Document:

ex10-29.htm

Exhibit 10.29

 

VERTEX ENERGY, INC.

Stock Option Agreement

	
  

	
Date: _____________to be effective __________

To Whom It May Concern:

VERTEX ENERGY, INC. (the “Company”), for value received, hereby agrees to issue common stock purchase options entitling _____________ (“Holder” or the “Option Holder”) to purchase an aggregate of _____________ shares of the Company’s common stock (“Common Stock”).  Such option is evidenced by option certificates in the form attached hereto as Schedule 1a, Schedule 1b, Schedule 1c and Schedule 1d  (such instrument being hereinafter referred to as an “Option,” and such Option and all instruments hereafter issued in replacement, substitution, combination or subdivision thereof being hereinafter collectively referred to as the “Option”). The Option is issued in consideration for services rendered and to be rendered to the Company and evidences the grant of the Option to the Holder by the Board of Directors of the Company on _______________ (the “Grant Date”).  The number of shares of Common Stock purchasable upon exercise of the Option is subject to adjustment as provided in Section 5 below.  The Option will be exercisable by the Option Holder (as defined below) as to all or any lesser number of shares of Common Stock covered thereby, at an initial purchase price of US $______ per share (the “Purchase Price”), subject to adjustment as provided in Section 5 below, which shall vest to the Holder as provided in Section 3(a) below, for the exercise period defined in Section 3(b) below.

	
  

	
1.

	
Representations and Warranties.

The Company represents and warrants to the Option Holder as follows:

	
  

	
(a)

	
Corporate and Other Action.  The Company has all requisite power and authority (corporate and other), and has taken all necessary corporate action, to authorize, execute, deliver and perform this Stock Option Agreement (the “Option Agreement”), to execute, issue, sell and deliver the Option and a certificate or certificates evidencing the Option, to authorize and reserve for issue and, upon payment from time to time of the Purchase Price, to issue, sell and deliver, the shares of the Common Stock issuable upon exercise of the Option (“Shares”), and to perform all of its obligations under this Option Agreement and the Option.  The Shares, when issued in accordance with this Option Agreement, will be duly authorized and validly issued and outstanding, fully paid and nonassessable and free of all liens, claims, encumbrances and preemptive rights. This Option Agreement and, when issued, each Option issued pursuant hereto, has been or will be duly executed and delivered by the Company and is or will be a legal, valid and binding agreement of the Company, enforceable in accordance with its terms.  No authorization, approval, consent or other order of any governmental entity, regulatory authority or other third party is required for such authorization, execution, delivery, performance, issue or sale.

	
  

	
(b)

	
No Violation.  The execution and delivery of this Option Agreement, the consummation of the transactions herein contemplated and the compliance with the terms and provisions of this Option Agreement and of the Option will not conflict with, or result in a breach of, or constitute a default or an event permitting acceleration under, any statute, the Articles of Incorporation or Bylaws of the Company or any indenture, mortgage, deed of trust, note, bank loan, credit agreement, franchise, license, lease, permit, or any other agreement, understanding, instrument, judgment, decree, order, statute, rule or regulation to which the Company is a party or by which it is bound.

 

 

 

 

 

 

 

 

 

  

1

  

	
  

	
2.

	
Transfer.

	
  

	
(a)

	
Transferability of Option.  The Option Holder agrees that this Option is not transferable by Holder.

 

 

	
  

	
(b)

	
Registration of Shares.  The Option Holder agrees not to make any sale or other disposition of the Shares except pursuant to a registration statement which has become effective under the Securities Act of 1933, as amended (the “Act”), setting forth the terms of such offering, the underwriting discount and commissions and any other pertinent data with respect thereto, unless the Option Holder has provided the Company with an acceptable opinion of counsel acceptable to the Company that such registration is not required.  Certificates representing the Shares, which are not registered as provided in this Section 2, shall bear an appropriate legend and be subject to a “stop-transfer” order.

	
  

	
3.

	
Vesting of Option, Exercise of Option, Partial Exercise, Notice.

	
  

	
(a)

	
Vesting Period.  Options to purchase ______  shares shall vest upon the expiration of each year that elapses from the Grant Date (with options to purchase the first ______  shares vesting on ______________), until Holder has vested the entire Option, provided that the entire Option shall vest to Holder immediately upon the occurrence of a "Change in Control" as defined under the Company’s 2009 Stock Incentive Plan (the “Plan”), which includes:

	
  

	
(1)

	
the adoption of a plan of merger or consolidation of the Company with any other corporation or association as a result of which the holders of the voting capital stock of the Company as a group would receive less than 50% of the voting capital stock of the surviving or resulting corporation;

	
  

	
(2)

	
the approval by the Board of Directors of the Company of an agreement providing for the sale or transfer of substantially all the assets of the Company; or

	
  

	
(3)

	
in the absence of a prior expression of approval by the Board of Directors, the acquisition of more than 20% of the Company's voting capital stock by any person within the meaning of Rule 13d-3 under the Act (other than the Company or a person that directly or indirectly controls, is controlled by, or is under common control with, the Company);

Provided that Holder shall cease to continue vesting the Option as provided above, upon the later of (a) the termination of Holder’s employment with the Company, or (b) in the case the Holder is a Director of the Company on the Grant Date, the date such Director ceases to serve as a Director of the Company (each a “Termination Date”), as determined by the Board of Directors of the Company in its sole discretion.

	
  

	
(b)

	
 Exercise Period.  This Option shall expire and all rights hereunder shall be extinguished upon the earlier of:

 

	
  

	
(i)

	
Ten (10) years from the Grant Date; or

	
  

	
(ii)

	
Three (3) Months from the date Holder’s employment with the Company ceases (or in the case of a Director of the Company, the date such Director ceases to serve as a Director of the Company), as determined by the Board of Directors of the Company in its sole discretion, unless such employment shall have terminated:

	
  

	
(1) as a result of the Disability of Holder, as defined in the Plan, in which event such exercise period shall expire on the date twelve (12) months following such termination of service by the Company, not to exceed the time period specified in Section 3(b)(i) above; or

	
  

	
(2) as a result of the death of Holder (other than as a result of disability), in which event such exercise period shall expire on the date twelve (12) months after the date of Holder’s death, not to exceed the time period specified in Section 3(b)(i) above.

 

 

 

  

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(c)

	
Exercise in Full.  Subject to Section 3(a) and 3(b), the Option may be exercised in full by the Option Holder by surrender of the Option, with the Form of Subscription attached hereto as Schedule 2 executed by such Option Holder, to the Company, accompanied by payment as determined by 3(e) below, in the amount obtained by multiplying the number of Shares represented by the respective Option by the Purchase Price per share (after giving effect to any adjustments as provided in Section 5 below).

	
  

	
(d)

	
Partial Exercise.  Subject to Section 3(a) and 3(b), each Option may be exercised in part by the Option Holder by surrender of the Option, with the Form of Subscription attached hereto as Schedule 2 at the end thereof duly executed by such Option Holder, in the manner and at the place provided in Section 3(c) above, accompanied by payment as determined by 3(e) below, in amount obtained by multiplying the number of Shares designated by the Option Holder in the Form of Subscription attached hereto as Schedule 2 to the Option by the Purchase Price per share (after giving effect to any adjustments as provided in Section 5 below).  Upon any such partial exercise, the Company at its expense will forthwith issue and deliver to or upon the order of the Option Holder a new Option of like tenor, in the name of the Option Holder, calling in the aggregate for the purchase of the number of Shares equal to the number of such Shares called for on the face of the respective Option (after giving effect to any adjustment herein as provided in Section 5 below) minus the number of such Shares designated by the Option Holder in the aforementioned form of subscription.

	
  

	
(e)

	
Payment of Purchase Price.  The Purchase Price may be made by any of the following or a combination thereof, at the election of the Option Holder:

 

	
  

	
(i)   In cash, by wire transfer, by certified or cashier’s check, or by money order; or

	 	
  

	
(ii)  By delivery to the Company of an exercise notice that requests the Company to issue to the Option Holder the full number of shares as to which the Option is then exercisable, less the number of shares that have an aggregate Fair Market Value, as determined by the Board in its sole discretion at the time of exercise, equal to the aggregate purchase price of the shares to which such exercise relates.  (This method of exercise allows the Option Holder to use a portion of the shares issuable at the time of exercise as payment for the shares to which the Option relates and is often referred to as a "cashless exercise." For example, if the Option Holder elects to exercise 1,000 shares at an exercise price of $0.25 and the current Fair Market Value of the shares on the date of exercise is $1.00, the Option Holder can use 250 of the 1,000 shares at $1.00 per share to pay for the exercise of the entire Option (250 x $1.00 = $250.00) and receive only the remaining 750 shares).

 

For purposes of this section, "Fair Market Value” shall be defined as the average closing price of the Common Stock (if actual sales price information on any trading day is not available, the closing bid price shall be used) for the five trading days prior to the date of exercise of this Option (the “Average Closing Bid Price”), as reported by the National Association of Securities Dealers Automated Quotation System (“NASDAQ”), or if the Common Stock is not traded on NASDAQ, the Average Closing Bid Price in the over-the-counter market; provided, however, that if the Common Stock is listed on a stock exchange, the Fair Market Value shall be the Average Closing Bid Price on such exchange; and, provided further, that if the Common Stock is not quoted or listed by any organization, the fair value of the Common Stock, as determined by the Board of Directors of the Company, whose determination shall be conclusive, shall be used).  In no event shall the Fair Market Value of any share of Common Stock be less than its par value.

 

 

 

  

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4.

	
Delivery of Stock Certificates on Exercise.

Any exercise of the Option pursuant to Section 3 shall be deemed to have been effected immediately prior to the close of business on the date on which the Option together with the Form of Subscription and the payment for the aggregate Purchase Price shall have been received by the Company.  At such time, the person or persons in whose name or names any certificate or certificates representing the Shares or Other Securities (as defined below) shall be issuable upon such exercise shall be deemed to have become the holder or holders of record of the Shares or Other Securities so purchased.  As soon as practicable after the exercise of any Option in full or in part, and in any event within Ten (10) Business Days thereafter, the Company at its expense (including the payment by it of any applicable issue taxes) will cause to be issued in the name of, and delivered to the purchasing Option Holder, a certificate or certificates representing the number of fully paid and nonassessable shares of Common Stock or Other Securities to which such Option Holder shall be entitled upon such exercise, plus in lieu of any fractional share to which such Option Holder would otherwise be entitled, cash in an amount determined pursuant to Section 6(e).  The term “Other Securities” refers to any stock (other than Common Stock), other securities or assets (including cash) of the Company or any other person (corporate or otherwise) which the Option Holder at any time shall be entitled to receive, or shall have received, upon the exercise of the Option, in lieu of or in addition to Common Stock, or which at any time shall be issuable or shall have been issued in exchange for or in replacement of Common Stock or Other Securities pursuant to Section 5 below or otherwise.  “Business Day” means a day other than (i) a Saturday, (ii) a Sunday or (iii) a day on which commercial banks in the City of Houston, Texas are authorized or required to be closed for business.

	
  

	
5.

	
Adjustment of Purchase Price and Number of Shares Purchasable.

The Purchase Price and the number of Shares are subject to adjustment from time to time as set forth in this Section 5.

	
  

	
(a)

	
In case the Company shall at any time after the date of this Option Agreement (i) declare a dividend on the Common Stock in shares of its capital stock, (ii) subdivide the outstanding Common Stock, (iii) combine the outstanding Common Stock into a smaller number of shares of Common Stock, or (iv) issue any shares of its capital stock by reclassification of the Common Stock (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing corporation), then in each case the Purchase Price, and the number and kind of Shares receivable upon exercise, in effect at the time of the record date for such dividend or of the effective date of such subdivision, combination, or reclassification shall be proportionately adjusted so that the holder of any Option exercised after such time shall be entitled to receive the aggregate number and kind of Shares which, if such Option had been exercised immediately prior to such record date, he would have owned upon such exercise and been entitled to receive by virtue of such dividend, subdivision, combination, or reclassification.  Such adjustment shall be made successively whenever any event listed above shall occur.

	
  

	
(b)

	
No adjustment in the Purchase Price shall be required if such adjustment is less than US $0.01; provided, however, that any adjustments which by reason of this subsection (b) are not required to be made shall be carried forward and taken into account in any subsequent adjustment.  All calculations under this Section 5 shall be made to the nearest cent or to the nearest one-thousandth of a share, as the case may be.

	
  

	
(c)

	
Upon each adjustment of the Purchase Price as a result of the calculations made in subsection (a) of this Section 5, the Option outstanding prior to the making of the adjustment in the Purchase Price shall thereafter evidence the right to purchase, at the adjusted Purchase Price, that number of Shares (calculated to the nearest thousandth) obtained by (i) multiplying the number of Shares purchasable upon exercise of the Option immediately prior to adjustment of the number of Shares by the Purchase Price in effect prior to adjustment of the Purchase Price and (ii) dividing the product so obtained by the Purchase Price in effect immediately after such adjustment of the Purchase Price.

 

 

  

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6.

	
Further Covenants of the Company.

	
  

	
(a)

	
Dilution or Impairments.  The Company will not, by amendment of its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger or dissolution, avoid or seek to avoid the observance or performance of any of the terms of the Option or of this Option Agreement, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Option Holder against dilution or other impairment.  Without limiting the generality of the foregoing, the Company:

	
  

	
(i)

	
shall at all times reserve and keep available, solely for issuance and delivery upon the exercise of the Option, all shares of Common Stock (or Other Securities) from time to time issuable upon the exercise of the Option and shall take all necessary actions to ensure that the par value per share, if any, of the Common Stock (or Other Securities) is at all times equal to or less than the then effective Purchase Price per share; and

	
  

	
(ii)

	
will take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock or Other Securities upon the exercise of the Option from time to time outstanding.

	
  

	
(b)

	
Title to Stock.  All Shares delivered upon the exercise of the Option shall be validly issued, fully paid and nonassessable; each Option Holder shall, upon such delivery, receive good and marketable title to the Shares, free and clear of all voting and other trust arrangements, liens, encumbrances, equities and claims whatsoever; and the Company shall have paid all taxes, if any, in respect of the issuance thereof.

	
  

	
(c)

	
Replacement of Option.  Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of any Option and, in the case of any such loss, theft or destruction, upon delivery of an indemnity agreement reasonably satisfactory in form and amount to the Company or, in the case of any such mutilation, upon surrender and cancellation of such Option, the Company, at the expense of the Option Holder, will execute and deliver, in lieu thereof, a new Option of like tenor.

	
  

	
(d)

	
Fractional Shares.  No fractional Shares are to be issued upon the exercise of any Option, but the Company shall round any fraction of a share to the nearest whole Share.

	
  

	
7.

	
Holders of Shares.

	
  

	
(a)

	
The Option is issued upon the following terms, to all of which each Option Holder by the taking thereof consents and agrees: any person who shall become a holder or owner of Shares shall take such shares subject to the provisions of Section 2(b) hereof; each prior taker or owner waives and renounces all of his equities or rights in such Option in favor of each such permitted bona fide purchaser, and each such permitted bona fide purchaser shall acquire absolute title thereto and to all rights presented thereby.

 

 

	
  

	
(b)

	
The Option Holder shall notify the Company if such Option Holder sells or otherwise transfers any shares of Common Stock of the Company acquired upon exercise of the Option within two (2) years of the Grant Date of such Option or within one (1) year of the date such shares were acquired upon exercise of this Option.

	
  

	
8.

	
Miscellaneous.

All notices, certificates and other communications from or at the request of the Company to any Option Holder shall be mailed by first class, registered or certified mail, postage prepaid, to such address as may have been furnished to the Company in writing by such Option Holder, or, until an address is so furnished, to the address of the last holder of such Option who has so furnished an address to the Company, except as otherwise provided herein.  This Option Agreement and any of the terms hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought.  This Option Agreement shall be construed and enforced in accordance with and governed by the laws of the State of Texas.  The headings in this Option Agreement are for purposes of reference only and shall not limit or otherwise affect any of the terms hereof.  This Option Agreement, together with the forms of instruments annexed hereto as schedules, constitutes the full and complete agreement of the parties hereto with respect to the subject matter hereof.  For purposes of this Option Agreement, a faxed signature shall constitute an original signature.  A photocopy or faxed copy of this Agreement shall be effective as an original for all purposes.

  

5

  

IN WITNESS WHEREOF, the Company has caused this Option Agreement to be executed on this _____th day of ___________, to be effective as of _____________, the Grant Date, by its proper corporate officers, thereunto duly authorized.

 

 

	 	 	

VERTEX ENERGY, INC.

By________________________________________

    Benjamin P. Cowart, Chief Executive Officer

	 	 	 	 
	 	 	 	 

 

 

 

HOLDER:___________________

____________________________

____________________________               

 

 

 

 

 

 

 

 

 

 

 

  

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SCHEDULE 1a

 OPTION

THIS OPTION AND THE SECURITIES TO BE ISSUED UPON ITS EXERCISE HAVE NOT BEEN REGISTERED UNDER: (A) THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), IN RELIANCE UPON THE EXEMPTIONS FROM REGISTRATION PROVIDED IN SECTIONS 3 AND 4 OF SUCH ACT AND REGULATION S PROMULGATED THEREUNDER; OR (B) ANY STATE SECURITIES LAWS IN RELIANCE UPON APPLICABLE EXEMPTIONS THEREUNDER.  THIS OPTION MAY NOT BE EXERCISED BY OR ON BEHALF OF ANY U.S. PERSON UNLESS REGISTERED UNDER THE ACT OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.  THIS OPTION MUST BE ACQUIRED FOR INVESTMENT ONLY FOR THE ACCOUNT OF THE INVESTOR, AND NEITHER THE OPTION NOR THE UNDERLYING STOCK MAY BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE PROVISIONS OF REGULATION S AND OTHER LAWS OR PURSUANT TO REGISTRATION UNDER THE ACT OR AN AVAILABLE EXEMPTION FROM REGISTRATION.  HEDGING TRANSACTIONS INVOLVING THIS OPTION OR THE SECURITIES TO BE ISSUED UPON ITS EXERCISE MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT.

 

 

To Purchase ______  Shares

of Common Stock

VERTEX ENERGY, INC.

This certifies that, for value received, the hereafter named registered owner is entitled, subject to the terms and conditions of this Option, until the expiration date, to purchase the number of shares (the “Shares”) set forth above of the common stock (“Common Stock”), of VERTEX ENERGY, INC. (the “Company”) from the Company at the purchase price per share hereafter set forth below, on delivery of this Option to the Company with the exercise form duly executed and payment of the purchase price (in cash, via certified or bank cashier’s check payable to the order of the Company, or in shares of the Company’s common stock in the event of a cashless exercise) for each Share purchased.  This Option is subject to the terms of the Option Agreement between the parties thereto dated as of _______________, the terms of which are hereby incorporated herein. Reference is hereby made to such Option Agreement for a further statement of the rights of the holder of this Option.

	
Registered Owner: _____________

	
Effective Date: _______________

Purchase Price

  Per Share:     US $______

Vesting Date: Subject to Section 3(a) of the Option Agreement, ____________, 5:00 p.m. Central Standard Time

	
Expiration Date:

	
Subject to Section 3(b) of the Option Agreement, 5:00 p.m. Central Standard Time.

WITNESS the signature of the Company’s authorized officer:

 

 

	 	 	

VERTEX ENERGY, INC.

By________________________________________

    Benjamin P. Cowart, Chief Executive Officer

	 	 	 	 
	 	 	 	 

 

 

 

 

 

 

  

  

  

SCHEDULE 1b

OPTION

THIS OPTION AND THE SECURITIES TO BE ISSUED UPON ITS EXERCISE HAVE NOT BEEN REGISTERED UNDER: (A) THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), IN RELIANCE UPON THE EXEMPTIONS FROM REGISTRATION PROVIDED IN SECTIONS 3 AND 4 OF SUCH ACT AND REGULATION S PROMULGATED THEREUNDER; OR (B) ANY STATE SECURITIES LAWS IN RELIANCE UPON APPLICABLE EXEMPTIONS THEREUNDER.  THIS OPTION MAY NOT BE EXERCISED BY OR ON BEHALF OF ANY U.S. PERSON UNLESS REGISTERED UNDER THE ACT OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.  THIS OPTION MUST BE ACQUIRED FOR INVESTMENT ONLY FOR THE ACCOUNT OF THE INVESTOR, AND NEITHER THE OPTION NOR THE UNDERLYING STOCK MAY BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE PROVISIONS OF REGULATION S AND OTHER LAWS OR PURSUANT TO REGISTRATION UNDER THE ACT OR AN AVAILABLE EXEMPTION FROM REGISTRATION.  HEDGING TRANSACTIONS INVOLVING THIS OPTION OR THE SECURITIES TO BE ISSUED UPON ITS EXERCISE MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT.

 

 

To Purchase ______  Shares

of Common Stock

VERTEX ENERGY, INC.

This certifies that, for value received, the hereafter named registered owner is entitled, subject to the terms and conditions of this Option, until the expiration date, to purchase the number of shares (the “Shares”) set forth above of the common stock (“Common Stock”), of VERTEX ENERGY, INC. (the “Company”) from the Company at the purchase price per share hereafter set forth below, on delivery of this Option to the Company with the exercise form duly executed and payment of the purchase price (in cash, via certified or bank cashier’s check payable to the order of the Company, or in shares of the Company’s common stock in the event of a cashless exercise) for each Share purchased.  This Option is subject to the terms of the Option Agreement between the parties thereto dated as of ______________, the terms of which are hereby incorporated herein. Reference is hereby made to such Option Agreement for a further statement of the rights of the holder of this Option.

	
Registered Owner: _____________

	
Effective Date: ________________

Purchase Price

  Per Share:    US $______

Vesting Date: Subject to Section 3(a) of the Option Agreement, ______________, 5:00 p.m. Central Standard Time

	
Expiration Date:

	
Subject to Section 3(b) of the Option Agreement, 5:00 p.m. Central Standard Time.

WITNESS the signature of the Company’s authorized officer:

 

	 	 	

VERTEX ENERGY, INC.

By________________________________________

    Benjamin P. Cowart, Chief Executive Officer

	 	 	 	 
	 	 	 	 

 

 

 

 

 

 

  

  

  

SCHEDULE 1c

OPTION

THIS OPTION AND THE SECURITIES TO BE ISSUED UPON ITS EXERCISE HAVE NOT BEEN REGISTERED UNDER: (A) THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), IN RELIANCE UPON THE EXEMPTIONS FROM REGISTRATION PROVIDED IN SECTIONS 3 AND 4 OF SUCH ACT AND REGULATION S PROMULGATED THEREUNDER; OR (B) ANY STATE SECURITIES LAWS IN RELIANCE UPON APPLICABLE EXEMPTIONS THEREUNDER.  THIS OPTION MAY NOT BE EXERCISED BY OR ON BEHALF OF ANY U.S. PERSON UNLESS REGISTERED UNDER THE ACT OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.  THIS OPTION MUST BE ACQUIRED FOR INVESTMENT ONLY FOR THE ACCOUNT OF THE INVESTOR, AND NEITHER THE OPTION NOR THE UNDERLYING STOCK MAY BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE PROVISIONS OF REGULATION S AND OTHER LAWS OR PURSUANT TO REGISTRATION UNDER THE ACT OR AN AVAILABLE EXEMPTION FROM REGISTRATION.  HEDGING TRANSACTIONS INVOLVING THIS OPTION OR THE SECURITIES TO BE ISSUED UPON ITS EXERCISE MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT.

 

 

To Purchase ______  Shares

of Common Stock

VERTEX ENERGY, INC.

This certifies that, for value received, the hereafter named registered owner is entitled, subject to the terms and conditions of this Option, until the expiration date, to purchase the number of shares (the “Shares”) set forth above of the common stock (“Common Stock”), of VERTEX ENERGY, INC. (the “Company”) from the Company at the purchase price per share hereafter set forth below, on delivery of this Option to the Company with the exercise form duly executed and payment of the purchase price (in cash, via certified or bank cashier’s check payable to the order of the Company, or in shares of the Company’s common stock in the event of a cashless exercise) for each Share purchased.  This Option is subject to the terms of the Option Agreement between the parties thereto dated as of ____________________, the terms of which are hereby incorporated herein. Reference is hereby made to such Option Agreement for a further statement of the rights of the holder of this Option.

	
Registered Owner: _____________

	
Effective Date: _________________

Purchase Price

  Per Share: US $______

Vesting Date: Subject to Section 3(a) of the Option Agreement, _____________, 5:00 p.m. Central Standard Time

	
Expiration Date:

	
Subject to Section 3(b) of the Option Agreement, 5:00 p.m. Central Standard Time.

WITNESS the signature of the Company’s authorized officer:

 

	 	 	

VERTEX ENERGY, INC.

By________________________________________

    Benjamin P. Cowart, Chief Executive Officer

	 	 	 	 
	 	 	 	 

 

 

 

 

 

 

 

 

  

  

  

SCHEDULE 1d

OPTION

THIS OPTION AND THE SECURITIES TO BE ISSUED UPON ITS EXERCISE HAVE NOT BEEN REGISTERED UNDER: (A) THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), IN RELIANCE UPON THE EXEMPTIONS FROM REGISTRATION PROVIDED IN SECTIONS 3 AND 4 OF SUCH ACT AND REGULATION S PROMULGATED THEREUNDER; OR (B) ANY STATE SECURITIES LAWS IN RELIANCE UPON APPLICABLE EXEMPTIONS THEREUNDER.  THIS OPTION MAY NOT BE EXERCISED BY OR ON BEHALF OF ANY U.S. PERSON UNLESS REGISTERED UNDER THE ACT OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.  THIS OPTION MUST BE ACQUIRED FOR INVESTMENT ONLY FOR THE ACCOUNT OF THE INVESTOR, AND NEITHER THE OPTION NOR THE UNDERLYING STOCK MAY BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE PROVISIONS OF REGULATION S AND OTHER LAWS OR PURSUANT TO REGISTRATION UNDER THE ACT OR AN AVAILABLE EXEMPTION FROM REGISTRATION.  HEDGING TRANSACTIONS INVOLVING THIS OPTION OR THE SECURITIES TO BE ISSUED UPON ITS EXERCISE MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT.

 

 

To Purchase ______  Shares

of Common Stock

VERTEX ENERGY, INC.

This certifies that, for value received, the hereafter named registered owner is entitled, subject to the terms and conditions of this Option, until the expiration date, to purchase the number of shares (the “Shares”) set forth above of the common stock (“Common Stock”), of VERTEX ENERGY, INC. (the “Company”) from the Company at the purchase price per share hereafter set forth below, on delivery of this Option to the Company with the exercise form duly executed and payment of the purchase price (in cash, via certified or bank cashier’s check payable to the order of the Company, or in shares of the Company’s common stock in the event of a cashless exercise)for each Share purchased.  This Option is subject to the terms of the Option Agreement between the parties thereto dated as of _______________, the terms of which are hereby incorporated herein. Reference is hereby made to such Option Agreement for a further statement of the rights of the holder of this Option.

	
Registered Owner: _____________

	
Effective Date: _______________

 

Purchase Price

  Per Share:  US $______

Vesting Date: Subject to Section 3(a) of the Option Agreement, _______________, 5:00 p.m. Central Standard Time

	
Expiration Date:

	
Subject to Section 3(b) of the Option Agreement, 5:00 p.m. Central Standard Time.

WITNESS the signature of the Company’s authorized officer:

 

	 	 	

VERTEX ENERGY, INC.

By________________________________________

    Benjamin P. Cowart, Chief Executive Officer

	 	 	 	 
	 	 	 	 

 

 

 

 

 

 

  

  

  

	
  

	
 SCHEDULE 2

 

FORM OF SUBSCRIPTION

(To be signed only upon exercise of Option)

To VERTEX ENERGY, INC.:

The undersigned, the holder of the enclosed Option, hereby irrevocably elects to exercise the purchase right represented by such Option for, and to purchase thereunder,_______* shares of Common Stock of VERTEX ENERGY, INC. and herewith makes payment of US $_______________(or elects to pay for the exercise in shares of common stock pursuant to Section 3(e)(ii) of the Stock Option Agreement as evidenced by the calculation below by checking this box o), and requests that the certificate or certificates for such shares be issued in the name of and delivered to the undersigned.

Dated:______________

____________________________________________

(Signature must conform in all respects to name of holder

 as specified on the face of  the enclosed Option)

____________________________________________

(Printed Name)

____________________________________________

(Address)

(*)           Insert here the number of shares called for on the face of the Option or, in the case of a partial exercise, the portion thereof as to which the Option is being exercised, in either case without making any adjustment for additional Common Stock or any other stock or other securities or property which, pursuant to the adjustment provisions of the Option Agreement pursuant to which the Option was granted, may be delivered upon exercise.

 

 

Calculation pursuant to Section 3(e)(ii) of the Stock Option Agreement

________________ = Total Shares Exercised

________________ = Purchase Price (as defined and adjusted in the Stock Option Agreement)

 

	
  

	
________________ =   Fair Market Value - the average closing price of the Common Stock (if actual sales price information on any trading day is not available, the closing bid price shall be used) for the five trading days prior to the date of exercise of this Warrant (the “Average Closing Bid Price”), as reported by the National Association of Securities Dealers Automated Quotation System (“NASDAQ”), or if the Common Stock is not traded on NASDAQ, the Average Closing Bid Price in the over-the-counter market; provided, however, that if the Common Stock is listed on a stock exchange, the Fair Market Value shall be the Average Closing Bid Price on such exchange; and, provided further, that if the Common Stock is not quoted or listed by any organization, the fair value of the Common Stock, as determined by the Board of Directors of the Company, whose determination shall be conclusive, shall be used).  In no event shall the Fair Market Value of any share of Common Stock be less than its par value.

                                                                        Total Shares Exercised x Purchase Price

_____________ =   Shares to be Issued   =     Total Shares Exercised            --------------------------------------------------

           Fair Market Valueex10-30.htm

Exhibit 10.30

 

WAIVER AND SECOND AMENDMENT TO CREDIT AGREEMENT

 

THIS WAIVER AND SECOND AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is entered into as of January 18, 2013 (the “Effective Date”), between VERTEX ENERGY, INC., a Nevada corporation (“Borrower”), and BANK OF AMERICA, N.A. (“Lender”). Capitalized terms used but not defined in this Amendment have the meanings given them in the Credit Agreement (defined below).

 

RECITALS

 

A.           Borrower and Lender are party to that certain Credit Agreement dated as of August 31, 2012 (as amended by the First Amendment to Credit Agreement dated as of October 10, 2012, and as further amended, restated, or supplemented from time to time, the “Credit Agreement”).

 

B.          Certain Defaults have occurred as a result of Borrower’s failure to comply with the minimum Tangible Net Worth covenant for the fiscal quarters ending September 30, 2012, and December 31, 2012, as set forth in Section 10.3 of the Credit Agreement (collectively, the “Existing Defaults”).

C.            Borrower and Lender are party to that certain Post-Closing Letter Agreement dated as of August 31, 2012 (the “Post-Closing Letter Agreement”).

 

D.          Borrower has requested that Lender waive the Existing Defaults, extend certain deadlines in the Post-Closing Letter Agreement, and amend the Credit Agreement in order to, among other things, remove the minimum Tangible Net Worth covenant and modify the definition of “LIBOR” to include a daily floating LIBOR rate, and Lender is willing to do so subject to the terms and conditions of this Amendment.

 

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are acknowledged, the undersigned hereby agree as follows:

1.           Amendments to Credit Agreement.

 

(a)        Section  1.1  (Definitions) of  the  Credit  Agreement  is  amended  to  delete  the defined terms “BBA LIBOR”, “Business Day”, “LIBOR”, and “Loan Request” in their entirety and to replace them with the following:

“BBA LIBOR means the British Bankers Association LIBOR Rate (or any successor thereto approved by Lender if the British Bankers Association is no longer making a LIBOR rate available).

Business Day means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state where Lender’s Office is located.

LIBOR means a fluctuating rate of interest equal to the rate per annum (rounded upwards to the nearest 1/100 of one percent) equal to BBA LIBOR, as published by Reuters (or other commercially available source providing quotations of BBA LIBOR as selected by Lender from time to time) as determined for each banking day at approximately 11:00 a.m., London time, two Business Days prior to the date in question, for U.S. deposits (for delivery on the first day of such interest period) with a one month term, as adjusted from time to time in Lender’s sole discretion for reserve requirements, deposit insurance assessment rates and other regulatory costs.  If such rate is not available at such time for any reason, then the rate for that interest period will be determined by such alternate method as reasonably selected by Lender.

 

  

  

  

Loan Request means a request substantially in the form of Exhibit B, or in such other form as may be acceptable to Lender.”

(b)      Section  1.1  (Definitions) of  the  Credit  Agreement  is  amended  to  delete  the defined terms “Continue, Continuation, and Continued”, “Convert, Conversion, and Converted”, “Conversion/Continuation Notice”, “Funding Loss”, “Interest Period”, “LIBOR Reserve Percentage”, and “Type” in their entirety.

 

(c)      Section 2.3(a) (Loan Procedure) of the Credit Agreement is amended to delete the first sentence in its entirety and to replace it with the following:

“(a)      Subject to compliance with Section 5, Borrower may request a Loan under the Revolving Credit Facility or the Term Loan by submitting a Loan Request to Lender.  A Loan Request is irrevocable and binding on Borrower.  Each Loan Request must be received by Lender no later than 11:00 a.m. on the proposed Loan Date.”

 

(d)      Section 2.4(g) (Prepayments) of the Credit Agreement is deleted in its entirety.

 

(e)      Section 3.2(a) (Revolving Credit Facility) of the Credit Agreement is deleted in its entirety and replaced with the following:

 

“(a)      Accrued interest on the Revolving Principal Amount is due and payable monthly in arrears on the last day of each month and on the Revolving Credit Termination Date.”

(f)       Section 3.3(a) (Term Loan) of the Credit Agreement is deleted in its entirety and replaced with the following:

 

“(a)      Accrued  interest  on  the  Term  Principal  Amount  is  due  and  payable monthly in arrears on the last day of each month and on the Term Loan Maturity Date.”

 

(g)       Section 3.10 (Interest Periods, Conversions, and Continuations) of the Credit Agreement is deleted in its entirety and replaced with the following:

“3.10                     (Intentionally Omitted).”

 

(h)       Section 3.11 (Limitations on Types of Loans) of the Credit Agreement is deleted in its entirety and replaced with the following:

“3.11                     (Intentionally Omitted).”

 

(i)       Section 3.12 (Increased Cost and Reduced Return) of the Credit Agreement is deleted in its entirety and replaced with the following:

“3.12                     (Intentionally Omitted).”

 

  

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(j)         Section 3.13 (Illegality) of the Credit Agreement is deleted in its entirety and replaced with the following:

 

“3.13                    (Intentionally Omitted).”

 

(k)        Section 3.14 (Treatment of Affected Loans) of the Credit Agreement is deleted in its entirety and replaced with the following:

“3.14                    (Intentionally Omitted).”

 

(l)         Section 3.15 (Funding Loss) of the Credit Agreement is deleted in its entirety and replaced with the following:

 

“3.15                    (Intentionally Omitted).”

 

(m)         Section 10.3 (Minimum Tangible Net Worth) of the Credit Agreement is deleted in its entirety and replaced with the following:

“10.3                    (Intentionally Omitted).”

 

2.          Waiver  of  Existing  Defaults.    Subject  to  the  terms  and  conditions  set  out  in  this Amendment, Lender hereby (a) waives the Existing Defaults, and (b) agrees not to exercise any of the rights or remedies available to Lender under the Loan Documents solely as a result of the noncompliance described in the immediately preceding clause (a).  Except as set out in the preceding sentence, the foregoing waiver does not constitute a waiver of any present or future violation of, or noncompliance with, any provision of any Loan Document or a waiver of Lender’s right to insist upon strict compliance with each term, covenant, condition, and provision of the Loan Documents.

 

3.          Post-Closing.    Effective as of December 31, 2012, Borrower and Lender covenant and agree that the deadline specified in Paragraph A.2. of the Post-Closing Letter Agreement with respect to the delivery of an extension to the CMT Lease is hereby extended to March 1, 2013.

 

4.          Conditions.  This Amendment shall be effective as of the Effective Date once each of the following has been delivered to Lender, in each case, in Proper Form:

 

(a)           this Amendment executed by Borrower and Lender;

 

(b)           Guarantors’ Consent and Agreement executed by Guarantors; and

 

(c)           such other documents as Lender may reasonably request.

 

5.          Representations and Warranties.  Borrower represents and warrants to Lender that (a) it possesses all requisite power and authority to execute, deliver and comply with the terms of this Amendment, (b) this Amendment has been duly authorized and approved by all requisite corporate action on the part of Borrower, (c) no other consent of any Person (other than Lender) is required for this Amendment to be effective, (d) the execution and delivery of this Amendment does not violate its organizational documents, (e) the representations and warranties in each Loan Document to which it is a party are true and correct in all material respects on and as of the date of this Amendment as though made on the date of this Amendment (except to the extent that such representations and warranties speak to a specific date), (f) it is in full compliance with all covenants and agreements contained in each Loan Document to which it is a party, and (g) no Default or Potential Default (other than the Existing Defaults) has occurred and is continuing.   The representations and warranties made in this Amendment shall survive the execution and delivery of this Amendment.  No investigation by Lender is required for Lender to rely on the representations and warranties in this Amendment.

  

3

  

 

6.          Scope of Amendment; Reaffirmation; RELEASE.  All references to the Credit Agreement shall refer to the Credit Agreement as amended by this Amendment. Except as affected by this Amendment, the Loan Documents are unchanged and continue in full force and effect. However, in the event of any inconsistency between the terms of the Credit Agreement (as amended by this Amendment) and any other Loan Document, the terms of the Credit Agreement shall control and such other document shall be deemed to be amended to conform to the terms of the Credit Agreement. Borrower hereby reaffirms its obligations under the Loan Documents to which it is a party and agrees that all Loan Documents to which it is a party remain in full force and effect and continue to be legal, valid, and binding obligations enforceable in accordance with their terms (as the same are affected by this Amendment). AS A MATERIAL PART OF THE CONSIDERATION FOR LENDER ENTERING INTO THIS AMENDMENT, BORROWER HEREBY RELEASES AND FOREVER DISCHARGES LENDER (AND ITS SUCCESSORS, ASSIGNS, AFFILIATES, OFFICERS, MANAGERS, DIRECTORS, EMPLOYEES, AND AGENTS) FROM ANY AND ALL CLAIMS, DEMANDS, DAMAGES, CAUSES OF ACTION, OR LIABILITIES FOR ACTIONS OR OMISSIONS (WHETHER ARISING AT LAW OR IN EQUITY, AND WHETHER DIRECT OR INDIRECT) IN CONNECTION WITH THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS PRIOR TO THE DATE OF THIS AMENDMENT, WHETHER OR NOT HERETOFORE ASSERTED, AND WHICH BORROWER OR ANY COMPANY MAY HAVE OR CLAIM TO HAVE AGAINST LENDER.

 

7.          Miscellaneous.

 

(a)        No Waiver of Defaults.  This Amendment does not constitute (i) a waiver of, or a consent to, (A) any provision of the Credit Agreement or any other Loan Document not expressly referred to in this Amendment, or (B) any present or future violation of, or default under, any provision  of  the  Loan  Documents,  or  (ii) a  waiver  of  Lender’s  right  to  insist  upon  future compliance with each term, covenant, condition and provision of the Loan Documents.

 

(b)        Form.   Each agreement, document, instrument or other writing to be furnished Lender under any provision of this Amendment must be in form and substance satisfactory to Lender and its counsel.

 

(c)        Headings. The headings and captions used in this Amendment are for convenience only and will not be deemed to limit, amplify or modify the terms of this Amendment, the Credit Agreement, or the other Loan Documents.

 

(d)       Costs, Expenses and Attorneys’ Fees. Borrower agrees to pay or reimburse Lender on demand for all its reasonable out-of-pocket costs and expenses incurred in connection with the preparation, negotiation, and execution of this Amendment, including, without limitation, the reasonable fees and disbursements of Lender’s counsel.

 

(e)        Successors and Assigns.  This Amendment shall be binding upon and inure to the benefit of each of the undersigned and their respective successors and permitted assigns.

 

(f)        Multiple Counterparts.  This Amendment may be executed in any number of counterparts with the same effect as if all signatories had signed the same document.  All counterparts must be construed together to constitute one and the same instrument.   This Amendment may be transmitted and signed by facsimile or portable document format (PDF). The effectiveness of any such documents and signatures shall, subject to applicable law, have the same force and effect as manually-signed originals and shall be binding on Borrower and Lender. Lender may also require that any such documents and signatures be confirmed by a manually- signed original; provided that the failure to request or deliver the same shall not limit the effectiveness of any facsimile or PDF document or signature.

 

  

4

  

(g)        Governing Law.  This Amendment and the other Loan Documents must be construed, and their performance enforced, under Texas law.

 

(h)        Arbitration.  Upon the demand of any party to this Amendment, any dispute shall be resolved by binding arbitration as provided for in Section 13.9 of the Credit Agreement.

 

(i)         Entirety.    The  Loan  Documents  (as  amended  hereby)  Represent  the  Final Agreement Between Borrower and Lender and May Not Be Contradicted by Evidence of Prior, Contemporaneous, or Subsequent Oral Agreements by the Parties.  There Are No Unwritten Oral Agreements among the Parties.

 

[Signatures are on the following pages.]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

5

  

The Amendment is executed as of the date set out in the preamble to this Amendment.

 

	  	
BORROWER:

	  	  
	  	
VERTEX ENERGY, INC., 

a Nevada corporation

	  	  
	  	  
	  	  
	  	
By: /s/ Chris Carlson

	  	
Chris Carlson

	  	
Chief Financial Officer and Secretary

	  	  

 

 

 

 

 

 

 

 

Signature Page to Second Amendment to Credit Agreement

  

6

  

	  	
LENDER:

	  	  
	  	
BANK OF AMERICA, N.A.

	  	  
	  	  
	  	  
	  	
By: /s/ Christopher King

	  	
Christopher King

	  	
Senior Vice President

	  	  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Signature Page to Waiver and Second Amendment to Credit Agreement

  

7

  

 

GUARANTORS’ CONSENT AND AGREEMENT 

 

TO

 

WAIVER AND SECOND AMENDMENT TO CREDIT AGREEMENT

 

As an inducement to Lender to execute, and in consideration of Lender’s execution of, this Amendment, each of the undersigned hereby consents to this Amendment and agrees that this Amendment shall in no way release, diminish, impair, reduce or otherwise adversely affect the obligations and liabilities of the undersigned under the Guaranty executed by the undersigned in connection with the Credit Agreement, or under any Loan Documents, agreements, documents or instruments executed by the undersigned to create liens, security interests or charges to secure any of the Obligation, all of which are in full force and effect. Each of the undersigned further represent and warrant to Lender that (a) the representations and warranties in each Loan Document to which the undersigned is a party are true and correct in all material respects on and as of the date of this Amendment as though made on the date of this Amendment (except to the extent that such representations and warranties speak to a specific date), (b) the undersigned is in full compliance with all covenants and agreements contained in each Loan Document to which it is a party, and (c) no Default or Potential Default (other than the Existing Defaults) has occurred and is continuing. Each Guarantor hereby releases Lender from any liability for actions or omissions in connection with the Loan Documents prior to the date of this Amendment. This Consent and Agreement shall be binding upon each of the undersigned, and its respective legal representatives and permitted assigns, and shall inure to the benefit of Lender, and its successors and assigns.

 

	  	
GUARANTORS:

	  	  
	  	  
	  	
VERTEX ACQUISITION SUB, LLC,

	  	
a Nevada limited liability company

	  	  
	  	  
	  	  
	  	
By: /s/ Chris Carlson

	  	
Chris Carlson

	  	
Chief Financial Officer and Secretary

	  	  
	  	  
	  	  
	  	
CEDAR MARINE TERMINALS, LP,

	  	
a Texas limited partnership

	  	  
	  	
By: Vertex II GP, LLC,

	  	
        a Nevada limited liability company, 

        its general partner

	 	 
	 	
By: /s/ Chris Carlson

	 	Chris Carlson
	 	
Chief Financial Officer and Secretary

	 	 
	 	 

 

 

 

 

Guarantors’ Consent to Waiver and Second Amendment to Credit Agreement

  

8

  

 

 

 

	 	CROSSROAD CARRIERS, L.P.,
	 	a Texas limited partnership
	 	 
	 	 
	 	By:  Vertex II GP, LLC,
	 	        a Nevada limited liability company,
	 	        its general partner
	 	 
	 	 
	 	
By: /s/ Chris Carlson

	 	Chris Carlson
	 	
Chief Financial Officer and Secretary

	 	 
	 	 
	 	
VERTEX RECOVERY, L.P.,

	 	a Texas limited partnership
	 	 
	 	 
	 	By:  Vertex II GP, LLC,
	 	        a Nevada limited liability company,
	 	        its general partner
	 	 
	 	
By: /s/ Chris Carlson

	 	Chris Carlson
	 	
Chief Financial Officer and Secretary

	 	 
	 	 
	 	 
	 	H & H OIL, L.P.,
	 	a Texas limited partnership
	 	 
	 	 
	 	By:  Vertex II GP, LLC,
	 	        a Nevada limited liability company,
	 	        its general partner
	 	 
	 	 
	 	
By: /s/ Chris Carlson

	 	Chris Carlson
	 	
Chief Financial Officer and Secretary

	 	 
	 	 
	 	 
	 	
VERTEX II GP, LLC,

	 	a Nevada limited liability company
	 	 
	 	 
	 	
By: /s/ Chris Carlson

	 	Chris Carlson
	 	
Chief Financial Officer and Secretary

	 	 
	 	 
	 	 
	 	 

Guarantors’ Consent to Waiver and Second Amendment to Credit Agreement

  

9

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