LOAN AGREEMENT
THIS AGREEMENT is dated March 1, 1996, and is entered into by and
between PENN OCTANE CORPORATION, a Delawar corporation (hereinafter
called "Borrower"), whose address is 000 Xxxxxxxx Xxxx., Xxxxx 000,
Xxxxxxx Xxxx, Xxxxxxxxxx 00000, and Xxxx X. Xxxxxxxx, an individual
(hereinafter called "Lender") whose adress is 000 Xxxxxxxx Xxxxxx,
Xxxxxx Xxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000.
In consideration of the mutual agreements herein contained, the
parties hereto agree as follows:
1. Commitment of the Lender.
Subject to the terms and conditions of this agreement, the Lender
agrees to lend to the Borrower the principal sum of Five Hundred
Thousand and No/100 Dollars ($500,000).
2. Promissory Note Evidencing Borrowing.
The borrowing hereunder is evidenced by a promissory note payable
to the order of the Lender (the "Note") of even date herewith,
executed by the Borrower and maturing in eighteen (18) months. The
Note shall bear interest of ten percent per annum (10%) and
otherwise shall be in the form of Exhibit A attached hereto and made
a part hereof for all purposes.
3. Security.
Payment of the Note shall be secured by the following (the "Security"
or "Collateral"):
a. All tanks, pumps, product, inventory, equipment and other personal
property located on the Borrower's location at the Port of Brownsville
in Camercon County, Texas (the "Port Facility").
b. Any proceeds received by Borrower from a judgment or settlement
of Borrower's litigation with the International Bank of Commerce-
Brownsville, subject to prior claims and commitments made by
Borrower as part of settlement agreemetns entered into with
Lauren Constructors, Inc., Xxxxxx X. Xxxxx & Associates, Inc.,
MTS Systems and Louisiana Chemical Co.
c. UCC Financing Statements as applicable.
4. Note Payment; Prepayment Privilege.
a. Payment of accrued and unpaid interest shall be made on
March 1, 1997 and on the Maturity Date (as defined below).
b. Payment of principal shall be made on the earlier of
September 1, 1997 or within five (5) days of the receipt
by Borrower of the proceeds from a secondary offering of
equity in the minimum amount of Five Million Dollars
($5,000,000) (the "Maturity Date").
c. Borrower may prepay the principal balance in full without
premium or penalty, together with andy accrued and unpaid
interest to the date of such prepayment upon thirty (30)
days written notice to Lender.
d. Until otherwise directed by written notice from Lender to
Borrower, all payments on the Note shall be made to the
following:
Xxxx X. Xxxxxxxx
000 Xxxxxxxx Xxxxxx, Xxxxxx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
(000) 000-0000
5. Warranties and Representations.
The Borrower warrants and represents that:
a. This agreement and the Note are legal, valid and binding upon
the parties thereto and enforceable in accordance with their
terms' and all corporate proceedings of the Borrower prerequisite
to the effectiveness of any instruments described herein have
been duly and properly held.
x. Xxxx Octance Corporation ("POCC") is a corporation duly organized
and in good standing under the laws of the State of Delaware
and is duly authorized to conduct business in the State of Texas.
POCC has requisite power and authority to own, operate and lease
its poroperties and assets, to carry on its business and to enter
intop and perform under the provisions of this agreement.
c. Neither the making nor performance of this agreement nor the
borrowing hereunder, requires the consent or approval of any
governmental instrumentality or any other person or entity.
d. The financial statements furnished (or to be furnished)
hereunder accurately reflect the financial position of the
Borrower on the dates of said statemetns and no material
changes in financial condition ahve occurred since such
dates as of the date of closing of this loan transaction.
e. Any financial changes or other occurences adverse to the
interests of the Borrower or the Lender will be promptly
brought to the attention of the lender.
6. Borrower's Affirmative Covenants.
Until the Note is paid in full, the Borrower agrees that
(unless the Lender shall otherwise consent in writing)
it will:
a. Furnish to the Lender annual audited financial statements
on the Borrower within ninety (90) days following the end
of each fiscal year, and quarterly financial statements
withing forty-five (45) days after the end of each fiscal
quarter. The Borrower agrees to furnish to the Lender such
additional statements and supportive information, whether
financial or otherwise, as the Lender may reasonably
request from time to time.
b. Comply with all laws, regulations and governmental
requirements applicable to all aspects of the Borrower's operations
and transactions.
c. Keep the Lender fully advised as to any matter or occurrence
materially affecting the value of the Collateral.
7. Borrower's Negative Covenants.
Until the Note is paid in full, the Borrower agrees that
(unless the Lender shall otherwise consent in writing)
it will not:
a. Change the general character of business conducted at the date
hereof, or engage in any type of business not reasonably related
to the Borrower's business as presently conducted.
b. Sell, transfer or otherwise dispose of any of the Collateral,
except for payment of prior claims and settlements entered
into as described in 3.b. above.
8. Events of Default; Remedies.
a. If one or more of the following events (the "Events of
Default") shall occur and be continuiing, then Lender shall
be entitled to pursue such remedies as are provided for in
subparagraph b. hereunder:
i. Default shall be made and continue for ten (10) days in
the payment when due of any installment of principal or
interest on the Note;
ii. A material adverse change occurs in the property or
condition, financial or otherwise of the Borrower; and such
material adverse change remains unremedied for a period
of thirty (30) days;
iii. The dissolution of the Borrower;
iv. The Borrower fails to pay its debts as they become due or
admits its inability to pay its debts as they mature, or
the Borrower is adjudicated bankrupt or insolvent or any
of the property of the Borrower is sequestered by court
order or a petition is filed against the Borrower under
any bankruptcy, reorganization, arrangement, insolvency
or readjustment of debt law of any jurisdiction, whether
now or subsequently in effect, and such condition remains
in existence or effect for a period of sixty (60) days; or
v. The Borrower files a petition in voluntary bankruptcy,
reorganization, arrangement, insolvency or readjustment
of debt law of any jurisdiction, whether now or subsequently
in effect, or consents to the filing of any petition
against Borrower under any such law; or consents to the
filing of any petition against Borrower under any such
law; or consents to the appointment of or taking possession
by a custodian, receiver, trustee or liquidator of any of
the property of Borrower, and such condition remains in
existence or effect for a period of sixty (60) days.
b. Remedies.
Upon the occurrance and during the continuation of any
Event of Default hereunder, Lender shall be entitled to exercise
all rights, powers and remedies Lender may have for the protection
end enforcement of Lender's rights in respect of any Collateral
granted as security for Borrower's obligations hereunder.
9. Miscellaneous.
a. All agreements, representations and warranties made herein and
in any instrument referred to hereing shall survive the making
of the loan hereunder, and shll be binding upon and inure to
the benefit of the successors and assigns of the parties hereto;
provided, however, that notwithstanding the foregoind, the Borrower
shall not have the right to assign its rights or obligations hereunder
without the prior written consent of the Lender.
b. This agreement and the Note shall be governed and construed in
accordance with the laws of the State of California.
EXECUTED on the day and year first above written
XXXX X. XXXXXXXX
By: Xxxx X. Xxxxxxxx
"Lender"
PENN OCTANE CORPORATION
By: Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx
Its: Executive Vice President
"Borrower"
PROMISSORY NOTE
Amount $500,000 March 1, 1996
FOR VALUE RECEIVED, the undersigned, PENN OCTANE CORPORATION (the
"Maker"), promises to pay to the order of XXXX X. XXXXXXXX (the
"Payee"_, the principal sum of FIVE HUNDRED THOUSAND AND 00/100
U.S. DOLLARS (U.S. $500,000.00) plus interest on the unpaid
principal balance thereof (the "Principal Balance") at the rate
and on the terms set forth in this (the "Note").
Section 1. Payment Terms.
(a) Rate of Interest. Beginning on the date hereof, interest
(computed on the basis of the acrual number of days
elapsed over a 360-day year) on the Principal Balance shall
accrue at a rate per annum equal to ten percent (10%).
(b) Payments of Interest. Interest shall be payable annually in
arrears beginning March 1, 1997 and on the Maturity Date
(as defined below).
(c) Payments of Principal. The Maker shall pay the principal of the
Note on the Maturity Date (as defined below).
The Maker may prepay the Principal Balance in full,
together with any accrued interest to the date of such prepayment,
upon thirty (30) days written notice to Payee, without premium
or penalty, provided that the Principal Balance and accrued
but unpaid interst shall be due and payable in full on the
earlier of September 1, 1997, or the receipt by Maker of a
minimum of $5,000,000 in proceeds from a secondary offering of
equity (th "Maturity Date").
(d) Form and Application of Payments. All payments on this Note shall
be (i) paid in lawful money of the United States of America during
regular hours of the Payee at the office of the Payee at 000
Xxxxxxxx Xxxxxx, Xxxxxx Xxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000 or at
such other place or in such other manner as the "Holder" (as
defined below) may at any time or from time to time designate
in writing to the Maker and (ii) applied first to the payment of
accrued but unpaid interest and second to the reduction of the
Principal Balance. The term "Holder" as used herein means the
holder of this Note, including the Payee.
Section 2. Security.
All obligations of the Maker hereunder are secured under the Loan
Agreement gby and between Maker and Payee.
Section 3. Default.
(a) If one or more of the following events (herein called "Events of
Default") shall occur and be continuing, then Payee shall be entitled
to pursue such remedies as are provided for in subparagraph (b) hereunder:
(i) Default shall be made and continue for ten (10) days in the
payment when due of any installment of principal or interest on
this Note;
(ii) A material adverse change occurs in the property or
condition, financial or otherwise of the Maker; and such
material adverse change remains unremedied for a period
of thirty (30) days;
(iii) The dissolution of Maker;
(iv) The Maker fails to pay its debts as they become due or
admits its inability to pay its debts as they mature,
or the Maker is adjudicated bankrupt or insolvent or
any of the property of the Maker is sequestered by court
order or a petition is filed against the Maker under any
bankruptcy, reorganization, arrangement, insolvency or
readjustment of debt law of any jurisdiction, whether
now or subsequently in effect, and such condition remains
in existence or effect for a period of sixty (60) days; or
(v) The Maker files a petition in voluntary bankruptcy,
reorganization, arrangement, insolvency or readjustment of
debt law of any jurisdiction, whether now or subsequently in
effect; or consents to the filing of any petition against
such Maker under any such law; or consents to the
appointment of or taking possession by a custodian, receiver,
trustee or liquidator of any of the property of Maker, and such
condition remains in existence or effect for a period of
sixty (60) days.
(b) Remedies.
Upon the occurrence and during the continuation of any Event
of Default hereunder, Payee shall be entitled to exercise all
of the rights, pwers and remedies Payee may have for the protection
and enforcement of Payee's rights in respect of any collateral
granted as security for Maker's obligations pursuant to the
Loan Agreement.
Section 4. Notices
Any notice and other communications to be given or received hereunder,
shall be given in writing to the following:
Payee: Xxxx X. Xxxxxxxx
000 Xxxxxxxx Xxxxxx, Xxxxxx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Maker: Penn Octane Corporation
000 Xxxxxxxx Xxxx., Xxxxx 000
Xxxxxxx Xxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxx
Chief Financial Officer
Section 5. Governing Law.
This Note, the Loan Agreement and all other instruments executed pursuant
to this Note shall be governed and construed in accordance with the
laws of the State of California.
IN WITNESS WHEREOF, the Maker has executed and delivered this Note
on the date first above written
PENN OCTANE CORPORATION
By: Xxxxxx X. Xxxxxxx
Name:Xxxxxx X. Xxxxxxx
Title: Executive Vice President &
Chief Financial Officer
SECURITY AGREEMENT
Date: March 1, 1996
Debtor: Penn Octane Corporation
Debtor's Mailing Address: 0000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Secured Party: Xxxx X. Xxxxxxxx
Secured Party's Mailing Address: 000 Xxxxxxxx Xxxxxx, Xxxxxx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Classification of Collateral: equipment and general intangibles
Collateral (including all accessions):
1. All tanks, pumps, equipment and other personal property
located on, in or about the following described leased premises:
The property described in a Contract between Brownsville
Navigation District of Cameron County, Texas, and Penn Octane
Corp. dated October 5, 1993 covering 11.29 acres of land and
as amended on February 11, 1994, to increase the leased
premises to 14.51 acres of land.
2. Contract between Brownsville Navigation District of Cameron
County, Texas, and Penn Octane Corp. dated October 5, 1993
covering 11.29 acres and as amended on February 11, 1994,
to increase the leased premises to 14.51 acres of land.
3. Any cash recovery from litigation involving Penn Octane
Corporation or International Energy Development Corp. and
International Bank of Commerce-Brownsville.
Each of the above is given as collateral subject to all prior
liens and/or assignments.
Obligation: Note:
Date: Xxxxx 0, 0000
Xxxxxx: $500,000.00
Maker: Penn Octane Corporation
Payee: Xxxx X. Xxxxxxxx
Final Maturity Date: September 1, 1997
Terms of Payment: (optional): as provided therein
Debtor's Representation Concerning Location of Collateral
(optional): Cameron County, Texas.
Subject to the terms of this agreement, Debtor grants to
Secured Party a security interest in the collateral and
all its proceeds to secure payment and performance of
Debtor's obligation in this security agreement and all
renewals and extensions of any of the obligation.
Debtor's Warranties
1. Financing Statement. The collateral is subject to
assignments and prior financing statements which have been
filed in any public office, if any.
2. Ownership. Debtor owns the collateral and has the
authority to grant this security interest. Ownership may be
subject to prior liens, security interests, or encumbrances.
3. Fixtures and Accessions. None of the collateral is affixed
to real estate, is an accession to any goods, is commingled
with other goods, or will become a fixture, accession, or
part of a product or mass with other goods except as
expressly provided in this agreement.
4. Financial Statements. All information about Debtor's
financial condition provided to Secured Party was accurate
when submitted, as will be any information subsequently provided.
Debtor's Covenants
1. Protection of Collateral. Debtor will defend the collateral
against all claims and demands adverse to secured Party's
interest in it and will keep it free from all liens except
those for taxes not yet due and from all security interests
except this one. The collateral will remain in Debtor's
possession or control at all times, except as otherwise
provided in this agreement. Debtor will maintain the
collateral in good condition and protect it against misuse,
abuse, waste, and deterioration except for
2. Insurance. Debtor will insure the collateral in accord
with Secured Party's reasonable requirements regarding choice
of carrier, casualties insured against, and amount of coverage.
Policies will be written in favor of Debtor and Secured Party
according to their respective interests or according to
Secured Party's other requirements. All policies will provide
that Secured Party will receive at least ten days' notice
before cancellation, and the policies or certificates evidencing
them will be provided to Secured Party when issued. Debtor assumes
all risk of loss and damage to the collateral to the extent
of any deficiency in insurance coverage. Debtor irrevocably
appoints Secured Party as attorney-in-fact to collect any
return, unearned premiums, and proceeds of any insurance on
the collateral and to endorse any draft or check deriving from
the policies and made payable to Debtor.
3. Secured Party's Costs. Debtor will pay all expenses
incurred by Secured Party in obtaining, preserving, perfecting,
defending, and enforcing this security interest or the
collateral and in collecting or enforcing the note. Expenses
for which Debtor is liable include, but are not limited to
taxes, assessments, reasonable attorneys' fees and other
legal expenses. These expenses will bear interest from the
dates of payments at the highest rate stated in notes that are
part of the obligation, and Debtor will pay Secured Party this
interest on demand at a time and place reasonably specified
by Secured Party.
. These expenses and interest will be part of the obligation
and will be recoverable as such in all respects.
4. Additional Documents. Debtor will sign any papers that
Secured Party considers necessary to obtain, maintain, and
perfect this security interest or to comply with any relevant law.
5. Notice of Changes. Debtor will immediately notify Secured
Party of any material change in the collateral; change in
Debtor's name, address, or location; change in any matter
warranted or represented in this agreement; change that may
affect this security interest; and any event of default.
6. Use and Removal of Collateral. Debtor will use the collateral
primarily according to the stated classification unless Secured
Party consents otherwise in writing. Debtor will not permit
the collateral to be affixed to any real estate, to become an
accession to any goods, to be commingled with other goods, or
to become a fixture, accession, or part of a product or mass
with other goods except as expressly provided in this agreement.
7. Sale. Debtor will not sell, transfer, or encumber any of
the collateral without the prior written consent of Secured Party.
Rights and Remedies of Secured Party
1. Generally. Secured Party may exercise the following rights
and remedies either before or after default:
a. take control of any proceeds of the collateral;
b. release any collateral in Secured Party's possession to
any debtor, temporarily or otherwise;
c. take control of any funds generated by the collateral,
such as refunds from and proceeds of insurance, and reduce
any part of the obligation accordingly or permit Debtor to
use such funds to repair or replace damaged or destroyed
collateral covered by insurance; and
d. demand, collect, convert, redeem, settle, compromise,
receipt for, realize on, xxx for, and adjust the collateral
either in Secured Party's or Debtor's name, as Secured Party
desires.
2. Insurance. If Debtor fails to maintain insurance as
required by this agreement or otherwise by Secured Party,
then Secured Party may purchase single-interest insurance
coverage that will protect only Secured Party. If Secured
Party purchases this insurance, its premiums will become
part of the obligation.
Events of Default
Each of the following conditions is an event of default:
1. if Debtor defaults in timely payment or performance of
any obligation, covenant, or liability in any written agreement
between Debtor and Secured Party or in any other transaction
secured by this agreement;
2. if any warranty, covenant, or representation made to
Secured Party by or on behalf of Debtor proves to have been
false in any material respect when made;
3. if a receiver is appointed for Debtor or any of the
collateral;
4. if the collateral is assigned for the benefit of creditors
or, to the extent permitted by law, if bankruptcy or
insolvency proceedings commence against or by any of these
parties: Debtor; any partnership of which Debtor is a general
partner; and any maker, drawer, acceptor, endorser, guarantor,
surety, accommodation party, or other person liable on or for
any part of the obligation;
5. if any financing statement regarding the collateral but
not related to this security interest and not favoring Secured
Party is filed;
6. if any lien attaches to any of the collateral;
7. if any of the collateral is lost, stolen, damaged, or
destroyed, unless it is promptly replaced with collateral of
like quality or restored to its former condition.
Remedies of Secured Party on Default
During the existence of any event of default, Secured Party
may declare the unpaid principal and earned interest of the
obligation immediately due in whole or part, enforce the
obligation, and exercise any rights and remedies granted by
chapter 9 of the Texas Business and Commerce Code or by this
agreement, including the following:
1. require Debtor to deliver to Secured Party all books and
records relating to the collateral;
2. require Debtor to assemble the collateral and make it
available to Secured Party at a place reasonably convenient
to both parties;
3. take possession of any of the collateral and for this
purpose enter any premises where it is located if this
can be done without breach of the peace;
4. sell, lease, or otherwise dispose of any of the
collateral in accord with the rights, remedies, and
duties of a secured party under chapters 2 and 9 of
the Texas Business and Commerce Code after giving
notice as required by those chapters; unless the collateral
threatens to decline speedily in value, is perishable, or
would typically be sold on a recognized market, Secured
Party will give Debtor reasonable notice of any public sale
of the collateral or of a time after which it may be
otherwise disposed tage prepaid, to Debtor at the address
specified on this agreement at least ten days before any
public sale or ten days before the time when the collateral
may be otherwise disposed of without further notice to Debtor;
5. surrender any insurance policies covering the collateral
and receive the unearned premiums;
6. apply any proceeds from disposition of the collateral
after default in the manner specified in chapter 9 of the
Texas Business and Commerce Code, including payment of Secured
Party's reasonable attorneys' fees and court expenses; and
7. if disposition of the collateral leaves the obligation
unsatisfied, collect the deficiency from Debtor.
General Provisions
1. Parties Bound. Secured Party's rights under this agreement
shall inure to the benefit of its successors and assigns.
Assignment of any part of the obligation and delivery by
Secured Party of any part of the collateral will fully
discharge Secured Party from responsibility for that part
of the collateral. If Debtor is more than one, all their
representations, warranties, and agreements are joint and
several. Debtor's obligations under this agreement shall
bind Debtor's personal representatives, succe
2. Waiver. Neither delay in exercise nor partial exercise
of any Secured Party's remedies or rights shall waive further
exercise of those remedies or rights. Secured Party's failure
to exercise remedies or rights does not waive subsequent
exercise of those remedies or rights. Secured Party's waiver
of any default does not waive further default. Secured
Party's waiver of any right in this agreement or of any default
is binding only if it is in writing. Secured Party may remedy
any default without waivi
3. Reimbursement. If Debtor fails to perform any of Debtor's
obligations, secured Party may perform those obligations and
be reimbursed by Debtor on demand at the place where the note
is payable for any sums so paid, including attorneys' fees
and other legal expenses, plus interest on those sums from
the dates of payment at the rate stated in the note for matured,
unpaid amounts. The Sum to be reimbursed shall be secured by
the security agreement.
4. Interest Rate. Interest included in the obligation shall
not exceed the maximum amount of nonusurious interest that
may be contracted for, taken, reserved, charged, or received
under law; any interest in excess of that maximum amount shall
be credited to the principal of the obligation or, if that has
been paid, refunded. On any acceleration or required or
permitted prepayment of the obligation, any such excess shall
be canceled automatically as of the acceleration or prepayment
or, if already paid, credited on the principal amount of the obligation
or, if the principal amount has been paid, refunded. This provision
overrides other provisions in this and all other
instruments concerning the obligation.
5. Modifications. No provisions of this agreement shall be
modified or limited except by written agreement.
6. Severability. The unenforceability of any provision of this
agreement will not affect the enforceability or validity of any
other provision.
7. After-Acquired Consumer Goods. This security interest shall
attach to after-acquired consumer goods only to the extent
permitted by law.
8. Applicable Law. This agreement will be construed according
to Texas laws.
9. Place of Performance. This agreement is to be performed in
the county of Secured Party's mailing address.
10. Financing Statement. A carbon, photographic, or other
reproduction of this agreement or any financing statement
covering the collateral is sufficient as a financing statement.
11. Presumption of Truth and Validity. If the collateral is sold
after default, recitals in the xxxx of sale or transfer will be
prima facie evidence of their truth, and all prerequisites to the
sale specified by this agreement and by chapter 9 of the Texas
Business and Commerce Code will be presumed satisfied.
12. Singular and Plural. When the context requires, singular
nouns and pronouns include the plural.
13. priority of Security Interest. This security interest shall
neither affect nor be affected by any other security for any of
the obligation. Neither extensions of any of the obligation nor
releases of any of the collateral will affect the priority or
validity of this security interest with reference to any third
person.
14. Cumulative Remedies. Foreclosure of this security interest
by suit does not limit Secured Party's remedies, including the
right to sell the collateral under the terms of this agreement.
All remedies of Secured Party may be exercised at the same or
different times, and no remedy shall be a defense to any other.
Secured Party's rights and remedies include all those granted by
law or otherwise, in addition to those specified in this agreement.
15. Agency. Debtor's appointment of Secured Party as Debtor's
agent is coupled with an interest and will survive any
disability of Debtor.
16. Attachments Incorporated. The addendum indicated below
is attached to this agreement and incorporated into it for all purposes:
X Accounts, Inventory, Documents, Chattel Paper, General Intangibles.
PENN OCTANE CORPORATION
BY: _____________________________
ITS: _____________________________
(Acknowledgment)
State of
County of
This instrument was acknowledged before me on the ____ day
of July, 1996, by Xxxxxx X. Xxxxxxx, Executive Vice President
and Chief Financial Officer of Penn Octane Corporation, on
behalf of Penn Octane Corporation.
_____________________________
Notary Public, State of
PREPARED BY:
XXXXXXX, XXXXXX & XXXXXX
Xxxxxxxxxxx, Xxxxx 00000
NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE THEREOF
HAS BEEN REGISTERED UNDER THE CEURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE. NEITHER THIS
WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
THEREOF MAY BE SOLD OR TRANSFERRED IN THE ABSENCE OF REGISTRATION OR
QUALIFICATION OR AN EXEMPTION THEREFROM UNDER ANY APPLICABLE STATE
SECURITIES LAW.
COMMON STOCK PURCHASE WARRANT
Void after February 28, 2001
No. 001 Warrant to Purchase 50,000
Shares of Common Stock, $.01
par value
PENN OCTANE CORPORATION (POCC)
This is to Certify That, FOR VALUE RECEIVED,
Xxxx X. Xxxxxxxx
or registered assign(s) (herein referred to as the "Holder", whether one
or more), is entitled to purchase, subject to the provisions of this
Warrant, from PENN OCTANE CORPORATION (POCC), ad Delaware Corporation
(the "Company"), but in no event later than 5:00 p.m., San Francisco time,
on February 28, 2001 (or, if such date is a day authorized by law to close,
then on the next succeeding day which shall not be such a day), 50,000
shares of Common Stock (herein so called), $.01 par value, of the
Company at a price of $5.00 per share, subject to adjustment as to number
of shares and purchase price as set forth in Section 6 below. The exercise
price of a share of Common Stock in effect at any time and as adjusted from
time to time is hereinafter sometimes referred to as the "Exercise Price".
The shares of Common Stock issuable upon exercise of the Warrants are
sometimes herein called the "Warrant Stock."
1. Exercise of Warrant This Warrant may be exercised in whole or in part
at any time and fromt time to time by presentation and surrender hereof to
the Company with the Purchase Form annexed hereto duly executed and
accompanied by payment of the Exercise Price for the number of shares
specified in such form. If this Warrant should be exercised in part only,
the Company shall, upon surrender of this Warrant for cancellation,
execute and deliver a new Warrant evidencing the right of the Holder to
purchase the balance of the shares purchaseable hereunder. Upon receipt
by the Company of this Warrant at the office of the Company, in proper
from for exercise, accompanied by payment of the Exercise Price, the
Holder shall be deemed to be the holder of record of the shares of Common
Stock issuable upon such exercise, notwithstanding that certificates
representing such shares of Common Stock shall not then be actually
delivered to the Holder. The issuance of certificates for shares of
Common Stock upon the exercise orf this Warrant shall be made without
charge to the Holder for any issuance tax in respect thereof
(with the exception of any federal or state income taxes applicable
thereto), all such taxes to be required to pay any tax which xxx be
payable in respect of any transfer involved in the issuance and delivery
of any certificate in a name other than that of the Holder.
The Company will at no time close its tranfer books against the transfer
orf this Warrant or the issuance of any shares of Common Stock issuable
upon the exercis of this Warrant in any manner which interferes with
the timely exercise of this Warrant.
2. Reservation of Shares; Stock Fully Paid. The Company agrees that at
all times there shall be authorized and reserved for issuance upon
exercise of this Warrant such number of shares of its Common Stock as
shall be required for issuance or delivery upon exercise of this Warrant.
All shares which may be issued upon erecise hereof will, upon issuance,
by duly authorized, validly issued, fully paid and non-assessable, with
no personal liability attaching to the ownership thereof.
3. Fractional Shares. This Warrant shall not be exercisable in such manner
as to require the issuance of fractional shares or script representing
fractional shares. If, as a result of adjustment in the Exercise Price
or the number of shares of Common Stock to be received upon exercise of
this Warrant, fractional shares would be issuable, no such fractional shares
shall be issued. In lieu thereof, the Company shall pay the Holder an
amount in cash equal to such fraction mutiplied by the Fair Market Value
of such fractional share. The term "Fair Market Value" shall mean, as
of a particular date, the market price on such date.
The market price on such day shall be the last sale price on such day on the
New York Stock Exchange, or, if the Common Stock is not then listed or
admitted to trading on the New York Stock Exchange, on such other principal
stock exchange on which such stock is then listed or admitted to trading,
or, if no sale takes place on such day on any such exchange, the average
of the closing bid and asked prices on such day as officially quoted
on any such exchange, or it the Common Stock is not then listed or
admitted to trading on any stock exchange, the market price on such day shall
be the average of the reported closing bid and asked prices on such day as
officially quoted on any such exchange, or, if the Common Stock is not
then listed or admitted to trading on any wstock exchange, the market price
on such day shall be the average of the reported closing bid and asked prices
on such day in the over-the-counter market as quoted on the National
Association of Securities Dealers Automated Quotation System or, if not
so quoted, then as furnished by any member of the National Association
of Securities Dealers, Inc. selected by the Company. If there shall be no
meaningful over-the-counter market, then Fair Market Value shall be such
amount, not less than book value, as may be determined by the Board of
Directors of the Company.
4. Exchange or Assignment of Warrant. This Warrant is exchangeable,
without expense (other than applicable transfer taxes), at the option of
the Holder, upon presentation and surrender hereof to the Company for any
other Warrants of different denominations entitling the holder thereof to
purchase in the aggregate the same number of shares of Common Stock
purchasable hereunder. Subject to the provisions of Section 11 below, upon
surrender of this Warrant to the Company with an assignment form duly
executed, and funds sufficient to pay any transfer tax, the Company shall,
without charge, execute and deliver a new Warrant in the name of the assignee
named in such instrument of assignment, and this Warrant shall promptly
be concelled. This Warrant may be divided or combined with other
Warrants which carry the same rights upon presentation hereof the
office or agency of the Company maintained for that purpose, together
with a written notice specifying the names and denominations in
which new Warrants are to be issued signed by the Holder hereof. The term
"Warrant" as used herein includes any Warrants into which this Warrant
may be divided or exchanged, and the term "Holder" as used herein includes
any holder of any Warrant into which this Warrant may be divided or for which
this Warrant may be exchanged.
5. Rights of the Holder. The Holder shall not, by virue hereof, be
entitled to any rights of a stockholder in the Company, either at
law or in equity, and the rights of the Holder arelimited to those
expressed in this Warrant.
6. Adjustment of Exercise Rights. If, and whenever, after the date
hereof and prior to delivery by the Company pursuant to exercies of
this Warrant of all shares of Warrant Stock purchasable upon exercise of
this Warrant:
a. The number of outstanding shares of the Company's stock of the
class at the time purchasable upon exercise of this Warrant is
increased as the result of a subdivision of such outstanding
shares of stock of such class in payment of a dividend declared
upon the outstanding shares of stock of such class, then the
number of shares of Warrant Stock at the time remaining subject
to issuance upon exercise of this Warrant shall thereupon be
increased proportionately, and Exercise Price at the time in
effect shall thereupon be decrease proportionately; or
b. The number of outstanding shares of the Company's stock of the
class at the time purchasable upon exercise of this Warrant is
decreased as the result of a combination of outstanding shares
into a smaller number of shares, then the number of shares of Warrant
Stock at the time remaining subject to issuance upon exercies of
this Warrant shall thereupon be decreased proportionately, and
the Exercise Price at the time in effect shall thereupon be increased
proportionately; or
c. The outstanding shares of the Company's stock of the class at the
time purchasable upon exercise of this Warrant are changed (including
a change in par value) as the result of a reclassification (other than
a reclassificaiton resulting solely in a change to which the
provisions of clause a. or b. are applicable), or the Company merges
with another corporation or corporations in a merger in which the Company
is the resulting corporation (except a merger that does not result
in a reclassification of the outstanding shares of the Company's stock
of the class at the time purchasable upon exercise of this Warrant),
then thereafter, upon any exerecise of this Warrant the registered holder
hereof will, at no additional cost, be entitled to receive (subject to
any additional cost, be entitled to receive (subject tot any required
action by stockholders), in lieu of the number and class of shares
of stock theretofore purchasable upon such exercise, the number
and class of shares of stock and/or other securities and/or property
receivable, as a result of such relassification or merger, by a holder
of that number and class of shares of stock theretofore purchasable upon
such exercise.
d. Reorganizaiton or Reclassification. In the event of any capital
reorganization ro any reclassification of the capital stock of the
Company, this Warrant shall thereafter be exercisable for the number
of shares of stock or other securities or property to which a holder
of the number of shares of Common Stock of the company issuable
upon exercise of this Warrant would have been entitled upon such
reorganization or reclassification; and, in any such case, appropriate
adjustment (as determined by the Board of Directors) shall be made
in the application of the provisions herein set forth with respect
to the rights and interest thereafter of the Holder of this Warrant
to the end that the provisions set forth herein (including provisions
with respect to adjustments of the Exercise Price) shall thereafter
be applicable, as nearly as reasonably practicable, in relation to
any shares of stock or other property thereafter deliverable upon
the exercise of this Warrant.
e. Effect of Merger or Consolidation. In the event the Company shall
enter into any consolidation with or merger into any other corporation
wherein the Company is not the surviving corporation, or shall sell
or convey its property as an entirety or substantially as an entirety,
and, in connection with such consolidation, merger, sale or
conveyance, shares of stock or other securities shall be issuable
or deliverable in exchange for the Common Stock of the Company,
the Holder shall thereafter be entitled to purchase (in lieu of the
number of shares of Common Stock which such Holder would have been
entitled to purchase immediately prior to such consolidation, merger,
sale or conveyance) the shares of stock or other securities to which
such number of shares of Common Stock would have been entitled at the
time of such consolidation, merger, sale or conveyance, at an
aggregate Exercise Price equal to that which would have been payable
if such number of shares of Common stock had been purchased immediately
prior thereto. In case of any such consolidation, merger, sale or
conveyance, appropriate provision (as determined by resolution of the
Board of Directors of the Company) shall be made with respect to
the rights and interests thereafter of the Holders of the Warrant, to
the end that all the provisions of this Warrant (including adjustment
provisions) shall thereafter be applicable, as nearly as reasonably
practicable, in relation to such stock or other securities.
f. No adjustments for Small Amounts. Anything herein to the contrary
notwithstanding, no adjustment of the Exercise Price shall be made
if the amount of such adjustment shall be less the $.01 per share,
but in such case, any adjustment that would otherwise be required
tehn to be made shall be carried forward and shall be made at the time
and together with the next subsequent adjustment which, together with
any adjustment so carried forward, shall amount to $.01 per share or
more.
g. Statement of Adjustments. Whenever the Exercise Price and number
of shares of Common Stock purchasable hereunder is required to be
adjusted as provided herein, the Company shall promptly make a
certificate signed by its President or a Vice President and its
Trasurer or Assistant Treasurer, setting forth, in reasonable
detail, the event requiring the adjustment, the amount of the
adjustment, the method by which such adjsutment was calculated
(including a description of the basis on which the Company's
Board of Directors made any determination hereunder), and the
Exercise Price and number of shares of Common Stock purcasable
hereunder after giving effect to such adjustment, and shall
promptly cause copies of such certificates to be mailed to the
holder of the Warrant.
7. Notice to Warrant Holders. So long as this Warrant shall be outstanding,
(i) if the Company shall pay any dividend or make any discribution upon
its Common Stock, or (ii) if the Company shall offer to the holders
of Common Stock for subscription or purchase by them any shares of
stock or securities of any class or any other rights,or (iii) if any
capital reorganization of the Company, reclassification of the capital
stock or the Company, consolidation or merger of the Company with
or into another corporation, or any conveyance of all or substantially all
of the assets of the Company, or voluntary or involuntary dissolution
or liquidation of the Company shall be effected, then, in any such case,
the Company shall cause to be mailed to the Holder, at least twenty-one
(21) days prior to the date specified in (x) or (y) below, as the case
may be, a notice containing a brief description of the proposed action
and stating the date on which (x) a record is to be taken for the purpose
of such dividend, distribution or tights, or (y) such reclassification,
reorganization, consolidation, merger, conveyance, dissolution or
liquidation is to take place and the date, if any is to be fixed, as of
which the holders of Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities or other property deliverable
upon such reclassificaiton, reorgainzaiton, consolidation, merger,
conveyance, dissolution or liquidation. Such mailing shall be a
condition precendent to takin of the action proposed to be taken
by the Company.
8. Certain obligations of the Company. The Company agrees that it will not
increase the par value of the shares of Warrant Stock issuable upon
exercise of this Warrant above the prevailing and currently applicable
Exercise Price hereunder, and that before taking any action that would
cuase an adjustment reducing the prevailing and current applicable
Exercise Price hereunder below the then par value of the Warrant Stock
at the time issuable upon exercise of this Warrant, the Company will
take such corporate action, as in the opinion of its counsel, may be
necessary in order that the Company may validly issue fully paid
nonassessable shares of such Warrant Stock. The Company will maintain
an office or agency where presentations and demands to or upon
the Company in respect of this Warrant may be made and will give notice
in writing to the registered holders of the then outstanding
Warrant may be made and will give notice in writing to the registered
holders of the then outstanding Warrants, at their addresses as
shown on the books of the Company, of each change of location thereof.
9. Determination by Board of Directors. All determinations by the Board
of Directors of the Company under the provisions of this Warrant will be
made in good faith with due regard to the interest of the registered
holder of this Warrant and in accordance with sound financial practices.
10. Notice. All notices to the Holder shall be in writing, and all notices
and certificates given to the Holder shall be sent registered or
certified mail, return receipt requested, to such Holder at his address
appearing on the records of the Company.
11. Replacement of Lost, Stolen, Destroyed or Mutilated Warrants. Upon
receipt of evidence reasonably satisfactory to the Company of the loss,
theft, destruction or mutilation of this Warrant and, in the case of
any such loss, theft or destruction, upon delivery of an indemnity
bond in such reasonable amount as the Company may determine (or, in the
case of the original holder of this Warrant or his nominee, upon
delivery of an indemnity agreement reasonably satisfactory to the
Company), or, in the case of any such mutilation, upon the surrender
of such Warrant for cancellation, the Company, at its expense,
will execute and deliver, in lieu of such lost, stolen, destroyed or
mutilated Warrant, a new Warrant of like tenor.
12. Number and Gender. Whenever herein the singular number is used,
the same shall include the plural where appropriate, and words
of any gender shall include each other gender where appropriate.
13. Applicable Law. This Warrant shall be governed by, and constructed
in accordance with, the laws of the State of Delaware.
WITNESS the execution hereof under seal this 6th day of June, 1996.
PENN OCTANE CORPORATION
(POCC)
Attest: Xxxxxx X. Xxxxxxx By: Xxxx X. Xxxxxxx
Xx. Xxxxxx X. Xxxxxxx Xx. Xxxx X. Xxxxxxx
Its: Assistant Secretary Its: President
