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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of Earliest Event Reported): April 1, 2022

 

VERTEX ENERGY, INC.

(Exact name of registrant as specified in its charter)

 

Nevada 001-11476 94-3439569
(State or other jurisdiction of
incorporation)
(Commission File Number) (IRS Employer
Identification No.)

 

 

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

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class Trading Symbol(s) Name of each exchange on which registered

Common Stock,

$0.001 Par Value Per Share

VTNR

NASDAQ
Stock Market LLC

(Nasdaq Capital Market)

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company  

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐ 

 

 

 

  

Item 1.01. Entry into a Material Definitive Agreement.

Loan and Security Agreement

 

On April 1, 2022 (the “Closing Date”), Vertex Refining Alabama LLC, a Delaware limited liability company (“Vertex Refining”) which is indirectly wholly-owned by Vertex Energy, Inc. (the “Company”, “we” and “us”); the Company, as a guarantor; substantially all of the Company’s direct and indirect subsidiaries, as guarantors (together with the Company, the “Guarantors”); certain funds and accounts under management by BlackRock Financial Management, Inc. or its affiliates, as lenders (“BlackRock”), certain funds managed or advised by Whitebox Advisors, LLC, as lenders (“Whitebox”), certain funds managed by Highbridge Capital Management, LLC, as lenders (“Highbridge”), Chambers Energy Capital IV, LP, as a lender (“Chambers”), CrowdOut Capital LLC, as a lender (“CrowdOut Capital”), CrowdOut Credit Opportunities Fund LLC, as a lender (collectively with BlackRock, Whitebox, Highbridge, Chambers and CrowdOut Capital, the “Lenders”); and Cantor Fitzgerald Securities, in its capacity as administrative agent and collateral agent for the Lenders (the “Agent”), entered into a Loan and Security Agreement (the “Loan and Security Agreement”).

 

Pursuant to the Loan and Security Agreement, the Lenders agreed to provide a $125 million term loan to Vertex Refining (the “Term Loan”), the proceeds of which, less agreed upon fees and discounts, were held in escrow prior to the Closing Date, pursuant to that certain escrow agreement, entered into between Vertex Refining, the Lenders and Cantor Fitzgerald Securities, in its capacity as escrow agent on March 2, 2022. On the Closing Date, net proceeds from the term loans, less the agreed upon fees and discounts, as well as certain transaction expenses, were released from escrow to Vertex Refining in an aggregate amount of $94,309,958.

 

The amounts borrowed under the Loan and Security Agreement will bear interest at a rate per annum equal to the sum of (i) the greater of (x) the per annum rate publicly quoted from time to time by The Wall Street Journal as the “Prime Rate” in the United States minus 1.50% as in effect on such day and (y) the Federal Funds rate for such day plus 0.50%, subject in the case of this clause (i), to a floor of 1.0%, plus (ii) 9.25%. The funds borrowed in connection with the Term Loan were issued with an original issue discount of 1.5%. The Company also paid certain fees and transaction expenses in connection with the release of the funds in connection with the Term Loan. Amounts owed under the Loan and Security Agreement, if not earlier repaid, are due on April 1, 2025 (or the next business day thereafter). Interest on the Term Loan is payable in cash (i) quarterly, in arrears, on the last business day of each calendar quarter, commencing on the last business day of the calendar quarter ending June 30, 2022, (ii) in connection with any payment, prepayment or repayment of the Term Loan (including as discussed in greater detail below), and (iii) at maturity (whether upon demand, by acceleration or otherwise).

 

Pursuant to the Loan and Security Agreement, on the last day of March, June, September and December of each year (or if such day is not a business day, the next succeeding business day), beginning on March 31, 2023 and ending on December 31, 2024, Vertex Refining is required to repay $1,562,500 of the principal amount owed under the Loan and Security Agreement (i.e., 1.25% of the original principal amount per quarter), subject to reductions in the event of any prepayment of the Loan and Security Agreement.

 

In the event of any payment, repayment or prepayment (other than with respect to a sale of the Company’s used motor oil assets or a change of control which are discussed below, and other than in connection with prepayments required to be made with funds received from insurance settlements and recoveries which are not subject to a prepayment premium), including in the event of acceleration of the Term Loan, certain asset sales (other than the used motor oil assets), certain equity issuances, and voluntary prepayments (a) during the first 18 months after the Closing Date, Vertex Refining agreed to pay an additional amount to the Lenders equal to 150% of the applicable interest rate, multiplied by the amount of such prepayment amount; (b) during the 19th through 24th months after the Closing Date, Vertex Refining agreed to pay an additional amount to the Lenders equal to 50% of the applicable interest rate, multiplied by the amount of such prepayment amount; and (c) at any time during the 25th month after the Closing Date, but prior to the date that is 90 days before the maturity date of amounts owed pursuant to the Loan and Security Agreement, Vertex Refining agreed to pay an additional amount to the Lenders equal to 25% of the applicable interest rate, multiplied by the amount of such prepayment amount. Upon the sale of the Company’s used motor oil assets (as discussed below), or the required repayment upon a change of control (also discussed below) Vertex Refining agreed to pay an additional amount to the Lenders equal to 1% of the aggregate principal amount of the amount prepaid (as applicable, the “Prepayment Premium”).

 

 

 
 

  

The Prepayment Premium is also due upon a change of control, which includes the direct or indirect transfer of all or substantially all of the assets of the Loan Parties (defined below); the adoption of a plan of liquidation or dissolution relating to the Company; the acquisition in one or a series of transactions of 33% or more of the equity interests of the Company by a person or entity; the Company’s failure to own 100% of Vertex Refining and the other Loan Parties, unless permitted by the Lenders; during any period of twelve consecutive months commencing on or after the Closing Date, the occurrence of a change in the composition of the Board of Directors of the Company such that a majority of the members of such Board of Directors are no longer directors; or a “change of control” or any comparable term under, and as defined in, any other indebtedness exceeding $2 million of the Loan Parties, shall have occurred (each a “Change of Control”).

 

The Company used a portion of the proceeds from the Term Loan borrowing to pay a portion of the purchase price associated with the acquisition of the Mobile, Alabama refinery (the “Mobile Refinery”) acquired by Vertex Refining on April 1, 2022, as discussed in greater detail below under Item 2.01, and to pay certain fees and expenses associated with the closing of the Loan and Security Agreement and is required to use the remainder of the funds for (i) the planned renewable diesel conversion of the Mobile Refinery, and (ii) working capital and liquidity needs.

 

The amounts borrowed pursuant to the terms of the Loan and Security Agreement are secured by substantially all of the present and after-acquired assets of the Company and its subsidiaries. Additionally, Vertex Refining’s obligations under the Loan and Security Agreement are jointly and severally guaranteed by substantially all of the Company’s subsidiaries and the Company (collectively, Vertex Refining, the Company and the Company’s subsidiaries which have guaranteed Vertex Refining’s obligations under the Loan and Security Agreement, the “Loan Parties”).

 

The Loan and Security Agreement includes customary representations and warranties, and affirmative and negative covenants of the Loan Parties for a facility of this size and type, including prohibiting the Loan Parties from creating any indebtedness without the consent of the Lenders, subject to certain exceptions, and requiring the Loan Parties to have no less than $17.5 million of unrestricted cash for more than three consecutive business days. The Loan and Security Agreement includes customary events of default for transactions of this type, including failures to pay amounts due, bankruptcy proceedings, covenant defaults, attachment or seizure of a material portion of the collateral securing the Loan and Security Agreement, cross defaults, if there is a default in any agreement governing indebtedness in excess of $3,000,000, resulting in the right to accelerate such indebtedness, certain judgments against a Loan Party, misrepresentations by the Loan Parties in the transaction documents, insolvency, cross default of the Offtake and Supply Agreement (defined and described below), a Change of Control, termination of certain intercreditor agreements, and the loss or termination of certain material contacts. Upon the occurrence of an event of default the Agent may declare the entire amount of obligations owed under the Loan and Security Agreement immediately due and payable and take certain other actions provided for under the Loan and Security Agreement, including enforcing security interests and guarantees.

 

The Loan and Security Agreement includes customary indemnification obligations for a facility of this size and type, requiring us to indemnify the Agent and the Lenders for certain expenses, losses and claims.

 

In connection with the Loan and Security Agreement, and as additional consideration for the Lenders agreeing to loan funds to the Company thereunder, the Company granted warrants to purchase 2,750,000 shares of common stock of the Company to the Lenders (and/or their affiliates) on the Closing Date, as discussed in greater detail below.

 

The amounts owed under the Loan and Security Agreement are also secured by various deeds of trusts and mortgages for the real property(s) described therein, over the Mobile Refinery and substantially all other material owned and leased real property of the Guarantors including properties in Texas and Louisiana.

 

 
 

 

Intellectual Property Security Agreement

 

In connection with the entry into the Loan and Security Agreement, Vertex Energy Operating, LLC, the Company’s wholly-owned subsidiary, entered into an Intellectual Property Security Agreement in favor of the Agent, pursuant to which it granted a security interest in substantially all of its intellectual property (including patents and trademarks) in favor of the Lenders to secure the obligations of the Loan Parties under the Loan and Security Agreement.

 

Collateral Pledge Agreement

 

In connection with the entry into the Loan and Security Agreement, the Company, Vertex Refining and each of the Guarantors, entered into a Collateral Pledge Agreement in favor of the Agent, pursuant to which they granted the Agent a security interest in all now owned or hereafter acquired promissory notes and instruments evidencing indebtedness to any Guarantor and all now owned or hereafter acquired equity interests owned by such Guarantor.

 

Intercreditor Agreement

 

In connection with the entry into the Loan and Security Agreement and the Supply and Offtake Agreement (as defined below), Agent, Macquarie (as defined below), Vertex Refining and each of the Guarantors (collectively, the “Grantors”) entered into an intercreditor agreement (the “Intercreditor Agreement”) pursuant to which the Agent and Macquarie acknowledged each other’s liens on the assets of Vertex Refining. The intercreditor arrangements may limit our ability to amend the Loan and Security Agreement and the Supply and Offtake Agreement and related agreements, provides for certain restrictions on the exercise of remedies (through “standstill” and access periods) and governs certain creditor rights in bankruptcy proceedings relating to Grantors.

 

Supply and Offtake Agreement

 

On April 1, 2022 (the “Commencement Date”), Vertex Refining entered into a Supply and Offtake Agreement (the “Supply and Offtake Agreement”) with Macquarie Energy North America Trading Inc., a Delaware corporation (“Macquarie”), pertaining to crude oil supply and offtake of finished products located at the Mobile Refinery acquired on April 1, 2022. On the Commencement Date, pursuant to an Inventory Sales Agreement and in connection with the Supply and Offtake Agreement, Macquarie purchased from Vertex Refining all crude oil and finished products within the categories covered by the Supply and Offtake Agreement and the Inventory Sales Agreement, which were held at the Mobile Refinery and a certain specified third party storage terminal, which were previously purchased by Vertex Refining as part of the acquisition of the Mobile Refinery as discussed in greater detail below under Item 2.01.

 

Pursuant to the Supply and Offtake Agreement, beginning on the Commencement Date and subject to certain exceptions, substantially all of the crude oil located at the Mobile Refinery and at a specified third party storage terminal from time to time will be owned by Macquarie prior to its sale to Vertex Refining for consumption within the Mobile Refinery processing units. Also pursuant to the Supply and Offtake Agreement, and subject to the terms and conditions and certain exceptions set forth therein, Macquarie will purchase from Vertex Refining substantially all of the Mobile Refinery’s output of certain refined products and will own such refined products while they are located within certain specified locations at the Mobile Refinery. Macquarie will have title to and risk of loss of crude oil and refined products purchased from Vertex Refining while within certain specified locations at the Mobile Refinery and a specified third party storage terminal.

 

Pursuant to the Supply and Offtake Agreement and subject to the terms and conditions therein, Macquarie may during the term of the Supply and Offtake Agreement procure crude oil and refined products from certain third parties which may be sold to Vertex Refining or third parties pursuant to the Supply and Offtake Agreement and may sell Refined Products to Vertex Refining or third parties (including customers of Vertex Refining).

 

The obligations of Vertex Refining and any of its subsidiaries under the Supply and Offtake Agreement and related transaction documents are guaranteed by the Company. The obligations of Vertex Refining and any of its subsidiaries under the Supply and Offtake Agreement and related transaction documents are also secured by a Pledge and Security Agreement in favor of Macquarie, discussed below, executed by Vertex Refining. In addition, the Supply and Offtake Agreement also requires that Vertex Refining post and maintain cash collateral (in the form of an independent amount) as security for Vertex Refining’s obligations under the Supply and Offtake Agreement and the related transaction documents. The amount of cash collateral is subject to adjustments during the term.

 

 
 

 

Pursuant to the Supply and Offtake Agreement, Vertex Refining and Macquarie agreed to cooperate to develop and document, by no later than 180 days after the Commencement Date, procedures relating to the unwinding and termination of the agreement and related agreements, in the event of the expiration or early termination of the Supply and Offtake Agreement. The parties also agreed to use commercially reasonable efforts to negotiate mutually agreeable terms for Macquarie’s intermediating of renewable feedstocks and renewable diesel that will be utilized and/or produced by Vertex Refining in connection with and following a planned renewable diesel conversion project at the Mobile Refinery (including providing Macquarie a right of first refusal in connection therewith), for 90 days after the Commencement Date (the “RD Period”). If, by the end of the RD Period, Macquarie and Vertex Refining, each acting in good faith and in a commercially reasonable manner, have not been able to reach commercial agreement regarding the entry into a renewable diesel intermediation, Vertex Refining may elect to terminate the Supply and Offtake Agreement by providing notice of any such election to Macquarie; provided that no such election may be effective earlier than the date falling 90 calendar days following the date on which such notice is delivered. The agreement is also subject to termination upon the occurrence of certain events, including the termination of certain agreements relating to the delivery of crude oil to and the offtake of products from the Mobile Refinery. Upon an early termination of the Supply and Offtake Agreement, Vertex Refining is required to pay amounts relating to such termination to Macquarie including, among other things, outstanding unpaid amounts, amounts owing with respect to terminating transactions under the Supply and Offtake Agreement and related transaction documents, unpaid ancillary costs, and breakage costs, losses and out-of-pocket costs with respect to the termination, liquidation, maintenance or reestablishment, or redeployment of certain hedges put in place by Macquarie in connection with the transactions contemplated by the agreement, and Vertex Refining is required to pay other termination fees and amounts to Macquarie in the event of any termination of the agreement. Additionally, upon the termination of the Supply and Offtake Agreement, the outstanding obligations of Vertex Refining and Macquarie to each other will be calculated and reduced to an estimated net settlement payment which will be subject to true-up when the final settlement payment has been calculated following termination.

 

The Supply and Offtake Agreement requires Vertex Refining to prepare and deliver certain forecasts, projections and estimates and comply with financial statement delivery obligations and other disclosure obligations. The agreement also requires Vertex Refining to provide Macquarie notice of certain estimated monthly crude oil delivery, crude oil consumption, product production, target inventory levels and product offtake terms, which Macquarie has the right to reject, subject to certain disclosure requirements.

 

The Supply and Offtake Agreement has a 24 month term following the Commencement Date, subject to the performance of customary covenants, and certain events of default and termination events provided therein (certain of which are discussed in greater detail below), for a facility of this size and type. Additionally, either party may terminate the agreement at any time, for any reason, with no less than 180 days prior notice to the other.

 

The Supply and Offtake Agreement includes certain customary representations, warranties, indemnification obligations and limitations of liability of the parties for a facility of this size and type, and also requires Vertex Refining to be responsible for certain ancillary costs relating to the Supply and Offtake Agreement and the transactions contemplated thereby. The Supply and Offtake Agreement requires Vertex Refining to comply with various indemnity, insurance and tax obligations, and also includes a prohibition on any amendments to Vertex Refining’s financing agreements which, among other things, adversely affect Macquarie’s rights and remedies under the Supply and Offtake Agreement and related transaction documents without the prior consent of Macquarie; a prohibition on Vertex Refining entering into any financing agreement which would cause Vertex Refining’s specified indebtedness to exceed $10 million without Macquarie’s prior consent, subject to certain exceptions; and a requirement that Vertex Refining not have less than $17.5 million in unrestricted cash for any period of more than three consecutive business days. The Supply and Offtake Agreement includes events of default and termination events, including if the Company ceases to beneficially own, directly or indirectly, 100% of the capital stock of Vertex Refining; the change in ownership of the Company or Vertex Refining resulting in one person or group acquiring 50% or more of the capital stock of the Company or Vertex Refining (as applicable); or a change in a majority of the Board of Directors of the Company or Vertex Refining during any 12 consecutive months, without certain approvals, including the approval of the Board of Directors of the Company or Vertex Refining (as applicable) immediately prior to such change; and a cross default to indebtedness (other than indebtedness under financing agreements) of the Company or Vertex Refining for over $20 million, a cross default to indebtedness under financing agreements of Vertex Refining or the Company, or a final judgment or order being rendered against Vertex Refining or the Company in an amount exceeding $20 million.

 
 

 

 

The price for crude oil purchased by the Company from Macquarie and for products sold by the Company to Macquarie within each agreed product group, in each case, is equal to a pre-determined benchmark, plus a pre-agreed upon differential, subject to adjustments and monthly true-ups.

 

Vertex Refining will be required to pay Macquarie various monthly fees in connection with the Supply and Offtake Agreement and related arrangements, including, without limitation, (1) an inventory management fee, calculated based on the value of the inventory owned by Macquarie in connection with the Supply and Offtake Agreement, (2) a lien inventory fee  based upon the value of certain inventory on which Macquarie has a lien, (3) a per barrel crude handling fee based upon the volume of crude oil Macquarie sells to Vertex Refining, (4) per barrel crude oil and products intermediation fees for each barrel of crude oil which Macquarie buys from a third party and each barrel of products Macquarie sells to a third party, in each case, in connection with the Supply and Offtake Agreement, and (5) a services fee in respect of which Macquarie agrees to make Crude Oil and Products available to the Company in accordance with the weekly nomination procedure as set forth in the Supply and Offtake Agreement. 

 

Vertex Refining will also be responsible for certain payments relating to Macquarie’s hedging of the inventory it owns in connection with the Supply and Offtake Agreement, including the costs of rolling hedges forward each month, as well as any costs (or gains) resulting from a mismatch between the Company’s projected target inventory levels (which provide the basis for Macquarie’s hedge position) and actual month end inventory levels.

 

In connection with the entry into the Supply and Offtake Agreement, Vertex Refining entered into various ancillary agreements which relate to supply, storage, marketing and sales of crude oil and refined products including, but not limited to the following: Inventory Sales Agreement, Master Crude Oil and Products Agreement, Storage and Services Agreement, and a Pledge and Security Agreement (collectively with the Supply and Offtake Agreement, the “Supply Transaction Documents”). The Company agreed to guarantee the obligations of Vertex Refining and any of its subsidiaries arising under the Supply Transaction Documents pursuant to the entry into a Guaranty in favor of Macquarie.

 

Tripartite Agreements

 

Also on the Commencement Date, Vertex Refining, Macquarie and certain parties subject to crude oil supply and products offtake agreements with Vertex Refining, relating to the Mobile Refinery, entered into various tripartite agreements (the “Tripartite Agreements”), whereby Vertex Refining granted Macquarie the right, on a rolling daily or monthly basis, as applicable, to elect to assume Vertex Refining’s rights and obligations under such crude oil supply and products offtake agreements in connection with the performance of the Supply and Offtake Agreement, and the counterparties thereto are deemed to have consented to Macquarie’s assuming such obligations. Such Tripartite Agreements also provided for certain interpretations of the provisions of such supply and offtake agreements between Vertex Refining and such third parties in connection with Macquarie’s right to elect to assume Vertex Refining’s rights and obligations under such agreements. The Tripartite Agreements remain in place until the termination of the agreements to which they relate, or the earlier termination thereof as set forth in the Tripartite Agreements, including in the event of certain events of default by the parties thereto under the modified crude oil supply and products offtake agreements or the Supply and Offtake Agreement and related transaction documents and also in the event of the termination of the Supply and Offtake Agreement. Macquarie, Vertex Refining and a third party offtaker also entered into a tripartite agreement pursuant to which certain storage capacity within the Mobile Refinery which Macquarie had leased pursuant to the Storage and Services Agreement was effectively made available to such third party consistent with the terms agreed by such party and Vertex Refining in its underlying products offtake agreement. Macquarie, Vertex Refining and a third party storage terminal operator also entered into a tripartite agreement relating to the storage of Macquarie-owned crude oil in such terminal in connection with the Supply and Offtake Agreement.

 

Guaranty

 

Vertex Refining’s obligations under the Supply and Offtake Agreement and related transaction documents (other than the hedges which are secured and guaranteed on a pari passu basis under the Loan and Security Agreement) were unconditionally guaranteed by the Company pursuant to the terms of a Guaranty entered into on April 1, 2022, by the Company in favor of Macquarie (the “Guaranty”).

 

Pledge and Security Agreement

 

In connection with the entry into the Supply and Offtake Agreement, Vertex Refining entered into a Pledge and Security Agreement in favor of Macquarie, pursuant to which it provided Macquarie a first priority security interest in all inventory, including all crude oil, product, and all proceeds with respect of the forgoing, subject to certain exceptions. The Pledge and Security Agreement includes customary representations, warranties and covenants of Vertex Refining for a facility of this size and type.

 

Inventory Sales Agreement

 

On April 1, 2022, pursuant to an Inventory Sales Agreement entered into between Vertex Refining and Macquarie, Macquarie purchased all crude oil and finished products (including, jet fuel, diesel and gasoline) located the Mobile Refinery and held in inventory on such date, which purchase was based on agreed upon market values (the “Mobile Refinery Inventory”) from Vertex Refining for $154 million (which funds, together with cash on hand, were used by Vertex Refining to purchase the Mobile Refinery Inventory from Shell, as discussed in Item 2.01, below), which Mobile Refinery Inventory then became subject to the terms of the Supply and Offtake Agreement.

 

 
 

 

 

Warrant Agreement and Registration Rights Agreement

 

In connection with the entry into the Loan and Security Agreement, and as a required term and condition thereof, on April 1, 2022, the Company granted warrants (the “Warrants”) to purchase 2,750,000 shares of the Company’s common stock to the Lenders and their assigns. The terms of the Warrants are set forth in a Warrant Agreement entered into on April 1, 2022, between the Company and Continental Stock Transfer & Trust Company as warrant agent (the “Warrant Agreement”).

 

The Warrants have a five-year term and a $4.50 per share exercise price, and include weighted average anti-dilutive rights in the event any shares of common stock or other equity or equity equivalent securities payable in common stock are granted, issued or sold (or the Company enters into any agreement to grant, issue or sell), or in accordance with the terms of the Warrant Agreement, are deemed to have granted, issued or sold, in each case, at a price less than the exercise price, which automatically decreases the exercise price of the Warrants upon the occurrence of such event, as described in greater detail in the Warrant Agreement, and increases the number of shares of common stock issuable upon exercise of the Warrants, such that the aggregate exercise price of all Warrants remains the same before and after any such dilutive event. Until or unless the Company receives shareholder approval under applicable Nasdaq listing rules for the issuance of more than 19.9% of the Company’s outstanding shares of common stock on the date the Warrant Agreement was entered into (i.e., 12,828,681 shares of common stock, based on 64,465,734 shares of outstanding common stock on such date)(the “Share Cap”), the Company may not issue more shares of common stock upon exercise of the Warrants than totals the Share Cap, and is required to pay the Lenders cash, based on the fair market value of any shares required to be issued upon exercise of the Warrants (as calculated in the Warrant Agreement), which would exceed the Share Cap. Upon the occurrence of a fundamental transaction (as described in the Warrant Agreement) the Warrant Agreement (a) provides each holder a put right and (b) provides the Company with a call right in respect of the Warrants. Upon the exercise of a put right by the holder or a call right by the Company, the Company is obligated to repurchase the Warrants for the Black Scholes Value of the Warrants repurchased, as calculated in the Warrant Agreement. The Warrants also include cashless exercise rights and a provision preventing a holder of the Warrants from exercising any portion of their Warrants if such holder (together with its affiliates) would beneficially own in excess of 4.99% or 9.99% (as applicable pursuant to the Warrant Agreement) of the number of shares of Company common stock outstanding immediately after giving effect to the exercise, subject to certain rights of the holders to increase or decrease such percentage.

 

In connection with the grant of the Warrants, the Company and the holders of such Warrants entered into a Registration Rights Agreement dated April 1, 2022 (the “Registration Rights Agreement”). Under the Registration Rights Agreement, the Company agreed to file a registration statement (the “Initial Registration Statement”) with the Securities and Exchange Commission (the “SEC” or the “Commission”) as soon as reasonably practicable and in no event later than 75 days following April 1, 2022, for purposes of registering the resale of the shares of common stock issuable upon exercise of the Warrants. The Company also agreed to use commercially reasonable efforts to cause the SEC to declare the Registration Statement effective as soon as practicable and no later than 45 days following the filing of the Initial Registration Statement; provided, that such date is extended until 120 days after the filing date if the Initial Registration Statement is reviewed by the staff of the Commission. The Registration Rights Agreement also provides the holders of the Warrants certain piggyback and demand registration rights (including pursuant to an underwritten offering, in the event the gross proceeds from such underwritten offering are expected to exceed $35 million).

 

 
 

 

 

If, subject to certain limited exceptions described in the Registration Rights Agreement, (i) the Initial Registration Statement required to be filed pursuant to the Registration Rights Agreement is not filed on or prior to the required filing deadline (or without complying with the terms of the Registration Rights Agreement), (ii) a registration statement registering for resale all of the registrable securities is not declared effective by the Commission by the required effectiveness deadline, or (iii) during the period commencing on the effective date of the Initial Registration Statement and ending on the earlier of the date when there are no registrable securities or the third anniversary of the effective date of the Initial Registration Statement, a registration statement is not continuously effective to allow the sale of the shares underlying the Warrants, for more than 10 consecutive calendar days or more than an aggregate of 15 calendar days (which need not be consecutive) during any 12-month period, then, in addition to any other rights such holder of Warrants may have under the Registration Rights Agreement or applicable law, (x) on the first such applicable default date, the Company shall pay to such holder of a Warrant an amount in cash, as partial liquidated damages and not as a penalty, equal to 1.0% of the fair market value (such fair market value calculated as required under the Registration Rights Agreement) of the registrable securities held by such holder (the “1% Penalty”), and (y) on each monthly anniversary of such default date until all applicable defaults have been cured, shall pay the 1% Penalty, subject to a maximum penalty of 10% of the fair market value of the registrable securities held by each applicable holder of Warrants, (such fair market value calculated as required under the Registration Rights Agreement).

 

The Company has agreed, among other things, to indemnify the holders of the Warrants and their affiliates with respect to certain liabilities and to pay all fees and expenses incident to the Company’s obligations under the Registration Rights Agreement.

 

* * * * *

The foregoing description of the Loan and Security Agreement, Intellectual Property Security Agreement, Collateral Pledge Agreement, Supply and Offtake Agreement, Intercreditor Agreement, Guaranty, Pledge and Security Agreement, Warrant Agreement, Registration Rights Agreement, and Inventory Sales Agreement, does not purport to be complete and is qualified in its entirety by reference to the full text of such Loan and Security Agreement, Intellectual Property Security Agreement, Collateral Pledge Agreement, Supply and Offtake Agreement, Intercreditor Agreement, Pledge and Security Agreement, Warrant Agreement, Registration Rights Agreement, and Inventory Sales Agreement, which are filed as Exhibits 10.1, 10.2, 10.3, 10.4, 10.5, 10.6, 10.7, 4.1, 10.8 and 10.11 to this Current Report on Form 8-K and are incorporated herein by reference.

* * * * *

In connection with the Mobile Acquisition and related transactions described herein, Vertex Refining and Macquarie and Vertex Refining and Shell (and certain of its related parties), entered into certain agreements, other than those described in detail herein, certain of which are anticipated to be deemed material definitive agreements. The Company and the counterparties to these agreements are still in the process of drafting disclosure of the material terms of these agreements as of the date of this Current Report on Form 8-K and the Company plans to file an amendment to this Current Report on Form 8-K, following the date of this filing, to more fully disclose the material terms of such agreements, and plans to include such agreements as exhibits to a future filing.

 

Item 2.01 Completion of Acquisition or Disposition of Assets.

 

Mobile Refinery Acquisition

 

As previously reported in the Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission on May 26, 2021, on May 26, 2021, Vertex Energy Operating LLC (“Vertex Operating”), a wholly-owned subsidiary of the Company, entered into a definitive Refinery Purchase Agreement (the “Refinery Purchase Agreement”) with Equilon Enterprises LLC d/b/a Shell Oil Products US, Shell Oil Company and Shell Chemical LP, subsidiaries of Shell plc (“Shell”), to purchase Shell’s Mobile, Alabama refinery, certain real property associated therewith, and related assets, including all inventory at the refinery as of closing and certain equipment, rolling stock, and other personal property associated with the Mobile Refinery (collectively, the “Mobile Acquisition”). The Mobile Refinery is located on an 800+ acre site in the city and county of Mobile, Alabama. The 91,000 barrel-per-day nameplate capacity Mobile Refinery is capable of sourcing a flexible mix of cost-advantaged light-sweet domestic and international feedstocks. Approximately 70% of the refinery’s current annual production is distillate, gasoline and jet fuel, with the remainder being vacuum gas oil, liquefied petroleum gas (LPG) and other products. The facility distributes its finished product across the southeastern United States through a high-capacity truck rack, together with deep and shallow water distribution points capable of supplying waterborne vessels.

 

On April 1, 2022, Vertex Operating assigned its rights to the Refinery Purchase Agreement to Vertex Refining and on the same date, Vertex Refining completed the Mobile Acquisition.

 

 
 

 

On the Effective Date, a total of $75.0 million (less $10 million previously paid) was paid by Vertex Refining in consideration for the acquisition of the Mobile Refinery, which amount is subject to customary purchase price adjustments and reimbursement for certain capital expenditures in the amount of approximately $440,000, $15.9 million was paid to Shell for previously agreed upon capital expenditures and miscellaneous prepaid and reimbursable items, and $164.2 million was paid to Shell by Vertex Refining in connection with the purchase of certain crude oil inventory and finished products owned by Shell and located at the Mobile Refinery on the Closing Date (approximately $154 million of which was funded by Macquarie as a result of the simultaneous sale of such inventory to Macquarie pursuant to an Inventory Sales Agreement between Vertex Refining and Macquarie). The Company also paid $8.7 million at closing pursuant to the terms of a Swapkit Purchase Agreement entered into with Shell on May 26, 2021 (the “Swapkit Agreement”), pursuant to which the Company agreed to fund a technology solution comprising the ecosystem required for the Company to run the Mobile Refinery after closing (the “Swapkit”).

 

Following the closing of the Mobile Acquisition, the Company (through one or more of its subsidiaries and affiliates) plans to complete an $85 million capital project designed to modify the Mobile Refinery’s hydrocracking unit to produce renewable diesel fuel on a standalone basis.

 

The foregoing description of the Refinery Purchase Agreement, Assignment Agreement and Swapkit Agreement is only a summary and is not complete, and is qualified in its entirety by reference to the Refinery Purchase Agreement, Assignment Agreement and Swapkit Agreement, copies of which are attached hereto (or incorporated by reference herein) as Exhibits 2.1, 2.2 and 10.9, respectively, and are incorporated herein by reference.

 

Funds for the purchase of the Mobile Refinery, Swapkit Agreement, provision of cash collateral required pursuant to terms of the Supply and Offtake Agreement (discussed below), capital expenditures and transaction expenses, came from funds previously held in escrow in connection with our November 2021 sale of $155 million principal at maturity of 6.25% senior unsecured notes due 2027 ($100.4 million), the Term Loan and cash on hand. Following the transactions described above, including the Term Loan, and our acquisition of Tensile-MG (as defined and discussed in Item 2.01, below), our unrestricted cash increased by approximately $75 million, which funds are anticipated to be used for (i) the planned renewable diesel conversion of the Mobile Refinery, and (ii) working capital and liquidity needs.

 

Myrtle Grove Purchase Agreement

 

As previously disclosed in the Current Report on Form 8-K filed by the Company with the SEC on July 31, 2019, the Company and its subsidiaries entered into a number of transactions with Tensile-Myrtle Grove Acquisition Corporation (“Tensile-MG”), an affiliate of Tensile Capital Partners Master Fund LP, an investment fund based in San Francisco, California (“Tensile”), including forming Vertex Refining Myrtle Grove LLC, a Delaware limited liability company, which entity was formed as a special purpose vehicle. As a result of the transactions, Tensile, through Tensile-MG, acquired an approximate 15% ownership interest in MG SPV, which indirectly owns the Company’s Belle Chasse, Louisiana, re-refining complex.

 

As previously disclosed in the Current Report on Form 8-K filed by the Company with the Commission on March 3, 2022 (the “March 2022 Form 8-K”), on February 25, 2022, Vertex Splitter Corporation (“Vertex Splitter”), a wholly-owned subsidiary of the Company entered into a Purchase and Sale Agreement with Tensile-Vertex and Tensile-MG (the “Purchase Agreement”).

 

On April 1, 2022, the Company, through Vertex Splitter acquired 100% of Tensile-MG from Vertex-Tensile for $7.2 million, which was based on the value of the Class B Unit preference of MG SPV held by Tensile-MG, plus capital invested by Tensile-MG in MG SPV (which had not been returned as of the date of payment), plus cash and cash equivalents held by Tensile-MG as of the closing date. As a result, the Company acquired 100% of MG SPV, which in turn owns the Company’s Belle Chasse, Louisiana, re-refining complex.

 

 
 

 

 

The Myrtle Grove Purchase Agreement includes customary representations of the parties for a transaction of that size and type, requires Vertex Splitter to maintain officer and director insurance for Tensile-MG for at least six years following the closing; requires that they bear their own fees and expenses, except that each party is required to pay the fees and expenses of the other party upon termination of the agreement in certain situations; includes customary indemnification obligations; and includes mutual releases of the parties, effective upon closing.

 

The foregoing description of the Myrtle Grove Purchase Agreement is only a summary and is not complete, and is qualified in its entirety by reference to the Myrtle Grove Purchase Agreement, a copy of which is incorporated by reference herein as Exhibit 10.10, and is incorporated herein by reference.

 

Inventory and Finished Products Purchase and Sale

 

As a required condition to the closing of the Mobile Acquisition, on the Closing Date, Vertex Refining paid approximately $164.2 million for the acquisition from Shell, of all Mobile Refinery Inventory. Also on April 1, 2022, pursuant to an Inventory Sales Agreement entered into between Vertex Refining and Macquarie, Macquarie purchased all the Mobile Refinery Inventory from Vertex Refining for $154 million (which funds, together with cash on hand, were used by Vertex Refining to purchase the Mobile Refinery Inventory from Shell), which Mobile Refinery Inventory then became subject to the terms of the Supply and Offtake Agreement, discussed above under Item 1.01.

 

The foregoing description of the Inventory Sales Agreement is only a summary and is not complete, and is qualified in its entirety by reference to the Inventory Sales Agreement, a copy of which is attached hereto as Exhibit 10.11, and is incorporated herein by reference.

 

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

 

The disclosures included in Item 1.01 above, including regarding the Loan and Security Agreement and Supply and Offtake Agreement, and the related agreements and transactions associated therewith, are incorporated into this Item 2.03 in their entirety by reference.

 

Item 3.02 Unregistered Sales of Equity Securities.

The disclosure included in Item 1.01 above regarding the grant of the Warrants is incorporated into this Item 3.02 by reference. The issuance of the Warrants to purchase 2,750,000 shares of common stock to the lenders as discussed in Item 1.01 above was exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), in accordance with Section 4(a)(2) and/or Regulation D, Rule 506 thereunder, since the transaction did not involve a public offering, the recipients confirmed that they were “accredited investors”, and that they were acquiring the securities for investment only and not with a view towards, or for resale in connection with, the public sale or distribution thereof. The securities are subject to transfer restrictions, and the certificates evidencing the securities contain an appropriate legend stating that such securities have not been registered under the Securities Act and may not be offered or sold absent registration or pursuant to an exemption therefrom. The Warrants and the shares of common stock issuable upon exercise thereof have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

 

The maximum number of shares of common stock issuable upon exercise of the Warrants is 2,750,000 shares of common stock (subject to anti-dilution protection as provided for in the Warrant Agreement).

 

Item 3.03 Material Modification to Rights of Security Holders.

 

The disclosures included in Item 1.01 above, including regarding the Loan and Security Agreement and Supply and Offtake Agreement, and the related agreements associated therewith, are incorporated into this Item 3.03 in their entirety by reference.

 

 
 

 

Item 9.01 Financial Statements and Exhibits.

 

(a) Financial Statements of Businesses Acquired

 

The financial statements of the Mobile Refinery, to the extent required to be disclosed pursuant to this Item 9.01, will be filed no later than 71 calendar days after the date that this Current Report on Form 8-K is required to be filed.

 

(b) Pro Forma Financial Information

 

Pro forma financial information relative to acquisition of the Mobile Refinery, to the extent required to be disclosed pursuant to this Item 9.01, will be filed no later than 71 calendar days after the date that this Current Report on Form 8-K is required to be filed.

 

(d) Exhibits.

 

Exhibit No.   Description  
       
2.1+   Sale and Purchase Agreement dated May 26, 2021, by and between Vertex Operating Company LLC and Equilon Enterprises LLC d/b/a Shell Oil Products US and/or Shell Chemical LP and/or Shell Oil Company (filed as Exhibit 2.1 to the Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission on May 27, 2021, and incorporated by reference herein)(File No. 001-11476)
2.2*   Assignment and Assumption of Contract effective April 1, 2022, between Vertex Energy Operating LLC and Vertex Refining Alabama LLC
4.1*   Warrant Agreement dated April 1, 2022, by and among Vertex Energy, Inc. and Continental Stock Transfer & Trust Company, as warrant agent
10.1*+   Loan and Security Agreement dated April 1, 2022, by and among Vertex Refining Alabama LLC, as borrower, Vertex Energy, Inc., as parent and as a guarantor, certain direct and indirect subsidiaries of Vertex Energy, Inc., as guarantors, the lenders party thereto, and Cantor Fitzgerald Securities, as administrative agent and collateral agent for the lenders
10.2*   Intellectual Property Security Agreement dated April 1, 2022, by and between Vertex Energy Operating, LLC, as grantor and Cantor Fitzgerald Securities, as administrative and collateral agent for the lenders
10.3*   Collateral Pledge Agreement dated April 1, 2022, by and among Vertex Energy Inc., Vertex Refining Alabama LLC,  each of Vertex Energy, Inc.’s direct and indirect subsidiaries party thereto and Cantor Fitzgerald Securities, as collateral agent for the lenders
10.4*+   Supply and Offtake Agreement dated April 1, 2022, by and between Macquarie Energy North America Trading Inc. and Vertex Refining Alabama LLC
10.5*   Intercreditor Agreement dated April 1, 2022, among Cantor Fitzgerald Securities, as the term loan agent, Macquarie Energy North America Trading Inc., as the intermediation facility secured party, Vertex Refining Alabama LLC, and the other grantors party thereto
10.6*   Guaranty between Vertex Energy, Inc. and Macquarie Energy North America Trading Inc., dated April 1, 2022
10.7*   Pledge and Security Agreement dated April 1, 2022, between Vertex Alabama Refining LLC, and Macquarie Energy North America Trading Inc.
10.8*   Registration Rights Agreement dated April 1, 2022, between Vertex Energy, Inc. and each of the holders of the Lender Warrants
10.9+   Swapkit Purchase Agreement entered into between Vertex Energy Operating, LLC and Equilon Enterprises LLC d/b/a Shell Oil Products US, dated May 26, 2021 (filed as Exhibit 10.2 to the Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission on May 27, 2021, and incorporated by reference herein)(File No. 001-11476)
10.10   Purchase and Sale Agreement dated February 25, 2022, by and between Tensile-Vertex Holdings, LLC, Tensile-Myrtle Grove Acquisition Corporation and Vertex Splitter Corporation (filed as Exhibit 10.2 to the Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission on March 3, 2022, and incorporated by reference herein)(File No. 001-11476)
10.11*   Inventory Sales Agreement dated April 1, 2022, by and between Vertex Refining Alabama LLC and Macquarie Energy North America Trading Inc.
104   Inline XBRL for the cover page of this Current Report on Form 8-K

 

 

* Filed herewith.

 

# Certain schedules, annexes and similar attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule or exhibit will be furnished supplementally to the Securities and Exchange Commission upon request; provided, however that Vertex Energy, Inc. may request confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, for any schedule or exhibit so furnished.

 

 

 

 

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: April 7, 2022 By: /s/ Chris Carlson
    Chris Carlson
    Chief Financial Officer

 

 

 

 

Vertex Energy Inc. 8-K

Exhibit 2.2

 

 

ASSIGNMENT AND ASSUMPTION OF CONTRACT

 

This Assignment and Assumption of Contract (the "Assignment") is made and effective April 1, 2022, by and between Vertex Energy Operating LLC (the "Assignor") and Vertex Refining Alabama LLC ("Assignee"). Assignor and Assignee are each a "Party" and collectively the "Parties" hereto.

 

WHEREAS, Assignor and Equilon Enterprises LLC d/b/a Shell Oil Products US and/or Shell Chemical LP and/or Shell USA, Inc. (previously known as Shell Oil Company) (“Shell”) entered into that certain Sale and Purchase Agreement dated May 26, 2021 (the "CONTRACT"); and

 

WHERAS, Assignor desires to assign all of its rights, title, obligations and interest by, though, and under the Contract attached hereto as Exhibit A and incorporated herein by this reference, and Assignee desires to accept the assignment provided for herein; and

 

WHERAS, Shell will agree to the assignment of the Contract, provided that Assignor shall remain jointly and severally liable for all of Buyer’s obligations thereunder.

 

 NOW, THEREFORE in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged and confessed, the undersigned Assignor hereby assigns, transfers and sets over to Assignee all rights, title and interest held by the Assignor in and to the Contract, according to the terms herein.

 

1. TERMS 

 

a. The Assignor warrants that it has full right and authority to transfer said Contract and that the contract rights herein transferred are free of lien, encumbrance or adverse claim.

 

b. The Assignor warrants that the Contract is as set forth in Exhibit A, which includes any amendments to the Contract, and remains in full force and effect on the terms contained in the Contract. 

 

c. Assignor hereby assigns, sets over and transfers to Assignee all of Assignor’s right, title and interest in and to the Contract.

 

d. Assignee hereby accepts such assignment and assumes and agrees to pay, perform, timely discharge and be bound by all of the covenants, terms, conditions and obligations contained in the Contract.

 

e. Notwithstanding the foregoing, Assignor and Assignee shall be jointly and severally liable to Shell for all of the covenants, terms, conditions and obligations contained in the Contract, and nothing herein shall impair Shell’s ability to enforce the covenants, terms, conditions, and obligations contained in the contract and the remedies as set forth in the Contract against either or both of Assignor or Assignee. 

 

2. MISCELLANEOUS

 

a. This Assignment shall be binding upon and inure to the benefit of the parties, their successors and assigns.

 

b. This Assignment may be executed in any number of counterparts, all of which shall, for all purposes, constitute one agreement binding on the parties hereto, notwithstanding that all parties hereto may not be signatory to the same counterpart. Any such counterpart, to the extent delivered by means of a facsimile machine or by .pdf, .tif, .gif, .jpeg or similar attachment to electronic mail (any such delivery, an "Electronic Delivery") shall be treated in all manner and respects as an original executed counterpart and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person.

 

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c. The introductory language and the recitals set forth above shall be deemed incorporated herein by reference.

 

d. This Assignment shall be governed by and construed in accordance with the laws of the State of Texas without regard to any choice of law provisions thereof.

 

[Signature pages to follow] 

 

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IN WITNESS WHEREOF, the parties have executed this Assignment on the day and year first above written. 

 

ASSIGNOR: ASSIGNEE:

 

VERTEX ENERGY OPERATING LLC

 

/s/ Benjamin P. Cowart                  

By: Ben Cowart

Its: CEO

 

VERTEX REFINING ALABAMA LLC 

 

/s/ Benjamin P. Cowart                  

By: Ben Cowart

Its: CEO

   

In consideration of the covenants and agreements hereinabove set forth, and subject to the terms and conditions of this agreement of Assignment, the undersigned Shell does hereby agree and consent to the assignment of the Contract by Assignor to Assignee.

 

Equilon Enterprises LLC d/b/a Shell Oil Products US

 

By: /s/ Rhoman Hardy                  

 

Name: Rhoman Hardy

Title: President

 

 

 

Shell Chemical LP

 

By: /s/ Sean Clarry                         

Name: Sean Clarry

Title: President
Mar 28, 2022

 

 

Shell USA, Inc.

 

By: /s/ Keith Probyn                      

Name: Keith Probyn

Title: Vice President Real Estate

 

 

Signature Page to Assignment and Assumption of Contract

 

 

 

 

Vertex Energy Inc. 8-K

Exhibit 4.1

 

 

 

WARRANT AGREEMENT

 

THIS WARRANT AGREEMENT (as amended from time to time in accordance with the terms hereof, this “Agreement”), dated as of April 1, 2022, is by and between Vertex Energy Inc., a Nevada corporation (the “Company”), and Continental Stock Transfer & Trust Company, a New York corporation, as warrant agent (together with its successors and assigns, the “Warrant Agent”).

 

RECITALS

 

WHEREAS, the Company has entered into that certain Loan and Security Agreement (the “Loan Agreement”), dated as of April 1, 2022, by and among the Company, Vertex Refining Alabama LLC, a Delaware limited liability company (“Borrower”), certain direct and indirect subsidiaries of the Company from time to time party thereto and Cantor Fitzgerald Securities, as administrative and collateral agent for the Lenders, pursuant to which the Lenders agreed to lend to the Borrower an aggregate of $125,000,000; and

 

WHEREAS, in connection with the transactions contemplated by the Loan Agreement, on the Closing Date, pursuant to an exemption from registration provided by Section 4(a)(2), and Rule 506 thereunder, of the Securities Act, the Company is issuing to the Initial Lenders an aggregate of 2,750,000 warrants (the “Warrants”), with each Warrant entitling the holder thereof to purchase one share of Common Stock (as may be adjusted in accordance herewith, the “Warrant Shares”); and

 

WHEREAS, the Company desires to provide for the form and provisions of the Warrants, the terms upon which they shall be issued and may be exercised and the respective rights, limitation of rights, and immunities of the Company, the Warrant Agent and the registered holders of the Warrants (the “Holders”); and

 

WHEREAS, the Company desires for the Warrant Agent to act on behalf of the Company, and the Warrant Agent is willing so to act, in connection with the issuance, transfer, exchange and exercise of the Warrants and other matters as provided herein; and 

 

WHEREAS, all acts and things have been done and performed which are necessary to make the Warrants, when issued, the valid, binding and legal obligations of the Company, and to authorize the execution and delivery of this Agreement.

 

NOW, THEREFORE, in consideration of the mutual agreements herein contained, the parties hereto agree as follows:

 

ARTICLE I
DEFINITIONS

 

Section 1.1             Definition of Terms. In addition to the terms defined elsewhere in this Agreement, the following terms shall have the meanings indicated in this Section 1.1.

 

(a)          Adjustment Right” means any right granted with respect to any securities issued in connection with, or with respect to, any issuance or sale (or deemed issuance or sale in accordance with Article V) of shares of Common Stock that could result in a decrease in the net consideration received by the Company in connection with, or with respect to, such securities (including, without limitation, any cash settlement rights, cash adjustment or other similar rights).

 

(b)          Affiliate” means, with respect to any specified Person, at any time, a Person that, directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, such specified Person at such time. For purposes of this definition, “control,” when used with respect to any specified Person, shall mean (i) the direct or indirect ownership of more than 50% of the total voting power of securities or other evidences of ownership interest in such Person or (ii) the power to direct or cause the direction of the management and policies of such Person, directly or indirectly, whether through ownership of voting securities, by contract or otherwise.

 

 

 

 

(c)          Aggregate Warrant Exercise Price” means, with respect to a Warrant, the product of the Exercise Price multiplied by the number of Warrant Shares issuable upon exercise thereof.

 

(d)          Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

 

(e)          Black Scholes Value” means the value of the unexercised Warrants subject to a Put Notice or a Call Notice at the time such Put Notice or Call Notice is delivered, which value is to be calculated using the Black Scholes Option Pricing Model obtained from the “OV” function on Bloomberg utilizing (i) an underlying price per share equal to the greater of (1) the highest Closing Sale Price of the Common Stock during the period beginning on the Trading Day immediately preceding the announcement of the applicable Fundamental Transaction (or the consummation of the applicable Fundamental Transaction, if earlier) and ending on the Trading Day that the Put Notice or Call Notice is delivered and (2) the sum of the price per share being offered in cash in the applicable Fundamental Transaction (if any) plus the Fair Market Value of the non-cash consideration being offered in the applicable Fundamental Transaction (if any), (ii) a strike price equal to the Exercise Price in effect on the date that the Put Notice or Call Notice is delivered, (iii) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the greater of (1) the remaining term of the Warrants as of the date that a Put Notice or Call Notice is delivered and (2) the remaining term of the Warrants as of the date of consummation of the applicable Fundamental Transaction, (iv) a zero cost of borrow and (v) an expected volatility equal to the 90 day volatility obtained from the “HVT” function on Bloomberg (determined utilizing a 365 day annualization factor) as of the Trading Day immediately following the earliest to occur of (A) the public disclosure of the applicable Fundamental Transaction, (B) the consummation of the applicable Fundamental Transaction and (C) in the case of the exercise of a Put Right, the date on which the applicable Holder was first notified by the Company in writing of the execution and delivery of a definitive agreement with respect to the applicable Fundamental Transaction.

 

(f)           Bloomberg” means Bloomberg Financial Markets or, to the extent Bloomberg Financial Markets is not in existence as of any date of determination, an equivalent, reliable reporting service reasonably acceptable to the Super-Majority Holders and the Company.

 

(g)          Board” means the board of directors of the Company.

 

(h)          Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed.

 

(i)           Closing Date” means the date of this Agreement (such date being the date of the consummation of the transactions contemplated by the Loan Agreement).

 

(j)           Closing Sale Price” means, for any security as of any date, the last closing trade price for such security on the Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing trade price, then the last trade price, of such security prior to 4:00 p.m., New York time, as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market for such security, the last closing trade price of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last trade price of such security in the Over the Counter Bulletin Board (the “Bulletin Board”) for such security as reported by Bloomberg, or, if no last trade price is reported for such security by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market makers for such security as reported in the “pink sheets” (or any successor) by the OTC Markets Group, Inc. If the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Sale Price shall be the fair market value for such security as determined by an independent, reputable appraiser selected in good faith by the Board, notice of whose selection shall be provided in writing to each Holder; provided, however, that if the Majority Holders object in writing to such selection within ten (10) Business Days after the Company gives written notice thereof to each Holder, the appraiser shall be selected jointly by the Company and the Majority Holders. The fees and expenses of such appraiser shall be paid by the Company. All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during the applicable calculation period.

 

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(k)          Commission” means the Securities and Exchange Commission, or any governmental or regulatory authority succeeding to any of its principal functions.

 

(l)           Common Stock” means (i) the Company’s shares of common stock, $0.001 par value per share, and (ii) any capital stock into which such common stock shall have been changed or any share capital resulting from a reclassification of such common stock.

 

(m)         Common Stock Equivalent” means any security or obligation which is by its terms convertible or exchangeable into shares of Common Stock or another Common Stock Equivalent, and any option, warrant or other subscription or purchase right with respect to Common Stock.

 

(n)          Convertible Note Indenture” means that certain Indenture, dated as of November 1, 2021, by and between the Company and U.S. Bank National Association.

 

(o)          Convertible Securities” means any capital stock or other security (other than Options) that is at any time and under any circumstances, directly or indirectly, convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, any shares of Common Stock.

 

(p)          DTC” means The Depository Trust Company.

 

(q)          Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time.

 

(r)           Excluded Issuance” means the issuance or deemed issuance of (i) shares of Common Stock, Options or Convertible Securities issued or issuable to directors, officers, employees or consultants of the Company in connection with their service as directors of the Company, their employment by the Company or their retention as consultants by the Company pursuant to an equity compensation program or arrangement approved by the Board or the compensation committee of the Board; (ii) shares of Common Stock issued or issuable upon the conversion or exercise of Options or Convertible Securities issued prior to the Closing Date (including without limitation, the Existing Convertible Notes), provided that neither the conversion price or exercise price nor number of shares issuable under such Options or Convertible Securities is amended, modified or changed after the Closing Date other than pursuant to the provisions of such Options or Convertible Securities as they exist as of the Closing Date; (iii) shares of Common Stock issued or issuable pursuant to any event for which adjustment is made pursuant to Article V; (iv) shares of Common Stock, Options or Convertible Securities issued or issuable pursuant to and as consideration for (A) the acquisition of another corporation or other entity by the Company, by merger, purchase of stock or other equity interests, purchase of substantially all of the assets or other reorganization approved by the Board, or (B) an acquisition of assets from another corporation or other entity approved by the Board; (v) shares of Common Stock, Options or Convertible Securities issued or issuable as consideration in connection with a strategic transaction or joint venture approved by the Board or (vi) shares of Common Stock issued upon the exercise of the Warrants.

 

(s)          Existing Convertible Notes” means the 6.25% Convertible Senior Notes Due 2027 issued under the Convertible Note Indenture.

 

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(t)           Fair Market Value” means (i) in the case of cash, the amount of such cash, (ii) in the case of a security, the Market Price of such security, or (iii) in the case of any consideration other than cash or securities, the amount as agreed between the Company and the Majority Holders; or if the Company and the Majority Holders do not agree on such amount within fifteen (15) Business Days, the fair value of such consideration as determined in good faith by the Board, notice of which shall be provided in writing to each Holder; provided, however, that if the Majority Holders object in writing to the fair value as determined by the Board within ten (10) Business Days after the Company gives written notice thereof to each Holder, the Company shall engage an independent, reputable appraiser selected in good faith by the Board, notice of whose selection shall be provided in writing to each Holder, to determine the fair value of such consideration (provided, however, that if the Majority Holders object in writing to the appraiser selected by the Board within ten (10) Business Days after the Company gives written notice of the selection to each Holder, the appraiser shall be selected jointly by the Company and the Majority Holders). The determination of such appraiser shall be final and binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.

 

(u)          Form of Assignment” means a certificate in substantially the form attached hereto as Exhibit C accounting for the transfer of Warrants.

 

(v)          Fund” means any Person (other than a natural Person), fund, commingled investment vehicle or managed account that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans, bonds and similar extensions of credit in the ordinary course of its activities.

 

(w)         Fundamental Transaction” means any of the following transactions, whether effected directly or indirectly in one or a series of related transactions: (i) any merger or consolidation of the Company with or into another person, (ii) any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of the assets of the Company and its subsidiaries, (iii) the consummation of any purchase offer, tender offer or exchange offer (whether by the Company or another person) pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property, (iv) any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange by the Company pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property and (v) the consummation of a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off, merger or scheme of arrangement) with another person or group of persons; provided, however, only those transactions described in clauses (i), (iii), (iv) and (v) that result in (a) a person or group (as such term is used in Section 13(d) of the Exchange Act) becoming beneficial owners of a majority of the outstanding Common Stock or (b) the holders of the Company’s outstanding Common Stock as of immediately prior to the transaction (or series of related transactions) beneficially owning less than a majority by voting power of the outstanding shares of common stock of the surviving or successor entity as of immediately after the transaction, shall be considered a Fundamental Transaction for purposes of the Put Right and Call Right.

 

(x)          Governmental Authority” means any government of any nation or any federation, province or state or any other political subdivision thereof, any entity, authority or body exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including any governmental authority, agency, department, board, commission or instrumentality, or any political subdivision thereof, any court, tribunal or arbitrator, and any self-regulatory organization.

 

(y)         Initial Lenders” means the initial lenders identified in the Loan Agreement.

 

(z)          Initial Holder Representation Letter” means a representation letter substantially in the form attached hereto as Exhibit D.

 

(aa)        Lenders” means the lenders identified in the Loan Agreement.

 

(bb)       Majority Holders” means Holders representing more than 50% of the Warrants then outstanding.

 

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(cc)        Market Price” as of a particular date means: (i) if the security is then listed on the Nasdaq Capital Market or any other national securities exchange, the Closing Sale Price of one (1) share of such security on such exchange on the last Trading Day for such security prior to such date; (ii) if the security is then quoted on the Bulletin Board or any similar quotation system or association, the Closing Sale Price of one (1) share of such security on the Bulletin Board or such other quotation system or association on the last Trading Day for such security prior to the such date or, if no such Closing Sale Price is available, the average of the high bid and the low asked price quoted thereon on the last Trading Day for such security prior to such date; or (iii) if the security is not then listed on a national securities exchange or quoted on the Bulletin Board or such other quotation system or association, the fair value of one (1) share of such security as of such date, as agreed between the Company and the Majority Holders; provided, that, if the Company and the Majority Holders do not agree upon such fair value within fifteen (15) Business Days, the Market Price shall be the fair value of one (1) share of such security as determined in good faith by the Board, notice of which shall be provided in writing to each Holder; provided, however, that if the Majority Holders object in writing to the fair value as determined by the Board within ten (10) Business Days after the Company gives written notice thereof to each Holder, the Company shall engage an independent, reputable appraiser selected in good faith by the Board, notice of whose selection shall be provided in writing to each Holder, to determine the fair value of one (1) share of such security (provided, however, that if the Majority Holders object in writing to the appraiser selected by the Board within ten (10) Business Days after the Company gives written notice of the selection to each Holder, the appraiser shall be selected jointly by the Company and the Majority Holders). The determination of such appraiser shall be final and binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.

 

(dd)       Nasdaq” means The NASDAQ Capital Market.

 

(ee)        New Warrant Certificate” means a new Warrant Certificate issued in accordance with the terms of this Agreement and in substantially the form attached hereto as Exhibit A.

 

(ff)         Notice of Exercise” means the exercise form for the election to exercise the Warrants in substantially the form attached hereto as Exhibit B.

 

(gg)       Options” means any rights, warrants or options to subscribe for, convert or exchange into, or purchase or acquire shares of Common Stock or Convertible Securities.

 

(hh)       Person” means and includes any individual, any partnership, any corporation, any business trust, any joint stock company, any limited liability company, any unincorporated association or any other entity and any Governmental Authority.

 

(ii)          Principal Market” means, with respect to the Common Stock, the Nasdaq and, with respect to any other security, the principal securities exchange or trading market for such other security.

 

(jj)          Securities Act” means the Securities Act of 1933, as amended from time to time.

 

(kk)        Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Primary Market with respect to the Common Stock as in effect on the date of delivery of the Notice of Exercise.

 

(ll)          Super-Majority Holders” means the Holders representing at least sixty-six and two-thirds percent (66 2/3%) of the Warrants then outstanding.

 

(mm)      Trading Day” means, with respect to any security, any day on which such security is traded on the Principal Market, or, if the Principal Market is not the principal trading market for such security, then on the principal securities exchange or securities market on which such security is then traded, provided that “Trading Day” shall not include any day that such security is suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York time) unless such day is otherwise designated as a Trading Day in writing by the applicable Holder.

 

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(nn)       Transferee Representation Letter” means a representation letter substantially in the form attached hereto as Exhibit E.

 

(oo)       VWAP” means, with respect to any security, as of any day or period of days (as the case may be), the volume-weighted average sale price on the Principal Market as reported by, or based upon data reported by, Bloomberg or, if the Principal Market is not the principal trading market for such security, the volume weighted average sale price of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg or, if no volume-weighted average sale price is reported for such security by Bloomberg, then the last closing trade price of such security as reported by Bloomberg, or, if no last closing trade price is reported for such security by Bloomberg, the average of the bid prices of any market makers for such security that are listed in the over the counter market by the Financial Industry Regulatory Authority, Inc. or on the Bulletin Board (or any successor) or in the OTCQB market or “pink sheets” (or any successor) by the OTC Markets Group, Inc.; provided, however, that if VWAP cannot be calculated for such security on such date in the manner provided above, the VWAP shall be the fair market value of such security as agreed between the Company and the Majority Holders or, solely for purposes of Section 4.3(b), the exercising Holder or, if the Company and the Majority Holders or exercising Holder, as applicable, do not agree upon such fair market value within fifteen (15) Business Days, the fair market value of such security as determined in good faith by the Board, notice of which shall be provided in writing to each Holder or the exercising Holder, as applicable; provided, however, that if the Majority Holders or the exercising Holder, as applicable, object in writing to the fair market value as determined by the Board within ten (10) Business Days after the Company gives written notice thereof to each Holder or the exercising Holder, as applicable, the Company shall engage an independent, reputable appraiser selected in good faith by the Board, notice of whose selection shall be provided in writing to each Holder or the exercising Holder, as applicable, to determine the fair market value of such security (provided, however, that if the Majority Holders or the exercising Holder, as applicable, object in writing to the appraiser selected by the Board within ten (10) Business Days after the Company gives written notice of the selection to each Holder or the exercising Holder, as applicable, the appraiser shall be selected jointly by the Company and the Majority Holders or the exercising Holder, as applicable). The determination of such appraiser shall be final and binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.

 

(pp)       Warrant Certificate” means a certificate in substantially the form attached hereto as Exhibit A representing such number of Warrants as is indicated on the face thereof. A reference to any Warrant Certificates hereunder shall also include New Warrant Certificates.

 

 

Section 1.2            Rules of Construction. The singular form of any word used herein, including the terms defined in Section 1.1 hereof, shall include the plural, and vice versa. The use herein of a word of any gender shall include correlative words of all genders. Unless otherwise specified, references to Articles, Sections and other subdivisions of this Agreement are to the designated Articles, Sections and other subdivision of this Agreement as originally executed. The words “hereof,” “herein,” “hereunder” and words of similar import refer to this Agreement as a whole. References to “$” are to dollars in lawful currency of the United States of America.

 

ARTICLE II
APPOINTMENT OF WARRANT AGENT

 

Section 2.1           Appointment. The Company hereby appoints the Warrant Agent to act as agent for the Company in accordance with the express terms and subject to the conditions set forth in this Agreement (and no implied terms or conditions), and the Warrant Agent hereby accepts such appointment and agrees to perform the same in accordance with the express terms and subject to the conditions set forth in this Agreement.

 

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ARTICLE III
WARRANTS

 

Section 3.1           Issuance of Warrants. On the Closing Date (i) the Company shall issue Warrants entitling each Initial Lender (or, subject to applicable securities laws, an Affiliate or Approved Fund of such Initial Lender) to purchase the amount of Warrant Shares set forth opposite the name of such Initial Lender (or such Initial Lender’s Affiliate or Approved Fund) on Schedule A attached hereto, which in the aggregate entitle the Holders to purchase 2,750,000 Warrant Shares (subject to adjustment from time to time as described herein) and (ii) each Initial Lender (or such Affiliate or Approved Fund of such Initial Lender) shall (as a condition of receipt of the applicable Warrants) execute and deliver to the Company an Initial Holder Representation Letter. The Warrants shall be dated as of the Closing Date and, subject to the terms hereof, shall evidence the only Warrants issued or outstanding under this Agreement as of the Closing Date.

 

Section 3.2           Form and Execution of Warrants. The Warrants shall reflect the provisions set forth on Exhibit A and shall be issued by book-entry registration and reflected by the Warrant Agent on the Warrant Register; provided, however, that, at the request of any Holder, the Warrants held by such Holder shall be represented by a definitive Warrant Certificate in substantially the form attached hereto as Exhibit A (except that a Warrant need not bear any legend appearing at the top of such form from and after such time as all the restrictions to which such legend relates no longer apply), the provisions of which are incorporated herein. Any Warrant Certificates shall be executed on behalf of the Company by its Chief Executive Officer, its President, its Chief Financial Officer or its Treasurer, either manually or by electronic signature, and which may be imprinted or otherwise reproduced on the Warrant Certificates. Warrant Certificates shall be countersigned by the Warrant Agent, either manually or by electronic signature, and in any case shall not be valid for any purpose unless so countersigned. Such signature by the Warrant Agent upon any Warrant Certificate executed by the Company shall be conclusive evidence that such Warrant Certificate so countersigned has been duly issued hereunder. In case any officer of the Company whose signature shall have been placed upon any of the Warrant Certificates shall cease to be such officer of the Company before issue and delivery thereof, such Warrant Certificates may, nevertheless, be issued, countersigned by the Warrant Agent and delivered with the same force and effect as though such person had not ceased to be such officer of the Company, and any Warrant Certificate may be signed on behalf of the Company by such person as, at the actual date of the execution of such Warrant Certificate, shall be a proper officer of the Company, although at the date of the execution of this Agreement any such person was not such officer. Any statements reflecting ownership of Warrants issued in book-entry registration shall conspicuously bear, or shall be deemed to conspicuously bear (even if such statement does not actually bear such legend), a legend substantially in the form of the legend appearing on the form attached as Exhibit A.

 

Section 3.3           Warrant Register. The Warrant Agent shall maintain books (the “Warrant Register”) for the registration of the original issuances, exercises, exchanges and cancellations of the Warrants, as well as all transfers in accordance with Section 6.3 below. Upon the initial issuance of the Warrants, the Warrant Agent shall issue and register the Warrants in the names of the respective holders thereof in such denominations and otherwise in accordance with instructions delivered to the Warrant Agent by the Company. The Company and the Warrant Agent may deem and treat the registered Holder of each Warrant as the absolute owner of the Warrants represented thereby for the purpose of any exercise thereof or any distribution to such Holder, and for all other purposes, absent actual notice to the contrary.

 

ARTICLE IV
TERMS AND EXERCISE OF WARRANTS

 

Section 4.1            Exercise Price. Each Warrant shall entitle the registered Holder thereof, subject to the provisions of this Agreement and applicable law, the right to purchase from the Company one share of Common Stock (subject to adjustment from time to time as provided in Article V hereof), at a price of $4.50 per share (subject to adjustment from time to time as provided in Article V, the “Exercise Price”).

 

Section 4.2            Exercise Period. The Warrants may be exercised by the Holder thereof, in whole or in part (but not as to a fractional Warrant or a fractional share of Common Stock), at any time and from time to time after the Closing Date and prior to 5:00 P.M., New York time on April 1, 2027 (such period, the “Exercise Period”). To the extent that a Warrant or portion thereof is not exercised prior to the expiration of the Exercise Period, such Warrant shall be automatically cancelled and will become permanently and irrevocably null and void with no action by any Person, and with no further rights hereunder or under any Warrant Certificate representing such Warrants, upon such expiration and the Holder of such Warrant shall not be entitled to any distribution, payment or other amount in respect of such Warrant.

 

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Section 4.3            Exercise of Warrants.

 

(a)          Subject to the terms and conditions of this Agreement, the Holder of any Warrants may exercise, in whole or in part, such Holder’s right to purchase the Warrant Shares by completing, executing and delivering a physical copy or .pdf copy via email of a Notice of Exercise to the Company with a copy to the Warrant Agent in accordance with Section 8.2. The exercising Holder shall be required to physically surrender the Warrant Certificate (if any) to the Warrant Agent in connection with any exercise thereof. Except to the extent that the cashless exercise procedure specified in Section 4.3(b) is specified in the applicable Notice of Exercise, within the earlier of (i) two (2) Trading Days or (ii) the number of Trading Days comprising the Standard Settlement Period following the date on which the Company received the Notice of Exercise, the applicable Holder shall pay to the Warrant Agent on behalf of the Company an amount equal to the applicable Exercise Price multiplied by the number of Warrant Shares as to which the Warrants are being exercised (the “Aggregate Exercise Price”) in United States dollars by personal, certified or official bank check payable to the Warrant Agent or by wire transfer to an account specified in writing by the Warrant Agent to such Holder. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise be required unless required by the Warrant Agent in the case of an issuance of Warrant Shares to a Person who is not the registered Holder of the Warrant being exercised. Partial exercises of a Warrant resulting in purchases of a portion of the total number of Warrant Shares available thereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable thereunder in an amount equal to the applicable number of Warrant Shares purchased. Following the exercise by a Holder of any of its Warrants, the Warrant Agent shall reduce the Warrant Register and such Holder’s position by the number of Warrants duly exercised. As stated above, if a Warrant Certificate is surrendered by the exercising Holder and such Warrant Certificate covers a larger number of Warrants than the number exercised, the Warrant Agent shall deliver to the exercising Holder a New Warrant Certificate for the unexercised portion of such Warrant Certificate. Except as otherwise set forth herein, any exercise of Warrants pursuant to the terms of this Agreement shall be irrevocable and shall constitute a binding agreement between the Holder and the Company, enforceable in accordance with the terms of the Warrants and this Agreement. Any Warrant Certificate surrendered upon exercise to the Company or the Warrant Agent by a Holder shall be promptly cancelled by the Company.

 

(b)          The Holder of any Warrants may, at such Holder’s option, elect to exercise Warrants, in whole or in part, by means of a “cashless exercise” in which such Holder shall be entitled to receive a number of Warrant Shares determined pursuant to the following formula:

 

X = (A – B) * C / A

 

where:

 

(A) =       the VWAP during the five (5) consecutive Trading Day period ending on the Trading Day immediately preceding the date the applicable Notice of Exercise is delivered to the Company pursuant to Section 4.3(a) hereof;

 

(B) =      the Exercise Price at the time of such exercise;

 

(C) = the number of Warrant Shares issuable upon the exercise of the applicable Warrants being exercised, if such exercise were by means of a cash exercise rather than a cashless exercise; and

 

(X) =       the number of Warrant Shares to be issued to such Holder.

 

If the foregoing calculation results in a negative number, then no Warrant Shares shall be issuable via a cashless exercise. If Warrant Shares are issued in such a cashless exercise the Warrant Shares shall take on the characteristics of the Warrants being exercised, and the holding period of the Warrant Shares being issued may be tacked on to the holding period of the applicable Warrants, to the extent permitted in accordance with Section 3(a)(9) of the Securities Act. The Company agrees not to take any position contrary to this Section 4.3(b).

 

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Section 4.4            Issuance of Common Stock. On or before the first Business Day following the date on which the Company has received the properly completed and duly executed Notice of Exercise, the Company shall transmit by email a confirmation of receipt of the Notice of Exercise to the applicable Holder and the Warrant Agent. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Warrant Agent to such Holder by crediting such Holder’s (or its specified designee’s) balance account with DTC through its Deposit or Withdrawal at Custodian (“DWAC”) system, if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by such Holder or (B) the Warrant Shares are eligible for resale by such Holder without volume or manner-of-sale limitations pursuant to Rule 144 (assuming cashless exercise of the applicable Warrants), and otherwise by physical delivery of a certificate, registered in the Company’s share register in the name of such Holder or its specified designee, for the number of Warrant Shares to which such Holder is entitled pursuant to such exercise to the address specified by such Holder in the Notice of Exercise by the date that is the earliest of (i) two (2) Trading Days after the delivery to the Company of the Notice of Exercise and the Exercise Price, if applicable, and (ii) the Standard Settlement Period after the delivery to the Company of the Notice of Exercise and the Exercise Price, if applicable (such date, the “Warrant Share Delivery Date”). Upon delivery of the properly completed and duly executed Notice of Exercise and, if applicable, payment of the Aggregate Exercise Price in respect thereof, such Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which the applicable Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares. If the Company fails to cause the Warrant Agent to transmit to such Holder such Warrant Shares on or before the Warrant Share Delivery Date, then such Holder will have the right to rescind such exercise. The Company reserves the right to reject any and all Notices of Exercise that it reasonably determines are not in proper form, provided that the Company shall promptly notify the exercising Holder of any such rejection. The Company reserves the right to waive any of the conditions to any particular exercise of Warrants or any defects in the Notice(s) of Exercise with respect to any particular exercise of Warrants.

 

Section 4.5            Reservation of Shares. During the Exercise Period, the Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock solely for the purpose of issuance upon the exercise of the Warrants, a number of shares of Common Stock equal to the aggregate Warrant Shares issuable upon the exercise of all outstanding Warrants. The Company shall take such actions as may be reasonably necessary to assure that all such shares of Common Stock may be so issued without violating the Company’s governing documents, any agreements to which the Company is a party, any requirements of any national securities exchange upon which shares of Common Stock may be listed or any applicable laws. The Company covenants that it will take such actions as may be reasonably necessary or appropriate in order that all Warrant Shares issued upon exercise of the Warrants will, upon issuance in accordance with the terms of this Agreement, be fully paid and non-assessable and free from any and all (i) security interests created by or imposed upon the Company and (ii) taxes, liens and charges with respect to the issuance thereof.

 

Section 4.6           Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. If, the Company and Warrant Agent fail, for any reason or no reason, to deliver or cause to be delivered to the Holder the Warrant Shares in accordance with the provisions of Section 4.4 above on or before the Warrant Share Delivery Date, and if on or after the Warrant Share Delivery Date such Holder purchases (in an open market transaction or otherwise) or such Holder’s brokerage firm otherwise purchases shares of Common Stock to deliver in satisfaction of a sale by such Holder of shares of Common Stock which such Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall, within three (3) Business Days after such Holder’s request and in such Holder’s sole discretion, either (i) pay cash to such Holder in an amount equal to such Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased, at which point the Company’s obligation to deliver such Warrant Shares shall terminate, or (ii) promptly honor its obligation to deliver to such Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder and pay cash to such Holder in an amount equal to the excess, if any, of the such Holder’s total purchase price (including brokerage commissions, if any) for such shares of Common Stock so purchased over the product of (x) such number of shares of Common Stock multiplied by (y) the price at which the sell order giving rise to the Buy-In obligation was executed. Such Holder shall provide the Company with written or email notice indicating the amount payable to such Holder in respect of the Buy-In and, upon request of the Company, evidence supporting the calculation of such amount. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity, including, without limitation, a decree of specific performance and/or injunctive relief with respect to the failure to timely deliver shares of Common Stock upon exercise of a Warrant as required pursuant to the terms hereof.

 

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Section 4.7            Fractional Shares. No fractional shares of Common Stock or scrip representing fractional shares of Common Stock shall be issued upon the exercise of a Warrant. As to any fraction of a share of Common Stock which a Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share of Common Stock. The Company shall provide funding to cover cash payment in lieu of fractional shares of Common Stock. The Warrant Agent shall have no obligation to make cash payments in lieu of fractional shares of Common Stock unless the Company shall have provided the necessary funds to pay in full all amounts due and payable with respect thereto. Each Holder, by its acceptance of Warrants, expressly waives its right to any fraction of a share of Common Stock upon its exercise of such Warrant(s).

 

Section 4.8            Close of Books. The Company shall not close its books against the transfer of any Warrants or any Warrant Shares in any manner which interferes with the timely exercise of such Warrants.

 

Section 4.9            Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to such Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company. The Company shall pay all fees required for same-day processing of any Notice of Exercise and all fees to the DTC (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares. Notwithstanding the foregoing, in connection with the exercise of any Warrants, the Company shall not be required to pay any tax or other charge imposed in respect of any transfer involved in the Company’s issuance and delivery of shares of Common Stock (including certificates therefor) (or any payment of cash or other property in lieu of such shares) to any recipient other than the Holder of the Warrants being exercised (such tax or other charge, a “Non-Registered Holder Tax”), and in case of any such Non-Registered Holder Tax, the Warrant Agent and the Company shall not be required to issue or deliver any such shares (or cash or other property in lieu of such shares) until (a) such Non-Registered Holder Tax has been paid or an amount sufficient for the payment thereof has been delivered to the Warrant Agent or the Company or (b) it has been established to the Company’s and the Warrant Agent’s satisfaction that any such Non-Registered Holder Tax that is or may become due has been paid. The Warrant Agent shall not have any duty or obligation to take any action under any section of this Agreement that requires the payment of Non-Registered Holder Taxes, unless and until the Warrant Agent is satisfied that all such Non-Registered Holder Taxes have been paid.

 

Section 4.10          Investment Unit Allocation. The Company agrees, and by acceptance of any Warrant, each initial Holder is deemed to have agreed, (i) that the Term Loan (as defined under the Loan Agreement) disbursed to the Borrower on the Closing Date and the Warrants issued on the Closing Date, taken together, comprise an “investment unit” for purposes of Section 1273(c)(2) of the Internal Revenue Code, (ii) to treat the investment unit as issued by the Company for U.S. federal income tax purposes and (iii) to allocate the issue price of such investment unit among the Term Loan and the Warrants in proportion to their fair market value as of the Closing Date, in accordance with Treasury Regulations Section 1.1273-2(h). The Lenders shall determine in good faith the fair market value of the Warrants for purposes of allocating the issue price of the investment unit between the Term Loan and the Warrants, as described in clause (iii) above, notice of which shall be provided in writing to the Company; provided, however, that if the Company objects in writing to the fair market value as determined by the Lenders within ten (10) Business Days after the Lenders give written notice thereof, the Company shall engage an independent, reputable appraiser selected jointly by the Company and the Lenders, to determine such fair market value. The fees and expenses of such appraiser shall be paid by the Company. Unless otherwise required by applicable law, the Company agrees, and, by acceptance of any Warrant, each initial Holder is deemed to have agreed, to file all tax returns in a manner consistent with this Section 4.10.

 

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Section 4.11          Holder’s Exercise Limitations. Unless otherwise agreed in writing by both the Company and the Holder, the Company shall not effectuate any exercise of a Warrant, and a Holder shall not have any right to exercise a Warrant, to the extent that such exercise would result in such Holder (together with such Holder’s Affiliates and any other Persons acting as a group together with such Holder or any of such Holder’s Affiliates, in each case, to the extent that such Affiliates and persons acting as a group are required to aggregate their beneficial ownership of Common Stock for purposes of Section 13(d) of the Exchange Act (“Attribution Parties”)), beneficially owning more than the percentage of Common Stock outstanding set forth on Schedule A attached hereto opposite the name of such Holder (or for the Affiliate of such Holder that elected such Holder receive Warrants) as its “Initial Beneficial Ownership Limitation” (subject to adjustment under this Section 4.11, such Holder’s “Beneficial Ownership Limitation”). For purposes of this Section 4.11, beneficial ownership and the determination of any group status shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder (it being acknowledged and understood by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and that the Holder is solely responsible for the preparation of any schedules required to be filed in accordance therewith). To the extent that the limitations contained in this Section 4.11 apply to a Holder, the determination of whether any Warrants are exercisable, and the portion thereof that is exercisable in relation to other securities owned by such Holder and such Holder’s Attribution Parties, shall be in the discretion of the Holder and the submission of a Notice of Exercise shall be deemed to be a determination by such Holder in relation to other securities owned by such Holder and such Holder’s Attribution Parties that the Warrants set forth in the applicable Notice of Exercise are exercisable. Neither the Company, nor the Warrant Agent shall be required to independently confirm whether any exercise of any Warrant by a Holder would result in the violation by such Holder of its applicable Beneficial Ownership Limitation, and instead the Company and the Warrant Agent shall be able to rely for all purposes on a Notice of Exercise as such Holder’s determination and confirmation that such exercise set forth therein does not result in such Holder exceeding its Beneficial Ownership Limitation. Upon the written request of a Holder, the Company shall within two (2) Business Days confirm in writing to such Holder the number of shares of Common Stock then outstanding. A Holder, upon notice to the Company, may increase or decrease its Beneficial Ownership Limitation, provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the Common Stock outstanding and the provisions of this Section 4.11 shall continue to apply. Any change in the Beneficial Ownership Limitation will not be effective until the sixty-first (61st) day after such notice is delivered to the Company. The limitations contained in this paragraph shall apply to a successor holder of any Warrants which successor holder shall be subject to the same Beneficial Ownership Limitation as its transferor unless and until changed in accordance with this Section 4.11.

 

Section 4.12          Warrant Shares Legends. Unless the Warrants or the Warrant Shares are sold pursuant to an effective registration statement under the Securities Act, the certificates representing or statements evidencing the Warrant Shares will bear a conspicuous legend in substantially the form set forth below:

 

“THIS SECURITY HAS NOT BEEN REGISTERED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE AND MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.”

 

Section 4.13          Cap on Shares of Common Stock. Notwithstanding anything herein to the contrary, the maximum number of shares of Warrant Shares eligible to be issued in connection with the exercise of the Warrants upon adjustment in accordance Sections 5.3, 5.4 or 5.5 hereof, shall not exceed (i) 19.9% of the outstanding shares of Common Stock immediately prior to the initial entry into this Agreement, or (ii) 19.9% of the combined voting power of the then outstanding voting securities of the Company immediately prior to the initial entry into this Agreement (the “Share Cap”), unless the Company has previously obtained the approval of the Company’s shareholders under applicable rules and requirements of the NASDAQ Capital Market for the issuance of shares of Common Stock in excess of the Share Cap (the “Shareholder Approval”), prior to issuing any Excess Shares (as defined below). In the event the number of shares of Common Stock to be issued to Holders hereunder in connection with the exercise of the Warrants exceeds the Share Cap, then the Company shall, in lieu of issuing such shares in excess of the Share Cap, pay the Holders the cash value of such shares of Common Stock which exceed the Share Cap (the “Excess Shares”), upon exercise of the applicable Warrants by the Holders thereof, with the value of each such Excess Share being the Fair Market Value thereof. For the sake of clarity, in the event Shareholder Approval has been received, or there is no limit on the number of Warrant Shares which may be issued under applicable Nasdaq Stock Market rules pursuant to the terms of this Warrant Agreement, there shall be no Excess Shares, this Section 4.13 shall have no effect, and the requirement to pay cash for any Excess Shares shall apply only if, and to the extent that, the exercise of the Warrants would result in a number of Warrant Shares being issued in excess of the Share Cap. To the extent that any concurrent exercise of Warrants by multiple Holders results in the Share Cap being exceeded, the maximum number of Warrant Shares issuable without exceeding the Share Cap shall be issued pro rata to each exercising Holder. Nothing herein shall prevent or limit the Company’s ability to issue a number of Warrant Shares up to, but without exceeding, the Share Cap.

 

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ARTICLE V
ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES

 

Section 5.1            General. In order to prevent dilution of the rights granted under the Warrants, the Exercise Price and number of shares of Common Stock issuable upon exercise of each Warrant shall be subject to adjustment from time to time as provided in this Article V; provided, that if more than one subsection of this Article V is applicable to a single event, the subsection shall be applied that produces the largest adjustment in favor of the Holders and no single event shall cause an adjustment under more than one subsection of this Article V so as to result in duplication.

 

Section 5.2            Stock Dividends and Splits. If the Company, at any time while a Warrant is outstanding: (a) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of a Warrant), (b) subdivides outstanding shares of Common Stock into a larger number of shares, (c) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (d) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case (i) the Exercise Price of each outstanding Warrant shall be increased or decreased to an amount determined by multiplying (x) the Exercise Price in effect immediately prior to such event by (y) a fraction, the numerator of which is the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and the denominator of which is the number of shares of Common Stock outstanding immediately after such event and (ii) the number of Warrant Shares issuable upon exercise of each outstanding Warrant shall be proportionately adjusted such that the Aggregate Warrant Exercise Price shall remain unchanged. Any adjustment made pursuant to this Section 5.2 shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification. In the event that such dividend or distribution is not so made, the Exercise Price and the number of Warrant Shares issuable upon exercise of each outstanding Warrant shall be readjusted, effective as of the date when the Board determines not to make such dividend or distribution, to the Exercise Price that would then be in effect and the number of Warrant Shares issuable upon exercise of each outstanding Warrant if such record date had not been fixed.

 

Section 5.3            Tender or Exchange Offer. If the Company, at any time while a Warrant is outstanding, makes any payment or distribution in respect of any tender offer or exchange offer for shares of Common Stock where the Fair Market Value of the consideration per share of Common Stock when paid or distributed by the Company exceeds the Market Price of a share of Common Stock actually acquired in such tender offer or exchange offer as of the Business Day immediately preceding the first public announcement of the tender offer or exchange offer (the aggregate excess amount for all Common Stock acquired in such tender offer or exchange offer, the “Excess Tender Amount”), then, and in each such case, (i) the Exercise Price of each outstanding Warrant shall be decreased to an amount determined by multiplying (x) the Exercise Price in effect immediately prior to the close of business on the expiration date of the tender offer or exchange offer by (y) a fraction, (1) the numerator of which is the positive difference of (A) the Market Price of a share of Common Stock on the Business Day immediately preceding the first public announcement of the tender offer or exchange offer minus (B) the quotient determined by dividing (I) the Excess Tender Amount by (II) the number of shares of Common Stock outstanding immediately after the expiration of the tender offer or exchange offer (after giving effect to the purchase or exchange of Common Stock) and (2) the denominator of which is the Market Price of a share of Common Stock on the Business Day immediately preceding the first public announcement of the tender offer or exchange offer and (ii) the number of Warrant Shares issuable upon exercise of each outstanding Warrant shall be proportionately adjusted such that the Aggregate Warrant Exercise Price shall remain unchanged. Such adjustment shall become effective immediately after any such exchange offer or tender offer is consummated.

 

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Section 5.4            Adjustment of Exercise Price Upon Issuance of Shares of Common Stock. If the Company, at any time while a Warrant is outstanding, in each case, other than in an Excluded Issuance, grants, issues or sells (or enters into any agreement to grant, issue or sell), or in accordance with this Section 5.4 is deemed to have granted, issued or sold, any shares of Common Stock (including the issuance or sale of shares of Common Stock owned or held by or for the account of the Company) for a consideration per share less than a price equal to the Exercise Price in effect immediately prior to such granting, issuance or sale or deemed granting, issuance or sale (such Exercise Price then in effect, the “Applicable Price” and such issuance, a “Dilutive Issuance”), then immediately after such Dilutive Issuance, the Exercise Price of each outstanding Warrant shall be reduced to an amount equal to the quotient determined by dividing (1) the sum of (I) the product of (x) the Applicable Price multiplied by (y) the number of shares of Common Stock outstanding immediately prior to such Dilutive Issuance plus (II) the aggregate consideration, if any, received by the Company upon such Dilutive Issuance, by (2) the number of shares of Common Stock outstanding immediately after such Dilutive Issuance. For all purposes of the foregoing (including, without limitation, determining the adjusted Exercise Price under this Section 5.4), the following shall be applicable:

 

(a)          Issuance of Options. If the Company shall, at any time or from time to time after the Closing Date, in any manner (other than in an Excluded Issuance) grant, issue or sell or enter into any agreement to grant, issue or sell (whether directly or by assumption in a merger or otherwise) any Options, whether or not such Options or the right to convert or exchange any Convertible Securities issuable upon the exercise of such Options are immediately exercisable, and the price per share (determined as provided in this paragraph and in Section 5.4(d)) for which Common Stock is issuable upon the exercise of such Options or upon the conversion or exchange of Convertible Securities issuable upon the exercise of such Options is less than the Applicable Price, then the total maximum number of shares of Common Stock issuable upon the exercise of such Options or upon conversion or exchange of the total maximum amount of Convertible Securities issuable upon the exercise of such Options shall be deemed to have been issued as of the date of the granting, issuance or sale (or the date of execution of such agreement to grant, issue or sell, as applicable) of such Options (and thereafter shall be deemed to be outstanding for purposes of adjusting the Exercise Price under this Section 5.4), at a price per share equal to the quotient obtained by dividing (A) the sum (which sum shall constitute the applicable consideration received for purposes of this Section 5.4) of (x) the total amount, if any, received or receivable by the Company as consideration for the granting or sale of all such Options, plus (y) the minimum aggregate amount of additional consideration payable to the Company upon the exercise of all such Options, plus (z), in the case of such Options which relate to Convertible Securities, the minimum aggregate amount of additional consideration, if any, payable to the Company upon the issuance or sale of all such Convertible Securities and the conversion or exchange of all such Convertible Securities, by (B) the total maximum number of shares of Common Stock issuable upon the exercise of all such Options or upon the conversion or exchange of all Convertible Securities issuable upon the exercise of all such Options. Except as otherwise provided in Section 5.4(c), no further adjustment of the Exercise Price shall be made upon the actual issuance of Common Stock or of Convertible Securities upon exercise of such Options or upon the actual issuance of Common Stock upon conversion or exchange of Convertible Securities issuable upon exercise of such Options. Simultaneously with any adjustment to the Exercise Price of the Warrants pursuant this Section 5.4(a), the number of Warrant Shares issuable upon exercise of each outstanding Warrant shall be proportionately adjusted such that the Aggregate Warrant Exercise Price shall remain unchanged.

 

(b)          Issuance of Convertible Securities. If the Company shall, at any time or from time to time after the Closing Date, in any manner (other than in an Excluded Issuance) grant, issue or sell or enter into any agreement to grant, issue or sell (whether directly or by assumption in a merger or otherwise) any Convertible Securities, whether or not the right to convert or exchange any such Convertible Securities is immediately exercisable, and the price per share (determined as provided in this paragraph and in Section 5.4(d)) for which Common Stock is issuable upon the conversion or exchange of such Convertible Securities is less than the Applicable Price, then the total maximum number of shares of Common Stock issuable upon conversion or exchange of the total maximum amount of such Convertible Securities shall be deemed to have been issued as of the date of the granting, issuance or sale (or the date of execution of such agreement to grant, issue or sell, as applicable) of such Convertible Securities (and thereafter shall be deemed to be outstanding for purposes of adjusting the Exercise Price pursuant to this Section 5.4), at a price per share equal to the quotient obtained by dividing (A) the sum (which sum shall constitute the applicable consideration received for purposes of this Section 5.4) of (x) the total amount, if any, received or receivable by the Company as consideration for the granting or sale of such Convertible Securities, plus (y) the minimum aggregate amount of additional consideration, if any, payable to the Company upon the conversion or exchange of all such Convertible Securities, by (B) the total maximum number of shares of Common Stock issuable upon the conversion or exchange of all such Convertible Securities. Except as otherwise provided in Section 5.4(c), no further adjustment of the Exercise Price shall be made upon the actual issuance of Common Stock upon conversion or exchange of such Convertible Securities or the granting, issuance or sale of Convertible Securities upon exercise of any Options to purchase any such Convertible Securities for which adjustments of the Exercise Price have been made pursuant to the other provisions of this Section 5.4. Simultaneously with any adjustment to the Exercise Price of the Warrants pursuant this Section 5.4(b), the number of Warrant Shares issuable upon exercise of each outstanding Warrant shall be proportionately adjusted such that the Aggregate Warrant Exercise Price shall remain unchanged.

 

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(c)          Change in Option Price or Rate of Conversion. If the purchase or exercise price provided for in any Options, the consideration, if any, payable upon the conversion, exercise or exchange of any Convertible Securities, or the rate at which any Convertible Securities are convertible into or exercisable or exchangeable for shares of Common Stock increases or decreases at any time (other than (i) proportional changes in conversion or exercise prices, as applicable, in connection with an event referred to in Section 5.2, (ii) changes in conversion or exercise prices, as applicable, resulting from anti-dilution provisions contained in the instruments governing such securities which are in effect as of the Closing Date, and/or (iii) changes in conversion or exercise prices, as applicable, in respect of securities issued in an Excluded Issuance), then the Exercise Price then in effect shall be adjusted to an amount equal to the Exercise Price that would have been in effect had such Options or Convertible Securities provided for such increased or decreased purchase price, additional consideration or increased or decreased conversion rate, as the case may be, at the time initially granted, issued or sold. For purposes of this Section 5.4(c), if the terms of any Option or Convertible Security (including, without limitation, any Option or Convertible Security that was outstanding as of the date hereof) are increased or decreased in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such increase or decrease. Simultaneously with any adjustment to the Exercise Price of the Warrants pursuant this Section 5.4(c), the number of Warrant Shares issuable upon exercise of each outstanding Warrant shall be proportionately adjusted such that the Aggregate Warrant Exercise Price shall remain unchanged. No adjustment pursuant to this Section 5.4(c) shall be made if such adjustment would result in an increase of the Exercise Price of the Warrants or a decrease in the number of Warrant Shares.

 

(d)          Calculation of Consideration Received. If any Option, Convertible Security or Adjustment Right is issued in connection with the issuance or sale or deemed issuance or sale of any other securities of the Company, together comprising one integrated transaction, the aggregate amount of consideration therefor shall be deemed to be the Fair Market Value of such portion of the aggregate consideration received by the Company in such transaction as is attributable to such Options, Convertible Securities or Adjustment Rights, which portion shall be allocated based on the relative Fair Market Value of the applicable Options, Convertible Securities or Adjustment Rights and the other securities issued or sold or deemed to be issued or sold in connection therewith. If any shares of Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to be the net amount of consideration received by the Company therefor. If any shares of Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of such consideration received by the Company will be the Fair Market Value of such consideration, except where such consideration consists of publicly traded securities, in which case the amount of consideration received by the Company for such securities will be the VWAP of such securities during the five (5) consecutive Trading Day period applicable to such securities ending on the date immediately preceding the date of receipt. If any shares of Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed to be the Fair Market Value of such portion of the net assets and business of the non-surviving entity as is attributable to such shares of Common Stock, Options or Convertible Securities, as the case may be.

 

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(e)          Record Date. If the Company takes a record of the holders of shares of Common Stock for the purpose of entitling them to (i) receive a dividend or other distribution payable in shares of Common Stock, Options or in Convertible Securities or (ii) to subscribe for or purchase shares of Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issuance or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase (as the case may be), provided, that if before the distribution to its holders of Common Stock the Company legally abandons its plan to pay or deliver such dividend, distribution, subscription or purchase rights and, to the extent such plan is publicly disclosed, announces the abandonment of such plan, then thereafter the adjustment previously made in respect thereof shall be rescinded and annulled.

 

(f)           Treatment of Terminated Options or Convertible Securities. Upon the occurrence of any event (other than any event that (i) constitutes or occurs in connection with a Fundamental Transaction or (ii) involves the Company making any payment or providing any consideration to the holder of such Option or Convertible Security) that results in (x) the lapse of any unexercised Option (or any portion thereof) prior to the scheduled expiration date thereof or (y) the early termination of a conversion or exchange right with respect to any unconverted or unexchanged Convertible Security (or portion thereof), in each case, for which any adjustment was made pursuant to this Section 5.4, the Exercise Price then in effect hereunder shall forthwith be changed pursuant to the provisions of this Section 5.4 to the Exercise Price which would have been in effect at the time of such lapse or early termination had such unexercised Option (or portion thereof) or unconverted or unexchanged Convertible Security (or portion thereof), to the extent outstanding immediately prior to such lapse or early termination, never been issued; provided, however, that no such adjustment of the Exercise Price under this Section 5.4(f) shall be made with respect to any unexercised Option (or portion thereof) or unconverted or unexchanged Convertible Security (or portion thereof) that lapses or is terminated more than one (1) calendar year after the date of issuance thereof.

 

Section 5.5            Pro Rata Distributions. If the Company, at any time while a Warrant is outstanding, shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock (other than Common Stock) or other securities, assets, property or Options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction, but excluding any distribution made upon the consummation of a Fundamental Transaction to the extent included in the Alternate Consideration) (a “Distribution”), then, in each such case, effective immediately after the record date mentioned above, (i) the Exercise Price of each outstanding Warrant shall be decreased to an amount determined by subtracting the (x) then per share Fair Market Value at such record date of the portion of such Distribution applicable to one (1) outstanding share of the Common Stock from (y) the amount of such Exercise Price and (ii) the number of Warrant Shares issuable upon exercise of each outstanding Warrant shall be proportionately adjusted such that the Aggregate Warrant Exercise Price shall remain unchanged. The adjustments shall be described in a statement provided to the Holder of the portion of assets or evidences of indebtedness so distributed or such subscription rights applicable to one share of Common Stock.

 

Section 5.6            Other Events. If the Company (or any subsidiary of the Company), at any time while a Warrant is outstanding, shall take any action to which the provisions hereof are not strictly applicable, or, if applicable, would not operate to protect the Holders from dilution or if any event occurs of the type contemplated by the provisions of this Article V but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Board shall in good faith determine and implement an appropriate adjustment in the Exercise Price and the number of Warrant Shares issuable upon exercise of a Warrant so as to protect the rights of the Holders, provided that no such adjustment pursuant to this Section 5.6 will increase the Exercise Price or decrease the number of Warrant Shares issuable upon exercise of a Warrant as otherwise determined pursuant to this Article V, provided further that if the Majority Holders provide written notice in accordance with Section 8.2 to the Company within twenty (20) Business Days after notice of such adjustment is given by the Company to each Holder in accordance with Section 5.8 that they do not accept such adjustments as appropriately protecting their interests hereunder against such dilution, then the Board and the Majority Holders shall agree, in good faith, upon an independent investment bank of nationally recognized standing to make such appropriate adjustments, whose determination shall be final and binding and whose fees and expenses shall be borne by the Company.

 

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Section 5.7             Fundamental Transaction.

 

(a)          In the event of a Fundamental Transaction, the Warrants shall remain outstanding and each Holder shall have the right thereafter to receive, upon exercise of a Warrant, the same amount and kind of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of the number of Warrant Shares then issuable upon exercise in full of such Warrant (assuming such Holder failed to exercise its rights of election, if any, as to the kind or amount of securities, cash or property receivable upon such Fundamental Transaction) (the “Alternate Consideration”). The Aggregate Warrant Exercise Price will not be affected by any such Fundamental Transaction, but, in the event of any such exercise occurring on or after the effectiveness of such Fundamental Transaction, the Company shall apportion the Aggregate Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then each Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of a Warrant following such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Agreement prior to such Fundamental Transaction and shall, at the option of each Holder, deliver to such Holder in exchange for such Holder’s Warrants a security of the Successor Entity evidenced by a written instrument (reasonably satisfactory in form and substance to the Majority Holders) on substantially similar terms and substance to the Warrants which are exercisable for the Alternate Consideration (which, if the Alternate Consideration consists solely of capital stock of such Successor Entity (or its parent entity), shall represent a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the Warrant Shares issuable upon exercise of the Warrants (without regard to any limitations on the exercise of the Warrants) prior to such Fundamental Transaction, and with an exercise price which applies the Exercise Price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of the Warrants immediately prior to the consummation of such Fundamental Transaction)). Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Agreement referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of, the Company and shall assume all of the obligations of the Company under this Agreement with the same effect as if such Successor Entity had been named as the Company herein.

 

(b)          Notwithstanding anything to the contrary contained herein, in the event of a Fundamental Transaction, the Company shall provide (or cause the Warrant Agent to provide) written notice (a “Fundamental Transaction Notice”) of a Fundamental Transaction to all Holders reasonably promptly after public announcement by the Company of the execution and delivery of a definitive agreement with respect to such Fundamental Transaction (and, in any event, not less than thirty (30) days prior to the consummation of such Fundamental Transaction), which notice shall include the date such Fundamental Transaction is expected to be consummated.

 

(i)         Holder Put Right. At any time on or after a Holder’s receipt of a Fundamental Transaction Notice in accordance with Section 5.7(b) and before the third Business Day prior to the consummation of such Fundamental Transaction, each Holder shall have the right (the “Put Right”) to require the Company to repurchase any portion of the Warrants held by such Holder concurrently with the consummation of such Fundamental Transaction by delivering written notice to the Company (the “Put Notice”) indicating the portion of the Warrants held by the Holder to which the Put Notice applies. In the event a Holder exercises the Put Right in accordance with this Section 5.7(b)(i), the Company shall, concurrently with and subject to the consummation of the Fundamental Transaction, repurchase, or cause another party to such Fundamental Transaction to purchase, the Warrants to which the Put Notice applies for an amount in cash equivalent to the aggregate value of such Warrants as determined by the Black Scholes Value.

 

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(ii)        Company Call Right. At any time on or after the fifteenth (15th) day following the giving of a Fundamental Transaction Notice to all Holders of outstanding Warrants in accordance with Section 5.7(b) and before the third Business Day prior to the consummation of such Fundamental Transaction, the Company shall have the right (the “Call Right”) to repurchase the Warrants from all Holders thereof concurrently with the consummation of such Fundamental Transaction by delivering an irrevocable written notice of exercise of the Call Right to all Holders of the Warrants (the “Call Notice”) indicating the Company’s intent to exercise the Call Right concurrent with and subject to the consummation of such Fundamental Transaction. In the event the Company exercises the Call Right in accordance with this Section 5.7(b)(ii) the Company shall repurchase, or cause another party to such Fundamental Transaction to purchase, all of the unexercised Warrants for which a Notice of Exercise shall not have been delivered to the Company prior to the last Business Day preceding the consummation of such Fundamental Transaction for an amount in cash equivalent to the aggregate value of such Warrants as determined by the Black Scholes Value. Notwithstanding the foregoing, the Holders shall retain the right to exercise the Warrants subject to the Call Notice at any time prior to the last Business Day preceding the consummation of such Fundamental Transaction, and the Company covenants and agrees that it will honor all Notices of Exercise with respect thereto.

 

Section 5.8            Notice of Adjustments. Whenever the number and/or kind of Warrant Shares or the Exercise Price is adjusted as provided in this Agreement, the Company shall promptly (i) prepare and deliver to the Warrant Agent, or cause to be prepared and delivered by the Warrant Agent, a written statement setting forth the adjusted number and/or kind of shares issuable upon the exercise of Warrants, the Exercise Price of the Warrants after such adjustment, the facts requiring such adjustment, the computation by which the adjustment was made and the record date or the effective date of the event and adjustment, and (ii) cause the Warrant Agent to give written notice of the foregoing to each Holder in the manner provided in Section 8.2 below. Failure to give such notice, or any defect therein, shall not affect the legality or validity of such event or any adjustment therefrom. The Warrant Agent shall be fully protected in relying upon any such written notice delivered in accordance with this Section 5.8, and on any adjustment therein contained and shall not be deemed to have knowledge of any such adjustment unless and until it shall have received such written notice.

 

Section 5.9            Calculations; Minimum Adjustments. All adjustment calculations under this Article V shall be made to the nearest one one-thousandth (1/1,000) of one cent ($0.01) or to the nearest one one-thousandth (1/1,000) of a share, as the case may be. For purposes of this Article V, subject to the adjustments set forth in Section 5.4(a) and Section 5.4(b), the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding. No adjustment to the Exercise Price or the number of Warrant Shares issuable upon exercise of a Warrant shall be made if the amount of such adjustment would be less than $0.01 or one-tenth (1/10th) of a share of Common Stock, respectively, but any such amount shall be carried forward and an adjustment with respect thereto shall be made at the time of and together with any subsequent adjustment which, together with such amount and any other amount or amounts so carried forward, shall aggregate $0.01 or 1/10th of a share of Common Stock, respectively, or more.

 

Section 5.10          Form of Warrant After Adjustments. The form of Warrant Certificate need not be changed because of any adjustments in the Exercise Price or the number and/or kind of shares issuable upon exercise of the Warrants, and the Warrant Certificates theretofore or thereafter issued may continue to express the same price and number and kind of shares as are stated therein, as initially issued; provided, that such adjustments in the Exercise Price or the number and/or kind of shares issuable upon exercise of the Warrants pursuant to the terms of this Agreement shall nonetheless have effect upon exercise of the Warrants. The Company, however, may at any time in its sole discretion make any change in the form of Warrant Certificate that it may deem appropriate to give effect to such adjustments and that does not affect the substance of the Warrant Certificate or this Agreement (including the rights, duties, liabilities or obligations of the Warrant Agent), and any Warrant Certificate thereafter issued, whether in exchange or substitution for an outstanding Warrant Certificate, may be in the form so changed.

 

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ARTICLE VI
OTHER PROVISIONS RELATING TO RIGHTS OF HOLDERS OF WARRANTS

 

Section 6.1            No Rights or Liability as Stockholder. The Warrants do not entitle the Holders to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof, except as expressly set forth in herein. No provision thereof and no mere enumeration therein of the rights or privileges of the Holders shall give rise to any liability of any Holder for the Exercise Price hereunder or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

 

Section 6.2            Notice to Allow Exercise by Holder. If (a) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (b) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (c) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (d) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, consolidation or merger to which the Company (or any of its subsidiaries) is a party, any sale or transfer of all or substantially all of its assets, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (e) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by email to each Holder at its last email address as it shall appear upon the Warrant Register, at least fourteen (14) calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided in this Agreement constitutes, or contains, material, non-public information regarding the Company or any of its subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holders shall remain entitled to exercise the Warrants during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

 

Section 6.3            Transferability. Subject to compliance with any applicable securities laws and the conditions set forth in this Section 6.3, the Warrants and all rights hereunder are transferable by the Holders, in whole or in part, on the records of the Warrant Agent, subject to surrender of the applicable Warrant Certificate (if any) by the applicable Holder, by delivery of a Form of Assignment properly completed and duly signed, together with funds sufficient to pay any transfer taxes payable upon the making of such transfer, to the principal office of the Warrant Agent. Upon receipt of the foregoing, to the extent a Warrant Certificate is requested in writing by the transferee, the Company shall execute and deliver, or shall cause to be executed and delivered, one or more New Warrant Certificates evidencing the Warrants so transferred to the transferee and, to the extent a Warrant Certificate is requested by the transferor, a New Warrant Certificate evidencing the remaining portion of the Warrants not so transferred, if any, to the transferring Holder. Notwithstanding the foregoing, the Company shall not be required to effectuate a transfer that would result in the issuance of Warrants for the purchase of a fraction of a share of Common Stock. In connection with any transfer hereunder, the transferee’s acceptance of the transferred Warrants and (if applicable) the New Warrant Certificate shall be deemed to constitute acceptance by such transferee of all of the rights and obligations of a Holder of a Warrant. If requested by the Company or the Warrant Agent, in the event that the Warrants are not then covered under an effective registration statement under the Securities Act, the Holder and, where applicable, the transferee, shall, as a condition to the effectiveness of such transfer, provide the Company and the Warrant Agent, together with such Form of Assignment, with a duly executed Transferee Representation Letter or such information, confirmations and acknowledgements as are reasonably necessary for the Company and/or the Warrant Agent to confirm that an exemption from registration exists for such proposed transfer.

 

Section 6.4            Registration Rights. The Holders shall be entitled to the benefit of certain registration rights with respect to the Warrant Shares pursuant to that certain Registration Rights Agreement, dated as of the date hereof, by and between the Company and the Initial Lenders (the “Registration Rights Agreement”), and such registration rights may only be assigned to any subsequent Holders in accordance with the terms and provisions thereof.

 

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Section 6.5            Lost, Stolen, Mutilated or Destroyed Warrant Certificates. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of any Warrant Certificate or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which shall not include the posting of any bond), and upon surrender and cancellation of such Warrant Certificate or stock certificate, if mutilated, the Company or Warrant Agent will make and deliver a new Warrant Certificate or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant Certificate or stock certificate.

 

ARTICLE VII
CONCERNING THE WARRANT AGENT AND OTHER MATTERS

 

Section 7.1             Resignation, Removal, Consolidation or Merger of Warrant Agent.

 

(a)          Appointment of Successor Warrant Agent. The Warrant Agent, or any successor to it hereafter appointed, may resign its duties and be discharged from all further duties and liabilities hereunder after giving sixty (60) days’ notice in writing to the Company. If the office of the Warrant Agent becomes vacant by resignation or incapacity to act or otherwise, the Company shall appoint in writing a successor Warrant Agent (which successor Warrant Agent may not be the Company or an Affiliate of the Company and must be reasonably acceptable to the Majority Holders) in place of the Warrant Agent. If the Company shall fail to make such appointment within a period of sixty (60) days after it has been notified in writing of such resignation or incapacity by the Warrant Agent or by the Holder of a Warrant, then the Holder of any Warrant may apply to the Supreme Court of the State of New York for the County of New York for the appointment of a successor Warrant Agent at the Company’s cost. The Company may, at any time and for any reason, at no cost to the Holders, remove the Warrant Agent and appoint a successor Warrant Agent (which successor Warrant Agent may not be the Company or an Affiliate of the Company and must be reasonably acceptable to the Majority Holders) by written instrument signed by the Company and specifying such removal and the date when it is intended to become effective, one copy of which shall be delivered to the Warrant Agent being removed and one copy to the successor Warrant Agent. Any successor Warrant Agent, whether appointed by the Company or by such court, shall be a Person organized and existing under the laws of the United States of America, or any state thereunder, in good standing. After appointment, any successor Warrant Agent shall be vested with all the authority, powers, rights, immunities, duties and obligations of its predecessor Warrant Agent with like effect as if originally named as Warrant Agent hereunder, without any further act or deed; but if for any reason it becomes necessary or appropriate, the predecessor Warrant Agent shall execute and deliver, at the expense of the Company, an instrument transferring to such successor Warrant Agent all the authority, powers, rights, immunities, duties and obligations of such predecessor Warrant Agent hereunder; and upon request of any successor Warrant Agent, the Company shall make, execute, acknowledge and deliver any and all instruments in writing for more fully and effectually vesting in and confirming to such successor Warrant Agent all such authority, powers, rights, immunities, duties and obligations.

 

(b)          Notice of Successor Warrant Agent. In the event a successor Warrant Agent shall be appointed, the Company shall (i) give notice thereof to the predecessor Warrant Agent and the transfer agent for the Common Stock not later than the effective date of any such appointment, and (ii) cause written or email notice thereof to be delivered to each Holder at such Holder’s address or email address, as applicable, appearing on the Warrant Register.

 

(c)          Merger or Consolidation of Warrant Agent. Any Person into which the Warrant Agent may be merged or with which it may be consolidated or any entity resulting from any merger or consolidation to which the Warrant Agent shall be a party shall be the successor Warrant Agent under this Agreement without any further act.

 

Section 7.2             Renumeration. The Company agrees to pay the Warrant Agent reasonable remuneration for its services as such Warrant Agent hereunder in accordance with a separate fee schedule to be mutually agreed upon by the Company and the Warrant Agent and shall, pursuant to its obligations under this Agreement, reimburse the Warrant Agent upon demand for all expenditures that the Warrant Agent may reasonably incur in the execution of its duties hereunder.

 

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Section 7.3             Further Assurances. The Company agrees to perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further and other acts, instruments, and assurances as may reasonably be required by the Warrant Agent for the carrying out or performing of the provisions of this Agreement.

 

Section 7.4             Liability of Warrant Agent.

 

(a)          Reliance on Company Statement. Whenever in the performance of its duties under this Agreement, the Warrant Agent shall deem it necessary or desirable that any fact or matter be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a statement signed by the Chief Executive Officer, Chief Financial Officer, President, Executive Vice President, Vice President, Secretary or Chairman of the Board and delivered to the Warrant Agent. The Warrant Agent may rely upon such statement for any action taken or suffered in good faith by it pursuant to the provisions of this Agreement.

 

(b)          Indemnity. The Warrant Agent shall be liable hereunder only for its own gross negligence, willful misconduct or bad faith. The Company agrees to indemnify the Warrant Agent and hold it harmless against any and all liabilities, including judgments, costs and reasonable counsel fees, for anything done or omitted by the Warrant Agent in the execution of this Agreement, except as a result of the Warrant Agent’s gross negligence, willful misconduct or bad faith.

 

(c)          Exclusions. The Warrant Agent shall have no responsibility with respect to the validity of this Agreement or with respect to the validity or execution of any Warrant (except its countersignature thereof). The Warrant Agent shall not be responsible for any breach by the Company of any covenant or condition contained in this Agreement or in any Warrant. The Warrant Agent shall not be responsible to make any adjustments required under the provisions of Article V hereof or responsible for the manner, method, or amount of any such adjustment or the ascertaining of the existence of facts that would require any such adjustment; nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any shares of Common Stock to be issued pursuant to this Agreement or any Warrant or as to whether any shares of Common Stock shall, when issued, be valid and fully paid and non-assessable.

 

(d)          Acceptance of Agency. The Warrant Agent hereby accepts the agency established by this Agreement and agrees to perform the same upon the terms and conditions herein set forth and among other things, shall account promptly to the Company with respect to Warrants exercised and concurrently account for, and pay to the Company, all monies received by the Warrant Agent for the purchase of shares of Common Stock through the exercise of the Warrants.

 

ARTICLE VIII
MISCELLANEOUS

 

Section 8.1            Binding Effects; Benefits. This Agreement shall inure to the benefit of and shall be binding upon the Company and the Warrant Agent and their respective heirs, legal representatives, successors and assigns. Nothing in this Agreement, expressed or implied, is intended to or shall confer on any person other than the Company, the Warrant Agent and the Holders, or their respective heirs, legal representatives, successors or assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement.

 

Section 8.2            Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given: (a) when delivered by hand; (b) when received by the addressee if sent by a nationally recognized overnight courier; (c) on the date and time sent by email of a PDF document, with receipt acknowledged, if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient; or (d) on the third (3rd) day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the addresses indicated below (or at such other address for a party as shall be specified in a notice given in accordance with this Section 8.2).

 

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(a)          If to the Warrant Agent, to: Continental Stock Transfer & Trust Company, 1 State Street, 30th Floor, New York, New York 10004, Attention: Compliance Department, Email: compliance@continentalstock.com.

 

(b)          If to the Company, to: Vertex Energy, Inc., 1331 Gemini St., Suite 250, Houston, Texas 77058, Attention: Chief Financial Officer, Email: chrisc@vertexenergy.com.

 

(c)          If to the Holder of any Warrant, to the address or email address of such Holder as shown on the Warrant Register. Any notice required to be delivered by the Company to the Holder of any Warrant may be given by the Warrant Agent on behalf of the Company.

 

Section 8.3            Counterparts. This Agreement may be executed in any number of original or electronic PDF counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.

 

Section 8.4            Construction. This Agreement shall be deemed to be jointly drafted by the Company and the Warrant Agent and shall not be construed against any Person as the drafter hereof. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, Agreement.

 

Section 8.5            Amendments and Waivers. Any provision of this Agreement may be amended or waived, but only pursuant to a written agreement signed by the Warrant Agent and the Company and consented to in writing by the Super-Majority Holders, provided that no such amendment or waiver shall, without the written consent of each Holder, (i) increase the Exercise Price or decrease the number of Warrant Shares receivable upon exercise of the Warrants held by such Holder, (ii) shorten the Exercise Period of any Warrants held by such Holder, (iii) modify any provision of Article V in a manner adverse to such Holder, (iv) change any of the provisions of this Section 8.5 or the definitions of “Majority Holders” or “Super-Majority Holders” or any other provision hereof specifying the number or percentage of Holders required to amend or waive any rights hereunder or make any determination or grant any consent hereunder or otherwise act with respect to this Agreement or any Warrants or (v) increase the obligations of such Holder or otherwise materially and adversely affect the rights and benefits of such Holder under this Agreement. No course of dealing between any Holder or the Company and any other party hereto or any failure or delay on the part of a Holder or the Company in exercising any rights or remedies under this Agreement shall operate as a waiver of any rights or remedies of any Holder or the Company. No single or partial exercise of any rights or remedies under this Agreement by a party shall operate as a waiver or preclude the exercise of any other rights or remedies hereunder by such party.

 

Section 8.6            No Inconsistent Agreements; No Impairment. The Company shall not, on or after the date hereof, enter into any agreement with respect to its securities which conflicts with the rights granted to the Holders in this Agreement. The Company represents and warrants to the Holders that the rights granted hereunder do not in any way conflict with the rights granted to holders of the Company’s securities under any other agreements. The Company shall not, by amendment of its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Agreement and in the taking of all such action as may be necessary in order to preserve the exercise rights of the Holders against impairment.

 

Section 8.7            Governing Law. This Agreement and each Warrant issued hereunder shall be governed by and construed under the laws of the State of New York in all respects as such laws are applied to agreements among New York residents entered into and to be performed entirely within New York, without reference to conflicts of laws or principles thereof. The parties hereto agree that any action brought by either party under or in relation to this Agreement, including without limitation to interpret or enforce any provision of this Agreement, shall be brought in, and each party agrees to and does hereby submit to the exclusive jurisdiction and venue of, any state or federal court located in the City of New York, borough of Manhattan, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for notices to it contemplated by this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto hereby irrevocably waives any right it may have to, and agrees not to request, a trial by jury for the adjudication of any action brought by either party under or in relation to this Agreement.

 

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Section 8.8            Remedies. Each Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Agreement. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Agreement and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

 

Section 8.9            Severability. In the event that any one or more of the provisions contained in this Agreement, or the application thereof in any circumstances, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provisions in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby.

 

Section 8.10          Binding Effect on Holders. By acceptance of any Warrant, each Holder acknowledges the terms of this Agreement and agrees to be bound hereby.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, this Agreement has been duly executed by the undersigned parties hereto as of the date first above written.

 

  VERTEX ENERGY INC.
     
  By: /s/ Benjamin P. Cowart
  Name: Benjamin P. Cowart
  Title: President and Chief Executive Officer

 

  CONTINENTAL STOCK TRANSFER & TRUST COMPANY
     
  By: /s/ Henry Ferrell
  Name: Henry Ferrell
  Title: Vice President

  

 

[Signature Page to Warrant Agreement]

 

 

 

EXHIBIT A

 

[Form of Warrant]

 

NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER SECTION 4(A)(2) OF THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND RULE 506 OF REGULATION D THEREUNDER, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES. THE SECURITIES REPRESENTED BY THIS WARRANT CERTIFICATE ARE SUBJECT TO ADDITIONAL AGREEMENTS SET FORTH IN THE WARRANT AGREEMENT REFERRED TO BELOW. SHARES OF COMMON STOCK OF THE COMPANY ISSUED OR ISSUABLE UPON EXERCISE OF THE SECURITIES EVIDENCED HEREBY SHALL BE ENTITLED TO CERTAIN REGISTRATION RIGHTS UNDER A REGISTRATION RIGHTS AGREEMENT EXECUTED BY THE COMPANY.

 

VERTEX ENERGY INC.

Common Stock Purchase Warrant

 

This certifies that, _____________________ and its registered assigns, is the registered holder of __________ warrants evidenced hereby (the “Warrants”) to purchase shares of common stock, $0.001 par value per share (“Common Stock”), of Vertex Energy Inc., a Nevada corporation (the “Company”). Each whole Warrant entitles the holder, upon exercise during the period set forth in that certain Warrant Agreement, dated as of April 1, 2022, by and between the Company and Continental Stock Transfer & Trust Company, as warrant agent (as amended from time to time in accordance with the terms thereof, the “Warrant Agreement”), to receive from the Company that number of fully paid and non-assessable shares of Common Stock as set forth below, at the exercise price (the “Exercise Price”) as determined pursuant to the Warrant Agreement, payable in lawful money (or through “cashless exercise” as provided for in the Warrant Agreement) of the United States of America upon payment of the Exercise Price, if applicable, to the Warrant Agent on behalf of the Company, subject to the conditions set forth herein and in the Warrant Agreement. Defined terms used in this Warrant but not defined herein shall have the meanings given to them in the Warrant Agreement, which Warrant Agreement is hereby incorporated by reference in and made a part of this instrument and is hereby referred to for a description of the rights, limitation of rights, obligations, duties and immunities thereunder of the Warrant Agent, the Company and the Holders. A copy of the Warrant Agreement may be obtained by the Holder hereof upon written request to the Company.

 

Each Warrant is initially exercisable for one (1) fully paid and non-assessable share of Common Stock. The initial Exercise Price per share of Common Stock for any Warrant is equal to $4.50 per share. The Exercise Price and the number of shares of Common Stock issuable upon exercise of the Warrants are subject to adjustment upon the occurrence of certain events set forth in the Warrant Agreement. Subject to the conditions set forth in the Warrant Agreement, the Warrants may be exercised only during the Exercise Period and to the extent not exercised by the end of such Exercise Period, the Warrants shall become void.

 

A Warrant Certificate shall not be valid unless countersigned by the Warrant Agent. This Warrant shall be governed by and construed in accordance with the internal laws of the State of New York, without regard to conflicts of laws principles thereof. 

 

[Signature Page Follows]

 

 

 

 

IN WITNESS WHEREOF, this Warrant has been duly executed by the Company.

 

  VERTEX ENERGY INC.
     
  By:  
  Name:  
  Title:  

 

Countersigned:
 

CONTINENTAL STOCK TRANSFER & TRUST COMPANY, as Warrant Agent

 

By: ___________________________
Authorized Signatory 

 

Dated: _______________, ____

 

[Signature Page to Warrant Certificate]

 

 

 

 

EXHIBIT B

 

NOTICE OF EXERCISE

 

The undersigned holder hereby exercises the right to purchase _________ of the shares of Common Stock (“Warrant Shares”) of Vertex Energy Inc., a Nevada corporation (the “Company”), which it is entitled to purchase under the Warrant Agreement and the Warrants issued to the undersigned thereunder (the “Warrants”). Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant Agreement (the “Warrant Agreement”), dated as of April 1, 2022, by and between the Company and Continental Stock Transfer & Trust Company, a New York corporation, as warrant agent (the “Warrant Agent”).

 

1.             Form of Exercise Price. The Holder intends that payment of the Exercise Price shall be made as:

 

[   ] a “cash exercise” with respect to ___________Warrants; and/or

[   ] a “cashless exercise” with respect to _________ Warrants.

 

2.             Payment of Exercise Price. In the event that the Holder has elected a cash exercise with respect to the exercise of some or all of the Warrants as set forth herein, the Holder shall pay the Aggregate Exercise Price in the sum of $________________ with respect to such Warrants to the Company or the Warrant Agent in accordance with the terms of the Warrant Agreement.

 

3.             Surrender of Warrant Certificates.  If the Warrants being exercised hereby are evidenced by a Warrant Certificate, the exercising Holder has caused the original Warrant Certificate to be surrendered for cancellation.

 

4.             Delivery of Warrant Shares. The Holder requests that a certificate for such shares of Common Stock be registered in the name of ___________________, whose address is __________________________ and that such shares of Common Stock be delivered to ___________________ whose address (or DWAC account number) is _______________________.

 

 

 

Name of Holder:  

 

Signature of Authorized Signatory of Investing Entity:

 

 

Name of Authorized Signatory:

 

 

Title of Authorized Signatory:

 

 

Date:

 

 

 

 

 

 

EXHIBIT C

 

FORM OF ASSIGNMENT

 

(To assign the foregoing Warrants, execute this form and supply required information. Do not use this form to purchase shares.)

 

FOR VALUE RECEIVED, the undersigned assigns and transfers ____________ of the Warrants [represented by this Warrant Certificate] to:

 

Assignee Name: ______________________________________
Assignee Address: ______________________________________
  ______________________________________

 

and irrevocably appoints the following ______________________ as its agent to transfer such Warrants on the books of the Warrant Agent. 

 

Assignor Name: _____________________________________

 

 

By:

 

 

______________________________________

Name: ______________________________________
Title: ______________________________________
Date: ______________________________________

 

 

 

 

EXHIBIT D

 

FORM OF INITIAL HOLDER REPRESENTATION LETTER

 

 

April 1, 2022

 

Vertex Energy, Inc.,

1331 Gemini St., Suite 250

Houston, Texas 77058

 

Ladies and Gentlemen:

 

Reference is hereby made to (a) that certain Loan and Security Agreement, dated as of April 1, 2022 (the “Term Loan Credit Agreement”), by and among Vertex Refining Alabama LLC, as Borrower thereunder, Vertex Energy, Inc. (the “Company”), as Parent and Guarantor thereunder, certain direct and indirect subsidiaries of the Company, as Guarantors thereunder, the Lenders from time to time party thereto and Cantor Fitzgerald Securities as Agent thereunder and (b) that certain Warrant Agreement, dated as of April 1, 2022 (the “Warrant Agreement”), by and between the Company and Continental Stock Transfer & Trust Company, as Warrant Agent thereunder. Capitalized terms used but not otherwise defined herein have the meanings ascribed to such terms in the Warrant Agreement.

 

In connection with the consummation of the transactions contemplated by the Term Loan Credit Agreement, the Company has agreed to issue (the “Issuance”) to the undersigned (“Recipient”) the number of Warrants (as defined in the Term Loan Credit Agreement) set forth opposite the name of the Recipient on Schedule A of the Warrant Agreement. Each such Warrant shall entitle Recipient to purchase one share of the Company’s common stock at the exercise price set forth in the Warrant Agreement.

 

Recipient acknowledges and agrees that the Warrants issued pursuant to the Term Loan Credit Agreement are subject to, and entitled to the benefit of, the terms, provisions and conditions set forth in the Warrant Agreement.

In connection with, and as a condition to, the Issuance, Recipient hereby represents and warrants to the Company as follows:

 

1.It is an “Accredited Investor,” as that term is defined in Rule 501 of Regulation D under the Securities Act of 1933, as amended (the “Securities Act”).

 

2.It has such knowledge, skill and experience in securities, business and financial matters and investments generally, based on actual participation, that it is capable of evaluating the merits and risks of an investment in the Company and the Warrants and the suitability thereof as an investment for it.

 

3.It is capable of bearing and managing the risk of its investment in the Warrants.

 

4.It has reviewed such documents and information from the Company that it has requested and has had adequate opportunity to ask questions of and receive answers from the Company’s officers, directors and representatives concerning the terms and conditions of the Warrants, and the Company’s business, financial condition, properties, operations and prospects, and, without limiting any of Recipient’s rights under the Term Loan Credit Agreement or the Warrant Agreement, all such questions, if any, have been answered to its satisfaction. The Recipient is relying on the representations and warranties contained in the Term Loan Credit Agreement and its own investigation and evaluation of the Company and the Warrants and not on any other information.

 

5.It is acquiring the Warrants, and any common stock issuable upon exercise thereof, for investment for its own account and not with a view to, or for sale or resale in connection with, any distribution thereof which would require registration under the Securities Act or any state securities laws.

 

 

 

 

6.It understands that the Warrants and any common stock issuable upon exercise thereof have not been registered under applicable state or federal securities laws by reason of certain exemptions from the registration provisions thereof which depend upon, among other things, the bona fide nature of its representations and investment intent as expressed herein. The Company has not agreed to register the Warrants or, except as provided in the Registration Rights Agreement (as defined in the Warrant Agreement), any of the shares of common stock issuable upon the exercise of the Warrants for distribution in accordance with the provisions of the Securities Act or applicable state securities laws, or agreed to comply with any exemption from registration under the Securities Act or applicable state securities laws for the resale of such shares. It understands that by virtue of the provisions of certain rules respecting “restricted securities” promulgated by the Securities and Exchange Commission, the shares of common stock issuable upon the exercise of the Warrants shall be required to be held indefinitely, unless and until registered under the Securities Act and applicable state securities laws, or unless an exemption from the registration requirements of the Securities Act and applicable state securities laws is available, in which case it may still be limited as to the number of such shares that may be sold. It agrees that the Warrants will not be offered, sold or transferred except as permitted by the Warrant Agreement.

 

Unless sold pursuant to a registration statement under the Securities Act, the certificates representing the Warrants will bear a conspicuous legend in substantially the form set forth below:

 

NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER SECTION 4(A)(2) OF THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND RULE 506 OF REGULATION D THEREUNDER, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES. THE SECURITIES REPRESENTED BY THIS WARRANT CERTIFICATE ARE SUBJECT TO ADDITIONAL AGREEMENTS SET FORTH IN THE WARRANT AGREEMENT REFERRED TO BELOW. SHARES OF COMMON STOCK OF THE COMPANY ISSUED OR ISSUABLE UPON EXERCISE OF THE SECURITIES EVIDENCED HEREBY SHALL BE ENTITLED TO CERTAIN REGISTRATION RIGHTS UNDER A REGISTRATION RIGHTS AGREEMENT EXECUTED BY THE COMPANY.

 

Unless the Warrants or the common stock issuable upon exercise of the Warrants are sold pursuant to a registration statement under the Securities Act, the certificates representing or statements evidencing the common stock issuable upon exercise of the Warrants will bear a conspicuous legend in substantially the form set forth below:

 

THIS SECURITY HAS NOT BEEN REGISTERED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE AND MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

7.It has not been offered the Warrants by any form of general solicitation or advertising, including, but not limited to, advertisements, articles, notices or other communications published in any newspaper, magazine, or other similar media or television or radio broadcast or any seminar or meeting where, to its knowledge, those individuals that have attended have been invited by any such or similar means of general solicitation or advertising.

 

 

 

 

8.To the extent that the Recipient is not one of the Initial Lenders (as defined in the Term Loan Credit Agreement), the Recipient represents that it is an affiliate of an Initial Lender, as such term is defined in Rule 405 of the Securities Act, and that such applicable Initial Lender has requested that the Company issue the Warrants in the name of such affiliated Recipient.

 

9.Its principal place of business is as set forth on the signature page to this letter under the heading “Principal Place of Business”.

 

10.Its EIN and its address and email address for notices under the Warrant Agreement that should be included in the Warrant Register as its record address, are as set forth on the signature page to this letter under the heading “Notice Information”.

 

11.The Warrants will be governed by the Warrant Agreement, a copy of which has been provided to the Recipient, and, at the written request of the holder, may be evidenced by Warrant Certificates in the form attached to the Warrant Agreement as Exhibit A thereto.

 

The undersigned Recipient acknowledges that the Company and its representatives (including its attorneys) will be relying (and authorizes the Company and its representatives (including its attorneys) to rely) upon the representations set forth above for all purposes, including for the purposes of counsel to the Company’s legal opinion to the Warrant Agent with respect to the Issuance of the Warrants.

 

[The Remainder of this Page Left Blank]

 

 

 

 

  Very truly yours,
  [RECIPIENT]
     
  By:  
    Name:
    Title:

  

Principal Place of Business:

 

[ADDRESS]
[ADDRESS]
[ADDRESS]

 

Address, contact and phone number, for delivery of Warrant Certificate, if any:

 

[ATTN]
[ADDRESS]
[ADDRESS]
[ADDRESS]
[PHONE NUMBER]

 

Notice Information:

 

[ADDRESS]
[ADDRESS]
[ADDRESS]
Attn:
Email:
EIN:

 

[Signature Page to Representations Letter]

 

 

 

 

EXHIBIT E

 

FORM OF TRANSFEREE REPRESENTATION LETTER

 

[●], 202[●]

 

Vertex Energy, Inc.,

1331 Gemini St., Suite 250

Houston, Texas 77058

Ladies and Gentlemen:

 

Reference is hereby made to that certain Warrant Agreement, dated as of April 1, 2022 (the “Warrant Agreement”), by and between Vertex Energy, Inc. (the “Company”) and Continental Stock Transfer & Trust Company, as Warrant Agent thereunder, pursuant to which the Company issued an aggregate of 2,750,000 warrants (the “Warrants”), with each Warrant entitling the holder thereof to purchase one share of the Company’s common stock (subject to adjustment in accordance with the Warrant Agreement), on the terms set forth in the Warrant Agreement. Capitalized terms used but not otherwise defined herein have the meanings ascribed to such terms in the Warrant Agreement.

 

The entity set forth on Schedule I attached hereto under the heading “Transferor” desires to transfer (the “Transfer”) the number of Warrants set forth on Schedule I attached hereto under the heading “Transferred Warrants” (the “Transferred Warrants”) to the undersigned (“Transferee”).

 

Transferee acknowledges and agrees that, upon consummation of the Transfer, the Transferred Warrants shall be subject to, and entitled to the benefit of, the terms, provisions and conditions set forth in the Warrant Agreement.

 

In connection with, and as a condition to, the Transfer, Transferee hereby represents and warrants to the Company as follows:

 

1.It is an “Accredited Investor,” as that term is defined in Rule 501 of Regulation D under the Securities Act of 1933, as amended (the “Securities Act”).

 

2.It has such knowledge, skill and experience in securities, business and financial matters and investments generally, based on actual participation, that it is capable of evaluating the merits and risks of an investment in the Company and the Warrants and the suitability thereof as an investment for it.

 

3.It is capable of bearing and managing the risk of its investment in the Warrants.

 

4.It has reviewed such documents and information from the Company that it has requested and has had adequate opportunity to ask questions of and receive answers from the Company’s officers, directors and representatives concerning the terms and conditions of the Warrants, and the Company’s business, financial condition, properties, operations and prospects, and, without limiting any of Transferee’s rights under the Warrant Agreement, all such questions, if any, have been answered to its satisfaction. The Transferee is relying on its own investigation and evaluation of the Company and the Warrants and not on any other information.

 

5.It is acquiring the Warrants, and any common stock issuable upon exercise thereof, for investment for its own account and not with a view to, or for sale or resale in connection with, any distribution thereof which would require registration under the Securities Act or any state securities laws.

 

6.It understands that the Warrants [and any common stock issuable upon exercise thereof]1 have not been registered under applicable state or federal securities laws by reason of certain exemptions from the registration provisions thereof which depend upon, among other things, the bona fide nature of its representations and investment intent as expressed herein. The Company has not agreed to register the Warrants [or, except as provided in the Registration Rights Agreement (as defined in the Warrant Agreement), any of the shares of common stock issuable upon the exercise of the Warrants]2 for distribution in accordance with the provisions of the Securities Act or applicable state securities laws, or agreed to comply with any exemption from registration under the Securities Act or applicable state securities laws for the resale of such shares. It understands that by virtue of the provisions of certain rules respecting “restricted securities” promulgated by the Securities and Exchange Commission, the shares of common stock issuable upon the exercise of the Warrants shall be required to be held indefinitely, unless and until registered under the Securities Act and applicable state securities laws, or unless an exemption from the registration requirements of the Securities Act and applicable state securities laws is available, in which case it may still be limited as to the number of such shares that may be sold. It agrees that the Warrants will not be offered, sold or transferred except as permitted by the Warrant Agreement.

 

 

1 To be omitted to the extent the common stock issuable upon exercise of the Warrants no longer qualifies as a restricted security.

2 To be omitted to the extent the common stock issuable upon exercise of the Warrants no longer qualifies as a restricted security.

 

 

 

 

Unless sold pursuant to a registration statement under the Securities Act, the certificates representing the Warrants will bear a conspicuous legend in substantially the form set forth below:

 

NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER SECTION 4(A)(2) OF THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND RULE 506 OF REGULATION D THEREUNDER, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES. THE SECURITIES REPRESENTED BY THIS WARRANT CERTIFICATE ARE SUBJECT TO ADDITIONAL AGREEMENTS SET FORTH IN THE WARRANT AGREEMENT DATED AS OF APRIL 1, 2022, BY AND BETWEEN THE COMPANY AND THE WARRANT AGENT (AS DEFINED THEREIN). SHARES OF COMMON STOCK OF THE COMPANY ISSUED OR ISSUABLE UPON EXERCISE OF THE SECURITIES EVIDENCED HEREBY SHALL BE ENTITLED TO CERTAIN REGISTRATION RIGHTS UNDER A REGISTRATION RIGHTS AGREEMENT EXECUTED BY THE COMPANY.

 

Unless the Warrants or the common stock issuable upon exercise of the Warrants are sold pursuant to a registration statement under the Securities Act, the certificates representing or statements evidencing the common stock issuable upon exercise of the Warrants will bear a conspicuous legend in substantially the form set forth below:

 

THIS SECURITY HAS NOT BEEN REGISTERED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE AND MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

7.It has not been offered the Warrants by any form of general solicitation or advertising, including, but not limited to, advertisements, articles, notices or other communications published in any newspaper, magazine, or other similar media or television or radio broadcast or any seminar or meeting where, to its knowledge, those individuals that have attended have been invited by any such or similar means of general solicitation or advertising.

 

 

 

 

8.Its principal place of business is as set forth on the signature page to this letter under the heading “Principal Place of Business”.

 

9.Its EIN and its address and email address for notices under the Warrant Agreement that should be included in the Warrant Register as its record address, are as set forth on the signature page to this letter under the heading “Notice Information”.

 

10.The Warrants will be governed by the Warrant Agreement, a copy of which has been provided to the Transferee, and, at the written request of the holder, may be evidenced by Warrant Certificates in the form attached to the Warrant Agreement as Exhibit A thereto.

 

11.To the extent the Warrants subject to the Transfer are not covered under an effective registration statement under the Securities Act, the Transferee will provide, and will cause the Transferor to provide, such information, confirmations and documentation, as may be reasonably requested by the Company and its legal counsel, in order to confirm that an exemption from registration exists for the Transfer and in order to enable such parties to provide any required legal opinions to the Warrant Agent in connection therewith.

 

The undersigned Transferee acknowledges that the Company and its representatives (including its attorneys) will be relying (and authorizes the Company and its representatives (including its attorneys) to rely) upon the representations set forth above for all purposes, including for the purposes of counsel to the Company’s legal opinion to the Warrant Agent with respect to the Transfer. 

 

[The Remainder of this Page Left Blank]

 

 

 

 

  Very truly yours,
  [TRANSFEREE]
     
  By:  
    Name:
    Title:

 

Principal Place of Business:

 

[ADDRESS]
[ADDRESS]
[ADDRESS]

 

Address, contact and phone number, for delivery of Warrant Certificate, if any:

 

[ATTN]
[ADDRESS]
[ADDRESS]
[ADDRESS]
[PHONE NUMBER]

 

Notice Information:

 

[ADDRESS]
[ADDRESS]
[ADDRESS]
Attn:
Email:
EIN:

 

[Signature Page to Transferee Representation Letter]

 

 

 

 

EXHIBIT E

 

Schedule I

 

Transferor Transferee Transferred Warrants
     

 

 

 

 

SCHEDULE A

 

WARRANT ALLOCATIONS

 

Initial Holder Warrant Shares Initial Beneficial Ownership Limitation
Whitebox Multi-Strategy Partners, LP 297,000 9.99%
Whitebox Relative Value Partners, LP 147,400 9.99%
Whitebox GT Fund, LP 26,400 9.99%
Pandora Select Partners, LP 24,200 9.99%
Highbridge Tactical Credit Master Fund, L.P. 495,000 9.99%
Global Credit Opportunities II Fund A Master SCSp 626,366 9.99%
GCO II Fund B (Investment 2), L.P. 395,396 9.99%
BlackRock Diversified Private Debt Fund Master LP 408,238 9.99%
Chambers Energy Capital IV, LP 165,000 9.99%
CrowdOut Credit Opportunities Fund LLC 22,000 4.99%
CrowdOut Capital LLC 143,000 4.99%
TOTAL 2,750,000 --

 

 

 

Vertex Energy Inc. 8-K

Exhibit 10-1

 

 

LOAN AND SECURITY AGREEMENT

 

Dated as of April 1, 2022

among

VERTEX REFINING ALABAMA LLC,
as the Borrower,

VERTEX ENERGY INC.,
as Parent and as a Guarantor,

CERTAIN DIRECT AND INDIRECT SUBSIDIARIES OF PARENT PARTY HERETO,
as Guarantors,

THE LENDERS PARTY HERETO,

CANTOR FITZGERALD SECURITIES,
as Agent

 

 

TABLE OF CONTENTS

 

Page

 

1.   Definitions and Construction 1
       
  1.1   Definitions 1
  1.2   Divisions 45
  1.3   Other Interpretive Provisions 45
         
2.   Term Loan and Terms of Payment 46
       
  2.1   Term Loan 46
  2.2   Use of Proceeds; The Term Loan 46
  2.3   Procedure for Making the Term Loan; Interest 47
  2.4   Payments of Principal and Interest 47
  2.5   Fees and Expenses 48
  2.6   Prepayments 49
  2.7   Other Payment Terms 53
  2.8   Increased Costs 55
  2.9   Taxes 55
  2.10   Term 59
  2.11   Issuance of Warrants 59
  2.12   Investment Unit Allocation 59
         
3.   Conditions Precedent 60
       
  3.1   Conditions Precedent to the Closing Date 60
         
4.   Creation of Security Interest 62
       
  4.1   Grant of Security Interest 62
  4.2   Duration of Security Interest 63
  4.3   Possession of Collateral 63
  4.4   Delivery of Additional Documentation Required 64
  4.5   Right to Inspect 64
  4.6   Authorization to File 64
         
5.   Representations and Warranties 65
         
  5.1   Due Organization and Qualification 65
  5.2   Authority and Power 65
  5.3   Subsidiaries 65

i

 

TABLE OF CONTENTS
(continued)

 

Page

 

  5.4   Conflict with Other Instruments, etc 65
  5.5   Enforceability 66
  5.6   No Prior Encumbrances 66
  5.7   Name; Location of Chief Executive Office, Principal Place of Business and Collateral 66
  5.8   Litigation; Governmental Action 66
  5.9   Financial Statements 66
  5.10   Solvency 67
  5.11   Taxes; Pension Plans 67
  5.12   Consents and Approvals 67
  5.13   Intellectual Property 68
  5.14   Accounts 68
  5.15   Environmental Matters 68
  5.16   Government Consents 69
  5.17   Full Disclosure 69
  5.18   Inventory 69
  5.19   Sanctioned Persons 69
  5.20   Foreign Assets Control Regulations, Etc 70
  5.21   Status 70
  5.22   Other Permitted Amendments to Disclosure Letter; Certificate of Title Collateral 70
  5.23   Tax Classification 71
  5.24   Title to Securities 71
         
6.   Affirmative Covenants 71
       
  6.1   Good Standing 71
  6.2   Government Compliance 71
  6.3   Financial Statements, Reports, Certificates 72
  6.4   Certificates of Compliance; Disclosure Letter Updates 73
  6.5   Notices 74
  6.6   Taxes 74
  6.7   Maintenance 75
  6.8   Insurance 75
  6.9   Environmental Laws 76

 

 

TABLE OF CONTENTS
(continued)

 

Page

 

  6.10   Intellectual Property Rights 76
  6.11   Formation or Acquisition of Subsidiaries 77
  6.12   Further Assurances 78
  6.13   Inventory, Returns 78
  6.14   Delivery of Third-Party Agreements 79
  6.15   Inspections and Rights to Consult with Management 79
  6.16   Privacy and Data Security 79
  6.17   Deposit Accounts/Securities Accounts 79
  6.18   Operating Covenants 80
  6.19   Post-Closing Matters 80
  6.20   Most Favored Lender 80
         
7.   Negative Covenants 81
       
  7.1   Chief Executive Office; Location of Collateral 81
  7.2   Extraordinary Transactions and Disposal of Collateral 81
  7.3   Restructure 82
  7.4   Liens 82
  7.5   Indebtedness 82
  7.6   Investments 82
  7.7   [Reserved] 82
  7.8   Transactions with Affiliates 82
  7.9   Stock Certificates 82
  7.10   Compliance 83
  7.11   Deposit Accounts 83
  7.12   Equipment 83
  7.13   Restrictions on Use of Proceeds 83
  7.14   Accounting Changes; Change in Nature of Business; Foreign Operations 83
  7.15   Burdensome Agreements 83
  7.16   Restricted Payments; Prepayments of certain Indebtedness 85
  7.17   Amendments or Waivers of Certain Related Agreements 86
  7.18   Activities of Parent 86
  7.19   Financial Covenant 86
         
8.   Events of Default 86

 

TABLE OF CONTENTS
(continued)

 

Page

 

  8.1   Payment Default 86
  8.2   Certain Covenant Defaults 86
  8.3   Other Covenant Defaults 87
  8.4   Attachment 87
  8.5   Other Agreements 87
  8.6   Judgments 87
  8.7   Misrepresentations 87
  8.8   Enforceability 88
  8.9   Involuntary Bankruptcy 88
  8.10   Voluntary Bankruptcy or Insolvency 88
  8.11   Insolvency 88
  8.12   Cross Default 88
  8.13   ERISA 88
  8.14   Change of Control 88
  8.15   Collateral Documents 88
  8.16   Intercreditor and Subordination 89
  8.17   Loss of Material Contracts 89
         
9.   Agent and Lenders’ Rights and Remedies 89
       
  9.1   Rights and Remedies 89
  9.2   Waiver by the Loan Parties 90
  9.3   Effect of Sale 91
  9.4   Power of Attorney in Respect of the Collateral 91
  9.5   Lender Expenses 91
  9.6   Remedies Cumulative 92
  9.7   Reinstatement of Rights 92
  9.8   Share Collateral 92
  9.9   Payments after an Event of Default 92
         
10.   Waivers; Indemnification 93
       
  10.1   Demand; Protest 93
  10.2   Liability for Collateral 93
  10.3   Indemnification; Lender Expenses 94

 

TABLE OF CONTENTS
(continued)

 

Page

 

11.   Notices 95
       
12.   Agent Provisions 97
       
  12.1   Appointment and Authorization 97
  12.2   Agent in Individual Capacity; Lender as Agent 98
  12.3   Exculpatory Provisions 98
  12.4   Exculpation; Limitation of Liability 99
  12.5   Credit Decisions 100
  12.6   Indemnification 100
  12.7   Successor Agents 100
  12.8   Agent Generally 101
  12.9   Reliance 101
  12.10   Notice of Default 101
  12.11   Erroneous Payments 102
  12.12   Collateral Matters 105
         
13.   Guaranty 105
       
  13.1   Guaranty 105
  13.2   Rights of Lenders 106
  13.3   Certain Waivers 106
  13.4   Obligations Independent 107
  13.5   Subrogation 107
  13.6   Termination; Reinstatement 107
  13.7   Stay of Acceleration 108
  13.8   Condition of Borrower 108
  13.9   Appointment of Borrower 108
  13.10   Right of Contribution 108
         
14.   General Provisions 109
       
  14.1   Successors and Assigns 109
  14.2   [Reserved] 112
  14.3   Severability of Provisions 112
  14.4   Entire Agreement; Construction; Amendments and Waivers 112
  14.5   Reliance 114

 

 

TABLE OF CONTENTS
(continued)

 

Page

 

  14.6   [Reserved] 114
  14.7   Counterparts 114
  14.8   Survival 114
  14.9   Publicity 115
  14.10   Keepwell; Acknowledgement Regarding Any Supported QFCs 115
  14.11   Relationship of Parties 116
  14.12   Confidentiality 116
  14.13   Patriot Act/Freedom Act 117
  14.14   Governing Law; Jurisdiction; Waiver of Jury Trial 117
  14.15   Replacement of Lender 118
  14.16   Counterparts 119
  14.17   Acknowledgement and Consent to Bail-In of Affected Financial Institutions 119
  14.18   Consent to Intercreditor Agreement 119
  14.19   Intercreditor Agreement Governs 120
  14.20   Myrtle Grove Acknowledgement 120

  

 

 

 

LOAN AND SECURITY AGREEMENT

 

This Loan and Security Agreement (this “Agreement”) is entered into as of April 1, 2022, by and among Vertex Energy Inc., a Nevada corporation (“Parent”), Vertex Refining Alabama LLC, a Delaware limited liability company (“Borrower”), each of Parent’s direct and indirect Subsidiaries from time to time party hereto listed on Schedule 1 hereto other than Excluded Subsidiaries (as hereinafter defined) (collectively, the “Subsidiary Guarantors” and each, individually, a “Subsidiary Guarantor”; the Subsidiary Guarantors, together with Parent, each a “Guarantor” and collectively, the “Guarantors”), Cantor Fitzgerald Securities (“Cantor”) as administrative agent and collateral agent for the Lenders (“Agent”) and the lenders from time to time party hereto (collectively with the Initial Lenders, the “Lenders” and each, a “Lender”).

 

Recitals

 

Borrower has requested that the Lenders make available to the Borrower a senior secured term loan in an aggregate principal amount equal to $125,000,000. The Lenders are willing to make available the senior secured term loan facility described herein, subject to and in accordance with the terms and conditions set forth in this Agreement.

 

Agreement

 

For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, parties agree as follows:

 

1.            Definitions and Construction.

 

1.1          Definitions. As used in this Agreement, the following terms shall have the following definitions:

 

Account” is any “account” as defined in the Code, and includes, without limitation, all accounts receivable and other sums owing to any Loan Party.

 

Account Debtor” is any “account debtor” as defined in the Code with such additions to such term as may hereafter be made.

 

Acquisition Side Letter” means that certain side letter dated as of February 25, 2022, by and among Parent, Tensile – Vertex Holdings LLC, and Tensile-Myrtle Grove Acquisition Corporation.

 

Additional Covenant” means any maintenance financial covenant or similar requirement applicable to any Loan Party (regardless of whether such provision is labeled or otherwise characterized as a covenant) required to be maintained under any Subject Indebtedness, including any defined terms as used therein and including any grace periods and/or equity or other cure rights with respect thereto, the subject matter of which either (i) is similar to that of any covenant in Section 7.19 of this Agreement, or related definitions in this Agreement, but contains one or more percentages, amounts, formulas or other provisions that are more restrictive as to any Loan Party or more beneficial to the holder or holders of the Indebtedness to which the document containing such covenant or similar restriction relates than as set forth herein (and such covenant or similar restriction shall be deemed an Additional Covenant only to the extent that it is more restrictive or more beneficial) or (ii) is different from the subject matter of any covenant in Section 7.19 of this Agreement, or the related definitions in this Agreement.

 

 

Additional Secured Obligations” means (x) all fees, costs and expenses incurred in connection with enforcement and collection of the Secured Obligations, including the out-of-pocket fees, charges and disbursements of counsel for each of the Agent and the Lenders, in each case whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and (y) interest and fees that accrue after the commencement by or against any Loan Party or any Affiliate thereof of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest, expenses and fees are allowed claims in such proceeding; provided that (x) Additional Secured Obligations of a Loan Party shall exclude any Excluded Swap Obligations with respect to such Loan Party and (y) Additional Secured Obligations shall not include any obligations (including, without limitation, any Transaction Obligations and Related Hedges (in each case, under and as defined under the Intermediation Facility (as in effect on the date hereof)) under any Intermediation Facility Document, including, without limitation, by virtue of setoff or indemnification rights under the Intermediation Facility Documents.

 

Administrative Questionnaire” means with respect to each Lender, an administrative questionnaire in the form provided or approved by Agent (which form shall be reasonable in light of its scope and purpose) and submitted to Agent duly completed by such Lender.

 

Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK Financial Institution.

 

Affiliate” means, with respect to any Person, any Person that owns or Controls such Person, any Person that Controls or is Controlled by or is under common Control with such Person or each of such Person’s senior executive officers, directors, members or partners. Notwithstanding anything to the contrary, no Secured Party (nor any of their Affiliates or Approved Funds), and none of Macquarie Energy North America Trading Inc., Shell Trading (US) Company, Equilon Enterprises LLC d/b/a Shell Oil Products US, Shell Chemical LP, Synergy Supply & Trading LLC, and Idemitsu Apollo Renewable Corp. (or any of their respective Affiliates) shall be an Affiliate of any Loan Party or of any Subsidiary of any Loan Party.

 

Agent” has the meaning given to such term in preamble to this Agreement.

 

“Agent Fee Letter” means that certain Agent Fee Letter, dated as of the date hereof, by and between Parent, Borrower and Agent, as may be amended, amended and restated, replaced, supplemented or otherwise modified from time to time.

 

Anti-Corruption Laws” means the United States Foreign Corrupt Practices Act of 1977, the U.K. Bribery Act of 2010, as amended, and all other Applicable Laws and regulations or ordinances concerning or relating to bribery, money laundering or corruption in any jurisdiction in which any Loan Party or any of its Subsidiaries or Affiliates is located or is doing business.

 

2

 

Anti-Money Laundering Laws” means the Applicable Laws, statutes, regulations or rules in any jurisdiction in which any Loan Party or any of its Subsidiaries or Affiliates is located or is doing business that relates to money laundering, any predicate crime to money laundering, or any financial record keeping and reporting requirements related thereto, including, but not limited to, the Bank Secrecy Act (31 U.S.C. § 5311 et seq.) and the USA Patriot Act.

 

Applicable Law” means, as to any Person, all applicable Laws of any Governmental Authority binding upon such Person or to which such a Person is subject.

 

Applicable Rate” means with respect to any Term Loan, a percentage equal to the Base Rate plus 9.25% per annum.

 

Approved Acquisitions” means (a) the Mobile Refinery Acquisition, (b) the acquisition (including, without limitation, by merger or consolidation) by Parent (or a Subsidiary thereof) after the Closing Date of all or substantially all of the assets or a business line, product line or unit or division of, or a majority of the capital stock (or membership interests) of, or an exclusive license or right to use the Intellectual Property or other assets of, a non-affiliated entity (the “New Target”), where all of the following criteria are satisfied: (i) no Event of Default shall have occurred and be continuing or would result from the consummation of the proposed acquisition and Agent and the Required Lenders have received evidence that Borrower is in compliance with all terms and conditions of this Agreement on a pro forma basis after giving effect to such acquisition, (ii) if the acquisition includes a merger of Borrower, Borrower shall remain the surviving legal entity after giving effect to such acquisition; (iii) if such acquisition is a stock acquisition, Borrower shall cause the New Target to comply with the requirements set forth in Section 6.11 and Section 6.12 of this Agreement; (iv) Parent (or any Subsidiary Guarantor) are not required to assume or guarantee any Indebtedness other than Permitted Indebtedness in connection with the transaction or the ownership or operation of the New Target or any of New Target’s assets, (v) the business and operations of the New Target is substantially similar to that of the Parent (or is a line of business reasonably related thereto); and (vi) the total cash consideration (including any earnout, deferred payments or management/employee compensation) payable by the Parent in connection with all such transactions (or series of related transactions) does not exceed $10,000,000 in the aggregate for all Approved Acquisitions during the term of this Agreement, (c) the acquisition pursuant to the Myrtle Grove Purchase Agreement, (d) the acquisition pursuant to the Heartland Purchase Agreement and (e) any Ordinary Course Acquisitions.

 

Approved Bank” has the meaning ascribed thereto in the definition of “Cash Equivalents” contained herein.

 

Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

 

Assignment Agreement” means an agreement substantially in the form of Exhibit C attached hereto or such other form as approved by Agent.

 

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Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution.

 

Bail-In Legislation” means (a) with respect to any EEA Member Country implementing Article 5 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law, regulation rule or requirement for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings).

 

Bank Product” means any one or more of the following financial products or accommodations extended to any Loan Party or any of its Subsidiaries by a Bank Product Provider: (a) credit cards (including commercial cards (including so-called “purchase cards”, “procurement cards” or “p-cards”)), (b) payment card processing services, (c) debit cards, (d) stored value cards, (e) Cash Management Services, or (f) transactions under Hedging Agreements.

 

Bank Product Agreements” means those agreements entered into from time to time by any Loan Party or any of its Subsidiaries with a Bank Product Provider in connection with the obtaining of any of the Bank Products.

 

Bank Product Obligations” means (a) all obligations, liabilities, reimbursement obligations, fees, or expenses owing by each Loan Party and its Subsidiaries to any Bank Product Provider pursuant to or evidenced by a Bank Product Agreement and irrespective of whether for the payment of money, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, in each case, other than Hedge Obligations, (b) all Hedge Obligations, and (c) all amounts that Agent or any Lender is obligated to pay to a Bank Product Provider as a result of Agent or such Lender purchasing participations from, or executing guarantees or indemnities or reimbursement obligations to, a Bank Product Provider with respect to the Bank Products provided by such Bank Product Provider to a Loan Party; provided that Bank Product Obligations shall not include any obligations (including, without limitation, any Transaction Obligations and Related Hedges (in each case, under and as defined under the Intermediation Facility (as in effect on the date hereof)) under any Intermediation Facility Document, including, without limitation, by virtue of setoff or indemnification rights under the Intermediation Facility Documents.

 

Bank Product Provider” means each Person providing the Bank Products to the Loan Parties.

 

Base Rate” shall be, for any day, the greater of (i) the per annum rate publicly quoted from time to time by The Wall Street Journal as the “Prime Rate” in the United States minus 1.50% as in effect on such day and (ii) the sum of the Federal Funds Rate for such day plus 1/2 of 1.0%. In no event shall the Base Rate be less than 1.0%.

 

4

 

BHC Act Affiliate” of a Person means an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such Person.

 

BlackRock Lenders” means each of the Lenders party hereto from time to time that are affiliated with or managed by BlackRock Financial Management, Inc. or any Affiliate thereof.

 

Board” means Parent’s board of directors (or equivalent management or oversight body) as elected from time to time in accordance with the Organization Documents and bylaws of Parent in effect from time to time.

 

“Books” means, as to any Person, the books and records, including: ledgers; records concerning such Person’s assets or liabilities, including the Collateral, business operations or financial condition; and all computer programs, or data storage, and the related devices and equipment, containing such information.

 

Borrower” has the meaning set forth in the introductory paragraph hereto.

 

Borrower Joinder Agreement” means the agreement substantially in the form of Exhibit B-1 hereto.

 

Borrower Materials” has the meaning given to such term in Section 6.3(c).

 

Business Day” means any day that is not a Saturday, Sunday, or other day on which banks in the State of New York are authorized to close under the laws of, or are in fact closed in, New York.

 

Cantor” has the meaning given to such term in preamble to this Agreement.

 

Capital Lease Obligations” means, as to any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP (consistently applied), and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP (consistently applied); provided that any lease that would properly be recognized as an “operating lease” by Parent as of the date hereof shall continue to be treated as an operating lease and shall not constitute a Capital Lease Obligation for purposes of this Agreement.

 

5

 

Cash Equivalents” means, as to any Person: (a) securities issued or directly and guaranteed or insured by the United States or any agency or instrumentality thereof having maturities of not more than twelve (12) months from the date of acquisition; (b) securities issued by any state of the United States or any political subdivision of any such state or any public instrumentality thereof having maturities of not more than twelve (12) months from the date of acquisition and having one of the two highest ratings from either Standard & Poor’s, a division of The McGraw-Hill Companies, Inc., or Moody’s Investors Service, Inc.; (c) certificates of deposit, denominated solely in U.S. Dollars, maturing within 180 days after the date of acquisition, issued by any commercial bank organized under the laws of the United States or any state thereof or the District of Columbia or that is a U.S. subsidiary of a foreign commercial bank; in each of the foregoing cases, solely to the extent that: (i) such commercial bank’s short-term commercial paper is rated at least A-1 or the equivalent by Standard & Poor’s, a division of The McGraw-Hill Companies, Inc., or at least P-1 or the equivalent thereof by Moody’s Investors Service, Inc. (any such commercial bank, an “Approved Bank”); or (ii) the par amount of all certificates of deposit acquired from such commercial bank are fully insured by the Federal Deposit Insurance Corporation; or (d) commercial paper issued by any Approved Bank (or by the parent company thereof), in each case maturing not more than twelve months after the date of the acquisition thereof.

 

Cash Management Services” means any cash management or related services including treasury, depository, return items, overdraft, controlled disbursement, credit, purchasing debit card, merchant store value cards, e-payables services, electronic funds transfer, interstate depository network, treasury management services (including controlled disbursement services), cash pooling arrangements, automatic clearing house transfer (including the Automated Clearing House processing of electronic funds transfers through the direct Federal Reserve Fedline system) and other cash management arrangements.

 

Casualty Event” means any material loss of or damage to any tangible property or interest in tangible property of Parent or any Subsidiary.

 

CERCLA” shall mean the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. § 9601 et seq.

 

Certificate of Title Collateral” shall mean all Vehicles and Rolling Stock (to the extent covered by a certificate of title), in each case, with a fair market value in excess of $100,000.

 

CFP” means any current or future U.S. federal, state, regional or local renewable or clean transportation fuel program, other than the RFS, the LCFS, and the OCFP.

 

Change in Law” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.

 

6

 

Change of Control” means an event or series of events by which:

 

(a)       the direct or indirect Transfer (other than by way of merger or consolidation permitted hereunder), in one or a series of related transactions, of all or substantially all of the Properties or assets of Loan Parties taken as a whole, to any “person” (as that term is defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended);

 

(b)       the adoption of a plan relating to the liquidation or dissolution of Parent;

 

(c)       the consummation of any transaction (including any merger or consolidation), in one or a series of related transactions, the result of which is that any “person” (as that term is defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended), becomes the beneficial owner, directly or indirectly, of more than 33% of the Equity Interest of Parent, measured by voting power rather than number of shares, units or the like;

 

(d)       Parent fails to own and control, directly or indirectly, one hundred percent (100%) of the Equity Interests of (x) the Borrower and (y) each other Loan Party, unless, in the case of this clause (y), permitted hereunder;

 

(e)       during any period of twelve (12) consecutive months commencing on or after the Closing Date, the occurrence of a change in the composition of the Board of Parent such that a majority of the members of such Board are not Continuing Directors; or

 

(f)        a “change of control” or any comparable term which would result in an “event of default”, termination event or similar or equivalent event would occur under, and as defined in, any other Indebtedness (with an aggregate principal amount, together with all related Indebtedness, in excess of the Threshold Amount) of the Loan Parties, shall have occurred.

 

Closing Date” has the meaning assigned to it in Section 3.1.

 

Code” means the Uniform Commercial Code as adopted and in effect in the State of New York, as amended from time to time, provided, that, to the extent that the Code is used to define any term herein or in any Loan Document and such term is defined differently in different Articles or Divisions of the Code, the definition of such term contained in Article or Division 9 shall govern; provided further, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection, or priority of, or remedies with respect to, Agent’s Lien on any Collateral is governed by the Uniform Commercial Code in effect in a jurisdiction other than the State of New York, the term “Code” shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection, priority, or remedies and for purposes of definitions relating to such provisions.

 

Collateral” means the property described on Exhibit A attached hereto.

 

7

 

Collateral Access Agreement” means an agreement reasonably satisfactory in form and substance to the Agent and the Required Lenders (it being agreed that the Agent shall not be obligated to enter into any agreement where it indemnifies a third party in Agent’s individual capacity) executed by (a) a bailee or other Person in possession of Collateral, and/or (b) any mortgagee or lessor of real property on which Collateral is stored, pursuant to which such Person (i) acknowledges the Agent’s Lien on the Collateral, (ii) releases or waives such Person’s Liens in such stored Collateral held by such Person or located on such real property, (iii) provides the Agent with access to such Collateral held by such bailee or other Person or located in or on such real property upon prior notice and on mutually agreeable terms and conditions, (iv) as to any mortgagee or landlord, provides the Agent with a reasonable time to sell and dispose of the Collateral from such real property on mutually agreeable terms and conditions, and (v) makes such other agreements with the Agent as the Agent may reasonably require, including but not limited to, leasehold mortgagee protections in favor of Agent to the extent such real property is subject to a Mortgage, in each case, as such agreements are amended, amended and restated, replaced, supplemented or otherwise modified from time to time.

 

Collateral Assignment of Material Contracts” means that (x) certain Collateral Assignment of Material Contracts, dated as of the Closing Date, by Parent in favor Agent relating to Material Contracts with Synergy Supply & Trading LLC, and Idemitsu Apollo Renewable Corp. and (y) any other collateral assignment of Material Contracts entered into after the date hereof.

 

Collateral Documents” means Article 4 of this Agreement, the Collateral Pledge Agreement, the Mortgages, if any, the Collateral Access Agreements, if any, any Control Agreement, each Collateral Assignment of Material Contracts, and all other instruments, documents, and agreements delivered by any Loan Party pursuant to this Agreement or any of the other Loan Documents which purport to grant to Agent, for the benefit of Secured Parties, a Lien on any real, personal, or mixed property of such Loan Party as security for the Secured Obligations and any power of attorney from time to time granted by Agent in relation to notating the Agent’s Lien on any Certificate of Title Collateral, in each case, as such Collateral Documents may be amended, amended and restated, replaced, supplemented or otherwise modified from time to time.

 

Collateral Pledge Agreements” mean, collectively, any pledge agreement relating to the Equity Interests or evidence of Indebtedness of any Subsidiary owned directly or indirectly by a Loan Party to the extent necessary or useful to perfect Agent’s security interest therein under Applicable Law, in each case, as amended, amended and restated, replaced, supplemented or otherwise modified from time to time.

 

Collateral Threshold Amount” means $250,000.

 

Commercial Tort Claim” means any “commercial tort claim” as defined in the Code.

 

“Commitment Letter” means that certain Commitment Letter, dated as of the February 17, 2022, by and between Parent, Borrower and the Initial Lenders, as may be amended, amended and restated, replaced, supplemented or otherwise modified from time to time.

 

Compliance Certificate” has the meaning given to such term in Section 6.4.

 

8

 

“Conforming Renewable Product” means a renewable diesel that (i) is produced from one hundred percent (100%) Renewable Biomass and no portion of which is produced from non-renewable feedstock, including petroleum products; (ii) meets the Renewable Product Specifications, and (iii) is eligible to generate a valid RIN with a D Code of 4 under the RFS.

 

“Connection Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.

 

Consolidated Liquidity” means, for any period, an amount determined for the Loan Parties on a consolidated basis, equal to the aggregate sum of Unrestricted Cash of the Loan Parties.

 

Construction Agreement” means that certain Construction Agreement dated on or about the Closing Date, by and between the Borrower and Hargrove & Associates, Inc.

 

Contingent Obligation” means, as applied to any Person, any obligation, whether contingent or otherwise, with respect to any indebtedness, lease, dividend, letter of credit of such Person or other obligation of another Person, including, without limitation, any obligation of such Person, with respect to (i) undrawn letters of credit, corporate credit cards, or merchant services issued or provided for the account of that Person; and (ii) all obligations arising under any agreement or arrangement designed to protect such Person against fluctuation in interest rates, currency exchange rates or commodity prices; provided, however, that the term “Contingent Obligation” shall not include endorsements for collection or deposit in the ordinary course of business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determined amount of the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by Agent in good faith; provided, however, that such amount shall not in any event exceed the maximum amount of the obligations under such guarantee or other support arrangement.

 

Continuing Director” means (a) any member of the Board who was a director (or comparable manager) of Parent on the Closing Date, (b) any individual who becomes a member of the Board after the Closing Date if such individual was approved, appointed or nominated for election to the Board by a majority of the members of the Board on the Closing Date, and (c) any individual who becomes a member of the Board after the Closing Date if such individual was approved, appointed or nominated for election to the Board by a majority of the members of the Board referred to in clauses (a) and (b) constituting at the time of such approval, appointment or nomination at least a majority of that Board.

 

Contractual Obligation” means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.

 

9

 

Control” means the ability to directly or indirectly vote more than thirty percent (30%) of the outstanding voting stock of any Person. “Controlling” and “Controlled” have meanings correlative thereto.

 

Control Agreement” means an account control agreement, the terms of which are reasonably satisfactory to Agent and Required Lenders (it being agreed that the Agent shall not be obligated to enter into any agreement where it indemnifies a third party in Agent’s individual capacity; provided that the Control Agreement entered into on or about the Closing Date is satisfactory to Agent), which is executed by Agent, each Loan Party and the applicable financial institution and/or securities/investment intermediary, and which perfects Agent’s (for itself and for the benefit of the Lenders) first priority security interest in the Loan Parties’ accounts maintained at such financial institution or securities/investment intermediary, in each case, as amended, amended and restated, replaced, supplemented or otherwise modified from time to time.

 

Copyrights” means any and all copyright rights in the United States (whether registered or unregistered and whether published or unpublished), copyright applications, copyright registrations and like protections in each work or authorship and derivative work thereof, together with any and all (i) rights and privileges arising under Applicable Law with respect thereto and (ii) renewals and extensions thereof.

 

Covered Entity” means any of the following:

 

(a)       a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b);

 

(b)       a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or

 

(c)       a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).

 

Covered Party” has the meaning given to such term in Section 14.10(b).

 

Current Financial Statements” has the meaning given to such term in Section 5.9.

 

Debtor Relief Laws” means the Bankruptcy Code of the United States and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, arrangement, compromise, receivership, insolvency, reorganization, or similar debtor relief Laws (including applicable provisions of any corporate laws) of the United States or any state thereof or other applicable jurisdictions from time to time in effect.

 

Default” means any event which with the passing of time or the giving of notice or both would become an Event of Default hereunder.

 

Default Rate” means the per annum rate of interest equal to (i) the then Applicable Rate, plus (ii) 2% per annum.

 

10

 

Defaulting Lender” means any Lender that:

 

(a)       has failed to (i) fund any payments required to be made by it under the Loan Documents within two (2) Business Days after any such payment is due (excluding expense and similar reimbursements that are subject to good faith disputes) unless such Lender notifies Agent and the Borrower in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied or (ii) pay to Agent or any other Lender any other amount required to be paid by it hereunder within two (2) Business Days of the date when due,

 

(b)       has given written notice (and Agent has not received a revocation in writing), to the Borrower, Agent or has otherwise publicly announced (and Agent has not received notice of a public retraction) that such Lender believes it will fail to fund payments or purchases of participations required to be funded by it under the Loan Documents (unless such writing or public statement relates to such Lender’s obligation to fund a Term Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied), or

 

(c)       has, or any Person that directly or indirectly controls such Lender has, (i) become subject to a voluntary or involuntary case under an Insolvency Proceeding, (ii) had a custodian, conservator, receiver or similar official appointed for it or any substantial part of such Person’s assets or (iii) made a general assignment for the benefit of creditors, been liquidated, or otherwise been adjudicated as, or determined by any Governmental Authority having regulatory authority over such Person or its assets to be, insolvent or bankrupt, and for this clause (c), Agent has determined that such Lender is reasonably likely to fail to fund any payments required to be made by it under the Loan Documents.

 

Deposit Account” means any “deposit account” as defined in the Code.

 

Disclosure Amount” means $250,000.

 

Disclosure Letter” means the disclosure letter/perfection certificate dated as of the Closing Date containing certain information and schedules delivered by the Loan Parties to Agent and the Lenders (as such disclosure letter/perfection certificate may be supplemented from time to time in accordance with the terms of this Agreement).

 

Disqualified Equity Interests” means any Equity Interest that, by its terms (or by the terms of any security or other Equity Interests into which it is convertible or for which it is exchangeable), or upon the happening of any event or condition (a) matures or is mandatorily redeemable (other than solely for Qualified Equity Interests), pursuant to a sinking fund obligation or otherwise (except as a result of a change of control or asset sale so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale event shall be subject to the prior repayment in full of the Term Loans and all other Obligations that are accrued and payable and the termination of the Term Loan Commitments), (b) is redeemable at the option of the holder thereof (other than solely for Qualified Equity Interests), in whole or in part, (c) provides for the scheduled payments of dividends in cash, or (d) is or becomes convertible into or exchangeable for Indebtedness or any other Equity Interests that would constitute Disqualified Equity Interests, in each case, prior to the date that is ninety-one (91) days after the Maturity Date of the Term Loans at the time of issuance;  provided  that if such Equity Interests are issued pursuant to a plan for the benefit of employees of any Loan Party or by any such plan to such employees, such Equity Interests shall not constitute Disqualified Equity Interests solely because it may be required to be repurchased by any Loan Party in order to satisfy applicable statutory or regulatory obligations.

 

11

 

Disqualified Institution” shall mean any person that is (i) designated by the Borrower by written notice delivered to Agent on or prior to the Closing Date or (ii) a competitor of the Parent or its Subsidiary Guarantors that has been identified by the Borrower to Agent, but excluding any affiliate that is primarily engaged in, or that advises funds or other investment vehicles that are engaged in, making, purchasing, holding or otherwise investing in commercial loans, bonds and similar extensions of credit or securities in the ordinary course and with respect to which the Disqualified Institution does not, directly or indirectly, possess the power to direct or cause the direction of the investment policies of such entity.

 

Disqualified Stock” means any Equity Interest that, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, (a) matures (excluding any maturity as the result of an optional redemption by the issuer thereof) or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof, in whole or in part, or requires the payment of any cash dividend or any other scheduled payment constituting a return of capital, in each case at any time on or prior to the date that is one year and one day following the Maturity Date; or (b) is convertible into or exchangeable (unless at the sole option of the issuer thereof) for (i) debt securities or (ii) any Equity Interest referred to in clause (a) above, in each case at any time on or prior to the date that is one year and one day following the Maturity Date.

 

EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.

 

EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

 

EEA Resolution Authority” means any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

 

Engineering Review” means a third party engineering review by a licensed professional engineer that confirms the Renewable Diesel Project has achieved Mechanical Completion.

 

12

 

Environmental Claim” means any complaint, summons, citation, notice, request for information, notice of potential liability, notice of violation, directive, order, claim, suit, litigation, investigation, judicial or administrative proceeding, judgment, letter, or other written communication from any Governmental Authority or any other Person arising (i) pursuant to or in connection with any actual or alleged violation of any Environmental Law or permit, license or approval issued thereunder; (ii) in connection with the actual or alleged presence, Release or threatened Release of Hazardous Materials; (iii) exposure to any Hazardous Materials; or (iv) in connection with any actual or alleged liability under Environmental Law arising from any damage, injury, threat or harm to human health or safety, natural resources or the environment.

 

Environmental Law” means any federal, state, provincial, foreign or local statute, law, rule, regulation, ordinance, code, or rule of common law now or hereafter in effect and in each case as amended, or any binding and enforceable judicial or administrative interpretation thereof, including any judicial or administrative order, consent decree or judgment, in each case, to the extent binding on any Loan Party and/or any Subsidiary thereof, relating to (i) the protection of human health, safety and the environment, (ii) the conservation, management or use of natural resources and wildlife, (iii) the manufacture, processing, handling, generation, use, disposal, production, storage, handling, treatment, Release, threatened Release or transport of, or exposure to, Hazardous Materials, (iv) occupational health and safety (to the extent relating to Hazardous Materials) or (v) pipeline safety, in each case as amended from time to time.

 

Environmental Liabilities” means all liabilities, contingent or otherwise (including any liability for damages, costs of medical monitoring, costs of environmental remediation or restoration, fines, penalties or indemnities), of the Borrower, any other Loan Party or any of their respective Subsidiaries directly or indirectly resulting from or based upon (a) any violation of any Environmental Law or permit, license or approval issued thereunder, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the Release or threatened Release of any Hazardous Materials or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

 

Environmental Lien” means any Lien in favor of any Governmental Authority for Environmental Liabilities.

 

Equity Interests” mean shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity interests in any Person, and any option, warrant, convertible debt or other right entitling the holder thereof to purchase or otherwise acquire any such equity interest.

 

Equity Issuance” means, any issuance by any Loan Party or any of its Subsidiaries to any Person of its Equity Interests.

 

ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.

 

ERISA Affiliate” means, with respect to any Loan Party, any entity, trade or business (whether or not incorporated) under common control with the Loan Party within the meaning of Section 414(b) or (c) of the Internal Revenue Code (and Sections 414(m) and (o) for purposes of provisions relating to Section 412 of the Internal Revenue Code).

 

13

 

ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) the failure to meet the minimum funding standards of Sections 412 or 430 of the Code or Sections 302 or 303 of ERISA with respect to any Pension Plan (whether or not waived in accordance with Section 412(c) of the Code or Section 302(c) of ERISA) or the failure to make by its due date a required installment under Section 430(j) of the Code with respect to any Pension Plan or the failure to make any required contribution to a Multiemployer Plan; (c) a determination that any Pension Plan is, or is expected to be, in “at risk” status (as defined in Section 430 of the Code or Section 303 of ERISA); (d) a determination that any Multiemployer Plan is, or is expected to be, in “critical” or “endangered” status under Section 432 of the Code or Section 305 of ERISA; (e) a withdrawal by a Loan Party or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (f) a complete or partial withdrawal by a Loan Party or any ERISA Affiliate from a Multiemployer Plan; (g) the filing of a notice of intent to terminate a Pension Plan, the treatment of a Plan amendment as a termination under Section 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (h) an event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; (i) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon Parent or any ERISA Affiliate; (j) receipt from the IRS of notice of the failure of any Pension Plan (or any other Plan intended to be qualified under Section 401(a) of the Code) to qualify under Section 401(a) of the Code, or the failure of any trust forming part of any Pension Plan to qualify for exemption from taxation under Section 501(a) of the Code, (k) the filing by a Loan Party or any ERISA Affiliate of an application with respect to a Pension Plan for a waiver of the minimum funding standard under Section 412(c) of the Code or Section 302(c) of ERISA, or (l) the imposition of a Lien pursuant to Section 430(k) of the Code or Section 303(k) of ERISA or a violation of Section 436 of the Code with respect to any Pension Plan.

 

Erroneous Payment” has the meaning assigned to it in Section 12.11(a).

 

Erroneous Payment Deficiency Assignment” has the meaning assigned to it in Section 12.11(d)(i).

 

Erroneous Payment Impacted Class” has the meaning assigned to it in Section 12.11(d)(i).

 

Erroneous Payment Return Deficiency” has the meaning assigned to it in Section 12.11(d)(i).

 

Erroneous Payment Subrogation Rights” has the meaning assigned to it in Section 12.11(e).

 

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Escrow Account” has the meaning ascribed to such term in the Escrow Agreement.

 

Escrow Agent” means Cantor Fitzgerald Securities, in its capacity as escrow agent under the Escrow Agreement.

 

Escrow Agreement” means that certain Escrow Agreement, dated as of March 2, 2022, by and among the Borrower, Parent, the Initial Lenders party thereto and the Escrow Agent.

 

Escrow Funding Date” means the date upon which the net amounts constituting the Term Loan were funded into the Escrow Account which was March 2, 2022.

 

Event of Default” has the meaning given to such term in Article 8.

 

Excluded Account” means (a) any tax, trust, or payroll account (including, without limitation, accounts used for payroll, payroll taxes, workers’ compensation or unemployment compensation premiums or benefits and other employee wage and benefit payments to or for the benefit of any Loan Party’s employees or for other trust or fiduciary purposes of a Loan Party or accounts of a Loan Party used specifically and exclusively for holding any other taxes required to be collected or withheld by a Loan Party (including, without limitation, federal and state sales, use and excise taxes, customs duties, import duties and independent customs brokers’ charges) for which any Loan Party is or may reasonably be expected to be liable), so long as such deposit account contains only funds to be used exclusively for taxes, trust obligations and payroll obligations, (b) any account solely used to post cash collateral or margin to an Intermediation Facility Agent to secure any Intermediation Facility, (c) any account solely used to post cash collateral or margin to any Bank Product Provider to secure Non-LSA Hedges up to an amount not to exceed $25,000,000 less any amounts secured under clause (m) of Permitted Liens, (d) any collections accounts and other accounts solely containing proceeds of collateral securing Permitted Indebtedness under clauses, (f), (r) or (s) thereof and (e) other deposit accounts, so long as at any time the balance in any such account does not exceed $250,000 and the aggregate balance in all such accounts does not exceed $1,000,000.

 

Excluded Property” means, with respect to any Loan Party, (a) any property which, subject to the terms of clause (c) of “Permitted Indebtedness”, is subject to a Lien of the type described in clause (c) of “Permitted Liens” pursuant to documents that prohibit such Loan Party from granting any other Liens in such property, (b) Excluded Accounts, (c) (i) any contract, permit, license or any contractual obligation entered into by any Loan Party (A) that prohibits or requires the consent of any Person other than any Loan Party and its Affiliates (which consent has not been obtained) as a condition to the creation by such Loan Party of a Lien on any right, title or interest in such permit, license or contractual obligation or any equity interest related thereto or that would be breached or give the other party to the right to terminate such permit, license or contractual obligation as a result thereof or (B) to the extent that any requirement of law applicable thereto prohibits the creation of a Lien thereon, but only, with respect to the prohibition or requirement for consent in clauses (A) and (B), to the extent, and for as long as, such prohibition or requirement for consent (y) was not entered into in contemplation of this Agreement and (z) is not terminated or rendered unenforceable or otherwise deemed ineffective by the Code or any other requirement of law or by the receipt of the applicable Person whose consent is required, and (d) any “intent to use” trademark application for registration of a Trademark filed pursuant to Section 1(b) of the Lanham Act, 15 U.S.C. § 1051, prior to the filing of a “Statement of Use” pursuant to Section 1(d) of the Lanham Act or an “Amendment to Allege Use” pursuant to Section 1(c) of the Lanham Act with respect thereto.

 

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Excluded Subsidiary” means (x) as of the Closing Date, HPRM, LLC, a Delaware limited liability company, Leverage Lubricants, LLC, a Texas limited liability company and Vertex Recovery Management LA, LLC, a Louisiana limited liability company and (y) any Subsidiary that is prohibited, but only so long as such Subsidiary would be prohibited, by any contract entered into by any Loan Party or any Subsidiary acquired after the Closing Date (but only to the extent in existence on the Closing Date or, upon the acquisition of any Subsidiary and in respect of such Subsidiary, in existence on the date of acquisition thereof and, in each case, only to the extent not entered into in contemplation of this Agreement or is not terminated or rendered unenforceable or otherwise deemed ineffective by the Code or any other requirement of law) with one or more unaffiliated third parties, from providing a guaranty of the Secured Obligations or granting a Lien on its assets to secure the Secured Obligations or that would require third party contractual authorization to provide such a guaranty or grant such a Lien unless such authorization has been received (it being understood that the Loan Parties shall not be obligated to seek any authorization except to the extent it is commercially reasonable to do so); provided that the exclusion in this clause (y) shall in no way be construed to (A) apply to the extent that any described prohibition is ineffective under Section 9-406, 9-407, 9-408, or 9-409 of the Code or other applicable law, or (B) limit, impair, or otherwise affect any of the Agent’s continuing security interests in and liens upon any rights or interests of any Loan Party in or to (1) monies due or to become due under or in connection with the Equity Interests of such Excluded Subsidiary, or (2) any proceeds from the sale, license, lease, or other dispositions of the Equity Interests of such Excluded Subsidiary; provided that in the case of clauses (x) or (y) above, such Subsidiary or Subsidiaries shall, upon no longer constituting an “Excluded Subsidiary”, promptly (and, in all events, within 10 Business Days or such longer period as the Required Lenders shall reasonably agree) comply with Sections 6.11 and 6.12; provided further that upon the consummation of the transactions under the Heartland Purchase Agreement, HPRM, LLC shall no longer constitute an Excluded Subsidiary and shall comply with Sections 6.11 and 6.12.

 

Excluded Swap Obligation” means, with respect to any Loan Party, any Hedge Obligation if, and to the extent that, all or a portion of the guaranty of such Loan Party of (including by virtue of the joint and several liability provisions of Section 14.1), or the grant by such Loan Party of a security interest to secure, such Hedge Obligation (or any guaranty thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Loan Party’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder at the time the guaranty of such Loan Party or the grant of such security interest becomes effective with respect to such Hedge Obligation. If a Hedge Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Hedge Obligation that is attributable to swaps for which such guaranty or security interest is or becomes illegal.

 

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“Excluded Taxes” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Term Loan or Term Loan Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Term Loan or Term Loan Commitment or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 2.9, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office, (c) Taxes attributable to such Recipient’s failure to comply with Section 2.9(g) and (d) any withholding Taxes imposed under FATCA.

 

Existing Convertible Notes” means the 6.25% Convertible Senior Notes due 2027 issued by Vertex Energy Operating LLC listed in Section 8 of the Disclosure Letter.

 

FATCA” means Sections 1471 through 1474 of the Internal Revenue Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Internal Revenue Code and any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement, treaty or convention among Governmental Authorities and implementing such Sections of the Internal Revenue Code.

 

Federal Funds Rate” means, for any day, the rate per annum calculated by the Federal Reserve Bank of New York based on such day’s federal funds transactions by depositary institutions (as determined in such manner as the Federal Reserve Bank of New York shall set forth on its public website from time to time) and published on the next succeeding Business Day by the Federal Reserve Bank of New York as the federal funds effective rate; provided that if the Federal Funds Rate as so determined would be less than zero, such rate shall be deemed to be zero for the purposes of this Agreement.

 

“Fee Letter” means that certain Fee Letter, dated as of the February 17, 2022, by and between Parent, Borrower and the Initial Lenders, as may be amended, amended and restated, replaced, supplemented or otherwise modified from time to time.

 

Flood Laws” means all Applicable Law relating to policies and procedures that address requirements placed on federally regulated lenders under the National Flood Insurance Reform Act of 1994 and other Applicable Law related thereto.

 

Foreign Lender” means any Lender that is not a U.S. Person.

 

Free Trade Amount” has the meaning assigned to it in Section 14.1(f).

 

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Fund” means any Person (other than a natural Person), fund, commingled investment vehicle or managed account that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans, bonds and similar extensions of credit in the ordinary course of its activities.

 

Funds Flow Memorandum” shall mean that certain funds flow memorandum to be dated the Closing Date and executed and delivered by the Borrower to the Agent in connection with the application of Term Loan proceeds on the Closing Date, which funds flow memorandum shall be in form and substance reasonably satisfactory to the Initial Lenders.

 

GAAP” means, as of any date of determination, generally accepted accounting principles as then in effect in the United States of America set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board.

 

GDPR” means the European Union General Data Protection Regulation, Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 of the European Parliament and the Council of the European Union and all regulations promulgated thereunder.

 

Governmental Authority” means (a) any United States federal, state, county, municipal or foreign government, or political subdivision thereof, (b) any governmental or quasi-governmental agency, authority, board, bureau, commission, department, instrumentality or public body, (c) any court or administrative tribunal or (d) with respect to any Person, any arbitration tribunal or other similar non-governmental authority to whose jurisdiction that Person has consented.

 

Guarantee” means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness of the kind described in the definition thereof or other obligation payable or performable by another Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed or expressly undertaken by such Person (or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien). The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith. The term “Guarantee” as a verb has a corresponding meaning.

 

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Guaranteed Obligations” has the meaning given to such term in Section 13.1.

 

Guarantor Joinder Agreement” means the agreement substantially in the form of Exhibit B-2 hereto.

 

Guaranty” means, collectively, the Guarantee made by the Guarantors under Article 13 in favor of the Secured Parties, together with each other guaranty delivered pursuant to Section 6.11, in each case, as amended, amended and restated, replaced, supplemented or otherwise modified from time to time.

 

Hazardous Materials” means (a) any material, substance, chemical, waste, product, derivative, compound, mixture, solid, liquid, mineral or gas, in each case, whether naturally occurring or manmade, that is defined, designated, identified or classified as a hazardous waste, hazardous substance, hazardous material, pollutant, contaminant or toxic substance under, or for which liability or standards of care are imposed by, any Environmental Law; and (b) any petroleum, petroleum distillate or petroleum-derived substances or products, crude oil, natural gas, natural gas liquids, synthetic gas, drilling fluids, produced waters, and other wastes associated with the exploration, development or production of crude oil or natural gas, radon, radioactive materials or wastes, per- and polyfluoroalkyl substances, asbestos or asbestos-containing materials, lead or lead-containing materials, urea formaldehyde foam insulation, and polychlorinated biphenyls.

 

Heartland Election Notice” has the meaning ascribed to such term in clause (g) of the definition of “Permitted Indebtedness” contained herein.

 

Heartland Indebtedness” has the meaning ascribed to such term in clause (g) of the definition of “Permitted Indebtedness” contained herein.

 

Heartland Purchase Agreement” means that certain Purchase and Sale Agreement dated as of February 25, 2022, between Vertex Splitter Corporation and Tensile-Vertex Holdings LLC, as amended, restated, amended and restated, supplemented or otherwise modified after the date thereof.

 

Heartland ROFR” has the meaning ascribed to such term in clause (g) of the definition of “Permitted Indebtedness” contained herein.

 

Heartland ROFR Notice” has the meaning ascribed to such term in clause (g) of the definition of “Permitted Indebtedness” contained herein.

 

Hedge Obligations” means any and all obligations or liabilities, whether absolute or contingent, due or to become due, now existing or hereafter arising, of each Loan Party arising under, owing pursuant to, or existing in respect of Hedging Agreements entered into with one or more of the Hedge Providers; provided that Hedge Obligations shall not include any obligations (including, without limitation, any Transaction Obligations and Related Hedges (in each case, under and as defined under the Intermediation Facility (as in effect on the date hereof)) under any Intermediation Facility Document, including, without limitation, by virtue of setoff or indemnification rights under the Intermediation Facility Documents.

 

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Hedge Provider” means any Bank Product Provider that is a party to a Hedging Agreement with a Loan Party or otherwise provides Bank Products under clause (f) of the definition thereof.

 

Hedging Agreement” means any interest rate protection agreement, foreign currency exchange agreement, commodity price protection agreement or other interest or currency exchange rate or commodity price hedging arrangement, in each case, as amended, amended and restated, replaced, supplemented or otherwise modified from time to time; provided that, notwithstanding anything to the contrary, Intermediation Facility Documents shall not constitute a Hedging Agreement hereunder.

 

Highbridge Lenders” means each of the Lenders party hereto that are managed by Highbridge Capital Management, LLC.

 

Indebtedness” of any Person means, without duplication, (a) all obligations of such Person for borrowed money (including interest whether charged at the Applicable Rate or otherwise) or with respect to deposits or advances of any kind, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person upon which interest charges are customarily paid, (d) all obligations of such Person under conditional sale or other title retention agreements relating to property or assets purchased by such Person, including any earn-out obligations, (e) all obligations of such Person issued or assumed as the deferred purchase price of property or services (excluding trade accounts payable and accrued obligations incurred in the ordinary course of business and not more than sixty (60) days past due), (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the obligations secured thereby have been assumed, (g) all Contingent Obligations of such Person (not in duplication of any other clause of this definition), (h) all Capital Lease Obligations and Synthetic Lease Obligations of such Person, (i) all obligations of such Person as an account party in respect of letters of credit, (j) all obligations of such Person in respect of bankers’ acceptances, (k) obligations in respect of Disqualified Stock, and (l) all obligations of such Person in respect of any exchange traded or over the counter derivative transaction, including any Hedging Agreement, in each case, whether entered into for hedging or speculative purposes or otherwise. The amount of any Indebtedness of any Person in respect of a Hedging Agreement shall be the amount determined in respect thereof as of the end of the then most recently ended calendar quarter of such Person, based on the assumption that such Hedging Agreement had terminated at the end of such calendar quarter. In making such determination, if any agreement relating to such Hedging Agreement provides for the netting of amounts payable by and to such Person thereunder or if any such agreement provides for the simultaneous payment of amounts by and to such Person, then in each such case, the amount of such obligation shall be the net amount so determined, in each case to the extent that such agreement is legally enforceable in Insolvency Proceedings against the applicable counterparty thereof. The Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture in which such Person is a general partner or joint venture; provided that Indebtedness will not be deemed to include obligations incurred in advance of, and the proceeds of which are to be applied in connection with, the consummation of a transaction (including any proceeds held in an escrow, trust, collateral or similar account or arrangement for a period of no longer than 30 days (or such longer period to which the Required Lenders may reasonably agree).

 

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Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of the Borrower under any Loan Document and (b) to the extent not otherwise described in (a), Other Taxes.

 

Initial Lender” means each of the Whitebox Lenders, the Highbridge Lenders, the BlackRock Lenders, Chambers Energy Capital IV, LP, CrowdOut Credit Opportunities Fund LLC, and CrowdOut Capital LLC.

 

Insolvency Proceeding” means any proceeding commenced by or against any Person or entity under any provision of the United States Bankruptcy Code, as amended, or under any other bankruptcy or insolvency law (domestic or foreign), including assignments for the benefit of creditors, formal or informal moratoria, compositions, extensions generally with its creditors, or proceedings seeking reorganization, arrangement, or other relief.

 

Insolvent” means, with respect to any Person as of any date of determination, that (a) the sum of the debt (including contingent liabilities existing as of the date hereof) of such Person and its subsidiaries (on a consolidated basis) exceeds the present fair saleable value of the present assets of such Person and its subsidiaries (on a consolidated basis), (b) the capital of such Person and its subsidiaries (on a consolidated basis) is not unreasonably small in relation to its business as of such date or as contemplated as of such date, (c) such Person and its subsidiaries have incurred, or reasonably believe that they will incur, debts beyond their ability to pay such debts as they mature or, in the case of contingent liabilities, otherwise become payable, or (d) such Person is not “solvent” or is “insolvent”, as applicable within the meaning given those terms and similar terms under Applicable Law relating to fraudulent transfers and conveyances.

 

“Intellectual Property” means all of a Person’s right, title, and interest in and to the following: Copyrights, Trademarks and Patents (including registrations and applications therefor prior to granting, and whether or not filed, recorded or issued); domain names; all trade secrets and related rights, including without limitation rights to unpatented inventions, know-how and manuals; all design rights; claims for damages by way of past, present and future infringement of any of the rights included above; all amendments, renewals and extensions of any Copyrights, Trademarks or Patents; all licenses or other rights to use any of the foregoing and all license fees and royalties arising from such use; and all proceeds and products of the foregoing.

 

Intellectual Property Security Agreement” means the agreement substantially in the form of Exhibit F hereto, as amended, amended and restated, replaced, supplemented or otherwise modified from time to time.

 

Intercreditor Agreement” means that certain Intercreditor Agreement, dated as of the date hereof, by and between the Agent, the Lenders, each Intermediation Facility Agent party thereto from time to time, and acknowledged by the Loan Parties, or any Market Intercreditor Agreement or other intercreditor agreement entered into from time to time by the Loan Parties, Agent and other secured parties party thereto, in each case as amended, amended and restated, replaced, supplemented or otherwise modified from time to time. 

 

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Intercreditor Provisions” has the meaning assigned to it in Section 8.16.

 

Intermediation Facility” means (x) that certain Supply and Offtake Agreement, dated as of the date hereof, entered into by the certain of the Loan Parties (including any replacement or refinancing of thereof) subject to and in accordance with the terms and conditions of the Intercreditor Agreement and (y) any other intermediation, monetization, supply and offtake or similar arrangement entered into by the Loan Parties, that provides for the purchase and/or sale or the financing of the Loan Parties of Intermediation Facility Priority Collateral, and the transactions contemplated thereby and entered into thereunder and in connection therewith, in each case, as amended, amended and restated, replaced, supplemented or otherwise modified from time to time, subject to a Market Intercreditor Agreement.

 

Intermediation Facility Agent” means any Intermediators and/or any agent or representative acting for the Intermediators under the Intercreditor Agreement.

 

Intermediation Facility Documents” means the agreements documenting an Intermediation Facility between a Loan Party, the Intermediators and any Intermediation Facility Agent, in each case, as amended, amended and restated, replaced, supplemented or otherwise modified from time to time.

 

Intermediation Facility Priority Collateral” has the meaning specified therefor in the Intercreditor Agreement.

 

Intermediators” means Macquarie Energy North America Trading Inc and any other financing providers under any Intermediation Facility (including any replacement or refinancing of thereof), as the case may be.

 

Internal Revenue Code” means the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

 

Inventory” means “inventory” as defined in the Code, including work in process and finished products intended for sale or lease or to be furnished under a contract of service, of every kind and description now or at any time hereafter owned by or in the custody or possession, actual or constructive, of any Loan Party, including such inventory as is temporarily out of its custody or possession or in transit and including any returns upon any accounts or other proceeds, including insurance proceeds, resulting from the sale or disposition of any of the foregoing and any documents of title representing any of the above, and each Loan Party’s Books relating to any of the foregoing.

 

Investment” means any beneficial equity ownership in any Person (including stock, partnership interest or other securities), any purchase or other acquisition of debt or other securities of any Person, any loan, advance or capital contribution to, or Guarantee or assumption of debt of, any Person (including any partnership or joint venture interest in any Person), or the purchase or other acquisition (in one transaction or series of transactions) of all or substantially all of the property and assets or business of any Person or assets constituting a business unit, line of business or division of any Person.

 

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Involuntary Disposition” means any loss of, damage to or destruction of, or any condemnation or other taking for public use of, any property of any Loan Party .

 

“IRS” means the United States Internal Revenue Service.

 

Knowingly” has a correlative meaning of undertaking an action with Knowledge.

 

Knowledge” means, with respect to a Person, the knowledge of the individuals of such Person, including a Responsible Officer, who have the responsibility for any day-to-day decision making, or legal, operational, or financial affairs of such Person, which knowledge shall include any and all facts and other information of such Person actually knew or reasonably should have known in accordance with all applicable industry standards and commercially reasonable prudence and diligence.

 

Laws” means, collectively, all international, foreign, federal, state, provincial, territorial and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.

 

LCFS” means the California Low Carbon Fuel Standard as set forth in Section 95484 of Title 17 of the California Code of Regulations, as amended or supplemented.

 

Lender Expenses” means all reasonable and reasonably documented out-of-pocket costs or expenses (including reasonable attorneys’ fees and expenses), incurred by Agent or any Lender in connection with the preparation, negotiation, administration, any Default or Events of Default, and enforcement of the Loan Documents (including without limitation the reasonable and documented legal fees and expenses of (i) Sidley Austin LLP, counsel for the Lender group (and one local counsel in each applicable jurisdiction, for the Lenders as a group and the Agent), (ii) Shipman & Goodwin LLP, counsel to the Agent, and (iii) Clifford Chance LLP, as special counsel for the Blackrock Lenders with scope of role and limitations as agreed by Blackrock and the Borrower), including any amendments, modifications, consents and waiver to and/or under any and all Loan Documents; any public record searches conducted by or at the request of Agent from time to time, including without limitation, title investigations, public records searches, pending litigation and tax lien searches and searches for applicable corporate, limited liability, partnership and related records; reasonable Collateral audit fees incurred by Agent or any Lender; and Agent’s and any Lender’s reasonable attorneys’ fees and expenses incurred before, during and/or after an Insolvency Proceeding (i) protecting, storing, insuring, handling, maintaining, auditing, examining, valuing or selling any Collateral; or (ii) maintaining, amending, enforcing, collecting, performing (including any workout or restructuring) or defending the Loan Documents; or incurred in any other matter or proceeding relating to the Loan Documents (including in all cases, without limit, court costs, legal expenses and reasonable attorneys’ fees and expenses, whether or not suit is instituted, and, if suit is instituted, whether at trial court level, appellate court level, in a bankruptcy, probate or administrative proceeding or otherwise).

 

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Lender Group” has the meaning assigned to it in Section 14.1(b).

 

Lien” means any pledge, bailment, lease, mortgage, deed of trust (or similar instrument), hypothecation, conditional sales and title retention agreement, charge, claim, encumbrance, preference, priority or other lien (statutory or otherwise) in favor of any Person.

 

Loan Documents” means, collectively, this Agreement, each Note, the Warrants, the Warrant Agreement, the Registration Rights Agreement, the Agent Fee Letter, the Fee Letter, the Commitment Letter, any Borrower Joinder Agreement, any Guarantor Joinder Agreement, each Notice of Borrowing, the Collateral Documents, any Subordination Agreement and all other documents, instruments and agreements executed or delivered by any Loan Party to or for the benefit of Agent and Lenders in connection with this Agreement, all as amended or extended from time to time.

 

Loan Party” means the Borrower and each Guarantor.

 

Market Intercreditor Agreement” means any intercreditor agreement in form and substance reasonably acceptable to the Required Lenders, the Borrower and the other secured parties party thereto establishing, among other things, the relative Lien and payment priorities of the Secured Obligations vis-à-vis other Permitted Indebtedness (i.e., whether that the holder of such Permitted Lien will have a first priority lien in such Collateral), and terms relating to the control of remedies; provided that in no event shall the Intercreditor Agreement be considered precedent for any Market Intercreditor Agreement.

 

Material Adverse Effect” means a material adverse effect on (i) the business, operations, assets, liabilities, prospects or condition (financial or otherwise) of Parent and the other Loan Parties taken as a whole, (ii) the ability of Borrower to repay the Secured Obligations or any Loan Party to otherwise perform its obligations under the Loan Documents, or (iii) the validity, perfection or priority of, or any impairment to, Agent’s security interests in the Collateral or Agent’s right to enforce any of its rights or remedies with respect to the Secured Obligations.

 

Material Contracts” means any contract or agreement (whether written or oral) to which any Loan Party is a party where the aggregate consideration payable to or by such Loan Party pursuant to the terms of such contract or agreement exceeds 10% of such Loan Party’s expenditures for contracts or agreements of such type, with the types of “expenditures” being (A) Revenue, (B) costs and (C) operating expenditures.

 

Maturity Date” means April 1, 2025; provided that if such day is not a Business Day, the Maturity Date shall be the Business Day immediately succeeding such day.

 

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Mechanical Completion” has the meaning set forth in the Construction Agreement (as in effect on the date hereof).

 

Mobile Refinery” means that certain refinery and related assets in Mobile, Alabama to be purchased pursuant to the Mobile Refinery Acquisition Agreement.

 

Mobile Refinery Acquisition” means the consummation of the purchase of the Mobile Refinery from Shell on terms satisfactory to the Initial Lenders pursuant to the terms of the Mobile Refinery Acquisition Agreement.

 

Mobile Refinery Acquisition Agreement” means that certain Sale and Purchase Agreement by and between Borrower (as successor in interest to Vertex Energy Operating, LLC, a Texas limited liability company), as the Buyer, and Equilon Enterprises LLC d/b/a Shell Oil Products US, Shell Chemical LP, and Shell Oil Company, as Sellers.

 

Mortgage” means a mortgage, deed of trust, trust deeds, or deed to secure debt, in form and substance reasonably satisfactory to the Required Lenders, made by a Loan Party in favor of Agent for the benefit of Agents and the Lenders, securing the Secured Obligations and delivered to Agent, in each case, as amended, amended and restated, replaced, supplemented or otherwise modified from time to time.

 

Multiemployer Plan” means any “multiemployer plan” (as defined in Section 4001(a)(3) of ERISA) to which a Loan Party or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding six years has made or been obligated to make contributions.

 

Myrtle Grove Purchase Agreement” means that certain Purchase and Sale Agreement dated as of February 25, 2022, between Vertex Splitter Corporation, Tensile – Vertex Holdings LLC and Tensile-Myrtle Grove Acquisition Corporation, as amended, restated, amended and restated, supplemented or otherwise modified from time to time following the date thereof.

 

Negotiable Collateral” means all Collateral of which any Loan Party is a beneficiary, including, letters of credit, notes, drafts, instruments, securities, documents of title, and chattel paper, and such Loan Party’s Books relating to any of the foregoing.

 

Net Cash Proceeds” means the aggregate cash or Cash Equivalents proceeds received by Parent or any Subsidiary in respect of any Transfer, Equity Issuance, or Involuntary Disposition, net of (a) direct costs incurred in connection therewith (including, without limitation, legal, accounting and investment banking fees and sales commissions), (b) taxes paid or payable as a result thereof and (c) in the case of any Transfer or any Involuntary Disposition, the amount necessary to retire any Indebtedness permitted to be incurred hereunder and secured by a Permitted Lien (ranking senior to any Lien of the Agent) on the related property; it being understood that “Net Cash Proceeds” shall include, without limitation, any cash or Cash Equivalents received upon the sale or other disposition of any non-cash consideration received by Parent or any Subsidiary in any Transfer, Equity Issuance, or Involuntary Disposition.

 

New Facility” has the meaning specified therefor in Section 6.14(c).

 

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Non-Conforming Renewable Product” means a renewable diesel that (i) is produced from one hundred percent (100%) Renewable Biomass and no portion of which is produced from non-renewable feedstock, including petroleum products; and (ii) does not meet the Renewable Product Specifications.

 

Non-Consenting Lender” has the meaning specified therefor in Section 14.15.

 

Note” means a secured promissory note in favor of a Lender in substantially the form of Exhibit E.

 

Notice of Borrowing” means a notice of borrowing of a Term Loan pursuant to the terms of this Agreement in substantially the form of Exhibit D.

 

Obligations” means all debt, principal, interest, fees, charges, indemnities, Lender Expenses and other amounts owing by Borrower or any other Loan Party to Agent or a Lender of any kind and description whether arising under or pursuant to or evidenced by the Loan Documents, and whether or not for the payment of money, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, including the principal and interest due with respect to the Term Loans, and further including all Lender’s Expenses that Borrower or any other Loan Party is required to pay or reimburse by the Loan Documents, by law, or otherwise.

 

OCFP” mean the regulations, orders, decrees and standards issued by a Governmental Authority implementing or otherwise applicable to the Oregon Clean Fuels Program as set forth in Oregon Administrative Rules chapter 340, division 253 as defined in Oregon Administrative Rules 340-253-0060(4) and each successor regulation.

 

OFAC” means Office of Foreign Assets Control of the U.S. Treasury Department.

 

Offer” has the meaning assigned to it in Section 14.1(f).

 

OID” means original issue discount.

 

Ordinary Course Acquisition” means an acquisition (whether in a single transaction or related series of transactions) in the ordinary course of Property (including goods, materials, supplies, inventory, equipment and other personal Property) consumable or useful in the operation of the business of the Loan Parties (taken as a whole) not to exceed an aggregate amount equal to $10,000,000 per calendar year, provided that any unused amounts shall be permitted to be carried forward to be used in the following calendar year; provided that in no event shall an event that could otherwise be considered an Approved Acquisition under clauses (a), (b), (c) or (d) of the definition thereof be considered an Ordinary Course Acquisition.

 

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Organization Documents” means, (a) with respect to any corporation, the charter or certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction), (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement or limited liability company agreement (or equivalent or comparable documents with respect to any non-U.S. jurisdiction), (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization (or equivalent or comparable documents with respect to any non-U.S. jurisdiction) and (d) with respect to all entities, any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization (or equivalent or comparable documents with respect to any non-U.S. jurisdiction).

 

Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Term Loan or Loan Document).

 

Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment.

 

Parent” has the meaning given to such term in preamble to this Agreement.

 

“Participant” has the meaning specified in Section 14.1(e).

 

“Participant Register” has the meaning specified in Section 14.1(e).

 

Patents” means all issued patents, patent applications and like protections including without limitation rights and privileges arising under Applicable Law with respect thereto (in the United States), inventions, improvements, divisions, continuations, renewals, reissues, extensions and continuations-in-part of the same.

 

Payment Recipient” has the meaning assigned to it in Section 12.11(a).

 

PBGC” means the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA, or any successor thereto.

 

Pension Plan” means any “employee benefit plan” (as such term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, which is subject to Title IV of ERISA or Sections 412 of the Internal Revenue Code or Section 302 of ERISA, and which is or was, within the preceding six years, maintained, or required to be contributed to, a Loan Party or any ERISA Affiliate.

 

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Permitted Equity Issuance” means (a) any Equity Issuance pursuant to any employee, director or consultant option program, benefit plan or compensation program or agreement, (b) any Equity Issuance by a Loan Party to Parent, the Borrower or another Loan Party, (c) any Equity Issuance related to the Warrants, (d) any Equity Issuance to fund all or a portion of the purchase price of any (i) Approved Acquisition, (ii) any Permitted Investment, or (iii) any capital expenditures permitted hereunder, and (e) any Equity Issuance pursuant to (x) the Existing Convertible Notes and (y) any other convertible securities issued by Parent permitted by the terms of this Agreement (or as otherwise consented to by the Required Lenders in their reasonable discretion).

 

Permitted Indebtedness” means the following:

 

(a)       Indebtedness of any Loan Party in favor of Agent or a Lender arising under this Agreement or any other Loan Document;

 

(b)       Indebtedness existing on the Closing Date and disclosed in Section 8 of the Disclosure Letter;

 

(c)       Indebtedness consisting of: (i) capital leases; (ii) Permitted Investments allowed pursuant to clause (f) of the definition of Permitted Investments; and (iii) purchase money obligations for fixed or capital assets within the limitations set forth in clause (c) of the defined term “Permitted Liens,” provided such Indebtedness does not exceed the lesser of the cost or fair market value of the equipment and software financed with such Indebtedness; provided further, that the aggregate principal amount of Indebtedness permitted by this clause (c) shall not exceed $5,000,000 at any time outstanding and further provided that, if requested by the Required Lenders, the Loan Parties shall use commercially reasonable efforts to cause the holders of such Indebtedness to enter into a Collateral Access Agreement on terms reasonably satisfactory to the Required Lenders; provided that no Loan Party shall be deemed in breach of this provision if the applicable holder of such Indebtedness does not deliver such Collateral Access Agreement;

 

(d)       Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business, provided that such Indebtedness is promptly extinguished;

 

(e)       Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;

 

(f)       to the extent constituting Indebtedness, obligations arising from Permitted Renewables Transactions;

 

(g)       to the extent constituting Indebtedness, the obligations under the Acquisition Side Letter and any Indebtedness necessary to fund the Loan Parties obligations under subclause(a) of Section 1A thereof (such Indebtedness, the “Heartland Indebtedness”), provided that (x) (i) the applicable Loan Party shall provide written notice (the “Heartland ROFR Notice”) to the Lenders offering the Lenders a right of first refusal (the “Heartland ROFR”) to provide the Heartland Indebtedness (which, for the avoidance of doubt, shall not impose any requirement on any such Lender to provide (or commit to provide) the Heartland Indebtedness) through the establishment of one or more term loan commitments under this Agreement on terms substantially similar to the Term Loans or as otherwise mutually agreed, (ii) the Lenders shall have 15 days following receipt of such notice to accept or decline the Heartland ROFR by notice to the applicable Loan Party (the “Heartland Election Notice”); provided however, if the Lenders do not respond in such 15 day period following the Heartland ROFR Notice, it shall be deemed that the Lenders have declined such Heartland ROFR, (iii) (x) if the Lenders accept the Heartland ROFR, the Lenders and Loan Parties shall use commercially reasonable efforts to close and fund the Heartland Indebtedness within 20 days of the Heartland Election Notice or (y) if the Lenders decline or are deemed to have declined the Heartland ROFR, then such Loan Party shall be permitted to engage alternate financing sources in connection with the Heartland Indebtedness; provided that any such Indebtedness be on terms reasonably satisfactory to the Required Lenders and, if intended to be secured by Collateral, be subject to a Market Intercreditor Agreement;

 

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(h)       Indebtedness of any Loan Party arising from Bank Products provided by Bank Product Providers; provided that in the case of Hedge Obligations (i) such obligations are (or were) entered into by such Person in the ordinary course of business and not for purposes of speculation and (ii) such Hedging Agreement does not contain any provision exonerating the non-defaulting party from its obligation to make payments on outstanding transactions to the defaulting party;

 

(i)       Indebtedness consisting of the financing of insurance premiums contemplated by clause (h) of the definition of “Permitted Liens”;

 

(j)       unsecured Indebtedness to trade creditors in the ordinary course of business which is more than 90 days past due (unless such Indebtedness is being contested in good faith by appropriate proceedings and for which the Loan Parties have set aside on their Books adequate reserves in accordance with GAAP) not to exceed at any time outstanding more than $1,500,000 (for clarity all unsecured Indebtedness to trade creditors in the ordinary course of business which is less than sixty (60) days past due is permitted);

 

(k)       other obligations of any kind not to exceed at any time outstanding more than $1,000,000;

 

(l)       Indebtedness of the Loan Parties with respect to performance bonds, surety bonds, appeal bonds or customs bonds required in the ordinary course of business not to exceed in the aggregate more than $3,000,000 at any time outstanding;

 

(m)       intercompany Indebtedness by and among Parent and its Subsidiaries (subject to clauses (d) and (j) of the definition of “Permitted Investments”);

 

(n)       Indebtedness assumed or acquired in connection with Approved Acquisitions (but not in contemplation thereof), not to exceed $10,000,000 in aggregate outstanding at any time; provided, that (x) the material terms of such Indebtedness shall be satisfactory to the Required Lenders, (y) such Indebtedness shall not mature until at least ninety (90) days after the Maturity Date, and (z) to the extent secured, the Liens securing such Indebtedness shall not extend to any assets other than those of the Person that is subject to such Approved Acquisition;

 

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(o)       purchase price adjustments, indemnity payments and earn-out obligations in connection with any Approved Acquisition (to the extent not in excess of the consideration limitations set forth in the definition thereof);

 

(p)       Subordinated Debt, so long as such Subordinated Debt is on then current market terms (as reasonably determined by the Borrower in consultation with the Required Lenders);

 

(q)       advances or deposits received in the ordinary course of business from customers or vendors;

 

(r)       Indebtedness under an asset-based financing or working capital facility in an aggregate principal amount not to exceed $25,000,000 at any time outstanding and any refinancings, refundings, renewals or extensions thereof; provided that (A) the amount of such Indebtedness is not increased at the time of such refinancing, refunding, renewal or extension except by an amount equal to a reasonable premium or other reasonable amount paid, and fees and expenses reasonably incurred, in connection with such refinancing and by an amount equal to any existing commitments unutilized thereunder and the direct or any contingent obligor with respect thereto is not changed, as a result of or in connection with such refinancing, refunding, renewal or extension and (B) the terms relating to principal amount, amortization, maturity, collateral (if any) and subordination, standstill and related terms (if any), and other material terms taken as a whole, of any such refinancing, refunding, renewing or extending Indebtedness, and of any agreement entered into and of any instrument issued in connection therewith, are no less favorable in any material respect to the Loan Parties or the Lenders than the terms of any agreement or instrument governing the Indebtedness being refinanced, refunded, renewed or extended and the interest rate applicable to any such refinancing, refunding, renewing or extending Indebtedness does not exceed the then applicable market interest rate; provided, further, that (i) all documentation therefor shall be in form and substance reasonably acceptable to the Required Lenders and (ii) the parties shall have entered into, and such Indebtedness shall be subject to a Market Intercreditor Agreement;

 

(s)       Solely to the extent constituting Indebtedness, obligations, including deferred payment obligations, of and incurred by the Borrower in favor of Intermediation Facility Agent under Intermediation Facility entered into on the date hereof, subject to the terms of the Intercreditor Agreement and, notwithstanding Section 7.16(b), any refinancings, refundings, renewals or extensions thereof; provided that the terms relating to principal amount, amortization, maturity, collateral (if any) and subordination, standstill and related terms (if any), and other material terms taken as a whole, of any such refinancing, refunding, renewing or extending Indebtedness, and of any agreement entered into and of any instrument issued in connection therewith, are no less favorable in any material respect to the Loan Parties or the Lenders than the terms of any agreement or instrument governing the Indebtedness being refinanced, refunded, renewed or extended and the interest rate applicable to any such refinancing, refunding, renewing or extending Indebtedness does not exceed the then applicable market interest rate; provided, further, that (i) all documentation therefor shall be in form and substance reasonably acceptable to the Required Lenders and (ii) the parties shall have entered into, and such Indebtedness shall be subject to a Market Intercreditor Agreement; and

 

(t) guarantees in respect of any Permitted Indebtedness;

 

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(u) Solely to the extent permitted under Section 7.16(b), extensions, refinancings, modifications, amendments and restatements of Indebtedness incurred pursuant to clauses (b) and (c) above (other than the Existing Convertible Notes), provided that (i) the principal amount thereof is not increased or the terms thereof are not modified to impose more burdensome terms upon any Loan Party or other applicable Loan Party, as the case may be, (ii) the maturity and weighted average life to maturity with respect to any Indebtedness incurred pursuant to clauses (b) and (c) above in this definition is not shortened in connection with any such extensions, refinancings, modifications, amendments and restatements, (iii) such Indebtedness shall have the same obligors as the Indebtedness so extended, refinanced, modified, amended or restated, (iv) to the extent unsecured, any such extended, refinanced, modified, amended or restated Indebtedness shall remain unsecured, and (v) with respect to any such extensions, refinancings, modifications, amendments and restatements of the Existing Convertible Notes, such Indebtedness shall be on then current market terms (as reasonably determined by the Borrower in consultation with the Agent and the Required Lenders).

 

Permitted Investment” means:

 

(a)       Investments existing on the Closing Date disclosed in Section 1 of the Disclosure Letter;

 

(b)       Investments constituting cash and Cash Equivalents, provided such cash and Cash Equivalents are in accounts which are subject to a Control Agreement in favor of Agent to the extent required under Section 7.11 of this Agreement;

 

(c)       Investments accepted in connection with Permitted Transfers;

 

(d)       Investments among Loan Parties;

 

(e)       Investments (including debt obligations) received in connection with the bankruptcy or reorganization of customers or suppliers and in settlement of delinquent obligations of, and other disputes with, customers or suppliers arising in the ordinary course of the Loan Parties’ business;

 

(f)       Investments to the extent that payment for such Investments is made solely with Qualified Equity Interests of Parent or the proceeds from the issuance thereof; provided that Investments in Subsidiaries that have not signed a Borrower Joinder Agreement or Guarantor Agreement shall not exceed $200,000 in the aggregate during the term of this Agreement;

 

(g)       Investments consisting of (i) travel advances and employee relocation loans and other employee loans and advances in the ordinary course of business in an aggregate amount not to exceed $100,000 per fiscal year, and (ii) loans to employees, officers or directors relating to the purchase of equity securities of any Loan Party pursuant to employee stock purchase plans or agreements approved by Parent’s Board of Directors in an aggregate amount not to exceed $250,000 per fiscal year;

 

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(h)       Approved Acquisitions; provided that if any Person is acquired or becomes a Subsidiary pursuant to such transactions, such Person shall comply with Sections 6.11 and 6.12 of this Agreement;

 

(i)       Investments consisting of the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business;

 

(j)       so long as no Default or Event of Default has occurred and is continuing or would result from such Investment, Investments in Subsidiaries that have not signed a Borrower Joinder Agreement or Guarantor Agreement not to exceed $200,000 in the aggregate during the term of this Agreement;

 

(k)       Investments in accounts at financial institutions; provided, that such accounts are permitted pursuant to Section 7.11 and Agent has a perfected security interest in the amounts held in such deposit accounts as required pursuant to Section 7.11;

 

(l)       Investments consisting of notes receivable of, or prepaid royalties and other credit extensions, to customers and suppliers who are not Affiliates, in the ordinary course of business, and Investments received in satisfaction or partial satisfaction thereof from financially troubled account debtors to the extent reasonably necessary in order to prevent or limit loss; provided that this clause shall not apply to Investments of Parent in any Subsidiary;

 

(m)       Investments held by any Person as of the date such Person is acquired in connection with an Approved Acquisition; provided that such Investments were not made, in any case, by such Person in connection with, or in contemplation of, such Approved Acquisition;

 

(n)       deposits made to secure the performance of leases, licenses or contracts in the ordinary course of business, and other deposits made in connection with the incurrence of Permitted Liens;

 

(o)       Investments by any Loan Party to the extent constituting Permitted Indebtedness hereunder (for the avoidance of doubt, other than clause (m) thereof); and

 

(p)        Investments not otherwise expressly permitted hereunder in an amount not to exceed $250,000 per fiscal year.

 

Permitted Liens” means the following:

 

(a)       Liens existing on the Closing Date and disclosed in Section 8 of the Disclosure Letter;

 

(b)       Liens for taxes, fees, assessments or other governmental charges or levies that are delinquent and for which the applicable Loan Party maintains adequate reserves;

 

(c)       Liens on fixed or capital assets or on Real Property of any Loan Party which secure Indebtedness permitted under clause (c) of the definition of Permitted Indebtedness so long as (i) such Liens and the Indebtedness secured thereby are incurred prior to or within ninety (90) days after such acquisition, (ii) the Indebtedness secured thereby does not exceed the cost of acquisition of the applicable assets, and (iii) such Liens shall attach only to the assets or Real Property acquired, improved or refinanced with such Indebtedness and shall not extend to any other property or assets of the Loan Parties;

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(d)       Liens incurred in connection with the extension, renewal or refinancing of the indebtedness secured by Liens of the type described in clauses (a) through (c) above, provided that any extension, renewal or replacement Lien (i) shall be limited to the property encumbered by the existing Lien, (ii) shall not exceed the principal amount and interest rate of the indebtedness being extended, renewed or refinanced and (iii) the term for payment, the maturity and weighted average life to maturity with respect to items listed in clause (a) above in this definition shall not decrease in connection with any such extension, renewal or refinancing;

 

(e)       Non-exclusive licenses of Intellectual Property granted to third parties in the ordinary course of business and not materially interfering with the business of the Parent or any of its Subsidiaries;

 

(f)       Liens arising from judgments, decrees or attachments in circumstances not constituting an Event of Default under Section 8.4 or Section 8.6;

 

(g)       Liens in favor of other financial institutions arising in connection with Loan Parties’ deposit accounts or securities accounts held at such institutions to secure standard fees for services charged by, but not financing made available by such institutions; provided that Agent, for itself and the benefit of Lenders has a perfected security interest in the amounts held in such accounts to the extent required under Section 7.11 of this Agreement;

 

(h)       Liens in favor of customs and revenue authorities arising as a matter of law to secure payments of customs duties in connection with the importation of goods;

 

(i)       Liens on insurance proceeds in favor of insurance companies granted solely as security for financed premiums;

 

(j)       Liens on deposits securing obligations with suppliers entered into in the ordinary course of business and deposits to secure the performance of bids, trade contracts and leases (other than Indebtedness), statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;

 

(k)       statutory Liens of landlords and Liens of carriers, warehousemen, mechanics and suppliers and other Liens imposed by law or pursuant to customary reservations or retentions of title arising in the ordinary course of business; provided that such Liens attach only to Inventory and secure only amounts not yet due and payable or, if due and payable, are unfiled and no other action has been taken to enforce the same;

 

(l)       (i) Liens in favor of any Intermediation Facility Agent arising under Intermediation Facility Documents to secure Permitted Indebtedness under clause (s) of the definition thereof subject to the terms of the Intercreditor Agreement, (ii) Liens to secure Permitted Indebtedness under clause (r) of the definition thereof to be secured only by collateral typical of asset-based or working capital facilities with respect to the businesses other than the Mobile Refinery subject to a Market Intercreditor Agreement, and (iii) Liens to secure Permitted Indebtedness under clause (f) of the definition thereof subject to a Market Intercreditor Agreement;

 

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(m)       Liens in favor of a Bank Product Provider securing Bank Product Obligations constituting Permitted Indebtedness under clause (h) of the definition thereof but not constituting Secured Obligations hereunder (any such obligations, “Non-LSA Hedges”); provided that the value of collateral securing such Bank Product Obligations shall not exceed $25,000,000 at any time outstanding less any cash collateral held in Excluded Accounts under clause (c) of the definition thereof; provided further that any such Liens are subject to a Market Intercreditor Agreement;

 

(n)       Liens arising from the filing of any financing statement on operating leases, to the extent such operating leases are permitted under this Agreement;

 

(o)       Liens to secure workers’ compensation, employment insurance, old-age pensions, social security and other like obligations incurred in the ordinary course of business;

 

(p)       Liens on property of a Person existing at the time such Person is acquired in connection with an Approved Acquisition; provided that (i) such Liens were not created in contemplation of such Approved Acquisition, (ii) such Liens do not extend to any assets other than those of such Person, and (iii) the applicable Indebtedness or obligation secured by such Lien is not prohibited under this Agreement;

 

(q)       Liens on any earnest money deposits required in connection with an Approved Acquisition;

 

(r)       the replacement, extension or renewal of any Lien permitted by clauses (a) through (q) above (but without duplication thereof) upon or in the same property theretofore subject thereto or the replacement, extension or renewal (without increase in the amount or change in any direct or contingent obligor) of the Indebtedness secured thereby under clause (u) of Permitted Indebtedness;

 

(s)       Liens granted in favor of the Agent to secure the Secured Obligations; and

 

(t)       other Liens (not otherwise enumerated in this defined term) securing Indebtedness not exceeding $1,000,000 in the aggregate outstanding at any time.

 

Permitted Renewables Transaction” means an inventory monetization, intermediation agreement, supply and offtake agreement or other similar agreement with respect to any Renewable Feedstocks and Renewables Products, entered into by any Loan Party and a third party with respect to which each of the following is true:

 

(a)       immediately prior to and after giving effect to such transaction, no Event of Default has occurred and is continuing; and

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(b)        as of any date, such agreement may not have an aggregate sale and repurchase price or maximum principal amount (as applicable) in an amount greater than the value of the Renewable Products (inclusive of the value of any hedge transaction entered into to hedge price risk with respect to such Renewable Products under such agreement) at any time for longer than three (3) Business Days.

Permitted Tax Distributions” means:

(a)       for any taxable period in which Borrower and/or any of its Subsidiaries is a member of a consolidated, combined or similar income tax group of which a direct or indirect parent of the Borrower is the common parent (a “Tax Group”), distributions by a Loan Party to such direct or indirect parent of such Loan Party (in each case, taking into account indirect ownership through partnerships) to pay federal, foreign, state and local income Taxes of such Tax Group that are attributable to the taxable income of Parent and/or its Subsidiaries; provided that, for each taxable period, the amount of such payments made in respect of such taxable period in the aggregate shall not exceed the amount that Parent and the Subsidiaries would have been required to pay as a stand-alone Tax Group, reduced by any portion of such income Taxes directly paid by Parent or any of its Subsidiaries; or

(b)       with respect to any taxable year (or portion thereof) with respect to which Parent is a partnership or disregarded entity for U.S. federal, state and/or local income tax purposes, distributions to Parent’s direct owner(s) in an aggregate amount equal to the product of (i) the net taxable income of Parent and its Subsidiaries for such taxable year (or portion thereof), reduced by any cumulative net taxable loss with respect to all prior taxable years (or portions thereof) beginning after the date hereof (determined as if all such periods were one period) to the extent such cumulative net taxable loss is of a timing perspective (based on applicable carryforward rules) and character (ordinary or capital) that would permit such loss to be deducted against the income of the taxable year in question (or portion thereof) and (ii) the highest combined marginal federal and applicable state and/or local income tax rate (taking into account, to the extent applicable, the deductibility of state and local income taxes for U.S. federal income tax purposes, the deduction for qualified business income under Section 199A of the Internal Revenue Code, and the character of the taxable income in question (i.e., long term capital gain, qualified dividend income, etc.)) applicable to any direct owner (or, if a direct owner is a pass-through entity, indirect owner) of Parent and its Subsidiaries for the taxable year in question (or portion thereof).

Permitted Transfer” has the meaning given to such term in Section 7.2.

Person” means and includes any individual, any partnership, any corporation, any business trust, any joint stock company, any limited liability company, any unincorporated association or any other entity and any Governmental Authority.

Plan” means any “employee benefit plan” (as such term is defined in Section 3(3) of ERISA) established, maintained or required to be contributed to by a Loan Party or, with respect to any such plan that is subject to Section 412 of the Internal Revenue Code or Title IV of ERISA, by any ERISA Affiliate.

Platform” has the meaning given to such term in Section 6.3(c).

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Prepayment Premium” has the meaning specified therefor in Section 2.5(b).

Pro Rata Percentage” means, with respect to any Lender (a) a percentage equal to a fraction (i) the numerator of which is such Lender’s applicable undisbursed Term Loan Commitment (as the case may be), then in effect plus the aggregate unpaid principal balance of the applicable Term Loans (as the case may be) of such Lender and (ii) the denominator of which is the aggregate of the applicable undisbursed Term Loan Commitments (as the case may be) of all Lenders then in effect plus the aggregate unpaid principal balance of all outstanding applicable Term Loans (as the case may be) or (b) if all of the applicable Term Loan Commitments (as the case may be) have terminated, a percentage equal to a fraction (i) the numerator of which is the aggregate unpaid principal balance of the applicable Term Loans (as the case may be) of such Lender and (ii) the denominator of which is the aggregate unpaid principal balance of all outstanding applicable Term Loans (as the case may be).

Project Milestones” means each of the milestones set forth on Schedule 6.18 hereto.

Property” means any interest in any kind of property or asset, whether real, personal or mixed, whether tangible or intangible.

Public Lender” has the meaning given to such term in Section 6.3(c).

Purchasing Initial Lender” has the meaning assigned to it in Section 14.1(f).

QFC” has the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).

QFC Credit Support” has the meaning given to such term in Section 14.10(b).

Qualified ECP Guarantor” means, in respect of any Hedge Obligations under a Secured Hedge Agreement, each Loan Party that has total assets exceeding $10,000,000 at the time the relevant guarantee or grant of the relevant security interest becomes effective with respect to such Hedge Obligation under a Secured Hedge Agreement or such other person as constitutes an “eligible contract participant” under the Commodity Exchange Act and can cause another person to qualify as an “eligible contract participant” at such time by entering into a keepwell under Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

Qualified Equity Interests” means any Equity Interests that do not constitute Disqualified Equity Interests.

Qualifying Renewable Fuel” is defined as fuel eligible to generate RINs under the RFS Program.

Real Property” means any estates or interests in real property now owned or hereafter acquired by any Loan Party or one of its Subsidiaries and the improvements thereto.

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“Real Property Deliverables” means each of the following agreements, instruments and other documents in respect of each New Facility, each in form and substance reasonably satisfactory to the Required Lenders:

(a)       a Mortgage duly executed by the applicable Loan Party, together with evidence of the recording of such Mortgage in such office or offices as may be necessary to create a valid and perfected Lien on such New Facility in favor of the Agent for the benefit of the Required Lenders (or evidence that such Mortgage has been deposited with such recording office or offices for recording) and that all filing and recording taxes and fees have been paid or otherwise provided for in a manner reasonably satisfactory to the Required Lenders;

(b)       a paid Title Insurance Policy with respect to each Mortgage, dated as of the date such Title Insurance Policy is required to be delivered to the Agent;

(c)       a current ALTA survey and a surveyor’s certificate, certified to Agent and to the issuer of the Title Insurance Policy with respect thereto by a professional surveyor licensed in the state in which such New Facility is located;

(d)       customary opinions of counsel (x) from counsel in the state where such New Facility is located with respect to the enforceability of the Mortgage to be recorded and (y) from counsel of the jurisdiction of organization of the Loan Party entering into the Mortgage as to matters relating to due authorization and execution of the Mortgage by such Loan Party;

(e)       to the extent reasonably requested by the Agent, an ASTM 1527-21 Phase I Environmental Site Assessment (“Phase I ESA”) by an independent firm reasonably satisfactory to the Required Lenders with respect to such New Facility;

(f)       such documentation and information reasonably requested by any Lender (through the Agent) to ensure that such Lender is in compliance with the Flood Laws applicable to New Facility that is subject to a Mortgage, including, but not limited to, if required by Flood Laws obtaining flood insurance for such property, structures and contents prior to or upon such property, structures and contents becoming Collateral, and thereafter maintaining such flood insurance in full force and effect for so long as required by the Flood Laws; and

(g)       such other agreements, instruments and other documents (including “bad boy” guarantees and opinions of counsel) as Agent may reasonably require and to the extent customarily required by lenders in comparable loan transactions.

Recipient” means (a) the Agent or (b) any Lender, as applicable.

Recovery Event Proceeds” means any insurance proceeds from any Casualty Event or any condemnation proceeds (or similar recoveries) received by any Parent or any Subsidiary, in each case, net of (a) any reasonable and documented collection expenses and other direct costs incurred in connection therewith (including, without limitation, legal and accounting fees, if applicable), (b) taxes paid or reasonably estimated by the Borrower to be payable by the applicable Loan Party as a result thereof (after taking into account any available tax credit or deduction), and (c) any amount required to be applied to the repayment of any Indebtedness secured by a Lien on the asset subject to the Casualty Event or condemnation (excluding any repayment hereunder).

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Register” has the meaning given to such term in Section 14.1.

Registration Rights Agreement” means that certain Registration Rights Agreement, dated as of the date hereof, by and among Parent and the other Persons party thereto as “Holders” thereunder, as the same may be amended, restated, amended and restated, modified or otherwise supplemented from time to time in accordance with the terms thereof.

Related Agreements” means, collectively, the Mobile Refinery Acquisition Agreement, Construction Agreement, Myrtle Grove Purchase Agreement, the Heartland Purchase Agreement, Acquisition Side Letter, any Intermediation Facility Documents, any agreements governing Indebtedness over the Threshold Amount, any Organization Documents and any Material Contracts.

Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, shareholders, controlling persons, members, directors, officers, employees, agents, trustees, administrators, financing sources, managers, advisors, attorneys-in-fact, managed funds and accounts and representatives of such Person and of such Person’s Affiliates and each of the successors and assigns of each of the foregoing.

Release” means any release, spill, emission, leaking, pumping, pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching or migration of any Hazardous Material into the environment (including the abandonment or disposal of any barrels, containers or other closed receptacles containing any Hazardous Material), including from any building, structure, facility or fixture and any movement of any Hazardous Material through the air, soil, surface water or groundwater.

Renewable Biomass” has the meaning set forth in 42 U.S.C. § 7545(o)(I).

Renewable Diesel Project” means the conversion of the Mobile Refinery to a facility capable of producing Qualifying Renewable Fuel under the RFS Program.

Renewable Feedstock” means all renewable feedstocks, including Renewable Biomass.

Renewable Product” means Conforming Renewable Product or Non-Conforming Renewable Product.

Renewable Product Specifications” means (i) the requirements and specifications for fuels and fuel additives established by the U.S. Environmental Protection Agency in Part 79 of Title 40 of the Code of Federal Regulations; (ii) the requirements and specifications established by the California Air Resources Board in Sections 2281, 2282, and 2284 of Title 13 of the California Code of Regulations; (iii) the requirements and specifications of American Society of Testing and Materials specification D 975; and (vi) all requirements under Applicable Law governing the production and composition of renewable diesel sold and used as vehicle fuel, including those imposed by any Governmental Authority and under any CFP.

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Replacement Lender” has the meaning specified therefor in Section 14.15.

Reportable Event” means any of the events set forth in Section 4043(c) of ERISA, other than events for which the thirty (30) day notice period has been waived.

Required Lenders” means Lenders holding more than 66 2/3% of the sum of (a) the undisbursed Term Loan Commitments then in effect plus (b) the aggregate unpaid principal balance of the Term Loans then outstanding. Such portion of the aggregate undisbursed Term Loan Commitments and the sum of the aggregate unpaid principal amount of the Term Loans then outstanding, as applicable, held by a Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders at any time.

Resolution Authority” means EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.

Responsible Officer” means the President, Chief Executive Officer, Chief Financial Officer, Head of Finance, or Controller of any Loan Party.

Restricted Payment” means (a) any dividend or other distribution (including without limitation Permitted Tax Distributions), direct or indirect, on account of any shares (or equivalent) of any class of Equity Interests of Parent or any of its Subsidiaries, now or hereafter outstanding, (b) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any shares (or equivalent) of any class of Equity Interests of Parent or any of its Subsidiaries, now or hereafter outstanding, (c) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of any class of Equity Interests of any Loan Party or any of its Subsidiaries, now or hereafter outstanding, (d) any payment with respect to any earnouts, hold back amounts, deferred purchase price, contingent obligations or similar obligation and (e) any payment or prepayment of principal of, premium, if any, or interest on, or redemption, purchase, retirement, defeasance (including in-substance or legal defeasance), sinking fund or similar payment with respect to, any Indebtedness subordinated to the Term Loan.

Revenue” means, for any Person, revenue received by such Person as determined in accordance with GAAP (consistently applied) from the sale of finished Goods, Inventory or services, in all cases in the ordinary course of such entity’s business, less returns, credits and sales taxes, computed using the same methodology employed in Current Financial Statements to report such matter.

RFS Program” means the renewable fuel program and policies established section 211(o) of the Clean Air Act (42 U.S.C. § 7545(o)) as implemented by the U.S. Environmental Protection Agency under Subpart M of Part 80 of Title 40 of the Code of Federal Regulations.

Right of First Offer” has the meaning assigned to it in Section 14.1(f).

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RIN” means renewable identification number, which is the serial number assigned to a batch of biofuel for the purpose of tracking biofuel production, use and trading as required by the RFS Program.

RIN Generation Protocol” is defined as the document (x) setting forth the Borrower’s process for RIN generation, transfer and separation and (y) establishing and describing the temperature-correcting methodology for Qualifying Renewable Fuel for inclusion in Engineering Review. For renewable diesel produced via co-processing renewable and petroleum feedstocks, the document must incorporate the U.S. Environmental Protection Agency’s required C14 testing protocol.

Rolling Stock” means all Equipment (as defined in the UCC) covered by a certificate of title under applicable state law, including, without limitation, trucks, trailers, tractors, and other registered mobile equipment.

Sanctions” means economic or financial sanctions, requirements or trade embargoes imposed, administered or enforced from time to time by Governmental Authorities in the United States (including, but not limited to, OFAC, the U.S. Department of State and the U.S. Department of Commerce), the United Nations Security Council, the European Union, Her Majesty’s Treasury or any other relevant Governmental Authority.

Sanctions Target” means any Person: (a) that is the subject or target of any Sanctions; (b) named in any Sanctions-related list maintained by OFAC, the U.S. Department of State, the U.S. Department of Commerce or the U.S. Department of the Treasury, including the OFAC list of “Specially Designated Nationals and Blocked Persons,” or any similar list maintained by the United Nations Security Council, the European Union, Her Majesty’s Treasury or any other relevant Governmental Authority (c) located, organized or resident in a country, territory or geographical region which is itself the subject or target of any Sanctions (including, without limitation, Cuba, Iran, North Korea, Syria, Crimea and so-called Donetsk People's Republic and Luhansk People's Republic regions of Ukraine, and, prior to January 1, 2017, Sudan) or (d) owned or controlled (as such terms are defined by the applicable Sanctions) by any such Person or Persons described in the foregoing clauses (a)-(c).

SEC” means the Securities and Exchange Commission, or any governmental or regulatory authority succeeding to any of its principal functions.

Secured Bank Product Agreement” means any Bank Product permitted to be incurred under Section 7.5 and permitted to be secured under Section 7.4 that is entered into by and between any Loan Party (and to the extent such Loan Party is not the Borrower, the Borrower as joint and several primary obligor thereunder) and any Bank Product Provider and designated by the Borrower and the Bank Product Provider in writing to the Agent as a “Secured Bank Product Agreement”; provided that no such agreement (shall constitute a Secured Bank Product Agreement unless and until Agent receives an agreement (in form and substance reasonably satisfactory to the Required Lenders) from such Person on or prior to the date that is ten (10) days after the provision of such Bank Product to a Loan Party (or such later date as Agent (at the direction of the Required Lenders) shall agree to in writing in its sole discretion) with respect to Bank Product Agreements entered into after the Closing Date. The designation of any Bank Products as a “Secured Bank Product Agreement” shall not create in favor of such Bank Product Provider any rights in connection with the management or release of Collateral or the obligations of any Loan Party under the Loan Documents.

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Secured Hedge Agreement” means any Hedging Agreement permitted to be incurred under Section 7.5 and permitted to be secured under Section 7.4 that is entered into by and between any Loan Party (and to the extent such Loan Party is not the Borrower, the Borrower as joint and several primary obligor thereunder) and any Hedge Provider and designated by the Borrower and the Hedge Provider in writing to the Agent as a “Secured Hedge Agreement”; provided that no such agreement (shall constitute a Secured Hedge Agreement unless and until Agent receives an agreement (in form and substance reasonably satisfactory to the Required Lenders) from such Person on or prior to the date that is ten (10) days after the effectiveness of such Hedging Agreement (or such later date as Agent (at the direction of the Required Lenders) shall agree to in writing in its sole discretion) with respect to Hedging Agreements entered into after the Closing Date. The designation of any Hedging Agreement as a “Secured Hedge Agreement” as provided above shall not create in favor of such Hedge Provider any rights in connection with the management or release of Collateral or the obligations of any Loan Party under the Loan Documents.

Secured Obligations” means all Obligations, all Bank Product Obligations arising under Secured Bank Product Agreements and Secured Hedge Agreements, any Erroneous Payment Subrogation Rights and all Additional Secured Obligations.

Secured Parties” means, collectively, the Agent, the Lenders, the Bank Product Providers party to Secured Bank Product Agreements, the Indemnified Persons and each co-agent or sub-agent appointed by the Agent from time to time pursuant to Section 12.1; provided that no such Bank Product Provider (including any Hedge Provider), in its capacity as such, shall have any rights under any Loan Document in connection with the management or release of any Collateral or the obligations of any Loan Party under the Loan Documents.

Securities Account” means any “securities account” as defined in the Code.

Selling Initial Lender” has the meaning assigned to it in Section 14.1(f).

Similar Business” any of the following, whether domestic or foreign: refining used motor oil (as described in the definition of Used Motor Oil Asset Divestiture), processing various grades of sweet crude oil and renewable biomass into gasoline, diesel, renewable diesel, vacuum gas oil, jet, renewable jet, benzene concentrate, LPG and other miscellaneous related products or byproducts, for sale to customers via pipeline, marine transportation and truck, any acquired business activity so long as a material portion of such acquired business was otherwise a Similar Business, and any business that is ancillary or complementary to the foregoing.

Solvency Certificate” means a solvency certificate in substantially the form of Exhibit H.

Subject Indebtedness” has the meaning given to such term in Section 6.20.

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Subordinated Debt” means any Indebtedness incurred by any Loan Party that is subordinated to the Secured Obligations pursuant to a Subordination Agreement on terms acceptable to Required Lenders.

Subordination Agreement” means any subordination, intercreditor, or other similar agreement in form and substance satisfactory to the Required Lenders entered into between Agent and the other creditor, on terms acceptable to the Required Lenders whereby a Person subordinates the Indebtedness of a Loan Party owing to such Person to the Indebtedness of a Loan Party owing to Agent and/or Lenders.

Subordination Provisions” has the meaning assigned to it in Section 8.16.

Subsidiary” means any Person that is an entity of which a majority of the outstanding capital stock, membership interests or other equity interests entitled to vote for the election of directors, managers or the equivalent is owned, controlled or held by Parent directly or indirectly through Subsidiaries including any Subsidiary formed after the date hereof, in each case, other than Excluded Subsidiaries as of such date.

Subsidiary Guarantor” has the meaning given to such term in preamble to this Agreement.

Supermajority Lenders” means Lenders holding more than 80% of the sum of (a) the undisbursed Term Loan Commitments then in effect plus (b) the aggregate unpaid principal balance of the Term Loans then outstanding. Such portion of the aggregate undisbursed Term Loan Commitments and the sum of the aggregate unpaid principal amount of the Term Loans then outstanding, as applicable, held by a Defaulting Lender shall be excluded for purposes of making a determination of Supermajority Lenders at any time.

Supported QFC” has the meaning given to such term in Section 14.10(b).

Synthetic Lease Obligations” means, as to any Person, an amount equal to the capitalized amount of the remaining lease payments under any synthetic lease that would appear on a balance sheet of such Person in accordance with GAAP (consistently applied) if such obligations were accounted for as Capital Lease Obligations.

Tax Group” has the meaning set forth in the definition of “Permitted Tax Distributions”.

Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

Term Loan” means the term loan funded from the Escrow Account to the Borrower on the Closing Date pursuant to Section 2.1 in the aggregate principal amount equal to the Term Loan Commitment.

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Term Loan Commitment” means (a) with respect to all Lenders, $125,000,000 and (b) with respect to each Lender, the amount set forth opposite such Lender’s name on Schedule 2.1(a) attached hereto under the column entitled “Term Loan Commitment”.

Term Loan Priority Collateral” has the meaning specified therefor in the Intercreditor Agreement.

Threshold Amount” means $2,000,000.

Title Insurance Policy” means a mortgagee’s loan policy, in form and substance reasonably satisfactory to the Required Lenders, together with all customary endorsements made from time to time thereto and available in the state in which the New Facility is located, issued by or on behalf of a title insurance company reasonably satisfactory to the Required Lenders, insuring the Lien created by a Mortgage in an amount equal to the loan amount allocated to such real property secured by the Mortgage and on terms otherwise reasonably satisfactory to the Required Lenders and delivered thereto.

Trademarks” means any and all trademark and service mark rights, whether registered or not, applications to register and registrations of the same and like protections (whether filed with the USPTO or any similar offices in any State of the United States), and the entire goodwill of the business of Loan Party connected with and symbolized by such trademarks, together with any and all (i) rights and privileges arising under Applicable Law, (ii) extensions and renewals thereof and (iii) rights corresponding thereto throughout the world.

Transfer” has the meaning given to such term in Section 7.2. “Transferred” has a correlative meaning.

UK Financial Institution” means any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended from time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person falling with IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms.

UK Resolution Authority” means the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution.

Unrestricted Cash” of any Person, means cash or Cash Equivalents of such Person, (a) that are not, and are not required to be, designated as “restricted” on the financial statements of such Person, (b) that are not contractually required, and have not been contractually committed by such Person, to be used for a specific purpose, (c) that are not subject to (i) any provision of law, statute, rule or regulation, (ii) any provision of the organizational documents of such Person, (iii) any order of any Governmental Authority or (iv) any contractual restriction (including the terms of any Equity Interests), in each case of (i) through (iv), preventing such cash or Cash Equivalents from being applied to the payment of the Obligations, (d) in which no Person other than Agent has a Lien other than Permitted Liens as set forth in clause (f) of the definition of Permitted Liens, and (e) that are held in a Deposit Account or Securities Account, as applicable, in which Agent has a valid and enforceable security interest, perfected by “control” (within the meaning of the applicable Code or for any Deposit Account or Securities Account located outside the United States, other controlling legal authority), but in all cases shall exclude the amount of such Person’s Indebtedness which is more than 10 Business Days overdue (or in the case of Indebtedness of the type described in clause (e) of the definition of Indebtedness, remains outstanding more than 10 Business Days from the date constituting Indebtedness).

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U.S. Borrower” means any Borrower that is a U.S. Person.

U.S. Person” means any Person that is a “United States person” as defined in Section 7701(a)(30) of the Internal Revenue Code.

U.S. Special Resolution Regimes” has the meaning given to such term in Section 14.10(b).

U.S. Tax Compliance Certificate” has the meaning given to such term in Section 2.9(g).

USA FREEDOM Act” means The Uniting and Strengthening America by Fulfilling Rights and Ending Eavesdropping, Dragnet-collection and Online Monitoring (USA FREEDOM ACT) Act of 2015, Public Law 114-23 (June 2, 2015), as may be amended.

USA PATRIOT Act” means The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Title III of Pub. L. No. 107-56 (signed into law October 26, 2001)), as may be amended.

Used Motor Oil Asset Divestiture” means the sale, transfer or other disposition of any substantial portion of the businesses and related assets owned or controlled by Borrower and/or its Affiliates consisting primarily of (1) operating two used oil refineries and a barge terminal and, in connection therewith, acquiring used lubricating oils from commercial and retail establishments and re-refining such oils into processed oils and other products for the distribution, supply and sale to end-customers, (2) collecting and processing used motor oil, oil filters, and related automotive waste streams and (3) the provision of related products and support services.

Vehicles” means (i) all cars, Rolling Stock, construction and earth moving equipment and other vehicles covered by a certificate of title or similar evidence of title, law of any state, (ii) motor vehicles, trailers, and road vehicles in each case as defined in any applicable UCC and any other term now or hereafter used to describe or define any of the foregoing in any applicable UCC, and (iii) in any event, shall include, without limitation, the vehicles listed on Schedules 3(A)(4) or 3(A)(5) of the Disclosure Letter.

Warrant Agreement” means that certain Warrant Agreement, dated as of the date hereof, by and between Parent and Continental Stock Transfer & Trust Company, as “Warrant Agent” thereunder, as the same may be amended, restated, amended and restated, modified or otherwise supplemented from time to time in accordance with the terms thereof.

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Warrants” means the warrants to purchase shares of common stock of Parent issued by Parent to the Initial Lenders (or at the Initial Lender’s option, an Affiliate or Approved Fund of such Initial Lender) on the date hereof pursuant to Section 2.12, which warrants are governed by and subject to the terms of the Warrant Agreement.

Whitebox Lender” means each of the Lenders party hereto that are affiliated with or managed by Whitebox Advisors, LLC.

Withholding Agent” means the Borrower and the Agent.

Write-Down and Conversion Powers” means, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.

1.2          Divisions. For all purposes under the Loan Documents, in connection with any division or plan of division under Delaware law (or any comparable event under a different jurisdiction’s laws): (a) if any asset, right, obligation or liability of any Person becomes the asset, right, obligation or liability of a different Person, then it shall be deemed to have been transferred from the original Person to the subsequent Person, and (b) if any new Person comes into existence, such new Person shall be deemed to have been organized on the first date of its existence by the holders of its Equity Interests at such time.

1.3          Other Interpretive Provisions. References in this Agreement to “Articles,” “Sections,” “Exhibits,” “Schedules” and “Annexes” are to articles, sections, exhibits, schedules and annexes herein and hereto unless otherwise indicated. References in this Agreement and each of the other Loan Documents to (a) any other document, instrument or agreement shall include all exhibits, schedules, annexes and other attachments thereto, and (b) any law, statute or regulation shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such law, statute or regulation, and (c) any reference herein to any Person shall be construed to include such Person’s successors and permitted assigns. References to this Agreement or any of the other Loan Documents shall mean such document, instrument or agreement, or replacement or predecessor thereto, as amended, modified and supplemented from time to time and in effect at any given time, provided that Borrower may amend the Disclosure Letter unilaterally only as expressly authorized in Section 5 herein. The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement or any other Loan Document shall refer to this Agreement or such other Loan Document, as the case may be, as a whole and not to any particular provision of this Agreement or such other Loan Document, as the case may be. The words “include” and “including” and words or similar import when used in this Agreement or any other Loan Document shall not be construed to be limiting or exclusive. Unless otherwise indicated in this Agreement or any other Loan Document, (d) all references to dollars, Dollars or $ shall mean United States Dollars, and (e) all accounting terms used in this Agreement or any other Loan Document (e.g. revenue) shall be construed, and all accounting and financial computations hereunder or thereunder shall be computed, in accordance with GAAP, consistently applied. Any of the terms defined herein may, unless the context otherwise requires, be used in the singular or the plural, depending on the reference. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. Any reference herein or in any other Loan Document to the “satisfaction,” “repayment,” “paid in full” or “payment in full” of the Secured Obligations (including the “Guaranteed Obligations” and the “Secured Obligations” as may be defined in any Collateral Document) shall mean the repayment in Dollars in full in cash of immediately available funds of all of the Secured Obligations other than (x) unasserted contingent indemnification obligations or (y) Bank Product Obligations or Additional Secured Obligations relating to such Bank Product Obligations unless acceptable arrangements have been made with the Bank Product Providers holding such Bank Product Obligations. A Default or Event of Default shall be deemed to exist at all times during the period commencing on the date that such Default or Event of Default occurs to the date on which such Default or Event of Default is waived in writing pursuant to this Credit Agreement or, in the case of a Default, is cured within any period of cure expressly provided for in this Credit Agreement; and an Event of Default shall “continue” or be “continuing” until such Event of Default has been waived in writing by the Required Lender.

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2.            Term Loan and Terms of Payment.

2.1          Term Loan. Prior to the date hereof, subject to the terms and conditions of the Commitment Letter and the Escrow Agreement, each Lender shall have funded the Term Loan in an amount equal to its Term Loan Commitment (net of certain fees and expenses payable prior to the date hereof from pursuant to the Fee Letter) to the Escrow Account. Upon satisfaction of the conditions precedent specified in Section 3.1, the Initial Lenders, shall, together with the Borrower, deliver a Joint Release Instruction (as defined in the Escrow Agreement) to the Escrow Agent under the Escrow Agreement directing the Escrow Agent to make the full amount on deposit in the Escrow Account available to the Borrower on the Closing Date for disbursement (net of certain fees and expenses payable pursuant to the Commitment Letter) in accordance with the Funds Flow Memorandum, which shall constitute the making of the Term Loan to the Borrower for purposes hereof.

2.2          Use of Proceeds; The Term Loan.

(a)        Use of Proceeds. The proceeds of the Term Loan provided on the Closing Date, shall be used solely to fund (i) the Mobile Refinery Acquisition, (ii) the renewable diesel conversion of the Mobile Refinery, (iii) working capital and liquidity needs and (iv) certain fees and expenses associated with the closing of the Term Loan, in all cases, subject to the terms of this Agreement.

(b)        The Term Loan. The Term Loan shall be repayable as set forth in Section 2.4. If prepaid or repaid, the principal of the Term Loan may not be re-borrowed. Each Lender and Agent may, and are hereby authorized by Borrower to, endorse in Lender’s and Agent’s books and records appropriate notations regarding such Lender’s interest in the Term Loan; provided, however, that the failure to make, or an error in making, any such notation shall not limit or otherwise affect the Obligations.

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2.3          Procedure for Making the Term Loan; Interest.

(a)        Notice and Eligibility. The Notice of Borrowing for the Term Loan must be submitted by 3:00 p.m. New York time at least one (1) Business Day before the Closing Date. Upon receipt of a Notice of Borrowing, Agent shall promptly notify the Lenders. The Closing Date shall be subject to the satisfaction of the conditions set forth in Section 3.1. Upon satisfaction of the conditions set forth in Section 3.1, each Initial Lender with a Term Loan Commitment applicable to such Term Loan agrees, severally and not jointly, to deliver the Joint Release Instruction as provided in Section 2.12. The amount of the requested Term Loan on the Closing Date shall be $125,000,000 (net of any upfront fees and OID).

(b)        Interest Rate. Interest will accrue on the unpaid principal amount of the Term Loan from the date of the Term Loan until the Term Loan has been paid in full, at a per annum rate of interest equal to the Applicable Rate, payable as set forth in Section 2.4(a). All computations of interest shall be based on a year of three hundred sixty (360) days for actual days elapsed including the first day, but excluding the last. Notwithstanding any other provision hereof, the amount of interest payable hereunder shall not in any event exceed the maximum amount permitted by the law applicable to interest charged on commercial loans.

(c)        Disbursement. Subject to the satisfaction of the conditions set forth in Section 3.1, upon receipt of the funds from the Escrow Account, Agent shall make all funds so received available to Borrower in like funds as received by Agent by wire transfer of such in accordance with the Funds Flow Memorandum.

2.4          Payments of Principal and Interest.

(a)         Interest Payments. Interest on the Term Loan shall be payable in cash (i) quarterly, in arrears, on the last Business Day of each calendar quarter, commencing on the last Business Day of the calendar quarter ending June 30, 2022, (ii) in connection with any payment, prepayment or repayment of the Term Loan, and (iii) at maturity (whether upon demand, by acceleration or otherwise).

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(b)        Amortization of Principal. On the last Business Day of each March, June, September and December ending on or after March 31, 2023, Borrower shall repay the Term Loan in quarterly installments as specified in the table below which amounts shall be reduced as a result of the application of prepayments in accordance with the order of priority set forth in Section 2.6(c), unless accelerated sooner pursuant to Section 9.1:

Payment Dates

Principal Repayment

Installments

March 31, 2023 $1,562,500.00
June 30, 2023 $1,562,500.00
September 30, 2023 $1,562,500.00
December 31, 2023 $1,562,500.00
March 31, 2024 $1,562,500.00
June 30, 2024 $1,562,500.00
September 30, 2024 $1,562,500.00
December 31, 2024 $1,562,500.00


 provided, however, that if any principal repayment installment to be made by the Borrower shall come due on a day other than a Business Day, such principal repayment installment shall be due on the next succeeding Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be.

(c)         Principal Payment at Maturity. Unless the Term Loan is prepaid in full prior to the Maturity Date, Borrower shall pay the entire unpaid principal and accrued interest and all unpaid Obligations constituting Secured Obligations and Additional Secured Obligations relating to such Obligations on the Maturity Date. Agent shall allocate and distribute all such payments of principal and accrued interest to the Lenders based on each Lender’s Pro Rata Percentage.

2.5          Fees and Expenses.

(a)         [Reserved].

(b)        Applicable Premium. (A) Upon the making of any payment, repayment, prepayment (other than payments under Sections 2.4(b), 2.6(a)(iii), 2.6(a)(v) or 2.6(a)(vii)), replacement, refinancing, reduction or other satisfaction of the Term Loan (including, without limitation, as a result of acceleration and/or as otherwise contemplated below) (any such event, a “Payment”) (i) at any time during the first eighteen (18) months after the Closing Date, the Borrower shall pay to Agent, for the account of the Lenders in accordance with their Pro Rata Percentage (x), one hundred fifty percent (150%) of the Applicable Rate or Default Rate (as applicable), multiplied by (y), the amount of such prepayment, (ii) at any time during or after the nineteenth (19th) month through twenty-fourth (24th) month after the Closing Date, the Borrower shall pay to Agent, for the account of the Lenders in accordance with their Pro Rata Percentage (x), fifty percent (50%) of the Applicable Rate or Default Rate (as applicable), multiplied by (y), the amount of such Payment and (iii) at any time during or after the twenty-fifth (25) month after the Closing Date but prior to the date that is 90 days before the Maturity Date, the Borrower shall pay to Agent, for the account of the Lenders in accordance with their Pro Rata Percentage (x), twenty five percent (25%) of the Applicable Rate or Default Rate (as applicable), multiplied by (y), the amount of such Payment or (B) upon the making of any prepayment in accordance with Section 2.6(a)(v) or Section 2.6(a)(vii), the Borrower shall pay to Agent, for the account of the Lenders in accordance with their Pro Rata Percentage, a premium equal to 1.00% of the aggregate principal amount of the Term Loan so prepaid (collectively, each a “Prepayment Premium”).

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Notwithstanding anything to the contrary herein, the Borrower acknowledges and agrees that if payment of the Obligations is accelerated or the Term Loan and other Obligations otherwise become due prior to the time period specified above, in each case, in respect of any Event of Default (including, but not limited to, upon the occurrence of a bankruptcy or insolvency event (including the acceleration of claims by operation of Applicable Law) or a Change of Control) or otherwise, the Prepayment Premium with respect to any payment, repayment or prepayment of the Term Loan will also be due and payable immediately as though the Term Loan were prepaid (regardless of whether all or any portion of the Term Loan were or will be paid or prepaid) and shall constitute part of the Secured Obligations, in view of the impracticability and extreme difficulty of ascertaining actual damages and by mutual agreement of the parties as to a reasonable calculation of each Lender’s lost profits as a result thereof. The Prepayment Premium payable above shall be presumed to be the liquidated damages sustained by each Lender as the result of the early redemption and the Loan Parties agree that it is reasonable under the circumstances currently existing. The Prepayment Premium shall also be payable immediately in the event the Term Loans are satisfied, restructured, discharged or released by foreclosure (whether by power of judicial proceeding), deed in lieu of foreclosure or by any other means on any date prior to the Maturity Date. EACH OF THE LOAN PARTIES EXPRESSLY WAIVES (TO THE FULLEST EXTENT IT MAY LAWFULLY DO SO) THE PROVISIONS OF ANY PRESENT OR FUTURE STATUTE OR LAW THAT PROHIBITS OR MAY PROHIBIT THE COLLECTION OF THE FOREGOING PREPAYMENT PREMIUM IN CONNECTION WITH ANY SUCH ACCELERATION. The Loan Parties expressly agree (to the fullest extent they may lawfully do so) that: (A) the Prepayment Premium is reasonable and is the product of an arm’s-length transaction between sophisticated business people, ably represented by counsel; (B) the Prepayment Premium shall be payable notwithstanding the then-prevailing market rates at the time payment is made; (C) there has been a course of conduct between the Lenders and the Loan Parties giving specific consideration in this transaction for such agreement to pay the Prepayment Premium; and (D) the Loan Parties shall be estopped hereafter from claiming differently than as agreed to in this paragraph. The Loan Parties expressly acknowledge that the Borrower’s agreement to pay the Prepayment Premium to the Lenders as herein described is a material inducement to the Lenders to provide the Term Loan. For the avoidance of doubt, each reference to the Term Loan in this paragraph shall include all interest (if any) that has been capitalized and added to the principal of the Term Loan from time to time.

(c)         Agent Fees. The Borrower agrees to pay Agent the fees set forth in the Agent Fee Letter.

(d)        Lender Expenses. On the Closing Date, Borrower shall pay to Agent, for the benefit of the applicable Persons, (i) the fees set forth in the Commitment Letter and (ii) all unreimbursed Lender Expenses, which Agent may deduct from the Escrow Amount (as defined in the Escrow Agreement). Thereafter, all unreimbursed Lender Expenses shall be due and payable on demand. Agent shall allocate and disburse such payments to the Person having incurred such Lender Expenses.

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2.6          Prepayments.

(a)         Mandatory Prepayments.

             (i)        Acceleration. If, at the election of Agent (acting at the direction of the Required Lenders) repayment of the Term Loan is accelerated following the occurrence and continuance of an Event of Default, then Borrower shall immediately pay to Agent for its benefit and the benefit of Lenders, as applicable (x) (i) all accrued and unpaid payments of interest with respect to the Term Loan due prior to the date of prepayment, (ii) the outstanding principal amount of the Term Loan and (iii) all other sums, if any, that shall have become due and payable hereunder with respect to the Term Loan, including all Obligations due hereunder plus (y) if applicable, the Prepayment Premium.

             (ii)      [Reserved].

             (iii)     Recovery Event Proceeds. Subject in all respects to the terms and conditions of and the rights of other secured parties set forth in the Intercreditor Agreement, Borrower shall prepay the Term Loans in an aggregate amount equal to 100% of the Recovery Event Proceeds concurrently upon receipt of the same by Borrower, Parent or any Subsidiary of Parent and the same shall be applied to (i) all accrued and unpaid payments of interest with respect to the Term Loan due prior to the date of prepayment, (ii) the outstanding principal amount of the Term Loan and (iii) all other sums, if any, that shall have become due and payable hereunder with respect to the Term Loan, including all Obligations due hereunder; provided, however, that so long as no Default or Event of Default shall have occurred and be continuing, such Recovery Event Proceeds shall not be required to be so applied to the extent that Borrower notifies Agent prior to or concurrently with receipt of such Recovery Event Proceeds that the same will be used (and to the extent Borrower, Parent or such Subsidiary actually uses such Recovery Event Proceeds) for the replacement, substitution or restoration of the assets subject to the applicable Casualty Event or condemnation within one hundred eighty (180) days after the receipt of such Recovery Event Proceeds; provided further that, if at any time Borrower, Parent or any Subsidiary of Parent determines that such Recovery Event Proceeds or any portion thereof will not be so used within one hundred eighty (180) days after the receipt of such Recovery Event Proceeds, such Recovery Event Proceeds shall be immediately applied to prepay the Term Loans as required above.

             (iv)     Transfers and Involuntary Dispositions (Excluding the Used Motor Oil Asset Divestiture). Subject in all respects to the terms and conditions of, and the rights of other secured parties set forth in, the Intercreditor Agreement, Borrower shall (x) prepay the Term Loans in an aggregate amount equal to 100% of the Net Cash Proceeds received by Borrower, Parent or any Subsidiary of Parent from all Transfers (other than Permitted Transfers and any Used Motor Oil Asset Divestiture) and Involuntary Dispositions within five (5) Business Days of the date of such Transfer or Involuntary Disposition and shall be applied to (i) all accrued and unpaid payments of interest with respect to the Term Loan due prior to the date of prepayment, (ii) the outstanding principal amount of the Term Loan and (iii) all other sums, if any, that shall have become due and payable hereunder with respect to the Term Loan, including all Obligations due hereunder and (y) shall immediately pay to Agent for its benefit and the benefit of Lenders, if applicable, the Prepayment Premium; provided, however, that so long as no Default or Event of Default shall have occurred and be continuing, such Net Cash Proceeds shall not be required to be so applied at the election of the Borrower (as notified by the Borrower to the Agent) to the extent Borrower, Parent or any Subsidiary of Parent reinvests all or any portion of such Net Cash Proceeds in operating assets (other than current assets) used in the business within one hundred eighty (180) days after the receipt of such Net Cash Proceeds; provided further that, if such Net Cash Proceeds shall have not been so reinvested, such Net Cash Proceeds shall be immediately applied to prepay the Term Loans as required above.

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             (v)      Used Motor Oil Asset Divesture (Required Amounts). Subject to Section 2.6(d), Borrower shall (x) prepay (a) the Term Loans in an aggregate amount equal to 50% of the Net Cash Proceeds received by Borrower, Parent or any Subsidiary of Parent from any Used Motor Oil Asset Divestiture (such proceeds “UMO Sale Proceeds”) within five (5) Business Days of the date of such Transfer; provided, however, that so long as no Default or Event of Default shall have occurred and be continuing, such Net Cash Proceeds shall not be required to be so applied until at least $5,000,000 of Net Cash Proceeds have been received by Borrower, Parent or any Subsidiary of Parent and thereafter shall be applied to (i) all accrued and unpaid payments of interest with respect to the Term Loan due prior to the date of prepayment, (ii) the outstanding principal amount of the Term Loan and (iii) all other sums, if any, that shall have become due and payable hereunder with respect to the Term Loan, including all Obligations due hereunder and (y) shall immediately pay to Agent for its benefit and the benefit of Lenders, if applicable, the Prepayment Premium.

             (vi)     Used Motor Oil Asset Divesture (Elective Amounts). Subject to Section 2.6(d), Borrower may, at its election, offer to prepay (x) the Term Loans in an aggregate amount greater than the 50% of the UMO Sale Proceeds received by any Loan Party in clause (v) above, within five (5) Business Days of the date of such Transfer; such excess Net Cash Proceeds shall be applied to (i) all accrued and unpaid payments of interest with respect to the Term Loan due prior to the date of prepayment, (ii) the outstanding principal amount of the Term Loan, (iii) all other sums, if any, that shall have become due and payable hereunder with respect to the Term Loan, including all Obligations due hereunder and (y) shall immediately pay to Agent for its benefit and the benefit of Lenders, if applicable, the Prepayment Premium.

             (vii)    Change of Control. Upon a Change of Control, Borrower shall immediately offer to pay to Agent for its benefit and the benefit of Lenders, as applicable (x) (i) all accrued and unpaid payments of interest with respect to the Term Loan due prior to the date of prepayment, (ii) the outstanding principal amount of the Term Loan and (iii) all other sums, if any, that shall have become due and payable hereunder with respect to the Term Loan, including all Obligations due hereunder and (y) the Prepayment Premium.

             (viii)   Equity Issuance. Immediately upon the receipt by Borrower, Parent or any Subsidiary of Parent of the Net Cash Proceeds of any Equity Issuance (other than any Permitted Equity Issuance) Borrower shall prepay the Term Loans in an aggregate amount equal to 100% of such Net Cash Proceeds plus if applicable, the Prepayment Premium.

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             (ix)      Issuance of Indebtedness. Immediately upon the receipt by Borrower, Parent or any Subsidiary of Parent of the Net Cash Proceeds of any Indebtedness (other than any Permitted Indebtedness), the Borrower shall prepay the Term Loans as hereinafter provided in an aggregate amount equal to 100% of such Net Cash Proceeds plus if applicable, the Prepayment Premium.

(b)        Voluntary Prepayments. Borrower may voluntarily prepay the Term Loan in whole or in part, at any time; provided that each of the following conditions is satisfied: Borrower pays to Agent for its benefit and the benefit of Lenders, as applicable, (i) all accrued and unpaid payments of interest with respect to the Term Loan (or portion thereof subject to prepayment) due up to and including the date of prepayment, (ii) the outstanding principal amount of the Term Loan being prepaid, (iii) to the extent the Term Loan is being voluntarily prepaid in full, all other sums, if any, that shall have become due and payable hereunder with respect to the Term Loan, including all Obligations due hereunder and (iv) the Prepayment Premium. Term Loans bearing interest based on the Base Rate may be prepaid with same-day written notice, which is received by the Agent no later than 11:00 a.m. New York time on a Business Day, subject to the applicable Prepayment Premium.

(c)         Each prepayment of the outstanding Term Loan pursuant to this Section 2.6 shall be applied to the principal repayment installments thereof in indirect order of maturity on a pro rata basis. Such prepayments shall be paid to the Lenders in accordance with their Pro Rata Percentage.

(d)        Borrower shall notify the Agent in writing (such writing to include, the subsection of this Section 2.6 pursuant to which such prepayment is being made, the amount of such prepayment (including any Prepayment Premium) and the date of such prepayment) of any prepayment required to be made pursuant to this Section 2.6 at least one (1) Business Day prior to the date of such prepayment. Each Lender may elect (in its sole discretion) to decline all or any portion of its Pro Rata Percentage of any mandatory prepayment pursuant to Section 2.6(a)(v) or Section 2.6(a)(vi) (such declined amounts the “Declined Proceeds” and each such Lender, a “Declining Lender”) by giving notice of such election in writing to the Agent by 11:00 a.m. New York time on the date that is one (1) Business Day after the date of such Lender’s receipt of notice from the Agent regarding such prepayment. If a Lender fails to deliver a notice of election declining receipt of its Pro Rata Percentage of such mandatory prepayment to the Agent within the time frame specified above, any such failure will be deemed to constitute an acceptance of such Lender’s Pro Rata Percentage of the total amount of such mandatory prepayment of Term Loans. Upon receipt by the Agent of such notice, the Agent shall immediately notify the Borrower of such election. Any Declined Proceeds shall (1) first, be applied to prepay non-Declining Lenders’ Pro Rata Percentage of the outstanding amount of the Term Loan (excluding the outstanding amount of the Term Loan owed to the Declining Lenders) and (2) second, be retained by the Borrower; provided that non-Declining Lenders’ may decline such additional amounts under clause (1) and such amounts will be retained by the Borrower and/or applied by the Borrower in any manner not inconsistent with the terms of this Agreement. If the Borrower elects to voluntarily prepay the outstanding amount of the Term Loan with any Declined Proceeds, then such prepayment shall be accompanied with the applicable Prepayment Premium.

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2.7          Other Payment Terms.

(a)         Place and Manner. Except as otherwise provided herein. all payments to be made by Borrower under any Loan Document, including payments of principal and accrued but unpaid interest hereunder, and all fees and Lender Expenses shall be made without setoff or counterclaim from. All payments to be made by Borrower under any of the Loan Documents shall be made by 3:00 p.m. New York time in immediately available funds by same day wire transfer to Agent, for its benefit and the benefit of Lenders, as applicable, in accordance with the wire transfer instructions as provided in writing by Agent from time to time. Unless otherwise determined by Agent (acting at the direction of the Required Lenders), all payments received from Borrower shall be applied first to any outstanding fees and/or Lender Expenses, then to accrued and unpaid interest, then to principal. Any wire transfer or payment received by Agent after 3:00 p.m. New York time may be deemed to have been received by Agent, in its sole discretion, as of the opening of business on the immediately following Business Day. Any prepayment made pursuant to Section 2.6 shall be accompanied by interest to, but not including, the prepayment date on the amount so prepaid.

(b)        Date. Whenever any payment due hereunder shall fall due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall be included in the computation of interest or fees, as the case may be.

(c)        Default Rate. If an Event of Default has occurred and is continuing, at the election of the Required Lenders (or automatically if an Event of Default pursuant to Sections 8.1, 8.9 or 8.10 is continuing), Borrower shall pay interest on the Obligations from the date of such Event of Default until such Event of Default is cured, at a per annum rate equal to the Default Rate. All computations of interest shall be made on the basis of a year of 360 days, as the case may be, and actual days elapsed.

(d)        Sharing of Payments, Etc. If any Lender, directly or through an Affiliate or branch office thereof, obtains any payment of any Obligation of any Loan Party (whether voluntary, involuntary or through the exercise of any right of setoff or the receipt of any Collateral or “proceeds” (as defined under the applicable Code) of Collateral) (and other than pursuant to Section 2.8, Section 14.1, Section 14.15, or any purchase option pursuant to any intercreditor agreement or any subordination agreement to which Agent is a party) and such payment exceeds the amount such Lender would have been entitled to receive if all payments had gone to, and been distributed by, Agent in accordance with the provisions of the Loan Documents, such Lender shall purchase for cash from other Lenders such participations in their Obligations as necessary for such Lender to share such excess payment with such Lenders to ensure such payment is applied as though it had been received by Agent and applied in accordance with this Agreement (or, if such application would then be at the discretion of the Borrower, applied to repay the Obligations in accordance herewith); provided, however, that (i) if such payment is rescinded or otherwise recovered from such Lender in whole or in part, such purchase shall be rescinded and the purchase price therefor shall be returned to such Lender without interest and (ii) such Lender shall, to the fullest extent permitted by applicable requirements of law, be able to exercise all its rights of payment (including the right of setoff) with respect to such participation as fully as if such Lender were the direct creditor of the applicable Loan Party in the amount of such participation.

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(e)         Defaulting Lenders.

             (i)       Responsibility. The failure of any Defaulting Lender to make any Term Loan, or to fund any purchase of any participation required to be made or funded by hereunder, or to make any payment required by it under any Loan Document on the date specified therefor shall not relieve any other Lender of its obligations to make such loan, fund the purchase of any such participation, or make any other such required payment on such date, and neither Agent nor, other than as expressly set forth herein, any other Lender shall be responsible for the failure of any Defaulting Lender to make a loan, fund the purchase of a participation or make any other required payment under any Loan Document.

             (ii)      Voting Rights. Notwithstanding anything set forth herein to the contrary, including Section 14.4, a Defaulting Lender shall not have any voting or consent rights under or with respect to any Loan Document (or be, or have its Term Loans and Term Loan Commitments, included in the determination of “Required Lenders” or “Lenders directly and adversely affected” pursuant to Section 14.4) for any voting or consent rights under or with respect to any Loan Document, provided that (A) the Term Loan Commitment of a Defaulting Lender may not be increased, extended or reinstated, (B) the principal of a Defaulting Lender’s Term Loans may not be reduced or forgiven, and (C) the interest rate applicable to Obligations under the Loan Documents owing to a Defaulting Lender may not be reduced in such a manner that by its terms affects such Defaulting Lender more adversely than other Lenders, in each case, without the consent of such Defaulting Lender. Moreover, for the purposes of determining Required Lenders, the Term Loans and Term Loan Commitments held by Defaulting Lenders shall be excluded from the total Term Loans and Term Loan Commitments outstanding.

             (iii)     Borrower Payments to a Defaulting Lender. Agent shall be authorized to use all payments received by Agent for the benefit of any Defaulting Lender pursuant to this Agreement to pay in full the Aggregate Excess Funding Amount to the appropriate Lenders. Upon any such unfunded obligations owing by a Defaulting Lender becoming due and payable, Agent shall be authorized to use such cash collateral to make such payment on behalf of such Defaulting Lender. In the event that Agent is holding cash collateral of a Defaulting Lender that cures pursuant to clause (iv) below or ceases to be a Defaulting Lender pursuant to the definition of Defaulting Lender, Agent shall return the unused portion of such cash collateral to such Lender. The “Aggregate Excess Funding Amount” of a Defaulting Lender shall be the aggregate amount of all unpaid obligations owing by such Lender to Agent, and other Lenders under the Loan Documents.

             (iv)     Cure. A Lender may cure its status as a Defaulting Lender under clause (a) of the definition of Defaulting Lender if such Lender fully pays to Agent, on behalf of the applicable Lenders the Aggregate Excess Funding Amount, plus all interest due thereon. Any such cure shall not relieve any Lender from liability for breaching its Contractual Obligations hereunder and shall not constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.

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2.8          Increased Costs.

If any Change in Law shall:

(a)         impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender;

(b)         subject any Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (b) through (d) of the definition of Excluded Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or

(c)         impose on any Lender or the London interbank market any other condition, cost or expense (other than Taxes) affecting this Agreement or Term Loans made by such Lender or participation in any such Term Loan;

and the result of any of the foregoing shall be to increase the cost to such Lender or such other Recipient of making, converting to, continuing or maintaining any Term Loan or of maintaining its obligation to make any such Term Loan, or to reduce the amount of any sum received or receivable by such Lender or other Recipient hereunder (whether of principal, interest or any other amount) then, upon request of such Lender or other Recipient, the Borrower will pay to such Lender or other Recipient, as the case may be, such additional amount or amounts as will compensate such Lender or other Recipient, as the case may be, for such additional costs incurred or reduction suffered.

2.9          Taxes.

(a)         Defined Terms: For purposes of this Section, the term “Applicable Law” includes FATCA.

(b)        Payments Free of Taxes. Any and all payments by or on account of any obligation of any Loan Party under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by Applicable Law. If any Applicable Law (as determined in good faith discretion of an applicable Withholding Agent) requires the deduction or withholding of any Tax from any such payment by a Withholding Agent, then the applicable Withholding Agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with Applicable Law and, if such Tax is an Indemnified Tax, then the sum payable by such Loan Party shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section 2.9(b)) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made.

(c)         Payment of Other Taxes by Borrower. The Borrower shall timely pay to the relevant Governmental Authority in accordance with Applicable Law, or at the option of the Agent timely reimburse it for the payment of, any Other Taxes.

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(d)        Indemnification by Borrower. The Borrower shall indemnify each Recipient, within 10 days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender (with a copy to the Agent), or by the Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.

(e)         Indemnification by the Lenders. Each Lender shall severally indemnify the Agent, within 10 days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that the Borrower has not already indemnified the Agent for such Indemnified Taxes and without limiting the obligation of the Borrower to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 14.1(e) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the Agent to the Lender from any other source against any amount due to the Agent under this paragraph (e).

(f)         Evidence of Payments. As soon as practicable after any payment of Taxes by the Borrower to a Governmental Authority pursuant to this Section, the Borrower shall deliver to the Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Agent.

(g)        Status of Lenders. (i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to the Borrower and the Agent, at the time or times reasonably requested by the Borrower or the Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the Borrower or the Agent, shall deliver such other documentation prescribed by Applicable Law or reasonably requested by the Borrower or the Agent as will enable the Borrower or the Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in paragraphs (g)(ii)(A), (ii)(B) and (ii)(D) of this Section) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.

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             (ii)      Without limiting the generality of the foregoing, in the event that the Borrower is a U.S. Borrower,

        (A)       any Lender that is a U.S. Person shall deliver to the Borrower and the Agent on or about the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Agent), executed copies of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding tax.

        (B)        Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Agent (in such number of copies as shall be requested by the recipient) on or about the date on which such Foreign Lender becomes a Lender under this Agreement and from time to time thereafter upon the reasonable request of the Borrower or the Agent), whichever of the following is applicable

     (1)         in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed copies of IRS Form W-8BEN or IRS Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN or IRS Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;

     (2)         executed copies of IRS Form W-8ECI;

     (3)         in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Internal Revenue Code, (x) a certificate substantially in the form of Exhibit I-1 to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code, a “10 percent shareholder” of the Borrower within the meaning of Section 871(h)(3)(B) of the Internal Revenue Code, or a “controlled foreign corporation” related to the Borrower as described in Section 881(c)(3)(C) of the Internal Revenue Code (a “U.S. Tax Compliance Certificate”) and (y) executed copies of IRS Form W-8BEN or IRS Form W-8BEN-E; or

     (4)         to the extent a Foreign Lender is not the beneficial owner, executed copies of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, IRS Form W 8 BEN-E, a U.S. Tax Compliance Certificate substantially in the form of Exhibit I-2 or Exhibit I-3, IRS Form W-9, or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit I-4 on behalf of each such direct and indirect partner

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        (C)        any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Agent (in such number of copies as shall be requested by the recipient) on or about the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Agent), executed copies of any other form prescribed by Applicable Law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by Applicable Law to permit the Borrower or the Agent to determine the withholding or deduction required to be made; and

        (D)        if a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Internal Revenue Code, as applicable), such Lender shall deliver to the Borrower and the Agent, at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Agent, such documentation prescribed by Applicable Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Internal Revenue Code) and such additional documentation reasonably requested by the Borrower or the Agent as may be necessary for the Borrower and the Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount, if any, to deduct and withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Agent in writing of its legal inability to do so.

(h)        Treatment of Certain Refunds. If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section (including by the payment of additional amounts pursuant to this Section), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this paragraph (h) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this paragraph (h), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this paragraph (h) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This paragraph shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.

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(i)         Survival. Each party’s obligations under this Section 2.9 shall survive the resignation or replacement of the Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Term Loan Commitments and the repayment, satisfaction or discharge of all obligations under any Loan Document.

2.10        Term. This Agreement shall become effective on the Closing Date and shall continue in full force and effect for so long as any Obligations remain outstanding (other than inchoate indemnity obligations). Agent’s Lien on the Collateral shall remain in effect for so long as any Obligations are outstanding (other than inchoate indemnity obligations) and upon payment in full of all Obligations (other than inchoate indemnity obligations which are not the subject of an indemnity claim), Agent’s Lien on the Collateral shall terminate automatically. This Agreement may be terminated prior to the Maturity Date by Borrower, effective five (5) Business Days after written notice of termination is given to Agent and Lenders and upon receipt by Agent of payment of the Obligations (including, without limitation, the Prepayment Premium, if applicable) in full in cash (other than inchoate indemnity obligations and any other obligations which, by their terms, are to survive the termination of this Agreement).

2.11        Issuance of Warrants. On the Closing Date, in connection with (and as additional consideration for) the making of the Term Loans by the Initial Lenders, Parent shall issue to each Initial Lender (or, with respect to certain of the Initial Lenders, to such Initial Lender’s Affiliate or Approved Fund identified on Schedule A of the Warrant Agreement), the number of Warrants set forth opposite the name of such Initial Lender (or such Initial Lender’s Affiliate or Approved Fund, as applicable) on Schedule A of the Warrant Agreement. Upon issuance pursuant to this Section 2.11, the Warrants shall be governed by and shall be entitled to the benefits, and subject to the terms, of the Warrant Agreement.

2.12       Investment Unit Allocation. Each Loan Party and each Lender hereby agree (i) that the Term Loan disbursed to the Borrower on the Closing Date and the Warrants issued on the Closing Date, taken together, comprise an “investment unit” for purposes of Section 1273(c)(2) of the Internal Revenue Code, (ii) to treat the investment unit as issued by the Parent for U.S. federal income tax purposes and (iii) to allocate the issue price of such investment unit among the Term Loan and the Warrants in proportion to their fair market value as of the Closing Date, in accordance with Treasury Regulations Section 1.1273-2(h). The Lenders shall determine in good faith the fair market value of the Warrants for purposes of allocating the issue price of the investment unit between the Term Loan and the Warrants, as described in clause (iii) above, notice of which shall be provided in writing to the Borrower; provided, however, that if the Borrower objects in writing to the fair market value as determined by the Lenders within ten (10) Business Days after the Lenders give written notice thereof, the Borrower shall engage an independent, reputable appraiser selected jointly by the Borrower and the Lenders, to determine such fair market value. The fees and expenses of such appraiser shall be paid by the Borrower. Unless otherwise required by Applicable Law, Borrower each Loan Party and each Lender agree to file all tax returns in a manner consistent with this Section 2.12.

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3.            Conditions Precedent.

3.1          Conditions Precedent to the Closing Date. The Initial Lenders and the Borrower shall issue a joint release instruction to the Escrow Agent upon the satisfaction of (or waiver by the Initial Lenders in writing of) the following the conditions precedent, in form and substance satisfactory to Agent and Initial Lenders (the “Closing Date”):

(a)         The Loan Documents (including, but not limited to, this Agreement and the Agent Fee Letter) duly executed by Borrower and the Guarantors required to sign such Loan Document;

(b)         The Current Financial Statements of Parent;

(c)         Evidence of the insurance coverage required by Section 6.8 of this Agreement;

(d)         To the extent requested by any Initial Lender, a Note in the principal amount of the Term Loan in respect of such Initial Lender’s Pro Rata Percentage shall be provided by Borrower to such requesting Initial Lender;

(e)         Customary legal opinions of (x) Stroock & Stroock & Lavan LLP, in its capacity as special counsel to the Loan Parties and (y) local counsel opinions covering Loan Parties and jurisdictions as reasonably agreed by the Borrower and the Initial Lenders in each case, dated as of the Closing Date and addressed to the Agent and the Initial Lenders;

(f)          Delivery of an executed Notice of Borrowing, direction letter and Funds Flow Memorandum;

(g)         The Closing Date shall not occur before April 1, 2022;

(h)         A duly executed officer’s certificate of each Loan Party containing the following documents: (i) the Organization Documents of each Loan Party (which, to the extent filed with a Governmental Authority, shall be certified as of a recent date by such Governmental Authority), (ii) resolutions authorizing the Loan Documents and, in the case of Parent, the Warrants, the Warrant Agreement and the Registration Rights Agreement (including authorization of the reservation and issuance of Parent’s common stock upon exercise of the Warrants), (iii) a good standing certificate from (A) each Loan Party’s state of formation and (B) from any state where such party is, or is required to be, qualified to do business to the extent failure to so qualified could reasonably be expected to have a Material Adverse Effect and (iv) incumbency and representative signatures;

(i)          All necessary consents of stockholders or members and other third parties with respect to the execution, delivery and performance of the Loan Documents by the Loan Parties and, in the case of Parent, the Warrants, the Warrant Agreement and the Registration Rights Agreement (including consent to the issuance of Parent’s common stock upon exercise of the Warrants);

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(j)          [reserved];

(k)         The execution and delivery by the Intermediation Facility Agent and the Loan Parties of an Intercreditor Agreement;

(l)          The execution and delivery by Parent of the Warrant Agreement and the Registration Rights Agreement and the issuance by Parent of the Warrants to the Initial Lenders or their Affiliates or Approved Funds;

(m)        A Solvency Certificate from the chief financial officer, chief executive officer, president or similar senior officer of Parent (after giving effect to the transactions contemplated by this Agreement, including the issuance by Parent of the Warrants) certifying that the Loan Parties, individually and collectively, are not Insolvent;

(n)         The Mobile Refinery Acquisition shall have been consummated substantially simultaneously with the initial borrowings under the Facility in accordance with the Mobile Refinery Acquisition Agreement;

(o)         Since the date of the Mobile Refinery Acquisition Agreement, there shall not have occurred a Material Adverse Effect (as defined in the Mobile Refinery Acquisition Agreement);

(p)         Such documents, instruments and agreements, including certificates evidencing Collateral consisting of Equity Interests, Uniform Commercial Code financing statements or amendments to Uniform Commercial Code financing statements, as the Initial Lenders shall reasonably request to evidence the perfection and priority of the security interests granted to Agent pursuant to Section 4;

(q)         Subject to Section 6.19, the Agent shall have received, subject to the Intercreditor Agreement, all documents, agreements and instruments required to create and perfect the Agent’s security interest in the Collateral. The Loan Parties shall have filed or shall have provided all UCC-1 financing statements and the Intellectual Property Security Agreement in form for filing by the Required Lenders or their counsel and shall have delivered all certificated pledged equity and documented pledged debt (if any) with appropriate transfer powers and/or allonges by the Closing Date;

(r)          Borrower shall have paid all Lender Expenses and all fees due pursuant to the Agent Fee Letter or the Commitment Letter, as applicable;

(s)         The Borrower and each of the Guarantors shall have provided no less than 3 business days prior to the Closing Date the documentation and other information to the Lenders that are reasonably requested by the Lenders no later than 10 days prior to the Closing Date under applicable “know your customer” and anti-money laundering rules and regulations, including the USA PATRIOT ACT, the USA FREEDOM Act, IRS Form W-9 (if applicable) and other applicable tax forms;

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(t)         Such other documents, and completion of such other matters, as Agent or Initial Lenders may reasonably deem necessary or appropriate;

(u)        Confirmation that (i) the representations and warranties contained in Section 5 shall be true and correct on and as of the Closing Date (except for such representations and warranties made as of a specific date, in which case such representations and warranties shall be true and correct as of such specific date), after giving effect in all cases to any standard(s) of materiality contained in Article 5 as to such representations and warranties, and (ii) no Default or Event of Default shall have occurred and be continuing, or would exist after giving effect to the funding of the Term Loan. The making of the Term Loan shall be deemed to be a representation and warranty by Borrower on the date of the Term Loan as to the accuracy of the facts referred to in this Section 3.1; and

(v)        Concurrently with the consummation of the Mobile Refinery Acquisition, the Loan Parties (and/or any Intermediation Facility Agent) shall execute and deliver or confirm effectiveness of the material supply and offtake agreements with Macquarie Energy North America Trading Inc., Shell Trading (US) Company, Equilon Enterprises LLC d/b/a Shell Oil Products US, Shell Chemical LP, Synergy Supply & Trading LLC, and Idemitsu Apollo Renewable Corp. on substantially similar terms as the agreements provided to counsel to the Lenders on February 16, 2022, subject to (x) any amendments, modifications or adjustments to the terms thereof (other than economic terms) required by any Intermediation Facility Agent, the Loan Parties or the applicable counterparty to the intermediation arrangements to the extent not materially adverse to the Lenders and (y) any amendments, modifications or adjustments to the economic terms thereof required by any Intermediation Facility Agent, the Loan Parties or the applicable counterparty to the intermediation arrangements to the extent not adverse to the Lenders.

For purposes of determining compliance with the conditions specified in this Section 3.1, each Initial Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its objection thereto.

4.            Creation of Security Interest.

4.1          Grant of Security Interest. To secure prompt repayment of any and all Secured Obligations and prompt performance by the Loan Parties of each of their covenants and duties under the Loan Documents, each Loan Party grants Agent, for itself and as agent for Lenders, a continuing security interest in all presently existing and hereafter acquired or arising Collateral. Such security interest constitutes a valid, first priority security interest in the presently existing Collateral, and will constitute a valid, first priority security interest in Collateral acquired after the date hereof, in each case, subject to Permitted Liens. This Agreement is intended by the parties to be a security agreement for purposes of the Code.

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IT BEING UNDERSTOOD, HOWEVER, that, notwithstanding anything in this Section 4.1 to the contrary, (1) in no event shall the Collateral include, or the security interest or Lien granted under this Section 4.1 attach to, any Excluded Property, and (2) for so long as the applicable property continues to be Excluded Property, the Loan Parties shall not be required to take any action intended to cause any Excluded Property to constitute Collateral, and none of the covenants or representations and warranties herein shall be deemed to apply to any property constituting Excluded Property; provided, however, that the security interest granted under this Section 4.1 shall immediately attach to, and the Collateral shall immediately include, any such asset (or portion thereof) that would otherwise constitute Collateral, were it not Excluded Property, upon such asset (or portion thereof) ceasing to be Excluded Property and (3) any and all assets or property sold, conveyed, transferred, assigned or otherwise disposed of by the Loan Parties to the extent permitted by the terms of the Loan Documents shall be free of the security interests granted and created herein upon, from and after such sale, conveyance, transfer, assignment or other disposition, and all rights therein shall revert to the applicable Loan Party; provided, further, however, that security interests granted and created herein shall continue in any Proceeds (as defined in the UCC) of such sale, conveyance, transfer, assignment or other disposition. Upon any such release or such sale, transfer, conveyance, assignment or other disposition of Collateral or any part thereof, the Agent shall, upon the request and at the sole cost and expense of the Loan Parties, assign, transfer and deliver to the applicable Loan Party, against receipt and without recourse to our any warranty by Agent except as to the fact that the Agent has not encumbered the released assets, such of the Collateral or any part thereof to be released (in the case of a release) as may be in the possession of the Agent and as have been sold or otherwise applied pursuant to the terms hereof, and, with respect to any other Collateral, documents and instruments (including UCC-3 termination financing statements or releases) reasonably requested by the Borrower acknowledging the termination hereof or the release of such Collateral.

4.2          Duration of Security Interest. Agent’s security interest in the Collateral shall continue until the payment in full in cash and the satisfaction of all Secured Obligations (other than inchoate indemnity obligations or other obligations that expressly survive termination), whereupon such security interest shall terminate and Agent shall, at Borrower’s sole cost and expense, promptly execute such further documents and take such further actions as may be reasonably requested by the Borrower at the Borrower’s sole cost and expense to effect the release contemplated by this Section 4.2, including duly executing and delivering termination statements for filing in all relevant jurisdictions under the Code. Any such release shall be without recourse, representation or warranty by Agent.

4.3          Possession of Collateral. So long as no Event of Default has occurred and is continuing, and subject to the respective rights and terms and conditions set forth in the Intercreditor Agreement, the Loan Parties shall remain in full possession, enjoyment and control of the Collateral (except only as may be otherwise required by Agent or the Required Lenders for perfection or protection of Agent’s security interest therein or in connection with any Permitted Lien, Permitted Distribution or Permitted Disposition) and shall be entitled to manage, operate and use the same and each part thereof with all the rights and franchises appertaining thereto; provided, however, that the possession, enjoyment, control and use of the Collateral shall at all times be subject to the observance and performance of the terms of this Agreement.

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4.4          Delivery of Additional Documentation Required.

(a)         Negotiable Collateral. Subject to the rights of the respective secured parties set forth in the Intercreditor Agreement, the Loan Parties shall from time to time execute and deliver to Agent for the benefit of Lenders, in accordance with the terms of the Collateral Pledge Agreement, all Negotiable Collateral (in the case of pledged Indebtedness, to the extent having a value in excess of the Collateral Threshold Amount in the aggregate) and other documents that Agent (at the direction of Required Lenders) may reasonably request, in a form reasonably satisfactory to Agent and Required Lenders, to perfect and continue the perfection of Agent’s security interests in the Collateral and in order to fully consummate all of the transactions contemplated under the Loan Documents.

(b)         Commercial Tort Claims. Subject to the rights of the respective secured parties set forth in the Intercreditor Agreement, for the avoidance of doubt, if Borrower acquires a Commercial Tort Claim (which would reasonably be expected to result in damages in excess of the Collateral Threshold Amount, Borrower shall promptly notify Agent in a writing signed by Borrower of the general details thereof and upon Agent’s request (at the direction of the Required Lenders), Borrower shall promptly, but in no event more than ten (10) Business Days after such request agree to an amendment to the definition of Collateral in Exhibit A hereto to include such Commercial Tort Claim, such amendment to be in form and substance as required by Agent (at the direction of the Required Lenders).

(c)         Certificate of Title Collateral. Subject to Section 6.19, on the Closing Date, each Loan Party agrees to deliver to Agent or Agent’s designee the certificates of title for all Certificate of Title Collateral owned by such Loan Party for notation of the Agent’s Lien. With respect to any Certificate of Title Collateral acquired by any Loan Party after the Closing Date, the Loan Parties shall deliver to Agent or Agent’s designee the certificates of title for all Certificate of Title Collateral identified on the most recently delivered Disclosure Letter within twenty (20) Business Days of the delivery of such Disclosure Letter. Each Loan Party agrees to take all actions necessary to cause such certificates to be filed (with the Agent’s Lien noted thereon) in the appropriate state motor vehicle filing office.

4.5          Right to Inspect. Agent and/or a representative of the Required Lenders (through any of their officers, employees, or agents) shall have the right, upon reasonable prior notice, from time to time during the Loan Parties’ usual business hours but no more than once per year at the expense of the Borrower (or if an Event of Default has occurred and is continuing may do any of the foregoing at the expense of the Borrower as often as the Agent and/or a representative of the Required Lenders may desire any time during normal business hours and without advance notice), to inspect each Loan Party’s Books and to make copies thereof and to check, test, and appraise the Collateral in order to verify the Loan Parties’ financial condition or the amount, condition of, or any other matter relating to, the Collateral.

4.6              Authorization to File. Each Loan Party hereby authorizes the Agent, at the expense of such Loan Party (including the reasonable and documented fees and expenses of outside counsel to the extent of and as permitted by Section 10.3), to file one or more financing or continuation statements, and amendments thereto, relating to all or any part of the Collateral without the signature of such Loan Party where permitted by law and using language such as “All assets of the Debtor whether now owned or hereafter acquired or arising and wheresoever located, including all accessions thereto and products and proceeds thereof” or such other language as the Agent (acting at the direction of the Required Lenders) reasonably deems necessary or appropriate. A photocopy or other reproduction of any financing statement covering the Collateral or any part thereof shall be sufficient as a financing statement where permitted by law. Each Loan Party understands and agrees that even though the Agent has no obligation to do so, with respect to any financing statement, the Agent intends to file (at the expense of such Loan Party, including the reasonable and documented fees and expenses of outside counsel to the extent of and as permitted by Section 10.3) any continuation statement or amendment where failure to so file could reasonably be expected to result in the lapse of such financing statement at any time within six months of any such proposed filing. Notwithstanding the foregoing, Agent shall have no obligation to make such filings or to otherwise perfect or maintain the perfection of the security interest on the Collateral.

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5.            Representations and Warranties.

Each Loan Party represents, warrants and covenants to Agent and Lenders as follows, which representations, warranties and covenants shall survive the execution and delivery of this Agreement and the providing of any Term Loan pursuant hereto:

5.1          Due Organization and Qualification. Each Loan Party (a) is duly formed and existing under the laws of its respective state of formation or incorporation, as applicable, and (b) is qualified and licensed to do business in any state in which the conduct of its business or its ownership of property requires that it be so qualified, except, solely in the case of this clause (b), where the failure to do so could not reasonably be expected to cause a Material Adverse Effect.

5.2          Authority and Power. The execution, delivery, and performance of the Loan Documents are within each Loan Party’s powers, have been duly authorized, and are not in conflict with nor constitute a breach of any provision of such Loan Party’s Organization Documents. No Loan Party is in default under any Material Contract to which it is a party or by which it is bound in which the default could reasonably be expected to have a Material Adverse Effect and the execution and delivery by the Loan Parties of the Loan Documents will not cause a breach of any Material Contract to which any Loan Party is a party or by which it is bound.

5.3          Subsidiaries. Parent has no Subsidiaries other than as disclosed in (i) Section 1 of the Disclosure Letter, as may be amended and (ii) Schedule 1 hereto. The ownership interests in each Subsidiary is uncertificated. Each Subsidiary is duly formed and validly existing under the laws of its respective jurisdiction.

5.4          Conflict with Other Instruments, etc. Neither the execution and delivery of any Loan Document to which any Loan Party is a party nor the consummation of the transactions therein contemplated nor compliance with the terms, conditions and provisions thereof will (a) conflict with or result in a breach of any law or any regulation, order, writ, injunction or decree of any court or governmental instrumentality (other than instances in which (i) such instance is being contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP or (ii) such instance could not reasonably be expected to have a Material Adverse Effect) or (b) result in the creation or imposition of any Lien on any assets of any Loan Party, other than Permitted Liens under this Agreement.

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5.5          Enforceability. The Loan Documents have been duly executed and delivered by each Loan Party that is a party thereto, and constitute legal, valid and binding obligations of such Loan Party, enforceable in accordance with their respective terms, except as the enforceability thereof may be limited by bankruptcy, insolvency or other similar laws of general application relating to or affecting the enforcement of creditors’ rights or by general principles of equity.

5.6          No Prior Encumbrances. Except as set forth in Section 8 of the Disclosure Letter, each Loan Party has good and marketable title to (i) its respective property, except for defects to title which individually or in the aggregate could not reasonably be expected to have a Material Adverse Effect and (ii) its respective Collateral, free and clear of Liens, except for Permitted Liens.

5.7          Name; Location of Chief Executive Office, Principal Place of Business and Collateral. As of the Closing Date and each date that a Compliance Certificate is to be delivered (a) in the most recent five (5) years, no Loan Party has done business under any name other than that specified on the signature page hereof or as disclosed on Section 1 or 2 of the Disclosure Letter, as may be amended, (b) the chief executive office, principal place of business, and the locations where each Loan Party maintains its records concerning its respective Collateral are presently located at the address(es) set forth on Section 1 or 2 of the Disclosure Letter, as may be amended (c) the tangible property included in the Collateral is presently located at the address(es) set forth on Section 2 of the Disclosure Letter, as may be amended, and (d) the information in the Disclosure Letter is accurate and complete in all material respects. Except as disclosed in Section 2 of the Disclosure Letter, as may be amended, no Collateral is in the possession of a bailee or any third party.

5.8          Litigation; Governmental Action. Except as set forth in Section 5 of the Disclosure Letter, as amended/or as otherwise disclosed to Agent and Lenders pursuant to Section 6.3 hereof, there are no actions or proceedings pending or, to the Knowledge of the Responsible Officers, threatened by or against any Loan Party or any of their respective Subsidiaries (x) with reasonably expected liability more than the Disclosure Amount or (y) that could be reasonably be expected to have a Material Adverse Effect.

5.9          Financial Statements. As of the Closing Date, Agent and the Lenders have received (a) audited consolidated balance sheet of the Parent and its Subsidiaries for the fiscal year ended December 31, 2020, and the related consolidated statement of operations, shareholder’s equity and cash flows for the fiscal year then ended, and (b) the unaudited consolidated balance sheet of the Parent and its Subsidiaries for the twelve (12) months ended December 31, 2021, and the related consolidated statement of operations and cash flows for the twelve (12) months then ended (the “Current Financial Statements”). The Current Financial Statements fairly present in all material respects Parent’s consolidated financial condition as of the dates thereof and consolidated results of operations for the periods then ended, subject, in the case of unaudited financial statements, to normal year-end adjustments and the absence of footnote disclosures. On the Closing Date, there has not been a material adverse change in the financial condition of the Loan Parties, taken as a whole, since the date of the most recent of such Current Financial Statements.

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5.10        Solvency.        The Loan Parties, individually and collectively, are not Insolvent.

5.11        Taxes; Pension Plans. Parent and each Subsidiary has filed or caused to be filed all federal income tax returns and other material tax returns required to be filed, and has paid, or has made adequate provision for the payment of, all Taxes before the same become delinquent, other than payments of Taxes in an aggregate amount not to exceed the Disclosure Amount or except to the extent such Taxes are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted, so long as such reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made therefor. No Loan Party is aware of any claims or adjustments proposed for Parent’s or any Subsidiary’s prior tax years which could result in additional Taxes in excess of the Disclosure Amount becoming due and payable. Except as, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, (a) Parent and each Subsidiary have paid all amounts necessary, if any, to fund all present pension, profit sharing and deferred compensation plans in accordance with their terms, (b) no Loan Party nor any ERISA Affiliate has incurred any liability to the Pension Benefit Guaranty Corporation which remains outstanding other than the payment of premiums, and there are no such premium payments which have become due which are unpaid, (c) no ERISA Event has occurred or is reasonably expected to occur and (d) no Loan Party or ERISA Affiliate has withdrawn from participation in, permitted the partial or complete termination of, or permitted the occurrence of any other event with respect to, any pension, profit sharing and deferred compensation plans which could reasonably be expected to result in any liability to any Loan Party, including any such liability to the Pension Benefit Guaranty Corporation or its successors or any other governmental agency.

5.12        Consents and Approvals. No approval, authorization or consent of any trustee or holder of any Indebtedness or obligation of any Loan Party or of any other Person under any material agreement, contract, lease or license or similar document or instrument to which any Loan Party is a party or by which any Loan Party is bound, is required to be obtained by the Loan Parties in order to make or consummate the transactions contemplated under the Loan Documents except for those that have already been obtained and are in full force and effect and except where the failure to do so could not reasonably be expected, either individually or in the aggregate, to have a Material Adverse Effect. All consents and approvals of, filings and registrations with, and other actions in respect of, all Governmental Authorities required to be obtained by the Loan Parties in order to make or consummate the transactions contemplated under the Loan Documents have been, or prior to the time when required will have been, obtained, given, filed or taken and are or will be in full force and effect, except for those that have already been obtained and are in full force and effect and except where the failure to do so could not reasonably be expected, either individually or in the aggregate, to have a Material Adverse Effect.

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5.13        Intellectual Property. The Loan Parties own all Intellectual Property used in their business, except for (i) off the shelf or shrink-wrap software and non-customized mass market licenses that are commercially available to the public, (ii) non-exclusive licenses granted by any Loan Party to its customers or other third parties in the ordinary course of business and not materially interfering with the business of the Parent or its Subsidiaries, (iii) [reserved], and (iv) Intellectual Property licensed to any Loan Party. To the Knowledge of such Loan Party, each Loan Party has all rights with respect to Intellectual Property that are reasonably necessary for, or otherwise used or held for use in, the operation of any portion of its respective businesses as currently conducted. Section 3 of the Disclosure Letter, as may be amended, lists all of the Loan Parties’ pending and registered Intellectual Property. No Intellectual Property material to the Loan Parties’ business is owned by any Subsidiary that is not a Loan Party. Except as set forth in the Disclosure Letter, (a) each of the Copyrights, Trademarks and Patents owned by any Loan Party that is material to its business is valid and enforceable, (b) no part of the Intellectual Property owned by any Loan Party that is material to its business has been judged invalid or unenforceable, in whole or in part, (c) no claim has been made to any Loan Party that any material Intellectual Property used in the business of such Loan Party violates or infringes the rights of any third party, and (d) no Loan Party is a party to, or bound by, any material inbound license or other agreement that restricts the grant by such Loan Party of a security interest in Parent’s or such Subsidiary’s rights in such license or agreement or any other Intellectual Property. Each Loan Party has a valid license agreement for the use of Intellectual Property rights of third parties known to the Loan Parties to be necessary to the conduct of the Loan Parties’ business.

5.14       Accounts. The Deposit Accounts and Securities Accounts of each Loan Party are listed on Section 3 of the Disclosure Letter, as may be amended. Each of such accounts is subject to a Control Agreement in favor of Agent to the extent required under Section 7.11 of this Agreement. Prior to opening any new account after the Closing Date (other than Excluded Accounts), each Loan Party shall first notify Agent and not deposit any funds or securities into such account until such account is subject to a Control Agreement in favor of Agent to the extent required under Section 7.11 of this Agreement, whereupon, such Loan Party shall be deemed to have updated Section 3 of the Disclosure Letter to include such new account.

5.15       Environmental Matters. Except as, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, (a) each Loan Party and its Subsidiaries, business, operations and Real Property are in compliance with, and none of the Loan Parties or their Subsidiaries have any liability under, any Environmental Laws, (b) each Loan Party and its Subsidiaries have obtained and maintain all permits, licenses, approvals, registrations and other authorizations required for the conduct of their businesses and operations, and the ownership, operation and use of their Real Property, under Environmental Laws, and all such permits, licenses, approvals, registrations and other authorizations are valid and in good standing, (c) there has been no Release or threatened Release of any Hazardous Materials on, at, under, to or from any Real Property or facility presently or formerly owned, leased or operated by the Loan Parties, their Subsidiaries, or their predecessors in interest that would result in liability for the Loan Parties or any of their Subsidiaries under Environmental Law (d) there is no Environmental Claim pending, or to each Loan Party’s Knowledge, threatened against the Loan Parties or any of their Subsidiaries or relating to any Real Property currently or formerly owned, leased or operated by the Loan Parties or any of their Subsidiaries or relating to the operations of the Loan Parties or any of their Subsidiaries, and there are no actions, activities, circumstances, conditions, events or incidents that could reasonably be expected to form the basis of such Environmental Claim, (e) no Real Property or facility owned, operated or leased by the Loan Parties or any of their Subsidiaries and, to each Loan Party’s Knowledge, no Real Property or facility formerly owned, operated or leased by the Loan Parties or any of their Subsidiaries or predecessors in interest is (i) listed or proposed for listing on the National Priorities List promulgated pursuant to CERCLA or (ii) listed on the Comprehensive Environmental Response, Compensation and Liability Information System or the Superfund Enterprise Management System promulgated pursuant to CERCLA or (iii) included on any similar list maintained by any Governmental Authority including any such list relating to petroleum, (f) none of the Loan Parties or their Subsidiaries is conducting any investigation, removal, remedial or other corrective action pursuant to any Environmental Law at any location, (g) no Environmental Lien has been recorded or attached to any revenues or to any Real Property owned or operated by a Loan Party or any of their Subsidiaries, (h) none of the Loan Parties or their Subsidiaries has treated, stored, transported, released or disposed or arranged for disposal or transport for disposal of Hazardous Materials at, on, under or from any currently or formerly owned or leased Real Property or facility in a manner that could reasonably be expected to give rise to any Environmental Liability of the Loan Parties or any of their Subsidiaries, and (i) no Loan Party nor any of its Subsidiaries nor any of their respective facilities or operations is subject to any outstanding written order, consent decree, or settlement agreement with any Person relating to any Environmental Law or Environmental Liability.

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5.16       Government Consents. Each Loan Party (and each Subsidiary thereof) has obtained all consents, approvals and authorizations of, made all declarations or filings with, and given all notices to, all Governmental Authorities that are necessary for the continued operation of the Loan Parties’ (and their Subsidiaries’) business as currently conducted, except where the failure to do so could not reasonably be expected, either individually or in the aggregate, to have a Material Adverse Effect.

5.17        Full Disclosure. No representation, warranty or other statement made by (or on behalf of) any Loan Party (or any Subsidiary thereof) in any Loan Document, certificate or written statement furnished to Agent or any Lender, taken together with all such certificates, Loan Documents and written statements, contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained in such Loan Documents, certificates or statements not misleading, it being recognized by Agent and Lenders that the projections and forecasts provided by the Loan Parties in good faith and based upon reasonable assumptions are not to be viewed as facts and that actual results during the period or periods covered by any such projections and forecasts may differ from the projected or forecasted results.

5.18        Inventory. All Inventory is in all material respects of good and marketable quality, free from all material defects, spoilage, non-conformance, or payment dispute (except for Inventory for which adequate reserves have been made), and free and clear of Liens (except for Permitted Liens).

5.19        Sanctioned Persons. None of Parent or any of its Subsidiaries, and to Parent’s Knowledge, any of their directors, officers, agents, employees or Affiliates is, or is owned or controlled (as such terms are defined in the applicable Sanctions) by Persons that are, currently subject to or the target of any Sanctions, or is a Sanctions Target, or is located, organized or resident in a country or territory that is the subject of Sanctions. Borrower will not directly or Knowingly indirectly use the proceeds of the Term Loan or otherwise make available such proceeds to any Person, for the purpose of financing the activities of any Person subject to any Sanctions.

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5.20        Foreign Assets Control Regulations, Etc.

(a)         Neither the borrowing of the Term Loan by Borrower hereunder nor its use thereof will violate (i) the United States Trading with the Enemy Act, as amended, (ii) any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) executive order relating thereto, (iii) Executive Order No. 13,224, 66 Fed Reg 49,079 (2001), issued by the President of the United States (Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit or Support Terrorism) (the “Terrorism Order”), (iv) USA PATRIOT ACT, or (v) USA FREEDOM ACT. No part of the Term Loan will be used, directly or Knowingly indirectly, for any material payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.

(b)         Neither Parent nor any Subsidiary, including Borrower (i) is or will become a “blocked person” as described in Section 1.01 of the Terrorism Order or (ii) engages or will engage in any dealings or transactions, or is otherwise associated, with any such blocked person.

(c)         Each Loan Party, including Borrower, and their respective Affiliates are in compliance, in all material respects, with the USA PATRIOT ACT and the USA FREEDOM ACT.

(d)         The Loan Parties, each of their Subsidiaries, and, to the Knowledge of Parent, each of their respective directors, officers and employees and, to the Knowledge of Parent, the agents of the Loan Parties, are and will remain in material compliance with all applicable Sanctions and all Anti-Corruption Laws and Anti-Money Laundering Laws. Parent and its Subsidiaries, including Borrower have instituted and maintain policies and procedures designed to ensure continued compliance with applicable Sanctions, Anti-Corruption Laws and Anti-Money Laundering Laws.

5.21        Status. Neither Parent nor any of its Subsidiaries, including Borrower, ever has been, is, or, upon the consummation of the transactions contemplated hereby, by any other Loan Document or any related agreements, will be (i) a “passive foreign investment company” within the meaning of Section 1297 of the Internal Revenue Code, (ii) a “controlled foreign corporation” within the meaning of Section 957(a) of the Internal Revenue Code or (iii) a “U.S. Real Property Holding Corporation” within the meaning of Section 897 of the Internal Revenue Code.

5.22        Other Permitted Amendments to Disclosure Letter; Certificate of Title Collateral. In addition to those Sections of the Disclosure Letter which Borrower is permitted to amend as set forth in this Section 5, Borrower may also amend the other Sections of the Disclosure Letter from time to time, with the exception of Section 8 of the Disclosure Letter which may only be amended to the extent the Indebtedness and Liens per any such amendment are otherwise permitted under the express terms of this Agreement; provided that with the delivery of each Compliance Certificate, the Borrower shall update the Vehicles listed on Schedules 3(A)(4) or 3(A)(5) of the Disclosure Letter. All such amendments to the Disclosure Letter may be made without Agent’s or Lenders’ consent, and shall be made by delivery of an amended Disclosure Letter (together with, in each case, a copy marked to show changes from the previous version) by email to Agent.

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5.23        Tax Classification. The Borrower is classified as a disregarded entity for U.S. federal income tax purposes.

5.24        Title to Securities. Upon issuance in accordance with the terms of the Warrant Agreement, the Warrants will be duly and validly issued, and upon issuance in accordance with the terms of the Warrant Agreement, the common stock of Parent issuable upon exercise of the Warrants, will be duly and validly issued, fully paid and nonassessable. On the date of issuance of the Warrants, such common stock will have been reserved for issuance. Upon issuance in accordance with the terms of the Warrant Agreement, the Initial Lenders will have good title to the Warrants and, upon exercise of the Warrants in accordance with the terms of the Warrant Agreement, to such common stock, free and clear of all liens, claims and encumbrances of any kind, other than (i) transfer restrictions set forth under the Warrant Agreement, (ii) transfer restrictions under federal and state securities laws and (iii) liens, claims or encumbrances imposed due to the actions of the Initial Lenders.

6.            Affirmative Covenants.

The Loan Parties covenant and agree that, until the full and complete payment of the Obligations (other than inchoate indemnity obligations) in cash, each Loan Party shall (and shall cause each of its Subsidiaries to) do all of the following:

6.1          Good Standing. Each Loan Party and each of its Subsidiaries shall maintain its corporate existence and good standing in its jurisdiction of formation and maintain qualification in each other jurisdiction in which the failure to so qualify could reasonably be expected to have a Material Adverse Effect. Each Loan Party and each of its Subsidiaries shall maintain in force all licenses, approvals and agreements, the loss of which could reasonably be expected to have a Material Adverse Effect.

6.2          Government Compliance. Parent, each Loan Party, and each of their Subsidiaries shall comply with all applicable federal and state statutes, laws, ordinances and government rules and regulations (including Environmental Laws) to which it or its operations is subject, noncompliance with which could reasonably be expected to have a Material Adverse Effect.

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6.3          Financial Statements, Reports, Certificates.

(a)        Borrower shall deliver the following to Agent by email to the address specified pursuant to Article 11 (and Agent shall deliver same to Lenders immediately upon receipt thereof), and Agent and Lenders shall be entitled to rely on the information contained therein: (i) as soon as available, but in any event within the earlier of (x) forty-five (45) days after the end of each calendar quarter and (y) the date on which delivered to the SEC, Parent’s consolidated financial statements including a cash flow statement, income statement and balance sheet for the period reported, and certified by a Responsible Officer of Parent; (ii) if a Default or Event of Default has occurred and is continuing, as soon as available, but in any event within thirty (30) days after the end of each calendar month (in form and substance satisfactory to the Required Lenders), Parent’s consolidated financial statements including a cash flow statement, income statement and balance sheet for the period reported, and certified by a Responsible Officer of Parent; (iii) as soon as available, but in any event within the earlier of (x) one hundred and twenty (120) days after the end of Parent’s fiscal year and (y) the date on which delivered to the SEC, audited consolidated financial statements of Parent in accordance with GAAP, consistently applied, together with an unqualified opinion on the financial statements from an independent certified public accounting firm reasonably acceptable the Initial Lenders; (iv) as soon as available, but in any event within thirty (30) days prior to the end of Parent’s fiscal year, an annual operating budget and financial projections (including income statements, balance sheets and cash flow statements) for such fiscal year, presented in a quarterly format reasonably acceptable to the Required Lenders; (v) copies of all statements, reports and notices sent or made available generally by any Loan Party to its security holders and debt holders, when made available to such holders; (vi) promptly upon receipt of written notice thereof, a report of any legal actions pending or threatened against any Loan Party that could reasonably be deemed to result in damages, fines, penalties or other sanctions by any Governmental Authority payable by any Loan Party exceeding the Threshold Amount, or claims for injunctive or equitable relief; (vii) promptly upon receipt thereof (but in any event no more than three (3) Business Days thereafter), (A) copies of any amendments, waivers, consents or other modifications to any Intermediation Facility Documents or any other documents relating to Indebtedness in excess of the Threshold Amount, as applicable, (B) notices of default required to be delivered pursuant to any Intermediation Facility Documents, or any other documents relating to Indebtedness in excess of the Threshold Amount, as applicable, (C) notices of material adverse changes, and (D) notice of any Change of Control; (viii) other financial information as Agent or any Lender may reasonably request from time to time promptly after such request and (ix) environmental, social and corporate governance related materials reasonably requested by the Lenders, including the BlackRock ESG Questionnaire within 75 days after the end of each year. Notwithstanding the foregoing, any Lender may request to not receive any information that may constitute material non-public information from the Agent, it being acknowledged that such documents or information may include amendments or requests for amendment that have been designated as “private side” information by the Borrower.

(b)        Electronic Delivery. Documents required to be delivered pursuant to Section 6.3(a) (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which Parent or any other Loan Party posts such documents, or provides a link thereto on the Parent’s website at: www.vertexenergy.com; or (ii) on which such documents are posted on the Loan Parties’ behalf on an Internet or intranet website, if any, to which each Lender and the Agent have access (whether a commercial, third-party website or whether sponsored by the Agent); provided that: (x) the Borrower shall deliver paper copies of such documents to the Agent or any Lender upon its request to the Borrower to deliver such paper copies until a written request to cease delivering paper copies is given by the Agent or such Lender and (y) the Borrower shall notify the Agent and each Lender (by fax transmission or e-mail transmission) of the posting of any such documents (other than documents otherwise filed with the SEC) and provide to the Agent by e-mail electronic versions (i.e., soft copies) of such documents. The Agent shall have no obligation to request the delivery of or to maintain paper copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by the Borrower with any such request by a Lender for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents.

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(c)        “PUBLIC” Borrower Materials. The Loan Parties hereby acknowledge that (i) the Agent and/or an Affiliate thereof may, but shall not be obligated to, make available to the Lenders materials and/or information provided by or on behalf of the Loan Parties hereunder (collectively, “Borrower Materials”) by posting the Borrower Materials on IntraLinks, Syndtrak, ClearPar or a substantially similar electronic transmission system (the “Platform”) and (ii) certain of the Lenders (each, a “Public Lender”) may have personnel who do not wish to receive material non-public information with respect to Parent, Borrower or their Affiliates, or the respective securities of any of the foregoing, and who may be engaged in investment and other market-related activities with respect to such Persons’ securities. The Loan Parties hereby agree that they will use commercially reasonable efforts to identify that portion of the Borrower Materials that may be distributed to the Public Lenders and that (A) all such Borrower Materials shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, means that the word “PUBLIC” shall appear prominently on the first page thereof; (B) by marking Borrower Materials “PUBLIC,” the Loan Parties shall be deemed to have authorized the Agent, any Affiliate thereof and the Lenders to treat such Borrower Materials as not containing any material non-public information (although it may be sensitive and proprietary) with respect to Parent, Borrower, their Affiliates or their respective securities for purposes of United States federal and state securities laws (provided, however, that to the extent such Borrower Materials constitute Confidential Information, they shall be treated as set forth in Section 14.12); (C) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Side Information;” and (D) the Agent and any Affiliate thereof shall be entitled to treat the Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Side Information.”

(d)        Reports delivered to the Agent pursuant this Section 6.3 are for informational purposes only and the Agent will not be deemed to have actual or constructive notice of any information contained therein or determinable therefrom, including the Borrower’s compliance with its covenants under this Agreement.

6.4          Certificates of Compliance; Disclosure Letter Updates. Each time financial statements are required to be furnished pursuant to Section 6.3(a) or (c) above, there shall be delivered to Agent a certificate signed by a Responsible Officer of Parent (each a “Compliance Certificate”) in the substantially the form attached hereto as Exhibit G certifying that as of the end of the reporting period for such financial statements, the Loan Parties were in full compliance with all of the terms and conditions of the Loan Documents, and setting forth such other information as Agent shall reasonably request. If any information contained in the Schedules to the Disclosure Letter changes after the Closing Date and if that information relates to a subsection of Section 5 which specifically allows for information in the Disclosure Letter to be updated after the Closing Date, Borrower shall update such information in an amended Disclosure Letter (if applicable), to be delivered with the next compliance certificate then due. Parent shall deliver the Compliance Certificate and updated Disclosure Letter (if any) to Agent by email to the address specified pursuant to Section 11, and Agent and Lenders shall be entitled to rely on the information contained therein.

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6.5          Notices.

(a)         As soon as possible, and in any event within three (3) Business Days after any Loan Party’s Knowledge of a Default or an Event of Default, notify the Agent of the facts relating to or giving rise to such Default or Event of Default and the action which the Loan Parties propose to take with respect thereto. Borrower shall deliver such notice to Agent by email to the address specified pursuant to Section 11, and Agent and Lenders shall be entitled to rely on the information contained therein.

(b)         Notify the Agent, as soon as possible, and in any event within five (5) Business Days after any Loan Party’s Knowledge of (x) any completion of, or material delay in, reaching the Project Milestones and (y) any material communication received by a Loan Party from any Governmental Authority in respect of the Renewable Diesel Project which could result in a delay in reaching the Project Milestones. Borrower shall deliver such notice to Agent by email to the address specified pursuant to Section 11, and Agent and Lenders shall be entitled to rely on the information contained therein.

(c)         Notify the Agent (each such notice, an “IA Notice”), as soon as possible, and in any event within five (5) Business Days after any Loan Party’s Knowledge that the amount of the Intermediation Facility Cash Collateral (as defined in the Intercreditor Agreement) has increased by 20% or more from (x) the amount of the Intermediation Facility Cash Collateral(as defined in the Intercreditor Agreement) as in effect on the date hereof or (y) the amount of the Intermediation Facility Cash Collateral (as defined in the Intercreditor Agreement) as in effect on the date of the previously delivered IA Notice, as applicable. Borrower shall deliver such IA Notice to Agent by email to the address specified pursuant to Section 11, and Agent and Lenders shall be entitled to rely on the information contained therein.

(d)         Notify the Agent, as soon as possible, and in any event within five (5) Business Days after any Loan Party’s Knowledge of any matter that results in or could reasonably be expected to result in a Material Adverse Effect with respect to the Loan Parties, taken as a whole.

Notwithstanding the foregoing, any Lender may request to not receive any information that may constitute material non-public information from the Agent, it being acknowledged that such documents or information may include amendments or requests for amendment that have been designated as “private side” information by the Borrower.

6.6          Taxes. Parent shall make, and cause each other Subsidiary to make, due and timely payment or deposit of all federal and material state and local Taxes, assessments, or contributions required of it by law or imposed on its income or upon any properties belonging to it (other than payments of due and payable Taxes in an aggregate amount not to exceed $250,000); and Parent will make due and timely payment or deposit of all material related tax payments and withholding Taxes required of it by Applicable Law, including those laws concerning F.I.C.A., F.U.T.A., and state disability, and will, upon request, furnish Agent with proof reasonably satisfactory to Agent and Required Lenders indicating that the Loan Parties have made such payments or deposits; provided that the Loan Parties need not make any payment if the amount or validity of such payment is contested in good faith by appropriate proceedings and is fully reserved against by the applicable Loan Party.

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6.7          Maintenance. The Loan Parties, at their expense, shall maintain the Collateral in good condition, normal wear and tear and casualty and condemnation excepted, and will comply in all material respects with all laws, rules and regulations to which the use and operation of the Collateral may be or become subject. Such obligation shall extend to repair and replacement of any partial loss or damage to the Collateral, regardless of the cause, except where the failure to do so would not reasonably be expected to result in a Material Adverse Effect.

6.8          Insurance.

(a)         The Loan Parties and each of their Subsidiaries shall maintain, at its sole cost and expense, with financially sound and reputable insurance companies which are not Affiliates of the Loan Parties, insurance with respect to the Collateral, its properties and businesses against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts in such amounts, with such deductibles and covering such risks as are, in the reasonable business judgment of the management of Parent, adequate for Loan Parties. All such policies of insurance shall be in such form, with such companies, and in such amounts as are reasonably satisfactory to the Required Lenders.

(b)         All such policies of property insurance shall contain a lender’s loss payable endorsement, in a form satisfactory to Agent and Required Lenders, showing Agent for itself and the benefit of each other Secured Party as an additional loss payee thereof, and all liability insurance policies shall show Agent for itself and the benefit of each other Secured Party as an additional insured and shall specify that the insurer must give at least thirty (30) days’ notice to Agent before canceling its policy for any reason (except for nonpayment, which shall be ten (10) days prior notice). Each Loan Party shall promptly deliver to Agent its current copy of such policies of insurance, evidence of the payments of all premiums therefor and insurance certificates and related endorsements thereto, it being understood that any time there is a change or renewal of insurance, it is Borrower’s obligation to promptly deliver such materials to Agent.

(c)         The Loan Parties shall bear the risk of the Collateral being lost, stolen, destroyed, damaged beyond repair, rendered permanently unfit for use, or seized by a Governmental Authority for any reason whatsoever at any time. Proceeds payable under any insurance policy shall, at Agent’s option, be payable to Agent for the benefit of the Secured Parties on account of the Secured Obligations.

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6.9          Environmental Laws.

(a)         At its sole expense, the Loan Parties shall (i) comply, and shall cause their Subsidiaries and their Real Property and operations to comply, with applicable Environmental Laws, the breach of which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect; (ii) not Release or threaten to Release any Hazardous Material on, under, about or from any of the Loan Parties’ or any of their Subsidiaries’ Real Property or any other property offsite the Real Property to the extent caused by any Loan Party’s or any of their Subsidiaries’ operations except in compliance with applicable Environmental Laws, if and to the extent that the Release or threatened Release of such Hazardous Materials, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect; (iii) timely obtain or file all permits, licenses, approvals, registrations and other authorizations to be obtained or filed in connection with the operation or use of the Loan Parties’ or any of their Subsidiaries’ Real Property, if and to the extent that the failure to obtain or file such permits, licenses, approvals, registrations or other authorizations, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect; and (iv) promptly commence and diligently prosecute to completion any assessment, evaluation, investigation, monitoring, containment, cleanup, removal, repair, restoration, remediation or other remedial obligations (collectively, the “Remedial Work”) in the event such Remedial Work is required under applicable Environmental Laws because of or in connection with the Release or threatened Release of Hazardous Material on, under, about or from any of the Loan Parties’ or any of their Subsidiaries’ Real Property, if and to the extent that failure to commence and diligently prosecute to completion such Remedial Work, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

(b)         If any Loan Party or any of its Subsidiaries receives written notice of any action or, investigation or inquiry by any Governmental Authority or any threatened demand or lawsuit by any Person against any Loan Party, any of its Subsidiaries, or their Real Properties, in each case in connection with any Environmental Laws, the Borrower shall within fifteen (15) days after any Responsible Officer obtains actual Knowledge thereof give written notice of the same to Agent if such action, investigation, inquiry, demand or lawsuit could reasonably be expected to cause a Material Adverse Effect.

6.10       Intellectual Property Rights.

(a)         Concurrently with the delivery of each Compliance Certificate for the months ending March 31, June 30, September 30 and December 31 pursuant to Section 6.4, Borrower shall give Agent written notice of: (i) any registration or filing of any Trademark, Copyright or Patent by any Loan Party since the delivery of the prior Compliance Certificate including the date of such registration or filing, the registration or filing numbers, the jurisdiction of such registration or filing, and a general description of such registration or filing and shall execute an Intellectual Property Security Agreement and take such other actions as necessary or that Agent (at direction for the Required Lenders) may request to perfect and maintain a first priority perfected security interest in favor of the Agent; (ii) any material change to any Loan Party’s material Intellectual Property, and (iii) Parent’s knowledge of an event that could reasonably be expected to materially and adversely affect the value of its or any other Loan Party’s material Intellectual Property.

(b)         The Loan Parties shall (and shall cause all its licensees to) (i) (1) continue to use each material Trademark in order to maintain such Trademark in full force and effect with respect to each class of goods for which such Trademark is currently used, free from any claim of abandonment for non-use, (2) maintain at least the same standards of quality of products and services offered under such Trademark as are currently maintained, (3) use such Trademark with the appropriate notice of registration and all other notices and legends required by applicable requirements of law, (4) not adopt or use any other Trademark that is confusingly similar or a colorable imitation of such Trademark unless the Agent shall obtain a perfected security interest in such other Trademark pursuant to this Agreement and (ii) not do any act or omit to do any act whereby (w) such Trademark (or any goodwill associated therewith) may become destroyed, invalidated, impaired or harmed in any way, (x) any material Patent may become forfeited, misused, unenforceable, abandoned or dedicated to the public, (y) any portion of the material Copyrights may become invalidated, otherwise impaired or fall into the public domain or (z) any material trade secret may become publicly available or otherwise unprotectable.

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(c)         The Loan Parties shall notify the Agent promptly if it knows, or has reason to know, that any application or registration relating to any material Intellectual Property may become forfeited, misused, unenforceable, abandoned or dedicated to the public, or of any adverse determination or development regarding the validity or enforceability or such entity’s ownership of, interest in, right to use, register, own or maintain any material Intellectual Property (including the institution of, or any such determination or development in, any proceeding relating to the foregoing in any intellectual property office). The Loan Parties shall take all actions that are necessary or reasonably requested by the Agent (at the direction of the Required Lenders) to maintain and pursue each application (and to obtain the relevant registration or recordation) and to maintain each registration and recordation included in the material Intellectual Property.

(d)        The Loan Parties shall not knowingly do any act or omit to do any act to infringe, misappropriate, dilute, violate or otherwise impair the Intellectual Property of any other Person. In the event that any material Intellectual Property of the Loan Parties is or has been infringed, misappropriated, violated, diluted or otherwise impaired by a third party, such entity shall take such action as it reasonably deems appropriate under the circumstances in response thereto, including promptly bringing suit and recovering all damages therefor.

6.11        Formation or Acquisition of Subsidiaries. Notwithstanding and without limiting the negative covenants contained in Section 7.6 hereof, the Loan Parties will cause each of their Subsidiaries (other than any Excluded Subsidiary so long as such Subsidiary remains an Excluded Subsidiary) whether newly formed, after acquired or otherwise existing to promptly (and in any event within thirty (30) days after such Subsidiary is formed or acquired (or such longer period of time as agreed to by the Required Lenders in their reasonable discretion)) become a Guarantor hereunder by way of execution of a Guarantor Joinder Agreement or become a Borrower hereunder by way of execution of a Borrower Joinder Agreement. In connection therewith, the Loan Parties shall give notice to the Agent and the Lenders not less than ten (10) days prior to creating a Subsidiary (or such shorter period of time as agreed to by the Required Lenders in their reasonable discretion), or acquiring the Equity Interests of any other Person that results in such Person becoming a Subsidiary. In connection with the foregoing, the Loan Parties shall deliver to the Agent and the Lenders, with respect to each new Guarantor or Borrower to the extent applicable, substantially the same documentation required pursuant to Sections 4.01(b) – (e), and 6.12 and such other documents or agreements as the Agent or any Lender may reasonably request with respect to any new Subsidiary that signs and delivers a Borrower Joinder Agreement or Guarantor Joinder Agreement in order to comply with their ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the USA PATRIOT ACT, the USA FREEDOM Act, an IRS Form W-9 or other applicable tax forms.

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6.12          Further Assurances.

(a) Except with respect to Excluded Property, each Loan Party will cause all Equity Interests and all of its tangible and intangible personal property now owned or hereafter acquired by it to be subject at all times to a first priority, perfected Lien (subject to Permitted Liens) in favor of the Agent for the benefit of the Secured Parties to secure the Secured Obligations pursuant to the terms and conditions of the Collateral Documents. Each Loan Party shall provide opinions of counsel and any filings and deliveries reasonably necessary in connection therewith to perfect the security interests therein, all in form and substance reasonably satisfactory to the Required Lenders.

(b)      At any time upon request of the Required Lenders, promptly execute and deliver any and all further instruments and documents and take all such other action as the Required Lenders may reasonably deem necessary or desirable to maintain in favor of the Agent, for the benefit of the Secured Parties, Liens and insurance rights on the Collateral that are duly perfected in accordance with the requirements of, or the obligations of the Loan Parties under, the Loan Documents and all Applicable Laws.

(c)       Promptly upon request by the Agent, or any Lender through the Agent, (a) correct any material defect or material error that may be discovered in any Loan Document or in the execution, acknowledgment, filing or recordation thereof, and (b) do, execute, acknowledge, deliver, record, re-record, file, re-file, register and re-register any and all such further acts, deeds, certificates, assurances and other instruments as the Agent (at the direction of the Required Lenders) may reasonably require from time to time in order to (i) carry out more effectively the purposes of (A) the Collateral Documents or (B) this Agreement and the other Loan Documents, (ii) to the fullest extent permitted by Applicable Law, subject any Loan Party’s or any of its Subsidiaries’ (other than any Excluded Subsidiary so long as such Subsidiary remains an Excluded Subsidiary) properties, assets, rights or interests to the Liens intended to be covered by any of the Collateral Documents, (iii) perfect and maintain the validity, effectiveness and priority of any of the Collateral Documents and any of the Liens intended to be created thereunder and (iv) assure, convey, grant, assign, transfer, preserve, protect and confirm more effectively unto the Secured Parties the rights granted or now or hereafter intended to be granted to the Secured Parties under any Loan Document or under any other instrument executed in connection with any Loan Document to which any Loan Party or any of its Subsidiaries (other than any Excluded Subsidiary so long as such Subsidiary remains an Excluded Subsidiary) is or is to be a party, and cause each of its Subsidiaries (other than any Excluded Subsidiary so long as such Subsidiary remains an Excluded Subsidiary) to do so, provided that in the case of clause (i)(B) above, the same does not increase the obligations, or detract from the rights, of any Loan Parties under the Loan Documents in any material respect.

6.13        Inventory, Returns. The Loan Parties shall use commercially reasonable efforts to keep all Inventory in good and marketable condition, free from all material defects and payment disputes (except for Inventory for which adequate reserves have been made), and free and clear of Liens (except for Permitted Liens). Returns and allowances, if any, as between the Loan Parties and its Account Debtors shall be on the same basis and in accordance with GAAP, consistently applied, or with the usual customary practices of the Loan Parties, as they exist at the time of the execution and delivery of this Agreement.

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6.14        Delivery of Third-Party Agreements.

(a)        Subject to the terms and conditions and other rights set forth in the Intercreditor Agreement, for any existing lease of a Loan Party and in the event that any Loan Party shall enter into a new lease with respect to a new or additional operating location after the Closing Date where more than $500,000 of equipment or other similar assets constituting Term Loan Priority Collateral (as defined in the Intercreditor Agreement) will be located, then such Loan Party shall, upon Agent’s request (at direction for the Required Lenders), within sixty (60) days following the Closing Date or execution of such lease, as applicable, use commercially reasonable efforts to obtain from the applicable landlord and deliver to Agent a Collateral Access Agreement with respect to such lease, in form and substance reasonably satisfactory to Agent and Required Lenders; provided that no Loan Party shall be deemed in breach of this provision if the applicable landlord does not execute or deliver such Collateral Access Agreement.

(b)        [reserved].

(c)        Subject to the terms and conditions and other rights set forth in the Intercreditor Agreement, upon the acquisition by Loan Party after the date hereof of any fee interest in any real property (wherever located) (each such interest, a “New Facility”) with a Current Value (as defined below) in excess of $500,000, promptly so notify Agent, setting forth with reasonable specificity a description of the interest acquired, the location of the real property, any structures or improvements. For purposes of this Section 6.14(c), the “Current Value” shall be calculated as the greater of (i) either an appraisal or such Loan Party’s good-faith and reasonable estimate of the current fair market value of such real property and (ii) the value of such real property at the time of its acquisition. Agent (at the direction of the Required Lenders) shall notify such Loan Party whether it intends to require a Mortgage (and any other Real Property Deliverables) with respect to any such New Facility with a Current Value in excess of $500,000. Upon receipt of such notice requesting a Mortgage (and any other Real Property Deliverables), the Loan Party that has acquired such New Facility shall promptly furnish the same to Agent within ninety (90) days of such Loan Party’s receipt of such notice. The Borrower shall pay all actual fees and out-of-pocket expenses, including, without limitation, reasonable attorneys’ fees and expenses, and all customary title insurance charges and premiums, in connection with each Loan Party’s obligations under this Section 6.14(c).

6.15        Inspections and Rights to Consult with Management. Agent and Lenders shall have the inspection rights provided in Section 4.5 of this Agreement. In addition, the Loan Parties shall permit any representative of the Agent or the Lenders to meet, at reasonable times and upon reasonable notice, with management and officers of the Loan Parties and their Subsidiaries at least once per calendar quarter (unless an Event of Default is continuing, in which case such additional meetings as requested shall be permitted).

6.16        Privacy and Data Security. The Loan Parties and their Subsidiaries shall, at all times, remain in compliance in all material respects with all applicable United States and international privacy and data security laws and regulations including GDPR (to the extent applicable).

6.17        Deposit Accounts/Securities Accounts. Except for Excluded Accounts, prior to opening any Deposit Account or Securities Account after the Closing Date, subject to the Intercreditor Agreement, each Loan Party shall first notify Agent and not deposit any funds or securities into such account until such account is subject to a Control Agreement in favor of Agent, whereupon, Borrower shall update the Disclosure Letter to include such new account.

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6.18        Operating Covenants. Borrower shall (x) provide evidence of initial commercial production of renewable diesel by February 28, 2023 (the “Commercial Operations Date”) and (y) agrees to complete, or cause all the Project Milestones to be completed and submitted (as applicable) not later than the dates set forth Schedule 6.18; provided that the Lenders and the Borrower agree to use commercially reasonable efforts to agree to reasonable extensions to the Commercial Operations Date and any remaining Project Milestone should the Commercial Operations Date or Project Milestones become unachievable due to causes, in each case, which (i) are directly related to the achievement of the Commercial Operations Date and/or the relevant Project Milestone, whether related to the operation of the Mobile Refinery or the Renewable Diesel Project and (ii) are beyond Borrower’s or any other Loan Party’s control, including, but not limited, to:

(a)         Acts of God, lightning, epidemics, pandemics (including, without limitation, COVID-19), floods, fires, earthquakes, other natural disasters, explosions or storm; transportation difficulties, unplanned outages, breakdown of necessary equipment, power outages, strikes, lockouts or other industrial disturbances;

(b)        wars, invasions, boycotts, terrorist activities, or any law, rule, order or action of any court or instrumentality of the federal, state or local government or any foreign government; and

(c)         exhaustion, reduction, or unavailability or delay in delivery of any material or product necessary in the manufacture of renewable diesel.

6.19        Post-Closing Matters. Each Loan Party agrees to complete, or cause all of the items, matters and documents set forth in Schedule 6.19 to be completed, executed and delivered (as applicable) not later than the dates and times set forth in the Schedule 6.19.

6.20        Most Favored Lender.

(a)         If, on any date on or after the Closing Date, Parent or any of the other Loan Parties enters into, assumes or otherwise becomes bound or obligated under any agreement, document or instrument creating or evidencing any Indebtedness above the Threshold Amount or under which any Indebtedness is outstanding or may be incurred by any Loan Party, or amends any agreement, document or instrument (whether in effect on or after the Closing Date) creating or evidencing any Indebtedness or under which any Indebtedness is outstanding or may be incurred by any Loan Party, in each case in excess of the Threshold Amount (such Indebtedness, the “Subject Indebtedness”), that contains one or more Additional Covenants (including, for the avoidance of doubt, as a result of any amendment to any such agreement, whether or not in effect on the date hereof, causing it to contain one or more Additional Covenants), then, concurrently therewith, (i) the Borrower will notify the Agent and the Required Lenders thereof, and (ii) whether or not the Borrower provides such notice, the terms of this Agreement shall, without any further action on the part of the Borrower, the Agent or any Lender, be deemed to be amended automatically to include each Additional Covenant, including any applicable equity cure right under such Subject Indebtedness in this Agreement.

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(b)        The Loan Parties further covenant to promptly execute and deliver at their expense (including, without limitation, the fees and expenses of counsel for the Agent and the Lenders) an amendment to this Agreement in form and substance reasonably satisfactory to the Agent and the Required Lenders evidencing any amendment of this Agreement pursuant to this Section 6.20 to include such Additional Covenants in this Agreement, provided that the execution and delivery of such amendment shall not be a precondition to the effectiveness of such amendment as provided for in this Section 6.20, but shall merely be for the convenience of the parties hereto.

7.             Negative Covenants.

Each Loan Party covenants and agrees that until the full and complete payment of the Obligations (other than inchoate indemnity obligations) in cash and termination of the Term Loan Commitment, such Loan Party (and will cause each of its Subsidiaries to) will not do any of the following:

7.1          Chief Executive Office; Location of Collateral. During the continuance of this Agreement, change the state of formation, chief executive office or principal place of business or remove or cause to be removed, except in the ordinary course of a Loan Party’s business, the Collateral or the records concerning the Collateral from the premises listed in Section 2 of the Disclosure Letter without twenty (20) days prior written notice to Agent, provided that any such removal of a Loan Party’s Collateral may not be to a location outside of the United States without Agent’s (at direction for the Required Lenders) and Required Lenders’ prior written consent.

7.2          Extraordinary Transactions and Disposal of Collateral. Convey, sell, lease, license, transfer or otherwise dispose of (collectively, a “Transfer”), all or any Collateral, other than: (i) Inventory in the ordinary course of business (including with respect to consignment arrangements with respect to such Inventory and any disposition or transfer of any Inventory pursuant to the terms of any Indebtedness under clauses (r) and (s) of the definition of Permitted Indebtedness); (ii)  Transfers of surplus, worn-out or obsolete equipment, Vehicles, Rolling Stock and similar assets; (iii) uses of cash and Cash Equivalents not prohibited under this Agreement, (iv) Transfers consisting of or made in connection with Permitted Liens and Permitted Investments and Restricted Payments, to the extent permitted under Section 7.16, (v) the issuance, transfer or sale of stock of Parent and Permitted Equity Issuances, (vi) other assets of Parent or any other Loan Party the fair market value of which do not in the aggregate exceed $1,000,000 in any fiscal year or (vii) the Used Motor Oil Asset Divestiture (collectively, the “Permitted Transfers”). Except for the pledge of its interests in the Equity Interest of any of its Subsidiaries in compliance with the provisions of this Section 7.2, no Loan Party shall, nor shall it permit any of its Subsidiaries to, (a) directly or indirectly sell, assign, pledge or otherwise encumber or dispose of any Equity Interests of any of its Subsidiaries, except to qualify directors if required by applicable law; or (b) permit any of its Subsidiaries directly or indirectly to sell, assign, pledge or otherwise encumber or dispose of any Equity Interests of any of its Subsidiaries, except to another Loan Party (subject to the restrictions on such disposition otherwise imposed hereunder), or to qualify directors if required by applicable law.

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7.3          Restructure. (i) Without providing not less than twenty (20) days advance written notice to Agent, change its name, type of organization, or jurisdiction of formation, (ii) suspend operation of its business or permit any Subsidiary to suspend operations of its business (other than in connection with a dissolution permitted pursuant to Section 7.3(vi)), (iii) engage in any business other than the businesses currently engaged in by Parent and its Subsidiaries, and any business substantially similar or related thereto (except for the conversion of a portion of the Mobile Refinery to renewable diesel); (iv) experience a departure of a Responsible Officer, without providing Agent a written notice within 10 days after the occurrence of such departure; (v) without Agent’s and Required Lenders’ prior written consent, change the date on which its fiscal year ends; (vi) permit any Loan Party to liquidate or dissolve (other than the liquidation or dissolution of Subsidiaries that (x) are not Loan Parties or (y) whose assets are transferred to Borrower or another Loan Party at the time of such liquidation or dissolution) or (vii) consummate or permit any Subsidiary to consummate any transaction or series of related transactions (provided such transactions are otherwise permitted under this Agreement) in which the stockholders of Parent or such Subsidiary, as applicable, who were not stockholders immediately prior to the first such transaction own more than fifty percent (50%) of the voting Equity Interests of a Loan Party, including the Borrower, or a Subsidiary, as applicable, immediately after giving effect to such transaction or related series of such transactions.

7.4          Liens. Create, incur, assume or suffer to exist any Lien with respect to any of Collateral, except for Permitted Liens.

7.5          Indebtedness. Create, incur, assume or suffer to exist any Indebtedness other than Permitted Indebtedness without Required Lenders’ prior written consent.

7.6          Investments. Directly or indirectly make any Investment other than a Permitted Investment without Required Lenders’ prior written consent.

7.7          [Reserved].

7.8          Transactions with Affiliates. Directly or indirectly enter into or permit to exist any material transaction with any Affiliate of any Loan Party after the Closing Date except for (i) ordinary course compensatory transactions and agreements (including employment agreements and benefit plans) with officers and directors, (ii) transactions that are in the ordinary course of the Loan Party’s business, on material terms no less favorable to such Loan Party than could be obtained in an arm’s length transaction with a non-affiliated Person, (iii) transactions between or among Loan Parties, (iv) equity financings, the Existing Convertible Notes or Subordinated Debt with the Loan Party’s investors (or their Affiliates), as permitted hereunder, (v) the issuance or transfer of Qualified Equity Interests, as permitted hereunder, and (vi) other transactions approved by the Required Lenders in writing.

7.9          Stock Certificates. For any Loan Party (other than Parent) for which such Loan Party’s parent’s ownership interest is not evidenced by a certificate, allow such Subsidiary Guarantor to certificate such ownership interest without Agent’s (at direction for the Required Lenders) and Required Lenders’ prior written consent, which consent may be conditioned upon requiring such Subsidiary Guarantor to execute and deliver a Collateral Pledge Agreement satisfactory to Agent and Required Lenders.

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7.10        Compliance. Become an “investment company” under the Investment Company Act of 1940 or undertake as one of its important activities extending credit to purchase or carry margin stock, or use the proceeds of the Term Loan for that purpose; except as could not be reasonably expected to have a Material Adverse Effect, fail to meet the minimum funding requirements of ERISA with respect to any Pension Plan or permit an ERISA Event or a Prohibited Transaction (as such term is defined in Section 406 of ERISA and Section 4975 of the Internal Revenue Code) to occur; fail to comply with the Federal Fair Labor Standards Act or violate any other law or regulation, if the violation could reasonably be expected to have a Material Adverse Effect.

7.11        Deposit Accounts. Maintain any Deposit Accounts or Securities Accounts except accounts respecting which Agent has obtained a Control Agreement, provided however, that the Loan Parties may maintain Excluded Accounts without them being subject to a Control Agreement.

7.12        Equipment. Subject to the rights, terms and conditions set forth in the Intercreditor Agreement, store equipment constituting Collateral with a bailee, warehouseman, or other third party where the aggregate amount of such equipment constituting Collateral with such bailee, warehouseman or other third party shall be in excess of 5% of the Loan Parties’ aggregate equipment for a period of ninety (90) days or longer (other than those entities for which such Loan Party has delivered a Collateral Access Agreement pursuant to Section 6.14).

7.13        Restrictions on Use of Proceeds. Directly or Knowingly indirectly use any part of the Term Loan to (a) make any payments to a Sanctions Target, to fund any investments, loans or contributions in, or otherwise make such proceeds available to, a Sanctions Target, to fund any operations, activities or business of a Sanctions Target, or in any other manner that would result in a violation of Sanctions applicable to any party hereto or (b) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in material violation of any Anti-Corruption Laws or Anti-Money Laundering Laws.

7.14        Accounting Changes; Change in Nature of Business; Foreign Operations. Change the Parent’s or any Loan Party’s accounting and financial reporting practices as in effect as of the Closing Date in any material respect, except for any changes made in accordance with GAAP, without the prior written consent of the Agent (at the direction of the Required Lenders) or engage in any material line of business other than a Similar Business or hold a material portion of its Property that would otherwise be required pursuant to the Loan Documents to become subject to a fully perfected Lien in favor of the Agent in a foreign jurisdiction.

7.15        Burdensome Agreements. Enter into any Contractual Obligation that (x) limits the ability of the Borrower or any Guarantor to create, incur, assume or suffer to exist any Lien upon any of its property to secure the Obligations hereunder or (y) limits the ability of any Subsidiary to make Restricted Payments to the Borrower or any Guarantor or to otherwise transfer property to the Borrower or any Guarantor; provided, however, that the foregoing clause shall not apply to Contractual Obligations which:

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(a)         solely in the case of clause (y) of this Section 7.15, exist on the Closing Date and (to the extent not otherwise permitted by this Section 7.15) are listed on Schedule 7.15;

(b)         are binding on a Subsidiary at the time such Subsidiary first becomes a Subsidiary of the Parent, so long as such Contractual Obligations were not entered into solely in contemplation of such Person becoming a Subsidiary of the Borrower;

(c)         arise in connection with covenants in documents creating Permitted Liens prohibiting further Liens on the properties encumbered thereby;

(d)         arise in connection the Intermediation Facility Documents or any Permitted Indebtedness (including negative pledges and restriction on Liens in favor of any holder of Permitted Indebtedness, Permitted Investments or Restricted Payments permitted by this Agreement);

(e)         arise in connection with any Permitted Transfer solely with respect to the assets that are the subject of such Transfer;

(f)          are customary restrictions on leases, subleases, licenses or asset sale agreements otherwise permitted hereby so long as such restrictions relate to the assets subject thereto;

(g)         are customary provisions restricting subletting or assignment of any lease governing a leasehold interest of the Parent or any Subsidiary;

(h)         are customary limitations (including financial maintenance covenants) existing under or by reason of leases entered into in the ordinary course of business;

(i)          are restrictions on cash or other deposits imposed under contracts entered into in the ordinary course of business;

(j)          are customary provisions restricting assignment of any agreements;

(k)         arise in connection with any Contractual Obligations that relate to Excluded Property;

(l)          arise in connection with Applicable Law, rule, regulation, order, approval, license, permit or similar restriction (whether or not existing on the Closing Date) or are mandated by any Governmental Authority;

(m)        customary provisions in Hedging Agreements;

(n)         customary provisions in joint venture agreements and other similar agreements to the extent permitted hereunder; or

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(o)         are set forth in any agreement evidencing an amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing of the Contractual Obligations referred to in clauses (a) through (n) above; provided, that such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing is, in the good faith judgment of the Borrower, not materially less favorable to the Loan Party with respect to such limitations than those applicable pursuant to such Contractual Obligations prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing.

7.16        Restricted Payments; Prepayments of certain Indebtedness. (a) Declare or make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so, and except that:

             (i)        each Subsidiary may make Restricted Payments to any Person that owns Equity Interests in such Subsidiary, ratably according to their respective holdings of the type of Equity Interest in respect of which such Restricted Payment is being made;

             (ii)       Parent may make Permitted Tax Distributions;

             (iii)      Parent and each Subsidiary may declare and make dividend cashless payments or other distributions payable solely in common Equity Interests of such Person; and

             (iv)      Restricted Payments in connection with the Warrants, the Warrant Agreement, the Registration Rights Agreement and the Existing Convertible Notes;

provided, however, that notwithstanding the foregoing, no Loan Party shall, nor shall it permit any Subsidiary to, directly or indirectly, make any Restricted Payment to any parent company of Parent other than as provided in clauses (ii) and (iii) of this Section 7.16(a).

Notwithstanding anything herein to the contrary, no amount shall be permitted to be distributed by any Loan Party to pay, or otherwise in connection with, any Tax resulting from the cancellation or discharge of Indebtedness.

(b)        Directly or indirectly, purchase, redeem, refinance, convert, exchange, settle, acquire for value, defease or prepay any principal of, premium, if any, interest or any other amount payable in respect of any Indebtedness prior to its scheduled maturity, other than (x) the Secured Obligations, (y) Permitted Indebtedness or (z) make any payment with respect to any Subordinated Debt except in accordance with the terms of the applicable Subordination Agreement. No Loan Party (nor any Subsidiary thereof) may make any “earn-out” payments or other similar payments if a Default or Event of Default exists at the time of such payment or would arise after giving effect to any such payment, unless such payment is made with common Equity Interests of Parent. Borrower shall provide notice to the Agent prior to making any such payment, which notice shall demonstrate pro forma compliance with Section 7.16 after giving effect to such payment.

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7.17        Amendments or Waivers of Certain Related Agreements. (a) To the extent adverse to the rights of the Lenders, agree to any amendment, restatement, supplement or other modification to, any of its rights under any Related Agreement (other than any Intermediation Facility Documents) after the Closing Date without in each case obtaining the prior written consent of Agent (at direction for the Required Lenders) and Required Lenders to such amendment, restatement, supplement or other modification or waiver or (b) (x) except as permitted under the Intercreditor Agreement, agree to any amendment, restatement, supplement or other modification to, or waiver of, any of its rights under any Intermediation Facility Documents or (y) to the extent materially adverse to the rights of the Lenders, agree to amend or modify any Intermediation Facility Documents that would have the effect of changing the definition of Independent Amount (as defined in the Independent Amount Letter (as defined in the Intercreditor Agreement) as in effect on the date hereof) or any component definition or component calculation thereof.

 

7.18        Activities of Parent. In respect of Parent, (a) incur, directly or indirectly, any Indebtedness or any other obligation or liability whatsoever, other than guarantees and obligations under the Loan Documents and any Intermediation Facility Documents; (b) create or suffer to exist any Lien upon any property or assets now owned or hereafter acquired by it other than the Liens created under the Collateral Documents to which it is a party or Liens permitted pursuant to Section 7.4; (c) engage in any business or activity or own any assets other than (i) directly or indirectly holding 100% of the Equity Interests of each of the Loan Parties and directly or indirectly holding Equity Interests in the other non-Loan Party Subsidiaries as of the Closing Date; (ii) performing its obligations and activities incidental thereto under the Loan Documents, and to the extent not inconsistent therewith, the Related Agreements; (iii) making Restricted Payments and Investments to the extent permitted by this Agreement; (d) consolidate with or merge with or into, or convey, transfer or lease all or substantially all its assets to, any Person; (e) sell or otherwise dispose of any Equity Interests of any of its Subsidiaries other than as permitted under this Agreement; (f) create or acquire any Subsidiary or make or own any Investment in any Person other than the Subsidiaries on the Closing Date other than to the extent permitted by this Agreement; or (g) fail to hold itself out to the public as a legal entity separate and distinct from all other Persons.

 

7.19        Financial Covenant. At any time, permit Consolidated Liquidity to be less than $17,500,000 for any period of more than three (3) consecutive Business Days.

 

8.             Events of Default.

 

Any one or more of the following events shall constitute an “Event of Default” under this Agreement:

 

8.1          Payment Default. If Borrower or any other Loan Party fails to (a) make any payment of principal or interest on the Term Loan when due, or (b) pay any other Obligations required under the terms of the Loan Document within three (3) Business Days after such Obligations are due and payable (which three (3) Business Day cure period shall not apply to payments due on the Maturity Date).

 

8.2          Certain Covenant Defaults. If Borrower or any other Loan Party or Subsidiary thereof fails to perform any obligation under Section 4.4, Section 6.3, Section 6.4, Section 6.5, Section 6.8, Section 6.10(a), Section 6.11, Section 6.12, Section 6.17, Section 6.18, Section 6.19 and Section 6.20, or violates any of the covenants contained in Section 7 of this Agreement.

 

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8.3          Other Covenant Defaults. If Borrower or any other Loan Party or Subsidiary thereof fails or neglects to perform or observe any other material term, provision, condition, or covenant, or if any representation or warranty made by (or on behalf of) Borrower or any other Loan Party or any Subsidiary thereof becomes untrue, in each case contained in this Agreement, in any of the Loan Documents, and as to any default under such other term, provision, condition, covenant, representation or warranty that can be cured, has failed to cure such default within the earlier of thirty (30) days after Borrower receives notice thereof or any Responsible Officer of Borrower becomes aware thereof.

 

8.4          Attachment. If any material portion of the Collateral is attached, seized, subjected to a writ or distress warrant, or is levied upon, or comes into the possession of any trustee, receiver or Person acting in a similar capacity and such attachment, seizure, writ or distress warrant or levy has not been removed, discharged or rescinded within ten (10) Business Days, or if any Loan Party is enjoined, restrained, or in any way prevented by court order from continuing to conduct all or any material part of its business affairs, or if a judgment or other claim becomes a lien or encumbrance upon any material portion of any Loan Party’s assets, or if a notice of lien, levy, or assessment is filed of record with respect to any Loan Party’s assets by the United States Government, or any department, agency, or instrumentality thereof, or by any state, county, municipal, or governmental agency, and the same is not paid within ten (10) days after such Loan Party receives notice thereof; provided that none of the foregoing shall constitute an Event of Default where such action or event is stayed or an adequate bond has been posted pending a good faith contesting by the Loan Parties.

 

8.5          Other Agreements. If an “event of default”, termination event or similar or equivalent event has occurred and is continuing under any agreement governing Indebtedness in excess of $3,000,000 to which Parent or a Subsidiary, including Borrower, is a party with a third party or parties (other than any Intermediation Facility Documents).

 

8.6          Judgments. If there is entry of a judgment or judgments against any Loan Party, including Borrower, (other than a judgment or judgements covered by independent third-party insurance as to which liability has been acknowledged by such insurance carrier) for the payment of money in an amount, individually or in the aggregate, of at least the Threshold Amount, and the same are not, within thirty (30) days after the entry thereof, vacated or stayed or bonded pending appeal.

 

8.7          Misrepresentations. If any material misrepresentation or material misstatement exists when made or when deemed made in any written warranty, representation, statement, certificate, or report made to Agent or any Lender by (or on behalf of) any Loan Party or any Responsible Officer of any Loan Party.

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8.8          Enforceability. If any Loan Document shall in any material respect cease to be, or any Loan Party asserts that any Loan Document is not a legal, valid and binding obligation of the Loan Party that is a party thereto, enforceable in accordance with its terms except for the termination of such Loan Document pursuant to its terms. If any Subordination Agreement relating to Subordinated Debt shall in any material respect cease to be a legal, valid and binding obligation, or the holder or holders of Subordinated Debt of an aggregate amount equal to or greater than the Threshold Amount challenge(s) the legality, validity or binding nature of the Subordination Agreement to which such Subordinated Debt relates except for the termination of such Subordination Agreement pursuant to its terms.

 

8.9          Involuntary Bankruptcy. If a proceeding shall have been instituted in a court having jurisdiction in the premises seeking a decree or order for relief in respect of any Loan Party, including Borrower, in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or for the appointment of a receiver, liquidator, assignee, custodian, trustee (or similar official) of Parent, any Subsidiary, including Borrower, or for any substantial part of its property, or for the winding-up or liquidation of its affairs, and such proceeding shall remain undismissed or unstayed and in effect for a period of sixty (60) consecutive days or such court shall enter a decree or order granting the relief sought in such proceeding.

 

8.10        Voluntary Bankruptcy or Insolvency. If any Loan Party, including Borrower, shall commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, shall consent to the entry of an order for relief in an involuntary case under any such law, or shall consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian (or other similar official) of any Loan Party, including Borrower, or for any substantial part of the Loan Parties’ property, or shall make a general assignment for the benefit of creditors, or shall take any corporate action in furtherance of any of the foregoing.

 

8.11        Insolvency. If the Loan Parties and their Subsidiaries, individually and collectively, become Insolvent.

 

8.12        Cross Default. If an “event of default”, termination event or similar or equivalent event has occurred and is continuing under any Intermediation Facility Documents.

 

8.13        ERISA. The occurrence of any of the following events that would reasonably be expected to result in a Material Adverse Effect: (i) an ERISA Event, or (ii) a Loan Party or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment under Section 4219 of ERISA with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan.

 

8.14        Change of Control. There occurs any Change of Control.

 

8.15        Collateral Documents. Any Collateral Document after delivery thereof pursuant to the terms of the Loan Documents shall for any reason cease to create a valid and perfected first priority Lien (subject to Permitted Liens) on any material portion of the Collateral purported to be covered thereby, or any Loan Party shall assert the invalidity of such Liens.

 

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8.16        Intercreditor and Subordination. (i) Any of the subordination, standstill, payover and insolvency related provisions of any of the Subordinated Debt to which it is a party (the “Subordination Provisions”) governing Subordinated Debt above the Threshold Amount shall terminate, cease to be effective or cease to be legally valid, binding and enforceable against any holder of the applicable Subordinated Debt (ii) any of the intercreditor, subordination, standstill, payover and insolvency related provisions of the Intercreditor Agreement (“Intercreditor Provisions”) shall, in whole or in part, terminate, cease to be effective or cease to be legally valid, binding and enforceable against any holder of the applicable Indebtedness or (iii) Parent, the Borrower or any other Loan Party shall, directly or indirectly, disavow or contest in any manner (A) the effectiveness, validity or enforceability of any of the Subordination Provisions or Intercreditor Provisions, (B) that the Subordination Provisions or Intercreditor Provisions, as the case may be, exist for the benefit of the Agent and the Secured Parties or (C) that all payments of principal of or premium and interest on the applicable Subordinated Debt, any Intermediation Facility, as the case may be, or realized from the liquidation of any property of any Loan Party and/or the exercise of rights or remedies with respect to the Collateral, shall be subject to any of the Subordination Provisions or Intercreditor Provisions, as the case may be.

 

8.17        Loss of Material Contracts. The loss, termination or modification of, or default under, any Material Contract (unless otherwise replaced on terms not adverse to the interests of the Loan Parties or the Lenders), if such loss, termination, modification or default could reasonably be expected to result in a Material Adverse Effect.

 

9.             Agent and Lenders’ Rights and Remedies.

 

9.1          Rights and Remedies. Upon the occurrence and during the continuance of any Event of Default, Agent shall have the rights, options, duties and remedies of a secured party as permitted by, and in accordance with, Applicable Law and, in addition to and without limitation of the foregoing, Agent may (and not any Lender without Agent’s written consent), at its election, without notice of election and without demand, and at the direction of the Required Lenders shall, do any one or more of the following, all of which are authorized by the Loan Parties, in each case subject to the terms of the Intercreditor Agreement:

 

(a)            Declare all Obligations, whether evidenced by this Agreement, or by any of the other Loan Documents, including the outstanding principal amount of, and accrued interest on, the Term Loan, immediately due and payable (provided that upon the occurrence of an Event of Default described in Section 8.9 or 8.10 all Obligations shall become immediately due and payable without any action by Agent);

 

(b)           Make such payments and do such acts as Agent considers necessary or reasonable to protect its security interest in the Collateral. The Loan Parties agree to assemble the Collateral if Agent so requires, and to make the Collateral available to Agent as Agent may designate. Each Loan Party authorizes Agent to enter the premises where the Collateral is located, to take and maintain possession of the Collateral, or any part of it, and to pay, purchase, contest, or compromise any Lien which in Agent’s determination appears to be prior or superior to its security interest and to pay all expenses incurred in connection therewith; with respect to any of Loan Parties’ owned premises, each Loan Party hereby grants Agent, subject to any rights of third parties, a license to enter into possession of such premises and to occupy the same, without charge in order to exercise any of Agent’s rights or remedies provided herein, at law, in equity, or otherwise;

 

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(c)           Set off and apply to the Secured Obligations any and all Indebtedness at any time owing to or for the credit or the account of Borrower;

 

(d)           Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell (in the manner provided for herein) the Collateral;

 

(e)           Deliver a notice of exclusive control, any entitlement order, or other directions or instructions pursuant to any Control Agreement or similar agreement providing control of any Collateral:

 

(f)            Sell the Collateral at either a public or private sale, or both, by way of one or more contracts or transactions, for cash or on terms, in such manner and at such places (including the Loan Parties’ premises) as Agent determines are commercially reasonable;

 

(g)           Agent may credit bid and purchase at any public sale; and

 

(h)           For the purpose of enabling the Agent to exercise rights and remedies under this Section 9.1 (including in order to take possession of, collect, receive, assemble, process, appropriate, remove, realize upon, sell, assign, convey, transfer or grant options to purchase any Collateral) at such time as the Agent shall be lawfully entitled to exercise such rights and remedies, the Loan Parties hereby grant to the Agent, (i) an irrevocable, nonexclusive, worldwide license (exercisable without payment of royalty or other compensation to such Loan Party), including in such license the right to sublicense, use and practice any Intellectual Property now owned or hereafter acquired by such Loan Party and access to all media in which any of the licensed items may be recorded or stored and to all software and programs used for the compilation or printout thereof.

 

Any deficiency that exists after disposition of the Collateral as provided above will be paid immediately by Borrower.

 

9.2          Waiver by the Loan Parties. Upon the occurrence and during the continuance of an Event of Default, to the extent permitted by law, each Loan Party covenants that it will not at any time insist upon or plead, or in any manner whatever claim or take any benefit or advantage of, any stay or extension of law now or at any time hereafter in force, nor claim, take nor insist upon any benefit or advantage of or from any law now or hereafter in force providing for the valuation or appraisement of the Collateral or any part thereof prior to any sale or sales thereof to be made pursuant to any provision herein contained, or to the decree, judgment or order of any court of competent jurisdiction; nor, after such sale or sales, claim or exercise any right under any statute now or hereafter made or enacted by any state or otherwise to redeem the Property so sold or any part thereof, and, to the full extent legally permitted, except as to rights expressly provided herein, hereby expressly waives for itself and on behalf of each and every Person, except decree or judgment creditors of such Loan Party acquiring any interest in or title to the Collateral or any part thereof subsequent to the date of this Agreement, all benefit and advantage of any such law or laws, and covenants that it will not invoke or utilize any such law or laws or otherwise hinder, delay or impede the execution of any power herein granted and delegated to Agent, but will suffer and permit the execution of every such power as though no such power, law or laws had been made or enacted.

 

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9.3          Effect of Sale. Subject to Applicable Law, any sale, whether under any power of sale hereby given under this Article 9 or by virtue of judicial proceedings, shall operate to divest all right, title, interest, claim and demand whatsoever, either at law or in equity, of each Loan Party in and to the Property sold, and shall be a perpetual bar, both at law and in equity, against such Loan Party, its successors and assigns, and against any and all Persons claiming the Property sold or any part thereof under, by or through such Loan Party, its successors or assigns. The timing of any foreclosure sale of Collateral shall be deemed reasonable provided that Agent gives at least ten (10) days advance notice of the initial date set for such foreclosure sale.

 

9.4          Power of Attorney in Respect of the Collateral. The Loan Parties do hereby irrevocably appoint Agent (which appointment is coupled with an interest) effective only on the occurrence and during the continuance of an Event of Default, the true and lawful attorney in fact of such Loan Party with full power of substitution, for it and in its name: (a) to ask, demand, collect, receive, receipt for, sue for, compound and give acquittance for any and all rents, issues, profits, avails, distributions, income, payment draws and other sums in which a security interest is granted under Article 4 with full power to settle, adjust or compromise any claim thereunder as fully as if Agent were such Loan Party itself, (b) to receive payment of and to endorse the name of such Loan Party to any items of Collateral (including checks, drafts and other orders for the payment of money) that come into Agent’s possession or under Agent’s control, (c) to make all demands, consents and waivers, or take any other action with respect to, the Collateral, (d) in Agent’s discretion (at direction for the Required Lenders) to file any claim or take any other action or proceedings, either in its own name or in the name of such Loan Party or otherwise, which Agent (at direction for the Required Lenders) may reasonably deem necessary or appropriate to protect and preserve the right, title and interest of Agent in and to the Collateral, (e) to sign an amendment to any Loan Document if such Loan Party is obligated, but fails, to do so, (f) in the case of any Intellectual Property owned by or licensed to any Loan Party, execute, deliver and have recorded any document that the Agent may request to evidence, effect, publicize or record the Agent’s security interest in such Intellectual Property and the goodwill and general intangibles of such Loan Party relating thereto or represented thereby, (g) assign any Intellectual Property owned by any Loan Party or any licenses of any Loan Party throughout the world on such terms and conditions and in such manner as the Agent shall in its sole discretion determine, including the execution and filing of any document necessary to effectuate or record such assignment or (h) to otherwise act with respect thereto as though Agent were the outright owner of the Collateral.

 

9.5          Lender Expenses. If Borrower fails to pay any amounts or furnish any required proof of payment due to third persons or entities as required under the terms of this Agreement, then Agent and/or any Lender may do (but shall not be required to do) any or all of the following: (a) make payment of the same or any part thereof; (b) set up such reserves as Agent or such Lender, as applicable, deems necessary to protect Agent and Lender from the exposure created by such failure; or (c) obtain and maintain insurance policies of the type discussed in Section 6.8 of this Agreement, and take any action with respect to such policies as Agent or such Lender, as applicable, deems prudent. Any amounts paid or deposited by Agent or such Lender, as applicable, shall constitute Lender Expenses, shall be immediately due and payable, and shall bear interest at the then applicable rate hereinabove provided, and shall be secured by the Collateral. Any payments made by Agent or such Lender shall not constitute an agreement by Agent or any Lender to make similar payments in the future or a waiver by Agent of any Event of Default under this Agreement.

 

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9.6          Remedies Cumulative. Agent’s and each Lender’s rights and remedies under this Agreement, the other Loan Documents, and all other agreements shall be cumulative. Agent and Lenders shall have all other rights and remedies not inconsistent herewith as provided under the Code, by law, or in equity, provided however, that Lender must first obtain Agent’s written consent before exercising any such rights and remedies. No exercise by Agent or Lenders (to the extent authorized by Agent) of one right or remedy shall be deemed an election, and no waiver by Agent, for itself or on behalf of Lenders, of any Event of Default on any Loan Party’s part shall be deemed a continuing waiver. No delay by Agent or Lenders shall constitute a waiver, election, or acquiescence by such party.

 

9.7          Reinstatement of Rights. If Agent (or a Lender with Agent’s written consent) shall have proceeded to enforce any right under this Agreement or any other Loan Document by foreclosure, sale, entry or otherwise, and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely, then and in every such case (unless otherwise ordered by a court of competent jurisdiction), Agent and Lenders shall be restored to their former position and rights hereunder with respect to the Property subject to the security interest created under this Agreement.

 

9.8          Share Collateral. The Loan Parties recognize that Agent may be unable to effect a public sale of any or all the Collateral comprising shares of Parent’s Subsidiaries that constitute Collateral (the “Shares”), by reason of certain prohibitions contained in federal securities laws and any other applicable securities laws or otherwise, and may be compelled to resort to one or more private sales thereof to a restricted group of purchasers which will be obliged to agree, among other things, to acquire such securities for their own account for investment and not with a view to the distribution or resale thereof or other applicable restrictions. The Loan Parties acknowledge and agree that any such private sale may result in prices and other terms less favorable than if such sale were a public sale and, notwithstanding such circumstances, agree that any such private sale shall be deemed to have been made in a commercially reasonable manner. Agent or any other holder of the Shares shall be under no obligation to delay a sale of any of the Shares for the period of time necessary to permit the issuer thereof to register such securities for public sale under federal securities laws or under applicable state or foreign securities laws. Notwithstanding the foregoing, Agent shall use commercially reasonable efforts with respect to such sale and the price and terms of such sale.

 

9.9          Payments after an Event of Default. Notwithstanding any contrary provision set forth herein or in any other Loan Document, (i) during the continuance of an Event of Default, Agent may, and shall upon the direction of Required Lenders apply any and all payments received by Agent in respect of any Obligation in accordance with clauses first through sixth below; and (ii) all payments made by Loan Parties to Agent after any or all of the Obligations under the Loan Documents have been accelerated (so long as such acceleration has not been rescinded) or have otherwise matured, including proceeds of Collateral, shall be applied as follows:

 

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first, to payment of costs, expenses and indemnities, including attorney costs, of Agent payable or reimbursable by the Loan Parties under the Loan Documents

 

second, payment of any other Lender Expenses, including costs, expenses, indemnities and attorney costs, of Lenders payable or reimbursable by the Loan Parties under this Agreement;

 

third, to payment of that portion of the Secured Obligations constituting principal and accrued and unpaid interest on the Term Loans, fees, premiums and scheduled periodic payments, and any interest accrued thereon owed to Agent, any Lender and any Bank Product Provider, ratably among them in proportion to the respective amounts described in this clause second payable to them (whether or not accruing after the filing of any case under any Insolvency Proceeding with respect to any Secured Obligations and whether or not a claim for such post-filing or post-petition interest, fees, and charges is allowed or allowable in any such proceeding);

 

fourth, any remainder shall be for the account of and paid to the Borrower.

 

In carrying out the foregoing, (i) amounts received shall be applied to each category in the numerical order provided until exhausted prior to the application to the immediately succeeding category and (ii) each of the Lenders or other Persons entitled to payment shall receive an amount equal to its pro rata share of amounts available to be applied pursuant to clauses third, fourth and fifth above.

 

10.          Waivers; Indemnification.

 

10.1        Demand; Protest. Except as otherwise provided in this Agreement, Borrower waives any demand, protest, notice of protest, notice of default or dishonor, notice of payment and nonpayment, notice of any default, and any other notices relating to the Obligations or Agent’s and/or Lenders’ rights and remedies hereunder.

 

10.2        Liability for Collateral. So long as Agent complies with its obligations, if any, under Section 9207 of the Code, neither Agent nor any Lender in any way or manner shall be liable or responsible for: (a) the safekeeping of the Collateral; (b) any loss or damage thereto occurring or arising in any manner or fashion from any cause; (c) any diminution in the value thereof; or (d) any act or default of any carrier, warehouseman, bailee, forwarding agency, or other Person whomsoever. All risk of loss, damage or destruction of the Collateral shall be borne by Borrower.

 

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10.3        Indemnification; Lender Expenses.

 

(a)           General Indemnity. Each Loan Party shall, jointly and severally, pay, indemnify, and hold Agent and each Lender, and each of their Related Parties (each, an “Indemnified Person”) harmless from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, charges, claims, expenses or disbursements (including without limitations reasonable attorney’s fees and settlement costs) of any kind or nature whatsoever arising out of, with respect to, or as a result of (i) the execution, delivery, enforcement, performance and administration of this Agreement and any other Loan Documents or the transactions contemplated hereby and thereby, (ii) any actual or alleged presence or Release of Hazardous Materials on or from any Real Property currently or formerly owned or operated by any Loan Party or any of its Subsidiaries, or any Environmental Claim or Environmental Liability related in any way to any Loan Party or any of its Subsidiaries, and (iii) with respect to any investigation, litigation or proceeding (including any case, action or proceeding before any court or other Governmental Authority relating to bankruptcy, reorganization, insolvency, liquidation, dissolution or relief of debtors or any appellate proceeding) related to this Agreement or the Term Loan or the use or proposed use of the proceeds thereof, whether or not any Indemnified Person is a party thereto (all the foregoing, collectively, the “Indemnified Liabilities”); provided, that Borrower shall have no obligation hereunder to any Indemnified Person with respect to Indemnified Liabilities arising from solely the gross negligence or willful misconduct of such Indemnified Person as determined by a court of competent jurisdiction in a final, non-appealable judgment. Paragraph (a) of this Section shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim.

 

(b)           Defense. At the election of the Required Lenders, each Loan Party shall, jointly and severally, defend such Indemnified Persons in connection with the Indemnified Liabilities, at the sole cost and expense of Borrower. All indemnity amounts owing under this Section 10.3 shall be paid within thirty (30) days after written demand.

 

(c)           Lender Expenses. Borrower agrees to promptly pay (a) all Lender Expenses when due, (b) all reasonable out of pocket expenses incurred by the Agent and the Lenders in connection with the syndication of the Term Loans, the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents, or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), and (c) all out of pocket expenses incurred by the Agent or any Lender in connection with the enforcement or protection of its rights (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section, or (B) in connection with the Term Loans made, including all such out of pocket expenses incurred during any workout, restructuring or negotiations in respect of such Term Loans. Without limiting the foregoing, if any Loan Party is required to take any action under any Loan Document, such action shall be taken at the expense of such Loan Party.

 

(d)           Waiver of Consequential Damages, Etc. To the fullest extent permitted by applicable law, no party hereto shall assert, and each party hereto hereby waives, any claim against any Indemnified Person or any other party hereto, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby or any Term Loan or the use of the proceeds thereof. No Indemnified Person shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby.

 

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(e)           Survival. Each party’s obligations under this Section 10.3 shall survive the termination of the Loan Documents and payment of the obligations hereunder or the earlier resignation or removal of the Agent.

 

11.          Notices.

 

Unless otherwise provided in this Agreement, all notices or demands by any party relating to this Agreement or any other agreement entered into in connection herewith shall be in writing and (except for financial statements and other informational documents which shall be sent by e-mail) shall be personally delivered or sent by certified mail, postage prepaid, return receipt requested, by e-mail or by prepaid facsimile to Borrower, to Agent or to Lender, as the case may be, at their respective addresses set forth below:

 

  If to Borrower: Vertex Refining Alabama LLC
   

1331 Gemini, #250

Houston, Texas 77058

Attn:  Ben Cowart, President

E-mail: benc@vertexenergy.com

 

 

With a copy to (which shall not constitute notice):

 

 Stroock, Stroock & Lavan LLP

180 Maiden Lane

New York, New York 10038

Attn: Brian Rogers

E-mail: Brogers@stroock.com

 

  If to Agent:

Cantor Fitzgerald Securities

1801 N. Military Trail, Suite 202

Boca Raton, FL 33431

Attn: N. Horning (Vertex)

E-mail: nhorning@cantor.com

   
  With a copy to:

Cantor Fitzgerald Securities

900 West Trade, Suite 725

Charlotte, NC 28202

Attn: Bobbie Young (Vertex)

E-mail: BankLoansAgency@cantor.com

  With a copy (which shall not constitute notice) to:

Shipman & Goodwin LLP

One Constitution Plaza

Hartford, CT 06103

Attn: N. Plotkin (Vertex)

E-mail: nplotkin@goodwin.com

     
  If to the Whitebox Lenders:

Whitebox Advisors LLC

3033 Excelsior Boulevard, Suite 500

Minneapolis, MN 55416

    Attn:  Andrew Thau and Parker Tornell
   

E-mail:  AThau@whiteboxadvisors.com, ptornell@whiteboxadvisors.com,

WHB_LoanDocsHedgeFund_Dist@Whiteboxadvisors.com

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  With a copy to Sidley Austin LLP
  (which shall not 787 7th Avenue
  constitute notice): New York, NY 10019
    Attn:  Leslie Plaskon
    E-mail: lplaskon@sidley.com
  If to the Highbridge Lenders:  
   

Highbridge Capital Management, LLC

277 Park Avenue, 23rd Floor

New York, NY 10172

    Attn: Damon Meyer & Steve Ardovini
    E-mail:  damon.meyer@highbridge.com &
mo-us@highbridge.com
     
  With a copy to Sidley Austin LLP
  (which shall not 787 7th Avenue
  constitute notice): New York, NY 10019
    Attn:  Leslie Plaskon
    E-mail: lplaskon@sidley.com
  If to the BlackRock Lenders: c/o BlackRock Financial Management, Inc.
   

 

40 East 52nd Street

New York, NY 10022

    Attn: Zachary Viders and William Im
    E-mail:  zachary.viders@blackrock.com and
    William.im@blackrock.com
     
  With a copy to Clifford Chance US LLP
  (which shall not 31 West 52nd Street
  constitute notice): New York, NY 10019
    Attn:  Andrew Young
    E-mail: Andrew.Young@CliffordChance.com
     
  With a copy to c/o BlackRock, Inc.
  (which shall not Office of the General Counsel
  constitute notice): 40 East 52nd Street
    New York, New York 10022
   

Attention: Lucy Liu

E-mail: LegalTransactions@blackrock.com

 

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  If to any other Lender: At such address provided immediately below such Lender’s signature to this Agreement

 

The parties hereto may change the address at which they are to receive notices hereunder, by notice in writing in the foregoing manner given to the other.

 

12.          Agent Provisions.

 

12.1        Appointment and Authorization.

 

(a)            Each Lender hereby irrevocably appoints Agent to act on its behalf as the administrative agent and collateral agent under the Loan Documents, and authorizes Agent to take such actions on its behalf and to exercise such powers as are delegated to Agent by the terms of any of the Loan Documents, together with such actions and powers as are reasonably incidental thereto. The provisions of this Section 12 are solely for the benefit of the Agent and the Lenders, and neither the Borrower nor any other Loan Party shall have rights as a third-party beneficiary of any of such provisions. Should any Lender obtain possession or control of any such Collateral, such Lender shall be deemed to hold such Collateral for the benefit of Agent and each other Lender, shall notify Agent thereof, and, promptly upon Agent’s request therefor shall deliver possession or control of such Collateral to Agent.

 

(b)           Each Lender hereby authorizes Agent, on behalf of and for the benefit of Lender, to enter into any of the Loan Documents as secured party, and as Agent for and representative of such Lender thereunder, and each Lender agrees to be bound by the terms of each such document; provided that Agent shall not (i) enter into or consent to any material amendment, modification, termination or waiver of any provision contained in any such document or (ii) release any Collateral (except as otherwise expressly permitted or required pursuant to the terms of this Agreement or the applicable Loan Document), in the case of each of clauses (i) and (ii) without the prior consent of Required Lenders (or, if required pursuant to Section 14.4, all Lenders); provided further, however, that, without further written consent or authorization from Lenders (which may, in Agent’s sole discretion be evidence by direction by e-mail from the Required Lenders or their counsel (who as of the Closing Date is Sidley Austin LLP)), Agent may execute any documents or instruments necessary to (a) release any Lien encumbering any item of Collateral that is the subject of a Transfer of assets permitted by this Agreement or to which Required Lenders have otherwise consented, (b) release any party from a Guarantor Joinder Agreement if all of the Equity Interests of such party are Transferred to any Person (other than an Affiliate of a Loan Party) pursuant to a Transfer permitted hereunder or to which Required Lenders have otherwise consented, (c) subject to Section 14.4, subordinate the Liens of Agent, on behalf of Lenders, to any other Permitted Lien as certified by a Responsible Officer of the Borrower or (d) release all Liens in accordance with Section 2.4. Whether or not expressly stated therein, the rights, privileges and immunities of the Agent set forth herein shall be incorporated by reference, whether or not expressly stated in such Loan Document. Anything contained in any of the Loan Documents to the contrary notwithstanding, Borrower, Agent and each Lender hereby agree that (1) no Lender shall have any right individually to realize upon any of the Collateral under or otherwise enforce any Loan Document, it being understood and agreed that all powers, rights and remedies under the Loan Documents may be exercised solely by Agent for the benefit of Lenders and Agent in accordance with the terms thereof, and (2) in the event of a foreclosure by either on any of the Collateral pursuant to a public or private sale, either Agent or any Lender may be the purchaser of any or all of such Collateral at any such sale and Agent, as agent for and representative of Lenders (but not any Lender or Lenders in its or their respective individual capacities unless Required Lenders and Agent shall otherwise agree in writing) shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such public sale, to use and apply any of the Obligations as a credit on account of the purchase price for any Collateral payable by Agent at such sale. Without limiting the generality of the foregoing, Agent is hereby expressly authorized to execute any and all documents (including releases) with respect to (i) the Collateral and the rights of Lenders with respect thereto, as contemplated by and in accordance with the provisions of the Loan Documents, and (ii) any other Subordination Agreement with respect to any junior or Subordinated Debt.

 

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(c)           Upon receipt of any notice, agreement or other document required to be delivered to Agent hereunder, Agent shall immediately deliver such notice, agreement or other document to the Lenders.

 

12.2        Agent in Individual Capacity; Lender as Agent. The Person serving as Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not Agent and the term “Lender” shall, unless otherwise expressly indicated or unless the context otherwise requires, include each such Person serving as Agent hereunder in its individual capacity. The exculpatory provisions contained in this Article 12 shall not relieve a Person acting as Agent from its obligations as a Lender to the extent that such Agent is also a Lender.

 

12.3         Exculpatory Provisions. Agent shall have no duties or obligations except those expressly set forth in the Loan Documents. Without limiting the generality of the foregoing, Agent shall not:

 

(a)           be subject to any fiduciary or other implied duties, regardless of whether any Default or any Event of Default has occurred and is continuing;

 

(b)           have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated by the Loan Documents that Agent is required to exercise as directed in writing by the Required Lenders, provided that Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose Agent to liability or that is contrary to any Loan Document or Applicable Law; and

 

(c)           except as expressly set forth in the Loan Documents, have any duty to disclose, and Agent shall not be liable for the failure to disclose, any information relating to Parent, the Borrower or any of its Affiliates that is communicated to or obtained by any Person serving as Agent or any of its Affiliates in any capacity.

 

Agent shall (i) provide Lenders a copy of material written information its receives from Borrower promptly on receipt, it being understood that Agent anticipates that there will be a significant amount of email correspondence, much of which will not be material and therefore will not be relayed to Lenders, and (ii) endeavor to keep Lenders generally apprised of important non-written information Borrower communicates to Agent.

 

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12.4        Exculpation; Limitation of Liability.

 

(a)           Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders or as Agent shall believe in good faith shall be necessary, under the circumstances or (ii) in the absence of its own gross negligence or willful misconduct as determined by a final, non-appealable decision by a court of competent jurisdiction.

 

(b)           Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with the Loan Documents, (ii) the contents of any certificate, report or other document delivered under any of the Loan Documents, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth in any of the Loan Documents, (iv) the validity, enforceability, effectiveness or genuineness of any of the Loan Documents or any other agreement, instrument or document, (v) shall not be deemed to have made any representation or warranty regarding the existence, value or collectability of the Collateral, the existence, priority or perfection of Agent’s Lien thereon, or any certificate prepared by any Loan Party in connection therewith, nor shall Agent be responsible or liable to Lenders for any failure to monitor or maintain any portion of the Collateral or (vi) the satisfaction of any condition set forth in Article 3 or elsewhere in the Loan Documents, other than to confirm receipt of items expressly required to be delivered to Agent.

 

(c)           Agent may rely, and shall be fully protected in acting, or refraining to act, upon, any resolution, statement, certificate, instrument, opinion, report, notice, request, consent, order, bond or other paper or document that it has no reason to believe to be other than genuine and to have been signed or presented by the proper party or parties or, in the case of emails, cables, telecopies and telexes, to have been sent by the proper party or parties. Agent may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to Agent and conforming to the requirements of any of the Loan Documents. Agent may consult with counsel (which may be counsel for the Loan Parties), and any opinion or legal advice of such counsel shall be full and complete authorization and protection in respect of any action taken, not taken or suffered by Agent under any of the Loan Documents in accordance therewith. Agent shall have the right at any time to seek instructions concerning the administration of the Collateral from any court of competent jurisdiction. Agent shall not be under any obligation to exercise any of the rights or powers granted to Agent by the Loan Documents at the request or direction of any Lender unless Agent shall have been provided by such Lender with adequate security and indemnity against the costs, expenses and liabilities that may be incurred by it in compliance with such request or direction, and then, only to the extent that such Lender has the right under the applicable Loan Document to direct Agent to act.

 

(d)           The Agent shall not be responsible or have any liability for, or have any duty to ascertain, inquire into monitor or enforce, compliance with the provisions relating to Disqualified Institution. Without limiting the generality of the foregoing, the Agent shall not (x) be obligated to ascertain, monitor or inquire as to whether any Lender or participant or prospective Lender or participant is a Disqualified Institution or (y) have any liability with respect to or arising out of any assignment or participation of Term Loans, or disclosure of confidential information, to, or the restriction on any exercise of rights or remedies of, any Disqualified Institution.

 

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12.5        Credit Decisions. Each Lender acknowledges that neither Agent nor any other Lender has made any representation or warranty to it, and that no act by any Agent or other Lender hereafter taken, including any consent to and acceptance of any assignment or review of the affairs of Parent, Borrower or any Affiliate thereof, shall be deemed to constitute any representation or warranty by any Agent or such Lender to any other Lender as to any matter, including whether there has been disclosure of material information in their possession. Each Lender acknowledges that it has, independently and without reliance upon Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon Agent or any other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon the Loan Documents, any related agreement or any document furnished thereunder.

 

12.6        Indemnification. To the extent that the Loan Parties for any reason fail to indefeasibly pay any amount required under Section 10.3 to be paid by it to the Agent (or any sub-agent thereof), each Lender severally agrees to pay to the Agent (or any such sub-agent), such Lender’s pro rata share according to their respective Term Loan Commitment (provided, that if at such time all Term Loan Commitments have been terminated, then such Lender’s funded Term Loans, and if the Obligations paid in full, then each Lender’s pro rata share shall be determined as of the day immediately preceding the date that the Obligations were paid in full) of such unpaid amount (including any such unpaid amount in respect of a claim asserted by such Lender); provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Agent (or any such sub-agent) in its capacity as such; provided further that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements that are found by a final and non-appealable decision of a court of competent jurisdiction to have resulted from such Agent’s gross negligence or willful misconduct. The obligations of the Lenders under this Section 12.6 shall survive in accordance with Section 10.3(e) and are subject to the provisions of Section 2.7(d).

 

12.7        Successor Agents. Agent may resign upon thirty (30) days’ notice to the Lenders and Borrower. In addition, the Required Lenders may remove the Agent at any time upon at least five (5) Business Days’ notice to the Borrower and the existing Agent, with or without cause and without the consent of the Borrower (provided, the foregoing shall have no effect on the rights of the Borrower in the immediately succeeding sentence with respect to consent over appointment of a replacement Agent). If Agent shall resign or be removed in its capacity under this Agreement and the other Loan Documents, then the Required Lenders (with the consent of the Borrower so long as no Event of Default has occurred and is continuing) shall appoint a successor agent, whereupon such successor agent shall succeed to the rights, powers and duties of Agent in its capacity, and the term “Agent” shall mean such successor agent effective upon such appointment and approval, and the former Agent’s rights, powers and duties as Agent in its capacity shall be terminated, without any other or further act or deed on the part of such former Agent or any of the parties to this Agreement or any Lender. If no applicable successor agent has accepted appointment as such Agent in its capacity by the date that is thirty (30) days following such retiring Agent’s notice of resignation or within five (5) Business Days following notice to the Borrower and the existing Agent of such Agent’s removal by the Required Lenders, such retiring or removed Agent’s resignation or removal, as applicable, shall nevertheless thereupon become effective and the Required Lenders shall assume and perform all of the duties of such Agent hereunder until such time, if any, as the Required Lenders appoint a successor agent as provided for above. After any retiring or removed Agent’s resignation or removal as Agent, as applicable, the provisions of this Article 12 and Section 10.3 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was an Agent under this Agreement and the other Loan Documents.

 

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12.8        Agent Generally. Except as expressly set forth herein, Agent shall not have any duties or responsibilities hereunder in its capacity as such.

 

12.9        Reliance. Agent shall be entitled to rely upon any written notices, statements, certificates, orders or other documents or any telephone message believed by it in good faith to be genuine and correct and to have been signed, sent or made by the proper Person, and with respect to all matters pertaining to this Agreement or any of the other Loan Documents and its duties hereunder or thereunder, upon advice of counsel selected by it. Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such advice or concurrence of the Required Lenders or all Lenders, as it deems appropriate, or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and which may be incurred by it by reason of taking or continuing to take any such action. Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the other Loan Documents in accordance with a request of the Required Lenders or all Lenders, as may be required, and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of the Term Loans. Such instruction may, in the Agent’s sole discretion, be delivered by e-mail from the Required Lenders or their counsel, who, as of the date hereof is Sidley Austin LLP, and the Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose Agent to liability or that is contrary to any Loan Document or applicable law, including for the avoidance of doubt any action that may be in violation of the automatic stay under Debtor Relief Laws.

 

12.10      Notice of Default. Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default, unless Agent shall have received written notice from a Lender or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a “notice of default”. Agent will notify each Lender of its receipt of any such notice. Agent shall take such action with respect to such Default or Event of Default as may be requested by Required Lenders (or all such other portion of Lenders as shall be prescribed by this Agreement) in accordance with the terms hereof. Unless and until Agent has received any such request, Agent may (but shall not be obligated to) take such action or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable or in the best interest of Lenders.

 

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12.11      Erroneous Payments.

 

(a)           If the Agent (x) notifies a Lender, Secured Party, or any Person who has received funds on behalf of a Lender or Secured Party (any such Lender, Secured Party or other recipient (and each of their respective successors and assigns), a “Payment Recipient”) that the Agent has determined in its reasonable discretion (whether or not after receipt of any notice under immediately succeeding clause (b)) that any funds (as set forth in such notice from the Agent) received by such Payment Recipient from the Agent or any of its Affiliates were erroneously or mistakenly transmitted to, or otherwise erroneously or mistakenly received by, such Payment Recipient (whether or not known to such Lender, Secured Party or other Payment Recipient on its behalf) (any such funds, whether transmitted or received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise, individually and collectively, an “Erroneous Payment”) and (y) demands in writing the return of such Erroneous Payment (or a portion thereof) (provided, that, without limiting any other rights or remedies (whether at law or in equity), the Agent may not make any such demand under this clause (a) with respect to an Erroneous Payment unless such demand is made within 5 Business Days of the date of receipt of such Erroneous Payment by the applicable Payment Recipient), such Erroneous Payment shall at all times remain the property of the Agent pending its return or repayment as contemplated below in this Section 12.11 and held in trust for the benefit of the Agent, and such Lender or Secured Party shall (or, with respect to any Payment Recipient who received such funds on its behalf, shall cause such Payment Recipient to) promptly, but in no event later than two Business Days thereafter (or such later date as the Agent may, in its sole discretion, specify in writing), return to the Agent the amount of any such Erroneous Payment (or portion thereof) as to which such a demand was made, in same day funds (in the currency so received). A notice of the Agent to any Payment Recipient under this clause (a) shall be conclusive, absent manifest error.

 

(b)           Without limiting immediately preceding clause (a), each Lender, Secured Party or any Person who has received funds on behalf of a Lender or Secured Party (and each of their respective successors and assigns), agrees that if it receives a payment, prepayment or repayment (whether received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise) from the Agent (or any of its Affiliates) (x) that is in a different amount than, or on a different date from, that specified in this Agreement or in a notice of payment, prepayment or repayment sent by the Agent (or any of its Affiliates) with respect to such payment, prepayment or repayment, (y) that was not preceded or accompanied by a notice of payment, prepayment or repayment sent by the Agent (or any of its Affiliates), or (z) that such Lender or Secured Party, or other such recipient, otherwise becomes aware was transmitted, or received, in error or by mistake (in whole or in part), then in each such case:

 

(i)           it acknowledges and agrees that (A) in the case of immediately preceding clauses (x) or (y), an error and mistake shall be presumed to have been made (absent written confirmation from the Agent to the contrary) or (B) an error and mistake has been made (in the case of immediately preceding clause (z)), in each case, with respect to such payment, prepayment or repayment; and

 

(ii)          such Lender or Secured Party shall use commercially reasonable efforts to (and shall use commercially reasonable efforts to cause any other recipient that receives funds on its respective behalf to) promptly (and, in all events, within one Business Day of its knowledge of the occurrence of any of the circumstances described in immediately preceding clauses (x), (y) and (z)) notify the Agent of its receipt of such payment, prepayment or repayment, the details thereof (in reasonable detail) and that it is so notifying the Agent pursuant to this Section 12.11(b).

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For the avoidance of doubt, the failure to deliver a notice to the Agent pursuant to this Section 12.11(b) shall not have any effect on a Payment Recipient’s obligations pursuant to Section 12.11(a) or on whether or not an Erroneous Payment has been made.

 

(c)            Each Lender or Secured Party hereby authorizes the Agent to set off, net and apply any and all amounts at any time owing to such Lender or Secured Party under any Loan Document, or otherwise payable or distributable by the Agent to such Lender or Secured Party under any Loan Document with respect to any payment of principal, interest, fees or other amounts, against any amount that the Agent has demanded to be returned under immediately preceding clause (a).

 

(d)           (i) In the event that an Erroneous Payment (or portion thereof) is not recovered by the Agent for any reason, after demand therefor in accordance with immediately preceding clause (a), from any Lender that has received such Erroneous Payment (or portion thereof) (and/or from any Payment Recipient who received such Erroneous Payment (or portion thereof) on its respective behalf) (such unrecovered amount, an “Erroneous Payment Return Deficiency”), upon the Agent’s notice to such Lender at any time, then effective immediately (with the consideration therefor being acknowledged by the parties hereto), (A) such Lender shall be deemed to have assigned its Term Loans with respect to which such Erroneous Payment was made (the “Erroneous Payment Impacted Class”) in an amount equal to the Erroneous Payment Return Deficiency (or such lesser amount as the Agent may specify) (such assignment of the Term Loans of the Erroneous Payment Impacted Class, the “Erroneous Payment Deficiency Assignment”) (on a cashless basis and such amount calculated at par plus any accrued and unpaid interest (with the assignment fee to be waived by the Agent in such instance)), and is hereby (together with the Borrower) deemed to execute and deliver an Assignment Agreement (or, to the extent applicable, an agreement incorporating an Assignment Agreement by reference pursuant to a platform such as ClearPar as to which the Agent and such parties are participants) with respect to such Erroneous Payment Deficiency Assignment, and such Lender shall deliver any Notes evidencing such Term Loans to the Borrower or the Agent (but the failure of such Person to deliver any such Notes shall not affect the effectiveness of the foregoing assignment), (B) the Agent as the assignee Lender shall be deemed to have acquired the Erroneous Payment Deficiency Assignment, (C) upon such deemed acquisition, the Agent as the assignee Lender shall become a Lender, as applicable, hereunder with respect to such Erroneous Payment Deficiency Assignment and the assigning Lender shall cease to be a Lender, as applicable, hereunder with respect to such Erroneous Payment Deficiency Assignment, excluding, for the avoidance of doubt, its obligations under the indemnification provisions of this Agreement which shall survive as to such assigning Lender, (D) the Agent and the Borrower shall each be deemed to have waived any consents required under this Agreement to any such Erroneous Payment Deficiency Assignment, and (E) the Agent will reflect in the Register its ownership interest in the Term Loans subject to the Erroneous Payment Deficiency Assignment.

 

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(ii)          Subject to Section 14.1 (but excluding, in all events, any assignment consent or approval requirements (whether from the Borrower or otherwise)), the Agent may, in its discretion, sell any Term Loans acquired pursuant to an Erroneous Payment Deficiency Assignment and upon receipt of the proceeds of such sale, the Erroneous Payment Return Deficiency owing by the applicable Lender shall be reduced by the net proceeds of the sale of such Term Loan (or portion thereof), and the Agent shall retain all other rights, remedies and claims against such Lender (and/or against any recipient that receives funds on its respective behalf). In addition, an Erroneous Payment Return Deficiency owing by the applicable Lender (x) shall be reduced by the proceeds of prepayments or repayments of principal and interest, or other distribution in respect of principal and interest, received by the Agent on or with respect to any such Term Loans acquired from such Lender pursuant to an Erroneous Payment Deficiency Assignment (to the extent that any such Term Loans are then owned by the Agent) and (y) may, in the sole discretion of the Agent, be reduced by any amount specified by the Agent in writing to the applicable Lender from time to time.

 

(e)           The parties hereto agree that (x) irrespective of whether the Agent may be equitably subrogated, in the event that an Erroneous Payment (or portion thereof) is not recovered from any Payment Recipient that has received such Erroneous Payment (or portion thereof) for any reason, the Agent shall be subrogated to all the rights and interests of such Payment Recipient (and, in the case of any Payment Recipient who has received funds on behalf of a Lender or Secured Party, to the rights and interests of such Lender or Secured Party, as the case may be) under the Loan Documents with respect to such amount (the “Erroneous Payment Subrogation Rights”) (provided that the Loan Parties’ Secured Obligations under the Loan Documents in respect of the Erroneous Payment Subrogation Rights shall not be duplicative of such Secured Obligations in respect of Term Loans that have been assigned to the Agent under an Erroneous Payment Deficiency Assignment) and (y) an Erroneous Payment shall not pay, prepay, repay, discharge or otherwise satisfy any Secured Obligations owed by the Borrower or any other Loan Party; provided that this Section 12.11 shall not be interpreted to increase (or accelerate the due date for), or have the effect of increasing (or accelerating the due date for), the Obligations of the Borrower relative to the amount (and/or timing for payment) of the Obligations that would have been payable had such Erroneous Payment not been made by the Agent; provided, further, that for the avoidance of doubt, immediately preceding clauses (x) and (y) shall not apply to the extent any such Erroneous Payment is, and solely with respect to the amount of such Erroneous Payment that is, comprised of funds received by the Agent from the Borrower for the purpose of making such Erroneous Payment.

 

(f)            To the extent permitted by Applicable Law, no Payment Recipient shall assert any right or claim to an Erroneous Payment, and hereby waives, and is deemed to waive, any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by the Agent for the return of any Erroneous Payment received, including, without limitation, any defense based on “discharge for value” or any similar doctrine.

 

(g)           Each party’s obligations, agreements and waivers under this Section 12.11 shall survive the resignation or replacement of the Agent, any transfer of rights or obligations by, or the replacement of, a Lender, the termination of the Term Loan Commitments and/or the repayment, satisfaction or discharge of all Secured Obligations (or any portion thereof) under any Loan Document.

 

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12.12      Collateral Matters.

 

(a)            The Lenders hereby authorize Agent, at the direction of the Required Lenders, to release any Lien granted to or held by the Agent upon any Collateral (i) upon termination of the Term Loan Commitments and payment and satisfaction of all of the Obligations (other than contingent indemnification obligations that are not then due and payable) at any time arising under or in respect of this Agreement or the Loan Documents or the transactions contemplated hereby or thereby, (ii) constituting property being sold or otherwise disposed of upon the sale or other disposition thereof in compliance with Section 7.2, and (iii) if approved, authorized or ratified in writing by the Required Lenders or all Lenders, as applicable. Upon request by the Agent at any time, the Lenders will confirm in writing the Agent’s authority to release particular types or items of Collateral pursuant to this Section.

 

(b)           No Secured Party shall have any right individually to realize upon any of the Collateral or to enforce any provision of Sections 4 or 13 of this Agreement. The Lenders understand and agree that all powers, rights and remedies hereunder and under any of the Loan Documents may be exercised solely by Agent for the benefit of the Secured Parties in accordance with the terms hereof and thereof.

 

(c)           Agent shall not be responsible for or have a duty to ascertain or inquire into any representation or warranty regarding the existence, value or collectability of the Collateral, the existence, priority or perfection of any Lien thereon, or any certificate prepared by any Loan Party in connection therewith, and the Agent shall not be responsible or liable to the Lenders or any other Secured Party for any failure to monitor or maintain any portion of the Collateral. Each party to this Agreement acknowledges and agrees that the Agent shall have no obligation to file financing statements, amendments to financing statements, or continuation statements, or to perfect or maintain the perfection of any Agent’s Lien on the Collateral, other than, in each case, as instructed by the Required Lenders or their counsel, together with the form of such financing statement to be filed.

 

13.          Guaranty.

 

13.1        Guaranty.

 

Each Guarantor hereby absolutely and unconditionally, jointly and severally guarantees, as primary obligor and as a guaranty of payment and performance and not merely as a guaranty of collection, prompt payment when due, whether at stated maturity, by required prepayment, upon acceleration, demand or otherwise, and at all times thereafter, of any and all Secured Obligations (for each Guarantor, subject to the proviso in this sentence, its “Guaranteed Obligations”); provided that the liability of each Guarantor individually with respect to this Guaranty shall be limited to an aggregate amount equal to the largest amount that would not render its obligations hereunder subject to avoidance under Section 548 of the United States Bankruptcy Code or any comparable provisions of any applicable state law. Without limiting the generality of the foregoing, the Guaranteed Obligations shall include any such indebtedness, obligations, and liabilities, or portion thereof, which may be or hereafter become unenforceable or compromised or shall be an allowed or disallowed claim under any proceeding or Agent’s books and records showing the amount of the Obligations shall be admissible in evidence in any action or proceeding, and shall be binding upon each Guarantor, and conclusive for the purpose of establishing the amount of the Secured Obligations. This Guaranty shall not be affected by the genuineness, validity, regularity or enforceability of the Secured Obligations or any instrument or agreement evidencing any Secured Obligations, or by the existence, validity, enforceability, perfection, non-perfection or extent of any collateral therefor, or by any fact or circumstance relating to the Secured Obligations which might otherwise constitute a defense to the obligations of the Guarantors, or any of them, under this Guaranty, and each Guarantor hereby irrevocably waives any defenses it may now have or hereafter acquire in any way relating to any or all of the foregoing.

 

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13.2        Rights of Lenders.

 

Each Guarantor consents and agrees that the Secured Parties may, at any time and from time to time, without notice or demand, and without affecting the enforceability or continuing effectiveness hereof: (a) amend, extend, renew, compromise, discharge, accelerate or otherwise change the time for payment or the terms of the Secured Obligations or any part thereof; (b) take, hold, exchange, enforce, waive, release, fail to perfect, sell, or otherwise dispose of any security for the payment of this Guaranty or any Secured Obligations; (c) apply such security and direct the order or manner of sale thereof as the Agent and the Lenders in their sole discretion may determine; and (d) release or substitute one or more of any endorsers or other guarantors of any of the Secured Obligations. Without limiting the generality of the foregoing, each Guarantor consents to the taking of, or failure to take, any action which might in any manner or to any extent vary the risks of such Guarantor under this Guaranty or which, but for this provision, might operate as a discharge of such Guarantor.

 

13.3        Certain Waivers.

 

Each Guarantor waives (a) any defense arising by reason of any disability or other defense of the Borrower or any other guarantor, or the cessation from any cause whatsoever (including any act or omission of any Secured Party) of the liability of the Borrower or any other Loan Party; (b) any defense based on any claim that such Guarantor’s obligations exceed or are more burdensome than those of the Borrower or any other Loan Party; (c) the benefit of any statute of limitations affecting any Guarantor’s liability hereunder; (d) any right to proceed against the Borrower or any other Loan Party, proceed against or exhaust any security for the Secured Obligations, or pursue any other remedy in the power of any Secured Party whatsoever; (e) any benefit of and any right to participate in any security now or hereafter held by any Secured Party; and (f) to the fullest extent permitted by law, any and all other defenses or benefits that may be derived from or afforded by Applicable Law limiting the liability of or exonerating guarantors or sureties. Each Guarantor expressly waives all setoffs and counterclaims and all presentments, demands for payment or performance, notices of nonpayment or nonperformance, protests, notices of protest, notices of dishonor and all other notices or demands of any kind or nature whatsoever with respect to the Secured Obligations, and all notices of acceptance of this Guaranty or of the existence, creation or incurrence of new or additional Secured Obligations.

 

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Without limiting the generality of the foregoing, or of any other waiver or other provision set forth in this Agreement, each Loan Party waives all rights and defenses arising out of an election of remedies by Agent or any Lender, even though that election of remedies, such as a nonjudicial foreclosure with respect to security for a guaranteed obligation, has destroyed such Agent’s or Lender’s rights of subrogation and reimbursement against such Loan Party by the operation of Section 580(d) of the California Code of Civil Procedure or otherwise. Each Loan Party waives all rights and defenses that such Loan Party may have because the Obligations are secured by Real Property which means, among other things: (i) Agent may collect from any Loan Party without first foreclosing on any Real Property pledged by a Loan Party; (ii) if Agent or any Lender forecloses on any Real Property pledged by any Loan Party, the amount of the Obligations may be reduced only by the price for which that Real Property is sold at the foreclosure sale, even if the Real Property is worth more than the sale price; and (iii) the Agent may collect Obligations from a Loan Party even if Agent, by foreclosing on any such Real Property, has destroyed any right any Loan Party may have to collect from the other Loan Parties. This is an unconditional and irrevocable waiver of any rights and defenses any Loan Party may have because the Obligations are secured by Real Property. These rights and defenses include, but are not limited to, any rights or defenses based upon Section 580a, 580b, 580d or 726 of the California Code of Civil Procedure. Each Loan Party hereby absolutely, knowingly, unconditionally, and expressly waives any and all claim, defense or benefit arising directly or indirectly under any one or more of Sections 2787 to 2855 inclusive of the California Civil Code or any similar law of California.

 

13.4        Obligations Independent.

 

The obligations of each Guarantor hereunder are those of primary obligor, and not merely as surety, and are independent of the Secured Obligations and the obligations of any other guarantor, and a separate action may be brought against each Guarantor to enforce this Guaranty whether or not the Borrower or any other person or entity is joined as a party.

 

13.5        Subrogation.

 

No Guarantor shall exercise any right of subrogation, contribution, indemnity, reimbursement or similar rights with respect to any payments it makes under this Guaranty until all of the Secured Obligations and any amounts payable under this Guaranty have been indefeasibly paid and performed in full and the Term Loan Commitments and the Term Loans are terminated. If any amounts are paid to a Guarantor in violation of the foregoing limitation, then such amounts shall be held in trust for the benefit of the Secured Parties and shall forthwith be paid to the Secured Parties to reduce the amount of the Secured Obligations, whether matured or unmatured.

 

13.6        Termination; Reinstatement.

 

This Guaranty is a continuing and irrevocable guaranty of all Secured Obligations now or hereafter existing and shall remain in full force and effect until the Maturity Date. Notwithstanding the foregoing, this Guaranty shall continue in full force and effect or be revived, as the case may be, if any payment by or on behalf of the Borrower or a Guarantor is made, or any of the Secured Parties exercises its right of setoff, in respect of the Secured Obligations and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by any of the Secured Parties in their discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Laws or otherwise, all as if such payment had not been made or such setoff had not occurred and whether or not the Secured Parties are in possession of or have released this Guaranty and regardless of any prior revocation, rescission, termination or reduction. The obligations of each Guarantor under this Section 13.6 shall survive termination of this Guaranty.

 

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13.7        Stay of Acceleration.

 

If acceleration of the time for payment of any of the Secured Obligations is stayed, in connection with any case commenced by or against a Guarantor or the Borrower under any Debtor Relief Laws, or otherwise, all such amounts shall nonetheless be payable by each Guarantor, jointly and severally, immediately upon demand by the Secured Parties.

 

13.8        Condition of Borrower.

 

Each Guarantor acknowledges and agrees that it has the sole responsibility for, and has adequate means of, obtaining from the Borrower and any other guarantor such information concerning the financial condition, business and operations of the Borrower and any such other guarantor as such Guarantor requires, and that none of the Secured Parties has any duty, and such Guarantor is not relying on the Secured Parties at any time, to disclose to it any information relating to the business, operations or financial condition of the Borrower or any other guarantor (each Guarantor waiving any duty on the part of the Secured Parties to disclose such information and any defense relating to the failure to provide the same).

 

13.9        Appointment of Borrower.

 

Each of the Loan Parties hereby appoints the Borrower to act as its agent for all purposes of this Agreement, the other Loan Documents and all other documents and electronic platforms entered into in connection herewith and agrees that (a) the Borrower may execute such documents and provide such authorizations on behalf of such Loan Parties as the Borrower deems appropriate in its sole discretion and each Loan Party shall be obligated by all of the terms of any such document and/or authorization executed on its behalf, (b) any notice or communication delivered by the Agent or a Lender to the Borrower shall be deemed delivered to each Loan Party and (c) the Agent or the Lenders may accept, and be permitted to rely on, any document, authorization, instrument or agreement executed by the Borrower on behalf of each of the Loan Parties. The foregoing appointment and agreement shall terminate upon the foreclosure of any pledge in favor of the Secured Parties of the direct or indirect equity interest in the Borrower.

 

13.10      Right of Contribution.

 

The Guarantors agree among themselves that, in connection with payments made hereunder, each Guarantor shall have contribution rights against the other Guarantors as permitted under Applicable Law.

 

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14.          General Provisions.

 

14.1        Successors and Assigns.

 

(a)            This Agreement shall bind and inure to the benefit of the respective successors and permitted assigns of each of the parties; provided, however, that neither this Agreement nor any rights hereunder may be assigned by Borrower without Agent’s and Required Lenders’ prior written consent, which consent may be granted or withheld in Agent’s and Required Lenders’ sole discretion.

 

(b)           Each Lender, subject in the case of the Initial Lenders and their respective Affiliates and Approved Funds (each, a “Lender Group”) to Section 14.1(f), shall have the right without the consent of and without written notice to Borrower to sell, assign, transfer, negotiate, or grant participations in all or any part of, or any interest in Lender’s rights and benefits hereunder and under any Loan Document to a Lender or an Affiliate or Approved Fund of a Lender; provided, that any sale or assignment of a Lender’s interest in any Loan Document (to a Person other than a Lender or Affiliate or Approved Fund of a Lender) shall require (a) Agent’s prior written consent, such consent not to be unreasonably withheld, conditioned or delayed, (b) while no Event of Default exists, the prior written consent of the Borrower, such consent not to be unreasonably withheld, conditioned or delayed (provided, that, it shall not be unreasonable for the Borrower to withhold, condition or delay consent with respect to an assignment to a Disqualified Institution; provided, further, that the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Agent within five Business Days after written notice of such assignment shall have delivered to the Borrower), and (c) a minimum of $1,000,000 (which minimum may be waived with consent of the Agent (at the direction of the Required Lenders) and, unless an Event of Default exists, the Borrower). Borrower and Agent shall be entitled to continue to deal solely and directly with such Lender in connection with the interests so assigned to an assignee until Agent shall have received and accepted an effective Assignment Agreement executed, delivered and fully completed by the applicable parties thereto, and, except with respect to an assignee that is a Lender or Affiliate or Approved Fund of a Lender, such other information regarding such assignee as Agent reasonably shall require, to include, without limitation for any assignee which is not already a Lender party hereto, an Administrative Questionnaire, all applicable “know your customer” documentation requested by Agent, and a processing fee of $3,500. No Lender shall sell, transfer, negotiate, or grant participations in all or any part of, or any interest in Lender’s rights and benefits hereunder and under any Loan Document to any Defaulting Lender.

 

(c)           From and after the date on which the conditions described above have been met and recordation in the Register, as set forth in Section 14.1(d) below, (i) such assignee shall be deemed automatically to have become a party hereto and, to the extent of the interests assigned to such assignee pursuant to such Assignment Agreement, shall have the rights and obligations of a Lender hereunder, (ii) the assigning Lender, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment Agreement, shall be released from its rights and obligations hereunder (other than those that survived termination pursuant to Section 14.8 and, for greater certainty, the assigning Lender shall continue to be entitled to the benefits of Section 2.9 with respect to the facts and circumstances existing prior to the date of such assignment) and (iii) upon the request of such assignee (and as applicable, the assigning Lender), new Notes in the aggregate principal amount of such assignee’s percentage interest in the Term Loan (and, as applicable, Notes in the principal amount of that portion of the Term Loans retained by the assigning Lender) shall be executed and delivered to such assignee (and, if applicable, the assigning Lender) and the assigning Lender shall return to the Borrower any prior Note held by it upon receipt of such new Note (if applicable).

 

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(d)           The Agent, acting solely for this purpose as an agent of the Borrower, shall maintain at one of its offices in Charlotte, North Carolina a copy of each Assignment Agreement delivered to it and a register for the recordation of the names and addresses of the applicable Lenders, and the applicable Term Loan Commitments of, and principal amounts (and stated interest) of the applicable Term Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive absent manifest error, and the Borrower, the Agent and the applicable Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice. For clarification, this Section 14.1 shall not apply with respect to any Warrant, as to which assignment, transfer and other such actions are governed by the terms of the Warrant Agreement.

 

(e)           Any Lender may at any time, without the consent of, or notice to, Agent or Borrower, sell to one or more Persons participating interests in its Term Loans, commitments or other interests hereunder (any such Person, a “Participant”). In the event of a sale by a Lender of a participating interest to a Participant, (i) such Lender’s obligations hereunder shall remain unchanged for all purposes, (ii) Borrower and Agent shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations hereunder and (iii) all amounts payable by Borrower shall be determined as if such Lender had not sold such participation and shall be paid directly to such Lender. The Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.8 and 2.9 (subject to the requirements and limitations therein, including the requirements under Section 2.9(g) (it being understood that the documentation required under Section 2.9(g) shall be delivered to the participating Lender)) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section; provided that such Participant shall not be entitled to receive any greater payment under Section 2.8 or 2.9, with respect to any participation, than its participating Lender would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation. No Participant shall have any direct or indirect voting rights hereunder except with respect to any event described in Section 14.4 expressly requiring the unanimous vote of all Lenders or, as applicable, all directly and adversely affected lenders. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Term Loans or other obligations under the Loan Documents (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any commitments, loans, letters of credit or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Agent (in its capacity as Agent) shall have no responsibility for maintaining a Participant Register.

 

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(f)            Each Lender Group may freely assign up to $4,000,000 in the aggregate with respect to holdings of such Lender Group (the “Free Trade Amount”) of principal amount of the Term Loan they (or their Affiliates or Approved Funds) funded on the Escrow Funding Date to a third party non-affiliate of such Lender Group without being subject to the Right of First Offer (as defined below). Assignments by a member of a Lender Group to another member of such Lender Group or to a member of another Lender Group shall also not be subject to the Right of First Offer and will not decrease the available Free Trade Amount for such Lender Group. Any proposed assignment over the Free Trade Amount by any member of a Lender Group of the principal amount of the Term Loan they (or their Affiliates or Approved Funds) funded on the Escrow Funding Date to a third party non-affiliate (i.e., not an Initial Lender or an Affiliate or Approved Fund thereof) will be subject to the following (the “Right of First Offer”):

 

(i)           Such Lender (the “Selling Initial Lender”) shall offer the terms of the proposed assignment, including the principal amount and price (the “Offer”) to the other two Lender Groups (each, a “Purchasing Initial Lender”); provided that such Offer shall only be required to be made to a Lender Group if any member of such Lender Group still holds any portion of the Term Loan.

 

(ii)          The Purchasing Initial Lenders shall have three (3) Business Days to agree to the Offer after receiving written notice thereof and, to the extent such agreement is reached, shall close the purchase within a mutually agreeable time between the Selling Initial Lender and the Purchasing Initial Lender. If both other Lender Groups accept the Offer or a portion thereof, both will be able to participate on a pro rata basis. If both other Lender Groups decline to purchase the full principal amount of the Offer or any portion thereof, the Selling Initial Lender will have thirty (30) days to agree on a trade (an “Alternate Trade”) with a third party buyer with identical terms to the Offer for the same principal amount offered to the Purchasing Initial Lenders or any portion thereof; provided that the total consideration received by the assignor from such third party buyer may be (x) greater than or (y) up to 10% less than, in each case, the total consideration that would have been received from the Purchasing Initial Lenders under the Offer; provided, that the Selling Initial Lender shall notify the Purchasing Initial Lenders as to the outcome of such Alternate Trade at the end of such 30-day period; provided, further that, to the extent the Alternate Trade is not consummated within such 30-day period, the Term Loan interests relating to such Alternate Trade shall remain subject to the Right of First Offer.

 

(iii)         Agent shall have no obligation to monitor any Lender’s compliance with this Section 14.1(f) and may rely conclusively on the representation by such Lenders in the applicable Assignment Agreement that such assignment is in compliance with the Right of First Offer provisions.

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(g)           Notwithstanding the forgoing or any other provision of this agreement, any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement (including under its Note, if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank or any other central bank and, in the case of any Lender that is a fund, to its trustee for the benefit of its investors; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

 

14.2        [Reserved].

 

14.3        Severability of Provisions. Each provision of this Agreement shall be severable from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision.

 

14.4        Entire Agreement; Construction; Amendments and Waivers.

 

(a)            This Agreement and each of the other Loan Documents, taken together, constitute and contain the entire agreement between the Loan Parties, Agent and Lenders and supersede any and all prior agreements, negotiations, correspondence, understandings and communications between the parties, whether written or oral, respecting the subject matter hereof.

 

(b)           This Agreement is the result of negotiations between and has been reviewed by each of the Loan Parties, Agent and Lenders as of the date hereof and their respective counsel; accordingly, this Agreement shall be deemed to be the product of the parties hereto, and no ambiguity shall be construed in favor of or against any Loan Party, Agent or any Lender as a result of such provision having been written by such party. The Loan Parties, Agent and Lenders agree that they intend the literal words of this Agreement and the other Loan Documents and that no parol evidence shall be necessary or appropriate to establish the Loan Parties’, Agent’s or Lenders’ actual intentions.

 

(c)           Subject to clauses (d), (e), (f) and (g) of this Section 14.4, except as otherwise expressly set forth herein any and all amendments, modifications, discharges or waivers of, or consents to any departures from any provision of this Agreement or of any of the other Loan Documents shall not be effective without the written consent of the Required Lenders, Borrower, Agent and any other Loan Party party to the Loan Document being amended, provided however, that Borrower may amend the Disclosure Letter without the consent of the Required Lenders only as provided in Article 5; provided, however, that no such amendment, modification, discharge or waiver, unless in writing and signed by all the Supermajority Lenders, do any of the following:

 

(i)           postpone or delay any date fixed for, or reduce, waive, defer, forgive or extend any scheduled payment of interest (other than the waiver of interest at the Default Rate), fees, premiums or other amounts (other than principal) due to the Lenders (or any of them) hereunder or under any other Loan Document; and

 

(ii)          subordinate the Lien securing the Term Loans to any other Lien securing any material other Indebtedness for borrowed money except in the case of (1) any Indebtedness that is expressly permitted by this Agreement as in effect on the Closing Date to be secured by a Lien that is senior to the Lien securing the Term Loans, (2) any “debtor-in-possession” facility or (3) any other Indebtedness so long as such Indebtedness (and any fees offered in connection therewith) is offered ratably to all Lenders on the same terms and conditions.

 

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(d)           No amendment, modification, discharge or waiver, unless in writing and signed by all the Lenders (and in the case of clauses (iv)(a)(x), (iv)(a)(y) and (iv)(b), each Bank Product Provider holding Secured Obligations directly and adversely affected thereby at such time) directly and adversely affected thereby shall do any of the following:

 

(i)           increase or extend the Term Loan Commitment of such Lender;

 

(ii)          extend of the date scheduled for the payment of any principal, interest or fees;

 

(iii)         reduce the principal amount of any Term Loan, rate of interest or fees payable;

 

(iv)        (a) change the pro rata treatment of (x) any payments (including voluntary and mandatory prepayments), (y) proceeds of Collateral or (z) reductions in Term Loan Commitments and (b) amend the definition of Pro Rata Percentage;

 

(v)         amend Section 14.4(c) or this Section 14.4(d), the definition of Required Lenders, the definition of Supermajority Lenders, or any provision providing for consent or other action by all Lenders;

 

(vi)        discharge all or substantially all of the guarantees of the Loan Parties under the Loan Documents or release all or substantially all of the Collateral, in each case except as otherwise may be provided in this Agreement or the other Loan Documents; and

 

(vii)       subordinate the Term Loans to any material other Indebtedness for borrowed money except in the case of (1) any Indebtedness that is expressly permitted by this Agreement as in effect on the Closing Date to be senior in right of payment to the Term Loans, (2) any “debtor-in-possession” facility or (3) any other Indebtedness so long as such Indebtedness (and any fees offered in connection therewith) is offered ratably to all Lenders on the same terms and conditions.

 

Any waiver or consent with respect to any provision of the Loan Documents shall be effective only in the specific instance and for the specific purpose for which it was given. No notice to or demand on Borrower in any case shall entitle Borrower to any other or further notice or demand in similar or other circumstances. Any amendment, modification, waiver or consent effected in accordance with this Section 14.4 shall be binding upon Agent, Lenders and Borrower.

 

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(e)                This Agreement may be amended with the written consent of Agent, the Borrower and the Required Lenders to (i) add one or more additional credit facilities to this Agreement and to permit the extensions of credit from time to time outstanding thereunder and the outstanding principal and accrued interest and fees in respect thereof to share ratably in the benefits of this Agreement and the other Loan Documents with the Term Loans and the accrued interest and fees in respect thereof and (ii) include appropriately the Lenders holding such credit facilities in any determination of the Required Lenders.

 

(f)                Notwithstanding anything to the contrary contained in this Section 14.4 (i) Agent may amend Schedules to reflect assignments or participations entered into pursuant to Section 14.1 and (iii) Agent (at the direction of Required Lenders) and the Borrower may amend or modify this Agreement and any other Loan Document to (1) cure any ambiguity, omission, defect or inconsistency therein, (2) grant a new Lien for the benefit of the Lenders, extend an existing Lien over additional property for the benefit of the Lenders or join additional Persons as Loan Parties, and (3) to permit the extensions of credit from time to time outstanding thereunder and the accrued interest and fees in respect thereof to share ratably in the benefits of this Agreement and the other Loan Documents with the Term Loans and the accrued interest and fees in respect thereof and to include appropriately the Lenders holding such credit facilities in any determination of the Required Lenders.

 

(g)               The Warrant Agreement, the Registration Rights Agreement, any fee letter, side letter, any Control Agreement, any mortgage or similar agreement or any landlord, bailee or mortgagee agreement may be amended as provided therein and if not provided therein, by each of the parties thereto. The Warrant Agreement, the Warrants and the Registration Rights Agreement may be amended as provided in the Warrant Agreement or the Registration Rights Agreements, as applicable. Only the consent of the parties to any Bank Product Agreement relating to a Bank Product shall be required for any modification of such Bank Product Agreement.

 

14.5          Reliance. All covenants, agreements, representations and warranties made herein by the Loan Parties shall, notwithstanding any investigation by Agent and Lenders, be deemed to be material to and to have been relied upon by Agent and Lenders.

 

14.6          [Reserved].

 

14.7          Counterparts. This Agreement and each of the other Loan Documents may be executed in any number of counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Agreement or any of the other Loan Documents by telecopy or other electronic imaging means (e.g. PDF by email) shall be effective as delivery of a manually executed counterpart.

 

14.8          Survival. All covenants, representations and warranties made in this Agreement shall continue in full force and effect so long as any Obligations (other than inchoate indemnification obligations) remain outstanding. The obligation of Borrower to indemnify each Indemnified Person with respect to the expenses, damages, losses, costs and liabilities described in Section 10.3 shall survive until all applicable statute of limitations periods with respect to actions that may be brought against an Indemnified Person have run. Further, Sections 14.9 and 14.12 shall survive the termination of the Term Loan Commitment or this Agreement as will any other provision which by its terms extend beyond the payment in full in cash of the Obligations.

 

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14.9          Publicity. Agent and Lender may use Parent’s name and logo, and include a brief description of the relationship between Borrower, Parent, Agent and Lender, in Agent’s and Lender’s marketing materials.

 

14.10      Keepwell; Acknowledgement Regarding Any Supported QFCs.

 

(a)                Keepwell. Each Qualified ECP Guarantor hereby jointly and severally absolutely, unconditionally and irrevocably undertakes to provide such funds or other support as may be needed from time to time by each other Loan Party to honor all of its obligations under the this Agreement in respect of Hedge Obligations under any Secured Hedge Agreement (provided, however, that each Qualified ECP Guarantor shall only be liable under this Section 14.10(a) for the maximum amount of such liability that can be hereby incurred without rendering its obligations under this Section 14.10(a), or otherwise under this Agreement, voidable under applicable Law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount). The obligations of each Qualified ECP Guarantor under this Section 14.10(a) shall remain in full force and effect until the guarantees in respect of Hedge Obligations under each Secured Hedge Agreement have been discharged, or otherwise released or terminated in accordance with the terms of this Agreement. Each Qualified ECP Guarantor intends that this Section 14.10(a) constitute, and this Section 14.10(a) shall be deemed to constitute, a “keepwell, support, or other agreement” for the benefit of each other Loan Party for all purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

 

(b)               Acknowledgement Regarding Any Supported QFCs. To the extent that the Loan Documents provide support, through a guarantee or otherwise, for Hedging Agreements or any other agreement or instrument that is a QFC (such support “QFC Credit Support” and each such QFC a “Supported QFC”), the parties acknowledge and agree as follows with respect to the resolution power of the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the “U.S. Special Resolution Regimes”) in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Loan Documents and any Supported QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States or any other state of the United States):

 

In the event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property) were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Loan Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and the Loan Documents were governed by the laws of the United States or a state of the United States. Without limitation of the foregoing, it is understood and agreed that rights and remedies of the parties with respect to a Defaulting Lender shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support.

 

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14.11      Relationship of Parties. Borrower, Agent and Lenders acknowledge, understand and agree that the relationship between the Borrower, on the one hand, and Agent and Lenders, on the other, is, and at all times shall remain solely that of a borrower and lender. Neither Agent nor Lenders nor any of their Related Parties shall under any circumstances be construed to be a partner or joint venturer of Borrower, any other Loan Party or any of their respective Affiliates; nor shall Agent or any Lender nor any of their Related Parties under any circumstances be deemed to be in a relationship of confidence or trust or a fiduciary relationship with Borrower, any other Loan Party or any of their respective Affiliates, or to owe any fiduciary duty to Borrower, any other Loan Party or any of their respective Affiliates. Agent and Lenders do not undertake or assume any responsibility or duty to Borrower, any other Loan Party or any of their respective Affiliates to select, review, inspect, supervise, pass judgment upon or otherwise inform the Borrower, any other Loan Party or any of their respective Affiliates of any matter in connection with its or their Property, any Collateral or the operations of Borrower, any other Loan Party or any of their respective Affiliates. Borrower, each other Loan Party and their respective Affiliates shall rely entirely on their own judgment with respect to such matters, and any review, inspection, supervision, exercise of judgment or supply of information undertaken or assumed by Agent or Lenders in connection with such matters is solely for the protection of Agent and Lenders, and Borrower, any other Loan Party or any of their respective Affiliates is not entitled to rely thereon.

 

14.12      Confidentiality. Neither Agent, Lenders nor any of their employees, agents or representatives shall disclose to any third party any Confidential Information that any Loan Party or any Affiliate of any Loan Party discloses to it pursuant to the Loan Documents, except that Agent and Lenders (together with their employees, agents and representatives) (i) may disclose Confidential Information to a third party to the extent required by subpoena, civil investigative demand, interrogatories or similar legal process or otherwise as required by applicable law or regulation (including, without limitation, in connection with filings, submissions and any other similar documentation required or customary to comply with Securities and Exchange Commission filing requirements) or as requested by a governmental authority (in which case such Person, to the extent practical and permitted by law and except in connection with any request as part of a regulatory examination or with respect to any request for information by any legal, judicial, governmental, administrative, or regulatory authority that is not specific to the confidential information provided hereunder, agrees to inform the Borrower promptly thereof), (ii) may disclose Confidential Information to a potential assignee or transferee of or participant in the Loan Documents; provided that the potential assignee, transferee or participant agrees to be bound by substantially similar confidentiality obligations as Agent and Lenders under this Section 14.12, (iii) may disclose Confidential Information to their and their Affiliates’ members, partners, limited partners, lenders, investors, prospective investors, managed accounts, rating agencies, directors (or equivalent managers), officers, managers, employees, agents, independent auditors, legal counsel, accountants and other professional advisors and any other Related Parties of any Lender provided they are informed of the confidential nature of such information and advised to adhere to substantially similar confidentiality obligations as Agent or Lender as set forth in this Section, (iv) may disclose Confidential Information to regulatory authorities having jurisdiction over Agent or Lender or any assignee, transferee or participant, and (v) may disclose Confidential Information in connection with the exercise of its rights and remedies during the continuance of an Event of Default, to the extent Agent or Lenders reasonably deems necessary. For purposes hereof, “Confidential Information” is information that a Loan Party or an Affiliate of Loan Party discloses to Agent or Lenders pursuant to the Loan Documents that is not information which (i) becomes generally available to the public, other than as a result of disclosure by Agent or Lenders, (ii) was available on a non-confidential basis prior to its disclosure to Agent or Lenders by such Loan Party or such Affiliate, as applicable, (iii) becomes available to Agent or any Lender on a non-confidential basis from a source other the Loan Party or such Affiliate, as applicable; provided that neither Agent nor any Lender have actual knowledge that such third party is prohibited from disclosing such information, or (iv) is independently developed by Agent or any Lender without reference to confidential information provided by Loan Party or an Affiliate of a Loan Party. Notwithstanding the foregoing, (1) any Lender may disclose (A) the aggregate principal amount of the Term Loan, (B) the interest rate of the Term Loan, (C) the call protection applicable to the Term Loan, (D) the role of such Lender in the transactions contemplated hereby, (E) the name and logo of Parent and (F) the date on which the Closing Date actually occurs, in each case, to any potential limited partner or potential client of the applicable Lender or such Lender’s relevant Affiliates and (2) Parent grants each Lender permission to use Parent’s and its Subsidiaries’ names and logos in such Lender’s or its Affiliates’ marketing materials; provided that any such logos or other materials are used solely in a manner that is not intended to or reasonably likely to harm or disparage Parent or any of its Subsidiaries or the reputation or goodwill of any of them.

 

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14.13      Patriot Act/Freedom Act. Agent and Lenders hereby notify Parent and its Subsidiaries that pursuant to the requirements of the USA PATRIOT Act and USA FREEDOM Act, they are required to obtain, verify and record information that identifies Parent and its Subsidiaries, which information includes the name and address of Parent and its Subsidiaries and other information that will allow them to identify Parent and its Subsidiaries in accordance with the USA PATRIOT Act and the USA FREEDOM Act.

 

14.14      Governing Law; Jurisdiction; Waiver of Jury Trial. Except as otherwise expressly provided in any of the Loan Documents, New York law governs the Loan Documents without regard to principles of conflicts of law. Except to the extent otherwise set forth in the Loan Documents, each of the Loan Parties, Agent and Lenders submit to the exclusive jurisdiction of the State and Federal courts in the Borough of Manhattan in New York, New York; provided, however, that nothing in this Agreement shall be deemed to operate to preclude Agent from bringing suit or taking other legal action in any other jurisdiction to realize on the Collateral or any other security for the Obligations, or to enforce a judgment or other court order in favor of Agent or any Lender. Borrower and each other Loan Party expressly submits and consents in advance to such jurisdiction in any action or suit commenced in any such court, and Borrower and each other Loan Party hereby waives any objection that it may have based upon lack of personal jurisdiction, improper venue, or forum non conveniens and hereby consents to the granting of such legal or equitable relief as is deemed appropriate by such court. Borrower and each other Loan Party hereby waives personal service of the summons, complaints, and other process issued in such action or suit and agrees that service of such summons, complaints, and other process may be made by registered or certified mail addressed to Borrower at the address set forth in, or subsequently provided by Borrower in accordance with, Article 11 of this Agreement and that service so made shall be deemed completed upon the earlier to occur of Borrower’s or such other Loan Party’s actual receipt thereof or three (3) days after deposit in the U.S. mails, proper postage prepaid.

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TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BORROWER, EACH OTHER LOAN PARTY, AGENT AND EACH LENDER EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR ALL PARTIES TO ENTER INTO THIS AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL. This Section 14.14 shall survive the termination of this Agreement.

 

14.15      Replacement of Lender. Within five (5) Business Days after any failure by any Lender (a “Non-Consenting Lender”) to consent to a requested amendment, waiver or modification to any Loan Document in which Required Lenders have already consented to such amendment, waiver or modification but the consent of each Lender (or each Lender directly and adversely affected thereby, as applicable) is required with respect thereto, the Borrower or the Required Lenders may, at its or their option, as applicable, notify Agent and such Non-Consenting Lender of the Borrower’s intention to obtain, at the Borrower’s expense, a replacement Lender (“Replacement Lender”) for such Non-Consenting Lender, which Replacement Lender shall be reasonably satisfactory to the Required Lenders. In the event the Borrower or Required Lenders, as applicable, obtain a Replacement Lender within five (5) Business Days following notice of its or their intention to do so, the Non-Consenting Lender shall sell and assign its Term Loans and Term Loan Commitments to such Replacement Lender, at par. In the event that a replaced Non-Consenting Lender does not execute an Assignment Agreement pursuant to Section 14.1 within five (5) Business Days after receipt by such replaced Non-Consenting Lender of notice of replacement pursuant to this Section 14.15 and presentation to such replaced Non-Consenting Lender of an Assignment Agreement evidencing an assignment pursuant to this Section 14.15, the Borrower or the Agent (at the request of the Required Lenders) shall be entitled (but not obligated) to execute such an Assignment Agreement on behalf of such replaced Non-Consenting Lender, and any such Assignment Agreement so executed by the Borrower (if applicable), the Replacement Lender and Agent, shall be effective for purposes of this Section 14.15 and Section 14.1. Notwithstanding the foregoing, with respect to a Lender that is a Defaulting Lender, Agent may (and shall at the request of the Required Lenders), but shall not be obligated to, obtain a Replacement Lender and execute an Assignment Agreement on behalf of such Defaulting Lender at any time with two (2) Business Days’ prior notice to such Lender (unless notice is not practicable under the circumstances) and cause such Lender’s Term Loans and Term Loan Commitments to be sold and assigned, in whole or in part, at par. Upon any such assignment and payment and compliance with the other provisions of Section 14.1, such replaced Lender shall no longer constitute a “Lender” for purposes hereof; provided, any rights of such replaced Lender to indemnification hereunder shall survive.

 

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14.16      Counterparts. This Agreement and any notices delivered under this Agreement may be executed by means of (i) an electronic signature that complies with the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act or any other similar state laws based on the Uniform Electronic Transactions Act; (ii) an original manual signature; or (iii) a faxed, scanned, or photocopied manual signature. Each electronic signature or faxed, scanned, or photocopied manual signature shall for all purposes have the same validity, legal effect, and admissibility in evidence as an original manual signature. The words “execution,” “execute”, “signed,” “signature,” and words of like import in or related to any document to be signed in connection with this Agreement and the transactions contemplated hereby shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any Applicable Law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act. This Agreement may be executed in any number of counterparts, and it is not necessary that the signatures of all parties hereto be contained on any one counterpart hereof, each counterpart will be deemed to be an original, and all together shall constitute one and the same document.

 

14.17      Acknowledgement and Consent to Bail-In of Affected Financial Institutions. Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any Affected Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the write-down and conversion powers of the applicable Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by: (a) the application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an Affected Financial Institution, and (b) the effects of any Bail-In Action on any such liability, including, if applicable: (i) a reduction in full or in part or cancellation of any such liability, (ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document, or (iii) the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of the applicable Resolution Authority.

 

14.18      Consent to Intercreditor Agreement. Each Lender, by its acceptance of the benefits of this Agreement and the other Collateral Documents creating Liens to secure the Obligations:

 

(a)                acknowledges that it has received a copy of the Intercreditor Agreement and is satisfied with the terms and provisions thereof;

 

(b)               authorizes and instructs Agent to (i) enter into the Intercreditor Agreement, as Agent and on behalf of such Lender, (ii) to exercise all of Agent’s rights and to comply with all of its obligations under the Intercreditor Agreement and to take all other actions necessary to carry out the provisions and intent thereof and (iii) to take actions on its behalf in accordance with the terms of the Intercreditor Agreement;

 

119

 

(c)                agrees that it will be bound by and will take no actions contrary to the provisions of the Intercreditor Agreement, as if it was a signatory thereto;

 

(d)               consents to the treatment of Liens provided for under the Intercreditor Agreement and in furtherance thereof authorizes the Agent, to subordinate the liens on the Collateral securing the Obligations (other than liens on Term Loan Priority Collateral which may only be subordinated in accordance as permitted in Section 14.18) in accordance with the terms set forth in the Intercreditor Agreement;

 

(e)                authorizes and directs Agent to execute and deliver, in each case on behalf of such Secured Party and without any further consent or authorization from such Lender, any amendments, supplements or other modifications of the Intercreditor Agreement that the Borrower may from time to time request to give effect to any incurrence, amendment, or refinancing of any Indebtedness incurred pursuant to clause (s) of Permitted Indebtedness; and

 

(f)                agrees that no Lender shall have any right of action whatsoever against Agent as a result of any action taken by Agent pursuant to this Section 14.18 or in accordance with the terms of the Intercreditor Agreement.

 

14.19      Intercreditor Agreement Governs. This Agreement and the other Loan Documents are subject to the terms and conditions set forth in the Intercreditor Agreement, in all respects and, in the event of any conflict between the terms of the Intercreditor Agreement and this Agreement, the terms of the Intercreditor Agreement shall govern. Notwithstanding anything herein to the contrary, the lien and security interest granted to the Agent or any Intermediation Facility Agent, as applicable, pursuant to any Loan Document or any Intermediation Facility Document, and the exercise of any right or remedy in respect of the Collateral by the Agent or any Intermediation Facility Agent, as applicable hereunder, under any other Loan Document, under any Intermediation Facility Document and any other agreement entered into in connection with the foregoing are subject to the provisions of the Intercreditor Agreement and in the event of any conflict between the terms of the Intercreditor Agreement, this Agreement, any other Loan Document, any Intermediation Facility Document and any other agreement entered into in connection with the foregoing, the terms of the Intercreditor Agreement shall govern and control with respect to the exercise of any such right or remedy or the Loan Parties’ covenants and obligations

 

14.20      Myrtle Grove Acknowledgement. The parties hereto hereby acknowledge and agree that the transactions under the Myrtle Grove Purchase Agreement shall have been deemed to be occurred contemporaneously with the entry into this Agreement.

 

[Signature page follows]

 

120

 

In Witness Whereof, the parties hereto have caused this Agreement to be executed as of the date first above written.

 

PARENT: VERTEX ENERGY INC.
     
  By: /s/ Benjamin P. Cowart        
  Name: Benjamin P. Cowart
  Title: President and Chief Executive Officer 
     
BORROWER: VERTEX REFINING ALABAMA LLC
     
  By: /s/ Benjamin P. Cowart 
  Name: Benjamin P. Cowart
  Title: President and Chief Executive Officer 
     
SUBSIDIARY GUARANTORS: VERTEX ENERGY OPERATING, LLC
     
  By: /s/ Benjamin P. Cowart 
  Name: Benjamin P. Cowart
  Title: President and Chief Executive Officer 
     
  VERTEX REFINING, LA, LLC
     
  By: /s/ Benjamin P. Cowart 
  Name: Benjamin P. Cowart
  Title: President and Chief Executive Officer 
     
  VERTEX RECOVERY MANAGEMENT, LLC
     
  By: /s/ Benjamin P. Cowart 
  Name: Benjamin P. Cowart
  Title: President and Chief Executive Officer 
     

 

[Signature Page to Vertex Refining Alabama Loan and Security Agreement]

 

 

  VERTEX REFINING NV, LLC
     
  By: /s/ Benjamin P. Cowart
  Name: Benjamin P. Cowart 
  Title: President and Chief Executive Officer 
     
  VERTEX SPLITTER CORPORATION
     
  By: /s/ Benjamin P. Cowart
  Name: Benjamin P. Cowart
  Title: Director 
     
  VERTEX REFINING MYRTLE GROVE LLC
     
  By: /s/ Benjamin P. Cowart 
  Name: Benjamin P. Cowart 
  Title: President and Chief Executive Officer 
     
  CRYSTAL ENERGY, LLC
     
  By: /s/ Benjamin P. Cowart 
  Name: Benjamin P. Cowart 
  Title: President
     
  VERTEX ACQUISITION SUB, LLC
     
  By: /s/ Benjamin P. Cowart 
  Name: Benjamin P. Cowart 
  Title: President and Chief Executive Officer 
     
  BANGO OIL LLC
   
  By: /s/ Benjamin P. Cowart 
  Name: Benjamin P. Cowart 
  Title: President and Chief Executive Officer 
     

 

[Signature Page to Vertex Refining Alabama Loan and Security Agreement]

 

 

 

  CEDAR MARINE TERMINALS, LP
     
  By: /s/ Benjamin P. Cowart
  Name: Benjamin P. Cowart
  Title: President and Chief Executive Officer 
     
  CROSSROAD CARRIERS, L.P.
     
  By: /s/ Benjamin P. Cowart 
  Name: Benjamin P. Cowart
  Title: President and Chief Executive Officer 
     
  VERTEX RECOVERY, L.P.
     
  By: /s/ Benjamin P. Cowart 
  Name: Benjamin P. Cowart
  Title: President and Chief Executive Officer 
     
  H&H OIL, L.P.
     
  By: /s/ Benjamin P. Cowart 
  Name: Benjamin P. Cowart
  Title: President and Chief Executive Officer 
     

 

 

[Signature Page to Vertex Refining Alabama Loan and Security Agreement]

 

 

  VERTEX II GP, LLC
     
  By: /s/ Benjamin P. Cowart
  Name: Benjamin P. Cowart
  Title: President and Chief Executive Officer 
     

 

  VERTEX MERGER SUB, LLC
     
  By: /s/ Benjamin P. Cowart
  Name: Benjamin P. Cowart
  Title: President and Chief Executive Officer 
     

 

  TENSILE-MYRTLE GROVE ACQUISITION CORPORATION
     
  By: /s/ Benjamin P. Cowart
  Name: Benjamin P. Cowart
  Title: President and Chairman of the Board 
     

 

 

 

In Witness Whereof, the parties hereto have caused this Agreement to be executed as of the date first above written.

 

  LENDERS:
     
  WHITEBOX MULTI-STRATEGY PARTNERS, LP
     
  By: /s/ Lisa Conrad 
    Name:  Lisa Conrad
    Title:    General Counsel
     
  WHITEBOX RELATIVE VALUE PARTNERS, LP
     
  By: /s/ Lisa Conrad 
    Name:  Lisa Conrad
    Title:    General Counsel
     
  WHITEBOX GT FUND, LP
     
  By: /s/ Lisa Conrad 
    Name:  Lisa Conrad
    Title:    General Counsel
     
  PANDORA SELECT PARTNERS, LP
     
  By: /s/ Lisa Conrad 
    Name:  Lisa Conrad
    Title:    General Counsel
     

 

[Signature Page to Vertex Refining Alabama Loan and Security Agreement]

 

 

 

 

  HIGHBRIDGE TACTICAL CREDIT MASTER FUND, L.P.,
     
  By: Highbridge Capital Management, LLC,
    as Trading Manager and not in its individual capacity
     
  By: /s/ Jonathan Segal 
    Name:  Jonathan Segal
    Title:    Managing Director, Co-Chief Investment Officer
     

 

[Signature Page to Vertex Refining Alabama Loan and Security Agreement]

 

 

 

 

  BLACKROCK DIVERSIFIED PRIVATE DEBT FUND MASTER LP
     
  By: BlackRock Financial Management, Inc.,
    its manager

 

  By:   /s/ Zach Viders 
    Name: Zach Viders 
    Title: Authorized Signatory 

 

  GCO II Aggregator 2 L.P.
     
  By: BlackRock Financial Management, Inc.,
    its manager
     

  By:   /s/ Zach Viders 
    Name: Zach Viders 
    Title: Authorized Signatory 

 

[Signature Page to Vertex Refining Alabama Loan and Security Agreement]

 

 

 

 

  CHAMBERS ENERGY CAPITAL IV, LP
     
  By: CEC Fund IV GP, LLC, its general partner
     
  By: /s/ Robert Hendricks 
    Name:  Robert Hendricks
    Title:    Partner
     

[Signature Page to Vertex Refining Alabama Loan and Security Agreement]

 

 

 

  CROWDOUT CREDIT OPPORTUNITIES FUND LLC
     
  By: /s/ Alexander Schoenbaum 
    Name:  Alexander Schoenbaum
    Title:    Managing Member
     
  CROWDOUT CAPITAL LLC
     
  By: /s/ Alexander Schoenbaum 
    Name:  Alexander Schoenbaum
    Title:    Managing Member

 

[Signature Page to Vertex Refining Alabama Loan and Security Agreement]

 

 

 

 

  AGENT:
       
  CANTOR FITZGERALD SECURITIES, as Agent
       
  By:   /s/ James Buccola 
    Name: James Buccola 
    Title: Head of Fixed Income 
       

 

[Signature Page to Vertex Refining Alabama Loan and Security Agreement]

 

 

 

List of Schedules and Exhibits

 

Schedule 1 Subsidiaries
Schedule 2.1(a) Term Loan Commitments
Schedule 6.18 Project Milestones
Schedule 6.19 Post-Closing Matters
Schedule 7.15 Burdensome Agreements
Exhibit A Collateral Description
Exhibit B-1 Form of Borrower Joinder Agreement
Exhibit B-2 Form of Guarantor Joinder Agreement
Exhibit C Form of Assignment
Exhibit D Form of Notice of Borrowing
Exhibit E Form of Note
Exhibit F Form of Intellectual Property Security Agreement
Exhibit G Form of Compliance Certificate
Exhibit H Form of Solvency Certificate
Exhibit I Form of Tax Compliance Certificates
Exhibit J Form of Landlord Waiver

 

Loan and Security Agreement – Vertex Refining Alabama LLC

 

Schedule 2.1(a)
Term Loan Commitments

 

Initial Lender Name Term Loan Commitment1
Whitebox Multi-Strategy Partners, LP $13,500,000.00
Whitebox Relative Value Partners, LP $6,700,000.00
Whitebox GT Fund, LP $1,200,000.00
Pandora Select Partners, LP $1,100,000.00
Highbridge Tactical Credit Master Fund, L.P. $22,500,000.00
GCO II Aggregator 2 L.P. $46,443,724.34
BlackRock Diversified Private Debt Fund Master LP $18,556,275.66
Chambers Energy Capital IV, LP $7,500,000.00
CrowdOut Credit Opportunities Fund LLC $1,000,000.00
CrowdOut Capital LLC $6,500,000.00
TOTAL $125,000,000.00

 

 

1       For the avoidance of doubt, it is understood that these amounts were funded on the Escrow Funding Date net of the Upfront Fee (as defined in the Fee Letter).

 

Loan and Security Agreement – Vertex Refining Alabama LLC

 

Post-Closing Schedule - 1

 

 

 

Vertex Energy Inc. 8-K

Exhibit 10.2

 

 

Intellectual Property Security Agreement

 

This Intellectual Property Security Agreement is made as of April 1, 2022 (this “IP Security Agreement”), by and between Vertex Energy Operating, LLC, a Texas limited liability company (“Grantor”), and Cantor Fitzgerald Securities, as administrative and collateral agent for Lenders (as defined below) (in such capacities, the “Agent”).

 

RECITALS

 

A.       Agent, Grantor and the lender(s) party thereto (collectively, the “Lenders”) are entering into that certain Loan and Security Agreement dated as of April 1, 2022 (as the same may be modified, amended, supplemented, restated, amended and restated, superseded or otherwise modified from time to time, the “LSA”) whereby the Lenders are to provide Term Loans and other financial accommodations to Grantor pursuant to the terms of the LSA. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the LSA.

 

B.       It is a condition precedent to the effectiveness of the LSA that the parties hereto shall have executed and delivered this IP Security Agreement.

 

Now, Therefore, the parties hereto agree as follows:

 

1.        Grant of Security Interest. As collateral security for the prompt and complete payment and performance of all of Grantor’s present or future Obligations under the Loan Documents, Grantor hereby grants Agent, for itself and the benefit of the Lenders, a security interest in and to Grantor’s entire right, title and interest in, to and under the following, now or hereafter existing, created, acquired or held by Grantor (all of which shall collectively be called the “IP Collateral”):

 

a.Any and all Copyrights, including, without limitation, those U.S. applications and registrations set forth on Exhibit A attached hereto and incorporated herein by this reference (collectively, the “Copyrights”).

 

b.Any and all Patents, including, without limitation, those U.S. applications and issued patents set forth on Exhibit B attached hereto and incorporated herein by this reference (collectively, the “Patents”);

 

c.Any and all Trademarks, including, without limitation, those U.S. applications and registrations set forth on Exhibit C attached hereto and incorporated herein by this reference (collectively, the “Trademarks”);

 

d.Any and all claims for damages by way of past, present and future infringement of any of the rights included above, with the right, but not the obligation, to sue for and collect such damages for said use or infringement of the intellectual property rights identified above;

 

e.All amendments, renewals and extensions of any of the Copyrights, Patents or Trademarks; and

 

f.All proceeds and products of the foregoing.

 

Notwithstanding the foregoing, in no event shall the IP Collateral include: any intent-to use Trademark applications prior to the filing of a “Statement of Use”, “Amendment to Allege Use” or similar filing with regard thereto, to the extent and solely during the period, in which the grant of a security interest therein may impair the validity or enforceability of any Trademark that may issue from such intent to use Trademark application under applicable law.

 

1.                          Authorization and Request. Grantor authorizes and requests that the Register of Copyrights and the Commissioner of Patents and Trademarks record this security interest.

 

 

 

 

2.                          Counterparts. This IP Security Agreement may be executed in any number of counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this IP Security Agreement by telecopy or other electronic imaging means (e.g. PDF by email) shall be effective as delivery of a manually executed counterpart. 

 

3.                          Governing Law. New York law governs this IP Security Agreement without regard to principles of conflicts of law. 

 

4.                          Conflict. In the event of a conflict between any term and/or provision contained in this IP Security Agreement with any term and/or provision contained in any of LSA, the term and/or provision of the LSA shall govern. 

 

5.                          Cantor Fitzgerald Securities is entering into this IP Security Agreement solely in its capacity as Agent and shall be entitled to all of the rights, privileges and immunities set forth in the LSA in acting hereunder.

 

[Remainder of page intentionally left blank]

 

 

 

 

IN WITNESS WHEREOF, the Grantor has caused this Intellectual Property Security Agreement to be executed and delivered by its duly authorized officer as of the date first set forth above. 

 

  VERTEX ENERGY OPERATING, LLC, as Grantor
     
  By: /s/ Benjamin P. Cowart
  Name: Benjamin P. Cowart
  Title: President and Chief Executive Officer

 

 

 

 

 

ACCEPTED AND AGREED

as of the date first above written:

 

CANTOR FITZGERALD SECURITIES, as Agent

 

By: /s/ James Buccola  
Name: James Buccola  
Title: Head of Fixed Income  

 

 

 

 

Exhibit A

 

Copyrights

 

None.

 

 

 

 

Exhibit B

 

Patents

 

Patent Owner Issue Date
“System for producing an American Petroleum Institute Standards Group III Base Stock from vacuum gas oil” (US #10,421,916 B2) Vertex Energy 9/24/2019
“System for producing an American Petroleum Institute Standards Group III Base Stock from vacuum gas oil” (US #10,723,961 B2) Vertex Energy 7/28/2020

 

 

 

 

Exhibit C

 

Trademarks

 

Trademark Owner Registration Date Registration Number
VTX Vertex Energy Operating, LLC August 20, 2019 5839953
Vertex (Design) Vertex Energy Operating, LLC April 4, 2017 5177437
Producing Tomorrow’s Energy Vertex Energy Operating, LLC March 28, 2017 5172491
Vertex Vertex Energy Operating, LLC July 26, 2016 5007123

 

 

 

 

Vertex Energy Inc. 8-K

Exhibit 10.3

 

 

COLLATERAL PLEDGE AGREEMENT

 

This COLLATERAL PLEDGE AGREEMENT (as the same may be amended, restated, amended and restated, supplemented or otherwise modified from time to time, this “Pledge Agreement”), dated as of April 1, 2022, is made by and among Vertex Energy Inc., a Nevada corporation (“Parent”), Vertex Refining Alabama LLC, a Delaware limited liability company (“Borrower”), each of Parent’s direct and indirect subsidiaries from time to time party hereto (collectively, the “Subsidiary Guarantors”; the Subsidiary Guarantors, Parent, Borrower and together with any other Person that signs below as a “Pledgor” and joins this Pledge Agreement as a Pledgor in accordance with Section 25, collectively, the “Pledgors” and each a “Pledgor”) and Cantor Fitzgerald Securities, in its capacity as collateral agent for the Secured Parties (in such capacity, together with its successors in such capacity, the “Agent”).

 

W I T N E S S E T H:

 

WHEREAS, pursuant to that certain Loan and Security Agreement, dated as of the date hereof, by and among Parent, Borrower, the Subsidiary Guarantors, Agent and the lenders from time to time party thereto (as the same may be amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Loan Agreement”), such lenders (the “Lenders”) have agreed to make a Term Loan to Borrower on the terms and conditions set forth in the Loan Agreement; and

 

WHEREAS, in order to induce Agent and Lenders to enter into the Loan Agreement and the other Loan Documents and to induce Lenders to make the Term Loan provided for in the Loan Agreement, each Pledgor has agreed to pledge the Pledged Collateral (as defined below) to Agent, for the benefit of itself and the other Secured Parties, in accordance herewith.

 

NOW, THEREFORE, in consideration of the premises, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Pledgors, jointly and severally, hereby agree with Agent as follows:

 

1.             Definitions. Unless otherwise defined herein, terms defined in the Loan Agreement are used herein as therein defined, and the following shall have (unless otherwise provided elsewhere in this Pledge Agreement) the following respective meanings (such meanings being equally applicable to both the singular and plural form of the terms defined):

 

Act” means the provisions of the Securities Act of 1933, as amended from time to time, and any successor statute thereof.

 

Bankruptcy Code” means title 11, United States Code, as amended from time to time, and any successor statute thereto.

 

Pledge Agreement” has the meaning set forth in the preamble hereto.

 

Pledged Collateral” has the meaning assigned to such term in Section 2 hereof.

 

Pledged Entity” means an issuer of Pledged Securities or holder of Pledged Indebtedness, in each case, listed on Schedule I hereto.

 

 

 

 

Pledged Indebtedness” means the Indebtedness owing to a Pledgor evidenced by promissory notes and instruments including those listed on Schedule I hereto.

 

Pledged Securities” means all Equity Interests of a Pledged Entity now owned or hereafter acquired by a Pledgor, including without limitation those Equity Interests listed on Schedule I.

 

Termination Date” means the date of payment in full in cash of all outstanding Secured Obligations (other than inchoate indemnity obligations).

 

UCC” means the Uniform Commercial Code as enacted in the State of New York as in effect from time to time.

 

2.             Pledge. Each Pledgor hereby pledges and grants to Agent, for its benefit and for the benefit of the other Secured Parties, a first priority security interest in all of the following property of such Pledgor, whether now existing or hereafter arising or acquired (collectively, the “Pledged Collateral”):

 

(a)        the Pledged Securities and all documents and certificates representing or evidencing the Pledged Securities, all rights, privileges, authority and powers of Pledgor as owner or holder of the Pledged Securities (including rights arising under the bylaws, articles and similar organizational documents) and all dividends, distributions, cash, instruments and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the Pledged Securities and all rights to receive payment of principal and interest on loans made by a Pledgor to a Pledged Entity and all accessions to, substitutions and replacements for and proceeds and products of the foregoing, together with all books, records and documents pertaining to the foregoing;

 

(b)        any additional Equity Interests of a Pledged Entity from time to time acquired by Pledgor in any manner (which Equity Interests shall be deemed to be part of the Pledged Securities), and the certificates representing such additional Equity Interests, and all dividends, distributions, cash, instruments and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such Equity Interests;

 

(c)        the Pledged Indebtedness and the promissory notes or instruments evidencing the Pledged Indebtedness, and all interest, cash, instruments and other property and assets from time to time received, receivable or otherwise distributed in respect of the Pledged Indebtedness; and

 

(d)        all additional Indebtedness arising after the date hereof and owing to Pledgor and evidenced by promissory notes or other instruments, together with such promissory notes and instruments, and all interest, cash, instruments and other property and assets from time to time received, receivable or otherwise distributed in respect of that Indebtedness.

 

provided, that the grant of a security interest herein shall not extend to, and the term “Pledged Collateral” shall not include, any Excluded Property.

 

 

 

 

3.             Security for Secured Obligations. This Pledge Agreement secures, and the Pledged Collateral is security for, the prompt payment in full when due, whether at stated maturity, by acceleration or otherwise, and performance of all Secured Obligations of any kind under or in connection with the Loan Agreement and the other Loan Documents and all Secured Obligations of each Pledgor now or hereafter existing under this Pledge Agreement including, without limitation, all reasonable fees, costs and expenses of Agent and Lenders in connection with collection actions hereunder or otherwise.

 

4.             Delivery of Pledged Collateral. All certificates and all promissory notes and instruments evidencing the Pledged Collateral shall be delivered to Agent for its benefit and the benefit of the other Secured Parties. All certificated Pledged Securities shall be accompanied by duly executed instruments of transfer or assignment in blank, all in form and substance satisfactory to the Required Lenders and all promissory notes or other instruments evidencing the Pledged Indebtedness shall be endorsed by the applicable Pledgor.

 

5.             Control Agreement with Issuer. Except for Pledged Collateral held in any Securities Account, if any Pledged Collateral constitutes uncertificated ownership interests, each Pledgor shall cause each Pledged Entity to duly authorize, execute, and deliver to Agent on the date hereof an agreement in favor of the Agent, for the benefit of itself and the other Secured Parties, substantially in the form of Exhibit B (appropriately completed to the satisfaction of Required Lenders and with such modifications, if any, as shall be satisfactory to Required Lenders) pursuant to which each Pledged Entity agrees, upon the occurrence and during the continuance of an Event of Default, to comply with any and all instructions regarding the Pledged Securities originated by Agent without further consent by any Pledgor and not to comply with instructions regarding the Pledged Securities originated by any other Person.

 

6.             Representations and Warranties. Each Pledgor represents and warrants to Agent and each other Secured Party that:

 

(a)         Such Pledgor is, and at the time of delivery of the Pledged Securities to Agent will be, the holder of record and the sole beneficial owner of the Pledged Collateral pledged by such Pledgor free and clear of any Lien, voting trust agreements or other pledges thereon or affecting the title thereto, except for any Lien created by this Pledge Agreement and Permitted Liens; such Pledgor is and at the time of delivery of the Pledged Indebtedness to Agent will be, the sole owner of such Pledged Collateral free and clear of any Lien thereon or affecting title thereto, except for any Lien created by this Pledge Agreement and Permitted Liens;

 

(b)         All of the Pledged Securities have been duly authorized, validly issued and are fully paid and non-assessable (to the extent such concepts are relevant with respect to such Pledged Securities); the Pledged Indebtedness has been duly authorized, authenticated or issued and delivered by the obligor and is the legal, valid and binding obligations of the obligor under such Pledged Indebtedness (subject to any bankruptcy, insolvency or other equitable right or limitation), and neither the obligor nor Pledgor is in default thereunder;

 

 

 

 

(c)         Except for (i) restrictions and limitations imposed by the Loan Documents or securities laws generally or by Permitted Liens and (ii) in the case of Pledged Securities of Persons that are not wholly-owned Subsidiaries, transfer restrictions that exist at the time of acquisition of Equity Interests in such Person, such Pledgor has the right and requisite authority to pledge, assign, transfer, deliver, deposit and set over the Pledged Collateral pledged by such Pledgor to Agent, for the benefit of itself and the other Secured Parties, as provided herein;

 

(d)         None of the Pledged Securities or Pledged Indebtedness has been issued or transferred in violation of the securities registration, securities disclosure or similar laws of any jurisdiction to which such issuance or transfer may be subject;

 

(e)         All of the Pledged Securities listed on Schedule I hereto are presently owned by such Pledgor and are either presently represented by the certificates listed on Schedule I hereto or, if there is no certificate, it is so noted. As of the date hereof, there are no existing options, warrants, calls or commitments of any character whatsoever relating to the Pledged Securities;

 

(f)          No consent, approval, authorization or other order or other action (other than any already taken) by, and, other than the filing of UCC financing statements pursuant to this Pledge Agreement, no notice to or filing with, any Governmental Authority or any other Person is required (i) for the pledge by such Pledgor of the Pledged Collateral pursuant to this Pledge Agreement or for the execution, delivery or performance of this Pledge Agreement by such Pledgor, or (ii) for Agent’s exercise of the voting or other rights provided for in this Pledge Agreement or the remedies in respect of the Pledged Collateral pursuant to this Pledge Agreement, except as may be required in connection with such disposition by laws affecting the offering and sale of securities generally;

 

(g)         The pledge, assignment and delivery of the Pledged Collateral pursuant to this Pledge Agreement will create, upon delivery, a valid first priority Lien on and a first priority perfected security interest in favor of Agent, for itself and the benefit of other Secured Parties, on the Pledged Collateral and the proceeds thereof, securing the payment of the Secured Obligations, subject to Permitted Liens;

 

(h)         This Pledge Agreement has been duly authorized, executed and delivered by Pledgor and constitutes a legal, valid and binding obligation of Pledgor enforceable against Pledgor in accordance with its terms, subject to any bankruptcy, insolvency or other equitable right or limitation;

 

(i)          The Pledged Securities constitute the percentage of the issued and outstanding Equity Interests of each Pledged Entity as set forth in Schedule I;

 

(j)          No action has been commenced or threatened in writing that would reasonably be expected to prohibit or interfere with the execution and delivery of this Pledge Agreement or the performance or discharge of the obligations, duties, covenants, agreements and liabilities contained herein; and

 

(k)         None of the Pledged Indebtedness is subordinated in right of payment to other Indebtedness (except for the Secured Obligations, if applicable, and Permitted Liens) or subject to the terms of an indenture.

 

 

 

 

The representations and warranties set forth in this Section 6 shall survive the execution and delivery of this Pledge Agreement.

 

7.             Covenants. Each Pledgor covenants and agrees that, subject to Section 14 hereof, until the Termination Date (which covenants are in addition to and not in lieu of other applicable provisions of the Loan Agreement):

 

(a)         Without Agent’s prior written consent, such Pledgor will not sell, assign, transfer, pledge, or otherwise encumber any of its rights in or to the Pledged Collateral, or any unpaid dividends, interest or other distributions or payments with respect to the Pledged Collateral or grant a Lien in the Pledged Collateral, unless in each case otherwise permitted by the Loan Agreement or any other Loan Document;

 

(b)         Such Pledgor will, at its own expense, promptly execute, acknowledge and deliver all such instruments and take all such actions as are necessary or that Agent from time to time may reasonably request in order to ensure to Agent and the other Secured Parties the benefits of the Liens in and to the Pledged Collateral intended to be created by this Pledge Agreement, including the filing of any necessary UCC financing statements or the equivalent listing such Pledgor as the “debtor” and Agent as the “secured party” and giving a description of such Pledgor’s Pledged Collateral as the “collateral” covered by such financing statement, including, if the Agent or the Required Lenders shall so elect and if applicable, a description of the Pledged Collateral as “all assets of the Debtor whether now owned or existing or at any time hereafter acquired or arising, or in which Debtor now has or at any time in the future may acquire any right, title or interest, and wheresoever located, including all accessions thereto and products and proceeds thereof”, or words of similar effect) in such jurisdictions, and to file any and all amendments or financing change statements thereto and continuations thereof, as Agent (at the direction of the Required Lenders) may from time to time determine to be necessary, prudent or desirable in order to perfect any security interest granted hereunder under the UCC, or the Uniform Commercial Code as enacted in any jurisdiction applicable to the perfection and/or enforcement of Agent’s liens in the Pledged Collateral, which may be filed by Agent (or its designee) with or (to the extent permitted by law) without the signature of such Pledgor, and will cooperate with Agent, at such Pledgor’s own expense, in obtaining all necessary approvals and making all necessary filings under federal, state, local or foreign law in connection with such Liens or any sale or transfer of the Pledged Collateral;

 

(c)         Such Pledgor has and will defend the title to the Pledged Collateral and Agent’s Liens in the Pledged Collateral against the claim of any Person and will maintain and preserve such Liens and will do or cause to be done all things reasonably necessary to preserve and to keep in full force and effect its interest in the Pledged Collateral;

 

 

 

 

(d)         Other than in the case of Pledged Securities held in a Securities Account, such Pledgor will, upon obtaining ownership of any additional Pledged Indebtedness in an aggregate principal amount in excess of $250,000 and/or any Pledged Securities, which Pledged Indebtedness and/or Pledged Securities are not already Pledged Collateral, concurrently with the delivery of a Compliance Certificate pursuant to Section 6.4 of the Loan Agreement, deliver to Agent a Pledge Amendment, duly executed by Pledgor, in substantially the form of Exhibit A hereto (a “Pledge Amendment”) in respect of any such additional Pledged Indebtedness and/or any Pledged Securities, pursuant to which Pledgor shall pledge to Agent, for itself and the benefit of the other Secured Parties, all of such additional Pledged Indebtedness and/or any Pledged Securities, whereupon Schedule I shall be deemed updated to include such Pledged Collateral. Pledgor hereby authorizes Agent to attach each Pledge Amendment to this Pledge Agreement and agrees that all Pledged Securities and Pledged Indebtedness listed on any Pledge Amendment delivered to Agent shall for all purposes hereunder be considered Pledged Collateral; provided that the failure to provide any such Pledge Amendment shall not affect the validity of such pledge of Pledged Indebtedness and/or Pledged Securities, as applicable;

 

(e)         Such Pledgor shall cooperate in all reasonable respects with Agent’s efforts to preserve the Pledged Collateral (without creating any obligation on Agent to do so) and to take such actions to preserve the Pledged Collateral as Agent may in good faith direct; and

 

(f)          Such Pledgor consents to the admission of Agent, and its assigns or designees, as a member, partner or stockholder, as applicable, of the Pledged Entity upon Agent’s acquisition of any of the Pledged Securities as result of Agent’s exercise of remedies following the occurrence and continuance of an Event of Default (subject to any applicable cure periods with respect thereto).

 

8.             Pledgor’s Rights. As long as no Event of Default shall have occurred and be continuing and until written notice shall be given to the Pledgors in accordance with Section 9(a) hereof:

 

(a)         Each Pledgor shall have the right, from time to time, to vote and give consents with respect to the Pledged Collateral, or any part thereof for all purposes not inconsistent with the provisions of this Pledge Agreement, the Loan Agreement or any other Loan Document; provided, however, that no vote shall be cast, and no consent shall be given or action taken, which would have the effect of materially and adversely effecting Agent’s position or interest in respect of the Pledged Collateral or which would authorize, effect or consent to (unless and to the extent expressly permitted by the Loan Agreement) any of the following:

 

(i)         the dissolution or liquidation, in whole or in part, of a Pledged Entity;

 

(ii)        the consolidation or merger of a Pledged Entity with any other Person;

 

(iii)       the sale, disposition or encumbrance of all or substantially all of the assets of a Pledged Entity, except for the granting of Liens in favor of Agent, for itself and the benefit of the other Secured Parties and except for Permitted Liens;

 

(iv)       any change in the authorized number of shares, the stated capital or the authorized share capital of a Pledged Entity or the issuance of any additional shares of its Equity Interests; or

 

 

 

 

(v)        the alteration of the voting rights with respect to the Equity Interests of a Pledged Entity;

 

(b)         each Pledgor shall be entitled, from time to time, to collect and receive for its own use all dividends, interest, principal or other distributions paid on or distributed in respect of the Pledged Securities to the extent not in violation of the this Pledge Agreement or Loan Agreement other than any non-cash dividends, interest, principal or other distributions that would constitute Pledged Securities, whether received, receivable or otherwise distributed in respect of, or in exchange for, any Pledged Securities; and (c) all dividends, interest, principal or other distributions (other than such dividends, interest, principal or other distributions permitted to be paid to each Pledgor in accordance with clause (b) above), whenever paid or made, shall, to the extent constituting Pledged Collateral, be delivered to Agent to hold as Pledged Collateral for its and the other Secured Parties’ benefit, and shall, if received by such Pledgor, be received in trust for the benefit of Agent and the other Secured Parties, be segregated from the other property or funds of such Pledgor, and be delivered to Agent as Pledged Collateral in the same form as so received (with any necessary indorsement).

 

9.             Defaults and Remedies; Proxy.

 

(a)         Upon the occurrence of an Event of Default and during the continuation of such Event of Default, and with written notice to Borrower, Agent (personally or through an agent) is hereby authorized and empowered to transfer and register in its name or in the name of its nominee the whole or any part of the Pledged Collateral, to exchange certificates or instruments representing or evidencing Pledged Collateral for certificates or instruments of smaller or larger denominations, to exercise the voting and all other rights as a holder with respect thereto, to collect and receive all cash dividends, interest, principal and other distributions made thereon, to sell in any manner permitted by the UCC in one or more sales after ten (10) days’ notice of the time and place of any public sale or of the time at which a private sale is to take place (which notice each Pledgor agrees is commercially reasonable) the whole or any part of the Pledged Collateral and to otherwise act with respect to the Pledged Collateral as though Agent was the outright owner thereof. Any sale shall be made at a public or private sale at Agent’s place of business, or at any place to be named in the notice of sale, either for cash or upon credit or for future delivery at such price as Agent may deem fair, and Agent or Lenders may be the purchaser of the whole or any part of the Pledged Collateral so sold and hold the same thereafter in its own right free from any claim of any Pledgor or any right of redemption. Each sale shall be made to the highest bidder, but Agent reserves the right to reject any and all bids at such sale which, in its discretion, it shall deem inadequate. Agent may apply the proceeds of any sale or sales to other persons or entities, in whatever order Agent in its sole discretion may decide, to the expenses of such sale (including, without limitation, reasonable attorneys’ fees), to the Secured Obligations, and the remainder, if any, shall be paid to the applicable Pledgor or to such other person or entity legally entitled to payment of such remainder. Demands of performance, except as otherwise herein specifically provided for, notices of sale, advertisements and the presence of property at sale are hereby waived and any sale hereunder may be conducted by an auctioneer or any officer, agent or designee of Agent. EFFECTIVE UPON AN EVENT OF DEFAULT THAT REMAINS CONTINUING EACH PLEDGOR HEREBY IRREVOCABLY CONSTITUTES AND APPOINTS AGENT AS THE PROXY AND ATTORNEY-IN-FACT OF PLEDGOR WITH RESPECT TO THE PLEDGED COLLATERAL, INCLUDING THE RIGHT TO VOTE THE PLEDGED SECURITIES, WITH FULL POWER OF SUBSTITUTION TO DO SO. THE APPOINTMENT OF AGENT AS PROXY AND ATTORNEY-IN-FACT IS COUPLED WITH AN INTEREST AND SHALL BE IRREVOCABLE UNTIL THE TERMINATION DATE. IN ADDITION TO THE RIGHT TO VOTE THE PLEDGED SECURITIES, THE APPOINTMENT OF AGENT AS PROXY AND ATTORNEY-IN-FACT SHALL INCLUDE THE RIGHT TO EXERCISE ALL OTHER RIGHTS, POWERS, PRIVILEGES AND REMEDIES TO WHICH A HOLDER OF THE PLEDGED SECURITIES WOULD BE ENTITLED (INCLUDING GIVING OR WITHHOLDING WRITTEN CONSENTS OF SHAREHOLDERS, CALLING SPECIAL MEETINGS OF SHAREHOLDERS AND VOTING AT SUCH MEETINGS). SUCH PROXY SHALL BE EFFECTIVE, AUTOMATICALLY AND WITHOUT THE NECESSITY OF ANY ACTION (INCLUDING ANY TRANSFER OF ANY PLEDGED SECURITIES ON THE RECORD BOOKS OF THE ISSUER THEREOF) BY ANY PERSON (INCLUDING THE ISSUER OF THE PLEDGED SECURITIES OR ANY OFFICER OR AGENT THEREOF), UPON THE OCCURRENCE AND DURING THE CONTINUATION OF AN EVENT OF DEFAULT. NOTWITHSTANDING THE FOREGOING, AGENT SHALL NOT HAVE ANY DUTY TO EXERCISE ANY SUCH RIGHT OR TO PRESERVE THE SAME AND SHALL NOT BE LIABLE FOR ANY FAILURE TO DO SO OR FOR ANY DELAY IN DOING SO.

 

 

 

 

(b)         If, at the original time or times appointed for the sale of the whole or any part of the Pledged Collateral, the highest bid, if there be but one sale, shall be inadequate to discharge in full all the Secured Obligations, or if the Pledged Collateral be offered for sale in lots, if at any of such sales, the highest bid for the lot offered for sale would indicate to Agent, in its discretion (at the direction of the Required Lenders), that the proceeds of the sales of the whole of the Pledged Collateral would be unlikely to be sufficient to discharge all the Secured Obligations, Agent may, on one or more occasions and in its sole discretion, postpone any such sales by public announcement at the time of sale or the time of previous postponement of sale, and no other notice of such postponement or postponements of sale need be given, any other notice being hereby waived; provided, however, that any sale or sales made after such postponement shall be after five (5) days’ notice to the applicable Pledgor.

 

(c)         If, at any time when Agent shall determine to exercise its right to sell the whole or any part of the Pledged Collateral hereunder, such Pledged Collateral or the part thereof to be sold shall not, for any reason whatsoever, be effectively registered under the Act, Agent may, in its sole discretion (subject only to applicable requirements of law), sell such Pledged Collateral or part thereof by private sale in such manner and under such circumstances as Agent may deem necessary or advisable, but subject to the other requirements of this Section 9, and shall not be required to effect a registration of such Pledged Collateral under the Act or to cause the same to be effected. Without limiting the generality of the foregoing, in any such event, Agent in its discretion (x) may, in accordance with applicable securities laws, proceed to make such private sale notwithstanding that a registration statement for the purpose of registering such Pledged Collateral or part thereof could be or shall have been filed under said Act (or similar statute), (y) may approach and negotiate with a single possible purchaser to effect such sale, and (z) may restrict such sale to a purchaser who is an accredited investor under the Act and who will represent and agree that such purchaser is purchasing for its own account, for investment and not with a view to the distribution or sale of such Pledged Collateral or any part thereof. In addition to a private sale as provided above in this Section 9, if any of the Pledged Collateral shall not be freely distributable to the public without registration under the Act (or similar statute) at the time of any proposed sale pursuant to this Section 9, then Agent shall not be required to effect such registration or cause the same to be effected but, in its discretion (subject only to applicable requirements of law), may require that any sale hereunder (including a sale at auction) be conducted subject to restrictions:

 

 

 

 

(i)        as to the financial sophistication and ability of any person or entity permitted to bid or purchase at any such sale;

 

(ii)       as to the content of legends to be placed upon any certificates representing the Pledged Collateral sold in such sale, including restrictions on future transfer thereof;

 

(iii)      as to the representations required to be made by each Person bidding or purchasing at such sale relating to that Person’s access to financial information about the Pledgors and such Person’s intentions as to the holding of the Pledged Collateral so sold for investment for its own account and not with a view to the distribution thereof; and

 

(iv)      as to such other matters as Agent may, in its discretion, deem necessary or appropriate in order that such sale (notwithstanding any failure so to register) may be effected in compliance with the Bankruptcy Code and other laws affecting the enforcement of creditors’ rights and the Act and all applicable state securities laws.

 

(d)         Each Pledgor recognizes that Agent may be unable to effect a public sale of any or all the Pledged Collateral and may be compelled to resort to one or more private sales thereof in accordance with clause (c) above. Each Pledgor also acknowledges that any such private sale may result in prices and other terms less favorable to the seller than if such sale were a public sale and, notwithstanding such circumstances, agrees that any such private sale shall not be deemed to have been made in a commercially unreasonable manner solely by virtue of such sale being private. Agent shall be under no obligation to delay a sale of any of the Pledged Collateral for the period of time necessary to permit the Pledged Entity to register such securities for public sale under the Act, or under applicable state securities laws, even if the applicable Pledgor and the Pledged Entity would agree to do so.

 

(e)         Each Pledgor agrees to the maximum extent permitted by applicable law that following the occurrence and during the continuance of an Event of Default it will not at any time plead, claim or take the benefit of any appraisal, valuation, stay, extension, moratorium or redemption law now or hereafter in force in order to prevent or delay the enforcement of this Pledge Agreement, or the absolute sale of the whole or any part of the Pledged Collateral or the possession thereof by any purchaser at any sale hereunder, and each Pledgor waives the benefit of all such laws to the extent it lawfully may do so. Each Pledgor agrees that it will not interfere with any right, power and remedy of Agent provided for in this Pledge Agreement or now or hereafter existing at law or in equity or by statute or otherwise, or the exercise or beginning of the exercise by Agent of any one or more of such rights, powers or remedies. No failure or delay on the part of Agent to exercise any such right, power or remedy and no notice or demand which may be given to or made upon any Pledgor by Agent with respect to any such remedies shall operate as a waiver thereof, or limit or impair Agent’s right to take any action or to exercise any power or remedy hereunder, without notice or demand, or prejudice its rights as against any Pledgor in any respect.

 

 

 

 

(f)          Each Pledgor further agrees that a breach of any of the covenants contained in this Section 9 will cause irreparable injury to Agent and Lenders, that Agent and Lenders shall have no adequate remedy at law in respect of such breach and, as a consequence, agrees that each and every covenant contained in this Section 9 shall be specifically enforceable against Pledgor, and each Pledgor hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants except for a defense that the Secured Obligations are not then due and payable in accordance with the agreements and instruments governing and evidencing such obligations. Each Pledgor hereby waives any right to require the posting of a bond in connection with Agent’s request for equitable relief, including without limitation, specific performance or injunctive relief.

 

10.           Assignment. Agent may assign, indorse or transfer any instrument evidencing all or any part of the Secured Obligations as provided in, and in accordance with, the Loan Agreement, and the holder of such instrument shall be entitled to the benefits of this Pledge Agreement.

 

11.           Termination; Release. Upon the Termination Date or upon any sale, transfer, encumbrance or other disposition of Pledged Collateral or any part thereof in a transaction or series of transactions permitted by the provisions of the Loan Agreement or any other Loan Document (including, without limitation, upon any Pledged Collateral becoming Excluded Property), the Pledged Collateral (or any part thereof) shall automatically be released from the Liens granted or purported to be granted by this Agreement or any other Loan Document and all rights to the Pledged Collateral shall revert to the Pledgors. Upon the Termination Date or any such release or any such sale, transfer, encumbrance or disposition of Pledged Collateral or any part thereof, the Agent shall, upon the request and at the sole cost and expense of the Pledgors, assign, transfer and deliver to the Pledgors, against receipt and without recourse to or any warranty by the Agent except as to the fact that the Agent has not encumbered the released assets, such of the Pledged Collateral or any part thereof to be released (in the case of a release) as may be in the possession of the Agent and as have been sold or otherwise applied pursuant to the terms hereof, and, with respect to any other Pledged Collateral, proper documents and instruments (including UCC-3 termination financing statements or releases) acknowledging the termination hereof or the release of such Pledged Collateral.

 

 

 

 

12.           Lien Absolute. All rights of Agent, on behalf of itself and the other Secured Parties, hereunder, and all obligations of each Pledgor hereunder, shall be absolute and unconditional irrespective of:

 

(a)         any lack of validity or enforceability of the Loan Agreement, any other Loan Document or any other agreement or instrument governing or evidencing any Secured Obligations;

 

(b)         any change in the time, manner, place or terms of payment of, or in any other term of, all or any part of the Secured Obligations, or any other amendment or waiver of or any consent to any departure from the Loan Agreement, any other Loan Document or any other agreement or instrument governing or evidencing any Secured Obligations;

 

(c)         any exchange, release or non-perfection of any other Collateral, or any release or amendment or waiver of or consent to departure from any Joinder or guaranty, for all or any of the Secured Obligations;

 

(d)         the insolvency of any Loan Party; or

 

(e)         any other action or circumstance which might otherwise constitute a defense available to, or a legal or equitable discharge of, any Pledgor.

 

13.           Release. Each Pledgor consents and agrees that Agent or Lenders may at any time, or from time to time, in their discretion:

 

(a)         renew, extend or change the time of payment, and/or the manner, place or terms of payment of all or any part of the Secured Obligations in accordance with the terms of the Loan Documents; and

 

(b)         exchange, release and/or surrender all or any of the Collateral (including the Pledged Collateral), or any part thereof, by whomsoever deposited, which is now or may hereafter be held by Agent or Lenders in connection with all or any of the Secured Obligations; all in such manner and upon such terms as Agent or Lenders may deem proper, and without notice to or further assent from any Pledgor, it being hereby agreed that each Pledgor shall be and remain bound upon this Pledge Agreement, irrespective of the value or condition of any of the Collateral, and notwithstanding any such change, exchange, settlement, compromise, surrender, release, renewal or extension (other than as provided in Section 11), and notwithstanding also that the Secured Obligations may, at any time, exceed the aggregate principal amount thereof set forth in the Loan Agreement, or any other agreement governing any Secured Obligations. Each Pledgor hereby waives notice of acceptance of this Pledge Agreement, and also presentment, demand, protest and notice of dishonor of any and all of the Secured Obligations, and promptness in commencing suit against any party hereto or liable hereon, and in giving any notice to or of making any claim or demand hereunder upon any Pledgor. No act or omission of any kind on Agent or any Lender’s part shall in any event affect or impair this Pledge Agreement.

 

 

 

 

14.           Reinstatement. This Pledge Agreement shall remain in full force and effect and continue to be effective should any petition be filed by or against any Pledgor or any Pledged Entity for liquidation or reorganization, should any Pledgor or any Pledged Entity become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any significant part of a Pledgor’s or a Pledged Entity’s assets, and shall continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Secured Obligations, or any part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee of the Secured Obligations, whether as a “voidable preference”, “fraudulent conveyance”, or otherwise, all as though such payment or performance had not been made. In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Secured Obligations shall be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned, and all Pledged Collateral returned to Pledgor shall immediately be re-delivered to Agent and held by Agent in conformity with this Pledge Agreement.

 

15.           Notices. Except as otherwise provided herein, whenever it is provided herein that any notice, demand, request, consent, approval, declaration or other communication shall or may be given to or served upon any of the parties by any other party, or whenever any of the parties desires to give and serve upon any other party any communication with respect to this Pledge Agreement, each such notice, demand, request, consent, approval, declaration or other communication shall be in writing and shall be given in the manner, and deemed received, as provided for in the Loan Agreement.

 

16.           Severability. Whenever possible, each provision of this Pledge Agreement shall be interpreted in a manner as to be effective and valid under applicable law, but if any provision of this Pledge Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity without invalidating the remainder of such provision or the remaining provisions of this Pledge Agreement. This Pledge Agreement is to be read, construed and applied together with the Loan Agreement and the other Loan Documents which, taken together, set forth the complete understanding and agreement of Agent and the Pledgors with respect to the matters referred to herein and therein.

 

17.           No Waiver; Cumulative Remedies; Amendments. Neither the Agent nor any Lender shall by any act, delay, omission or otherwise be deemed to have waived any of its rights or remedies hereunder, and no waiver shall be valid unless in writing, signed by Agent and then only to the extent therein set forth. A waiver by Agent, for itself and the benefit of the other Secured Parties, of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which Agent or Lenders would otherwise have had on any future occasion. No failure to exercise nor any delay in exercising on the part of Agent or any Lender, any right, power or privilege hereunder, shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or future exercise thereof or the exercise of any other right, power or privilege. The rights and remedies hereunder provided are cumulative and may be exercised singly or concurrently, and are not exclusive of any rights and remedies provided by law. None of the terms or provisions of this Pledge Agreement may be waived, altered, modified, supplemented or amended except by an instrument in writing, duly executed by Agent and each Pledgor.

 

18.           Limitation By Law. All rights, remedies and powers provided in this Pledge Agreement may be exercised only to the extent that the exercise thereof does not violate any applicable provision of law, and all the provisions of this Pledge Agreement are intended to be subject to all applicable mandatory provisions of law that may be controlling and to be limited to the extent necessary so that they shall not render this Pledge Agreement invalid, unenforceable, in whole or in part, or not entitled to be recorded, registered or filed under the provisions of any applicable law.

 

 

 

 

19.           Successors And Assigns. This Pledge Agreement and all obligations of the Pledgors hereunder shall be binding upon the successors and assigns of each Pledgor (including any debtor-in-possession on behalf of such Pledgor) and shall, together with the rights and remedies of Agent hereunder, inure to the benefit of Agent and the other Secured Parties, all future holders of any instrument evidencing any of the Secured Obligations and their respective successors and assigns under the Loan Agreement. No sales of participations, other sales, assignments, transfers or other dispositions of any agreement governing or instrument evidencing the obligations or any portion thereof or interest therein shall in any manner impair the Lien granted hereunder. No Pledgor may assign, sell, hypothecate or otherwise transfer any interest in or obligation under this Pledge Agreement except as otherwise permitted by the Loan Documents.

 

20.           Counterparts. This Pledge Agreement may be executed in any number of counterparts and by different parties in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same agreement. Delivery of an executed signature page of this Pledge Agreement by facsimile transmission or electronic transmission shall be as effective as delivery of a manually executed counterpart hereof. This Pledge Agreement and any notices delivered under this Pledge Agreement may be executed by means of (i) an electronic signature that complies with the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act or any other similar state laws based on the Uniform Electronic Transactions Act; (ii) an original manual signature; or (iii) a faxed, scanned, or photocopied manual signature. Each electronic signature or faxed, scanned, or photocopied manual signature shall for all purposes have the same validity, legal effect, and admissibility in evidence as an original manual signature. The words “execution,” “execute”, “signed,” “signature,” and words of like import in or related to any document to be signed in connection with this Pledge Agreement and the transactions contemplated hereby shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

 

21.           Section Titles. The Section titles contained in this Pledge Agreement are and shall be without substantive meaning or content of any kind whatsoever and are not a part of the agreement between the parties hereto.

 

22.           No Strict Construction. The parties hereto have participated jointly in the negotiation and drafting of this Pledge Agreement. In the event an ambiguity or question of intent or interpretation arises, this Pledge Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Pledge Agreement.

 

 

 

 

23.           Advice of Counsel. Each of the parties represents to each other party hereto that it has discussed this Pledge Agreement with its counsel.

 

24.           Choice Of Law, Venue, Jury Trial Waiver.

 

(a)         Governing Law. New York law governs this Pledge Agreement without regard to principles of conflicts of law. Each Pledgor and Agent submit to the exclusive jurisdiction of the State and Federal courts in New York, New York; provided, however, that nothing in this Pledge Agreement shall be deemed to operate to preclude Agent from bringing suit or taking other legal action in any other jurisdiction to realize on the Collateral or any other security for the Secured Obligations, or to enforce a judgment or other court order in favor of Agent. Each Pledgor expressly submits and consents in advance to such jurisdiction in any action or suit commenced in any such court, and each Pledgor hereby waives any objection that it may have based upon lack of personal jurisdiction, improper venue, or forum non conveniens and hereby consents to the granting of such legal or equitable relief as is deemed appropriate by such court. Each Pledgor hereby waives personal service of the summons, complaints, and other process issued in such action or suit and agrees that service of such summons, complaints, and other process may be made by registered or certified mail addressed to such party at the address set forth in, or subsequently provided by such party in accordance with, Section 15 of this Pledge Agreement and that service so made shall be deemed completed upon the earlier to occur of a party’s actual receipt thereof or three (3) days after deposit in the U.S. mails, proper postage prepaid.

 

(b)         Waiver of Jury Trial. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH PLEDGOR AND AGENT WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS PLEDGE AGREEMENT OR ANY CONTEMPLATED TRANSACTION UNDER THIS PLEDGE AGREEMENT, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR THE PARTIES TO ENTER INTO THIS PLEDGE AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.

 

25.           Additional Pledgors. Additional Pledgors may become party to this Pledge Agreement by the execution and delivery by such Person of a joinder agreement in form and substance satisfactory to Agent and such other documents and deliverables as may be required by Agent. Upon receipt of such items, such Person shall become a “Pledgor” hereunder with the same force and effect as if it were originally a party to this Pledge Agreement and named as a “Pledgor” hereunder. The execution and delivery of such joinder agreement or such other requested deliverables, and the joining of such Person to this Pledge Agreement, shall not require the consent of any other Pledgor hereunder, and the rights and obligations of each Pledgor hereunder shall remain in full force and effect notwithstanding the addition of any new Pledgor as a party to this Pledge Agreement.

 

 

 

 

26.           Intercreditor Agreement. This Pledge Agreement is subject to the terms and conditions set forth in the Intercreditor Agreement, in all respects and, in the event of any conflict between the terms of the Intercreditor Agreement and this Pledge Agreement, the terms of the Intercreditor Agreement shall govern. Notwithstanding anything herein to the contrary, the lien and security interest granted to the Agent or any Intermediation Facility Agent, as applicable, pursuant to any Loan Document or any Intermediation Facility Document, and the exercise of any right or remedy in respect of the Collateral by the Agent or any Intermediation Facility Agent, as applicable hereunder, under any other Loan Document, under any Intermediation Facility Document and any other agreement entered into in connection with the foregoing are subject to the provisions of the Intercreditor Agreement and in the event of any conflict between the terms of the Intercreditor Agreement, this Pledge Agreement, any other Loan Document, and any other agreement entered into in connection with the foregoing, the terms of the Intercreditor Agreement shall govern and control with respect to the exercise of any such right or remedy or the Loan Parties’ covenants and obligations. The Agent acknowledges and agrees that no Pledgor shall be required to take or refrain from taking any action at the request of the Agent with respect to any Pledged Collateral if such action or inaction would be inconsistent with the terms of the Intercreditor Agreement.

 

27.           Concerning the Agent. Cantor Fitzgerald Securities is entering into this Agreement solely in its capacity as collateral agent under the Loan Agreement and not in its individual or corporate capacity. In acting hereunder, Agent shall be entitled to all of the rights, privileges and immunities set forth in the Loan Agreement and the other Loan Documents as though fully set forth herein.

 

[Signature page follows

 

 

 

 

IN WITNESS WHEREOF, each of the parties hereto has caused this Pledge Agreement to be executed and delivered by its duly authorized officer as of the date first set forth above.

 

  PLEDGORS:
     
  VERTEX ENERGY, INC.
   
  By:   /s/ Benjamin P. Cowart
  Name: Benjamin P. Cowart
  Title: President and Chief Executive Officer
     
  VERTEX REFINING ALABAMA LLC
   
  By:   /s/ Benjamin P. Cowart  
  Name: Benjamin P. Cowart
  Title: President and Chief Executive Officer
     
  VERTEX ENERGY OPERATING, LLC
   
  By:   /s/ Benjamin P. Cowart  
  Name: Benjamin P. Cowart
  Title: President and Chief Executive Officer
     
  VERTEX REFINING LA, LLC
   
  By:   /s/ Benjamin P. Cowart
  Name: Benjamin P. Cowart
  Title: President and Chief Executive Officer
     
  VERTEX RECOVERY MANAGEMENT, LLC
   
  By:   /s/ Benjamin P. Cowart  
  Name: Benjamin P. Cowart
  Title: President and Chief Executive Officer

 

[Signature Page to Pledge Agreement]

 

 

 

 

     
  VERTEX SPLITTER CORPORATION
   
  By:   /s/ Benjamin P. Cowart  
  Name: Benjamin P. Cowart
  Title: Director
     
  VERTEX REFINING MYRTLE GROVE LLC
   
  By:   /s/ Benjamin P. Cowart
  Name:  Benjamin P. Cowart
  Title: President and Chief Executive Officer
     
  CRYSTAL ENERGY, LLC
   
  By:   /s/ Benjamin P. Cowart  
  Name: Benjamin P. Cowart
  Title: President
     
  VERTEX ACQUISITION SUB, LLC
     
  By:   /s/ Benjamin P. Cowart
  Name: Benjamin P. Cowart
  Title: President and Chief Executive Officer
     
  CEDAR MARINE TERMINALS, LP
   
  By:   /s/ Benjamin P. Cowart
  Name: Benjamin P. Cowart
  Title: President and Chief Executive Officer
     
  TENSILE-MYRTLE GROVE ACQUISITION CORPORATION
   
  By:   /s/ Benjamin P. Cowart  
  Name: Benjamin P. Cowart
  Title: President and Chairman of the Board
     

 

[Signature Page to Pledge Agreement]

 

 

 

 

     
  CROSSROAD CARRIERS, L.P.
     
  By:   /s/ Benjamin P. Cowart
  Name: Benjamin P. Cowart
  Title: President and Chief Executive Officer
     
  VERTEX RECOVERY, L.P.
   
  By:   /s/ Benjamin P. Cowart
  Name: Benjamin P. Cowart
  Title: President and Chief Executive Officer
     
  H & H OIL, L. P.
     
  By:   /s/ Benjamin P. Cowart
  Name: Benjamin P. Cowart
  Title: President and Chief Executive Officer
     
  VERTEX MERGER SUB, LLC
   
  By:   /s/ Benjamin P. Cowart
  Name: Benjamin P. Cowart
  Title: President and Chief Executive Officer
     
  VERTEX II GP, LLC
   
  By:   /s/ Benjamin P. Cowart
  Name: Benjamin P. Cowart
  Title: President and Chief Executive Officer
     

 

[Signature Page to Pledge Agreement]

 

 

 

 

  VERTEX REFINING NV, LLC
   
  By:   /s/ Benjamin P. Cowart
  Name: Benjamin P. Cowart
  Title:  
     
     
  BANGO OIL LLC
   
  By:   /s/ Benjamin P. Cowart
  Name: Benjamin P. Cowart
  Title: President and Chief Executive Officer
     
  CANTOR FITZGERALD SECURITIES, as Agent
   
  By:   /s/ Benjamin P. Cowart
  Name: Benjamin P. Cowart
  Title: Head of Fixed Income

 

[Signature Page to Pledge Agreement]

 

 

 

 

SCHEDULE I1

 

PART A

 

PLEDGED SECURITIES

 

Pledged Entity Pledgor Equity Class Certificate Number(s) Number of Shares, Units, etc. Percentage Ownership of Pledged Company (Equity Class) Percentage of Pledged Company Ownership Pledged (Equity Class)
          100% 100%
          100% 100%
          100% 100%

 

PART B

 

PLEDGED INDEBTEDNESS

 

Pledged Entity Pledgor Initial Principal Amount Issue Date Maturity Date Interest Date
           

 

 

1 Vertex to populate schedules.

 

 

 

 

Exhibit A

 

PLEDGE AMENDMENT

 

This Pledge Amendment, dated as of ____________, ____ is delivered pursuant to Section 7(d) of the Pledge Agreement referred to below. All defined terms herein shall have the meanings ascribed thereto or incorporated by reference in the Pledge Agreement. The undersigned hereby certifies that the representations and warranties in Section 6 of the Pledge Agreement are and continue to be true and correct, both as to the Pledged Indebtedness and Pledged Securities pledged prior to this Pledge Amendment and as to the Pledged Indebtedness and/or Pledged Securities pledged pursuant to this Pledge Amendment. Accompanying this Pledge Amendment are the original Pledged Securities and/or Pledged Indebtedness required to be pledged pursuant to Section 7(d) of the Pledge Agreement.

 

The undersigned further agrees that this Pledge Amendment may be attached to that certain Pledge Agreement, dated as of April 1, 2022, between undersigned, as Pledgor, the other Pledgors signatory thereto and Cantor Fitzgerald Securities (the “Pledge Agreement”) and that the Pledged Securities and Pledged Indebtedness listed on this Pledge Amendment shall be and become a part of the Pledged Collateral referred to in said Pledge Agreement and shall secure all Secured Obligations referred to in said Pledge Agreement. The undersigned acknowledges that any Pledged Indebtedness and/or Pledged Securities not included in the Pledged Collateral at the discretion of Agent may not otherwise be pledged by Pledgor to any other Person otherwise used as security for any obligations other than the Secured Obligations.

 

  [NAME OF PLEDGOR]
     
  By:  
  Name:
  Title:

 

PLEDGED SECURITIES

 

Name and Address of Pledgor Pledged Entity Equity Class Certificate Number(s) if Certificated Number of Shares, Units, etc. Percentage Ownership of Pledged Company (Equity Class) Percentage of Pledged Company Ownership Pledged (Equity Class)
             

 

PLEDGED INDEBTEDNESS

 

Pledged Entity Pledgor Initial Principal Amount Issue Date Maturity Date Interest Date
           

 

 

 

 

Accepted:

 

CANTOR FITZGERALD SECURITIES, as Agent

 

By:   

Name:    

Title:    

 

 

 

 

Exhibit B

 

AGREEMENT REGARDING UNCERTIFICATED INTERESTS

 

This AGREEMENT REGARDING UNCERTIFICATED INTERESTS (as amended, modified, restated and/or supplemented from time to time, this “Agreement”), dated as of ____________, among [____________], a [____________], (the “Pledgor”), Cantor Fitzgerald Securities, as Agent (the “Pledgee”), and [____________], a [____________], (the “Issuer”) as the issuer of uncertificated Equity Interests (the “Pledged Interests”).

 

WITNESSETH:

 

WHEREAS, Pursuant to the Loan and Security Agreement, dated as of April 1, 2022, by and among Vertex Energy Inc., a Nevada corporation (“Parent”), Vertex Refining Alabama LLC, a Delaware limited liability company (“Borrower”), each of Parent’s direct and indirect subsidiaries from time to time party thereto (collectively, the “Subsidiary Guarantors”), Agent and the Lender(s) thereto (including all annexes, exhibits and schedules thereto, as from time to time amended, restated, supplemented or otherwise modified, the “Loan Agreement”), the Initial Lenders (as defined therein) have agreed to make a Term Loan (as defined in the Loan Agreement) to Borrower on the terms and conditions set forth in the Loan Agreement;

 

WHEREAS, the Pledgor, in order to secure the payment of the Secured Obligations, has entered into a Pledge Agreement, dated as of April 1, 2022, by and among each of the Pledgors and the Pledgee (as amended, modified, restated and/or supplemented from time to time, the “Pledge Agreement”), pursuant to which the Pledgors have pledged to the Pledgee and the other parties signatory thereto and granted a security interest in favor of the Pledgee in all of the right, title and interest of the Pledgors in and to the Pledged Interests; and

 

WHEREAS, the Pledgors desire the Issuer to enter into this Agreement in order to perfect the security interest of the Pledgee under the Pledge Agreement in the Pledged Interests, to vest in the Pledgee control of the Pledged Interests and to provide for the rights of the parties under this Agreement;

 

NOW THEREFORE, in consideration of the premises and the mutual promises and agreements contained herein, and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

1.             Capitalized terms used but not defined herein will have the meaning provided in the Pledge Agreement. Each Pledgor hereby irrevocably authorizes and directs the Issuer, and the Issuer hereby agrees, following the occurrence and continuation of an Event of Default, to comply with any and all instructions and orders originated by the Pledgee (and its successors and assigns) regarding any and all of the Pledged Interests without the further consent by the registered owner (including the respective Pledgor), and, following the occurrence and continuation of an Event of Default and its receipt of a notice from the Pledgee stating that the Pledgee is exercising exclusive control of the Pledged Interests, not to comply with any instructions or orders regarding any or all of the Pledged Interests originated by any person or entity other than the Pledgee (and its successors and assigns) or a court of competent jurisdiction.

 

 

 

 

2.             The Issuer hereby certifies that (i) no notice of any security interest, lien or other encumbrance or claim affecting the Pledged Interests (other than the security interest of the Pledgee and Permitted Liens) has been received by it, and (ii) the security interest of the Pledgee in the Pledged Interests has been registered in the books and records of the Issuer.

 

3.             The Issuer hereby represents and warrants that the pledge by each Pledgor of, and the granting by such Pledgor of a security interest in, the Pledged Interests to the Pledgee does not violate the charter, by-laws, partnership agreement, membership agreement or any other agreement governing the Issuer or the Pledged Interests.

 

4.             All notices, statements of accounts, reports, prospectuses, financial statements and other communications to be sent by the Issuer to the Pledgor in its capacity as a holder of Equity Interests will also be sent to the Pledgee at the following address:

 

Cantor Fitzgerald Securities
900 West Trade Street, Suite #725

Charlotte, NC 28202

Attn: Bobbie Young

Phone: (704) 374-0574

Email: BYoung@cantor.com

 

5.            Following the occurrence and continuation of an Event of Default and its receipt of a notice from the Pledgee stating that the Pledgee is exercising exclusive control of the Pledged Interests and until the Pledgee shall have delivered written notice to the issuer that all of the Secured Obligations have been paid in full and this Agreement is terminated, the Issuer will send any and all redemptions, distributions, interest or other payments in respect of the Pledged Interests from the Issuer for the account of the Pledgee only by wire transfers to such account as the Pledgee shall instruct.

 

6.             Except as expressly provided otherwise in Sections 4 and 5, all notices, instructions, orders and communications hereunder shall be sent or delivered by mail, e-mail, telecopy, or overnight courier service and all such notices and communications shall, when mailed, e-mailed, telecopied, or sent by overnight courier, be effective when deposited in the mails or delivered to overnight courier, prepaid and properly addressed for delivery on such or the next Business Day, or sent by e-mail or telecopier, except that notices and communications to the Pledgee or the Issuer shall not be effective until received. All notices and other communications shall be in writing and addressed as follows:

 

(a)if to a Pledgor at:

 

Vertex Refining Alabama LLC

c/o Vertex Energy, Inc.

1331 Gemini Street, Suite 250

Houston, Texas 77058
Attention: benc@vertexenergy.com

 

(b)if to the Pledgee, at the address given in Section 4;

 

 

 

 

(c)if to the Issuer, at:
________________________
________________________
________________________
________________________
Attention: _______________

 

or at such other address as shall have been furnished in writing by any Person described above to the party required to give notice hereunder. As used in this Section 6, “Business Day” means any day other than a Saturday, Sunday, or other day in which banks in New York are authorized to remain closed.

 

7.             This Agreement shall be binding upon the successors and assigns of each Pledgor and the Issuer and shall inure to the benefit of and be enforceable by the Pledgee and its successors and assigns. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which shall constitute one instrument. In the event that any provision of this Agreement shall prove to be invalid or unenforceable, such provision shall be deemed to be severable from the other provisions of this Agreement which shall remain binding on all parties hereto. None of the terms and conditions of this Agreement may be changed, waived, modified or varied in any manner whatsoever except in writing signed by the Pledgee, the Issuer and each Pledgor.

 

8.             Governing Law; Jurisdiction; Waiver Of Jury Trial.

 

(a)       Governing Law. New York law governs this Agreement without regard to principles of conflicts of law. Each Pledgor, Issuer and Pledgee submit to the exclusive jurisdiction of the State and Federal courts in New York, New York; provided, however, that nothing in this Agreement shall be deemed to operate to preclude Pledgee from bringing suit or taking other legal action in any other jurisdiction to realize on the Collateral or any other security for the Secured Obligations, or to enforce a judgment or other court order in favor of Pledgee. Each Pledgor, Issuer and Pledgee expressly submits and consents in advance to such jurisdiction in any action or suit commenced in any such court, and each Pledgor, Issuer and Pledgee hereby waive any objection that it may have based upon lack of personal jurisdiction, improper venue, or forum non conveniens and hereby consents to the granting of such legal or equitable relief as is deemed appropriate by such court. Each Pledgor, Issuer and Pledgee hereby waive personal service of the summons, complaints, and other process issued in such action or suit and agrees that service of such summons, complaints, and other process may be made by registered or certified mail addressed to such party at the address set forth in, or subsequently provided by such party in accordance with, Section 6 of this Agreement and that service so made shall be deemed completed upon the earlier to occur of a party’s actual receipt thereof or three (3) days after deposit in the U.S. mails, proper postage prepaid.

 

(b)       Waiver of Jury Trial. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH PLEDGOR, ISSUER AND PLEDGEE WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT OR ANY CONTEMPLATED TRANSACTION UNDER OR RELATED TO THIS AGREEMENT, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR THE PARTIES TO ENTER INTO THIS AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.

 

 

 

 

9.             Section Titles. The Section titles contained in this Agreement are and shall be without substantive meaning or content of any kind whatsoever and are not a part of the agreement between the parties hereto.

 

10.           No Strict Construction. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement.

 

11.           Advice of Counsel. Each of the parties represents to each other party hereto that it has discussed this Agreement with its counsel.

 

12.           Cantor Fitzgerald Securities is entering into Agreement solely in its capacity as Agent and shall be entitled to all of the rights, privileges and immunities set forth in the Loan Agreement in acting hereunder.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

 

 

IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed and delivered by its duly authorized officer as of the date first set forth above.

 

  [PLEDGORS]
     
  By:  
  Name:
  Title:
     
  CANTOR FITZGERALD SECURITIES, as Agent
     
  By:  
  Name:
  Title:
     
  [ISSUER]
     
  By:  
  Name:
  Title:

 

 

 

 

 

Vertex Energy Inc. 8-K

Exhibit 10.4

 

d a T E D A P R I L  1 ,  2 0 2 2

 

( 1 )M A C Q U A R I E   E N E R G Y   N O R T H   A M E R I C A   T R A D I N G   I N C .

 

( 2 )V e r t e x   R e f i n i n g   A l a b a m a   L L C

 

S U P P L Y   A N D   O F F T A K E   A G R E E M E N T

 

Reed Smith llp

 

r e e d s m i t h . c o m

 

 

 

 

CONTENTS

 

clause

 

1    DEFINITIONS AND CONSTRUCTION 1
2   CONDITIONS TO COMMENCEMENT 21
3   TERM OF AGREEMENT 26
4    COMMENCEMENT DATE TRANSFER 26
5    PURCHASE AND SALE OF CRUDE OIL 27
6    PURCHASE PRICE FOR CRUDE OIL 34
7    TARGET INVENTORY LEVELS AND DIFFERENTIAL ADJUSTMENT 35
8   PURCHASE AND DELIVERY OF PRODUCTS 38
9   ANCILLARY COSTS and MONTH END INVENTORY 42
10   Pledge over MacquArie’s Property 43
11   PAYMENT PROVISIONS 44
12    Eligible Hydrocarbon Inventory 46
13  INDEPENDENT INSPECTORS; STANDARDS OF MEASUREMENT 46
14    FINANCIAL INFORMATION; CREDIT SUPPORT 47
15   REFINERY TURNAROUND, MAINTENANCE AND CLOSURE 50
16    TAXES 52
17  INSURANCE 53
18   FORCE MAJEURE 54
19   REPRESENTATIONS, WARRANTIES AND COVENANTS 55
20   DEFAULT AND TERMINATION 61
21   SETTLEMENT AT TERMINATION 67
22  INDEMNIFICATION; EXPENSES 70
23  LIMITATION ON DAMAGES 71
24    RECORDS AND INSPECTION THEREOF 71
25   CONFIDENTIALITY 72
26   GOVERNING LAW 72
27    ASSIGNMENT 72
28   NOTICES 73
29   NO WAIVER, CUMULATIVE REMEDIES 73
30    NATURE OF THE TRANSACTION AND RELATIONSHIP OF PARTIES 73
31    Amendments and Modifications 73
32    MISCELLANEOUS 74

 

CONTENTS PAGE 1 

 

 

SCHEDULES

 

SCHEDULE DESCRIPTION    
       
SCHEDULE A Company Storage Locations   5
SCHEDULE B    Products and Product Specifications   41
SCHEDULE C    Monthly True-Up Amounts   31
SCHEDULE D   Minimum and Maximum Inventory Levels   81
SCHEDULE E    Included tanks   10
SCHEDULE F    FORM OF INVENTORY REPORTS   44
SCHEDULE G   Initial Inventory Targets   27
SCHEDULE H  current month pricing benchmarks   6
SCHEDULE I  SCHEDULING AND COMMUNICATIONS PROTOCOL   34
SCHEDULE J   [rESERVED]   101
SCHEDULE K   NOTICES   73
SCHEDULE L    FORM OF TRANSACTION SUPPLEMENT   29
SCHEDULE M   FORM OF STEP-OUT INVENTORY SALES AGREEMENT   17
SCHEDULE N Form of REFINERY PRODUCT VOLUME REPORT   48
SCHEDULE O   Form of INCLUDED STORAGE LOCATIONS   10
SCHEDULE P    Forecast of the Target Month End Crude Inventory Volume and Target Month End Product Volume   27
SCHEDULE Q   MONTHLY CRUDE FORECAST   27
SCHEDULE R   WEEKLY Crude PROJECTION   28
SCHEDULE S    WEEKLY PRODUCT PROJECTION   40
SCHEDULE T  MONTHLY PRODUCT ESTIMATE   40

 

CONTENTS PAGE 2 

 

 

THIS SUPPLY AND OFFTAKE AGREEMENT (this “Agreement”) is dated April 1, 2022 (the “Effective Date”),

 

BETWEEN:

 

(1)Macquarie Energy North America Trading Inc. (“Macquarie”), a Delaware corporation, located at 500 Dallas Street, Suite 3300 Houston, Texas 77002; and

 

(2)Vertex Refining Alabama LLC (the “Company”), a Delaware limited liability company, located at 1331 Gemini St Ste 250, Houston, Texas, TX 77058-2764 United States

 

each referred to individually as a “Party” or collectively as the “Parties”.

 

recitals

 

(A)             WHEREAS, the Company owns and operates a crude oil refinery located in Mobile, Alabama (the “Refinery”) for the processing and refining of Crude Oil (as defined below) and other feedstocks and the recovery therefrom of refined products;

 

(B)             WHEREAS, the Company desires Macquarie to sell Crude Oil to the Company for use at the Refinery and for Macquarie to purchase all Products (as defined below) upon and subject to the terms and conditions set forth below;

 

(C)             WHEREAS, it is contemplated that, Macquarie shall (a) on the Commencement Date (as defined below), purchase from the Company all Crude Oil and Products then being stored at the Included Storage Locations (as defined below); (b) purchase from the Company certain Products produced by the Refinery during the term of this Agreement; (c) sell and deliver Crude Oil and Products to the Company and certain Customers of the Company pursuant to the terms of this Agreement; (d) provide certain other financial accommodations to the Company based on Crude Oil and Products being stored at Company Storage Locations (as defined below) from time to time and otherwise being purchased and sold pursuant to the terms of this Agreement.

 

(D)             WHEREAS, it is contemplated that during the Term of this Agreement, that (i) Macquarie will have title and risk of loss of Crude Oil and Products while they are located in Crude Storage Tanks and Included Storage Locations, respectively, and (ii) Company will have title and risk of loss of Crude Oil and Products while they are not in Crude Storage Tanks or Included Storage Locations;

 

(E)             WHEREAS, it is contemplated that upon the termination of this Agreement, Macquarie shall transfer to the Company, through novations or reassignments, various contractual rights pursuant to the termination provisions provided herein, and is expected (but is not required) to sell to the Company all of Macquarie’s Crude Oil and Products inventory held in Included Storage Locations, in accordance with the Step Out Inventory Sales Agreement (as defined below); and

 

(F)             WHEREAS, the Parent (as defined below) shall derive substantial benefit from the transactions contemplated hereby and by the other Transaction Documents, and has agreed to guarantee all obligations of the Company hereunder and under the other Transaction Documents pursuant to the Guaranty.

 

(G)             NOW, THEREFORE, in consideration of the premises and respective promises, conditions, terms and agreements contained herein, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties do agree as follows:

 

1DEFINITIONS AND CONSTRUCTION

 

1.1Definitions.

 

For purposes of this Agreement, including the foregoing recitals, the following terms shall have the meanings indicated below:

 

Accepted Industry Practice” means those practices, methods, specifications and standards of safety and performance, as the same may be changed from time to time, as are commonly used in the operation and maintenance of refineries similar to the Refinery. The term “Accepted Industry Practice” contemplates the exercise of that degree of skill, care, diligence, prudence and foresight that would reasonably and ordinarily be expected under similar circumstances in the refining industry in the same type of undertaking under the same or similar circumstances but does not necessarily mean one particular practice, method, specification or standard in all cases and is instead intended to encompass a broad range of acceptable practices, methods and standards.

 

1 

 

 

Additional Financing Agreement” has the meaning specified in Section 19.3(k).

 

Affected Obligations” has the meaning specified in Section 18.3.

 

Affected Party” has the meaning specified in Section 18.1.

 

Affiliate” means, in relation to any Person, any entity controlled, directly or indirectly, by such Person, any entity that controls, directly or indirectly, such Person, or any entity directly or indirectly under common control with such Person. For this purpose, “control” of any entity or Person means ownership of a majority of the issued shares or voting power or control in fact of the entity or Person.

 

Aggregate Product Purchase Amounts” has the meaning specified in Section 8.9(b)(i).

 

Aggregate Product Sale Amount” has the meaning specified in Section 8.9(a)(i).

 

Agreement” has the meaning specified in the introductory paragraph of this Agreement.

 

Ancillary Costs” means, to the extent reasonably demonstrated by Macquarie by trade ticket, invoice or other supporting documentation and without duplication, (i) any amounts payable by Macquarie under the Plains Agreements, (ii) all transportation costs, liabilities, and risks associated with transportation to a Crude Intake Point (including, without limitation, pipeline, truck, or freight costs, port costs, terminaling costs, demurrage, bunkers, losses, inspections, liabilities and risks associated with operations at a third party terminal, extra tugs, pipeline scheduling issues or pro-ration issues, vessel delays, and Force Majeure events) in each case pursuant to the Tripartite Crude Supply Agreement, and (iii) all freight, pipeline, transportation, storage, tariffs and other out of pocket costs and expenses incurred as a result of the purchase, movement and storage of Crude Oil or Products undertaken in connection with or required for purposes of this Agreement (whether or not arising under Macquarie Crude Procurement Contracts and regardless of the point at which or terms upon which delivery is made under any such Macquarie Crude Procurement Contract), including, fees and expenses, any cost relating to insurance taken out by Macquarie, broker’s and agent’s fees, pipeline transportation costs, pipeline transfer and pumpover fees, pipeline throughput and scheduling charges (including any fees and charges resulting from changes in nominations undertaken to satisfy delivery requirements under this Agreement), pipeline and other common carrier tariffs, blending, tankage, linefill and throughput charges, pipeline demurrage, superfund and other comparable fees, processing fees (including fees for water or sediment removal or feedstock decontamination), merchandise processing costs and fees, any charges imposed by any Governmental Authority, user fees, fees and costs for any credit support provided to any third party with respect to any transactions contemplated by this Agreement and any pipeline compensation or reimbursement payments that are not timely paid by the pipeline to Macquarie. Ancillary Costs will also include, without duplication, out of pocket expenses associated with the cost of operation of transportation, storage or other facilities assigned hereunder to Macquarie by the Company, reasonable and documented third party out of pocket legal fees, tax advisory fees, and out of pocket expenses incurred by Macquarie in connection with any of the Transaction Documents and any amounts payable by Macquarie pursuant to any indemnity granted in favour of the Permitted Supplier or a third party product offtaker under and in accordance with the terms of the Tripartite Crude Supply Agreement, the Convenience Exchange Agreement and/or an Intermediated Product Offtake Contract. Notwithstanding the foregoing, the following shall not be considered Ancillary Costs: (i) Macquarie’s hedging costs in connection with this Agreement or any of the transactions contemplated by this Agreement (but such exclusion shall not change or be deemed to change the manner in which Related Hedges are addressed under Articles 20 and 21 below), (ii) any costs, fees, expenses, liabilities or risks, in each case, to the extent that Macquarie has otherwise been compensated therefor under this Agreement, any of the other Transaction Documents or any other agreement in any payment made hereunder or thereunder, including pursuant to any true-up, adjustment, or netting mechanism provided hereunder or thereunder, but only to the extent so compensated, or (iii) any costs, fees, expenses, liabilities or risks which Macquarie has agreed, in accordance with the express terms hereof or any other Transaction Document or agreement, shall be solely for Macquarie’s own account. In no event shall “Ancillary Costs” include (i) any costs or expenses that are not paid or payable out of pocket by Macquarie to a third party, (ii) any overhead allocations or other internal costs or amounts which are not due to third parties, (iii) any taxes; and (iv) except as otherwise provided in Section 13.2, any costs of Macquarie’s Inspector under or in respect of the Transaction Documents.

 

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Anti-Corruption Laws” means the United States Foreign Corrupt Practices Act of 1977, the U.K. Bribery Act of 2010, as amended, and all other Applicable Laws and regulations or ordinances concerning or relating to bribery, money laundering or corruption in any jurisdiction in which the Company, the Parent or any of Subsidiary or Affiliate thereof is located or is doing business.

 

Anti-Money Laundering Laws” means the Applicable Laws, statutes, regulations or rules in any jurisdiction in which the Company, the Parent, any Affiliate or Subsidiary thereof is located or is doing business that relates to money laundering, any predicate crime to money laundering, or any financial record keeping and reporting requirements related thereto, including, but not limited to, the Bank Secrecy Act (31 U.S.C. § 5311 et seq.) and the USA Patriot Act.

 

Applicable Law” means (i) any law, statute, regulation, code, ordinance, license, decision, order, writ, injunction, decision, directive, judgment, policy, decree and any judicial or administrative interpretations thereof, (ii) any agreement, concession or arrangement with any Governmental Authority and (iii) any license, permit or compliance requirement, including Environmental Law, in each case as may be applicable to either Party or the subject matter of this Agreement.

 

Authorization” means an authorization, consent, approval, resolution, license, exemption, filing, notarization, permit, permission or registration.

 

Authorized Representatives” means the list of individuals authorized by each Party to agree amendments to an Operational Schedule by an exchange of e-mails, as such list may be amended, modified, updated or varied from time to time.

 

Bank Holiday” means any day (other than a Saturday or Sunday) on which banks are authorized or required to close in the State of New York.

 

Bankrupt” means a Person that (i) is dissolved, other than pursuant to a consolidation, amalgamation or merger, (ii) becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due, (iii) makes a general assignment, arrangement or composition with or for the benefit of its creditors as a group, (iv) institutes a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or a petition is presented for its winding-up or liquidation, (v) has a resolution passed for its winding-up or liquidation, other than pursuant to a consolidation, amalgamation or merger, (vi) seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for all or substantially all of its assets, (vii) has a secured party take possession of all or substantially all of its assets, or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all of its assets, (viii) files an answer or other pleading admitting or failing to contest the allegations of a petition filed against it in any proceeding of the foregoing nature, (ix) has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy under any bankruptcy or insolvency law or other similar law affecting creditors’ rights and such proceeding is not dismissed within sixty (60) days or (x) takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing events.

 

Bankruptcy Code” means Title 11, U.S. Code.

 

Bankruptcy Law” means the Bankruptcy Code, as amended from time to time, or any similar federal or state law for the relief of debtors.

 

Barrel” means forty-two (42) net U.S. gallons, measured at 60° F.

 

Base Agreements” means (a) the Plains Agreements, (b) any agreements hereafter entered into between the Company and any third party pursuant to which the Company acquires any rights to use storage tanks or pipelines that the Company elects to be treated as, or that are, Crude Storage Tanks, Included Crude Pipelines, Included Product Pipelines, the Included Product Tanks or Company Storage Locations, and (c) any agreement entered into by Company with Parent or any of Parent’s Subsidiaries, relating to the Refinery and/or the operation or maintenance of the Refinery, including any related agreements related to Crude Oil and Products in connection with the Refinery.

 

Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular “person” (as that term is used in Section 13(d)(3) of the Exchange Act), such “person” shall be deemed to have beneficial ownership of all securities that such “person” has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition.

 

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Best Available Inventory Data” means the daily inventory reports produced by the Company or third parties in respect of the Crude Storage Tanks, Included Product Tanks, Included Crude Pipelines, Included Product Pipelines and Company Storage Locations, in the form specified in Schedule F.

 

Board of Directors” means: (1) with respect to a corporation, the board of directors of the corporation or any committee thereof duly authorized to act on behalf of such board; (2) with respect to a partnership, the board of directors or board of managers of the general partner of the partnership or, if such general partner is itself a limited partnership, then the board of directors or board of managers of its general partner; (3) with respect to a limited liability company, the board of managers or directors, the managing member or members or any controlling committee of managing members thereof; and (4) with respect to any other Person, the board or committee of such Person serving a similar function.

 

Business Day” means any day that is not a Saturday, Sunday, or Bank Holiday.

 

Capital Stock” means: (1) in the case of a corporation, corporate stock; (2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock; (3) in the case of a partnership or limited liability company, partnership interests (whether general or limited) or membership interests; and (4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person.

 

Cash Equivalents” means(a) securities issued or directly and guaranteed or insured by the United States or any agency or instrumentality thereof having maturities of not more than two (2) years from the date of acquisition; (b) securities issued by any state of the United States or any political subdivision of any such state or any public instrumentality thereof having maturities of not more than one (1) calendar year from the date of acquisition and having one of the two highest ratings from either Standard & Poor’s, a division of The McGraw-Hill Companies, Inc., or Moody’s Investors Service, Inc.; (c) certificates of deposit, denominated solely in U.S. Dollars, maturing within two years after the date of acquisition, issued by any commercial bank organized under the laws of the United States or any state thereof or the District of Columbia or that is a U.S. subsidiary of a foreign commercial bank; in each of the foregoing cases, solely to the extent that: (i) such commercial bank’s short-term commercial paper is rated at least A-1 or the equivalent by Standard & Poor’s, a division of The McGraw-Hill Companies, Inc., or at least P-1 or the equivalent thereof by Moody’s Investors Service, Inc. (any such commercial bank, an “Approved Bank”); or (ii) the par amount of all certificates of deposit acquired from such commercial bank are fully insured by the Federal Deposit Insurance Corporation; or (d) commercial paper issued by any Approved Bank (or by the parent company thereof), in each case maturing not more than twelve months after the date of the acquisition thereof.

 

Change in Law” means, with respect to a Party, an enactment of any new Applicable Law, a modification or change in the interpretation or application of any existing Applicable Law (in each case, which is generally settled or accepted), the imposition of a requirement for an Authorization and/or a change in the terms and conditions attached to an Authorization, in each case which:

 

(a)was not reasonably foreseeable as of the date of this Agreement;

 

(b)is not a response by a Governmental Authority with competent jurisdiction to such Party’s breach, violation or other non-compliance with the terms of an Applicable Law or Authorization.

 

Change of Control” means an event or series of events by which:

 

(a)the Parent ceases to be the Beneficial Owner, directly or indirectly, of 100% of the Capital Stock of the Company;

 

(b)any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or its Subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) becomes the Beneficial Owner, directly or indirectly, of 50% or more of the Capital Stock of the Company or the Parent, entitled to vote for members of the Board of Directors or equivalent governing body of the Company or the Parent on a fully-diluted basis (and taking into account all such securities that such person or group has the right to acquire pursuant to any option right); or

 

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(c)during any period of 12 consecutive months, a majority of the members of the Board of Directors or other equivalent governing body of the Company or the Parent cease to be composed of individuals (i) who were members of that board or equivalent governing body on the first day of such period, (ii) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (iii) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body.

 

CL Affected Party” has the meaning given to it in Section 20.2(a)(i).

 

Code” means the Internal Revenue Code of 1986, as amended.

 

Commencement Date” has the meaning specified in Section 2.3(a).

 

Commencement Date Crude Oil Volumes” means the total quantity of Crude Oil in the Crude Storage Tanks purchased by Macquarie on the Commencement Date, pursuant to the Inventory Sales Agreement.

 

Commencement Date Products Volumes” means the total quantities of the Products in the Included Product Locations purchased by Macquarie on the Commencement Date, pursuant to the Inventory Sales Agreement.

 

Commencement Date Purchase Value” means, with respect to the Commencement Date Volumes, initially the Estimated Commencement Date Value until the Definitive Commencement Date Value has been determined and thereafter the Definitive Commencement Date Value.

 

Commencement Date Volumes” means, collectively, the Commencement Date Crude Oil Volumes and the Commencement Date Products Volumes.

 

Company” has the meaning specified in the introductory paragraph of this Agreement.

 

Company Interim Payment” has the meaning set forth in Section 11.1(b).

 

Company Product Inventory” means, as of any day, Eligible Hydrocarbon Inventory consisting of Products that are then held at a Company Storage Location.

 

Company Storage Location” means the storage tanks and pipelines identified as such in Schedule A.

 

Convenience Exchange Agreement” means the convenience exchange agreement between Macquarie, the Company and Equilon Enterprises LLC, dba Shell Oil Product US, dated on or about the date of this Agreement for the delivery of certain Products by SOPUS to Macquarie, and the redelivery of an equivalent quantity of Products by Macquarie to SOPUS, which contract arises in connection with the contract for the offtake of Regular CBOB, Premium CBOB and ULSD between the Company and Equilon Enterprises LLC, dba Shell Oil Product US, dated April 1, 2022 and the associated Tripartite Product Offtake Agreement.

 

Costs” has the meaning set forth in the definition of “Liabilities”.

 

Credit Agreement Documents” means, collectively, the Existing Financing Agreement, each Note, the Warrants, the Warrant Agreement, the Agent Fee Letter, the Fee Letter, any Joinder Agreement, each Notice of Borrowing, the Intellectual Property Security Agreement, the Control Agreement(s), the Collateral Access Agreements, the Collateral Pledge Agreement, any Subordination Agreement (each as defined in the Existing Financing Agreement and all other documents, instruments and agreement executed or delivered at any time in connection therewith, including any intercreditor or joinder agreement among holders of Credit Agreement Obligations, to the extent such are effective at the relevant time).

 

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Credit Agreement Obligations” means all debt, principal, interest, fees, charges, Lender Expenses (as defined in the Existing Financing Agreement) and other amounts owing by the Company and each Guarantor (as defined in the Existing Financing Agreement) to Cantor Fitzgerald Securities, as agent to the lenders under the Existing Financing Agreement, of any kind and description whether arising under or pursuant to or evidenced by the Credit Agreement Documents, and whether or not for the payment of money, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, including the principal and interest due with respect to the Term Loans (as defined in the Existing Financing Agreement), and further including all Lender’s Expenses that the Company and each Guarantor is required to pay or reimburse by the Credit Agreement Documents, by law, or otherwise.

 

Credit Support” means “Collateral” as defined in the Pledge and Security Agreement.

 

Crude Cargo Rollover Barrels” means, as of any applicable day, the volumes of Crude Oil which Macquarie has contracted to purchase pursuant to Macquarie Crude Procurement Contracts which have completed pricing as of such day and for which Macquarie has not yet paid a Third Party Supplier Crude Purchase Amount pursuant to Section 6.4.

 

Crude Delivery Point” means, in relation to a sale of Crude Oil from Macquarie to the Company for processing at the Refinery, the first inlet flange of the relevant Refinery processing unit, and, in relation to any other sale of Crude Oil by Macquarie from an Included Storage Location, the relevant delivery point as determined in accordance with the relevant Included Crude Sales Transaction or, if such Crude Oil is being sold to the Company pursuant to Section 5.4(a)(ii), the exit flange from the applicable Included Storage Location or as otherwise agreed between the Parties.

 

Crude Intake Point” means, in relation to a delivery of Crude Oil to Macquarie at an Included Storage Location pursuant to a Macquarie Crude Procurement Contract, the relevant delivery location as determined in accordance with such Macquarie Crude Procurement Contract or, in relation to a purchase of Crude Oil by Macquarie from the Company, as agreed between the Parties.

 

Crude Oil” means crude oil of any type or grade, excluding any Sludge.

 

Crude Oil or Product Differential” means any Differential applicable to a Current Month Pricing Benchmark with respect to Crude Oil or Product as shall be set forth on Schedule H and as may be adjusted from time to time pursuant to Section 7.4.

 

Crude Purchase Adjustment” has the meaning specified in Section 6.4.

 

Crude Sales Proposal” has the meaning specified in Section 5.4(b)(i).

 

Crude Storage Tanks” means any of the tanks at the Refinery listed on Schedule E that store Crude Oil, including, as applicable, any related facilities or pipelines owned by the Company or Plains Marketing, L.P. and used in connection with such tanks.

 

Crude Transaction” has the meaning given to that term in the Master Agreement.

 

Current Financial Statements” means:

 

(a)audited consolidated balance sheet of the Parent and its Subsidiaries for the fiscal year ended December 31, 2020, and the related consolidated statement of operations, shareholder’s equity and cash flows for the fiscal year then ended; and

 

(b)the unaudited consolidated balance sheet of the Parent and its Subsidiaries for the twelve (12) months ended December 31, 2021, and the related consolidated statement of operations and cash flows for the twelve (12) months then ended.

 

Current Month Pricing Benchmark(s)” means, for any month and with respect to a particular Pricing Group, the pricing index, formula or benchmark plus or minus the applicable Differential (if any) set forth on and determined in accordance with Schedule H for such month.

 

Customer” means any third party purchaser of Crude Oil or Products from Macquarie (other than the Company).

 

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Daily Crude Purchases” means for any day, Macquarie’s estimate of the aggregate volume of Crude Oil purchased by Macquarie from Company at any Crude Intake Point.

 

Daily Crude Sales” means on any Delivery Date the volume of Crude Oil sold at a Crude Delivery Point by Macquarie to Company, other than sales pursuant to Section 5.4(a)(ii).

 

Daily Prices” means, with respect to a particular Pricing Group, the Current Month Pricing Benchmark applicable to such Pricing Group on any Delivery Date.

 

Daily Product Purchases” means, for any day and Product Group, Macquarie’s estimate of the aggregate volume of such Product purchased by Macquarie from the Company during such day pursuant to (i) Section 8.1(a) or (ii) Section 8.1(c).

 

Daily Product Sales” means, for any day and Product Group, Macquarie’s estimate of the aggregate sales volume of such Product sold by Macquarie during such day to Company.

 

Default” means any event that, with notice or the passage of time, would constitute an Event of Default.

 

Default Interest Rate” has the meaning given to that term in the Fee Letter.

 

Defaulting Party” has the meaning specified in Section 20.4(a).

 

Definitive Commencement Date Value” has the meaning specified in the Inventory Sales Agreement.

 

Delivery Date” means any day.

 

Delivery Month” means, with respect to Crude Oil, the calendar month in which Crude Oil is to be delivered into one or more Crude Storage Tanks or Included Crude Pipelines and, with respect to Products, the month in which Product is to be delivered into one or more Included Product Locations or Company Storage Locations.

 

Derivative Transaction” means any obligation in respect of any transaction in the nature of a transaction as described in the definition of Specified Transaction and any reference to the amount of Specified Indebtedness becoming, or becoming capable of being declared, due and payable shall, in the case of a Derivative Transaction, refer to the amount that becomes, or would become, due and payable as a result of the termination of such Derivative Transaction.

 

Determining Party” has the meaning specified in Section 20.4(c).

 

Differential” means, for each Current Month Pricing Benchmark, the amount added to or subtracted from the applicable pricing index, formula or benchmark set forth on Schedule H to determine such Current Month Pricing Benchmark. The Differentials applicable during the Term, shall be as set forth on Schedule H and as may be adjusted from time to time pursuant to Section 7.4.

 

Disclosure Letter” means the disclosure letter/perfection certificate dated as of the Commencement Date containing certain information and schedules delivered by the Company and the Parent to Macquarie.

 

Effective Date” has the meaning specified in the introductory paragraph of this Agreement.

 

Eligible Hydrocarbon Inventory” means, as of any day, Eligible Lien Products owned by the Company that are subject to a valid, first priority perfected Lien and security interest in favor of Macquarie, including, without limitation, the aggregate volume of such Eligible Lien Products constituting linefill; provided that, unless Macquarie shall otherwise elect in its reasonable discretion, Eligible Hydrocarbon Inventory shall not include any Hydrocarbon:

 

(a)that is held on consignment or not otherwise owned by the Company, as applicable;

 

(b)that is unmerchantable or damaged product or constitutes product that is permanently off-spec;

 

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(c)that is subject to any other Lien whatsoever (other than Permitted S&O Liens);

 

(d)that consists solely of chemicals (other than commodity chemicals maintained in bulk), samples, prototypes, supplies, or packing and shipping materials;

 

(e)that has been sold to a customer of the Company, as applicable;

 

(f)that is not located at a Company Storage Location;

 

(g)that is not currently either useable or saleable, at market price, in the normal course of the Company’s, business; or

 

(h)that is not identified on Schedule A, unless otherwise mutually agreed by the Parties.

 

Eligible Lien Product” means liquefied petroleum gas.

 

Ending Company Product Inventory” has the meaning specified in Section 9.2(a).

 

Ending In-Tank Crude Inventory” has the meaning specified in Section 9.2(a).

 

Ending In-Tank Product Inventory” has the meaning specified in Section 9.2(a).

 

Environmental Law” means any existing or past Applicable Law, policy, judicial or administrative interpretation thereof or any legally binding requirement that governs or purports to govern the protection of persons, natural resources or the environment (including the protection of ambient air, surface water, groundwater, land surface or subsurface strata, endangered species or wetlands), occupational health and safety and the manufacture, processing, distribution, use, generation, handling, treatment, storage, disposal, transportation, release or management of solid waste, industrial waste or hazardous substances or materials.

 

Equity Interests” mean shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity interests in any Person, and any option, warrant, convertible debt or other right entitling the holder thereof to purchase or otherwise acquire any such equity interest.

 

EST” means the prevailing time in the Eastern time zone of the United States of America.

 

Estimated Commencement Date Value” has the meaning specified in the Inventory Sales Agreement.

 

Estimated Termination Amount” has the meaning specified in Section 21.2(b).

 

Estimated Yield” has the meaning specified in Section 8.3(a).

 

Event of Default” has the meaning set forth in Section 20.1.

 

Excess Inventory Level” has the meaning specified in Section 7.7.

 

Excess Quantity” has the meaning specified in Section 7.8(a).

 

Exchange Act” means the Securities Exchange Act of 1934.

 

Existing Financing Agreements” means that certain Loan and Security Agreement, dated as of the date hereof, by and among the Company, as borrower, the other parties party thereto from time to time as guarantors, Cantor Fitzgerald Securities, as agent for the lenders and the lenders party thereto from time to time.

 

Expiration Date” has the meaning specified in Section 3.1.

 

FATCA” mean Sections 1471 through 1474 of the Code, any current or future regulations or official interpretations thereof, any agreement entered into pursuant to Section 1471(b)(1) of the Code, any intergovernmental agreement entered into in connection with the implementation of such Sections of the Code, and any fiscal or regulatory legislation, rules or practices adopted pursuant to any such intergovernmental agreement.

 

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Fee Letter” means that certain letter from Macquarie to the Company, executed on or before the Commencement Date and as from time to time thereafter amended and/or restated, which identifies itself as the “Fee Letter” for purposes hereof, and pursuant to which the Parties have set forth the amounts for and other terms relating to certain fees payable hereunder and other amounts determined for purposes hereof.

 

Financing Agreement” means any credit agreement, indenture, financing agreement, hedging agreement or other agreement (including, without limitation, the Credit Agreement Documents) under which the Company may incur or become liable for Specified Indebtedness.

 

Force Majeure” means any cause or event reasonably beyond the control of a Party, including fires, earthquakes, lightning, floods, explosions, storms, adverse weather, pandemics, landslides and other acts of natural calamity or acts of God; navigational accidents or maritime peril; vessel damage or loss; strikes, grievances, actions by or among workers or lock-outs (whether or not such labor difficulty could be settled by acceding to any demands of any such labor group of individuals and whether or not involving employees of the Company or Macquarie); accidents at, closing of, or restrictions upon the use of mooring facilities, docks, ports, pipelines, harbors, railroads or other navigational or transportation mechanisms; disruption or breakdown of, explosions or accidents to wells, storage plants, refineries, terminals, machinery or other facilities; acts of war, hostilities (whether declared or undeclared), civil commotion, embargoes, blockades, terrorism, sabotage or acts of the public enemy; any act or omission of any Governmental Authority; good faith compliance with any order, request or directive of any Governmental Authority; curtailment, interference, failure or cessation of supplies reasonably beyond the control of a Party; or any other cause reasonably beyond the control of a Party, whether similar or dissimilar to those above and whether foreseeable or unforeseeable, which, by the exercise of due diligence, such Party could not have been able to avoid or overcome. Solely for purposes of this definition, the failure of any Third Party Supplier to deliver Crude Oil pursuant to any Macquarie Crude Procurement Contract or Product under any Included Product Purchase Transaction, whether as a result of Force Majeure as defined above, “force majeure” as defined in such Macquarie Crude Procurement Contract or Included Product Purchase Transactions, breach of contract by such Third Party Supplier or any other reason, shall constitute an event of Force Majeure for Macquarie under this Agreement with respect to the quantity of Crude Oil or Product that was not delivered subject to that Macquarie Crude Procurement Contract or Included Product Purchase Transaction, as applicable.

 

GAAP” means generally accepted accounting principles in the U.S. set out in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and the Financial Accounting Standards Board as in effect from time to time.

 

Governmental Authority” means any federal, state, regional, local, or municipal governmental body, agency, instrumentality, authority or entity established or controlled by a government or subdivision thereof, including any legislative, administrative or judicial body, or any person purporting to act therefor.

 

Guarantors” means Parent and each other Person from time to time that guarantees the Transaction Obligations hereunder, each a “Guarantor”.

 

Guaranty” means the Guaranty, dated as of the Commencement Date, from the Parent provided to Macquarie in connection with this Agreement, the other Transaction Documents and the transactions contemplated hereby and thereby, in a form and in substance satisfactory to Macquarie.

 

Hazardous Substances” means any explosive or radioactive substances or wastes and any toxic or hazardous substances, materials, wastes, contaminants or pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances defined or listed as “hazardous substances,” “hazardous materials,” “hazardous wastes” or “toxic substances” (or similarly identified), regulated under or forming the basis for liability under any applicable Environmental Law.

 

Hydrocarbon Credit Support” means, as of any time, all Inventory constituting or consisting of Hydrocarbons then owned or at any time hereafter acquired by the Company, as applicable, that is located at a Company Storage Location; provided that Hydrocarbon Credit Support shall not include any “Excluded Property” as such term is defined in the Pledge and Security Agreement.

 

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Hydrocarbons” means Crude Oil, intermediate feedstocks, blendstocks (including, for the avoidance of doubt additives), and finished and unfinished petroleum products and fuels, including without limitation, Products, gasoline, diesel fuels, fuel oil and jet fuels.

 

Identified Crude Oil Delivery” has the meaning specified in Section 5.2(c)(ii)(A).

 

Identified Facilities” has the meaning specified in Section 15.5(a).

 

Included Crude Pipelines” means the Crude Oil pipelines or sections thereof owned or leased by the Company or by a third party that is listed on Schedule O as such schedule may from time to time be amended by the Parties.

 

Included Crude Sales Transaction” means sales of Crude Oil from an Included Storage Location by Macquarie to a Customer.

 

Included Product Locations” means, collectively, Included Product Tanks and Included Product Pipelines identified in Schedule A hereto.

 

Included Product Pipelines” means the Product pipelines or sections thereof owned or leased by the Company or by a third party that is listed on Schedule O as such schedule may from time to time be amended by the Parties.

 

Included Product Purchase Transaction” means an agreement entered into by Macquarie under Section 8.2(b) pursuant to which Macquarie purchases for delivery into the Included Storage Locations any Products from a Product Supplier.

 

Included Product Tanks” means the Product storage tanks owned and operated by the Company or by third parties as further identified and described on Schedule E, including, as applicable with respect to the inventory report provided by such third party, any related facilities or pipelines used in connection with such tanks.

 

Included Sales Transaction” means sales of Product from an Included Storage Location by Macquarie to an offtaker pursuant to any Tripartite Product Offtake Agreement and any other sales of Product from an Included Storage Location by Macquarie to a Customer pursuant to this Agreement.

 

Included Storage Locations” means, collectively, the Crude Storage Tanks, Included Crude Pipelines and the Included Product Locations, as more particularly described on Schedule E and Schedule O.

 

Included Tanks” means the Crude Storage Tanks and Included Product Tanks, as more particularly described on Schedule E.

 

Independent Amount” has the meaning assigned to such term in the Independent Amount Letter.

 

Independent Amount Letter” means that certain letter from Macquarie to the Company, executed on or before the Commencement Date and as from time to time thereafter amended and/or restated, which identifies itself as the “IA Letter”, and pursuant to which the Parties have set forth the amounts for and other terms relating to the transfer of Independent Amount as determined for the purposes hereof.

 

Independent Inspection Company” has the meaning specified in Section 13.3.

 

Index Crude Purchase Value” means (i) in respect of a delivery of Macquarie Procurement Barrels to a Crude Intake Point during the day, the number of Barrels of Crude Oil delivered, multiplied by (ii) the Current Month Pricing Benchmark for Crude Oil on such day.

 

Index Product Purchase Value” means, for any Product Group and a day, the product of (i) the number of Barrels of such Product Group purchased during such day under Included Product Purchase Transactions, multiplied by (ii) the Current Month Pricing Benchmark for that Product Group and day.

 

Index Product Sale Value” means, for any Product Group and relevant period, the product of (i) the sum of the aggregate quantity of Barrels of such Product Group sold during such period under Included Sales Transactions, multiplied by (ii) the Current Month Pricing Benchmark for that Product Group and period.

 

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Insolvent” means, with respect to any Person as of any date of determination, that (a) the sum of the debt (including contingent liabilities existing as of the date hereof) of such Person and its subsidiaries (on a consolidated basis) exceeds the present fair saleable value of the present assets of such Person and its subsidiaries (on a consolidated basis), (b) the capital of such Person and its subsidiaries (on a consolidated basis) is not unreasonably small in relation to its business as of such date or as contemplated as of such date, (c) such Person and its subsidiaries have incurred, or reasonably believe that they will incur, debts beyond their ability to pay such debts as they mature or, in the case of contingent liabilities, otherwise become payable, or (d) such Person is not “solvent” or is “insolvent”, as applicable within the meaning given those terms and similar terms under Applicable Law relating to fraudulent transfers and conveyances.

 

Initial Estimated Yield” has the meaning specified in Section 2.1(x).

 

Interim Payment” means a net payable amount determined by netting all of the Macquarie Interim Payments and Company Interim Payments.

 

Intermediated Product Offtake Contract” means each of (i) the term agreement for offtake of ULSD and Jet A-1/Defstan between the Company and Shell Trading (US) Company dated April 1, 2022, (ii) the term agreement for offtake of Heavy Olefin Plant Feed between the Company and Shell Chemical LP dated April 1, 2022 , (iii) the term agreement for offtake of Jet Fuel between the Company and Shell Trading (US) Company dated April 1, 2022, (iv) the term agreement for offtake of Gasoline between the Equilon Enterprises LLC, dba Shell Oil Product US, dated April 1, 2022 and any other agreement designated as such by the Parties.

 

Insolvency or Liquidation Proceeding” means:

 

(a)any case commenced by or against any Person under any Bankruptcy Law for the relief of debtors, any other proceeding for the reorganization, recapitalization or adjustment or marshalling of the assets or liabilities of any Person, any receivership or assignment for the benefit of all or substantially all creditors relating to any Person or any similar case or proceeding relative to any Person or all or substantially all of its creditors, as such, in each case whether or not voluntary; or

 

(b)any liquidation, dissolution, marshalling of assets or liabilities or other winding up of or relating to any Person, in each case whether or not voluntary and whether or not involving bankruptcy or insolvency, except for any liquidation or dissolution permitted under the Transaction Documents.

 

Intercreditor Agreement” means that certain intercreditor agreement, dated as of April 1, 2022 (as amended, restated, amended and restated, supplemented, modified, extended, renewed, replaced, refinanced or restructured from time to time) by and among Cantor Fitzgerald Securities, as agent for the Term Loan Secured Parties (as defined therein), Macquarie Energy North America Trading Inc., as Intermediation Facility Secured Party (as defined therein), Vertex Refining Alabama LLC, and each of the other Grantors (as defined therein) party thereto.

 

Interim Crude Supply Agreement” means the interim crude and hydrocarbon feedstock supply agreement dated April 1, 2022 and entered into between Shell Chemical LP, Shell Trading (US) Company and the Company.

 

Interim Crude Supply Assignment Agreement” means the assignment agreement entered into between the Company and Macquarie dated on or around the Commencement Date in respect of the assignment of the Company’s rights and obligations under the Interim Crude Supply Agreement to Macquarie.

 

Inventory” has the meaning assigned to such term in the Uniform Commercial Code of the State of New York as in effect from time to time.

 

Inventory Report” has the meaning as specified in Section 12.1(a).

 

Inventory Sales Agreement” means the purchase and sale agreement, in form and in substance mutually agreeable to the Parties, dated as of the Commencement Date, pursuant to which the Company is selling and transferring to Macquarie the Commencement Date Volumes then owned by the Company for the Commencement Date Purchase Value related thereto, free and clear of all liens, claims and encumbrances of any kind, other than Permitted S&O Liens.

 

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Knowledge” means, with respect to a Person, the knowledge of the individuals of such Person, including a Responsible Officer, who have the responsibility for any day-to-day decision making, or legal, operational, or financial affairs of such Person, which knowledge shall include any and all facts and other information of such Person actually knew or reasonably should have known in accordance with all applicable industry standards and commercially reasonable prudence and diligence.

 

Latest Commencement Date” has the meaning specified in Section 2.3(a).

 

Liabilities” means any losses, liabilities, charges, damages, deficiencies, assessments, interests, fines, penalties, costs and expenses (collectively, “Costs”) of any kind (including reasonable attorneys’ fees and other fees, court costs and other disbursements), including any Costs directly or indirectly arising out of or related to any suit, proceeding, judgment, settlement or judicial or administrative order and any Costs arising from compliance or non-compliance with Environmental Law.

 

Lien Documents” means the Pledge and Security Agreement and any other instruments, documents and agreements delivered by or on behalf of the Company and its Affiliates in order to grant to and perfect in favor of Macquarie a security interest in and lien on the Hydrocarbon Credit Support as security for the obligations of the Company pursuant to this Agreement and the other Transaction Documents.

 

Liens” has the meaning specified in Section 19.4(f)(ii).

 

Liquidated Amount” has the meaning specified in Section 20.4(g).

 

Macquarie” has the meaning specified in the introductory paragraph of this Agreement.

 

Macquarie Crude Procurement Contract” means the Tripartite Crude Supply Agreement and any other contract entered into by Macquarie pursuant to this Agreement (including, without limitation, pursuant to Section 5.2(c)) for the procurement and/or purchase of Crude Oil within the U.S. to be sold and delivered to Macquarie at the relevant Crude Intake Point.

 

Macquarie Interim Payment” has the meaning specified in Section 11.1(a).

 

Macquarie Procurement Barrels” means barrels of Crude Oil purchased by Macquarie under a Macquarie Crude Procurement Contract.

 

Macquarie’s Inspector” means any Person selected by Macquarie in a commercially reasonable manner that is acting as an agent for Macquarie and that (1) is a licensed Person who performs sampling, quality analysis and quantity determination of the Crude Oil and Products purchased and sold hereunder, (2) is not an Affiliate of any Party and (3) in the reasonable judgment of Macquarie, is qualified and reputed to perform its services in accordance with Applicable Law and industry practice, to perform any and all inspections required by Macquarie.

 

Macquarie’s Policies and Procedures” shall have the meaning specified in Section 15.5(a).

 

Macquarie’s Property” has the meaning specified in Section 19.4(f)(ii).

 

Master Agreement” means the Master Crude Oil and Products Agreement, dated as of the Commencement Date, between the Company and Macquarie.

 

Master Agreement Termination Event” means, with respect to a party, any “Event of Default” under the Master Agreement with respect to such party or any “Additional Termination Event” under the Master Agreement for which such party is the sole Affected Party thereunder.

 

Material Adverse Change” means (a) a material adverse change in, or a material adverse effect upon, the operations, assets, business, properties, liabilities (actual or contingent) or condition (financial or otherwise) of the Company or of the Parent and its Subsidiaries taken as a whole; (b) a material impairment of the ability of the Company, Parent or any other Subsidiary of Parent to perform its obligations under any of the Transaction Documents to which it is a party; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against the Company, the Parent or any Subsidiary of the Parent of any Transaction Document to which it is a party.

 

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Material Obligation” means, in respect of the Company, a failure to comply with:

 

(a)Section 14.1 (Provision of Financial Information);

 

(b)Paragraphs (c),(e) and (g) of Section 14.2 (Additional Information);

 

(c)Section 14.3 (Notification of Certain Events);

 

(d)Article 17 (Insurance);

 

(e)Paragraphs (c), (d), (e), (f) (j) and (k)of Section 19.3 (Company’s Covenants);

 

(f)Section 19.4(f) (Further Assurances);

 

(g)Section 19.5 (Negative Covenants); and

 

(h)Section 19.6 (Additional Covenants).

 

Measured Crude Quantity” means, for any Delivery Date, the total quantity of Crude Oil that, during such Delivery Date, was withdrawn and lifted by and delivered to the Company at the Crude Delivery Point, as evidenced by either (i) meter readings and meter tickets for that Delivery Date or (ii) tank gaugings conducted at the beginning and end of such Delivery Date.

 

Measured Product Quantity” means, for any Delivery Date, the total quantity of a particular Product that, during such Delivery Date, was delivered by the Company to Macquarie at the Products Intake Point, as evidenced by either (i) meter readings and meter tickets for that Delivery Date or (ii) tank gaugings conducted at the beginning and end of such Delivery Date.

 

Minimum Liquidity Requirement” has the meaning specified in Section 19.5.

 

Monthly Crude Confirmation” has the meaning specified in Section 5.1(b)(iii)(A).

 

Monthly Crude Forecast” has the meaning specified in Section ‎5.1(b)(iv).

 

Monthly Crude Purchase Offer” has the meaning specified in Section 5.1(b)(iii)(B).

 

Monthly Product Estimate” has the meaning specified in Section 8.3(b).

 

Monthly True-Up Amount” has the meaning specified in Schedule C.

 

Net Storage Volume” means, with respect to any measurement of volume, the total liquid volume, excluding sediment and water, corrected for the observed temperature to 60° F.

 

Non-Affected Party” has the meaning specified in Section 18.1.

 

Non-CL Affected Party” has the meaning given to it in Section 20.2(a)(ii)(A).

 

Non-Defaulting Party” has the meaning specified in Section 20.4(a).

 

Obligations” has the meaning specified in Section 14.4(c).

 

OFAC” means the Office of Foreign Assets Control of the United States Department of the Treasury.

 

Organization Documents” means, (a) with respect to any corporation, the charter or certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction), (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement or limited liability company agreement (or equivalent or comparable documents with respect to any non-U.S. jurisdiction), (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization (or equivalent or comparable documents with respect to any non-U.S. jurisdiction) and (d) with respect to all entities, any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization (or equivalent or comparable documents with respect to any non-U.S. jurisdiction).

 

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Operational Schedule” means Schedules A, D, E, F, K, I, N and O.

 

Optional Early Termination Date” has the meaning specified in Section 3.2(a).

 

Parent” means Vertex Energy, Inc.

 

Party” or “Parties” has the meaning specified in the preamble to this Agreement.

 

Patriot Act” means The USA Patriot Act.

 

Permitted Article 10 Liens” means any Liens which are permitted pursuant to Article 10.

 

Permitted S&O Liens” means: (a) Liens created in favor of Macquarie under the Lien Documents, (b) Liens for taxes, assessments, judgments, governmental charges or levies, or claims not yet delinquent or the non-payment of which is being diligently contested in good faith by appropriate proceedings and for which adequate reserves have been made; (c) Liens of mechanics, laborers, non-commodity suppliers, workers, materialmen, and other similar liens incurred in the ordinary course of business for sums not yet due or being diligently contested in good faith, if such reserve or appropriate provision, if any, as shall be required by GAAP shall have been made therefor (but not including any such Liens in favor of the Company or any of its Affiliates); (d) except to the extent released in any “bailee letter” or such similar documents, Liens securing rental, storage, throughput, transportation, handling or other similar fees or charges owing from time to time to carriers, bailees, transporters or warehousemen, solely to the extent of such fees or charges (but not including any such Liens in favor of the Company or any of its Affiliates); (e) Liens (1) incurred in the ordinary course of business (a) except to the extent released in any “bailee letter” or such similar documents, in connection with the purchase or shipping of goods or assets (or the related assets and proceeds thereof), which Liens arise by operation of law in favor of the seller or shipper of such goods or assets, which attach to such goods or assets and cease to be in effect upon payment in full of the purchase price for or for shipping of such goods or assets, and (b) to the extent available under Applicable Law, arising upon the purchase of oil or gas from the first producer thereof, which attach to such goods and cease to be in effect upon payment in full of the purchase price for such goods and (2) in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods; and (f) Permitted Article 10 Liens.

 

Permitted Supplier” means Shell Trading (US) Company and any other Third Party Supplier between the Parties from time to time.

 

Permitted Supplier’s Crude Confirmation” means the confirmation of the Crude Oil grades (including the volumes per grade and the pricing levels) secured by the Permitted Supplier for a Delivery Month, as communicated to the Company by the Permitted Supplier in accordance with the terms of the Tripartite Crude Supply Agreement.

 

Permitted Supplier Crude Estimate” means the Permitted Supplier’s best estimate of (a) prices; and (b) volume availability, in each case, for the each relevant grade of Crude Oil for a Delivery Month and as communicated to the Company by the Permitted Supplier in accordance with the terms of the Tripartite Crude Supply Agreement.

 

Person” means an individual, corporation, partnership, limited liability company, joint venture, trust or unincorporated organization, joint stock company or any other private entity or organization, Governmental Authority, court or any other legal entity, whether acting in an individual, fiduciary or other capacity.

 

Plains Agreements” means:

 

(a)the Plains Terminalling Agreement;

 

(b)the Plains Storage Rights Agreement; and

 

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(c)the Plains Consent Letter.

 

Plains Consent Letter” means the “Consent to Storage and Usage Agreement” dated on or around the date of this Agreement and entered into between the Plains Operator, Macquarie and the Company.

 

Plains Operator” means Plains Marketing, L.P., or such other successor that operates the Plains Storage Facilities.

 

Plains Storage Facilities” has the meaning given to the term “Storage Facilities” in the Plains Sub Lease Agreement.

 

Plains Storage Rights Agreement” means the sub-lease agreement entered into between the Company and Macquarie dated on or about the date of this Agreement

 

Plains Terminalling Agreement” means the terminal services agreement (Agreement No. 5716-15-02-0121) dated as of March 1, 2015 between the Plains Operator and the Company, as successor in interest to Shell Chemical LP (as from time to time further amended, modified, supplemented, extended, renewed and/or restated).

 

Pledge and Security Agreement” means that certain Pledge and Security Agreement by and between the Company and Macquarie, dated as of the Commencement Date.

 

Pricing Group” means any of the Product Groups listed as a pricing group on Schedule H.

 

Product” means any of the petroleum products listed on Schedule A, as from time to time amended by mutual agreement of the Parties.

 

Product Group” means Crude Oil or a group of Products as specified on Schedule A.

 

Product Purchase Adjustment” has the meaning specified in Section 8.9(b).

 

Product Sale Adjustment” has the meaning specified in Section 8.9(a).

 

Product Supplier” means any third party seller of Products with whom a Party proposes that Macquarie enter into an Included Product Purchase Transaction in accordance with Section 8.1(b).

 

Product Transaction” has the meaning given to that term in the Master Agreement.

 

Products Cover Costs” means, collectively, any additional costs and expenses or related damages as a result of the shortfall in the quantity of Product held for its account (in the circumstances described in Section 7.5).

 

Products Delivery Point” means, with respect to any delivery of Product from an Included Storage Location, the relevant delivery point as described in the relevant Tripartite Product Offtake Agreement or Included Sales Transaction or, in relation to a sale of Products to the Company, at the exit flange of the relevant Included Storage Location.

 

Products Intake Point” means the inlet flange of the relevant Included Product Tank.

 

Projected Monthly Run Volume” has the meaning specified in Section 7.2(a).

 

Projection Week” means Monday through Sunday.

 

Provisional Contract Price” means, with respect to any quantity of Crude Oil or Products of a given type, grade, or specification which is purchased or sold by Macquarie pursuant to a Macquarie Crude Procurement Contract, Included Product Purchase Transaction or Included Product Sales Transaction, the applicable pricing index plus the applicable differential specified in the applicable trade contract for such type, grade, or specification of Crude Oil or Product.

 

RD Negotiation Period” has the meaning specified in Section 2.5(b).

 

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RD Early Termination Date” has the meaning specified in Section 3.2(b).

 

Renewable Diesel Intermediation” has the meaning specified in Section 2.5(b).

 

Refinery” has the meaning specified in the recitals hereto.

 

Refinery Facilities” means (i) all the facilities located at the Refinery, and (ii) any associated or adjacent facility used by the Company to carry out the terms of this Agreement, excluding Crude Storage Tanks and Included Product Tanks.

 

Refinery Procured Crude Barrels” has the meaning given in Section 5.3(a).

 

Refinery Procured Product Barrels” has the meaning specified in Section 8.1(c).

 

Refinery Product Contract” means a procurement contract entered into by the Company for the purchase by the Company of Product, which Product is to be resold by the Company to Macquarie at the time such Product passes the Products Intake Point.

 

Refinery SPA” means the sale and purchase agreement in relation to the Refinery between (i) Equilon Enterprises LLC d/b/a Shell Oil Products US, Shell Chemical LP and Shell Oil Company, collectively as seller and (ii) the Vertex Energy Operating LLC as buyer.

 

Related Hedges” means any transactions from time to time entered into by Macquarie with third parties unrelated to Macquarie or its Affiliates to hedge Macquarie’s exposure resulting from this Agreement or any other Transaction Document and Macquarie’s rights and obligations hereunder or thereunder.

 

Relevant Default” has the meaning specified in Section 5.4(a).

 

Required Storage and Transportation Arrangements” means such designations and other binding contractual arrangements hereafter entered into, in form and substance reasonably satisfactory to Macquarie, pursuant to which the Company (or its Affiliates) hereafter shall provide Macquarie with the Company’s (or its Affiliates’) full right to use the third party Included Product Pipelines and third party Included Product Tanks, pursuant to the terms and conditions of the Base Agreements or such other agreements creating the Company’s rights in and to such facilities and the rights of existing third parties.

 

Responsible Officer” means the President, Chief Executive Officer, Chief Financial Officer, Head of Finance, or Controller of any Person.

 

Revised Estimated Yield” has the meaning specified in Section 8.3(a).

 

Sanctions Authority” means:

 

(a)the United Nations;

 

(b)the United States of America;

 

(c)the European Union;

 

(d)the United Kingdom;

 

(e)Australia; and

 

(f)the respective governmental, legislative, and regulatory institutions or bodies of any of the foregoing including the OFAC, the U.S. Department of Commerce, the U.S. Department of State, and any other agency of the U.S. government, Her Majesty’s Treasury of the United Kingdom, the United Nations Security Council or other relevant sanctions authority.

 

“Sanctions Law” or “Sanctions Laws” means any economic or financial sanctions law and/or regulation, export control, trade embargo, prohibition, restrictive measure, decision, executive order, or notice from any regulator implemented, adapted, imposed, administered, enacted and/or enforced by any Sanctions Authority from time to time.

 

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Sanctions Target” means any Person: (a) that is the subject or target of any Sanctions Law; (b) named in any Sanctions-related list maintained by OFAC, the U.S. Department of State, the U.S. Department of Commerce or the U.S. Department of the Treasury, including the OFAC list of “Specially Designated Nationals and Blocked Persons,” or any similar list maintained by any other Sanctions Authority (c) located, organized or resident in a country, territory or geographical region which is itself the subject or target of any Sanctions Law (including, without limitation, Cuba, Iran, North Korea, Syria, Crimea and so-called Donetsk People’s Republic (“DNR”) and Luhansk People’s Republic (“LNR”) regions of Ukraine, and, prior to January 1, 2017, Sudan) or (d) owned or controlled (as such terms are defined by the applicable Sanctions Laws) by any such Person or Persons described in the foregoing clauses (a) to (c).

 

SEC” means the U.S. Securities and Exchange Commission.

 

Settlement Amount” has the meaning specified in Section 20.4(c).

 

Shell Crude Supply Agreement” means the term Crude Oil supply agreement between the Company and Shell Trading (US) Company dated on or about the date of this Agreement.

 

Sludge” means a semi-solid slurry consisting of hydrocarbons, sediment, paraffin and water, produced from a process or as a result of solids separated from suspension in a liquid.

 

SOFR” has the meaning given to that term in the Fee Letter.

 

Sourcing Transaction” has the meaning specified in Section 19.3(h).

 

Specified Event” means a transaction or other event that results all or substantially all of the assets constituting the Refinery are sold (whether in one transaction or in a series of related transactions) to a Person that is not an Affiliate of the Parent.

 

Specified Indebtedness” means any obligation (whether present or future, contingent or otherwise, as principal or surety or otherwise) in respect of a repurchase transaction, borrowed money (including capitalized lease obligations and reimbursement obligations with respect to letters of credit) or money raised, any finance lease, redeemable preference share, letter of credit, futures contract, guarantee, indemnity or any Derivative Transaction.

 

Specified Transaction” means (a) any transaction (including an agreement with respect thereto) now existing or hereafter entered into between Macquarie (or any of its Affiliates) and the Company (or any of its Affiliates) (i) which is a rate swap transaction, swap option, basis swap, forward rate transaction, commodity swap, commodity option, commodity spot transaction, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, currency swap transaction, cross-currency rate swap transaction, currency option, weather swap, weather derivative, weather option, credit protection transaction, credit swap, credit default swap, credit default option, total return swap, credit spread transaction, repurchase transaction, reverse repurchase transaction, buy/sell-back transaction, securities lending transaction, or forward purchase or sale of a security, commodity or other financial instrument or interest (including any option with respect to any of these transactions) or (ii) which is a type of transaction that is similar to any transaction referred to in clause (i) that is currently, or in the future becomes, recurrently entered into the financial markets (including terms and conditions incorporated by reference in such agreement) and that is a forward, swap, future, option or other derivative on one or more rates, currencies, commodities, equity securities or other equity instruments, debt securities or other debt instruments, or economic indices or measures of economic risk or value, (b) any combination of these transactions, (c) any other transaction identified as a Specified Transaction in this agreement or the relevant confirmation.

 

Step-Out Inventory Sales Agreement” means the purchase and sale agreement, in the form provided on Schedule M, to be dated as of the Termination Date, if elected by Macquarie, pursuant to which the Company shall buy Crude Oil and Products from Macquarie subject to the provisions of this Agreement and any other terms agreed to by the Parties thereto.

 

Storage Facilities Agreement” means the storage facilities agreement, in form and substance mutually agreeable to the Parties, to be dated as of the Commencement Date, between the Company and Macquarie, pursuant to which the Company has granted to Macquarie an exclusive right to use the Crude Storage Tanks and Included Product Tanks (to the extent that such exclusive right can be granted) in connection with this Agreement.

 

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Subsidiaries” means, with respect to any Person (the “parent”), any corporation, partnership, joint venture, limited liability company, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, partnership, joint venture, limited liability company, association or other entity (a) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power, or in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held, or (b) that is, as of such date, otherwise controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent.

 

Target Month End Company Product Volume” means the commercially reasonable projected volume for Product in the Company Storage Locations at the end of the applicable Delivery Month as set forth in a report provided monthly by the Company in a form acceptable to Macquarie, and reconciling to Product purchases, run rates and sales for the applicable period.

 

Target Month End Crude Inventory Volume” means the commercially reasonably projected volume for (i) Crude Oil in the Crude Storage Tanks; plus (ii) Crude Cargo Rollover Barrels, in each case, at the end of the Delivery Month set forth in a report provided monthly by the Company in a form acceptable to Macquarie, and reconciling to Crude Oil purchases, run rates and sales for the applicable period.

 

Target Month End Product Inventory Volume” means the commercially reasonably projected volume for Product in the Included Product Locations at the end of the applicable Delivery Month as set forth in a report provided monthly by the Company in a form acceptable to Macquarie, and reconciling to Product purchases, run rates and sales for the applicable period.

 

Target Month End Product Volume” means the Target Month End Product Inventory Volume and Target Month End Company Product Volume, collectively.

 

Tax” or “Taxes” has the meaning specified in Section 16.1(a).

 

Term” has the meaning specified in Section 3.1.

 

Term Loan Agent” means Cantor Fitzgerald Securities.

 

Termination Amount” means, without duplication, the total net amount owed by one Party to the other Party upon termination of this Agreement under Section 21.2(a).

 

Termination Date” has the meaning specified in Section 21.1.

 

Termination Date Crude Oil Volumes” has the meaning specified in Section 21.1(c).

 

Termination Date Product Volumes” has the meaning specified in Section 21.1(c).

 

Termination Date Volumes” has the meaning specified in Section 21.1(c).

 

Termination Event” has the meaning specified in Section 20.3(a).

 

Termination Notice” has the meaning specified in Section 20.3(b).

 

Termination Reconciliation Statement” has the meaning specified in Section 21.2(c).

 

Third Party Supplier” means any seller of Crude Oil under a Macquarie Crude Procurement Contract or an Included Product Purchase Transaction (in each case, other than the Company).

 

Third Party Supplier Crude Purchase Amount” has the meaning specified in Section 6.4.

 

Transaction Document” means any of this Agreement, the Inventory Sales Agreement, the Storage Facilities Agreement, the Step-Out Inventory Sales Agreement, the Guaranty, the Required Storage and Transportation Arrangements, the Fee Letter, the Independent Amount Letter, the Lien Documents, the Intercreditor Agreement, the Master Agreement, the Convenience Exchange Agreement, the Plains Agreements, the Interim Crude Supply Agreement, the Interim Crude Supply Assignment Agreement, the Shell Crude Supply Agreement, the Tripartite Crude Supply Agreement, the Intermediated Product Offtake Contracts, each Tripartite Product Offtake Agreement, the Tripartite Communications Side Letter and any other agreement or instrument contemplated hereby or executed in connection herewith, including any guarantees or other credit support documents as may be from time to time provided by the Company and/or any of its Affiliates but excluding that certain 2002 ISDA Master Agreement, dated as of the date hereof, including all schedules and annexes thereto, by and between Macquarie Bank Limited and the Company.

 

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Transaction Obligations” means all obligations, including Obligations, owing from time to time by the Parent, the Company and any of the Company’s Subsidiaries to Macquarie pursuant to this Agreement, the Guaranty or any other Transaction Document and shall include, without limitation, (a) all principal, premium, if any, reimbursement obligations, interest accrued or accruing (or which would, absent commencement of an Insolvency or Liquidation Proceeding, accrue) in accordance with the relevant Transaction Document and (b) all fees, costs, expenses, indemnifications, damages, guarantees, and charges and other liabilities or amounts incurred in connection with any of the Transaction Documents and provided for thereunder, in the case of each of clause (a) and clause (b) whether before or after commencement of an Insolvency or Liquidation Proceeding and irrespective of whether any claim for such interest, fees, costs, expenses, indemnifications, damages, guarantees, charges or other liabilities or amounts is allowed as a claim in such Insolvency or Liquidation Proceeding.

 

Transaction Supplement” has the meaning given to that term in Section 5.2(c).

 

Transactions” has the meaning given to that term in Section 11.5.

 

Tripartite Communications Side Letter” means the side letter entered into between the Company and Macquarie in relation to the Tripartite Crude Supply Agreement and each Tripartite Product Offtake Agreement on or around the Commencement Date.

 

Tripartite Crude Supply Agreement” means the tripartite agreement among the Company, Macquarie and the Permitted Supplier in relation to the Shell Crude Supply Agreement.

 

Tripartite Product Offtake Agreement” means any tripartite agreement entered into among the Parties and the relevant offtaker in the relation to an Intermediated Product Offtake Contract.

 

UCC” means the Uniform Commercial Code as from time to time in effect in the State of New York.

 

Unrestricted Cash” means cash or Cash Equivalents:

 

(a)that are not, and are not required to be, designated as “restricted” on the financial statements of the Company;

 

(b)that are not contractually required, and have not been contractually committed by the Company, to be used for a specific purpose;

 

(c)that are not subject to:

 

(i)any provision of law, statute, rule or regulation;

 

(ii)any provision of the organizational documents of the Company;

 

(iii)any order of any Governmental Authority; or

 

(iv)any contractual restriction (including the terms of any Equity Interests),

 

in each case of (i) through (iv), preventing such cash or Cash Equivalents from being applied to the payment of the “Obligations” (as defined in the Existing Financing Agreement) or any of the Company’s payment obligations under the Transaction Documents;

 

(d)in which no Person other than the Term Loan Agent has a Lien other than “Permitted Liens” as set forth in clause (f) of the definition of “Permitted Liens” in the Existing Financing Agreement;

 

(e)that are held in a “Deposit Account” or “Securities Account” (each as defined in the Existing Financing Agreement), as applicable, but in all cases shall exclude the amount of the Company’s “Indebtedness” (as defined in the Existing Financing Agreement) which is more than 10 Business Days overdue (or in the case of Indebtedness of the type described in clause (e) of the definition of Indebtedness, remains outstanding more than 10 Business Days from the date constituting Indebtedness).

 

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U.S.” means the United States of America.

 

Volume Determination Procedures” means (a) in respect of determining the Net Storage Volume of Crude Oil in the Crude Storage Tanks or Products in the Included Product Tanks, the Company’s ordinary daily and month-end procedures, which include manually gauging each Crude Storage Tank or Included Product Tank owned by Company on the last day of the month to ensure that the automated tank level readings are accurate to within a tolerance of two inches; provided that if the automated reading cannot be calibrated to be within such tolerance, “Volume Determination Procedures” shall include the manual gauge reading in the Company’s calculation of month-end inventory; (b) in respect of determining the Net Storage Volume of Products in the Included Product Tanks owned by any third party, using the volumes reported on the most recently available daily reports or monthly statements in respect of such tanks; (c) in respect of the linefill in the Included Crude Pipelines, such pipelines shall be deemed full, except when products owned by third parties are flowing through such pipelines, and (d) in respect to linefill or stored barrels in an Included Crude Pipelines owned by third parties, the most recently available daily storage reports or monthly statements indicating the amount of Crude Oil in respect of such pipelines, adjusted for best available information for daily injections and receipts since the last storage report date.

 

Weekly Crude Projection” has the meaning specified in Section 5.1(c).

 

Weekly Product Projection” has the meaning specified in Section 8.3(c).

 

1.2Construction of Agreement.

 

(a)Unless otherwise specified, reference to, and the definition of any document or agreement (including this Agreement, as well as all schedules thereto and hereto) shall be deemed a reference to such document or agreement as may be, amended, restated, amended and restated, supplemented, revised or otherwise modified from time to time.

 

(b)Unless otherwise specified, all references to an “Article,” “Section,” or “Schedule” are to an Article or Section hereof or a Schedule attached hereto.

 

(c)All headings herein are intended solely for convenience of reference and shall not affect the meaning or interpretation of the provisions of this Agreement.

 

(d)Unless expressly provided otherwise, the word “including” as used herein does not limit the preceding words or terms and shall be read to be followed by the words “without limitation” or words having similar import.

 

(e)Unless expressly provided otherwise, all references to days, weeks, months and quarters mean calendar days, weeks, months and quarters, respectively.

 

(f)A reference to any Party to this Agreement or another agreement or document includes the Party’s permitted successors and assigns.

 

(g)Unless the contrary clearly appears from the context, for purposes of this Agreement, the singular number includes the plural number and vice versa; and each gender includes the other gender.

 

(h)Except where specifically stated otherwise, any reference to any Applicable Law or agreement shall be a reference to the same as amended, supplemented or re-enacted from time to time.

 

(i)Unless otherwise expressly stated herein, any reference to “volume” shall be deemed to refer to actual Net Storage Volume, unless such volume has not been yet been determined, in which case, volume shall be an estimated net volume determined in accordance with the terms hereof.

 

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(j)The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.

 

(k)All references herein to “estimates” or “projections” are intended to be references to good faith statements with respect to future events, and are not to be construed as guarantees of future performance.

 

(l)Unless otherwise expressly stated herein, all references to “Schedules” shall mean and include such Schedules as they may be amended, revised or updated from time to time, as evidenced by written agreement (including, to the extent permitted herein, by exchange of e-mails between Authorized Representatives of the Parties) of the Parties evidencing such revision, amendment or update (it being acknowledged hereby that the foregoing does not require any Party hereto to revise, amend or update any such Schedule).

 

1.3The Parties acknowledge that they and their counsel have reviewed and revised this Agreement and that no presumption of contract interpretation or construction shall apply to the advantage or disadvantage of the drafter of this Agreement.

 

2CONDITIONS TO COMMENCEMENT

 

2.1Conditions to Obligations of Macquarie. The effectiveness of this Agreement and the obligations of Macquarie contemplated by this Agreement shall be subject to satisfaction (or waiver by Macquarie) of the following conditions precedent on and as of the Commencement Date:

 

(a)The “Effective Time” has occurred under the Refinery SPA.

 

(b)The Inventory Sales Agreement shall have been duly executed by the Company and, pursuant thereto, the Company shall have agreed to transfer to Macquarie on the Commencement Date, all right, title and interest in and to the Commencement Date Volumes subject thereto, free and clear of all Liens, other than Permitted S&O Liens;

 

(c)The Interim Crude Supply Agreement and the Interim Crude Supply Assignment Agreement shall have been duly executed by the Company;

 

(d)The Company shall have agreed to a form of the Step-Out Inventory Sales Agreement in form and in substance satisfactory to Macquarie;

 

(e)The Company shall have duly executed the Storage Facilities Agreement in form and in substance satisfactory to Macquarie and provided Macquarie satisfactory documentation that it has secured, for the benefit of Macquarie, full, unencumbered storage and usage rights of the Crude Storage Tanks and Included Product Tanks;

 

(f)Macquarie shall have confirmed to its satisfaction that, as of the Commencement Date, the Intercreditor Agreement contains provisions (including through amendments thereto and other ancillary documents such as lien releases, in each case in form and substance satisfactory to Macquarie) that (i) recognize the respective rights and obligations of the Parties under this Agreement and the other Transaction Documents, (ii) confirm that this Agreement, the other Transaction Documents and the transactions contemplated hereby and thereby do not and shall not conflict with or violate any terms and conditions of such Existing Financing Agreement, (iii) recognize that Macquarie is the owner of Crude Oil and Products to the extent contemplated hereby and by the other Transaction Documents, free and clear of any liens of any lender or other creditor that is party to such Existing Financing Agreement, (iv) recognize that Macquarie has a perfected first priority Lien on (A) the Hydrocarbon Credit Support and that such Hydrocarbon Credit Support is not part of the collateral security under the Existing Financing Agreement; and (B) related proceeds of insurance and that such proceeds of insurance are subject to the lien priorities set forth in the Intercreditor Agreements; and (v) confirm the release of any lien in favor of such lender or other creditor that might apply to or be deemed to apply to any Crude Oil and/or Products of which Macquarie is the owner or on which Macquarie has a Lien, in each case as contemplated by this Agreement and the other Transaction Documents;

 

(g)Without limiting the generality of clause (f) above, Macquarie shall have received the Intercreditor Agreement with respect to the Existing Financing Agreement;

 

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(h)The Company shall have provided Macquarie with evidence, in a form reasonably satisfactory to Macquarie, that the Commencement Date Volumes shall be sold to Macquarie free and clear of any Liens, other than Permitted S&O Liens;

 

(i)The Company shall have entered into the Lien Documents granting and perfecting in favor of Macquarie the security interest and lien contemplated thereby and all actions necessary to perfect the Liens granted thereunder shall have been completed, including the delivery of executed bailee’s letters as contemplated thereby but excluding the filing of UCC financing statements which shall be filed promptly following the Commencement Date.

 

(j)The Company shall have duly executed the Fee Letter and the Independent Amount Letter and performed any terms and conditions thereof to be performed by the Company on or before the Commencement Date;

 

(k)The Company shall have delivered to Macquarie the Guaranty, duly executed by the Parent;

 

(l)The Company shall have delivered to Macquarie a duly executed officer’s certificate of each of the Company and the Parent containing the following documents: (i) the Organization Documents of the Company or the Parent, as applicable (which, to the extent filed with a Governmental Authority, shall be certified as of a recent date by such Governmental Authority), (ii) resolutions authorizing the entry into of this Agreement and the other Transaction Documents to which it is a party, (iii) a good standing certificate for each of the Company and the Parent from (A) the relevant state of formation and (B) from any state where it is, or is required to be, qualified to do business to the extent failure to so qualified could reasonably be expected to result in a Material Adverse Change and (iv) incumbency and representative signatures;

 

(m)The Company shall have delivered to Macquarie a solvency certificate from the chief financial officer, chief executive officer, president or similar senior officer of Parent (after giving effect to the transactions contemplated by this Agreement, the other Transaction Documents and the Existing Financing Agreement) certifying that the Company and the Parent, individually and collectively, are not Insolvent;

 

(n)The Company shall have delivered to Macquarie a duly executed Disclosure Letter, in form and substance satisfactory to Macquarie;

 

(o)The Company shall have delivered to Macquarie:

 

(i)the Current Financial Statements of Parent;

 

(ii)a copy of the most recent balance sheet, statement of income and statement of cash flow of the Company for the relevant fiscal year, as reviewed by the Company’s independent certified public accountants,

 

(iii)a copy of the Parent’s most recent quarterly report, containing unaudited consolidated financial statements of the Company for the relevant fiscal year; and

 

(iv)a copy of the Parent’s consolidated financial statements including a cash flow statement, income statement and balance sheet for the second month preceding the Commencement Date, and certified by a Responsible Officer of Parent;

 

(p)The Company shall have delivered to Macquarie an opinion of counsel, in form and substance satisfactory to Macquarie, covering such matters as Macquarie shall reasonably request, including: good standing; existence and due qualification; power and authority; due authorization and execution; and the enforceability of the Transaction Documents and the Guaranty;

 

(q)No action or proceeding shall have been instituted nor shall any action by a Governmental Authority be threatened, nor shall any order, judgment or decree have been issued or proposed to be issued by any Governmental Authority as of the Commencement Date to set aside, restrain, enjoin or prevent the transactions and performance of the obligations contemplated by this Agreement;

 

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(r)Neither the Refinery nor any of the Included Storage Locations shall have been affected adversely or threatened to be affected adversely by any loss or damage, whether or not covered by insurance, unless such loss or damages would not have a material adverse effect on the usual, regular and ordinary operations of the Refinery or the Included Storage Locations;

 

(s)The Company shall have delivered to Macquarie insurance certificates evidencing the effectiveness of the insurance policies and endorsements required by Article 17 below within five (5) Business Days after the Commencement Date;

 

(t)The Company shall have complied with all covenants and agreements hereunder that it is required to comply with on or before the Commencement Date;

 

(u)All representations and warranties of the Company and its Affiliates contained in the Transaction Documents shall be true and correct on and as of the Commencement Date, except for such representations and warranties that are expressly limited to another date;

 

(v)The Company shall have delivered to Macquarie all necessary consents of stockholders or members and other third parties with respect to the execution, delivery and performance of the Transaction Documents by the Company and the Parent and such other certificates, documents and instruments as may be reasonably necessary to consummate the transactions contemplated herein;

 

(w)[reserved];

 

(x)On or prior to the Commencement Date, the Company shall have provided to Macquarie:

 

(i)the Target Month End Crude Inventory Volume and the Target Month End Product Volume in respect of April 2022;

 

(ii)the Monthly Crude Purchase Offer in respect of April 2022;

 

(iii)the most recent reports (as at the Commencement Date):

 

(A)the Monthly Crude Forecast;

 

(B)the Monthly Product Estimate;

 

(C)the Projected Monthly Run Volume;

 

(D)the Weekly Crude Projection; and

 

(E)the Weekly Product Projection; and

 

(iv)an expected Product yield for the Refinery based on its then current operating forecast for the Refinery (the “Initial Estimated Yield”);

 

(y)Macquarie shall have received payment of all fees, expenses and other amounts due and payable on or prior to the Commencement Date required to be reimbursed or paid by the Company hereunder, under the Fee Letter or any other Transaction Document on or prior to such date, including reimbursement or payment of Macquarie’s and its Affiliates’ reasonable out-of-pocket expenses (including fees, charges and disbursements of Macquarie’s counsel, experts and consultants);

 

(z)The Independent Amount shall have been posted with Macquarie as contemplated by Section 4.3;

 

(aa)Payment of other Macquarie fees and expenses expressly required hereby and due on the Commencement Date. For the avoidance of doubt, this does not include any monthly fees due throughout the term of the contract;

 

(bb)On or prior to the Commencement Date, Reed Smith LLP shall have provided to Macquarie such legal opinions or memoranda of law regarding this Agreement as may be required by Macquarie; and

 

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(cc)Without duplication, the Company shall have provided Macquarie fully executed Transaction Documents in form and in substance satisfactory to Macquarie.

 

2.2Conditions to Obligations of the Company. The obligations of the Company contemplated by this Agreement shall be subject to satisfaction by Macquarie of the following conditions precedent on and as of the Commencement Date:

 

(a)Macquarie shall have duly executed and delivered the Inventory Sales Agreement in form and substance satisfactory to the Company;

 

(b)Macquarie shall have duly executed and delivered the Interim Crude Supply Assignment Agreement in form and substance satisfactory to the Company;

 

(c)Macquarie shall have agreed to the form of the Step-Out Inventory Sales Agreement in form and in substance satisfactory to the Company;

 

(d)Macquarie shall have duly executed and delivered the Storage Facilities Agreement in form and in substance satisfactory to the Company;

 

(e)Macquarie shall have duly executed and delivered the Fee Letter and the Independent Amount Letter;

 

(f)Macquarie shall have executed and delivered the Lien Documents to the extent its signature is required thereunder;

 

(g)All representations and warranties of Macquarie contained in the Transaction Documents shall be true and correct on and as of the Commencement Date except for such as are expressly limited to another date;

 

(h)Macquarie shall have complied with all covenants and agreements hereunder that it is required to comply with on or before the Commencement Date;

 

(i)Macquarie shall have delivered to the Company such other certificates, documents and instruments as may be reasonably necessary to consummate the transactions contemplated herein; and

 

(j)Macquarie shall have delivered satisfactory evidence of its federal form 637 license.

 

2.3Commencement Date.

 

(a)Subject to the satisfaction (or waiver) of the conditions set forth in Sections 2.1 and 2.2, the “Commencement Date” shall be a Business Day mutually agreed to by the Parties on or after the Effective Date and on or prior to April 1, 2022 or such later date as the Parties shall agree (the “Latest Commencement Date”).

 

(b)If the Commencement Date has not occurred on or before the Latest Commencement Date, this Agreement shall terminate on the first Business Day following the Latest Commencement Date. In such case, all obligations of the Parties hereunder shall terminate, except for the obligations set forth in Article 2 (excluding Section 2.5(b)), Article 22, Article 23 and Article 25 and any obligation under the last sentence of this Section 2.3(b); provided, however, that nothing herein shall relieve any Party from liability for the breach of any of its representations, warranties, covenants or agreements set forth in this Agreement. Without limiting the foregoing, if the failure of the Commencement Date to occur on or before the Latest Commencement Date is due to (i) any breach by the Company of its obligations hereunder, including its obligations under clause (c) below or (ii) the failure of any of the conditions contained in Section 2.1 to be satisfied on or before the Latest Commencement Date unless such failure is due to any breach by Macquarie of its obligations hereunder, including its obligations under clause (c) below, then the Company shall be obligated to reimburse Macquarie for any out of pocket losses, costs and damages incurred or realized by Macquarie as a result of its maintaining, terminating or obtaining any Related Hedges.

 

(c)From and after the Effective Date, the Company shall use commercially reasonable efforts to cause each of the conditions referred to in Section 2.1 to be satisfied on or prior to the Latest Commencement Date and Macquarie shall use commercially reasonable efforts to cause each of the conditions referred to in Section 2.2 to be satisfied on or prior to the Latest Commencement Date.

 

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2.4UCC Filings and Mortgages.

 

(a)UCC Filings.

 

(i)From and after the Commencement Date, the Company shall cooperate with Macquarie to cause to be prepared, and filed, in such jurisdictions as Macquarie shall deem necessary or appropriate, UCC-1 financing statements reflecting (i) Macquarie as owner of all Crude Oil and Products in the Included Storage Locations and (ii) Macquarie as a secured party with respect to the Credit Support to perfect Macquarie’s security interest under the Lien Documents. The Company shall execute and deliver to Macquarie, and the Company hereby authorizes Macquarie to file (with or without the Company’s signature), at any time and from time to time, all such financing statements, amendments to financing statements, continuation financing statements, termination statements, relating to such Crude Oil and Products and the Credit Support, and other documents and instruments, all in form satisfactory to Macquarie, as Macquarie may request, to confirm Macquarie’s ownership of such Crude Oil and Products and to otherwise accomplish the purposes of this Agreement and as required pursuant to the Lien Documents.

 

(ii)Without limiting the generality of the foregoing, the Company ratifies and authorizes the filing by Macquarie of any financing statements filed prior to the Commencement Date and identified by Macquarie in writing to the Company.

 

2.5Post-Commencement Date Covenants

 

(a)Unwind Procedures. From and after the Commencement Date, the Company and Macquarie shall cooperate to develop and document, by no later than the date falling 180 days after the Commencement Date, a detailed set of terms and procedures relating to the unwind of the transactions contemplated by this Agreement and the other Transaction Documents upon the expiration or early termination of this Agreement, including, without limitation, in relation to the removal of all Macquarie’s Inventory from the Included Storage Locations and the Refinery Facilities, and the Parties shall amend this Agreement, the Storage Facilities Agreement and other applicable Transaction Documents as necessary to reflect such terms and procedures.

 

(b)Renewable Diesel Conversion. From and after the Commencement Date to and including the date falling 90 days after the Commencement Date or such later date as may be agreed between the parties (the “RD Negotiation Period”), the Company and Macquarie shall, in good faith, use commercially reasonable efforts to negotiate mutually agreeable terms for Macquarie’s intermediating of renewable feedstocks and renewable diesel that will be utilized and/or produced by the Company in connection with and following the renewable diesel conversion project (such intermediation, the “Renewable Diesel Intermediation”). During the RD Negotiation Period, the Company acknowledges and agrees that Macquarie shall have the first right of refusal in respect of any intermediation arrangements for renewable feedstock and renewable diesel and accordingly, the Company shall not (and shall procure that neither the Parent nor any of its Affiliates shall) enter into any negotiations with any third parties in respect to any such intermediation arrangements unless and until the earliest to occur of (i) Macquarie notifying the Company in writing that it is not able or willing to enter into a Renewable Diesel Intermediation in relation to the Refinery; and (ii) 11:59 p.m. (EST) on the last day of the RD Negotiation Period. Notwithstanding the foregoing, this Agreement (including this Section 2.5(b)) shall not limit or otherwise restrict the Company’s ability to enter into and negotiate agreements for the purchase and sale of renewable diesel and renewable feedstock with third parties and any such agreements, and any renewable feedstocks or renewable diesel (and any products or proceeds thereof) owned, purchased or sold by the Company shall not be governed by this Agreement unless and until the Parties have consummated the Renewable Diesel Intermediation.

 

(c)Cashflow Forecast. From and after the Commencement Date, the Company shall cooperate with Macquarie to develop a form of Cashflow Forecast (in form and substance satisfactory to Macquarie) by no later than the date falling 10 Business Days after the Commencement Date to enable Macquarie to monitor the Company’s compliance with the Minimum Liquidity Requirement and the requirements of Section 19.5 (Negative Covenants),

 

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3TERM OF AGREEMENT

 

3.1Term. The Agreement shall become effective on the Effective Date, and subject to Section 3.2, shall continue for a 24 month period immediately following the Commencement Date (the “Term”). The last day of the Term is the “Expiration Date”. Unless an Optional Early Termination Date or an RD Early Termination Date is designated pursuant to Section 3.2, the Term shall be automatically extended for a further year period on the date that is the then prevailing Expiration Date.

 

3.2Early Termination Rights.

 

(a)Either Party may elect to terminate this Agreement by providing the other Party notice of any such election pursuant to Article 28; provided that no such election shall be effective until the day falling 180 calendar days following the date on which such notice is delivered (the “Optional Early Termination Date”). For the avoidance of doubt, the Termination Amount for any early termination pursuant to this paragraph shall be calculated in accordance with Section 21.2.

 

(b)If, by the end of the RD Negotiation Period and without limiting either Parties’ rights under Section 3.2(a), Macquarie and the Company, each acting in good faith and in a commercially reasonable manner, have not been able to reach commercial agreement regarding the entry into of a Renewable Diesel Intermediation between Macquarie and the Company, the Company may elect to terminate this Agreement by providing notice of any such election (which shall specify the effective date of termination (the “RD Early Termination Date”)) to Macquarie pursuant to Article 28; provided that no such election shall be effective earlier than the date falling 90 calendar days following the date on which such notice is delivered.

 

(c)During the period from (and including) the date on which a notice to terminate has been delivered to Macquarie or to the Company, under Section 3.2(a) or Section 3.2(b), as the case may be, but prior to occurrence of the Optional Early Termination Date or the RD Early Termination Date, as applicable, (i) each of the Parties shall cooperate in good faith and in a commercially reasonable manner with the other Party to implement an orderly transition and (ii) Macquarie will agree to use commercially reasonable efforts to facilitate a sale of all of Crude Oil and Products then stored Included Storage Locations to the Company or to a replacement intermediation provider, as the case may be.

 

3.3Obligations upon Termination. The Parties shall perform their obligations relating to termination pursuant to Article 21 in connection with the termination of the Agreement on the Expiration Date.

 

4COMMENCEMENT DATE TRANSFER

 

4.1Transfer and Payment on the Commencement Date. The Parties acknowledge that Macquarie’s obligations hereunder (other than its obligation under Section 2.3 above) shall commence on the Commencement Date only if the Commencement Date Volumes shall be sold and transferred to Macquarie as provided under the Inventory Sales Agreement upon payment of the Estimated Commencement Date Value as provided therein.

 

4.2Post-Commencement Date Reconciliation and True-Up. The Parties further acknowledge that the determination and payment of the Definitive Commencement Date Value shall be made as provided in the Inventory Sales Agreement.

 

4.3Posting of Independent Amount. The Company shall transfer or otherwise make available to Macquarie the Independent Amount in accordance with the Independent Amount Letter. The Independent Amount shall (a) constitute credit support for all of the Company’s obligations to Macquarie under the Transactions Documents, inclusive of all of the Company’s obligations to Macquarie under Transactions and (b) be subject to the applicable provisions of this Agreement, including Section 14.4(c), and (c) except as otherwise applied or returned in accordance with the terms of the Transaction Documents, be returned to the Company only if (and when) the Transaction Documents have been terminated and all of the Company’s respective obligations to Macquarie under the Transactions Documents have been satisfied in full.

 

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5PURCHASE AND SALE OF CRUDE OIL

 

5.1Monthly and Weekly Forecasts and Projections.

 

(a)Target Month End Crude Inventory Volume and Target Month End Product Volume. No later than the twenty-fifth (25th) day of the month preceding a Delivery Month, the Company shall provide Macquarie with a preliminary written forecast in the form of Schedule P of the Target Month End Crude Inventory Volume and the Target Month End Product Volume for the following Delivery Month. During the first (1st) month of deliveries of Crude Oil made pursuant to this Agreement, the Target Month End Crude Inventory Volume and Target Month End Product Volume shall be the amounts set forth on Schedule G.

 

(b)Monthly Crude Forecast.

 

(i)No later than the tenth (10th) day of the second month preceding a Delivery Month, the Company will deliver to Macquarie the Permitted Supplier Crude Estimate for that Delivery Month;

 

(ii)No later than the twentieth (20th) day of the second month preceding a Delivery Month, the Company shall provide Macquarie and the Permitted Supplier with an initial mandate for that Delivery Month in the form of Schedule Q, setting forth the Refinery’s anticipated Crude Oil requirements (each, a “Monthly Crude Forecast”). The Monthly Crude Forecast will include (i) the quantity, grade and schedule of Crude Oil to be supplied to Macquarie by the Permitted Supplier in accordance with the terms of the Tripartite Crude Supply Agreement; and (ii) the quantity, grade and schedule of any Refinery Procured Crude Barrels (if any) expected to be delivered for that Delivery Month.

 

(iii)No later than the twenty-fifth (25th) day of the month preceding a Delivery Month, or promptly following the Company’s receipt of the Permitted Supplier’s Crude Confirmation from the Permitted Supplier (such date being, the “Monthly Crude Notification Date”), the Company will deliver to Macquarie:

 

(A)the Permitted Supplier’s Crude Confirmation for that Delivery Month (a “Monthly Crude Confirmation”); and

 

(B)an offer to purchase certain grades and quantities of Crude Oil from Macquarie (a “Monthly Crude Purchase Offer”) in accordance with the terms of this Agreement within two calendar months of the Monthly Crude Notification Date.

 

(iv)Macquarie shall have the right to reject any Monthly Crude Confirmation and/or any Monthly Crude Purchase Offer; provided, however, that if Macquarie determines that it is not able to accept any Monthly Crude Confirmation or any Monthly Crude Purchase Offer for a Delivery Month, it will notify the Company within one (1) Business Day of the Monthly Crude Notification Date. Macquarie shall, subject to confidentiality and compliance with its internal policies and procedures of general application and consistently applied, provide a reasonably detailed explanation for its rejection of such Monthly Crude Confirmation and/or such Monthly Crude Purchase Offer, as applicable, to the extent possible but shall be under no obligation to disclose any information that Macquarie determines, in good faith and in a commercially reasonable manner, to be confidential or proprietary information. In the event that Macquarie does not reject a Monthly Crude Confirmation or a Monthly Crude Purchase Offer within one (1) Business Day of the Monthly Crude Notification Date, Macquarie shall be deemed to have accepted the same. In the event Macquarie timely rejects any Monthly Crude Confirmation and/or any Monthly Crude Purchase Offer, the Parties will meet not later than the following day to agree upon a mutually agreeable alternative.

 

(v)If thereafter any change occurs outside of customary refinery operations affecting the quantity, grade or schedule of the Crude Oil to be supplied to Macquarie by the Permitted Supplier or any Third Party Supplier pursuant to Section 5.1(b)(iv) or the Refinery Procured Crude Barrels (if any) that the Company expects to procure for delivery during a Delivery Month that the Monthly Crude Forecast or Monthly Crude Confirmation relates to, the Company shall promptly advise Macquarie of such change and resolve and agree upon any needed changes in Target Month End Crude Inventory Volumes.

 

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(c)Weekly Crude Projection. No later than 5:00 p.m., CT on Thursday of each week, the Company shall provide Macquarie with a written summary in the form of Schedule R of the Refinery’s projected Crude Oil runs for the next immediately succeeding Projection Week (each, a “Weekly Crude Projection”). Macquarie shall have the right to reject any Weekly Crude Projection if it determines that either (i) such Weekly Crude Projection is not consistent with the terms of any Monthly Crude Purchase Offer that has been accepted by Macquarie; and/or (ii) such Weekly Crude Projection is inconsistent with the quantities of Crude Oil expected to be stored in the Crude Storage Tanks on any day during the relevant Projection Week, after taking into account any quantities of Crude Oil that Macquarie has notified the Company that it intends to withdraw from the Crude Storage Tanks on or prior to such date in accordance with the terms of the Storage Facilities Agreement; provided, however, that in the event Macquarie does not reject a Weekly Crude Projection by Friday at 5:00 pm CT, Macquarie shall be deemed to have accepted the same. In the event that Macquarie timely rejects any Weekly Crude Projection, the Parties will meet not later than the following day to agree upon a mutually agreeable alternative to be used as the Weekly Crude Projection.

 

(d)Change in Weekly Crude Projection. The Company shall promptly notify Macquarie in writing upon learning of any material change in any Weekly Crude Projection or if it is necessary to delay any previously scheduled pipeline nominations.

 

(e)Responsibility of Company for Forecast and Projections. The Parties acknowledge that the Company is solely responsible for providing the Monthly Crude Confirmation, the Monthly Crude Purchase Offer, the Monthly Crude Forecast and the Weekly Crude Projection and for making any adjustments thereto, and the Company agrees that any forecasts and projections shall be prepared in good faith, with due regard to all available and reliable historical information and the Company’s then-current business prospects, and in accordance with Accepted Industry Practice; provided, however, that the Parties acknowledge and agree that any such forecasts and projections are only estimates and not guarantees of future performance, and the Company shall have no liability to Macquarie for any differences between such forecasts and projections provided by the Company in good faith and the actual crude requirements or runs. The Company acknowledges and agrees that (i) Macquarie shall be entitled to rely and act, and shall be fully protected in relying and acting, upon all such forecasts and projections until notified otherwise by the Company in accordance with Section 5.1(b)(v) or (d) of this Agreement, and (ii) Macquarie shall not have any responsibility to make any investigation into the facts or matters stated in such forecasts or projections.

 

5.2Macquarie Crude Procurement Contracts.

 

(a)Volume of Macquarie Procurement Barrels. On and after the Commencement Date through the end of the Term, Macquarie shall, if it has agreed to do so in accordance with the terms and conditions set forth therein, purchase from:

 

(i)the Permitted Supplier under the Tripartite Crude Supply Agreement; if it has agreed to do so in accordance with the terms and conditions set forth therein;

 

(ii)a Third Party Supplier (other than the Permitted Supplier under the Tripartite Crude Supply Agreement) but only to the extent that Macquarie has notified the Company pursuant to Section 5.2(c)(v) that it is willing and able to enter into a Macquarie Crude Procurement Contract with the relevant Third Party Supplier in relation to an Identified Crude Oil Delivery; and/or

 

(iii)the Company, in the limited circumstances described in Section 5.2(c)(viii) below,

 

in each case, the Crude Oil set out in each Monthly Crude Confirmation accepted by Macquarie.

 

(b)Sale of Macquarie Procurement Barrels. For sales of Macquarie Procurement Barrels by Macquarie to Company, title and risk of loss for each quantity of Crude Oil shall pass to Company on an “ex works” basis (EXW Incoterms ® 2010) as the Crude Oil passes the applicable Crude Delivery Point and such title shall pass to the Company free of all Liens, other than Permitted S&O Liens which are not Permitted Article 10 Liens. The Parties acknowledge that the consideration due from the Company to Macquarie for any Crude Oil shall be paid for in accordance with Article 11.

 

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(c)Procedures and Mechanisms for Additional Macquarie Crude Procurement Contracts.

 

(i)Macquarie and the Company may, from time to time, to the extent not prohibited by the terms of the Tripartite Crude Supply Agreement and the Shell Crude Supply Contract, agree on an ad hoc basis that Macquarie will procure Crude Oil pursuant to a Macquarie Crude Procurement Contract on such terms and subject to such conditions as the Parties may agree, each in their sole discretion.

 

(ii)Without limiting the foregoing, the Company may, from time to time and to the extent permitted by the terms of the Tripartite Crude Supply Agreement and the Shell Crude Supply Contract, notify Macquarie of:

 

(A)one or more quantities of Crude Oil available in the market for delivery (each an “Identified Crude Oil Delivery”) which:

 

(1)are available from a Third Party Supplier (other than the Permitted Supplier under the Shell Crude Supply Contract);

 

(2)are of a specified grade; and

 

(B)the terms (including any applicable discount or premium to index, and terms and conditions of sale) on which such cargoes are expected to be available for purchase (for the avoidance of doubt on a DES, DAT, FOB, CFR, DAP or CIF basis (or any others as may be agreed in writing as between the parties)) and whether the Company requires freight to be arranged for such Identified Crude Oil Delivery,

 

by providing Macquarie with a notice in the relevant form set out in Schedule L (Form of Transaction Supplement) (a “Transaction Supplement”) or in such other form as may be agreed by the Parties in writing from time to time which:

 

(1)shall comply with all applicable Sanctions Laws and other Applicable Laws relating to the control of export and contract;

 

(2)shall relate to a proposed contract with a Third Party Supplier:

 

(I)on open credit terms, unless otherwise agreed with Macquarie in its sole discretion (in which case, without duplication, any costs of expenses incurred by Macquarie in connection with the provision and maintenance of such credit support or collateral shall be deemed to be Ancillary Costs for which the Company is required to indemnify Macquarie); and

 

(II)which are on contract terms with the relevant Third Party Supplier that are acceptable to Macquarie;

 

(3)shall provide for each cargo of Crude Oil to be supplied on a customs-cleared basis where the original Third Party Supplier shall arrange and pay for export documentation and costs;

 

(4)shall include full charterparty options for discharge and with diversions at charterparty cost, with access to vessel and charterparty data; and

 

(5)when such volume of Crude Oil is expected to be purchased by the Company from Macquarie.

 

(iii)The Company shall use commercially reasonable efforts to:

 

(A)provide to Macquarie and the relevant Third Party Supplier a draft trade recap in respect of each Transaction Supplement; and

 

(B)agree to terms with the relevant Third Party Supplier to permit Macquarie to disclose the resultant Macquarie Crude Procurement Contract and related information to the Company,

 

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in each case, at the same time as its delivery of the relevant Transaction Supplement or as soon as practicable thereafter (and, in any case, prior to Macquarie and the relevant Third Party Supplier entering into the relevant Macquarie Crude Procurement Contract).

 

(iv)Upon receipt of a Transaction Supplement from the Company pursuant to Section 5.2(c)(ii) above, Macquarie shall:

 

(A)promptly notify the Company that it has received the same; and

 

(B)promptly review the proposed terms of purchase of the identified delivery of Crude Oil set out in the relevant Transaction Supplement.

 

(v)Macquarie shall as soon as is reasonably practicable and in any event within one (1) Business Day of receipt of a Transaction Supplement pursuant to Section 5.2(c)(ii) above, notify the Company whether or not Macquarie is willing and able to enter into a contract to purchase the Identified Crude Oil Delivery on the terms set out in the Transaction Supplement (provided that if the Company indicates together with the relevant Transaction Supplement that greater urgency is required setting out a target time for response then Macquarie shall use commercially reasonable efforts to respond by the target time so notified). Macquarie may in its sole discretion determine whether or not it is willing and able to enter into such contract.

 

(vi)If Macquarie notifies the Company pursuant to Section 5.2(c)(v) that, subject to the terms of any Macquarie Crude Procurement Contract being in form and substance acceptable to Macquarie, it is able to enter into a Macquarie Crude Procurement Contract to purchase the Identified Crude Oil Delivery on the terms set out in the Transaction Supplement, Macquarie shall use commercially reasonable efforts to promptly enter into such Macquarie Crude Procurement Contract with the Third Party Supplier for the purchase of the Identified Crude Oil Delivery (as the same may be negotiated between Macquarie and the Third Party Supplier), provided that the Identified Crude Oil Delivery remains available for purchase on the market under those same terms (or similar terms acceptable to the Company and Macquarie) and provided always that Macquarie, in its sole discretion, may decline to enter into any such Macquarie Crude Procurement Contract. In the event that Macquarie, in its sole discretion, declines to enter into any such Macquarie Crude Procurement Contract, it shall promptly notify the Company of its decision.

 

(vii)Macquarie shall notify the Company promptly after entering into any Macquarie Crude Procurement Contract pursuant to Section 5.2(c)(vi) (and, in any event, no later than one (1) Business Day after entering into the relevant Macquarie Crude Procurement Contract).

 

(viii)If Macquarie notifies the Company that it is unwilling or unable to enter into the relevant Macquarie Crude Procurement Contract with a Third Party Supplier, the Company may instead purchase the Identified Crude Oil Delivery from the relevant Third Party Supplier and sell the relevant Identified Crude Oil Delivery to Macquarie in accordance with Section 5.3 below.

 

5.3Refinery Procured Crude Barrels.

 

(a)Macquarie Purchase of Refinery Procured Crude Barrels. Macquarie shall purchase all quantities of Crude Oil which the Company procures from a Third Party Supplier (“Refinery Procured Crude Barrels”) which are consistent with the volumetric nominations in the applicable Monthly Crude Confirmation that has been accepted by Macquarie; provided that Macquarie is satisfied that the following conditions are met:

 

(i)such Refinery Procured Crude Barrels are of such grade as Macquarie has approved (including any of the grades specified in the Shell Crude Supply Contract);

 

(ii)the procurement of such Refinery Procured Crude Barrels by the Company does not breach and/or would not cause the Company or Macquarie to breach the terms of the Shell Crude Supply Agreement or the Tripartite Crude Supply Agreement;

 

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(iii)the quantities of Crude Oil comprising such Refinery Procured Crude Barrels do not exceed, and would not cause the Company to exceed, the maximum inventory level for Crude Oil set forth on Schedule D; and

 

(iv)no Relevant Default has occurred and is continuing in respect of the Company and no Event of Default has occurred and is continuing under this Agreement.

 

(b)Procedures and Mechanisms for Refinery Procured Crude Barrels. Prior to the delivery of any Refinery Procured Crude Barrels hereunder, the Parties shall establish procedures and mechanisms, reasonably satisfactory to Macquarie, for determining and reporting specific volumes of such Refinery Procured Crude Barrels.

 

(c)Sales of Refinery Procured Crude Barrels. For sales by the Company to Macquarie, they shall be on DDP (Incoterms 2010) basis (or such other basis as may be agreed between the Parties) at Current Month Pricing Benchmark(s), subject to the calculation of the Monthly True-Up Amounts as provided for on Schedule C, and title and risk of loss for each quantity of Crude Oil shall pass to Macquarie as the Crude Oil passes the applicable Crude Intake Point free of Liens other than Permitted S&O Liens. The Parties acknowledge that the consideration due from Macquarie to the Company for any Crude Oil shall be paid for in accordance with Article 11.

 

(d)Sale of Refinery Procured Crude Barrels. For sales of Refinery Procured Crude Barrels by Macquarie to Company, title and risk of loss for each quantity of Crude Oil shall pass to Company on an “ex works” basis (EXW Incoterms ® 2010) as the Crude Oil passes the applicable Crude Delivery Point free of Liens, other than Permitted S&O Liens which are not Permitted Article 10 Liens. The Parties acknowledge that the consideration due from the Company to Macquarie for any Crude Oil shall be paid for in accordance with Article 11.

 

(e)Company’s Obligation to Refinery Procured Crude Barrels. The Company acknowledges and agrees that, subject to the terms and conditions of this Agreement, it is obligated to purchase and take delivery of Refinery Procured Crude Barrels acquired by Macquarie from the Company.

 

5.4Sale of Crude Oil by Macquarie at Crude Delivery Points.

 

(a)Sale of Crude Oil by Macquarie to the Company. Provided that (a) no Default pursuant to Section 20.1(a), 20.1(d) or Section 20.1(e) of this Agreement has occurred and is continuing with respect to the Company (a “Relevant Default”); or (b) no Event of Default has occurred and is continuing:

 

(i)the Company shall be permitted to purchase Crude Oil from the Crude Storage Tanks and take delivery of such Crude Oil at the Crude Delivery Point in accordance with the Weekly Crude Projection and contracted for under an accepted Monthly Crude Purchase Offer, or as otherwise mutually agreed to by the Parties. The Parties acknowledge and agree that Macquarie is under no obligation to sell Crude Oil purchased by Macquarie pursuant to a Macquarie Crude Procurement Contract to the Company but, in any event, Macquarie is obliged to sell Crude Oil to the Company in accordance with the terms of any accepted Monthly Crude Purchase Offer. The sale and receipt of any Crude Oil by Company at any Crude Delivery Point shall be on an “ex works” basis (EXW Incoterms 2010) free of liens, other than Permitted S&O Liens. Upon such sale, title and risk of loss will transfer to the Company. The Company shall take all commercially reasonable actions necessary to maintain a connection with the Crude Storage Tanks to enable withdrawal and delivery of Crude Oil to be made as contemplated hereby; and

 

(ii)the Company may, from time to time, notify Macquarie that it wishes to optimize the Crude Oil stored in the Crude Storage Tanks by purchasing Crude Oil from such Crude Storage Tanks and on-selling such Crude Oil to a third party. In such circumstances, the Company shall take delivery of such Crude Oil at a Crude Delivery Point for such purposes which, for the avoidance of doubt, shall be different to the Crude Delivery Point for purchases of Crude Oil by the Company from Macquarie pursuant to sub-paragraph (i) above. The terms for pricing and transfer of title and risk of loss for any such sale shall be as set forth in Sections 5.2(b) and 5.3(d); provided, that, on the date falling one Business Day prior to the relevant Delivery Date, the Company shall prepay to Macquarie an amount equal to the applicable Daily Price (determined by Macquarie as of the date falling two (2) Business Days prior to the relevant Delivery Date) for any volumes of Crude Oil which the Company purchases pursuant to this Section 5.4(a)(ii) prior to the withdrawal of such Crude Oil from the Included Storage Locations. Any such prepayment will be subject to the calculation of the Monthly True-Up Amounts as provided for on Schedule C and shall be invoiced and otherwise payable by the Company in accordance with Article 11 of this Agreement. For the avoidance of doubt, any such prepaid volumes shall not be separately included in the calculation of Daily Crude Sales. Any such sales shall corresponding reduce the obligations of the Parties under the relevant Monthly Crude Purchase Offer.

 

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(b)Included Crude Sales Transactions.

 

(i)Notwithstanding anything to the contrary in this Agreement, the Company may from time to time propose to Macquarie that Macquarie enter into an Included Crude Sales Transaction with a Customer. Any such proposal must specify an identified Customer and trade terms, including price, quantity, delivery period(s), product grade or other material terms (a “Crude Sales Proposal”); provided, that the Company shall not have authority to bind Macquarie to, or enter into on Macquarie’s behalf, any Included Sales Transactions and the Company shall not represent to any Person that it has such authority. Macquarie shall consider any such proposal to enter into an Included Crude Sales Transaction in good faith and in a commercially reasonable manner, but shall be under no obligation to enter into any such Included Crude Sale Transaction. Macquarie may, as a condition precedent to the entry into of any such Included Crude Sales Transaction, require in its sole and absolute discretion that (i) an additional fee is payable by the Company to Macquarie in relation to Included Crude Sales Transactions; and (ii) procedures and mechanisms for determining and reporting the quantities and grades of Crude Oil that are the subject of any Included Crude Sales Transaction are agreed between the Parties.

 

(ii)If, and only if, the Company and Macquarie agree on the terms for a potential Included Crude Sales Transaction (each in their sole and absolute discretion), Macquarie shall use commercially reasonable efforts to promptly enter into a binding agreement with a potential Customer on pricing terms at least as favorable to the Company as those on which the Company proposed that Macquarie enter into such Included Crude Sales Transaction, as specified in the Crude Sales Proposal. In the event that Macquarie identifies and enters into such an agreement with a Customer, Macquarie shall promptly finalize and confirm such Included Crude Sales Transaction to the Company using its ordinary documentation and confirmation procedures. Macquarie shall use commercially reasonable efforts to obtain the relevant Customer’s consent to Macquarie’s disclosing the applicable trade documents for such Included Sales Transaction to the Company.

 

(iii)Each of the Company and Macquarie acknowledges and agrees that the difference between the amount at which Macquarie sold the relevant quantity of Crude Oil to a Customer pursuant to an Included Crude Sales Transaction and the amount at which Macquarie would have sold such quantity of Crude Oil to the Company in accordance with the terms of Section 5.4(a)(i) of the Agreement shall form part of the calculation of the Monthly True-Up Amount.

 

5.5Transportation, Storage and Delivery of Crude Oil. Macquarie shall have the exclusive right to inject (except for such injections by the Company otherwise contemplated in Section 11.3), store and withdraw Crude Oil in and from the Crude Storage Tanks as provided in and subject to the Storage Facilities Agreement or applicable Required Storage and Transportation Arrangement; provided, however, that the Company shall (i) bear sole responsibility for the physical transfer of Crude Oil to and from the Crude Storage Tanks and (ii) be permitted to withdraw, transfer and inject Crude Oil to facilitate the transactions contemplated by this Agreement and as otherwise permitted by the terms of the Storage Facilities Agreement and the other Transactions Documents.

 

5.6Hydrocarbon Credit Support. In the event that the Company holds title to any Hydrocarbon Credit Support, the Company shall, (for the avoidance of doubt in construing Article 22) indemnify and hold harmless Macquarie, its Affiliates and their agents, representatives, contractors, employees, directors and officers, for all Liabilities directly or indirectly arising therefrom as and to the extent provided in Article 22 (and subject thereto in all respects) except to the extent such Liabilities are caused by or attributable to any of the matters for which Macquarie is indemnifying the Company pursuant to Article 22.

 

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5.7Contract Documentation, Confirmations and Conditions.

 

Conditions to Macquarie Delivery of Crude. Macquarie’s obligations to sell Crude Oil to the Company under this Agreement shall be subject to (i) all of the terms and conditions of the Macquarie Crude Procurement Contracts, (ii) the Company fulfilling its obligations to deliver Refinery Procured Crude Barrels (if any) to Macquarie and (iii) the condition precedent that no Relevant Default and/or no Event of Default has occurred and is continuing with respect to the Company.

 

5.8DISCLAIMER OF WARRANTIES. EXCEPT FOR THE WARRANTY THAT (I) MACQUARIE SHALL HAVE AND CONVEY GOOD TITLE TO ALL CRUDE OIL OR PRODUCTS SOLD BY MACQUARIE TO COMPANY HEREUNDER; OR (II) THE COMPANY SHALL HAVE AND CONVEY GOOD TITLE TO ALL CRUDE OIL OR PRODUCTS SOLD TO MACQUARIE BY THE COMPANY HEREUNDER, IN EACH CASE, FREE AND CLEAR OF ALL LIENS, other than Permitted S&O Liens (WHICH, FOR CONVEYANCES TO THE COMPANY, ARE NOT PERMITTED ARTICLE 10 LIENS), NEITHER THE COMPANY NOR MACQUARIE, AS APPLICABLE, MAKES ANY WARRANTY, CONDITION OR OTHER REPRESENTATION, WRITTEN OR ORAL, EXPRESS OR IMPLIED, OF MERCHANTABILITY, FITNESS OR SUITABILITY OF SUCH CRUDE OIL OR PRODUCTS FOR ANY PARTICULAR PURPOSE OR OTHERWISE AND ALL SUCH WARRANTIES, CONDITIONS AND OTHER REPRESENTATIONS ARE HEREBY DISCLAIMED. FURTHER, MACQUARIE MAKES NO WARRANTY OR REPRESENTATION THAT SUCH CRUDE OIL OR PRODUCTS CONFORMS TO THE SPECIFICATIONS IDENTIFIED IN ANY CONTRACT WITH THE COMPANY OR ANY THIRD PARTY SUPPLIER.

 

5.9Losses, Quality Claims and Claims Handling.

 

(a)Responsibility for volume differences. Where a delivery of Crude Oil to Macquarie from a Third Party Supplier pursuant to a Macquarie Crude Procurement Contract prices based on load volume, the Company shall indemnify and hold Macquarie harmless against any losses, costs and damages incurred by Macquarie if the actual volume of Crude Oil delivered to the relevant Crude Intake Point is less than the supplier invoiced load volume, including, without limitation as a result of Macquarie adjusting, entering into or terminating or obtaining any Related Hedges; provided that the Company shall be under no obligation to indemnify and hold Macquarie harmless against any losses, costs and damages incurred by Macquarie if such losses, costs and damages were caused as a result of the gross negligence, willful misconduct or intentional default of Macquarie.

 

(b)Responsibility for Specifications of Crude Oil. The failure of any Crude Oil or Product that Macquarie hereunder sells to the Company to meet the specifications or other quality requirements applicable thereto as stated in a Macquarie Crude Procurement Contract for that Crude Oil shall be for the sole account of the Company and shall not entitle the Company to any reduction in the amounts due by it to Macquarie hereunder; provided, however, that any claims made by Macquarie with respect to such non-conforming Crude Oil or Product shall be for the Company’s account and resolved in accordance with this Section 5.9. The sale of any Crude Oil to the Company by Macquarie that does not meet the specifications or other quality requirements application thereto as specified in the relevant Macquarie Crude Procurement Contract for that Crude Oil shall not constitute a breach of this Agreement by Macquarie.

 

(c)Coordination of Resolution of Disputes with Third Parties. The Parties shall consult with each other and coordinate how to handle and resolve any claims arising in the ordinary course of business (including claims related to Crude Oil, Products, pipeline, tank transfers, ocean transportation or Ancillary Costs and any dispute, claim, or controversy arising hereunder or under or in relation to any Transaction Document between Macquarie and any of its vendors or counterparties who supply goods or services in conjunction with Macquarie’s performance of its obligations under this Agreement) made by or against Macquarie arising out of or in connection with the Transaction Documents or the transactions contemplated therein. In all instances wherein any such claims are made by a third party against Macquarie which, absent any gross negligence, willful misconduct or intentional default on the part of Macquarie, shall be for the account of the Company, the Company shall have the right, subject to Section 5.9(e), to either direct Macquarie to take commercially reasonable actions in the handling of such claims or assume the handling of such claims in the name of Macquarie, all at the Company’s cost and expense; provided that Macquarie may require that the Company assume the handling of any such claim. To the extent that the Company believes that any claim should be made by Macquarie for the account of the Company against any third party (whether a Third Party Supplier, terminal facility, pipeline, storage facility or otherwise), and subject to Section 5.9(e), Macquarie shall take any commercially reasonable actions as requested by the Company either directly, or by allowing the Company to do so, to prosecute such claim all at the Company’s cost and expense and all recoveries resulting from the prosecution of such claim shall be for the account of the Company.

 

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(d)Macquarie Involvement Resolution of Disputes with Third Parties. Macquarie shall, in a commercially reasonable manner, cooperate with the Company in prosecuting any such claim and shall be entitled to assist in the prosecution of such claim at the Company’s expense, if the Company so requests. In the event that Macquarie assists in the prosecution of such claim not at the request of Company, such prosecution shall be at Macquarie’s sole cost and expense. In no event may Macquarie settle any such claim without the Company’s prior written consent, such consent not to be unreasonably conditioned, delayed or withheld. In the event that Macquarie has a claim or cause of action arising under any Macquarie Crude Procurement Contract that Macquarie declines to pursue or prosecute, then Macquarie shall, upon written request of the Company, to the extent possible through the use of commercially reasonable efforts either assign such claim or cause of action to the Company, or designate the Company as Macquarie’s limited agent, so at to facilitate the Company’s ability to pursue or prosecute such claim.

 

(e)Disputes Subject to Indemnification Provisions. In addition, any claim that is or becomes subject to Article 22 shall be handled and resolved in accordance with the provisions of Article 22.

 

(f)Disputes with a Permitted Supplier: Macquarie shall be under no obligation to pay any amount to the Company in relation to any quantity, quality or other claim in relation to any Crude Oil delivered to Refinery that is the subject of a Macquarie Crude Procurement Contract including, without limitation, in relation to any damage caused to the Refinery, the Refinery Facility, the Included Storage Locations or otherwise, except and to the extent only, that Macquarie has received the corresponding payment from the Permitted Supplier or Third Party Supplier or other third party with respect to such claim.

 

(g)Intent of the Parties. The Parties acknowledge and agree that the excusal of Macquarie’s performance under Sections 5.9(a), 5.9(b), and otherwise under this Agreement and the other Transaction Documents, is solely for purposes of allocating the respective rights, liabilities and obligations as between Macquarie and the Company and is not intended to excuse a default or limit the liability of any third party.

 

5.10Communications Regarding Nominations and Deliveries. The Parties shall coordinate all nominations and deliveries according to the communications protocol on Schedule I.

 

6PURCHASE PRICE FOR CRUDE OIL

 

6.1Daily Volumes. Each Business Day the Company shall provide to Macquarie meter tickets and/or meter readings, and tank gauge readings confirming the Measured Crude Quantity for each of the Crude Storage Tanks for all Delivery Dates since the prior Business Day. The Company shall use commercially reasonable efforts to deliver such tickets, readings and other information by 10:00 a.m. CT on the relevant Business Day (as applicable) but shall in any event deliver such tickets, readings and other information by no later than 12:00 pm CT on such day or Business Day.

 

6.2Purchase Price for Crude Oil. The per Barrel purchase price for the Daily Crude Sales and Daily Crude Purchases shall equal the Current Month Pricing Benchmark specified for Crude Oil, subject to the calculation of the Monthly True-Up Amounts as provided for on Schedule C, and Macquarie shall provide interim invoice statements (subject to the calculation of the Monthly True-Up Amount) to the Company during each month based on provisional prices (determined using the index price for the day plus the applicable Differential for such month) established in good faith by Macquarie for Barrels purchased.

 

6.3Material Crude Grade Changes. If either the Company or Macquarie concludes in its reasonable judgment that the specifications (including specific gravity and sulfur content of the Crude Oil) of the Crude Oil procured, or projected to be procured, differ materially from the grades that have generally been run by the Refinery or such grades that the Company may run from time to time in accordance with Accepted Industry Practice, then the Company and Macquarie shall endeavor in good faith to mutually agree on (i) acceptable price indices for such Crude Oil, and (ii) a settlement payment from one Party to the other that is sufficient to compensate the relevant Party for the relative costs and benefits to each of the price differences between the prior price indices and the amended price indices.

 

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6.4Crude Purchase Adjustment. In respect of each delivery of Macquarie Procurement Barrels to a Crude Intake Point pursuant to a Macquarie Crude Procurement Contract, Macquarie shall determine whether an amount is due by one Party to the other (a “Crude Purchase Adjustment”) in accordance with the following terms and conditions:

 

(a)Macquarie shall determine the quantity of Barrels of Crude Oil purchased and Macquarie shall provide interim invoice statements (subject to adjustment in accordance with the Crude Purchase Adjustment contemplated in this Section 6.4(b) and (c)) for a provisional amount equal to the product of (i) the applicable number of Barrels of Crude Oil delivered on that day; and (ii) the applicable Provisional Contract Price(s) on such day (a “Third Party Supplier Crude Purchase Amount”); provided that, for delivery by vessel, a Third Party Supplier Crude Purchase Amount will not be calculated until the applicable cargo has fully discharged;

 

(b)If, (i) the Third Party Supplier Crude Purchase Amount exceeds the Index Crude Purchase Value, then the Crude Purchase Adjustment for that Crude Oil shall equal such excess and shall be due to Macquarie or (ii) the Index Crude Purchase Value exceeds the Third Party Supplier Crude Purchase Amount, then the Crude Purchase Adjustment for that Crude Oil shall equal such excess and shall be due to Company, in either case within two Business Days; and

 

(c)Once the final price is known for the relevant delivery of Crude Oil by a Third Party Supplier to Macquarie, a further true-up shall be determined and incorporated as a component of the next Monthly True-Up Amount in accordance with Schedule C.

 

7TARGET INVENTORY LEVELS AND DIFFERENTIAL ADJUSTMENT

 

7.1Target Inventory Levels. Monthly inventory targets for Crude Oil and Products shall be set pursuant to this Article 7. Such monthly inventory targets for Crude Oil and Products shall (except in the case of Crude Cargo Rollover Barrels) be subject to the minimum and maximum inventory levels set forth in Schedule D for each Pricing Group, which minimum and maximum inventory levels shall be satisfied by the procurement and sale of Crude Oil and Products in accordance with the terms hereof. The Company represents and warrants that the respective Target Month End Crude Inventory Volumes and Target Month End Product Volumes that the Company sets for each month during the Term hereof shall be the Company’s good faith estimate (which is not a guarantee of actual performance), at the time it sets such targets, of the Ending In-Tank Crude Inventory (and, as applicable, Crude Cargo Rollover Barrels) and the Ending In-Tank Product Inventory at the end of such month.

 

7.2Target Month End Crude Inventory Volume.

 

(a)Projected Monthly Run Volume. By no later than the twenty-fifth (25th) day of the month preceding each Delivery Month, the Company shall notify Macquarie of the aggregate quantity of Crude Oil that the Company expects to run at the Refinery during such Delivery Month (the “Projected Monthly Run Volume”). Macquarie shall have the right to reject any Projected Monthly Run Volume if it determines that either (i) such Projected Monthly Run Volume is not consistent with the terms of any Monthly Crude Purchase Offer that has been accepted by Macquarie; and/or (ii) such Projected Monthly Run Volume is inconsistent with the quantities of Crude Oil expected to be stored in the Crude Storage Tanks on any day during the relevant Delivery Month, after taking into account any quantities of Crude Oil that Macquarie has notified the Company that it intends to withdraw from the Crude Storage Tanks on or prior to such date in accordance with the terms of the Storage Facilities Agreement; provided, however, that in the event Macquarie does not reject a Projected Monthly Run Volume within one (1) Business Day of receipt, Macquarie shall be deemed to have accepted the same. If Macquarie elects to reject any Projected Monthly Run Volume, it shall, subject to confidentiality and compliance with its internal policies and procedures of general application and consistently applied, provide a reasonably detailed explanation for its rejection of such Projected Monthly Run Volume to the extent possible, but shall be under no obligation to disclose any information that Macquarie determines, in good faith and a commercially reasonable manner to be confidential or proprietary information. In the event that Macquarie timely rejects any Projected Monthly Run Volume, the Parties will meet not later than the following day to agree upon a mutually agreeable alternative to be used as the Projected Monthly Run Volume.

 

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(b)Constraints on Target Month End Crude Inventory Volume. In establishing a Target Month End Crude Inventory Volume, the Parties acknowledge that any increase in a Target Month End Crude Inventory Volume is constrained by the maximum inventory levels specified in Schedule D and the terms of any relevant Monthly Crude Purchase Offer that has been accepted by Macquarie, and that such Target Month End Crude Inventory volumes may not exceed such limits for the applicable month without the prior written consent of Macquarie.

 

(c)Adjustments to Target Month End Crude Inventory Volume. The Parties may, by mutual agreement, adjust the Target Month End Crude Inventory Volume for any month. Any change to a Target Month End Crude Inventory Volume shall affect only the subject month and does not impact the calculation of the Target Month End Crude Inventory Volume in subsequent months.

 

7.3Target Month End Product Volume.

 

(a)Target Month End Product Volume; Applicable Range. Subject to events of Force Majeure, facility turnarounds, the performance of any third parties (including purchasers of Products under Included Sales Transactions and offtakers pursuant to the Tripartite Product Offtake Agreements), the Company shall, in establishing each Target Month End Product Volume, use commercially reasonable efforts to cause such Target Month End Product Volume to be within the applicable range specified for such Product on Schedule D.

 

(b)Changes to Target Month End Product Volume. At any time the Parties may, by mutual agreement, change such Target Month End Product Volume.

 

7.4Differential Adjustments. Promptly following the twenty-fifth (25th) of each month, Macquarie shall review the data for such month and the immediately succeeding Delivery Month and determine in consultation with the Company, and in good faith and in a commercially reasonable manner, whether, based on such data, an adjustment to any of the Crude Oil or Product Differentials is appropriate so as to more closely approximate applicable market differentials for Crude Oil or Product during that month; provided that, if Macquarie determines in its reasonable judgment that the data for such months does not provide a representative basis for such determination (due to anomalies, distortions or other factors identified by Macquarie), Macquarie shall adjust the applicable Crude Oil and/or Product Differentials commencing with the month immediately following such month (again in accordance with this Section 7.4). Macquarie shall deliver a revised Schedule H to the Company reflecting any such amended Differentials.

 

7.5Products Cover Costs.

 

(a)If, for any month (or portion thereof), Macquarie reasonably determines that, as a result of the Company’s failure to produce the quantities of Product projected under this Agreement, regardless of how caused (including any event of Force Majeure), Macquarie retains insufficient quantities of Product to comply with its obligations to any third parties under Included Sales Transactions, and Macquarie incurs any Products Cover Costs, then the Company shall be obliged to reimburse Macquarie for such Products Cover Costs.

 

(b)If, for any month (or portion thereof), the Company reasonably determines that, solely as a result of the withdrawal of Product from an Included Product Tank by Macquarie (other than pursuant to Included Sales Transactions and/or sales to the Company), there are insufficient quantities of Product available to be sold to the Company by Macquarie pursuant to Section 8.2(b) below and the Company incurs any Product Cover Costs, then Macquarie shall be obliged to reimburse the Company for such Products Cover Costs.

 

7.6Costs Related to Shortfall of Product.

 

(a)To the extent that Macquarie is required to cover, pursuant to an Included Sales Transaction, any shortfall in any Product delivery, which shortfall arises as a result of the failure by the Company to produce, store or deliver when due such Product of the correct quality and quantity, using any inventory Macquarie owns and acquires separately from the inventory owned and maintained in connection with this Agreement, regardless of how caused (including any event of Force Majeure), any out of pocket cost or loss (excluding lost profits) incurred by Macquarie in connection therewith that is not otherwise included as a Products Cover Cost shall constitute an Ancillary Cost that is to be reimbursed to Macquarie.

 

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(b)To the extent that, as a result of the withdrawal of Product from an Included Product Tank by Macquarie, there is a shortfall in any Product to be sold to the Company by Macquarie pursuant to Section 8.2(b) below, any out of pocket cost or loss (excluding lost profits) incurred by the Company in connection therewith that is not otherwise included as a Products Cover Cost shall, notwithstanding anything to the contrary in this Agreement, constitute an Ancillary Cost that is to be reimbursed to the Company by Macquarie.

 

7.7Excess Target Levels. No later than five (5) Business Days prior to the date on which the Company is obligated to establish the Target Month End Crude Inventory Volume or the Target Month End Product Volumes for any month, the Company may request that Macquarie agree to a level for any of the foregoing that, without taking into any account any Crude Cargo Rollover Barrels, exceeds that applicable maximum level set forth on Schedule D (an “Excess Inventory Level”); provided that such request may be for only such month or for a period of two (2) or more consecutive months starting with such month, as the Company shall specify in its request. If such request is made in a timely manner, Macquarie shall promptly review such request and advise the Company as to whether Macquarie accepts or rejects such Excess Inventory Level; provided that, Macquarie is under no obligation to accept any such request. If Macquarie accepts any request for an Excess Inventory Level, then for all purposes of this Agreement and in lieu of the relevant level set forth on Schedule D, such Excess Inventory Level shall constitute the maximum inventory level for the relevant Product Group for the period specified in such request; provided that, after such period, the applicable level set forth on Schedule D shall be in effect for purposes of this Agreement. If Macquarie rejects any such request, then the applicable level set forth on Schedule D shall continue in effect, unless otherwise expressly agreed by the Parties in writing.

 

7.8Excess Inventory Levels.

 

(a)Excess Quantity. If, at any time, either Party determines, with respect to any Product Group, that the aggregate quantity of such Product Group being held in the Included Storage Locations exceeds the maximum inventory level set forth on Schedule D for such Product Group in the Included Storage Locations (such excess, an “Excess Quantity”), such Party shall promptly notify the other Party of the existence and volume of such Excess Quantity. Within three (3) Business Days after such notice is given, Macquarie shall advise the Company as to whether Macquarie accepts such Excess Quantity (in which case Section 7.8(b) shall apply) or rejects such Excess Quantity (in which case Section 7.8(c) shall apply).

 

(b)Response for Excess Quantity. If, and as of the day that, Macquarie accepts an Excess Quantity then:

 

(i)for all purposes of this Agreement, the Excess Inventory Level for the relevant Product Group for the Included Storage Locations shall be increased by such Excess Quantity for the balance of the month in which such Excess Quantity was first identified and, at Macquarie’s option, for such additional month or months as Macquarie may specify; provided that if Macquarie does not accept such Excess Quantity for any additional month or months, such Excess Inventory Level shall only be in effect for the then current month and if the maximum inventory level is exceeded after the end of such current month, the provisions of this Section 7.8 shall apply anew as of the beginning the following month; and

 

(ii)the provisions of this Agreement relating to the purchase and sale of Product (including, without limitation, Article 8 below) shall apply as if such quantity of Product did not constitute Excess Quantity.

 

(c)Deferred Payment for Excess Quantity. If Macquarie rejects an Excess Quantity then, Macquarie shall purchase such Excess Quantity of Product from the Company on deferred payment terms and, accordingly, the provisions of Article 8 below shall not apply and no Monthly True-Up Amount shall be calculated in respect of such Excess Quantity. Instead, on (i) the date on which such Excess Quantity of Product is sold to the Company in accordance with the Weekly Product Projections, Macquarie shall pay to the Company an amount equal to the amount payable for the purchase of such Excess Quantity of Product by the Company, as determined in accordance with the terms of this Agreement; and (ii) the second Business Day following the date on which Excess Quantity of Product is sold to an offtaker in accordance with the terms of the relevant Tripartite Product Offtake Agreement, Macquarie shall pay to the Company an amount equal to the amount payable for the purpose of such Excess Quantity by the relevant offtaker, as determined in accordance with the terms of the relevant Tripartite Product Offtake Agreement. For the purposes of determining when any Excess Quantity of Product is sold, such Excess Quantity shall be deemed to have been withdrawn from the Included Product Tanks first.

 

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8PURCHASE AND DELIVERY OF PRODUCTS

 

8.1Purchase and Sale of Products.

 

(a)Macquarie Purchase of Products. From (and including) the Commencement Date through to (and including) the last day of the Term, the Company agrees to offer to sell and deliver to Macquarie, the entire Products output of the Refinery (excluding Eligible Lien Products). If Macquarie has accepted (or is deemed to have accepted) a Monthly Product Estimate delivered to it pursuant to Section 8.3 below, then Macquarie shall purchase and receive from the Company the entire Products output of the Refinery (excluding the Eligible Lien Products) during the Month in respect of which the Monthly Product Estimate relates, irrespective of whether or not such Products output is consistent with that Monthly Product Estimate.

 

(b)Included Product Purchase Transaction.

 

(i)From time to time, the Company may propose that Macquarie enter into an Included Product Purchase Transaction with an identified Product Supplier or on certain specified trade terms, such as price, quantity, delivery period(s), product grade or any other material term(s) (a “Product Purchase Proposal”). Macquarie may, in its sole and absolute discretion, reject a Product Purchase Proposal from the Company.

 

(ii)If, and only if, the Company and Macquarie agree on the terms for a potential Included Product Purchase Transaction, Macquarie shall use commercially reasonable efforts to promptly enter into a binding agreement with a potential Product Supplier on terms which, unless otherwise agreed by the Company, are at least as favorable to the Company as those specified by the Company in the relevant Product Purchase Proposal, to the extent such terms were accepted by Macquarie. In the event that Macquarie enters into an Included Product Purchase Transaction in accordance with the foregoing procedures, Macquarie shall promptly confirm such Included Product Purchase Transaction and its key trade terms to the Company using Macquarie’s ordinary documentation and confirmation procedures. Macquarie shall use commercially reasonable efforts to obtain the consent of each Product Supplier party to an Included Product Purchase Transaction to Macquarie’s disclosing the applicable trade documents for such Included Product Purchase Transaction to the Company and, if required and so provided, shall share such documents with the Company.

 

(c)Refinery Procured Product Barrels. No later than the fifteenth (15th) day of the month preceding a Delivery Month, the Company shall inform Macquarie whether the Company intends to purchase any Product (other than any Eligible Lien Product) that is being procured under a Refinery Product Contract for delivery during such Delivery Month (“Refinery Procured Product Barrels”) (such notification, a “Refinery Procured Product Notification”). In connection with each such quantity of Refinery Procured Product Barrels, the Company shall provide to Macquarie a transaction supplement in substantially the form annexed hereto as Schedule L (Form of Transaction Supplement) stating the known or estimated quantity, grade and delivery terms of such Refinery Procured Product Barrels expected to be delivered to the Included Product Tanks or such other Included Product Location designated by the Company. Macquarie shall consider any such notification in its sole and absolute discretion and shall notify the Company whether it is willing and able to purchase such Refinery Procured Product Barrels from the Company during such Delivery Month. Macquarie shall be under no obligation to consider any such Refinery Procured Product Notification unless it is satisfied that (i) no Relevant Default or Event of Default with respect to the Company has occurred and is then continuing; (ii) such Refinery Procured Product Barrels are of such grades as Macquarie has approved (including any of the grades specified in any Tripartite Products Offtake Agreement), would fall within an existing Product Group, and such quantity upon delivery does not exceed the maximum inventory level for such Products set forth on Schedule D; and (iii) the purchase by the Company of such Refinery Procured Product Barrels does not and would not cause the Company to breach the terms of any Intermediated Product Offtake Contract. If Macquarie accepts a Refinery Procured Product Notification, Macquarie shall purchase such quantity from the Company on a “DDP” (Incoterms 2010) basis (or such other basis as may be agreed between the Parties) at Current Month Pricing Benchmark(s), subject to the calculation of the Monthly True-Up Amounts as provided for in Schedule C, and title and risk of loss for such quantity shall pass to Macquarie as and when it passes the Products Intake Point free of Liens (other than Permitted S&O Liens). If any change occurs in the quantity, grade or delivery terms of the Refinery Procured Product Barrels that the Company expects to procure for delivery during such month, the Company shall promptly advise Macquarie of such change. The Parties acknowledge that the consideration due from Macquarie to the Company for any Refinery Procured Product Barrels shall be paid for in accordance with Article 11.

 

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8.2Sale and Purchase of Products.

 

(a)Sale of Products from the Company to Macquarie. Unless otherwise agreed by Macquarie, all Products output of the Refinery (other than Eligible Lien Products) that Macquarie has agreed to purchase pursuant to Section 8.1(a) above shall be delivered and sold by the Company to Macquarie at the Products Intake Point of the Included Product Tanks on a DDP (Incoterms 2010) basis (or such other basis as may be agreed between the Parties) at the Current Month Pricing Benchmark(s), subject to the calculation of the Monthly True-Up Amounts as provided for in Schedule C, free and clear of all Liens (other than Permitted S&O Liens), with the Company being responsible for ensuring transportation and delivery of such Product into the Included Product Tanks. Title and risk for loss shall transfer from the Company to Macquarie at the time of such sale.

 

(b)Sale of Products by Macquarie to the Company. Provided no Relevant Default and/or Event of Default has occurred and is continuing, the Company shall be permitted to purchase Products from the Included Product Tanks and take delivery of such Products at any Products Delivery Point in accordance with any accepted Weekly Products Projection, or as otherwise mutually agreed to by the Parties. Though not obligated to do so, Macquarie shall, absent a Relevant Default or an Event of Default, use commercially reasonable efforts to sell Products to the Company before selling to another Person. The sale and delivery of any Products by Macquarie at the Products Delivery Point shall be on an “ex works” basis (EXW Incoterms 2010) at the Current Month Pricing Benchmark(s), subject to the calculation of the Monthly True-Up Amounts as provided for in Schedule C, and free of Liens, other than Permitted S&O Liens which are not Permitted Article 10 Liens. Title and risk of loss for such Products shall pass to the Company as such Products pass the applicable Products Delivery Point. The Company shall bear sole responsibility for the withdrawal of Products from the Included Product Tanks. The Company shall take all commercially reasonable actions necessary to maintain a connection with the Included Product Tanks to enable withdrawal and delivery of Products to be made as contemplated hereby.

 

(c)Sale of Products by Macquarie to Third Party. Macquarie shall not be required to enter into any transactions involving the sale of Products to any third party other than an offtaker pursuant to a Tripartite Product Offtake Agreement. Notwithstanding the foregoing the Company may from time to time propose to Macquarie that Macquarie enter into an Included Sales Transaction, which proposal must specify an identified Customer and trade terms, including price, quantity, delivery period(s), product grade or other material terms (a “Third Party Product Sales Proposal”); provided, that the Company shall not have authority to bind Macquarie to, or enter into on Macquarie’s behalf, any Included Sales Transactions and the Company shall not represent to any Person that it has such authority.

 

(d)If, and only if, the Company and Macquarie agree on the terms for a potential Included Sales Transaction (each in their sole and absolute discretion). Macquarie shall use commercially reasonable efforts to promptly enter into a binding agreement with a potential Customer on pricing terms at least as favorable to the Company as those specified in the Third Party Product Sales Proposal, to the extent such terms were accepted by Macquarie. In the event that Macquarie identifies and enters into such an agreement with a Customer, Macquarie shall promptly finalize and confirm such Included Sales Transaction to the Company using its ordinary documentation and confirmation procedures. Macquarie shall use commercially reasonable efforts to obtain the consent of each Customer party to an Included Sales Transaction to Macquarie’s disclosing the applicable trade documents for such Included Sales Transaction to the Company.

 

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8.3Expected Yield and Estimated Output; Weekly Products Projection.

 

(a)Estimated Yield.

 

(i)From time to time, based on its then current operating forecast for the Refinery, the Company may provide to Macquarie a revised expected Product yield for the Refinery (each, a “Revised Estimated Yield” and, together with the Initial Estimated Yield, an “Estimated Yield”).

 

(ii)By no later than the last Business Day of each month, the Company shall deliver to Macquarie, its expected Product yield for the Refinery for the next three calendar months (the “90-day Product Yield”).

 

(b)Monthly Product Estimate.

 

(i)No later than the twenty-fifth (25th) day of the month preceding a Delivery Month, the Company shall, based on the then current Estimated Yield and such other operating factors as it deems relevant, prepare and provide to Macquarie an estimate in the form of Schedule T of the Product quantities it expects to deliver to Macquarie during such month (each, a “Monthly Product Estimate”).

 

(ii)Macquarie shall have the right to reject any Monthly Product Estimate if it determines that (i) a Relevant Default has occurred and is continuing in respect of the Company and/or an Event of Default has occurred and is continuing; or (ii) such Monthly Product Estimate is not consistent with the terms of any relevant Monthly Crude Purchase Offer that Macquarie has accepted; provided, however, that in the event Macquarie does not reject the same within one (1) Business Day after receiving the Monthly Product Estimate, Macquarie shall be deemed to have accepted the same. In the event Macquarie timely rejects any Monthly Product Estimate, the Parties will meet not later than the following day to seek to agree upon a mutually agreeable alternative.

 

(c)Weekly Product Projection. No later than 5:00 p.m., CT on Thursday of each week, the Company shall provide Macquarie with a written summary in the form of Schedule S of the Company’s projected Product purchases from Macquarie at the Included Product Tanks for the next immediately succeeding Projection Week (each, a “Weekly Product Projection”). Macquarie shall have the right to reject any Weekly Product Projection if it determines that (i) a Relevant Default has occurred and is continuing in respect of the Company and/or an Event of Default has occurred and is continuing; or (ii) such Weekly Product Projection is not consistent with the quantities of Product expected to be stored in the Included Product Tanks on any day during the relevant Delivery Month, after taking into account any quantities of Product that Macquarie has notified the Company that it intends to withdraw from the Included Product Tanks on or prior to such date in accordance with the terms of the Storage Facilities Agreement. In the event Macquarie does not reject a Weekly Product Projection by 5:00 pm CT on the next succeeding Friday, Macquarie shall be deemed to have accepted the same. In the event Macquarie timely rejects any Weekly Product Projection, the Parties will meet not later than the following day to seek to agree upon a mutually agreeable alternative.

 

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8.4Delivered Quantities.

 

(a)Readings. For each Delivery Date, the Company shall provide to Macquarie meter tickets and/or meter readings and tank gauge readings confirming the Measured Product Quantity in each Included Product Tank for each Product delivered during that Delivery Date and other such relevant information including but not limited to Product identifiers and the location of Products, aggregated on a Product Group basis. The Company shall use commercially reasonable efforts to deliver such meter tickets and/or meter readings and tank gauge readings, by no later than 10:00 a.m. CT on the first Business Day following such Delivery Date but shall in any event deliver such meter tickets and/or meter readings and tank gauge readings by no later than 12:00 pm CT on such Business Day.

 

(b)Correction of Readings. If the Company determines that any meter tickets and/or meter readings and tank gauge readings provided pursuant to clause (a) above are inaccurate, the Company shall provide to Macquarie such corrected meter tickets and/or meter readings and tank gauge readings by no later than 10:00 a.m. CT on the third (3rd) Business Day following the date on which such determination is made.

 

8.5Product Specifications. The Company agrees that all Products sold to Macquarie hereunder shall conform to the respective specifications set forth on Schedule B or to such other specifications as are from time to time agreed upon by the Parties, provided that Products that do not conform to specifications shall be subject to mutual agreement between the Parties, each acting in good faith and in a commercially reasonable manner, as to a product differential to reflect such difference in values. The sale of any Products by the Company to Macquarie that do not conform to the respective specifications set forth on Schedule B or to such other specifications as are from time to time agreed upon by the Parties shall not constitute an Event of Default in respect of the Company.

 

8.6Purchase Price of Products. The per Barrel purchase price for the Daily Product Sales and Daily Product Purchases for each type of Product Group bought or sold hereunder shall equal the Current Month Pricing Benchmark specified for such Product Group, subject to the calculation of the Monthly True-Up Amount provided for on Schedule C.

 

8.7Storage of Products. Macquarie shall have the exclusive right (to the extent that such exclusive right can be granted, and except to the extent otherwise expressly contemplated in Section 7.8) to inject into, store in and withdraw Products from the Included Product Tanks as provided under the Storage Facilities Agreement and, if hereafter entered into, any Required Storage and Transportation Arrangements; provided, however, that the Company shall be permitted to withdraw, transfer and inject Products to facilitate the transactions contemplated by this Agreement and as otherwise permitted by the terms of the Storage Facilities Agreement and the other Transactions Documents.

 

8.8Material Product Grade Changes. If either the Company or Macquarie concludes in its reasonable judgment that the specifications or the mix of the constituents of a Pricing Group produced, or projected to be produced, differ materially from those that have generally been produced by the Refinery or those that the Company may produce from time to time in accordance with Accepted Industry Practice, then the Company and Macquarie shall endeavor in good faith to mutually agree on (i) acceptable price indices for such Product, and (ii) a settlement payment from one Party to the other sufficient to compensate the relevant Party for the relative costs and benefits to each of the price differences between the prior price indices and the amended price indices.

 

8.9Product Purchase and Product Sale Adjustments.

 

(a)Product Sale Adjustment. For each day during the Term and for each Product Group, Macquarie shall determine whether an amount is due by one Party to the other in relation to Included Sales Transactions in accordance with the following terms and conditions:

 

(i)In respect of each Product Group and all related Included Sales Transactions entered into on that day, Macquarie shall provide interim invoice statements to the Company during each day for a provisional amount equal to the aggregate sum of the products in relation to each relevant Included Sales Transactions of (A) the quantity of Barrels of such Product Group sold pursuant to such Included Sales Transaction on such day; and (B) the applicable Provisional Contract Price (such aggregate sum, the “Aggregate Product Sale Amount”);

 

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(ii)If, for any Product Group and relevant day, (i) the Aggregate Product Sale Amount exceeds the Index Product Sale Value, then the Product Sale Adjustment for that Product Group shall equal such excess and shall be due to the Company or (ii) the Index Product Sale Value exceeds the Aggregate Product Sale Amount, then the “Product Sale Adjustment” for that Product Group shall equal such excess and shall be due to Macquarie, in each case within two Business Days; and

 

(iii)Once the final price is known for the relevant delivery of Product by Macquarie to a Customer, a further true-up shall be determined and incorporated as a component of the next Monthly True-Up Amount in accordance with Schedule C.

 

(b)Product Purchase Adjustment. For each day during the Term and for each Product Group, Macquarie shall determine whether an amount is due by one Party to the other in relation to Included Product Purchase Transaction in accordance with the following terms and conditions:

 

(i)In respect of each Product Group and all related Included Product Purchase Transactions entered into on a day, Macquarie shall provide interim invoice statements to the Company during each day for a provisional amount equal to the aggregate sum of the products in relation to each Included Product Purchase Transaction of (A) the quantity of Barrels of such Product Group purchased by Macquarie pursuant to such Included Product Purchase Transaction; and (B) the applicable Provisional Contract Price (such amount being, the “Aggregate Product Purchase Amount” in respect of that day);

 

(ii)If, for any Product Group and day, (i) the Aggregate Product Purchase Amounts exceeds the Index Product Purchase Value, then the Product Purchase Adjustment for that Product Group shall equal such excess and shall be due to Macquarie or (ii) the Index Product Purchase Value exceeds the Aggregate Product Purchase Amounts, then the “Product Purchase Adjustment” for that Product Group shall equal such excess and shall be due to the Company, in each case within two Business Day; and

 

(iii)Once the final price is known for the relevant purchase of Product by Macquarie from a Products Supplier, a further true-up shall be determined and incorporated as a component of the next Monthly True-Up Amount in accordance with Schedule C.

 

8.10Upon reasonable request by the Company, Macquarie shall provide such information from Macquarie’s settlement model as the Company may reasonably request regarding the accounting for and settlement of transactions, movements and other costs and amounts under the Transaction Documents.

 

9ANCILLARY COSTS and MONTH END INVENTORY

 

9.1Ancillary Costs.

 

(a)The Parties agree that, to the maximum extent reasonably practicable, the Company shall pay directly any item that would constitute an Ancillary Cost.

 

(b)Without limiting the foregoing, the Company agrees to reimburse Macquarie for all Ancillary Costs incurred by Macquarie. Such reimbursement shall occur from time to time upon demand of Macquarie to the Company and shall be invoiced to the Company in accordance with Article 11 below. When making such demand, Macquarie shall promptly provide the Company with copies of any relevant trade tickets, invoices or other supporting documentation for Ancillary Costs incurred by Macquarie and shall consult with the Company, in good faith and in a commercially reasonable manner to the extent that any such Ancillary Costs are disputed or relate to a claim that has been made against Macquarie prior to settling any such Ancillary Costs.

 

(c)To the extent the Company has not paid or reimbursed Macquarie for any Ancillary Costs then outstanding and payable with respect to any month or any adjustments or refunds have occurred with respect to any Ancillary Costs previously paid or reimbursed, Macquarie may include in the Monthly True-Up Amount for such month as a separate line item on the applicable Monthly True-Up Amount invoice an amount to compensate the Parties, as appropriate, for such items.

 

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(d)From time to time upon the reasonable request of either Party, the Parties shall consult to assess whether (i) Ancillary Costs actually being incurred are consistent with the expectations of the Parties and the terms of this Agreement, (ii) procedures for paying, handling or otherwise dealing with Ancillary Costs can be improved or should be modified, (iii) documentation relating to substantiation of Ancillary Costs is sufficient and (iv) in any other respect the processing of Ancillary Costs hereunder can or improved or modified.

 

9.2Month End Inventory.

 

(a)Ending Inventory.

 

(i)On the first Business Day of any Delivery Month, the Company, using Best Available Inventory Data, provided that if such inventory data is not available, using the last day for which such data is available, shall report to Macquarie the following: (i) the aggregate volume of Crude Oil held in the Crude Storage Tanks at that time (the “Ending In-Tank Crude Inventory”), (ii) for each Product, the aggregate volume of such Product held in the Included Product Locations at that time (each, an “Ending In-Tank Product Inventory”), and (iii) for each Product, the aggregate volume of such Product held in the Company Storage Locations at that time (each, an “Ending Company Product Inventory”). The Company shall use commercially reasonable efforts to deliver the Ending In-Tank Crude Inventory, the Ending In-Tank Product Inventory, and the Ending Company Product Inventory by 10:00 a.m. CT on the relevant Business Day, but shall in any event deliver the same by no later than 12:00 pm CT on such Business Day.

 

(ii)As of 11:59 p.m., CT, on the last day of each month, the Company shall apply the Volume Determination Procedures to the Included Storage Locations, and Company Storage Locations and based thereon shall determine for such month (i) the aggregate volume of Crude Oil held in the Included Storage Locations at that time, (ii) for each Product, the aggregate volume of such Product held in the Included Product Locations at that time and (iii) for each Product, the aggregate volume of such Product held in the Company Storage Locations at that time. The Company shall notify Macquarie of such volumes by no later than 5:00 p.m., CT on the fifth Business Day thereafter, except that with respect to volume information provided by third parties, the Company shall endeavor to cause third parties to provide such information to Macquarie by the fifteenth (15th) day after the end of such month.

 

(b)Inspection of Volume Determination Procedures. Macquarie may, or may have Macquarie’s Inspector, at Macquarie’s sole cost and expense, witness all or any aspects of the Refinery Facilities or any Included Storage Location or Company Storage Location as Macquarie shall direct. If, in the reasonable judgment of Macquarie or Macquarie’s Inspector, the Volume Determination Procedures have not been applied correctly, then the Company shall cooperate with Macquarie, or Macquarie’s Inspector, to ensure the correct application of the Volume Determination Procedures, including making such revisions to the Ending In-Tank Crude Inventory, any Ending In-Tank Product Inventory and any Ending Company Product Inventory as may be necessary to correct any such errors.

 

(c)Records Related to Volume Determination. The Company agrees that in addition to reporting to Macquarie the volume determinations made by the Company pursuant to Section 9.2(a), the Company shall provide to Macquarie copies of all volume reports and statements related to Crude Oil or Products held at any Included Storage Locations or Company Storage Locations or with respect to any hydrocarbon inventories held by the Company at any other locations including any inventory, quantity, or quality inspection reports prepared by a third party.

 

10Pledge over MacquArie’s Property

 

Notwithstanding anything to the contrary contained in any agreement or in any Transaction Document or otherwise in effect, the Company hereby acknowledges and agrees that, Macquarie may, and shall have the right to, pledge and grant a security interest, in favor of any lender to Macquarie from time to time (a “Macquarie Lender”), in and to Macquarie’s Property (and for the avoidance of doubt, Macquarie’s Property does not include the assets or rights of the Company) that is subject to this Agreement (including, without limitation, Crude Oil and Products to which Macquarie holds title while located in Crude Storage Tanks and Included Product Locations), in each case, as collateral security for any and all obligations due and owing by Macquarie or its Affiliates to any such Person, without the need for any consent or approval of, or any further action taken by, the Company or any of the Company’s Affiliates. In consideration of the foregoing, Macquarie shall procure that any such liens and security interests shall be terminated and extinguished automatically at such time as this Supply and Offtake Agreement is terminated (other than with respect to any provisions or obligations, including indemnity obligations, as applicable, that survive such termination pursuant to the terms of the Transaction Documents) and the Company has performed all of its payment obligations under Article 20 and Article 21 of this Agreement.

 

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11PAYMENT PROVISIONS

 

11.1Interim Payments.

 

(a)Macquarie Interim Payments. For each Delivery Date, Macquarie shall calculate a provisional payment (each a “Macquarie Interim Payment”) by applying the applicable Daily Prices to the Daily Crude Purchases and Daily Product Purchases for that day.

 

(b)Company Interim Payments. For each day, Macquarie shall calculate a provisional payment (each a “Company Interim Payment”) by applying the applicable Daily Prices to the Daily Crude Sales for that day and Daily Product Sales for that day (or, in either case, in relation to any volumes of Crude Oil and/or Products which the Company is required to prepay for). If, in accordance with the terms of this Agreement, the Company is required to prepay for any volume of Crude Oil and/or Products, the applicable Daily Price shall be determined as of the date falling two (2) Business Days prior to the relevant Delivery Date and shall be paid by no later than 5:00 p.m. CT on the date falling one (1) Business Day prior to the relevant Delivery Date.

 

(c)Macquarie shall determine the Macquarie Interim payments and Company Interim Payments using Best Available Inventory Data; provided that if inventory data have not been reported on any day within a two (2) Business Day period, Macquarie shall use the inventory data for the day occurring during the thirty (30) day period preceding such day that results in the largest Daily Crude Sales, in any case resulting in an amount equal to the highest daily amount that would be payable to Macquarie (or lowest amount payable by Macquarie); provided further that, if Macquarie determines (including without limitation upon Macquarie’s receipt of updated Best Available Inventory Data) that any inventory data or assumption or estimate it has used in such determination was inaccurate, then Macquarie shall adjust future Company Interim Payments or Macquarie Interim Payments, as applicable, to take account of any corrected or updated inventory data, and Macquarie shall notify the Company of such adjustment when made.

 

(d)The Company shall, at the end of each day, provide to Macquarie inventory reports in the form set forth on Schedule F, showing the quantity of (i) Crude Oil held in the Crude Storage Tanks, (ii) Products held in the Included Product Locations and (iii) Products that are Company Product Inventory.

 

(e)Invoices for Interim Payments. For any Business Day, the Interim Payments and the Party responsible for such Interim Payments shall be determined by Macquarie for all Delivery Dates since the prior Business Day and Macquarie shall advise the Company of the amount of Interim Payments via invoice. Each invoice will contain a breakdown of the applicable Product Groups.

 

(f)Payment Due Dates of Interim Payments. The Interim Payment shall be made by the responsible Party on the Business Day that follows the day Macquarie issues the applicable invoice.

 

11.2Monthly True-Up Amount.

 

(a)Macquarie shall use commercially reasonable efforts to provide to the Company, within five (5) Business Days following receipt of the Ending In-Tank Crude Inventory and the Ending In-Tank Product Inventory pursuant to Section 9.2, a calculation and appropriate documentation to support the calculations for such month contemplated in the Transaction Documents for the Monthly True-Up Amount as set forth in Schedule C. Macquarie may from time to time during a month, if it determines that the Company is not or will not be in compliance with the Minimum Liquidity Requirement, calculate and invoice the Company for a provisional Monthly True-Up Amount based on all applicable data available to it at the time.

 

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(b)If the final or provisional Monthly True-Up Amount is a negative number, then the absolute value of such number shall be the amount due from Macquarie to the Company, and if the final or provisional Monthly True-Up Amount is a positive number, such amount shall be due from the Company to Macquarie. The Company shall pay any final or provisional Monthly True-Up Amount due to Macquarie no later than the two (2) Business Days after the Company’s receipt of the relevant invoice and all related documentation supporting the invoiced amount or such earlier date as may be required by Macquarie if it determines that the Minimum Liquidity Requirement has been breached on or prior to such date and such breach is continuing at the time the payment is due.

 

(c)Macquarie may, upon reasonable request from the Company, provide the Company with a good faith estimate of the expected quantum of any provisional Monthly True-Up Amount that would be payable by the Company if the Company were to breach the Minimum Liquidity Requirement.

 

11.3Maximum Inventory Levels. Notwithstanding any transfer of title to Macquarie to any Crude Oil or Products or the quantity of any Eligible Hydrocarbon Inventory in a Company Storage Location, Macquarie shall not be obligated at any time to pay for any quantity of Crude Oil or Product under Section 11.1 or 11.2 or otherwise hereunder to the extent such payment would relate to an aggregate quantity of Products in the Included Storage Locations in excess of the then applicable maximum inventory level as set forth on Schedule D or as may have been temporarily adjusted under Section 7.7.

 

11.4Invoices.

 

(a)Invoices shall be provided to the Company by Macquarie not later than 5:00 pm CT on a Business Day (and if delivered thereafter shall be deemed delivered on the next succeeding Business Day).

 

(b)If the Company in good faith disputes the amount of any invoice issued by Macquarie relating to any amount payable hereunder (including Interim Payments, Monthly True-Up Amounts or Ancillary Costs), the Company shall pay Macquarie the undisputed amount of such invoice by the due date and inform Macquarie in writing of the portion of the invoice with which it disagrees and why; the Company may retain such disputed amount pending resolution of such dispute. The Parties shall cooperate in resolving the dispute expeditiously. If the Parties agree that the Company does owe some or all of the disputed amount or as may be determined by a court pursuant to Article 26, the Company shall pay such amount to Macquarie, together with interest at a rate equal to SOFR plus 350 basis points from the date such amount was originally due, within two (2) Business Days from, as appropriate, the date of their agreement or the date of the final, non-appealable decision of such court. Following resolution of any such disputed amount, Macquarie shall issue a corrected invoice and any residual payment that would be required thereby shall be made by the appropriate Party within two (2) Business Days or, to the extent the payment is due from the Company, such earlier date after delivery of such invoice as Macquarie may require by specifying therein if it determines that the Minimum Liquidity Requirement has been breached on or prior to such date and that such breach is continuing at such time as such invoice is delivered.

 

11.5Payment Netting. All payments owing under each Crude Transaction and each Product Transaction (each individually referred to as a “Transaction” and collectively, “Transactions”) shall be net such that all amounts owing on a particular day shall result in a single net payment by the owing Party to the owed Party. The Parties agree that if on any date amounts are due and payable by each Party to the other, then, on such date, each Party’s obligation to make payment of any such amounts will be automatically satisfied and discharged by netting the aggregate amount payable by one Party against the aggregate amount payable by the other Party and replacing those payment obligations with a single payment obligation (such obligation, a “Net Payment Amount”) of the Party owing the larger such aggregate amount to pay the net difference between such aggregate amounts to the other Party on the applicable payment date by wire transfer of immediately available funds. The Parties shall cooperate to calculate the aggregate mutual amounts due and payable to or from each Party by examining the payments due on each applicable payment date and determining which Party is the net payer and which is the net receiver.

 

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11.6Other Feedstocks. If Macquarie procures any catfeed or other non-Crude Oil feedstocks for the Company to run at the Refinery, the Parties shall agree in connection with such procurement upon terms for incorporating the purchase of such feedstocks into the daily and monthly settlements contemplated by Section 11.1 and 11.2 above.

 

11.7Interest. Interest shall accrue on late payments under this Agreement at the Default Interest Rate from the date that payment is due until the date that payment is actually received by Macquarie.

 

11.8Payment in Full in Same Day Funds. All payments to be made under this Agreement shall be made by wire transfer of same day funds in U.S. dollars to such bank account at such bank as the payee shall designate in writing to the payor from time to time and, in respect of payments to be made to the Company by Macquarie, by no later than 5:00 p.m. (CT).

 

11.9Shipments from Blakely Island: Any sales of Product by Macquarie to the Company for onward delivery by the Company to any of the Company’s customers by way of a vessel loading at Blakely Island must be prepaid by the Company prior to any removal from the Included Product Locations or any delivery or transfer of title to such Product.

 

11.10Minimum Liquidity Requirement: If, at any time, Macquarie determines that the Company has failed to maintain Unrestricted Cash in compliance with the requirements of Section 19.5, then, without prejudice to any of Macquarie’s rights or remedies under any Transaction Documents or otherwise, Macquarie may require that (i) to the extent that the Company is purchasing Product from Macquarie pursuant to Section 8.2(b) above, that the Company prepay the amount payable to Macquarie prior to any removal from the Included Product Locations or any delivery or transfer of title to such Product; and (ii) 8.2(b)accelerate the timing for any other payments due from the Company to Macquarie in accordance with the terms of this Agreement.

 

12Eligible Hydrocarbon Inventory

 

12.1Eligible Hydrocarbon Inventory Reporting.

 

(a)For each day during the Term, the Company shall provide to Macquarie on the first Business Day following such day, via email, a report in form and substance reasonably satisfactory to Macquarie as illustrated in Schedule F (the “Inventory Report”) showing the inventory quantities that then constitute Eligible Hydrocarbon Inventory, including the quantity and location of each type of inventory. The Company shall use commercially reasonable efforts to deliver the Inventory Report by 10:00 a.m. CT on the relevant Business Day but shall in any event deliver such Inventory Reports by no later than 12:00 pm CT on such Business Day.

 

(b)By delivering an Inventory Report, the Company shall be deemed to represent and warrant to Macquarie (to the same extent as if set forth in this Agreement) that all Hydrocarbons identified as Eligible Hydrocarbon Inventory in such report meet all the requirements of Eligible Hydrocarbon Inventory set forth in this Agreement.

 

13INDEPENDENT INSPECTORS; STANDARDS OF MEASUREMENT

 

13.1Macquarie shall be entitled to have Macquarie’s Inspector, at Macquarie’s sole cost and expense, present at any time the Volume Determination Procedures are to be applied in accordance with the terms of this Agreement and to observe the conduct of Volume Determination Procedures. The foregoing notwithstanding, the reasonable out of pocket costs, of the initial surveying by an independent inspector of the Company’s facilities, shall be paid by the Company.

 

13.2In addition to its rights under Section 13.1, Macquarie may, from time to time during the Term of this Agreement, upon reasonable prior notice to the Company, have Macquarie’s Inspector conduct surveys and inspections of any of the Included Tanks or observe any Crude Oil or Product transmission, handling, metering or other activities being conducted at such Included Tanks or any delivery or offtake point; provided that such surveys, inspections and observations shall not materially interfere with the ordinary course of business being conducted at such Included Tanks or the Refinery. The Company shall cover the reasonable costs of no more than any one such inspection per calendar quarter, which shall constitute Ancillary Costs for the purposes of this Agreement and accordingly, shall be invoiced to the Company no more frequently than once per quarter and shall be payable in accordance with Article 11. The Company acknowledges and agrees that, subject to the provision of reasonable prior notice to the Company, Macquarie shall not be prevent from conducting inspections more than once per calendar month if it considers it necessary or appropriate to do so.

 

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13.3In the event that recalibration of meters, gauges or other measurement equipment is requested by Macquarie such as “strapping,” the Parties shall select a mutually agreeable certified and licensed independent petroleum inspection company (the “Independent Inspection Company”) to conduct such recalibration. The cost of the Independent Inspection Company is to be shared equally by the Company and Macquarie.

 

13.4Standards of Measurement. All quantity determinations herein shall be corrected to sixty (60) degrees Fahrenheit based on a U.S. gallon of two hundred thirty one (231) cubic inches and forty two (42) gallons to the Barrel, in accordance with the latest supplement or amendment to ASTM-IP petroleum measurement tables (Table 6A of ASTM-IP for Crude Oil and Table 6B of ASTM-IP for Products).

 

14FINANCIAL INFORMATION; CREDIT SUPPORT

 

14.1Provision of Financial Information. The Company shall provide Macquarie:

 

(a)as soon as available, but in any event within the earlier of (x) within one hundred twenty (120) days following the end of each of its fiscal years; and, in the case of sub-paragraph (i) below, (y) the date on which the Parent delivered to the SEC the Parent’s consolidated financial statements:

 

(i)a copy of the Parent’s annual report, containing audited consolidated financial statements of the Parent and its consolidated subsidiaries for such fiscal year certified by independent certified public accountants; and

 

(ii)the balance sheet, statement of income and statement of cash flow of the Company and the Parent for such fiscal year, as reviewed by the Parent’s independent certified public accountants;

 

(iii)a copy of the Company’s unaudited financial statement for such fiscal year;

 

(b)as soon as available, but in any event, within the earlier of (x) sixty (60) days after the end of its first three fiscal quarters of each of its fiscal years; and, in the case of sub-paragraph (i) below, (y) the date on which the Parent delivered to the SEC the Parent’s unaudited consolidated financial statements:

 

(i)a copy of the Parent’s quarterly report, containing unaudited consolidated financial statements of the Parent and its consolidated subsidiaries for such fiscal quarter; and

 

(ii)the Company’s quarterly report, containing unaudited financial statements of the Company for such fiscal quarter;

 

(c)if a Default or Event of Default has occurred and is continuing in respect of the Company, as soon as available, but in any event within thirty (30) days after the end of each calendar month (in form and substance satisfactory to Macquarie), the Parent’s consolidated financial statements including a cash flow statement, income statement and balance sheet for the period reported, and certified by a Responsible Officer of the Parent; and

 

(d)if a Default or Event of Default has occurred and is continuing in respect of the Company, as soon as available, but in any event within ninety (90) days after the end of the Parent’s fiscal year, an annual operating budget and financial projections (including income statements, balance sheets and cash flow statements) for such fiscal year, presented in a quarterly format reasonably acceptable to the Macquarie,

 

provided that so long as the Parent is required to make public filings of its quarterly and annual financial results pursuant to the Exchange Act, such filings are available on the SEC’s EDGAR database and such filings are made in a timely manner, then the Company shall not be required to provide the Parent’s annual or quarterly reports to Macquarie.

 

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14.2Additional Information.

 

(a)The Company shall promptly provide Macquarie with copies of any notices sent or received by the Company in relation to the Shell Crude Supply Agreement or Intermediated Product Offtake Contract;

 

(b)The Company shall promptly provide Macquarie with copies of any notices sent or received by the Company in relation to the Plains Terminalling Agreement;

 

(c)Upon reasonable notice, the Company shall provide to Macquarie such additional information as Macquarie may reasonably request to enable it to ascertain the current financial condition of the Company, including product reports in the form of Schedule N; and

 

(d)From time to time, upon reasonable request by Macquarie, the Company shall obtain and provide to Macquarie additional information regarding third party arrangements relating to the operation of the Refinery or any Crude Oil and/or Product, if any, but only to the extent the Company may contractually disclose such arrangements to Macquarie.

 

(e)Any notices of default or acceleration and any other information which is material or would have a material adverse effect on the ability of the Company to comply with its obligations under the Transaction Documents from time to time delivered to the Company or its Affiliates by lenders, agents, noteholders, trustees or other creditors under the outstanding Financing Agreements shall be promptly delivered to Macquarie.

 

(f)Any notices, requests for amendments or waivers and any other information which is material or would have a material adverse effect on the ability of the Company to comply with its obligations under the Transaction Documents from time to time and which are delivered by the Company or its Affiliates to lenders, agents, noteholders, trustees or other creditors under the outstanding Financing Agreements shall be promptly delivered to Macquarie.

 

(g)The Company shall promptly provide to the Macquarie:

 

(i)on the Wednesday of each week during the Term:

 

(A)a cashflow forecast and projected financials report for the immediately succeeding week, which, amongst other matters, specifies the amount of Unrestricted Cash that the Company expects to have on its balance sheet for the immediately succeeding week, in the form agreed between the Company and Macquarie for such purposes and as may be appended to this Agreement on or after the Commencement Date (the “Cashflow Forecast”); and

 

(B)confirmation from two directors of the Company that (1) the Cashflow Forecast for the immediately succeeding week represents the good faith and reasonable expectations of the Company in respect of the relevant period; and (2) the Company complied with the requirements of Section 19.5 (Negative Covenants) for the immediately preceding week; and

 

(ii)at any other time upon reasonable request by Macquarie, such other information as Macquarie may require for the purpose of determining whether the Minimum Liquidity Requirement have been breached.

 

14.3Notification of Certain Events. The Company shall notify Macquarie (i) of the matters set forth in Section 15.3 (as and to the extent set forth therein), and (ii) within four (4) Business Days after learning of any of the following events:

 

(a)The Parent’s, the Company’s or any of the Parent’s Subsidiaries binding written agreement to sell, lease, sublease, transfer or otherwise dispose of, or grant any Person an option to acquire, in one transaction or a series of related transactions, all or a material portion of the Refinery assets;

 

(b)The Company’s or any of its Affiliates’ binding agreement to consolidate or amalgamate with, merge with or into, or transfer all or substantially all of its assets to, another entity (including an Affiliate);

 

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(c)An early termination of or any notice of or the occurrence of any “event of default” under any Base Agreement, if any;

 

(d)An early termination of or any notice of or the occurrence of an “event of default” under any Financing Agreement;

 

(e)Any Master Agreement Termination Event;

 

(f)An early termination of or any notice of or the occurrence of an “event of default” under the Guaranty;

 

(g)Any default of a material obligation under, or termination or revocation, of any Plains Agreement;

 

(h)An amendment to any Financing Agreement; provided that the Company shall notify Macquarie at least ten (10) Business Days prior to entering into any new Financing Agreement; and

 

(i)The execution of any agreement or other instrument or the announcement of any transaction or proposed transaction that contemplates or results in a Change of Control or Specified Event.

 

14.4Credit Support.

 

(a)Guaranty. As a condition to Macquarie’s entering into this Agreement, the Company has agreed to provide the Guaranty to Macquarie, as credit support for the prompt and complete performance and payment of all of the Company’s obligations hereunder and under the other Transaction Documents.

 

(b)Lien Documents. As further security for the prompt and complete payment of all amounts due or that may become due hereunder, the Company shall grant the Lien contemplated by, comply with the terms of and maintain in full force and effect the Lien Documents and assist Macquarie in maintaining any UCC financing statements or other filings necessary to preserve Macquarie’s Liens pursuant to the Lien Documents.

 

(c)Independent Amount.

 

(i)As security for the prompt and complete payment of all amounts due or that may become due from the Company, to Macquarie, and the performance by the Company of all covenants and obligations to be performed by it for Macquarie pursuant to this Agreement and all other Transaction Documents and all outstanding transactions hereunder and thereunder, inclusive of all of the Company’s aggregate obligations under Transactions (collectively, the “Obligations”), the Company hereby pledges, assigns, conveys and transfers to Macquarie as margin, and hereby grants to Macquarie a present and continuing security interest in and to, and a general first lien upon and right of set off against, the amount of U.S. dollars constituting the Independent Amount and all interest and other proceeds from time to time received, receivable or otherwise distributed in respect thereof, or in exchange therefor; provided that (i) the Company shall effect such pledge, assignment, conveyance and transfer of the Independent Amount as and when required under Section 4.3 hereof and (ii) once the full amount (or any subsequent additional portions thereof) of the Independent Amount has been so pledged, assigned, conveyed and transferred, the Company agrees that for the duration of the Term, it shall maintain such pledge, assignment, conveyance and transfer (subject to permitted reductions in the amount of such Independent Amount as set forth in the Independent Amount Letter) and take such action as Macquarie reasonably requests, including providing Macquarie with possession of an amount of immediately available funds necessary to satisfy the then prevailing required Independent Amount, as applicable, in order to perfect Macquarie’s continuing security interest in, and lien on (and right of setoff against), such amount. Notwithstanding the provisions of Applicable Law, at all times even if no Event of Default has occurred and is continuing with respect to Macquarie, then Macquarie shall have the right to sell, pledge, rehypothecate, assign, invest, use, commingle or otherwise use in its business all or any portion of the Independent Amount, free from any claim or right of any nature whatsoever of the Company, including any equity or right of redemption by the Company. Nothing in this Section 14.4(c) shall limit any rights of Macquarie under any other provision of this Agreement or any other Transaction Documents, including without limitation, under Section 14.4(a) or Article 20 below. The Company acknowledges and agrees that, as provided in the Master Agreement, the Independent Amount constitutes credit support for the Company’s obligations under the Master Agreement in accordance with the terms thereof. Macquarie shall exercise reasonable care to assure the safe custody of the Independent Amount to the extent required by Applicable Law.

 

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(d)As further security for the prompt and complete payment of all amounts due or that may become due hereunder, the Company shall grant the Lien contemplated by, comply with the terms of and maintain in full force and effect the Lien Documents and assist Macquarie in maintaining any UCC financing statements or other filings necessary to preserve Macquarie’s Liens pursuant to the Lien Documents.

 

15REFINERY TURNAROUND, MAINTENANCE AND CLOSURE

 

15.1As between Macquarie and the Company, the Company shall be responsible for all operations and maintenance of Included Storage Locations which are, directly or indirectly, owned by the Company. The Company shall promptly notify Macquarie in writing of the date for which any inspection, maintenance, restart or turnaround at the Included Storage Locations, Refinery or the Refinery Facilities has been scheduled, or any revision to previously scheduled inspection, maintenance, restart or turnaround, which may materially affect receipts of Crude Oil at the Refinery, the Included Tanks, the processing of Crude Oil in the Refinery or the delivery of Products to Macquarie or by Macquarie to the Company or any third parties, it being acknowledged that any turnaround shall be considered material for these purposes; provided that, (i) promptly after the Company completes its annual business plan with respect to any year, it shall notify Macquarie of any such inspection, maintenance, restart or turnaround contemplated with respect to such year and (ii) the Company shall give Macquarie at least two (2) months’ prior written notice of the commencement of any such scheduled restart or turnaround or any inspection or maintenance which would be reasonably expected to have a material impact on the Refinery’s operations.

 

15.2Promptly upon request by Macquarie, acting reasonably, and in any event no later than five (5) Business Days following the end of each Delivery Month and to the extent it is permitted to do so contractually and is not otherwise subject to any confidentiality restrictions, the Company shall use commercially reasonable efforts to promptly deliver to Macquarie information relating to the partial conversion of the Refinery for the production of Products constituting renewable diesel including costs incurred to date and projected further costs, staffing requirements, projected downtime, changes to the expected consumption of Crude Oil or any other feedstocks, negotiations with suppliers, and such other information that Macquarie may reasonably request.

 

15.3The Company shall (i) promptly notify Macquarie of any discharge into the environment of any Hydrocarbons, in a manner contrary to Applicable Law, which discharge would reasonably be expected to result in a Material Adverse Change, and (ii) use commercially reasonable efforts to notify Macquarie promptly of the suspension, for a period in excess of twenty-four (24) hours, of more than 50% of the applicable daily forecasted production of all Products (taken as a whole) at the Refinery as set forth in the Weekly Product Projection; provided that, in each case, such notice must first be delivered orally and followed by prompt written notice.

 

15.4In the event of a scheduled shutdown of the Refinery, the Company shall, to the extent feasible and commercially reasonable (as determined in accordance with Accepted Industry Practice, complete processing of all Crude Oil being charged to, processed at or consumed in the Refinery at that time.

 

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15.5             

 

(a)Subject to Section 15.5(b) below, if at any time Macquarie determines that the maintenance and operation of all or any portion of the facilities constituting an Included Storage Location (in each case, “Identified Facilities”) in accordance with the Company’s policies and procedures would fail to satisfy Macquarie’s then applicable policies and procedures (such policies and procedures to be in reasonable accordance with and not to exceed industry, regulatory and customary practices) relating to the prudent maintenance and operation of storage tanks, pipeline facilities, vessels and other infrastructure used to store or transport crude oil and/or refined products (“Macquarie’s Policies and Procedures”), and without limiting any other rights and remedies available to Macquarie hereunder or under any other Transaction Document, Macquarie may provide the Company notice of such failure so long as such failure is continuing and, if Macquarie provides such notice, the following provisions shall be applicable:

 

(i)in the case of any Identified Facilities that are subject to the Storage Facility Agreement, upon such date as Macquarie shall specify, but not less than two hundred seventy (270) days after the date such notice is delivered to the Company (so as to allow to the Company time to remedy the non-compliance or other failure or to find substitute financial arrangements), such Identified Facilities shall cease to constitute an Included Storage Location (or part of an Included Storage Location) for purposes hereof and any payment to Macquarie in respect of any Crude Oil or Products held in such Identified Facilities shall, unless such failure has been cured to the reasonable satisfaction of Macquarie, become due in accordance with the provisions of Article 11 hereof; and

 

(ii)in the case of any Identified Facilities that are subject to a Required Storage and Transportation Arrangement, the Parties shall endeavor, within not more than two hundred seventy (270) days after the date such notice is delivered to the Company (so as to allow to the Company time to remedy the non-compliance or other failure or to find substitute financial arrangements), to execute such rights, provide such notices, negotiate such reassignments or terminations and/or take such further actions as Macquarie deems necessary or appropriate to terminate Macquarie’s status as the party entitled to use and/or hold Crude Oil or Products at such Identified Facilities and, concurrently with effecting the termination of such status, such Identified Facilities shall cease to constitute an Included Storage Location (or part of an Included Storage Location) for purposes hereof and any payment to Macquarie in respect of any Crude Oil or Products held in such Identified Facilities shall become due in accordance with the provisions of Article 11 hereof.

 

(b)Macquarie’s rights under Section 15.5(a) above are subject to the following additional terms and conditions:

 

(i)Macquarie shall apply Macquarie’s Policies and Procedures with respect to the Included Storage Locations in a non-discriminatory manner as compared with other similar storage tanks and pipeline facilities utilized by Macquarie in a similar manner;

 

(ii)If the failure of any Identified Facilities to satisfy Macquarie’s Policies and Procedures is a result of Macquarie’s Policies and Procedures exceeding the standards or requirements imposed under Applicable Law or good and prudent industry practice, then (1) Macquarie shall not require the removal of such Identified Facilities as Included Storage Locations until the 270th day after giving the Company written notice of such failure, (2) during such 270 day period, Macquarie shall consult with the Company in good faith to determine whether based on further information provided by the Company such Identified Facilities comply with Macquarie’s Policies and Procedures and/or whether additional actions or procedures can be taken or implemented so that, as a result, such Identified Facilities would comply with Macquarie’s Policies and Procedures, and (3) if it is determined that such Identified Facilities do comply with Macquarie’s Policies and Procedures or, as a result of such additional actions or procedures, such Identified Facilities become so compliant within such 270 day period, then such Identified Facilities shall not cease to be Included Storage Locations based on the noncompliance stated in Macquarie’s notice to the Company;

 

(iii)If within the 270 day period referred to in clause (ii)(2) above, the Company has identified and diligently commenced the implementation of additional actions or procedures that are intended to result in such Identified Facilities becoming compliant with Macquarie’s Policies and Procedures, but such implementation cannot through commercially reasonable efforts be completed within such 270 day period, then so long as the Company continues to diligently and in a commercially reasonable manner pursue the implementation of such additional actions and procedures, Macquarie shall extend such 270 day period up for up to an additional ninety (90) days (or such longer period as the Parties may mutually agree) to allow for such implementation to be completed and if such implementation is completed within such additional 90 day period (or such longer period as the Parties may mutually agree), then such Identified Facilities shall not cease to be Included Storage Locations based on the noncompliance stated in Macquarie’s notice to the Company; and

 

(iv)If any Identified Facilities cease to be Included Storage Locations pursuant to Section 15.5(a) above and thereafter Macquarie determines, in its reasonable good faith judgment, that such Identified Facilities have become compliant with Macquarie’s Policies and Procedures, then Macquarie shall promptly cooperate with the Company to re-establish such Identified Facilities as Included Storage Locations hereunder.

 

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16TAXES

 

16.1 (a)The Company shall pay and indemnify and hold Macquarie harmless against, the amount of all sales, use, value added, transfer, stamp, property, duties, ad valorem, or other similar taxes, (but excluding all taxes imposed on or measured by net income or profits, all franchise taxes, all branch profits taxes, and all U.S. federal withholding taxes, including U.S. federal withholding tax imposed pursuant to FATCA), howsoever designated regardless of the taxing authority, and all penalties and interest thereon, paid, owing, asserted against, or incurred by Macquarie directly or indirectly with respect to the Crude Oil procured and sold to Company hereunder, and the Products purchased and resold to Company hereunder, and other transactions contemplated hereunder, except to the extent any such taxes, penalties, or interest are due to the gross negligence or willful misconduct of Macquarie or breach of the terms hereof by Macquarie (each indemnifiable tax is a “Tax” and collectively are “Taxes”). The Company shall pay when due such Taxes unless there is an applicable exemption from such Tax, with written confirmation of such Tax exemption to be contemporaneously provided to Macquarie. To the extent Macquarie is required by law to collect such Taxes, one hundred percent (100%) of such Taxes shall be added to invoices as separately stated charges and paid in full by the Company in accordance with this Agreement, unless the Company is exempt from such Taxes and furnishes Macquarie with a certificate of exemption, and Macquarie shall timely pay the full amount of such Taxes to the applicable taxing authority. Any refund or credit with respect to any Taxes paid or indemnified by the Company hereunder shall belong to the Company. For the avoidance of doubt, Macquarie shall be responsible for all taxes imposed on or measured by Macquarie’s net or gross (or any derivative thereof) income, and the Company shall be responsible for all taxes imposed on or measured by the Company’s net or gross (or any derivative thereof) income.

 

(b)In addition to paragraph (a) above, the Company shall complete and file all necessary property tax returns on Macquarie’s behalf with respect to Crude Oil and Products, regardless of whether property tax laws place the obligation to do so upon Macquarie or the Company, disclose Macquarie’s ownership interest therein, and pay such amounts as due. Provided that the Company pays (or indemnifies Macquarie for) all such property Taxes, the Company shall have the first right to claim income tax credits for such property Taxes paid and shall be solely responsible for the extent to which such credits are available to or realized by the Company.

 

16.2If the Company disagrees with Macquarie’s determination that any Tax is due with respect to transactions under this Agreement, the Company shall have the right to seek an administrative determination from the applicable taxing authority, or, alternatively, the Company shall have the right to contest any asserted claim for such Taxes, subject to its agreeing to indemnify Macquarie for the entire amount of such contested Tax should such Tax be deemed applicable. Macquarie agrees to reasonably cooperate with the Company, in the event the Company determines to contest any such Taxes. Company shall be responsible for all reasonable out of pocket costs and expenses incurred by Company or Macquarie in the event Company decides to seek an administrative determination from the applicable taxing authority or to contest any such Taxes. The Company and Macquarie agree to act reasonably in cooperating with each other to claim any refund or drawback of such Taxes at the time or times reasonably requested by the other Party.

 

16.3(a) The Company and Macquarie shall promptly inform each other in writing of any assertion by a taxing authority of additional liability for Taxes in respect of said transactions. Any legal proceedings or any other action against Macquarie with respect to such asserted liability shall be under Macquarie’s direction but the Company shall be kept reasonably informed and consulted by Macquarie, provided that so long as the Company has sufficient available liquidity (as reasonably determined by Macquarie), then the Company shall have the option to assume the control and direction of any such legal proceedings or actions. Any legal proceedings or any other action against the Company with respect to such asserted liability shall be under the Company’s direction but Macquarie shall be consulted. In any event, the Company and Macquarie shall fully cooperate with each other as to the asserted liability. Each Party shall bear all the reasonable out of pocket costs of any action undertaken by the other at the Party’s request.

 

(b)In addition to paragraph (a) above and other information sharing requirements applicable to Macquarie and the Company, Macquarie and the Company shall annually and from time to time as is otherwise reasonable exchange and share information with each other as necessary to properly report, defend, challenge, and pay Taxes (including but not limited to sales taxes and file tax returns (including without limitation any returns referred to in Section 16.1(a)), including information that supports and demonstrates total sales, sales that are exempt from Tax, and sales that are subject to Tax at a reduced rate.

 

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16.4On or prior to the date of this Agreement (and from time to time thereafter upon the reasonable request of the Company), Macquarie shall deliver to the Company an executed original of IRS Form W-8 or W-9, as applicable, certifying that Macquarie is exempt from U.S. federal backup withholding tax, and if such form expires or becomes obsolete in any respect, Macquarie shall provide an updated form certifying that it is exempt from U.S. federal backup withholding tax.

 

16.5Any other provision of this Agreement to the contrary notwithstanding, this Article 16 shall survive until ninety (90) days after the expiration of the statute of limitations for the assessment, collection, and levy of any Tax.

 

17INSURANCE

 

17.1Insurance Coverages. The Company shall procure and maintain in full force and effect throughout the Term of this Agreement insurance coverages of the following types and amounts and with insurance companies rated not less than A- by A.M. Best Company, or otherwise equivalent in respect of the Company’s properties and operations consistent with or exceeding, the insurance coverage that the Company maintains as of the date of this Agreement.

 

(a)Property damage including business interruption coverage on an “all risk” basis, including but not limited to flood, earthquake, windstorm, and tsunami, covering damage to the Refinery Facilities and the Included Storage Locations on a repair or replacement cost basis in an amount sufficient to repair major components of such Included Storage Locations. Business interruption and extra expense coverage shall include at least 18 months indemnity period and shall be in an amount equal to the projected net income and costs that would necessarily continue from such Refinery Facilities based upon the Company’s reasonable estimate thereof. The property damage and business interruption premium must be maintained with a minimum amount of $850,000,000 per occurrence with sub-limits in a minimum amount of $200,000,000 for earthquake, flood and windstorm, each peril separately.

 

(b)Inventory coverage on an “all risk” basis, including but not limited to flood, earthquake, windstorm, and tsunami, covering the loss, damage, destruction and/or theft of the Refinery’s Crude Oil and Products in an amount equal to the market value or potential full replacement cost. Such coverage may be incorporated into the property insurance required in Section 17.1(a).

 

(c)Commercial general liability coverage which includes bodily injury, broad form property damage and contractual liability, cross suit liability, products and completed operations liability, and sudden and accidental pollution liability, in a minimum amount of $1,000,000 per occurrence and $2,000,000 in the aggregate.

 

(d)(i) Workers compensation in the amount required by Applicable Law, and (ii) employer’s liability with a minimum amount of $1,000,000 per accident, $1,000,000 per disease, and $1,000,000 aggregate.

 

(e)Commercial automobile liability insurance in a minimum amount of $1,000,000 per accident, or as required by Applicable Law.

 

(f)Umbrella/excess liability coverage providing coverage with respect to the coverage required under Sections 17.1(c), Section 17.1(d)(ii) and Section 17.1(e) in a minimum amount of $500,000,000 per occurrence and in the aggregate.

 

17.2Additional Insurance Requirements.

 

(a)The foregoing policies in Section 17.1, in each case, shall include or provide that the underwriters waive all rights of subrogation against Macquarie and the insurance is primary without contribution from Macquarie’s insurance. The foregoing policies in Section 17.1 shall, in each case, include (i) Macquarie as additional insured and (ii) Macquarie as loss payee under Sections 17.1(b) only.

 

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(b)The Company shall cause its insurance carriers or its authorized insurance broker to furnish Macquarie with insurance certificates, in Acord form or equivalent, evidencing the existence of the coverages and the endorsements required above. The Company shall provide thirty (30) days’ written notice prior to cancellation or material modification of insurance becoming effective. The Company also shall provide renewal certificates prior to expiration of the policy.

 

(c)The Company shall comply with all notice and reporting requirements in the foregoing policies and timely pay all premiums.

 

(d)The Company shall be responsible for any deductibles or retentions that are applicable to the insurance required pursuant to Section 17.1.

 

17.3No Reduction or Release. The mere purchase and existence of insurance does not reduce or release either Party from any liability incurred or assumed under this Agreement.

 

17.4Macquarie Insurance. Macquarie shall maintain its own insurance in relation to any Crude Oil or Products owned by it and any Eligible Hydrocarbon Inventory, and such insurance shall be the primary policy in respect of such Crude Oil or Products. To the extent that any insurance procured by Macquarie is duplicative with insurance procured by the Company, the insurance procured by the Company shall the secondary policy in respect of such Crude Oil or Products.

 

18FORCE MAJEURE

 

18.1If a Party is rendered unable by an event of Force Majeure to perform in whole or in part any obligation or condition of this Agreement (the “Affected Party”), it shall not be liable to the other Party to perform such obligation or condition (except for payment and indemnification obligations) for so long as the event of Force Majeure exists and to the extent that performance is prevented or materially hindered, in whole or in part, by such event of Force Majeure; provided, however, that the Affected Party shall use any commercially reasonable efforts to avoid or remove the event of Force Majeure. During the period that performance by the Affected Party of a part or whole of its obligations under this Agreement has been suspended by reason of an event of Force Majeure, the other Party (the “Non-Affected Party”) may suspend the performance of all or a part of its obligations hereunder (except for any payment and indemnification obligations) to the extent that such suspension is commercially reasonable in respect of such event of Force Majeure and which obligations of the Affected Party are suspended as a result thereof, except for any payment and indemnification obligations. The Parties acknowledge that if, as a result of an event of Force Majeure, the Company were to suspend its receipt and/or processing of Crude Oil, then Macquarie would be entitled to suspend, to a comparable extent, its purchasing of Products.

 

18.2The Affected Party shall give prompt oral notice to the Non-Affected Party of its declaration of an event of Force Majeure, to be followed by written notice within twenty-four (24) hours after receiving such oral notice of the occurrence of a Force Majeure event, including, to the extent feasible, the details and the expected duration of the Force Majeure event and the volume of Crude Oil or Products affected. The Affected Party also shall promptly notify the Non-Affected Party when the event of Force Majeure is terminated. However, the failure or inability of the Affected Party to provide such notice within the time periods specified above shall not preclude it from declaring an event of Force Majeure.

 

18.3In the event the Affected Party’s performance is suspended due to an event of Force Majeure in excess of sixty (60) consecutive days after the date that notice of such event is given pursuant to Section 18.2 above, and so long as such event is continuing, the Non-Affected Party, in its sole discretion, may terminate or curtail its obligations under this Agreement affected by such event of Force Majeure (the “Affected Obligations”) by giving notice of such termination or curtailment to the Affected Party, and neither Party shall have any further liability to the other in respect of such Affected Obligations to the extent terminated or curtailed, except for the rights and remedies previously accrued under this Agreement, any payment and indemnification obligations by either Party under this Agreement and the obligations set forth in Article 21. Without limiting any rights of any Non-Affected Party under this Article 18, the parties agree that following notice of an event of Force Majeure, they shall consult in good faith to assess potential actions or steps with respect thereto.

 

18.4If any Affected Obligation has been suspended but has not been terminated pursuant to this Article 18 or any other provision of this Agreement, performance shall resume to the extent made possible by the end or amelioration of the event of Force Majeure in accordance with the terms of this Agreement; provided, however, that the term of this Agreement shall not be extended.

 

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18.5The Parties acknowledge and agree that the right of Macquarie to declare a Force Majeure based upon any failure by a Third Party Supplier to deliver Crude Oil under a Macquarie Crude Procurement Contract or Products under an Included Product Purchase Transaction is solely for purposes of determining the respective rights and obligations as between Macquarie and the Company with respect to any Crude Oil or Products delivery affected thereby, and any such declaration shall not excuse the default of such Third Party Supplier under one or more Macquarie Crude Procurement Contracts or Included Product Purchase Transactions. Any claims that Macquarie may have as a result of such Third Party Supplier’s failure shall be subject to Section 5.9 and any other applicable provisions of this Agreement relating to claims against third parties.

 

18.6If at any time during the Term any of the Required Storage and Transportation Arrangements cease to be in effect (in whole or in part) or any of the applicable Included Product Pipelines or Included Product Tanks cease, in whole or in part, to be available to Macquarie pursuant to the Required Storage and Transportation Arrangements, and the foregoing is a result of or attributable to any owner or operator of such Included Product Pipelines or Included Product Tanks becoming Bankrupt or breaching or defaulting in any of its obligations relating to the Required Storage and Transportation Arrangements, then:

 

(a)The Company shall use commercially reasonable efforts to promptly establish for Macquarie’s benefit alternative and/or replacement storage and transportation arrangements no less favorable to Macquarie (in Macquarie’s reasonable judgment) than those that have ceased to be available;

 

(b)Until such alternative and/or replacement arrangements complying with clause (a) above have been established, each Party shall be deemed to have been affected by an event of Force Majeure and its obligations under this Agreement shall be curtailed to the extent such performance is hindered by such lack of effectiveness of any Required Storage and Transportation Arrangements or the availability of any pipeline or storage facility related thereto; and

 

(c)Without limiting the generality of the foregoing, in no event shall Macquarie have any obligation under or in connection with this Agreement to store Crude Oil or Product in any pipeline or store Crude Oil or Product in any storage facility at any time from and after the owner or operator thereof becomes Bankrupt. If any such storage facility is an Included Storage Location then Macquarie may, in its discretion, elect upon written notice to the Company that such storage facility shall cease to be an Included Storage Location as of a date specified in such written notice in which case any Crude Oil or Product held by Macquarie therein shall be purchased by the Company in accordance with the applicable provisions of Sections 11.1 and 11.2 hereof.

 

19REPRESENTATIONS, WARRANTIES AND COVENANTS

 

19.1Mutual Representations. Each Party represents and warrants to the other Party as of the Effective Date and each sale of Crude Oil hereunder, that:

 

(a)It is an “Eligible Contract Participant,” as defined in Section 1a(18) of the Commodity Exchange Act, as amended.

 

(b)It is a “forward contract merchant” in respect of this Agreement and each sale of Crude Oil or Products hereunder constitutes a “forward contract,” as such term is used in Section 556 of the Bankruptcy Code.

 

(c)It is duly organized and validly existing under the laws of the jurisdiction of its organization or incorporation and in good standing under such laws.

 

(d)It has the corporate, governmental or other legal capacity, authority and power to execute and deliver the Transaction Documents to which it is a party and to perform its obligations under this Agreement, and has taken all necessary action to authorize the foregoing.

 

(e)The execution, delivery and performance of the Transaction Documents to which it is a party and the performance of its obligations thereunder and the consummation of the transactions contemplated thereby do not violate any Applicable Law (to its knowledge), any provision of its constitutional documents, any order or judgment of any court or Governmental Authority applicable to it or any of its assets or any contractual restriction binding on or affecting it or any of its assets.

 

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(f)Except for the filing of UCC-1 or UCC-3 financing statements and the Lien Documents in applicable state and county filing offices, all governmental and other authorizations, approvals, consents, notices and filings that are required to have been obtained or submitted by it with respect to the Transaction Documents have been obtained or submitted and are in full force and effect, and all conditions of any such authorizations, approvals, consents, notices and filings have been complied with, except for such of the foregoing the absence or failure of which would not result in a Material Adverse Change.

 

(g)Its obligations under the Transaction Documents to which it is a party constitute its legal, valid and binding obligations, enforceable in accordance with its terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors’ rights generally and subject, as to enforceability, to equitable principles of general application regardless of whether enforcement is sought in a proceeding in equity or at law).

 

(h)No Event of Default or Default has occurred and is continuing with respect to such Party, and no such event or circumstance would occur as a result of its entering into or performing its obligations under the Transaction Documents.

 

(i)There is not pending or, to its knowledge, threatened against it or any of its Affiliates any action, suit or proceeding at law or in equity or before any court, tribunal, Governmental Authority, official or any arbitrator that is likely to affect the legality, validity or enforceability against it of the Transaction Documents or its ability to perform its obligations under the Transaction Documents.

 

(j)It is not relying upon any representations of the other Party other than those expressly set forth in this Agreement or the other Transaction Documents.

 

(k)It has entered into this Agreement as principal (and not as advisor, agent, broker or in any other capacity, fiduciary or otherwise), with a full understanding of the material terms and risks of the same, and is capable of assuming those risks.

 

(l)It has made its trading and investment decisions (including their suitability) based upon its own judgment and any advice from its advisors as it has deemed necessary and not in reliance upon any view expressed by the other Party.

 

(m)The other Party (i) is acting solely in the capacity of an arm’s-length contractual counterparty with respect to this Agreement, (ii) is not acting as a financial advisor or fiduciary or in any similar capacity with respect to this Agreement and (iii) has not given to it any assurance or guarantee as to the expected performance or result of this Agreement.

 

(n)It is not bound by any agreement that would be violated by the execution, delivery or performance of this Agreement.

 

(o)Neither it nor any of its Affiliates has been contacted by or negotiated with any finder, broker or other intermediary in connection with the sale or purchase of Crude Oil or Products hereunder who is entitled to any compensation with respect thereto.

 

(p)None of its directors, officers, employees or agents or those of its Affiliates has received or shall receive any commission, fee, rebate, gift or entertainment of significant value in connection with this Agreement.

 

19.2Company’s Representations. The Company represents and warrants as follows:

 

(a)The Parent and the Company, individually and collectively, are not Insolvent.

 

(b)No representation, warranty or other statement made by the Company or the Parent in any Transaction Document, certificate or written statement furnished to Macquarie, taken together with all such certificates, Transaction Documents and written statements, contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained in such Transaction Documents, certificates or statements not misleading, it being recognized by Macquarie that the projections and forecasts provided by the Company and the Parent in good faith and based upon reasonable assumptions are not to be viewed as facts and that actual results during the period or periods covered by any such projections and forecasts may differ from the projected or forecasted results.

 

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(c)As of the Commencement Date, Macquarie has received the Current Financial Statements of the Parent. The Current Financial Statements fairly present in all material respects Parent’s consolidated financial condition as of the dates thereof and consolidated results of operations for the periods then ended, subject, in the case of unaudited financial statements, to normal year-end adjustments and the absence of footnote disclosures. On the Commencement Date, there has not been a Material Adverse Change in the financial condition of the Parent, the Company or any of their respective Subsidiaries, taken as a whole, since the date of the most recent of such Current Financial Statements.

 

(d)None of the Company, the Parent or any of its Subsidiaries, and to its Knowledge, any of their directors, officers, agents, employees or Affiliates is, or is owned or controlled (as such terms are defined in the applicable Sanctions Laws) by Persons that are, currently subject to or the target of any Sanctions Laws, or is a Sanctions Target, or is located, organized or resident in a country or territory that is the subject of Sanctions. The Company will not Knowingly directly or indirectly use the proceeds of any payment made to it by Macquarie or otherwise make available such proceeds to any Person, for the purpose of materially financing the activities of any Person currently subject to any Sanctions.

 

(e)To the Knowledge of the Company, neither the entry into any of the Transaction Documents nor the use of any payments received thereunder will materially violate (i) the United States Trading with the Enemy Act, as amended, (ii) any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) executive order relating thereto, (iii) Executive Order No. 13,224, 66 Fed Reg 49,079 (2001), issued by the President of the United States (Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit or Support Terrorism) (the “Terrorism Order”), (iv) USA PATRIOT ACT, or (v) USA FREEDOM ACT. No part of any payment made to the Company under and in accordance with the terms of this Agreement will be Knowingly used, directly or indirectly, for any material payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.

 

(f)To the Knowledge of the Company, neither it, nor the Parent, (i) is or will become a “blocked person” as described in Section 1.01 of the Terrorism Order or (ii) engages or will engage in any dealings or transactions, or is otherwise associated, with any such blocked person.

 

(g)To the Knowledge of the Company, it, the Parent, and their respective Affiliates are in compliance, in all material respects, with the USA PATRIOT ACT and the USA FREEDOM ACT.

 

(h)To the Knowledge of Parent, the Company and their respective directors, officers and employees and, to the Knowledge of the Company, the agents of the Company, are in material compliance with all applicable Sanctions and all Anti-Corruption Laws and Anti-Money Laundering Laws. The Company and the Parent have instituted and maintain policies and procedures designed to ensure continued compliance with applicable Sanctions Laws and Anti-Corruption Laws and Anti-Money Laundering Laws.

 

19.3Company Covenants. The Company represents, warrants and covenants to Macquarie as follows:

 

(a)The Company shall deliver true and complete copies of the Base Agreements and all amendments thereto to Macquarie as and when such agreements are entered into by the Company.

 

(b)The Company shall in all material respects perform its obligations under and comply with the terms of the Base Agreements and Required Storage and Transportation Arrangements as and when such agreements are entered into by the Company.

 

(c)The Company shall maintain and pursue diligently all of its material rights under the Base Agreements and Required Storage and Transportation Arrangements and take all reasonable steps to enforce its rights and any rights granted to the Company thereunder as and when such agreements are entered into by the Company, except where the failure to do so would not result in a Material Adverse Change.

 

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(d)The Company shall not modify, amend or waive rights arising under any of the Base Agreements or the Required Storage and Transportation Arrangements as and when such agreements are entered into by the Company without the prior written consent of Macquarie; provided, however, that if the Company provides Macquarie with prior written notice of such modifications, amendments or waivers, the Company may make such modifications or amendments and grant such waivers, including extensions or elections under any of the foregoing, that do not materially and adversely affect Macquarie’s rights hereunder, degrade, reduce or limit the standards applicable to the operator thereunder or otherwise interfere with Macquarie’s rights to use the Included Product Pipelines and Included Product Tanks subject thereto.

 

(e)The Company shall not cause or permit any of the Crude Oil or Products held at the Included Storage Locations to become subject to any Liens, except for Permitted S&O Liens.

 

(f)The Company represents and warrants that the Company Storage Locations and Included Storage Locations, to the extent owned or operated by or with the assistance of the Company, have been maintained, repaired, inspected and serviced in accordance with Accepted Industry Practice and Applicable Law and are in good working order and repair in all material respects.

 

(g)In the event the Company becomes Bankrupt, and to the extent permitted by Applicable Law, the Company intends that (i) Macquarie’s right to liquidate, collect, net and set off rights and obligations under this Agreement and liquidate and terminate this Agreement shall not be stayed, avoided, or otherwise limited by the Bankruptcy Code, including sections 362(a), 547, 548 or 553 thereof; (ii) Macquarie shall be entitled to the rights, remedies and protections afforded by and under, among other sections, sections 362(b)(6), 362(b)(17), 362((b)(27), 362(o), 546(e), 546(g), 546(j), 548(d), 553, 556, 560, 561 and 562 of the Bankruptcy Code; and (iii) any cash, securities or other property provided as performance assurance, credit support or collateral with respect to the transactions contemplated hereby shall constitute “margin payments” as defined in section 101(38) of the Bankruptcy Code and all payments for, under or in connection with the transactions contemplated hereby, shall constitute “settlement payments” as defined in section 101(51A) of the Bankruptcy Code.

 

(h)In connection with Macquarie’s procurement of Crude Oil or Products, whether from the Company or any third party and whether under a Macquarie Crude Procurement Contract or an Included Product Purchase Transaction (each a “Sourcing Transaction”), the Company covenants and agrees that any out of pocket costs, losses or damages that Macquarie may incur as a result of such Sourcing Transaction, including due to failure by the Company or any such third party to deliver the Crude Oil or Products subject to such Sourcing Transaction, shall constitute, without duplication, Ancillary Costs and be for the account of the Company and claims arising in connection therewith shall be subject to Section 5.9 hereof, except to the extent that such out of pocket costs, losses or damages have been incurred by Macquarie as a result of its gross negligence, willful misconduct or intentional default.

 

(i)This Agreement, the other Transaction Documents and the transactions contemplated hereby and thereby do not and shall not violate any terms and conditions of any Existing Financing Agreement or other Financing Agreement that is hereafter entered into by the Company.

 

(j)The Company shall not modify or amend (including any extensions of or elections under), or waive any arising under, any Financing Agreement without the prior written consent of Macquarie, if doing so would (i) adversely affect in any respect any of Macquarie’s rights or remedies under this Agreement or the other Transaction Documents or (ii) cause any Existing Financing Agreement to no longer satisfy the conditions set forth in Section 2.1(f) above, including, without limitation, the recognition that Macquarie is the owner of Crude Oil and Products to the extent contemplated hereby and by the other Transaction Documents, free and clear of any liens of any lender or other creditor that is party to such Financing Agreement, other than Permitted S&O Liens; provided however, that Macquarie will not charge a fee to the Company for any written acknowledgment that any such amendment of a Financing Agreement does not adversely affect in any material respect any of Macquarie’s rights or remedies hereunder.

 

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(k)The Company shall not, from and after the Effective Date, enter into any Financing Agreement that would cause its aggregate Specified Indebtedness (excluding, for these purposes, the Existing Financing Agreement) to exceed USD 10,000,000 (an “Additional Financing Agreement”) without the prior written consent of Macquarie (such consent not to be unreasonably withheld or delayed) unless such Additional Financing Agreement, at the time it is entered into, (i) does not adversely affect in any respect any of Macquarie’s rights or remedies under this Agreement or the other Transaction Documents or Macquarie’s status as the owner of Crude Oil and Products to the extent contemplated hereby and by the other Transaction Documents, free and clear of any liens of any lender or other creditor that is party to such Financing Agreement, other than Permitted S&O Liens, in which case, the Company shall notify Macquarie of such Additional Financing Agreement by no later than the date on which Additional Financing Agreement is entered into. The Company shall not modify or amend (including any extensions of or elections under), or waive any rights arising under, any Additional Financing Agreement without the prior written consent of Macquarie, if doing so would adversely affect in any respect any of Macquarie’s rights or remedies under this Agreement or the other Transaction Documents including, without limitation, Macquarie’s status as the owner of Crude Oil and Products to the extent contemplated hereby and by the other Transaction Documents, free and clear of any liens of any lender or other creditor that is party to such Financing Agreement.

 

19.4Affirmative Covenants. The Company shall, and shall cause each of its Subsidiaries to:

 

(a)Preservation of Existence, Etc. (i) Preserve, renew and maintain in full force and effect its legal existence and good standing under the Applicable Laws of the jurisdiction of its organization except in a transaction permitted by the Existing Financing Agreement with prior notice to Macquarie and provided that all required actions are taken, or caused to be taken, so to preserve the perfection of liens in favor of Macquarie created in connection herewith on or before the consummation of any such transaction; (ii) take all reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary or desirable in the normal conduct of its business, except to the extent that failure to do so could not reasonably be expected to result in a Material Adverse Change; and (iii) preserve or renew all of its registered patents, trademarks, trade names and service marks, the non-preservation of which could reasonably be expected to result in a Material Adverse Change.

 

(b)Maintenance of Properties. (i) Maintain, preserve and protect all of its material properties and equipment necessary in conduct of its business and operation in accordance with Accepted Industry Practice, ordinary wear and tear excepted; and (ii) make all necessary repairs thereto and renewals and replacements thereof except where the failure to do so could not reasonably be expected to result in a Material Adverse Change.

 

(c)Compliance with Laws. Comply in all respects with the requirements of all Applicable Laws and all orders, writs, injunctions and decrees applicable to it or to the conduct of its business, operations or property, except in such instances in which (i) such requirement of Applicable Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted; or (ii) the failure to comply therewith could not reasonably be expected to result in a Material Adverse Change.

 

(d)Books and Records. (i) Maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP in all material respects and consistently applied shall be made of all financial transactions and matters involving the assets and business of the Company; and (ii) maintain such books of record and account in conformity with all applicable requirements of any Governmental Authority having regulatory jurisdiction over the Company, except where the failure to do so would not result in a Material Adverse Change. To the extent permitted by GAAP, the Company shall reflect the buy/sell transactions contemplated hereby as buy/sell transactions on its books and records and will not list as assets in its books and records any Crude Oil or Product agreed hereunder to be owned by Macquarie. To the extent permitted by GAAP, the Company shall not reflect amounts owed to Macquarie hereunder as indebtedness for borrowed money, but will reflect them as trade payables.

 

(e)Additional Inspection Rights. In addition to the inspection rights of Macquarie set forth elsewhere in this Agreement or any other Transaction Document, all of which rights shall continue in full force and effect, and notwithstanding anything to the contrary contained in this Agreement or in any other Transaction Document, upon providing commercially reasonable notice and during normal business hours, permit Macquarie (or any representative of Macquarie) to visit and inspect any of the Company’s properties, to examine the Company’s corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss the Company’s affairs, finances and accounts with any of the Company’s directors (or equivalent), or officers and, if requested by the Company, in the presence of an officer of the Company, in each case, as often as reasonably may be desired by Macquarie, all at the sole cost and expense of the Company.

 

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(f)Further Assurances.

 

(i)To the extent deemed necessary or appropriate by Macquarie, the Company shall cause to be filed acknowledgements and/or releases (including without limitation, amendments or terminations of UCC financing statements), in form and substance reasonably satisfactory to Macquarie, confirming the release of any Lien in favor of any lender or other creditor, other than Permitted S&O Liens, that might apply to or be deemed to apply to any Crude Oil and/or Products of which Macquarie is the owner as contemplated by this Agreement and the other Transaction Documents and recognition of Macquarie’s first priority Lien with respect to the Hydrocarbon Credit Support granted to Macquarie under the Lien Documents, and agrees to use commercially reasonable efforts to provide Macquarie with such further documentation as it may reasonably request in order to confirm the foregoing.

 

(ii)The Company agrees that it shall not have any interest in or the right to dispose of (other than as set forth in the Transaction Documents) (but shall have the right to purchase contemplated herein), and shall not permit the creation of, or suffer to exist, any security interest, lien, mortgage, encumbrance, charge or other claim of any nature (collectively, “Liens”), other than Permitted S&O Liens, with respect to, any quantities of Crude Oil or Products that are owned by Macquarie from time to time pursuant to the Transaction Documents and held in the Included Storage Locations (collectively, “Macquarie’s Property”). The Company authorizes Macquarie to file at any time and from time to time any UCC financing statements describing the quantities of Macquarie’s Property subject to this Agreement and Macquarie’s ownership thereof and title thereto, as well as any inventory or other Credit Support on which the Company, as applicable, or has granted to Macquarie a first priority Lien pursuant to the Lien Documents, and the Company shall execute and deliver to Macquarie, and the Company hereby authorizes Macquarie to file (with or without such the Company’s signature), at any time and from time to time, all amendments to financing statements, assignments, continuation financing statements, termination statements, and other documents and instruments, in form reasonably satisfactory to Macquarie, as Macquarie may reasonably request, to provide public notice of Macquarie’s ownership of and title to the quantities of Macquarie’s Property subject to this Agreement and to otherwise protect Macquarie’s interest therein and provide notice of Macquarie’s Liens on any property covered thereby.

 

19.5Negative Covenants. The Company covenants and agrees that it shall not, at any time, permit the Unrestricted Cash of the Company to be less than $17,500,000 for any period of more than three (3) consecutive Business Days (the “Minimum Liquidity Requirement”).

 

19.6Additional Covenants. Subject to Section 19.3(j), the Company will provide prior written notice to Macquarie of any amendments, restatements, supplements or other material modifications of or to any Financing Agreement prior to the effectiveness of same, provided however, that the Company shall not be required hereby to provide notice of (i) supplements to any indenture if such supplement either (a) does not change a material term thereof or (b) adds a guarantor or pledger thereunder, (ii) changes to any hedging contract, forward purchase agreement or swap agreement, (iii) the addition or release of any collateral (so long as such collateral does not constitute the Company’s Hydrocarbons) with respect to any Financing Agreement.

 

19.7Acknowledgment. The Company acknowledges and agrees that (1) Macquarie is a merchant of Crude Oil and Products and may, from time to time, be dealing with prospective counterparties, or pursuing trading or hedging strategies, in connection with aspects of Macquarie’s business which are unrelated hereto and that such dealings and such trading or hedging strategies may be different from or opposite to those being pursued by or for the Company, (2) Macquarie may, in its sole discretion, determine whether to advise the Company of any potential transaction with a Third Party Supplier and prior to advising the Company of any such potential transaction Macquarie may, in its discretion, determine not to pursue such transaction or to pursue such transaction in connection with another aspect of Macquarie’s business and Macquarie shall have no liability of any nature to the Company as a result of any such determination, (3) Macquarie has no fiduciary duties or trust obligations of any nature with respect to the Refinery or the Company or any of its Affiliates, (4) Macquarie may enter into transactions and purchase Crude Oil or Products for its own account or the account of others at prices more favorable than those being paid by the Company hereunder and (5) nothing herein shall be construed to prevent Macquarie, or any of its partners, officers, employees or Affiliates, in any way from purchasing, selling or otherwise trading in Crude Oil, Products or any other commodity for its or their own account or for the account of others, whether prior to, simultaneously with or subsequent to any transaction under this Agreement.

 

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20DEFAULT AND TERMINATION

 

20.1Events of Default. Notwithstanding any other provision of this Agreement, the occurrence of any of the following with respect to a Party shall constitute an “Event of Default” with respect to such Party:

 

(a)Failure to Pay. Either Party fails to make payment when due under any Transaction Document within one (1) Business Day after delivery of a written notice from the other Party of such failure to pay; or

 

(b)Material Obligations. Other than a default described in Section 20.1(a), 20.1(c), 20.1(e), or 20.1(p), the Company fails to:

 

(i)comply with the requirements of Section 19.5 (Negative Covenants); or

 

(ii)perform any Material Obligation (other than as described in sub-paragraph (i) above) under this Agreement or any other Transaction Document, which is not cured to the reasonable satisfaction of the other Party (in its reasonable discretion) within two Business Days after the date that such Party receives written notice that such obligation or covenant has not been performed; (or such longer grace period as provided under the applicable Transaction Document) or

 

(c)Misrepresentation. Either Party (or, if applicable, any Affiliate of such Party that is party to a Transaction Document) breaches any material representation or material warranty made or repeated or deemed to have been made or repeated by the Party (or any such Affiliate of such Party), or any warranty or representation proves to have been incorrect or misleading in any material respect when made or repeated or deemed to have been made or repeated under any Transaction Document; provided, however, that if such breach is curable, such breach is not cured to the reasonable satisfaction of the other Party within ten (10) Business Days after the date that such Party receives notice that corrective action is needed (or such longer grace period as provided under the applicable Transaction Document) or

 

(d)Bankruptcy. Either Party becomes Bankrupt; or

 

(e)Default under Specified Transaction. Either Party or any of its Affiliates (1) defaults on payment obligations under any Specified Transaction, or (2) defaults on posting required collateral or credit support in connection with any Specified Transaction and such breach is not cured to the reasonable satisfaction of the other Party within two (2) Business Days after the date that such Party receives notice that corrective action is needed; or

 

(f)Master Agreement. A Master Agreement Termination Event occurs with respect to either Party;

 

(g)Change of Control or Specified Event. A Change of Control or Specified Event; or

 

(h)Material Agreement. The Company fails, after giving effect to any applicable notice requirement or grace period, to perform its obligations under, comply with, or maintain in any material respect a Base Agreement or the Required Storage and Transportation Arrangements, if any; or

 

(i)Disposals. The Company or any of its Subsidiaries sells, leases, subleases, transfers or otherwise disposes of, in one transaction or a series of related transactions, all or substantially all of the assets that constitute the Refinery; or

 

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(j)Merger. The Company (i) consolidates or amalgamates with, merges with or into, or transfers all or substantially all of its assets to, another entity (including an Affiliate) or any such consolidation, amalgamation, merger or transfer is consummated, and (ii) (A) the successor entity resulting from any such consolidation, amalgamation or merger or the Person that otherwise acquires all or substantially all of the assets of the Company does not assume, in a manner reasonably satisfactory to Macquarie, all of the Company’s obligations hereunder and under the other Transaction Documents, or (B) in the reasonable judgment of Macquarie, the creditworthiness of the resulting, surviving or transferee entity, taking into account any guaranties, is materially weaker than the Company immediately prior to the consolidation, amalgamation, merger or transfer; or

 

(k)Breach of covenant. The Company fails to perform or observe any covenant, affirmative or negative, set forth herein or in any other Transaction Document (other than any such covenant specified in any other sub-section of this Section 20.1) and the Company fails to cure, correct or eliminate such failure or non-compliance within five (5) Business Days after receipt from Macquarie of written notice of such failure; provided further that no Event of Default shall occur pursuant to this sub-section (k) if an administrative, technical or unintentional error is identified in a report delivered to Macquarie by the Company pursuant to this Agreement and the Parties have agreed to correct any such error; or

 

(l)Cross Default. There shall occur, after giving effect to any applicable notice requirement or grace period, either (A) a default, event of default or other similar condition or event (however described) in respect of the Company or its Guarantor under one or more agreements or instruments relating to Specified Indebtedness (other than any Financing Agreement) in an aggregate amount of not less than ($20,000,000) which has resulted in such Specified Indebtedness becoming due and payable under such agreements and instruments before it would have otherwise been due and payable or (B) a default by the Company its Guarantor in making one or more payments on the due date thereof in an aggregate amount of not less than ($20,000,000) under such agreements or instruments (after giving effect to any applicable notice requirement or grace period); or

 

(m)Financing Agreement. Any indebtedness of the Company or its Guarantor pursuant to a Financing Agreement is declared to be or otherwise becomes due and payable prior to its specified maturity as a result of the occurrence of an event of default (howsoever described) under any of the Financing Agreements; or

 

(n)Repudiation. The Company or the Parent disaffirms, disclaims, repudiates or rejects, in whole or in part, or challenge the validity of this Agreement or the Guaranty; or

 

(o)Parent. Any of the following: (i) the Parent fails to perform or otherwise defaults in any payment obligation under the Guaranty, (ii) the Parent becomes Bankrupt, (iii) the Guaranty expires (other than in accordance with its terms) or terminates or ceases to be in full force and effect prior to the satisfaction of all obligations of the Company to Macquarie under this Agreement and the other Transaction Documents or (iv) the Parent disaffirms, disclaims, repudiates or rejects, in whole or in part, or challenges the validity of the Guaranty or any of the Intercreditor Provisions (as defined below),

 

(p)Security Instruments. (i) Macquarie fails to have a valid perfected security interest in any portion of the Credit Support (other than Credit Support released in accordance with the Transaction Documents) or (ii) any Lien Document shall at any time and for any reason (other than solely with respect to any action or inaction of Macquarie) cease to create a security interest on the Credit Support purported to be subject to such instrument in accordance with the terms of such instrument, or cease to be in full force and effect; or

 

(q)Compliance with Governmental Authority. The Company or Parent fails to comply in any respect with the order, regulation or directive of any Governmental Authority pertaining in any way to such person, the transactions contemplated by the Transaction Documents or the Credit Support, except for such failure to comply as would not result in a Material Adverse Change; or

 

(r)Judgments Against Company. There is entered against the Company (i) one or more final judgments or orders for the payment of money in an aggregate amount (as to all such judgments and orders) exceeding $20,000,000 (to the extent not covered by independent third-party insurance) which is not paid when due in accordance with its terms, or (ii) one or more non-monetary final orders of a court of competent jurisdiction that have, or would reasonably be expected to result in, individually or in the aggregate, a Material Adverse Change; or

 

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(s)Judgments Against Parent. There is entered against Parent (i) one or more final judgments or orders for the payment of money in an aggregate amount (as to all such judgments and orders) exceeding $ 20,000,000 (to the extent not covered by independent third-party insurance) which is not paid when due in accordance with its terms, or (ii) one or more non-monetary final orders of a court of competent jurisdiction that have, or would reasonably be expected to result in, individually or in the aggregate, a Material Adverse Change.

 

(t)Intercreditor Agreement.

 

(i)any of the intercreditor, subordination, standstill, payover and insolvency related provisions of the Intercreditor Agreement (“Intercreditor Provisions”) shall, in whole or in part, terminate, cease to be effective or cease to be legally valid, binding and enforceable against any holder of the applicable indebtedness; or

 

(ii)the Company shall, directly or indirectly, disavow or contest in any manner the effectiveness, validity or enforceability of any of the Intercreditor Provisions.

 

20.2Change in Law.

 

(a)If, due to a Change in Law after the date of this Agreement:

 

(i)it becomes:

 

(A)unlawful or otherwise prohibited on any day, or it would become unlawful or otherwise prohibited if the relevant payment, delivery or compliance were required on that day, for a Party (the “CL Affected Party”) to perform any absolute or contingent obligation to make a payment or delivery or to receive a payment or delivery under this Agreement or to comply with any other material provision of this Agreement or any other Transaction Document; or

 

(B)unlawful for any Affiliate of the CL Affected Party, for the CL Affected Party to do the acts described at Section 20.2(a)(i) above; or

 

(ii)if the CL Affected Party is Macquarie, it would be or is likely to be subject to additional or increased burdens or costs if it were to continue to hold Crude Oil and Product in the manner contemplated by this Agreement,

 

then:

 

(A)the CL Affected Party shall promptly notify the other Party (the “Non-CL Affected Party”) upon becoming aware of that event; and

 

(B)without prejudice to Section 20.2(c) below, the relevant right, obligation or other provision shall be suspended to the extent required to avoid any breach of the matter which is the subject of the Change in Law or any other unlawfulness on the part of the CL Affected Party.

 

(b)The obligations of the Non-CL Affected Party under this Agreement shall be suspended to the same extent as those of the CL Affected Party.

 

(c)If either:

 

(i)at any time it is not possible by virtue of the suspension described in Section 20.2(a)(ii) (B) above to avoid the breach or other unlawfulness on the part of the CL Affected Party described in Section 20.2(a)(ii); or

 

(ii)it is so possible but the Parties have been unable to agree, each acting in good faith and in a commercially reasonable manner, consequential amendments to be made to the Transactions that may be substituted for any such invalid, illegal or unenforceable provision and which, as nearly as is practicable in all the circumstances, preserve the commercial intention of the Parties and the intended economic effect of the transactions contemplated by the Transaction Documents,

 

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in either such case by the date falling 10 (ten) Business Days after the date of the notice described in Clause 20.2(a) (or, if earlier, the date specified by the CL Affected Party in the notice described in Clause 20.2(a) as the last day of any applicable grace period permitted by Applicable Law), the CL Affected Party shall be entitled to terminate this Agreement by notice to the Non-CL Affected Party (an “Illegality Termination Notice”).

 

(d)An Illegality Termination Notice shall specify the termination date which shall not be earlier than:

 

(i)where it has not been possible to avoid the breach or unlawfulness described in Section 20.2(a), the date of the Illegality Termination Notice; or

 

(ii)otherwise, 30 (thirty) days after the date of the Illegality Termination Notice.

 

20.3Termination Event.

 

(a)The occurrence of any of the following events shall constitute a “Termination Event” for the purposes of this Agreement:

 

(i)Illegality Termination Notice. An Illegality Termination Notice is delivered by the CL Affected Party to the Non-CL Affected Party pursuant to Section 20.2(c).

 

(ii)Invalidity. Any material obligation(s) of the Company or Macquarie under any Transaction Document between the Company and Macquarie are not or cease to be legal, valid, binding or enforceable.

 

(iii)Termination of certain agreements: An Intermediated Product Offtake Contract, the Shell Crude Supply Agreement or the Tripartite Crude Supply Agreement is terminated by any party thereto.

 

(b)Following the occurrence of a Termination Event, either Party may, by notice in writing to the other Party, elect to terminate this Agreement (a “Termination Notice”). A Termination Notice must specify the date on which the Agreement shall terminate, which shall be a date no earlier than the date of that notice and, in the case of a Termination Event pursuant to sub-paragraph 20.3(a)(i) above, shall be a date no earlier than the date determined in accordance with Section 20.2(d) above. Once a Termination Notice has been validly given, the Agreement shall terminate on the date specified in that Termination Notice.

 

(c)Following termination of this Agreement pursuant to this Section 20.3, the provisions of Article 21 shall apply unless, following the occurrence of a Change in Law, the CL Affected Party determines that compliance with Article 21 would be contrary to Applicable Law, in which case, Section 20.4 (other than Section 20.4(a)) shall apply.

 

20.4Remedies.

 

(a)Acceleration. Notwithstanding any other provision of this Agreement, if any Event of Default with respect to the Company, on the one hand, or Macquarie, on the other hand (such defaulting Party, the “Defaulting Party”) has occurred and is continuing, Macquarie (where the Company is the Defaulting Party) or the Company (where Macquarie is the Defaulting Party) (such non-defaulting Party or Parties, the “Non-Defaulting Party”) may, upon notice to the Defaulting Party (an “Acceleration Notice”), (i) designate a date not earlier than the date of the Acceleration Notice as the date on which this Agreement shall terminate and declare all of the Defaulting Party’s obligations under this Agreement to be forthwith due and payable, all without presentment, demand, protest or further notice of any kind, all of which are expressly waived by the Defaulting Party and/or (ii) subject to Section 20.4(d), exercise any rights and remedies provided or available to the Non-Defaulting Party under this Agreement, the other Transaction Documents or at law or equity, including all remedies provided under the UCC and as provided under this Section 20.4.

 

(b)Termination/Settlement Amount. Notwithstanding any other provision of this Agreement, if an Event of Default has occurred and is continuing with respect to the Defaulting Party, the Non-Defaulting Party shall have the right, to terminate the Agreement (and any other contract or agreement that may then be outstanding between the Parties that relates specifically to this Agreement, including any Transaction Document) on a date no earlier than the date specified in the Acceleration Notice or, to the extent that the provisions of this Section 20.4 apply following the occurrence of a Change in Law, the relevant Termination Date, and, subject to Section 20.4(d), to liquidate and terminate any or all rights and obligations under this Agreement and such other Transaction Documents; provided that, in the event Macquarie is the Non-Defaulting Party, this Agreement shall not be deemed to have terminated in full until Macquarie shall have disposed of all Crude Oil and Products owned or maintained by Macquarie in which Macquarie has lien or other rights in connection herewith and exercised in full all of its rights and remedies with respect to the Hydrocarbon Credit Support.

 

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(c)Settlement Amount. The Settlement Amount (as defined below) payable upon the early termination of this Agreement pursuant to Section 20.3(c) or Section 20.4(a) shall be calculated in a commercially reasonable manner based on such liquidated and terminated rights and obligations and shall be payable by one Party to the other. The “Settlement Amount” shall mean the amount, expressed in U.S. dollars, of losses and out of pocket costs that are or would be incurred by (i) Macquarie, if the Agreement is terminated pursuant to Section 20.3(c) and the provisions of this Section 20.4 apply; or (ii) the Non-Defaulting Party (each, the “Determining Party”) (expressed as a positive number) or gains that are or would be realized by the Determining Party (expressed as a negative number) as a result of the liquidation and termination of all rights and obligations under this Agreement and such other Transaction Documents. The determination of the Settlement Amount shall include (without duplication): (x) the losses and out of pocket costs (or gains) incurred or realized (and determined in a commercially reasonable manner) by the Determining Party in terminating, transferring, redeploying or otherwise modifying any outstanding Macquarie Crude Procurement Contracts, (y) the losses and out of pocket costs (or gains) incurred or realized (and determined in a commercially reasonable manner) by the Determining Party in terminating and liquidating any transactions subject hereto, including but not limited to, any unpaid amounts owed pursuant to Section 11.1 and Section 11.2 herein and (z) all breakage costs, losses and out of pocket costs (or gains) incurred or realized by the Determining Party, as a result of the Determining Party’s terminating, liquidating, maintaining, obtaining or re-establishing any Related Hedges (including, if Macquarie is the Determining Party, all hedging transactions relating to the roll procedures set forth in the Fee Letter.

 

(d)Determination of Settlement Amount. The Settlement Amount shall be determined by the Determining Party, acting in good faith, in a commercially reasonable manner. The Determining Party shall determine the Settlement Amount commencing as of the date on which such termination occurs by reference to such futures, forward, swap and options markets as it shall select in its commercially reasonable judgment; provided that the Determining Party is not required to effect such terminations and/or determine the Settlement Amount on a single day, but rather may effect such terminations and determine the Settlement Amount over a commercially reasonable period of time. Without limiting the generality of the foregoing, it is agreed that for purposes of determining the Settlement Amount: to the extent the Determining Party deems it commercially reasonable to do so, it may in referencing prices in the futures, forward, swap and options markets for purposes of calculating various elements of the Settlement Amount endeavor to align the dates as of which such reference prices are determined. In calculating the Settlement Amount, the Determining Party shall discount to present value (in any commercially reasonable manner based on London interbank rates for the applicable period and currency) any amount which would be due at a later date and shall add interest (at a rate determined in the same manner) to any amount due prior to the date of the calculation.

 

(e)Additional Rights of Macquarie. Without limiting any other rights or remedies hereunder, if an Event of Default has occurred and is continuing and Macquarie is the Non-Defaulting Party, Macquarie may, in its discretion, (i) withhold or suspend its obligations, including any of its delivery or payment obligations, under this Agreement or any other Transaction Documents, (ii) withdraw from storage any and all of the Crude Oil and/or Products then in the Included Storage Locations, (iii) otherwise arrange for the disposition of any Crude Oil and/or Products subject to any outstanding Macquarie Crude Procurement Contract or Included Product Purchase Transaction and/or the modification, settlement or termination of such outstanding Macquarie Crude Procurement Contract or Included Product Purchase Transaction in such manner as it elects, (iv) liquidate in a commercially reasonable manner any credit support, margin or collateral, to the extent not already in the form of cash (including applying any other margin or collateral) and apply and set off such credit support, margin or collateral or the proceeds thereof against any obligation owing by the Company or any of its Affiliates, to Macquarie or any of its Affiliates, (including without limitation the Independent Amount), (v) foreclose any lien or security interest, and (vi) exercise its rights in respect of any agreement or assignment of rights from a third party in respect of the transportation or storage of the Company Product Inventory. Macquarie shall be under no obligation to prioritize the order with respect to which it exercises any one or more rights and remedies available hereunder. The Company shall in all events remain liable to Macquarie for any amount payable by the Company in respect of any of its obligations remaining unpaid after any such liquidation, application and set off and, to the extent that the disposition or any Crude Oil and/or Products, the liquidation of any applicable credit support, margin or collateral or the exercise of any of its other rights or remedies hereunder results in Macquarie receiving amounts in excess of the amount owed to it by the Company, the amount of such excess shall be for the account of the Company.

 

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(f)Company’s Rights. Without limiting any other rights or remedies hereunder or under any other Transaction Document and notwithstanding anything to the contrary specified herein or therein, if an Event of Default has occurred and is continuing and the Company is the Non-Defaulting Party, the Company may, in its discretion, (i) withhold or suspend its obligations, including any of its delivery or payment obligations, under this Agreement (ii) otherwise provide for the settlement or termination of the Parties’ outstanding commitments hereunder, or (iii) arrange for the sale in a commercially reasonable manner of Crude Oil and/or Product hereunder for Macquarie’s account, and the replacement of the intermediation, supply and offtake transactions contemplated hereby with such alternative arrangements as it may procure, and the consolidation of Macquarie’s Property into a subset of Included Storage Locations without loss to or commingling of Macquarie’s Property; provided that if the Company recovers any amount(s) in excess of the amount (if any) owed to Macquarie, such excess shall be for the account of the Company.

 

(g)Net Liquidated Amount. The Determining Party shall set off (i) the Settlement Amount (if due to the other Party), plus any performance security (including any other margin or collateral) then held by the Determining Party pursuant to the Transaction Documents, plus (at the Determining Party’s election) any or all other amounts due to the other Party hereunder (including under Article 11), against (ii) the Settlement Amount (if due to the Determining Party), plus any performance security (including any other margin or collateral) then held by the other Party, plus (at the Determining Party’s election) any or all other amounts due to the Determining Party hereunder (including under Article 11), so that all such amounts (including, for the avoidance of doubt, the amount of any Independent Amount held by Macquarie) shall be netted to a single liquidated amount payable by one Party to the other (the “Liquidated Amount”). The Party with the payment obligation shall pay the Liquidated Amount to the applicable other Parties within one (1) Business Day after such amount has been determined. In addition, the Parties acknowledge that, in connection with an Event of Default hereunder, the Step-Out Inventory Sales Agreement may be terminated and with respect thereto any rights and remedies available hereunder, under any other agreement between the Parties hereto or the parties thereto, or at law or equity may be exercised.

 

(h)No Abandonment of Rights. No delay or failure on the part of the Determining Party in exercising any right or remedy to which it may be entitled on account of any Event of Default or a Change in Law shall constitute an abandonment of any such right, and the Non-Defaulting Party or Non-CL Affected Party shall be entitled to exercise such right or remedy at any time during the continuance of an Event of Default or, as applicable, at any time following the occurrence of the Change in Law.

 

(i)Rights Cumulative. The Non-Defaulting Party’s rights under this Section 20.4 shall be in addition to, and not in limitation or exclusion of, any other rights which the Non-Defaulting Party may have (whether by agreement, operation of law or otherwise), including any rights of recoupment, setoff, combination of accounts or other rights under any credit support that may from time to time be provided in connection with this Agreement or at law or in equity. The Defaulting Party shall indemnify and hold the Non-Defaulting Party harmless from all reasonable out of pocket costs and expenses, including reasonable attorney fees, incurred in the exercise of any remedies hereunder, as and to the extent provided in Article 22 hereof, and subject to the limitations set forth therein.

 

(j)Setoff. If an Event of Default has occurred and is continuing or a Change in Law has occurred and an Illegality Notice has been delivered to the Non-CL Affected Party by the CL Affected Party, the Determining Party may, without limitation on its rights under this Section 20.4, set off amounts which the other Party owes to it against any amounts which it owes to the other Party (whether hereunder, under any other contract or agreement or otherwise and whether or not then due).

 

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(k)Master Netting Agreement. The Parties acknowledge and agree that this Agreement is intended to be a “master netting agreement” as such term is defined in section 101(38A) of the Bankruptcy Code. As used in this Section 20.4, unless otherwise expressly provided, each reference to “this Agreement” shall, and shall be deemed to, be a reference to “this Agreement and the other Transaction Documents.”

 

(l)Additional Master Netting and Setoff. The Parties acknowledge and agree that the Non-Defaulting Party or Non-CL Affected Party has such additional netting and setoff rights as are provided in any master netting agreement executed in connection herewith and expressly referencing this Agreement.

 

21SETTLEMENT AT TERMINATION

 

21.1Procedures for Settlement at Termination. Upon expiration or termination of this Agreement for any reason other than as a result of an Event of Default or, if applicable, a Change in Law in respect of which Section 20.4 applies (in which case the Expiration Date or such other date as the Parties may agree shall be the “Termination Date”; provided that if such date is not a Business Day, the Termination Date shall occur on the immediately preceding Business Day), the Parties covenant and agree to proceed as provided in this Article 21; provided that (x) this Agreement shall continue in effect following the Termination Date until all obligations are finally settled as contemplated by this Article 21 and (y) the provisions of this Article 21 shall in no way limit the rights and remedies which the Non-Defaulting Party may have as a result of an Event of Default, whether pursuant to Article 20 above or otherwise:

 

(a)Macquarie Contracts. If any Macquarie Crude Procurement Contract, Included Product Purchase Transaction, Included Sales Transaction or Included Crude Sales Transaction does not either (i) by its terms automatically become assigned to the Company on and as of the Termination Date in a manner which releases Macquarie from all obligations thereunder for all periods following the Termination Date or (ii) by its terms, expire or terminate on and as of the Termination Date, then the Parties shall promptly negotiate and enter into, with each of the then existing Third Party Suppliers and Customers, assignments, assumptions and/or such other documentation, in form and substance reasonably satisfactory to the Parties, pursuant to which, as of the Termination Date, (w) such Macquarie Crude Procurement Contract, Included Product Purchase Transaction, Included Sales Transaction or Included Crude Sales Transaction shall be assigned to the Company or shall be terminated, (x) all rights and obligations of Macquarie under each of the then outstanding Macquarie Crude Procurement Contract, Included Product Purchase Transaction, Included Sales Transaction or Included Crude Sales Transactions shall be assigned to the Company, (y) the Company shall assume all of such obligations to be paid or performed following such termination, and (z) Macquarie shall be released by such Third Party Suppliers, Customers and the Company from any further obligations thereunder. In connection with the assignment or reassignment of any Macquarie Crude Procurement Contract, Included Product Purchase Transaction, Included Sales Transaction or Included Crude Sales Transaction, the Parties shall endeavor, in a commercially reasonable manner, to facilitate the transitioning of the supply and payment arrangements, including any change in payment terms, under the relevant Macquarie Crude Procurement Contract, Included Product Purchase Transaction, Included Sales Transaction or Included Crude Sales Transaction so as to prevent any material disruption thereunder.

 

(b)Tripartite Agreements. If, pursuant to any Tripartite Crude Supply Agreement or Tripartite Product Offtake Agreement, any sales commitments are outstanding which, by their terms, extend beyond the Termination Date, then the Parties shall promptly negotiate and enter into, with each of the purchasers thereunder, assignments, assumptions and/or such other documentation, in form and substance reasonably satisfactory to the Parties, pursuant to which, as of the Termination Date, (i) such purchase or sales commitment shall be assigned (or reassigned) to the Company or shall be terminated, (ii) all rights and obligations of Macquarie with respect to each then outstanding purchase or sales commitment shall be assigned to the Company, (iii) the Company shall assume all of such obligations to be paid or performed following such termination, and (iv) Macquarie shall be released by the purchasers or sellers thereunder and the Company from any further obligations with respect to such sales commitments. In connection with the assignment or reassignment of any Tripartite Crude Supply Agreement or Tripartite Product Offtake Agreement or transaction thereunder, the Parties shall use commercially reasonable efforts to facilitate the transitioning so as to prevent any material disruption in the receipt of Crude Oil at and distribution of Products from the Refinery.

 

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(c)Purchase and Transfer of Crude and Products. The volume of Crude Oil and Products at the Included Storage Locations, at Macquarie’s election (i) shall be purchased and transferred as contemplated in the Step-Out Inventory Sales Agreement, (ii) at Macquarie’s cost, but with the mutual agreement of both Parties (each in its sole discretion), including the use of any Base Contracts, shall be taken and accepted in kind satisfaction of obligations hereunder or (iii) at Macquarie’s cost, but with Company’s reasonable assistance, including the use of any Base Contracts, shall be sold in its entirety or in parts to Customers of Macquarie’s choosing but with withdrawal from the Included Storage Locations in connection therewith promptly. The Crude Oil volumes measured by Macquarie’s Inspector at the Termination Date and recorded in Macquarie’s Inspector’s final inventory report shall be the “Termination Date Crude Oil Volumes” for the purposes of this Agreement and the Product volumes measured by Macquarie’s Inspector at the Termination Date and recorded in Macquarie’s Inspector’s final inventory report shall be the “Termination Date Product Volumes” for purposes of this Agreement, and such Termination Date Crude Oil Volumes and Termination Date Product Volumes shall collectively be referred to as the “Termination Date Volumes.”

 

(d)Determination of Termination Amount. Macquarie shall promptly reconcile and determine the Termination Amount pursuant to Section 21.2. The Parties shall promptly exchange all information necessary to determine the estimates and final calculations contemplated by Section 21.2.

 

(e)No Further Obligations. Macquarie shall have no further obligation to purchase and shall not purchase or pay for Crude Oil or Products, or incur any such purchase obligations on and after the Termination Date. Except as may be required for Macquarie to fulfil its obligations hereunder until the Termination Date or during any obligatory notice period pursuant to any Macquarie Crude Procurement Contract, Macquarie shall not be obligated to purchase, take title to or pay for any Crude Oil or Products on or following the Termination Date or such earlier date as the Parties may determine in connection with the transitioning of such supply arrangements to the Company or its designee. Notwithstanding anything to the contrary herein, no Delivery Date shall occur later than the day immediately preceding the Termination Date.

 

21.2Termination Amount.

 

(a)The “Termination Amount” shall equal:

 

(i)Any unpaid amounts owed by the Company to Macquarie pursuant to the Step-Out Inventory Sales Agreement and, without duplication, in respect of Crude Oil delivered on or prior to the Termination Date but not otherwise accounted for in the Step-Out Inventory Sales Agreement, plus

 

(ii)all Ancillary Costs incurred through the Termination Date that have not yet been paid or reimbursed by the Company, plus

 

(iii)in the case of an early termination, the amount reasonably determined by Macquarie as the breakage costs it incurred directly in connection with the termination, unwinding or redeploying of all Related Hedges as a result of such early termination, including all hedging transactions relating to the roll procedures set forth in the Fee Letter, plus

 

(iv)the aggregate amount due under Section 11.2(b), calculated as of the Termination Date with such date being the final day of the last monthly period for which such calculations are to be made under this Agreement; provided that, if such amount under Section 11.2(b) is due to Macquarie, then such amount shall be included in this Termination Amount as a positive number and if such amount under Section 11.2(a) is due to the Company, then such amount shall be included in this Termination Amount as a negative number, plus

 

(v)all unpaid amounts payable hereunder by Macquarie to the Company in respect of Product delivered on or prior to the Termination Date.

 

All of the foregoing amounts shall be aggregated or netted to a single liquidation amount owing from one Party to the other. If the Termination Amount is a positive number, it shall be due to Macquarie and if it is a negative number, the absolute value thereof shall be due to the Company.

 

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(b)The Parties acknowledge that one or more of the components of the Termination Amount may not be capable of definitive determination by the Termination Date and therefore agree that Macquarie shall, in a commercially reasonable manner, estimate in good faith each of such components and use such estimated components to determine an estimate of the Termination Amount (the “Estimated Termination Amount”); provided that the Parties agree that Macquarie shall apply the Independent Amount against the Estimated Termination Amount and shall not wait until final settlement is completed pursuant to Section 21.2(c). Without limiting the generality of the foregoing, the Parties agree that the amount due under Section 21.2(a)(i) above shall be estimated by Macquarie in the same manner and using the same methodology as it used in preparing the Estimated Commencement Date Value, but applying the then Current Month Benchmark Price(s) (the “Step-Out Prices”) and other price terms provided for herein with respect to the purchase of the Termination Date Volumes. Macquarie shall use commercially reasonable efforts to prepare, and provide the Company with, an initial Estimated Termination Amount, together with appropriate supporting documentation, at least five (5) Business Days prior to the Termination Date. To the extent reasonably practicable, Macquarie shall endeavor to update its calculation of the Estimated Termination Amount by no later than 12:00 p.m. CT on the Business Day prior to the Termination Date. If Macquarie is able to provide such updated amount, that amount shall constitute the Estimated Termination Amount and shall be due and payable by no later than 5:00 p.m., CT on the Business Day preceding the Termination Date. Otherwise, the initial Estimated Termination Amount shall be the amount payable on the Termination Date. If the Estimated Termination Amount is a positive number, it shall be due to Macquarie and if it is a negative number, the absolute value thereof shall be due to the Company. Substantially concurrently with Macquarie’s receiving (or making) payment of the Estimated Termination Amount upon request by (and at the sole cost and expense of) the Company, Macquarie shall (i) cause any filing or recording of any UCC financing statements filed by Macquarie in respect of the Transaction Obligations and Macquarie’s Property to be terminated, (ii) release and terminate all Lien Documents pursuant to one or more instruments mutually acceptable to the Parties and release or cause to be released all Permitted Article 10 Liens on Macquarie Property and (iii) deliver, re-assign, re-convey and transfer, as applicable, to the Company any other Collateral or credit support held or maintained by Macquarie; provided that Macquarie may retain such portion of the Independent Amount as Macquarie determines in a commercially reasonable manner is appropriate to secure potential obligations of the Company in respect of amounts which may remain to be paid by the Company pursuant to the Termination Reconciliation Statement until such statement is finalized and, if any such amounts are due from the Company, until such amounts are paid.

 

(c)On or before ten (10) Business Days following the Termination Date, Macquarie shall prepare, and provide the Company with, (i) a statement showing the calculation, as of the Termination Date, of the Termination Amount, (ii) a statement (the “Termination Reconciliation Statement”) reconciling the Termination Amount with the sum of the Estimated Termination Amount pursuant to Section 21.2(b) and the Independent Amount and indicating any amount remaining to be paid by one Party to the other as a result of such reconciliation. Within one (1) Business Day after receiving the Termination Reconciliation Statement and the related supporting documentation, the Parties shall make any and all payments required pursuant thereto. Promptly after receiving such payment (but in any event within five (5) Business Days of such receipt), Macquarie shall (x) cause any filing or recording of any UCC financing forms to be terminated, (y) release and terminate all Lien Documents pursuant to one or more instruments mutually acceptable to the Parties and (z) deliver, re-assign, re-convey and transfer, as applicable, to the Company any other Credit Support or credit support held or maintained by Macquarie (including, without limitation, the remaining balance, if any, of the Independent Amount after giving effect to this Article 21).

 

(d)Notwithstanding anything herein to the contrary, Macquarie shall not have any obligation to make any payment contemplated by this Section 21.2, transfer title to Crude Oil or Products or to otherwise cooperate in the transition matters described in Section 21.1 unless (i) the Company shall have performed its obligations under the Step-Out Inventory Sales Agreement and this Section 21.2 as and when required pursuant to the terms hereof and thereof, and (ii) except as otherwise agreed by the Parties, the Master Agreement and all Transactions outstanding thereunder have been terminated and all amounts due with respect to such terminated Transactions shall have been paid in full.

 

21.3Transition Services. To the extent necessary to facilitate the transition to the purchasers of the storage and transportation rights and status contemplated hereby, each Party shall take such additional actions, execute such further instruments and provide such additional assistance as the other Party may from time to time reasonably request for such purposes.

 

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22INDEMNIFICATION; EXPENSES

 

22.1To the fullest extent permitted by Applicable Law and except as specified otherwise elsewhere in the Transaction Documents, Macquarie shall defend, indemnify and hold harmless the Company, its Affiliates, and their directors, officers, employees, representatives, agents and contractors for and against any Liabilities directly or indirectly arising out of

 

(a)any breach by Macquarie of any covenant or agreement contained herein or made in connection herewith or any representation or warranty of Macquarie made herein or in connection herewith proving to be false or misleading or incorrect in any material respect,

 

(b)any failure by Macquarie to comply with or observe any Applicable Law,

 

(c)Macquarie’s negligence or willful misconduct, or

 

(d)injury, disease, or death of any person or damage to or loss of any property, fine or penalty, any of which is caused by Macquarie or its employees, representatives, agents or contractors in exercising any rights or performing any obligations hereunder or in connection herewith,

 

except to the extent that any indemnified Liability arising under this Section 22.1 has resulted from (A) the negligence or willful misconduct on the part of the Company, its Affiliates or any of their respective employees, representatives, agents or contractors or (B) the breach by the Company of its obligations hereunder.

 

22.2To the fullest extent permitted by Applicable Law and except as specified otherwise elsewhere in this Agreement, the Company shall defend, indemnify and hold harmless Macquarie, its Affiliates, and their directors, officers, employees, representatives, agents and contractors from and against any Liabilities directly or indirectly arising out of

 

(a)any breach by the Company of any covenant or agreement contained herein or made in connection herewith or any representation or warranty of the Company made herein or in connection herewith proving to be false or misleading or incorrect in any material respect, including, without limitation the Company’s obligation for payment of taxes pursuant to Section 16.1,

 

(b)the Company’s transportation, handling, storage, refining or disposal of any Crude Oil or the products thereof, including any conduct by the Company on behalf of or as the agent of Macquarie under the Required Storage and Transportation Arrangements,

 

(c)the Company’s failure to comply with its obligations under the terminalling, pipeline and lease agreements underlying the Required Storage and Transportation Arrangements,

 

(d)the Company’s negligence or willful misconduct,

 

(e)any failure by the Company to comply with or observe any Applicable Law,

 

(f)injury, disease, or death of any person or damage to or loss of any property, fine or penalty, any of which is caused by the Company or its employees, representatives, agents or contractors in exercising any rights or performing any obligations hereunder or in connection herewith,

 

(g)actual or alleged presence or release of Hazardous Substances in connection with the Transaction Documents or the transactions contemplated thereby, or any liability under any Environmental Law related in any way to or asserted in connection with the Transaction Documents or the transactions contemplated thereby or

 

(h)any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by the Company, and regardless of whether Macquarie is a party thereto,

 

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except to the extent that any Liability arising under this Section 22.2 has resulted from (A) the negligence or willful misconduct on the part of Macquarie, its Affiliates or any of their respective employees, representatives, agents or contractors, or (B) the breach by Macquarie of its obligations hereunder.

 

22.3The Parties’ obligations to defend, indemnify, and hold each other harmless under the terms of the Transaction Documents shall not vest any rights in any third party (except as expressly provided for in this Article 22), nor shall they be considered an admission of liability or responsibility for any purposes other than those enumerated in the Transaction Documents.

 

22.4Each Party agrees to notify the other as soon as practicable after receiving notice of any claim or suit brought against it within the indemnities of this Agreement, shall furnish to the other the complete details within its knowledge and shall render all reasonable assistance requested by the other in the defense; provided that, the failure to give such notice shall not affect the indemnification provided hereunder, except to the extent that the indemnifying Party is materially adversely affected by such failure. Each Party shall have the right but not the duty to participate, at its own expense, with counsel of its own selection, in the defense and settlement thereof without relieving the other of any obligations hereunder.

 

22.5The Company shall pay (i) all reasonable and documented out-of-pocket expenses incurred by Macquarie and its Affiliates (including the reasonable fees, charges and disbursements of counsel and tax consultants for Macquarie) in connection with the preparation, negotiation, execution, delivery and administration of this Agreement and the other Transaction Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated) and (ii) all reasonable and documented out-of-pocket expenses incurred by Macquarie and its Affiliates in connection with the enforcement or protection of Macquarie’s rights under or in connection with this Agreement and the other Transaction Documents.

 

23LIMITATION ON DAMAGES

 

23.1LIMITED RIGHT TO DAMAGES.TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES’ LIABILITY FOR DAMAGES IS LIMITED TO DIRECT, ACTUAL DAMAGES ONLY (WHICH INCLUDE ANY AMOUNTS DETERMINED UNDER Article 20) AND NEITHER PARTY SHALL BE LIABLE FOR SPECIFIC PERFORMANCE, LOST PROFITS OR OTHER BUSINESS INTERRUPTION DAMAGES, OR SPECIAL, CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES, IN TORT, CONTRACT OR OTHERWISE, OF ANY KIND, ARISING OUT OF OR IN ANY WAY CONNECTED WITH THE PERFORMANCE, THE SUSPENSION OF PERFORMANCE, THE FAILURE TO PERFORM, OR THE TERMINATION OF THIS AGREEMENT; ;PROVIDED, HOWEVER, THAT THE FORGOING IS NOT (AND IS NOT INTENDED TO BE AND SHALL NOT BE DEEMED TO CONSTITUTE) A WAIVER BY A PARTY OF ANY RIGHT TO RECOVER COMPENSATORY DAMAGES SUFFERED BY A PARTY THAT ARE OR COULD HAVE BEEN REASONABLY FORESEEABLE AS A RESULT OF ANY BREACH OF ARTICLE 25 (EVEN IF SUCH COMPENSATORY DAMAGES COULD BE CHARACTERIZED AS INDIRECT, CONTINGENT, INCIDENTAL, OR CONSEQUENTIAL DAMAGES); AND PROVIDED FURTHER THAT SUCH LIMITATION SHALL NOT APPLY WITH RESPECT TO ANY THIRD PARTY CLAIM FOR WHICH INDEMNIFICATION IS AVAILABLE UNDER THIS AGREEMENT. EACH PARTY ACKNOWLEDGES THE DUTY TO MITIGATE DAMAGES HEREUNDER.

 

24RECORDS AND INSPECTION THEREOF

 

During the Term of this Agreement each Party and its duly Authorized Representative upon reasonable notice, and during normal working hours, shall have access to the accounting records and other documents maintained by the other Party, or any of the other Party’s contractors and agents, which relate to this Agreement; provided that, neither this Section nor any other provision hereof shall entitle the Company to have access to any records concerning any hedges or offsetting transactions or other trading positions or pricing information that may have been entered into with other parties or utilized in connection with any transactions contemplated hereby or by any other Transaction Document. The right to inspect or audit such records shall survive termination of this Agreement for a period of two (2) years following the Termination Date. Each Party shall preserve, and shall use commercially reasonable efforts to cause all contractors or agents to preserve, all of the aforesaid documents for a period of at least two (2) years from the Termination Date.

 

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25CONFIDENTIALITY

 

25.1In addition to the Company’s confidentiality obligations under the Transaction Documents and as set forth in Section 32.10, the Parties agree that the specific terms and conditions of this Agreement, including any list of counterparties, the Transaction Documents and the drafts of this Agreement exchanged by the Parties and any information exchanged between the Parties, including calculations of any fees or other amounts paid by the Company to Macquarie under this Agreement and all information received by Macquarie from the Company relating to the costs of operation, operating conditions, and other commercial information of the Company not made available to the public, are confidential and shall not be disclosed to any third party, except (i) as may be required by court order or Applicable Laws (including without limitation as may be required by any applicable federal or state securities laws), (ii) as requested by a Governmental Authority, (iii) to such Party’s or its Affiliates’ employees, directors, shareholders, auditors, consultants, banks, lenders, financial advisors and legal advisors for purposes of administering, negotiating, considering, processing or evaluating this Agreement and the other Transaction Documents or the transactions contemplated thereby, or (iv) to such Party’s insurance providers, solely for the purpose of procuring insurance coverage or confirming the extent of existing insurance coverage; provided that, prior to any disclosure permitted by this clause (iv), such insurance providers shall have agreed in writing to keep confidential any information or document subject to this Section 25.1.

 

25.2The confidentiality obligations under this Agreement shall survive termination of this Agreement for a period of two (2) years following the Termination Date. The Parties shall be entitled to all remedies available at law, or in equity, to enforce or seek relief in connection with the confidentiality obligations contained herein (including, without limitation), the right to seek injunctive relief.

 

25.3In the case of disclosure covered by clause (i) of Section 25.1, to the extent practicable and in conformance with the relevant court order, Applicable Law or request, the disclosing Party shall notify the other Party in writing of any proceeding of which it is aware which may result in disclosure.

 

25.4Tax Disclosure. Notwithstanding anything herein to the contrary, the Parties (and their respective employees, representatives or other agents) are authorized to disclose to any person the U.S. federal and state income tax treatment and tax structure of the transaction and all materials of any kind (including tax opinions and other tax analyses) that are provided to the Parties relating to that treatment and structure, without the Parties imposing any limitation of any kind. However, any information relating to the tax treatment and tax structure shall remain confidential (and the foregoing sentence shall not apply) to the extent necessary to enable any person to comply with securities laws. For this purpose, “tax structure” is limited to any facts that may be relevant to that treatment.

 

26GOVERNING LAW

 

26.1THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED AND ENFORCED UNDER THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ITS CONFLICT OF LAWS PRINCIPLES THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER STATE.

 

26.2EACH OF THE PARTIES HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF ANY FEDERAL OR STATE COURT OF COMPETENT JURISDICTION SITUATED IN THE CITY OF NEW YORK, (WITHOUT RECOURSE TO ARBITRATION UNLESS BOTH PARTIES AGREE IN WRITING), AND TO SERVICE OF PROCESS BY CERTIFIED MAIL, DELIVERED TO THE PARTY AT THE ADDRESS INDICATED IN Article 28. EACH PARTY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION TO PERSONAL JURISDICTION, WHETHER ON GROUNDS OF VENUE, RESIDENCE OR DOMICILE.

 

26.3EACH PARTY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY PROCEEDINGS RELATING TO THIS AGREEMENT.

 

27ASSIGNMENT

 

27.1This Agreement shall inure to the benefit of and be binding upon the Parties hereto, their respective successors and permitted assigns.

 

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27.2Neither Party shall assign this Agreement or its rights or interests hereunder in whole or in part, or delegate its obligations hereunder in whole or in part, without the consent of the other Party. Notwithstanding the foregoing, Macquarie may, without the Company’s consent, assign and delegate all of Macquarie’s rights and obligations hereunder to (i) any Affiliate of Macquarie, provided it is no worse a credit counterparty and would not result in any adverse tax consequences to the Company and all Company’s costs, if any, are covered—just as provided above for a Company transfer or (ii) any non-Affiliate Person that succeeds to all or substantially all of its assets and business and assumes Macquarie’s obligations hereunder, whether by contract, operation of law or otherwise, provided that (i) the creditworthiness of such successor entity is equal or superior to the creditworthiness of Macquarie (taking into account any credit support for Macquarie) immediately prior to such assignment, and (ii) such successor assumes all of the obligations of Macquarie under the Transaction Documents.

 

27.3Any attempted assignment in violation of this Article 27 shall be null and void ab initio and the non-assigning Party shall have the right, without prejudice to any other rights or remedies it may have hereunder or otherwise, to terminate this Agreement effective immediately upon notice to the Party attempting such assignment.

 

28NOTICES

 

All invoices, notices, requests and other communications given pursuant to this Agreement shall be in writing and sent by email or nationally recognized overnight courier. A notice shall be deemed to have been received when transmitted by email to the other Party’s email set forth in Schedule K, or on the following Business Day if sent by nationally recognized overnight courier to the other Party’s address set forth in Schedule K and to the attention of the person or department indicated. A Party may change its address or email address by giving written notice in accordance with this Section, which is effective upon receipt.

 

29NO WAIVER, CUMULATIVE REMEDIES

 

29.1The failure of a Party hereunder to assert a right or enforce an obligation of the other Party shall not be deemed a waiver of such right or obligation. The waiver by any Party of a breach of any provision of, or Event of Default or Default under, this Agreement shall not operate or be construed as a waiver of any other breach of that provision or as a waiver of any breach of another provision of, Event of Default or Default under, this Agreement, whether of a like kind or different nature.

 

29.2Each and every right granted to the Parties under this Agreement or allowed it by law or equity shall be cumulative and may be exercised from time to time in accordance with the terms thereof and Applicable Law.

 

30NATURE OF THE TRANSACTION AND RELATIONSHIP OF PARTIES

 

30.1No Partnership or Joint Venture. This Agreement shall not be construed as creating a partnership, association or joint venture between the Parties. It is understood that each Party is an independent contractor with complete charge of its employees and agents in the performance of its duties hereunder, and nothing herein shall be construed to make such Party, or any employee or agent of the Company, an agent or employee of the other Party.

 

30.2No Authority to Contract. Neither Party shall have the right or authority to negotiate, conclude or execute any contract or legal document with any third person; to assume, create, or incur any liability of any kind, express or implied, against or in the name of the other; or to otherwise act as the representative of the other, unless expressly authorized in writing by the other.

 

30.3No Indebtedness. The transactions contemplated hereunder are intended to be construed and characterized as sales and purchases of commodities and the Lien Documents, the Independent Amount and any other security posted in connection with this Agreement is to be construed as security for the performance by the Company of its obligations expressly set out in this Agreement. The Company will account for transactions arising hereunder in accordance with GAAP however.

 

31Amendments and Modifications

 

31.1The Parties may, from time to time, by written agreement amend of modify any provision of this Agreement. Notwithstanding the foregoing, if an amendment is required to be made to an Operational Schedule, the Parties may evidence their agreement to the amendment of such Operational Schedule by an exchange of e-mails between Authorized Representatives of the Parties.

 

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32MISCELLANEOUS

 

32.1If any Article, Section or provision of this Agreement shall be determined to be null and void, voidable or invalid by a court of competent jurisdiction, then for such period that the same is void or invalid, it shall be deemed to be deleted from this Agreement and the remaining portions of this Agreement shall remain in full force and effect.

 

32.2The terms of this Agreement constitute the entire agreement between the Parties with respect to the matters set forth in this Agreement, and no representations or warranties shall be implied or provisions added in the absence of a written agreement to such effect between the Parties. This Agreement shall not be modified or changed except by written instrument executed by the Parties’ duly Authorized Representatives.

 

32.3No promise, representation or inducement has been made by either Party that is not embodied in this Agreement or the Transaction Documents, and neither Party shall be bound by or liable for any alleged representation, promise or inducement not so set forth.

 

32.4Time is of the essence with respect to all aspects of each Party’s performance of any obligations under this Agreement.

 

32.5Nothing expressed or implied in this Agreement is intended to create any rights, obligations or benefits under this Agreement in any person other than the Parties and their successors and permitted assigns.

 

32.6All audit rights, payment, confidentiality and indemnification obligations and obligations under this Agreement shall survive for the time periods specified herein.

 

32.7This Agreement may be executed by the Parties in separate counterparts and initially delivered by facsimile transmission, pdf or otherwise, with original signature pages to follow, and all such counterparts shall together constitute one and the same instrument.

 

32.8All transactions hereunder are entered into in reliance on the fact that this Agreement and all such transactions constitute a single, integrated agreement between the Parties, and the Parties would not have otherwise entered into any other transactions hereunder.

 

32.9In the event of a conflict between any of the Transaction Documents and this Agreement, the term and conditions contained in this Agreement shall control (except solely with respect to any fees, amounts, transfers and payments set forth in the Fee Letter and/or the Independent Amount Letter).

 

32.10Macquarie and the Company shall consult with each other with regard to all press releases or other announcements to the general public issued or made at or prior to the Commencement Date concerning this Agreement or the transactions contemplated herein, and, except as may be required by Applicable Laws, neither Company nor Macquarie shall issue any such press release or other announcement to the general public without the prior written consent of the other Party, which consent shall not be unreasonably withheld. The Parties shall be obligated to hold all specific terms and provisions of this Agreement strictly confidential until the expiration of two years following the Termination Date under this Agreement. Nothing contained in this Section 32.10 shall prohibit, limit or restrict disclosures by the Company or Macquarie that are (i) required by Applicable Laws, including any federal or state securities laws, (ii) any court order, judgment or decree, or (iii) ordered, directed, required or suggested by any Governmental Authority.

 

[Remainder of Page Intentionally Left Blank]

 

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Executed by MACQUARIE ENERGY NORTH AMERICA TRADING INC. acting by:
  and  
[signature of first director]   [signature of second director or secretary]
/s/ Daniel Vizel    /s/ Travis McCullough 
Name: Daniel Vizel   Name: Travis McCullough
Title: Senior Managing Director   Title: Division Director
     
Executed by VERTEX REFINING ALABAMA LLC acting by:
  and  
/s/ Benjamin P. Cowart    
Name: Benjamin P. Cowart    
Title: President and Chief Executive Officer    

 

 i

 

 

Vertex Energy Inc. 8-K

Exhibit 10.5

 

INTERCREDITOR AGREEMENT
 
dated as of April 1, 2022
 
among
 
CANTOR FITZGERALD SECURITIES,
 
as the Term Loan Agent,
 
MACQUARIE ENERGY NORTH AMERICA TRADING INC.,
 
as the Intermediation Facility Representative,
 
 

VERTEX REFINING ALABAMA LLC,

 

as the Company

 
and
 
THE OTHER GRANTORS PARTY HERETO
 
 
 

 

TABLE OF CONTENTS
 
PAGE
ARTICLE 1
DEFINITIONS 1
Section 1.01.   UCC Definitions 1
Section 1.02.   Definitions 1
Section 1.03.   Terms Generally 12
ARTICLE 2
LIEN PRIORITIES 13
Section 2.01.   Lien Priorities 13
Section 2.02.   Nature of Obligations 14
Section 2.03.   Additional Liens 15
Section 2.04.   [Reserved] 15
Section 2.05.   Delivery of Termination Date Notices 15
Section 2.06.   Reinstatement 15
ARTICLE 3
ENFORCEMENT RIGHTS 16
Section 3.01.   Exclusive Enforcement 16
Section 3.02.   Standstill and Waivers 16
Section 3.03.   [Reserved] 17
Section 3.04.   Cooperation with respect to Collateral 17
Section 3.05.   [Reserved.] 21
Section 3.06.   [Reserved] 21
Section 3.07.   Actions Upon Breach 21
Section 3.08.   Proceeds of Business Interruption Insurance 21
ARTICLE 4
APPLICATION OF PROCEEDS OF COLLATERAL; DISPOSITIONS AND RELEASES OF COLLATERAL; INSPECTION AND INSURANCE 22
Section 4.01.   Application of Proceeds; Turnover Provisions 22

 

i 
 
ARTICLE 5
INSOLVENCY PROCEEDINGS 24
Section 5.01.   Filing of Motions 24
Section 5.02.   Financing Matters 24
Section 5.03.   [Reserved] 25
Section 5.04.   Adequate Protection 25
Section 5.05.   Avoidance Issues 26
Section 5.06.   Asset Dispositions in an Insolvency Proceeding 26
Section 5.07.   [Reserved] 27
Section 5.08.   Plans of Reorganization 27
Section 5.09.   Other Matters 27
Section 5.10.   No Waiver of Rights of First Priority Secured Parties 28
Section 5.11.   Effectiveness in Insolvency Proceedings 28
Section 5.12.   Section 1111 of the Bankruptcy Code 28
ARTICLE 6
MATTERS RELATING TO FINANCE DOCUMENTS 28
Section 6.01.   Amendments to Finance Documents 28
Section 6.02.   Consents 29
ARTICLE 7
RELIANCE; WAIVERS; ETC 29
Section 7.01.   Reliance 29
Section 7.02.   No Warranties or Liability 29
Section 7.03.   No Waivers 29
Section 7.04.   Obligations Unconditional 30
ARTICLE 8
MISCELLANEOUS 30
Section 8.01.   Conflicts 30
Section 8.02.   Continuing Nature of Provisions 30
Section 8.03.   Amendments; Waivers 30
Section 8.04.   Information Concerning Financial Condition of the Company and the Other Grantors 30
Section 8.05.   Additional Grantors 31
Section 8.06.   GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS 31
Section 8.07.   WAIVER OF JURY TRIAL 32
Section 8.08.   Notices 32
Section 8.09.   Successors and Assigns 33
Section 8.10.   Headings 34
Section 8.11.   Further Assurances 34
Section 8.12.   Subrogation 34
Section 8.13.   Severability 34
Section 8.14.   Counterparts; Integration; Effectiveness 34
Section 8.15.   Provisions Solely to Define Relative Rights 34
Section 8.16.   No Third Party Beneficiaries 35
Section 8.17.   Concerning the Term Loan Agent 35
ii 
 

 

ARTICLE 9
AGREEMENTS WITH RESPECT TO INTERMEDIATION TITLE PROPERTY 35
Section 9.01.   Turnover 35
Section 9.02.   UCC Notices 35
Section 9.03.   Further Assurances with Respect to Intermediation Title Property 35
Section 9.04.   Additional Understanding and Agreements with Respect to Intermediation Title Property 36
Section 9.05.   Additional Understanding and Agreements of the Term Loan Agent 36

 

Annex I [Reserved]
     
Annex II Provisions for Finance Documents
     
Annex III Joinder Agreement
     
iii 
 

 

INTERCREDITOR AGREEMENT

This INTERCREDITOR AGREEMENT (this “Agreement”) dated as of April 1, 2022 by and among Cantor Fitzgerald Securities, as collateral agent (in such capacity, with its successors and assigns, the “Term Loan Agent”) for the Term Loan Secured Parties, Macquarie Energy North America Trading Inc., in its capacity as intermediator under the Intermediation Facility Documents (in such capacity, with its successor and assigns, the “Intermediation Facility Representative”), Vertex Refining Alabama LLC, a Delaware limited liability company (the “Company”), and each of the other Grantors from time to time party hereto.

WHEREAS, the Company is a borrower under the Term Loan Agreement, pursuant to which the lenders party thereto have made and/or will make term loans to the Company on the terms and conditions set forth therein; and

WHEREAS, the Company has or will become a party to the Intermediation Agreement, which provide certain arrangements for (i) the provision of intermediation services by the Intermediation Facility Secured Party to the Company and (ii) certain other transactions between the Intermediation Facility Secured Party and the Company related thereto; and

WHEREAS, the Grantors, including the Company, have granted, or will grant, Liens on certain of their respective assets (i) to the Term Loan Agent pursuant to the Term Loan Collateral Documents to secure the Term Loan Obligations and (ii) to the Intermediation Facility Secured Party pursuant to the Intermediation Facility Documents to secure the Intermediation Facility Obligations; and

WHEREAS, it is the desire of the parties hereto to set forth their respective rights and priorities with respect to the Collateral;

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants herein contained and other good and valuable consideration, the existence and sufficiency of which is expressly recognized by all of the parties hereto, the parties agree as follows:

ARTICLE 1
DEFINITIONS

Section 1.01.      UCC Definitions. Unless otherwise defined herein, the following terms are used herein as defined in the Uniform Commercial Code: Accounts, Chattel Paper, Commercial Tort Claims, Commodities Account, Deposit Account, Documents, Electronic Chattel Paper, Equipment, Financial Assets, Fixtures, General Intangibles, Instruments, Investment Property, Letter-of-Credit Rights, Letters of Credit, Money, Payment Intangibles, Proceeds, Records, Securities Account, Security Entitlements, and Supporting Obligations.

Section 1.02.      Definitions. The following terms, as used herein, have the following meanings:

Access Period” has the meaning set forth in Section 3.04(b)(i).

1 
 

 

Adequate Protection Liens” means any Liens granted in any Insolvency Proceeding to any Secured Party as adequate protection for the value of the Liens securing the Secured Obligations held by such Secured Party.

Affiliate” means, with respect to any Person, any Person that owns or Controls such Person, any Person that Controls or is Controlled by or is under common Control with such Person or each of such Person’s senior executive officers, directors, members or partners. Notwithstanding anything to the contrary, no Secured Party (nor any of their Affiliates), shall be an Affiliate of any Grantor or of any Subsidiary of any Grantor.

Applicable Law” means, as to any Person, all applicable laws of any Governmental Authority binding upon such Person or to which such a Person is subject.

Business Interruption Insurance Percentage” shall mean, as of any date of determination, (i) with respect to the Intermediation Facility Secured Parties, the percentage determined by dividing the Intermediation Facility Secured Parties’ respective Intermediation Facility Obligations outstanding after the Intermediation Facility Secured Parties have marshalled, taken, liquidated and exhausted all remedies and recoveries available to such Intermediation Facility Secured Parties from any other Intermediation Facility Priority Collateral and any insurance rights owned or held by the Intermediation Facility Secured Parties in their own name covering such Collateral in accordance with Section 3.08 hereof to the Intermediation Facility Obligations under the respective Intermediation Facility Documents, by the sum of such Intermediation Facility Obligations, plus the outstanding Term Loan Obligations, in each case, as of the time of the occurrence of the event giving rise to the payment of business interruption insurance; and (ii) with respect to the Term Loan Secured Parties, the difference between 100% and the percentage determined in item (i) of this definition.

Cash Equivalents” means, as to any Person: (a) securities issued or directly and guaranteed or insured by the United States or any agency or instrumentality thereof having maturities of not more than twelve (12) months from the date of acquisition; (b) securities issued by any state of the United States or any political subdivision of any such state or any public instrumentality thereof having maturities of not more than twelve (12) months from the date of acquisition and having one of the two highest ratings from either Standard & Poor’s, a division of The McGraw-Hill Companies, Inc., or Moody’s Investors Service, Inc.; (c) certificates of deposit, denominated solely in U.S. Dollars, maturing within 180 days after the date of acquisition, issued by any commercial bank organized under the laws of the United States or any state thereof or the District of Columbia or that is a U.S. subsidiary of a foreign commercial bank; in each of the foregoing cases, solely to the extent that: (i) such commercial bank’s short-term commercial paper is rated at least A-1 or the equivalent by Standard & Poor’s, a division of The McGraw-Hill Companies, Inc., or at least P-1 or the equivalent thereof by Moody’s Investors Service, Inc. (any such commercial bank, an “Approved Bank”); or (ii) the par amount of all certificates of deposit acquired from such commercial bank are fully insured by the Federal Deposit Insurance Corporation; or (d) commercial paper issued by any Approved Bank (or by the parent company thereof), in each case maturing not more than twelve months after the date of the acquisition thereof.

2 
 

Catalyst Assets” means any catalyst assets and inventory constituting catalyst, precious metals assets and precious metals inventory and all additions, accessions and all rights related thereto.

CFP” means any current or future U.S. federal, state, regional or local renewable or clean transportation fuel program, other than the RFS, the LCFS, and the OCFP.

CFP Credits” means credits generated and traded under the relevant CFP.

Class” refers to the determination in relation to any particular Type of Collateral, (i) with respect to any Secured Obligations and (ii) with respect to any Secured Party.

Collateral” means, collectively, the Intermediation Facility Priority Collateral, the Term Loan Priority Collateral.

Company” has the meaning set forth in the introductory paragraph of this Agreement.

Conforming Renewable Product” means a renewable diesel that (i) is produced from one hundred percent (100%) Renewable Biomass and no portion of which is produced from non-renewable feedstock, including petroleum products; (ii) meets the Renewable Product Specifications, and (iii) is eligible to generate a valid RIN with a D Code of 4 under the RFS.

Control” means the ability to directly or indirectly vote more than thirty percent (30%) of the outstanding voting stock of any Person. “Controlled” shall have the correlative meaning thereto.

Controlling Term Loan Agent” means the collateral agent under the replacement Term Loan Agreement (if any) holding the largest outstanding principal amount of Term Loan Obligations then outstanding.

Copyrights” means any and all copyright rights in the United States (whether registered or unregistered and whether published or unpublished), copyright applications, copyright registrations and like protections in each work or authorship and derivative work thereof, together with any and all (i) rights and privileges arising under Applicable Law with respect thereto and (ii) renewals and extensions thereof.

Debtor Relief Laws” means the Bankruptcy Code, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

DIP Financing” has the meaning set forth in Section 5.02(a).

Discharge of Intermediation Facility Obligations” means both of the following have occurred: (a) the Intermediation Agreement has been terminated including all commitments for further purchases of inventory thereunder, either (i) at the expiration or deemed expiration of its stated term, (ii) by mutual written agreement by the parties thereto or (iii) otherwise in accordance with the Intermediation Agreement, and (b) payment has been made in full in cash of all Intermediation Facility Obligations (including all “termination amounts or settlement amounts, if any) that are due and payable or otherwise accrued and owing in connection with any such termination of the Intermediation Agreement (other than those that constitute Unasserted Contingent Obligations).

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Discharge of Term Loan Obligations” means that both of the following have occurred (a) the Term Loan Agreement has been terminated including all commitments for further extensions of credit thereunder, either (i) at the expiration or deemed expiration of its stated term, (ii) by mutual written agreement by the parties thereto or (iii) otherwise in accordance with the Term Loan Agreement, and (b) payment has been made in full in cash of all Term Loan Obligations (including all regular and/or default interest, premiums, fees, expenses, and indemnities if any that are due and payable or otherwise accrued and owing in connection with the termination of the Term Loan Agreement (other than those that constitute Unasserted Contingent Obligations).

Enforcement Action” means, with respect to any Class of Secured Obligations, the exercise of any rights and remedies with respect to any Collateral securing such obligations or the commencement or prosecution of enforcement of any of the rights and remedies under the Finance Documents of such Class, or Applicable Law, in each case, with respect to any Collateral, including the exercise of any rights of set-off or recoupment, and the exercise of any rights or remedies of a secured creditor under the Uniform Commercial Code, the Bankruptcy Code or other similar creditors’ rights, bankruptcy, insolvency, reorganization or similar laws of any applicable jurisdiction.

Environmental Attributes” means any and all attributes, credits, benefits, emission reductions, offsets, and allowances, howsoever entitled, attributable to the characteristics, production, use or combustion of renewable diesel or its displacement or reduction in the use of transportation fuel, but only to the extent that any of the foregoing is generated, produced and verified through and in compliance with the RFS Program, the LCFS, the OCFP, and any other applicable CFP. For sake of clarity, Environmental Attributes (i) to the extent verified, includes RINs, LCFS Credits, OCFP Credits, and CFP Credits, and (ii) excludes any federal or state tax credits, development credits, or similar incentives.

Equity Interests” mean shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity interests in any Person, and any option, warrant, convertible debt or other right entitling the holder thereof to purchase or otherwise acquire any such equity interest.

Event of Default” means an “Event of Default” or “Termination Event”, as applicable, in each case, as defined in the applicable First Priority Documents or any corresponding definition thereunder.

Finance Document” means any of the Intermediation Facility Documents or the Term Loan Documents, as applicable.

First Priority Documents” means, with respect to any Type of Collateral, the Finance Documents governing the First Priority Obligations.

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First Priority Lien” means any Lien on any Type of Collateral securing any First Priority Obligation.

First Priority Obligations” means, at any time of determination, (i) with respect to the Intermediation Facility Priority Collateral, all Intermediation Facility Obligations and (ii) with respect to the Term Loan Priority Collateral, all Term Loan Obligations.

First Priority Obligations Payment Date” means (i) with respect to the Intermediation Facility Priority Collateral, the Intermediation Facility Termination Date and (ii) with respect to the Term Loan Priority Collateral, the Term Loan Termination Date.

First Priority Representative” means, at any time of determination, with respect to any Type of Collateral, the applicable Representative for the holders of the First Priority Obligations with respect to such Collateral.

First Priority Secured Parties” means, with respect to any Type of Collateral, the First Priority Representative and the holders of the First Priority Obligations.

Governmental Authority” means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions of or pertaining to any government (including any supernational bodies such as the European Union, the European Central Bank or the Organisation for Economic Co-operation and Development.

Grantor” means the Company and each other Person that has granted (or may have from time to time hereafter grant) a Lien on any assets that constitute Collateral. The Grantors existing on the date hereof are signatories hereto.

Hydrocarbon Credit Support” means, as of any time, all Inventory constituting or consisting of “Hydrocarbons” (as defined in the Intermediation Agreement ) then owned or at any time hereafter acquired by the Company, as applicable, that is located at a Company Storage Location (as defined in the Intermediation Agreement); provided that “Hydrocarbon Credit Support” shall not include any Excluded Property (as defined in the Intermediation Facility Security Documents).

Indebtedness” means and includes all obligations and liabilities that constitute “Indebtedness” under and as defined in the Term Loan Agreement or “Transaction Obligations” under and as defined in the Intermediation Agreement, as applicable.

Independent Amount Letter” means the independent amount letter entered into between the Company and the Intermediation Facility Secured Party in connection with the Intermediation Agreement, as may be amended from time to time.

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Insolvency Proceeding” shall mean any of the following: (a) the filing by any Grantor of a voluntary petition in bankruptcy under any state, federal or foreign Debtor Relief Law (including the Bankruptcy Code) or a petition to take advantage of any receivership or insolvency laws, including any petition seeking the dissolution, winding up, total liquidation, reorganization, composition, arrangement, adjustment or readjustment or other relief of such Grantor, such Grantor’s debts or such Grantor’s assets or the appointment of a trustee, receiver, liquidator, custodian or similar official for such Grantor or a material part of such Grantor’s property; (b) the appointment of a receiver, liquidator, trustee, custodian or other similar official for such Grantor or all or a material part of such Grantor’s assets; (c) the filing of any petition against such Grantor under any state, federal or foreign Debtor Relief Law (including the Bankruptcy Code) or other receivership or insolvency law, including any petition seeking the dissolution, winding up, total liquidation, reorganization, composition, arrangement, adjustment or readjustment or other relief of such Grantor, such Grantor’s debts or such Grantor’s assets or the appointment of a trustee, receiver, liquidator, custodian or similar official for such Grantor or a material part of such Grantor’s property; (d) the general assignment by such Grantor for the benefit of creditors or any other marshaling of the assets and liabilities of such Grantor; or (e) any other case or proceeding of any type or nature in which substantially all claims of creditors of the Grantors are determined and any payment or distribution is or may be made on account of such claims.

Intellectual Property” means all of a Person’s right, title, and interest in and to the following: Copyrights, Trademarks and Patents (including registrations and applications therefor prior to granting, and whether or not filed, recorded or issued); domain names; all trade secrets and related rights, including without limitation rights to unpatented inventions, know-how and manuals; all design rights; claims for damages by way of past, present and future infringement of any of the rights included above; all amendments, renewals and extensions of any Copyrights, Trademarks or Patents; all licenses or other rights to use any of the foregoing and all license fees and royalties arising from such use; and all proceeds and products of the foregoing.

Intermediation Agreement” means the Supply and Offtake Agreement entered into between the Company and the Intermediation Facility Representative on or around the date hereof in relation to, amongst other matters, the sale and purchase of Crude Oil and Products (each as defined in the Intermediation Agreement), as amended from time to time.

Intermediation Cash Collateral” means the “Independent Amount” (as defined in the Independent Amount Letter).

Intermediation Documents” means the Intermediation Agreement, the Independent Amount Letter and the “Transaction Documents” (as defined in the Intermediation Agreement as amended from time to time in accordance herewith) and each of the other agreements, documents and instruments providing for or evidencing any other Intermediation Facility Obligation, and any other document or instrument executed or delivered at any time in connection with any Intermediation Facility Obligations, including any intercreditor or joinder agreement among holders of Intermediation Facility Obligations, to the extent such are effective at the relevant time, as each may be amended or modified from time to time in accordance with this Agreement.

Intermediation Facility Obligations” means all obligations of every nature of the Company or any other Grantor under the Intermediation Facility Documents, including obligations to purchase Inventory, repay principal, pay interest (including default interest accruing pursuant to the terms of the applicable Intermediation Facility Document), fees (including prepayment fees), Post-Petition Interest, costs, expenses, indemnities or otherwise (including all fees and disbursements of counsel to the Intermediation Facility Secured Parties or any other holder of Intermediation Facility Obligations that, in each case, are required to be paid or reimbursed by the Company or any other Grantor pursuant to the terms of any such Intermediation Facility Document), in each case, whether fixed or contingent, whether direct or indirect, whether due or to become due and whether now existing or hereafter incurred, but for the avoidance of doubt, excluding all Term Loan Bank Product Obligations under any Intermediation Facility Documents.

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Intermediation Facility Priority Collateral” means all of the following assets of the Company with respect to which a Lien is granted as security for the Intermediation Facility Obligations in each case whether tangible or intangible: (a) all Inventory, including Inventory subject to or intended to be sold as Intermediation Title Property under the Intermediation Facility Documents (and solely to the extent a Lien is granted on such assets under any Intermediation Facility Security Documents, Renewable Products, Renewable Feedstock, Environmental Attributes, Catalyst Assets and RINs); (b) all Inventory constituting Hydrocarbon Credit Support, (c) the Intermediation Facility Secured Parties’ Business Interruption Insurance Percentage of the proceeds of business interruption insurance policies (subject in all respects to Section 3.08); (d) all Proceeds of (including other proceeds of insurance with respect to the foregoing), and Supporting Obligations (including Letter-of-Credit Rights) with respect to, any of the foregoing and (e) the Intermediation Cash Collateral.

Intermediation Facility Representative” means, initially, the Intermediation Facility Representative as set forth in the introductory paragraph of this Agreement or, from and after the date of any Refinancing in full or replacement of the Intermediation Agreement (or entry into any other permitted Intermediation Agreement), the Person(s) identified as the intermediation facility representative under such replacement or additional Intermediation Agreement; provided that the Intermediation Agreement (or any other of the Transaction Documents (as defined in the Intermediation Agreement) in effect on the date hereof, as amended, modified or waived, shall not constitute a “replacement” Intermediation Agreement.

Intermediation Facility Secured Parties” means the Intermediation Facility Representative and all other holders of the Intermediation Facility Obligations (each, an “Intermediation Facility Secured Party”).

Intermediation Facility Security Documents” means, individually or collectively, as context requires, all “Lien Documents” (under and as defined in the Intermediation Agreement) or other agreements which grant or transfer for security executed and delivered by any Grantor creating (or purporting to create) a Lien upon Intermediation Facility Priority Collateral in favor of the Intermediation Facility Secured Party, in each case, as amended, restated, amended and restated, modified, renewed, restated or replaced, in whole or in part, from time to time. Intermediation Facility Document.

Intermediation Facility Termination Date” means the first date on which the Discharge of Intermediation Facility Obligations in respect of the applicable Intermediation Facility Documents shall have occurred. Notwithstanding the foregoing, if at any time substantially concurrently with or after any Intermediation Facility Termination Date has occurred, any Grantor enters into any Intermediation Facility Document evidencing any Intermediation Facility Obligations permitted hereby, then such Intermediation Facility Termination Date shall automatically be deemed to not have occurred for all purposes of this Agreement, and the obligations under such Intermediation Facility Document shall automatically be treated as “Intermediation Facility Obligations” for all purposes of this Agreement, including for purposes of the Lien priorities and rights in respect of Collateral set forth herein.

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“Intermediation Title Property” means the volumes of Inventory that are owned or under contract to be acquired and owned by the Intermediation Facility Secured Parties and held in any of the “Included Storage Locations” (each, as defined in the Intermediation Agreement) pursuant to the Intermediation Agreement.

Inventory” means any and all inventory of any Grantor, including (i) crude oil, refined products, sulfur or other hydrocarbon inventory of the Grantors (including hydrocarbons in storage, in transit, in process or in pipelines of the Refinery), Renewable Feedstock and refined product (including Renewable Biomass), (iii) Renewable Product, (iv) Environmental Attributes, (v) Catalyst Assets, (vi) RINs and (vii) all other property or assets included within the scope of the definition of “Inventory” as such term is defined in the UCC.

LCFS” means the California Low Carbon Fuel Standard as set forth in Section 95484 of Title 17 of the California Code of Regulations, as amended or supplemented.

LCFS Credits” means a Credit as defined in the LCFS Regulations.

LCFS Regulations” means the regulations, orders, decrees and standards issued by a Governmental Authority implementing or otherwise applicable to the LCFS as set forth in 17 CCR § 95480 et seq. and each successor regulation.

License Expiration Date” has the meaning set forth in Section 3.04(d).

Lien” means any pledge, bailment, lease, mortgage, deed of trust (or similar instrument), hypothecation, conditional sales and title retention agreement, charge, claim, encumbrance or other lien in favor of any Person.

Mortgage” means each of the mortgages and deeds of trust made by any Grantor to secure any Secured Obligations or under which rights or remedies with respect to any such Lien are governed.

Non-Conforming Renewable Product” means a renewable diesel that (i) is produced from one hundred percent (100%) Renewable Biomass and no portion of which is produced from non-renewable feedstock, including petroleum products; and (ii) does not meet the Renewable Product Specifications.

OCFP” means the Oregon Clean Fuels Program as set forth in Oregon Administrative Rules 340-253-0060(4) and each successor regulation.

OCFP Credits” means a credit as defined in the OCFP Regulations.

OCFP Regulations” mean the regulations, orders, decrees and standards issued by a Governmental Authority implementing or otherwise applicable to the OCFP.

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Parent” means Vertex Energy, Inc., a Nevada corporation.

Patents” means all issued patents, patent applications and like protections including without limitation rights and privileges arising under Applicable Law with respect thereto (in the United States), inventions, improvements, divisions, continuations, renewals, reissues, extensions and continuations-in-part of the same.

Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

Post-Petition Interest” means any interest or entitlement to fees or expenses or other charges that accrues after the commencement of any Insolvency Proceeding, whether or not such interest, fees, expenses or other charges are allowed or allowable against the Company or any other Grantor in such Insolvency Proceeding.

Re-Characterization” means the actual or purported re-characterization by any court, arbitrator or Governmental Authority re-characterizing all or part of the transactions contemplated by any Intermediation Agreement (whether as a financing transaction or otherwise) in such manner as to give any Grantor rights, title or interest in any Intermediation Title Property or otherwise purport to include any Intermediation Title Property in the debtor’s estate of any Grantor. “Re-Characterized” shall have a correlative meaning.

Real Property” means, at any time, any of the real property owned or leased by any Grantor.

Recovery” has the meaning set forth in Section 5.05.

Refinance” means, in respect of any indebtedness or other obligation, to refinance, extend, renew, defease, supplement, restructure, replace, refund or repay, or to issue other indebtedness or obligation in exchange or replacement for such indebtedness or obligation, in whole or in part, whether with the same or different lenders, arrangers, agents or buyers. “Refinanced” and “Refinancing” shall have correlative meanings.

Refinery” means that certain facility acquired by the Company, located at Mobile, Alabama consisting of petroleum processing equipment and related facilities.

Renewable Biomass” has the meaning set forth in 42 U.S.C. § 7545(o)(I).

Renewable Feedstock” means all renewable feedstocks, including Renewable Biomass.

Renewable Product” means all Conforming Renewable Product or Non-Conforming Renewable Product.

Renewable Product Specifications” means (i) the requirements and specifications for fuels and fuel additives established by the U.S. Environmental Protection Agency in Part 79 of Title 40 of the Code of Federal Regulations; (ii) the requirements and specifications established by the California Air Resources Board in Sections 2281, 2282, and 2284 of Title 13 of the California Code of Regulations; (iii) the requirements and specifications of American Society of Testing and Materials specification D 975; and (vi) all requirements under Applicable Law governing the production and composition of renewable diesel sold and used as vehicle fuel, including those imposed by any Governmental Authority and under any CFP.

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Representatives” means the Intermediation Facility Representative or the Term Loan Agent, as applicable.

RFS Program” means the renewable fuel program and policies established section 211(o) of the Clean Air Act (42 U.S.C. § 7545(o)) as implemented by the U.S. Environmental Protection Agency under Subpart M of Part 80 of Title 40 of the Code of Federal Regulations.

RIN” means renewable identification number, which is the serial number assigned to a batch of biofuel for the purpose of tracking biofuel production, use and trading as required by the RFS Program.

Secured Obligations” means the Intermediation Facility Obligations and the Term Loan Obligations.

Secured Parties” means the Intermediation Facility Secured Parties and the Term Loan Secured Parties.

Security Document” means any of the Intermediation Facility Security Documents and the Term Loan Collateral Documents.

Subsidiary” means any Person that is an entity of which a majority of the outstanding capital stock, membership interests, partnership interests or other equity interests entitled to vote for the election of directors, managers or the equivalent is owned by Parent directly or indirectly through Subsidiaries including any Subsidiary formed after the date hereof. Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of the Parent.

Term Loan Agent” means, initially, the Term Loan Agent as set forth in the introductory paragraph of this Agreement or, from and after the date of any Refinancing in full or replacement of the Term Loan Agreement, the Person identified as the collateral agent under such replacement Term Loan Agreement or, if there is more than one replacement Term Loan Agreement outstanding at any time, the Controlling Term Loan Agent; provided that the Term Loan Agreement in effect on the date hereof, as amended, modified or waived, shall not constitute a “replacement” Term Loan Agreement.

Term Loan Agreement” means (i) that certain Loan and Security Agreement dated as of April 1, 2022, among the Parent, Company, the other guarantors party thereto, the lenders party thereto and the Term Loan Agent, as amended, restated, amended and restated, supplemented or otherwise modified from time to time after the date hereof in accordance with this Agreement and (ii) any credit agreement, loan agreement, note agreement, promissory note, indenture or other agreement or instrument evidencing or governing the terms of any Indebtedness or other financial accommodation incurred or provided in connection with any Refinancing of Indebtedness thereunder.

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Term Loan Bank Product Obligations” shall mean all “Bank Product Obligations” (as defined in the Term Loan Agreement) arising under Secured Bank Product Agreements and Secured Hedge Agreements (each as defined in the Term Loan Agreement); provided that Term Loan Bank Product Obligations shall not include any Intermediation Facility Obligations (including, without limitation, any Transaction Obligations and Related Hedges (in each case, under and as defined under the Intermediation Agreement (as in effect on the date hereof)) under any Intermediation Facility Document, including, without limitation, by virtue of setoff or indemnification rights under any such Intermediation Facility Documents).

Term Loan Collateral Documents” means the “Collateral Documents” as defined in the Term Loan Agreement or any corresponding definition thereunder.

Term Loan Documents” means the Term Loan Agreement, the Term Loan Collateral Documents and any other “Loan Documents” (as defined in the Term Loan Agreement or any corresponding definition thereunder), other than this Agreement.

Term Loan Obligations” means all “Secured Obligations” as defined in the Term Loan Agreement or any corresponding definition thereunder.

Term Loan Priority Collateral” means all of the assets and property of any Grantor whether real, personal or mixed, to which a Lien has been granted as security for the Term Loan Priority Collateral that does not constitute Intermediation Facility Priority Collateral, and including, for the avoidance of doubt, all of the following: (a) all Equipment, all Real Property and interests therein (including both fee and leasehold interests) and all fixtures including all buildings, terminals, storage tanks, refining and other facilities, pipelines, pipeline rights, loading racks, rail spurs and loading facilities; (b) all Intellectual Property; (c) all cash, Cash Equivalents, checks and other negotiable Instruments, funds and other evidences of payment and all Financial Assets, in each case, held on deposit therein and credited thereto, all Security Entitlements arising therefrom; (d) all Equity Interests; (e) all Commercial Tort Claims; (f) all Accounts, Payment Intangibles and any other rights arising thereunder; (g) all Payments Intangibles that represent tax refunds in respect of or otherwise related to real property or Fixtures or other extraordinary receipts of any kind; (h) all other General Intangibles, all Investment Property, all Documents, all Instruments (including all promissory notes), all Chattel Paper (including Electronic Chattel Paper) and all Letter-of-Credit Rights; (i) all other assets not constituting Intermediation Facility Priority Collateral, including for the avoidance of doubt, all Inventory of each Grantor other than the Company; (j) all Proceeds, including all insurance proceeds, including for the avoidance of doubt, the Term Loan Secured Parties’ Business Interruption Insurance Percentage of proceeds of all business interruption insurance policies or Proceeds of any of the foregoing and all collateral security guarantees, Supporting Obligations or other credit support given by any Person with respect to any of the foregoing; and (k) all books and records relating to any of the foregoing.

Term Loan Required Lenders” means the “Required Lenders” as defined in the Term Loan Agreement or any corresponding definition thereunder.

Term Loan Secured Parties” means the Term Loan Agent and all other holders of the Term Loan Obligations.

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Term Loan Termination Date” means the first date on which the Discharge of Term Loan Obligations shall have occurred. For the avoidance of doubt, a Refinancing of the Term Loan Obligations shall not give rise to the Term Loan Termination Date unless the terms thereof expressly so provide with reference to this Agreement.

Termination Date” means any of the Intermediation Facility Termination Date and the Term Loan Termination Date, as applicable.

Trademarks” means any and all trademark and service mark rights, whether registered or not, applications to register and registrations of the same and like protections (whether filed with the USPTO or any similar offices in any State of the United States), and the entire goodwill of the business of the Grantor connected with and symbolized by such trademarks, together with any and all (i) rights and privileges arising under Applicable Law, (ii) extensions and renewals thereof and (iii) rights corresponding thereto throughout the world.

Type” when used to describe any Collateral, refers to whether such Collateral is Intermediation Facility Priority Collateral or Term Loan Priority Collateral.

Unasserted Contingent Obligations” means, at any time, with respect to any Class of Secured Obligations, Secured Obligations of such Class for taxes, costs, indemnifications, reimbursements, damages and other liabilities (excluding (i) the principal of, and interest and premium (if any) on, and fees and expenses relating to, any Secured Obligation of such Class and (ii) contingent reimbursement obligations in respect of amounts that may be drawn under outstanding letters of credit) in respect of which no assertion of liability (whether oral or written) and no claim or demand for payment (whether oral or written) has been made (and, in the case of Secured Obligations of such Class for indemnification, no notice for indemnification has been issued by the indemnitee) at such time.

Uniform Commercial Code” or “UCC” means the Uniform Commercial Code as in effect from time to time in the State of New York or, when the laws of any other jurisdiction govern the perfection or enforcement of any Lien, the Uniform Commercial Code of such jurisdiction.

United States” means the United States of America.

Section 1.03.      Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented, modified, restated, replaced, refinanced, extended, renewed or restructured (subject to any restrictions on such supplements, amendments, modifications, replacements, refinancings, extensions, renewals, restatements or restructurings set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and permitted assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement, (e) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights, (f) references to any law shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such law (including by succession of comparable successor laws), and (g) in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including”; the words “to” and “until” each mean “to but excluding”; and the word “through” means “to and including”.

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ARTICLE 2
LIEN PRIORITIES

Section 2.01.      Lien Priorities.

(a)               Each Representative hereby (i) acknowledges that the Grantors (x) have granted or will grant Liens on the Collateral in favor of the Term Loan Agent (for the benefit of itself and/or the other Term Loan Secured Parties) to secure the Term Loan Obligations and (y) have granted or will grant Liens on the Collateral in favor of the Intermediation Facility Secured Parties to secure the Intermediation Facility Obligations. Notwithstanding anything to the contrary herein or any Finance Document, any and all Liens now existing or hereafter created or arising, regardless of how or when acquired, whether by grant, statute, operation of law, subrogation or otherwise, are expressly, and shall remain, junior in priority, operation and effect to any and all First Priority Liens now existing or hereafter created or arising, notwithstanding (i) the date, time, method, manner or order of grant, attachment, or perfection of any Liens granted to any Secured Party in respect of all or any portion of the Collateral, (ii) the order or time of filing or recordation of any document or instrument for perfecting the Liens in favor of any Secured Party in any Collateral, (iii) any provision of the UCC, any other applicable law or any of the Finance Documents, (iv) whether the Liens securing any of the Secured Obligations are valid, enforceable, void, avoidable, subordinated, disputed, or allowed, (v) whether any Term Loan Agent or Intermediation Facility Secured Party, in each case directly or through agents, has control over all or any portion of the Collateral, (vi) any defect or deficiencies in, or non-perfection or alleged or purported defect or deficiency in any of the foregoing (including any failure to perfect or lapse in perfection), setting aside, Re-Characterization, or avoidance (including as a fraudulent conveyance or otherwise) of, any Lien, or (vii) the fact that any such First Priority Liens are (x) subordinated to any Lien securing any obligation of any Grantor or (y) otherwise subordinated, voided, avoided, invalidated or lapsed in any manner.

(b)               No Secured Party shall object to or contest, or support any other Person in contesting or objecting to, in any proceeding (including any Insolvency Proceeding), the validity, extent, perfection, priority or enforceability of any Lien on the Collateral granted to any other Secured Party to secure any Secured Obligations. No Secured Party shall take, or cause to be taken, any action the purpose of which is to make any other Lien pari passu with or senior to the First Priority Lien. Nothing in this Section 2.01(b) shall be construed to prevent or impair the rights of any party hereto to enforce the terms of this Agreement, or in accordance with the terms of this Agreement, any of the Finance Documents, or to prohibit any Secured Party for exercising any rights expressly granted to it under this Agreement.

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(c)               Notwithstanding any failure by any Secured Party to perfect any Lien on the Collateral securing Secured Obligations or any avoidance, setting aside, Re-Characterization, invalidation or subordination by any third party or court of competent jurisdiction of the security interests in the Collateral granted to such Secured Party to secure any Secured Obligations, the priority and rights as among the Secured Parties with respect to the Collateral shall be as set forth herein.

(d)               Nothing in this Agreement shall affect the right of (i) any Secured Party to receive payments of interest, principal and other required amounts in respect of their respective Secured Obligations, unless the payment or receipt of amounts or performance thereof is expressly prohibited by this Agreement or any of the Finance Documents pursuant to which it is acting as a Secured Party, (ii) the Intermediation Facility Secured Parties to (A) require performance from the Company or any other Grantor pursuant to the Intermediation Facility Documents or (B) terminate the commitments and/or other arrangements under the Intermediation Facility Documents in accordance therewith, in each case of this clause (ii) unless such performance or termination and/or other arrangements is expressly prohibited by this Agreement or any of the Intermediation Facility Documents, or (iii) the Term Loan Agent (or any other Term Loan Secured Party) to (A) require performance from the Company or any other Grantor pursuant to the Term Loan Documents or (B) terminate the commitments and/or other arrangements under the Term Loan Documents in accordance therewith, in each case of this clause (ii) unless such performance or termination and/or other arrangements is expressly prohibited by this Agreement or any of the Term Loan Documents

Section 2.02.      Nature of Obligations.

(a)               The Term Loan Agent, for and on behalf of itself and the other Term Loan Secured Parties, expressly acknowledges and agrees that, subject to the limitations set forth in this Agreement and the applicable Intermediation Facility Documents, (i) certain of the Intermediation Facility Obligations are revolving in nature and that the amount thereof that may be outstanding at any time, or from time to time, may be increased or reduced and subsequently reborrowed, as applicable, (ii) the terms of such Intermediation Facility Obligations may be modified, supplemented, renewed, restructured, replaced, refinanced, extended or otherwise amended from time to time, and that the aggregate amount of the Intermediation Facility Obligations may be increased, replaced, renewed, extended, restructured or refinanced, in each such event, without notice to or consent by the Secured Parties and (iii) all Intermediation Facility Priority Collateral received by the Intermediation Facility Secured Parties may be applied, reversed, reapplied and credited or reborrowed, in whole or in part, to the Intermediation Facility Obligations at any time, in each case, without affecting the provisions hereof. The Lien priorities provided in Section 2.01 shall not be altered or otherwise affected by any such amendment, modification, supplement, extension, repayment, reborrowing, increase, replacement, renewal, restructuring, application, reversal, restatement or refinancing of or waiver, consent or accommodation with respect to, any Intermediation Facility Obligations, or any portion thereof, to the extent in compliance with the terms of this Agreement.

(b)               The Intermediation Facility Representative for itself and the other Intermediation Facility Secured Parties, expressly acknowledges and agrees that, subject to the limitations set forth in this Agreement and the applicable Term Loan Documents, (i) the terms of the Term Loan Obligations may be modified, supplemented, renewed, restructured, replaced, refinanced, extended or otherwise amended from time to time, and that the aggregate amount of the Term Loan Obligations may be replaced, renewed, extended, restructured or refinanced, in each event, without notice to or consent by the Secured Parties (except to the extent required under Article 6) and (ii) all Term Loan Priority Collateral received by the Term Loan Agent may be applied, reversed, reapplied, reborrowed or credited in whole or in part, to the Term Loan Obligations in accordance with the Term Loan Agreement at any time, in each case, without affecting the provisions hereof. The Lien priorities provided in Section 2.01 shall not be altered or otherwise affected by any such amendment, modification, supplement, extension, repayment, reborrowing, increase, replacement, renewal, restructuring, application, reversal, restatement or refinancing of or waiver, consent or accommodation with respect to, any Term Loan Obligations, or any portion thereof, to the extent in compliance with the terms of this Agreement.

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Section 2.03.      Additional Liens. The Term Loan Agent and the Intermediation Facility Representative each agree that it will not assert Liens on the other Secured Party’s Type of Collateral and that there is not intended to be shared Collateral other than business interruption insurance policies and the proceeds thereof which are subject to Section 3.08. The Term Loan Agent additionally agrees that it will not assert Liens on the Intermediation Title Property.

Section 2.04.      [Reserved].

Section 2.05.      Delivery of Termination Date Notices. Upon the occurrence of the Termination Date in respect of any Class of Secured Obligations, the Representative in respect of such Class of Secured Obligations shall deliver a written notice to the Representatives of the other Classes of Secured Obligations then outstanding stating that such Termination Date has occurred.

Section 2.06.      Reinstatement. To the extent any payment with respect to any First Priority Obligation (whether by or on behalf of any Grantor, as proceeds of security, enforcement of any right of setoff or otherwise) is declared to be avoided as a fraudulent conveyance, fraudulent transfer, or a preference in any respect, set aside or required to be paid to a debtor in possession or any trustee appointed therefor, any other Secured Party, receiver or similar Person, then the obligation or part thereof originally intended to be satisfied shall, for the purposes of this Agreement and the rights and obligations of the First Priority Secured Parties and the other Secured Parties, be deemed to be reinstated and outstanding as if such payment, or payments, have not occurred and the terms and conditions of this Article 2 shall be fully applicable thereto until all such First Priority Obligations shall again have been paid in full in cash. To the extent any payment with respect to any Secured Obligation other than the First Priority Obligations (whether by or on behalf of any Grantor, as proceeds of security, enforcement of any right or setoff or otherwise) is declared to be avoided as a fraudulent conveyance, fraudulent transfer, or a preference in any respect, set aside or required to be paid to a debtor in possession or any trustee appointed therefor, any First Priority Secured Party, receiver or similar Person, then the obligation or part thereof originally intended to be satisfied shall, for the purposes of this Agreement and the rights and obligations of the First Priority Secured Parties and the other Secured Parties, be deemed to be reinstated and outstanding as if such payment, or payments, have not occurred.

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ARTICLE 3
ENFORCEMENT RIGHTS

Section 3.01.     

Exclusive Enforcement.

With respect to each Type of Collateral, until the First Priority Obligations Payment Date, whether or not an Insolvency Proceeding has been commenced by or against any Grantor, the First Priority Representative (on behalf of itself and the other First Priority Secured Parties) shall have the exclusive right to take and continue (or refrain from taking or continuing) any Enforcement Action with respect to such Collateral in accordance with the applicable First Priority Documents, without any consultation with or consent of any other Secured Parties with respect to such Collateral. With respect to each Type of Collateral, upon the occurrence and during the continuance of an Event of Default (and subject to the provisions of the First Priority Documents), the First Priority Representative (on behalf of itself and the other First Priority Secured Party) may take and continue any Enforcement Action with respect to the applicable First Priority Obligations and such Collateral.

Section 3.02.      Standstill and Waivers.

(a)               With respect to each Type of Collateral, the other Representatives, on behalf of itself and the other Secured Parties, agrees, for the benefit of the First Priority Representative and each other First Priority Secured Party, that it will not (i) oppose, object to, interfere with, hinder or delay, in any manner, whether by judicial proceedings (including the filing of an Insolvency Proceeding) or otherwise, any foreclosure, sale, lease, exchange, transfer or other disposition of such Type of Collateral pursuant to an Enforcement Action or any other Enforcement Action with respect to Collateral taken by or on behalf of the First Priority Representative or any other First Priority Secured Party or (ii) take any action that is otherwise prohibited under this Agreement;

(b)               With respect to each Type of Collateral, each Representative, on behalf of itself and the other Secured Parties, agrees, for the benefit of the First Priority Representative and each other First Priority Secured Party, that until the First Priority Obligations Payment Date, they have no right to (x) direct the First Priority Representative or any other First Priority Secured Party to take any Enforcement Action with respect to such Collateral or (y) consent or object to the taking by the First Priority Representative or any other First Priority Secured Party of any Enforcement Action with respect to such Collateral or to the timing or manner thereof (or, to the extent they may have any such right described in this clause (b) as a junior lien creditor, they hereby irrevocably waive such right) regardless of whether any action or failure to act by or on behalf of the First Priority Representative or First Priority Secured Parties is adverse to the interest of the other Secured Parties;

(c)               With respect to each Type of Collateral, each Representative, on behalf of itself and the other Secured Parties, agrees, for the benefit of the First Priority Representative and each other First Priority Secured Party, that until the First Priority Obligations Payment Date, it will not institute any suit or other proceeding or assert in any suit, Insolvency Proceeding or other proceeding any claim against the First Priority Representative or any other First Priority Secured Party seeking damages from or other relief by way of specific performance, instructions or otherwise, with respect to, and none of the First Priority Representative nor any other First Priority Secured Party shall be liable for, any action taken or omitted to be taken by the First Priority Representative or any First Priority Secured Party with respect to such Collateral or pursuant to the First Priority Documents; provided that nothing in this Section 3.02(c) shall be construed to prevent or limit any party hereto from instituting any such suit or other proceeding to enforce the terms of this Agreement;

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(d)               With respect to each Type of Collateral, each Representative, on behalf of itself and the other Secured Parties, agrees, for the benefit of the First Priority Representative and each other First Priority Secured Party, that until the First Priority Obligations Payment Date it will not take any Enforcement Action with respect to such Collateral;

(e)               With respect to each Type of Collateral, each Representative, on behalf of itself and the other Secured Parties, agrees, for the benefit of the First Priority Representative and each other First Priority Secured Party, that until the First Priority Obligations Payment Date they will not commence judicial or nonjudicial foreclosure proceedings with respect to, seek to have a trustee, receiver, liquidator or similar official appointed for or over, attempt any action to take possession of, exercise any right, remedy or power with respect to, or otherwise take any action to enforce their interest in or realize upon, such Collateral; and

(f)                With respect to each Type of Collateral, each Representative, on behalf of itself and the other Secured Parties, agrees, for the benefit of the First Priority Representative and each other First Priority Secured Party, that until the First Priority Obligations Payment Date, they will not seek, and hereby waive any right, to have such Collateral or any part thereof marshaled upon any foreclosure or other disposition of such Collateral.

Section 3.03.      [Reserved].

Section 3.04.      Cooperation with respect to Collateral.

(a)               Access to Information. If any Representative takes actual possession of any documentation of a Grantor in accordance with the terms and conditions of the applicable Finance Documents (whether such documentation is in the form of a writing or is stored in any data equipment or data record in the physical possession of such Representative), then upon request of any other Representatives and reasonable advance notice, such Representative will permit such other Representative or its representative to inspect and copy such documentation if and to the extent such other Representative certifies to such Representative that:

(i)                 such documentation contains or may contain information necessary or appropriate, in the good faith opinion of the Representative, to the enforcement of the Representative’s Liens upon any Collateral; and

(ii)              such Representative is entitled to receive and use such information under applicable law and the applicable Finance Documents and, in doing so, will comply with all obligations imposed by law or contract in respect of the disclosure, or use of such information (including any applicable confidentiality restrictions).

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(b)               Access by Intermediation Facility Secured Party to Property to Process and Sell Inventory constituting Intermediation Facility Priority Collateral and Intermediation Title Property.

(i)                 In the event the Term Loan Agent shall acquire control or possession of any of the Term Loan Priority Collateral or shall, through the exercise of remedies under the Term Loan Priority Collateral Documents or otherwise, sell any of the Term Loan Priority Collateral to any third party purchaser (“Third Party Purchaser”), the Term Loan Agent shall, to the extent permitted by law, permit the Intermediation Facility Representative (or shall require as a condition of such sale to the Third Party Purchaser that the Third Party Purchaser agree to permit the Intermediation Facility Representative), at the Intermediation Facility Representative's option: (i) to enter any of the premises of any Grantor (or Third Party Purchaser) constituting such Term Loan Priority Collateral under such control or possession (or sold to a Third Party Purchaser) in order to inspect, remove or take any action with respect to the Intermediation Facility Priority Collateral or Intermediation Title Property or to enforce the Intermediation Facility Representative's rights or remedies with respect thereto, including, but not limited to, the removal of Intermediation Facility Priority Collateral and/or Intermediation Title Property and the examination and duplication of any property (to the extent not Intermediation Facility Priority Collateral or Intermediation Title Property) under such control or possession (or sold to a Third Party Purchaser) consisting of books and records of any Grantor related to the Intermediation Facility Priority Collateral and/or the Intermediation Title Property; (ii) to use such property for the purpose of manufacturing or processing raw materials or work-in-process into finished inventory; and (iii) to use any of the property under such control or possession (or sold to a Third Party Purchaser) consisting of computers or other data processing equipment related to the storage or processing of records, documents or files pertaining to the Intermediation Facility Priority Collateral or the Intermediation Title Property and to use any of the property under such control or possession (or sold to a Third Party Purchaser) consisting of other equipment to handle, deal with or dispose of any (A) Intermediation Facility Priority Collateral pursuant to the Intermediation Facility Representative's rights or remedies as set forth in the Intermediation Facility Security Documents, the Uniform Commercial Code of any applicable jurisdiction and other applicable law; or (B) Intermediation Title Property. Such use by the Intermediation Facility Representative of such property shall not be on an exclusive basis.

(ii)              The Intermediation Facility Representative hereby acknowledges, for itself and on behalf of the other Intermediation Facility Secured Parties, that, during the period any Intermediation Facility Priority Collateral or Intermediation Title Property shall be under control or possession of the Term Loan Agent, the Term Loan Agent shall not be obligated to take any action to protect or to procure insurance with respect to such Intermediation Facility Priority Collateral or Intermediation Title Property, it being understood that the Term Loan Agent shall not have any responsibility for loss or damage to the Intermediation Facility Priority Collateral or Intermediation Title Property (other than as a result of the gross negligence or willful misconduct of the Term Loan Agent or its agents (as applicable), as determined by a final non-appealable judgment of a court of competent jurisdiction) and that all the risk of loss or damage to the Intermediation Facility Priority Collateral or the Intermediation Title Property shall remain with the Intermediation Facility Secured Parties; provided, that, to the extent insurance obtained by the Term Loan Agent provides coverage for risks relating to access to or use of any Intermediation Facility Priority Collateral or Intermediation Title Property, the Intermediation Facility Representative will be made an additional named insured or a loss payee (as applicable) thereunder.

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(iii)            The rights of the Intermediation Facility Representative set forth in clauses (i) and (ii) above shall continue until the later of (x) 180 days after the date on which the Intermediation Facility Representative receives written notice from the Term Loan Agent that the Term Loan Agent has control or possession of the Term Loan Priority Collateral at issue and (y) the sale or other disposition of such Term Loan Priority Collateral by the Term Loan Agent or the Term Loan Secured Parties. Such time period shall be tolled during the pendency of any Insolvency Proceeding of any Grantor or other proceedings pursuant to which the Intermediation Facility Representative or the other Intermediation Facility Secured Parties are effectively stayed from enforcing their rights against the Intermediation Facility Priority Collateral or the Intermediation Title Property. In no event shall any Term Loan Secured Parties take any action to interfere with, limit or restrict the rights of the Intermediation Facility Representative or any other Intermediation Facility Secured Parties or the exercise of such rights by the Intermediation Facility Representative or any other Intermediation Facility Secured Party to have access to or to use any of such Collateral pursuant to Section ___ prior to the expiration of such period.

(iv)             During the period of actual occupation, use and/or control by the Intermediation Facility Representative (or its employees, agents, advisers and representatives) of any parcel or item of Term Loan Priority Collateral (constituting Real Property subject to a Mortgage), the Intermediation Facility Representative shall (v) use the Term Loan Priority Collateral in accordance with applicable law, (w) insure for damage to property and liability to persons, including property and liability insurance for the benefit of the Term Loan Secured Parties, (x) pay any utility, rental, lease or similar charges and payments owed to third parties that accrue during, or that arise as a result of, such use and/or control to the extent not paid for by the Grantors, (y) indemnify each Term Loan Secured Party from any claim, loss, damage, cost or liability arising from the Intermediation Facility Representative’s or any other Intermediation Facility Secured Party’s use of the Term Loan Priority Collateral (except for those arising from the gross negligence or willful misconduct of such Term Loan Secured Party), and (z) be obligated to repair at their expense any physical damage to such Term Loan Priority Collateral resulting from such occupancy, use or control, and to leave such Term Loan Priority Collateral in substantially the same condition as it was at the commencement of such occupancy, use or control, ordinary wear and tear excepted. Notwithstanding the foregoing, (i) in no event shall the Intermediation Facility Representative or any other Intermediation Facility Secured Party have any liability to the Term Loan Secured Parties pursuant to this Section 3.04(b) as a result of any condition (including any environmental condition, claim or liability) on or with respect to the Term Loan Priority Collateral existing prior to the date of the exercise by the Intermediation Facility Representative of its rights under this Section 3.04(b) and (ii) the Intermediation Facility Representative shall have no duty or liability to maintain the Term Loan Priority Collateral in a condition or manner better than that in which it was maintained prior to the use thereof by the Intermediation Facility Representative or any other Intermediation Facility Secured Party, or for any diminution in the value of the Term Loan Priority Collateral that results from ordinary wear and tear resulting from the use of the Term Loan Priority Collateral by the Intermediation Facility Secured Parties in the manner and for the time periods specified under this Section 3.04(b). Notwithstanding the rights granted in this Section 3.04(b), the Intermediation Facility Secured Parties shall cooperate with the Term Loan Secured Parties in connection with any efforts made by the Term Loan Secured Parties to sell any Term Loan Priority Collateral or otherwise exercise their rights and remedies with respect thereto, including, without limitation, the right to commence foreclosure of the Term Loan Priority Collateral or show the Term Loan Priority Collateral to prospective purchasers and to ready the Term Loan Priority Collateral for sale. The rights of the Intermediation Facility Secured Parties under this Section 3.04(b) shall automatically cease to apply to any Term Loan Priority Collateral from and after the date, if any, on which such Term Loan Priority Collateral is no longer physically located on any property subject to a Mortgage. No Representative nor any Secured Parties shall be responsible for perfecting or maintaining the perfection of Liens with respect to the Collateral for the benefit of the other Representatives or Secured Parties.

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(c)               License. The Term Loan Agent, on behalf of the Term Loan Secured Parties, hereby irrevocably grants the Intermediation Facility Secured Party a non-exclusive worldwide license to or right to use, to the maximum extent permitted by applicable law, exercisable without payment of royalty or other compensation, any of the Intellectual Property now or hereafter owned by, licensed to, or otherwise exclusively used by the Grantors in order for the Intermediation Facility Secured Parties to purchase, use, market, repossess, possess, store, assemble, manufacture, process, sell, transfer, distribute or otherwise dispose of any asset included in the Intermediation Facility Priority Collateral or the Intermediation Title Property in connection with the liquidation, disposition, foreclosure or realization upon the Intermediation Facility Priority Collateral and the Intermediation Title Property in accordance with the terms of the Intermediation Facility Documents, in each case of the foregoing, in connection with an Enforcement Action with respect to such Intermediation Facility Priority Collateral or Intermediation Title Property; provided that such license shall expire on the earlier of (i) the Intermediation Facility Termination Date, (ii) the expiration of the Access Period and (iii) with respect to the Intermediation Facility Secured Parties, the date that all or substantially all of the Intermediation Facility Priority Collateral or the Intermediation Title Property, in each case, has been liquidated, disposed of, foreclosed on or realized upon in full (the “License Expiration Date”); provided, further that that the Intermediation Facility Representative exercising such rights and the Secured Parties represented by it shall be subject to the same obligations set forth in clauses Section 3.04(b)(ii) through Section 3.04(b)(iv) above. The Term Loan Agent agrees that any of the Intellectual Property constituting Term Loan Priority Collateral that is sold, transferred or otherwise disposed of (whether pursuant to an Enforcement Action or otherwise) prior to the License Expiration Date shall be subject to the rights of the Intermediation Facility Secured Party as set forth in this Section 3.04.

(d)               Grantor Consent.

(i)                 The Company and the other Grantors consent to the performance by the Term Loan Agent of the obligations set forth in this Section 3.04 and acknowledge and agree that neither the Term Loan Agent nor any other Term Loan Secured Party, shall ever be liable for any action taken or omitted by the Intermediation Facility Representative or any other Intermediation Facility Secured Party or any of their officers, employees, agents successors or assigns in connection therewith or incidental thereto or in consequence thereof, including any improper use or disclosure of any proprietary information or other Intellectual Property by the Intermediation Facility Secured Parties or their officers, employees, agents, successors or assigns or any other damage to or misuse or loss of any property of the Grantors as a result of any action taken or omitted by the Intermediation Facility Secured Parties or any of their officers, employees, agents, successors or assigns.

(ii)              The Company and the other Grantors consent to the performance by the Intermediation Facility Secured Parties of the obligations set forth in this Section 3.04 and acknowledge and agree that the Intermediation Facility Secured Parties shall not be accountable or liable for any action taken or omitted by the Term Loan Agent or any holder of Term Loan Obligations or any of their respective officers, employees, agents successors or assigns in connection therewith or incidental thereto or in consequence thereof, including any improper use or disclosure of any proprietary information or other Intellectual Property by the Term Loan Agent, Term Loan Secured Party or any of their respective officers, employees, agents, successors or assigns or any other damage to or misuse or loss of any property of the Grantors as a result of any action taken or omitted by the Term Loan Agent or any holder of Term Loan Obligations or its officers, employees, agents, successors or assigns.

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Section 3.05.      [Reserved.]

Section 3.06.      [Reserved].

Section 3.07.      Actions Upon Breach. With respect to each Type of Collateral, if any Secured Party (or any agent or other representative thereof) other than the First Priority Secured Parties with respect to such Type of Collateral in any way takes, attempts to or threatens to take any action with respect to such Type of Collateral (including any attempt to enforce any remedy on such Collateral, whether pursuant to the terms hereof or any other Finance Document or otherwise) in violation of this Agreement, or fails to take any action required by this Agreement, any First Priority Secured Party (in its or their own name or in the name of any Grantor) may obtain relief against such other Secured Party or agent or other representative thereof by injunction, specific performance and/or other appropriate equitable relief, including interposing as a defense or dilatory plea the making of this Agreement, it being understood and agreed by the other Representatives on behalf of each other Secured Party that (i) the damages of the First Priority Secured Parties from its actions may at that time be difficult to ascertain and may be irreparable, and (ii) each such other Secured Party waives any defense that any Grantor and/or the First Priority Secured Parties cannot demonstrate damage and/or be made whole by the awarding of damages.

Section 3.08.      Proceeds of Business Interruption Insurance. Notwithstanding anything to the contrary in this Agreement of any Intermediation Facility Documents, with respect to any and all proceeds of business interruption insurance constituting Intermediation Facility Priority Collateral, the Intermediation Facility Secured Parties shall be required to marshall, take, liquidate and exhaust all remedies and recoveries available to such Intermediation Facility Secured Parties with respect to (x) all other categories of Intermediation Facility Priority Collateral and (y) all insurance owned and held in the name of the Intermediation Facility Representative and/or the Intermediation Facility Secured Parties with respect to the Intermediation Facility Priority Collateral prior to receiving any recovery with respect to such proceeds of business interruption insurance with respect to Intermediation Facility Priority Collateral maintained by the Company as required by Section 17.1(b) of the Intermediation Agreement and such policy shall be the secondary policy with respect to Intermediation Facility Priority Collateral.

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ARTICLE 4
APPLICATION OF PROCEEDS OF COLLATERAL; DISPOSITIONS AND RELEASES OF
COLLATERAL; INSPECTION AND INSURANCE

Section 4.01.      Application of Proceeds; Turnover Provisions.

(a)               All proceeds of the Intermediation Facility Priority Collateral resulting from any Enforcement Action, and whether or not pursuant to an Insolvency Proceeding, and any distribution made in respect of Intermediation Facility Priority Collateral in any Insolvency Proceeding with respect to any Grantor, but subject in all respects to the conditions and limitations set forth in Section 3.08, shall be distributed as follows:

first, to the Intermediation Facility Representative for the payment in full in cash of all out of pocket fees, costs, indemnities and expenses (including reasonable and documented attorney’s fees and disbursements) of the Intermediation Facility Representative (in such capacity) in connection with any such Enforcement Action or protection of its rights under any Intermediation Facility Document or otherwise by reason of the occurrence of a default thereunder;

second, to the Intermediation Facility Secured Parties for the payment in full in cash of the Intermediation Facility Obligations not paid pursuant to clause first above in accordance with the Intermediation Facility Documents;

finally, to the relevant Grantor, or as a court of competent jurisdiction may direct.

If any Enforcement Action with respect to the Intermediation Facility Priority Collateral produces non-cash proceeds, then such non-cash proceeds shall be held by the Intermediation Facility Representative and, at such time as such non-cash proceeds are monetized, shall be applied as set forth above.

(b)               All proceeds of the Term Loan Priority Collateral resulting from any Enforcement Action, and whether or not pursuant to an Insolvency Proceeding, and any distribution made in respect of Term Loan Priority Collateral in any Insolvency Proceeding with respect to any Grantor, shall be distributed as follows:

first, to the Term Loan Agent, for the payment in full in cash out of pocket fees, costs, indemnities and expenses (including reasonable and documented attorney’s fees and disbursements) of the Term Loan Agent (in such capacity) in connection with any such Enforcement Action or protection of its rights under the Term Loan Documents or otherwise by reason of the occurrence of a default thereunder;

second, to the Term Loan Agent for the payment in full in cash of the Term Loan Obligations not paid pursuant to clause first above in accordance with the Term Loan Documents to be further paid in accordance with the provisions of the Term Loan Credit Agreement;

finally, to the relevant Grantor, or as a court of competent jurisdiction may direct.

If any Enforcement Action with respect to the Term Loan Priority Collateral produces non-cash proceeds, then such non-cash proceeds shall be held by the Term Loan Agent and, at such time as such non-cash proceeds are monetized, shall be applied as set forth above.

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(c)               With respect to each Type of Collateral, until the occurrence of the First Priority Obligations Payment Date, no Secured Party other than the First Priority Secured Party with respect to such Collateral may accept any such Type of Collateral, including any such Collateral constituting proceeds, in satisfaction, in whole or in part, of its Secured Obligations in violation of Section 3.08, 4.01(a) or 4.01(b). Any Type of Collateral received by any such other Secured Party that is not permitted to be received pursuant to the preceding sentence shall be segregated and held in trust and promptly turned over to the First Priority Representative to be applied in accordance with Section 3.08, 4.01(a) or 4.01(b), as the case may be, in the same form as received, with any necessary endorsements, and each Secured Party hereby authorizes the First Priority Representative to make any such endorsements as agent for such other Representative (which authorization, being coupled with an interest, is irrevocable until the First Priority Obligations Payment Date). Upon the turnover of such Type of Collateral as contemplated by the immediately preceding sentence, the other Secured Obligations purported to be satisfied by the payment of such Type of Collateral shall be immediately reinstated in full as though such payment had never occurred.

(d)               In connection with any asset sale by a Grantor that includes both Intermediation Facility Priority Collateral and Term Loan Priority Collateral (unless otherwise agreed by both the Intermediation Facility Representative and the Term Loan Agent and as provided by Section 3.08), such proceeds thereof shall be allocated as follows: (i) proceeds attributable to Intermediation Facility Priority Collateral shall be allocated to the Intermediation Facility Priority Collateral and (ii) all proceeds attributable to Term Loan Priority Collateral shall be allocated to the Term Loan Priority Collateral.

(e)               Notwithstanding anything to the contrary contained in this Agreement, any Term Loan Document or any Intermediation Facility Document, each Grantor and the Intermediation Facility Representative, agrees that prior to the receipt of any notice of an Enforcement Action from the Intermediation Facility Representative, the Term Loan Agent is hereby permitted to treat all cash, Cash Equivalents, Money, collections and payments deposited in any deposit account subject to a deposit account control agreement or similar agreements (the “Term Loan Deposit Accounts”) in favor of the Term Loan Agent or otherwise received by the Term Loan Agent as Term Loan Priority Collateral. For the avoidance of doubt, the Term Loan Agent hereby agrees that if the Term Loan Deposit Accounts contain any cash, Cash Equivalents or Money, which constitutes proceeds of the Intermediation Facility Priority Collateral, then, upon obtaining knowledge or notice from the Intermediation Facility Representative or any Grantor that such cash, Cash Equivalents or Money constitute proceeds of the Intermediation Facility Priority Collateral the Term Loan Agent shall (x) hold such proceeds in trust for the Intermediation Facility Representative and turn over such proceeds to the Company to be applied to the Intermediation Facility Obligations or reinvested, in each case, in accordance with the Intermediation Agreement to the extent required or (y) if an Event of Default (as defined in the Intermediation Agreement) has occurred and is continuing, hold such proceeds in trust for the Intermediation Facility Representative and turn over such proceeds to the Intermediation Facility Representative as soon as practicable in accordance with Section 4.01(c).

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ARTICLE 5
INSOLVENCY PROCEEDINGS

Section 5.01.      Filing of Motions. No Secured Party shall, in or in connection with any Insolvency Proceeding, file any pleadings or motions, take any position at any hearing or proceeding of any nature, or otherwise take any action whatsoever, in each case to challenge, contest or otherwise object to the scope, validity, enforceability, perfection or priority of any Liens held by any other Secured Party on account of Secured Obligations, the value or allowability of any claims (including any claims for Post-Petition Interest) of any other Secured Party under Section 506(a) of the Bankruptcy Code or otherwise, or assert or support any claim for costs or expenses of preserving or disposing of any Collateral under Section 506(c) of the Bankruptcy Code or any similar provision of any other Debtor Relief Law, and no Secured Party shall support any other Person doing any of the foregoing.

Section 5.02.      Financing Matters.

(a)               With respect to each Type of Collateral, prior to the First Priority Obligations Payment Date, if any Grantor becomes subject to any Insolvency Proceeding, and if the First Priority Representative (acting at the direction of the requisite First Priority Secured Parties) consents to the use of such Type of Collateral (for the avoidance of doubt, including to the use of cash collateral) by any Grantor during any Insolvency Proceeding or provides financing to any Grantor under the Bankruptcy Code or consents to the provision of such financing to any Grantor by any third party to be secured (pari or senior to the First Priority Obligations on such Type of Collateral at the option of such First Priority Secured Parties) at least in part by such Type of Collateral (and, if also secured by the other Type of Collateral, secured only by Liens on such other Collateral that are junior to the Liens on such Collateral securing the First Priority Obligations on such other Type of Collateral) (any such financing, whether provided by the First Priority Secured Parties or any third party, being referred therein as a “DIP Financing”), then the other Representatives agrees, on behalf of itself and the other Secured Parties, that each such Secured Party (i) will be deemed to have consented to, will raise no objection to, and will not support any other Person objecting to, the use of such Collateral or to such DIP Financing, (ii) shall only request or accept adequate protection in connection with the use of such Collateral or such DIP Financing as permitted by Section 5.04, (iii) to the extent the Liens on the Collateral securing any First Priority Obligations are subordinated or pari passu with such DIP Financing, will subordinate (and will be deemed hereunder to have subordinated) the other Liens and any Adequate Protection Liens provided in respect thereof, (A) to the Liens on such Collateral securing the DIP Financing (and all obligations relating thereto) on the same terms and conditions as the First Priority Liens on such Collateral are subordinated, if applicable, thereto (and such subordination will not alter in any manner the terms of this Agreement), (B) to any adequate protection, including Adequate Protection Liens, provided to the First Priority Secured Parties with respect to such Collateral and (C) to any customary “carve-out” from such Collateral for professional and United States Trustee fees agreed to by the First Priority Representative (or the other First Priority Secured Parties) and, if not the First Priority Secured Parties, the Person providing such DIP Financing, as applicable, (iv) that any notice of such events found to be adequate by the court presiding over the Insolvency Proceeding shall be adequate notice, (v) that such DIP Financing does not compel any Grantor to seek confirmation of any specific plan of reorganization for which all or substantially all of the materials terms are set forth in the court order authorizing such DIP Financing or the accompanying financing documentation, or as may be acceptable to the First Priority Representative (each, acting at the direction of the respective requisite Secured Parties), (vi) will not oppose or object to the exercise by the First Priority Representative and the First Priority Secured Parties of the right to “credit bid” any of the First Priority Obligations pursuant to Section 363(k) of the Bankruptcy Code or other applicable law (or the amount of such credit bid), (vii) will not seek to “credit bid” any of its Secured Obligations other than its First Priority Obligations pursuant to Section 363(k) of the Bankruptcy Code or other applicable law, without providing for payment in full in cash of the First Priority Obligations upon the closing of such credit bid, and (viii) and will not propose, seek and/or support confirmation of any plan of reorganization to which the First Priority Representative and the First Priority Secured Parties have not consented in writing unless such plan provides for payment in full in cash of the First Priority Obligations. All Liens granted to the Intermediation Facility Secured Party or Term Loan Agent in any Insolvency Proceeding, whether as adequate protection or otherwise, are intended by the parties to be and shall be deemed to be subject to the Lien priority and the other terms and conditions of this Agreement. For clarity, none of the Term Loan Agent nor the Term Loan Secured Parties shall seek to “prime” the Lien of the Intermediation Facility Secured Party on the Intermediation Facility Priority Collateral or request, seek or receive a Lien on the Intermediation Facility Priority Collateral pursuant to Section 364(d) of the Bankruptcy Code, and the Intermediation Facility Secured Party shall not seek to “prime” the Liens of the Term Loan Agent and the Term Loan Secured Parties on the Term Loan Priority Collateral or request, seek or receive a Lien on the Term Loan Priority Collateral pursuant to Section 364(d) of the Bankruptcy Code.

(b)               Notwithstanding the foregoing, the provisions of Section 5.02(a) permitting the provision of DIP Financing to be secured by Collateral to the extent the amount of such DIP Financing does not exceed the sum of (i) the aggregate outstanding principal amount of the applicable First Priority Obligations as of the date of commencement of any such Insolvency Proceeding (the “Petition Date”) plus (ii) an amount equal to 10% of the applicable First Priority Obligations as of the Petition Date. For purposes of this clause (b), the “principal amount” of all First Priority Obligations shall refer to the aggregate amount of all monetary payment obligations that are First Priority Obligations as of such date.

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Section 5.03.      [Reserved].

Section 5.04.      Adequate Protection. With respect to each Type of Collateral, each Representative, on behalf of itself and the other respective Secured Parties, agrees that none of them shall object to, contest, or support any other Person objecting to or contesting, (i) any request by the First Priority Representative or any other First Priority Secured Party for adequate protection with respect to their First Priority Liens in such Collateral, including, without limitation, in the form of Adequate Protection Liens, superpriority claims, interest, fees, expenses or other amounts or (ii) any objection by the First Priority Representative or any other First Priority Secured Party to any motion, relief, action or proceeding based on a claim of a lack of adequate protection with respect to such Type of Collateral or (iii) the payment of interest, fees, expenses or other amounts to the First Priority Representative or any other First Priority Secured Party under section 506(b) of the Bankruptcy Code or otherwise with respect to such Type of Collateral. Notwithstanding anything contained in this Agreement, in any Insolvency Proceeding, the Representative and the other Secured Parties with respect to each Type of Collateral, may seek, support, accept or retain adequate protection solely in the form of (v) only if the First Priority Secured Parties are granted an Adequate Protection Lien on additional or replacement collateral (whether consisting of existing or future assets) as adequate protection for the value of their First Priority Liens in connection with any DIP Financing secured by such Collateral or any use of such Collateral, an Adequate Protection Lien on such additional or replacement collateral, subordinated to any Liens of the First Priority Secured Parties on such additional or replacement collateral, (w) only if the First Priority Secured Parties are granted superpriority claims (other than any superpriority claims granted to First Priority Secured Parties providing DIP Financing on account of obligations with respect to such DIP Financing), superpriority claims junior in all respects to the superpriority claims granted to the First Priority Secured Parties, (x) payment of the fees and expenses of the other Secured Parties, (y) any form of adequate protection that is consistent with the priorities set forth in this Agreement and (z) non-monetary adequate protection that is customarily provided in an Insolvency Proceeding, including, without limitation, the provision of information and the ability to monitor such Type of Collateral. With respect to each Type of Collateral, in the event any Secured Party receives adequate protection for its Liens on such Collateral in the form of Adequate Protection Liens on additional or replacement collateral (whether consisting of existing or future assets), then the Representative, on behalf of itself and the other Secured Parties, (i) consents to the First Priority Representative having a senior Adequate Protection Lien on such additional or replacement collateral as adequate protection for the First Priority Liens on such Collateral and agrees that any such Adequate Protection Liens granted to the other Secured Parties on additional or replacement collateral shall be subordinated to the Liens on such additional or replacement collateral securing the First Priority Obligations and any DIP Financing (and all obligations relating thereto) and any Adequate Protection Liens on such replacement or additional collateral granted to the First Priority Secured Parties, with such subordination to be on the same terms that the other Liens on such Collateral are subordinated to the First Priority Liens under this Agreement and (ii) agrees that, if the court in the Insolvency Proceeding does not grant the First Priority Secured Parties a senior Adequate Protection Lien on such additional collateral, then the other Secured Parties shall be deemed to hold and have held their Adequate Protection Lien on such additional collateral for the benefit of the First Priority Secured Parties (and each such Lien so deemed to have been held shall be subject in all respects to the provisions of this Agreement, including without limitation the Lien priority provisions set forth in Section 2.01) and until the First Priority Obligations Payment Date, any distributions in respect of such additional collateral received by the other Secured Parties shall be segregated and held in trust and promptly turned over to the First Priority Representative to repay the First Priority Obligations; provided that, in each case, any Lien granted on any additional or replacement collateral shall be subject to this Agreement with its priority based on the Type of Collateral hereunder. Upon the turnover of such distributions as contemplated by the immediately preceding sentence, the other Secured Obligations purported to be satisfied by such distributions shall be immediately reinstated in full as though such payment had never occurred.

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Section 5.05.      Avoidance Issues.

(a)               With respect to each Type of Collateral, if any First Priority Secured Party is required in any Insolvency Proceeding or otherwise to disgorge, turn over or otherwise pay to the estate of any Grantor, because such amount was avoided or ordered to be paid or disgorged for any reason, including because it was found to be a fraudulent or preferential transfer, any amount (a “Recovery”), whether received as proceeds of security, enforcement of any right of set-off, recoupment, or otherwise, then the First Priority Obligations shall be reinstated to the extent of such Recovery and deemed to be outstanding as if such payment had not occurred, and the First Priority Obligations Payment Date shall be deemed not to have occurred for all purposes hereunder. If this Agreement shall have been terminated prior to such Recovery, this Agreement shall be reinstated in full force and effect, and each such prior termination shall not diminish, release, discharge, impair or otherwise affect the obligations of the parties hereto with respect to such Recovery. The Secured Parties (other than the First Priority Secured Parties) with respect to each Type of Collateral agree that none of them shall be entitled to benefit from any avoidance action affecting or otherwise relating to any distribution or allocation with respect to Collateral made in accordance with this Agreement, whether by preference or otherwise, it being understood and agreed that the benefit of such avoidance action otherwise allocable to them shall instead be allocated and turned over for application in accordance with the priorities set forth in this Agreement.

Section 5.06.      Asset Dispositions in an Insolvency Proceeding.

(a)               With respect to each Type of Collateral, each Representative, on behalf of itself and the other Secured Parties, without limiting any rights under Section 3.01, agrees that, until the First Priority Obligations Payment Date, they will not contest, protest or object (or support any other Person in contesting, protesting or objecting) to, will not request adequate protection in connection with, and will be deemed to have consented pursuant to Section 363(f) of the Bankruptcy Code or any similar provision of any other Debtor Relief Law to, any sale or disposition of any such Collateral free and clear of their Liens on or other interests in such Collateral under Section 363 or Section 1129 of the Bankruptcy Code or any similar provision of any other Debtor Relief Law (and to any proposed bid protections, sale procedures, retention of professionals in connection with such sale or disposition and other similar matters related to such sale or disposition) if the First Priority Representative consents in writing to the sale or disposition, in each case so long as (i) either (A) pursuant to court order, all First Priority Liens attach to the proceeds of the sale or disposition for application in accordance with the distribution and allocation provisions of Section 4.01 (it being understood and agreed that such proceeds may not be sufficient to effect the occurrence of the First Priority Obligations Payment Date), or (B) the proceeds of the sale or disposition of such Collateral received by First Priority Representative in excess of those necessary to achieve the occurrence of the First Priority Obligations Payment Date, are distributed in accordance with this Agreement, the UCC and applicable law, and (ii) the rights of each Representative and Secured Parties to credit bid on such Collateral in any such sale or disposition in accordance with Section 5.06(b) are not impaired; provided that the cash component of such bid must be sufficient to, and must, cause the First Priority Obligations Payment Date to occur immediately upon the closing of any resulting sale or disposition.

(b)               Notwithstanding anything contained in this Agreement to the contrary, each Secured Party shall expressly have the right to bid or credit bid any of its Secured Obligations for or purchase the Collateral at any public, private or judicial foreclosure or sale of any Collateral (including a “partial credit bid”) or in an Insolvency Proceeding or otherwise; provided that any such credit bid or partial credit bid of the Secured Obligations (other than the First Priority Obligations) must provide for the payment in full in cash of the First Priority Obligations on closing of any resulting disposition (to the extent then outstanding).

(c)               If a single sale or disposition of Collateral includes both Intermediation Facility Priority Collateral and Term Loan Priority Collateral, the allocation of proceeds shall be as provided in Section 4.01(d). If the parties are unable after negotiating in good faith to agree on the allocation of the purchase price between the Intermediation Facility Priority Collateral and the Term Loan Priority Collateral, either party may apply to the court in such Insolvency Proceeding to make a determination of such allocation, and the court’s determination, once final and non-appealable, shall be binding upon the parties.

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Section 5.07.      [Reserved].

Section 5.08.      Plans of Reorganization.

(a)                With respect to each Type of Collateral, if the claims of the First Priority Secured Parties and the claims held by the other Secured Parties constitute only one secured claim pursuant to any plan of reorganization or similar dispositive restructuring plan proposed in an Insolvency Proceeding (rather than separate classes of secured claims subject to the relative Lien priorities set forth in this Agreement), notwithstanding the objection to, and vote against, such plan by such Secured Parties in accordance with Section 5.07, no Secured Party other than the First Priority Secured Parties (whether in the capacity of a secured or an unsecured creditor) shall support or vote in favor of such plan of reorganization or similar dispositive restructuring plan unless such plan (i) pays off, in cash in full, all First Priority Obligations or (ii) is supported by the First Priority Representative. With respect to each Type of Collateral, each Representative (other than the First Priority Representative), on behalf of itself and the other applicable Secured Parties, further agrees that no such Secured Party (whether in the capacity of a secured or an unsecured creditor) shall propose, support or vote in favor of any plan of reorganization or similar dispositive restructuring plan that (i) is inconsistent with the priorities and other provisions of this Agreement or (ii) without the consent of the First Priority Representative or the support of the requisite First Priority Secured Parties in accordance with Section 1126(c) of the Bankruptcy Code, does not pay off, in cash in full, all First Priority Obligations on the effective date of such plan.

(b)                With respect to each Type of Collateral, if, in any Insolvency Proceeding, debt obligations of the reorganized debtor secured by Liens upon any property of the reorganized debtor are distributed pursuant to a plan of reorganization or similar dispositive restructuring plan, on account of any Secured Obligations, then, to the extent the debt obligations distributed on account of the Secured Obligations are secured by Liens upon the same property, the provisions of this Agreement will survive the distribution of such debt obligations pursuant to such plan and will apply with like effect to the Liens securing such debt obligations

Section 5.09.      Other Matters. With respect to each Type of Collateral, to the extent that any Representative or any other Secured Party other than the First Priority Representative or any other First Priority Secured Party has or acquires rights under Section 363 or Section 364 of the Bankruptcy Code with respect to any of such Type of Collateral, each Representative agrees, on behalf of itself and the other Secured Parties, not to assert any of such rights in violation of this Agreement; provided that if requested by the First Priority Representative, the other Representative shall timely exercise such rights in the manner requested by the other Representative, including any rights to payments in respect of such rights.

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Section 5.10.      No Waiver of Rights of First Priority Secured Parties. With respect to each Type of Collateral, nothing contained herein shall prohibit or in any way limit the First Priority Representative or any other First Priority Secured Party from objecting in any Insolvency Proceeding or otherwise to any action taken by any other Secured Party in respect of the Collateral, other than any action taken by such other Secured Party that is expressly permitted by this Agreement.

Section 5.11.      Effectiveness in Insolvency Proceedings. This Agreement, which the parties hereto expressly acknowledge is a “subordination agreement” under Section 510(a) of the Bankruptcy Code, shall be effective before, during and after the commencement of an Insolvency Proceeding. All references in this Agreement to any Grantor shall include such Grantor as a debtor-in-possession and any receiver or trustee for such Grantor in any Insolvency Proceeding, and the rights and obligations hereunder of the Secured Parties with respect to each Type of Collateral shall be fully enforceable as between such parties regardless of the pendency of Insolvency Proceedings or any related limitations on the enforcement of this Agreement against any Grantor.

Section 5.12.      Section 1111 of the Bankruptcy Code. Until the First Priority Obligations Payment Date, no Representative nor any Secured Party (other than the First Priority Representative and the First Priority Secured Parties) shall seek to exercise any rights under Section 1111(b) of the Bankruptcy Code or any similar provision under any Debtor Relief Law. All rights of First Priority Secured Parties to exercise any rights under Section 1111(b) of the Bankruptcy Code or any similar provision of any other Debtor Relief Law, if any, are reserved and unaltered by this Agreement.

ARTICLE 6
MATTERS RELATING TO FINANCE DOCUMENTS

Section 6.01.      Amendments to Finance Documents.

(a)               The Finance Documents may be amended, amended and restated, supplemented, modified, refinanced, replaced, renewed, extended or restructured from time to time in accordance with their terms, and the Indebtedness thereunder may be Refinanced; provided, however, that no such amendment, amendment and restatement, supplement, modification, replacement, renewal, extension, restructuring or Refinancing shall (it being understood and agreed that any DIP Financing under Section 5.02 shall not be subject to the terms of this Article 6), without the consent of the Intermediation Facility Secured Parties and the Term Loan Required Lenders, (i) contravene any provision of this Agreement (provided, that if the Intermediation Facility Termination Date shall have occurred, the consent of the Intermediation Facility Secured Parties shall not be required, and if the Term Loan Termination Date shall have occurred, the consent of the Term Loan Required Lenders shall not be required); provided further that, in the case of a Refinancing, the holders of the Indebtedness resulting from such Refinancing, or a duly authorized agent on their behalf, agree in writing to be bound by the terms of this Agreement, (ii) [reserved], (iii) [reserved], (iv) [reserved], (v) change (to an earlier date) the scheduled maturity date (as defined in the Term Loan Agreement), (vi) make the conditions to permit prepayments more restrictive and (vii) converting revolving loans to term loans.

(b)               Each of the Grantors and the Representatives agrees that each of the Term Loan Documents and the Intermediation Facility Security Documents shall contain the applicable provisions set forth on Annex II hereto, or similar provisions approved by the Representatives, which approval shall not be unreasonably withheld or delayed.

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Section 6.02.      Consents. The Term Loan Agent, the Intermediation Secured Party and the Company each hereby consent to (i) the entry into and performance of the Intermediation Documents and the transactions thereunder and (ii) the entry into and performance of the Term Loan Documents and transactions thereunder.

ARTICLE 7
RELIANCE; WAIVERS; ETC.

Section 7.01.      Reliance. The First Priority Documents with respect to each Type of Collateral are deemed to have been executed and delivered, and all extensions of credit thereunder are deemed to have been made or incurred, in reliance upon this Agreement. With respect to each Type of Collateral, the Representative, on behalf of it itself and the other applicable Secured Parties, expressly waives all notice of the acceptance of and reliance on this Agreement by the other Secured Parties.

Section 7.02.      No Warranties or Liability. The First Priority Representative with respect to each Type of Collateral acknowledges and agrees that it has not made any express or implied representation or warranty including with respect to the execution, validity, legality, completeness, collectability or enforceability of any First Priority Document or the ownership of any Type of Collateral. Except as otherwise provided in this Agreement and the First Priority Representative with respect to each Type of Collateral will be entitled to manage and supervise their respective extensions of credit to any Grantor in accordance with law and their usual practices, modified from time to time as they deem appropriate.

Section 7.03.      No Waivers. No right or benefit of any party hereunder shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of such party or any other party hereto or by any noncompliance by any Grantor with the terms and conditions of any of the Finance Documents. Until the First Priority Obligations Payment Date the other Secured Parties agree not to assert and hereby waive, to the fullest extent permitted by law, any right to demand, request, plead or otherwise assert or otherwise claim the benefit of, any appraisal, valuation or other similar right that may otherwise be available under applicable law with respect to the Collateral or any other similar rights a junior secured creditor may have under applicable law.

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Section 7.04.      Obligations Unconditional. All rights, interests, agreements and obligations of the Intermediation Facility Representative, the Intermediation Facility Secured Parties and the Term Loan Agent and the Term Loan Secured Parties, respectively, hereunder shall remain in full force and effect irrespective of:

(a)               any lack of validity or enforceability of any First Priority Document and regardless of whether the Liens of the First Priority Secured Parties are not perfected or are voidable for any reason;

(b)               any change in the time, manner or place of payment of, or in any other terms of, all or any of the First Priority Obligations, or any amendment or waiver or other modification, including any increase in the amount thereof or any refinancing, whether by course of conduct or otherwise, of the terms of any First Priority Document;

(c)               any exchange, release or lack of perfection of any Lien on any Type of Collateral or any other asset, or any amendment, waiver or other modification, whether in writing or by course of conduct or otherwise, of all or any of the First Priority Obligations or any guarantee thereof;

(d)               the commencement of any Insolvency Proceeding in respect of any Grantor; or

(e)               any other circumstances which otherwise might constitute a defense available to, or a discharge of, any Grantor in respect of any Secured Obligation or of any Secured Party (other than the applicable First Priority Secured Party) in respect of this Agreement.

ARTICLE 8
MISCELLANEOUS

Section 8.01.      Conflicts. Except as otherwise provided herein, in the event of any conflict between the provisions of this Agreement and the provisions of any First Priority Document, the provisions of this Agreement shall govern.

Section 8.02.      Continuing Nature of Provisions. This Agreement shall continue to be effective, and shall not be revocable by any party hereto, until the First Priority Obligations Payment Date shall have occurred with respect to each Type of Collateral. This is a continuing agreement and the First Priority Secured Parties may continue, at any time and without notice to the other parties hereto, to extend credit and other financial accommodations, lend monies and provide indebtedness to, or for the benefit of, any Grantor on the faith hereof.

Section 8.03.      Amendments; Waivers. No amendment or modification of any of the provisions of this Agreement shall be effective unless the same shall be in writing and signed by each of the Intermediation Facility Representative and the Term Loan Agent, and, in the case of amendments or modifications that adversely affect the rights, duties or obligations of the Company and the other Grantors, the Company and the other Grantors.

Section 8.04.      Information Concerning Financial Condition of the Company and the Other Grantors. With respect to each Type of Collateral, the First Priority Representative, on behalf of itself and the other First Priority Secured Parties, hereby agree that each Secured Party assumes responsibility for keeping itself informed of the financial condition of the relevant Grantors and all other circumstances bearing upon the risk of nonpayment of the First Priority Obligations. With respect to each Type of Collateral, the Secured Parties, and the Representatives, on behalf of itself and the other Secured Parties, hereby agree that no party shall have any duty to advise any other party of information known to it regarding such condition or any such circumstances. In the event any Secured Party, in its sole discretion, undertakes at any time or from time to time to provide any information to any other Secured Party, it shall be under no obligation (a) to provide any such information to such other party or any other party on any subsequent occasion, (b) to undertake any investigation or (c) to disclose any other information.

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Section 8.05.      Additional Grantors. The Company agrees that, if any Person shall become a Subsidiary of the Company after the date hereof, it will promptly cause such Subsidiary to become a Grantor hereto by executing and delivering an instrument in the form of Annex III. Whether or not such instrument is executed and delivered, such Person shall be bound as a Grantor hereunder with the same force and effect as if originally named as a Grantor herein. The execution and delivery of such instrument shall not require the consent of any other party hereunder, and will be acknowledged by the Representatives. The rights and obligations of each Grantor hereunder shall remain in full force and effect notwithstanding the addition of any new Grantor as a party to this Agreement.

Section 8.06.      GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS.

(a)               THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

(b)               Each party hereto hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding will be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that any party may otherwise have to bring any action or proceeding relating to this Agreement against any other party or their respective properties in the courts of any jurisdiction.

(c)               Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any court referred to in Section 8.06(b). Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(d)               Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 8.08. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

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Section 8.07.     

WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER FINANCE DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN OR RELATED THERETO.

Section 8.08.      Notices.

(a)               Unless otherwise specifically provided herein, any notice or other communication herein required or permitted to be given shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy, as follows:

(i)                 If to a Grantor:

Vertex Refining Alabama LLC

1331 Gemini, #250

Houston, Texas 77058

Attention: Ben Cowart, President

E-mail: benc@vertexenergy.com

 

with a copy to (which shall not constitute notice):

Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, NY 10038
Attention: Scott Le Bouef; Brian Rogers
Email: slebouef@stroock.com; brogers@stroock.com

 

(ii)              If to Cantor Fitzgerald Securities, as Term Loan Agent:

Cantor Fitzgerald Securities

900 West Trade Street, Suite #725

Charlotte, NC 28202

Attn: Bobbie Young

Email: BYoung@cantor.com

 

with a copy to:

Cantor Fitzgerald Securities

1801 N Military Trail, Suite 202

Boca Raton, FL 33431

Attn: Nils Horning

Email: NHorning@cantor.com

 

With a copy to (which shall not constitute notice):

 

Shipman & Goodwin LLP

One Constitution Plaza
Hartford, CT 06103

Attention: Nate Plotkin

Email: nplotkin@goodwin.com

 

32 
 

 

(iii)            If to Macquarie Energy North America Trading Inc., as Intermediation Facility Representative:

All Legal Notices:

 

Macquarie Energy North America Trading Inc.

500 Dallas Street, Suite 3300

Houston, Texas 77002

Attn: Legal Risk Management Department

Email: CGMLegalHouston@macquarie.com

 

Deal Management:

 

500 Dallas Street, Suite 3300

Houston, Texas 77002

Attn: US Deal Management Team

Email: cfmemdvertexoperations@macquarie.com

 

(iv)             If to the Lenders:

with a copy to:

Sidley Austin LLP

787 7th Avenue

New York, NY 10019

Attention: Leslie Plaskon

Email: lplaskon@sidley.com

 

(b)               The parties hereto may, in their discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications. All notices hereunder shall be deemed to have been given when received at the address, electronic mail, or telecopy set forth above.

Section 8.09.      Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of each of the parties hereto and each of the Secured Parties and their respective successors and permitted assigns, and nothing herein is intended, or shall be construed to give, any other Person any right, remedy or claim under, to or in respect of this Agreement, any Collateral or any Type thereof or any Intermediation Title Property. All references to any Grantor shall include any Grantor as debtor-in-possession and any receiver or trustee for such Grantor in any Insolvency Proceeding.

33 
 

Section 8.10.      Headings. Section headings used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

Section 8.11.      Further Assurances. The First Priority Representative, on behalf of itself and the First Priority Secured Parties, and the Company agree that each of them shall take (and, in the case of the Company, shall cause the other Grantors to take) such further action and shall execute and deliver such additional documents and instruments (in recordable form, if requested) as the First Priority Representative may reasonably request, at the expense of the Grantors, to effectuate the terms of and the Lien priorities contemplated by this Agreement.

Section 8.12.      Subrogation. With respect to the value of any payments or distributions in cash, property or other assets that any Representative pays over to the First Priority Secured Parties under the terms of this Agreement, the other junior Secured Parties shall be subrogated to the rights of the First Priority Secured Parties; provided, that, the other Representatives hereby agrees not to assert or enforce any such rights of subrogation it may acquire as a result of any payment hereunder until the First Priority Obligations Payment Date has occurred. The Company acknowledges and agrees that the value of any payments or distributions in cash, property or other assets so paid over shall not reduce any of the payor’s Secured Obligations.

Section 8.13.      Severability. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

Section 8.14.      Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page of this Agreement by telecopy or electronic transmission (e.g., “pdf” file) shall be effective as delivery of a manually executed counterpart of this Agreement. This Agreement shall become effective when it shall have been executed by each party hereto.

Section 8.15.      Provisions Solely to Define Relative Rights. The provisions of this Agreement are and are intended solely for the purpose of defining the relative rights of the Intermediation Facility Secured Party on the one hand, and the Term Loan Agent and the Term Loan Secured Parties, on the other hand, with respect to the Collateral and the Intermediation Facility Secured Party, on the on the one hand, and the Term Loan Agent and the Term Loan Secured Parties, on the other hand, with respect to the Intermediation Title Property and Intermediation Facility Priority Collateral. Nothing in this Agreement shall create vary or modify the rights or duties of the Term Loan Secured Parties, inter se, under the Term Loan Documents or the rights or duties of the Intermediation Facility Secured Parties under the Intermediation Facility Documents. Except with respect to liability for breach of an obligation under this Agreement, no Representative shall have any liability to any other party hereto relating to this Agreement or the matters contemplated hereby.

34 
 

Section 8.16.      No Third Party Beneficiaries. This Agreement and the rights and benefits hereof shall inure to the benefit of each of the parties hereto and its respective successors and assigns and shall inure to the benefit of and bind each of First Priority Secured Parties and the other Secured Parties. Subject to Section 8.03, in no event shall any Grantor be a party to or a third party beneficiary of this Agreement.

Section 8.17.      Concerning the Term Loan Agent. Except as expressly set forth herein, the Term Loan Agent shall not have any duties or obligations in respect of any of the Collateral, all of such duties and obligations, if any, being subject to and governed by the applicable Term Loan Documents. To the extent that it does not supersede or contradict any of the terms set forth in this Agreement, it is understood and agreed that Cantor Fitzgerald Securities is entering into this Agreement in its capacity as collateral agent under the Term Loan Agreement and the provisions of the Term Loan Agreement applicable to Cantor Fitzgerald Securities as collateral agent thereunder (including its rights, privileges, immunities and indemnities) shall also apply to Cantor Fitzgerald Securities as Term Loan Agent hereunder.

ARTICLE 9
AGREEMENTS WITH RESPECT TO INTERMEDIATION TITLE PROPERTY

Section 9.01.      Turnover. Unless and until the Discharge of Intermediation Facility Obligations, in the event that any of the Term Loan Agent or the Term Loan Secured Parties now or hereafter obtains possession of any Intermediation Title Property and is actually aware thereof, such Person shall immediately deliver to the Intermediation Facility Representative (or as the Intermediation Facility Representative may reasonably direct), at the expense of the Grantors, such Intermediation Title Property in whatever form possessed by the Term Loan Agent or the Term Loan Secured Parties (and until delivered to the Intermediation Facility Representative such Intermediation Title Property shall be held in trust for the Intermediation Facility Representative for itself and for the benefit of the other Intermediation Facility Secured Parties).

Section 9.02.      UCC Notices. In the event that any party hereto shall be required by the UCC or any other applicable law to give notice to the other of an intended disposition of Intermediation Title Property or Collateral, respectively, such notice shall be given in accordance with Section 8.08 hereof and ten (10) days’ notice shall be deemed to be commercially reasonable.

Section 9.03.      Further Assurances with Respect to Intermediation Title Property. Each of the Intermediation Facility Representative and the Term Loan Agent agrees to take such actions as may be reasonably requested by the other party, whether before, during or after an exercise by any Intermediation Facility Secured Party of any rights or remedies with respect to any Intermediation Title Property, in order to effectuate the terms and Lien priorities hereof and to otherwise give effect to the provisions of this Agreement including, without limitation, to the extent that such party has the ability to do so, to allow access to and removal of their respective assets and collateral.

35 
 

Section 9.04.      Additional Understanding and Agreements with Respect to Intermediation Title Property. Each of the parties hereto agrees that:

(a)               nothing in this Agreement impairs or otherwise adversely affects any rights or remedies (including any netting, right of set-off or recoupment under any of the Intermediation Facility Documents) that the Intermediation Facility Secured Parties may have with respect to that Intermediation Title Property; provided that in no event shall (x) any Intermediation Facility Obligations whether by netting, right of set-off, recoupment or assertion of any claims whatsoever, including by any Affiliate of any Intermediation Facility Secured Parties be added to the Term Loan Obligations or (y) any Term Loan Obligations whether by netting, right of set-off, recoupment or assertion of any claims whatsoever, including by any Affiliate of any Intermediation Facility Secured Parties be permitted to be asserted against the Intermediation Facility Priority Collateral;

(b)               nothing in this Agreement is intended to impair or shall impair the obligations of the Company or any other Grantor, which obligations are absolute and unconditional, to pay the Intermediation Facility Obligations and the Term Loan Obligations as and when the same shall become due and payable in accordance with their terms (after giving effect to any netting, rights of set-off or recoupment under the Intermediation Facility Documents); provided that in no event shall (x) any Intermediation Facility Obligations whether by netting, rights of set-off, recoupment, or assertion of any claims whatsoever, including by any Affiliate of any Intermediation Facility Secured Parties be added in the Term Loan Obligations or (y) any Term Loan Obligations whether by netting, rights of set-off, recoupment or assertion of any claims whatsoever, including by any Affiliate of any Intermediation Facility Secured Parties be permitted to be asserted against the Intermediation Facility Priority Collateral; and

(c)               for the avoidance of doubt, the Intermediation Facility Secured Party shall be entitled to sell Intermediation Facility Priority Collateral and Intermediation Title Property free and clear of all Liens of the Term Loan Agent.

Section 9.05.      Additional Understanding and Agreements of the Term Loan Agent. Notwithstanding any rights or remedies (if any) available under the Term Loan Documents, any related documents, the UCC, other applicable law or otherwise, the Term Loan Agent (on behalf of itself and the other Term Loan Secured Parties) shall not:

(a)               contest, protest or object to, or support any other person in contesting, protesting or objecting to, in any proceeding or action (including any bankruptcy, insolvency or liquidation proceeding) the Intermediation Facility Secured Parties’ title to or ownership of, or other rights in, all or any part of the Intermediation Title Property or (A) the provisions of this Agreement or (B) the provisions of this Agreement other than with respect to any good faith dispute;

(b)               directly or indirectly, exercise or seek to exercise any rights or remedies with respect to any of the Intermediation Title Property or institute any action or proceeding with respect to such rights or remedies, including any action to foreclose, execute, levy, collect on, take possession or control of, sell or otherwise realize upon any of the Intermediation Title Property (and to the extent the Term Loan Agent receives proceeds of any such actions, the Term Loan Agent shall hold such proceeds in trust for the Intermediation Facility Secured Party and promptly pay over such proceeds to the Intermediation Facility Secured Party in the form received with all necessary endorsements); or

(c)               contest, protest or object to, or support any other person in contesting, protesting or objecting to, in any proceeding or action (including any bankruptcy, insolvency or liquidation proceeding) any proceeding or action brought by or on behalf of the Intermediation Facility Secured Parties to execute, levy, collect on, take possession or control of, sell or otherwise realize upon any of the Intermediation Title Property, or any other exercise by or on behalf of the Intermediation Facility Secured Parties of any rights and remedies relating to, the Intermediation Title Property under the Intermediation Documents, the UCC, other applicable law or otherwise.

 

[SIGNATURE PAGES FOLLOW]

 

 

36 
 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

 

 

VERTEX REFINING ALABAMA LLC
 

     as the Company

   
  By:

/s/ Benjamin P. Cowart

  Name:

Benjamin P. Cowart

  Title:

President and Chief Executive Officer

 

 

 

[Signature Page to Intercreditor Agreement]

 

 

VERTEX ENERGY INC.
   
   
  By:

/s/ Benjamin P. Cowart

  Name:

Benjamin P. Cowart

  Title:

President and Chief Executive Officer

 

 

  VERTEX ENERGY OPERATING, LLC
   
   
  By:

/s/ Benjamin P. Cowart

  Name:

Benjamin P. Cowart

  Title:

President and Chief Executive Officer

 

 

  VERTEX SPLITTER CORPORATION
   
   
  By:

/s/ Benjamin P. Cowart

  Name:

Benjamin P. Cowart

  Title:

Director

 

 

  TENSILE-MYRTLE GROVE ACQUISITION CORPORATION
   
   
  By:

/s/ Benjamin P. Cowart

  Name:

Benjamin P. Cowart

  Title:

President and Chairman of the Board

     
     
  VERTEX REFINING LA, LLC
   
   
  By:

/s/ Benjamin P. Cowart

  Name:

Benjamin P. Cowart

  Title:

President and Chief Executive Officer

     
     

 

 

 

[Signature Page to Intercreditor Agreement]

 

 

 

  VERTEX REFINING MYRTLE GROVE LLC
   
   
  By: /s/ Benjamin P. Cowart
  Name: Benjamin P. Cowart 
  Title:

President and Chief Executive Officer

 

 

  CRYSTAL ENERGY, LLC
   
   
  By: /s/ Benjamin P. Cowart 
  Name: Benjamin P. Cowart 
  Title:

President and Chief Executive Officer

 

 

  VERTEX MERGER SUB, LLC
   
   
  By: /s/ Benjamin P. Cowart 
  Name: Benjamin P. Cowart 
  Title:

President

 

 

  VERTEX RECOVERY MANAGEMENT, LLC
   
   
  By: /s/ Benjamin P. Cowart 
  Name: Benjamin P. Cowart 
  Title:

President and Chief Executive Officer

 

 

  VERTEX REFINING NV, LLC
   
   
  By: /s/ Benjamin P. Cowart 
  Name: Benjamin P. Cowart 
  Title:

President and Chief Executive Officer

 

 

 

[Signature Page to Intercreditor Agreement]

 

 

 

  BANGO OIL LLC
   
   
  By: /s/ Benjamin P. Cowart
  Name: Benjamin P. Cowart 
  Title:

President and Chief Executive Officer

 

 

  VERTEX II GP, LLC
   
   
  By: /s/ Benjamin P. Cowart 
  Name: Benjamin P. Cowart 
  Title:

President and Chief Executive Officer

 

 

  VERTEX ACQUISITION SUB, LLC
   
   
  By: /s/ Benjamin P. Cowart 
  Name: Benjamin P. Cowart 
  Title:

President

 

 

  VERTEX RECOVERY, L.P.
   
 

By: Vertex II GP, LLC, its General Partner

   
  By: /s/ Benjamin P. Cowart 
  Name: Benjamin P. Cowart 
  Title:

President and Chief Executive Officer

 

 

  VERTEX REFINING NV, LLC
   
 

By: Vertex II GP, LLC, its General Partner

   
  By: /s/ Benjamin P. Cowart 
  Name: Benjamin P. Cowart 
  Title:

President and Chief Executive Officer

 

 

 

 

[Signature Page to Intercreditor Agreement]

 

 

  CEDAR MARINE TERMINALS, LP
   
 

By: Vertex II GP, LLC, its General Partner

   
  By: /s/ Benjamin P. Cowart 
  Name: Benjamin P. Cowart 
  Title:

President and Chief Executive Officer

 

 

  H & H OIL, L. P.
   
 

By: Vertex II GP, LLC, its General Partner

   
  By: /s/ Benjamin P. Cowart 
  Name: Benjamin P. Cowart 
  Title:

President and Chief Executive Officer

 

 

 

 

[Signature Page to Intercreditor Agreement]

 

 

 

 

 

 

 

CANTOR FITZGERALD SECURITIES,
as Term Loan Agent

   
   
  By: /s/ James Buccola
    Name: James Buccola
    Title: Head of Fixed Income

 

 

 

MACQUARIE ENERGY NORTH AMERICA TRADING INC.,

as Intermediation Facility Representative

   
   
  By: /s/ Travis McCullough
    Name: Travis McCullough
    Title: Division Director

 

 

  By: /s/ Daniel Vizel
    Name: Daniel Vizel
    Title: Senior Managing Director

 

[Signature Page to Intercreditor Agreement]
 

ANNEX I

[Reserved]

 

 

 

 

 

 

 

 
 

 

ANNEX II

Provision for the Finance Agreements

“Reference is made to the Intercreditor Agreement dated as of April 1, 2022 (as amended, restated, amended and restated, supplemented, modified, extended, renewed, replaced, refinanced or restructured from time to time, the “Intercreditor Agreement”), by and among Cantor Fitzgerald Securities, as agent for the Term Loan Secured Parties (as defined therein), Macquarie Energy North America Trading Inc., as Intermediation Facility Secured Party (as defined therein), Vertex Refining Alabama LLC, and each of the other Grantors (as defined therein) party thereto. Notwithstanding any provisions in this Agreement or any other Loan Document to the contrary, the terms, conditions and provisions of this Agreement and the other Loan Documents are subject to the terms of the Intercreditor Agreement. To the extent there is a conflict between the Loan Documents and the Intercreditor Agreement, the terms and conditions of the Intercreditor Agreement shall control.”

Provision for each Security Documents

“Reference is made to the Intercreditor Agreement dated as of April 1, 2022 (as amended, restated, amended and restated, supplemented, modified, extended, renewed, replaced, refinanced or restructured from time to time, the “Intercreditor Agreement”), by and among Cantor Fitzgerald Securities, as agent for the Term Loan Secured Parties (as defined therein), Macquarie Energy North America Trading Inc., as Intermediation Facility Secured Party (as defined therein), Vertex Refining Alabama LLC, and each of the other Grantors (as defined therein) party thereto. Notwithstanding anything herein to the contrary, the lien and security interest granted to the [Administrative Agent][Collateral Agent][Intermediation Facility Secured Party], [for the benefit of the Secured Parties], pursuant to this Agreement and the exercise of any right or remedy by the [Administrative Agent][Collateral Agent] [Intermediation Facility Secured Party][and the other Secured Parties hereunder] are subject to the provisions of the Intercreditor Agreement. In the event of any conflict or inconsistency between the provisions of the Intercreditor Agreement and this Agreement, the provisions of the Intercreditor Agreement shall control.”

 

 
 

 

ANNEX III

JOINDER AGREEMENT

THIS JOINDER AGREEMENT (this “Joinder Agreement”), dated as of __________, 20__, to the INTERCREDITOR AGREEMENT dated April 1, 2022 (as amended, restated, amended and restated, supplemented, modified, extended, renewed, replaced, refinanced or restructured from time to time, the “Intercreditor Agreement”), by and among Cantor Fitzgerald Securities, as agent (in such capacity, with its successors and assigns, the “Term Loan Agent”) for the Term Loan Secured Parties, Macquarie Energy North America Trading Inc., (including its successors and assigns from time to time, the “Intermediation Facility Representative”), Vertex Refining Alabama LLC, and each of the other Grantors party thereto, is executed by __________________, a _________________ (the “Additional Grantor”) in favor of the Term Loan Agent, the Intermediation Facility Secured Party (collectively, the “Representatives”). All capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Intercreditor Agreement.

The Additional Grantor, for the benefit of the Representatives, hereby agrees as follows:

(a)               The Additional Grantor hereby acknowledges the Intercreditor Agreement and acknowledges, agrees and confirms that, by its execution of this Joinder Agreement, the Additional Grantor will be deemed to be a Grantor under the Intercreditor Agreement for all intents and purposes under the Intercreditor Agreement and shall have all of the obligations of a Grantor thereunder as if it had executed the Intercreditor Agreement. The Additional Grantor hereby ratifies, as of the date hereof, and agrees to be bound by, all of the terms, provisions and conditions contained in the Intercreditor Agreement.

(b)               The address of the Additional Grantor for purposes of Section 8.08 of the Intercreditor Agreement is as follows:

______________________
______________________
______________________
______________________

(c)               THIS JOINDER AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS JOINDER AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 
 

 

IN WITNESS WHEREOF, the Additional Grantor has caused this Joinder Agreement to be duly executed by its authorized officer, as of the day and year first above written.

 

  [ADDITIONAL GRANTOR]
   
   
  By:  
  Name:  
  Title:  

 

 

 

 

 

 

Vertex Energy Inc. 8-K

Exhibit 10.6

 

EXECUTION VERSION

 

GUARANTY

 

between

 

VERTEX ENERGY, INC.

 

and

 

MACQUARIE ENERGY NORTH AMERICA TRADING INC.

dated as of

 

April 1, 2022

 

 

 

 

TABLE OF CONTENTS

 

Page

 

Section 1. DEFINITIONS 1
Section  2. AGREEMENT TO GUARANTEE OBLIGATIONS 1
  2.1    Guaranty 1
  2.2    Reinstatement 2
Section 3. GUARANTY ABSOLUTE AND UNCONDITIONAL; WAIVERS 2
  3.1    Guaranty Absolute and Unconditional; No Waiver of Obligations 2
  3.2    Waivers and Acknowledgements 3
Section 4. GUARANTOR RIGHTS OF SUBROGATION, ETC. 4
  4.1    Agreement to Pay; Subrogation, Subordination, Etc. 4
Section 5. REPRESENTATIONS AND WARRANTIES; COVENANTS 4
  5.1    Representations and Warranties 4
  5.2    Covenants 5
Section 6. MISCELLANEOUS 5
  6.1    Taxes 5
  6.2    Right of Set-off 5
  6.3    Amendments 5
  6.4    Indemnification 5
  6.5    Notices 6
  6.6    Continuing Guaranty; Assignments Under the S&O Agreement 6
  6.7    Counterparts; Integration; Effectiveness; Electronic Execution 6
  6.8    Applicable Law; Consent to Jurisdiction; etc. 7
  6.9    WAIVER OF JURY TRIAL 7

 

i 

 

 

GUARANTY

 

This GUARANTY (this “Agreement”), dated as of April 1, 2022 is made by and among VERTEX ENERGY, INC., a Nevada corporation (the “Guarantor”) and MACQUARIE ENERGY NORTH AMERICA TRADING INC., a Delaware corporation (“Macquarie”).

 

RECITALS

 

WHEREAS, Vertex Refining Alabama LLC, a Delaware limited liability company (the “Company”), has entered into a Supply and Offtake Agreement (as amended, amended and restated, supplemented or otherwise modified from time to time in accordance with its provisions, the “S&O Agreement”; capitalized terms used herein without definition shall have the meanings ascribed thereto in the S&O Agreement) dated as of the date hereof, between the Company and Macquarie;

 

WHEREAS, the Guarantor is a direct or indirect parent of the Company and will derive substantial direct and indirect benefits from the transactions contemplated by the S&O Agreement; and

 

WHEREAS, it is a condition precedent to the effectiveness of the S&O Agreement that the Guarantor shall have executed and delivered this Agreement.

 

NOW, THEREFORE, in consideration of the premises and in order to induce Macquarie to enter into the S&O Agreement, and for other good and valuable consideration which is hereby acknowledged the parties hereby agree, intending to be legally bound, as follows:

 

Section 1. DEFINITIONS

 

Capitalized terms used herein without definition shall have the meanings ascribed thereto in the S&O Agreement. For purposes of this Agreement, the following terms shall have the following meanings:

 

Guaranteed Obligations” means all obligations and liabilities of the Company owing to Macquarie in relation to the Transaction Documents, including, without limitation, the “Transaction Obligations” (as defined in the S&O Agreement).

 

Indemnitee” has the meaning specified in Section 6.4.

 

S&O Agreement” has the meaning set forth in the Recitals hereof.

 

Subordinated Indebtedness” has the meaning specified in Section 4.1(b).

 

Termination Date” has the meaning specified in Section 6.6.

 

Section 2.AGREEMENT TO GUARANTEE OBLIGATIONS

 

2.1                     Guaranty. The Guarantor, hereby absolutely, unconditionally and irrevocably guarantees, as primary obligor and not merely as surety, the due and prompt payment and performance by the Company of all Guaranteed Obligations. The Guarantor further agrees that all or part of the Guaranteed Obligations may be increased, extended, substituted, amended, renewed or otherwise modified without notice to or consent from the Guarantor and such actions shall not affect the liability of the Guarantor hereunder. Without limiting the generality of the foregoing, the Guarantor’s liability shall extend to all amounts that constitute part of the Guaranteed Obligations and would be owed by the Company to Macquarie under or in respect of the Transaction Documents but for the fact that they are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving the Company.

 

1 

 

 

2.2                     Reinstatement. The Guarantor agrees that its guaranty hereunder shall continue to be effective or be reinstated, as the case may be, if at any time all or part of any payment of any Guaranteed Obligation is rescinded or must otherwise be returned by Macquarie or any other Person upon the insolvency, bankruptcy or reorganization of the Company or otherwise.

 

Section 3.GUARANTY ABSOLUTE AND UNCONDITIONAL; WAIVERS

 

3.1                     Guaranty Absolute and Unconditional; No Waiver of Obligations. The Guarantor guarantees that the Guaranteed Obligations will be paid strictly in accordance with the terms of the Transaction Documents, regardless of any law, regulation or order of any Governmental Authority now or hereafter in effect. The Guaranteed Obligations of the Guarantor hereunder are independent of the obligations of the Company under any Transaction Document. A separate action may be brought against the Guarantor to enforce this Agreement, whether or not any action is brought against the Company or whether or not the Company is joined in any such action. The liability of the Guarantor hereunder is irrevocable, continuing, absolute and unconditional and the Guaranteed Obligations of the Guarantor hereunder, to the fullest extent permitted by applicable law, shall not be discharged or impaired or otherwise effected by, and the Guarantor hereby irrevocably waives any defenses to enforcement it may have (now or in the future) by reason of:

 

(a)                any illegality or lack of validity or enforceability of any Guaranteed Obligation or any Transaction Documents or any related agreement or instrument;

 

(b)                any change in the time, place or manner of payment of, or in any other term of, the Guaranteed Obligations or any other obligation of the Company under any Transaction Documents, or any rescission, waiver, amendment or other modification of Transaction Documents or any other agreement, including any increase in the Guaranteed Obligations resulting from any extension of additional credit or otherwise;

 

(c)                any taking, exchange, substitution, release, impairment or non-perfection of any collateral, or any taking, release, impairment, amendment, waiver or other modification of any guaranty, for the Guaranteed Obligations;

 

(d)                any manner of sale, disposition or application of proceeds of any collateral or other assets to all or part of the Guaranteed Obligations;

 

(e)                any default, failure or delay, willful or otherwise, in the performance of the Guaranteed Obligations;

 

(f)                 any change, restructuring or termination of the corporate structure, ownership or existence of the Company or any of its Affiliates or any insolvency, bankruptcy, reorganization or other similar proceeding affecting the Company or its assets or any resulting release or discharge of any Guaranteed Obligation;

 

(g)                any failure of Macquarie to disclose to the Guarantor any information relating to the business, condition (financial or otherwise), operations, performance, properties or prospects of the Company now or hereafter known to Macquarie; the Guarantor waiving any duty of Macquarie to disclose such information;

 

2 

 

 

(h)                the failure of any other Person to execute or deliver this Agreement or any other guaranty or agreement or the release or reduction of liability of the Guarantor or other guarantor or surety with respect to the Guaranteed Obligations;

 

(i)                 the failure of Macquarie to assert any claim or demand or to exercise or enforce any right or remedy under the provisions of any Transaction Documents or otherwise;

 

(j)                 any defense, set-off or counterclaim (other than a defense of payment or performance) that may at any time be available to, or be asserted by, the Company against Macquarie; or

 

(k)                any other circumstance (including, without limitation, any statute of limitations) or any existence of or reliance on any representation by Macquarie that might vary the risk of the Guarantor or otherwise operate as a defense available to, or a legal or equitable discharge of, the Company or any other guarantor or surety.

 

3.2                     Waivers and Acknowledgements.

 

(a)                 The Guarantor hereby unconditionally and irrevocably waives any right to revoke this Agreement and acknowledges that this Agreement is continuing in nature and applies to all presently existing and future Guaranteed Obligations.

 

(b)                 The Guarantor hereby unconditionally and irrevocably waives promptness, diligence, notice of acceptance, presentment, demand for performance, notice of non-performance, default, acceleration, protest or dishonor and any other notice with respect to any of the Guaranteed Obligations and this Agreement and any requirement that Macquarie protect, secure, perfect or insure any Lien or any property subject thereto.

 

(c)                 The Guarantor hereby unconditionally and irrevocably waives any defense based on any right of set-off or recoupment or counterclaim against or in respect of the Guaranteed Obligations of the Guarantor hereunder.

 

(d)                 The Guarantor acknowledges that Macquarie may, at its election and without notice to or demand upon the Guarantor, foreclose on any collateral held by it by one or more judicial or non-judicial sales, accept an assignment of any such collateral in lieu of foreclosure, compromise or adjust any part of the Guaranteed Obligations, make any other accommodation with the Company or any other guarantor or exercise any other right or remedy available to it against the Company or any other guarantor, without affecting or impairing in any way the liability of the Guarantor hereunder except to the extent the Guaranteed Obligations have been paid in full or collateralized in full in cash. The Guarantor hereby waives any defense arising out of such election even though such election operates, pursuant to applicable law, to impair or to extinguish any right of subrogation, reimbursement, exoneration, contribution or indemnification or other right or remedy of the Guarantor against the Company or any other guarantor or any collateral.

 

3 

 

 

Section 4.GUARANTOR RIGHTS OF SUBROGATION, ETC.

 

4.1                     Agreement to Pay; Subrogation, Subordination, Etc.

 

(a)                Without limiting any other right that Macquarie has at law or in equity against the Guarantor, if the Company fails to pay any Guaranteed Obligation when and as due, whether at maturity, by acceleration, after notice of prepayment or otherwise, the Guarantor agrees to promptly pay the amount of such unpaid Guaranteed Obligations to Macquarie in cash. Upon payment by the Guarantor of any sums to Macquarie as provided herein, all of such Guarantor’s rights of subrogation, exoneration, contribution, reimbursement, indemnity or otherwise arising therefrom against the Company shall be subordinate and junior in right of payment to the prior indefeasible payment in full in cash of all Guaranteed Obligations.

 

(b)                The Guarantor hereby subordinates any and all obligations owed to the Guarantor by the Company (the “Subordinated Indebtedness”) to the Guaranteed Obligations to the extent provided below:

 

(i)                Except during the continuance of an Event of Default (including the commencement and continuation of any proceeding against the Company under any Bankruptcy Law), the Guarantor may receive regularly scheduled payments of principal and interest on the Subordinated Indebtedness from the Company. After the occurrence of any Default or Event of Default (including the commencement and continuation of any proceeding against the Company under any Bankruptcy Law), the Guarantor shall not accept, demand or take any action to collect any payment on the Subordinated Indebtedness without the prior written consent of Macquarie.

 

(ii)               The Guarantor agrees that Macquarie shall be entitled to receive full payment in cash of all Guaranteed Obligations (including interest accrued on late payments at the Default Interest Rate) in any proceeding under any Bankruptcy Law against the Company before the Guarantor receives any payment on account of any Subordinated Indebtedness.

 

(iii)             After the occurrence and during the continuance of any Event of Default (including the commencement and continuation of any proceeding against the Company under any Bankruptcy Law), the Guarantor shall collect, enforce and receive payments on the Subordinated Indebtedness as trustee for Macquarie and deliver such payments to Macquarie on account of the Guaranteed Obligations (including interest accrued on late payments at the Default Interest Rate), together with any necessary endorsements or other instruments of transfer, without reducing or affecting the liability of such Guarantor under this Agreement in any respect.

 

(iv)              After the occurrence and during the continuance of any Event of Default (including the commencement and continuation of any proceeding against the Company under any Bankruptcy Law), Macquarie is authorized and empowered (but not obligated), in its discretion, (x) in the name of the Guarantor, to collect and enforce, and to submit claims in respect of, Subordinated Indebtedness and to apply any amount so received to the Guaranteed Obligations, and (y) to require the Guarantor (A) to collect and enforce and to submit claims in respect of, Subordinated Indebtedness and (B) to pay any amounts received on such obligations to Macquarie for application to the Guaranteed Obligations.

 

Section 5.REPRESENTATIONS AND WARRANTIES; COVENANTS

 

5.1                     Representations and Warranties. The Guarantor represents and warrants as to itself that all representations and warranties relating to it contained in the Transaction Documents are true and correct. The Guarantor further represents and warrants that:

 

(a)                There are no conditions precedent to the effectiveness of this Agreement that have not been satisfied or waived.

 

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(b)                The Guarantor has, independently and without reliance upon Macquarie and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement and any other Transaction Documents to which it is or may become a party, and has established adequate procedures for continually obtaining information pertaining to, and is now and at all times will be completely familiar with, the business, condition (financial or otherwise), operations, performance, properties and prospects of the Company.

 

5.2                     Covenants. The Guarantor covenants and agrees that, until the Expiration Date, the Guarantor will perform and observe, and cause the Company and each of the Company’s Subsidiaries to perform and observe, all of the terms, covenants and agreements set forth in the Transaction Documents that are required to be, or that the Company has agreed to cause to be, performed or observed by the Guarantor.

 

Section 6.MISCELLANEOUS

 

6.1                     Taxes. Article 16 (Taxes) of the S&O Agreement is hereby incorporated, mutatis mutandis, by reference as if such section were set forth in full herein and the Guarantor agrees to observe and perform each of the terms and conditions set forth in Article 16 (Taxes) of the S&O Agreement as such Article relates to the Guarantor.

 

6.2                     Right of Set-off. If an Event of Default shall have occurred and is continuing with respect to the Company, Macquarie and its Affiliates are hereby authorized at any time and from time to time, to the fullest extent permitted by law, and without prior notice to the Guarantor or the Company, any such notice being expressly waived by the Guarantor, to set off and appropriate and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by Macquarie or such Affiliate to or for the credit or the account of the Company or the Guarantor against any and all of the obligations of the Company or the Guarantor now or hereafter existing under this Agreement or any Transaction (as defined in the Master Agreement) whether direct or indirect, absolute or contingent, matured or unmatured, and irrespective of whether or not Macquarie or such Affiliate shall have made any demand under this Agreement or any other Transaction Document and although such obligations of the Company or the Guarantor are owed to a branch, office or Affiliate of Macquarie different from the branch, office or Affiliate holding such deposit or obligated with respect to such obligations. The rights of Macquarie and its Affiliates under this Section are in addition to other rights and remedies (including other rights of set-off) that Macquarie or such Affiliate may have. Macquarie agrees to notify the Guarantor promptly after any such set off and appropriation and application; provided that the failure to give such notice shall not affect the validity of such set off and appropriation and application.

 

6.3                     Amendments. No term or provision of this Agreement may be waived, amended, supplemented or otherwise modified except in a writing signed by the Guarantor and Macquarie.

 

6.4                     Indemnification.

 

(a)                The Guarantor hereby agrees to indemnify and hold harmless Macquarie, its Affiliates, and their directors, officers, employees, representatives, agents and contractors (each such Person being called an “Indemnitee”) from any losses, damages, liabilities, claims and related expenses (including the fees and expenses of any counsel for any Indemnitee), and shall indemnify and hold harmless each Indemnitee from all fees and expenses (including reasonable attorneys’ fees and disbursements) incurred by any Indemnitee or asserted against any Indemnitee by any Person (including the Company or the Guarantor) other than such Indemnitee and its Affiliates, and their directors, officers, employees, representatives, agents and contractors arising out of, in connection with or resulting from this Agreement (including, without limitation, enforcement of this Agreement) or any failure of any Guaranteed Obligations to be the legal, valid, and binding obligations of the Company or the Guarantor enforceable against the Company or the Guarantor in accordance with their terms, whether brought by a third party or by the Company or the Guarantor, and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (i) are determined by a court of competent jurisdiction by final and non-appealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or (ii) result from a claim brought by the Company or the Guarantor against an Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder or under any other Transaction Document, if the Company or the Guarantor has obtained a final and non-appealable judgment in its favor on such claim as determined by a court of competent jurisdiction. This clause (a) shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, or similar items arising from any non-Tax claim.

 

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(b)                To the fullest extent permitted by applicable law, the Guarantor hereby agrees not to assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Transaction Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Transaction or the use of proceeds thereof. No Indemnitee shall be liable for any damages arising from the use of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Transaction Documents or the transactions contemplated hereby or thereby by unintended recipients.

 

(c)                All amounts due under this Section shall be payable promptly after demand therefor.

 

(d)               Without prejudice to the survival of any other agreement of the Guarantor under this Agreement or any other Transaction Documents, the agreements and obligations of each Guarantor contained in Section 2.1 (with respect to enforcement expenses), Section 2.2, and this Section 6.4 shall survive termination of the Transaction Documents and payment in full of the Guaranteed Obligations and all other amounts payable under this Agreement.

 

6.5                     Notices. Unless otherwise expressly specified or permitted by the terms hereof, all communications, consents, and notices provided for herein shall be pursuant to Article 28 (Notices) of the S&O Agreement.

 

6.6                     Continuing Guaranty; Assignments Under the S&O Agreement. This Agreement is a continuing guaranty and shall (i) remain in full force and effect until the latest of (x) the payment in full in cash of the Guaranteed Obligations and all other amounts payable under this Agreement, (y) the Expiration Date, and (z) the Termination Date (as defined in the S&O Agreement) (such date, the “Termination Date”), (ii) be binding on the Guarantor, its successors and assigns, and (iii) inure to the benefit of and be enforceable by Macquarie and its successors and assigns. No party shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of the other party; provided that in the event Macquarie assigns its rights and obligations under the S&O Agreement in accordance with section 27.2 of the S&O Agreement, such assignee shall thereupon become vested with all of the benefits in respect thereof granted to Macquarie herein or otherwise.

  

6.7                    Counterparts; Integration; Effectiveness; Electronic Execution. This Agreement and any amendments, waivers, consents or supplements hereto may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all taken together shall constitute a single contract. This Agreement and the other Transaction Documents, and any separate letter agreements with respect to fees payable to Macquarie, constitute the entire contract among the parties with respect to the subject matter hereof and supersede all previous agreements and understandings, oral or written, with respect thereto. This Agreement shall become effective when it shall have been executed by Macquarie and when Macquarie shall have received counterparts hereof that together bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or in electronic (i.e., “pdf” or “tif”) format shall be effective as delivery of a manually executed counterpart of this Agreement.

 

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6.8                     Applicable Law; Consent to Jurisdiction; etc.

 

(a)                APPLICABLE LAW. THIS AGREEMENT AND THE RIGHTS AND GUARANTEED OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER STATE.

 

(b)                CONSENT TO JURISDICTION.

 

(i)                EACH OF THE PARTIES HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF ANY FEDERAL OR STATE COURT OF COMPETENT JURISDICTION SITUATED IN THE CITY OF NEW YORK, (WITHOUT RECOURSE TO ARBITRATION UNLESS BOTH PARTIES AGREE IN WRITING), AND TO SERVICE OF PROCESS BY CERTIFIED MAIL, DELIVERED TO THE PARTY AT THE ADDRESS INDICATED IN ARTICLE 28 OF THE S&O AGREEMENT. EACH PARTY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION TO PERSONAL JURISDICTION, WHETHER ON GROUNDS OF VENUE, RESIDENCE OR DOMICILE.

 

(ii)                EACH PARTY HEREBY AGREES THAT PROCESS MAY BE SERVED ON IT BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO THE ADDRESSES PERTAINING TO IT AS SPECIFIED IN ARTICLE 28 OF THE S&O AGREEMENT. ANY AND ALL SERVICE OF PROCESS AND ANY OTHER NOTICE IN ANY SUCH ACTION, SUIT OR PROCEEDING SHALL BE EFFECTIVE AGAINST ANY PARTY IF GIVEN BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, OR BY ANY OTHER MEANS OR MAIL WHICH REQUIRES A SIGNED RECEIPT, POSTAGE PREPAID, MAILED AS PROVIDED ABOVE.

 

6.9                     WAIVER OF JURY TRIAL. EACH PARTY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY PROCEEDINGS RELATING TO THIS AGREEMENT. EACH PARTY HERETO (A) CERTIFIES THAT NO AGENT, ATTORNEY, REPRESENTATIVE OR ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF LITIGATION, AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 6.9.

 

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized as of the date hereof

 

GUARANTOR: VERTEX ENERGY, INC.
     
  By: /s/ Benjamin P. Cowart
    Name: Benjamin P. Cowart
    Title: President and Chief Executive Officer
     
     
MACQUARIE: Macquarie Energy North America Trading Inc.
     
  By: /s/ Travis McCullough
    Name: Travis McCullough
    Title: Division Director
     
  By: /s/ Daniel Vizel
    Name: Daniel Vizel
    Title: Senior Managing Director

 

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Vertex Energy Inc. 8-K

 Exhibit 10.7

 

Execution Version

 

PLEDGE AND SECURITY AGREEMENT

 

THIS PLEDGE AND SECURITY AGREEMENT (this “Agreement”), dated as of April 1, 2022, is made between VERTEX ALABAMA REFINING LLC, a Delaware limited liability company (the “Company”), and MACQUARIE ENERGY NORTH AMERICA TRADING INC., a Delaware corporation (“Secured Party”).

 

Reference is made to that certain Supply and Offtake Agreement dated as of April 1, 2022, between Secured Party and the Company (as amended, restated, supplemented or otherwise modified from time to time, the “S&O Agreement”), pursuant to which Secured Party has agreed to sell and deliver Crude Oil to and purchase and receive Products from the Company upon and subject to the terms of the S&O Agreement and related Transaction Documents. The obligations of Secured Party contemplated by the S&O Agreement are conditioned upon, among other things, the execution and delivery of this Agreement.

 

In order to comply with the terms and conditions of the S&O Agreement, for and in consideration of the agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of all of which being hereby acknowledged, the Company and Secured Party hereby agree as follows:

 

ARTICLE I

Definitions

 

SECTION 1.01. (a) Capitalized terms used in this Agreement and not otherwise defined herein have the meanings specified in the S&O Agreement. All terms defined in the New York UCC (as defined herein) and not defined in this Agreement or the S&O Agreement have the meanings specified therein.

 

(b)      The rules of construction specified in Section 1.2 of the S&O Agreement also apply to this Agreement.

 

SECTION 1.02. Other Defined Terms. As used in this Agreement, the following terms have the meanings specified below:

 

Catalyst Assets” means any catalyst assets and inventory constituting catalyst, precious metals assets and precious metals inventory and all additions, accessions and all rights related thereto.

 

CFP” means any current or future U.S. federal, state, regional or local renewable or clean transportation fuel program, other than the RFS, the LCFS, and the OCFP.

 

CFP Credits” means credits generated and traded under the relevant CFP.

 

Collateral” has the meaning assigned to such term in Section 2.01.

 

Company” has the meaning assigned to such term in the preliminary statement of this Agreement.

 

 

Conforming Renewable Product” means a renewable diesel that (i) is produced from one hundred percent (100%) Renewable Biomass and no portion of which is produced from non-renewable feedstock, including petroleum products; (ii) meets the Product Specifications, and (iii) is eligible to generate a valid RIN with a D Code of 4 under the RFS.

 

Environmental Attributes” means any and all attributes, credits, benefits, emission reductions, offsets, and allowances, howsoever entitled, attributable to the characteristics, production, use or combustion of renewable diesel or its displacement or reduction in the use of transportation fuel, but only to the extent that any of the foregoing is generated, produced and verified through and in compliance with the RFS, the LCFS, the OCFP, and any other applicable CFP. For sake of clarity, Environmental Attributes (i) to the extent verified, includes RINs, LCFS Credits, OCFP Credits, and CFP Credits, and (ii) excludes any federal or state tax credits, development credits, or similar incentives.

 

Excluded Property” means, (a) Environmental Attributes, Renewable Products and Renewable Feedstocks, RINs and Catalyst Assets and (b) any “intent to use” trademark application for registration of a Trademark filed pursuant to Section 1(b) of the Lanham Act, 15 U.S.C. § 1051, prior to the filing of a “Statement of Use” pursuant to Section 1(d) of the Lanham Act or an “Amendment to Allege Use” pursuant to Section 1(c) of the Lanham Act with respect thereto.

 

Intercreditor Agreement” means the Intercreditor Agreement dated as of April 1, 2022 by and among Cantor Fitzgerald Securities, as agent for the Term Loan Secured Parties (as defined therein), Macquarie Energy North America Trading Inc., as Intermediation Facility Secured Party (as defined therein), Vertex Refining Alabama LLC, and each of the other Grantors (as defined therein) party thereto (as amended, restated, amended and restated, supplemented, modified, extended, renewed, replaced, refinanced or restructured from time to time).

 

Inventory” has the meaning assigned to such term in Section 9-102 of the New York UCC.

 

LCFS” or “Low Carbon Fuel Standard” means the California Low Carbon Fuel Standard as set forth in Section 95484 of Title 17 of the California Code of Regulations, as amended or supplemented.

 

LCFS Credits” means a Credit as defined in the LCFS Regulations.

 

LCFS Regulations” means the regulations, orders, decrees and standards issued by a Governmental Authority implementing or otherwise applicable to the LCFS as set forth in 17 CCR § 95480 et seq. and each successor regulation.

 

Letter-of-Credit Rights” means any and all of the Company’s letter-of-credit rights, as such term is defined in Section 9-102 of the New York UCC.

 

New York UCC” means the Uniform Commercial Code as from time to time in effect in the State of New York, as amended from time to time.

 

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Non-Conforming Renewable Product” means a renewable diesel that (i) is produced from one hundred percent (100%) Renewable Biomass and no portion of which is produced from non-renewable feedstock, including petroleum products; and (ii) does not meet the Product Specifications.

 

Obligations” has the meaning assigned to such term in Section 2.01(a).

 

OCFP Credits” means a credit as defined in the OCFP Regulations.

 

OCFP Regulations” means the regulations, orders, decrees and standards issued by a Governmental Authority implementing or otherwise applicable to the Oregon Clean Fuels Program as set forth in the Oregon Administrative Rules chapter 340, division 253 as defined in OAR 340-253-0060(4) and each successor regulation.

 

person” shall mean any natural person, corporation, business trust, joint venture, association, company, limited liability company, partnership, Governmental Authority or other entity.

 

Proceeds” has the meaning specified in Section 9-102 of the New York UCC.

 

Renewable Biomass” has the meaning set forth in 42 U.S.C. § 7545(o)(I).

 

Renewable Feedstock” means all renewable feedstocks, including Renewable Biomass.

 

Renewable Fuel Standard” or “RFS” means the renewable fuel program and policies established section 211(o) of the Clean Air Act (42 U.S.C. § 7545(o)) as implemented by the U.S. Environmental Protection Agency under Subpart M of Part 80 of Title 40 of the Code of Federal Regulations.

 

Renewable Product” means all renewable products, including all Conforming Renewable Product or Non-Conforming Renewable Product.

 

Renewable Product Specifications” means (i) the requirements and specifications for fuels and fuel additives established by the U.S. Environmental Protection Agency in Part 79 of Title 40 of the Code of Federal Regulations; (ii) the requirements and specifications established by the California Air Resources Board in Sections 2281, 2282, and 2284 of Title 13 of the California Code of Regulations; (iii) the requirements and specifications of American Society of Testing and Materials specification D 975; and (vi) all requirements under Applicable Law governing the production and composition of renewable diesel sold and used as vehicle fuel, including those imposed by any Governmental Authority and under any CFP.

 

RIN” or “Renewable Identification Number” means mean a thirty-eight (38) character numeric code that is generated by the producer or importer of renewable fuel representing gallons of renewable fuel produced/imported and assigned to batches of renewable fuel that are transferred to others such that a change of ownership is effected, or any similar successor instrument thereof.

 

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S&O Agreement” has the meaning assigned to such term in the preliminary statement of this Agreement.

 

Secured Party” has the meaning assigned to such term in the preliminary statement of this Agreement.

 

Security Interest” has the meaning assigned to such term in Section 2.01.

 

Supporting Obligations” means all supporting obligations, as such term is defined in Section 9-102 of the New York UCC.

 

Term Loan Agent” has the meaning specified in the S&O Agreement.

 

ARTICLE II

Security Interests in Collateral

 

SECTION 2.01. Security Interest. (a) As security for the payment and performance, as the case may be, in full of its obligations and liabilities, including, without limitation, the Transaction Obligations as defined in the S&O Agreement, under the S&O Agreement and the other Transaction Documents (collectively, the “Obligations”), the Company hereby grants to Secured Party, and its permitted successors and assigns, a continuing security interest (the “Security Interest”) in and to, and a right of set off against, all right, title and interest in or to any and all of the following assets and properties now owned or at any time hereafter acquired by the Company or in which the Company now has or at any time in the future may acquire any right, title or interest (collectively, the “Collateral”):

 

(i)          all Inventory, including, but not limited to Crude Oil and Products (and all Hydrocarbon Credit Support); and

 

(ii)         all Proceeds of (including proceeds of business interruption and other insurance), and Supporting Obligations (including Letter-of-Credit Rights) with respect to, any of the foregoing.

 

Notwithstanding anything in this Section 2.01(a) to the contrary, (1) in no event shall the Collateral include, or the security interest or Lien granted under this Section 2.01(a) attach to, any Excluded Property, and (2) for so long as the applicable property continues to be Excluded Property, the Company shall not be required to take any action intended to cause any Excluded Property to constitute Collateral, and none of the covenants or representations and warranties herein shall be deemed to apply to any property constituting Excluded Property; provided, however, that the security interest granted under this Section 2.01(a) shall immediately attach to, and the Collateral shall immediately include, any such asset (or portion thereof) that would otherwise constitute Collateral, were it not Excluded Property, upon such asset (or portion thereof) ceasing to be Excluded Property and (3) any and all assets or property sold, conveyed, transferred, assigned or otherwise disposed of by the Company to the extent not prohibited by the terms of the Transaction Documents shall be free of the security interests granted and created herein upon, from and after such sale, conveyance, transfer, assignment or other disposition, and all rights therein shall revert to the Company; provided, further, however, that security interests granted and created herein shall continue in any Proceeds of such sale, conveyance, transfer, assignment or other disposition. Upon any such release or such sale, transfer, conveyance, assignment or other disposition of Collateral or any part thereof, the Secured Party shall, upon the request and at the sole cost and expense of the Company, execute and deliver to the Company such documents and instruments reasonably requested by the Company as shall be necessary to evidence such termination.

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(b)          The Company hereby irrevocably authorizes Secured Party at any time and from time to time to file in any relevant jurisdiction any initial financing statements and amendments thereto that contain the information required by Article 9 of the Uniform Commercial Code of each applicable jurisdiction for the filing of any financing statement or amendment that is necessary or advisable with respect to perfecting the Secured Party’s security interest in the Collateral, including whether the Company is an organization, the type of organization and any organizational identification number issued to the Company identifying the Collateral as collateral thereon. The Company agrees to provide such information to Secured Party promptly upon request. The Company also ratifies its authorization for Secured Party to file in any relevant jurisdiction any such initial financing statements or amendments thereto if filed prior to the date hereof.

 

(c)          The Security Interest is granted as security only and shall not subject Secured Party to, or in any way alter or modify, any obligation or liability of the Company with respect to or arising out of the Collateral.

 

(d)          The Company and Secured Party agree and acknowledge that to the extent one or more schedules to the S&O Agreement are modified, supplemented or changed in anyway, such modification, supplement or change will, as applicable, be deemed to, and will, automatically, be reflected and incorporated in this Agreement.

 

(e)          Anything herein to the contrary notwithstanding, (i) the Company shall remain liable under any contracts, agreements and other documents included in the Collateral, to the extent set forth therein, to perform all of its duties and obligations thereunder to the same extent as if this Agreement had not been executed, (ii) the exercise by Secured Party of any of the rights granted to Secured Party hereunder or under any other Transaction Document shall not release the Company from any of its duties or obligations under any such contracts, agreements and other documents included in the Collateral, and (iii) Secured Party shall not have any obligation or liability under any such contracts, agreements and other documents by reason of this Agreement, nor shall Secured Party be obligated to perform any of the obligations or duties of the Company thereunder or to take any action to collect or enforce any such contract, agreement or other document included in the Collateral hereunder.

 

(f)            The Company agrees that this Agreement shall create a continuing security interest in the Collateral which shall remain in effect until terminated in accordance with Section 4.18.

 

(g)           The Company acknowledges and agrees that Secured Party, the Term Loan Agent, and the Company are parties to the Intercreditor Agreement and that nothing in this Agreement limits Secured Party’s rights under the Intercreditor Agreement.

 

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SECTION 2.02. Representations and Warranties. The Company represents and warrants to Secured Party that:

 

(a)           Except for the Security Interest of Secured Party granted pursuant to this Agreement and other Permitted Liens, the Company has good and valid rights in, title to and interests in the Collateral, with respect to which it has purported to grant a Security Interest hereunder, free and clear of any other Liens (other than Permitted Liens) adverse claims or options, and has full power and authority to grant to Secured Party the Security Interest in such Collateral pursuant hereto and to execute, deliver and perform its obligations in accordance with the terms of this Agreement, without the consent or approval of any other person other than any consent or approval that has been obtained.

 

(b)           No other Lien, adverse claim or option has been created by the Company or is known by the Company to exist with respect to any Collateral other than Permitted Liens; and no financing statement or other security instrument is on file in any jurisdiction covering such Collateral, other than those in favor of Secured Party (and other than with respect to Permitted Liens).

 

(c)           At the time the Security Interest in favor of Secured Party attaches, good and defensible title to all after-acquired property included within the Collateral, free and clear of any other Liens or adverse claims other than the Secured Interest of Secured Party granted pursuant to this Agreement (other than Permitted Liens), will be vested in the Company.

 

(d)           (i) Attached hereto as Schedule 1 is (a) the exact legal name of the Company as such name appears in its document of formation, (b) the jurisdiction of formation and the form of organization of the Company, (c) the organizational identification number, if any, assigned by such jurisdiction and (d) the address (including the county) of the chief executive office of the Company, and (ii) attached hereto as Schedule 2 is the name and address of any person that has, as of the date of this Agreement, possession from time to time of any Collateral with an aggregate market value greater than $250,000. Except as set forth on Schedule 2, no Inventory is stored with any bailee, warehouseman or similar person or on any premises leased to the Company, nor has any Inventory been consigned to the Company or consigned by the Company to any person or is held by the Company for any person under any “bill and hold” or other arrangement.

 

(e)           The Security Interest constitutes (i) a legal and valid first priority security interest (subject to Permitted Liens and the Intercreditor Agreement) in and to all the Collateral securing the payment and performance of the Obligations and (ii) when properly perfected by filing with the Delaware Secretary of State, shall constitute a perfected security interest to the extent that a security interest in such Collateral can be perfected by filing under the Uniform Commercial Code. No further or subsequent filing, recording, registration or other public notice of such Security Interest is necessary in any office or jurisdiction in order to perfect such Security Interest in all Collateral or to continue, preserve or protect such Security Interest except for continuation statements or for filings upon the occurrence of any of the events stated in Section 2.03(a) of this Agreement.

 

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(f)            The Company is not a party to any license or other agreement which would materially limit Secured Party’s (or any of Secured Party’s transferees) right to sell, lease or otherwise use any Collateral upon Secured Party’s proper exercise of its rights or remedies hereunder or under the other Transaction Documents (including, without limitation, the rights of the Secured Party pursuant to Section 20.4 of the S&O Agreement).

 

(g)           Within the 12-month period preceding the date hereof, the Company has not purchased any of the Collateral consisting of goods in a bulk transfer or in a transaction which was outside the ordinary course of business of the Company other than pursuant to the Refinery SPA and the Step-In Inventory Sales Agreement.

 

SECTION 2.03. Covenants. (a) The Company shall not change (i) its corporate name, (ii) its form of organization, (iii) its Federal Taxpayer Identification Number or organizational identification number or (iv) its jurisdiction of organization, in each case, without providing written notice to Secured Party at least thirty (30) days prior to any such change. Within five (5) Business Days after Secured Party’s request therefor, the Company shall execute and deliver all such additional documents and perform all additional acts as are necessary, including to perfect the Security Interest in the Collateral, or that Secured Party may reasonably request in order to continue or maintain the existence and priority of the Liens granted hereunder in the Collateral. The Company agrees to promptly notify Secured Party if any material portion of the Collateral owned or held by the Company is destroyed.

 

(b)           The Company agrees (i) to maintain, at its own cost and expense, such records with respect to the Collateral as are consistent with its current practices and in accordance with such prudent and standard practices used in industries that are the same as or similar to those in which the Company is engaged, and in any event, complete and accurate in all material respects, and, (ii) at such time or times as Secured Party may reasonably request, promptly to prepare and deliver to Secured Party a duly certified schedule or schedules in form and detail reasonably satisfactory to Secured Party showing the identity, amount and location of any and all Collateral.

 

(c)           The Company agrees, at its own expense, to execute, acknowledge, sign and deliver, alone or with Secured Party, any financing statements, security agreements or other document reasonably requested by the Secured Party, procure any instruments or documents as may be reasonably requested by Secured Party, and cause to be duly filed all such further instruments and documents, and take all such actions as Secured Party may from time to time reasonably request to better assure, preserve, protect and perfect the Security Interest and the rights and remedies created hereby, including the payment of any fees and taxes required in connection with the execution and delivery of this Agreement, the granting of the Security Interest and the filing of any financing statements or other documents in connection herewith or therewith. The Company agrees to take steps reasonably requested by the Secured Party to protect the title to the Collateral.

 

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(d)           At its option, Secured Party may discharge past due taxes, assessments, charges, fees, Liens, security interests or other encumbrances at any time levied or placed on the Collateral (other than Permitted S&O Liens) that are not being contested in accordance with Section 5.9 or 16.2 of the S&O Agreement or being contested in accordance with the applicable agreement or Applicable Law under which they are levied or placed, and may pay for the maintenance and preservation of the Collateral to the extent the Company fails to do so as required by this Agreement or the S&O Agreement, and the Company agrees to reimburse Secured Party upon written request for any payment made or any expense incurred by Secured Party pursuant to the foregoing authorization other than to the extent relating to Permitted Article 10 Liens; provided, however, that nothing in this paragraph shall be interpreted as excusing the Company from the performance of, or imposing any obligation on Secured Party to cure or perform, any covenants or other promises of the Company with respect to taxes, assessments, charges, fees, Liens, security interests or other encumbrances and maintenance as set forth herein or in the Transaction Documents,

 

(e)           The Company’s entry into this Agreement shall not relieve the Company of any obligation to be observed or performed by it under any contract, agreement or instrument relating to the Collateral, all in accordance with the terms and conditions thereof.

 

(f)            The Company, at its own expense, shall maintain or cause to be maintained insurance covering physical loss or damage to the Collateral in accordance with the requirements set forth in Article 17 of the S&O Agreement. The Company irrevocably makes, constitutes and appoints Secured Party (and all officers, employees or agents designated by Secured Party) as the Company’s true and lawful agent (and attorney-in-fact) for the purpose, during the occurrence and continuance of an Event of Default, of making, settling and adjusting claims in respect of Collateral under policies of insurance, endorsing the name of the Company on any check, draft, instrument or other item of payment for the proceeds of such policies of insurance and for making all determinations and decisions with respect thereto. In the event that the Company at any time or times shall fail to obtain or maintain any of the policies of insurance required by the S&O Agreement or to pay any premium in whole or part relating thereto, Secured Party may, without waiving or releasing any obligation or liability of the Company hereunder or any Event of Default, in its sole discretion, obtain and maintain such policies of insurance and pay such premium and take any other actions with respect thereto as Secured Party deems advisable. Without duplication of any obligations under the SOA, all sums disbursed by Secured Party in connection with this paragraph, including reasonable out of pocket attorneys’ fees, court costs, expenses and other charges relating thereto, shall be payable, upon demand, by the Company to Secured Party and shall be additional Obligations secured hereby.

 

(g)           After the occurrence and during the continuance of an Event of Default, any person (other than Secured Party) or the Company at any time and from time to time holding all or any portion of the Collateral shall be deemed to, and shall, hold the Collateral as the agent of, and as pledge holder for, Secured Party. After the occurrence and during the continuance of an Event of Default, at any time and from time to time, Secured Party may give notice to any such person holding all or any portion of the Collateral that such person is holding the Collateral as the agent and bailee of, and as pledge holder for, Secured Party, and obtain such person’s written acknowledgment thereof, and the Company shall, upon request, join with Secured Party in any such notice.

 

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(h)           Subject to the terms and conditions of the Intercreditor Agreement, the Company will use commercially reasonable efforts to obtain from each person from whom the Company leases any premises at which any Collateral with a value in excess of $250,000 is located, and from each other person at whose premises Collateral with a value in excess of $250,000 is located (including any bailee, warehouseman or similar person), (1) on or before the Commencement Date or (2) if later, within 30 days of the date the Company enters into a lease of or a contract to hold Collateral at any premises, any such collateral access, subordination, landlord waiver, bailment, consent and estoppel agreements, as Secured Party may reasonably request, in form and substance satisfactory to Secured Party and the other parties thereto. In the event that any such person becomes an Affiliate of the Company after the Commencement Date and from whom the Company leases any premises at which any Collateral is located, the Company will cause such person to deliver such bailee’s letter no later than 30 days after the date such person becomes an Affiliate of the Company.

 

(i)            Secured Party may from to time (but it shall not be obligated to), inspect the Company’s records concerning the Collateral in accordance with Article 24 of the S&O Agreement.

 

(j)            Under all circumstances, access to the Facilities (as such term is defined in the Storage Facilities Agreement) shall be subject to the terms of the Storage Facilities Agreement.

 

ARTICLE III

Remedies

 

SECTION 3.01. Remedies Upon Default. Upon the occurrence and during the continuance of an Event of Default, it is agreed that Secured Party shall have the right to, from time to time, apply, set-off, collect, sell in one or more sales, lease, or otherwise dispose of, any or all of the Collateral, in its then current condition or following any commercially reasonable preparation or processing, in such order as Secured Party may elect, and may take any of or all of the following actions set forth herein below, at the same or different times, with or without legal process and with or without prior notice or demand for performance, without resistance or interference by the Company, to take possession of the Collateral and without liability for trespass to enter any premises where the Collateral may be located for the purpose of taking possession of or removing the Collateral, and may so remove the Collateral from such premises, and, generally, in addition to the rights and remedies provided herein, in the other Transaction Documents and in any other documents relating to the Obligations, to exercise any and all rights afforded to a secured party under the New York UCC or other Applicable Law. Without limiting the generality of the foregoing, the Company agrees that Secured Party shall have the right, subject to the mandatory requirements of Applicable Law, to sell or otherwise dispose of all or any part of the Collateral on any such premises at a public or private sale or at any broker’s board or on any securities exchange, for cash, upon credit or for future delivery as Secured Party shall deem appropriate. Each such purchaser at any such sale shall hold the property sold absolutely, free from any claim or right on the part of the Company, and the Company hereby waives (to the extent permitted by Applicable Law) all rights of redemption, stay and appraisal which the Company now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted.

 

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Secured Party shall give the Company ten (10) Business Days’ written notice (which the Company agrees is reasonable notice within the meaning of Section 9-611 of the New York UCC or its equivalent in other jurisdictions) of Secured Party’s intention to make any sale of Collateral. Such notice, in the case of a public sale, shall state the time and place for such sale and, in the case of a sale at a broker’s board or on a securities exchange, shall state the board or exchange at which such sale is to be made and the day on which the Collateral, or portion thereof, will first be offered for sale at such board or exchange. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as Secured Party may fix and state in the notice (if any) of such sale. At any such sale, the Collateral or portion thereof, to be sold may be sold in one lot as an entirety or in separate parcels, as Secured Party may (in its sole and absolute discretion) determine, for cash, upon credit or otherwise, at such prices and upon such terms as Secured Party deems advisable, in its sole discretion (subject to any and all mandatory legal requirements). Secured Party shall not be obligated to make any sale of any Collateral if it shall determine not to do so, regardless of the fact that notice of sale of such Collateral shall have been given. Secured Party may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for sale, and such sale may, without further notice, be made at the time and place to which the same was so adjourned. In case any sale of all or any part of the Collateral is made on credit or for future delivery, the Collateral so sold may be retained by Secured Party until the sale price is paid by the purchaser or purchasers thereof, but Secured Party shall not incur any liability in case any such purchaser or purchasers shall fail to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may be sold again upon like notice. At any public (or, to the extent permitted by Applicable Law, private) sale made pursuant to this Section, Secured Party may bid for or purchase, free (to the extent permitted by Applicable Law) from any right of redemption, stay, valuation or appraisal on the part of the Company (all said rights being also hereby waived and released to the extent permitted by Applicable Law), the Collateral or any part thereof offered for sale and may make payment on account thereof by using any claim then due and payable to Secured Party from the Company as a credit against the purchase price, and Secured Party may, upon compliance with the terms of sale, hold, retain and dispose of such property without further accountability to the Company therefor. The Company acknowledges that any such private sale may be at prices and on terms less favorable to the seller than the prices and other terms which might have been obtained at a public sale and, notwithstanding the foregoing, agrees that such private sale shall not solely by reason thereof be deemed not to have been made in a commercially reasonable manner. Neither Secured Party’s compliance with Applicable Law nor its disclaimer of warranties relating to the Collateral shall be considered to adversely affect the commercial reasonableness of any sale. For purposes hereof, a written agreement to purchase the Collateral or any portion thereof shall be treated as a sale thereof; Secured Party shall be free to carry out such sale pursuant to such agreement and the Company shall not be entitled to the return of the Collateral or any portion thereof subject thereto, notwithstanding the fact that after Secured Party shall have entered into such an agreement all Events of Default shall have been remedied and the Obligations paid in full. As an alternative to exercising the power of sale herein conferred upon it, Secured Party may proceed by a suit or suits at law or in equity to foreclose this Agreement and to sell the Collateral or any portion thereof pursuant to a judgment or decree of a court or courts having competent jurisdiction or pursuant to a proceeding by a court-appointed receiver. Any sale pursuant to the provisions of this Section 3.01 shall be deemed to conform to the commercially reasonable standards as provided in Section 9-610(b) of the New York UCC or its equivalent in other jurisdictions. For avoidance of doubt, Secured Party shall be entitled to any and all cash proceeds received upon the collection, sale or other disposition of any Collateral pursuant to the exercise of its remedies as set forth herein, including under law or in equity.

 

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SECTION 3.02. Access. In addition to the rights and remedies hereunder, upon the occurrence and during the continuance of an Event of Default, (i) Secured Party shall have the right to enter and remain upon the various premises of the Company without cost or charge to Secured Party, and use the same, together with materials, supplies, books and records of the Company for the purpose of collecting and liquidating the Collateral, or for preparing for sale and conducting the sale of the Collateral, whether by foreclosure, auction or otherwise, (ii) Secured Party may remove Collateral, or any part thereof, from such premises and/or any records with respect thereto, in order to effectively collect or liquidate such Collateral and (iii) if Secured Party exercises its right to take possession of the Collateral, the Company shall also at its expense take any and all other actions reasonably requested by Secured Party to preserve and protect the security interest hereby granted in the Collateral, such as placing and maintaining signs indicating the security interest of Secured Party, appointing overseers for the Collateral and maintaining inventory records.

 

SECTION 3.03. Secured Party’s Duties. The powers conferred upon Secured Party by this Agreement are solely to protect its interest in the Collateral and shall not impose any duty upon Secured Party to exercise any such powers. Secured Party shall be under no duty whatsoever to make or give any presentment, demand for performance, notice of nonperformance, protest, notice of protest, notice of dishonor or other notice or demand in connection with any Collateral or the Obligations, or to take any steps necessary to preserve any rights against prior parties. Secured Party shall not be liable for failure to collect or realize upon any or all of the Obligations or Collateral, or for any delay in so doing, nor shall Secured Party be under any duty to take any action whatsoever with regard thereto. Secured Party shall use reasonable care in the custody and preservation of any Collateral in its possession. Secured Party shall have no duty to comply with any recording, filing or other legal requirements necessary to establish or maintain the validity, priority or enforceability of, or Secured Party’s rights in or to, any of the Collateral.

 

SECTION 3.04. Right of Set-Off. Upon the occurrence and during the continuance of an Event of Default, Secured Party may exercise any rights of set-off as provided for in Article 20.4 of the S&O Agreement, or otherwise as available under law or in equity.

 

SECTION 3.05. Application of Proceeds. Secured Party shall apply all proceeds that it shall receive from any collection, sale or other disposition of Collateral, as well as any Collateral consisting of cash, as follows:

 

FIRST, to the payment of all costs and expenses incurred by Secured Party in connection with such collection, sale or other disposition or otherwise in connection with this Agreement, the S&O Agreement or any of the Obligations, including all court costs and the fees and expenses of its agents and internal and outside legal counsel, the repayment of all advances made by Secured Party hereunder or under the S&O Agreement or the other Transaction Documents on behalf of the Company and any other costs or expenses incurred in connection with the exercise of any right or remedy hereunder or under the S&O Agreement or the other Transaction Documents;

 

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SECOND, to the payment in full of the Obligations; and

 

THIRD, to the Company or such other person as directed by a court of competent jurisdiction.

 

Upon any collection, sale or other disposition of Collateral by Secured Party (including pursuant to a power of sale granted by statute or under a judicial proceeding), the receipt of Secured Party or of the officer making the sale shall be a sufficient discharge to the purchaser or purchasers of the Collateral so sold and such purchaser or purchasers shall not be obligated to see to the application of any part of the purchase money paid over to Secured Party or such officer or be answerable in any way for the misapplication thereof.

 

SECTION 3.06. Access to Collateral. Notwithstanding anything in this Agreement to the contrary, so long as no Event of Default shall have occurred and be continuing, the Company may, subject to the provisions of the S&O Agreement, use, convey, sell, lease, assign, transfer or otherwise dispose of, commingle or blend all or any part of any of the Collateral.

 

ARTICLE IV

Miscellaneous

 

SECTION 4.01.  Notices. All communications and notices hereunder shall (except as otherwise expressly permitted herein) be in writing and given as provided in Article 28 of the S&O Agreement.

 

SECTION 4.02. Security Interest Absolute. All rights of Secured Party hereunder, the Security Interest, the grant of a security interest in the Collateral and all obligations of the Company hereunder shall be absolute and unconditional irrespective of (a) any lack of validity or enforceability of the S&O Agreement, any other Transaction Document, any agreement with respect to any of the Obligations or any other agreement or instrument relating to any of the foregoing, (b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to any departure from the S&O Agreement, any other Transaction Document or any other agreement or instrument, (c) any exchange, release or non-perfection of any Lien on other collateral, or any release or amendment or waiver of or consent under or departure from any guarantee, securing or guaranteeing all or any of the Obligations, or (d) any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Company (other than a defense relating to payment or performance under the S&O Agreement or Transaction Documents) in respect of the Obligations or this Agreement.

 

SECTION 4.03.  Survival of Agreement. All covenants, agreements, representations and warranties made by the Company herein and in the certificates or other instruments required to be prepared or delivered in connection with or pursuant to this Agreement shall be considered to have been relied upon by Secured Party and shall survive the execution and delivery of the Transaction Documents, regardless of any investigation made by any such other party or on its behalf, and shall continue in full force and effect as long as the parties’ obligations under the S&O Agreement, any other Transaction Document or any other agreement relating thereto remain in effect and such agreements have not expired or terminated.

 

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SECTION 4.04. Binding Effect; Several Agreement. This Agreement shall become effective when a counterpart hereof executed on behalf of the Company shall have been delivered to Secured Party and a counterpart hereof shall have been executed on behalf of Secured Party, and thereafter shall be binding upon the Company and Secured Party and their respective permitted successors and assigns, and shall inure to the benefit of the Company and Secured Party and their respective successors and assigns, except that neither the Company nor Secured Party shall have the right to assign or transfer its rights or obligations hereunder or any interest herein (and any such assignment or transfer shall be void) except (i) as expressly contemplated in this Agreement pursuant to the exercise by Secured Party of rights as a secured creditor after default, or (ii) to any assignee pursuant to Article 27 of the S&O Agreement.

 

SECTION 4.05. Successors and Assigns. Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the permitted successors and assigns of such party; and all covenants, promises and agreements by or on behalf of the Company or Secured Party that are contained in this Agreement shall bind and inure to the benefit of their respective successors and assigns.

 

SECTION 4.06. Any amounts payable by the Company, including such amounts paid by Secured Party on behalf of the Company, as provided hereunder shall be additional Obligations secured hereby and by any other Lien Documents. The provisions of this Section 4.06 shall survive the termination of this Agreement or any other Transaction Document.

 

SECTION 4.07. Secured Party Appointed Attorney-in-Fact. The Company hereby appoints Secured Party the attorney-in-fact of the Company for the purpose, to act upon the occurrence and continuation of an Event of Default, of carrying out the provisions of this Agreement and taking any action and executing any instrument that Secured Party may deem necessary or advisable to accomplish the purposes hereof, which appointment is irrevocable and coupled with an interest. Without limiting the generality of the foregoing, Secured Party shall have the right, upon the occurrence and during the continuance of an Event of Default, with full power of substitution either in Secured Party’s name or in the name of the Company (a) to receive, endorse, assign and/or deliver any and all notes, acceptances, checks, drafts, money orders or other evidences of payment relating to the Collateral or any part thereof; (b) to demand, collect, receive payment of, give receipt for and give discharges and releases of all or any of the Collateral; (c) to sign the name of the Company on any invoice or bill of lading relating to any of the Collateral; (d) to commence and prosecute any and all suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect or otherwise realize on all or any of the Collateral or to enforce any rights in respect of any Collateral; (e) to settle, compromise, compound, adjust or defend any actions, suits or proceedings relating to all or any of the Collateral; and (f) to use, sell, assign, transfer, pledge, make any agreement with respect to or otherwise deal with all or any of the Collateral, and to do all other acts and things necessary to carry out the purposes of this Agreement, as fully and completely as though Secured Party were the absolute owner of the Collateral for all purposes; provided that nothing herein contained shall be construed as requiring or obligating Secured Party to make any commitment or to make any inquiry as to the nature or sufficiency of any payment received by Secured Party, or to assume or take on any obligation of the Company under any contract or agreement to which the Company is a party, or to present or file any claim or notice, or to take any action with respect to the Collateral or any part thereof or the moneys due or to become due in respect thereof or any property covered thereby.

 

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SECTION 4.08. Liability for Deficiency. Neither the acceptance of this Agreement by Secured Party nor any action taken pursuant hereto shall be construed as relieving any party liable for the Obligations from any liability or deficiency thereon. The execution and delivery of this Agreement shall not in any manner affect any other security for the Obligations, nor shall any security taken hereafter as security for the Obligations impair or affect this Agreement.

 

SECTION 4.09. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ITS CONFLICT OF LAWS PRINCIPLES THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER STATE.

 

SECTION 4.10. Waivers; Amendment. (a) No failure or delay of Secured Party in exercising any right or power hereunder or under any other Transaction Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of Secured Party hereunder and under the other Transaction Documents are cumulative and are not exclusive of any rights or remedies that it would otherwise have, including under law or in equity. No waiver of any provision of any Transaction Document or consent to any departure by the Company therefrom shall in any event be effective unless the same shall be agreed in writing by the parties hereto, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given, and no such waiver or consent shall be construed to establish any cause of dealing between the parties hereto. No notice or demand on the Company in any case shall entitle the Company to any other or further notice or demand in similar or other circumstances. To the extent permitted by Applicable Law, neither the Secured Party nor any party acting as attorney for Secured Party shall be liable hereunder for any acts or omissions or for any error of judgment or mistake of fact or law other than their gross negligence or willful misconduct hereunder.

 

SECTION 4.11. WAIVER OF JURY TRIAL. EACH PARTY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY PROCEEDINGS RELATING TO THIS AGREEMENT. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

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SECTION 4.12. Severability. In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

 

SECTION 4.13. Counterparts. This Agreement may be executed in counterparts (and by different parties hereto or different counterparts), each of which shall constitute an original but all of which when taken together shall constitute a single contract, and shall become effective as provided in Section 4.04. Delivery of an executed signature page to this Agreement by facsimile or other form of electronic transmission, including a PDF of a signature page, shall be as effective as delivery of a manually signed counterpart of this Agreement.

 

SECTION 4.14. Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, and shall not be construed to have any effect or meaning with respect to the other content of such articles, sections, subsections or other divisions, such other content being controlling as to the agreement between the parties, and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.

 

SECTION 4.15. Jurisdiction. (a) The Company hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or Federal court of the United States of America, sitting in New York City and County, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or any other Transaction Document or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by Applicable Law, in such Federal court. Nothing in this Agreement or any other Transaction Document shall affect any right that Secured Party may otherwise have to bring any action or proceeding relating to this Agreement or any other Transaction Document against the Company or its properties in the courts of any jurisdiction.

 

SECTION 4.16. Venue; Forum. The Company hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any other Transaction Document in any court referred to in Section 4.15. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by Applicable Law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

 

SECTION 4.17. Consent to Service of Process. Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 4.01. Nothing in this Agreement or any other Transaction Document will affect the right of any party to this Agreement to serve process in any other manner permitted by Applicable Law.

 

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SECTION 4.18. Termination. Upon the termination of the S&O Agreement, in accordance with its terms, and the performance and payment of the obligations thereunder (other than the indemnity and other obligations hereunder and under the other Transaction Documents that by their terms survive), the security interests created by this Agreement shall terminate and Secured Party shall promptly execute and deliver to the Company, at the cost and expense of the Company, such documents and instruments reasonably requested by the Company as shall be necessary to evidence termination of all security interests given by the Company to Secured Party hereunder.

 

SECTION 4.19. Entire Agreement. THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS REFLECT THE ENTIRE AGREEMENT OF THE PARTIES WITH RESPECT TO THE MATTERS SET OUT HEREIN AND MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENT OF THE UNDERSIGNED. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 

SECTION 4.20. Intercreditor Agreement. Reference is made to the Intercreditor Agreement. Notwithstanding anything herein to the contrary, the lien and security interest granted to the Secured Party pursuant to this Agreement and the exercise of any right or remedy by the Secured Party are subject to the provisions of the Intercreditor Agreement. In the event of any conflict or inconsistency between the provisions of the Intercreditor Agreement and this Agreement, the provisions of the Intercreditor Agreement shall control.

 

[Remainder of page intentionally left blank.]

 

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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.

 

  COMPANY:
     
  VERTEX ALABAMA REFINING LLC
     
  By: /s/ Benjamin P. Cowart          
  Name: Benjamin P. Cowart
  Title: President & Chief Executive Officer
     
  SECURED PARTY:
     
  MACQUARIE ENERGY NORTH AMERICA TRADING INC.
     
  By: /s/ Travis McCullough   
  Name: Travis McCullough
  Title: Division Director 
     
  By: /s/ Daniel Vizel         
  Name: Daniel Vizel
  Title: Senior Managing Director

 

[Signature Page to Pledge and Security Agreement]

 

 

 

Schedule 1

 

Name, Jurisdiction of Formation, Organizational Identification Number
and Chief Executive Office Address

 

Company’s Exact Legal Name

Jurisdiction of Formation

Form of Organization

Organizational
Identification Number
(if any)

Chief Executive Office Address 

(including county) 

Vertex Refining Alabama, LLC Delaware Limited Liability Company 4818589 1331 Gemini Street, Suite 250, Houston, TX 77058

 

Schedule 2

 

Addresses of Collateral Locations

 

The name and address, as applicable, of any person that has possession of any Collateral with an aggregate market value greater than $250,000:

 

Property Name and Address Entity that Owns/Leases/Occupies Property Owned or Leased? If Leased, Name of Landlord

Refinery
400 Industrial Parkway
Saraland, AL 36571

Vertex Refining Alabama LLC Owned N/A

Terminals
400 Industrial Parkway
Saraland, AL 36571

Vertex Refining Alabama LLC Owned N/A

Plains Terminal
1871 Hess Rd.
Mobile, AL 36610

Vertex Refining Alabama LLC Leased Plains Marketing, L.P.

Blakely Island Terminal
1105 Cochran Causeway
Mobile, AL 36602

Vertex Refining Alabama LLC Owned N/A

 

 

 

Vertex Energy Inc. 8-K

Exhibit 10.8

 

 

 

REGISTRATION RIGHTS AGREEMENT

 

THIS REGISTRATION RIGHTS AGREEMENT (as amended from time to time in accordance with the terms hereof, this “Agreement”), dated as of April 1, 2022, is made and entered into by and among Vertex Energy Inc., a Nevada corporation (the “Company”), and each of the undersigned entities (together with any person or entity who hereafter becomes a party to this Agreement pursuant to Section 5.2 of this Agreement, a “Holder” and collectively the “Holders”).

 

RECITALS

 

WHEREAS, the Company has entered into that certain Loan and Security Agreement (the “Loan Agreement”), dated as of April 1, 2022, by and among the Company, Vertex Refining Alabama LLC, a Delaware limited liability company (“Borrower”), certain direct and indirect subsidiaries of the Company from time to time party thereto and Cantor Fitzgerald Securities, as administrative and collateral agent for the Lenders, pursuant to which the Lenders agreed to lend to the Borrower an aggregate of $125,000,000; and

 

WHEREAS, in connection with the transactions contemplated by the Loan Agreement, and in accordance with that certain Warrant Agreement, dated as of the date hereof, by and between the Company and the Warrant Agent (as defined therein) (the “Warrant Agreement”), on the Closing Date, pursuant to an exemption from registration provided by Section 4(a)(2), and Rule 506 thereunder, of the Securities Act, the Company is issuing to the Holders an aggregate of 2,750,000 warrants (the “Warrants”), with each Warrant entitling the holder thereof to purchase one share of Common Stock (such shares of Common Stock, as may be adjusted in accordance with the Warrant Agreement, the “Warrant Shares”); and

 

WHEREAS, the Company and the Holders desire to enter into this Agreement, pursuant to which the Company shall grant to the Holders certain registration rights with respect to the Warrant Shares, as set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the representations, covenants and agreements contained herein, and certain 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

 

1.1 Definitions. The terms defined in this Article I shall, for all purposes of this Agreement, have the respective meanings set forth below:

 

Adverse Disclosure” shall mean any public disclosure of material non-public information, which disclosure, in the good faith judgment of the Chief Executive Officer or principal financial officer of the Company, after consultation with counsel to the Company, (i) would be required to be made in any Registration Statement or Prospectus in order for the applicable Registration Statement or Prospectus not to contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein (in the case of any prospectus and any preliminary prospectus, in the light of the circumstances under which they were made) not misleading, (ii) would not be required to be made at such time if the applicable Registration Statement or Prospectus were not being filed, declared effective or used, as the case may be, and (iii) the Company has a bona fide business purpose for not making such information public.

 

Agreement” shall have the meaning given in the Preamble hereto.

 

Applicable Holders” shall mean, at any time, Holders representing at least a majority-in-interest of the then outstanding Registrable Securities.

 

Block Trade” shall mean an offering and/or sale of Registrable Securities by any Holder on a block trade or underwritten basis (whether firm commitment or otherwise) without substantial marketing efforts prior to pricing, including, without limitation, a same day trade, overnight trade or similar transaction, but excluding a variable price reoffer.

 

 

 

 

Board” shall mean the Board of Directors of the Company.

 

Borrower” shall have the meaning given in the Recitals hereto.

 

Closing” shall mean the consummation of the Loan Agreement.

 

Closing Date” shall mean the date hereof.

 

Commission” shall mean the Securities and Exchange Commission.

 

Common Stock” shall mean shares of common stock, par value $0.001 per share, of the Company.

 

Company” shall have the meaning given in the Preamble hereto and includes the Company’s successors by merger, acquisition, reorganization or otherwise.

 

Demanding Holder” shall mean the applicable Holders making a written demand pursuant to Section 2.1.3 or Section 2.1.4.

 

Exchange Act” shall mean the Securities Exchange Act of 1934, as it may be amended from time to time.

 

Fair Market Value” shall mean the average of the daily volume weighted average prices per share of such shares or securities for the five (5) consecutive Trading Days immediately preceding the day as of which Fair Market Value is being determined, as reported on the New York Stock Exchange, or if such shares or securities are not listed on the New York Stock Exchange, as reported on the principal U.S. national or regional securities exchange or quotation system on which such shares or securities are then listed or quoted; provided, however, if (x) such shares or securities are not listed or quoted on the New York Stock Exchange or any U.S. national or regional securities exchange or quotations system or (y) a transaction impacting such shares or securities makes it unjust or inequitable to value such shares or securities in the manner provided above as reasonably determined in good faith by the Board, then the Fair Market Value of such securities shall be determined in good faith by the Board, with written notification of such determination to be provided to all Holders; provided, that within twenty (20) days following notification to all Holders of such determination by the Board, the Applicable Holders may, by written notice to the Company, require the Company to engage an independent, reputable appraiser jointly selected by the Company and the Applicable Holders to determine the Fair Market Value of such shares or securities.

 

"Filing Deadline” shall have the meaning given in Section 2.1.1

 

Form S-1 Shelf” shall have the meaning given in Section 2.1.1.

 

Form S-3 Shelf” shall have the meaning given in Section 2.1.1.

 

Holder Information” shall have the meaning given in Section 4.1.2.

 

Holders” shall have the meaning given in the Preamble hereto.

 

Initial Registration Statement” shall have the meaning given in Section 2.5.

 

Lenders” shall mean the lenders identified in the Loan Agreement.

 

Loan Agreement” shall have the meaning given in the Recitals hereto.

 

Maximum Number of Securities” shall have the meaning given in Section 2.1.5.

 

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Minimum Takedown Threshold” shall have the meaning given in Section 2.1.4.

 

Misstatement” shall mean an untrue statement of a material fact or an omission to state a material fact required to be stated in a Registration Statement or Prospectus, or necessary to make the statements in a Registration Statement or Prospectus (in the light of the circumstances under which they were made) not misleading.

  

Permitted Transferees” shall mean (i) with respect to any Holder, an affiliate of such Holder or (ii) transferees of the Warrants in a transaction in which the applicable Holder’s rights under this Agreement are assigned to such transferee(s) in accordance with Section 5.2.

 

Piggyback Registration” shall have the meaning given in Section 2.2.1.

 

Pro Rata” shall have the meaning given in Section 2.1.5.

 

Prospectus” shall mean the prospectus included in any Registration Statement, as supplemented by any and all prospectus supplements and as amended by any and all post-effective amendments and including all material incorporated by reference in such prospectus in accordance with the rules of the Commission.

 

Registrable Security” shall mean (a) any Warrant Shares, and (b) any other equity security of the Company issued or issuable with respect to any securities referenced in clause (a) above by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or reorganization; providedhowever, that, as to any particular Registrable Securities, such securities shall cease to be Registrable Securities upon the earliest to occur of: (A) a Registration Statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been sold, transferred, disposed of or exchanged in accordance with such Registration Statement by the applicable Holder; (B) such securities shall have been sold, transferred, disposed of or exchanged, other than pursuant to a Registration Statement, new certificates for such securities (or book entry positions) not bearing a legend restricting further transfer shall have been delivered by the Company and subsequent public distribution of such securities shall not require registration under the Securities Act; (C) such securities are held by the Company or one of its subsidiaries or have ceased to be outstanding; (D) such securities may be sold by the applicable Holder without registration pursuant to Rule 144 promulgated under the Securities Act (or any successor rule promulgated thereafter by the Commission) (but with no volume or other restrictions or limitations) and new certificates or book entry positions for such securities not bearing a legend restricting further transfer shall have been delivered by the Company; or (E) such securities have been sold in a private transaction in which the transferor’s rights under this Agreement have not been assigned to the transferee of such securities in accordance with Section 5.2.

 

Registration” shall mean a registration, including any related Shelf Takedown, effected by preparing and filing with the Commission a registration statement, prospectus or similar document in compliance with the requirements of the Securities Act, and the applicable rules and regulations promulgated thereunder, and such registration statement becoming effective under the Securities Act.

 

Registration Expenses” shall mean the out-of-pocket expenses of a Registration, including, without limitation, the following:

 

(A)       all registration and filing fees (including fees with respect to filings required to be made with the Financial Industry Regulatory Authority, Inc.) and any securities exchange on which the Common Stock is then listed;

 

(B)       fees and expenses of compliance with securities or blue sky laws (including reasonable fees and disbursements of counsel for the Underwriters in connection with blue sky qualifications of Registrable Securities);

 

(C)       printing, messenger, telephone and delivery expenses;

 

(D)       reasonable fees and disbursements of counsel for the Company;

 

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(E)       reasonable fees and disbursements of all independent registered public accountants of the Company incurred specifically in connection with such Registration; and

 

(F)       reasonable and documented fees and expenses of one (1) legal counsel selected by the majority-in-interest of the Demanding Holders in a Shelf Registration (including any Subsequent Shelf Registration), an Underwritten Offering or a Shelf Takedown, as the case may be.

 

Registration Statement” shall mean any registration statement that covers the Registrable Securities pursuant to the provisions of this Agreement, including the Prospectus included in such registration statement, amendments (including post-effective amendments) and supplements to such registration statement, and all exhibits to and all material incorporated by reference in such registration statement.

 

Requesting Holder” shall have the meaning given in Section 2.1.5

 

Securities Act” shall mean the Securities Act of 1933, as amended from time to time.

 

Shelf” shall mean the Form S-1 Shelf, the Form S-3 Shelf or any Subsequent Shelf Registration, as the case may be.

 

Shelf Registration” shall mean a registration of securities pursuant to a registration statement filed with the Commission in accordance with and pursuant to Rule 415 promulgated under the Securities Act (or any successor rule then in effect).

 

Shelf Takedown” shall mean an Underwritten Shelf Takedown or any proposed transfer or sale using a Shelf Registration, including a Piggyback Registration.

 

Subsequent Shelf Registration” shall have the meaning given in Section 2.1.2.

 

Trading Day” means a day on which the Nasdaq Capital Market, or if the Common Stock is not listed on the Nasdaq Capital Market, on which the principal U.S. national or regional securities exchange or quotation system on which the Common Stock is then listed or quoted is open for the transaction of business, or, if such Common Stock is not listed or admitted to trading on any U.S. national or regional securities exchange, a day on which banking institutions in New York City generally are open.

 

Underwriter” shall mean a securities dealer who purchases any Registrable Securities as principal in an Underwritten Offering and not as part of such dealer’s market-making activities.

 

Underwritten Offering” shall mean a Registration in which securities of the Company are sold to an Underwriter in a firm commitment underwriting for distribution to the public.

 

Underwritten Shelf Takedown” shall have the meaning given in Section 2.1.4.

 

Warrant” shall have the meaning given in the Recitals hereto.

 

Warrant Shares” shall have the meaning given in the Recitals hereto.

 

Withdrawal Notice” shall have the meaning given in Section 2.1.6.

 

ARTICLE II

REGISTRATIONS

 

2.1 Shelf Registration.

 

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2.1.1 Filing. The Company shall use commercially reasonable efforts to file with the Commission as soon as reasonably practicable and in no event later than seventy-five (75) days after the Closing Date (the “Filing Deadline”), a Registration Statement for a Shelf Registration on Form S-3 (the “Form S-3 Shelf”) or, if the Company is then ineligible to use a Form S-3 Shelf, a Registration Statement for a Shelf Registration on Form S-1 (the “Form S-1 Shelf”), in each case, covering the resale by the Holders of all the Registrable Securities (determined as of two (2) business days prior to such filing) on a delayed or continuous basis and shall use commercially reasonable efforts to cause such Registration Statement to be declared effective under the Securities Act as promptly as reasonably practicable after the initial filing thereof and in no event later than forty-five (45) days following the initial filing of the Registration Statement (the “Effectiveness Deadline”); provided, that the Effectiveness Deadline shall be extended to seventy-five (75) days after the initial filing of the Registration Statement if the Registration Statement is reviewed by the staff of the Commission. Such Shelf shall provide for the resale of the Registrable Securities included therein pursuant to any method or combination of methods legally available to, and requested by, any Holder named therein. The Company shall maintain such Shelf (or a replacement Shelf) in accordance with the terms hereof, and shall prepare and file with the Commission such amendments, including post-effective amendments, and supplements as may be necessary to keep such Shelf (or a replacement Shelf) continuously effective, available for use by the Holders of the Registrable Securities and in compliance with the provisions of the Securities Act until the earlier of the fifth anniversary of the effective date of the Initial Registration Statement or such time as there are no longer any Registrable Securities. In the event the Company files a Form S-1 Shelf, the Company shall use its commercially reasonable efforts to convert the Form S-1 Shelf (and any Subsequent Shelf Registration) on Form S-1 to a Form S-3 Shelf as soon as practicable after the Company is eligible to use Form S-3.

 

2.1.2 Subsequent Shelf Registration. If any Shelf ceases to be effective under the Securities Act prior to the fifth anniversary of the effective date of the Initial Registration Statement for any reason at any time while Registrable Securities are still outstanding, the Company shall, subject to Section 3.4, use its commercially reasonable efforts to as promptly as is reasonably practicable, (i) cause such Shelf to again become effective under the Securities Act (including obtaining the prompt withdrawal of any order suspending the effectiveness of such Shelf), and use its commercially reasonable efforts to, as promptly as is reasonably practicable, amend such Shelf in a manner reasonably expected to result in the withdrawal of any order suspending the effectiveness of such Shelf or (ii) file an additional registration statement as a replacement Shelf Registration (a “Subsequent Shelf Registration”) registering the resale of all Registrable Securities still outstanding (determined as of two (2) business days prior to such filing), and pursuant to any method or combination of methods legally available to, and requested by, any Holder named therein. If a Subsequent Shelf Registration is filed, the Company shall use its commercially reasonable efforts to (i) cause such Subsequent Shelf Registration to become effective under the Securities Act as promptly as is reasonably practicable after the filing thereof (it being agreed that the Subsequent Shelf Registration shall be an automatic shelf registration statement (as defined in Rule 405 promulgated under the Securities Act) if the Company is a well-known seasoned issuer (as defined in Rule 405 promulgated under the Securities Act) at the most recent applicable eligibility determination date) and (ii) keep such Subsequent Shelf Registration continuously effective, available for use by the Holders of the Registrable Securities and in compliance with the provisions of the Securities Act until the earlier of (x) the later of the fifth anniversary of the effective date of the Initial Registration Statement and one year after the effective date of such Subsequent Shelf Registration and (y) such time as there are no longer any Registrable Securities. Any such Subsequent Shelf Registration shall be on Form S-3 to the extent that the Company is eligible to use such form. Otherwise, such Subsequent Shelf Registration shall be on another appropriate form. 

 

2.1.3 Additional Registrable Securities. In the event that, after the effective date of the Initial Registration Statement, any Holder holds Registrable Securities that have not been registered for resale on a delayed or continuous basis, the Company, upon the written request of Demanding Holders representing at least a majority-in-interest of the then outstanding Registrable Securities, shall promptly use its commercially reasonable efforts to cause the resale of such Registrable Securities to be covered by either, at the Company’s option, the Shelf (including by means of a post-effective amendment) or a Subsequent Shelf Registration and use commercially reasonable efforts to cause the same to become effective as soon as practicable after such filing and such Shelf or Subsequent Shelf Registration shall be subject to the terms hereof.

 

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2.1.4 Requests for Underwritten Shelf Takedowns. At any time and from time to time when an effective Shelf is on file with the Commission, Demanding Holders representing at least a majority-in-interest of the then outstanding Registrable Securities may request to sell all or any portion of their Registrable Securities in an Underwritten Offering that is registered pursuant to the Shelf, including a Block Trade (each, an “Underwritten Shelf Takedown”); provided that the Company shall only be obligated to effect an Underwritten Shelf Takedown if the aggregate gross proceeds from such Underwritten Shelf Takedown are reasonably expected to exceed, in the aggregate, $35 million (the “Minimum Takedown Threshold”). All requests for Underwritten Shelf Takedowns shall be made by giving written notice to the Company, which shall specify the approximate number of Registrable Securities proposed to be sold in the Underwritten Shelf Takedown. The Demanding Holders shall have the right to select the Underwriters for such Underwritten Shelf Takedown (which shall consist of one or more reputable nationally recognized investment banks that are reasonably acceptable to the Company). Notwithstanding anything to the contrary in this Agreement, the Company may effect any such Underwritten Shelf Takedown pursuant to any then effective Registration Statement, including a Form S-3, that is then available for such offering. The Company shall enter into an underwriting agreement in a form as is customary in Underwritten Offerings with the managing Underwriter or Underwriters and shall take all such other reasonable actions as are requested by the managing Underwriter or Underwriters in order to expedite or facilitate the disposition of such Registrable Securities. In connection with any Underwritten Shelf Takedown contemplated by this Section 2.1.4, the underwriting agreement into which each Demanding Holder, the Company and the managing Underwriter or Underwriters shall enter shall contain such representations, covenants, indemnities and other rights and obligations of the Company and the selling stockholders as are customary in underwritten offerings of securities. The Company may elect to include primary shares of Common Stock in any Underwritten Shelf Takedown undertaken pursuant to this Section 2.1.4, subject to any reductions required by Section 2.1.5 below.

 

2.1.5 Reduction of Underwritten Offering. If the managing Underwriter or Underwriters in an Underwritten Shelf Takedown, in good faith, advises the Company, the Demanding Holders and any Holders requesting piggy back rights pursuant to this Agreement with respect to such Underwritten Shelf Takedown (the “Requesting Holders”) (if any) in writing that the dollar amount or number of Registrable Securities that the Demanding Holders and the Requesting Holders (if any) desire to sell, taken together with all other Common Stock or other securities that the Company desires to sell and the Common Stock or other securities, if any, that have been requested to be sold in such Underwritten Shelf Takedown pursuant to separate written contractual piggy-back registration rights held by other securityholders of the Company, exceeds the maximum dollar amount or maximum number of securities that can be sold in the Underwritten Shelf Takedown without adversely affecting the proposed offering price, the timing, the distribution method, or the probability of success of such offering (such maximum dollar amount or maximum number of such securities, as applicable, the “Maximum Number of Securities”), then the Company shall include in such Underwritten Shelf Takedown, as follows: (i) first, the Registrable Securities of the Demanding Holders and the Requesting Holders (if any) (pro rata based on the respective number of Registrable Securities that each Demanding Holder and Requesting Holder (if any) has requested be included in such Underwritten Shelf Takedown as compared to the aggregate number of Registrable Securities that the Demanding Holders and Requesting Holders have requested be included in such Underwritten Shelf Takedown (such proportion is referred to herein as “Pro Rata”)) that can be sold without exceeding the Maximum Number of Securities; (ii) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (i), the Common Stock or other securities that the Company desires to sell, which can be sold without exceeding the Maximum Number of Securities; and (iii) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (i) and (ii), the Common Stock or other securities held by other persons or entities that the Company is obligated to offer in an Underwritten Offering pursuant to separate written contractual arrangements with such persons or entities and that can be sold without exceeding the Maximum Number of Securities.

 

2.1.6  Withdrawal. Prior to the execution of the underwriting agreement with respect to an Underwritten Shelf Takedown, a majority-in-interest of the Demanding Holders initiating such Underwritten Shelf Takedown shall have the right to irrevocably withdraw from such Underwritten Shelf Takedown for any or no reason whatsoever upon written notification (a “Withdrawal Notice”) to the Company and the managing Underwriter or Underwriters (if any) of their intention to withdraw from such Underwritten Shelf Takedown, and such Underwritten Shelf Takedown shall not be counted as a demand for an Underwritten Shelf Takedown under Section 2.1.4 hereof; provided that the Requesting Holders may elect to have the Company continue an Underwritten Shelf Takedown if the Minimum Takedown Threshold would still be satisfied by the Registrable Securities proposed to be sold in the Underwritten Shelf Takedown by the Requesting Holders or any of their respective Permitted Transferees, as applicable. Following the receipt of any Withdrawal Notice, the Company shall promptly forward such Withdrawal Notice to any other Holders that had elected to participate in such Shelf Takedown. Notwithstanding anything to the contrary in this Agreement, the Company shall be responsible for the Registration Expenses incurred in connection with a Shelf Takedown prior to its withdrawal under this Section 2.1.6.

 

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2.2 Piggyback Registration.

 

2.2.1 Piggyback Rights. If the Company or any Holder who has the right to demand a Shelf Takedown pursuant to the terms of this Agreement proposes to conduct a Shelf Takedown of, or if the Company proposes to file a Registration Statement under the Securities Act with respect to the Registration of, equity securities (including securities or other obligations exercisable or exchangeable for, or convertible into, equity securities) in each case to be sold in an Underwritten Offering for the Company’s or such Holder’s own account or for the account of other persons or entities (or by the Company and such Holders and by such other persons or entities, including, without limitation, an Underwritten Shelf Takedown pursuant to Section 2.1 hereof), other than a Registration Statement (or any Shelf Takedown with respect thereto) (i) filed in connection with any employee stock option or other benefit plan, (ii) for an exchange offer or offering of securities solely to the Company’s existing stockholders, (iii) for an offering of debt that is convertible into equity securities of the Company (iv) for a dividend reinvestment plan or (v) on Form S-4 (or any similar form that relates to a transaction subject to Rule 145 under the Securities Act or any successor rule thereto), then in the event any Registrable Securities are not then covered under an effective Registration Statement, the Company shall give written notice of such proposed offering to all of the Holders of Registrable Securities as soon as practicable but not less than ten (10) days before the anticipated filing date of such Registration Statement or the applicable “red herring” prospectus or prospectus supplement to be used for marketing such offering, which notice shall (A) describe the amount and type of securities to be included in such offering, the intended method(s) of distribution, and the name of the proposed managing Underwriter or Underwriters, if any, in such offering, and (B) offer to all of the Holders of Registrable Securities, to the extent permitted under the rules of the Commission, the opportunity to include in such offering such number of Registrable Securities as such Holders may request in writing within five (5) days after receipt of such written notice (such offering, a “Piggyback Registration”). Subject to Section 2.2.2, the Company shall, in good faith, cause the Registrable Securities that the Holders of Registrable Securities have requested to be included in such Piggyback Registration to be so included, to the extent permitted under the rules of the Commission, and, if applicable, shall use its commercially reasonable efforts to cause the managing Underwriter or Underwriters of such Piggyback Registration to permit the Registrable Securities so requested by the Holders pursuant to this Section 2.2.1 to be included in such Piggyback Registration on the same terms and conditions as any Common Stock to be sold by the Company included in such Piggyback Registration and to permit the sale or other disposition of such Registrable Securities in accordance with the intended method(s) of distribution thereof. The inclusion of any Holder’s Registrable Securities in a Piggyback Registration shall, to the extent applicable, be subject to such Holder’s agreement to enter into an underwriting agreement in customary form with the managing Underwriter(s) selected for such Underwritten Offering.

 

2.2.2 Reduction of Piggyback Registration. If the managing Underwriter or Underwriters in an Underwritten Offering that is to be a Piggyback Registration, in good faith, advises the Company and the Holders of Registrable Securities participating in the Piggyback Registration in writing that the dollar amount or number of the Common Stock or other equity securities that the Company desires to sell, taken together with (i) the Common Stock or other equity securities, if any, as to which Registration or a Shelf Takedown has been demanded pursuant to separate written contractual arrangements with persons or entities other than the Holders of Registrable Securities hereunder, (ii) the Registrable Securities as to which registration has been requested pursuant to Section 2.2 hereof, and (iii) the Common Stock or other equity securities, if any, as to which Registration or a Shelf Takedown has been requested pursuant to separate written contractual piggy-back registration rights of other stockholders of the Company, exceeds the Maximum Number of Securities, then:

 

(a) If the Registration or Shelf Takedown is undertaken at the Company’s initiative for the Company’s account, the Company shall include in any such Registration or Shelf Takedown (A) first, the Common Stock or other equity securities that the Company desires to sell, which can be sold without exceeding the Maximum Number of Securities; (B) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (A), the Registrable Securities of Holders exercising their rights to register their Registrable Securities pursuant to Section 2.2.1 hereof, Pro Rata, which can be sold without exceeding the Maximum Number of Securities; and (C) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (A) and (B), the Common Stock or other equity securities, if any, as to which Registration or a Shelf Takedown has been requested pursuant to written contractual piggy-back registration rights of other persons or entities, which can be sold without exceeding the Maximum Number of Securities;

 

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(b) If the Registration or Shelf Takedown is pursuant to a request by persons or entities other than the Holders of Registrable Securities, then the Company shall include in any such Registration or Shelf Takedown (A) first, the Common Stock or other equity securities, if any, of such requesting persons or entities, other than the Holders of Registrable Securities, which can be sold without exceeding the Maximum Number of Securities; (B) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (A), the Registrable Securities of Holders exercising their rights to register their Registrable Securities pursuant to Section 2.2.1, pro rata based on the respective number of Registrable Securities that each Holder has requested be included in such Underwritten Offering as compared to the aggregate number of Registrable Securities that the Holders have requested to be included in such Underwritten Offering which can be sold without exceeding the Maximum Number of Securities; (C) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (A) and (B), the Common Stock or other equity securities that the Company desires to sell which can be sold without exceeding the Maximum Number of Securities; and (D) fourth, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (A), (B) and (C), the Common Stock or other equity securities for the account of other persons or entities that the Company is obligated to register pursuant to separate written contractual arrangements with such persons or entities which can be sold without exceeding the Maximum Number of Securities. 

 

(c) If the Registration or Shelf Takedown is pursuant to a request by Holder(s) of Registrable Securities pursuant to Section 2.1 hereof, then the Company shall include in any such Registration or Shelf Takedown securities in accordance with Section 2.1.5.

 

(d) Notwithstanding the foregoing, if the Registrable Securities requested to be included in a Registration or Shelf Takedown by any Holder pursuant to Section 2.2.1 differ from the type of equity securities proposed to be registered by the Company and the managing Underwriter for the related underwritten offering advises the Company in writing that due to such differences the inclusion of such Registrable Securities would cause a material adverse effect on the price or success of the offering (an “Adverse Effect”), and the Company notifies such Holder in writing of such advice, then (A) the number of such Holder’s or Holders’ Registrable Securities to be included in the Registration or Shelf Takedown shall be reduced to an amount which, in the judgment of such managing Underwriter, would eliminate such Adverse Effect or (B) if no such reduction would, in the judgment of such managing Underwriter, eliminate such Adverse Effect, then the Company shall have the right to exclude all such Registrable Securities from such Registration or Shelf Takedown; provided, however, that, in the case of this clause (B), no other securities that are the same as, or similar to, the Registrable Securities that had been requested to be included in a Registration or Shelf Takedown by any Holder pursuant to Section 2.2.1 shall be included and offered for the account of any other Person (other than the Company) in such Registration or Shelf Takedown. Any partial reduction in the number of Registrable Securities to be included in the Registration or Shelf Takedown pursuant to clause (A) of the immediately preceding sentence shall be effected on a pro rata basis among each of the Holders requesting inclusion of Registrable Securities in such Registration or Shelf Takedown and each of the other holders of securities of the Company that are requesting inclusion of securities of the Company in such Registration or Shelf Takedown that are the same as, or similar to, the Registrable Securities that had been requested to be included by Holders, based on the ratio that the number of Registrable Securities or other securities of the Company that each such Holder or each such other holder requested to be included bears to the total number of Registrable Securities and other securities of the Company that all Holders and such other holders requested to be included.

 

2.2.3 Piggyback Registration Withdrawal. Any Holder of Registrable Securities (other than a Demanding Holder) shall have the right to withdraw from a Piggyback Registration for any or no reason whatsoever upon written notification to the Company and the Underwriter or Underwriters (if any) of his, her or its intention to withdraw from such Piggyback Registration prior to the effectiveness of the Registration Statement filed with the Commission with respect to such Piggyback Registration or, in the case of a Piggyback Registration pursuant to a Shelf Registration, the filing of the applicable “red herring” prospectus or prospectus supplement with respect to such Piggyback Registration used for marketing such transaction. The Company (whether on its own good faith determination or as the result of a request for withdrawal by persons pursuant to separate written contractual obligations) may withdraw a Registration Statement filed with the Commission in connection with a Piggyback Registration (which, in no circumstance, shall include the Shelf) at any time prior to the effectiveness of such Registration Statement. Notwithstanding anything to the contrary in this Agreement, the Company shall be responsible for the Registration Expenses incurred in connection with the Piggyback Registration prior to its withdrawal under this Section 2.2.3.

 

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2.3 Restrictions on Registration Rights. If during the period starting with the date forty-five (45) days prior to the Company’s good faith estimate of the date of the filing of, and ending on a date one hundred and twenty (120) days after the effective date of, a Company initiated Registration, the Demanding Holders request an Underwritten Shelf Takedown and provided that the Company continues to actively employ, in good faith, all reasonable efforts to cause the applicable Registration Statement for such Company initiated Registration to be filed and to become effective (A)  the Company and the Holders are unable to obtain the commitment of underwriters to firmly underwrite the Underwritten Shelf Takedown requested by the Demanding Holders; and/or (B) in the good faith judgment of the Board such Registration or Underwritten Shelf Takedown would be seriously detrimental to the Company and the Board concludes as a result of any of the foregoing that it is essential to defer the filing of such Registration Statement or such Underwritten Shelf Takedown at such time, then in each case the Company shall furnish to such Holders a certificate signed by the Chairman of the Board confirming the existence of one or more of the conditions described in clauses (A) and/or (B) above and that in the good faith judgment of the Board it would be seriously detrimental to the Company for such Registration Statement to be filed or such Underwritten Shelf Takedown to be conducted, as the case may be, in the near future and that it is therefore essential to defer such Underwritten Shelf Takedown or the filing of such Registration Statement, as the case may be. In such event, the Company shall have the right to defer such Underwritten Shelf Takedown or such filing for a period of not more than sixty (60) days; providedhowever, that the Company shall not defer its obligation in this manner more than once in any 12-month period.

 

2.4. Block Trades. Notwithstanding any other provision of Article II, but subject to Section 2.3, if the Demanding Holders desire to effect a Block Trade at a time when a Shelf Registration is effective and available, the Demanding Holders shall provide written notice to the Company at least five (5) business days prior to the date such Block Trade will commence. As promptly as reasonably practicable, the Company shall use its commercially reasonable efforts to facilitate such Block Trade, in the event the total offering price associated with such Block Trade is expected to exceed $25,000,000. The Demanding Holders shall use commercially reasonable efforts to work with the Company and the applicable Underwriter(s) (including by disclosing the maximum number of Registrable Securities proposed to be the subject of such Block Trade) in order to facilitate preparation of the Prospectus and other offering documentation related to the Block Trade and any related due diligence and comfort procedures.

 

2.5. Liquidated Damages. If (i) the initial Registration Statement required to be filed pursuant to Section 2.1.1 (the “Initial Registration Statement”) is not filed on or prior to the Filing Deadline (if the Company files the Initial Registration Statement without affording the Holders the opportunity to review and comment on the same as required by Section 3.1 herein, the Company shall be deemed to have not satisfied this clause (i) unless the Holders are given a reasonable opportunity to review and comment prior to the Initial Registration Statement becoming effective), (ii) a Registration Statement registering for resale all of the Registrable Securities is not declared effective by the Commission by the Effectiveness Deadline, or (iii) during the period commencing on the effective date of the Initial Registration Statement and ending on the earlier of the date when there are no Registrable Securities or the fifth anniversary of the effective date of the Initial Registration Statement, a Registration Statement is not continuously effective as to all Registrable Securities included in such Registration Statement, or a Holder is otherwise not permitted (except as a result of Section 2.1.5 or Section 2.2.2 above) to utilize the Prospectus therein to resell such Registrable Securities, for more than ten (10) consecutive calendar days or more than an aggregate of fifteen (15) calendar days (which need not be consecutive calendar days) during any 12-month period (any such failure or breach being referred to as a “Registration Default”, and for purposes of clauses (i) and (ii), the date on which such Registration Default occurs, and for purpose of clause (iii) the date on which such ten (10) or fifteen (15) calendar day period, as applicable, is exceeded being referred to as a “Registration Default Date”), then, in addition to any other rights such Holder may have hereunder or under applicable law, (x) on the first such Registration Default Date, the Company shall pay to such Holder an amount in cash, as partial liquidated damages and not as a penalty, equal to 1.0% of the Fair Market Value (calculated as of the first Registration Default Date) of the Registrable Securities held by such Holder as of such Registration Default Date, and (y) on each monthly anniversary of such Registration Default Date (if all applicable Registration Defaults shall not have been cured by such date) until all applicable Registration Defaults have been cured, the Company shall pay to such Holder an amount in cash, as partial liquidated damages and not as a penalty, equal to 1.0% of the Fair Market Value (calculated as of the first Registration Default Date) of the Registrable Securities held by such Holder on the first Registration Default Date. The parties agree that the maximum aggregate liquidated damages payable to any Holder under this Agreement with respect to all Registration Defaults shall be 10.0% of the Fair Market Value (calculated as of the first Registration Default Date) of the Registrable Securities held by such Holder on the first Registration Default Date). If the Company fails to pay any partial liquidated damages pursuant to this Section 2.5 in full within ten (10) days after the date payable, the Company will pay interest thereon at a rate of 18% per annum (or such lesser maximum amount that is permitted to be paid by applicable law) to the Holder, accruing daily from the date such partial liquidated damages are due until such amounts, plus all such interest thereon, are paid in full. The partial liquidated damages pursuant to the terms hereof shall apply on a daily pro rata basis for any portion of a month prior to the cure of a Registration Default.

 

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2.6 Other Securities in Registration Statements. Nothing herein shall prohibit the Company from registering any other securities of the Company in any Form S-3 Shelf or Form S-1 Shelf required to be filed herein, and/or any other Registration Statement required to be filed hereunder, except to the extent explicitly provided for herein.

 

2.7 Provision of Information. The Company’s obligations to include any Holder’s Registrable Securities in any Registration Statement shall be subject to such Holder’s timely compliance with the requirements of Sections 5.8 and 4.1.2 hereof. 

 

ARTICLE III

COMPANY PROCEDURES; HOLDER REQUIREMENTS

 

3.1 General Procedures. In connection with any Shelf and/or Shelf Takedown, the Company shall use its commercially reasonable efforts to effect such Registration to permit the sale of such Registrable Securities in accordance with the intended plan of distribution thereof, and pursuant thereto the Company shall, as promptly as reasonably practicable:

 

3.1.1 prepare and file with the Commission as soon as practicable a Registration Statement with respect to such Registrable Securities and use its commercially reasonable efforts to cause such Registration Statement to become effective and remain effective until all Registrable Securities covered by such Registration Statement have been sold;

 

3.1.2 prepare and file with the Commission such amendments and post-effective amendments to the Registration Statement, and such supplements to the Prospectus, as may be reasonably requested by any Holder or any Underwriter of Registrable Securities or as may be required by the rules, regulations or instructions applicable to the registration form used by the Company or by the Securities Act or rules and regulations thereunder to keep the Registration Statement effective until all Registrable Securities covered by such Registration Statement are sold in accordance with the intended plan of distribution set forth in such Registration Statement or supplement to the Prospectus;

 

3.1.3 prior to filing a Registration Statement or Prospectus, or any amendment or supplement thereto, furnish without charge to the Underwriters, if any, and each Holder of Registrable Securities included in such Registration, and each such Holder’s legal counsel, copies of such Registration Statement as proposed to be filed, each amendment and supplement to such Registration Statement (in each case including all exhibits thereto and documents incorporated by reference therein), the Prospectus included in such Registration Statement (including each preliminary Prospectus), and such other documents as the Underwriters and each Holder of Registrable Securities included in such Registration or the legal counsel for any such Holders may request in order to facilitate the disposition of the Registrable Securities owned by such Holders;

 

3.1.4 prior to any public offering of Registrable Securities, use its commercially reasonable efforts to (i) register or qualify the Registrable Securities covered by the Registration Statement under such securities or “blue sky” laws of such jurisdictions in the United States as any Holder of Registrable Securities included in such Registration Statement (in light of their intended plan of distribution) may request (or provide evidence satisfactory to such Holders that the Registrable Securities are exempt from such registration or qualification) and (ii) take such action necessary to cause such Registrable Securities covered by the Registration Statement to be registered with or approved by such other governmental authorities as may be reasonably necessary by virtue of the business and operations of the Company and do any and all other acts and things that may be reasonably necessary or advisable to enable the Holders of Registrable Securities included in such Registration Statement to consummate the disposition of such Registrable Securities in such jurisdictions; providedhowever, that the Company shall not be required to qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify or take any action to which it would be subject to general service of process or taxation in any such jurisdiction where it is not then otherwise so subject;

 

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3.1.5 cause all such Registrable Securities to be listed on each securities exchange or automated quotation system on which similar securities issued by the Company are then listed;

 

3.1.6 provide a transfer agent and registrar for all such Registrable Securities no later than the effective date of such Registration Statement;

 

3.1.7 advise each seller of such Registrable Securities, promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order by the Commission suspending the effectiveness of such Registration Statement or the initiation or threatening of any proceeding for such purpose and promptly use its commercially reasonable efforts to prevent the issuance of any stop order or to obtain its withdrawal if such stop order should be issued;

 

3.1.8 at least three (3) business days prior to the filing of any Registration Statement or Prospectus or any amendment or supplement to such Registration Statement or Prospectus or any document that is to be incorporated by reference into such Registration Statement or Prospectus (excluding any exhibits thereto and any filing made under the Exchange Act that is to be incorporated by reference therein), furnish a copy thereof to each Holder of Registrable Securities included in such Registration Statement or Prospectus and its counsel, including, without limitation, providing copies promptly upon receipt of any comment letters received with respect to any such Registration Statement or Prospectus; 

 

3.1.9 notify the Holders of Registrable Securities included in a Registration Statement at any time when a Prospectus relating to such Registration Statement is required to be delivered under the Securities Act, of the happening of any event as a result of which the Prospectus included in such Registration Statement, as then in effect, includes a Misstatement, and then to correct such Misstatement as set forth in Section 3.4 hereof;

 

3.1.10 permit a representative of the Holders of Registrable Securities included in a Registration Statement, the Underwriters, if any, and any attorney or accountant retained by any such party, if any, to participate, at each such person’s own expense, in the preparation of the Registration Statement, and cause the Company’s officers, directors and employees to supply all information reasonably requested by any such representatives, the Underwriters, attorney or accountant in connection with the Registration; providedhowever, that such representatives or the Underwriters enter into a confidentiality agreement, in form and substance reasonably satisfactory to the Company, prior to the release or disclosure of any such information; and provided further, the Company may not include the name of any Holder or Underwriter or any information regarding any Holder or Underwriter in any Registration Statement or Prospectus, any amendment or supplement to such Registration Statement or Prospectus, any document that is to be incorporated by reference into such Registration Statement or Prospectus, or any response to any comment letter, without the prior written consent (which shall not be unreasonably withheld or delayed) of such Holder or Underwriter and providing each such Holder or Underwriter a reasonable amount of time to review and comment on such applicable document, which comments the Company shall include unless contrary to applicable law;

 

3.1.11 use commercially reasonable efforts to obtain, upon request, a “cold comfort” letter from the Company’s independent registered public accountants in the event of an Underwritten Offering, in customary form and covering such matters of the type customarily covered by “cold comfort” letters as the managing Underwriter may reasonably request;

 

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3.1.12 on the date the Registrable Securities are delivered for sale pursuant to such Registration, obtain an opinion, dated such date, of counsel representing the Company for the purposes of such Registration, addressed to the Holders of Registrable Securities included in a Registration Statement, the placement agent or sales agent, if any, and the Underwriters, if any, covering such legal matters with respect to the Registration and sale in respect of which such opinion is being given as such Holders, the placement agent, the sales agent, or the Underwriter(s) may reasonably request and as are customarily included in such opinions and negative assurance letters, and reasonably satisfactory to a majority-in-interest of the participating Holders;

 

3.1.13 in the event of any Underwritten Offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing Underwriter of such offering;

 

3.1.14 make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve (12) months beginning with the first day of the Company’s first full calendar quarter after the effective date of the Registration Statement which satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or any successor rule promulgated thereafter by the Commission);

 

3.1.15 with respect to an Underwritten Shelf Takedown pursuant to Section 2.1.4 and subject to the conditions set forth therein, use its commercially reasonable efforts to make available senior executives of the Company to participate in customary “road show” presentations that may be reasonably requested by the managing Underwriter in such Underwritten Offering; and

 

3.1.16 otherwise, in good faith, cooperate reasonably with, and take such customary actions as may reasonably be requested by the Holders, in connection with such Registration.

 

3.2 Registration Expenses. The Registration Expenses of all Registrations shall be borne by the Company. It is acknowledged by the Holders that subject to this Section 3.2, the Holders shall bear all incremental selling expenses relating to the sale of Registrable Securities, such as Underwriters’ commissions and discounts, brokerage fees and Underwriter marketing costs.

 

3.3 Requirements for Participation in Underwritten Offerings. Notwithstanding anything in this Agreement to the contrary, if any Holder does not provide the Company with its requested Holder Information, the Company may exclude such Holder’s Registrable Securities from the applicable Registration Statement or Prospectus if the Company determines, based on the advice of counsel, that such information is necessary to effect the Registration and such Holder continues thereafter to withhold such information. No person may participate in any Underwritten Offering for equity securities of the Company pursuant to a Registration initiated by the Company or the Demanding Holders hereunder unless such person (i) agrees to sell such person’s securities on the basis provided in any underwriting arrangements approved by the Company or the Demanding Holders, as applicable, and (ii) completes and executes all customary questionnaires, powers of attorney, indemnities, lock-up agreements, underwriting agreements and other customary documents as may be reasonably required under the terms of such underwriting arrangements. The exclusion of a Holder’s Registrable Securities as a result of this Section 3.3 shall not affect the Registration of the other Registrable Securities to be included in such Registration.

 

3.4 Suspension of Sales; Adverse Disclosure. Upon receipt of written notice from the Company that a Registration Statement or Prospectus contains a Misstatement or that the Registration Statement or Prospectus can no longer be relied upon or used, each of the Holders shall forthwith discontinue disposition of Registrable Securities until it has received copies of a supplemented or amended Prospectus correcting the Misstatement (it being understood that the Company hereby covenants to prepare and file such supplement or amendment as soon as reasonably practicable after the time of such notice), or until it is advised in writing by the Company that the use of the Prospectus may be resumed. If the filing, initial effectiveness or continued use of a Registration Statement in respect of any Registration at any time would require the Company to make an Adverse Disclosure or would, under the Commission’s rules and regulations, require the inclusion in such Registration Statement of financial statements that are unavailable to the Company for reasons beyond the Company’s reasonable control, the Company may, upon giving prompt written notice of such action to the Holders, delay the filing or initial effectiveness of, or suspend use of, such Registration Statement, provided, however, that the Company may not delay the filing or initial effectiveness of, or suspend use of, such Registration Statement on more than one occasion or for more than thirty (30) consecutive calendar days, or more than sixty (60) total calendar days in each case during any twelve-month period. In the event the Company exercises its rights under the preceding sentence, the Holders agree to suspend, immediately upon their receipt of the notice referred to above, their use of the Prospectus relating to any Registration in connection with any sale or offer to sell Registrable Securities. The Company shall immediately notify the Holders of the expiration of any period during which it exercised its rights under this Section 3.4.

 

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3.5 Reporting Obligations. As long as any Holder shall own Registrable Securities, the Company, at all times while it shall be a reporting company under the Exchange Act, covenants to file timely (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to Sections 13(a) or 15(d) of the Exchange Act and to promptly furnish the Holders with true and complete copies of all such filings; provided that any documents publicly filed or furnished with the Commission pursuant to the Electronic Data Gathering, Analysis and Retrieval (EDGAR) System shall be deemed to have been furnished or delivered to the Holders pursuant to this Section 3.5. The Company further covenants that it shall take such further action as any Holder may reasonably request, all to the extent required from time to time to enable such Holder to sell shares of the Common Stock held by such Holder without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 promulgated under the Securities Act (or any successor rule promulgated thereafter by the Commission), including providing any customary legal opinions in connection with any such sale pursuant to such exemptions. Upon the request of any Holder, the Company shall deliver to such Holder a written certification of a duly authorized officer as to whether it has complied with such requirements.

 

3.6 Obligations of the Holders. Each of the Holders agrees to sell all Registrable Securities registered under any Registration Statement and sold in connection therewith, in compliance with the plan of distribution set forth in such Registration Statement and any and all applicable prospectus delivery requirements under applicable securities laws.

 

 

ARTICLE IV

INDEMNIFICATION AND CONTRIBUTION

 

4.1 Indemnification.

 

4.1.1 The Company agrees to indemnify, to the extent permitted by law, each Holder of Registrable Securities, its officers and directors and agents and each person who controls such Holder (within the meaning of the Securities Act) against all losses, claims, damages, liabilities and expenses (including attorneys’ fees) caused by any untrue or alleged untrue statement of material fact contained or incorporated by reference in any Registration Statement, Prospectus or preliminary Prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as the same are caused by or contained or incorporated by reference in any information furnished in writing to the Company by such Holder expressly for use therein. The Company shall indemnify the Underwriters, their officers and directors and each person who controls such Underwriters (within the meaning of the Securities Act) to the same extent as provided in the foregoing with respect to the indemnification of the Holder.

 

4.1.2 In connection with any Registration Statement in which a Holder of Registrable Securities is participating, such Holder shall furnish to the Company in writing such information as the Company reasonably requests for use in connection with any such Registration Statement or Prospectus (the “Holder Information”) and, to the extent permitted by law, shall indemnify the Company, its directors and officers and agents and each person who controls the Company (within the meaning of the Securities Act) against any losses, claims, damages, liabilities and expenses (including without limitation reasonable attorneys’ fees) resulting from any untrue statement of material fact contained or incorporated by reference in the Registration Statement, Prospectus or preliminary Prospectus or any amendment thereof or supplement thereto or any omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that such untrue statement or omission is contained in any information so furnished in writing by such Holder expressly for use therein; providedhowever, that the obligation to indemnify shall be several, not joint and several, among such Holders of Registrable Securities, and the liability of each such Holder of Registrable Securities shall be limited to the net proceeds received by such Holder from the sale of Registrable Securities pursuant to such Registration Statement. The Holders of Registrable Securities shall indemnify the Underwriters, their officers, directors and each person who controls such Underwriters (within the meaning of the Securities Act) to the same extent as provided in the foregoing with respect to indemnification of the Company. 

 

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4.1.3 Any person entitled to indemnification herein shall (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give prompt notice shall not impair any person’s right to indemnification hereunder to the extent such failure has not materially prejudiced the indemnifying party) and (ii) unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the indemnifying party shall not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent shall not be unreasonably withheld). An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel (plus local counsel) for all parties indemnified by such indemnifying party with respect to such claim, unless, in the reasonable judgment of any indemnified party, a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim. No indemnifying party shall, without the consent of the indemnified party, consent to the entry of any judgment or enter into any settlement (a) which cannot be settled in all respects by the payment of money (and such money is so paid by the indemnifying party pursuant to the terms of such settlement), (b) which settlement does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation or (c) which includes a statement as to, or an admission of, fault, culpability or a failure to act, by or on behalf of the indemnified party.

 

4.1.4 The indemnification provided for under this Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling person of such indemnified party and shall survive the transfer of securities. The Company and each Holder of Registrable Securities participating in an offering also agree to make such provisions as are reasonably requested by any indemnified party for contribution to such party in the event the Company’s or such Holder’s indemnification is unavailable for any reason.

 

4.1.5 If the indemnification provided under Section 4.1 hereof from the indemnifying party is unavailable or insufficient to hold harmless an indemnified party in respect of any losses, claims, damages, liabilities and expenses referred to herein, then the indemnifying party, in lieu of indemnifying the indemnified party, shall contribute to the amount paid or payable by the indemnified party as a result of such losses, claims, damages, liabilities and expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and the indemnified party, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and indemnified party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, was made by, or relates to information supplied by, such indemnifying party or indemnified party, and the indemnifying party’s and indemnified party’s relative intent, knowledge, access to information and opportunity to correct or prevent such action; providedhowever, that the liability of any Holder under this Section 4.1.5 shall be limited to the amount of the net proceeds received by such Holder in such offering giving rise to such liability. The amount paid or payable by a party as a result of the losses or other liabilities referred to above shall be deemed to include, subject to the limitations set forth in Sections 4.1.14.1.2 and 4.1.3 above, any legal or other fees, charges or expenses reasonably incurred by such party in connection with any investigation or proceeding. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 4.1.5 were determined by pro rata allocation or by any other method of allocation, which does not take account of the equitable considerations referred to in this Section 4.1.5. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution pursuant to this Section 4.1.5 from any person who was not guilty of such fraudulent misrepresentation. 

 

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ARTICLE V

MISCELLANEOUS

 

5.1 Notices. Any notice or communication under this Agreement must be in writing and given by (i) deposit in the United States mail, addressed to the party to be notified, postage prepaid and registered or certified with return receipt requested, (ii) delivery in person or by courier service providing evidence of delivery, (iii) transmission by hand delivery or (iv) transmission by electronic mail with receipt acknowledged. Each notice or communication that is mailed, delivered or transmitted in the manner described above shall be deemed sufficiently given, served, sent and received, in the case of mailed notices, on the fifth business day following the date on which it is mailed in the case of notices delivered by courier service or hand delivery, at such time as it is delivered to the addressee (with the affidavit of messenger) or at such time as delivery is refused by the addressee upon presentation, or, in the case of electronic mail, when receipt is acknowledged in writing by the recipient. Any notice or communication under this Agreement must be addressed, if to the Company, to: Vertex Energy, Inc., 1331 Gemini St., Suite 250, Houston, Texas 77058, Attention: Chief Financial Officer, and, if to any Holder, at such Holder’s address or contact information as set forth in the Company’s books and records. Any party may change its address for notice at any time and from time to time by written notice to the other parties hereto, and such change of address shall become effective thirty (30) days after delivery of such notice as provided in this Section 5.1.

 

5.2 Assignment; No Third Party Beneficiaries.

 

5.2.1 This Agreement and the rights, duties and obligations of the Company hereunder may not be assigned or delegated by the Company in whole or in part.

 

5.2.2 This Agreement and the provisions hereof shall be binding upon and shall inure to the benefit of each of the parties and its successors and the permitted assigns of the Holders, which shall include Permitted Transferees.

 

5.2.3 This Agreement shall not confer any rights or benefits on any persons that are not parties hereto, other than as expressly set forth in this Agreement and Section 5.2 hereof.

 

5.2.4 Notwithstanding the foregoing, no assignment by any Holder of such Holder’s rights, duties and obligations hereunder shall be effective and binding upon or obligate the Company unless and until the Company shall have received (i) written notice of such assignment as provided in Section 5.1 hereof and (ii) the written agreement of the assignee, in a form reasonably satisfactory to the Company, to be bound by the terms and provisions of this Agreement (which may be accomplished by an addendum or certificate of joinder to this Agreement). Any transfer or assignment made other than as provided in this Section 5.2 shall be null and void.

 

5.3 Counterparts. This Agreement may be executed in multiple counterparts (including facsimile or PDF counterparts), each of which shall be deemed an original, and all of which together shall constitute the same instrument, but only one of which need be produced.

 

5.4 Governing Law; Venue. THIS AGREEMENT SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTIONS) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTIONS OTHER THAN THE STATE OF NEW YORK. EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN, FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN, AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, THAT SUCH SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE OF SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER. EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF TO SUCH PARTY AT THE ADDRESS FOR SUCH NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

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5.5 Amendments and Modifications. Upon the written consent of (a) the Company, and (b) the Holders of at least sixty-six and two-thirds percent (66 2/3%) in interest of the Registrable Securities at the time in question, compliance with any of the provisions, covenants and conditions set forth in this Agreement may be waived, or any of such provisions, covenants or conditions may be amended or modified; providedhowever, that notwithstanding the foregoing, any amendment hereto or waiver hereof that adversely affects one Holder, solely in its capacity as a holder of Registrable Securities, in a manner that is materially different from the other Holders (in such capacity) shall require the consent of the Holder so affected. No course of dealing between any Holder or the Company and any other party hereto or any failure or delay on the part of a Holder or the Company in exercising any rights or remedies under this Agreement shall operate as a waiver of any rights or remedies of any Holder or the Company. No single or partial exercise of any rights or remedies under this Agreement by a party shall operate as a waiver or preclude the exercise of any other rights or remedies hereunder or thereunder by such party.

 

5.6 Other Registration Rights. The Company represents and warrants that no person other than Tensile Capital Partners Master Fund LP, which holds registration rights in connection with warrants to purchase 1,500,000 shares of Common Stock, has any right to require the Company to register any securities of the Company for sale or to include such securities of the Company in any Registration Statement filed by the Company for the sale of securities for its own account or for the account of any other person. Further, the Company represents and warrants that the rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to Tensile Capital Partners Master Fund LP or to the holders of any other outstanding securities issued by the Company under any agreement, including any registration rights agreement. The Company will not grant any person any registration rights with respect to the capital stock of the Company that are prior in right or in conflict or inconsistent with the rights of the Holders as set forth in Article II in any material respect (it being understood that this shall not preclude the grant of additional demand and piggyback registration rights in and of themselves so long as such rights are not prior in right to the rights under this Agreement). Nothing in this Section 5.6 will prohibit or restrict the Company’s ability to register the resale of any other securities on any of the Registration Statements.

 

5.7 Term. This Agreement shall terminate with respect to any Holder upon the date that such Holder no longer holds any Registrable Securities, provided that the provisions of Article IV shall survive any termination with respect to such Holder.

 

5.8 Holder Information. Each Holder agrees, if requested in writing, to represent to the Company the total number of Registrable Securities held by such Holder and such other information as may be reasonably requested by the Company or its counsel, in order for the Company to make determinations hereunder and to comply with the terms hereof. 

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed as of the date first written above.

 

  COMPANY:
   
  VERTEX ENERGY INC.
     
  By: /s/ Benjamin P. Cowart
    Name: Benjamin P. Cowart
    Title:   President and Chief Executive Officer

 

[Signature Page to Registration Rights Agreement]

  

 

 

 

  HOLDERS:
 

 

WHITEBOX MULTI-STRATEGY PARTNERS, LP

 

 

  By:   /s/ Lisa Conrad
    Name: Lisa Conrad
    Title:   General Counsel
 

 

WHITEBOX RELATIVE VALUE PARTNERS, LP

 

 

 
  By:   /s/ Lisa Conrad
    Name: Lisa Conrad
    Title:   General Counsel
 

 

WHITEBOX GT FUND, LP

 

 

 
  By:   /s/ Lisa Conrad
    Name: Lisa Conrad
    Title:   General Counsel
 

 

PANDORA SELECT PARTNERS, LP

 

 

 
  By:   /s/ Lisa Conrad
    Name: Lisa Conrad
    Title:   General Counsel
 

 

HIGHBRIDGE TACTICAL CREDIT MASTER FUND, L.P.

 

 

 
  By:   /s/ Jonathan Segal
    Name: Jonathan Segal
    Title:   Managing Director, Co-Chief Investment Officer
 

 

GLOBAL CREDIT OPPORTUNITIES II FUND A MASTER SCSP

 

 

 
  By:   /s/ Zach Viders
    Name: Zach Viders
    Title:   Managing Director
 

 

GCO II FUND B (INVESTMENT 2), L.P.

 

 

 
  By:   /s/ Zach Viders
    Name: Zach Viders
    Title:   Authorized Signatory

 

[Signature Page to Registration Rights Agreement]

 

 

 

 

 

BLACKROCK DIVERSIFIED PRIVATE DEBT FUND MASTER LP

 

 

 
  By:   /s/ Zach Viders
    Name: Zach Viders
    Title:   Authorized Signatory
 

 

CHAMBERS ENERGY CAPITAL IV, LP

 

 

 
  By:   /s/ Robert Hendricks
    Name: Robert Hendricks
    Title:   Partner
 

 

CROWDOUT CREDIT OPPORTUNITIES FUND LLC

 

 

 
  By:   /s/ Alexander Schoenbaum
    Name: Alexander Schoenbaum
    Title:   Managing Member
 

 

CROWDOUT CAPITAL LLC

 

 

 
  By:   /s/ Alexander Schoenbaum
    Name: Alexander Schoenbaum
    Title:   Managing Member

 

[Signature Page to Registration Rights Agreement]

 

 

 

 

Vertex Energy Inc. 8-K

Exhibit 10.11

 

 

daTED 1 april 2022

 

 

(1)VERTEX REFINING ALABAMA LLC
(2)Macquarie Energy North America Trading Inc.

ORIGINAL/COUNTERPART

INVENTORY SALES AGREEMENT

 

EXECUTION VERSION

 

 

CONTENTS

clause

1    DEFINITIONS 1
2    ASSIGNMENT AND CONVEYANCE 2
3    DETERMINATION OF INVENTORY 3
4    PAYMENT AND PRICING 3
5    MISCELLANEOUS 5

 

CONTENTS PAGE 2

 

 

 

 

THIS INVENTORY SALES AGREEMENT (this “Agreement”), is made and entered into as of 1 April 2022.

 

BETWEEN:

(1)Vertex Refining Alabama LLC (“Seller”); and
(2)Macquarie Energy North America Trading Inc. (“Buyer”),

each referred to individually as a “Party” and collectively, the “Parties”.

recitals

(A)WHEREAS, Seller owns and operates a crude oil refinery and related assets located in Mobile, Alabama (the “Refinery”) for the processing and refining of crude oil and other feedstocks and the recovery therefrom of refined products;
(B)WHEREAS, Seller and Buyer have entered into a Supply and Offtake Agreement, dated 1 April 2022 (the “S&O Agreement”), pursuant to which, among other things, it is contemplated that, the Buyer shall (a) on the Commencement Date, purchase from the Seller all Crude Oil and Products then being stored at the Included Storage Locations; (b) purchase from the Seller certain Products produced by the Refinery during the term of the S&O Agreement; (c) sell and deliver Crude Oil and Products to the Seller and certain Customers of the Company pursuant to the terms of the S&O Agreement; (d) provide certain other accommodations to the Seller based on Crude Oil and Products being stored at Company Storage Locations from time to time and otherwise being purchased and sold pursuant to the terms of the S&O Agreement;
(C)WHEREAS, as a condition (among others) to the Buyer’s obligations under the S&O Agreement, on the Commencement Date, the Seller is to sell to Buyer all Crude Oil and Products then being held at the Included Storage Locations on such date;
(D)WHEREAS, to satisfy such condition, and to set forth their agreements regarding the protocols to be used for measuring the quantity and quality of Crude Oil and Products being sold by the Seller and to establish the prices to be paid for such Crude Oil and Products by the Buyer, the Seller and the Buyer are entering into this Agreement; and
(E)NOW, THEREFORE, in consideration of the foregoing premises, the mutual promises and covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, subject to the terms and conditions hereinafter set forth, agree as follows:
1DEFINITIONS
1.1Definitions.

All capitalized terms used, but that are not otherwise defined, in the body of this Agreement shall have the meanings ascribed to such terms in the S&O Agreement. The following terms shall have the following meanings for the purposes of this Agreement:

"Average Current Month Pricing Benchmark" means, in respect of a calendar month and a Product Group, an amount equal to the sum of the Current Month Pricing Benchmark applicable to the relevant Product Group for each Quotation Day in such calendar month; divided by the number of Quotation Days in that calendar month; provided, however, that for the purposes of calculating the Estimated Commencement Date Value, the "Average Current Month Pricing Benchmark" for a Product Group shall be calculated by taking into account only those Quotation Days from (and including) 1 March 2022 to (and including) 25 March 2022.

BS&W” means basic sediment and water.

Buyer” has the meaning set forth in the introductory paragraph immediately preceding the Recitals.

Crude and Product Inventory” means all Crude Oil, Products and Product Linefill that are held in the Included Storage Locations as of, and owned by Seller immediately prior to, the Inventory Transfer Time.

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CT” means the prevailing time in the Central time zone of the United States of America.

Definitive Commencement Date Value” means the value calculated by the Buyer in accordance with Section 4.3.1.

Estimated Commencement Date Value” has the meaning set forth in Section 4.1.2.

Independent Inventory Report” has the meaning set forth in Section 3.3 of this Agreement.

Inventory Transfer Time” means 12:00:01 a.m. CT on the Commencement Date.

Parties” and “Party” have the meanings set forth in the introductory paragraph immediately preceding the Recitals.

Price Adjustment” has the meaning set forth in Section 4.4 of this Agreement.

Product Linefill” means, at any time and for any grade of Product, the aggregate volume of linefill of that Product on the Included Product Pipelines for which the Buyer will be treated as the exclusive owner by the Included Product Pipelines from (and including) the Commencement Date; provided that such volume shall be determined by using the volumes reported on the monthly or daily statements, as applicable, from the Included Product Pipelines.

Projected Inventory Report” has the meaning set forth in Section 4.1.1 of this Agreement.

"Quotation Days" means, in respect of a Product Group, a quotation day for the relevant pricing index, formula or benchmark set out in Schedule H to the S&O Agreement.

Refinery” has the meaning set forth in the Recitals of this Agreement.

S&O Agreement” has the meaning specified in the Recitals hereto.

Sales Statement” has the meaning set forth in Section 4.3.1 of this Agreement.

Seller” has the meaning set forth in the introductory paragraph immediately preceding the Recitals.

Shell” means the “Seller” as such term is defined in the Refinery SPA.

2ASSIGNMENT AND CONVEYANCE
2.1Assignment, Purchase and Conveyance.

Effective upon the Inventory Transfer Time, Seller shall, and hereby does, assign, transfer and deliver unto Buyer, and Buyer shall and hereby does purchase from Seller, all of Seller’s right, title, and interest in and to all of the Crude and Product Inventory, free and clear of all Liens, claims and encumbrances of any nature, other than Permitted S&O Liens, to have and to hold. Seller covenants and agrees to warrant and forever defend good title to the Crude and Product Inventory, free and clear of all Liens, claims and encumbrances of any nature, subject to Permitted S&O Liens, against the claims of all parties claiming the same by, through, or under Seller, but not otherwise.

2.2Warranties and Representations of Conveying Party.

All representations and warranties of the Seller contained herein shall be true and correct on and as of the Commencement Date.

2.3Disclaimer of Warranties.

SELLER DOES NOT MAKE ANY WARRANTY, CONDITION OR OTHER REPRESENTATION, WRITTEN OR ORAL, EXPRESS OR IMPLIED, OF MERCHANTABILITY, FITNESS OR SUITABILITY OF SUCH CRUDE OIL OR PRODUCTS FOR ANY PARTICULAR PURPOSE OR OTHERWISE AND ALL SUCH WARRANTIES, CONDITIONS AND OTHER REPRESENTATIONS ARE HEREBY DISCLAIMED.

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3DETERMINATION OF INVENTORY
3.1Inspection.

The Independent Inspection Company shall determine and report the quantity and quality of the physical inventory, except as described in Section 3.2.2 below. The cost of the Independent Inspection Company is to be borne by and is the sole responsibility of the Seller.

3.2Physical Inventory.
3.2.1The Independent Inspection Company shall conduct a survey of the physical inventory at the Included Storage Locations and the Company Storage Locations as of the Inventory Transfer Time, except as described in Section 3.2.2 below. The Independent Inspection Company shall conduct such survey of the physical inventory in accordance with its customary procedures and in accordance with the latest ASTM standards and principles then in effect, provided that the Independent Inspection Company shall be instructed by the Parties to maximize, to the extent reasonably practicable, the extent to which tank measurements are conducted on a static tank basis. Each of the Buyer and the Seller shall have the right to witness or appoint a representative to witness on its behalf, the survey of the physical inventory conducted by the Independent Inspection Company.
3.2.2With respect to volumes (if any) located at any Crude Storage Tanks owned or operated by a third party, the physical inventory shall be determined by such third party at that location based on its normal month-end inventory determination procedures.
3.3Disputes.

Either Party or their respective representatives present at the survey of the physical inventory conducted by the Independent Inspection Company at the Inventory Transfer Time may question or dispute the calculations and/or laboratory results of the Independent Inspection Company. The Parties shall use commercially reasonable efforts to ensure that any questions or disputes relating to the quantity and the qualitative laboratory results of the entire physical inventory shall be resolved by the Independent Inspection Company within three (3) Business Days after the receipt of the Independent Inspection Company quantity and quality report and the resolution by the Independent Inspection Company shall be final and binding on both Parties. Following resolution of any quantity and quality disputes, the agreed quantity and quality entries, together with the quantity (if any) determined under Section 3.2.2, shall be recorded in the physical inventory report (the “Independent Inventory Report”) and will become the official quantity and quality measurements of the Crude and Product Inventory as of the Inventory Transfer Time. Such recorded quantity shall be adjusted for BS&W and temperature corrected to 60 degrees Fahrenheit.

3.4Independent Inventory Report.

The Parties shall use commercially reasonable efforts to procure that, within five (5) Business Days after the Inventory Transfer Time, the Independent Inspection Company shall provide the Parties with the Independent Inventory Report.

4PAYMENT AND PRICING
4.1Delivery of Estimated Commencement Date Value.
4.1.1The Parties acknowledge that prior to the Commencement Date, the Seller has delivered to the Buyer a notice containing Shell’s provisional estimate of the Crude and Product Inventory in the Included Storage Locations determined in accordance with the Refinery SPA (the “Projected Inventory Report”).
4.1.2Based on the Projected Inventory Report and such data as are then reasonably available and using, where applicable, the applicable Average Current Month Pricing Benchmark(s) calculated in respect of March 2022 or, in the case of Product Linefill, such other pricing measure as Buyer may select, in good faith and in a commercially reasonable manner, the Buyer shall, no later than two (2) Business Days prior to the Commencement Date, calculate and notify Seller of the pricing basis and value for the Projected Inventory Report (the “Estimated Commencement Date Value”) available at the Inventory Transfer Time. The Buyer shall include the Estimated Commencement Date Value and all supporting calculations used to determine it in the notice delivered to Seller.

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4.2Payment of Estimated Commencement Date Value.

On the Commencement Date, the Buyer shall pay to, or as directed by, the Seller an amount equal to the Estimated Commencement Date Value.

4.3Crude and Product Inventory Sales Statement.
4.3.1Promptly following the last day in April 2022, the Buyer shall calculate the Definitive Commencement Date Value using the data regarding the Crude and Product Inventory provided in the Projected Inventory Report delivered to the Buyer pursuant to section 4.1.1 above and deliver to Seller a statement including such calculated price (the “Sales Statement”). The Buyer shall use the applicable Average Current Month Pricing Benchmark(s) calculated in respect of April 2022 or, in the case of Product Linefill, such other pricing measure as Buyer may select in good faith and in a commercially reasonable manner, to price the various quantities set forth in the Projected Inventory Report. The Buyer shall include in the Sales Statement all supporting calculations and documentation used to determine the Definitive Commencement Date Value. Each of Buyer and Seller acknowledges and agrees that any volumetric differences between the Projected Inventory Report and the Independent Inventory Report provided by the Independent Inspection Company shall be taken into account to the extent it identifies an inaccuracy with the daily settlements under and in accordance with the terms of the Supply and Offtake Agreement through which, as set forth in Section 4.4 below, the Parties intend to effect a volumetric true up.
4.3.2Unless the Seller gives notice to the Buyer on or before the third (3rd) Business Day after Seller’s receipt of the Sales Statement that Seller disputes the Definitive Commencement Date Value specified in the Sales Statement, the Definitive Commencement Date Value shall be as specified in the Sales Statement. If Seller gives timely notice to Buyer that it disputes the Definitive Commencement Date Value specified in the Sales Statement, the Parties shall consult in good faith and use all reasonable efforts to agree upon the calculation of the Definitive Commencement Date Value. If the Parties have not agreed on the Definitive Commencement Date Value within one (1) Business Day after the Buyer receives a notice of dispute from the Seller, the Buyer's original determination of the Definitive Commencement Date Value shall prevail.
4.4Crude and Product Inventory Sales Price Adjustment.

Upon the final determination of the Definitive Commencement Date Value pursuant to Section 4.3, a true-up adjustment will be made in accordance with the provisions of this Section 4.4 (the “Price Adjustment”) or otherwise as may be agreed between the Parties. If the Definitive Commencement Date Value is greater than the Estimated Commencement Date Value paid by Buyer to Seller on the Commencement Date, then Buyer shall make a payment to Seller in an amount equal to such excess. If the Estimated Commencement Date Value is greater than the Definitive Commencement Date Value paid by Buyer to Seller on the Commencement Date, then the Seller shall make a payment to Buyer in an amount equal to such excess. Any such payment by Buyer or Seller shall be made by wire transfer of immediately available funds on or before 5:00 p.m. CT on the 3rd Business Day in May 2022. The Parties acknowledge and agree that any volumetric true-up based on the data set out in the Projected Inventory Report and the actual Crude Oil and Products sold by the Refinery to Macquarie shall be settled in accordance with the on-going purchase and sale mechanisms set out in the S&O Agreement.

4.5Priced Cargos on the Commencement Date.

The Parties acknowledge and agree that certain cargos of Crude Oil which are the subject of Macquarie Crude Procurement Contracts with Shell Trading (US) Company have fully priced prior to the Commencement Date (“Fully Priced Cargos”). Accordingly, the price true-ups in Section 6.4 and Schedule C of the S&O Agreement will not apply to any such Fully Priced Cargos. Instead, on or promptly following the Commencement Date, Macquarie shall determine an amount equal to the product of:

(i)the Current Month Pricing Benchmark in respect of Crude Oil, as in effect as of the Commencement Date; minus the volume weight average price per barrel across each of the Fully Priced Cargos; and
(ii)the total volume of the Fully Priced Cargos,

(the “Fully Priced Cargos Adjustment Amount”)

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If the Fully Priced Cargos Adjustment Amount is a positive amount it shall be payable by Macquarie to the Company, and if the Fully Priced Cargos Adjustment Amount is a negative amount, the absolute value of such amount shall be payable by the Company to Macquarie, in either case on or prior to the second Business Day immediately following the Commencement Date.

4.6Taxes.

The Parties agree that the provisions of Article 16 of the S&O Agreement relating to tax matters shall apply to this Agreement and the transactions contemplated hereby to the same extent as if set forth herein in full (except that references to the “Company” shall be deemed to refer to the Seller hereunder and references to “Macquarie” shall be deemed to refer to the Buyer hereunder).

5MISCELLANEOUS
5.1Assignment.
5.1.1This Agreement shall inure to the benefit of and be binding upon the Parties hereto, their respective successors and permitted assigns.
5.1.2Neither Party shall assign this Agreement or its rights or interests hereunder in whole or in part, or delegate its obligations hereunder in whole or in part, without the consent of the other Party. Any attempted assignment in violation of this Section 5 shall be null and void ab initio and the non-assigning Party shall have the right, without prejudice to any other rights or remedies it may have hereunder or otherwise, to terminate this Agreement effective immediately upon notice to the Party attempting such assignment.
5.2Notices.

All invoices, notices, requests and other communications given pursuant to this Agreement shall be in writing and sent by email or nationally recognized overnight courier. A notice shall be deemed to have been received when transmitted by email to the other Party’s email address set forth in Schedule K of the S&O Agreement, or on the following Business Day if sent by nationally recognized overnight courier to the other Party’s address set forth in Schedule K of the S&O Agreement and to the attention of the person or department indicated. A Party may change its address or email address by giving written notice in accordance with this Section, which is effective upon receipt.

5.3Severability.

In the event any portion of this Agreement shall be found by a court of competent jurisdiction to be unenforceable, that portion of this Agreement will be null and void and the remainder of this Agreement will be binding on the Parties as if the unenforceable provisions had never been contained herein.

5.4No Waiver, Cumulative Remedies.
5.4.1The failure of a Party hereunder to assert a right or enforce an obligation of the other Party shall not be deemed a waiver of such right or obligation. The waiver by any Party of a breach of any provision of, Event of Default or Default under, this Agreement shall not operate or be construed as a waiver of any other breach of that provision or as a waiver of any breach of another provision of, Event of Default or Default under, this Agreement, whether of a like kind or different nature.
5.4.2Each and every right grant to the Parties under this Agreement or allowed it by law or equity shall be cumulative and may be exercised from time to time in accordance with the terms thereof and Applicable Law.
5.5Entire Agreement; Amendment.

The terms of this Agreement constitute the entire agreement between the Parties with respect to the matters set forth in this Agreement, and no representations or warranties shall be implied or provisions added in the absence of a written agreement to such effect between the Parties. This Agreement shall not be modified or changed except by written instrument executed by the Parties’ duly Authorized Representatives.

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5.6GOVERNING LAW
5.6.1This Agreement shall be governed by, construed and enforced under the laws of the State of New York without giving effect to its conflicts of laws principles that would require the application of the laws of another state.
5.6.2Each of the Parties hereby irrevocably submits to the exclusive jurisdiction of any federal or state court of competent jurisdiction situated in the City of New York, (without recourse to arbitration unless both Parties agree in writing), and to service of process by certified mail, delivered to the Party at the address indicated in SCHEDULE K of the S&O Agreement. Each Party hereby irrevocably waives, to the fullest extent permitted by Applicable Law, any objection to personal jurisdiction, whether on grounds of venue, residence or domicile.
5.6.3EACH PARTY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY PROCEEDINGS RELATING TO THIS AGREEMENT.
5.7Counterparts.

This Agreement may be executed by the Parties in separate counterparts and initially delivered by facsimile transmission, pdf or otherwise, with original signature pages to follow, and all such counterparts shall together constitute one and the same instrument.

5.8Further Assurances.

Both Seller and Buyer agree to execute and deliver, from time to time, such other and additional instruments, notices, transfer orders and other documents, and to do all such other and further acts and things as may be necessary to more fully and effectively transfer and assign the Crude and Product Inventory to Buyer.

[Signature page follows.]

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Executed by MACQUARIE ENERGY NORTH AMERICA TRADING INC. acting by:
     
  and  
     
/s/ Daniel Vizel   /s/ Travis McCullough
Name: Daniel Vizel   Name: Travis McCullough
Title: Senior Managing Director   Title: Division Director
     

 

Executed by VERTEX REFINING ALABAMA LLC acting by:
 
  and  
     
/s/ Benjamin P. Cowart    
Name: Benjamin P. Cowart    
Title: President & Chief Executive Officer    
     

 

 

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