Penn Octane Corp Current Report Filing 8-K List of Exhibits

Easement and Right of Way (Pipeline)

For Ten Dollars ($10.00) and other valuable consideration, Grantor, named above, grants, sells, and conveys to Grantee, named above, its successors and assigns, a right of way and easement for the purpose of locating and surveying a route, constructing a pipeline on adjacent lands, operating and storing construction equipment during the construction period of the pipeline, and constructing and locating appurtenances to the pipeline on the easement and right-of-way. This grant shall then continue for the purpose of operating, maintaining, altering, repairing, substituting, relocating, removing, and replacing pipelines on adjacent lands and appurtenances located on lands described below and adjacent lands, including but not limited to valves, metering equipment and cathodic equipment, and in connection with them, a road (pipelines, appurtenances, valves, metering equipment, and cathodic equipment, and road being sometimes collectively called the “Facilities”) over, under, and through the described lands. The Easement and Right of Way will lie approximately along the line designated by a survey made by Grantee, and further described on Exhibit “A” attached to and made a part of this Easement and Right of Way.

1. The Right of Way and Easement shall have a permanent width of feet and will carry with it the right of ingress and egress to and from, and access on and along the Right of Way, with the right to use existing roads for the purpose of constructing, inspecting, repairing, protecting, and maintaining the facilities on the described lands and adjacent lands, and the removal or replacement of same at will, either in whole or in part, and the replacement of the pipelines with either like or different size pipe. If there are no existing roads, Grantee may execute its right of ingress and egress, referenced above, by utilizing the route or routes that shall cause the least damage and inconvenience to Grantor. During temporary periods, Grantee may use that portion of the property along and adjacent to the Right of Way as may be reasonably necessary in connection with the construction, maintenance, repair, removal, or replacement of its Facilities.

2. Grantor grants, sells, and conveys the described rights and easements, together with all rights necessary to operate, protect, and maintain the Facilities over the Right of Way granted to Grantee, its successors and assigns, and the Grantee may assign the rights and easements, either in whole or in part, subject to the terms of this Easement and Right of Way. The rights and easements shall be covenants running with the land and be binding on Grantor, and Grantor’s heirs, legal representatives, successors in title, and assigns.

3. Grantor reserves the right to the use and enjoyment of the property except for the purposes granted by this Easement and Right of Way, but the use shall not hinder, conflict, or interfere with Grantee’s surface or subsurface rights, or disturb its Facilities. No road, reservoir, excavation, obstruction, or structure shall be constructed, created, or maintained on, over, along, or within feet of the pipeline. Grantor agrees not to increase or decrease the elevation of the earth within the right-of-way, without Grantee’s prior written consent.

4. Grantee shall compensate Grantor for all damages to Grantor’s growing crops, pasture, fences, livestock, and other real or personal property improvements caused by the construction, maintenance, repair, replacement, or removal of the Facilities. Grantee shall have the right to cut and keep clear, without payment of damages, all trees, brush, and other obstructions that may, in Grantee’s opinion, endanger, hinder, or conflict with the construction, operation, inspection, protection, maintenance, and use of the Facilities.

5. After construction of the Facilities and after any repair, maintenance, or removal of the Facilities which disturbs the surface of the Right of Way, Grantee will:

6. Grantee may at any time permanently abandon the Easement and Right-of-Way, and at its discretion, may remove or abandon in place improvements constructed. On the abandonment action, Grantee may, at its discretion, execute and record a reconveyance and release, at which time this Easement and Right of Way, and all rights and privileges granted, shall be fully released and terminated. Any assignment of Grantee’s interests in this Easement and Right of Way shall not constitute an abandonment.

7. Grantor represents and warrants to be the owner in fee simple of the land described in Exhibit “A,” subject only to outstanding mortgages, if any, now of record in County, . In the event of default by Grantor, Grantee shall have the right to discharge or redeem for Grantor, in whole or in part, any mortgage, tax, or other lien on the land and be subrogated to the lien and rights incident to it.

8. Any notice to be given by either Grantor or Grantee to the other may be served by depositing in the United States Post Office, postage prepaid, a sealed envelope containing a copy of the notice and addressed to the other party at its address set out below, and the same shall be sufficient service of the notice.

Grantor:

Grantee:

9. This grant contains all the agreements between Grantor and Grantee and no representations or statements, verbal or written, have been made, modifying, adding to or changing the terms of this Easement and Right of Way. The terms and provisions of this Easement and Right of Way shall inure to the benefit of and be binding on Grantor and Grantee and their respective heirs, representatives, successors, or assigns.

10. This Easement and Right of Way may be executed in counterparts, all of which taken together shall constitute one document, and shall be binding on each party executing any counterpart.

(Acknowledgments)

Exhibit “A”: