EXHIBIT 10.2
PROMISSORY NOTE
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$250,000.00 Houston, Texas January 1, 2005
For value received, the undersigned, Blue Dolphin Pipe Line Company, a
Delaware corporation (the "Maker"), promises to pay to the order of MCNIC
Offshore Pipeline & Processing Company, a Michigan corporation, or its designee
(the "Payee"), at 2000 Second Avenue, WCB 937, Detroit Michigan 48226, or at
such other place as the owner and holder hereof may from time to time designate,
in writing, the principal sum of Two Hundred Fifty Thousand and No/100 Dollars
($250,000.00). No interest shall accrue on the principal balance of this Note.
If not sooner paid, this Note shall be due and payable in full on
December 31, 2006.
THE PRINCIPAL AMOUNT of this Note is payable as follows: $20,000 shall
be payable upon the execution and delivery of this Note. Commencing on February
28, 2005 and continuing on the last day of each month thereafter, an amount
equal to $10,000 shall be paid pursuant to this Note. On December 31, 2006, all
amounts of principal which then remain outstanding and unpaid pursuant to this
Note shall be due and payable.
The Maker may from time to time prepay this Note, in whole or in part,
without notice or penalty.
The entire principal balance hereof shall immediately become due and
payable (a) upon the merger, consolidation, dissolution, liquidation or sale of
all or substantially all the assets of the Maker; (b) if any "Person" (as such
term is used in Sections 12(d) and 14(d) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) other than the Maker is or becomes a
"beneficial Owner" (as defined in Rule 13d-3 under the Exchange Act) directly of
(i) any portion of the Purchased Interests (as hereinafter defined), or (ii) 50%
or more of the Maker's ownership interest in the Blue Dolphin Pipeline,
Buccaneer Pipeline, the Land, or the Shore Facilities (all as more fully defined
in that certain Asset Purchase Agreement dated January 1, 2002 by and between
Maker and Payee (the "Purchase Agreement"); or (c) upon the failure by the Maker
to perform or observe any of the provisions of this Note or the Pledge and
Security Agreement, dated January 1, 2002, by and between Maker and Payee (the
"Security Agreement") which failure is not cured within 30 days of written
notice thereof.
In the event the Maker sells 50% or more of the Maker's ownership
interest in the Blue Dolphin Pipeline, Buccaneer Pipeline, the Land, and the
Shore Facilities in a single transaction or a series of related transactions to
a single purchaser prior to December 31, 2006 (a "Majority Interest Sale"), an
additional amount of principal equal to $500,000 shall be added to the principal
balance of this Note and shall be immediately due and payable.
The failure of the Maker to pay when due any installment due hereunder,
which is not cured within 10 days of written notice thereof, or the bankruptcy
of the Maker, shall constitute an "Event of Default".
If an Event of Default shall occur, the holder hereof may, at the
option of the holder, without demand, notice (except as provided above), or
presentment, declare the entire unpaid principal balance of this Note, to be due
and payable immediately. Upon any such declaration, the principal of this Note
shall become and be immediately due and payable, and the holder hereof may
thereupon proceed to protect and enforce the obligations of the Maker hereunder
by suit in equity, by action of law, or by other appropriate proceedings,
whether for specific performance (to the extent permitted by law) of any
covenant or agreement contained herein or in aid of the exercise of any power
granted herein, or proceed to enforce the payment of this Note or to enforce any
other legal or equitable right of the holder hereof. Any installment of
principal not paid when due, whether by acceleration or otherwise, shall bear
interest at the Maximum Non-usurious Rate (as hereinafter defined) from the date
due.
If this Note is not paid when due (whether the Note becomes due by
acceleration or otherwise) and is placed in the hands of an attorney for
collection, or if suit is filed hereon, or if this Note shall be collected by
legal proceedings or through a probate, bankruptcy, or other court, the Maker
agrees to pay all reasonable costs of collection, including reasonable
attorneys' fees.
EXCEPT AS PROVIDED HEREIN, THE MAKER expressly waives demand and
presentment for payment, notice of nonpayment, protest, notice of
protest, notice of dishonor, notice of intent to accelerate the
maturity hereof, notice of the acceleration of the maturity hereof,
notice of any other kind with respect thereto, bringing of suit and
diligence in taking any action to collect amounts called for hereunder
and in the handling of securities at any time existing in connection
herewith; and Maker shall be directly and primarily liable for the
payment of all sums owing and to be owing hereon, regardless of and
without any notice, diligence, act or omission as or with respect to
the collection of any amount called for hereunder or in connection with
any right, lien, interest or property at any and all times had or
existing as security for any amount called for hereunder.
IT IS the intention of Maker and Payee to conform strictly to
applicable usury laws. Accordingly, if the transactions contemplated hereby
would be usurious under applicable law (including the laws of the State of Texas
and the laws of the United States of America), then, in that event,
notwithstanding anything to the contrary herein or in any agreement entered into
in connection with or as security for this Note, it is agreed as follows: (a)
the aggregate of all consideration which constitutes interest under applicable
law that is taken, reserved, contracted for, charged or received under this Note
or under any of the other aforesaid agreements or otherwise in connection with
this Note shall under no circumstances exceed the maximum amount of interest
allowed by applicable law (the "Maximum Non-usurious Rate"), and any excess
shall be cancelled automatically and, if theretofore paid, shall be credited on
the Note by Payee (or, to the extent that this Note shall have been or would
thereby be paid in full, refunded to Maker); and (b) in the event that maturity
of this Note is accelerated by reason of an election by Payee resulting from any
default hereunder or otherwise, or in the event of any required or permitted
prepayment, then such consideration that constitutes interest may never include
more than the Maximum Non-usurious Rate, and excess interest, if any, provided
for in this Note or otherwise shall be cancelled automatically as of the date of
such acceleration or prepayment and, if theretofore paid, shall be credited on
this Note (or, to the extent that this Note shall have been or would thereby be
paid in full, refunded to Maker).
This Note is an amendment and restatement of that certain Promissory
Note dated January 1, 2002 payable by the Maker to the Payee (the "Original
Note"). The Original Note was delivered by the Maker to the Payee pursuant to
Purchase Agreement, pursuant to which the Payee has sold to the Maker undivided
1/3 of 8/8ths interests in and to the Blue Dolphin Pipeline, Buccaneer Pipeline,
the Land, the Shore Facilities, and the Omega Pipeline (collectively, such 1/3
of 8/8ths interests are referred to herein as the "Purchased Interests").
THIS NOTE is entitled to the benefits of the Security Agreement.
Reference is made to the Security Agreement for provisions for the granting of
liens and security interests in the Collateral (as defined in the Security
Agreement) as security for this Note and for all other pertinent purposes.
This Note shall be construed in accordance with the laws of the State
of Texas and the laws of the United States applicable to transactions in Texas.
Any notice to be given pursuant to this Note to the Maker shall be
given at 801 Travis, Suite 2100, Houston, Texas 77002.
Any check, draft, money order, or other instrument given in payment of
all or any portion of any amounts due hereunder may be accepted by the holder
hereof and handled in collection in the customary manner, but the same shall not
constitute payment hereunder or diminish any rights of the holder hereof except
to the extent that actual cash proceeds of such instrument are unconditionally
received by the holder and applied to the indebtedness in the manner elsewhere
herein provided.
Payments which are due on a Saturday, Sunday, or on a bank holiday of
the United States of America shall be due on the following business day.
This Note shall only be assignable by Payee (i) with the written
consent of Maker, or (ii) to a person that is under common control with the
Payee.
THIS NOTE REPRESENTS THE FINAL AGREEMENT OF MAKER AND PAYEE AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
It is agreed that time is of the essence with respect to this Note.
BLUE DOLPHIN PIPE LINE COMPANY
By:______________________________
Michael J. Jacobson, President