Document:

Vertex Energy, Inc. 8-K 

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]

Page
2 of 7

  

     

     

    

 

  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]

Page
5  of 7

 

     

     

    

 

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:______________________________________Vertex Energy, Inc. 8-K 

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

Page
1 of 13

 

     

     

    

 

“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

Page
2 of 13

 

     

     

    

 

“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

Page
3 of 13

 

     

     

    

 

(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

Page
5 of 13

 

     

     

    

 

		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

Page
6 of 13

 

     

     

    

 

		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

Page
7 of 13

 

     

     

    

 

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

Page
8 of 13

 

     

     

    

  

		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.

 

Registration
Rights and Lock-Up Agreement

Page
9 of 13

 

     

     

    

 

		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

Page
10 of 13

 

     

     

    

 

		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

Page
11 of 13

 

     

     

    

 

		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

Page
12 of 13

 

     

     

    

  

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

Page
13 of 13

 

     

     

    

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.

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