment of rental payable for the initial
Month  of the Initial Lease Year.  POC shall make an entire monthly installment.
Such  payment shall be considered a prepayment for the partial month's rental at
the  end of the Lease Term.  POC shall require its customer to make all payments
to an escrow account in the name of CPSC.  An escrow agent (RZB) will deduct the
lease payment and any other funds due CPSC from the escrow account and remit the
remainder  to  POC.  A  sample  escrow  agreement  is  attached  as Exhibit "F."

3.3.     Letter  of  Credit.  POC  shall  provide,  at  closing  of  the  Lease
         ------------------
Installment  Agreement,  an  irrevocable  standby  letter of credit to guarantee
payments  to  CPSC  in  the  amount  of  Four  Hundred  Eight  Thousand  Dollars
($408,000.00).  If there is a default in payment, CPSC can call on the letter of
credit  for  payment.  The  irrevocable letter of credit will be obtained from a
first  rated  bank  acceptable  to  CPSC.

3.4.     Security  Agreement.  POC  will  grant  CPSC  a first priority security
         -------------------
interest  in  all  of  its assets (except for accounts receivable and inventory)
including;  the POC contract rights with Seadrift, Exxon, and PMI or other PEMEX
entities  as  security  for  the timely payment of the lease payments.  POC will
provide  U.C.C.  and  lien  documents  as  necessary  to perfect CPSC's priority
interest  herein  mentioned.

                                        5

3.5.     Default.
         -------

3.5.1.     Each  of  the following shall be deemed a default by POC and a breach
of  this  Agreement:

3.5.1.1.     Filing  of  a  petition  for  adjudication  as  a  bankrupt, or for
reorganization,  or  for  an  arrangement  under  any  Federal  or State statue;

3.5.1.2.     Dissolution  or  liquidation  of  POC,  without the transfer to and
assumption  by  a  financially  responsible  third  party  of  this  Agreement;

3.5.1.3.     Appointment  of a permanent or temporary receiver or a permanent or
temporary  trustee  of  all  or  substantially  all  the  property  of  POC;

3.5.1.4.     Taking  possession of the property of POC by a governmental officer
or  agency  pursuant  to  statutory  authority  for dissolution, rehabilitation,
reorganization  or  liquidation,  nationalization  or  other  similar government
action;

3.5.1.5.     Making  by  POC  of  an  assignment  for  the benefit or creditors.

3.5.1.6.     Filing  of  a  voluntary lien without CPSC's permission, which will
not  be unreasonably withheld, or involuntary lien on the assets of POC that are
security  for  this  lease.

If any event mentioned in this Section 3.5.1. shall occur, CPSC may thereupon or
at any time within ninety (90) days thereafter elect to terminate this Agreement
upon  ten  (10)  days'  prior  written  notice  to POC  and this Agreement shall
terminate  on the day in such notice specified with the same force and effect as
if  that  date  were  the  date  herein  fixed  for  the Term of this Agreement.

3.5.2.     Default  in  the  payment  of  the  rental or any other amount herein
reserved  or  any  part  thereof  for  a period of sixty (60) days after written
notice  of  such  default  from  CPSC.

                                        6

3.5.3.     In the event of any default under Section 3.5.1. and/or 3.5.2., CPSC,
at  its option, in addition to all other rights, can present a letter of default
to  the  __________  bank and draw down on the letter of credit provided by POC,
and  can  repossess  and  assume  all  rights  in  any assets or agreements that
constitute  security  for  this  lease.

3.5.4.     Default in the performance of any other covenant or condition of this
Agreement on the part of either party to be performed for a period of sixty (60)
days after written notice from the non-defaulting party specifying the nature of
such  default.  For  purposes  of this Section 3.5.4., no default on the part of
either  party in performance of work required to be performed or acts to be done
shall  be  deemed to exist if after receipt of the aforesaid notice the party in
default  diligently  takes action to rectify the same and prosecutes such action
towards  completion  with  reasonable  diligence, subject, however, to avoidable
delays.

3.5.5.     In  case  of  any  such  default  under Section 3.5.2. and/or Section
3.5.4.  and  at  any  time  within  ninety  (90)  days  thereafter following the
expiration  of  the respective grace periods above-mentioned, the non-defaulting
party  may  serve  a notice upon the defaulting party electing to terminate this
Agreement upon a specified date not less than thirty (30) days after the date of
serving  such notice and this Agreement shall expire on the date so specified as
if that date had been originally fixed as the expiration date of the Term herein
granted.  However, a default under Section 3.5.2. and/or Section 3.5.4. shall be
deemed  waived  if  such  default  is  remedied  before  the  date specified for
termination in the notice of termination served on the defaulting party pursuant
to  this  Section  3.5.5.

3.6.     Substantial  Completion.  In  the  event  that  CPSC,  using  its  best
         -----------------------
efforts,  determines that it will not be able to meet the Substantial Completion
Date,  CPSC  shall inform POC.  When, in CPSC's judgment, CPSC has completed the
Pipelines,  Transfer  Terminal  and  Facilities  in  a condition to be placed in
service,  CPSC  shall conduct a hydrostatic pressure test in accordance with the
Design  and  Specifications.  If the Pipelines, Transfer Terminal and Facilities
fail  to  satisfy such test, CPSC shall use all reasonable efforts to repair the
Pipelines,  Transfer  Terminal  and  Facilities  so that the Pipelines, Transfer
Terminal  and  Facilities  satisfy  such test.  "Substantial Completion Date" as
used  herein  shall occur when, and shall mean the date on which, the Pipelines,
Transfer  Terminal  and Facilities have satisfied such hydrostatic pressure test
and  are  clean  and  dry  internally  so as to be ready to be placed in service
("Substantial  Completion").  CPSC  shall  use  its  best  efforts to obtain all
necessary rights of way and design, engineer, construct, test and obtain permits
for  the  Pipelines,  Transfer  Terminal  and Facilities so that the Substantial
Completion  Date  is  no  later  than  May  1,  1999.

                                        7

3.7.     Certificate.  When  substantial  completion  has  occurred, the Parties
         -----------
shall  execute  a  certificate substantially in the form of Exhibit "D" attached
hereto  setting forth such fact, specifying the Substantial Completion Date, and
acknowledging  that the lease of the Pipelines, Transfer Terminal and Facilities
commences  on  the  Lease  Effective  Date.

3.8.     Lease  Term.  The  Pipelines,  Transfer Terminal and the Facilities are
         -----------
leased  for a term commencing on the Lease Effective Date and ending on the last
day  of  the fifteenth (15th) Lease Year or if prior to such date, at the end of
the Lease Year during which POC exercises its option to purchase under Section 5
(i.e.,  the  10th,  or  15th  Lease  Year,  as  applicable)  (the "Lease Term").

3.9.     Insurance.  Throughout  the  Lease Term, CPSC shall, at CPSC's expense,
         ---------
provide  liability  insurance.  POC shall provide, at its expense, the insurance
necessary  for  property  damage  as  defined  in  Section  3.10  below.

3.10.     Damage or Destruction.  If the Pipelines and Transfer Terminal Assets,
          ---------------------
or  any portion thereof, shall be damaged or destroyed during the Lease Term due
to  causes  other  than  either a) Operator's failure to perform any obligations
under the terms hereof (including Exhibit "B") or b) Operator's negligence then,
POC  may  elect  whether  or  not to repair or rebuild the Pipeline and Transfer
Terminal  Assets; provided, however, CPSC shall not have any duty, liability, or
responsibility  to perform any repairs, replacement, or reconstruction not fully
funded  by  POC  or insured; and also provided that if Operator shall proceed as
promptly  as  practicable  to  complete  such  repair or rebuilding with all due
diligence  and  due  care  and  shall  make  available  for inspection by POC as
provided  by  Section  2.5  all work and materials used to repair or rebuild. In
event  of  any  such  damage  or  destruction,  and  POC elects not to repair or
rebuild, POC shall have the right to terminate the Lease and Operating Agreement
forthwith  and POC and CPSC shall negotiate to determine the unrecovered capital
POC shall pay with any insurance proceeds; salvaged or income from reletting all
or  a  portion  of the Pipelines and Transfer Terminal to be subtracted from the
unrecovered  capital.

                                        8

3.11.     Indemnification of POC.  Except as otherwise expressly provided below,
          ----------------------
from  and  after  the  effective  date  hereof,  including the period of design,
engineering  and construction of the Pipelines, Transfer Terminal and Facilities
and  while  CPSC is Operator of the Pipelines, CPSC shall defend, indemnify, and
hold  harmless POC, its officers, agents, representatives and employees from and
against  any  and  all  claims,  losses,  damages,  causes of action, suits, and
liability  of every kind (including, without limitation, expenses of litigation,
court  costs  and  attorneys'  fees)  of  or by any person or entity (including,
without limitation, CPSC and its employees) for injury to or death of any person
or  persons, or for damage to any property, arising out of or in connection with
CPSC's  operation,  repair,  replacement,  or  maintenance  of  the  Pipeline
Facilities,  or  the  escape  or  loss  of any gas or other substance therein or
transported  thereby, including, without limitation, injuries, death, or damages
caused by POC's sole negligence or joint negligence except only injuries, death,
or  damages caused by POC's gross negligence or willful misconduct.  THE PARTIES
EXPRESSLY  INTEND  THAT THE INDEMNITY PROVIDED IN THIS SECTION 3.11 INCLUDES THE
OBLIGATION  OF  CPSC TO INDEMNIFY AND PROTECT POC FROM THE CONSEQUENCES OF POC's
OWN NEGLIGENCE, WHETHER THAT NEGLIGENCE IS THE SOLE OR A CONCURRING CAUSE OF THE
INJURY,  DEATH  OR  DAMAGE.

3.12.     Indemnification  of  CPSC.  For  claims,  losses,  damages,  causes of
          -------------------------
action,  suits,  and  liability  of  every  kind (including, without limitation,
expenses  of  litigation,  court costs and attorneys' fees) arising at any time,
providing that such claim arises from POC's operation of the Pipeline Facilities
and/or  Transfer Terminal, POC shall defend indemnify and hold harmless CPSC its
officers,  agents,  representatives  and  employees from and against any and all
claims,  losses,  damages,  causes of action, suits, and liability of every kind
(including,  without  limitation,  expenses  of  litigation,  court  costs  and
attorneys'  fees)  of or by any person or entity (including, without limitation,
POC  and  its employees) for injury to or death of any person or persons, or for
damage  to  any  property, arising out of or in connection with POC's operation,
repair,  replacement,  or maintenance of the Pipeline Facilities and/or Transfer
Terminal,  or  the  escape  or loss of any product or other substance therein or
transported  thereby, including, without limitation, injuries, death, or damages
caused  by  CPSC's  sole  negligence  or  joint negligence except only injuries,
death,  or damages caused by CPSC's gross negligence or willful misconduct.  THE
PARTIES  EXPRESSLY  INTEND  THAT  THE  INDEMNITY  PROVIDED  IN THIS SECTION 3.12
INCLUDES  THE  OBLIGATION  OF  POC  TO  INDEMNIFY  AND  PROTECT  CPSC  FROM  THE
CONSEQUENCES  OF CPSC's OWN NEGLIGENCE, WHETHER THAT NEGLIGENCE IS THE SOLE OR A
CONCURRING  CAUSE  OF  THE  INJURY,  DEATH  OR  DAMAGE.

                                        9

3.13.     Maintenance.  The Rental payments set out in Section 3.2 shall include
          -----------
all routine maintenance as defined in contracting Operating Agreement Schedule A
of  Exhibit C.  POC will be responsible for all other maintenance costs.  In the
event  there is a change in regulations governing the operation of the Pipelines
and  Transfer  Terminal  Assets  which  results  in  a  substantial  increase in
maintenance  costs  the  parties agree to meet to arrive at a mutually agreeable
adjustment  to  Rental.

3.14.     Progress  Reports.  CPSC  shall  provide  POC  progress  reports which
          ------------------
detail  the status of the construction and operation of the Pipeline Facilities.

4.     OPERATOR

4.1     Initial  Operator.  CPSC, or its designee, shall be the initial Operator
        -----------------
of  the Pipelines and the Facilities.  POC will be responsible for operations of
the  Transfer  Terminal.

4.2     Operating  Agreement.  CPSC,  or its designee, acting as Operator of the
        --------------------
Pipeline  Facilities  shall  be  responsible  for and act in accordance with the
terms  and  provisions  of  the  Contract Operating Agreement attached hereto as
Exhibit  "C"  (the  "Operating  Agreement").

5.     OPTION  TO  PURCHASE

5.1.     Option  to  Purchase.  POC  shall have the following option to purchase
         --------------------
the  Pipelines  and  Transfer  Terminal,  the  Facilities and the Easements (the
Pipeline  and  Transfer  Terminal  Assets)  with  closing to occur as set out in
Section  7.

5.1.1.     POC  shall  have  the  option  to  purchase the Pipeline and Transfer
Terminal  Assets  at the end of the tenth (10th) Lease Year, upon 180 days prior
written  notice.  At  Closing, POC shall pay to CPSC the sum of two million five
hundred  thousand  dollars ($2,500,000.00) as consideration for the Pipeline and
Transfer  Terminal  Assets.

5.1.2.     If POC has not previously exercised its option to purchase, POC shall
have  the  option  to  purchase  the  Pipeline and Transfer Terminal Assets with
closing  of  such  purchase transaction to take place on or before at the end of
the  fifteenth  (15th)  Lease  Year,  upon  180  days  prior written notice.  At
Closing, POC shall pay to CPSC the sum of Fifty Thousand Dollars ($50,000.00) as
consideration  for  the  Pipeline  and  Transfer  Terminal  Assets.

5.2.     Option  Price.  In  the event POC exercises its option to purchase, the
         -------------
sum  set  forth in the applicable clause of Section 5.1 as the consideration for
the  Pipeline  and  Transfer Terminal Assets shall be the "Option Price" as used
herein.

                                       10

5.3.     Environmental  Due  Diligence.  At any time prior to POC exercising its
         ------------------------------
option  to purchase, POC shall have access to the Pipeline and Transfer Terminal
Assets  and  all  associated records for the purpose of monitoring and assessing
the  environmental condition of the Pipeline and Transfer Terminal Assets.  Such
monitoring  and  assessment  may  include  not  only  a  review  of  records and
documents,  but  an assessment of the real and personal property associated with
the  Pipeline  Facilities  including  but not limited to taking core samples and
other  samples  for  analysis.

6.     REPRESENTATIONS  AND  WARRANTIES;  COVENANTS

6.1.     Representations  and  Warranties of CPSC.  CPSC represents and warrants
         ----------------------------------------
to  POC:

6.1.1.     that  the  execution,  delivery and performance of this Agreement and
the  transactions  contemplated  hereby have been duly and validly authorized by
all  requisite  corporate  action  on  the  part  of  CPSC;  and

6.1.2.     that  CPSC  is  a  Texas  corporation and has all requisite power and
authority  to  enter  into  this  Agreement  and  consummate  the  transactions
contemplated  hereby;  and

6.1.3.     that  this  Agreement  constitutes  the  valid  and  legally  binding
obligation of CPSC, and the taking by CPSC of the actions contemplated hereby do
not  and  will not violate or constitute a default under any material agreement,
order,  law,  statute  or  regulation  or  result  in  the  acceleration  of any
obligation,  deed of trust, or indenture or other encumbrance to which CPSC is a
party;  and

6.1.4.     that  CPSC,  or its designee, is duly qualified to own and to operate
the  Pipeline  and  Transfer  Terminal  Assets.

6.2.     Covenants  of CPSC.  CPSC covenants that CPSC will acquire and maintain
         ------------------
all permits required by CPSC to own and operate the Pipelines, Transfer Terminal
and  Facilities.

6.3.     Representations  and Warranties of POC.  POC represents and warrants to
         --------------------------------------
CPSC:

6.3.1.     that  the  execution,  delivery and performance of this Agreement and
the  transactions  contemplated  hereby have been duly and validly authorized by
all  requisite  corporate  action  on  the  part  of  POC;  and

                                       11

6.3.2.     that  POC is a Delaware corporation duly organized, validly existing,
and in good standing under the laws of the States of Delaware and Texas, and has
all  requisite  corporate  power  and authority to enter into this Agreement and
consummate  the  transactions  contemplated  hereby;  and

6.3.3.     that  this  Agreement  constitutes  the  valid  and  legally  binding
obligation  of  POC, and the taking by POC of the actions contemplated hereby do
not  and  will not violate or constitute a default under any material agreement,
order,  law,  statute  or  regulation;  and

6.3.4.     POC  has  granted  to CPSC that all agreements and assets (except for
accounts  receivable and inventory) used as security for this lease, a first and
superior  lien  to  all  other  creditors and parties.  If existing liens are in
place,  the  current  lienholders  have  subordinated  the  liens  to  CPSC; and

6.3.5.     that  POC, or its designee, is duly qualified to operate the Transfer
Terminal.

7.     CLOSING  UNDER  OPTION  TO  PURCHASE

7.1.     Closing.  If  POC  exercises  its  option  to  purchase in a timely and
         -------
proper manner, POC and CPSC agree that the consummation of the sale and purchase
of  the  Pipeline  and  Transfer  Terminal  Assets  ("Closing") shall occur at a
mutually  agreed  upon date at the end of the Lease Year for which POC exercised
its option (i.e., the 10th, or 15th Lease Year, as applicable) ("Closing Date").
The  Closing  shall  be  held  at the offices of CPSC at Two Allen Center, Suite
2250,  Houston,  Texas.

7.1.1.     Closing  Obligations.  At  the  Closing,  the  following events shall
           --------------------
occur,  each  event  under  the  control  of  one party hereto being a condition
precedent  to  the  events  under the control of the other party, and each event
shall  be  deemed  to  have  occurred  simultaneously  with  the  other  events:

CPSC  shall duly execute, acknowledge and deliver an Assignment and Bill of Sale
("Assignment"),  substantially  in  the  form  set forth in Exhibit "E" attached
hereto  and  made  a  part  hereof;

7.1.2.     If  POC  has  not previously done so, POC shall pay to CPSC an amount
equal to the total Option Price in immediately available funds  by wire transfer
to  CPSC's  account  at  Bank  One  Texas,  N.A.-Houston, Texas, ABA Routing No.
111-000-614  Account  No.  182-413-6335  for  credit  to  CPSC;  and

                                       12

7.1.3.     CPSC  shall  transfer  and  deliver  or  cause  to be transferred and
delivered  to  POC the original (or if an original is not available, then a true
copy)  of  all  relevant  written  instruments, documents and files, or relevant
portions  thereof, pertaining to the Pipeline and Transfer Terminal Assets which
are  within  the possession or control of CPSC (other than material dealing with
matters  between  CPSC  and  the  contractor).

8.     OBLIGATIONS  AFTER  CLOSING;  DISCLAIMER  OF  WARRANTIES

8.1.     Indemnification  of  CPSC  after Closing.  If Closing occurs, POC shall
         ----------------------------------------
indemnify  and hold harmless CPSC and its affiliates, and all their contractors,
officers,  agents  and  employees  from  and  against  all  damages,  demands,
liabilities,  losses,  lawsuits  (including, without limitation, court costs and
reasonable  attorneys'  fees),  costs, claims and causes of action (collectively
referred to in this Section  8.1 as "Claims") that arise out of or in connection
with  any  errors, defects or deficiencies in the engineering, the design or the
construction  of  the Pipelines, Transfer Terminal and Facilities (including the
Specifications)  or  the condition of the Pipeline and Transfer Terminal Assets,
or  that  arise  out  of  or  in  connection  with  the  ownership,  operation,
maintenance,  repair or replacement of the Pipeline and Transfer Terminal Assets
after  the  Closing,  provided,  however, that POC shall have no indemnification
obligation  under  this  paragraph  for any claim caused by CPSC's negligence or
intentional  acts.

8.2.     DISCLAIMERS  OF  WARRANTIES;  WAIVERS.  THE  PARTIES AGREE THAT, TO THE
         -------------------------------------
EXTENT  REQUIRED  TO  BE  OPERATIVE, THE FOLLOWING DISCLAIMERS OF WARRANTIES ARE
"CONSPICUOUS" DISCLAIMERS FOR THE PURPOSES OF APPLICABLE LAW.  THIS AGREEMENT IS
MADE  AND  ACCEPTED,  AND IF POC EXERCISES ITS OPTION TO PURCHASE THE ASSIGNMENT
WILL  BE  MADE AND ACCEPTED, WITH THE UNDERSTANDING AND AGREEMENT OF THE PARTIES
THAT IF POC EXERCISES ITS OPTION TO PURCHASE, THE PIPELINE AND TRANSFER TERMINAL
ASSETS  AND  ALL PERSONAL PROPERTY, MACHINERY, FIXTURES, EQUIPMENT AND MATERIALS
COVERED HEREBY SHALL BE SOLD AND ASSIGNED AND ACCEPTED BY POC IN THEIR CONDITION
AT  THAT  TIME, "AS IS, WHERE IS, AND WITH ALL FAULTS" AT THAT TIME, WITHOUT ANY
WARRANTIES  WHATSOEVER,  EXPRESS,  IMPLIED  OR STATUTORY, OF QUALITY, CONDITION,
MERCHANTABILITY  AND/OR  FITNESS  FOR  A  PARTICULAR  PURPOSE OR USE, OR DESIGN,
PERFORMANCE,  CONDITION,  OR  OF  ANY  OTHER  KIND,  ALL  OF WHICH ARE EXPRESSLY
DISCLAIMED; PROVIDED, HOWEVER, CPSC WARRANTS THAT THE PIPELINE FACILITIES ARE IN
GOOD  OPERATING  ORDER  AND  WHILE  CPSC  WAS  OPERATOR PIPELINE FACILITIES WERE
OPERATED  IN  ACCORDANCE  WITH  ALL APPLICABLE LAWS AND REGULATIONS AND THAT THE
FOREGOING DISCLAIMERS DO NOT NEGATE OR DETRACT IN ANY WAY FROM ANY WARRANTIES TO
BE  SET  FORTH  IN  THE  ASSIGNMENT.

                                       13

9.     TAXES

9.1.     Sales  Taxes.     If the option to purchase provided for in Section 5.1
         ------------
is  exercised,  the  Option  Price provided for in Section 5.2 shall not include
(and  POC shall not otherwise pay CPSC for) any sales or use tax or other excise
taxes, fees or levies.  However, in the event that a taxing authority(ies) deems
any  such tax, fee or levy to arise out of or in connection with the exercise of
the  option  to purchase under Section 5.1, POC shall be responsible for payment
thereof  and  shall indemnify and hold CPSC harmless with respect to the payment
of  any  such  taxes,  fees  or  levies.  The  Parties  agree  that,  under  no
circumstance (other than challenge by a taxing authority) shall any sales or use
tax,  other excise tax, fees or levies be due prior to exercise of the option to
purchase.

9.2.     Other  Taxes  and  Fees.     If  the option to purchase provided for in
         -----------------------
Section  5.1 is exercised, proration of ad valorem taxes, water taxes, hazardous
waste taxes, utility and fuel charges, permit and inspection fees, and any other
taxes  levied  on  or  with respect to the Pipeline and Transfer Terminal Assets
(other  than taxes covered in Section 9.1 above) shall be made as of the Closing
Date  specified  in  Section  7,  with all such items attributable to the period
prior  the  Closing  Date to be for the sole account of CPSC, and all such items
attributable  to  the  period  on  or  after the Closing Date to be for the sole
account  of  POC.

9.3.     Cooperation.     Each  Party  shall  provide  the  other  party  with
         -----------
reasonable  access  to  all relevant documents, data and other information which
may  be required by the other Party for the purpose of preparing tax returns and
responding  to any audit by any taxing jurisdiction.  Each Party shall cooperate
with  all  reasonable  requests  of  the  other  Party  made  in connection with
determining  or  contesting  tax  liabilities  attributable  to the Pipeline and
Transfer Terminal Assets.  Notwithstanding anything to the contrary contained in
this Agreement, neither Party to this Agreement shall be required at any time to
disclose  to  the  other  Party  any  tax  returns  or  other  confidential  tax
information.

                                       14

10.     MISCELLANEOUS

10.1.     Commissions.  Whether  or  not  the  Closing  occurs,  (a)  CPSC shall
          -----------
indemnify  and  hold harmless POC from and against any and all liability for any
brokers'  of  finders'  fees  arising  with  respect  to  any brokers or finders
retained  or engaged by CPSC in respect to the transactions contemplated by this
Agreement,  and  (b) POC shall indemnify and hold harmless CPSC from and against
any  and all liability for any brokers' or finders' fees arising with respect to
any brokers or finders retained or engaged by POC in respect to the transactions
contemplated  by  this  Agreement.

10.2.     Fees.  Each  Party  hereto shall bear and be responsible for all fees,
          ----
costs  and  expenses  (including,  without  limitation,  legal,  accounting  and
engineering expenses) incurred by such party with respect to the negotiation and
execution  of  this  Agreement.

10.3.     Notices.  All  notices,  requests,  demands,  instructions  and  other
          -------
communications  required  or permitted to be given hereunder shall be in writing
and  shall  be  delivered  personally, by messenger or mail courier service with
receipt obtained thereby or mailed by registered mail, or certified mail, return
receipt  requested,  postage  prepaid,  as  follows:

If  to  POC,  addressed  to:

PENN  OCTANE  CORPORATION         and  PENN  OCTANE  CORPORATION
                                  ---
900  Veterans  Blvd.,  Suite 240       12118  South  Bloomfield
Redwood  City,  CA  94063              Santa  Fe  Springs,  CA  90620
Attention: Mr. Jerome B. Richter       Attention:  Financial  Officer

                                       15

If  to  CPSC,  addressed  to:

CPSC  INTERNATIONAL
Two  Allen  Center,  Suite  2250
1200  Smith  Street
Houston,  Texas  77002
Attention:  Mr.  Eric  B.  DuBose

or  to  such  other  place as either party may designate as to itself by written
notice to the other.  All notices will be deemed given on the date of receipt at
the  appropriate  address.

10.4.     Force Majeure.  A Party shall be excused from complying with the terms
          -------------
of  this  Agreement,  except  the  payment  term,  if  and  for  so long as such
compliance  is  hindered,  prevented  or  made  unsafe by strikes or other labor
disturbances,  riots,  wars  (declared or undeclared), insurrection, rebellions,
terrorist  acts,  civil  disturbances,  dispositions,  acts of God, inability to
obtain  equipment,  supplies  or  fuel  which  was  not  reasonably foreseeable,
epidemics,  lightning, earthquakes, fires, storms, hurricanes, floods, washouts,
breakage  or  accident  to  machinery, equipment or lines of pipe, freeze-ups of
lines  of  pipe or equipment, the necessity to make repairs or tests to lines of
pipe  or  equipment, laws, rules, regulations,  orders of governmental entities,
agencies,  or  authorities,  or  by  other  act  or  cause,  whether  similar or
dissimilar,  which  is  reasonably beyond the control of such Party, such causes
being  herein  sometimes  called "Force Majeure."  If any failure to comply with
this  Contract  is  occasioned  by  a  governmental  law,  rule,  regulation,
disposition,  or  order  and  the affected Party is operating in accordance with
accepted  practice  in the area of operations and is making reasonable effort to
comply  with such law, rule, regulation, disposition, or order, the matter shall
be  deemed  beyond  the control of the affected Party.  In the event that either
Party  hereto is rendered unable, wholly or in part, temporarily or permanently,
by  any  of these causes to carry out its obligations under this Contract, it is
agreed that such Party shall give notice and details of such occurrence of Force
Majeure, along with an estimate as to the time of delay, in writing to the other
Party  as  promptly  as  possible  after  its  occurrence.  In  such cases, such
obligations  of  the  Party  giving  the  notice  shall  be suspended during the
continuance  of  any  inability  so  caused.

10.5.     Governing  Law.  THIS  AGREEMENT IS TO BE CONSTRUED IN ACCORDANCE WITH
          --------------
THE  LAWS  OF  THE  STATE  OF  TEXAS, WITHOUT GIVING EFFECT TO THE PRINCIPLES OF
CONFLICT  OF  LAWS.  IN THE EVENT OF ANY DISPUTE BETWEEN THE PARTIES, THEY SHALL
USE  THEIR  BEST  EFFORTS  TO MUTUALLY AGREE UPON AN ALTERNATIVE FORM OF DISPUTE
RESOLUTION  ("ADR") BEFORE AN ADR PANEL OR ADR INDIVIDUAL IN HOUSTON, TEXAS; ANY
JUDGMENT ENTERED THEREUPON SHALL BE FILED ONLY IN THE STATE OR FEDERAL COURTS OF
TEXAS.  IN  THE  EVENT  OF  (a)  FAILURE  TO AGREE ON ADR METHOD, (b) FAILURE TO
CONSENT TO A NON-BINDING ADR DECISION, OR (c) APPEAL OF, OR CHALLENGE TO, AN ADR
DECISION,  THEN  ANY  LEGAL  ACTIONS  FILED  MAY BE BROUGHT ONLY IN THE STATE OR
FEDERAL  COURTS AT HOUSTON, TEXAS.  IF THERE IS ANY COURT RULING THAT MEXICO HAS
JURISDICTION OVER ANY DISPUTE ARISING UNDER THIS AGREEMENT, THE DISPUTE SHALL BE
FINALLY SETTLED BY BINDING ARBITRATION UNDER THE RULES OF THE I.C.C. USING THREE
ARBITRATORS  TO  BE  CONDUCTED  IN  ENGLISH,  IN  HOUSTON,  TEXAS.

                                       16

10.6.     Assignment.  This  Agreement  shall  be  binding upon and inure to the
          ----------
benefit  of  the  successors of the Parties, but shall not be assigned by either
Party and if assignment is attempted it shall be null and void without the prior
written  consent  of  the  other  Party, which consent shall not unreasonably be
withheld, except that assignment to a parent corporation, subsidiary of a parent
corporation,  or a successor to substantially all of the business of the Parties
shall  not  require  the  other  Party's  consent  to  become effective.  In any
assignment  the  Assignor  shall guarantee the full performance of the terms and
conditions  of  this  Agreement  by  the  Assignee.

10.7.     Entire  Agreement;  Amendments.  This  Agreement  shall constitute the
          ------------------------------
entire  agreement between the Parties with respect to the subject matter hereof,
superseding  any  and  all  prior  negotiations,  discussions,  agreements  and
understandings,  whether oral or written, relating to such subject matter.  This
Agreement may not be amended, and no rights hereunder may be waived, except by a
written  document  signed  by  the  Party  to  be charged with such amendment or
waiver.

10.8.     Severability.  If  any one or more of the provisions contained in this
          -------------
Agreement shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any  other  provisions  of  this  Agreement.

10.9.     No  Consequential  or  Punitive  Damages.  In  the  event of breach or
          ----------------------------------------
violation  of  this  Agreement,  neither  Party  shall  be  entitled  to recover
consequential  or  punitive  damages from the other Party, and each Party hereby
waives  any  claim  or  right  to  consequential  or punitive damages hereunder.

10.10.     Headings;  References.  The  headings of the articles and sections of
           ---------------------
this  Agreement are for guidance and convenience of reference only and shall not
limit  or  otherwise  affect  any  of the terms or provisions of this Agreement.
References  herein  to  an  "Exhibit"  shall  be to an Exhibit of this Agreement
unless  a  contrary  intent  is  clearly  stated.

                                       17

10.11.     Counterparts.  This  Agreement may be executed by POC and CPSC in any
           ------------
number  of  counterparts,  each of which shall be deemed an original instrument,
but  all  of  which  together  shall constitute but one and the same instrument.

10.12.     Recording  Fees.  POC  shall  pay  all recording fees relating to the
           ---------------
filing  of  instruments  transferring  title  from  CPSC  to  POC.

10.13.     Conflict.  In  the event of any conflict or inconsistency between the
           --------
Specifications  and  the  terms  and provisions of this Agreement, the terms and
provisions  of  this  Agreement  shall  prevail  and  govern.

10.14.     Publicity.  All  notices  to  third  parties  and  other  publicity
           ---------
concerning  the  transactions  contemplated  by  this Agreement shall be jointly
planned  and coordinated by and between POC and CPSC; provided, however, no such
notices  or  other publicity shall disclose the Option Price of the Pipeline and
Transfer  Terminal  Assets,  except  as  required  by  law.  No  Party shall act
unilaterally  in  this  regard  without the prior written approval of the other,
unless  required  by  law.

10.15.     Waiver.  No  waiver  of  any  term,  provision  or  condition of this
           ------
Agreement shall be effective unless in writing signed by the parties hereto, and
no  such  waiver  shall  be deemed to be or construed as a further or continuing
waiver  of  any  such  term,  provision or condition or as a waiver of any other
term, provision or condition of this Agreement, unless specifically so stated in
such  written  waiver.

10.16.     Facsimile.  Facsimile  copies  of  all documents required for Closing
           ---------
hereunder,  including  signatures  thereon,  shall  constitute  original  copies
thereof  and  shall be binding on the parties hereto.  POC and CPSC will, within
five  (5) working days of the Closing Date, send to the other an original of all
documents  executed  by  the  parties  hereto  for  Closing.

10.17.     First  Right  of  Refusal.  If  CPSC  desires to sell this lease to a
           -------------------------
non-affiliated  third  party, CPSC shall notify POC of CPSC's offer and give POC
ten  (10)  days  to  make  a  firm  and binding offer with proof of financing to
purchase  this lease which is equivalent to or better than the offer to purchase
that  CPSC has presented to POC.  If POC fails to make a binding offer as stated
above  within ten (10) days of receipt of CPSC's offer, then in that event, CPSC
shall  have  the  right  to proceed with the sale of the lease to a third party.

                                       18

     IN WITNESS WHEREOF, each of the parties hereto have executed this Agreement
as  of the date first above written.  POC is executing this Agreement subject to
POC's  Board  of Directors' approval.  Said approval will be confirmed by letter
from  Jerome  Richter  to  CPSC.


CPSC:                             POC:

CPSC  INTERNATIONAL               PENN  OCTANE  CORPORATION

By:                               By:
       -------------------------         -------------------------

Name:  Eric  B.  DuBose           Name:  Jerome  Richter
       -------------------------         -------------------------

Title: President                  Title: Chief  Executive  Officer
       -------------------------         -------------------------

                                       19
                                   EXHIBIT "A"
                            DESIGN AND SPECIFICATIONS


CPSC INTERNATIONAL (CPSC) will design, construct, and own two (2) new  Pipelines
(8"  and  6") and Transfer Terminal for PENN OCTANE CORPORATION (POC) from POC's
LPG  terminal in Brownsville, Texas to a prescribed location on the Mexican side
of  the  Rio  Grande  River  west  of  Matamoros,  Tamaulipas,  Mexico.

All  of  the  design  and  construction  of  the proposed Pipelines and Transfer
Terminal  will  be  in  accordance  with  the  DOT  CFR  Title  49  Part  195,
"Transportation of LPG Gas by Pipelines"; ANSI B31.8, "Gas Transportation Piping
Systems",  AI 1104, "Standard for Welding Pipelines and Related Facilities", CFR
Title  29  Part  1910,  "Occupational  Safety  and Health Standards (OSHA)", and
applicable  Pipeline  Standard  Specifications  and  Engineering Standards.  All
design  will be to ANSI 600 and all facilities will be hydrostatically tested to
1800  psig.

                                      A - 1

                                   EXHIBIT "B"

                             OPERATING REQUIREMENTS


General  Description
--------------------

CPSC  INTERNATIONAL  (CPSC)  will design, construct, own and operate two (2) new
Pipelines  (8" and 6") for PENN OCTANE CORPORATION (POC) from POC's LPG terminal
in  Brownsville,  Texas  to a prescribed location on the Mexican side of the Rio
Grande  River  west  of  Matamoros,  Tamaulipas,  Mexico.

Scope  -  General  Design  Criteria
-----------------------------------

All  of  the  design  and  construction  of  the  proposed  pipelines will be in
accordance  with  the  DOT  CFR Title 49 Part 195, "Transportation of LPG Gas by
Pipelines";  ANSI B31.8, "Gas Transportation Piping Systems", AI 1104, "Standard
for  Welding  Pipelines  and  Related  Facilities";  CFR  Title  29  Part  1910,
"Occupational  Safety  and  Health  Standards  (OSHA)"; and applicable Pipelines
Standard  Specifications  and Engineering Standards.  All design will be to ANSI
600  and  all  facilities  will  be  hydrostatically  tested to 1800 psig unless
directed  otherwise  by  POC.

Schedule
--------

CPSC  will  commence  the  described  activities  as  outlined  in  the contract
immediately  upon  execution  of  the  contract in order to meet the substantial
completion  date  of  May  1,  1999.

Project  Services
-----------------

In  accordance  and  as  per  the terms of the contract CPSC will provide and be
responsible  for  the  following:

-     Final  Route  Selection
-     Final  Design  Layout  for  Transfer  Terminal
-     Engineering  Design  per  Function  Code  Specifications for LPG Pipelines
-     Project  Management  and  Material  and  Equipment  Procurement
-     Construction
-     100%  X-Ray
-     Hydrostatically  tested,  dried  and  cleaned  to  -0  F.
-     Inspection
-     Cathodic  protection

                                      B - 1

-     Capital  funding  (interim/long  term)
-     Construction  Insurance
-     Operation  and  routine  maintenance  of  pipeline  and  facilities

In  accordance and as per the terms of the contract POC will be responsible for:

-     Sales  Tax  on  product  sale.

                                      B - 2

                                   EXHIBIT "C"

                          CONTRACT OPERATING AGREEMENT


THIS  CONTRACT  OPERATING  AGREEMENT ("Operating Agreement") is made and entered
into  as  of  the ___ day of __________, 1999, by and between CPSC INTERNATIONAL
("CPSC"  or  "Operator"),  a Texas corporation, and PENN OCTANE CORP. ("POC"), a
________________  corporation  (hereinafter  referred  to  collectively  as  the
"Parties"  and  individually as a "Party" where either POC or CPSC could apply).

WHEREAS,  CPSC is the owner of the "Pipelines and Transfer Terminal" hereinafter
described and concurrent CPSC and POC shall enter into an Agreement for lease of
the  Pipelines  and  Transfer  Terminal  to  POC  under  the  terms  of  the
Lease/Installment Purchase Agreement, hereinafter described; and pursuant to the
Lease/Installment  Purchase  Agreement,  CPSC has agreed to operate the Pipeline
Facilities  on  a  contract  basis  in accordance with the terms, conditions and
provisions  of  this  Operating  Agreement;  and

WHEREAS,  POC may take over operatorship of the Pipeline Facilities at some time
in  the  future;  and

WHEREAS,  throughout  this Exhibit the reference to Operator will refer to CPSC;
NOW,  THEREFORE,  in consideration of the mutual covenants herein contained, the
parties  agree  as  follows:

I.     SCOPE  OF  OPERATING  AGREEMENT

1.1     General.  This Operating Agreement is entered into pursuant to the terms
        -------
of  the  Lease  Installment  Purchase Agreement for two (2) 7-mile Pipelines and
Transfer  Terminal ("Lease Installment Purchase Agreement") between POC and CPSC
dated                    .  All  capitalized  terms  used  in  this  Operating
Agreement  which  are  defined in the Lease/Installment Purchase Agreement shall
have  the respective meanings assigned to such terms in the Installment Purchase
Agreement; and, as used herein, the term "Pipeline Facilities" shall include the
Pipelines  and  the  Facilities.  The effective date of this Operating Agreement
("Effective  Date")  is  the  same  date as the Lease Effective Date.  Under the
terms, conditions and provisions of this Operating Agreement, Operator agrees to
furnish  all  expertise,  services, materials, equipment, supplies and labor for
the  operation  of  the  Pipeline Facilities and routine maintenance thereof, as
described  in  Exhibit  "A"  ("Operations  and  Routine  Maintenance").

                                      C - 1

1.2     Operator.  CPSC  shall  serve  as  the  operator  of  the  Pipelines and
        --------
Facilities  ("Operator")  pursuant  to the terms of this Operating Agreement and
subject to the terms of the Lease/Installment Purchase Agreement.  In accordance
with  this  Operating  Agreement,  Operator shall perform Operations and Routine
Maintenance  for  and  on  behalf  of  POC  and  in  POC's  name; and POC hereby
constitutes and appoints Operator the agent and attorney in fact for POC, hereby
authorizing  and  empowering Operator in the name and on behalf of POC to do and
perform  any  and  all  acts  that  Operator  shall, in the exercise of its sole
judgment  deem  or  find  necessary,  requisite,  or  proper  for  the efficient
performance  of  Operations  and Routine Maintenance, subject to the limitations
contained  in  this  Operating  Agreement.

1.3      Independent  Contractor  Relationship.  The relationship of Operator to
         -------------------------------------
POC  shall  be  that of an independent contractor, Operator not being subject to
the control or direction of POC, and POC being interested only in the results to
be  obtained.  All employees shall be the employees of Operator, and not of POC.
Hours  of  work,  compensation of employees, and similar matters shall be within
the  discretion  of  Operator  and  will  be performed in a good and workmanlike
manner.

1.4     Performance.  Operator  shall  have  full  control  of  the  Pipeline
        -----------
Facilities  and  the  operation thereof as permitted and required by, and within
        -
the  limits  of,  this  Operating  Agreement.  Operator  shall  conduct  all its
activities under this Operating Agreement in accordance with applicable laws and
regulations  and  industry  standards,  and  in  a  good and workmanlike manner.

II.     RESPONSIBILITIES  OF  OPERATOR

2.1     General  Responsibilities  of  Operator.  Subject  to  the  terms  and
        ---------------------------------------
provisions  of  this Operating Agreement, Operator shall, at Operator's expense,
operate  and  perform  maintenance  of  the  Pipeline  and  Facilities Assets as
described  in  Schedule  A.

2.2     Normal  Operations.  It  is  contemplated  that  normal  operations will
        ------------------
include  operating  the Pipelines for the transportation of Liquid Petroleum Gas
(LPG)  from  POC's  Brownsville  Terminal  to  said Transfer Terminal located in
Matamoros,  Tamaulipas,  Mexico.  POC  shall  communicate  fully  with  Operator
regarding  operations.  Operator shall use all reasonable efforts to make and to
implement  operating  decisions  that  will  minimize  any adverse effect on the
transmission  of  LPG  through  the  Pipelines.  If  the  implementation  of  an
operational  decision  during  a  non-emergency  situation  could  reasonably be
anticipated  to impair the transmission of LPG through the Pipelines at the rate
such  LPG is scheduled to be taken, Operator shall use all reasonable efforts to
give  POC  twenty-four  (24)  hours  prior  notice  of  any  such  decision.

                                      C - 2

2.3     Emergencies.  Notwithstanding  any  other  provision  of  this Operating
        -----------
Agreement,  in  case  of explosion, fire, flood, extreme cold, freezing or other
sudden  emergency, or sudden major interruption of the operation of the Pipeline
Facilities,  or  any part thereof, Operator shall notify POC as soon as possible
and  communicate  Operator's  recommendation  for protective, remedial and other
actions,  but  where  the  situation  does  not  permit time for obtaining POC's
specific  approval,  the  prior  approval  of POC shall not be a prerequisite to
Operator's  taking  such  steps  and  incurring  such  costs  as,  in Operator's
judgment,  are  required  to  deal  with  such  emergency  or interruption or to
safeguard  life  and/or property in such event; provided, however, that Operator
shall, as promptly as possible, report such emergency or interruption to POC and
endeavor  to  secure  from  POC authorization required for any further action or
expenditure.  Operator  shall  also  promptly  make any required reports of such
emergency  or  interruption  to  federal,  state or local regulatory authorities
having  jurisdiction.

2.4     Records  and  Reports.  Operator  shall  retain  all  records,  books of
        ---------------------
account, reports and other documents related to the operation and maintenance of
the  Pipelines  for a period of two (2) years from the date of completion of the
activity to which such records relate, or such longer period as specified by law
in  the  case  of those records which by government regulations must be retained
for  a  longer  period  of  time.

2.5     Employees,  Consultants  and  Subcontractors.
        --------------------------------------------

2.5.1     All  personnel  engaged  or directed by Operator in the performance of
Operator's  duties  and  obligations  under  this  Operating  Agreement  and all
contractors  (and  their  subcontractors)  and  consultants retained by Operator
shall  be duly qualified and experienced to perform such duties and obligations.
Operator  shall require such Persons to comply with all relevant laws, statutes,
ordinances,  safety  codes,  regulations  and  rules of governmental authorities
applicable  to  the  Pipelines.

2.5.2     Operator  shall  maintain and shall require all contractors (and their
subcontractors) performing services in connection with the Pipelines to maintain
in  force and effect Worker's Compensation insurance coverage as required by the
laws  of  Texas.

2.5.3     Operator shall implement and enforce an appropriate safety program and
shall  use its best efforts to cause all employees, contractors, subcontractors,
consultants,  vendors  and suppliers to perform their services in a safe, sound,
workmanlike  and  prudent  manner,  in  accordance  with  industry practices and
applicable  laws,  rules,  regulations  and  safety  codes.

                                      C - 3

III.     PAYMENTS  AND  RELATED  MATTERS

3.1     Monthly  Statements.  For  informational  purposes  only, on a requested
        -------------------
basis,  Operator  shall  prepare and deliver to POC a written itemization of all
expenditures  for labor, material, Subcontractors' fees and other costs incurred
by  Operator  in  connection  with  routine  maintenance  expenses.

3.2     Account  Books.  Operator  shall maintain records of costs, expenses and
        --------------
expenditures  incurred in performing any of its obligations under this Operating
Agreement,  so  as  to provide POC with the information required for accounting,
regulatory,  tax (including federal, state and local), insurance, financing, and
other  reasonable  purposes.

3.3     Review  of  Records.  POC  shall  have the right at all reasonable times
        -------------------
during  ordinary  business  hours  to  examine  and  make copies of the books of
account  and  records  maintained by Operator regarding the Pipelines, including
the records maintained pursuant to Sections 2 and 3 of this Operating Agreement.
Such  right may be exercised through an agent or employee designated in writing,
or  by  an independent accountant or attorney so designated.  POC shall bear all
expenses  incurred  in  connection  with  any  such  inspection,  examination or
copying.

3.4     Access.  Operator  shall permit POC, at POC's risk, full and free access
        ------
to  the  Pipeline  Facilities  at  all  reasonable  times.

VI.     TERM

4.1     Term.  This  Operating  Agreement  shall  become  effective  as  of  the
        ----
Effective  Date  and  shall continue in force and effect for a period of fifteen
(15)  years, and from year to year thereafter; or until terminated in accordance
with  the  said  Lease/Installment  Purchase  Agreement.

4.2     Termination  by  POC.  This Operating Agreement may be terminated at any
        --------------------
time  by  POC (i) in the event Operator violates any safety standard or code and
does  not remedy such situation within thirty (30) days after notice, or (ii) in
the  event  Operator  breaches any other provision hereof or fails or refuses to
timely  perform  any  of  its duties hereunder and fails or refuses to cure such
deficiency  or  default  within thirty (30) days after receipt of notice of such
default  by  POC.  If  Operator  becomes  insolvent,  bankrupt  or  is placed in
receivership,  it  shall  be  deemed  to  have  resigned  as  Operator, and this
Operating Agreement shall terminate.  If a petition for relief under the federal
bankruptcy  laws  is  filed  by or against Operator, and the removal of Operator
and/or  the  termination of this Operating Agreement is prevented by the federal
bankruptcy court, then at POC's option, POC, Operator and a third Party selected
by POC shall comprise an interim operating committee to serve until Operator has
elected  to  reject or to assume this Operating Agreement, and all actions shall
require  the  agreement  of  two  (2)  members  of  the  operating  committee.

                                      C - 4

4.3     Effect.  Termination  of  this  Operating  Agreement  shall  not relieve
        ------
either  Party  of any obligation or liability on account of obligations accruing
or  conduct  or  events  occurring  prior  to  the  date  of  such  termination.

4.4     All  other  terms  and  conditions  of  the  Lease  Installment Purchase
Agreement  are  hereby  incorporated  by  reference.

EXECUTED  as  of  the  date  first  above  written.


CPSC  INTERNATIONAL               PENN  OCTANE  CORPORATION

By:                               By:
--------------------------------  ---------------------------------

Printed  Name:  Eric  B.  DuBose  Printed  Name:  ________________
--------------------------------  ---------------------------------

Title:  President                 Title:  ________________________
--------------------------------  ---------------------------------

                                      C - 5

                                   Schedule A

                            (of Operating Agreement)
                         _______________________________


SERVICES  PROVIDED:

1.     Operator  will  provide  the  following  documentation  services:

-     Document  maintenance activities and inspections for the activities listed
in  items  2  through 4 below as necessary to comply with existing Department of
Transportation  (DOT) and Texas Railroad Commission (TRC) requirements and OSHA.

2.     Operator  will  provide the following operating and engineering services:

-     Maintain  and update as needed all drawings and alignment maps.  (DOT/TRC)

-     Perform  24  hour  pipeline  surveillance  via SCADA or similar monitoring
equipment.

3.     Open/shut  appropriate  valves  to  start/end all deliveries that require
manual  operations  and  coordinate  all  such activity with the appropriate POC
personnel.

-     Inspect  corrosion  coupons and/or test spool pieces, change them when, in
operator's judgement it is necessary, and report findings to POC semiannually or
more  frequently  if  in  operator's  judgment  circumstances warrant. (DOT/TRC)

-     Perform  annual  cathodic  protection  surveys.  (DOT/TRC)

-     Review  operating  and  maintenance  manuals  annually.  (DOT/TRC)

4.     Operator  will  provide  the  following  measurement  services:

-     Prove  each  meter  up  to  once  per  three  (3) month for the purpose of
assuring  accurate  measurement  or  as  reasonably  requested  by POC to ensure
accurate  measurement.

-     Identify  volume  discrepancies  in  a  timely  manner.

-     Provide  daily  and monthly summary of measurement figures into and out of
the  pipeline  to  the  appropriate  POC  personnel.

                                      C - 6

-     Calibrate  instrumentation  semiannually  and  inspect  relief  valves
semiannually.  (DOT/TRC)

5.     Operator  will  provide  only the following routine maintenance services:

-     Perform  ROW  patrols  as  required  by  existing  regulation.  (DOT/TRC)

-     Perform  ROW  maintenance  (mowing,  clearing,  and replacing and painting
markers,  vents  and  fence  posts).  (DOT/TRC)

-     Inspect  fire  extinguishers  monthly.  (OSHA)

-     Provide  inspection  during foreign construction activities and respond to
"one-calls".

-     Inspect  mainline  block  valves  semiannually.  (DOT/TRC)

-     Perform  annual  gas  line  leak  survey.  (DOT/TRC)

-     Inspect  above  ground  piping  and  spans  every  five  (5) years.  (TRC)

6.     Operator will provide the following Scheduling and Control Room Operating
services:

-     Schedule  the  pipeline  transportation  service to meet whenever feasible
POC's  operational  requirements  in  a  safe  and  efficient  manner.

-     Provide  twenty-four  (24)  hour  Control  Center  coverage  including
maintaining  the  on-line  computer  system.

                                      C - 7

                                   EXHIBIT "D"

                      CERTIFICATE OF SUBSTANTIAL COMPLETION


REFERENCE  for  all  purposes  is  hereby made to that certain Lease/Installment
Purchase  Agreement  ("Agreement")  for  two  (2)  7-mile Pipelines and Transfer
Terminal dated ____________ _____, 1999, between PENN OCTANE CORPORATION ("POC")
and  CPSC  INTERNATIONAL  ("CPSC").  Capitalized  terms which are defined in the
Agreement  are  used  in  this  Certificate  with  the  same  meaning.

Pursuant  to  the  terms  of  Section 3.6. of the Agreement, POC and CPSC agree,
certify,  and  acknowledge  as  follows:

(1)          Substantial  Completion  date  occurred  on,  ____,  199.

(2)          The  Lease  Effective  Date  is,  199__.

(3)          The  Pipelines,  Transfer Terminal and the Facilities are leased to
POC  under  the terms of the Agreement effective as of the Lease Effective Date.

(4)          The  Lease  Term commenced on the Lease Effective Date and will end
on  _________,  2014  ,  unless and until the option to purchase provided for in
Article V is exercised, in which case the Lease Term shall end at the end of the
Lease  Year  for  which  POC exercises its option (i.e., the 10th, or 15th Lease
Year,  as  applicable).

(5)     The  Operating  Agreement  became effective on the Lease Effective Date.


EXECUTED  this  day  of,  199.


PENN  OCTANE  CORPORATION

By:     _______________________________________


CPSC  INTERNATIONAL

By:     _______________________________________

                                      D - 1

                                   EXHIBIT "E"

                           ASSIGNMENT AND BILL OF SALE


     This ASSIGNMENT AND BILL OF SALE ("Assignment") is made and entered into by
and between CPSC INTERNATIONAL, a Texas corporation, with an office at Two Allen
Center,  Suite  2250,  1200 Smith Street, Houston, Texas 77002 ("Assignor"), and
PENN  OCTANE CORPORATION, a Delaware corporation, with an office at 900 Veterans
Blvd.,  Suite 240, Redwood City, CA 94063 ("Assignee"), pursuant to that certain
Lease/Installment  Purchase  Agreement  ("Purchase  and  Sale  Agreement") dated
November  24,  1998,  between  Assignor  and  Assignee.

     For  and  in  consideration  of the premises and the sum of Ten Dollars and
other  valuable  consideration,  the  receipt  of  which is hereby acknowledged,
Assignor  hereby  SELLS,  TRANSFERS AND ASSIGNS to Assignee all of the following
described  property;

(a)     Those  certain  Pipelines  and  Transfer  Terminal located in Matamoros,
Tamaulipas,  Mexico, described in Exhibit "A" attached hereto, together with all
vents,  casings,  valves,  cathodic  protection  devices  and other property and
equipment  constructed  on,  affixed  to  or  installed  on  said  pipelines
(collectively,  the  "Pipeline,  Transfer  Terminal  and  Facilities");  and

(b)     To  the  extent  of  Assignor's  ability  to  transfer  the same, all of
Assignor's  right,  title,  and  interest in and to the pipelines a right-of-way
easements,  licenses,  and  permits  (collectively,  the  "Easements");

     TO  HAVE  AND  TO  HOLD the same unto Assignee, its successors and assigns.
This  Assignment  is  made  by  Assignor and accepted by Assignee subject to the
following:

1.     This  Assignment  is  made  subject  to  the  terms and provisions of the
Purchase  and  Sale  Agreement,  to the terms and provisions of the right-of way
easements  and  licenses  in which the Pipeline Facilities and Transfer Terminal
are  located,  and  to  the  following,  to  the  extent  the same are valid and
subsisting  and  pertain  to  the  Pipeline  Facilities,  Transfer  Terminal and
Easements  in  which  they  are  located:  any  and all restrictions, covenants,
conditions,  easements,  licenses,  leases  and  other  matters of record in the
public  records  of                    ,  and  zoning  laws,  regulations  and
ordinances  of  municipal  and  other  governmental  authorities.

2.     Assignor  hereby binds Assignor and its successors to warrant and forever
defend  all  and  singular  the  title  to  the Pipeline Facilities and Transfer
Terminal,  subject  as  aforesaid,  unto  Assignee,  its successors and assigns,
against  the claims of all persons lawfully claiming or to claim the same or any
part  thereof  by,  through  or  under  Assignor,  but  not  otherwise.

                                      E - 1

3.     THE  PIPELINE  FACILITIES AND TRANSFER TERMINAL ARE SOLD AND ASSIGNED AND
ACCEPTED  BY  ASSIGNEE  "AS  IS,  WHERE IS," AND IN THEIR PRESENT CONDITION, AND
"WITH  ALL  FAULTS,"  WITHOUT  ANY  WARRANTIES  WHATSOEVER,  EXPRESS, IMPLIED OR
STATUTORY,  OF  QUALITY,  CONDITION,  MERCHANTABILITY  AND/OR  FITNESS  FOR  A
PARTICULAR PURPOSE OR USE, DESIGN, PERFORMANCE, CONDITION, OR OF ANY OTHER KIND,
ALL  OF WHICH ARE EXPRESSLY DISCLAIMED; PROVIDED, HOWEVER ASSIGNOR WARRANTS THAT
THE  PIPELINE FACILITIES ARE IN GOOD OPERATING ORDER AND THAT WHILE ASSIGNEE WAS
OPERATOR  UNDER THE OPERATING AGREEMENT THE PIPELINE FACILITIES WERE OPERATED IN
ACCORDANCE  WITH  ALL  APPLICABLE  LAWS  AND  REGULATIONS AND THAT THE FOREGOING
DISCLAIMERS DO NOT NEGATE OR DETRACT IN ANY WAY FROM ANY WARRANTIES SET FORTH IN
PARAGRAPH  2  OF  THIS  ASSIGNMENT.

EXECUTED  THIS  THE  _____  DAY  OF  ________________.


                         CPSC  INTERNATIONAL

                         By:
                             ----------------------------
                             Eric  B.  DuBose,  President

                                      E - 2

                                   EXHIBIT "F"

                                ESCROW AGRREMENT


AGREEMENT made as of this ________day of _________________, 19__, by and between
__________________________________,  a____________________  corporation
("___________")  and  _________________________________ ________________ Bank as
escrow  agent  (the  "Escrow  Agent").

                                   WITNESSETH:

WHEREAS,

NOW,  THEREFORE,  in  consideration  of the promises and of the mutual covenants
herein  contained,  the  parties  hereto  agrees  as  follows:

1.     Acceptance  by  Escrow  Agent
       -----------------------------

The  Escrow  Agent  hereby accepts the appointment as escrow agent hereunder and
agrees  to  act  on  the  terms  and  conditions  hereinafter  set  forth.

2.     Investment  of  Escrow  Fund
       ----------------------------

The  Escrow  Agent  shall  invest  the  Escrow  Fund,  upon  the express written
direction  of  _______________________________,  in one or more of the following
investments:

3.     Rights  and  Responsibilities  of  Escrow  Agent
       ------------------------------------------------

The  acceptance  by  the  Escrow Agent of its duties hereunder is subject to the
following terms and conditions, which the parties to this Agreement hereby shall
govern  and  control  with  respect  to  the  Escrow  Agent's  rights,  duties,
liabilities  and  immunities.

(a)     The  Escrow Agent shall act hereunder as a depository only, and it shall
not  be  responsible  or  liable  in  any  manner  whatever for the sufficiency,
correctness,  genuineness  or  validity  of any document furnished to the Escrow
agent  or  any  asset  deposited  with  it.

(b)     The  Escrow Agent shall be protected in acting upon written instructions
from  _____________________  if  it,  in  good  faith,  believes  such  written
instructions  to  be  genuine  and  what  it  purports  to  be.

                                      F - 1

__________________shall from time to time file with the Escrow Agent a certified
copy  of  each  resolution  of  its Board of Directors authorizing the person or
persons to give written instructions. Such resolution shall specify the class of
instructions  that  may  be given by each person to the Escrow Agent, under this
Agreement,  together  with  certified  signatures  of such persons authorized to
sign.  This  shall  constitute  conclusive  evidence  of  the  authority  of the
signatories  designated therein to act. It shall be considered in full force and
effect  with  the  Escrow  Agent  fully  protected in acting in reliance thereon
unless  and  until  it  receives  written  notice  to  the  contrary.

(c)     The  Escrow  Agent  shall not be liable for any error of judgment or for
any  action  taken or omitted by it in good faith, or for any mistake of fact or
law,  or  for  anything  which  it  may  do  or refrain from doing in connection
herewith  except  its  own  gross  negligence  or  willful  misconduct.

(d)     ____________________and ___________________agree to indemnify the Escrow
Agent  and  hold  it  harmless  from  and  against any loss, liability, expenses
(including reasonable attorneys' fees and expenses), claim or demand arising out
of  or  in connection with the performance of its obligations in accordance with
the  provisions  of  this  Escrow  Agreement, except for the gross negligence or
willful  misconduct  of  the  Escrow  Agent. These indemnities shall survive the
resignation  of  the  Escrow  Agent or the termination of this Escrow Agreement.

(e)     The  Escrow  Agent  shall  have  no duties except those specifically set
forth  in  this Agreement. This Agreement represents the entire understanding of
the  parties  hereto  with  respect  to  the subject matter contained herein and
supersedes  any  and  all  other  and  prior  agreements  between  them.

(f)     The  Escrow  Agent shall have the right at any time it deems appropriate
to  seek an adjudication in court of competent jurisdiction as to the respective
rights  of  the  parties hereto and shall not be held liable by any party hereto
for  any  delay  or  the  consequences of any delay occasioned by such resort to
court.

(g)     The  fee of the Escrow Agent for its services hereunder shall be paid by
________________  in  accordance with the standard schedule of charges in effect
when  services  are  rendered.  Such  schedule  will  be furnished upon request.

                                      F - 2

4.     Statements
       ----------

During  the  term  of  this  Agreement,  the  Escrow  Agent  shall  provide
_________________________with  monthly  statements  containing  the  beginning
balance  in  the escrow account as well as all principal and income transactions
for  the  statement period. ___________________________ shall be responsible for
reconciling  such  statements.  The  Escrow  Agent shall be forever released and
discharged  from  all liability with respect to the accuracy of such statements,
except  with  respect  to  any  such  act  or  transaction  as  to  which
____________________________shall,  within  90  days after the furnishing of the
statement,  file  written  objections  with  the  Escrow  Agent.

5.     Distributions
       -------------

The  Escrow  Agent  shall  distribute  the  Escrow  Funds  from time to time, in
accordance with the instructions contained in written statements provided to the
Escrow  Agent  by  _________________________________________.

6.     Income
       ------

All  income,  including  interest  and  dividends,  earned  on  the  Escrow Fund
deposited hereunder (hereinafter called the "Income") shall be added to and held
in  the  Escrow  Account  created  hereunder.

7.     Tax  Identification  Number
       ---------------------------

All  interest  accrued  in  the  Escrow  Fund  shall  be  for  the  account  of
_________________  and  shall  be  reported under applicable federal regulations
using  the  tax  identification  number of ___________________________, which is
#_____________________________.

8.     Indemnification  as  to  Taxes,  Penalties  and  Interest
       ---------------------------------------------------------

____________________  shall indemnify and hold harmless the Escrow Agent against
and  in  respect of any liability for taxes and for any penalties or interest in
respect  of  taxes  attributable  to  the  investment of funds held in escrow by
Escrow  Agent  pursuant  to  this  Agreement.

9.     Amendment
       ---------

This Agreement may not be amended or supplemented and no provision hereof may be
modified  or  waived,  except  by an instrument in writing, signed by all of the
parties  hereto.

                                      F - 3

10.     Termination
        -----------

The purpose of this Escrow Agreement and the terms hereof shall terminate on the
earlier  of ____________________or _______________________. Upon the termination
of  this  Agreement  and  upon  the delivery of all or any portion of the Escrow
Funds by the Escrow Agent, in accordance with the terms hereof, the Escrow Agent
shall  be  relieved  of  any  and  all  further  obligations  hereunder.

11.     Resignation
        -----------

The  Escrow  Agent  may  resign  at  any time by giving thirty (30) days written
notice  of  such  resignation  to _____________________________. If no successor
Escrow Agent has been named at the expiration of the thirty (30) day period, the
Escrow  Agent  shall  have  no  further  obligation hereunder except to hold the
Escrow  Funds  as  a  depository. Upon notification by __________________ of the
appointment of the successor, the Escrow Agent shall promptly deliver the Escrow
Fund  and  all  materials  in its possession relating to the Escrow Fund to such
successor,  and  the duties of the resigning Escrow Agent shall thereupon in all
respects  terminate,  and  it  shall be released and discharged from all further
obligations  hereunder.  Similarly,  the Escrow Agent may be discharged from its
duties as Escrow Agent under this Agreement upon thirty (30) days written notice
from  _________________________  and  upon  payment  of  any and all fees due to
Escrow  Agent.  In  such  event,  the  Escrow Agent shall be entitled to rely on
instructions  from ___________________ as to the disposition and delivery of the
Escrow  Fund.

12.     Execution
        ---------

This  Agreement  may be executed in several counterparts, each of which shall be
deemed  an original, but such counterparts together shall constitute one and the
same  instrument.  The  effective date of this Agreement shall be the date it is
executed  by  the  last  party  to  do  so.

13.     Miscellaneous
        -------------
All  covenants and agreements contained in this Agreement by or on behalf of the
parties  hereto  shall  bind  and inure to the benefit of such parties and their
respective heirs, administrators, legal representatives, successors and assigns,
as  the  case  may  be.  The  headings  in this Agreement are for convenience of
reference  only  and  shall neither be considered as part of this Agreement, nor
limit  or otherwise affect the meaning hereof. This Agreement shall be construed
and  enforced  in  accordance  with  the  laws  of  ________________________.

14.     Notices
        -------
All  instructions, notices and other communications hereunder must be in writing
and  shall  be  deemed to have been duly given if delivered by hand or mailed by
first  class,  registered  mail,  return receipt requested, postage prepaid, and
addressed  as  follows:

                                      F - 4

(a)  If  to  ________________________________________________

(b)  If  to  ________________________________________________

(c)  If  to  the  Escrow  Agent:


IN  WITNESS  THEREOF, the parties hereto have duly executed this Agreement as of
the  date  first  above  written.

(NAME  OF  COMPANY)

By:  ___________________________

Name:  _________________________

Title:  ________________________


as  (ESCROW  AGENT)

By:  ___________________________

Name:  _________________________

Title:  ________________________

                                      F - 5