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)
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(Zip Code)
|
Title of each class
|
Name of each exchange on which registered
|
|
Common Stock,
$0.001 Par Value Per Share
|
The NASDAQ Stock Market LLC
(Nasdaq Capital Market)
|
Large accelerated filer
¨
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Accelerated filer
¨
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Non-accelerated filer
¨
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Smaller reporting company
x
|
Item 1. Business
|
1 |
Item 1A. Risk Factors
|
10 |
Item 2. Properties
|
25 |
Item 3. Legal Proceedings
|
26 |
Item 4. Mine Safety Disclosures
|
26 |
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
27 |
Item 6. Selected Financial Data
|
31 |
Item 7. Management's Discussion and Analysis or Plan of Operation
|
31 |
Item 8. Financial Statements and Supplementary Data
|
F-1
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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
42 |
Item 9A. Controls and Procedures
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42 |
Item 9B. Other Information
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43 |
Item 10. Directors, Executive Officers and Corporate Governance
|
44 |
Item 11. Executive Compensation
|
44 |
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
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44 |
Item 13. Certain Relationships and Related Transactions, and Director Independence
|
44 |
Item 14. Principal Accountant Fees and Services
|
44 |
Part IV
|
|
Item 15. Exhibits, Financial Statement Schedules
|
45 |
•
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the level of competition in our industry and our ability to compete;
|
|
•
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our ability to respond to changes in our industry;
|
|
•
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the loss of key personnel or failure to attract, integrate and retain additional personnel;
|
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•
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our ability to protect our intellectual property and not infringe on others’ intellectual property;
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•
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our ability to scale our business;
|
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•
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our ability to maintain supplier relationships and obtain adequate supplies of feedstocks;
|
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•
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our ability to obtain and retain customers;
|
|
•
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our ability to produce our products at competitive rates;
|
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•
|
our ability to execute our business strategy in a very competitive environment;
|
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•
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trends in, and the market for, the price of oil and gas and alternative energy sources;
|
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•
|
our ability to maintain our relationship with KMTEX, Ltd.;
|
|
•
|
the impact of competitive services and products;
|
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•
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changes in environmental and other laws and regulations and risks associated with such laws and regulations;
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•
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economic downturns both in the United States and globally;
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|
•
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risk of increased regulation of our operations and products;
|
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•
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negative publicity and public opposition to our operations;
|
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•
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disruptions in the infrastructure that we and our partners rely on;
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|
•
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an inability to identify attractive acquisition opportunities, successfully negotiate acquisition terms or effectively integrate acquired companies or businesses;
|
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•
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interruptions at our facilities;
|
|
•
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unexpected changes in our anticipated capital expenditures resulting from unforeseen required maintenance, repairs, or upgrades;
|
|
•
|
our ability to effectively manage our growth;
|
|
•
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the lack of capital available on acceptable terms to finance our continued growth; and
|
|
•
|
other risk factors included under “
Risk Factors
” in this Report.
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·
|
Cedar Marine Terminals, L.P.
operates a 19-acre bulk liquid storage facility on the Houston Ship Channel. The terminal serves as a truck-in, barge-out facility and provides throughput terminal operations. Cedar Marine Terminals is also the site of the Thermal Chemical Extraction Process (“
TCEP
”) (described below).
|
·
|
Crossroad Carriers, L.P.
is a third-party common carrier that provides transportation and logistical services for liquid petroleum products, as well as other hazardous materials and product streams.
|
·
|
Vertex Recovery L.P.
is a generator solutions company for the recycling and collection of used oil and oil-related residual materials from large regional and national customers throughout the U.S. and Canada. It facilitates its services through a network of independent recyclers and franchise collectors.
|
·
|
H&H Oil, L.P.
collects and recycles used oil and residual materials from customers based in Austin, Baytown, San Antonio and Corpus Christi, Texas.
|
Used Motor Oil
|
Fuel Oil
|
Pygas
|
Gasoline Blendstock
|
•
|
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.
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·
|
regulate the collection, transportation, handling, processing and disposal of hazardous and non-hazardous wastes;
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·
|
impose liability on persons involved in generating, handling, processing, transporting or disposing hazardous materials;
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·
|
impose joint and several liability for remediation and clean-up of environmental contamination; and
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·
|
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.
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·
|
the failure to successfully integrate the acquired businesses or facilities or new technology into our operations;
|
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·
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incurring significantly higher than anticipated capital expenditures and operating expenses;
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·
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disrupting our ongoing business;
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·
|
dissipating our management resources;
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·
|
failing to maintain uniform standards, controls and policies;
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·
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the inability to maintain key pre-acquisition business relationships;
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·
|
loss of key personnel of the acquired business or facility;
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·
|
exposure to unanticipated liabilities; and
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·
|
the failure to realize efficiencies, synergies and cost savings.
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·
|
actual or anticipated variations in our results of operations;
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·
|
our ability or inability to generate revenues;
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·
|
the number of shares in our public float;
|
·
|
increased competition; and
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·
|
conditions and trends in the market for oil refining and re-refining services, transportation services and oil feedstock.
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QUARTER ENDING
|
HIGH
|
LOW
|
||||||
FISCAL 2012
|
||||||||
December 31, 2012
|
$
|
3.60
|
$
|
2.01
|
||||
September 30, 2012
|
$
|
2.52
|
$
|
1.25
|
||||
June 30, 2012
|
$
|
2.35
|
$
|
1.30
|
||||
March 31, 2012
|
$
|
2.49
|
$
|
1.80
|
||||
FISCAL 2011
|
||||||||
December 31, 2011
|
$
|
2.90
|
$
|
2.05
|
||||
September 30, 2011
|
$
|
3.90
|
$
|
2.56
|
||||
June 30, 2011
|
$
|
4.00
|
$
|
0.71
|
||||
March 31, 2011
|
$
|
0.88
|
$
|
0.36
|
·
|
The affirmative vote or written consent of the holders of a majority of the then-outstanding shares of Series A Preferred;
|
·
|
If the closing market price of our common stock averages at least $15.00 per share over a period of 20 consecutive trading days and the daily trading volume averages at least 7,500 shares over such period;
|
·
|
If we consummate an underwritten public offering of our securities at a price per share not less than $10.00 and for a total gross offering amount of at least $10 million; or
|
·
|
If a sale of the Company occurs resulting in proceeds to the holders of Series A Preferred of a per share amount of at least $10.00.
|
·
|
The Series B Preferred Stock includes a liquidation preference which is junior to the Company’s previously outstanding shares of preferred stock, senior securities and other security holders as provided in further detail in the Designation;
|
·
|
The Series B Preferred Stock is convertible into shares of the Company’s common stock on a one for one basis at a conversion price of $1.00 per share, provided that the Series B Preferred Stock automatically converts into shares of the Company’s common stock on a one for one basis if the Company’s common stock trades above $2.00 per share for a period of 10 consecutive trading days;
|
·
|
The Series B Preferred Stock has no voting rights (other than on matters concerning the Series B Preferred Stock as further described in the Designation); and
|
·
|
The Company was obligated to redeem any unconverted shares of Series B Preferred Stock in cash at $1.00 per share on the third anniversary date of the original issuance date of each share of Vertex Series B Preferred Stock.
|
Plan Category
|
Number of securities to be issued upon exercise of outstanding options, warrants and rights
|
Weighted-average exercise price of outstanding options, warrants and rights
|
Number of securities available for future issuance under equity compensation plans (excluding those in first column)
|
|||
Equity compensation plans
approved by the security holders
|
2,804,500
|
$2.95
|
28,800
|
|||
Equity compensation plans
not approved by the security holders
|
773,100
|
$5.89
|
156,900
|
|||
Total
|
3,577,600
|
185,700
|
·
|
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 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.
|
·
|
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 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 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 Technologies, Inc., a development stage municipal solid waste conversion company we merged with in April 2009, and/or may include new projects initiated by us.
|
Twelve Months Ended December 31,
|
||||||||||||||||
2012
|
2011
|
$ Change
|
% Change
|
|||||||||||||
Revenues
|
$ | 134,573,243 | $ | 109,740,257 | $ | 24,832,986 | 23 | % | ||||||||
Cost of Revenues
|
124,788,116 | 101,666,187 | (23,121,929 | ) | (23 | )% | ||||||||||
Gross Profit
|
9,785,127 | 8,074,070 | 1,711,057 | 21 | % | |||||||||||
Selling, general and administrative expenses (exclusive of merger related expenses)
|
6,137,301 | 4,099,682 | (2,037,619 | ) | (50 | )% | ||||||||||
Merger related expenses
|
1,256,576 | - | (1,256,576 | ) | - | |||||||||||
Total selling, general and administrative expenses
|
7,393,877 | 4,099,682 | (3,294,195 | ) | (80 | )% | ||||||||||
Income (loss) from operations
|
2,391,250 | 3,974,388 | (1,583,138 | ) | (40 | )% | ||||||||||
Other Income (expense)
|
||||||||||||||||
Interest Income
|
1,740 | - | 1,740 | 100 | % | |||||||||||
Interest Expense
|
(135,364 | ) | (62,686 | ) | (72,678 | ) | (116 | )% | ||||||||
Total other income (expense)
|
(133,624 | ) | (62,686 | ) | (70,938 | ) | (113 | )% | ||||||||
Income (loss) before income tax
|
2,257,626 | 3,911,702 | (1,654,076 | ) | (42 | )% | ||||||||||
Income tax (expense) benefit
|
1,400,641 | 1,841,813 | (441,172 | ) | (24 | )% | ||||||||||
Net income (loss)
|
$ | 3,658,267 | $ | 5,753,515 | $ | (2,095,248 | ) | (36 | )% |
Twelve Months Ended December 31,
|
||||||||||||||||
Black Oil Segment
|
2012
|
2011
|
$ Change
|
% Change
|
||||||||||||
Total revenue
|
$ | 90,237,692 | $ | 72,349,181 | $ | 17,888,511 | 25 | % | ||||||||
Total cost of revenue
|
85,206,169 | 68,194,943 | (17,011,226 | ) | (25 | )% | ||||||||||
Gross profit
|
$ | 5,031,523 | $ | 4,154,238 | $ | 877,285 | 21 | % | ||||||||
Refining Segment
|
||||||||||||||||
Total revenue
|
$ | 44,335,551 | $ | 37,391,076 | $ | 6,944,475 | 19 | % | ||||||||
Total cost of revenue
|
39,581,947 | 33,471,244 | (6,110,703 | ) | (18 | )% | ||||||||||
Gross profit
|
$ | 4,753,604 | $ | 3,919,832 | $ | 833,772 | 21 | % |
2012
|
||||||||||
Benchmark
|
High
|
Date
|
Low
|
Date
|
||||||
U.S. Gulfcoast No. 2 Waterborne (dollars per gallon)
|
$ | 3.27 |
Feb. 24
|
$ | 2.54 |
June 28
|
||||
U.S. Gulfcoast Unleaded 87 Waterborne (dollars per gallon)
|
$ | 3.43 |
April 2
|
$ | 2.36 |
Dec. 10
|
||||
U.S. Gulfcoast Residual Fuel No. 6 3% (dollars per barrel)
|
$ | 114.35 |
March 1
|
$ | 82.60 |
June 21
|
||||
NYMEX Crude oil (Dollars per barrel)
|
$ | 109.77 |
Feb. 24
|
$ | 77.69 |
June 28
|
||||
Reported in Platt's US Marketscan (Gulf Coast)
|
|
·
|
Revenue increased 3% to $32.2 million for the fourth quarter 2012, compared with $31.3 million in the fourth quarter of 2011;
|
|
·
|
Gross profit increased 127% to $2.9 million compared with $1.3 million in the prior year’s quarter; and
|
|
·
|
Volumes increased 15% during the fourth quarter of 2012 compared to 2011, and our per barrel margin increased approximately 98% for the fourth quarter of 2012, compared to the prior year’s fourth quarter.
|
(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.
|
Twelve Months Ended December 31,
|
||||||||
2012
|
2011
|
|||||||
Beginning cash and cash equivalents
|
$ | 675,188 | $ | 744,313 | ||||
Net cash provided by (used in):
|
||||||||
Operating activities
|
3,000,114 | (70,866 | ) | |||||
Investing activities
|
(3,148,025 | ) | (304,509 | ) | ||||
Financing activities
|
280,663 | 306,250 | ||||||
Net increase in cash and cash equivalents
|
132,752 | (69,125 | ) | |||||
Ending cash and cash equivalents
|
$ | 807,940 | $ | 675,188 |
Page
|
||
Consolidated Financial Statements
|
||
Report of Independent Registered Public Accounting Firm
|
F-2
|
|
Consolidated Balance Sheets
|
F-3
|
|
Consolidated Statements of Operations
|
F-4
|
|
Consolidated Statements of Stockholders’ Equity
|
F-5
|
|
Consolidated Statements of Cash Flows
|
F-6
|
|
Notes to Consolidated Financial Statements
|
F-7
|
VERTEX ENERGY, INC.
|
||||||||
CONSOLIDATED BALANCE SHEETS
|
||||||||
December 31,
|
December 31,
|
|||||||
2012
|
2011
|
|||||||
|
||||||||
ASSETS
|
||||||||
Current assets
|
||||||||
Cash and cash equivalents
|
$ | 807,940 | $ | 675,188 | ||||
Accounts receivable, net
|
7,160,780 | 5,436,006 | ||||||
Accounts receivable- related party
|
- | 2,459 | ||||||
Inventory
|
5,870,121 | 6,408,780 | ||||||
Prepaid expenses
|
492,467 | 151,821 | ||||||
Total current assets
|
14,331,308 | 12,674,254 | ||||||
Noncurrent assets
|
||||||||
Licensing agreement, net
|
- | 1,929,549 | ||||||
Fixed assets, net
|
11,617,368 | 124,168 | ||||||
Intangible assets, net
|
15,934,724 | - | ||||||
Goodwill
|
3,515,977 | - | ||||||
Deferred tax assets
|
3,703,000 | 2,006,000 | ||||||
Total noncurrent assets
|
34,771,069 | 4,059,717 | ||||||
TOTAL ASSETS
|
$ | 49,102,377 | $ | 16,733,971 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
|
||||||||
Current liabilities
|
||||||||
Accounts payable and accrued expenses
|
$ | 8,869,234 | $ | 6,464,193 | ||||
Accounts payable-related party
|
- | 620,724 | ||||||
Deposits
|
- | 235,557 | ||||||
Current portion of long-term debt
|
1,749,329 | - | ||||||
Total current liabilities
|
10,618,563 | 7,320,474 | ||||||
Long-term liabilities
|
||||||||
Long-term debt
|
6,281,457 | - | ||||||
Contingent consideration
|
4,711,000 | - | ||||||
Line of credit
|
6,750,000 | - | ||||||
Deferred tax liabilities
|
341,000 | 76,000 | ||||||
Total liabilities
|
28,702,020 | 7,396,474 | ||||||
Commitments and contingencies
|
||||||||
STOCKHOLDERS’ 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 1,512,891 and 4,426,639 issued
and outstanding at December 31, 2012 and December 31,
2011, respectively
|
1,513 | 4,427 | ||||||
Common stock, $0.001 par value per share;
|
||||||||
750,000,000 shares authorized; 16,965,464 and 9,414,926
issued and outstanding at December 31, 2012 and
December 31, 2011, respectively
|
16,965 | 9,415 | ||||||
Additional paid-in capital
|
10,719,345 | 3,319,388 | ||||||
Retained earnings
|
9,662,534 | 6,004,267 | ||||||
Total stockholders’ equity
|
20,400,357 | 9,337,497 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$ | 49,102,377 | $ | 16,733,971 |
VERTEX ENERGY, INC.
|
||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||||||
DECEMBER 31, 2012 AND 2011
|
||||||||
2012
|
2011
|
|||||||
Revenues
|
$ | 134,573,243 | $ | 109,722,279 | ||||
Revenues-related parties
|
- | 17,978 | ||||||
134,573,243 | 109,740,257 | |||||||
|
||||||||
Cost of revenues
|
124,788,116 | 101,666,187 | ||||||
Gross profit
|
9,785,127 | 8,074,070 | ||||||
|
||||||||
Selling, general and administrative expenses
|
6,137,301 | 4,099,682 | ||||||
Acquisition related expenses
|
1,256,576 | - | ||||||
|
||||||||
Total selling, general and administrative expenses
|
7,393,877 | 4,099,682 | ||||||
Income from operations
|
2,391,250 | 3,974,388 | ||||||
Other income (expense)
|
||||||||
Other income
|
1,740 | - | ||||||
Interest expense
|
(135,364 | ) | (62,686 | ) | ||||
Total other income (expense)
|
(133,624 | ) | (62,686 | ) | ||||
Income before income taxes
|
2,257,626 | 3,911,702 | ||||||
Income tax benefit
|
1,400,641 | 1,841,813 | ||||||
Net income
|
$ | 3,658,267 | $ | 5,753,515 | ||||
Earnings per common share
|
||||||||
Basic
|
$ | 0.30 | $ | 0.65 | ||||
Diluted
|
$ | 0.25 | $ | 0.39 | ||||
Shares used in computing earnings per share
|
||||||||
Basic
|
12,138,229 | 8,884,681 | ||||||
Diluted
|
14,866,134 | 14,775,339 |
VERTEX ENERGY, INC.
|
||||||||||||||||||||||||||||
STATEMENTS OF STOCKHOLDERS' EQUITY
|
||||||||||||||||||||||||||||
FOR THE YEARS ENDING DECEMBER 31, 2012 AND 2011
|
||||||||||||||||||||||||||||
Common
|
Common
|
Preferred
|
Preferred
|
Additional
|
|
Total
|
||||||||||||||||||||||
Stock
|
Stock
|
Stock
|
Stock
|
Paid-in
|
Retained
|
Stockholders'
|
||||||||||||||||||||||
Shares
|
$.001 Par
|
Shares
|
$.001 Par
|
Capital
|
Earnings
|
Equity
|
||||||||||||||||||||||
Balance on December 31, 2010
|
8,370,849 | $ | 8,371 | 4,675,716 | $ | 4,676 | $ | 2,275,074 | $ | 250,752 | $ | 2,538,873 | ||||||||||||||||
Exercise of stock options and warrants
|
195,000 | 195 | - | - | 306,055 | - | 306,250 | |||||||||||||||||||||
Issuance of stock options and warrants
|
- | - | - | - | 138,859 | - | 138,859 | |||||||||||||||||||||
Conversion of preferred B stock to common
|
600,000 | 600 | - | - | 599,400 | - | 600,000 | |||||||||||||||||||||
Conversion of preferred A stock to common
|
249,077 | 249 | (249,077 | ) | (249 | ) | - | - | - | |||||||||||||||||||
Net income
|
- | - | - | - | - | 5,753,515 | 5,753,515 | |||||||||||||||||||||
Balance on December 31, 2011
|
9,414,926 | 9,415 | 4,426,639 | 4,427 | 3,319,388 | 6,004,267 | 9,337,497 | |||||||||||||||||||||
Exercise of stock options and warrants
|
91,335 | 91 | - | - | 112,534 | - | 112,625 | |||||||||||||||||||||
Issuance of stock options and warrants
|
- | - | - | - | 178,968 | - | 178,968 | |||||||||||||||||||||
Issuance of restricted common stock
|
4,545,455 | 4,545 | - | - | 7,108,455 | - | 7,113,000 | |||||||||||||||||||||
Conversion of preferred A stock to common
|
2,913,748 | 2,914 | (2,913,748 | ) | (2,914 | ) | - | - | - | |||||||||||||||||||
Net income
|
- | - | - | - | - | 3,658,267 | 3,658,267 | |||||||||||||||||||||
Balance on December 31, 2012
|
16,965,464 | $ | 16,965 | 1,512,891 | $ | 1,513 | $ | 10,719,345 | $ | 9,662,534 | $ | 20,400,357 |
VERTEX ENERGY, INC.
|
||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||||
YEARS ENDED DECEMBER 31, 2012 AND 2011
|
||||||||
2012
|
2011
|
|||||||
Cash flows operating activities
|
||||||||
Net income
|
$ | 3,658,267 | $ | 5,753,515 | ||||
Adjustments to reconcile net income to cash
|
||||||||
provided by (used in) operating activities
|
||||||||
Stock based compensation expense
|
178,968 | 138,859 | ||||||
Depreciation and amortization
|
711,555 | 161,048 | ||||||
Deferred federal income tax
|
(1,432,000 | ) | (1,930,000 | ) | ||||
Changes in assets and liabilities
|
||||||||
Accounts receivable
|
128,184 | (3,953,496 | ) | |||||
Accounts receivable- related parties
|
2,459 | (2,459 | ) | |||||
Inventory
|
551,438 | (2,506,999 | ) | |||||
Prepaid expenses and other current assets
|
(247,337 | ) | (51,336 | ) | ||||
Accounts payable and accrued expenses
|
304,861 | 1,870,994 | ||||||
Accounts payable-related parties
|
(620,724 | ) | 213,451 | |||||
Other deposits
|
(235,557 | ) | 235,557 | |||||
Net cash provided by (used in) operating activities
|
3,000,114 | (70,866 | ) | |||||
Cash flows from investing activities
|
||||||||
Purchase of intangible assets
|
(209,061 | ) | (241,454 | ) | ||||
Acquisition, net
|
(1,804,389 | ) | - | |||||
Purchase of fixed assets
|
(1,134,575 | ) | (63,055 | ) | ||||
Net cash used in investing activities
|
(3,148,025 | ) | (304,509 | ) | ||||
Cash flows from financing activities
|
||||||||
Line of credit proceeds, net
|
750,000 | - | ||||||
Proceeds from exercise of common stock warrants
|
112,625 | 306,250 | ||||||
Borrowing from (payments to) note payable
|
(581,962 | ) | - | |||||
Net cash provided by financing activities
|
280,663 | 306,250 | ||||||
Net change in cash and cash equivalents
|
132,752 | (69,125 | ) | |||||
Cash and cash equivalents at beginning of the period
|
675,188 | 744,313 | ||||||
Cash and cash equivalents at end of period
|
$ | 807,940 | $ | 675,188 | ||||
SUPPLEMENTAL INFORMATION
|
||||||||
Cash paid for interest during the period
|
$ | 128,838 | $ | 80,756 | ||||
Cash paid for income taxes during the period
|
$ | 23,359 | $ | 107,000 | ||||
NON-CASH TRANSACTIONS
|
||||||||
Conversion of Series A Preferred Stock into common stock
|
$ | 2,914 | $ | 249 | ||||
Conversion of Series B Preferred Stock into common stock
|
$ | - | $ | 600,000 |
|
·
|
CMT operates a 19-acre bulk liquid storage facility on the Houston Ship Channel. The terminal serves as a truck-in, barge-out facility and provides throughput terminal operations. CMT is also the site of the TCEP.
|
|
·
|
Crossroad is a third-party common carrier that provides transportation and logistical services for liquid petroleum products, as well as other hazardous materials and product streams.
|
|
·
|
Vertex Recovery is a generator solutions company for the recycling and collections of used oil and oil-related residual materials from large regional and national customers throughout the U.S. It facilitates its services through a network of independent recyclers and franchise collectors.
|
|
·
|
H&H Oil collects and recycles used oil and residual materials from customers based in Austin, Baytown, San Antonio and Corpus Christi, Texas.
|
|
·
|
Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;
|
|
·
|
Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and
|
|
·
|
Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
|
2012
|
2011
|
||||||||
% of
|
% of
|
% of
|
% of
|
||||||
Revenues
|
Receivables
|
Revenues
|
Receivables
|
||||||
Customer 1
|
31%
|
0%
|
49%
|
44%
|
|||||
Customer 2
|
25%
|
54%
|
5%
|
15%
|
|||||
Customer 3
|
13%
|
0%
|
12%
|
15%
|
|||||
Customer 4
|
12%
|
15%
|
10%
|
16%
|
|||||
Customer 5
|
4%
|
12%
|
6%
|
0%
|
2012
|
2011
|
|||||||
Related party leases
|
$
|
629,904
|
$
|
876,048
|
||||
Office leases
|
100,405
|
-
|
||||||
Vehicle leases
|
33,012
|
-
|
||||||
$
|
763,321
|
$
|
876,048
|
Year ending December 31
|
Office Facilities
|
Vehicles/Lab
|
||||||
2013
|
$
|
303,284
|
$
|
99,035
|
||||
2014
|
304,547
|
99,035
|
||||||
2015
|
302,609
|
88,265
|
||||||
2016
|
304,672
|
100,688
|
||||||
2017
|
212,249
|
-
|
||||||
thereafter
|
-
|
-
|
||||||
$
|
1,427,361
|
$
|
387,023
|
Useful Life
(in years)
|
December 31,
2012
|
December 31,
2011
|
|||||||
Equipment
|
7-20 |
$
|
4,423,133
|
$
|
-
|
||||
Furniture and fixtures
|
7 |
83,887
|
28,527
|
||||||
Leasehold improvements
|
15 |
1,866,702
|
-
|
||||||
Office equipment
|
5 |
302,668
|
135,856
|
||||||
Vehicles
|
5 |
2,250,300
|
-
|
||||||
Construction in progress
|
1,030,845
|
-
|
|||||||
Land
|
1,995,000 | - | |||||||
Total fixed assets
|
11,952,535
|
164,383
|
|||||||
Less accumulated depreciation
|
(335,167
|
)
|
(40,215
|
)
|
|||||
Net fixed assets
|
$
|
11,617,368
|
$
|
124,168
|
December 31, 2012
|
|||||||||||||
Useful Life
(in years)
|
Gross
Carrying
Amount
|
Accumulated Amortization
|
Net
Carrying
Amount
|
||||||||||
Customer relations
|
5
|
$
|
343,000
|
$
|
17,150
|
$
|
325,850
|
||||||
Vendor relations
|
10
|
4,064,000
|
101,600
|
3,962,400
|
|||||||||
H&H Oil Trademark/Trade name
|
16
|
775,000
|
12,110
|
762,890
|
|||||||||
TCEP Technology/Patent
|
15
|
11,000,000
|
183,333
|
10,816,667
|
|||||||||
Non-compete agreements
|
3
|
73,000
|
6,083
|
66,917
|
|||||||||
$
|
16,255,000
|
$
|
320,276
|
$
|
15,934,724
|
2013
|
$
|
1,281,104
|
||
2014
|
1,281,104
|
|||
2015
|
1,275,021
|
|||
2016
|
1,256,771
|
|||
2017
|
1,239,621
|
|||
thereafter
|
9,601,103
|
|||
$
|
15,934,724
|
Year Ending December 31,
|
||||
2013
|
$
|
1,749,329
|
||
2014
|
1,746,354
|
|||
2015
|
4,535,103
|
|||
Total debt |
$
|
8,030,786
|
||
Less current maturities | (1,749,329 | ) | ||
Long-term debt | $ | 6,281,457 |
December 31, 2012
|
December 31, 2011
|
|||||||
Statutory tax on book income
|
$ | 768,000 | $ | 1,330,000 | ||||
Nondeductible expenses
|
44,000 | 31,000 | ||||||
Net operating loss utilization
|
(812,000 | ) | (1,361,000 | ) | ||||
Reduction in valuation allowance
|
(1,408,000 | ) | (1,823,000 | ) | ||||
Other
|
7,359 | (18,813 | ) | |||||
Income tax benefit
|
$ | (1,400,641 | ) | $ | (1,841,813 | ) |
December 31, 2012
|
December 31, 2011
|
|||||||
Current federal tax expense
|
$ | 31,359 | $ | 88,187 | ||||
Deferred federal tax benefit
|
(1,432,000 | ) | (1,930,000 | ) | ||||
Total federal tax benefit
|
$ | (1,400,641 | ) | $ | (1,841,813 | ) |
December 31, 2012
|
December 31, 2011
|
|||||||
Deferred tax assets:
|
||||||||
Alternative minimum tax credits
|
$ | 130,000 | $ | 107,000 | ||||
Accrued compensation
|
173,000 | 199,000 | ||||||
Net operating loss carry forwards
|
11,536,000 | 12,056,000 | ||||||
Less valuation allowance
|
(8,136,000 | ) | (10,356,000 | ) | ||||
Net deferred tax assets
|
$ | 3,703,000 | $ | 2,006,000 |
December 31, 2012
|
December 31, 2011
|
|||||||
Deferred tax liabilities:
|
||||||||
Accelerated tax depreciation
|
$ | 341,000 | $ | 76,000 | ||||
Net deferred tax liabilities
|
$ | 341,000 | $ | 76,000 |
Shares
|
Weighted Average Exercise Price
|
Weighted Average Remaining Contractual Life (in Years)
|
Grant Date Fair Value
|
|||||||||||||
Outstanding at December 31, 2011
|
3,073,334 | $ | 5.46 | 7.00 | $ | 990,995 | ||||||||||
Options granted
|
225,000 | 1.91 | 10.00 | 197,146 | ||||||||||||
Options exercised
|
(65,000 | ) | (1.47 | ) | - | (5,239 | ) | |||||||||
Options cancelled/forfeited/expired
|
(294,167 | ) | (1.21 | ) | - | (38,878 | ) | |||||||||
Outstanding at December 31, 2012
|
2,939,167 | $ | 5.70 | 6.50 | $ | 1,144,024 | ||||||||||
Vested at December 31, 2012
|
2,283,237 | $ | 6.89 | 6.41 | $ | 709,902 | ||||||||||
Exercisable at December 31, 2012
|
2,283,237 | $ | 6.89 | 6.41 | $ | 709,902 |
Shares
|
Weighted Average Exercise Price
|
Weighted Average Remaining Contractual Life (in Years)
|
Grant Date Fair Value
|
|||||||||||||
Outstanding at December 31, 2010
|
2,703,334 | $ | 5.81 | 7.60 | $ | 715,826 | ||||||||||
Options granted
|
390,000 | 2.77 | 10.00 | 283,591 | ||||||||||||
Options exercised
|
(5,000 | ) | (.45 | ) | (7.94 | ) | (1,800 | ) | ||||||||
Options cancelled/forfeited/expired
|
(15,000 | ) | (.62 | ) | - | (6,622 | ) | |||||||||
Outstanding at December 31, 2011
|
3,073,334 | $ | 5.46 | 7.00 | $ | 990,995 | ||||||||||
Vested at December 31, 2011
|
1,847,902 | $ | 8.20 | 6.21 | $ | 365,798 | ||||||||||
Exercisable at December 31, 2011
|
1,847,902 | $ | 8.20 | 6.21 | $ | 365,798 |
Shares
|
Weighted Average Exercise Price
|
Weighted Average Remaining Contractual Life (in Years)
|
Grant Date Fair Value
|
|||||||||||||
Outstanding at December 31, 2011
|
1,245,311 | $ | 12.48 | 1.41 | $ | 142,065 | ||||||||||
Warrants exercised
|
(37,500 | ) | (1.08 | ) | - | (10,626 | ) | |||||||||
Warrants cancelled/forfeited/expired
|
(44,503 | ) | (25.00 | ) | - | (2,550 | ) | |||||||||
Warrants at December 31, 2012
|
1,163,308 | $ | 12.37 | 0.40 | $ | 128,889 | ||||||||||
Vested at December 31, 2012
|
1,150,808 | $ | 12.50 | 0.41 | $ | 123,289 | ||||||||||
Exercisable at December 31, 2012
|
1,150,808 | $ | 12.50 | 0.41 | $ | 123,289 |
Shares
|
Weighted Average Exercise Price
|
Weighted Average Remaining Contractual Life (in Years)
|
Grant Date Fair Value
|
|||||||||||||
Outstanding at December 31, 2010
|
1,773,457 | $ | 14.24 | 1.96 | $ | 172,973 | ||||||||||
Warrants granted
|
25,000 | 1.75 | 4.00 | 11,201 | ||||||||||||
Warrants exercised
|
(190,000 | ) | (1.60 | ) | (1.64 | ) | (20,320 | ) | ||||||||
Warrants cancelled/forfeited/expired
|
(363,146 | ) | (26.02 | ) | - | (21,789 | ) | |||||||||
Warrants at December 31, 2011
|
1,245,311 | $ | 12.48 | 1.41 | $ | 142,065 | ||||||||||
Vested at December 31, 2011
|
1,169,278 | $ | 13.23 | 1.35 | $ | 122,150 | ||||||||||
Exercisable at December 31, 2011
|
1,169,278 | $ | 13.23 | 1.35 | $ | 122,150 |
YEAR ENDED
|
YEAR ENDED
|
|||||||
DECEMBER 31, 2012
|
DECEMBER 31, 2011
|
|||||||
Expected volatility
|
35-39 | % | 31-35 | % | ||||
Expected dividends
|
0 | % | 0 | % | ||||
Expected term (in years)
|
10 | 4 | ||||||
Risk-free rate
|
0.35-0.39 | % | 0.37-1.03 | % |
2012
|
2011
|
|||||||
Basic Earnings per Share
|
||||||||
Numerator:
|
||||||||
Net income available to common shareholders
|
$ | 3,658,267 | $ | 5,753,515 | ||||
Denominator:
|
||||||||
Weighted-average common shares outstanding
|
12,138,229 | 8,884,681 | ||||||
Basic earnings per share
|
$ | 0.30 | $ | 0.65 | ||||
Diluted Earnings per Share
|
||||||||
Numerator:
|
||||||||
Net income available to common shareholders
|
$ | 3,658,267 | $ | 5,753,515 | ||||
Denominator:
|
||||||||
Weighted-average shares outstanding
|
12,138,229 | 8,884,681 | ||||||
Effect of dilutive securities
|
||||||||
Stock options and warrants
|
1,215,014 | 1,464,019 | ||||||
Preferred stock
|
1,512,891 | 4,426,639 | ||||||
Diluted weighted-average shares outstanding
|
14,866,134 | 14,775,339 | ||||||
Diluted earnings per share
|
$ | 0.25 | $ | 0.39 |
·
|
The affirmative vote or written consent of the holders of a majority of the then-outstanding shares of Series A Preferred;
|
·
|
If the closing market price of our common stock averages at least $15.00 per share over a period of 20 consecutive trading days and the daily trading volume averages at least 7,500 shares over such period;
|
·
|
If we consummate an underwritten public offering of our securities at a price per share not less than $10.00 and for a total gross offering amount of at least $10 million; or
|
·
|
If a sale of the Company occurs resulting in proceeds to the holders of Series A Preferred of a per share amount of at least $10.00.
|
·
|
The Series B Preferred Stock includes a liquidation preference which is junior to the Company’s previously outstanding shares of preferred stock, senior securities and other security holders as provided in further detail in the Designation;
|
·
|
The Series B Preferred Stock is convertible into shares of the Company’s common stock on a one for one basis at a conversion price of $1.00 per share, provided that the Series B Preferred Stock automatically converts into shares of the Company’s common stock on a one for one basis if the Company’s common stock trades above $2.00 per share for a period of 10 consecutive trading days;
|
·
|
The Series B Preferred Stock has no voting rights (other than on matters concerning the Series B Preferred Stock as further described in the Designation); and
|
·
|
The Company was obligated to redeem any unconverted shares of Series B Preferred Stock in cash at $1.00 per share on the third anniversary date of the original issuance date of each share of Series B Preferred Stock.
|
(in thousands)
|
||||
Cash and cash equivalents
|
$ | 663 | ||
Accounts receivable
|
1,853 | |||
Inventory
|
13 | |||
Prepaid expenses
|
61 | |||
Property, plant and equipment
|
8,659 | |||
Land
|
1,995 | |||
Other assets
|
32 | |||
Intangible assets
|
14,212 | |||
Goodwill
|
3,516 | |||
Total identifiable net assets
|
31,004 | |||
Less liabilities assumed
|
(2,213 | ) | ||
Total purchase price
|
$ | 28,791 | ||
Estimated Cost
(in thousands)
|
Useful life
(years)
|
|||||||
Customer relations
|
$ | 343 | 5 | |||||
Vendor relations
|
4,064 | 10 | ||||||
H&H Oil Trademark/Trade name
|
775 | 16 | ||||||
TCEP Technology/Patent
|
8,957 | 15 | ||||||
Non-competes
|
73 | 3 | ||||||
Total
|
$ | 14,212 |
Twelve Months Ended December
|
||||||||
2012
(unaudited)
|
2011
(unaudited)
|
|||||||
Revenue
|
$ | 142,199,659 | $ | 118,817,983 | ||||
Cost of goods sold
|
125,781,532 | 100,638,913 | ||||||
Gross profit
|
16,418,127 | 18,179,070 | ||||||
Selling, general and administrative expenses
|
9,823,076 | 8,408,591 | ||||||
Income from operations
|
6,595,051 | 9,770,479 | ||||||
Other income and expense
|
630,216 | 949,036 | ||||||
Net income
|
7,225,267 | 10,719,515 | ||||||
Earnings per common share-Basic
|
0.60 | 1.21 | ||||||
Earnings per common share-Diluted
|
0.49 | 0.73 |
Fee Category
|
2012 Fees
|
2011 Fees
|
||||||
Audit Related Fees
|
$
|
96,639
|
$
|
68,000
|
||||
All Other Fees
|
$
|
14,035
|
$
|
25,915
|
||||
Total Fees
|
$
|
110,674
|
$
|
93,915
|
(a)
|
Documents filed as part of this report
|
(1)
|
All financial statements
|
Index to Consolidated Financial Statements
|
|
Page
|
Report of Independent Registered Public Accounting Firm | F-2 | |
Consolidated Balance Sheets as of December 31, 2012 and 2011
|
|
F-3 |
Consolidated Statements of Operations for the years ended December 31, 2012 and 2011
|
|
F-4 |
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2012 and 2011
|
F-5 | |
Consolidated Statements of Cash Flows for the years ended December 31, 2012 and 2011
|
F-6 | |
Notes to Consolidated Financial Statements
|
|
F-7 |
(2)
|
Financial Statement Schedules
|
(3)
|
Exhibits required by Item 601 of Regulation S-K
|
VERTEX ENERGY, INC.
|
|
Date: March 21, 2013
|
By: /s/ Benjamin P. Cowart
|
Benjamin P. Cowart
|
|
Chief Executive Officer
|
|
(Principal Executive Officer)
|
|
Date: March 21, 2013
|
By: /s/ Chris Carlson
|
Chris Carlson
|
|
Chief Financial Officer
|
|
(Principal Financial Officer)
|
By:
|
/s/ Benjamin P. Cowart
|
By:
|
/s/ Chris Carlson
|
||
Benjamin P. Cowart
Chief Executive Officer
(Principal Executive Officer)
and Chairman
|
Chris Carlson
Chief Financial Officer
(Principal Accounting Officer)
|
||||
Date:
|
March 21, 2013
|
Date:
|
March 21, 2013
|
||
By:
|
/s/ Christopher Stratton
|
By:
|
/s/ Dan Borgen
|
||
Christopher Stratton
Director
|
Dan Borgen
Director
|
||||
Date:
|
March 21, 2013
|
Date:
|
March 21, 2013
|
||
By:
|
/s/ John Pimentel
|
By:
|
/s/ David Phillips
|
||
John Pimentel
Director
|
David Phillips
Director
|
||||
Date:
|
March 21, 2013
|
Date:
|
March 21, 2013
|
||
By:
|
/s/ Timothy C. Harvey
|
||||
Timothy C. Harvey
Director
|
|||||
Date:
|
March 21, 2013
|
Incorporated by Reference
|
||||||
Exhibit Number
|
Description of Exhibit
|
Filed or Furnished Herewith
|
Form
|
Exhibit
|
Filing Date/Period End Date
|
File No.
|
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
|
8/15/12
|
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
|
9/12/12
|
000-53619
|
|
3.1
|
Articles of Incorporation (and amendments thereto) of Vertex Energy, Inc.
|
8-K/A
|
3.1
|
6/26/09
|
000-53619
|
|
3.2
|
Amended and Restated Certificate of Designation of Rights, Preferences and Privileges of Vertex Energy, Inc.'s Series A Convertible Preferred Stock.
|
8-K
|
3.1
|
7/16/10
|
000-53619
|
|
3.3
|
Bylaws of Vertex Energy, Inc.
|
8-K/A
|
3.4
|
6/26/09
|
000-53619
|
|
10.1
|
Employment Agreement with Benjamin P. Cowart effective April 16, 2009
***
|
8-K/A
|
10.5
|
6/26/09
|
000-53619
|
|
10.2
|
Employment Agreement with Matthew Lieb effective April 16, 2009 ***
|
8-K/A
|
10.7
|
6/26/09
|
000-53619
|
|
10.3
|
Loan Agreement with Bank of America dated September 16, 2010
|
8-K
|
10.1
|
9/24/10
|
000-53619
|
|
10.4
|
Security Agreement with Bank of America dated September 16, 2010
|
8-K
|
10.2
|
9/24/10
|
000-53619
|
|
10.5(+)
|
Tolling (Processing) Agreement with KMTEX effective July 1, 2009
|
10-K
|
10.14
|
12/31/04
|
000-53619
|
|
10.6(+)
|
First Amendment to Processing Agreement with KMTEX effective July 1, 2010
|
10-K
|
10.15
|
12/31/04
|
000-53619
|
|
10.7
|
Amended and Restated Employment Agreement with Chris Carlson dated March 29, 2011 and effective April 1, 2010***
|
10-K
|
10.18
|
12/31/04
|
000-53619
|
10.8
|
First Amendment to Employment Agreement with Benjamin P. Cowart dated March 25, 2011 and effective as of December 15, 2010***
|
10-K
|
10.19
|
12/31/04
|
000-53619
|
|
10.9
|
First Amendment to Employment Agreement with Matt Lieb dated February 1, 2011 and effective March 28, 2011***
|
10-K
|
10.20
|
12/31/10
|
000-53619
|
|
10.10
|
Addendum to The Employment Agreement Between Vertex Energy, Inc. and Greg Wallace dated July 5, 2011***
|
10-Q
|
10.21
|
9/30/11
|
000-53619
|
10.11
|
Second Addendum to The Employment Agreement Between Vertex Energy, Inc. and Greg Wallace dated June 15, 2012***
|
10-Q
|
10.11
|
9/30/12
|
000-53619
|
|
10.12
|
Employment Agreement with John Strickland - July 2012**
|
10-Q
|
10.12
|
9/30/12
|
000-53619
|
|
10.13
|
Credit Agreement between Vertex Energy, Inc. and Bank of America, N.A. dated August 31, 2012
|
8-K
|
10.1
|
9/12/12
|
000-53619
|
|
10.14
|
$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
|
9/12/12
|
000-53619
|
|
10.15
|
$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
|
9/12/12
|
000-53619
|
|
10.16
|
Security Agreement with Bank of America, N.A. dated August 31, 2012
|
8-K
|
10.4
|
9/12/12
|
000-53619
|
|
10.17
|
Corporate Guaranty in favor of Bank of America, N.A. dated August 31, 2012
|
8-K
|
10.5
|
9/12/12
|
000-53619
|
|
10.18
|
First Amendment to Credit Agreement between Vertex Energy, Inc. and Bank of America, N.A. dated August 31, 2012
|
10-Q
|
10.18
|
9/30/12
|
000-53619
|
|
10.19
|
Non-Competition and Non-Solicitation Agreement by Vertex Holdings, L.P., B & S Cowart Family L.P., Benjamin P. Cowart, Chris Carlson and Greg Wallace in favor of Vertex Energy, Inc., dated August 31, 2012***
|
10-Q
|
10.19
|
9/30/12
|
000-53619
|
|
10.20
|
Second Addendum to Employment Agreement with Benjamin P. Cowart, dated August 31, 2012***
|
10-Q
|
10.20
|
9/30/12
|
000-53619
|
|
10.21
|
First Addendum to Amended and Restated Employment Agreement with Chris Carlson, dated August 31, 2012***
|
10-Q
|
10.21
|
9/30/12
|
000-53619
|
|
10.22
|
2004 Stock Option Plan - World Waste Technologies, Inc.***
|
10-KSB
|
10.3
|
12/31/04
|
001-11476
|
|
10.23
|
Form of Stock Option Agreement, pursuant to 2004 Stock Option Plan***
|
10-KSB
|
10.4
|
12/31/04
|
001-11476
|
|
10.24
|
2007 Stock Plan - World Waste Technologies, Inc.***
|
8-K
|
10.2
|
5/21/07
|
001-11476
|
|
10.25
|
Form of Stock Option Agreement, pursuant to 2007 Stock Option Plan***
|
8-K
|
10.3
|
5/21/07
|
001-11476
|
|
10.26
|
Vertex Energy, Inc., 2008 Stock Incentive Plan***
|
8-K/A
|
4.1
|
6/26/09
|
000-53619
|
|
10.27
|
2008 Stock Incentive Plan - Form of Stock Option Agreement***
|
X
|
||||
10.28
|
Vertex Energy, Inc., 2009 Stock Incentive Plan***
|
8-K
|
4.1
|
7/31/09
|
000-53619
|
|
10.29
|
2009 Stock Incentive Plan - Form of Stock Option Agreement***
|
X
|
||||
10.30
|
Waiver and Second Amendment to Credit Agreement with Bank of America, N.A. (January 2013)
|
X
|
||||
14.1
|
Code of Ethical Business Conduct and Whistleblower Protection Policy
|
8-K/A
|
14.1
|
2/13/13
|
001-11476
|
|
21.1
|
Subsidiaries
|
X
|
||||
23.1
|
Consent of LBB & Associates Ltd., LLP
|
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
|
X
|
||||
99.2
|
Charters Of The Compensation Committee; Audit Committee; Nominating And Corporate Governance Committee; and Related Party Transaction Committee
|
8-K/A
|
99.2
|
2/13/13
|
001-11476
|
|
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
|
|
Date: _____________to be effective __________
|
|
1.
|
Representations and Warranties
.
|
|
(a)
|
Corporate and Other Action
. The Company has all requisite power and authority (corporate and other), and has taken all necessary corporate action, to authorize, execute, deliver and perform this Stock Option Agreement (the “
Option Agreement
”), to execute, issue, sell and deliver the Option and a certificate or certificates evidencing the Option, to authorize and reserve for issue and, upon payment from time to time of the Purchase Price, to issue, sell and deliver, the shares of the Common Stock issuable upon exercise of the Option (“
Shares
”), and to perform all of its obligations under this Option Agreement and the Option. The Shares, when issued in accordance with this Option Agreement, will be duly authorized and validly issued and outstanding, fully paid and nonassessable and free of all liens, claims, encumbrances and preemptive rights. This Option Agreement and, when issued, each Option issued pursuant hereto, has been or will be duly executed and delivered by the Company and is or will be a legal, valid and binding agreement of the Company, enforceable in accordance with its terms. No authorization, approval, consent or other order of any governmental entity, regulatory authority or other third party is required for such authorization, execution, delivery, performance, issue or sale.
|
|
(b)
|
No Violation
. The execution and delivery of this Option Agreement, the consummation of the transactions herein contemplated and the compliance with the terms and provisions of this Option Agreement and of the Option will not conflict with, or result in a breach of, or constitute a default or an event permitting acceleration under, any statute, the Articles of Incorporation or Bylaws of the Company or any indenture, mortgage, deed of trust, note, bank loan, credit agreement, franchise, license, lease, permit, or any other agreement, understanding, instrument, judgment, decree, order, statute, rule or regulation to which the Company is a party or by which it is bound.
|
|
2.
|
Transfer
.
|
|
(a)
|
Transferability of Option
. The Option Holder agrees that this Option is not transferable by Holder.
|
|
(b)
|
Registration of Shares
. The Option Holder agrees not to make any sale or other disposition of the Shares except pursuant to a registration statement which has become effective under the Securities Act of 1933, as amended (the “
Act
”), setting forth the terms of such offering, the underwriting discount and commissions and any other pertinent data with respect thereto, unless the Option Holder has provided the Company with an acceptable opinion of counsel acceptable to the Company that such registration is not required. Certificates representing the Shares, which are not registered as provided in this Section 2, shall bear an appropriate legend and be subject to a “
stop-transfer
” order.
|
|
3.
|
Vesting of Option, Exercise of Option, Partial Exercise, Notice
.
|
|
(a)
|
Vesting Period.
Options to purchase ______ shares shall vest upon the expiration of each year that elapses from the Grant Date (with options to purchase the first ______ shares vesting on ______________), until Holder has vested the entire Option, provided that the entire Option shall vest to Holder immediately upon the occurrence of a "
Change in Control
" as defined under the Company’s 2008 Stock Incentive Plan (the “
Plan
”), which includes:
|
|
(1)
|
the adoption of a plan of merger or consolidation of the Company with any other corporation or association as a result of which the holders of the voting capital stock of the Company as a group would receive less than 50% of the voting capital stock of the surviving or resulting corporation;
|
|
(2)
|
the approval by the Board of Directors of the Company of an agreement providing for the sale or transfer of substantially all the assets of the Company; or
|
|
(3)
|
in the absence of a prior expression of approval by the Board of Directors, the acquisition of more than 20% of the Company's voting capital stock by any person within the meaning of Rule 13d-3 under the Act (other than the Company or a person that directly or indirectly controls, is controlled by, or is under common control with, the Company);
|
|
(b)
|
Exercise Period
. This Option shall expire and all rights hereunder shall be extinguished upon the earlier of:
|
|
(i)
|
Ten (10) years from the Grant Date; or
|
|
(ii)
|
Three (3) Months from the date Holder’s employment with the Company ceases (or in the case of a Director of the Company, the date such Director ceases to serve as a Director of the Company), as determined by the Board of Directors of the Company in its sole discretion, unless such employment shall have terminated:
|
|
(1) as a result of the Disability of Holder, as defined in the Plan, in which event such exercise period shall expire on the date twelve (12) months following such termination of service by the Company, not to exceed the time period specified in Section 3(b)(i) above; or
|
|
|
(2) as a result of the death of Holder (other than as a result of disability), in which event such exercise period shall expire on the date twelve (12) months after the date of Holder’s death, not to exceed the time period specified in Section 3(b)(i) above.
|
|
(c)
|
Exercise in Full
. Subject to Section 3(a) and 3(b), the Option may be exercised in full by the Option Holder by surrender of the Option, with the Form of Subscription attached hereto as Schedule 2 executed by such Option Holder, to the Company, accompanied by payment as determined by 3(e) below, in the amount obtained by multiplying the number of Shares represented by the respective Option by the Purchase Price per share (after giving effect to any adjustments as provided in Section 5 below).
|
|
(d)
|
Partial Exercise
. Subject to Section 3(a) and 3(b), each Option may be exercised in part by the Option Holder by surrender of the Option, with the Form of Subscription attached hereto as Schedule 2 at the end thereof duly executed by such Option Holder, in the manner and at the place provided in Section 3(c) above, accompanied by payment as determined by 3(e) below, in amount obtained by multiplying the number of Shares designated by the Option Holder in the Form of Subscription attached hereto as Schedule 2 to the Option by the Purchase Price per share (after giving effect to any adjustments as provided in Section 5 below). Upon any such partial exercise, the Company at its expense will forthwith issue and deliver to or upon the order of the Option Holder a new Option of like tenor, in the name of the Option Holder, calling in the aggregate for the purchase of the number of Shares equal to the number of such Shares called for on the face of the respective Option (after giving effect to any adjustment herein as provided in Section 5 below) minus the number of such Shares designated by the Option Holder in the aforementioned form of subscription.
|
|
(e)
|
Payment of Purchase Price
. The Purchase Price may be made by any of the following or a combination thereof, at the election of the Option Holder:
|
|
(i) In cash, by wire transfer, by certified or cashier’s check, or by money order; or
|
|
(ii) By delivery to the Company of an exercise notice that requests the Company to issue to the Option Holder the full number of shares as to which the Option is then exercisable, less the number of shares that have an aggregate Fair Market Value, as determined by the Board in its
sole discretion at the time of exercise, equal to the aggregate purchase price of the shares to which such exercise relates. (This method of exercise allows the Option Holder to use a portion of the shares issuable at the time of exercise as payment for the shares to which the Option relates and is often referred to as a "
cashless exercise.
" For example, if the Option Holder elects to exercise 1,000 shares at an exercise price of $0.25 and the current Fair Market Value of the shares on the date of exercise is $1.00, the Option Holder can use 250 of the 1,000 shares at $1.00 per share to pay for the exercise of the entire Option (250 x $1.00 = $250.00) and receive only the remaining 750 shares).
|
|
4.
|
Delivery of Stock Certificates on Exercise
.
|
|
5.
|
Adjustment of Purchase Price and Number of Shares Purchasable
.
|
|
(a)
|
In case the Company shall at any time after the date of this Option Agreement (i) declare a dividend on the Common Stock in shares of its capital stock, (ii) subdivide the outstanding Common Stock, (iii) combine the outstanding Common Stock into a smaller number of Common Stock, or (iv) issue any shares of its capital stock by reclassification of the Common Stock (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing corporation), then in each case the Purchase Price, and the number and kind of Shares receivable upon exercise, in effect at the time of the record date for such dividend or of the effective date of such subdivision, combination, or reclassification shall be proportionately adjusted so that the holder of any Option exercised after such time shall be entitled to receive the aggregate number and kind of Shares which, if such Option had been exercised immediately prior to such record date, he would have owned upon such exercise and been entitled to receive by virtue of such dividend, subdivision, combination, or reclassification. Such adjustment shall be made successively whenever any event listed above shall occur.
|
|
(b)
|
No adjustment in the Purchase Price shall be required if such adjustment is less than US $.01;
provided, however
, that any adjustments which by reason of this subsection (b) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 5 shall be made to the nearest cent or to the nearest one-thousandth of a share, as the case may be.
|
|
(c)
|
Upon each adjustment of the Purchase Price as a result of the calculations made in subsection (a) of this Section 5, the Option outstanding prior to the making of the adjustment in the Purchase Price shall thereafter evidence the right to purchase, at the adjusted Purchase Price, that number of Shares (calculated to the nearest thousandth) obtained by (i) multiplying the number of Shares purchasable upon exercise of the Option immediately prior to adjustment of the number of Shares by the Purchase Price in effect prior to adjustment of the Purchase Price and (ii) dividing the product so obtained by the Purchase Price in effect immediately after such adjustment of the Purchase Price.
|
|
6.
|
Further Covenants of the Company
.
|
|
(a)
|
Dilution or Impairments
. The Company will not, by amendment of its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger or dissolution, avoid or seek to avoid the observance or performance of any of the terms of the Option or of this Option Agreement, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Option Holder against dilution or other impairment. Without limiting the generality of the foregoing, the Company:
|
|
(i)
|
shall at all times reserve and keep available, solely for issuance and delivery upon the exercise of the Option, all shares of Common Stock (or Other Securities) from time to time issuable upon the exercise of the Option and shall take all necessary actions to ensure that the par value per share, if any, of the Common Stock (or Other Securities) is at all times equal to or less than the then effective Purchase Price per share; and
|
|
(ii)
|
will take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock or Other Securities upon the exercise of the Option from time to time outstanding.
|
|
(b)
|
Title to Stock
. All Shares delivered upon the exercise of the Option shall be validly issued, fully paid and nonassessable; each Option Holder shall, upon such delivery, receive good and marketable title to the Shares, free and clear of all voting and other trust arrangements, liens, encumbrances, equities and claims whatsoever; and the Company shall have paid all taxes, if any, in respect of the issuance thereof.
|
|
(c)
|
Replacement of Option
. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of any Option and, in the case of any such loss, theft or destruction, upon delivery of an indemnity agreement reasonably satisfactory in form and amount to the Company or, in the case of any such mutilation, upon surrender and cancellation of such Option, the Company, at the expense of the Option Holder, will execute and deliver, in lieu thereof, a new Option of like tenor.
|
|
(d)
|
Fractional Shares
. No fractional Shares are to be issued upon the exercise of any Option, but the Company shall round any fraction of a share to the nearest whole Share.
|
|
7.
|
Holders of Shares
.
|
|
(a)
|
The Option is issued upon the following terms, to all of which each Option Holder by the taking thereof consents and agrees: any person who shall become a holder or owner of Shares shall take such shares subject to the provisions of Section 2(b) hereof; each prior taker or owner waives and renounces all of his equities or rights in such Option in favor of each such permitted
bona fide
purchaser, and each such permitted
bona fide
purchaser shall acquire absolute title thereto and to all rights presented thereby.
|
|
(b)
|
The Option Holder shall notify the Company if such Option Holder sells or otherwise transfers any shares of Common Stock of the Company acquired upon exercise of the Option within two (2) years of the Grant Date of such Option or within one (1) year of the date such shares were acquired upon exercise of this Option.
|
|
8.
|
Miscellaneous
.
|
VERTEX ENERGY, INC.
By______________________________
Benjamin P. Cowart, Chief Executive Officer
|
|||
HOLDER:
__________________
____________________________
____________________________
|
|||
Registered Owner: _____________ |
Effective Date: _______________
|
||
Expiration Date:
|
Subject to Section 3(b) of the Option Agreement, 5:00 p.m. Central Standard Time.
|
VERTEX ENERGY, INC.
By________________________________________
Benjamin P. Cowart, Chief Executive Officer
|
Registered Owner: _____________ |
Effective Date: _______________
|
||
Expiration Date:
|
Subject to Section 3(b) of the Option Agreement, 5:00 p.m. Central Standard Time.
|
VERTEX ENERGY, INC.
By________________________________________
Benjamin P. Cowart, Chief Executive Officer
|
Registered Owner: _____________ |
Effective Date: _______________
|
||
Expiration Date:
|
Subject to Section 3(b) of the Option Agreement, 5:00 p.m. Central Standard Time.
|
VERTEX ENERGY, INC.
By________________________________________
Benjamin P. Cowart, Chief Executive Officer
|
Registered Owner: _____________ |
Effective Date: _______________
|
||
Expiration Date:
|
Subject to Section 3(b) of the Option Agreement, 5:00 p.m. Central Standard Time.
|
VERTEX ENERGY, INC.
By________________________________________
Benjamin P. Cowart, Chief Executive Officer
|
|
SCHEDULE 2
|
|
________________ =
Fair Market Value
- the average closing price of the Common Stock (if actual sales price information on any trading day is not available, the closing bid price shall be used) for the five trading days prior to the date of exercise of this Warrant (the “
Average Closing Bid Price
”), as reported by the National Association of Securities Dealers Automated Quotation System (“
NASDAQ
”), or if the Common Stock is not traded on NASDAQ, the Average Closing Bid Price in the over-the-counter market; provided, however, that if the Common Stock is listed on a stock exchange, the Fair Market Value shall be the Average Closing Bid Price on such exchange; and, provided further, that if the Common Stock is not quoted or listed by any organization, the fair value of the Common Stock, as determined by the Board of Directors of the Company, whose determination shall be conclusive, shall be used). In no event shall the Fair Market Value of any share of Common Stock be less than its par value.
|
|
Date: _____________to be effective __________
|
|
1.
|
Representations and Warranties
.
|
|
(a)
|
Corporate and Other Action
. The Company has all requisite power and authority (corporate and other), and has taken all necessary corporate action, to authorize, execute, deliver and perform this Stock Option Agreement (the “
Option Agreement
”), to execute, issue, sell and deliver the Option and a certificate or certificates evidencing the Option, to authorize and reserve for issue and, upon payment from time to time of the Purchase Price, to issue, sell and deliver, the shares of the Common Stock issuable upon exercise of the Option (“
Shares
”), and to perform all of its obligations under this Option Agreement and the Option. The Shares, when issued in accordance with this Option Agreement, will be duly authorized and validly issued and outstanding, fully paid and nonassessable and free of all liens, claims, encumbrances and preemptive rights. This Option Agreement and, when issued, each Option issued pursuant hereto, has been or will be duly executed and delivered by the Company and is or will be a legal, valid and binding agreement of the Company, enforceable in accordance with its terms. No authorization, approval, consent or other order of any governmental entity, regulatory authority or other third party is required for such authorization, execution, delivery, performance, issue or sale.
|
|
(b)
|
No Violation
. The execution and delivery of this Option Agreement, the consummation of the transactions herein contemplated and the compliance with the terms and provisions of this Option Agreement and of the Option will not conflict with, or result in a breach of, or constitute a default or an event permitting acceleration under, any statute, the Articles of Incorporation or Bylaws of the Company or any indenture, mortgage, deed of trust, note, bank loan, credit agreement, franchise, license, lease, permit, or any other agreement, understanding, instrument, judgment, decree, order, statute, rule or regulation to which the Company is a party or by which it is bound.
|
|
2.
|
Transfer
.
|
|
(a)
|
Transferability of Option
. The Option Holder agrees that this Option is not transferable by Holder.
|
|
(b)
|
Registration of Shares
. The Option Holder agrees not to make any sale or other disposition of the Shares except pursuant to a registration statement which has become effective under the Securities Act of 1933, as amended (the “
Act
”), setting forth the terms of such offering, the underwriting discount and commissions and any other pertinent data with respect thereto, unless the Option Holder has provided the Company with an acceptable opinion of counsel acceptable to the Company that such registration is not required. Certificates representing the Shares, which are not registered as provided in this Section 2, shall bear an appropriate legend and be subject to a “
stop-transfer
” order.
|
|
3.
|
Vesting of Option, Exercise of Option, Partial Exercise, Notice
.
|
|
(a)
|
Vesting Period.
Options to purchase ______ shares shall vest upon the expiration of each year that elapses from the Grant Date (with options to purchase the first ______ shares vesting on ______________), until Holder has vested the entire Option, provided that the entire Option shall vest to Holder immediately upon the occurrence of a "
Change in Control
" as defined under the Company’s 2009 Stock Incentive Plan (the “
Plan
”), which includes:
|
|
(1)
|
the adoption of a plan of merger or consolidation of the Company with any other corporation or association as a result of which the holders of the voting capital stock of the Company as a group would receive less than 50% of the voting capital stock of the surviving or resulting corporation;
|
|
(2)
|
the approval by the Board of Directors of the Company of an agreement providing for the sale or transfer of substantially all the assets of the Company; or
|
|
(3)
|
in the absence of a prior expression of approval by the Board of Directors, the acquisition of more than 20% of the Company's voting capital stock by any person within the meaning of Rule 13d-3 under the Act (other than the Company or a person that directly or indirectly controls, is controlled by, or is under common control with, the Company);
|
|
(b)
|
Exercise Period
. This Option shall expire and all rights hereunder shall be extinguished upon the earlier of:
|
|
(i)
|
Ten (10) years from the Grant Date; or
|
|
(ii)
|
Three (3) Months from the date Holder’s employment with the Company ceases (or in the case of a Director of the Company, the date such Director ceases to serve as a Director of the Company), as determined by the Board of Directors of the Company in its sole discretion, unless such employment shall have terminated:
|
|
(1) as a result of the Disability of Holder, as defined in the Plan, in which event such exercise period shall expire on the date twelve (12) months following such termination of service by the Company, not to exceed the time period specified in Section 3(b)(i) above; or
|
|
(2) as a result of the death of Holder (other than as a result of disability), in which event such exercise period shall expire on the date twelve (12) months after the date of Holder’s death, not to exceed the time period specified in Section 3(b)(i) above.
|
|
(c)
|
Exercise in Full
. Subject to Section 3(a) and 3(b), the Option may be exercised in full by the Option Holder by surrender of the Option, with the Form of Subscription attached hereto as Schedule 2 executed by such Option Holder, to the Company, accompanied by payment as determined by 3(e) below, in the amount obtained by multiplying the number of Shares represented by the respective Option by the Purchase Price per share (after giving effect to any adjustments as provided in Section 5 below).
|
|
(d)
|
Partial Exercise
. Subject to Section 3(a) and 3(b), each Option may be exercised in part by the Option Holder by surrender of the Option, with the Form of Subscription attached hereto as Schedule 2 at the end thereof duly executed by such Option Holder, in the manner and at the place provided in Section 3(c) above, accompanied by payment as determined by 3(e) below, in amount obtained by multiplying the number of Shares designated by the Option Holder in the Form of Subscription attached hereto as Schedule 2 to the Option by the Purchase Price per share (after giving effect to any adjustments as provided in Section 5 below). Upon any such partial exercise, the Company at its expense will forthwith issue and deliver to or upon the order of the Option Holder a new Option of like tenor, in the name of the Option Holder, calling in the aggregate for the purchase of the number of Shares equal to the number of such Shares called for on the face of the respective Option (after giving effect to any adjustment herein as provided in Section 5 below) minus the number of such Shares designated by the Option Holder in the aforementioned form of subscription.
|
|
(e)
|
Payment of Purchase Price
. The Purchase Price may be made by any of the following or a combination thereof, at the election of the Option Holder:
|
|
(i) In cash, by wire transfer, by certified or cashier’s check, or by money order; or
|
|
(ii) By delivery to the Company of an exercise notice that requests the Company to issue to the Option Holder the full number of shares as to which the Option is then exercisable, less the number of shares that have an aggregate Fair Market Value, as determined by the Board in its
sole discretion at the time of exercise, equal to the aggregate purchase price of the shares to which such exercise relates. (This method of exercise allows the Option Holder to use a portion of the shares issuable at the time of exercise as payment for the shares to which the Option relates and is often referred to as a "
cashless exercise.
" For example, if the Option Holder elects to exercise 1,000 shares at an exercise price of $0.25 and the current Fair Market Value of the shares on the date of exercise is $1.00, the Option Holder can use 250 of the 1,000 shares at $1.00 per share to pay for the exercise of the entire Option (250 x $1.00 = $250.00) and receive only the remaining 750 shares).
|
|
4.
|
Delivery of Stock Certificates on Exercise
.
|
|
5.
|
Adjustment of Purchase Price and Number of Shares Purchasable
.
|
|
(a)
|
In case the Company shall at any time after the date of this Option Agreement (i) declare a dividend on the Common Stock in shares of its capital stock, (ii) subdivide the outstanding Common Stock, (iii) combine the outstanding Common Stock into a smaller number of shares of Common Stock, or (iv) issue any shares of its capital stock by reclassification of the Common Stock (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing corporation), then in each case the Purchase Price, and the number and kind of Shares receivable upon exercise, in effect at the time of the record date for such dividend or of the effective date of such subdivision, combination, or reclassification shall be proportionately adjusted so that the holder of any Option exercised after such time shall be entitled to receive the aggregate number and kind of Shares which, if such Option had been exercised immediately prior to such record date, he would have owned upon such exercise and been entitled to receive by virtue of such dividend, subdivision, combination, or reclassification. Such adjustment shall be made successively whenever any event listed above shall occur.
|
|
(b)
|
No adjustment in the Purchase Price shall be required if such adjustment is less than US $0.01;
provided, however
, that any adjustments which by reason of this subsection (b) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 5 shall be made to the nearest cent or to the nearest one-thousandth of a share, as the case may be.
|
|
(c)
|
Upon each adjustment of the Purchase Price as a result of the calculations made in subsection (a) of this Section 5, the Option outstanding prior to the making of the adjustment in the Purchase Price shall thereafter evidence the right to purchase, at the adjusted Purchase Price, that number of Shares (calculated to the nearest thousandth) obtained by (i) multiplying the number of Shares purchasable upon exercise of the Option immediately prior to adjustment of the number of Shares by the Purchase Price in effect prior to adjustment of the Purchase Price and (ii) dividing the product so obtained by the Purchase Price in effect immediately after such adjustment of the Purchase Price.
|
|
6.
|
Further Covenants of the Company
.
|
|
(a)
|
Dilution or Impairments
. The Company will not, by amendment of its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger or dissolution, avoid or seek to avoid the observance or performance of any of the terms of the Option or of this Option Agreement, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Option Holder against dilution or other impairment. Without limiting the generality of the foregoing, the Company:
|
|
(i)
|
shall at all times reserve and keep available, solely for issuance and delivery upon the exercise of the Option, all shares of Common Stock (or Other Securities) from time to time issuable upon the exercise of the Option and shall take all necessary actions to ensure that the par value per share, if any, of the Common Stock (or Other Securities) is at all times equal to or less than the then effective Purchase Price per share; and
|
|
(ii)
|
will take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock or Other Securities upon the exercise of the Option from time to time outstanding.
|
|
(b)
|
Title to Stock
. All Shares delivered upon the exercise of the Option shall be validly issued, fully paid and nonassessable; each Option Holder shall, upon such delivery, receive good and marketable title to the Shares, free and clear of all voting and other trust arrangements, liens, encumbrances, equities and claims whatsoever; and the Company shall have paid all taxes, if any, in respect of the issuance thereof.
|
|
(c)
|
Replacement of Option
. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of any Option and, in the case of any such loss, theft or destruction, upon delivery of an indemnity agreement reasonably satisfactory in form and amount to the Company or, in the case of any such mutilation, upon surrender and cancellation of such Option, the Company, at the expense of the Option Holder, will execute and deliver, in lieu thereof, a new Option of like tenor.
|
|
(d)
|
Fractional Shares
. No fractional Shares are to be issued upon the exercise of any Option, but the Company shall round any fraction of a share to the nearest whole Share.
|
|
7.
|
Holders of Shares
.
|
|
(a)
|
The Option is issued upon the following terms, to all of which each Option Holder by the taking thereof consents and agrees: any person who shall become a holder or owner of Shares shall take such shares subject to the provisions of Section 2(b) hereof; each prior taker or owner waives and renounces all of his equities or rights in such Option in favor of each such permitted
bona fide
purchaser, and each such permitted
bona fide
purchaser shall acquire absolute title thereto and to all rights presented thereby.
|
|
(b)
|
The Option Holder shall notify the Company if such Option Holder sells or otherwise transfers any shares of Common Stock of the Company acquired upon exercise of the Option within two (2) years of the Grant Date of such Option or within one (1) year of the date such shares were acquired upon exercise of this Option.
|
|
8.
|
Miscellaneous
.
|
VERTEX ENERGY, INC.
By________________________________________
Benjamin P. Cowart, Chief Executive Officer
|
|||
Registered Owner: _____________
|
Effective Date: _______________
|
Expiration Date:
|
Subject to Section 3(b) of the Option Agreement, 5:00 p.m. Central Standard Time.
|
VERTEX ENERGY, INC.
By________________________________________
Benjamin P. Cowart, Chief Executive Officer
|
|||
Registered Owner: _____________
|
Effective Date: ________________
|
Expiration Date:
|
Subject to Section 3(b) of the Option Agreement, 5:00 p.m. Central Standard Time.
|
VERTEX ENERGY, INC.
By________________________________________
Benjamin P. Cowart, Chief Executive Officer
|
|||
Registered Owner: _____________
|
Effective Date: _________________
|
Expiration Date:
|
Subject to Section 3(b) of the Option Agreement, 5:00 p.m. Central Standard Time.
|
VERTEX ENERGY, INC.
By________________________________________
Benjamin P. Cowart, Chief Executive Officer
|
|||
Registered Owner: _____________
|
Effective Date: _______________
|
Expiration Date:
|
Subject to Section 3(b) of the Option Agreement, 5:00 p.m. Central Standard Time.
|
VERTEX ENERGY, INC.
By________________________________________
Benjamin P. Cowart, Chief Executive Officer
|
|||
|
SCHEDULE 2
|
|
________________ =
Fair Market Value
- the average closing price of the Common Stock (if actual sales price information on any trading day is not available, the closing bid price shall be used) for the five trading days prior to the date of exercise of this Warrant (the “
Average Closing Bid Price
”), as reported by the National Association of Securities Dealers Automated Quotation System (“
NASDAQ
”), or if the Common Stock is not traded on NASDAQ, the Average Closing Bid Price in the over-the-counter market; provided, however, that if the Common Stock is listed on a stock exchange, the Fair Market Value shall be the Average Closing Bid Price on such exchange; and, provided further, that if the Common Stock is not quoted or listed by any organization, the fair value of the Common Stock, as determined by the Board of Directors of the Company, whose determination shall be conclusive, shall be used). In no event shall the Fair Market Value of any share of Common Stock be less than its par value.
|
BORROWER:
|
|
VERTEX ENERGY, INC.,
a Nevada corporation
|
|
By:
/s/ Chris Carlson
|
|
Chris Carlson
|
|
Chief Financial Officer and Secretary
|
|
LENDER:
|
|
BANK OF AMERICA, N.A.
|
|
By:
/s/ Christopher King
|
|
Christopher King
|
|
Senior Vice President
|
|
GUARANTORS:
|
|
VERTEX ACQUISITION SUB, LLC,
|
|
a Nevada limited liability company
|
|
By:
/s/ Chris Carlson
|
|
Chris Carlson
|
|
Chief Financial Officer and Secretary
|
|
CEDAR MARINE TERMINALS, LP,
|
|
a Texas limited partnership
|
|
By: Vertex II GP, LLC,
|
|
a Nevada limited liability company,
its general partner
|
|
By:
/s/ Chris Carlson
|
|
Chris Carlson | |
Chief Financial Officer and Secretary
|
|
CROSSROAD CARRIERS, L.P., | |
a Texas limited partnership | |
By: Vertex II GP, LLC, | |
a Nevada limited liability company, | |
its general partner | |
By:
/s/ Chris Carlson
|
|
Chris Carlson | |
Chief Financial Officer and Secretary
|
|
VERTEX RECOVERY, L.P.,
|
|
a Texas limited partnership | |
By: Vertex II GP, LLC, | |
a Nevada limited liability company, | |
its general partner | |
By:
/s/ Chris Carlson
|
|
Chris Carlson | |
Chief Financial Officer and Secretary
|
|
H & H OIL, L.P., | |
a Texas limited partnership | |
By: Vertex II GP, LLC, | |
a Nevada limited liability company, | |
its general partner | |
By:
/s/ Chris Carlson
|
|
Chris Carlson | |
Chief Financial Officer and Secretary
|
|
VERTEX II GP, LLC,
|
|
a Nevada limited liability company | |
By:
/s/ Chris Carlson
|
|
Chris Carlson | |
Chief Financial Officer and Secretary
|
|
·
|
Vertex Merger Sub, LLC, a California Limited Liability Company
|
·
|
Vertex Acquisition Sub, LLC, a Nevada Limited Liability Company (“
Vertex Acquisition
”)
|
o
|
Cedar Marine Terminals, L.P., a Texas limited partnership
|
o
|
Crossroad Carriers, L.P., a Texas limited partnership
|
o
|
Vertex Recovery L.P., a Texas limited partnership
|
o
|
H&H Oil, L.P., a Texas limited partnership
|
1.
|
I have reviewed this Annual Report on Form 10-K 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(s) 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(s) 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: March 21, 2013
|
By:
|
/s/ Benjamin P. Cowart
|
Benjamin P. Cowart
|
||
Chief Executive Officer
|
||
(Principal Executive Officer)
|
1.
|
I have reviewed this Annual Report on Form 10-K 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(s) 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(s) 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: March 21, 2013
|
|
|||
By:
|
/s/ Chris Carlson
|
|||
Chris Carlson
|
||||
Chief Financial Officer
(Principal Accounting Officer)
|
March 21, 2013
|
/s/ Benjamin P. Cowart
|
||
Benjamin P. Cowart
|
|||
Chief Executive Officer
|
|||
(Principal Executive Officer)
|
March 21, 2013
|
/s/ Chris Carlson
|
||
Chris Carlson
|
|||
Chief Financial Officer
(Principal Accounting Officer)
|