Vertex Energy Inc. 8-K


Exhibit 10.11



 


 


	daTED	1
    april 2022



 


 

		(1)	VERTEX
                                            REFINING ALABAMA LLC



		(2)	Macquarie
                                            Energy North America Trading Inc.



ORIGINAL/COUNTERPART


INVENTORY
SALES AGREEMENT


 


EXECUTION
VERSION



     


     


    




CONTENTS


clause







	1   	DEFINITIONS	1
	2   	ASSIGNMENT AND CONVEYANCE	2
	3   	DETERMINATION OF INVENTORY	3
	4   	PAYMENT AND PRICING	3
	5   	MISCELLANEOUS	5


 


CONTENTS PAGE 2


 




     


     


    

 


THIS
INVENTORY SALES AGREEMENT (this “Agreement”), is made and entered into as of
1 April 2022.


 


BETWEEN:


		(1)	Vertex
                                            Refining Alabama LLC (“Seller”); and



		(2)	Macquarie
                                            Energy North America Trading Inc. (“Buyer”),



each
referred to individually as a “Party” and collectively, the “Parties”.


recitals


		(A)	WHEREAS,
                                            Seller owns and operates a crude oil refinery and related assets located in Mobile, Alabama
                                            (the “Refinery”) for the processing and refining of crude oil and other
                                            feedstocks and the recovery therefrom of refined products;



		(B)	WHEREAS,
                                            Seller and Buyer have entered into a Supply and Offtake Agreement, dated 1 April 2022 (the
                                            “S&O Agreement”), pursuant to which, among other things, it is contemplated
                                            that, the Buyer shall (a) on the Commencement Date, purchase from the Seller all Crude Oil
                                            and Products then being stored at the Included Storage Locations; (b) purchase from the Seller
                                            certain Products produced by the Refinery during the term of the S&O Agreement; (c) sell
                                            and deliver Crude Oil and Products to the Seller and certain Customers of the Company pursuant
                                            to the terms of the S&O Agreement; (d) provide certain other accommodations to the Seller
                                            based on Crude Oil and Products being stored at Company Storage Locations from time to time
                                            and otherwise being purchased and sold pursuant to the terms of the S&O Agreement;



		(C)	WHEREAS,
                                            as a condition (among others) to the Buyer’s obligations under the S&O Agreement,
                                            on the Commencement Date, the Seller is to sell to Buyer all Crude Oil and Products then
                                            being held at the Included Storage Locations on such date;



		(D)	WHEREAS,
                                            to satisfy such condition, and to set forth their agreements regarding the protocols to be
                                            used for measuring the quantity and quality of Crude Oil and Products being sold by the Seller
                                            and to establish the prices to be paid for such Crude Oil and Products by the Buyer, the
                                            Seller and the Buyer are entering into this Agreement; and



		(E)	NOW,
                                            THEREFORE, in consideration of the foregoing premises, the mutual promises and covenants
                                            contained herein and other good and valuable consideration, the receipt and sufficiency of
                                            which are hereby acknowledged, the Parties, subject to the terms and conditions hereinafter
                                            set forth, agree as follows:



		1	DEFINITIONS



		1.1	Definitions.



All
capitalized terms used, but that are not otherwise defined, in the body of this Agreement shall have the meanings ascribed to such terms
in the S&O Agreement. The following terms shall have the following meanings for the purposes of this Agreement:


"Average
Current Month Pricing Benchmark" means, in respect of a calendar month and a Product Group, an amount equal to the sum of the
Current Month Pricing Benchmark applicable to the relevant Product Group for each Quotation Day in such calendar month; divided by
the number of Quotation Days in that calendar month; provided, however, that for the purposes of calculating the Estimated
Commencement Date Value, the "Average Current Month Pricing Benchmark" for a Product Group shall be calculated by taking
into account only those Quotation Days from (and including) 1 March 2022 to (and including) 25 March 2022.


“BS&W”
means basic sediment and water.


“Buyer”
has the meaning set forth in the introductory paragraph immediately preceding the Recitals.


“Crude
and Product Inventory” means all Crude Oil, Products and Product Linefill that are held in the Included Storage Locations as
of, and owned by Seller immediately prior to, the Inventory Transfer Time.



    1 


     


    




“CT”
means the prevailing time in the Central time zone of the United States of America.


“Definitive
Commencement Date Value” means the value calculated by the Buyer in accordance with Section 4.3.1.


“Estimated
Commencement Date Value” has the meaning set forth in Section 4.1.2.


“Independent
Inventory Report” has the meaning set forth in Section 3.3 of this Agreement.


“Inventory
Transfer Time” means 12:00:01 a.m. CT on the Commencement Date.


“Parties”
and “Party” have the meanings set forth in the introductory paragraph immediately preceding the Recitals.


“Price
Adjustment” has the meaning set forth in Section 4.4 of this Agreement.


“Product
Linefill” means, at any time and for any grade of Product, the aggregate volume of linefill of that Product on the Included
Product Pipelines for which the Buyer will be treated as the exclusive owner by the Included Product Pipelines from (and including) the
Commencement Date; provided that such volume shall be determined by using the volumes reported on the monthly or daily statements,
as applicable, from the Included Product Pipelines.


“Projected
Inventory Report” has the meaning set forth in Section 4.1.1 of this Agreement.


"Quotation
Days" means, in respect of a Product Group, a quotation day for the relevant pricing index, formula or benchmark set out in
Schedule H to the S&O Agreement.


“Refinery”
has the meaning set forth in the Recitals of this Agreement.


“S&O
Agreement” has the meaning specified in the Recitals hereto.


“Sales
Statement” has the meaning set forth in Section 4.3.1 of this Agreement.


“Seller”
has the meaning set forth in the introductory paragraph immediately preceding the Recitals.


“Shell”
means the “Seller” as such term is defined in the Refinery SPA.


		2	ASSIGNMENT
                                            AND CONVEYANCE



		2.1	Assignment,
                                            Purchase and Conveyance. 



Effective
upon the Inventory Transfer Time, Seller shall, and hereby does, assign, transfer and deliver unto Buyer, and Buyer shall and hereby
does purchase from Seller, all of Seller’s right, title, and interest in and to all of the Crude and Product Inventory, free and
clear of all Liens, claims and encumbrances of any nature, other than Permitted S&O Liens, to have and to hold. Seller covenants
and agrees to warrant and forever defend good title to the Crude and Product Inventory, free and clear of all Liens, claims and encumbrances
of any nature, subject to Permitted S&O Liens, against the claims of all parties claiming the same by, through, or under Seller,
but not otherwise.


		2.2	Warranties
                                            and Representations of Conveying Party.



All
representations and warranties of the Seller contained herein shall be true and correct on and as of the Commencement Date.


		2.3	Disclaimer
                                            of Warranties.



SELLER
DOES NOT MAKE ANY WARRANTY, CONDITION OR OTHER REPRESENTATION, WRITTEN OR ORAL, EXPRESS OR IMPLIED, OF MERCHANTABILITY, FITNESS OR SUITABILITY
OF SUCH CRUDE OIL OR PRODUCTS FOR ANY PARTICULAR PURPOSE OR OTHERWISE AND ALL SUCH WARRANTIES, CONDITIONS AND OTHER REPRESENTATIONS ARE
HEREBY DISCLAIMED.



    2 


     


    




		3	DETERMINATION
                                            OF INVENTORY



		3.1	Inspection.



The
Independent Inspection Company shall determine and report the quantity and quality of the physical inventory, except as described in
Section 3.2.2 below. The cost of the Independent Inspection Company is to be borne by and is the sole responsibility of the Seller.


		3.2	Physical
                                            Inventory.



		3.2.1	The
                                            Independent Inspection Company shall conduct a survey of the physical inventory at the Included
                                            Storage Locations and the Company Storage Locations as of the Inventory Transfer Time, except
                                            as described in Section 3.2.2 below. The Independent Inspection Company shall conduct such
                                            survey of the physical inventory in accordance with its customary procedures and in accordance
                                            with the latest ASTM standards and principles then in effect, provided that the Independent
                                            Inspection Company shall be instructed by the Parties to maximize, to the extent reasonably
                                            practicable, the extent to which tank measurements are conducted on a static tank basis.
                                            Each of the Buyer and the Seller shall have the right to witness or appoint a representative
                                            to witness on its behalf, the survey of the physical inventory conducted by the Independent
                                            Inspection Company.



		3.2.2	With
                                            respect to volumes (if any) located at any Crude Storage Tanks owned or operated by a third
                                            party, the physical inventory shall be determined by such third party at that location based
                                            on its normal month-end inventory determination procedures.



		3.3	Disputes.



Either
Party or their respective representatives present at the survey of the physical inventory conducted by the Independent Inspection Company
at the Inventory Transfer Time may question or dispute the calculations and/or laboratory results of the Independent Inspection Company.
The Parties shall use commercially reasonable efforts to ensure that any questions or disputes relating to the quantity and the qualitative
laboratory results of the entire physical inventory shall be resolved by the Independent Inspection Company within three (3) Business
Days after the receipt of the Independent Inspection Company quantity and quality report and the resolution by the Independent Inspection
Company shall be final and binding on both Parties. Following resolution of any quantity and quality disputes, the agreed quantity and
quality entries, together with the quantity (if any) determined under Section 3.2.2, shall be recorded in the physical inventory report
(the “Independent Inventory Report”) and will become the official quantity and quality measurements of the Crude and
Product Inventory as of the Inventory Transfer Time. Such recorded quantity shall be adjusted for BS&W and temperature corrected
to 60 degrees Fahrenheit.


		3.4	Independent
                                            Inventory Report.



The
Parties shall use commercially reasonable efforts to procure that, within five (5) Business Days after the Inventory Transfer Time, the
Independent Inspection Company shall provide the Parties with the Independent Inventory Report.


		4	PAYMENT
                                            AND PRICING



		4.1	Delivery
                                            of Estimated Commencement Date Value.



		4.1.1	The
                                            Parties acknowledge that prior to the Commencement Date, the Seller has delivered to the
                                            Buyer a notice containing Shell’s provisional estimate of the Crude and Product Inventory
                                            in the Included Storage Locations determined in accordance with the Refinery SPA (the “Projected
                                            Inventory Report”).



		4.1.2	Based
                                            on the Projected Inventory Report and such data as are then reasonably available and using,
                                            where applicable, the applicable Average Current Month Pricing Benchmark(s) calculated in
                                            respect of March 2022 or, in the case of Product Linefill, such other pricing measure as
                                            Buyer may select, in good faith and in a commercially reasonable manner, the Buyer shall,
                                            no later than two (2) Business Days prior to the Commencement Date, calculate and notify
                                            Seller of the pricing basis and value for the Projected Inventory Report (the “Estimated
                                            Commencement Date Value”) available at the Inventory Transfer Time. The Buyer shall
                                            include the Estimated Commencement Date Value and all supporting calculations used to determine
                                            it in the notice delivered to Seller.







    3 


     


    

 


		4.2	Payment
                                            of Estimated Commencement Date Value.



On
the Commencement Date, the Buyer shall pay to, or as directed by, the Seller an amount equal to the Estimated Commencement Date Value.


		4.3	Crude
                                            and Product Inventory Sales Statement.



		4.3.1	Promptly
                                            following the last day in April 2022, the Buyer shall calculate the Definitive Commencement
                                            Date Value using the data regarding the Crude and Product Inventory provided in the Projected
                                            Inventory Report delivered to the Buyer pursuant to section 4.1.1 above and deliver to Seller
                                            a statement including such calculated price (the “Sales Statement”). The
                                            Buyer shall use the applicable Average Current Month Pricing Benchmark(s) calculated in respect
                                            of April 2022 or, in the case of Product Linefill, such other pricing measure as Buyer may
                                            select in good faith and in a commercially reasonable manner, to price the various quantities
                                            set forth in the Projected Inventory Report. The Buyer shall include in the Sales Statement
                                            all supporting calculations and documentation used to determine the Definitive Commencement
                                            Date Value. Each of Buyer and Seller acknowledges and agrees that any volumetric differences
                                            between the Projected Inventory Report and the Independent Inventory Report provided by the
                                            Independent Inspection Company shall be taken into account to the extent it identifies an
                                            inaccuracy with the daily settlements under and in accordance with the terms of the Supply
                                            and Offtake Agreement through which, as set forth in Section 4.4 below, the Parties intend
                                            to effect a volumetric true up.



		4.3.2	Unless
                                            the Seller gives notice to the Buyer on or before the third (3rd) Business Day
                                            after Seller’s receipt of the Sales Statement that Seller disputes the Definitive Commencement
                                            Date Value specified in the Sales Statement, the Definitive Commencement Date Value shall
                                            be as specified in the Sales Statement. If Seller gives timely notice to Buyer that it disputes
                                            the Definitive Commencement Date Value specified in the Sales Statement, the Parties shall
                                            consult in good faith and use all reasonable efforts to agree upon the calculation of the
                                            Definitive Commencement Date Value. If the Parties have not agreed on the Definitive Commencement
                                            Date Value within one (1) Business Day after the Buyer receives a notice of dispute from
                                            the Seller, the Buyer's original determination of the Definitive Commencement Date Value
                                            shall prevail.



		4.4	Crude
                                            and Product Inventory Sales Price Adjustment.



Upon
the final determination of the Definitive Commencement Date Value pursuant to Section 4.3, a true-up adjustment will be made in accordance
with the provisions of this Section 4.4 (the “Price Adjustment”) or otherwise as may be agreed between the Parties.
If the Definitive Commencement Date Value is greater than the Estimated Commencement Date Value paid by Buyer to Seller on the Commencement
Date, then Buyer shall make a payment to Seller in an amount equal to such excess. If the Estimated Commencement Date Value is greater
than the Definitive Commencement Date Value paid by Buyer to Seller on the Commencement Date, then the Seller shall make a payment to
Buyer in an amount equal to such excess. Any such payment by Buyer or Seller shall be made by wire transfer of immediately available
funds on or before 5:00 p.m. CT on the 3rd Business Day in May 2022. The Parties acknowledge and agree that any volumetric true-up based
on the data set out in the Projected Inventory Report and the actual Crude Oil and Products sold by the Refinery to Macquarie shall be
settled in accordance with the on-going purchase and sale mechanisms set out in the S&O Agreement.


		4.5	Priced
                                            Cargos on the Commencement Date. 



The
Parties acknowledge and agree that certain cargos of Crude Oil which are the subject of Macquarie Crude Procurement Contracts with Shell
Trading (US) Company have fully priced prior to the Commencement Date (“Fully Priced Cargos”). Accordingly, the price
true-ups in Section 6.4 and Schedule C of the S&O Agreement will not apply to any such Fully Priced Cargos. Instead, on or promptly
following the Commencement Date, Macquarie shall determine an amount equal to the product of:


		(i)	the
                                            Current Month Pricing Benchmark in respect of Crude Oil, as in effect as of the Commencement
                                            Date; minus the volume weight average price per barrel across each of the Fully Priced
                                            Cargos; and



		(ii)	the
                                            total volume of the Fully Priced Cargos,



(the
“Fully Priced Cargos Adjustment Amount”)



    4 


     


    




If
the Fully Priced Cargos Adjustment Amount is a positive amount it shall be payable by Macquarie to the Company, and if the Fully Priced
Cargos Adjustment Amount is a negative amount, the absolute value of such amount shall be payable by the Company to Macquarie, in either
case on or prior to the second Business Day immediately following the Commencement Date.


		4.6	Taxes.
                                            



The
Parties agree that the provisions of Article 16 of the S&O Agreement relating to tax matters shall apply to this Agreement and the
transactions contemplated hereby to the same extent as if set forth herein in full (except that references to the “Company”
shall be deemed to refer to the Seller hereunder and references to “Macquarie” shall be deemed to refer to the Buyer hereunder).


		5	MISCELLANEOUS



		5.1	Assignment.
                                            



		5.1.1	This
                                            Agreement shall inure to the benefit of and be binding upon the Parties hereto, their respective
                                            successors and permitted assigns.



		5.1.2	Neither
                                            Party shall assign this Agreement or its rights or interests hereunder in whole or in part,
                                            or delegate its obligations hereunder in whole or in part, without the consent of the other
                                            Party. Any attempted assignment in violation of this Section 5 shall be null and void ab
                                            initio and the non-assigning Party shall have the right, without prejudice to any other
                                            rights or remedies it may have hereunder or otherwise, to terminate this Agreement effective
                                            immediately upon notice to the Party attempting such assignment.



		5.2	Notices.
                                            



All
invoices, notices, requests and other communications given pursuant to this Agreement shall be in writing and sent by email or nationally
recognized overnight courier. A notice shall be deemed to have been received when transmitted by email to the other Party’s email
address set forth in Schedule K of the S&O Agreement, or on the following Business Day if sent by nationally recognized overnight
courier to the other Party’s address set forth in Schedule K of the S&O Agreement and to the attention of the person or department
indicated. A Party may change its address or email address by giving written notice in accordance with this Section, which is effective
upon receipt.


		5.3	Severability.
                                            



In
the event any portion of this Agreement shall be found by a court of competent jurisdiction to be unenforceable, that portion of this
Agreement will be null and void and the remainder of this Agreement will be binding on the Parties as if the unenforceable provisions
had never been contained herein.


		5.4	No
                                            Waiver, Cumulative Remedies.



		5.4.1	The
                                            failure of a Party hereunder to assert a right or enforce an obligation of the other Party
                                            shall not be deemed a waiver of such right or obligation. The waiver by any Party of a breach
                                            of any provision of, Event of Default or Default under, this Agreement shall not operate
                                            or be construed as a waiver of any other breach of that provision or as a waiver of any breach
                                            of another provision of, Event of Default or Default under, this Agreement, whether of a
                                            like kind or different nature.



		5.4.2	Each
                                            and every right grant to the Parties under this Agreement or allowed it by law or equity
                                            shall be cumulative and may be exercised from time to time in accordance with the terms thereof
                                            and Applicable Law.



		5.5	Entire
                                            Agreement; Amendment.



The
terms of this Agreement constitute the entire agreement between the Parties with respect to the matters set forth in this Agreement,
and no representations or warranties shall be implied or provisions added in the absence of a written agreement to such effect between
the Parties. This Agreement shall not be modified or changed except by written instrument executed by the Parties’ duly Authorized
Representatives.



    5 


     


    




		5.6	GOVERNING
                                            LAW



		5.6.1	This
                                            Agreement shall be governed by, construed and enforced under the laws of the State of New
                                            York without giving effect to its conflicts of laws principles that would require the application
                                            of the laws of another state.



		5.6.2	Each
                                            of the Parties hereby irrevocably submits to the exclusive jurisdiction of any federal or
                                            state court of competent jurisdiction situated in the City of New York, (without recourse
                                            to arbitration unless both Parties agree in writing), and to service of process by certified
                                            mail, delivered to the Party at the address indicated in SCHEDULE
                                            K of the S&O Agreement. Each Party hereby irrevocably
                                            waives, to the fullest extent permitted by Applicable Law, any objection to personal jurisdiction,
                                            whether on grounds of venue, residence or domicile.



		5.6.3	EACH
                                            PARTY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO
                                            A TRIAL BY JURY IN RESPECT OF ANY PROCEEDINGS RELATING TO THIS AGREEMENT.



		5.7	Counterparts.
                                            



This
Agreement may be executed by the Parties in separate counterparts and initially delivered by facsimile transmission, pdf or otherwise,
with original signature pages to follow, and all such counterparts shall together constitute one and the same instrument.


		5.8	Further
                                            Assurances. 



Both
Seller and Buyer agree to execute and deliver, from time to time, such other and additional instruments, notices, transfer orders and
other documents, and to do all such other and further acts and things as may be necessary to more fully and effectively transfer and
assign the Crude and Product Inventory to Buyer.


[Signature
page follows.]




    6 


     


    

 


	Executed
    by MACQUARIE ENERGY NORTH AMERICA TRADING INC. acting by:
	 	 	 
	 	and	 
	 	 	 
	/s/ Daniel Vizel	 	/s/ Travis McCullough
	Name: Daniel Vizel	 	Name: Travis McCullough
	Title: Senior Managing Director	 	Title: Division Director
	 	 	 


 


	Executed
    by VERTEX REFINING ALABAMA LLC acting by:
	 
	 	and	 
	 	 	 
	/s/ Benjamin P. Cowart	 	 
	Name: Benjamin P. Cowart	 	 
	Title: President & Chief Executive Officer	 	 
	 	 	 



 


 



    7