UNION CARBIDE CORPORATION
00 Xxx Xxxxxxxxx Xxxx Xxxxxxx, XX 00000-0000
X.X. Xxxxx Phone: (000) 000-0000
BUSINESS CONFIDENTIAL
July 31, 1997
Xx. Xxxxx Xxxxxxx
Penn Octane Corporation
000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxx Xxxx, XX 00000
Re: Purchase Agreement 0515-007182
Dear Xxxxx,
Confirming our conversation today, it is agreed that for deliveries by tank
trucks, the price of propylene will be the US Gulf Coast Polymer Grade marker
price, as reported by CMAI, less 2.0 cents per pound. The discount will be
2.5 cents per pound once shipments are made by rail cars, or as of September
15, 1997 which ever comes first.
Please sign both originals of this letter and return one signed original to me
for our files.
Very truly yours,
X.X. Xxxxx
Agreed to by:
/s/ Xxxxx Xxxxxxx
-------------------------------------- --------------------------------------
PENN OCTANE COMPANY DATE
DBJ/lr
UNION CARBIDE CORPORATION
PURCHASE AGREEMENT
Sellers Agreement No. UCC.#1 Union Carbide Corporation
Agreement No. 0515-007182
AGREEMENT made this 1st day of July, 1997 between UNION CARBIDE CORPORATION, a
New York corporation (hereinafter called "UCC") and Penn Octane Corporation
(hereinafter called "SELLER") 000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxx Xxxx,
Xxxxxxxxxx 00000 a Corporation.
SELLER shall sell and deliver to UCC and UCC shall purchase from SELLER the
PRODUCT described below, upon the terms contained in the BOXES below, in the
GENERAL PROVISIONS hereinafter set forth, and in each RIDER, if and, listed
below, all attached hereto and made a part hereof.
Fill in required information in appropriate BOXES. If insufficient space,
attach a RIDER containing the appropriate information, mark it with
identifying Number and Title and insert in the applicable BOX. "See Rider No.
(insert identifying number)."
A. PRODUCT Propylene
B. SPECIFICATIONS See Rider No. 1
C. PLACE OF DELIVERY UCC's Plant at Texas City, Texas
D. MEANS OF TRANSPORTATION Rail Cars and Tank Trucks
E. CONTAINERS Tank Trucks and Rail Cars
SELLER is responsible for furnishing tank trucks
and rail cars that meet DOT requirements.
F. DELIVERY PERIOD August 1, 1997 through July 31, 1998 and
continuing thereafter unless terminated by either
party giving written notice not less than ninety
(90) days prior to the effective date of
termination.
G. RATE OF DELIVERY Nine (9) million pounds per month or as mutually
agreed by both parties.
H. QUANTITY One hundred eight (108) Million Pounds
I. PRICE The monthly price for Product will be the final
US Gulf Coast Polymer Grade contract marker
price for such month as reported in the CMAI
Monomers Market Report less 2.5 cents per
pound.
For reference, the final US Gulf Coast Polymer
Grade market price for product in June 1997 was
21.25 cents per pound and the monthly price
would have been 18.75 cents per pound.
J. INVOICES AND TERMS OF
PAYMENT INVOICE PAYMENT TERMS:
NET TEN (10) DAYS from receipt of invoice
and supporting documentation.
Payment will be by wire transfer:
PENN OCTANE CORPORATION
c/o Bay Area Bank
Account No. 00000000
ABA No. 000000000
SEND INVOICES TO:
UNION CARBIDE CORPORATION
Attn: Xxxxx Xxxxxxx
Building 2000, Room 1414
P.O. Box 8361
South Charleston, WV 25303
Please refer to UCC's Agreement Number 0515--
007182 on all invoices and supporting
documentation.
K. QUANTITY AND QUALITY
DETERMINATION UCC's truck or rail scale tickets for Tank Trucks
or Rail Cars.
L. FREIGHT CHARGES Account of SELLER
M. COMMUNICATIONS ADDRESS UNION CARBIDE CORPORATION
00 Xxx Xxxxxxxxx Xxxx
Xxxxxxx, XX 00000-0001
ATTN: X.X. Xxxxx - Xxxxxxx Supply and Product Manager
SELLER'S Address:
PENN OCTANE CORPORATION
000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxx Xxxx, XX 00000
Attn: X. Xxxxxxx
PENN OCTANE CORPORATION UNION CARBIDE CORPORATION
(Name of SELLER)
By: /s/ X. Xxxxxxx By: /s/ X.X. Xxxxx
---------------------------------- --------------------------------------
X.X. Xxxxx
TITLE: President TITLE: Olefins Supply and Product Manager
PLACE OF SIGNING: Danbury, CT
LIST OF RIDERS
RIDER NO. TITLE OF RIDER
1 Refinery Grade Propylene Specifications
GENERAL PROVISIONS UNION CARBIDE CORPORATION
AGREEMENT NO. 0515-007182
SECTION 1. PRICE
Except as set forth in this Agreement or as otherwise agreed upon in
writing by the parties hereto, all prices specified in this Agreement are firm
and are not subject to adjustment except as set forth in Rider No. 3 and no
charge shall made by SELLER to UCC for any CONTAINERS or other packaging
materials or services furnished by SELLER in connection with PRODUCT.
SECTION 2. INVOICES AND PAYMENT TERMS
Unless otherwise specified in the BOX entitled "INVOICES AND TERMS OF
PAYMENT", an invoice shall be rendered by SELLER to UCC at the address
specified for such purposes in said BOX within a reasonable time after each
delivery made hereunder and setting forth the quantity of PRODUCT included in
such delivery and the amount due hereunder for such quantity, and payment
shall be made by UCC to SELLER at the address specified for such purposes in
said invoice for the correct amount of such invoice so rendered.
SECTION 3. TAXES
Except as provided in Section 4 with respect to Sales and Use Taxes, and
except as otherwise agreed in writing by UCC and SELLER, SELLER shall be
liable for all taxes, excises, and other governmental charges which are
enacted prior to the date of this Agreement and required to be paid or
collected by SELLER under any federal, state or other law, applicable to the
production, processing,l severance, transportation, storage or delivery of any
or all PRODUCT hereunder, or to income, profits, or receipts received by
SELLER for such PRODUCT.
SECTION 4. RELEASES
UCC shall issue written releases to SELLER covering all deliveries to be
made by SELLER hereunder,r in no event shall SELLER make any delivery
hereunder until after its receipt of the authorized release issued by UCC
covering such delivery. UCC shall notify SELLER in writing of the person or
persons authorized to issue such releases. Each such release shall set forth
the following: A statement identifying such release to this Agreement, the
number by which such release shall be identified; a description for PRODUCT to
be shipped, the quantity of PRODUCT to be delivered; the means of
transportation and name of carrier, a description of container; the date of
delivery, the place of delivery, the Sales and/or Use Tax Status of the
quantity of PRODUCT to be delivered; and invoicing instructions. In case of a
conflict between any of the terms of any such release and any of the terms set
forth in the BOXES, GENERAL PROVISION or RIDERS, the former terms shall
control. There shall be no limitation on the number of releases issued
hereunder.
SECTION 5. DELIVERIES
Where the PLACE OF DELIVERY of PRODUCT is the place of shipment, SELLER
shall, at its own expense, provide, maintain and operate suitable facilities
for making deliveries of such PRODUCT, and when the PLACE OF DELIVERY of
PRODUCT is the place of destination, UCC shall, at its own expense, provide,
maintain and operate suitable facilities for receiving deliveries of such
PRODUCT; provided, however, that, except as hereinafter provided in this
SECTION, all loading and unloading equipment customarily furnished with the
CONTAINERS shall be provided, maintained and operated by the party hereto
responsible for furnishing such CONTAINERS. Unless otherwise agreed upon in
writing by the parties hereto, SELLER shall perform all loading functions, at
its own expense, and UCC shall perform all unloading functions,l at its own
expense. Deliveries shall be made at the applicable RATE OF DELIVERY and at
the applicable PLACE OF DELIVERY; provided, however, that the particular time
and quantity of each delivery shall be specified UCC to SELLER reasonably in
advance of such delivery, together with all necessary shipping instructions
for such delivery which are not set forth in the BOXES.
SECTION 6. TRANSPORTATION, CONTAINERS
When the PLACE OF DELIVERY of PRODUCT is the place of shipment, UCC shall
either transport such PRODUCT from such place or cause a carrier or carriers
to transport such PRODUCT from such place; and if such transportation is by
means of ship or barge, such ship or barge shall also be furnished by UCC or
such carrier or carriers shall either be named by UCC in the BOX entitled
"MEANS OF TRANSPORTATION" or by UCC at a later date. When the PLACE OF
DELIVERY of PRODUCT is the place of destination SELLER shall either transport
such PRODUCT to destination or cause a carrier or carriers to transport such
PRODUCT to such destination; and if such transportation is by means of ship or
barge, such ship or barge shall also be furnished by SELLER or such carrier or
carriers. Such carrier or carriers shall either be named by SELLER in the BOX
entitled "MEANS OF TRANSPORTATION" or by SELLER at a later date. When xxxxxx
cars, tank cars or other rail cars are furnished by SELLER as CONTAINERS for
making any shipment hereunder and such xxxxxx cars, tank cars or other rail
cars are not supplied by a common carrier, then such xxxxxx cars, tank cars or
other rail cars shall be trip leased by SELLER to UCC. Upon mutually agreed
terms and conditions.
SECTION 7. TITLE AND RISK OF LOSS
Title to, and risk of loss of, PRODUCT delivered hereunder shall pass at
the following applicable points:
(a) when the PLACE OF DELIVERY is the place of shipment and such
PRODUCT leaves the place of shipment by ship or barge or truck, at the point
such PRODUCT enters such barge, ship or truck at the point such PRODUCT enters
such barge, s hip or truck, or if prior to entering such ship or barge or
truck such PRODUCT enters the loading equipment furnished by and attached or
affixed to such ship or barge or truck, then at the point such PRODUCT enters
such loading equipment;
(b) when the PLACE OF DELIVERY is the place of shipment and such
PRODUCT leaves the place of shipment by rail, at the point where the carrier
accepts the shipment;
(c) when the PLACE OF DELIVERY is the place of destination and such
PRODUCT arrives at the place of destination by barge or ship or truck, at the
point such barge, ship or truck is ready for unloading facilities designated
by UCC for unloading;
(d) when the PLACE OF DELIVERY is the place of destination and such
PRODUCT arrives at the place of destination by rail, at the point where the
shipment is delivered by the carrier to UCC.
SECTION 8. QUANTITY AND QUALITY DETERMINATION
The quantity of PRODUCT delivered to SELLER shall be determined in
accordance with the method specified in the BOX entitled "QUANTITY AND QUALITY
DETERMINATION," or if a method is not specified, in accordance with customary
industry procedures. The quality of PRODUCT delivered hereunder shall be
determined in accordance with the method specified in the BOX entitled
'QUANTITY AND QUALITY DETERMINATION," or if a method is not so specified, by
sampling and analysis in accordance with customary industry procedures. In
the event and to the extent it is not specified in the BOX entitled "QUALITY
AND QUALITY DETERMINATION" that the quantity and/or quality determination of
PRODUCT delivered is to be made by an independent Party, such determination
shall be made by SELLER in accordance with the applicable method or procedure
provided for in this Section, and shall be final and binding with respect to
such PRODUCT so delivered unless proven to be in error. Promptly following
each delivery of PRODUCT hereunder, SELLER shall give a written report to UCC
setting forth the quantity and quality determination of the PRODUCT so
delivered. In the event it is specified in the BOX entitled "QUANTITY AND
QUALITY DETERMINATION" that the quantity and/or quality determination of
PRODUCT delivered hereunder is to be made by an independent Party, SELLER
shall make all necessary arrangements with such independent Party and shall
require that such determination be made in accordance with the applicable
method and procedures described above and that a written report of such
quantity and/or determination shall be promptly given by such independent
Party to each party hereto at the applicable address provided for in Section
15 of these GENERAL PROVISIONS. The quantity and/or quality determination of
such Independent Party, as set forth in such report, shall be final and
binding with respect to such PRODUCT so delivered, and the expense of hiring
such independent Party shall be shared equally by the parties hereto, unless
otherwise specified in said BOX. If an independent Party is specified, but
not named, in said BOX, Seller shall select such Independent Party.
SECTION 9. FORCE MAJEURE
Neither party shall be liable for its failure to perform hereunder due to
any occurrence beyond its reasonable control, including but not limited to
Seller's failure to perform as a result of its failure to produce, transport
or deliver PRODUCT due to any such occurrence, or Buyer's failure to perform
as a result of its failure to use or consume PRODUCT due to any such
occurrence. The aforesaid occurrences shall include acts of God, fires,
floods,l wars, sabotage, accidents, labor disputes or shortages, governmental
laws, ordinances, rules and regulations,l whether valid or invalid (including
but not limited to priorities, requisitions, allocations,l and price
adjustment restrictions), inability to obtain material, equipment or
transportation,a nd any other similar or different occurrence. The failing
party shall notify the other party thereof in writing as soon as its
reasonably possible after the commencement of such occurrence, setting forth
the full particulars in connection therewith, shall remedy such occurrence
with all reasonable dispatch, and shall promptly give written notice to the
other party of the cessation of such occurrence. Any delivery of PRODUCT
omitted at the time or times required for such delivery hereunder due to
either party's failure to perform its obligations hereunder due to any such
occurrence shall be omitted from this Agreement and the DELIVERY PERIOD for
such PRODUCT shall not be extended. If, due to any such occurrence, SELLER is
unable to make any delivery or deliveries at the time or times required under
this Agreement, SELLER shall have the right to allocate its available supply
among its customers and its departments and divisions in a fair and equitable
manner. In no event shall SELLER be obligated to purchase PRODUCT from others
in order to enable it to deliver product to UCC hereunder.
SECTION 10. WARRANTIES
SELLER warrants that PRODUCT delivered by it hereunder meets the
specifications for such PRODUCT hereunder and that such PRODUCT is adequately
contained, packages and labeled and conforms to the promises and affirmations
of fact made on the CONTAINER and label. NO WARRANTIES, INCLUDING BUT NOT
LIMITED WARRANTY OF MERCHANTABILITY AND WARRANTY OF FITNESS FOR A PARTICULAR
PURPOSE SHALL BE IMPLIED.
SECTION 11. CHANGES
Should SELLER contemplate as to PRODUCT any change in (i) formulation,
(ii) specifications or test methods, (iii) manufacturing or production methods
or processes, and/or (iv) raw materials or their source, SELLER shall promptly
notify UCC in writing prior to implementing any such change, setting forth
sufficient information as to the nature of the change and SELLER'S assessment
of (a) the impact of such change on PRODUCT, and (b) if known to SELLER, the
impact of such change on the use or uses for PRODUCT. SELLER shall not
implement such change with respect to PRODUCT to be delivered hereunder
without UCC's prior written approval. Should SELLER proceed without such
approval, UCC may suspend further purchases and terminate this Agreement as to
such PRODUCT without prejudice to UCC's exercise of any other rights and
remedies it may have against SELLER. SELLER shall indemnify and hold UCC, its
successors and assigns, harmless from any and all claims, losses, liabilities,
damages and expenses of every character whatsoever arising out of or in
connection with any unapproved change affecting PRODUCT delivered hereunder.
SECTION 12. PATENT INDEMNITY
Except as hereinafter limited, SELLER shall protect and indemnify UCC
from and against any and all claims, damages, judgments, expenses and loss
arising from infringement or alleged infringement of any patent of the United
States by any of the PRODUCT delivered hereunder, and SELLER shall defend or
settle, at its own expense, any suit or proceeding brought against UCC for
such infringement; provided that SELLER is notified promptly in writing of the
commencement of such suit or proceeding and is given authority, information
and assistance by UCC for the defense or settlement thereof; and provide
further that UCC shall not settle or compromise any such suit or proceeding
without the prior written consent of SELLER. Furthermore, in the event that
UCC should be enjoined in such suit or proceeding from suing any of the
PRODUCT delivered hereunder. SELLER, at its option, shall promptly either (i)
secure liability, (ii) replace said PRODUCT with noninfringing PRODUCT or
modify same to become noninfringing, all at SELLER'S expense and to UCC's
satisfaction, or (iii) remove said PRODUCT at SELLER'S expense and refund to
UCC the amount paid to SELLER therefore. The provisions of this Section,
however, shall not apply to the use of any of the PRODUCT delivered hereunder
in combination with other materials or in the practice of any process, or to
infringement by reason of such use.
SECTION 13. CLAIMS
Receipt by UCC of any PRODUCT delivered hereunder shall be an unqualified
acceptance of,a nd a waiver by UCC of any and all claims with respect to, such
PRODUCT, unless UCC gives SELLER written notice of claim within thirty (30)
days after (a) the date of such PRODUCT arrives at the destination specified
by UCC to SELLER in the shipping instructions for such PRODUCT; or (b) the
earliest date on which the basis for such claim becomes reasonably
discoverable by UCC, whichever date is the later. UCC assumes all risk and
liability for the results obtained by the use in manufacturing processes of
UCC or in combination with other substances or any product which is delivered
to it hereunder and which meets the specifications of such PRODUCT contained
in or referred to in this Agreement. In no event shall either party be liable
for special , indirect or consequential damages.
SECTION 14. FAIR LABOR STANDARDS ACT
SELLER agrees that all Product delivered by it hereunder will be produced
in compliance with the Fair Labor Standards Act, as amended, and agrees to so
certify on its invoices if so directed by a stamp placed on the face of this
Agreement.
SECTION 15. NOTICES
Any notice, request, report, statement or other communication to be given
in writing under this Agreement shall be deemed to have been given by either
party to the other party:
(a) upon the date of the mailing thereof to such other party by
registered or certified mail, as shown on the Post Office receipt, at the
applicable address set forth in the BOX entitled "COMMUNICATIONS ADDRESS" or
at such other address as such other party may specify from time to time in
writing;
(b) if not so mailed by registered or certified mail, upon the date
of the receipt thereof such other party.
SECTION 16. MISCELLANEOUS
No modification of, addition to, or waiver of any of the terms of this
Agreement (a) shall be binding upon either party unless in writing and signed
by an authorized representative of such party; or (b) shall be effected by the
acknowledgement or acceptance of purchase order or other forms containing
additional or different terms of conditions, whether or not signed by an
authorized representative of such party. No waiver by either party of any
breach by the other party of any of the terms of this Agreement shall be
construed as a waiver of any subsequent breach, whether of the same or of a
different term of this Agreement. Any assignment of this Agreement by SELLER
without the written consent of UCC shall be void. THE VALIDITY,
INTERPRETATION AND PERFORMANCE OF THIS AGREEMENT SHALL BE GOVERNED BY THE LAW
OF THE STATE OF TEXAS, WITHOUT REFERENCE TO ITS PRINCIPLES OF CONFLICTS OF
LAW. The rights and remedies of the parties set forth in this Agreement shall
not be exclusive and are in addition to all other rights and remedies of the
parties hereto. This Agreement sets forth the entire agreement between the
parties hereto with respect to the subject matter of this Agreement and
supersedes all prior understandings, negotiations and dealings between the
parties hereto with respect to such subject matter. Neither course of
performance, nor course of dealing, nor usage of trade shall be used to
qualify, explain or supplement any of the terms of this Agreement.
UNION CARBIDE CORPORATION
AGREEMENT NO. 0515-007182
-----------
RIDER NO. 1
POLYMER GRADE PROPYLENE
SPECIFICATION
REQUIREMENTS LIMITS METHOD
---------------------------- --------------------------------------- -----------
1. Propylene 98% by volume, min. Equivalent to 98% 1B-1C2-1.22
by weight, min.
2. Sulfur 3 ppm by weight, max. 1B-1C2-1.22
3. Total C4's 1100 ppm by volume, max. Equivalent to 1B-1C2-1.22
1400 ppm by weight, max.
4. Methylacetylene (propyne) 200 ppm by volume, max. Equivalent to 1B-1C2-1.22
and propadienc (xxxxxx) 190 ppm by weight, max.
5. Ethylene 1000 ppm by volume, max. Equivalent to 1B-1C2-1.22
650 ppm by weight, max.
SUPPLEMENTAL QUALITY DESCRIPTIONS
The Supplier guarantees that this product also meets the following, but
analytical data is not required on the product quality report.
6. Acetylene 60 ppm by volume, max. Equivalent to 40 1B-1C2-1.22
ppm by weight, max.
7. Chlorides 10 ppm by weight, max. 1B-1C2-1.22
8. Methane plus ethane plus 2% by volume, max. Equivalent to 2% by 1B-1C2-1.22
propane weight, max.
9. Butadiene 100 ppm by volume, max. Equivalent to 1B-1C2-1.22
130 ppm by weight, max.
