Document:

f8k032013ex10iii_magnegas.htm

Exhibit 10.3

 

LIMITED LICENSE AGREEMENT

 

THIS LIMITED LICENSE AGREEMENT dated as of March 20, 2013 (this “Agreement”), is entered into by and between MAGNEGAS CORPORATION, a Delaware corporation (“MAGNEGAS”) having its business headquarters in Tarpon Springs, Florida, and CLEAR SKY ENERGY, S.A., C.V., a company constituted under the laws of Mexico (“CSE”), having its business headquarters in Torreon, Coahuila Mexico (each, a “Party,” and collectively, the “Parties”).

 

RECITALS:

 

WHEREAS, MAGNEGAS is the owner of various trademarks, service marks, logos, and trade names, whether or not registered in the U.S. or elsewhere, relating to products (“Gasifiers”) manufactured using MAGNEGAS’s proprietary plasma Arc Flow technology (the “Marks”);

WHEREAS, CSE has agreed to purchase one or more Gasifiers from MAGNEGAS for the manufacture of gaseous fuels and other products, by-products or rendition of services (the “Products”) pursuant to the terms of that certain “Gasifier Purchase Agreement” of even date herewith (the “Purchase Agreement”); and

WHEREAS, CSE and MAGNEGAS are Parties to that certain “Distribution Agreement” of even date herewith (the “Distribution Agreement”) pursuant to which CSE has been granted certain rights as described therein to distribute Products.

WHEREAS, the Parties deem it desirable that, in performing its duties under the Distribution Agreement, CSE distribute, market and sell the Products under the Marks.

 

NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein contained, the Parties hereby agree as follows:

 

ARTICLE 1

DEFINITIONS

 

Any capitalized terms used but not defined herein shall have the meaning specified in the Purchase Agreement.  For purposes of this Agreement, the terms defined in this Article 1 shall have the respective meanings set forth below:

 

1.1           “Affiliates” shall mean any person that controls, is controlled by, or is under common control with any Party to this Agreement.   For purposes of this definition, “control” is defined as voting control of more than 50% of the voting interests of a Party, whether attained through stock or equity ownership or through a contractual arrangement.

 

1.2           “Effective Date” shall be the date of execution of this Agreement.

 

1.3           “Distribution Agreement” shall have the meaning ascribed to that term in the Recitals to this Agreement.

 

  

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1.4           “Licensed Territory” shall mean any territory under license for distribution of Products pursuant to the Distribution Agreement, whether on an exclusive or non-exclusive basis.

 

1.5           “Marks” shall have the meaning ascribed to that term in the Recitals to this Agreement and shall specifically cover the Marks identified in Exhibit A.

 

1.6           “Product” shall mean the gaseous fuels manufactured by a Gasifier and any by-product or other output from a Gasifier.

 

1.7           “Gasifier” shall have the meaning ascribed to that term in the Recitals to this Agreement.

 

1.8           “Sub-agents” shall have the meaning ascribed to that term in Subsection 2.1.2.

 

ARTICLE 2

GRANT OF LICENSES

 

2.1           License. As of the Effective Date of this Agreement, MAGNEGAS hereby grants to CSE the following right and licenses, which shall be exclusive to the extent that the distribution rights granted in the Distribution Agreement are exclusive, and non-exclusive to the extent that such distribution rights are non-exclusive:

 

2.1.1.  the right and license to identify itself as an independent distributor of Products in the Territory pursuant  to the terms of the Distribution Agreement;

 

2.1.2   the right and license to  use MAGNEGAS’ Marks  for (a) display purposes, advertising and communications in written and non-written format to promote the Products and use of the Products in connection with the solicitation of orders for Products in the Licensed Territory, and (b) such other purposes as are reasonably necessary for CSE to exercise its rights and perform its obligations under the Distribution  Agreement.  CSE may exercise these rights through its sub-agents and other persons selected to assist it in marketing and selling Products, or in otherwise performing any of CSE's obligations under the Distribution Agreement (the “Sub-agents”).

 

2.2           Sublicense Rights.  CSE may grant sublicenses to its Sub-agents to use the Marks solely in connection with the sale, marketing and distribution of the Products.

 

2.3           Restrictions on Usage.  CSE shall not use or display any of MAGNEGAS’ Marks or names confusingly similar thereto as part of its corporate business name or in any manner other than as authorized hereunder.  All uses of MAGNEGAS’ Marks by CSE hereunder shall be in a manner consistent with reasonable usage guidelines that are communicated to CSE in writing.  MagneGas’s current usage guidelines are attached hereto and are incorporated by reference herein.

 

2.4           Non-Assert Provision.  During the term of this Agreement and for so long as CSE is not in default with respect to any obligation due to MAGNEGAS hereunder or under the Distribution Agreement, MAGNEGAS will not assert any right to Marks to prevent CSE from importing, developing, making, having made, using, offering for sale, commercialization, marketing and/or selling any Gasifier or Product in the Licensed Territory.

  

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ARTICLE 3

WARRANTIES AND INDEMNITY

 

3.1           Corporate Existence and Power.  MAGNEGAS (a) is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware; (b) has the requisite power and authority and the legal right to own and operate its property and assets, to lease the property and assets it operates under lease, and to carry on its business as it is now being conducted; and (c) is in material compliance with all requirements of applicable law, except to the extent that any noncompliance would not have a material adverse effect on the properties, business, financial or other condition of it and would not materially adversely affect its ability to perform its obligations under this Agreement.

 

3.2           Authorization and Enforcement of Obligations.  MAGNEGAS (a) has the requisite power and authority and the legal right to enter into this Agreement and to perform its obligations hereunder; and (b) has taken all necessary corporate action on its part to authorize the execution and delivery of this Agreement and the performance of its obligations hereunder.  This Agreement has been duly executed and delivered on behalf of MAGNEGAS, and constitutes a legal, valid, binding obligation, enforceable against MAGNEGAS in accordance with its terms, except to the extent that such enforcement may be limited by bankruptcy, insolvency, moratorium or other laws affecting creditors rights.

 

3.3           Title. MAGNEGAS owns all rights, title and interests in and to the Marks set forth on Exhibit A in the United States, and no third  party has any rights to the Marks in the United States.  MAGNEGAS claims proprietary rights to the Marks in the Licensed Territory but has not yet registered such Marks in the Territory but covenants to do so in the near future and to maintain such registrations in good standing during the term of this Agreement once those registrations are effective.  MagneGas claims common law rights to the Marks identified on Exhibit A by virtue of its use of such Marks, whether or not registered.    Exhibit A reflects which Marks are registered in the United States.  MAGNEGAS is aware of no basis for a claim of superior right in the Marks, or any of them, by any other party.

 

3.4           Noncontravention. There are no existing agreements, commitments, proposals, offers, or rights with, to, or in any person to acquire any of the rights under the Marks that would prevent, alter, or hinder the performance of MAGNEGAS’s obligations hereunder or the exercise of CSE’s right hereunder.

 

3.5           Exclusions. Notwithstanding any representation, warranty, or agreement to the contrary, in this Agreement or otherwise, MAGNEGAS expressly excludes any representations, conditions, and warranties that MAGNEGAS has any obligation to bring or prosecute actions or suits gainst third parties for infringement of the Marks.

  

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ARTICLE 4

ROYALTIES

 

. No royalties shall be due to MAGNEGAS under this Agreement.

ARTICLE 5

ENFORCEMENT

5.1           Maintenance of the Marks.  MAGNEGAS shall undertake all commercially reasonable actions necessary for protecting the Marks, including maintaining all registrations in the Licensed Territory. 

 

5.2           Improvements.   CSE shall not own nor shall CSE have any rights to any variations on the Marks which it may develop with the consent of MAGNEGAS in the course of this Agreement; provided, however, that CSE shall be granted a license, without additional consideration, to any such additional Marks that may be developed for the Licensed Territory, and the CSE shall not develop, use, or register any variations to the Marks without the prior written consent of MAGNEGAS.

 

ARTICLE 6

TERMINATION

6.1.           Normal Termination. Unless terminated earlier as hereinafter provided, and subject to the provisions of paragraph 6.2 of this Article, this Agreement shall terminate concurrently with and upon any termination of the Distribution Agreement.

6.2.           Surviving Obligations. The termination of this Agreement shall not relieve CSE of any obligation hereunder to keep records nor shall such termination relieve CSE of:

	
  

	
(1)

	
any liability hereunder for damages to CSE or MAGNEGAS resulting from the unauthorized disclosure or use of any Confidential Information by the other party, or other party or person affiliated therewith; or

	
  

	
(2)

	
The termination of this Agreement shall not terminate MAGNEGAS’s rights under Article 3.

 

  

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6.3           Termination by CSE.  CSE may terminate this Agreement at any time by giving MAGNEGAS at least sixty (60) days’ advance written notice.  This Agreement may not be terminated if CSE maintains any distribution rights (other than limited distribution rights to dispose of inventory on hand following the termination of the Distribution Agreement) unless the parties have otherwise agreed in writing that the Products are to be marketed or sold under a name other than the name “MagneGas.”

6.4.           Termination by MAGNEGAS.  MAGNEGAS may terminate this Agreement, in addition to the provisions of  Section 1, upon thirty (30) days’ written notice to CSE as to a material breach by CSE of any material provision of this Agreement.  However, if such breach is corrected within the sixty (60) day period, this Agreement shall continue in full force and effect.

 

ARTICLE 7

ASSIGNABILITY

Except as expressly permitted hereunder, neither Party may, assign, delegate, or otherwise transfer this Agreement, or any of its rights or obligations hereunder without the prior written consent of the other Party, and any such assignment, delegation, or transfer shall be null and void. Notwithstanding the foregoing, each Party may, without consent, assign or transfer this Agreement in its entirety to any Affiliate, or entity into or with which such Party merges or consolidates, or to whom the Party transfers all or substantially all of its business, equity interests  or assets to which this Agreement relates; provided, however, that this sentence shall not apply to assignments or transfers of this Agreement by or to the following competitors of MagneGas or CSE: Air Gas, Praxair, or Air Liquide. Subject to the foregoing, all of the terms and conditions of this Agreement shall be binding upon and shall inure to the benefit of the Parties and their respective successors and assigns.

ARTICLE 8

APPLICABLE LAW

This Agreement is acknowledged to have been made in and shall be construed in accordance with the laws of the State of Florida without regard to the principles thereof relating to the conflict of laws.

ARTICLE 9

FORCE MAJEURE

Neither Party shall be responsible to the other for delay or failure in performance of any of the obligations imposed by this Agreement, provided such delay or failure shall be occasioned by a cause beyond the control of and without the fault or negligence of such Party,  including fire, flood, explosion, lightning, windstorm, earthquake, subsidence of soil, failure of machinery or equipment or supply of materials, discontinuity in the supply of power, court order or governmental interference, civil commotion, riot, war, terrorism or terrorist threats, strikes, labor disturbances, transportation difficulties or labor shortage.  Notwithstanding the aforesaid, if either Party fails to a substantial extent for at least three (3) months to fulfill any of its obligations under this Agreement, the other Party may terminate the Agreement.

 

  

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ARTICLE 10

DISPUTE RESOLUTION

10.1          Alternative Dispute Resolution.  The parties agree to refer any and all disputes which the parties cannot mutually resolve to binding arbitration by a single arbitrator mutually agreeable to the parties under the rules and regulations set out by the American Arbitration Association. The arbitrator’s ruling shall be final and binding and judgment thereon may be entered by any court of competent jurisdiction. The costs of said arbitration shall be borne by each party. The losing party shall then reimburse the prevailing party for all out-of-pocket costs and expenses (including reasonable attorneys’ fees) after the decision of the arbitrator.  Arbitration will take place in Dallas, Texas or Miami, Florida.

 

10.2.           Litigation.  Any controversy or claim arising out of or relating to this Agreement, or the breach thereof, and not settled as described according to the provisions of paragraph 11.1, may be settled by litigation in the courts of the State of Florida or the State of Texas.

 

ARTICLE 11

MISCELLANEOUS PROVISIONS

 

11.1.           No license or right is granted by implication or otherwise with respect to any patent application, patent, trademark or copyright except as specifically set forth herein.

 

11.2.           This Agreement was negotiated and drafted in the English language.  To the extent that any translation of this Agreement into Spanish is facilitated to or by CSE, such translation will be solely for convenience purposes and only the English language version will govern.  This Agreement may be amended, modified, or supplemented only by a written instrument in English duly executed by each of the Parties.

11.3.           This Agreement embody the entire understanding of the Parties as to the use of the Marks and shall supersede all previous communications, representations, undertakings or agreements, between them, either verbal or written, relating to the subject matter hereof.

11.4            The rights and remedies provided in this Agreement are cumulative and not exclusive of any rights or remedies provided by law or in equity. The failure of either Party to assert a right hereunder or to insist upon compliance with any term or condition herein will not constitute a waiver of that right or excuse any subsequent nonperformance of any such term or condition, or of any other term or condition, by the other Party.

11.5.           This Agreement shall be binding upon and inure to the benefit of the successors, permitted assignees and personal representatives of the Parties.

  

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IN WITNESS WHEREOF, the Parties have executed this Agreement and have entered the Effective Date on the first page hereof.

 

	CLEAR SKY ENERGY, S.A. DE C.V.	 	
MAGNEGAS CORPORATION

	 
	 	 	 	 	 	 
	By:	 /s/  Manual Juan Marco	
 

	By: 	 /s/ Ermanno Santilli   	 
	Name:	Manual Juan Marco  	 	Name:   	Ermanno Santilli	 
	Title: 	Chief Executive Officer	 	Title: 	Chief Executive Officer 	 
	Date: 	March 19, 2013   	 	Date:	March 20, 2013 	 
	 	 	 	 	 	 
	
CLEAR SKY ENERGY, S.A. DE C.V.

	 	 	 	 
	 	 	 	 	 	 
	By:	 /s/  Jorge Torres	 	 	 	 
	Name:      	Jorge Torres	 	 	 	 
	Title:	President	 	 	 	 
	Date:	March 19, 2013	 	 	 	 

 

  

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Exhibit A - Licensed Marks

 

Magnegas

MagneHydrogen

 

TRADEMARK USAGE GUIDELINES:  MagneGas name to be used with logo , with appropriate colors

 

 

8ex10-27.htm

Exhibit 10.27

 

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 2008 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 termination of Holder’s employment with the Company (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.

	
  

	
(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.

	
  

	
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 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 $.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:__________________

____________________________

____________________________

	 	 	 
	 	 	 	 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

6

  

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 Value

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