10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal quarter ended June 30, 2014

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM _____________ TO _____________

Commission File Number 001-11476

———————

VERTEX ENERGY, INC.

(Exact name of registrant as specified in its charter)

———————

NEVADA	94-3439569
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)
1331 GEMINI STREET, SUITE 250 HOUSTON, TEXAS	77058
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code: 866-660-8156

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes  ý    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, and accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  ¨	Accelerated filer   ¨
Non-accelerated filer  ¨	Smaller reporting company  ý

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.

Yes   ¨ No ý

State the number of shares of the issuer’s common stock outstanding, as of the latest practicable date: 25,042,210shares of common stock issued and outstanding as of August 12, 2014.

TABLE OF CONTENTS

		Page
	PART I
Item 1.	Financial Statements
	Consolidated  Balance Sheets (unaudited)	F-1
	Consolidated  Statements of  Operations (unaudited)	F-2
	Consolidated  Statements of Cash Flows (unaudited)	F-3
	Notes to Consolidated Financial Statements (unaudited)	F-4
Item 2	Management’s Discussion And Analysis Of Financial Condition And Results Of Operations	13
Item 3.	Quantitative And Qualitative Disclosures About Market Risk	37
Item 4.	Controls and Procedures	37
	PART II
Item 1.	Legal Proceedings	38
Item 1A.	Risk Factors	38
Item 2.	Unregistered Sales Of Equity Securities And Use Of Proceeds	46
Item 3.	Defaults Upon Senior Securities	47
Item 4.	Mine Safety Disclosures	47
Item 5.	Other Information	47
Item 6.	Exhibits	47

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

VERTEX ENERGY, INC.
CONSOLIDATED BALANCE SHEETS (Unaudited)
	June 30, 2014			December 31, 2013
ASSETS
Current assets
Cash and cash equivalents	$	19,651,831		$	2,678,628
Accounts receivable, net	13,952,805			11,714,813
Accounts receivable-related party	9,335,321			—
Inventory	16,412,448			8,540,459
Prepaid expenses	3,530,682			1,161,721
Total current assets	62,883,087			24,095,621
Noncurrent assets
Other assets	2,925,096			—
Fixed assets, net	46,725,108			15,091,176
Intangible assets, net	16,733,683			15,172,816
Goodwill	4,922,353			4,502,743
Deferred federal income tax	5,684,000			5,684,000
Total noncurrent assets	76,990,240			40,450,735
TOTAL ASSETS	$	139,873,327		$	64,546,356
LIABILITIES AND EQUITY
Current liabilities
Accounts payable and accrued expenses	$	26,004,141		$	14,096,185
Capital leases	809,497			—
Current portion of long-term debt	2,417,335			1,956,847
Total current liabilities	29,230,973			16,053,032
Long-term liabilities
Long-term debt	40,173,643			6,558,851
Contingent consideration	5,385,250			3,220,250
Line of credit	304,000			—
Deferred federal income tax	378,000			378,000
Total liabilities	75,471,866			26,210,133
Commitments and contingencies
EQUITY
Preferred stock, $0.001 par value per share:
50,000,000 shares authorized
Series A Convertible Preferred stock, $0.001 par value,
5,000,000 authorized and 675,558 and 1,319,002 issued
and outstanding at June 30, 2014 and December 31,
2013, respectively	675			1,319
Common stock, $0.001 par value per share;
750,000,000 shares authorized; 25,019,450 and 21,205,609
issued and outstanding at June 30, 2014 and
December 31, 2013, respectively	25,019			21,206
Additional paid-in capital	39,189,263			19,579,732
Retained earnings	25,405,251			17,542,004
Total Vertex Energy, Inc. stockholders' equity	64,620,208			37,144,261
Non-controlling interest	(218,747		)	1,191,962
Total equity	64,401,461			38,336,223
TOTAL LIABILITIES AND EQUITY	$	139,873,327		$	64,546,356

See accompanying notes to the consolidated financial statements

F-1

VERTEX ENERGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013
(UNAUDITED)
	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
Revenues	$	72,079,622		$	35,111,402		$	119,429,280		$	68,366,204
Cost of revenues	63,200,942			32,556,738			105,406,112			62,341,782
Gross profit	8,878,680			2,554,664			14,023,168			6,024,422
Reduction of contingent liability	—			(1,850,000		)	—			(1,850,000		)
Operating expenses:
Selling, general and administrative expenses   (exclusive of acquisition related expenses)	6,075,517			2,395,745			9,663,006			4,653,829
Acquisition related expenses	1,959,418			—			2,559,830			—
Total operating expenses	8,034,935			2,395,745			12,222,836			4,653,829
Income from operations	843,745			2,008,919			1,800,332			3,220,593
Other income (expense)
Other income	7			7,598			377			32,888
Bargain purchase gain related to Omega acquisition	6,481,051			—			6,481,051			—
Other expense	(10,866		)	—			(10,866		)	(40,726		)
Interest expense	(657,235		)	(112,999		)	(733,046		)	(219,139		)
Total other income (expense)	5,812,957			(105,401		)	5,737,516			(226,977		)
Income before income tax	6,656,702			1,903,518			7,537,848			2,993,616
Income tax benefit (expense)	—			(12,248		)	—			(18,751		)
Net income	$	6,656,702		$	1,891,270		$	7,537,848		$	2,974,865
Net income attributable to non-controlling interest	344,380			—			325,399			—
Net income attributable to Vertex Energy, Inc.	$	7,001,082		$	1,891,270		$	7,863,247		$	2,974,865
Earnings  per common share
Basic	$	0.31		$	0.11		$	0.36		$	0.17
Diluted	$	0.28		$	0.10		$	0.33		$	0.15
Shares used in computing earnings per share
Basic	22,826,102			17,409,034			22,025,316			17,243,762
Diluted	24,847,456			19,887,288			23,879,500			19,798,989

See accompanying notes to the consolidated financial statements

F-2

VERTEX ENERGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2014 AND 2013
(UNAUDITED)
	Six Months Ended
	June 30, 2014			June 30, 2013
Cash flows from operating activities
Net income	$	7,537,848		$	2,974,865
Adjustments to reconcile net income to cash   provided by operating activities
Stock based compensation expense	101,378			94,466
Depreciation and amortization	1,800,950			1,069,035
Gain on acquisition	(6,481,051		)	—
Deferred federal income tax	—			11,000
Reduction of contingent liability	—			(1,850,000		)
Changes in operating assets and liabilities
Accounts receivable	(2,237,992		)	(930,490		)
Accounts receivable-other	950,000			—
Accounts receivable-related party	(1,027,321		)	—
Inventory	(3,679,989		)	(3,465,205		)
Prepaid expenses	(2,717,571		)	(45,451		)
Accounts payable	9,464,956			3,669,339
Other assets	(79,806		)	—
Net cash provided by operating activities	3,631,402			1,527,559
Cash flows from investing activities
Acquisition of Omega	(28,764,099		)	(67,972		)
Refund of asset acquisition	—			675,558
Purchase of fixed assets	(2,635,882		)	(1,010,485		)
Net cash (used in) investing activities	(31,399,981		)	(402,899		)
Cash flows from financing activities
Line of credit (payments) proceeds, net	304,000			(750,000		)
Proceeds related to primary stock offering	15,803,000			—
Proceeds from note payable	40,509,906			—
Payments on note payable	(9,634,029		)	(922,873		)
Proceeds from exercise of common stock options and warrants	211,062			37,501
Debt issue costs	(2,452,157		)	—
Net cash provided by (used in) financing activities	44,741,782			(1,635,372		)
Net change in cash and cash equivalents	16,973,203			(510,712		)
Cash and cash equivalents at beginning of the period	2,678,628			807,940
Cash and cash equivalents at end of period	$	19,651,831		$	297,228
SUPPLEMENTAL INFORMATION
Cash paid for interest	$	733,046		$	199,737
Cash paid for income taxes	$	—		$	21,249
NON-CASH INVESTING AND FINANCING TRANSACTIONS
Conversion of Series A Preferred Stock into common stock	$	644		$	168
Note payable for acquisition of E-Source interest	$	854,050		$	—
Additional paid in capital for acquisition of E-Source interest	$	231,260		$	—

 See accompanying notes to the consolidated financial statements

F-3

VERTEX ENERGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2014

(UNAUDITED)

NOTE 1.  BASIS OF PRESENTATION AND NATURE OF OPERATIONS

The accompanying unaudited consolidated interim financial statements of Vertex Energy, Inc. (the “Company,” or “Vertex Energy”) have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’s annual consolidated financial statements as filed with the SEC on Form 10-K on March 25, 2014 (the “Form 10-K”).  In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein.  The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Certain prior period amounts have been reclassified to conform to current period presentation. Notes to the consolidated financial statements which would substantially duplicate the disclosure contained in the audited consolidated financial statements for the most recent fiscal year 2013 as reported in Form 10-K, have been omitted.

NOTE 2.  CONCENTRATIONS, SIGNIFICANT CUSTOMERS, COMMITMENTS AND CONTINGENCIES

At June 30, 2014 and 2013 and for each of the six months then ended, the Company’s revenues and receivables were comprised of the following customer concentrations:

	2014		2013
	% of Revenues	% of Receivables	% of Revenues	% of Receivables
Customer 1	36%	19%	—%	—%
Customer 2	16%	3%	54%	40%
Customer 3	14%	25%	—%	—%
Customer 4	11%	9%	8%	—%
Customer 5	7%	9%	10%	30%
Customer 6	—%	—%	3%	12%

The Company purchases goods and services from one company that represented 10% of total purchases for the six months ended June 30, 2014 and one company that represented 12% for the six months ended June 30, 2013.

The Company has had various debt facilities available for use, of which there was $43,704,475 and $8,515,698 outstanding as of June 30, 2014 and December 31, 2013, respectively. See Note 3 for further details.

In February 2013, Bank of America agreed to lease the Company up to $1,025,000 of equipment to enhance the Thermal Chemical Extraction Process (TCEP) operation, which went into effect in April 2013.  Under the current terms of the lease agreement, there are 60 monthly payments of approximately $13,328.

The Company’s revenue, profitability and future rate of growth are substantially dependent on prevailing prices for petroleum-based products.  Historically, the energy markets have been very volatile, and there can be no assurance that these prices will not be subject to wide fluctuations in the future.  A substantial or extended decline in such prices could have a material adverse effect on the Company’s financial position, results of operations, cash flows, and access to capital and on the quantities of petroleum-based products that the Company can economically produce.

The Company, in its normal course of business, is involved in various other claims and legal action.  In the opinion of management, the outcome of these claims and actions will not have a material adverse impact upon the financial position of the Company.

We intend to take advantage of any potential tax benefits related to net operating losses (“NOLs”) acquired as part of the Company's April 2009 merger with World Waste Technologies, Inc. ("World Waste").  As a result of the merger, we acquired approximately $42 million of net operating losses that may be used to offset taxable income generated by the Company in future periods.

It is possible that the Company may be unable to use these NOLs in their entirety.  The extent to which the Company will be able to utilize these carry-forwards in future periods is subject to limitations based on a number of factors, including the number of

F-4

VERTEX ENERGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2014

(UNAUDITED)

shares issued within a three-year look-back period, whether the merger is deemed to be a change in control, whether there is deemed to be a continuity of World Waste’s historical business, and the extent of the Company’s subsequent income. As of December 31, 2013, the Company had utilized approximately $11.25 million of these NOLs leaving approximately $30.75 million of potential NOLs of which we expect to utilize approximately $2.2 million for the six months ended June 30, 2014.  The Company recorded a change in valuation allowance for the six months ended June 30, 2014 of approximately $748,000.

NOTE 3. NOTES PAYABLE

In September 2012, the Company entered into a credit agreement with Bank of America. Pursuant to the agreement, Bank of America agreed to loan the Company $8,500,000 in the form of a term loan and to provide the Company with an additional $10,000,000 in the form of a revolving line of credit.

In May 2014, the Company entered into an amended and restated credit agreement with Bank of America. The amended credit agreement amended and restated the prior credit agreement entered into with Bank of America in September 2012. Pursuant to the agreement, Bank of America agreed to loan the Company up to $20,000,000 in the form of a revolving line of credit, subject to certain terms and lending ratios, to be used for feedstock purchases and general corporate purposes. The line of credit bears interest at the option of the Company of either the lender's prime commercial lending rate then in effect between 1.25% and 2% per annum or the Bank of America LIBOR rate plus between 2.35% and 3% (both ranges dependent upon the Company's leverage ratio from time to time). Accrued and unpaid interest on the revolving note is due and payable monthly in arrears and all amounts outstanding under the revolving note are due and payable on May 2, 2017.  The balance on the revolving line of credit was $0 at June 30, 2014.

The financing arrangement discussed above is secured by a first priority security interest in all of the assets and securities of our direct and indirect subsidiaries other than E-Source Holdings, LLC. The loan includes various covenants binding upon the Company, including, requiring that the Company comply with certain reporting requirements, provide notices of material corporate events and forecasts to Bank of America, and maintain certain financial ratios relating to debt leverage, consolidated EBITDA, maximum debt exposure, and minimum liquidity, including maintaining a ratio of quarterly consolidated EBITDA to certain fixed charges. The Company was in compliance with all aspects of the agreement at June 30, 2014.

On May 2, 2014, the Company entered into a Credit and Guaranty Agreement with Goldman Sachs Bank USA. Pursuant to the agreement, Goldman Sachs Bank USA loaned the Company $40,000,000 in the form of a term loan. As set forth in the Credit Agreement, the Company has the option to select whether loans made under the Credit Agreement bear interest at (a) the greater of (i) the prime rate in effect, (ii) the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System plus ½ of 1%, (iii) the sum of (A) the Adjusted LIBOR Rate and (B) 1%, and (iv) 4.5% per annum; or (b) the greater of (i) 1.50% and (ii) the applicable ICE Benchmark Administration Limited interest rate, divided by (x) one minus, (y) the Adjusted LIBOR Rate. Interest on the Credit Agreement is payable monthly in arrears. Amortizing principal payments are due on the Credit Agreement Loan in the amount of $300,000 per fiscal quarter for June 30, 2014, September 30, 2014, December 31, 2014 and March 31, 2015, and $800,000 per fiscal quarter thereafter until maturity on May 2, 2019. The balance on the term loan was $39,700,000 at June 30, 2014.

The Goldman Sachs Bank USA financing arrangement is secured by all of the assets of the Company, but subordinate to the aforementioned Bank of America credit agreement. The Credit Agreement contains customary representations, warranties, and covenants for facilities of similar nature and size as the Credit Agreement. The Credit Agreement also includes various covenants binding the Company including limits on indebtedness the Company may incur and maintenance of certain financial ratios relating to consolidated EBITDA and debt leverage. The Company was in compliance with all aspects of the agreement at June 30, 2014.

In August, 2013, the Company entered into a credit agreement with Texas Citizens Bank N.A. Pursuant to the agreement, Texas Citizens Bank agreed to loan E-Source Holdings $500,000 in the form of a revolving line of credit secured by E-Source held assets. The credit agreement carries an interest rate of 6.25% per annum. Accrued and unpaid interest on the revolving note is due and payable monthly in arrears and all amounts outstanding under the revolving note are due and payable on August 27, 2014. The balance on the line of credit was $304,000 at June 30, 2014.

On May 2, 2014, in connection with the closing of the Omega Refining acquisition, the Company assumed two capital leases totaling $3,154,860. Payments of $2,345,363 were made and the balance was $809,497 at June 30, 2014.

F-5

The Company has notes payable to various financial institutions, bearing interest at rates ranging from 5% to 6.35%, maturing from November 2015 to April 2023. The balance of the notes payable is $2,454,944 at June 30, 2014.

Effective January 1, 2014, the Company purchased an additional 19% ownership interest in E-Source Holdings, LLC ("E-Source") of which it had previously acquired 51%. In consideration for the additional interest the Company will pay $854,050 of which $200,000 was paid on April 11, 2014 and the remainder is to be paid monthly in $72,672 installments through December 31, 2014. The Company will also issue up to 207,743 shares of stock on January 31, 2015 based on certain EBITDA criteria being met for 2014 (reduced pro rata based on actual EBITDA). As of the date of the transaction, the estimated value of the stock to be issued of approximately $231,000 was recorded as additional paid in capital and a reduction of the non-controlling interest in accordance with ASC 810-10-45. The balance of the note payable is $436,033 at June 30, 2014.

NOTE 4. STOCK-BASED COMPENSATION

Stock-based compensation expense was $101,378 and $94,466 for the six months ended June 30, 2014 and 2013, respectively, for options previously awarded by the Company.

Stock option activity for the six months ended June 30, 2014 is summarized as follows:

	Shares		Weighted Average Exercise Price			Weighted Average Remaining Contractual Life (in Years)	Grant Date Fair Value
Outstanding at December 31, 2013	3,060,834		$	5.89		6.07	$	1,327,163
Options granted	150,000		7.55			10.00	304,915
Options forfeited/expired	(91,667	)	10.78			—	(29,335		)
Options exercised	(483,750	)	(0.68		)	—	(192,127		)
Outstanding at June 30, 2014	2,635,417		$	6.77		5.99	$	1,410,616
Vested at June 30, 2014	1,719,792		$	8.43		4.72	$	522,691
Exercisable at June 30, 2014	1,719,792		$	8.43		4.72	$	522,691

A summary of the Company’s stock warrant activity and related information for the six months ended June 30, 2014 is as follows: 

	Shares		Weighted Average Exercise Price			Weighted Average Remaining Contractual Life (in Years)	Grant Date Fair Value
Outstanding at December 31, 2013	7,083		$	2.72		1.57	$	2,900
Warrants exercised	(6,250	)	(1.75		)	—	(2,800		)
Warrants cancelled/forfeited/expired	(833	)	(10.00		)	—	(100		)
Warrants at June 30, 2014	—		$	—		—	$	—
Vested at June 30, 2014	—		$	—		—	$	—
Exercisable at June 30, 2014	—		$	—		—	$	—

NOTE 5. EARNINGS PER SHARE

Basic earnings per share includes no dilution and is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the periods presented. The calculation of basic earnings per share for the six months ended June 30, 2014 includes the weighted average of common shares outstanding.  Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity, such as convertible preferred stock, stock options, warrants or convertible securities.  The calculation of diluted earnings per share for the six months ended June 30, 2014 does not include options to purchase 906,000 shares due to their anti-dilutive effect.

F-6

VERTEX ENERGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2014

(UNAUDITED)

The following is a reconciliation of the numerator and denominator for basic and diluted earnings per share for the six months ended June 30, 2014 and 2013: 

	2014		2013
Basic Earnings per Share
Numerator:
Net income available to common shareholders	$	7,863,247	$	2,974,865
Denominator:
Weighted-average shares outstanding	22,025,316		17,243,762
Basic earnings per share	$	0.36	$	0.17
Diluted Earnings per Share
Numerator:
Net income available to common shareholders	$	7,863,247	$	2,974,865
Denominator:
Weighted-average shares outstanding	22,025,316		17,243,762
Effect of dilutive securities
Stock options and warrants	1,178,626		1,210,007
Preferred stock	675,558		1,345,220
Diluted weighted-average shares outstanding	23,879,500		19,798,989
Diluted earnings per share	$	0.33	$	0.15

NOTE 6. COMMON STOCK

The total number of authorized shares of the Company’s common stock is 750,000,000 shares, $0.001 par value per share. As of June 30, 2014, there were 25,019,450 common shares issued and outstanding.

Each share of the Company's common stock is entitled to equal dividends and distributions per share with respect to the common stock when, as and if declared by the Company's board of directors.  No holders of any shares of the Company's common stock has a preemptive right to subscribe for any of the Company's securities, nor are any shares of the Company's common stock subject to redemption or convertible into other securities.  Upon liquidation, dissolution or winding-up of the Company and after payment of creditors and preferred shareholders of the Company, if any, the assets of the Company will be divided pro rata on a share-for-share basis among the holders of the Company's common stock.  Each share of the Company's common stock is entitled to one vote.  Shares of the Company's common stock do not possess any cumulative voting rights.

During the six months ended June 30, 2014, a total of 643,444 shares of the Company's Series A Preferred Stock were converted into 643,444 shares of our common stock on a one-for-one basis. Warrants to purchase 6,250 shares of the Company's common stock were exercised for 6,250 shares of common stock with $10,937 of exercise price paid in cash. Options to purchase 483,750 shares of common stock were exercised for a net of 464,148 shares of common stock (when adjusting for a cashless exercise of 186,250 of such options and the payment, in shares of common stock, of an aggregate exercise price of $130,625, along with an exercise price of $200,125 paid in cash in connection with such exercises) and 464,148 shares of common stock were issued to the option holders in connection with such exercises. Additionally, in June 2014, 2,200,000 shares were sold in connection with an underwritten offering of the Company's common stock for net proceeds of $15,803,000 after deducting offering costs of $1,247,000 from the $17,050,000 raised. The shares have a par value per share of $0.001. In May 2014, 500,000 shares of our restricted common stock (valued at $3,266,000) were issued in connection with the initial closing of the Omega Refining acquisition.

In April 2014, the Company granted two employees Incentive Stock Options to purchase an aggregate of 150,000 shares of the Company's common stock, which have a term of ten years, an exercise price of $7.55 per share and vest at the rate of 1/4th of such options per year on each of the first four anniversaries of the grant date.

F-7

VERTEX ENERGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2014

(UNAUDITED)

NOTE 7.  PREFERRED STOCK

The total number of authorized shares of the Company’s preferred stock is 50,000,000 shares, $0.001 par value per share. The total number of designated shares of the Company’s Series A Preferred Stock is 5,000,000 (“Series A Preferred”).  The total number of designated shares of the Company’s Series B Preferred Stock is 2,000,000. As of June 30, 2014, there were 675,558 shares of Series A Preferred Stock issued and outstanding and no Series B Preferred shares issued and outstanding.

NOTE 8.  SEGMENT REPORTING

The Company’s reportable segments include the Black Oil, Refining & Marketing and Recovery divisions.  Segment information for the six months ended June 30, 2014 and 2013 is as follows:

SIX MONTHS ENDED JUNE 30, 2014
	Black Oil		Refining & Marketing		Recovery			Total
Revenues	$	72,449,922	$	38,345,278	$	8,634,080		$	119,429,280
Income (loss) from operations	$	1,137,078	$	1,538,784	$	(875,530	)	$	1,800,332

SIX MONTHS ENDED JUNE 30, 2013
	Black Oil		Refining & Marketing		Recovery		Total
Revenues	$	42,692,716	$	23,065,950	$	2,607,538	$	68,366,204
Income from operations	$	784,537	$	1,102,197	$	1,333,859	$	3,220,593

THREE MONTHS ENDED JUNE 30, 2014
	Black Oil		Refining & Marketing		Recovery			Total
Revenues	$	48,878,522	$	18,517,819	$	4,683,281		$	72,079,622
Income (loss) from operations	$	1,116,688	$	768,209	$	(1,041,152	)	$	843,745

THREE MONTHS ENDED JUNE 30, 2013
	Black Oil		Refining & Marketing		Recovery			Total
Revenues	$	19,493,407	$	14,234,204	$	1,383,791		$	35,111,402
Income (loss) from operations	$	1,091,268	$	963,842	$	(46,191	)	$	2,008,919

NOTE 9. CONTINGENT CONSIDERATION

As part of the consideration paid related to the August 2012 acquisition of Vertex Holdings, L.P., if certain earnings targets are met, the Company has to pay the seller approximately $2,233,000 annually in each of 2013, 2014 and 2015. In 2013, it had been determined that the 2013 earnings target would not be met and the contingent consideration was reduced by $1,850,000, which represents the discounted cash flow for year one. It had also been determined that there was a 25% probability that the 2014 earnings target would not be met and the contingent consideration was reduced by $388,750, which represents 25% of the discounted cash flows for year two.

F-8

VERTEX ENERGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2014

(UNAUDITED)

As part of the consideration paid in connection with the acquisition of E-Source Holding, LLC, if certain targets are met, the Company has to pay the seller approximately $260,000 annually in 2014, 2015, 2016 and 2017. The Company has recorded contingent consideration of $748,000, which is the discounted cash flows of the earn-out payments. In addition, on January 31, 2015, 207,743 shares of the Company's stock will be issued as consideration for the additional equity interest if certain performance metrics are achieved for 2014. As of the date of the transaction, the estimated value of the stock to be issued of approximately $231,000 was recorded as additional paid in capital and a reduction of the non-controlling interest in accordance with ASC 810-10-45.

As part of the consideration paid in connection with the acquisition of Omega Holdings, the Company has agreed to pay the seller additional earn-out consideration in the event that certain EBITDA targets are met (a) during any twelve month period during the eighteen month period commencing on the first day of the first full calendar month following the May 2, 2014 initial closing date (which targets begin at $8,000,000 of EBITDA during such twelve month period) of up to 470,498 shares of common stock of the Company; and (b) during the calendar year ended December 31, 2015 (which targets begin at $9,000,000 of EBITDA) of up to 770,498 shares of common stock of the Company, in each case subject to adjustment for certain capital expenditures. 

NOTE 10. ACQUISITION

Omega Refining Transaction

On May 2, 2014, the Company completed its acquisition of substantially all of the assets of Omega Refining, LLC (including the Marrero, Louisiana re-refinery and Omega’s Myrtle Grove complex in Belle Chaise, Louisiana) and ownership of Golden State Lubricant Works, LLC for the purpose of re-refining used lubricating oils into processed oils and other products for the distribution, supply and sale to end-customers with related products and support services. The purchase price paid at the closing was approximately $28,764,000 in cash, 500,000 shares of our restricted common stock (valued at $3,266,000) and the assumption of certain capital lease obligations and other liabilities relating to contracts and leases of Omega Refining in connection with the initial closing.  We also agreed to provide Omega a loan in the amount of up to approximately $13.8 million.

The acquisition was accounted for under the purchase method of accounting, with the Company identified as the acquirer. Under the purchase method of accounting, the aggregate amount of consideration paid by the Company was allocated to Omega Refining's net tangible assets and intangible assets based on their estimated fair values as of May 2, 2014. The transaction resulted in a bargain purchase of $6,481,051 recognized in net income as an acquisition-date gain. The Omega purchase qualifies as a bargain purchase since the acquisition date amounts of the identifiable net asset acquired, excluding goodwill ($38.92 million), exceed the value of the consideration transferred ($32.44 million). The difference of $6.48 million is a gain as of the acquisition date. The bargain purchase resulted from the financial distress that Omega was in due to the large amount of debt held by Omega and the unexpected decrease in crack spreads that made the debt level overbearing. Evidence that a bargain purchase exists was seen in the common stock price of the Company, which increased from $3.82 (on March 19, 2014) when the transaction was announced) to $8.10 (on May 2, 2014 when the initial closing occurred). The Company retained an independent third party to assist management in determining the fair value of tangible and intangible assets transferred and liabilities assumed. The allocation of the purchase price is based on the best estimates of management.

The following information summarizes the allocation of the fair values assigned to the assets at the purchase date. The allocation of fair values are preliminary and are subject to change in the future during the measurement period.

F-9

VERTEX ENERGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2014

(UNAUDITED)

	(in thousands)
Cash and cash equivalents	$	406
Accounts receivable	950
Inventory	4,192
Prepaid expenses	71
Property, plant and equipment	30,000
Deposits	400
Bango secured note issued to Vertex	8,308
Technology	2,287
Non-compete agreements	66
Total identifiable net assets	$	46,680
Less liabilities assumed, including contingent consideration	(7,763		)
Gain on purchase	(6,481		)
Total purchase price	$	32,436

The Company incurred $2,559,830 in costs associated with the Omega Refining acquisition. These included legal, accounting, environmental and investment banking.

The following table summarizes the cost of amortizable intangible assets related to the Omega Refining acquisition: 

	Estimated Cost (in thousands)		Useful life (years)
Non-Competes	$	66	1
Technology	$	2,287	15
Total	$	2,353

The results of Omega Refining are included in the consolidated financial statements subsequent to May 2, 2014. The following schedule contains pro forma results from operations as if the acquisition had occurred on January 1, 2013. The pro forma results do not report actual results that would have occurred had the merger taken place on January 1, 2013 nor do they necessarily suggest future operating results.

	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Revenues	$	79,747,665	$	68,597,653	$	127,097,323	$	140,850,582
Income from operations	498,141		335,135		1,454,728		3,899,588
Net income	6,284,339		116,145		7,165,485		3,346,949
Net loss attributable to non-controlling interest	344,380		—		325,399		—
Net income attributable to Vertex Energy, Inc.	$	6,628,719	$	116,145	$	7,490,884	$	3,346,949
Earnings  per common share
Basic	$	0.29	$	0.01	$	0.34	$	0.19
Diluted	$	0.27	$	0.01	$	0.31	$	0.17

F-10

VERTEX ENERGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2014

(UNAUDITED)

NOTE 11. SUBSEQUENT EVENTS

Subsequent to June 30, 2014, 22,760 shares of the Company's Series A Preferred Stock were converted into 22,760 shares of our common stock on a one-for-one basis.

Subsequent to June 30, 2014, the available credit on the Line of Credit is $20,000,000. As of August 12, 2014, the outstanding balance drawn on the line of credit is $0 leaving an available balance for draw downs of $20,000,000.

On May 2, 2014, we completed the Initial Closing (defined below) contemplated under that certain Asset Purchase Agreement entered into on March 17, 2014, and amended by the First Amendment dated April 14, 2014, Second Amendment dated April 30, 2014 and Third Amendment dated May 2, 2014 (as amended to date, the “Purchase Agreement”) by and among the Company, Vertex Refining LA, LLC and Vertex Refining NV, LLC (“Vertex Refining Nevada”), both wholly-owned subsidiaries of Vertex Operating, Omega Refining, LLC (“Omega Refining”), Bango Refining NV, LLC (“Bango Refining”) and Omega Holdings Company LLC (“Omega Holdings” and collectively with Omega Refining and Bango Refining, “Omega” or the “sellers”).

The acquisition is to close in two separate closings, the first of which relating to the acquisition of Omega Refining (including the Marrero, Louisiana re-refinery and Omega’s Myrtle Grove complex in Belle Chaise, Louisiana) and ownership of Golden State, as described above, closed on May 2, 2014 (the “Initial Closing”), and the second of which relating to the acquisition of Bango Refining and the Bango, Nevada plant, is expected to close on or around September 2014, subject to certain closing conditions being met prior to closing (the “Final Closing”).  Vertex’s obligation to consummate the Final Closing is subject to among other things, compliance with certain provisions of the credit agreements described herein and that the Bango plant operated by Bango Refining be fully restored and operational, as well as the plant meeting certain used motor oil processing run rates and that there are no adverse claims or legal proceedings related to an accident that occurred at the Bango plant in December 2013.

The amount due at the Final Closing, in consideration for the acquisition of Bango Refining, will be the assumption of certain loans made pursuant to the Omega Secured Note (described below), the issuance of 1,500,000 shares of Vertex’s common stock of which 650,000 shares (with an agreed value of $3.2301 per share or approximately $2.1 million) will be held in escrow (the “Pledged Shares”) and used to satisfy indemnification claims and secure the repayment of the Omega Secured Note (defined below), and which amount is subject to adjustment in the event minimum inventory levels are not delivered at the Final Closing, and the assumption of certain capital lease obligations and other liabilities relating to contracts and leases of Bango Refining.  A portion of the Pledged Shares will be released from escrow, subject to outstanding claims, on September 15, 2015, and the remainder will be released on the 18 month anniversary of the Final Closing.  Subject to certain negotiated exceptions for excluded liabilities, taxes and other fundamental items, the sellers’ indemnification obligations are capped at $5 million.

The consideration payable in connection with the Final Closing is subject to customary adjustments prior to the Final Closing depending on certain criteria, including the amount of inventory delivered by the sellers at the Final Closing.

The sellers also have the right to earn additional earn-out consideration in the event certain EBITDA targets are met by (a) Vertex Refining NV, LLC during the years ended December 31, 2015 and 2016 (which targets begin at $3.5 million of EBITDA per year), of up to an aggregate of $6 million (payable in shares of the Company’s common stock equal to the volume-weighted average of the regular session closing prices per share of the Company’s common stock on the NASDAQ Capital Market for the ten (10) consecutive trading days prior to the applicable due date of such payments, provided, however, in no event shall the VWAP be less than $3.15 per share or more than $10.00 per share, as adjusted for any stock splits or recapitalizations); (b) Vertex Refining LA, LLC during any twelve month period during the eighteen month period commencing on the first day of the first full calendar month following the Initial Closing date (which targets begin at $8 million of EBITDA during such twelve month period) of up to 470,498 shares of common stock of the Company; and (c) Vertex Refining LA, LLC during the calendar year ended December 31, 2015 (which targets begin at $9 million of EBITDA) of up to 770,498 shares of common stock of the Company, in each case subject to adjustment for certain capital expenditures (collectively, the “Earn-Outs).  Notwithstanding the above, the maximum number of shares of common stock to be issued pursuant to the Purchase Agreement cannot (i) exceed 19.9% of the outstanding shares of common stock outstanding on March 17, 2014, (ii) exceed 19.9% of the combined voting power of the Company on March 17, 2014, or (iii) otherwise exceed such number of shares of common stock that would violate applicable listing rules of the NASDAQ Stock Market in the event the Company’s stockholders do not approve the issuance of such shares (the “Share Cap”).  In the event the number of shares to be issued under the Purchase Agreement exceeds the Share Cap, then the Company is required to instead pay any such additional consideration in cash or obtain the approval of the Company’s stockholders under applicable rules and requirements of the NASDAQ Capital Market for the additional issuance of shares.

F-11

VERTEX ENERGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2014

(UNAUDITED)

Finally, pursuant to the acquisition, (a) with certain exceptions related to sellers’ operation of Bango Refining between the Initial Closing and the Final Closing, the sellers agreed to enter into a non-competition agreement whereby they agreed not to compete against Vertex in connection with the acquired businesses, or to solicit active customers of the acquired businesses for a period of five years and (b) certain of the employees of the sellers agreed to enter into three year employment agreements with Vertex’s newly formed subsidiaries.

Additionally, we were required to file and obtain effectiveness of a registration statement within 90 days following the Initial Closing (if the Securities and Exchange Commission did not review the filing) and 150 days following the Initial Closing (if the Securities and Exchange Commission did review the filing), registering the shares of common stock issuable in connection with the acquisition, which registration statement was declared effective on July 29, 2014.

The Final Closing remains subject to the satisfaction of certain customary closing conditions. The Purchase Agreement contains customary representations, warranties, covenants and indemnities by the parties thereto. Craig-Hallum Capital Group LLC is acting as exclusive financial advisor to the Company in connection with the acquisition and has provided a fairness opinion to the Board of Directors in connection with the transaction.

On July 30, 2014 the Company announced that it has begun due diligence of Heartland Group Holdings LLC ("Heartland") under the terms of a letter of intent which contemplates Vertex acquiring substantially all of the assets of Heartland for approximately $16.5 million, which includes an approximate $8 million dollar earnout achievable during the first 2 years.

Along with the Letter of Intent, Vertex also entered into a consulting agreement with Heartland to provide consulting services, which include advice and guidance related to Heartland petroleum’s collection operations, Heartland’s Re-refinery, the installation of new equipment there, and the implementation of operational changes at the re-refinery. The objective is to eventually facilitate the integration of all of Heartland's operations into Vertex’s platform, allowing for a smooth transition upon the closing of the transaction. Vertex has agreed to cover expenses throughout implementation of these changes and to reimburse Heartland for any operating losses recognized after July 16, 2014, subject to a cap of $500,000 if Vertex decides not to move forward with the closing, and which losses are reimbursable to Vertex if Heartland breaches the terms of the letter of intent.

The acquisition remains subject to due diligence, the negotiation of definitive purchase agreements, satisfaction of closing conditions, and receipt of required consents and approvals. The parties plan to enter into definitive purchase agreements by the end of September 2014, and tentatively plan to close the acquisition, subject to the negotiated conditions of closing being met by the end of October 2014.

F-12

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In some cases, you can identify forward-looking statements by the following words: “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. Forward-looking statements are not a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time the statements are made and involve known and unknown risks, uncertainties and other factors that may cause our results, levels of activity, performance or achievements to be materially different from the information expressed or implied by the forward-looking statements in this Report. These factors include:

• risks associated with our outstanding credit facilities, including amounts owed, restrictive covenants and security interests thereon;

• the level of competition in our industry and our ability to compete;

• our ability to respond to changes in our industry;

• the loss of key personnel or failure to attract, integrate and retain additional personnel;

• our ability to protect our intellectual property and not infringe on others’ intellectual property;

• our ability to scale our business;

• our ability to maintain supplier relationships and obtain adequate supplies of feedstocks;

• our ability to obtain and retain customers;

• our ability to produce our products at competitive rates;

• our ability to execute our business strategy in a very competitive environment;

• trends in, and the market for, the price of oil and gas and alternative energy sources;

• our ability to maintain our relationship with KMTEX, Ltd.;

• the impact of competitive services and products;

• our ability to maintain insurance;

• potential future litigation, judgments and settlements;

• rules and regulations making our operations more costly or restrictive;

• changes in environmental and other laws and regulations and risks associated with such laws and regulations;

• economic downturns both in the United States and globally;

• risk of increased regulation of our operations and products;

• negative publicity and public opposition to our operations;

• disruptions in the infrastructure that we and our partners rely on;

• an inability to identify attractive acquisition opportunities and successfully negotiate acquisition terms;

• our ability to effectively integrate acquired assets, companies, employees or businesses;

• liabilities associated with acquired companies, assets or businesses;

• interruptions at our facilities;

• our ability to complete pending acquisitions;

• required earn-out payments and other contingent payments we are required to make;

• unexpected changes in our anticipated capital expenditures resulting from unforeseen required maintenance, repairs, or upgrades;

• our ability to acquire and construct new facilities;

• our ability to effectively manage our growth;

• repayment of and covenants in our debt facilities;

• the lack of capital available on acceptable terms to finance our continued growth; and

• other risk factors included under “Risk Factors” below and in our Annual Report on Form 10-K.

13

You should read the matters described in “Risk Factors” below and disclosed in the Company’s Annual Report on Form 10-K, filed with the Commission on March 25, 2014, and the other cautionary statements made in this Report as being applicable to all related forward-looking statements wherever they appear in this Report. We cannot assure you that the forward-looking statements in this Report will prove to be accurate and therefore prospective investors are encouraged not to place undue reliance on forward-looking statements. Other than as required by law, we undertake no obligation to update or revise these forward-looking statements, even though our situation may change in the future.

Please see the “Glossary of Selected Terms” incorporated by reference hereto as Exhibit 99.1, for a list of abbreviations and definitions used throughout this Report.

In this Quarterly Report on Form 10-Q, we may rely on and refer to information regarding the refining, re-refining, used oil and oil and gas industries in general from market research reports, analyst reports and other publicly available information.  Although we believe that this information is reliable, we cannot guarantee the accuracy and completeness of this information, and we have not independently verified any of it.

Corporate History of the Registrant:

Vertex Energy, Inc. (the “Company,” “we,” “us,” and “Vertex”) was formed as a Nevada corporation on May 14, 2008.  Pursuant to an Amended and Restated Agreement and Plan of Merger dated May 19, 2008, by and between Vertex Holdings, L.P. (formerly Vertex Energy, L.P.), a Texas limited partnership ("Holdings"), us, World Waste Technologies, Inc., a California corporation (“WWT” or “World Waste”), Vertex Merger Sub, LLC, a California limited liability company and our wholly-owned subsidiary ("Merger Subsidiary"), and Benjamin P. Cowart, our Chief Executive Officer, as agent for our shareholders (as amended from time to time, the “Merger Agreement”). Effective on April 16, 2009, World Waste merged with and into Merger Subsidiary, with Merger Subsidiary continuing as the surviving corporation and becoming our wholly-owned subsidiary (the "Merger"). In connection with the Merger, (i) each outstanding share of World Waste common stock was cancelled and exchanged for 0.10 shares of our common stock; (ii) each outstanding share of World Waste Series A preferred stock was cancelled and exchanged for 0.4062 shares of our Series A preferred stock; and (iii) each outstanding share of World Waste Series B preferred stock was cancelled and exchanged for 11.651 shares of our Series A preferred stock. Additionally, as a result of the Merger, the common stock of World Waste was effectively reversed one for ten (10) as a result of the exchange ratios set forth in the Merger, and unless otherwise noted, the impact of such effective reverse stock split, created by the exchange ratio set forth above, is retroactively reflected throughout this Report.

Finally, as a result of the Merger, as the successor entity of World Waste, we assumed World Waste’s filing obligations with the Securities and Exchange Commission and our common stock began trading on the Over-The-Counter Bulletin Board under the symbol “VTNR.OB” effective May 4, 2009.  Subsequently, effective February 13, 2013, our common stock began trading on the NASDAQ Capital Market under the symbol “VTNR".

Material Acquisitions

Holdings:

Effective as of August 31, 2012, we acquired 100% of the outstanding equity interests of Vertex Acquisition Sub, LLC (“Acquisition Sub”), a special purpose entity consisting of substantially all of the assets of Holdings and real-estate properties of B & S Cowart Family L.P. (“B&S LP” and the “Acquisition”), both of which entities were owned and operated by related parties.  Prior to closing the Acquisition, Holdings contributed to Acquisition Sub substantially all of its assets and liabilities relating to the business of transporting, storing, processing and re-refining petroleum products, crudes and used lubricants, including all of the outstanding equity interests in Holdings’ wholly-owned operating subsidiaries, Cedar Marine Terminals, L.P. (“CMT”), Crossroad Carriers, L.P. (“Crossroad”), Vertex Recovery, L.P. (“Vertex Recovery”) and H&H Oil, L.P. (“H&H Oil”, and collectively, the “Transferred Partnerships”), and B&S LP contributed real estate associated with the operations of H&H Oil.

We paid the following consideration for 100% of the equity interests in Acquisition Sub (the “Purchase Price”): (i) to Holdings, (a) $14.8 million in cash and assumed debt; and (b) 4,545,455 million restricted shares of our common stock; and (ii) to B&S LP, $1.7 million cash consideration, representing the appraised value of certain real estate contributed by B&S LP to Acquisition Sub.  Additionally, for each of the three one-year periods following September 11, 2012, the closing date of the transaction, Holdings will be eligible to receive earn-out payments of $2.23 million, up to $6.7 million in the aggregate (the “Earn-Out Payments”), contingent on the combined company achieving adjusted EBITDA targets of $10.75 million, $12.0 million and $13.5 million, respectively, in those periods. In 2013 it was determined that the 2013 earnings target would not be met and the contingent consideration was reduced by $1,850,000, which represents the discounted cash flow for year one. It was also determined

14

that there is a 25% probability that the 2014 earnings target will not be met and the contingent consideration was reduced by $388,750, which represents 25% of the discounted cash flow for year two.

We had numerous relationships and related-party transactions with Holdings and its subsidiaries prior to the closing of the Acquisition, including the lease of a storage facility, the subletting of office space, and agreements to operate the Thermal Chemical Extraction Process ("TCEP") (described below) facility and to transport and store feedstock and end products. The closing of the Acquisition eliminated these related-party transactions.  The description of our operations below reflects the closing of the Acquisition, unless otherwise stated or the discussion requires otherwise.

E-Source:

Effective October 1, 2013 Vertex acquired a 51% interest in E-Source Holdings, LLC (“E-Source”), a company that leases and operates a facility located in Houston, Texas, and provides dismantling, demolition, decommission and marine salvage services at industrial facilities throughout the Gulf Coast. E-Source also owns and operates a fleet of trucks and other vehicles used for shipping and handling equipment and scrap materials. The consideration paid for the acquisition of E-Source was approximately $900,000 and the right of one of the sellers (the “Earn-Out Seller”) to earn additional earn-out payments of up to 15% of E-Source’s net income before taxes, in the event certain calendar year net income thresholds are met, in calendar years 2014 through 2017, as well as a commission of 20% of the net income before taxes associated with certain future planned projects of E-Source required to be completed prior to December 31, 2014, as long as such applicable seller remains an employee of E-Source during such applicable periods. Effective on March 14, 2014, we entered into an amendment to our acquisition agreement with the Earn-Out Seller, and mutually agreed that the lesser of (a) 20% and (b) $100,000, per calendar year of earn-out payments due the Earn-Out Seller, if any, will be payable in shares of our restricted common stock, based on the average of the five closing sales prices of the Company’s common stock on the first five trading days of each applicable calendar year (each a “Valuation”) for which the earn-out consideration relates, provided that the parties mutually agreed to use a valuation of $3.2922 per share (the “2014 Valuation Price”) for any earn-out payments relating to the 2014 calendar year and further agreed that in no event will any future calendar year Valuation be less than the 2014 Valuation Price. On March 26, 2014, but effective January 1, 2014, the Company acquired an additional 19% interest in E-Source for $854,050 in cash consideration and the right to receive stock consideration (on January 31, 2015) in the amount of 207,743 shares of stock subject to certain performance metrics being met during 2014.

E-Source leases and operates a plant located in Houston, Texas, and provides dismantling, demolition, decommission and marine salvage services at industrial facilities throughout the Gulf Coast.   E-Source also owns and operates a fleet of trucks and other vehicles used for shipping and handling equipment and scrap materials.

Omega:

On May 2, 2014, we completed the Initial Closing (defined below) contemplated under the Asset Purchase Agreement entered into on March 17, 2014, and amended by the First Amendment dated April 14, 2014, Second Amendment dated April 30, 2014 and Third Amendment dated May 2, 2014 (as amended to date, the “Purchase Agreement”) by and among the Company, Vertex Refining LA, LLC and Vertex Refining NV, LLC (“Vertex Refining Nevada”), both wholly-owned subsidiaries of Vertex Operating, LLC (“Vertex Operating”), Omega Refining, LLC (“Omega Refining”), Bango Refining NV, LLC (“Bango Refining”) and Omega Holdings Company LLC (“Omega Holdings” and collectively with Omega Refining and Bango Refining, “Omega” or the “sellers”).

Pursuant to the Purchase Agreement, we agreed to acquire certain of Omega’s assets related to (1) the operation of oil re-refineries and, in connection therewith, purchasing used lubricating oils and re-refining such oils into processed oils and other products for the distribution, supply and sale to end-customers and (2) the provision of related products and support services. Specifically, the assets included Omega’s Marrero, Louisiana and Bango, Nevada, re-refineries (which re-refine approximately 80 million gallons of used motor oil per year). Additionally, the Marrero, Louisiana plant produces vacuum gas oil (VGO) and the Bango, Nevada plant produces base lubricating oils. Omega also operates Golden State Lubricants Works, LLC (“Golden State”), a strategic blending and storage facility located in Bakersfield, California, which is included in the acquisition. In connection with the acquisition, we also acquired certain of Omega’s prepaid assets and inventory.

The acquisition is to close in two separate closings, the first of which relating to the acquisition of Omega Refining (including the Marrero, Louisiana re-refinery and Omega’s Myrtle Grove complex in Belle Chaise, Louisiana) and ownership of Golden State, as described above, closed on May 2, 2014 (the “Initial Closing”), and the second of which relating to the acquisition of Bango Refining and the Bango, Nevada plant, is expected to close on or around September 2014, subject to certain closing

15

conditions being met prior to closing (the “Final Closing”). Vertex’s obligation to consummate the Final Closing is subject to among other things, compliance with certain provisions of the credit agreements described herein and that the Bango plant operated by Bango Refining be fully restored and operational, as well as the plant meeting certain used motor oil processing run rates and that there are no adverse claims or legal proceedings related to an accident that occurred at the Bango plant in December 2013.

The purchase price paid at the Initial Closing was approximately $28,764,000 in cash (which funds we raised pursuant to our entry into the Credit Agreements, described below under “Liquidity and Capital Resources”), 500,000 shares of our restricted common stock (valued at $3,266,000) and the assumption of certain capital lease obligations and other liabilities relating to contracts and leases of Omega Refining in connection with the Initial Closing. We also agreed to provide Omega a loan in the amount of up to approximately $13.8 million (described below).

The amount due at the Final Closing, in consideration for the acquisition of Bango Refining, will be the assumption of certain loans made pursuant to the Omega Secured Note (described below), the issuance of 1,500,000 shares of Vertex’s common stock of which 650,000 shares (with an agreed value of $3.2301 per share or approximately $2.1 million) will be held in escrow (the “Pledged Shares”) and used to satisfy indemnification claims and secure the repayment of the Omega Secured Note (defined below), and which amount is subject to adjustment in the event minimum inventory levels are not delivered at the Final Closing, and the assumption of certain capital lease obligations and other liabilities relating to contracts and leases of Bango Refining. A portion of the Pledged Shares will be released from escrow, subject to outstanding claims, on September 15, 2015, and the remainder will be released on the 18 month anniversary of the Final Closing. Subject to certain negotiated exceptions for excluded liabilities, taxes and other fundamental items, the sellers’ indemnification obligations are capped at $5 million.

In connection with the First Closing, Omega Refining and Bango Refining provided Vertex Refining Nevada a Secured Promissory Note (the “Omega Secured Note”) in the aggregate amount of $13,858,067, representing (a) a loan to Omega in the amount of approximately $7.56 million (representing the agreed upon value of the amount by which the consideration paid at the Initial Closing (which included consideration relating to the assets acquired at the Initial Closing and which will be acquired at the Final Closing) exceeded the value of assets acquired at the Initial Closing) (the “Purchase Price Loan”); (b) a $750,000 loan related to the delivery of a certain amount of used motor oil inventory at the Initial Closing (the “First Inventory Loan”); (c) a $1,400,000 loan related to the delivery of a certain amount of used motor oil inventory at the Final Closing (the “Second Inventory Loan” and along with the First Inventory Loan, the “Inventory Loans”); (d) a loan in a single advance of $3.15 million to satisfy accounts payable and other working capital related obligations of Omega after the Initial Closing, provided such loans are not required to be made until after June 16, 2014 (the “Draw Down Loan”) and (e) an additional loan of up to $1 million for capital expenditures, if mutually approved by us and Omega (the “Capital Expenditure Loan”). The Purchase Price Loan and the Draw Down Loan bear interest at the short-term federal rate as published by the Internal Revenue Service from time to time (currently 0.33% per annum) prior to October 30, 2014, and thereafter at 9.5% per annum, payable monthly in arrears and have a maturity date of March 31, 2015. The First Inventory Loan and the Draw Down Loan accrue interest at the rate of 9.5% per annum beginning on May 31, 2014, and are due and payable on March 31, 2015. Upon an event of default under any of the loans, the loans accrue interest at 18% per annum until paid in full. The Purchase Price Loan and the Draw Down Loan are due and payable in full on the earlier of March 31, 2015 and the date of the Final Closing, provided that both the Purchase Price Loan and Draw Down Loan (including accrued and unpaid interest thereon) will be deemed paid in full upon the Final Closing. The Omega Secured Note may be prepaid in whole or part from time to time without penalty.

The repayment of the Omega Secured Note is guaranteed by Omega Holdings pursuant to a Guaranty Agreement and secured by a security interest granted pursuant to the terms of the Omega Secured Note and a Leasehold Deed of Trust, Security Agreement, Assignment of Leases and Rents and Fixture Filing. Additionally, we have the right to set-off any amount due upon an event of default against certain of the Pledged Shares and the earn-out consideration described below, of which a portion of such shares were pledged to secure the Omega Secured Note pursuant to a Pledge Agreement, subject to the terms of the Purchase Agreement.

The consideration payable in connection with the Final Closing is subject to customary adjustments prior to the Final Closing depending on certain criteria, including the amount of inventory delivered by the sellers at the Final Closing.

The sellers also have the right to earn additional earn-out consideration in the event certain EBITDA targets are met by (a) Vertex Refining NV, LLC during the years ended December 31, 2015 and 2016 (which targets begin at $3.5 million of EBITDA per year), of up to an aggregate of $6 million (payable in shares of the Company’s common stock equal to the volume-weighted average of the regular session closing prices per share of the Company’s common stock on the NASDAQ Capital Market for the ten (10) consecutive trading days prior to the applicable due date of such payments, provided, however, in no event shall the VWAP be less than $3.15 per share or more than $10.00 per share, as adjusted for any stock splits or recapitalizations); (b) Vertex Refining

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LA, LLC during any twelve month period during the eighteen month period commencing on the first day of the first full calendar month following the Initial Closing date (which targets begin at $8 million of EBITDA during such twelve month period) of up to 470,498 shares of common stock of the Company; and (c) Vertex Refining LA, LLC during the calendar year ended December 31, 2015 (which targets begin at $9 million of EBITDA) of up to 770,498 shares of common stock of the Company, in each case subject to adjustment for certain capital expenditures (collectively, the “Earn-Outs). Notwithstanding the above, the maximum number of shares of common stock to be issued pursuant to the Purchase Agreement cannot (i) exceed 19.9% of the outstanding shares of common stock outstanding on March 17, 2014, (ii) exceed 19.9% of the combined voting power of the Company on March 17, 2014, or (iii) otherwise exceed such number of shares of common stock that would violate applicable listing rules of the NASDAQ Stock Market in the event the Company’s stockholders do not approve the issuance of such shares (the “Share Cap”). In the event the number of shares to be issued under the Purchase Agreement exceeds the Share Cap, then the Company is required to instead pay any such additional consideration in cash or obtain the approval of the Company’s stockholders under applicable rules and requirements of the NASDAQ Capital Market for the additional issuance of shares.

Finally, pursuant to the acquisition, (a) with certain exceptions related to sellers’ operation of Bango Refining between the Initial Closing and the Final Closing, the sellers agreed to enter into a non-competition agreement whereby they agreed not to compete against Vertex in connection with the acquired businesses, or to solicit active customers of the acquired businesses for a period of five years and (b) certain of the employees of the sellers agreed to enter into three year employment agreements with Vertex’s newly formed subsidiaries.

Additionally, we were required to file and obtain effectiveness of a registration statement within 90 days following the Initial Closing (if the Securities and Exchange Commission did not review the filing) and 150 days following the Initial Closing (if the Securities and Exchange Commission did review the filing), registering the shares of common stock issuable in connection with the acquisition, which registration statement was declared effective on July 29, 2014.

We obtained rights to certain material agreements and contracts of Omega Refining in connection with the Initial Closing, including obligations under Omega Refining’s capital leases and rights under a Terminaling Services Agreement dated May 1, 2008, originally between Omega Refining and Marrero Terminal LLC (the “Terminaling Agreement”) and a Second Used Motor Oil Buy/Sell Contract originally between Omega Refining and Thermo Fluids Inc. dated August 1, 2012 (the “Used Oil Contract”). Pursuant to the Terminaling Agreement, Marrero Terminal LLC agreed to provide certain terminaling services at the Marrero, Louisiana facility, subject to the terms of the agreement, including the use of tanks for storage in consideration for certain per barrel storage and throughput fees. The Terminaling Agreement has a term through April 30, 2018, subject to the right to extend such agreement pursuant to the terms thereof. Pursuant to the Used Oil Contract, we are required to purchase from Thermo Fluids Inc. an aggregate of a minimum of 26 million gallons of used motor oil through the end of the term of the agreement, December 31, 2014, with certain required minimum monthly and yearly volumes. We are required to pay Thermo Fluids Inc. consideration based on a discount to the average low posting of Platts U.S. Gulf Coast No. 6 Fuel Oil, plus in some cases additional consideration per barrel, for all used motor oil purchased pursuant to the agreement, subject to certain adjustments provided for in the agreement.

The Final Closing remains subject to the satisfaction of certain customary closing conditions. The Purchase Agreement contains customary representations, warranties, covenants and indemnities by the parties thereto. Craig-Hallum Capital Group LLC is acting as exclusive financial advisor to the Company in connection with the acquisition and has provided a fairness opinion to the Board of Directors in connection with the transaction.

Description of Business Activities:

We are an environmental services company that recycles industrial waste streams and off-specification commercial chemical products. Our primary focus is recycling used motor oil and other petroleum by-products.  We are engaged in operations across the entire petroleum recycling value chain including collection, aggregation, transportation, storage, refinement, and sales of aggregated feedstock and re-refined products to end users.  We operate in three divisions- the Black Oil, Refining and Marketing and Recovery divisions. Our Black Oil division collects and purchases used motor oil directly from third-party generators, aggregates used motor oil from an established network of local and regional collectors, and sells used motor oil to our customers for use as a feedstock or replacement fuel for industrial burners. Our Refining and Marketing division aggregates and manages the re-refinement of used motor oil and other petroleum by-products and sells the re-refined products to end customers. Our Recovery division is a generator solutions company for the proper recovery and management of hydrocarbon streams. We operate a refining facility that uses our proprietary TCEP technology and we also utilize third-party processing facilities.

We recently acquired a 70% interest in E-Source (as described above) a company that leases and operates a facility located in Houston, Texas, and provides dismantling, demolition, decommission and marine salvage services at industrial facilities throughout the Gulf Coast.   E-Source also owns and operates a fleet of trucks and other vehicles used for shipping and handling

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equipment and scrap materials. We also recently acquired Omega's Marrero, Louisiana re-refinery and Myrtle Grove complex in Belle Chasse, Louisiana and ownership of Golden State, as described above. The Marrero, Louisiana facility re-refines used motor oil and also produces vacuum gas oil. Golden State operates a strategic blending and storage facility located in Bakersfield, California.

Black Oil Division

Our Black Oil division is engaged in operations across the entire used motor oil recycling value chain including collection, aggregation, transportation, storage, refinement, and sales of aggregated feedstock and re-refined products to end users. We collect and purchase used oil directly from generators such as oil change service stations, automotive repair shops, manufacturing facilities, petroleum refineries, and petrochemical manufacturing operations.  We collect and purchase used oil directly from generators such as oil change service stations, automotive repair shops, manufacturing facilities, petroleum refineries, and petrochemical manufacturing operations.  We own a fleet of 13 collection vehicles which routinely visit generators to collect and purchase used motor oil.   We also aggregate used oil from a diverse network of approximately 50 suppliers who operate similar collection businesses to ours.

We manage the logistics of transport, storage and delivery of used oil to our customers.   We own a fleet of seven transportation trucks and more than 90 aboveground storage tanks with over 4.5 million gallons of storage capacity.  These assets are used by both the Black Oil division and the Refining and Marketing division.  In addition, we also utilize third parties for the transportation and storage of used oil feedstocks.  Typically, we sell used oil to our customers in bulk to ensure efficient delivery by truck, rail, or barge.  In many cases, we have contractual purchase and sale agreements with our suppliers and customers, respectively. We believe these contracts are beneficial to all parties involved because it ensures that a minimum volume is purchased from collectors and generators, a minimum volume is sold to our customers, and we are able to minimize our inventory risk by a spread between the costs to acquire used oil and the revenues received from the sale and delivery of used oil.  We also use our proprietary TCEP technology to re-refine used oil into marine fuel cutterstock and a higher-value feedstock for further processing. In addition at our Marrero facility we produce a Vacuum Gas Oil (VGO) product that is sold to refineries as well as to the marine fuels market.

Refining and Marketing Division

Our Refining and Marketing division is engaged in the aggregation of feedstock, re-refining it into higher value end products, and selling these products to our customers, as well as related transportation and storage activities. We aggregate a diverse mix of feedstocks including used motor oil, petroleum distillates, transmix and other off-specification chemical products. These feedstock streams are purchased from pipeline operators, refineries, chemical processing facilities and third-party providers, and are also transferred from our Black Oil division.  We have a toll-based processing agreement in place with KMTEX, Ltd. (“KMTEX”) to re-refine feedstock streams, under our direction, into various end products that we specify.  KMTEX uses industry standard processing technologies to re-refine our feedstocks into pygas, gasoline blendstock and marine fuel cutterstock.  We sell all of our re-refined products directly to end-customers or to processing facilities for further refinement.

Recovery Division

The Recovery division is a generator solutions company for the proper recovery and management of hydrocarbon streams. The Recovery division also provides industrial dismantling, demolition, decommissioning, investment recovery and marine salvage services in industrial facilities. The Company (through this division) owns and operates a fleet of eight trucks and heavy equipment used for processing, shipping and handling of reusable process equipment and other scrap commodities.

We currently provide our services in 13 states, primarily in the Gulf Coast and Central Midwest regions of the United States.  For the rolling twelve month period ending June 30, 2014, we aggregated approximately 91 million gallons of used motor oil and other petroleum by-product feedstocks and managed the re-refining of approximately 32 million gallons of used motor oil with our proprietary TCEP.

Biomass Renewable Energy

We are also continuing to work on joint development commercial projects which focus on the separation of municipal solid waste into feedstocks for energy production.  We are very selective in choosing opportunities that we believe will result in value for our shareholders.  We can provide no assurance that the ongoing venture will successfully bring any projects to a point of financing or successful construction and operation.

Thermal Chemical Extraction Process

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We own the intellectual property for our patented TCEP technology.  TCEP is a technology which utilizes thermal and chemical dynamics to extract impurities from used oil which increases the value of the feedstock.  We currently sell the TCEP final product as fuel oil cutterstock. We intend to continue to develop the TCEP technology and design with the goal of producing additional re-refined products including lubricating base oil.

TCEP differs from conventional re-refining technologies, such as vacuum distillation and hydrotreatment, by relying more heavily on chemical processes to remove impurities rather than temperature and pressure. Therefore, the capital requirements to build a TCEP plant are typically much less than a traditional re-refinery because large feed heaters, vacuum distillation columns, and a hydrotreating unit are not required.  The end product currently produced by TCEP is used as fuel oil cutterstock. Conventional re-refineries produce lubricating base oils or product grades slightly lower than base oil that can be used as industrial fuels or transportation fuel blendstocks.

We currently estimate the cost to construct a new, fully-functional, commercial facility using our TCEP technology, with annual processing capacity of between 25 and 50 million gallons at another location would be approximately $10 to $15 million, which could fluctuate based on throughput capacity.  The facility infrastructure would require additional capitalized expenditures which would depend on the location and site specifics of the facility.

Strategy and Plan of Operations

The principal elements of our strategy include:

Expand Feedstock Supply Volume.  We intend to expand our feedstock supply volume by growing our collection and aggregation operations.  We plan to increase the volume of feedstock we collect directly by developing new relationships with generators and working to displace incumbent collectors; increasing the number of collection personnel, vehicles, equipment, and geographical areas we serve; and acquiring collectors in new or existing territories.  We intend to increase the volume of feedstock we aggregate from third-party collectors by expanding our existing relationships and developing new vendor relationships.  We believe that our ability to acquire large feedstock volumes will help to cultivate new vendor relationships because collectors often prefer to work with a single, reliable customer rather than manage multiple relationships and the uncertainty of excess inventory.

Broaden Existing Customer Relationships and Secure New Large Accounts.  We intend to broaden our existing customer relationships by increasing sales of used motor oil and re-refined products to these accounts. In some cases, we may also seek to serve as our customers’ primary or exclusive supplier.  We also believe that as we increase our supply of feedstock and re-refined products that we will secure larger customer accounts that require a partner who can consistently deliver high volumes.

Re-Refine Higher Value End Products.  We intend to develop, lease, or acquire technologies to re-refine our feedstock supply into higher-value end products, including assets or technologies which complement TCEP.  Currently, we are using TCEP to re-refine used oil feedstock into cutterstock for use in the marine fuel market.  We believe that the expansion of our TCEP facilities and continued improvements in our technology, and investments in additional technologies, will enable us to upgrade feedstock into end products, such as lubricating base oil, that command higher market prices than the current re-refined products we produce. In addition to TCEP, at our Marrero, Louisiana facility we are producing a vacuum gas oil (VGO) through our re-refinery.

Expand TCEP Re-Refinement Capacity.  We intend to expand our TCEP capacity by building additional TCEP facilities to re-refine feedstock.  We believe the TCEP technology has a distinct competitive advantage over conventional re-refining technology because it produces a high-quality, fuel oil product, and the capital expenditures required to build a TCEP plant are significantly lower than a comparable conventional re-refining facility.  By continuing the transition from our historical role as a value-added logistics provider to operating as a re-refiner, we believe we will be able to leverage our feedstock supply network and aggregation capabilities to upgrade a larger percentage of our feedstock inventory into higher value end products which we believe should lead to increased revenue and gross margins. We intend to build TCEP facilities near the geographic location of substantial feedstock sources that we have relationships with through our existing operations or from an acquisition.  By establishing TCEP facilities near proven feedstock sources, we seek to lower our transportation costs and lower the risk of operating plants at low capacity.

Pursue Selective Strategic Relationships Or Acquisitions.  We plan to grow market share by consolidating feedstock supply through partnering with or acquiring collection and aggregation assets, such as the acquisition of Omega's assets (as described in greater detail above) and our recently announced proposed acquisition of certain assets from Heartland Group Holdings, LLC.  Such acquisitions and/or partnerships could increase our revenue and provide better control over the quality and quantity of feedstock available for resale and/or upgrading as well as providing additional locations for the implementation of TCEP.  In

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addition, we intend to pursue further vertical integration opportunities by acquiring complementary recycling and processing technologies where we can realize synergies by leveraging our customer and vendor relationships, infrastructure, and personnel, and by eliminating duplicative overhead costs.

Alternative Energy Project Development. We will continue to evaluate and potentially pursue various alternative energy project development opportunities.  These opportunities may be a continuation of the projects sourced originally by World Waste and/or may include new projects initiated by us.

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RESULTS OF OPERATIONS

Description of Material Financial Line Items:

Revenues

We generate revenues from three existing operating divisions as follows:

BLACK OIL - Revenues for our Black Oil division are comprised primarily of feedstock sales (used motor oil) which are purchased from generators of used motor oil such as oil change shops and garages, as well as a network of local and regional suppliers.  Volumes are consolidated for efficient delivery and then sold to third-party re-refiners and fuel oil blenders for the export market.  In addition, through used oil re-refining, we re-refine used oil through TCEP.  The finished product is then sold by barge as a fuel oil cutterstock and a feedstock component for major refineries. Through the operations at our Marrero, Louisiana facility we produce a Vacuum Gas Oil (VGO) product from used oil re-refining which is then sold via barge to end users to utilize in a refining process or a fuel oil blend.

REFINING AND MARKETING - The Refining and Marketing division generates revenues relating to the sales of finished products.  The Refining and Marketing division gathers hydrocarbon streams in the form of petroleum distillates, transmix and other chemical products that have become off-specification during the transportation or refining process. These feedstock streams are purchased from pipeline operators, refineries, chemical processing facilities and third-party providers, and then processed at a third-party facility under our direction. The end products are typically three distillate petroleum streams (gasoline blendstock, pygas and fuel oil cutterstock), which are sold to major oil companies or to large petroleum trading and blending companies. The end products are delivered by barge and truck to customers.  

RECOVERY - The Recovery division is a generator solutions company for the proper recovery and management of hydrocarbon streams. This division also provides dismantling, demolition, decommission and marine salvage services at industrial facilities. We own and operate a fleet of trucks and other vehicles used for shipping and handling equipment and scrap materials.

Our revenues are affected by changes in various commodity prices including crude oil, natural gas, #6 oil and metals.

Cost of Revenues

BLACK OIL - Cost of revenues for our Black Oil division are comprised primarily of feedstock purchases from a network of providers. Other cost of revenues include processing costs, transportation costs, purchasing and receiving costs, analytical assessments, brokerage fees and commissions, and surveying and storage costs.

REFINING AND MARKETING - The Refining and Marketing division incurs cost of revenues relating to the purchase of feedstock, purchasing and receiving costs, and inspection and processing of the feedstock into gasoline blendstock, pygas and fuel oil cutter by a third party. Cost of revenues also includes broker’s fees, inspection and transportation costs.

RECOVERY - The Recovery division incurs cost of revenues relating to the purchase of hydrocarbon products, purchasing and receiving costs, inspection, demolition and transporting of metals and other salvage and materials. Cost of revenues also includes broker’s fees, inspection and transportation costs.

Our cost of revenues are affected by changes in various commodity indices, including crude oil, natural gas, #6 oil and metals.  For example, if the price for crude oil increases, the cost of solvent additives used in the production of blended oil products, and fuel cost for transportation cost from third party providers will generally increase. Similarly, if the price of crude oil falls, these costs may also decline.

General and Administrative Expenses

Our general and administrative expenses consist primarily of salaries and other employee-related benefits for executive, administrative, legal, financial and information technology personnel, as well as outsourced and professional services, rent, utilities, and related expenses at our headquarters, as well as certain taxes.

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RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2014 COMPARED TO THE THREE MONTHS ENDED JUNE 30, 2013

Set forth below are our results of operations for the three months ended June 30, 2014, as compared to the same period in 2013.  In the comparative tables below, increases in revenue/income or decreases in expense (favorable variances) are shown without parentheses while decreases in revenue/income or increases in expense (unfavorable variances) are shown with parentheses in the “$ Change” and “% Change” columns. 

	Three Months Ended June 30,
	2014			2013			$ Change			% Change
Revenues	$	72,079,622		$	35,111,402		$	36,968,220		105	%
Cost of Revenues	63,200,942			32,556,738			(30,644,204		)	(94	)%
Gross Profit	8,878,680			2,554,664			6,324,016			248	%
Reduction of contingent liability	—			(1,850,000		)	(1,850,000		)	100	%
Selling, general and administrative expenses	6,075,517			2,395,745			(3,679,772		)	(154	)%
Acquisition related expenses	1,959,418			—			(1,959,418		)	(100	)%
Income from operations	843,745			2,008,919			(1,165,174		)	(58	)%
Other Income	7			7,598			(7,591		)	(100	)%
Bargain purchase gain related to Omega acquisition	6,481,051			—			6,481,051			100	%
Other expense	(10,866		)	—			(10,866		)	(100	)%
Interest Expense	(657,235		)	(112,999		)	(544,236		)	(482	)%
Total other income (expense)	5,812,957			(105,401		)	5,918,358			5,615	%
Income before income taxes	6,656,702			1,903,518			4,753,184			250	%
Income tax (expense) benefit	—			(12,248		)	12,248			100	%
Net income	6,656,702			1,891,270			4,765,432			252	%
Net loss attributable to non-controlling interest	344,380			—			344,380			(100	)%
Net income attributable to Vertex Energy, Inc.	$	7,001,082		$	1,891,270		$	5,109,812		270	%

Each of our segments’ gross profit during the three months ended June 30, 2014 and 2013 was as follows (increases in revenue and/or decreases in cost of revenues are shown without parentheses while decreases in revenue and/or increases in cost of revenues are shown with parentheses in the “$ Change” and “% Change” columns): 

	Three Months Ended June 30,
Black Oil Segment	2014		2013		$ Change			% Change
Total revenue	$	48,878,522	$	19,493,407	$	29,385,115		151	%
Total cost of revenue	42,330,639		18,363,098		(23,967,541		)	(131	)%
Gross profit	$	6,547,883	$	1,130,309	$	5,417,574		479	%
Refining Segment
Total revenue	$	18,517,819	$	14,234,204	$	4,283,615		30	%
Total cost of revenue	16,626,178		12,824,955		(3,801,223		)	(30	)%
Gross profit	$	1,891,641	$	1,409,249	$	482,392		34	%
Recovery Segment
Total revenue	$	4,683,281	$	1,383,791	$	3,299,490		238	%
Total cost of revenue	4,244,125		1,368,685		(2,875,440		)	(210	)%
Gross profit	$	439,156	$	15,106	$	424,050		2,807	%

Our revenues and cost of revenues are significantly impacted by fluctuations in commodity prices; decreases in commodity prices typically result in decreases in revenue and cost of revenues.  Our gross profit is to a large extent a function of the market discount we are able to obtain in purchasing feedstock, as well as how efficiently management conducts operations.

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Total revenues increased 105% for the three months ended June 30, 2014, compared to the same period in 2013, due primarily to an increase in overall volume of product sold during the three months ended June 30, 2014 compared to the same period in 2013. Total volume increased 84% largely as a result of the increased volume the Company has seen over the past twelve months of cutterstock produced through our TCEP operation and the recent addition during the three months ended June 30, 2014 of the Marrero facility which produces a VGO finished product. Gross profit increased 248% for the three months ended June 30, 2014 compared to the three months ended June 30, 2013. Additionally, our per barrel margin increased 60% relative to the three months ended June 30, 2013. This increase was a result of the acquisition of the Omega Refining business which is now part of our Black Oil division, the acquisition of E-Source, which is part of our Recovery division, as well as some improved margins in our Refining and Marketing division. The 94% increase in cost of revenues for the three months ended June 30, 2014 compared to the three months ended June 30, 2013 is mainly a result of our increased revenues.

Our Black Oil division's volume increased approximately 117% during the three months ended June 30, 2014 compared to the same period in 2013. This increase was due to the increased amount of volume managed through our TCEP operation, as well as the increased volume we realized from the Marrero facility (beginning May 2, 2014) (described in greater detail below) which produces a VGO finished product.

We experienced a 117% increase in the volume of our TCEP refined product during the three months ended June 30, 2014, compared to the same period in 2013. This increase is a result of the improvements that were made in 2013 to improve efficiencies and improve the volume throughput at the facility. In addition, commodity prices increased approximately 1% for the three months ended June 30, 2014, compared to the same period in 2013. The average posting (U.S. Gulfcoast Residual Fuel No. 6 3%) for the three months ended June 30, 2014 increased $1.01 per barrel from a three month average of $90.85 for the three months ended June 30, 2013 per barrel to $91.86 per barrel for the three months ended June 30, 2014.

Our TCEP technology generated revenues of $22,873,771 during the three months ended June 30, 2014, with cost of revenues of $19,107,694, producing a gross profit of $3,766,077.  The per barrel margin for our TCEP product increased 218% as compared to same period during 2013.  This increase was a result of increased volumes being produced as well as a slight improvement in the market value of the finished product of 1% while feedstock costs remained relatively unchanged.

Overall volume for the Refining and Marketing division increased 29% during the three month period ended June 30, 2014 as compared to the same period in 2013. This division experienced an increase in production of 22% for its gasoline blendstock for the three months ended June 30, 2014, compared to the same period in 2013. Our fuel oil cutter volumes increased 44% for the three months ended June 30, 2014, compared to the same period in 2013. Our pygas volumes increased 19% for the three months ended June 30, 2014 as compared to the same period in 2013. These increases are a result of new feedstock streams that we started managing during the third quarter of 2013.

Our Recovery division includes the business operations of Vertex Recovery as well as the recently acquired business of E-Source (of which we own a 70% interest). This segment was formed as of the fourth quarter of 2013 (provided that our historical segment information provided below and elsewhere throughout this filing has been retroactively adjusted to include the Recovery division had it been in place during the periods presented). Revenues for this division increased substantially as a result of E-Source during the three months ended June 30, 2014. This division periodically participates in project works that are not ongoing thus we expect to see fluctuations in revenue and gross profit from this division from period to period.

Overall gross profit increased 248% and our margin per barrel increased approximately 60% for the three months ended June 30, 2014, compared to the same period in 2013. This improvement was a result of increased volumes along with the increase in overall business production at each of our facilities.

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The following table sets forth the high and low spot prices during the first six months of 2014 for our key benchmarks.

2014
Benchmark	High		Date	Low		Date
U.S. Gulfcoast No. 2 Waterborne (dollars per gallon)	$	3.00	March 3	$	2.73	February 4
U.S. Gulfcoast Unleaded 87 Waterborne (dollars per gallon)	$	3.08	June 20	$	2.54	January 3
U.S. Gulfcoast Residual Fuel No. 6 3% (dollars per barrel)	$	94.94	June 24	$	87.09	January 13
NYMEX Crude oil (Dollars per barrel)	$	107.26	June 20	$	91.66	January 9
Reported in Platt's US Marketscan (Gulf Coast)

The following table sets forth the high and low spot prices during the first six months of 2013 for our key benchmarks.

2013
Benchmark	High		Date	Low		Date
U.S. Gulfcoast No. 2 Waterborne (dollars per gallon)	$	3.25	February 12	$	2.57	April 17
U.S. Gulfcoast Unleaded 87 Waterborne (dollars per gallon)	$	3.21	February 15	$	2.58	June 28
U.S. Gulfcoast Residual Fuel No. 6 3% (dollars per barrel)	$	101.02	February 14	$	87.49	April 17
NYMEX Crude oil (Dollars per barrel)	$	98.44	June 18	$	86.68	April 17
Reported in Platt's US Marketscan (Gulf Coast)

We saw a decrease during the first six months of 2014 in each of the benchmark commodities we track compared to the same period in 2013.

Our margins are a function of the difference between what we are able to pay for raw materials and the market prices for the range of products produced. The various petroleum products produced are typically a function of crude oil indices and are quoted on multiple exchanges such as the New York Mercantile Exchange ("NYMEX"). These prices are determined by a global market and can be influenced by many factors, including but not limited to supply/demand, weather, politics, and global/regional inventory levels. As such, we cannot provide any assurances regarding results of operations for any future periods, as numerous factors outside of our control affect the prices paid for raw materials and the prices (for the most part keyed to the NYMEX) that can be charged for such products. Additionally, for the near term, results of operations will be subject to further uncertainty, as the global markets and exchanges, including the NYMEX, continue to experience volatility.

As our competitors bring new technologies to the marketplace, which will likely enable them to obtain higher values for the finished products created through their technologies from purchased black oil feedstock, we anticipate that they will be able to pay more for feedstock due to the additional value received from their finished product (i.e., as their margins increase, they are able to increase the prices they are willing to pay for feedstock).  If we are not able to continue to refine and improve our technologies and gain efficiencies in the TCEP technology, and our recently acquired VGO technology through our Marrero facility, we could be negatively impacted by the ability of our competitors to bring new processes to market which compete with our processes, as well as their ability to outbid us for feedstock supplies.

If we are unable to effectively compete with additional technologies brought to market by our competitors, our finished products could be worth less and if our competitors are willing to pay more for feedstock than we are, they could drive up prices, which would cause our revenues to decrease (as described above, our revenues track the spread between the prices we purchase feedstock for and the prices we can sell finished product at), and cause our cost of sales to increase, respectively.  Additionally, if we are forced to pay more for feedstock, our cash flows will be negatively impacted and our margins will decrease.

We had total operating expenses of $8,034,935 for the three months ended June 30, 2014, which included $1,959,418 of acquisition related expenses, compared to $2,395,745 of total operating expenses for the prior year’s period, an increase of $5,639,190 or 235% from the prior period.  This increase is primarily due to the additional selling, general and administrative expenses generated by new business lines, specifically those business lines acquired from Omega Refining and as a part of the E-source acquisition business, as well as increased sales expenses associated with our expansion into new West Coast markets. The Company incurred an additional $1,959,418 of legal, accounting, auditing, investment banking expenses and other one-time

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expenses related to acquisitions during the three months ended June 30, 2014, which expenses were not represented in the prior period.

We had income from operations of $843,745 for the three months ended June 30, 2014, compared to income from operations of $2,008,919 for the three months ended June 30, 2013, a decrease of $1,165,174 or 58% from the prior year’s period.  The decrease was mainly due to additional selling general and administrative expenses associated with new product lines, and acquired operations, and certain one-time expenses associated with acquisitions partially offset by an increase in volumes and revenues during the three month period ended June 30, 2014, and a $1,850,000 reduction in contingent liability during the three months ended June 30, 2013, which positively affected income from operations for the three months ended June 30, 2013.  

Contributing to other income for the three months ended June 30, 2014 was $6,481,051, relating to a one-time non-cash bargain purchase benefit from the purchase price of the Omega assets in the most recent acquisition. We also had interest expense of $657,235 for the three months ended June 30, 2014, compared to interest expense of $112,999 for the three months ended June 30, 2013, an increase in interest expense of $544,236 or 482% from the prior period mainly due to the new debt facility with Goldman Sachs. We had total other income of $5,812,597 for the three months ended June 30, 2014, mainly due to the increase in other income described above, compared to total other expense of $105,401 for the three months ended June 30, 2013, mainly due to interest expense.

We had net income of $6,656,702 which includes a $6,481,051 bargain purchase benefit, which is the excess over fair value received from the assets purchased, related to the Omega acquisition for the three months ended June 30, 2014, compared to net income of $1,891,270 for the three months ended June 30, 2013, an increase in net income of $4,765,432 or 252% from the prior period. Net loss related to the 30% minority interest in E-Source was $344,380. We had net income attributable to the Company of $7,001,082 for the three months ended June 30, 2014, compared to $1,891,270 for the three months ended June 30, 2013, an increase in net income of $5,109,812 or 270% from the prior period.

RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2014 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2013

Set forth below are our results of operations for the six months ended June 30, 2014, as compared to the same period in 2013.  In the comparative tables below, increases in revenue/income or decreases in expense (favorable variances) are shown without parentheses while decreases in revenue/income or increases in expense (unfavorable variances) are shown with parentheses in the “$ Change” and “% Change” columns. 

	Six Months Ended June 30,
	2014			2013			$ Change			% Change
Revenues	$	119,429,280		$	68,366,204		$	51,063,076		75	%
Cost of Revenues	105,406,112			62,341,782			$	(43,064,330	)	(69	)%
Gross Profit	14,023,168			6,024,422			7,998,746			133	%
Reduction of contingent liability	—			(1,850,000		)	(1,850,000		)	100	%
Selling, general and administrative expenses	9,663,006			4,653,829			(5,009,177		)	(108	)%
Acquisition related expenses	2,559,830			—			(2,559,830		)	(100	)%
Income from operations	1,800,332			3,220,593			(1,420,261		)	(44	)%
Other Income	377			32,888			(32,511		)	(99	)%
Bargain purchase gain related to Omega acquisition	6,481,051			—			6,481,051			100	%
Other expense	(10,866		)	(40,726		)	29,860			73	%
Interest Expense	(733,046		)	(219,139		)	(513,907		)	235	%
Total other income (expense)	5,737,516			(226,977		)	5,964,493			(2,628	)%
Income before income taxes	7,537,848			2,993,616			4,544,232			152	%
Income tax (expense) benefit	—			(18,751		)	18,751			(100	)%
Net income	7,537,848			2,974,865			4,562,983			153	%
Net loss attributable to non-controlling interest	325,399			—			325,399			(100	)%
Net income attributable to Vertex Energy, Inc.	$	7,863,247		$	2,974,865		4,888,382			164	%

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Each of our segments’ gross profit during the six months ended June 30, 2014 and 2013 was as follows (increases in revenue and/or decreases in cost of revenues are shown without parentheses while decreases in revenue and/or increases in cost of revenues are shown with parentheses in the “$ Change” and “% Change” columns):

	Six Months Ended June 30,
Black Oil Segment	2014		2013		$ Change			% Change
Total revenue	$	72,449,922	$	42,692,716	$	29,757,206		70	%
Total cost of revenue	63,421,922		40,148,098		(23,273,824		)	(58	)%
Gross profit	$	9,028,000	$	2,544,618	$	6,483,382		255	%
Refining Segment
Total revenue	$	38,345,278	$	23,065,950	$	15,279,328		66	%
Total cost of revenue	34,876,244		21,049,089		(13,827,155		)	(66	)%
Gross profit	$	3,469,034	$	2,016,861	$	1,452,173		72	%
Recovery Segment
Total revenue	$	8,634,080	$	2,607,538	$	6,026,542		231	%
Total cost of revenue	7,107,946		1,144,595		(5,963,351		)	(521	)%
Gross profit	$	1,526,134	$	1,462,943	$	63,191		4	%

Our revenues and cost of revenues are significantly impacted by fluctuations in commodity prices; decreases in commodity prices typically result in decreases in revenue and cost of revenues.  Our gross profit is to a large extent a function of the market discount we are able to obtain in purchasing feedstock, as well as how efficiently management conducts operations.

Total revenues increased 75% for the six months ended June 30, 2014, compared to the same period in 2013, due primarily to an increase in overall volume of product sold during the six months ended June 30, 2014 compared to 2013. Total volume increased 60% largely as a result of the increased volume the Company has seen over the past twelve months of Cutterstock produced through our TCEP operation as well as through our Refining and Marketing division and the recent addition during the six months ended June 30, 2014 of the Marrero facility which produces a VGO finished product. Gross profit increased 133% for the six months ended June 30, 2014 compared to the same period in 2013. Additionally, our per barrel margin increased 45% relative to the six months ended June 30, 2013. This increase was a result of the acquisition of the Omega Refining business which is now part of our Black Oil division, the acquisition of E-Source, which is part of our Recovery division, as well as some improved margins and volumes in our other division. The 69% increase in cost of revenues for the six months ended June 30, 2014 compared to the same period in 2013 is mainly a result of our increased revenues.

Our Black Oil division's volume increased approximately 54% during the six months ended June 30, 2014 compared to the same period in 2013. This increase was due to an increased amount of volume managed through our TCEP operation (described in greater detail below), as well as the increased volume we realized from the Marrero facility (beginning May 2, 2014) which produces a VGO finished product.

Overall volume for the Refining and Marketing division increased 77% during the six month period ended June 30, 2014 as compared to the same period in 2013. This division experienced an increase in production of 71% for its gasoline blendstock for the six months ended June 30, 2014, compared to the same period in 2013. Our fuel oil cutterstock volumes increased 102% for the six months ended June 30, 2014, compared to the same period in 2013. Our pygas volumes increased 48% for the six months ended June 30, 2014 as compared to the same period in 2013. These increases are a result of new feedstock streams that we started managing during the third quarter of 2013.

We experienced a 73% increase in the volume of our TCEP refined product during the six months ended June 30, 2014, compared to the same period in 2013. This increase is a result of the improvements that were made in 2013 to improve efficiencies and improve the volume throughput at the facility. Commodity prices decreased approximately 4% for the six months ended June 30, 2014, compared to the same period in 2013. The average posting (U.S. Gulfcoast Residual Fuel No. 6 3%) for the six months ended June 30, 2014 decreased $3.42 per barrel from a six month average of $93.99 per barrel for the six months ended June 30, 2013, to $90.57 per barrel for the six months ended June 30, 2014.

Our Recovery division includes the business operations of Vertex Recovery as well as the recently acquired business of E-Source (of which we own a 70% interest). This segment was formed as of the fourth quarter of 2013 (provided that our historical segment information provided below and elsewhere throughout this filing has been retroactively adjusted to include the Recovery

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division had it been in place during the periods presented). Revenues for this division increased substantially as a result of E-Source during the six months ended June 30, 2014. This division periodically participates in project works that are not ongoing thus we expect to see fluctuations in revenue and gross profit from this division from period to period.

Our TCEP technology generated revenues of $42,610,179 during the six months ended June 30, 2014, with cost of revenues of $36,206,256, producing a gross profit of $6,403,923.  The per barrel margin for our TCEP product increased 14% as compared to same period during 2013.  This increase was a result of increased production as well as reductions in overall feedstock prices during this period.

We had total operating expenses of $12,222,836 for the six months ended June 30, 2014, which included $2,559,830 of acquisition related expenses compared to $4,653,829 of total operating expenses for the prior year’s period, an increase of $7,569,007 or 163% from the prior period.  This increase is primarily due to the additional selling, general and administrative expenses generated by the new business lines, specifically from the acquisition of Omega Refining's operations and the E-source acquisition, as well as increased sales expenses associated with our expansion into new markets. The Company incurred an additional $2,559,830 of legal, accounting, auditing, investment banking expenses and other one-time expenses related to acquisitions during the six months ended June 30, 2014, which expenses were not represented in the prior period.

We had income from operations of $1,800,332 for the six months ended June 30, 2014, compared to income from operations of $3,220,593 for the six months ended June 30, 2013, a decrease of $1,420,261 or 44% from the prior period.  The decrease was mainly due to increased expenses associated with new product lines and acquired operations, and certain one-time expenses associated with acquisitions partially offset by an increase in volumes and revenues during the six month period ended June 30, 2014 and a $1,850,000 reduction in contingent liability during the six months ended June 30, 2013, which positively affected income from operations for the six months ended June 30, 2013.

We had total other income of $5,737,516 for the six months ended June 30, 2014, mainly due to increase in other income described below, compared to other expense of $226,997 for the six months ended June 30, 2013. Included in other income for the six months ended June 30, 2014, was a one-time non-cash bargain purchase benefit from the purchase price of the Omega assets of $6,481,051. We also had interest expense of $733,046 for the six months ended June 30, 2014, compared to interest expense of $219,139 for the six months ended June 30, 2013, an increase in interest expense of $513,907 or 235% from the prior period mainly due to the recent financing from Goldman Sachs.

We had net income of $7,537,848 for the six months ended June 30, 2014, compared to net income of $2,974,865 for the six months ended June 30, 2013, an increase in net income of $4,562,983 or 153% from the prior period. Net loss related to the 30% minority interest in E-Source was $325,399 for the six months ended June 30, 2014. We had net income attributable to the Company of $7,863,247 for the six months ended June 30, 2014, compared to $2,974,865 for the six months ended June 30, 2013, an increase in net income of $4,888,382 or 164% from the prior year period.

Set forth below, we have disclosed a quarter-by-quarter summary of our statements of operations and statements of operations by segment information for the quarters ended December 31, September 30, June 30, and March 31, 2012, and 2013 and March 31, and June 30, 2014 respectively.

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							Statements of Operations by Quarter
	Fiscal 2014						Fiscal 2013												Fiscal 2012
	Second			First			Fourth			Third			Second			First			Fourth			Third			Second			First
	Quarter			Quarter			Quarter			Quarter			Quarter			Quarter			Quarter			Quarter			Quarter			Quarter
Revenues	$	72,079,622		$	47,349,658		$	46,770,402		$	46,830,647		$	35,111,402		$	33,254,801		$	32,256,541		$	36,195,570		$	31,293,193		$	34,827,939
Cost of Revenues	63,200,942			42,205,170			41,340,555			41,945,879			32,556,738			29,785,043			29,290,855			33,011,934			30,542,452			31,942,875
Gross Profit	8,878,680			5,144,488			5,429,847			4,884,768			2,554,664			3,469,758			2,965,686			3,183,636			750,741			2,885,064
Reduction of contingent liability	—			—			(388,750		)	—			(1,850,000		)	—			—			—			—			—
Selling, general and administrative expenses	6,075,517			3,587,489			4,359,857			2,495,748			2,395,745			2,221,492			2,413,181			1,610,146			919,227			1,194,747
Acquisition related expenses	1,959,418			600,412			17,150			—			—			36,592			101,964			1,154,612			—			—
Total selling, general and administrative expenses	8,034,935			4,187,901			3,988,257			2,495,748			545,745			2,258,084			2,515,145			2,764,758			919,227			1,194,747
Income (loss) from operations	843,745			956,587			1,441,590			2,389,020			2,008,919			1,211,674			450,541			418,878			(168,486		)	1,690,317
Other income (expense)
Other income	7			370			4,809			—			7,598			25,289			—			—			—			—
Bargain purchase gain	6,481,051			—			—			—			—			—			—			—			—			—
Other expense	(10,866		)	—			(9,838		)	(3,949		)	—			(40,726		)	158			949			633			—
Interest expense	(657,235		)	(75,811		)	(108,327		)	(95,488		)	(112,999		)	(106,140		)	(106,348		)	(28,972		)	—			(44		)
Total other income (expense)	5,812,957			(75,441		)	(113,356		)	(99,437		)	(105,401		)	(121,577		)	(106,190		)	(28,023		)	633			(44		)
Income (loss) before income taxes	6,656,702			881,146			1,328,234			2,289,583			1,903,518			1,090,097			344,351			390,855			(167,853		)	1,690,273
Income tax benefit (expense)	—			—			1,678,539			40,211			(12,248		)	(6,502		)	(207,000		)	1,714,813			8,828			(116,000		)
Net income (loss)	6,656,702			881,146			3,006,773			2,329,794			1,891,270			1,083,595			137,351			2,105,668			(159,025		)	1,574,273
Net income (loss) attributable to non-controlling interest	344,380			(18,981		)	(431,962		)	—			—			—			—			—			—			—
Net income attributable to Vertex Energy, Inc.	$	7,001,082		$	862,165		$	2,574,811		$	2,329,794		$	1,891,270		$	1,083,595		$	137,351		$	2,105,668		$	(159,025	)	$	1,574,273
Number of weighted average common shares outstanding
Basic	22,826,102			21,232,949			17,830,194			17,715,786			17,409,034			17,079,242			12,138,229			12,255,372			10,136,941			9,434,094
Diluted	24,847,456			21,738,018			20,182,829			19,997,257			19,887,288			20,139,182			14,866,134			16,484,023			10,136,941			15,473,017

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The below graph charts our total quarterly revenue over time from March 31, 2012 to June 30, 2014:

					Statements of Operations by Segments
	Fiscal 2014				Fiscal 2013								Fiscal 2012
	Second		First		Fourth		Third		Second		First		Fourth		Third		Second		First
	Quarter		Quarter		Quarter		Quarter		Quarter		Quarter		Quarter		Quarter		Quarter		Quarter
Black Oil
Revenues	$	48,878,522	$	23,571,400	$	23,660,574	$	22,766,929	$	19,493,407	$	23,199,308	$	19,959,930	$	22,703,429	$	22,308,780	$	24,160,235
Cost of revenues	42,330,639		21,091,283		21,717,508		21,632,211		18,363,098		20,416,314		18,063,709		21,632,753		22,103,561		22,367,745
Gross profit	$	6,547,883	$	2,480,117	$	1,943,066	$	1,134,718	$	1,130,309	$	2,782,994	$	1,896,221	$	1,070,676	$	205,219	$	1,792,490
Refining & Marketing
Revenues	$	18,517,819	$	19,827,459	$	16,749,930	$	15,913,554	$	14,234,204	$	8,831,746	$	11,595,766	$	13,087,667	$	8,984,413	$	10,667,704
Cost of revenues	16,626,178		18,250,066		15,207,097		14,244,023		12,824,955		8,224,134		10,569,315		10,998,611		8,438,891		9,575,130
Gross profit	$	1,891,641	$	1,577,393	$	1,542,833	$	1,669,531	$	1,409,249	$	607,612	$	1,026,451	$	2,089,056	$	545,522	$	1,092,574
Recovery
Revenues	$	4,683,281	$	3,950,799	$	6,359,898	$	8,150,164	$	1,383,791	$	1,223,747	$	700,845	$	404,474	$	—	$	—
Cost of revenues	4,244,125		2,863,821		4,415,950		6,069,645		1,368,685		1,144,595		657,831		380,570		—		—
Gross profit	$	439,156	$	1,086,978	$	1,943,948	$	2,080,519	$	15,106	$	79,152	$	43,014	$	23,904	$	—	$	—

Liquidity and Capital Resources

The success of our current business operations is not dependent on extensive capital expenditures (although we plan to construct additional TCEP facilities in the future, which will require substantial capital expenditures), but rather on relationships with feedstock suppliers and end-product customers, and on efficient management of overhead costs.   Through these relationships, we have historically been able to achieve volume discounts in the procurement of our feedstock, thereby increasing the margins of our segments’ operations.  The resulting operating cash flow is crucial to the viability and growth of our existing business lines.

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We had total assets of $139,873,327 as of June 30, 2014 compared to $64,546,356 at December 31, 2013.   The increase was mainly due to the $46,680,000 of assets acquired from Omega in May 2014, the $7,537,848 of net income which was generated during the six months ended June 30, 2014, and a $16,973,203 increase in cash and cash equivalents as of June 30, 2014. Total current assets as of June 30, 2014 of $62,883,087 consisted of cash and cash equivalents of $19,651,831, accounts receivable, net, of $13,952,805, accounts receivable-related party of $9,335,321 inventory of $16,412,448, and prepaid expenses of $3,530,682. Long term assets consisted of fixed assets, net, of $46,725,108, net intangible assets of $16,733,683, which primarily represents the value of the Company's TCEP patent and certain other patents acquired from Omega Refining, and $4,922,353 of goodwill (booked in connection with the Acquisition of Holdings and E-Source) and other assets of $2,925,096. Fixed assets increased $31,633,932 mainly as a result of our acquisition of certain assets and operations from Omega Refining in May 2014. Additionally, the $16,973,203 increase in cash and cash equivalents was mainly due to funds raised in our June 2014 private offering of shares of common stock described in greater detail below. In addition, mainly as a result of the approximately $30.75 million of net operating losses that may be used to offset taxable income generated by the Company in future periods, the Company has recorded a deferred federal tax asset of $5,684,000 as of June 30, 2014 and December 31, 2013. Our cash, accounts receivable, inventory and accounts payable fluctuate and are somewhat tied to one another based on the timing our inventory cycle and sales.

We had total current liabilities of $29,230,973 as of June 30, 2014 compared to $16,053,032 at December 31, 2013.  This increase was largely due to the increase in our accounts payable during the six months ended June 30, 2014, which accounts payable totaled $26,004,141 as of June 30, 2014, and an increase in capital lease liabilities obtained in connection with the acquisition with Omega Refining (described in greater detail below) of which the current portion outstanding at June 30, 2014 was $809,497. In addition, we had $2,417,335 of current liabilities associated with long-term debt of which $717,335 were related to the E-Source acquisition and $1,700,000 were related to the Omega acquisition.

We had total liabilities of $75,471,866 as of June 30, 2014, including current liabilities of $29,230,973 and long-term liabilities of $46,240,893, which included $38,000,000 of long-term debt representing non-current amounts due on the Term Note and Goldman Sachs Bank USA Credit Agreement (described below), and $2,477,643 related to E-Source debt and line of credit, $5,385,250 of contingent consideration, after the reduction described above, relating to the earn-out payments associated with the acquisition of Vertex Holdings, L.P., and E-Source and certain assets from Omega Refining and $378,000 of deferred federal income tax.

We had working capital of $33,652,114 as of June 30, 2014, compared to working capital of $8,042,589 as of December 31, 2013.  The increase in working capital from December 31, 2013 to June 30, 2014 is due to an increase in cash and cash equivalents related to the offering of common stock described below and an increase in accounts receivable and inventory due to the Omega Refining acquisition.

Our future operating cash flows will vary based on a number of factors, many of which are beyond our control, including commodity prices, the cost of recovered oil, and the ability to turn our inventory.  Other factors that have affected and are expected to continue to affect earnings and cash flow are transportation, processing, and storage costs.  Over the long term, our operating cash flows will also be impacted by our ability to effectively manage our administrative and operating costs. Additionally, we may incur future capital expenditures related to new TCEP facilities.

On September 11, 2012, we entered into a Credit Agreement with Bank of America, N.A. ("BOA”) effective as of August 31, 2012, pursuant to which we borrowed $8,500,000 in the form of a term loan, which is evidenced by a Term Note (the “TermNote”) , and BOA agreed to provide us with an additional $10,000,000 revolving credit facility (the “Credit Facility”), which is evidenced by a Revolving Note (the “Revolving Note”, and together with the Term Note, the “Notes”).

Pursuant to the Credit Agreement, we had the right to request loans from time to time under the Credit Facility, subject to the terms and conditions of the Credit Agreement, provided that the total amount loaned pursuant to the Credit Facility could not exceed the lesser of (a) $10,000,000 and (b) an amount equal to the total of (i) 80% of our accounts in which BOA has a first-priority perfected security interest; (ii) 80% of our finished-goods inventory in which BOA holds a first-priority perfected security interest, in each case subject to the terms and conditions of the Credit Agreement.

Amounts borrowed under the Revolving Note bear interest at our option at the lesser of BOA’s prime commercial lending rate then in effect or the LIBOR rate in effect plus 2.75%.  Accrued and unpaid interest on the Revolving Note is due and payable monthly in arrears and all amounts outstanding under the Revolving Note are due and payable on August 31, 2014.

Amounts borrowed under the Term Note bear interest at our option at the lesser of BOA's prime commercial lending rate then in effect or the LIBOR rate in effect plus 2.75%.  Accrued and unpaid interest on the Term Note is due and payable monthly in arrears and all amounts outstanding under the Term Note are due and payable on August 31, 2015.  Additionally, payments of

30

principal in the amount of $141,667 are due and payable on the Term Note, monthly in arrears on the last day of each month beginning September 30, 2012, and continuing thereafter until the maturity date.

The Credit Agreement was replaced by the Amended BOA Credit Agreement (defined and described below in May 2014).

On September 11, 2012, we borrowed a total of $8.5 million under the Term Note and $8.75 million under the Revolving Note, the majority of which funds were used to pay Holdings the cash portion of the Purchase Price due in connection with the closing of the Acquisition, as described in greater detail above under “MaterialAcquisitions”- "Holdings" and to pay fees and costs associated with the closing of the Acquisition.

As of June 30, 2014, the Line of Credit had a balance of $0 and the Term Note had a balance of $0.

As a result of the E-Source acquisition, the Company has notes payable to various financial institutions, bearing interest at rates ranging from 5% to 6.35%. The balance of these notes is $2,454,944 as of June 30, 2014.

In February 2013, the Lender agreed to lease the Company up to $1,025,000 of equipment to enhance the TCEP operation. Monthly payments are fixed for the sixty month duration of the lease at $13,328 per month.  The lease also provides an early buy-out right for the Company and a right for the Company to extend the lease at the end of its term.  

Credit and Guaranty Agreement

Effective May 2, 2014, we and our newly formed subsidiary, Vertex Energy Operating, LLC (which was formed as a holding company to hold the Company’s operating subsidiaries, which were subsequently transferred to and are currently wholly-owned by Vertex Operating), as well as certain of our other direct and indirect subsidiaries (other than E-Source) as guarantors, entered into a Credit and Guaranty Agreement (the “Credit Agreement”) with Goldman Sachs Bank USA as lender and as administrative agent and collateral agent (the “Lender” or the “Agent”). Pursuant to the Credit Agreement, the Lender loaned us $40 million (the “Credit Agreement Loan”), which was evidenced by a Term Loan Note. Pursuant to the Credit Agreement, the Company has the option to select whether loans made under the Credit Agreement bear interest at (a) the greater of (i) the prime rate in effect, (ii) the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System plus ½ of 1%, (iii) the sum of (A) the Adjusted LIBOR Rate (defined below) and (B) 1%, and (iv) 4.5% per annum; or (b) the greater of (i) 1.50% and (ii) the applicable ICE Benchmark Administration Limited interest rate, divided by (x) one minus, (y) the maximum rate at which reserves (including, without limitation, any basic marginal, special, supplemental, emergency or other reserves) are required to be maintained with respect thereto against “Eurocurrency liabilities” (as such term is defined in Regulation D) under regulations issued from time to time by the Board of Governors of the Federal Reserve System or other applicable banking regulator (the “Adjusted LIBOR Rate”), in each case subject to the terms and conditions of the Credit Agreement, and in each case plus between 5.5% and 7.5% per annum (as provided in the Credit Agreement, based on several factors, including the Company’s total leverage). Interest on the Credit Agreement is payable monthly in arrears, provided that upon any event of default the interest rate increases to 2% per annum in excess of the applicable interest rate then in effect. The amount owed under the Credit Agreement is due and payable on May 2, 2019.

Amortizing principal payments are due on the Credit Agreement Loan in the amount of $300,000 per fiscal quarter for June 30, 2014, September 30, 2014, December 31, 2014 and March 31, 2015, and $800,000 per fiscal quarter thereafter through maturity. Additionally, in the event (a) we receive any sale proceeds from the sale of assets or insurance proceeds (each as described in greater detail in the Credit Agreement), in excess of $250,000, we are required to pay such sale proceeds, less certain deductions, as a prepayment of the Credit Agreement Loan, unless we decide to reinvest such proceeds in long-term production assets as described in the Credit Agreement; (b) we sell equity securities (subject to certain exceptions) we are required to use 100% of the proceeds from such sales to repay the Credit Agreement Loan, subject to certain exemptions, including up to $5 million to be used for working capital, permitted acquisitions, working capital of Vertex Refining Nevada and funds (which are required to total at least $10 million) which we are able to raise prior to June 30, 2014 (subject to the terms of the Credit Agreement) through the sale of securities; (c) we issue debt, we are required to prepay the Credit Agreement Loan in an amount equal to 100% of such funds received; (d) we have cash flow which exceeds certain pre-negotiated limits, we are required to use between 50% and 75% of such additional cash flow to repay the Credit Agreement Loan; (e) we receive tax refunds in excess of $100,000 in any year, we are required to use such funds to prepay the Credit Agreement Loan; (f) our total debt exceeds certain maximum debt ratios set forth in the Credit Agreement, we are required to immediately repay the Credit Agreement Loan in an amount equal to such excess debt; or (g) we receive any funds under the Purchase Agreement, we are required to prepay the Credit Agreement Loan in an amount equal to such received funds, subject in each case to the terms and conditions of the Credit Agreement. We also have the right to make voluntary repayments of the Credit Agreement Loan in the minimum amount of $500,000 (and in multiples of $100,000) from time to time.

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Except with respect to certain accounts, certain finished goods inventory and certain other reserves described in the Amended BOA Credit Agreement (as defined below), the amount owed pursuant to the Credit Agreement is secured by a first priority security interest in all of our assets and all of the assets and securities of our direct and indirect subsidiaries and is also guaranteed by our subsidiaries (other than E-Source) pursuant to the terms of the Credit Agreement, a Pledge and Security Agreement and Mortgage (providing a security interest over certain of our real property assets).

The Credit Agreement contains customary representations, warranties, covenants for facilities of similar nature and size as the Credit Agreement, and requirements for the Company to indemnify the Lender and the Agent for certain losses. The Credit Agreement also includes various covenants (positive and negative) binding the Company, including, requiring that the Company provide the Agent with certain reports, provide the Agent notices of material corporate events and forecasts, limiting the amount of indebtedness the Company may incur (for example, the Company’s total indebtedness cannot exceed between $30,000,000-$32,000,000 at any time, subject to certain exemptions set forth in greater detail in the Credit Agreement), and requiring us to maintain certain financial ratios, relating to consolidated EBITDA and debt leverage including maintaining a ratio of quarterly consolidated EBITDA (as calculated and adjusted in the Credit Agreement) to certain fixed charges (cumulative for subsequent periods up to the first 12 months and thereafter on a 12 month basis), for each quarter beginning June 30, 2014, of between 0.90:1.00 and 1.25:1.00 (depending on the applicable quarter); maintaining a ratio of consolidated debt to consolidated EBITDA (as calculated and adjusted in the Credit Agreement), for the prior 12 month period, for each quarter beginning June 30, 2014, of between 4:1 and 2:1 (depending on the applicable quarter); maintaining consolidated EBITDA (as calculated and adjusted in the Credit Agreement), for each fiscal quarter beginning June 30, 2014, and ending June 30, 2018, of between $4.25 million and $17 million (depending on the applicable quarter); and maintaining at all times (a) liquid cash on hand and (b) available drawdowns under the Amended BOA Credit Agreement (defined below), of at least $3 million.

The Credit Agreement includes customary events of default for facilities of a similar nature and size as the Credit Agreement, including if a default occurs under certain material agreements of the Company; a judgment is obtained against the Company in an amount in excess of $250,000 or which could have a material adverse effect on the Company; and also provides that an event of default occurs if (a) Benjamin P. Cowart, the Company’s Chief Executive Officer, Chairman of the Board and largest shareholder, ceases to own and control at least 20% of the economic and voting interests of the Company (on a fully-diluted basis); (b) any person other than Mr. Cowart (i) obtains 30% of more of the voting or economic interest in the Company on a fully-diluted basis or (ii) obtains the power (whether or not exercised) to elect a majority of the members of the Board of Directors; (c) we cease to own and control 100% of Vertex Operating; (d) the majority of the seats (other than vacant seats) on the Board of Directors of the Company cease to be occupied by persons who either (i) were members of the Board of Directors of the Company on May 2, 2014, or (ii) were nominated for election by the Board of Directors of the Company, a majority of whom were directors on May 2, 2014 or whose election or nomination for election was previously approved by a majority of such directors; (e) Vertex II, GP, LLC (Vertex Operating’s wholly-owned subsidiary) ceases to be the sole general partner of any guarantor of the Credit Agreement that is a partnership; (f) a “change of control” or similar event under the Amended BOA Credit Agreement (described below) shall occur; or (g) any event, transaction or occurrence occurs, a result of which Benjamin P. Cowart shall for any reason cease to be actively engaged in the day-to-day management of the Company and its subsidiaries in the role he serves on May 2, 2014, unless (x) an interim successor reasonably acceptable to Agent and the Lender as required by the Credit Agreement is appointed within 10 days and (y) a permanent successor reasonably acceptable to the Agent and the Lender as required by the Credit Agreement is appointed within 60 days.

Additionally, in connection with our entry into the Credit Agreement, all parties to whom any deferred purchase price or “earn-out” obligations are owed by us executed and delivered to the Agent an Earnout Subordination Agreement (other than one of the individuals who is owed earn-out payments in connection with the E-Source purchase), pursuant to which they agreed to not receive or demand any “earn-out” payments until the Lender and BOA are paid in full under the credit agreements.

In connection with the closing of the Credit Agreement, we agreed to pay the Agent’s legal fees and transaction costs associated with the transactions contemplated by the Credit Agreement. We also paid an aggregate of approximately $1.7 million in commissions and fees to our advisors Craig-Hallum Capital Group LLC, Sapphire Financial Group, LLC and Wunderlich Securities, Inc. in consideration for financial advisory services rendered in connection with the Purchase Agreement and credit agreements, the transactions contemplated therein and in certain cases a fairness opinion obtained on certain of the transactions.

The proceeds from the Credit Agreement were used to pay the amounts due at the Initial Closing of the Omega purchase (described above), pay certain Omega capital leases and other obligations of Omega, and to pay expenses associated with the Initial Closing of the Omega acquisition.

The Credit Agreement had a balance of $39,700,000 as of June 30, 2014.

Amended and Restated Credit Agreement with Bank of America, N.A.

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On May 2, 2014, we and Vertex Operating entered into an Amended and Restated Credit Agreement (the “Amended BOA Credit Agreement” and together with the “Credit Agreement”, the “Credit Agreements”) with BOA. The Amended BOA Credit Agreement amended and restated the prior credit agreement we entered into with BOA in August 2012. Pursuant to the Amended BOA Credit Agreement, BOA agreed to loan us up to $20 million (the “BOA Loan”), subject to the terms of the Amended BOA Credit Agreement and certain lending ratios set forth therein, provided that the amount outstanding cannot exceed an amount equal to the total of (i) 80% of the Company’s accounts in which BOA has a first-priority perfected security interest; (ii) 65% of the Company’s finished-goods inventory in which BOA holds a first-priority perfected security interest, in each case subject to the terms and conditions of the credit agreement, plus (iii) certain reserves established by BOA.

We have the right to request up to three increases in the amount of the facility, which in the aggregate cannot exceed $10 million and which individually are required to be a minimum of $3 million each, provided that BOA has the right to approve any increase in its sole discretion. Loans made pursuant to the Amended BOA Credit Agreement are evidenced by a Revolving Note, which replaced the Company’s August 2012 Revolving Note, which was repaid on May 2, 2014 in connection with the parties’ entry into the Amended BOA Credit Agreement.

Amounts borrowed under the Revolving Note bear interest at the option of the Company at BOA’s prime commercial lending rate then in effect plus between 1.25% and 2% per annum (depending on the Company’s leverage ratio from time to time) or the LIBOR rate in effect plus between 2.35% and 3% per annum (depending on the Company’s leverage ratio from time to time), and are payable monthly in arrears (provided that upon an event of default the interest rate then in effect increases by 4% per annum). The Revolving Note is due and payable on May 2, 2017.

We have the right to prepay the Revolving Note at any time without penalty. We are also required to make certain mandatory prepayments on the Revolving Note as described therein.

The Amended BOA Credit Agreement also requires BOA to provide us certain letters of credit as described therein.

We agreed to pay BOA a commitment fee equal to between 0.25% and 0.35% (depending on our leverage ratio) multiplied by the actual daily amount by which the maximum amount BOA has agreed to loan us (currently $20 million) exceeds the amount loaned (and subject to letters of credit), which is due and payable quarterly in arrears on the last day of each March, June, September, and December, beginning June 30, 2014, until maturity. We also paid BOA $50,000 at closing in fees. In connection with letters of credit issued by BOA, we agreed to pay BOA a fee equal to the greater of 2% per annum (multiplied by the daily maximum amount available to be drawn) and $500 per line of credit.

    The Amended BOA Credit Agreement contains customary representations, warranties, covenants and requirements for the Company to indemnify BOA and its affiliates. The Amended BOA Credit Agreement also includes various covenants (positive and negative) binding upon the Company, including, requiring that the Company comply with certain reporting requirements, provide notices of material corporate events and forecasts to BOA, and maintain certain financial ratios, relating to debt leverage, consolidated EBITDA, maximum debt exposure we can incur (provided that if we exceed such maximum debt exposure limit as set forth in the Amended BOA Credit Agreement, we are required to immediately repay any amount exceeding the limits set forth in the BOA Credit Agreement) and minimum liquidity, including maintaining a ratio of quarterly consolidated EBITDA (as calculated and adjusted in the Amended BOA Credit Agreement) to certain fixed charges (cumulative for subsequent periods up to the first 12 months and thereafter on a 12 month basis), for each quarter beginning June 30, 2014, of not less than 1.25 to 1.00; maintaining a ratio of consolidated debt to consolidated EBITDA (as calculated and adjusted in the Amended BOA Credit Agreement), for the prior 12 month period, for each quarter beginning June 30, 2014, of between 3.5 to 1 and 2 to 1 (depending on the applicable quarter); maintaining consolidated EBITDA (as calculated and adjusted in the Amended BOA Credit Agreement), for each fiscal quarter beginning June 30, 2014, and ending March 30, 2017, of between $4.25 million and $15.5 million (depending on the applicable quarter); and maintaining at all times (a) liquid cash on hand and (b) available drawdowns under the Amended BOA Credit Agreement, of at least $3 million.

The Amended BOA Credit Agreement includes customary events of default for facilities of a similar nature and size as the Amended BOA Credit Agreement, including if an event of default occurs under any agreement the Company is subject to and in an amount in excess of $250,000 or if the Company breaches any term of any material agreement the Company is party to, subject to its right to cure such breach(s) under the Amended BOA Credit Agreement, and also provides that an event of default occurs if (a) Benjamin P. Cowart, the Company’s Chief Executive Officer, Chairman of the Board and largest shareholder, ceases to be actively involved in the day-to-day management or operation of the Company or if Mr. Cowart ceases to own and control at least 20% of the equity interests of the Company; (b) the Company ceases at any time to own and control 100% of Vertex Operating or certain other of its subsidiaries; (c) Vertex Acquisition Sub, LLC (Vertex Operating’s wholly-owned subsidiary) ceases to control 100% of its current subsidiaries; (d) certain other changes in control of our subsidiaries occur; (e) a “change of

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control” or similar event or event of default occurs under the Credit Agreement; or (f) a default occurs under certain lease agreements related to premises leased by the Company.

The amounts due pursuant to the Amended BOA Credit Agreement are secured by a Pledge and Security Agreement and various Deeds of Trust, Assignment of Rents and Leases, Security Agreement and Fixture Filings in favor of BOA. Additionally, Vertex Operating and the Company and each of the Company’s subsidiaries (other than E-Source) pledged all collateral which they own (including securities held) as security for the repayment of the amounts due pursuant to the Amended BOA Credit Agreement and guaranteed the amounts owed pursuant to an Amended and Restated Guaranty.

We used and will use the proceeds borrowed pursuant to the Amended BOA Credit Agreement to consummate the transactions contemplated by the Initial Closing of the Purchase Agreement, pay costs associated with the Amended BOA Credit Agreement and for working capital and other general corporate purposes.

The Amended BOA Credit Agreement had a balance of $0 as of June 30, 2014.

Private Offering of Common Stock

On June 5, 2014, the Company entered into a Common Stock Purchase Agreement (the “Purchase Agreement”) with certain institutional investors (the “Investors”), pursuant to which the Company agreed to sell to the Investors an aggregate of 2.2 million shares (the “Shares”) of the Company’s common stock, par value $0.001 per share (“Common Stock”), for $7.75 per Share (a 12.3% discount to the 30 day volume-weighted average price for the Common Stock as of the date the Purchase Agreement was entered into). Total gross proceeds from the offering of the Shares, which closed on June 11, 2014 (the “Offering”) was $17.1 million.

Craig-Hallum Capital Group LLC (the “Placement Agent”) acted as exclusive placement agent in connection with the Offering. The Placement Agent received a commission equal to 7% of gross proceeds, for an aggregate commission of $1.2 million.

Under the Purchase Agreement, the Company agreed to register the Shares under the Securities Act of 1933, as amended, for resale by the Investors by certain time periods set forth in the Purchase Agreement, which required time periods were satisfied by the effectiveness of the Company’s Form S-3 Registration Statement, registering the resale of the Shares, which was declared effective on July 29, 2014.

Under the Purchase Agreement, the Company has agreed to indemnify the Investors for liabilities arising out of or relating to (i) any untrue statement of a material fact contained in the registration statement, (ii) any inaccuracy in the representations and warranties of the Company contained in the Purchase Agreement or the failure of the Company to perform its obligations under the Purchase Agreement and (iii) any failure by the Company to fulfill any undertaking included in the registration statement, subject to certain exceptions. The Investors, severally, and not jointly agreed to indemnify the Company against (i) any failure by such Investor to comply with the covenants and agreements contained in the Purchase Agreement and (ii) any untrue statement of a material fact contained in the registration statement to the extent such untrue statement was made in reliance upon and in conformity with written information furnished by or on behalf of that Investor specifically for use in preparation of the registration statement, subject to certain exceptions.

Need for additional funding

Our re-refining business will require significant capital to design and construct any new facilities other than the existing facility in Baytown, Texas.  We currently estimate that the cost to construct a new, fully functional full-scale commercial process at another location would be approximately $10 to $15.0 million, based on throughput capacity.  The facility infrastructure would be an additional capitalized expenditure to these proposed process costs and would depend on the location and site specifics of the facility.

Management believes that our Credit Agreements, in addition to projected earnings, will provide sufficient liquidity to fund our operations for the foreseeable future, although we may seek additional financing to fund acquisitions or other development in the future.

Additionally, as part of our ongoing efforts to maintain a capital structure that is closely aligned with what we believe to be the potential of our business and goals for future growth, which is subject to cyclical changes in commodity prices, we will be

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exploring additional sources of external liquidity.  The receptiveness of the capital markets to an offering of debt or equities cannot be assured and may be negatively impacted by, among other things, debt maturities, current market conditions, and potential stockholder dilution. The sale of additional securities, if undertaken by us and if accomplished, may result in dilution to our shareholders. We cannot assure you, however, that future financing will be available in amounts or on terms acceptable to us, or at all.

There is currently only a limited market for our common stock, and as such, we anticipate that such market will be illiquid, sporadic and subject to wide fluctuations in response to several factors moving forward, including, but not limited to:

(1) actual or anticipated variations in our results of operations;

(2) our ability or inability to generate new revenues; and 

(3) the number of shares in our public float.

Furthermore, because our common stock is traded on the NASDAQ Capital Market, our stock price may be impacted by factors that are unrelated or disproportionate to our operating performance. These market fluctuations, as well as general economic, political and market conditions, such as recessions, interest rates or international currency fluctuations may adversely affect the market price of our common stock. Additionally, at present, we have a limited number of shares in our public float, and as a result, there could be extreme fluctuations in the price of our common stock.  

We believe that our stock prices (bid, ask and closing prices) may not relate to the actual value of our company, and may not reflect the actual value of our common stock. Shareholders and potential investors in our common stock should exercise caution before making an investment in our common stock, and should not rely on the publicly quoted or traded stock prices in determining our common stock value, but should instead determine the value of our common stock based on the information contained in our public reports, industry information, and those business valuation methods commonly used to value private companies.

Cash flows for the six months ended June 30, 2014 compared to the six months ended June 30, 2013

	Six Months Ended June 30,
	2014			2013
Beginning cash and cash equivalents	$	2,678,628		$	807,940
Net cash provided by (used in):
Operating activities	3,631,402			1,527,559
Investing activities	(31,399,981		)	(402,899		)
Financing activities	44,741,782			(1,635,372		)
Net increase (decrease)  in cash and cash equivalents	16,973,203			(510,712		)
Ending cash and cash equivalents	$	19,651,831		$	297,228

Operating activities provided cash of $3,631,402 for the six months ended June 30, 2014 as compared to $1,527,559 of cash being provided during the corresponding period in 2013.  Our primary sources of liquidity are cash flows from our operations and the availability to borrow funds under our Credit Facilities, notes and lease line of credit with Bank of America, as described above.  The primary reasons for the increase in cash provided by operating activities are related to net income of $7,537,848 (compared to $2,974,865 in the prior period), $1,800,950 of depreciation and amortization (compared to $1,069,035 in the prior period), and an $9,464,956 increase in accounts payable (compared to an increase of $3,669,339 in the prior period), offset by $6,481,051 of gain on the Omega acquisition.

Investing activities used cash of $31,399,981 for the six months ended June 30, 2014 as compared to having used $402,899 of cash during the corresponding period in 2013.  Investing activities for the six months ended June 30, 2014 are comprised of $2,635,882 invested in fixed assets, and $28,764,099 used for the Omega acquisition.

Financing activities provided cash of $44,741,782 for the six months ended June 30, 2014 as compared to having used $1,635,372 of cash during the corresponding period in 2013.  Financing activities for the six months ended June 30, 2014 are comprised of $40,509,906 of proceeds from notes payable of which $40,000,000 is related to the Omega acquisition, $304,000 drawn on a line of credit held by E-Source, $15,803,000 of cash related to the primary stock offering undertaken by the Company in the second quarter of 2014, and $211,062 of cash provided during the six months ended June 30, 2014 in connection with proceeds from the exercise of common stock warrants, offset by $9,634,029 in cash payments towards the repayment of the Term Note and Revolving Note and $2,452,157 of debt issue costs.

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Net Operating Losses

We intend to take advantage of any potential tax benefits related to net operating losses (“NOLs”) acquired as part of the World Waste merger.  As a result of the merger we acquired approximately $42 million of net operating losses that may be used to offset taxable income generated by the Company in future periods.

It is possible that the Company may be unable to use these NOLs in their entirety.  The extent to which the Company will be able to utilize these carry-forwards in future periods is subject to limitations based on a number of factors, including the number of shares issued within a three-year look-back period, whether the merger is deemed to be a change in control, whether there is deemed to be a continuity of World Waste’s historical business, and the extent of the Company’s subsequent income. As of December 31, 2013, the Company had utilized approximately $11.25 million of these NOLs leaving approximately $30.75 million of potential NOLs of which we expect to utilize approximately $2,200,000 for the six months ended June 30, 2014.  The Company recorded a change in the valuation allowance as of June 30, 2014 for approximately $748,000

Critical Accounting Policies and Use of Estimates

Our financial statements are prepared in accordance with GAAP. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. Management regularly evaluates its estimates and judgments, including those related to revenue recognition, goodwill, intangible assets, long-lived assets valuation, and legal matters. Actual results may differ from these estimates.

We evaluate the carrying value and recoverability of our long-lived assets within the provisions of the FASB ASC regarding long-lived assets.  It requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets.  Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value.

Revenue Recognition.   Revenue for each of our divisions is recognized when persuasive evidence of an arrangement exists, goods are delivered, sales price is determinable, and collection is reasonably assured. Revenue is recognized upon delivery by truck and railcar of feedstock to its re-refining customers and upon product leaving the Company's terminal facilities and third party processing facility via barge. Revenue is also recognized as recovered scrap materials are sold and projects are completed.

Stock Based Compensation

We account for share-based expense and activity in accordance with FASB ASC Topic 718, which establishes accounting for equity instruments exchanged for services. Under this provision, share-based compensation costs are measured at the grant date, based on the calculated fair value of the award, and are recognized as an expense over the employee’s requisite service period, generally the vesting period of the equity grant.

Share-based payments to non-employees are measured at the grant date, based on the calculated fair value of the award, and are recognized as an expense over the service period, generally the vesting period of the equity grant. We estimate the fair value of stock options using the Black-Scholes valuation model. Key input assumptions used to estimate the fair value of stock options include the exercise price of the award, expected option term, expected volatility of the stock over the option’s expected term, risk-free interest rate over the option’s expected term, and the expected annual dividend yield. We believe that the valuation technique and approach utilized to develop the underlying assumptions are appropriate in calculating the fair values of the stock options granted.

Basic and Diluted Income/ Loss per Share

Basic and diluted income/loss per share has been calculated based on the weighted average number of shares of common stock outstanding during the period.

Income Taxes

We account for income taxes in accordance with the FASB ASC Topic 740.  We record a valuation allowance against net deferred tax assets if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.  The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and when temporary differences become deductible.  We consider, among other available information, uncertainties surrounding the

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recoverability of deferred tax assets, scheduled reversals of deferred tax liabilities, projected future taxable income, and other matters in making this assessment.

Market Risk

Our revenues and cost of revenues are affected by fluctuations in the value of energy related products.  We attempt to mitigate much of the risk associated with the volatility of relevant commodity prices by using our knowledge of the market to obtain feedstock at attractive costs, by efficiently managing the logistics associated with our products, by turning our inventory over quickly, and by selling our products into markets where we believe we can achieve the greatest value.  We believe that the current downward trend in natural gas prices coupled with increasing crude oil prices provides an attractive margin opportunity for our TCEP.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the end of the period covered by this Quarterly Report on Form 10-Q. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Based on our evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

We regularly review our system of internal control over financial reporting to ensure we maintain an effective internal control environment. There were no changes in our internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Part II – OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we may become party to litigation or other legal proceedings that we consider to be a part of the ordinary course of our business.

We are not currently involved in legal proceedings that could reasonably be expected to have a material adverse effect on our business, prospects, financial condition or results of operations other than as described above. We may become involved in material legal proceedings in the future.

Item 1A. Risk Factors

There have been no material changes from the risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013, filed with the Commission on March 25, 2014, except as provided below and investors should review the risks provided below and in the Form 10-K, prior to making an investment in the Company.

We face risks associated with the integration of the businesses, assets and operations recently acquired from Vertex Holdings, L.P., E-Source Holdings, LLC and Omega.

We previously acquired substantially all of the assets and operations of Vertex Holdings, L.P., (formerly Vertex Energy, L.P.), a Texas limited partnership (“Holdings”). Those assets and operations included Cedar Marine Terminals, L.P. (“CMT”), which operates a 19-acre bulk liquid storage facility on the Houston Ship Channel; Crossroad Carriers, L.P. (“Crossroad”), which is a transportation carrier that provides transportation and logistical services for liquid petroleum products, as well as other hazardous materials and waste streams; Vertex Recovery, L.P. (“Vertex Recovery”) which collects and recycles used oil and residual materials from large regional and national customers throughout the U.S. and Canada; and H&H Oil, L.P. (“H&H Oil”), which collects and recycles used oil and residual materials from customers based in Austin, Baytown, and Corpus Christi, Texas.

Additionally, we previously acquired a 70% interest in E-Source, which provides dismantling, demolition, decommission and marine salvage services at industrial facilities throughout the Gulf Coast.

Finally, pursuant to the Initial Closing under the Purchase Agreement in May 2014, we acquired certain assets and operations from Omega including Omega Refining (including the Marrero, Louisiana re-refinery and Omega’s Myrtle Grove complex in Belle Chaise, Louisiana) and ownership of Golden State, a strategic blending and storage facility located in Bakersfield, California.

The majority of these represented new business lines and operations for us and while our management has significant prior experience in connection with the operations and management of Holdings, it does not have any experience with or in connection with the operations of E-Source or those assets and operations acquired by Omega and we may not be able to successfully integrate the acquisitions into our operations and such acquisitions may not positively affect our operations and cash flow. Acquisitions such as these involve numerous risks, including difficulties in the assimilation of the acquired businesses. The consolidation of our operations with the operations of the acquired companies, including the consolidation of systems, procedures, personnel and facilities and the achievement of anticipated cost savings, economies of scale and other business efficiencies presents significant challenges to our management. The acquisition of the acquired businesses and/or our failure to successfully integrate the acquired businesses could have an adverse effect on our liquidity, financial condition and results of operations.

We may be required to pay substantial additional amounts of consideration in the event certain earn-out targets are met by us. There may also be actual or perceived conflicts of interest with management regarding certain of such targets and amounts due in connection therewith.

We acquired substantially all of the assets and liabilities of Holdings on September 11, 2012 (the “Acquisition”). Concurrent with the closing of the transactions contemplated in the Acquisition, we paid the following purchase price (the “Purchase Price”) to Holdings, (a) $14.8 million in cash and assumed debt; and (b) 4,545,455 restricted shares of our common stock; and to B & S Cowart Family L.P., approximately $1.7 million in cash, representing the appraised value of certain owned real property. Additionally, for each of the three one-year periods following the closing date, Holdings will be eligible to receive earn-out payments of $2.23 million, up to $6.7 million in the aggregate (the “Earn-Out Payments”), contingent on the combined company achieving adjusted EBITDA targets of $10.75 million, $12.0 million and $13.5 million, respectively, in those periods, provided that the Company failed to meet the targeted EBITDA for the first year’s Earn-Out Payment, and as such, there are $4.4 million

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of potential Earn-Out Payments currently remaining. As of the date of this Report it has been determined that the 2013 earnings target was not met and the contingent consideration has been reduced by $1,850,000, which represents the discounted cash flow for year one. It has also been determined that there is a 25% probability that the 2014 earnings target will not be met and the contingent consideration has been reduced by $388,750, which represents 25% of the discounted cash flows for year two.  Notwithstanding the above, Holdings agreed to subordinate the payment of the Earn-Out Payments to the repayment of the Credit Agreement.

As part of the consideration paid in connection with the acquisition of E-Source, if certain targets are met, the Company has to pay the seller approximately $260,000 annually in 2014, 2015, 2016 and 2017. The Company has recorded contingent consideration of $748,000, which is the discounted cash flows of the earn-out payments. The lesser of (a) 20% and (b) $100,000, per calendar year of earn-out payments due to the E-Source seller, if any, will be payable in shares of our restricted common stock, based on the average of the five closing sales prices of the Company’s common stock on the first five trading days of each applicable calendar year (each a “Valuation”) for which the earn-out consideration relates, provided that the parties mutually agreed to use a valuation of $3.2922 per share (the “2014 Valuation Price”) for any earn-out payments relating to the 2014 calendar year and further agreed that in no event will any future calendar year Valuation be less than the 2014 Valuation Price.

The sellers in the Omega acquisition have the right to earn additional earn-out consideration in the event certain EBITDA targets are met by (a) Vertex Refining NV, LLC during the years ended December 31, 2015 and 2016 (which targets begin at $3.5 million of EBITDA per year), of up to an aggregate of $6 million (payable in shares of the Company’s common stock equal to the volume-weighted average of the regular session closing prices per share of the Company’s common stock on the NASDAQ Capital Market for the ten (10) consecutive trading days prior to the applicable due date of such payments, provided, however, in no event shall the VWAP be less than $3.15 per share or more than $10.00 per share, as adjusted for any stock splits or recapitalizations), which earn-out consideration is contingent upon the Final Closing occurring under the Purchase Agreement; (b) Vertex Refining LA, LLC during any twelve month period during the eighteen month period commencing on the first day of the first full calendar month following the Initial Closing date (which targets begin at $8 million of EBITDA during such twelve month period) of up to 470,498 shares of common stock of the Company); and (c) Vertex Refining LA, LLC during the calendar year ended December 31, 2015 (which targets begin at $9 million of EBITDA) of up to 770,498 shares of common stock of the Company, which earn-out consideration is contingent upon the Final Closing occurring under the Purchase Agreement, in each case subject to adjustment for certain capital expenditures (collectively, the “Earn-Outs”). Notwithstanding the above, the maximum number of shares of common stock to be issued pursuant to the Purchase Agreement cannot (i) exceed 19.9% of the outstanding shares of common stock outstanding on March 17, 2014, (ii) exceed 19.9% of the combined voting power of the Company on March 17, 2014, or (iii) otherwise exceed such number of shares of common stock that would violate applicable listing rules of the NASDAQ Stock Market in the event the Company’s stockholders do not approve the issuance of such shares (the “Share Cap”). In the event the number of shares to be issued under the Purchase Agreement exceeds the Share Cap, then the Company is required to instead pay any such additional consideration in cash or obtain the approval of the Company’s stockholders under applicable rules and requirements of the NASDAQ Capital Market for the additional issuance of shares.

Additionally, our currently contemplated acquisition transaction with Heartland Group Holdings LLC contemplates $8 million of potential earn-outs payable over the first two years following the closing of the transaction, which transaction is subject to completion of due diligence and mutual agreement of definitive agreements. Finally, we may enter into acquisition or other agreements in the future which require earn-outs.

In the event we meet the required targets and thresholds described above and are required to pay Holdings the Earn-Out Payments, the earn-out payments to the E-Source seller, the Earn-Outs to the sellers in the Omega transaction, or any other earn-outs in the future, it could have a material adverse effect on our liquidity, the funds we have available for future expansion, and our results of operations.

Holdings was a related party controlled by Benjamin P. Cowart, our President, Chairman and largest shareholder, who owned directly or indirectly a 77% interest in Holdings. Additionally, Chris Carlson, our Chief Financial Officer, owned a 10% interest in Holdings and certain other of our employees (including Greg Wallace, our General Manager of Refining and Marketing) had a beneficial ownership interest in Holdings. Due to the structure of the earn-out payments, Mr. Cowart, Mr. Carlson and the other employees who will receive these payments have an incentive to increase our EBITDA in the periods covered in order to facilitate earn-out payments. They may therefore have an incentive to take steps to increase our EBITDA in the relevant periods at the expense of our future growth and long-term expansion. Consequently, the earn-out payments and/or the structure thereof may cause actual or perceived conflicts of interest between Mr. Cowart, Mr. Carlson and certain of our other employees, our company and our other shareholders.

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We have substantial indebtedness which could adversely affect our financial flexibility and our competitive position.  Our failure to comply with financial covenants in our debt agreements could result in such debt agreements being declared in default.

We have a significant amount of outstanding indebtedness. As of June 30, 2014, we owed approximately $25.3 million in accounts payable. Additionally, effective May 2, 2014, we, as well as certain of our other direct and indirect subsidiaries (other than E-Source) as guarantors, entered into the Credit Agreement.  Pursuant to the Credit Agreement, the Lender loaned us $40 million, which was evidenced by a Term Loan Note, which has a balance of $39,700,000 as of June 30, 2014.  The amount owed under the Credit Agreement is due and payable on May 2, 2019.  On May 2, 2014, we and Vertex Operating entered into the Amended BOA Credit Agreement with BOA.  The Amended BOA Credit Agreement amended and restated the prior credit agreement we entered into with BOA in August 2012.  Pursuant to the Amended BOA Credit Agreement, BOA agreed to loan us up to $20 million, subject to the terms of the Amended BOA Credit Agreement and certain lending ratios set forth therein.

Our substantial indebtedness could have important consequences and significant effects on our business. For example, it could:

increase our vulnerability to adverse changes in general economic, industry and competitive conditions;

require us to dedicate a substantial portion of our cash flow from operations to make payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures and other general corporate purposes;

limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;

restrict us from taking advantage of business opportunities;

make it more difficult to satisfy our financial obligations;

place us at a competitive disadvantage compared to our competitors that have less debt obligations; and

limit our ability to borrow additional funds for working capital, capital expenditures, acquisitions, debt service requirements, execution of our business strategy or other general corporate purposes on satisfactory terms or at all.

We may need to raise additional funding in the future to repay or refinance the Credit Agreement and Amended BOA Credit Agreement and our accounts payable, and as such may need to seek additional debt or equity financing. Such additional financing may not be available on favorable terms, if at all. If debt financing is available and obtained, our interest expense may increase and we may be subject to the risk of default, depending on the terms of such financing. If equity financing is available and obtained it may result in our shareholders experiencing significant dilution. If such financing is unavailable, we may be forced to curtail our operations, which may cause the value of our securities to decline in value and/or become worthless.

The covenants in our credit agreements restrict our ability to operate our business and might lead to a default under our credit agreements.

Our debt agreements limit, among other things, our ability to:

incur or guarantee additional indebtedness;

create liens;

make payments to junior creditors;

make investments;

sell material assets;

affect fundamental changes in our structure;

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make certain acquisitions;

sell interests of our subsidiaries;

consolidate or merge with or into other companies or transfer all or substantially all of our assets; and

engage in transactions with affiliates.

Additionally, the Credit Agreement also includes various covenants (positive and negative) binding the Company, including, requiring that the Company provide the Agent with certain reports, provide the Agent notice of material corporate events and forecasts, limiting the amount of indebtedness the Company may incur (for example, the Company’s total indebtedness cannot exceed between $30,000,000-$32,000,000 at any time, subject to certain exemptions set forth in greater detail in the Credit Agreement), and requiring us to maintain certain financial ratios, relating to consolidated EBITDA and debt leverage including maintaining a ratio of quarterly consolidated EBITDA (as calculated and adjusted in the Credit Agreement) to certain fixed charges (cumulative for subsequent periods up to the first 12 months and thereafter on a 12 month basis), for each quarter beginning June 30, 2014, of between 0.90:1.00 and 1.25:1.00 (depending on the applicable quarter); maintaining a ratio of consolidated debt to consolidated EBITDA (as calculated and adjusted in the Credit Agreement), for the prior 12 month period, for each quarter beginning June 30, 2014, of between 4:1 and 2:1 (depending on the applicable quarter); maintaining consolidated EBITDA (as calculated and adjusted in the Credit Agreement), for each fiscal quarter beginning June 30, 2014, and ending June 30, 2018, of between $4.25 million and $17 million (depending on the applicable quarter); and maintaining at all times (a) liquid cash on hand and (b) available drawdowns under the Amended BOA Credit Agreement, of at least $3 million. Except with respect to certain accounts, certain finished goods inventory and certain other reserves described in the Amended BOA Credit Agreement, the amount owed pursuant to the Credit Agreement is secured by a first priority security interest in all of our assets and all of the assets and securities of our direct and indirect subsidiaries and is also guaranteed by our subsidiaries (other than E-Source) pursuant to the terms of the Credit Agreement, a Pledge and Security Agreement and Mortgage (providing a security interest over certain of our real property assets).

The Amended BOA Credit Agreement also includes various covenants (positive and negative) binding upon the Company, including, requiring that the Company comply with certain reporting requirements, provide notices of material corporate events and forecasts to BOA, and maintain certain financial ratios, relating to debt leverage, consolidated EBITDA, maximum debt exposure we can incur (provided that if we exceed such maximum debt exposure limit as set forth in the Amended BOA Credit Agreement, we are required to immediately repay any amount exceeding the limits set forth in the BOA Credit Agreement) and minimum liquidity, including maintaining a ratio of quarterly consolidated EBITDA (as calculated and adjusted in the Amended BOA Credit Agreement) to certain fixed charges (cumulative for subsequent periods up to the first 12 months and thereafter on a 12 month basis), for each quarter beginning June 30, 2014, of not less than 1.25 to 1.00; maintaining a ratio of consolidated debt to consolidated EBITDA (as calculated and adjusted in the Amended BOA Credit Agreement), for the prior 12 month period, for each quarter beginning June 30, 2014, of between 3.5 to 1 and 2 to 1 (depending on the applicable quarter); maintaining consolidated EBITDA (as calculated and adjusted in the Amended BOA Credit Agreement), for each fiscal quarter beginning June 30, 2014, and ending March 30, 2017, of between $4.25 million and $15.5 million (depending on the applicable quarter); and maintaining at all times (a) liquid cash on hand and (b) available drawdowns under the Amended BOA Credit Agreement, of at least $3 million. The amounts due pursuant to the Amended BOA Credit Agreement are secured by a Pledge and Security Agreement and various Deeds of Trust, Assignment of Rents and Leases, Security Agreement and Fixture Filings in favor of BOA.  Additionally, Vertex Operating and the Company and each of the Company’s subsidiaries (other than E-Source) pledged all collateral which they own (including securities held) as security for the repayment of the amounts due pursuant to the Amended BOA Credit Agreement and guaranteed the amounts owed pursuant to an Amended and Restated Guaranty.

As a result of these covenants and limitations, we may not be able to respond to changes in business and economic conditions and to obtain additional financing, if needed, and we may be prevented from engaging in transactions that might otherwise be beneficial to us. Our credit agreements require, and our future credit facilities may require, us to maintain certain financial ratios and satisfy certain other financial condition tests. Our ability to meet these financial ratios and tests can be affected by events beyond our control, and we may not be able to meet those tests. The breach of any of these covenants could result in a default under our credit agreements or future credit facilities. Upon the occurrence of an event of default, the lenders could elect to declare all amounts outstanding under such credit agreements, including accrued interest or other obligations, to be immediately due and payable. If amounts outstanding under such credit agreements were to be accelerated, our assets might not be sufficient to repay in full that indebtedness and our other indebtedness.

Our credit agreements also contain cross-default and cross-acceleration provisions. Under these provisions, a default or acceleration under one instrument governing our debt may constitute a default under our other debt instruments that contain cross-default and cross-acceleration provisions, which could result in the related debt and the debt issued under such other instruments

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becoming immediately due and payable. In such event, we would need to raise funds from alternative sources, which funds might not be available to us on favorable terms, on a timely basis or at all. Alternatively, such a default could require us to sell assets and otherwise curtail operations to pay our creditors. The proceeds of such a sale of assets, or curtailment of operations, might not enable us to pay all of our liabilities.

Our ability to service our indebtedness will depend on our ability to generate cash in the future.

Our ability to make payments on our indebtedness will depend on our ability to generate cash in the future. Our ability to generate cash is subject to general economic and market conditions and financial, competitive, legislative, regulatory and other factors that are beyond our control. Our business may not generate sufficient cash to fund our working capital requirements, capital expenditure, debt service and other liquidity needs, which could result in our inability to comply with financial and other covenants contained in our debt agreements, our being unable to repay or pay interest on our indebtedness, and our inability to fund our other liquidity needs. If we are unable to service our debt obligations, fund our other liquidity needs and maintain compliance with our financial and other covenants, we could be forced to curtail our operations, our creditors could accelerate our indebtedness and exercise other remedies and we could be required to pursue one or more alternative strategies, such as selling assets or refinancing or restructuring our indebtedness. However, such alternatives may not be feasible or adequate.

There is no guarantee that the proposed final acquisition of Omega’s assets or our acquisition of Heartland Group Holdings LLC will be completed; the failure to acquire the final Omega assets or Heartland Group Holdings LLC could adversely affect our business and results of operations.

We entered into the Purchase Agreement pursuant to which we have agreed to purchase substantially all of the assets of Omega (as described in greater detail above). The acquisition is planned to close in two separate closings, the Initial Closing of which occurred on May 2, 2014 and the Final Closing which is planned to occur in or around September 2014, subject to certain closing conditions being met. Our obligation to consummate the Final Closing is subject to among other things, that the Bango, Nevada plant operated by Bango Refining be fully restored and operational, as well as the plant meeting certain used motor oil proceeding run rates and that there are no adverse claims or legal proceedings related to an accident that occurred at the Bango plant in December 2013. The amount due at the Final Closing, in consideration for the acquisition of Bango Refining, will be the assumption of certain loans made pursuant to a secured note provided to Omega, the issuance of 1,500,000 shares of our common stock of which 650,000 shares (with an agreed value of $3.2301 per share or approximately $2.1 million) will be held in escrow and used to satisfy indemnification claims and secure the repayment of the Omega secured note (the “Pledged Shares”), and which amount is subject to adjustment in the event minimum inventory levels are not delivered at the Final Closing, and the assumption of certain capital lease obligations and other liabilities relating to contracts and leases of Bango Refining.  A portion of the Pledged Shares will be released from escrow, subject to outstanding claims, on September 15, 2015, and the remainder will be released on the 18 month anniversary of the Final Closing.  Subject to certain negotiated exceptions for excluded liabilities, taxes and other fundamental items, the sellers’ indemnification obligations are capped at $5 million.

Additionally, in July 2014, we entered into a letter of intent relating to the acquisition of certain assets from Heartland Group Holdings LLC.

The completion of the Final Closing is subject to customary closing conditions and other requirements as summarized above which are required to be completed prior to the Final Closing. The completion of the acquisition with Heartland Group Holdings LLC is subject to satisfactory due diligence and the mutual agreement between the parties of definitive purchase agreement(s) and terms. Such conditions to closing may not be met. These acquisitions represent a significant business opportunity for us. If the acquisitions are completed, we could be forced to pay significant earn-out payments to the sellers if the required EBITDA targets are met (described in greater detail above under “We may be required to pay substantial additional amounts of consideration in the event certain earn-out targets are met by us. There may also be actual or perceived conflicts of interest with management regarding certain of such targets and amounts due in connection therewith”), which could decrease the amount of funds we have available for working capital. If we fail to complete the acquisitions or the acquisitions are not successful, our anticipated business and results of operations could be adversely affected.

Our failure to comply with the covenants in the documents governing our existing and future indebtedness could materially adversely affect our financial condition and liquidity.

In connection with the Credit Agreement and Amended BOA Credit Agreement, we agreed to comply with certain affirmative and negative covenants and agreed to meet certain financial covenants (described in greater detail above under “The covenants in our credit agreements restrict our ability to operate our business and might lead to a default under our credit agreements”).

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The Credit Agreement includes customary events of default for facilities of a similar nature and size as the Credit Agreement, including if a default occurs under certain material agreements of the Company; a judgment is obtained against the Company in an amount in excess of $250,000 or which could have a material adverse effect on the Company; and also provides that an event of default occurs if (a) Benjamin P. Cowart, the Company’s Chief Executive Officer, Chairman of the Board and largest shareholder, ceases to own and control at least 20% of the economic and voting interests of the Company (on a fully-diluted basis); (b) any person other than Mr. Cowart (i) obtains 30% or more of the voting or economic interest in the Company on a fully-diluted basis or (ii) obtains the power (whether or not exercised) to elect a majority of the members of the Board of Directors; (c) we cease to own and control 100% of Vertex Operating; (d) the majority of the seats (other than vacant seats) on the Board of Directors of the Company cease to be occupied by persons who either (i) were members of the Board of Directors of the Company on May 2, 2014, or (ii) were nominated for election by the Board of Directors of the Company, a majority of whom were directors on May 2, 2014 or whose election or nomination for election was previously approved by a majority of such directors; (e) Vertex II, GP, LLC (Vertex Operating’s wholly-owned subsidiary) ceases to be the sole general partner of any guarantor of the Credit Agreement that is a partnership; (f) a “change of control” or similar event under the Amended BOA Credit Agreement (described below) shall occur; or (g) any event, transaction or occurrence occurs, a result of which Benjamin P. Cowart shall for any reason cease to be actively engaged in the day-to-day management of the Company and its subsidiaries in the role he serves on May 2, 2014, unless (x) an interim successor reasonably acceptable to the lender as required by the Credit Agreement is appointed within 10 days and (y) a permanent successor reasonably acceptable to the lender as required by the Credit Agreement is appointed within 60 days.

The Amended BOA Credit Agreement includes customary events of default for facilities of a similar nature and size as the Amended BOA Credit Agreement, including if an event of default occurs under any agreement the Company is subject to and in an amount in excess of $250,000 or if the Company breaches any term of any material agreement the Company is party to, subject to its right to cure such breach(s) under the Amended BOA Credit Agreement, and also provides that an event of default occurs if (a) Benjamin P. Cowart, the Company’s Chief Executive Officer, Chairman of the Board and largest shareholder, ceases to be actively involved in the day-to-day management or operation of the Company or if Mr. Cowart ceases to own and control at least 20% of the equity interests of the Company; (b) the Company ceases at any time to own and control 100% of Vertex Operating or certain other of its subsidiaries; (c) Vertex Acquisition Sub, LLC (Vertex Operating’s wholly-owned subsidiary) ceases to control 100% of its current subsidiaries; (d) certain other changes in control of our subsidiaries occur; (e) a “change of control” or similar event or event of default occurs under the Credit Agreement; or (f) a default occurs under certain lease agreements related to premises leased by the Company.

A breach of any of the covenants of the Credit Agreement, Amended BOA Credit Agreement or any future agreements, if uncured, could lead to an event of default under any such document, which in some circumstances could give our creditors the right to demand that we accelerate repayment of amounts due and/or enforce their security interests over substantially all of our assets. This would likely in turn trigger cross-acceleration or cross-default rights in other documents governing our indebtedness. Therefore, in the event of any such breach, we may need to seek covenant waivers or amendments from our creditors or seek alternative or additional sources of financing, and we may not be able to obtain any such waivers or amendments or alternative or additional financing on acceptable terms, if at all. In addition, any covenant breach or event of default could harm our credit rating and our ability to obtain additional financing on acceptable terms. The occurrence of any of these events could have a material adverse effect on our financial condition and liquidity and/or cause our lenders to enforce their security interests which could ultimately result in the foreclosure of our assets, which would have a material adverse effect on our operations and the value of our securities.

Our obligations under the Credit Agreement and Amended BOA Credit Agreement are secured by a first priority security interest in substantially all of our assets.

Our obligations under the Credit Agreement and Amended BOA Credit Agreement are secured by a first priority security interest in substantially all of our assets. Additionally, substantially all of our subsidiaries agreed to guarantee our obligations under the Credit Agreement and Amended BOA Credit Agreement. As such, if an event of default occurs under the Credit Agreement or Amended BOA Credit Agreement, our creditors may enforce their security interests over our assets and/or our subsidiaries which secure the repayment of such obligations, and we could be forced to curtail or abandon our current business plans and operations. If that were to happen, any investment in the Company could become worthless.

If we are unable to maintain a credit facility, it could have an adverse effect on our business.

We have historically been able to maintain lines of credit and other credit facilities similar to the Credit Agreement and Amended BOA Credit Agreement. We rely heavily on the availability and utilization of these lines of credit and credit facilities for our operations and for the purchase of inventory. If we are unable to renew or replace our facility or are unable to borrow funds

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under such facility or any future facility), for any reason, either due to having no available funds remaining under the facility and/or upon any default of the facility, we may be forced to curtail or abandon our current and/or future planned business operations.

We are subject to numerous environmental and other laws and regulations and, to the extent we are found to be in violation of any such laws and regulations, our business could be materially and adversely affected.

We are subject to extensive federal, state, provincial and local laws and regulations relating to the protection of the environment which, among other things:

regulate the collection, transportation, handling, processing and disposal of hazardous and non-hazardous wastes;

impose liability on persons involved in generating, handling, processing, transporting or disposing hazardous materials;

impose joint and several liability for remediation and clean-up of environmental contamination; and

require financial assurance that funds will be available for the closure and post-closure care of sites where hazardous wastes are stored, processed or disposed.

The breadth and complexity of all of these laws and regulations impacting us make consistent compliance extremely difficult and often result in increased operating and compliance costs, including requiring the implementation of new programs to promote compliance. Even with these programs, we and other companies in the industry are routinely faced with legal and administrative proceedings which can result in civil and criminal penalties, interruption of business operations, fines or other sanctions and require expenditures.

Our operations involve the risks of fuel spillage or seepage, environmental damage and hazardous waste disposal, among others. If we are involved in a spill or other accident involving hazardous substances, or if we are found to be in violation of applicable environmental laws or regulations, it could significantly increase our cost of doing business.

Additionally, under current law, we may be held liable for damage caused by conditions that existed before we acquired our assets and/or before we took control of our leased properties or if we arranged for the transportation, disposal or treatment of hazardous substances that cause environmental contamination. In the future, we may be subject to monetary fines, civil or criminal penalties, remediation, clean-up or stop orders, injunctions, orders to cease or suspend certain practices or denial of permits required to operate our facilities and conduct our operations. The outcome of any proceeding and associated costs and expenses could have a material adverse impact on our operations and financial condition.

Our trucking operations are subject to a number of federal, state and local rules and regulations generally governing such activities as authorization to engage in motor carrier operations, safety compliance and reporting, contract compliance, insurance requirements, taxation and financial reporting. We could be subject to new or more restrictive regulations, such as regulations relating to engine emissions, drivers’ hours of service, occupational safety and health, ergonomics or cargo security. Compliance with such regulations could substantially reduce equipment productivity, and the costs of compliance could increase our operating expenses.

Environmental laws also govern the presence, maintenance and removal of asbestos-containing building materials, or ACBM, and may impose fines and penalties for failure to comply with these requirements. Such laws require that owners or operators of buildings containing ACBM (and employers in such buildings) properly manage and maintain the asbestos, adequately notify or train those who may come into contact with asbestos, and undertake special precautions, including removal or other abatement, if asbestos would be disturbed during renovation or demolition of a building or plant. In addition, the presence of ACBM in our properties or plants may expose us to third-party liability (e.g., liability for personal injury associated with exposure to asbestos).

Environmental laws and regulations are subject to change and may become increasingly stringent or relaxed. Interpretation or enforcement of existing laws and regulations, or the adoption of new laws and regulations, may require us to modify or curtail our operations or replace or upgrade our facilities or equipment at substantial costs which we may not be able to pass on to our customers. On the other hand, if new laws and regulations are less stringent, then our customers or competitors may be able to compete with us more effectively, without reliance on our services, which could decrease the need for our services and/or increase competition which could adversely affect our revenues and profitability, if any.

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We are required to obtain and maintain permits, licenses and approvals to conduct our operations in compliance with such laws and regulations. If we are unable to maintain our currently held permits, licenses and approvals, we may not be able to continue certain of our operations. If we are unable to obtain any additional permits, licenses and approvals which may be required as we expand our operations, we may be forced to curtail or abandon our current and/or future planned business operations.

Environmental risks and regulations may adversely affect our business.

All phases of designing, constructing and operating our refining and planned re-refining plants present environmental risks and hazards. We are subject to environmental regulation implemented or imposed by a variety of federal, state and municipal laws and regulations as well as international conventions. Among other things, environmental legislation provides for restrictions and prohibitions on spills and discharges, as well as emissions of various substances produced in association with our operations. Legislation also requires that facility sites be operated, maintained, abandoned and reclaimed in such a way that would satisfy applicable regulatory authorities. Compliance with such legislation can require significant expenditures and a breach could result in the imposition of fines and penalties, some of which could be material. Environmental legislation is evolving in a manner we expect may result in stricter standards and enforcement, larger fines and liability, as well as potentially increased capital expenditures and operating costs. The presence or discharge of pollutants in or into the air, soil or water may give rise to liabilities to governments and third parties and may require us to incur costs to remedy such presence or discharge.

Environmental, health and safety laws, regulations and permit requirements, and the potential for further expanded laws, regulations and permit requirements may increase our costs or reduce demand for our products and thereby negatively affect our business. Environmental permits required for our operations are subject to periodic renewal and may be revoked or modified for cause or when new or revised environmental requirements are implemented. Changing and increasingly strict environmental requirements and the potential for further expanded regulation may increase our costs and can affect the manufacturing, handling, processing, distribution and use of our products. If so affected, our business and operations may be materially and adversely affected. In addition, changes in these requirements may cause us to incur substantial costs in upgrading or redesigning our facilities and processes, including our waste treatment, storage, disposal and other waste handling practices and equipment. For these reasons, we may need to make capital expenditures beyond those currently anticipated to comply with existing or future environmental or safety laws. The application of environmental, health and safety laws, regulations and permit requirements to our business may cause us to limit our production, significantly increase the costs of our operations and activities, reduce the market for our products or to otherwise adversely affect our financial condition, results of operations or prospects.

Climate change legislation or regulations restricting emissions of greenhouse gases could result in increased operating and capital costs and reduced demand for our products.

There is a growing belief that emissions of greenhouse gases, or GHGs, such as carbon dioxide and methane, may be linked to climate change. Climate change and the costs that may be associated with its impacts and the regulation of GHGs have the potential to affect our business in many ways, including negatively impacting the costs of our operations, transportation costs, feedstock costs and demand for our products (due to changes in both costs and weather patterns).

In recent years, the U.S. Congress has from time to time considered adopting legislation to reduce emissions of GHGs and almost one-half of the states have already taken legal measures to reduce emissions of GHGs primarily through the planned development of GHG emission inventories and/or regional GHG cap and trade programs. Most of these cap and trade programs work by requiring major sources of emissions, such as electric power plants, or major producers of fuels, such as refineries and gas processing plants, to acquire and surrender emission allowances. The number of allowances available for purchase is generally reduced each year in an effort to achieve the overall GHG emission reduction goal.

Depending on the scope of a particular program, we could be required to purchase and surrender allowances for GHG emissions resulting from our operations. Although most of the state-level initiatives have to date been focused on large sources of GHG emissions, such as electric power plants, it is possible that smaller sources such as our operations could become subject to GHG-related regulation. Depending on the particular program, we could be required to control emissions or to purchase and surrender allowances for GHG emissions resulting from our operations. Independent of Congress, the Environmental Protection Agency (EPA) has adopted regulations controlling GHG emissions under its existing Clean Air Act authority. For example, on December 15, 2009, the EPA officially published its findings that emissions of carbon dioxide, methane and other GHGs present an endangerment to human health and the environment because emissions of such gases are, according to the EPA, contributing to warming of the earth’s atmosphere and other climatic changes. These findings by the EPA allow the agency to proceed with the adoption and implementation of regulations that would restrict emissions of greenhouse gases under existing provisions of the federal Clean Air Act. In 2009, the EPA adopted rules regarding regulation of GHG emissions from motor vehicles. In 2010, EPA also issued a final rule, known as the “Tailoring Rule,” that makes certain large stationary sources and modification projects subject to permitting requirements for greenhouse gas emissions under the Clean Air Act. In addition, on September 22, 2009, the EPA

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issued a final rule requiring the reporting of greenhouse gas emissions from specified large greenhouse gas emission sources in the U.S. beginning in 2011 for emissions occurring in 2010. None of our facilities currently generate enough greenhouse gasses to be subject to this reporting requirement under this rule, but we could become subject to such reporting requirements in the future.

Although it is not possible at this time to accurately estimate how potential future laws or regulations addressing greenhouse gas emissions would impact our business, any future federal laws or implementation of regulations that may be adopted to address greenhouse gas emissions could require us to incur increased operating costs and could adversely affect demand for our feedstocks and resulting products, and/or increase our transportation costs. The potential increase in the costs of our operations resulting from any legislation or regulation to restrict emissions of greenhouse gases could include new or increased costs to operate and maintain our facilities, install new emission controls on our facilities, acquire allowances to authorize our greenhouse gas emissions, pay any taxes related to our greenhouse gas emissions and administer and manage a greenhouse gas emissions program. While we may be able to include some or all of such increased costs in the rates charged for our products, such recovery of costs is uncertain. Moreover, incentives to conserve energy or use alternative energy sources could reduce demand for our products and/or lower the supply of our feedstocks. We cannot predict with any certainty at this time how these possibilities may affect our operations. Many scientists have concluded that increasing concentrations of GHGs in the Earth’s atmosphere may produce climate change that could have significant physical effects, such as increased frequency and severity of storms, droughts, and floods and other climatic events; if such effects were to occur, they could have an adverse effect on our operations.

The adoption of regulations implementing recent financial reform legislation could impede our ability to manage business and financial risks by restricting our use of derivative instruments as hedges against fluctuating commodity prices.

The U.S. Congress adopted the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010 (the “Dodd-Frank Act”). This comprehensive financial reform legislation establishes federal oversight and regulation of the over-the-counter derivatives market and entities that participate in that market. The Dodd-Frank Act requires the Commodity Futures Trading Commission (“CFTC”), the SEC and other regulators to promulgate rules and regulations implementing the new legislation. The CFTC has adopted regulations to set position limits for certain futures and option contracts in the major energy markets and for swaps that are their economic equivalents. Certain bona fide hedging transactions or derivative instruments would be exempt from these position limits. The Dodd-Frank Act may also require compliance with margin requirements and with certain clearing and trade-execution requirements in connection with certain derivative activities. The final rules will be phased in over time according to a specified schedule which is dependent on finalization of certain other rules to be promulgated by the CFTC and the SEC.

The Dodd-Frank Act and any new regulations could significantly increase the cost of some commodity derivative contracts (including through requirements to post collateral), materially alter the terms of some commodity derivative contracts and reduce the availability of some derivatives to protect against risks we encounter. While we are not currently party to any commodity derivative contracts, we may enter into such contracts in the future and the Dodd-Frank Act and any new regulations may have the effect of making our results of operations more volatile and our cash flows may be less predictable, if we are unable to enter into commodity derivative contracts or similar hedging transactions in the future. Finally, the Dodd- Frank Act was intended, in part, to reduce the volatility of oil and natural gas prices, which some legislators attributed to speculative trading in derivatives and commodity instruments related to oil and natural gas. If the Dodd-Frank Act and any new regulations result in lower commodity prices, our revenues could be adversely affected. Any of these consequences could adversely affect our business, financial condition and results of operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

During the six months ended June 30, 2014, a total of 643,444 shares of the Company's Series A Preferred Stock were converted into 643,444 shares of our common stock on a one-for-one basis.  Warrants to purchase 6,250 shares of common stock were exercised with $10,937 of exercise price paid in cash. Options to purchase 483,750 shares of common stock were exercised for a net of 464,148 shares of common stock (when adjusting for a cashless exercise of 186,250 of such options and the payment, in shares of common stock, of an aggregate exercise price of $130,625, along with an exercise price of $200,125 paid in cash in connections with such exercises) and 464,148 shares of common stock were issued to the option holders in connection with such exercises.

In April 2014, the Company granted two employees Incentive Stock Options to purchase an aggregate of 150,000 shares of the Company's common stock, which have a term of ten years, an exercise price of $7.55 per share and vest at the rate of 1/4th of such options per year on each of the first four anniversaries of the grant date.

46

Subsequent to June 30, 2014, 22,760 shares of the Company's Series A Preferred Stock were converted into 22,760 shares of our common stock on a one-for-one basis.

In May 2014, 500,000 shares of our restricted common stock (valued at $3,266,000) were issued in connection with the Initial Closing of the Omega Refining acquisition.

On June 5, 2014, we entered into a Common Stock Purchase Agreement (the "Purchase Agreement") with certain institutional investors (the "Investors"), pursuant to which the Company agreed to sell to the Investors an aggregate of 2.2 million shares (the "Shares") of the Company's restricted common stock for $7.75 per share (a 12.3% discount to the 30 day volume-weighted average price of the Company's common stock as of the date the Purchase Agreement was entered into). Total gross proceeds from the offering of the Shares was $17.1 million. The Company intends o use the net proceeds from the offering for general corporate and working capital purposes, a majority of which is expected to be used for the Company's West Coast expansion.

All of the shares of common stock issuable upon conversion of the Series A Preferred Stock shares were exempt from registration pursuant to an exemption from registration afforded by Section 3(a)(9) and 3(a)(10) of the Securities Exchange Act of 1934, as amended. All of the shares of common stock issuable upon exercise of options were registered on Form S-8 and therefore did not constitute restricted securities (except to the extent such securities were acquired by "affiliates" of the Company).

The issuance of restricted shares in connection with the exercise of the warrants, the Omega transaction and the sale of Shares to the Investors and the grant of the options were exempt from registration pursuant to Section 4(2) and/or Rule 506 of Regulation D of the Securities Act of 1933, as amended, since the issuances and grants did not involve a public offering, the recipients took the securities for investment and not resale, we took appropriate measures to restrict transfer, and the recipients were "accredited investors" and/or had information regarding the Company similar to what would be included in a Registration Statement under the Securities Act of 1933, as amended. With respect to the transactions described above, no general solicitation was made either by us or by any person acting on our behalf.

Item 3.  Defaults Upon Senior Securities

None.

Item 4.  Mine Safety Disclosures

Not applicable.

Item 5.  Other Information.

Effective July 24, 2014, the Board of Directors approved certain amendments to the Charter of the Compensation Committee of the Board of Directors to comply with applicable NASDAQ rules and requirements. A copy of the Charter of the Compensation Committee as amended is furnished hereto as Exhibit 99.2.

Item 6.  Exhibits

See the Exhibit Index following the signature page to this Quarterly Report on Form 10-Q for a list of exhibits filed or furnished with this report, which Exhibit Index is incorporated herein by reference. 

47

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, hereunto duly authorized.

	VERTEX ENERGY, INC.
Date: August 14, 2014	By: /s/ Benjamin P. Cowart
	Benjamin P. Cowart
	Chief Executive Officer
	(Principal Executive Officer)
Date: August 14, 2014	By: /s/ Chris Carlson
	Chris Carlson
	Chief Financial Officer
	(Principal Financial Officer)

48

EXHIBIT INDEX

			Incorporated by Reference
Exhibit Number	Description of Exhibit	Filed or Furnished Herewith	Form	Exhibit	Filing Date/Period End Date	File No.
1.1	Underwriting Agreement, dated November 20, 2013, by and among Vertex Energy, Inc. and Craig-Hallum Capital Group LLC		8-K	1.1	11/21/2013	001-11476
2.1	Unit Purchase Agreement by and among Vertex Energy, Inc., Vertex Acquisition Sub, LLC, Vertex Holdings, L.P. and B&S Cowart Family L.P. dated as of August 14, 2012		8-K	2.1	8/15/2012	000-53619
2.2	First Amendment to Unit Purchase Agreement by and among Vertex Energy, Inc., Vertex Acquisition Sub, LLC, Vertex Holdings, L.P. and B&S Cowart Family L.P. dated as of September 11, 2012		8-K	2.2	9/12/2012	000-53619
2.3	Asset Purchase Agreement by and among Vertex Energy, Inc., Vertex Refining LA, LLC.,Vertex Refining NV., LLC, Omega Refining, LLC, Bango Refining NV, LLC and Omega Holdings Company LLC (March 17, 2014)		8-K	2.1	3/19/2014	001-11476
2.4	First Amendment to Asset Purchase Agreement by and among Vertex Energy, Inc., Vertex Refining LA, LLC, Vertex Refining NV, LLC, Omega Refining, LLC, Bango Refining NV, LLC and Omega Holdings Company LLC (April 14, 2014)		8-K	2.2	4/15/2014	001-11476
2.5	Second Amendment to Asset Purchase Agreement by and among Vertex Energy, Inc., Vertex Refining LA, LLC, Vertex Refining NV, LLC, Bango Refining NV, LLC and Omega Holdings Company LLC (April 30, 2014)		8-K	2.3	5/6/2014	001-11476
2.6(#)	Third Amendment to Asset Purchase Agreement by and among Vertex Energy, Inc., Vertex Refining LA, LLC, Vertex Refining NV, LLC, Bango Refining NV, LLC and Omega Holdings Company LLC (May 2, 2014)		8-K	2.4	5/6/2014	001-11476
4.1	Vertex Energy, Inc. - 2013 Stock Incentive Plan		4.1	S-8	7/28/2014	333-197659
4.2	Vertex Energy, Inc. - Form of 2013 Stock Incentive Plan Restricted Stock Grant Agreement		4.3	S-8	7/28/2014	333-197659
10.1(+)	Tolling Agreement between KMTEX, Ltd. and Vertex Energy Inc., dated April 17, 2013		8-K	10.1	11/12/2013	001-11476
10.2	Credit Agreement between Vertex Energy Inc. and Bank of America, N.A. dated August 31, 2012		8-K	10.1	9/12/2012	000-53619
10.3	$10,000,000 Revolving Note by Vertex Energy, Inc. in favor of Bank of America, N.A. dated August 31, 2012		8-K	10.2	9/12/2012	000-53619

49

10.4	$8,500,000 Term Note by Vertex Energy, Inc. in favor of Bank of America, N.A. dated August 31, 2012	8-K	10.3	9/12/2012	000-53619
10.5	Security Agreement with Bank of America, N.A. dated August 31, 2012	8-K	10.40	9/12/2012	000-53619
10.6	Corporate Guaranty in favor of Bank of America, N.A. dated August 31, 2012	8-K	10.5	9/12/2012	000-53619
10.7	First Amendment to Credit Agreement between Vertex Energy, Inc. and Bank of America, N.A. dated August 31, 2012	10-Q	10.18	9/30/2012	000-53619
10.8(#)	Secured Promissory Note ($13,858,066.67)-May 2, 2014-Omega Refining, LLC and Bango Refining NV, LLC as borrowers and Vertex Refining NV, LLC as lender	8-K	10.1	5/6/2014	001-11476
10.9	Guaranty Agreement-Omega Holdings-May 2, 2014	8-K	10.2	5/6/2014	001-11476
10.10(#)	Credit and Guaranty Agreement dated as of May 2, 2014, by and among Vertex Energy Operating, LLC, Vertex Energy, Inc., and certain other subsidiaries of Vertex Energy, Inc., as Guarantors, and Goldman Sachs USA, as Lender and as Administrative Agent, Collateral Agent, and Lead Arranger	8-K	10.3	5/6/2014	001-11476
10.11	Term Loan Note ($40,000,000)-Credit and Guaranty Agreement dated as of May 2, 2014	8-K	10.4	5/6/2014	001-11476
10.12(#)	Pledge and Security Agreement-Credit and Guaranty Agreement dated as of May 2, 2014	8-K	10.5	5/6/2014	001-11476
10.13(#)	Amended and Restated Credit Agreement, among Vertex Energy, Inc., and Vertex Energy Operating, LLC, as Borrowers and Bank of America, N.A., as Lender as of May 2, 2014	8-K	10.6	5/6/2014	001-11476
10.14	Revolving Note ($20,000,000)-Amended and Restated Credit Agreement, as of May 2, 2014	8-K	10.7	5/6/2014	001-11476
10.15(#)	Pledge and Security Agreement-Amended and Restated Credit Agreement, as of May 2, 2014	8-K	10.8	5/6/2014	001-11476
10.16	Amended and Restated Guaranty-Amended and Restated Credit Agreement, as of May 2, 2014	8-K	10.9	5/6/2014	001-11476
10.17	Intercreditor Agreement, May 2, 2014, by and among Bank of America, N.A. and Goldman Sachs Bank USA	8-K	10.10	5/6/2014	001-11476
10.18	At-Will Employment, Confidential Information, Invention Assignment and Arbitration Agreement with David Peel (April 2014)***	8-K	10.1	6/24/14	001-11476
10.19	Retention and Noncompetition Agreement with David Peel (April 2014)***	8-K	10.2	6/24/14	001-11476
10.20	Employment Agreement between Vertex Refining LA, LLC and James P. Gregory (Effective May 2, 2014)***	8-K	10.1	07/29/2014	001-11476

50

10.21	Form of Common Stock Purchase Agreement dated June 5, 2014 by and between Vertex Energy, Inc. and the purchasers named therein		8-K	10.1	6/6/2014	001-11476
10.22	Land Lease between Marrero Terminal LLC, as Landlord and Omega Refining, LLC, as Tenant, relating to the Used Motor Oil Re-Refinery Located at 5000 River Road, Marrero, Louisiana 70094, dated as of April 30, 2008 and amendments	X
10.23	Commercial Lease between Plaquemines Holdings, LLC as Landlord and Omega Refining, LLC, as Tenant, relating to the Myrtle Grove Facility Located at 278 East Ravenna Road, Myrtle Grove, LA, dated as of May 25, 2012 and amendments	X
10.24	Operation and Maintenance Agreement dated as of November 3, 2010, by and between Magellan Terminals Holdings, L.P. (f/k/a Marrero Terminal, LLC) and Omega Refining, LLC	X
10.25(##)	Terminaling Services Agreement between Marrero Terminal LLC (Owner) and Omega Refining, LLC (Customer) dated as of May 1, 2008	X
10.26(##)	Second Use Motor Oil Buy/Sell Contract dated August 1, 2012, by and between Thermo Fluids, Inc. and Omega Refining, LLC	X
31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act*	X
31.2	Certification of Principal Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act*	X
32.1	Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act**	X
32.2	Certification of Principal Accounting Officer Pursuant to Section 906 of the Sarbanes-Oxley Act**	X
99.1	Glossary of Selected Terms		10-K	99.1	12/31/2012	001-11476
99.2	Amended Charter of the Compensation Committee effective July 24, 2014	X	8-K/A	99.1	07/18/2014
99.3	Audited Balance Sheets of Omega Refining, LLC as of December 31, 2013 and 2012, Audited Statements of Operations and Member’s Equity for the years ended December 31, 2013 and 2012, Audited Statements of Cash Flows for the years ended December 31, 2013 and 2012, and the notes thereto		8-K/A	99.2	07/18/2014	001-11476
99.4	Unaudited Balance Sheet of Omega Refining, LLC as of March 31, 2014, and the Unaudited Statements of Operations and Member’s Equity for the three months ended March 31, 2014 and 2013, and the notes thereto		8-K/A	99.2	07/18/2014	001-11476
99.5	Unaudited Pro Forma Combined Balance Sheet of Vertex Energy, Inc. as of March 31, 2014, Unaudited Pro Forma Combined Statement of Operations for the three months ended March 31, 2014, and Unaudited Pro Forma Combined Statement of Operations for the year ended December 31, 2013					001-11476

51

101.INS++	XBRL Instance Document	X
101.SCH++	XBRL Taxonomy Extension Schema Document	X
101.CAL++	XBRL Taxonomy Extension Calculation Linkbase Document	X
101.DEF++	XBRL Taxonomy Extension Definition Linkbase Document	X
101.LAB++	XBRL Taxonomy Extension Label Linkbase Document	X
101.PRE++	XBRL Taxonomy Extension Presentation Linkbase Document	X

* Filed herewith.

** Furnished herewith.

*** Indicates management contract or compensatory plan or arrangement.

+ Certain portions of these documents (which portions have been replaced by "X's") have been omitted in connection with a request for Confidential Treatment which was granted by the Commission.   This entire exhibit including the omitted confidential information has been filed separately with the Commission.

# Certain portions of these documents (which portions have been replaced by "***'s") have been omitted in connection with a request for Confidential Treatment which has been accepted by the Commission. This entire exhibit including the omitted confidential information has been filed separately with the Commission.

## Certain portions of these documents (which portions have been replaced by "***'s") have been omitted in connection with a request for Confidential Treatment which has been submitted to the Commission. This entire exhibit including the omitted confidential information has been filed separately with the Commission.

 ++XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

52

EX-10.22

Exhibit 10.22

LAND LEASE

between

MARRERO TERMINAL LLC,

as Landlord

and

OMEGA REFINING, LLC,

as Tenant

Relating to the Used Motor Oil Re-Refinery

Located at 5000 River Road,

Marrero, Louisiana 70094

Dated as of April 30, 2008

TABLE OF CONTENTS

Page No.

ARTICLE 1 – LEASE2

1.1Lease.    2

1.2Condition of the Leased Premises.    2

1.3Joint Use Areas.    2

1.4Office/Warehouse and Parking Lot.    3

1.5Option Tract.    3

ARTICLE 2 – TERM AND COMMENCEMENT3

2.1Term.    3

2.2Renewal Options.    3

2.3Coterminous with Terminaling Agreement.    4

ARTICLE 3 – RENT4

3.1Base Rent.    4

3.2Operating Expense Subsidy.    4

3.3Option to Pay Base Rent and the Operating Expense Subsidy in Arrears.    4

3.4Joint Use Area Costs.    5

3.5Rent.    6

3.6Late Charge.    6

3.7Net Lease.    6

3.8Prepayment of Base Rent and Operating Expense Subsidy.    6

3.9Independent Obligations.    6

ARTICLE 4 – QUIET POSSESSION6

4.1Quiet Possession.    6

ARTICLE 5 – USE, ALTERATIONS, MAINTENANCE AND REPAIRS7

Land Lease    Page i

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10.22

5.1Use.    7

5.2Alterations.    7

5.3Maintenance and Repair of Plant and Leased Premises.    7

5.4Maintenance and Repair of Joint Use Areas.    7

ARTICLE 6 – TAXES7

6.1Personal Property Taxes.    7

6.2Impositions.    8

6.3Rent and Use Taxes.    8

6.4Other Taxes.    8

6.5Delinquency of Payment.    8

ARTICLE 7 – INSURANCE9

7.1Tenant’s Insurance.    9

7.2Landlord’s Insurance    9

7.3Subrogation.    9

ARTICLE 8 – UTILITIES AND SERVICES9

8.1Utilities and Services.    9

ARTICLE 9 – COMPLIANCE WITH LAWS AND permitS9

9.1Compliance with Laws and Permits.    9

9.2Permits.    10

9.3Survival.    10

ARTICLE 10 – HAZARDOUS MATERIALS10

10.1Hazardous Materials.    10

10.2Notice to Landlord.    11

10.3Indemnification.    11

Land Lease    Page ii

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10.22

10.4Disclaimer Regarding Pre-Existing Conditions.    12

10.5Survival.    12

ARTICLE 11 – INDEMNIFICATION12

11.1Tenant’s Indemnification, Waiver and Release.    12

11.2Landlord’s Indemnification.    13

ARTICLE 12 – LANDLORD’S LIABILITY14

12.1Liability of Landlord.    14

ARTICLE 13 – EXPROPRIATION AND CASUALTY14

13.1Expropriation of Entire Leased Premises or Portions of the Storage Facility.    14

13.2Partial Expropriation/Continuation of Lease.    14

13.3Continuance of Obligations.    15

13.4Fire and Casualty Damage.    15

ARTICLE 14 – ASSIGNMENT AND SUBLETTING15

14.1Assignment and Subletting.    15

14.2Release of Tenant upon Assignment.    16

14.3Assignment by Landlord.    16

ARTICLE 15 – SUBORDINATION AND LENDER AGREEMENTS16

15.1Subordination.    16

15.2Waiver of Landlord’s Lien; Tenant’s Right to Encumber Leasehold Interest and Personal Property.    17

ARTICLE 16 – DEFAULT17

16.1Default.    17

16.2Landlord Remedies.    18

16.3Waiver.    18

16.4Bankruptcy or Insolvency.    19

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10.22

16.5Waiver by Tenant.    19

ARTICLE 17 – NOTICES19

17.1Notices.    19

ARTICLE 18 – SURRENDER20

18.1Surrender of Leased Premises.    20

18.2No Surrender During Lease Term.    21

ARTICLE 19 – MISCELLANEOUS21

19.1Successors.    21

19.2Headings.    21

19.3Time of Essence.    21

19.4Invalidity.    21

19.5Attorney’s Fees.    21

19.6Governing Law.    21

19.7Entire Agreement.    21

19.8Authority.    21

19.9Servitudes.    22

19.10Landlord’s Liability.    22

19.11Recording of Lease.    22

19.12Estoppel Certificates.    22

19.13Force Majeure.    23

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10.22

EXHIBITS

Exhibit A-1 – Description of Land

Exhibit A-2 – Description of Leased Premises

Exhibit B – Site Plan

Exhibit C – Office Space

Exhibit D – Insurance Requirements

Exhibit E – Form of Notice of Lease Agreement

Exhibit F – Tax Matrix

Land Lease    Page v

H-

10.22

LAND LEASE

This LAND LEASE (this “Lease”), dated for reference purposes as of the 30th day of April, 2008 (the “Effective Date”), is made by and between MARRERO TERMINAL LLC, a Delaware limited liability company (“Landlord”), and OMEGA REFINING, LLC, a Delaware limited liability company (“Tenant”).

R E C I T A L S

A.Landlord is the owner of a tract of land situated in Marrero, Jefferson Parish, Louisiana on which is located a terminal and storage facility and related assets, and more particularly described in Exhibit A-1 attached hereto (the “Land”) and on which Landlord owns and operates a certain terminal and storage facility (together with the Land, the “Storage Facility”).

B.Tenant is the owner of certain refinery plant assets and equipment for the refining of used motor oil (the “Plant”) situated on a tract of land within the Land more particularly described as Tracts 1, 2, and 4 on Exhibit A-2 attached hereto (“Plant Site”).

C.Landlord is the owner of certain improvements situated on portions of the Land consisting of (i) a structure containing office space and a warehouse (“Office/Warehouse”) located on [Tract 4] described on Exhibit A-2 attached hereto (“Office/Warehouse Site”), and (ii) a parking lot located on [Tract 5] described on Exhibit A-2 attached hereto (“Parking Lot Site”) (the Plant Site, the Parking Lot Site and the Office/Warehouse Site, together with the Office/Warehouse, being referred to herein as the “Leased Premises”)

D.Pursuant to that certain Purchase and Sale Agreement (“PSA”) dated as of the date hereof, between Landlord and Tenant, Landlord has agreed to lease to Tenant the Leased Premises, together with the right to use and access certain common areas within the Storage Facility more particularly described below as the “Joint Use Areas”, on the terms and conditions set forth herein. The various components of the Leased Premises and the locations of the Joint Use Areas are further depicted on the site plan attached hereto as Exhibit B (“Site Plan”).

E.Landlord is also the owner of a portion of the Land located adjacent to the Plant Site and more particularly described in Exhibit A-3 attached hereto (“Option Tract”), for which Landlord has granted to Tenant an option to include as part of the Leased Premises in accordance with the terms provided herein.

F.Concurrent with the execution and delivery of this Lease, Landlord and Tenant have also executed (i) that certain Co-Employer and Shared Services Agreement, as the same may be renewed, extended, modified or amended (the “Shared Services Agreement”) relating to certain agreements of Tenant to provide and Landlord to purchase and pay for certain services to Landlord in connection with Landlord’s operation of the Storage Facility, and (ii) that certain Terminaling Services Agreement, as the same may be renewed, extended, modified or amended (the “Terminaling Agreement”) relating to Landlord’s agreement to provide terminaling and storage services to Tenant at the Storage Facility and Tenant’s commitment to store certain volumes of product at the Storage Facility (the Shared Services Agreement and the Terminaling Agreement are together referred to herein as the “Related Agreements”).

G.As an inducement to Landlord to enter into this Lease, Tenant has agreed to cause its affiliate, CAM2 International, LLC, a Colorado limited liability company, and Hammond Lubricant Works, Inc., an Indiana corporation (collectively, “Guarantor”) to unconditionally guarantee, jointly and severally, all of Tenant’s obligations under this Lease and the Related Agreements pursuant to that certain Guaranty Agreement (“Guaranty”) dated as of the Effective Date.

Land Lease    Page 1

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10.22

NOW, THEREFORE, Landlord and Tenant agree as follows:

ARTICLE 1 – LEASE

1.1Lease.

Landlord hereby leases the Leased Premises to Tenant and Tenant hereby leases the Leased Premises from Landlord, for the Term and subject to the agreements, conditions and provisions contained herein.

1.2Condition of the Leased Premises.

(a)EXCEPT AS PROVIDED IN SECTION 10.4, TENANT HEREBY ACKNOWLEDGES THAT TENANT IS LEASING THE LEASED PREMISES, AND THE LEASED PREMISES SHALL BE LEASED TO TENANT, “AS IS, WHERE IS, AND WITH ALL FAULTS” AND SPECIFICALLY AND EXPRESSLY WITHOUT ANY WARRANTIES, REPRESENTATIONS, OR GUARANTEES, EITHER EXPRESS OR IMPLIED, OF ANY KIND, NATURE, OR TYPE WHATSOEVER FROM OR ON BEHALF OF LANDLORD, INCLUDING, WITHOUT LIMITATION, ANY RELATED TO COMPLIANCE WITH OR LIABILITIES UNDER ENVIRONMENTAL LAW.

(b)WITHOUT IN ANY WAY LIMITING THE GENERALITY OF THE PRECEDING SECTIONS 1.2(A), EXCEPT AS PROVIDED IN SECTION 10.4, TENANT SPECIFICALLY ACKNOWLEDGES AND AGREES THAT TENANT HEREBY WAIVES AND RELEASES ANY CLAIM TENANT HAS, MIGHT HAVE HAD, OR MAY HAVE AGAINST LANDLORD WITH RESPECT TO: THE CONDITION OF THE LEASED PREMISES, EXCEPT FOR ANY ARISING UNDER THE EXPRESS PROVISIONS OF THE RELATED AGREEMENTS, WHETHER SUCH CONDITION IS PATENT OR LATENT; COMPLIANCE WITH OR LIABILITIES UNDER ENVIRONMENTAL LAW; AND ANY OTHER STATE OF FACTS WHICH EXIST WITH RESPECT TO THE LEASED PREMISES.

(c)For purposes of this Lease: (i) the term “Environmental Law” means all Laws that regulate activities, conditions, or substances because of their effect or potential effect on public health and welfare and the environment, including those relating to the emission, discharge, release, treatment, storage, disposal, or transport of chemicals, wastes, or other materials, including without limitation, the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. §§ 321, et seq., the Oil Pollution Act, 33 U.S.C. §§ 2702, et seq., the Clean Water Act, 33 U.S.C. §§ 1251, et seq., the Clean Air Act, 42 U.S.C. §§ 7401, et seq., the Toxic Substances Control Act, 15 U.S.C. §§2601 et seq., and the Endangered Species Act, 16 U.S.C. §§1531 et seq. and their state and local counterparts, if any; and (ii) the term “Laws” means all “statutes, rules, orders, ordinances, principles of common law, or other requirements of any governmental or quasi-governmental entity.

1.3Joint Use Areas.

Landlord hereby grants to Tenant and its customers, agents, invitees and contractors, the non-exclusive right and license to use the Joint Use Areas, in common with Landlord and its customers, agents, invitees and contractors, for purposes of ingress and egress in connection with Tenant’s operation of the Plant or providing services to Landlord pursuant to the Related Agreements. Tenant’s use of the Joint Use Areas shall be subject to Landlord’s reasonable procedures, rules and regulations relating to security and safety for the Storage Facility and Joint Use Areas provided to Tenant in writing from time to time. The

Land Lease    Page 2

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10.22

term “Joint Use Areas” shall mean those areas shown on the Site Plan as the Joint Use Areas, including the entry and exit areas on River Road, the truck dock and related driveways, and yard area.

1.4Office/Warehouse and Parking Lot.

Landlord hereby reserves to itself, and Tenant hereby consents to Landlord's use of (a) certain portions of the Office/Warehouse for office and warehouse purposes, to be determined by the parties as necessary for Landlord's use as office and warehouse space from time to time, and (b) the Parking Lot for parking for employees and invitees. Landlord will not initially be charged rent or other costs or fees for such use; provided, however, if Landlord's requirements for use of office space, warehouse space or parking areas increase over time to the point that Landlord's use is substantially greater than it is at the Commencement Date, then Landlord and Tenant agree to amend this Lease to provide for a reasonable and equitable sharing of costs for operation, maintenance and repair of the Office/Warehouse and Parking Lot based on the extent of use by each party. Tenant agrees to use reasonable efforts to accommodate Landlord's needs for additional office or warehouse space or parking spaces, subject to availability and Tenant's needs. Tenant shall provide and pay for all utilities serving the Office/Warehouse and Parking Lot, subject to any future right of reimbursement by Landlord as provided in the previous sentence. Landlord shall provide for its own telephone and data services to any space utilized by it in the Office/Warehouse.

1.5Option Tract.

Landlord hereby grants to Tenant the right and option to lease the Option Tract on the same terms and conditions as set forth herein. Upon delivery of written notice by Tenant to Landlord, the parties shall execute an amendment to this Lease wherein the Option Tract shall become part of the Leased Premises. No additional Rent shall be due with respect to the Option Tract, except for incremental Impositions that may be due pursuant to Section 6.2.

ARTICLE 2 – TERM AND COMMENCEMENT

2.1Term.

The initial term of this Lease (and including any renewal term, referred to as the “Term”) shall be for a period commencing on the Effective Date and expiring at midnight on the five (5) year anniversary of the Term Commencement Date. For purposes hereof, the “Term Commencement Date” shall be April 30, 2008.

2.2Renewal Options.

Tenant shall have the right to extend the initial Term of this Lease for up to sixteen (16) renewal periods of five (5) years each, with each being on the same terms and conditions set forth herein, except that the number of renewal periods remaining to be exercised shall, in each case, be reduced by one upon the exercise of a renewal option. As long as there remains additional rights to renew the Term of this Lease, unless Tenant elects not to exercise a renewal option as provided below, the Term of this Lease shall automatically be renewed for an additional period of five (5) years. If Tenant elects not to renew the Term of this Lease, Tenant must notify Landlord in writing that it is not renewing the Term at least 180 days prior to the expiration of the initial Term, or the then current renewal Term, as the case may be, or the Term will be deemed to be renewed for the next renewal Term.

2.3Coterminous with Terminaling Agreement.

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Notwithstanding anything in this Lease to the contrary, upon the expiration or termination of the Terminaling Agreement for any reason, Landlord shall have the right, but not the obligation, to terminate this Lease effective upon the expiration or termination of the Terminaling Agreement.

ARTICLE 3 – RENT

3.1Base Rent.

(a)Tenant covenants and agrees to pay to Landlord at its address for notice, in lawful money of the United States, without demand, offset or deduction rent (“BaseRent”) in the amounts set forth below during the Initial Term and each renewal Term, as applicable, per year.

(b)During the initial Term, Base Rent shall be payable in the amount of $1,800,000 per year, to be payable in monthly installments of $150,000 per month, in advance, with the first installment to be due and payable on the Term Commencement Date and all subsequent monthly installments to be due and payable on the first day of each month. If the first or last days of the initial Term are not the first or last days of a calendar month, as the case may be, then the Base Rent for such month(s) shall be prorated based on the number of days in the initial Term within such calendar month(s).

(c)During each renewal Term, Base Rent shall be payable in the amount of $1.00 per year, payable in advance on the anniversary date of the Term Commencement Date.

3.2Operating Expense Subsidy.

As additional consideration for the execution of this Lease, Tenant agrees to pay and reimburse to Landlord, as additional rent, during the initial Term of this Lease (and not any renewal terms), a portion of Landlord’s operating expenses for the Storage Facility in the following amounts for each one year period of the initial Term, commencing with the Term Commencement Date (“Operating Expense Subsidy”):

Year	Operating Expense Subsidy
1	$471,000
2	$314,000
3	$235,000
4	$157,000
5	$78,500

The Operating Expense Subsidy will be payable monthly in advance, on the same dates as Base Rent, in an amount equal to one-twelfth (1/12^th) of the applicable annual Operating Expense Subsidy amount.

3.3Option to Pay Base Rent and the Operating Expense Subsidy in Arrears.

(a)Notwithstanding any provision in this Article 3 to the contrary, as long as (i) the Landlord is an affiliate of Pipestem Energy Group, LLC, and (ii) no Event of Default has occurred and is continuing, Tenant may pay Base Rent and the Operating Expense Subsidy (to the extent

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applicable) quarterly in arrears (instead of monthly in advance as provided in Sections 3.1 and 3.2 above) as set forth below, upon at least ten (10) days written notice to Landlord; provided, however, if during the first three (3) years of the Initial Term, Landlord is no longer an affiliate of Pipestem Energy Group, LLC, Tenant shall have the right to continue to pay Base Rent and the Operating Expense Subsidy quarterly in arrears in accordance with this Section 3.3 through the end of such three (3) year period. Tenant hereby notifies Landlord that it elects to pay Base Rent and the Operating Expense Subsidy quarterly in arrears as of the Term Commencement Date.

(b)If Tenant elects to pay Base Rent and the Operating Expense Subsidy quarterly in arrears, Tenant shall pay all Base Rent and the Operating Expense Subsidy (to the extent applicable) accrued through the last day of each calendar quarter on the first (1^st) day of each succeeding calendar quarter, together with interest on the amount of Base Rent and the Operating Expense Subsidy (to the extent applicable) that would otherwise have become due as provided in Sections 3.1 and 3.2 above, accrued at the Applicable Rate (defined below).

(c)Upon the occurrence of an Event of Default, all accrued and unpaid Base Rent and Operating Expense Subsidy (to the extent applicable) that would have become due but for Tenant’s election under this Section 3.3, shall be immediately due and payable without additional notice, and thereafter Base Rent and Operating Expense Subsidy shall be due and payable as set forth in Sections 3.1 and 3.2 above. Effective thirty (30) days following written notice by Landlord of a sale of the Storage Facility to an unaffiliated third party, all accrued and unpaid Base Rent and Operating Expense Subsidy that would have become due but for this Section 3.3, shall be due and payable, and thereafter Base Rent and Operating Expense Subsidy shall be due and payable as set forth in Sections 3.1 and 3.2 above.

(d)As used in this Section 3.3, the term “Applicable Rate” means the lesser of (i) 0.5% in excess of the average rate of interest charged by Landlord’s lenders under Landlord’s acquisition and working capital loan facilities related to its acquisition and operation of the Storage Facility during any period of calculation, and (ii) the highest lawful rate of interest under applicable law. Landlord shall deliver an invoice to Tenant setting forth the calculation of the payment of Base Rent and Operating Expenses Subsidy (to the extent applicable) due hereunder, not less than five (5) days prior to the date such payment is due. If at any time Landlord does not have any debt with respect to the Storage Facility, then the Applicable Rate shall be the lesser of (A) 0.5% in excess of the Prime Rate set forth in “Money Rates” section of The Wall Street Journal, and (ii) the highest lawful rate of interest under applicable law.

3.4Joint Use Area Costs.

Tenant agrees to pay and reimburse to Landlord, as additional rent hereunder, a portion of Landlord’s costs to operate, maintain and repair the Joint Use Areas (“Joint Use Area Costs”) within thirty (30) days following invoice therefor, such invoice to be accompanied by reasonable supporting documentation of the Joint Use Areas Costs. Landlord shall only invoice Tenant once each calendar year for Joint Use Area Costs, unless an unusually large capital expenditure is necessary. Initially, Tenant’s share of the Joint Use Area Costs shall be 50%, but this percentage shall be equitably adjusted by the parties hereto from time to time to reflect each parties relative percentage use of the Joint Use Areas. Landlord and Tenant agree to reasonably cooperate with each other to determine the appropriate sharing percentage. Landlord further agrees to provide written notice to Tenant of any contemplated capital expenditure for repair or replacement of any portion of the Joint Use Areas in excess of $50,000.

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3.5Rent.

All other amounts due by Tenant to Landlord under this Lease (including any amounts that Landlord advances to satisfy any of Tenant’s obligations hereunder) (referred to herein as “Additional Rent”), shall be, unless otherwise provided, due and payable within fifteen (15) days of written notice thereof to Tenant, and all such Additional Rent, together with the Base Rent, the Operating Expense Subsidy and the Joint Use Area Costs, shall be referred to herein as “Rent”.

3.6Late Charge.

If Tenant fails to pay any installment of Rent or any other amount due hereunder within ten (10) days after the date the payment is due, Tenant covenants and agrees to pay a late charge equal to three percent (3%) of the delinquent rent payment. The late charge shall be paid within ten (10) days after Landlord’s written request therefor.

3.7Net Lease.

Except as otherwise provided in the Related Agreements, it is the intention of Landlord and Tenant that all rent paid to Landlord shall be absolutely net; that is, all costs, expenses and obligations of every kind relating directly or indirectly in any way, foreseen or unforeseen, to Tenant’s use, occupancy, possession, maintenance, repair and replacement of the Leased Premises, or any part thereof, which may arise or become due during the Term shall be paid by Tenant and that Landlord shall be indemnified by Tenant therefrom. Notwithstanding any provision herein to the contrary, Landlord and Tenant acknowledge that the respective obligations of Landlord and Tenant to the other under this Lease and the Related Agreements are in certain respects interrelated and interdependent, but that a default or breach by Landlord of its obligations under the Related Agreements shall only give rise to a defense to Tenant’s performance, or right of offset against payment, of its obligations hereunder to the extent such claims against Landlord under the Related Agreements have been finally determined by a court of competent jurisdiction or by arbitration under the terms of the Related Agreements to a liquidated sum (an “Adjudicated Claim”).

3.8Prepayment of Base Rent and Operating Expense Subsidy.

Tenant shall have the right at any time during the initial Term, at its option, to prepay all of the Base Rent and the Operating Expense Subsidy remaining to become due during the initial Term. Such prepayment will be without any discount for time value of money.

3.9Independent Obligations.

Any term or provision of this Lease to the contrary notwithstanding, the covenants and obligations of Tenant to pay Rent hereunder shall be independent from any obligations, warranties or representations, express or implied, if any, of Landlord herein contained or in the Related Agreements, except to the extent of any Adjudicated Claims.

ARTICLE 4 – QUIET POSSESSION

4.1Quiet Possession.

Provided no Event of Default (hereinafter defined) by Tenant has occurred and is continuing, Landlord covenants and agrees to keep Tenant in quiet possession and enjoyment of the Leased Premises and the Joint Use Areas during the Term, as the same may be renewed and extended as provided herein.

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ARTICLE 5 – USE, ALTERATIONS, MAINTENANCE AND REPAIRS

5.1Use.

Tenant shall be permitted to use the Leased Premises and Joint Use Areas only for uses associated with the operation of the Plant (and other uses provided such uses are similar or related to Tenant’s current use) and performance of the Related Agreements, and Tenant’s use shall be in compliance with all Laws applicable to the Leased Premises and the Joint Use Areas affecting Tenant’s use and the Leased Premises, and for no other use or purpose without the prior written consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed.

5.2Alterations.

Tenant shall be permitted to make such alterations and modifications to the Plant on the Leased Premises as it desires, including by way of example and not limitation, a hydrotreater, a hydrocracker, a propane de-asphalting unit, and miscellaneous grease and lubricant manufacturing equipment ("Proposed Alterations"), , without the consent of Landlord, provided that Tenant gives Landlord reasonable notice and that all such alterations or modifications are performed and completed in a safe and prudent manner, in accordance with all Laws, and in such a manner not to adversely affect or impair Landlord’s operations at the Storage Facility or its ability to perform its obligations under the Related Agreements. Tenant shall be permitted to make alterations and modifications to the Office/Warehouse, the Parking Lot and other improvements on the Leased Premises owned by Landlord, with the prior written consent of Landlord, not to be unreasonably withheld, and provided further that Tenant gives Landlord reasonable notice and that all such alterations or modifications are performed and completed in a safe and prudent manner, in accordance with all Laws, and in such a manner not to adversely affect or impair Landlord’s operations at the Storage Facility or its ability to perform its obligations under the Related Agreements. Tenant will be solely responsible, for any liabilities or obligations arising out of the construction or operation of such alterations or modifications. Landlord will cooperate with Tenant to the extent required by regulatory or other governmental authorities with jurisdiction over any such alterations or modifications at no cost to Landlord apart from administrative assistance, and with respect to any air quality permitting requirements associated with the Proposed Alterations, Landlord agrees that any new construction, alterations or modifications being made or proposed by Landlord to the Storage Facility will not adversely affect Tenant's ability to obtain such air quality permits, it being agreed that the Proposed Alterations will have priority over any alterations to the Storage Facility planned or constructed by Landlord with respect to air quality permits; provided that the Proposed Alterations are completed during the initial Term of this Lease.

5.3Maintenance and Repair of Plant and Leased Premises. 

Tenant agrees that, at its own expense, it will keep and maintain the Office/Warehouse and the Parking Lot, in a condition and repair similar to, but not less than, its condition and repair on the Term Commencement Date hereof, reasonable wear and tear excepted.  Tenant shall be responsible for disposal of its trash from the Leased Premises.  Tenant further agrees to keep and maintain the Plant in good and operable condition in accordance with Laws.

5.4Maintenance and Repair of Joint Use Areas.

Landlord agrees, at its own expense (but subject to reimbursement under Section 3.4), to keep and maintain the Joint Use Areas is good, safe and operable condition in compliance with all applicable Laws.

ARTICLE 6 – TAXES

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6.1Personal Property Taxes.

Tenant covenants and agrees to pay before delinquency all taxes that become payable during the Term which are levied or assessed upon the Plant or any of Tenant’s equipment, furniture, fixtures and Tenant’s other personal (movable) property installed or located in or on the Leased Premises. To the extent that the Plant (or portions thereof) are or can be assessed as personal property for ad valorem tax purposes, Tenant shall, promptly following the Term Commencement Date, undertake to have the Plant assessed separately from the Storage Facility such that Tenant is primarily and directly responsible to all taxing authorities that assess taxes against the Plant (as opposed to the Leased Premises) and Tenant receives all tax bills and notices with respect to the Plant.

6.2Impositions.

Tenant covenants and agrees to pay to Landlord, as additional Rent, the allocable portion of Impositions (hereinafter defined) attributable to the Leased Premises. Landlord and Tenant acknowledge and agree that the Leased Premises is not separately assessed for property tax purposes and Tenant’s allocable share of Impositions allocable to land will be calculated based upon the proportion of the area of the Leased Premises compared to the entire tax parcel on which Landlord’s Impositions are assessed, and that Tenant’s share of Impositions allocable to improvements within the Leased Premises shall be the full assessed value of such improvements. If the improvements located on the Leased Premises are not separately assessed and valued by the taxing authorities, then Landlord and Tenant will cooperate and use reasonable efforts to agree on a value of those improvements or an allocation of such value compared with the value of all improvements located on the Land for purposes of determining Tenant’s allocable share of Impositions attributable to the improvements located on the Leased Premises. “Impositions” as used herein are defined as all real (immovable) property taxes and other charges, impositions, fees, and levies against the Land and any improvements located thereon (including any payments in lieu of taxes), whether any of the foregoing are general or specific, ordinary or extraordinary, foreseen or unforeseen which at any time during the Term may be or may have been assessed, levied, confirmed, imposed upon or become a lien on the Land, or any part thereof. Tenant shall pay to Landlord its allocable share of the Impositions within fifteen (15) days after written request from Landlord, such request to be accompanied by copies of tax statements and a calculation of the amount due. Upon request by Tenant, Landlord shall make available to Tenant and its representatives, Landlord’s books and records relating to the calculation of Tenant’s share of Impositions as reflected in the written request for payment submitted by Landlord to Tenant.

6.3Rent and Use Taxes.

Tenant covenants and agrees to reimburse Landlord for all charges, taxes or other fees arising out of or in connection with Tenant's use or occupancy of the Leased Premises or Tenant's rental payments to Landlord, other than income or other taxes (excluding franchise or corporate income taxes payable by Landlord as a result of or with respect to this Lease) imposed on Landlord based on Landlord's income.

6.4     Delinquency of Payment.

If Tenant fails to pay Impositions to Landlord within thirty (30) days after written request therefrom, such delinquent amounts shall bear interest until paid at the lesser of the rate of fifteen percent (15%) per annum, or the maximum non-usurious rate permitted by Law (“Default Rate”).

ARTICLE 7 – INSURANCE

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7.1Tenant’s Insurance.

Tenant shall maintain the insurance coverages in accordance with Exhibit D.

7.2Landlord’s Insurance

Landlord agrees to carry or cause to be carried during the term hereof any and all insurance coverages required to be obtained and maintained by Landlord or any of its Affiliates under any of the Related Agreements, and, to the extent not specifically provided therein, commercial general liability insurance providing coverage of not less than the limits for Tenant for such insurance set forth in Exhibit D.

7.3Subrogation.

Notwithstanding any provisions contained in this Lease to the contrary, each party hereto waives all claims for recovery from the other party, its officers, agents or employees for any loss or damage (whether or not such loss or damage is caused by negligence of the other party) to any of its real or personal property insured under the valid and collectible insurance policies to the extent of the collectible recovery under such insurance.

ARTICLE 8 – UTILITIES AND SERVICES

8.1Utilities and Services.

Tenant shall pay and arrange for all utilities and other services to the Plant and Leased Premises, at no cost to Landlord. Landlord will reasonably cooperate with Tenant regarding the provision and continuation of all existing utility services serving the Plant and Leased Premises. Except as provided in Section 19.13, in the event Tenant breaches its responsibility under the section, including failing to adequately serve the Plant or Leased Premises, Landlord may notify Tenant of such breach, and, if, within twenty (20) days of receipt of such notice, Tenant fails to cure that breach, Landlord may take steps necessary to cure that breach and Tenant shall be responsible for all costs Landlord incurs to effect that cure.

ARTICLE 9 – COMPLIANCE WITH LAWS AND PERMITS

9.1Compliance with Laws and Permits.

Except as limited by Section 10.4, and except to the extent any non-compliance may be caused by Landlord’s acts or omissions, Tenant covenants that it shall, throughout the Term of this Lease, and at Tenant’s sole cost and expense, comply or cause compliance with, and prevent liabilities from arising under, Laws, including Environmental Law, applicable or relating to Tenant’s ownership, leasing and operation of the Plant and the Leased Premises, notwithstanding whether the compliance, and the costs and expenses necessitated thereby shall have been foreseen or unforeseen, ordinary or extraordinary, and whether or not the same shall be presently within the contemplation of Landlord or Tenant or shall involve any change of governmental policy, or require structural or extraordinary repairs, alterations or additions by Tenant and irrespective of the costs thereof. In the event any such non-compliance or liabilities should be discovered, Tenant, at its sole cost and expense, shall take immediate steps to cure the non-compliance or to eliminate the liabilities. In the event Tenant breaches its responsibility under the section, including failing to adequately serve the Plant, Landlord may notify Tenant of such breach.

9.2Permits.

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Tenant covenants that it shall at its own expense procure, maintain in effect, and comply with all conditions of any and all permits, licenses, authorizations, registrations, and other governmental and regulatory approvals (collectively, “Permits”) required for Tenant’s use of the Leased Premises and the Plant, including, without limitation, those relating to the discharge of stormwater or processing of wastewater, either directly or indirectly through a treatment works owned by a governmental entity, the emission of air contaminants, or the handling of any materials of any kind, including without limitation, chemicals and wastes, that are regulated under Environmental Law (collectively, “Hazardous Materials”), Tenant and Landlord shall cooperate and coordinate with each other as necessary to insure that both the Storage Facility and the Plant obtain and maintain Permits required for each to operate.

9.3Survival.

The respective rights and obligations of Landlord and Tenant under this Article 9 shall survive the expiration or earlier termination of this Lease.

ARTICLE 10 – HAZARDOUS MATERIALS

10.1Hazardous Materials.

(a)Except as provided in Section 10.4, Tenant shall, handle, treat, deal with and manage any and all Hazardous Materials in, on, under or about the Leased Premises not only in accordance with all applicable Environmental Law, but also in accordance with prudent industry practices regarding the management of such Hazardous Materials. With regard to the disposal of any Hazardous Materials offsite, Tenant is, and shall be named as, the generator (and in no way shall responsibility for any such materials be attributed to Landlord) and shall be the signatory of any required manifests and shall not dispose of any such materials except in compliance with Environmental Law using authorized transporters and disposal facilities.

(b)Except as provided in Section 10.4, upon expiration or earlier termination of this Lease, Tenant covenants to cause all Hazardous Materials to be removed from the Leased Premises, which shall include decontamination of all equipment, and transported for use, storage or disposal in accordance and in compliance with applicable Environmental Law. In addition, at Landlord’s request, upon expiration or earlier termination of this Lease, Tenant shall remove all tanks and other equipment and fixtures that were placed on the Leased Premises prior to or during the term of this Lease and that contain, have contained or are contaminated with, Hazardous Materials, and shall, at Tenant’s expense, restore the Leased Premises to the same or substantially similar condition as existed prior to the placement of such tanks, equipment or fixtures, normal wear and tear and damage by the elements, fire and other casualty excepted. Notwithstanding the foregoing, Tenant shall not be required to remove the concrete pad underlying the Plant.

(c)Tenant shall not take any remedial action in response to the presence of any Hazardous Materials in, on, about or under the Leased Premises or in any improvements situated on the Leased Premises, nor enter into any settlement agreement, consent, decree or other compromise in respect to any claims relating to or in any way connected with the Leased Premises or the improvements on the Leased Premises without first notifying Landlord of Tenant’s intention to do so and affording Landlord ample opportunity to appear, intervene or otherwise appropriately assert and protect Landlord’s interest with respect thereto.

(d)Tenant shall not place any underground storage tanks on the Leased Premises without Landlord’s prior written consent, which consent shall be in Landlord’s sole discretion.

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10.2Notice to Landlord.

Tenant shall immediately notify Landlord in writing of (a) any enforcement, clean-up, removal or other governmental or regulatory action instituted, completed or threatened against Tenant, the Leased Premises or any part thereof pursuant to any Environmental Law; (b) any claim made or threatened by any person against Tenant, Landlord or the Leased Premises relating to damage, contribution, cost recovery, compensation, loss or injury resulting from or claimed to result from any Hazardous Materials; (c) any reports made to any environmental agency arising out of or in connection with any Hazardous Materials in, on or about or under the Leased Premises or with respect to any Hazardous Materials removed from the Leased Premises, including, any complaints, notices, warnings, reports or asserted violations in connection therewith; and (d) the discovery of any Hazardous Materials on the Leased Premises that are or may be in violation of Environmental Law, other than Hazardous Materials described and disclosed in Exhibit D to the PSA. Tenant shall also provide to Landlord, as promptly as possible, and in any event within five (5) business days after Tenant first received or sent the same, copies of all claims, reports, complaints, notices, warnings or asserted violations relating in any way to the Leased Premises or Tenant’s use thereof. Upon written request of Landlord (to enable Landlord to defend itself from any claim or charge related to any Environmental Law), Tenant shall promptly deliver to Landlord notices of hazardous waste manifests reflecting the legal and proper disposal of all such Hazardous Materials removed from the Leased Premises.

10.3Indemnification.

TENANT SHALL INDEMNIFY, DEFEND (WITH COUNSEL REASONABLY ACCEPTABLE TO LANDLORD), PROTECT AND HOLD HARMLESS LANDLORD AND EACH OF LANDLORD’S OFFICERS, DIRECTORS, PARTNERS, MANAGERS, EMPLOYEES, MEMBERS, SHAREHOLDERS, AGENTS, SUCCESSORS AND ASSIGNS (“LANDLORD PARTIES”) FROM AND AGAINST ANY AND ALL CLAIMS, LIABILITIES, DAMAGES, COSTS, PENALTIES, FORFEITURES, LOSSES OR EXPENSES (INCLUDING, BUT NOT LIMITED TO, ATTORNEYS’ AND EXPERTS’ FEES) FOR DEATH OR INJURY TO ANY PERSON OR DAMAGE TO OR DIMINUTION IN VALUE OF ANY PROPERTY WHATSOEVER, INCLUDING NATURAL RESOURCES AND THE ENVIRONMENT, AND FOR COSTS OF INVESTIGATION, REMEDIATION, AND POST-REMEDIATION CARE, E.G., GROUND WATER MONITORING, AND FOR COSTS OF DECONTAMINATING TANKS AND OTHER EQUIPMENT AND FIXTURES ON THE LEASED PREMISES ARISING OR RESULTING IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, FROM THE OPERATION OF TENANT’S BUSINESS ON THE LEASED PREMISES OR THE JOINT USE AREAS, FROM THE PRESENCE OR DISCHARGE OF HAZARDOUS MATERIALS IN, ON, UNDER, UPON OR FROM THE LEASED PREMISES OR THE IMPROVEMENTS OR EQUIPMENT LOCATED THEREON OR FROM THE TRANSPORTATION OR DISPOSAL OF HAZARDOUS MATERIALS TO OR FROM THE LEASED PREMISES, OR FROM THE ARRANGEMENT FOR DISPOSAL OR DISPOSAL OF ANY SUCH MATERIALS OCCURING OR ARISING FROM AND AFTER THE TERM COMMENCEMENT DATE, BUT EXCLUDING SUCH LIABILITY TO THE EXTENT IT ARISES SOLELY FROM OR IS SOLELY ATTRIBUTABLE TO THE ACTS OR OMISSIONS OF LANDLORD PARTIES. FOR PURPOSES OF THE INDEMNITY PROVIDED HEREIN, ANY ACTS OR OMISSIONS OF TENANT, OR ITS EMPLOYEES, AGENTS, CUSTOMERS, SUBLESSEES, ASSIGNEES, CONTRACTORS OR SUBCONTRACTORS OF TENANT, BUT EXCLUDING ANY EMPLOYEES OF LANDLORD OR UNDER LANDLORD’S CONTROL PURSUANT TO THE SHARED SERVICES AGREEMENT (WHETHER OR NOT THEY ARE NEGLIGENT, INTENTIONAL, WILLFUL OR UNLAWFUL) SHALL BE STRICTLY ATTRIBUTABLE TO TENANT. THE INDEMNITY OBLIGATIONS OF TENANT UNDER THIS SECTION 10.3 SHALL BE THE EXCLUSIVE INDEMNITY PROVIDED BY TENANT UNDER THIS LEASE WITH RESPECT TO THE SUBJECT MATTER OF THIS ARTICLE 10, AND SHALL SPECIFICALLY EXCLUDE AND

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SHALL NOT OVERLAP WITH THE INDEMNITY OBLIGATIONS OF TENANT UNDER SECTION 11.1. THE INDEMNITY OBLIGATIONS OF TENANT UNDER THIS SECTION 10.3 SHALL SURVIVE THE EXPIRATION OR EARLIER TERMINATION OF THIS LEASE.

10.4Disclaimer Regarding Pre-Existing Conditions.

Notwithstanding any provision herein to the contrary, Landlord and Tenant acknowledge and agree that (a) Landlord has acquired the Storage Facility contemporaneous with the execution of this Lease and has not owned or operated the Storage Facility prior to the Effective Date; (b) Tenant has acquired the Plant and is leasing the Leased Premises contemporaneous with the execution of this Lease and has not owned or operated the Plant or leased the Leased Premises prior to the Effective Date; (c) Tenant shall not be liable for or be required to remove, remediate, or otherwise deal with, any Hazardous Materials that were existing on the Leased Premises on the date of this Lease (“Pre-Existing Environmental Conditions”), and (d) Tenant’s indemnity set forth in Section 9.4 above shall not be applicable to Pre-Existing Environmental Conditions; provided, however, that Tenant shall have the burden of proof to establish that any Pre-Existing Environmental Conditions that are the subject of a claim for indemnity under Section 10.3 existed on or were discharged from the Leased Premises prior to the Term Commencement Date; provided, however, notwithstanding the foregoing, Tenant shall be responsible for all claims and conditions, including Pre-Existing Environmental Conditions, to the extent they are covered by Tenant’s indemnity attached as Exhibit D to the PSA (“Omega Indemnity”).

10.5Survival.

The respective rights and obligations of Landlord and Tenant under this Article 10 shall survive the expiration or earlier termination of this Lease.

ARTICLE 11 – INDEMNIFICATION

11.1Tenant’s Indemnification, Waiver and Release.

FROM AND AFTER THE TERM COMMENCEMENT DATE, IN ADDITION TO TENANT’S OTHER DUTIES, OBLIGATIONS AND LIABILITIES UNDER THIS LEASE, TENANT HEREBY WAIVES AS TO THE LANDLORD PARTIES (DEFINED IN EXHIBIT D) AND HEREBY AGREES TO INDEMNIFY, PROTECT, DEFEND AND HOLD HARMLESS THE LANDLORD PARTIES FROM AND AGAINST ANY AND ALL LIABILITIES, CLAIMS, CAUSES OF ACTION, FINES, DAMAGES (EXCLUDING CONSEQUENTIAL DAMAGES), SUITS AND EXPENSES, INCLUDING COURT COSTS, EXPERTS' FEES AND ATTORNEYS' FEES (COLLECTIVELY, THE “CLAIMS”), WHETHER ARISING IN EQUITY, AT COMMON LAW, OR BY STATUTE, OR UNDER THE LAW OF CONTRACTS, TORTS (INCLUDING, WITHOUT LIMITATION, NEGLIGENCE AND STRICT LIABILITY WITHOUT REGARD TO FAULT) OR PROPERTY ARISING FROM ANY INJURY TO OR DEATH OF ANY PERSON OR THE DAMAGE TO OR THEFT, DESTRUCTION, LOSS OR LOSS OF USE OF ANY PROPERTY IN ANY EVENT ARISING FROM TENANT’S USE, OCCUPANCY OR ENJOYMENT (OR THE USE, OCCUPANCY OR ENJOYMENT OF ANY TENANT PARTY) OF THE LEASED PREMISES AND ITS FACILITIES FOR THE CONDUCT OF TENANT’S BUSINESS (OR THE BUSINESS OF SUCH TENANT PARTY) AND/OR TENANT’S USE OR ENJOYMENT (OR THE USE OR ENJOYMENT OF ANY TENANT PARTY) OF THE JOINT USE AREAS, AND/OR ARISING FROM ANY DEFECTS IN THE LEASED PREMISES OR IN THE JOINT USE AREAS EXCEPT AS OTHERWISE PROVIDED IN ANY OF THE RELATED AGREEMENTS (UNLESS ANY OF THE LANDLORD PARTIES KNEW OR SHOULD HAVE KNOWN OF SUCH DEFECT OR HAD RECEIVED NOTICE OF SUCH DEFECT AND FAILED TO REMEDY IT WITHIN A REASONABLE PERIOD OF TIME AS PROVIDED IN LA. R.S.

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9:3221) AND TENANT FURTHER HEREBY WAIVES AS TO THE LANDLORD PARTIES AND AGREES TO INDEMNIFY, PROTECT, DEFEND AND HOLD HARMLESS THE LANDLORD PARTIES FROM AND AGAINST ANY AND ALL CLAIMS ARISING FROM ANY BREACH OR DEFAULT IN THE PERFORMANCE OF ANY OBLIGATION ON TENANT’S PART TO BE PERFORMED UNDER THE TERMS OF THIS LEASE OR ARISING FROM ANY NEGLIGENCE OR WILLFUL MISCONDUCT OF TENANT OR ANY TENANT PARTY. IN CASE ANY ACTION OR PROCEEDING SHALL BE BROUGHT AGAINST THE LANDLORD PARTIES BY REASON OF ANY SUCH CLAIM, TENANT, UPON NOTICE FROM LANDLORD, SHALL DEFEND THE SAME AT TENANT’S SOLE COST AND EXPENSE BY COUNSEL REASONABLY SATISFACTORY TO LANDLORD. THE INDEMNITY OBLIGATIONS OF TENANT UNDER THIS SECTION 11.1 SHALL SPECIFICALLY EXCLUDE AND SHALL NOT OVERLAP WITH THE INDMENITY OBLIGATIONS OF TENANT UNDER SECTION 10.3, AND SHALL NOT BE APPLICABLE TO ANY MATTER DESCRIBED IN ARTICLE 10, IT BEING THE EXPRESS INTENT OF THE PARTIES THAT SECTION 10.3 IS THE EXCLUSIVE INDEMNITY PROVIDED BY TENANT WITH RESPECT TO SUCH MATTERS. THE INDEMNITY OBLIGATIONS OF TENANT UNDER THIS SECTION 11.1 SHALL SURVIVE THE EXPIRATION OR EARLIER TERMINATION OF THIS LEASE .

As used in this Lease, “Tenant Party” means any of the following persons: Tenant, any assignees claiming by, through, or under Tenant, any subtenants claiming by, through, or under Tenant, and any of their respective shareholders, members, partners, officers, directors, managers, agents, contractors, employees, licensees, customers, guests and invitees, but excluding any employees of Tenant that are under Landlord’s control pursuant to the Shared Services Agreement.

11.2Landlord’s Indemnification.

FROM AND AFTER THE TERM COMMENCEMENT DATE, LANDLORD HEREBY AGREES TO INDEMNIFY, PROTECT, DEFEND AND HOLD HARMLESS THE TENANT PARTIES FROM AND AGAINST ANY AND ALL CLAIMS (AS DEFINED IN SECTION ll.I) ARISING FROM ANY INJURY TO OR DEATH OF ANY PERSON OR THE DAMAGE TO OR THEFT, DESTRUCTION, LOSS OR LOSS OF USE OF ANY PROPERTY IN ANY EVENT TO THE EXTENT ARISING FROM LANDLORD'S (OR ANY LANDLORD PARTY'S) NEGLIGENT OR INTENTIONAL ACTS AND OMISSIONS RELATING TO LANDLORD'S OPERATION OF THE STORAGE FACILITY OR THE JOINT USE AREAS. IN CASE ANY ACTION OR PROCEEDING SHALL BE BROUGHT AGAINST THE TENANT PARTIES BY REASON OF ANY SUCH CLAIM, LANDLORD, UPON NOTICE FROM TENANT, SHALL DEFEND THE SAME AT LANDLORD'S SOLE COST AND EXPENSE BY COUNSEL REASONABLY SATISFACTORY TO TENANT. NOTWITHSTANDING THE ABOVE, THIS INDEMNITY SHALL SPECIFICALLY EXCLUDE ANY LIABILITY FOR ANY CLAIMS BROUGHT BY ANY OF TENANT'S EMPLOYEES FOR INJURIES SUFFERED IN THE COURSE AND SCOPE OF THEIR EMPLOYMENT AND FOR WHICH SUCH EMPLOYEE COULD ASSERT A CLAIM FOR WORKER'S COMPENSATION.  THE INDEMNITY OBLIGATIONS OF LANDLORD UNDER THIS SECTION 11.2 SHALL SURVIVE THE EXPIRATION OR EARLIER TERMINATION OF THIS LEASE .

As used in this Lease, “Landlord Party” has the meaning given that term in Exhibit D.

ARTICLE 12– LANDLORD’S LIABILITY

12.1Liability of Landlord.

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Except to the extent expressly provided in any of the Related Agreements, Landlord shall not be liable to Tenant or to Tenant’s employees, agents, licensees or visitors, or to any other person whomsoever for (a) any injury or damage to person or property due to the Leased Premises, the Joint Use Areas or related improvements or appurtenances or any part thereof becoming out of repair or by defect in or failure of pipes or wiring, or by the backing up of drains or by the bursting or leaking of pipes, faucets, and plumbing fixtures or by gas, water, steam, electricity, oil leaking, escaping or flowing into the Plant or the Leased Premises unless caused by the gross negligence or willful misconduct of Landlord; or (b) any loss or damage that may be occasioned by or through the acts or omissions of any other persons whatsoever, excepting only the willful conduct and gross negligence of employees, agents and contractors of Landlord; or (c) any loss or damage to any property or person occasioned by theft, fire, act of God, public enemy, injunction, riot, insurrection, war, court order, requisition or order of governmental authority, or any other matter beyond the reasonable control of Landlord. In no event shall Landlord be liable for consequential damages to Tenant of any type whatsoever such as, but not limited to, loss of business. Landlord shall not be liable to Tenant for any damage to or loss of Tenant's personal property on or about the Leased Premises or Joint Use Areas except to the extent that such damage is the result of Landlord's acts and omissions. Tenant agrees that all or Tenant’s personal (movable) property upon the Leased Premises or Joint Use Areas shall be at the risk of Tenant only, and that Landlord shall not be liable for any damage thereto or theft thereof except as specifically provided herein to the contrary.

ARTICLE 13 – EXPROPRIATION AND CASUALTY

13.1Expropriation of Entire Leased Premises or Portions of the Storage Facility.

If, during the Term of this Lease, either (a) the entire Leased Premises or the Joint Use Areas, or any portion of the Leased Premises or the Joint Use Areas such that Tenant’s ability to operate the Plant is materially and adversely affected and such operations or facilities cannot be relocated to another part of the Land, as reasonably determined by Landlord and Tenant, shall be taken as the result of the exercise of the power of expropriation or (b) all or a portion of the Storage Facility is expropriated such that Tenant’s ability to operate the Plant is materially and adversely affected to such an extent that Tenant can no longer reasonably operate its business at the Plant, as reasonably determined by Landlord and Tenant (either hereinafter referred to as a “Major Taking”), this Lease and all right, title and interest of Tenant hereunder shall cease and come to an end on the date of vesting of title pursuant to the Major Taking and Landlord shall be entitled to and shall receive the total award allocable to the Leased Premises (but not any improvements located therein) with respect to the Major Taking; provided, however, that nothing contained in this Article 13 shall be deemed to give Landlord any interest in, or to require Tenant to assign to Landlord, any award made to Tenant for the taking of the Plant or any personal property belonging to Tenant, reasonable expenses of relocation, and any interest accruing thereon (collectively, the “Tenant’s Recoverable Damages”).

13.2Partial Expropriation/Continuation of Lease.

If any part of the Leased Premises or the Joint Use Areas shall be taken in an expropriation proceeding other than a Major Taking (“Minor Taking”), then this Lease shall, upon vesting of title in the Minor Taking, terminate as to the parts so taken, and Tenant shall have no claim or interest in the award, damages, consequential damages and compensation, or any part thereof other than for Tenant’s Recoverable Damages. Landlord shall be entitled to and shall receive the total award made in such Minor Taking, Tenant hereby assigning any interest in such award, damages, consequential damages and compensation to Landlord, and Tenant hereby waiving any right Tenant has now or may have under present or future law to receive any separate award of damages for its interest in the Leased Premises, or any portion thereof, or its interest in

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this Lease; provided, however, that nothing contained herein shall be deemed to give Landlord any interest in, or to require Tenant to assign to Landlord, any award made to Tenant for Tenant’s Recoverable Damages.

13.3Continuance of Obligations.

In the event of any termination of this Lease as a result of any such Major Taking or Minor Taking, Tenant shall pay to Landlord all Rent and all additional Rent and other charges payable hereunder, justly apportioned to the date of such termination; provided, however, there shall be no apportionment or abatement of Base Rent or the Operating Expense Subsidy during the initial Term for any reason. If this Lease is not terminated, then, from and after the date of vesting of title in such proceedings, Tenant shall continue to pay all of the Rent and additional Rent and other charges payable hereunder, as in this Lease provided, to be paid by Tenant, it being expressly agreed to by Landlord and Tenant that there shall in no event be any abatement or adjustment of any rental amounts due under this Lease as a result of any such proceedings or the exercise of any power of eminent domain.

13.4Fire and Casualty Damage.

If any of the Leased Premises shall be damaged by fire or other casualty, then Tenant shall give prompt written notice thereof to Landlord, and Tenant shall, to the extent of available insurance proceeds, proceed to restore such portion of the Leased Premises that is damaged by the casualty to substantially the same or better condition as on the Term Commencement Date, reasonable wear and tear excepted.  Tenant shall commence the restoration and reconstruction work within a reasonable period following the casualty, and shall use reasonable diligence to complete such work as soon as reasonably possible.  Tenant shall have the right to adjust and settle all property insurance claims relating thereto, subject to Landlord’s approval, not to be unreasonably withheld, conditioned or delayed.  Tenant shall have the sole responsibility for restoring and rebuilding the Leased Premises to the extent of available insurance proceeds, and Landlord shall have no obligation to Tenant and shall not be liable for any inconvenience or annoyance to Tenant or injury to the business of Tenant resulting in any way from such damage or the repair thereof.  Tenant shall not be entitled to any diminution in Rent during the time and to the extent any of the Leased Premises are unfit for occupancy.

ARTICLE 14 – ASSIGNMENT AND SUBLETTING

14.1Assignment and Subletting.

Tenant shall not assign this Lease or sublet the Leased Premises without Landlord’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed, provided Tenant’s assignee (a) assumes in writing all of the obligations of Tenant under this Lease and the Related Agreements accruing from and after the date of the assignment, and (b) provides evidence satisfactory to Landlord of its experience in operating businesses such as the Plant and its financial capability to perform Tenant’s obligations under this Lease and the Related Agreements. For these purposes, in the event any such assignee or transferee has a net worth in excess of [$13,800,000], the “financial capability” requirement shall be deemed satisfied. Notwithstanding anything to the contrary contained in this Lease, a transfer to, or an assignment or subletting of all or a portion of the Leased Premises to an Affiliate (defined below) of Tenant shall not be deemed an assignment or sublease under this Section 14.1. As used herein, the term “Affiliate” shall mean an entity which is (i) Controlled by, Controls, or is under common Control with Tenant; (ii) any entity with which Tenant has merged or consolidated; or (iii) any entity which acquires all or substantially all of the assets and/or shares of stock, or membership interests, or assets of Tenant. A public offering of Tenant’s stock or a subsequent conversion to a private company shall not be deemed a transfer, assignment or sublease hereunder. “Control”, as used in this Section 14.1 shall mean the possession, direct or indirect,

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of the power to direct or cause the direction of the management and policies of an entity, whether through ownership of voting securities, by contract, or otherwise. Except as provided in Section 14.2, following any permitted assignment or subletting, Tenant (or the assigning or subletting entity) shall remain directly and primarily liable for the performance of all of the covenants, duties, and obligations of Tenant hereunder, and Landlord shall be permitted to enforce the provisions of this Lease against Tenant or any assignee or sublessee without demand upon or proceeding in any way against any other person.

14.2Release of Tenant upon Assignment.

If Landlord approves the assignment of this Lease by Tenant as provided in Section 14.1 above, and such assignment occurs after the end of the initial Term hereof (unless Tenant prepays all Base Rent and the Operating Expense Subsidy for the remainder of the initial Term in connection with such assignment as provided in Section 3.8), Landlord agrees to release Tenant and Guarantors from all obligations arising after the date of such assignment under this Lease or the Related Agreements.

14.3Assignment by Landlord.

Landlord shall have the right to sell, transfer or assign its interest hereunder without the prior consent of Tenant, provided that such purchaser, transferee or assignee assumes Landlord’s obligations hereunder and under the Terminaling Agreement. After such sale, transfer or assignment, Tenant shall attorn to the new landlord and Landlord shall be released from all obligations arising hereunder after the date of such sale, transfer or assignment.

ARTICLE 15 – SUBORDINATION AND LENDER AGREEMENTS

15.1Subordination.

Provided that Landlord obtains for the benefit of Tenant from each present and future holder of any Mortgage (as hereinafter defined) encumbering the Land, a non-disturbance agreement in reasonable customary form (and in recordable form) agreeing that, among other things, the holder of such mortgage or any purchaser in a foreclosure sale shall recognize and be bound by the terms of this Lease upon a foreclosure or deed in lieu thereof (“Non-disturbance Agreement”), this Lease will be subject and subordinate to the lien of all and any Mortgages, or superior thereto should Landlord and/or its mortgagee so determine (which term “Mortgages” shall include both construction and permanent financing and shall include deeds of trust and similar security instruments), which may now or hereafter encumber or otherwise affect the real estate of which the Leased Premises is a part, and to all and any renewals, extensions, modifications, recastings or refinancings thereof.

15.2Waiver of Landlord’s Lien; Tenant’s Right to Encumber Leasehold Interest and Personal Property.

Landlord hereby waives any and all constitutional, statutory and common law liens and security interests, and any rights of distraint, with respect to Tenant’s property. Landlord will execute and deliver, on request by Tenant, any and all such instruments, forms and other documents as may be reasonably necessary or required by Tenant’s secured lender, to evidence the waiver of Landlord’s lien for the payment of Rent under any applicable statute to the lien of Tenant’s secured lender in Tenant’s leasehold estate hereunder, or any of Tenant’s property located on the Leased Premises, and providing for such lender’s right to enter the Leased Premises to take possession of and remove Tenant’s personal property, on such terms as are typical and customary in similar transactions.

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ARTICLE 16 – DEFAULT

16.1Default.

If any of the following shall occur, Tenant shall be deemed to be in default under this Lease (“Event of Default”):

(a)Tenant shall fail to pay any rent or other sum after same has become due and payable and such failure shall continue for more than fifteen (15) days after Tenant has received written notice of such default; provided, however, if Tenant is paying Base Rent and the Operating Expense Subsidy pursuant to Section 3.3, Tenant’s cure period shall only be ten (10) days;

(b)Tenant shall fail to perform any of the other duties required to be performed by Tenant under this Lease and such failure shall continue for more than sixty (60) days after receipt of written notice thereof by Tenant from Landlord; provided, however, that if such default cannot reasonably be cured within such sixty (60) day period, Tenant shall have such additional time as is reasonably necessary to diligently perform such duty so long as Tenant commences to cure within such sixty (60) day period and continues to diligently perform such cure, but provided further, if the default is such that the continuation of the default has or may have an material adverse effect on Landlord’s operation of the Storage Facility or result in a material liability or damage to Landlord, and Landlord provides written notice of such (“Damage Notice”), then in no event shall the cure period exceed the greater of (i) one hundred twenty (120) days after Landlord’s initial notice of the default, or (ii) thirty (30) days after Landlord’s Damage Notice;

(c)Tenant shall make a general assignment for the benefit of creditors, admit in writing its inability to pay its debts as they become due, file a petition in bankruptcy, be adjudicated bankrupt, or file a petition seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any present or future statute, law or regulation;

(d)there is a levy upon or a taking of Tenant’s leasehold estate or any of Tenant’s assets by execution or other process of law that remains in effect and undischarged for a period in excess of one hundred twenty (120) days;

(e)a termination of the Terminaling Agreement, for any reason (other than default by Landlord thereunder); or

(f)a default by Guarantor under the Guaranty that is not cured within any applicable cure period provided for therein, if any.

16.2Landlord Remedies.

If an Event of Default occurs, Landlord shall have, in addition to such other rights or remedies as are contained within this Lease, the right at Landlord’s election, then or any time thereafter, but only if such Event of Default shall continue, to pursue any one or more of the following remedies:

(a)Landlord may (i) terminate this Lease by giving written notice thereof to Tenant, in which event Tenant shall immediately surrender the Leased Premises and Joint Use Areas to Landlord and if Tenant fails so to do, Landlord may, without prejudice to any other remedy which it may have for possession or arrearages in rent immediately institute eviction proceedings in accordance with the provisions of the Louisiana Code of Civil Procedure to expel or remove Tenant

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and any other person who may be occupying the Leased Premises and Joint Use Areas, or any part thereof, and Tenant shall pay to Landlord on demand an amount equal to one year’s Rent as liquidated damages which Landlord may suffer by reason of such termination, or (ii) accelerate the future Rent due under this Lease, or (iii) allow this Lease to remain in effect and proceed for damages and for the Rent as the same shall become due. Nothing contained in this Lease shall limit or prejudice the right of Landlord to prove for and obtain in proceedings for bankruptcy or insolvency by reason of the termination of this Lease, an amount equal to the maximum allowed by any statute or rule of law in effect at the time when, and governing the proceedings in which, the damages are to be proved, whether or not the amount be greater, equal to, or less than the amount the loss and damages referred to above. All accrued but unpaid sums shall bear interest at the Default Rate.

(b)No eviction of Tenant and repossession of the Leased Premises and Joint Use Areas or any part thereof pursuant to Sections 16.2(a) and 16.2(b) or otherwise shall relieve Tenant of its liabilities and obligations hereunder, all of which shall survive such eviction and repossession of the Leased Premises and Joint Use Areas or any part thereof by reason of the occurrence of an event of default, and Tenant will pay to Landlord the rent required to be paid by Tenant.

(c)No right or remedy herein conferred upon or reserved to Landlord is intended to be exclusive of any other right or remedy, and each and every right and remedy shall be cumulative and in addition to any other right or remedy given hereunder or now or hereafter existing at law or in equity or by statute. In addition to other remedies provided in this Lease, Landlord shall be entitled, to the extent permitted by applicable Laws, to injunctive relief in case of the violation, or attempted or threatened violation, of any of the covenants, agreements, conditions, or provisions of this Lease, or to a decree compelling performance of any of the other covenants, agreements, conditions, or provisions of this Lease, or to any other remedy allowed to Landlord at law or in equity.

(d)Tenant waives all applicable notice requirements in connection with Landlord’s exercise of any remedies under this Article 16.

16.3Waiver.

The waiver by Landlord of any default or Landlord’s failure to insist upon strict compliance with any provision hereof shall not be deemed to be a waiver of any subsequent default under the same, or under any other term, covenant or condition of this Lease. The subsequent acceptance of any rent by Landlord shall not be deemed to be a waiver of any preceding default by Tenant under any term, covenant or condition of this Lease, other than the failure of Tenant to pay the particular rent so accepted, regardless of Landlord’s knowledge of such preceding default at the time of acceptance of such rent.

16.4Bankruptcy or Insolvency.

Neither Tenant’s interest in this Lease, nor any interest herein of Tenant nor any estate hereby created in Tenant shall pass to any trustee or receiver or assignee for the benefit of creditors or otherwise by operation of law. In the event Tenant shall become insolvent or become a debtor under the Federal Bankruptcy Code, or make a transfer in fraud of creditors, or make an assignment for the benefit of creditors, or take or have taken against Tenant, any proceeding of any kind under any provision of the Federal Bankruptcy Code or under any other federal or state insolvency, bankruptcy, reorganization or similar act or if a receiver or trustee is appointed for a substantial portion of Tenant’s assets, Landlord shall have the right to terminate this Lease, except that Tenant shall not be relieved of any obligations which have accrued prior to the date of such termination. Upon such termination, the provisions herein relating to the expiration or earlier termination

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of this Lease shall control and Tenant shall immediately surrender the Leased Premises in the condition required by the provisions of this Lease. Additionally, Landlord shall be entitled to all relief, including recovery of damages from Tenant, which may from time to time be permitted or recoverable under the Federal Bankruptcy Code or any other applicable laws.

16.5Waiver by Tenant.

Tenant hereby expressly waives, so far as permitted by law, any and all right of redemption or reentry or repossession to revive the validity and existence of this Lease in the event that Tenant shall be dispossessed by a judgment or by order of any court having jurisdiction over the Leased Premises or the interpretation of this Lease or in case of eviction and repossession by Landlord or in case of any expiration or termination of this Lease.

ARTICLE 17– NOTICES

17.1Notices.

Any notice required or permitted under this Lease must be in writing and will be deemed received when actually received and delivered by (a) United States mail, certified or registered, return receipt requested, (b) confirmed overnight courier service, (c) confirmed facsimile transmission, or (iv) other electronic communication where receipt of the communication has been acknowledged, in each case properly addressed or transmitted to the address of the party set forth below or to such other address or facsimile number as a party will provide to the other party in accordance with this provision:

Landlord:    Marrero Terminal LLC

c/o PipeStem Energy Group, LLC

3721 Briarpark Drive, Suite 200

Houston, Texas 77042

Attn:    Vincent J. DiCosimo

Telecopy No. 713.266.3113

Tenant:    Omega Refining, LLC

1331 17^th Street, Suite 1060

Denver, Colorado 80202

Attn:    James P. Gregory

Telecopy No.:    303.292.9121

ARTICLE 18 – SURRENDER

18.1Surrender of Leased Premises.

Upon the expiration or earlier termination of this Lease, Tenant shall vacate and surrender to Landlord the Leased Premises in good, clean and operable condition. Tenant shall cause the Plant and all of its personal property to be removed from the Leased Premises on or before (a) the expiration date of the Lease, or (b) if the Lease is terminated for any reason prior to the scheduled expiration date (“Early Termination”), six (6) months from the effective date of termination (either date, the “Removal Date”). Nothing herein shall be interpreted to require that Tenant is obligated to remove the concrete pad underlying the Plant. Tenant shall, on or before the Removal Date, remove the Plant and all of its personal property therefrom in accordance with all applicable Laws, and in accordance with the terms of Section 10.1. With respect to any Early Termination, Tenant’s obligations under this Lease shall be deemed to continue in effect until the later of

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the Removal Date or the completion of the removal of the Plant and personal property (for example, Tenant must continue to maintain insurance, comply with Laws, etc.), but Tenant’s right to use the Leased Premises and the Joint Use Areas shall be limited to removing the Plant and Tenant’s personal property therefrom. Tenant shall repair any damage to the Leased Premises caused by such removal, and any and all such property not so removed within thirty (30) days after the Removal Date shall, at Landlord’s option, become the exclusive property of Landlord and be disposed of by Landlord, at Tenant’s cost and expense, without further notice to or demand upon Tenant. If the Leased Premises are not surrendered as above set forth, Tenant shall indemnify, defend and hold harmless Landlord against loss or liability resulting from the delay by Tenant in so surrendering the Leased Premises, including, without limitation, the cost of dismantling and disposing of the Plant and compliance with Laws with respect thereto. Tenant’s obligation to observe or perform these covenants shall survive the expiration or other termination of this Lease.

All property of Tenant not removed on or before the thirtieth (30^th) day after the Removal Date shall, at the option of Landlord, be deemed abandoned to Landlord. To the extent legally permitted, Tenant hereby irrevocably authorizes Landlord to remove all property of Tenant from the Leased Premises thirty (30) days following the Removal Date and to cause its transportation and storage for Tenant’s benefit, all at the sole cost and risk of Tenant, and Landlord shall not be liable in any manner in respect thereto. Tenant covenants to pay all costs and expenses of such removal, transportation and storage. Tenant shall reimburse Landlord upon demand for any expenses incurred by Landlord with respect to removal or storage of abandoned property and with respect to restoring said Leased Premises to good order, condition and repair. In addition, Landlord is hereby irrevocably authorized, to the extent legally permitted, to sell, at public or private sale, with or without legal proceedings, and with or without notice, demand, advertisement, appraisement, or any other formality, any and all of the contents of the Leased Premises, and Landlord may purchase these contents at private sale or for the highest bid at a public sale, and the proceeds of this sale, after deducting all costs, charges, attorney’s fees and expenses of the sale, will be applied to the payment of Rent and all other amounts due to Landlord, with any remaining balance belonging and being paid to Tenant. Tenant’s obligations hereunder shall survive the expiration or early termination of this Lease.

18.2No Surrender During Lease Term.

No surrender to Landlord of this Lease or of the Leased Premises and Joint Use Areas, or any portion thereof, or any interest therein, prior to the expiration of the Term of this Lease shall be valid or effective to relieve Tenant of any obligations hereunder unless such release is specifically agreed to and accepted in writing by Landlord and consented to in writing by all lenders holding a lien on the Leased Premises, and no act or omission by Landlord or any representative or agent of Landlord, other than such a written acceptance, as aforesaid, shall constitute an acceptance of any such surrender.

ARTICLE 19– MISCELLANEOUS

19.1Successors.

The covenants and conditions contained herein shall be binding upon and inure to the benefit of Landlord and Tenant and their respective successors and permitted assigns.

19.2Headings.

The article and section headings in this Lease are for convenience only, and shall not limit or otherwise affect the meaning of any provision hereof.

19.3Time of Essence.

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Time is of the essence in each and every provision of this Lease.

19.4Invalidity.

The invalidity or unenforceability of any provision of this Lease shall not affect any other provision hereof.

19.5Attorney’s Fees.

Should either party hereto commence an action against the other to enforce any obligation under this Lease, the prevailing party shall be entitled to recover reasonable attorneys’ fees from the other.

19.6Governing Law.

This Lease shall be construed and enforced in accordance with the laws of the State of Louisiana.

19.7Entire Agreement.

This Lease constitutes the entire agreement between the parties hereto and may not be modified in any manner other than by written agreement, executed by all of the parties hereto and their successors in interest. No prior understanding or representation of any kind dated before the execution of this Lease shall be binding upon either party unless incorporated herein.

19.8Authority.

Both parties executing this Lease represent that they are fully authorized to execute this Lease on behalf of their respective entities.

19.9Servitudes.

As an appurtenance to the estate created by this Lease, Landlord hereby grants to Tenant, during the Term, non-exclusive (unless otherwise indicated) servitudes and rights-of-way over the parking areas, driveways, walkways, and service lanes shown on the Site Plan for vehicular and pedestrian access, ingress, and egress to and from the Leased Premises and for the use and enjoyment of the Joint Use Areas for use by Tenant, its employees, agents, contractors, invitees, assignees, subtenants, and licensees.

19.10Landlord’s Liability.

Tenant agrees to look solely to Landlord’s estate and interest in the Leased Premises for the satisfaction of any monetary claim hereunder or the collection of any judgment based thereon, and no other property of Landlord, or any joint venturer, partner, member, shareholder, co‑owner, officer, director or manager shall be subject to levy, execution or other enforcement procedure for satisfaction of such claim or judgment.

19.11Recording of Lease.

Tenant shall not record this Lease. After the Term Commencement Date, upon the request of a party hereto, the parties shall join in the execution of a Notice of Lease Agreement for the purpose of recordation in the form attached hereto as Exhibit E. Any recording costs associated with the Notice of Lease Agreement shall be borne by the party requesting recordation.

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19.12Estoppel Certificates.

(a)At any time and from time to time, but in no event on less than fifteen (15) days’ prior written request by Landlord or its lender, Tenant shall execute and deliver to the requesting party a certificate certifying: (a) that Tenant has accepted the Leased Premises and Joint Use Areas as being suitable for its purposes (or, if Tenant has not done so, that Tenant has not accepted the Leased Premises and Joint Use Areas and specifying the reasons therefor); (b) the commencement and expiration dates of this Lease; (c) whether there are then existing any defaults by Landlord in the performance of its obligations under this Lease (and, if so, specifying the same); (d) that this Lease is unmodified and in full force and effect (or, if there have been modifications, that this Lease is in full force and effect, as modified, and stating the date and nature of each modification); (e) the capacity of the person executing such certificate, and that such person is duly authorized to execute the same on behalf of Tenant; (f) the date, if any, to which rent and other sums payable hereunder have been paid; (g) that no notice has been received by Tenant of any default which has not been cured, except as to defaults specified in the certificate; and (h) such other matters as may be reasonably requested by Landlord or its lender. Any such certificate may be relied upon by any prospective purchaser, mortgagee, beneficiary, subtenant, assignee, or other nominee third party of the party receiving the certificate.

(b)At any time and from time to time, but in no event on less than fifteen (15) days’ prior written request by Tenant or its lender, Landlord shall execute and deliver to the requesting party a certificate certifying: (a) the commencement and expiration dates of this Lease; (b) whether there are then existing any defaults by Tenant in the performance of its obligations under this Lease (and, if so, specifying the same); (c) that this Lease is unmodified and in full force and effect (or, if there have been modifications, that this Lease is in full force and effect, as modified, and stating the date and nature of each modification); (d) the capacity of the person executing such certificate, and that such person is duly authorized to execute the same on behalf of Landlord; (e) the date, if any, to which rent and other sums payable hereunder have been paid; (f) that no notice has been received by Landlord of any default which has not been cured, except as to defaults specified in the certificate; and (g) such other matters as may be reasonably requested by Tenant or its lender. Any such certificate may be relied upon by any prospective purchaser, mortgagee, beneficiary, subtenant, assignee, or other nominee third party of the party receiving the certificate.

19.13Force Majeure.

Other than for Tenant's or Landlord’s monetary obligations under this Lease and obligations that can be cured by the payment of money (e.g., maintaining insurance), whenever a period of time is herein prescribed for action to be taken by either party hereto, such party shall not be liable or responsible for, and there shall be excluded from the computation of any such period of time, any delays due to terrorism, strikes, riots, acts of God, shortages of labor or materials, war, laws, regulations or restrictions or any other causes of any kind whatsoever that are beyond the control of such party

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Executed and effective as of the Effective Date.

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Exhibit A-1

DESCRIPTION OF LAND

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Exhibit A-2

DESCRIPTION OF LEASED PREMISES

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Exhibit B

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Exhibit C

INTENTIONALLY OMITTED

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Exhibit D

INSURANCE REQUIREMENTS

TENANT’S REQUIREMENTS

1.Tenant’s Insurance Representations to Landlord.

A.It is expressly understood and agreed that the insurance requirements set forth herein:

i.represent the Landlord’s minimum requirements and are not to be construed to void or limit Tenant’s indemnity obligations as contained in the Lease nor represent in any manner a determination of the insurance Tenant should or should not maintain for its own protection; and

ii.represent insurance which is being, or has been, obtained by Tenant in support of Tenant’s liability and indemnity obligations under the Lease. Irrespective of the requirements as to insurance to be carried as provided for herein, the insolvency, bankruptcy or failure of any insurance company carrying insurance of Tenant, or the failure of any insurance company to pay claims accruing, shall not be held to affect, negate or waive any of the provisions of this Exhibit or the Lease.

B.Tenant shall obtain and maintain the insurance policies and coverages as required under this Lease, and shall deliver to Landlord evidence of same, and shall additionally deliver to Landlord renewal insurance certificate(s) at least five (5) days before the expiration of the then current policy(ies). In the event of any failure by Tenant to comply with the provisions of this Exhibit, Landlord may (but shall have no obligation to do so), without in any way compromising or waiving any other right or remedy under this Lease, at law or in equity, on notice to Tenant, purchase such insurance at Tenant’s expense; provided, however, that such action by Landlord shall in no event relieve Tenant of or excuse Tenant from the obligation to obtain and maintain such insurance amounts and coverages as required herein.

C.Notwithstanding anything to the contrary contained herein, Landlord shall have the right to reasonably increase the amount or expand the scope of insurance coverages to be maintained by Tenant hereunder from time to time. Within thirty (30) days after Landlord’s request, Tenant shall provide Landlord with an insurance policy or policies as so requested to provide such increased or other coverages, which insurance policy or policies shall otherwise be in accordance with the terms and conditions of this Lease.

2.Conditions Affecting All Insurance Required Herein.

A.Cost of Insurance. All insurance coverage shall be provided at Tenant’s sole expense.

B.Maintenance of Insurance. All insurance coverage shall be maintained in effect with limits not less than those set forth below at all times during the Term or any extension or renewal of the Lease.

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C.Status and Rating of Insurance Company. All insurance coverage shall be written through insurance companies licensed to do business in the State of Louisiana and rated no less than A: VIII in the most current edition of A. M. Best’s Key Rating Guide and no less than A- in the most current edition of Standard & Poor Insurance Solvency Review.

D.Non-Standard, Special and/or Unusual Exclusions, Limitations or Endorsements. All insurance coverage shall be provided to Landlord Parties in compliance with the requirements herein and shall contain no non-standard, special and/or unusual exclusions or restrictive endorsements without the prior express written approval of Landlord.

E.Limits of Liability. The limits of liability required herein may be provided by a single policy of insurance or by a combination of primary and umbrella policies, but in no event shall the total limits of liability available for any one occurrence or accident be less than the amount required herein.

F.Notice of Cancellation, Nonrenewal, or Material Reduction in Coverage. All insurance coverage shall contain the following express provision:

“This is to certify that the policies of insurance described herein have been issued to the Insured and are in force at this time. In the event of cancellation, non-renewal, or material reduction in coverage affecting the certificate holder, thirty (30) days prior written notice shall be given to the certificate holder”.

G.Additional Insured Status. Additional insured status shall be provided in favor of Landlord Parties on all liability insurance required herein except workers’ compensation/ employer’s liability. Additional insured status on the general liability insurance shall be provided on ISO form 2026 or its equivalent.

H.Primary Liability. All insurance coverage required herein shall be primary to all insurance available to Landlord Parties, with Landlord Parties’ insurance being excess, secondary and non-contributing. Where necessary, coverage shall be endorsed to provide such primary liability.

I.Deductible/Retention. All deductibles and/or retentions shall be paid by, assumed by, for the account of, and at Tenant’s sole risk. All deductibles and/or retentions are subject to approval by Landlord Parties.

J.Waiver of Subrogation. All insurance policies required herein shall be endorsed to waive the insurance carriers’ rights of subrogation against Landlord Parties.

3.Commercial General Liability Insurance.

A.Coverage. Such insurance shall cover liability arising out of all locations leased by Tenant and/or all operations of Tenant, including but not limited to liability assumed under the Lease (including the tort liability of another assumed in a business contract). Defense shall be provided as an additional benefit and not included within the limit of liability.

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B.Form. Commercial General Liability Occurrence form (ISO CG 0001 0798 or its equivalent).

C.Amount of Insurance. Coverage shall be provided with limits of not less than:

i.Each Occurrence Limit $1,000,000

ii.General Aggregate Limit $2,000,000

iii.Product-Completed Operations Aggregate Limit    $2,000,000

iv.Personal and Advertising Injury Limit $1,000,000

v.Damage to Premises Rented to You Limit $100,000

vi.Medical Expense Limit $5,000

D.Required Endorsements:

i.Additional Insured status, as required above.

ii.Notice of Cancellation, Nonrenewal or Material Reduction in Coverage, as required above.

iii.Personal Injury Liability: The personal injury contractual liability exclusion shall be deleted.

iv.Primary Liability, as required above.

v.Waiver of Subrogation, as required above.

4.Auto Liability Insurance.

A.Coverage. Such insurance shall cover liability arising out of any auto (including owned, hired, non-owned and leased autos).

B.Form. Business Auto form (ISO CA 0001 or its equivalent).

C.Amount of Insurance. Coverage shall be provided with a limit of not less than $1,000,000.

D.Required Endorsements:

i.Additional Insured status required above.

ii.Notice of Cancellation, Nonrenewal or Material Reduction in Coverage, as required above.

iii.Waiver of Subrogation, as required above.

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iv.Contractual Liability sufficient to cover Tenant’s obligations under this Lease.

5.Workers’ Compensation/Employer’s Liability Insurance.

A.Coverage. Such insurance shall cover liability arising out of Tenant’s employment of workers and anyone for whom Tenant may be liable for workers’ compensation claims, and shall insure against and satisfy Tenant’s obligations and liabilities under the worker’s compensation laws of the State of Louisiana. Workers’ compensation insurance is required, and no “alternative” forms of insurance shall be permitted.

B.Amount of Insurance. Coverage shall be provided with a limit of not less than:

vi.Workers’ Compensation:Statutory limits;

vii.Employer’s Liability: $500,000 each accident; $500,000 each disease; and in any event in no less than statutorily required amounts.

C.Required Endorsements:

v.Notice of Cancellation, Nonrenewal or Material Reduction in Coverage, as required above;

vi.Waiver of Subrogation, as required above.

D.Indemnity:

TENANT SHALL BE LIABLE TO LANDLORD PARTIES AND SHALL INDEMNIFY AND HOLD HARMLESS LANDLORD PARTIES FROM AND AGAINST ALL CLAIMS, LOSSES, COSTS, DAMAGES OR EXPENSES (INCLUDING, WITHOUT LIMITATION, ATTORNEYS’ FEES) THAT MAY BE ASSERTED AGAINST, SUFFERED BY, ACCRUED AGAINST, CHARGED TO, OR RECOVERABLE FROM LANDLORD PARTIES, AS A RESULT OF TENANT NOT CARRYING WORKER’S COMPENSATION INSURANCE AND/OR EMPLOYER’S LIABILITY INSURANCE OR NOT BEING A SUBSCRIBER UNDER ANY APPLICABLE LOUISIANA WORKER’S COMPENSATION ACT, OR ARISING OUT OF ANY LOSS SUFFERED BY (OR IN CONNECTION WITH) ANY OF TENANT’S EMPLOYEES, AGENTS OR REPRESENTATIVES WHICH WOULD HAVE BEEN OR IS COVERED BY AN APPROPRIATE WORKER’S COMPENSATION INSURANCE POLICY AND/OR EMPLOYER’S LIABILITY INSURANCE POLICY. This provision shall survive the expiration or other termination of this Lease.

6.Umbrella Liability Insurance.

A.Coverage. Such insurance shall be excess over and be no less broad than all coverages described above and shall include a drop-down provision.

B.Form: This policy shall have the same inception and expiration dates as the commercial general liability insurance required above.

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C.Amount of Insurance. Coverage shall be provided with a limit of not less than $25,000,000.

D.Required Endorsements:

i.Additional Insured status as required above;

ii.Waiver of Subrogation, as required above.

7.Causes of Loss – Special Form (f/k/a “All-Risk”) Property Insurance.

A.Coverage. Such insurance shall be provided on all of Tenant’s business records, furniture, fixtures, personal property, equipment, all improvements and/or betterments located on the Leased Premises including, but not limited to, the Plant, and the Office/Warehouse for the full replacement cost, and the amount shall satisfy any coinsurance requirements under the applicable policy. Policy limits for leasehold improvements and personal property must be stated separately.

B.Form. ISO Causes of Loss – Special Form.

C.Amount of Insurance. Coverage shall be provided in the amount 100% of replacement cost of all property required to be covered herein and in compliance with all laws, regulations or ordinances affecting such property.

D.Required Endorsements:

i.Agreed Value.

ii.Ordinance or Law.

iii.Replacement Cost.

iv.Landlord shown as loss payee with respect to all improvements owned by Landlord.

v.Waiver of Subrogation, as required above.

8.Business Income and Extra Expense Insurance.

A.Coverage. Such insurance shall be provided on all operations in the location covered by the Lease Agreement.

B.Form. ISO Causes of Loss – Special Form.

C.Amount of Insurance. Coverage shall be provided in an amount of not less than eighty percent (80%) of Tenant’s gross annual income at this location less non-continuing expense.

D.Required Endorsements:

i.Agreed Value.

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ii.Waiver of Subrogation, as required above.

9.Pollution Legal Liability Insurance

A. Coverage. Such insurance coverage shall cover environmental liability (for both sudden and gradual alleged environmental conditions) arising out of the Leased Premises or Tenant’s operations at the Leased Premises, including, but not limited to, coverage for clean-up costs, business interruption, loss of site value and claims for bodily injury and property damage. Such coverage shall be in place for the entirety of the Lease Term (and all renewals thereof) and for at least three (3) years thereafter.

B. Amount of Insurance. Coverage shall be provided with a limit of not less than $1,000,000 per event/occurrence.

C.    Required Endorsements:

i. Landlord Parties to be named as Additional Insured with respect to all liability arising out of Tenant’s operations on the Leased Premises.

ii. Insurer shall waive any and all rights of subrogation as against Landlord Parties with respect to amounts paid under any such policies.

iii. Primary Liability, as required above.

10.Other Tenant Insurance. Tenant will, at Landlord’s request and at Tenant’s sole expense, procure and maintain any other and further insurance coverage that Landlord may require, including but not limited to:

A.Boiler and Machinery Insurance.

B.Earthquake Insurance.

C.Flood Insurance.

11.Evidence of Insurance.

A.Provision of Evidence. Evidence of the insurance coverage required to be maintained by Tenant, represented by original certificates of insurance, evidence of insurance and endorsements issued by the insurance company or its legal agent, must be furnished to Landlord no later than two (2) days after execution of this Lease. New certificates of insurance, evidence of insurance, and endorsements shall be provided to Landlord at least thirty (30) days prior to the termination date of the then-current certificates of insurance, evidence of insurance, and endorsements. Upon request of any Landlord Party, Tenant shall provide to Landlord a certified copy of all insurance policies required herein within ten (10) days of any such request. Renewal policies, as necessary, shall be delivered to Landlord at least thirty (30) days prior to the expiration of the previous policy.

B.Form:

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i.All property and business income insurance required herein shall be evidenced by ACORD form 28, “Evidence of Property Insurance”.

ii.All liability insurance required herein shall be evidenced by ACORD form 25 (2001/08), “Certificate of Insurance”.

C.Specifications. Such certificates of insurance, evidence of insurance, and endorsements shall specify:

i.Landlord as a certificate holder with correct mailing address.

ii.Insured’s name, which must match that on the Lease.

iii.Insurance companies affording each coverage, policy number of each coverage, policy dates of each coverage, all coverages and limits described herein, and signature of authorized representative of insurance company.

iv.Producer of the certificate with correct address and phone number listed.

v.Additional insured status required by this Exhibit.

vi.Aggregate limits per project required by this Exhibit.

vii.Property policy limits for leasehold improvements and personal property shown separately.

viii.Amount of any deductibles and/or retentions.

ix.Cancellation, nonrenewal and material reduction in coverage notification as required by this Exhibit. Additionally, the words “endeavor to” and “but failure to mail such notice shall impose no obligation or liability of any kind upon Company, it agents or representatives” shall be deleted from the cancellation provision of the ACORD 25S certificate of insurance form.

x.Primary status required by this Exhibit.

xi.Waivers of subrogation required by this Exhibit.

xii.Loss payee status required by this Exhibit.

D.Required Endorsements. A copy of each required endorsement shall also be provided.

E.Failure to Obtain: Failure of Landlord to demand such certificate or other evidence of full compliance with these insurance requirements or failure of Landlord to identify a deficiency from evidence that is provided shall not be construed as a waiver of Tenant’s obligation to maintain such insurance.

12.Definitions. For purposes of this Exhibit:

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A.ISO. “ISO” means Insurance Services Office;

B.Landlord Parties. As used in this Exhibit, “Landlord Parties” means (a) Landlord, (b) any lender whose loan is secured by a lien against the Storage Facility, (c) Pipestem Energy Group LLC, (d) Laminar Direct Capital GP, Inc. and D.E. Shaw AQ-SP Series 6-03, L.L.C., (e) USRG Mid-Stream Biofuels, LLC, (f) their respective shareholders, members, partners, affiliates and subsidiaries, successors and assigns, and (g) any directors, managers, officers, employees, agents, or contractors of the foregoing persons or entities (and each such person or entity shall be a “Landlord Party”).

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Exhibit E

FORM OF NOTICE OF LEASE AGREEMENT

THIS NOTICE OF LEASE AGREEMENT (“Notice”), dated as of March ____, 2008, is made and entered into by and between MARRERO TERMINAL, LLC, a Delaware limited liability company (“Landlord”), and OMEGA REFINING, LLC, a Colorado limited liability company (“Tenant”), for the purpose of making effective as to third parties the following lease terms:

1.Declaration of Lease. Pursuant to that certain Land Lease Agreement dated March ____, 2008, by and between Landlord and Tenant (the “Lease”), Landlord has leased to Tenant that certain tract of land more particularly described on Exhibit A (the “Leased Premises”), together with the right to use certain portions of Landlord’s adjacent property more particularly described in the Lease as the “Joint Use Areas”.

2.Landlord’s Name and Address.

Marrero Terminal LLC

c/o PipeStem Energy Group, LLC

3721 Briarpark Drive, Suite 200

Houston, Texas 77042

Attn:    Vincent J. DiCosimo

3.Tenant’s Name and Address.

Omega Refining, LLC

1331 17^th Street, Suite 1060

Denver, Colorado 80202

Attn:    James P. Gregory

4.Description of Leased Premises. The Leased Premises are more particularly described in Exhibit A attached hereto.

5.Term of the Lease. The term (the “Term”) of the Lease commenced on March ____, 2008, and shall terminate on the last day of the sixtieth (60^th) full calendar month ensuing after the commencement of the Term.

6.Options to Extend the Term. The Lease provides that Tenant shall have the option to extend the Term of the Lease upon written notice as provided in the Lease sixteen (16) additional periods of five (5) years each.

7.Purpose. This Notice is not a complete summary of the Lease and is made by the parties hereto for the purpose of recording the same in the public records. This Notice is for information purposes only and is subject to all of the terms, provisions and conditions of the Lease, all of which are incorporated herein by reference. Nothing contained in this Notice shall be deemed in any way to modify, supplement, negate or otherwise affect any of the terms, provisions or conditions of the Lease. In the event of any inconsistencies between the terms, provisions or conditions of the Lease and this Notice, the terms, provisions and conditions of the Lease shall prevail.

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IN WITNESS WHEREOF, Landlord and Tenant have caused their names to be affixed hereto as of the date first set forth hereinabove.

LANDLORD:

MARRERO TERMINAL LLC, a Delaware limited liability company

By:

Name:

Title:

TENANT:

OMEGA REFINING, LLC, a Colorado limited liability company

By:

Name:

Title:

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Exhibit A

LEGAL DESCRIPTION

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Exhibit F

TAX MATRIX

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FIRST AMENDMENT TO LAND LEASE

THIS FIRST AMENDMENT TO LAND LEASE (“Amendment”), dated as of October 29, 2009, is made and entered into by and between MARRERO TERMINAL, LLC, a Delaware limited liability company (“Landlord”), and OMEGA REFINING, LLC, a Delaware limited liability company (“Tenant”).

RECITALS:

A.Landlord and Tenant entered into that certain Land Lease (“Lease”) dated as of April 30, 2008, pursuant to which Tenant leased certain property from Landlord as described therein. The Lease is further evidenced by that certain Notice of Lease Agreement (“Notice of Lease Agreement”) filed of record in the Real Property Records of Jefferson Parish, Louisiana as Instrument No. 10825506.

B.Landlord has agreed to lease to Tenant certain additional tracts of land located within Landlord’s Storage Facility (as defined in the Lease) as more particularly set forth below, and the parties desire to amend the Lease accordingly.

NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

1.Defined Terms. All capitalized terms used herein and not otherwise defined shall have the meaning given that term in the Lease.

2.Lease of Plant Site. Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, all of the real property more particularly described on Exhibit 1 attached hereto (“Plant Site”), for the Term and subject to the agreements, conditions and provisions contained in the Lease, which includes all of the real property described in the Lease as the Plant Site, as well as certain additional property, which shall hereafter be part of the Plant Site.

3.Amendments to the Lease. The Lease is amended as follows:

(a)Exhibit A-2. Exhibit A-2 of the Lease is amended by deleting such exhibit in its entirety and replacing it with the property descriptions set forth on Exhibit 1 attached to this Amendment, which shall describe the Plant Site. Exhibit A-2 of the Lease shall also be amended by deleting the reference to “Leased Premises” in the heading of such exhibit and replacing it with “Plant Site”. The reference in the list of Exhibits on page iii following the Table of Contents to Exhibit A-2 shall also be amended to be “Description of Plant Site”.

(b)Section 1.5 Piperack Areas and Easements. Section 1.5 of the Lease is hereby deleted in its entirety, as the Option Tract is now included in the Plant Site, and replaced with the provision set forth below:

1.5    AccessEasements. Landlord hereby grants to Tenant a non-exclusive easement (“Access Easement”) (a) within the portions of the Storage Facility in areas marked on the Site Plan as “Piperacks” (“Piperack Areas”) for the purpose of placing pipes and related equipment therein, but only to the extent necessary to connect Tenant’s tanks and Plant facilities with the Plant, and (b) over and across the roadways situated within the Storage Facility marked on the Site Plan as “Fire Access”, but only with respect to the areas necessary to access Tenant’s Plant and Plant Site for the operation of Tenant’s business

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(“Road Access Areas”). The Piperack Areas and the Road Access Areas shall be collectively referred to herein as the “Easement Areas”). Tenant’s use of the Easement Areas pursuant to the Access Easement shall be subject to Landlord’s (i) reasonable procedures, rules and regulations relating to security and safety for the Storage Facility and the Easement Areas provided to Tenant in writing from time to time, and (ii) Landlord’s rights to use the Piperack Areas and Road Access Areas for the operation of the Storage Facility. Landlord reserves the right to relocate, modify or reconfigure the Easement Areas, and in connection therewith, Tenant shall pay its own costs associated with altering or relocating any of its pipes and related equipment; provided, however, that Landlord shall always provide Tenant with Easement Areas sufficient to connect its tanks and facilities to the other portions of its Plant and to access all portions of the Plant Site and Piperack Areas. Tenant acknowledges and agrees that any pipes, facilities and equipment it installs or places in the Piperack Areas shall be subject to the provisions of Section 18.1 of this Lease regarding removal of all portions of the Plant upon expiration or termination of this Lease.

(c)Definition of Plant. The term “Plant” as used in the Lease, shall mean, collectively, all refinery plant assets and equipment used by Tenant for the refining of used motor oil and situated on the Plant Site, together with all refining plant assets, equipment, tanks, and other property hereinafter constructed on or placed on the Plant Site by Tenant, together with any pipelines and related equipment placed within the Piperack Areas.

(d)Exhibit A-3. Exhibit A-3 of the Lease is hereby deleted in its entirety.

(e)Exhibit B (Site Plan). Exhibit B of the Lease is hereby deleted in its entirety and replaced with the Site Plan attached hereto as Exhibit 2.

4.Proposed Alterations. The parties acknowledge and agree that the purpose of this Amendment is to add additional portions of the land comprising the Storage Facility to the Leased Premises in order to allow Tenant, if it elects to do so, to construct some or all of the Proposed Alterations (as such term is defined in the Lease) and related equipment and facilities, including additional storage tanks and related piping, on the Leased Premises (collectively, the “New Facilities”). If Tenant constructs any of the New Facilities, Tenant covenants and agrees that (a) Tenant will obtain and receive, all necessary approvals, authorizations, consents, rights-of-way, easements and permits (environmental or otherwise) required to construct, own or operate the New Facilities on the Leased Premises, (b) the construction, ownership and operation of any New Facilities on the Leased Premises will be in accordance with the terms and conditions of the Lease and applicable Laws, (c) all new tanks constructed by Tenant and associated with the New Facilities will be and will continue to be certified pursuant to the American Petroleum Institute’s Aboveground Storage Tank Inspector Certification Program under API 653, and (d) the New Facilities will comply with accepted industry practices and standards with respect to health, safety, security and the environment. Landlord will have the right (but not the obligation), at any reasonable time and from time to time, to inspect the progress of the construction of the New Facilities and the operation thereof in order to confirm that those New Facilities are or will be completed, owned and operated in accordance with applicable Laws and accepted industry practices and standards with respect to health, safety, security and the environment.

5.Reversion and Termination. Notwithstanding any provision herein to the contrary, if Tenant has not completed construction of so much of the New Facilities as Tenant elects to construct or install on the Leased Premises by October 31, 2014 (“Reversion Date”), then the parties acknowledge and agree that unless the New Facilities actually constructed by Tenant reasonably require the use of the additional real property added to the Leased Premises by virtue of this Amendment (the “Add-On Premises”) to allow Tenant to construct, maintain and operate those New Facilities, the provisions hereof will terminate and be of no further force and effect with respect to any portion of the Add-On Premises not so dedicated or used

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by Tenant (the “Excess Add-On Premises”), with the effect that (a) all portions of the Excess Add-On Premises that are described in this Amendment that were not part of the Leased Premises under the original Lease shall revert back to Landlord and shall no longer be a part of the Leased Premises, and (b) from and after such date, with respect to the Excess Add-On Premises this Amendment shall terminate, and the Lease, as originally entered into by the parties, shall continue in effect as originally written. On or before the date that is fifteen (15) days prior to the Reversion Date, Tenant shall provide written notice to Landlord certifying to Landlord that certain New Facilities have been completed and describing that portion of the Add-On Premises that constitutes Excess Add-On Premises, if any, and Landlord shall, upon Tenant’s request, execute and deliver such documents and agreements reasonably requested by Tenant, in recordable form, to document any changes to the description of the Leased Premises based on the foregoing.

6.Notice Address Change. Landlord’s address for notice is hereby changed to:

Marrero Terminal LLC

c/o PipeStem Energy Group, LLC

Three Allen Center, Suite 3680

Houston, TX  77002

Attn: President

Telecopy No. 713.266.3113

7.Notice of Lease Agreement. Landlord and Tenant shall execute an amendment to the Notice of Lease Agreement in form suitable for recordation in the real property records setting for the terms of this Amendment.

8.Continuation of Lease Terms. Except as otherwise amended by the terms of this Amendment, the Lease shall continue to be in full force and effect as originally written.

9.Multiple Counterparts. This Amendment may be executed in multiple counterparts, each of which shall be deemed to be an original, and together which shall constitute one and the same instrument.

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Executed and effective as of the date set forth above.

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Exhibit 1

DESCRIPTION OF PLANT SITE

1.    MAIN LEASE AREA

One certain parcel of land situated in the state of Louisiana, Parish of Jefferson, Section 19, township 13 South, Range 23 East bounded by Barataria Blvd., Alice Street and River Road, being designated as Main Lease Area and being more fully described as follows:

Commencing at the northwest corner of Alice Street and Barataria Blvd. thence measure along the north right of way line of Alice Street South 83 degrees 09’ 51” West a distance of 883.61’ to a point, thence measure North 05 degrees 22’ 06” West a distance of 1429.65” to the point of beginning, thence measure North 05 degrees 22’ 06” West a distance of 410.00’ to a point, thence measure North 77 degrees 20’ 02” East a distance of 25.74’ to a point, thence measure North 78 degrees 45’ 58” East a distance of 203.96’ to a point, then measure North 77 degrees 20’ 02” East a distance of 92.29’ to a point, thence measure South 07 degrees 34’ 48” East a distance of 151.07’ to a point, thence measure North 82 degrees 15’ 08” East a distance of 264.68’ to a point, thence measure North 04 degrees 42’ 32” West a distance of 166.43’ to a point, thence measure North 85 degrees 19’ 24” East a distance of 120.05’ to a point, thence measure South 04 degrees 43’ 27” East a distance of 200.51’ to a point, thence measure South 85 degrees 21’ 24” West a distance of 2.84’ to a point, thence measure South 04 degrees 42’ 53” East a distance of 36.80’ to a point, thence measure South 85 degrees 17’ 07” West a distance of 10.00’ to a point, thence measure South 04 degrees 42’ 53” East a distance of 51.03’ to a point, thence measure South 86 degrees 11’ 53” West a Distance of 585.55’ to a point, thence measure South 04 degrees 55’ 54” East a distance of 29.83’ to a point, thence measure North 84 degrees 37’ 54” West a distance of 23.33’ to a point, thence measure South 05 degrees 22’ 06” West a distance of 58.00’ to a point, thence measure South 28 degrees 06’ 32” West a distance of 139.32’ to the point of beginning and containing 1258.75 square feet more or less.

2.    NEW TANK AREA ONE

One certain parcel of land situated in the state of Louisiana, Parish of Jefferson, Section 19, Township 13 South, Range 23 East bounded by Barataria Blvd., Alice Street, and River Road being designated as New Tank Area One and being more fully described as follows:

Commencing at the Northwest corner of Alice Street and Barataria Blvd. thence measure along the West right of way line of Barataria Blvd. North 05 degrees 15’ 39” West a distance of 1505.05’ to a point, thence measure South 84 degrees 44’ 21” West a distance of 280.73’ to the point of beginning, thence measure South 50 degrees 46’ 11” West a distance of 130’ to a point, thence measure North 30 degrees 28’ 22” West a distance of 87’ to a point, thence measure North 87 degrees 08’ 25” East a distance of 145’ to the point of beginning and containing 5589.07 square feet more or less.

3.    NEW TANK AREA TWO

One certain parcel of land situated in the state of Louisiana, Parish of Jefferson, section 19, Township 13 South, range 23 East bounded by Barataria Blvd., Alice Street, and River Road, being designated as New Tank Area Two and being more fully described as follows:

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Commencing at the Northwest corner of Alice Street and Barataria Blvd. thence measure along the West right of way line of Barataria Blvd. North 05 degrees 15’ 39” West a distance of 1373.73’ to a point, thence measure South 84 degrees 44’ 21” West a distance of 500.65’ to the point of beginning, thence measure South 05 degrees 46’ 12” East a distance of 55’ to a point, thence measure South 84 degrees 13’ 48” West a distance of 52.50’ to a point, thence measure South 05 degrees 46’ 12” East a distance of 100’ to a point, thence measure South 84 degrees 13’ 48” West a distance of 52.50’ to a point, thence measure South 05 degrees 46’ 12” East a distance of 35.82’ to a point, thence measure South 67 degrees 13’ 48” West a distance of 165.03’ to a point, thence measure North 22 degrees 46’ 12” West a distance of 54’ to a point, thence measure North 67 degrees 13’ 48” East a distance of 92’ to a point, thence measure North 32 degrees 56’ 48” East a distance of 52’ to a point, thence measure North 04 degrees 17’ 12” West a distance of 120’ to a point, thence measure North 84 degrees 13’ 48” East a distance of 155’ to the point of beginning and containing 28259.79 square feet more or less.

4.    PARKING LOT

ONE CERTAIN PARCEL OF LAND SITUATED IN THE STATE OF LOUISIANA, PARISH OF JEFFERSON, SECTION 19, TOWNSHIP 13 SOUTH, RANGE 23 EAST BOUNDED BY BARATARIA BLVD, ALICE STREET AND RIVER ROAD, BEING A PORTION OF TRACT 4A AND BEING MORE FULLY DESCRIBED AS FOLLOWS:

COMMENCING AT THE NORTHWEST CORNER OF ALICE STREET AND BARATARIA BLVD THENCE MEASURE ALONG THE WEST RIGHT OF WAY LINE OF BARATARIA BLVD N 05 DEGREES 15’ 39’W A DISTANCE OF 1730.23’ TO THE POINT OF BEGINNING, THENCE MEASURE S 84 DEGREES 09’ 54”W A DISTANCE OF 127’ TO A POINT, THENCE MEASURE N 00 DEGREES 12’ 34”E A DISTANCE OF 136.58 TO A POINT, THENCE MEASURE N 85 DEGREES 41’ 27”E A DISTANCE OF 93.73 TO A POINT, THENCE MEASURE S 05 DEGREES 10’ 05”E A DISTANCE OF 61.68’ TO A POINT, THENCE MEASURE N 85 DEGREES 22’ 53”E A DISTANCE OF 20.36’ TO A POINT ON THE WEST RIGHT OF WAY LINE OF BARATARIA BLVD, THENCE MEASURE ALONG SAID RIGHT OF WAY S 05 DEGREES 15’ 39”E A DISTANCE OF 71.22’ TO THE POINT OF THE BEGINNING.

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Exhibit 2

SITE PLAN

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SECOND AMENDMENT TO LAND LEASE

THIS SECOND AMENDMENT TO LAND LEASE (“Amendment”), dated as of March 11, 2011, is made and entered into by and between MAGELLAN TERMINALS HOLDINGS, L.P. (f/k/a Marrero Terminal, LLC), a Delaware limited partnership (“Landlord”), and OMEGA REFINING, LLC, a Delaware limited liability company (“Tenant”).

RECITALS:

A.    Landlord and Tenant entered into that certain Land Lease (“Lease”) dated as of April 30, 2008, pursuant to which Tenant leased certain property from Landlord as described therein. The Lease is further evidenced by that certain Notice of Lease Agreement (“Notice of Lease Agreement”) filed of record in the Real Property Records of Jefferson Parish, Louisiana as Instrument No. 10825506.

B.    Landlord and Tenant entered into that certain First Amendment to Land Lease (“First Amendment”) dated as of October 29^th, 2008. The First Amendment is further evidenced by that certain First Amendment to Notice of Lease Agreement, filed of record in the Real Property Records of Jefferson Parish, Louisiana as Instrument No. 11017672.

C.    Except with respect to one office located at the Office/Warehouse (such office located at the Office/Warehouse being more particularly depicted on Schedule A), (i) subject to Landlord receiving the requisite state and local building permits (the “Permits”) necessary for Landlord to construct its new office space, Landlord has agreed to relinquish its reserved right to the use certain portions of the Office/Warehouse space and Parking Lot as provided for in the Lease on or before December 31, 2011, (ii) in exchange for Landlord relinquishing such rights, Tenant has agreed to pay Landlord the amount of Two Hundred Fifty Thousand and 00/100 Dollars ($250,000.00), and (iii) the parties desire to amend the Lease accordingly.

NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

1.    Defined Terms. All capitalized terms used herein and not otherwise defined shall have the meaning given that term in the Lease.

2.    Amendments to the Lease. The Lease is amended as follows:

(a)    Section 1.4. Section 1.4 of the Lease is amended by deleting the existing provision in its entirety and replacing it with the language set forth below:

(a)    Until the later to occur of (i) December 31, 2011 or (ii) thirty (30) days after Landlord completes the construction of new office space for its use (such new office space to be situated on the property more particularly described on Exhibit A-4) (the “New Office Space”), Landlord hereby reserves to itself, and Tenant hereby consents to Landlord’s use of (x) certain portions of the Office/Warehouse for office and warehouse purposes, to be determined by the parties as necessary for Landlord’s use as office and warehouse space from time to time, and (y) the joint use of the Parking Lot with Tenant for parking for their respective employees and invitees. Except as set forth in Section 1.4(b) below, Landlord will vacate the Office/

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Warehouse on or before the later to occur of (1) December 31, 2011 or (2) thirty (30) days after Landlord completes the construction of the New Office Space.

(b)    From and after the date upon which Landlord vacates the Office/Warehouse pursuant to the terms set forth in Section 1.4(a) above, Landlord hereby reserves to itself, and Tenant hereby consents to Landlord’s use of (a) certain portions of the Office/Warehouse for office and warehouse purposes, in the area shown on Exhibit A-5attached hereto, and (b) the joint use of the Parking Lot with Tenant for parking for respective employees and invitees. Landlord will not be charged rent or other costs or fees for such use.

(c)    Tenant shall provide and pay for all utilities serving the Office/Warehouse and Parking Lot. Landlord shall provide for its own telephone and data services to any space utilized by it in the Office/Warehouse.

(b)Section 3.1(b). Section 3.1(b)of the Lease is amended by inserting the following language at the end of the paragraph:

At such time as Landlord has obtained all requisite Permits and issued a “notice to proceed” under a contract to construct the New Office Space, Tenant shall make a one-time payment of additional rent to Landlord in the amount of Two Hundred Fifty Thousand and 00/100 Dollars ($250,000.00).

(c)    Exhibit A-4. Exhibit A-4, as described below, is hereby added in its entirety to the Lease:

Exhibit A-4

DESCRIPTION OF PROPERTY ON WHICH NEW OFFICE IS SITUATED

That certain real property owned by Magellan Terminals Holdings, L.P. located at Section 17 & 19, T13S, R23E, Lot M1 and N2.

(d)    Exhibit A-5. Schedule A to this Amendment is hereby added in its entirety as Exhibit A-5 to the Lease.

3.    Notice Address Change.

Landlord’s address for notice is hereby changed to:

Magellan Terminals Holdings, L.P.

Manager, Commercial Development

P.O. Box 22186 MD 31st Floor

Tulsa, Oklahoma 74121-2186

Attn: Paul Potts

Tenant’s address for notice is hereby changed to:

Omega Refining, LLC

1331 17^th Street, Suite 800

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Denver, CO 80202

Attn: James P. Gregory

4.    Notice of Lease Agreement. Landlord and Tenant shall execute an amendment to the Notice of Lease Agreement in form suitable for recordation in the real property records setting for the terms of this Amendment.

5.    Continuation of Lease Terms. Except as otherwise amended by the terms of this Amendment, the Lease shall continue to be in full force and effect as originally written.

6.    Multiple Counterparts. This Amendment may be executed in multiple counterparts, each of which shall be deemed to be an original, and together which shall constitute one and the same instrument.

7.    Rescission. In the event Landlord has not obtained the requisite Permits on or before July 30, 2011, this agreement shall be rescinded abinitio and the Parties shall be restored to their respective positions as they existed under and with respect to the Lease prior to the execution hereof.

Executed and effective as of the date set forth above.

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SCHEDULE A

Landlord’s Office Space

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EX-10.23

Exhibit 10.23

COMMERCIAL LEASE

between

PLAQUEMINES HOLDINGS, LLC,

as Landlord

and

OMEGA REFINING, LLC,

as Tenant

Relating to the Myrtle Grove Facility

Located at

278 East Ravenna Road

Myrtle Grove, LA

Dated as of May 25th, 2012

TABLE OF CONTENTS

Page No.

ARTICLE 1 – LEASE1

1.1Lease.    1

1.2Condition of the Leased Premises.    1

1.3Office/Warehouse and Parking Lot.    2

ARTICLE 2 – TERM AND COMMENCEMENT2

2.1Term.    2

2.2Renewal Options.    3

ARTICLE 3 – RENT3

3.1Base Rent.    3

3.2Option to Pay Base Rent in Arrears.    3

3.3Rent Due.    4

3.4Late Charge.    4

3.5Net Lease.    4

3.6Prepayment of Base Rent.    4

3.7Independent Obligations.    4

ARTICLE 4 – QUIET POSSESSION5

4.1Quiet Possession.    5

ARTICLE 5 – USE, ALTERATIONS, MAINTENANCE AND REPAIRS5

5.1Use.    5

5.2Alterations.    5

5.3Maintenance and Repair of Leased Premises.    5

ARTICLE 6 – TAXES6

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6.1Personal Property Taxes.    6

6.2Rent and Use Taxes.    6

6.3Delinquency of Payment.    6

ARTICLE 7 – INSURANCE6

7.1Tenant’s Insurance.    6

7.2Landlord’s Insurance    6

7.3Subrogation.    6

ARTICLE 8 – UTILITIES AND SERVICES7

8.1Utilities and Services.    7

ARTICLE 9 – COMPLIANCE WITH LAWS AND permitS7

9.1Compliance with Laws and Permits.    7

9.2Permits.    7

9.3Survival.    7

ARTICLE 10 – HAZARDOUS MATERIALS8

10.1Hazardous Materials.    8

10.2Notice to Landlord.    8

10.3Indemnification.    9

10.4Disclaimer Regarding Pre-Existing Conditions.    9

10.5Survival.    10

ARTICLE 11 – INDEMNIFICATION10

11.1Tenant’s Indemnification, Waiver and Release.    10

11.2Landlord’s Indemnification.    11

ARTICLE 12 – LANDLORD’S LIABILITY11

12.1Liability of Landlord.    11

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ARTICLE 13 – EXPROPRIATION AND CASUALTY11

13.1Expropriation of Entire Leased Premises.    11

13.2Partial Expropriation/Continuation of Lease.    12

13.3Continuance of Obligations.    12

13.4Fire and Casualty Damage.    12

ARTICLE 14 – ASSIGNMENT AND SUBLETTING13

14.1Assignment and Subletting.    13

14.2Release of Tenant upon Assignment.    13

14.3Assignment by Landlord.    13

ARTICLE 15 – SUBORDINATION AND LENDER AGREEMENTS13

15.1Subordination.    13

15.2Waiver of Landlord’s Lien; Tenant’s Right to Encumber Leasehold Interest and Personal Property.    14

ARTICLE 16 – DEFAULT14

16.1Default.    14

16.2Landlord Remedies.    15

16.3Waiver.    15

16.4Bankruptcy or Insolvency.    16

16.5Waiver by Tenant.    16

ARTICLE 17 – NOTICES16

17.1Notices.    16

ARTICLE 18 – SURRENDER17

18.1Surrender of Leased Premises.    17

18.2No Surrender During Lease Term.    17

ARTICLE 19 – MISCELLANEOUS18

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19.1Successors.    18

19.2Headings.    18

19.3Time of Essence.    18

19.4Invalidity.    18

19.5Attorney’s Fees.    18

19.6Governing Law.    18

19.7Entire Agreement.    18

19.8Authority.    18

19.9Servitudes.    18

19.10Landlord’s Liability.    19

19.11Recording of Lease.    19

19.12Estoppel Certificates.    19

19.13Force Majeure.    20

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EXHIBITS

Exhibit A – Description of Land

Exhibit B – Site Plan

Exhibit C – Excluded Assets

Exhibit D – Insurance Requirements

Exhibit D – Form of Notice of Lease Agreement

Exhibit E – Environmental Baseline

Exhibit F – Guaranty of Lease

Exhibit G – Removal Agreement

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COMMERCIAL LEASE

This COMMERCIAL LEASE (this “Lease”), dated for reference purposes as of the 25^th day of May, 2012 (the “Effective Date”), is made by and between PLAQUEMINES HOLDINGS, LLC a Louisiana limited liability company (“Landlord”), and OMEGA REFINING, LLC, a Delaware limited liability company (“Tenant”).

R E C I T A L S

A.Landlord is the owner of a tract of land situated in Myrtle Grove, Plaquemines Parish, Louisiana, and more particularly described in Exhibit A (Description of Land) attached hereto (the “Land”).

B.Tenant intends to build and operate a used motor oil re-refinery (the “Plant”) situated on a tract of land within the Land further described and depicted on Exhibit B attached hereto (“Plant Site”).

C.Landlord is the owner of certain improvements situated on portions of the Land consisting of a non-operating fuel grade ethanol plant and related assets, some portions of which Landlord intends to remove, which ethanol plant and related assets and immovable property are more particularly described in Exhibit C and are excluded from the provisions of this Lease (the “Excluded Assets”).

D.The Land and Plant Site, less the Excluded Assets, are herein referred to as the “Leased Premises”. Landlord has agreed to lease to Tenant the Leased Premises, subject to Landlord’s retained right to use and access certain common areas more particularly described below as the “Joint Use Areas”, on the terms and conditions set forth herein. The various components of the Leased Premises and the locations of the Joint Use Areas are further depicted on the site plan attached hereto as Exhibit B (“Site Plan”).

E.As an inducement to Landlord to enter into this Lease, Tenant has agreed to cause its parent, Omega Holdings Company, LLC, a Delaware limited liability company (“Guarantor”) to unconditionally guarantee all of Tenant’s obligations under this Lease and the Related Agreements pursuant to that certain Guaranty Agreement (“Guaranty”) dated as of the Effective Date and attached hereto as Exhibit G.

NOW, THEREFORE, Landlord and Tenant agree as follows:

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ARTICLE 1 – LEASE

1.1Lease.

Landlord hereby leases the Leased Premises to Tenant and Tenant hereby leases the Leased Premises from Landlord, for the Term and subject to the agreements, conditions and provisions contained herein.

1.2Condition of the Leased Premises.

(a)EXCEPT AS PROVIDED IN SECTION 10.4, TENANT HEREBY ACKNOWLEDGES THAT TENANT IS LEASING THE LEASED PREMISES, AND THE LEASED PREMISES SHALL BE LEASED TO TENANT, “AS IS, WHERE IS, AND WITH ALL FAULTS” AND SPECIFICALLY AND EXPRESSLY WITHOUT ANY WARRANTIES, REPRESENTATIONS, OR GUARANTEES, EITHER EXPRESS OR IMPLIED, OF ANY KIND, NATURE, OR TYPE WHATSOEVER FROM OR ON BEHALF OF LANDLORD, INCLUDING, WITHOUT LIMITATION, ANY RELATED TO COMPLIANCE WITH OR LIABILITIES UNDER ENVIRONMENTAL LAW.

(b)WITHOUT IN ANY WAY LIMITING THE GENERALITY OF THE PRECEDING SECTIONS 1.2(A), EXCEPT AS PROVIDED IN SECTION 10.4, TENANT SPECIFICALLY ACKNOWLEDGES AND AGREES THAT TENANT HEREBY WAIVES AND RELEASES ANY CLAIM TENANT HAS, MIGHT HAVE HAD, OR MAY HAVE AGAINST LANDLORD WITH RESPECT TO: THE CONDITION OF THE LEASED PREMISES, WHETHER SUCH CONDITION IS PATENT OR LATENT; COMPLIANCE WITH OR LIABILITIES UNDER ENVIRONMENTAL LAW; AND ANY OTHER STATE OF FACTS WHICH EXIST WITH RESPECT TO THE LEASED PREMISES. NOTWITHSTANDING THE FOREGOING, TENANT DOES NOT WAIVE ANY SUCH CLAIM RELATED TO THE CONDITION OF THE EXCLUDED ASSETS.

(c)For purposes of this Lease: (i) the term “Environmental Law” means all Laws that regulate activities, conditions, or substances because of their effect or potential effect on public health and welfare and the environment, including those relating to the emission, discharge, release, treatment, storage, disposal, or transport of chemicals, wastes, or other materials, including without limitation, the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. §§ 321, et seq., the Oil Pollution Act, 33 U.S.C. §§ 2702, et seq., the Clean Water Act, 33 U.S.C. §§ 1251, et seq., the Clean Air Act, 42 U.S.C. §§ 7401, et seq., the Toxic Substances Control Act, 15 U.S.C. §§2601 et seq., and the Endangered Species Act, 16 U.S.C. §§1531 et seq. and their state and local counterparts, if any; and (ii) the term “Laws” means all “statutes, rules, orders, ordinances, principles of common law, or other requirements of any governmental or quasi-governmental entity.

1.3 Acknowledgment of Co-Tenant; Reservation of Certain Rights. Tenant acknowledges that Landlord has an agreement to lease the Tract identified as Tract “A” on attached Exhibit “B” - Site Plan to Plaquemines Processing & Recovery, L.L.C. (“Plaquemines Processing”) Landlord reserves for the benefit of Plaquemines Processing (or any other tenant of Landlord leasing Tract A which uses said Tract A for industrial purposes in a manner that does not materially and adversely affect Tenant’s use of the Leased Premises) a right of ingress and egress as depicted on the attached Site Plan, utility rights of way through the Leased Premises, to the extent that such rights of way do not materially interfere with Tenant’s operations, and the right to add one or more pipes to the existing pipe rack running from the Leased Premises to the river, to the extent that such rights of way do not materially interfere with Tenant’s operations; provided, however,

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that the rights granted to Landlord are subject to the requirement that Plaquemines Processing (or any other future tenant of Tract “A”) agrees to indemnify, defend and hold harmless Tenant for its use of these rights, and further agrees to carry insurance in the minimum amount of $1 million each occurrence/$2 million aggregate, and which insurance shall otherwise comply with Section 3 of Exhibit D – “Insurance Requirements.” To the extent Plaquemines Processing, or any future tenant, seeks to utilize improvements paid for by Tenant in conjunction with exercising its rights to place pipe on the pipe rack for the purpose of accessing the river or other loading/unloading facilities (including scales), such use shall be conditioned on entering an agreement with Tenant pursuant to which usage and throughput fees are imposed consistent with standard agreements governing similar arrangements in the greater New Orleans area.

1.4    Joint Use Areas.

Landlord hereby grants to Tenant and its customers, agents, invitees and contractors, the non- exclusive right and license to use the Joint Use Areas, in common with Landlord and its lessees, agents, invitees and contractors, for purposes of ingress and egress in connection with Tenant’s operation of the Plant. Tenant’s use of the Joint Use Areas shall be subject to Landlord’s reasonable procedures, rules and regulations relating to security and safety for the property and Joint Use Areas provided to Tenant in writing from time to time. The term “Joint Use Areas” shall mean those areas shown on the Site Plan as the Joint Use Areas, and designated as Site C.

ARTICLE 2ARTICLE 2– TERM AND COMMENCEMENT

2.1Term.

The initial term of this Lease (and including any renewal term, referred to as the “Term”) shall be for a period commencing on the Effective Date and expiring at midnight on the five (5) year anniversary of the Term Commencement Date. For purposes hereof, the “Term Commencement Date” shall be the date of the signing of this lease.

2.2Renewal Options.

Tenant shall have the right to extend the initial Term of this Lease for up to ten (10) renewal periods of five (5) years each, with each being on the same terms and conditions set forth herein, except that the number of renewal periods remaining to be exercised shall, in each case, be reduced by one upon the exercise of a renewal option. As long as there remains an additional right to renew the Term of this Lease, unless Tenant elects not to exercise a renewal option as provided below, the Term of this Lease shall automatically be renewed for an additional period of five (5) years. If Tenant elects not to renew the Term of this Lease, Tenant must notify Landlord in writing that it is not renewing the Term at least 180 days prior to the expiration of the initial Term, or the then current renewal Term, as the case may be, or the Term will be deemed to be renewed for the next renewal Term.

ARTICLE 3– RENT

3.1Base Rent.

(a)Tenant covenants and agrees to pay to Landlord at its address for notice, in lawful money of the United States, without demand, offset or deduction rent (“BaseRent”) in the amounts set forth below during the Initial Term and each renewal Term, as applicable, per year.

2

10.23

(b)During the initial Term, Base Rent shall be payable in the amount of $8,000 per month increasing by $3,818.18 per month until the monthly base rent reaches $50,000 per month, which will be the Base Rent for the remainder of the Initial Term. The first installment of $8,000 will be due and payable on the Term Commencement Date and all subsequent monthly installments to be due and payable on the first day of each month thereafter. If the first or last days of the initial Term are not the first or last days of a calendar month, as the case may be, then the Base Rent for such month(s) shall be prorated based on the number of days in the initial Term within such calendar month(s).

(c) During each renewal Term, Base Rent shall be equal to Base Rent during the last year of the immediately preceding term increased by eight percent (8%), resulting in the following schedule of monthly rent payments:

First Renewal Term        $54,000 per month

Second Renewal Term        $58,320 per month

Third Renewal Term $62,986 per month

Fourth Renewal Term $68,024 per month

Fifth Renewal Term $73,466 per month

Sixth Renewal Term $79,344 per month

Seventh Renewal Term $85,961 per month

Eighth Renewal Term $92,547 per month

Ninth Renewal Term $99,950 per month

Tenth Renewal Term $107,946 per month

3.2Rent Due.

All other amounts due by Tenant to Landlord under this Lease (including any amounts that Landlord advances to satisfy any of Tenant’s obligations hereunder) (referred to herein as “Additional Rent”), shall be, unless otherwise provided, due and payable within fifteen (15) days of written notice thereof to Tenant, and all such Additional Rent, together with the Base Rent, shall be referred to herein as “Rent”.

3.3Late Charge.

If Tenant fails to pay any installment of Rent or any other amount due hereunder within ten (10) days after the date the payment is due, Tenant covenants and agrees to pay a late charge equal to three percent (3%) of the delinquent rent payment. The late charge shall be paid within ten (10) days after Landlord’s written request therefor.

3.4Net Lease.

3

10.23

It is the intention of Landlord and Tenant that all rent paid to Landlord shall be absolutely net; that is, all costs, expenses and obligations of every kind relating directly or indirectly in any way, foreseen or unforeseen, to Tenant’s use, occupancy, possession, maintenance, repair and replacement of the Leased Premises, or any part thereof, which may arise or become due during the Term shall be paid by Tenant and that Landlord shall be indemnified by Tenant therefrom.

3.5    Joint Use Area Costs.

Landlord agrees to pay and reimburse, or cause Landlord’s other tenant(s) on the Land to pay and reimburse, Tenant a portion of Tenant’s costs to operate, maintain and repair the Joint Use Areas (“Joint Use Area Costs”) within thirty (30) days following invoice therefor, such invoice to be accompanied by reasonable supporting documentation of the Joint Use Areas Costs. Tenant shall only invoice Landlord once each calendar year for Joint Use Area Costs, unless an unusually large capital expenditure is necessary. Initially, Landlord’s share of the Joint Use Area Costs shall be 10%, but this percentage shall be equitably adjusted by the parties hereto from time to time to reflect each party’srelative percentage use of the Joint Use Areas. Landlord and Tenant agree to reasonably cooperate with each other to determine the appropriate sharing percentage. Tenant further agrees to provide written notice to Landlord of any contemplated capital expenditure for repair or replacement of any portion of the Joint Use Areas in excess of $10,000. To the extent the Landlord fails to occupy or use Site A, or fails to lease Site A to any third party tenant, for any period more than six (6) consecutive months, Landlord’s obligation to pay and reimburse Tenant under this Section 3.5 shall be suspended and released until such time that Landlord again uses or occupies Site A, or leases Site A to a tenant.

3.53.6    Independent Obligations.

Any term or provision of this Lease to the contrary notwithstanding, the covenants and obligations of Tenant to pay Rent hereunder shall be independent from any obligations, warranties or representations, express or implied, if any, of Landlord herein contained.

ARTICLE 4 – QUIET POSSESSION

4.1Quiet Possession.

Provided no Event of Default (hereinafter defined) by Tenant has occurred and is continuing, Landlord covenants and agrees to keep Tenant in quiet possession and enjoyment of the Leased Premises and the Joint Use Areas during the Term, as the same may be renewed and extended as provided herein.

ARTICLE 5 – USE, ALTERATIONS, MAINTENANCE AND REPAIRS

5.1Use.

Tenant shall be permitted to use the Leased Premises and the Joint Use Areas only for uses associated with the construction and operation of the Plant (and other uses provided such uses are similar or related to Tenant’s current use) and Tenant’s use shall be in compliance with all Laws applicable to the Leased Premises and the Joint Use Areas affecting Tenant’s use and the Leased Premises, and for no other use or purpose without the prior written consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed.

5.2Alterations.

Tenant shall be permitted to construct the Plant on the Leased Premises, provided Tenant presents plans for construction of the Plant to Landlord for its approval (“Plant Construction”). Landlord’s approval of the

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Plant Construction shall not be unreasonably withheld, conditioned or delayed. Tenant shall be permitted to make such alterations and modifications to the Plant on the Leased Premises as it desires, including by way of example and not limitation, a wiped film evaporator(s) (or similar distillation equipment), hydrotreater, a hydrocracker, a propane de-asphalting unit, and miscellaneous grease and lubricant manufacturing equipment (“Permitted Alterations”) without the consent of Landlord, provided that Tenant gives Landlord reasonable notice and that all such alterations or modifications are performed and completed in a safe and prudent manner, in accordance with all Laws. Tenant shall be permitted to make alterations and modifications to the office/warehouse, the parking lot and other improvements on the Leased Premises owned by Landlord, without the prior written consent of Landlord provided that Tenant gives Landlord reasonable notice and that all such alterations or modifications are performed and completed in a safe and prudent manner, in accordance with all Laws. Tenant will be solely responsible for any liabilities or obligations arising out of the construction or operation of such alterations or modifications. Landlord will cooperate with Tenant to the extent required by regulatory or other governmental authorities with jurisdiction over any such alterations or modifications at no cost to Landlord apart from administrative assistance.

5.3Maintenance and Repair of Leased Premises. 

Tenant agrees that, at its own expense, it will keep and maintain the Leased Premises, in a condition and repair similar to, but not less than, its condition and repair on the Term Commencement Date hereof, reasonable wear and tear excepted.  Tenant shall be responsible for disposal of its trash from the Leased Premises. Notwithstanding the foregoing, Tenant shall not have any such obligation with respect to the Excluded Assets.

5.4Expansion of Rail and Barge Dock.

Landlord and Tenant shall cooperate with each other and adjacent property owners in obtaining an extension of the existing rail line and additional rail spurs so as to enable Tenant to receive and ship products over and across the Leased Premises in accordance with Tenant’s anticipated Use of the Leased Premises (“Rail Facilities”).  Any associated cost related to such extension or expansion of the Rail Facilities will be the sole responsibility of Tenant. Landlord is actively engaged and pursuing permitting of a barge dock with pipeline access connecting with the Leased Premises (“Barge Dock”). Any associated cost related to the design, permitting and construction of the Barge Dock from and after the Effective Date shall be the sole responsibility of the Tenant.

5.5    Maintenance and Repair of Joint Use Areas.

Tenant agrees, at its own expense (but subject to reimbursement under Section 3.5), to keep and maintain the Joint Use Areas is good, safe and operable condition in compliance with all applicable Laws.

ARTICLE 6ARTICLE 6– TAXES

6.1Personal Property Taxes.

Tenant covenants and agrees to pay before delinquency all ad valorem personal property taxes that become payable during the Term which are levied or assessed upon the Leased Premises or any of Tenant’s equipment, furniture, fixtures and Tenant’s other personal (movable) property installed or located in or on the Leased Premises (but expressly excluding, for these purposes existing equipment on the Leased Premises owned by or belonging to Landlord).

6.2Rent and Use Taxes and Real Estate Taxes..

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Tenant covenants and agrees to reimburse Landlord for all charges, taxes or other fees arising out of or in connection with Tenant’s use or occupancy of the Leased Premises or Tenant’s rental payments to Landlord, other than income or other taxes (excluding franchise or corporate income taxes payable by Landlord as a result of or with respect to this Lease) imposed on Landlord based on Landlord’s income. In addition, Tenant covenants and agrees to pay all immovable property ad valorem tax assessed against the Leased Premises. Tenant shall pay the immovable property ad valorem tax to LESSOR as an additional amount each month which shall be equal to 1/12 of the total estimated ad valorem taxes on the land and improvements thereto based on the prior year’s ad valorem tax liability against the leased Premises. Upon receipt of the tax bill, Landlord shall provide a copy to Tenant and Landlord shall pay Tenant (or Tenant shall pay Landlord, as the case may be) any difference between the estimated tax payments and the actual tax payments. Landlord shall promptly pay the immovable property ad valorem tax on the Leased Premises when due and shall furnish to Tenant evidence that the taxes have been paid.

Assuming Tenant and Landlord are successful in obtaining a ten (1) year ad valorem “freeze” on the assessment of the Land, Landlord and Tenant agree that the ad valorem taxes on the immovable property shall be allocated 90% to Tenant and 10% to Landlord (or Landlord’s other tenant, as the case may be). After the end of the 10 year term (or, if no ad valorem freeze is available), Landlord and Tenant agree that the assessment of the Land (without any improvements) shall be allocated 90% to Tenant and

10% to Landlord, with all improvements being allocated in kind based on the value of the actual improvements located on each of Tract A and Tract B.

6.36.3    Delinquency of Payment.

If Tenant fails to pay use taxes to Landlord within thirty (30) days after written request therefrom, such delinquent amounts shall bear interest until paid at the lesser of the rate of fifteen percent (15%) per annum, or the maximum non-usurious rate permitted by Law (“Default Rate”).

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ARTICLE 7 – INSURANCE

7.1Tenant’s Insurance.

Tenant shall maintain the insurance coverages in accordance with Exhibit D.

7.2Subrogation.

Notwithstanding any provisions contained in this Lease to the contrary, each party hereto waives all claims for recovery from the other party, its officers, agents or employees for any loss or damage (whether or not such loss or damage is caused by negligence of the other party) to any of its real or personal property insured under the valid and collectible insurance policies to the extent of the collectible recovery under such insurance.

ARTICLE 8 – UTILITIES AND SERVICES

8.1Utilities and Services.

Tenant shall pay and arrange for all utilities and other services to the Plant and Leased Premises, at no cost to Landlord. Landlord will reasonably cooperate with Tenant regarding the provision and continuation of all existing utility services serving the Plant and Leased Premises. Except as provided in Section 19.13, in the event Tenant breaches its responsibility under the section, including failing to adequately serve the Plant or Leased Premises, Landlord may notify Tenant of such breach, and, if, within twenty (20) days of receipt of such notice, Tenant fails to cure that breach, Landlord may take steps necessary to cure that breach and Tenant shall be responsible for all costs Landlord incurs to effect that cure.

ARTICLE 9 – COMPLIANCE WITH LAWS AND PERMITS

9.1Compliance with Laws and Permits.

Except as limited by Section 10.4, and except to the extent any non-compliance may be caused by Landlord’s acts or omissions, Tenant covenants that it shall, throughout the Term of this Lease, and at Tenant’s sole cost and expense, comply or cause compliance with, and prevent liabilities from arising under, Laws, including Environmental Law, applicable or relating to Tenant’s ownership, leasing and operation of the Plant and the Leased Premises, notwithstanding whether the compliance, and the costs and expenses necessitated thereby shall have been foreseen or unforeseen, ordinary or extraordinary, and whether or not the same shall be presently within the contemplation of Landlord or Tenant or shall involve any change of governmental policy, or require structural or extraordinary repairs, alterations or additions by Tenant and irrespective of the costs thereof. In the event any such non-compliance or liabilities should be discovered, Tenant, at its sole cost and expense, shall take immediate steps to cure the non-compliance or to eliminate the liabilities. In the event Tenant breaches its responsibility under the section, including failing to adequately serve the Plant, Landlord may notify Tenant of such breach.

9.2Permits.

Tenant covenants that it shall at its own expense procure, maintain in effect, and comply with all conditions of any and all permits, licenses, authorizations, registrations, and other governmental and regulatory approvals (collectively, “Permits”) required for Tenant’s use of the Leased Premises and the Plant, including, without limitation, those relating to the discharge of stormwater or processing of wastewater, either directly or indirectly through a treatment works owned by a governmental entity, the emission of air

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contaminants, or the handling of any materials of any kind, including without limitation, chemicals and wastes, that are regulated under Environmental Law (collectively, “Hazardous Materials”), Tenant and Landlord shall cooperate and coordinate with each other as necessary to insure that the Plant obtain and maintain Permits required for it to operate.

9.3Survival.

The respective rights and obligations of Landlord and Tenant under this Article 9 shall survive the expiration or earlier termination of this Lease.

ARTICLE 10 – HAZARDOUS MATERIALS

10.1Hazardous Materials.

(a)Except as provided in Section 10.4 and Section 10.1(e) below, Tenant shall, handle, treat, deal with and manage any and all Hazardous Materials in, on, under or about the Leased Premises not only in accordance with all applicable Environmental Law, but also in accordance with prudent industry practices regarding the management of such Hazardous Materials. With regard to the disposal of any Hazardous Materials offsite, Tenant is, and shall be named as, the generator (and in no way shall responsibility for any such materials be attributed to Landlord) and shall be the signatory of any required manifests and shall not dispose of any such materials except in compliance with Environmental Law using authorized transporters and disposal facilities.

(b)     Except as provided in Section 10.4 and Section 10.1(e) below ,upon expiration or earlier termination of this Lease, Tenant covenants to cause all Hazardous Materials to be removed from the Leased Premises, which shall include decontamination of all equipment, and transported for use, storage or disposal in accordance and in compliance with applicable Environmental Law. In addition, at Landlord’s request, upon expiration or earlier termination of this Lease, Tenant shall remove all tanks and other equipment and fixtures (except the Excluded Assets) that were placed on the Leased Premises during the term of this Lease and that contain, have contained or are contaminated with, Hazardous Materials, and shall, at Tenant’s expense, restore the Leased Premises, including the cleaning of all tanks and other equipment that are to remain on the Leased Premises (other than the Excluded Assets) to the same or substantially similar condition as existed prior to the placement of such tanks, equipment or fixtures (or when placed, as the case may be),, normal wear and tear and damage by the elements, fire and othercasualty excepted. Notwithstanding the foregoing, Tenant shall not be required to remove concrete pads underlying such tanks, equipment, or fixtures.

(b)Tenant shall not take any remedial action in response to the presence of any Hazardous Materials in, on, about or under the Leased Premises or in any improvements situated on the Leased Premises, nor enter into any settlement agreement, consent, decree or other compromise in respect to any claims relating to or in any way connected with the Leased Premises or the improvements on the Leased Premises without first notifying Landlord of Tenant’s intention to do so and affording Landlord ample opportunity to appear, intervene or otherwise appropriately assert and protect Landlord’s interest with respect thereto.

(c)Tenant shall not place any underground storage tanks on the Leased Premises without Landlord’s prior written consent, which consent shall be in Landlord’s sole discretion.

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(d)Landlord shall solely handle, treat, deal with and manage any and all Hazardous Materials associated with the Excluded Assets, or any Hazardous Materials found within the Leased Premises as a result of the removal of the Excluded Assets in accordance with all applicable Environmental Law, and in accordance with prudent industry practices regarding the management of such Hazardous Materials

10.2Notice to Landlord.

Tenant shall immediately notify Landlord in writing of (a) any enforcement, clean-up, removal or other governmental or regulatory action instituted, completed or threatened against Tenant, the Leased Premises or any part thereof pursuant to any Environmental Law; (b) any claim made or threatened by any person against Tenant, Landlord or the Leased Premises relating to damage, contribution, cost recovery, compensation, loss or injury resulting from or claimed to result from any Hazardous Materials; (c) any reports made to any environmental agency arising out of or in connection with any Hazardous Materials in, on or about or under the Leased Premises or with respect to any Hazardous Materials removed from the Leased Premises, including, any complaints, notices, warnings, reports or asserted violations in connection therewith; and (d) the discovery of any Hazardous Materials on the Leased Premises that are or may be in violation of Environmental Law. Tenant shall also provide to Landlord, as promptly as possible, and in any event within five (5) business days after Tenant first received or sent the same, copies of all claims, reports, complaints, notices, warnings or asserted violations relating in any way to the Leased Premises or Tenant’s use thereof. Upon written request of Landlord (to enable Landlord to defend itself from any claim or charge related to any Environmental Law), Tenant shall promptly deliver to Landlord notices of hazardous waste manifests reflecting the legal and proper disposal of all such Hazardous Materials removed from the Leased Premises.

10.3Indemnification.

TENANT SHALL INDEMNIFY, DEFEND, PROTECT AND HOLD HARMLESS LANDLORD AND EACH OF LANDLORD’S OFFICERS, DIRECTORS, PARTNERS, MANAGERS, EMPLOYEES, MEMBERS, SHAREHOLDERS, AGENTS, SUCCESSORS AND ASSIGNS (“LANDLORD PARTIES”) FROM AND AGAINST ANY AND ALL CLAIMS, LIABILITIES, DAMAGES, COSTS, PENALTIES, FORFEITURES, LOSSES OR EXPENSES (INCLUDING, BUT NOT LIMITED TO, ATTORNEYS’ AND EXPERTS’ FEES) FOR DEATH OR INJURY TO ANY PERSON OR DAMAGE TO OR DIMINUTION IN VALUE OF ANY PROPERTY WHATSOEVER, INCLUDING NATURAL RESOURCES AND THE ENVIRONMENT, AND FOR COSTS OF INVESTIGATION, REMEDIATION, AND POST-REMEDIATION CARE, E.G., GROUND WATER MONITORING, AND FOR COSTS OF DECONTAMINATING TANKS AND OTHER EQUIPMENT AND FIXTURES ON THE LEASED PREMISES OR JOINT USE AREAS ARISING OR RESULTING IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, FROM THE OPERATION OF TENANT’S BUSINESS ON THE LEASED PREMISES, FROM THE PRESENCE OR DISCHARGE OF HAZARDOUS MATERIALS BY OR ON BEHALF OF TENANT, IN, ON, UNDER, UPON OR FROM THE LEASED PREMISES OR THE IMPROVEMENTS OR EQUIPMENT LOCATED THEREON OR FROM THE TRANSPORTATION OR DISPOSAL OF HAZARDOUS MATERIALS TO OR FROM THE LEASED PREMISES, OR FROM THE ARRANGEMENT FOR DISPOSAL OR DISPOSAL OF ANY SUCH MATERIALS, OCCURING OR ARISING FROM AND AFTER THE TERM COMMENCEMENT DATE, BUT EXCLUDING SUCH LIABILITY TO THE EXTENT IT ARISES FROM OR IS ATTRIBUTABLE TO THE ACTS OR OMISSIONS OF LANDLORD PARTIES. FOR PURPOSES OF THE INDEMNITY PROVIDED HEREIN, ANY ACTS OR OMISSIONS OF TENANT, OR ITS EMPLOYEES, AGENTS, CUSTOMERS, SUBLESSEES, ASSIGNEES, CONTRACTORS OR SUBCONTRACTORS OF TENANT, BUT EXCLUDING ANY EMPLOYEES OF LANDLORD (WHETHER OR NOT THEY ARE NEGLIGENT,

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INTENTIONAL, WILLFUL OR UNLAWFUL) SHALL BE STRICTLY ATTRIBUTABLE TO TENANT. THE INDEMNITY OBLIGATIONS OF TENANT UNDER THIS SECTION 10.3 SHALL BE THE EXCLUSIVE INDEMNITY PROVIDED BY TENANT UNDER THIS LEASE WITH RESPECT TO THE SUBJECT MATTER OF THIS ARTICLE 10, AND SHALL SPECIFICALLY EXCLUDE AND SHALL NOT OVERLAP WITH THE INDEMNITY OBLIGATIONS OF TENANT UNDER SECTION 11.1. THE INDEMNITY OBLIGATIONS OF TENANT UNDER THIS SECTION 10.3 SHALL SURVIVE THE EXPIRATION OR EARLIER TERMINATION OF THIS LEASE.

10.4Disclaimer Regarding Pre-Existing Conditions.

Notwithstanding any provision herein to the contrary, Landlord and Tenant acknowledge and agree that (a) Tenant shall not be liable for or be required to remove, remediate, or otherwise deal with, any Hazardous Materials that were existing on the Leased Premises on the date of this Lease (“Pre-Existing Environmental Conditions”), (b) Tenant shall not be liable for or be required to remove, remediate or otherwise deal with any Hazardous Materials that exist on the Leased Premises as a result of Landlord’s removal of the Excluded Assets (“Excluded Asset Conditions”) and (c) Tenant’s indemnity set forth in Section 10.3 above shall not be applicable to Pre-Existing Environmental Conditions or Excluded Asset Conditions; provided, however, that Tenant shall have the burden of proof to establish that any Pre-Existing Environmental Conditions or Excluded Asset Conditions that are the subject of a claim for indemnity under Section 10.3 existed on or were discharged from the Leased Premises prior to the Term Commencement Date or in connection with Landlord’s removal of the Excluded Assets, as the case may be. Pre-Existing Environmental Conditions are identified in the Environmental Baseline, which is attached hereto as Exhibit E. Removal and remediation of the Excluded Asset Conditions by Landlord shall be governed by the Removal Agreement.

10.5Survival.

The respective rights and obligations of Landlord and Tenant under this Article 10 shall survive the expiration or earlier termination of this Lease.

ARTICLE 11 – INDEMNIFICATION

11.1Tenant’s Indemnification, Waiver and Release.

FROM AND AFTER THE TERM COMMENCEMENT DATE, IN ADDITION TO TENANT’S OTHER DUTIES, OBLIGATIONS AND LIABILITIES UNDER THIS LEASE, TENANT HEREBY WAIVES AS TO THE LANDLORD PARTIES (DEFINED IN EXHIBIT D) AND HEREBY AGREES TO INDEMNIFY, PROTECT, DEFEND AND HOLD HARMLESS THE LANDLORD PARTIES FROM AND AGAINST ANY AND ALL LIABILITIES, CLAIMS, CAUSES OF ACTION, FINES, DAMAGES (EXCLUDING CONSEQUENTIAL DAMAGES), SUITS AND EXPENSES, INCLUDING COURT COSTS, EXPERTS’ FEES AND ATTORNEYS’ FEES (COLLECTIVELY, THE “CLAIMS”), WHETHER ARISING IN EQUITY, AT COMMON LAW, OR BY STATUTE, OR UNDER THE LAW OF CONTRACTS, TORTS (INCLUDING, WITHOUT LIMITATION, NEGLIGENCE AND STRICT LIABILITY WITHOUT REGARD TO FAULT) OR PROPERTY ARISING FROM ANY INJURY TO OR DEATH OF ANY PERSON OR THE DAMAGE TO OR THEFT, DESTRUCTION, LOSS OR LOSS OF USE OF ANY PROPERTY IN ANY EVENT ARISING FROM TENANT’S USE, OCCUPANCY OR ENJOYMENT (OR THE USE, OCCUPANCY OR ENJOYMENT OF ANY TENANT PARTY) OF THE LEASED PREMISES AND ITS FACILITIES FOR THE CONDUCT OF TENANT’S BUSINESS (OR THE BUSINESS OF SUCH TENANT PARTY) AND/OR TENANT’S USE OR ENJOYMENT (OR THE USE OR ENJOYMENT OF ANY TENANT PARTY) OF THE JOINT USE AREAS, AND/OR ARISING FROM ANY DEFECTS IN

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THE LEASED PREMISES OR THE JOINT USE AREAS (UNLESS ANY OF THE LANDLORD PARTIES KNEW OR SHOULD HAVE KNOWN OF SUCH DEFECT OR HAD RECEIVED NOTICE OF SUCH DEFECT AND FAILED TO REMEDY IT WITHIN A REASONABLE PERIOD OF TIME AS PROVIDED IN LA. R.S. 9:3221) AND TENANT FURTHER HEREBY WAIVES AS TO THE LANDLORD PARTIES AND AGREES TO INDEMNIFY, PROTECT, DEFEND AND HOLD HARMLESS THE LANDLORD PARTIES FROM AND AGAINST ANY AND ALL CLAIMS ARISING FROM ANY BREACH OR DEFAULT IN THE PERFORMANCE OF ANY OBLIGATION ON TENANT’S PART TO BE PERFORMED UNDER THE TERMS OF THIS LEASE OR ARISING FROM ANY NEGLIGENCE OR WILLFUL MISCONDUCT OF TENANT OR ANY TENANT PARTY. IN CASE ANY ACTION OR PROCEEDING SHALL BE BROUGHT AGAINST THE LANDLORD PARTIES BY REASON OF ANY SUCH CLAIM, TENANT, UPON NOTICE FROM LANDLORD, SHALL DEFEND THE SAME AT TENANT’S SOLE COST. THE INDEMNITY OBLIGATIONS OF TENANT UNDER THIS SECTION 11.1 SHALL SPECIFICALLY EXCLUDE AND SHALL NOT OVERLAP WITH THE INDMENITY OBLIGATIONS OF TENANT UNDER SECTION 10.3, AND SHALL NOT BE APPLICABLE TO ANY MATTER DESCRIBED IN ARTICLE 10, IT BEING THE EXPRESS INTENT OF THE PARTIES THAT SECTION 10.3 IS THE EXCLUSIVE INDEMNITY PROVIDED BY TENANT WITH RESPECT TO SUCH MATTERS. THE INDEMNITY OBLIGATIONS OF TENANT UNDER THIS SECTION 11.1 SHALL SURVIVE THE EXPIRATION OR EARLIER TERMINATION OF THIS LEASE.

As used in this Lease, “Tenant Party” means any of the following persons: Tenant, any assignees claiming by, through, or under Tenant, any subtenants claiming by, through, or under Tenant, and any of their respective shareholders, members, partners, officers, directors, managers, agents, contractors, employees, licensees, customers, guests and invitees.

11.2Landlord’s Indemnification.

FROM AND AFTER THE TERM COMMENCEMENT DATE, LANDLORD HEREBY AGREES TO INDEMNIFY, PROTECT, DEFEND AND HOLD HARMLESS THE TENANT PARTIES FROM AND AGAINST ANY AND ALL CLAIMS (AS DEFINED IN SECTION 11.1) ARISING FROM ANY INJURY TO OR DEATH OF ANY PERSON OR THE DAMAGE TO OR THEFT, DESTRUCTION, LOSS OR LOSS OF USE OF ANY PROPERTY IN ANY EVENT TO THE EXTENT ARISING FROM LANDLORD’S (OR ANY LANDLORD PARTY’S) NEGLIGENT OR INTENTIONAL ACTS AND OMISSIONS RELATING TO LANDLORD’S OPERATIONS ON THE LEASED PREMISES.  IN CASE ANY ACTION OR PROCEEDING SHALL BE BROUGHT AGAINST THE TENANT PARTIES BY REASON OF ANY SUCH CLAIM, LANDLORD, UPON NOTICE FROM TENANT, SHALL DEFEND THE SAME AT LANDLORD’S SOLE COST AND EXPENSE BY COUNSEL REASONABLY SATISFACTORY TO TENANT.  NOTWITHSTANDING THE ABOVE, THIS INDEMNITY SHALL SPECIFICALLY EXCLUDE ANY LIABILITY FOR ANY CLAIMS BROUGHT BY ANY OF TENANT’S EMPLOYEES FOR INJURIES SUFFERED IN THE COURSE AND SCOPE OF THEIR EMPLOYMENT AND FOR WHICH SUCH EMPLOYEE COULD ASSERT A CLAIM FOR WORKER’S COMPENSATION.  THE INDEMNITY OBLIGATIONS OF LANDLORD UNDER THIS SECTION 11.2 SHALL SURVIVE THE EXPIRATION OR EARLIER TERMINATION OF THIS LEASE.

As used in this Lease, “Landlord Party” has the meaning given that term in Exhibit C.

ARTICLE 12– LANDLORD’S LIABILITY

12.1Liability of Landlord.

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Landlord shall not be liable to Tenant or to Tenant’s employees, agents, licensees or visitors, or to any other person whomsoever for (a) any injury or damage to person or property due to the Leased Premises, the Joint Use Areas or related improvements or appurtenances or any part thereof becoming out of repair or by defect in or failure of pipes or wiring, or by the backing up of drains or by the bursting or leaking of pipes, faucets, and plumbing fixtures or by gas, water, steam, electricity, oil leaking, escaping or flowing into the Plant or the Leased Premises or the Joint Use Areas unless caused by the gross negligence or willful misconduct of Landlord; or (b) any loss or damage that may be occasioned by or through the acts or omissions of any other persons whatsoever, excepting only the willful conduct and gross negligence of employees, agents and contractors of Landlord; or (c) any loss or damage to any property or person occasioned by theft, fire, act of God, public enemy, injunction, riot, insurrection, war, court order, requisition or order of governmental authority, or any other matter beyond the reasonable control of Landlord. In no event shall Landlord be liable for consequential damages to Tenant of any type whatsoever such as, but not limited to, loss of business. Landlord shall not be liable to Tenant for any damage to or loss of Tenant’s personal property on or about the Leased Premises except to the extent that such damage is the result of Landlord’s acts or omissions. Tenant agrees that all of Tenant’s personal (movable) property upon the Leased Premises shall be at the risk of Tenant only, and that Landlord shall not be liable for any damage thereto or theft thereof except as specifically provided herein to the contrary.

ARTICLE 13 – EXPROPRIATION AND CASUALTY

13.1Expropriation of Entire Leased Premises.

If, during the Term of this Lease, either (a) the entire Leased Premises, Joint Use Areas, or any portion of the Leased Premises or Joint Use Areas such that Tenant’s ability to operate the Plant is materially and adversely affected and such operations or facilities cannot be relocated to another part of the Land, as reasonably determined by Landlord and Tenant, shall be taken as the result of the exercise of the power of expropriation (either hereinafter referred to as a “Major Taking”), this Lease and all right, title and interest of Tenant hereunder shall cease and come to an end on the date of vesting of title pursuant to the Major Taking and Landlord shall be entitled to and shall receive the total award allocable to the Leased Premises (but not any improvements located therein) with respect to the Major Taking; provided, however, that nothing contained in this Article 13 shall be deemed to give Landlord any interest in, or to require Tenant to assign to Landlord, any award made to Tenant for the taking of the Plant or any personal property belonging to Tenant, reasonable expenses of relocation, and any interest accruing thereon (collectively, the “Tenant’s Recoverable Damages”).

13.2Partial Expropriation/Continuation of Lease.

If any part of the Leased Premises or Joint Use Areas shall be taken in an expropriation proceeding other than a Major Taking (“Minor Taking”), then this Lease shall, upon vesting of title in the Minor Taking, terminate as to the parts so taken, and Tenant shall have no claim or interest in the award, damages, consequential damages and compensation, or any part thereof other than for Tenant’s Recoverable Damages. Landlord shall be entitled to and shall receive the total award made in such Minor Taking, Tenant hereby assigning any interest in such award, damages, consequential damages and compensation to Landlord, and Tenant hereby waiving any right Tenant has now or may have under present or future law to receive any separate award of damages for its interest in the Leased Premises, or any portion thereof, or its interest in this Lease; provided, however, that nothing contained herein shall be deemed to give Landlord any interest in, or to require Tenant to assign to Landlord, any award made to Tenant for Tenant’s Recoverable Damages.

13.3Continuance of Obligations.

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In the event of any termination of this Lease as a result of any such Major Taking or Minor Taking, Tenant shall pay to Landlord all Rent and all additional Rent and other charges payable hereunder, justly apportioned to the date of such termination. If this Lease is not terminated, then, from and after the date of vesting of title in such proceedings, Tenant shall continue to pay all of the Rent and additional Rent and other charges payable hereunder, as in this Lease provided, to be paid by Tenant, it being expressly agreed to by Landlord and Tenant that there shall in no event be any abatement or adjustment of any rental amounts due under this Lease as a result of any such proceedings or the exercise of any power of eminent domain.

13.4Fire and Casualty Damage.

If any of the Leased Premises shall be damaged by fire or other casualty, then Tenant shall give prompt written notice thereof to Landlord, and Tenant shall, to the extent of available insurance proceeds, proceed to restore such portion of the Leased Premises that is damaged by the casualty to substantially the same or better condition as on the Term Commencement Date, reasonable wear and tear excepted.  Notwithstanding the foregoing, Tenant shall have no obligation to insure, repair or restore the equipment and related facilities in the non-operational ethanol plant that exists on the Land as of the Commencement Date. Tenant shall, to the extent required hereby, commence the restoration and reconstruction work within a reasonable period following the casualty, and shall use reasonable diligence to complete such work as soon as reasonably possible.  Tenant shall have the right to adjust and settle all property insurance claims relating thereto, subject to Landlord’s approval, not to be unreasonably withheld, conditioned or delayed.  Tenant shall have the sole responsibility for restoring and rebuilding the Plant to the extent of available insurance proceeds, and Landlord shall have no obligation to Tenant and shall not be liable for any inconvenience or annoyance to Tenant or injury to the business of Tenant resulting in any way from such damage or the repair thereof.  Tenant shall not be entitled to any diminution in Rent during the time and to the extent any portion of the Leased Premises not devoted to Tenant’s use are unfit for occupancy.

ARTICLE 14 – ASSIGNMENT AND SUBLETTING

14.1Assignment and Subletting.

Tenant shall not assign this Lease or sublet the Leased Premises without Landlord’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed, provided Tenant’s assignee (a) assumes in writing all of the obligations of Tenant under this Lease accruing from and after the date of the assignment, and (b) provides evidence satisfactory to Landlord of its experience in operating businesses such as the Plant and its financial capability to perform Tenant’s obligations under this Lease. For these purposes, in the event any such assignee or transferee has a net worth in excess of $10,000,000, the “financial capability” requirement shall be deemed satisfied. Notwithstanding anything to the contrary contained in this Lease, a transfer to, or an assignment or subletting of all or a portion of the Leased Premises to an Affiliate (defined below) of Tenant shall not be deemed an assignment or sublease under this Section 14.1, provided Tenant and its Guarantor remain responsible for the Tenant’s obligations under the Terms of this Lease. . As used herein, the term “Affiliate” shall mean an entity which is (i) Controlled by, Controls, or is under common Control with Tenant; (ii) any entity with which Tenant has merged or consolidated; or (iii) any entity which acquires all or substantially all of the assets and/or shares of stock, or membership interests, or assets of Tenant. A public offering of Tenant’s stock or a subsequent conversion to a private company shall not be deemed a transfer, assignment or sublease hereunder. “Control”, as used in this Section 14.1 shall mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of an entity, whether through ownership of voting securities, by contract, or otherwise. Except as provided in Section 14.2, following any permitted assignment or subletting, Tenant (or the assigning or subletting entity) shall remain directly and primarily liable for the performance of all of

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the covenants, duties, and obligations of Tenant hereunder, and Landlord shall be permitted to enforce the provisions of this Lease against Tenant or any assignee or sublessee without demand upon or proceeding in any way against any other person.

14.2 Term of Continuing Obligation of Tenant under this Lease. Upon the assignment of this Lease by Tenant to a third party non-affiliate, Tenant and Guarantor shall remain fully responsible for the tenant’s obligations under this Lease for the greater of (a) the remainder of the applicable 5 year term in effect at the time of the assignment; or (b) two (2) years.

14.3    Assignment by Landlord.

Landlord shall have the right to sell, transfer or assign its interest hereunder without the prior consent of Tenant, provided that such purchaser, transferee or assignee assumes Landlord’s obligations hereunder. After such sale, transfer or assignment, Tenant shall, upon presentation of an acceptable Non-disturbance Agreement (as defined below in Section 15.1), attorn to the new landlord and Landlord shall be released from all obligations arising hereunder after the date of such sale, transfer or assignment.

ARTICLE 15 – SUBORDINATION AND LENDER AGREEMENTS

15.1Subordination.

Provided that Landlord obtains for the benefit of Tenant from each present and future holder of any Mortgage (as hereinafter defined) encumbering the Land, a non-disturbance agreement in reasonable customary form (and in recordable form) agreeing that, among other things, the holder of such mortgage or any purchaser in a foreclosure sale shall recognize and be bound by the terms of this Lease upon a foreclosure or deed in lieu thereof (“Non-disturbance Agreement”), this Lease will be subject and subordinate to the lien of all and any Mortgages, or superior thereto should Landlord and/or its mortgagee so determine (which term “Mortgages” shall include both construction and permanent financing and shall include deeds of trust and similar security instruments), which may now or hereafter encumber or otherwise affect the real estate of which the Leased Premises is a part, and to all and any renewals, extensions, modifications, recastings or refinancings thereof.

15.2Waiver of Landlord’s Lien; Tenant’s Right to Encumber Leasehold Interest and Personal Property.

Landlord hereby waives any and all constitutional, statutory and common law liens and security interests, and any rights of distraint, with respect to Tenant’s property. Landlord will execute and deliver, on request by Tenant, any and all such instruments, forms and other documents as may be reasonably necessary or required by Tenant’s secured lender, to evidence the waiver of Landlord’s lien for the payment of Rent under any applicable statute to the lien of Tenant’s secured lender in Tenant’s leasehold estate hereunder, or any of Tenant’s property located on the Leased Premises, and providing for such lender’s right to enter the Leased Premises to take possession of and remove Tenant’s personal property, on such terms as are typical and customary in similar transactions.

ARTICLE 16 – DEFAULT

16.1Default.

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If any of the following shall occur, Tenant shall be deemed to be in default under this Lease (“Event of Default”):

(a)Tenant shall fail to pay any rent or other sum after same has become due and payable and such failure shall continue for more than fifteen (15) days after Tenant has received written notice of such default;

(b)Tenant shall fail to perform any of the other duties required to be performed by Tenant under this Lease and such failure shall continue for more than sixty (60) days after receipt of written notice thereof by Tenant from Landlord; provided, however, that if such default cannot reasonably be cured within such sixty (60) day period, Tenant shall have such additional time as is reasonably necessary to diligently perform such duty so long as Tenant commences to cure within such sixty (60) day period and continues to diligently perform such cure;

(c)Tenant shall make a general assignment for the benefit of creditors, admit in writing its inability to pay its debts as they become due, file a petition in bankruptcy, be adjudicated bankrupt, or file a petition seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any present or future statute, law or regulation;

or

(d)there is a levy upon or a taking of Tenant’s leasehold estate or any of Tenant’s assets by execution or other process of law that remains in effect and undischarged for a period in excess of one hundred twenty (120) days;

16.2Landlord Remedies.

If an Event of Default occurs, Landlord shall have, in addition to such other rights or remedies as are contained within this Lease, the right at Landlord’s election, then or any time thereafter, but only if such Event of Default shall continue, to pursue any one or more of the following remedies:

(a)Landlord may (i) terminate this Lease by giving written notice thereof to Tenant, in which event Tenant shall immediately surrender the Leased Premises and Joint Use Areas to Landlord and if Tenant fails so to do, Landlord may, without prejudice to any other remedy which it may have for possession or arrearages in rent immediately institute eviction proceedings in accordance with the provisions of the Louisiana Code of Civil Procedure to expel or remove Tenant and any other person who may be occupying the Leased Premises and Joint Use Areas, or any part thereof, and Tenant shall pay to Landlord on demand an amount equal to one year’s Rent as liquidated damages which Landlord may suffer by reason of such termination, or (ii) accelerate the future Rent due under this Lease, or (iii) allow this Lease to remain in effect and proceed for damages and for the Rent as the same shall become due. Nothing contained in this Lease shall limit or prejudice the right of Landlord to prove for and obtain in proceedings for bankruptcy or insolvency by reason of the termination of this Lease, an amount equal to the maximum allowed by any statute or rule of law in effect at the time when, and governing the proceedings in which, the damages are to be proved, whether or not the amount be greater, equal to, or less than the amount the loss and damages referred to above. All accrued but unpaid sums shall bear interest at the Default Rate.

(b)No eviction of Tenant and repossession of the Leased Premises and Joint Use Areas or any part thereof pursuant to Sections 16.2(a) and 16.2(b) or otherwise shall relieve Tenant of its liabilities and obligations hereunder, all of which shall survive such eviction and repossession of the

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Leased Premises and Joint Use Areas or any part thereof by reason of the occurrence of an event of default, and Tenant will pay to Landlord the rent required to be paid by Tenant.

(c)No right or remedy herein conferred upon or reserved to Landlord is intended to be exclusive of any other right or remedy, and each and every right and remedy shall be cumulative and in addition to any other right or remedy given hereunder or now or hereafter existing at law or in equity or by statute. In addition to other remedies provided in this Lease, Landlord shall be entitled, to the extent permitted by applicable Laws, to injunctive relief in case of the violation, or attempted or threatened violation, of any of the covenants, agreements, conditions, or provisions of this Lease, or to a decree compelling performance of any of the other covenants, agreements, conditions, or provisions of this Lease, or to any other remedy allowed to Landlord at law or in equity.

(d)Tenant waives all applicable notice requirements in connection with Landlord’s exercise of any remedies under this Article 16.

16.3Waiver.

The waiver by Landlord of any default or Landlord’s failure to insist upon strict compliance with any provision hereof shall not be deemed to be a waiver of any subsequent default under the same, or under any other term, covenant or condition of this Lease. The subsequent acceptance of any rent by Landlord shall not be deemed to be a waiver of any preceding default by Tenant under any term, covenant or condition of this Lease, other than the failure of Tenant to pay the particular rent so accepted, regardless of Landlord’s knowledge of such preceding default at the time of acceptance of such rent.

16.4Bankruptcy or Insolvency.

Neither Tenant’s interest in this Lease, nor any interest herein of Tenant nor any estate hereby created in Tenant shall pass to any trustee or receiver or assignee for the benefit of creditors or otherwise by operation of law. In the event Tenant shall become insolvent or become a debtor under the Federal Bankruptcy Code, or make a transfer in fraud of creditors, or make an assignment for the benefit of creditors, or take or have taken against Tenant, any proceeding of any kind under any provision of the Federal Bankruptcy Code or under any other federal or state insolvency, bankruptcy, reorganization or similar act or if a receiver or trustee is appointed for a substantial portion of Tenant’s assets, Landlord shall have the right to terminate this Lease, except that Tenant shall not be relieved of any obligations which have accrued prior to the date of such termination. Upon such termination, the provisions herein relating to the expiration or earlier termination of this Lease shall control and Tenant shall immediately surrender the Leased Premises in the condition required by the provisions of this Lease. Additionally, Landlord shall be entitled to all relief, including recovery of damages from Tenant, which may from time to time be permitted or recoverable under the Federal Bankruptcy Code or any other applicable laws.

16.5Waiver by Tenant.

Tenant hereby expressly waives, so far as permitted by law, any and all right of redemption or reentry or repossession to revive the validity and existence of this Lease in the event that Tenant shall be dispossessed by a judgment or by order of any court having jurisdiction over the Leased Premises or the interpretation of this Lease or in case of eviction and repossession by Landlord or in case of any expiration or termination of this Lease.

ARTICLE 17– NOTICES

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17.1Notices.

Any notice required or permitted under this Lease must be in writing and will be deemed received when actually received and delivered by (a) United States mail, certified or registered, return receipt requested, (b) confirmed overnight courier service, (c) confirmed facsimile transmission, or (iv) other electronic communication where receipt of the communication has been acknowledged, in each case properly addressed or transmitted to the address of the party set forth below or to such other address or facsimile number as a party will provide to the other party in accordance with this provision:

Landlord:    Plaquemines Holdings, LLC

13340 Florida Blvd.

Livingston, LA 70764

Attn:    Jeffrey A. Henderson

Telecopy No.:    

Tenant:    Omega Refining, LLC

1331 17^th Street, Suite 800

Denver, Colorado 80202

Attn:    James P. Gregory

Telecopy No.:    303.292.9121

ARTICLE 18 – SURRENDER

18.1Surrender of Leased Premises.

(a)    Property and Improvements Remaining with Property (“Remaining Assets).

At the termination of this Lease all, the Excluded Assets and all immovable property (as defined by Louisiana law) and component parts of immovable property (as defined by Louisiana law) constructed or installed by Tenant shall remain with the property and to the extent not then constituting property belonging to Landlord, shall become the property of Landlord without any further act of Tenant. By way of illustration only, and not intended to be exclusive, the following types of property shall constitute “Remaining Assets”:

Any railroad improvements

Dock improvements

Any piping, pipe racks, or related property permanently affixed to the ground

Any storage tanks that are not able to be trucked without significant dismantling

(b) Property to be Removed by Tenant. All other personal property constructed, installed or located on the property by or on behalf of Tenant shall constitute “Removed Assets”, and shall be removed by Tenant in accordance with sub- paragraph (c) below. By way of illustration only, and not intended to be exclusive, the following personal property shall be considered to be “Removed Assets”:

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All processing equipment that can be transported by truck, including hydrotreaters, hydrocrackers, and other distillation equipment

All tools, inventory, and office equipment,

(c) Upon the expiration or earlier termination of this Lease, Tenant shall vacate and surrender to Landlord the Leased Premises in good, clean and operable condition. Tenant shall cause all of the Removed Assets to be removed from the Leased Premises on or before (a) the expiration date of the Lease, or (b) if the Lease is terminated for any reason prior to the scheduled expiration date (“Early Termination”), six (6) months from the effective date of termination (either date, the “Removal Date”). Nothing herein shall be interpreted to require that Tenant is obligated to remove the concrete pad underlying the Plant. Tenant shall, on or before the Removal Date, remove the Removed Assets in accordance with all applicable Laws, and in accordance with the terms of Section 10.1. With respect to any Early Termination, Tenant’s obligations under this Lease shall be deemed to continue in effect until the later of the Removal Date or the completion of the removal of the Removed Assets (for example, Tenant must continue to maintain insurance, comply with Laws, etc.), but Tenant’s right to use the Leased Premises and Joint Use Areas shall be limited to removing the Removed Assets therefrom. Tenant shall repair any damage to the Leased Premises or Joint Use Areas caused by such removal, and any and all such property not so removed within thirty (30) days after the Removal Date shall, at Landlord’s option, become the exclusive property of Landlord and be disposed of by Landlord, at Tenant’s cost and expense, without further notice to or demand upon Tenant. If the Leased Premises and Joint Use Areas are not surrendered as above set forth, Tenant shall indemnify, defend and hold harmless Landlord against loss or liability resulting from the delay by Tenant in so surrendering the Leased Premises and Joint Use Areas, including, without limitation, the cost of dismantling and disposing of the Plant (if Tenant so chooses) and compliance with Laws with respect thereto. Tenant’s obligation to observe or perform these covenants shall survive the expiration or other termination of this Lease. Tenant shall have no obligation to restore the non-operational ethanol plant that exists on the Land as of the Commencement Date.

All property of Tenant not removed on or before the thirtieth (30^th) day after the Removal Date shall, at the option of Landlord, be deemed abandoned to Landlord. To the extent legally permitted, Tenant hereby irrevocably authorizes Landlord to remove all property of Tenant from the Leased Premises and Joint Use Areas thirty (30) days following the Removal Date and to cause its transportation and storage for Tenant’s benefit, all at the sole cost and risk of Tenant, and Landlord shall not be liable in any manner in respect thereto. Tenant covenants to pay all costs and expenses of such removal, transportation and storage. Tenant shall reimburse Landlord upon demand for any expenses incurred by Landlord with respect to removal or storage of abandoned property and with respect to restoring said Leased Premises and Joint Use Areas to good order, condition and repair. In addition, Landlord is hereby irrevocably authorized, to the extent legally permitted, to sell, at public or private sale, with or without legal proceedings, and with or without notice, demand, advertisement, appraisement, or any other formality, any and all of the contents of the Leased Premises, and Landlord may purchase these contents at private sale or for the highest bid at a public sale, and the proceeds of this sale, after deducting all costs, charges, attorney’s fees and expenses of the sale, will be applied to the payment of Rent and all other amounts due to Landlord, with any remaining balance belonging and being paid to Tenant. Tenant’s obligations hereunder shall survive the expiration or early termination of this Lease.

18.2No Surrender During Lease Term.

No surrender to Landlord of this Lease or of the Leased Premises and Joint Use Areas, or any portion thereof, or any interest therein, prior to the expiration of the Term of this Lease shall be valid or effective to

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relieve Tenant of any obligations hereunder unless such release is specifically agreed to and accepted in writing by Landlord and consented to in writing by all lenders holding a lien on the Leased Premises, and no act or omission by Landlord or any representative or agent of Landlord, other than such a written acceptance, as aforesaid, shall constitute an acceptance of any such surrender.

ARTICLE 19– MISCELLANEOUS

19.1Successors.

The covenants and conditions contained herein shall be binding upon and inure to the benefit of Landlord and Tenant and their respective successors and permitted assigns.

19.2Headings.

The article and section headings in this Lease are for convenience only, and shall not limit or otherwise affect the meaning of any provision hereof.

19.3Time of Essence.

Time is of the essence in each and every provision of this Lease.

19.4Invalidity.

The invalidity or unenforceability of any provision of this Lease shall not affect any other provision hereof.

19.5Attorney’s Fees.

Should either party hereto commence an action against the other to enforce any obligation under this Lease, the prevailing party shall be entitled to recover reasonable attorneys’ fees from the other.

19.6Governing Law.

This Lease shall be construed and enforced in accordance with the laws of the State of Louisiana.

19.7Entire Agreement.

This Lease constitutes the entire agreement between the parties hereto and may not be modified in any manner other than by written agreement, executed by all of the parties hereto and their successors in interest. No prior understanding or representation of any kind dated before the execution of this Lease shall be binding upon either party unless incorporated herein.

19.8Authority.

Both parties executing this Lease represent that they are fully authorized to execute this Lease on behalf of their respective entities.

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19.9    Servitudes.

As an appurtenance to the estate created by this Lease, Landlord hereby grants to Tenant, during the Term, non-exclusive (unless otherwise indicated) servitudes and rights-of-way over the parking areas, driveways, walkways, and service lanes shown on the Site Plan for vehicular and pedestrian access, ingress, and egress to and from the Leased Premises and for the use and enjoyment of the Joint Use Areas for use by Tenant, its employees, agents, contractors, invitees, assignees, subtenants, and licensees.

19.10    Landlord’s Liability.

Tenant agrees to look solely to Landlord’s estate and interest in the Leased Premises for the satisfaction of any monetary claim hereunder or the collection of any judgment based thereon, and no other property of Landlord, or any joint venturer, partner, member, shareholder, co‑owner, officer, director or manager shall be subject to levy, execution or other enforcement procedure for satisfaction of such claim or judgment.

19.11    Recording of Lease.

Tenant shall not record this Lease. After the Term Commencement Date, upon the request of a party hereto, the parties shall join in the execution of a Notice of Lease Agreement for the purpose of recordation in the form attached hereto as Exhibit D. Any recording costs associated with the Notice of Lease Agreement shall be borne by the party requesting recordation.

19.12    Estoppel Certificates.

(a)At any time and from time to time, but in no event on less than fifteen (15) days’ prior written request by Landlord or its lender, Tenant shall execute and deliver to the requesting party a certificate certifying: (a) that Tenant has accepted the Leased Premises as being suitable for its purposes (or, if Tenant has not done so, that Tenant has not accepted the Leased Premises and specifying the reasons therefor); (b) the commencement and expiration dates of this Lease; (c) whether there are then existing any defaults by Landlord in the performance of its obligations under this Lease (and, if so, specifying the same); (d) that this Lease is unmodified and in full force and effect (or, if there have been modifications, that this Lease is in full force and effect, as modified, and stating the date and nature of each modification); (e) the capacity of the person executing such certificate, and that such person is duly authorized to execute the same on behalf of Tenant; (f) the date, if any, to which rent and other sums payable hereunder have been paid; (g) that no notice has been received by Tenant of any default which has not been cured, except as to defaults specified in the certificate; and (h) such other matters as may be reasonably requested by Landlord or its lender. Any such certificate may be relied upon by any prospective purchaser, mortgagee, beneficiary, subtenant, assignee, or other nominee third party of the party receiving the certificate.

(b)At any time and from time to time, but in no event on less than fifteen (15) days’ prior written request by Tenant or its lender, Landlord shall execute and deliver to the requesting party a certificate certifying: (a) the commencement and expiration dates of this Lease; (b) whether there are then existing any defaults by Tenant in the performance of its obligations under this Lease (and, if so, specifying the same); (c) that this Lease is unmodified and in full force and effect (or, if there have been modifications, that this Lease is in full force and effect, as modified, and stating the date and nature of each modification); (d) the capacity of the person executing such certificate, and that such person is duly authorized to execute the same on behalf of Landlord; (e) the date, if any, to which rent and other sums payable hereunder have been paid; (f) that no notice has been received by Landlord of any default which has not been cured, except as to defaults

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specified in the certificate; and (g) such other matters as may be reasonably requested by Tenant or its lender. Any such certificate may be relied upon by any prospective purchaser, mortgagee, beneficiary, subtenant, assignee, or other nominee third party of the party receiving the certificate.

19.13    Force Majeure.

Other than for Tenant's or Landlord’s monetary obligations under this Lease and obligations that can be cured by the payment of money (e.g., maintaining insurance), whenever a period of time is herein prescribed for action to be taken by either party hereto, such party shall not be liable or responsible for, and there shall be excluded from the computation of any such period of time, any delays due to terrorism, strikes, riots, acts of God, shortages of labor or materials, war, laws, regulations or restrictions or any other causes of any kind whatsoever that are beyond the control of such party

19.14    Landlord’s Removal Operations.

Landlord intends to remove some or all of the Excluded Assets from the Land. The rights and obligations of Landlord and Tenant with respect to such removal operations are more particularly addressed in the Removal Agreement attached hereto as Exhibit H, incorporated herein by this reference.

[Remainder of page intentionally left blank.]

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Executed and effective as of the Effective Date.

(Signature page to Land Lease)

22

Exhibit A

DESCRIPTION OF THE “LAND”

A CERTAIN PORTION OF GROUND located in Alliance and St. Rosalie Plantation, Section 5, T16S, R25E, Southeast District of Louisiana, West of the Mississippi River, Plaquemines Parish, Louisiana in an area bounded by La. State Highway No 23, the Mississippi River, above by Citrus Lands of Louisiana, and below by La. Power & Light co., designated as Tract A-1C and described as follows:

Commence from the intersection of the upper line of La. Power & Light Co. Property and the original easterly right of way line of La. State Highway 23 said point having coordinates X=2,430,858.48, Y=366,504.59 and go North 21°56’19” West a distance of 416.07; thence go North 69°07’01” East a distance of 2111.83 feet to the POINT OF BEGINNING. Thence continue North 69°07’01” East a distance of 210.64 feet; thence go of North 20°52’59” West a distance of 1301.27 feet; thence go of North 69°07’01” East a distance of 1221.80 feet; thence go of South 24°30’41” East a distance of 95.98 feet; thence go South 20°53’09” East a distance of 505.11 feet; thence go of South 13°29’42” East a distance of 159.40 feet; thence go of South 29°50’59” East a distance of 220.75 feet; thence go of South 20°49’56” East a distance of 332.00 feet; thence go of North 69°07’01” East a distance of 170.23 feet; thence go of South 20°43’33” East a distance of 358.55 feet; thence go of South 69°08’57” West a distance of 1397.84 feet; thence go of North 20°47’37” West a distance of 222.20 feet; thence go of North 63°58’24” West a distance of 55.28 feet; thence go of South 69°12’23” West a distance of 186.13 feet; thence go of North 20°52’59” West a distance of 102.66 feet to the POINT OF BEGINNING.

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Exhibit B

SITE PLAN AND DESCRIPTION OF THE “LEASED PREMISES” AND “JOINT USE AREAS

Description of Leased Premises:

A CERTAIN PORTION OF GROUND located in Alliance and St. Rosalie Plantation, Section 5, T16S, R25E, Southeast District of Louisiana, West of the Mississippi River, Plaquemines Parish, Louisiana in an area bounded by La. State Highway No 23, the Mississippi River, above by Citrus Lands of Louisiana, and below by La. Power & Light co., designated as Tract A-1C and described as follows:

Commence from the intersection of the upper line of La. Power & Light Co. Property and the original easterly right of way line of La. State Highway 23 said point having coordinates X=2,430,858.48, Y=366,504.59 and go North 21°56’19” West a distance of 416.07; thence go North 69°07’01” East a distance of 2111.83 feet to the POINT OF BEGINNING. Thence continue North 69°07’01” East a distance of 210.64 feet; thence go of North 20°52’59” West a distance of 1301.27 feet; thence go of North 69°07’01” East a distance of 1221.80 feet; thence go of South 24°30’41” East a distance of 95.98 feet; thence go South 20°53’09” East a distance of 505.11 feet; thence go of South 13°29’42” East a distance of 159.40 feet; thence go of South 29°50’59” East a distance of 220.75 feet; thence go of South 20°49’56” East a distance of 332.00 feet; thence go of North 69°07’01” East a distance of 170.23 feet; thence go of South 20°43’33” East a distance of 358.55 feet; thence go of South 69°08’57” West a distance of 1397.84 feet; thence go of North 20°47’37” West a distance of 222.20 feet; thence go of North 63°58’24” West a distance of 55.28 feet; thence go of South 69°12’23” West a distance of 186.13 feet; thence go of North 20°52’59” West a distance of 102.66 feet to the POINT OF BEGINNING.

Less and Except:

A 5.29 Acre Tract measuring approximately 475 feet by 485 feet and identified as Site A on the attached site plan of Hugh McCurdy, III, PLS and further described below:

A CERTAIN PARCEL OF GROUND, together with all improvements thereon, and all rights, ways, privileges, servitudes, appurtenances, and advantages thereunto belonging and appertaining, situated in Township 16 South, Range 25 East, Section 5, Alliance Plantation, Plaquemines Parish, Louisiana, and being more fully described as follows:

Commencing at corner common to the properties of Harvest States, Conoco Phillips Alliance Refinery, and Plaquemines Holdings, LLC, having a Latitude of 29 degrees 40 minutes 31.9 seconds West and a Longitude of 89 degrees 58 minutes 05.4 seconds West; thence in a southwesterly direction along the line between Conoco Phillips Alliance

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Refinery and Plaquemines Holdings, LLC, for a distance of 281 feet to a 6 foot chain link fence and the POINT OF BEGINNING;

Thence in a southeasterly direction along the 6’ chain link fence for a distance of 485 feet to the intersection with the northeasterly prolongation of the downriver edge of an existing asphalt roadway;

Thence in a southwesterly direction along the downriver edge of the existing asphalt roadway for a distance of 475 feet to the southeasterly prolongation of the riverside face of an existing metal building;

Thence in a northwesterly direction along the riverside face of the existing metal building for a distance of 485 feet to the intersection with the line between the properties of between Conoco Phillips Alliance Refinery and Plaquemines Holdings, LLC;

Thence in a northeasterly direction along the line between the properties of between Conoco Phillips Alliance Refinery and Plaquemines Holdings, LLC, for a distance of 475 feet to the POINT OF BEGINNING.

Together with all improvements, buildings, component parts of immovables, slabs, foundations, tanks in excess of 10,000 barrels, and other similar items. The Leased Premises is identified as Site B on the attached Sketch of Lease Areas by Hugh McCurdy, III, PLS

Description of Joint Use Area:

A CERTAIN RIGHT OF INGRESS AND EGRESS, 25 feet in width, for the purposes of Ingress and Egress, on and across Site “B”, situated in Township 16 South, Range 25 East, Section 5, Alliance Plantation, Plaquemines Parish, Louisiana, 12.5 feet on either side of the following described existing centerline:

BEGINNING at the point of intersection with the southwesterly line of the property of Plaquemines Holdings, LLC, with the centerline of Ravenna Road having a Latitude of 29 degrees 40 minutes 14.6 seconds North and a Longitude of 89 degrees 58 minutes 15.3 seconds West, thence in a northeasterly direction 248 feet to an intersection;

Thence in a southeasterly direction 307 feet to an intersection; Thence in a northeasterly direction 950 feet to an intersection; Thence in a northwesterly direction 307 feet to an intersection; Thence in a southwesterly direction 58 feet to an intersection;

Thence in a northwesterly direction 850 feet to the intersection with Site “A” and the POINT OF TERMINATION.

The Joint Use Area is identified as Site C on the attached Sketch of Lease Areas by Hugh McCurdy, III, PLS

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Non-exclusive List of Movable Assets Included in “Leased Premises” That Are Owned by Landlord

Location: Outside next to truck loading rack inside impoundment area

4 - 990,000 gallon carbon steel storage tanks

Location: Outside in cement impoundment area next to chemical building

4 – Tanks: #254 – 13 ft diameter cone bottom stainless

#253 – 11.6 ft diameter cone bottom stainless

#251-- 8 ft. diameter flat bottom stainless

#252 – 8 ft. diameter flat bottom fiberglass

Location: Next to cement impoundment area inside chemical building

4 – Tanks: #SI20 – 6ft. diameter flat bottom stainless with adjitation

#SI21 – 6 ft. diameter flat bottom stainless with adjitation

#SI22 – 6 ft. diameter flat bottom stainless with adjitation

#SI23 – 6 ft. diameter flat bottom stainless with adjitation

Location: Outside on slab next to mash pre building

10 – Tanks: #IR-411, #IR-412, #IR-413, #IR-414, #IR-415, #2R-415, #2R-414

#2R-413, #2R-412, #2R-411

460,000 capacity cone bottom stainless

1    -- 7 ft. diameter 80 ft. tall vapor recovery column

Location: Outside next to mash prep building

2    – Tanks: #R-751 and #R-752 – 9 ft. diameter cone bottom stainless

Location: Bottom floor mash prep building

1 --Tank: R-401-C – 10 ft. diameter cone bottom stainless

2 --Tanks: 2-R-303 & IR-303 – 8 ft. diameter cone bottom stainless

2 --Tanks: IR-304, 2R-30R – 12 ft. diameter cone bottom stainless

6 --Tanks: 2R-305, IR-305, 2R-310A, IR-310A, IR-310B, 2R-310B

11 ft. diameter cone bottom stainless

Location: Upstairs 3rd floor mash prep building

6 – Tanks: #334, #329, #330, #331, #332, #333

7 ft. diameter cone bottom stainless

2 – Tanks: #328, #327-- 9 ft. diameter cone bottom stainless

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Location: office Building – All items in currently in office building – office furniture, file drawers, cabinets, etc.

Location – Maintenance Shed – All items currently in maintenance shed

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Exhibit C

EXCLUDED ASSETS

1. A 5.29 Acre Tract measuring approximately 475 feet by 485 feet and identified as Site A on the attached Sketch of Lease Areas of Hugh McCurdy, III, PLS and further described below:

A CERTAIN PARCEL OF GROUND, together with all improvements thereon, and all rights, ways, privileges, servitudes, appurtenances, and advantages thereunto belonging and appertaining, situated in Township 16 South, Range 25 East, Section 5, Alliance Plantation, Plaquemines Parish, Louisiana, and being more fully described as follows:

Commencing at corner common to the properties of Harvest States, Conoco Phillips Alliance Refinery, and Plaquemines Holdings, LLC, having a Latitude of 29 degrees 40 minutes 31.9 seconds West and a Longitude of 89 degrees 58 minutes 05.4 seconds West; thence in a southwesterly direction along the line between Conoco Phillips Alliance Refinery and Plaquemines Holdings, LLC, for a distance of 281 feet to a 6 foot chain link fence and the POINT OF BEGINNING;

Thence in a southeasterly direction along the 6’ chain link fence for a distance of 485 feet to the intersection with the northeasterly prolongation of the downriver edge of an existing asphalt roadway;

Thence in a southwesterly direction along the downriver edge of the existing asphalt roadway for a distance of 475 feet to the southeasterly prolongation of the riverside face of an existing metal building;

Thence in a northwesterly direction along the riverside face of the existing metal building for a distance of 485 feet to the intersection with the line between the properties of between Conoco Phillips Alliance Refinery and Plaquemines Holdings, LLC;

Thence in a northeasterly direction along the line between the properties of between Conoco Phillips Alliance Refinery and Plaquemines Holdings, LLC, for a distance of 475 feet to the POINT OF BEGINNING.

2.    Large Stainless Steel Distillation Column and all related and ancillary equipment;

3.    One (1) Gas Fired Turbine Generator and four (4) large Chillers; and

4.    All property identified as such in the Equipment Sale and Removal Agreement.

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Exhibit D

INSURANCE REQUIREMENTS

TENANT’S REQUIREMENTS

1.Tenant’s Insurance Representations to Landlord.

A.It is expressly understood and agreed that the insurance requirements set forth herein:

i.represent the Landlord’s minimum requirements and are not to be construed to void or limit Tenant’s indemnity obligations as contained in the Lease nor represent in any manner a determination of the insurance Tenant should or should not maintain for its own protection; and

ii.represent insurance which is being, or has been, obtained by Tenant in support of Tenant’s liability and indemnity obligations under the Lease. Irrespective of the requirements as to insurance to be carried as provided for herein, the insolvency, bankruptcy or failure of any insurance company carrying insurance of Tenant, or the failure of any insurance company to pay claims accruing, shall not be held to affect, negate or waive any of the provisions of this Exhibit or the Lease.

B.Tenant shall obtain and maintain the insurance policies and coverages as required under this Lease, and shall deliver to Landlord evidence of same, and shall additionally deliver to Landlord renewal insurance certificate(s) at least five (5) days before the expiration of the then current policy(ies). In the event of any failure by Tenant to comply with the provisions of this Exhibit, Landlord may (but shall have no obligation to do so), without in any way compromising or waiving any other right or remedy under this Lease, at law or in equity, on notice to Tenant, purchase such insurance at Tenant’s expense; provided, however, that such action by Landlord shall in no event relieve Tenant of or excuse Tenant from the obligation to obtain and maintain such insurance amounts and coverages as required herein.

C.Notwithstanding anything to the contrary contained herein, Landlord shall have the right to reasonably increase the amount or expand the scope of insurance coverages to be maintained by Tenant hereunder from time to time. Within thirty (30) days after Landlord’s request, Tenant shall provide Landlord with an insurance policy or policies as so requested to provide such increased or other coverages, which insurance policy or policies shall otherwise be in accordance with the terms and conditions of this Lease.

2.Conditions Affecting All Insurance Required Herein.

A.Cost of Insurance. All insurance coverage shall be provided at Tenant’s sole expense.

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B.Maintenance of Insurance. All insurance coverage shall be maintained in effect with limits not less than those set forth below at all times during the Term or any extension or renewal of the Lease.

C.Status and Rating of Insurance Company. All insurance coverage shall be written through insurance companies licensed to do business in the State of Louisiana and rated no less than A: VIII in the most current edition of A. M. Best’s Key Rating Guide and no less than A- in the most current edition of Standard & Poor Insurance Solvency Review.

D.Non-Standard, Special and/or Unusual Exclusions, Limitations or Endorsements. All insurance coverage shall be provided to Landlord Parties in compliance with the requirements herein and shall contain no non-standard, special and/or unusual exclusions or restrictive endorsements without the prior express written approval of Landlord.

E.Limits of Liability. The limits of liability required herein may be provided by a single policy of insurance or by a combination of primary and umbrella policies, but in no event shall the total limits of liability available for any one occurrence or accident be less than the amount required herein.

F.Notice of Cancellation, Nonrenewal, or Material Reduction in Coverage. All insurance coverage shall contain the following express provision:

“This is to certify that the policies of insurance described herein have been issued to the Insured and are in force at this time. In the event of cancellation, non-renewal, or material reduction in coverage affecting the certificate holder, thirty (30) days prior written notice shall be given to the certificate holder”.

G.Additional Insured Status. Additional insured status shall be provided in favor of Landlord Parties on all liability insurance required herein except workers’ compensation/ employer’s liability. Additional insured status on the general liability insurance shall be provided on ISO form 2026 or its equivalent.

H.Primary Liability. All insurance coverage required herein shall be primary to all insurance available to Landlord Parties, with Landlord Parties’ insurance being excess, secondary and non-contributing. Where necessary, coverage shall be endorsed to provide such primary liability.

I.Deductible/Retention. All deductibles and/or retentions shall be paid by, assumed by, for the account of, and at Tenant’s sole risk. All deductibles and/or retentions are subject to approval by Landlord Parties.

J.Waiver of Subrogation. All insurance policies required herein shall be endorsed to waive the insurance carriers’ rights of subrogation against Landlord Parties.

3.Commercial General Liability Insurance.

A.Coverage. Such insurance shall cover liability arising out of all locations leased by Tenant and/or all operations of Tenant, including but not limited to liability assumed under the Lease (including the tort liability of another assumed in a business contract).

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Defense shall be provided as an additional benefit and not included within the limit of liability.

B.Form. Commercial General Liability Occurrence form (ISO CG 0001 0798 or its equivalent).

C.Amount of Insurance. Coverage shall be provided with limits of not less than:

i.Each Occurrence Limit    $1,000,000

ii.General Aggregate Limit    $2,000,000

iii.Product-Completed Operations Aggregate Limit    $2,000,000

iv.Personal and Advertising Injury Limit    $1,000,000

v.Damage to Premises Rented to You Limit    $ 100,000

vi.Medical Expense Limit    $ 5,000

D.Required Endorsements:

i.Additional Insured status, as required above.

ii.Notice of Cancellation, Nonrenewal or Material Reduction in Coverage, as required above.

iii.Personal Injury Liability: The personal injury contractual liability exclusion shall be deleted.

iv.Primary Liability, as required above.

v.Waiver of Subrogation, as required above.

4.Auto Liability Insurance.

A.Coverage. Such insurance shall cover liability arising out of any auto (including owned, hired, non-owned and leased autos).

B.Form. Business Auto form (ISO CA 0001 or its equivalent).

C.Amount of Insurance. Coverage shall be provided with a limit of not less than $1,000,000.

D.Required Endorsements:

i.Additional Insured status required above.

ii.Notice of Cancellation, Nonrenewal or Material Reduction in Coverage, as required above.

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iii.Waiver of Subrogation, as required above.

iv.Contractual Liability sufficient to cover Tenant’s obligations under this Lease.

5.Workers’ Compensation/Employer’s Liability Insurance.

A.Coverage. Such insurance shall cover liability arising out of Tenant’s employment of workers and anyone for whom Tenant may be liable for workers’ compensation claims, and shall insure against and satisfy Tenant’s obligations and liabilities under the worker’s compensation laws of the State of Louisiana. Workers’ compensation insurance is required, and no “alternative” forms of insurance shall be permitted.

B.Amount of Insurance. Coverage shall be provided with a limit of not less than:

vi.    Workers’ Compensation:    Statutory limits;

vii.    Employer’s Liability:    $500,000 each accident; $500,000 each disease; and in any event in no less than statutorily required amounts.

C.Required Endorsements:

v.Notice of Cancellation, Nonrenewal or Material Reduction in Coverage, as required above;

vi.Waiver of Subrogation, as required above.

D.    Indemnity:

TENANT SHALL BE LIABLE TO LANDLORD PARTIES AND SHALL INDEMNIFY AND HOLD HARMLESS LANDLORD PARTIES FROM AND AGAINST ALL CLAIMS, LOSSES, COSTS, DAMAGES OR EXPENSES (INCLUDING, WITHOUT LIMITATION, ATTORNEYS’ FEES) THAT MAY BE ASSERTED AGAINST, SUFFERED BY, ACCRUED AGAINST, CHARGED TO, OR RECOVERABLE FROM LANDLORD PARTIES, AS A RESULT OF TENANT NOT CARRYING WORKER’S COMPENSATION INSURANCE AND/OR EMPLOYER’S LIABILITY INSURANCE OR NOT BEING A SUBSCRIBER UNDER ANY APPLICABLE LOUISIANA WORKER’S COMPENSATION ACT, OR ARISING OUT OF ANY LOSS SUFFERED BY (OR IN CONNECTION WITH) ANY OF TENANT’S EMPLOYEES, AGENTS OR REPRESENTATIVES WHICH WOULD HAVE BEEN OR IS COVERED BY AN APPROPRIATE WORKER’S COMPENSATION INSURANCE POLICY AND/OR EMPLOYER’S LIABILITY INSURANCE POLICY. This provision shall survive the expiration or other termination of this Lease.

6.    Umbrella Liability Insurance.

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A.Coverage. Such insurance shall be excess over and be no less broad than all coverages described above and shall include a drop-down provision.

B.Form: This policy shall have the same inception and expiration dates as the commercial general liability insurance required above.

C.Amount of Insurance. Coverage shall be provided with a limit of not less than $25,000,000.

D.Required Endorsements:

i.Additional Insured status as required above;

ii.Waiver of Subrogation, as required above.

7.Causes of Loss – Special Form (f/k/a “All-Risk”) Property Insurance.

A.Coverage. Such insurance shall be provided on all of Tenant’s business records, furniture, fixtures, personal property, equipment, all improvements and/or betterments located on the Leased Premises including, but not limited to, the Plant, and the Office/Warehouse for the full replacement cost, and the amount shall satisfy any coinsurance requirements under the applicable policy. Policy limits for leasehold improvements and personal property must be stated separately.

B.Form. ISO Causes of Loss – Special Form.

C.Amount of Insurance. Coverage shall be provided in the amount 100% of replacement cost of all property required to be covered herein and in compliance with all laws, regulations or ordinances affecting such property.

D.Required Endorsements:

i.Agreed Value.

ii.Ordinance or Law.

iii.Replacement Cost.

iv.Landlord shown as loss payee with respect to all improvements owned by Landlord.

v.Waiver of Subrogation, as required above.

8.Business Income and Extra Expense Insurance.

A.Coverage. Such insurance shall be provided on all operations in the location covered by the Lease Agreement.

B.Form. ISO Causes of Loss – Special Form.

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C.Amount of Insurance. Coverage shall be provided in an amount of not less than eighty percent (80%) of Tenant’s gross annual income at this location less non-continuing expense.

D.Required Endorsements:

i.Agreed Value.

ii.Waiver of Subrogation, as required above.

9.Pollution Legal Liability Insurance

A. Coverage. Such insurance coverage shall cover environmental liability (for both sudden and gradual alleged environmental conditions) arising out of the Leased Premises or Tenant’s operations at the Leased Premises, including, but not limited to, coverage for clean-up costs, business interruption, loss of site value and claims for bodily injury and property damage. Such coverage shall be in place for the entirety of the Lease Term (and all renewals thereof) and for at least three (3) years thereafter.

B. Amount of Insurance. Coverage shall be provided with a limit of not less than $10 million per event/occurrence.

C.    Required Endorsements:

i. Landlord Parties to be named as Additional Insured with respect to all liability arising out of Tenant’s operations on the Leased Premises.

ii. Insurer shall waive any and all rights of subrogation as against Landlord Parties with respect to amounts paid under any such policies.

iii. Primary Liability, as required above.

10.Other Tenant Insurance. Tenant will, at Landlord’s request and at Tenant’s sole expense, procure and maintain any other and further insurance coverage that Landlord may require, including but not limited to:

A.Boiler and Machinery Insurance.

B.Earthquake Insurance.

C.Flood Insurance.

11.Evidence of Insurance.

A.Provision of Evidence. Evidence of the insurance coverage required to be maintained by Tenant, represented by original certificates of insurance, evidence of insurance and endorsements issued by the insurance company or its legal agent, must be furnished to Landlord no later than two (2) days after execution of this Lease. New certificates of insurance, evidence of insurance, and endorsements shall be provided to Landlord at least thirty (30) days prior to the termination date of the then-current certificates

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of insurance, evidence of insurance, and endorsements. Upon request of any Landlord Party, Tenant shall provide to Landlord a certified copy of all insurance policies required herein within ten (10) days of any such request. Renewal policies, as necessary, shall be delivered to Landlord at least thirty (30) days prior to the expiration of the previous policy.

B.Form:

i.All property and business income insurance required herein shall be evidenced by ACORD form 28, “Evidence of Property Insurance”.

ii.All liability insurance required herein shall be evidenced by ACORD form 25 (2001/08), “Certificate of Insurance”.

C.Specifications. Such certificates of insurance, evidence of insurance, and endorsements shall specify:

i.Landlord as a certificate holder with correct mailing address.

ii.Insured’s name, which must match that on the Lease.

iii.Insurance companies affording each coverage, policy number of each coverage, policy dates of each coverage, all coverages and limits described herein, and signature of authorized representative of insurance company.

iv.Producer of the certificate with correct address and phone number listed.

v.Additional insured status required by this Exhibit.

vi.Aggregate limits per project required by this Exhibit.

vii.Property policy limits for leasehold improvements and personal property shown separately.

viii.Amount of any deductibles and/or retentions.

ix.Cancellation, nonrenewal and material reduction in coverage notification as required by this Exhibit. Additionally, the words “endeavor to” and “but failure to mail such notice shall impose no obligation or liability of any kind upon Company, it agents or representatives” shall be deleted from the cancellation provision of the ACORD 25S certificate of insurance form.

x.Primary status required by this Exhibit.

xi.Waivers of subrogation required by this Exhibit.

xii.Loss payee status required by this Exhibit.

D.Required Endorsements. A copy of each required endorsement shall also be provided.

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E.Failure to Obtain: Failure of Landlord to demand such certificate or other evidence of full compliance with these insurance requirements or failure of Landlord to identify a deficiency from evidence that is provided shall not be construed as a waiver of Tenant’s obligation to maintain such insurance.

12.Definitions. For purposes of this Exhibit:

A.ISO. “ISO” means Insurance Services Office;

B.Landlord Parties. As used in this Exhibit, “Landlord Parties” means (a) Landlord, (b) any lender whose loan is secured by a lien against the Land, (c) their respective shareholders, members, partners, affiliates and subsidiaries, successors and assigns, and (d) any directors, managers, officers, employees, agents, or contractors of the foregoing persons or entities (and each such person or entity shall be a “Landlord Party”).

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Exhibit D

ENVIRONMENTAL BASELINE

Diesel range impacts in groundwater were most elevated in the vicinity of the the former molasses AST (HA-5), where a level of 13.1 milligrams per Liter (mg/L) was detected and the LDEQ GW_SS reportable level is 0.15 mg/L. The groundwater sample from this boring also exceeded LDEQ GW_SS for gasoline range organics and arsenic. This is the only sample that contained gasoline range organics in excess of the LDEQ standards. However, arsenic was detected in excess of GW_SS standards in five of the eight samples where it was analyzed, indicating these levels may be associated with background levels and not associated with a contaminate introduced to the site through past operations. Diesel range organics were also detected in excess of LDEQ GW_SS standards in samples collected from HA-2, HA-3 and HA-6 at levels of 0.217, 0.242 and 0.217 mg/L, respectively. These samples were collected from along the west and northwest property boundaries of the site and are most likely associated with impacts at the ConocoPhillips Alliance Refinery. Groundwater was detected in temporary well HA-5 at a depth of 5 feet below ground surface, which would indicate excavation activities would need to extend to a depth of approximately six feet below ground surface to fully eliminate the potential source of impacts. Figure 3 is attached which depicts the constituents of concern that were detected in groundwater in excess of LDEQ GW_SS.

[FIGURE 3 IS THE NEXT PAGE]

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Exhibit F

FORM OF NOTICE OF LEASE AGREEMENT

THIS NOTICE OF LEASE AGREEMENT (“Notice”), dated as of May ____, 2012, is made and entered into by and between PLAQUEMINES HOLDINGS, LLC, a Louisiana limited liability company (“Landlord”), and OMEGA REFINING, LLC, a Colorado limited liability company (“Tenant”), for the purpose of making effective as to third parties the following lease terms:

1.Declaration of Lease. Pursuant to that certain Land Lease Agreement dated _________, ___, 2012, by and between Landlord and Tenant (the “Lease”), Landlord has leased to Tenant that certain tract of land more particularly described on Exhibit A (the “Leased Premises”), together with the non- exclusive right to use certain portions of the Land more particularly described in the Lease as the “Joint Use Areas”.

2.Landlord’s Name and Address.

Plaquemines Holdings, LLC

13340 Florida Blvd.

Livingston, LA 707464

Attn:    Jeffrey A. Henderson

3.Tenant’s Name and Address.

Omega Refining, LLC

1331 17^th Street, Suite 800

Denver, Colorado 80202

Attn:    James P. Gregory

4.Description of Leased Premises. The Leased Premises are more particularly described in Exhibit A attached hereto.

5.Term of the Lease. The term (the “Term”) of the Lease commenced on ___________, 2012, and shall terminate on the last day of the sixtieth (60^th) full calendar month ensuing after the commencement of the Term.

6.Options to Extend the Term. The Lease provides that Tenant shall have the option to extend the Term of the Lease upon written notice as provided in the Lease ten (10) additional periods of five (5) years each.

7.Purpose. This Notice is not a complete summary of the Lease and is made by the parties hereto for the purpose of recording the same in the public records. This Notice is for information purposes only and is subject to all of the terms, provisions and conditions of the Lease, all of which are incorporated herein by reference. Nothing contained in this Notice shall be deemed in any way to modify, supplement, negate or otherwise affect any of the terms, provisions or conditions of the Lease. In the event of any inconsistencies between the terms, provisions or conditions of the Lease and this Notice, the terms, provisions and conditions of the Lease shall prevail.

[Remainder of page intentionally left blank. Signature page(s) to follow.]

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IN WITNESS WHEREOF, Landlord and Tenant have caused their names to be affixed hereto as of the date first set forth hereinabove.

LANDLORD:

PLAQUEMINES HOLDINGS LLC, a Louisiana limited liability company

By:

Chief Executive Officer

TENANT:

OMEGA REFINING, LLC, a Delaware limited liability company

By:

James P. Gregory

Vice President and General Counsel

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Exhibit A

LEGAL DESCRIPTION

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Exhibit F

GUARANTY

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Exhibit G

REMOVAL AGREEMENT

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UNITED STATES OF AMERICA

STATE OF LOUISIANA

PARISH OF PLAQUEMINES

FIRST AMENDMENT TO COMMERCIAL LEASE

PLAQUEMINES HOLDINGS, LLC a Louisiana limited liability company (“Landlord”), and OMEGA REFINING, LLC, a Delaware limited liability company (“Tenant”) do hereby agree to change and amend the Commercial Lease executed by them on the 25th day of May, 2012 (attached as Exhibit A) as follows:

l. SITE A: All references and descriptions of “Site A” contained in the Commercial Lease as more particularly described in Exhibit B to the Commercial Lease dated May 25, 2012 are hereby superceded and amended for the following described property:

A tract measuring approximately 700 feet by 495 feet and identified as Site A on the attached Sketch of Lease Areas of Hugh McCurdy, III, PLS and further described below:

A CERTAIN PARCEL OF GROUND, together with all improvements thereon, and all rights, ways, privileges, servitudes, appurtenances, and advantages thereunto belonging and appertaining, situated in Township 16 South, Range 25 East, Section 5, Alliance Plantation, Plaquemines Parish, Louisiana, and being more fully described as follows:

Commencing at corner common to the properties of Harvest States, Conoco Phillips Alliance Refinery, and Plaquemines Holdings, LLC, having a Latitude of 29 degrees 40 minutes 31.9 seconds West and a Longitude of 89 degrees 58 minutes 05.4 seconds West; thence in a southwesterly direction along the line between Conoco Phillips Alliance Refinery and Plaquemines Holdings, LLC, for a distance of 281 feet to a 6 foot chain link fence and the POINT OF BEGINNING;

Thence in a southeasterly direction along the 6' chain link fence for a distance of 495 feet to the intersection with the northeasterly prolongation of the downriver edge of an existing asphalt roadway;

Thence in a southwesterly direction along the downriver edge of the existing asphalt roadway for a distance of 700 feet a point;

Thence in a northwesterly direction for a distance of 495 feet to the intersection with the line between the properties of between Conoco Phillips Alliance Refinery and Plaquemines Holdings, LLC;

Thence in a northeasterly direction along the line between the properties of between Conoco Phillips Alliance Refinery and Plaquemines Holdings, LLC, for a distance of 700 feet to the POINT OF BEGINNING.

2. EFFECTIVE DATE: The amendments made herein shall be effective as of April 1, 2013.

3. REMAINING TERMS: All other terms of the May 25, 2012 Commercial Lease are unchanged and remain in full force and effect.

Executed on this ____ day of May, 2013.

EX-10.24

Exhibit 10.24

______________________________________________________________________________

______________________________________________________________________________

OPERATION AND MAINTENANCE AGREEMENT

Dated as of November 3, 2010

______________________________________________________________________________

______________________________________________________________________________

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TABLE OF CONTENTS

Page

ARTICLE I : DEFINITIONS 1

ARTICLE II : ENGAGEMENT OF OPERATOR 5

2.1 Engagement..    5

2.2 Independent Contractor.    5

2.3 Owner Cooperation    5

ARTICLE III : TERM, RESIGNATION OR REMOVAL OF OPERATOR 5

3.1 Term.    5

3.2 Owner Default.    5

3.3 Operator Default    6

3.4 Cooperation with Owner or Successor Operator    7

3.5 Effect of Termination    7

ARTICLE IV : DUTIES AS OPERATOR 7

4.1 Duties as Operator.    7

4.2 Standard of Care..    11

4.4 Limitation of Authority    12

ARTICLE V : ACCOUNTING, REPORTS, RECORDS 12

5.1 Accounting Methods.    12

5.2 Independent Audit.    12

ARTICLE VI : FORCE MAJEURE 12

6.1 Procedure..    12

6.2 Strikes.    13

ARTICLE VII : INSURANCE AND INDEMNIFICATION 13

7.1 Operator Insurance.    13

7.2 Contractors    14

7.3 Notice of Claims..    14

7.4 Mutual Release and Indemnification.    14

ARTICLE VIII : GENERAL PROVISIONS 15

8.2 Notices    15

8.3 Rights    16

8.4 Applicable Laws    16

8.5 Rules of Construction.    16

8.6 Governing Law..    17

8.7 Dispute Resolution.    17

8.8 Limitation of Liability..    17

8.9 Entirety of Agreement, Amendments    17

8.10 Waivers.    18

8.11 Headings.    18

8.12 Rights and Remedies.    18

8.13 Assignment    18

8.14 Counterparts    18

8.15 No Third Party Beneficiary    18

8.16 Further Assurances.    28

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OPERATION AND MAINTENANCE AGREEMENT

    This OPERATIONS AND MAINTENANCE AGREEMENT dated this 3rd day of November, 2010 (the “Effective Date”), is made and entered into by and between MAGELLAN TERMINALS HOLDINGS, L.P. (f/k/a Marrero Terminal, LLC), a Delaware limited partnership (“Owner”), and OMEGA REFINING, LLC, a Delaware limited liability company (“Omega” or “Operator”). Owner and Operator are referred to individually herein as a “Party” and collectively herein as the “Parties”.

WITNESSETH:

WHEREAS, Owner currently operates that certain six spot rail car loading/offloading area located at 5000 River Road, Marrero, Louisiana, including associated piping, hoses, and pumps as more particularly described on Exhibit “A” attached hereto and incorporated by reference herein (the “Rail Facility”); and

WHEREAS, Owner wishes to retain Operator to maintain and operate the Rail Facility as well as administering the business and regulatory affairs of Owner relating to the Rail Facility, all in accordance with the terms and conditions set forth below.

NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

ARTICLE I: DEFINITIONS

Capitalized terms used in this Agreement but not otherwise defined herein shall have the following meanings:

“Affiliate” means, with respect to any Person, any other Person that, directly or indirectly, controls, is controlled by, or is under common control with, such specified Person through one or more intermediaries or otherwise. For the purposes of this definition, “control” means, where used with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of Voting Securities or interests, by contract or otherwise, and the terms “controlling” and “controlled” have correlative meanings.

“Agreement” means this Amended and Restated Operations and Maintenance Agreement (including all exhibits), as amended from time to time in accordance with the terms hereof.

“Business Day” means any calendar day, other than a Saturday or Sunday, on which commercial banks in New Orleans, Louisiana are open for business.

“Calendar Year” means the time period from January 1 through December 31 of the same calendar year.

1

“Capital Project” means any capital expenditure to repair, maintain, construct, expand, or modify the Rail Facility.

“Capital Project Proposal” shall have the meaning set forth in Section 4.1.11.

“Claim” means any lawsuit, claim, proceeding, investigation, review, audit or other cause of action of any kind.

“Constituent of Concern” means any substance defined as a hazardous substance, hazardous waste, hazardous material, toxic substance, solid waste, pollutant or contaminant by an Environmental Law.

“Effective Date” shall have the meaning set forth in the preamble to this Agreement.

“Emergency” means a sudden or unexpected event that causes, or risks causing, imminent material damage to the Rail Facility, death or injury to any Person, or material damage to property or the environment.

“Emergency Work” shall have the meaning set forth in Section 4.1.12.

“Environmental Law” means all applicable Laws and Environmental Permits of any Governmental Authority relating to the environment, natural resources, or the protection thereof, including, without limitation: (a) all requirements pertaining to liability for reporting, management, licensing, permitting, investigation, and remediation of emissions, discharges, releases, or threatened releases of a Constituent of Concern; and (b) CERCLA, the Hazardous Materials Transportation Act, 49 U.S.C. § 5101 et seq. the Federal Clean Water Act, the Federal Clean Air Act, the Federal Solid Waste Disposal Act (which includes the Resource Conservation and Recovery Act), the Federal Toxic Substances Control Act, and the Federal Insecticide, Fungicide and Rodenticide Act, the Oil Pollution Act of 1990, 33 U.S.C. § 2701 et seq., and the Safe Drinking Water Act, 42 U.S.C. § 300f et seq. and any applicable Law relating to health, safety, the environment, natural resources or the protection thereof, each as amended from time to time, including any regulations promulgated pursuant thereto, and any state or local counterparts.

“Environmental Permits” all permits, licenses, registrations, authorizations, certificates and approvals, and any other similar items, of Governmental Authorities required by Environmental Laws and necessary for or held in connection with the ownership and/or operation of the Rail Facility or any of the transactions contemplated hereby.

“Force Majeure” means any cause or causes not reasonably within the control of the Party claiming suspension and which, by the exercise of reasonable diligence, such Party is unable to prevent or overcome, including, without limitation, acts of God, acts, omissions to act, and/or delays in action of federal, state, or local government or any agency thereof, strikes, lockouts, work stoppages, or other industrial disturbances, acts of a public enemy, sabotage, wars, blockades, insurrections, riots, acts of terror, epidemics, landslides, lightning, earthquakes, fires, storms, storm warnings, floods, washouts, extreme cold or freezing weather, arrests and restraints of governments

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and people, civil or criminal disturbances, interruptions by governmental or court orders, present and future valid orders of any regulatory body having jurisdiction, explosions, mechanical failures, breakage, or accident to equipment installations, machinery, compressors, or lines of pipe, and associated repairs, freezing of wells or lines of pipe, partial or entire failure of wells, pipes, facilities, or equipment, electric power unavailability or shortages, failure of pipelines or carriers to transport, partial or entire failure or refusal of operators of upstream or downstream pipelines or facilities to receive used motor oil, governmental regulations, and inability to obtain or timely obtain, or obtain at a reasonable cost, after exercise of reasonable diligence, pipe, materials, equipment, rights-of-way, servitudes, governmental approvals, or labor, including those necessary for the facilities provided for in this Agreement.

“GAAP” means generally accepted accounting principles, consistently applied.

“Governmental Authority” means any federal, state, municipal, local or similar governmental authority, regulatory or administrative agency, court or arbitral body with jurisdiction over the Parties, this Agreement, any of the transactions contemplated hereby or the Rail Facility.

“Hazardous Materials” means any materials, including without limitation chemicals and wastes that are regulated under Environmental Law.

“Law” means any statute, writ, law, common law, rule, regulation, ordinance, order, judgment, injunction, award, determination or decree of a Governmental Authority, or any requirement under the common law.

“Lease” shall mean that certain Land Lease dated as of April 30, 2008, pursuant to which Operator leased certain property from Owner’s predecessor in interest, as described therein, as amended by that certain First Amendment to Land Lease dated as of October 29, 2009.

“Liability Claim” means a Claim arising out of the administration, operation, or maintenance of the Rail Facility, or arising out of or incidental to the activities carried on or work performed or required by this Agreement.

“Loss” means any loss, cost, expense, liability, damage, sanction, judgment, lien, fine, or penalty, including reasonable attorney’s and consultant’s fees and expenses, incurred, suffered or paid by, or resulting to, the applicable indemnified Persons on account of (i) injuries (including death) to any Person or damage to or destruction of any property, sustained or alleged to have been sustained in connection with or arising out of the matters for which the indemnifying Party has indemnified the applicable indemnified Persons, (ii) any failure of any representation or warranty made by Operator in this Agreement to be true and correct when made, or (iii) the breach of any covenant or agreement made or to be performed by the indemnifying Party pursuant to this Agreement.

“Operating and Capital Expenditure Budget” means, with respect to each period, the Operating and Capital Expenditure Budget for such period approved by Owner.

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“Operator” shall have the meaning set forth in the preamble to this Agreement.

“Operator Indemnified Parties” means, collectively, Operator, its successors and permitted assigns, and their respective Affiliates, shareholders, members, partners, officers, directors, employees, and agents.

“Operator Parties” means, collectively, Operator, Operator’s Affiliates, and their respective successors and assigns; “Operator Party” means any such Person individually.

“Owner” shall have the meaning set forth in the preamble to this Agreement.

“Owner Indemnified Parties” means, collectively, Owner, its successors and permitted assigns, and their respective Affiliates, shareholders, members, partners, officers, directors, employees, and agents.

“Party” means either Owner or Operator, as applicable, and “Parties” means both Owner and Operator.

“Person” means an individual, a corporation, a partnership, a limited partnership, a limited liability company, an association, a joint venture, a trust, an unincorporated organization, or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.    

“Rail Facility” shall have the meaning ascribed to such term m the recital of this

Agreement.

"“Tax” or “Taxes” means any (i) federal, state, provincial, county, local or foreign taxes, charges, fees, levies or other assessments, including all sales and use, goods and services, ad valorem, transfer, gains, profits, excise, franchise, real and personal property, gross receipt, value added, capital stock, production, business and occupation, disability, employment, payroll, license, estimated, stamp, custom duties, severance, unemployment, social security, Medicare, alternative minimum or withholding taxes or charges imposed by any Governmental Authority, and including any interest and penalties (civil or criminal) on or additions to any such taxes, but expressly excluding any income tax or tax based on income, such as, without limitation, the franchise tax set forth in Delaware Tax Code: 8 Del. Laws, c. 5 §501 et. seq., as the same may be amended or recodified from time to time, and (ii) liability for items in (i) of any other Person by contract, operation of Law (including Treasury Regulation 1.1502-6) or otherwise.

“Tax Returns” means any return, report, election, declaration, statement, notice, information return, schedule, or other document (including any related or supporting information) filed or required to be filed with any Governmental Authority in connection with the determination, assessment, collection or administration of any Taxes or any income tax or tax based on income, such as, without limitation, the franchise tax set forth in Delaware Tax Code 8 Del. Laws, c. 5 §501

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et. seq., as the same may be amended or recodified from time to time, or the administration of any laws, regulations or administrative requirements relating to any Taxes or any amendment thereof.

“Voting Securities” means, as it relates to a Person, securities of any class of such Person entitling the holders thereof to vote in the election of, or to appoint, members of the board of directors or other similar governing body of the Person; provided that if such Person is a limited partnership, Voting Securities of such Person shall be the general partner interest in such Person.

ARTICLE II: ENGAGEMENT OF OPERATOR

2.1Engagement. Owner hereby appoints and retains Operator to manage, operate, and maintain the Rail Facility and to administer the business and regulatory affairs of Owner relating to the Rail Facility in accordance with the terms and conditions set forth herein, and Operator hereby accepts such appointment.

2.2Independent Contractor. The Parties expressly understand and agree that Operator is acting and shall perform and execute the provisions of this Agreement as an independent contractor unrelated to Owner or any Owner Affiliate, and the work performed by Operator hereunder shall be subject to Owner’s general right of inspection and approval. Nothing in this Agreement is intended to create a relationship, expressed or implied, of employer-employee or principal-agent between Owner and Operator or between Owner and any individual employed or provided to work hereunder by Operator.

2.3Owner Cooperation. Owner shall cooperate with Operator and provide Operator with such information as Operator may reasonably request from time to time in connection with the performance of Operator’s duties hereunder.

ARTICLE III: TERM, RESIGNATION OR REMOVAL OF OPERATOR

3.1Term. This Agreement shall commence on the Effective Date and, shall continue for the duration of the Lease, unless terminated earlier pursuant to Section 3.2 or 3.3.

3.2Owner Default. Operator may terminate this Agreement at any time upon the occurrence of any of the following:

(a)the dissolution or bankruptcy of Owner;

(b)Owner fails to pay when due any amount due and payable hereunder, including, without limitation, any interest, fees, reimbursements or indemnifications, and such failure shall continue for a period of 15 days after the due date thereof; or

(c) other than as set forth in clause (b) above, Owner breaches or fails to observe or perform any material term, condition, or obligation contained in this Agreement and fails to correct, or fails to diligently pursue correction of, such breach within 60 days after receipt of written notice from Operator of any such breach.

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If any of the above occurs and Operator elects to terminate this Agreement, then Operator may give a written notice of termination to Owner, which termination shall be effective on the date specified by Operator in such notice, provided that such termination date shall be within 60 days of the date such notice is delivered to Owner. Operator’s notice of breach to Owner under Section 3.2(b) or (c) shall state with particularity the breach alleged by Operator. To the extent Owner disputes the basis for Operator’s notice of breach, the matter shall be addressed under Section 8.6. Nothing in this Section 3.2 shall be construed to limit or preclude any remedy Operator may have at law or in equity with respect to any material breach by Owner.

3.3 Operator Default. Owner may terminate this Agreement at any time upon the occurrence of any of the following:

(a) the dissolution or bankruptcy of Operator;

(b) Operator fails to pay when due any amount due and payable hereunder, including, without limitation, any interest, fees, reimbursements or indemnifications, and such failure shall continue for a period of 15 days after the due date thereof;

(c) other than as set forth in clause (b) above, Operator breaches or fails to observe or perform any material term, condition, or obligation contained in this Agreement and fails to correct, or fails to diligently pursue correction of, such breach within 60 days after receipt of written notice from Owner of any such breach;

(d) Termination by Owner pursuant to Section 4.1.1; or

(e) Without cause on no less than seven (7) days prior written notice.

In the event Owner terminates this Agreement pursuant to subparagraph (e) above, Owner may reimburse Operator for any unamortized capital expenditure (determined in accordance with GAAP) to the extent such capital expenditure was included in the Operating and Capital Expenditure Budget. If any of the above occurs, other than an event described in subparagraph (d), and Owner elects to terminate this Agreement (a termination for “cause”), then Owner may give a written notice of termination to Operator, which termination shall be effective on the date specified by Owner in the notice, provided that such termination date shall be within 60 days of the date the notice is delivered to Operator. Owner’s notice of breach to Operator under Section 3.3(b) or (c) shall state with particularity the breach alleged by Owner. To the extent Operator disputes the basis for Owner’s notice of breach, the matter shall be addressed under Section 8.6. Nothing in this Section 3.3 shall be construed to limit or preclude any remedy Owner may have at law or in equity with respect to any material breach by Operator.

3.4Cooperation with Owner or Successor Operator. Upon the termination of this Agreement, Operator shall cooperate in the transition of operations to Owner or a successor operator

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and upon Owner’s request, will promptly deliver all books and records and other property (including, without limitation, intellectual property) of Owner to Owner or the successor operator, as applicable.

3.5Effect of Termination. Any termination of this Agreement pursuant to this Article III will release Operator from, and Owner agrees to indemnify Operator against, any liability accruing or accrued hereunder after the effective date of termination, except with respect to the obligations and liabilities of Operator that survive termination including any and all liabilities arising out of or resulting from Operator’s operation and maintenance of the Rail Facility. Termination of this Agreement shall not relieve the Parties from any liability or obligation accruing or accrued prior to the date of such termination or deprive a Party not in breach (other than a breach which occurs because such Party is rightfully withholding performance in response to a breach by the other Party) of its right to any remedy otherwise available to such Party.

ARTICLE IV: DUTIES AS OPERATOR

4.1Duties as Operator. Operator shall be responsible for (1) construction of the improvements to the Rail Facility in accordance with those plans and specifications approved by Owner in writing, (2) administering the regulatory, business, and financial affairs of the Rail Facility; (3) maintaining the financial and product accounting records of the Rail Facility; 4) preparing and distributing financial statements; (5) complying with any and all instructions it receives from Owner with respect to the operation and maintenance of the Rail Facility, provided that such instructions are consistent with applicable Laws and (6) complying with any and all Law and Environmental Law including any other permits or licenses.

4.1.2Improvements/Alterations to the Rail Facility. Operator shall evaluate and modify, at its sole cost and expense, the rail car containment pan system (the “Containment Pan System”) so that such system is in compliance with the Spill Prevention, Control, and Countermeasure Regulations promulgated by the Environmental Protection Agency (the “SPCC Regulations”) and any other applicable regulations, rules or similar administrative publications promulgated by any other federal, state, or local regulatory agency. Such evaluation and modification, if necessary, of the Containment Pan System shall occur within ninety (90) days of the Effective Date. Owner specifically reserves the right to review, evaluate and approve the plans and specifications developed by Operator for any modifications to be made to the Containment Pan System for such compliance. Owner will provide written notice to Operator, within fifteen (15) days of Operator’s submission of the plans and specifications for the Containment Pan System, confirming or denying its approval of Operator’s plans and specifications for modification to the Containment Pan System, and in the event Owner does not approve such plans and specifications, Owner will provide Operator with written detail describing why such approval was withheld. Operator will have ten (10) days from the date it receives such written notice from Owner denying approval of its Containment Pan System plans and specifications to remediate such plans and specifications so that the modifications will comply with the SPCC Regulations. If Operator fails to remediate the Containment Pan System plans and specifications in a manner that will result in the modifications to the Containment Pan System complying with the SPCC Regulations within such ten (10) day period in a manner satisfactory to Owner, Owner, in its sole discretion, may unilaterally terminate this Agreement. Additionally, Owner reserves the right to inspect the

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Containment Pan System after Operator has modified such equipment, and if such modifications made by Operator to the Containment Pay System do not comply with SPCC Regulations, then Owner, in its sole discretion, may unilaterally terminate this Agreement. Any other alterations or improvements to the Rail Facility may not be made by Operator without the written consent of Owner.

4.1.3Operation of the Rail Facility. Operator shall manage and operate the Rail Facility, the construction and future modifications to the Rail Facility, and negotiate agreements in Owner's name with third parties related to the operation of the Rail Facility (provided that (i) Owner shall have the right to approve or disapprove any such agreements, and (ii) if approved, except as provided in Section 4.1.1, Owner, and not Operator, shall execute all such agreements), comply with any instructions it receives from Owner with respect to the operation and maintenance of the Rail Facility, provided that such instructions are consistent with applicable Laws, and perform all other services and functions related thereto subject to the limits, requirements, and restrictions otherwise set forth in this Agreement.

4.1.4Maintenance of the Rail Facility. Subject to the terms, conditions and limitations set forth in this Agreement, Owner hereby authorizes and empowers Operator, and Operator agrees, in the name of and on behalf of Owner, to, at its sole cost and expense, keep and maintain the Rail Facility in a condition and repair similar to, but not less than, its condition and repair on the Effective Date hereof.

4.1.5Operator Recommendations. In the event that Operator makes a good-faith recommendation in writing regarding an operational issue to Owner, and Owner does not, for any reason whatsoever, approve such recommendation, then Operator shall not be liable and Owner hereby releases and shall indemnify, defend and hold Operator harmless from and against any Claim or Loss that arises from, or is attributable to, the failure to implement such recommendation.

4.1.6Compliance with Owner Instructions. Notwithstanding anything to the contrary in this Agreement, in the event that Owner instructs Operator to take any action or refrain from taking any action in connection with the operation or maintenance of the Rail Facility and Operator in good faith disagrees with Owner because, among other reasons, it is not consistent with prudent operating standards, then Operator shall notify Owner of such disagreement in writing, and Owner hereby releases and shall indemnify, defend and hold Operator harmless from and against any Claim or Loss that arises from, or is attributable to, Operator’s compliance with Owner’s instructions.

4.1.7Environmental Laws. Operator shall comply, in the performance of its duties and responsibilities hereunder, in all respects with all Environmental Laws and all Environmental Permits.

4.1.8Purchase of Services, Materials and Supplies. Except as otherwise provided below and subject to the limitations herein, Operator shall, on Owner’s behalf and as its agent, purchase or cause to be purchased necessary services, materials and supplies and incur such expenses and enter into such commitments as may be necessary to operate and maintain the Rail Facility, including, but not limited to, (i) contracts for the maintenance, repair and replacement of the Rail

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Facility and, if requested by Owner, construction of additions to the Rail Facility; and (ii) contracts for power, fuel, other utilities, and communication facilities as may be necessary in connection with proper operation and maintenance of the Rail Facility and for providing adjustments and replacements thereto.

4.1.9Personnel. Except as otherwise provided below and subject to the limitations herein, Operator, in its reasonable judgment, shall employ such personnel, with Operator or an Affiliate as their employer, as it may deem necessary to operate and maintain the Rail Facility and to provide adjustments and replacements thereto and to perform its other obligations hereunder. In addition to Operator's or Operator's Affiliates' employees who are either full-time or part-time dedicated to operating and maintaining the Rail Facility, Operator may: (i) utilize from time to time its other employees or the employees of Operator's Affiliates in services in connection therewith at a usual and customary rate of compensation; and/or (ii) engage the services of third-party contractors in the performance of such functions. Notwithstanding the foregoing, all personnel provided by Operator to operate and maintain the Rail Facility shall have the requisite background, training and skill necessary to operate such a facility in accordance with all current industry standards and any and all applicable state and federal Laws, Environmental Laws, and Environmental Permits.

4.1.10Payment of Operating Expenses. Operator shall promptly pay all direct costs and expenses incurred in operating and maintaining the Rail Facility as they become due, without reimbursement by Owner save and except to the extent specifically provided otherwise herein.

4.1.11Operating Expense Budget. Operator shall (i) administer and otherwise comply with the budget proposed by Operator and approved by Owner (ii) operate and maintain the Rail Facility in compliance with the Operating and Capital Expenditure Budget established for the Rail Facility; provided, however, if Owner instructs Operator to perform any services outside of the scope of the services contemplated in the Operating and Capital Expenditure Budget (exclusive of those services to be performed by Operator in connection with any necessary alterations or modifications to the Containment Pan System pursuant to Section 4.1.1), then Owner shall reimburse Operator for the costs and expenses associated therewith.

4.1.12Capital Projects. Operator may propose an unbudgeted Capital Project at any time by giving written notice of such to Owner. The notice (the “Capital Project Proposal”) must specifically describe the proposed Capital Project and shall include the following:

(i) a good-faith estimate of the costs associated with the operation and maintenance of the proposed Capital Project;

(ii) preliminary engineering designs and plans; and

(iii) general requirements or provisions for the Capital Project, including construction of the Capital Project and insurance coverage.

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Owner shall approve or reject the proposed Capital Project set forth in the applicable Capital Project Proposal within fifteen (15) days from the date of receipt of the same, such approval not to be unreasonably withheld, conditioned or delayed. If Owner approves the applicable Capital Project, then Operator shall have the right and authority with respect to the approved Capital Project to make expenditures, or enter into contracts to incur expenditures, without further authorization by Owner; provided, however, Owner will not be responsible for reimbursing Operator for any expenditures incurred by Operator related to the construction, operation, and maintenance of the Capital Project.

4.1.13Emergencies. Notwithstanding any provision of this Agreement, in the event of an Emergency, Operator shall proceed with maintenance or repair work or with any other action when necessary to minimize damage and to end the Emergency (“Emergency Work”), without regard to the limits set forth in this Article IV. Operator shall, as soon as reasonably practicable, notify Owner of the existence or occurrence of the Emergency, setting forth the nature of the emergency, the corrective action taken or proposed to be taken, and the actual or estimated cost of such corrective action. Emergency Work shall include only such work as is necessary to immediately address the Emergency and does not include any work necessary to restore the Rail Facility or improve the Rail Facility in order to permit continued operations.

4.1.14Reporting By Operator. Operator shall (by either (i) submitting written reports or records or (ii) providing Owner with access to Operator’s internet website containing the relevant information, at Operator’s discretion) provide to Owner the following reports or records, based on the best data available at the time of preparation and subject to revision based on acquisition of more accurate data:

(i) as soon as available, and in any event within 30 days after the end of each calendar month, an operational report on major repairs and other operational details materially affecting the operations of the Rail Facility during such month;

(ii) as soon as available, and in any event within 30 days after the end of each Calendar Year, a certificate from the president or chief executive officer of Operator stating that no event or condition exists or has occurred that violates, results in a breach of, or constitutes a default on the part of any Operator Party under, any of the terms, conditions or provisions of this Agreement;

(iii) within 5 days of Owner’s request, environmental information or records pertaining to the Rail Facility (as specified by Owner) necessary for Owner to comply with any reporting obligations of Owner related to all applicable Environmental Law and Environmental Permits; and

(iv) such other information regarding the Rail Facility or the operation and maintenance of the Rail Facility as Owner may from time to time reasonably request.

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4.1.15Notices to Owner. Operator shall immediately notify Owner in writing of (i) any enforcement, clean-up, removal or other governmental or regulatory action instituted, completed or threatened against Operator Parties or Owner pursuant to any Law or Environmental Law as a result of the operation of the Rail Facility; (ii) any claim made or threatened by any person arising out of or in connection with the operation of the Rail Facility against Operator Parties or Owner relating to damage, contribution, cost recovery, compensation loss or injury resulting from or claimed to result from any Hazardous Materials; (iii) any reports made to any environmental agency arising out of or in connection with any Hazardous Materials removed from the Rail Facility or the property on which the Rail Facility is situated including any complaints, notices, warnings, reports or asserted violations in connection therewith; and (d) the discovery of any Hazardous Materials at the Rail Facility or the property on which the Rail Facility is situated that are or may be in violation of Environmental Law. Operator shall also provide to Owner, as promptly as possible, and in any event within five (5) business days after the Operator Parties first received or sent the same, copies of all claims, reports, complaints, notices, warnings or asserted violations relating in any way to the Rail Facility or the Operator Parties’ operation thereof. Upon written request of Owner (to enable Owner to defend itself from any claim or charge related to any Law or Environmental Law), Operator shall promptly deliver to Owner notices of hazardous waste manifests reflecting the legal and proper disposal of all such Hazardous Materials removed from the Rail Facility or the property on which the Rail Facility is situated.

4.1.16Chevron Terminaling Agreement. Each of the parties hereto acknowledges that rail car utilization is a service to which Chevron Marine Products LLC (“Chevron”) is entitled under that certain Terminaling Agreement between Chevron and Owner, dated as of May 1, 2008 (the “Chevron Terminaling Agreement”). As such, Operator agrees to provide such service to Chevron in the event such service is warranted until the earlier to occur of (i) the termination of the provisions of this Agreement, or (ii) the termination of the Chevron Terminaling Agreement.

4.1.17Regulatory Affairs. Operator shall be responsible for preparing and submitting all regulatory filings pertaining to the Rail Facility required by any Governmental Authority.

4.1.18Devotion of Time. The employees of Operator, or the Operator Parties, as applicable, designated to perform the functions under this Agreement shall devote such time to the operation and maintenance of the Rail Facility as necessary to accomplish the responsibilities of Operator as set forth in this Article IV. Owner recognizes that the employees of Operator, or the Operator Parties, as applicable, shall not be obligated to devote full time to the operation and maintenance of the Rail Facility and that such employees of Operator may act on behalf of Operator or the Operator Parties, as applicable, in activities not associated with this Agreement.

4.2Standard of Care. Operator shall perform its duties and obligations hereunder and its responsibilities as Operator of the Rail Facility, (i) in a good and workmanlike manner, (ii) in conformity with the good practices in the rail car loading and unloading industry, (iii) in accordance with all valid and applicable Laws, including, without limitation, all Environmental Laws and Environmental Permits, and (iv) in accordance with the Operating and Capital Expenditure Budget.

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4.3Limitation of Authority. Notwithstanding anything in this Agreement, Operator shall seek prior approval of Owner prior to taking the following actions:

4.3.1Binding Owner. Endorsing the name of Owner on any contract, commercial paper, or instruments of any nature or otherwise creating any obligation binding upon Owner except as expressly permitted under this Agreement.

4.3.2Asset Sales. Acquiring or disposing of any assets of Owner in a single transaction or in a series of related transactions, with a fair market value exceeding $10,000 in the aggregate, provided, however that Operator is expressly permitted to terminate leases or other contracts in respect of rental equipment regardless of value.

4.3.3Incurring any indebtedness on behalf of Owner, except for trade credit incurred by Operator in the ordinary course of business or within its expenditure authority set forth in this Agreement.

ARTICLE V: ACCOUNTING, REPORTS, RECORDS

5.1Accounting Methods. Operator shall keep proper and complete records and books of account, which shall fully and accurately reflect all transactions and other matters relative to its operation and maintenance of the Rail Facility as are entered into records and books of account in accordance with generally accepted industry practices, and the same shall be supported by purchase orders, invoices, payrolls or other customary or necessary records pertaining thereto. Operator’s financial books and records shall be kept in accordance with GAAP and shall be maintained on an accrual basis. The costs of any audit of Operator’s books or records shall be borne by Owner absent manifest error.

5.2Independent Audits. Upon reasonable prior written notice to Operator, Owner shall have the right during normal business hours to audit or examine all books and records of Operator to the extent they relate to Operator’s performance hereunder as well as the relevant books of account of Operator’s contractors, relating to the performance of Operator’s obligations under this Agreement. Operator shall cooperate with Owner’s auditors by (i) making the applicable books and records available for inspection by Owner’s auditors, and (ii) making such copies of books and records as may be reasonably requested by such auditors. In no event shall Owner’s audits unreasonably interfere with Operator’s operations.

ARTICLE VI: FORCE MAJEURE

6.1Procedure. If either Party is rendered unable, wholly or in part, by Force Majeure to carry out its obligations under this Agreement, other than the obligation to indemnify and to make payments then or thereafter due hereunder, upon such Party giving notice and full particulars of such Force Majeure in writing to the other Party as soon as reasonably possible after the occurrence of the cause relied on, then the obligations of the Party giving such notice, so far as they are affected by such Force Majeure, will be suspended during the continuance of any inability so caused but for no longer period, and such cause must as far as possible be remedied with all reasonable and diligent dispatch by the Party claiming such in order to put itself in a position to carry out its obligations

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under this Agreement. Such notifying Party must also provide notice of the date of termination of such Force Majeure event. A Force Majeure event affecting the performance by either Party shall not relieve it of liability in the event of its negligence, where such negligence was a cause of the Force Majeure event, or in the event of its failure to use commercially reasonable efforts to remedy the situation and remove the cause with all reasonable dispatch.

6.2Strikes. It is understood and agreed that the settlement of strikes or lockouts is entirely within the discretion of the Party directly involved in the strike or lockout, and that the above requirement that any Force Majeure must be remedied with all reasonable dispatch will not require the settlement of strikes or lockouts by acceding to the demands of the opposing party when such course is inadvisable in the discretion of the Party having the difficulty.

ARTICLE VII: INSURANCE AND INDEMNIFICATION

7.1Operator Insurance.

7.1.1Operator, with respect to Operator’s activities provided for under this Agreement, shall maintain the following insurance coverage with responsible insurance carriers:

(a)Workers’ Compensation. Operator shall maintain statutory worker’s compensation insurance, covering all of its and its Affiliates’ employees and statutory employees, in accordance with the benefits afforded by the statutory Worker’s Compensation Acts applicable to the state, territory, or district of hire, supervision, or place of accident. In addition, Operator shall maintain employer’s liability insurance with a limit of not less than one million dollars ($1,000,000) each accident, one million dollars ($1,000,000) disease each employee, and one million dollars ($1,000,000) disease policy limit. Where not prohibited by law, Operator shall waive its right of subrogation against Owner.

(b)Commercial General Liability Insurance. Operator shall maintain Commercial General Liability Insurance covering its operations under this Agreement including, without limitation, bodily injury, death, property damage, premises/operations, sudden and accidental pollution, independent contractors, products/completed operations, contractual, and personal injury liability, with a limit of not less than one million dollars ($1,000,000) per occurrence and two million dollars ($2,000,000) in the annual aggregate.

(c)Commercial Automobile Insurance. Operator shall maintain Commercial Automobile Insurance coverage, including, without limitation, bodily injury and property damage for owned, hired, rented, and non-owned automotive equipment with a limit of not less than one million dollars ($1,000,000) per accident.

(d)Umbrella Liability Insurance. Operator shall maintain Umbrella Liability Insurance coverage covering in excess of (a), (b), and (c) above, excluding Worker’s Compensation, in the amount of ten million dollars ($10,000,000).

7.1.2To the extent of the liabilities assumed by Operator in this Agreement, Operator shall name Owner Indemnified Parties as additional insured on all insurance policies,

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except Workers’ Compensation. The Owner Indemnified Parties’ additional insured status will not limit the application of insurance protection as required by this Agreement which arises out of the Operator’s indemnity obligations. These policies shall provide primary coverage for claims in which Operator has agreed to hold harmless and/or to indemnify the Owner Indemnified Parties. No “other insurance” clause may be invoked by any insurer. This coverage shall apply whether or not the indemnification is valid. Operator shall have its insurer(s) waive its right of subrogation against Owner Indemnified Parties on all insurance carried. Unless expressly stated to the contrary elsewhere in this Agreement or prohibited by applicable law or legal statute, Operator’s indemnification obligations under this Agreement shall not be limited by amount or in scope to coverage provided by insurance which is required under this Agreement.

7.1.3Upon request, Operator agrees to furnish to Owner certificates of insurance or other evidence satisfactory to Owner to demonstrate that the required insurance has been procured and is in force. The certificate shall accurately reflect the required insurance coverages and shall provide that in the event of modification, expiration, cancellation or material change in a policy affecting the certificate holder, thirty days prior written notice shall be given to the certificate holder. Operator waives all rights against Owner for recovery of damages to the extent such damages are covered by the insurance maintained in accordance with this Section 7.1.

7.2Contractors. Operator acknowledges and agrees that any contractor engaged by Operator to perform services at the Rail Facility will be required to execute an access agreement, in a form acceptable to Owner, prior to such contractor accessing the Rail Facility and performing any services. Further, Operator shall attempt to obtain reasonable indemnification and insurance protection from contractors performing services for Owner to protect Owner and Operator. Operator shall require each of its contractors to carry insurance coverage substantially equivalent to the insurance required of Operator above, and to include provisions for its contractors to name Owner and Operator as additional insureds, with the exception of Workers’ Compensation Insurance, and state that such policies will be primary to and non-contributory with any other insurance maintained by Operator and Owner. With respect to Workers’ Compensation Insurance, the applicable contractor shall be required to cause its insurers to wave all rights of recovery or subrogation against Owner and Operator, where not prohibited by law.

7.3Notice of Claims. In the event that Operator receives notice, either in writing or orally, of an asserted or threatened Liability Claim against Operator or Owner, Operator shall provide Owner within 10 days of receipt of such Liability Claim a copy of any demand letter, petition, or similar documentation of the Liability Claim.

7.4Mutual Release and Indemnification.

7.4.1Owner’s Indemnification. Subject to the terms of this Agreement, including, without limitation, Section 8.8 of this Agreement, Owner shall indemnify, defend, and hold harmless the Operator Indemnified Parties from and against all Claims and Losses arising out of or relating to (i) allegations of death or bodily injury or damage to property, to the extent arising out of or resulting from the negligence, gross negligence or willful misconduct of Owner, its Affiliates or its or their respective officers, directors, employees, or contractors in connection with this Agreement or the performance hereof; provided that Owner shall not be required to indemnify the Operator

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Indemnified Parties against such Claims and Losses to the extent such Claims and Losses are attributable to the acts or omissions of any Operator Indemnified Parties, (ii) any breach of this Agreement by Owner, and (iii) any agreements relating to the Rail Facility between Owner and third parties not affiliated with the Operator Parties (except to the extent expressly assumed by Operator hereunder). The duty to indemnify, defend and hold harmless under this Section 7.4.1 shall continue in full force and effect, notwithstanding the expiration or early termination of this Agreement, with respect to any Claims or Losses based on facts or conditions that occurred prior to such expiration or termination.

7.4.2Operator’s Indemnification. Subject to the terms of this Agreement, including, without limitation, Section 8.8 of this Agreement, Operator shall indemnify, defend, and hold harmless the Owner Indemnified Parties from and against all Claims and Losses arising out of or relating to (i) allegations of death or bodily injury or damage to property, to the extent arising out of or resulting from the negligence, gross negligence or willful misconduct of Operator, its Affiliates or its or their respective officers, directors, employees, or contractors in connection with this Agreement or the performance hereof; provided that Operator shall not be required to indemnify the Owner Indemnified Parties against such Claims or Losses to the extent such Claims or Losses are attributable to the acts or omissions of any Owner Indemnified Party, (ii) any breach of this Agreement by Operator, and (iii) any agreements relating to the Rail Facility between Operator and third parties not affiliated with Owner (except to the extent expressly assumed by Owner hereunder). The duty to indemnify, defend and hold harmless under this Section 7.4.2 shall continue in full force and effect, notwithstanding the expiration or early termination of this Agreement, with respect to any Claims or Losses based on facts or conditions that occurred prior to such expiration or termination.

ARTICLE VIII: GENERAL PROVISIONS

8.1Additional Rail Facilities. Nothing in this Agreement shall limit Owner’s right to construct, expand or modify, and operate other rail car loading/off loading facilities (i) at Owner’s terminal and storage facility located on the property on which the Rail Facility is located, or (ii) at any other location in Owner deems necessary and beneficial.

8.2Notices. Except as specifically provided otherwise herein, any notice, claim, or other communication provided for in this Agreement or any notice that either Party may desire to give to the other shall be in writing and shall be: (i) sent by facsimile transmission; (ii) delivered by hand; (iii) sent by United States mail with all postage fully prepaid; or (iv) delivered by courier with charges paid in accordance with the customary arrangements established by such courier, in each of the foregoing cases addressed to the Party at the following addresses:

To Owner:

Magellan Terminals Holdings, L.P.

Attn: Mark Roles

Manager, Commercial Development

P.O. Box 22186 MD 31st Floor

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Tulsa, Oklahoma 74121-2186

To Operator:

Omega Refining, LLC

Attn: Robert Winland

5000 River Road

Marrero, Louisiana 70072

with a copy to:

Gregory & Plotkin, LLC

Attn: James P. Gregory, Esq.

1331 17^th Street, Suite 1060

Denver, Colorado 80202

or at such other address as either Party may at any time designate by giving written notice to the other Party. Such notices, claims, or other communications shall be deemed received as follows:

(i) if delivered personally, upon delivery;

(ii) if sent by United States mail, whether by express mail, registered mail, certified mail or regular mail, the notice shall be deemed to have been received on the day receipt is refused or is confirmed orally or in writing by the receiving Party;

(iii) if sent by a courier service, upon delivery; or

(iv) if sent by facsimile, the Business Day following the day on which it was transmitted and confirmed by transmission report or such earlier time as confirmed orally or in writing by the receiving Party.

8.3Rights. The failure of either Party to exercise any right granted hereunder shall not impair nor be deemed a waiver of that Party’s privilege of exercising that right at any subsequent time or times.

8.4Applicable Laws. This Agreement is subject to all valid present and future laws, regulations, rules, and orders of governmental authorities now or hereafter having jurisdiction over the Parties, this Agreement, any of the transactions contemplated hereby or the Rail Facility.

8.5Rules of Construction. In construing this Agreement, the following principles shall be followed:

8.5.1no consideration shall be given to the fact or presumption that one Party had a greater or lesser hand in drafting this Agreement;

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8.5.2examples shall not be construed to limit, expressly or by implication, the matter they illustrate;

8.5.3the word “includes” and its syntactical variants mean “includes, but is not limited to” and corresponding syntactical variant expressions; and

8.5.4     the plural shall be deemed to include the singular and vice versa, as applicable.

8.6Governing Law. This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of Delaware, without regard to choice of law principles that would require the application of the laws of any other jurisdiction.

8.7Dispute Resolution.

8.7.1Negotiation. Prior to submitting any dispute for resolution by a court, a Party shall provide written notice to the other of the occurrence of such dispute. If the Parties have failed to resolve the dispute within 15 Business Days after such notice was given, the Parties shall seek to resolve the dispute by negotiation between senior management personnel of each Party. Such personnel shall endeavor to meet and attempt to amicably resolve the dispute. If the Parties are unable to resolve the dispute for any reason within 30 Business Days after the original notice of dispute was given, then either Party shall be entitled to pursue any remedies available at law or in equity; provided, however, this Section 8.6.1 shall not limit a Party’s right to initiate litigation prior to the expiration of the time periods set forth herein of such limitations would prevent a Party from filing a lawsuit or claim within the applicable period for filing lawsuits (e.g. statutes of limitation, prescription, etc.).

8.7.2Costs and Expenses. The prevailing Party in any litigation pertaining to any dispute hereunder shall be entitled to recover its reasonable costs, expenses, and attorney’s fees in connection with such litigation.

8.8Limitation of Liability. Notwithstanding anything in this agreement to the contrary, neither Party shall be liable to the other Party for special, indirect, consequential, punitive, or exemplary damages suffered by such Party resulting from or arising out of this Agreement or the breach thereof or under any other theory of liability, whether tort, negligence, strict liability, breach of contract, warranty, indemnity, or otherwise, including, without limitation, loss of use, increased cost of operations, loss of profit or revenue, or business interruptions. In furtherance of the foregoing, each Party releases the other Party and waives any right of recovery for special, indirect, consequential, punitive, or exemplary damages suffered by such Party regardless of whether any such damages are caused by the other Party’s negligence (and regardless of whether such negligence is sole, joint, concurrent, active, passive, or gross negligence), fault, or liability without fault.

8.9Entirety of Agreement, Amendments. This Agreement, including, without limitation, all exhibits hereto, integrate the entire understanding between the Parties with respect to the operation and maintenance by Operator of Owner’s Rail Facility and supersede all prior understandings, drafts, discussions, or statements, whether oral or in writing, expressed or implied,

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dealing with the same subject matter. This Agreement may not be amended or modified in any manner except by a written document signed by the Parties that expressly amends this Agreement.

8.10Waivers. No waiver by either Party of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision hereof (whether or not similar), nor shall such waiver constitute a continuing waiver unless expressly provided. No waiver shall be effective unless made in writing and signed by the Party to be charged with such waiver.

8.11Headings. The headings and captions in this Agreement have been inserted for convenience of reference only and shall not define or limit any of the terms and provisions hereof.

8.12Rights and Remedies. Except as otherwise provided in this Agreement, each Party reserves to itself all rights, counterclaims, other remedies, and defenses to which such Party is or may be entitled arising from or out of this Agreement or as otherwise provided by law.

8.13Assignment. Operator shall not make any assignment of all or any part of this Agreement or any of the rights or obligations hereunder unless there first shall have been obtained the written consent thereto of Owner, which consent shall not be unreasonably withheld, conditioned, or delayed. Owner shall not make any assignment of all or any part of this Agreement or any of the rights or obligations hereunder except in connection with the sale, financing or conveyance of all or any part of the Rail Facility. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the Parties. Any attempted assignment of this Agreement in violation of this Section 8.12 shall be null and void.

8.14Counterparts. This Agreement may be executed in one or more counterparts (including by facsimile), each of which shall be deemed an original, and all of which shall be deemed one and the same Agreement.

8.15No Third Party Beneficiary. Except for parties indemnified hereunder, this Agreement is for the sole benefit of the Parties and their respective successors and permitted assigns, and shall not inure to the benefit of any other Person whomsoever or whatsoever, it being the intention of the Parties that no third Person shall be deemed a third-party beneficiary of this Agreement.

8.16Further Assurances. Each Party shall take such acts and execute and deliver such documents as may be reasonably required to effectuate the purposes of this Agreement.

* * * * *

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IN WITNESS WHEREOF, the undersigned have executed or caused to be executed on their behalf this Agreement to be effective on the Effective Date.

Operation & Maintenance Agreement

Signature Page

K&E 10351208.3

EXHIBIT “A”

Exhibit “A”

K&E 10351208.3

EXHIBIT “C”

Owner’s Facility Security Plan

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EX-10.25

**************************************************

MATERIAL BELOW MARKED BY AN “***” HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THIS ENTIRE EXHIBIT INCLUDING THE OMITTED CONFIDENTIAL INFORMATION HAS BEEN FILED SEPARATELY WITH THE COMMISSION.

**************************************************

Exhibit 10.25

**************************************************

MATERIAL BELOW MARKED BY AN “***” HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THIS ENTIRE EXHIBIT INCLUDING THE OMITTED CONFIDENTIAL INFORMATION HAS BEEN FILED SEPARATELY WITH THE COMMISSION.

**************************************************

TERMINALING SERVICES AGREEMENT

between

MARRERO TERMINAL LLC

(Owner)

and

OMEGA REFINING, LLC

(Customer)

Dated as of May 1, 2008

10.23

TABLE OF CONTENTS

Page

Section 1.Definitions    1

Section 2.Services, Statements, Invoices, Documents and Records    4

Section 3.Fees, Charges and Taxes    6

Section 4.Operations, Receipts and Deliveries    8

Section 5.Product Quality Standards and Requirements    12

Section 6.Title, Custody and Loss of Product    13

Section 7.Limitation of Liability and Damages    13

Section 8.Product Measurement    14

Section 9.Product Loss Allowance    14

Section 10.Force Majeure    15

Section 11.Inspection of and Access to Terminal    16

Section 12.Assignment    16

Section 13.Notice    17

Section 14.Compliance with Law and Safety    17

Section 15.Default, Waiver and Remedies    18

Section 16.Insurance    19

Section 17.Indemnity    20

Section 18.Other Representations, Warranties and Covenants    22

Section 19.Construction of Agreement    22

Section 20.Law    22

Section 21.Confidentiality    23

Section 22.Reserved    24

Section 23.Arbitration    24

i

TERMINALING SERVICES AGREEMENT

This Terminaling Services Agreement (“Agreement”) is made effective as of the 1st day of May, 2008 (“Effective Date”), by and between MARRERO TERMINAL LLC,a Delaware limited liability company (“Owner”), and OMEGA REFINING, LLC, a Delaware limited liability company (“Customer”), sometimes referred to individually as a “Party” and collectively as the “Parties.” In consideration of the mutual promises contained in this Agreement, the Parties agree to the following terms and conditions relating to the provision of terminal storage and throughput services related to the Product (as hereinafter defined).

Section 1.    Definitions. In this Agreement, unless the context requires otherwise, the terms defined in the preamble have the meanings indicated and the following terms will have the meanings set forth below:

“AAA” has the meaning set forth in Section 23.1.

“Affiliate” means with respect to any person, any other person that directly or indirectly Controls, is Controlled by, or is under common Control with that first person.

“Applicable Rate” has the meaning set forth in Section 3.5(d).

“ASTM” means the American Society for Testing and Materials.

“Barrel” or “bbl” means 42 U.S. Gallons.

“Change in Law” has the meaning set forth in Section 4.10.

“Claimant” has the meaning set forth in Section 23.4.

“Commencement Date” has the meaning set forth in Item 9 of Exhibit A.

“Confidential Information” has the meaning set forth in Section 21.2.

“Contract Year” means each one year period beginning with the Commencement Date of this Agreement.

“Control” or “Controlled” means the possession, directly or indirectly, through one or more intermediaries, of either of the following:

(a)    (i) in the case of a corporation, more than fifty percent (50%) of the outstanding voting securities thereof; (ii) in the case of a limited liability company, partnership, limited partnership or venture, the right to more than fifty percent (50%) of the distributions therefrom (including liquidating distributions); (iii) in the case of a trust or estate, including a business trust, more than fifty percent (50%) of the beneficial interest therein; and (iv) in the case of

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any other entity, more than fifty percent (50%) of the economic or beneficial interest therein; or

(b)    in the case of any entity, the power or authority, through the ownership of voting securities, by contract or otherwise, to exercise a controlling influence over the management of the entity.

“Damages” means any and all liability, loss, damage, claim, suit, penalty, fine, judgment, cost or expense, including reasonable attorneys’ fees and other legal costs.

“ETA” means estimated time of arrival.

“Force Majeure” means:

(a) strikes, lockouts or other industrial labor disputes or disturbances;

(b) acts of the public enemy or of belligerents, hostilities or other disorders, wars (declared or undeclared), blockades, insurrections, riots, civil disturbances, sabotage or terrorism;

(c) acts of God or of nature, including: landslides; lightning; earthquakes; fires; tornadoes; hurricanes; storms; floods; washouts; freezing of machinery, equipment, or lines of pipe; inclement weather that necessitates extraordinary measures and expense to construct or repair facilities or maintain operations; tidal waves; perils of the sea or other body of water or other adverse weather or water conditions and unusual or abnormal conditions of the sea or other body of water; and warnings for any of the foregoing which may necessitate the precautionary shut-down of plants, pipelines, loading facilities, the Terminal or other related facilities;

(d) arrests and/or restraints or other interference or orders, statutes, restrictions imposed by a Governmental Authority (whether legal or de facto or purporting to act under some Law or otherwise), necessity for compliance with any court order, or any Law promulgated by a Governmental Authority having or asserting jurisdiction, expropriation, requisition, confiscation or nationalization;

(e) epidemics or quarantine, explosions, breakage or accidents to equipment, machinery, plants, facilities or lines of pipe, the making of repairs or alterations to lines of pipe or plants, inability to secure labor or materials to do so, partial or entire failure of gas supply or electric power shortages; or

(f) any other causes, whether of the kind enumerated above or otherwise, but in each case as to such causes and the above stated scenarios, only to the extent to which they were not reasonably foreseeable, and are not within the control of the Party claiming suspension and by the exercise of due diligence such Party is unable to prevent or overcome.

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“Governmental Authority” or “Governmental” means a federal, state, local or foreign governmental or regulatory authority, including the United States of America; a state, province, commonwealth, territory or district thereof; a county or parish; a city, town, township, village or other municipality; a district, ward or other subdivision of any of the foregoing; any executive, legislative or other governing body of any of the foregoing; any agency, authority, board, department, system, service, office, commission, committee, council or other administrative body of any of the foregoing; any court or other judicial body; and any officer or other representative of any of the foregoing.

“Guaranty Agreement” has the meaning set forth in Item 5 of Exhibit A.

“include” or “including” means “including, without limitation” or “including, but not limited to”.

“Indemnitees” means a Party and its subsidiaries and Affiliates, and all of their respective shareholders, partners, members, sublessees, officers, directors, managers, employees, attorneys, consultants, contractors, agents, representatives, successors and assigns.

“Indirect Taxes” has the meaning set forth in Section 3.3(a).

“Initial Term” has the meaning set forth in Item 9.B of Exhibit A.

“Law” or “Laws” means any applicable constitutional provision, statute, act, code, law, regulation, rule, ordinance, order, decree, directive, ruling, proclamation, resolution, judgment, decision, declaration, or interpretative or advisory opinion or letter of a Governmental Authority having valid jurisdiction.

“Lease Agreement” means that certain Land Lease, dated effective as of the date hereof, between Owner, as lessor, and Customer, as lessee.

“Month” means each full calendar month during the Term of this Agreement.

“Monthly Storage and Service Fees” has the meaning set forth in Item 4 of Exhibit A.

"MSDS" means a material safety data sheet in conformity with industry standards describing the Product.

“Other Fees and Charges” has the meaning set forth in Item 6 of Exhibit A.

“prime” has the meaning set forth in Section 3.2.

“Product” shall mean and refer to Heavy Fuel Oil (HFO), High Sulphur Fuel Oil (HSFO), Low Sulphur Fuel Oil (LSFO), Intermediate Fuel Oils (IFOs), Distillates, Marine Diesel Oil (MDO), Diesel, Lube Oils, cutter stock, VGO, used motor and lubricant oils, and intermediate stocks and any other such petroleum products that are within the permitted uses of the Terminal for the Tanks. Product shall include asphalts, asphalt blendstock, asphalt components, asphalt flux,

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vacuum tower bottoms, coker feedstocks, pg graded asphalts, viscosity graded asphalts or pen graded asphalt, subject to Owner's consent, such consent not to be unreasonably withheld.

“Respondent” has the meaning set forth in Section 23.4.

“Rules” has the meaning set forth in Section 23.1.

“Special Provisions” has the meaning set forth in Section 23.1.

“Standard Loss Allowance” has the meaning set forth in Item 8 of Exhibit A.

“Storage Fees” has the meaning set forth in Item 4.B.(1)(a) of Exhibit A.

“Subsequent Term” has the meaning set forth in Item 9.B of Exhibit A.

“Tank Bottom Volumes” has the meaning set forth in Section 4.9.

“Tanks” has the meaning set forth in Item 4.A. of Exhibit A.

“Term” has the meaning set forth in Item 9.B of Exhibit A.

“Terminal” has the meaning set forth in Item 3 of Exhibit A.

“Terminaling Services” has the meaning set forth in Section 2.1.

Section 2.    Services, Statements, Invoices, Documents and Records.

2.1    Owner will make the Tanks available to Customer on an exclusive basis and will provide services and suitable facilities, pumps, piping, boilers, rack, railspur, railroad car unloading facilities, marine dock, and other infrastructure related to the receipt, storage, heating, throughput, and delivery of Customer’s Product to and from Customer or on behalf of Customer into and out of the Tanks at the Terminal and provide the facilities reasonably necessary to perform such services and provide such additional services as may be provided under this Agreement (collectively, “Terminaling Services”), for the fees, rates and charges contained in this Agreement and in the Lease Agreement. Those Terminaling Services will be performed in a manner consistent with industry practices and in compliance with Law.

2.2    On each day of activity, Owner will transmit to Customer a statement of receipts, inbound deliveries, outbound deliveries and ending inventory. This statement will be transmitted to Customer at the number or other address set forth in Item 1 of Exhibit A.

2.3    Within fifteen (15) days following the end of each Month (or as soon thereafter as reasonably possible) during the Term of this Agreement and together with the invoice referenced in Section 2.4, Owner will provide to Customer copies of individual tank gauging documents and all barge, marine vessel, railcar and tank truck loading rack bills of lading documents for receipts or deliveries of its Product.

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2.4    Within fifteen (15) days following the end of each Month (or as soon thereafter as reasonably possible) during the Term of this Agreement, Owner will submit to Customer statements recording the volume of Customer’s Product received into and delivered from the Terminal during the preceding Month, together with an invoice for the following: (i) the Monthly Storage and Service Fees for the following Month, and (ii) any amounts due for any charges and other services provided during the preceding Month, as applicable and set forth in Items 4 and 6 of Exhibit A. This Monthly statement and invoice will be mailed to Customer at the address set forth in Item 1 of Exhibit A. Each such Monthly statement will include, in addition to the location of the Terminal and the identity and volume of Product, (i) a consecutive number, (ii) date of issuance, (iii) a reference to the rate of storage and handling fees included in this Agreement, (iv) a statement that the Product will be delivered to Customer or its agent and the location of delivery, and (v) the signature of an authorized representative of Owner. In case of any conflict between the daily statements provided to Customer under Section 2.2 or bills of lading issued under Section 2.3 and the Monthly statements provided under this Section, the statements and other relevant information provided under Sections 2.2 and 2.3 will prevail as to the volume of Product received and delivered by Owner.

2.5    If the Commencement Date is other than the 1^st day of a Month or if the Term expires on any day other than the last day of a Month, then the Monthly Storage and Service Fees and any other charges for such partial Month or Months shall be prorated based on the number of days for such Month. The Monthly Storage and Service Fees shall commence on the later of the Commencement Date or the date upon which Owner is ready to commence Terminaling Services hereunder.

2.6 Each Party will maintain a true and correct set of records pertaining to its performance of this Agreement and all transactions related to such performance and will retain copies of all such records for a period of not less than three (3) years following termination or cancellation of this Agreement. Upon reasonable prior notice, a Party or its authorized representative may, during the Term of this Agreement and for the three (3) year period following termination or cancellation of this Agreement, audit such records of the other Party during normal business hours at the other Party’s place of business.

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Section 3.    Fees, Charges and Taxes.

3.1    Customer will pay Owner for Terminaling Services provided under this Agreement the charges and fees set forth in Exhibit A.

3.2    All (a) Storage Fees and (b) undisputed Service Fees and other charges reflected in Owner’s invoices are due and payable on or before the later of (i) the first day of each calendar month or (ii) fifteen (15) days after Customer’s receipt of such invoice. Undisputed amounts which are not paid within thirty (30) days from the due date thereof will accrue interest at prime plus 1% or the highest rate allowed by Law, whichever is lower, until paid in full. As used in this Section, “prime” means the prime rate listed in the Wall Street Journal on the applicable due date. Nothing in this Section 3.2 is intended to provide a grace period for payment of amounts due and owing by Customer to Owner. In the event that Customer disputes any Service Fees or other charges (which it may do only in good faith), Customer shall provide a detailed explanation to Owner of the amount in dispute prior to the payment due date, may withhold the disputed amount, and shall timely pay all undisputed amounts. Customer may not dispute any Storage Fees unless the specific Tank for which such fees are applicable was not available for storage. Any disputed amounts that are ultimately determined to be owed to Owner shall be paid by Customer to Owner with interest accrued at prime plus 1% (or the highest rate allowed by Law, whichever is lower) from the date payment was due through the date of payment to Owner, and any over payments by Customer to Owner shall be promptly reimbursed by Owner to Customer with interest accrued at prime plus 1% (or the highest rate allowed by Law, whichever is lower) from the date payment was made through the date of reimbursement to Customer. Customer acknowledges and agrees that Storage Fees are due and payable without setoff on the first day of each calendar month. The Parties hereby agree that they shall discharge debts and payment obligations due and owing to each other arising from this Agreement through netting, in which case all amounts owed by each Party to the other Party shall be netted so that only the excess amount remaining due shall be paid by the owing Party.

3.3    (a)    Except as provided in this Agreement, the Monthly Storage and Service Fees as stated in Item 4 of Exhibit A and Other Fees and Charges as stated in Item 6 of Exhibit A include all taxes, assessments, levies and fees imposed upon the Owner by any Governmental Authority, including taxes based upon or measured by Owner’s net income, any gross receipts tax imposed in lieu of an income tax, all franchise taxes based upon Owner’s existence or its general right to transact business, and any payroll or other employment tax for which Owner is liable. The Parties understand and agree that there will be added to the Other Fees and Charges any applicable sales, use or similar taxes imposed by or under the authority of any Law (the “Indirect Taxes”) with respect to the Terminaling Services supplied by Owner to Customer hereunder, and that any such addition to the Other Fees and Charges shall be separately stated on the applicable invoice from Owner to Customer. Customer expressly authorizes Owner to collect and remit such taxes as may be required by any Laws. If for any reason the purchase of Terminaling Services is exempt from any Indirect Taxes, Customer shall furnish Owner with evidence which supports that position.

(b)    Notwithstanding the generality of the foregoing, Customer agrees to be responsible for, and shall pay, any real or personal property taxes which may be assessed against the Product which is stored or otherwise located at the Terminal or upon any other property belonging to Customer which is located at the Terminal.

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(c)    For purposes of this Section 3.3, the term “Owner” includes Owner, PipeStem Energy Group, LLC, and Marrero Holdings LLC, and their respective employees, agents, successors and assigns.

3.4    In the event of an assignment of this Agreement by Customer, as permitted in Section 12, Owner will provide Terminaling Services for the same Product to Customer's assignee. Notwithstanding any such assignment, Customer and any subsequent Customers will remain liable for payment of the Monthly Storage and Service Fees and all Other Fees and Charges under this Agreement.

3.5    (a)    Notwithstanding any provision in this Section 3 to the contrary, as long as (i)(x) Owner is an Affiliate of PipeStem Energy Group, LLC or (y) the Storage Fees to be paid quarterly in arrears are due prior to the third anniversary of the Effective Date, and (ii) no event of default has occurred and is continuing under this Agreement, Customer may pay the Storage Fee portion of the fees under this Agreement as provided in Item 4.B.(1)(a) of Exhibit A quarterly in arrears (instead of monthly in advance as provided in Section 3.2 above) as set forth below, upon at least ten (10) days written notice to Owner. Customer hereby notifies Owner that it elects to pay quarterly in arrears the Storage Fees under this Agreement as provided in Section 4.B.(1)(a) as of the Commencement Date.

(b)    If Customer elects to pay the Storage Fees quarterly in arrears, Customer shall pay all Storage Fees accrued through the last day of each calendar quarter on the first (1^st) day of each succeeding calendar quarter, together with interest on the amount of the Storage Fees that would otherwise have become due as provided in Section 3.2 above, accrued at the Applicable Rate (defined below).

(c)    Upon the occurrence of an event of default under this Agreement, all accrued and unpaid Storage Fees that would have become due but for this Section 3.5 shall be immediately due and payable without additional notice, and thereafter Storage Fees shall be due and payable as set forth in Section 3.2 above. Effective upon the later to occur of (i) thirty (30) days following written notice by Owner of a sale of the Terminal to an un-affiliated third party or Owner no longer being an Affiliate of PipeStem Energy Group, LLC and (ii) the third anniversary of the Effective Date, all accrued and unpaid Storage Fees that would have become due but for this Section 3.5 shall be due and payable, and thereafter Storage Fees shall be due and payable as set forth in Section 3.2 above.

(d)    As used in this Section 3.5 the term “Applicable Rate” means the lesser of (i) 0.5% in excess of the average rate of interest charged by Owner’s lenders under Owner’s acquisition and working capital loan facilities related to its acquisition and operation of the Terminal during any period of calculation, and (ii) the highest lawful rate of interest under applicable Law. Owner shall deliver an invoice to Customer setting forth the calculation of the payment of Storage Fees due hereunder, not less than five (5) days prior to the date such payment is due. If at any time Owner does not have any debt with respect to the Terminal, then the Applicable Rate shall be the lesser of (A) 0.5% in excess of prime, and (ii) the highest lawful rate of interest under applicable Law.

Section 4.    Operations, Receipts and Deliveries.

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4.1    Product will be delivered to the Terminal via truck, train, barge or marine vessel identified in Exhibit A by Customer or on its behalf free of any charge to Owner. In the case of Product delivered by barge, marine vessel or railcar, Customer must provide to the Terminal and maintain reasonably timely forecasts of scheduled arrivals of its Product by barge, marine vessel or railcar at the Terminal, which forecasts must include details as to type, grade and quantity of each Product. The quantity of Product received at the Terminal by barge or marine vessel shall be determined by manual shore tank gauging. Free water shall be subtracted and adjustments for gravity and temperature shall be made to sixty (60) degrees Fahrenheit in accordance with the latest ASTM table applicable to such Product to determine net barrels received. For railcar, quantities of Product shall be determined by the applicable gauging tables for the specific delivering railcars. For truck shipments and receipts, quantities of Product shall be determined by weighing on Owner’s truck scale and conversion by API Table 8. Customer may elect to appoint an independent inspector acceptable to Owner for shipments and/or receipts, at Customer’s sole expense (or at Owner’s expense in the event Owner’s scales or meters are discovered to be inaccurate), to perform gauging and related sampling. The inspector’s findings shall be binding on Customer and Owner. Owner will be provided a copy of all independent written reports prepared by the inspector on a timely basis. Owner shall witness all gauging procedures.

4.2    Receipts and deliveries of Product will be handled within the operating hours of the Terminal as specified on Exhibit A. Prior to discharging Products to the Terminal, Customer shall notify Owner by e-mail or fax designating Tank(s) to which Product is to be discharged. Prior to loading Product from the Terminal, Customer shall notify Owner by e-mail or fax what volumes are to be loaded from a Tank or Tanks. While Products are in Owner’s custody, and except in emergency situations, Owner shall make no inter-tank transfers without first obtaining authorization and instructions from Customer by e-mail or fax. Barges, marine vessels, railcars and tank trucks will be unloaded and loaded on first come, first serve basis and Owner will not be responsible for the payment of any demurrage or costs incurred by Customer or its transportation carrier for any delay in receiving or delivering the Product; provided, however, Owner will be responsible for demurrage incurred by Customer as a result and to the extent of any of the following provided they are not a result of a Force Majeure event: (i) once offloading of the Product is completed, to the extent Owner’s negligence or willful misconduct causes a delay in the vessel’s ability to leave the dock in a timely manner, or (ii) upon the vessel’s arrival at the dock, to the extent the Product cannot be offloaded timely because of a failure of Owner’s equipment or Owner’s negligence or willful misconduct (but in no event will Owner be responsible or liable for demurrage if the vessel is unable to offload Product at a pumping rate commensurate with that of Owner’s equipment), or (iii) to the extent the Product cannot be delivered timely to the truck because of a failure of Owner’s equipment or Owner’s negligence or willful misconduct. Unless a delivery/receipt has been scheduled by Customer for a particular time, Owner may make temporary changes in business hours, without Customer’s approval, but Owner will notify Customer of such temporary changes at least seventy-two (72) hours in advance. Owner will provide Customer at least seventy-two (72) hours advance notice of the exact date of any days when the Terminal will close because of any routine maintenance, and notice as soon as possible for any other day(s) when the Terminal closes because of an extraordinary event. In each event, Owner shall work with Customer to accommodate Customer’s scheduled deliveries and receipts. The Parties further acknowledge and agree that during any Force Majeure event Owner may make modifications to the availability of the Terminal for receipts and deliveries.

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4.3    Customer must arrange for and pay the costs of the transportation of all Product and Owner is responsible only to receive or deliver, as the case may be, the Product at its Terminal. Customer must notify Owner of tentative Product arrival dates by fax or email reasonably in advance and of any revision of those dates as soon as practicable. Tentative arrival dates must be confirmed by Customer approximately forty-eight (48), thirty-six (36) and twelve (12) hours in advance, and as otherwise specified for barges or marine vessels in Section 4.4. At the time of said notice, Customer must furnish Owner with necessary shipping instructions. Upon receipt of such confirmation, Owner will promptly advise Customer of Terminal availability, and a loading/discharge window shall be mutually agreed upon by both Parties. If the Terminal will not be available to receive or deliver Customer’s Product on the confirmed arrival date, Owner will advise as to the earliest time when Customer’s Product may be received or delivered. Owner may change dock designation within the Terminal from time to time with prior notice to Customer. If Owner reasonably determines that a truck, railcar, barge or marine vessel is unsuitable for shipment or receipt of Product, Owner may refuse to load or unload such equipment and will promptly advise the carrier and Customer of the condition, and request further instructions from the Customer.

4.4    Berth scheduling shall be on a first come first served basis with marine vessels given preference over barges. After the vessel has, within such agreed upon time window, arrived at the customary anchorage, berth, or other place of waiting, received all required Governmental clearances, and is otherwise ready to proceed to berth and commence loading or unloading of Products, the vessel or vessel’s agent shall tender a notice of readiness to Owner. The allowed lay time for the completion of the offloading of each vessel shall be at a minimum of 5,000 bbl/hr, or the cargo discharge rate the vessel is able to achieve while maintaining 100 psi at the vessel’s rail. Time allowed shall commence upon the point at which Customer’s vessel is all fast alongside Owner’s berth. Owner shall not be obligated to berth any barge or marine vessel unless such vessel has, no later than eight (8) hours prior to the expected berthing time, provided Owner with copies of any documents that may be required under Law. Barges with less than forty-eight (48) hour notice shall be received by Owner on a commercially reasonable efforts basis. Barges will communicate with the Terminal via VHF radio or other acceptable means, its ETA where practicable at least forty-eight (48) hours prior to arrival. Where forty-eight (48) hour notice is not possible, the barge will communicate ETA to the Terminal via VHF radio or other acceptable means, upon commencement of cargo operations at its last port of call. Tow will communicate at approximately twenty-four (24) hours prior, twelve (12) hours prior and then again at six (6) hours prior to arrival. Notice of readiness will be given via VHF radio or other acceptable means to the Terminal per standard industry practice and logged accordingly in barge time logs. The allowed lay time for the completion of the offloading of each barge shall be at a minimum of 5,000 bbl/hr, or the cargo discharge rate the barge is able to achieve while maintaining 100 psi at the barge’s rail. Time allowed shall commence upon the point at which Customer’s barge is all fast alongside Owner’s berth. Owner shall not be obligated to berth any barge unless such barge has, no later than eight (8) hours prior to the expected berthing time, provided Owner with copies of any documents that may be required by Law. Owner shall maintain a minimum pump rate of 2,500 bbls/hour to inland barges and 3,000 bbls/hour to ocean-going barges, unless otherwise restricted by the barge itself. All pumping rates specified in this Section 4.4 assume a maximum Product viscosity of 700 cst at 50˚C, and are subject to Customer’s delivery vessel being able to pump at not less than 100 psi at dock flange.

4.5    Owner will deliver to Customer or to such third parties as Customer may direct the Product held by Owner at the Terminal for the account of Customer. Customer is responsible for

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providing to Owner documentation required to authorize receipt of deliveries from the Terminal. Where Product is to be delivered from the Terminal, such deliveries will be made only upon the written authorization of Customer and only to properly qualified individuals. All receipts and discharges of Product shall be arranged by Customer. Owner shall be responsible to receive and discharge the Product at its designated lines and from or to those barges, marine vessels, railcars and trucks designated by it. However, all receipts of any Products from barges, marine vessels, railcars or trucks shall be arranged for and provided by Customer, and Customer’s barges, marine vessels, railcars and trucks shall be responsible for providing appropriate receiving/discharge hoses in accordance with customary industry practices and applicable Laws.

4.6    Owner shall reserve for the storage and handling of the Products of Customer the Tanks listed in Item 4 of Exhibit A. Owner, at its expense, will have the right to substitute tanks, equipment or other facilities from time to time as Owner deems necessary in its sole discretion, so long as the available capacity, condition and quality of the substituted tanks, equipment and/or other facilities are at least comparable in all material respects to the Tanks replaced. All regularly scheduled maintenance, inspection and repair shall be coordinated with Customer in advance to accommodate Customer’s schedule, and shall be completed promptly and within a reasonable time. Customer shall not pay for any Tank while it is out of service, unless a substituted tank is provided. The Tanks (and any substituted tanks) shall be segregated tankage, and Product shall not be commingled with any Owner or third party product except in an emergency.

4.7    The Terminaling Services hereunder are being provided to Customer only with respect to the Product and no other products unless otherwise consented to by Owner in writing as provided in this Agreement. If a special method of storing or handling Product is required, then Customer must notify Owner in sufficient time to enable Owner to consider whether it will accept the proposed changes in the method of storing or handling the Product and to take the necessary preparatory measures if it agrees with such changes. Failing such notice, Owner will not be obligated to provide such special storage and handling service nor be liable for loss or damage to the Product because such special service was not provided. It is understood that the cost of alterations made necessary by the nature of Customer’s Product or otherwise required by Customer for special methods of storing or handling Product will be for the account of Customer and Customer will be responsible for the expense of any related and necessary cleaning of the storage and handling equipment, including Tanks, pipelines, pumps, hoses, meters, and loading arms. It is also understood that Customer will treat its Product during receipt, delivery or while in the Tanks, for H2S, Pour Point, Flash Point or as may otherwise be required based on accepted industry practices.

4.8    Both Parties acknowledge that there are amounts of petroleum products known as tank heels and line fills in the Tanks. Customer owns these tank heels and line fills, as well as all other petroleum products in the Tanks. Customer shall be responsible for, and liable for all charges related to, the removal, handling, and disposal of any tank heels and line fills (including those that constitute "hazardous waste" as defined by the Resource Conservation and Recovery Act, as amended, and the implementing regulations under the United States Environmental Protection Agency), and shall be responsible for selecting the site for disposal and signing any manifests as the generator of such hazardous waste.

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4.9    Customer and Owner will jointly appoint an independent inspector to inspect the Tanks prior to commencement of this Agreement or as the Tanks are ready for service. This inspection will establish the baseline condition of the Tanks and the volumes of Product in the Tank bottoms (“Tank Bottom Volumes”), and both Parties agree to be bound by this established baseline for purposes of evaluating the condition of the Tanks and the Tank Bottom Volumes upon the termination of this Agreement, with the requirement that upon termination of this Agreement (a) Customer return the Tanks to the state of condition or repair as they existed on the Commencement Date, subject to normal wear and tear and the acts or omissions of Owner, and Owner shall pay Customer the market value of the Tank Bottom Volumes within ten (10) days following the termination of this Agreement. Customer will initiate the tank cleaning and return process within ten (10) days following termination of this Agreement. If the parties fail to agree on the payment owed to a party pursuant to Section 4.9(b) or following the tank cleaning and return process, if Owner disagrees with Customer that the Tanks are in the condition required by this Section 4.9, Customer and Owner will jointly appoint an independent inspector or appraiser (as applicable) to inspect the Tanks or determine the payment owed, and such inspector’s or appraiser’s findings and recommendation, which shall take into account the condition of the Tanks and the Product volume at the initial inspection, shall be binding upon the Parties. Owner and Customer shall share equally the costs of the inspectors or appraisers.

4.10    During the Term of this Agreement, Owner will be required to perform routine maintenance and repair in accordance with industry practices, but will not be required to make any improvements, alterations or additions to the Terminal other than as contemplated by Sections 4.7 and 14.1. If the Tanks are fully or partially destroyed during the Term of this Agreement, insurance proceeds to rebuild the tanks are available for such purpose and the rebuilding of the Tanks is economically viable, the Owner shall, unless substitute tanks have been provided by Owner in accordance with Section 4.6, use the proceeds of such insurance to rebuild the Tanks. If any Governmental Authority requires installation of any improvement, alteration or addition to any Tank or other equipment at the Terminal for purposes of compliance with any Law that hereafter comes into effect that would materially interfere with or materially change the nature of the Terminaling Services provided under this Agreement (or the cost thereof), whether the result of the operation of the Terminal or the handling or storage of the Product (“Change in Law”), Owner will notify Customer in writing of (a) the cost of making any such improvement, alteration or addition, (b) when such improvement, alteration or addition must be completed, and (c) Customer’s share of such costs. Customer will pay its proportionate share of the costs (which will be determined by commercially reasonable means that reflect the use of the Terminal facilities for the Terminaling Services provided to Customer under this Agreement compared with the same for other customers), said costs to be prorated Monthly over the remaining Term of this Agreement. In addition to installation costs, the costs for Customer’s account as a result of a Change in Law will include engineering and interest expense (at a rate of 1% over the prime lending rate on the date of completion of such installation).

4.11    All fixtures, equipment and appurtenances attached to the Tanks, pipelines and other facilities of the Terminal (except for (i) any special equipment defined in Item 10 of Exhibit A and (ii) any such assets that are subsequently installed and paid for by Customer, which it may remove consistent with the terms of Section 18.1 of the Lease, provided it pays for all damage caused by removal) are and remain the property of Owner.

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Section 5.    Product Quality Standards and Requirements.

5.1    Customer warrants to Owner that all Product tendered by or for the account of Customer for receipt by the Terminal will conform to the specifications for such Product set forth in Exhibit B, subject to Section 5.2, and will comply with industry standards (Pour Point, Viscosity, Flash and Temperature) adequate to permit Product to be moved through the Terminal facilities without special handling and consistent with past practices, and all Laws, including all State and Federal Dangerous Waste Regulations. Customer will supply to Owner in writing the basic specifications of the Product to be stored. Owner will not be obligated to receive Product into the Terminal that is contaminated or otherwise fails to meet those specifications, nor will Owner be obligated to accept Product that fails to meet quality specifications set forth in the arrival notice, but in no event will Owner have any liability whatsoever for accepting Product for storage in Tanks which Product is either contaminated or does not meet such specifications. Owner may rely upon the specifications and representations of Customer as to Product quality; provided, however, if cleaning of Tanks, pipelines, valves or pumps is necessary because Customer’s Product is off specification or is contaminated, Customer will be responsible for the cost of the removal and proper disposal of all such Product, residue, scale, non-merchantable bottoms and any other accumulation from the affected Tanks, pipelines, valves or pumps, and for cleaning Tanks, pipelines, valves and pumps to a condition again suitable for the storage of Product as the affected Tanks, pipelines, valves and pumps existed on the Effective Date, subject to normal wear and tear, Force Majeure and the acts or omissions of Owner.

5.2    The quality of Product tendered into the Terminal for Customer’s account must be verified either by Owner’s laboratory analysis, or by an independent inspector’s analysis, at Customer’s discretion, indicating that the Product so tendered meets the Product specifications provided in Section 5.1; provided, however,such Product specifications may be modified from time to time as agreed by Owner so long as the specifications, as modified, do not alter the basic Product. All costs for Owner’s laboratory analysis will be borne by Owner and costs for independent inspector’s analysis are to be borne by Customer. Owner may sample any Product tendered to Owner for Customer’s account for the purpose of confirming the accuracy of the analysis. The cost of such confirmation will be borne by Owner.

5.3    Owner will be liable to Customer for contamination occurring at the Terminal caused by Owner or occurring during Owner's custody of the Product that results in one or more of the following: contamination of Product; Product that fails to meet Customer's specifications; downgrading of Product; or change in the character of Product. Owner will not be liable for contamination that is caused by: the negligence or willful misconduct of Customer, its personnel, contractors, customers or suppliers (other than Owner or its Affiliates, or their respective employees or representatives); breach of Customer's obligations under this Agreement; or natural deterioration of the Product. Customer shall give Owner written notice of any claim alleging contamination, downgrading or character change of the Product within thirty (30) days of discovery.

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Section 6.    Title, Custody and Loss of Product.

6.1    Title to Customer's Product will remain with Customer at all times. Owner will assume custody of the Product at the time and at the point at which such Product passes the flange connection between the transportation carrier and that of Owner's receiving facilities. Owner's delivery of Customer's Product will be deemed completed and its custody of it will cease when the Product passes the flange coupler connection between Owner's loading assembly and the Customer's transportation carrier.

6.2    Except for any (a) Standard Loss Allowance under Section 9, (b) loss of Customer's Product associated with Customer approved Product flushings to eliminate residual particles or other contaminants from pipelines, tanks, valves or pumps, and (c) loss caused by any Force Majeure event, Owner is responsible for any Product lost while in its custody. Upon delivery of Customer Product, as provided above, Owner shall have no further responsibility for any Damages to persons or property (including the Product) arising out of possession or use of the Product, except to the extent that such Damages are caused by the negligence or willful misconduct of Owner, its personnel, contractors, customers or suppliers (other than Customer or its Affiliates, or their respective employees or representatives) or by breach of Owner's obligations under this Agreement.

Section 7.    Limitation of Liability and Damages.

7.1    Notwithstanding any other provision of this Agreement, Owner is not responsible for any lost Product unless a written claim is delivered to Owner by Customer within ninety (90) days after Owner reports the alleged loss to Customer or Customer otherwise learns of such loss. The maximum liability of Owner for lost Product under Sections 6 and 9 will not exceed, and is strictly limited to the value (i.e., replacement cost, FOB Terminal) of the Product delivered. Owner may, in lieu of payment for Product, replace such Product with product of like grade and quality (FOB Terminal)..

7.2    Customer shall procure and cause to remain in effect during the Term credit support in accordance with the requirements set forth in Item 5 of Exhibit A.

Section 8.    Product Measurement.

8.1    Quantities of Product received into and delivered from the Terminal will be determined for the applicable mode of receipt and delivery of Product designated in Exhibit A by either (a) shore tank gauge readings taken before and after each receipt or delivery, (b) loading rack meter readings or (c) other appropriate quantity measuring devices, as determined by the Parties. Absent obvious error, the quantities of Product in storage at any time will be determined from Terminal inventory records of receipts and deliveries. Inventory records of Product will be verified against the sum of the material in the Tanks as well as line fill. Gauging of Product received, delivered and in storage will be taken jointly by representatives of the Parties. Customer may use certified public inspectors at its own expense.

8.2    Terminal and loading facility meters will be calibrated periodically and upon each completion of repair or replacement of a meter, at the meter owner’s expense. Current calibration

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charts, licenses and inspection permits will be available at the Terminal for examination during normal business hours. If a meter is determined by either Party to be defective or inoperative, such Party shall immediately notify the other Party, and it will be the responsibility of the owner of such meter to promptly make repairs or replacements. Product received or delivered through a facility having an inoperative or defective meter will be measured based upon before and after tank gauges or official scale for tank truck.

8.3    Unless indicated otherwise, quantity determinations will be based on a Barrel of Product.

8.4    Owner certifies to Customer the accuracy of all gauging and Terminal records as to quantities, and grants Customer and its authorized representatives access during Owner’s normal business hours and upon reasonable prior notice for purposes of examination, testing and audit of Terminal records pertaining to the receipt, handling, storage and delivery of Customer Product.

Section 9.    Product Loss Allowance. During such time as Owner is the custodian of Product, Owner will indemnify Customer against any Product loss, including loss due to evaporation, shrinkage, line loss, clingage and pipeline, valve, flange, meter and tank leakage in excess of the Standard Loss Allowance per Exhibit A of the total barrels of Product withdrawn from the Terminal by Customer; provided, however, under no circumstances will Owner be responsible for Product loss of any kind to the extent that such loss is caused by the negligence or willful misconduct of Customer, its personnel, contractors, customers or suppliers (other than Owner or its Affiliates, or their respective employees or representatives) or Force Majeure. If Product losses exceed the Standard Loss Allowance of Customer withdrawals during any Contract Year or at the end of a shorter Term of this Agreement, Owner will, within thirty (30) days after such loss is known to exist, either replace the Product or pay Customer for it in accordance with Section 7.

Section 10.    Force Majeure.

10.1    Except as may be otherwise provided herein, neither Party shall be liable for any failure or delay in performance hereunder which may be due, in whole or in part, to an event of Force Majeure. Force Majeure shall not excuse either Party from making any payments already due to the other Party. The Party seeking to be excused from its performance will give the other Party prompt written notice of the Force Majeure event stating the nature of the condition and when the condition is terminated and will make commercially reasonable attempts to ameliorate, avoid or remove the effects of the Force Majeure and continue performance under this Agreement as soon as possible; provided, however, that no provision of this Agreement shall be interpreted to require Customer to deliver, or Owner to receive, Product at any delivery point other than the Terminal. The obligations of the Party giving notice, so far as they are affected by the Force Majeure event, will be suspended during, but not longer than, the continuance of the Force Majeure event. The affected Party must act with commercially reasonable diligence to resume performance and the affected Party must notify the other Party when the Force Majeure event no longer affects its ability to perform under this Agreement. Notwithstanding any provision in this Agreement to the contrary, in no event will an event of Force Majeure extend the term of this Agreement beyond the then effective Term (as same may be automatically renewed pursuant to the provisions of this Agreement).

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10.2    Notwithstanding the foregoing, Owner agrees to provide Customer as much advance notice as possible of any projected incapacity of the Terminal or of Owner to provide Terminaling Services whether or not such incapacity (a) results from a Force Majeure event or (b) may result in excused performance under this Section 10.

10.3    The requirement that any Force Majeure event be remedied as soon as possible will not require the settlement of strikes, lockouts, or other labor difficulty by the Party claiming excuse due to a Force Majeure event contrary to its wishes.

10.4    If either Party is rendered unable to perform by reason of Force Majeure for a period in excess of one hundred eighty (180) consecutive calendar days, then the other Party, thereafter, may terminate this Agreement upon thirty (30) days prior written notice to the Party claiming excuse due to a Force Majeure event.

10.5    If Owner is excused from providing service pursuant to this Agreement due to a Force Majeure event, the Monthly Storage and Service Fees and Other Fees and Charges not already due and payable will be excused or proportionately reduced (based on the shell capacity volumes of the Tanks set forth in Item 4 of Exhibit A) for so long as the Owner’s performance is excused due to the Force Majeure event. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, IN NO EVENT WILL CUSTOMER BE EXCUSED FROM PAYING THE MONTHLY STORAGE FEES AS A RESULT OF CUSTOMER’S INABILITY TO OBTAIN PRODUCT FROM THIRD PARTIES FOR SHIPMENT TO THE TERMINAL EVEN IF DUE TO EMBARGOS OR EXPORT OR IMPORT RESTRICTIONS OR LOSS OF SUPPLY (INCLUDING ANY FORCE MAJEURE AFFECTING CUSTOMER’S TRANSPORTATION OR SUPPLY OF THE PRODUCT OUTSIDE THE TERMINAL) DURING THE INITIAL TERM OR ANY SUBSEQUENT TERM OF THIS AGREEMENT.

Section 11.    Inspection of and Access to Terminal.

11.1    Customer and its authorized representatives shall have the right during the Terminal operation hours to visit and inspect the Terminal including the right to inspect records relating to storage, use and handling of Customer’s Product. Customer’s right and that of its authorized representatives to enter the Terminal in order to observe and verify Owner’s performance of its Terminaling Services and to the extent required for other purposes of this Agreement will be exercised by Customer in a way that will not unreasonably interfere with or diminish Owner’s control over or its operation of the Terminal and will be subject to reasonable rules and regulations from time to time promulgated by Owner, including safety rules. Customer acknowledges that under this Agreement none of Customer’s vehicles or vehicles acting on behalf of Customer will be granted access to the Terminal until the owner of such vehicles and its employees or agents have reviewed and become familiar with Owner’s operating and safety procedures relating to the Terminal.

11.2    Within seven (7) days after the Effective Date, Customer must notify Owner of those third parties to which Owner may deliver Product from the Terminal. Customer must furnish at least forty-eight (48) hours prior notice of any additions or deletions to its list of approved third parties. Customer will cause all persons receiving or delivering its Product to utilize only those portions of the

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Terminal facilities designated for such purposes by Owner and only for the period of time required for expeditious completion of such receipt and delivery.

11.3    Customer acknowledges that any grant of the right of access to the Terminal under this Agreement or under any document related to this Agreement is a grant of merely a license and will convey no interest in or to the Terminal or any part of it.

Section 12.    Assignment.

12.1    This Agreement will inure to the benefit of and be binding upon the Parties hereto and their respective successors and permitted assigns. This Agreement and the rights and obligations of a Party hereunder shall not be transferred or assigned, in whole or in part, without the prior written consent of the other Party; provided (a) Customer may freely assign this Agreement to any of its Controlled Affiliates, (b) Owner may freely (i) assign, sell, pledge or encumber this Agreement or the accounts, revenues, or proceeds hereof in connection with any financing or other financial arrangements, or (ii) assign this Agreement in connection with the sale of all or substantially all of the assets of Owner, and (c) Owner shall approve an assignment of this Agreement (whether for purposes of a financing or otherwise) by Customer to an assignee in conjunction with a permitted assignment by Customer of the Lease to such assignee, and effective with the assignment of the Lease. In the event of any assignment by a Party of this Agreement or its rights or obligations hereunder (other than an assignment strictly for purposes of securing financing), the assignee shall assume in writing and in form adequate at law for such purpose the assigning Party's prospective obligations under this Agreement from and after such assignment. Notwithstanding any assignment by a Party, the assigning Party shall remain fully obligated under all terms of this Agreement; provided, however, that in connection with any assignment by Owner under Section 12.1(b)(ii) hereof, Owner shall be fully released from any and all prospective obligations under this Agreement from and after such assignment.

12.2    Customer may only sublease unused Tank storage (on a Tank-by-Tank basis, but not on any partial Tank basis) to its Controlled Affiliates and not to any other persons. Prior to entering into such sublease, Customer will advise Owner as to the Product which will be stored in any Tanks which Customer elects to sublease. Customer shall remain obligated to pay Owner the Monthly Storage and Service Fees even if Customer elects to sublease any or all of the Tanks.

Section 13.    Notice. Any notice required or permitted under this Agreement must be in writing and will be deemed received when actually received and delivered by (i) United States mail, certified or registered, return receipt requested, (ii) confirmed overnight courier service, (iii) confirmed facsimile transmission, or (iv) other electronic communication where receipt of the communication has been acknowledged, in each case properly addressed or transmitted to the address of the Party set forth in Items 1 and 2 of Exhibit A or to such other address or facsimile number as a Party will provide to the other Party in accordance with this provision. In the event of any assignment of this Agreement by either Party, all Parties hereto (and any of their assignees) shall continue to provide all notices required or permitted under this Agreement to the initial Parties hereto unless otherwise advised to the contrary in writing by an initial Party hereto.

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Section 14.    Compliance with Law and Safety.

14.1    Customer warrants that the Products tendered by it are produced, transported, and handled, and Owner warrants that the Terminal and the Terminaling Services provided by it under this Agreement are, in full compliance with all Laws. Each Party also warrants that it may lawfully receive and handle the Product, and it will furnish to the other Party any evidence required to provide compliance with all Laws, and will file with Governmental Authorities any required reports evidencing such compliance with those Laws.

14.2    Customer certifies, on behalf of itself, its employees, agents, and contractors, that all railcars, vehicles, barges and marine vessels owned or procured by Customer in connection with this Agreement will comply with all Laws and any requirements imposed by Customer’s or Owner’s insurers. Customer will furnish Owner with information (including Material Safety Data Sheet) concerning the safety and health aspects of Product stored under this Agreement. Owner will communicate such information to all persons who may be exposed to or may handle such Product, including Owner’s employees, agents and contractors.

14.3    Customer hereby authorizes Owner to take measures necessary to protect the environment from damage arising from spillage or transport of Customer’s Products. Owner is authorized to incur such expenses by employing its own resources or by contracting with others as are reasonably necessary to remove the Product and mitigate the effects of any spill. Customer shall fully reimburse Owner for all expenses incurred for Product removal, mitigation and cleanup provided that the spill was caused by the negligence or willful misconduct of Customer, its employees or transportation agents. In such event, Owner agrees to assign to Customer any rights Owner may have against the party causing the spill for costs of Product removal, mitigation and cleanup, provided Customer has prior thereto fully reimbursed Owner therefor.

Section 15.    Default, Waiver and Remedies.

15.1    Customer Default. A material breach of any of the terms and conditions of this Agreement by Customer, or the bankruptcy or insolvency of Customer, will constitute a default under this Section. In the case of a non-monetary default by Customer, Owner may notify Customer of the particulars of such default and Customer will have sixty (60) days thereafter to cure such default; provided, however, if such default cannot be cured within such sixty (60) day period, then Customer will have such additional time as reasonably necessary to cure such default so long as Customer takes steps necessary to begin curing such default within the sixty (60) day period and proceeds with reasonable diligence to cure such default, but provided further, if the default is such that the continuation of the default has or may have an material adverse effect on Owner’s operation of the Terminal or result in a material liability or damage to Owner, and Owner provides written notice of such (“Damage Notice”), then in no event shall the cure period exceed the greater of (i) one hundred twenty (120) days after Owner’s initial notice of the default, or (ii) thirty (30) days after Owner’s Damage Notice. In the case of a monetary default by Customer, Owner will notify Customer of such monetary default and Customer will have five (5) days after receipt of such notification to cure such default. If Customer fails to cure such monetary default on or before the

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end of such five (5) day cure period, then Owner may terminate this Agreement and/or exercise any of its other rights and remedies.

15.2    Owner Default. A material breach of any of the terms and conditions of this Agreement by Owner, or the bankruptcy or insolvency of Owner, will constitute a default under this Section. Upon default, Customer may notify Owner of the particulars of such default and Owner will have sixty (60) days thereafter to cure such default; provided, however, if such default cannot be cured within such sixty (60) day period, then Owner will have such additional time as reasonably necessary to cure such default so long as Owner takes steps necessary to begin curing such default within the sixty (60) day period and proceeds with reasonable diligence to cure such default, but provided further, if the default is such that the continuation of the default has or may have an material adverse effect on Customer’s operation of its facility or result in a material liability or damage to Customer, and Customer provides a Damage Notice, then in no event shall the cure period exceed the greater of (i) one hundred twenty (120) days after Customer’s initial notice of the default, or (ii) thirty (30) days after Customer’s Damage Notice.

15.3    The waiver by a non-defaulting Party of any right under this Agreement will not operate to waive any other such right nor operate as waiver of that right at any future date upon another default by the defaulting Party under this Agreement, and a single or partial exercise of any right, power or privilege will not be presumed to preclude any subsequent or further exercise of that right, power, or privilege or the exercise of any other right, power, or privilege. Nothing in this Section is intended in any way to limit or prejudice any other rights or remedies the non‑defaulting Party may have under this Agreement or by law. The remedies of the non-defaulting Party provided in this Agreement are not exclusive and, except as otherwise expressly limited by this Agreement, are in addition to all other remedies of the non-defaulting Party at law or in equity. Acceptance by Owner of any payment from Customer for any charge or service after termination of this Agreement shall not be deemed a renewal of this Agreement under any circumstances, nor a waiver of any rights Owner may have under this Agreement or otherwise.

15.4    Each Party agrees that it has a duty to mitigate damages and to use commercially reasonable efforts to minimize any damages it may incur as a result of the other Party’s performance or non-performance of this Agreement.

Section 16.    Insurance.

16.1    Coverage. Owner and Customer will procure and maintain in effect during the Term of this Agreement and as otherwise required herein insurance coverages as set forth on Exhibit C hereto.

16.2    Failure to Secure. Subject to Item V of Exhibit C, failure to secure the insurance coverage, or failure to comply fully with any of the insurance provisions of this Agreement, or the failure to secure such endorsements on the policies as may be necessary to carry out the terms and conditions of this Agreement, will in no way relieve a Party from the obligations of this Agreement.

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16.3    Certificates of Insurance. Prior to Owner commencing any performance under this Agreement and as a condition of Customer exercising any of its rights under this Agreement, each Party will furnish to the other Party certificates of insurance, in accordance with Item I of Exhibit C, evidencing that proper insurance has been secured in accordance with the specific terms of this Agreement. Failure of a Party to require such certificate or to object to any such certificate it receives or to commence performance without first providing a conforming certificate or request copies of any policy will not be a waiver of the other Party’s obligation to meet its insurance obligations under this Section, including its obligation to provide conforming certificates.

16.4    Reports of Accidents. Each Party will provide written notice to the other Party of all accidents or occurrences resulting in injuries to employees or third parties, or damage to property while at the Terminal as soon as practical upon learning of the accident, occurrence or damage, and will furnish the other Party with a copy of all reports made by the Party or its underwriter or reports to others of such accidents or occurrences.

16.5    Insurance of Product. Insurance covering the Product, to the extent not intended to be covered by Owner’s property insurance under Item II.C. of Exhibit C, may, if desired by Customer, be carried by Customer at its own expense.

Section 17.    Indemnity.

17.1    To the extent permitted by law and except as otherwise specifically provided in this Agreement, each Party will defend, indemnify and hold harmless the other Party and its Indemnitees from and against any and all Damages, resulting from or arising out of (a) the indemnifying Party’s failure to comply with all Laws, or (b) bodily injury or death of any person, including any Party’s or its Indemnitees’ personnel, to the extent such injury or death in clause (b) is caused by the negligence or willful misconduct of the indemnifying Party. Where the injury or death in clause (b) is the result of the joint or concurrent negligence or willful misconduct of Owner and Customer, each Party’s duty of indemnification will be in proportion to its share of such joint or concurrent negligence or willful misconduct.

17.2    (a)    To the extent permitted by law and except as otherwise specifically provided in this Agreement, Owner shall be responsible for, and shall release and defend, indemnify, and hold harmless Customer and its Indemnitees from and against, Damages to the natural resources and the environment and to property of Owner and its neighbors, including the Terminal facility, and for Damages to Product while in Owner's custody to the extent provided in this Agreement, unless and to the extent such Damages are caused by the negligence or willful misconduct of Customer or its Indemnitees, customers, transporters or suppliers (other than Owner or its Indemnitees).

(b)    To the extent permitted by law and except as otherwise specifically provided in this Agreement, Customer shall be responsible for, and shall release and defend, indemnify and hold harmless Owner and its Indemnitees from and against, Damages to the natural resources and property of Customer and other persons, including the barges, marine vessels, railcars and vehicles

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that transport Product for Customer, unless and to the extent such Damages are caused by the negligence or willful misconduct of Owner or its Indemnitees.

17.3    Each Party or its Indemnitees will (and each is deemed to be an “indemnified party” pursuant to this Section 17.3), promptly after the receipt of notice of any claim in respect of which indemnity may be sought from the other Party, notify such Party in writing of the receipt of such claim. The omission of the indemnified party so to notify the indemnifying Party of any such claim shall not relieve the indemnifying Party from any liability in respect of such claim which it may have to the indemnified party on account of the indemnity agreement herein (except, however, that the indemnifying Party shall be relieved of liability to the extent that the failure so to notify shall have caused prejudice to defense of such claim), nor shall it relieve the indemnifying Party from any other liability which it may have to the indemnified party. The indemnifying Party shall be entitled at its cost and expense to contest and defend by all appropriate legal proceedings any claim with respect to which it is called upon to indemnify the indemnified party under the provisions of this Agreement; provided, however, that notice of the intention so to assume and contest shall be delivered by the indemnifying Party to the indemnified party within thirty (30) days from the date of delivery to the indemnifying Party of notice by the indemnified party of the assertion of the claim. Any such contest may be conducted in the name and on behalf of the indemnifying Party or the indemnified party as may be appropriate. Such contest shall be conducted by attorneys employed or engaged by the indemnifying Party, but the indemnified party shall have the right to participate in such proceedings and to be represented by attorneys of its own choosing at its cost and expense. If the indemnified party joins in any such contest, the indemnifying Party shall coordinate all matters with the indemnified party, but the indemnifying Party have full authority to determine all action to be taken with respect thereto. If after notice as provided for herein, the indemnifying Party does not elect to contest or defend any claim as provided in this Section 17.3, the indemnifying Party shall be bound by the result obtained with respect thereto by the indemnified party and the indemnified party may (but shall have no obligation to) contest any such claim. At any time after the commencement of defense of any claim, the indemnifying Party may request the indemnified party to agree in writing to the abandonment of such contest or to the payment or compromise by the indemnifying Party of the asserted claim, whereupon such action shall be taken unless the indemnified party determines that failure to continue the contest or taking of such action could adversely affect the business of the indemnified party or any of its Affiliates, and so notifies the indemnifying Party in writing within fifteen (15) days of such request from the indemnifying Party. If requested by the indemnifying Party, the indemnified party agrees to cooperate with the indemnifying Party and its counsel in contesting any claim which the indemnifying Party elects to contest or, if appropriate, in making any counterclaim against the person asserting the claim or any cross‑complaint against any person (other than any Affiliates of the indemnified party), but the indemnifying Party will reimburse the indemnified party for any expenses incurred by it in so cooperating. The indemnified party agrees to afford the indemnifying Party and its counsel the opportunity to be present at, and to participate in, conferences with all persons, including Governmental Authorities, asserting any claim against the indemnified party, or conferences with representatives of or counsel for such persons.

17.4    In addition to and separate and apart from other insurance obligations that each Party may assume under the terms of this Agreement, insurance covering this indemnity agreement may

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be provided by each Party to the extent permitted by law. Further, such insurance coverage and limits will not be deemed as a limitation on either Party’s liability under the indemnities granted to the other Party and its Indemnitees in this Agreement.

17.5    NOTWITHSTANDING ANY OTHER TERMS IN THIS AGREEMENT AND REGARDLESS OF FAULT, NEITHER PARTY SHALL HAVE ANY LIABILITY TO THE OTHER PARTY OR ITS INDEMNITEES UNDER OR ARISING OUT OF THIS AGREEMENT FOR LOST PROFITS OR INCOME OR CONSEQUENTIAL DAMAGES (INCLUDING RESULTING FROM BREACH OF CONTRACT IN FAVOR OF ANY PURCHASER OF CUSTOMER) NOR BE LIABLE TO THE OTHER PARTY OR ITS INDEMNITEES FOR THE OTHER PARTY’S OR ITS INDEMNITEES’ SPECIAL, INCIDENTAL, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES WITH RESPECT TO THIS AGREEMENT OR ANY ACT IN CONNECTION HEREWITH, WHETHER IN CONTRACT, TORT OR OTHERWISE IRRESPECTIVE OF WHETHER SUCH DAMAGES WERE FORESEEABLE BY EITHER PARTY.

Section 18.    Other Representations, Warranties and Covenants. As a material inducement to entering into this Agreement, each Party, with respect to itself, represents and warrants to the other Party as of the Effective Date of this Agreement as follows: (a) it is duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation and is qualified to conduct its business in those jurisdictions necessary to perform this Agreement; (b) it has all Governmental and other authorizations, permits and licenses necessary for it to legally perform its obligations under this Agreement; (c) the execution, delivery and performance of this Agreement are within its powers, have been duly authorized by all necessary action and do not violate any of the terms or conditions in its governing documents or any contract to which it is a party or any Law applicable to it; (d) this Agreement and each other document executed and delivered in accordance with this Agreement constitutes its legally valid and binding obligation enforceable against it in accordance with its terms, subject to any equitable defenses; (e) it is not bankrupt or insolvent and there are no reorganization, receivership or other arrangement proceedings pending or being contemplated by it, or to its knowledge threatened against it; and (f) it has read this Agreement and fully understands its rights and obligations under this Agreement, and has had an opportunity to consult with an attorney of its own choosing to explain the terms of this Agreement and the consequences of signing it.

Section 19.    Construction of Agreement.

19.1    Headings. The headings of the sections and subsections of this Agreement are for convenience only and will not be used in the interpretation of this Agreement.

19.2    Amendment or Waiver. This Agreement may not be amended, modified or waived except by written instrument executed by officers or duly authorized representatives of the respective Parties. The failure of either Party to insist upon strict performance of any of the covenants and conditions of this Agreement shall not be construed to be a waiver or relinquishment of such, or any other covenants or conditions, but the same shall be and remain in full force and effect.

19.3    Severability. Any provision of this Agreement that is prohibited or not enforceable in any jurisdiction will, as to that jurisdiction, be ineffective only to the extent of the prohibition or

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lack of enforceability without invalidating the remaining provisions of this Agreement, and will not affect the validity or enforceability of those provisions in another jurisdiction or the validity or enforceability of this Agreement as a whole.

19.4    Entire Agreement. This Agreement (including the Exhibits and the Lease Agreement) contains the entire and exclusive agreement between the Parties with respect to the subject matter, and there are no other promises, representations, or warranties affecting it. The terms of this Agreement may not be contradicted, explained or supplanted by any usage of trade, course of dealing or course of performance, and any other representation, promise, statement or warranty made by either Party or their agents that differs in any way from these terms will be given no force or effect unless made in writing and signed by authorized representatives of Customer and Owner.

Section 20.    Law. THIS AGREEMENT WILL BE GOVERNED BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS.

Section 21.    Confidentiality.

21.1    During the Term and for a period of two (2) years following the Term, each Party will, and will cause its officers, directors, managers, members, partners, stockholders, employees, Affiliates, agents and representatives to, hold in strict confidence all Confidential Information (as hereinafter defined) and will not, and will ensure that such other persons will not, disclose the same to any person except only for (i) any such disclosure as is reasonably necessary to carry out this Agreement and the transactions contemplated hereby or (ii) any disclosure required by Law (and then only upon prior written notice to the other Party). Notwithstanding any provision in this Agreement to the contrary, any Party (and any representative of such Party) may disclose to any and all Governmental Authorities, without limitation of any kind, the tax treatment and tax structure of the transactions contemplated by this Agreement, and all materials of any kind (including opinions or other tax analyses) that are provided to such Party relating to such tax treatment and tax structure. If this Agreement is terminated, upon a Party’s request, the other Party shall return all written Confidential Information of the requesting Party, except for that portion of such Confidential Information that may be found in analyses, compilations, studies or other documents prepared by, or for, the returning Party, and the returning Party and its officers, directors, managers, members, partners, stockholders, employees, Affiliates, agents and representatives shall not retain any copies of such written Confidential Information. The portion of written Confidential Information that may be found in analyses, compilations, studies or other documents prepared by, or for, the returning Party, and any written Confidential Information furnished by the requesting Party not so requested or returned, will be destroyed. Notwithstanding any provision in this Agreement to the contrary, however, neither Party nor any of its representatives shall be required to destroy or alter any computer

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archival or computer backup tapes or files which may contain any Confidential Information of the requesting Party, provided they are kept confidential in accordance with the terms of this Agreement and are not used for any purpose inconsistent with the terms of this Agreement.

21.2    For purposes of this Agreement, “Confidential Information” shall mean all information of any kind concerning the Parties (or their Affiliates), or the properties or business of the Parties (or their Affiliates), which information is confidential, proprietary or generally not available to the public, but excludes information which (a) becomes generally available to the public through no act or fault of the receiving Party; (b) a Party can demonstrate was already known to the Party at the time of disclosure by the other Party (other than any information known to the Parties regarding the Parties or their properties or business, or disclosures made by the Parties, pursuant to the transactions contemplated by this Agreement or in a Party’s evaluation thereof); (c) was acquired from a third party whom such Party does not reasonably believe is prohibited from making disclosure; or (d) a Party can demonstrate was independently developed by the Party without use of any of the Confidential Information.

21.3    The Parties shall have all rights and remedies available at law and in equity with respect to a breach of the provisions of this Section 21, including the remedies of specific performance and injunctive relief.

Section 22.    Reserved.

Section 23.    Arbitration.

23.1THE PARTIES TO THIS AGREEMENT AGREE THAT ANY DISPUTE, CONTROVERSY OR CLAIM THAT MAY ARISE BETWEEN THEM IN CONNECTION WITH OR OTHERWISE RELATING TO THIS AGREEMENT OR THE APPLICATION, IMPLEMENTATION, VALIDITY OR BREACH OF THIS AGREEMENT OR ANY PROVISION OF THIS AGREEMENT (INCLUDING CLAIMS BASED ON CONTRACT, TORT OR STATUTE), SHALL BE FINALLY, CONCLUSIVELY AND EXCLUSIVELY SETTLED BY BINDING ARBITRATION IN HOUSTON, TEXAS, IN ACCORDANCE WITH THE COMMERCIAL ARBITRATION RULES (THE “RULES”) OF THE AMERICAN ARBITRATION ASSOCIATION OR ANY SUCCESSOR THERETO (“AAA”) THEN IN EFFECT. THE PARTIES TO THIS AGREEMENT HEREBY EXPRESSLY WAIVE THEIR RIGHT TO SEEK REMEDIES IN COURT, INCLUDING THE RIGHT TO TRIAL BY JURY, WITH RESPECT TO ANY MATTER SUBJECT TO ARBITRATION PURSUANT TO THIS SECTION 23. ANY PARTY TO THIS AGREEMENT MAY BRING AN ACTION, INCLUDING A SUMMARY OR EXPEDITED PROCEEDING IN ANY COURT HAVING JURISDICTION, TO COMPEL ARBITRATION OF ANY DISPUTE, CONTROVERSY OR CLAIM TO WHICH THIS SECTION 23 APPLIES. EXCEPT WITH RESPECT TO THE FOLLOWING PROVISIONS (THE “SPECIAL PROVISIONS”) WHICH SHALL APPLY WITH RESPECT TO ANY ARBITRATION PURSUANT TO THIS SECTION 23, THE INITIATION AND CONDUCT OF ARBITRATION SHALL BE AS SET FORTH IN THE RULES, WHICH RULES ARE

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INCORPORATED IN THIS AGREEMENT BY REFERENCE WITH THE SAME EFFECT AS IF THEY WERE SET FORTH IN THIS AGREEMENT.

23.2    In the event of any inconsistency between the Rules and the Special Provisions, the Special Provisions shall control. Any references in the Rules to a sole arbitrator shall be deemed to refer to the tribunal of arbitrators provided for under Section 23.4.

23.3    The arbitration shall be administered by the AAA. If the AAA is unable or legally precluded from administering the arbitration, then the Parties shall agree upon an alternative arbitration organization, provided that if the Parties cannot agree, such organization shall be selected by the Chief Judge of the United States District Court for the Southern District of Texas.

23.4    Unless otherwise agreed in writing by the Parties for the selection of a single neutral arbitrator, the arbitration shall be conducted by a tribunal of three (3) arbitrators. Within ten (10) days after arbitration is initiated pursuant to the Rules, the initiating Party (the “Claimant”) shall send written notice to the other Party (the “Respondent”), with a copy to the Houston, Texas office of the AAA, designating the first arbitrator (who shall not be a representative or agent of any Party but may or may not be an AAA panel member and, in any case, shall be reasonably believed by the Claimant to possess the requisite experience, education and expertise in respect of the matters to which the Claim relates to enable such person to competently perform arbitral duties). With ten (10) days after receipt of such notice, the Respondent shall send written notice to the Claimant, with a copy to the Houston, Texas office of the AAA and to the first arbitrator, designating the second arbitrator (who shall not be a representative or agent of any Party but may or may not be an AAA panel member and, in any case, shall be reasonably believed by the Respondent to possess the requisite experience, education and expertise in respect of the matters to which the Claim relates to enable such person to competently perform arbitral duties). Within ten (10) days after such notice from the Respondent is received by the Claimant, the Respondent and the Claimant shall cause their respective designated arbitrators to select any mutually agreeable AAA panel member as the third arbitrator. If the respective designated arbitrators of the Respondent and the Claimant cannot so agree within said ten (10) day period, then the third arbitrator will be determined pursuant to the Rules. Prior to commencement of the arbitration proceeding, each arbitrator shall have provided the Parties with a resume outlining such arbitrator’s background and qualifications and shall certify that such arbitrator is not a representative or agent of any of the Parties. If any arbitrator shall die, fail to act, resign, become disqualified or otherwise cease to act, then the arbitration proceeding shall be delayed for fifteen (15) days and the Party by or on behalf of whom such arbitrator was appointed shall be entitled to appoint a substitute arbitrator (meeting the qualifications set forth in this Section 23.4) within such fifteen (15) day period; provided, however, that if the Party by or on behalf of whom such arbitrator was appointed shall fail to appoint a substitute arbitrator within such fifteen (15) day period, the substitute arbitrator shall be a neutral arbitrator appointed by the AAA arbitrator within fifteen (15) days thereafter.

23.5    All arbitration hearings shall be commenced within ninety (90) days after arbitration is initiated pursuant to the Rules, unless, upon a showing of good cause by a Party to the arbitration, the tribunal of arbitrators permits the extension of the commencement of such hearing; provided, however, that any such extension shall not be longer than sixty (60) days.

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23.6    All claims presented for arbitration shall be particularly identified and the Parties to the arbitration shall each prepare a statement of their position with recommended courses of action. These statements of position and recommended courses of action shall be submitted to the tribunal of arbitrators chosen as provided hereinabove for binding decision. The tribunal of arbitrators shall not be empowered to make decisions beyond the scope of the position papers.

23.7    The arbitration proceeding will be governed by the substantive laws of the State of Texas and will be conducted in accordance with such procedures as shall be fixed for such purpose by the tribunal of arbitrators, except that (a) discovery in connection with any arbitration proceeding shall be conducted in accordance with the Federal Rules of Civil Procedure and applicable case law, (b) the tribunal of arbitrators shall have the power to compel discovery, and (c) unless the Parties otherwise agree and except as may be provided in this Section 23, the arbitration shall be governed by the Federal Arbitration Act, 9 U.S. §§ 1‑16, to the exclusion of any provision of Law or procedure inconsistent therewith or which would produce a different result. The Parties shall preserve their right to assert and to avail themselves of the attorney‑client and attorney-work product privileges, and any other privileges to which they may be entitled pursuant to Law. No Party to the arbitration or any arbitrator may compel or require mediation and/or settlement conferences without the prior written consent of all such Parties and the tribunal of arbitrators.

23.8    The tribunal of arbitrators shall make an arbitration award as soon as possible after the later of the close of evidence or the submission of final briefs, and in all cases the award shall be made not later than thirty (30) days following submission of the matter. The finding and decision of a majority of the arbitrators shall be fmal and shall be binding upon the Parties. Judgment upon the arbitration award or decision may be entered in any court having jurisdiction thereof or application may be made to any such court for a judicial acceptance of the award and an order of enforcement, as the case may be. The tribunal of arbitrators shall have the authority to assess liability for pre-award and post-award interest on the claims, attorneys' fees, expert witness fees and all other expenses of arbitration as such arbitrators shall deem appropriate based on the outcome of the claims arbitrated. Unless otherwise agreed by the Parties to the arbitration in writing, the arbitration award shall include fmdings of fact and conclusions of law.

23.9    Notwithstanding any provision in this Section 23 to the contrary, this Section 23 shall not be construed to require arbitration of a claim or dispute brought by a person who is not a Party to this Agreement, or affect the ability of any Party to interplead or otherwise join the other Party in a proceeding brought by a person who is not a Party to this Agreement.

23.10    EACH PARTY UNDERSTANDS THAT THIS AGREEMENT CONTAINS AN AGREEMENT TO ARBITRATE WITH RESPECT TO ANY DISPUTE OR NEED OF INTERPRETATION OF THIS AGREEMENT. AFTER SIGNING THIS AGREEMENT, EACH PARTY UNDERSTANDS THAT IT WILL NOT BE ABLE TO BRING A LAWSUIT GOVERNING ANY DISPUTE THAT MAY ARISE WHICH IS COVERED BY THE ARBITRATION PROVISION, EXCEPT TO COMPEL ARBITRATION OR SEEK INJUNCTIVE RELIEF. INSTEAD, EACH PARTY AGREES TO SUBMIT ANY SUCH DISPUTE TO ARBITRATION.

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Remainder of page intentionally left blank;

Signature page follows

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This Agreement has been executed by the authorized representatives of each Party as set forth below effective as of the Effective Date.

Signature Page

Terminaling Services Agreement

EXHIBIT A

1.    Customer Address

Omega Refining, LLC

c/o Sterling, Gregory & Plotkin, LLC

1331 17^th Street, Suite 1060        

Denver, Colorado 80202        

Attention:    James P. Gregory,

Vice President and General Counsel

Tel. No. 303.292.9122

Fax No. 303.292.9121

2.    Owner Address

Marrero Terminal LLC

c/o PipeStem Energy Group, LLC

3721 Briarpark, Suite 200

Houston, Texas 77042

Attn: Christina Henderson

Tel. No.: 713.266.3100

Fax No.: 713.266.3113

3.    Terminal, Services, and Modes of Receipt and Delivery

Owner’s Terminaling Services shall be provided hereunder at the area designated from time to time within the Marrero facility located at 5000 River Road, Marrero, Louisiana 70094 (“Terminal”). The Terminal shall be capable of receiving and delivering Product as provided below:

	Modes of Receipt & Delivery
Barges and Marine Vessels drafting 35 feet or less
Tank Trucks
Railcars

Exhibit A - 1

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**************************************************

MATERIAL BELOW MARKED BY AN “***” HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THIS ENTIRE EXHIBIT INCLUDING THE OMITTED CONFIDENTIAL INFORMATION HAS BEEN FILED SEPARATELY WITH THE COMMISSION.

**************************************************

4.    MonthlyService Fees; Tanks at the Terminal

A.    Tanks

Exhibit A - 2

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Tanks Available on Effective Date
Tank Number	Shell (bbl)		Safe Fill (bbl)
805	6615		6261
806	3381		3123
807	3499		3293
808	3797		3462
6331		11688		10367
6854		11368		10391
7397		55830		53189
7499		13811		12302
7543		10734		9926
31493		42582		41686
31494		53832		51860

The term "Tanks" as used in this Agreement shall mean those storage tanks located at the Terminal specified above by "Tank Number," and any other tanks at the Terminal which replace or are used in substitution of the identified tanks as provided by Owner pursuant to the terms of this Agreement. The term "Tanks" shall not include any other tanks or storage facilities at the Terminal.

B.    Calculation of Fees

Exhibit A - 3

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(1)    Storage, Handling and Throughput Service Fees. During the Initial Term, Owner shall charge and Customer shall pay monthly storage, handling and throughput service charges as follows:

(a)(a) Storage Fees: *** per month based on the shell capacity of each of the Tanks, inclusive of all fees, charges, costs and expenses related to the services provided herein (including wharfage/dockage fees; vessel and barge tie­

, up costs; truck and railcar handling; overtime/holiday expenses), other than

heating as set forth below;

(b)

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MATERIAL BELOW MARKED BY AN “***” HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THIS ENTIRE EXHIBIT INCLUDING THE OMITTED CONFIDENTIAL INFORMATION HAS BEEN FILED SEPARATELY WITH THE COMMISSION.

**************************************************

(c)Throughput Fees: Additional *** for any throughput volumes above the available shell capacity on a monthly basis; and

(c) Heating: Owner will have no obligation to provide any Tank or line heating to Customer (or any fuel therefor), and Customer will arrange for its own heating and fuel requirements.

During each Subsequent Term, Owner and Customer agree that the charges set forth in Sections 4.B(l)(a), (b) and (c) above shall be at the then prevailing market rate (determined with respect to each Subsequent Term and for the period of that Subsequent Term) that would be charged by Owner to other customers of the Terminal for similar Terminal Services with comparable tank storage safe fill capacities (provided that the storage fees in Item 4.B(l)(a) shall not be less than *** per month). Owner hereby agrees to inform Customer at least thirty (30) days prior to the date on which Customer must elect whether to extend the Term of the Lease, of Owner's determination of the amount of the Storage, Throughput and Heating Fees (if any) for the following Subsequent Term.

(2)    Vessel or Barge Demurrage Charges. During the Term, demurrage claims and expenses shall be addressed as provided in Section 4.2 of this Agreement.

(3)    Taxesand Assessments. During the Term, taxes incurred with respect to this Agreement shall be addressed as provided in Section 3 of this Agreement.

Exhibit A - 4

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5.    Customer Credit Support

As further consideration and to induce Owner to enter into this Agreement, Customer has, contemporaneously with the execution hereof, caused CAM 2 International, LLC, a Colorado limited liability company, and Hammond Lubricant Works, Inc., an Indiana corporation, to execute and deliver that certain Guaranty Agreement, dated effective as of the date hereof ("Guaranty Agreement"), to guarantee for the benefit of Owner and the Owner Indemnitees the payment and performance by Customer of all of its respective obligations under this Agreement and under any agreement executed and delivered by Customer in connection with this Agreement. The form of the Guaranty Agreement is attached hereto as Exhibit D. The Guaranty Agreement shall automatically terminate on the day following expiration of the Initial Term unless Owner has made a claim under the Guaranty Agreement during the Initial Term which claim has not been satisfied in full or adequate provision (in Owner's reasonable discretion) for which has not been made on or before the expiration of the Initial Term. During any Subsequent Term, Owner may periodically review the financial condition of Customer and, if circumstances warrant, require Customer to supply and maintain a letter of credit, guaranty or other form of credit support reasonably acceptable to Owner to secure Customer's performance under this Agreement

6.    Other Fees and Charges

For any services requested by Customer that are outside of the terms of this Agreement, Owner and Customer shall agree in writing on the payment or reimbursement for such services before any such services shall be performed.

7.    Operating Hours

Hours of Operation: The Terminal shall be operated by Owner to perform its functions herein agreed to be performed twenty-four (24) hours a day, seven (7) days a week for all Products. The Terminal may be closed at Owner’s discretion if there is not available work.

8.    Standard Loss Allowance

½ of one percent

9.    Commencement Date and Term

A.    The "Commencement Date" ofthis Agreement is May 1, 2008.

B.The initial term of this Agreement will begin on the Commencement Date and continue through and including April 30, 2013 ("Initial Term"). The term of this Agreement shall continue for five (5) year successive periods (such continuance being the "Subsequent Term") in accordance with each exercise to extend the term of the Lease Agreement, shall be co­ terminous with the Lease Agreement, and shall terminate effective upon the date of termination or expiration,

Exhibit A - 5

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for any reason, of the Lease Agreement. The Initial Term and any Subsequent Term will be deemed the "Term" ofthis Agreement.

C.Customer and Owner acknowledge and agree that any termination of this Agreement shall give Owner the right, but not the obligation, to tem1inate the Lease Agreement effective upon termination of this Agreement.

10.     Customer's Equipment

None

Exhibit A - 6

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EXHIBIT B

PRODUCT SPECIFICATIONS

Normal and customary commercial specifications for the Product as contained in any MSDS supplied to Owner prior to delivery, and any other specifications provided by Customer to Owner in writing and agreed to by Owner in writing.

Exhibit B - 1

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EXHIBIT C

INSURANCE REQUIREMENTS

I.    CUSTOMER AND OWNER REQUIREMENTS

Customer (and any customers, contractors, suppliers or sublessees of Customer entering the Terminal on Customer's behalf) and Owner will each procure and maintain, at their respective sole expense, policies of insurance with the minimum amounts outlined below or such other coverages and amounts as are acceptable to Owner. Evidence of such insurance must be provided in the form of an Accord Certificate of Insurance or such other form as may be reasonably acceptable to both Parties. All insurance companies must have a financial rating from A.M. Best & Company of A IX or better.

A.    COMMERCIAL GENERAL LIABILITY

• Limit per Occurrence $1,000,000

(Bodily Injury & Property Damage Combined Single Limit)

• General Aggregate $2,000,000

• Products & Completed Operations Aggregate $1,000,000

•     Personal & Advertising Injury $1,000,000

Policy extensions and/or modifications

(1) Occurrence Insuring Agreement

(2)     Sudden & Accidental Pollution (as per standard Insuring Agreement)

arising out of Products and Completed Operations

(3)      Broad Form Property Damage coverage

(4)      Full Contractual Liability coverage

(5)     No exclusions as respects X, Cor U (Explosion, Collapse and

Underground).

(6)     30 days Notice of Cancellation or Material Change in Coverage (10 days

Non-Payment of Premium)

(7)      No limitation as respects policy territory

(8)     Independent Contractors Endorsement

Exhibit C - 1

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B.    AUTOMOBILE LIABILITY

•     Limit per Accident $1,000,000

(Bodily Injury & Property Damage Combined Single Limit)

Policy Extensions and/or Modifications

(1) Coverage for all Owned, Hired and Non-Owned Vehicles.

(2) 30 Days Notice of Cancellation or Material Change in Coverage (10 days

Non-Payment of Premium)

C.    WORKER'S COMPENSATION

•     Worker's Compensation $1,000,000 Each Accident

•     Employer's Liability $1,000,000 Disease-Each Employee

Statutory State of Hire Benefits $1,000,000 Disease-Policy Limit

Policy Extensions and/or Modifications

(1) Including United States Longshoremen and Harbor Workers Act

(2) Maritime Employers Liability Endorsement to include coverage under the Jones Act including Transportation Wages, Maintenance and Cure, Death on the High Seas Act and "In Rem" Endorsement

(3) Voluntary Compensation Endorsement

(4) Alternate Employer Endorsement

(5)    30 days Notice of Cancellation or Material Change in Coverage (10 days

Non-Payment of Premium)

(6)    Insurance must be in accordance with Louisiana Law and provided by an

Admitted Carrier

D.    UMBRELLA I EXCESS LIABILITY

• •     Limit per Occurrence

(Bodily Injury & Property Damage Combined Single Limit)

•     Annual Aggregate $5,000,000

Exhibit C - 2

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Policy Extensions and/or Modifications

(1) Occurrence Insuring Agreement

(2)    Sudden & Accidental Pollution (as per standard Insuring Agreement)

arising out of Products and Completed Operations

(3)     Broad Form Property Damage coverage

(4)     Full Contractual Liability coverage

(5)     No exclusions as respects X, Cor U (Explosion, Collapse and

Underground).

(6)     30 days Notice of Cancellation or Material Change in Coverage (10 Days

Non-Payment of Premium)

E. ANY OTHER INSURANCE REQUESTED AND AGREED TO BY BOTH PARTIES.

II.    ADDITIONAL OWNER REQUIREMENTS

In addition to the foregoing insurances, Owner shall maintain the following insurances:

A.    MARINE TERMINAL OPERATORS LIABILITY

• Limit per Occurrence

• Annual Aggregate $10,000,000

Policy Extensions and/or Modifications

(1)     Including American Institute Wharfingers Liability Wording

(2)     Including American Institute Stevedores Liability Wording

(3)     Seepage and Pollution as per 7/90 day buy back wording

B.    POLLUTION LEGAL LIABILITY

• Limit per Occurrence

•    Annual Aggregate $10,000,000

Policy Extensions and/or Modifications

(1) Applicable to bodily injury, property damage, including loss of use of damaged property or loss of property that has not been physically injured or destroyed

Exhibit C - 3

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(2) Including cleanup costs and defense, including costs and expenses

incurred in the investigation, defense or settlement of claims

(3) Coverage to apply to sudden and non-sudden pollution conditions resulting from the escape or release of smoke, vapors, fumes, acids, alkalis, toxic chemicals, liquids, gases, waste materials, or other irritants, contaminants or pollutants

C.    PROPERTY

• All risk property insurance on a replacement cost basis on all real and personal property at the Terminal, including all pipelines, tanks, railcar and truck-loading

facilities, docks and other property needed by Owner to perform the Terminaling

• Services. Coverage shall include Boiler & Machinery and Machinery Interruption.

III. CLAIMS-MADE COVERAGE

If coverage as required by Item II.B. above is written on a claims-made basis, Owner warrants that the retroactive date applicable to coverage under the policy will precede the Commencement Date, and that continuous coverage will be maintained or an extended discovery period will be exercised for a period of six years beginning from the time that performance under this Agreement is completed.

IV. INSURANCE AND INDEMNIFICATION

It is expressly understood that the insurance provisions of this Agreement, including the minimum required limits outlined above, are intended to assure that certain minimum standards of insurance protection are afforded by each Party and the specifications in this Agreement of any amount will be construed to support but not in any way limit the amount or scope of liabilities and indemnity obligations (express or implied) of each Party. The minimum limits required in this Agreement for any particular type of insurance may be satisfied by a combination of the specific type of insurance and umbrella or excess liability insurance. Each Party shall be responsible for all deductibles applicable to the minimum required coverage required of such Party in this Agreement.

V. SELF-INSURANCE

Not applicable.

Exhibit C - 4

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EXIBIT D

FORM OF GUARANTY AGREEMENT

(See Attached)

Exhibit D - 1

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EXHBIT D

FORM OF GUARANTY AGREEMENT

UNCONDITIONAL GUARANTY AGREEMENT

THIS UNCONDITIONAL GUARANTY AGREEMENT (as amended, this "Guaranty Agreement') is executed as of April30, 2008, by CAM2 INTERNATIONAL, LLC, a Colorado limited liability company, and HAMMOND LUBRICANT WORKS, INC., an Indiana corporation (such parties being referred to herein, jointly and severally, as "Guarantor," and each use of the term "Guarantor" or reference thereto shall mean or be a reference to each of such persons, jointly and severally), for the benefit of MARRERO TERMINAL LLCROTERNUNAL LLC, a Delaware limited liability company ("Marrero Terminaf').

WHEREAS, Omega Refining, LLC, a Delaware limited liability company ("Omega"), and Marrero Terminal have entered into (a) a Purchase and Sale Agreement dated of even date herewith, (b) a Terminaling Services Agreement dated of even date herewith (as amended, the "TSA"), (c) a Land Lease dated of even date herewith (as amended, the "Lease"), and (d) a Co-Employer and Shared Services Agreement dated of even date herewith (collectively, as such agreements may hereafter be renewed, extended, amended, restated, or replaced from time to time, the "Marrero Documents");

WHEREAS, Marrero Terminal is not willing to enter into the Marrero Documents unless Guarantor unconditionally guarantees all obligations of Omega to Marrero Tenninal under the Marrero Documents; and

WHEREAS, Guarantor will benefit from Marrero Terminal entering into the Marrero Documents with Omega.

NOW, THEREFORE, as an inducement to Marrero Terminal to enter into the Marrero Document with Omega, and to incur such obligations to Omega as may be set forth in the Marrero Documents, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Guarantor hereby guarantees payment of the Guaranteed Obligations (hereinafter defined) as more specifically described in Section 1.03 below, and hereby further agrees as follows:

Article I

NATURE AND SCOPE OF GUARANTY

Section 1.01.    Definition of Guaranteed Obligations. As used herein, the term "Guaranteed

Obligations" means:

(a)    all indebtedness, obligations, liabilities, and duties of Omega to Marrero

Terminal at any time created or arising in connection with or under the Marrero Documents; and

(b) all costs, expenses and fees, including but not limited to court costs and attorneys' fees, arising in connection with the collection of any or all amounts, indebtedness, obligations, and liabilities of Omega to Marrero Terminal described in clause (a) of this Section 1.01.

Notwithstanding anything to the contrary set forth above, after the Initial Term (as such term is defined in the TSA and the Lease, respectively), the indebtedness, obligations, liabilities, and duties of

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Omega to Marrero Terminal under the TSA and the Lease shall not constitute "Guaranteed Obligations"; provided, that, the same shall constitute "Guaranteed Obligations" if, and to the extent that, a claim has been duly made hereunder during the Initial Term, which claim has not been satisfied in full or adequate provision (in Marrero Terminal's reasonable discretion) for which has not been made on or before the expiration of the Initial Term.

Section 1.02. Guaranteed Obligations Not Reduced by Offset. The indebtedness, liabilities, obligations and other Guaranteed Obligations guaranteed hereby, and the liabilities and obligations of Guarantor to Marrero Terminal hereunder, shall not be reduced, discharged or released because or by reason of any existing or future offset, claim or defense of Omega or any other party against Marrero Terminal or against the Guaranteed Obligations, whether such offset, claim or defense arises in connection with the Guaranteed Obligations (or the transactions creating the Guaranteed Obligations) or otherwise.

Section 1.03. Guaranty of Obligation. Guarantor and each of them, jointly and severally, hereby irrevocably and unconditionally guarantees to Marrero Terminal and its successors and assigns (a) the due and punctual payment of the Guaranteed Obligations, and (b) the timely performance of those obligations of Omega to Marrero Terminal under the Marrero Documents. Each Guarantor, jointly and severally, hereby irrevocably and unconditionally covenants and agrees that it is liable for the Guaranteed Obligations as primary obligor.

Section 1.04. Nature of Guaranty. This Guaranty Agreement is intended to be an irrevocable, absolute, and continuing guaranty of payment and is not a guaranty of collection. This Guaranty Agreement may not be revoked by Guarantor (provided, however, if, according to applicable law, it shall ever be determined or held that a guarantor under a continuing guaranty such as this Guaranty Agreement shall have the absolute right, notwithstanding the express agreement of such a guarantor otherwise, to revoke such guaranty as to Guaranteed Obligations which has then not yet arisen, then Guarantor, or any one or more of them, may deliver to Marrero Terminal written notice, in addition to giving such notice as provided in Section 5.02 hereof, that the Guarantor giving such notice will not be liable hereunder for any Guaranteed Obligations created, incurred, or arising after the giving of such notice, and such notice will be effective as to the Guarantor who gives such notice from and after (but not before) such times as said written notice is actually delivered to Marrero Terminal, in addition to giving such notice as provided in Section 5.02 hereof, and received by and receipted for in writing by Marrero Terminal; provided, that such notice shall not in any way affect, impair, or limit the liability and responsibility of any other Guarantor hereunder or other person or entity with respect to any Guaranteed Obligations theretofore existing or thereafter existing, arising, renewed, extended or modified; and provided, further, that such notice shall not affect, impair, or release the liability and responsibility of the Guarantor giving such notice with respect to Guaranteed Obligations created, incurred, or arising (or in respect of any Guaranteed Obligations agreed or contemplated, in any respect, to be created, whether advanced or not and whether or not committed to by Marrero Terminal) prior to the receipt of such notice by Marrero Terminal as aforesaid, or in respect of any renewals, extensions, or modifications of such Guaranteed Obligations, or in respect of interest or costs of collection thereafter accruing on or with respect to such Guaranteed Obligations, or with respect to attorneys' fees thereafter becoming payable hereunder with respect to such Guaranteed Obligations), and shall continue to be effective with respect to any Guaranteed Obligations arising or created after any attempted revocation by Guarantor. This Guaranty Agreement may be enforced by Marrero Terminal and shall not be discharged by the assignment or negotiation of all or part of the Guaranteed Obligations.

Section 1.05.     Payment by Guarantor. Upon any breach or default under, or termination of, the

Marrero Documents, Guarantor shall, immediately upon demand by Marrero Terminal, and without

presentment, protest, notice of protest, notice or nonpayment, or any other notice whatsoever, pay in lawful money of the United States of America any amount due on the Guaranteed Obligations to Marrero Terminal at Marrero Terminal's principal office in Houston, Texas. Such demand may be made at any time coincident with or after the time for payment of all or part of the Guaranteed Obligations, and may be made from time to time with

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respect to the same or different items of Guaranteed Obligations. Such demand shall be deemed made, given and received in accordance with Section 5.02 hereof.

Section 1.06. Payment of Expenses. In the event that Guarantor should breach or fail to timely perform any provisions of this Guaranty Agreement, Guarantor shall, immediately upon demand by Marrero Terminal, pay Marrero Terminal all costs and expenses (including court costs and reasonable attorneys' fees) incurred by Marrero Terminal in the enforcement hereof or the preservation of Marrero Terminal's rights hereunder. The covenant contained in this Sectioul.06 shall survive the termination of the Guaranteed Obligations.

Section 1.07. No Duty to Pursue Others.It shall not be necessary for Marrero Terminal (and Guarantor hereby waives any rights which Guarantor may have to require Marrero Terminal), in order to enforce any payment by Guarantor hereunder, first to (a) institute suit or exhaust its remedies against Omega or others liable on the Guaranteed Obligations or any other person, (b) enforce Marrero Terminal's rights against any security which shall ever have been given to secure the Guaranteed Obligations, (c) enforce Marrero Terminal's rights against any other guarantors of the Guaranteed Obligations, (d) join Omega or any others liable on the Guaranteed Obligations in any action seeking to enforce this Guaranty Agreement, (e) exhaust any remedies available to Marrero Terminal against any security which shall ever have been given to secure the Guaranteed Obligations, or (f) resort to any other means of obtaining payment of the Guaranteed Obligations. Marrero Terminal shall not be required to mitigate damages or take any other action to reduce, collect or enforce the Guaranteed Obligations. Further, Guarantor expressly waives each and every right to which it may be entitled by virtue of the suretyship law of the State ofTexas.

Section 1.08. Waiver of Notices, etc. Guarantor agrees to the provlSlons of the Marrero Documents, and hereby waives notice of (a) acceptance of this Guaranty Agreement, (b) the execution and delivery by Omega and Marrero Terminal of any agreement other than a Marrero Document (or amendment thereto), (c) the occurrence of any breach by Omega or default in connection with the Guaranteed Obligations and any instruments, agreements or security documents with respect thereto, (d) Marrero Terminal's transfer or disposition of the Guaranteed Obligations, or any part thereof, (e) sale or foreclosure (or posting or advertising for sale or foreclosure) of any collateral for the Guaranteed Obligations, (f) protest, proof of nonpayment or default or breach by Omega under the Marrero Documents, or (g) any other action at any time taken or omitted by Marrero Terminal, and, generally, all demands and notices of every kind in connection with this Guaranty Agreement, the Marrero Documents, and any documents or agreements evidencing, securing or relating to any of the Guaranteed Obligations and the obligations guaranteed hereby.

Section 1.09. Effect of Bankruptcy, Other Matters.In the event that, pursuant to any insolvency, bankruptcy, reorganization, receivership or other debtor relief law, or any judgment, order or decision thereunder, or for any other reason, (a) Marrero Terminal must rescind or restore any payment, or any part thereof, received by Marrero Terminal in satisfaction of the Guaranteed Obligations, as set forth herein, any prior release or discharge from the terms of this Guaranty Agreement given to Guarantor by Marrero Terminal shall be without effect, and this Guaranty Agreement shall remain in full force and effect, (b) Omega shall cease to be liable to Marrero Terminal for any of the Guaranteed Obligations (other than by reason of the indefeasible payment in full thereof by Omega), the obligations of Guarantor under this Guaranty Agreement shall remain in full force and effect. It is the intention of Marrero

Tenninal and Guarantor that Guarantor's obligations hereunder shall not be discharged except by Guarantor's performance of such obligations and then only to the extent of such performance. Without limiting the generality of the foregoing, it is the intention of Marrero Terminal and Guarantor that the filing of any bankruptcy or similar proceeding by or against Omega or any other person or party obligated on any portion of the Guaranteed Obligations shall not affect the obligations of Guarantor under this Guaranty Agreement or the rights of

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Marrero Terminal under this Guaranty Agreement, including, without limitation, the right or ability of Marrero Terminal to pursue or institute suit against Guarantor for the entire Guaranteed Obligations.

Section 1.10. Financial Information. Guarantor agrees to deliver to Marrero Terminal balance sheets, profit and loss statements, reconciliations of capital and surplus, changes in financial condition, schedules of sources and application of funds, and other financial information of Guarantor as shall be reasonably required by Marrero Terminal, not later than ninety (90) days after the end of each fiscal year of Guarantor, which statements shall be certified by an independent certified public accounting firm reasonably acceptable to Marrero Terminal.

Section 1.11. Termination. Notwithstanding anything to the contrary set forth in this Guaranty Agreement, this Guaranty Agreement shall terminate, and the Guarantor shall have no further obligation to Marrero Terminal, if: (a) as of the end of any fiscal year of Omega after the initial Term (as defined in the Lease) of the Lease, the Consolidated Net Worth of Omega and its subsidiaries, as determined by independent public accountants reasonably acceptable to Marrero Terminal, shall exceed the Consolidated Net Worth Threshold; or (b) upon any sale of all or substantially all of Omega's assets, or equity interests in Omega, or the occurrence of any other "change of control" transaction not otherwise prohibited under the Marrero Documents, the Consolidated Net Worth of the successor to Omega's rights and obligations under the Marrero Documents shall exceed the Consolidated Net Worth Threshold. As used herein: (x) "Consolidated Net Worth" means, as of any date of determination, all items that, in confonnity with generally accepted accounting principles in the United States of America in effect from time to time, would be included under shareholders' equity on a consolidated balance sheet of a person and its subsidiaries at such date; and (y) "Consolidated Net Worth Threshold'' means $13,800,000.

ARTICLE II

ADDITIONAL EVENTS AND CIR.CUMSTANCES NOT REDUCINGOR DISCHARGING GUARANTOR'S OBLIGATIONS

Guarantor hereby consents and agrees to each of the following, agrees that Guarantor's obligations under this Guaranty Agreement shall not be released, diminished, impaired, reduced or adversely affected by any of the following, and waives any common law, equitable, statutory or other rights (including without limitation rights to notice) which Guarantor or any of them might otherwise have as a result of or in connection with any of the following:

Section 2.01. Modifications, etc. Any renewal, extension, increase, modification, alteration or rearrangement of any agreement, document, instrument, contract or understanding between Omega and Marrero Terminal pertaining to the Guaranteed Obligations;

Section 2.02. Adjustment, etc. Any adjustment, indulgence, forbearance or compromise that might be granted or given by Marrero Terminal to Omega or Guarantor;

Section 2.03. Condition, Composition or Structure of Omega or Guarantor. The insolvency, bankruptcy, arrangement, adjustment, composition, structure, liquidation, disability, dissolution or lack of

power of Omega or any other party at any time liable for the payment of all or part of the Guaranteed Obligations; or any dissolution of Omega or Guarantor, or any sale, lease or transfer of any or all of the assets of Omega or Guarantor, or any changes in name, business, location, composition, structure or changes in the shareholders, partners or members (whether by accession, secession, cessation, death, dissolution, transfer of assets or other matter) of Omega or Guarantor; or any reorganization of Omega or Guarantor;

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Section 2.04. Invalidity of Guaranteed Obligations. The invalidity, illegality or unenforceability of all or any part of the Guaranteed Obligations, or any document or agreement executed in connection with the Guaranteed Obligations, for any reason whatsoever, including without limitation the fact that (a) the Guaranteed Obligations, or any part thereof, exceeds the amount permitted by law, (b) the act of creating the Guaranteed Obligations or any part thereof is ultra vires , (c) the officers or representatives executing the Marrero Documents or other documents or otherwise creating the Guaranteed Obligations acted in excess of their authority, (d) the Omega has valid defenses, claims or offsets (whether at law, in equity or by agreement) which render the Guaranteed Obligations wholly or partially uncollectible from Omega, (e) the creation, performance or repayment of the Guaranteed Obligations (or the execution, delivery and performance of any document or instrument representing part of the Guaranteed Obligations or executed in connection with the Guaranteed Obligations, or given to secure the repayment of the Guaranteed Obligations) is illegal, uncollectible or unenforceable, or (f) the Marrero Documents or other documents or instruments pertaining to the Guaranteed Obligations have been forged or otherwise are irregular or not genuine or authentic;

Section 2.05. Release of Obligors. Any full or partial release of the liability of Omega on the Guaranteed Obligations or any part thereof, or of any Guarantor, it being recognized, acknowledged and agreed by Guarantor that Guarantor may be required to pay the Guaranteed Obligations in full without assistance or support of any other party; notwithstanding the foregoing, Guarantor does not hereby waive or release (expressly or impliedly) any rights of subrogation, reimbursement or contribution which it may have, after payment in full of the Guaranteed Obligations, against others liable on the Guaranteed Obligations;

Section 2.06. Other Security. The taking or accepting of any other security, collateral or guaranty, or other assurance of payment, for all or any part of the Guaranteed Obligations;

Section 2.07. Merger. The reorganization, merger or consolidation of Omega or Guarantor into or with any other corporation or entity;

Section 2.08. Preference. Any payment by Omega to Marrero Terminal is held to constitute a preference under bankruptcy laws, or for any reason Marrero Terminal is required to refund such payment or pay such amount to Omega or someone else; or

Section 2.09. Other Actions Taken or Omitted. Any other action taken or omitted to be taken with respect to the Marrero Documents or the Guaranteed Obligations.

Article IIIREPRESENTATIONS AND WARRANTIES

To induce Marrero Terminal to enter into the Marrero Documents with Omega, Guarantor represents and warrants to Marrero Terminal that:

Section 3.0I.Benefit. Guarantor is directly or indirectly controlled by persons that directly or indirectly control Omega and has received, or will receive, direct or indirect benefit from the making of this Guaranty and the Guaranteed Obligations;

Section 3.02. Familiarity and Reliance. Guarantor is familiar with, and has independently reviewed books and records regarding, the financial condition of the Omega and is familiar with the value of any and all

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collateral intended to be created as security for the payment of the Guaranteed Obligations; however, Guarantor is not relying on such financial condition or the collateral as an inducement to enter into this Guaranty Agreement;

Section 3.03. No Representation by Marrero Terminal. Neither Marrero Terminal nor any other party has made any representation, warranty or statement to Guarantor in order to induce the Guarantor to execute this Guaranty Agreement;

Section 3.04. Guarantor's Financial Condition. As of the date hereof, and after giving effect to this Guaranty Agreement and the contingent obligation evidenced hereby, Guarantor is, and will be, solvent, and has and will have assets which, fairly valued, exceed its obligations, liabilities and debts;

Section 3.05. Directors' Determination of Benefit. The Board of Directors or equivalent governing body of Guarantor, acting pursuant to a duly called and constituted meeting, after proper notice, or pursuant to a valid unanimous consent, has determined that this Guaranty directly or indirectly benefits Guarantor and is in the best interests of Guarantor.

Section 3.06. Legality. The execution, delivery and performance by Guarantor of this Guaranty Agreement and the consummation of the transactions contemplated hereunder (a) have been duly authorized by all necessary corporate and stockholder action or limited liability company and member action of Guarantor, and (b) do not, and will not, contravene or conflict with any law, statute or regulation whatsoever to which Guarantor is subject or constitute a default (or an event which with notice or lapse of time or both would constitute a default) under, or result in the breach of, any indenture, mortgage, deed of trust, charge, lien, or any contract, agreement or other instrument to which Guarantor is a party or which may be applicable to Guarantor or any of its assets, or violate any provisions of its Certificate of Incorporation or Certificate of Formation, Bylaws or any other organizational document of Guarantor; this Guaranty Agreement is a legal and binding obligation of Guarantor and is enforceable in accordance with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to the enforcement of creditors' rights.

Section 3.07. Organization and Good Standing. Guarantor (a) is, and will continue to be, a corporation duly organized and validly existing in good standing under the laws of the State of Indiana, or a limited liability company duly organized and validly existing in good standing under the laws of the State of Colorado, as applicable, and (b) possesses all requisite authority, power, licenses, permits and franchises necessary to own its assets, to conduct its business and to execute and deliver and comply with the terms of this Guaranty Agreement.

Section 3.08. Survival. All representations and warranties made by Guarantor herein shall survive the execution hereof.

Article IV

WAIVER, SUBORDINATION OF CERTAIN INDEBTEDNESS

Section 4.01. Subordination of Guarantor Claims. As used herein, the term "Guarantor Claims" shall mean all debts and liabilities of Omega to Guarantor, whether such debts and liabilities now exist or are hereafter incurred or arise, or whether the obligations of Omega thereon be direct, contingent, primary, secondary, several, joint and several, or otherwise, and irrespective of whether such debts or liabilities be evidenced by note, contract, open account, or otherwise, and irrespective of the person or persons in whose favor such debts or liabilities may, at their inception, have been, or may hereafter be created, or the manner in which they have been or may hereafter be acquired by Guarantor. Until the Guaranteed Obligations shall be paid and satisfied in

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full and Guarantor shall have performed all of its obligations hereunder, Guarantor shall not receive or collect, directly or indirectly, from Omega or any other party any amount upon the Guarantor Claims.

Section 4.02. Claims in Bankruptcy. In the event of receivership, bankruptcy, reorganization, arrangement, debtor's relief, or other insolvency proceedings involving Omega, as debtor, Marrero Terminal shall have the right to prove its claim in any such proceeding so as to establish its rights hereunder and receive directly from the receiver, trustee or other court custodian dividends and payments which would otherwise be payable upon Guarantor Claims. Guarantor hereby assigns such dividends and payments to Marrero Tenninal. Should Marrero Terminal receive, for application upon the Guaranteed Obligations, any such dividend or payment that is otherwise payable to Guarantor, and which, as between Omega and Guarantor, shall constitute a credit upon the Guarantor Claims, then upon payment to Marrero Terminal in full of the Guaranteed Obligations, Guarantor shall become subrogated to the rights of Marrero Terminal to the extent that such payments to Marrero Terminal on the Guarantor Claims have contributed toward the liquidation of the Guaranteed Obligations, and such subrogation shall be with respect to that proportion of the Guaranteed Obligations which would have been unpaid if Marrero Terminal had not received dividends or payments upon the Guarantor Claims.

Section 4.03.     Payments Held in Trust.In the event that, notwithstanding Sections 4.01 and

4.02 above, Guarantor shall receive any funds, payment, claim or distribution which is prohibited by such Sections, Guarantor agrees to hold in trust for Marrero Terminal, in kind, all funds, payments, claims or distributions so received, and agrees that he shall have absolutely no dominion over such funds, payments, claims or distributions so received except to pay them promptly to Marrero Terminal, and Guarantor covenants promptly to pay the same to Marrero Terminal.

Section 4.04. Liens Subordinate. Guarantor agrees that any liens, security interests, judgment liens, charges or other encumbrances upon Omega's assets securing payment of the Guarantor Claims shall be and remain inferior and subordinate to any liens, security interests, judgment liens, charges or other encumbrances upon Omega's assets securing payment of the Guaranteed Obligations, if any, regardless of whether such encumbrances in favor of Guarantor or Marrero Terminal presently exist or are hereafter created or attach. Without the prior written consent of Marrero Terminal, Guarantor shall not (a) exercise or enforce any creditor's right it may have against Omega, or (b) foreclose, repossess, sequester or otherwise take steps or institute any action or proceedings Uudicial or otherwise, including without limitation the commencement of, or joinder in, any liquidation, bankruptcy, rearrangement, debtor's relief or insolvency proceeding) to enforce any liens, mortgages, deeds of trust, security interest, collateral rights, judgments or other encumbrances on assets of Omega held by Guarantor.

Section 4.05. Notation of Records. All promissory notes, accounts receivable ledgers or other evidences of the Guarantor Claims accepted by or held by Guarantor shall contain a specific written notice thereon that the indebtedness evidenced thereby is subordinated under the terms of this Guaranty Agreement.

Section 4.06. Waiver of Incidental Claims. Notwithstanding anything to the contrary contained in this Guaranty, Guarantor waives all rights of subrogation, reimbursement, indemnification, contribution and all other claims against Omega and every other party which is or shall ever be in any way obligated on the Guaranteed Obligations which Guarantor may ever have as a result of payment of any of the Guaranteed Obligations, as well as all incidental rights and benefits in favor of Guarantor in connection with payment of any of the Guaranteed Obligations.

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ARTICLE V MISCELLANEOUS

Section 5.01. Waiver. No failure to exercise, and no delay in exercising, on the part of Marrero Terminal, any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right. The rights of Marrero Terminal hereunder shall be in addition to all other rights provided by law. No modification or waiver of any provision of this Guaranty Agreement, nor consent to departure therefrom, shall be effective unless in writing and no such consent or waiver shall extend beyond the particular case and purpose involved. No notice or demand given in any case shall constitute a waiver of the right to take other action in the same, similar or other instances without such notice or demand.

Section 5.02. Notices. Any notices or other communications required or permitted to be given by this Guaranty Agreement must be (a) given in writing and personally delivered or mailed by prepaid certified or registered mail, return receipt requested, or (b) made by tested telex delivered or transmitted, to the party to whom such notice or communication is directed, to the address of such party as follows:

Guarantor:    Omega Refining, LLC

1331 1i11 Street, Suite 1060

Denver, Colorado 80202

Attn:    James P. Gregory

Telecopy No.: 303.292.9121 with copy to:

Omega Refining, LLC

3045 Whitman Drive, Ste. 103

Attn: David Bluestein

Evergreen, CO 80439

Telecopy No.: 303.679.8988

Marrero Terminal:    Marrero Terminal LLC

c/o PipeStem Energy Group, LLC

3721 Briarpark Drive, Suite 200

Houston, Texas 77042

Attn:    Vincent J. Di Cosimo

TelecopyNo.: 713-266-3117

Any such notice or other communication shall be deemed to have been given (whether actually received or not) on the day it is personally delivered as aforesaid or, if mailed, on the day it is mailed as aforesaid, or, if transmitted by telex, on the day that such notice is transmitted as aforesaid. Any party may change

its address for purposes of this Guaranty Agreement by giving notice of such change to the other party pursuant to this Section 5.02.

Section 5.03. Governing Law. The substantive laws of the State of Texas shall govern the validity, construction, enforcement and interpretation of this Guaranty Agreement. For purposes of this Guaranty

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Agreement and the resolution of disputes hereunder, Guarantor hereby irrevocably submits and consents to, and waives any objection to, the non-exclusive jurisdiction of the courts of the State of Texas located in Harris County, Texas and of the federal court located in the Southern District of Texas, Houston Division.

Section 5.04. Invalid Provisions. If any provision of this Guaranty Agreement is held to be illegal, invalid, or unenforceable under present or future laws effective during the term of this Guaranty Agreement, such provision shall be fully severable and this Guaranty Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part of this Guaranty Agreement, and the remaining provisions of this Guaranty Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Guaranty Agreement, unless such continued effectiveness of this Guaranty Agreement, as modified, would be contrary to the basic understandings and intentions of the parties as expressed herein.

Section 5.05. Entirety and Amendments. This Guaranty Agreement embodies the entire agreement between the parties and supersedes all prior agreements and understandings, if any, relating to the subject matter hereof, and this Guaranty Agreement may be amended only by an instrument in writing executed by an authorized officer of the party against whom such amendment is sought to be enforced.

Section 5.06. Parties Bound; Assignment. This Guaranty Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors, assigns and legal representatives; provided, however, that Guarantor may not, without the prior written consent of Marrero Terminal, assign any of its rights, powers, duties or obligations hereunder.

Section 5.07. Headings. Section headings are for convenience of reference only and shall in no way affect the interpretation of this Guaranty Agreement.

Section 5.08. Multiple Counterparts. This Guaranty Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same agreement, and any of the parties hereto may execute this Guaranty Agreement by signing any such counterpart.

Section 5.09. Rights and Remedies. If Guarantor becomes liable for any indebtedness or other obligations owing by Omega to Marrero Terminal, by endorsement or otherwise, other than under this Guaranty Agreement, such liability shall not be in any manner impaired or affected hereby and the rights of Marrero Terminal hereunder shall be cumulative of any and all other rights that Marrero Terminal may ever have against Guarantor. The exercise by Marrero Terminal of any right or remedy hereunder or under any other instrument, or at law or in equity, shall not preclude the concurrent or subsequent exercise of any other right or remedy.

Remainder of Page Intentionally Blank.

Signature Page to Follow.

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EXECUTED as of the day and year first above written.

GUARANTORS:

CAM2 INTERNATIONAL, LLC,

a Colorado limited liability company

By: Name:

Title:

HAMMOND LUBRICANT WORKS, INC.,

an Indiana corporation

By: Name:

Title:

Signature Page to Unconditional Guaranty Agreement

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EX-10.26

Exhibit 10.26

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MATERIAL BELOW MARKED BY AN “***” HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THIS ENTIRE EXHIBIT INCLUDING THE OMITTED CONFIDENTIAL INFORMATION HAS BEEN FILED SEPARATELY WITH THE COMMISSION.

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SECOND USED MOTOR OIL BUY/SELL CONTRACT

THIS SECOND USED MOTOR OIL BUY/SELL CONTRACT (“Agreement”) is entered into and made effective as of the 1st day of August, 2012, (the “Effective Date”) by and between Thermo Fluids Inc., a Delaware corporation with its principal place of business located at 8925 E. Pima Center Parkway, Ste. 105, Scottsdale AZ 85258 (the “Seller”) and Omega Refining, LLC, a Delaware limited liability corporation and Bango Refining NV, LLC, a Delaware limited liability corporation, both having principal offices located at 211 Violet Street, units 100 and 110 respectively, Golden, Colorado 80409 (collectively the “Buyer”). Seller and Buyer, each of which, is sometimes referred to herein individually as “Party” and collectively as the “Parties”.

WHEREAS, Seller is in the business of recycling and selling used motor oil (as defined below);

WHEREAS, Buyer is in the business of operating facilities that re-refine used motor oil;

WHEREAS, This Agreement provides for the sale and purchase of used motor oil meeting the specifications and per the minimum volume requirements set forth herein.

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is mutually acknowledged, both Parties agree as follows:

1. TERM.     This Agreement shall commence effective August 1, 2012, and shall terminate December 31, 2014 (the “Term”). This Agreement will automatically renew at the end of the initial Term for one year periods unless either Party provides notice to the other at least 120 days prior to the expiration date declaring its intent to terminate the Agreement at the end of the initial or renewal term.

2. SCOPE OF SERVICES (the “Services”).

(a) Product and Quality. Seller intends to sell and Buyer intends to buy used motor oil in accordance with the quality specifications referenced in Exhibit A (the “Specifications”) attached and incorporated by reference (“UMO”). UMO that meets or exceeds the Specifications shall be referred to herein as the “Product”. If the UMO does not meet Specifications, Purchaser shall have the right to reject or revoke its acceptance of the UMO, in accordance with Section 6 herein.

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(b) Quantity. Seller shall sell supply and deliver, and Buyer shall purchase and accept no less than the minimum of 26,000,000 gallons of Product per year at the Points of Delivery specified below (the Minimum Volume”) during the Term. For the avoidance of doubt, by mutual agreement between the Parties, Buyer may adjust the Minimum Monthly Volumes delivered, but in no event, except for the prorated term as defined in 3(b), shall that the total number of gallons delivered by Seller and accepted by Buyer be less than 26,000,000 at the end of each year. For the initial term of August 1, 2012 through December 31, 2012, the measurement period for the annual minimum volume will begin with Product supplied to Buyer on October 1, 2012. Notwithstanding the terms of default in Section 7, if Buyer defaults in its obligation to purchase the Minimum Monthly or Annual Volumes as set forth herein, Buyer’s cure period for such deficiency is 30 days from Seller’s notice of default. The Product shall be allocated between the following Points of Delivery and Seller shall supply and Buyer will be obligated to purchase no less than the minimum monthly and annual volume amounts as specified below:

Point of Delivery	Min. Monthly Volume (measured in gallons)	Min. Annual Volume (measured in gallons)
Bango Refining, Fallon NV Year 2012	See Delivery and Pricing Schedule in Section 3	3,800,000 (annualized calendar year proration as defined in section 3(a))
Bango Refining, Fallon NV Year 2013	900,000	10,800,000
Bango Refining, Fallon NV Year 2014	900,000	10,800,000
Omega Refining, LA Year 2012	1,266,666	15,200,000
Omega Refining, LA Year 2013	1,266,666	15,200,000
Omega Refining, LA Year 2014	1,266,666	15,200,000

Upon 90 days prior written notice to Seller, Buyer may reallocate up to a maximum of 500,000 gallons per month of the required monthly Minimum Volume. If Buyer elects to reallocate gallons, Product pricing shall be determined as though delivery was made to the original destination, but Buyer shall pay all additional transportation and transportation related costs resulting from such reallocation, including but not limited to, railcar rental, wash-out fees, and any applicable fuel charges. In the event Buyer elects to reallocate more than 300,000 gallons in any

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calendar month, the excess above 300,000 gallons shall be subject to Seller’s access to railcars including any railcars that Buyer provides to Seller for such purpose.

(c) Points of Delivery. Seller shall deliver the Product in accordance with the limitations set forth in Exhibit C (“Mode of Receipt and Delivery), to the receiving flange at: (i) Bango’s facility located at 22211 Bango Road, Fallon NV 89511, or (ii) Omega’s facility located at 5000 River Road, Marrero, Louisiana 70072 (“Marrero LA”) as directed by Buyer in accordance with this Section 2, or (iii) Kinder Morgan rail spur zone 7, track 756, 7 Oaks Kinder Morgan, 106 Bridge City Avenue, Westwego LA 70094 (each considered a “Point of Delivery”). Except for the fuel charge and as otherwise provided herein, Seller shall be responsible for all transportation and transportation related costs to the Point of Delivery. Seller shall invoice Buyer when Product passes the flange at the Point of Delivery (“Seller Invoicing”).

(i) Deliveries to Fallon NV will be limited to transportation via railcar and truck only;

(ii) Deliveries to Marrero LA will be transported by barge, railcar and or truck.

(iii) Deliveries to Kinder Morgan will be via railcar.

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MATERIAL BELOW MARKED BY AN “***” HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THIS ENTIRE EXHIBIT INCLUDING THE OMITTED CONFIDENTIAL INFORMATION HAS BEEN FILED SEPARATELY WITH THE COMMISSION.

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3. DELIVERY, PRICING SCHEDULES AND PAYMENT.

(a) The purchase price for each gallon of the Minimum Volume of Product sold and delivered to the Point of Delivery will be determined by the percentage of the average low posting of Platts US Gulf Coast No. 6 Fuel Oil 3% sulphur for the month prior to the date the Product is released by Seller via railcar or truck and further adjusted in accordance with subsection (d) of this Section shall be as follows:

Point of Delivery: Bango Refining, Fallon Nevada

Term: August 1, 2012 through December 31, 2012	Shipment Date Tier	Minimum Monthly Volume of gallons delivered	% of Avg. low posting of Platts US Gulf Coast No. 6 Fuel Oil, 3% sulphur	Additional amount added to Platt’s %
	8/1/12 through 8/31/12	Total Minimum: 400,000	***	***
	9/1/12 through 9/30/12	1st 400,000	***	***
		Plus: 2nd 300,000	***	***
		Total Minimum: 700,000
	10/1/12 through 12/31/12	1st 400,000	***	***
		Plus: 2nd 300,000	***	***
		Plus 3rd: 200,000	***	***
		Total Minimum: 900,000

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MATERIAL BELOW MARKED BY AN “***” HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THIS ENTIRE EXHIBIT INCLUDING THE OMITTED CONFIDENTIAL INFORMATION HAS BEEN FILED SEPARATELY WITH THE COMMISSION.

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Term: January 1, 2013 through December 31, 2014	Shipment Tier	Minimum Monthly Volume of gallons delivered	% of Avg. low posting of Platts US Gulf Coast No. 6 Fuel Oil, 3% sulphur	Additional amount added to Platt’s %
	1/1/13 through 12/31/14	1st 400,000	***	***
		Plus: 2nd 300,000	***	***
		Plus 3rd: 200,000	***	***
		Total Minimum: 900,000

Point of Delivery: Omega Refining, Louisiana

Term: August 1 , 2012 through December 31, 2014	Shipment Date Tier	Minimum Monthly Volume of gallons delivered	% of Avg. low posting of Platts US Gulf Coast No. 6 Fuel Oil, 3% sulphur	Additional amount added to Platt’s %
	8/1/12 through 12/31/12	1,266,666	***	***
	1/1/13 through 12/31/14	1,266,666	***	***

(b) The price paid shall apply to dry oil, net of water, glycol and sediment (the “Net Gallons”). The volume specified in this Section 3 will be prorated for any portion of the Term that does not constitute a full calendar year. Payments for the Product shall be made no later than five (5) days after Seller’s Invoicing and copy of terminal records indicating quantity and quality of Product. Payment shall be made in US dollars by telegraphic transfer of immediately available funds to Seller as indicated on Seller’s invoice or at such address or depository as Seller may indicate in writing.

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If the payment due date falls on a Sunday, or on a Monday that is a bank holiday in the place where payment is to be made, payment shall be made in immediately available funds to Seller on the next banking day after such payment due date. If the payment due date falls on a Saturday, or on a bank holiday other than Monday in a place where payment is to be made, payment shall be made in immediately available funds to the Seller on the last banking day prior to such payment due date.

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MATERIAL BELOW MARKED BY AN “***” HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THIS ENTIRE EXHIBIT INCLUDING THE OMITTED CONFIDENTIAL INFORMATION HAS BEEN FILED SEPARATELY WITH THE COMMISSION.

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(c) The price for Product delivered to any Point of Delivery assumes an ultra-low sulfur number 2 diesel fuel (“On-Road Fuel”) retail price of $3.705 per gallon (the “ORFP”). Commencing October 1, 2012, Buyer shall pay *** ("Fuel Charge") in addition to the pricing provisions set forth above. Should the ORFP as reported by the US Energy Information Administration (EIA) for Rocky Mountain No. 2 Diesel Ultra Low Sulfur (0-15 ppm) Retail Sales by all Sellers increase, commencing in October, 2012, and in each subsequent month, the Fuel Charge shall be increased by the same percentage as the change in the price of On-Road-Fuel as compared to the prior month. By way of example, if the price of On-Road Fuel for the preceding month is averaged $4.076 per gallon, and the month prior to that the price of On-Road Fuel was $3.705 per gallon, then the applicable Fuel Charge for the current month would be ($4.076 / $3.705 x ***). Should the price of On-Road Fuel decrease, then the price for the Product delivered would decrease in reverse of the given example.

(d) Notwithstanding the foregoing, Seller may reduce the Minimum Monthly Volume set forth above for Louisiana but not below 750,000 gallons, and in no event for more than two consecutive calendar months. In the event Seller elects to ship less than the the Minimum Monthly Volume for Louisiana, Seller shall make up such shortfall within the twelve (12) month period ending with the eleventh (11^th) month following the month in which such shortfall occurs. Seller will make good faith efforts to communicate its estimated future deliveries reasonably in advance of any such reduction so that Buyer may adjust its production and purchasing activities in light of same.

4. RIGHT OF FIRST REFUSAL (“ROFR”). If Buyer receives an offer to purchase used oil within the Territories as defined in the Non-compete Non-Solicitation Agreement dated November 1, 2010 (attached herein as Exhibit B-1) where: (a) the offeror’s purchase price is more than Seller’s Third Tier purchase price, and (b) the number of gallons to be purchased subject to said offer is greater than one hundred thousand gallons in any given month, Buyer shall provide notice to Seller which will include redacted documentation evidencing the purchase offer, setting forth the following: (i) price, (ii) quantity, (iii) quality, and (iv) other terms and conditions

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(the “Buyer’s ROFR Notice”). Within two (2) business days of Seller’s receipt of Buyer’s ROFR Notice , Seller shall agree in writing (“Seller’s Notice”), to provide the same quantity and quality of used oil reasonably consistent with the acceptance criteria of the receiving facility at the price and on the other terms and conditions specified in Buyer’s ROFR Notice, or decline the opportunity. Unless otherwise mutually agreed to by the parties, Seller’s failure to respond within the stated period shall be construed as a declination of Seller’s right of first refusal under this provision. Notwithstanding the foregoing, the ROFR granted Seller hereby shall not apply to purchases by Buyer of used oil: (i) from its Existing Suppliers, or (ii) Spot Market Purchases. For the purposes of clarity, Existing Suppliers shall be construed to include Suppliers contracted to provide used oil to Buyer prior to the effective date of this Agreement. Buyer will provide a list of its Existing Suppliers who would be subject to the Seller’s ROFR under this provision but who are exempt. “Spot Market Purchases” shall mean purchases of used oil in the open market where Buyer must act promptly to accept an offer and the seller, price and volume are unique (i.e. the transaction is non-recurring in nature). For purposes of this Section 4 only, Territories, as defined in Exhibit B-1 shall be deemed to include California.

5. OPERATIONS RECEIPTS AND DELIVERIES.

(a) Product will be delivered to the Point of Delivery in accordance with the Section 2(c) and the limitations set forth in Exhibit C. Seller must provide to Buyer and maintain reasonably timely forecasts of scheduled Product shipments. The quantity for all Product volumes provided by Seller shall be determined by strapping charts for railcars , Buyer’s truck scales for trucks, or the down gauge at Buyer’s tanks in the event of delivery by barge. In the event of a dispute, quantity shall be determined by a mutually agreed upon person or entity using the down gauge of Buyer’s tanks (subject to manifest error in the accuracy of such gauge). Free water shall be subtracted and adjustments for gravity and temperature shall be made to sixty (60) degrees Fahrenheit in accordance with the latest ASTM table applicable to such Product to determine Net Gallons received. Seller may elect to appoint an independent inspector acceptable to Buyer, at Seller’s sole expense (or at Buyer’s expense in the event Buyer’s gauges or meters are discovered to be inaccurate), to perform gauging and related sampling. The inspector’s findings shall be binding on Seller and Buyer. Buyer will be provided a copy of all independent written reports prepared by the inspector on a timely basis. Buyer shall have the right to witness all gauging procedures.

(b) Receipts of Product will be handled within the operating hours of the Point of Delivery as specified in Exhibit C. Barges, railcars and trucks will be unloaded and loaded on a first come first serve basis and Buyer will not be responsible for the payment of any demurrage or costs incurred by Seller or its transportation carrier for any delay in receiving the Product; provided, however, Buyer will be responsible for demurrage incurred by Seller as a result and to the extent of any of the following (except in the instance of a Force Majeure event as described herein): (i) once offloading of the Product is completed, to the extent Buyer’s negligence or willful

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misconduct causes a delay in the carrier’s ability to leave the facility in a timely manner, or (ii) upon carrier’s arrival at the facility to the extent the Product cannot be offloaded timely because of a failure of the equipment at the facility or Buyer’s negligence or willful misconduct (but in no event will Buyer be responsible or liable for demurrage if the carrier is unable to offload Product at a pumping rate commensurate with that of the equipment at the facility). Seller will only charge a truck demurrage if Seller’s truck is on Buyer’s property in excess of two (2) hours from the time of the truck’s arrival to the time of the truck’s departure. Such demurrage charge will not exceed $105.00 per hour for each hour from the time Seller’s truck first arrives at Buyer’s facility. Seller will only charge railcar demurrage if Seller’s railcar is not released to the appropriate rail transportation company for return shipment to Seller within five (5) calendar days of receipt of such railcar by Buyer. The demurrage charge will not exceed $30.00 per day for each day in excess of five (5) calendar days.

(c) Except as otherwise provided in Section 2(c), Seller must arrange for and pay the cost of the transportation of Product and Buyer is responsible only to receive the Product at the terminal located at the Point of Delivery. For truck delivered Product, upon receipt of Seller’s delivery schedule, Buyer will promptly advise Seller of the facility’s availability, and a loading/discharge window shall be mutually agreed upon by both Parties. If Buyer reasonably determines that a barge, railcar or truck is unsuitable for receipt of Product, Buyer may refuse to unload the Product and will promptly advise the carrier and Seller of the condition, and request further instructions from the Seller.

6. PRODUCT QUALITY STANDARDS AND REQUIREMENTS.

(a) Seller warrants to Buyer that all Product tendered by or for the account of Seller will conform to the Specifications, and will comply with industry standards (including but not limited to; Pour Point, Viscosity, Flash and Temperature) adequate to permit Product to be moved through Buyer’s facility without special handling and consistent with past practices, and all Laws (as defined below), including all state and federal hazardous or dangerous waste laws and regulations. Buyer will not be obligated to accept Product that is contaminated or otherwise fails to meet the Specifications, nor will Buyer be obligated to accept Product that fails to meet quality specifications set forth in the arrival notice, but in no event will Buyer have any liability whatsoever for accepting Product which Product is either contaminated or does not meet such Specifications.

(b) The quality of Product must be verified either by Buyer’s laboratory analysis, or by an independent inspector’s analysis, at Seller’s discretion indicating that the Product so tendered meets the Specifications before the Product is unloaded at the Point of Delivery. Such Specifications may be modified from time to time by mutual agreement between the Buyer and Seller, so long as the Specifications, as modified, do not alter the basic Product. All costs for Buyer’s laboratory analysis will be borne by Buyer and the cost for independent inspector’s

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analysis will be borne by Seller subject to Section 6(a) herein. Buyer may sample any Product tendered to Buyer for Seller’s account for the purpose of confirming the accuracy of the analysis. The cost of such confirmation will be borne by the Buyer.

7. DEFAULT, WAIVER AND REMEDIES.

(a) Buyer Default. A material breach of any of the terms and conditions of this Agreement by Buyer, or the bankruptcy or insolvency of Buyer, will constitute a default under this Section, in the event Buyer fails to remedy said breach, Seller, at its reasonable discretion may elect terminate this Agreement without penalty. Except for Buyer’s default for failure to purchase the volume requirements pursuant to Section 2 (b) of this Agreement, in the case of a non-monetary default by Buyer, Seller may notify Buyer of the particulars of such default and Buyer will have thirty (30) days thereafter to cure such default; provided, however, if such default cannot be cured within such thirty (30) day period, by no fault of Buyer, then Buyer may have such additional time as reasonably necessary to cure such default so long as Buyer takes steps necessary to begin curing such default within the thirty (30) day period and proceeds with reasonable diligence to cure such default. In the case of a monetary default by Buyer, Seller will notify Buyer of such monetary default and Buyer will have ten (10) days after receipt of such notification to cure such default; provided, however, that Seller will not be required to give Buyer notice of any monetary default more than two (2) times in any twelve (12) month period. Buyer shall pay Seller interest thereon at a rate of one and one-half percent (1.5%) per month (or the maximum allowed by law, whichever is less) together with all costs and expenses incurred by Seller in collecting such overdue amounts or otherwise enforcing Seller’s rights hereunder starting from the date of the monetary default. In addition to and not in limitation of the foregoing, if Buyer fails to accept and purchase Product in connection with any regular delivery of Product, Seller will have all rights and remedies available under this Agreement and applicable law on account of such breach. Upon any such breach (which is immediate and not subject to cure as provided above), Seller will be entitled to recover as incidental damages (in addition to all other damages provided under law) a Product restocking and storage fee in the amount of $0.005 per gallon, per day until such time as Seller is able to sell the Product to another buyer.

(b) Seller Default. A material breach of any of the terms and conditions of this Agreement by Seller, or the bankruptcy or insolvency of Seller, will constitute a default under this Section. Upon default, Buyer may notify Seller of the particulars of such default and Seller will have thirty (30) days thereafter to cure such default; provided, however, if such default cannot be cured within such thirty (30) day period, then Seller will have such additional time as reasonably necessary to cure such default so long as Seller takes steps necessary to begin curing such default within the thirty (30) day period and proceeds with reasonable diligence to cure such default, but provided further, if the default is such that the continuation of the default has or may result in material liability or damage to Buyer, and Buyer provides written notice to Seller of such damage, then in no event shall the cure period exceed the greater of (a) ninety (90) days after receipt of Buyer’s initial notice of default, or (b) thirty (30) days after receipt of Buyer’s written notice of damage, but in any event if Seller does not cure such default within the period specified in (a) or (b), then Buyer may terminate this Agreement and exercise any of its other rights and remedies.

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(c) The waiver by a non-defaulting Party of any right under this Agreement will not operate to waive any other such right nor operate as waiver of that right at any future date upon another default by the defaulting Party under this Agreement, and a single or partial exercise of any right, power or privilege will not be presumed to preclude any subsequent or further exercise of that right, power, or privilege or the exercise of any other right, power, or privilege. Nothing in this Section is intended in any way to limit or prejudice any other rights or remedies the non-defaulting Party may have under this Agreement or by law. The remedies of the non-defaulting Party provided in this Agreement are not exclusive and, except as otherwise expressly limited by this Agreement, are in addition to all other remedies of the non-defaulting Party at law or in equity. Acceptance by Buyer of any payment from Seller for any charge or service after termination of this Agreement shall not be deemed a renewal of this Agreement under any circumstances, nor a waiver of any rights Buyer may have under this Agreement or otherwise.

(d) Each Party agrees that it has a duty to mitigate damages and to use commercially reasonable efforts to minimize any damages it may incur as a result of the other Party’s performance or non-performance of this Agreement.

8. REQUEST FOR DOCUMENTATION. Subject to Section 9 herein, Seller shall have the right, in its reasonable discretion to request the following computations: (i) current ratio, (ii) quick ratio, or (iii) Altman Z score for the time periods specified by Seller.

9. CONFIDENTIALITY. The parties agree that Confidential Information may include any confidential or proprietary information of the disclosing Party, existing currently or later developed, including without limitation, trade secrets, know how, techniques and specifications, manufacturing processes, data, materials, products, strategic business plans and objectives, product development plans, research, business activities, products, software, service, technical knowledge, designs, methodologies, markets, customers, marketing, vendors, suppliers, contractors, accounting, price structures, safety processes, finance or capitalization or other business information disclosed by disclosing party, directly or indirectly, in writing, orally, electronically or by drawings or observation.

Confidential Information shall not include any information that the recipient can demonstrate: (a) was in the public domain prior to disclosure to the recipient, or thereafter comes into the public domain without the fault or breach of any confidentiality obligation by the recipient or its Representatives; (b) was known by the recipient prior to disclosure, as shown by contemporaneous written records provided to disclosing party within thirty (30) days of receipt of such information by recipient; (c) was acquired in good faith from a third party who is not in breach of a confidential relationship with the disclosing party by its disclosure to recipient; or (d) was independently developed without the use of Confidential Information.

Recipient agrees that it and its Representatives (as defined below) shall hold all Confidential Information in strict confidence; shall use the Confidential Information only for the Purpose, and shall not disclose the same to any person or entity except: (a) with the prior written consent of the disclosing party, which consent may be withheld at the sole discretion

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of the disclosing party, and only to the extent permitted in any such written consent; (b) to the directors, officers, employees, consultants of the recipient (collectively, the “Representatives”) who have a need to know the same for the Purpose, provided that each such Representative shall agree to be bound by this Agreement; and (c) pursuant to any court decree, subpoena or order compelling such disclosure, provided that the recipient shall give the disclosing party at least ten (10) days prior written notice of any proposed disclosure and shall cooperate, in all reasonable respects, in any efforts that the disclosing party may elect to oppose such compelled disclosure. Recipient shall be responsible for any unauthorized disclosure of Confidential Information by itself or any of its Representatives. Recipient and its Representatives shall not use the Confidential Information for their own benefits or otherwise, unless expressly authorized to do so in writing by the disclosing Party. This Agreement intends that the prohibition against “use” by recipient be construed as broadly as possible. Recipient agrees that it and its Representatives shall take such precautions as may be necessary or advisable to maintain the Confidential Information secret. The recipient admits that improper use or disclosure of Confidential Information may cause irreparable harm to the disclosing party, such that equitable or injunctive relief may be sought as necessary and allowed by law.

10. COMPLIANCE WITH LAW AND SAFETY.

(a) Seller warrants that the Product tendered by it is and will be produced, transported, and handled under this Agreement in full compliance with all Laws. Each Party also warrants that it may lawfully receive and handle the Product, and it will furnish to the other Party any evidence required to provide compliance with all federal and state laws, rules and regulation and orders that may be applicable thereto (“Laws”), and will file with Governmental Authorities any required reports evidencing such compliance with those Laws.

(b) Seller certifies, on behalf of itself, its employees, agents, and contractors, that all barges, railcars and trucks owned or procured by Seller in connections with this Agreement will comply with all laws and any requirements imposed by Seller’s or, upon notice from Buyer, Buyer’s insurers. Seller will furnish Buyer with information (including Material Safety Data Sheets) concerning the safety and health aspects of Product delivered under this Agreement. Buyer will communicate such information to all persons who may be exposed to or may handle such Product, including Buyer’s employees, agents, and contractors.

(c) Seller hereby authorizes Buyer to take such measures reasonably necessary to protect the environment from damage arising from spillage or transport of Seller’s Product. Buyer is authorized to incur such expenses, by employing its own resources or by contracting with others as are reasonably necessary to remove the Product and mitigate the effects of any such spill. Seller shall fully reimburse Buyer for all expenses incurred for Product removal, mitigation and cleanup provided that the spill was caused by the negligence or willful misconduct of Seller, its employees or transportation agents. In such event, Buyer agrees to assign to Seller any rights Buyers may have against the party causing the spill for costs of Product removal, mitigation and cleanup, provided Seller has prior thereto fully reimbursed Buyer therefor.

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i. TITLE AND RISK OF LOSS. With the exception of fuel charges and Seller’s obligation to pay for all transportation and transportation related costs to the Point of Delivery, title and risk of loss shall pass to the Buyer at the time Product is loaded onto the mode of transportation (via barge, railcar or truck) and released from Seller’s facility.

11. INSURANCE.

(a) Coverage. Buyer and Seller will procure and maintain in effect during the Term of this Agreement and as otherwise required herein insurance coverage as set forth on Exhibit “D” hereto.

(b) Failure to Secure. Failure to secure the insurance coverage, or failure to comply fully with any of the insurance provisions of this Agreement, or the failure to secure such endorsements on the policies as may be necessary to carry out the terms and conditions of this Agreement, will in no way relieve a Party from the obligations of this Agreement.

(c) Certificates of Insurance. Prior to Seller commencing any performance under this Agreement, each Party will furnish to the other Party certificates of insurance, in accordance with Item 1 of Exhibit D, evidencing that proper insurance has been secured in accordance with the specific terms of this Agreement. Failure of a Party to require such certificate or to object to any such certificate it receives or to commence performance without first providing a conforming certificate or request copies of any policy will not be a waiver of the other Party’s obligation to meet its insurance obligations under this Section, including its obligation to provide conforming certificates.

(d) Accident Reporting. Each Party will provide written notice to the other Party of all accidents or occurrences resulting in injuries to employees or third parties, or damage to property while at the Point of Delivery as soon as practical upon learning of the accident, occurrence or damage, and will furnish the other Party with a copy of all reports made by the Party or its underwriter or reports to others of such accidents or occurrences.

13. INDEMNITY.

(a) To the extent permitted by law and except as otherwise specifically provided in this Agreement, each Party will defend, indemnify and hold harmless the other Party and its directors, officers, agents and employees (“Indemnitees”) from and against any and all losses, liabilities, damages, claims, suits, expenses and costs, including attorneys’ fees, resulting from or arising out of (a) the indemnifying Party’s failure to comply with all applicable Laws, or (b) bodily injury or death of any person to the extent such injury or death is caused by the negligence or willful misconduct of the indemnifying Party. Where the injury or death in clause (b) is the result of the joint or concurrent negligence or willful misconduct of Buyer and Seller, each Party’s duty of indemnification will be in proportion to its share of such joint or concurrent negligence or willful misconduct.

(b) Each Party or its Indemnitees will (and each is deemed to be an “indemnified Party” pursuant to this Section). Promptly after the receipt of notice of any claim in respect of which indemnity may be sought from the other Party, notify such Party in writing of the receipt of such

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claim. The failure of the indemnified Party so to notify the indemnifying Party of any such claim shall not relieve the indemnifying Party from any liability in respect of such claim which it may have to the indemnified Party on account of the indemnity obligation herein (except, however, that the indemnifying Party shall be relieved of liability to the extent that the failure so to notify shall have caused material prejudice to defense of such claim). Nor shall it relieve the indemnifying Party from any other liability which it may have to the indemnified Party. The indemnifying Party shall be entitled at its cost and expense to consent and defend by all appropriate legal proceedings any claim with respect to which it is called upon to indemnify the indemnified Party under the provisions of this Agreement; provided, however, that notice of the intention so to assume and contest shall be delivered by the indemnifying Party to the indemnified Party within thirty (30) days from the date of delivery to the indemnifying Party of notice by the indemnified Party of the assertion of the claim. Any such contest may be conducted in the name and on behalf of the indemnifying Party or the indemnified Party as may be appropriate. Such contest shall be conducted by attorneys employed or engage by the indemnifying Party, but the indemnified Party shall have the right to participate in such proceeding s and to be represented by attorneys of its own choosing at its cost and expense. If the indemnified Party joins in any such contest, the indemnifying Party shall coordinate all matters with the indemnified Party, but the indemnifying Party shall have full authority to determine all action to be taken with respect there. If after notice as provided for herein, the indemnifying Party does not elect to contest or defend any claim as provided in this Section, the indemnifying Party shall be bound by the result obtained with respect thereto by the indemnified Party. At any time after the commencement of defense of any claim, the indemnifying Party may request the indemnified Party to agree in writing to the abandonment of such contest or to the payment or compromise by the indemnifying Party of the asserted claim, whereupon such action shall be taken unless the indemnified Party determines that failure to continue the contest or taking of such action could adversely affect the business of the indemnified Party or any of its affiliates, and so notifies the indemnifying Party in writing within fifteen (15) days of such request from the indemnifying Party. If requested by the indemnifying Party, the indemnified Party agrees to cooperate with the indemnifying Party and its counsel in contesting any claim which the indemnifying Party elects to contest or, if appropriate, in making any counterclaim against the person asserting the claim or any cross-complaint against any person (other than any affiliates of the indemnified Party), but

The indemnifying Party will reimburse the indemnified Party for any expenses incurred by it in so cooperating. The indemnified Party agrees to afford the indemnifying Party and its counsel the opportunity to be present at, and to participate in, conferences with all persons, including Governmental Authorities, asserting any claim against the indemnified Party, or conferences with representatives of or counsel for such persons.

(c) In addition to and separate and apart from other insurance obligations that each Party may assume under the terms of this Agreement, insurance covering this indemnity agreement may be provided by each Party to the extent permitted by law.

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(d) NOTWITHSTANDING ANY OTHER TERMS IN THIS AGREEMENT AND REGARDLESS OF FAULT, NEITHER PARTY SHALL HAVE ANY LIABILITY TO THE OTHER PARTY OR ITS INDEMNITEES UNDER OR ARISING OUT OF THIS AGREEMENT FOR LOST PROFITS OR INCOME OR CONSEQUENTIAL DAMAGES (INCLUDING RESULTING FROM BREACH OF CONTRACT IN FAVOR OF ANY PURCHASER OR SELLER) NOR BE LIABLE TO THE OTHER PARTY OR ITS INDEMNITIEES FOR THE OTHER PARTY’S OR ITS INDEMNITEES’ SPECIAL, INCIDENTAL, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES WITH RESPECT TO THIS AGREEMENT OR ANY ACT IN CONNECTION HEREWITH, WHETHER IN CONTRACT, TORT OR OTHERWISE IRRESPECTIVE OF WHETHER SUCH DAMAGES WERE FORESEEABLE BY EITHER PARTY.

14. OTHER REPRESENTATIONS, WARRANTIES AND COVENANTS. As a material inducement to entering into this Agreement, each Party, with respect to itself only, represents and warrants to the other Party as of the Effective Date of this Agreement as follows: (a) it is duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation and is qualified to conduct its business in those jurisdictions necessary to perform this Agreement; (b) it has all Governmental and other authorizations, permits and licenses necessary for it to legally perform its obligations under this Agreement: (c) the execution, delivery and performance of this Agreement are within its powers, have been duly authorized by all necessary action and do not violate any of the terms or conditions in its governing documents or any contract to which it is a party or any Law applicable to it; (d) this Agreement and each other document executed and delivered in accordance with this Agreement constitutes its legally valid and binding obligation enforceable against it in accordance with its terms, subject to any equitable defenses; (e) it is not bankrupt or insolvent and there are no reorganization, receivership or other arrangement proceedings pending or being contemplated by it, or to its knowledge threatened against it; and (f) it has read this Agreement and fully understands its rights and obligations under this Agreement, and has had an opportunity to consult with an attorney of its own choosing to explain the terms of this Agreement and the consequences of signing it.

15. GOVERNING LAW.THIS AGREEMENT WILL BE GOVERNED BY, CONSTURED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ARIZONA, WITHOUT GIVING EFFECT TO PRINCIPLE OF CONFLICTS OF LAWS.

16. ARBITRATION.

(a) THE PARTIES AGREE THAT ANY DISPUTE, CONTROVERSY OR CLAIM THAT MAY ARISE BETWEEN THEM IN CONNECTION WITH OR OTHERWISE RELATING TO THIS AGREEMENT OR THE APPLICATION, IMPLEMENTATION, VALIDITY OR BREACH OF THIS AGREEMENT OR ANY PROVISION OF THIS AGREEMENT (INCLUDING CLAIMS BASED ON CONTRACT, TORT OR STATUTE), SHALL BE FINALLY, CONCLUSIVELY AND EXCLUSIVELY SETTLED BY BINDING ARBITRATION IN PHOENIX, ARIZONA, IN ACCORDANCE WITH THE COMMERCIAL ARBITRATION RULES (THE “RULES”) OF THE AMERICAN ARBITRATION ASSOCIATION OR ANY SUCCESSOR THERETO (“AAA”) THEN IN EFFECT. THE PARTIES TO THIS AGREEEMENT HEREBY EXPRESSLY WAIVE THEIR RIGHT TO SEEK REMEDIES IN COURT, INCLUDING THE RIGHT TO TRIAL BY

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JURY, WITH RESPECT TO ANY MATTER SUBJECT TO ARBITRATION PURSUANT TO THIS SECTION. ANY PARTY TO THIS AGREEMENT MAY BRING AN ACTION, INCLUDING A SUMMARY OR EXPEDITED PROCEEDING IN ANY COURT HAVING JURISDICTION, TO COMPEL ARBITRATION OF ANY DISPUTE, CONTROVERSY OR CLAIM TO WHICH THIS SECTION APPLIES. EXCEPT WITH RESPECT TO THE FOLLOWING PROVISIONS, (THE “SPECIAL PROVISIONS”) WHICH SHALL APPLY WITH RESPECT TO ANY ARBITRATION PURSUANT TO THIS SECTION, THE INITIATION AND CONDUCT OF ARBITRATION SHALL BE AS SET FORTH IN THE RULES, WHICH RULES ARE INCORPORATED IN THIS AGREEMENT BY REFERENCE WITH THE SAME EFFECT AS IF THEY WERE SET FORTH IN THIS AGREEMENT.

(b) In the event of any inconsistency between the Rules and the Special Provisions, the Special Provisions shall control. Any references in the Rules to a sole arbitrator shall also be deemed to refer to the tribunal of arbitrators provided for under sub-section (d) herein.

(c) The arbitration shall be administered by the AAA. If the AAA is unable or legally precluded from administering the arbitration, then the Parties shall agree upon an              alternative arbitration organization, provided that if the Parties cannot agree, such              organization shall be selected by the Chief Judge of the United States District Court for          the District of Arizona in Phoenix, Arizona.

(d) Unless otherwise agreed in writing by the Parties for the selection of a single neutral arbitrator, the arbitration shall be conducted by a tribunal of three (3) arbitrators. Within ten (10) days after arbitration is initiated pursuant to the Rules, the initiating Party (the “Claimant”) shall send written notice to the other Party (the “Respondent”), with a copy to the Phoenix, Arizona office of the AAA, designating the first arbitrator (who shall not be a representative or agent of any Party but may or may not be an AAA panel member and, in any case, shall be reasonably believed by the Claimant to possess the requisite experience, education and expertise in respect of the matters to which the Claim relates to enable such person to competently perform arbitral duties). Within ten (10) days after receipt of such notice, the Respondent shall send written notice to the Claimant, with a copy to the Phoenix, Arizona office of the AAA and to the first arbitrator, designating the second arbitrator (who shall not be a representative or agent of any Party but may or may not be an AAA panel member and, in any case, shall be reasonably believed by the Respondent to possess the requisite experience, education and expertise in respect of the matters to which the Claim relates to enable such person to competently perform arbitral duties). Within ten (10) days after such notice from the Respondent is received by the Claimant, the Respondent and the Claimant shall cause their respective designated arbitrators to select any mutually agreeable AAA panel member as the third arbitrator. If the respective designated arbitrators of the Respondent and the Claimant cannot so agree within said ten (10) day period, then the third arbitrator will be determined pursuant to the Rules. Prior to commencement of the arbitration proceeding, each arbitrator shall

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have provided the Parties with a resume outlining such arbitrator’s background and qualifications and shall certify that such arbitrator is not a representative or agent of any of the Parties. If any arbitrator shall die, fail to act, resign, become disqualified or otherwise cease to act, then the arbitration proceeding shall be delayed for fifteen (15) days and the Party by or on behalf of whom such arbitrator was appointed shall be entitled to appoint a substitute arbitrator (meeting the qualifications set forth in this Section) within such fifteen (15) day period: provided, however, that if the Party by or on behalf of who such arbitrator was appointed shall fail to appoint a substitute arbitrator within such fifteen (15) day period, the substitute arbitrator shall be a neutral arbitrator appointed by the AAA arbitrator within fifteen (15) days thereafter.

(e) All arbitration hearings shall be commenced within ninety (90) days after arbitration is initiated pursuant to the Rules, unless, upon a showing of good cause by a Party to the arbitration, the tribunal of arbitrators permits the commencement of such hearing; provided, however, that any such extension shall not be longer than sixty (60) days.

(f) All claims presented for arbitration shall be particularly identified and the Parties to the arbitration shall each prepare a statement of their position with recommended courses of action. These statements of position and recommended courses of action shall be submitted to the tribunal of arbitrators chosen as provided hereinabove for binding decision. The tribunal of arbitrators shall not be empowered to make decisions beyond the scope of the position papers.

(g) The arbitration proceeding will be governed by the substantive laws of the State of Arizona and will be conducted in accordance with such procedures as shall be fixed or such purpose by the tribunal of arbitrators, except that (a) discovery in connection with any arbitration proceeding shall be conducted in accordance with the Federal Rules of Civil Procedure and applicable case law, (b) the tribunal of arbitrators shall have the power to compel discovery, and (c) unless the Parties otherwise agree and except as may be provided in this Section 14, the arbitration shall be governed by the Federal Arbitration Act, 9 U.S. §§ 1-16, to the exclusion of any provision of Law or procedure inconsistent therewith or which would produce a different result. The Parties shall preserve their right to assert and to avail themselves of the attorney-client and attorney-work product privileges, and any other privileges to which they may be entitled pursuant to Law. No Party to the arbitration or any arbitrator may compel and require mediation and/or settlement conferences without the prior written consent of all such Parties and the tribunal of arbitrators.

(h) The tribunal of arbitrators shall make an arbitration award as soon as possible after the later of the close of evidence or the submission of final briefs, and in all cases the award shall be made not later than thirty (30) days following submission of the matter. The finding and decision of a majority of the arbitrators shall be final and shall be binding upon the Parties. Judgment upon the arbitration award or decision may be

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entered in any court having jurisdiction thereof or application may be made to any such court for a judicial acceptance of the award and an order of enforcement, as the case may be. The tribunal of arbitrators shall have the authority to assess liability for pre-award and post-award interest on the claims, attorneys’ fees, expert witness fees and all other expenses of arbitration as such arbitrators shall deem appropriate based on the outcome of the claims arbitrated. Unless otherwise agreed by the Parties to the arbitration in writing, the arbitration award shall include findings of fact and conclusions of law.

(i) Notwithstanding any provision in this Section 16 to the contrary, this Section 16 shall not be construed to require arbitration of a claim or dispute brought by a person who is not a Party to this Agreement, or affect the ability of any Party to interplead or otherwise join the other Party in a proceeding brought by a person who is not a Party to this Agreement.

(j) EACH PARTY UNDERSTANDS THAT THIS AGREEMENT CONTAINS AN AGREEMENT TO ARBITRATE WITH RESPECT TO ANY DISPUTE OR NEED OF INTERPRETATION OF THIS AGREEMENT. AFTER SIGNING THIS AGREEMENT, EACH PARTY UNDERSTANDS THAT IT WILL NOT BE ABLE TO BRING A LAWSUIT GOVERNING ANY DISPUTE THAT MAY ARISE WHICH IS COVERED BY THE ARBITRATION PROVISION, EXCEPT TO COMPEL ARBITRATION OR SEEK INJUNCTIVE RELIEF. INSTEAD, EACH PARTY AGREES TO SUBMIT ANY SUCH DISPUTE TO ARBITRATION.

17. GUARANTY. The obligations of the Buyer with respect to payments and other obligations under this Agreement will be guaranteed by Omega Holdings Company LLC, a Delaware limited liability company (“Guarantor”), pursuant to the executed Form of Guaranty attached and incorporated by reference as Exhibit B (the “Guaranty”).

18. OTHER AGREEMENTS. As additional consideration for Seller’s covenant to supply the Minimum Volume of Product under this Agreement, Buyer agrees to comply with the terms and conditions of the Non-Compete and Non-Solicitation Agreement, and shall execute Amendment #1 to the Non-Compete and Non-Solicitation concurrently with this Agreement, attached and incorporated by reference as Exhibit B-1 (the “NDA”).

19. NOTICE.Any Notice or Notification made pursuant to the terms and conditions of this Agreement shall be in writing and be: (a) delivered personally; (b) sent by certified mail, return receipt requested; (c) sent by a recognized overnight mail or courier service, with delivery receipt requested; or (d) sent by confirmed facsimile transmission to the following addresses; provided, that the Parties issue notices and other communications to one another solely in respect of ordinary course communications via electronic mail at such addresses as they may provide to one another from time to time:

If to Buyer:                    If to Seller:

Omega Refining Co. LLC            Thermo Fluids Inc.

211 Violet Street                8925 E. Pima Center Parkway

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Unit 100                    Suite 105

Golden, CO 80409                Scottsdale AZ 85258

Attention: Richard A. Silverberg        Attn.: James Devlin    

Fax: 303-679-8988                

20. ASSIGNMENT. This Agreement will inure to the benefit of and will be binding upon the Parties hereto and their respective successors and permitted assigns. This Agreement and the rights and obligations of a Party hereunder shall not be transferred or assigned, in whole or in part, without the prior written consent of the other Party, consent not to be unreasonably withheld, conditioned, or delayed, except that either Party may assign this Agreement: (a) to any affiliate, and (b) to any third party in connection with a transfer of sale of all or substantially all of its equity or assets related to this Agreement. In the event of any approved or permitted assignment by a Party of this Agreement or its rights or obligations (other than an assignment strictly for the purposes of securing financing), the assignee shall assume in writing and in a form adequate at law for such purpose, the assigning Party’s prospective obligations under this Agreement from and after such assignment. Notwithstanding any assignment by a Party, the assigning Party shall remain fully obligated under all terms of this Agreement. In the event of any assignment of this Agreement by any Party, all Parties hereto (and any of their assignees) shall continue to provide all notices required or permitted under this Agreement to the initial parties hereto unless advised to the contrary in writing by an initial Party hereto.

21. FORCE MAJEURE. Neither Party shall be liable for damages nor have the right to terminate this Agreement for any delay or default in performing hereunder (other than delay in the payment of money due and payable hereunder) if such delay or default is caused by conditions beyond its reasonable control including but not limited to Acts of God (including fire, flood, earthquake, storm, hurricane or other natural disasters), Government restrictions (provided that such restriction is not the result of Buyer’s acts or omissions), war, invasion, act of foreign enemies, hostilities (regardless of whether war is declared), civil war, rebellion, revolution, insurrection, military or usurped power or confiscation, terrorist activities, nationalization, government sanction, blockage, embargo, labor dispute, strike, or lockout. If a party asserts Force Majeure as an excuse for failure to perform the party's obligation, then the nonperforming party must prove that the party took reasonable steps to minimize delay or damages caused by foreseeable events, that the party substantially fulfilled all non-excused obligations, and that the other party was timely notified of the likelihood or actual occurrence of an event described in this Section.

22. INDEPENDENT CONTRACTOR. The Parties expressly understand and agree that Seller is acting and shall perform and execute the provisions of this Agreement as an independent contractor unrelated to Buyer or any affiliate of Buyer. Nothing in this Agreement is intended to create a relationship, expressed or implied, of joint venturers or partners.

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23. AUTHORIZATION. Each Party executing this Agreement represents and warrants to the other Party that it is duly authorized to execute and deliver this Agreement in the capacity and for the entity identified where signed.

24. CONSTRUCTION OF AGREEMENT.

(a) Headings. The headings of the Sections and subsections of this Agreement are for convenience only and will not be used in the interpretation of this Agreement.

(b) Amendment or Waiver. This Agreement may not be amended, modified or waived except by written instrument executed by officers or duly authorized representatives of the respective Parties. The failure of either Party to insist upon strict performance of any of the covenants and conditions of this Agreement shall not be construed to be a waiver or relinquishment of such, or any other covenants or conditions, but the same shall be and remain in full force and effect.

25. SEVERABILITY. If any provision of this Agreement or the application thereof to any Party is held invalid or unenforceable to any extent, the remainder of this Agreement and the application of that provision to the other Party is not affected thereby and that provision shall be enforced to the greatest extent permitted by law. If such provision of this Agreement is so declared invalid, the Parties shall promptly negotiate in good faith new provisions to eliminate such invalidity and to restore this Agreement as near as possible to its original intent and effect.

26. TIME IS OF THE ESSENCE. Time is of the essence in the performance of the obligations of both Parties under this Agreement.

27. COUNTERPARTS. This Agreement may be executed in any number of counterparts with the same effect as if all signing parties had signed the same document. The exchange of copies of this Agreement and the signature pages by facsimile transmission shall constitute effective execution and delivery of this Agreement as to the Parties and may be used in lieu of the original Agreement for all purposes. All counterparts shall be construed together and constitute the same instrument.

28. MERGER CLAUSE; NO RELIANCE. In addition to the Guaranty (“Exhibit B”), Buyer’s NDA (“Exhibit B-1”) both with an effective date of November 1, 2010, Randy Sole’s individual NDA (Exhibit B-2”), the Purchase Agreement and Bill of Sale (“Exhibit B-3”), this Agreement and all other attached amendments and exhibits constitute the entire agreement between the Parties with respect to the subject matter hereof and supersedes any other agreements, correspondences, negotiations, proposals, promises or representations whether written or oral that may have been made or entered into between Seller and Buyer with respect to the subject matter hereof. The Parties hereto agree that with respect to the subject matter hereof, they shall not be entitled to rely upon, nor has either relied upon, any prior representations, negotiations, documents, or agreements, whether oral or written, that are not expressly contained in this Agreement or any NDAs entered into with respect to this Agreement.

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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed as of the Execution Date.

BUYER                SELLER

Omega Refining, LLC            Thermo Fluids Inc.

By: /s/ Richard A. Silverberg        By: /s/ James E. Devlin

Print Name: Richard A. Silverberg    Print Name: James E. Devlin

Title: Managing Member        Title: C.E.O.

BUYER

Bango Refining NV, LLC

By: /s/ Richard A. Silverberg

Print Name: Richard A. Silverberg        

Title: Managing Member    

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SCHEDULE OF EXEMPT EXISTING SUPPLIERS

Mesa Oil, Inc.

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EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Benjamin P. Cowart, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Vertex Energy, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of a Quarterly Report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 14, 2014	By:	/s/ Benjamin P. Cowart
		Benjamin P. Cowart Chief Executive Officer (Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Chris Carlson, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Vertex Energy, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of a Quarterly Report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 14, 2014	By:	/s/ Chris Carlson
		Chris Carlson Chief Financial Officer (Principal Accounting Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO18 U.S.C. SS. 1350AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Vertex Energy, Inc. (the "Company") on Form 10-Q for the period ended June 30, 2014, as filed with the Securities and Exchange Commission (the "Report"), I, Benjamin P. Cowart, Principal Executive Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 14, 2014	By:	/s/ Benjamin P. Cowart
		Benjamin P. Cowart Chief Executive Officer (Principal Executive Officer)

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO18 U.S.C. SS. 1350AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Vertex Energy, Inc. (the "Company") on Form 10-Q for the period ended June 30, 2014, as filed with the Securities and Exchange Commission (the "Report"), I, Chris Carlson, Principal Accounting Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 14, 2014	By:	/s/ Chris Carlson
		Chris Carlson Chief Financial Officer (Principal Accounting Officer)

EX-99.2

VERTEX ENERGY, INC.

AMENDED CHARTER OF THE:

COMPENSATION COMMITTEE

Effective July 24, 2014

Vertex Energy, Inc.

Committee Charters

Page 1 of 1

Vertex Energy, Inc. (the “Company”)

Compensation Committee Charter

Role:

The Compensation Committee's role is to discharge the Board of Directors (the “Board's”) responsibilities relating to compensation of the Company's executives and to oversee and advise the Board on the adoption of policies that govern the Company's compensation and benefit programs.

Membership:

The membership of the Committee will consist of at least two directors of the Company, who shall satisfy the definition of “independent” under the listing standard of the NASDAQ Capital Market, or such other exchange(s) upon which the Company’s securities are then listed from time to time (the “Exchange”). If the Committee is comprised of at least three members, one director who is not “independent” as defined under the rules of the Exchange and is not currently an executive officer or employee or a family member of an executive officer, may be appointed to the Committee if the Board, under exceptional and limited circumstances, determines that such individual's membership on the Committee is required by the best interests of the Company and its shareholders (with such member being defined as an “Excepted Member”). An Excepted Member may not serve longer than two years.

The Board may remove any member from the Committee at any time with or without cause. Each Committee member may be required to satisfy certain independence requirements of applicable securities laws, rules or guidelines and any other applicable regulatory rules. Determinations as to whether a particular director satisfies the requirements for membership on the Committee shall be made by the full Board.

Operations:

The Board shall designate one member of the Committee to act as its chairperson. The Committee will meet a minimum of once a year. Additional meetings may occur as the Committee or its chair deems advisable. The Committee may also meet periodically in executive session without Company management present. The Committee will cause to be kept adequate minutes of its proceedings, and will report on its actions and activities at the next quarterly meeting of the Board. Committee members will be furnished with copies of the minutes of each meeting and any action taken by unanimous consent. The Committee is governed by the same rules regarding meetings (including meetings by conference telephone or similar communications equipment), action without meetings, notice, waiver of notice, and quorum and voting requirements as are applicable to the Board. The Committee is authorized to adopt its own rules of procedure not inconsistent with (a) any provision of the Company’s Articles of Incorporation, (b) any provision of the Bylaws of the Company, or (c) the laws of the State of Nevada.

Authority:

The Committee will have the resources and authority necessary to discharge its duties and responsibilities. The Committee has sole authority to retain and terminate outside counsel, compensation consultants, or other experts or consultants, as it deems appropriate, including sole authority to approve the fees and other retention terms for such persons. Any communications between the Committee and legal counsel in the course of obtaining legal advice will be considered privileged communications of the Company and the Committee will take all necessary steps to preserve the privileged nature of those communications.

Vertex Energy, Inc.

Committee Charters

Page 2 of 2

Except as otherwise delegated by the Board or the Committee, the Committee will act on behalf of the Board. The Committee will serve as the "Committee" established to administer equity-based and employee benefit plans, and as such will discharge any responsibilities imposed on the Committee under those plans, including making and authorizing grants, in accordance with the terms of those plans. The Committee may delegate to one or more executive officers the authority to make grants of stock options and stock awards to eligible individuals who are not executive officers. Any executive officer to whom the Committee grants such authority shall regularly report to the Committee grants so made. The Committee may revoke any such delegation of authority at any time.

The Committee may form and delegate authority to subcommittees and may delegate authority to one or more designated members of the Committee to perform certain of its duties from time to time.

Performance Evaluation:

The Committee shall review its own performance and reassess the adequacy of this Charter at least annually in such manner as it deems appropriate, and submit such evaluation, including any recommendations for change, to the full Board for review, discussion and approval.

Responsibilities:

Subject to the sole determination of the Board, the principal responsibilities and functions of the Compensation Committee are as follows:

Vertex Energy, Inc.

Committee Charters

Page 3 of 3

1.	Review the competitiveness of the Company's executive compensation programs to ensure (a) the attraction and retention of executives, (b) the motivation of executives to achieve the Company's business objectives, and (c) the alignment of the interests of key leadership with the long-term interests of the Company's shareholders. The Committee shall have the responsibility to determine, or to recommend to the Board for approval, the compensation of the CEO and other executive officers of the Company. Assist the Board in establishing CEO annual goals and objectives. Notwithstanding the above, the CEO may not be present during voting or deliberations on his or her compensation.
2.	Review trends in executive compensation, oversee the development of new compensation plans, and, when necessary, approve the revision of existing plans.
3.	Review and approve the compensation structure for executives.
4.	Oversee an evaluation of the performance of the Company's executive officers and approve the annual compensation, including salary, bonus, incentive and equity compensation, for the executive officers. Review and approve compensation packages for new executive officers and termination packages for executive officers.
5.	Review and make recommendations concerning long-term incentive compensation plans, including the use of equity-based plans.
6.	Periodically review the compensation paid to non-employee directors and make recommendations to the Board for any adjustments. No member of the Committee will act to fix his or her own compensation except for uniform compensation to directors for their services as a director.
7.	Review periodic reports from management on matters relating to the Company's compensation practices.
8.	Produce an annual report of the Compensation Committee on executive compensation for the Company's annual proxy statement in compliance with and to the extent required by applicable Securities and Exchange Commission rules and regulations and any relevant listing authority.
9.	Obtain or perform an annual evaluation of the Committee's performance and make applicable recommendations about, among other things, changes to the charter of the Committee.
10.	Take whatever other action that the Board shall reasonably request in its sole determination.

The Committee shall also have the following responsibilities and authority as dictated by the Exchange:

(A) The Committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, legal counsel or other adviser.

(B) The Committee shall be directly responsible for the appointment, compensation and oversight of the work of any compensation consultant, legal counsel and other adviser retained by the Committee.

(C) The Company must provide for appropriate funding, as determined by the Committee, for payment of reasonable compensation to a compensation consultant, legal counsel or any other adviser retained by the Committee.

(D) The Committee may select, or receive advice from, a compensation consultant, legal counsel or other adviser to the Committee, other than in-house legal counsel, only after taking into consideration factors set forth in the Exchange’s rules.

Vertex Energy, Inc.

Committee Charters

Page 4 of 4

XML

CONTINGENT CONSIDERATION (Details Narrative) (USD $)	3 Months Ended		6 Months Ended			6 Months Ended			0 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013	Jun. 30, 2014 Vertex Acquisition LP	Jun. 30, 2014 E-Source Holdings, LLC	Jan. 03, 2014 E-Source Holdings, LLC	May 02, 2014 Omega Refining	Jun. 30, 2014 Omega Refining	May 02, 2014 Maximum Omega Refining	Dec. 31, 2015 Maximum Forecast Omega Refining
Business Acquisition [Line Items]
Contingent consideration	$ 5,385,250		$ 5,385,250		$ 3,220,250	$ 2,233,000	$ 748,000
Increase (decrease) of contingent consideration	0	(1,850,000)	0	(1,850,000)		(1,850,000)
Probability that 2014 earnings target will not be met						25.00%
Increase (decrease) of 2014 contingent consideration						(388,750)
Discount on cash flows in year two, percent						25.00%
Payment to seller, 2014							260,000
Payment to seller, 2015							260,000
Payment to seller, 2016							260,000
Payment to seller, 2017							260,000
Number of shares to be issued as consideration, contingent on certain performance metrics							207,743
Estimated value of stock to be issued recorded in additional paid in capital	39,189,263		39,189,263		19,579,732			231,000
EBITDA measurement period									12 months
EBITDA performance period									18 months
Earnings before interest, taxes, depreciation, and amortization (EBITDA), target amount over succeeding 12-month period										8,000,000
Earnings before interest, taxes, depreciation, and amortization (EBITDA), shares (maximum)											470,498	770,498
Earnings before interest, taxes, depreciation, and amortization (EBITDA), annual target amount (minimum)										$ 9,000,000

XML

STOCK-BASED COMPENSATION (Details Narrative) (USD $)	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Stock based compensation expense	$ 101,378	$ 94,466

XML

ACQUISITIONS (Pro Forma Financial Information) (Details) (Omega Refining, USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Omega Refining
Business Acquisition [Line Items]
Revenues	$ 79,747,665	$ 68,597,653	$ 127,097,323	$ 140,850,582
Income from operations	498,141	335,135	1,454,728	3,899,588
Net income	6,284,339	116,145	7,165,485	3,346,949
Net loss attributable to non-controlling interest	344,380	0	325,399	0
Net income attributable to Vertex Energy, Inc.	$ 6,628,719	$ 116,145	$ 7,490,884	$ 3,346,949
Earnings per common share (in dollars per share)	$ 0.29	$ 0.01	$ 0.34	$ 0.19
Earnings per common share (in dollars per share)	$ 0.27	$ 0.01	$ 0.31	$ 0.17

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STOCK-BASED COMPENSATION

6 Months Ended

Jun. 30, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

Stock-based compensation expense was $101,378 and $94,466 for the six months ended June 30, 2014 and 2013, respectively, for options previously awarded by the Company.

Stock option activity for the six months ended June 30, 2014 is summarized as follows:

	Shares		Weighted Average Exercise Price			Weighted Average Remaining Contractual Life (in Years)	Grant Date Fair Value
Outstanding at December 31, 2013	3,060,834		$	5.89		6.07	$	1,327,163
Options granted	150,000		7.55			10.00	304,915
Options forfeited/expired	(91,667	)	10.78			—	(29,335		)
Options exercised	(483,750	)	(0.68		)	—	(192,127		)
Outstanding at June 30, 2014	2,635,417		$	6.77		5.99	$	1,410,616
Vested at June 30, 2014	1,719,792		$	8.43		4.72	$	522,691
Exercisable at June 30, 2014	1,719,792		$	8.43		4.72	$	522,691

A summary of the Company’s stock warrant activity and related information for the six months ended June 30, 2014 is as follows: 

	Shares		Weighted Average Exercise Price			Weighted Average Remaining Contractual Life (in Years)	Grant Date Fair Value
Outstanding at December 31, 2013	7,083		$	2.72		1.57	$	2,900
Warrants exercised	(6,250	)	(1.75		)	—	(2,800		)
Warrants cancelled/forfeited/expired	(833	)	(10.00		)	—	(100		)
Warrants at June 30, 2014	—		$	—		—	$	—
Vested at June 30, 2014	—		$	—		—	$	—
Exercisable at June 30, 2014	—		$	—		—	$	—

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EARNINGS PER SHARE (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Numerator:
Net income available to common shareholders			$ 7,863,247	$ 2,974,865
Denominator:
Weighted-average common shares outstanding	22,826,102	17,409,034	22,025,316	17,243,762
Basic earnings per share (in USD per share)	$ 0.31	$ 0.11	$ 0.36	$ 0.17
Effect of dilutive securities
Stock options and warrants (shares)			1,178,626	1,210,007
Preferred stock (shares)			675,558	1,345,220
Diluted weighted-average shares outstanding	24,847,456	19,887,288	23,879,500	19,798,989
Diluted earnings per share (in USD per share)	$ 0.28	$ 0.10	$ 0.33	$ 0.15

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EARNINGS PER SHARE (Details Narrative)	6 Months Ended
	Jun. 30, 2014
Earnings Per Share [Abstract]
Options to purchase	906,000

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COMMON STOCK (Details Narrative) (USD $)	1 Months Ended	6 Months Ended			6 Months Ended	1 Months Ended	6 Months Ended	1 Months Ended
	Jun. 30, 2014	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013	Jun. 30, 2014 Series A Preferred Stock	Jun. 30, 2014 Common stock	Jun. 30, 2014 Common stock	May 31, 2014 Omega Refining Restricted common stock	Apr. 30, 2014 Incentive Stock Options employee
Conversion of Stock [Line Items]
Common stock, shares authorized	750,000,000	750,000,000		750,000,000
Common stock, par value (in USD per share)	$ 0.001	$ 0.001		$ 0.001
Common stock, shares issued	25,019,450	25,019,450		21,205,609
Common stock, shares outstanding	25,019,450	25,019,450		21,205,609
Number of votes entitled to each common stock share		1
Preferred stock converted to common stock, shares					643,444
New shares as a result of stock conversion, in shares							643,444
Number of common shares issued for each convertible share					1
Options to purchase shares, exercised gross	483,750	483,750
Options to purchase shares, exercised net	464,148	464,148
Options to purchase shares, cashless exercise adjustment	186,250	186,250
Options to purchase shares, aggregate exercise price		$ 130,625
Proceeds from stock option exercise		200,125
Cash in connection with stock option exercises		10,937
Warrants and options exercised, shares	6,250	6,250
Warrants exercised, shares net	6,250	6,250
Stock issued during period, new issuance, shares						2,200,000		500,000
Proceeds from stock offering	15,803,000	15,803,000	0
Stock offering costs	1,247,000
Stock issued during period, new issuance, value						$ 17,050,000		$ 3,266,000
Number of employees who were granted options									2
Aggregate number of shares authorized for purchase		150,000							150,000
Term of awards		10 years							10 years
Exercise price of options (in USD per share)		$ 7.55							$ 7.55
Annual vesting percentage									25.00%
Award vesting period									4 years

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PREFERRED STOCK (Details Narrative) (USD $)	Jun. 30, 2014	Dec. 31, 2013
Class of Stock [Line Items]
Preferred stock, shares authorized	50,000,000	50,000,000
Preferred stock, par value (in USD per share)	$ 0.001	$ 0.001
Series A Preferred Stock
Class of Stock [Line Items]
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, par value (in USD per share)	$ 0.001	$ 0.001
Preferred stock, shares issued	675,558	1,319,002
Preferred stock, shares outstanding	675,558	1,319,002
Series B Preferred Stock
Class of Stock [Line Items]
Preferred stock, shares authorized	2,000,000
Preferred stock, shares issued	0
Preferred stock, shares outstanding	0

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NOTES PAYABLE

6 Months Ended

Jun. 30, 2014

Notes Payable [Abstract]

NOTES PAYABLE

NOTES PAYABLE

In September 2012, the Company entered into a credit agreement with Bank of America. Pursuant to the agreement, Bank of America agreed to loan the Company $8,500,000 in the form of a term loan and to provide the Company with an additional $10,000,000 in the form of a revolving line of credit.

In May 2014, the Company entered into an amended and restated credit agreement with Bank of America. The amended credit agreement amended and restated the prior credit agreement entered into with Bank of America in September 2012. Pursuant to the agreement, Bank of America agreed to loan the Company up to $20,000,000 in the form of a revolving line of credit, subject to certain terms and lending ratios, to be used for feedstock purchases and general corporate purposes. The line of credit bears interest at the option of the Company of either the lender's prime commercial lending rate then in effect between 1.25% and 2% per annum or the Bank of America LIBOR rate plus between 2.35% and 3% (both ranges dependent upon the Company's leverage ratio from time to time). Accrued and unpaid interest on the revolving note is due and payable monthly in arrears and all amounts outstanding under the revolving note are due and payable on May 2, 2017.  The balance on the revolving line of credit was $0 at June 30, 2014.

The financing arrangement discussed above is secured by a first priority security interest in all of the assets and securities of our direct and indirect subsidiaries other than E-Source Holdings, LLC. The loan includes various covenants binding upon the Company, including, requiring that the Company comply with certain reporting requirements, provide notices of material corporate events and forecasts to Bank of America, and maintain certain financial ratios relating to debt leverage, consolidated EBITDA, maximum debt exposure, and minimum liquidity, including maintaining a ratio of quarterly consolidated EBITDA to certain fixed charges. The Company was in compliance with all aspects of the agreement at June 30, 2014.

On May 2, 2014, the Company entered into a Credit and Guaranty Agreement with Goldman Sachs Bank USA. Pursuant to the agreement, Goldman Sachs Bank USA loaned the Company $40,000,000 in the form of a term loan. As set forth in the Credit Agreement, the Company has the option to select whether loans made under the Credit Agreement bear interest at (a) the greater of (i) the prime rate in effect, (ii) the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System plus ½ of 1%, (iii) the sum of (A) the Adjusted LIBOR Rate and (B) 1%, and (iv) 4.5% per annum; or (b) the greater of (i) 1.50% and (ii) the applicable ICE Benchmark Administration Limited interest rate, divided by (x) one minus, (y) the Adjusted LIBOR Rate. Interest on the Credit Agreement is payable monthly in arrears. Amortizing principal payments are due on the Credit Agreement Loan in the amount of $300,000 per fiscal quarter for June 30, 2014, September 30, 2014, December 31, 2014 and March 31, 2015, and $800,000 per fiscal quarter thereafter until maturity on May 2, 2019. The balance on the term loan was $39,700,000 at June 30, 2014.

The Goldman Sachs Bank USA financing arrangement is secured by all of the assets of the Company, but subordinate to the aforementioned Bank of America credit agreement. The Credit Agreement contains customary representations, warranties, and covenants for facilities of similar nature and size as the Credit Agreement. The Credit Agreement also includes various covenants binding the Company including limits on indebtedness the Company may incur and maintenance of certain financial ratios relating to consolidated EBITDA and debt leverage. The Company was in compliance with all aspects of the agreement at June 30, 2014.

In August, 2013, the Company entered into a credit agreement with Texas Citizens Bank N.A. Pursuant to the agreement, Texas Citizens Bank agreed to loan E-Source Holdings $500,000 in the form of a revolving line of credit secured by E-Source held assets. The credit agreement carries an interest rate of 6.25% per annum. Accrued and unpaid interest on the revolving note is due and payable monthly in arrears and all amounts outstanding under the revolving note are due and payable on August 27, 2014. The balance on the line of credit was $304,000 at June 30, 2014.

On May 2, 2014, in connection with the closing of the Omega Refining acquisition, the Company assumed two capital leases totaling $3,154,860. Payments of $2,345,363 were made and the balance was $809,497 at June 30, 2014.

The Company has notes payable to various financial institutions, bearing interest at rates ranging from 5% to 6.35%, maturing from November 2015 to April 2023. The balance of the notes payable is $2,454,944 at June 30, 2014.

Effective January 1, 2014, the Company purchased an additional 19% ownership interest in E-Source Holdings, LLC ("E-Source") of which it had previously acquired 51%. In consideration for the additional interest the Company will pay $854,050 of which $200,000 was paid on April 11, 2014 and the remainder is to be paid monthly in $72,672 installments through December 31, 2014. The Company will also issue up to 207,743 shares of stock on January 31, 2015 based on certain EBITDA criteria being met for 2014 (reduced pro rata based on actual EBITDA). As of the date of the transaction, the estimated value of the stock to be issued of approximately $231,000 was recorded as additional paid in capital and a reduction of the non-controlling interest in accordance with ASC 810-10-45. The balance of the note payable is $436,033 at June 30, 2014.

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SEGMENT REPORTING (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Segment Reporting Information [Line Items]
Revenues	$ 72,079,622	$ 35,111,402	$ 119,429,280	$ 68,366,204
Income (loss) from operations	843,745	2,008,919	1,800,332	3,220,593
Operating segments | Black Oil
Segment Reporting Information [Line Items]
Revenues	48,878,522	19,493,407	72,449,922	42,692,716
Income (loss) from operations	1,116,688	1,091,268	1,137,078	784,537
Operating segments | Refining & Marketing
Segment Reporting Information [Line Items]
Revenues	18,517,819	14,234,204	38,345,278	23,065,950
Income (loss) from operations	768,209	963,842	1,538,784	1,102,197
Operating segments | Recovery
Segment Reporting Information [Line Items]
Revenues	4,683,281	1,383,791	8,634,080	2,607,538
Income (loss) from operations	$ (1,041,152)	$ (46,191)	$ (875,530)	$ 1,333,859

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CONSOLIDATED BALANCE SHEETS (unaudited) (USD $)	Jun. 30, 2014	Dec. 31, 2013
Current assets
Cash and cash equivalents	$ 19,651,831	$ 2,678,628
Accounts receivable, net	13,952,805	11,714,813
Accounts receivable-related party	9,335,321	0
Inventory	16,412,448	8,540,459
Prepaid expenses	3,530,682	1,161,721
Total current assets	62,883,087	24,095,621
Noncurrent assets
Other assets	2,925,096	0
Fixed assets, net	46,725,108	15,091,176
Intangible assets, net	16,733,683	15,172,816
Goodwill	4,922,353	4,502,743
Deferred federal income tax	5,684,000	5,684,000
Total noncurrent assets	76,990,240	40,450,735
TOTAL ASSETS	139,873,327	64,546,356
Current liabilities
Accounts payable and accrued expenses	26,004,141	14,096,185
Capital leases	809,497	0
Current portion of long-term debt	2,417,335	1,956,847
Total current liabilities	29,230,973	16,053,032
Long-term liabilities
Long-term debt	40,173,643	6,558,851
Contingent consideration	5,385,250	3,220,250
Line of credit	304,000	0
Deferred federal income tax	378,000	378,000
Total liabilities	75,471,866	26,210,133
Commitments and contingencies
EQUITY
Preferred stock, $0.001 par value per share: 50,000,000 shares authorized Series A Convertible Preferred stock, $0.001 par value, 5,000,000 authorized and 675,558 and 1,319,002 issued and outstanding at June 30, 2014 and December 31, 2013, respectively	675	1,319
Common stock, $0.001 par value per share; 750,000,000 shares authorized; 25,019,450 and 21,205,609 issued and outstanding at June 30, 2014 and December 31, 2013, respectively	25,019	21,206
Additional paid-in capital	39,189,263	19,579,732
Retained earnings	25,405,251	17,542,004
Total Vertex Energy, Inc. stockholders' equity	64,620,208	37,144,261
Non-controlling interest	(218,747)	1,191,962
Total equity	64,401,461	38,336,223
TOTAL LIABILITIES AND EQUITY	$ 139,873,327	$ 64,546,356

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BASIS OF PRESENTATION AND NATURE OF OPERATIONS

6 Months Ended

Jun. 30, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BASIS OF PRESENTATION AND NATURE OF OPERATIONS

BASIS OF PRESENTATION AND NATURE OF OPERATIONS

The accompanying unaudited consolidated interim financial statements of Vertex Energy, Inc. (the “Company,” or “Vertex Energy”) have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’s annual consolidated financial statements as filed with the SEC on Form 10-K on March 25, 2014 (the “Form 10-K”).  In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein.  The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Certain prior period amounts have been reclassified to conform to current period presentation. Notes to the consolidated financial statements which would substantially duplicate the disclosure contained in the audited consolidated financial statements for the most recent fiscal year 2013 as reported in Form 10-K, have been omitted.

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ACQUISITIONS (Purchase Price Allocation) (Details) (Omega Refining, USD $) In Thousands, unless otherwise specified	0 Months Ended
	May 02, 2014	May 02, 2014
Omega Refining
Business Acquisition [Line Items]
Cash and cash equivalents		$ 406
Accounts receivable		950
Inventory		4,192
Prepaid expenses		71
Property, plant and equipment		30,000
Deposits		400
Bango secured note issued to Vertex		8,308
Technology		2,287
Non-compete agreements		66
Total identifiable net assets		46,680
Less liabilities assumed, including contingent consideration		(7,763)
Gain on purchase		(6,481)
Total purchase price	$ 32,436

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CONCENTRATIONS, SIGNIFICANT CUSTOMERS, COMMITMENTS AND CONTINGENCIES (Details Narrative) (USD $)	6 Months Ended			6 Months Ended
	Jun. 30, 2014 Payment	Dec. 31, 2013	Feb. 28, 2013	Jun. 30, 2014 Purchases Supplier concentration risk Supplier 1 company	Jun. 30, 2013 Purchases Supplier concentration risk Supplier 2 company
Revenue, Major Customer [Line Items]
Number of suppliers				1	1
Concentration percentage				10.00%	12.00%
Debt facilities outstanding	$ 43,704,475	$ 8,515,698
Equipment leased to the company			1,025,000
Number of payments	60
Monthly lease payments for equipment leased to the company	13,328
Net operating losses acquired as a result of a merger		42,000,000
NOL utilized		11,250,000
NOL remaining balance		30,750,000
NOL expected to be utilized	2,200,000
Change in valuation allowance	$ 748,000

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ACQUISITIONS (Summary of Intangible Assets Acquired) (Details) (Omega Refining, USD $) In Thousands, unless otherwise specified	0 Months Ended
	May 02, 2014
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets acquired	$ 2,353
Non-Competes
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets acquired	66
Finite-lived intangible assets, useful life	1 year
Technology
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets acquired	$ 2,287
Finite-lived intangible assets, useful life	15 years

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NOTES PAYABLE (Details Narrative) (USD $)	3 Months Ended	6 Months Ended			6 Months Ended					3 Months Ended		6 Months Ended	0 Months Ended								6 Months Ended		0 Months Ended	6 Months Ended	0 Months Ended			3 Months Ended
	Jun. 30, 2014	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013	Jun. 30, 2014 Notes Payable	Jun. 30, 2014 Revolving Line of Credit 2012 Credit Agreement	May 31, 2014 Revolving Line of Credit 2012 Credit Agreement	Sep. 30, 2012 Revolving Line of Credit 2012 Credit Agreement	Sep. 30, 2012 Term Loan 2012 Credit Agreement	Jun. 30, 2014 Term Loan 2014 Goldman Sachs Bank Credit Agreement	May 02, 2014 Term Loan 2014 Goldman Sachs Bank Credit Agreement	Jun. 30, 2014 Term Loan Bank of America LIBOR rate 2012 Credit Agreement	Apr. 11, 2014 E-Source Holdings, LLC	Jan. 01, 2014 E-Source Holdings, LLC	Jun. 30, 2014 E-Source Holdings, LLC	Jan. 03, 2014 E-Source Holdings, LLC	Dec. 31, 2013 E-Source Holdings, LLC	Jun. 30, 2014 E-Source Holdings, LLC Revolving Line of Credit Citizens Bank Credit Agreement	Aug. 31, 2013 E-Source Holdings, LLC Revolving Line of Credit Citizens Bank Credit Agreement	May 02, 2014 Omega Refining lease	Jun. 30, 2014 Minimum Term Loan Bank of America LIBOR rate 2012 Credit Agreement	May 02, 2014 Maximum Term Loan 2014 Goldman Sachs Bank Credit Agreement	May 02, 2014 Maximum Term Loan Federal Funds rate 2014 Goldman Sachs Bank Credit Agreement	Jun. 30, 2014 Maximum Term Loan Bank of America LIBOR rate 2012 Credit Agreement	May 02, 2014 Maximum Term Loan Bank of America LIBOR rate 2014 Goldman Sachs Bank Credit Agreement	May 02, 2014 Maximum Term Loan ICE Benchmark Administration Limited 2014 Goldman Sachs Bank Credit Agreement	Jan. 01, 2014 Maximum E-Source Holdings, LLC	Mar. 31, 2015 Forecast 2014 Goldman Sachs Bank Credit Agreement	Dec. 31, 2014 Forecast 2014 Goldman Sachs Bank Credit Agreement	Sep. 30, 2014 Forecast 2014 Goldman Sachs Bank Credit Agreement	Jun. 30, 2015 Forecast Term Loan 2014 Goldman Sachs Bank Credit Agreement
Line of Credit Facility [Line Items]
Term loan amount									$ 8,500,000		$ 40,000,000
Line of credit, maximum borrowing capacity							20,000,000	10,000,000
Variable rate, basis spread																					2.35%		0.50%	3.00%	1.00%
Debt due date						May 02, 2017
Line of credit, balance						0
Debt instrument, stated rate																						4.50%
Basis spread on variable rate, numerator component																										1.50%
Loan monthly principal payments										300,000																		300,000	300,000	300,000	800,000
Loan amount										39,700,000
Line of credit to business acquisition																			500,000
Debt instrument, effective rate																			6.25%
Line of credit balance, acquiree																		304,000
Number of capital leases assumed																				2
Capital lease amount assume as part of acquisition																				3,000,000
Capital lease payments made during period	2,345,363
Capital lease obligations	809,497	809,497		0
Effective percentage rate, minimum					5.00%							1.25%
Effective percentage rate, maximum					6.35%							2.00%
Amount payable in consideration for additional interest	2,454,944	2,454,944													436,033	854,050
Additional ownership acquired in equity method investment														19.00%
Ownership percentage																	51.00%
Payments on note payable for additional interest in equity method investment		9,634,029	922,873										200,000
Monthly installment of note payable														72,672
Stock consideration (maximum)																											207,743
Estimated value of stock to be issued recorded in additional paid in capital	$ 39,189,263	$ 39,189,263		$ 19,579,732												$ 231,000

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CONCENTRATIONS, SIGNIFICANT CUSTOMERS, COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2014

Concentrations, Significant Customers, Commitments And Contingencies Disclosure [Abstract]

CONCENTRATIONS, SIGNIFICANT CUSTOMERS, COMMITMENTS AND CONTINGENCIES

CONCENTRATIONS, SIGNIFICANT CUSTOMERS, COMMITMENTS AND CONTINGENCIES

At June 30, 2014 and 2013 and for each of the six months then ended, the Company’s revenues and receivables were comprised of the following customer concentrations:

	2014		2013
	% of Revenues	% of Receivables	% of Revenues	% of Receivables
Customer 1	36%	19%	—%	—%
Customer 2	16%	3%	54%	40%
Customer 3	14%	25%	—%	—%
Customer 4	11%	9%	8%	—%
Customer 5	7%	9%	10%	30%
Customer 6	—%	—%	3%	12%

The Company purchases goods and services from one company that represented 10% of total purchases for the six months ended June 30, 2014 and one company that represented 12% for the six months ended June 30, 2013.

The Company has had various debt facilities available for use, of which there was $43,704,475 and $8,515,698 outstanding as of June 30, 2014 and December 31, 2013, respectively. See Note 3 for further details.

In February 2013, Bank of America agreed to lease the Company up to $1,025,000 of equipment to enhance the Thermal Chemical Extraction Process (TCEP) operation, which went into effect in April 2013.  Under the current terms of the lease agreement, there are 60 monthly payments of approximately $13,328.

The Company’s revenue, profitability and future rate of growth are substantially dependent on prevailing prices for petroleum-based products.  Historically, the energy markets have been very volatile, and there can be no assurance that these prices will not be subject to wide fluctuations in the future.  A substantial or extended decline in such prices could have a material adverse effect on the Company’s financial position, results of operations, cash flows, and access to capital and on the quantities of petroleum-based products that the Company can economically produce.

The Company, in its normal course of business, is involved in various other claims and legal action.  In the opinion of management, the outcome of these claims and actions will not have a material adverse impact upon the financial position of the Company.

We intend to take advantage of any potential tax benefits related to net operating losses (“NOLs”) acquired as part of the Company's April 2009 merger with World Waste Technologies, Inc. ("World Waste").  As a result of the merger, we acquired approximately $42 million of net operating losses that may be used to offset taxable income generated by the Company in future periods.

It is possible that the Company may be unable to use these NOLs in their entirety.  The extent to which the Company will be able to utilize these carry-forwards in future periods is subject to limitations based on a number of factors, including the number of shares issued within a three-year look-back period, whether the merger is deemed to be a change in control, whether there is deemed to be a continuity of World Waste’s historical business, and the extent of the Company’s subsequent income. As of December 31, 2013, the Company had utilized approximately $11.25 million of these NOLs leaving approximately $30.75 million of potential NOLs of which we expect to utilize approximately $2.2 million for the six months ended June 30, 2014.  The Company recorded a change in valuation allowance for the six months ended June 30, 2014 of approximately $748,000.

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CONSOLIDATED BALANCE SHEETS (unaudited) (Parenthetical) (USD $)	Jun. 30, 2014	Dec. 31, 2013
Preferred stock, par value (in USD per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	50,000,000	50,000,000
Common stock, par value (in USD per share)	$ 0.001	$ 0.001
Common stock, shares authorized	750,000,000	750,000,000
Common stock, shares issued	25,019,450	21,205,609
Common stock, shares outstanding	25,019,450	21,205,609
Series A Preferred Stock
Preferred stock, par value (in USD per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	675,558	1,319,002
Preferred stock, shares outstanding	675,558	1,319,002

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CONCENTRATIONS, SIGNIFICANT CUSTOMERS, COMMITMENTS AND CONTINGENCIES (Tables)

6 Months Ended

Jun. 30, 2014

Concentrations, Significant Customers, Commitments And Contingencies Disclosure [Abstract]

Schedule of Concentrations

At June 30, 2014 and 2013 and for each of the six months then ended, the Company’s revenues and receivables were comprised of the following customer concentrations:

	2014		2013
	% of Revenues	% of Receivables	% of Revenues	% of Receivables
Customer 1	36%	19%	—%	—%
Customer 2	16%	3%	54%	40%
Customer 3	14%	25%	—%	—%
Customer 4	11%	9%	8%	—%
Customer 5	7%	9%	10%	30%
Customer 6	—%	—%	3%	12%

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Document and Entity Information	6 Months Ended
	Jun. 30, 2014	Aug. 12, 2014
Document And Entity Information
Entity Registrant Name	Vertex Energy Inc.
Entity Central Index Key	0000890447
Document Type	10-Q
Document Period End Date	Jun. 30, 2014
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		25,042,210
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2014

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STOCK-BASED COMPENSATION (Tables)

6 Months Ended

Jun. 30, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Stock option activity

Stock option activity for the six months ended June 30, 2014 is summarized as follows:

	Shares		Weighted Average Exercise Price			Weighted Average Remaining Contractual Life (in Years)	Grant Date Fair Value
Outstanding at December 31, 2013	3,060,834		$	5.89		6.07	$	1,327,163
Options granted	150,000		7.55			10.00	304,915
Options forfeited/expired	(91,667	)	10.78			—	(29,335		)
Options exercised	(483,750	)	(0.68		)	—	(192,127		)
Outstanding at June 30, 2014	2,635,417		$	6.77		5.99	$	1,410,616
Vested at June 30, 2014	1,719,792		$	8.43		4.72	$	522,691
Exercisable at June 30, 2014	1,719,792		$	8.43		4.72	$	522,691

Schedule of Stock warrant activity

A summary of the Company’s stock warrant activity and related information for the six months ended June 30, 2014 is as follows: 

	Shares		Weighted Average Exercise Price			Weighted Average Remaining Contractual Life (in Years)	Grant Date Fair Value
Outstanding at December 31, 2013	7,083		$	2.72		1.57	$	2,900
Warrants exercised	(6,250	)	(1.75		)	—	(2,800		)
Warrants cancelled/forfeited/expired	(833	)	(10.00		)	—	(100		)
Warrants at June 30, 2014	—		$	—		—	$	—
Vested at June 30, 2014	—		$	—		—	$	—
Exercisable at June 30, 2014	—		$	—		—	$	—

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CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Statement of Cash Flows [Abstract]
Revenues	$ 72,079,622	$ 35,111,402	$ 119,429,280	$ 68,366,204
Cost of revenues	63,200,942	32,556,738	105,406,112	62,341,782
Gross profit	8,878,680	2,554,664	14,023,168	6,024,422
Reduction of contingent liability	0	(1,850,000)	0	(1,850,000)
Operating expenses:
Selling, general and administrative expenses (exclusive of acquisition related expenses)	6,075,517	2,395,745	9,663,006	4,653,829
Acquisition related expenses	1,959,418	0	2,559,830	0
Total operating expenses	8,034,935	2,395,745	12,222,836	4,653,829
Income from operations	843,745	2,008,919	1,800,332	3,220,593
Other income (expense)
Other income	7	7,598	377	32,888
Bargain purchase gain related to Omega acquisition	6,481,051	0	6,481,051	0
Other expense	(10,866)	0	(10,866)	(40,726)
Interest expense	(657,235)	(112,999)	(733,046)	(219,139)
Total other income (expense)	5,812,957	(105,401)	5,737,516	(226,977)
Income before income tax	6,656,702	1,903,518	7,537,848	2,993,616
Income tax benefit (expense)	0	(12,248)	0	(18,751)
Net income	6,656,702	1,891,270	7,537,848	2,974,865
Net income attributable to non-controlling interest	344,380	0	325,399	0
Net income attributable to Vertex Energy, Inc.	$ 7,001,082	$ 1,891,270	$ 7,863,247	$ 2,974,865
Earnings per common share
Basic (in USD per share)	$ 0.31	$ 0.11	$ 0.36	$ 0.17
Diluted (in USD per share)	$ 0.28	$ 0.10	$ 0.33	$ 0.15
Shares used in computing earnings per share
Basic (shares)	22,826,102	17,409,034	22,025,316	17,243,762
Diluted (shares)	24,847,456	19,887,288	23,879,500	19,798,989

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PREFERRED STOCK

6 Months Ended

Jun. 30, 2014

Equity [Abstract]

PREFERRED STOCK

PREFERRED STOCK

The total number of authorized shares of the Company’s preferred stock is 50,000,000 shares, $0.001 par value per share. The total number of designated shares of the Company’s Series A Preferred Stock is 5,000,000 (“Series A Preferred”).  The total number of designated shares of the Company’s Series B Preferred Stock is 2,000,000. As of June 30, 2014, there were 675,558 shares of Series A Preferred Stock issued and outstanding and no Series B Preferred shares issued and outstanding.

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COMMON STOCK

6 Months Ended

Jun. 30, 2014

Common Stock, Number of Shares, Par Value and Other Disclosures [Abstract]

COMMON STOCK

COMMON STOCK

The total number of authorized shares of the Company’s common stock is 750,000,000 shares, $0.001 par value per share. As of June 30, 2014, there were 25,019,450 common shares issued and outstanding.

Each share of the Company's common stock is entitled to equal dividends and distributions per share with respect to the common stock when, as and if declared by the Company's board of directors.  No holders of any shares of the Company's common stock has a preemptive right to subscribe for any of the Company's securities, nor are any shares of the Company's common stock subject to redemption or convertible into other securities.  Upon liquidation, dissolution or winding-up of the Company and after payment of creditors and preferred shareholders of the Company, if any, the assets of the Company will be divided pro rata on a share-for-share basis among the holders of the Company's common stock.  Each share of the Company's common stock is entitled to one vote.  Shares of the Company's common stock do not possess any cumulative voting rights.

During the six months ended June 30, 2014, a total of 643,444 shares of the Company's Series A Preferred Stock were converted into 643,444 shares of our common stock on a one-for-one basis. Warrants to purchase 6,250 shares of the Company's common stock were exercised for 6,250 shares of common stock with $10,937 of exercise price paid in cash. Options to purchase 483,750 shares of common stock were exercised for a net of 464,148 shares of common stock (when adjusting for a cashless exercise of 186,250 of such options and the payment, in shares of common stock, of an aggregate exercise price of $130,625, along with an exercise price of $200,125 paid in cash in connection with such exercises) and 464,148 shares of common stock were issued to the option holders in connection with such exercises. Additionally, in June 2014, 2,200,000 shares were sold in connection with an underwritten offering of the Company's common stock for net proceeds of $15,803,000 after deducting offering costs of $1,247,000 from the $17,050,000 raised. The shares have a par value per share of $0.001. In May 2014, 500,000 shares of our restricted common stock (valued at $3,266,000) were issued in connection with the initial closing of the Omega Refining acquisition.

In April 2014, the Company granted two employees Incentive Stock Options to purchase an aggregate of 150,000 shares of the Company's common stock, which have a term of ten years, an exercise price of $7.55 per share and vest at the rate of 1/4th of such options per year on each of the first four anniversaries of the grant date.

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CONCENTRATIONS, SIGNIFICANT CUSTOMERS, COMMITMENTS AND CONTINGENCIES (Details) (Customer concentration risk)	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Revenues | Customer 1
Revenue, Major Customer [Line Items]
Concentration percentage	36.00%	0.00%
Revenues | Customer 2
Revenue, Major Customer [Line Items]
Concentration percentage	16.00%	54.00%
Revenues | Customer 3
Revenue, Major Customer [Line Items]
Concentration percentage	14.00%	0.00%
Revenues | Customer 4
Revenue, Major Customer [Line Items]
Concentration percentage	11.00%	8.00%
Revenues | Customer 5
Revenue, Major Customer [Line Items]
Concentration percentage	7.00%	10.00%
Revenues | Customer 6
Revenue, Major Customer [Line Items]
Concentration percentage	0.00%	3.00%
Receivables | Customer 1
Revenue, Major Customer [Line Items]
Concentration percentage	19.00%	0.00%
Receivables | Customer 2
Revenue, Major Customer [Line Items]
Concentration percentage	3.00%	40.00%
Receivables | Customer 3
Revenue, Major Customer [Line Items]
Concentration percentage	25.00%	0.00%
Receivables | Customer 4
Revenue, Major Customer [Line Items]
Concentration percentage	9.00%	0.00%
Receivables | Customer 5
Revenue, Major Customer [Line Items]
Concentration percentage	9.00%	30.00%
Receivables | Customer 6
Revenue, Major Customer [Line Items]
Concentration percentage	0.00%	12.00%

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EARNINGS PER SHARE (Tables)

6 Months Ended

Jun. 30, 2014

Earnings Per Share [Abstract]

Schedule of reconciliation of basic and diluted earnings per share

The following is a reconciliation of the numerator and denominator for basic and diluted earnings per share for the six months ended June 30, 2014 and 2013: 

	2014		2013
Basic Earnings per Share
Numerator:
Net income available to common shareholders	$	7,863,247	$	2,974,865
Denominator:
Weighted-average shares outstanding	22,025,316		17,243,762
Basic earnings per share	$	0.36	$	0.17
Diluted Earnings per Share
Numerator:
Net income available to common shareholders	$	7,863,247	$	2,974,865
Denominator:
Weighted-average shares outstanding	22,025,316		17,243,762
Effect of dilutive securities
Stock options and warrants	1,178,626		1,210,007
Preferred stock	675,558		1,345,220
Diluted weighted-average shares outstanding	23,879,500		19,798,989
Diluted earnings per share	$	0.33	$	0.15

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ACQUISITIONS

6 Months Ended

Jun. 30, 2014

Business Combinations [Abstract]

Acquisitions

ACQUISITION

Omega Refining Transaction

On May 2, 2014, the Company completed its acquisition of substantially all of the assets of Omega Refining, LLC (including the Marrero, Louisiana re-refinery and Omega’s Myrtle Grove complex in Belle Chaise, Louisiana) and ownership of Golden State Lubricant Works, LLC for the purpose of re-refining used lubricating oils into processed oils and other products for the distribution, supply and sale to end-customers with related products and support services. The purchase price paid at the closing was approximately $28,764,000 in cash, 500,000 shares of our restricted common stock (valued at $3,266,000) and the assumption of certain capital lease obligations and other liabilities relating to contracts and leases of Omega Refining in connection with the initial closing.  We also agreed to provide Omega a loan in the amount of up to approximately $13.8 million.

The acquisition was accounted for under the purchase method of accounting, with the Company identified as the acquirer. Under the purchase method of accounting, the aggregate amount of consideration paid by the Company was allocated to Omega Refining's net tangible assets and intangible assets based on their estimated fair values as of May 2, 2014. The transaction resulted in a bargain purchase of $6,481,051 recognized in net income as an acquisition-date gain. The Omega purchase qualifies as a bargain purchase since the acquisition date amounts of the identifiable net asset acquired, excluding goodwill ($38.92 million), exceed the value of the consideration transferred ($32.44 million). The difference of $6.48 million is a gain as of the acquisition date. The bargain purchase resulted from the financial distress that Omega was in due to the large amount of debt held by Omega and the unexpected decrease in crack spreads that made the debt level overbearing. Evidence that a bargain purchase exists was seen in the common stock price of the Company, which increased from $3.82 (on March 19, 2014) when the transaction was announced) to $8.10 (on May 2, 2014 when the initial closing occurred). The Company retained an independent third party to assist management in determining the fair value of tangible and intangible assets transferred and liabilities assumed. The allocation of the purchase price is based on the best estimates of management.

The following information summarizes the allocation of the fair values assigned to the assets at the purchase date. The allocation of fair values are preliminary and are subject to change in the future during the measurement period.

	(in thousands)
Cash and cash equivalents	$	406
Accounts receivable	950
Inventory	4,192
Prepaid expenses	71
Property, plant and equipment	30,000
Deposits	400
Bango secured note issued to Vertex	8,308
Technology	2,287
Non-compete agreements	66
Total identifiable net assets	$	46,680
Less liabilities assumed, including contingent consideration	(7,763		)
Gain on purchase	(6,481		)
Total purchase price	$	32,436

The Company incurred $2,559,830 in costs associated with the Omega Refining acquisition. These included legal, accounting, environmental and investment banking.

The following table summarizes the cost of amortizable intangible assets related to the Omega Refining acquisition: 

	Estimated Cost (in thousands)		Useful life (years)
Non-Competes	$	66	1
Technology	$	2,287	15
Total	$	2,353

The results of Omega Refining are included in the consolidated financial statements subsequent to May 2, 2014. The following schedule contains pro forma results from operations as if the acquisition had occurred on January 1, 2013. The pro forma results do not report actual results that would have occurred had the merger taken place on January 1, 2013 nor do they necessarily suggest future operating results.

	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Revenues	$	79,747,665	$	68,597,653	$	127,097,323	$	140,850,582
Income from operations	498,141		335,135		1,454,728		3,899,588
Net income	6,284,339		116,145		7,165,485		3,346,949
Net loss attributable to non-controlling interest	344,380		—		325,399		—
Net income attributable to Vertex Energy, Inc.	$	6,628,719	$	116,145	$	7,490,884	$	3,346,949
Earnings  per common share
Basic	$	0.29	$	0.01	$	0.34	$	0.19
Diluted	$	0.27	$	0.01	$	0.31	$	0.17

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SEGMENT REPORTING

6 Months Ended

Jun. 30, 2014

Segment Reporting [Abstract]

SEGMENT REPORTING

SEGMENT REPORTING

The Company’s reportable segments include the Black Oil, Refining & Marketing and Recovery divisions.  Segment information for the six months ended June 30, 2014 and 2013 is as follows:

SIX MONTHS ENDED JUNE 30, 2014
	Black Oil		Refining & Marketing		Recovery			Total
Revenues	$	72,449,922	$	38,345,278	$	8,634,080		$	119,429,280
Income (loss) from operations	$	1,137,078	$	1,538,784	$	(875,530	)	$	1,800,332

SIX MONTHS ENDED JUNE 30, 2013
	Black Oil		Refining & Marketing		Recovery		Total
Revenues	$	42,692,716	$	23,065,950	$	2,607,538	$	68,366,204
Income from operations	$	784,537	$	1,102,197	$	1,333,859	$	3,220,593

THREE MONTHS ENDED JUNE 30, 2014
	Black Oil		Refining & Marketing		Recovery			Total
Revenues	$	48,878,522	$	18,517,819	$	4,683,281		$	72,079,622
Income (loss) from operations	$	1,116,688	$	768,209	$	(1,041,152	)	$	843,745

THREE MONTHS ENDED JUNE 30, 2013
	Black Oil		Refining & Marketing		Recovery			Total
Revenues	$	19,493,407	$	14,234,204	$	1,383,791		$	35,111,402
Income (loss) from operations	$	1,091,268	$	963,842	$	(46,191	)	$	2,008,919

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CONTINGENT CONSIDERATION

6 Months Ended

Jun. 30, 2014

Business Combination, Contingent Consideration Arrangements [Abstract]

CONTINGENT CONSIDERATION

CONTINGENT CONSIDERATION

As part of the consideration paid related to the August 2012 acquisition of Vertex Holdings, L.P., if certain earnings targets are met, the Company has to pay the seller approximately $2,233,000 annually in each of 2013, 2014 and 2015. In 2013, it had been determined that the 2013 earnings target would not be met and the contingent consideration was reduced by $1,850,000, which represents the discounted cash flow for year one. It had also been determined that there was a 25% probability that the 2014 earnings target would not be met and the contingent consideration was reduced by $388,750, which represents 25% of the discounted cash flows for year two.

As part of the consideration paid in connection with the acquisition of E-Source Holding, LLC, if certain targets are met, the Company has to pay the seller approximately $260,000 annually in 2014, 2015, 2016 and 2017. The Company has recorded contingent consideration of $748,000, which is the discounted cash flows of the earn-out payments. In addition, on January 31, 2015, 207,743 shares of the Company's stock will be issued as consideration for the additional equity interest if certain performance metrics are achieved for 2014. As of the date of the transaction, the estimated value of the stock to be issued of approximately $231,000 was recorded as additional paid in capital and a reduction of the non-controlling interest in accordance with ASC 810-10-45.

As part of the consideration paid in connection with the acquisition of Omega Holdings, the Company has agreed to pay the seller additional earn-out consideration in the event that certain EBITDA targets are met (a) during any twelve month period during the eighteen month period commencing on the first day of the first full calendar month following the May 2, 2014 initial closing date (which targets begin at $8,000,000 of EBITDA during such twelve month period) of up to 470,498 shares of common stock of the Company; and (b) during the calendar year ended December 31, 2015 (which targets begin at $9,000,000 of EBITDA) of up to 770,498 shares of common stock of the Company, in each case subject to adjustment for certain capital expenditures.

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SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2014

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

Subsequent to June 30, 2014, 22,760 shares of the Company's Series A Preferred Stock were converted into 22,760 shares of our common stock on a one-for-one basis.

Subsequent to June 30, 2014, the available credit on the Line of Credit is $20,000,000. As of August 12, 2014, the outstanding balance drawn on the line of credit is $0 leaving an available balance for draw downs of $20,000,000.

On May 2, 2014, we completed the Initial Closing (defined below) contemplated under that certain Asset Purchase Agreement entered into on March 17, 2014, and amended by the First Amendment dated April 14, 2014, Second Amendment dated April 30, 2014 and Third Amendment dated May 2, 2014 (as amended to date, the “Purchase Agreement”) by and among the Company, Vertex Refining LA, LLC and Vertex Refining NV, LLC (“Vertex Refining Nevada”), both wholly-owned subsidiaries of Vertex Operating, Omega Refining, LLC (“Omega Refining”), Bango Refining NV, LLC (“Bango Refining”) and Omega Holdings Company LLC (“Omega Holdings” and collectively with Omega Refining and Bango Refining, “Omega” or the “sellers”).

The acquisition is to close in two separate closings, the first of which relating to the acquisition of Omega Refining (including the Marrero, Louisiana re-refinery and Omega’s Myrtle Grove complex in Belle Chaise, Louisiana) and ownership of Golden State, as described above, closed on May 2, 2014 (the “Initial Closing”), and the second of which relating to the acquisition of Bango Refining and the Bango, Nevada plant, is expected to close on or around September 2014, subject to certain closing conditions being met prior to closing (the “Final Closing”).  Vertex’s obligation to consummate the Final Closing is subject to among other things, compliance with certain provisions of the credit agreements described herein and that the Bango plant operated by Bango Refining be fully restored and operational, as well as the plant meeting certain used motor oil processing run rates and that there are no adverse claims or legal proceedings related to an accident that occurred at the Bango plant in December 2013.

The amount due at the Final Closing, in consideration for the acquisition of Bango Refining, will be the assumption of certain loans made pursuant to the Omega Secured Note (described below), the issuance of 1,500,000 shares of Vertex’s common stock of which 650,000 shares (with an agreed value of $3.2301 per share or approximately $2.1 million) will be held in escrow (the “Pledged Shares”) and used to satisfy indemnification claims and secure the repayment of the Omega Secured Note (defined below), and which amount is subject to adjustment in the event minimum inventory levels are not delivered at the Final Closing, and the assumption of certain capital lease obligations and other liabilities relating to contracts and leases of Bango Refining.  A portion of the Pledged Shares will be released from escrow, subject to outstanding claims, on September 15, 2015, and the remainder will be released on the 18 month anniversary of the Final Closing.  Subject to certain negotiated exceptions for excluded liabilities, taxes and other fundamental items, the sellers’ indemnification obligations are capped at $5 million.

The consideration payable in connection with the Final Closing is subject to customary adjustments prior to the Final Closing depending on certain criteria, including the amount of inventory delivered by the sellers at the Final Closing.

The sellers also have the right to earn additional earn-out consideration in the event certain EBITDA targets are met by (a) Vertex Refining NV, LLC during the years ended December 31, 2015 and 2016 (which targets begin at $3.5 million of EBITDA per year), of up to an aggregate of $6 million (payable in shares of the Company’s common stock equal to the volume-weighted average of the regular session closing prices per share of the Company’s common stock on the NASDAQ Capital Market for the ten (10) consecutive trading days prior to the applicable due date of such payments, provided, however, in no event shall the VWAP be less than $3.15 per share or more than $10.00 per share, as adjusted for any stock splits or recapitalizations); (b) Vertex Refining LA, LLC during any twelve month period during the eighteen month period commencing on the first day of the first full calendar month following the Initial Closing date (which targets begin at $8 million of EBITDA during such twelve month period) of up to 470,498 shares of common stock of the Company; and (c) Vertex Refining LA, LLC during the calendar year ended December 31, 2015 (which targets begin at $9 million of EBITDA) of up to 770,498 shares of common stock of the Company, in each case subject to adjustment for certain capital expenditures (collectively, the “Earn-Outs).  Notwithstanding the above, the maximum number of shares of common stock to be issued pursuant to the Purchase Agreement cannot (i) exceed 19.9% of the outstanding shares of common stock outstanding on March 17, 2014, (ii) exceed 19.9% of the combined voting power of the Company on March 17, 2014, or (iii) otherwise exceed such number of shares of common stock that would violate applicable listing rules of the NASDAQ Stock Market in the event the Company’s stockholders do not approve the issuance of such shares (the “Share Cap”).  In the event the number of shares to be issued under the Purchase Agreement exceeds the Share Cap, then the Company is required to instead pay any such additional consideration in cash or obtain the approval of the Company’s stockholders under applicable rules and requirements of the NASDAQ Capital Market for the additional issuance of shares.

Finally, pursuant to the acquisition, (a) with certain exceptions related to sellers’ operation of Bango Refining between the Initial Closing and the Final Closing, the sellers agreed to enter into a non-competition agreement whereby they agreed not to compete against Vertex in connection with the acquired businesses, or to solicit active customers of the acquired businesses for a period of five years and (b) certain of the employees of the sellers agreed to enter into three year employment agreements with Vertex’s newly formed subsidiaries.

Additionally, we were required to file and obtain effectiveness of a registration statement within 90 days following the Initial Closing (if the Securities and Exchange Commission did not review the filing) and 150 days following the Initial Closing (if the Securities and Exchange Commission did review the filing), registering the shares of common stock issuable in connection with the acquisition, which registration statement was declared effective on July 29, 2014.

The Final Closing remains subject to the satisfaction of certain customary closing conditions. The Purchase Agreement contains customary representations, warranties, covenants and indemnities by the parties thereto. Craig-Hallum Capital Group LLC is acting as exclusive financial advisor to the Company in connection with the acquisition and has provided a fairness opinion to the Board of Directors in connection with the transaction.

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ACQUISITIONS (Details Narrative) (USD $)	3 Months Ended		6 Months Ended				0 Months Ended		0 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	May 02, 2014	Mar. 19, 2014	May 02, 2014 Omega Refining	May 02, 2014 Omega Refining	May 02, 2014 Omega Refining Restricted common stock
Business Acquisition [Line Items]
Amount paid for business acquisition							$ 28,764,000
Number of shares issued as part of business acquisition									500,000
Value of shares issued as part of business acquisition									3,266,000
Amount of loan provided to acquiree								13,800,000
Bargain purchase gain related to Omega acquisition	6,481,051	0	6,481,051	0			6,481,051
Total identifiable assets, excluding Goodwill								38,920,000
Consideration transferred							32,436,000
Price of common stock (in USD per share)					$ 8.10	$ 3.82
Costs incurred associated with acquisition	$ 1,959,418	$ 0	$ 2,559,830	$ 0			$ 2,559,830

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ACQUISITIONS (Tables)

6 Months Ended

Jun. 30, 2014

Business Combinations [Abstract]

Summary of Purchase Price Allocation, Fair Value

	(in thousands)
Cash and cash equivalents	$	406
Accounts receivable	950
Inventory	4,192
Prepaid expenses	71
Property, plant and equipment	30,000
Deposits	400
Bango secured note issued to Vertex	8,308
Technology	2,287
Non-compete agreements	66
Total identifiable net assets	$	46,680
Less liabilities assumed, including contingent consideration	(7,763		)
Gain on purchase	(6,481		)
Total purchase price	$	32,436

Schedule of Pro-Forma Information

The following schedule contains pro forma results from operations as if the acquisition had occurred on January 1, 2013. The pro forma results do not report actual results that would have occurred had the merger taken place on January 1, 2013 nor do they necessarily suggest future operating results.

	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Revenues	$	79,747,665	$	68,597,653	$	127,097,323	$	140,850,582
Income from operations	498,141		335,135		1,454,728		3,899,588
Net income	6,284,339		116,145		7,165,485		3,346,949
Net loss attributable to non-controlling interest	344,380		—		325,399		—
Net income attributable to Vertex Energy, Inc.	$	6,628,719	$	116,145	$	7,490,884	$	3,346,949
Earnings  per common share
Basic	$	0.29	$	0.01	$	0.34	$	0.19
Diluted	$	0.27	$	0.01	$	0.31	$	0.17

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STOCK-BASED COMPENSATION (Details) (USD $)	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
Stock Options
Outstanding, beginning - shares	3,060,834
Options granted - shares	150,000
Options forfeited/expired - shares	(91,667)
Options exercised - shares	(483,750)
Outstanding, ending - shares	2,635,417	3,060,834
Vested - shares	1,719,792
Exercisable - shares	1,719,792
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract]
Outstanding, beginning - weighted average exercise price (in USD per share)	$ 5.89
Options granted - weighted average exercise price (in USD per share)	$ 7.55
Options forfeited/expired - weighted average exercise price (in USD per share)	$ 10.78
Options exercised - weighted average exercise price (in USD per share)	$ (0.68)
Outstanding, ending - weighted average exercise price (in USD per share)	$ 6.77	$ 5.89
Vested - weighted average exercise price (in USD per share)	$ 8.43
Exercisable - weighted average exercise price (in USD per share)	$ 8.43
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
Outstanding, beginning - weighted average remaining contractual life (in years)	5 years 11 months 26 days	6 years 0 months 25 days
Options granted - weighted average remaining contractual life (in years)	10 years
Outstanding, ending - weighted average remaining contractual life (in years)	5 years 11 months 26 days	6 years 0 months 25 days
Vested - weighted average remaining contractual life (in years)	4 years 8 months 19 days
Exercisable - weighted average remaining contractual life (in years)	4 years 8 months 19 days
Outstanding, beginning - grant date fair value	$ 1,327,163
Options granted - grant date fair value	304,915
Options forfeited/expired - grant date fair value	(29,335)
Options exercised - grant date fair value	(192,127)
Outstanding, ending - grant date fair value	1,410,616	1,327,163
Vested - grant date fair value	522,691
Exercisable - grant date fair value	$ 522,691

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CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (USD $)	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014 E-Source Holdings, LLC	Jun. 30, 2013 E-Source Holdings, LLC
Cash flows from operating activities
Net income	$ 7,537,848	$ 2,974,865
Adjustments to reconcile net income to cash provided by operating activities
Stock based compensation expense	101,378	94,466
Depreciation and amortization	1,800,950	1,069,035
Gain on acquisition	(6,481,051)	0
Deferred federal income tax	0	11,000
Reduction of contingent liability	0	(1,850,000)
Changes in operating assets and liabilities
Accounts receivable	(2,237,992)	(930,490)
Accounts receivable-other	950,000	0
Accounts receivable-related party	(1,027,321)	0
Inventory	(3,679,989)	(3,465,205)
Prepaid expenses	(2,717,571)	(45,451)
Accounts payable	9,464,956	3,669,339
Other assets	(79,806)	0
Net cash provided by operating activities	3,631,402	1,527,559
Cash flows from investing activities
Acquisition of Omega	(28,764,099)	(67,972)
Refund of asset acquisition	0	675,558
Purchase of fixed assets	(2,635,882)	(1,010,485)
Net cash (used in) investing activities	(31,399,981)	(402,899)
Cash flows from financing activities
Line of credit (payments) proceeds, net	304,000	(750,000)
Proceeds related to primary stock offering	15,803,000	0
Proceeds from note payable	40,509,906	0
Payments on note payable	(9,634,029)	(922,873)
Proceeds from exercise of common stock options and warrants	211,062	37,501
Debt issue costs	(2,452,157)	0
Net cash provided by (used in) financing activities	44,741,782	(1,635,372)
Net change in cash and cash equivalents	16,973,203	(510,712)
Cash and cash equivalents at beginning of the period	2,678,628	807,940
Cash and cash equivalents at end of period	19,651,831	297,228
SUPPLEMENTAL INFORMATION
Cash paid for interest	733,046	199,737
Cash paid for income taxes	0	21,249
NON-CASH INVESTING AND FINANCING TRANSACTIONS
Conversion of Series A Preferred Stock into common stock	644	168
Note payable for acquisition of E-Source interest			854,050	0
Additional paid in capital for acquisition of E-Source interest			$ 231,260	$ 0

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EARNINGS PER SHARE

6 Months Ended

Jun. 30, 2014

Earnings Per Share [Abstract]

EARNINGS PER SHARE

EARNINGS PER SHARE

Basic earnings per share includes no dilution and is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the periods presented. The calculation of basic earnings per share for the six months ended June 30, 2014 includes the weighted average of common shares outstanding.  Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity, such as convertible preferred stock, stock options, warrants or convertible securities.  The calculation of diluted earnings per share for the six months ended June 30, 2014 does not include options to purchase 906,000 shares due to their anti-dilutive effect.

The following is a reconciliation of the numerator and denominator for basic and diluted earnings per share for the six months ended June 30, 2014 and 2013: 

	2014		2013
Basic Earnings per Share
Numerator:
Net income available to common shareholders	$	7,863,247	$	2,974,865
Denominator:
Weighted-average shares outstanding	22,025,316		17,243,762
Basic earnings per share	$	0.36	$	0.17
Diluted Earnings per Share
Numerator:
Net income available to common shareholders	$	7,863,247	$	2,974,865
Denominator:
Weighted-average shares outstanding	22,025,316		17,243,762
Effect of dilutive securities
Stock options and warrants	1,178,626		1,210,007
Preferred stock	675,558		1,345,220
Diluted weighted-average shares outstanding	23,879,500		19,798,989
Diluted earnings per share	$	0.33	$	0.15

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STOCK-BASED COMPENSATION (Details 1) (USD $)	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
Stock Warrants
Outstanding, beginning - shares	7,083
Warrants exercised - shares	(6,250)
Warrants cancelled/forfeited/expired - shares	(833)
Outstanding, ending - shares	0	7,083
Vested - shares	0
Exercisable - shares	0
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Outstanding, beginning - weighted average exercise price (in USD per share)	$ 2.72
Warrants exercised - weighted average exercise price (in USD per share)	$ (1.75)
Warrants cancelled/forfeited/expired - weighted average exercise price (in USD per share)	$ (10.00)
Outstanding, ending - weighted average exercise price (in USD per share)	$ 0.00	$ 2.72
Vested - weighted average exercise price (in USD per share)	$ 0.00
Exercisable - weighted average exercise price (in USD per share)	$ 0.00
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Additional Disclosures [Abstract]
Outstanding, beginning - weighted average remaining contractual life (in years)	0 years	1 year 6 months 25 days
Outstanding, ending - weighted average remaining contractual life (in years)	0 years	1 year 6 months 25 days
Vested - weighted average remaining contractual life (in years)	0 years
Exercisable - weighted average remaining contractual life (in years)	0 years
Outstanding, beginning - grant date fair value	$ 2,900
Warrants exercised - grant date fair value	(2,800)
Warrants cancelled/forfeited/expired - grant date fair value	(100)
Outstanding, ending - grant date fair value	0	2,900
Vested - grant date fair value	0
Exercisable - grant date fair value	$ 0

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SUBSEQUENT EVENTS (Details Narrative) (USD $)	6 Months Ended		1 Months Ended	6 Months Ended	1 Months Ended	0 Months Ended		0 Months Ended	1 Months Ended								1 Months Ended
	Jun. 30, 2014	Jun. 30, 2014 Series A Preferred Stock	Aug. 14, 2014 Series A Preferred Stock Subsequent Event	Jun. 30, 2014 Common stock	Aug. 14, 2014 Common stock Subsequent Event	May 02, 2014 Omega Refining	Jun. 30, 2014 Omega Refining	Jul. 30, 2014 Heartland Group Holdings, LLC Subsequent Event	Aug. 31, 2014 Forecast	Aug. 31, 2014 Forecast Bango Refining Common stock	Aug. 31, 2014 Forecast Omega Refining and Bango Refining	Aug. 31, 2014 Vertex Refining Nevada, LLC Forecast Omega Refining and Bango Refining	Aug. 31, 2014 Vertex Refining LA, LLC Forecast Omega Refining and Bango Refining	Aug. 31, 2014 Minimum Vertex Refining Nevada, LLC Forecast Omega Refining and Bango Refining	May 02, 2014 Maximum Omega Refining	Dec. 31, 2015 Maximum Forecast Omega Refining	Aug. 31, 2014 Maximum Vertex Refining Nevada, LLC Forecast Omega Refining and Bango Refining	Dec. 31, 2015 Maximum Vertex Refining LA, LLC Forecast Omega Refining and Bango Refining	Aug. 31, 2014 Maximum Vertex Refining LA, LLC Forecast Omega Refining and Bango Refining	Aug. 14, 2014 Amended and Restated Credit Agreement 2014 Subsequent Event	Aug. 12, 2014 Amended and Restated Credit Agreement 2014 Subsequent Event	Jul. 30, 2014 Operating Income Guarantee Upon Cancellation of Acquisition of Vertex Heartland Group Holdings, LLC Subsequent Event
Subsequent Event [Line Items]
Preferred stock converted to common stock, shares		643,444	22,760
New shares as a result of stock conversion, in shares				643,444	22,760
Number of common shares issued for each convertible share		1	1
Line of credit, available																				$ 20,000,000
Line of credit, balance																					0
Line of credit, available																					20,000,000
Options to purchase shares, exercised gross	483,750
Options to purchase shares, exercised net	464,148
Options to purchase shares, aggregate exercise price	130,625
Options to purchase shares, cashless exercise adjustment	186,250
Cash from stock option exercise	200,125
Number of shares issued as part of business acquisition										1,500,000
Number of shares issued held in escrow										650,000
Value of common shares held in escrow (in USD per share)										$ 3.2301
Value of common shares held in escrow										2,100,000
Anniversary which remaining shares held in escrow will be released									18 months
Indemnification obligations of the seller (maximum)									5,000,000
Earnings before interest, taxes, depreciation, and amortization (EBITDA), annual target amount (minimum)												3,500,000.0
Earnings before interest, taxes, depreciation, and amortization (EBITDA), aggregate target amount (maximum)												6,000,000
Number of consecutive trading days used to compute weighted-average closing price per share												10 days
Volume-weighted average price (VWAP) (in USD per share)														$ 3.15			$ 10.00
EBITDA measurement period						12 months							12 months
EBITDA performance period						18 months					18 months
Earnings before interest, taxes, depreciation, and amortization (EBITDA), target amount over succeeding 12-month period							8,000,000						8,000,000
Earnings before interest, taxes, depreciation, and amortization (EBITDA), shares (maximum)															470,498	770,498		770,498	470,498
Earnings before interest, taxes, depreciation, and amortization (EBITDA), annual target amount (minimum)							9,000,000						9,000,000
Number of common shares issued to number of common shares outstanding (maximum percentage)											19.90%
Maximum combined voting power, percentage											19.90%
Consideration transferred						32,436,000		16,500,000
Earnout achievable								8,000,000
Period to achieve earnout								2 years
Commitment to cover expenses and operating losses recognized after July 16, 2014																						$ 500,000

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SEGMENT REPORTING (Tables)

6 Months Ended

Jun. 30, 2014

Segment Reporting [Abstract]

Schedule of the Company's reportable segment information

The Company’s reportable segments include the Black Oil, Refining & Marketing and Recovery divisions.  Segment information for the six months ended June 30, 2014 and 2013 is as follows:

SIX MONTHS ENDED JUNE 30, 2014
	Black Oil		Refining & Marketing		Recovery			Total
Revenues	$	72,449,922	$	38,345,278	$	8,634,080		$	119,429,280
Income (loss) from operations	$	1,137,078	$	1,538,784	$	(875,530	)	$	1,800,332

SIX MONTHS ENDED JUNE 30, 2013
	Black Oil		Refining & Marketing		Recovery		Total
Revenues	$	42,692,716	$	23,065,950	$	2,607,538	$	68,366,204
Income from operations	$	784,537	$	1,102,197	$	1,333,859	$	3,220,593

THREE MONTHS ENDED JUNE 30, 2014
	Black Oil		Refining & Marketing		Recovery			Total
Revenues	$	48,878,522	$	18,517,819	$	4,683,281		$	72,079,622
Income (loss) from operations	$	1,116,688	$	768,209	$	(1,041,152	)	$	843,745

THREE MONTHS ENDED JUNE 30, 2013
	Black Oil		Refining & Marketing		Recovery			Total
Revenues	$	19,493,407	$	14,234,204	$	1,383,791		$	35,111,402
Income (loss) from operations	$	1,091,268	$	963,842	$	(46,191	)	$	2,008,919