Vertex Energy 8-K [ex10-2.htm]

Exhibit 10.2

 

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MATERIAL BELOW MARKED BY AN “***” HAS BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT. THIS ENTIRE EXHIBIT INCLUDING THE OMITTED CONFIDENTIAL
INFORMATION HAS BEEN FILED SEPARATELY WITH THE COMMISSION.

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BASE OIL SALES AGREEMENT

 

 

THIS BASE OIL SALES AGREEMENT, (this “Agreement”) is made on this 29th, day of
January, 2016 (the “Effective Date”), by and between Vertex Energy Operating,
LLC, a Texas limited liability company with its principal place of business
located at 1331 Gemini Street, Suite 250, Houston, Texas 77058 and its
affiliates and subsidiaries (collectively, “Purchaser”) and Safety-Kleen
Systems, Inc., a Wisconsin corporation with its principal place of business
located at 2600 North Central Expressway, Suite 400, Richardson, Texas 75080 and
its affiliates and subsidiaries (collectively, “Safety- Kleen” and, together
with Vertex, the “Parties”).

 

The following paragraphs set forth the general terms and conditions under which
Purchaser will purchase from Safety-Kleen and Safety-Kleen will supply to
Purchaser base oils and other finished lubricants of the type specified in
Exhibit A (the “Product”).

 

1.                  TERM:

 

Subject to the provisions hereof, this Agreement shall have a term of five (5)
years from the date hereof (the “Initial Term”) and shall automatically renew
for additional subsequent one (1) year terms (each a “Renewal Term”) unless a
Party provides the other Party with ninety (90) days prior written notice to the
other Party that it desires not to renew this Agreement (such Initial Term plus
the Renewal Terms, if applicable, the “Term”).

 

2.                  PRODUCT AND QUANTITY/ VOLUME COMMITMENT:

 

During the Term, Safety-Kleen agrees to sell to Purchaser, and Purchaser agrees
to purchase from Safety-Kleen, the Product up to the maximum quantities set
forth in Exhibit B (the “Volume Commitment”) and at the locations specified
herein or otherwise mutually agreed by the Parties in accordance with the terms
of this Agreement.

 

Safety-Kleen shall have no obligation to sell or deliver more than 95% of the
Volume Commitment of any Product.

 

In the event Purchaser seeks to purchase Product in excess of the Maximum Annual
Volume Commitment (as specified in Exhibit B) in any given year, written notice
of request by Purchaser to purchase such additional Product must be given ninety
(90) days prior to desired purchase date. Safety-Kleen has the right to accept
or not accept request, upon timely notice.

 

3.                  FORECAST:

 

During the Term, Purchaser will provide Safety-Kleen with a Product forecast
each month that details its requirements for the next two (2) months (the
“Forecast”). The Forecast will be by Product type, including by contracted grade
and volume, and will define planned shipments for each month in the Forecast. If
Purchaser fails to provide the Forecast in any month during the Term, then the
Forecast for such month shall be equivalent to the last monthly Forecast
provided by Purchaser; provided, however, if Purchaser shall have failed to
deliver a Forecast for six consecutive months, then Safety-Kleen, at its sole
discretion, may elect to terminate this Agreement.

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4.                  SPECIFICATIONS:

 

The Product shall meet Safety-Kleen’s current specifications for the Product as
disclosed in advance to Purchaser or the specifications provided upon request by
Purchaser (the “Specifications”). If any Product does not meet the
Specifications, Purchaser shall have the right to reject or revoke its
acceptance of such Product.

 

5.                  PRICING:

 

The price at which Safety-Kleen shall invoice Purchaser for Product sold and
delivered hereunder for shipping shall be as specified in Exhibit C.

 

6.                  PAYMENT:

 

Payment is due within thirty (30) days from the date of the bill of lading. 
Safety-Kleen and Purchaser agree that, in the event Purchaser fails to make
payment when due, an amount equal to 1.5% per month (18% per annum) or the
maximum amount allowed by law, whichever is greater, will be added to all
amounts outstanding beyond the due date.  In order to assure timely payment,
Purchaser agrees to notify Safety-Kleen within a reasonable time after receipt
of the invoice of any questions concerning an invoice charge.  All payments from
Purchaser shall be made through an Electric Funds Transfer (EFT) account.
Safety-Kleen, in its sole discretion, reserves the right to change credit
amounts extended to Purchaser to the extent it is reasonable to do so under the
circumstances.  If amounts owed to Safety-Kleen by Purchaser exceed allowed
credit amounts, Safety-Kleen further reserves the right to require certain
shipments be paid on a C.O.D. basis until Purchaser’s outstanding balances are
reduced within established credit terms.

 

7.                  ORDERING:

 

Orders must be placed in full rail car or truck load quantities. The minimum
order for one rail car is 22,000 gallons. The minimum order lead time (the
interval between the day an order is received and the day such order is
delivered to the applicable carrier for shipping) is seven (7) business days.
Orders must be placed by Purchaser with Safety-Kleen’s Customer Service
department at (800) 421-6841.

 

8.                  TRANSPORTATION AND DELIVERY:

 

The pricing specified in Section 5 does not include transportation fees. All
transportation to Purchaser’s location shall be billed as a separate line item
on the invoice. Freight charges will be based on mode of transportation, which
is at the election of Purchaser. Safety-Kleen shall sell, and Purchaser shall
buy, the Product F.O.B. Origin, freight prepaid as specified in Exhibit B.

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Safety-Kleen shall arrange for shipping by rail or truck carrier to Purchaser’s
agreed upon facilities. Purchaser shall pay demurrage at a rate of seventy five
dollars ($75) per day beginning on day eight (8) after the rail carrier notifies
Purchaser of the rail car’s arrival for delivery at the receiving facility and
at one hundred fifty dollars ($150) per day beginning on day thirty (30) until
the empty railcar is released.

 

Any claims for shortage in quantity or deficiency in quality shall be waived
unless Purchaser gives Safety-Kleen notice of the claim in writing within ten
(10) business days of delivery. Such notice shall set forth in reasonable detail
the facts on which Purchaser’s claim is based, and Safety-Kleen (and/or its
representatives) shall be given full opportunity to inspect, measure and test
the Product and alleged deficiencies. Safety-Kleen tank gauge, rail strapping
chart and/or scale ticket readings, which Safety-Kleen represents will be
accurate in all material respects, will be used to determine delivered quantity
which shall be conclusive and binding on both Parties. To support deficiency of
quality claims, Purchaser must submit to Safety-Kleen in a timely manner,
appropriate retained samples (4 ounce minimum).

 

Notwithstanding a delivery date stated on a purchaser order, Safety-Kleen makes
no guaranty as to the date of delivery of any order and, subject to the last
sentence of this paragraph, Purchaser shall have no recourse against
Safety-Kleen based on a failure to meet a stated delivery date. Safety-Kleen,
however, agrees to make all reasonable efforts to deliver the Product to
Purchaser in a timely manner. Notwithstanding the foregoing, in the event
Safety-Kleen fails to deliver any order for Product from Purchaser within 3 days
of the delivery date stated on a purchaser order, then (a) Purchaser shall be
entitled to obtain equivalent Product from a third party source and such volume
of Product shall reduce Purchaser’s Volume Commitment obligation hereunder in an
amount equivalent to such third party procured product, (b) Safety-Kleen shall
be responsible for any incremental increase in costs incurred by Vertex related
thereto and (c) Safety-Kleen shall accept return of such late Product at no cost
to Purchaser.

 

 

9.                  INSPECTIONS:

 

Each delivery of Product shall be inspected by Purchaser for damage or defects
and to verify that they meet the Specifications in accordance with the
provisions of Section 8 above. Purchaser will notify Safety-Kleen as provided in
Section 8 above if any Product is damaged or does not meet Specifications.
Purchaser’s only remedy in the event of non-conformity will be to return the
Product to Safety-Kleen (at Safety-Kleen’s expense) and receive a refund of the
purchase price paid, and, additionally, Purchaser shall be entitled to procure
alternative quantities of the Product from third party sources in accordance
with the terms set forth in the last paragraph of Section 8 above.

 

10.              TITLE AND RISK:

 

Upon loading, title to the Product and its risk of loss shall pass to Purchaser,
subject to any interest of Safety-Kleen reserved to secure Purchaser’s payment
or performance.

 

 

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11.              WARRANTIES:

 

Safety-Kleen expressly warrants that at the time of transfer of title,
Safety-Kleen shall (A) hold full and unencumbered legal and equitable title to
the Product, and (B) have full right, authority and power to transfer and convey
such title to Purchaser and to effect delivery of the Product to Purchaser.
Additionally, Safety-Kleen expressly warrants that at the time of transfer of
title the Product shall conform to the Specifications. OTHER THAN THE FOREGOING,
THERE ARE NO GUARANTEES OR WARRANTIES, EXPRESSED OR IMPLIED, INCLUDING WITHOUT
LIMITATION THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS OR SUITABILITY
OF THE PRODUCT FOR ANY PARTICULAR PURPOSE. THERE ARE NO OTHER ORAL OR WRITTEN
GUARANTEES OR WARRANTIES EXCEPT AS PROVIDED HEREIN. PURCHASER’S SOLE AND
EXCLUSIVE REMEDIES AGAINST SAFETY-KLEEN FOR ANY LIABILITY WITH RESPECT TO THE
PRODUCT, WHETHER ANY CLAIM FOR RECOVERY IS BASED UPON OR ARISES OUT OF THEORIES
OF CONTRACT, TORT OR OTHERWISE SHALL BE REFUND OF THE PURCHASE PRICE. IN NO
EVENT SHALL SAFETY-KLEEN BE LIABLE FOR ANY SPECIAL, INDIRECT, INCIDENTAL,
PUNITIVE OR CONSEQUENTIAL DAMAGES, WHETHER BASED IN CONTRACT, WARRANTY,
INDEMNITY OR TORT, NEGLIGENCE OR STRICT LIABILITY.

 

Purchaser expressly warrants THAT PRODUCT Purchased from Safety-Kleen will not
be resold to Safety-Kleen’s existing BASE OIL Customers.

 

Neither Party shall be liable to the other for indirect, incidental,
consequential, or special damages, including but not limited to loss of use and
lost profits.

 

12.              DISCLAIMER TO SUPPLY AND DELIVERY: 

Failure (in whole or in part) or delay on the part of either Party in the
performance of any of the obligations imposed upon such Party hereunder, except
for the payment for Product previously received, shall be excused and such Party
shall not be liable for damages or otherwise on account thereof, when such
failure or delay is the direct or indirect result of any cause beyond the
reasonable control of such Party, whether or not existing at the date hereof,
and whether or not reasonably within the contemplation of the Parties at the
date hereof (each a “Force Majeure Event”), including, without limitation, fire,
labor dispute, embargo, material shortage, acts of God, or acts of any
government, whether national, state, municipal or otherwise.  If, for any
reason, Safety-Kleen is unable to make deliveries to all of its customers, its
failure in whole or in part to make deliveries to Purchaser, while delivering to
others, shall not be a breach of this Agreement.  In such event, Safety-Kleen
will prorate its available supply of product on an equitable basis to
Purchaser.  The applicable Party shall make every commercially reasonable effort
to eliminate and/or correct the effect of such Force Majeure Event as completely
and rapidly as is reasonably possible. Upon cessation of such cause or causes
for any such failure or delay, performance under this Agreement shall be
resumed, but such failure or delay shall not extend the Term of this Agreement,
nor obligate either Party to make up deliveries or receipts, as the case may
be.  Nothing herein contained shall excuse Purchaser from paying Safety-Kleen,
when due, any amounts payable for any conforming Product sold and delivered to
Purchaser hereunder.

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13.              EXPORT CONTROL:

Purchaser represents, covenants and warrants to Safety-Kleen that neither it nor
any of its officers or employees will engage in or facilitate the export or
re-export of any Product, any other Safety-Kleen products or any other product
incorporating any Safety-Kleen products purchased from Safety-Kleen or from a
third Party:

  a) to Cuba, Iran, North Korea, Syria or to any other country subject to a U.S.
trade embargo;         b) to any person or entity found on lists of restricted
or denied parties maintained by the U.S. government, including the Denied
Persons List, the Specially Designated Nationals List, the Unverified List, the
Entity List and the Debarred List; or         c) subject to any other U.S.
export control restriction (except with necessary licenses and approvals).

     

Purchaser shall take all reasonable steps necessary to require its consultants,
agents and employees to comply with the above representations, covenants and
warranties. Purchaser agrees that it will notify Safety-Kleen in writing
immediately of the occurrence of any event which contravenes any of the
foregoing representations, covenants and warranties.

 

14.              ASSIGNMENT:

 

Neither Party shall assign its rights and obligations hereunder directly or
indirectly without prior written consent of the other Party. Notwithstanding the
foregoing, either Party may assign its rights and obligations hereunder to an
affiliate of such Party provided that the credit worthiness of such affiliate is
not materially weaker than the credit worthiness of the assignor.

 

15.              AMENDMENT:

 

No amendment to, or modification, waiver or discharge of, any provision of this
Agreement shall be binding on either Party unless in writing and signed by
authorized representatives of both Parties.

 

16.              TERMINATION:

 

Either Party may terminate this Agreement if the other Party fails to perform in
accordance with this Agreement and the defaulting Party fails to correct such
default within thirty (30) days of written notice of default by the
non-defaulting Party; provided, however, (i) either Party may terminate this
Agreement at its sole option immediately if the other Party is liquidated,
dissolved, or has a change of ownership or control; (ii) Safety-Kleen may
terminate this Agreement at its sole option if Purchaser fails to pay
Safety-Kleen when due any amounts hereunder and such failure continues for
fifteen (15) days after written notice from Safety-Kleen; (iii) either Party may
terminate this Agreement at its sole option immediately if the other Party
voluntarily files a petition for bankruptcy for reorganization or to effect a
plan or other arrangements with creditors or is adjudicated bankrupt or
insolvent; (iv) and Safety-Kleen may terminate this Agreement at its sole option
if Purchaser fails or refuses to accept delivery of the conforming Product as
agreed herein or refuses any further deliveries without required notice.

 

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17.              CONFIDENTIALITY:

 

Safety-Kleen and Purchaser, and their respective affiliates, officers,
directors, employee and agents (“Representatives”), shall treat and maintain as
confidential property, and not use for its own benefit or disclose to others
during the term of this Agreement and for a period of ten (10) years thereafter,
except as is necessary to provide the Products and any related services
hereunder, any information (including any technical information, experience or
data) regarding products, pricing, plans, programs, plants, processes, costs,
equipment, operations, or such Party’s vendors, suppliers and customers, or the
chemical composition, quantity or analysis of the Product, the terms of this
Agreement or the existence of this Agreement (collectively, “Confidential
Information”), which may be disclosed by a Party (the “Disclosing Party”) to, or
come within the knowledge of, the other Party (the “Receiving Party”), its
respective Representatives in the performance of this Agreement, without the
Disclosing Party’s prior written consent.

 

The provisions of this section shall not apply to any Confidential Information
which: (a) has been published and has become part of the public domain other
than by wrongful acts or omissions of Receiving Party, its employees and agents;
(b) has been furnished or made known to the Receiving Party, its employees or
agents, by third parties (other than those acting directly or indirectly for or
on behalf of Receiving Party) as a matter of legal right and without restriction
on disclosure; (c) was in Receiving Party’s possession prior to disclosure by
the Disclosing Party and was not acquired by Receiving Party, its employees and
agents directly or indirectly from the Disclosing Party; or (d) is required by
law or by any governmental regulatory authority to be disclosed; provided the
Receiving Party gives the Disclosing Party sufficient notice of such anticipated
disclosure so that the Disclosing Party might, at Disclosing Party’s expense,
seek a protective order or other remedy it deems appropriate to prevent
disclosure of the Confidential Information.

 

The Parties agree to exercise the same degree of care and discretion to avoid
unauthorized disclosure, publication or dissemination of all of the other
Party’s Confidential Information as the Party exercises to protect its own
confidential information, being no less than a reasonable degree of care.

 

The obligations of this Section 17 shall survive for a period of five (5) years
after termination of this Agreement. Notwithstanding anything herein to the
contrary, breach of the obligations set forth in this Section 17 shall give rise
to immediate termination.

 

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18.              NOTICES:

 

All notices and communications required or permitted to be given hereunder shall
be considered to be given and received in all respects when personally delivered
or sent by facsimile or sent by reputable overnight courier service or three (3)
days after being deposited in the United States mail, certified, postage prepaid
and return receipt requested to the following addresses:

 

Purchaser:

Vertex Energy Operating, LLC

1331 Gemini Street, Suite 250
Houston, TX 77058

Attn: Benjamin P. Cowart, President and CEO

 

Safety-Kleen:

Safety-Kleen Systems Inc

2600 N. Central Expressway

Suite 400

Richardson, TX 75080

 

With a copy to:

Clean Harbors Inc.

42 Longwater Drive

P.O. Box 9149

Norwell, MA 02061-9149

Attn: General Counsel (Urgent Contract Matter)

 

19.  GOVERNING LAW:

 

This contract shall be governed by and construed in accordance with Texas law
without regard to conflicts of law rules. The Parties consent to the exclusive
jurisdiction of the state and federal courts located in the state of Texas with
regard to all disputes hereunder.

 

20.  WAIVER:

 

Any waiver by either Party of any provision or condition of this Agreement shall
not be construed or deemed to be a waiver of any other provisions or conditions.

 

21.  SEVERABILITY:

 

If any section of this Agreement shall be found to be unenforceable, such
finding shall not affect the enforceability of any other section or the
Agreement as a whole.

 

22.  ENTIRE AGREEMENT:

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This Agreement and the attachments hereto, constitute the entire agreement
between Purchaser and Safety-Kleen related to the purchase of the Product and
shall be deemed effective on the date signed by the Party executing this
Agreement last. Should any discrepancy exist between this Agreement and any
supporting documents, such as Purchaser’s request for Product and Product
receipts, the terms and conditions of this Agreement shall control. The Parties
agree that preprinted terms and conditions on a purchase or work order shall be
of no force and effect, even if signed by both Parties. No modification of this
Agreement shall be binding on Safety-Kleen or Purchaser unless in writing and
signed by both Parties.

 

23.  COUNTERPARTS:

 

This Agreement may be executed in several counterparts, each of which shall be
an original and all of which shall constitute one and the same document. A
signed copy of this Agreement delivered by facsimile, e-mail or other means of
electronic transmission shall be deemed to have the same legal effect as
delivery of an original signed copy of this Agreement.

 

SIGNATURE PAGE FOLLOWS

 

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IN WITNESS WHEREOF, the Parties have caused this Base Oil Sales Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.

 

 

SAFETY-KLEEN SYSTEMS, INC.

VERTEX ENERGY OPERATING, LLC:                         By: /s/ James M. Rutledge
  By: /s/ Benjamin P. Cowart               Its: Executive Vice President   Its:
President and Chief Executive Officer               Date: January 29, 2016  
Date: January 29, 2016  

 

 

 

 

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Exhibit A

 

Description of Product (Base Oils and Finished Lubricants)

 

Finished Lubricants:

15 W 40

5 W 20

5 W 30

10 W 30

10 W 30 HD

AW 32

AW 46

AW 68

UTF

ATF Dexron/Mercon

 

Base Oils:

 

[see attachment beginning on next page]

 

 

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MATERIAL BELOW MARKED BY AN “***” HAS BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT. THIS ENTIRE EXHIBIT INCLUDING THE OMITTED CONFIDENTIAL
INFORMATION HAS BEEN FILED SEPARATELY WITH THE COMMISSION.

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Exhibit B

 

 

VOLUME COMMITMENT:

 

Maximum Annual Volume Commitment: *** U.S. gallons

 

Maximum Quarterly Volume Commitment: *** U.S. gallons

 

 

PICKUP:

 

At the option of Purchaser, to the extent the applicable Product is produced and
available from such location, either:

 

–          FOB East Chicago;

–          FOB Breslau; or

–          FOB Newark/Bango.

 

 

Exhibit C – Pricing

 

The price at which Safety-Kleen shall invoice Purchaser for Product sold and
delivered hereunder for shipping shall be a price equal to ***. Purchaser shall
be responsible for all taxes, if any, applicable to the sale of the Product
contemplated herein, which taxes are not included in the pricing specified
herein. Safety-Kleen shall invoice Purchaser at the time the Product is
delivered to the destination point for such Product.

 

 

 

 

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