CONTRIBUTION, CONVEYANCE AND ASSUMPTION AGREEMENT
This Contribution, Conveyance and Assumption Agreement (this
"Agreement") is
entered into as of September 16, 2004, by and
among Penn Octane Corporation, a
Delaware corporation ("POCC"), Rio Vista GP LLC, a Delaware
limited liability
company (the "GP"), Rio Vista Energy Partners L.P., a Delaware limited
partnership (the "MLP"), Rio Vista Operating GP LLC, a Delaware limited
liability company (the "Operating GP"), and Rio Vista Operating
Partnership
L.P., a Delaware limited partnership (the "Operating Partnership").
RECITALS
WHEREAS,
prior to the date hereof, POCC formed the
GP, as a wholly-owned
direct subsidiary, and purchased for $1,000.00 all of the limited
liability
company interests in the GP;
WHEREAS,
the GP and POCC formed the MLP, with the GP purchasing a
2%
general partner interest for $20 and POCC
purchasing common units representing a
98% limited partner interest for $980.00;
WHEREAS,
the MLP formed the Operating GP and
purchased all of the limited
liability company interests in the Operating GP for $1,000.00;
WHEREAS,
POCC and the Operating GP formed the
Operating Partnership, with
the Operating GP purchasing a 0.10%
general partner interest for $1.00 and POCC
purchasing a 99.9% limited partner interest for $999.00;
WHEREAS,
each of the following transactions shall occur
as of 4:58 P.M.
Eastern Time on September 30, 2004 (the "Contribution Effective Time"):
1. POCC will contribute all of its ownership
interest in the outstanding
capital stock of its subsidiaries (the "Subsidiary Interests") set
forth on
Exhibit A (the "Subsidiaries") hereto to
the Operating Partnership as a capital
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contribution;
2. POCC will contribute to the Operating
Partnership the assets set forth
in the Conveyance Agreement described in
Section 1.2 below (the "LPG Assets") as
an additional capital contribution; and
3. The GP will convey $1,000 to the MLP in
exchange for the issuance of
incentive distribution rights to the GP;
WHEREAS,
each of the following transactions shall occur
as of 4:59 P.M.
Eastern Time on September 30, 2004 (the "Closing Day Effective Time"):
1. POCC will contribute all of its limited partner interest in the
Operating Partnership to the MLP as an additional capital contribution.
NOW, THEREFORE, in consideration of their mutual undertakings and
agreements hereunder, the parties to this Agreement undertake and agree
as
follows:
ARTICLE I
CONVERSIONS, CONTRIBUTIONS AND DISTRIBUTIONS OF VARIOUS ASSETS
SECTION
1.1 CONTRIBUTION
OF THE SUBSIDIARY INTERESTS BY POCC TO
THE
OPERATING PARTNERSHIP. At the Contribution Effective
Time, POCC hereby grants,
contributes, transfers, assigns and conveys to the Operating
Partnership, its
successors and assigns, all right, title and
interest in and to the Subsidiary
Interests as a capital contribution and the
Operating Partnership hereby accepts
the Subsidiary Interests.
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SECTION
1.2 CONTRIBUTION OF LPG ASSETS BY POCC TO THE OPERATING
PARTNERSHIP. At the Contribution Effective Time, POCC hereby grants,
contributes, transfers, assigns and conveys to the Operating
Partnership, its
successors and assigns, all right, title and
interest in and to the LPG Assets
as a capital contribution, and the
Operating Partnership hereby accepts the LPG
Assets. In order to give full effect to the foregoing grant,
contribution,
transfer, assignment and conveyance, POCC, as grantor, and the Operating
Partnership, as grantee, shall execute a Conveyance Agreement in the form
attached hereto as Exhibit B together with such other
special warranty deeds,
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conveyances or other documents required to transfer the LPG Assets in the
jurisdictions in which they are located.
SECTION
1.3 CONTRIBUTION OF OPERATING
PARTNERSHIP INTEREST BY POCC TO THE
MLP. At the Closing Day Effective Time, POCC hereby grants, contributes,
transfers, assigns and conveys to the MLP, its successors and assigns,
all
right, title and interest of POCC in and to the
99.9% limited partner interest
in the Operating Partnership as an additional
capital contribution to the MLP
and the MLP hereby accepts such limited partner interest as an
additional
capital contribution to the MLP.
SECTION
1.4 CONVEYANCE BY THE
GP TO THE MLP. At the Contribution Effective
Time, the GP hereby conveys to the MLP $1,000.00 in exchange
for all of the
incentive distribution rights under the
First Amended and Restated Agreement of
Limited Partnership of the MLP.
ARTICLE II
RECORDATION OF EVIDENCE OF OWNERSHIP OF ASSETS
SECTION
2.1. In connection with the conveyances that are
referred to in
Article I to this Agreement, the parties to this Agreement
acknowledge that
certain jurisdictions in which the assets of the applicable parties
to such
conveyances are located may require that documents
be recorded by such parties
resulting from such conveyances in order to
evidence title to the assets owned
by such parties. All such documents shall evidence
such new ownership and are
not intended to modify, and shall not modify, any
of the terms, covenants and
conditions herein set forth.
ARTICLE III
ASSUMPTION OF CERTAIN LIABILITIES
SECTION
3.1 ASSUMPTION OF
LIABILITIES AND OBLIGATIONS BY THE OPERATING
PARTNERSHIP AND THE MLP. In connection with the
contributions of the LPG Assets
and the Subsidiary Interests to the Operating Partnership, the Operating
Partnership hereby assumes and agrees to duly and timely pay, perform and
discharge all obligations and liabilities associated with the Contributed
Assets, that arise from and after the Closing Day
Effective Time, to the full
extent that either of the Subsidiaries or
POCC would have been obligated to pay,
perform and discharge such obligations and liabilities
in the future, were it
not for the execution and delivery of this
Agreement; provided, however, that
said assumption and agreement to duly and
timely pay, perform and discharge such
obligations and liabilities shall not increase the
obligation of the Operating
Partnership with respect to such
obligations and liabilities beyond that of POCC
as to the LPG Assets, or the Subsidiaries as to the assets
acquired by the
Operating Partnership in such interest conveyed by any of POCC or the
Subsidiaries. For purposes of this Agreement, the term "Contributed
Assets"
shall mean, collectively, the LPG Assets and the Subsidiary Interests.
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ARTICLE IV
TITLE MATTERS
SECTION
4.1 DISCLAIMER OF WARRANTIES; SUBROGATION.
(a) (i) NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS
AGREEMENT, THE MLP AND THE OPERATING PARTNERSHIP ACKNOWLEDGE AND
AGREE
THAT POCC AND THE SUBSIDIARIES HAVE NOT MADE, DO NOT MAKE, AND
SPECIFICALLY NEGATE
AND DISCLAIM, ANY REPRESENTATIONS,
WARRANTIES,
PROMISES, COVENANTS, AGREEMENTS OR GUARANTIES OF ANY KIND OR
CHARACTER
WHATSOEVER, WHETHER
EXPRESS, IMPLIED OR STATUTORY, ORAL OR
WRITTEN,
PAST OR PRESENT (ALL OF WHICH ARE EXPRESSLY DISCLAIMED BY POCC AND
THE
SUBSIDIARIES)
REGARDING (1)
THE TITLE, VALUE, NATURE, QUALITY OR
CONDITION OF THE CONTRIBUTED ASSETS, (2) THE INCOME TO BE DERIVED
FROM
THE CONTRIBUTED
ASSETS, (3) THE SUITABILITY OF THE CONTRIBUTED ASSETS
FOR ANY AND ALL ACTIVITIES AND USES WHICH THE MLP MAY CONDUCT
THEREON,
(4) THE COMPLIANCE OF OR BY THE CONTRIBUTED ASSETS, OR THEIR
OPERATIONS WITH
ANY LAWS (INCLUDING WITHOUT LIMITATION ANY
ZONING,
ENVIRONMENTAL
PROTECTION, POLLUTION
OR LAND USE LAWS, RULES,
REGULATIONS, ORDERS
OR REQUIREMENTS), OR (5) THE HABITABILITY,
MERCHANTABILITY,
MARKETABILITY,
PROFITABILITY OR
FITNESS FOR A
PARTICULAR PURPOSE
OF THE CONTRIBUTED ASSETS.
(ii) THE
MLP AND THE OPERATING
PARTNERSHIP ACKNOWLEDGE AND AGREE THAT THEY
HAVE HAD THE OPPORTUNITY TO INSPECT THE
CONTRIBUTED ASSETS, AND THAT
THEY ARE RELYING
SOLELY ON THEIR OWN INVESTIGATION OF THE CONTRIBUTED
ASSETS, AND NOT ON ANY
INFORMATION PROVIDED OR TO BE PROVIDED BY POCC
AND THE SUBSIDIARIES,
AND POCC AND THE SUBSIDIARIES ARE NOT LIABLE OR
BOUND IN ANY MANNER BY ANY VERBAL OR WRITTEN STATEMENTS,
REPRESENTATIONS OR
INFORMATION PERTAINING
TO THE CONTRIBUTED ASSETS,
FURNISHED BY
ANY AGENT, EMPLOYEE, SERVANT OR THIRD PARTY.
(iii) THE MLP
AND THE OPERATING PARTNERSHIP ACKNOWLEDGE THAT TO THE MAXIMUM
EXTENT PERMITTED
BY LAW, THE
CONTRIBUTION OF THE CONTRIBUTED ASSETS,
AS PROVIDED
FOR HEREIN IS MADE ON AN "AS IS",
"WHERE IS" BASIS WITH
ALL FAULTS AND THE
CONTRIBUTED ASSETS, ARE CONTRIBUTED OR DISTRIBUTED
AND CONVEYED
BY POCC AND THE SUBSIDIARIES SUBJECT
TO THE FOREGOING.
THIS PARAGRAPH
SHALL SURVIVE SUCH CONTRIBUTION OR DISTRIBUTION
AND
CONVEYANCE OR
THE TERMINATION OF THIS AGREEMENT.
(iv) THE
PROVISIONS
OF THIS SECTION 4.1
HAVE BEEN NEGOTIATED BY POCC, THE
SUBSIDIARIES, THE
MLP AND THE OPERATING PARTNERSHIP AFTER DUE
CONSIDERATION AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND
NEGATION
OF ANY REPRESENTATIONS OR WARRANTIES OF POCC AND THE
SUBSIDIARIES,
WHETHER EXPRESS, IMPLIED OR STATUTORY, WITH RESPECT TO THE
CONTRIBUTED
ASSETS, THAT MAY ARISE PURSUANT TO ANY LAW NOW OR HEREAFTER IN
EFFECT,
OR OTHERWISE.
(b) The contributions of the
Contributed Assets, made under this Agreement
are made with full rights of substitution and subrogation of
the
Operating Partnership,
and all persons claiming by, through and under
the Operating
Partnership,
to the extent assignable, in and to
all
covenants and
warranties by the predecessors-in-title of POCC and the
Subsidiaries, and
with full subrogation
of all rights accruing under
applicable statutes of limitation and all rights of action of
warranty
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against all
former owners of the Contributed Assets.
(c) POCC, the Subsidiaries, the MLP,
the GP, the Operating Partnership and
Operating GP agree
that the disclaimers contained in this Section 4.1
are "conspicuous" disclaimers. Any covenants
