VERTEX ENERGY, INC. 8-K
Exhibit 10.1
Vertex
Energy, Inc.
Exchange
Agreement
June 7, 2023
The undersigned investor
(the “Investor”), for itself and, if applicable, on behalf of the beneficial owners listed on Exhibit A hereto
(“Accounts”) for whom the Investor holds contractual and investment authority (each, including the Investor if it is
a party exchanging Notes (as defined below), an “Exchanging Investor”), hereby agrees to exchange, with Vertex Energy,
Inc., a Nevada corporation (the “Company”), certain 6.25% Convertible Senior Notes due 2027, CUSIP 92534K AA5 (the
“Notes”) for the Exchange Consideration (as defined below) pursuant to this exchange agreement (this “Agreement”).
The Investor understands that the exchange (the “Exchange”) is being made without registration of the offer or sale
of the Shares (as defined below) under the Securities Act of 1933, as amended (the “Securities Act”), or any securities
laws of any state of the United States or of any other jurisdiction in a private placement pursuant to the exemption from registration
provided by Section 4(a)(2) of the Securities Act and that each Exchanging Investor participating in the Exchange is required to be an
institutional “accredited investor” within the meaning of Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act that is also a “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act. Capitalized terms
used but not defined in this Agreement have the respective meanings set forth in the Indenture, dated as of November 1, 2021 (the “Indenture”),
between the Company and U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association), as
trustee (the “Trustee”). “Business Day” means any day other than a Saturday, a Sunday or a day on
which the Federal Reserve Bank of New York is authorized or required by law or executive order to close or be closed.
1.
Exchange. On the basis of the representations, warranties and agreements herein contained
and subject to the terms and conditions herein set forth, the Investor hereby agrees to exchange for itself and on behalf of the Exchanging
Investors, an aggregate principal amount of the Notes set forth on Exhibit A hereto (the “Exchanged Notes”)
for (a) a number of shares of the Company’s common stock, $0.001 par value per share as set forth on Exhibit A hereto (the
“Shares”), and (b) an amount of cash in respect of any accrued interest unpaid to the Closing Date (as defined below)
for the Exchanged Notes as set forth on Exhibit A hereto (the “Accrued Interest,” and together with the Shares,
the “Exchange Consideration”).
The Investor agrees that
it and any Exchanging Investor shall not deliver a Notice of Conversion with respect to any Exchanged Notes and the Investor and each
Exchanging Investor shall hold the Exchanged Notes until the Closing (as defined below). In consideration for the performance of their
obligations hereunder (including as described in the immediately preceding sentence), the Company agrees to deliver the Exchange Consideration
on the Closing Date to each Exchanging Investor in exchange for its Exchanged Notes.
The Exchange shall occur
in accordance with the procedures set forth in Exhibit B.2 hereto (the “Exchange Procedures”); provided
that each of the Company and the Investor acknowledges that the delivery of the Shares to any Exchanging Investor may be delayed
due to procedures and mechanics within the system of the transfer agent, The Depositary Trust Company (“DTC”) or The
Nasdaq Capital Market (“Nasdaq”) (including the procedures and mechanics regarding the listing of the Shares on Nasdaq)
or other events beyond the Company’s control and that such a delay will not be a default under this Agreement so long as (i) the
Company is using its commercially reasonable efforts to effect such delivery and such delay is no longer than five (5) business days
or (ii) such delay arises due to a failure by Investor to deliver settlement instructions in accordance with Section 3(r); provided,
further, that no delivery of Shares will be made until the Exchanged Notes have been properly submitted for exchange in accordance
with the Exchange Procedures and no Accrued Interest will be payable by reason of any delay in making such delivery.
The closing of the Exchange
(the “Closing”) shall take place remotely via the exchange of documents and signatures at 10:00 a.m., New York City
time, on June 12, 2023 (the “Closing Date”), or at such other time and place as the Company and the Investor may mutually
agree. On the Closing Date, subject to satisfaction of the conditions precedent specified herein, the Company shall deliver the Shares
to the DTC account specified by the Investor for each relevant Exchanging Investor in Exhibit B.1. Subject to the terms and conditions
of this Agreement, effective as of the Closing, the Investor hereby, for itself and on behalf of its Accounts, (a) waives any and all
other rights with respect to such Exchanged Notes and (b) releases and discharges the Company from any and all claims the undersigned
and its Accounts may now have, or may have in the future, arising out of, or related to, such Exchanged Notes.
2.
Representations and Warranties and Covenants of the Company. As of the date hereof and the
Closing Date, the Company represents and warrants to, and covenants with, the Exchanging Investors that:
(a)
The Company is duly organized, validly existing and in good standing under the laws of its jurisdiction
of incorporation, and has the requisite power and authority to own or lease their properties and to carry on their business as now being
conducted. The Company is duly qualified as a foreign entity to do business (where such concept exists) and is in good standing in every
jurisdiction (where such concept exists) in which its ownership or lease of property or the nature of the business conducted by it makes
such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not reasonably be
expected to have a material adverse effect on the business, properties, assets, liabilities, operations, prospects, financial position
or results of operations of the Company and its subsidiaries, taken as a whole. The Company has the power, authority and capacity to execute
and deliver this Agreement, to perform its obligations hereunder and to consummate the Exchange contemplated hereby.
(b)
This Agreement has been duly authorized, executed and delivered by the Company and constitutes a
legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except that such enforcement
may be subject to (A) bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other similar laws affecting or relating
to enforcement of creditors’ rights generally and (B) general principles of equity, whether such enforceability is considered in
a proceeding at law or in equity (the “Enforceability Exceptions”).
(c) This
Agreement and consummation of the Exchange will not violate, conflict with or result in a breach of or default under (i) the
charter, bylaws or other organizational documents of the Company, (ii) any agreement or instrument to which the Company is a party
or by which the Company or any of its assets are bound, or (iii) assuming the truth and accuracy of the representations and
warranties and compliance with the covenants of the Investor and each Exchanging Investor herein, any laws, regulations or
governmental or judicial decrees, injunctions or orders applicable to the Company and its subsidiaries, except in the case of
clauses (ii) or (iii), where such violations, conflicts, breaches or defaults as would not, individually or in the aggregate,
materially impair the ability of the Company to consummate the transactions contemplated by this Agreement. No consent, approval,
order or authorization of, or registration, declaration or filing with any governmental entity is required on the part of the
Company or any of its subsidiaries in connection with the execution, delivery and performance by the Company of this Agreement and
the consummation by the Company of the Exchange, except as may be required under any state or federal securities laws or that may be
made or obtained after the Closing without penalty or such that would not, individually or in the aggregate, reasonably be expected
to materially impair the ability of the Company to perform its obligations under this Agreement or to consummate the transactions
contemplated by this Agreement.
(d)
When issued, delivered and paid for in the manner set forth in this Agreement, the Shares will (i)
be validly issued, fully paid and non-assessable, (ii) be free and clear of any Liens (as defined in Section 3(c) below), option,
equity or other adverse claim thereto, including claims or rights under any voting trust agreements, shareholder agreements or other agreements
to which the Company is a party, and (iii) will not be subject to any preemptive, participation, rights of first refusal or other similar
rights under the Chapter 78 of the Nevada Revised Statutes of the State of Nevada or any to which the Company is a party (other than any
such rights that will be waived prior to the Closing). Assuming the accuracy of the Investor’s and each Exchanging Investor’s
representations and warranties hereunder, the Shares (A) will be issued in the Exchange in reliance on the exemption from the registration
requirements of the Securities Act pursuant to Section 4(a)(2) of the Securities Act and (B) when issued will be free of any restrictive
legend and will be eligible for resale under Rule 144 promulgated under the Securities Act, so long as the Company satisfies the reporting
conditions set forth in Rule 144(c) and Rule 144(i)(2) under the Securities Act. For the purposes of Rule 144 promulgated under the Securities
Act, the Company acknowledges that, assuming the accuracy of each Exchanging Investor’s representations and warranties hereunder,
the holding period of the Shares may be tacked onto the holding period of the Exchanged Notes and the Company agrees not to take a position
contrary thereto.
(e)
As of the Closing, the Company shall have filed a Notice of a Listing of Additional Shares form with
Nasdaq, to the extent required by Nasdaq.
(f)
Since such date that is twelve months prior to the date of this Agreement, the Company has timely
filed all reports, schedules, forms, proxy statements, statements and other documents required to be filed by it with the Securities and
Exchange Commission (the “SEC”) pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”) or timely filed notifications of late filings for any of the foregoing (all of the foregoing filed
prior to the date hereof and all exhibits and appendices included therein and financial statements, notes and schedules thereto and documents
incorporated by reference therein being hereinafter referred to as the “SEC Documents”). As of their respective dates,
the SEC Documents complied in all material respects with the requirements of the Exchange Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents. The Company is in compliance with the requirements of Rule 144(c) and Rule 144(i)(2)
under the Securities Act.
(g)
Without the prior written consent of the Investor, the Company shall not disclose the name of the
Investor or any Exchanging Investor in any filing or announcement, unless such disclosure is required by applicable law, rule, regulation
or legal process based on advice of counsel.
(h)
The Company agrees that it shall, upon request, execute and deliver any additional documents deemed
by the Trustee or transfer agent to be reasonably necessary to complete the Exchange.
(i)
The Company hereby agrees to publicly disclose on or before 9:00 a.m., New York City time, on the
first Business Day after the date hereof, the exchange of the Exchanged Notes as contemplated by this Agreement in a press release. The
Company hereby acknowledges and agrees that any press release or Current Report on Form 8-K will disclose all confidential information
communicated by the Company to the Investor or any Exchanging Investor in connection with the Exchange to the extent the Company believes
such confidential information constitutes material non-public information, if any, with respect to the Exchange or otherwise.
(j)
There is no action, lawsuit, arbitration, claim or proceeding pending or, to the knowledge of the
Company, threatened, against the Company that would reasonably be expected to impede the consummation of the transaction contemplated
hereby.
3.
Representations and Warranties and Covenants of the Investor. As of the date hereof and as
of the Closing Date (except as otherwise set forth below), the Investor hereby, for itself and on behalf of the Exchanging Investors,
represents and warrants to, and covenants with, the Company that:
(a)
The Investor and each Exchanging Investor is a corporation, limited partnership, limited liability
company or other entity, as the case may be, duly organized, validly existing and in good standing under the laws of the jurisdiction
of its organization.
(b)
The Investor has all requisite power, authority and capacity to execute and deliver this Agreement
for itself and on behalf of the Exchanging Investors, to perform its obligations hereunder, and to consummate the Exchange contemplated
hereby. This Agreement has been duly authorized, executed and delivered by the Investor and constitutes the legal, valid and binding obligation
of the Investor and each Exchanging Investor, enforceable in accordance with its terms, except that such enforcement may be subject to
the Enforceability Exceptions. If the Investor is executing this Agreement on behalf of an Account, (i) the Investor has all requisite
discretionary and contractual authority to enter into this Agreement on behalf of, and, bind, each Account, and (ii) Exhibit A
attached to this Agreement contains a true, correct and complete list of (A) the name of each Account and (B) the principal amount of
each Account’s Exchanged Notes, as applicable.
(c)
As of the date hereof and as of the Closing, each of the Exchanging Investors is the sole legal and
beneficial owner of the Exchanged Notes set forth on Exhibit A attached to this Agreement. When the Exchanged Notes are exchanged,
the Company will acquire good, marketable and unencumbered title thereto, free and clear of all liens, mortgages, pledges, security interests,
restrictions, charges, encumbrances or adverse claims, rights or proxies of any kind (other than pledges or security interests that the
Exchanging Investors may have created in favor of a prime broker under and in accordance with its prime brokerage agreement with such
broker) (“Liens”). None of the Exchanging Investors has, nor prior to the Closing, will have, in whole or in part,
other than pledges or security interests that an Exchanging Investor may have created in favor of a prime broker under and in accordance
with its prime brokerage agreement with such broker and other than the authority granted by the Exchanging Investors to the Investor,
(x) assigned, transferred, hypothecated, pledged, exchanged, submitted for conversion pursuant to the Indenture or otherwise disposed
of any of its Exchanged Notes (other than to the Company pursuant hereto), or (y) given any person or entity any transfer order, power
of attorney or other authority of any nature whatsoever with respect to its Exchanged Notes.
(d)
This Agreement and consummation of the Exchange will not violate, conflict with or result in a breach
of or default under (i) the organizational documents of the Investor or any Exchanging Investor (or any similar documents governing each
Account), (ii) any agreement or instrument to which any Investor or any Exchanging Investor is a party or by which the Investor or such
Exchanging Investor or their respective assets are bound, or (iii) any laws, regulations or governmental or judicial decrees, injunctions
or orders applicable to the Investor or such Exchanging Investor, except in the case of clauses (ii) and (iii), where such violations,
conflicts, breaches or defaults would not, individually or in the aggregate, reasonably be expected to have a material adverse effect
on the business, properties, assets, liabilities, operations, prospects, financial position or results of operations of the Investor or
any Exchanging Investor, taken as a whole, or affect the Investor or any Exchanging Investor’s ability to consummate the Exchange
in any material respect.
(e)
The Investor and each Exchanging Investor will comply with all applicable laws and regulations in
effect necessary for each Exchanging Investor to consummate the transactions contemplated hereby and obtain any consent, approval or permission
required for the transactions contemplated hereby and the laws and regulations of any jurisdiction to which the Investor and each such
Exchanging Investor is subject, and the Company shall have no responsibility therefor.
(f)
The Investor and each Exchanging Investor acknowledges that no person has been authorized to give
any information or to make any representation or warranty concerning the Company or the Exchange other than the information set forth
herein in connection with the Investor’s and each Exchanging Investor’s examination of the Company and the terms of the Exchange
and the Shares, and the Company does not take, and Oppenheimer & Co. Inc. (the “Advisor”) does not take any responsibility
for, and neither the Company nor the Advisor can provide any assurance as to the reliability of, any other information that others may
provide to the Investor or any Exchanging Investor.
(g)
The Investor and each Exchanging Investor has such knowledge, skill and experience in business, financial
and investment matters so that it is capable of evaluating the merits and risks with respect to the Exchange and an investment in the
Shares. With the assistance of the Investor’s and each Exchanging Investor’s own professional advisors, to the extent that
the Investor and Exchanging Investor has deemed appropriate, such Exchanging Investor has made its own legal, tax, accounting and financial
evaluation of the merits and risks of an investment in the Shares and the consequences of the Exchange and this Agreement and the Investor
and each Exchanging Investor has made its own independent decision that the investment in the Shares is suitable and appropriate for the
Investor and such Exchanging Investor. The Investor and each Exchanging Investor has considered the suitability of the Shares as an investment
in light of the Investor and such Exchanging Investor’s circumstances and financial condition and is able to bear the risks associated
with an investment in the Shares, including the risk of total loss.
(h)
The Investor confirms that it and each Exchanging Investor is not relying on any communication (written
or oral) of the Company, the Advisor or any of their respective affiliates or representatives as investment advice or as a recommendation
to acquire the Shares in the Exchange. It is understood that information provided by the Company, the Advisor or any of their respective
affiliates and representatives shall not be considered investment advice or a recommendation to participate in the Exchange, and that
none of the Company, the Advisor or any of their respective affiliates or representatives is acting or has acted as an advisor to the
Investor or any Exchanging Investor in deciding to participate in the Exchange.
(i)
The Investor confirms that neither the Company nor the Advisor has (i) given the Investor or any
Exchanging Investor any guarantee, representation or warranty as to the potential success, return, effect, consequences or benefit (either
legal, regulatory, tax, financial, accounting or otherwise) of an investment in the Shares or (ii) made any representation or warranty
to the Investor or any Exchanging Investor regarding the legality of an investment in the Shares under applicable legal investment or
similar laws or regulations. The Investor confirms that it and each Exchanging Investor is not relying and has not relied, upon any statement,
advice (whether accounting, tax, financial legal or other), representation or warranty by the Company or any of its affiliates or representatives,
including, without limitation, the Advisor, its affiliates and its or their directors, officers, employees, representatives and controlling
persons, except for the representations and warranties made by the Company in this Agreement, and that the Investor has made its own independent
decision that the investment in the Shares is suitable and appropriate for the Investor and the Exchanging Investors.
(j)
The Investor and each Exchanging Investor is familiar with the business and financial condition
and operations of the Company and the Investor and each Exchanging Investor has had the opportunity to conduct its own investigation of
the Company and the Shares. The Investor and each Exchanging Investor has had access to the SEC Documents of the Company and such other
information concerning the Company and the Shares as it deems necessary to enable it to make an informed investment decision concerning
the Exchange. The Investor and each Exchanging Investor has been offered the opportunity to ask such questions of the Company and its
representatives and received answers thereto, as it deems necessary to enable it to make an informed investment decision concerning the
Exchange.
(k)
Each Exchanging Investor is an institutional “accredited investor” as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act and a “qualified institutional buyer” as defined in Rule 144A under the
Securities Act and an “Institutional Account” as defined in FINRA Rule 4512(c). The Investor agrees to furnish any additional
information regarding the Investor or any Exchanging Investor reasonably requested by the Company or any of its affiliates to assure compliance
with applicable U.S. federal and state securities laws in connection with the Exchange.
(l)
The Investor and each Exchanging Investor is not, and has not been during the consecutive three-month
period preceding the date hereof and as of the Closing, will not be, a director, officer or “affiliate” within the meaning
of Rule 144 promulgated under the Securities Act (an “Affiliate”) of the Company. To the Investor’s knowledge,
no Exchanging Investor acquired any of the Notes, directly or indirectly, from an Affiliate of the Company.
(m)
Each Exchanging Investor is acquiring the Shares solely for its own beneficial account, for investment
purposes, and not with a view to, or for resale in connection with, any distribution of the Shares. The Investor and each Exchanging Investor
understands that the offer and sale of the Shares have not been registered under the Securities Act or any state securities laws and are
being issued without registration under the Securities Act pursuant to Section 4(a)(2) of the Securities Act, which exemption depends
in part upon the investment intent of the Exchanging Investors and the accuracy of the other representations and warranties made by the
Investor or behalf of the Exchanging Investors in this Agreement. The Investor and the Exchanging Investors understand that the Company
is relying upon the representations, warranties and agreements contained in this Agreement (and any supplemental information provided
to the Company by the Investor or any of the Exchanging Investors) for the purpose of determining whether this transaction meets the requirements
for such exemption(s) and to issue the Shares without legends as set forth herein.
(n)
The Investor acknowledges that the terms of the Exchange have been mutually negotiated between the
Investor and the Company. The Investor was given a meaningful opportunity to negotiate the terms of the Exchange.
(o)
The Investor acknowledges that it and each Exchanging Investor had a sufficient amount of time to
consider whether to participate in the Exchange and that neither the Company nor the Advisor has placed any pressure on the Investor or
any Exchanging Investor to respond to the opportunity to participate in the Exchange. The Investor acknowledges that neither it nor any
Exchanging Investor became aware of the Exchange through any form of general solicitation or advertising within the meaning of Rule 502
under the Securities Act or otherwise through a “public offering” under Section 4(a)(2) of the Securities Act.
(p)
The Investor will, upon request, execute and deliver, for itself and on behalf of any Exchanging
Investor, any additional documents deemed by the Company and the Trustee or the transfer agent to be reasonably necessary
to complete the transactions contemplated by this Agreement.
(q)
No later than one (1) Business Day after the date hereof, the Investor agrees to deliver to the Company
settlement instructions substantially in the form of Exhibit B.1 attached to this Agreement for each of the Exchanging Investors.
(r)
The Investor acknowledges it and each Exchanging Investor understands that the Company intends to
pay the Advisor a fee in respect of the Exchange.
(s)
The Investor acknowledges and agrees that it and each Exchanging Investor has not disclosed, and
will not disclose, to any third party any information regarding the Exchange, and has not transacted, and will not transact in any securities
of the Company, including, but not limited to, any hedging transactions, from the time the Investor was first contacted by the Company
or the Advisor with respect to the transactions contemplated by this Agreement until after the confidential information (as described
in the confirmatory wall-crossing email received by the Investor from the Advisor) is made public.
(t)
The Investor and each Exchanging Investor acknowledges and the Investor agrees that the Advisor has
not acted as a financial advisor or fiduciary to the Investor or any Exchanging Investor and that the Advisor, its affiliates and its
or their directors, officers, employees, representatives and controlling persons have no responsibility for making, and have not made,
any independent investigation of the information contained herein or in the Company’s SEC Filings and make no representation or
warranty to the Investor or any Exchanging Investor, express or implied, with respect to the Company, the Exchanged Notes or the Shares
or the accuracy, completeness or adequacy of the information provided to the Investor or any Exchanging Investor or any other publicly
available information, nor shall any of the foregoing persons be liable for any loss or damages of any kind resulting from the use of
the information contained therein or otherwise supplied to the Investor or any Exchanging Investor.
(u)
The Investor and each Exchanging Investor acknowledges and understands that as of the date of this
Agreement and at the time of the Closing, the Company and/or the Advisor may be in possession of material non-public information not known
to the Investor or any Exchanging Investor that may impact the value of the Notes, including the Exchanged Notes, and the Shares (“Information”)
that the Company and/or the Advisor have not disclosed to the Investor or any Exchanging Investor. The Investor and each Exchanging Investor
acknowledges that they have not relied upon the non-disclosure of any such Information for purposes of making their decision to participate
in the Exchange. The Investor and each Exchanging Investor understands, based on its experience, the disadvantage to which the Investor
and each Exchanging Investor is subject due to the disparity of information between the Company and the Advisor, on the one hand, and
the Investor and each Exchanging Investor, on the other hand. Notwithstanding this, the Investor and each Exchanging Investor has deemed
it appropriate to participate in the Exchange. The Investor agrees that the Company, the Advisor and each of their respective directors,
officers, employees, agents, stockholders and affiliates shall have no liability to the Investor or any Exchanging Investor or their respective
beneficiaries whatsoever due to or in connection with the Company’s and/or the Advisor’s use or non-disclosure of the Information
or otherwise as a result of the Exchange, and the Investor hereby irrevocably waives any claim that it or any Exchanging Investor might
have based on the failure of the Company and/or the Advisor to disclose the Information, except to the extent the Company and/or the Advisor
is or was required to disclose such Information pursuant to applicable law, or such failure to disclose the Information constitutes fraud,
gross negligence or wilful misconduct.
(v)
The Investor and each Exchanging Investor understands that no federal, state, local or foreign agency
has passed upon the merits or risks of an investment in the Shares or made any finding or determination concerning the fairness or advisability
of this investment.
(w)
The operations of the Investor and each Exchanging Investor have been conducted in material compliance
with the applicable rules and regulations administered or conducted by the U.S. Department of Treasury Office of Foreign Assets Control
(“OFAC”), the applicable rules and regulations of the Foreign Corrupt Practices Act (“FCPA”) and
the applicable Anti-Money Laundering (“AML”) rules in the Bank Secrecy Act. The Investor has performed due diligence
necessary to reasonably determine that the Exchanging Investors are not named on the lists of denied parties or blocked persons administered
by OFAC, resident in or organized under the laws of a country that is the subject of comprehensive economic sanctions and embargoes administered
or conducted by OFAC (“Sanctions”), are not otherwise the subject of Sanctions and have not been found to be in violation
or under suspicion of violating OFAC, FCPA or AML rules and regulations.
(x)
The Investor acknowledges that, in the event Investor materially breaches the provisions of this
Section 3, the Company may issue appropriate stop-transfer instructions to its transfer agent, if any, and may make appropriate
notations to the same effect in its books and records to ensure compliance with the provisions of this Section 3.
(y)
The Investor and each Exchanging Investor is a resident of the jurisdiction set forth on Exhibit
B.1 attached to this Agreement.
(z)
Each of the Investor and each Exchanging Investor has not, directly or indirectly, and no person
acting on behalf of or pursuant to any understanding with it has, disclosed to a non-affiliated third party (other than to its legal advisors
and other representatives) any of the information regarding the Exchange nor engaged in any transactions in the securities of the Company
(including, without limitation, any Short Sales (as defined below) involving any of the Company’s securities) from the time that
the Investor was first contacted by either the Company or the Advisor regarding the Exchange or this Agreement. The Investor and each
Exchanging Investor covenants that neither it nor any person acting on its behalf or pursuant to any understanding with it shall disclose
to a third party (other than to its legal advisors and other representatives) any information regarding the Exchange or engage, directly
or indirectly, in any transactions in the securities of the Company (including Short Sales) prior to the time the Exchange is publicly
disclosed by the Company. “Short Sales” include all “short sales” as defined in Rule 200 of Regulation SHO promulgated
under the Exchange Act, and all types of direct and indirect stock pledges, forward sale contracts, options, puts, calls, short sales,
swaps, derivatives and similar arrangements (including on a total return basis), and sales and other transactions through non-U.S. broker-dealers
or foreign regulated brokers, in each case, solely to the extent such transaction has the same economic effect as a “short sale”
as defined in Rule 200 of Regulation SHO. Solely for purposes of this Section 3(z), subject to the Investor’s and each Exchanging
Investor’s compliance with their respective obligations under the U.S. federal securities laws and the Investor’s and such
Exchange Investor’s respective internal policies, (a) “Investor” and “Exchanging Investor” shall not be
deemed to include any employees, subsidiaries, desks, groups or affiliates of the Investor or the applicable Exchanging Investor that
are effectively walled off by appropriate “Fire Wall” information barriers approved by the Investor’s or such Exchanging
Investor’s respective legal or compliance department (and thus such walled off parties have not been privy to any information concerning
the Exchange), and (b) the foregoing representations and covenants of this Section 3(z) shall not apply to any transaction by or
on behalf of an Account that was effected without the advice or participation of, or such Account’s receipt of information regarding
the Exchange provided by, the Investor or the applicable Exchanging Investor.
(aa)
The Investor and each Exchanging Investor understands that the Company, the Advisor and others will
rely upon the truth and accuracy of the foregoing representations, warranties and covenants and agrees that if any of the representations
and warranties deemed to have been made by it or the Exchanging Investors are no longer accurate, the Investor shall promptly notify the
Company and the Advisor prior to the Closing. The Investor understands that, unless the Investor notifies the Company in writing to the
contrary before the Closing, each of the Investor’s and Exchanging Investors’ representations and warranties contained in
this Agreement will be deemed to have been reaffirmed and confirmed as of the Closing. If the Investor is exchanging any Exchanged Notes
and acquiring the Shares as a fiduciary or agent for one or more accounts (including for purposes of this Section 3(aa), the Accounts
which are Exchanging Investors), it represents that (i) it has sole investment discretion with respect to each such account, (ii) it has
full power to make the foregoing representations, warranties and covenants on behalf of such account and (iii) it has contractual authority
with respect to each such account.
(bb)
The Investor agrees that until it has resold the Shares, if the Company
at any time notifies the Investor that the Company is not in compliance with the requirements of Rule 144(i)(2), the Investor will not
resell the Shares until the Company is in compliance with the requirements of Rule 144(i)(2).
(cc) The Investor and
each Exchanging Investor agrees that none of the Shares will be used to cover any “Short Sale” (as defined in Section 3(z))
in violation of any applicable securities laws or SEC guidance.
4.
Conditions to Obligations of the Investor and the Company. The obligations of the Investor
and the Exchanging Investors and of the Company under this Agreement are subject to the satisfaction at or prior to the Closing of the
following conditions precedent: (a) the representations and warranties of the Company contained in Section 2 hereof (with respect
to the Investor and Exchanging Investors) and of the Investor contained in Section 3 hereof (with respect to the Company) shall
be true and correct as of the Closing in all respects with the same effect as though such representations and warranties had been made
as of the Closing and (b) no provision of any applicable law or any judgment, ruling, order, writ, injunction, award or decree of any
governmental authority shall be in effect prohibiting or making illegal the consummation of the transactions contemplated by this Agreement.
5.
Waiver, Amendment. Neither this Agreement nor any provisions hereof or thereof shall be modified,
changed or discharged, except by an instrument in writing, signed by the Company and the Investor.
6.
Assignability. Neither this Agreement nor any right, remedy, obligation or liability arising
hereunder or by reason hereof shall be assignable by either the Company or the Investor without the prior written consent of the other.
7.
Waiver of Jury Trial. EACH OF THE COMPANY AND THE INVESTOR HEREBY IRREVOCABLY WAIVES ANY AND
ALL RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING ARISING OUT OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
8.
Governing Law. This Agreement shall be governed by and construed in accordance with the laws
of the State of New York, without giving effect to such state’s rules concerning conflicts of laws that might provide for any other
choice of law.
9. Submission
to Jurisdiction. Each of the Company and the Investor: (a) agrees that any legal suit, action or proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby shall be instituted exclusively in the courts of the State of New
York located in the City and County of New York or in the United States District Court for the Southern District of New York; (b)
waives any objection that it may now or hereafter have to the venue of any such suit, action or proceeding; and (c) irrevocably
consents to the jurisdiction of the aforesaid courts in any such suit, action or proceeding. Each of the Company and the Investor
agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit
on the judgment or in any other manner provided by law.
10.
Venue. Each of the Company and the Investor irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement in any court referred to in Section 9. Each of the Company and
the Investor irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such
action or proceeding in any such court.
11.
Service of Process. Each of the Company and the Investor irrevocably consents to service of
process in the manner provided for notices in Section 12. Nothing in this Agreement will affect the right of the Company or the
Investor to serve process in any other manner permitted by law.
12.
Notices. All notices and other communications to the Company provided for herein shall be
in writing and shall be deemed to have been duly given if delivered personally, sent by prepaid overnight courier (providing written proof
of delivery) or sent by confirmed facsimile transmission or electronic mail and will be deemed given on the date so delivered (or,
if such day is not a Business Day, on the first subsequent Business Day) to the following addresses, or in the case of the Investor, the
address provided on Exhibit B.1 attached to this Agreement (or such other address as the Company or the Investor shall have specified
by notice in writing to the other):
| If to the Company: |
Vertex Energy, Inc.
1331 Gemini Street, Suite 250
Houston, TX 77058
Attention: Chief Financial Officer
|
|
with a copy to (which shall not constitute
notice):
|
The Loev Law Firm, PC
6300 West Loop South, Suite 280
Bellaire, TX 77401
Attention: David Loev |
13.
Binding Effect. The provisions of this Agreement shall be binding upon and accrue to the benefit
of the Company, the Investor and the Exchanging Investors and their respective heirs, legal representatives, successors and assigns. This
Agreement constitutes the entire agreement between the Company and the Investor with respect to the subject matters hereof. This Agreement
may be executed by one or more of the parties hereto in any number of separate counterparts (including by facsimile or other electronic
means, including telecopy, email or otherwise), and all of said counterparts taken together shall be deemed to constitute one and the
same instrument. Delivery of an executed signature page of this Agreement by facsimile or other transmission (e.g., “pdf”
or “tif” format) shall be effective as delivery of a manually executed counterpart hereof.
14.
Notification of Changes. After the date of this Agreement, each of the Company and the Investor
hereby covenants and agrees to notify the other and the Advisor upon the knowledge of any event prior to the Closing of the Exchange pursuant
to this Agreement that would cause any representation, warranty or covenant of the Company or the Investor, as the case may be, contained
in this Agreement to be false or incorrect.
15.
Reliance by the Advisor. The Advisor shall be a third-party beneficiary of this Agreement
to the extent provided in this Section 15. This Agreement is intended for the benefit of the parties hereto and their respective
successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other person; provided,
however, that the Advisor (1) may rely on the representations and warranties of the Company in Section 2 hereof and the
representations and warranties of the Investor and Exchanging Investors in Section 3 hereof, in each case with the same force and
effect as if such representations or warranties were made directly to the Advisor, and (2) shall be the intended third-party beneficiary
of Sections 5-17 and Section 20 of this Agreement.
16.
Severability. If any term or provision of this Agreement (in whole or in part) is invalid,
illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision
of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction.
17.
Survival. The representations and warranties of the Company and the Investor contained in
this Agreement or made by or on behalf of the Exchanging Investors pursuant to this Agreement shall survive the consummation of the transactions
contemplated hereby.
18.
Termination. This Agreement may be terminated and the transactions contemplated hereby abandoned
(a) by mutual agreement of the Company and the Investor in writing or (b) by either the Company or the Investor if the conditions to such
party’s obligations set forth herein have not been satisfied (unless waived by the party entitled to the benefit thereof), and the
Closing has not occurred within ten (10) Business Days immediately following the date of this Agreement without liability of either the
Company or the Investor or the Exchanging Investors, as the case may be; provided that neither the Company nor the Investor shall be released
from liability hereunder if this Agreement is terminated and the transactions abandoned by reason of the failure of the Company or the
Investor or any of the Exchanging Investors, as the case may be to have performed its obligations hereunder. Except as provided above,
if this Agreement is terminated and the transactions contemplated hereby are not concluded as described above, this Agreement will become
void and of no further force and effect.
19.
Taxation. The Investor acknowledges that, if an Exchanging Investor is a United States person
for U.S. federal income tax purposes, either (i) the Company must be provided with a correct taxpayer identification number (“TIN,”
generally a person’s social security or federal employer identification number) and certain other information on a properly completed
and executed Internal Revenue Service (“IRS”) Form W-9, or (ii) another basis for exemption from backup withholding
must be established. The Investor further acknowledges that, if an Exchanging Investor is not a United States person for U.S. federal
income tax purposes, the Company must be provided with a properly completed and executed IRS Form W-8BEN, IRS Form W-8BEN-E, IRS Form
W-8IMY (and all required attachments) or other applicable IRS Form W-8, attesting to that non-U.S. Exchanging Investor’s foreign
status and certain other information, including information establishing an exemption from withholding under Sections 1471 through 1474
of the Internal Revenue Code of 1986, as amended (the “Code”). The Investor further acknowledges that any Exchanging
Investor may be subject to 30% U.S. federal tax withholding or 24% U.S. federal backup tax withholding on certain payments made to such
Exchanging Investor unless such Exchanging Investor properly establishes an exemption from, or a reduced rate of, such withholding or
backup withholding. See Exhibit C for certain additional information. The Company and its agents shall be entitled to deduct and
withhold from any consideration payable pursuant to this Agreement such amounts as are required to be deducted or withheld under applicable
law. To the extent any such amounts are withheld and remitted to the appropriate taxing authority, such amounts shall be treated for all
purposes as having been paid to the Exchanging Investor to whom such amounts otherwise would have been paid.
20.
Section and Other Headings. The sections and other headings contained in this Agreement are
for reference purposes only and shall not affect the meaning or interpretation of this Agreement.
[SIGNATURE PAGE FOLLOWS]
| |
Very truly yours, |
| |
|
|
| |
VERTEX ENERGY, INC. |
| |
|
|
| |
By |
|
| |
|
Name: |
| |
|
Title: |
Please confirm that the foregoing correctly
sets forth the agreement between the Company and the Investor by signing in the space provided below for that purpose.
| |
AGREED AND ACCEPTED: |
| |
|
| |
Investor: |
| |
[_____________],
in its capacity as described in the first
paragraph hereof
|
| |
By |
|
| |
Name: |
| |
Title: |
EXHIBIT A
Exchanging Investor Information
| Exchanging
Investor |
Aggregate
Principal Amount of Exchanged Notes1 |
Exchange
Consideration |
| Shares |
Accrued Interest |
| |
|
|
|
| |
|
|
|
| |
|
|
|
1 Insert aggregate principal of Outstanding Notes to be
exchanged.
EXHIBIT B.1
| Exchanging Investor: |
|
|
|
| |
|
|
|
|
|
|
|
| |
|
|
|
| |
|
|
|
| Investor Address: |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| Telephone: |
|
|
|
| Country of Residence: |
|
|
|
| |
|
|
|
| |
|
|
|
| Taxpayer Identification Number: |
|
|
|
| |
|
|
|
| |
|
|
|
| Account for Notes: |
| |
| DTC Participant Number: |
|
|
| DTC Participant Name: |
|
|
| DTC Participant Phone Number: |
|
|
| DTC Participant Contact Email: |
|
|
| Account # at Bank/Broker: |
|
|
| |
| Account for Shares (if different from Notes): |
| |
| DTC Participant Number: |
|
|
| DTC Participant Name: |
|
|
| DTC Participant Phone Number: |
|
|
| DTC Participant Contact Email: |
|
|
| Account # at Bank/Broker: |
|
|
| |
|
|
| Wire instructions for Accrued Interest: |
| |
| Bank Name: |
|
|
| Bank Address: |
|
|
| ABA Routing Number: |
|
|
| Account Name: |
|
|
| Account Number: |
|
|
| Contact Person: |
|
|
| FFC Account Name |
|
|
| FFC Account # at Bank/Broker: |
|
|
EXHIBIT B.2
Exchange Procedures
NOTICE TO INVESTOR
These are the Exchange Procedures
for the settlement of the exchange of 6.25% Convertible Senior Notes due 2027, CUSIP 92534K AA5 (the “Exchanged Notes”)
of Vertex Energy, Inc., a Nevada corporation (the “Company”), for the Shares to be issued as Exchange Consideration
(as defined in and pursuant to the Agreement between you and the Company), which is expected to occur on or about June 12, 2023. To ensure
timely settlement for the Exchange Consideration, please follow the instructions as set forth below.
These instructions supersede any prior instructions
you received. Your failure to comply with these instructions may delay your receipt of the Exchange Consideration.
If you have any questions, please contact James
Lin of Oppenheimer & Co. Inc. at 408-838-1354.
To deliver Exchanged Notes:
You must direct the eligible DTC participant
through which you hold a beneficial interest in the Exchanged Notes on June 12, 2023, no later than 9:00 a.m., New York City
time, to post a withdrawal request through DTC for the aggregate principal amount of Exchanged Notes set forth on Exhibit A
of the Agreement to be exchanged for Shares. It is important that this instruction be submitted and the one-sided DWAC withdrawal
(not a deliver vs. payment or free delivery) is posted on June 12, 2023.
To receive Exchange Consideration:
You must direct the eligible DTC participant
on June 12, 2023, no later than 9:00 a.m., New York City time, to post a deposit request through DTC via DWAC for the aggregate
number of Shares to be received as set forth on Exhibit A of the Agreement.
Continental Stock Transfer & Trust Company
is the Transfer Agent and Registrar for the Shares.
| · | To receive the Accrued Interest: |
You must deliver to Oppenheimer the necessary
tax form(s) and your wiring instructions for payment of accrued and unpaid interest.
Closing: On June 12, 2023, subject
to the satisfaction of the conditions to Closing as set forth in the Agreement, the Company will deliver the Exchange Consideration in
respect of the Exchanged Notes in accordance with the delivery instructions above.
EXHIBIT C
Under U.S. federal income tax law, a holder
who exchanges Notes for the Exchange Consideration generally must provide such holder’s correct TIN on a properly completed and
executed IRS Form W-9 (available from the Company or at www.irs.gov/pub/irs-pdf/fw9.pdf) or otherwise establish a basis for exemption
from backup withholding. A TIN is generally an individual holder’s social security number or a holder’s employer identification
number. If the correct TIN is not provided, the holder may be subject to a $50 penalty imposed under Section 6723 of the Code. In
addition, certain payments made to holders may be subject to U.S. backup withholding (currently set at 24% of the payment). If a holder
is required to provide a TIN but does not have a TIN, the holder should consult its tax advisor regarding how to obtain a TIN. Certain
holders (including corporations and non-U.S. holders) are not subject to these backup withholding and reporting requirements.
A non-U.S. holder (i) will be subject to 30%
U.S. federal withholding on certain payments to such holder unless such holder establishes an exemption from, or a reduced rate of, such
withholding, and (ii) must establish its status as an exempt recipient from backup withholding and can do so by submitting a properly
completed IRS Form W-8BEN, IRS Form W-8BEN-E, IRS Form W-8IMY (and all required attachments), or other applicable IRS Form W-8 (available
from the Company or at www.irs.gov), signed, under penalties of perjury, attesting to such holder’s exempt foreign status. This
form also may establish an exemption from withholding under Section 1471 through 1474 of the Code.
U.S. backup withholding is not an additional
tax. Rather, the U.S. federal income tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld.
If withholding results in an overpayment of taxes, a refund may be obtained provided that the required information is timely furnished
to the IRS. Exchanging Investors are urged to consult their tax advisors regarding how to complete the appropriate forms and to determine
whether they are exempt from backup withholding or other withholding taxes.
