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

Exhibit 10.5 

 

REGISTRATION RIGHTS AND LOCK-UP AGREEMENT

 

This Registration Rights and Lock-Up Agreement (this “Agreement”) is entered
into on July 25, 2019 (the “Effective Date”), by and among Vertex Energy, Inc.,
a Nevada corporation (the “Company”), and Tensile Capital Partners Master Fund
LP, a Cayman Islands exempted limited partnership (the “Holder”).

 

WHEREAS, concurrently herewith, the Holder has subscribed to purchase (a)
1,500,000 shares of the common stock, $0.001 par value per share (the “Common
Stock” and the “Subscription Shares”) of the Company, and (b) warrants to
purchase 1,500,000 shares of the Common Stock of the Company at an exercise
price of $2.25 per share (the “Warrants”), pursuant to the Holder’s entry into a
Subscription Agreement with the Company (the “Subscription Agreement”); and

 

WHEREAS, it is a condition precedent to the obligations of the Holder to
consummate the transactions described in the Subscription Agreement that the
Company provide the Holder with the registration rights set forth in Section 3.

 

NOW, THEREFORE, in consideration of the foregoing, the mutual promises and
agreements set forth herein, and other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:

 

1.Certain Definitions.

 

As used in this Agreement, in addition to the other terms defined herein, the
following capitalized defined terms shall have the following meanings:

 

“Affiliate” of any particular Person means any other Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by or is
under common control with such Person. The term “control” means possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities, by contract, management control or otherwise.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.

 

“Expiration Date” means the date which falls five (5) years from the Effective
Date.

 

“Holders” means, if the Holder (as defined in the introductory paragraph hereof)
is the only Holder of Registrable Shares, such Holder, and if there is more than
one Holder hereunder, all such Holders who have become Holders consistent with
Section 2(c), and “Holder” shall mean any one of the Holders as applicable.

 

“Person” means an individual, partnership, corporation, trust, or unincorporated
organization, or a government or agency or political subdivision thereof.

 

Registration Rights and Lock-Up Agreement

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“Prospectus” means the prospectus included in a Registration Statement,
including any preliminary prospectus, as amended or supplemented by any
prospectus supplement with respect to the terms of the offering of any portion
of the Registrable Shares covered by such Registration Statement, and by all
other amendments and supplements to such prospectus, including post-effective
amendments, and in each case including all material incorporated by reference
therein.

 

“Purchase Agreement” means that certain Share Purchase and Subscription
Agreement by and among HPRM LLC, Vertex Energy Operating LLC and
Tensile-Heartland Acquisition Corporation.

 

“Quarterly Volume” means 300,000 shares of the Company’s Common Stock, as
adjusted equitably for any stock splits, stock dividends or recapitalizations
completed by the Company.

 

“Registrable Shares” means the Shares held or beneficially owned by each Holder,
excluding (i) Shares for which a Registration Statement relating to the sale
thereof shall have become effective under the Securities Act and which have been
issued or Disposed of under such Registration Statement, and (ii) Shares sold
pursuant to Rule 144 or another exemption from registration under the Securities
Act.

 

“Registration Expenses” means any and all expenses incident to performance of or
compliance with this Agreement, including, without limitation: (i) all SEC,
stock exchange or filing fees; (ii) all fees and expenses incurred in connection
with compliance with state securities or “blue sky” laws (including reasonable
fees and disbursements of counsel in connection with “blue sky” qualification of
any of the Registrable Shares); (iii) all expenses of any Persons in preparing
or assisting in preparing, word processing, printing and distributing any
Registration Statement, any Prospectus, certificates and other documents
relating to the performance of and compliance with this Agreement, except for
those expenses incurred by the Holder in preparing materials required hereby
under Section 6; (iv) all fees and expenses incurred in connection with the
listing, if any, of any of the Registrable Shares on any securities exchange or
exchanges pursuant to Section 5; and (v) the fees and disbursements of counsel
for the Company and of the independent public accountants of the Company
incident to such performance and compliance.

 

“Registration Statement” means any registration statement of the Company which
covers the resale of any of the Registrable Shares, and all amendments and
supplements to such registration statement, including post-effective amendments,
in each case including the Prospectus contained therein, all exhibits thereto
and all materials incorporated by reference therein. Each Registration Statement
filed hereunder shall be on Form S-3 (except if the Company is not then eligible
to register for resale the Registrable Shares on Form S-3, in which case such
registration shall be on another appropriate form in accordance herewith).

 

“Rule 144” means Rule 144 under the Securities Act (or any successor provision).

 

“SEC” means the Securities and Exchange Commission.

 

Registration Rights and Lock-Up Agreement

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

 

“Shares” means the Subscription Shares and the shares of Common Stock issuable
upon exercise of the Warrant.

 

“Trading Market” means The NASDAQ Global Market, The NASDAQ Global Select
Market, The NASDAQ Capital Market or the New York Stock Exchange (or any
successor to any of the foregoing).

 

2.Lock-up Agreement.

 

(a)        The Holder hereby agrees that, except as set forth in Section 2(d)
below, for a period of one (1) year from the Effective Date (the “Initial
Lock-up Period”), without the prior written consent of the Company, the Holder
will not offer, pledge, sell, contract to sell, grant any options for the sale
of, seek the redemption or exchange of, or otherwise Dispose of, or transfer,
directly or indirectly (collectively “Dispose of”), any Warrants or Shares (the
“Initial Lock-Up”).

 

(b)       The Holder hereby agrees that, except as set forth in Section 2(d)
below, for a period of four (4) years from the end of the Initial Lock-Up Period
until the Expiration Date, without the prior written consent of the Company, the
Holder will not Dispose of more than the Quarterly Volume of Shares of Warrants
or Shares in any 90 day period (the “Volume Limitation” and together with the
Initial Lock-Up, the “Lock-Up”).

 

(c)       The Initial Lock-Up (but not, for the avoidance of doubt, the Volume
Limitation) shall terminate and be of no force and effect if (i) the
transactions contemplated by the Purchase Agreement have not been consummated by
June 30, 2020 and/or (ii) the Common Stock is no longer listed on a Trading
Market for a period of more than five (5) consecutive trading days. Upon any
termination of the Initial Lock-Up pursuant to the preceding sentence, in the
event the Holder holds any Shares or any Warrants, the Company shall disclose
publicly all material nonpublic information disclosed to the Holder prior to the
date of such termination so that the Holder will not be restricted from
Disposing of Warrants and/or Shares under the Exchange Act, and the rules and
regulations promulgated thereunder, as a result of its possession of such
material nonpublic information.

 

(d)        The following Dispositions of Warrants and/or Shares shall not be
subject to the Lock-up set forth in Section 2(a) and (b):

 

(i)       a Holder who is a natural person may Dispose of Warrants and/or Shares
to his or her spouse, siblings, parents or any natural or adopted children or
other descendants or to any personal trust in which any such family member or
such Holder retains the entire beneficial interest;

 

(ii)       a Holder that is a corporation, partnership, joint venture, limited
liability company or other business entity may Dispose of Warrants and/or Shares
to a stockholder, partner or member, as the case may be, of such corporation,
partnership or limited liability company or any wholly-owned subsidiary of the
Holder or to an Affiliate of the Holder;

 

Registration Rights and Lock-Up Agreement

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(iii)       a Holder may Dispose of Warrants and/or Shares on his or her death
to such Holder’s estate, executor, administrator or personal representative or
to such Holder’s beneficiaries pursuant to a devise or bequest or by laws of
descent and distribution;

 

(iv)       a Holder may Dispose of Warrants and/or Shares as a bona fide gift or
other transfer without consideration; and

 

(v)       a Holder may Dispose of Warrants and/or Shares pursuant to a pledge,
grant of security interest or other encumbrance effected in a bona fide
transaction with an unrelated and unaffiliated pledgee, and such a pledgee may
foreclose upon such Warrants and/or Shares;

 

provided, however, that in the case of any transfer of Warrants and/or Shares
pursuant to clauses (i), (ii), (iv) and (v), the transferor shall, at the
request of the Company, provide evidence satisfactory to the Company that the
transfer is exempt from the registration requirements of the Securities Act.

 

In furtherance of the foregoing, the Company and its transfer agent are hereby
authorized (i) to decline to make any transfer of securities if such transfer
would constitute a violation or breach of this Agreement and (ii) to imprint on
any certificate representing Shares beneficially owned by a Holder a legend
describing the restrictions contained herein in the form set forth in Section
6(d).

 

In the event the Holder Disposes of Warrants and/or Shares described in this
Section 2(d), such Warrants and/or Shares shall remain subject to this Agreement
and, as a condition of the validity of such Disposition, the transferee shall be
required to execute and deliver a counterpart of, or joinder to, this Agreement,
in the option of the Company (except that a pledgee shall not be required to
execute and deliver a counterpart of this Agreement until it forecloses upon
such Warrants and/or Shares). Thereafter, such transferee shall be deemed to be
a Holder for purposes of this Agreement and subject to the terms hereof.

 

3.Registration.

 

(a)        Filing of Resale Registration Statement. Subject to the conditions
set forth in this Agreement, the Company shall cause to be filed a Registration
Statement under Rule 415 under the Securities Act relating to the resale by the
Holder of all of the Registrable Shares in accordance with the terms hereof, and
shall use reasonable best efforts to cause such Registration Statement to be
declared effective by the SEC prior to the end of the Initial Lock-up Period.
The Company agrees to use reasonable efforts to keep the Registration Statement,
after its date of effectiveness, continuously effective with respect to the
Registrable Shares of a particular Holder until the earlier of (a) the date on
which such Holder no longer holds or beneficially owns any Registrable Shares;
(b) the date the Registrable Shares held by any Holder may be sold without
volume or manner-of-sale restrictions pursuant to Rule 144 and without the
requirement for the Company to be in compliance with the current public
information requirement under Rule 144, as determined by the counsel to the
Company pursuant to a written opinion letter to such effect, addressed and
acceptable to the affected Holders; or (c) the date which falls on the
Expiration Date. The Registration Statement shall include a “Plan of
Distribution” section in substantially the form of Schedule A attached hereto.

 

Registration Rights and Lock-Up Agreement

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(b)        Notification and Distribution of Materials. The Company shall notify
each Holder of the effectiveness of any Registration Statement applicable to the
Shares of such Holder and shall furnish to each such Holder such number of
copies of the Registration Statement (including any amendments, supplements and
exhibits), the Prospectus contained therein (including each preliminary
prospectus and all related amendments and supplements) and any documents
incorporated by reference in the Registration Statement or such other documents
as such Holder may reasonably request in order to facilitate its sale of the
Registrable Shares in the manner described in the Registration Statement.

 

(c)        Amendments and Supplements. The Company shall prepare and file with
the SEC from time to time such amendments and supplements to the Registration
Statement and Prospectus used in connection therewith as may be necessary to
keep the Registration Statement effective and to comply with the provisions of
the Securities Act with respect to the Disposition of all the Registrable Shares
until the earlier of (a) such time as all of the Registrable Shares have been
issued or Disposed of in accordance with the intended methods of Disposition by
the Holder or issuance by the Company as set forth in the Registration
Statement; (b) the date on which the Registration Statement ceases to be
effective in accordance with the terms of this Section 3; or the Expiration
Date. Upon twenty (20) business days’ notice, the Company shall file any
supplement or post-effective amendment to the Registration Statement with
respect to the plan of distribution or such Holder’s ownership interests in
Registrable Shares that is reasonably necessary to permit the sale of the
Holder’s Registrable Shares pursuant to the Registration Statement. The Company
shall file any necessary listing applications or amendments to the existing
applications to cause the Shares registered under any Registration Statement to
be then listed or quoted on the primary exchange or quotation system on which
the Common Stock of the Company are then listed or quoted.

 

(d)        Notice of Certain Events. The Company shall promptly notify each
Holder of, and confirm in writing, the filing of the Registration Statement or
any Prospectus, amendment or supplement related thereto or any post-effective
amendment to the Registration Statement and the effectiveness of any
post-effective amendment.

 

At any time when a Prospectus relating to the Registration Statement is required
to be delivered under the Securities Act by a Holder to a transferee, the
Company shall immediately notify each Holder of the happening of any event as a
result of which the Prospectus included in such Registration Statement, as then
in effect, includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. In such event, the Company shall promptly prepare and furnish to
each applicable Holder a reasonable number of copies of a supplement to or an
amendment of such Prospectus as may be necessary so that, as thereafter
delivered to the purchasers of Registrable Shares, such Prospectus shall not
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they are made, not misleading. The
Company will, if necessary, amend the Registration Statement of which such
Prospectus is a part to reflect such amendment or supplement.

 

Registration Rights and Lock-Up Agreement

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4.Expenses.

 

The Company shall bear all Registration Expenses incurred in connection with the
registration of the Registrable Shares pursuant to this Agreement, except that
each Holder shall be responsible for any brokerage or underwriting commissions
and taxes of any kind (including, without limitation, transfer taxes) with
respect to any Disposition of Registrable Shares sold by it and for any legal,
accounting and other expenses incurred by it.

 

5.Indemnification by the Company.

 

The Company agrees to indemnify each of the Holders and their respective
officers, directors, employees, agents, representatives and affiliates, and each
person or entity, if any, that controls a Holder within the meaning of the
Securities Act, and each other person or entity, if any, subject to liability
because of his, her or its connection with a Holder (each, an “Indemnitee”),
against any and all losses, claims, damages, actions, liabilities, costs and
expenses (including without limitation reasonable fees, expenses and
disbursements of attorneys and other professionals), joint or several, arising
out of or based upon any violation by the Company of any rule or regulation
promulgated under the Securities Act applicable to the Company and relating to
action or inaction required of the Company in connection with any Registration
Statement or Prospectus, or upon any untrue or alleged untrue statement of
material fact contained in the Registration Statement or any Prospectus, or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, that the
Company shall not be liable to such Indemnitee or any person who participates as
an underwriter in the offering or sale of Registrable Shares or any other
person, if any, who controls such underwriter within the meaning of the
Securities Act, in any such case to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or expense arises
out of or is based upon (i) an untrue statement or alleged untrue statement or
omission or alleged omission made in such Registration Statement or in any such
Prospectus in reliance upon and in conformity with information regarding such
Indemnitee or its plan of distribution or ownership interests which was
furnished to the Company for use in connection with the Registration Statement
or the Prospectus contained therein by such Indemnitee or (ii) such Holder’s
failure to send or give a copy of the final, amended or supplemented prospectus
furnished to the Holder by the Company at or prior to the time such action is
required by the Securities Act to the person claiming an untrue statement or
alleged untrue statement or omission or alleged omission if such statement or
omission was corrected in such final, amended or supplemented prospectus.

 

Registration Rights and Lock-Up Agreement

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6.Covenants of Holders.

 

Each of the Holders hereby individually, and not jointly with any other Holders,
agrees:

 

(a)        to cooperate with the Company and to furnish promptly to the Company
all such information concerning its plan of distribution and ownership interests
with respect to its Registrable Shares in connection with the preparation of a
Registration Statement with respect to such Holder’s Registrable Shares and any
filings with any state securities commissions as the Company may reasonably
request,

 

(b)        to deliver or cause delivery of the Prospectus contained in such
Registration Statement to any purchaser of the shares covered by such
Registration Statement from the Holder,

 

(c)        Subject to Section 10, to indemnify the Company, its officers,
directors, employees, agents, representatives and affiliates, and each person,
if any, who controls the Company within the meaning of the Securities Act, and
each other person, if any, subject to liability because of his connection with
the Company, against any and all losses, claims, damages, actions, liabilities,
costs and expenses arising out of or based upon (i) any untrue statement or
alleged untrue statement of material fact contained in either such Registration
Statement or the Prospectus contained therein, or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, if and to the extent that such statement
or omission occurs from reliance upon and in conformity with written information
regarding the Holder, its plan of distribution or its ownership interests, which
was furnished to the Company by the Holder for use therein unless such statement
or omission was corrected in writing to the Company not less than three (3)
business days prior to the date of the final prospectus (as supplemented or
amended, as the case may be) or (ii) the failure by the Holder to deliver or
cause to be delivered the Prospectus contained in such Registration Statement
(as amended or supplemented if applicable) furnished by the Company to the
Holder to any purchaser of the shares covered by such Registration Statement
from the Holder through no fault of the Company. The liability of the Holders
under the preceding indemnity shall be several and not joint, and

 

(d)       That the Shares and any certificate evidencing such Shares may, at the
request of the Company, be stamped or otherwise imprinted with a conspicuous
legend in substantially the following form:

 

“THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF THAT
CERTAIN REGISTRATION RIGHTS AND LOCK-UP AGREEMENT BETWEEN THE HOLDER AND THE
COMPANY, DATED AS OF July 25, 2019. A COPY OF THE LOCK-UP AGREEMENT MAY BE
INSPECTED AT THE PRINCIPAL OFFICE OF THE COMPANY.”

 

Registration Rights and Lock-Up Agreement

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provided, however, that the Company shall promptly remove such legend from any
Shares that are no longer subject to a Lock-Up.

 

(e)       Subject to the Company’s receipt of an opinion of counsel reasonably
satisfactory to the Company that registration under the Securities Act is not
required, the Company shall use its reasonable best efforts to remove, or cause
its registrar and transfer agent to remove, any other restrictive legend from
the certificates evidencing the Shares, following a Holder’s written request to
have such legend removed.

 

7.Suspension of Registration Requirement: Restriction on Sales.

 

(a)        The Company shall promptly notify each Holder of, and confirm in
writing, the issuance by the SEC of any stop order suspending the effectiveness
of a Registration Statement with respect to such Holder’s Registrable Shares or
the initiation of any proceedings for that purpose. The Company shall use its
best efforts to obtain the withdrawal of any order suspending the effectiveness
of such a Registration Statement at the earliest possible moment.

 

(b)        Notwithstanding anything to the contrary set forth in this Agreement,
the Company’s obligation under this Agreement to cause a Registration Statement
to become effective or to amend or supplement a Registration Statement shall be
suspended in the event and during such period as unforeseen circumstances exist
(such unforeseen circumstances being hereinafter referred to as a “Suspension
Event”) such that causing the Registration Statement or such filings to become
effective or amending or supplementing the Registration Statement would
reasonably be expected to have a material adverse effect on the Company, but
such suspension shall continue only for so long as such event or its effect is
continuing and in no event shall any suspensions continue longer than 60 days in
the aggregate in any 12-month period. The Company shall notify the Holders of
the existence and, in the case of circumstances referred to in this Section
7(b), nature of any Suspension Event.

 

8.Restrictions on Sales During Suspension Period.

 

Each Holder agrees that, following the effectiveness of any Registration
Statement relating to Registrable Shares of such Holder, such Holder will not
effect any sales of the Registrable Shares pursuant to the Registration
Statement at any time after such Holder has received notice from the Company to
suspend sales as a result of the occurrence or existence of any Suspension Event
or so that the Company may correct or update the Registration Statement or such
filing. The Holder may recommence effecting sales of the Shares pursuant to the
Registration Statement or such filings following further notice to such effect
from the Company, which notice shall be given by the Company not later than
three (3) business days after the conclusion of any such Suspension Event.

 

Registration Rights and Lock-Up Agreement

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9.Additional Shares.

 

The Company, at its option, may register, under any Registration Statement filed
pursuant to this Agreement, any number of shares of Common Stock or other
securities of the Company owned by any other shareholder or shareholders of the
Company.

 

10.Contribution.

 

If the indemnification provided for in Sections 6 and 7 is unavailable to an
indemnified party with respect to any losses, claims, damages, actions,
liabilities, costs or expenses referred to therein or is insufficient to hold
the indemnified party harmless as contemplated therein, then the indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, actions, liabilities, costs or expenses in such proportion as
is appropriate to reflect the relative fault of the Company, on the one hand,
and the Indemnitee, on the other hand, in connection with the statements or
omissions which resulted in such losses, claims, damages, actions, liabilities,
costs or expenses as well as any other relevant equitable considerations. The
relative fault of the Company, on the one hand, and of the Indemnitee, on the
other hand, shall be determined by reference to, among other factors, whether
the untrue or alleged untrue statement of a material fact or omission to state a
material fact relates to information supplied by the Company or by the
Indemnitee and the parties’ relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission; provided,
however, that in no event shall the obligation of any indemnifying party to
contribute under this Section 10 exceed the amount that such indemnifying party
would have been obligated to pay by way of indemnification if the
indemnification provided for under Sections 6 and 7 had been available under the
circumstances.

 

The Company and the Holder agree that it would be just and equitable if
contribution pursuant to this Section 10 were determined by pro rata allocation
or by any other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph.

 

Notwithstanding the provisions of Section 6(c) or this Section 10, no Holder
shall be required to contribute any amount in excess of the amount by which the
gross proceeds from the sale of Shares exceeds the amount of any damages that
the Holder has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission. No indemnified party guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any indemnifying party who was not guilty
of such fraudulent misrepresentation.

 

11.No Other Obligation to Register.

 

Except as otherwise expressly provided in this Agreement, the Company shall have
no obligation to the Holder to register the Registrable Shares under the
Securities Act.

 

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12.Current Public Information.

 

At all times after the Effective Date, the Company will (i) file all reports
required to be filed by it under the Securities Act and the Exchange Act and the
rules and regulations promulgated thereunder, (ii) make available information
necessary to comply with Rule 144 at all times, all to the extent required from
time to time to enable such Holder to sell Registrable Shares without
registration under the Securities Act within the limitations of the exemption
provided by Rule 144, (iii) deliver, upon the reasonable request of any Holder,
a written certification to such Holder as to whether the Company has complied
with the information requirements of Rule 144, and (iv) take such further action
as the Holders may reasonably request, all to the extent required to enable such
Holders to sell Registrable Shares pursuant to Rule 144. If at any time the
Company is not subject to the reporting requirements of the Exchange Act, it
will make available any information as required by, and so long as necessary to
permit sales of Registrable Shares pursuant to, Rule 144.

 

13.Amendments and Waivers.

 

The provisions of this Agreement may not be amended, modified, or supplemented
or waived without the prior written consent of the Company and Holders holding
in excess of two-thirds of the aggregate of all Shares and Warrants then held by
such Holders.

 

14.Notices.

 

Except as set forth below, all notices and other communications provided for or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if delivered personally or sent by facsimile, registered or certified mail
(return receipt requested), postage prepaid or courier or overnight delivery
service to the respective parties at the following addresses (or at such other
address for any party as shall be specified by like notice, provided that
notices of a change of address shall be effective only upon receipt thereof),
and further provided that in case of directions to amend the Registration
Statement pursuant to Section 3(d) or Section 7, a Holder must confirm such
notice in writing by overnight express delivery with confirmation of receipt:

 

If to the Company:

Vertex Energy, Inc. 

Attn:________________

1331 Gemini St.

Suite 250

Houston, Texas 77058

Fax:_____________________

 

with a copy to (which shall not constitute notice):

 

The Loev Law Firm, PC

Attn: David M. Loev

6300 West Loop South, Suite 280

Bellaire, Texas 77401

Fax: (713) 524-4122

Email: dloev@loevlaw.com and john@loevlaw.com

 

  If to the Holder: To Holder’s address for notice on the signature page hereof.

 

Registration Rights and Lock-Up Agreement

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15.Right to Terminate.

 

Any party hereto may terminate this Agreement and the rights and obligations
hereunder by providing written notice to the other parties in the event the
Effective Date has not occurred prior to July 25, 2019.

 

16.Successors and Assigns.

 

This Agreement shall be binding upon the parties hereto and their respective
successors and assigns and shall inure to the benefit of the parties hereto and
their respective successors and assigns. This Agreement may not be assigned by
any Holder and any attempted assignment hereof by any Holder will be void and of
no effect and shall terminate all obligations of the Company hereunder;
provided, that any Holder may assign its rights hereunder to any person to whom
such Holder may Dispose of Shares and/or Warrants pursuant to Section 2(d),
including any pledgee described in clause (v) of Section 2(d).

 

17.Counterparts, Effect of Facsimile, Emailed and Photocopied Signatures.

 

This Agreement and any signed agreement or instrument entered into in connection
with this Agreement, and any amendments hereto or thereto, may be executed in
one or more counterparts, all of which shall constitute one and the same
instrument. Any such counterpart, to the extent delivered by means of a
facsimile machine or by .pdf, .tif, .gif, .jpeg or similar attachment to
electronic mail (email) or downloaded from a website or data room (any such
delivery, an “Electronic Delivery”) shall be treated in all manner and respects
as an original executed counterpart and shall be considered to have the same
binding legal effect as if it were the original signed version thereof delivered
in person. At the request of any party, each other party shall re execute the
original form of this Agreement and deliver such form to all other parties. No
party shall raise the use of Electronic Delivery to deliver a signature or the
fact that any signature or agreement or instrument was transmitted or
communicated through the use of Electronic Delivery as a defense to the
formation of a contract, and each such party forever waives any such defense,
except to the extent such defense relates to lack of authenticity.

 

18.Severability.

 

In the event that any one or more of the provisions contained herein, or the
application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be in any way impaired thereby, it being
intended that all of the rights and privileges of the parties hereto shall be
enforceable to the fullest extent permitted by law.

 

Registration Rights and Lock-Up Agreement

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19.Entire Agreement.

 

This Agreement is intended by the parties as a final expression of their
agreement and intended to be the complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein, with respect to
such subject matter. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.

 

20.Jurisdiction.

 

THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED, INTERPRETED AND ENFORCED
ACCORDING TO, THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO PRINCIPLES OF
CONFLICT OF LAWS PROVISIONS THEREOF AND SHALL BE BINDING UPON THE PARTIES HERETO
AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS. Any judicial proceeding brought by
or any party regarding any dispute arising out of this Agreement or any matter
related hereto may be brought in the courts of the State of Texas, or in the
United States District Court for the Southern District of Texas and, by
execution and delivery of this Agreement, each party hereby submits to the
jurisdiction of such courts. EACH PARTY HEREBY WAIVES ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN CONNECTION WITH ANY MATTER CONTESTED UNDER, OR ARISING OUT OF,
THIS AGREEMENT.

 

21.        Further Assurances.

 

All parties agree that, from time to time, each of them will take such other
action and to execute, acknowledge and deliver such contracts or other documents
as may be reasonably requested and necessary or appropriate to carry out the
purposes and intent of this Agreement.

 

[Remainder of page left intentionally blank. Signature page follows.]

 

Registration Rights and Lock-Up Agreement

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.

 

  “COMPANY”:       VERTEX ENERGY, INC.       By: /s/ Benjamin P. Cowart   Name:
Benjamin P. Cowart    Title: CEO 

 

  “HOLDER”:       TENSILE CAPITAL
PARTNERS MASTER FUND
LP       By: /s/ Douglas J. Dossey   Name: Douglas J. Dossey   Title: Manager

 

  Address for Notice:      

Tensile Capital Management LLC

700 Larkspur Landing Circle, Suite 255

Larkspur, CA 94939

Attention: Douglas J. Dossey and Neal Barcelo

      With a copy to (which shall not constitute notice):    

Kirkland & Ellis LLP

555 California Street, Suite 2700

San Francisco, CA 94104

Attention: Noah D. Boyens, P.C. and Chris Harding

 

Registration Rights and Lock-Up Agreement

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SCHEDULE A

 

PLAN OF DISTRIBUTION

 

We are registering for resale by the selling shareholder and certain transferees
a total of 1,500,000 shares of common stock and a total of 1,500,000 shares of
common stock issuable upon exercise of the Warrants. We will not receive any of
the proceeds from the sale by the selling shareholder of the shares of common
stock. We will bear all fees and expenses incident to our obligation to register
the shares of common stock. If the shares of common stock are sold through
broker-dealers or agents, the selling shareholder will be responsible for any
compensation to such broker-dealers or agents.

 

The selling shareholder may pledge or grant a security interest in some or all
of the shares of common stock owned by it and, if it defaults in the performance
of their secured obligations, the pledgees or secured parties may offer and sell
the shares of common stock from time to time pursuant to this prospectus.

 

The selling shareholder also may transfer and donate the shares of common stock
in other circumstances in which case the transferees, donees, pledgees or other
successors in interest will be the selling beneficial owners for purposes of
this prospectus.

 

The selling shareholder will sell its shares of common stock subject to the
following:

 

  ● all of a portion of the shares of common stock beneficially owned by the
selling shareholder or its perspective pledgees, donees, transferees or
successors in interest, may be sold on the over-the-counter markets, any
national securities exchange or quotation service on which the shares of our
common stock may be listed or quoted at the time of sale, in privately
negotiated transactions, through the writing of options, whether such options
are listed on an options exchange or otherwise, short sales or in a combination
of such transactions, in
“at the market” offerings to or through a market maker or into an existing
trading market, on an exchange or otherwise, to the extent permitted by
applicable law, or by any other method or combination of methods permitted
pursuant to applicable law;         ● each sale may be made at market price
prevailing at the time of such sale, at negotiated prices, at fixed prices or at
carrying prices determined at the time of sale;         ● some or all of the
shares of common stock may be sold through one or more broker-dealers or agents
and may involve crosses, block transactions or hedging transactions. The selling
shareholder may enter into hedging transactions with broker-dealers or agents,
which may in turn engage in short sales of the common stock in the course of
hedging in positions they assume. The selling shareholder may also sell shares
of common stock short and deliver shares of common stock to close out short
positions or loan or pledge shares of common stock to broker-dealers or agents
that in turn may sell such shares; and         ● in connection with such sales
through one or more broker-dealers or agents, such broker-dealers or agents may
receive compensation in the form of discounts, concessions or commissions from
the selling shareholder and may receive commissions from the purchasers of the
shares of common stock for whom they act as broker-dealer or agent or to whom
they sell as principal (which discounts, concessions or commissions as to
particular broker-dealers or agents may be in excess of those customary in the
types of transaction involved). Any broker-dealer or agent participating in any
such sale may be deemed to be an “underwriter” within the meaning of the
Securities Act and will be required to deliver a copy of this prospectus to any
person who purchases any shares of common stock from or through such
broker-dealer or agent. To our knowledge, there are currently no plans,
arrangements or understandings between any selling shareholders and any
underwriter, broker-dealer or agent regarding the sale of the common stock by
the selling shareholder.

 

 

 

 

A selling stockholder that is an entity may elect to make a pro rata in-kind
distribution of shares of our common stock to its members, partners or
stockholders pursuant to the registration statement of which this prospectus
forms a part by delivering a prospectus.

 

The selling shareholder and any broker-dealer participating in the distribution
of the shares of common stock may be deemed to be “underwriters” within the
meaning of the Securities Act, and any profits realized by the selling
shareholder and any commissions paid, or any discounts or concessions allowed to
any such broker-dealer may be deemed to be underwriting commissions or discounts
under the Securities Act. In addition, any shares of common stock covered by
this prospectus which qualify for sale pursuant to Rule 144 may be sold under
Rule 144 rather than pursuant to this prospectus. The selling shareholder may
also transfer, devise or gift the shares of common stock by other means not
covered in this prospectus in which case the transferee, devisee or giftee will
be the selling shareholder under this prospectus.

 

If required at the time a particular offering of the shares of common stock is
made, a prospectus supplement or, if appropriate, a post-effective amendment to
the shelf registration statements of which this prospectus is a part, will be
distributed which will set forth the aggregate amount of shares of common stock
being offered and the terms of the offering, including the name or names of any
broker-dealers or agents, any discounts, commissions or concessions allowed or
reallowed or paid to broker-dealers.

 

Under the securities laws of some states, the shares of common stock may be sold
in such states only through registered or licensed brokers or dealers. In
addition, in some states the shares of common stock may not be sold unless such
shares have been registered or qualified for sale in such state or an exemption
from registration or qualification is available and is complied with. There can
be no assurance that the selling shareholder will sell any or all of the shares
of common stock registered pursuant to the shelf registration statement, of
which this prospectus forms a part.

 

The selling shareholder and any other person participating in such distribution
will be subject to applicable provisions of the Exchange Act and the rules and
regulations thereunder, including, without limitation, Regulation M of the
Exchange Act, which may limit the timing of purchases and sales of any of the
shares of common stock by the selling shareholder and any other participating
person. Regulation M may also restrict the ability of any person engaged in the
distribution of the shares of common stock to engage in market-making activities
with respect to the shares of common stock. All of the foregoing may affect the
marketability of the shares of common stock and the ability of any person or
entity to engage in market-making activities with respect to the shares of
common stock.

 

We will bear all expenses of the registration of the shares of common stock
including, without limitation, Securities and Exchange Commission filing fees
and expenses of compliance with the state securities of “blue sky” laws. The
selling shareholder will pay all underwriting discounts and selling commissions
and expenses, brokerage fees and transfer taxes, as well as the fees and
disbursements of counsel to and experts for the selling shareholder, if any. We
will indemnify the selling shareholder against liabilities, including some
liabilities under the Securities Act, in accordance with the registration rights
agreement or the selling shareholder will be entitled to contribution.

 

Once sold under the registration statement, of which this prospectus forms a
part, the shares of common stock will be freely tradable in the hands of persons
other than our affiliates.