EXHIBIT 10.2
WAIVER AGREEMENT
THIS WAIVER AGREEMENT is entered into by Blue Dolphin Energy Company, a
Delaware corporation (the "Company"), and Western Gulf Pipeline Partners, LP, a
Texas limited partnership ("Western Gulf"). Certain capitalized terms not
defined herein have the meanings assigned to them in the Purchase Agreement (as
defined below).
RECITALS:
In Section 5.10 of Article 5 of the Note and Warrant Purchase
Agreement dated September 8, 2004 (the "Purchase Agreement") between
the Company and certain investors named in Schedule I thereto (the
"Investors"), each Investor, including Western Gulf, agreed that,
during the nine (9) month period following the Additional Closing Date,
it will not sell, transfer or assign any of the Warrants or the Warrant
Shares without the prior written consent of the Company.
Western Gulf has requested that the Company waive compliance
with the Section 5.10 of the Purchase Agreement.
Western Gulf has advised the Company that Western Gulf plans
to distribute and assign (the "Assignment") the Warrants represented by
Warrant Certificates 1 and 1A (an aggregate of 916,667 Warrants)
pursuant to, and in compliance with, Section 5.5(a)(iii) of the
Purchase Agreement to the partners of Western Gulf identified on
Schedule I hereto (each a "Partner" and collectively, the "Partners")
on a pro rata basis.
Western Gulf has requested the Company to acknowledge (i) the
anticipated Assignment of Warrants by Western Gulf and (ii) that upon
the Assignment of the Warrants to the partners of Western Gulf the
Partners will succeed to the rights and obligations of Western Gulf
under the Purchase Agreement, including, but not limited to, the rights
of Investors pursuant to Section 5.12 of the Purchase Agreement.
Concurrently herewith the Company and Western Gulf are
entering into the Note Modification Agreement (as defined below).
NOW, THEREFORE, in consideration of the promises herein contained, the
mutual benefits to be derived herefrom and other good and valuable consideration
received by each party, and each intending to be legally bound hereby, the
Company and Western Gulf hereby agree as follows:
The Company waives any further compliance by Western Gulf with Section
5.10 of the Purchase Agreement.
Western Gulf represents and warrants that each Partner is an affiliate,
as such term is defined in Section 5.5(a)(iii)(A) of the Purchase Agreement, of
Western Gulf and agrees to cause each Partner to enter into an assignment
agreement substantially in the form of Exhibit A (the "Assignment Agreement")
attached hereto as soon as reasonably practicable.
The Company agrees that upon execution and delivery of an Assignment
Agreement the Assignment of the Warrants by Western Gulf to the Partners will be
in compliance with Section 5.5(a)(iii) of the Purchase Agreement will not
violate the transfer restrictions contained in Section 5.5 of the Purchase
Agreement.
The Company agrees that upon the Assignment of the Warrants to the
Partners, the Partners will succeed to the rights and obligations of Western
Gulf under the Purchase Agreement;, including, but not limited to, the rights of
Investors pursuant to Section 5.12 of the Purchase Agreement.
The Company agrees that, pursuant to Section 10.3 of the Purchase
Agreement, the Assignment of the Warrants to the Partners is a proper assignment
of the rights, interests and obligations of Western Gulf in accordance with
Section 10.3 of the Purchase Agreement.
The Company agrees to use its commercially reasonable best efforts to
(i) file a registration statement on Form S-3 or such other form that the
Company is then eligible to use (the "Registration Statement") by May 15, 2005
registering the resale of the Warrant Shares beneficially owned by Western Gulf
and (ii) cause such Registration Statement to be declared effective under the
Securities Act as soon as reasonably practicable thereafter.
Concurrently with the execution of this Waiver Agreement, Western Gulf
agrees to enter into that certain Note Modification Agreement dated April ___,
2005 between the Company and Western Gulf (the "Note Modification Agreement").
Except as modified by this Agreement all other obligations of Western
Gulf and the Company pursuant to the Purchase Agreement remain in full force and
effect.
IN WITNESS WHEREOF, the parties have caused this Agreement which may be
executed in multiple counterparts, to be executed by their duly authorized
representatives, all as of the ____ day of April, 2005.
THE COMPANY:
BLUE DOLPHIN ENERGY COMPANY
By:___________________________________
Name: Michael J. Jacobson
Title: President
WESTERN GULF PIPELINE PARTNERS, LP
By: PEREGRINE MANAGEMENT, LLC,
Its General Partner
By:_______________________________
Barrett L. Webster, its Manager
SCHEDULE I
DISTRIBUTION OF BLUE DOLPHIN WARRANTS
TO WESTERN GULF PARTNERS
Number of Number of
Warrants Warrants
Partner Certificate No. 1 Certificate No. 2 Total
------- ----------------- ----------------- -----
Peregrine Management, LLC 4,584 4,583 9,167
Steven A. Webster 206,250 206,250 412,500
Kestrel Capital, LP 122,500 122,500 245,000
William A. Lang 41,667 41,667 83,334
William R. Ziegler 83,333 83,333 166,666
-------
Total 916,667
=======
EXHIBIT A
ASSIGNMENT AGREEMENT
THIS ASSIGNMENT AGREEMENT (this "Agreement") is entered into and
effective as of the _____ day of April, 2005 (the "Effective Time"), by and
among Western Gulf Pipeline Partners, LP, a Texas limited partnership
("Assignor"), ___________________, a ____________ ("Assignee"), and is joined in
by Blue Dolphin Energy Company, a Delaware corporation ("Blue Dolphin"), for the
purposes of Article III.
RECITALS:
A. Assignor owns warrants, issued by Blue Dolphin, to acquire an
aggregate of 916,667 shares of Common Stock (the "Warrants").
B. Assignor desires to distribute and assign, and Assignee desires to
acquire, all of Assignor's right, title and interest in and to Warrants to
acquire ____ shares of Common Stock currently held by Assignor (the "Transferred
Warrants").
NOW, THEREFORE, the parties hereto, intending to be legally bound, do
hereby represent, warrant, covenant and agree as follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms. Capitalized terms used but not defined herein and
defined in the Note and Warrant Purchase Agreement dated as of September 8, 2004
(the "Purchase Agreement"), shall have the meanings described to such terms in
the Purchase Agreement.
ARTICLE II
ASSIGNMENT
2.1 Assignment.
(a) Assignor hereby distributes, transfers and assigns to
Assignee, and Assignee hereby acquires from Assignor, all of Assignor's right,
title, and interest in and to the Transferred Warrants, it being understood and
agreed that the Transferred Warrants thereby shall remain subject to the terms
of the Purchase Agreement.
(b) From and after the Effective Time, Assignee shall be the
sole and exclusive owner of the Transferred Warrants, and Assignor shall cease
to have any right, title or interest in or to the Transferred Warrants.
(c) Assignor hereby assigns all of Assignor's rights and
interests under the Purchase Agreement with respect to the Transferred Warrants,
and Assignee hereby accepts such assignment and assumes and agrees to perform
and discharge all of Assignor's duties and obligations under the Purchase
Agreement.
(d) The assignment of the Transferred Warrants pursuant to
this Agreement is being effected pursuant to, and subject to the terms and
conditions of, Section 5.5(a)(iii) of the Purchase Agreement.
(e) The assignment of the Transferred Warrants hereby shall
not create any rights, duties or obligations of Assignee with respect to the
Note owned by Assignor
ARTICLE III
CERTAIN AGREEMENTS
3.1 Representations and Warranties of Assignee. Assignee represents and
warrants as follows:
(a) Assignee understands that (i) none of the Warrants or the
Warrant Shares have been registered under the Securities Act and (ii) the
Warrants and the Warrant Shares were offered and sold pursuant to an exemption
from registration contained in the Securities Act based in part upon Assignor's
representations contained in the Purchase Agreement.
(b) Assignee has substantial experience in evaluating and
investing in private placement transactions of securities in companies similar
to Blue Dolphin so that it is capable of evaluating the merits and risks of its
investment in Blue Dolphin and has the capacity to protect its own interests.
Without limiting the generality of the foregoing, such Assignee further
represents that it has such knowledge regarding the pipeline and the oil and gas
industries and the business of Blue Dolphin and the current circumstances
surrounding such industries and business that it is capable of evaluating the
merits and risks of the acquisition of the Warrants and the Warrant Shares.
Assignee must bear the economic risk of this investment indefinitely unless the
Warrants or the Warrant Shares are registered pursuant to the Securities Act, or
an exemption from registration is available. Assignee understands that, except
as provided in Section 5.12 of the Purchase Agreement, Blue Dolphin has no
present intention of registering the Warrants or the Warrant Shares. Assignee
also understands that there is no assurance that any exemption from registration
under the Securities Act will be available and that, even if available, such
exemption may not allow Assignee to transfer all or any portion of the Warrants
or the Warrant Shares under the circumstances, in the amounts or at the times
Assignee might propose.
(c) Acquisition for Own Account. Assignee is acquiring the
Warrants and the Warrant Shares for Assignee's own account for investment only,
and not with a view towards their distribution.
(d) Assignee Can Protect Its Interest. Assignee represents
that by reason of its, or of its management's, business or financial experience,
Assignee has the capacity to protect its own interests in connection with the
transactions contemplated in this Agreement. Further, Assignee is not aware of
any publication of any advertisement in connection with the transactions
consummated by the Purchase Agreement.
(e) Accredited Investor. Assignee is (i) an accredited
investor within the meaning of Regulation D under the Securities Act and, (ii)
if Assignee is an entity all of its equity owners are accredited investors.
(f) Company Information. Assignee has had access to Blue
Dolphin's SEC Filings and has had an opportunity to discuss Blue Dolphin's
business, management and financial affairs with directors, officers and
management of Blue Dolphin and has had the opportunity to review Blue Dolphin's
operations and facilities. Assignee has also had the opportunity to ask
questions of, and receive answers from, Blue Dolphin and its management
regarding the terms and conditions of this investment. Assignee hereby
acknowledges and affirms that it has completed its own independent
investigation, analysis, and evaluation of Blue Dolphin and its subsidiaries,
that it has made all such reviews and inspections of the business, assets,
results of operations, condition (financial or otherwise), and prospects of Blue
Dolphin and its subsidiaries as it has deemed necessary or appropriate, and that
it has relied solely on its own independent investigation, analysis, and
evaluation of Blue Dolphin and its subsidiaries, or that of its own independent
advisers in evaluating its investment in the Warrants and the Warrant Shares.
(g) Rule 144. Assignee acknowledges and agrees that the
Warrants, and, if issued, the Warrant Shares, must be held indefinitely unless
they are subsequently registered under the Securities Act or an exemption from
such registration is available. Assignee has been advised or is aware of the
provisions of Rule 144, which permits limited resale of shares purchased in a
private placement subject to the satisfaction of certain conditions, including,
among other things: the availability of certain current public information about
Blue Dolphin, the resale occurring following the required holding period under
Rule 144 and the number of shares being sold during any three-month period not
exceeding specified limitations.
(h) Transfer Restrictions. Assignee acknowledges and agrees
that the Warrants and the Warrant Shares are subject to restrictions on transfer
as set forth in Section 5.5 of the Purchase Agreement, and further understands
that the Warrants and the Warrant Shares have not been registered pursuant to
the Securities Act or any applicable state securities laws, that the Warrants
and the Warrant Shares will be characterized as "restricted securities" under
federal securities laws, and that under such laws and applicable regulations the
Warrants and the Warrant Shares cannot be sold or otherwise disposed of without
registration under the Securities Act or an exemption therefrom. In this
connection, Assignee represents that it is familiar with Rule 144 promulgated
under the Securities Act, as currently in effect, and understands the resale
limitations imposed thereby and by the Securities Act. Appropriate stop transfer
instructions may be issued to the transfer agent for securities of Blue Dolphin
(or a notation may be made in the appropriate records of Blue Dolphin) in
connection with the Warrants or the Warrant Shares.
(i) Affiliate Status. Assignee is an affiliate, as such term
is defined in Section 5.5(a)(iii)(A) of the Purchase Agreement, of Assignor.
3.2 Agreement of Assignee. Assignee agrees to be bound by the terms and
provisions of the Purchase Agreement.
3.3 Waiver of Lockup. Blue Dolphin waives any further compliance by
Assignee with Section 5.10 of the Purchase Agreement.
ARTICLE IV
MISCELLANEOUS PROVISIONS
4.1 Multiple Counterparts. This Agreement may be executed in one or
more counterparts for the convenience of the parties hereto, all of which
together shall constitute one and the same instrument.
4.2 Entire Agreement. This Agreement contains the entire understanding
of the parties relating to the subject matter contained herein and supersedes
all prior agreements and understandings, either written or oral, relating to the
subject matter hereof. This Agreement shall not be modified, amended or
terminated except in a writing signed by the party against whom enforcement is
sought.
4.3 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas without regard to principles of
conflict of laws.
4.4 Headings. The headings of the articles and sections herein are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
ASSIGNOR:
WESTERN GULF PIPELINE PARTNERS, L.P.
By: PEREGRINE MANAGEMENT, LLC,
its General Partner
By:_____________________________
Name:___________________________
Title:__________________________
ASSIGNEE:
By:_________________________________
Name:_______________________________
Title:______________________________
Blue Dolphin Energy Company
By:_________________________________
Name:_______________________________
Title:______________________________