DISTRIBUTION AGREEMENT
BY AND BETWEEN
PENN OCTANE CORPORATION
AND
RIO VISTA ENERGY PARTNERS L.P. AND SUBSIDIARIES
SEPTEMBER 16, 2004
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DISTRIBUTION AGREEMENT
THIS
DISTRIBUTION AGREEMENT (this "Agreement") is dated September 16,
2004,
by and among PENN OCTANE CORPORATION., a
Delaware corporation ("POC"), RIO VISTA
ENERGY PARTNERS L.P., a Delaware limited partnership ("RVP"), and the Tax
Subsidiaries (as defined in Article 1) of RVP.
WITNESSETH:
WHEREAS,
POC is the sole limited partner of RVP
and owner of common units
representing a 98% limited partner interest
in RVP (the "RVP Common Units"); and
WHEREAS,
POC desires to distribute to its stockholders all of the
RVP
Common Units;
NOW,
THEREFORE,
in consideration of the premises and the mutual
terms,
covenants and conditions herein contained, and intending to be
legally bound
hereby, the parties hereto hereby agree as follows:
ARTICLE 1
CERTAIN DEFINITIONS
As used in this Agreement, the following terms have the following
respective meanings:
1.1 "Affiliate" shall mean, with respect to POC or RVP,
any Person, that
directly or indirectly, is in control of,
is controlled by, controls or is under
common control of POC or RVP, as the case may be. For purposes of this
definition, control shall include the ownership of 50%
or more of the legal or
beneficial interest in any Person or the
power to direct or cause the direction
of the management and policies of
such Person, whether through the ownership of
voting securities, by contract or
otherwise. A Person who is an Affiliate shall
only be considered an Affiliate for so
long as that Person meets the definition
of an Affiliate. An officer, director, general partner, managing member
or
trustee of a Person or Affiliate of such
Person shall not be considered to be an
Affiliate unless such Person is under the direct or
indirect control or common
control of POC or RVP, as the case may be.
For purposes of clarity, POC and RVP
shall not be considered to be an Affiliate of the other,
nor shall any other
company in which a director or officer of
POC or RVP is also a director, officer
or stockholder be considered an Affiliate of POC or
RVP unless POC or RVP, as
the case may be, itself controls such company.
1.2 "Agreement"
shall have the meaning specified in the preamble.
1.3 "Business
Day" shall mean any
day other than Saturday, Sunday or a
day on which commercial banks located in Houston, Texas are required or
authorized by law to close.
1.4 "Code"
shall mean the Internal Revenue Code of 1986,
as amended.
1.5 "Common
Unit" shall mean the
common units of RVP as defined in the
RVP First Amended and Restated Agreement of Limited Partnership.
1
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1.6 "Distribution" shall mean the distribution by POC
to its stockholders
of the RVP Common Units.
1.7 "Distribution Agent" shall mean Computershare Investor Services.
1.8 "Distribution Date" shall mean the time and date as of which the
Distribution is effective.
1.9 "Liability" shall mean any and all claims, demands, liabilities,
responsibilities, disputes, causes of action, losses, damages, assessments,
costs and expenses (including interest, awards, judgments, penalties,
settlements, fines, costs of remediation, diminutions in value, costs and
expenses incurred in connection with investigating
and defending any claims or
causes of action (including, without limitation,
attorneys' fees and expenses
and all fees and expenses of consultants and other professionals)) and
obligations of every nature whatsoever, liquidated or
unliquidated, known or
unknown, matured or unmatured, or fixed or contingent.
1.10
"Nasdaq" shall mean The Nasdaq Stock Market, Inc.
1.11
"POC" shall mean Penn Octane Corporation, a Delaware
corporation.
1.12
"POC Common Stock" shall mean POC's common stock, $.01 par
value.
1.13
"Person" shall mean an
individual, partnership, corporation, business
trust, limited liability company, limited liability partnership,
joint stock
company, trust, unincorporated association, joint venture, governmental
authority or other entity of whatever nature.
1.14 "RVP" for
purposes of the assumption and indemnification provisions of
this Agreement, shall include Rio Vista Energy Partners L.P. and
any and all
predecessors or successors thereto, whether by merger, purchase or other
acquisition of substantially all of the assets or otherwise, and
any and all
predecessors or successors to such entities.
1.15
"RVP Assets" shall mean, collectively, all the
property, assets and
rights, tangible and intangible, owned or operated by the RVP Companies
on,
before or after the Distribution Date.
1.16
"RVP Common Units" shall have the meaning specified in the
introduction to this Agreement.
1.17
"RVP Company" shall mean any Subsidiary of RVP.
1.18
"RVP First Amended and Restated Agreement of Limited
Partnership"
shall mean that certain limited partnership
agreement of RVP dated September 16,
2004.
1.19
"RVP Properties" shall mean the properties currently or
previously
owned or operated by any RVP Company.
1.20
"Record Date" shall
have the meaning specified in Section 2.1 hereof.
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1.21 "SEC" shall
mean the United States Securities and Exchange Commission.
1.22
"Subsidiary" shall mean, with respect to any Person, (i) a
corporation
a majority of whose Voting Stock is at the
time, directly or indirectly, owned
by such Person, by one or more wholly owned
subsidiaries of such Person or by
such Person and one or more wholly owned subsidiaries
of such Person, (ii) a
partnership in which such Person or a
wholly owned subsidiary of such Person is,
at the date of determination, a
general or limited partner of such partnership,
but only if such Person or its wholly owned
subsidiary is entitled to receive
more than fifty percent of the assets of
such partnership upon its dissolution
or (iii) any other Person (other than a corporation
or partnership) in which
such Person, a wholly owned subsidiary
of such Person or such Person and one or
more wholly owned subsidiaries of such Person,
directly or indirectly, at the
date of determination thereof, has (x) at
least a majority ownership interest or
(y) the power to elect or direct the
election of a majority of the directors or
other governing body of such Person.
1.23 "Tax
Subsidiary" shall mean, with respect to POC or RVP as the
context
may require, (i) any corporation or
association taxable as a corporation that is
connected in an unbroken chain of stock
ownership satisfying the requirements of
Section 1504(a) of the Code beginning with POC or RVP as the case may be
(provided that, for this purpose, after the Distribution Date, RVP
shall be
regarded as a corporation that is the
common parent of the RVP Group); (ii) any
entity not a corporation that is a
"disregarded" entity for federal income tax
purposes pursuant to Treasury Regulations
Sections 301.7701-3 and that is owned
by POC, RVP or any Tax Subsidiary of either
(determined after application of
clause (i) above) and (iii) any "disregarded" entity
owned by POC, RVP or any
Tax Subsidiary of either (determined after
application of clauses (i) and (ii)
above).
1.24
"Transfer Agent" shall mean Computershare Investor Services.
1.25
"Voting Stock" shall mean, with respect to
any Person, securities of
any class or classes of capital stock in such Person entitling the
holders
thereof (whether at all times or only so long as no
senior class of stock has
voting power by reason of any contingency) to vote in the election of the
members of the board of directors or other governing body of such
Person.
ARTICLE 2
MECHANICS OF DISTRIBUTION
2.1 Mechanics of RVP Distribution. The Distribution
shall be effected by
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the distribution to each holder of
record of POC Common Stock, as of the record
date designated for the Distribution by
or pursuant to the authorization of the
Board of Directors of POC (the "Record Date"), of one Common
Unit for every
eight shares of POC Common Stock held by such
holder. No fraction of a Common
Unit shall be issued, but in lieu thereof
POC shall cause the Distribution Agent
to aggregate all fractional shares that
would be issued but for this Section 2.1
and sell such aggregated fractional shares in the
