Vertex Energy, Inc. 8-K [vtnr-8k_072519.htm]

Exhibit 10.9

 

THIRD AMENDMENT AND LIMITED WAIVER TO ABL CREDIT AGREEMENT

 

THIS THIRD AMENDMENT AND LIMITED WAIVER TO ABL CREDIT AGREEMENT (this
“Agreement”) is entered into as of July 25, 2019 by and among VERTEX ENERGY,
INC., a Nevada corporation (“Parent”), VERTEX ENERGY OPERATING, LLC, a Texas
limited liability company (the “Lead Borrower”), the other Borrowers signatory
hereto, ENCINA BUSINESS CREDIT, LLC, as Agent, and the Lenders signatory hereto.

 

W I T N E S E T H:

 

WHEREAS, Parent, the Lead Borrower, the other Loan Parties, Agent and the
Lenders from time to time party thereto are parties to that certain ABL Credit
Agreement dated as of February 1, 2017 (as amended prior to the date hereof and
as it may be further amended, restated, supplemented or modified from time to
time, the “Credit Agreement”; unless otherwise defined herein, capitalized terms
used herein that are not otherwise defined herein shall have the respective
meanings assigned to such terms in the Credit Agreement); and

 

WHEREAS, the Loan Parties have requested that the Agent and Lenders amend and
provide a limited waiver to certain provisions of the Credit Agreement, and
subject to the satisfaction of the conditions set forth herein, the Agent and
the Lenders signatory hereto are willing to do so, on the terms set forth
herein.

 

 

 

 

NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, the parties agree as follows:

 

1.            Amendments to Credit Agreement. Upon satisfaction of the
conditions set forth in Section 3 hereof, the Credit Agreement is hereby amended
as follows:

 

(a)The definition of “Maturity Date” set forth in Section 1.01 of the Credit
Agreement is hereby amended by replacing the date “February 1, 2020” with the
date “February 1, 2021”.

 

(b)The definition of “Permitted Indebtedness” set forth in Section 1.01 of the
Credit Agreement is hereby amended by replacing the amount of “$500,000” set
forth in clause (c) of such definition with the amount of “$750,000”.

 

(c)Section 7.15 of the Credit Agreement is hereby amended and restated to read
as follows:

 

“7.15 Capital Expenditures. Borrowers shall not incur in any Fiscal Year of
Parent listed below, Capital Expenditures in an aggregate amount in excess of
the amount set forth below with respect to such Fiscal Year:

 

Fiscal Year  Capital Expenditures 2017   $3,000,000  2018   $3,000,000  2019  
$3,500,000  2020 and thereafter   $3,000,000 

 

(d)       “Section 7.16 of the Credit Agreement is hereby amended and restated
to read as follows:

 

“7.16 Minimum Availability. Permit average Availability for any 30-day period to
be less than (a) $1,500,000 at any time during the period commencing on July 25,
2019 and ending on August 31, 2019 and (b) $2,000,000 at any time from and after
September 1, 2019.

 

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2.              Limited Waiver. Upon satisfaction of the conditions set forth in
Section 3 hereof, the Agent hereby waives the restrictions set forth in Sections
6.11 and 7.05 of the Credit Agreement for the sole purposes of allowing the Lead
Borrower to: (i) form HPRM LLC (the “Company”) and form Vertex Splitter
Corporation (the “Splitter”) without the Company and the Splitter in each case
becoming a Loan Party, (ii) contribute all of the issued and outstanding units
of Vertex Refining OH, LLC to the Company, (iii) sell 65% of the Lead Borrower’s
equity in the Company to Tensile-Heartland Acquisition Corporation (the “Buyer”)
(together with clauses (i) and (ii), the “Purchase”), in each case in clauses
(i), (ii) and (iii) so long as (v) Agent has received all documents to be
entered into in connection with the Purchase which shall be in form and
substance reasonably satisfactory to Agent, (w) Agent has received evidence that
the Net Proceeds from the Purchase were at least $13,000,000 of which $9,000,000
(or such lesser amount approved by Agent in its sole discretion) were applied to
the repayment of the outstanding Term Loans with the balance applied to the
Revolving Loans (with any remaining Net Proceeds retained by the Borrowers), (x)
no Default or Event of Default shall be continuing at the time of, or result
from, the consummation of the Purchase, (y) Agent shall have received a pro
forma Borrowing Base Certificate giving effect to the Purchase and (z) the
Purchase is consummated on or prior to December 31, 2019; and (iv) form Vertex
Refining Myrtle Grove LLC (the “Myrtle Grove Company”) without the Myrtle Grove
Company becoming a Loan Party, (v) (v) consummate the contribution of assets
(the “Myrtle Grove Assets”) to the Myrtle Grove Company pursuant to that certain
Contribution Agreement, dated and as in effect on the date hereof, between
Vertex Refining LA, LLC and the Myrtle Grove Company and (vi) sell 15% of the
Lead Borrower’s equity in the Myrtle Grove Company to the Buyer (together with
clauses (iv) and (v), the “Myrtle Grove Sale”), in each case in clauses (iv),
(v) and (vi) so long as (w) Agent has received all documents to be entered into
in connection with the Myrtle Grove Sale which shall be in form and substance
reasonably satisfactory to Agent, (x) Agent has received evidence that at least
$1,000,000 in Net Proceeds from the Myrtle Grove Sale (together with an
additional $117,000 in proceeds from other sources) were applied to the
repayment of the outstanding Term Loans (with any remaining Net Proceeds from
the Myrtle Grove Sale retained by the Borrowers) and (y) no Default or Event of
Default shall be continuing at the time of, or result from, the consummation of
the Myrtle Grove Sale.

 

3.               Conditions. The effectiveness of this Agreement is subject to
the satisfaction of the following conditions precedent:

 

a.       the execution and delivery of this Agreement by each Loan Party, Agent
and the Lenders;

 

b.       the truth and accuracy of the representations and warranties contained
in Section 4 hereof;

 

c.       receipt by Agent, for the ratable benefit of the Lenders, of an
amendment fee in the amount of $21,089.93;

 

d.       Lead Borrower shall have reimbursed the Agent for all reasonable out of
pocket costs, fees and expenses in connection with this Agreement;

 

e.       the Myrtle Grove Sale shall have been consummated and in connection
therewith, (w) Agent shall have received all documents to be entered into in
connection with the Myrtle Grove Sale which shall be in form and substance
reasonably satisfactory to Agent, (x) Agent shall have received evidence that at
least $1,000,000 in Net Proceeds from the Myrtle Grove Sale (together with an
additional $117,000 in proceeds from other sources) were applied to the
repayment of the outstanding Term Loans (with any remaining Net Proceeds from
the Myrtle Grove Sale retained by the Borrowers) and (y) no Default or Event of
Default shall be continuing at the time of, or result from, the consummation of
the Myrtle Grove Sale;

 

 

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f.        Agent shall have received an amendment to the Term Loan Agreement in
form and substance satisfactory to Agent; and

 

g.       Agent shall have received such other documents, opinions or materials
reasonably requested by Agent, in form and substance reasonably acceptable to
Agent.

 

4.               Representations and Warranties. Each Loan Party hereby
represents and warrants to Agent and each Lender as follows:

 

a.       the execution, delivery and performance by such Loan Party of this
Agreement has been duly authorized by all necessary corporate or other
organizational action, and does not and will not (a) contravene the terms of any
of such Person’s Organization Documents; (b) conflict with or result in any
breach, termination, or contravention of, or constitute a default under, or
require any payment to be made under (i) any Material Contract or any Material
Indebtedness to which such Person is a party or affecting such Person or the
properties of such Person or any of its Subsidiaries or (ii) any order,
injunction, writ or decree of any Governmental Authority or any arbitral award
to which such Person or its property is subject; (c) result in or require the
creation of any Lien upon any asset of such Loan Party (other than Liens in
favor of the Agent under the Security Documents); or (d) violate any Law;

 

b.       such Loan Party has all requisite power and authority to execute,
deliver and perform its obligations under this Agreement and the Credit
Agreement, as amended hereby;

 

c.       this Agreement constitutes a legal, valid and binding obligation of
such Loan Party, enforceable against such Loan Party in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
or other laws affecting creditors’ rights generally and subject to general
principles of equity, regardless of whether considered in a proceeding in equity
or at law;

 

d.       after giving effect to this Agreement and the transactions contemplated
hereby, each of the representations and warranties of such Loan Party contained
herein, in Article V of the Credit Agreement or in any other Loan Document are
true and correct in all material respects on and as of the date hereof, except
(i) to the extent that such representations and warranties specifically refer to
an earlier date, in which case they shall be true and correct as of such earlier
date, (ii) in the case of any representation and warranty qualified by
materiality, they shall be true and correct in all respects and (iii) for
purposes of this Section 4(d), the representations and warranties contained in
subsections (a) and (b) of Section 5.05 of the Credit Agreement shall be deemed
to refer to the most recent statements furnished pursuant to clauses (a) and
(b), respectively, of Section 6.01 of the Credit Agreement; and

 

e.     after giving effect to this Agreement, no Default or Event of Default has
occurred and is continuing or would result from the transactions contemplated
hereby.

 

5.               No Modification. Except as expressly set forth herein, nothing
contained herein shall be deemed to constitute a waiver of compliance with any
term or condition contained in the Credit Agreement or any of the other Loan
Documents or constitute a course of conduct or dealing among the parties. Except
as expressly stated herein, the Agent and Lenders reserve all rights, privileges
and remedies under the Loan Documents. Except as amended or consented to hereby,
the Credit Agreement and other Loan Documents remain unmodified and in full
force and effect. All references in the Loan Documents to the Credit Agreement
shall be deemed to be references to the Credit Agreement as modified hereby.
This Agreement shall constitute a Loan Document.

 

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6.               Counterparts. This Agreement may be executed in counterparts
(and by different parties hereto in different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. This Agreement and the other Loan Documents constitute the
entire contract among the parties relating to the subject matter hereof and
supersede any and all previous agreements and understandings, oral or written,
relating to the subject matter hereof. Except as provided in Section 3, this
Agreement shall become effective when it shall have been executed by the Agent
and when the Agent shall have received counterparts hereof that, when taken
together, bear the signatures of each of the other parties hereto. Delivery of
an executed counterpart of a signature page of this Agreement by telecopy, pdf
or other electronic transmission shall be as effective as delivery of a manually
executed counterpart of this Agreement.

 

7.               Successors and Assigns. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that no Loan Party
may assign or otherwise transfer any of its rights or obligations hereunder or
under any other Loan Document without the prior written consent of the Agent and
each Lender.

 

8.               Governing Law. This Agreement and any claims, controversy,
dispute or cause of action (whether in contract or tort or otherwise) based
upon, arising out of or relating to this Agreement and the transactions
contemplated hereby shall be governed by, and construed in accordance with, the
law of the State of Illinois.

 

9.               Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable, (a) the legality, validity and enforceability
of the remaining provisions of this Agreement shall not be affected or impaired
thereby and (b) the parties shall endeavor in good faith negotiations to replace
the illegal, invalid or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the illegal,
invalid or unenforceable provisions. The invalidity of a provision in a
particular jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.

 

10.             Section Headings. Section headings herein are included for
convenience of reference only and shall not affect the interpretation of this
Agreement.

 

11.             Reaffirmation. Each of the Loan Parties as debtor, grantor,
pledgor, guarantor, assignor, or in other any other similar capacity in which
such Loan Party grants liens or security interests in its property or otherwise
acts as accommodation party or guarantor, as the case may be, hereby (i)
ratifies and reaffirms all of its payment and performance obligations,
contingent or otherwise, under each of the Loan Documents to which it is a party
(after giving effect hereto) and (ii) to the extent such Loan Party granted
liens on or security interests in any of its property pursuant to any such Loan
Document as security for or otherwise guaranteed the Borrower’s Obligations
under or with respect to the Loan Documents, ratifies and reaffirms such
guarantee and grant of security interests and liens and confirms and agrees that
such security interests and liens hereafter secure all of the Obligations as
amended hereby in each case except as provided in Section 13 of this Agreement.
Each of the Loan Parties hereby consents to this Agreement and acknowledges that
each of the Loan Documents remains in full force and effect and is hereby
ratified and reaffirmed. The execution of this Agreement shall not operate as a
waiver of any right, power or remedy of the Agent or Lenders, constitute a
waiver of any provision of any of the Loan Documents or serve to effect a
novation of the Obligations.

 

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12.             Release of Claims. In consideration of the Lenders’ and the
Agent’s agreements contained in this Agreement, each Loan Party hereby
irrevocably releases and forever discharge the Lenders and the Agent and their
affiliates, subsidiaries, successors, assigns, directors, officers, employees,
agents, consultants and attorneys (each, a “Released Person”) of and from any
and all claims, suits, actions, investigations, proceedings or demands, whether
based in contract, tort, implied or express warranty, strict liability, criminal
or civil statute or common law of any kind or character, known or unknown, which
such Loan Party ever had or now has against Agent, any Lender or any other
Released Person which relates, directly or indirectly, to any acts or omissions
of Agent, any Lender or any other Released Person relating to the Credit
Agreement or any other Loan Document on or prior to the date hereof.

 

13.             Partial Lien Release. Upon satisfaction of all the conditions
set forth in Section 2 of this Agreement relating to the Purchase. Vertex
Refining OH, LLC shall no longer be a Loan Party. Upon satisfaction of all the
conditions set forth in Section 2 of this Agreement relating to the Myrtle Grove
Sale, the liens of Agent on the Myrtle Grove Assets shall be deemed
automatically released and Agent shall deliver such lien releases and
terminations as to the Myrtle Grove Assets as the Loan Parties shall reasonably
require to effectuate the transactions described in Section 2 of this Agreement.

 

[Signature pages follow.]

 

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IN WITNESS WHEREOF, each of the undersigned has executed this Agreement as of
the date set forth above. 

 

Lead Borrower: 

 

VERTEX ENERGY OPERATING, LLC             By: /s/ Chris Carlson       Name: Chris
Carlson       Its: CFO  

 

[Signature Page to Third Amendment and Limited Waiver to ABL Credit Agreement] 

 

 

 

 

Additional Borrowers:

 

BANGO OIL LLC   VERTEX RECOVERY MANAGEMENT LA, LLC                       By: /s/
Chris Carlson   By: /s/ Chris Carlson     Name:  Chris Carlson       Name:
 Chris Carlson     Its: CFO       Its: CFO

 

 

VERTEX REFINING NV, LLC   VERTEX REFINING LA, LLC                       By: /s/
Chris Carlson   By: /s/ Chris Carlson     Name:  Chris Carlson       Name:
 Chris Carlson     Its: CFO       Its: CFO

 

 

VERTEX REFINING OH, LLC   VERTEX II GP, LLC                       By: /s/ Chris
Carlson   By: /s/ Chris Carlson     Name:  Chris Carlson       Name:  Chris
Carlson     Its: CFO       Its: CFO

 

VERTEX MERGER SUB, LLC   VERTEX ACQUISITION SUB, LLC                       By:
/s/ Chris Carlson   By: /s/ Chris Carlson     Name:  Chris Carlson       Name:
 Chris Carlson     Its: CFO       Its: CFO

 

CEDAR MARINE TERMINALS, LP   CROSSROAD CARRIERS, L.P.                       By:
/s/ Chris Carlson   By: /s/ Chris Carlson     Name:  Chris Carlson       Name:
 Chris Carlson     Its: CFO       Its: CFO

 

 

VERTEX RECOVERY, L.P.   H&H OIL, L.P.                       By: /s/ Chris
Carlson   By: /s/ Chris Carlson     Name:  Chris Carlson       Name:  Chris
Carlson     Its: CFO       Its: CFO

 

[Signature Page to Third Amendment and Limited Waiver to ABL Credit Agreement]

 

 

 

 

  VERTEX RECOVERY MANAGEMENT, LLC                           By: /s/ Chris
Carlson             Name:  Chris Carlson             Its: CFO

  

VERTEX ENERGY, INC., as Parent and as a Guarantor                       By: /s/
Chris Carlson         Name:  Chris Carlson         Title:   CFO

 

[Signature Page to Third Amendment and Limited Waiver to ABL Credit Agreement] 

 

 

 

 

 

AGENT:           ENCINA BUSINESS CREDIT, LLC, as Agent           By: /s/ Daniel
Ross     Name: Daniel Ross     Title: Its Duly Authorized Signatory  

 

[Signature Page to Third Amendment and Limited Waiver to ABL Credit Agreement]

 

 

 

  

ENCINA BUSINESS CREDIT SPV, LLC,
as a Lender                 By: /s/ Daniel Ross       Name: Daniel Ross      
Title: Its Duly Authorized Signatory

 

[Signature Page to Third Amendment and Limited Waiver to ABL Credit Agreement]