TRD-DP-063/01
SETTLEMENT AGREEMENT
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THIS SETTLEMENT AGREEMENT (this "Agreement"), dated as of March 1, 2002, by
and between P.M.I. Trading Limited ("PMI") and Penn Octane Corporation ("POCC").
WHEREAS, POCC believes that is has claims against PMI for alleged
shortfalls and other damages arising under or related to any contracts or any
amendments thereto commencing on or about April 1, 2000 and concluding on or
about March 31, 2001 for the sale of LPG Mix by POCC to PMI for delivery of the
product to PMI at (a) Matamoros, Tamaulipas, Mexico (the "Matamoros Contract")
and (b) Saltillo, Coahuila, Mexico (the "Saltillo Contract") (collectively, the
Matamoros and Saltillo Contacts");
WHEREAS, POCC claims that in or about April 2001 a contract was formed
between the Parties (the "Alleged April 2001 Contract") and believes that it has
claims for damages against PMI arising under such contract;
WHEREAS, PMI refutes all of POCC's claims and denies owing POCC any monies
or other damages to POCC under either the Matamoros and Saltillo Contracts or
the Alledged April 2001 contract;
WHEREAS, PMI and POCC desire to settle all claims arising under the
Matamoros and Saltillo Contracts and the Alleged April 2001 Contract and, in
connection therewith, enter into a contract the ("Contract") for the sale of LPG
Mix by POCC to PMI on the terms and conditions mutually satisfactory to the
Parties (such actions, collectively, the "Settlement"); and
WHEREAS, PMI previously purchased from POCC 39,555,216 gallons of propane,
which propane was stored at storage facilities leased by POCC and which propane
has been delivered to PMI pursuant to an exchange agreement or agreements, and
subject to certain Guaranty and Reimbursement Agreements (such Guaranty and
Reimbursement Agreements attached hereto as Exhibit A). The aforementioned
propane delivered to PMI shall be referred to as "Exchanged Propane."
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained and agreements contained herein, and for other goods and valuable
consideration, receipt of which is hereby acknowledged, PMI and POCC hereby
agrees as follows:
1. RECITALS. The foregoing recitals are true and correct.
2. DEFINITIONS. Capitalized terms used but not defined herein shall have
the meaning ascribed to the same in the Contract.
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3. NO ADMISSION. Neither this Agreement not anything provided for herein
shall act as or constitute an admission by PMI or POCC that any of
them, or their respective past or present officers, directors,
shareholders, agents, employees, accountants or attorneys, committed
any wrongful act, or violated or breached the terms of any agreement
or duty owed, whether statutory or otherwise. It is specifically
understood and agreed that this represents a compromise settlement of
disputed claims and that any liability is denied.
4. REPRESENTATIONS AND WARRANTIES OF POCC
4.1 Corporate Authorization. POCC has full corporate power and
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authority to execute and deliver this Agreement, and to perform
its obligations hereunder. The execution, delivery and
performance by POCC of this Agreement has been duly and validly
authorized and no additional corporate authorization or consent
is required in connection with the execution, delivery and
performance by it of this Agreement.
4.2 Consents and Approvals. No consent, approval, waiver or
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authorization is required to be obtained by POCC from, and no
notice of filing is required to be given by POCC or made by POCC
with, any federal, state, local or foreign governmental authority
or other person in connection with the execution, delivery and
performance of this Agreement.
4.3 Non-Contravention. The execution, delivery and performance by
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POCC of this Agreement, and the consummation of the transactions
contemplated hereby, do not and will not (i) violate any
provision of the organizational documents of POCC (ii) conflict
with, or result in breach of, or constitute a default under, or
result in the termination, cancellation or acceleration (whether
after the filing or notice or the lapse of time or both) of any
right or obligations of POCC under, or to a loss of any benefit
to which POCC is entitled under, any contact; or (iii) result in
a breach of or constitute a default under any law of any court or
governmental authority to which POCC is subject.
4.4 Binding Effect. This Agreement constitutes a valid and
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legally binding obligation of POCC enforceable against POCC in
accordance with the terms of this Agreement, subject to
bankruptcy, insolvency, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors'
rights and to general equity principles.
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5. REPRESENTATIONS AND WARRANTIES OF PMI.
5.1 Corporation Authorization. PMI has full corporate power and
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authority to execute and deliver this Agreement, and to perform
its obligations hereunder. The execution, delivery and
performance by PMI of this Agreement has been duly and validly
authorized and no additional corporate authorization or consent
is required in connection with the execution, delivery and
performance by it of this Agreement.
5.2 Consents and Approvals. No consent, approval, waiver or
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authorization is required to be obtained by PMI from, and no
notice or filing is required to be given by PMI or made by PMI
with, any federal, state, local, or foreign governmental
authority or other person in connection with the execution
delivery and performance of this Agreement.
5.3 Non-Contravention. The execution, delivery and performance by
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PMI of this Agreement, and the consummation of the transactions
contemplated hereby, do not and will not (i) violate any
provision of the organizational; documents of PMI (ii) conflict
with, or result in the breach of, or constitute a default under,
or result in the termination, cancellation or acceleration
(whether after the filing of notice or the lapse of time or both)
of any right or obligation of PMI under, or to a loss of any
benefit to which PMI is entitled under, any contract; or (iii)
result in a breach of or constitute a default under any law of
any court or governmental authority to which PMI is subject.
5.4 Binding Effect. This Agreement constitutes a valid and
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legally binding obligation of PMI enforceable against PMI in
accordance with the terms of this Agreement, subject to
bankruptcy, insolvency, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors'
rights and to general equity principles.
6. EXCHANGED PROPANE.
6.1 The Exchanged Propane has been delivered to PMI by POCC
pursuant to an exchange agreement or agreements, and subject to
certain Guaranty and Reimbursement Agreements attached hereto as
Exhibit A.
6.2 POCC and PMI agree and acknowledge that, with respect to all
Exchanged Propane delivered by POCC to PMI from the Markham
Storage Facility to Matamoros, Mexico, PMI has paid (i) a
transportation fee of US $XXXX per Gallon, and (ii) a through
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put-out fee of US$XXXX per Gallon. After March 1, 2002, PMI
shall not be liable nor shall it pay any other fee, including
without limitation, any storage fee with respect to propane
previously purchased and paid for by PMI, stored at the Markham
Storage Facility, and owed to PMI by POCC.
6.3 POCC and PMI further agree and acknowledge that, with respect
to all Exchanged Propane delivered by POCC to PMI at the Mont
Belvieu Storage Facility, PMI has paid a fee of US$XXXX per
Gallon for all such Exchanged Propane. The aforementioned fee
constituted payment in full for (i) the through put-out costs
from the Markham Storage Facility, (ii) the transportation costs
from the Markham Storage Facility to the Mont Belvieu Storage
Facility, (iii) all storage costs for storage at the Mont Belvieu
Storage Facility, and (iv) any other or additional cost or fee
that POCC may incur as a result of placing the Exchanged Propane
in the Mont Belvieu Storage Facility. After March 1, 2002, PMI
shall not be liable nor shall it pay any other fee, including
without limitation, any storage fee with respect to propane
previously purchased and paid for by PMI, stored at the Mont
Belvieu Storage Facility, and owed by PMI by POCC.
7. CONTRACT. As part of the Settlement, PMI and POCC are entering into
a contract for the purchase of the LPG Mix by PMI from POCC, of even
date herewith, on terms and conditions mutually satisfactory to the
Parties (the "Contract"), the effectiveness of which shall be
expressly subject to and conditioned upon the execution by the Parties
thereto of this Settlement Agreement.
8. POCC RELEASE. POCC releases and discharges PMI, its shareholders,
officers, directors, agents, employees, insurers, parent companies,
subsidiary companies, predecessors, successors and assigns
(hereinafter in this paragraph collectively referred to as Releasees),
from all actions, causes of action, suits, debts, dues, sums of money,
accounts, reckonings, bonds, bills, specialties, convenants,
contracts, controversies, agreements, promises, variances, trespasses,
damages, judgments, extents, executions, claims and demands
whatsoever, in law, admiralty or equity (collectively, "Claims"), that
POCC, its successors or assigns ever had or now have against Releasees
for, upon, or by reason of any matter, cause or thing whatsoever from
the beginning of the world to the day of the date of this Release
arising under or related to the Matamoros Contract, the Saltillo
Contract and/or the Alleged April 2001 Contract. POCC represents to
PMI that as of the date of this Release it does not know of nor does
it have information upon which to believe that it has any other Claims
arising from or relating to the Matamoros Contract, the Saltillo
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Contract and/or the Alleged April 2001 Contract. Notwithstanding the
foregoing Release the Parties specifically agree that this Release
does not release claims that may arise with respect to delivery of the
Exchanged Propane in accordance with the terms of this Agreement.
9. PMI RELEASE. PMI releases and discharges POCC, it shareholders,
officers, directors, agents, employees, insurers, parent companies,
subsidiary companies, predecessors, successors and assigns
(hereinafter in this paragraph collectively referred to as Releasees)
from all Claims that PMI, it successors or assigns ever had or now
have against Releasees for, upon, or by reason of any matter, cause or
thing whatsoever from the beginning of the world to the day of the
date of this Release, including, without limitation, Claims arising
under or related to the Matamoros Contract, the Saltillo Contract
and/or the Alleged April 2001 Contract. PMI represents to POCC that as
of the date of this Release it does not know of nor does it have
information upon which to believe that it has any other Claims arising
from or relating to the Matamoros Contract, the Saltillo Contract
and/or the Alleged April 2001 Contract. Notwithstanding the foregoing
Release, the Parties specifically agree that this Release does not
release claims that may arise with respect to delivery of the
Exchanged Propane in accordance with the terms of this Agreement.
10. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall deemed or original and all of which
taken together shall constitute one of the same instrument. Manual
delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of an original
executed counterpart of this Agreement. No modification or amendment
of this Agreement shall be effective unless in writing and singed by
the Party against whom it is sought to enforce the modification or
amendment.
11. GOVERNING LAW; ARBITRATION. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New
York, without regards to its conflicts of law principles. Any and all
disputes, claims or controversies arising under or relating to this
Agreement shall be settled by arbitration administered by the American
Arbitration Association under its International Arbitration Rules. The
place of the arbitration shall be New York City, New York. The Parties
agree that the number of arbitrators shall be three. Each Party shall
nominate a neutral and independent arbitrator, and the two arbitrators
so appointed shall appoint the third neutral and independent
arbitrator, who shall act as the Chairperson. If the arbitrators
selected by the Parties are unable or fail to agree upon the third
arbitrator, the third arbitrator shall be selected by the American
Arbitration Association. The award shall be in writing, shall be
signed by a majority of the arbitrators, and shall include a statement
regarding the reasons for the disposition of any claim. A judgment of
the court having jurisdiction may be entered on the award. Except as
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may be required by law, neither a Party nor an arbitrator may disclose
the existence, content, or results of any arbitration hereunder
without the prior written consent of both Parties.
12. ENTIRE AGREEMENT. This Agreement, together with the Contract,
constitute the entire agreement between the Parties hereto, and
supercede all prior agreements and understanding, both written and
oral, among the Parties with respect to the subject matter hereof.
13. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision
shall not affect the validity or enforceability of the other
provisions hereof. If any provision of this Agreement, or the
application thereof to any Person or any circumstance, is invalid or
unenforceable, (a) a suitable and equitable provision shall be
substituted therefore in order to carry out, so far as may be valid
and enforceable, the intent and purpose of such invalid or
unenforceable provisions and (b) the remainder of this Agreement and
the application of such provision to other Persons or circumstances
shall not be affected by such invalidity or unenforceability, nor
shall such invalidity or unenforceability affect the validity or
enforceability of such provisions, or the application thereof, in any
other jurisdiction.
14. EXPENSES. Whether or not the transactions contemplated by this
Agreement are consummated, all costs and expenses incurred in
connection with this Agreement and the transactions contemplated here
shall be borne by the party incurring such expenses.
IN WITNESS WHEREOF, the Parties have executed this Agreement effective on
the date first above written.
P.M.I. TRADING LIMITED PENN OCTANE CORPORATION
By: /s/ Xxxxxxx Xxxxxx By: /s/ X. X. Xxxxxxx
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Name: Xxxxxxx Xxxxxx Name: X. X. Xxxxxxx
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Title: Signatory Title: President
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