P.M.I. TRADING LIMITED
- --------------------------------------------------------------------------------
SEPTEMBER 28, 1998.
DTIR-0273-98.
TO: PENN OCTANE CORPORATION
ATT'N: MR. J.B. RICHTER. / JORGE BRACAMONTES.
FAX: (415) 368 1505. / 543 6837
P.M.I. TRADING LIMITED, IS PLEASED TO CONFIRM THE "LPG MIX" CONTRACT PURCHASE,
ACCORDING TO THE FOLLOWING TERMS AND CONDITIONS:
(1) PMI ORDER NO.: WILL BE INFORMED MONTH BY MONTH IN OUR FAX OPERATION.
PLEASE REFER IN ALL DOCUMENTS TO PMI'S ORDER NUMBER.
(2) BUYER: P.M.I. TRADING LIMITED
------------------------
ADDRESS: AV. MARINA NACIONAL No. 329
TORRE EJECUTIVA, PISO 20
COL. HUASTECA
11311 MEXICO, D.F.
COMMERCIAL CONTACT
-------------------
NAME: LEOPOLDO SIMON / LUIS FELIPE VACA / ISMAEL HERNANDEZ
TELEPHONE No.: (52-5) 227-0121 / 227-0169 / 227-0158
TELEX No.: 1773671 / 1773509
FAX No.: (52-5) 227-0140 / (713) 567-0140
OPERATIONS CONTACT
-------------------
NAME: VICTOR GOMEZ / ELIN VAZQUEZ / JUAN ANTONIO LIRA
TELEPHONE No.: (52-5) 227-0114 / 227-1049 / 227-0157
TELEX No.: 1773671 / 1773509
FAX No.: (52-5) 227-0111 / (713) 567-0111
FINANCIAL CONTACT
------------------
NAME: ARMANDO CONTRERAS / FRANCISCO CERVANTES
TELEPHONE No.: (52-5) 227-0073
TELEX No.: 1773671 / 1773509
FAX No.: (52-5) 227-0072 / (713) 567-0072
(3) SELLER: PENN OCTANE CORPORATION
ADDRESS: 12118 SOUTH BLOOMFIELD
SANTA FE SPRINGS, CA 90670
- --------------------------------------------------------------------------------
AV. MARINA NACIONAL 329 TELEX: 1773669 PMIME
TORRE EJECUTIVA, PISO 20 FAX: 227-0140
COL. HUASTECA Tel. 227-0121
MEXICO. D.F. C.P. 11311 Tel. 227-0159
DTIR-0273-98.
Page no. 2
COMMERCIAL CONTACT
-------------------
NAME: MR. JORGE R. BRACAMONTES
TELEPHONE No.: (525) 687 6513 / 687 1189.
FAX No.: (525) 543 6837.
OPERATIONS CONTACT
-------------------
NAME: MR. JOE MARTINEZ.
TELEPHONE No: (210) 831 9442.
FAX No: (210) 831 9447.
FINANCIAL CONTACT
------------------
NAME: MR. IAN BOTHWELL
TELEPHONE No.: (562) 929 1984.
FAX No.: (562) 929 1921.
(4) GENERAL AGREEMENT
-----------------
4.1. SUBJECT TO ALL TERMS AND CONDITIONS OF THIS AGREEMENT, BUYER SHALL
PURCHASE "LPG MIX" (AS HEREIN DEFINED) FROM SELLER AND SELLER AGREES TO
SELL "LPG MIX" TO BUYER UNDER THE TERMS OF THIS AGREEMENT. AS USED IN THIS
AGREEMENT, "LPG MIX" IS A PROPANE/BUTANE PRODUCT MIXTURE CONSISTING OF 90
PERCENT PROPANE AND 10 PERCENT COMMERCIAL BUTANE.
4.2. COMMERCIAL TERMS:
------------------
EXW (EX WORKS) BROWNSVILLE, TEXAS AT PENN OCTANE'S LOADING RACK IN
ACCORDANCE WITH INCOTERMS 1990.
(5) TERM
----
UNLESS EITHER PARTY BREACHES ITS OBLIGATION UNDER THIS AGREEMENT, THE TERM
SHALL BE ONE YEAR COMMENCING ON OCTOBER 1ST, 1998 AND CONCLUDING ON
SEPTEMBER 30, 1999.
IN CASE SELLER OBTAINS LEGAL RIGHTS TO IMPORT PROPANE INTO MEXICO OR/AND IF
BURGOS BASIN STARTS PRODUCING, THEN EITHER PARTY SHALL HAVE THE RIGHT TO
NOTIFY THE OTHER PARTY ITS INTENTION TO BEGIN A RENEGOTIATION PROCESS OF
THIS CONTACT. SUCH RENEGOTIATION PROCESS SHALL START NO LATER THAN 10 DAYS
AFTER THE NOTIFICATION IS GIVEN. RENEGOTIATION PROCESS CAN NOT ENDURE MORE
THAN 90 DAYS. IF AN AGREEMENT IS REACHED DURING THE RENEGOTIATION PROCESS
THIS CONTACT SHALL BE MODIFIED BY MUTUALLY AGREEMENT, OTHERWISE EITHER
PARTY SHALL HAVE THE RIGHT TO CANCEL.
DTIR-0273-98.
Page no. 3
(6) VOLUMES
-------
6.1. BUYER WILL SCHEDULE, PURCHASE AND ACCEPT AND SELLER WILL DELIVER AN
ANNUAL VOLUME OF "LPG MIX" EQUAL TO 81,180,000 GALLONS +/- 15% AT BUYER'S
OPTION, COMPLYING WITH THE FOLLOWING MINIMUM MONTHLY VOLUMES:
WINTER SEASON MINIMUM 7,500,000 GALLONS PER MONTH.
SUMMER SEASON MINIMUM 4,000,000 GALLONS PER MONTH.
SUCH VOLUMES TO BE REFERRED HEREIN AS "MINIMUM MONTHLY VOLUME"
------------------------
SEASONALITY IS DEFINED AS DESCRIBED BELOW:
-----------------------------------------------
WINTER SEASON SHALL MEAN THE PERIOD FROM OCTOBER 1998 THROUGH MARCH 1999.
--------------
SUMMER SEASON SHALL MEAN THE PERIOD FROM APRIL 1999 THROUGH STEPTEMBER
--------------
1999.
6.2 NOTWITHSTANDING THE FOREGOING, BUYER MAY REQUEST ADDITIONAL VOLUMES TO
THE MINIMUM MONTHLY VOLUME, IN ANY MONTH. SUCH VOLUMES TO BE REFERRED
HEREIN AS "ADDITIONAL VOLUME".
-----------------
EXCEPT FOR THE SCHEDULE OF THE "MINIMUM MONTHLY VOLUME" OF THIS AGREEMENT,
AT LEAST SEVEN (7) DAYS PRIOR TO EACH MONTH, BUYER SHALL SUBMIT TO SELLER
AN ADDITIONAL VOLUME REQUEST. THE SUM OF THE "MINIMUM MONTHLY VOLUME" AND
THE "ADDITIONAL VOLUME" SHALL BE DEFINED AS "MONTHLY NOMINATED VOLUME"
--------------------------
6.3 BUYER SHALL PROVIDE SELLER WITH A THREE MONTH FORECAST, FOR "MONTHLY
NOMINATED VOLUMES" TO BE SCHEDULED WITH A RANGE OF +/- 15% BUYER'S OPTION.
SELLER WILL ACCEPT AND DELIVER TO BUYER THE ADDITIONAL VOLUME REQUESTED AT
LEAST BETWEEN THE 15% RANGE OF BUYER'S THREE MONTH FORECAST.
6.4 BUYER WILL SCHEDULE ITS LIFTING OF "LPG MIX" WITH SELLER FOR EACH
DELIVERY MONTH AT LEAST SEVEN NATURAL DAYS BEFORE THE BEGINNING MONTH OF
DELIVERIES.
6.5. BUYER WILL ACCEPT DELIVERY OF THE "LPG MIX" VIA TRUCK AT SELLER'S
TERMINAL IN BROWNSVILLE, TEXAS (THE TERMINAL) AS SCHEDULED BY BUYER, AS
LONG AS IT MEETS THE SPECS DESCRIBED IN ATTACHMENT "A".
(7) PRICE OF "LPG MIX"
-----------------
7.1. PRICE FORMULA FOR PROPANE AND BUTANE SHALL BE BASED ON THE MONTHLY
AVERAGE OF THE DELIVERY MONTH, AS PUBLISHED BY OPIS (OIL PRICE INFORMATION
SERVICE) UNDER MT. BELVIEU NON-TET SPOT POSTINGS FOR 90% PROPANE AND 10%
N-BUTANE, PLUS A SERVICE COST TO BE DETERMINED IN ACCORDANCE WITH CLAUSE 8
OF THIS AGREEMENT.
7.2. THE ESTIMATED PRICE FOR TEMPORARY INVOICING PURPOSES WILL BE THE
POSTING PRICE OF THE FIFTH DAY QUOTATIONS PRIOR OF THE DELIVERY MONTH, PLUS
THE SERVICE COSTS OF x.xxxx USD/GAL. AFTER DELIVERY MONTH ENDS, AN
ADJUSTMENT SHALL BE MADE (AS DESCRIBED IN PARAGRAPH 9.2 BELOW) SO AS TO
REFLECT THE FINAL PRICE COMPUTED AS PER SUBCLAUSE 7.1.
DTIR-0273-98.
Page no. 4
(8) SERVICE COST DETERMINATION
--------------------------
8.1. WHEN BUYER LIFTS THE "MINIMUM MONTHLY VOLUME" OR LESS OF THE "MINIMUM
MONTHLY VOLUME", BUYER SHALL PAY TO SELLER A SERVICE COST OF:
(i) USD xxx,xxx.xx - PER MONTH DURING WINTER SEASON MONTHS.
(ii) USD xxx,xxx.xx - PER MONTH DURING SUMMER SEASON MONTHS.
THESE AMOUNTS REFLECT A SERVICE COST OF x.xxxx USD/GAL. FOR EACH "MINIMUM
MONTHLY VOLUME".
8.2 IF THE ACTUAL VOLUME LIFTED AT THE END OF ANY MONTH IS LESS THAN THE
"MINIMUM MONTHLY VOLUME" DUE TO: A) OPERATIVE PROBLEMS AT THE BROWNSVILLE
TERMINAL OWNED BY PENN OCTANE OR AT THE PIPELINE OR B) SHORTAGE OF PRODUCT
AT THE BROWNSVILLE TERMINAL, THEN THE SERVICE COSTS FOR THE ACTUAL VOLUME
LIFTED SHOULD BE x.xxxx USD/GAL.
8.3 IF THE ACTUAL VOLUME LIFTED AT THE END OF ANY MONTH IS LESS THAN THE
"MONTHLY NOMINATED VOLUME" (MINUS) -10% DUE TO: A) CLOSURE OF THE
US-MEXICAN BOARDER OR B) ANY CAUSE BEYOND EITHER PARTY RESPONSIBILITY, THEN
THE SERVICES COSTS FOR THE TOTAL VOLUME LIFTED SHOULD BE x.xxxx USD/GAL.
8.4 IF THE ACTUAL VOLUME LIFTED AT THE END OF ANY MONTH IS LESS THAN THE
"MONTHLY NOMINATED VOLUME" (MINUS) -10% DUE TO A) OPERATIVE PROBLEMS AT THE
BROWNSVILLE TERMINAL OWNED BY PENN OCTANE OR AT THE PIPELINE OR B) SHORTAGE
OF PRODUCT AT THE BROWNSVILLE TERMINAL, OR IF THE VOLUME LIFTED AT THE END
OF ANY MONTH IS WITHIN THE RANGE OF THE "MONTHLY NOMINATED VOLUME" +/- 10%.
THEN BUYER SHALL PAY TO SELLER A SERVICE COST CORRESPONDING TO THE
DIFFERENTIAL VOLUME BETWEEN THE MINIMUM MONTHLY VOLUME AND THE ACTUAL
VOLUME LIFTED (ATTACHMENT "B"). SUCH SERVICE COST FOR ADDITIONAL VOLUME
SHALL BE COMPUTED AS FOLLOWS:
CSF = x.xxxx USD/GAL LESS ADJ.
WHERE
CSF = SERVICE COST FOR ADDITIONAL VOLUMES.
ADJ = ADJUSTMENT FOR THE INCREMENTAL VOLUME.
WHERE
ADJ = [x.xxxxUSD/GAL - (x.xxxx * MMV)] / 2
------------
AVL
THUS
ADJ = [x.xxxx * (1 - MMV)] / 2
---
AVL
THUS
ADJ = x.xxxxx * (1 - MMV) / 2
---
AVL
WHERE
DTIR-0273-98.
Page no. 5
MMV = MINIMUM MONTHLY VOLUME.
AVL = ACTUAL VOLUME LIFTED DURING THE DELIVERY MONTH.
8.5 IF THE ACTUAL VOLUME LIFTED AT THE END OF ANY MONTH IS HIGHER THAN THE
MONTHLY NOMINATED VOLUME (PLUS) + 10%, THEN THE SERVICE COSTS FOR THE
GALLONS EXCEEDING THE "MONTHLY NOMINATED VOLUME" +10% SHOULD BE NEGOTIATED
BETWEEN SELLER AND BUYER. SUCH NEGOTIATION SHOULD NOT EXCEED 3 WORKING DAYS
UPON NOTICE FROM BUYER TO SELLER.
(9) INVOICING
---------
9.1. SELLER WILL INVOICE BUYER EVERY WEEK FOR THE TOTAL VOLUME LOADED
DURING THE IMMEDIATELY PRECEDING WEEK.
9.2. THE PRICE PER GALLON INVOICED WILL BE, ACCORDING TO THE ESTIMATED
PRICE AS DESCRIBED IN SUBCLAUSE 7.2. THE ADJUSTMENT FOR THE ACTUAL PRICE
AND SERVICE COST SHOULD BE INVOICED THROUGH DEBIT/CREDIT NOTES TO BUYER IN
THE FIRST WEEK OF THE FOLLOWING MONTH TO DELIVERY MONTH.
9.3. ALL THE INVOICES MUST COMPLY WITH BUYER'S TREASURY DEPARTMENT
INSTRUCTIONS AND SHALL BE SENT TO THE ATTENTION OF ARMANDO
CONTRERAS/FRANCISCO CERVANTES.
(10) PAYMENT TERMS
-------------
FULL NET CASH IN U.S. DOLLARS PAYABLE WITH 12 DAYS AFTER ORIGINAL INVOICE
IN HARD COPY IS RECEIVED BY BUYER IN ITS OFFICES, TREASURY DEPARTMENT (AV.
MARINA NACIONAL 329, TORRE EJECUTIVA PISO 20).
A FAX TRANSMISSION OF THE CORRESPONDING INVOICE WILL BE ACCEPTABLE TO BUYER
IN ORDER TO REVIEW IT AS SOON AS POSSIBLE AND TO ASSURE PROMPT PAYMENT AS
OUTLINED IN THE ABOVE PARAGRAPH TO SELLER, IN ACCORDANCE WITH THE PAYMENT
TERMS HEREIN AGREED. HOWEVER, ORIGINAL INVOICE MUST BE RECEIVED AT LEAST 7
DAYS PRIOR TO PAYMENT DUE DATE.
IN CASE THAT THE PAYMENT DATE FALLS ON A SUNDAY OR HOLIDAY, THEN THE
PAYMENT DATE WILL BE THE NEXT WORKING DATE. IN CASE THAT THE PAYMENT DATE
FALLS ON A SATURDAY, THEN THE PAYMENT DATE WILL BE THE PRIOR WORKING DATE.
(11) OFFICE EXPENSE
--------------
SELLER SHOULD PROVIDE TELEPHONE, TELEFAX, CLEANING SERVICES AND SECRETARIAL
EXPENSES INCURRED BY PEMEX GAS REPRESENTATIVES SUPERVISING RECEIPT OF THE
"LPG MIX" DELIVERIES AT THE TEMRINAL. SELLER SHALL INVOICE x,xxx USD EVERY
MONTH FOR THOSE SERVICES AT THE END OF EACH MONTH, AND BUYER SHALL PAY
FIFTEEN DAYS AFTER INVOICE RECEIPT AS PER BUYER'S TREASURY DEPARTMENT
INSTRUCTIONS.
DTIR-0273-98.
Page no. 6
IF THE PAYMENT DATE IS A WEEKEND OR HOLIDAY, PAYMENT SHALL BE MADE ON THE
NEXT BUSINESS DAY.
(12) SCHEDULE OF SERVICE
-------------------
12.1. SELLER WILL PROVIDE LOADING SERVICES AT THE TERMINAL SEVEN DAYS A
WEEK, TWENTY-FOUR HOURS PER DAY. HOWEVER HOURS OF SERVICE SHALL BE SUBJECT
TO AVAILABILITY OF BUYER'S AUTHORIZED PERSON(S) TO DISPATCH THE "LPG MIX"
FROM THE TERMINAL.
12.2. SELLER WILL PROVIDE BUYER A DAILY ACTIVITY REPORT SPECIFYING THE
QUANTITY (WEIGHT AND VOLUME) AND QUALITY OF THE "LPG MIX" DELIVERED TO
BUYER AT THE TERMINAL, AS PER INDEPENDENT INSPECTOR REPORTS.
(13) QUALITY
-------
THE "LPG MIX" SHALL MEET THE SPECIFICATIONS ATTACHED AS EXHIBIT "A"
(14) MEASUREMENT
-----------
14.1 THE QUANTITY OF PRODUCT DELIVERED SHALL BE DETERMINED BY NET WEIGHT,
AND FOR PAYMENT PURPOSES, THE WEIGHT OF THE "LPG MIX" DELIVERED TO BUYER
WILL BE CONVERTED TO VOLUME (CORRECTED TO 60 F) VIA ANALYSIS OF SAMPLES
USING A GAS CHROMATOGRAPH. THE CHROMATOGRAPH MUST BE CALIBRATED ACCORDING
TO THE ASTM AND GPA PROCEDURES. BUYER AND SELLER WILL CAUSE AN INDEPENDENT
INSPECTOR, MUTUALLY AGREED BY THE PARTIES, TO SAMPLE AND ANALYZE EACH LOAD
OF THE "LPG MIX". THE COST OF SUCH INSPECTIONS WILL BE BORNED BY BUYER.
14.2. BEFORE ENTERING THE TERMINAL, EMPTY TRUCKS WILL BE WEIGHTED AT THE
PORT OF BROWNSVILLE PUBLIC SCALES OR OTHER SCALE MUTUALLY AGREED BY BOTH
PARTIES. LOADED TRUCK WILL BE WEIGHTED AT THE SAME SCALE UPON DEPARTURE.
THE VOLUME OBTAINED BY THE DIFFERENTIAL BETWEEN THESE TWO MEASUREMENTS
SHALL BE THE VOLUME TO BE INVOICED BY SELLER AND PAID BY BUYER. THE SCALE
WILL BE TESTED AND ADJUSTED TO ACCURACY AT LEAST ONCE EVERY 30 DAYS OR
ACCORDING TO GOVERNMENT REGULATIONS. THE COSTS OF WEIGHTING THE TRUCK
BEFORE AND AFTER LOADING, AND/OR IF A THIRD PARTY IS REQUIRED TO TEST OR
CALIBRATE THE SCALE, WILL BE SHARED BY THE PARTIES ON A 50%/50% BASIS. IF
SELLER, AT ANY TIME, INSTALLS SCALES AT THE TERMINAL, THEY WILL THEREAFTER
BE THE SCALES FOR ALL TRUCKS RECEIVING "LPG MIX" AT THE TERMINAL, AND THEY
SHOULD BE OPERATED AND MAINTAINED IN ACCORDANCE WITH THE ABOVE PROVISIONS.
THE CHARGE FOR SUCH SCALES SHALL BE 100% FOR SELLERS ACCOUNT.
IF SELLER'S SCALE IS USED, THEN BUYER SHALL HAVE THE RIGHT TO SEND TRUCKS
TO AN INDEPENDENT SCALE IN A RANDOMLY BASIS EVERY WEEK, IN ORDER TO CHECK
SELLER'S SCALE ACCURACY. COST OF INDEPENDENT SCALE SHALL BE ON BUYER'S
ACCOUNT.
DTIR-0273-98.
Page no. 7
(15) TITLE AND RISK
---------------
TITLE AND RISK OF LOSS OF THE "LPG MIX" WILL PASS FROM SELLER TO BUYER AT
OUTLET FLANGE OF THE TRUCK AT THE LOADING RACKS LOCATED AT THE TERMINAL. AT
SUCH POINT, THE "LPG MIX" SHALL BE DEEMED TO BE DELIVERED.
(16) LAW AND ARBITRATION
-------------------
THE AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK. ALL DISPUTES ARISING OUT OF OR RELATING TO
THE AGREEMENT SHALL BE SETTLED BY FINAL ARBITRATION IN THE STATE OF NEW
YORK, CITY OF N.Y. CONDUCTED IN ACCORDANCE WITH THE RULES OF CONCILIATION
AND ARBITRATION OF THE AMERICAN ARBITRATION ASSOCIATION IN EFFECT AT SUCH
TIME. THE NUMBER OF ARBITRATORS SHALL BE THREE.
(17) SPILL/ENVIRONMENTAL POLLUTION
-----------------------------
IN THE EVENT OF ANY "LPG MIX" SPILL OR OTHER ENVIRONMENTAL POLLUTING
DISCHARGE OCCURS PRIOR TO DELIVERY, AS THE SAME IS DEFINED IN ARTICLE 15 OF
THIS AGREEMENT, ALL CLEAN-UP OPERATIONS THAT MAY BE REQUIRED BY ANY
GOVERNMENTAL AUTHORITIES, SHALL BE FOR SELLER'S ACCOUNT.
IF SUCH SPILL OR ENVIRONMENTAL POLLUTING DISCHARGE OCCURS AFTER DELIVERY,
AS THE SAME IS DEFINED IN ARTICLE 15 OF THIS AGREEMENT, ALL CLEAN-UP
OPERATIONS THAT MAY BE REQUIRED, SHALL BE FOR BUYER'S ACCOUNT.
IN THE EVEN THAT SUCH SPILL OR ENVIRONMENTAL POLLUTING DISCHARGE OCCURS
AFTER DELIVERY, AT THE TERMINAL, BUYER AUTHORIZES SELLER TO COMMENCE
CONTAINMENT OR CLEAN-UP OPERATIONS AS DEEMED APPROPRIATE OR NECESSARY BY
SELLER OR AS MAY BE REQUIRED BY ANY GOVERNMENTAL AUTHORITIES. SELLER WILL
NOTIFY BUYER IMMEDIATELY OF SUCH OPERATIONS. SELLER SHALL HAVE THE RIGHT TO
DIRECT ALL CONTAINMENT AND CLEAN-UP OPERATIONS. ALL COSTS OF CONTAINMENT
AND CLEAN-UP FOR SUCH SPILL WILL BE BORNE BY BUYER, AND BUYER SHALL
INDEMNIFY AND HOLD SELLER HARMLESS FROM ANY AND ALL EXPENSES, CLAIMS,
LIABILITIES, DAMAGES, PENALTIES, FINES AND OTHER COST (INCLUDING, WITHOUT
LIMITATION, ATTORNEYS FEES) RESULTING OR RELATED TO SUCH INCIDENT.
FOLLOWING THE INDEMNITY OF SELLER BY BUYER, SELLER WILL COOPERATE WITH
BUYER FOR THE PURPOSE OF OBTAINING REIMBURSEMENT IN THE EVENT THAT ANY
NON-AGENT THIRD PARTY IS LEGALLY RESPONSIBLE FOR ANY COSTS OR EXPENSES
BORNE BY BUYER UNDER THIS PARAGRAPH.
IN THE EVENT THAT SUCH SPILL OR ENVIRONMENTAL POLLUTING DISCHARGE OCCURS
AFTER DELIVERY, OUT OF THE TERMINAL, BUYER MAY AUTHORIZE SELLER TO COMMENCE
CONTAINMENT OR CLEAN-UP OPERATIONS AS DEEMED APPROPRIATE OR NECESSARY BY
SELLER OR AS MAY BE REQUIRED BY ANY GOVERNMENTAL AUTHORITIES. SELLER WILL
NOTIFY BUYER IMMEDIATELY OF SUCH OPERATIONS. SELLER SHALL HAVE THE RIGHT TO
DTIR-0273-98.
Page no. 8
DIRECT ALL CONTAINMENT AND CLEAN-UP OPERATIONS. ALL COSTS OF CONTAINMENT
AND CLEAN-UP FOR SUCH SPILL WILL BE BORNE BY BUYER, AND BUYER SHALL
INDEMNIFY AND HOLD SELLER HARMLESS FROM ANY AND ALL EXPENSES, CLAIMS,
LIABILITIES, DAMAGES, PENALTIES, FINES AND OTHER COST (INCLUDING, WITHOUT
LIMITATION, ATTORNEYS FEES) RESULTING OR RELATED TO SUCH INCIDENT.
FOLLOWING THE INDEMNITY OF SELLER BY BUYER, SELLER WILL COOPERATE WITH
BUYER FOR THE PURPOSE OF OBTAINING REIMBURSEMENT IN THE EVENT THAT ANY
NON-AGENT THIRD PARTY IS LEGALLY RESPONSIBLE FOR ANY COSTS OR EXPENSES
BORNE BY BUYER UNDER THIS PARAGRAPH.
(18) SAFETY
------
BUYER WILL COMPLY, AND WILL CAUSE BUYER'S EMPLOYEES, AGENTS AND OTHERS
ENTERING THE TERMINAL ON BEHALF OF BUYER TO COMPLY, WITH ALL TERMINAL
SAFETY AND HEALTH REGULATIONS. SELLER WILL EXECUTE IN ITS NAME, PAY FOR,
AND FURNISH TO BUYER PRIOR TO ACCEPTING ANY "LPG MIX" AT THE TERMINAL, ALL
INFORMATION (INCLUDING APPLICABLE MATERIAL DATA SHEETS), DOCUMENTS, LABELS,
PLACARDS, CONTAINERS, AND OTHER MATERIALS WHICH MAY BE REQUIRED TO BE
FURNISHED BY BUYER BY STATUTES, ORDINANCES, RULES OR REGULATIONS OF ANY
PUBLIC AUTHORITY RELATING TO THE DESCRIBING, PACKAGING, RECEIVING, STORING,
HANDLING, OR SHIPPING OF THE "LPG MIX" AT OR FROM THE TERMINAL.
(19) FORCE MAJEURE
--------------
NEITHER PARTY SHALL BE LIABLE FOR FAILURE OR DELAY IN THE PERFORMANCE OF
THIS AGREEMENT DUE TO ACTS OF GOD, EARTHQUAKE, FLOOD, FIRE, WAR,
HOSTILITIES, CIVIL COMMOTIONS, GOVERNMENTAL ACTS, STRIKES, TRANSPORTATION
PROBLEMS, PIPELINE STOPPED DUE TO LEAK OR EXPLOSION AND ANY OTHER CAUSE
BEYOND THE CONTROL OF EITHER OF THE PARTIES.
ANY PARTY CLAIMING FORCE MAJEURE SHALL PROMPTLY NOTIFY THE OTHER OF THE
OCCURRENCE OF THE EVENT OF FORCE MAJEURE RELIED UPON.
EVENTS OF FORCE MAJEURE SHALL NOT RELIEVE ANY PARTY FROM MAKING ANY PAYMENT
FOR PRODUCT DELIVERED AND/OR SERVICE RENDERED HEREUNDER.
(20) LIMITATION OF LIABILITY
-----------------------
SELLER SHALL NOT BE LIABLE FOR MORE THAN THE ACTUAL COST TO REPLACE ANY
"LPG MIX" NOT DELIVERED HEREUNDER. NEITHER PARTY SHALL BE LIABLE FOR
SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES.
(21) MISCELLANEOUS
-------------
21.1. AMENDMENTS, WAIVER. THIS AGREEMENT MAY NOT BE CHANGED OR MODIFIED,
-------------------
EXCEPT IN WRITING BY MUTUAL AGREEMENT OF BOTH PARTIES. THE FAILURE OF ANY
PARTY TO ENFORCE ANY OF THE PROVISIONS OF THIS AGREEMENT WILL NOT BE
CONSTRUED TO BE A WAIVER OF THOSE PROVISIONS, OR A WAIVER OF THE RIGHT OF
ANY PARTY TO ENFORCE THEM.
DTIR-0273-98.
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21.2 SEVERABILITY. IF ANY PROVISION OF THIS AGREEMENT IS DETERMINED TO BE
------------
INVALID OR UNENFORCEABLE, THE REMAINDER OF THIS AGREEMENT SHALL REMAIN IN
FULL FORCE AND EFFECT.
21.3 ASSIGNMENT. NEITHER PARTY MAY ASSIGN THIS AGREEMENT OR ANY PORTION OF
----------
IT WITHOUT THE PRIOR WRITTEN CONSENT OF THE OTHER PARTY.
21.4 OTHER TERMS AND CONDITIONS. WHERE NOT IN CONFLICT WITH THE ABOVE,
----------------------------
INCOTERMS 1990 FOR EXW TRANSACTIONS WITH LATEST AMENDMENTS SHALL APPLY.
THE UNITED NATIONS CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF
GOODS SHALL NOT APPLY TO THIS CONTRACT.
21.5. ENTIRE AGREEMENT. THIS AGREEMENT CONSTITUTES THE ENTIRE AGREEMENT
-----------------
AMONG THE PARTIES AND SUPERSEDES ALL PREVIOUS NEGOTIATIONS, COMMITMENTS AND
WRITINGS WITH RESPECT TO SUCH SUBJECT MATTER OF THIS AGREEMENT.
(22) CONFIDENTIALITY
---------------
THIS AGREEMENT TO BE HELD STRICTLY PRIVATE AND CONFIDENTIAL BY ALL PARTIES
INVOLVED.
IF THIS MEETS WITH YOUR UNDERSTANDING AND APPROVAL, PLEASE SIGN IN THE
APPROPRIATE SPACE.
BUYER SELLER
LEOPOLDO SIMON JORGE BRACAMONTES
PMI TRADING LIMITED PENN OCTANE CORPORATION
LFVG/MOGP
DTIR-0273-98.
Page no. 10
EXHIBIT "A"
GPM MIX CHARACTERISTICS MAX TEST METHODS
COMPOSITION
PROPANE/BUTANE 90/10 PCT OF VOL
ETHANE 20 PCT. VOL. OF PROPANE
PROPYLENE 5.0 PCT. VOL. OF PROPANE
PENTANES & HEAVIES 2.0 PCT. VOL. OF BUTANE
VAPOR PRESSURE 190 ASTM D-1267-75
CHROMATOGRAPH ANALYSIS ASTM D-2163
SPECIFIC GRAVITY ASTM D-1657
CORROSION COPPER STRIP AT 100
F. DEG 1B ASTM D-1638-74
OTHER DELETERIONS SUBSTANCES NONE
DTIR-0273-98.
Page no. 11
EXHIBIT "B"
PRICE FORMULA AND SERVICE COST DETERMINATION
- -------------------------------------------------
------------------------------------------------------------
Month: |Price formula for C3 AND C4 shall be based on the monthly|
- --------------- |average of the delivery month, published by OPIS Mont|
PMI Order No: |Belvieu NON-TET spot posting for 90% Propane and 10%|
- --------------- |Burtane, plus the service costs. |
------------------------------------------------------------
A) ESTIMATED PRICE FOR INVOICES: The fifth day quotations prior of the delivery
month, plus the service costs
Calculation date, for the Estimated Price Invoice: 0-Jan-00
---------
Propane Price 0.9 Butane Price 0.1
USCTS/GAL USD/GAL USCTS/GAL USD/GAL SC
0.000 0.00000 0.000 + 0.00000 x.xxxxx x.xxxxx USD/GAL
- ----- -----
B) CLAUSE 8.2 SERVICE COST FORMULA, if buyer lift more than the minimum
monthly volume:
Formula: CSF = X.XXXXUSD/GAL - ADJ
Where: CSF: Service Cost for Additional Volume.
AVL: Adjustment for the Incremental Volume Lifted.
Where: ADJ = [X.XXXXUSD/GAL - (X.XXXX * MMV)] / 2
---
AVL
Where: MMV: Minimum Monthly Volume.
AVL: Actual Volume Lifted during the delivery Month.
MMV Minimum Monthly Volume: 7,500,000 GAL
AVL Actual Volume Lifted: 0 GAL
---------
Service Costs Minimum Volume: x.xxxxx USD/GAL.
Propane Monthly Average: 0.000 USCTS/GAL. For 90% 0.00000 USD/GAL
---------
Butane Monthly Average: 0.000 USCTS/GAL. For 10% 0.00000 USD/GAL
--------- ---------------
COMMODITY PRICE FORMULA 0.00000 USD/GAL
===============
CSF SERVICE COST FORMULA
- ---------------------------
- -------------------------------------------
| ADJ[x.xxxx/2] | *[MMV/AVL]-1 | EQUAL TO | + x.xxxxx EQUAL CSF
| | | | ----------------
| x.xxxxx | #DIV/01 | #DIV/01 | #DIV/01 USD/GAL
- ------------------------------------------- ================
GALLONS USD/GAL
PRICE FOR MINIMUM MONTHLY VOLUME: 7,500,000 x.xxxxx xxx,xxx.xx USD
PRICE FOR ACTUAL VOLUME LIFTED: -7,500,000 #DIV/01 #DIV/01 USD
PRICE IN USD / GAL FOR THE CURRENT MONTH: #DIV/01 USD/GAL
TOTAL PRICE FOR THE CURRENT MONTH: 0.00 #DIV/01 USD