Fifth Amendment to the Settlement Agreement, dated as of May 6, 2019, by and among Lazarus Energy, LLC, Blue Dolphin Energy Company, Lazarus Energy Holdings, LLC, Nixon Product Storage, LLC, Carroll & Company Financial Holdings, L.P., Jonathan Carroll and GEL Tex Marketing, LLC

This Fifth Amendment to the Settlement Agreement (this “Fifth Amendment”), dated as of May 6, 2019, is by and between Lazarus Energy, LLC, a Delaware limited liability company (“Lazarus”); Blue Dolphin Energy Company, a Delaware corporation (“BDEC”); Lazarus Energy Holdings, LLC, a Delaware limited liability company (“LEH”); Nixon Product Storage, LLC, a Delaware limited liability company (“Nixon”); Carroll & Company Financial Holdings, L.P. (“C&C”); Jonathan Carroll (“Carroll” and, together with Lazarus, BDEC, LEH, Nixon, and C&C the “Lazarus Parties”); and GEL Tex Marketing, LLC, a Delaware limited liability company (“GEL Tex”) (each, a “Party” and, collectively, the “Parties”).

WHEREAS, on July 20, 2018, the Parties executed the Settlement Agreement1 in order to provide for a settlement between the Lazarus Parties and GEL Tex regarding the Final Award that resolves the Arbitration and the District Court Action contingent upon the Lazarus Parties obtaining the Settlement Financing to fund a settlement in accordance with the terms of the Settlement Agreement;

WHEREAS, paragraph 15(d) of the Settlement Agreement requires the Lazarus Parties to achieve certain milestones in connection with obtaining the Settlement Financing;

WHEREAS, paragraph 17(a) of the Settlement Agreement provides that the Settlement Agreement shall terminate automatically on December 31, 2018 unless otherwise extended in writing by GEL Tex;

WHEREAS, on October 17, 2018, the Parties executed the First Amendment to the Settlement Agreement (the “First Amendment”) to amend the Settlement Agreement;

WHEREAS, on November 15, 2018, the Parties executed the Second Amendment to the Settlement Agreement (the “Second Amendment”) to further amend the Settlement Agreement;

WHEREAS, on December 19, 2018, the Parties executed the Third Amendment to the Settlement Agreement (the “Third Amendment”) to further amend the Settlement Agreement;

WHEREAS, on March 19, 2019, the Parties executed the Fourth Amendment to the Settlement Agreement (the “Fourth Amendment”) to further amend the Settlement Agreement;

WHEREAS, on April 19, 2019, the Lazarus Parties provided GEL Tex with that certain letter from Pilot Travel Centers LLC d/b/a Pilot Flying J (“Pilot”) to Lazarus Energy Holdings LLC dated April 18, 2019, in compliance with the Settlement Financing Milestone detailed in Paragraph 15(d)(i) of the Settlement Agreement;

1 All capitalized terms used but not otherwise defined in this Fifth Amendment shall have the meanings given to such terms in the Settlement Agreement.

 

WHEREAS, Pilot, as Lender, and Nixon Product Storage, LLC, Lazarus Refining & Marketing, LLC, Lazarus Energy Holdings LLC, Lazarus Energy, LLC, Blue Dolphin Energy Company, as Loan Parties, intend to enter into that certain Line of Credit, Guarantee and Security Agreement in the form annexed hereto as Exhibit E (the “Pilot Settlement Financing”);

WHEREAS, in order to facilitate the Lazarus Parties’ entry into the Pilot Settlement Financing, GEL Tex and the Lazarus Parties hereby agree to further amend the Settlement Agreement;

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements set forth in the Settlement Agreement and this Fifth Amendment, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, agree as follows:

of $500,000 due on the last business day of April 2019 (i.e., April 30, 2019) pursuant to Paragraph 2 of this Settlement Agreement (the “Deferred Interim Payment”) in one or more installments of no less than $100,000 (each, a “Deferred Interim Installment Payment,” and collectively, the “Deferred Interim Installment Payments”) as set forth in Section 2A(b)(ii) below.

Lazarus Parties to GEL Tex on or before the following dates (each, a “Deferred Interim Installment Payment Date”) and according to the following schedule:

  

 

GEL Tex as contemplated under Section 2A(c) above (and, for the avoidance of doubt, whether or not the Deferred Interim Payment has been paid in full at the time such Settlement Payment is made, so long as the Lazarus Parties have timely made each Settlement Installment Payment on the Settlement Installment Payment Date), no additional Interim Payments shall be due under Section 2 above, except that this Section 2A(d) shall not affect the obligations of the Lazarus Parties in respect of any Interim Payment representing a Deferred Interim Payment under Section 2A(b) above, which shall continue to be due and payable on the Deferred Interim Installment Payment Dates as provided in Section 2A(b)(ii); provided that, in the event the Lazarus Parties fail for any reason to make any of (i) a Deferred Interim Installment Payment by the applicable Deferred Interim Installment Payment Date or (ii) a Settlement Installment Payment by the

 

applicable Settlement Installment Payment Date, then (x) the Deferred Interim Payment for April 2019 and all Interim Payments that would have been due on the last business day of each month under Paragraph 2 of this Settlement Agreement but for the execution of this Fifth Amendment shall become immediately due and payable, and (y) the Lazarus Parties shall continue to make monthly Interim Payments until the earlier of (I) the Termination Date or (II) the date the Lazarus Parties pays to GEL Tex the entire Settlement Payment, the Deferred Interim Payment, and all accrued Interim Payments as contemplated under this Paragraph 2A(d)(x) that have arisen prior to such date of payment; provided further that the outstanding balance of the Final Award shall be reduced by all payments by the Lazarus Parties to GEL Tex, whether made with respect to an Interim Payment, the Deferred Interim Payment, the Deferred Interim Installment Payments, the Settlement Payment, or the Settlement Installment Payments.”

The “Settlement Payment Date” shall be the first date upon which the Lazarus Parties pay GEL Tex all of the following: (i) the Settlement Installment Payments totaling $10 million; (ii) the Deferred Interim Payments totaling $500,000; and (iii) all Interim Payments described in Paragraph 2A(d)(x) and (y).

Payment Default. The failure, refusal or neglect of the Lazarus Parties to pay any Interim Payment when due to GEL Tex.

Provide GEL Tex with copies of the fully executed loan documents for the Pilot Settlement Financing by no later than May 6, 2019, unless otherwise extended in writing by GEL Tex;

October 31, 2019, unless otherwise extended in writing by GEL Tex, if the Settlement Payment Date has not occurred on or before such date; or