PROMISSORY NOTE
---------------
$2,000,000.00
Houston,
Texas
Effective July 31, 2009
For value received, LAZARUS LOUISIANA REFINERY II, LLC
("Borrower"), promises to
pay to the order of BLUE DOLPHIN ENERGY COMPANY ("Lender") at 801
Travis Street,
Suite 2100, Houston, Texas 77002, or at such other address as
Lender shall from
time to time specify in writing, the
principal sum of TWO MILLION AND NO/100
DOLLARS ($2,000,000.00), in legal and
lawful money of the United States of
America, on the outstanding principal from the date
advanced until paid at the
rate set out below.
1. Payment Terms.
This Note is due and payable as follows: The
unpaid
principal balance of this Note shall all be due and payable in full
on or before
January 31, 2010.
2. Late Charge.
Upon maturity of this Note, if
any portion of the
outstanding principal balance (plus all accrued but unpaid
interest) is not paid
within 10 days of the maturity date,
Borrower will be charged a delinquency
charge of 5% of the sum of the outstanding principal
balance (plus all accrued
but unpaid interest). Borrower agrees with
Lender that the charges set forth
herein are reasonable compensation to
Lender for the handling of such late
payments. All past due installments of principal shall bear
interest at the rate
of eighteen percent (18%) per annum, with no
compounding. All payments shall
first be applied to accrued interest, if any,
with the balance of the payment
reducing the unpaid principal balance hereof.
3. Prepayment. Borrower shall
have the right to prepay, prior to maturity,
all or any part of the principal of this Note without
penalty. All payments and
prepayments of principal or interest on this Note shall be
made in lawful money
of the United States of America in immediately
available funds, at the address
of Lender indicated herein, or such other place as the holder of
this Note shall
designate in writing to Borrower
4. Default. The
occurrence or existence of any of the following events or
conditions shall constitute an "Event of Default":
(a) the failure of the Borrower to pay when
due any of the
principal or interest payable pursuant to this Note; provided
however, an Event
of Default shall not arise hereunder until the
expiration of thirty (30) days
after the maturity date if prior to the maturity
date, Borrower provides to
Lender a written loan commitment from a
third party lender evidencing its
commitment to loan money to Borrower within thirty (30) days
after the maturity
date;
(b) the assignment by the
Borrower for the benefit of
creditors or the application by the Borrower to any court for the
appointment of
a trustee or receiver for any of the assets
of the Borrower that have been
pledged to secure the repayment
of the Note or the commencement of
any
proceedings relating to the Borrower under
any bankruptcy, reorganization,
arrangement, readjustment of debts or other insolvency law of
any jurisdiction,
or the entering of an order appointing such trustee or
receiver or adjudicating
the Borrower bankrupt or insolvent
or approving the petition in any such
proceedings;
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(c) the breach or violation by the
Borrower of any of its
agreements or covenants contained in this
Note, other than the payment of
principal or interest, or in any other
document or agreement between the
Borrower and the Lender concerning the
indebtedness evidenced by this Note,
including, but not limited to, the Mortgage and Security
Agreement described in
Section 13 of this Note.
(d) any prepayment of (i) the indebtedness of the Borrower
to
Notre Dame Investors, Inc. ("Notre Dame") existing as of the date
hereof or (ii)
the future indebtedness of the Borrower to Rio Vista Energy
Partners, L.P. ("Rio
Vista") or any of its affiliates, which is
made out of the proceeds of any
future loan received by the Borrower
or its affiliates and is not made in
accordance with the following order of repayment on a
proportionate basis based
on relative principal balances: (i) first to Notre Dame
and (ii) second to the
Lender and Rio Vista or its applicable affiliate.
If an event of default shall occur, the holder hereof may, at
the option of the
holder, without demand, notice or
presentment, declare the entire unpaid
principal balance of this Note, together
with all accrued unpaid interest
thereon, to be due and payable immediately.
Upon any such declaration, the
principal of this Note and any such
accrued interest shall become and be
immediately due and payable, and the holder
hereof may thereupon proceed to
protect and enforce the obligations of the Borrower hereunder
either by suit in
equity or by action of law or by other
appropriate proceedings, whether for
specific performance (to the extent
permitted by law) of any covenant or
agreement contained herein or in aid of the
exercise of any power granted
herein, or proceed to enforce the payment of this Note
or to enforce any other
legal or equitable right of the holder hereof. In the
event default is made in
the prompt payment of this Note when due or declared due, and the
same is placed
in the hands of an attorney for collection, or suit is
brought on same, or the
same is collected through probate, bankruptcy or
other judicial proceedings,
then the Borrower agrees and promises to pay all costs of
collection, including
reasonable attorney's fees.
5. Joint and Several
Liability; Waiver. Each borrower, maker,
signer,
surety and endorser hereof, as
well as all heirs, successors and
legal
representatives of said parties, shall be directly and
primarily, jointly and
severally, liable for the payment of all
indebtedness hereunder. Lender may
release or modify the obligations of any of the foregoing
perso
