Amendment to Promissory Notes and Related Agreements between Penn Octane Corporation and Noteholders

Summary

Penn Octane Corporation and its promissory noteholders agree to extend the payment due date on certain promissory notes from December 15, 2001 to June 15, 2002. The company will continue to pay interest at 16.5% per year, pay a 1% fee to noteholders, and extend the expiration date of related stock purchase warrants by one year while removing the company's repurchase right. Noteholders must agree to these terms by December 7, 2001. The agreement also allows the company to repay any noteholders who do not accept the amendment without breaching prior agreements.

EX-10.1 3 doc2.txt November 28, 2001 FirstName LastName Company Company1 Address1 Address2 City , State Zip RE: AMENDMENT - PROMISSORY NOTE ("NOTE") OF PENN OCTANE CORPORATION (THE "COMPANY") CURRENTLY HELD BY YOU WITH A DUE DATE OF DECEMBER 15, 2001 AND RELATED AGREEMENTS AND INSTRUMENTS Dear Holder Of The Promissory Notes: Reference is made to the promissory note(s) which is currently held by you in connection with one or more of the following transactions with the Company: i.) The promissory note(s) originally issued by the Company in connection with the private placement on or around December 17, 1999 (the "Original Notes"), as amended (the "Restructured Notes"), ii.) The promissory note(s) originally issued by the Company contemporaneously with the issuance of the Original Notes (the "Original Other Notes"), as amended (the "Other Restructured Notes"), and/or iii.) The promissory note(s) originally issued by the Company contemporaneously with the restructuring of the Original Notes and the Original Other Notes (the "New Notes"). The Restructured Notes, the Other Restructured Notes and the New Notes are collectively referred to as the "Promissory Notes" and all of the underlying agreements pertaining to the Promissory Notes, including the purchase agreement, the note agreement, the common stock purchase warrant agreement, the registration rights agreement, and all related amendments, if any, are collectively referred to as the "Original Documents". The Promissory Notes, including unpaid interest are due and payable on December 15, 2001. The Company is in the position to satisfy the December 15, 2001 payment date. However, the Company would prefer to extend the payment date of the Promissory Notes instead of liquidating assets. Therefore the Company is willing to extend the payment due date on the Promissory Notes until June 15, 2002, continue interest payments on the Promissory Notes at a rate of 16.50% per annum, pay you a 1% fee and modify your common stock purchase warrants by extension of the expiration date until December 15, 2004 and removal of the Company's repurchase right with regards to the warrants. For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and you hereby agree that your Original Documents shall be, and hereby are, amended, effective from and after December 15, 2001, to the fullest extent necessary to effectuate the following: 1. Promissory Notes. The Promissory Notes held by you are hereby amended ----------------- to the full extent necessary to effectuate the following: (a) Extend the payment due date from "December 15, 2001" to "June 15, 2002". (b) Pay interest on the Promissory Notes at the rate of 16.50% per annum on December 15, 2001, March 15, 2002 and June 15, 2002. (c) The interest rate of 16.50% per annum, shall not be further adjusted. 2. Common Stock Purchase Warrants. The Common Stock Purchase Warrants --------------------------------- held by you are hereby amended to the fullest extent necessary to effectuate the following: (a) Extend the expiration date of the Common Stock Purchase Warrants from "December 15, 2003" to "December 15, 2004". (b) Remove the Company's repurchase right. 3. Additional Payment. The Company will pay to you a fee equal to 1.0% of ------------------ the amount of your Promissory Notes which are extended pursuant to this amendment letter. The fee will be paid on December 15, 2001 as well as any unpaid interest due on the Promissory Notes as of December 15, 2001 (see 1(b) above). 4. Declining Noteholders. Notwithstanding anything to the contrary ---------------------- contained in your Original Documents, you hereby agree that, to the extent that any other holders of the Promissory Notes do not agree to this amendment letter by December 7, 2001 (collectively, the "Declining Promissory Noteholders"), the Company shall be entitled to repay such Declining Promissory Noteholders all amounts owing by the Company to such Declining Promissory Noteholders under their respective Original Documents without, by virtue thereof, in any way breaching or otherwise being in default of any of your Original Documents. Any such amounts paid, shall be excluded from the definition of "Financing" provided for in your Original Documents. 2 If you are in agreement with the terms of this amendment letter, please indicate so by signing below and faxing an executed copy to Ian Bothwell at ###-###-#### no later than the close of business on December 7, 2001. Very truly yours, Penn Octane Corporation By: -------------------------------------------- Its: Vice President and Chief Financial Officer 3 The undersigned holder of the Promissory Note and other Original Documents referred to in this amendment letter hereby acknowledges his/her/its agreement to all of the provisions of this amendment letter and intention to be so bound. The undersigned also agrees to keep the contents of this amendment letter and any documents or discussions regarding the same strictly confidential and not to use the same for any purpose pending public disclosure thereof by the Company; provided, however, that the undersigned may consult with his, her or its agents and advisors with respect to the transactions contemplated hereby and, in connection therewith, disclose the terms and contents of this amendment letter and any other documents relating to the subject matter thereof or hereof. FirstName LastName Company Company1 By: ---------------------------------- Its: --------------------------------- Date: -------------------------------- Promissory Note Amount: $ NoteAmt ----------- Name and Telephone Number of Holder: - -------------------------------------- - -------------------------------------- - -------------------------------------- 4