Attached files
| file | filename |
|---|---|
| 8-K - 8-K - American Midstream Partners, LP | a8-kxblackwateracquisition.htm |
| EX-99.1 - EXHIBIT - American Midstream Partners, LP | ex991pressrelease-8xkblack.htm |
| EX-99.2 - EXHIBIT - American Midstream Partners, LP | ex992historicalfinancials-.htm |
| EX-2.1 - EXHIBIT - American Midstream Partners, LP | ex21mergeragreement-8xkbla.htm |
| EX-23.1 - EXHIBIT - American Midstream Partners, LP | ex231malonebaileyconsent-8.htm |
| EX-99.4 - EXHIBIT - American Midstream Partners, LP | ex994proformafinancials-8x.htm |
BLACKWATER MIDSTREAM HOLDINGS LLC
(FORMERLY BLACKWATER MIDSTREAM CORP.)
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page | |
Unaudited consolidated balance sheets as of September 30, 2013 and March 31, 2013 | 3 |
Unaudited consolidated statements of operations for the three and six months ended September 30, 2013 and 2012 | 4 |
Unaudited consolidated statement of stockholder's and members' equity for the six months ended September 30, 2013 and 2012 | 5 |
Unaudited consolidated statements of cash flows for the six months ended September 30, 2013 and 2012 | 6 |
Notes to unaudited consolidated financial statements | 7 |
BLACKWATER MIDSTREAM HOLDINGS LLC
(FORMERLY BLACKWATER MIDSTREAM CORP.)
CONSOLIDATED BALANCE SHEETS
(unaudited)
September 30, 2013 | March 31, 2013 | |||||||||
ASSETS: | ||||||||||
Current assets | ||||||||||
Cash and cash equivalents | $ | 2,397,260 | $ | 306,528 | ||||||
Restricted cash | 165,127 | 165,002 | ||||||||
Receivables-trade | 611,843 | 423,978 | ||||||||
Receivables-other | 42,843 | 47,477 | ||||||||
Prepaid expenses and other current assets | 488,528 | 386,841 | ||||||||
Current assets held for sale | 105,471 | 158,678 | ||||||||
Total current assets | 3,811,072 | 1,488,504 | ||||||||
Property and equipment, net | 36,127,232 | 30,515,337 | ||||||||
Intangible assets, net | 4,350,512 | 7,679,561 | ||||||||
Goodwill | 16,917,602 | 16,917,602 | ||||||||
Deferred tax asset | 5,315,029 | 5,246,788 | ||||||||
Noncurrent assets held for sale | 2,153,613 | 2,229,709 | ||||||||
Total assets | $ | 68,675,060 | $ | 64,077,501 | ||||||
LIABILITIES AND MEMBERS' EQUITY: | ||||||||||
Current liabilities | ||||||||||
Accounts payable | $ | 651,193 | $ | 902,297 | ||||||
Accounts payable-related parties | 1,682 | 19,216 | ||||||||
Accrued liabilities | 2,296,535 | 1,083,576 | ||||||||
Accrued payroll | 24,452 | 243,055 | ||||||||
Deferred revenue | 517,630 | 351,422 | ||||||||
Current portion of convertible promissory note to affiliate | 20,000,000 | 20,000,000 | ||||||||
Current portion of long-term bank loans | 7,123,921 | 1,957,040 | ||||||||
Current liability held for sale | 368,375 | 381,360 | ||||||||
Total current liabilities | 30,983,788 | 24,937,966 | ||||||||
Long-term liabilities | ||||||||||
Bank loans | 3,852,873 | 3,721,581 | ||||||||
Deferred tax liability | 10,713,617 | 11,381,354 | ||||||||
Long-term liability held for sale | 986,542 | 1,133,444 | ||||||||
Total long-term liabilities | 15,553,032 | 16,236,379 | ||||||||
Total liabilities | 46,536,820 | 41,174,345 | ||||||||
Commitments and contingencies | ||||||||||
Members' equity | 22,138,240 | 22,903,156 | ||||||||
Total liabilities and members' equity | $ | 68,675,060 | $ | 64,077,501 | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
BLACKWATER MIDSTREAM HOLDINGS LLC
(FORMERLY BLACKWATER MIDSTREAM CORP.)
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Successor | Predecessor | Successor | Predecessor | |||||||||||||||
Three Months ended September 30, | Six Months ended September 30, | |||||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||||
REVENUE | ||||||||||||||||||
Storage | $ | 2,748,875 | $ | 2,099,008 | $ | 5,182,877 | $ | 4,212,043 | ||||||||||
Packaging services | 246,894 | 256,806 | 665,926 | 576,540 | ||||||||||||||
Excess through-put services | 23,786 | — | 203,773 | 174,282 | ||||||||||||||
Other services | 438,316 | 129,484 | 847,882 | 213,660 | ||||||||||||||
Total revenue | 3,457,871 | 2,485,298 | 6,900,458 | 5,176,525 | ||||||||||||||
COSTS AND EXPENSES | ||||||||||||||||||
Operating expenses | 630,307 | 557,966 | 1,382,645 | 1,156,414 | ||||||||||||||
Depreciation and amortization | 1,422,087 | 165,683 | 3,884,237 | 328,435 | ||||||||||||||
Selling, general and administrative expenses | 1,187,508 | 732,283 | 1,883,429 | 1,614,557 | ||||||||||||||
Loss on disposal of assets | — | 19,363 | — | 19,363 | ||||||||||||||
Total costs and expenses | 3,239,902 | 1,475,295 | 7,150,311 | 3,118,769 | ||||||||||||||
Operating income (loss) | 217,969 | 1,010,003 | (249,853 | ) | 2,057,756 | |||||||||||||
OTHER (EXPENSE)/INCOME | ||||||||||||||||||
Net interest expense | (553,122 | ) | (377,722 | ) | (1,084,236 | ) | (669,145 | ) | ||||||||||
Gain (loss) on change in fair market value of derivative liabilities | — | 254,502 | — | (747,470 | ) | |||||||||||||
Other income and expenses, net | (655 | ) | 10 | 42,843 | 10 | |||||||||||||
Income (loss) from continuing operations before taxes | (335,808 | ) | 886,793 | (1,291,246 | ) | 641,151 | ||||||||||||
Loss from discontinued operations, net of tax | (52,764 | ) | (82,629 | ) | (127,885 | ) | (207,756 | ) | ||||||||||
Income tax benefit (expense) | 214,213 | (345,849 | ) | 654,215 | (241,032 | ) | ||||||||||||
Net income (loss) | $ | (174,359 | ) | $ | 458,315 | $ | (764,916 | ) | $ | 192,363 | ||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
BLACKWATER MIDSTREAM HOLDINGS LLC
(FORMERLY BLACKWATER MIDSTREAM CORP.)
CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY AND
MEMBERS' EQUITY
(unaudited)
Predecessor Blackwater Midstream Corp. Common Stock | |||||||||||||||||||
Number of Common Shares | Par Value $.001 | Additional Paid-in-Capital | Accumulated Deficit | Total | |||||||||||||||
Balance, March 31, 2012 | 56,476,186 | $ | 56,476 | $ | 8,398,943 | $ | (1,407,575 | ) | $ | 7,047,844 | |||||||||
Shares issued for services | — | — | 12,533 | — | 12,533 | ||||||||||||||
Net loss | — | — | — | (265,952 | ) | (265,952 | ) | ||||||||||||
Balance, June 30, 2012 | 56,476,186 | 56,476 | 8,411,476 | (1,673,527 | ) | 6,794,425 | |||||||||||||
Shares issued for services | — | — | 12,533 | — | 12,533 | ||||||||||||||
Net income | — | — | — | 458,315 | 458,315 | ||||||||||||||
Balance, September 30, 2012 | 56,476,186 | 56,476 | 8,424,009 | (1,215,212 | ) | 7,265,273 | |||||||||||||
Successor Blackwater Midstream Holdings LLC | |||||||||||||||||||
Members' Equity, March 31, 2013 | $ | 22,903,156 | |||||||||||||||||
Net loss | (590,557 | ) | |||||||||||||||||
Members' Equity, June 30, 2013 | 22,312,599 | ||||||||||||||||||
Net loss | (174,359 | ) | |||||||||||||||||
Members' Equity, September 30, 2013 | $ | 22,138,240 | |||||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
BLACKWATER MIDSTREAM HOLDINGS LLC
(FORMERLY BLACKWATER MIDSTREAM CORP.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Successor | Predecessor | |||||||||
Six months ended September 30, | ||||||||||
2013 | 2012 | |||||||||
Cash flows from operating activities | ||||||||||
Net income (loss) | $ | (764,916 | ) | $ | 192,363 | |||||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||||
Depreciation and amortization | 3,979,645 | 553,773 | ||||||||
Loss on disposal of assets, net | — | 19,362 | ||||||||
Amortization of convertible loan discounts | — | 415,535 | ||||||||
Net gain on change in fair market value of derivative liabilities | — | 747,470 | ||||||||
Stock based compensation | — | 25,066 | ||||||||
Deferred tax expense (benefit), net | (735,978 | ) | 108,204 | |||||||
Changes in operating assets and liabilities: | ||||||||||
Accounts receivable - trade | (169,768 | ) | 32,404 | |||||||
Accounts receivable - other | 4,634 | 50,567 | ||||||||
Prepaid expenses | (75,109 | ) | (28,838 | ) | ||||||
Inventory | (11,528 | ) | (27,769 | ) | ||||||
Deferred revenue | 163,908 | 71,017 | ||||||||
Accounts payable and accruals | 648,464 | (988,532 | ) | |||||||
Net cash provided by operating activities | 3,039,352 | 1,170,622 | ||||||||
Cash flows from investing activities: | ||||||||||
Proceeds from restricted cash | (125 | ) | — | |||||||
Purchase of property, plant and equipment | (6,081,082 | ) | (2,550,461 | ) | ||||||
Net cash flows used in investing activities | (6,081,207 | ) | (2,550,461 | ) | ||||||
Cash flows from financing activities: | ||||||||||
Proceeds from bank loans | 6,200,242 | 2,387,110 | ||||||||
Payment on bank loans | (1,071,752 | ) | (666,932 | ) | ||||||
Net cash flows provided by financing activities | 5,128,490 | 1,720,178 | ||||||||
Net increase in cash and cash equivalents | 2,086,635 | 340,339 | ||||||||
Cash and cash equivalents at beginning of period | 312,284 | 190,334 | ||||||||
Cash and cash equivalents at end of period | $ | 2,398,919 | $ | 530,673 | ||||||
Supplemental cash flow disclosures | ||||||||||
Cash paid for interest, net of amounts capitalized | $ | 118,105 | $ | 290,006 | ||||||
Non-cash investing and financing activities | ||||||||||
Construction in process included in accounts payable | $ | 89,348 | $ | 363,942 | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
BLACKWATER MIDSTREAM HOLDINGS LLC
(FORMERLY BLACKWATER MIDSTREAM CORP.)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2013 AND 2012
1. BASIS OF PRESENTATION.
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the US (US GAAP) for interim financial information and with the instructions to Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by US GAAP for complete financial statements. The accompanying consolidated financial statements at September 30, 2013 and December 31, 2012 and for the three and six months ended September 30, 2013 (Successor) and the three and six months ended September 30, 2012 (Predecessor) contain all normally recurring adjustments considered necessary for a fair presentation of our financial position, results of operations, cash flows and shareholders’ equity for such periods. Operating results for the 2013 interim periods are not necessarily indicative of the results that may be expected for the year ending March 31, 2014.
These financial statements should be read in conjunction with the March 31, 2013 audited financial statements and notes thereto. The balance sheet at March 31, 2013 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by accepted accounting principles for complete financial statements. Certain items in 2012 have been reclassified to conform to the 2013 financial statement presentation generally accepted in the United States of America. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s audited financial statements for the year ended March 31, 2013. The results of operations for the six-month period ended September 30, 2013 are not necessarily indicative of the results that may be expected for the year.
RECLASSIFICATIONS
We have reclassified certain prior-year amounts to conform to the current year’s presentation.
2. ASSETS HELD FOR SALE & DISCONTINUED OPERATIONS
In May 2013, the Company entered into a one-year exclusive listing agreement with a Maryland commercial real estate broker to market the Maryland Terminal: its on-going business operations, its customer contracts, its assets and other intangibles. To date, we have not entered into a letter of intent to purchase with an interested party. However, we have prepared these financial reports showing the Maryland Terminal’s operating activities as discontinued operations and the assets and liabilities as held for sale.
The following table summarizes the income (loss) from discontinued operations reported in the consolidated statement of operations: | |||||||||||||||||
Successor | Predecessor | Successor | Predecessor | ||||||||||||||
Three Months ended September 30, | Six Months ended September 30, | ||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||
Revenue | $ | 39,814 | $ | 74,439 | $ | 84,583 | $ | 102,228 | |||||||||
Cost of revenues | 26,057 | 40,880 | 61,622 | 86,501 | |||||||||||||
Depreciation and amortization expense | 43,608 | 112,670 | 95,408 | 225,338 | |||||||||||||
Selling, general and administrative expenses | 40,512 | 39,178 | 105,364 | 95,136 | |||||||||||||
Operating Loss | (70,363 | ) | (118,289 | ) | (177,811 | ) | (304,747 | ) | |||||||||
Net interest expense | (16,135 | ) | (17,168 | ) | (31,837 | ) | (35,837 | ) | |||||||||
Income tax benefit | 33,734 | 52,828 | 81,763 | 132,828 | |||||||||||||
Loss from discontinued operations, net of tax | $ | (52,764 | ) | $ | (82,629 | ) | $ | (127,885 | ) | $ | (207,756 | ) | |||||
A summarized report of the assets and liabilities of Asset Held for Sale (the Blackwater Maryland, LLC Terminal) is as follows: | ||||||||
Successor | Successor | |||||||
as of | as of | |||||||
September 30, 2013 | March 31, 2013 | |||||||
Cash | $ | 1,659 | $ | 5,756 | ||||
Receivables | 13,700 | 31,797 | ||||||
Intangible assets, net | — | 15,964 | ||||||
Prepaid expenses and other current assets | 90,112 | 105,161 | ||||||
Property, plant, equipment, net | 2,153,613 | 2,229,709 | ||||||
Total assets of asset held for sale | 2,259,084 | 2,388,387 | ||||||
Accounts payable | 19,323 | 7,227 | ||||||
Current bank debt | 349,052 | 371,833 | ||||||
Long-term bank debt | 986,542 | 1,133,444 | ||||||
Deferred revenue | — | 2,300 | ||||||
Total liabilities of asset held for sale | $ | 1,354,917 | $ | 1,514,804 | ||||
3. HARVEY, LOUISIANA SITE PURCHASE
On July 10, 2013, Blackwater Harvey, L.L.C. (“BWHV”) acquired and purchased from Chemtura Corporation approximately 56 acres of property and improvements located at 1805 Fourth Street in Harvey, LA for $2,500,000. The land is adjacent to the Mississippi River and the assets include dormant storage tanks, unoccupied buildings, a barge dock and other improvements (“the Harvey assets”). As the site has not been in use for many years, BWHV intends to clear the site of debris, demolish some assets, improve other assets and build new assets to develop the site into a new bulk liquid storage terminal.
The Harvey assets when purchased did not include any employees, customer contracts, permits, licenses, offices, procedures, systems, or processes that had the ability to produce outputs; thus this asset purchase did not meet the definition of a business as per ASC Topic 805-10-55, paragraphs 4 through 9.
4. LONG-TERM DEBT
Summary of current and long-term debt at September 30, 2013 and March 31, 2013:
September 30, 2013 | March 31, 2013 | ||||||
The BWNO October 2010 note with JPM in the amount of $4,695,456 bears interest at the annual rate of 1.50% above the Prime Rate, subject to certain minimum rate requirements. The October 2010 Note provides for consecutive monthly installments of principal in the amount of $97,822, plus interest, commencing October 31, 2010 and continuing until maturity on September 30, 2014; along with related interest. | $ | 1,173,864 | $ | 1,760,796 | |||
The BWMD January 2012 term loan with JPM in the amount of $1,600,000 bears interest at the annual fixed rate of 4.50%. Beginning on July 21, 2012 and continuing on the last day of each calendar month thereafter, BWMD will pay monthly principal installments of $26,667, plus interest. All unpaid principal and accrued and unpaid interest is finally due and payable on July 21, 2017. | 1,199,997 | 1,360,000 | |||||
The BWGA February 2012 term loan with JPM in the amount of $1,380,000 bears interest at the annual fixed rate of 4.50%. Beginning on October 31, 2012 and continuing on the last day of each calendar month thereafter, BWGA will pay monthly principal installments of $23,000, plus interest. All unpaid principal and accrued and unpaid interest is finally due and payable on August 31, 2017. | 1,103,847 | 1,242,000 | |||||
The BWNO June 2012 term loan with JPM in the amount of $2,300,000 bears interest at the JPM CB Prime Floating interest rate. Beginning on January 31, 2013 and continuing on the last day of each calendar month thereafter, BWNO will pay monthly principal installments of principal and interest. All unpaid principal and accrued and unpaid interest is finally due and payable on December 31, 2017. In November 2012, this term note was increased to the amount of $2,800,000 and revised with principal payment of approximately $46,667, plus interest, commencing on June 30, 2013 and continuing on the last day of each calendar month thereafter. All unpaid principal and accrued unpaid interest is finally due and payable on May 31, 2018. As of September 30, 2013, $2,613,176 had been advanced on this loan. | 2,613,176 | 2,728,760 | |||||
The BWNO March 2013 term loan with JPM in the amount of $1,348,000 bears interest at the JPM CB Prime Floating interest rate. Beginning on October 8, 2013 and continuing on the 8th day of each calendar month thereafter BWNO will pay monthly principal installments of approximately $22,467, plus interest. All unpaid principal and accrued and unpaid interest is finally due and payable on September 8, 2018. As of September 30, 2013, $1,348,000 had been advanced on this loan. | 1,348,000 | 92,342 | |||||
The BWHD October 9, 2012 convertible promissory note with its affiliate, ArcLight Energy Partners Fund V, L.P., in the amount of $20,000,000 bears interest at the fixed annual rate of 10%. The principal and all accrued interest shall be payable on the maturity date of October 9, 2013. | 20,000,000 | 20,000,000 | |||||
The BWNO July 2013 term loan with JPM in the amount of $2,800,000 bears interest at the JPM CB Prime Floating interest rate. Beginning on August 10, 2013 and continuing on the 10th day of each calendar month thereafter BWNO will pay monthly interest installments. All unpaid principal and accrued and unpaid interest is finally due and payable on July 10, 2014. As of September 30, 2013, $1,298,409 had been advanced on this loan. | 1,298,409 | — | |||||
The BWHV July 2013 term loan with JPM in the amount of $5,800,000 bears interest at the JPM CB Prime Floating interest rate. Beginning on August 10, 2013 and continuing on the 10th day of each calendar month thereafter BWHV will pay monthly interest installments. All unpaid principal and accrued and unpaid interest is finally due and payable on July 10, 2014. As of September 30, 2013, $3,575,095 had been advanced on this loan. | 3,575,095 | — | |||||
Total debt | 32,312,388 | 27,183,898 | |||||
Less current maturities | (27,472,973 | ) | (22,328,873 | ) | |||
Total debt net of current maturities | 4,839,415 | 4,855,025 | |||||
Less asset held for sale | (986,542 | ) | (1,133,444 | ) | |||
Total debt net of current maturities and asset held for sale | $ | 3,852,873 | $ | 3,721,581 | |||
5. INCOME TAXES
The Company’s provision for taxes on income varied from the statutory income tax rate for the quarter and six-months ended September 30, 2013 and 2012 due to the following:
Three months ended September 30, | Six months ended September 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Federal income tax at statutory rate | $ | (143,584 | ) | $ | 255,454 | $ | (510,243 | ) | $ | 102,193 | |||||
State and local taxes | (21,115 | ) | 37,567 | (75,036 | ) | 15,028 | |||||||||
Income not subject to corporate-level tax | (84,718 | ) | — | (152,247 | ) | — | |||||||||
Other | 937 | — | 1,547 | (9,017 | ) | ||||||||||
Income tax expense (benefit) | (248,480 | ) | 293,021 | (735,979 | ) | 108,204 | |||||||||
Tax benefit from discontinued operations | 33,734 | 52,828 | 81,763 | 132,828 | |||||||||||
Income tax expense (benefit) from continuing operations | $ | (214,746 | ) | $ | 345,849 | $ | (654,216 | ) | $ | 241,032 | |||||
The income tax provision related to continuing operations consist of the following:
Three months ended September 30, | Six months ended September 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Current | $ | — | $ | — | $ | — | $ | — | |||||||
Deferred benefit (expense) | 214,746 | (345,849 | ) | 654,216 | (241,032 | ) | |||||||||
Effective rate | 64 | % | 39 | % | 51 | % | 38 | % | |||||||
Our effective tax rate for the periods ended September 2013 were higher than the statutory rate due to the inclusion in the financial statements of income of the parent company, which is not taxed at the corporate level.
6. SUBSEQUENT EVENTS
Management has evaluated subsequent events through December 10, 2013.
On October 7, 2013, Blackwater New Orleans, LLC entered into a $12,000,000 Term Note, maturity date of December 31, 2013; along with the Ninth Amendment to the Credit Agreement; the Second Amendment to the Collateral Mortgage, Assignment of Leases and Rents and Security Agreement; and an Allonge to the Collateral Mortgage Note. Proceeds of the note were used to pay (i) $9,315,000 of principal and $2,685,000 in accrued interest on the $27,000,000 promissory note issued by Blackwater Investments, Inc. to Blackwater Midstream Holdings LLC and (ii) $10,011,111 of principal and $1,988,889 in accrued interest on the $20,000,000 convertible promissory note issued by Blackwater Midstream Holdings LLC to ArcLight Energy Partners Fund V, L.P. (the “Fund V Loan”).
Additionally, on October 7, 2013, AL Blackwater, LLC, a wholly-owned entity of ArcLight Energy Partners Fund V, L.P., entered into a $30,000,000 one year Credit Agreement with Barclays Bank PLC. Proceeds of the loan were used to pay certain fees and expenses, to pay Blackwater Midstream Holdings LLC’s remaining $9,988,889 of principal towards the Fund V Loan, and to partially reimburse ArcLight Energy Partners Fund V, L.P. for its initial equity contribution into Blackwater Midstream Holdings LLC.
On December 10, 2013, Blackwater Midstream Holdings LLC entered into an Agreement and Plan of Merger by and among AL Blackwater, LLC ("ALB"), Blackwater Midstream Holdings LLC, ArcLight Capital Partners, LLC, American Midstream Partners, LP (“AMID”) and Blackwater Merger Sub, LLC (the “Merger Agreement”). Pursuant to the terms of the Merger Agreement, Blackwater will merge with Merger Sub, with Blackwater continuing as the surviving entity and an indirect wholly owned subsidiary of AMID (the “Merger”). The aggregate purchase price for the merger is approximately $60 million, subject to certain purchase price adjustments (the “Consideration”), which will be paid in a combination of cash and approximately $3 million of Partnership common units (the “Rollover Units”). The aggregate Consideration includes the payoff of existing indebtedness of Blackwater. In addition to the Consideration, AMID has
agreed to an earnout that is payable to ALB if, at any time during the five years following the consummation of the Merger, Blackwater Harvey, LLC, a Delaware limited liability company and a wholly owned subsidiary of Blackwater (“BW Harvey”), exceeds a trailing twelve month “EBITDA” of $5,000,000 (the “Target”). In the event BW Harvey achieves the Target, the Partnership will pay ALB the lesser of (i) $5,000,000 and (ii) 50% of eight times BW Harvey’s trailing-twelve month “EBITDA” less its capital costs.