SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. 1)
Filed by the Registrant X
Filed by a Party other than the Registrant
Check the appropriate box:
X Preliminary Proxy Statement Confidential, For Use of the
Commission Only (as permitted by
Rule 14A-6(e)(2))
Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
PENN OCTANE CORPORATION
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
X No fee required
Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
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Fee paid previously with preliminary materials:
Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(4) Date Filed:
[PENN OCTANE CORPORATION LETTERHEAD]
April __, 1997
To Our Stockholders:
You are cordially invited to attend the 1997 Annual Meeting of
Stockholders of Penn Octane Corporation (the "Company") to be held at our
offices at 900 Veterans Boulevard, Redwood City, California 94063, at 9:00 a.m.
on May 12, 1997.
The matters to be acted upon at the meeting include (i) the election
of the Board of Directors, (ii) the amendment of the Company's Restated
Certificate of Incorporation to authorize an aggregate of 5,000,000 shares of a
new class of senior preferred stock, (iii) the amendment of the Company's
By-Laws to allow the Board of Directors to amend the By-Laws and take certain
other action without first obtaining the consent of a majority of stockholders,
and to make certain other changes, and (iv) the ratification of Burton McCumber
& Prichard, L.L.P. as the Company's auditors for the fiscal year ending July
31, 1997, all as described in detail in the Notice of Annual Meeting of
Stockholders, Proxy Statement and proxy card that are enclosed with this
letter.
It is important that you use this opportunity to participate in the
Company's affairs by voting on the business to come before this meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
PROMPTLY RETURN THE ACCOMPANYING PROXY CARD IN THE ENCLOSED POSTAGE PREPAID
ENVELOPE PRIOR TO THE MEETING. Returning the proxy card will not deprive you of
your right to attend the meeting and to vote your shares in person.
We look forward to seeing you at the meeting.
Sincerely,
Jerome B. Richter
Chairman of the Board of Directors
[Penn Octane Logo]
PENN OCTANE CORPORATION
900 VETERANS BOULEVARD, SUITE 510
REDWOOD CITY, CALIFORNIA 94063
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of Penn Octane Corporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Penn
Octane Corporation (the "Company") will be held at the Company's offices at 900
Veterans Boulevard, Redwood City, California 94063, on May 12, 1997, at 9:00
a.m. for the following purposes:
1. To elect seven directors to the Board of Directors of the
Company.
2. To approve an amendment to the Company's Restated Certificate
of Incorporation to authorize 5,000,000 shares of a new class
of senior preferred stock of the Company.
3. To approve an amendment to the Company's By-Laws to allow the
Board of Directors to amend the By-Laws and to take certain
other action without first obtaining the consent of a
majority of stockholders, and to make certain other changes.
4. To ratify the appointment of Burton McCumber & Prichard,
L.L.P. as the independent auditors for the Company for the
fiscal year ending July 31, 1997.
5. To transact such other business as may properly come before
the meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice. Only stockholders of record at the close of
business on April 18, 1997 are entitled to notice of and to vote at the meeting
or any adjournment thereof.
By Order of the Board of Directors
Redwood City, California Jorge R. Bracamontes
April __, 1997 Secretary
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
PROMPTLY RETURN THE ACCOMPANYING PROXY CARD IN THE ENCLOSED POSTAGE PREPAID
ENVELOPE SO THAT YOUR SHARES MAY BE REPRESENTED AT THE ANNUAL MEETING. YOU MAY
REVOKE THE PROXY AT ANY TIME PRIOR TO ITS EXERCISE. IF YOU ATTEND THE MEETING,
YOU MAY VOTE IN PERSON.
PENN OCTANE CORPORATION
900 VETERANS BOULEVARD, SUITE 510
REDWOOD CITY, CALIFORNIA 94063
----------------
PROXY STATEMENT
----------------
ANNUAL MEETING OF STOCKHOLDERS
MAY 12, 1997
----------------
This Proxy Statement and the accompanying form of proxy were first
mailed to stockholders on or about April __, 1997.
INFORMATION REGARDING VOTING, PROXIES AND THE MEETING
DATE, TIME AND PLACE OF MEETING
The accompanying proxy is solicited on behalf of the Board of
Directors of Penn Octane Corporation, a Delaware corporation (the "Company"),
for use at the 1997 Annual Meeting of Stockholders of the Company to be held at
the Company's offices at 900 Veterans Boulevard, Suite 510, Redwood City,
California 94063, on May 12, 1997, at 9:00 a.m. (the "Meeting").
RECORD DATE; OUTSTANDING SHARES; QUORUM
Only holders of record of the Company's Common Stock, $0.01 par value
(the "Common Stock"), at the close of business on April 18, 1997 (the "Record
Date") will be entitled to notice of and to vote at the Meeting. At the close
of business on the Record Date, the Company had approximately 5,369,286 shares
of Common Stock outstanding and entitled to vote, held by approximately 264
stockholders of record. A majority of the shares of the issued and outstanding
Common Stock entitled to vote at such Meeting, present in person or by proxy at
the Meeting, will constitute a quorum for the transaction of business. Proxies
marked to abstain from voting on a proposal or to withhold authority to vote on
a matter and broker non-votes (as defined below) will be included in
determining the presence of a quorum.
VOTING RIGHTS; VOTING OF PROXIES
Holders of the Company's Common Stock are entitled to one vote for
each share held as of the Record Date. Cumulative voting for directors is not
permitted.
In the event that a broker, bank, custodian, nominee or other record
holder of the Common Stock indicates on a proxy that it does not have
discretionary authority to vote certain shares on a particular matter (a
"broker non-vote"), such shares will not be counted as shares entitled to vote
with respect to that matter, although they will be counted toward the
establishment of a quorum.
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With regard to Proposal No. 1 below, directors will be elected by a
plurality of the votes cast by the shares present in person or represented by
proxy at the Meeting and entitled to vote on the election of directors. With
regard to Proposals No. 2 and No. 3 below, the affirmative vote of the holders
of a majority of the issued and outstanding shares of the Common Stock on the
Record Date is required for approval. Abstentions and broker non-votes will not
be counted with respect to Proposals No. 1 and No. 4. below, but will have the
effect of voting "against" Proposals No. 2 and No. 3. Proxies giving no
instructions will be counted as votes "for" such proposals. With regard to
Proposal No. 4 below, such proposal must be approved by a majority of the
shares of the Common Stock present in person or represented by proxy at the
Meeting and entitled to vote on the proposal. Neither an abstention from voting
on Proposal No. 4 by a Stockholder present in person or represented by proxy at
the Meeting nor a broker non-vote will be counted as a vote "for" or "against"
such proposal.
SOLICITATION AND VOTING OF PROXIES
The proxy card accompanying this Proxy Statement is solicited on
behalf of the Board of Directors of the Company for use at the Meeting.
Stockholders are requested to complete, date and sign the accompanying proxy
card and promptly return it in the accompanying postage prepaid envelope or
otherwise mail or deliver it to the Company. All proxy cards that are properly
executed and returned, and that are not revoked prior to their use, will be
voted at the Meeting in accordance with the instructions indicated therein or,
if no direction is indicated, in favor of the election to the Company's Board
of Directors of each of the nominees listed in Proposal No. 1 below and in
favor of Proposals No. 2, No. 3 and No. 4. To the best knowledge of the
Company's Board of Directors, no other matters are to be brought before the
Meeting. As to any business that may properly come before the Meeting, however,
it is intended that proxy cards in the form enclosed will be voted in respect
of the election of directors and each other proposal in accordance with the
judgment of the persons holding such proxies.
The expenses of soliciting proxies to be voted at the Meeting will be
paid by the Company. Following the original mailing of the proxies and other
soliciting materials, the Company, its officers and employees and/or its agents
may also solicit proxies by mail, telephone, telegraph, telecopy or in person.
The Company will request that the brokers, custodians, nominees and other
record holders forward copies of the Proxy Statement, proxy card and any other
soliciting materials to persons for whom they hold shares of Common Stock and
request authority for the exercise thereof. In such cases, the Company, upon
the request of the record holders, will reimburse such holders for their
reasonable expenses incurred in forwarding such proxies.
REVOCATION OF PROXIES
Any person signing a proxy card in the form accompanying this Proxy
Statement has the power to revoke it prior to the Meeting or at the Meeting
prior to the vote. A Company stockholder who has given a proxy may revoke it at
any time before it is exercised at the Meeting by (i) delivering to the
Secretary of the Company (by any means, including facsimile) a written notice,
bearing a date later than the proxy, stating that the proxy is revoked; (ii)
signing and delivering a subsequent proxy relating to the same shares of Common
Stock and
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bearing a later date prior to the vote at the Meeting; or (iii) attending the
Meeting and voting in person (although attendance at the Meeting will not, by
itself, revoke a proxy). Please note, however, that if a stockholder's shares
of Common Stock are held of record by a broker, bank or other nominee and that
stockholder wishes to vote at the Meeting, the stockholder must bring to the
Meeting a valid proxy from the broker, bank or other nominee authorizing the
stockholder to vote on behalf of the record holder.
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
The Board of Directors of the Company is presently composed of seven
members, with each director serving until the next annual meeting of
stockholders and until their successor is duly elected and qualified or until
such director's earlier resignation or removal.
At the Meeting, the following seven persons will be nominated for
election to the Board of Directors: Jerome B. Richter, Ian T. Bothwell, Jorge
R. Bracamontes, John P. Holmes, Kenneth G. Oberman, Stewart J. Paperin and John
H. Robinson. All of such nominees are currently directors of the Company.
Shares represented by the accompanying proxy will be voted for the election of
each of these nominees unless the proxy is marked in such a manner as to
withhold authority so to vote. If any nominee for any reason is unable to serve
or for good cause will not serve, the proxy may be voted for such substitute
nominee as the proxy holder may determine. The Company is not aware of any
nominee who will be unable to or for good cause will not serve as a director.
Directors will be elected by a plurality of the votes of the shares present in
person or represented by proxy at the Meeting and entitled to vote in the
election of directors.
DIRECTORS/NOMINEES
The names of the Company's directors, including the nominees, and
certain information about them are set forth below:
Director
Name of Director Age Principal Occupation Since
- ---------------- --- -------------------- -----
Jerome B. Richter 61 Chairman of the Board, President 1992
and Chief Executive Officer of the
Company
Ian T. Bothwell 37 Vice President, Treasurer, Assistant 1997
Secretary and Chief Financial
Officer of the Company
Jorge R. Bracamontes 32 Executive Vice President and 1996
Secretary of the Company
John P. Holmes 58 President and Chief Executive 1996
Officer of John P. Holmes and Co.,
a private investment company
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Director
Name of Director Age Principal Occupation Since
- ---------------- --- -------------------- -----
Kenneth G. Oberman 34 Senior Director of Fujitsu Computer 1992
Products of America, Mobile/
Desktop Business Unit, a computer
peripherals company
Stewart J. Paperin 48 Managing Director of Lionrock 1996
Partners Ltd., a management
consulting and investment firm,
and Managing Director of Capital
Resources East, a management
consulting firm.
John H. Robinson 73 Vice Chairman of Commonwealth 1996
Associates, an investment banking
firm
Each of the nominees, if elected, will serve until the next Annual
Meeting of Stockholders and until his successor has been elected and qualified
or until his earlier resignation or removal.
JEROME B. RICHTER founded the Company and served as its Chairman of
the Board and Chief Executive Officer from the date of its organization in
August 1992 to December 1994, when he surrendered his title as CEO and Chairman
of the Board and became Secretary and Treasurer of the Company, positions he
held until his resignation on August 1, 1996. Effective October 29, 1996, Mr.
Richter was elected Chairman of the Board, President and Chief Executive
Officer of the Company.
IAN T. BOTHWELL was elected as Vice President, Treasurer, Assistant
Secretary and Chief Financial Officer of the Company on October 29, 1996. Since
July 1993, Mr. Bothwell has been a principal of Bothwell & Asociados, S.A. de
C.V., a Mexican management consulting and financial advisory company that was
founded by Mr. Bothwell in 1993 and specializes in financing Mexican
infrastructure projects. During the period February 1992 through November 1993,
Mr. Bothwell was a senior manager with Ruiz, Urquiza y Cia., S.C., the Mexican
affiliate of Arthur Andersen L.L.P., an accounting firm. From 1987 through
1992, Mr. Bothwell was Controller and Director of Financial Analysis for Brooke
Management Inc., a management company which is an affiliate of Brooke Group
Ltd., a financial services and investment company.
JORGE R. BRACAMONTES was elected as a director of the Company in
February 1996. Effective October 29, 1996, he was elected Executive Vice
President and Secretary of the Company. Mr. Bracamontes also serves as
President and Chief Executive Officer of Penn Octane S.A. de C.V., a Mexican
company and affiliate of the Company. Prior to joining the Company, Mr.
Bracamontes was General Counsel for Environmental Matters at Petreoleos
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Mexicanos, the Mexican national oil company ("PEMEX") for the period from May
1994 to March 1996. During the period from November 1992 to May 1994, Mr.
Bracamontes was legal representative for PEMEX in New York. From May 1990
through November 1992, Mr. Bracamontes served as in-house counsel for PEMEX in
Houston.
JOHN P. HOLMES was elected as a director of the Company in February
1996. Since 1991, Mr. Holmes has served as President and Chief Executive
Officer of John P. Holmes and Co., a private investment company. Mr. Holmes is
also a member of the Board of Directors of Village Green Books.
KENNETH G. OBERMAN has been a director of the Company since its
organization in August 1992. Since 1996, Mr. Oberman has been Senior Director
of Fujitsu Computer Products of America, a San Jose, California-based computer
peripherals company. From 1994 through 1995, Mr. Oberman held the position of
business unit manager for Conner Peripherals, a computer peripherals company,
in San Jose, California. During the period from 1992 through 1994, Mr. Oberman
served as Vice President of International Economic Development Corporation in
Moscow, Russia, a consulting company to the Ministry of Sports involved in the
sale of sporting goods and sports apparel. From 1989 through 1992, Mr. Oberman
was employed by Conner Peripherals, where he was a sales and world accounts
manager.
STEWART J. PAPERIN was elected as a director of the Company in
February 1996. Mr. Paperin has been Managing Director of Lionrock Partners
Ltd., a management consulting and investment firm, and Managing Director of
Capital Resources East, a management consulting firm, since 1993. From 1990 to
1993, Mr. Paperin served as President of Brooke Group International, an
international trading company and a subsidiary of Brooke Group Ltd., a
financial services and investment company.
JOHN H. ROBINSON was elected as a director of the Company in February
1996. Mr. Robinson serves as Vice Chairman of Commonwealth Associates, an
investment banking firm. Prior to 1993 Mr. Robinson served as Chairman of the
Harper Group, an international transportation and information management
company. Mr. Robinson is also a member of the Board of Directors of Lukens
Medical Corp.
Mr. Oberman is Mr. Richter's son. There are no other family
relationships among the Company's officers and directors.
LEGAL PROCEEDINGS
In connection with a law suit by the Company against International Bank
of CommerceBrownsville, a Texas state banking association ("IBC"), concerning
the breach by IBC of a credit facility dated July 1, 1994 between the Company
and IBC, IBC filed an appeal with the Texas Court of Appeals on June 3, 1996 of
the judgment entered on February 26, 1996 against IBC in the sum of $2,810,737,
plus post-award interest at a rate of 9.75% compounded annually
5
plus additional amounts for attorneys' fees and a release of all collateral
transferred to IBC by the Company. The Company filed a response to IBC's appeal
on February 14, 1997.
On June 26, 1996, IBC filed suit against the Company, Case No.
96-06-3502 in the 357th Judicial District Court of Cameron County, Texas
alleging that the Company, in filing the judgment against IBC in order to clear
title to its assets, slandered the name of IBC. IBC has claimed actual damages
of $600,000 and requested punitive damages of $2,300,000. On September 23, 1997,
the court which entered the judgment on behalf of the Company indicated in a
preliminary ruling that the Company was privileged in filing the judgment to
clear title to its assets. The Company believes the case to be frivolous.
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.
On July 30, 1996, the Company filed suit in the District Court of
Harris County, Texas against the former Chief Executive Officer of the Company,
Jorge V. Duran, regarding alleged conversion and fraud by Mr. Duran during his
time as an employee of the Company. The Company has not yet quantified its
damages and is seeking a declaration that the termination of employment of Mr.
Duran was lawful and within the rights of the Company based on Mr. Duran's
status as an at-will employee of the Company. On December 12, 1996, Mr. Duran
filed a counterclaim against the Company in the District Court of Harris County,
Texas alleging wrongful termination and seeking compensation in an unspecified
amount. On February 27, 1997, the two actions were consolidated into one.
BOARD OF DIRECTORS' MEETINGS AND COMMITTEES
The Board of Directors met two times during the fiscal year ended July
31, 1996 (sometimes referred to herein as "fiscal 1996"). During fiscal 1996,
each incumbent director attended at least 75% of the total number of meetings
of the Board of Directors and meetings held of all committees of the Board of
Directors on which such director served (during the period that he served). The
Company did not have an audit committee, compensation committee or a nominating
committee in fiscal 1996.
In March 1997, the Company established an audit committee (the "Audit
Committee") consisting of Messrs. Stewart J. Paperin, John H. Robinson and John
P. Holmes. The Audit Committee is composed entirely of outside directors who
are independent of the management of the Company and are free from any
relationships that in the opinion of the Board of Directors
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would interfere with their exercise of independent judgment. The Audit
Committee recommends the engagement or termination of independent auditors and
reviews the scope of their services and reviews the Company's consolidated
financial statements and the related audit. The Audit Committee is also charged
with reviewing the internal audit function, including the scope and extent of
internal audits and credit reviews and is responsible for investigations of any
matter brought to its attention within its purview. The Audit Committee also
reviews all reports of examination and management's responses and annually
reviews transactions involving the Company and any director, executive officer
or other affiliate.
In March 1997, the Company established a compensation committee (the
"Compensation Committee") consisting of Messrs. Jerome B. Richter, Stewart J.
Paperin and John P. Holmes. The Compensation Committee makes recommendations
concerning the election and reelection of officers, and approves all salary
levels and incentive awards for all senior management officers, subject to
ratification by the Board in the case of the Chief Executive Officer and the
President and Chief Operating Officer of the Company.
Other than reimbursement for out-of-pocket expenses incurred to attend
Board and committee meetings, directors do not receive any compensation for
their services as such.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF
THE NOMINEES.
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PROPOSAL NO. 2 - AMENDMENT TO RESTATED CERTIFICATE OF
INCORPORATION AUTHORIZING 5,000,000 SHARES
OF A NEW CLASS OF SENIOR PREFERRED STOCK
REASONS FOR THE PROPOSAL
The Company currently has authorized 5,000,000 shares of preferred stock (the
"Existing Preferred Stock") which may not be issued in series and all of the
terms of which, including the dividend rate and conversion rate, are set forth
in the Restated Certificate of Incorporation of the Company and may not be
changed except by formal amendment of the Restated Certificate of
Incorporation. As of the date of this Proxy Statement, 270,000 shares of
Existing Preferred Stock were issued and outstanding. However, because of the
difficulty of altering the terms of the Existing Preferred Stock to meet the
needs of the Company in the current market, the Board has determined not to
issue any additional shares of Existing Preferred Stock.
In these circumstances, the Board believes it is in the best interest of the
Company and its shareholders to amend Article FOURTH of the Restated
Certificate of Incorporation of the Company to authorize 5,000,000 shares,
$0.01 par value per share, of a new class of "blank check" senior preferred
stock (the "New Preferred Stock"). The text of the proposed amendment to the
Restated Certificate of Incorporation of the Company is set forth in the
Certificate of Amendment (the "Charter Amendment") which is attached as Exhibit
A to this Proxy Statement.
The Board believes it advisable to authorize such shares of New Preferred Stock
to have them available, among other things, for issuance in connection with
acquisitions and general corporate purposes, including public or private
offerings of shares for cash and stock dividends. The Company has no present
commitments, arrangements or plans which would require the issuance of such
additional shares of New Preferred Stock in connection with an equity offering,
merger, acquisition or otherwise.
The term "blank check" preferred stock refers to stock for which the board of
directors of a corporation may fix or change: (i) the division of such shares
into series; (ii) the dividend or distribution rate; (iii) the dates of payment
of dividends or distributions and the dates from which they are cumulative;
(iv) liquidation price; (v) redemption rights and price; (vi) sinking fund
requirements; (vii) conversion rights; and (viii) restrictions on the issuance
of additional shares of any class or series. As a result, the Board of
Directors of the Company will, in the event of the approval of this proposal by
the stockholders, be entitled to authorize the creation and issuance of up to
5,000,000 shares of New Preferred Stock in one or more series with such
limitations and restrictions as may be determined in the Board's sole
discretion, with no further authorization (except as may be required by
applicable laws, regulatory authorities or the rules of any stock exchange on
which the Company's securities are then listed) by the Company's stockholders
required for the creation and issuance thereof.
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The holders of shares of New Preferred Stock will have only such voting rights
as are granted by law and authorized by the Board of Directors with respect to
any series thereof. The Board of the Company will have the right to establish
the relative rights of the New Preferred Stock in respect of dividends and
other distributions and in the event of the voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Company as
compared with such rights applicable to the Common Stock, the Existing
Preferred Stock and any other series of New Preferred Stock.
EFFECT OF AUTHORIZATION
It is not possible to state the effect of the authorization of the New
Preferred Stock upon the rights of holders of Common Stock or the Existing
Preferred Stock until the Board determines the terms relating to one or more
series of New Preferred Stock. However, such effects might include (i) the
reduction of amounts otherwise available for payment of dividends on Common
Stock or the Existing Preferred Stock, to the extent dividends are payable on
any issued shares of New Preferred Stock, (ii) restrictions on dividends on
Common Stock or the Existing Preferred Stock if dividends on New Preferred
Stock are in arrears, (iii) dilution of the voting power of the Common Stock
and the Existing Preferred Stock, dilution of net income and net tangible book
value per share, and (iv) the holders of Common Stock and the Existing
Preferred Stock not being entitled to share in the Company's assets upon
liquidation until satisfaction of any liquidation preference granted to shares
of New Preferred Stock.
Although the Company has no present plans, agreements or commitments for the
issuance of the New Preferred Stock, the authorized but unissued shares of such
New Preferred Stock could be used to make a takeover or change in control in
the Company more difficult. Under certain circumstances, rights granted upon
issuance of shares of the New Preferred Stock could be used to create voting
impediments or to discourage third parties seeking to effect a takeover or
otherwise gain control of the Company. The Board has made no determination with
respect to the issuance of any shares of New Preferred Stock and has no plans,
proposals, commitments, undertakings or arrangements which would result in the
issuance of any shares of the New Preferred Stock.
The Board of Directors proposes that the stockholders approve the Charter
Amendment in its entirety as set forth in Exhibit A to this Proxy Statement. If
the Charter Amendment is adopted by the Company's stockholders, the Charter
Amendment will become effective on the date filed with the Secretary of State
of the State of Delaware, the Company's state of incorporation.
RECOMMENDATION OF THE COMPANY'S BOARD OF DIRECTORS; VOTE REQUIRED
The Company's Board of Directors unanimously determined that the Charter
Amendment is in the best interest of the Company and its stockholders and
recommends that stockholders approve the Charter Amendment. It is intended that
proxies not marked to the contrary will be voted in favor of the Charter
Amendment. Authorization of the Charter Amendment will require the affirmative
vote of the holders of a majority of the issued and outstanding shares of
Common
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Stock of the Company. Abstentions and broker non-votes will each have the
effect of a vote against the proposed Charter Amendment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT TO THE
COMPANY'S RESTATED CERTIFICATE OF INCORPORATION.
10
PROPOSAL NO. 3 - AMENDMENT AND RESTATEMENT OF
THE COMPANY'S BY-LAWS
The Board of Directors has approved a resolution, subject to
stockholder approval, to amend and restate the Company's By-Laws, among other
things, to allow the Board of Directors of the Company to amend the By-Laws of
the Company and to take certain other actions and to effect certain other
matters by an affirmative vote of a majority of the Board of Directors.
Presently, amendments to the Company's By-Laws and certain other actions
require the vote of a majority of stockholders.
REASONS FOR THE PROPOSAL
The Board believes it is in the best interests of the Company to amend
and restate the Company's By-Laws to, among other things, allow the Board of
Directors of the Company to amend the By-Laws of the Company and to take
certain other actions and to effect certain other matters by an affirmative
vote of a majority of the Board of Directors. The text of the proposed Amended
and Restated By-Laws (the "New By-Laws") is attached as Exhibit B to this Proxy
Statement. The text of the existing Amended and Restated By-Laws of the Company
(the "Existing By-Laws") is attached as Exhibit C.
SUMMARY OF CHANGES
Presently, Section 8 of Article II of the Existing By-Laws requires
the affirmative vote of the holders of not less than half of the then issued
and outstanding shares of the Common Stock in order for the Company to take any
of the following actions:
(a) the amendment, alteration, modification or repeal of the Restated
Certificate of Incorporation or By-Laws of the Company;
(b) the issuance, sale, grant, repurchase or redemption by the Company
of any shares of the capital stock of the Company or other securities
either convertible to capital stock of the Company or carrying the
right to acquire capital stock of the Company;
(c) the merger or consolidation of the Company with any person or
entity;
(d) the transfer or pledge, mortgage or grant of a security interest
or other adverse right or encumbrance of or in all or substantially
all of the assets of the Company;
(e) the recapitalization of the Company;
(f) the removal of a director of the Company whether with or without
cause;
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(g) incurring of any indebtedness for borrowed money or guaranteeing
the obligations of others, except for trade payables incurred by the
Company in the ordinary course of business, accrued employee expenses,
accrued taxes, reasonable reserves for losses and other contingencies
and except for additional indebtedness in an amount not to exceed
$100,000 in any single fiscal year;
(h) the declaration, payment or making of any dividend or distribution
with respect to either shares of the capital stock of the Company or
other securities either convertible to capital stock of the Company or
carrying the right to acquire capital stock of the Company, other than
as provided in a stockholders agreement between the Company and all of
its stockholders; and
(i) any other matter requiring the approval or authorization of
stockholders under Delaware law.
Of the above listed items, the New By-Laws will eliminate this
provision and thereby permit the actions described in (a) (amendment of By-Laws
only), (b), (d), (g) and (h) to be taken by the Company upon the approval of
the Board of Directors and such actions will no longer require stockholder
approval. Under Delaware law, the remaining actions will continue to require
the approval of stockholders. The Board believes that the restrictions
contained in Section 8 of Article II of the Existing By-Laws, as set forth
above, are inconsistent with the system of governance envisioned by the
Delaware Corporation Law, will result in significant delay and expense in the
accomplishment of essential corporate activities and are detrimental to the
efficient operation of the Company, and that it is in the best interest of the
Company and its stockholders that the New By-Laws be approved by the
stockholders.
Presently, Section 2 of Article III of the Existing By-Laws provides
that the number of directors which shall constitute the Board of Directors
shall not be less than one nor more than ten and sets the initial size of the
Board of Directors at five until changed, within such limits, by resolution of
the Board or by the stockholders. The New By-Laws provides for the Board of
Directors to be of such number as shall, from time to time, be determined by
resolution of the Board of Directors, except to the extent that the number of
directors is fixed by the stockholders of the Company, in which event, such
number shall not be changed except by further vote of the stockholders. The
Board of Directors believes that such an amendment will provide the Company
with the flexibility to expand the Board to such size as it deems appropriate
or necessary from time to time.
Presently, Section 14 of Article III of the Existing By-Laws provides
for the designation of one or more committees of the Board with such powers of
the Board of Directors as shall be conferred in the designating resolution of
the Board. Section 4 of the New By-Laws will restrict any committee of the
Board of Directors with respect to its power to amend the Company's Restated
Certificate of Incorporation, to adopt an agreement of merger or consolidation,
to recommend to the stockholders a dissolution of the Company or a revocation
of a dissolution, or to amend the New By-Laws of the Company and, unless
expressly provided in a resolution
12
of the Board as a whole, the power or authority to declare a dividend,
authorize issuance of stock or adopt a certificate of ownership and merger. The
Board of Directors believes such restrictions on the power of committees of the
Board of Directors with respect to the above-listed actions to be in the best
interest of the Company by requiring such actions to be taken with the full
knowledge and approval of the whole Board.
Presently, Section 11 of Article III of the Existing By-Laws provides
that in the event of the removal of a director by the stockholders of the
Company, the vacancy created must be filled by the affirmative vote of a
majority in interest of the stockholders entitled to vote. The New By-Laws
would amend Section 11 of Article III such that any such vacancy created may,
but need not be, filled by the vote of the stockholders; and, if not so filled
by the stockholders, the remaining directors may fill such vacancy by a
majority vote.
Presently, Section 2 of Article VI of the Existing By-Laws allows for
the closing of the stock transfer books of the Company in order to determine
the stockholders entitled to notice of or to vote at any meeting of
stockholders, or stockholders entitled to receive dividends, for a period not
to exceed 60 days. The New By-Laws will not provide for the closing of the
stock transfer books of the Company. The Board believes that the setting of a
record date by resolution of the Board of Directors renders any closing of the
stock transfer books unnecessary for purposes of making such determinations.
EFFECT OF AMENDMENT
The Board believes that the adoption of the New By-Laws will provide
the Company with more modern By-Laws which offer the flexibility to respond
more effectively to the demands of the marketplace. Certain actions restricted
by the Existing By-Laws require the vote of a majority of outstanding shares
according to Delaware law and therefore will not be affected by the New
By-Laws.
The Board of Directors proposes that the stockholders approve the New
By-Laws in their entirety in the form of Exhibit B to this Proxy Statement. If
the New By-Laws are adopted by the Company's stockholders, they will become
effective immediately.
RECOMMENDATION OF THE COMPANY'S BOARD OF DIRECTORS; VOTE REQUIRED
The Company's Board of Directors has unanimously approved the
amendment and restatement of the Company's By-Laws and has determined that the
approval of the New ByLaws is in the best interest of the Company and its
stockholders. It is intended that proxies not marked to the contrary will be
voted in favor of the approval of the New By-Laws. Authorization of the
amendment and restatement of the Company's Existing By-Laws will require the
affirmative vote of the holders of a majority of the issued and outstanding
shares of Common Stock of the Company. Abstentions and broker non-votes will
each have the effect of a vote against the New By-Laws.
13
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NEW BY-LAWS.
14
PROPOSAL NO. 4 - RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITORS
The Company has appointed Burton McCumber & Prichard, L.L.P. as its
independent auditors to perform the audit of the Company's financial statements
for the fiscal year ending July 31, 1997, and the stockholders are being asked
to ratify such appointment. Representatives of Burton McCumber & Prichard,
L.L.P. will be present at the Meeting, will have the opportunity to make a
statement at the Meeting if they desire to do so and will be available to
respond to appropriate questions.
Ratification of the appointment of Burton McCumber & Prichard, L.L.P.
as the Company's independent auditors for fiscal year 1997 will require the
affirmative vote of the holders of a majority of the shares of Common Stock
present in person or represented by proxy and entitled to vote at the Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF BURTON MCCUMBER & PRICHARD, L.L.P. AS THE COMPANY'S INDEPENDENT
AUDITORS FOR FISCAL YEAR 1997.
15
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth certain information, as of March 25,
1997, regarding the beneficial ownership of the Company's Common Stock by (i)
each stockholder known by the Company to beneficially own more than five
percent of the Company's Common Stock, (ii) each director and nominee for
director, (iii) each person serving as an executive officer of the Company at
the end of fiscal 1996, and (iv) all directors and executive officers as a
group.
NAME AND ADDRESS AMOUNT AND NATURE OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) PERCENT OF CLASS
- ------------------- ----------------------- ----------------
Jerome B. Richter 3,902,000(2) 51.55%
Chairman of the Board, President
and Director
Penn Octane Corporation
900 Veterans Boulevard
Redwood City, CA
Kenneth G. Oberman 189,000(3) 3.46%
Director
3562 Amber Drive
San Jose, CA
Stewart J. Paperin 16,500 *
Director
Lionrock Partners, Ltd.
14 East 60th Street
New York, NY
* Less than 1%.
- --------
(1) The number of shares of Common Stock issued and outstanding on March 25,
1997 was 5,369,286 and all calculations and percentages are based on such
number. The beneficial ownership indicated in the table includes shares of
Common Stock subject to warrants held by the respective persons as of the
date of this Proxy Statement that are exercisable on the date hereof or
within 60 days thereafter. Unless otherwise indicated, each person has
sole voting and sole investment power with respect to the shares shown as
beneficially owned.
(2) Includes 2,200,000 shares of Common Stock issuable upon exercise of common
stock purchase warrants. Includes 2,000 shares of Common Stock owned by
Mrs. Richter.
(3) Includes 100,000 shares of Common Stock issuable upon the exercise of
common stock purchase warrants.
16
NAME AND ADDRESS AMOUNT AND NATURE OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
- ------------------- -------------------- ----------------
Mark D. Casaday 50,000(4) *
Former President
6819 Fawncliff Drive
Houston, TX
Thomas P. Muse 140,909(5) 2.62%
Former Chairman
Muse, Stancil & Co.
100 McKinney Place
3131 McKinney Avenue
Dallas, TX
Thomas A. Serleth 81,791(6) 1.52%
Former Executive Vice President
55 Olive Avenue
Larkspur, California
Ian T. Bothwell 0 *
Vice President, Treasurer, Assistant
Secretary, Chief Financial Officer and
Director
Penn Octane Corporation
5847 San Felipe, Suite 3420
Houston, TX
- --------
(4) Mr. Casaday resigned as an officer and director of the Company in October,
1996. At that time he owned 130,000 shares of Common Stock and 200,000
shares of Common Stock were issuable to him upon the exercise of common
stock purchase warrants. Subsequent to October 31, 1996, Mr. Casaday sold
130,000 shares of Common Stock and exchanged 200,000 warrants for 50,000
additional shares of Common Stock in a private transaction with the
Company.
(5) Mr. Muse resigned as an officer and director of the Company in October,
1996. At that time he owned 85,714 shares of Common Stock and 242,856
shares of Common Stock were issuable to him upon exercise of common stock
purchase warrants. Subsequent to October 31, 1997, Mr. Muse exchanged
242,586 warrants for 55,195 additional shares of Common Stock in a private
transaction with the Company.
(6) Mr. Serleth resigned as an officer and director of the Company in October,
1996. At that time he owned 22,700 shares of Common Stock and 260,000
shares of Common Stock were issuable to him upon exercise of common stock
purchase warrants. Subsequent to October 31, 1996, Mr. Serleth exchanged
260,000 warrants for 59,091 additional shares of Common Stock in a private
transaction with the Company.
17
NAME AND ADDRESS AMOUNT AND NATURE OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) PERCENT OF CLASS
- ------------------- ----------------------- ----------------
Jorge R. Bracamontes 225,000(7) 4.03%
Executive-Vice President, Secretary
and Director
Penn Octane de Mexico S.A. de C.V.
Diagonal San Antonio 838
Coli del Valle
Mexico, D.F.
John P. Holmes 430,000(8) 7.41%
Director
47 Ram Island Road
Shelter Island Heights,
New York
John H. Robinson 112,500(9) 2.06%
Director
Commonwealth Associates
733 Third Avenue
New York, New York
Victoria Duran 850,000(10) 13.67%
4 Leaf Towers
Houston, Texas
As a group, the current officers and directors of the Company are beneficial
owners of 1,830,000 shares or 34.08% of the voting securities of the Company
excluding warrants held by members of such group and 4,875,000 shares or 57.94%
of the voting securities of the Company including warrants so held.
- --------
(7) Includes 200,000 shares of Common Stock issuable upon exercise of common
stock purchase warrants owned by Mr. Bracamontes and 15,000 shares of
Common Stock issuable upon exercise of common stock purchase warrants
owned by Mrs. Bracamontes.
(8) Includes 430,000 shares of Common Stock issuable upon exercise of common
stock purchase warrants.
(9) Includes 100,000 shares of Common Stock issuable upon exercise of common
stock purchase warrants.
(10) All of such shares of Common Stock are issuable upon exercise of common
stock purchase warrants.
18
EXECUTIVE COMPENSATION
The following table sets forth annual and all other compensation for
services rendered in all capacities to the Company and its subsidiaries during
each of the fiscal years indicated of those persons who, at July 31, 1996, were
(i) the Company's Chief Executive Officer, and (ii) the other three most highly
compensated executive officers (collectively, the "Named Executive Officers").
No other executive officer received compensation in excess of $100,000 during
fiscal 1996. This information includes the dollar values of base salaries,
bonus awards, the number of stock options granted and certain other
compensation, if any, whether paid or deferred. The Company does not grant
stock appreciation rights and has no restricted stock, stock option or other
long-term compensation plans. No bonuses were paid during or with respect to
the fiscal years indicated.
SUMMARY COMPENSATION TABLE
Annual Compensation
-------------------------------------
Name And Other Annual
Principal Position Year Salary Bonus Compensation
------------------ ---- ------ ----- ------------
Jerome B. Richter, 1996 $132,923 $0 N/A
Secretary Treasurer & 1995 0
Chief Executive Officer 1994 0
for portion of 1995 and
all of 1996
Mark D. Casaday, 1996 $111,692 $0 N/A
Former President 1995 $78,312
1994 N/A
Thomas A. Serleth, 1996 $101,308 $0 N/A
Former Executive Vice 1995 $78,487
President and Chief 1994 $28,000
Financial Officer for a
portion of 1995
Thomas P. Muse 1996 $56,571 $0 (1)
Former Chairman 1995 N/A
of the Board 1994 N/A
(1) On February 16, 1996, the Board of Directors granted 200,000 warrants
to Mr. Muse to purchase 200,000 shares of common stock for $2.50 per
share through February 29, 2000.
19
AGGREGATED OPTION/SAR EXERCISES IN FISCAL 1996 AND OPTION/SAR VALUES ON
JULY 31, 1996
Number Of
Securities Value Of
Number Underlying Unexercised
of Shares Unexercised In-The-Money
Acquired Value Options/SARs Options/SARs
Upon Realized At July 31, 1996 At July 31, 1996
Exercise Upon Exercisable/ Exercisable/
Name of Option Exercise Unexercisable Unexercisable
---- ---------- -------- ------------- -------------
Jerome B. Richter 0 $0 2,300,000/0 $8,050,000/0 (1)
Mark D. Casaday 0 $0 200,000/0 $ 0/0
Thomas A. Serleth 0 $0 260,000/0 $ 0/0
Thomas P. Muse 0 $0 42,856/0 $ 0/0
(1) Based on a closing price of $4.75 per share of Common Stock on July 31,
1996.
EMPLOYMENT AGREEMENTS
The Company has signed three and six year employment agreements with
Mr. Casaday and Mr. Richter, respectively. Mr. Casaday's employment agreement
expired October 31, 1996 (at which time Mr. Casaday resigned from the Company).
Mr. Richter's employment agreement expires January 31, 2001. Under Mr.
Richter's agreement, he is entitled to receive $300,000 in annual compensation
equal to a monthly salary of $25,000 until earnings exceed a gross profit of
$500,000 per month, whereupon Mr. Richter is entitled to an increase in his
salary to $40,000 per month for the first year of the agreement increasing to
$50,000 per month during the second year of the agreement. Mr. Richter is also
entitled under the employment agreement to (i) an annual bonus of 5% of all
pre-tax profits of the Corporation, (ii) 200,000 stock options for the purchase
of 200,000 shares of Common Stock that can be exercised under certain
circumstances at an option price of $7.50 (giving effect to a 2-for-1 stock
split on June 10, 1994), and (iii) a term life insurance policy commensurate
with the term of the employment agreement, equal to six times Mr. Richter's
annual salary and three times his annual bonus. Mr. Richter's employment
agreement also entitles him to a right of first refusal to participate in joint
venture opportunities in which the Company may invest, contains a covenant not
to compete until one year from the termination of the agreement and
restrictions on use of confidential information. To present, Mr. Richter has
waived his entitlement to his full salary, receipt of the stock options and the
purchase by the Company of a term life insurance policy. Mr. Richter may, in
the future, elect not to waive such entitlements.
20
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On September 29, 1994, the Company agreed to offer and sell 300,000
shares of Common Stock for approximately $2.25 per share to Mosstroi Bank, a
Russian company, and issued a promissory note in the amount of $800,000 at 10%
interest per annum in exchange for $1,474,138. On January 31, 1995, the Company
agreed to issue and sell 300,000 shares of Common Stock for approximately $2.42
per share to Mosstroi Bank in exchange for full payment on such promissory
note, of which a payment of $100,000 had been made against principal and
interest.
During the year ended July 31, 1995, the Company made advances to, and
received advances from Thomas P. Muse, the former Chairman of the Company, and
several companies which were wholly-owned by him. The total owed to the Company
aggregated to $144,000 during the year. These advances accrued interest at an
annual rate of 8%. As of July 31, 1995, the Company owed net $19,762 to the
former Chairman.
On February 26, 1996, the Board of Directors granted 330,000 warrants
to John P. Holmes, a director to purchase 330,000 shares of Common Stock for
$2.50 per share through February 8, 2000, in exchange for advisory services
during that period.
On February 26, 1996, the Board of Directors granted 200,000 warrants
to Thomas P. Muse, former Chairman of the Board, to purchase 200,000 shares of
common stock for $2.50 per share through February 29, 2000.
On March 1, 1996, the Company entered into a loan agreement with John
Robinson to borrow $500,000 in the form of subordinated debt of a like
principal amount and warrants to purchase 50,000 shares of Common Stock at
$5.00 per share. This loan, which is secured by a lien against the Company's
terminal assets, including all tanks, pumps, equipment and other personal
property located on the Company's location at the Port of Brownsville in
Cameron County, Texas, requires payment of interest at the rate of 10% per
annum at maturity with principal due in full on September 1, 1997, subject to
certain pre-payment provisions. In connection with such transactions, John H.
Robinson, Vice Chairman of Commonwealth Associates, became a director of the
Company. On April 12, 1996, the Company borrowed an additional $500,000 from
TRAKO International Company Limited, an organization affiliated with Mr.
Robinson, under identical terms and conditions.
During the year ended July 31, 1996, the Company entered into certain
commission arrangements with Consultores di Chemica, a consulting firm
affiliated with Jorge Duran that assisted the Company in connection with its
negotiation of purchase orders with PEMEX, its major customer. The former
Chairman, Jorge Duran, elected by the Board of Directors at its January 6, 1995
meeting, is related to a person with a decision making role with Consultores di
Chemica.
On October 21, 1996, Thomas P. Muse resigned as a Director and as
Chairman of the Board of the Company. In connection with his resignation, the
Company agreed to extend 42,856 warrants held by Mr. Muse for an additional
three year period. The Company and Mr. Muse also agreed that if the Common
Stock were trading at $6.00 or more per share for twenty consecutive trading
days, the warrants would be exercised by Mr. Muse. See "Certain Ownership of
Certain Beneficial Owners and Management" for additional information concerning
the warrants held by Mr. Muse.
On October 24, 1996, Thomas A. Serleth resigned as a Director and
Executive Vice President of the Company. In connection with his resignation,
the Company agreed to enter into a two month consulting agreement, at a fee of
$10,000 per month, with Mr. Serleth terminating on December 31, 1996 and agreed
that Mr. Serleth would be entitled to a payment of 5% of the net proceeds
(after expenses and legal fees) received by the Company arising out of the
lawsuit with IBC. See "Certain Ownership of Certain Beneficial Owners and
Management" for additional information concerning Mr. Muse's ownership of
Common Stock. See "Legal Proceedings" for information concerning the IBC
lawsuit.
In October 1996, Mr. Casaday resigned as a Director and President of
the Company. In connection with his resignation, the Company agreed to extend
200,000 warrants held by Mr. Casaday for an additional three year period. The
Company and Mr. Casaday also agreed that if the Common Stock were to trade at
$6.00 or more per share for 20 consecutive trading days, the warrants would be
exercised by Mr. Casaday. The Company agreed to guarantee a floor of $3.00 per
share on 130,000 shares which became eligible for sale by Mr. Casaday 90 days
after his resignation from the Company. In addition, the Company agreed to sell
the Company car that Mr. Casaday was using to Mr. Casaday for $1.00. See
"Certain Ownership of Certain Beneficial Owners and Management" for additional
information concerning Mr. Casaday's ownership of Common Stock.
On March 25, 1997, the Company agreed to allow Mr. Richter to exercise
2,200,000 warrants at an exercise price of $1.25 through payment of $22,000 and
issuance of a promissory note to the Company in the amount of $2,728,000 at
8.25% and secured by 1,000,000 shares of Common Stock to be placed with a
collateral agent.
On March 25, 1997, the Company agreed to adjust the exercise price of
50,000 warrants held by Mr. Robinson and 50,000 warrants held by TRAKO
International Company Limited to $2.50 from $5.00. In all other respects, the
terms of the warrants remain the same.
The lease for the Company's executive offices located at 900 Veterans
Boulevard in Redwood City, California is between Mr. Richter, as an individual,
and Nine-C Corporation as Landlord. The Company currently makes monthly
payments directly to Nine-C Corporation in satisfaction of obligations under
such lease.
21
COMPLIANCE UNDER SECTION 16(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's directors and
officers, and persons who own more than 10% of a registered class of the
Company's equity securities, to file initial reports of ownership and
22
reports of changes in ownership with the Commission. Such persons are required
by the Commission to furnish the Company with copies of all Section 16(a) forms
they file. Based solely on its review of the copies of Forms 3, 4 and 5
received by it, the Company believes that, with the exception of those persons
indicated below, all directors, officers and 10% stockholders complied with
such filing requirements.
According to the Company's records, the following filings appear not
to have been timely made. A Form 3 for Mr. Thomas P. Muse and a Form 4 relating
to his ownership of 85,714 shares of common stock of the Company were not filed
on a timely basis during fiscal 1996. A Form 3 for Mr. Thomas Serleth relating
to his election to the Board in 1994 and two Form 4's relating to his receipt
of 200,000 warrants and 60,000 warrants were not timely filed during fiscal
1996. A Form 3 for Mr. Mark Casaday and a Form 4 reporting his receipt of
200,000 warrants were not timely filed during fiscal 1996. Mr. Casaday filed a
Form 4 in February 1997 reporting his disposition of 50,000 shares of Common
Stock. A Form 3 for Mr. Jerome B. Richter was not filed on a timely basis
during fiscal 1996. A Form 5 correcting this matter was filed in September,
1996. A Form 3 for Mr. Jorge R. Bracamontes was not filed on a timely basis in
1996. A Form 3 for Mr. Kenneth Oberman and a Form 4 relating to his receipt of
100,000 warrants were not filed on a timely basis during fiscal 1996. A Form 3
for Mr. John P. Holmes was not filed on a timely basis during fiscal 1996. A
Form 3 for Mr. John H. Robinson and a Form 4 reflecting the grant of 50,000
warrants were not filed on a timely basis during fiscal 1996. A Form 3 for Mr.
Stewart J. Paperin was not filed on a timely basis during fiscal 1996. A Form 3
correcting this matter was filed on July 15, 1996. The Company intends to
arrange for the appropriate forms to be filed by Messrs. Bracamontes, Oberman,
Holmes and Robinson.
REPORTS ON FORMS 10-KSB AND FORM 10-QSB
The Company's Annual Report on Form 10-KSB for the fiscal year ended
July 31, 1996 (the "10-KSB") and the Company's Quarterly Report on Form 10-QSB
(the "10-QSB") for the three and six months ended January 31, 1997, in each
case including consolidated financial statements, are being furnished along
with this proxy statement to stockholders of record on the Record Date. The
consolidated financial statements of the Company contained in the 10-KSB
(Commission File No. 33-53740-A) and 10-QSB (Commission File No. 0-24394) are
incorporated herein by reference.
OTHER BUSINESS
The Board of Directors does not presently intend to bring any other
business before the Meeting and, to the best knowledge of the Board of
Directors, no matters are to be brought before the Meeting except as specified
in the Notice. As to any business that may properly come before the Meeting, it
is intended that proxies, in the form enclosed, will be voted in accordance
with the judgment of the persons voting such proxies.
STOCKHOLDER PROPOSALS
23
The Company anticipates that the 1998 Annual Meeting of Stockholders
will be held in May, 1998. Accordingly, proposals of stockholders intended to
be presented at the Company's 1998 Annual Meeting of Stockholders must be
received by the Secretary of the Company at the Company's principal executive
offices no later than January 1, 1998 in order to be included in the Company's
Proxy Statement and form of proxy relating to that meeting. All such proposals
must comply with applicable Commission regulations.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE,
SIGN AND PROMPTLY RETURN THE ACCOMPANYING PROXY CARD IN THE ENCLOSED POSTAGE
PREPAID ENVELOPE.
By Order of the Board of Directors
Jorge R. Bracamontes
April __, 1997 Secretary
24
EXHIBIT A
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
PENN OCTANE CORPORATION
PENN OCTANE CORPORATION, a corporation duly organized and existing
under and by virtue of the General Corporation Law of the State of Delaware,
does hereby certify as follows:
1. The name of the corporation is Penn Octane Corporation (hereinafter
called the "Corporation").
2. The Corporation's Restated Certificate of Incorporation is hereby
amended to delete in its entirety the present Article FOURTH and to replace it
with the following:
"FOURTH: (a) Capital Stock. The total number of shares of capital stock which
the Corporation shall have authority to issue is 35,000,000 shares of which
25,000,000 shall be Common Stock, having a par value of $.01 per share,
5,000,00 shares shall be Senior Preferred Stock, having a par value of $.01 per
share, and 5,000,000 shares shall be Preferred Stock, having a par value of
$.01 per share. The capital stock of the Corporation may be issued for such
consideration and for such corporate purposes as the directors of the
Corporation may from time to time determine by resolution.
(b) Senior Preferred Stock. The relative rights, privileges,
and restrictions relating to the Senior Preferred Stock are set forth
below:
(1) Shares of Senior Preferred Stock may be issued in
one or more series at such time or times and for such consideration as
the Board of Directors may determine. Each such series shall be given
a distinguishing designation. All shares of any one series shall have
preferences, limitations and relative rights identical with those of
other shares of the same series and, except to the extent otherwise
provided in the description of such series, with those of other shares
of Senior Preferred Stock.
(2) Authority is hereby expressly granted to the
Board of Directors to fix from time to time by resolution or
resolutions providing for the establishment and/or issuance of any
series of Senior Preferred Stock, the designation of such series and
the preferences, limitations and relative rights of the shares of such
series, including the following:
(A) The distinctive designation and number
of shares comprising such series, which number may (except where
otherwise provided by the Board of Directors in creating such series)
be increased or decreased (but not
A-1
below the number of shares then outstanding) from time to time by
action of the Board of Directors;
(B) The voting rights, if any, which shares
of that series shall have, which may be special, conditional, limited
or otherwise;
(C) The rate of dividends, if any, on the
shares of that series, whether dividends shall be non-cumulative to
the extent earned, partially cumulative or cumulative (and, if
cumulative, from which date or dates), whether dividends shall be
payable in cash, property or rights, or in shares of the corporation's
capital stock, and the relative rights of priority, if any, of payment
of dividends on shares of that series over shares of any other series,
shares of Preferred Stock or shares of Common Stock;
(D) Whether the shares of that series shall
be redeemable and, if so, the terms and conditions of such redemption,
including the date or dates upon or after which they shall be
redeemable, the event or events upon or after which they shall be
redeemable, whether they shall be redeemable at the option of the
corporation, the shareholder or another person, the amount per share
payable in case of redemption (which amount may vary under different
conditions and at different redemption dates), whether such amount
shall be a designated amount or an amount determined in accordance
with a designated formula or by reference to extrinsic data or events
and whether such amount shall be paid in cash, indebtedness,
securities or other property or rights, including securities of any
other corporation;
(E) Whether that series shall have a
sinking fund for the redemption or purchase of shares of that series
and, if so, the terms of and amounts payable into such sinking fund;
(F) The rights to which the holders of the
shares of that series shall be entitled in the event of voluntary or
involuntary dissolution or liquidation of the Corporation, and the
relative rights of priority, if any, of payment of shares of that
series over shares of any other series, shares of Preferred Stock or
shares of Common Stock in any such event;
(G) Whether the shares of that series shall
be convertible into or exchangeable for cash, shares of stock of any
other class or any other series, indebtedness, or other property or
rights, including securities of another corporation, and, if so, the
terms and conditions of such conversion or exchange, including the
rate or rates of conversion or exchange, and whether such rates shall
be a designated amount or an amount determined in accordance with a
designated formula or by reference to extrinsic data or events, the
date or dates upon or after which they shall be convertible or
exchangeable, the duration for which they shall be convertible or
exchangeable, the event or events upon or after which they shall be
convertible or exchangeable, and whether they shall be convertible or
exchangeable at the option of the Corporation, the shareholder or
A-2
another person, and the method (if any) of adjusting the rate of
conversion or exchange in the event of a stock split, stock dividend,
combination of shares, or similar event;
(H) Whether the issuance of any additional
shares of such series, or of any shares of any other series, shall be
subject to restrictions as to issuance, or as to the powers,
preferences or rights of any such other series; and
(I) Any other preferences, privileges and
powers and relative, participating, optional or other special rights
and qualifications, limitations or restrictions of such series, as the
Board of Directors may deem advisable and as shall not be inconsistent
with the provisions of this Article FOURTH and to the full extent now
or hereafter permitted by the laws of the State of Delaware.
(c) Preferred Stock. The relative rights, preferences,
privileges, and restrictions relating to the Preferred Stock are set
forth below:
(1) Conversion. The Preferred Stock shall be subject
to the following provisions regarding conversions:
(A) Holder's Rights to Convert. Each share
of Preferred Stock shall be convertible, without the payment of any
additional consideration by the holder thereof and at the option of
the holder thereof at the office of the Corporation or any transfer
agent for the Corporation, into 3.333 fully paid and nonassessable
shares of Common Stock.
(B) Terms of Conversion Period. Each share
of Preferred Stock shall be convertible at the option of the holder of
such stock for a period of five-years beginning on September 18, 1993
and concluding on September 18, 1998.
(C) Mechanics of Right to Convert. Before
any holder of Preferred Stock shall be entitled to convert the same
into shares of Common Stock, he shall surrender the certificate or
certificates therefor, duly endorsed, at the office of the Corporation
or of its transfer agent, and shall give written notice to the
Corporation at such office that he elects to convert the same and
shall state therein his name or the name or names of his nominees in
which he wishes the certificate or certificates for the shares of
Common Stock to be issued. The Corporation shall, as soon as
practicable thereafter, issue and deliver at such office to such
holder of Preferred Stock, or to his nominee or nominees, a
certificate or certificates for the number of shares of Common Stock
to which he shall be entitled as aforesaid. Such conversion shall be
deemed to have been made immediately prior to the close of business on
the date of such surrender of the shares of the Preferred Stock to be
converted, and the person or persons entitled to receive the shares of
Common Stock issuable upon conversion shall be
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treated for all purposes as the record holder of such shares of Common
Stock on such date.
(D) Common Stock Reserved. The Corporation
shall reserve and keep available out of its authorized but unissued
Common Stock such number of shares of Common Stock as shall from time
to time be sufficient to effect conversion of the Preferred Stock.
(E) Adjustment of Conversion Ratio. The
1-to-3.333 conversion ratio specified above shall be subject to an
equitable adjustment upon the occurrence of a stock split or stock
dividend, reclassification or other similar event relating to the
Common Stock.
(2) Voting Rights. The holders of the Preferred
Stock shall hold no voting rights, except as may be provided by law.
(3) Dividend Rights. The holders of the Preferred
Stock shall be entitled to receive, when and as declared by the board
of directors, yearly dividends from the surplus of net profits of the
Corporation at the rate of eleven percent per annum, beginning on the
date the particular shares of Class I Preferred Stock are issued by
the Corporation and payable twice annually on the 30th day of June and
the 31st day of December in each year, with proper adjustment for any
dividend period that is less than a full half-year. Such dividends
shall be payable before any dividends shall be paid upon, or set apart
for, the Common Stock of the Corporation, and shall be cumulative from
the date of issuance so that if such dividends shall not have been
paid upon or set apart for the Preferred Stock, the deficiency (but
without interest) shall be fully paid or set apart for payment, before
any dividends shall be paid upon, or set apart for, the Common Stock.
(c) Common Stock
(1) Dividend Rights. Out of any assets of the
Corporation available for dividends remaining after full satisfaction
of any preference with respect to dividends on the Senior Preferred
Stock and the Preferred Stock then outstanding, and after full
satisfaction of any obligations then or theretofore matured in respect
of any sinking fund provided for the Senior Preferred Stock or any
series thereof and for the Preferred Stock then outstanding, then,
subject to the restrictions set forth in this Article FOURTH and in
any resolution of the Board of Directors of this Corporation
establishing a particular series of shares, dividends may be paid upon
the Common Stock.
(2) Liquidation Rights. In the event of any
liquidation, dissolution or winding up of this Corporation, after
there shall have been paid or set aside in cash for the holders of the
Senior Preferred Stock and the Preferred Stock the full preferential
amounts to which they are entitled under the provisions of this
Article FOURTH or any resolution of the Board of Directors
establishing
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a particular series of shares, the holders of the Common Stock shall
be entitled to receive pro rata all of the remaining assets of this
Corporation available for distribution to its shareholders.
(3) Voting Rights. The holders of the Common Stock
shall be entitled to vote for the election of directors and for all
other purposes and shall be entitled to one vote for each share held."
3. The amendment was duly adopted in accordance with the applicable
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, Penn Octane Corporation has caused this
Certificate to be signed by an authorized officer, this ___ day of _________,
1997.
By ___________________________________
Name: Jerome B. Richter
Title: Chairman, President and
Chief Executive Officer
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EXHIBIT B
PROPOSED BY-LAWS
OF
PENN OCTANE CORPORATION
(a Delaware corporation)
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the Corporation
shall be maintained at 1209 Orange Street, Wilmington, Delaware. The
Corporation Trust Company shall be the registered agent of this corporation in
charge thereof.
Section 2. Other Offices. The corporation may have other offices,
either within or without the State of Delaware, at such place or places as the
Board of Directors may from time to time determine or the business of the
corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Annual Meetings. Annual meetings of stockholders for the
election of directors and for such other business as may be stated in the
notice of the meeting shall be held at such place, either within or without the
State of Delaware, and at such time and date as the Board of Directors, shall
determine and set forth in the notice of the meeting.
Section 2. Other Meetings. Meetings of stockholders for any purpose
other than the election of directors may be held at such time and place, within
or without the State of Delaware, as shall be determined by the Board of
Directors and stated in the notice of the meeting.
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Section 3. Voting. Each stockholder entitled to vote in accordance with
the terms of the Restated Certificate of Incorporation and in accordance with
the provisions of these By-Laws shall be entitled to one vote, in person or by
proxy, for each share of stock entitled to vote held by such stockholder, but no
proxy shall be voted after three years from its date unless such proxy provides
for a longer period. Upon the demand of any stockholder, the vote for directors
and the vote upon any question before the meeting, shall be by
ballot. All elections for directors shall be decided by a plurality of the
votes of the shares present in person or by proxy at the meeting and entitled
to vote on the election of directors; all other questions shall be decided by
the affirmative vote of the majority of shares present in person or by proxy
and entitled to vote except as otherwise provided in these By-Laws or by the
Certificate of Incorporation or by the laws of the State of Delaware.
A complete list of the stockholders entitled to vote in the ensuing
election, arranged in alphabetical order, with the address of each, and the
number of shares held by each, shall be opened to the examination of any
stockholder for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten days prior to the meeting, either at a
place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list shall also be produced and kept at
the time and place of the meeting during the whole time thereof and may be
inspected by any stockholder who is present.
Section 4. Quorum. Except as otherwise required by law, by the
Certificate of Incorporation or by these By-Laws, the presence, in person or by
proxy, of stockholders holding a majority of the stock of the corporation
entitled to vote shall constitute a quorum at all meetings of the stockholders.
In case a quorum shall not be present at any meeting, a majority in interest of
the stockholders entitled to vote thereat, present in person or by proxy, shall
have
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the power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until the requisite amount of stock entitled to
vote shall be present. At such adjourned meeting at which the requisite amount
of stock entitled to vote shall be represented, any business may be transacted
which might have been transacted at the meeting as originally noticed; but only
those stockholders entitled to vote at the meeting as originally noticed shall
be entitled to vote at any adjournment or adjournments thereof. If any
adjournment is for more than thirty days or if after the adjournment a new
record date is fixed for the adjourned meeting, notice of the adjourned meeting
shall be given to each stockholder of record entitled to vote thereat.
Section 5. Special Meetings. Special meetings of the stockholders for
any purpose or purposes may be called by the President of the Corporation and
shall be called by the President or Secretary at the request in writing of a
majority of the Board of Directors, or at the request in writing of the
registered holder or holders of 10% or more of the capital stock outstanding
and entitled to vote. Any such request shall state the purpose or purposes of
the proposed meeting.
Section 6. Notice of Meetings. Written notice, stating the place, date
and time of the meeting, and the general nature of the business to be
considered, shall be given to each stockholder entitled to vote thereat at his
address as it appears on the records of the corporation, not less than ten nor
more than sixty days before the date of the meeting. No business other than
that stated in the notice shall be transacted at any meeting without the
unanimous consent of all the stockholders entitled to vote thereat.
Section 7. Action Without Meeting. Unless otherwise provided by the
Certificate of Incorporation, any action required to or which may be taken at
any annual or special meeting of stockholders, may be taken without a meeting,
without prior notice and without a vote, if a
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consent in writing, setting forth the action so taken, shall be signed by the
holders of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voted. Prompt notice of
the taking of the corporate action without a meeting by less than unanimous
written consent shall be given to those stockholders who have not consented in
writing.
ARTICLE III
DIRECTORS
Section 1. Number and Term. The number of directors shall be such
number as shall, from time to time, be determined by resolution of the Board of
Directors or by the affirmative vote of a majority in interest of the
stockholders, at the annual meeting or at a special meeting called for that
purpose. The directors shall be elected at the annual meeting of the
stockholders and each director shall be elected to serve until his successor
shall be elected and qualified. Directors need not be stockholders. If the
numbers of directors is determined by the stockholders, such number shall not
be changed except by further vote of the stockholders.
Section 2. Removal. Except as otherwise required by law, any director
or directors may be removed either for or without cause at any time by the
affirmative vote of the holders of a majority of all the shares of stock
outstanding and entitled to vote, and the vacancies thus created may but need
not be filled by the affirmative vote of a majority in interest of the
stockholders entitled to vote, but if not so filled, such vacancies shall be
filled as provided in Section 2 of Article V hereof.
Section 3. Powers. The business and affairs of the corporation shall
be managed by or under the direction of the Board of Directors, which shall
exercise all of the powers of the
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corporation except such as are by law or by the Certificate of Incorporation of
the corporation or by these By-Laws or otherwise conferred upon or reserved to
the stockholders.
Section 4. Committees. The Board of Directors may, by resolution or
resolutions passed by a majority of the whole Board, designate one or more
committees, each committee to consist of one or more of the directors of the
corporation. The Board may designate one or more directors as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of such committee or committees. The member or members thereof present
at any meeting and not disqualified from voting, whether or not he or they
constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of any such absent or disqualified
member.
Any such committee, to the extent provided in the resolution of the
Board of Directors, or in these By-Laws, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the
business and affairs of the corporation, and may authorize the seal of the
corporation to be affixed to all papers which may require it; but no such
committee shall have the power or authority in reference to amending the
Certificate of Incorporation (except as provided by law with respect to the
issuance of certain shares of stock of the Corporation), adopting an agreement
of merger or consolidation, recommending to the stockholders the sale, lease or
exchange of all or substantially all of the corporation's property and assets,
recommending to the stockholders a dissolution of the corporation or a
revocation of a dissolution, or amending the By-Laws of the corporation; and,
unless the resolution, these By-Laws or the Certificate of Incorporation
expressly so provides, no such committee shall have the power or authority to
declare a dividend, authorize the issuance of stock or adopt a certificate of
ownership and merger.
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Section 5. Meetings. The newly elected directors shall hold their
first meeting for the purpose of organization and the transaction of business,
if a quorum be present, immediately after the annual meeting of the
stockholders; or the time and place of such meeting may be fixed by consent in
writing of all the directors.
Regular meetings of the directors may be held without notice at such
places and times as shall be determined from time to time by resolution of the
directors.
Special meetings of the Board may be called by the President and shall
be called by the Secretary on the written request of any two directors on at
least two days' notice to each director and shall be held at such place or
places as may be determined by the directors, or as shall be stated in the
notice of the meeting.
Section 6. Quorum. A majority of the directors at the time in office
shall constitute a quorum for the transaction of business and, except as
otherwise required by law, the Certificate of Incorporation or these By-Laws,
the act of a majority of the Board of Directors present at a meeting shall
constitute the act of the Board of Directors. If at any meeting of the Board of
Directors there shall be less than a quorum present, a majority of those
present may adjourn the meeting from time to time until a quorum is obtained,
and no further notice thereof need be given other than by announcement at the
meeting which shall be so adjourned.
Section 7. Compensation. Directors shall not receive any stated salary
for their services as directors or as members of committees, but by resolution
of the Board of Directors a fixed fee and expenses of attendance may be allowed
for attendance at each meeting. Nothing herein contained shall be construed to
preclude any director from serving the corporation in any other capacity as an
officer, agent or otherwise, and receiving compensation therefor.
Section 8. Action Without Meeting. Any action required or permitted to
be taken at any meeting of the Board of Directors, or of any committee thereof,
may be taken without a
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meeting, if a written consent thereto is signed by all members of the Board of
Directors, or of such committee as the case may be, and such written consent is
filed with the minutes of proceedings of the Board of Directors or committee.
Section 9. Participation by Conference Telephone. Members of the Board
of Directors of the corporation, or any committee designated by such Board, may
participate in a meeting of such Board or committee by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a
meeting shall constitute presence in person at such meeting.
ARTICLE IV
OFFICERS
Section 1. Officers. The officers of the corporation shall be a
President, a Treasurer and a Secretary, each of whom shall be elected by the
Board of Directors and shall hold office at the pleasure of the Board until
his/her successor is elected and qualified. In addition, the Board of Directors
may elect a Chairman, one or more Vice Presidents and such Assistant
Secretaries and Assistant Treasurers as they may deem proper. None of the
officers of the corporation need be directors. The officers shall be elected at
the first meeting of the Board of Directors after each annual meeting. More
than two offices may be held by the same person.
Section 2. Other Officers and Agents. The Board of Directors may
appoint such other officers and agents as it may deem advisable, who shall hold
their offices for such terms and shall exercise such powers and perform such
duties as shall be determined from time to time by the Board of Directors.
Section 3. Chairman. The Chairman of the Board of Directors, if one be
elected, shall preside at all meetings of the Board of Directors and he shall
have and perform such other duties as from time to time may be assigned to him
by the Board of Directors.
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Section 4. President. The President shall be the chief executive
officer of the corporation and shall have the general powers and duties of
supervision and management usually vested in the office of president of a
corporation. He shall preside at all meetings of the stockholders if present
thereat and, in the absence or non-election of the Chairman of the Board of
Directors, at all meetings of the Board of Directors, and shall have general
supervision, direction and control of the business of the corporation. Except
as the Board of Directors shall authorize the execution thereof in some other
manner, he shall execute bonds, mortgages and other contracts on behalf of the
corporation, and shall cause the seal to be affixed to any instrument requiring
it and when so affixed the seal shall be attested by the signature of the
Secretary or the Treasurer or an Assistant Secretary or an Assistant Treasurer.
Section 5. Vice President. Each Vice President shall have such powers
and shall perform such duties as shall be assigned to him by the directors.
Section 6. Treasurer. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate account of
receipts and disbursements in books belonging to the corporation. He shall
deposit all moneys and other valuables in the name and to the credit of the
corporation in such depositories as may be designated by the Board of
Directors.
The Treasurer shall disburse the funds of the corporation as may be
ordered by the Board of Directors, or the President, taking proper vouchers for
such disbursements. He shall render to the President and Board of Directors at
the regular meetings of the Board of Directors, or whenever they may request
it, an account of all his transactions as Treasurer and of the financial
condition of the corporation. If required by the Board of Directors, he shall
give the corporation a bond for the faithful discharge of his duties in such
amount and with such surety as the Board of Directors shall prescribe.
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Section 7. Secretary. The Secretary shall give, or cause to be given,
notice of all meetings of stockholders and directors, and all other notices
required by law or by these By-Laws, and in case of his absence or refusal or
neglect so to do, any such notice may be given by any person thereunto directed
by the President, or by the directors, or stockholders, upon whose requisition
the meeting is called as provided in these By-Laws. He shall record all the
proceedings of the meetings of the corporation and of the directors in a book
to be kept for that purpose, and shall perform such other duties as may be
assigned to him by the directors or the President. He shall have the custody of
the seal of the corporation and shall affix the same to all instruments
requiring it, when authorized by the directors or the President, and attest the
same.
Section 8. Assistant Treasurers and Assistant Secretaries. Assistant
Treasurers and Assistant Secretaries, if any, shall be elected and shall have
such powers and shall perform such duties as shall be assigned to them,
respectively, by the directors.
ARTICLE V
MISCELLANEOUS
Section 1. Resignations. Any director, member of a committee or
corporate officer may, provided the same would not result in a breach of any
contract to which said person is a party, resign at any time. Such resignation
shall be made in writing, and shall take effect at the time specified therein,
and if no time be specified, at the time of its receipt by the President or
Secretary. The acceptance of a resignation shall not be necessary to make it
effective.
Section 2. Vacancies. If the office of any director, member of a
committee or corporate officer becomes vacant, by reason of death, disability
or otherwise, the remaining directors in office, though less than a quorum, by
a majority vote may appoint any qualified person to fill
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such vacancy, who shall hold office for the unexpired term and until his
successor shall be duly chosen.
Section 3. Certificates of Stock. Certificates of stock, signed by the
Chairman of the Board of Directors, or the President or any Vice President, and
the Treasurer or an Assistant Treasurer, or Secretary or an Assistant
Secretary, shall be issued to each stockholder certifying the number of shares
owned by him in the corporation, unless otherwise required by the Board of
Directors. When such certificates are countersigned (1) by a transfer agent
other than the corporation or its employee, or (2) by a registrar other than
the corporation or its employee, the signatures of such officers of the
corporation may be facsimiles.
Section 4. Lost Certificates. A new certificate of stock may be issued
in the place of any certificate theretofore issued by the corporation, alleged
to have been lost or destroyed, and the directors may, in their discretion,
require the owner of the lost or destroyed certificate, or his legal
representatives, to give the corporation a bond, in such sum as they may
direct, not exceeding double the value of the stock represented by such
certificate, to indemnify the corporation against any claim that may be made
against it on account of the alleged loss of any such certificate, or the
issuance of any such new certificate.
Section 5. Transfer of Shares. The shares of stock of the corporation
shall be transferable only upon its books by the holders thereof in person or
by their duly authorized attorneys or legal representatives, and upon such
transfer the old certificates shall be surrendered to the corporation by the
delivery thereof to the person in charge of the stock transfer books and
ledgers, or to such other person as the directors may designate, by whom they
shall be canceled, and new certificates shall thereupon be issued. A record
shall be made of each transfer and whenever a transfer shall be made for
collateral security, and not absolutely, it shall be so expressed in the entry
of the transfer.
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Section 6. Stockholders Record Date. In order that the corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock
or for the purpose of any other lawful action, the Board of Directors may fix,
in advance, a record date, which shall not be more than sixty nor less than ten
days before the date of such meeting, nor more than sixty days prior to any
other action. A determination of stockholders of record entitled to notice of
or to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
Section 7. Dividends. Subject to the provisions of the Certificate of
Incorporation, the Board of Directors may, out of funds legally available
therefor at any regular or special meeting, declare dividends upon the capital
stock of the corporation as and when they deem expedient. Before declaring any
dividend there may be set apart out of any funds of the corporation available
for dividends, such sum or sums as the directors from time to time in their
discretion deem proper for working capital or as a reserve fund to meet
contingencies or for equalizing dividends or for such other purposes as the
directors shall deem conducive to the interests of the corporation.
Section 8. Seal. The corporate seal shall be circular in form and
shall contain the name of the corporation, the year of its creation and the
words "CORPORATE SEAL DELAWARE". Said seal may be used by causing it or a
facsimile thereof to be impressed or affixed or otherwise reproduced.
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Section 9. Fiscal Year. The fiscal year of the corporation shall be
determined by resolution of the Board of Directors. In the absence of such
determination, the fiscal year shall be the calendar year.
Section 10. Checks. All checks, drafts or other orders for the payment
of money, notes or other evidences of indebtedness issued in the name of the
corporation shall be signed by such officer or officers, agent or agents of the
corporation, and in such manner as shall be determined from time to time by
resolution of the Board of Directors.
Section 11. Notice and Waiver of Notice. Whenever any notice is
required by these By-Laws to be given, personal notice is not meant unless
expressly so stated, and any notice so required shall be deemed to be
sufficient if given by depositing the same in the United States mail, postage
prepaid, addressed to the person entitled thereto at his address as it appears
on the records of the corporation, and such notice shall be deemed to have been
given on the day of such mailing. Stockholders not entitled to vote shall not
be entitled to receive notice of any meetings except as otherwise provided by
statute.
Whenever any notice whatever is required to be given under the
provisions of any law, or under the provisions of the Certificate of
Incorporation of the corporation or these By-Laws, a waiver thereof in writing,
signed by the person or persons entitled to said notice, whether before or
after the time stated therein, shall be deemed equivalent thereto.
ARTICLE VI
INDEMNIFICATION
To the full extent permitted by law, the corporation must indemnify
any person or his heirs, distributees, next of kin, successors, appointees,
executors, administrators, legal representatives and assigns who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
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administrative or investigative by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
domestic or foreign, against expenses, attorneys' fees, court costs, judgments,
fines, amounts paid in settlement and other losses actually and reasonably
incurred by him in connection with such action, suit or proceeding.
ARTICLE VII
AMENDMENTS
These By-Laws may be altered or repealed and new By-Laws may be
adopted at any annual or special meeting of the stockholders by the affirmative
vote of a majority of the stock issued and outstanding and entitled to vote
thereat, or by the affirmative vote of a majority of the Board of Directors, at
any regular or special meeting of the Board of Directors.
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EXHIBIT C
AMENDED AND RESTATED
BYLAWS
OF
PENN OCTANE CORPORATION
(FORMERLY INTERNATIONAL ENERGY DEVELOPMENT CORPORATION)
(ADOPTED FEBRUARY 1995)
ARTICLE I
Offices
Section 1. Registered Office. The registered office of PENN OCTANE
CORPORATION (hereinafter called the "Corporation") shall be at Corporation
Trust Center, 1209 Orange Street, Wilmington, Delaware.
Section 2. Other Offices. The Corporation also may have offices at
such other place or places, within or without the State of Delaware as the
Board of Directors may from time to time determine or the business of the
Corporation may require.
ARTICLE II
Meetings of Stockholders
Section 1. Place of Meeting. All meetings of the stockholders of the
Corporation shall be held at such place, within or without the State of
Delaware, as may from time to time be fixed in the respective notices or
waivers of notices thereof.
Section 2. Annual Meeting. The annual meeting of the stockholders for
the election of directors and for the transaction of such other business as may
come before the meeting shall be held at such time and place as shall be
determined by the President or the Board of Directors
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and stated in the notice or the meeting. Written notice of the annual meeting
stating the place, date and hour of the meeting shall be given to each
stockholder entitled to vote at such meeting not less than ten (10) nor more
than sixty (60) days before the date of the meeting.
Section 3. Special Meetings. Special meetings of the stockholders, for
any purpose or purposes, unless otherwise prescribed by statute or by the
Certificate of Incorporation, may be called by the President and shall be
called by the President or Secretary at the request in writing of a majority of
the Board of Directors, or at the request in writing of stockholders owning ten
percent (10%) or more in amount of the entire capital stock of the Corporation
issued and outstanding and entitled to vote. Such request shall state the
purpose or purposes of the proposed meeting. Written notice of a special
meeting stating the place, date and hour of the meeting and the purpose or
purposes for which the meeting is called shall be given not less than ten (10)
nor more than sixty (60) days before the date of the meeting to each
stockholder entitled to vote at such meeting. Business transacted at any
special meeting of stockholders shall be limited to the purposes stated in the
notice.
Section 4. Notice Not Required. Notice of any meeting of stockholders
shall not be required to be given to any stockholder who shall attend such
meeting in person or by proxy, and if any stockholder shall, in person or by
attorney thereunto authorized, in writing or by telegraph, cable or telex,
waive notice of any meeting, whether before or after such meeting shall be
held, notice thereof need not be given to him. Notice of any adjourned meeting
of the stockholders shall not be required to be given, except when expressly
required by law.
Section 5. Quorum. At each meeting of the stockholders, the holders of
a majority of each class of the issued and outstanding stock of the Corporation
entitled to vote at such meeting, present either in person or by proxy, shall
constitute a quorum for the transaction of business of the Corporation. In the
absence of a quorum, a majority present in person or by
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proxy and entitled to vote, or, in the absence of all of the holders of each
class of issued and outstanding stock of the Corporation entitled to vote, any
officer entitled to preside or act as secretary at such meeting, shall have the
power to adjourn the meeting, from time to time, until the requisite number of
stockholders of each class shall be present or represented. At any such
adjourned meeting at which a quorum shall be present, any business may be
transacted which might have been transacted at the meeting as originally
noticed.
Section 6. Voting. At each meeting of the stockholders, every
stockholder of record of the Corporation entitled to vote at such meeting shall
be entitled to one vote within his class or classes in person or by proxy
(executed in writing by the stockholder or by his duly authorized attorney in
fact) for each share in such class or classes of stock of the Corporation
registered in his name on the books of the Corporation on the date fixed
pursuant to Section 2 of Article VI of these Bylaws as the record date for the
determination of the stockholders entitled to vote at such meeting. Shares of
its own capital stock belonging to the Corporation shall not be voted upon
directly or indirectly. At all meetings of the stockholders, all matters
(except special cases where other provision is made in the Corporation's
Certificate of Incorporation, these Bylaws, any agreement between or among the
Corporation's stockholders or by statute) to be decided by each respective
class of stockholders shall be decided by the holders of a majority of the
stock of each class, respectively, present in person or by proxy and entitled
to vote thereat, a quorum being present. Unless demanded by a stockholder
present in person or by proxy at any meeting and entitled to vote thereat, the
vote on any question need not be by ballot.
Section 7. Action by Consent. Whenever any action is required or
permitted to be taken by vote of stockholders of any class at a meeting thereof
by any provision of the statutes or of the Certificate of Incorporation or
these Bylaws or any agreement between or among the
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Corporation's stockholders, the meeting and votes of stockholders of any class
may be dispensed with if the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize to take such
action shall consent in writing to such corporate action being taken. Such
written consent may be given by any person holding a power of attorney for any
stockholder.
Section 8. Minimum Shareholder Vote. In addition to any affirmative
vote required by law or by any other provision of these Bylaws, the approval or
authorization of any of the following actions shall require the affirmative
vote of the holders of not less than half of the then issued and outstanding
shares of the Corporation's common stock:
(a) the amendment, alteration, modification or repeal of
the Articles of Incorporation or Bylaws of the
Corporation;
(b) the issuance, sale, grant, repurchase or redemption
by the Corporation of any shares of the capital
stock of the Corporation or other securities either
convertible to capital stock of the Corporation or
carrying the right to acquire capital stock of the
Corporation;
(c) the merger or consolidation of the Corporation with
any person or entity;
(d) the transfer or pledge, mortgage or grant of a
security interest or other adverse right or
encumbrance of or in all or substantially all of the
assets of the Corporation;
(e) the recapitalization of the Corporation;
(f) the removal of a director of the Corporation whether
with or without cause;
(g) incurring of any indebtedness for borrowed money or
guaranteeing the obligations of others, except for
trade payables incurred by the
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Corporation in the ordinary course of business,
accrued employee expenses, accrued taxes, reasonable
reserves for losses and other contingencies and
except for additional indebtedness in an amount not
to exceed $100,000 in any single fiscal year;
(h) the declaration, payment or making of any dividend
or distribution with respect to either shares of the
capital stock of the Corporation or other securities
either convertible to capital stock of the
Corporation or carrying the right to acquire capital
stock of the Corporation, other than as provided in
a shareholders agreement between the Corporation and
all of its shareholders;
(i) any other matter requiring the approval or
authorization of shareholders under Delaware law.
ARTICLE III
Board of Directors
Section 1. General Powers. The business and affairs of the Corporation
shall be managed by the Board of Directors, which may exercise all such powers
of the Corporation and do all such lawful acts and things as are not by statute
or by the Certificate of Incorporation or these Bylaws or any agreement between
or among the Corporation's stockholders, directed or required to be exercised
and done by the stockholders.
Section 2. Number and Term of Office. The number of directors which
shall constitute the whole Board shall be not less than one (1) nor more than
ten (10). Until such time as the size of the Board is modified in the manner
provided below, the Board shall consist of five (5) directors. Within the
limits specified in the first sentence of this Section 2, and in the Amended
and Restated Certificate of Incorporation of the Corporation, the number of
directors
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shall be determined by resolution of the Board or by the stockholders at the
annual meeting or at any special meeting. Directors need not be stockholders.
Each director shall hold office until the annual meeting of the stockholders
next following his election or until his successor shall have been elected and
shall qualify, or until his death, or until he shall resign, or until he shall
have been removed in the manner herein provided.
Section 3. Quorum and Manner of Acting. Except as otherwise provided
by statute or by these Bylaws, a majority of the directors in office shall be
required to constitute a quorum for the transaction of business at any meeting,
and the act of a majority of the directors present at any meeting at which a
quorum is present shall be the act of the Board of Directors. In the absence of
a quorum, a majority of the directors present may adjourn any meeting from time
to time until a quorum shall be present. No notice other than announcement at
the meeting of any adjourned meeting need be given.
Section 4. Place of Meetings, etc. The Board of Directors may hold its
meetings, have one or more offices, and keep the books and records of the
Corporation at such place or places within or without the State of Delaware as
the Board from time to time may determine.
Section 5. First Meeting. The first meeting of each newly elected
Board of Directors shall be held at such time and place as shall be fixed by
the vote of the stockholders at the annual meeting, and no notice of such
meeting shall be necessary to the newly elected directors in order legally to
constitute the meeting, provided a quorum shall be present, or it may convene
at such place and time as shall be fixed by the consent in writing of all the
directors.
Section 6. Regular Meetings. Regular meetings of the Board of
Directors shall be held at such places and at such times as the Board shall
from time to time determine. If any day fixed for a regular meeting shall be a
legal holiday at the place where the meeting is to be held, then the meeting
which otherwise would be held on that day shall be held at said place at the
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same hour on the next succeeding day not a legal holiday. Notice of regular
meetings need not be given.
Section 7. Special Meetings; Notice. Special meetings of the Board of
Directors shall be held whenever called by the President or by a majority of
the directors. Notice of each such meeting shall be mailed to each director,
addressed to him at his residence or usual place of business, at least three
(3) days before the day on which the meeting is to be held, or shall be sent to
him at such place by telegraph, facsimile, telex or cable, or be delivered
personally by telephone, not later than one day before the day upon which the
meeting is to be held. Each such notice shall state the time and place of the
meeting but need not state the purposes thereof except as otherwise herein
expressly provided. Notice of any meeting of the Board need not be given to any
director, however, if waived by him in writing or by telegraph, cable or telex,
whether before or after such meeting shall be held, or if he shall be present
at such meeting; and any meeting of the Board shall be a legal meeting without
any notice thereof having been given, if all the directors of the Corporation
then in office shall be present thereat.
Section 8. Action Without Meeting. Any action required or permitted to
be taken at a meeting of the Board of Directors may be taken without a meeting
if a consent in writing setting forth the action so taken shall be signed by
all of the members of the Board and filed with the minutes of proceedings of
the Board.
Section 9. Action by Telephone Conference. Members of the Board of
Directors or any committee designated thereby may participate in any meeting of
such Board or Committee by means of conference telephone or similar
communications equipment in which all persons participating can hear each
other. Participation in a meeting pursuant to this section shall constitute
presence in person at such meeting.
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Section 10. Resignation. Any director of the Corporation may resign at
any time by giving written notice to the President or to the Secretary of the
Corporation. The resignation of any director shall take effect at the time
specified therein; and, unless otherwise specified therein, acceptance of such
resignation shall not be necessary to make it effective.
Section 11. Removal of Directors. Any director may be removed, either
with or without cause, at any time, but such removal shall require the
affirmative vote of the holders of a majority of all of the shares of the class
of stock by whom he was elected, and the election of a director to fill the
unexpired portion of the term of any director so removed shall require a vote
of at least a majority of the outstanding shares of such class of stock of the
Corporation.
Section 12. Vacancies. Except as otherwise provided by statute or by
these Bylaws, any vacancy in the Board of Directors caused by death,
resignation, disqualification, or any other cause other than removal of
stockholders, may be filled either by a majority vote of the remaining
directors, though less than a quorum, or by the stockholders of the Corporation
entitled to vote by class thereon at the next annual meeting or at any special
meeting called for the purpose. A director elected to fill a vacancy shall be
elected for the unexpired term of his predecessor in office. Any directorship
to be filled by reason of an increase in a number of directors may be filled by
election of a majority vote of the then serving directors at any annual meeting
or at a special meeting of the class of stockholders entitled to vote called
for that purpose.
Section 13. Compensation. Directors, as such, shall not receive any
stated salary for their services, but by resolution of the Board of Directors a
fixed sum and expenses of attendance, if any, may be allowed for attendance at
each regular and special meeting of the Board. Nothing herein contained shall
be construed so as to preclude any director from serving the Corporation in any
other capacity and receiving compensation therefore.
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Section 14. Directors' Committees. The Board of Directors may, by
resolution adopted by a majority of the directors, designate one or more
committees, each committee to consist of one or more of the directors of the
Corporation, which, to the extent provided in the resolution, shall have and
may exercise the powers of the Board of Directors in the management of the
business and affairs of the Corporation and may authorize the seal of the
Corporation to be affixed to all papers which may require it. Such a committee
or committees shall have such name or names as may be determined from time to
time by resolution adopted by the Board of Directors.
ARTICLE IV
Officers
Section 1. Number. The officers of the Corporation shall be a
President, one or more Vice Presidents, a Secretary, a Treasurer and such other
officers as may be appointed by the Board of Directors. In addition, the Board
of Directors may elect a Chairman. Any number of offices may be held by the
same person.
Section 2. Election and Term of Office. The officers shall be elected
annually by the Board of Directors, and each shall hold office until the next
annual election of officers and until his successor shall have been duly
elected and qualified or until his death, or until he shall resign by written
notice to the Corporation, or until he shall have been removed in the manner
hereinafter provided. A vacancy in any office because of death, resignation,
removal or for any other cause shall be filled for the unexpired portion of the
term in the manner prescribed in these Bylaws for election or appointment to
such office.
Section 3. Removal. Any officer may be removed by the vote of a
majority of the Board of Directors at a special meeting called for the purpose
whenever in the judgment of the Board of Directors the best interests of the
Corporation will be served thereby, but such removal
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shall be without prejudice to the contract rights, if any, of the person so
removed. The purpose shall be stated in a notice or waiver of notice of such
meeting unless all the directors of the Corporation shall be present thereat.
Section 4. Chairman. The Chairman of the Board of Directors, if one is
elected, shall preside at all meetings of the Board or Directors and shall have
and perform such other duties as from time to time may be assigned to the
Chairman by the Board of Directors.
Section 5. President. The President shall have direct charge of the
management of the business operations of the Corporation, subject to general
control of the Board of Directors, and shall preside at all meetings of the
Board of Directors and at all meetings of the stockholders. He shall execute
bonds, mortgages, and other contracts requiring the seal of the Corporation,
except where required or permitted by law to be otherwise signed and executed
and except where the signing and execution thereof shall be expressly delegated
by the Board of Directors to some other officer or agent of the Corporation.
Section 6. Vice Presidents. The Vice President (or, in the event that
there is more than one Vice President, the Vice Presidents in the order
designated at the time of their election, or in the absence of any delegation,
then in the order of their election) shall perform such duties as from time to
time may be assigned to him by the President or by the Board of Directors.
Section 7. Secretary. The Secretary shall attend all meetings of the
Board of Directors and all meetings of the stockholders and record all the
proceedings of the meetings of the Corporation and of the Board of Directors in
a book to be given, notice of all meetings of the stockholders and special
meetings of the Board of Directors, and shall perform such other duties as may
be prescribed by the Board of Directors or President, under whose supervision
he shall be. He shall have custody of the corporate seal of the Corporation and
he shall have authority to affix the same to any instrument requiring it and,
when so affixed, it may be
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attested by his signature. The Board of Directors may give general authority to
any other officer to affix the seal of the Corporation and to attest the
affixing by his signature.
Section 8. Treasurer. If required by the Board of Directors, the
Treasurer shall give a bond for the faithful discharge of his duties, in such
sum and with such surety or securities as the Board of Directors shall
determine. The Treasurer shall keep and disburse the moneys of the Corporation,
as directed by the Board of Directors; shall keep correct books of account;
shall render to the President and to the Board of Directors at the regular
meetings thereof, or whenever requested by them, reports of financial
transactions by him and of the financial condition of the Corporation; and, in
general, shall perform all duties incident to the office of Treasurer.
Section 9. Other Officers. The Corporation may have such other
officers and agents as may be deemed necessary by the Board of Directors, who
shall be appointed in such manner, have such duties, and hold their offices for
such terms as may be determined by resolution of the Board of Directors
Section 10. Salaries. The salaries of the officers shall be fixed from
time to time by the Board of Directors, and no officer shall be prevented from
receiving such salary by reason of the fact that he is also a director of the
Corporation.
ARTICLE V
Contracts and Accounts
Section 1. Contracts, Checks, Notes, Bank Accounts, etc. All contracts
and agreements authorized by the Board or Directors, and all checks, drafts,
notes, bonds, bills of exchange and orders for the payment of money, shall be
signed by the President, or such officer or officers or employee or employees
as the Board of Directors may from time to time designate. The President, or
any other officer or employee so authorized by the Board of
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Directors, may enter into any contract or execute and deliver any contract or
other instrument in the name and on behalf of the Corporation, and such
authority may be general or confined to specific instances. Unless authorized
so to do by these Bylaws or by the Board of Directors, no officer, agent or
employee shall have any power or authority to bind the Corporation by any
contract or engagement, or to pledge its credit, or to render it liable
pecuniary for any purpose or in any amount.
Section 2. Deposits. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
as the Board of Directors or the President shall direct, in such banks, trust
companies or other depositories as the Board of Directors may select or as may
be selected by any officer or officers or agent or agents of the Corporation to
whom power in that respect shall have been delegated by the Board of Directors.
For the purpose of deposit, and for the purpose of collection for the account
of the Corporation, checks, drafts and other orders for the payment of money
that are payable to the order of the Corporation may be endorsed, assigned and
delivered by any officer or agent of the Corporation.
Section 3. General and Special Bank Accounts. The Board of Directors
may from time to time authorize the opening and keeping of general and special
bank accounts with such banks, trust companies or other depositories as the
Board of Directors may select, or as may be selected by any officer or
officers, agent or agents of the Corporation to whom power in that respect
shall have been delegated by the Board of Directors. The Board of Directors may
make such special rules and regulations with respect to such bank accounts, not
inconsistent with the provisions of these Bylaws, as it may deem expedient.
ARTICLE VI
Capital Stock
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Section 1. Certificates of Stock. Every stockholder shall be entitled
to have a certificate signed by, or in the name of the Corporation by, the
President and the Secretary of the Corporation, certifying the number of shares
of stock of the Corporation owned by him. The certificate shall be sealed with
the seal of the Corporation, or a facsimile thereof. No certificate shall be
issued for any share until such share is fully paid. Each certificate
representing shares shall state that the Corporation is organized under the
laws of the State of Delaware, the name of the person to whom issued, and the
par value of each share represented by such certificate or a statement that the
shares are without par value. Such certificate shall be transferable on the
stock books of the Corporation in person or by attorney, but, except as
hereinafter provided in the case of loss, destruction or mutilation of
certificates, no transfer of stock shall be entered until the previous
certificate, if any, given for the same shall have been surrendered and
canceled.
Section 2. Closing of Transfer Books. For the purpose of determining
stockholders entitled to notice of or to vote at any meeting of stockholders,
or stockholders entitled to receive payment of any dividend, or in order to
make a determination of stockholders for any proper purpose, the Board of
Directors may provide that the stock transfer books shall be closed for a
stated period but not to exceed, in any case, sixty (60) days. If the stock
transfer books shall be closed for the purpose of determining stockholders
entitled to notice of or to vote at a meeting of stockholders, such books shall
be closed for at least ten (10) days immediately preceding such meeting. In
lieu of closing the stock transfer books, the Board of Directors may fix in
advance a date as the record for any determination of stockholders, such date
in any case to be not more than sixty (60) days, and in case of a meeting of
stockholders not less than ten (10) days, prior to the date upon which the
particular action requiring such determination of stockholders is to be taken.
If the stock transfer books are not closed and no record date is fixed for the
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determination of stockholders entitled to vote at a meeting thereof or to
receive payment of a dividend, the date on which notice of the meeting is
mailed or the date on which the resolution of the Board of Directors declaring
such dividends is adopted, as the case may be, shall be the record date for
such determination of stockholders.
Section 3. Lost, Destroyed or Mutilated Certificate. The Board of
Directors may direct a new certificate or certificates to be issued in place of
any certificate or certificates heretofore issued by the Corporation alleged to
have been lost, destroyed or mutilated upon the making of an affidavit of that
fact by the person claiming the certificates for shares to be lost or
destroyed. When authorizing such issuance of a new certificate or certificates,
the Board of Directors may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of such lost or destroyed certificate
or certificates, or his legal representative, to advertise the same in such
manner as it shall require, or to give the Corporation a bond in such sums as
it may direct, as indemnity against any claim that may be made against the
Corporation with respect to the certificate alleged to have been lost or
destroyed.
ARTICLE VII
Dividends
Section 1. Payment of Dividends. The Board of Directors may declare
and the Corporation may pay dividends on its outstanding shares in cash,
property, or its shares pursuant to law and subject to the provisions of its
Certificate of Incorporation and Bylaws.
Section 2. Reserves. Before payment of any dividend, there may be set
aside out of any funds of the Corporation available for dividends such sum or
sums as the Board of Directors from time to time, in their absolute discretion,
deem proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for preparing or maintaining any property of the Corporation, or
for such other purpose as the Board of Directors shall deem conducive to the
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interest of the Corporation, and the Board of Directors may modify or abolish
any such reserve in the manner in which it was created.
ARTICLE VIII
Seal
The Board of Directors may provide a corporate seal, which shall be in
form of a circle and shall have inscribed thereon the name of the Corporation,
the years of its organization and the state of incorporation. The seal may be
used by causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise.
ARTICLE IX
Fiscal Year
The Fiscal year of the Corporation shall be as determined by the Board
of Directors.
ARTICLE X
Amendments
Subject to the reserved power of the stockholders to make, alter and
repeal these Bylaws, these Bylaws, or any of them, may be altered, amended or
repealed, or new Bylaws may be made, at any meeting of the Board of Directors,
by vote of a majority of the Board of Directors, provided that the proposed
action in respect thereof shall be stated in the notice or waiver of notice of
such meeting or that all of the directors of the Corporation shall be present
at such meeting.
ARTICLE XI
Indemnity of Directors and Officers
The Corporation shall indemnify its directors, officers, employees and
agents and each of their respective heirs, executors and administrators, to the
full extent permitted by the Delaware General Corporation Law, as amended.
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I HEREBY CERTIFY that the foregoing is a full, true and correct copy
of the Bylaws of Penn Octane Corporation, a Delaware corporation, as in effect
on the first day or February, 1995.
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PENN OCTANE CORPORATION
This Proxy is Solicited on Behalf of the Board of Directors. The undersigned
hereby appoints Jerome B. Richter and Ian T. Bothwell as proxies, each with full
power of substitution, and hereby authorizes them to vote all the shares of
Common Stock of Penn Octane Corporation held of record by the undersigned on
April [18], 1997 at the Annual Meeting of Stockholders to be held on May [12],
1997, or any adjournment thereof, as designated below and, in their discretion,
on such other matters as may properly come before the Annual Meeting or any
adjournment thereof.
The Board of Directors recommends a vote FOR Proposals 1, 2, 3 and 4.
1. ELECTION OF DIRECTORS
FOR all nominees listed below / / WITHHOLD Authority
to vote for all nominees listed below / /
to vote for individual nominee(s)
indicated below / /
(Instruction: To withhold authority to vote for any individual nominee strike a
line through the nominee's name in the list below.)
Jerome B. Richter, Ian T. Bothwell, Jorge R. Bracamontes, John P. Holmes,
Kenneth G. Oberman, Stewart J. Paperin and John H. Robinson
2. PROPOSAL TO APPROVE AN AMENDMENT TO THE RESTATED CERTIFICATE OF
INCORPORATION TO AUTHORIZE 5,000,000 SHARES OF A NEW CLASS OF
SENIOR PREFERRED STOCK
/ / FOR / / AGAINST / / ABSTAIN
3. PROPOSAL TO APPROVE AN AMENDMENT TO THE BY-LAWS TO ALLOW THE
BOARD OF DIRECTORS TO AMEND THE BY-LAWS AND TO TAKE CERTAIN
OTHER ACTION WITHOUT THE CONSENT OF THE SHAREHOLDERS
/ / FOR / / AGAINST / / ABSTAIN
- --------------------------------------------------------------------------------
IMPORTANT: This Proxy is continued on the reverse side. Please mark, sign
and date the reverse side and return promptly.
(continued from other side)
4. PROPOSAL TO RATIFY THE APPOINTMENT OF BURTON MCCUMBER &
PRICHARD, L.L.P. AS THE INDEPENDENT AUDITORS FOR PENN OCTANE
CORPORATION.
/ / FOR / / AGAINST / / ABSTAIN
5. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH
OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING
OR ANY ADJOURNMENT THEREOF.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned stockholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" the election of all nominees for election as directors and "FOR"
PROPOSALS 2, 3 AND 4.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation or a
partnership, please sign in corporate or partnership name by authorized person.
DATED:_________________, 1997 --------------------------------------
PLEASE VOTE, SIGN, DATE AND Signature
RETURN THIS PROXY CARD USING
THE ENCLOSED ENVELOPE. --------------------------------------
Signature if held jointly