Document:

exv10w38

 

Exhibit 10.38

Penn Octane Corporation

Rio Vista Energy Partners L.P.

820 Gessner Road, Suite 1285

Houston, Texas 77024

March 5, 2007

JBR Capital Resources, Inc.

Attn: Jerome B. Richter, President

335 Tomahawk Drive

Palm Desert, California 92211

Re: Payments Under 2007 Consulting Agreement

Dear Mr. Richter:

Penn Octane Corporation, Rio Vista Energy Partners L.P. and JBR Capital Resources, Inc. are entering into a 2007
Consulting Agreement dated March 5, 2007, with an effective date of November 15, 2006 (the “Consulting Agreement”).
Capitalized terms used, and not otherwise defined, herein shall have the meaning set forth in the Consulting Agreement.
Notwithstanding any contrary provision of the Consulting Agreement, and as a condition of the Company’s execution and
delivery of the Consulting Agreement, the Company shall, in lieu of cash payment pursuant to Section 2.1 of the
Consulting Agreement, apply fifty percent (50%) of the amount of any Fees due and payable to Consultant by the Company
against any amounts owed (whether or not then due or payable) by Consultant or its affiliates to the Company, including
without limitation, any amounts owed by Jerome B. Richter to Penn Octane pursuant to his promissory note dated
April 11, 2000, as such note may be amended from time to time.

If you are in agreement with the foregoing, kindly sign where indicated below and return this letter to my
attention.

Sincerely,

	 	 	 
	PENN OCTANE CORPORATION	 	 	 	 	 	RIO VISTA ENERGY PARTNERS L.P.

	By:

	 	                                         
	 	By:
	 	                                         
	
 
	 	 
	 	 	 
	
 
	 	Ian T. Bothwell

Acting Chief Executive Officer
	 	 	 	Ian T. Bothwell

Acting Chief Executive Officer
Rio Vista GP LLC, General Partner
	Agreed:     

	 	

	 	

	 	

	JBR CAPITAL RESOURCES, INC.	 	 	 	 
	By:

	 	                                         
	 	

	 	

	
 
	 	 
	 	

	 	

	
 
	 	Jerome B. Richter, 
Presidentexv10w39

 

Exhibit 10.39

Penn Octane Corporation

NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE. NEITHER THIS WARRANT
NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF MAY BE SOLD OR OTHERWISE TRANSFERRED
IN THE ABSENCE OF REGISTRATION OR QUALIFICATION OR AN EXEMPTION THEREFROM UNDER APPLICABLE LAW.

COMMON STOCK PURCHASE WARRANT

Under the 2001 Warrant Plan

Warrant to Purchase _________ Shares

of Common Stock, $0.01 par value

of Penn Octane Corporation

Dated _____________, 20__

Void after _____________, 20__

This is to Certify That ___(herein referred to as the “Holder”) is entitled to
purchase, subject to the provisions hereof, from PENN OCTANE CORPORATION, a Delaware corporation
(the “Company”), but not later than 5:00 p.m., California time, on ___, 20___(or, if such
date is not a Business Day in Palm Desert, California, then on the next succeeding day which shall
be a Business Day), ___shares of Common Stock, $0.01 par value, of the Company (the “Common
Stock”) at an exercise price of $  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”. For purposes of this Warrant, a “Business Day” shall mean any day other than a
Saturday, a Sunday or a day on which banking institutions in New York, New York, or in Palm Desert,
California, are authorized by law or regulation to close. This Warrant is subject in all respects
to the provisions of the Company’s 2001 Warrant Plan, as amended (the “Plan”), a copy of which has
been delivered to the Holder.

The shares of Common Stock issuable upon exercise of the Warrants are sometimes herein called the
“Warrant Stock.”

 

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1. Exercise of Warrant. This Warrant may be exercised in whole or in part at any time and from
time to time, subject to the limitations as set forth in Section 2, by presentation and surrender
hereof to the Company at its principal office with the Exercise Notice in the form attached hereto
as Exhibit A duly executed and accompanied by payment of the Exercise Price in immediately
available funds for the number of shares specified in such form. If this Warrant is 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 purchasable
hereunder. Upon receipt by the Company of this Warrant at the office of the Company, in proper form
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 of 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), any such issuance tax to be
paid by the Company, it being understood however that the Holder shall be required to pay all
income taxes and any tax which may 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.

2. Vesting Of Warrants. Subject to the provisions of this Section 2, this Warrant shall vest
and become exercisable at the rate of ___% of the Warrant Stock for each month that has
elapsed since ___, 20___, until this Warrant is fully vested and exercisable, subject to
earlier acceleration of vesting or termination in accordance with Section 6.9 of the Plan.

2.A. Termination of Employment or Service. If the Holder’s employment by or service to the
Company is terminated by the Company for Cause (as defined below) or by the Holder without Good
Reason (as defined below), any unvested portion of this Warrant shall immediately be cancelled, and
the Holder may exercise any portion of this Warrant that had vested on or before the date of such
termination at any time within ninety (90) days after the date of such termination to the extent
not previously exercised. If the Holder’s employment by or service to the Company is terminated by
the Company without Cause or by the Holder with Good Reason, any unvested portion of this Warrant
shall immediately become fully vested and exercisable, and the Holder may exercise this Warrant at
any time within one (1) year from the date of the Holder’s termination of employment or service to
the extent not previously exercised.

For purposes of this Warrant, termination for “Cause” shall mean an event where the Holder:
(i) materially fails to perform his duties and responsibilities as determined by the Board of
Directors, provided that the Company provides the Holder with notice and reasonable opportunity to
cure such failure; (ii) commits a material breach of his obligations under any written employment
or consulting agreement with the Company; (iii) commits any act of gross misconduct or conducts
himself in a way which is harmful to the Company or its affiliates (whether or not in connection
with the Holder’s employment by or service to the Company); (iv) commits one or more acts of
dishonesty which are intended to result in substantial gain or personal enrichment of the Holder
at the expense of any the Company or its affiliates; (v) is convicted of a felony (whether or not
in connection with the Holder’s employment by or service to the Company); and/or (vi) commits a
violation of any law or regulation in force which may affect or relate to the business of any the
Company or its affiliates.

 

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For purposes of this Warrant, “Good Reason” shall mean: (a) a reduction in the Holder’s base
salary, absent the Holder’s prior written consent; (b) the failure of Company to pay any
compensation, or otherwise provide any material benefits, due to the Holder in accordance with the
terms of any written employment agreement with the Company, or as otherwise provided to other
employees of the Company, absent the Holder’s prior written consent; (c) a material reduction in
the Holder’s title and responsibilities or the assignment to the Holder of duties substantially
inconsistent with the Holder’s position, duties, and status with the Company as of the date of this
Warrant, absent the Holder’s prior written consent; (d) the breach of any of Company’s material
obligations under any written employment agreement with the Holder or under applicable law; and/or
(e) the change by the Company of the Holder’s place of employment more than fifty (50) miles from
the Holder’s office location as of the date of this Warrant, absent the Holder’s prior written
approval.

2.B. Death. Except as expressly provided otherwise in this Warrant, if the Holder dies while
employed by or providing services to the Company, any unvested portion of this Warrant shall
immediately become fully vested and exercisable, and the executor of the Holder’s will,
administrator of the Holder’s estate or any successor trustee of a grantor trust may exercise this
Warrant at any time within one (1) year from the date of death, to the extent not previously
exercised. Except as expressly provided otherwise in this Warrant, if the Holder dies within
ninety (90) days after termination of the Holder’s employment or service with the Company, the
executor of the Holder’s will or administrator of the Holder’s estate may exercise this Warrant at
any time within one (1) year from the date of the Holder’s termination of employment or service, to
the extent this Warrant had vested on or before the date of the Holder’s termination of employment
or service and to the extent not previously exercised. This Warrant shall terminate on the
applicable expiration date described in this Section 2.B, to the extent that it is unexercised.

2.C. Disability. Except as expressly provided otherwise in this Warrant and at the
discretion of the Board of Directors or its delegate, following the Holder’s termination of
employment or service due to Disability, the Holder may exercise this Warrant, to the extent not
previously exercised and whether or not this Warrant had vested on or before the date of
termination employment or service, at any time within one (1) year from the date of determination
of the Holder’s Disability as described in this Section 2.C; provided, however, that while the
claim of Disability is pending, such portion of this Warrant that was unvested at termination of
employment or service may not be exercised and such portion of this Warrant that was vested at
termination of employment or service may be exercised only during the period set forth in Section
2.A hereof. This Warrant shall terminate one (1) year following the date of determination of
Disability, to the extent that it is unexercised.

For purposes of this Warrant, “Disability” means a physical condition arising from an illness or
injury, which renders an individual incapable of performing work in his or her customary
occupation. The determination as to an individual’s Disability shall be made by the Board of
Directors and shall be conclusive on all of the parties.

3. 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 exercise hereof will, upon issuance, and receipt of payment
therefor, be duly authorized, validly issued, fully paid and non-assessable.

 

3

 

4. Fractional Shares. This Warrant shall not be exercisable in such manner as to require the
issuance of 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 multiplied by the Fair Market Value of a share of
Common Stock. The term “Fair Market Value” shall mean, as of a particular date, the market price on
such date.

For purposes of this Warrant, the market price on any day shall be the last sale price on such
day on the NASDAQ Stock Market, or, if the Common Stock is not then listed or admitted to trading
on the NASDAQ Stock Market, 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, if the Common Stock is not then listed or admitted to trading on any stock exchange, 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.

5. Rights of the Holder. The Holder shall not, by virtue hereof, be entitled to any rights of
a stockholder in the Company, either at law or in equity, and the rights of the Holder are limited
to those expressed in this Warrant.

6. Adjustment of Exercise Price and Number of Shares. The number and kind of securities
purchasable upon the exercise or exchange of this Warrant and the Exercise Price shall be subject
to adjustment from time to time upon the occurrence of certain events, as follows:

6.A. Adjustment for Change in Capital Stock. If at any time after the date hereof, the
Company:

	 	(a)	 	pays a dividend or makes a distribution on its Common Stock in
 shares of its Common Stock;

	 
	 	(b)	 	subdivides its outstanding shares of Common Stock into a
greater number of shares;

	 
	 	(c)	 	combines its outstanding shares of Common Stock into a smaller
number of shares;

	 
	 	(d)	 	makes a distribution on its Common Stock in shares of its
capital stock other than Common Stock; or

	 
	 	(e)	 	issues by reclassification of its Common Stock any shares of
its capital stock;

 

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then the Exercise Price in effect immediately prior to such action shall be adjusted so that the
Holder may receive, upon exercise or exchange of this Warrant and payment of the same aggregate
consideration, the number of shares of capital stock of the Company which the Holder would have
owned immediately following such action if the Holder had exercised or exchanged the Warrant
immediately prior to such action.

The adjustment shall become effective immediately after the record date in the case of a
dividend or distribution and immediately after the effective date in the case of a subdivision,
combination or reclassification.

6.B. Adjustment for Other Distributions. If at any time after the date hereof, the Company
distributes to all holders of its Common Stock any of its assets or debt securities, the Exercise
Price following the record date shall be adjusted in accordance with the following formula:

	 	 	 
	E’ = E x

	 	M — F
	 

	 	 
	 

	 	M

			
	where: E’ =	 	the adjusted Exercise Price.

			
	where: E =	 	the Exercise Price immediately prior to the adjustment.

			
	where: M =	 	the current market price (as defined in Section 4 above) per
share of Common Stock on the record date of the distribution.

			
	where: F =	 	the aggregate fair market value (as conclusively determined
by the Board of Directors of the Company) on the record date
of the assets or debt securities to be distributed divided by
the number of outstanding shares of Common Stock.

The adjustment shall be made successively whenever any such distribution is made and shall
become effective immediately after the record date for the determination of shareholders entitled
to receive the distribution. In the event that such distribution is not actually made, the Exercise
Price shall again be adjusted to the Exercise Price as determined without giving effect to the
calculation provided hereby. In no event shall the Exercise Price be adjusted to an amount less
than zero.

In addition to the foregoing, the number of shares of capital stock of the Company which the
holder is entitled to receive upon exercise of their Warrant shall be appropriately and equitably
adjusted as determined by the Company’s Board of Directors to make appropriate provision for any
adjustments in the Exercise price made on account of the foregoing.

This subsection does not apply to cash dividends or cash distributions paid out of
consolidated current or retained earnings as shown on the books of the Company and paid in the
ordinary course of business.

 

5

 

6.C. Deferral of Issuance or Payment. In any case in which an event covered by this Section 6
shall require that an adjustment in the Exercise Price be made effective as of a record date, the
Company may elect to defer making such adjustment until the occurrence of such event. If the
Company so defers making any such adjustment and if this Warrant is exercised after such record
date but before the occurrence of such event, the shares of Common Stock and other capital stock of
the Company, if any, issuable upon such exercise, had such adjustment been made as of the record
date, over and above the shares of Common Stock or other capital stock of the Company, if any,
issuable upon such exercise on the basis of the Exercise Price as unadjusted, shall be issued
promptly following the occurrence of such event and the Company shall pay to the Holder by check
any amount in lieu of the issuance of fractional shares pursuant to Section 4.

6.D. When No Adjustment Required. No adjustment need be made for a change in the par value or
no par value of the Common Stock.

6.E. 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 prepare a certificate signed by its President or any Vice President and its Treasurer or
Assistant Treasurer, setting forth, in reasonable detail, the event requiring the adjustment, the
amount of the adjustment, the method by which such adjustment was calculated (including a
description hereunder), and the Exercise Price and number of shares of Common Stock purchasable
hereunder after giving effect to such adjustment, and shall promptly cause copies of such
certificates to be mailed to the Holder.

6.F. No Adjustment Upon Exercise of Warrants. No adjustments shall be made under any Section
herein in connection with the issuance of Warrant Stock upon exercise or exchange of the Warrants.

6.G. No adjustment 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 than
$0.05 per share, but in such case, any adjustment that would otherwise be required then 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 $0.05 per share
or more.

6.H. Common Stock Defined. Whenever reference is made in Section 6.A to the issuance of shares
of Common Stock, the term “Common Stock” shall include any equity securities of any class of the
Company hereinafter authorized which shall not be limited to a fixed sum or percentage in respect
of the right of the holders thereof to participate in dividends or distributions of assets upon the
voluntary or involuntary liquidation, dissolution or winding up of the Company. Subject to the
provisions of Section 8 hereof, however, shares issuable upon exercise or exchange hereof shall
include only shares of the class designated as Common Stock of the Company as of the date hereof or
shares of any class or classes resulting from any reclassification or reclassifications thereof or
as a result of any corporate reorganization as provided for in Section 8 hereof.

 

6

 

7. Notice to Warrant Holders. So long as this Warrant shall be outstanding, (i) if the Company
shall pay any dividend or make any distribution 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 of 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 thirty (30)
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 rights, 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 reclassification, reorganization, consolidation, merger, conveyance, dissolution or
liquidation.

8. Reclassification, Reorganization, Consolidation or Merger. In the event of any
reclassification, capital reorganization or other change of outstanding shares of Common Stock of
the Company (other than a subdivision or combination of the outstanding Common Stock and other than
a change in the par value of the Common Stock) or in the event of any consolidation or merger of
the Company with or into another corporation (other than a merger in which merger the Company is
the continuing corporation and that does not result in any reclassification, capital reorganization
or other change of outstanding shares of Common Stock of the class issuable upon exercise or
exchange of this Warrant) or in the event of any sale, lease, transfer or conveyance to another
corporation of the property and assets of the Company as an entirety or substantially as an
entirety, the Company shall, as a condition precedent to such transaction, cause effective
provisions to be made so that the Holder shall have the right thereafter, by exercising this
Warrant, to purchase the kind and amount of shares of stock and other securities and property
(including cash) receivable upon such reclassification, capital reorganization and other change,
consolidation, merger, sale or conveyance by a holder of the number of shares of Common Stock that
might have been received upon exercise or exchange of this Warrant immediately prior to such
reclassification, capital reorganization, change, consolidation, merger, sale or conveyance. Any
such provision shall include provisions for adjustments in respect of such shares of stock and
other securities and property that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Warrant. The foregoing provisions of this Section 8 shall
similarly apply to successive reclassifications, capital reorganizations and changes of shares of
Common Stock and to successive consolidations, mergers, sales or conveyances. In the event that in
connection with any such capital reorganization or classification, consolidation, merger, sale or
conveyance, additional shares of Common Stock shall be issued in exchange, conversion, substitution
or payment, in whole or in part, for, or of, a security of the Company other than Common Stock, any
such issue shall be treated as an issue of Common Stock covered by the provisions of Section 6.A
hereof.

 

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9. 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
cause 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 (which shall initially be the Company’s principal
office in Palm Desert, California) 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 Warrants, at their addresses as shown on the books of the Company, of each
change of location thereof.

10. 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 Holder and in accordance with sound financial practices.

11. 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.

12. 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 any indemnity
bond in such reasonable amount as the Company may determine, and 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.

13. Number and Gender. Whenever the singular number is used herein, the same shall include the
plural where appropriate, and words of any gender shall include each other gender where
appropriate.

14. Applicable Law. This Warrant shall be governed by, and construed in accordance with, the
laws of the State of California, without regard to its conflict of laws principles.

{Signatures on following page}

 

8

 

The undersigned have duly executed this Common Stock Purchase Warrant as of the date first set
forth above.

	 	 	 	 	 
	 	PENN OCTANE CORPORATION

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 
	Acknowledged and Agreed:
	 
	 	 
	EMPLOYEE OR DIRECTOR
	 
	 	 
	 
	 	 
	 
	 
	 	 
	Print Name:
	 	 
	 

	 	 

 

9

 

Penn Octane Corporation

Exhibit A

NOTICE OF EXERCISE

Penn Octane Corporation

 

 

Attention: Chief Financial Officer

1. Election to Exercise. Effective as of today, ___, 20___, the undersigned
(the “Holder”) hereby elects to exercise the Holder’s warrant to purchase ___
shares of Common Stock (the “Warrant Stock”) of Penn Octane Corporation (the
“Company”) under and pursuant to the Company’s 2001 Warrant Plan, as amended from time to
time (the “Plan”) and the Common Stock Purchase Warrant (the “Warrant Agreement”) dated
___, 20___. Unless otherwise defined herein, the terms defined in the Warrant Agreement
and the Plan shall have the same defined meanings in this Notice of Exercise (“Exercise
Notice”).

2. Representations of the Holder. The Holder acknowledges that the Holder has
received, read and understood the Plan and the Warrant Agreement and agrees to abide by and be
bound by their terms and conditions. In addition, the undersigned Holder represents and warrants
to the Company the following:

(a) Holder has received a copy of the Plan, the Warrant Agreement and this Exercise Notice,
has read and understands the terms of the Plan, the Warrant Agreement, and this Exercise Notice,
and agrees to be bound by their terms and conditions.

(b) Holder is aware of the Company’s business affairs and financial condition and has acquired
sufficient information about the Company to reach an informed and knowledgeable decision to acquire
the Warrant Stock. Holder is acquiring these Warrant Stock for investment for Holder’s own account
only and not with a view to, or for resale in connection with, any “distribution” thereof within
the meaning of the Securities Act of 1933, as amended (the “Securities Act”).

(c) Holder acknowledges and understands that shares of the Warrant Stock constitute
“restricted securities” under the Securities Act and have not been registered under the Securities
Act in reliance upon a specific exemption therefrom, which exemption depends upon among other
things, the bona fide nature of Holder’s investment intent as expressed herein. Holder further
understands that the Warrant Stock must be held indefinitely unless it is subsequently registered
under the Securities Act or an exemption from such registration is available. Holder further
acknowledges and understands that the Company is under no obligation to register the Warrant Stock.
Holder understands that the certificate evidencing the Warrant Stock will be imprinted with a
legend which prohibits the transfer of the Warrant Stock unless they are registered or such
registration is not required in the opinion of counsel satisfactory to the Company.

 

A-1

 

(d) Holder is familiar with the provisions of Rule 144 promulgated under the Securities Act,
which, in substance, permit limited public resale of “restricted securities” acquired, directly or
indirectly from the issuer thereof, in a non-public offering subject to the satisfaction of certain
conditions, including: (i) the resale being made through a broker in an unsolicited “broker’s
transaction” or in transactions directly with a “market maker”, (ii) the availability of certain
public information about the Company, (iii) the amount of Warrant Stock being sold during any three
month period not exceeding the limitations specified in Rule 144(e); (iv) the timely filing of a
Form 144; and (v) satisfaction of a one-year holding period.

(e) Holder further understands that in the event all of the applicable requirements of Rule
144 are not satisfied, registration under the Securities Act, compliance with Regulation A, or some
other registration exemption will be required.

(f) Holder is a resident of the state of ___.

3. Rights as Stockholder. Until the stock certificate evidencing such Warrant Stock is
issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to vote or receive dividends or any other rights as a
stockholder shall exist with respect to the Warrant Stock, notwithstanding the exercise of the
Warrant. The Company shall issue (or cause to be issued) such stock certificate promptly after the
date on which the Warrant is exercised. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the stock certificate is issued.

4. Delivery of Payment. The Holder herewith delivers to the Company the full Exercise
Price for the Warrant Stock in accordance with Section 1 of the Warrant Agreement, by
certified or bank check payable to the Company in the amount of $___.

5. Tax Consultation. The Holder understands that the Holder may suffer adverse tax
consequences as a result of the Holder’s purchase or disposition of the Warrant Stock. The Holder
represents that the Holder has consulted with any tax consultants the Holder deems advisable in
connection with the purchase or disposition of the Warrant Stock and that the Holder is not relying
on the Company for any tax advice.

6. Taxes. The Holder agrees to satisfy all applicable federal, state and local income
and employment tax withholding obligations and herewith delivers to the Company the full amount of
such obligations or has made arrangements acceptable to the Company to satisfy such obligations.

7. Restrictive Legends. The Holder understands and agrees that the Company may cause
the legends set forth below or legends substantially equivalent thereto, to be placed upon any
certificate(s) evidencing ownership of the Warrant Stock together with any other legends that may
be required by the Company or by state or federal securities laws:

 

A-2

 

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
(THE “ACT”) OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED,
PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN THE OPINION OF COUNSEL
SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR
HYPOTHECATION IS EXEMPT FROM REGISTRATION.

This Notice of Exercise is duly executed by the parties set forth below:

	 	 	 	 	 	 	 
	Submitted by:	 	Accepted by:
	 
	 	 	 	 	 	 
	PARTICIPANT:	 	PENN OCTANE CORPORATION
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	By:	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	Name:

	 	 	 	Name:	 	 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	Title:	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Address:
	 	 	 	 	 	 
	 

	 	 	 	 	 	 

 

A-3

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00121-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00121-of-00352.parquet"}]]