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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Penn Octane Corporation
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(Name of Issuer)
Common Stock, par value $.01 per share
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(Title of Class of Securities)
707573-10-1
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(CUSIP Number)
Mr. Jerome B. Richter
c/o Penn Octane Corporation
900 Veterans Boulevard
Redwood City, California 94063
(415) 368-1501
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
April 11, 1997
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(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box /x/.
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosure provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
Page 1 of 16 Pages
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CUSIP No. 707573-10-1
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1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Jerome B. Richter
S.S.# ###-##-####
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2 Check the Appropriate Box If a Member of a Group
a. [_]
b. [x]
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3 SEC Use Only
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4 Source of Funds
PF
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5 Check If Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e) [x]
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6 Citizenship or Place of Organization
United States
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7 Sole Voting Power
Number of 3,900,000(1)
Shares
Beneficially 8 Shared Voting Power
Owned By 0
Each
Reporting 9 Sole Dispositive Power
Person 3,900,000(1)
With
10 Shared Dispositive Power
0
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11 Aggregate Amount Beneficially Owned by Each Reporting Person
3,900,000(1)
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12 Check Box If the Aggregate Amount in Row (11) Excludes Certain
Shares [x]
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(1) Does not include 2,000 shares of Common Stock owned by Mrs. Richter as to
which Mr. Richter disclaims beneficial ownership.
Page 2 of 16 Pages
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13 Percent of Class Represented By Amount in Row (11)
47.80%
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14 Type of Reporting Person
IN
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Page 3 of 16 Pages
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Item 1. Security and Issuer.
This Statement on Schedule 13D (the "Schedule 13D") relates to the
Common Stock, par value $.01 per share (the "Common Stock"), of Penn
Octane Corporation, a Delaware corporation (the "Company"). The
address of the principal executive offices of the Company is 900
Veterans Boulevard, Suite 510, Redwood City, California 94063.
Item 2. Identity and Background.
This Schedule 13D is filed on behalf of Mr. Jerome B. Richter. Mr.
Richter resides at 26280 Dori Lane, Los Altos Hills, California 94022,
and is a citizen of the United States. Mr. Richter is the Chairman of
the Board, President and Chief Executive Officer of the Company whose
address is set forth in Item 1.
Mr. Richter has not, during the last five years, been convicted in a
criminal proceeding (excluding traffic violations or similar
misdemeanors).
In October 1996, the Company and Mr. Richter, without admitting or
denying the findings contained therein (other than as to
jurisdiction), consented to the issuance of an Order by the Securities
and Exchange Commission (the "Commission") in which the Commission (i)
made findings that the Company and Mr. Richter had violated portions
of Section 13 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), relating to the filing of periodic reports and the
maintenance of books and records, and certain related rules under the
Exchange Act, and (ii) ordered respondents to cease and desist from
committing or causing any current or future violation of such Section
and rules.
Item 3. Source and Amount of Funds or Other Consideration.
Mr. Richter exercised 2,200,000 warrants to purchase 2,200,000 shares
of Common Stock at an exercise price of $1.25 (the "Warrants") through
the payment of $22,000 of personal funds to the Company in cash and
the issuance by Mr. Richter of a promissory note dated April 11, 1997
to the Company in the amount of $2,728,000, due April 11, 2000,
bearing interest at a per annum rate of 8.25% (the "Promissory Note"),
which Promissory Note is secured by one million shares of Common Stock
(the "Pledged Shares") owned by Mr. Richter and held by the Company
pursuant to the terms of a Pledge and Security Agreement dated April
11, 1997 (the "Pledge Agreement").
Item 4. Purpose of Transaction.
Mr. Richter has exercised the Warrants for investment purposes. As of
the date of this Schedule 13D, no determination has been made by Mr.
Richter to acquire additional shares of Common Stock or to dispose of
any shares of Common Stock now held by him, although he may decide to
so acquire or dispose of shares of Common Stock. Any such
determination will depend on market conditions prevailing from time to
time and on other conditions which may be applicable depending on the
nature of the transaction or transactions involved.
Except as indicated above, Mr. Richter has no plans or proposals
which relate to or would result in any of the events, actions or
conditions specified in paragraphs (a) through (j) of Item 4 of this
Form, although Mr. Richter reserves the right to determine in the
future to take any action which relates to or would result in any of
such events, actions or conditions.
Page 4 of 16 Pages
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Item 5. Interest in Securities of the Issuer.
(a) Mr. Richter is the beneficial owner of 3,900,000(2)
shares of Common Stock, which shares constitute 47.80%
of the issued and outstanding shares of Common Stock
based upon the aggregate of 8,159,286 shares issued
and outstanding as of April 18, 1997, based on
information provided by the Company.
(b) Mr. Richter has the sole power to vote or direct the vote and
to dispose or direct the disposition of 3,900,000 shares of
Common Stock.
(c) On March 25, 1997, Mr. Richter transferred 100,000 warrants
to purchase 100,000 shares of Common Stock at an exercise
price of $1.25 per share to Mr. John P. Holmes, a director of
the Company, for no consideration.
On April 11, 1997, Mr. Richter exercised the Warrants for an
aggregate purchase price of $2,750,000 of which $22,000 was
paid by Mr. Richter in cash out of personal funds and
$2,728,000 of which was paid with the Promissory Note, as
secured by the Pledged Shares under the Pledge Agreement.
In connection with the exercise of the Warrants, Mr. Richter
issued the Promissory Note and entered into the Pledge
Agreement pursuant to which the Pledged Shares have been
placed with the Company. A copy of each of the Promissory
Note and the Pledge Agreement are attached hereto as
exhibits.
(d) Except as set forth in this Schedule 13D, no person is known
by Mr. Richter to have the right to receive or the power to
direct the receipt of dividends from, or the proceeds from
the sale of, the Common Stock held by him.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
Except as set forth in this Schedule 13D, there are no contracts,
arrangements, understandings or relationships (legal or otherwise)
among the persons referred to in Item 2 of this Schedule 13D or
between such persons and any other person with respect to any of the
securities of the Company, including, but not limited to, any relating
to the transfer or voting of any of such securities, finder's fees,
joint ventures, loan or option arrangements, puts or calls, guarantees
of profits, division of profits or loss or the giving or withholding
of proxies.
Item 7. Materials to Be Filed as Exhibits
1. Promissory Note due April 11, 2000 by Mr. Richter in favor of
the Company in the amount of $2,728,000 bearing interest at a
rate per annum of 8.25%.
2. Pledge and Security Agreement dated as of April 11, 1997.
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(2) Does not include 2,000 shares of Common Stock owned by Mrs. Richter as to
which Mr. Richter disclaims beneficial ownership.
Page 5 of 16 Pages
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: April 21, 1997
/s/ Jerome B. Richter
--------------------------
Jerome B. Richter
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EXHIBIT INDEX
Exhibit
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1. Promissory Note due April 11, 2000 by Mr. Richter in favor of the
Company in the amount of $2,728,000 bearing interest at a rate per
annum of 8.25%.
2. Pledge and Security Agreement dated as of April 11, 1997.
Page 7 of 16 Pages
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Exhibit 1
PROMISSORY NOTE
$2,728,000.00 New York, New York
April 11, 1997
FOR VALUE RECEIVED, Jerome B. Richter, an individual residing at 26280
Dori Lane, Los Altos Hills, California 94022 (the "Borrower"), hereby promises
to pay to the order of Penn Octane Corporation, a Delaware corporation (the
"Lender"), at its offices located at 900 Veterans Boulevard, Redwood City,
California 94063, or at such other place as the Lender shall designate, the
principal amount of Two Million Seven Hundred and Twenty Eight Thousand Dollars
($2,728,000.00) on April 11, 2000. The Borrower shall pay interest on the
unpaid principal amount hereof from the date hereof until paid, at a rate of
eight and one quarter percent (8.25%) per annum, to be paid annually in arrears
on each April 11 commencing April 11, 1998 and ending on April 11, 2000.
Should the indebtedness represented by this Promissory Note or any
part thereof be collected at law or in equity or in bankruptcy, receivership or
other similar court proceedings or this Promissory Note be placed in the hands
of attorneys for collection before or after maturity, the Borrower, its
successors and assigns, agree to pay, in addition to the principal and interest
due and payable hereon, reasonable attorneys' and collection fees.
If the Borrower shall fail to make payment of any installment of
interest on this Promissory Note when due, and if such default is not cured
within ten (10) days thereafter, or if the Borrower shall become insolvent or a
voluntary or uncontroverted
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petition shall be filed under the Federal Bankruptcy Code or other similar
Federal or state law dealing with arrangements for the relief of creditors with
respect to the Borrower (in each case, an "Event of Default"), and in any such
event, the holder shall have the right without notice to the Borrower to
declare this Promissory Note with accrued interest hereon to be immediately due
and payable (whether or not then due by the stated terms hereof), whereupon the
same shall become and be immediately due and payable without presentment,
demand, protest or notice of any kind, all of which are hereby expressly waived
by the Borrower.
This Note is secured by and entitled to the benefits of a Pledge and
Security Agreement dated the date hereof pursuant to which Borrower's
obligations hereunder are secured by one million (1,000,000) shares of Common
Stock, $0.01 par value, of the Lender owned by Borrower.
No waiver by the holder of any breach of any covenant of the Borrower
herein contained or any term or condition hereof shall be construed as a waiver
of any subsequent breach of the same or of any other covenant, term or
condition herein.
This Promissory Note shall be deemed to have been made under, and in
all respects shall be governed by and construed in accordance with, the laws of
the State of New York.
/s/ Jerome B. Richter
-------------------------
Jerome B. Richter
Page 9 of 16 Pages
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Exhibit 2
PLEDGE AND SECURITY AGREEMENT
PLEDGE AND SECURITY AGREEMENT dated as of April 11, 1997, made by
Jerome B. Richter ("Borrower") in favor of Penn Octane Corporation, a Delaware
corporation (the "Corporation"), for the benefit of the Corporation.
W I T N E S S E T H :
WHEREAS, in connection with the exercise by Borrower of warrants to
purchase 2,200,000 shares of Common Stock, $0.01 par value, of the Corporation
(the "Common Stock") for $1.25 per share, the Corporation has agreed to accept
$22,000 in cash and a three-year promissory note dated the date hereof (the
"Promissory Note") from Borrower in the amount of $2,728,000 bearing interest
at the rate of 8.25% per annum, payable annually, and subject to the terms and
conditions set forth in the Promissory Note; and
WHEREAS, Borrower has agreed to grant a security interest in certain
shares of Common Stock owned by Borrower to secure, equally and ratably, the
prompt and complete payment when due of all Borrower's payment obligations
under the Promissory Note (the "Secured Obligations") and the performance and
observance by Borrower of the covenants, obligations and conditions to be
performed and observed by Borrower pursuant to the Promissory Note;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth herein, the parties hereto agree as follows:
1. Definitions.
(a) The words "hereof," "herein" and "hereunder" and words of similar
import, when used in this Agreement, shall refer to this Agreement as a whole
and not to any particular provision of this Agreement, and section references
are to this Agreement, unless otherwise specified.
(b) Unless otherwise defined herein, all terms defined in Article 8
and 9 of the Uniform Commercial Code in effect as of the date hereof in the
State of New York (the "Uniform Commercial Code") are used herein as therein
defined.
2. Grant of Security Interest.
(a) To secure the prompt and complete payment when due of all Secured
Obligations, now existing or hereafter arising, and the performance and
observance by Borrower of the covenants, obligations and conditions to be
performed and observed by Borrower pursuant to the Promissory Note, Borrower
hereby assigns and pledges to the Corporation and grants to the Corporation a
continuing security interest in all of its right, title and interest in and to
one million (1,000,000) shares of Common Stock of the Corporation owned by
Borrower (the "Pledged Stock") and the certificates representing such Pledged
Stock, and all dividends, cash, rights, instruments and other property and all
proceeds of every kind thereof (whether the same are now owned or exist or
arise or are acquired before or after the date hereof) from time to time
received, receivable or otherwise distributed in respect of or in exchange for,
any or all of the Pledged Stock
Page 10 of 16 Pages
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(whether the same are now owned or exist or arise before or after the date
hereof) (the Pledged Stock together with all such certificates, dividends,
cash, rights, instruments, property and proceeds, being hereinafter referred to
as the "Pledged Stock Collateral").
(b) Borrower hereby delivers to the Corporation, duly endorsed in
blank or accompanied by appropriate undated stock powers duly executed in
blank, all certificates or instruments representing or evidencing the Pledged
Stock.
3. Stock Dividends, Distributions, Etc. If, while this Agreement is in
effect, Borrower shall become entitled to receive or shall receive any stock,
any stock certificate representing same, options, rights or other Property
(including, without limitation, any certificate representing a stock dividend
or any distribution in connection with any recapitalization, reclassification,
increase or reduction of capital, or issued in connection with any
reorganization), whether as an addition to, in substitution of, or in exchange
for, any shares of any Pledged Stock Collateral, or otherwise, or any payment
or distribution of capital on account of any Pledged Stock Collateral, Borrower
agrees to accept the same as the Corporation's agent and to hold the same in
trust on behalf of and for the benefit of the Corporation and to deliver the
same to the Corporation on or before the close of business on the second
Business Day following the receipt thereof by Borrower, in the exact form
received, with the endorsement of Borrower when necessary or appropriate
undated stock powers duly executed in blank, to be held by the Corporation,
subject to the terms of this Agreement, as additional Pledged Stock Collateral
and any cash distribution in connection therewith or cash proceeds therefrom
shall be deposited by the Corporation in a segregated account for Borrower (the
"Borrower Collateral Account"), and thereafter disposed of in accordance with
this Agreement.
4. Cash Dividends; Voting Rights. Unless Borrower is in default of his payment
obligations under the Promissory Note for a period of ten (10) days after
written notice from the Corporation of such default, Borrower shall be
entitled, except as otherwise provided in Section 3, to receive all cash
distributions and cash dividends in respect of the Pledged Stock and to
exercise all voting and other consensual rights pertaining to the Pledged
Stock. Borrower agrees to exercise all such voting and other consensual rights
for a purpose not inconsistent with or violative of the terms of this
Agreement. The Corporation shall not have the right at any time to exercise any
voting rights with respect to the Pledged Stock; provided, however, that upon
the sale or other disposition of the Corporation's interest in the Pledged
Stock or any part thereof, any third party purchaser or other transferee shall
have the full and unrestricted right to vote the Pledged Stock, in any manner
permitted by applicable law.
5. Proxies, Etc. The Corporation shall execute and deliver (or cause to be
executed and delivered) to Borrower all such proxies and other instruments as
Borrower may reasonably request for the purpose of enabling Borrower to
exercise the voting or other rights which Borrower is entitled to exercise
pursuant to Section 4 hereof and to receive all distributions and dividends he
is authorized to receive and retain pursuant to Section 4 hereof.
6. Financing Statements. Borrower hereby agrees to execute such financing
statements as the Corporation may request, from time to time, with respect to
the Pledged Stock Collateral, and take such action as may be required to
perfect and keep perfected the security interest in the Pledged Stock
Collateral created hereby, and Borrower hereby authorizes the Corporation to
execute as its attorney in fact and file any such financing statements on
Borrower's behalf.
Page 11 of 16 Pages
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7. Rights of the Corporation. If Borrower is in default of his payment
obligations under the Promissory Note and such default is not cured within a
period of ten (10) days thereafter, or if Borrower shall become insolvent or a
voluntary or uncontroverted involuntary petition shall be filed under the
Federal Bankruptcy Code or other similar Federal or state law dealing with
arrangements for the relief of creditors with respect to Borrower (in each
case, an "Event of Default"), Borrower shall no longer be entitled to receive
any cash dividends or distributions in respect of the Pledged Stock or to
exercise any voting rights, rights of conversion, exchange or subscription or
any other rights, privileges or options pertaining to any shares of the Pledged
Stock; and, upon the sale or other disposition of the Corporation's interest in
the Pledged Stock or any part thereof, any third party purchaser or other
transferee shall have the full and unrestricted right to exercise any and all
such rights, privileges or options.
8. Remedies.
(a) If there shall have occurred an Event of Default, the Corporation
may at any time or from time to time exercise in respect of the Pledged Stock
Collateral, in addition to all other rights, powers and remedies provided for
in Section 7, at law, in equity or otherwise available to it, all the rights
and remedies of a secured party under the Uniform Commercial Code and under any
other applicable law as in effect in any relevant jurisdiction and, in
connection therewith but not in limitation thereof, the Corporation may,
without demand for performance or other demand, advertisement or notice of any
kind (except the notice specified below of time and place of public or private
sale or other disposition) to Borrower or any other Person (all and each of
which demands, advertisements and notices are hereby expressly waived), sell,
assign, grant an option or options to purchase or otherwise dispose of the
Pledged Stock Collateral or any part thereof in one or more parcels at public
or private sale or sales, at any exchange, broker's board or at any of the
Corporation's offices or elsewhere and at such prices as the Corporation may
deem best, for cash, on credit or for future delivery, without assumption of
any credit risk, free of any claim or right of whatsoever kind (including any
right or equity of redemption) of Borrower, which claim, right and equity are
hereby expressly waived and released, and upon such other terms and conditions
as the Corporation may deem commercially reasonable, provided, however, that
Borrower shall not be credited with the net proceeds of any such credit sale or
future delivery until the cash proceeds thereof are actually received by the
Corporation and are applied to the Secured Obligations until satisfied.
(b) Borrower agrees that, to the extent notice of sale or other
disposition shall be required by applicable law, at least ten (10) days' notice
to Borrower of the time and place of any public sale or other disposition or
the time after which any private sale or other intended disposition may be
made. Notice shall constitute reasonable notification thereof. Notification
need not be given to Borrower if it has signed, after an Event of Default has
occurred, a statement renouncing any right to notification of sale or other
intended disposition. The Corporation shall not be obligated to make any sale
or other disposition of Pledged Stock regardless of notice having been given.
(c) The Corporation may adjourn any public or private sale or other
disposition from time to time by announcement at the time and place fixed
therefor, and such sale or other disposition may, without further notice, be
made at the time and place to which it was so adjourned. The Corporation shall
have the right upon any such public sale or other disposition, to the extent
permitted by applicable law, to purchase the whole or any part of the Pledged
Stock Collateral so sold or disposed of. Any and all proceeds received by the
Corporation in respect of any sale or disposition of, collection from, or
Page 12 of 16 Pages
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other recovery or realization upon all or any part of the Pledged Stock,
whether consisting of moneys, checks, notes, drafts, bills of exchange, money
orders or commercial paper of any kind whatsoever, shall be deposited by the
Corporation in the Borrower Collateral Account and shall be held by the
Corporation, to be withdrawn and distributed by the Corporation as provided
herein.
(d) The rights and remedies provided under this Agreement are
cumulative and may be exercised singly or concurrently, and are not exclusive
of any rights and remedies provided by law or equity.
(e) Borrower recognizes that the Corporation may be unable to effect a
public sale of all or a part of the Pledged Stock Collateral by reason of
certain prohibitions contained in the Securities Act of 1933, as amended, or
other federal securities laws, as now or hereafter in effect, or in applicable
Blue Sky or other state securities laws, as now or hereafter in effect, but may
be compelled to resort to one or more private sales to a restricted group of
purchasers who will be obliged to agree, among other things, to acquire such
Pledged Stock Collateral for their own account, for investment and not with a
view to the distribution or resale thereof. Borrower agrees that private sales
so made may be at prices and on other terms less favorable to the Corporation
than if such Pledged Stock Collateral were sold at public sale, and that the
Corporation has no obligation to delay sale of any such Pledged Stock
Collateral for the period of time necessary to permit the registration of such
Pledged Stock Collateral for public sale under such applicable securities laws.
Borrower agrees that private sales made under the foregoing circumstances shall
be deemed to have been made in a commercially reasonable manner.
(f) If the Corporation determines to exercise its right to sell all or
any of the Collateral, upon written request, Borrower shall from time to time
furnish to the Corporation all such information as the Corporation may request
in order to determine the Collateral which may be sold by Borrower as exempt
transactions under the federal securities laws.
(g) The proceeds of the sale of any of the Pledged Stock Collateral
sold pursuant to this Section 8 and cash constituting Pledged Stock Collateral
received under Section 2(a) shall be applied by the Corporation as follows:
FIRST: to the payment of the costs and expenses of such sale,
including the out-of-pocket expenses of the Corporation and the fees and out-of
pocket expenses of legal advisers employed by the Corporation in connection
therewith, and to the payment of all advances made by the Corporation hereunder
and payment of all costs and expenses incurred by the Corporation in connection
with the administration and enforcement of this Agreement;
SECOND: to the payment in full of the Promissory Note; and
THIRD: the balance (if any) of such proceeds to Borrower, the
successors or assigns of Borrower, or as a court of competent jurisdiction may
direct.
9. Representations; No Disposition, Etc. Borrower hereby represents and
warrants that it now owns good and marketable title to the Pledged Stock, free
and clear of any liens, charges, encumbrances or security interests of any kind
whatsoever, and that the Pledged Stock is not subject to any restriction on
alienation or transfer, in each case, other than this Agreement. Borrower
covenants to defend the right, title and special property
Page 13 of 16 Pages
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of Borrower in and to the Pledged Stock against the claims and demands of all
persons whatsoever. Borrower hereby represents, warrants and covenants that
Borrower is currently, or shall be, the only owner of the Pledged Stock and
that Borrower does not, and will not have, outstanding rights, options,
warrants, conversion rights or other commitments or agreements for the purchase
or acquisition of the Pledged Stock. Borrower agrees that he will not sell,
assign, transfer, exchange, or otherwise dispose of, or grant any option or
right with respect to, the Pledged Stock Collateral, nor will it create, incur
or permit to exist any lien, security interest therein, charge or encumbrance
with respect to any of the Pledged Stock Collateral, any interest, or any
proceeds thereof except as permitted by this Agreement.
10. Possession of the Collateral. The Corporation shall hold in its possession
in the State of California all the Pledged Stock and all other certificates,
documents or instruments constituting Pledged Stock Collateral pledged,
assigned or transferred hereunder except as from time to time any such
certificate, document or instrument may be required for recordation or for the
purpose of enforcing or realizing upon any right or value thereby represented;
provided, however, that Borrower, in his capacity as an officer of the
Corporation or otherwise, shall have no ability to assign, release, transfer or
otherwise deal with the Pledged Stock Collateral. The Corporation may, from
time to time, in its sole discretion appoint one or more agents or trustees
(which in no case shall be Borrower or any of his affiliates) to hold physical
custody, for the account of the Corporation, of any or all such certificates,
documents or instruments.
11. Collateral Agreement. Each of Borrower and the Corporation agrees that the
parties hereto may supplement, amend or supersede this Agreement with a
collateral agreement among the Corporation, Borrower and a third party bank, as
trustee, pursuant to which such third party bank shall accept and maintain
possession of the Pledged Stock Collateral until such time as the Secured
Obligations shall have been satisfied.
12. Further Assurance. Borrower agrees that at any time and from time upon the
written request of the Corporation, Borrower will execute and deliver such
further documents, including a collateral agreement appointing a trustee other
than the Corporation and any necessary financing statements, and do or cause to
be done such further acts and things as the Corporation may reasonably request
in order to effect the purposes of this Agreement.
13. Release of Security Interest. Upon termination of this Agreement pursuant
to Section 17 hereof, the security interest granted hereby shall terminate.
Upon any such termination, the Corporation will, at Borrower's expense, execute
and deliver to Borrower such documents as Borrower shall reasonably request to
evidence such termination including, without limitation, duly executed Uniform
Commercial Code termination statements.
14. Limitation by Law; Severability.
(a) All rights, remedies and powers provided in this Agreement may be
exercised only to the extent that the exercise thereof does not violate any
applicable provision of law, and all the provisions of this Agreement are
intended to be subject to all applicable mandatory provisions of law which may
be controlling and to be limited to the extent necessary so that they will not
render this Agreement illegal, invalid, unenforceable, in whole or in part, or
not entitled to be recorded, registered, or filed under the provisions of any
applicable law.
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(b) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall not invalidate the remaining provisions
hereof, and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other
jurisdiction.
15. Waivers, Amendments. None of the terms or provisions of this Agreement may
be waived, altered, modified or amended by any act, delay, omission or
otherwise, except by an instrument in writing which is duly executed by
Borrower and the Corporation. Any such waiver, alteration, modification or
amendment shall be valid only to the extent therein set forth. A waiver by the
Corporation of any right or remedy under this Agreement on any one occasion
shall not be construed as a bar to any right, remedy or power which the
Corporation would otherwise have on any future occasion. No failure to exercise
nor any delay in exercising on the part of the Corporation, any right, remedy
or power under this Agreement, shall operate as a waiver thereof; further, no
single or partial exercise of any right, remedy or power under this Agreement
shall preclude any other or further exercise thereof or the exercise of any
other right, remedy or power.
16. Binding Effect; Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and shall inure to the
benefit of the Corporation its successors and assigns and nothing herein is
intended or shall be construed to give any other Person any right, remedy or
claim under, to or in respect of this Agreement or any Pledged Stock
Collateral.
17. Termination of This Agreement. This Agreement shall terminate
simultaneously with the payment in full of all principal and interest due under
the Promissory Note and, upon such termination, any Pledged Stock Collateral
held hereunder shall be released and delivered to Borrower or at his direction.
18. Notices. All notices or other communications hereunder shall be given in
the following manner.
If to the Corporation:
Penn Octane Corporation
900 Veterans Boulevard
Redwood City, California 94063
Attention: Chief Financial Officer
If to Borrower:
Jerome B. Richter
Penn Octane Corporation
900 Veterans Boulevard
Redwood City, California 94063
Any of the addresses set forth above may be changed from time to time
by written notice from the party requesting the change.
19. Applicable Law. This Agreement shall be governed by, and be construed and
interpreted in accordance with, the internal laws of the State of New York
without reference to principles of conflict of laws, except as required by
mandatory provisions of law.
Page 15 of 16 Pages
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
caused this Agreement to be duly executed and delivered by their duly
authorized officers as of the date first above written.
BORROWER
/s/ Jerome B. Richter
-----------------------------------------------
Jerome B. Richter
PENN OCTANE CORPORATION
By /s/ Jorge R. Bracamontes
--------------------------------------------
Name: Jorge R. Bracamontes
Title: Executive Vice President & Secretary
Page 16 of 16 Pages
