EXHIBIT 10.1
January 1, 2005
MCNIC Offshore Pipeline & Processing Company
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Attention: General Counsel
Re: Asset Purchase Agreement dated February 1, 2002 by and among
MCNIC Offshore Pipeline & Processing Company, a Michigan
corporation ("Seller"), and Blue Dolphin Pipe Line Company, a
Delaware corporation ("Buyer") (the "Purchase Agreement")
Gentlemen:
It is our understanding that we have agreed as follows:
1. Section 1.03 of the Purchase Agreement shall be amended and
restated in its entirety as follows:
1.03 Conditional Consideration. Within 90 days of the
end of each calendar year that includes any period which is
subsequent to January 1, 2005, Buyer shall pay Seller an
annual amount equal to 50% of the Net Revenue for the portion
of such calendar year which is subsequent to January 1, 2005.
Payments pursuant to this Section shall continue until Seller
has received payments equal to $500,000. Notwithstanding the
foregoing, however, no amounts shall be payable pursuant to
this Section with respect to the Net Revenue of any period
subsequent to the Termination Date. For purposes of this
Section 1.03 only:
(a) The term "Net Revenue" shall mean the gross
revenue attributable to the Purchased Interests as determined
on a cash basis, consistently applied, minus (i) the
reasonable operating expenditures attributable to the
Purchased Interests (including the Operator's Fee, not to
exceed $12,800 per month) as determined by Buyer in a manner
consistent with past practices, which shall specifically take
into account, by way of example and not by way of limitation,
any legal fees with respect to litigation that relates to the
Purchased Interests, and (ii) any negative amount of Net
Revenue for any period subsequent to January 1, 2005 which has
not been offset by positive Net Revenue generated subsequent
to the period in which such negative amount was realized. Net
Revenue shall include the sales proceeds realized from the
sale of any of the Purchased Interests unless the Purchased
Interests are sold pursuant to a Majority Interest Sale, as
defined in the Note.
Within ten (10) days of Buyer entering into an
agreement for the sale of any of the Purchased Interests other
than a Majority Interest Sale, Buyer shall notify Seller in
writing (a "Purchased Interest Transfer Notice"), describing
the consideration to be received (including cash and non-cash
consideration) with respect to such sale of a Purchased
Interest. To the extent that such sale of a Purchased Interest
involves assets other than the Purchased Interests, (1) Buyer
will include in the Purchased Interest Transfer Notice their
reasonable good faith determination of the portion of the
total consideration that is applicable to the Purchased
Interests and (2) if the Seller does not raise any objections
to such determination within 15 days after receipt of such
Purchased Interest Transfer Notice, such determination will
become final and binding upon all Parties; provided that if
the Seller raises any objection within such 15-day period, the
actual fair market value of such consideration will be
determined by a third-party appraiser mutually agreed upon by
the Parties. To the extent that any portion of such
consideration is non-cash consideration, (i) the Buyer will
include in the Purchased Interest Transfer Notice their
reasonable good faith determination of the fair market value
of such non-cash consideration and (ii) if the Seller does not
raise any objections to such determination within 15 days
after receipt of such Purchased Interest Transfer Notice, such
determination will become final and binding upon all Parties;
provided that if the Seller raises any objection within such
15-day period, the actual fair market value of such non-cash
consideration will be determined by a third-party appraiser
mutually agreed upon by the Parties.
(b) The term "Termination Date" means December 31,
2006; provided, however that the Termination Date shall
automatically extend by one additional calendar year (up to a
maximum of two calendar years) for each instance in which the
non-recurring, extraordinary expenditures attributable to the
Purchased Interests exceed $200,000, in the aggregate, during
any calendar year subsequent to January 1, 2005.
2. The "Note" which is referenced in Section 1.02 of the Purchase
Agreement has been amended and restated pursuant to an amended
and restated promissory note dated the date hereof in the
original principal amount of $250,000.
All capitalized terms set forth in this letter agreement shall have the meanings
given to them in the Purchase Agreement, unless otherwise indicated. Except as
specifically provided in this letter agreement, the Purchase Agreement shall
continue in full force and effect as originally written.
If the foregoing sets forth the terms of our binding agreement, which shall be
binding and enforceable in accordance with the laws of the State of Texas
without reference to the conflict of laws principles thereof.
Sincerely,
BLUE DOLPHIN PIPE LINE COMPANY
By:
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Name:
Title:
ACCEPTED AND AGREED TO:
MCNIC OFFSHORE PIPELINE &
PROCESSING COMPANY
By:
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Name:
Title:
