Lazarus Energy Holdings, LLC
801 Travis, Suite 2100
Houston, Texas 77002
(713)850-0513
 
 
June 10, 2012

Mr. Ivar Siem
Chairman
Blue Dolphin Energy Company
801 Travis, Suite 2100
Houston, Texas 77002

 
In Re:
Ingleside Refinery

Dear Mr. Siem:

Representatives of Lazarus Energy Holdings, LLC (LEH) and Blue Dolphin Energy
Company (Blue Dolphin) have discussed the prospect of Blue Dolphin purchasing
from LEH Lazarus Texas Refinery I, LLC, (“LTRI”) a Delaware Limited Liability
company, comprised of land, equipment, pipelines and barge facility located in
Ingleside, San Patricio County, Texas and commonly known as the
InglesideRefinery (“Ingleside”).

Blue Dolphin has requested of LEH and LEH does hereby grant Blue Dolphin a 180
day exclusive option period to inspect and, if appropriate, negotiate a Purchase
and Sale Agreement (PSA), which would contain mutually agreeable terms and
provisions, as follows:

1.  
Option Consideration: As consideration for the exclusive option period,
simultaneously with the execution and delivery of this Letter Agreement, Blue
Dolphin shall pay LEH the fully refundable sum of One Hundred Thousand Dollars
($100,000.00) cash.

2.  
Financial Terms: The financial terms for Blue Dolphin’s acquisition of LTRIshall
consists of cash and/or a note payable and provided as follows:

a.  
Cash and assumption of all outstanding liabilities

b.  
Reimbursement of all cost associated with the acquisition, refurbishment and
environmental remediation of Ingleside by LTRI and LEH.

c.  
LEH will credit the full amount of the Option Consideration towards the purchase
price of LTRI by Blue Dolphin.

3.  
Give Back: If LEH and Blue Dolphin are unable to negotiate and execute within
the time referenced in paragraph 1. above, a mutually agreeable PSA, or if after
the EPA has signed off on the remediation cleanup of Ingleside, there is a
difference between the amount spent by LEH in cleaning up the Refinery and what
Blue Dolphin is willing to pay to acquire the interests of LTRI,then LEH, with
no extra consideration from Blue Dolphin, shall return to Blue Dolphin the
Option Consideration.

 
 
 
 
 

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Mr. Ivar Siem
June 10, 2012
Page 2
 
 
 
4.  
Superior Crude Gathering, Inc. Lease Agreement: Blue Dolphin acknowledges that
Ingleside is subject to a Lease Agreement with Superior Crude Gathering, Inc.
(“Superior”), the terms and provisions of which have been delivered to Blue
Dolphin.  Any cash consideration that must be paid to Superior in connection
with its termination of the Superior Lease Agreement would be payable by Blue
Dolphin.

The foregoing sets forth the understanding of the parties as to the basis by
which they are negotiating a PSA, with the understanding that the above
provisions comprise negotiating points only and do not constitute a definitive
obligation on the part of Blue Dolphin to purchase LTRI from LEH, but rather is
merely a statement of intention and the terms and provisions that the parties
will be discussing in an attempt to reach a mutual agreeable PSA.

If the foregoing correctly sets forth your understanding of the purpose of this
Letter Agreement, then please sign duplicate originals in the space provided
below and remit the Option Consideration to LEH.
 
 

 
Very truly yours,
     
LAZARUS ENERGY HOLDINGS, LLC
         
By:/s/ JONATHAN CARROLL                                 
         Jonathan Carroll 

 

BLUE DOLPHIN ENERGY COMPANY

By:
/s/ IVAR SIEM                                         
 
Ivar Siem, Chairman

By:
/s/ JONATHAN CARROLL                   
 
Jonathan Carroll, President

 
 

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