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Exhibit 10.1
 
LEASE WITH OPTION FOR MEMBERSHIP INTEREST PURCHASE

This LEASE WITH OPTION FOR MEMBERSHIP INTEREST PURCHASE (this "Agreement") is
made and effective as of April 30, 2015 (the "Effective Date"), by and between
Bango Oil, LLC, a Nevada limited liability company ("Landowner") and Vertex
Refining NV, LLC, a Nevada limited liability company ("Lessee") (At times,
Landowner and Lessee are collectively referenced as the "Parties" or
individually as a "Party").

1.           Premises and Term.
 
1.1           Premises.  In consideration of the obligation of Lessee to pay
Rent (defined below) as hereinafter provided and in consideration of the other
terms, provisions, and covenants hereof, Landowner hereby demises and leases to
Lessee, and Lessee hereby takes from Landowner, a leasehold interest in those
certain tracts or parcels of land located in Churchill County, Nevada, described
on Exhibit "A" attached hereto and incorporated herein by this reference (the
"Land"), together with the structures and other improvements currently erected
thereon, including, without limitation, the current used oil re-refining plant,
storage tanks, and warehouse, and related improvements owned by Landowner
(collectively, the "Facility"), and together with any rights, privileges,
easements, entitlements, permits, and appurtenances belonging or in any way
pertaining to the Land not otherwise inconsistent with the terms of this
Agreement (all of the foregoing hereinafter collectively referred to as the
"Property"). Landowner makes no representations or warranties concerning the
Property, or any matters with respect thereto, except as expressly stated
herein. Except for such representations and warranties memorialized in this
Agreement, Lessee acknowledges that it is entering into this Agreement based on
its own investigation and analysis of the Property as well as Lessee's
experience in the type of facility contemplated by this Agreement.

1.2           Encumbrances.  Except with the written consent of Lessee, which
consent shall not be unreasonably withheld, or except as directed by a
governmental or quasi-governmental agency, or the Union Pacific Railroad,
Landowner shall not grant any easement, lease, encumbrance, or other interest in
the Property.

1.3           Term.  The term of this Agreement shall commence on the Effective
Date, and shall continue, unless sooner terminated pursuant to the provisions
this Agreement, until August 10, 2025 (the "Lease Term").

1.4           Right to Terminate.

(a)           Subject to Section 3.4.1 of this Agreement, at any time after six
(6) months from the Effective Date have passed, and if no Event of Default
(defined below) shall then exist, Lessee shall have the right to terminate this
Agreement; provided, however, that Lessee must provide twelve (12) months
written notice to Landowner of Lessee's termination of this Agreement. If Lessee
exercises its right to terminate the Lease, Landowner shall then have the right
to, during Lessee's twelve (12) month termination period, terminate the Lease
upon thirty (30) days written notice to Lessee. In the event this Agreement is
terminated, Rent shall be prorated on the basis of a thirty (30) day month.

 
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(b)           If no Event of Default shall then exist (outside of Lessee's
ability to operate at the Property due to creditor issues of the Prior Lessee),
Lessee shall have the right to terminate this Agreement upon five (5) days
written notice to Landowner in the limited event either Pac West Equipment
Finance or Republic Bank: (i) physically removes, over Lessee’s commercially
reasonable objections, a material portion of the improvements or equipment
located at the Property or (ii) obtains a preliminary injunction (as
differentiated from a temporary restraining order) preventing the use of a
material portion of such improvements or equipment, and in either case such
removal or preliminary injunction materially interferes with Lessee's operations
at the Property. This Section 1.4(b) shall automatically terminate and be of no
force or effect as of the date that is six (6) months after the Effective Date
unless either Pac West Equipment Finance or Republic Bank have filed an action
seeking to retake, or to prevent Lessee’s use of, such improvements or equipment
by that date.

2.           Payments and Required Improvements.

2.1           Intentionally Deleted.

2.2           Rent.  In order to keep this Agreement in effect during the Lease
Term, Lessee shall pay rent to Landowner as follows ("Rent"):

(a)           Abatement Period.  No Rent shall be payable until January 1, 2016.

(b)           Commencement of Rent Payments.  Beginning on January 1, 2016, and
continuing on a monthly basis until the termination of the Lease Term, Lessee
shall pay Landowner Rent in the amount of Two Hundred Forty-Four Thousand
Dollars ($244,000.00) per month.

(c)           Payment of Rent During 2016. During 2016, Lessee shall have the
option of paying Rent in the stock of Lessee's parent company, Vertex Energy,
Inc., a Nevada corporation ("Vertex"). Should Lessee exercise its option of
paying rent in Vertex stock as opposed to immediately available funds, Lessee
shall cause Vertex to issue stock to Landowner in an amount equal to 110% of the
otherwise applicable $244,000.00 Rent amount ($268,400.00), as calculated using
the Volume Weighted Average Price ("VWAP") of Vertex's stock for the 10-day
period preceding the first day of each month.  Landlord acknowledges that
Vertex's stock is restricted under Rule 144 and, as a result, may not be traded
until the six-month anniversary of the issuance date of such stock. If on the
six-month anniversary of the date that Vertex stock is issued as Rent, the value
of such stock (as calculated using the VWAP for the 10-day period immediately
prior to the six-month anniversary of the issuance date (the "New Value")) is
less than $268,400.00, then Lessee shall either (i) pay Landowner in immediately
available funds or (ii) cause Vertex to issue additional shares of Vertex stock
to Landowner, in either instance in the amount necessary to cause Landowner to
have at least $268,400.00 in cash and/or Vertex stock (as calculated based upon
the New Value) associated with the Rent payment in question. For the purpose of
clarity, if on the six-month anniversary of the date that Vertex stock is issued
as Rent the value of such stock is greater than $268,400.00, then Landowner may
keep this excess value as consideration for agreeing to accept equity in lieu of
immediately available funds, and no further action shall be required by Lessee,
Vertex, or Landowner with respect to such Rent payment.

 
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(d)           Payment of Rent Beginning January 1, 2017. Beginning with the Rent
payment due on January 1, 2017, all payments of Rent shall be made by Lessee to
Landowner in immediately available funds.

Except as provided in Section 2.2(a) above, Rent is due and payable on the first
(1st) day of each calendar month during the Lease Term.  Any amount due from
Lessee to Landowner which is not paid upon, or prior to, the date due for such
payment, shall bear interest in the per annum amount equal to two percent (2%)
in excess of the reference rate of interest announced from time to time by Bank
of America, N.A. (or an equivalent rate announced by a comparable national bank
selected by Landowner in the event Bank of America no longer announces a
Reference Rate) (the "Reference Rate of Interest"), but in no event in excess of
the maximum interest rate permitted by law, from the date such payment is due
until paid, but the payment of such interest shall not excuse or cure any
default by Lessee under this Agreement. In the event Lessee is more than five
(5) days late in paying any installment of Rent due under this Agreement, Lessee
shall additionally pay Landowner a late charge equal to ten percent (10%) of the
delinquent installment of Rent. The parties agree that the amount of such late
charge represents a reasonable estimate of the cost and expense that would be
incurred by Landowner in processing each delinquent payment of Rent by Lessee,
but the payment of such late charge shall not excuse or cure any default by
Lessee under this Agreement. The parties further agree that the payment of late
charges and the payment of interest provided for in this Section are distinct
and separate from one another.

2.3           Intentionally Deleted.

2.4           Required and Proposed Improvements.

2.4.1           Fire Suppression System. Notwithstanding anything to the
contrary contained in this Agreement, Lessee acknowledges that the Facility is
presently out of compliance with certain fire suppression system requirements
imposed by certain governmental authorities of the State of Nevada. One of these
requirements is the installation of the improvements described on Exhibit “H”
attached hereto and incorporated herein by this reference (the "Fire Suppression
System"). Lessee agrees to install, at no cost to Landowner, the Fire
Suppression System, and to diligently pursue such installation; provided,
however, that if Lessee fails to complete the installation of the Fire
Suppression System by the time that a governmental authority commences an
enforcement action against the Facility arising from a failure to timely install
the Fire Suppression System, such enforcement action shall not be a default
under Section 11.1 of this Agreement so long as Lessee is diligently pursuing
all commercially reasonable efforts to complete the installation of the Fire
Suppression System as soon as practicable; further provided, however, that
Landowner may declare a default under Section 11.1 in the event that Landowner
is subjected to a fine as a result of an enforcement action unless Lessee pays
such fine within five (5) days of receiving notice of such fine. Notwithstanding
anything to the contrary in this Agreement, the Fire Suppression System shall
conclusively be deemed a fixture of the Land, and title to the Fire Suppression
System shall automatically transfer to Landlord without the need of a bill of
sale upon the expiration or earlier termination of this Agreement.

 
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2.4.2           Intentionally Deleted.

2.4.3           Status of Second Distillation Column. Notwithstanding anything
to the contrary contained in this Agreement, if Lessee does not exercise the
Option (defined below), the second distillation column previously installed at
the Facility, which allows the Facility to have the capacity to produce no less
than 50,000 gallons of vacuum gas oil per day (the "SDC"), shall remain the
property of Landowner, and Lessee agrees that the SDC shall remain free and
clear of any liens, financing statements, or other encumbrances.

2.4.4           Lessee's Additional Processing Equipment.  Lessee may add, at
its expense, additional processing equipment to supplement the refining
capabilities of the Facility as of the Effective Date ("Lessee's Additional
Processing Equipment"); Landowner agrees to allow Lessee to construct and
operate Lessee's Additional Processing Equipment upon the condition that
Lessee's Additional Processing Equipment is permitted by the terms of the
Existing Permits (defined below); or Lessee obtains any additional permits
necessary to permit the construction and operation of Lessee's Additional
Processing Equipment. In order to avoid disputes as to the ownership of Lessee’s
Additional Processing Equipment following a termination of this Lease, Lessee
shall create and periodically supplement a schedule of Lessee’s Additional
Processing Equipment as such equipment is installed at the Facility by Lessee
(“Additional Processing Equipment Schedule”). Lessee shall provide updates of
the Additional Processing Equipment Schedule to Landowner no later than ten (10)
business days’ after Lessee completes installation of any equipment comprising
Lessee’s Additional Processing Equipment at the Facility.

2.4.5           Status of Improvements Installed by Prior Lessee.  Landowner and
Lessee agree that Lessee has a perfected security interest (recorded deed of
trust and filed UCC financing statement) in the personal property owned by Bango
Refining NV, LLC (“Prior Tenant”) and brought onto the Property pursuant to that
certain Lease With Option for Membership Interest Purchase dated as of August 4,
2010 by and between Landowner and Prior Tenant (“Prior Lease”). Lessee will
obtain permission from Prior Tenant to use Prior Tenant's personal property that
is located at the Property ("Prior Tenant Property") and may obtain title to all
or a portion of the Prior Tenant Property by enforcing its security
interest.  Upon the expiration or earlier termination of this Lease, Lessee's
security interest in the Prior Tenant Property shall terminate and Lessee's
ownership interest in the Prior Tenant Property, if any, shall be deemed to have
been conveyed to Landowner, without the need for a bill of sale to formally
transfer title. For the purpose of clarity, the Prior Tenant Property does not
include the SDC installed by Prior Tenant pursuant to the Prior Lease.

 
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3.           Purpose of this Agreement; Permitted Uses; Additional Construction.

3.1           Purpose of this Agreement.  This Agreement is for the purpose of
using the Facility and any Additional Facilities (defined below) to (i)
re-refine used lubricating oils, blending re-refined lubricating oils, and each
and every related and/or ancillary purpose or function (the "Existing Use") and
(ii) design, construct, install, and operate a biorefinery for the purpose of
producing renewable diesel fuel, renewable jet fuel, biochemicals and related
byproducts (the "Proposed Use"), each to the extent permitted by applicable law,
the Existing Permits and permits obtained after the date of this Agreement
(collectively, the "Permitted Use"), and throughout the term of this Agreement,
Lessee shall have the sole and exclusive right to use the Property for the
Permitted Use. Lessee shall not use the Property for any purpose other than the
Permitted Use without the prior written consent of Landowner, which consent may
be withheld, in Landowner's reasonable discretion. Notwithstanding anything to
the contrary in this Agreement, In no event shall Lessee construct or install
any underground storage tanks on the Property.  Lessee shall not construct or
install any underground piping at the Property without Landowner's prior written
consent, which consent shall not be unreasonably withheld, delayed or
conditioned.

3.2           Use of the Property.  Subject to Lessee's compliance with
Section 3.1 of this Agreement, the rights granted to Lessee in this Agreement
permit Lessee, by way of example and not limitation, to do the following:

3.2.1           Extract soil samples, perform geotechnical tests, and conduct
such other tests, studies, inspections, and analysis on the Land as Lessee deems
necessary, useful, or appropriate.

3.2.2           Construct, erect, install, operate, maintain, reinstall,
enhance, replace, relocate and remove from time to time, the following
"Additional Facilities" on, above, and under the Land:

(a)           foundations and concrete pads, support structures,
footings,  anchors, fences, maintenance, security, office facilities, storage
tanks and warehouses, staging areas for the assembly of equipment, and related
facilities and equipment to be operated in conjunction with used oil re-refining
equipment;

(b)           electrical wires and cables required for the gathering and
transmission of electrical energy and/or for communication purposes; water and
sewage lines, leech fields, and wells; and roadway and railroad improvements
including siding and spurs, and other related infrastructure improvements; and

(c)           any other improvements, including facilities, machinery and
equipment that Lessee reasonably determines are necessary, useful or appropriate
to accomplish the Permitted Use, regardless of whether such improvements are
located above, upon, or below the surface of the Property (subject, however, to
Section 3.1 of this Agreement).

 
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3.2.3           Remove, trim, prune, top or otherwise control the growth of any
tree, shrub, plant or other vegetation that could obstruct, interfere with, or
impair the Facility, Additional Facilities, or the Permitted Use;

3.2.4           Excavating, grading, leveling and otherwise modifying the Land,
all in Lessee's sole discretion as Lessee may deem desirable or necessary in
connection with the Permitted Use.

3.3           Lessee's Improvement Work.  Should Lessee decide to construct any
Additional Facilities, Lessee's improvement work shall be subject to the
following requirements, the failure to comply with which is an explicit default
under this Agreement:

3.3.1           Improvements; Approval of Plans.  Lessee shall consult with
Landowner on its site development plan prior to construction of any Additional
Facilities, which plan shall depict the proposed location of new or expanded
structures, transportation improvements, and utility lines, before making
Lessee's final decisions (including applying for any construction permits) as to
the location of such Additional Facilities on the Property. Within thirty (30)
days of receiving Lessee's site development plan, Landowner shall notify Lessee
of any concerns of Landowner, and Lessee shall make any reasonable modifications
to its site development plan necessary to reasonably address Landowner's
concerns; provided, however, that Lessee shall make all final siting decisions
at its discretion, subject to working in good faith to address the concerns of
Landowner. Within thirty (30) days after completion of the Additional
Facilities, Lessee shall deliver a complete set of the as-built plans for the
Additional Facilities, as well as any governmental permits, to Landowner.

3.3.2           General Contractor.  Selection of a general contractor to
construct the Additional Facilities shall be made by Lessee. The general
contractor shall be licensed in the State of Nevada. All engineering shall be
performed by, or under the supervision of, professional engineers licensed in
the State of Nevada.

3.3.3           Liability.  The Additional Facilities shall be constructed
without cost or expense to Landowner and in accordance with the requirements of
all laws, ordinances, codes, orders, rules, regulations, and any applicable
entitlements, permits or approvals, of all governmental authorities having
jurisdiction over the Property. Lessee agrees to defend, protect, indemnify, and
hold Landowner, its successors, assigns, agents and employees harmless from and
against any and all cost, liability, expense, damage, or injury resulting from,
or arising in connection with, the construction, operation, repair, and
maintenance of the Additional Facilities during the Lease Term.

3.3.4           Insurance.  In addition to the other insurance requirements of
this Agreement, prior to the commencement of any construction on the Property,
Lessee shall obtain, or cause its contractors to obtain, on behalf of Lessee,
its contractors and agents, without cost to Landowner, such additional insurance
coverages as Landowner shall reasonably request in light of existing policies
maintained by Lessee. Lessee shall also obtain general liability insurance for
the mutual benefit of Landowner, Lessee, and the Property, and shall name
Landowner an Additional Insured on such policy of insurance. To the extent not
inconsistent with this Section, all of the aforementioned policies shall comply
with the requirements of Section 7.3 of this Agreement.

 
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3.3.5           No Subordination of Landowner's Fee Title.  Landowner shall not
be required to subordinate Landowner's fee interest in the Property or encumber
its reversionary interest in the Property to any lien securing Lessee's
construction loan or other financing.

3.3.6           No Waiver of Notice of Nonresponsibility.  Lessee acknowledges
that Landowner expressly does not waive its rights under NRS 108.234, including
but not limited to, the right to record a Notice of Nonresponsibility prior to
the commencement of any work of improvement on the Property, including the
Additional Facilities. Lessee agrees to provide Landowner with at least thirty
(30) days advance written notice of any contemplated construction activities in
order to provide Landowner sufficient time to record Notices of
Nonresponsibility and similar documents.

3.3.7           Liens and Fees.  Lessee shall at all times indemnify, protect,
defend, and hold harmless Landowner and Landowner's successors, assigns, agents
and employees and the Property against all liens, or claims which may ripen into
liens, and against all attorneys' fees and other costs and expenses, growing out
of, incurred by reason of, or with respect to any construction done by or for
Lessee on the Property. Lessee shall pay or otherwise secure payment (by
bonding, letter of credit or other similar method of guaranteeing payment), no
less than five (5) days in advance of their respective due dates, all invoices
related to any construction work of Lessee that could potentially ripen into a
lien. Should Lessee fail to fully discharge any lien or claim, or in the
alternative fail to post a bond sufficient to discharge such lien or claim
within twenty (20) days after written request by Landowner, then Landowner, at
its option, may pay the same or any part thereof.  Landowner shall be the sole
judge of the legality of such lien or claim. All amounts so paid by Landowner,
together with interest in the per annum amount equal to two percent (2%) in
excess of the Reference Rate of Interest, but in no event in excess of the
maximum interest rate permitted by law, from the time of payment until
repayment, shall be repaid by Lessee as additional Rent on the next Rent payment
date after written notice by Landowner is delivered to Lessee.

3.4           Entitlements and Environmental Permits.

3.4.1           Existing Entitlements and Permits.  Lessee acknowledges that
certain state and local entitlements, permits, and other governmental approvals,
as well as certain transportation and service agreements, are currently in use
with respect to the operation of the Property (the "Existing Permits"). A
non-exhaustive listing of the Existing Permits is attached hereto as Exhibit "B"
and incorporated herein by this reference. Notwithstanding anything to the
contrary contained in this Agreement, the Amended Special Use Permit issued by
Churchill County, Nevada to Landowner on or about May 10, 2010 ("ASUP") shall be
considered an Existing Permit under this Agreement, and Lessee agrees to use its
best efforts to ensure that the ASUP remains in full force and effect. To the
extent permitted by law, and to the extent necessary to allow Lessee to perform
the Existing Use, upon Lessee's written request, Landowner agrees to assign,
transfer, or convey the Existing Permits held in Landowner's name to Lessee, or,
to the extent not otherwise transferrable to Lessee, to use its best efforts to
make available to Lessee the operating rights and privileges associated with any
such non-transferrable permit. Lessee agrees to fully cooperate with Landowner's
efforts to make available to Lessee the operating rights and privileges
associated with any such non-transferrable permit, and Lessee further agrees to
apply for any non-transferrable permits that Lessee determines are necessary to
the Existing Use. Lessee agrees to assign any such assigned permits to Landowner
upon the expiration or earlier termination of the Lease Term. Lessee expressly
acknowledges that a substantial portion of the Facility's and the Property's
value is dependent on the Existing Permits; accordingly, subject to
Section 2.4.1 of this Agreement, Lessee agrees to use its best efforts to ensure
that none of the Existing Permits lapse, expire, terminate, become subject to
revocation or are revoked, or are materially conditioned by reason of any action
or inaction on the part of Lessee without Landowner's express written consent.
Landowner agrees that so long as Lessee complies with Section 2.4.1 of this
Agreement, the suspension, revocation or other action by applicable governmental
authorities with respect to any of the Existing Permits due to the lack of the
Fire Suppression System shall not constitute a breach of this provision. Lessee
expressly acknowledges that Lessee's breach of this provision could materially
reduce the value of the Property, and that such reduction in value could be
equal to the total Purchase Consideration (defined below) without offset for
Rent, and Lessee agrees that it shall have the burden of proving that
Landowner's damages in such event are less than the total Purchase Consideration
without offset for Rent. Lessee acknowledges that its breach of this provision
shall constitute an Event of Default under this Agreement and shall,
notwithstanding anything to the contrary contained in this Agreement, have the
effect of both: (i) subjecting Lessee to Consequential Damages (defined below)
claims by Landowner; and (ii) prohibiting Lessee from exercising its right to
terminate this Agreement pursuant to Section 1.4 of this Agreement; provided,
however, that Lessee's right to exercise the Option (defined below) shall not be
impaired.

 
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3.4.2           New Entitlements and Permits.  Landowner agrees to execute or
join with Lessee as necessary in the execution of any governmental or private
entitlement or permit applications to obtain such entitlements or permits as may
be reasonably necessary for the Lessee's permitted development and use of the
Property, all at Lessee's expense and without cost or expense to Landowner.  If
Lessee is threatened with any governmental action that could have the effect of
revoking or materially conditioning any entitlement or permit obtained by
Lessee, Landowner shall have the right, but not the obligation, to participate
in any relevant governmental proceeding, but at Landowner's own cost. To the
extent permitted by law, Lessee shall assign any new entitlements or permits
relating to the Property to Landowner upon the expiration or earlier termination
of the Lease Term; upon Lessee's exercise of the Option, Landowner agrees to use
its best efforts to assist Lessee in assigning all new permits to the Landowner
entity.

3.4.3           Lessee's Right of Rescission. Subject to the provisions of
Section 3.4.1 of this Agreement, which are acknowledged to waive Landowner's
obligation to assign any Existing Permit to Lessee if and to the extent that
Lessee does not need such permit assigned to engage in the Existing Use and such
permit was not assigned to Prior Tenant, in the event Landowner is unable to
transfer, or otherwise make available for Lessee's use in operating the
Facility, any Existing Permit (each, a "Non-Transferrable Privilege") which
Non-Transferrable Privilege is essential to Lessee's operation of the Facility
for the Existing Use or in the event Lessee is unable to obtain any other permit
necessary for the Operation of the Facility for the Existing Use, including
without limitation, any permits held by Prior Lessee that cannot be transferred
to Lessee or reissued to Lessee, Lessee shall have the option of rescinding this
agreement by sending written notice thereof to Landowner, which notice shall
identify the Non-Transferrable Privilege or other permit and the reason why it
is essential to Lessee's operation of the Facility for the Existing Use, and
specifying an effective date of sixty (60) days after the date of such notice,
whereupon each Party shall, as nearly as practicable, and with the exception of
rental paid to Landowner through the effective date of Lessee's rescission
notice, if any, be placed in the same position such Party was in prior to
entering into this Agreement. Notwithstanding anything to the contrary contained
in this Section 3, but subject to Landowner using its best efforts to make
available the necessary rights granted under the respective Non-Transferable
Privilege, Lessee's right of rescission shall not be not triggered by issues
related to:  (i) Existing Permits that by their own terms, or by state law, are
non-transferrable, but which remain effective by virtue of Landowner's ownership
of the Property for Lessee's use in operating the Facility; or (ii) any matters
related to the Proposed Use. In no event shall Lessee be entitled to exercise
its right of rescission until and unless it has applied for a Non-Transferrable
Permit or other necessary permit (or an assignment of same) and been denied by
the appropriate governmental agency.

 
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4.           Ownership and Operation of Fixtures and Personal Property; Water
Rights Matters; Existing Security Interests and Mechanics' Liens.

4.1           Ownership of the Facility and Additional Facilities.  Title to the
Facility  (except for Lessee's Additional Processing Equipment), regardless of
whether the improvements comprising the Facility are considered real property,
fixtures, or personal property, is reserved to Landowner and shall remain the
sole property of Landowner. Lessee's use of the Facility is merely usufructary
in nature. Lessee has no right to, and shall not attempt to, remove, convey, or
encumber any portion of, or interest in, the Facility, and no such conveyance or
encumbrance shall have any force or effect. Upon the expiration or earlier
termination of the Lease Term, Lessee shall return the Facility, together with
any and all Additional Facilities, save and except for Lessee's Additional
Processing Equipment (which Lessee shall be entitled to remove subject to
Lessee's obligation to restore the Facility to the condition existing as of the
Effective Date reasonable wear and tear and loss by casualty excepted), to
Landowner in substantially the same condition as it exists on the Effective Date
or, in the case of Additional Facilities, the date on which such Additional
Facilities were first placed in service, reasonable wear and tear excepted.

4.2           Operation and Repair of the Facility and Additional
Facilities.  The manner of operation of the Facility and the Additional
Facilities is within the discretion of Lessee, so long as Lessee's operations
are undertaken in a prudent and safe manner; provided, however, that Lessee
shall not operate the Facility or the Additional Facilities in such a manner as
to allow the Facility or the Additional Facilities to fall into a state of
disrepair, to cause a common law nuisance, or to cause the violation of any
state, local, or federal law, regulation, standard, or of any condition of any
permit, approval, or entitlement. Lessee shall perform reasonable maintenance of
the Facilities and, as and when necessary, repair or replace components of the
Facility in order to ensure that the Facility remains in substantially the same
condition as on the Effective Date.

4.3           Water Rights and Agreements.  Notwithstanding anything to the
contrary contained in this Agreement, Landowner shall retain any and all
existing water rights, existing interests in water rights, including, without
limitation, NDWR Permits 73000 and 80516, existing claims to water (including
applications now pending with the State Engineer), and existing water banking
agreements, water credits, and will-serve letters (whether governmental or
quasi-governmental in nature) which are appurtenant and/or related to the
Property and all such rights shall be made available to Lessee pursuant to this
Agreement. Lessee shall have the obligation to obtain any additional water
rights necessary to the operation of the Facility ("Additional Water Rights"),
which Additional Water Rights, once obtained, shall remain the property of
Lessee; provided, however, that Landowner shall have the option to acquire the
Additional Water Rights, for the price paid by Lessee to acquire the Additional
Water Rights, in the event that Lessee either declines to exercise the Option or
commits or causes to occur an Event of Default (defined below).

 
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4.4           Previously Leased or Encumbered Equipment. The Parties agree that
in the event of a conflict between the terms of this Section 4.4 and the
remainder of Section 4, the terms and conditions of this Section 4.4 shall
prevail. Effective as of February 21, 2015 (the "Trigger Date"), if Lessee
satisfies any security interests existing against equipment and other property
located at the Facility (the "Third-Party Collateral"), except for the Existing
Mechanics' Liens (defined below) Lessee shall be entitled to receive a fifty
percent (50%) reimbursement for Lessee's documented costs in satisfying such
security interests against the Third-Party Collateral in the event that (i)
Lessee defaults under this Agreement and (ii) Landowner retakes possession of
the Property and the Third-Party Collateral; provided, however, that in order to
be entitled to such reimbursement, Lessee shall provide Landowner a running
schedule of all such costs Lessee may seek reimbursement of, which schedule
shall be prepared and updated by Lessee upon any payment related to the
Third-Party Collateral, and which schedule Landowner shall be entitled to audit
and obtain any reasonably necessary backup documentation with respect to.
Lessee's fifty percent (50%) reimbursement for the Third-Party Collateral shall
be paid by Landowner either (x) out of the proceeds of a sale or lease of the
Property by Landowner to an unrelated third-party or (y) out of Landowner's
operational profits from the Facility should Landowner engage a third-party
operator to operate the Facility on Landowner's behalf, in either case on an
equal, 50/50, basis (i.e., of each dollar of proceeds or profits, as the case
may be, received by Landowner, Landowner shall be entitled to fifty cents, and
Lessee shall be entitled to fifty cents) until such time as Landowner has
satisfied its reimbursement obligation under this Section 4.4. Upon Lessee’s
request, Lessee shall have the right to receive documentation in reasonable
detail of Landowner's proceeds or profits, as applicable. Notwithstanding
anything to the contrary in this Agreement, Lessee will not grant any security
interests or liens purporting to encumber Landowner’s fee interest in and to the
Land or any fixtures at the Facility (other than Lessee's Additional Processing
Equipment) without Landowner's prior written consent; provided, however, that
for the purpose of clarity, as between Landowner and Lessee, Landowner consents
to, but does not concede to the effectiveness of, the security interests
purporting to encumber the Facility as of the Effective Date, as the same are
scheduled on Schedule 4.4 attached hereto and incorporated herein by this
reference, and Landowner will not assert a default against Lessee under this
Agreement as a result of such existing security interests.

4.5           Existing Mechanics Liens. The Parties agree that in the event of a
conflict between the terms of this Section 4.5 and the remainder of Section 4,
the terms and conditions of this Section 4.5 shall prevail. Landowner and Lessee
agree to cooperate toward the timely removal (whether through direct payment,
expungement, or bonding-over) of all mechanics' liens filed against the Land as
of the Effective Date, which liens are scheduled on Schedule 4.5 attached hereto
and incorporated herein by this reference (the "Existing Mechanics' Liens"). To
the extent such Existing Mechanics’ Liens are not first satisfied or expunged by
Prior Lessee, Landowner agrees to take the lead role in negotiating the removal
of the Existing Mechanics' Liens and in responding to any litigation filed by
any such lien claimants; provided, however, that Landowner and Lessee shall
equally share, on a 50/50 basis, the responsibility for any payments to
mechanics' lien claimants with respect to the Existing Mechanics' Liens. For the
purpose of clarity, any mechanics' liens occasioned by Prior Lessee's (defined
below) operations at the Property shall be subject to the cost-sharing mechanism
expressed in this Section 4.5; provided, however, that Lessee shall have the
sole responsibility to remove any mechanics' liens arising from Lessee's
operations at the Property occurring on or after the Trigger Date. For the
purpose of clarity, it is expressly agreed by and between the Parties that there
are no third-party beneficiaries, express or implied, of this Section 4.5.

 
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5.           Taxes.  During the Lease Term, in addition to the Rent, Lessee
shall pay, on a pro-rated basis, all property taxes and assessments that are
levied against the Property, including taxes that are attributable to the
installation of Additional Facilities on the Property or any reclassification of
the Property as a result of the Additional Facilities or this Agreement, to the
extent that such increase is not separately assessed as personal property to
Lessee and paid directly by Lessee to the taxing authorities. For the purpose of
clarity, Lessee shall be responsible for the payment of all property taxes
assessed against the Facility during the Lease Term, regardless of whether such
taxes are directly charged to Lessee (as in the case of new personal property)
or are changed to Landowner (as is the case with real property and existing
personal property). Landowner shall submit the property tax bill and the bill
for any assessments against the Property to Lessee within ten (10) days after
Landowner receives the bill from the taxing authority.  No later than fifteen
(15) days prior to the due date of any installment, Lessee shall pay the
property taxes and assessments for which Lessee is responsible under the terms
of this Agreement directly to the taxing authority.  Lessee shall have the
right, upon prior written notice to Landowner, to contest or review the amount,
applicability or validity of any real or personal property taxes which are
assessed against the Property by appropriate lawful proceedings, which, if
instituted, shall be diligently conducted by Lessee in good faith at its own
cost and expense, and free of any expense to Landowner, and Landowner shall,
upon the request of Lessee, execute all documents reasonably necessary to
accomplish such contest or review; provided, however, that Landowner shall not
be required to assume any expenses, obligations, or liabilities with respect
thereto. Lessee shall indemnify and hold Landowner harmless from and against all
claims arising out of such contest or review conducted by Lessee. If at any time
the Property or any part thereof shall then be subject to forfeiture, or if
Landowner shall be subject to any liability arising out of the nonpayment of
real property or personal property taxes, Lessee shall, notwithstanding any
pending contest or review, either pay such taxes or post such bonds as the
taxing authority may require to prevent such forfeiture or liability.
 
6.           Hazardous Materials and Substances.

6.1.           Covenant.  Lessee covenants to Landowner that it will not use, or
allow to be used on the Property, or bring onto, or allow to be brought onto,
the Property, any Hazardous Substance (defined below), except as may be required
in connection with the Permitted Use, and then only in full compliance with all
applicable federal, state and local laws, regulations, and any conditions of
permits, entitlements, and approvals. Lessee shall not violate, and does hereby
agree to indemnify, protect, defend and hold Landowner harmless against, any
violation by Lessee or Lessee's agents, invitees, sublessees (including, without
limitation, Aemetis Advanced Fuels, Inc.) or contractors of any federal, state,
or local law, ordinance, regulation, permit, approval, or entitlement relating
to the generation, manufacture, production, use, storage, release or threatened
release, discharge, disposal, transportation or presence of any substance,
material or waste which is introduced, released, or brought onto the Property by
Lessee and which is now or hereafter classified as hazardous or toxic, or which
is regulated under current or future federal, state or local laws or
regulations, or which otherwise qualifies as a Hazardous Substance. Further,
Lessee shall not install, or allow to be installed, any underground fuel storage
tanks on the Property.

 
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6.2.           Right of Entry.  Subject to Lessee's normal security policies,
Landowner reserves the right to enter the Property at any reasonable time and
upon reasonable notice, and at any time in exigent circumstances, for the
purpose of inspecting and examining the Property for the presence of any
Hazardous Substance.  If the results of such inspection or examination reveal
the presence of Hazardous Substances in violation of any law, permit, approval,
or regulation in, on, or about the Property, the presence of which would
constitute a violation of any provision of this Agreement, then Lessee shall
reimburse Landowner for its costs incurred in undertaking such inspection and
examination, and, at Landowner's option, Landowner may remediate the Hazardous
Substances at Lessee's sole cost and expense.

6.3.           Hazardous Materials Indemnity.  Lessee shall indemnify, defend,
protect, save, and hold Landowner and its successors, assigns, agents, employees
and representatives harmless in accordance with and subject to the provisions of
the Environmental Responsibilities Addendum attached hereto as Exhibit "C" and
incorporated herein by this reference. For the purpose of clarity, Lessee
acknowledges that the indemnity granted in this Section 6.3, as well as the
Environmental Responsibility Addendum, each require Lessee to assume Prior
Lessee's environmental obligations and indemnities under the Prior Lease and
Lessee hereby assumes such obligations.

6.4.           Hazardous Substances Defined.  As used in this Agreement, the
term "Hazardous Substances" shall include:  (i) explosives, radioactive
materials, hazardous wastes or substances, toxic wastes or substances or any
other similar materials or pollutants which pose a hazard to the Property, or to
persons on or about same, cause the Property to be in violation of any law or
local approval, or are defined as or included in the definition of "hazardous
substances", "hazardous wastes", "hazardous materials", or "toxic", or words of
similar import under any applicable law, including, but not limited to:  (A) the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, 42 U.S.C. § 9601, et seq.; (B) the Hazardous Materials Transportation
Act, as amended. 49 U.S.C. § 1801. et seq.; (C) the Resource Conservation and
Recovery Act, as amended. 42 U.S.C. § 6901, et seq.; and (D) regulations adopted
and publications promulgated pursuant to the aforesaid laws, and similar laws of
the State of Nevada, including, without limitation, the Nevada Administrative
Code regulations adopted by the Nevada Division of Environmental Protection
(collectively. the "Environmental Laws"); (ii) asbestos in any form which is or
could become friable, urea formaldehyde foam insulation, transformers or other
equipment which contain dielectric fluid containing levels of polychlorinated
biphenyls in excess of 50 parts per million; and (iii) any other chemical,
material or substance, exposure to which is prohibited, limited or regulated by
any governmental authority under any Environmental Laws now or hereafter in
effect.

 
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7.           Lessee's Representations, Warranties and Covenants.  In addition to
Lessee's other representations, warranties, and covenants expressed in this
Agreement, Lessee hereby represents, warrants and covenants to as follows:

7.1           Lessee's Authority.  Lessee is a limited liability company
organized under the laws of the State of Nevada, is duly qualified to do
business in Nevada, and has the unrestricted right and authority to execute this
Agreement. The person signing this Agreement on behalf of Lessee is authorized
to do so. When signed by Lessee, this Agreement constitutes a valid and binding
agreement enforceable against Lessee in accordance with its terms.  No consent
or other approval, authorization or action by, or filing with, any person is
required to be made or obtained by such party for Lessee's lawful execution,
delivery and performance of this Agreement.

7.2           Landowner's Continuing Rights.  Landowner shall have no right to
use the Property during the Lease Term; provided, however, that except with
respect to the Additional Water Rights, Landowner shall continue to have any and
all rights related to water appurtenant to the Property, as well as to any and
all subsurface resources, except to the extent that Landowner's exercise of its
subsurface rights would unreasonably interfere with the Permitted Use. As used
in this Agreement, "unreasonable interference" means any activities that
materially lessen, or reasonably threaten to materially lessen, the Lessee's
ability to use the Facility in accordance with the Permitted Use including,
without limitation, excess vibration or blasting impacts.

7.3           Insurance.  Lessee shall, at its expense, maintain the insurance
coverages set forth in Exhibit "D" attached hereto and incorporated by this
reference, or as otherwise required in this Agreement. Lessee shall name
Landowner as an additional insured on all such policies. Certificates of
insurance evidencing the coverages required by this Agreement shall be provided
to Landowner annually, as well as at Landowner's periodic request. Such
certificates of insurance shall provide evidence that the insurance will not be
cancelled, materially changed, or not renewed until the expiration of thirty
(30) days after written notice of cancellation, material change, or nonrenewal
has been received by Landowner.

7.4           Indemnity.  Lessee will indemnify, defend, protect, and hold
harmless Landowner against costs and other liabilities for physical damage to
property, for fines and/or governmental liabilities, for physical injuries or
death, for environmental claims (except as otherwise set forth in, and subject
to the provisions of, the Environmental Responsibilities Addendum), for claims
related to the infringement of Landowner's Proprietary Information (defined
below), for claims of nuisance, caused by, in connection with, or in any manner
related to, Lessee's or any sublessee's (including, without limitation, Aemetis
Advanced Fuels, Inc.) construction, operation, maintenance, repair, replacement,
or removal of the Facilities or the Additional Facilities, the Permitted Use, or
otherwise related to Lessee's, or any sublessee's (including, without
limitation, Aemetis Advanced Fuels, Inc.), use of, or occupancy on, the
Property, except to the extent such damages, injuries or death arose before the
Effective Date (exempting claims arising under Section 6.3 or the Environmental
Responsibilities Addendum) or are caused by the gross negligence or willful
misconduct of Landowner or Landowner's invitees.  Landowner authorizes Lessee,
at Lessee's sole expense, to take all reasonable safety and security measures to
reduce the risk that the Facility or Additional Facilities will cause damage,
injury, or death to people, livestock, other animals, and real and personal
property. The terms set forth in this Section 7.4 shall survive termination of
this Agreement.

 
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7.5           Governmental Approvals.  During the Lease Term, Lessee, at its
expense, shall comply in all respects with all laws, ordinances, statutes,
orders, and regulations, and conditions of permits, approvals and entitlements
of any governmental agency applicable to the Property. Additionally, Lessee
shall, at its expense, use its best efforts to maintain in full force and effect
all governmental permits or other authorizations connected with the Property,
the Facility, or the Additional Facilities, including, without limitation,
compliance with minimum work and renewal requirements. Landowner shall, to the
extent required by law or as otherwise requested by Lessee, cooperate in such
activities, provided Lessee reimburses Landowner for its out-of-pocket expenses
incurred in connection with such cooperation. Any breach of Lessee's obligations
pursuant to this Section is specifically acknowledged by Lessee to be material,
and any such breach shall allow Landowner to pursue each and every of its
remedies pursuant to this Agreement.

7.6           Construction Liens.  Except as provided in Section 4.5, Lessee
shall keep the Property free and clear of all liens and claims of liens for
labor and services performed on, and materials, supplies or equipment furnished
to, the Property; provided, however, that if Lessee wishes to contest any such
lien, Lessee shall, within thirty (30) days after it receives notice of the
filing of such lien, remove or bond around such lien pursuant to applicable law.

7.7           Brokers' Agreements.  Lessee hereby represents and warrants that
no broker's commission or fee is due to any party engaged by Lessee in
connection with this Agreement, and Lessee agrees to indemnify, defend, protect,
and hold Landowner harmless from any claims or actions by any such third parties
for a broker's commission or fee.

7.8           Accounting Matters. Lessee represents and warrants that Lessee
will perform and utilize substantially similar accounting methods to those
utilized by Landowner as of the Effective Date, it being acknowledged by Lessee
that Landowner's current accounting methods generate reports that are necessary
for required reporting to governmental agencies.

7.9           Turnover and Restoration. Lessee will be permitted thirty (30)
days after the expiration or earlier termination of this Agreement to remove
Lessee’s Additional Processing Equipment, without additional charge or rental
for such entry and removal, and without such entry constituting a holdover.
Lessee hereby warrants that Lessee’s removal of Lessee’s Additional Processing
Equipment shall be performed in a good and workmanlike manner, and Lessee shall
be obligated to restore the Facility to the condition existing as of the
Effective Date, reasonable wear and tear and loss by casualty excepted. Lessee
hereby further represents and warrants that, upon the expiration or earlier
termination of this Agreement and the removal of Lessee’s Additional Processing
Equipment, the Facility shall be left in operable condition and in substantially
the same condition as of the Effective Date, reasonable wear and tear excluded.

 
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8.           Landowner's Representations, Warranties and Covenants.  In addition
to Landowner's other representations, warranties and covenants expressed in this
Agreement, Landowner hereby represents, warrants and covenants to Lessee as
follows:

8.1           Landowner's Authority.  Landowner is a limited liability company
organized under the laws of the State of Nevada and duly qualified to do
business in Nevada, is the sole owner of the Property, and has the unrestricted
right and authority to execute this Agreement and to grant to Lessee the rights
granted hereunder. The person signing this Agreement on behalf of Landowner is
authorized to do so. When signed by Landowner, this Agreement constitutes a
valid and binding agreement enforceable against Landowner in accordance with its
terms.  No consent or other approval, authorization or action by, or filing
with, any person is required to be made or obtained by such party for
Landowner's lawful execution, delivery and performance of this Agreement.

8.2           No Interference.  Landowner's activities and any grant of rights
Landowner makes to any person or entity shall not impede or interfere with the
Permitted Use or Lessee's right to possess the Property free of unreasonable
interference.

8.3            Title Policy and Cooperation.  Lessee shall have the right, but
not the obligation, to obtain a title insurance policy insuring its leasehold
interest in the Property from a title insurer of its choice, and at its sole
cost. Landowner shall cooperate with Lessee to obtain non-disturbance,
subordination, and attornment agreements as requested by Lessee from any person
with a lien, encumbrance, mortgage, lease, or other material exception to
Landowner's fee title to the Property, to the limited extent necessary to
eliminate any actual interference by any such person with any rights granted to
Lessee under this Agreement.

8.4           Requirements of Governmental Agencies.  Landowner, at no cost to
Landowner, shall assist and fully cooperate with Lessee in complying with or
obtaining any land use and environmental entitlements, permits, and approvals,
tax-incentive or tax-abatement program approvals, building and site improvement
permits, environmental permits, or any other approvals required or deemed
desirable by Lessee in connection with the Permitted Use, including execution of
applications for such approvals and delivery of information and documentation
related thereto, and execution, if required, of any orders or conditions of
approval. Lessee shall reimburse Landowner for its out-of-pocket expenses
incurred in connection with such cooperation, to the extent Lessee has approved
such expenses in advance.

8.5           Indemnity.  Landowner will defend, indemnify, protect, and hold
harmless Lessee for, from, and against liability by reason of, resulting from,
or arising out of: (i) the inaccuracy of any representation or warranty of
Landowner set forth in this Agreement; (ii) the non-fulfillment or
nonperformance of any covenant of Landowner set forth in this Agreement;
(iii) for fines and/or governmental liabilities, for physical injuries or death,
for environmental claims, or for claims of nuisance, caused by, in connection
with, or in any manner related to, Landowner's  operation, maintenance and
repair of the Facility prior to the Effective Date (except as otherwise set
forth in, and subject to the provisions of, the Environmental Responsibilities
Addendum); (iv) the gross negligence or willful misconduct of Landowner or its
representatives and agents in the performance of their obligations under this
Agreement; (v) for physical damage to the Property, and for physical injuries or
death to Lessee or its employees, invitees, contractors or the public, to the
extent caused by the gross negligence or willful misconduct of Landowner; and
(vi) any claims or losses asserted by Prior Lessee in relation to the Prior
Lease, except for those claims caused or occasioned by Lessee’s actions,
omissions, or negligence.

 
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8.6           Hazardous Materials.  As of the effective date of the Prior Lease,
Landowner was in material compliance with all state, federal, and local
environmental laws as the same were applicable to the Property, and Landowner
was not subject to any environmental proceedings with respect to the
Property.  Landowner has not received any written notice of any violation, that,
as of the effective date of the Prior Lease, remained uncured, and to
Landowner's actual knowledge no writs, injunctions, decrees, orders or judgments
have been instituted or filed, under any Environmental Laws with respect to the
ownership, use or occupation of the Property. Landowner shall not violate, and
shall indemnify Lessee for, from and against any violation by Landowner of any
federal, state or local law, ordinance or regulation relating to the generation,
manufacture, production, use, storage, release, discharge, disposal,
transportation or presence of any Hazardous Substance.

8.7           Quiet Enjoyment.  Landowner covenants and warrants that Lessee
shall peacefully hold and enjoy all of the rights granted by this Agreement for
the Lease Term without hindrance or interruption by Landowner, or any person
claiming by, through, or under Landowner.

8.8           Utilities.  Landowner shall cooperate with Lessee in Lessee's
efforts to obtain utility services to and from the Property, including executing
any applications or assignments necessary for such service to the Property, and,
to the extent necessary, granting service providers easements or licenses to
cross the Property for terms coextensive with the Lease Term, provided that
Lessee shall be solely responsible for all costs related to such services,
including those costs related to construction and operation of the facilities
necessary to provide such services, and those costs related to Landowner's legal
review of any such instruments.

8.9           Brokers' Agreements.  Landowner hereby represents and warrants
that no broker's commission or fee is due to any party engaged by Landowner in
connection with this Agreement and agrees to indemnify, defend and hold Lessee
harmless from any claims or actions by any such third parties for a broker's
commission or fee in connection with this Agreement.

8.10           Condemnation.  Landowner hereby represents that there are no
pending or, to Landowner's actual knowledge, threatened condemnation proceedings
affecting the Property.

 
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8.11           Absence of Changes/No Undisclosed Liabilities. Landowner shall
provide Lessee with a current balance sheet, accurately detailing Landowner's
assets, liabilities and ownership equity as of the Effective Date in a form
substantially similar to that attached hereto as Exhibit "E" and incorporated
herein by this reference. Landowner hereby represents that, during the Lease
Term, Landowner will take no action whatsoever that will result in any material
adverse change in Landowner's business, condition, capitalization, assets
(tangible or intangible), liabilities, operations and financial performance.
Furthermore, during the Lease Term, Landowner will not incur or accrue any
material contingent or other liabilities of any nature.  Notwithstanding
anything to the contrary contained in this Section 8.11, intra-company loans or
liabilities shall not be considered a violation of this Section 8.11. For
purposes of this Section 8.11, "intra-company loans or liabilities" shall mean
transactions between Landowner and its LLC members.  In the event that Lessee
exercises its option to purchase all of the Landowner entity as provided in
Section 13 of this Agreement, any change or deviation from Landowner's balance
sheet shall be adjusted by the parties prior to the Closing (as defined in the
Membership Interest Purchase Agreement).

9.           Transfers.  Lessee and, as applicable, any Permitted Transferee
(defined below) shall have the right, subject to Landowner's written consent,
which shall not be unreasonably withheld, conditioned or delayed, to do any of
the following: (i) finance Additional Facilities; (ii) encumber with a deed of
trust or other security instrument this Agreement, or Lessee's leasehold estate
in the Property; or (iii) assign this Agreement to a Permitted Transferee;
provided that in no event shall Landowner be required to subordinate or encumber
its fee title interest in the Property, or any part thereof or interest therein,
in connection with any such mortgage, deed of trust, hypothecation, or other
transfer, and further provided that, for purposes of clarity, that in no event
shall Lessee encumber, or attempt to encumber, Landowner's fee interest in the
Property. Landowner consents to the existing security interests against the
Facility, as the same are scheduled on Schedule 4.4 attached hereto and
incorporated herein by this reference, and Landowner will not assert a default
against Lessee under this Agreement as a result of such existing security
interests. A "Permitted Transferee" is any of the following: (i) any purchaser
of more than seventy percent (70%) of the membership interests in, or stock of,
Lessee; (ii) a wholly-owned U.S. subsidiary of Vertex or Vertex Energy
Operating, LLC qualified to do business in Nevada; or (iii) any entity to which
Landowner gives Lessee written consent to a proposed transfer; provided,
however, that Landowner may unreasonably withhold such consent in its sole and
absolute discretion; and further provided, however, that Landowner's refusal to
provide its written consent to any proposed assignee that has an audited net
worth lower than that of Lessee shall not be deemed unreasonable or made in bad
faith. Notwithstanding anything to the contrary contained in this Agreement,
Lessee shall continue to be liable, jointly and severally, with any Permitted
Transferee, for all liabilities and obligations of Lessee under this Agreement,
including, without limitation, the representation and warranty and indemnity
provisions of this Agreement, after this Agreement has been assigned to a
Permitted Transferee. Subject to Section 8.11 of this Agreement, this Agreement
may be assigned or otherwise encumbered by Landowner, and Landowner may sell the
Land and the Facility, without the prior written consent of Lessee.

 
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10.           EXPROPRIATION AND CASUALTY.
 
10.1           Expropriation of Entire Property or Portions of the
Facility.  If, during the Term of this Agreement, the entire Property, or any
portion of the Property such that Lessee's ability to operate the Facility for
the Permitted Use is materially and adversely affected and such operations or
facilities cannot be relocated to another part of the Property, as reasonably
determined by Landowner and Lessee, shall be taken as the result of the exercise
of the power of expropriation (a "Major Taking"), this Agreement and all right,
title and interest of Lessee hereunder shall cease and come to an end on the
date of vesting of title pursuant to the Major Taking and Landowner shall be
entitled to and shall receive the total award allocable to the Property with
respect to the Major Taking; provided, however, that nothing contained in this
Section 10 shall be deemed to give Landowner any interest in, or to require
Lessee to assign to Landowner, any award made to Lessee for the taking of the
Lessee's business operations or any personal property belonging to Lessee,
reasonable expenses of relocation, and any interest accruing thereon
(collectively, the "Lessee's Recoverable Damages").

10.2           Partial Expropriation/Continuation of Lease.  If any part of the
Property shall be taken in an expropriation proceeding other than a Major Taking
("Minor Taking"), then this Agreement shall, upon vesting of title in the Minor
Taking, terminate as to the parts so taken, and Lessee shall have no claim or
interest in the award, damages, consequential damages and compensation, or any
part thereof other than for Lessee's Recoverable Damages.  Landowner shall be
entitled to and shall receive the total award made in such Minor Taking, Lessee
hereby assigning any interest in such award, damages, consequential damages and
compensation to Landowner, and Lessee hereby waiving any right Lessee has now or
may have under present or future law to receive any separate award of damages
for its interest in the Property, or any portion thereof, or its interest in
this Agreement; provided, however, that nothing contained herein shall be deemed
to give Landowner any interest in, or to require Lessee to assign to Landowner,
any award made to Lessee for Lessee's Recoverable Damages.

10.3           Continuance of Obligations.  In the event of any termination of
this Agreement as a result of any such Major Taking or Minor Taking, Lessee
shall pay to Landowner all Rent and all additional Rent and other charges
payable hereunder, justly apportioned to the date of such termination.  If this
Agreement is not terminated, then, from and after the date of vesting of title
in such proceedings, Lessee shall continue to pay all of the Rent and additional
Rent and other charges payable hereunder provided in this Agreement, to be paid
by Lessee, it being expressly agreed to by Landowner and Lessee that there shall
in no event be any abatement or adjustment of any rental amounts due under this
Agreement as a result of any such proceedings or the exercise of any power of
eminent domain.

10.4           Fire and Casualty Damage.  Notwithstanding anything to the
contrary contained in this Agreement, Lessee shall obtain fire and other
casualty insurance in the amount of the full replacement value of the Facility
and, as applicable, any Additional Facilities. If any of the Property shall be
damaged by fire or other casualty, then Lessee shall give prompt written notice
thereof to Landowner, and Lessee shall proceed to restore such portion of the
Property that is damaged by the casualty to substantially the same or better
condition as on the Effective Date, reasonable wear and tear excepted. Lessee
shall commence the restoration and reconstruction work within a reasonable
period following the casualty, and shall use reasonable diligence to complete
such work as soon as reasonably possible. Lessee shall have the right to adjust
and settle all property insurance claims relating thereto, subject to
Landowner's approval, not to be unreasonably withheld, conditioned or delayed.
Lessee shall have the sole responsibility for restoring and rebuilding the
Property, and Landowner shall have no obligation to Lessee and shall not be
liable for any inconvenience or annoyance to Lessee or injury to the business of
Lessee resulting in any way from such damage or the repair thereof. Lessee shall
not be entitled to any diminution in Rent during the time and to the extent any
of the Property are unfit for occupancy. If the insurance proceeds received by,
or for the account of, Lessee, shall be insufficient to pay the entire cost of
necessary repairs and restoration, Lessee shall supply the amount of any such
deficiency and shall apply the same to the payment of the cost of such repair
and restoration. Under no circumstances shall Landowner be obligated to make any
payment or contribution toward the cost of any repairs or restoration.

 
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11.           Default.

11.1           Event of Default.  With respect to a Party, an event of default
("Event of Default") shall exist under this Agreement if:

(a)           such Party fails to pay any amount within ten (10) business days
after receipt of written notice that such amount is past due;

(b)           except as otherwise expressly set forth, such Party is in breach
of any representation or warranty set forth herein or fails to perform any
material obligation set forth in this Agreement, and such breach or failure is
not cured within thirty (30) days after notice from the non-defaulting Party;
provided, however, that if the breach or failure is such that it cannot be cured
within such thirty (30) day period using commercially reasonable efforts ,the
cure period shall be extended so long as the defaulting Party is diligently
pursuing such cure; and further provided, however, that the cure period shall be
extended by the number of days during which the defaulting Party is prevented
from taking curative action solely by Force Majeure (defined below) if the
defaulting Party had begun curative action and was proceeding diligently, using
commercially reasonable efforts, to complete such curative action;

(c)           as to Lessee, Lessee files a petition or answer seeking
reorganization or arrangement under the federal bankruptcy laws or any other
applicable law or statute of the United States of America or any State,
district, or territory thereof;

(d)           as to Lessee, Lessee is determined to be, by the relevant
governmental entity, whether administratively or judicially, in violation of a
federal, state, or local law or regulation, or of a permit or governmental
approval, and such breach or failure is not cured within ten (10) days after
notice from the non-defaulting party; or

(e)           as to Lessee, any material breach of Section 3.4.1 of this
Agreement.

11.2           Remedies.  Upon an Event of Default by one Party, the other Party
shall have the right, but not the obligation, to terminate or suspend this
Agreement, in part or in whole as to the Property, with respect to all
obligations arising after the effective date of such termination or suspension
(other than payment obligations relating to obligations arising prior to such
termination or suspension), or to pursue any appropriate civil action against
the defaulting Party. The defaulting Party shall be liable to reimburse the
non-defaulting Party for such non-defaulting Party's expenses and costs relating
to such default (including, but not limited to, reasonable attorneys' fees).

 
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11.3           Cumulative Remedies.  Each Party shall have all rights and
remedies available at law and in equity for any breach of this Agreement by the
other Party.
 
11.4           Consequential Damages.  The Parties agree that it is the intent
that, neither Landowner nor Lessee, nor their respective officers, directors,
partners, shareholders, agents, employees, contractors or affiliates, shall be
liable to the other party or to its affiliates, officers, directors,
shareholders, partners, agents, employees, successors or assigns, for claims for
incidental, special, indirect, punitive or consequential damages of any nature
connected with or resulting from performance or non-performance of this
Agreement, including claims in the nature of lost revenue, income or profits,
losses, damages or liabilities under any financing, lending, construction or
other contracts, agreements or arrangements to which either may be a party
irrespective of whether such claims are based upon negligence, strict liability,
contract, operation of law or otherwise ("Consequential Damages");
notwithstanding anything to the contrary contained in this Agreement, however,
Landowner shall be entitled to recover any Consequential Damages derived or
occasioned as a result of Lessee's breach of the provisions set forth in Section
3.4.1 of this Agreement.
 
12.           General Right of Inspection.  In addition to Landowner's rights
concerning environmental inspections, Landowner and its agents and
representatives shall be entitled to enter upon and inspect the Property at any
time during normal business hours and upon prior reasonable notice, provided
only that such inspection shall not unreasonably interfere with Lessee's
business activities. Lessee reserves the right to require that Landowner be
accompanied by a representative of Lessee while on the Property.

13.           Option to Purchase the Landowner Entity.

13.1.           Grant of Option.  If no Event of Default on the part of Lessee
shall then exist, Lessee shall have the option at any time during the Lease Term
to purchase the equity of Landowner upon the terms and conditions set forth in
this Agreement (the "Option"). Should Lessee choose to exercise the Option, the
purchase of Landowner's equity shall be effectuated through a Membership
Interest Purchase Agreement in substantially similar form as that attached
hereto as Exhibit "F" and incorporated herein by this reference. The Parties
acknowledge that the consideration for this grant of Option is encompassed in
the Rent payable by Lessee to Landowner.

13.2.           Exercise and Delivery.  If Lessee elects to exercise the Option,
such Option shall be exercised by Lessee by irrevocable written notice to
Landowner. The closing date of the Option transaction (the effective date of the
transfer of Landowner's equity to Lessee) shall be sixty (60) days after Lessee
provides written notice to Landowner of its decision to exercise the Option,
unless the Parties hereto agree to close this purchase transaction earlier
("Option Effective Date").

 
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13.3.           Purchase Consideration.  Concurrently with the Option Closing
Date, Lessee shall pay to Landowner consideration in the amount calculated as
follows: (i) if paid on or prior to August 31, 2015, the Purchase Consideration
(defined below) shall be EIGHT MILLION FIVE HUNDRED THOUSAND DOLLARS
($8,500,000.00) ("Discounted Purchase Price"); (ii) if not paid on or prior to
August 31, 2015, effective as of (and starting as of) September 1, 2015, the
Purchase Consideration shall increase, starting from the Discounted Purchase
Price, by ONE HUNDRED TWENTY-FIVE THOUSAND DOLLARS ($125,000.00) per month until
July 1, 2016, on which date, and effective every month thereafter, the Purchase
Consideration shall increase by TWO HUNDRED FORTY-FOUR THOUSAND DOLLARS
($244,000.00) per month; provided, however, that (x) the Purchase Consideration
shall be capped at THIRTEEN MILLION DOLLARS ($13,000,000.00) and (y) the
Purchase Consideration shall be reduced by the sum of ONE HUNDRED TWENTY-TWO
THOUSAND DOLLARS ($122,000.00) for each payment of Rent fully and timely made
(for the purpose of clarity, the net effect of these provisions is that (1) from
the period of September 1, 2015 through December 31, 2015, the Purchase
Consideration will increase by ONE HUNDRED TWENTY-FIVE THOUSAND DOLLARS
($125,000.00) per month; (2) as long as Rent is fully and timely paid, during
the period of January 1, 2016 through June 30, 2016, the Purchase Consideration
will increase by THREE THOUSAND DOLLARS ($3,000.00) per month; and (3) as long
as Rent is fully and timely paid, during the period of July 1, 2016 until the
Closing Date (defined below) the Purchase Consideration will increase by ONE
HUNDRED TWENTY-TWO THOUSAND DOLLARS ($122,000.00) per month) (as applicable, the
"Purchase Consideration"). Landowner acknowledges that, depending on when the
Option is exercised, that the Purchase Consideration may be zero dollars
pursuant to the formula set forth in this Section; in that event, the Purchase
Consideration payable upon the Option Closing Date shall be ONE HUNDRED DOLLARS
($100.00).

13.4.           Termination of Option.  In the event that Lessee does not
exercise its Option on or before the expiration or earlier termination of the
Lease Term, or prior to giving Landowner notice of termination pursuant to
Section 1.4, the Option shall automatically terminate and be of no further force
and effect, and shall not be deemed to encumber Landowner's fee estate in the
Property in any manner.

14.           Proprietary Information.

14.1           Definition of "Proprietary Information". "Proprietary
Information" means all information developed by Landowner and its employees,
consultants, and agents with respect to, in connection with, or necessary or
useful for, the operation of the Facility, including, without limitation, the
following: data, know-how, trade secrets, processes, specifications, drawings,
sketches, models, samples, tools, technical information, mask works, software,
firmware, designs, methodologies, ideas, concepts, inventions, plans,
techniques, hardware, works of authorship, and studies.  Proprietary Information
includes all intellectual property rights of Landowner, including without
limitation, copyrights, patents, industrial design rights, trademarks, logos,
slogans, corporate names, trade names, rights of priority, and applications and
registrations for any of the foregoing.  Proprietary Information does not
include: (i) information of Landowner that at the time furnished to Lessee is in
the public domain or becomes part of the public domain by publication or
otherwise through no fault of the other Party or its employees or agents; or
(ii) information of Landowner that at the time furnished to Lessee was in the
possession of Lessee as shown by written records and was independently developed
by Lessee or obtained from a source on a non-confidential basis by a Person
entitled to disclose it.

 
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14.2           Permitted Use of Proprietary Information. During the Lease Term,
Landowner may furnish Proprietary Information to Lessee without the payment of
any license fee to Landowner.  Landowner acknowledges and agrees that any
Proprietary Information furnished to Lessee by Landowner shall be solely for the
purpose of Lessee's operation of the Facility, and the care, maintenance and
proper settings of the Facility, and that all Proprietary Information is
confidential and, as between Lessee and Landowner, proprietary to Landowner. As
between Lessee and Landowner, Landowner shall, at all times, have the exclusive
right and interest in and to such Proprietary Information and the goodwill
associated therewith.  Lessee shall not directly or indirectly contest the
ownership by Landowner of Proprietary Information. The use of the Proprietary
Information of Landowner in the operation of the Facility does not give Lessee
any ownership interest or other interest in or to such information; provided,
however, that Landowner, if Lessee exercises the Option, and upon the Option
Closing Date, will grant to Lessee at no additional cost a nonexclusive
perpetual limited license (which license shall not be sublicensed, assigned,
conveyed or otherwise transferred in any fashion by Lessee) to use, solely for
the continued operation of the Facility (but not any similar facility or plant),
such Proprietary Information of Lessee that is then utilized in the operation of
the Facility and necessary for the continued operations of the
Facility.  Nothing in this Agreement shall be construed as requiring Landowner
to furnish any Proprietary Information to Lessee, or allowing Lessee to utilize
any Proprietary Information previously furnished to Lessee, with respect to any
facility or plant other than the Facility.  Should Lessee desire to utilize any
Proprietary Information of Landowner at a facility or plant other than the
Facility, Lessee must first negotiate and enter into a license agreement with
Landowner requiring the payment of consideration separate from that required
under this Agreement.  Any such license agreement must be mutually agreed upon
by Landowner and Lessee and Landowner is not, and shall not be, obligated by
virtue of entering into this Agreement, to enter into any such license agreement
with Lessee.

Lessee shall keep the Proprietary Information of Landowner confidential and
shall use all reasonable efforts to maintain the Proprietary Information as
secret and confidential in perpetuity.  Failure to so maintain the Proprietary
Information of Landowner as confidential will entitle Landowner to any damages
stemming from such failure, to include, without limitation, reasonable
attorneys' fees.  Lessee will not at any time without the prior written consent
of Landowner, copy, duplicate, record, or otherwise reproduce the Proprietary
Information of Landowner, in whole or in part, or otherwise make the same
available to any unauthorized person.  Lessee agrees that Landowner would be
irreparably damaged by reason of any violation of the confidentiality provisions
contained herein and that any remedy at law for a breach of such provisions
would be inadequate.  Therefore, Landowner will be entitled to seek injunctive
or other equitable relief in a court of competent jurisdiction against Lessee,
its agents, employees, affiliates, officers or other associates, for any breach
or threatened breach of the confidentiality covenants contained herein without
the necessity of proving actual monetary loss.  It is expressly understood that
the remedy described herein will not be the exclusive remedy of Landowner for
any breach of such covenants, and Landowner will be entitled to seek such other
relief or remedy, at law or in equity, to which it may be entitled as a
consequence of any breach of such covenants. The terms set forth in this Section
shall survive termination of this Agreement.

 
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15.           Miscellaneous.

15.1           Business Days. If an action required under this Agreement falls
on a weekend or a national holiday recognized by national banks operating in
Reno, Nevada, such action shall be excused until the next business day.

15.2           Confidentiality.  Landowner and Lessee each warrant and covenant
with the other to maintain in the strictest confidence, for the benefit of the
other Party, all information pertaining to the financial terms of or payments
under this Agreement, the design of the Facility, methods of production, and the
like, unless such information is in the public domain by reason of permitting
applications or other governmental or legal obligations. Notwithstanding the
foregoing, either Party may disclose such information to its lenders, attorneys,
accountants and other advisors solely for use in connection with their
representation of Landowner regarding this Agreement; or pursuant to lawful
process, subpoena, or court order requiring such disclosure, provided that a
Party, in making such disclosure, advises the party receiving the information of
the confidentiality of the information.  The provisions of this Section shall
survive the termination or expiration of this Agreement.

15.3           Successors and Assigns.  This Agreement shall inure to the
benefit of, and be binding upon, Landowner and Lessee and, to the extent
permitted under this Agreement, any Permitted Transferee of Lessee, and their
respective heirs, transferees, successors and assigns, and all persons claiming
under them.  References to Lessee in this Agreement shall be deemed to include
Permitted Transferees which assume or pursuant to this Agreement are deemed to
have assumed any of Lessee's obligations in this Agreement.

15.4           Memorandum of Lease and Purchase Option.  Upon Lessee's request,
Landowner shall execute in recordable form, and Lessee shall then be entitled to
record, a memorandum of the Lease substantially similar to the form attached
hereto as Exhibit "G" and incorporated herein by this reference. Within ten (10)
days of the termination of this Agreement, Lessee shall record a quitclaim or
similar release of the memorandum of lease; should Lessee fail to do so,
Landowner shall be entitled to record same without liability to Lessee for such
action.

15.5           Notices.  All notices or other communications required or
permitted by this Agreement, including payments to Landowner, shall be in
writing and shall be deemed given when personally delivered, or in lieu of such
personal service, five (5) days after deposit in the United States mail,
certified, or the next business day if sent by reputable overnight courier,
provided receipt is obtained and charges prepaid by the delivering party.  Any
notice shall be addressed as follows:

 
23

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If to Landowner:
 
Bango Oil, LLC
c/o Fox Encore 05 LLC
c/o ACF Property Management, Inc.
12411 Ventura Boulevard
Studio  City, CA 91604-2407
Attn: Alan C. Fox, President
If to Lessee:
 
Vertex Refining NV, LLC
c/o Vertex Energy, Inc.
1331 Gemini Street, Suite 250
Houston, TX 77058
Attn:  Chris Coulson
 
 
With a required copy to:
Holland & Hart LLP
5441 Kietzke Lane
Second Floor
Reno, NV 89511
Attn:  Bryce C. Alstead
With a required copy to:
Timothy P. Reardon
Reinhart Boerner Van Deuren s.c.
1000 North Water Street, Suite 1700
Milwaukee, WI 53202

 
Any Party may change its address for purposes of this Section by giving written
notice of such change to the other Party in the manner provided in this Section.

15.6           Entire Agreement; Amendments.  This Agreement constitutes the
entire agreement between Landowner and Lessee respecting its subject matter. Any
agreement, understanding or representation respecting the Property, this
Agreement, or any other matter referenced herein not expressly set forth in this
Agreement, or in a subsequent writing signed by both parties, is null and
void.  This Agreement shall not be modified or amended except in a writing
signed by both parties.  No purported modifications or amendments, including,
without limitation, any oral agreement (even if supported by new consideration),
course of conduct or absence of a response to a unilateral communication, shall
be binding on either party.

15.7           Governing Law and Venue. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Nevada, without regard
to the conflict of law principles of such State.  If the parties are unable to
resolve amicably any dispute arising out of or in connection with this
Agreement, they agree that such dispute shall be resolved in the Second Judicial
District Court of the State of Nevada in Washoe County, Nevada.

15.8           Attorneys' Fees.  In the event that either Party fails to perform
any of its obligations under this Agreement and such failure is an Event of
Default hereunder or in the event a dispute arises concerning the meaning or
interpretation of any provision of this Agreement, the Party not prevailing in
such dispute shall pay any and all reasonable costs and expenses incurred by the
other Party in enforcing or establishing its rights hereunder, including,
without limitation, court costs and attorneys' fees.

 
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15.9           Partial Invalidity.  Should any provision of this Agreement be
held in a final and unappealable decision by a court of competent jurisdiction
to be invalid, void, or otherwise unenforceable, the remaining provisions hereof
shall remain in full force and effect and unimpaired by the court's holding.

15.10           Tax Credits.  If under applicable law the holder of a leasehold
interest in the nature of that held by Lessee or a Permitted Transferee under
this Agreement becomes eligible for any tax credit, benefit, or incentive for
alternative energy expenditure established by any local, state, or federal
government (a "Tax Benefit Item"), then, at Lessee's option, Landowner and
Lessee shall amend this Agreement, if necessary, and to the limited extent
necessary, so as to allow Lessee to become eligible for such tax credit,
benefit, or incentive; provided, however, that Landowner shall not be required
to amend this Agreement should such amendment negatively impact Landowner's
taxes payable as a result of this Agreement (including income taxes) exclusive
of the positive tax impact to Landowner arising from the Tax Benefit Item(s).

15.11           No Partnership.  Nothing contained in this Agreement shall be
construed to create an association, joint venture, trust or partnership
covenant, obligation or liability on or with regard to any one or more of the
parties to this Agreement.

15.12           Counterparts.  This Agreement may be executed with counterpart
signature pages and in duplicate originals, each of which shall be deemed an
original, and all of which together shall constitute a single instrument.
 
15.13           Interpretations.  Preparation of this Agreement has been a joint
effort of both the Parties and the resulting document shall not be construed
more severely against one of the Parties than against the other. The captions to
this Agreement are inserted solely for ease or reference, are not to be
considered material terms, and are not intended to aid in the interpretation of
this Agreement.
 
15.14           No Waiver.  No waiver by either Party of any term or provision
of this Agreement shall be deemed a continuing waiver, or a waiver of a
different term of provision of this Agreement.
 
15.15           Exhibits. Unless otherwise provided by this Agreement, in the
event of a conflict between the terms of this Agreement and the terms of the
Exhibits hereto, the terms of this Agreement shall control.

15.15           Time.  Time is of the essence of this Agreement.

[Signature blocks on next page.]

 
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IN WITNESS WHEREOF, Landowner and Lessee have caused this Agreement to be
executed and delivered by their duly authorized representatives as of the
Effective Date.

LESSEE
Vertex Refining NV, LLC:
 
By:  Vertex Energy Operating, LLC
        Its: Sole Member
 
By:   /s/ Benjamin P. Cowart            
         Benjamin P. Cowart, Manager
   
LANDOWNER
Bango Oil, LLC:
 
By:           Fox Encore 05 LLC,
a Washington limited liability company
Its:           Managing Member
 
By:           ACF Property Management, Inc.,
a California corporation
Its:           Managing Member
 
By:          /s/Alan C. Fox                      
Alan C. Fox
Its:  President

 
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Schedule 4.4

Existing Security Interests Against the Facility

[sc44.jpg]

 

[continued on next page.]

 
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[sc442.jpg]

 
 
 
28

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Schedule 4.5

Existing Mechanics' Liens

Claimant
Date
Amount
Nevada Thermal Services, LLC
1/06/2015
$7,581.70
H&E Equipment Services
1/27/2015
51,950.31
Farwest Insulation Contracting
1/13/2015
128,322.00
NRC Environmental Services, Inc.
2/02/2015
550,000.00
LA Perks Plumbing and Heating
2/10/2015
290,338.24
LA Perks Plumbing and Heating
2/11/2015
30,599.95
LA Perks Plumbing and Heating
2/11/2015
6,650.20
LA Perks Plumbing and Heating
2/11/2015
54,463.20
R.F. MacDonald Co.
2/18/2015
61,003.31
LA Perks Plumbing and Heating
2/19/2015
11,664.18

 

 
29

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Exhibit "A"

Legal Description
 
[sc45a.jpg]
 
30

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Exhibit "B"

Existing Permits

Permittee
Agency/Issuer
Permit
Permit Number
Date
Bango Refining, LLC
NDEP – Bureau of Water Pollution Control
Onsite Sewage Disposal System General Permit
GNEVOSDS
09S0139
7/16/13
Bango Refining, LLC
NDEP – Bureau of Air Pollution Control
Class II Air Quality Operating Permit
AP2992-1473.01
2/04/13
Bango Refining, LLC
NDEP – Bureau of Air Pollution Control
Order No. 2014-05
Order No. 2014-05
11/19/13
Bango Refining, LLC
NDEP – Bureau of Water Pollution Control
NDEP Authorization to Discharge Permit
NEV2009509
4/01/10
Bango Refining, LLC
NDEP – Bureau of Water Pollution Control
NDEP Stormwater General Permit for Industrial Activity
NVR050000 (ISW-4966)
9/18/09
Bango Oil, LLC
NDEP – Bureau of Waste Management
NDEP Written Determination (NAC 444.8455 and 444.84555)
NA
3/16/06
Best Energy, LLC
NDEP – Bureau of Waste Management
Notification of Waste Activity
NVR000080655
11/03/05
Best Energy, LLC
NDEP – Bureau of Waste Management
Certificate of Designation (NAC 444.8455)/ Variance (NAC 444.8456 (1), (6),
(8)(b), and (8)(d))
NA
10/03/02
Bango Oil, LLC
Churchill County Planning Commission
Special Use Permit (Amended)
Doc #413864
5/10/10
 
Bango Refining NV, LLC
Nevada State Fire Marshall
Construction Permit for Fire Protection System Installation
SFM No. 15CH051
8/20/14
Bango Oil, LLC
Nevada Division of Water Resources
Nevada Water Rights Permit
Permit No. 80156
8/30/11
 
Bango Oil, LLC
Churchill County Board of Commissioners
Settlement Agreement
N/A
1/19/10

 
 

 
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Exhibit "C"

Environmental Responsibilities Addendum

(See attached.)

 
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ENVIRONMENTAL RESPONSIBILITIES ADDENDUM
FOR THE
BANGO USED OIL RECYCLING FACILITY

This Environmental Responsibilities Addendum ( “Addendum”) is attached to,
governed by, and made a part of the Lease Agreement (the “Agreement”) dated
April 30, 2015 by and between Vertex Refining NV, LLC, a Nevada limited
liability company, as “Lessee” and Bango Oil LLC, a Nevada limited liability
company, as “Landowner”.  For convenience, all capitalized terms not otherwise
defined in this Addendum have the same meaning ascribed to them in the
Agreement.
 
RECITALS
 
1.           Landowner is owner of the property and improvements at the Bango
Oil Used Oil Recycling Facility, collectively referenced as the Property and
more particularly defined in the Agreement.
 
2.           Lessee has been operating the Bango Oil Used Oil Recycling Facility
on behalf of Prior Lessee (defined below) since May of 2014.
 
3.           Lessee desires to lease the Property, with an option to purchase
the membership interests of Landowner, and to continue the operation of the
Property.
 
4.           Lessee and Landowner wish to allocate responsibility for
environmental liabilities and claims associated with the Property according to
each party’s ownership and operation of the property and improvements.
 
AGREEMENT
 
1.           Definitions.  As used in this Addendum, the following terms have
the meanings set forth below:
 
a.           “Environmental Baseline” means the environmental facts,
circumstances and conditions existing, initiated or occurring at the Property
prior to August 11, 2011 (the “Effective Date”).
 
b.           “Environmental Claims” means all suits, liabilities, losses,
claims, enforcement actions, fines and penalties arising out of or resulting
from (i) circumstances at the Property forming the basis for any violation of
Environmental Law in effect on the Effective Date or (ii) the presence of
Hazardous Substances at, under or emanating from the Property at levels in
excess of those levels, standards or limits that are applicable, relevant or
appropriate to the industrial use of the Property as defined and restricted in
the Agreement, or as promulgated under, or pursuant to, any Environmental Law in
effect on the Effective Date.
 
c.           “Environmental Law” shall have the meaning given thereto in the
Agreement.
 

 
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d.           “Hazardous Substances” shall have the meaning given thereto in the
Agreement.
 
e.           “Pre-Closing Environmental Liabilities” means all Environmental
Claims arising prior to the Effective Date (“Environmental Baseline Condition”)
except to the extent such Environmental Claims have been materially exacerbated
by any act or omission of Lessee.  In the event that an act or omission of
Lessee results in the material exacerbation or compounding of, or intermingling
with, an Environmental Baseline Condition, the Environmental Claims arising out
of such Environmental Baseline Condition shall cease to be Pre-Closing
Environmental Liabilities.  For purposes hereof, such Environmental Claims shall
be deemed to have been “materially” exacerbated and such exacerbation,
compounding or intermingling shall be deemed to be “material” if, as a result of
the foregoing, any corrective action with respect to the Environmental Baseline
Condition is required under any Environmental Law that would otherwise not have
been required under such Environmental Law or if, as a result of the foregoing,
the cost of any corrective action with respect to the Environmental Baseline
Condition is increased by at least Two Hundred Thousand Dollars (US $200,000) or
more.
 
2.           Landowner’s Representations and Warranties.
 
a.           As Is.  THE PROPERTY IS LEASED, AND, UPON EXERCISE BY LESSEE OF ITS
OPTION TO PURCHASE WILL BE TRANSFERRED, TO LESSEE ON AN “AS-IS WHERE-IS” BASIS
WITHOUT ANY IMPLIED OR EXPLICIT WARRANTIES, EITHER ORAL OR WRITTEN, MADE BY
LANDOWNER OR ANY AGENT OR REPRESENTATIVE OF LANDOWNER, EXCEPT AS EXPRESSLY SET
FORTH IN THE AGREEMENT AND THIS ADDENDUM.  LANDOWNER EXPRESSLY DISCLAIMS
RESPONSIBILITY FOR THE ACCURACY OR ADEQUACY OF ANY AND ALL REPORTS AND OTHER
MATERIALS OF WHATEVER NATURE CONCERNING THE PROPERTY SUPPLIED BY LANDOWNER OR
LANDOWNER’S REPRESENTATIVES TO LESSEE OR LESSEE’S REPRESENTATIVES, BUT
REPRESENTS THAT IT HAS NO KNOWLEDGE (WITHOUT HAVING PERFORMED ANY INDEPENDENT
INVESTIGATION AND HAVING NO SUCH DUTY TO DO SO) THAT ANY SUCH MATERIALS ARE
MATERIALLY INACCURATE. THE FOREGOING LIMITED REPRESENTATION IS NOT A
REPRESENTATION (1) THAT THE MATERIALS PRESENT A COMPLETE PICTURE OF THE
ENVIRONMENTAL CONDITION OF THE PROPERTY OR ALL ENVIRONMENTAL INFORMATION THAT
MIGHT BE MATERIAL TO LESSEE'S DECISION, OR (2) AS TO THE ACCURACY OF INFORMATION
CONTAINED IN ANY REPORTS GENERATED BY THIRD PARTIES OR OF MATTERS OF OPINION OR
ANY ESTIMATE OR FORECAST (WHETHER CONTAINED IN ANY THIRD PARTY REPORTS OR
OTHERWISE).
 

 
34

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b.           Documents, Files and Records.  The files, records, documents and
other materials provided or otherwise made available to Lessee relating to the
environmental condition of the Property constitute all of the files, records and
other documents regarding the history, condition, operation, development, use,
occupancy and management of the Property as such relate to environmental matters
(“Environmental Records”) which are within Landowner’s possession and reasonable
control and which are not otherwise privileged or confidential.  It is
acknowledged by Lessee that Landowner’s withholding of privileged or
confidential Environmental Records from Lessee does not constitute or create a
Material Adverse Effect on Lessee’s ability to perform a due diligence review of
the Property or otherwise form an independent understanding of the Environmental
Baseline Conditions.
 
3.           Lessee’s Representations and Warranties.
 
a.           Disclaimer.  Lessee acknowledges and agrees that, except as
explicitly stated in this Addendum, Landowner has not made and does not make any
representations, warranties, or covenants of any kind or character whatsoever,
either express or implied, with respect to the habitability, tenantability or
suitability for commercial purposes, merchantability, or fitness of the Property
for a particular purpose, all of which warranties Landowner hereby expressly
disclaims.
 
b.           Environmental Baseline.  Lessee acknowledges that the Property has
been used for terminalling, used oil recycling and blending, and other
industrial purposes.  Lessee understands that Hazardous Substances may have
spilled, leaked, seeped, entered, or otherwise may have been released onto or
into the soil, groundwater or surface water, that the facility has been subject
to various NDEP "stop orders", all of which, to Landowner’s actual knowledge,
have been cured, and that Hazardous Substances may still be present on or under
the property or in or under other real property and natural features in the
vicinity of the Bango Used Oil Recycling Facility.
 
4.           Survival of Warranties.  The representations and warranties made by
Landowner and Lessee in this Addendum shall survive Closing.
 
5.           Landowner’s Indemnity.
 
a.           Indemnity.  From the date of the Agreement, Landowner shall
indemnify, defend and hold harmless Lessee and its affiliates and their
directors, officers, shareholders and employees from and against any
liabilities, damages, claims, penalties, costs, expenses or losses (an
“Indemnified Obligation”) arising out of any breach by Landowner of its
representations and warranties hereunder or related to the Pre-Closing
Environmental Liabilities. The indemnity set forth in this section 5(a) shall
also be deemed to run to any bank or other financial institution (and to any
purchaser at a foreclosure sale of the Property instituted by such financial
institution) to which Lessee may grant a security interest in the leasehold
estate.
 

 
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b.           Exceptions.  Landowner shall not be obligated to indemnify, defend
or hold harmless Lessee for (i) any Environmental Claims arising from any act or
omission by Lessee or by Prior Lessee or failure by Lessee or Prior Lessee to
comply with any Environmental Law, or (ii) any Environmental Claim or any
failure to comply with Environmental Law, including a Pre-Closing Environmental
Liability, that is de minimis.  For the purposes of this paragraph, an
Environmental Claim or a failure to comply with Environmental Law, including a
Pre-Closing Environmental Liability, is “de minimis” if it can be corrected,
remediated, brought into compliance or otherwise resolved at a cost of less than
$25,000.00.
 
c.           Expiration.  Landowner’s indemnity obligations under this Addendum
shall remain in effect for three (3) years after the expiration or sooner
termination of the Agreement; provided, however, that Landowner’s obligations
for any claim of which Lessee has properly notified Landowner in accordance with
paragraph 7 of this Addendum prior to the expiration of Landowner’s indemnity
obligations shall survive until such claim is fully resolved.
 
6.            Lessee’s Indemnity.  From the date of the Agreement, Lessee shall
indemnify, defend and hold harmless Landowner and its affiliates and their
directors, officers, shareholders, employees, successors and assigns from and
against any liabilities, damages, claims, penalties, costs, expenses, or losses
arising out of or relating to (i) any Environmental Claim relating to the
Property; (ii) any Environmental Claim arising from any act or omission by
Lessee, or Lessee’s predecessor-in-leasehold-title, Bango Refining, NV, LLC
(“Prior Lessee”), after the Effective Date, or failure by Lessee or Prior Lessee
to comply with any Environmental Law, provided such claim does not arise from
any Pre-Closing Liability; or (iii) any Pre-Closing Environmental Liability that
is de minimis, as defined in paragraph 5 of this Addendum, or that arises after
the Landowner’s indemnity obligations have expired pursuant to paragraph 5 of
this Addendum.
 
7.           Indemnification Procedure.  For purposes of this Section 7, and the
procedures outlined herein, “Indemnitor” shall mean Landowner as Indemnitor from
whom indemnification is sought under Section 5 hereof and Lessee as Indemnitor
from whom indemnification is sought under Section 6 hereof, and “Indemnitee”
shall mean, for purposes of Section 5, Lessee and its affiliates and their
respective directors, officers, shareholders, employees, successors and assigns,
and for purposes of Section 6, Landowner and its affiliates and their respective
directors, officers, shareholders, employees, successors and assigns. Upon any
Indemnitee’s becoming aware of anything which is or may give rise to a claim for
indemnification or grounds for making a claim under any of the indemnities under
Article 5 or 6 of this Agreement or of any claim, action or demand against it or
matter likely to give rise to any of these in respect of such indemnities,
Indemnitee shall:
 
(i)           notify Indemnitor from whom indemnity is sought by written notice
as soon as reasonably practicable after it appears to Indemnitee that any
assessment or claim, action or demand of a third party received by or coming to
the notice of Indemnitee may result in a claim under the indemnities, specifying
all material relevant details as are then available to Indemnitee;
 

 
36

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(ii)           take such action and give such information and access to
personnel, premises, property, documents and records to Indemnitor and its
professional advisors as Indemnitor may reasonably request, and Indemnitor shall
be entitled to require Indemnitee to take such action and give such information
and assistance in order to avoid, dispute, resist, mitigate, settle, compromise,
defend or appeal any claim in respect thereof or adjudication with respect
thereto;
 
(iii)           at the request of Indemnitor, allow Indemnitor to take the sole,
but not unreasonable, conduct of such actions as Indemnitor may deem appropriate
in connection with any such assessment or claim in the name of Indemnitee, and
in that connection Indemnitee shall give or cause to be given to Indemnitor all
such assistance as Indemnitor may reasonably require in avoiding, disputing,
resisting, settling, compromising, defending or appealing any such claim and
shall instruct such attorneys or other professional advisors as Indemnitor may
nominate to act on behalf of Indemnitee (subject to Indemnitee's approval, which
shall not be unreasonably withheld), as appropriate, but to act in accordance
with Indemnitor’s sole, but not unreasonable, instructions, subject to
Indemnitor’s indemnifying Indemnitee against all costs and expenses incurred by
Indemnitee in complying with any such requirement; and
 
(iv)           make no admission of liability, agreement, settlement or
compromise with any third party in relation to any such claim or adjudication
without the prior written consent of Indemnitor.
 
8.           Assignment.  Except as provided in Section 5(a) hereof, the rights,
interest and obligations of this Addendum may not be assigned by either party
without the prior written agreement of the other party.
 
9.           Waiver.  Unless this Addendum provides a period of time within
which a right must be exercised, no party shall be deemed to have waived any
right under this Addendum unless such party has expressly waived that right in
writing.  The waiver by any party of a right, claim or default by another party
hereunder shall not be deemed to be a waiver or any other right, claim or
default or any subsequent default of the same kind.
 
10.           No Third Party Beneficiaries.  Except as expressly stated in this
Addendum, no term or provision of this Addendum is intended to be for the
benefit of any person or entity not a party hereto – including, without
limitation, Prior Lessee – and no such other person or entity shall have any
right or cause of action hereunder.  Nothing in this Addendum is intended to
relieve or discharge the obligation or liability of any third persons or
entities to any party to this Addendum.  No provision of this Addendum gives any
third persons or entities any right of subrogation or action over and against
any party to this Addendum.
 

 
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AGREED and EXECUTED this  30  day of   April , 2015.
 

LESSEE
Vertex Refining NV, LLC:
 
By:   Vertex Energy Operating, LLC
         Its: Sole Member
 
 
          By:    /s/ Benjamin P. Cowart                               
                    Benjamin P. Cowart, Manager
 
 
LANDOWNER
Bango Oil, LLC:
 
By:           Fox Encore 05 LLC,
a Washington limited liability company
Its:           Managing Member
 
By:           ACF Property Management, Inc.,
a California corporation
Its:           Managing Member
 
 
By:          /s/ Alan C. Fox                                  
Alan C. Fox
Its:  President
 

 
 
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Exhibit "D"
 
Required Insurance Coverages

(See attached.)

 
39

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INSURANCE REQUIREMENTS
 
LESSEE’S REQUIREMENTS
 
 
Lessee’s Insurance Representations to Landowner.

 
 
A.
It is expressly understood and agreed that the insurance requirements set forth
herein:

 
 
i.
represent the Landowner’s minimum requirements and are not to be construed to
void or limit Lessee’s indemnity obligations as contained in the Agreement nor
represent in any manner a determination of the insurance Lessee should or should
not maintain for its own protection; and

 
 
ii.
represent insurance which is being, or has been, obtained by Lessee in support
of Lessee’s liability and indemnity obligations under the
Agreement.  Irrespective of the requirements as to insurance to be carried as
provided for herein, the insolvency, bankruptcy or failure of any insurance
company carrying insurance of Lessee, or the failure of any insurance company to
pay claims accruing, shall not be held to affect, negate or waive any of the
provisions of this Exhibit or the Agreement.

 
 
B.
Lessee shall obtain and maintain the insurance policies and coverages as
required under this Agreement, and shall deliver to Landowner evidence of same,
and shall additionally deliver to Landowner renewal insurance certificate(s) at
least thirty (30) days before the expiration of the then current
policy(ies).  In the event of any failure by Lessee to comply with the
provisions of this Exhibit, Landowner may (but shall have no obligation to do
so), without in any way compromising or waiving any other right or remedy under
this Agreement, at law or in equity, on notice to Lessee, purchase such
insurance at Lessee’s expense; provided, however, that such action by Landowner
shall in no event relieve Lessee of or excuse Lessee from the obligation to
obtain and maintain such insurance amounts and coverages as required herein.

 
 
C.
Notwithstanding anything to the contrary contained herein, Landowner shall have
the right to reasonably increase the amount or expand the scope of insurance
coverages to be maintained by Lessee hereunder from time to time.  Within thirty
(30) days after Landowner’s request, Lessee shall provide Landowner with an
insurance policy or policies as so requested to provide such increased or other
coverages, which insurance policy or policies shall otherwise be in accordance
with the terms and conditions of this Agreement.

 
 
Conditions Affecting All Insurance Required Herein.

 
 
D.
Cost of Insurance.  All insurance coverage shall be provided at Lessee’s sole
expense.

 
 
E.
Maintenance of Insurance.  All insurance coverage shall be maintained in effect
with limits not less than those set forth below at all times during the Term or
any extension or renewal of the Agreement.

 

 
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F.
Status and Rating of Insurance Company.  All insurance coverage shall be written
through insurance companies licensed to do business in the State of Nevada and
rated no less than A: VIII in the most current edition of A. M. Best’s Key
Rating Guide and no less than A- in the most current edition of Standard & Poor
Insurance Solvency Review.

 
 
G.
Non-Standard, Special and/or Unusual Exclusions, Limitations or Endorsements.
All insurance coverage shall be provided to Landowner Parties in compliance with
the requirements herein and shall contain no non-standard, special and/or
unusual exclusions or restrictive endorsements without the prior express written
approval of Landowner.

 
 
H.
Limits of Liability.  The limits of liability required herein may be provided by
a single policy of insurance or by a combination of primary and umbrella
policies, but in no event shall the total limits of liability available for any
one occurrence or accident be less than the amount required herein.

 
 
I.
Notice of Cancellation, Nonrenewal, or Material Reduction in Coverage.  All
insurance coverage shall contain the following express provision:

 
“This is to certify that the policies of insurance described herein have been
issued to the Insured and are in force at this time.  In the event of
cancellation, non-renewal, or material reduction in coverage affecting the
certificate holder, thirty (30) days prior written notice shall be given to the
certificate holder”.
 
 
J.
Additional Insured Status.  Additional insured status shall be provided in favor
of Landowner Parties on all liability insurance required herein except workers’
compensation/ employer’s liability.  Additional insured status on the general
liability insurance shall be provided on ISO form 2026 or its equivalent.

 
 
K.
Primary Liability.  All insurance coverage required herein shall be primary to
all insurance available to Landowner Parties, with Landowner Parties’ insurance
being excess, secondary and non-contributing.  Where necessary, coverage shall
be endorsed to provide such primary liability.

 
 
L.
Deductible/Retention.  All deductibles and/or retentions shall be paid by,
assumed by, for the account of, and at Lessee’s sole risk.  All deductibles
and/or retentions are subject to approval by Landowner Parties.

 
 
M.
Waiver of Subrogation.  All insurance policies required herein shall be endorsed
to waive the insurance carriers’ rights of subrogation against Landowner
Parties.

 
 
Commercial General Liability Insurance.

 
 
N.
Coverage.  Such insurance shall cover liability arising out of all locations
leased by Lessee and/or all operations of Lessee, including but not limited to
liability assumed under the Agreement (including the tort liability of another
assumed in a business contract).  Defense shall be provided as an additional
benefit and not included within the limit of liability.

 

 
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O.
Form.  Commercial General Liability Occurrence form (ISO CG 0001 0798 or its
equivalent).

 
 
P.
Amount of Insurance.  Coverage shall be provided with limits of not less than:

 

 
i.
Each Occurrence Limit
$1,000,000
         
ii.
General Aggregate Limit
$2,000,000
         
iii.
Product-Completed Operations Aggregate Limit
$2,000,000
         
iv.
Personal and Advertising Injury Limit
$1,000,000
         
v.
Damage to Premises Rented to You Limit
$   100,000
         
vi.
Medical Expense Limit
$       5,000
       

 
Q.
Required Endorsements:

 
 
i.
Additional Insured status, as required above.

 
 
ii.
Notice of Cancellation, Nonrenewal or Material Reduction in Coverage, as
required above.

 
 
iii.
Personal Injury Liability:  The personal injury contractual liability exclusion
shall be deleted.

 
 
iv.
Primary Liability, as required above.

 
 
v.
Waiver of Subrogation, as required above.

 
 
Auto Liability Insurance.

 
 
R.
Coverage.  Such insurance shall cover liability arising out of any auto
(including owned, hired, non-owned and leased autos).

 
 
S.
Form.  Business Auto form (ISO CA 0001 or its equivalent).

 
 
T.
Amount of Insurance.  Coverage shall be provided with a limit of not less than
$1,000,000.

 
 
U.
Required Endorsements:

 
 
i.
Additional Insured status required above.

 
 
ii.
Notice of Cancellation, Nonrenewal or Material Reduction in Coverage, as
required above.

 
 
iii.
Waiver of Subrogation, as required above.

 
 
iv.
Contractual Liability sufficient to cover Lessee’s obligations under this
Agreement.

 

 
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Workers’ Compensation/Employer’s Liability Insurance.

 
 
V.
Coverage.  Such insurance shall cover liability arising out of Lessee’s
employment of workers and anyone for whom Lessee may be liable for workers’
compensation claims, and shall insure against and satisfy Lessee’s obligations
and liabilities under the worker’s compensation laws of the State of
Nevada.  Workers’ compensation insurance is required, and no “alternative” forms
of insurance shall be permitted.

 
 
W.
Amount of Insurance.  Coverage shall be provided with a limit of not less than:

 
 
i.
Workers’ Compensation:
Statutory limits;

 
 
ii.
Employer’s Liability:
$500,000 each accident;

 
 
$500,000 each disease;
and in any event in no less than statutorily required amounts.

 
X.
Required Endorsements:

 
 
i.
Notice of Cancellation, Nonrenewal or Material Reduction in Coverage, as
required above;

 
 
ii.
Waiver of Subrogation, as required above.

 
 
Y.
Indemnity:

 
 
 
LESSEE SHALL BE LIABLE TO LANDOWNER PARTIES AND SHALL INDEMNIFY AND HOLD
HARMLESS LANDOWNER PARTIES FROM AND AGAINST ALL CLAIMS, LOSSES, COSTS, DAMAGES
OR EXPENSES (INCLUDING, WITHOUT LIMITATION, ATTORNEYS’ FEES) THAT MAY BE
ASSERTED AGAINST, SUFFERED BY, ACCRUED AGAINST, CHARGED TO, OR RECOVERABLE FROM
LANDOWNER PARTIES, AS A RESULT OF LESSEE NOT CARRYING WORKER’S COMPENSATION
INSURANCE AND/OR EMPLOYER’S LIABILITY INSURANCE OR NOT BEING A SUBSCRIBER UNDER
ANY APPLICABLE NEVADA WORKER’S COMPENSATION ACT, OR ARISING OUT OF ANY LOSS
SUFFERED BY (OR IN CONNECTION WITH) ANY OF LESSEE’S EMPLOYEES, AGENTS OR
REPRESENTATIVES WHICH WOULD HAVE BEEN OR IS COVERED BY AN APPROPRIATE WORKER’S
COMPENSATION INSURANCE POLICY AND/OR EMPLOYER’S LIABILITY INSURANCE
POLICY.  This provision shall survive the expiration or other termination of
this Agreement.

 
 
Umbrella Liability Insurance.

 
 
Z.
Coverage.  Such insurance shall be excess over and be no less broad than all
coverages described in this Exhibit and shall include a drop-down provision.

 
 
AA.
Form:  This policy shall have the same inception and expiration dates as the
commercial general liability insurance required above.

 

 
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BB.
Amount of Insurance.  Coverage shall be provided with a limit of not less than
$25,000,000.

 
 
CC.
Required Endorsements:

 
 
i.
Additional Insured status as required above;

 
 
ii.
Waiver of Subrogation, as required above.

 
 
Causes of Loss – Special Form (f/k/a “All-Risk”) Property Insurance.

 
 
DD.
Coverage.  Such insurance shall be provided on all of Lessee’s business records,
furniture, fixtures, personal property, equipment, all improvements and/or
betterments located on the Land including, but not limited to, the
office/warehouse for the full replacement cost, and the amount shall satisfy any
coinsurance requirements under the applicable policy.  Policy limits for
leasehold improvements and personal property must be stated separately.

 
 
EE.
Form.  ISO Causes of Loss – Special Form.

 
 
FF.
Amount of Insurance.  Coverage shall be provided in the amount 100% of
replacement cost of all property required to be covered herein and in compliance
with all laws, regulations or ordinances affecting such property.

 
 
GG.
Required Endorsements:

 
 
i.
Agreed Value.

 
 
ii.
Ordinance or Law.

 
 
iii.
Replacement Cost.

 
 
iv.
Landowner shown as loss payee with respect to all improvements owned by
Landowner.

 
 
v.
Waiver of Subrogation, as required above.

 
 
Business Income and Extra Expense Insurance.

 
 
HH.
Coverage.  Such insurance shall be provided on all operations in the location
covered by the Agreement.

 
 
II.
Form.  ISO Causes of Loss – Special Form.

 
 
JJ.
Amount of Insurance.  Coverage shall be provided in an amount of not less than
eighty percent (80%) of Lessee’s gross annual income at this location less
non-continuing expense.

 
 
KK.
Required Endorsements:

 
 
i.
Agreed Value.

 
 
ii.
Waiver

 
 
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Pollution Legal Liability Insurance

 
 
A.
Coverage.  Such insurance coverage shall cover environmental liability (for both
sudden and gradual alleged environmental conditions) arising out of the Land or
Lessee’s operations at the Land, including, but not limited to, coverage for
clean-up costs, business interruption, loss of site value and claims for bodily
injury and property damage.  Such coverage shall be in place for the entirety of
the Lease Term (and all renewals thereof) and for at least three (3) years
thereafter.

 
B.
Amount of Insurance.  Coverage shall be provided with a limit of not less than
$15 million per event/occurrence.

 
 
C.
Required Endorsements:

 
 
i.
Landowner Parties to be named as Additional Insured with respect to all
liability arising out of Lessee’s operations on the Land.

 
ii.
Insurer shall waive any and all rights of subrogation as against Landowner
Parties with respect to amounts paid under any such policies.

 
 
iii.
Primary Liability, as required above.

 
Other Lessee Insurance.  Lessee will, at Landowner’s request and at Lessee’s
sole expense, procure and maintain any other and further insurance coverage that
Landowner may require, including but not limited to:

 
 
LL.
Boiler and Machinery Insurance.

 
 
MM.
Earthquake Insurance.

 
 
NN.
Flood Insurance.

 
 
Evidence of Insurance.

 
 
OO.
Provision of Evidence.  Evidence of the insurance coverage required to be
maintained by Lessee, represented by original certificates of insurance,
evidence of insurance and endorsements issued by the insurance company or its
legal agent, must be furnished to Landowner no later than two (2) days after
execution of this Agreement.  New certificates of insurance, evidence of
insurance, and endorsements shall be provided to Landowner at least thirty (30)
days prior to the termination date of the then-current certificates of
insurance, evidence of insurance, and endorsements.  Upon request of any
Landowner Party, Lessee shall provide to Landowner a certified copy of all
insurance policies required herein within ten (10) days of any such
request.  Renewal policies, as necessary, shall be delivered to Landowner at
least thirty (30) days prior to the expiration of the previous policy.

 

 
45

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PP.
Form:

 
 
i.
All property and business income insurance required herein shall be evidenced by
ACORD form 28, “Evidence of Property Insurance”.

 
 
ii.
All liability insurance required herein shall be evidenced by ACORD form 25
(2001/08), “Certificate of Insurance”.

 
 
QQ.
Specifications.  Such certificates of insurance, evidence of insurance, and
endorsements shall specify:

 
 
i.
Landowner as a certificate holder with correct mailing address.

 
 
ii.
Insured’s name, which must match that on the Agreement.

 
 
iii.
Insurance companies affording each coverage, policy number of each coverage,
policy dates of each coverage, all coverages and limits described herein, and
signature of authorized representative of insurance company.

 
 
iv.
Producer of the certificate with correct address and phone number listed.

 
 
v.
Additional insured status required by this Exhibit.

 
 
vi.
Aggregate limits per project required by this Exhibit.

 
 
vii.
Property policy limits for leasehold improvements and personal property shown
separately.

 
 
viii.
Amount of any deductibles and/or retentions.

 
 
ix.
Cancellation, nonrenewal and material reduction in coverage notification as
required by this Exhibit.  Additionally, the words “endeavor to” and “but
failure to mail such notice shall impose no obligation or liability of any kind
upon Company, it agents or representatives” shall be deleted from the
cancellation provision of the ACORD 25S certificate of insurance form.

 
 
x.
Primary status required by this Exhibit.

 
 
xi.
Waivers of subrogation required by this Exhibit.

 
 
xii.
Loss payee status required by this Exhibit.

 
 
RR.
Required Endorsements.  A copy of each required endorsement shall also be
provided.

 
 
SS.
Failure to Obtain:  Failure of Landowner to demand such certificate or other
evidence of full compliance with these insurance requirements or failure of
Landowner to identify a deficiency from evidence that is provided shall not be
construed as a waiver of Lessee’s obligation to maintain such insurance.

 

 
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Definitions.  For purposes of this Exhibit:

 
 
TT.
ISO.  “ISO” means Insurance Services Office;

 
 
UU.
Landowner Parties.  As used in this Exhibit, “Landowner Parties” means (a)
Landowner, (b) any lender whose loan is secured by a lien against the Property,
(c) their respective shareholders, members, partners, affiliates and
subsidiaries, successors and assigns, and (D) any directors, managers, officers,
employees, agents, or contractors of the foregoing persons or entities (and each
such person or entity shall be a “Landowner Party”).

 
 

 
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Exhibit "E"
 
Landowner's Balance Sheet

[To be attached via supplemental disclosure.]

 
48

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Exhibit "F"

Membership Interest Purchase Agreement

(See attached.)

 

 
49

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MEMBERSHIP INTEREST PURCHASE AGREEMENT

THIS MEMBERSHIP INTEREST PURCHASE AGREEMENT (the “Agreement”) is entered into as
of ________________, 20__ by and among VERTEX REFINING NV, LLC, a Nevada limited
liability company (“Buyer”), and the sole member of BANGO OIL LLC, a Nevada
limited liability company (the “Company”): FOX ENCORE 05 LLC, a Washington
limited liability company ( “Seller”).

RECITALS

WHEREAS, Seller owns one hundred percent (100%) of the issued and outstanding
Membership Interests (as defined in Article I hereof) of the Company;

WHEREAS, Buyer and the Company entered into that certain Lease With Option for
Membership Interest Purchase dated April 30, 2015 (the “Lease”), which included
in Section 13 thereof an option (the “Option”) for Buyer to purchase one hundred
percent (100%) of the issued and outstanding Membership Interests of the
Company;

WHEREAS, Buyer properly and timely exercised the Option on ________________,
20__ in accordance with Section 13 of the Lease; and

WHEREAS, pursuant to Buyer’s exercise of the Option, Seller desires to sell and
transfer to Buyer, and Buyer desires to purchase from Seller, one hundred
percent (100%) of the issued and outstanding Membership Interests of the Company
upon the terms and conditions hereinafter set forth.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
hereby agree as follows:

ARTICLE I
DEFINITIONS

In addition to other terms defined elsewhere in this Agreement, the following
terms shall have the meanings set forth below:

“1933 Act” means the Securities Act of 1933, as amended, and the rules
promulgated thereunder.

“Affiliate” means, with respect to any Person, any Person controlling,
controlled by or under common control with such Person.

“Bango Articles” means the articles of organization attached hereto as Exhibit [
].

“Bango Operating Agreement” means the operating agreement attached hereto as
Exhibit [ ].

 
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“Business Day” means any day other than Saturday, Sunday or a day on which banks
are authorized or required to close in Reno, Nevada.

“Company Charter Documents” means the Bango Articles and Bango Operating
Agreement.

“Equity Interests” means all Membership Interests, securities, equity interests
or other ownership interests of or in the Company or any options, warrants or
other rights to acquire, or securities convertible into, any Membership
Interests, securities, equity interests or other ownership interests of or in
the Company.

“Intellectual Property” means all intellectual property rights, including
without limitation (i) copyrights, patents, industrial design rights,
trademarks, logos, slogans, corporate names, trade names, rights of priority,
and applications and registrations for any of the foregoing, (ii) inventions,
trade secrets, know-how, mask works, software, firmware, specifications,
designs, drawings, processes, data, methodologies, ideas, concepts, inventions,
plans, techniques, tools, hardware, works of authorship, and (iii) other
Proprietary Information and technology necessary to the past and present conduct
of the Company’s business.

“Knowledge”, when used with respect to Seller, means the actual knowledge,
without any duty of inquiry, of Alan C. Fox and D. Steven Fox.

“Material Adverse Change” means a material adverse change in the assets,
financial condition, operating results, customer, employee or supplier
relations, business condition or prospects of the Company or the value of the
Membership Interests.

“Material Adverse Effect” means a material adverse effect on the assets,
financial condition, operating results, customer, employee or supplier
relations, business condition or prospects of the Company or the value of the
Membership Interests.

“Membership Interests” means the issued and outstanding membership units or
interests of the Company.

“Person” means any individual, corporation, trust, limited liability company,
partnership, organization or other entity.

“Prior Lessee” means Bango Refining NV, LLC, a Delaware limited liability
company.

“State of Formation” means the State of Nevada.

“Tax” or “Taxes” means all taxes, charges, fees, levies, or other assessments,
including, without limitation, all net income, gross income, gross receipts,
sales, use, ad valorem, transfer, franchise, profits, license, withholding,
payroll, employment, social security, unemployment, excise, estimated,
severance, stamp, occupation, property, or other taxes, customs duties, fees,
assessments, or charges of any kind whatsoever, including, without limitation,
all interest and penalties thereon, and additions to tax or additional amounts
imposed by any taxing authority, domestic or foreign, upon the Company or any
Tax Affiliate.

 
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“Tax Affiliate” means any subsidiary, any affiliated, combined or unitary group
of which the Company is or was a member.

“Tax Return” means any return, declaration, report, claim for refund, or
information return or statement or other form relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.

ARTICLE II
PURCHASE AND SALE OF MEMBERSHIP INTERESTS AND CLOSING

2.1           Purchase of Membership Interests by Buyer.  Seller agrees to sell
to Buyer and Buyer agrees to purchase from Seller, one hundred percent (100%) of
all of the issued and outstanding Membership Interests of the Company (“Seller’s
Membership Interests”) at the Closing (as defined in Section 2.3 hereof) on the
terms and subject to the conditions set forth in this Agreement. The parties
acknowledge and agree that Seller’s Membership Interests shall be deemed to
include those certain tracts or parcels of land located in Churchill County,
Nevada, described on Schedule 2.1 attached hereto and incorporated herein by
this reference (the “Land”), together with the structures and other improvements
owned by Company currently erected thereon, including, without limitation, the
current used oil re-refining plant, storage tanks, offices, and warehouse, and
together with any rights, privileges, easements, entitlements, permits,
appurtenances and technology and/or intellectual property utilized in the
construction, operation, repair, maintenance of the oil re-refining plant and
the Company’s  business and belonging or in any way pertaining to the foregoing
(collectively, the “Property”).

2.2           Purchase Price.  The total purchase price for Seller’s Membership
Interests (the “Purchase Price”) to be paid to Seller in exchange for Seller’s
Membership Interests and performance of this Agreement by the Company and Seller
shall be as follows: (i) if paid on or prior to August 31, 2015, the Purchase
Price shall be EIGHT MILLION FIVE HUNDRED THOUSAND DOLLARS ($8,500,000.00)
(“Discounted Purchase Price”); (ii) if not paid on or prior to August 31, 2015,
effective as of (and starting as of) September 1, 2015, the Purchase Price shall
increase, starting from the Discounted Purchase Price, by ONE HUNDRED
TWENTY-FIVE THOUSAND DOLLARS ($125,000.00) per month until July 1, 2016, on
which date, and effective every month thereafter, the Purchase Price shall
increase by TWO HUNDRED FORTY-FOUR THOUSAND DOLLARS ($244,000.00) per month;
provided, however, that (x) the Purchase Price shall be capped at THIRTEEN
MILLION DOLLARS ($13,000,000.00) and (y) the Purchase Price shall be reduced by
the sum of ONE HUNDRED TWENTY-TWO THOUSAND DOLLARS ($122,000.00) for each
payment of Rent (as defined in the Lease) fully and timely made (for the purpose
of clarity, the net effect of these provisions is that (1) from the period of
September 1, 2015 through December 31, 2015, the Purchase Price will increase by
ONE HUNDRED TWENTY-FIVE THOUSAND DOLLARS ($125,000.00) per month; (2) as long as
Rent is fully and timely paid, during the period of January 1, 2016 through June
30, 2016, the Purchase Price will increase by THREE THOUSAND DOLLARS ($3,000.00)
per month; and (3) as long as Rent is fully and timely paid, during the period
of July 1, 2016 until the Closing Date (defined below) the Purchase Price will
increase by ONE HUNDRED TWENTY-TWO THOUSAND DOLLARS ($122,000.00) per month).
Seller acknowledges that, depending on when the Closing occurs, the Purchase
Price could be Zero Dollars ($0.00) pursuant to the formula set forth in this
Section 2.2; in that event, the Purchase Price payable to Seller by Buyer at
Closing shall be One Hundred Dollars ($100.00).

 
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2.3           The Closing.
 
(a)           The closing of the transactions contemplated by this Agreement
(the “Closing”) will take place concurrently with the execution of this
Agreement by all parties hereto (the “Closing Date”). The Closing will occur at,
or be coordinated from, the offices of Holland & Hart LLP, 5441 Kietzke Lane,
Second Floor, Reno, Nevada, or at such other place and on such other date and
time as is mutually agreeable to Buyer and Seller.  The Closing will be
effective as of the close of business on the Closing Date.

(b)           The parties agree to consummate the following transactions/make
the following deliveries on the Closing Date:

(i)           Seller will assign and transfer to Buyer merchantable title in and
to Seller’s Membership Interests, free and clear of all liens, and shall deliver
to Buyer an assignment of membership interest substantially in the form attached
hereto as Exhibit A and incorporated herein by this reference;

(ii)           Any Person (including Seller) that is a manager or managing
member of the Company shall deliver a resignation to the Company substantially
in the form attached hereto as Exhibit B and incorporated herein by this
reference;

(iii)           The Company and Buyer shall deliver a release of Seller
substantially in the form attached hereto as Exhibit C and incorporated herein
by this reference, releasing Seller for (A) any obligations owed to or due the
Company through and including the Closing Date, and (B) any liability associated
with the operation of the Company from and after the Closing Date; and

(iv)           Buyer shall deliver to Seller the Purchase Price by wire transfer
of immediately available funds to an account or accounts designated by Seller to
Buyer prior to the Closing.

(v)           Buyer shall deliver to Seller either a limited liability company
resolution confirming that all necessary corporate action was taken by Buyer in
entering into this Agreement and proceeding to Closing or a certificate of
Buyer’s managing member confirming that Buyer was authorized to enter into this
Agreement and proceed to Closing.

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER

Seller makes the following representations and warranties and acknowledges that
Buyer has relied thereon in entering into this Agreement.  Any exceptions to
such representations and warranties are as set forth in the schedules attached
hereto and Seller’s Disclosure Schedule [TO BE COMPLETED AND ATTACHED AS
APPLICABLE].  Each such representation and warranty is true and correct as of
the Closing Date.

 
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3.1           Power and Authority.  The Company is a limited liability company
duly formed, validly existing and in good standing under the laws of its State
of Formation.  The Company Charter Documents have been provided by Seller to
Buyer on or prior to the date hereof, reflect all amendments made thereto and
are true, correct and complete as of the date hereof.  True, correct and
complete copies of the Company Charter Documents are attached hereto as Schedule
3.1.

3.2           Binding Agreements.  This Agreement has been duly executed and
delivered by Seller and constitutes the valid and binding obligations of Seller,
enforceable against Seller in accordance with its terms, subject to applicable
bankruptcy, reorganization, insolvency, moratorium and other laws affecting
creditors’ rights generally from time to time in effect and to general equitable
principles.

3.3           No Breach.  Except as set forth on Schedule 3.3, the execution,
delivery and performance of this Agreement by Seller and the consummation by
Seller of the transactions contemplated hereby does not conflict with, result in
any breach of any of the provisions of, constitute a default under, result in a
violation of, result in the creation of a right of termination or acceleration
or any lien, security interest, charge or encumbrance upon any of the Membership
Interests or any assets of the Company under the provisions of the Company
Charter Documents or any indenture, mortgage, lease, loan agreement or other
agreement or instrument by which the Company or Seller is bound or affected, or
any law, statute, rule or regulation or order, judgment or decree to which the
Company or Seller are subject.
 
3.4           The Membership Interests.
 
(a)           The Company Charter Documents set forth the issued and outstanding
Membership Interests of the Company and the Membership Interests owned by
Seller.  All of the outstanding Membership Interests are validly issued and
owned, beneficially and of record, by Seller.  There are no Equity Interests
other than the Membership Interests issued, outstanding or otherwise in
existence.  No Person owns, has a right to, or has been issued any “phantom
stock,” equity or Membership Interest appreciation rights or similar
compensation expressed in or computed on the basis of Membership Interests or
the value thereof.  No Person has any preemptive right or right of first refusal
to purchase any Equity Interests, except as set forth in the Company Charter
Documents.
 
(b)           All legal and beneficial right, title and interest in Seller’s
Membership Interests will be on the Closing Date owned solely by Seller and on
the Closing Date, Seller’s Membership Interests shall be transferred by Seller
to Buyer, free and clear of all liens, claims, pledges, security interests,
encumbrances, charges, agreements, voting trusts, proxies or other arrangements,
restrictions or other legal or equitable limitations of any kind, except as set
forth in the Company Charter Documents. Seller has not entered into any
agreement, commitment or arrangement to transfer, pledge, mortgage or
hypothecate Seller’s Membership Interest or any interest therein to any Person
other than to Buyer.  Seller is not a party to any proxy, voting trust, voting
agreement or similar understanding with respect to Seller’s Membership Interests
or the election of managers of the Company, except as set forth in the Company
Charter Documents.  Seller’s Membership Interests transferred to Buyer by Seller
on the Closing Date shall constitute one hundred percent (100%) of all of the
issued and outstanding Membership Interests of the Company.
 
 
 
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3.5           Governmental Authorities; Consents.  Neither the Company nor any
Seller is required to submit any notice, report or other filing with any
governmental authority in connection with the execution or delivery by Seller of
this Agreement or the consummation of the transactions contemplated hereby. No
consent, approval or authorization of any governmental or regulatory authority
or any other party or Person is required in connection with the execution,
delivery and performance of this Agreement or the transactions contemplated
hereby by Seller.

3.6           Subsidiaries.  The Company does not own, directly or indirectly,
any stock, partnership interest, joint venture interest or any other security or
ownership interest of, or issued by, any other corporation, partnership, limited
liability company, organization or other entity.
 
3.7           Title to the Land.

(a)           At the Closing, the Company will own the Land free and clear of
liens and encumbrances, except for the items disclosed in that certain
Preliminary Title Report issued by Western Nevada Title Company, dated as of
March 23, 2015, and those items created or caused by Buyer (collectively, the
“Permitted Exceptions”).

(b)           To the best of Seller’s knowledge, the Company is not in violation
of any applicable zoning ordinance or other law of similar type or nature,
regulation or requirement relating to the operation of the Property, and Seller
has not received any notice of any such violation, or the existence of any
condemnation proceeding with respect to the Property, except, in each case, with
respect to violations the potential consequences of which do not or will not
have a Material Adverse Effect.

3.8           Tax Matters.
 
(a)           Except for the Permitted Exceptions, there are no Tax liens upon
the Land except for liens for current Taxes not yet due and payable. Any
Permitted Exceptions that are Tax liens shall be removed on our prior to the
Closing Date.

(b)           The Company has at all times during its existence been, and will
be until the Closing Date, taxable as a partnership for federal and state income
tax purposes.  Neither the Company nor Seller or any taxing authority has taken
a position inconsistent with such treatment.

3.9           Litigation.
 
(a)           Except as related to the actions or omissions of Prior Lessee,
there are no actions, suits, proceedings, orders or investigations pending or,
to the best knowledge of Seller, threatened against the Company, at law or in
equity, or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign.

(b)           There are no outstanding orders, judgments, injunctions, fines,
penalties, citations, awards or decrees of any court, arbitrator or governmental
or regulatory body involving the Company.
 
 
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3.10           Affiliate Transactions.  Other than pursuant to this Agreement,
no Person has any agreement with the Company or any interest in any property,
real, personal or mixed, tangible or intangible used in or pertaining to the
business of the Company (other than ownership of Membership Interests).

3.11           Compliance with Laws; Permits.  Seller has no knowledge of any
action, pending or threatened, to change the zoning or building ordinances or
any other laws, rules, regulations or ordinances affecting the Property.

3.12           Environmental Matters.  The Company is not in violation of any
applicable statute, law or regulation relating to the environment or
occupational health and safety.  No Hazardous Substances (as defined below) are
used or have been used, stored, or disposed of by the Company (except in the
ordinary course of business and in compliance with applicable laws) or, to the
best of Seller’s knowledge, by any other person or entity on any property owned,
leased or used by the Company, with the exception of Buyer pursuant to the
Lease.  As used in this Agreement, the term “Hazardous Substances” shall
include: (i) explosives, radioactive materials, hazardous wastes or substances,
toxic wastes or substances or any other similar materials or pollutants which
pose a hazard to the Property, or to persons on or about same, cause the
Property to be in violation of any law or local approval, or are defined as or
included in the definition of “hazardous substances”, “hazardous wastes”,
“hazardous materials”, or “toxic”, or words of similar import under any
applicable law, including, but not limited to: (A) the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. § 9601, et seq.; (B) the Hazardous Materials Transportation Act, as
amended, 49 U.S.C. § 1801. et seq.; (C) the Resource Conservation and Recovery
Act, as amended, 42 U.S.C. § 6901, et seq.; and (D) regulations adopted and
publications promulgated pursuant to the aforesaid laws, and similar laws of the
State of Nevada, including, without limitation, the Nevada Administrative Code
regulations adopted by the Nevada Division of Environmental Protection
(collectively, the “Environmental Laws”); (ii) asbestos in any form which is or
could become friable, urea formaldehyde foam insulation, transformers or other
equipment which contain dielectric fluid containing levels of polychlorinated
biphenyls in excess of 50 parts per million; and (iii) any other chemical,
material or substance, exposure to which is prohibited, limited or regulated by
any governmental authority under any Environmental Laws now or hereafter in
effect.

3.13           Brokerage.  No third party shall be entitled to receive any
brokerage commissions, finder’s fees, fees for financial advisory services or
similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement or agreement made by or on behalf of the
Company or Seller.

3.14           Material Contracts; License Agreements.  Schedule 3.14 lists each
contract, agreement, lease, mortgage, note, and any other obligation or
commitment of the Company to the extent monetary obligations under the contract
exceeds Twenty-Five Thousand and No/100 Dollars ($25,000.00), and each license
agreement (or agreement of a similar nature) (whether or not such license or
similar agreement includes a monetary obligation in excess of Twenty-Five
Thousand and No/100 Dollars ($25,000.00)) that is material to the operation of
the Company’s plant located on the Property.

 
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3.15           Insurance Coverage.  Schedule 3.15 sets forth a list of all
insurance coverage of the Company, in full force and effect as of the Closing
Date, maintained by the Company (indicating the type, name of the insurer,
coverage amounts, period of coverage, premiums and deductibles).

3.16           Employee Matters. To Seller’s knowledge, the Company has complied
with all applicable employment and labor Laws, except where non-compliance would
not result in a Material Adverse Effect.  Schedule 3.16 sets forth a list of all
employees of the Company as of the Closing Date, together with their rate of
annual compensation and job title.
 
3.17           Intellectual Property.  Schedule 3.17 identifies all of the
following which are used in the business of the Company or in which the Company
claims any ownership rights: (A) all marks, that have been registered, together
with information regarding all registrations and pending applications to
register any such rights; (B) all patents on and pending applications to patents
on any technology or design; and (C) all registrations of and applications to
register copyrights.
 
3.18           Intentionally Deleted.

3.19           Seller’s Financial Condition.   Except as reflected in the
Balance Sheet dated  [                            ], since the execution of the
Lease, Seller has not (i) incurred any new indebtedness for money borrowed; or
(ii) sold, exchanged or otherwise disposed of any of its assets or rights.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer makes the following representations and warranties and acknowledges that
Seller has relied thereon in entering into this Agreement.  Any exceptions to
such representations and warranties are as set forth in the schedules attached
hereto and Buyer’s Disclosure Schedule [TO BE COMPLETED AND ATTACHED AS
APPLICABLE].  Each such representation and warranty is true and correct on the
Closing Date.

4.1           Formation and Corporate Power.  Buyer is a limited liability
company duly formed, validly existing and in good standing under the laws of the
State of Nevada, qualified to do business in Nevada, with the requisite power
and authority to enter into this Agreement and perform its obligations
hereunder.

4.2           Execution, Delivery; Valid and Binding Agreement.  The execution,
delivery and performance of this Agreement by Buyer and the consummation of the
transactions contemplated hereby have been duly and validly authorized by all
requisite action, and no other proceedings on the part of Buyer are necessary to
authorize the execution, delivery or performance of this Agreement.  This
Agreement has been duly executed and delivered by Buyer and constitutes the
valid and binding obligation of Buyer, subject to applicable bankruptcy,
reorganization, insolvency, moratorium and other laws affecting creditors’
rights generally from time to time in effect and to general equitable
principles.

4.3           No Breach.  The execution, delivery and performance of this
Agreement by Buyer and the consummation by Buyer of the transactions
contemplated hereby do not conflict with or result in any breach of any of the
provisions of, constitute a default under, result in a violation of, result in
the creation of a right of termination or acceleration or any lien, security
interest, charge or encumbrance upon any assets of Buyer, or require any
authorization, consent, approval, exemption or other action by or notice to any
court or other governmental body, under the provisions of the Buyer Charter
Documents or any indenture, mortgage, lease, loan agreement or other agreement
or instrument by which Buyer is bound or affected, or any law, statute, rule or
regulation or order, judgment or decree to which Buyer is subject.

 
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4.4           Governmental Authorities; Consents.  Except for the applicable
requirements of state securities or “blue sky” laws and the 1933 Act, if any,
Buyer is not required to submit any notice, report or other filing with any
governmental authority in connection with the execution or delivery by it of
this Agreement or the consummation of the transactions contemplated hereby, and
no consent, approval or authorization of any governmental or regulatory
authority or any other party or person is required to be obtained by Buyer in
connection with the execution, delivery and performance of this Agreement or the
transactions contemplated hereby by Buyer.

4.5           Investment Representations.  In connection with its purchase and
receipt of Seller’s Membership Interests, Buyer represents as follows:

(a)           Buyer is aware of the Company’s business affairs and financial
condition, and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire Seller’s Membership
Interests.  Buyer is acquiring Seller’s Membership Interests for its own account
for investment purposes only and not with a view to, or for the resale in
connection with, any “distribution” thereof for purposes of the 1933 Act.

(b)           Buyer understands that Seller’s Membership Interests have not been
registered under the 1933 Act or in any state in reliance upon specific
exemptions therefrom, which exemptions depend upon, among other things, the bona
fide nature of Buyer’s investment intent as expressed herein.

(c)           By reason of the business or financial experience of Buyer or
Buyer’s professional advisors who are unaffiliated with the Company or Seller,
Buyer has the capacity to protect its own interests in the acquisition of
Seller’s Membership Interests.

ARTICLE V
COVENANTS OF SELLER

5.1           Preparation and Filing of Tax Returns.  Seller shall file or cause
to be filed all federal, state and local income Tax Returns for the Company for
all taxable periods ending on or before the Closing Date, and the Company shall
close its books for the period ending on the Closing Date, and Seller shall pay
or cause to be paid all Tax liabilities based on taxable income of the Company
for periods ending on or before the Closing Date.

 
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ARTICLE VI
SURVIVAL; INDEMNIFICATION

6.1           Agreement by Seller to Indemnify.  Seller agrees to indemnify,
defend and hold Buyer and its affiliates, managers, members and agents thereof
(collectively, the “Buyer Indemnified Party”) harmless from and against the
aggregate of all expenses, losses, costs, deficiencies, liabilities and damages
(including, without limitation, related counsel and paralegal fees and expenses)
incurred or suffered by the Buyer Indemnified Party resulting from or arising
out of (i) any breach of a representation or warranty made by Seller in or
pursuant to this Agreement, or (ii) any breach of the covenants or agreements
made by Seller in this Agreement.  The period of such indemnification shall be
for a period of one (1) year following the Closing.  The aggregate amount of
liability of Seller under this Section 6.1 shall not exceed $3,000,000.00.
 
6.2           Agreement by Buyer to Indemnify.  Buyer agrees to indemnify,
defend and hold Seller and its affiliates, managers, members and agents thereof
(collectively, a “Seller Indemnified Party”) harmless from and against the
aggregate of all expenses, losses, costs, deficiencies, liabilities and damages
(including, without limitation, related counsel and paralegal fees and expenses)
incurred or suffered by the Seller Indemnified Party resulting from or arising
out of (i) any breach of a representation or warranty made by Buyer in or
pursuant to this Agreement, or (ii) any breach of the covenants or agreements
made by Buyer in this Agreement.  The period of such indemnification shall be
for a period of one (1) year following the Closing.  The aggregate amount of
liability of Buyer under this Section 6.2 shall not exceed $3,000,000.00.
 
6.3           Survival of Representations and Warranties.  Each of the
representations and warranties made by the parties in this Agreement or pursuant
hereto shall survive through and including the date which is the first (1st)
anniversary of the Closing Date.  Notwithstanding any knowledge of facts
determined or determinable by any party by investigation, each party shall have
the right to fully rely on the representations, warranties, covenants and
agreements of the other parties contained in this Agreement or in any other
documents or papers delivered in connection herewith.  Each representation,
warranty, covenant and agreement of the parties contained in this Agreement is
independent of each other representation, warranty, covenant and
agreement.  After the Closing, the rights set forth in this Article VI shall be
each party’s sole and exclusive remedies against the other party hereto for
misrepresentations or breaches of covenants contained in this Agreement and any
related documents delivered in connection therewith.
 
ARTICLE VII
MISCELLANEOUS

7.1           Publicity.  No public disclosure, announcement or publicity with
respect to the transactions contemplated hereby may be made except with the
prior written approval of Buyer and Seller.

7.2           Expenses.  Seller and Buyer will pay all of their own expenses
(including attorneys’ and accountants’ fees (and, in the case of Seller, the
expenses of the Company up to and including the Closing Date)) in connection
with the negotiation of this Agreement, the performance of their respective
obligations hereunder and the consummation of the transactions contemplated by
this Agreement (whether consummated or not).

 
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7.3           Further Assurances.  Seller and Buyer agree that, on and after the
Closing Date, they shall take all appropriate action and execute any documents,
instruments or conveyances of any kind which may be reasonably necessary or
advisable to carry out any of the provisions hereof.

7.4           Amendment and Waiver.  This Agreement may not be amended or waived
except in a writing executed by the party against whom such amendment or waiver
is sought to be enforced.  No course of dealing between or among any persons
having any interest in this Agreement will be deemed effective to modify or
amend any part of this Agreement or any rights or obligations of any person
under or by reason of this Agreement.

7.5           Notices.  All notices, demands and other communications to be
given or delivered under or by reason of the provisions of this Agreement will
be in writing and will be deemed to have been given when personally delivered or
mailed by first class certified mail, return receipt requested, or sent by
nationally recognized courier service such as Federal Express.  Notices, demands
and communications to Buyer and Seller will, unless another address is specified
in writing, be sent to the address indicated below:

If to Seller:                             Fox Encore 05 LLC
c/o ACF Property Management, Inc.
12411 Ventura Blvd.
Studio City, California 91604
Attn: Alan C. Fox

with a required copy, which shall not constitute notice to Seller, to:

Holland & Hart LLP
5441 Kietzke Lane, Second Floor
Reno, Nevada  89511
Attn: Bryce C. Alstead

If, to Buyer:                           Vertex Refining NV, LLC
_____________________________
_____________________________
Attn: ________________________
 
with a required copy, which shall not constitute notice to Buyer, to:
 
_____________________________
_____________________________
_____________________________
Attn: ________________________

7.6           Assignment.  This Agreement and all of the provisions hereof will
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, except that neither this Agreement
nor any of the rights, interests or obligations hereunder may be assigned by
Seller or by Buyer without the prior written consent of the other parties
hereto.

 
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7.7           Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.

7.8           Counterparts and Delivery of Signatures.  This Agreement may be
executed in one or more counterparts, any one of which need not contain the
signatures of more than one party, but all such counterparts taken together will
constitute one and the same instrument.  A facsimile or electronic copy of this
Agreement or its signature page shall be accepted as an original.

7.9           Governing Law; Venue.  The internal law, without regard to
conflicts of laws principles, of the State of Nevada will govern all questions
concerning the construction, validity and interpretation of this Agreement and
the performance of the obligations imposed by this Agreement.  The parties
hereto hereby consent and agree to the exclusive jurisdiction of the state
courts of the State of Nevada sitting in Washoe County, Nevada and the federal
courts sitting in Reno, Nevada for any actions, suits or proceedings arising out
of or relating to this Agreement and the matters contemplated hereby (and the
parties agree not to commence any action, suit or proceeding relating thereto
except in such courts).

7.10           Attorneys’ Fees and Costs.  If any action or proceeding is
brought for the enforcement or interpretation of this Agreement or because of an
alleged dispute, breach, default or misrepresentation in connection with this
Agreement, the successful or prevailing party shall be entitled to recover
reasonable attorneys’ fees and all other costs and expenses incurred in such
action or proceeding, in addition to any other relief to which it may be
entitled.

7.11           Entire Agreement.  This Agreement (including the exhibits and
schedules hereto), contain the complete agreement between the parties and
supersede any prior understandings, agreements or representations by or between
the parties, written or oral, which may have related to the subject matter
hereof in any way.

[Signature page follows.]

 
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The parties have executed this Agreement as of the date set forth above.

Buyer:

VERTEX REFINING NV, LLC,
a Nevada limited liability company

By:           Vertex Energy Operating, LLC
 Its: Sole Member

By:  __________________________
        Benjamin P. Cowart, Manager

Seller:

FOX ENCORE 05 LLC,
a Washington limited liability company

By:          ACF Property Management, Inc.,
a California corporation
Its:           Managing Member

By:  __________________________                                                    
                        Alan C. Fox
Its:   President

 
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Schedule 2.1

Description of Land

 
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Schedule 3.1

Company Charter Documents

 
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Schedule 3.3

1.  Note(s) owed by the Company to its members.

 
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Schedule 3.14

Material Contracts

Regarding License (or similar) Agreements, certain of the Company’s License (or
similar) Agreements with equipment manufacturers allow for the use of such
equipment at plants other than the Company’s plant located on the Property, so
such agreements may need to be amended or otherwise modified to allow the use of
such equipment by the Company (or affiliated Persons) at plants other than the
Company’s plant located on the Property.

 
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Schedule 3.15

Insurance
 

 
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Schedule 3.16

Employees

 
68

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Schedule 3.17

Intellectual Property

 
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Exhibit A

Assignment of Membership Interest

 
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Exhibit B

Form of Resignation

 
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Exhibit C

Form of Release
 

 
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Exhibit "G"

Memorandum of Lease And Purchase Option

(See attached.)
 

 
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APNs:    7-071-80
    7-071-81

RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

Vertex Refining NV, LLC
c/o Vertex Energy, Inc.
1331 Gemini Street, Suite 250
Houston, TX 77058
Attn:  Chris Coulson

 
The undersigned hereby affirms that this document, including any exhibits,
submitted for recording does not contain the social security number of any
person or persons.  (Per NRS 239B.030)
 

 

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MEMORANDUM OF LEASE

 
THIS MEMORANDUM OF LEASE (this "Memorandum") is entered into as of the ___ day
of ___________, 2015, by and between Bango Oil LLC, a Nevada limited liability
company, as "Lessor", and Vertex Refining NV, LLC, a Delaware limited liability
company, as “Lessee”.

1.           Lease.  Lessor has leased to Lessee that certain real property
located in the County of Churchill, State of Nevada, more particularly described
on Exhibit "A" attached hereto and incorporated herein by this reference, upon
the terms and conditions set forth in that certain lease dated April 30, between
Lessor and Lessee (the "Lease").

2.           Term. The term of the Lease began on April 30, 2015, and the term
of the Lease shall terminate on August 10, 2025, unless sooner terminated
pursuant to the terms of the Lease.

3.           Incorporation of Lease. This Memorandum incorporates herein all of
the terms and provisions of the Lease as though fully set forth herein.

4.           Purpose of Memorandum. The purpose of this Memorandum is to give
record notice of the existence of the Lease and it shall not be construed to
alter, modify, amend or supplement the Lease.  If there is any inconsistency
between the terms of this Memorandum and the terms of the Lease, the terms of
the Lease shall prevail.

 
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IN WITNESS WHEREOF, Lessor and Lessee have executed this Memorandum as of the
date set forth above.

LESSEE
Vertex Refining NV, LLC:
By:  Vertex Energy Operating, LLC
        Its: Sole Member
By:   _________________________
         Benjamin P. Cowart, Manager
   
LESSOR
Bango Oil, LLC:
By:          Fox Encore 05 LLC,
a Washington limited liability company
Its:           Managing Member
By:           ACF Property Management, Inc.,
a California corporation
Its:           Managing Member
By:           __________________________
Alan C. Fox
Its:  President

 
[notary pages follow.]
 
 
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[exg.jpg]
 
 
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STATE OF     )        )   COUNTY OF    )  

 
This instrument was acknowledged before me on ________________, 2015, by
___________________________ as ________________ of Vertex Refining NV, LLC, a
Delaware limited liability company.

 

          Notary Public       My Commission Expires:    

 
 
 
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EXHIBIT "A"

LEGAL DESCRIPTION

[exa.jpg]

 
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Exhibit "H"

Fire Suppression System
[exh1.jpg]

 
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[exh2.jpg]
 
 
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