Document:

Exhibit 10.27

                                CHANGE OF CONTROL
                              EMPLOYMENT AGREEMENT
                              --------------------

                  AGREEMENT by and between Webster Financial Corporation, a
Delaware corporation (the "Company") and Joseph J. Savage (the "Executive"),
dated as of the 24th day of April, 2002.

                  The Board of Directors of the Company (the "Board"), has
determined that it is in the best interests of the Company and its shareholders
to assure that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below) of the Company. The Board believes it is imperative to diminish
the inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change of Control and
to encourage the Executive's full attention and dedication to the Company
currently and in the event of any threatened or pending Change of Control, and
to provide the Executive with compensation and benefits arrangements upon a
Change of Control which ensure that the compensation and benefits expectations
of the Executive will be satisfied and which are competitive with those of other
corporations. Therefore, in order to accomplish these objectives, the Board has
caused the Company to enter into this Agreement.

                  NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

                  1. Certain Definitions. (a) The "Effective Date" shall mean
the first date during the Change of Control Period (as defined in Section 1(b))
on which a Change of Control (as defined in Section 2) occurs. Anything in this
Agreement to the contrary notwithstanding, if a Change of Control occurs and if
the Executive's employment with the Company is terminated prior to the date on
which the Change of Control occurs, and if it is reasonably demonstrated by the
Executive that such termination of employment (i) was at the request of a third
party who has taken steps reasonably calculated to effect a Change of Control or
(ii) otherwise arose in connection with or anticipation of a Change of Control,
then for all purposes of this Agreement the "Effective Date" shall mean the date
immediately prior to the date of such termination of employment.

                  (b) The "Change of Control Period" shall mean the period
commencing on the date hereof and ending on the second anniversary of the date
hereof; provided, however, that commencing on the date one year after the date
hereof, and on each annual anniversary of such date (such date and each annual
anniversary thereof shall be hereinafter referred to as the "Renewal Date"),
unless previously terminated, the Change of Control Period shall be
automatically extended so as to terminate two years from such Renewal Date,
unless at least 60

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days prior to the Renewal Date the Company shall give notice to the Executive
that the Change of Control Period shall not be so extended.

                  2.  Change of Control.  For the purpose of this Agreement, a
"Change of Control" shall mean:

                  (a) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or
more of either (i) the then outstanding shares of common stock of the Company
(the "Outstanding Company Common Stock") or (ii) the combined voting power of
the then outstanding voting securities of the Company entitled to vote generally
in the election of directors (the "Outstanding Company Voting Securities");
provided, however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change of Control: (i) any acquisition
directly from the Company, (ii) any acquisition by the Company, (iii) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company or (iv)
any acquisition by any corporation pursuant to a transaction which complies with
clauses (i), (ii) and (iii) of subsection (c) of this Section 2; or

                  (b) Individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or nomination for
election by the Company's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board; or

                  (c) Consummation of a reorganization, merger or consolidation
or sale or other disposition of all or substantially all of the assets of the
Company (a "Business Combination"), in each case, unless, following such
Business Combination, (i) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities immediately prior
to such Business Combination beneficially own, directly or indirectly, more than
50% of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without limitation, a
corporation which as a result of such

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transaction owns the Company or all or substantially all of the Company's assets
either directly or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business Combination
of the Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (ii) no Person (excluding any corporation
resulting from such Business Combination or any employee benefit plan (or
related trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting power of the
then outstanding voting securities of such corporation except to the extent that
such ownership existed prior to the Business Combination and (iii) at least a
majority of the members of the board of directors of the corporation resulting
from such Business Combination were members of the Incumbent Board at the time
of the execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or

                  (d) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.

                  3. Employment Period. The Company hereby agrees to continue
the Executive in its employ, and the Executive hereby agrees to remain in the
employ of the Company subject to the terms and conditions of this Agreement, for
the period commencing on the Effective Date and ending on the second anniversary
of such date (the "Employment Period").

                  4. Terms of Employment. (a) Position and Duties. (i) During
the Employment Period, (A) the Executive's position (including status, offices,
titles and reporting requirements), authority, duties and responsibilities shall
be at least commensurate in all material respects with the most significant of
those held, exercised and assigned at any time during the 120-day period
immediately preceding the Effective Date and (B) the Executive's services shall
be performed at the location where the Executive was employed immediately
preceding the Effective Date or any office or location less than 35 miles from
such location.

                      (ii) During the Employment Period, and excluding any
periods of vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote reasonable attention and time during normal business
hours to the business and affairs of the Company and, to the extent necessary to
discharge the responsibilities assigned to the Executive hereunder, to use the
Executive's reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a violation of
this Agreement for the Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (C) manage personal investments, so long
as such activities do not

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significantly interfere with the performance of the Executive's responsibilities
as an employee of the Company in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities have been
conducted by the Executive prior to the Effective Date, the continued conduct of
such activities (or the conduct of activities similar in nature and scope
thereto) subsequent to the Effective Date shall not thereafter be deemed to
interfere with the performance of the Executive's responsibilities to the
Company.

                  (b) Compensation. (i) Base Salary. During the Employment
Period, the Executive shall receive an annual base salary ("Annual Base
Salary"), which shall be paid at a monthly rate, at least equal to twelve times
the highest monthly base salary paid or payable, including any base salary which
has been earned but deferred, to the Executive by the Company and its affiliated
companies in respect of the twelve-month period immediately preceding the month
in which the Effective Date occurs. During the Employment Period, the Annual
Base Salary shall be reviewed no more than 12 months after the last salary
increase awarded to the Executive prior to the Effective Date and thereafter at
least annually. Any increase in Annual Base Salary shall not serve to limit or
reduce any other obligation to the Executive under this Agreement. Annual Base
Salary shall not be reduced after any such increase and the term Annual Base
Salary as utilized in this Agreement shall refer to Annual Base Salary as so
increased. As used in this Agreement, the term "affiliated companies" shall
include any company controlled by, controlling or under common control with the
Company.

                      (ii) Annual Bonus. In addition to Annual Base Salary, the
Executive shall be awarded, for each fiscal year ending during the Employment
Period, an annual bonus (the "Annual Bonus") in cash at least equal to the
Executive's highest bonus under the Webster Financial Corporation and Webster
Bank Annual Incentive Compensation Plan, or any comparable bonus under any
predecessor or successor plan, for the last three full fiscal years prior to the
Effective Date (annualized in the event that the Executive was not employed by
the Company for the whole of such fiscal year) (the "Recent Annual Bonus"). Each
such Annual Bonus shall be paid no later than the end of the third month of the
fiscal year next following the fiscal year for which the Annual Bonus is
awarded, unless the Executive shall elect to defer the receipt of such Annual
Bonus.

                      (iii) Incentive, Savings and Retirement Plans. During the
Employment Period, the Executive shall be entitled to participate in all
incentive, savings and retirement plans, practices, policies and programs
applicable generally to other peer executives of the Company and its affiliated
companies, but in no event shall such plans, practices, policies and programs
provide the Executive with incentive opportunities (measured with respect to
both regular and special incentive opportunities, to the extent, if any, that
such distinction is applicable), savings opportunities and retirement benefit
opportunities, in each case, less favorable, in the aggregate, than the most
favorable of those provided by the Company and its

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affiliated companies for the Executive under such plans, practices, policies and
programs as in effect at any time during the 120-day period immediately
preceding the Effective Date or if more favorable to the Executive, those
provided generally at any time after the Effective Date to other peer executives
of the Company and its affiliated companies.

                      (iv) Welfare Benefit Plans. During the Employment Period,
the Executive and/or the Executive's family, as the case may be, shall be
eligible for participation in and shall receive all benefits under welfare
benefit plans, practices, policies and programs provided by the Company and its
affiliated companies (including, without limitation, medical, prescription,
dental, disability, employee life, group life, accidental death and travel
accident insurance plans and programs) to the extent applicable generally to
other peer executives of the Company and its affiliated companies, but in no
event shall such plans, practices, policies and programs provide the Executive
with benefits which are less favorable, in the aggregate, than the most
favorable of such plans, practices, policies and programs in effect for the
Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, those provided generally
at any time after the Effective Date to other peer executives of the Company and
its affiliated companies.

                      (v) Expenses. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Executive in accordance with the most favorable policies,
practices and procedures of the Company and its affiliated companies in effect
for the Executive at any time during the 120-day period immediately preceding
the Effective Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer executives of the
Company and its affiliated companies.

                      (vi) Fringe Benefits. During the Employment Period, the
Executive shall be entitled to fringe benefits, including, without limitation,
tax and financial planning services, payment of club dues, and, if applicable,
use of an automobile and payment of related expenses, in accordance with the
most favorable plans, practices, programs and policies of the Company and its
affiliated companies in effect for the Executive at any time during the 120-day
period immediately preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with respect to other
peer executives of the Company and its affiliated companies.

                      (vii) Office and Support Staff. During the Employment
Period, the Executive shall be entitled to an office or offices of a size and
with furnishings and other appointments, and to exclusive personal secretarial
and other assistance, at least equal to the most favorable of the foregoing
provided to the Executive by the Company and its affiliated companies at any
time during the 120-day period

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immediately preceding the Effective Date or, if more favorable to the Executive,
as provided generally at any time thereafter with respect to other peer
executives of the Company and its affiliated companies.

                      (viii) Vacation. During the Employment Period, the
Executive shall be entitled to paid vacation in accordance with the most
favorable plans, policies, programs and practices of the Company and its
affiliated companies as in effect for the Executive at any time during the
120-day period immediately preceding the Effective Date or, if more favorable to
the Executive, as in effect generally at any time thereafter with respect to
other peer executives of the Company and its affiliated companies.

                 5. Termination of Employment.(a) Death or Disability. The
Executive's employment shall terminate automatically upon the Executive's death
during the Employment Period. If the Company determines in good faith that the
Disability of the Executive has occurred during the Employment Period (pursuant
to the definition of Disability set forth below), it may give to the Executive
written notice in accordance with Section 12(b) of this Agreement of its
intention to terminate the Executive's employment. In such event, the
Executive's employment with the Company shall terminate effective on the 30th
day after receipt of such notice by the Executive (the "Disability Effective
Date"), provided that, within the 30 days after such receipt, the Executive
shall not have returned to full-time performance of the Executive's duties. For
purposes of this Agreement, "Disability" shall mean the absence of the Executive
from the Executive's duties with the Company on a full-time basis for 180
consecutive business days as a result of incapacity due to mental or physical
illness which is determined to be total and permanent by a physician selected by
the Company or its insurers and acceptable to the Executive or the Executive's
legal representative.

                 (b) Cause. The Company may terminate the Executive's employment
during the Employment Period for Cause. For purposes of this Agreement, "Cause"
shall mean:

                  (i) the willful and continued failure of the Executive to
         perform substantially the Executive's duties with the Company or one of
         its affiliates (other than any such failure resulting from incapacity
         due to physical or mental illness), after a written demand for
         substantial performance is delivered to the Executive by the Board or
         the Chief Executive Officer of the Company which specifically
         identifies the manner in which the Board or Chief Executive Officer
         believes that the Executive has not substantially performed the
         Executive's duties, or

                  (ii) the willful engaging by the Executive in illegal conduct
         or gross misconduct which is materially and demonstrably injurious to
         the Company.

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For purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief Executive Officer or
a senior officer of the Company or based upon the advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company. The cessation
of employment of the Executive shall not be deemed to be for Cause unless and
until there shall have been delivered to the Executive a copy of a resolution
duly adopted by the affirmative vote of not less than three-quarters of the
entire membership of the Board at a meeting of the Board called and held for
such purpose (after reasonable notice is provided to the Executive and the
Executive is given an opportunity, together with counsel, to be heard before the
Board), finding that, in the good faith opinion of the Board, the Executive is
guilty of the conduct described in subparagraph (i) or (ii) above, and
specifying the particulars thereof in detail.

                 (c) Good Reason. The Executive's employment may be terminated
by the Executive for Good Reason. For purposes of this Agreement, "Good Reason"
shall mean:

                  (i) the assignment to the Executive of any duties inconsistent
         in any respect with the Executive's position (including status,
         offices, titles and reporting requirements), authority, duties or
         responsibilities as contemplated by Section 4(a) of this Agreement, or
         any other action by the Company which results in a diminution in such
         position, authority, duties or responsibilities, excluding for this
         purpose an isolated, insubstantial and inadvertent action not taken in
         bad faith and which is remedied by the Company promptly after receipt
         of notice thereof given by the Executive;

                  (ii) any failure by the Company to comply with any of the
         provisions of Section 4(b) of this Agreement, other than an isolated,
         insubstantial and inadvertent failure not occurring in bad faith and
         which is remedied by the Company promptly after receipt of notice
         thereof given by the Executive;

                  (iii) the Company's requiring the Executive to be based at any
         office or location other than as provided in Section 4(a)(i)(B) hereof
         or the Company's requiring the Executive to travel on Company business
         to a substantially greater extent than required immediately prior to
         the Effective Date;

                  (iv) any purported termination by the Company of the
         Executive's employment otherwise than as expressly permitted by this
         Agreement; or

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                  (v) any failure by the Company to comply with and satisfy
         Section 11(c) of this Agreement.

For purposes of this Section 5(c), any good faith determination of "Good Reason"
made by the Executive shall be conclusive. Anything in this Agreement to the
contrary notwithstanding, a termination by the Executive for any reason during
the 30-day period immediately following the first anniversary of the Effective
Date shall be deemed to be a termination for Good Reason for all purposes of
this Agreement.

                 (d) Notice of Termination. Any termination by the Company for
Cause, or by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 12(b) of
this Agreement. For purposes of this Agreement, a "Notice of Termination" means
a written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated and (iii) if the
Date of Termination (as defined below) is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than thirty
days after the giving of such notice). The failure by the Executive or the
Company to set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any right of
the Executive or the Company, respectively, hereunder or preclude the Executive
or the Company, respectively, from asserting such fact or circumstance in
enforcing the Executive's or the Company's rights hereunder.

                 (e) Date of Termination. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein, as the case may be, (ii) if the Executive's
employment is terminated by the Company other than for Cause or Disability, the
Date of Termination shall be the date on which the Company notifies the
Executive of such termination and (iii) if the Executive's employment is
terminated by reason of death or Disability, the Date of Termination shall be
the date of death of the Executive or the Disability Effective Date, as the case
may be.

                 6. Obligations of the Company upon Termination. (a) Good
Reason; Other Than for Cause, Death or Disability. If, during the Employment
Period, the Company shall terminate the Executive's employment other than for
Cause or Disability or the Executive shall terminate employment for Good Reason:

                  (i) the Company shall pay to the Executive in a lump sum in
         cash within 30 days after the Date of Termination the aggregate of the
         following amounts:

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                           A. the sum of (1) the Executive's Annual Base Salary
                  through the Date of Termination to the extent not theretofore
                  paid, (2) the product of (x) the higher of (I) the Recent
                  Annual Bonus and (II) the Annual Bonus paid or payable,
                  including any bonus or portion thereof which has been earned
                  but deferred (and annualized for any fiscal year consisting of
                  less than twelve full months or during which the Executive was
                  employed for less than twelve full months), for the most
                  recently completed fiscal year during the Employment Period,
                  if any (such higher amount being referred to as the "Highest
                  Annual Bonus") and (y) a fraction, the numerator of which is
                  the number of days in the current fiscal year through the Date
                  of Termination, and the denominator of which is 365 and (3)
                  any compensation previously deferred by the Executive
                  (together with any accrued interest or earnings thereon) and
                  any accrued vacation pay, in each case to the extent not
                  theretofore paid (the sum of the amounts described in clauses
                  (1), (2), and (3) shall be hereinafter referred to as the
                  "Accrued Obligations"); and

                           B. the amount equal to the product of (1) three and
                  (2) the sum of (x) the Executive's Annual Base Salary and (y)
                  the Highest Annual Bonus; and

                           C. an amount equal to the excess of (a) the actuarial
                  equivalent of the benefit under the Company's qualified
                  defined benefit retirement plan (the "Retirement Plan")
                  (utilizing actuarial assumptions no less favorable to the
                  Executive than those in effect under the Company's Retirement
                  Plan immediately prior to the Effective Date), and any excess
                  or supplemental retirement plan in which the Executive
                  participates (together, the "SERP") which the Executive would
                  receive if the Executive's employment continued for three
                  years after the Date of Termination assuming for this purpose
                  that all accrued benefits are fully vested, and, assuming that
                  the Executive's compensation in each of the three years is
                  that required by section 4(b)(i) and section 4(b)(ii), over
                  (b) the actuarial equivalent of the Executive's actual benefit
                  (paid or payable), if any, under the Retirement Plan and the
                  SERP as of the Date of Termination;

                  (ii) for three years after the Executive's Date of
         Termination, or such longer period as may be provided by the terms of
         the appropriate plan, program, practice or policy, the Company shall
         continue benefits to the Executive and/or the Executive's family at
         least equal to those which would have been provided to them in
         accordance with the plans, programs, practices and policies described
         in Section 4(b)(iv) of this Agreement if the Executive's employment had
         not been terminated or, if more favorable to the Executive, as in
         effect generally at any time thereafter with respect to other peer

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         executives of the Company and its affiliated companies and their
         families, provided, however, that if the Executive becomes reemployed
         with another employer and is eligible to receive medical or other
         welfare benefits under another employer provided plan, the medical and
         other welfare benefits described herein shall be secondary to those
         provided under such other plan during such applicable period of
         eligibility. For purposes of determining eligibility (but not the time
         of commencement of benefits) of the Executive for retiree benefits
         pursuant to such plans, practices, programs and policies, the Executive
         shall be considered to have remained employed until three years after
         the Date of Termination and to have retired on the last day of such
         period;

                  (iii) the Company shall, at its sole expense as incurred,
         provide the Executive with outplacement services the scope and provider
         of which shall be selected by the Executive in his sole discretion; and

                  (iv) to the extent not theretofore paid or provided, the
         Company shall timely pay or provide to the Executive any other amounts
         or benefits required to be paid or provided or which the Executive is
         eligible to receive under any plan, program, policy or practice or
         contract or agreement of the Company and its affiliated companies (such
         other amounts and benefits shall be hereinafter referred to as the
         "Other Benefits").

                 (b) Death. If the Executive's employment is terminated by
reason of the Executive's death during the Employment Period, this Agreement
shall terminate without further obligations to the Executive's legal
representatives under this Agreement, other than for payment of Accrued
Obligations and the timely payment or provision of Other Benefits. Accrued
Obligations shall be paid to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within 30 days of the Date of Termination.
With respect to the provision of Other Benefits, the term Other Benefits as
utilized in this Section 6(b) shall include, without limitation, and the
Executive's estate and/or beneficiaries shall be entitled to receive, benefits
at least equal to the most favorable benefits provided by the Company and
affiliated companies to the estates and beneficiaries of peer executives of the
Company and such affiliated companies under such plans, programs, practices and
policies relating to death benefits, if any, as in effect with respect to other
peer executives and their beneficiaries at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to the
Executive's estate and/or the Executive's beneficiaries, as in effect on the
date of the Executive's death with respect to other peer executives of the
Company and its affiliated companies and their beneficiaries.

                 (c) Disability. If the Executive's employment is terminated by
reason of the Executive's Disability during the Employment Period, this
Agreement shall terminate without further obligations to the Executive, other
than for

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payment of Accrued Obligations and the timely payment or provision of Other
Benefits. Accrued Obligations shall be paid to the Executive in a lump sum in
cash within 30 days of the Date of Termination. With respect to the provision of
Other Benefits, the term Other Benefits as utilized in this Section 6(c) shall
include, and the Executive shall be entitled after the Disability Effective Date
to receive, disability and other benefits at least equal to the most favorable
of those generally provided by the Company and its affiliated companies to
disabled executives and/or their families in accordance with such plans,
programs, practices and policies relating to disability, if any, as in effect
generally with respect to other peer executives and their families at any time
during the 120-day period immediately preceding the Effective Date or, if more
favorable to the Executive and/or the Executive's family, as in effect at any
time thereafter generally with respect to other peer executives of the Company
and its affiliated companies and their families.

                 (d) Cause; Other than for Good Reason. If the Executive's
employment shall be terminated for Cause during the Employment Period, this
Agreement shall terminate without further obligations to the Executive other
than the obligation to pay to the Executive (x) his Annual Base Salary through
the Date of Termination, (y) the amount of any compensation previously deferred
by the Executive, and (z) Other Benefits, in each case to the extent theretofore
unpaid. If the Executive voluntarily terminates employment during the Employment
Period, excluding a termination for Good Reason, this Agreement shall terminate
without further obligations to the Executive, other than for Accrued Obligations
and the timely payment or provision of Other Benefits. In such case, all Accrued
Obligations shall be paid to the Executive in a lump sum in cash within 30 days
of the Date of Termination.

                 7. Non-Exclusivity of Rights. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any plan,
program, policy or practice provided by the Company or any of its affiliated
companies and for which the Executive may qualify, nor, subject to Section
12(f), shall anything herein limit or otherwise affect such rights as the
Executive may have under any contract or agreement with the Company or any of
its affiliated companies. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan, policy, practice or
program of or any contract or agreement with the Company or any of its
affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract or
agreement except as explicitly modified by this Agreement.

                 8. Full Settlement. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or

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others. In no event shall the Executive be obligated to seek other employment or
take any other action by way of mitigation of the amounts payable to the
Executive under any of the provisions of this Agreement and such amounts shall
not be reduced whether or not the Executive obtains other employment. The
Company agrees to pay as incurred, to the full extent permitted by law, all
legal fees and expenses which the Executive may reasonably incur as a result of
any contest (regardless of the outcome thereof) by the Company, the Executive or
others of the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a result
of any contest by the Executive about the amount of any payment pursuant to this
Agreement), plus in each case interest on any delayed payment at the applicable
Federal rate provided for in Section 7872(f)(2)(A) of the Internal Revenue Code
of 1986, as amended (the "Code").

                 9. Certain Additional Payments by the Company.

                 (a) Anything in this Agreement to the contrary notwithstanding
and except as set forth below, in the event it shall be determined that any
payment or distribution by the Company or its affiliates to or for the benefit
of the Executive (whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise, but determined without
regard to any additional payments required under this Section 9) (a "Payment")
would be subject to the excise tax imposed by Section 4999 of the Code or any
interest or penalties are incurred by the Executive with respect to such excise
tax (such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the "Excise Tax"), then the Executive
shall be entitled to receive an additional payment (a "Gross-Up Payment") in an
amount such that after payment by the Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including, without
limitation, any income taxes (and any interest and penalties imposed with
respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon
the Payments. Notwithstanding the foregoing provisions of this Section 9(a), if
it shall be determined that the Executive is entitled to a Gross-Up Payment, but
that the Payments do not exceed 110% of the greatest amount (the "Reduced
Amount") that could be paid to the Executive such that the receipt of Payments
would not give rise to any Excise Tax, then no Gross-Up Payment shall be made to
the Executive and the Payments, in the aggregate, shall be reduced to the
Reduced Amount.

                 (b) Subject to the provisions of Section 9(c), all
determinations required to be made under this Section 9, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by KPMG Peat Marwick LLP or such other certified public accounting firm as may
be designated by the Executive (the "Accounting Firm") which shall provide
detailed

                                       12
<PAGE>

supporting calculations both to the Company and the Executive within 15 business
days of the receipt of notice from the Executive that there has been a Payment,
or such earlier time as is requested by the Company. In the event that the
Accounting Firm is serving as accountant or auditor for the individual, entity
or group effecting the Change of Control, the Executive shall appoint another
nationally recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the Accounting
Firm hereunder). All fees and expenses of the Accounting Firm shall be borne
solely by the Company. Any Gross-Up Payment, as determined pursuant to this
Section 9, shall be paid by the Company to the Executive within five days of the
receipt of the Accounting Firm's determination. Any determination by the
Accounting Firm shall be binding upon the Company and the Executive. As a result
of the uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have been
made ("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Section 9(c) and the Executive thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Executive.

                 (c) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of the Gross-Up Payment. Such notification shall be given
as soon as practicable but no later than ten business days after the Executive
is informed in writing of such claim and shall apprise the Company of the nature
of such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the 30-day period
following the date on which it gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect to such claim
is due). If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the Executive
shall:

                  (i) give the Company any information reasonably requested by
         the Company relating to such claim,

                  (ii) take such action in connection with contesting such claim
         as the Company shall reasonably request in writing from time to time,
         including, without limitation, accepting legal representation with
         respect to such claim by an attorney reasonably selected by the
         Company,

                  (iii) cooperate with the Company in good faith in order
         effectively to contest such claim, and

                                       13
<PAGE>

                  (iv) permit the Company to participate in any proceedings
         relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 9(c), the Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
the Executive to pay the tax claimed and sue for a refund or contest the claim
in any permissible manner, and the Executive agrees to prosecute such contest to
a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
such claim and sue for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and further provided that any extension of the statute of limitations relating
to payment of taxes for the taxable year of the Executive with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
the Executive shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority.

                  (d) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 9(c), the Executive becomes entitled
to receive any refund with respect to such claim, the Executive shall (subject
to the Company's complying with the requirements of Section 9(c)) promptly pay
to the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to Section 9(c), a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of 30 days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be paid.

                                       14
<PAGE>

                  10. Confidential Information. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its affiliated
companies, and their respective businesses, which shall have been obtained by
the Executive during the Executive's employment by the Company or any of its
affiliated companies and which shall not be or become public knowledge (other
than by acts by the Executive or representatives of the Executive in violation
of this Agreement). After termination of the Executive's employment with the
Company, the Executive shall not, without the prior written consent of the
Company or as may otherwise be required by law or legal process, communicate or
divulge any such information, knowledge or data to anyone other than the Company
and those designated by it. In no event shall an asserted violation of the
provisions of this Section 10 constitute a basis for deferring or withholding
any amounts otherwise payable to the Executive under this Agreement.

                  11. Successors. (a) This Agreement is personal to the
Executive and without the prior written consent of the Company shall not be
assignable by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by
the Executive's legal representatives.

                  (b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.

                  (c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.

                  12. Miscellaneous. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without
reference to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.

                  (b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:

                                       15
<PAGE>

         If to the Executive:              Joseph J. Savage
         -------------------
                                           ____________________________

                                           ____________________________

         If to the Company:                Webster Financial Corporation
                                           Webster Plaza
                                           145 Bank Street
                                           Waterbury, Connecticut  06702
                                           Attention:  Counsel

or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.

                 (c) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.

                 (d) The Company may withhold from any amounts payable under
this Agreement such Federal, state, local or foreign taxes as shall be required
to be withheld pursuant to any applicable law or regulation.

                 (e) The Executive's or the Company's failure to insist upon
strict compliance with any provision of this Agreement or the failure to assert
any right the Executive or the Company may have hereunder, including, without
limitation, the right of the Executive to terminate employment for Good Reason
pursuant to Section 5(c)(i)-(v) of this Agreement, shall not be deemed to be a
waiver of such provision or right or any other provision or right of this
Agreement.

                 (f) The Executive and the Company acknowledge that, except as
may otherwise be provided under any other written agreement between the
Executive and the Company, the employment of the Executive by the Company is "at
will" and, subject to Section 1(a) hereof, prior to the Effective Date, the
Executive's employment and/or this Agreement may be terminated by either the
Executive or the Company at any time prior to the Effective Date, in which case
the Executive shall have no further rights under this Agreement. From and after
the Effective Date this Agreement shall supersede any other agreement between
the parties with respect to the subject matter hereof.

                                       16
<PAGE>

                  IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its Board of Directors,
the Company has caused these presents to be executed in its name on its behalf,
all as of the day and year first above written.

                                           /s/ Joseph J. Savage
                                           ------------------------------------
                                           Joseph J. Savage

                                           WEBSTER FINANCIAL CORPORATION

                                           By  /s/ James C. Smith
                                               --------------------------------

                                       17ASSET PURCHASE AGREEMENT

                                  by and among

                  MCNIC OFFSHORE PIPELINE & PROCESSING COMPANY,
                                    as Seller

                                       and

                         BLUE DOLPHIN PIPE LINE COMPANY,
                                    as Buyer

                          Dated as of February 1, 2002

<PAGE>

                                                 TABLE OF CONTENTS

ARTICLE I     SALE AND PURCHASE OF ASSETS......................................1
   1.01     Agreement to Purchase and Sell.....................................1
   1.02     Purchase Price.....................................................2
   1.03     Conditional Consideration..........................................2
   1.04     Customer Contracts.................................................3
   1.05     Effective Time.....................................................3
ARTICLE II    CLOSING..........................................................3
ARTICLE III   ACTIONS TAKEN AT THE CLOSING.....................................4
   3.01     Actions Taken by Seller............................................4
   3.02     Actions Taken by Buyer.............................................4
ARTICLE IV    REPRESENTATIONS AND WARRANTIES OF THE SELLER.....................5
   4.01     By Seller..........................................................5
     (a)    Organization and Powers............................................5
     (b)    Agreements and Consents............................................5
     (c)    No Litigation......................................................5
     (d)    Validity and Enforceability........................................5
     (e)    Ownership of Assets................................................6
     (f)    No Brokers.........................................................6
     (g)    Not a Retailer.....................................................6
     (h)    Validity and Enforceability........................................6
   4.02     No Other Warranties................................................6
ARTICLE V     REPRESENTATIONS AND WARRANTIES OF BUYER..........................7
   5.01     By Buyer...........................................................7
     (a)    Organization and Powers............................................7
     (b)    Agreements and Consents............................................7
     (c)    Litigation; Orders.................................................7
     (d)    Validity and Enforceability........................................7
     (e)    No Brokers.........................................................8
ARTICLE VI    ADDITIONAL COVENANTS.............................................8
   6.01     Public Announcements...............................................8
   6.02     Tax Matters........................................................8
   6.03     Further Assurances.................................................9
   6.04     Third Party Consents...............................................9
   6.05     Operating Agreement................................................9
   6.06     Access.............................................................9
   6.07     Audit.............................................................10
ARTICLE VII   ASSUMPTION AND INDEMNIFICATION..................................10
   7.01     Assumption of Liabilities Relating to the Purchased Interests.....10
   7.02     Indemnification by Seller.........................................10
   7.03     Indemnification by Buyer..........................................10
   7.04     Notice of Asserted Liability......................................11
   7.05     Opportunity to Defend.............................................11
   7.06     Negligence and Strict Liability Waiver............................11
   7.07     Exclusive Remedy..................................................11

                                       i

<PAGE>

ARTICLE VIII  MISCELLANEOUS...................................................12
   8.01     Survival..........................................................12
   8.02     Counterparts......................................................12
   8.03     Governing Law.....................................................12
   8.04     Entire Agreement..................................................12
   8.05     Expenses..........................................................12
   8.06     Notices...........................................................12
   8.07     Successors and Assigns............................................13
   8.08     Headings..........................................................13
   8.09     Severability......................................................13
   8.10     No Third Party Beneficiaries......................................13
   8.11     Cross-references..................................................13
   8.12     Gender............................................................13
   8.13     Modification and Waiver...........................................13
   8.14     DTPA Waiver.......................................................14
   8.15     Agreement Duly Negotiated.........................................14

                                       ii

<PAGE>

                            ASSET PURCHASE AGREEMENT
                            ------------------------

     This  Agreement  is dated  February  1, 2002 but is made and  entered  into
effective  as of the  Effective  Time (as  defined  below),  by and among  MCNIC
Offshore Pipeline & Processing Company, a Michigan corporation  ("Seller"),  and
Blue Dolphin Pipe Line Company, a Delaware corporation ("Buyer").

                                   WITNESSETH:

     WHEREAS,  Seller owns undivided 1/3 interests in the Blue Dolphin Pipeline,
the Land, the Shore  Facilities,  the Buccaneer  Pipeline and the Omega Pipeline
(all as hereinafter defined);

     WHEREAS, Buyer desires to purchase from Seller such undivided 1/3 of 8/8ths
interests;

     WHEREAS,  Seller  purchased  from Buyer and its  affiliates  its  ownership
interests in certain of the assets  subject to this Agreement on August 31, 1995
(the "Original Purchase")

     WHEREAS,  Seller,  Buyer and WBI  Southern,  Inc.  have  entered  into that
certain Amended and Restated Operating Agreement (the "Operating Agreement");

     NOW,  THEREFORE,  in  consideration  of the premises and  covenants  herein
contained,  and the benefits to be derived herefrom, the parties hereby agree as
follows:

                                    ARTICLE I
                                    ---------

                           SALE AND PURCHASE OF ASSETS

     1.01  Agreement  to  Purchase  and  Sell.  Subject  to the  terms  and  the
conditions set forth in this Agreement,  as of the Effective Time (as defined in
Section 1.05),  Seller will sell to Buyer,  and Buyer will purchase from Seller,
an undivided 1/3 of 8/8ths interest in and to:

     (a) that certain  pipeline system located both onshore in Brazoria  County,
Texas, and offshore of the coast of Texas, which is referred to and described in
Exhibit  1.01(a),  including all  pipelines  and related  equipment and fixtures
related thereto (the "Blue Dolphin Pipeline") and any easements,  right-of-ways,
and permits  necessary to conduct the business of the Blue Dolphin Pipeline (the
"Blue Dolphin Pipeline Business");

     (b) that certain pipeline system located onshore in Brazoria County, Texas,
which is referred to and described in Exhibit  1.01(b),  including all pipelines
and related  equipment and fixtures  related thereto (the "Buccaneer  Pipeline")
and any easements,  right-of-ways, and permits necessary to conduct the business
of the Buccaneer Pipeline (the "Buccaneer Pipeline Business");

<PAGE>

     (c) all of those  certain  tracts or parcels of real  estate  described  in
Exhibit 1.01(c) (the "Land");

     (d) the onshore  separation,  vapor recovery,  and dehydration  facilities,
related equipment, storage tanks, and fixtures owned by Seller which are located
on the Land on the  date of this  Agreement  (the  "Shore  Facilities")  and any
easements,  right-of-ways,  and permits necessary to conduct the business of the
Shore Facilities (the "Shore Facilities Business");

     (e) the  pipeline  described  on Exhibit  1.01(e),  including  all  related
equipment and fixtures (the "Omega Pipeline") and any easements,  right-of-ways,
and permits  relating to the  business of the Omega  Pipeline  ("Omega  Pipeline
Business"); and

     (f) any other assets owned by Seller which relate to any of the  Businesses
(as hereinafter defined).

     The assets which are subject to the sale and assignment of an undivided 1/3
of 8/8ths  interest  pursuant to this Section are  sometimes  referred to herein
collectively  as the  "Assets".  The  undivided  1/3 of 8/8ths  interests in the
Assets to be acquired by Buyer  pursuant to this Section are sometimes  referred
to  herein  collectively  as  the  "Purchased  Interests"  or  singularly  as  a
"Purchased Interest". The Blue Dolphin Pipeline Business, the Buccaneer Pipeline
Business,  the Shore Facilities  Business,  and the Omega Pipeline  Business are
sometimes collectively referred to herein as the "Businesses" or separately as a
"Business."

     1.02 Purchase Price.  The purchase price for the Purchased  Interests shall
be a maximum amount of $1,500,000 (the "Purchase Price") payable as follows: (i)
$750,000  shall be payable  pursuant to the terms of a secured  promissory  note
which shall be  identical to Exhibit  1.02 (the  "Note"),  and (ii) a maximum of
$750,000  shall be payable as provided in Section 1.03. The Purchase Price shall
be   allocated   to  Class  V  assets  as   defined   in   Treasury   Regulation
ss.338-6(b)(2)(v)  and among the Purchased  Interests in the manner set forth in
Section 6.02(d).

     1.03 Conditional Consideration.  Within 90 days of the end of each calendar
year that  includes any period which is  subsequent  to the Note Payment  Month,
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 the Note Payment  Month.
Payments  pursuant to this  Section  shall  continue  until  Seller has received
payments equal to $750,000, plus the amount which would have accrued on $750,000
if  interest  had accrued  thereon  from the  Effective  Time at the rate of 6%.
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,  including but
not  limited  to 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 the Note Payment  Month which has not been offset by positive Net
Revenue  generated  subsequent to the period in which such  negative  amount was
realized.

                                       2
<PAGE>

     (b) The term "Note  Payment  Month"  means the month in which for the first
time the amount of the Net Revenue for the periods  subsequent  to the Effective
Time is  sufficient  to entitle the Seller  pursuant to the terms of the Note to
receive payment in full of the Note.

     (c) 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 the Closing.

     1.04 Customer  Contracts.  The sale and purchase of the Purchased Interests
shall include an assignment of undivided 1/3 of 8/8ths interest in and to all of
the agreements  pursuant to which certain  persons have entered into  agreements
with Seller with respect to (a) the transportation,  separation, dehydration, or
storage of natural gas,  crude oil,  and/or  condensate  through,  by, and/or on
certain of the Assets, or (b) the vapor recovery  processes  performed by Seller
by means of the Assets to the extent such  agreements  were in  existence at the
time of the Original  Purchase,  or have been entered into by Buyer on behalf of
Seller in its capacity as operator under the Operating  Agreement (the "Customer
Contracts").

     1.05  Effective  Time.  The  transfer  of the  ownership  of the  Purchased
Interests shall be effective as of 12:01 a.m., Central Standard Time, on January
1, 2002 (the  "Effective  Time").  All sums owing on  account of the  ownership,
operation,  or use of the Purchased  Interests prior to the Effective Time shall
be for the account of and  charged to the Seller,  and all sums owing on account
of the ownership,  operation,  or use of the Purchased Interests on or after the
Effective  Time  shall be charged  to and for the  account of Buyer.  The Seller
shall be entitled to any and all revenues, refunds, sums or amounts attributable
to the  ownership,  operation,  or use of the Purchased  Interests  prior to the
Effective Time. Buyer shall be entitled to any and all revenues,  refunds,  sums
or amounts  attributable  to the ownership,  operation,  or use of the Purchased
Interests  on and after the  Effective  Time.  Nothing set forth in this Section
1.05 shall be construed,  however,  to supersede any agreements made pursuant to
the Applicable Agreements with respect to the operation of the Assets subsequent
to the Effective  Time,  which shall be controlling  for all such purposes.  For
purposes of this Section  1.05,  (a) revenues  shall be treated as realized with
respect to the storage of crude oil,  condensate,  and natural gas liquids prior
to the  Effective  Time to the extent such  liquids were in storage in or on the
Assets at the Effective Time and (b) such liquids shall be deemed delivered from
storage on a "FIFO" basis.

                                   ARTICLE II
                                   ----------

                                     CLOSING

     The closing of the transactions  contemplated by this Agreement ("Closing")
is taking place simultaneously with the execution of this Agreement.

                                       3
<PAGE>

                                   ARTICLE III
                                   -----------

                          ACTIONS TAKEN AT THE CLOSING

     3.01 Actions Taken by Seller. Seller has executed and delivered on the date
hereof the following:

     (a) an  Assignment  and  Bill  of Sale  (the  "Assignment")  and any  other
instruments reasonably necessary to transfer an undivided 1/3 of 8/8ths interest
in the Blue Dolphin Pipeline, the Buccaneer Pipeline, the Shore Facilities,  and
the Omega Pipeline to Buyer,  free and clear of all Liens created by, through or
under Seller, other than Permitted Encumbrances;

     (b) a  Special  Warranty  Deed  (the  "Deed"),  and any  other  instruments
reasonably  necessary to transfer an undivided 1/3 of 8/8ths  interest in all of
the Land to Buyer  free and  clear of all Liens  created  by,  through  or under
Seller, other than Permitted Encumbrances; and

     (c) an  affidavit  or other  certification  that  Seller is not a  "foreign
person"  within the  meaning  of Section  1445 (or  similar  provisions)  of the
Internal  Revenue Code of 1986, as amended  (i.e.,  Seller is not a non-resident
alien, foreign corporation, foreign partnership, foreign trust or foreign estate
as  those  terms  are  defined  in such  code  and the  regulations  promulgated
thereunder).

As used in this  Agreement:  (a) the term "Liens"  shall mean any lien,  pledge,
claim,  charge,  security  interest  or  other  encumbrance,  and (b)  the  term
"Permitted Encumbrances" shall mean: (i) Liens for taxes not yet due and payable
or which are being  contested in good faith and disclosed in Schedule 3.01; (ii)
materialmen's, mechanics', workers', repairmen's, or other similar Liens arising
in the  ordinary  course of the  operation of the Assets for amounts not due and
payable or which are being  contested  in good faith and  disclosed  on Schedule
3.01;  (iii) all rights to, consents by,  required  notices to, filings with, or
other  actions by  governmental  entities if the same are  customarily  obtained
subsequent  to sale or  conveyance;  (iv)  rights  reserved  to or vested in any
local,  state,  and federal  governmental  bodies,  authorities,  or agencies to
control  or  regulate  any of the real  property  occupied  by the Assets in any
manner,  and all laws, rules,  regulations,  ordinances,  and orders of any such
bodies,  authorities,  or  agencies;  (v) Liens to be  released at or before the
Effective  Time;  (vi)  any  other  Liens  that do not,  individually  or in the
aggregate, have a material adverse effect on the ownership,  operation, or value
of the Purchased Interests; (vii) the encumbrances and restrictions with respect
to the Land  described  in Exhibit  "B" to the Deed and  (viii)  the  Applicable
Agreements (as defined in Section 7.01).

     3.02 Actions Taken by Buyer.  Buyer has executed and delivered to Seller on
the date  hereof:  (a) the Note,  and (b) a  Security  Agreement  in the form of
Exhibit 3.02.

                                       4
<PAGE>

                                   ARTICLE IV
                                   ----------

                  REPRESENTATIONS AND WARRANTIES OF THE SELLER

     4.01 By Seller. Seller represents and warrants to Buyer as set forth below:

     (a)  Organization  and  Powers.  Seller is a  corporation  duly  organized,
validly  existing,  and in good standing under the laws of the State of Michigan
and is duly  qualified to do business in, and is in good standing under the laws
of the State of Texas. Seller has all corporate power and authority necessary to
conduct its business as presently  conducted,  and to own, lease, or operate all
properties now owned, leased, or operated by Seller.

     (b)  Agreements  and  Consents.   Neither  the  execution,   delivery,  nor
performance of this Agreement,  the Assignment,  the Deed or any other documents
or instruments executed and delivered at the Closing (the "Closing  Agreements")
by Seller will (i) conflict  with or result in any breach of any  provisions  of
the charter or bylaws of Seller;  (ii) to the  knowledge of Seller,  require the
consent,  approval,  authorization  or permit of, or filing with or notification
to, any  governmental or regulatory  authority,  except as set forth in Schedule
4.01(b) or Section 6.07,  or any  regulatory  approvals or routine  governmental
consents   normally   acquired  after   consummation  of  transactions  such  as
transactions of the nature  contemplated by this Agreement,  (iii) except as set
forth in Schedule  4.01(b),  violate,  effect  acceleration  of or result in the
termination, cancellation, or modification of any material agreement, indenture,
instrument,  lease, contract, or other undertaking to which Seller is a party or
is bound,  except as provided in Section 6.07 or for such defaults (or rights of
termination,  cancellation,  or acceleration)  as to which requisite  waivers or
consents  have been obtained or will be obtained  prior to the  Effective  Time;
(iv) violate any order, writ, injunction,  or decree to which Seller is bound or
may be bound,  (v) to the  knowledge of Seller,  violate any statute,  rule,  or
regulation  to which  Seller  is bound or may be  bound;  or (vi)  result in the
imposition or creation of any Lien upon any of the Assets other than a Permitted
Encumbrance.

     (c) No Litigation.  No Proceeding with respect to which the Buyer or any of
its affiliates is not a party, or does not have actual knowledge,  is pending or
threatened  against  Seller  before  any  Governmental  Entity  (i)  seeking  to
restrain, prohibit, or obtain damages in connection with the consummation of the
transactions contemplated by this Agreement, or (ii) relating to the Assets.

     (d)  Validity  and  Enforceability.  Seller  has the  corporate  power  and
authority to execute and deliver this Agreement and the Closing Agreements.  The
execution and delivery by Seller of this  Agreement  and the Closing  Agreements
and the  consummation by Seller of the transactions and performance of the terms
and  conditions  contemplated  hereby  and  thereby  have been duly and  validly
authorized by all necessary corporate action on behalf of Seller. This Agreement
has been, and, at the Closing,  the Closing Agreements will be, duly and validly
executed and delivered by Seller and,  assuming  this  Agreement and the Closing
Agreements  constitute  valid and binding  obligations of Buyer,  this Agreement
constitutes,  and at the Closing, this Agreement and the Closing Agreements will
constitute,  valid and binding obligations of Seller,  enforceable in accordance
with their respective terms (except as the enforceability thereof may be limited
by  bankruptcy,   insolvency,   reorganization,   bank  moratorium,   fraudulent
conveyance,  or similar laws  affecting  creditors'  rights  generally,  general
principles  of  equity,  and laws  restricting  the  availability  of  equitable
remedies).

                                       5
<PAGE>

     (e)  Ownership  of  Assets.  Seller  is the  owner of and has  title to the
Purchased  Interests that are to be assigned by Seller pursuant to Section 1.01,
free and clear of all Liens  created  by  through,  or under  Seller  other than
Permitted Encumbrances.

     (f) No Brokers.  Neither Seller nor any of its affiliates has incurred, and
neither Seller nor any of its affiliates will incur, directly or indirectly,  as
a result of any action taken by Seller under this  Agreement,  any liability for
brokerage or finders' fees or commissions  or any similar  charges in connection
with this Agreement, for which Buyer will have any liability after the Closing.

     (g) Not a  Retailer.  Seller is not  engaged  in the  business  of  selling
tangible personal  property at retail,  does not hold a sales and use tax permit
issued by the  state of  Texas,  and has not made any  retail  sale of  tangible
personal property during the twelve month period ending on the Effective Time.

     (h) No Actions Taken. Seller has not entered into any contract or agreement
or participated in any governmental  proceeding,  or filed any suit or otherwise
taken any action with respect to the Assets  other than actions  taken on behalf
of the  Seller by the Buyer in its  capacity  as  operator  under the  Operating
Agreement or of which Buyer has actual knowledge.

     4.02 No Other  Warranties.  Except as and to the  extent  set forth in this
Article IV, Seller (i) has not made any  representations  or warranties to Buyer
whatsoever,  and (ii) hereby disclaims all liability and  responsibility for any
other representation,  warranty,  statement, or information made or communicated
(orally  or in  writing)  to Buyer  or its  representatives  (including  without
limitation any opinion, information, projection, or advice that may have been or
may be provided to Buyer by any director,  officer, employee, agent, consultant,
or representative of Seller or any Affiliate  thereof) by any person,  including
without limitation Seller or any of its representatives.  Specifically as a part
of (but not a limitation  of) the  foregoing,  Buyer  acknowledges  that neither
Seller  nor  any of  its  affiliates  has  made,  and  Seller  hereby  expressly
disclaims,  any representation or warranty (express,  implied, under common law,
by statute or otherwise) relating to the condition of any of the tangible assets
included in the Purchased  Interests (WITHOUT  LIMITATION,  SELLER  SPECIFICALLY
DISCLAIMS  ANY  IMPLIED OR EXPRESS  WARRANTY OF  MERCHANTABILITY,  FITNESS FOR A
PARTICULAR  PURPOSE,  OR  CONFORMITY  TO MODELS OR  SAMPLES OF  MATERIALS),  and
acknowledges  that it will acquire such  tangible  assets "AS IS" and "WHERE IS"
without  any  representation  or warranty  from Seller or any of its  affiliates
relating to their condition,  merchantability or fitness for a specific purpose.
By  its  action  in  closing  the  transactions   contemplated   hereby,   Buyer
acknowledges (or will be deemed to have  acknowledged) that it has been provided
access to all of the  Purchased  Interests  and to all records and other data to
which  it  requested  access,  all in  accordance  with the  provisions  of this
Agreement.

                                       6
<PAGE>

                                    ARTICLE V
                                    ---------

                     REPRESENTATIONS AND WARRANTIES OF BUYER

     5.01 By Buyer. Buyer represents and warrants to Seller as set forth below:

     (a)  Organization  and Powers.  Buyer (i) is a corporation  duly organized,
validly existing,  and in good standing under the laws of the state of Delaware,
(ii) is duly qualified to do business in, and is in good standing under the laws
of,  the  state of  Texas,  and (iii)  has all  corporate  power  and  authority
necessary to conduct its business as it is presently conducted.

     (b)  Agreements  and  Consents.   Neither  the  execution,   delivery,  nor
performance  of this  Agreement  or the  Closing  Agreements  by Buyer  will (i)
conflict with or result in any breach of any  provisions of the  certificate  of
incorporation or bylaws of Buyer; (ii) to Buyer's knowledge, require the consent
or approval, authorization, or permit of, or filing with or notification to, any
governmental or regulatory authority, except any regulatory approvals or routine
governmental  consents normally acquired after consummation of transactions such
as  transactions of the nature  contemplated  by this Agreement,  (iii) violate,
effect acceleration of, or result in termination,  cancellation, or modification
of any material agreement,  indenture,  instrument,  lease,  contract,  or other
undertaking  to which Buyer is a party or by which it is bound,  except for such
defaults (or rights of termination,  cancellation,  or acceleration) as to which
requisite  waivers or consents have been  obtained or will be obtained  prior to
the  Effective  Time;  or (iv) violate any order,  writ,  or injunction to which
Buyer is bound or may be bound,  or (v) to the  knowledge of Buyer,  violate any
decree, statute, rule, or regulation to which Buyer is bound or may be bound.

     (c)  Litigation;  Orders.  There is no Litigation,  judgment or outstanding
order, writ, injunction,  decree,  stipulation,  or award (whether rendered by a
court or administrative  agency, or by arbitration) pending, or to the knowledge
of Buyer threatened,  to which Buyer is or would be a party or to which Buyer is
bound that would have an adverse  effect on the  ability of Buyer to  consummate
the transactions  contemplated hereby or in the Closing Agreements or that would
prevent or delay in any material  respect the  consummation of the  transactions
contemplated  hereby  or  in  the  Closing  Agreements  or  could  otherwise  be
reasonably expected to materially adversely affect the Purchased Interests.

     (d)  Validity  and  Enforceability.  Buyer  has  the  corporate  power  and
authority to execute and deliver this Agreement and the Closing Agreements.  The
execution and delivery by Buyer of this Agreement and the Closing Agreements and
the  consummation by Buyer of the  transactions and performance of the terms and
conditions contemplated hereby and thereby have been duly and validly authorized
by all necessary  corporate action on behalf of Buyer.  This Agreement has been,
and, at the Closing,  the Closing  Agreements will be, duly and validly executed
and delivered by Buyer and,  assuming this Agreement and the Closing  Agreements
constitute a valid and binding obligation of Seller, the Agreements  constitute,
and, at the Closing,  the Closing Agreements will constitute,  valid and binding
obligations  of  Buyer,  enforceable  against  Buyer in  accordance  with  their
respective  terms  (except  as the  enforceability  thereof  may be  limited  by
bankruptcy, insolvency,  reorganization, bank moratorium, fraudulent conveyance,
or similar laws affecting  creditors'  rights generally,  general  principles of
equity, and laws restricting the availability of equitable remedies).

                                       7
<PAGE>

     (e) No Brokers.  Neither Buyer nor any of its affiliates has incurred,  and
will not incur, directly or indirectly, as a result of any action taken by Buyer
under  this  Agreement,   any  liability  for  brokerage  or  finders'  fees  or
commissions or any similar charges in connection with this Agreement,  for which
Seller has or will have any liability.

                                   ARTICLE VI
                                   ----------

                              ADDITIONAL COVENANTS

     6.01 Public Announcements.  Without the prior written approval of the other
parties  hereto,  which approval shall not be  unreasonably  withheld,  no party
hereto will issue, or permit any agent or affiliate to issue, any press releases
or otherwise make or cause any agent or affiliate to make, any public statements
with respect to this Agreement or the  transactions  contemplated  hereby except
where such release or statement is deemed in good faith by the  releasing  party
to be required by applicable law or any national securities exchange.  Any party
or parties issuing such a release or statement will use its or their  reasonable
efforts to provide a copy to the other  parties  prior to the  issuance  of such
release or statement.

     6.02 Tax Matters.

     (a) The term  "Taxes"  shall  mean all  income,  gross  receipts,  profits,
franchise,  sales, use,  occupation,  property (including in lieu-of-taxes),  ad
valorem,  capital, wealth,  environmental,  employment,  severance,  production,
excise, stamp, transfer, workers' compensation,  social security, withholding or
similar taxes, motor vehicle registration fees, customs or import duties and all
other  taxes or other  governmental  fees or charges  imposed by any  country or
political  subdivision  thereof,  together  with  any  interest,   additions  or
penalties with respect thereto.

     (b) Buyer  shall pay all  transfer  taxes,  including  without  limitation,
sales, use, excise (including excise taxes on petroleum,  products of petroleum,
petrochemicals,  chemicals, and other taxable substances),  stamp,  documentary,
filing,  recording,  permit,  license,  authorization,  and other similar Taxes,
filing  fees and  similar  charges  ("Transfer  Taxes"),  incurred or imposed in
connection  with or as a result of the  transactions  effected  pursuant to this
Agreement regardless of upon whom such Transfer Tax is levied or imposed by law.
Buyer shall  prepare and file all returns and reports for such  Transfer  Taxes.
Should Seller be required by law to pay such  Transfer  Tax,  Buyer shall notify
Seller of such  amount  and the due dates  thereof  and remit the amount of such
Transfer  Tax and  pre-prepared  filings  associated  therewith  to  Seller  for
remittance at least ten days before such Transfer Tax is due.

     (c)  Seller  shall be  liable  for all Taxes  (other  than  Transfer  Taxes
described  in  Section  6.02(b))  incurred  in  connection  with the sale of the
Purchased Interests and all taxes with respect to the ownership and operation of
the Purchased  Interests for taxable  periods  ending on or before the Effective
Time.  Buyer  shall be liable  for its pro rata  share of all Taxes  other  than
(subject to its obligations under the Operating Agreements) employment, workers'

                                       8
<PAGE>

compensation,  social  security,  withholding,  or  similar  taxes  relating  to
employees) imposed with respect to the ownership and operation of the Assets for
periods  beginning  after the Effective Time. With respect to any taxable period
which  includes  the  Effective  Time (i)  property  and other ad valorem  Taxes
accruing with respect to the Purchased  Interests  shall be apportioned  between
Seller,  on the one  hand,  and  Buyer,  on the other  hand,  based on the daily
proration of such Taxes,  and (ii) any other Taxes  accruing  during such period
shall be equitably apportioned among the parties.

     (d) Seller and Buyer agree that the Purchase Price shall be allocated among
the Purchased Interests in the manner set forth in Schedule 6.02(d).  Each party
agrees to complete IRS Form 8594  consistently with the agreed allocation and to
furnish  the other  party  with a draft  copy of such form  within a  reasonable
period before the filing due date of such form.  Neither  Seller nor Buyer shall
file any return with a tax authority that is inconsistent with such allocation.

     6.03 Further  Assurances.  After the Closing,  Seller and Buyer shall,  and
shall cause their  affiliates  to,  execute,  acknowledge,  and deliver all such
further conveyances, notices, assumptions,  releases, and acquittances, and such
other instruments,  and shall take such further actions,  as may be necessary or
appropriate more fully to assure to Buyer, and its successors or assigns, all of
the properties,  rights,  titles,  interests,  estates,  remedies,  powers,  and
privileges  intended to be conveyed to Buyer  pursuant to this  Agreement and to
assure  fully  to  Seller,  its  affiliates  and  successors  and  assigns,  the
assumption of the liabilities  and  obligations  intended to be assumed by Buyer
pursuant to this Agreement.

     6.04 Third  Party  Consents.  Seller and Buyer  shall use their  respective
reasonable   best   efforts  to  obtain   all   consents,   approvals,   orders,
authorizations,  and waivers of, and to effect all  declarations,  filings,  and
registrations with, all third parties (including governmental entities) that are
necessary or required to enable  Seller to transfer the  Purchased  Interests to
Buyer  as  contemplated  by  this  Agreement  and to  otherwise  consummate  the
transactions  contemplated  hereby.  All  costs and  expenses  of  obtaining  or
effecting  any  and  all of the  consents,  approvals,  orders,  authorizations,
waivers,  declarations,  filings, and registrations  referred to in this Section
shall be borne by Seller, provided, however, that the foregoing shall not affect
the obligation of Buyer to pay recording  costs and such expenses as required to
comply with  regulatory  requirements  imposed by the Federal Energy  Regulatory
Commission and the Minerals Management Service with respect to this transaction.

     6.05 Operating Agreement. From and after the Effective Time, Seller will no
longer have any  obligations  or rights  pursuant to the terms of the  Operating
Agreement.

     6.06 Access. So long as any obligations under the Note remain  outstanding,
but at least  until  December  31,  2007,  Buyer will  provide  Seller  with any
reports,  materials,  documents  and other  information  that Buyer is currently
required  to provide to Seller  under the  Operating  Agreement,  including  the
financial  information that Buyer is required to provide the Seller,  and Seller
will have the right of access to information  regarding the Purchased  Interests
that Seller had access to as an owner of any of the Purchased Interests.  Should
any Purchased  Interest  subsequently  be transferred  by Buyer,  so long as any
obligations under the Note continue to remain outstanding,  Buyer agrees to take
all action in its contractual  arrangements  relating to such transfer necessary
to allow Seller to receive information and to have the access described above.

                                       9
<PAGE>

     6.07 Audit. So long as any obligations  under the Note remain  outstanding,
but at least until December 31, 2007,  Seller shall have the right, upon written
notice to Buyer and at a time  mutually  acceptable  to the parties  hereto,  to
audit at its own expense during reasonable  business hours all books and records
of Buyer relating to the Purchased  Interests and the Net Revenue.  In the event
any audit  results in an adjustment in favor of the Seller in excess of $10,000,
any  reasonably  incurred costs and expenses of the audit shall be reimbursed by
Buyer up to a maximum  amount equal to fifty percent (50%) of the amount of such
adjustment.

                                   ARTICLE Rw
VII

                         ASSUMPTION AND INDEMNIFICATION

     7.01 Assumption of Liabilities Relating to the Purchased  Interests.  Buyer
shall  assume  and agree to pay,  perform,  and  discharge  or cause to be paid,
performed,   and   discharged   all   duties,   obligations,   and   liabilities
("Obligations")  arising out of, in connection  with, or otherwise in respect of
the  ownership or  operation  of the  Purchased  Interests,  whether  primary or
secondary,  fixed or  contingent,  including  a pro rata  portion of the duties,
obligations,  and  liabilities  of Seller under the Customer  Contracts  and the
agreements  (the  "Applicable  Agreements")  relating  to the  operation  of the
Businesses  that  either  (i)  were in  existence  at the  time of the  Original
Purchase,  or (ii) were  entered  into on  behalf of the  Seller by Buyer in its
capacity as operator under the Operating Agreement  (collectively,  the "Assumed
Obligations");  provided, however, that Buyer does not assume any Obligations of
Seller associated with or arising out of matters as to which Seller is obligated
to indemnify Buyer pursuant to Section 7.02.

     7.02  Indemnification by Seller.  Seller shall indemnify,  defend, and hold
harmless Buyer (and its directors, officers, employees, affiliates,  successors,
and  assigns)  from and against any  Obligations  based upon,  arising out of or
otherwise in respect of (a) any  inaccuracy in or breach of any  representation,
warranty,  or  covenant  of  Seller  contained  in this  Agreement;  and (b) any
liability for Taxes the  responsibility  for the payment of which is retained by
Seller pursuant to Section 6.02(c); provided, however, that Seller shall have no
liability  under this Section  7.02 with respect to matters  described in clause
(a) above for Obligations  until the aggregate amount of such Obligations  shall
exceed the sum of $25,000  and, in any event only with  respect to the amount in
excess  thereof,  subject at all times,  to the  provisions of this Article VII.
Notwithstanding anything to the contrary herein contained, the maximum aggregate
amount of the  obligations  of Seller to indemnify  Buyer pursuant to clause (a)
above shall be the Purchase Price which has been paid to Seller.

     7.03  Indemnification  by Buyer.  Buyer shall indemnify,  defend,  and hold
harmless Seller (and its respective directors, officers, employees,  affiliates,
successors,  and assigns) from and against any Obligations  based upon,  arising
out of or  otherwise  in  respect  of (a) any  inaccuracy  in or  breach  of any
representation,  warranty, or covenant of Buyer contained in this Agreement; (b)
any liability for Taxes the  responsibility  for the payment of which is assumed
by Buyer  pursuant  to  Section  6.02(b)  and (c)  hereof;  and (c) the  Assumed
Obligations.

                                       10
<PAGE>

     7.04  Notice of Asserted  Liability.  Promptly  after  receipt by any party
hereto (the "Indemnitee") of notice of any demand, claim, or circumstance which,
with the  lapse of time,  would  give  rise to a claim or the  commencement  (or
threatened  commencement),  or any  action,  proceeding,  or  investigation  (an
"Asserted  Liability")  that may result in an Obligation,  the Indemnitee  shall
give  notice  thereof  (the  "Claims  Notice")  to the other  party  hereto (the
"Indemnifying  Party").  The Claims Notice shall describe the Asserted Liability
in reasonable detail, and shall indicate the amount (estimated, if necessary) of
the   Obligation   that  has  been  or  may  be  suffered  by  the   Indemnitee.
Notwithstanding  the  foregoing,  no party shall have any  liability  for claims
arising  pursuant to Section  7.02(a) or 7.03(a) unless a Claims Notice has been
delivered within the appropriate time period indicated in Section 8.01.

     7.05 Opportunity to Defend.  The Indemnifying Party may elect to compromise
or defend, at its own expense and by its own counsel, any Asserted Liability and
if it does so the Indemnifying  Party shall have the right to make all judgments
and  decisions  in  respect of the  handling  of the  defense  of such  Asserted
Liability and the settlement or compromise of the Asserted Liability, subject to
the provisions of this Section 7.05. If the Indemnifying  Party elects to defend
such  Asserted  Liability,  it shall  within 30 days of the  Claims  Notice  (or
sooner,  if the  nature  of the  Asserted  Liability  so  requires)  notify  the
Indemnitee  of its  intent to do so,  and the  Indemnitee  shall  cooperate,  as
requested by and at the expense of the Indemnifying Party, in the compromise of,
or defense against,  such Asserted  Liability.  If the Indemnifying Party elects
not to defend the  Asserted  Liability,  fails to notify the  Indemnitee  of its
election as herein  provided or contests its obligation to indemnify  under this
Agreement,  the  Indemnitee  may  pay,  compromise,   or  defend  such  Asserted
Liability. Notwithstanding the foregoing, neither the Indemnifying Party nor the
Indemnitee  may settle or compromise any claim subject to  indemnification  over
the  objection of the other,  provided,  however,  that consent to settlement or
compromise shall not be unreasonably  withheld. In any event, the Indemnitee and
the Indemnifying Party may participate,  at their own expense, in the defense of
such Asserted Liability.  If the Indemnifying Party chooses to defend any claim,
the  Indemnitee  shall  make  available  to the  Indemnifying  Party any  books,
records, or other documents within its control that are necessary or appropriate
for such defense.

     7.06 Negligence and Strict Liability Waiver. The  indemnification  provided
for in this Article VII shall be applicable regardless of whether Obligations in
question  arose  solely  or in part  from the  active,  passive,  or  concurrent
negligence of any Indemnitee (or under any theory of strict  liability) prior to
the Effective Time or after the Effective Time, as the case may be.

     7.07 Exclusive  Remedy.  After the Closing,  and to the extent permitted by
applicable  law, the rights and remedies  expressly set forth in this  Agreement
and in the Closing  Agreements shall be the exclusive rights and remedies of the
parties  hereto with  respect to losses or claims  relating to the  transactions
consummated pursuant to this Agreement.

                                       11
<PAGE>

                                  ARTICLE VIII
                                  ------------

                                  MISCELLANEOUS

     8.01 Survival.  The representations and warranties made by Seller and Buyer
pursuant to this  Agreement  shall expire twelve (12) months after the Effective
Time  and  shall   thereafter  be  of  no  force  and  effect  except  (i)  such
representations and warranties shall be considered as continuing until three (3)
years  after the  Effective  Time with  respect to any  intentional  and willful
misrepresentations  set forth  herein,  after which time no claim or suit may be
brought  with  respect  to the same,  (ii) the  representations  made in Section
4.01(e), which shall survive indefinitely, and (iii) the representations made in
Section  5.01(d),  which shall  survive  until six (6) years after the Effective
Time.

     8.02  Counterparts.   This  Agreement  may  be  executed  in  one  or  more
counterparts,  all of which shall be considered one and the same agreement,  and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party.

     8.03 Governing  Law. This  Agreement  shall be governed by and construed in
accordance  with  the  laws of the  State  of  Texas  without  reference  to the
conflicts of law principles thereof.

     8.04 Entire Agreement. The Agreements and the Schedules and Exhibits hereto
supersede all prior  agreements  between the parties  (written or oral) and, are
intended as a complete and  exclusive  statement  of the terms of the  agreement
between the parties.  This Agreement may be amended only by a written instrument
duly executed by the parties.

     8.05 Expenses. Except as expressly set forth in this Agreement, whether the
transactions contemplated hereby are or are not consummated, all legal and other
costs  and  expenses   incurred  in  connection  with  this  Agreement  and  the
transactions contemplated hereby shall be paid by the party incurring such costs
and expenses.

     8.06 Notices. All notices hereunder shall be sufficiently given (and deemed
made) for all purposes hereunder if in writing and (a) delivered personally, (b)
sent by documented  overnight  delivery  service,  (c) to the extent  receipt is
confirmed,  sent by telecopy,  telefax, or other electronic transmission service
to the  appropriate  address or number as set forth below, or (d) sent by United
States mail,  postage prepaid with return receipt  requested.  Notices to Seller
shall be transmitted or addressed to:

         MCNIC Offshore Pipeline & Processing Company
         2000 Second Avenue, 688 WCB
         Detroit, Michigan 48226
         Attention:  General Counsel
         Telecopier No.: (313) 235-8500

or at such other addresses or telefax numbers and to the attention of such other
person as Seller may designate by written notice to the other party.

                                       12
<PAGE>

         Notices to Buyer shall be transmitted or addressed to:

         Blue Dolphin Pipe Line Company
         801 Travis, Suite 2100
         Houston, Texas 77002
         Attention:  President
         Telecopier No.: (713) 227-7626

or at such other addresses or telefax numbers and to the attention of such other
person as Buyer may designate by written notice to the other party.

     8.07 Successors and Assigns. This Agreement shall be binding upon and inure
to the  benefit  of the  parties  hereto  and their  respective  successors  and
assigns; provided, however, that (i) Buyer may not assign its rights or delegate
its obligations  under this Agreement  without the express prior written consent
of the  Seller  and (ii)  Seller may only  assign  its  rights or  delegate  its
obligations  under this  Agreement to an  affiliate or with the express  written
consent of the Buyer.

     8.08 Headings. The section and article headings contained in this Agreement
are inserted for  convenience  of reference only and will not affect the meaning
or interpretation of this Agreement.

     8.09  Severability.  If any term or provision of this Agreement is invalid,
illegal, or incapable of being enforced by any rule of law or public policy, all
other conditions and provisions of this Agreement shall  nevertheless  remain in
full  force  and  effect  so long as the  economic  or  legal  substance  of the
transactions  contemplated hereby is not affected in any material adverse manner
to any  party.  Upon  such  determination  that any term or other  provision  is
invalid,  illegal,  or incapable  of being  enforced,  the parties  hereto shall
negotiate  in good faith to modify this  Agreement  so as to effect the original
intent of the parties as closely as possible in an acceptable  manner to the end
that the transactions contemplated hereby are fulfilled to the extent possible.

     8.10 No Third  Party  Beneficiaries.  Except as  provided  in Article  VII,
nothing in this  Agreement  shall entitle any person other than Seller and Buyer
or their respective  successors and assigns permitted hereby to any claim, cause
of action, remedy, or right of any kind.

     8.11 Cross-references.  References in this Agreement to Articles, Sections,
Exhibits,  or Schedules shall be deemed to be references to Articles,  Sections,
Exhibits,  and Schedules of this Agreement  unless the context  specifically and
expressly requires otherwise.

     8.12 Gender.  Pronouns in masculine,  feminine,  and neuter genders will be
construed to include any other  gender,  and words in the singular  form will be
construed  to include  the plural and vice versa,  unless the context  otherwise
requires.

     8.13 Modification and Waiver. No amendment,  modification or alternation of
the terms or provisions of this Agreement shall be binding unless the same shall
be in writing and duly  executed by the Parties  hereto,  except that any of the
terms or  provisions  of this  Agreement may be waived in writing at any time by

                                       13
<PAGE>

the Person that is entitled to the benefits of such waived terms or  provisions.
No waiver of any of the provisions of this Agreement shall be deemed to or shall
constitute a waiver of any other provision  hereof (whether or not similar).  No
delay on the part of any  Person in  exercising  any right,  power or  privilege
hereunder shall operate as a waiver hereof.

     8.14 DTPA Waiver. To the extent applicable to the transactions contemplated
by this  Agreement,  Buyer waives the  provisions of the Texas  Deceptive  Trade
Practices Act, Chapter 17, Subchapter E, Sections 17.41 through 17.63, inclusive
(other than Section  17.55A,  which is not waived),  Tex. Bus. & Comm.  Code. In
order to evidence its ability to grant such waiver,  Buyer hereby represents and
warrants to Seller that Buyer (a) is in the business of seeking or acquiring, by
purchase or lease,  goods or services for  commercial  or business  use, (b) has
assets of $5,000,000 or more  according to its most recent  financial  statement
prepared in accordance with generally accepted  accounting  principles,  (c) has
knowledge and  experience in financial and business  matters that enable them to
evaluate  the  merits  and  risks  of  the  transactions  contemplated  by  this
Agreement, and (d) is not in a significantly disparate bargaining position.

     8.15 Agreement Duly Negotiated.  The Parties acknowledge that the Agreement
is the  product  of  negotiations  among  them and that each  Party  contributed
substantially to its preparation. For this reason, neither the Agreement nor any
documents to be executed and delivered in  connection  with it will be construed
more favorably toward one Party than any other.

IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of each of
the parties as of the date first above written.

MCNIC OFFSHORE PIPELINE                      BLUE DOLPHIN PIPE LINE
& PROCESSING COMPANY,                        COMPANY,
a Michigan corporation                       a Delaware corporation

By:_______________________________           By:________________________________
Name:                                           Larry Turpin, President
Title:

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