SOVEREIGN BANK
November 10, 2016
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SOVEREIGN BANK
Mr.
Xxxxxxxx Xxxxxxx
Xxxxxxx
Energy LLC and Lazarus Refining & Marketing, LLC
000
Xxxxxx Xxxxxx, Xxxxx 0000
Houston,
TX 77002
Lazarus Energy LLC ("LE") and Lazarus Refining
& Marketing, LLC ("LRM", and collectively, with LE,
"Lazarus")
have three outstanding loans
(collectively, the "Loans") from Sovereign Bank ("Bank"). The Loans
are evidenced by, among other documents, (i) three Loan Agreements
(collectively, the "Loan
Agreements") dated May 2, 2014,
June 22, 2015, and December 4, 2015, respectively. As of the
quarter ending September 30, 2016, Xxxxxxx is in breach of the
following covenants specified in the Loan Agreements, as specified
below (collectively, the "Covenant
Default"):
1.
Loan Agreement dated June 22, 2015 between Bank and
LE:
a. Section
4.2 (c) combined Current Ratio of not less than 1.0 to
1.0;
b. Section
4.2 (e) combined Debt Service Coverage Ratio of not less than 1 50
to 1.0;
2.
Loan Agreement dated December 4, 2015 between Bank and
LRM:
a. Section
4.2 (c) combined Current Ratio of not less than 1.0 to
1.0;
b. Section
4.2 (e) combined Debt Service Coverage Ratio of not less than 1.50
to 1.0;
Subject to the agreement and concurrence of the
United States Department of Agriculture ("USDA") that Bank's waiver
of the Covenant Default shall not impair or void any of the USDA
agreements and guarantees relating to the Loans, Bank hereby waives
(the "Waiver")
the Covenant Default as to only the
quarter ending September 30, 2016. Except for the foregoing, Bank
hereby expressly reserves and preserves all of Bank's rights,
remedies and recourses under the Loan Agreements and all of the
other documents evidencing, governing, guaranteeing and/or securing
the loans (all such documents, collectively, with the Loan
Agreements, the "Loan
Documents"), including, without
limitation, Bank's rights with respect to any other breaches or
defaults under the Loan Documents which may be now existing, or
which hereafter occur.
This
Waiver is made as a courtesy to Lazarus, and shall not constitute a
course of dealing or entitle Lazarus to any further waivers or
forbearances. Bank hereby demands strict performance with all terms
and conditions of the Loan Documents.
SOVEREIGN
BANK
By:/s/ XXXXXXX XXXXXX
Name:
Xxxxxxx Xxxxxx
Title:
Senior Vice President
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