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

Exhibit 10.4 

 

NEITHER THIS WARRANT NOR ANY OF THE SECURITIES ISSUABLE UPON ITS EXERCISE HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED AND SUCH SECURITIES
MAY NOT BE TRANSFERRED UNLESS COVERED BY AN EFFECTIVE REGISTRATION STATEMENT
UNDER SAID ACT OR AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT. THE
ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR
RESALE IS IN COMPLIANCE WITH THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES.

 

Warrant No.: T-1 Number of Shares: 1,500,000 Warrant Date: July 24, 2019  

 

VERTEX ENERGY, INC.
COMMON STOCK PURCHASE WARRANT

 

1.       Issuance. For value received, the receipt of which is hereby
acknowledged by Vertex Energy, Inc., a Nevada corporation (the “Company”),
Tensile Capital Partners Master Fund LP or its registered assigns (the
“Holder”), is hereby granted the right to purchase, at any time until the close
of business on July 24, 2029 (the “Expiration Date”), One Million Five Hundred
Thousand (1,500,000), subject to adjustment upon certain events as described in
greater detail below, fully paid and nonassessable shares of the Company’s
Common Stock, par value $0.001 per share (the “Common Stock”), at an exercise
price of $2.25 per share (the “Exercise Price”).

 

2.       Procedure for Exercise. Upon surrender of this Warrant with the annexed
Notice of Exercise Form duly executed, together with payment in cash of the
aggregate Exercise Price for the shares of Common Stock purchased, the Holder
shall be entitled to receive a certificate or certificates for the shares of
Common Stock so purchased. This Warrant may be exercised in whole or in part,
subject to the Beneficial Ownership Limitation (defined below). On any such
partial exercise, provided the Holder has surrendered the original Warrant, the
Company will issue and deliver to the order of the Holder a new Warrant of like
tenor, in the name of the Holder, for the whole number of shares of Common Stock
for which such Warrant may still be exercised.

 

3.       No Fractional Shares or Scrip. No fractional Shares or scrip
representing fractional Warrant Shares shall be issued upon the exercise of this
Warrant, but in lieu of such fractional Warrant Shares the Company shall issue
an additional share of Common Stock to the Holder or pay the Holder the fair
market value of such fractional share, as determined in the reasonable
discretion of the Board of Directors of the Company, in the Company’s sole
discretion.

 

4.       Reservation of Shares. The Company hereby agrees that at all times
during the term of this Warrant there shall be reserved for issuance upon
exercise of this Warrant such number of shares of Common Stock as shall be
required for issuance upon exercise hereof (the “Warrant Shares”). Any shares
issuable upon exercise of this Warrant will be duly and validly issued, fully
paid, non-assessable and free of all liens and charges and not subject to any
preemptive rights and rights of first refusal.

 

 

 

 

5.       Mutilation or Loss of Warrant. Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant, and (in the case of loss, theft or destruction) receipt of reasonably
satisfactory indemnification, and (in the case of mutilation) upon surrender and
cancellation of this Warrant, the Company will execute and deliver a new warrant
of like tenor and date and any such lost, stolen, destroyed or mutilated Warrant
shall thereupon become void.

 

6.       No Rights as Shareholder. The Holder shall not, by virtue hereof, be
entitled to any rights of a shareholder of the Company, either at law or in
equity, and the rights of the Holder are limited to those expressed in this
Warrant and are not enforceable against the Company except to the extent set
forth herein.

 

7.       Beneficial Ownership Limitation. Notwithstanding anything to the
contrary contained herein, the number of Warrant Shares that may be acquired by
the Holder upon any exercise of this Warrant (or otherwise in respect hereof)
shall be limited to the extent necessary to insure that, following such exercise
(or other issuance), the total number of shares of Common Stock then
beneficially owned by such Holder and its affiliates (as defined under Rule 144
of the Securities Act, “Affiliates”) and any other persons whose beneficial
ownership of Common Stock would be aggregated with the Holder’s for purposes of
Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), does not exceed 4.999% of the total number of issued and outstanding
shares of Common Stock (including for such purpose the shares of Common Stock
issuable upon such exercise)(the “Beneficial Ownership Limitation”). For such
purposes, beneficial ownership shall be determined in accordance with Section
13(d) of the Exchange Act and the rules and regulations promulgated thereunder.
This provision shall not restrict the number of shares of Common Stock which a
Holder may receive or beneficially own in order to determine the amount of
securities or other consideration that such Holder may receive in the event of a
transaction described in Section 8.2 hereof, to the extent applicable. By
written notice to the Company, the Holder may increase the Beneficial Ownership
Limitation to up to 9.999% of the total number of issued and outstanding shares
of Common Stock (including for such purpose the shares of Common Stock issuable
upon such exercise), but any such increase will not be effective until the 61st
day after delivery of such notice. In no event shall the Beneficial Ownership
Limitation be increased to greater than 9.999% of the total number of issued and
outstanding shares of Common Stock (including for such purpose the shares of
Common Stock issuable upon such exercise). This restriction may not be waived.

 

8.       Effect of Certain Transactions

 

  8.1       Adjustments for Stock Splits, Stock Dividends Etc. If the number of
outstanding shares of Common Stock of the Company are increased or decreased by
a stock split, reverse stock split, stock dividend, stock combination,
recapitalization or the like, the Exercise Price and the number of shares
purchasable pursuant to this Warrant shall be adjusted proportionately so that
the ratio of (i) the aggregate number of shares purchasable by exercise of this
Warrant to (ii) the total number of shares outstanding immediately following
such stock split, reverse stock split, stock dividend, stock combination,
recapitalization or the like shall remain unchanged, and the aggregate purchase
price of shares issuable pursuant to this Warrant shall remain unchanged.

 

Vertex Energy, Inc.

Common Stock Purchase Warrant [T-1]

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  8.2       Fundamental Transactions. Any recapitalization, reorganization,
reclassification, consolidation, merger, sale of all or substantially all of the
Company’s assets or other transaction, which in each case is effected in such a
way that the holders of Common Stock are entitled to receive (either directly or
upon subsequent liquidation) stock, securities or assets with respect to or in
exchange for Common Stock is referred to herein as “Organic Change.” Prior to
the consummation of any Organic Change, the Company shall make appropriate
provision (in form and substance reasonably satisfactory to the Holders of
Warrants representing a majority of the Common Stock obtainable upon exercise of
all Warrants then outstanding under this series of Warrants) to insure that each
of the Holders of Warrants under this Warrant shall thereafter have the right to
acquire and receive, in lieu of or in addition to (as the case may be) the
shares of Common Stock immediately theretofore acquirable and receivable upon
the exercise of such Holder’s Warrant, such shares of stock, securities or
assets as would have been issued or payable in such Organic Change (if the
holder had exercised this Warrant immediately prior to such Organic Change) with
respect to or in exchange for the number of shares of Common Stock immediately
theretofore acquirable and receivable upon exercise of such Holder’s Warrant had
such Organic Change not taken place, including by making appropriate provision
(in form and substance reasonably satisfactory to the Holders of Warrants
representing a majority of the Common Stock obtainable upon exercise of all
Warrants then outstanding under this series of Warrants) with respect to such
holders’ rights and interests to insure that the provisions of this Section 8.2
shall thereafter be applicable to the Warrants. The Company shall not effect any
such consolidation, merger or sale, unless prior to the consummation thereof,
the successor entity (if other than the Company) resulting from consolidation or
merger or the entity purchasing such assets assumes by written instrument (in
form and substance reasonably satisfactory to the Holders of Warrants
representing a majority of the Common Stock obtainable upon exercise of all
Warrants then outstanding under this series of Warrants), the obligation to
deliver to each such Holder such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such Holder may be entitled to
acquire.

 

9.       Transfer to Comply with the Securities Act. This Warrant and the
Warrant Shares have not been registered under the Securities Act of 1933, as
amended, (the “Securities Act”) and has been issued to the Holder for investment
and not with a view to the distribution of either this Warrant or the Warrant
Shares. Neither this Warrant nor any of the Warrant Shares or any other security
issued or upon exercise of this Warrant may be sold, transferred, pledged or
hypothecated in the absence of an effective registration statement under the
Securities Act relating to such security or an opinion of counsel satisfactory
to the Company that registration is not required under the Securities Act. Each
certificate for this Warrant, the Warrant Shares and any other security issued
or issuable upon exercise of this Warrant shall contain a legend in form and
substance satisfactory to counsel for the Company, setting forth the
restrictions on transfer contained in this Section.

 

10.     Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally or sent by
certified, registered or express mail, postage pre-paid. Any such notice shall
be deemed given when so delivered personally, or if mailed, two days after the
date of deposit in the United States mails, as follows:

 

Vertex Energy, Inc.

Common Stock Purchase Warrant [T-1]

Page 3 of 7

 

 

 

 

If to the Company, to:

 

Vertex Energy, Inc.

Attn: Chris Carlson, CFO
1331 Gemini St., Suite 250

Houston, Texas 77058

Email: chrisc@vertexenergy.com

  

With a copy to:

 

The Loev Law Firm, PC

Attn: David M. Loev

6300 West Loop South, Suite 280

Bellaire, Texas 77401

Email: dloev@loevlaw.com

 

If to the Holder, to its address appearing on the Company’ records.

 

Any party may designate another address or person for receipt of notices
hereunder by written notice given at least five (5) business days prior to the
date such change will be effective, given to the other parties in accordance
with this Section.

 

11.         Supplements and Amendments; Whole Agreement. This Warrant may be
amended or supplemented only by an instrument in writing signed by the Company
and the Holder hereof. This Warrant contains the full understanding of the
parties hereto with respect to the subject matter hereof, and there are no
representations, warranties, agreements or understandings other than expressly
contained herein.

 

12.         Governing Law. This Warrant shall be deemed to be a contract made
under the laws of the State of Texas and for all purposes shall be governed by
and construed in accordance with the laws of such State applicable to contracts
to be made and performed entirely within such State. Any action brought by
either party against the other concerning the transactions contemplated by this
Warrant shall be brought only in the state courts of Texas or in the federal
courts located in Harris County, Texas. The parties to this Warrant hereby
irrevocably waive any objection to jurisdiction and venue of any action
instituted hereunder and shall not assert any defense based on lack of
jurisdiction or venue or based upon forum non conveniens. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any suit, action or proceeding in connection with this Warrant by
mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices
to it under this Warrant and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein shall
be deemed to limit in any way any right to serve process in any other manner
permitted by law.

 

13.         Counterparts. This Warrant may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.

 

Vertex Energy, Inc.

Common Stock Purchase Warrant [T-1]

Page 4 of 7

 

 

 

 

14.       Descriptive Headings. Descriptive headings of the several Sections of
this Warrant are inserted for convenience only and shall not control or affect
the meaning or construction of any of the provisions hereof.

 

15.       Assignability. This Warrant or any part hereof may only be hereafter
assigned by the Holder to an affiliate thereof executing documents reasonably
required by the Company, subject to applicable law. Any such assignment shall be
binding on the Company and shall inure to the benefit of any such assignee.

 

16.       Restrictions. By acceptance hereof, the Holder acknowledges that the
Warrant Shares acquired upon the exercise of this Warrant have restrictions upon
their resale imposed by state and federal securities laws. 

 

[Remainder of the page intentionally left blank; signature page follows.]

 

Vertex Energy, Inc.

Common Stock Purchase Warrant [T-1]

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IN WITNESS WHEREOF, the parties hereto have executed this Warrant as of the
Warrant Date set forth above.

 

  COMPANY:       VERTEX ENERGY, INC.       By: /s/ Benjamin P. Cowart    Name:
Benjamin P. Cowart    Title: CEO          HOLDER:       TENSILE CAPITAL PARTNERS
  MASTER FUND LP       By: Tensile Capital GP LLC   Its: General Partner

  

  By:   /s/ Douglas J. Dossey   Name: Douglas J. Dossey   Title: Manager

 

Vertex Energy, Inc.

Common Stock Purchase Warrant [T-1]

Page 6 of 7

  

 

 

 

NOTICE OF EXERCISE OF WARRANT 

 

Attention: Corporate Secretary

 

The undersigned hereby elects to purchase, pursuant to the provisions of the
Common Stock Purchase Warrant T-1 issued by Vertex Energy, Inc., a Nevada
corporation (the “Company”) and held by the undersigned, _________ shares of
Common Stock of the Company. Payment of the Exercise Price per Warrant Share
required under the Warrant accompanies this Notice.

 

The issuance of the shares of Common Stock upon in connection with this Notice
of Exercise of Warrant will not cause the undersigned to exceed the Beneficial
Ownership Limitation of the Warrant.

 

The undersigned hereby represents and warrants that the undersigned is acquiring
such Shares for his own account for investment purposes only, and not for resale
or with a view to distribution of such Warrant Shares or any part thereof.

 

Date: ________, 20__ 

  WARRANTHOLDER:       Signature:       Print Name:       Title:       Address:
   

 

  Name in which Shares should be
registered:______________________________________