8-K

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): December 9, 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	The 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 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Resignation of Directors 

On December 9, 2022 David Phillips and on December 11, 2022 James P. Gregory, each provided notice to the Board of Directors of Vertex Energy, Inc. (“Vertex”, the “Company”, “we” and “us”), of their resignation as members of the Board of Directors, each effective upon acceptance by the Board of Directors. The Board of Directors accepted the resignations effective on December 12, 2022. Both Mr. Gregory and Mr. Phillips indicated that their resignations were not the result of any disagreement with the Company. Prior to his resignation, Mr. Phillips served on the Audit Committee, Compensation Committee, and Risk Committee and served as the Chairperson of the Nominating and Governance Committee of the Board of Directors. Mr. Gregory did not serve on any committees of the Board of Directors. Following his resignation as a director, Mr. Gregory continues to serve as the General Counsel of the Company, and was further appointed as the Secretary of the Company on December 12, 2022 (taking over for Chris Carlson, the Chief Financial Officer of the Company).

Appointment of Directors

On December 12, 2022, effective immediately upon the acceptance by the Board of Directors of the resignations of Mr. Gregory and Mr. Phillips, as discussed above, the Board of Directors, with the recommendation of the Nominating and Governance Committee of the Board of Directors, which is comprised entirely of independent directors, appointed Karen Maston and Odeh Khoury as members of the Board of Directors, to fill the vacancies left by Mr. Gregory’s and Mr. Phillip’s resignations.

The Board determined that Ms. Maston and Mr. Khoury meet the definition of an “independent” director under the rules and regulations promulgated by NASDAQ and pursuant to Rule 10A-3(b)(1) under the Securities Exchange Act of 1934, as amended. Ms. Maston and Mr. Khoury were also appointed to various committees of the Board of Directors upon their appointment, as discussed in greater detail below.

There are no family relationships between any director or executive officer of the Company, including Ms. Maston and Mr. Khoury.

Neither Ms. Maston nor Mr. Khoury is a party to any transaction, or series of transactions, required to be disclosed pursuant to Item 404(a) of Regulation S-K. There is no agreement, arrangement or understanding pursuant to which Ms. Maston or Mr. Khoury was selected as a director.

Ms. Maston and Mr. Khoury will be entitled to receive compensation for their services as a director and as committee members of the Board of Directors consistent with the compensation paid to other non-executive directors as described in greater detail below in Item 8.01 of this Current Report on Form 8-K and are entitled to participate in the Company’s equity incentive plans in effect and as amended from time to time.

The Company is also expected to enter into an Indemnification Agreement with Ms. Maston and Mr. Khoury in identical form in all material respects to the indemnification agreements entered into with other Company directors. The Indemnification Agreement will provide for indemnification of, and advancement of litigation and other expenses to, Ms. Maston and Mr. Khoury to the fullest extent permitted by law for claims relating to their service to the Company, subject to the terms and conditions contained in the form of Indemnification Agreement incorporated by reference hereto as Exhibit 10.1.

Ms. Maston’s and Mr. Khoury’s biographical information is provided below:

Ms. Karen Maston, age 66  

Ms. Maston has decades of experience representing clients in complex environmental, energy, contract, fiduciary, and other cutting edge legal matters. 

After graduating magna cum laude with her Bachelor of Science degree in Occupational Therapy from the University of Missouri-Columbia, Ms. Maston worked at the Mayo Clinic in Rochester, Minnesota. Following her tenure at Mayo Clinic, Ms. Maston joined Memorial Hermann Hospital in Houston, Texas as the Assistant Director of Occupational Therapy (1978-1979), and then became the Director of Occupational Therapy for St. Luke’s Episcopal Hospital, Texas Children’s Hospital and The Texas Heart Institute (1979-1984).

Ms. Maston graduated from The University of Texas Law School with a Doctor of Jurisprudence in 1986 and began her legal career with the global law firm of Baker Botts L.L.P. During her 17-year tenure at Baker Botts, she was elected as an equity partner. Ms. Maston accepted a position as a partner with the environmental boutique law firm Connelly Baker Maston Wotring and Jackson from 2003 to 2007. Ms. Maston continued as a partner in private practice including serving as the managing partner of the Houston office of the international law firm of Sedgwick, L.L.P. and was a member of the firm’s executive committee. Ms. Maston left private practice in 2015 to accept a position with the Department of Justice serving as an Assistant United States Attorney for the Southern District of Texas, which position she held from January 2015 to October 2018.

Ms. Maston is currently licensed to practice law in the states of Mississippi, Texas and West Virginia and as an Occupational Therapist in Nebraska and Texas. She is a supporter of the arts and has served as an advisory board member of Children at Risk and the Houston Grand Opera.

The Board of Directors believes that Ms. Maston is well qualified to serve on the Board of Directors because of her significant legal and management experience.

Mr. Odeh Khoury, age 54 

Mr. Khoury joined Shell Oil Products US Company in 1991 and at the time of his retirement in late 2021, Mr. Khoury served as the Regional Vice President of Commercial – Fuels Supply, Distribution & Trading– Americas, and was a member of Shell’s Global Products Trading & Supply Executive Leadership team. During his most recent 5+ year tenure, he led all regional commercial, supply, and logistics activities across 35 clean fuels terminals, including P&L management, value chain optimization, price risk management, business development and origination, bio/renewable fuels program compliance and optimization, and overall leadership of Shell’s US Downstream Fuels integrated business units. Prior to that, Mr. Odeh served as Vice President & General Manager of the Motiva Convent, Louisiana Refinery on behalf of Motiva Enterprises LLC (a former JV between Shell Oil Products & Saudi Aramco) (“Motiva”). 

From 2011 to 2013, Mr. Khoury held the position of Senior Operations Director for the Motiva & Shell Norco, Louisiana Petrochemical Complex, where he provided senior operations leadership for three separate sites (Fuels Refinery, Olefins Complex and Bitumen Refinery). Previously in 2009-2010, Mr. Khoury served as the US Gulf Coast Regional Director of Strategic Business Improvement - Refining & Chemicals for Shell Oil Products US Co., where he was responsible for strategic improvements across their refining and chemicals portfolio. In the preceding three years, Mr. Khoury served as Director - Strategy & Business Development for Supply & Distribution with Motiva, where he led business development and fuels/biofuels distribution strategy and managed third party commercial contracts and relationships. From 1991 to 2005, Mr. Khoury held various technical, operational, and commercial roles with Shell Oil Products US Co.

Between 2011 and 2021, Mr. Khoury served on several boards and trade associations, including Louisiana Mid-Continent Oil & Gas Association (LMOGA), Greater Baton Rouge Industry Alliance (GBRIA), National Association of Manufacturers (NAM), First Coast Energy LLC in Jacksonville, FL., TriStar Energy LLC in Nashville, Tennessee and most recently served as Shell’s Executive Member on American Petroleum Institute (API) Downstream Committee.

Mr. Khoury obtained his Bachelor of Science Degree in Chemical Engineering from the University of Maryland and an MBA from Rice University in Houston, Texas.

The Board of Directors believes that Mr. Khoury is well qualified to serve on the Board of Directors due to his more than 30 years of experience in the downstream and midstream energy industry. Mr. Khoury brings to the Board significant insight, extensive technical, operational, and commercial expertise, as well as broad executive and general management experience.

Committee Appointments

The Board of Directors (the “Board”), effective upon their appointments on December 12, 2022, also appointed (a) Ms. Maston to the Audit Committee; Compensation Committee; Related Party Transaction Committee and the newly formed Executive Committee (as discussed below in Item 8.01), and appointed Ms. Maston as Chairperson of the newly renamed Nominating, Corporate Governance and Environmental, Social, and Governance Committee (as discussed below in Item 8.01); and (b) Mr. Khoury to the Audit Committee, Compensation Committee, Nominating, Corporate Governance and Environmental, Social, and Governance Committee and as Chairperson of the Risk Committee.

As a result of the appointments discussed above, the membership of the committees of the Company’s Board of Directors is currently as follows:

	Audit Committee	Compensation Committee	Nominating, Corporate Governance and Environmental, Social, and Governance Committee	Related Party Transaction Committee	Risk Committee	Executive Committee
Benjamin P. Cowart(1)
Dan Borgen	M	C	M	M	M	C(2)
Christopher Stratton	C	M	M		M	M
Timothy C. Harvey			M	C	M
Karen Maston	M	M	C	M		M
Odeh Khoury	M	M	M		C

(1) Chairperson of Board of Directors. 

(2) The Chairperson of the Executive Committee also serves as the “Lead Director” (see Item 8.01, below).

C – Chairperson of Committee. 

M – Member.

Executive Employment Agreements

On December 12, 2022, we entered into Executive Employment Agreements with each of Benjamin P. Cowart, our President and Chief Executive Officer (and Chairman), James Rhame, our Chief Operating Officer and Alvaro Ruiz, our Chief Strategy Officer and on December 13, 2022, we entered into an Executive Employment Agreement with Chris Carlson, our Chief Financial Officer (collectively, the “Employment Agreements”). Mr. Cowart’s, Mr. Carlson’s and Mr. Ruiz’s Employment Agreements each replaced and superseded their prior employment agreements with the Company.

Each of the Employment Agreements are substantially similar (as discussed below), except for the base annual compensation payable to each of the executive officers as summarized below:

Executive	Executive Position	Base Annual Compensation
Benjamin P. Cowart	President and Chief Executive Officer	$514,000
Chris Carlson	Chief Financial Officer	$318,000
James Rhame	Chief Operating Officer	$316,000
Alvaro Ruiz	Chief Strategy Officer	$302,000

Each Employment Agreement provides for the applicable executive to serve as an executive of the Company (in the roles set forth above under “Executive Position”), for an initial three-year term extending through December 11, 2025 or December 12, 2025 (as applicable), provided that each of the agreements automatically renews for additional one-year terms thereafter in the event neither party provides the other at least 60 days prior notice of their intention not to renew the terms of the agreement, with the exception of the agreement with Mr. Rhame, which provides for an initial term until the later of (a) April 30, 2024, or (b) completion of the phase 2 renewable diesel project at the Company’s Mobile, Alabama refinery. Each of the agreements also have an effective date of April 1, 2022, and require that the Company pay each executive, within fourteen days after the execution of the agreement, a lump sum payment equal to the difference between the executive’s salary in effect prior to the effective date and the base salary called for under the executive’s agreement, during the period between the effective date and execution date.

Pursuant to the terms of the Employment Agreements, each executive’s annual compensation package includes (1) a base salary (as set forth above under “Base Annual Compensation”), subject to yearly determinations by the Compensation Committee of the Board (or the Board with the recommendation of the Compensation Committee), on each December 31^st, as to potential increases in salary, and (2) a bonus payment to be determined in the sole discretion of the Compensation Committee or the Board of Directors (the “Cash Bonus”). Each executive is also eligible for a yearly discretionary equity bonus (the “Equity Bonus”) equal to an amount as determined by the Board, with the recommendation of the Compensation Committee and based on the condition of the Company’s business and results of operations, the Compensation Committee’s evaluation of the executive’s individual performance for the relevant period, and the satisfaction of goals that may be established by the Compensation Committee.

Each Cash Bonus shall be paid in the Compensation Committee’s discretion at the same time annual bonuses are paid to other executives of the Company, in an amount determined by the Compensation Committee in its sole discretion, based on such criteria as the Compensation Committee deems relevant; provided that no Cash Bonus shall be paid at any time that the sum of the Current Ratios (defined below), at the end of the then last two completed calendar quarters that have been publicly filed with the SEC, divided by 2, totals less than 1.0. The Compensation Committee, or the Board, with the recommendation of the Compensation Committee, may also pay or grant discretionary Cash Bonuses or Equity Bonuses from time to time in their discretion, at any time, in its/their discretion. The Equity Bonus may be in the form of common stock, stock options or other equity consideration, in such amounts and with such terms as may be determined by the Compensation Committee or the Board, with the recommendation of the Compensation Committee, from time to time.

For the purposes of the Employment Agreements, “Current Ratio” means, as of the date of determination, (a) the current assets of the Company, divided by (b) the current liabilities of the Company, each as set forth in the financial statements of the Company as filed in the Company’s periodic reports with the SEC; except in the case of a Payment Date Current Ratio (defined below), which shall be calculated based on the Company’s internally generated financial statements, in accordance with generally accepted accounting principles, consistently applied.

The Cash Bonus is also only payable to the extent that, as of a date within 10 business days of the date the Cash Bonus is to be paid (the “Proposed Payment Date”), that the Company has a Current Ratio, after paying the Cash Bonus, and any other cash bonuses awarded by the Compensation Committee, which are unpaid as of such Proposed Payment Date, equal to at least 1.0 (the “Payment Date Current Ratio”). Notwithstanding the forgoing, the Cash Bonus will be paid not later than March 15 of the year following the year in which the Compensation Committee or the Board determine to grant such Cash Bonus.

Each executive is also paid an automobile allowance of $750 per month during the term of their Employment Agreement and is eligible to participate in our stock option plan and other benefit plans.

Each executive’s compensation under his employment agreement may be increased from time to time, by the Compensation Committee, or the Board of Directors (with the recommendation of the Compensation Committee), which increases do not require the entry into an amended employment agreement.

Each Employment Agreement prohibits the applicable executive party thereto from competing against us during the term of the agreement and for a period of twelve months after the termination of the agreement in any state and any other geographic area in which we or our subsidiaries provide Restricted Services or Restricted Products, directly or indirectly, during the twelve months preceding the date of the termination of the agreement. “Restricted Services” means the collection, trading, purchasing, processing, storing, aggregation, transportation, manufacture, distribution, recycling, storage, refinement, re-refinement and sale of Restricted Products; or dismantling, demolition, decommission and marine salvage services and any other services that we or our subsidiaries have provided or are researching, developing, performing and/or providing at any time during the two years immediately preceding the date of termination, or which the executive has obtained any trade secret or other confidential information about at any time during the two years immediately preceding the date of termination of the agreement. “Restricted Products” means renewable fuels, used motor oil, petroleum by-products, renewable fuels, vacuum gas oil, aggregated feedstock, conventional crude refining and re-refined oil products, gasoline blendstock, pygas and fuel oil cutterstock, oil filters, engine coolant and/or other hydrocarbons and any other product and any other product, that we or our subsidiaries have provided or are researching, developing, manufacturing, distributing, refining, re-refining, aggregating, selling and/or providing at any time during the two years immediately preceding the date the agreement is terminated, or which the applicable executive obtained any trade secret or other confidential information in connection with at any time during the two years immediately preceding the date of termination of the agreement. The non-compete requirements described in the paragraph above, as well as the restriction on the executive to refrain, for a period of twelve months from the termination date, from soliciting customers of the Company with whom executive worked during the last year of executive’s employment with the Company and from soliciting employees of the Company to leave the employment of the Company, are defined as the “Non-Compete Provisions”. As discussed in greater detail below, at the Company’s option at any time the Company determines in its discretion to not renew an Employment Agreement (other than Mr. Rhame’s as discussed below) at such time that such agreement would have otherwise automatically renewed pursuant to its terms, the Company may determine to waive the Non-Compete Provisions, at which time no Severance Payment (as discussed below) would be due, or to pay the Severance Payment, at which time the Non-Compete Provisions would continue to apply pursuant to their terms. The Non-Compete Provisions do not apply to Mr. Rhame in the event his employment agreement expires at the end of the initial term thereof, provided that at the Company’s option, at least 60 days before April 30, 2024, the Company can request that Mr. Rhame negotiate an extension of his employment agreement or a consulting agreement with the Company in good faith during such 60 day period.

We may terminate an executive’s Employment Agreement (a) for “cause” which means (i) that the applicable executive has materially breached any obligation, duty, covenant or agreement under the agreement, which breach is not cured or corrected within thirty days of written notice thereof from the Company (except for breaches of the assignment of inventions or confidentiality/non-solicitation and non-compete provisions of the agreement, which cannot be cured and for which the Company need not give any opportunity to cure); (ii) the applicable executive’s willful failure or refusal to perform or nonperformance of his duties required by the Employment Agreement or assigned by the Company through the Board of Directors, and without a reasonable basis for executive to do so; provided, however, that the executive shall have first received written notice from the Company stating with specificity the nature of such failure and refusal and affording executive an opportunity, as soon as practicable, to correct the acts or omissions complained of, and failure of the applicable executive to cure such failure or refusal within thirty days after written notice; (iii) any gross negligence or willful misconduct of the applicable executive with regard to the Company or any of its subsidiaries resulting in a material economic loss to the Company or material damage to the Company’s reputation or business relationships; (iv) if the executive commits any act of misappropriation of funds or embezzlement; or (v) if the executive commits any act of fraud; or (vi) if the executive is convicted of, or pleads guilty or nolo contendere with respect to, theft, fraud, a crime involving moral turpitude, or a felony under federal or applicable state law; and, in the case of any of the above offenses, such offense casts reasonable doubt on such executive’s ability to perform his duties going forward; (b) in the event the applicable executive suffers a physical or mental disability which renders him unable to perform his duties and obligations for either 90 consecutive days or 180 days in any 12-month period; (c) for any reason without “cause”; or (d) upon expiration of the initial term of the agreement (or any renewal) upon notice as provided above. The agreements also automatically terminate upon the death of the applicable executive.

Each executive may terminate his employment (a) for “good reason” if there is (i) a material diminution in his authority, duties, or responsibilities; (ii) a material diminution in the authority, duties, or responsibilities or a requirement that executive report to an officer or employee of the Company rather than reporting to the Board; (iii) a material breach by the Company of the agreement, or (iv) a material diminution in the applicable executive’s Base Salary, in each case without his prior written consent; provided, however, prior to any such termination by the executive for “good reason,” the executive must first advise us in writing (within 60 days of the occurrence of such event) and provide us 30 days to cure, after which in the event we do not cure the issue leading to such “good reason” notice, the applicable executive has 30 days to resign for “good reason”); (b) for any reason without “good reason”; and (c) upon expiration of the initial term of the agreement (or any renewal) upon notice as provided above.

If the applicable executive’s employment is terminated due to his death or disability, the executive or his estate is entitled to a lump sum cash severance payment equal to the sum of (i) the executive’s Base Salary accrued through the termination date; (ii) any unpaid Cash Bonus for the prior year that would have been paid had executive not been terminated prior to such payment; and (iii) the pro rata amount of the current year’s bonus (through the end of the month of termination), which would have been payable to the executive, had the executive been employed through the end of the then current calendar year, based on the Board or Compensation Committee’s good faith assessment of the amount which would have been paid to executive as a cash bonus for such calendar year, based on the Company’s and executive’s quantifiable performance through the date of termination, and the Board or Compensation Committee’s customary bonus determination matrix, with rankings based on the Company’s peer group and the Board or Compensation Committee’s individual rankings of such matrix items, in each case utilizing the Company’s then current process for determining bonuses as determined by the Committee in their reasonable discretion (the “Good Faith Bonus Determination”). Such amount shall be paid within 60 days after the termination date. Additionally, and notwithstanding anything to the contrary in any equity agreement, any unvested stock options or equity compensation held by executive upon such termination shall vest and shall be exercisable until the earlier of (A) ninety days from the date of termination and (B) the latest date upon which such stock options or equity would have expired by their original terms under any circumstances, provided that such provisions shall not affect any equity awards outstanding prior to the date of the Employment Agreements.

If an executive’s employment is terminated by executive without “good reason” or his non-renewal of the agreement, or by non-renewal by the Company, providing for a waiver of the Non-Compete Provisions (defined above), or by the Company with cause, the executive is entitled to his Base Salary accrued through the termination date and no other benefits other than continuation of health insurance benefits on the terms and to the extent required by COBRA, or such other similar law or regulation as may be applicable to the executive or the Company with respect to the executive. Additionally, any unvested stock options or equity compensation held by executive shall immediately terminate and be forfeited (unless otherwise provided in the applicable award) and any previously vested stock options (or if applicable equity compensation) shall be subject to terms and conditions set forth in the applicable equity agreement, as such may describe the rights and obligations upon termination of employment of executive.

If an executive’s employment is terminated by such executive for “good reason”, or by the Company without “cause”, or by the Company’s non-renewal, providing that the Non-Compete Provisions shall continue to apply (other than Mr. Rhame’s as discussed below), (a) such executive is entitled to his base salary accrued through the termination date and any unpaid Cash Bonus for the prior completed calendar year that would have been paid had executive not been terminated prior to such payment, plus a lump sum cash severance payment equal to the sum of (i) an amount equal to the executive’s current annual Base Salary plus (ii) an amount equal to the Good Faith Bonus Determination of the bonus which should have been due for the full calendar year containing the termination date (collectively, (i) and (ii), the “Severance Payment”); and (b) provided executive elects to receive continued health insurance coverage through COBRA, the Company will pay executive’s monthly COBRA contributions for health insurance coverage, as may be amended from time to time (less an amount equal to the premium contribution paid by active Company employees, if any) for twelve months following the termination date (the “Health Payment”); provided, however, that if at any time executive is covered by a substantially similar level of health insurance through subsequent employment or otherwise, the Company’s health benefit obligations shall immediately cease, and the Company shall have no further obligation to make the Health Payment. Additionally, and notwithstanding anything to the contrary in any equity agreement, any unvested stock options or equity compensation previously granted to the executive will vest immediately upon such termination and shall be exercisable by the executive until the earlier of (A) three months from the date of termination and (B) the latest date upon which such stock options or equity would have expired by their original terms under any circumstances, provided that such provisions shall not affect any equity awards outstanding prior to the date of the Employment Agreements. The Severance Payment shall be paid in cash within sixty days after the termination date. The Severance Payment is not due to Mr. Rhame in the event his employment agreement expires at the end of the initial term thereof.

As a condition to each executive’s right to receive any Severance Payment, (A) the executive must execute and deliver to the Company a written release in form and substance satisfactory to the Company, of any and all claims against the Company and all directors and officers of the Company with respect to all matters arising out of executive’s employment, or the termination thereof (other than claims for entitlements under the terms of the agreement or plans or programs of the Company in which executive has accrued a benefit), which must be effective by the 90^th day following his termination date; and (B) executive must not have breached any of his covenants and agreements under the Agreement relating to assignment of inventions and confidentiality, including the non-solicitation and non-compete provisions thereof, which shall continue following the termination date.

If a Change of Control (as defined below) occurs during the term of the agreement, or within six months after an executive’s termination of employment by him for good reason or by the Company without cause (but not non-renewal), the Company is required to pay executive, within 60 days following the date of such Change of Control, a cash payment in a lump sum in an amount equal to (x) minus (y) where (x) equals 3.0 times the sum of (a) the most recent annual Base Salary of the executive; and (b) the amount of the most recent Cash Bonus paid to the executive (the “Change of Control Payment”) and (y) equals the amount of any Severance Payment actually paid to executive. If the applicable Employment Agreement has been terminated prior to any Cash Bonus being awarded pursuant to the agreement or if the most recent Cash Bonus was zero, (x)(b) above is replaced with an amount equal to the greater of (1) the amount of executive’s most recent annual cash bonus awarded by the Compensation Committee or the Board (“Most Recent Cash Bonus”); and (2) the amount of executive’s annual cash bonus awarded by the Compensation Committee or the Board for the year immediately preceding the Most Recent Cash Bonus (the “Preceding Year Bonus”). Additionally, following a change of control termination, all outstanding stock options and other equity compensation held by an executive are exercisable by the executive pursuant to the terms thereof until the earlier of (A) three months from his termination date and (B) the latest date upon which such stock options and other equity compensation would have expired by their original terms under any circumstances; provided any equity awards outstanding prior to the entry into the Employment Agreement continue to be governed by the terms set forth in such award agreements.

“Change of Control” for the purposes of the Employment Agreements means: (a) any person obtaining beneficial ownership representing more than 50% of the total voting power represented by our then outstanding voting securities without the approval of not fewer than two-thirds of our Board of Directors; (b) a merger or consolidation of us whether or not approved by our Board of Directors, other than a merger or consolidation that would result in our voting securities immediately prior thereto continuing to represent at least 50% of the total voting power outstanding immediately after such merger or consolidation, (c) our shareholders approving a plan of complete liquidation or an agreement for the sale or disposition by us of all or substantially all of our assets, or (d) as a result of the election of members to our Board of Directors, a majority of the Board of Directors consists of persons who are not members of the Board of Directors on December [●], 2022, except in the event that such slate of directors is proposed by a committee of the Board of Directors.

The Employment Agreements also contain standard assignment of inventions, indemnification and confidentiality provisions. Further, each executive is subject to non-solicitation covenants during the term of the agreement.

Although each executive will be prohibited from competing with us while he is employed with us, he will only be prohibited from competing for twelve months after his employment with us ends pursuant to his employment agreement (subject to the terms thereof, and the Company’s option to terminate such non-compete provisions under certain circumstances as discussed above and subject to Mr. Rhame’s agreement which includes no non-compete obligations upon the expiration of his employment agreement at the end of its initial term). Accordingly, each executive could be in a position to use industry experience gained while working with us to compete with us.

Each Employment Agreement also includes a provision providing that any portion of the payments and benefits paid under the Employment Agreements, as well as any other payments and benefits which an executive receives pursuant to a Company plan or other arrangement, shall be subject to a clawback (a) to the extent necessary to comply with the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act or any SEC rule or any other applicable law; and/or (b) any policy adopted by the Company and applicable generally to the executive and other officers of the Company, relating to the recovery of compensation granted, paid, delivered, awarded or otherwise provided to executive by the Company or its subsidiaries or any of their respective affiliates, as applicable, as may be amended from time to time.

Separately, Mr. Cowart’s Employment Agreement provides that for so long as he is still employed by the Company, the Board shall nominate him to be elected to serve on the Board at each meeting of the Company’s shareholders held during the term of his Employment Agreement.

The description of the Employment Agreements above is not complete and is qualified in its entirety by the Employment Agreements entered into with each executive officer of the Company, copies of which are attached hereto as Exhibits 10.2, 10.3, 10.4 and 10.5, and incorporated by reference into this Item 5.02 by reference in their entirety.

Adoption of Clawback and Forfeiture Policy

On December 12, 2022, the Board adopted a preliminary Clawback and Forfeiture Policy, providing for certain rights of the Company to clawback amounts of cash or equity (and in some cases cancel equity awards) paid to an employee of the Company in the event (1) that the employee engages in: (a) misconduct or commits an error that, in each case, causes material financial or reputational harm to the Company or to the employee’s business group; or (b) for purposes of a cancellation or forfeiture (but not for clawback), any conduct that constitutes cause under the policy; (2) the amount of the award was based upon the achievement of certain financial results that were subsequently reduced due to a financial restatement (public restatement) or were based upon one or more materially inaccurate performance metrics; or

(1)  in connection with the employee’s job responsibilities, (i) failure through willful misconduct or gross negligence of the employee, including in a supervisory capacity, to identify, escalate, monitor, or manage, in a timely manner risks material to the Company or to the employee’s business group in accordance with Company policies and procedures (as applicable) or (ii) the Company or the employee’s business group suffers a material failure of risk management. The Board anticipates amending the Clawback and Forfeiture Policy in the future, once The NASDAQ Stock Market LLC has adopted final rules required by the Securities and Exchange Commission and the Dodd-Frank Act relating to clawbacks to comply with such future rules.

The description of the Clawback and Forfeiture Policy above is not complete and is qualified in its entirety by the Clawback and Forfeiture Policy, a copy of which is attached hereto as Exhibit 99.2, and is incorporated by reference into this Item 5.02 by reference in its entirety.

Item 8.01 Other Events.

Adoption of Amended Committee Charter

On December 12, 2022, the Board renamed the Nominating and Governance Committee of the Board of Directors to the Nominating, Corporate Governance and Environmental, Social, and Governance Committee and adopted a new charter for such committee to provide for certain Environmental, Social, and Governance (ESG) responsibilities including providing for the committee to: (a) oversee and review any reports the Company prepares and publishes related to ESG matters; (b) review and make recommendations to the Board with respect to proposals for corporate action relating to ESG matters received from the Company’s shareholders; (c) review and receive updates from management on significant social and public responsibility matters of interest to the Company and its stakeholders and strategies for enhancing the Company’s reputation among its stakeholders regarding ESG matters; (d) make regular reports to the Board, directly or through the Chairperson, about Committee activities; (e) review the Company’s strategy, policies and practices for consistency with its responsibility toward environmental, social and governance matters, including its diversity and inclusion efforts, and make recommendations to the Board and management regarding such matters as it may deem advisable; (f) oversee management’s monitoring and enforcement of the Company’s policies to protect the health and safety of employees, contractors, customers, the public, and the environment and review with management the quality of the Company’s procedures for identifying, assessing, monitoring and managing key environmental, safety and social risks in the Company’s business; (g) review and advise the Board on (i) the Company’s sustainability goals and commitments, (ii) the Company’s achievement of its sustainability goals and commitments, (iii) the Company’s position in relevant independent ranking systems and (iv) any reporting of such targets and the Company’s progress and position in rankings; (h) assist the Board in identifying, evaluating, and monitoring public policy trends, regulatory developments and environmental issues that affect the Company’s activities and performance, as well as oversight of voluntary reporting of these matters, and shall recommend to the Board policies, programs and strategies concerning such trends, developments and issues; (i) advise the Board on significant stakeholder concerns relating to sustainability; and (j) oversee and review the Company’s policies on community investment and corporate charitable activities.

The description of the charter of the Nominating, Corporate Governance and Environmental, Social, and Governance Committee above is not complete and is qualified in its entirety by the charter of the Nominating, Corporate Governance and Environmental, Social, and Governance Committee, a copy of which is attached hereto as Exhibit 99.1, and is incorporated by reference into this Item 8.01 by reference in its entirety.

Formation of Executive Committee and Designation of Lead Director

Also on December 12, 2022, the Board formed an Executive Committee to act as a steering committee for the full Board, with the main purpose of facilitating decision-making between board meetings or in urgent and crisis circumstances and with the goal of prioritizing issues for the full board to address, being responsible for overseeing board policies, ensuring good governance practices, and having such responsibilities and authority as may be further designated to such committee from time to time by the Board. The Board further provided that the Chairperson of the Executive Committee will serve as the Lead Director of the Board of Directors. Immediately upon the formation of the committee, the Board appointed Mr. Dan Borgen as Chairperson of the Executive Committee (and Lead Director) and Mr. Stratton and Ms. Maston as members of the Executive Committee.

Updated Compensation of Independent Members of the Board of Directors

On December 12, 2022, the Board of Directors, with the recommendation of the Compensation Committee of the Board of Directors, approved the following updated compensation payable to each non-executive member of the Board of Directors, effective as of November 1, 2022 (the “Updated Board Compensation”):

(a) Yearly cash compensation payable to each member of, and each Chairperson of, the Committees of the Board of Directors as follows:

	Audit  Committee	Compensation  Committee	Nominating  and Corporate  Governance  Committee/ESG	Related Party  Transaction  Committee	Risk  Committee	Executive Committee
Chairperson	$34,500	$32,500	$30,000	$7,500	$35,000	$55,000
Member	$7,500	$7,500	$5,000	$2,500	$10,000	$25,000

(b) Yearly cash compensation to each independent member of the Board of Directors of $75,000;

(c) Yearly equity compensation to each member of the Executive Committee equal to $12,000 of value and to the Chairperson of the Executive Committee, who is also the Lead Director, of $50,000 of value (the “Executive Committee Equity Compensation”); and

(d) Yearly equity compensation to each independent member of the Board of Directors equal to $115,200 of value (the “Equity Board Compensation”).

All cash compensation payable pursuant to the above will be paid quarterly in arrears. Equity compensation is expected to be paid in the form of options, issuable at such times, and subject to such terms, as may be further approved by the Board of Directors or the Compensation Committee of the Board of Directors from time to time.

Item 9.01 Financial Statements and Exhibits.

Exhibit No.	Description
10.1	Form of Indemnification Agreement between the Registrant and each director and executive officer of the Registrant (Filed as Exhibit 10.1 to the Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission on June 14, 2022, and incorporated herein by reference)(File No. 001-11476)
10.2*#	Executive Employment Agreement dated December 12, 2022, by and between Vertex Energy, Inc. and Benjamin P. Cowart
10.3*#	Executive Employment Agreement dated December 13, 2022, by and between Vertex Energy, Inc. and Chris Carlson
10.4*#	Executive Employment Agreement dated December 12, 2022, by and between Vertex Energy, Inc. and James Rhame
10.5*#	Executive Employment Agreement dated December 12, 2022, by and between Vertex Energy, Inc. and Alvaro Ruiz
99.1*	Charter of the Nominating, Corporate Governance and Environmental, Social, and Governance Committee
99.2*#	Vertex Energy, Inc. Clawack and Forfeiture Policy
104	Inline XBRL for the cover page of this Current Report on Form 8-K

* Filed herewith.

** Furnished herewith.

# Indicates management contract or compensatory plan or arrangement.

The inclusion of any website address in this Form 8-K, and any exhibit thereto, is intended to be an inactive textual reference only and not an active hyperlink. The information contained in, or that can be accessed through, such website(s) is not part of or incorporated into this Form 8-K.

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: December 14, 2022	By:	/s/ Chris Carlson
		Chris Carlson
		Chief Financial Officer

EX-10.2

Vertex Energy, Inc. 8-K

Exhibit 10.2

VERTEX ENERGY, INC.

EXECUTIVE EMPLOYMENT AGREEMENT

BENJAMIN P. COWART

PRESIDENT AND CHIEF EXECUTIVE OFFICER

TABLE OF CONTENTS

ARTICLE I. DEFINITIONS		1
1.1.	Definitions	1
ARTICLE II. EMPLOYMENT; TERM; DUTIES		3
2.1.	Employment	3
2.2.	Duties and Responsibilities	4
2.3.	Related Party Transaction Committee	4
2.4.	Covenants of Executive	4
2.5.	Board of Directors	4
ARTICLE III. COMPENSATION AND OTHER BENEFITS		5
3.1.	Base Salary	5
3.2.	Discretionary Bonus	5
3.3.	Performance Standards	5
3.4.	Equity Awards	5
3.5.	Additional Grants/Awards	6
3.6.	Business Expenses	6
3.7.	Vacation	6
3.8.	Other Benefits	6
3.9.	Car Allowance	6
3.10.	Change of Control Payment	6
ARTICLE IV. TERMINATION OF EMPLOYMENT		7
4.1.	Termination of Employment	7
4.2.	Effect of Termination	8
4.3.	Consulting	9
4.4.	Treatment of Equity	9
ARTICLE V. INVENTIONS		9
5.1.	Inventions in General	9
5.2.	Inventions Retained and Licensed	10
5.3.	Assignment of Inventions	10
5.4.	Assignment of Other Rights	10
5.5.	Inventions Assigned to the United States	10
5.6.	Maintenance of Records	10
5.7.	Patent and Copyright Registrations	11
ARTICLE VI. CONFIDENTIAL/TRADE SECRET INFORMATION		11
6.1.	Applicability of Provisions after Lapse of Agreement	11
6.2.	Confidential/Trade Secret Information	11
6.3.	Non-Compete	11
6.4.	Non-Solicitation During Employment	11
6.5.	Restriction on Use of Confidential/Trade Secret Information	12
6.6.	Other Activities	12
6.7.	Prohibition Against Unfair Competition	12
6.8.	Non-Solicitation of Customers	12
6.9.	Non-Solicitation of Employees	12
6.10.	Former Employer Information	13
6.11.	Third Party Information	13
6.12.	Immunity From Liability for Certain Confidential Disclosures and Certain Allowed Disclosures	13
6.13.	Conflict of Interest	13
6.14.	Reasonable Restrictions	13
6.15.	Specific Performance	13

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	Benjamin P. Cowart
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6.16.	Response to Legal Process; Allowable Disclosures	13
ARTICLE VII. INDEMNIFICATION		14
7.1.	Required Indemnification	14
7.2.	In Addition to Other Obligations	14
7.3.	Notification and Required Actions	14
ARTICLE VIII. ARBITRATION		14
8.1.	Scope	14
8.2.	Mediation and Arbitration Procedure	15
8.3.	Limitations Period; Deadline to Assert Claims	15
ARTICLE IX. MISCELLANEOUS		15
9.1.	Binding Effect; Assignment	15
9.2.	Notices	15
9.3.	Severability	16
9.4.	Waiver	16
9.5.	Entire Agreement	16
9.6.	Amendment	16
9.7.	Authority	16
9.8.	Attorneys’ and Arbitration Fees	16
9.9.	Construction	16
9.10.	Governing Law	16
9.11.	Survival	17
9.12.	Section 280G Safe Harbor Cap	17
9.13.	Section 409A Compliance	17
9.14.	Withholding of Taxes and Other Executive Deductions	18
9.15.	Clawback	18
9.16.	Legal Counsel	18
9.17.	Right to Negotiate	19
9.18.	Voluntary Nature of Agreement	19
9.19.	Counterparts, Effect of Facsimile, Emailed and Photocopied Signatures	19

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	Benjamin P. Cowart
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THIS EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) is entered into this 12th day of December (the “Execution Date”), to be effective as of the Effective Date as defined below between Vertex Energy, Inc., a Nevada corporation (the “Company”), and Benjamin P. Cowart (“Executive”) (each of the Company and Executive are referred to herein as a “Party”, and collectively referred to herein as the “Parties”).

W I T N E S S E T H:

WHEREAS, the Executive currently serves as the President and Chief Executive Officer of the Company; and

WHEREAS, the Company desires to continue to obtain the services of Executive, and Executive desires to continue to be employed by the Company upon the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the premises, the agreements herein contained and other good and valuable consideration, receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as of the Effective Date as follows:

ARTICLE I.
DEFINITIONS

1.1.         Definitions. In addition to other terms defined throughout this Agreement, the following terms have the following meanings when used herein:

1.1.1       “Cause” shall mean, in the context of a basis for termination by the Company of Executive’s employment with the Company, that:

(i)                  Executive materially breaches any obligation, duty, covenant or agreement under this Agreement, which breach is not cured or corrected within thirty (30) days of written notice thereof from the Company (except for breaches of ARTICLE V or ARTICLE VI of this Agreement, which cannot be cured and for which the Company need not give any opportunity to cure); or

(ii)                 Executive’s willful failure or refusal to perform or nonperformance of his duties required by this Agreement or assigned by the Company through the Board of Directors, and without a reasonable basis for Executive to do so; provided, however, that Executive shall have first received written notice from the Company stating with specificity the nature of such failure and refusal and affording Executive an opportunity, as soon as practicable, to correct the acts or omissions complained of, and failure of Executive to cure such failure or refusal within thirty (30) days after written notice; or

(iii)                Any gross negligence or willful misconduct of the Executive with regard to the Company or any of its subsidiaries resulting in a material economic loss to the Company or material damage to the Company’s reputation or business relationships; or

(iv)               Executive commits any act of misappropriation of funds or embezzlement; or

(v)                Executive commits any act of fraud; or

(vi)               Executive is convicted of, or pleads guilty or nolo contendere with respect to, theft, fraud, a crime involving moral turpitude, or a felony under federal or applicable state law; and, in the case of any of the above offenses, such offense casts reasonable doubt on Executive’s ability to perform his duties going forward.

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1.1.2       “Change of Control” shall mean the happening of any of the following without the prior written consent of the Executive:

(i)                  Any Person is or becomes the “Beneficial Owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing more than 50% of the total voting power represented by the Company’s then outstanding voting securities without the approval of not fewer than two-thirds of the Board of Directors of the Company voting on such matter, unless the Board of Directors specifically designates such acquisition to be a change of control;

(ii)                 A merger or consolidation of the Company whether or not approved by the Board of Directors of the Company, other than a merger or consolidation that would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted or into voting securities of the surviving entity) at least 50% of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or the shareholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets; or

(iii)                As a result of the election of members to the Board of Directors, a majority of the Board of Directors consists of persons who are not members of the Board of Directors as of the Execution Date (including Executive as a member of the Board of Directors as of the Execution Date), except in the event that such slate of directors is proposed by the Committee or the Board.

1.1.3       “COBRA” means Section 4980B of the Internal Revenue Code and Section 601 of the Employee Retirement Income Security Act of 1974, as amended.

1.1.4       “Confidential/Trade Secret Information” is information that is not generally known to the public and, as a result, is of economic benefit to the Company in the conduct of its business, and the business of the Company’s subsidiaries, which includes, but is not limited to, all proprietary information developed or obtained by the Company, including its affiliates, and predecessors, and comprising the following items, whether or not such items have been reduced to tangible form (e.g., physical writing, computer hard drive, disk, tape, e-mail, etc.): all methods, techniques, processes, ideas, research and development, product designs, engineering designs, plans, models, production plans, business plans, add-on features, trade names, service marks, slogans, forms, pricing structures, business forms, marketing programs and plans, layouts and designs, financial structures, operational methods and tactics, cost information, the identity of and/or contractual arrangements with customers, partners, suppliers and/or vendors, accounting procedures, and any document, record or other information of the Company relating to the above. Confidential/Trade Secret Information includes not only information directly belonging to the Company which existed before the date of this Agreement, but also information developed by Executive for the Company, including its subsidiaries, affiliates and predecessors, during the term of Executive’s employment with the Company. Confidential/Trade Secret Information does not include any information which (a) was in the lawful and unrestricted possession of Executive prior to its disclosure to Executive by the Company, its subsidiaries, affiliates or predecessors, (b) is or becomes generally available to the public by lawful acts other than those of Executive after receiving it, or (c) has been received lawfully and in good faith by Executive from a third party who is not and has never been an executive of the Company, its subsidiaries, affiliates or predecessors, and who did not derive it from the Company, its subsidiaries, affiliates or predecessors.

1.1.5       “Current Ratio” means, as of the date of determination, (a) the current assets of the Company, divided by (b) the current liabilities of the Company, each as set forth in the financial statements of the Company as filed in the Company’s periodic reports with the Securities and Exchange Commission; except in the case of a Payment Date Current Ratio, which shall be calculated based on the Company’s internally generated financial statements, in accordance with generally accepted accounting principles, consistently applied.

1.1.6       “Effective Date” means April 1, 2022.

1.1.7       “Exchange Act” means the Exchange Act of 1934, as amended.

1.1.8       “Good Reason” shall mean, in the context of a basis for termination by Executive of his employment with the Company, any of the following without his prior written consent: (a) a material diminution in his authority, duties, or responsibilities; (b) a material diminution in the authority, duties, or responsibilities of the supervisor to whom Executive is required to report, including, if applicable, a requirement that Executive report to an officer or employee of the Company rather than reporting to the Board; (c) a material breach by the Company of this Agreement, or (d) a material diminution in Executive’s Base Salary.

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1.1.9       “Initial Term” means a period beginning on the Execution Date and ending on the third (3rd) anniversary of the Execution Date.

1.1.10     “Non-Compete Period” means a period of twelve (12) months after the Termination Date.

1.1.11     “Person” (when capitalized) means any individual, corporation, partnership, joint venture, limited liability company, trust, unincorporated organization or governmental entity.

1.1.12     “Restricted Area” means (A) any State (in the United States); and/or (B) any other geographic area (province, if such Restricted Area is in Canada, or country, if such Restricted Area is in a country other than the United States or Canada), in which the Company or any of its Subsidiaries provides Restricted Services or Restricted Products, directly or indirectly, during the twelve months preceding the Termination Date of Executive’s employment hereunder.

1.1.13     “Restricted Products” means used motor oil, petroleum by-products, renewable fuels, vacuum gas oil, aggregated feedstock, conventional crude refining and re-refined oil products, gasoline blendstock, pygas and fuel oil cutterstock, oil filters, engine coolant and/or other hydrocarbons and any other product that the Company or any of its Subsidiaries has provided or is researching, developing, manufacturing, distributing, refining, re-refining, aggregating, purchasing, selling and/or providing at any time during the two years immediately preceding the Termination Date, or about which the Executive obtained any trade secret or other Confidential/Trade Secret Information during the two years immediately preceding the Termination Date as a result of (a) his employment with the Company, (b) consulting services he provided to the Company, or (c) his position as a director of the Company.

1.1.14     “Restricted Services” means the collection, trading, purchasing, processing, storing, aggregation, transportation, manufacture, distribution, recycling, storage, refinement, re-refinement and sale of Restricted Products; or dismantling, demolition, decommission and marine salvage services and any other services that the Company or any of its Subsidiaries has provided or is researching, developing, performing and/or providing at any time during the two years immediately preceding the Termination Date or about which Executive obtained any trade secret or other Confidential/Trade Secret Information during the two years immediately preceding the Termination Date as a result (a) of his employment with the Company, (b) consulting services he provided to the Company, or (c) his position as a director of the Company.

1.1.15     “Subsidiary” or “Subsidiaries” means any or all Persons of which the Company owns directly or indirectly through another Person, a nominee arrangement or otherwise (a) at least a 20% of the outstanding capital stock (or other shares of beneficial interest) entitled to vote generally or otherwise have the power to elect a majority of the board of directors or similar governing body or the legal power to direct the business or policies of such Person or (b) at least 20% of the economic interests of such Person.

1.1.16     “Term” means the Initial Term and any Automatic Renewal Terms.

1.1.17     “Termination Date” shall mean the date on which Executive’s employment with the Company hereunder ends.

ARTICLE II.
EMPLOYMENT; TERM; DUTIES

2.1.         Employment. Pursuant to the terms and conditions hereinafter set forth, the Company hereby employs Executive, and Executive hereby accepts such employment, as the President and Chief Executive Officer (“CEO”) of the Company for the period from the Effective Date to the Execution Date and for the Initial Term; provided that this Agreement shall automatically extend for additional one (1) year periods after the Initial Term (each an “Automatic Renewal Term”) unless either Party provides the other written notice of their intent not to automatically extend the term of this Agreement at least sixty (60) days prior to the end of the Initial Term or any Automatic Renewal Term, as applicable (each a “Non-Renewal Notice”).

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2.2.         Duties and Responsibilities. Executive, as President and CEO, shall perform such administrative, managerial and executive duties for the Company (i) as are prescribed by applicable job specifications for the President and Chief Executive Officer of a public company the size and nature of the Company, (ii) as may be prescribed by the Bylaws of the Company, (iii) as are customarily vested in and incidental to such position, and (iv) as may be assigned to him from time to time by the Board of Directors of the Company (the “Board”).

2.3.         Related Party Transaction Committee. The Company’s “Related Party Transaction Committee,” composed of at least two (2) independent directors (as determined by the rules and regulations of the NASDAQ Capital Market, or the principal exchange or market on which the Company’s securities then trade), shall be available to Executive to review any potential conflicts of interest between Executive, the Company and any other entity or individual which may be affiliated with Executive.

2.4.         Covenants of Executive.

2.4.1       Best Efforts. Executive shall devote his best efforts to the business and affairs of the Company. Executive shall perform his duties, responsibilities and functions to the Company hereunder to the best of his abilities in a diligent, trustworthy, professional and efficient manner and shall comply, in all material respects, with all rules and regulations of the Company (and special instructions of the Board, if any) and all other rules, regulations, guides, handbooks, procedures and policies applicable to the Company and its business in connection with his duties hereunder, including all United States federal and state securities laws applicable to the Company.

2.4.2       Records. Executive shall use his best efforts and skills to truthfully, accurately, and promptly prepare, maintain, and preserve all records and reports that the Company may, from time to time, request or require, fully account for all money, records, equipment, materials, or other property belonging to the Company of which he may have custody, and promptly pay and deliver the same whenever he may be directed to do so by the Board.

2.4.3       Compliance. Executive shall use his best efforts to maintain the Company’s compliance with all rules and regulations of the Securities and Exchange Commission (“SEC”), and reporting requirements for publicly traded companies under the Exchange Act. Executive shall at all times comply, and cause the Company to comply, with the then-current good corporate governance standards and practices as prescribed by the SEC, any exchange on which the Company’s capital stock or other securities may be traded and any other applicable governmental entity, agency or organization.

2.4.4       Exchange Act Filing Requirements. The Executive agrees and acknowledges that due to the Executive’s status as a Section 16(a) “officer” of the Company (as described in Rule 16a-1(f) of the Exchange Act), he has an obligation to file various beneficial ownership reports and forms with the Securities and Exchange Commission, including Forms 3, 4 and 5 (where applicable) and that such obligation is solely the Executive’s regardless of whether the Company assists the Executive in filing such forms or not. The Executive agrees to use his best efforts to timely and adequately file all required beneficial ownership reports and forms required under the Exchange Act.

2.5.         Board of Directors. Provided that Executive is still employed hereunder, the Board shall nominate Executive to be elected to serve on the Board at each meeting of the Company’s shareholders held during the term of this Agreement to elect directors, consistent with the provisions of the Bylaws and Articles of Incorporation of the Company, as amended and in effect from time to time.

2.6.         Retroactive Pay. Executive shall receive, within fourteen (14) days after the execution of this Agreement by the Executive and the counter-signature of this Agreement by the Company, a lump sum payment equal to the difference between his salary in effect prior to the Effective Date and his Base Salary for the time period from the Effective Date to the Execution Date.

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ARTICLE III.
COMPENSATION AND OTHER BENEFITS

3.1.         Base Salary. So long as this Agreement remains in effect, for all services rendered by Executive hereunder and all covenants and conditions undertaken by the Parties pursuant to this Agreement, the Company shall pay, and Executive shall accept, as compensation, an annual base salary of $514,000 (as may be increased from time to time in accordance with this Section, the “Base Salary”). The Base Salary shall be payable in regular installments in accordance with the normal payroll practices of the Company, in effect from time to time, but in any event no less frequently than on a monthly basis. For so long as Executive is employed hereunder, beginning on December 31, 2022, and on each December 31st thereafter, the Base Salary may be increased as determined by the Compensation Committee of the Board (the “Committee”), in its sole and absolute discretion, or the Board, with the recommendation of the Committee. Notwithstanding the above, the Committee or the Board, with the recommendation of the Committee, may also increase the Base Salary from time to time, at any time, in its/their discretion. Such increase(s) in salary shall be documented in the Company’s records, but shall not require the Parties enter into a new or amended form of this Agreement.

3.2.         Discretionary Bonus. Executive shall be eligible for a yearly discretionary cash bonus (a “Cash Bonus”) and equity bonus (the “Equity Bonus”) equal to an amount as determined by the Committee, with the recommendation of the Committee and based on the condition of the Company’s business and results of operations, the Committee’s evaluation of Executive’s individual performance for the relevant period, and the satisfaction of goals that may be established by the Committee. Each Cash Bonus shall be paid in the Committee’s discretion at the same time annual bonuses are paid to other executives of the Company, in an amount determined by the Committee in its sole discretion, based on such criteria as the Committee deems relevant; provided that, without limiting the above, and the discretionary nature of the bonuses, unless otherwise agreed by the Committee, no Cash Bonus shall be paid at any time that the sum of the Current Ratios, at the end of the last two completed calendar quarters that have been publicly filed with the SEC, divided by 2, totals less than 1.0. The Committee, or the Board, with the recommendation of the Committee, may also pay or grant discretionary Cash Bonuses or Equity Bonuses from time to time in their discretion, at any time, in its/their discretion. The Equity Bonus may be in the form of common stock, stock options or other equity consideration, in such amounts and with such terms as may be determined by the Committee or the Board, with the recommendation of the Committee, from time to time. Except as specified in ARTICLE IV regarding the payment of a bonus and other compensation following Executive’s termination of employment under certain circumstances, nothing herein shall require the Committee or the Board to pay any bonus, including any Cash Bonus or Equity Bonus. Except as specified in ARTICLE IV regarding the payment of a bonus and other compensation following Executive’s termination of employment, all bonuses paid to the Executive shall be in the discretion of the Committee or the Board with the recommendation of the Committee, absent a written agreement providing otherwise. The Cash Bonus shall only be paid to the extent the Company’s Chief Financial Officer has determined, as of a date within 10 business days of the date the Cash Bonus is to be paid (the “Proposed Payment Date”), that the Current Ratio, after paying the Cash Bonus, and any other cash bonuses awarded by the Compensation Committee, which are unpaid as of such Proposed Payment Date, will be equal to at least 1.0 (the “Payment Date Current Ratio”). Notwithstanding the forgoing, the Cash Bonus will be paid not later than March 15 of the year following the year in which the Committee or the Board determine to grant such Cash Bonus.

3.3.         Performance Standards. The Executive and the Company agree that the Executive’s discretionary Cash Bonus and equity-based compensation (including the Equity Bonus) may, but shall not be required to, be based on the Executive’s and the Company’s achievement of performance goals that may be established by the Committee after discussion with the Executive and his supervisors (if any). Until or unless the Company and the Committee establish performance goals, the Executive’s discretionary Cash Bonus and equity-based compensation (including the Equity Bonus) will be wholly discretionary.

3.4.         Equity Awards. During the Term, the Executive shall be eligible to receive equity and equity-based awards (including the Equity Bonus) in the discretion of the Board or the Committee and on such terms and conditions as determined by the Board or the Committee. Any equity and equity-based awards (including the Equity Bonus) granted to the Executive, whether before or after the Execution Date, shall be governed by the terms and conditions of the applicable Company equity incentive plan(s), as may be in effect from time to time, and the award agreements governing such equity or equity-based awards (any such plan and award agreements, collectively, the “Equity Agreements”). Any equity-based awards granted to Executive after the Execution Date shall have vesting and exercisability terms that are no less favorable to Executive than the terms required by this Agreement.

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3.5.         Additional Grants/Awards. Executive shall be eligible to receive additional equity incentive grants or cash bonus awards as determined by the Board or a committee of the Board in its sole discretion.

3.6.         Business Expenses. So long as this Agreement is in effect, the Company shall reimburse Executive for all reasonable, out-of-pocket business expenses incurred in the performance of his duties hereunder consistent with the Company’s policies and procedures, in effect from time to time, with respect to travel, entertainment, communications, technology/equipment and other business expenses customarily reimbursed to senior executives of the Company in connection with the performance of their duties on behalf of the Company.

3.7.         Vacation. Executive will be entitled to 20 days of paid time-off (“PTO”) per year. PTO days shall accrue beginning on the 1st of January for each year during the term of this Agreement. Unused PTO days shall expire on December 31 of each year and shall not roll over into the next year. Other than the use of PTO days for illness or personal emergencies, PTO days must be pre-approved by the Company.

3.8.         Other Benefits. During the Term, the Executive shall be entitled to participate in any employee benefit plans or programs for which he is eligible that are provided by the Company to its management employees, such as retirement, health, life insurance, and disability plans, vacation and sick leave policies, business expense reimbursement policies that the Company has in effect from time to time, and stock option plan, 401(k) plan, life, health, accident, disability insurance plans, pension plans and retirement plans, in effect from time to time (including, without limitation, any incentive program or discretionary bonus program of the Company which may be implemented in the future by the Board), to the extent and on such terms and conditions as the Company customarily makes such plans available to its senior executives. The Company retains the right to terminate or alter the terms of any benefit programs that it may establish, provided that no such termination or alteration shall adversely affect any vested benefit under any benefit program or other obligation set forth in this Agreement.

3.9.         Car Allowance. The Company shall provide the Executive an automobile allowance of $750 per month during the term of Executive’s employment hereunder.

3.10.       Change of Control Payment.

3.10.1     If a Change of Control occurs during the Term or within six months after Executive’s termination of employment pursuant to Section 4.1.5 or 4.1.6, the Company shall pay Executive, within 60 days following the date of such Change of Control, a cash payment in a lump sum in an amount equal to (x) minus (y) where (x) equals 3.0 times the sum of (a) the most recent annual Base Salary of the Executive; and (b) the amount of the most recent Cash Bonus paid to the Executive pursuant to Section 3.2 of this Agreement (the “Change of Control Payment”) and (y) equals the amount of any Severance Payment actually paid to Executive pursuant to Section 4.2.3, below). If this Agreement has been terminated prior to any Cash Bonus being awarded pursuant to this Agreement or if the most recent Cash Bonus was zero, the “amount of the most recent Cash Bonus paid to the Executive pursuant to Section 3.2 of this Agreement” in the immediately preceding sentence shall be replaced with “an amount equal to the greater of (1) the amount of Executive’s most recent annual cash bonus awarded by the Committee or the Board (whether or not a Cash Bonus hereunder) (“Most Recent Cash Bonus”); and (2) the amount of Executive’s annual cash bonus awarded by the Committee or the Board (whether or not a Cash Bonus hereunder) for the year immediately preceding the Most Recent Cash Bonus (the “Preceding Year Bonus”)”. The Change of Control Payment shall be made less applicable withholding.

3.10.2     In the event of a change of control (as such term(s) are defined and/or used in each Equity Agreement, an (“Equity Award Change of Control”), the equity-based compensation held by the Executive prior to the date of this Agreement shall vest to the extent set forth in such Equity Agreements and shall be exercisable for the time periods set forth in such Equity Agreements.

3.10.3     The Equity Agreements for all Equity Bonus and other equity-based compensation granted to Executive on and after the date of this Agreement shall provide that upon an Equity Award Change of Control all of Executive’s Equity Bonus and other equity-based compensation shall immediately vest regardless of whether the Executive is retained by the Company or successor following the Equity Award Change of Control and any outstanding stock options and other equity compensation held by the Executive shall be exercisable by the Executive pursuant to the terms thereof until the earlier of (A) three (3) months from Executive’s Termination Date and (B) the latest date upon which such stock options and other equity compensation would have expired by their original terms under any circumstances.

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ARTICLE IV.
TERMINATION OF EMPLOYMENT

4.1.         Termination of Employment. Executive’s employment pursuant to this Agreement shall terminate on the earliest to occur of the following:

4.1.1       upon the death of Executive;

4.1.2       upon the delivery to Executive of written notice of termination by the Company if Executive shall suffer a physical or mental disability which renders Executive, in the reasonable judgment of the Committee or the Board, unable to perform his duties and obligations under this Agreement for either 90 consecutive days or 180 days in any 12-month period;

4.1.3       upon delivery to the Company of a written notice of termination by Executive for any reason other than for Good Reason (for which Executive shall provide sixty (60) days of notice); except, if Executive delivers a notice of termination pursuant to Section 2.1, upon the expiration of the Initial Term or the applicable Automatic Renewal Term during which such notice is provided, which shall instead be subject to Section 4.1.7;

4.1.4       upon delivery to Executive of written notice of termination by the Company for Cause;

4.1.5       upon delivery of written notice of termination from Executive to the Company for Good Reason, provided, however, prior to any such termination by Executive pursuant to this Section 4.1.5, Executive shall have advised the Company in writing within ninety (90) days after the initial occurrence of any circumstances that would constitute Good Reason, the Company shall have thirty (30) days following receipt of Executive’s written notice (the “Cure Period”) to cure such initial occurrence of any circumstances that would constitute Good Reason, and further provided that such written notice of termination is provided by Executive within thirty (30) days after the end of such Cure Period, provided that such initial occurrence of the circumstances constituting Good Reason has not been cured during such Cure Period; or

4.1.6       upon delivery to Executive of a written notice of termination by the Company without Cause; except if Company delivers a notice of termination pursuant to Section 2.1, upon the expiration of the Initial Term or the applicable Automatic Renewal Term during which such notice is provided, which shall instead be subject to Section 4.1.8;

4.1.7       if the Executive delivers a notice of termination pursuant to Section 2.1, upon the expiration of the Initial Term or the applicable Automatic Renewal Term during which such notice is provided; or

4.1.8       if the Company delivers a notice of termination pursuant to Section 2.1, upon the expiration of the Initial Term or the applicable Automatic Renewal Term during which such notice is provided. The Company’s notice of termination under this section must contain a statement notifying the Executive that either:

(a)     the Company shall apply Section 6.1 of this Agreement and abrogates its right to enforce certain sections of ARTICLE VI as provided therein; or

(b)     the Company shall not apply Section 6.1 of this Agreement and intends that all of ARTICLE VI remains in full force and effect as provided therein.

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4.2.         Effect of Termination. In the event that Executive’s employment hereunder is terminated in accordance with the provisions of this Agreement, Executive shall be entitled to the following:

4.2.1       If Executive’s employment is terminated pursuant to Sections 4.1.1 (death) or Section 4.1.2 (disability), Executive or his estate shall be entitled to a lump sum cash severance payment equal to the sum of (i) Executive’s Base Salary accrued through the Termination Date; (ii) any unpaid Cash Bonus for the prior year that would have been paid had Executive not been terminated prior to such payment; and (iii) the pro rata amount of the current year’s bonus (through the end of the month of termination), which would have been payable to the Executive, had the Executive been employed through the end of the then current calendar year, based on the Board or Committee’s good faith assessment of the amount which would have been paid to Executive as a cash bonus for such calendar year, based on the Company’s and Executive’s quantifiable performance through the Date of Termination, and the Board or Committee’s customary bonus determination matrix, with rankings based on the Company’s peer group and the Board or Committee’s individual rankings of such matrix items, in each case utilizing the Company’s then current process for determining bonuses as determined by the Committee in their reasonable discretion (the “Good Faith Bonus Determination”). Such amount shall be paid within 60 days after the Termination Date. Executive or his estate shall be entitled to no other benefits other than as required under the terms of employee benefit plans in which Executive was participating as of the Termination Date and continuation of health insurance benefits on the terms and to the extent required by COBRA, or such other similar law or regulation as may be applicable to the Executive or the Company with respect to the Executive. Additionally, and notwithstanding anything to the contrary in any Equity Agreement, any unvested stock options or equity compensation held by Executive shall vest and shall be exercisable until the earlier of (A) ninety days (90) days from the date of termination and (B) the latest date upon which such stock options or equity would have expired by their original terms under any circumstances.

4.2.2       If Executive’s employment is terminated pursuant to Section 4.1.3 (without Good Reason by the Executive), Section 4.1.7 (Executive’s Non-Renewal Notice), Section 4.1.8(a) (Company’s Non-Renewal Notice providing that Section 6.1 shall apply), or Section 4.1.4 (by the Company for Cause): Executive shall be entitled to his Base Salary accrued through the Termination Date and no other benefits other than as required under the terms of employee benefit plans in which Executive was participating as of the Termination Date and continuation of health insurance benefits on the terms and to the extent required by COBRA, or such other similar law or regulation as may be applicable to the Executive or the Company with respect to the Executive. Additionally, any unvested stock options or equity compensation held by Executive shall immediately terminate and be forfeited (unless otherwise provided in the applicable award) and any previously vested stock options (or if applicable equity compensation) shall be subject to terms and conditions set forth in the applicable Equity Agreement, as such may describe the rights and obligations upon termination of employment of Executive.

4.2.3       If Executive’s employment is terminated by Executive pursuant to Section 4.1.5 (Good Reason), by the Company pursuant to Section 4.1.6 (without Cause by the Company), or by the Company pursuant to Section 4.1.8(b) (Company’s Non-Renewal Notice providing that Section 6.1 shall not apply): (a) Executive shall be entitled to his Base Salary accrued through the Termination Date and any unpaid Cash Bonus for the prior completed calendar year that would have been paid had Executive not been terminated prior to such payment, plus a lump sum cash severance payment equal to the sum of (i) an amount equal to Executive’s current annual Base Salary plus (ii) an amount equal to the Good Faith Bonus Determination for the full calendar year containing the Termination Date (instead of the period through the Termination Date as discussed in Section 4.2.1)(such total payment referred to herein in Section 4.2.3(a) as the “Severance Payment”); and (b) provided Executive elects to receive continued health insurance coverage through COBRA, the Company will pay Executive’s monthly COBRA contributions for health insurance coverage, as may be amended from time to time (less an amount equal to the premium contribution paid by active Company employees, if any) for twelve (12) months following the Termination Date (the “Health Payment”); provided, however, that if at any time Executive is covered by a substantially similar level of health insurance through subsequent employment or otherwise, the Company’s health benefit obligations shall immediately cease, and the Company shall have no further obligation to make the Health Payment. Additionally, and notwithstanding anything to the contrary in any Equity Agreement, any unvested stock options or equity compensation previously granted to the Executive will vest immediately upon such termination and shall be exercisable by the Executive until the earlier of (A) three (3) months from the date of termination and (B) the latest date upon which such stock options or equity would have expired by their original terms under any circumstances. Executive shall be entitled to no other post-employment benefits except as provided for under this Section 4.2.3 and for benefits payable under applicable benefit plans in which Executive is entitled to participate through the Termination Date, subject to and in accordance with the terms of such plans. The Severance Payment shall be paid in cash within sixty (60) days after the Termination Date.

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4.2.4       As a condition to Executive’s right to receive any benefits pursuant to Section 4.2.3 of this Agreement, (A) Executive must execute and deliver to the Company a written release in form and substance satisfactory to the Company, of any and all claims against the Company and all directors and officers of the Company with respect to all matters arising out of Executive’s employment hereunder, or the termination thereof (other than claims for entitlements under the terms of this Agreement or plans or programs of the Company in which Executive has accrued a benefit), which shall become effective by the 90^th day following the Executive’s Termination Date; and (B) Executive must not have breached any of his covenants and agreements under ARTICLE V or ARTICLE VI of this Agreement, which shall continue following the Termination Date.

4.2.5       In the event of termination of Executive’s employment pursuant to Section 4.1.4 (by the Company for Cause), and subject to applicable law and regulations, the Company shall be entitled to offset against any payments due Executive the demonstrable loss and damage, if any, which shall have been suffered by the Company as a result of the acts or omissions of Executive giving rise to termination. The foregoing shall not be construed to limit any cause of action, claim or other rights, which the Company may have against Executive in connection with such acts or omissions.

4.2.6       Upon termination of Executive’s employment hereunder, or on demand by the Company during the Term of this Agreement, Executive will immediately deliver to the Company, and will not keep in his possession, recreate or deliver to anyone else, any and all Company property, as well as all devices and equipment belonging to the Company (including computers, handheld electronic devices, telephone equipment, and other electronic devices), Company credit cards, records, data, notes, notebooks, reports, files, proposals, lists, correspondence, specifications, drawings blueprints, sketches, materials, photographs, charts, all documents and property, and reproductions of any of the aforementioned items that were developed by Executive pursuant to his employment with the Company, obtained by Executive in connection with his employment with the Company, or otherwise belonging to the Company, its successors or assigns, including, without limitation, those records maintained pursuant to this Agreement. However, Executive may retain any materials or documents which he shall need in any legal action to enforce the terms of this Agreement.

4.2.7       Executive also agrees to keep the Company advised of his home and business address for a period of three (3) years after termination of Executive’s employment hereunder, so that the Company can contact Executive regarding his continuing obligations provided by this Agreement. In the event that Executive’s employment hereunder is terminated, Executive agrees to grant consent to notification by the Company to Executive’s new employer about his obligations under this Agreement.

4.3.         Consulting. During the sixty (60) day period following any termination of this Agreement pursuant to Section 4.1.3, Section 4.1.4, Section 4.1.5, Section 4.1.6, or Section 4.1.8(b), and provided that Company and Executive have no disputes regarding the payment of any severance amounts under this Agreement, Executive shall be available, subject to his other reasonable commitments or obligations made or incurred in mitigation of the termination of his employment, by telephone, email or fax, as a consultant to the Company, without further compensation, to consult with its officers and directors regarding projects and/or tasks as defined by the Board. In no extent shall the consulting services required pursuant to this Section 4.3 exceed 80 hours.

4.4.         Treatment of Equity. To the extent not specifically provided for herein, the vesting and exercisability of equity and equity-based awards (if any) held by the Executive at termination, and all other terms of such equity and equity-based awards (if any), shall be governed by the Equity Agreements.

ARTICLE V.
INVENTIONS

5.1.         Inventions in General. As described in further detail in this ARTICLE V, all processes, technologies and inventions relating to the business of the Company (collectively, “Inventions”), including new contributions, improvements, ideas, discoveries, trademarks and trade names, conceived, developed, invented, made or found by Executive, alone or with others, during his employment by the Company, whether or not patentable and whether or not conceived, developed, invented, made or found on the Company’s time or with the use of the Company’s facilities or materials, shall be the property of the Company and shall be promptly and fully disclosed by Executive to the Company. Executive shall perform all necessary acts (including, without limitation, executing and delivering any confirmatory assignments, documents or instruments requested by the Company) to assign or otherwise to vest title to any such Inventions in the Company and to enable the Company, at its sole expense, to secure and maintain domestic and/or foreign patents or any other rights for such Inventions.

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5.2.         Inventions Retained and Licensed. Executive has attached hereto, as Exhibit A, a list describing all inventions, discoveries, original works of authorship, developments, improvements, and trade secrets, which were conceived in whole or in part by Executive prior to his employment with the Company to which Executive has any right, title or interest, which relate to the Company’s proposed business, products, or research and development (“Prior Inventions”); or, if no such list is attached, Executive represents and warrants that there are no such Prior Inventions. Furthermore, Executive represents and warrants that the inclusion of any Prior Inventions from Exhibit A of this Agreement will not materially affect his ability to perform all obligations under this Agreement. If, in the course of Executive’s employment with the Company, Executive incorporates into or uses in connection with any product, process, service, technology or other work by or on behalf of Company any Prior Invention, Executive hereby grants to the Company a nonexclusive, royalty-free, fully paid-up, irrevocable, perpetual, worldwide license, with the right to grant and authorize sublicenses, to make, have made, modify, use, import, offer for sale, and sell such Prior Invention as part of or in connection with such product, process, service, technology or other work and to practice any method related thereto.

5.3.         Assignment of Inventions. Executive agrees that Executive will promptly make full written disclosure to the Company, will hold in trust for the sole right and benefit of the Company, and hereby assigns to the Company, or its designee, all of his right, title, and interest in and to any and all inventions, original works of authorship, developments, concepts, improvements, designs, discoveries, ideas, trademarks or trade secrets, whether or not patentable or registrable under patent, copyright or similar laws, which Executive may solely or jointly conceive, develop, or reduce to practice, or cause to be conceived, developed, or reduced to practice, during his employment with the Company, or with the use of Company’s equipment, supplies, facilities, or Confidential/Trade Secret Information (collectively referred to as “Conceived Inventions”). All Conceived Inventions that Executive conceives, reduces to practice, develops or has developed (in whole or in part, either alone or jointly with others) shall be the sole property of the Company and its assigns to the maximum extent permitted by law (and to the fullest extent permitted by law shall be deemed “works made for hire”). Executive also agrees to irrevocably assign (or cause to be irrevocably assigned) and hereby irrevocably assigns to the Company all right, title and interest in all Conceived Inventions and any copyrights, patents, trademarks, trade secrets, mask work rights, moral rights and intellectual property and other rights (“Intellectual Property Rights”). Executive understands and agrees that the decision whether or not to commercialize or market any Conceived Inventions is within the Company’s sole discretion and for the Company’s sole benefit and that no royalty or other consideration will be due to Executive as a result of the Company’s efforts to commercialize or market any such Conceived Inventions.

5.4.         Assignment of Other Rights. In addition to the foregoing assignment of Inventions to the Company, Executive hereby irrevocably transfers and assigns to the Company: (i) all worldwide patents, patent applications, copyrights, mask works, trade secrets and other intellectual property rights in any Conceived Inventions; and (ii) any and all “Moral Rights” (as defined below) that Executive may have in or with respect to any Conceived Inventions. Executive also hereby forever waives and agrees never to assert any and all Moral Rights Executive may have in or with respect to any Conceived Inventions, even after termination of Executive’s work on behalf of the Company. “Moral Rights” means any rights to claim authorship of any Conceived Inventions, to object to or prevent the modification of any Conceived Inventions, or to withdraw from circulation or control the publication or distribution of any Conceived Inventions, and any similar right, existing under judicial or statutory law of any country in the world, or under any treaty, regardless of whether or not such right is denominated or generally referred to as a “moral right”.

5.5.         Inventions Assigned to the United States.  Executive agrees to assign to the United States government all of his right, title, and interest in and to any and all Inventions whenever such full title is required to be in the United States by a contract between the Company and the United States or any of its agencies.

5.6.         Maintenance of Records.  Executive agrees to keep and maintain adequate, current, accurate, and authentic written records of all such Conceived Inventions, which may be in the form of notes, sketches, drawings, electronic files, reports, or any other format that may be specified by the Company and which will be available to and remain the sole property of the Company at all times.

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5.7.         Patent and Copyright Registrations.  Executive agrees to take steps that may be necessary to assist the Company, or its designee, at the Company’s expense, in every proper way to complete the transfer of and secure the Company’s rights in the Conceived Inventions, Intellectual Property Rights and any rights relating thereto in any and all countries, including by making the disclosure to the Company of all pertinent information and data with respect thereto, executing all applications, specifications, oaths, assignments and all other instruments which the Company shall deem proper or necessary in order to apply for, register, obtain, maintain, defend, and enforce such rights and in order to assign and convey to the Company, its successors, assigns, and nominees the sole and exclusive rights, title and interest in and to such Conceived Inventions and any rights relating thereto, and by testifying in a suit or other proceeding relating to such Conceived Inventions and any rights relating thereto. Executive further agrees that his obligation to execute or cause to be executed, when it is in his power to do so, any such instrument or papers shall continue after the termination of this Agreement. If the Company is unable because of Executive’s mental or physical incapacity or for any other reason to secure Executive’s signature with respect to any Conceived Inventions including, without limitation, to apply for or to pursue any application for any United States or foreign patents or copyright registrations covering such Conceived Inventions, then Executive hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as his agent and attorney in fact, to act for and in his behalf and stead to execute and file any papers, oaths and to do all other lawfully permitted acts with respect to such Conceived Inventions with the same legal force and effect as if executed by Executive.

ARTICLE VI.
CONFIDENTIAL/TRADE SECRET INFORMATION 

AND RESTRICTIVE COVENANTS; NON-COMPETE

6.1.         Applicability of Provisions after Lapse of Agreement. If the Executive’s employment terminates pursuant to Section 4.1.8 of this Agreement, then the Company must elect whether the provisions of this Section 6.1 shall apply or not apply after Executive’s termination of employment. The Company agrees that in the event the Company elects that this Section 6.1 applies, then notwithstanding anything herein to the contrary, (a) the provisions of Sections 6.3, 6.8, and 6.9 below shall not apply to Executive after the Termination Date, and the Company abrogates its rights to enforce such provisions after his termination; and (b) the Executive agrees that the provisions of Section 4.2.3 shall not apply and instead the provisions of Section 4.2.2 shall apply. Executive agrees that in the event the Company elects that this Section 6.1 shall not apply after Executive’s termination of employment, then notwithstanding anything herein to the contrary, the provisions of Sections 6.3, 6.8, and 6.9 below shall continue to apply to Executive after the Termination Date and the Company agrees that it shall continue to be bound by Section 4.2.3.

6.2.         Confidential/Trade Secret Information. During the course of Executive’s employment, Executive will have access to Confidential/Trade Secret Information of the Company and information developed for the Company.

6.3.         Non-Compete. For $10 and in exchange for Executive’s access to Confidential/Trade Secret Information and other good and valuable consideration which Executive acknowledges the receipt and sufficiency of, Executive agrees to (a) devote substantially all of Executive’s business time, energy and efforts to the business of the Company (except as specifically provided for in Section 6.5 below), (b) to use Executive’s best efforts and abilities faithfully and diligently to promote the business interests of the Company and (c) to comply with the other terms and conditions of ARTICLE VI. For so long as Executive is employed hereunder, and for the twelve months following the Termination Date, Executive (whether by himself, through his employers or employees or agents or otherwise, and whether on his own behalf or on behalf of any other Person) shall not, directly or indirectly, either as an employee, employer, consultant, agent, investor, principal, partner, stockholder (except as the holder of less than 1% of the issued and outstanding stock of a publicly held corporation), own, manage, operate, control, be employed by, act as an officer, director, agent or consultant for, or be in any other way connected with or provide services or products to or for, any Person in the business of manufacturing, selling, creating, renting, aggregating, trading, distributing, marketing, producing, undertaking, developing, supplying, or otherwise dealing with or in Restricted Services or Restricted Products in the Restricted Area.

6.4.         Non-Solicitation During Employment. During his employment with the Company, Executive shall not: (a) interfere with the Company’s business relationship with its customers or suppliers, (b) solicit, directly or indirectly, or otherwise encourage any of the Company’s customers or suppliers to terminate their business relationship with the Company, or (c) solicit, directly or indirectly, or otherwise encourage any employees of the Company to leave the employ of the Company, or solicit any of the Company’s employees for employment outside the Company.

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6.5.         Restriction on Use of Confidential/Trade Secret Information. Executive agrees that his use of Confidential/Trade Secret Information is subject to the following restrictions for an indefinite period of time so long as the Confidential/Trade Secret Information does not become generally known to the public:

(i)            Non-Disclosure. Executive agrees that he will not publish or disclose, or allow to be published or disclosed, Confidential/Trade Secret Information to any person without the prior written authorization of the Company unless pursuant to or in connection with Executive’s job duties to the Company under this Agreement or as otherwise allowed pursuant to the terms of this Agreement; and

(ii)           Non-Removal/Surrender. Executive agrees that he will not remove any Confidential/Trade Secret Information from the offices of the Company or the premises of any facility in which the Company is performing services, except pursuant to his duties under this Agreement and except as needed in any legal action to enforce the terms of this Agreement. Executive further agrees that he shall surrender to the Company and/or destroy all documents and materials in his possession or control which contain Confidential/Trade Secret Information and which are the property of the Company upon the termination of his employment with the Company, and that he shall not thereafter retain any copies of any such materials except as needed in any legal action to enforce the terms of this Agreement.

6.6.         Other Activities. Subject to the foregoing prohibition and provided such services or investments do not violate any applicable law, regulation or order, or interfere in any way with the faithful and diligent performance by Executive of the services to the Company otherwise required or contemplated by this Agreement, the Company expressly acknowledges that Executive may:

6.6.1       make and manage personal business investments of Executive’s choice without consulting the Board;

6.6.2       serve in any capacity with any non-profit civic, educational or charitable organization; and

6.6.3       undertake any other actions, business transactions, agreements and undertakings of which the Executive has received approval of the Related Party Transaction Committee (as defined below) or the Audit Committee of the Company, to enter into and/or undertake, provided that

6.6.4       Executive shall undertake only such actions or services that do not interfere with the Executive’s obligations hereunder.

6.7.         Prohibition Against Unfair Competition. Executive agrees that at no time after his employment with the Company will he engage in competition with the Company while making any use of the Confidential/Trade Secret Information, or otherwise exploit or make use of the Confidential/Trade Secret Information.

6.8.         Non-Solicitation of Customers. Executive agrees that during the twelve-month period following the Termination Date, he will not, for any customer of the Company with whom Executive worked or otherwise had access to the Confidential/Trade Secret Information pertaining to the Company’s business with such customer during the last year of Executive’s employment with the Company, (i) directly or indirectly accept or solicit, in any capacity, Restricted Services or Restricted Products or (ii) solicit, directly or indirectly, or encourage any of the Company’s customers or suppliers to terminate their use of Restricted Products or Restricted Services.

6.9.         Non-Solicitation of Employees.   Executive agrees that during the twelve-month period following the Termination Date, he shall not, directly or indirectly, solicit or otherwise encourage any employees of the Company to leave the employ of the Company, or solicit, directly or indirectly, any of the Company’s employees for employment.

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6.10.       Former Employer Information.  Executive agrees that he will not, during his employment with the Company, improperly use or disclose, or induce the Company to use any proprietary information or trade secrets of any former or concurrent employer or other third party person or entity and that Executive will not bring onto the premises of the Company or transfer onto the Company’s technology systems any proprietary information or trade secrets belonging to any such former or concurrent employer or third party person or entity, unless consented to in writing by both Company and such employer, person or entity.

6.11.       Third Party Information.   Executive acknowledges that the Company may have received and in the future may receive from third parties associated with the Company (including, but not limited to, the Company’s customers, suppliers, licensors, licensees, partners, or collaborators (“Associated Third Parties”)) confidential or proprietary information (“Associated Third Party Confidential Information”). By way of example, Associated Third Party Confidential Information may include the habits or practices, technology, or requirements of Associated Third Parties, or other information related to the business conducted between the Company and Associated Third Parties. Executive agrees that Associated Third Party Confidential Information is Confidential/Trade Secret Information, and at all times during Executive’s employment with the Company and thereafter, Executive agrees to hold in the strictest confidence, and not to use or to disclose to any Person any Associated Third-Party Confidential Information, except as necessary in carrying out his work for the Company consistent with the Company’s agreement with such Associated Third Parties.

6.12.       Immunity From Liability for Certain Confidential Disclosures and Certain Allowed Disclosures. Executive acknowledges, agrees, and understands that (i) nothing in this Agreement prohibits him from reporting to any governmental authority or attorney information concerning suspected violations of law or regulation, provided that Executive does so consistent with 18 U.S.C. § 1833, and (ii) Executive may disclose trade secret information to a government official or to an attorney and use it in certain court proceedings without fear of prosecution or liability, provided that Executive does so consistent with 18 U.S.C. § 1833.

6.13.       Conflict of Interest. During Executive’s employment with the Company, Executive must not engage in any work, paid or unpaid, that creates an actual conflict of interest with the Company. If the Company or the Executive has any question as to the actual or apparent potential for a conflict of interest, either shall raise the issue formally to the other, and if appropriate and necessary the issue shall be put to the Related Party Transaction Committee or Audit Committee of the Company for consideration and approval or non-approval, which approval or non-approval the Executive agrees shall be binding on the Executive.

6.14.       Reasonable Restrictions. The Parties acknowledge that the foregoing restrictions, as well as the duration and the territorial scope thereof as set forth in this ARTICLE VI or ARTICLE V, are under all of the circumstances reasonable and necessary for the protection of the Company and its business and are (i) reasonable given Executive’s role with the Company, and are necessary to protect the interests of the Company and (ii) completely severable and independent agreements supported by good and valuable consideration and, as such, shall survive the termination of this Agreement for any reason whatsoever.

6.15.       Specific Performance. Executive acknowledges and agrees that the Company’s remedies at law for a breach or threatened breach of any of the provisions of this ARTICLE VI or ARTICLE V would be inadequate and, in recognition of this fact, Executive agrees that, in the event of such a breach or threatened breach, in addition to any remedies at law, the Company, without posting any bond, shall be entitled to obtain equitable relief in the form of specific performance, temporary restraining order, temporary or permanent injunction or any other equitable remedy which may then be available. Executive further agrees that the restricted period set forth in this ARTICLE VI or ARTICLE V shall be tolled, and shall not run, during the period of any breach by Executive of any of the covenants contained this ARTICLE VI or ARTICLE V, as applicable. Finally, no other violation of law attributed to the Company, or change in the nature or scope of Executive’s employment or other relationship with the Company, shall operate to excuse Executive from the performance of his obligations under this ARTICLE VI or ARTICLE V. The remedies under this Agreement are without prejudice to the Company’s right to seek any other remedy to which it may be entitled at law or in equity.

6.16.       Response to Legal Process; Allowable Disclosures. Notwithstanding any other term of this Agreement (including this ARTICLE VI or ARTICLE V), including any exhibit hereto, (a) the Executive may respond to a lawful and valid subpoena or other legal process relating to the Company or its business or operations; provided that the Executive shall: (i) give the Company the earliest possible notice thereof; (ii) as far in advance of the return date as possible, at the Company’s sole cost and expense, make available to the Company and its counsel the documents and other information sought; and (iii) at the Company’s sole cost and expense, assist such counsel in resisting or otherwise responding to such process, or (b) the Executive’s reporting of possible violations of federal law or regulation to any governmental agency or entity in accordance with the provisions of and rules promulgated under Section 21F of the Exchange Act, or any other whistleblower protection provisions of state or federal law or regulation shall not violate or constitute a breach of this Agreement. Nothing contained in this Agreement (or any exhibit hereto) shall be construed to prevent the Executive from reporting any act or failure to act to the Securities and Exchange Commission or other governmental body or prevent the Executive from obtaining a fee as a “whistleblower” under Rule 21F-17(a) under the Exchange Act or other rules or regulations implemented under the Dodd-Frank Wall Street Reform Act and Consumer Protection Act.

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	Benjamin P. Cowart
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ARTICLE VII.
INDEMNIFICATION

7.1.         Required Indemnification. The Company agrees to indemnify Executive and hold Executive harmless from and against any and all losses, claims, damages, liabilities and costs (and all actions in respect thereof and any legal or other expenses in giving testimony or furnishing documents in response to a subpoena or otherwise), including, without limitation, the costs of investigating, preparing or defending any such action or claim, whether or not in connection with litigation in which Executive is a party, as and when incurred, directly or indirectly caused by, relating to, based upon or arising out of any work performed by Executive in connection with this Agreement to the full extent permitted by the Nevada Revised Statutes, and by the Articles of Incorporation and Bylaws of the Company, as may be amended from time to time, and pursuant to any indemnification agreement between Executive and the Company.

7.2.         In Addition to Other Obligations. The indemnification provision of this ARTICLE VII shall be in addition to any liability which the Company may otherwise have to Executive.

7.3.         Notification and Required Actions. If any action, proceeding or investigation is commenced as to which Executive proposes to demand such indemnification, Executive shall notify the Company with reasonable promptness. Executive shall have the right to retain counsel of Executive’s own choice to represent Executive and the Company shall pay all reasonable fees and expenses of such counsel; and such counsel shall, to the fullest extent consistent with such counsel’s professional responsibilities, cooperate with the Company and any counsel designated by the Company. The Company shall be liable for any settlement of any claim against Executive made with the Company’s written consent, which consent shall not be unreasonably withheld or delayed, to the fullest extent permitted by the Nevada Revised Statutes and the Articles of Incorporation and Bylaws of the Company, as may be amended from time to time.

ARTICLE VIII.
ARBITRATION

8.1.         Scope. To the fullest extent permitted by law, Executive and the Company agree to the binding arbitration of any and all controversies, claims or disputes between them arising out of or in any way related to this Agreement, the employment relationship between the Company and Executive and any disputes upon termination of employment, including but not limited to breach of contract, tort, discrimination, harassment, wrongful termination, demotion, discipline, failure to accommodate, family and medical leave, compensation or benefits claims, constitutional claims; and any claims for violation of any local, state or federal law, statute, regulation or ordinance or common law. For the purpose of this agreement to arbitrate, references to “Company” include all subsidiaries or related entities and their respective executives, supervisors, officers, directors, agents, pension or benefit plans, pension or benefit plan sponsors, fiduciaries, administrators, affiliates and all successors and assigns of any of them, and this agreement to arbitrate shall apply to them to the extent Executive’s claims arise out of or relate to their actions on behalf of the Company.

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	Benjamin P. Cowart
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8.2.         Mediation and Arbitration Procedure. Before bringing any dispute to arbitration, and presuming that there is sufficient time prior to expiration of the limitations period to do so, the Parties agree that they will first mediate that dispute in good faith. They will agree on the mediator and split equally the costs of mediation. To commence any such arbitration proceeding, the Party commencing the arbitration must provide the other Party with written notice of any and all claims forming the basis of such right in sufficient detail to inform the other Party of the substance of such claims, and file this notice with the American Arbitration Association (“AAA”). The arbitration will be conducted in such location as mutually agreed upon by the Company and the Executive, provided that if such parties cannot mutually agree on a location, the arbitration shall be conducted in the city where the Company’s principal business location is located, by a single neutral arbitrator and in accordance with the then-current rules for resolution of employment disputes of the AAA. The Arbitrator is to be selected by the mutual agreement of the Parties using the AAA procedures. If the Parties cannot agree, the AAA will select the arbitrator. The Parties are entitled to representation by an attorney or other representative of their choosing. The arbitrator shall have the power to enter any award that could be entered by a judge of the trial court of the State of Texas, and only such power, and shall follow the law. The award shall be binding and the Parties agree to abide by and perform any award rendered by the arbitrator. The arbitrator shall issue the award in writing and therein state the essential findings and conclusions on which the award is based. Judgment on the award may be entered in any court having jurisdiction thereof. The Parties shall split equally the costs in the arbitration and, should the arbitrator find reasonable grounds for doing so, the arbitrator may order the losing Party in the arbitration hearing to bear the full costs of the arbitration filing and hearing fees and the cost of the arbitrator, including requiring such losing Party to reimburse the winning Party for such costs and expenses as previously paid.

8.3.         Limitations Period; Deadline to Assert Claims. Executive and the Company and its affiliates agree that arbitration of any disputes, claims, or controversies shall be initiated within one year of the act or occurrence giving rise to the dispute, claim or controversy, even though that deadline is or may be shorter than the period provided by statutes of limitations that would apply in the absence of this Section. Any claim that is not asserted in an arbitration within one (1) year of the act or occurrence giving rise to it shall be deemed waived. In order to effectuate this waiver of limitations, the Company waives its right to argue that Executive may not proceed with his claim(s) due to his failure to file any charge or complaint with a government agency having jurisdiction of his claim(s) under state and federal laws, such as the Equal Employment Opportunity Commission, Texas Workforce Commission-Civil Rights Division, or Occupational Safety and Health Administration.

ARTICLE IX.
MISCELLANEOUS

9.1.         Binding Effect; Assignment. This Agreement shall be binding upon any successor (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company’s business and/or assets. Any such successor will within a reasonable period of becoming the successor assume in writing and be bound by all of the Company’s obligations under this Agreement. For all purposes under this Agreement, the term “Company” shall include any successor to the Company’s business or assets that becomes bound by this Agreement. Executive may not assign any of his rights or obligations under this Agreement.

9.2.         Notices. Any notice provided for herein shall be in writing and shall be deemed to have been given or made (a) when personally delivered or (b) when sent by email and confirmed within 48 hours by letter mailed or delivered to the Party to be notified at its or his address set forth herein; or three (3) days after being sent by registered or certified mail, return receipt requested (or by equivalent currier with delivery documentation such as FEDEX or UPS) to the address of the other Party set forth or to such other address as may be specified by notice given in accordance with this Section 9.2: 

    If to the Company: Vertex Energy, Inc. 1331 Gemini, Suite 250 Houston, Texas 77058 Telephone: (866) 660-8156 Attention: Secretary

    If to the Executive: Benjamin P. Cowart (Address and contact information on file) 

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	Benjamin P. Cowart
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9.3.         Severability. If any provision of this Agreement, or portion thereof, shall be held invalid or unenforceable by a court of competent jurisdiction, such invalidity or unenforceability shall attach only to such provision or portion thereof, and shall not in any manner affect or render invalid or unenforceable any other provision of this Agreement or portion thereof, provided that should a court of competent jurisdiction determine that the scope of any provision of this Agreement is too broad to be enforced as written, the Parties hereby authorize the court to reform the provision to such narrower scope as it determines to be reasonable and enforceable and the Parties intend that the affected provision be enforced as so amended.

9.4.         Waiver. No waiver by a Party of a breach or default hereunder by the other Party shall be considered valid, unless expressed in a writing signed by such first Party, and no such waiver shall be deemed a waiver of any subsequent breach or default of the same or any other nature.

9.5.         Entire Agreement. This Agreement, along with the Equity Agreements, sets forth the entire agreement between the Parties with respect to the subject matter hereof, and supersedes any and all prior agreements between the Company and Executive, whether written or oral, relating to any or all matters covered by and contained or otherwise dealt with in this Agreement, including, but not limited to that certain Employment Agreement between the parties dated August 7, 2015. This Agreement does not constitute a commitment of the Company with regard to Executive’s employment, express or implied, other than to the extent expressly provided for herein.

9.6.         Amendment. No modification, change or amendment of this Agreement or any of its provisions shall be valid, unless in a writing signed by the Parties and approved by the Committee.

9.7.         Authority. The Parties each represent and warrant that it/he has the power, authority and right to enter into this Agreement and to carry out and perform the terms, covenants and conditions hereof.

9.8.         Attorneys’ and Arbitration Fees. Except as prohibited by law, if either Party hereto commences an arbitration or other action against the other Party to enforce any of the terms hereof, each Party shall pay its own costs and attorney’s fees, if any. If, however, any Party prevails on a statutory or contractual claim that affords the prevailing party attorneys’ fees (including pursuant to this Agreement), the arbitrator may award reasonable attorneys’ fees to the prevailing party to the extent permitted by law.

9.9.         Construction. When used in this Agreement, unless a contrary intention appears: (i) a term has the meaning assigned to it; (ii) “or” is not exclusive; (iii) “including” means including without limitation; (iv) words in the singular include the plural and words in the plural include the singular, and words importing the masculine gender include the feminine and neuter genders; (v) any agreement, instrument or statute defined or referred to herein or in any instrument or certificate delivered in connection herewith means such agreement, instrument or statute as from time to time amended, modified or supplemented and includes (in the case of agreements or instruments) references to all attachments thereto and instruments incorporated therein; (vi) 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 hereof; (vii) references contained herein to Article, Section, Schedule and Exhibit, as applicable, are references to Articles, Sections, Schedules and Exhibits in this Agreement unless otherwise specified; (viii) references to “writing” include printing, typing, lithography and other means of reproducing words in a visible form, including, but not limited to email; (ix) references to “dollars”, “Dollars” or “$” in this Agreement shall mean United States dollars; (x) reference to a particular statute, regulation or Law means such statute, regulation or Law as amended or otherwise modified from time to time; (xi) 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 or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein); (xii) unless otherwise stated in this Agreement, in the computation of a period of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each mean “to but excluding”; (xiii) references to “days” shall mean calendar days; and (xiv) the paragraph headings contained in this Agreement are for convenience only, and shall in no manner be construed as part of this Agreement.

9.10.       Governing Law. This Agreement, and all of the rights and obligations of the Parties in connection with the employment relationship established hereby, shall be governed by and construed in accordance with the substantive laws of the State of Texas without giving effect to principles relating to conflicts of law.

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9.11.       Survival. The termination of Executive’s employment with the Company pursuant to the provisions of this Agreement shall not affect Executive’s obligations to the Company hereunder which by the nature thereof are intended to survive any such termination, including, without limitation, Executive’s obligations under ARTICLE V and ARTICLE VI of this Agreement.

9.12.       Section 280G Safe Harbor Cap. In the event it shall be determined that any payment or distribution or any part thereof of any type to or for the benefit of Executive whether pursuant to the Agreement or any other agreement between Executive and the Company, or any person or entity that acquires ownership or effective control the Company or ownership of a substantial portion of the Company’s assets (within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended, and the regulations thereunder (the “Code”)) whether paid or payable or distributed or distributable pursuant to the terms of the Agreement or any other agreement, (the “Total Payments”), is or will be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the Total Payments shall be reduced to the maximum amount that could be paid to Executive without giving rise to the Excise Tax (the “Safe Harbor Cap”), if the net after-tax payment to Executive after reducing Executive’s Total Payments to the Safe Harbor Cap is greater than the net after-tax (including the Excise Tax) payment to Executive without such reduction. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payment made pursuant to the Agreement and then to any other agreement that triggers such Excise Tax, unless an alternative method of reduction is elected by Executive. All mathematical determinations, and all determinations as to whether any of the Total Payments are “parachute payments” (within the meaning of Section 280G of the Code), that are required to be made under ARTICLE IV, including determinations as to whether the Total Payments to Executive shall be reduced to the Safe Harbor Cap and the assumptions to be utilized in arriving at such determinations, shall be made by a nationally recognized accounting firm selected by the Company (the “Accounting Firm”). In making such determinations, the Accounting Firm shall allocate payments hereunder to Executive’s covenants under ARTICLE VI and to services provided or required to be provided following a Change of Control to the maximum extent permissible. If the Accounting Firm determines that the Total Payments to Executive shall be reduced to the Safe Harbor Cap (the “Cutback Payment”) and it is established pursuant to a final determination of a court or an Internal Revenue Service (the “IRS”) proceeding which has been finally and conclusively resolved, that the Cutback Payment is in excess of the limitations provided in this Section 9.12 (hereinafter referred to as an “Excess Payment”), such Excess Payment shall be deemed for all purposes to be an overpayment to Executive made on the date such Executive received the Excess Payment and Executive shall repay the Excess Payment to the Company on demand; provided, however, if Executive shall be required to pay an Excise Tax by reason of receiving such Excess Payment (regardless of the obligation to repay the Company), Executive shall not be required to repay the Excess Payment (if Executive has already repaid such amount, the Company shall refund the amount to the Executive), and the Company shall pay Executive an amount equal to the difference between the Total Payments and the Safe Harbor Cap (provided that such amount has previously been repaid by the Executive or not previously paid by the Company).

9.13.       Section 409A Compliance.

9.13.1     This Agreement is intended to comply with Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), or an exemption thereunder. This Agreement shall be construed and administered in accordance with Section 409A. To the extent that any provision of this Agreement is ambiguous as to its compliance with Section 409A, the provision shall be read in such a manner so that all payments hereunder comply with Section 409A. The parties agree that this Agreement may be amended, as reasonably requested by either party, and as may be necessary to fully comply with Section 409A and all related rules and regulations in order to preserve the payments and benefits provided hereunder without additional cost to either party. Notwithstanding any other provision of this Agreement to the contrary, payments provided under this Agreement shall be made upon an event and in a manner that complies with Section 409A or an applicable exemption. Any payments under this Agreement that may be excluded from Section 409A either as separation pay due to an involuntary separation from service (including a voluntary separation from service for good reason that is considered an involuntary separation for purposes of the separation pay exception under Treasury Regulation 1.409A-1(n)(2)) or as a short-term deferral shall be excluded from Section 409A to the maximum extent possible. For purposes of Section 409A, each installment payment provided under this Agreement shall be treated as a separate payment. Any payments of “nonqualified deferred compensation” subject to Section 409A (e.g., payments and benefits that do not qualify as a short-term deferral or as a separation pay exception) to be made under this Agreement upon a termination of employment shall only be made if such termination of employment constitutes a “separation from service” under Section 409A. Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under this Agreement comply with Section 409A and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest, or other expenses that may be incurred by the Executive on account of non-compliance with Section 409A.

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	Benjamin P. Cowart
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9.13.2     Notwithstanding any other provision of this Agreement, if at the time of the Executive’s termination of employment, the Executive is a “specified employee”, determined in accordance with Section 409A, any payments and benefits provided under this Agreement that constitute “nonqualified deferred compensation” subject to Section 409A (e.g., payments and benefits that do not qualify as a short-term deferral or as a separation pay exception) that are provided to the Executive on account of the Executive’s separation from service shall not be paid until the first payroll date to occur following the six-month anniversary of the Executive’s termination date (“Specified Employee Payment Date”). The aggregate amount of any payments that would otherwise have been made during such six-month period shall be paid in a lump sum on the Specified Employee Payment Date without interest and thereafter, any remaining payments shall be paid without delay in accordance with their original schedule. If the Executive dies during the six-month period, any delayed payments shall be paid to the Executive’s estate in a lump sum upon the Executive’s death. To the extent that the foregoing applies to the provision of benefits (including, but not limited to, life insurance and medical insurance), such benefit coverage shall nonetheless be provided to the Executive during the first six months following his separation from service (the “Six-Month Period”), provided that, during such Six-Month Period, the Executive pays to the Company, on a monthly basis in advance, an amount equal to the Monthly Cost (as defined below) of such benefit coverage. The Company shall reimburse the Executive for any such payments made by the Executive in a lump sum not later than 30 days following the sixth-month anniversary of the Executive’s separation from service. For purposes of this subparagraph, “Monthly Cost” means the minimum dollar amount which, if paid by the Executive on a monthly basis in advance, results in the Executive not being required to recognize any federal income tax on receipt of the benefit coverage during the Six-Month Period.

9.13.3     To the extent required to avoid taxation under Section 409A, each reimbursement or in-kind benefit provided under this Agreement shall be provided in accordance with the following:

(i)           the amount of expenses eligible for reimbursement, or in-kind benefits provided, during each calendar year cannot affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year;

(ii)          any reimbursement of an eligible expense shall be paid to the Executive on or before the last day of the calendar year following the calendar year in which the expense was incurred; and

9.13.4     any right to reimbursements or in-kind benefits under this Agreement shall not be subject to liquidation or exchange for another benefit.

9.14.       Withholding of Taxes and Other Executive Deductions. The Company may withhold from any benefits and payments made pursuant to this Agreement all federal, state, city and other taxes as may be required pursuant to any law or governmental regulation or ruling and any and all other normal Executive deductions made with respect to the Company’s Executives generally.

9.15.       Clawback. Notwithstanding any provision in this Agreement to the contrary, any portion of the payments and benefits provided under this Agreement, as well as any other payments and benefits which the Executive receives pursuant to a Company plan or other arrangement, shall be subject to a clawback (a) to the extent necessary to comply with the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act or any Securities and Exchange Commission rule or any other applicable law; and/or (b) any policy adopted by the Company and applicable generally to Executive and other officers of the Company, relating to the recovery of compensation granted, paid, delivered, awarded or otherwise provided to Executive by the Company or its subsidiaries or any of their respective affiliates, as applicable, as may be amended from time to time.

9.16.       Legal Counsel. Executive acknowledges and warrants that (A) he has been advised that Executive’s interests may be different from the Company’s interests, (B) he has been afforded a reasonable opportunity to review this Agreement, to understand its terms and to discuss it with an attorney and/or financial advisor of his choice, (C) that Executive fully understands the terms and contents of this Agreement and the exhibits hereto, and (D) he knowingly and voluntarily entered into this Agreement. The Company and Executive shall each bear their own costs and expenses in connection with the negotiation and execution of this Agreement. Executive understands and agrees that any attorney retained by the Company who has discussed any term or condition of this Agreement with Executive or its advisor is only acting on behalf of the Company and not on its behalf.

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	Benjamin P. Cowart
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9.17.       Right to Negotiate. Executive hereby acknowledges that Executive has been given the opportunity to participate in the negotiation of the terms of this Agreement. Executive acknowledges and confirms that he has read this Agreement and fully understands its terms and contents.

9.18.       Voluntary Nature of Agreement. Executive acknowledges and agrees that he is executing this Agreement voluntarily and without any duress or undue influence by the Company or anyone else. Executive agrees that he has been provided an opportunity to seek the advice of an attorney of his choice before signing this Agreement.

9.19.       Counterparts, Effect of Facsimile, Emailed and Photocopied Signatures. This Agreement and any signed agreement or instrument entered into in connection with this Agreement, and any amendments hereto or thereto, may be executed in one or more counterparts, all of which shall constitute one and the same instrument. 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 manners 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. At the request of any Party, each other Party shall re execute the original form of this Agreement and deliver such form to all other Parties. No Party shall raise the use of Electronic Delivery to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of Electronic Delivery as a defense to the formation of a contract, and each such Party forever waives any such defense, except to the extent such defense relates to lack of authenticity.

[Remainder of page left intentionally blank. Signature page follows]

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	Benjamin P. Cowart
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This Agreement contains provisions requiring binding arbitration of disputes. By signing this Agreement, Executive acknowledges that he (i) has read and understood the entire Agreement; (ii) has received a copy of it (iii) has had the opportunity to ask questions and consult counsel or other advisors about its terms; and (iv) agrees to be bound by it.

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the day and year first above written.

“COMPANY”	VERTEX ENERGY, INC.
	a Nevada corporation
	By:	/s/ Chris Carlson
	Name: Chris Carlson
	Title: Chief Financial Officer
“EXECUTIVE”
	/s/ Benjamin P. Cowart
	Benjamin P. Cowart
	(Address and contact information on file)

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	Benjamin P. Cowart
	Page 20 of 20

EXHIBIT A

LIST OF PRIOR INVENTIONS
AND ORIGINAL WORKS OF AUTHORSHIP

Title  Date  Identifying Number
or Brief Description 

________           No inventions or improvements

________           Additional Sheets Attached

Signature of Executive: ______________________________

Print Name of Executive: Benjamin P. Cowart

Date: ______________________________

EX-10.3

Vertex Energy, Inc. 8-K

Exhibit 10.3

VERTEX ENERGY, INC.

EXECUTIVE EMPLOYMENT AGREEMENT

CHRIS CARLSON

CHIEF FINANCIAL OFFICER

TABLE OF CONTENTS

ARTICLE I. DEFINITIONS	1
1.1.     Definitions	1
ARTICLE II. EMPLOYMENT; TERM; DUTIES	3
2.1.     Employment	3
2.2.     Duties and Responsibilities	4
2.3.     Related Party Transaction Committee	4
2.4.     Covenants of Executive	4
2.5.     Retroactive Pay	4
ARTICLE III. COMPENSATION AND OTHER BENEFITS	4
3.1.     Base Salary	4
3.2.     Discretionary Bonus	5
3.3.     Performance Standards	5
3.4.     Equity Awards	5
3.5.     Additional Grants/Awards	5
3.6.     Business Expenses	5
3.7.     Vacation	6
3.8.     Other Benefits	6
3.9.     Car Allowance	6
3.10.   Change of Control Payment	6
ARTICLE IV. TERMINATION OF EMPLOYMENT	7
4.1.     Termination of Employment	7
4.2.     Effect of Termination	7
4.3.     Consulting	9
4.4.     Treatment of Equity	9
ARTICLE V. INVENTIONS	9
5.1.     Inventions in General	9
5.2.     Inventions Retained and Licensed	9
5.3.     Assignment of Inventions	10
5.4.     Assignment of Other Rights	10
5.5.     Inventions Assigned to the United States	10
5.6.     Maintenance of Records	10
5.7.     Patent and Copyright Registrations	10
ARTICLE VI. CONFIDENTIAL/TRADE SECRET INFORMATION	11
6.1.     Applicability of Provisions after Lapse of Agreement	11
6.2.     Confidential/Trade Secret Information	11
6.3.     Non-Compete	11
6.4.     Non-Solicitation During Employment	11
6.5.     Restriction on Use of Confidential/Trade Secret Information	12
6.6.     Other Activities	12
6.7.     Prohibition Against Unfair Competition	12
6.8.     Non-Solicitation of Customers	12
6.9.     Non-Solicitation of Employees	12
6.10.   Former Employer Information	12
6.11.   Third Party Information	13
6.12.   Immunity From Liability for Certain Confidential Disclosures and Certain Allowed Disclosures	13
6.13.   Conflict of Interest	13
6.14.   Reasonable Restrictions	13
6.15.   Specific Performance	13

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6.16.   Response to Legal Process; Allowable Disclosures	13
ARTICLE VII. INDEMNIFICATION	14
7.1.     Required Indemnification	14
7.2.     In Addition to Other Obligations	14
7.3.     Notification and Required Actions	14
ARTICLE VIII. ARBITRATION	14
8.1.     Scope	14
8.2.     Mediation and Arbitration Procedure	14
8.3.     Limitations Period; Deadline to Assert Claims	15
ARTICLE IX. MISCELLANEOUS	15
9.1.     Binding Effect; Assignment	15
9.2.     Notices	15
9.3.     Severability	15
9.4.     Waiver	16
9.5.     Entire Agreement	16
9.6.     Amendment	16
9.7.     Authority	16
9.8.     Attorneys’ and Arbitration Fees	16
9.9.     Construction	16
9.10.   Governing Law	16
9.11.   Survival	16
9.12.   Section 280G Safe Harbor Cap	17
9.13.   Section 409A Compliance	17
9.14.   Withholding of Taxes and Other Executive Deductions	18
9.15.   Clawback	18
9.16.   Legal Counsel	18
9.17.   Right to Negotiate	19
9.18.   Voluntary Nature of Agreement	19
9.19.   Counterparts, Effect of Facsimile, Emailed and Photocopied Signatures	19

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	Chris Carlson
	Page ii

THIS EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) is entered into this 13th day of December (the “Execution Date”), to be effective as of the Effective Date as defined below between Vertex Energy, Inc., a Nevada corporation (the “Company”), and Chris Carlson (“Executive”) (each of the Company and Executive are referred to herein as a “Party”, and collectively referred to herein as the “Parties”).

W I T N E S S E T H:

WHEREAS, the Executive currently serves as the Chief Financial Officer of the Company; and

WHEREAS, the Company desires to continue to obtain the services of Executive, and Executive desires to continue to be employed by the Company upon the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the premises, the agreements herein contained and other good and valuable consideration, receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as of the Effective Date as follows:

ARTICLE I.
DEFINITIONS

1.1.       Definitions. In addition to other terms defined throughout this Agreement, the following terms have the following meanings when used herein:

1.1.1       “Cause” shall mean, in the context of a basis for termination by the Company of Executive’s employment with the Company, that:

(i)          Executive materially breaches any obligation, duty, covenant or agreement under this Agreement, which breach is not cured or corrected within thirty (30) days of written notice thereof from the Company (except for breaches of ARTICLE V or ARTICLE VI of this Agreement, which cannot be cured and for which the Company need not give any opportunity to cure); or

(ii)         Executive’s willful failure or refusal to perform or nonperformance of his duties required by this Agreement or assigned by the Company through the Board of Directors or the Chief Executive Officer, and without a reasonable basis for Executive to do so; provided, however, that Executive shall have first received written notice from the Company stating with specificity the nature of such failure and refusal and affording Executive an opportunity, as soon as practicable, to correct the acts or omissions complained of, and failure of Executive to cure such failure or refusal within thirty (30) days after written notice; or

(iii)       Any gross negligence or willful misconduct of the Executive with regard to the Company or any of its subsidiaries resulting in a material economic loss to the Company or material damage to the Company’s reputation or business relationships; or

(iv)        Executive commits any act of misappropriation of funds or embezzlement; or

(v)         Executive commits any act of fraud; or

(vi)        Executive is convicted of, or pleads guilty or nolo contendere with respect to, theft, fraud, a crime involving moral turpitude, or a felony under federal or applicable state law; and, in the case of any of the above offenses, such offense casts reasonable doubt on Executive’s ability to perform his duties going forward.

1.1.2       “Change of Control” shall mean the happening of any of the following without the prior written consent of the Executive:

(i)          Any Person is or becomes the “Beneficial Owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing more than 50% of the total voting power represented by the Company’s then outstanding voting securities without the approval of not fewer than two-thirds of the Board of Directors of the Company voting on such matter, unless the Board of Directors specifically designates such acquisition to be a change of control;

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(ii)         A merger or consolidation of the Company whether or not approved by the Board of Directors of the Company, other than a merger or consolidation that would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted or into voting securities of the surviving entity) at least 50% of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or the shareholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets; or

(iii)        As a result of the election of members to the Board of Directors, a majority of the Board of Directors consists of persons who are not members of the Board of Directors as of the Execution Date (including Executive as a member of the Board of Directors as of the Execution Date), except in the event that such slate of directors is proposed by the Committee or the Board.

1.1.3       “COBRA” means Section 4980B of the Internal Revenue Code and Section 601 of the Employee Retirement Income Security Act of 1974, as amended.

1.1.4       “Confidential/Trade Secret Information” is information that is not generally known to the public and, as a result, is of economic benefit to the Company in the conduct of its business, and the business of the Company’s subsidiaries, which includes, but is not limited to, all proprietary information developed or obtained by the Company, including its affiliates, and predecessors, and comprising the following items, whether or not such items have been reduced to tangible form (e.g., physical writing, computer hard drive, disk, tape, e-mail, etc.): all methods, techniques, processes, ideas, research and development, product designs, engineering designs, plans, models, production plans, business plans, add-on features, trade names, service marks, slogans, forms, pricing structures, business forms, marketing programs and plans, layouts and designs, financial structures, operational methods and tactics, cost information, the identity of and/or contractual arrangements with customers, partners, suppliers and/or vendors, accounting procedures, and any document, record or other information of the Company relating to the above. Confidential/Trade Secret Information includes not only information directly belonging to the Company which existed before the date of this Agreement, but also information developed by Executive for the Company, including its subsidiaries, affiliates and predecessors, during the term of Executive’s employment with the Company. Confidential/Trade Secret Information does not include any information which (a) was in the lawful and unrestricted possession of Executive prior to its disclosure to Executive by the Company, its subsidiaries, affiliates or predecessors, (b) is or becomes generally available to the public by lawful acts other than those of Executive after receiving it, or (c) has been received lawfully and in good faith by Executive from a third party who is not and has never been an executive of the Company, its subsidiaries, affiliates or predecessors, and who did not derive it from the Company, its subsidiaries, affiliates or predecessors.

1.1.5       “Current Ratio” means, as of the date of determination, (a) the current assets of the Company, divided by (b) the current liabilities of the Company, each as set forth in the financial statements of the Company as filed in the Company’s periodic reports with the Securities and Exchange Commission; except in the case of a Payment Date Current Ratio, which shall be calculated based on the Company’s internally generated financial statements, in accordance with generally accepted accounting principles, consistently applied.

1.1.6       “Effective Date” means April 1, 2022.

1.1.7       “Exchange Act” means the Exchange Act of 1934, as amended.

1.1.8       “Good Reason” shall mean, in the context of a basis for termination by Executive of his employment with the Company, any of the following without his prior written consent: (a) a material diminution in his authority, duties, or responsibilities; (b) a material diminution in the authority, duties, or responsibilities of the supervisor to whom Executive is required to report, including, if applicable, a requirement that Executive report to an officer or employee of the Company rather than reporting to the Board; (c) a material breach by the Company of this Agreement, or (d) a material diminution in Executive’s Base Salary.

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1.1.9       “Initial Term” means a period beginning on the Execution Date and ending on the third (3rd) anniversary of the Execution Date.

1.1.10     “Non-Compete Period” means a period of twelve (12) months after the Termination Date.

1.1.11     “Person” (when capitalized) means any individual, corporation, partnership, joint venture, limited liability company, trust, unincorporated organization or governmental entity.

1.1.12     “Restricted Area” means (A) any State (in the United States); and/or (B) any other geographic area (province, if such Restricted Area is in Canada, or country, if such Restricted Area is in a country other than the United States or Canada), in which the Company or any of its Subsidiaries provides Restricted Services or Restricted Products, directly or indirectly, during the twelve months preceding the Termination Date of Executive’s employment hereunder.

1.1.13     “Restricted Products” means used motor oil, petroleum by-products, renewable fuels, vacuum gas oil, aggregated feedstock, conventional crude refining and re-refined oil products, gasoline blendstock, pygas and fuel oil cutterstock, oil filters, engine coolant and/or other hydrocarbons and any other product that the Company or any of its Subsidiaries has provided or is researching, developing, manufacturing, distributing, refining, re-refining, aggregating, purchasing, selling and/or providing at any time during the two years immediately preceding the Termination Date, or about which the Executive obtained any trade secret or other Confidential/Trade Secret Information during the two years immediately preceding the Termination Date as a result of (a) his employment with the Company, (b) consulting services he provided to the Company, or (c) his position as a director of the Company.

1.1.14     “Restricted Services” means the collection, trading, purchasing, processing, storing, aggregation, transportation, manufacture, distribution, recycling, storage, refinement, re-refinement and sale of Restricted Products; or dismantling, demolition, decommission and marine salvage services and any other services that the Company or any of its Subsidiaries has provided or is researching, developing, performing and/or providing at any time during the two years immediately preceding the Termination Date or about which Executive obtained any trade secret or other Confidential/Trade Secret Information during the two years immediately preceding the Termination Date as a result (a) of his employment with the Company, (b) consulting services he provided to the Company, or (c) his position as a director of the Company.

1.1.15     “Subsidiary” or “Subsidiaries” means any or all Persons of which the Company owns directly or indirectly through another Person, a nominee arrangement or otherwise (a) at least a 20% of the outstanding capital stock (or other shares of beneficial interest) entitled to vote generally or otherwise have the power to elect a majority of the board of directors or similar governing body or the legal power to direct the business or policies of such Person or (b) at least 20% of the economic interests of such Person.

1.1.16     “Term” means the Initial Term and any Automatic Renewal Terms.

1.1.17     “Termination Date” shall mean the date on which Executive’s employment with the Company hereunder ends.

ARTICLE II.
EMPLOYMENT; TERM; DUTIES

2.1.         Employment. Pursuant to the terms and conditions hereinafter set forth, the Company hereby employs Executive, and Executive hereby accepts such employment, as the Chief Financial Officer (“CFO”) of the Company for the period from the Effective Date to the Execution Date and for the Initial Term; provided that this Agreement shall automatically extend for additional one (1) year periods after the Initial Term (each an “Automatic Renewal Term”) unless either Party provides the other written notice of their intent not to automatically extend the term of this Agreement at least sixty (60) days prior to the end of the Initial Term or any Automatic Renewal Term, as applicable (each a “Non-Renewal Notice”).

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2.2.         Duties and Responsibilities. Executive, as CFO, shall perform such administrative, managerial and executive duties for the Company (i) as are prescribed by applicable job specifications for the Chief Financial Officer of a public company the size and nature of the Company, (ii) as may be prescribed by the Bylaws of the Company, (iii) as are customarily vested in and incidental to such position, and (iv) as may be assigned to him from time to time by the President, Chief Executive Officer or Board of Directors of the Company (the “Board”).

2.3.         Related Party Transaction Committee. The Company’s “Related Party Transaction Committee,” composed of at least two (2) independent directors (as determined by the rules and regulations of the NASDAQ Capital Market, or the principal exchange or market on which the Company’s securities then trade), shall be available to Executive to review any potential conflicts of interest between Executive, the Company and any other entity or individual which may be affiliated with Executive.

2.4.         Covenants of Executive.

2.4.1       Best Efforts. Executive shall devote his best efforts to the business and affairs of the Company. Executive shall perform his duties, responsibilities and functions to the Company hereunder to the best of his abilities in a diligent, trustworthy, professional and efficient manner and shall comply, in all material respects, with all rules and regulations of the Company (and special instructions of the Board, if any) and all other rules, regulations, guides, handbooks, procedures and policies applicable to the Company and its business in connection with his duties hereunder, including all United States federal and state securities laws applicable to the Company.

2.4.2       Records. Executive shall use his best efforts and skills to truthfully, accurately, and promptly prepare, maintain, and preserve all records and reports that the Company may, from time to time, request or require, fully account for all money, records, equipment, materials, or other property belonging to the Company of which he may have custody, and promptly pay and deliver the same whenever he may be directed to do so by the Board.

2.4.3       Compliance. Executive shall use his best efforts to maintain the Company’s compliance with all rules and regulations of the Securities and Exchange Commission (“SEC”), and reporting requirements for publicly traded companies under the Exchange Act. Executive shall at all times comply, and cause the Company to comply, with the then-current good corporate governance standards and practices as prescribed by the SEC, any exchange on which the Company’s capital stock or other securities may be traded and any other applicable governmental entity, agency or organization.

2.4.4       Exchange Act Filing Requirements. The Executive agrees and acknowledges that due to the Executive’s status as a Section 16(a) “officer” of the Company (as described in Rule 16a-1(f) of the Exchange Act), he has an obligation to file various beneficial ownership reports and forms with the Securities and Exchange Commission, including Forms 3, 4 and 5 (where applicable) and that such obligation is solely the Executive’s regardless of whether the Company assists the Executive in filing such forms or not. The Executive agrees to use his best efforts to timely and adequately file all required beneficial ownership reports and forms required under the Exchange Act.

2.5.         Retroactive Pay. Executive shall receive, within fourteen (14) days after the execution of this Agreement by the Executive and the counter-signature of this Agreement by the Company, a lump sum payment equal to the difference between his salary in effect prior to the Effective Date and his Base Salary for the time period from the Effective Date to the Execution Date.

ARTICLE III.
COMPENSATION AND OTHER BENEFITS

3.1.         Base Salary. So long as this Agreement remains in effect, for all services rendered by Executive hereunder and all covenants and conditions undertaken by the Parties pursuant to this Agreement, the Company shall pay, and Executive shall accept, as compensation, an annual base salary of $318,000 (as may be increased from time to time in accordance with this Section, the “Base Salary”). The Base Salary shall be payable in regular installments in accordance with the normal payroll practices of the Company, in effect from time to time, but in any event no less frequently than on a monthly basis. For so long as Executive is employed hereunder, beginning on December 31, 2022, and on each December 31st thereafter, the Base Salary may be increased as determined by the Compensation Committee of the Board (the “Committee”), in its sole and absolute discretion, or the Board, with the recommendation of the Committee. Notwithstanding the above, the Committee or the Board, with the recommendation of the Committee, may also increase the Base Salary from time to time, at any time, in its/their discretion. Such increase(s) in salary shall be documented in the Company’s records, but shall not require the Parties enter into a new or amended form of this Agreement.

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3.2.         Discretionary Bonus. Executive shall be eligible for a yearly discretionary cash bonus (a “Cash Bonus”) and equity bonus (the “Equity Bonus”) equal to an amount as determined by the Committee or the Board, with the recommendation of the Committee and based on the condition of the Company’s business and results of operations, the Committee’s evaluation of Executive’s individual performance for the relevant period, and the satisfaction of goals that may be established by the Committee. Each Cash Bonus shall be paid in the Committee’s discretion at the same time annual bonuses are paid to other executives of the Company, in an amount determined by the Committee in its sole discretion, based on such criteria as the Committee deems relevant; provided that, without limiting the above, and the discretionary nature of the bonuses, unless otherwise agreed by the Committee, no Cash Bonus shall be paid at any time that the sum of the Current Ratios, at the end of the last two completed calendar quarters that have been publicly filed with the SEC, divided by 2, totals less than 1.0. The Committee, or the Board, with the recommendation of the Committee, may also pay or grant discretionary Cash Bonuses or Equity Bonuses from time to time in their discretion, at any time, in its/their discretion. The Equity Bonus may be in the form of common stock, stock options or other equity consideration, in such amounts and with such terms as may be determined by the Committee or the Board, with the recommendation of the Committee, from time to time. Except as specified in ARTICLE IV regarding the payment of a bonus and other compensation following Executive’s termination of employment under certain circumstances, nothing herein shall require the Committee or the Board to pay any bonus, including any Cash Bonus or Equity Bonus. Except as specified in ARTICLE IV regarding the payment of a bonus and other compensation following Executive’s termination of employment, all bonuses paid to the Executive shall be in the discretion of the Committee or the Board with the recommendation of the Committee, absent a written agreement providing otherwise. The Cash Bonus shall only be paid to the extent the Company’s Principal Accounting Officer has determined, as of a date within 10 business days of the date the Cash Bonus is to be paid (the “Proposed Payment Date”), that the Current Ratio, after paying the Cash Bonus, and any other cash bonuses awarded by the Compensation Committee and/or the Board of Directors of the Company, which are unpaid as of such Proposed Payment Date, will be equal to at least 1.0 (the “Payment Date Current Ratio”). Notwithstanding the forgoing, the Cash Bonus will be paid not later than March 15 of the year following the year in which the Committee or the Board determine to grant such Cash Bonus.

3.3.         Performance Standards. The Executive and the Company agree that the Executive’s discretionary Cash Bonus and equity-based compensation (including the Equity Bonus) may, but shall not be required to, be based on the Executive’s and the Company’s achievement of performance goals that may be established by the Committee after discussion with the Executive and his supervisors (if any). Until or unless the Company and the Committee establish performance goals, the Executive’s discretionary Cash Bonus and equity-based compensation (including the Equity Bonus) will be wholly discretionary.

3.4.         Equity Awards. During the Term, the Executive shall be eligible to receive equity and equity-based awards (including the Equity Bonus) in the discretion of the Board or the Committee and on such terms and conditions as determined by the Board or the Committee. Any equity and equity-based awards (including the Equity Bonus) granted to the Executive, whether before or after the Execution Date, shall be governed by the terms and conditions of the applicable Company equity incentive plan(s), as may be in effect from time to time, and the award agreements governing such equity or equity-based awards (any such plan and award agreements, collectively, the “Equity Agreements”). Any equity-based awards granted to Executive after the Execution Date shall have vesting and exercisability terms that are no less favorable to Executive than the terms required by this Agreement.

3.5.         Additional Grants/Awards. Executive shall be eligible to receive additional equity incentive grants or cash bonus awards as determined by the Board or a committee of the Board in its sole discretion.

3.6.         Business Expenses. So long as this Agreement is in effect, the Company shall reimburse Executive for all reasonable, out-of-pocket business expenses incurred in the performance of his duties hereunder consistent with the Company’s policies and procedures, in effect from time to time, with respect to travel, entertainment, communications, technology/equipment and other business expenses customarily reimbursed to senior executives of the Company in connection with the performance of their duties on behalf of the Company.

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3.7.         Vacation. Executive will be entitled to 20 days of paid time-off (“PTO”) per year. PTO days shall accrue beginning on the 1st of January for each year during the term of this Agreement. Unused PTO days shall expire on December 31 of each year and shall not roll over into the next year. Other than the use of PTO days for illness or personal emergencies, PTO days must be pre-approved by the Company.

3.8.         Other Benefits. During the Term, the Executive shall be entitled to participate in any employee benefit plans or programs for which he is eligible that are provided by the Company to its management employees, such as retirement, health, life insurance, and disability plans, vacation and sick leave policies, business expense reimbursement policies that the Company has in effect from time to time, and stock option plan, 401(k) plan, life, health, accident, disability insurance plans, pension plans and retirement plans, in effect from time to time (including, without limitation, any incentive program or discretionary bonus program of the Company which may be implemented in the future by the Board), to the extent and on such terms and conditions as the Company customarily makes such plans available to its senior executives. The Company retains the right to terminate or alter the terms of any benefit programs that it may establish, provided that no such termination or alteration shall adversely affect any vested benefit under any benefit program or other obligation set forth in this Agreement.

3.9.         Car Allowance. The Company shall provide the Executive an automobile allowance of $750 per month during the term of Executive’s employment hereunder.

3.10.       Change of Control Payment.

3.10.1      If a Change of Control occurs during the Term or within six months after Executive’s termination of employment pursuant to Section 4.1.5 or 4.1.6, the Company shall pay Executive, within 60 days following the date of such Change of Control, a cash payment in a lump sum in an amount equal to (x) minus (y) where (x) equals 3.0 times the sum of (a) the most recent annual Base Salary of the Executive; and (b) the amount of the most recent Cash Bonus paid to the Executive pursuant to Section 3.2 of this Agreement (the “Change of Control Payment”) and (y) equals the amount of any Severance Payment actually paid to Executive pursuant to Section 4.2.3, below). If this Agreement has been terminated prior to any Cash Bonus being awarded pursuant to this Agreement or if the most recent Cash Bonus was zero, the “amount of the most recent Cash Bonus paid to the Executive pursuant to Section 3.2 of this Agreement” in the immediately preceding sentence shall be replaced with “an amount equal to the greater of (1) the amount of Executive’s most recent annual cash bonus awarded by the Committee or the Board (whether or not a Cash Bonus hereunder) (“Most Recent Cash Bonus”); and (2) the amount of Executive’s annual cash bonus awarded by the Committee or the Board (whether or not a Cash Bonus hereunder) for the year immediately preceding the Most Recent Cash Bonus (the “Preceding Year Bonus”)”. The Change of Control Payment shall be made less applicable withholding.

3.10.2      In the event of a change of control (as such term(s) are defined and/or used in each Equity Agreement, an (“Equity Award Change of Control”), the equity-based compensation held by the Executive prior to the date of this Agreement shall vest to the extent set forth in such Equity Agreements and shall be exercisable for the time periods set forth in such Equity Agreements.

3.10.3      The Equity Agreements for all Equity Bonus and other equity-based compensation granted to Executive on and after the date of this Agreement shall provide that upon an Equity Award Change of Control all of Executive’s Equity Bonus and other equity-based compensation shall immediately vest regardless of whether the Executive is retained by the Company or successor following the Equity Award Change of Control and any outstanding stock options and other equity compensation held by the Executive shall be exercisable by the Executive pursuant to the terms thereof until the earlier of (A) three (3) months from Executive’s Termination Date and (B) the latest date upon which such stock options and other equity compensation would have expired by their original terms under any circumstances.

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ARTICLE IV.
TERMINATION OF EMPLOYMENT

4.1.         Termination of Employment. Executive’s employment pursuant to this Agreement shall terminate on the earliest to occur of the following:

4.1.1       upon the death of Executive;

4.1.2       upon the delivery to Executive of written notice of termination by the Company if Executive shall suffer a physical or mental disability which renders Executive, in the reasonable judgment of the Committee or the Board, unable to perform his duties and obligations under this Agreement for either 90 consecutive days or 180 days in any 12-month period;

4.1.3       upon delivery to the Company of a written notice of termination by Executive for any reason other than for Good Reason (for which Executive shall provide sixty (60) days of notice); except, if Executive delivers a notice of termination pursuant to Section 2.1, upon the expiration of the Initial Term or the applicable Automatic Renewal Term during which such notice is provided, which shall instead be subject to Section 4.1.7;

4.1.4       upon delivery to Executive of written notice of termination by the Company for Cause;

4.1.5       upon delivery of written notice of termination from Executive to the Company for Good Reason, provided, however, prior to any such termination by Executive pursuant to this Section 4.1.5, Executive shall have advised the Company in writing within ninety (90) days after the initial occurrence of any circumstances that would constitute Good Reason, the Company shall have thirty (30) days following receipt of Executive’s written notice (the “Cure Period”) to cure such initial occurrence of any circumstances that would constitute Good Reason, and further provided that such written notice of termination is provided by Executive within thirty (30) days after the end of such Cure Period, provided that such initial occurrence of the circumstances constituting Good Reason has not been cured during such Cure Period; or

4.1.6       upon delivery to Executive of a written notice of termination by the Company without Cause; except if Company delivers a notice of termination pursuant to Section 2.1, upon the expiration of the Initial Term or the applicable Automatic Renewal Term during which such notice is provided, which shall instead be subject to Section 4.1.8;

4.1.7       if the Executive delivers a notice of termination pursuant to Section 2.1, upon the expiration of the Initial Term or the applicable Automatic Renewal Term during which such notice is provided; or

4.1.8       if the Company delivers a notice of termination pursuant to Section 2.1, upon the expiration of the Initial Term or the applicable Automatic Renewal Term during which such notice is provided. The Company’s notice of termination under this section must contain a statement notifying the Executive that either:

(a)       the Company shall apply Section 6.1 of this Agreement and abrogates its right to enforce certain sections of ARTICLE VI as provided therein; or

(b)       the Company shall not apply Section 6.1 of this Agreement and intends that all of ARTICLE VI remains in full force and effect as provided therein.

4.2.         Effect of Termination. In the event that Executive’s employment hereunder is terminated in accordance with the provisions of this Agreement, Executive shall be entitled to the following:

4.2.1       If Executive’s employment is terminated pursuant to Sections 4.1.1 (death) or Section 4.1.2 (disability), Executive or his estate shall be entitled to a lump sum cash severance payment equal to the sum of (i) Executive’s Base Salary accrued through the Termination Date; (ii) any unpaid Cash Bonus for the prior year that would have been paid had Executive not been terminated prior to such payment; and (iii) the pro rata amount of the current year’s bonus (through the end of the month of termination), which would have been payable to the Executive, had the Executive been employed through the end of the then current calendar year, based on the Board or Committee’s good faith assessment of the amount which would have been paid to Executive as a cash bonus for such calendar year, based on the Company’s and Executive’s quantifiable performance through the Date of Termination, and the Board or Committee’s customary bonus determination matrix, with rankings based on the Company’s peer group and the Board or Committee’s individual rankings of such matrix items, in each case utilizing the Company’s then current process for determining bonuses as determined by the Committee in their reasonable discretion (the “Good Faith Bonus Determination”). Such amount shall be paid within 60 days after the Termination Date. Executive or his estate shall be entitled to no other benefits other than as required under the terms of employee benefit plans in which Executive was participating as of the Termination Date and continuation of health insurance benefits on the terms and to the extent required by COBRA, or such other similar law or regulation as may be applicable to the Executive or the Company with respect to the Executive. Additionally, and notwithstanding anything to the contrary in any Equity Agreement, any unvested stock options or equity compensation held by Executive shall vest and shall be exercisable until the earlier of (A) ninety days (90) days from the date of termination and (B) the latest date upon which such stock options or equity would have expired by their original terms under any circumstances.

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4.2.2       If Executive’s employment is terminated pursuant to Section 4.1.3 (without Good Reason by the Executive), Section 4.1.7 (Executive’s Non-Renewal Notice), Section 4.1.8(a) (Company’s Non-Renewal Notice providing that Section 6.1 shall apply), or Section 4.1.4 (by the Company for Cause): Executive shall be entitled to his Base Salary accrued through the Termination Date and no other benefits other than as required under the terms of employee benefit plans in which Executive was participating as of the Termination Date and continuation of health insurance benefits on the terms and to the extent required by COBRA, or such other similar law or regulation as may be applicable to the Executive or the Company with respect to the Executive. Additionally, any unvested stock options or equity compensation held by Executive shall immediately terminate and be forfeited (unless otherwise provided in the applicable award) and any previously vested stock options (or if applicable equity compensation) shall be subject to terms and conditions set forth in the applicable Equity Agreement, as such may describe the rights and obligations upon termination of employment of Executive.

4.2.3       If Executive’s employment is terminated by Executive pursuant to Section 4.1.5 (Good Reason), by the Company pursuant to Section 4.1.6 (without Cause by the Company), or by the Company pursuant to Section 4.1.8(b) (Company’s Non-Renewal Notice providing that Section 6.1 shall not apply): (a) Executive shall be entitled to his Base Salary accrued through the Termination Date and any unpaid Cash Bonus for the prior completed calendar year that would have been paid had Executive not been terminated prior to such payment, plus a lump sum cash severance payment equal to the sum of (i) an amount equal to Executive’s current annual Base Salary plus (ii) an amount equal to the Good Faith Bonus Determination for the full calendar year containing the Termination Date (instead of the period through the Termination Date as discussed in Section 4.2.1)(such total payment referred to herein in Section 4.2.3(a) as the “Severance Payment”); and (b) provided Executive elects to receive continued health insurance coverage through COBRA, the Company will pay Executive’s monthly COBRA contributions for health insurance coverage, as may be amended from time to time (less an amount equal to the premium contribution paid by active Company employees, if any) for twelve (12) months following the Termination Date (the “Health Payment”); provided, however, that if at any time Executive is covered by a substantially similar level of health insurance through subsequent employment or otherwise, the Company’s health benefit obligations shall immediately cease, and the Company shall have no further obligation to make the Health Payment. Additionally, and notwithstanding anything to the contrary in any Equity Agreement, any unvested stock options or equity compensation previously granted to the Executive will vest immediately upon such termination and shall be exercisable by the Executive until the earlier of (A) three (3) months from the date of termination and (B) the latest date upon which such stock options or equity would have expired by their original terms under any circumstances. Executive shall be entitled to no other post-employment benefits except as provided for under this Section 4.2.3 and for benefits payable under applicable benefit plans in which Executive is entitled to participate through the Termination Date, subject to and in accordance with the terms of such plans. The Severance Payment shall be paid in cash within sixty (60) days after the Termination Date.

4.2.4       As a condition to Executive’s right to receive any benefits pursuant to Section 4.2.3 of this Agreement, (A) Executive must execute and deliver to the Company a written release in form and substance satisfactory to the Company, of any and all claims against the Company and all directors and officers of the Company with respect to all matters arising out of Executive’s employment hereunder, or the termination thereof (other than claims for entitlements under the terms of this Agreement or plans or programs of the Company in which Executive has accrued a benefit), which shall become effective by the 90^th day following the Executive’s Termination Date; and (B) Executive must not have breached any of his covenants and agreements under ARTICLE V or ARTICLE VI of this Agreement, which shall continue following the Termination Date.

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4.2.5       In the event of termination of Executive’s employment pursuant to Section 4.1.4 (by the Company for Cause), and subject to applicable law and regulations, the Company shall be entitled to offset against any payments due Executive the demonstrable loss and damage, if any, which shall have been suffered by the Company as a result of the acts or omissions of Executive giving rise to termination. The foregoing shall not be construed to limit any cause of action, claim or other rights, which the Company may have against Executive in connection with such acts or omissions.

4.2.6       Upon termination of Executive’s employment hereunder, or on demand by the Company during the Term of this Agreement, Executive will immediately deliver to the Company, and will not keep in his possession, recreate or deliver to anyone else, any and all Company property, as well as all devices and equipment belonging to the Company (including computers, handheld electronic devices, telephone equipment, and other electronic devices), Company credit cards, records, data, notes, notebooks, reports, files, proposals, lists, correspondence, specifications, drawings blueprints, sketches, materials, photographs, charts, all documents and property, and reproductions of any of the aforementioned items that were developed by Executive pursuant to his employment with the Company, obtained by Executive in connection with his employment with the Company, or otherwise belonging to the Company, its successors or assigns, including, without limitation, those records maintained pursuant to this Agreement. However, Executive may retain any materials or documents which he shall need in any legal action to enforce the terms of this Agreement.

4.2.7       Executive also agrees to keep the Company advised of his home and business address for a period of three (3) years after termination of Executive’s employment hereunder, so that the Company can contact Executive regarding his continuing obligations provided by this Agreement. In the event that Executive’s employment hereunder is terminated, Executive agrees to grant consent to notification by the Company to Executive’s new employer about his obligations under this Agreement.

4.3.         Consulting. During the sixty (60) day period following any termination of this Agreement pursuant to Section 4.1.3, Section 4.1.4, Section 4.1.5, Section 4.1.6, or Section 4.1.8(b), and provided that Company and Executive have no disputes regarding the payment of any severance amounts under this Agreement, Executive shall be available, subject to his other reasonable commitments or obligations made or incurred in mitigation of the termination of his employment, by telephone, email or fax, as a consultant to the Company, without further compensation, to consult with its officers and directors regarding projects and/or tasks as defined by the Board. In no extent shall the consulting services required pursuant to this Section 4.3 exceed 80 hours.

4.4.         Treatment of Equity. To the extent not specifically provided for herein, the vesting and exercisability of equity and equity-based awards (if any) held by the Executive at termination, and all other terms of such equity and equity-based awards (if any), shall be governed by the Equity Agreements.

ARTICLE V.
INVENTIONS

5.1.         Inventions in General. As described in further detail in this ARTICLE V, all processes, technologies and inventions relating to the business of the Company (collectively, “Inventions”), including new contributions, improvements, ideas, discoveries, trademarks and trade names, conceived, developed, invented, made or found by Executive, alone or with others, during his employment by the Company, whether or not patentable and whether or not conceived, developed, invented, made or found on the Company’s time or with the use of the Company’s facilities or materials, shall be the property of the Company and shall be promptly and fully disclosed by Executive to the Company. Executive shall perform all necessary acts (including, without limitation, executing and delivering any confirmatory assignments, documents or instruments requested by the Company) to assign or otherwise to vest title to any such Inventions in the Company and to enable the Company, at its sole expense, to secure and maintain domestic and/or foreign patents or any other rights for such Inventions.

5.2.         Inventions Retained and Licensed. Executive has attached hereto, as Exhibit A, a list describing all inventions, discoveries, original works of authorship, developments, improvements, and trade secrets, which were conceived in whole or in part by Executive prior to his employment with the Company to which Executive has any right, title or interest, which relate to the Company’s proposed business, products, or research and development (“Prior Inventions”); or, if no such list is attached, Executive represents and warrants that there are no such Prior Inventions. Furthermore, Executive represents and warrants that the inclusion of any Prior Inventions from Exhibit A of this Agreement will not materially affect his ability to perform all obligations under this Agreement. If, in the course of Executive’s employment with the Company, Executive incorporates into or uses in connection with any product, process, service, technology or other work by or on behalf of Company any Prior Invention, Executive hereby grants to the Company a nonexclusive, royalty-free, fully paid-up, irrevocable, perpetual, worldwide license, with the right to grant and authorize sublicenses, to make, have made, modify, use, import, offer for sale, and sell such Prior Invention as part of or in connection with such product, process, service, technology or other work and to practice any method related thereto.

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5.3.         Assignment of Inventions. Executive agrees that Executive will promptly make full written disclosure to the Company, will hold in trust for the sole right and benefit of the Company, and hereby assigns to the Company, or its designee, all of his right, title, and interest in and to any and all inventions, original works of authorship, developments, concepts, improvements, designs, discoveries, ideas, trademarks or trade secrets, whether or not patentable or registrable under patent, copyright or similar laws, which Executive may solely or jointly conceive, develop, or reduce to practice, or cause to be conceived, developed, or reduced to practice, during his employment with the Company, or with the use of Company’s equipment, supplies, facilities, or Confidential/Trade Secret Information (collectively referred to as “Conceived Inventions”). All Conceived Inventions that Executive conceives, reduces to practice, develops or has developed (in whole or in part, either alone or jointly with others) shall be the sole property of the Company and its assigns to the maximum extent permitted by law (and to the fullest extent permitted by law shall be deemed “works made for hire”). Executive also agrees to irrevocably assign (or cause to be irrevocably assigned) and hereby irrevocably assigns to the Company all right, title and interest in all Conceived Inventions and any copyrights, patents, trademarks, trade secrets, mask work rights, moral rights and intellectual property and other rights (“Intellectual Property Rights”). Executive understands and agrees that the decision whether or not to commercialize or market any Conceived Inventions is within the Company’s sole discretion and for the Company’s sole benefit and that no royalty or other consideration will be due to Executive as a result of the Company’s efforts to commercialize or market any such Conceived Inventions.

5.4.         Assignment of Other Rights. In addition to the foregoing assignment of Inventions to the Company, Executive hereby irrevocably transfers and assigns to the Company: (i) all worldwide patents, patent applications, copyrights, mask works, trade secrets and other intellectual property rights in any Conceived Inventions; and (ii) any and all “Moral Rights” (as defined below) that Executive may have in or with respect to any Conceived Inventions. Executive also hereby forever waives and agrees never to assert any and all Moral Rights Executive may have in or with respect to any Conceived Inventions, even after termination of Executive’s work on behalf of the Company. “Moral Rights” means any rights to claim authorship of any Conceived Inventions, to object to or prevent the modification of any Conceived Inventions, or to withdraw from circulation or control the publication or distribution of any Conceived Inventions, and any similar right, existing under judicial or statutory law of any country in the world, or under any treaty, regardless of whether or not such right is denominated or generally referred to as a “moral right”.

5.5.         Inventions Assigned to the United States. Executive agrees to assign to the United States government all of his right, title, and interest in and to any and all Inventions whenever such full title is required to be in the United States by a contract between the Company and the United States or any of its agencies.

5.6.         Maintenance of Records. Executive agrees to keep and maintain adequate, current, accurate, and authentic written records of all such Conceived Inventions, which may be in the form of notes, sketches, drawings, electronic files, reports, or any other format that may be specified by the Company and which will be available to and remain the sole property of the Company at all times.

5.7.         Patent and Copyright Registrations. Executive agrees to take steps that may be necessary to assist the Company, or its designee, at the Company’s expense, in every proper way to complete the transfer of and secure the Company’s rights in the Conceived Inventions, Intellectual Property Rights and any rights relating thereto in any and all countries, including by making the disclosure to the Company of all pertinent information and data with respect thereto, executing all applications, specifications, oaths, assignments and all other instruments which the Company shall deem proper or necessary in order to apply for, register, obtain, maintain, defend, and enforce such rights and in order to assign and convey to the Company, its successors, assigns, and nominees the sole and exclusive rights, title and interest in and to such Conceived Inventions and any rights relating thereto, and by testifying in a suit or other proceeding relating to such Conceived Inventions and any rights relating thereto. Executive further agrees that his obligation to execute or cause to be executed, when it is in his power to do so, any such instrument or papers shall continue after the termination of this Agreement. If the Company is unable because of Executive’s mental or physical incapacity or for any other reason to secure Executive’s signature with respect to any Conceived Inventions including, without limitation, to apply for or to pursue any application for any United States or foreign patents or copyright registrations covering such Conceived Inventions, then Executive hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as his agent and attorney in fact, to act for and in his behalf and stead to execute and file any papers, oaths and to do all other lawfully permitted acts with respect to such Conceived Inventions with the same legal force and effect as if executed by Executive.

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ARTICLE VI.
CONFIDENTIAL/TRADE SECRET INFORMATION 

AND RESTRICTIVE COVENANTS; NON-COMPETE

6.1.         Applicability of Provisions after Lapse of Agreement. If the Executive’s employment terminates pursuant to Section 4.1.8 of this Agreement, then the Company must elect whether the provisions of this Section 6.1 shall apply or not apply after Executive’s termination of employment. The Company agrees that in the event the Company elects that this Section 6.1 applies, then notwithstanding anything herein to the contrary, (a) the provisions of Sections 6.3, 6.8, and 6.9 below shall not apply to Executive after the Termination Date, and the Company abrogates its rights to enforce such provisions after his termination; and (b) the Executive agrees that the provisions of Section 4.2.3 shall not apply and instead the provisions of Section 4.2.2 shall apply. Executive agrees that in the event the Company elects that this Section 6.1 shall not apply after Executive’s termination of employment, then notwithstanding anything herein to the contrary, the provisions of Sections 6.3, 6.8, and 6.9 below shall continue to apply to Executive after the Termination Date and the Company agrees that it shall continue to be bound by Section 4.2.3.

6.2.         Confidential/Trade Secret Information. During the course of Executive’s employment, Executive will have access to Confidential/Trade Secret Information of the Company and information developed for the Company.

6.3.         Non-Compete. For $10 and in exchange for Executive’s access to Confidential/Trade Secret Information and other good and valuable consideration which Executive acknowledges the receipt and sufficiency of, Executive agrees to (a) devote substantially all of Executive’s business time, energy and efforts to the business of the Company (except as specifically provided for in Section 6.5 below), (b) to use Executive’s best efforts and abilities faithfully and diligently to promote the business interests of the Company and (c) to comply with the other terms and conditions of ARTICLE VI. For so long as Executive is employed hereunder, and for the twelve months following the Termination Date, Executive (whether by himself, through his employers or employees or agents or otherwise, and whether on his own behalf or on behalf of any other Person) shall not, directly or indirectly, either as an employee, employer, consultant, agent, investor, principal, partner, stockholder (except as the holder of less than 1% of the issued and outstanding stock of a publicly held corporation), own, manage, operate, control, be employed by, act as an officer, director, agent or consultant for, or be in any other way connected with or provide services or products to or for, any Person in the business of manufacturing, selling, creating, renting, aggregating, trading, distributing, marketing, producing, undertaking, developing, supplying, or otherwise dealing with or in Restricted Services or Restricted Products in the Restricted Area.

6.4.         Non-Solicitation During Employment. During his employment with the Company, Executive shall not: (a) interfere with the Company’s business relationship with its customers or suppliers, (b) solicit, directly or indirectly, or otherwise encourage any of the Company’s customers or suppliers to terminate their business relationship with the Company, or (c) solicit, directly or indirectly, or otherwise encourage any employees of the Company to leave the employ of the Company, or solicit any of the Company’s employees for employment outside the Company.

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6.5.         Restriction on Use of Confidential/Trade Secret Information. Executive agrees that his use of Confidential/Trade Secret Information is subject to the following restrictions for an indefinite period of time so long as the Confidential/Trade Secret Information does not become generally known to the public:

(i)           Non-Disclosure. Executive agrees that he will not publish or disclose, or allow to be published or disclosed, Confidential/Trade Secret Information to any person without the prior written authorization of the Company unless pursuant to or in connection with Executive’s job duties to the Company under this Agreement or as otherwise allowed pursuant to the terms of this Agreement; and

(ii)          Non-Removal/Surrender. Executive agrees that he will not remove any Confidential/Trade Secret Information from the offices of the Company or the premises of any facility in which the Company is performing services, except pursuant to his duties under this Agreement and except as needed in any legal action to enforce the terms of this Agreement. Executive further agrees that he shall surrender to the Company and/or destroy all documents and materials in his possession or control which contain Confidential/Trade Secret Information and which are the property of the Company upon the termination of his employment with the Company, and that he shall not thereafter retain any copies of any such materials except as needed in any legal action to enforce the terms of this Agreement.

6.6.         Other Activities. Subject to the foregoing prohibition and provided such services or investments do not violate any applicable law, regulation or order, or interfere in any way with the faithful and diligent performance by Executive of the services to the Company otherwise required or contemplated by this Agreement, the Company expressly acknowledges that Executive may:

6.6.1       make and manage personal business investments of Executive’s choice without consulting the Board;

6.6.2       serve in any capacity with any non-profit civic, educational or charitable organization; and

6.6.3       undertake any other actions, business transactions, agreements and undertakings of which the Executive has received approval of the Related Party Transaction Committee (as defined below) or the Audit Committee of the Company, to enter into and/or undertake, provided that

6.6.4       Executive shall undertake only such actions or services that do not interfere with the Executive’s obligations hereunder.

6.7.         Prohibition Against Unfair Competition. Executive agrees that at no time after his employment with the Company will he engage in competition with the Company while making any use of the Confidential/Trade Secret Information, or otherwise exploit or make use of the Confidential/Trade Secret Information.

6.8.         Non-Solicitation of Customers. Executive agrees that during the twelve-month period following the Termination Date, he will not, for any customer of the Company with whom Executive worked or otherwise had access to the Confidential/Trade Secret Information pertaining to the Company’s business with such customer during the last year of Executive’s employment with the Company, (i) directly or indirectly accept or solicit, in any capacity, Restricted Services or Restricted Products or (ii) solicit, directly or indirectly, or encourage any of the Company’s customers or suppliers to terminate their use of Restricted Products or Restricted Services.

6.9.         Non-Solicitation of Employees. Executive agrees that during the twelve-month period following the Termination Date, he shall not, directly or indirectly, solicit or otherwise encourage any employees of the Company to leave the employ of the Company, or solicit, directly or indirectly, any of the Company’s employees for employment.

6.10.       Former Employer Information. Executive agrees that he will not, during his employment with the Company, improperly use or disclose, or induce the Company to use any proprietary information or trade secrets of any former or concurrent employer or other third party person or entity and that Executive will not bring onto the premises of the Company or transfer onto the Company’s technology systems any proprietary information or trade secrets belonging to any such former or concurrent employer or third party person or entity, unless consented to in writing by both Company and such employer, person or entity.

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6.11.       Third Party Information. Executive acknowledges that the Company may have received and in the future may receive from third parties associated with the Company (including, but not limited to, the Company’s customers, suppliers, licensors, licensees, partners, or collaborators (“Associated Third Parties”)) confidential or proprietary information (“Associated Third Party Confidential Information”). By way of example, Associated Third Party Confidential Information may include the habits or practices, technology, or requirements of Associated Third Parties, or other information related to the business conducted between the Company and Associated Third Parties. Executive agrees that Associated Third Party Confidential Information is Confidential/Trade Secret Information, and at all times during Executive’s employment with the Company and thereafter, Executive agrees to hold in the strictest confidence, and not to use or to disclose to any Person any Associated Third-Party Confidential Information, except as necessary in carrying out his work for the Company consistent with the Company’s agreement with such Associated Third Parties.

6.12.       Immunity From Liability for Certain Confidential Disclosures and Certain Allowed Disclosures. Executive acknowledges, agrees, and understands that (i) nothing in this Agreement prohibits him from reporting to any governmental authority or attorney information concerning suspected violations of law or regulation, provided that Executive does so consistent with 18 U.S.C. § 1833, and (ii) Executive may disclose trade secret information to a government official or to an attorney and use it in certain court proceedings without fear of prosecution or liability, provided that Executive does so consistent with 18 U.S.C. § 1833.

6.13.       Conflict of Interest. During Executive’s employment with the Company, Executive must not engage in any work, paid or unpaid, that creates an actual conflict of interest with the Company. If the Company or the Executive has any question as to the actual or apparent potential for a conflict of interest, either shall raise the issue formally to the other, and if appropriate and necessary the issue shall be put to the Related Party Transaction Committee or Audit Committee of the Company for consideration and approval or non-approval, which approval or non-approval the Executive agrees shall be binding on the Executive.

6.14.       Reasonable Restrictions. The Parties acknowledge that the foregoing restrictions, as well as the duration and the territorial scope thereof as set forth in this ARTICLE VI or ARTICLE V, are under all of the circumstances reasonable and necessary for the protection of the Company and its business and are (i) reasonable given Executive’s role with the Company, and are necessary to protect the interests of the Company and (ii) completely severable and independent agreements supported by good and valuable consideration and, as such, shall survive the termination of this Agreement for any reason whatsoever.

6.15.       Specific Performance. Executive acknowledges and agrees that the Company’s remedies at law for a breach or threatened breach of any of the provisions of this ARTICLE VI or ARTICLE V would be inadequate and, in recognition of this fact, Executive agrees that, in the event of such a breach or threatened breach, in addition to any remedies at law, the Company, without posting any bond, shall be entitled to obtain equitable relief in the form of specific performance, temporary restraining order, temporary or permanent injunction or any other equitable remedy which may then be available. Executive further agrees that the restricted period set forth in this ARTICLE VI or ARTICLE V shall be tolled, and shall not run, during the period of any breach by Executive of any of the covenants contained this ARTICLE VI or ARTICLE V, as applicable. Finally, no other violation of law attributed to the Company, or change in the nature or scope of Executive’s employment or other relationship with the Company, shall operate to excuse Executive from the performance of his obligations under this ARTICLE VI or ARTICLE V. The remedies under this Agreement are without prejudice to the Company’s right to seek any other remedy to which it may be entitled at law or in equity.

6.16.       Response to Legal Process; Allowable Disclosures. Notwithstanding any other term of this Agreement (including this ARTICLE VI or ARTICLE V), including any exhibit hereto, (a) the Executive may respond to a lawful and valid subpoena or other legal process relating to the Company or its business or operations; provided that the Executive shall: (i) give the Company the earliest possible notice thereof; (ii) as far in advance of the return date as possible, at the Company’s sole cost and expense, make available to the Company and its counsel the documents and other information sought; and (iii) at the Company’s sole cost and expense, assist such counsel in resisting or otherwise responding to such process, or (b) the Executive’s reporting of possible violations of federal law or regulation to any governmental agency or entity in accordance with the provisions of and rules promulgated under Section 21F of the Exchange Act, or any other whistleblower protection provisions of state or federal law or regulation shall not violate or constitute a breach of this Agreement. Nothing contained in this Agreement (or any exhibit hereto) shall be construed to prevent the Executive from reporting any act or failure to act to the Securities and Exchange Commission or other governmental body or prevent the Executive from obtaining a fee as a “whistleblower” under Rule 21F-17(a) under the Exchange Act or other rules or regulations implemented under the Dodd-Frank Wall Street Reform Act and Consumer Protection Act.

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ARTICLE VII.
INDEMNIFICATION

7.1.         Required Indemnification. The Company agrees to indemnify Executive and hold Executive harmless from and against any and all losses, claims, damages, liabilities and costs (and all actions in respect thereof and any legal or other expenses in giving testimony or furnishing documents in response to a subpoena or otherwise), including, without limitation, the costs of investigating, preparing or defending any such action or claim, whether or not in connection with litigation in which Executive is a party, as and when incurred, directly or indirectly caused by, relating to, based upon or arising out of any work performed by Executive in connection with this Agreement to the full extent permitted by the Nevada Revised Statutes, and by the Articles of Incorporation and Bylaws of the Company, as may be amended from time to time, and pursuant to any indemnification agreement between Executive and the Company.

7.2.         In Addition to Other Obligations. The indemnification provision of this ARTICLE VII shall be in addition to any liability which the Company may otherwise have to Executive.

7.3.         Notification and Required Actions. If any action, proceeding or investigation is commenced as to which Executive proposes to demand such indemnification, Executive shall notify the Company with reasonable promptness. Executive shall have the right to retain counsel of Executive’s own choice to represent Executive and the Company shall pay all reasonable fees and expenses of such counsel; and such counsel shall, to the fullest extent consistent with such counsel’s professional responsibilities, cooperate with the Company and any counsel designated by the Company. The Company shall be liable for any settlement of any claim against Executive made with the Company’s written consent, which consent shall not be unreasonably withheld or delayed, to the fullest extent permitted by the Nevada Revised Statutes and the Articles of Incorporation and Bylaws of the Company, as may be amended from time to time.

ARTICLE VIII.
ARBITRATION

8.1.         Scope. To the fullest extent permitted by law, Executive and the Company agree to the binding arbitration of any and all controversies, claims or disputes between them arising out of or in any way related to this Agreement, the employment relationship between the Company and Executive and any disputes upon termination of employment, including but not limited to breach of contract, tort, discrimination, harassment, wrongful termination, demotion, discipline, failure to accommodate, family and medical leave, compensation or benefits claims, constitutional claims; and any claims for violation of any local, state or federal law, statute, regulation or ordinance or common law. For the purpose of this agreement to arbitrate, references to “Company” include all subsidiaries or related entities and their respective executives, supervisors, officers, directors, agents, pension or benefit plans, pension or benefit plan sponsors, fiduciaries, administrators, affiliates and all successors and assigns of any of them, and this agreement to arbitrate shall apply to them to the extent Executive’s claims arise out of or relate to their actions on behalf of the Company.

8.2.         Mediation and Arbitration Procedure. Before bringing any dispute to arbitration, and presuming that there is sufficient time prior to expiration of the limitations period to do so, the Parties agree that they will first mediate that dispute in good faith. They will agree on the mediator and split equally the costs of mediation. To commence any such arbitration proceeding, the Party commencing the arbitration must provide the other Party with written notice of any and all claims forming the basis of such right in sufficient detail to inform the other Party of the substance of such claims, and file this notice with the American Arbitration Association (“AAA”). The arbitration will be conducted in such location as mutually agreed upon by the Company and the Executive, provided that if such parties cannot mutually agree on a location, the arbitration shall be conducted in the city where the Company’s principal business location is located, by a single neutral arbitrator and in accordance with the then-current rules for resolution of employment disputes of the AAA. The Arbitrator is to be selected by the mutual agreement of the Parties using the AAA procedures. If the Parties cannot agree, the AAA will select the arbitrator. The Parties are entitled to representation by an attorney or other representative of their choosing. The arbitrator shall have the power to enter any award that could be entered by a judge of the trial court of the State of Texas, and only such power, and shall follow the law. The award shall be binding and the Parties agree to abide by and perform any award rendered by the arbitrator. The arbitrator shall issue the award in writing and therein state the essential findings and conclusions on which the award is based. Judgment on the award may be entered in any court having jurisdiction thereof. The Parties shall split equally the costs in the arbitration and, should the arbitrator find reasonable grounds for doing so, the arbitrator may order the losing Party in the arbitration hearing to bear the full costs of the arbitration filing and hearing fees and the cost of the arbitrator, including requiring such losing Party to reimburse the winning Party for such costs and expenses as previously paid.

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8.3.         Limitations Period; Deadline to Assert Claims. Executive and the Company and its affiliates agree that arbitration of any disputes, claims, or controversies shall be initiated within one year of the act or occurrence giving rise to the dispute, claim or controversy, even though that deadline is or may be shorter than the period provided by statutes of limitations that would apply in the absence of this Section. Any claim that is not asserted in an arbitration within one (1) year of the act or occurrence giving rise to it shall be deemed waived. In order to effectuate this waiver of limitations, the Company waives its right to argue that Executive may not proceed with his claim(s) due to his failure to file any charge or complaint with a government agency having jurisdiction of his claim(s) under state and federal laws, such as the Equal Employment Opportunity Commission, Texas Workforce Commission-Civil Rights Division, or Occupational Safety and Health Administration.

ARTICLE IX.
MISCELLANEOUS

9.1.         Binding Effect; Assignment. This Agreement shall be binding upon any successor (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company’s business and/or assets. Any such successor will within a reasonable period of becoming the successor assume in writing and be bound by all of the Company’s obligations under this Agreement. For all purposes under this Agreement, the term “Company” shall include any successor to the Company’s business or assets that becomes bound by this Agreement. Executive may not assign any of his rights or obligations under this Agreement.

9.2.         Notices. Any notice provided for herein shall be in writing and shall be deemed to have been given or made (a) when personally delivered or (b) when sent by email and confirmed within 48 hours by letter mailed or delivered to the Party to be notified at its or his address set forth herein; or three (3) days after being sent by registered or certified mail, return receipt requested (or by equivalent currier with delivery documentation such as FEDEX or UPS) to the address of the other Party set forth or to such other address as may be specified by notice given in accordance with this Section 9.2:

If to the Company: Vertex Energy, Inc.  1331 Gemini, Suite 250  Houston, Texas 77058  Telephone: (866) 660-8156  Attention: Secretary

If to the Executive: Chris Carlson  (Address and contact information on file) 

9.3.         Severability. If any provision of this Agreement, or portion thereof, shall be held invalid or unenforceable by a court of competent jurisdiction, such invalidity or unenforceability shall attach only to such provision or portion thereof, and shall not in any manner affect or render invalid or unenforceable any other provision of this Agreement or portion thereof, provided that should a court of competent jurisdiction determine that the scope of any provision of this Agreement is too broad to be enforced as written, the Parties hereby authorize the court to reform the provision to such narrower scope as it determines to be reasonable and enforceable and the Parties intend that the affected provision be enforced as so amended.

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9.4.         Waiver. No waiver by a Party of a breach or default hereunder by the other Party shall be considered valid, unless expressed in a writing signed by such first Party, and no such waiver shall be deemed a waiver of any subsequent breach or default of the same or any other nature.

9.5.         Entire Agreement. This Agreement, along with the Equity Agreements, sets forth the entire agreement between the Parties with respect to the subject matter hereof, and supersedes any and all prior agreements between the Company and Executive, whether written or oral, relating to any or all matters covered by and contained or otherwise dealt with in this Agreement, including, but not limited to that certain Employment Agreement between the parties dated August 7, 2015. This Agreement does not constitute a commitment of the Company with regard to Executive’s employment, express or implied, other than to the extent expressly provided for herein.

9.6.         Amendment. No modification, change or amendment of this Agreement or any of its provisions shall be valid, unless in a writing signed by the Parties and approved by the Committee or the Board of Directors.

9.7.         Authority. The Parties each represent and warrant that it/he has the power, authority and right to enter into this Agreement and to carry out and perform the terms, covenants and conditions hereof.

9.8.         Attorneys’ and Arbitration Fees. Except as prohibited by law, if either Party hereto commences an arbitration or other action against the other Party to enforce any of the terms hereof, each Party shall pay its own costs and attorney’s fees, if any. If, however, any Party prevails on a statutory or contractual claim that affords the prevailing party attorneys’ fees (including pursuant to this Agreement), the arbitrator may award reasonable attorneys’ fees to the prevailing party to the extent permitted by law.

9.9.         Construction. When used in this Agreement, unless a contrary intention appears: (i) a term has the meaning assigned to it; (ii) “or” is not exclusive; (iii) “including” means including without limitation; (iv) words in the singular include the plural and words in the plural include the singular, and words importing the masculine gender include the feminine and neuter genders; (v) any agreement, instrument or statute defined or referred to herein or in any instrument or certificate delivered in connection herewith means such agreement, instrument or statute as from time to time amended, modified or supplemented and includes (in the case of agreements or instruments) references to all attachments thereto and instruments incorporated therein; (vi) 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 hereof; (vii) references contained herein to Article, Section, Schedule and Exhibit, as applicable, are references to Articles, Sections, Schedules and Exhibits in this Agreement unless otherwise specified; (viii) references to “writing” include printing, typing, lithography and other means of reproducing words in a visible form, including, but not limited to email; (ix) references to “dollars”, “Dollars” or “$” in this Agreement shall mean United States dollars; (x) reference to a particular statute, regulation or Law means such statute, regulation or Law as amended or otherwise modified from time to time; (xi) 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 or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein); (xii) unless otherwise stated in this Agreement, in the computation of a period of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each mean “to but excluding”; (xiii) references to “days” shall mean calendar days; and (xiv) the paragraph headings contained in this Agreement are for convenience only, and shall in no manner be construed as part of this Agreement.

9.10.       Governing Law. This Agreement, and all of the rights and obligations of the Parties in connection with the employment relationship established hereby, shall be governed by and construed in accordance with the substantive laws of the State of Texas without giving effect to principles relating to conflicts of law.

9.11.       Survival. The termination of Executive’s employment with the Company pursuant to the provisions of this Agreement shall not affect Executive’s obligations to the Company hereunder which by the nature thereof are intended to survive any such termination, including, without limitation, Executive’s obligations under ARTICLE V and ARTICLE VI of this Agreement.

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9.12.       Section 280G Safe Harbor Cap. In the event it shall be determined that any payment or distribution or any part thereof of any type to or for the benefit of Executive whether pursuant to the Agreement or any other agreement between Executive and the Company, or any person or entity that acquires ownership or effective control the Company or ownership of a substantial portion of the Company’s assets (within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended, and the regulations thereunder (the “Code”)) whether paid or payable or distributed or distributable pursuant to the terms of the Agreement or any other agreement, (the “Total Payments”), is or will be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the Total Payments shall be reduced to the maximum amount that could be paid to Executive without giving rise to the Excise Tax (the “Safe Harbor Cap”), if the net after-tax payment to Executive after reducing Executive’s Total Payments to the Safe Harbor Cap is greater than the net after-tax (including the Excise Tax) payment to Executive without such reduction. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payment made pursuant to the Agreement and then to any other agreement that triggers such Excise Tax, unless an alternative method of reduction is elected by Executive. All mathematical determinations, and all determinations as to whether any of the Total Payments are “parachute payments” (within the meaning of Section 280G of the Code), that are required to be made under ARTICLE IV, including determinations as to whether the Total Payments to Executive shall be reduced to the Safe Harbor Cap and the assumptions to be utilized in arriving at such determinations, shall be made by a nationally recognized accounting firm selected by the Company (the “Accounting Firm”). In making such determinations, the Accounting Firm shall allocate payments hereunder to Executive’s covenants under ARTICLE VI and to services provided or required to be provided following a Change of Control to the maximum extent permissible. If the Accounting Firm determines that the Total Payments to Executive shall be reduced to the Safe Harbor Cap (the “Cutback Payment”) and it is established pursuant to a final determination of a court or an Internal Revenue Service (the “IRS”) proceeding which has been finally and conclusively resolved, that the Cutback Payment is in excess of the limitations provided in this Section 9.12 (hereinafter referred to as an “Excess Payment”), such Excess Payment shall be deemed for all purposes to be an overpayment to Executive made on the date such Executive received the Excess Payment and Executive shall repay the Excess Payment to the Company on demand; provided, however, if Executive shall be required to pay an Excise Tax by reason of receiving such Excess Payment (regardless of the obligation to repay the Company), Executive shall not be required to repay the Excess Payment (if Executive has already repaid such amount, the Company shall refund the amount to the Executive), and the Company shall pay Executive an amount equal to the difference between the Total Payments and the Safe Harbor Cap (provided that such amount has previously been repaid by the Executive or not previously paid by the Company).

9.13.       Section 409A Compliance.

9.13.1      This Agreement is intended to comply with Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), or an exemption thereunder. This Agreement shall be construed and administered in accordance with Section 409A. To the extent that any provision of this Agreement is ambiguous as to its compliance with Section 409A, the provision shall be read in such a manner so that all payments hereunder comply with Section 409A. The parties agree that this Agreement may be amended, as reasonably requested by either party, and as may be necessary to fully comply with Section 409A and all related rules and regulations in order to preserve the payments and benefits provided hereunder without additional cost to either party. Notwithstanding any other provision of this Agreement to the contrary, payments provided under this Agreement shall be made upon an event and in a manner that complies with Section 409A or an applicable exemption. Any payments under this Agreement that may be excluded from Section 409A either as separation pay due to an involuntary separation from service (including a voluntary separation from service for good reason that is considered an involuntary separation for purposes of the separation pay exception under Treasury Regulation 1.409A-1(n)(2)) or as a short-term deferral shall be excluded from Section 409A to the maximum extent possible. For purposes of Section 409A, each installment payment provided under this Agreement shall be treated as a separate payment. Any payments of “nonqualified deferred compensation” subject to Section 409A (e.g., payments and benefits that do not qualify as a short-term deferral or as a separation pay exception) to be made under this Agreement upon a termination of employment shall only be made if such termination of employment constitutes a “separation from service” under Section 409A. Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under this Agreement comply with Section 409A and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest, or other expenses that may be incurred by the Executive on account of non-compliance with Section 409A.

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9.13.2      Notwithstanding any other provision of this Agreement, if at the time of the Executive’s termination of employment, the Executive is a “specified employee”, determined in accordance with Section 409A, any payments and benefits provided under this Agreement that constitute “nonqualified deferred compensation” subject to Section 409A (e.g., payments and benefits that do not qualify as a short-term deferral or as a separation pay exception) that are provided to the Executive on account of the Executive’s separation from service shall not be paid until the first payroll date to occur following the six-month anniversary of the Executive’s termination date (“Specified Employee Payment Date”). The aggregate amount of any payments that would otherwise have been made during such six-month period shall be paid in a lump sum on the Specified Employee Payment Date without interest and thereafter, any remaining payments shall be paid without delay in accordance with their original schedule. If the Executive dies during the six-month period, any delayed payments shall be paid to the Executive’s estate in a lump sum upon the Executive’s death. To the extent that the foregoing applies to the provision of benefits (including, but not limited to, life insurance and medical insurance), such benefit coverage shall nonetheless be provided to the Executive during the first six months following his separation from service (the “Six-Month Period”), provided that, during such Six-Month Period, the Executive pays to the Company, on a monthly basis in advance, an amount equal to the Monthly Cost (as defined below) of such benefit coverage. The Company shall reimburse the Executive for any such payments made by the Executive in a lump sum not later than 30 days following the sixth-month anniversary of the Executive’s separation from service. For purposes of this subparagraph, “Monthly Cost” means the minimum dollar amount which, if paid by the Executive on a monthly basis in advance, results in the Executive not being required to recognize any federal income tax on receipt of the benefit coverage during the Six-Month Period.

9.13.3      To the extent required to avoid taxation under Section 409A, each reimbursement or in-kind benefit provided under this Agreement shall be provided in accordance with the following:

(i)            the amount of expenses eligible for reimbursement, or in-kind benefits provided, during each calendar year cannot affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year;

(ii)           any reimbursement of an eligible expense shall be paid to the Executive on or before the last day of the calendar year following the calendar year in which the expense was incurred; and

9.13.4      any right to reimbursements or in-kind benefits under this Agreement shall not be subject to liquidation or exchange for another benefit.

9.14.       Withholding of Taxes and Other Executive Deductions. The Company may withhold from any benefits and payments made pursuant to this Agreement all federal, state, city and other taxes as may be required pursuant to any law or governmental regulation or ruling and any and all other normal Executive deductions made with respect to the Company’s Executives generally.

9.15.       Clawback. Notwithstanding any provision in this Agreement to the contrary, any portion of the payments and benefits provided under this Agreement, as well as any other payments and benefits which the Executive receives pursuant to a Company plan or other arrangement, shall be subject to a clawback (a) to the extent necessary to comply with the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act or any Securities and Exchange Commission rule or any other applicable law; and/or (b) any policy adopted by the Company and applicable generally to Executive and other officers of the Company, relating to the recovery of compensation granted, paid, delivered, awarded or otherwise provided to Executive by the Company or its subsidiaries or any of their respective affiliates, as applicable, as may be amended from time to time.

9.16.       Legal Counsel. Executive acknowledges and warrants that (A) he has been advised that Executive’s interests may be different from the Company’s interests, (B) he has been afforded a reasonable opportunity to review this Agreement, to understand its terms and to discuss it with an attorney and/or financial advisor of his choice, (C) that Executive fully understands the terms and contents of this Agreement and the exhibits hereto, and (D) he knowingly and voluntarily entered into this Agreement. The Company and Executive shall each bear their own costs and expenses in connection with the negotiation and execution of this Agreement. Executive understands and agrees that any attorney retained by the Company who has discussed any term or condition of this Agreement with Executive or its advisor is only acting on behalf of the Company and not on its behalf.

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9.17.       Right to Negotiate. Executive hereby acknowledges that Executive has been given the opportunity to participate in the negotiation of the terms of this Agreement. Executive acknowledges and confirms that he has read this Agreement and fully understands its terms and contents.

9.18.       Voluntary Nature of Agreement. Executive acknowledges and agrees that he is executing this Agreement voluntarily and without any duress or undue influence by the Company or anyone else. Executive agrees that he has been provided an opportunity to seek the advice of an attorney of his choice before signing this Agreement.

9.19.       Counterparts, Effect of Facsimile, Emailed and Photocopied Signatures. This Agreement and any signed agreement or instrument entered into in connection with this Agreement, and any amendments hereto or thereto, may be executed in one or more counterparts, all of which shall constitute one and the same instrument. 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 manners 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. At the request of any Party, each other Party shall re execute the original form of this Agreement and deliver such form to all other Parties. No Party shall raise the use of Electronic Delivery to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of Electronic Delivery as a defense to the formation of a contract, and each such Party forever waives any such defense, except to the extent such defense relates to lack of authenticity.

[Remainder of page left intentionally blank. Signature page follows]

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This Agreement contains provisions requiring binding arbitration of disputes. By signing this Agreement, Executive acknowledges that he (i) has read and understood the entire Agreement; (ii) has received a copy of it (iii) has had the opportunity to ask questions and consult counsel or other advisors about its terms; and (iv) agrees to be bound by it.

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the day and year first above written.

“COMPANY”	VERTEX ENERGY, INC.
	a Nevada corporation
	By:	/s/ Benjamin P. Cowart
	Name: Benjamin P. Cowart  Title: Chief Executive Officer
“EXECUTIVE”
	/s/ Chris Carlson
	Chris Carlson  (Address and contact information on file)

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EXHIBIT A

LIST OF PRIOR INVENTIONS
AND ORIGINAL WORKS OF AUTHORSHIP

Title  Date  Identifying Number
or Brief Description 

________           No inventions or improvements

________           Additional Sheets Attached

Signature of Executive: ______________________________

Print Name of Executive: Chris Carlson

Date: ______________________________

EX-10.4

Vertex Energy, Inc. 8-K

Exhibit 10.4

VERTEX ENERGY, INC.

EXECUTIVE EMPLOYMENT AGREEMENT

JAMES RHAME

CHIEF OPERATING OFFICER

TABLE OF CONTENTS

ARTICLE I. DEFINITIONS		1
1.1.	Definitions	1
ARTICLE II. EMPLOYMENT; TERM; DUTIES		3
2.1.	Employment	3
2.2.	Duties and Responsibilities	4
2.3.	Related Party Transaction Committee	4
2.4.	Covenants of Executive	4
ARTICLE III. COMPENSATION AND OTHER BENEFITS		4
3.1.	Base Salary	4
3.2.	Discretionary Bonus	5
3.3.	Performance Standards	5
3.4.	Equity Awards	5
3.5.	Additional Grants/Awards	5
3.6.	Business Expenses	5
3.7.	Vacation	6
3.8.	Other Benefits	6
3.9.	Car Allowance	6
3.10.	Change of Control Payment	6
ARTICLE IV. TERMINATION OF EMPLOYMENT		7
4.1.	Termination of Employment	7
4.2.	Effect of Termination	7
4.3.	Consulting	9
4.4.	Treatment of Equity	9
ARTICLE V. INVENTIONS		9
5.1.	Inventions in General	9
5.2.	Inventions Retained and Licensed	9
5.3.	Assignment of Inventions	10
5.4.	Assignment of Other Rights	10
5.5.	Inventions Assigned to the United States	10
5.6.	Maintenance of Records	10
5.7.	Patent and Copyright Registrations	10
ARTICLE VI. CONFIDENTIAL/TRADE SECRET INFORMATION		11
6.1.	Confidential/Trade Secret Information	11
6.2.	Non-Compete	11
6.3.	Non-Solicitation During Employment	11
6.4.	Restriction on Use of Confidential/Trade Secret Information	11
6.5.	Other Activities	12
6.6.	Prohibition Against Unfair Competition	12
6.7.	Non-Solicitation of Customers	12
6.8.	Non-Solicitation of Employees	12
6.9.	Former Employer Information	12
6.10.	Third Party Information	12
6.11.	Immunity From Liability for Certain Confidential Disclosures and Certain Allowed Disclosures	12
6.12.	Conflict of Interest	13
6.13.	Reasonable Restrictions	13
6.14.	Specific Performance	13
6.15.	Response to Legal Process; Allowable Disclosures	13

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ARTICLE VII. INDEMNIFICATION		13
7.1.	Required Indemnification	13
7.2.	In Addition to Other Obligations	14
7.3.	Notification and Required Actions	14
ARTICLE VIII. ARBITRATION		14
8.1.	Scope	14
8.2.	Mediation and Arbitration Procedure	14
8.3.	Limitations Period; Deadline to Assert Claims	14
ARTICLE IX. MISCELLANEOUS		15
9.1.	Binding Effect; Assignment	15
9.2.	Notices	15
9.3.	Severability	15
9.4.	Waiver	15
9.5.	Entire Agreement	15
9.6.	Amendment	15
9.7.	Authority	16
9.8.	Attorneys’ and Arbitration Fees	16
9.9.	Construction	16
9.10.	Governing Law	16
9.11.	Survival	16
9.12.	Section 280G Safe Harbor Cap	16
9.13.	Section 409A Compliance	17
9.14.	Withholding of Taxes and Other Executive Deductions	18
9.15.	Clawback	18
9.16.	Legal Counsel	18
9.17.	Right to Negotiate	18
9.18.	Voluntary Nature of Agreement	18
9.19.	Counterparts, Effect of Facsimile, Emailed and Photocopied Signatures	19

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THIS EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) is entered into this 12th day of December (the “Execution Date”), to be effective as of the Effective Date as defined below between Vertex Energy, Inc., a Nevada corporation (the “Company”), and James Rhame (“Executive”) (each of the Company and Executive are referred to herein as a “Party”, and collectively referred to herein as the “Parties”).

W I T N E S S E T H:

WHEREAS, the Executive currently serves as the Chief Operating Officer of the Company; and

WHEREAS, the Company desires to continue to obtain the services of Executive, and Executive desires to continue to be employed by the Company upon the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the premises, the agreements herein contained and other good and valuable consideration, receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as of the Effective Date as follows:

ARTICLE I.
DEFINITIONS

1.1.         Definitions. In addition to other terms defined throughout this Agreement, the following terms have the following meanings when used herein:

1.1.1       “Cause” shall mean, in the context of a basis for termination by the Company of Executive’s employment with the Company, that:

(i)           Executive materially breaches any obligation, duty, covenant or agreement under this Agreement, which breach is not cured or corrected within thirty (30) days of written notice thereof from the Company (except for breaches of ARTICLE V or ARTICLE VI of this Agreement, which cannot be cured and for which the Company need not give any opportunity to cure); or

(ii)          Executive’s willful failure or refusal to perform or nonperformance of his duties required by this Agreement or assigned by the Company through the Board of Directors or the Chief Executive Officer, and without a reasonable basis for Executive to do so; provided, however, that Executive shall have first received written notice from the Company stating with specificity the nature of such failure and refusal and affording Executive an opportunity, as soon as practicable, to correct the acts or omissions complained of, and failure of Executive to cure such failure or refusal within thirty (30) days after written notice; or

(iii)         Any gross negligence or willful misconduct of the Executive with regard to the Company or any of its subsidiaries resulting in a material economic loss to the Company or material damage to the Company’s reputation or business relationships; or

(iv)         Executive commits any act of misappropriation of funds or embezzlement; or

(v)          Executive commits any act of fraud; or

(vi)         Executive is convicted of, or pleads guilty or nolo contendere with respect to, theft, fraud, a crime involving moral turpitude, or a felony under federal or applicable state law; and, in the case of any of the above offenses, such offense casts reasonable doubt on Executive’s ability to perform his duties going forward.

1.1.2       “Change of Control” shall mean the happening of any of the following without the prior written consent of the Executive:

(i)            Any Person is or becomes the “Beneficial Owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing more than 50% of the total voting power represented by the Company’s then outstanding voting securities without the approval of not fewer than two-thirds of the Board of Directors of the Company voting on such matter, unless the Board of Directors specifically designates such acquisition to be a change of control;

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(ii)           A merger or consolidation of the Company whether or not approved by the Board of Directors of the Company, other than a merger or consolidation that would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted or into voting securities of the surviving entity) at least 50% of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or the shareholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets; or

(iii)          As a result of the election of members to the Board of Directors, a majority of the Board of Directors consists of persons who are not members of the Board of Directors as of the Execution Date (including Executive as a member of the Board of Directors as of the Execution Date), except in the event that such slate of directors is proposed by the Committee or the Board.

1.1.3       “COBRA” means Section 4980B of the Internal Revenue Code and Section 601 of the Employee Retirement Income Security Act of 1974, as amended.

1.1.4       “Confidential/Trade Secret Information” is information that is not generally known to the public and, as a result, is of economic benefit to the Company in the conduct of its business, and the business of the Company’s subsidiaries, which includes, but is not limited to, all proprietary information developed or obtained by the Company, including its affiliates, and predecessors, and comprising the following items, whether or not such items have been reduced to tangible form (e.g., physical writing, computer hard drive, disk, tape, e-mail, etc.): all methods, techniques, processes, ideas, research and development, product designs, engineering designs, plans, models, production plans, business plans, add-on features, trade names, service marks, slogans, forms, pricing structures, business forms, marketing programs and plans, layouts and designs, financial structures, operational methods and tactics, cost information, the identity of and/or contractual arrangements with customers, partners, suppliers and/or vendors, accounting procedures, and any document, record or other information of the Company relating to the above. Confidential/Trade Secret Information includes not only information directly belonging to the Company which existed before the date of this Agreement, but also information developed by Executive for the Company, including its subsidiaries, affiliates and predecessors, during the term of Executive’s employment with the Company. Confidential/Trade Secret Information does not include any information which (a) was in the lawful and unrestricted possession of Executive prior to its disclosure to Executive by the Company, its subsidiaries, affiliates or predecessors, (b) is or becomes generally available to the public by lawful acts other than those of Executive after receiving it, or (c) has been received lawfully and in good faith by Executive from a third party who is not and has never been an executive of the Company, its subsidiaries, affiliates or predecessors, and who did not derive it from the Company, its subsidiaries, affiliates or predecessors.

1.1.5       “Completion” means completion of Phase 2 of the Company’s renewable diesel project at the Company’s Mobile, Alabama refinery, i.e., the date that the refinery begins producing commercial amounts of renewable diesel at such refinery (as determined reasonably, in good faith by the Company).

1.1.6       “Current Ratio” means, as of the date of determination, (a) the current assets of the Company, divided by (b) the current liabilities of the Company, each as set forth in the financial statements of the Company as filed in the Company’s periodic reports with the Securities and Exchange Commission; except in the case of a Payment Date Current Ratio, which shall be calculated based on the Company’s internally generated financial statements, in accordance with generally accepted accounting principles, consistently applied.

1.1.7       “Effective Date” means April 1, 2022.

1.1.8       “Exchange Act” means the Exchange Act of 1934, as amended.

1.1.9       “Good Reason” shall mean, in the context of a basis for termination by Executive of his employment with the Company, any of the following without his prior written consent: (a) a material diminution in his authority, duties, or responsibilities; (b) a material diminution in the authority, duties, or responsibilities of the supervisor to whom Executive is required to report, including, if applicable, a requirement that Executive report to an officer or employee of the Company rather than reporting to the Board; (c) a material breach by the Company of this Agreement, or (d) a material diminution in Executive’s Base Salary.

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1.1.10     “Initial Term” means a period beginning on the Execution Date and ending on the later of (a) April 30, 2024 (the “Stated End Date”), or (b) the Completion Date.

1.1.11     “Non-Compete Period” means a period of twelve (12) months after the Termination Date.

1.1.12     “Person” (when capitalized) means any individual, corporation, partnership, joint venture, limited liability company, trust, unincorporated organization or governmental entity.

1.1.13     “Restricted Area” means (A) any State (in the United States); and/or (B) any other geographic area (province, if such Restricted Area is in Canada, or country, if such Restricted Area is in a country other than the United States or Canada), in which the Company or any of its Subsidiaries provides Restricted Services or Restricted Products, directly or indirectly, during the twelve months preceding the Termination Date of Executive’s employment hereunder.

1.1.14     “Restricted Products” means used motor oil, petroleum by-products, renewable fuels, vacuum gas oil, aggregated feedstock, conventional crude refining and re-refined oil products, gasoline blendstock, pygas and fuel oil cutterstock, oil filters, engine coolant and/or other hydrocarbons and any other product that the Company or any of its Subsidiaries has provided or is researching, developing, manufacturing, distributing, refining, re-refining, aggregating, purchasing, selling and/or providing at any time during the two years immediately preceding the Termination Date, or about which the Executive obtained any trade secret or other Confidential/Trade Secret Information during the two years immediately preceding the Termination Date as a result of (a) his employment with the Company, (b) consulting services he provided to the Company, or (c) his position as a director of the Company.

1.1.15     “Restricted Services” means the collection, trading, purchasing, processing, storing, aggregation, transportation, manufacture, distribution, recycling, storage, refinement, re-refinement and sale of Restricted Products; or dismantling, demolition, decommission and marine salvage services and any other services that the Company or any of its Subsidiaries has provided or is researching, developing, performing and/or providing at any time during the two years immediately preceding the Termination Date or about which Executive obtained any trade secret or other Confidential/Trade Secret Information during the two years immediately preceding the Termination Date as a result (a) of his employment with the Company, (b) consulting services he provided to the Company, or (c) his position as a director of the Company.

1.1.16     “Subsidiary” or “Subsidiaries” means any or all Persons of which the Company owns directly or indirectly through another Person, a nominee arrangement or otherwise (a) at least a 20% of the outstanding capital stock (or other shares of beneficial interest) entitled to vote generally or otherwise have the power to elect a majority of the board of directors or similar governing body or the legal power to direct the business or policies of such Person or (b) at least 20% of the economic interests of such Person.

1.1.17     “Term” means the Initial Term and any Automatic Renewal Terms.

1.1.18     “Termination Date” shall mean the date on which Executive’s employment with the Company hereunder ends.

ARTICLE II.
EMPLOYMENT; TERM; DUTIES

2.1.         Employment. Pursuant to the terms and conditions hereinafter set forth, the Company hereby employs Executive, and Executive hereby accepts such employment, as the Chief Operating Officer (“COO”) of the Company for the period from the Effective Date to the Execution Date and for the Initial Term. Prior to the 60^th day before the Stated End Date, the Company may provide written notice to the Executive of its desire to (1) enter into an extension of this Agreement with Executive; or (2) enter into a consulting agreement with the Executive, following the end of the Initial Term ((1) or (2) as applicable, a “Subsequent Agreement”). In the event the Company provides such notice, the Executive agrees to negotiate a Subsequent Agreement with the Company in good faith and the Company agrees to negotiate in good faith with the Executive regarding such Subsequent Agreement.

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2.2.         Duties and Responsibilities. Executive, as COO, shall perform such administrative, managerial and executive duties for the Company (i) as are prescribed by applicable job specifications for the Chief Operating Officer of a public company the size and nature of the Company, (ii) as may be prescribed by the Bylaws of the Company, (iii) as are customarily vested in and incidental to such position, and (iv) as may be assigned to him from time to time by the President, Chief Executive Officer or Board of Directors of the Company (the “Board”).

2.3.         Related Party Transaction Committee. The Company’s “Related Party Transaction Committee,” composed of at least two (2) independent directors (as determined by the rules and regulations of the NASDAQ Capital Market, or the principal exchange or market on which the Company’s securities then trade), shall be available to Executive to review any potential conflicts of interest between Executive, the Company and any other entity or individual which may be affiliated with Executive.

2.4.         Covenants of Executive.

2.4.1       Best Efforts. Executive shall devote his best efforts to the business and affairs of the Company. Executive shall perform his duties, responsibilities and functions to the Company hereunder to the best of his abilities in a diligent, trustworthy, professional and efficient manner and shall comply, in all material respects, with all rules and regulations of the Company (and special instructions of the Board, if any) and all other rules, regulations, guides, handbooks, procedures and policies applicable to the Company and its business in connection with his duties hereunder, including all United States federal and state securities laws applicable to the Company.

2.4.2       Records. Executive shall use his best efforts and skills to truthfully, accurately, and promptly prepare, maintain, and preserve all records and reports that the Company may, from time to time, request or require, fully account for all money, records, equipment, materials, or other property belonging to the Company of which he may have custody, and promptly pay and deliver the same whenever he may be directed to do so by the Board.

2.4.3       Compliance. Executive shall use his best efforts to maintain the Company’s compliance with all rules and regulations of the Securities and Exchange Commission (“SEC”), and reporting requirements for publicly traded companies under the Exchange Act. Executive shall at all times comply, and cause the Company to comply, with the then-current good corporate governance standards and practices as prescribed by the SEC, any exchange on which the Company’s capital stock or other securities may be traded and any other applicable governmental entity, agency or organization.

2.4.4       Exchange Act Filing Requirements. The Executive agrees and acknowledges that due to the Executive’s status as a Section 16(a) “officer” of the Company (as described in Rule 16a-1(f) of the Exchange Act), he has an obligation to file various beneficial ownership reports and forms with the Securities and Exchange Commission, including Forms 3, 4 and 5 (where applicable) and that such obligation is solely the Executive’s regardless of whether the Company assists the Executive in filing such forms or not. The Executive agrees to use his best efforts to timely and adequately file all required beneficial ownership reports and forms required under the Exchange Act.

ARTICLE III.
COMPENSATION AND OTHER BENEFITS

3.1.         Base Salary. So long as this Agreement remains in effect, for all services rendered by Executive hereunder and all covenants and conditions undertaken by the Parties pursuant to this Agreement, the Company shall pay, and Executive shall accept, as compensation, an annual base salary of $316,000 (as may be increased from time to time in accordance with this Section, the “Base Salary”). The Base Salary shall be payable in regular installments in accordance with the normal payroll practices of the Company, in effect from time to time, but in any event no less frequently than on a monthly basis. For so long as Executive is employed hereunder, beginning on December 31, 2022, and on each December 31st thereafter, the Base Salary may be increased as determined by the Compensation Committee of the Board (the “Committee”), in its sole and absolute discretion, or the Board, with the recommendation of the Committee. Notwithstanding the above, the Committee or the Board, with the recommendation of the Committee, may also increase the Base Salary from time to time, at any time, in its/their discretion. Such increase(s) in salary shall be documented in the Company’s records, but shall not require the Parties enter into a new or amended form of this Agreement.

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3.2.         Discretionary Bonus. Executive shall be eligible for a yearly discretionary cash bonus (a “Cash Bonus”) and equity bonus (the “Equity Bonus”) equal to an amount as determined by the Committee or the Board, with the recommendation of the Committee and based on the condition of the Company’s business and results of operations, the Committee’s evaluation of Executive’s individual performance for the relevant period, and the satisfaction of goals that may be established by the Committee. Each Cash Bonus shall be paid in the Committee’s discretion at the same time annual bonuses are paid to other executives of the Company, in an amount determined by the Committee in its sole discretion, based on such criteria as the Committee deems relevant; provided that, without limiting the above, and the discretionary nature of the bonuses, unless otherwise agreed by the Committee, no Cash Bonus shall be paid at any time that the sum of the Current Ratios, at the end of the last two completed calendar quarters that have been publicly filed with the SEC, divided by 2, totals less than 1.0. The Committee, or the Board, with the recommendation of the Committee, may also pay or grant discretionary Cash Bonuses or Equity Bonuses from time to time in their discretion, at any time, in its/their discretion. The Equity Bonus may be in the form of common stock, stock options or other equity consideration, in such amounts and with such terms as may be determined by the Committee or the Board, with the recommendation of the Committee, from time to time. Except as specified in ARTICLE IV regarding the payment of a bonus and other compensation following Executive’s termination of employment under certain circumstances, nothing herein shall require the Committee or the Board to pay any bonus, including any Cash Bonus or Equity Bonus. Except as specified in ARTICLE IV regarding the payment of a bonus and other compensation following Executive’s termination of employment, all bonuses paid to the Executive shall be in the discretion of the Committee or the Board with the recommendation of the Committee, absent a written agreement providing otherwise. The Cash Bonus shall only be paid to the extent the Company’s Chief Financial Officer has determined, as of a date within 10 business days of the date the Cash Bonus is to be paid (the “Proposed Payment Date”), that the Current Ratio, after paying the Cash Bonus, and any other cash bonuses awarded by the Compensation Committee and/or the Board of Directors of the Company, which are unpaid as of such Proposed Payment Date, will be equal to at least 1.0 (the “Payment Date Current Ratio”). Notwithstanding the forgoing, the Cash Bonus will be paid not later than March 15 of the year following the year in which the Committee or the Board determine to grant such Cash Bonus.

3.3.         Performance Standards. The Executive and the Company agree that the Executive’s discretionary Cash Bonus and equity-based compensation (including the Equity Bonus) may, but shall not be required to, be based on the Executive’s and the Company’s achievement of performance goals that may be established by the Committee after discussion with the Executive and his supervisors (if any). Until or unless the Company and the Committee establish performance goals, the Executive’s discretionary Cash Bonus and equity-based compensation (including the Equity Bonus) will be wholly discretionary.

3.4.         Equity Awards. During the Term, the Executive shall be eligible to receive equity and equity-based awards (including the Equity Bonus) in the discretion of the Board or the Committee and on such terms and conditions as determined by the Board or the Committee. Any equity and equity-based awards (including the Equity Bonus) granted to the Executive, whether before or after the Execution Date, shall be governed by the terms and conditions of the applicable Company equity incentive plan(s), as may be in effect from time to time, and the award agreements governing such equity or equity-based awards (any such plan and award agreements, collectively, the “Equity Agreements”). Any equity-based awards granted to Executive after the Execution Date shall have vesting and exercisability terms that are no less favorable to Executive than the terms required by this Agreement.

3.5.         Additional Grants/Awards. Executive shall be eligible to receive additional equity incentive grants or cash bonus awards as determined by the Board or a committee of the Board in its sole discretion.

3.6.         Business Expenses. So long as this Agreement is in effect, the Company shall reimburse Executive for all reasonable, out-of-pocket business expenses incurred in the performance of his duties hereunder consistent with the Company’s policies and procedures, in effect from time to time, with respect to travel, entertainment, communications, technology/equipment and other business expenses customarily reimbursed to senior executives of the Company in connection with the performance of their duties on behalf of the Company.

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3.7.         Vacation. Executive will be entitled to 20 days of paid time-off (“PTO”) per year. PTO days shall accrue beginning on the 1st of January for each year during the term of this Agreement. Unused PTO days shall expire on December 31 of each year and shall not roll over into the next year. Other than the use of PTO days for illness or personal emergencies, PTO days must be pre-approved by the Company.

3.8.         Other Benefits. During the Term, the Executive shall be entitled to participate in any employee benefit plans or programs for which he is eligible that are provided by the Company to its management employees, such as retirement, health, life insurance, and disability plans, vacation and sick leave policies, business expense reimbursement policies that the Company has in effect from time to time, and stock option plan, 401(k) plan, life, health, accident, disability insurance plans, pension plans and retirement plans, in effect from time to time (including, without limitation, any incentive program or discretionary bonus program of the Company which may be implemented in the future by the Board), to the extent and on such terms and conditions as the Company customarily makes such plans available to its senior executives. The Company retains the right to terminate or alter the terms of any benefit programs that it may establish, provided that no such termination or alteration shall adversely affect any vested benefit under any benefit program or other obligation set forth in this Agreement.

3.9.         Car Allowance. The Company shall provide the Executive an automobile allowance of $750 per month during the term of Executive’s employment hereunder.

3.10.       Change of Control Payment.

3.10.1     If a Change of Control occurs during the Term or within six months after Executive’s termination of employment pursuant to Section 4.1.5 or 4.1.6, the Company shall pay Executive, within 60 days following the date of such Change of Control, a cash payment in a lump sum in an amount equal to (x) minus (y) where (x) equals 3.0 times the sum of (a) the most recent annual Base Salary of the Executive; and (b) the amount of the most recent Cash Bonus paid to the Executive pursuant to Section 3.2 of this Agreement (the “Change of Control Payment”) and (y) equals the amount of any Severance Payment actually paid to Executive pursuant to Section 4.2.3, below). If this Agreement has been terminated prior to any Cash Bonus being awarded pursuant to this Agreement or if the most recent Cash Bonus was zero, the “amount of the most recent Cash Bonus paid to the Executive pursuant to Section 3.2 of this Agreement” in the immediately preceding sentence shall be replaced with “an amount equal to the greater of (1) the amount of Executive’s most recent annual cash bonus awarded by the Committee or the Board (whether or not a Cash Bonus hereunder) (“Most Recent Cash Bonus”); and (2) the amount of Executive’s annual cash bonus awarded by the Committee or the Board (whether or not a Cash Bonus hereunder) for the year immediately preceding the Most Recent Cash Bonus (the “Preceding Year Bonus”)”. The Change of Control Payment shall be made less applicable withholding.

3.10.2     In the event of a change of control (as such term(s) are defined and/or used in each Equity Agreement, an (“Equity Award Change of Control”), the equity-based compensation held by the Executive prior to the date of this Agreement shall vest to the extent set forth in such Equity Agreements and shall be exercisable for the time periods set forth in such Equity Agreements.

3.10.3     The Equity Agreements for all Equity Bonus and other equity-based compensation granted to Executive on and after the date of this Agreement shall provide that upon an Equity Award Change of Control all of Executive’s Equity Bonus and other equity-based compensation shall immediately vest regardless of whether the Executive is retained by the Company or successor following the Equity Award Change of Control and any outstanding stock options and other equity compensation held by the Executive shall be exercisable by the Executive pursuant to the terms thereof until the earlier of (A) three (3) months from Executive’s Termination Date and (B) the latest date upon which such stock options and other equity compensation would have expired by their original terms under any circumstances.

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ARTICLE IV.
TERMINATION OF EMPLOYMENT

4.1.         Termination of Employment. Executive’s employment pursuant to this Agreement shall terminate on the earliest to occur of the following:

4.1.1       upon the death of Executive;

4.1.2       upon the delivery to Executive of written notice of termination by the Company if Executive shall suffer a physical or mental disability which renders Executive, in the reasonable judgment of the Committee or the Board, unable to perform his duties and obligations under this Agreement for either 90 consecutive days or 180 days in any 12-month period;

4.1.3       upon delivery to the Company of a written notice of termination by Executive for any reason other than for Good Reason (for which Executive shall provide sixty (60) days of notice);

4.1.4       upon delivery to Executive of written notice of termination by the Company for Cause;

4.1.5       upon delivery of written notice of termination from Executive to the Company for Good Reason, provided, however, prior to any such termination by Executive pursuant to this Section 4.1.5, Executive shall have advised the Company in writing within ninety (90) days after the initial occurrence of any circumstances that would constitute Good Reason, the Company shall have thirty (30) days following receipt of Executive’s written notice (the “Cure Period”) to cure such initial occurrence of any circumstances that would constitute Good Reason, and further provided that such written notice of termination is provided by Executive within thirty (30) days after the end of such Cure Period, provided that such initial occurrence of the circumstances constituting Good Reason has not been cured during such Cure Period; or

4.1.6       upon delivery to Executive of a written notice of termination by the Company without Cause; or

4.1.7       upon the expiration of the Initial Term.

4.2.         Effect of Termination. In the event that Executive’s employment hereunder is terminated in accordance with the provisions of this Agreement, Executive shall be entitled to the following:

4.2.1       If Executive’s employment is terminated pursuant to Sections 4.1.1 (death) or Section 4.1.2 (disability), Executive or his estate shall be entitled to a lump sum cash severance payment equal to the sum of (i) Executive’s Base Salary accrued through the Termination Date; (ii) any unpaid Cash Bonus for the prior year that would have been paid had Executive not been terminated prior to such payment; and (iii) the pro rata amount of the current year’s bonus (through the end of the month of termination), which would have been payable to the Executive, had the Executive been employed through the end of the then current calendar year, based on the Board or Committee’s good faith assessment of the amount which would have been paid to Executive as a cash bonus for such calendar year, based on the Company’s and Executive’s quantifiable performance through the Date of Termination, and the Board or Committee’s customary bonus determination matrix, with rankings based on the Company’s peer group and the Board or Committee’s individual rankings of such matrix items, in each case utilizing the Company’s then current process for determining bonuses as determined by the Committee in their reasonable discretion (the “Good Faith Bonus Determination”). Such amount shall be paid within 60 days after the Termination Date. Executive or his estate shall be entitled to no other benefits other than as required under the terms of employee benefit plans in which Executive was participating as of the Termination Date and continuation of health insurance benefits on the terms and to the extent required by COBRA, or such other similar law or regulation as may be applicable to the Executive or the Company with respect to the Executive. Additionally, and notwithstanding anything to the contrary in any Equity Agreement, any unvested stock options or equity compensation held by Executive shall vest and shall be exercisable until the earlier of (A) ninety days (90) days from the date of termination and (B) the latest date upon which such stock options or equity would have expired by their original terms under any circumstances.

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4.2.2       If Executive’s employment is terminated pursuant to Section 4.1.3 (without Good Reason by the Executive), or Section 4.1.4 (by the Company for Cause): Executive shall be entitled to his Base Salary accrued through the Termination Date and no other benefits other than as required under the terms of employee benefit plans in which Executive was participating as of the Termination Date and continuation of health insurance benefits on the terms and to the extent required by COBRA, or such other similar law or regulation as may be applicable to the Executive or the Company with respect to the Executive. Additionally, any unvested stock options or equity compensation held by Executive shall immediately terminate and be forfeited (unless otherwise provided in the applicable award) and any previously vested stock options (or if applicable equity compensation) shall be subject to terms and conditions set forth in the applicable Equity Agreement, as such may describe the rights and obligations upon termination of employment of Executive.

4.2.3       If Executive’s employment is terminated by Executive pursuant to Section 4.1.5 (Good Reason), or by the Company pursuant to Section 4.1.6 (without Cause by the Company): (a) Executive shall be entitled to his Base Salary accrued through the Termination Date and any unpaid Cash Bonus for the prior completed calendar year that would have been paid had Executive not been terminated prior to such payment, plus a lump sum cash severance payment equal to the sum of (i) an amount equal to Executive’s current annual Base Salary plus (ii) an amount equal to the Good Faith Bonus Determination for the full calendar year containing the Termination Date (instead of the period through the Termination Date as discussed in Section 4.2.1)(such total payment referred to herein in Section 4.2.3(a) as the “Severance Payment”); and (b) provided Executive elects to receive continued health insurance coverage through COBRA, the Company will pay Executive’s monthly COBRA contributions for health insurance coverage, as may be amended from time to time (less an amount equal to the premium contribution paid by active Company employees, if any) for twelve (12) months following the Termination Date (the “Health Payment”); provided, however, that if at any time Executive is covered by a substantially similar level of health insurance through subsequent employment or otherwise, the Company’s health benefit obligations shall immediately cease, and the Company shall have no further obligation to make the Health Payment. Additionally, and notwithstanding anything to the contrary in any Equity Agreement, any unvested stock options or equity compensation previously granted to the Executive will vest immediately upon such termination and shall be exercisable by the Executive until the earlier of (A) three (3) months from the date of termination and (B) the latest date upon which such stock options or equity would have expired by their original terms under any circumstances. Executive shall be entitled to no other post-employment benefits except as provided for under this Section 4.2.3 or as otherwise agreed and for benefits payable under applicable benefit plans in which Executive is entitled to participate through the Termination Date, subject to and in accordance with the terms of such plans.

4.2.4       If Executive’s employment is terminated at the end of the Initial Term pursuant to Section 4.1.7, unless otherwise provided in a Subsequent Agreement, Executive shall be entitled to his Base Salary accrued through the Termination Date and any unpaid Cash Bonus for the prior completed calendar year that would have been paid had Executive not been terminated prior to such payment and no other benefits other than as required under the terms of employee benefit plans in which Executive was participating as of the Termination Date and continuation of health insurance benefits on the terms and to the extent required by COBRA, or such other similar law or regulation as may be applicable to the Executive or the Company with respect to the Executive, and the provisions of Sections 6.2, 6.7, and 6.8 below shall not apply to Executive after the Termination Date, and the Company abrogates its rights to enforce such provisions after such applicable termination. Additionally, any unvested stock options or equity compensation held by Executive shall immediately terminate and be forfeited (unless otherwise provided in the applicable award) and any previously vested stock options (or if applicable equity compensation) shall be subject to terms and conditions set forth in the applicable Equity Agreement, as such may describe the rights and obligations upon termination of employment of Executive.

4.2.5       As a condition to Executive’s right to receive any benefits pursuant to Section 4.2.3 of this Agreement, (A) Executive must execute and deliver to the Company a written release in form and substance satisfactory to the Company, of any and all claims against the Company and all directors and officers of the Company with respect to all matters arising out of Executive’s employment hereunder, or the termination thereof (other than claims for entitlements under the terms of this Agreement or plans or programs of the Company in which Executive has accrued a benefit), which shall become effective by the 90^th day following the Executive’s Termination Date; and (B) Executive must not have breached any of his covenants and agreements under ARTICLE V or ARTICLE VI of this Agreement, which shall continue following the Termination Date.

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4.2.6       In the event of termination of Executive’s employment pursuant to Section 4.1.4 (by the Company for Cause), and subject to applicable law and regulations, the Company shall be entitled to offset against any payments due Executive the demonstrable loss and damage, if any, which shall have been suffered by the Company as a result of the acts or omissions of Executive giving rise to termination. The foregoing shall not be construed to limit any cause of action, claim or other rights, which the Company may have against Executive in connection with such acts or omissions.

4.2.7       Upon termination of Executive’s employment hereunder, or on demand by the Company during the Term of this Agreement, Executive will immediately deliver to the Company, and will not keep in his possession, recreate or deliver to anyone else, any and all Company property, as well as all devices and equipment belonging to the Company (including computers, handheld electronic devices, telephone equipment, and other electronic devices), Company credit cards, records, data, notes, notebooks, reports, files, proposals, lists, correspondence, specifications, drawings blueprints, sketches, materials, photographs, charts, all documents and property, and reproductions of any of the aforementioned items that were developed by Executive pursuant to his employment with the Company, obtained by Executive in connection with his employment with the Company, or otherwise belonging to the Company, its successors or assigns, including, without limitation, those records maintained pursuant to this Agreement. However, Executive may retain any materials or documents which he shall need in any legal action to enforce the terms of this Agreement.

4.2.8       Executive also agrees to keep the Company advised of his home and business address for a period of three (3) years after termination of Executive’s employment hereunder, so that the Company can contact Executive regarding his continuing obligations provided by this Agreement. In the event that Executive’s employment hereunder is terminated, Executive agrees to grant consent to notification by the Company to Executive’s new employer about his obligations under this Agreement.

4.3.         Consulting. During the sixty (60) day period following any termination of this Agreement pursuant to Section 4.1.3, Section 4.1.4, Section 4.1.5, Section 4.1.6, or Section 1.1.1(b), and provided that Company and Executive have no disputes regarding the payment of any amounts under this Agreement, Executive shall be available, subject to his other reasonable commitments or obligations made or incurred in mitigation of the termination of his employment, by telephone, email or fax, as a consultant to the Company, without further compensation, to consult with its officers and directors regarding projects and/or tasks as defined by the Board. In no extent shall the consulting services required pursuant to this Section 4.3 exceed 80 hours.

4.4.         Treatment of Equity. To the extent not specifically provided for herein, the vesting and exercisability of equity and equity-based awards (if any) held by the Executive at termination, and all other terms of such equity and equity-based awards (if any), shall be governed by the Equity Agreements.

ARTICLE V.
INVENTIONS

5.1.         Inventions in General. As described in further detail in this ARTICLE V, all processes, technologies and inventions relating to the business of the Company (collectively, “Inventions”), including new contributions, improvements, ideas, discoveries, trademarks and trade names, conceived, developed, invented, made or found by Executive, alone or with others, during his employment by the Company, whether or not patentable and whether or not conceived, developed, invented, made or found on the Company’s time or with the use of the Company’s facilities or materials, shall be the property of the Company and shall be promptly and fully disclosed by Executive to the Company. Executive shall perform all necessary acts (including, without limitation, executing and delivering any confirmatory assignments, documents or instruments requested by the Company) to assign or otherwise to vest title to any such Inventions in the Company and to enable the Company, at its sole expense, to secure and maintain domestic and/or foreign patents or any other rights for such Inventions.

5.2.         Inventions Retained and Licensed. Executive has attached hereto, as Exhibit A, a list describing all inventions, discoveries, original works of authorship, developments, improvements, and trade secrets, which were conceived in whole or in part by Executive prior to his employment with the Company to which Executive has any right, title or interest, which relate to the Company’s proposed business, products, or research and development (“Prior Inventions”); or, if no such list is attached, Executive represents and warrants that there are no such Prior Inventions. Furthermore, Executive represents and warrants that the inclusion of any Prior Inventions from Exhibit A of this Agreement will not materially affect his ability to perform all obligations under this Agreement. If, in the course of Executive’s employment with the Company, Executive incorporates into or uses in connection with any product, process, service, technology or other work by or on behalf of Company any Prior Invention, Executive hereby grants to the Company a nonexclusive, royalty-free, fully paid-up, irrevocable, perpetual, worldwide license, with the right to grant and authorize sublicenses, to make, have made, modify, use, import, offer for sale, and sell such Prior Invention as part of or in connection with such product, process, service, technology or other work and to practice any method related thereto.

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5.3.         Assignment of Inventions. Executive agrees that Executive will promptly make full written disclosure to the Company, will hold in trust for the sole right and benefit of the Company, and hereby assigns to the Company, or its designee, all of his right, title, and interest in and to any and all inventions, original works of authorship, developments, concepts, improvements, designs, discoveries, ideas, trademarks or trade secrets, whether or not patentable or registrable under patent, copyright or similar laws, which Executive may solely or jointly conceive, develop, or reduce to practice, or cause to be conceived, developed, or reduced to practice, during his employment with the Company, or with the use of Company’s equipment, supplies, facilities, or Confidential/Trade Secret Information (collectively referred to as “Conceived Inventions”). All Conceived Inventions that Executive conceives, reduces to practice, develops or has developed (in whole or in part, either alone or jointly with others) shall be the sole property of the Company and its assigns to the maximum extent permitted by law (and to the fullest extent permitted by law shall be deemed “works made for hire”). Executive also agrees to irrevocably assign (or cause to be irrevocably assigned) and hereby irrevocably assigns to the Company all right, title and interest in all Conceived Inventions and any copyrights, patents, trademarks, trade secrets, mask work rights, moral rights and intellectual property and other rights (“Intellectual Property Rights”). Executive understands and agrees that the decision whether or not to commercialize or market any Conceived Inventions is within the Company’s sole discretion and for the Company’s sole benefit and that no royalty or other consideration will be due to Executive as a result of the Company’s efforts to commercialize or market any such Conceived Inventions.

5.4.         Assignment of Other Rights. In addition to the foregoing assignment of Inventions to the Company, Executive hereby irrevocably transfers and assigns to the Company: (i) all worldwide patents, patent applications, copyrights, mask works, trade secrets and other intellectual property rights in any Conceived Inventions; and (ii) any and all “Moral Rights” (as defined below) that Executive may have in or with respect to any Conceived Inventions. Executive also hereby forever waives and agrees never to assert any and all Moral Rights Executive may have in or with respect to any Conceived Inventions, even after termination of Executive’s work on behalf of the Company. “Moral Rights” means any rights to claim authorship of any Conceived Inventions, to object to or prevent the modification of any Conceived Inventions, or to withdraw from circulation or control the publication or distribution of any Conceived Inventions, and any similar right, existing under judicial or statutory law of any country in the world, or under any treaty, regardless of whether or not such right is denominated or generally referred to as a “moral right”.

5.5.         Inventions Assigned to the United States. Executive agrees to assign to the United States government all of his right, title, and interest in and to any and all Inventions whenever such full title is required to be in the United States by a contract between the Company and the United States or any of its agencies.

5.6.         Maintenance of Records. Executive agrees to keep and maintain adequate, current, accurate, and authentic written records of all such Conceived Inventions, which may be in the form of notes, sketches, drawings, electronic files, reports, or any other format that may be specified by the Company and which will be available to and remain the sole property of the Company at all times.

5.7.         Patent and Copyright Registrations. Executive agrees to take steps that may be necessary to assist the Company, or its designee, at the Company’s expense, in every proper way to complete the transfer of and secure the Company’s rights in the Conceived Inventions, Intellectual Property Rights and any rights relating thereto in any and all countries, including by making the disclosure to the Company of all pertinent information and data with respect thereto, executing all applications, specifications, oaths, assignments and all other instruments which the Company shall deem proper or necessary in order to apply for, register, obtain, maintain, defend, and enforce such rights and in order to assign and convey to the Company, its successors, assigns, and nominees the sole and exclusive rights, title and interest in and to such Conceived Inventions and any rights relating thereto, and by testifying in a suit or other proceeding relating to such Conceived Inventions and any rights relating thereto. Executive further agrees that his obligation to execute or cause to be executed, when it is in his power to do so, any such instrument or papers shall continue after the termination of this Agreement. If the Company is unable because of Executive’s mental or physical incapacity or for any other reason to secure Executive’s signature with respect to any Conceived Inventions including, without limitation, to apply for or to pursue any application for any United States or foreign patents or copyright registrations covering such Conceived Inventions, then Executive hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as his agent and attorney in fact, to act for and in his behalf and stead to execute and file any papers, oaths and to do all other lawfully permitted acts with respect to such Conceived Inventions with the same legal force and effect as if executed by Executive.

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ARTICLE VI.
CONFIDENTIAL/TRADE SECRET INFORMATION

AND RESTRICTIVE COVENANTS; NON-COMPETE

6.1.         Confidential/Trade Secret Information. During the course of Executive’s employment, Executive will have access to Confidential/Trade Secret Information of the Company and information developed for the Company.

6.2.         Non-Compete. For $10 and in exchange for Executive’s access to Confidential/Trade Secret Information and other good and valuable consideration which Executive acknowledges the receipt and sufficiency of, Executive agrees to (a) devote substantially all of Executive’s business time, energy and efforts to the business of the Company (except as specifically provided for in Section 6.5 below), (b) to use Executive’s best efforts and abilities faithfully and diligently to promote the business interests of the Company and (c) to comply with the other terms and conditions of ARTICLE VI. For so long as Executive is employed hereunder, and for the twelve months following the Termination Date, Executive (whether by himself, through his employers or employees or agents or otherwise, and whether on his own behalf or on behalf of any other Person) shall not, directly or indirectly, either as an employee, employer, consultant, agent, investor, principal, partner, stockholder (except as the holder of less than 1% of the issued and outstanding stock of a publicly held corporation), own, manage, operate, control, be employed by, act as an officer, director, agent or consultant for, or be in any other way connected with or provide services or products to or for, any Person in the business of manufacturing, selling, creating, renting, aggregating, trading, distributing, marketing, producing, undertaking, developing, supplying, or otherwise dealing with or in Restricted Services or Restricted Products in the Restricted Area.

6.3.         Non-Solicitation During Employment. During his employment with the Company, Executive shall not: (a) interfere with the Company’s business relationship with its customers or suppliers, (b) solicit, directly or indirectly, or otherwise encourage any of the Company’s customers or suppliers to terminate their business relationship with the Company, or (c) solicit, directly or indirectly, or otherwise encourage any employees of the Company to leave the employ of the Company, or solicit any of the Company’s employees for employment outside the Company.

6.4.         Restriction on Use of Confidential/Trade Secret Information. Executive agrees that his use of Confidential/Trade Secret Information is subject to the following restrictions for an indefinite period of time so long as the Confidential/Trade Secret Information does not become generally known to the public:

(i)           Non-Disclosure. Executive agrees that he will not publish or disclose, or allow to be published or disclosed, Confidential/Trade Secret Information to any person without the prior written authorization of the Company unless pursuant to or in connection with Executive’s job duties to the Company under this Agreement or as otherwise allowed pursuant to the terms of this Agreement; and

(ii)          Non-Removal/Surrender. Executive agrees that he will not remove any Confidential/Trade Secret Information from the offices of the Company or the premises of any facility in which the Company is performing services, except pursuant to his duties under this Agreement and except as needed in any legal action to enforce the terms of this Agreement. Executive further agrees that he shall surrender to the Company and/or destroy all documents and materials in his possession or control which contain Confidential/Trade Secret Information and which are the property of the Company upon the termination of his employment with the Company, and that he shall not thereafter retain any copies of any such materials except as needed in any legal action to enforce the terms of this Agreement.

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6.5.         Other Activities. Subject to the foregoing prohibition and provided such services or investments do not violate any applicable law, regulation or order, or interfere in any way with the faithful and diligent performance by Executive of the services to the Company otherwise required or contemplated by this Agreement, the Company expressly acknowledges that Executive may:

6.5.1       make and manage personal business investments of Executive’s choice without consulting the Board;

6.5.2       serve in any capacity with any non-profit civic, educational or charitable organization; and

6.5.3       undertake any other actions, business transactions, agreements and undertakings of which the Executive has received approval of the Related Party Transaction Committee (as defined below) or the Audit Committee of the Company, to enter into and/or undertake, provided that

6.5.4       Executive shall undertake only such actions or services that do not interfere with the Executive’s obligations hereunder.

6.6.         Prohibition Against Unfair Competition. Executive agrees that at no time after his employment with the Company will he engage in competition with the Company while making any use of the Confidential/Trade Secret Information, or otherwise exploit or make use of the Confidential/Trade Secret Information.

6.7.         Non-Solicitation of Customers. Executive agrees that during the twelve-month period following the Termination Date, he will not, for any customer of the Company with whom Executive worked or otherwise had access to the Confidential/Trade Secret Information pertaining to the Company’s business with such customer during the last year of Executive’s employment with the Company, (i) directly or indirectly accept or solicit, in any capacity, Restricted Services or Restricted Products or (ii) solicit, directly or indirectly, or encourage any of the Company’s customers or suppliers to terminate their use of Restricted Products or Restricted Services.

6.8.         Non-Solicitation of Employees. Executive agrees that during the twelve-month period following the Termination Date, he shall not, directly or indirectly, solicit or otherwise encourage any employees of the Company to leave the employ of the Company, or solicit, directly or indirectly, any of the Company’s employees for employment.

6.9.         Former Employer Information. Executive agrees that he will not, during his employment with the Company, improperly use or disclose, or induce the Company to use any proprietary information or trade secrets of any former or concurrent employer or other third party person or entity and that Executive will not bring onto the premises of the Company or transfer onto the Company’s technology systems any proprietary information or trade secrets belonging to any such former or concurrent employer or third party person or entity, unless consented to in writing by both Company and such employer, person or entity.

6.10.       Third Party Information. Executive acknowledges that the Company may have received and in the future may receive from third parties associated with the Company (including, but not limited to, the Company’s customers, suppliers, licensors, licensees, partners, or collaborators (“Associated Third Parties”)) confidential or proprietary information (“Associated Third Party Confidential Information”). By way of example, Associated Third Party Confidential Information may include the habits or practices, technology, or requirements of Associated Third Parties, or other information related to the business conducted between the Company and Associated Third Parties. Executive agrees that Associated Third Party Confidential Information is Confidential/Trade Secret Information, and at all times during Executive’s employment with the Company and thereafter, Executive agrees to hold in the strictest confidence, and not to use or to disclose to any Person any Associated Third-Party Confidential Information, except as necessary in carrying out his work for the Company consistent with the Company’s agreement with such Associated Third Parties.

6.11.       Immunity From Liability for Certain Confidential Disclosures and Certain Allowed Disclosures. Executive acknowledges, agrees, and understands that (i) nothing in this Agreement prohibits him from reporting to any governmental authority or attorney information concerning suspected violations of law or regulation, provided that Executive does so consistent with 18 U.S.C. § 1833, and (ii) Executive may disclose trade secret information to a government official or to an attorney and use it in certain court proceedings without fear of prosecution or liability, provided that Executive does so consistent with 18 U.S.C. § 1833.

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6.12.       Conflict of Interest. During Executive’s employment with the Company, Executive must not engage in any work, paid or unpaid, that creates an actual conflict of interest with the Company. If the Company or the Executive has any question as to the actual or apparent potential for a conflict of interest, either shall raise the issue formally to the other, and if appropriate and necessary the issue shall be put to the Related Party Transaction Committee or Audit Committee of the Company for consideration and approval or non-approval, which approval or non-approval the Executive agrees shall be binding on the Executive.

6.13.       Reasonable Restrictions. The Parties acknowledge that the foregoing restrictions, as well as the duration and the territorial scope thereof as set forth in this ARTICLE VI or ARTICLE V, are under all of the circumstances reasonable and necessary for the protection of the Company and its business and are (i) reasonable given Executive’s role with the Company, and are necessary to protect the interests of the Company and (ii) completely severable and independent agreements supported by good and valuable consideration and, as such, shall survive the termination of this Agreement for any reason whatsoever.

6.14.       Specific Performance. Executive acknowledges and agrees that the Company’s remedies at law for a breach or threatened breach of any of the provisions of this ARTICLE VI or ARTICLE V would be inadequate and, in recognition of this fact, Executive agrees that, in the event of such a breach or threatened breach, in addition to any remedies at law, the Company, without posting any bond, shall be entitled to obtain equitable relief in the form of specific performance, temporary restraining order, temporary or permanent injunction or any other equitable remedy which may then be available. Executive further agrees that the restricted period set forth in this ARTICLE VI or ARTICLE V shall be tolled, and shall not run, during the period of any breach by Executive of any of the covenants contained this ARTICLE VI or ARTICLE V, as applicable. Finally, no other violation of law attributed to the Company, or change in the nature or scope of Executive’s employment or other relationship with the Company, shall operate to excuse Executive from the performance of his obligations under this ARTICLE VI or ARTICLE V. The remedies under this Agreement are without prejudice to the Company’s right to seek any other remedy to which it may be entitled at law or in equity.

6.15.       Response to Legal Process; Allowable Disclosures. Notwithstanding any other term of this Agreement (including this ARTICLE VI or ARTICLE V), including any exhibit hereto, (a) the Executive may respond to a lawful and valid subpoena or other legal process relating to the Company or its business or operations; provided that the Executive shall: (i) give the Company the earliest possible notice thereof; (ii) as far in advance of the return date as possible, at the Company’s sole cost and expense, make available to the Company and its counsel the documents and other information sought; and (iii) at the Company’s sole cost and expense, assist such counsel in resisting or otherwise responding to such process, or (b) the Executive’s reporting of possible violations of federal law or regulation to any governmental agency or entity in accordance with the provisions of and rules promulgated under Section 21F of the Exchange Act, or any other whistleblower protection provisions of state or federal law or regulation shall not violate or constitute a breach of this Agreement. Nothing contained in this Agreement (or any exhibit hereto) shall be construed to prevent the Executive from reporting any act or failure to act to the Securities and Exchange Commission or other governmental body or prevent the Executive from obtaining a fee as a “whistleblower” under Rule 21F-17(a) under the Exchange Act or other rules or regulations implemented under the Dodd-Frank Wall Street Reform Act and Consumer Protection Act.

ARTICLE VII.
INDEMNIFICATION

7.1.         Required Indemnification. The Company agrees to indemnify Executive and hold Executive harmless from and against any and all losses, claims, damages, liabilities and costs (and all actions in respect thereof and any legal or other expenses in giving testimony or furnishing documents in response to a subpoena or otherwise), including, without limitation, the costs of investigating, preparing or defending any such action or claim, whether or not in connection with litigation in which Executive is a party, as and when incurred, directly or indirectly caused by, relating to, based upon or arising out of any work performed by Executive in connection with this Agreement to the full extent permitted by the Nevada Revised Statutes, and by the Articles of Incorporation and Bylaws of the Company, as may be amended from time to time, and pursuant to any indemnification agreement between Executive and the Company.

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7.2.         In Addition to Other Obligations. The indemnification provision of this ARTICLE VII shall be in addition to any liability which the Company may otherwise have to Executive.

7.3.         Notification and Required Actions. If any action, proceeding or investigation is commenced as to which Executive proposes to demand such indemnification, Executive shall notify the Company with reasonable promptness. Executive shall have the right to retain counsel of Executive’s own choice to represent Executive and the Company shall pay all reasonable fees and expenses of such counsel; and such counsel shall, to the fullest extent consistent with such counsel’s professional responsibilities, cooperate with the Company and any counsel designated by the Company. The Company shall be liable for any settlement of any claim against Executive made with the Company’s written consent, which consent shall not be unreasonably withheld or delayed, to the fullest extent permitted by the Nevada Revised Statutes and the Articles of Incorporation and Bylaws of the Company, as may be amended from time to time.

ARTICLE VIII.
ARBITRATION

8.1.         Scope. To the fullest extent permitted by law, Executive and the Company agree to the binding arbitration of any and all controversies, claims or disputes between them arising out of or in any way related to this Agreement, the employment relationship between the Company and Executive and any disputes upon termination of employment, including but not limited to breach of contract, tort, discrimination, harassment, wrongful termination, demotion, discipline, failure to accommodate, family and medical leave, compensation or benefits claims, constitutional claims; and any claims for violation of any local, state or federal law, statute, regulation or ordinance or common law. For the purpose of this agreement to arbitrate, references to “Company” include all subsidiaries or related entities and their respective executives, supervisors, officers, directors, agents, pension or benefit plans, pension or benefit plan sponsors, fiduciaries, administrators, affiliates and all successors and assigns of any of them, and this agreement to arbitrate shall apply to them to the extent Executive’s claims arise out of or relate to their actions on behalf of the Company.

8.2.         Mediation and Arbitration Procedure. Before bringing any dispute to arbitration, and presuming that there is sufficient time prior to expiration of the limitations period to do so, the Parties agree that they will first mediate that dispute in good faith. They will agree on the mediator and split equally the costs of mediation. To commence any such arbitration proceeding, the Party commencing the arbitration must provide the other Party with written notice of any and all claims forming the basis of such right in sufficient detail to inform the other Party of the substance of such claims, and file this notice with the American Arbitration Association (“AAA”). The arbitration will be conducted in such location as mutually agreed upon by the Company and the Executive, provided that if such parties cannot mutually agree on a location, the arbitration shall be conducted in the city where the Company’s principal business location is located, by a single neutral arbitrator and in accordance with the then-current rules for resolution of employment disputes of the AAA. The Arbitrator is to be selected by the mutual agreement of the Parties using the AAA procedures. If the Parties cannot agree, the AAA will select the arbitrator. The Parties are entitled to representation by an attorney or other representative of their choosing. The arbitrator shall have the power to enter any award that could be entered by a judge of the trial court of the State of Texas, and only such power, and shall follow the law. The award shall be binding and the Parties agree to abide by and perform any award rendered by the arbitrator. The arbitrator shall issue the award in writing and therein state the essential findings and conclusions on which the award is based. Judgment on the award may be entered in any court having jurisdiction thereof. The Parties shall split equally the costs in the arbitration and, should the arbitrator find reasonable grounds for doing so, the arbitrator may order the losing Party in the arbitration hearing to bear the full costs of the arbitration filing and hearing fees and the cost of the arbitrator, including requiring such losing Party to reimburse the winning Party for such costs and expenses as previously paid.

8.3.         Limitations Period; Deadline to Assert Claims. Executive and the Company and its affiliates agree that arbitration of any disputes, claims, or controversies shall be initiated within one year of the act or occurrence giving rise to the dispute, claim or controversy, even though that deadline is or may be shorter than the period provided by statutes of limitations that would apply in the absence of this Section. Any claim that is not asserted in an arbitration within one (1) year of the act or occurrence giving rise to it shall be deemed waived. In order to effectuate this waiver of limitations, the Company waives its right to argue that Executive may not proceed with his claim(s) due to his failure to file any charge or complaint with a government agency having jurisdiction of his claim(s) under state and federal laws, such as the Equal Employment Opportunity Commission, Texas Workforce Commission-Civil Rights Division, or Occupational Safety and Health Administration.

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ARTICLE IX.
MISCELLANEOUS

9.1.         Binding Effect; Assignment. This Agreement shall be binding upon any successor (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company’s business and/or assets. Any such successor will within a reasonable period of becoming the successor assume in writing and be bound by all of the Company’s obligations under this Agreement. For all purposes under this Agreement, the term “Company” shall include any successor to the Company’s business or assets that becomes bound by this Agreement. Executive may not assign any of his rights or obligations under this Agreement.

9.2.         Notices. Any notice provided for herein shall be in writing and shall be deemed to have been given or made (a) when personally delivered or (b) when sent by email and confirmed within 48 hours by letter mailed or delivered to the Party to be notified at its or his address set forth herein; or three (3) days after being sent by registered or certified mail, return receipt requested (or by equivalent currier with delivery documentation such as FEDEX or UPS) to the address of the other Party set forth or to such other address as may be specified by notice given in accordance with this Section 9.2: 

If to the Company: Vertex Energy, Inc. 1331 Gemini, Suite 250 Houston, Texas 77058 Telephone: (866) 660-8156 Attention: Secretary

If to the Executive: James Rhame (Address and contact information on file) 

9.3.         Severability. If any provision of this Agreement, or portion thereof, shall be held invalid or unenforceable by a court of competent jurisdiction, such invalidity or unenforceability shall attach only to such provision or portion thereof, and shall not in any manner affect or render invalid or unenforceable any other provision of this Agreement or portion thereof, provided that should a court of competent jurisdiction determine that the scope of any provision of this Agreement is too broad to be enforced as written, the Parties hereby authorize the court to reform the provision to such narrower scope as it determines to be reasonable and enforceable and the Parties intend that the affected provision be enforced as so amended.

9.4.         Waiver. No waiver by a Party of a breach or default hereunder by the other Party shall be considered valid, unless expressed in a writing signed by such first Party, and no such waiver shall be deemed a waiver of any subsequent breach or default of the same or any other nature.

9.5.         Entire Agreement. This Agreement, along with the Equity Agreements, sets forth the entire agreement between the Parties with respect to the subject matter hereof, and supersedes any and all prior agreements between the Company and Executive, whether written or oral, relating to any or all matters covered by and contained or otherwise dealt with in this Agreement. This Agreement does not constitute a commitment of the Company with regard to Executive’s employment, express or implied, other than to the extent expressly provided for herein.

9.6.         Amendment. No modification, change or amendment of this Agreement or any of its provisions shall be valid, unless in a writing signed by the Parties and approved by the Committee or the Board of Directors.

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9.7.        Authority. The Parties each represent and warrant that it/he has the power, authority and right to enter into this Agreement and to carry out and perform the terms, covenants and conditions hereof.

9.8.        Attorneys’ and Arbitration Fees. Except as prohibited by law, if either Party hereto commences an arbitration or other action against the other Party to enforce any of the terms hereof, each Party shall pay its own costs and attorney’s fees, if any. If, however, any Party prevails on a statutory or contractual claim that affords the prevailing party attorneys’ fees (including pursuant to this Agreement), the arbitrator may award reasonable attorneys’ fees to the prevailing party to the extent permitted by law.

9.9.        Construction. When used in this Agreement, unless a contrary intention appears: (i) a term has the meaning assigned to it; (ii) “or” is not exclusive; (iii) “including” means including without limitation; (iv) words in the singular include the plural and words in the plural include the singular, and words importing the masculine gender include the feminine and neuter genders; (v) any agreement, instrument or statute defined or referred to herein or in any instrument or certificate delivered in connection herewith means such agreement, instrument or statute as from time to time amended, modified or supplemented and includes (in the case of agreements or instruments) references to all attachments thereto and instruments incorporated therein; (vi) 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 hereof; (vii) references contained herein to Article, Section, Schedule and Exhibit, as applicable, are references to Articles, Sections, Schedules and Exhibits in this Agreement unless otherwise specified; (viii) references to “writing” include printing, typing, lithography and other means of reproducing words in a visible form, including, but not limited to email; (ix) references to “dollars”, “Dollars” or “$” in this Agreement shall mean United States dollars; (x) reference to a particular statute, regulation or Law means such statute, regulation or Law as amended or otherwise modified from time to time; (xi) 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 or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein); (xii) unless otherwise stated in this Agreement, in the computation of a period of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each mean “to but excluding”; (xiii) references to “days” shall mean calendar days; and (xiv) the paragraph headings contained in this Agreement are for convenience only, and shall in no manner be construed as part of this Agreement.

9.10.      Governing Law. This Agreement, and all of the rights and obligations of the Parties in connection with the employment relationship established hereby, shall be governed by and construed in accordance with the substantive laws of the State of Texas without giving effect to principles relating to conflicts of law.

9.11.      Survival. The termination of Executive’s employment with the Company pursuant to the provisions of this Agreement shall not affect Executive’s obligations to the Company hereunder which by the nature thereof are intended to survive any such termination, including, without limitation, Executive’s obligations under ARTICLE V and ARTICLE VI of this Agreement.

9.12.      Section 280G Safe Harbor Cap. In the event it shall be determined that any payment or distribution or any part thereof of any type to or for the benefit of Executive whether pursuant to the Agreement or any other agreement between Executive and the Company, or any person or entity that acquires ownership or effective control the Company or ownership of a substantial portion of the Company’s assets (within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended, and the regulations thereunder (the “Code”)) whether paid or payable or distributed or distributable pursuant to the terms of the Agreement or any other agreement, (the “Total Payments”), is or will be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the Total Payments shall be reduced to the maximum amount that could be paid to Executive without giving rise to the Excise Tax (the “Safe Harbor Cap”), if the net after-tax payment to Executive after reducing Executive’s Total Payments to the Safe Harbor Cap is greater than the net after-tax (including the Excise Tax) payment to Executive without such reduction. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payment made pursuant to the Agreement and then to any other agreement that triggers such Excise Tax, unless an alternative method of reduction is elected by Executive. All mathematical determinations, and all determinations as to whether any of the Total Payments are “parachute payments” (within the meaning of Section 280G of the Code), that are required to be made under ARTICLE IV, including determinations as to whether the Total Payments to Executive shall be reduced to the Safe Harbor Cap and the assumptions to be utilized in arriving at such determinations, shall be made by a nationally recognized accounting firm selected by the Company (the “Accounting Firm”). In making such determinations, the Accounting Firm shall allocate payments hereunder to Executive’s covenants under ARTICLE VI and to services provided or required to be provided following a Change of Control to the maximum extent permissible. If the Accounting Firm determines that the Total Payments to Executive shall be reduced to the Safe Harbor Cap (the “Cutback Payment”) and it is established pursuant to a final determination of a court or an Internal Revenue Service (the “IRS”) proceeding which has been finally and conclusively resolved, that the Cutback Payment is in excess of the limitations provided in this Section 9.12 (hereinafter referred to as an “Excess Payment”), such Excess Payment shall be deemed for all purposes to be an overpayment to Executive made on the date such Executive received the Excess Payment and Executive shall repay the Excess Payment to the Company on demand; provided, however, if Executive shall be required to pay an Excise Tax by reason of receiving such Excess Payment (regardless of the obligation to repay the Company), Executive shall not be required to repay the Excess Payment (if Executive has already repaid such amount, the Company shall refund the amount to the Executive), and the Company shall pay Executive an amount equal to the difference between the Total Payments and the Safe Harbor Cap (provided that such amount has previously been repaid by the Executive or not previously paid by the Company).

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9.13.      Section 409A Compliance.

9.13.1       This Agreement is intended to comply with Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), or an exemption thereunder. This Agreement shall be construed and administered in accordance with Section 409A. To the extent that any provision of this Agreement is ambiguous as to its compliance with Section 409A, the provision shall be read in such a manner so that all payments hereunder comply with Section 409A. The parties agree that this Agreement may be amended, as reasonably requested by either party, and as may be necessary to fully comply with Section 409A and all related rules and regulations in order to preserve the payments and benefits provided hereunder without additional cost to either party. Notwithstanding any other provision of this Agreement to the contrary, payments provided under this Agreement shall be made upon an event and in a manner that complies with Section 409A or an applicable exemption. Any payments under this Agreement that may be excluded from Section 409A either as separation pay due to an involuntary separation from service (including a voluntary separation from service for good reason that is considered an involuntary separation for purposes of the separation pay exception under Treasury Regulation 1.409A-1(n)(2)) or as a short-term deferral shall be excluded from Section 409A to the maximum extent possible. For purposes of Section 409A, each installment payment provided under this Agreement shall be treated as a separate payment. Any payments of “nonqualified deferred compensation” subject to Section 409A (e.g., payments and benefits that do not qualify as a short-term deferral or as a separation pay exception) to be made under this Agreement upon a termination of employment shall only be made if such termination of employment constitutes a “separation from service” under Section 409A. Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under this Agreement comply with Section 409A and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest, or other expenses that may be incurred by the Executive on account of non-compliance with Section 409A.

9.13.2       Notwithstanding any other provision of this Agreement, if at the time of the Executive’s termination of employment, the Executive is a “specified employee”, determined in accordance with Section 409A, any payments and benefits provided under this Agreement that constitute “nonqualified deferred compensation” subject to Section 409A (e.g., payments and benefits that do not qualify as a short-term deferral or as a separation pay exception) that are provided to the Executive on account of the Executive’s separation from service shall not be paid until the first payroll date to occur following the six-month anniversary of the Executive’s termination date (“Specified Employee Payment Date”). The aggregate amount of any payments that would otherwise have been made during such six-month period shall be paid in a lump sum on the Specified Employee Payment Date without interest and thereafter, any remaining payments shall be paid without delay in accordance with their original schedule. If the Executive dies during the six-month period, any delayed payments shall be paid to the Executive’s estate in a lump sum upon the Executive’s death. To the extent that the foregoing applies to the provision of benefits (including, but not limited to, life insurance and medical insurance), such benefit coverage shall nonetheless be provided to the Executive during the first six months following his separation from service (the “Six-Month Period”), provided that, during such Six-Month Period, the Executive pays to the Company, on a monthly basis in advance, an amount equal to the Monthly Cost (as defined below) of such benefit coverage. The Company shall reimburse the Executive for any such payments made by the Executive in a lump sum not later than 30 days following the sixth-month anniversary of the Executive’s separation from service. For purposes of this subparagraph, “Monthly Cost” means the minimum dollar amount which, if paid by the Executive on a monthly basis in advance, results in the Executive not being required to recognize any federal income tax on receipt of the benefit coverage during the Six-Month Period.

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9.13.3       To the extent required to avoid taxation under Section 409A, each reimbursement or in-kind benefit provided under this Agreement shall be provided in accordance with the following:

(i)             the amount of expenses eligible for reimbursement, or in-kind benefits provided, during each calendar year cannot affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year;

(ii)            any reimbursement of an eligible expense shall be paid to the Executive on or before the last day of the calendar year following the calendar year in which the expense was incurred; and

9.13.4       any right to reimbursements or in-kind benefits under this Agreement shall not be subject to liquidation or exchange for another benefit.

9.14.     Withholding of Taxes and Other Executive Deductions. The Company may withhold from any benefits and payments made pursuant to this Agreement all federal, state, city and other taxes as may be required pursuant to any law or governmental regulation or ruling and any and all other normal Executive deductions made with respect to the Company’s Executives generally.

9.15.     Clawback. Notwithstanding any provision in this Agreement to the contrary, any portion of the payments and benefits provided under this Agreement, as well as any other payments and benefits which the Executive receives pursuant to a Company plan or other arrangement, shall be subject to a clawback (a) to the extent necessary to comply with the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act or any Securities and Exchange Commission rule or any other applicable law; and/or (b) any policy adopted by the Company and applicable generally to Executive and other officers of the Company, relating to the recovery of compensation granted, paid, delivered, awarded or otherwise provided to Executive by the Company or its subsidiaries or any of their respective affiliates, as applicable, as may be amended from time to time.

9.16.     Legal Counsel. Executive acknowledges and warrants that (A) he has been advised that Executive’s interests may be different from the Company’s interests, (B) he has been afforded a reasonable opportunity to review this Agreement, to understand its terms and to discuss it with an attorney and/or financial advisor of his choice, (C) that Executive fully understands the terms and contents of this Agreement and the exhibits hereto, and (D) he knowingly and voluntarily entered into this Agreement. The Company and Executive shall each bear their own costs and expenses in connection with the negotiation and execution of this Agreement. Executive understands and agrees that any attorney retained by the Company who has discussed any term or condition of this Agreement with Executive or its advisor is only acting on behalf of the Company and not on its behalf.

9.17.      Right to Negotiate. Executive hereby acknowledges that Executive has been given the opportunity to participate in the negotiation of the terms of this Agreement. Executive acknowledges and confirms that he has read this Agreement and fully understands its terms and contents.

9.18.      Voluntary Nature of Agreement. Executive acknowledges and agrees that he is executing this Agreement voluntarily and without any duress or undue influence by the Company or anyone else. Executive agrees that he has been provided an opportunity to seek the advice of an attorney of his choice before signing this Agreement.

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9.19.      Counterparts, Effect of Facsimile, Emailed and Photocopied Signatures. This Agreement and any signed agreement or instrument entered into in connection with this Agreement, and any amendments hereto or thereto, may be executed in one or more counterparts, all of which shall constitute one and the same instrument. 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 manners 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. At the request of any Party, each other Party shall re execute the original form of this Agreement and deliver such form to all other Parties. No Party shall raise the use of Electronic Delivery to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of Electronic Delivery as a defense to the formation of a contract, and each such Party forever waives any such defense, except to the extent such defense relates to lack of authenticity.

[Remainder of page left intentionally blank. Signature page follows]

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This Agreement contains provisions requiring binding arbitration of disputes. By signing this Agreement, Executive acknowledges that he (i) has read and understood the entire Agreement; (ii) has received a copy of it (iii) has had the opportunity to ask questions and consult counsel or other advisors about its terms; and (iv) agrees to be bound by it.

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the day and year first above written.

“COMPANY”
	VERTEX ENERGY, INC.
	a Nevada corporation
	By:	/s/ Chris Carlson
	Name: Chris Carlson
	Title: Chief Financial Officer
“EXECUTIVE”
	/s/ James Rhame
	James Rhame
	(Address and contact information on file)

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EXHIBIT A

LIST OF PRIOR INVENTIONS
AND ORIGINAL WORKS OF AUTHORSHIP

Title  Date  Identifying Number
or Brief Description 

________        No inventions or improvements

________        Additional Sheets Attached

Signature of Executive:        ______________________________

Print Name of Executive: James Rhame

Date: ______________________________

EX-10.5

Vertex Energy, Inc. 8-K

Exhibit 10.5

VERTEX ENERGY, INC.

EXECUTIVE EMPLOYMENT AGREEMENT

ALVARO RUIZ

CHIEF STRATEGY OFFICER

TABLE OF CONTENTS

ARTICLE I. DEFINITIONS	1
1.1.          Definitions	1
ARTICLE II. EMPLOYMENT; TERM; DUTIES	3
2.1.          Employment	3
2.2.          Duties and Responsibilities	4
2.3.          Related Party Transaction Committee	4
2.4.          Covenants of Executive	4
2.5.          Retroactive Pay	4
ARTICLE III. COMPENSATION AND OTHER BENEFITS	4
3.1.          Base Salary	4
3.2.          Discretionary Bonus	5
3.3.          Performance Standards	5
3.4.          Equity Awards	5
3.5.          Additional Grants/Awards	5
3.6.          Business Expenses	5
3.7.          Vacation	6
3.8.          Other Benefits	6
3.9.          Car Allowance	6
3.10.        Change of Control Payment	6
ARTICLE IV. TERMINATION OF EMPLOYMENT	7
4.1.          Termination of Employment	7
4.2.          Effect of Termination	7
4.3.          Consulting	9
4.4.          Treatment of Equity	9
ARTICLE V. INVENTIONS	9
5.1.          Inventions in General	9
5.2.          Inventions Retained and Licensed	9
5.3.          Assignment of Inventions	10
5.4.          Assignment of Other Rights	10
5.5.          Inventions Assigned to the United States	10
5.6.          Maintenance of Records	10
5.7.          Patent and Copyright Registrations	10
ARTICLE VI. CONFIDENTIAL/TRADE SECRET INFORMATION	11
6.1.          Applicability of Provisions after Lapse of Agreement	11
6.2.          Confidential/Trade Secret Information	11
6.3.          Non-Compete	11
6.4.          Non-Solicitation During Employment	11
6.5.          Restriction on Use of Confidential/Trade Secret Information	12
6.6.          Other Activities	12
6.7.          Prohibition Against Unfair Competition	12
6.8.          Non-Solicitation of Customers	12
6.9.          Non-Solicitation of Employees	12
6.10.        Former Employer Information	12
6.11.        Third Party Information	13
6.12.        Immunity From Liability for Certain Confidential Disclosures and Certain Allowed Disclosures	13
6.13.        Conflict of Interest	13
6.14.        Reasonable Restrictions	13
6.15.        Specific Performance	13

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6.16.        Response to Legal Process; Allowable Disclosures	13
ARTICLE VII. INDEMNIFICATION	14
7.1.          Required Indemnification	14
7.2.          In Addition to Other Obligations	14
7.3.          Notification and Required Actions	14
ARTICLE VIII. ARBITRATION	14
8.1.          Scope	14
8.2.          Mediation and Arbitration Procedure	14
8.3.          Limitations Period; Deadline to Assert Claims	15
ARTICLE IX. MISCELLANEOUS	15
9.1.          Binding Effect; Assignment	15
9.2.          Notices	15
9.3.          Severability	15
9.4.          Waiver	16
9.5.          Entire Agreement	16
9.6.          Amendment	16
9.7.          Authority	16
9.8.          Attorneys’ and Arbitration Fees	16
9.9.          Construction	16
9.10.        Governing Law	16
9.11.        Survival	16
9.12.        Section 280G Safe Harbor Cap	17
9.13.        Section 409A Compliance	17
9.14.        Withholding of Taxes and Other Executive Deductions	18
9.15.        Clawback	18
9.16.        Legal Counsel	18
9.17.        Right to Negotiate	19
9.18.        Voluntary Nature of Agreement	19
9.19.        Counterparts, Effect of Facsimile, Emailed and Photocopied Signatures	19

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THIS EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) is entered into this 12th day of December (the “Execution Date”), to be effective as of the Effective Date as defined below between Vertex Energy, Inc., a Nevada corporation (the “Company”), and Alvaro Ruiz (“Executive”) (each of the Company and Executive are referred to herein as a “Party”, and collectively referred to herein as the “Parties”).

W I T N E S S E T H:

WHEREAS, the Executive currently serves as the Chief Strategy Officer of the Company; and

WHEREAS, the Company desires to continue to obtain the services of Executive, and Executive desires to continue to be employed by the Company upon the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the premises, the agreements herein contained and other good and valuable consideration, receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as of the Effective Date as follows:

ARTICLE I.
DEFINITIONS

1.1.Definitions. In addition to other terms defined throughout this Agreement, the following terms have the following meanings when used herein:

1.1.1“Cause” shall mean, in the context of a basis for termination by the Company of Executive’s employment with the Company, that:

(i)Executive materially breaches any obligation, duty, covenant or agreement under this Agreement, which breach is not cured or corrected within thirty (30) days of written notice thereof from the Company (except for breaches of ARTICLE V or ARTICLE VI of this Agreement, which cannot be cured and for which the Company need not give any opportunity to cure); or

(ii)Executive’s willful failure or refusal to perform or nonperformance of his duties required by this Agreement or assigned by the Company through the Board of Directors or the Chief Executive Officer, and without a reasonable basis for Executive to do so; provided, however, that Executive shall have first received written notice from the Company stating with specificity the nature of such failure and refusal and affording Executive an opportunity, as soon as practicable, to correct the acts or omissions complained of, and failure of Executive to cure such failure or refusal within thirty (30) days after written notice; or

(iii)Any gross negligence or willful misconduct of the Executive with regard to the Company or any of its subsidiaries resulting in a material economic loss to the Company or material damage to the Company’s reputation or business relationships; or

(iv)Executive commits any act of misappropriation of funds or embezzlement; or

(v)Executive commits any act of fraud; or

(vi)Executive is convicted of, or pleads guilty or nolo contendere with respect to, theft, fraud, a crime involving moral turpitude, or a felony under federal or applicable state law; and, in the case of any of the above offenses, such offense casts reasonable doubt on Executive’s ability to perform his duties going forward.

1.1.2“Change of Control” shall mean the happening of any of the following without the prior written consent of the Executive:

(i)Any Person is or becomes the “Beneficial Owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing more than 50% of the total voting power represented by the Company’s then outstanding voting securities without the approval of not fewer than two-thirds of the Board of Directors of the Company voting on such matter, unless the Board of Directors specifically designates such acquisition to be a change of control;

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(ii)A merger or consolidation of the Company whether or not approved by the Board of Directors of the Company, other than a merger or consolidation that would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted or into voting securities of the surviving entity) at least 50% of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or the shareholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets; or

(iii)As a result of the election of members to the Board of Directors, a majority of the Board of Directors consists of persons who are not members of the Board of Directors as of the Execution Date (including Executive as a member of the Board of Directors as of the Execution Date), except in the event that such slate of directors is proposed by the Committee or the Board.

1.1.3“COBRA” means Section 4980B of the Internal Revenue Code and Section 601 of the Employee Retirement Income Security Act of 1974, as amended.

1.1.4“Confidential/Trade Secret Information” is information that is not generally known to the public and, as a result, is of economic benefit to the Company in the conduct of its business, and the business of the Company’s subsidiaries, which includes, but is not limited to, all proprietary information developed or obtained by the Company, including its affiliates, and predecessors, and comprising the following items, whether or not such items have been reduced to tangible form (e.g., physical writing, computer hard drive, disk, tape, e-mail, etc.): all methods, techniques, processes, ideas, research and development, product designs, engineering designs, plans, models, production plans, business plans, add-on features, trade names, service marks, slogans, forms, pricing structures, business forms, marketing programs and plans, layouts and designs, financial structures, operational methods and tactics, cost information, the identity of and/or contractual arrangements with customers, partners, suppliers and/or vendors, accounting procedures, and any document, record or other information of the Company relating to the above. Confidential/Trade Secret Information includes not only information directly belonging to the Company which existed before the date of this Agreement, but also information developed by Executive for the Company, including its subsidiaries, affiliates and predecessors, during the term of Executive’s employment with the Company. Confidential/Trade Secret Information does not include any information which (a) was in the lawful and unrestricted possession of Executive prior to its disclosure to Executive by the Company, its subsidiaries, affiliates or predecessors, (b) is or becomes generally available to the public by lawful acts other than those of Executive after receiving it, or (c) has been received lawfully and in good faith by Executive from a third party who is not and has never been an executive of the Company, its subsidiaries, affiliates or predecessors, and who did not derive it from the Company, its subsidiaries, affiliates or predecessors.

1.1.5“Current Ratio” means, as of the date of determination, (a) the current assets of the Company, divided by (b) the current liabilities of the Company, each as set forth in the financial statements of the Company as filed in the Company’s periodic reports with the Securities and Exchange Commission; except in the case of a Payment Date Current Ratio, which shall be calculated based on the Company’s internally generated financial statements, in accordance with generally accepted accounting principles, consistently applied.

1.1.6“Effective Date” means April 1, 2022.

1.1.7“Exchange Act” means the Exchange Act of 1934, as amended.

1.1.8“Good Reason” shall mean, in the context of a basis for termination by Executive of his employment with the Company, any of the following without his prior written consent: (a) a material diminution in his authority, duties, or responsibilities; (b) a material diminution in the authority, duties, or responsibilities of the supervisor to whom Executive is required to report, including, if applicable, a requirement that Executive report to an officer or employee of the Company rather than reporting to the Board; (c) a material breach by the Company of this Agreement, or (d) a material diminution in Executive’s Base Salary.

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1.1.9“Initial Term” means a period beginning on the Execution Date and ending on the third (3rd) anniversary of the Execution Date.

1.1.10“Non-Compete Period” means a period of twelve (12) months after the Termination Date.

1.1.11“Person” (when capitalized) means any individual, corporation, partnership, joint venture, limited liability company, trust, unincorporated organization or governmental entity.

1.1.12“Restricted Area” means (A) any State (in the United States); and/or (B) any other geographic area (province, if such Restricted Area is in Canada, or country, if such Restricted Area is in a country other than the United States or Canada), in which the Company or any of its Subsidiaries provides Restricted Services or Restricted Products, directly or indirectly, during the twelve months preceding the Termination Date of Executive’s employment hereunder.

1.1.13“Restricted Products” means used motor oil, petroleum by-products, renewable fuels, vacuum gas oil, aggregated feedstock, conventional crude refining and re-refined oil products, gasoline blendstock, pygas and fuel oil cutterstock, oil filters, engine coolant and/or other hydrocarbons and any other product that the Company or any of its Subsidiaries has provided or is researching, developing, manufacturing, distributing, refining, re-refining, aggregating, purchasing, selling and/or providing at any time during the two years immediately preceding the Termination Date, or about which the Executive obtained any trade secret or other Confidential/Trade Secret Information during the two years immediately preceding the Termination Date as a result of (a) his employment with the Company, (b) consulting services he provided to the Company, or (c) his position as a director of the Company.

1.1.14“Restricted Services” means the collection, trading, purchasing, processing, storing, aggregation, transportation, manufacture, distribution, recycling, storage, refinement, re-refinement and sale of Restricted Products; or dismantling, demolition, decommission and marine salvage services and any other services that the Company or any of its Subsidiaries has provided or is researching, developing, performing and/or providing at any time during the two years immediately preceding the Termination Date or about which Executive obtained any trade secret or other Confidential/Trade Secret Information during the two years immediately preceding the Termination Date as a result (a) of his employment with the Company, (b) consulting services he provided to the Company, or (c) his position as a director of the Company.

1.1.15“Subsidiary” or “Subsidiaries” means any or all Persons of which the Company owns directly or indirectly through another Person, a nominee arrangement or otherwise (a) at least a 20% of the outstanding capital stock (or other shares of beneficial interest) entitled to vote generally or otherwise have the power to elect a majority of the board of directors or similar governing body or the legal power to direct the business or policies of such Person or (b) at least 20% of the economic interests of such Person.

1.1.16“Term” means the Initial Term and any Automatic Renewal Terms.

1.1.17“Termination Date” shall mean the date on which Executive’s employment with the Company hereunder ends.

ARTICLE II.
EMPLOYMENT; TERM; DUTIES

2.1.Employment. Pursuant to the terms and conditions hereinafter set forth, the Company hereby employs Executive, and Executive hereby accepts such employment, as the Chief Strategy Officer (“CSO”) of the Company for the period from the Effective Date to the Execution Date and for the Initial Term; provided that this Agreement shall automatically extend for additional one (1) year periods after the Initial Term (each an “Automatic Renewal Term”) unless either Party provides the other written notice of their intent not to automatically extend the term of this Agreement at least sixty (60) days prior to the end of the Initial Term or any Automatic Renewal Term, as applicable (each a “Non-Renewal Notice”).

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2.2.Duties and Responsibilities. Executive, as CSO, shall perform such administrative, managerial and executive duties for the Company (i) as are prescribed by applicable job specifications for the Chief Strategy Officer of a public company the size and nature of the Company, (ii) as may be prescribed by the Bylaws of the Company, (iii) as are customarily vested in and incidental to such position, and (iv) as may be assigned to him from time to time by the President, Chief Executive Officer or Board of Directors of the Company (the “Board”).

2.3.Related Party Transaction Committee. The Company’s “Related Party Transaction Committee,” composed of at least two (2) independent directors (as determined by the rules and regulations of the NASDAQ Capital Market, or the principal exchange or market on which the Company’s securities then trade), shall be available to Executive to review any potential conflicts of interest between Executive, the Company and any other entity or individual which may be affiliated with Executive.

2.4.Covenants of Executive.

2.4.1Best Efforts. Executive shall devote his best efforts to the business and affairs of the Company. Executive shall perform his duties, responsibilities and functions to the Company hereunder to the best of his abilities in a diligent, trustworthy, professional and efficient manner and shall comply, in all material respects, with all rules and regulations of the Company (and special instructions of the Board, if any) and all other rules, regulations, guides, handbooks, procedures and policies applicable to the Company and its business in connection with his duties hereunder, including all United States federal and state securities laws applicable to the Company.

2.4.2Records. Executive shall use his best efforts and skills to truthfully, accurately, and promptly prepare, maintain, and preserve all records and reports that the Company may, from time to time, request or require, fully account for all money, records, equipment, materials, or other property belonging to the Company of which he may have custody, and promptly pay and deliver the same whenever he may be directed to do so by the Board.

2.4.3Compliance. Executive shall use his best efforts to maintain the Company’s compliance with all rules and regulations of the Securities and Exchange Commission (“SEC”), and reporting requirements for publicly traded companies under the Exchange Act. Executive shall at all times comply, and cause the Company to comply, with the then-current good corporate governance standards and practices as prescribed by the SEC, any exchange on which the Company’s capital stock or other securities may be traded and any other applicable governmental entity, agency or organization.

2.4.4Exchange Act Filing Requirements. The Executive agrees and acknowledges that due to the Executive’s status as a Section 16(a) “officer” of the Company (as described in Rule 16a-1(f) of the Exchange Act), he has an obligation to file various beneficial ownership reports and forms with the Securities and Exchange Commission, including Forms 3, 4 and 5 (where applicable) and that such obligation is solely the Executive’s regardless of whether the Company assists the Executive in filing such forms or not. The Executive agrees to use his best efforts to timely and adequately file all required beneficial ownership reports and forms required under the Exchange Act.

2.5.Retroactive Pay. Executive shall receive, within fourteen (14) days after the execution of this Agreement by the Executive and the counter-signature of this Agreement by the Company, a lump sum payment equal to the difference between his salary in effect prior to the Effective Date and his Base Salary for the time period from the Effective Date to the Execution Date.

ARTICLE III.
COMPENSATION AND OTHER BENEFITS

3.1.Base Salary. So long as this Agreement remains in effect, for all services rendered by Executive hereunder and all covenants and conditions undertaken by the Parties pursuant to this Agreement, the Company shall pay, and Executive shall accept, as compensation, an annual base salary of $302,000 (as may be increased from time to time in accordance with this Section, the “Base Salary”). The Base Salary shall be payable in regular installments in accordance with the normal payroll practices of the Company, in effect from time to time, but in any event no less frequently than on a monthly basis. For so long as Executive is employed hereunder, beginning on December 31, 2022, and on each December 31st thereafter, the Base Salary may be increased as determined by the Compensation Committee of the Board (the “Committee”), in its sole and absolute discretion, or the Board, with the recommendation of the Committee. Notwithstanding the above, the Committee or the Board, with the recommendation of the Committee, may also increase the Base Salary from time to time, at any time, in its/their discretion. Such increase(s) in salary shall be documented in the Company’s records, but shall not require the Parties enter into a new or amended form of this Agreement.

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3.2.Discretionary Bonus. Executive shall be eligible for a yearly discretionary cash bonus (a “Cash Bonus”) and equity bonus (the “Equity Bonus”) equal to an amount as determined by the Committee or the Board, with the recommendation of the Committee and based on the condition of the Company’s business and results of operations, the Committee’s evaluation of Executive’s individual performance for the relevant period, and the satisfaction of goals that may be established by the Committee. Each Cash Bonus shall be paid in the Committee’s discretion at the same time annual bonuses are paid to other executives of the Company, in an amount determined by the Committee in its sole discretion, based on such criteria as the Committee deems relevant; provided that, without limiting the above, and the discretionary nature of the bonuses, unless otherwise agreed by the Committee, no Cash Bonus shall be paid at any time that the sum of the Current Ratios, at the end of the last two completed calendar quarters that have been publicly filed with the SEC, divided by 2, totals less than 1.0. The Committee, or the Board, with the recommendation of the Committee, may also pay or grant discretionary Cash Bonuses or Equity Bonuses from time to time in their discretion, at any time, in its/their discretion. The Equity Bonus may be in the form of common stock, stock options or other equity consideration, in such amounts and with such terms as may be determined by the Committee or the Board, with the recommendation of the Committee, from time to time. Except as specified in ARTICLE IV regarding the payment of a bonus and other compensation following Executive’s termination of employment under certain circumstances, nothing herein shall require the Committee or the Board to pay any bonus, including any Cash Bonus or Equity Bonus. Except as specified in ARTICLE IV regarding the payment of a bonus and other compensation following Executive’s termination of employment, all bonuses paid to the Executive shall be in the discretion of the Committee or the Board with the recommendation of the Committee, absent a written agreement providing otherwise. The Cash Bonus shall only be paid to the extent the Company’s Chief Financial Officer has determined, as of a date within 10 business days of the date the Cash Bonus is to be paid (the “Proposed Payment Date”), that the Current Ratio, after paying the Cash Bonus, and any other cash bonuses awarded by the Compensation Committee and/or the Board of Directors of the Company, which are unpaid as of such Proposed Payment Date, will be equal to at least 1.0 (the “Payment Date Current Ratio”). Notwithstanding the forgoing, the Cash Bonus will be paid not later than March 15 of the year following the year in which the Committee or the Board determine to grant such Cash Bonus.

3.3.Performance Standards. The Executive and the Company agree that the Executive’s discretionary Cash Bonus and equity-based compensation (including the Equity Bonus) may, but shall not be required to, be based on the Executive’s and the Company’s achievement of performance goals that may be established by the Committee after discussion with the Executive and his supervisors (if any). Until or unless the Company and the Committee establish performance goals, the Executive’s discretionary Cash Bonus and equity-based compensation (including the Equity Bonus) will be wholly discretionary.

3.4.Equity Awards. During the Term, the Executive shall be eligible to receive equity and equity-based awards (including the Equity Bonus) in the discretion of the Board or the Committee and on such terms and conditions as determined by the Board or the Committee. Any equity and equity-based awards (including the Equity Bonus) granted to the Executive, whether before or after the Execution Date, shall be governed by the terms and conditions of the applicable Company equity incentive plan(s), as may be in effect from time to time, and the award agreements governing such equity or equity-based awards (any such plan and award agreements, collectively, the “Equity Agreements”). Any equity-based awards granted to Executive after the Execution Date shall have vesting and exercisability terms that are no less favorable to Executive than the terms required by this Agreement.

3.5.Additional Grants/Awards. Executive shall be eligible to receive additional equity incentive grants or cash bonus awards as determined by the Board or a committee of the Board in its sole discretion.

3.6.Business Expenses. So long as this Agreement is in effect, the Company shall reimburse Executive for all reasonable, out-of-pocket business expenses incurred in the performance of his duties hereunder consistent with the Company’s policies and procedures, in effect from time to time, with respect to travel, entertainment, communications, technology/equipment and other business expenses customarily reimbursed to senior executives of the Company in connection with the performance of their duties on behalf of the Company.

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3.7.Vacation. Executive will be entitled to 20 days of paid time-off (“PTO”) per year. PTO days shall accrue beginning on the 1st of January for each year during the term of this Agreement. Unused PTO days shall expire on December 31 of each year and shall not roll over into the next year. Other than the use of PTO days for illness or personal emergencies, PTO days must be pre-approved by the Company.

3.8.Other Benefits. During the Term, the Executive shall be entitled to participate in any employee benefit plans or programs for which he is eligible that are provided by the Company to its management employees, such as retirement, health, life insurance, and disability plans, vacation and sick leave policies, business expense reimbursement policies that the Company has in effect from time to time, and stock option plan, 401(k) plan, life, health, accident, disability insurance plans, pension plans and retirement plans, in effect from time to time (including, without limitation, any incentive program or discretionary bonus program of the Company which may be implemented in the future by the Board), to the extent and on such terms and conditions as the Company customarily makes such plans available to its senior executives. The Company retains the right to terminate or alter the terms of any benefit programs that it may establish, provided that no such termination or alteration shall adversely affect any vested benefit under any benefit program or other obligation set forth in this Agreement.

3.9.Car Allowance. The Company shall provide the Executive an automobile allowance of $750 per month during the term of Executive’s employment hereunder.

3.10.Change of Control Payment.

3.10.1If a Change of Control occurs during the Term or within six months after Executive’s termination of employment pursuant to Section 4.1.5 or 4.1.6, the Company shall pay Executive, within 60 days following the date of such Change of Control, a cash payment in a lump sum in an amount equal to (x) minus (y) where (x) equals 3.0 times the sum of (a) the most recent annual Base Salary of the Executive; and (b) the amount of the most recent Cash Bonus paid to the Executive pursuant to Section 3.2 of this Agreement (the “Change of Control Payment”) and (y) equals the amount of any Severance Payment actually paid to Executive pursuant to Section 4.2.3, below). If this Agreement has been terminated prior to any Cash Bonus being awarded pursuant to this Agreement or if the most recent Cash Bonus was zero, the “amount of the most recent Cash Bonus paid to the Executive pursuant to Section 3.2 of this Agreement” in the immediately preceding sentence shall be replaced with “an amount equal to the greater of (1) the amount of Executive’s most recent annual cash bonus awarded by the Committee or the Board (whether or not a Cash Bonus hereunder) (“Most Recent Cash Bonus”); and (2) the amount of Executive’s annual cash bonus awarded by the Committee or the Board (whether or not a Cash Bonus hereunder) for the year immediately preceding the Most Recent Cash Bonus (the “Preceding Year Bonus”)”. The Change of Control Payment shall be made less applicable withholding.

3.10.2In the event of a change of control (as such term(s) are defined and/or used in each Equity Agreement, an (“Equity Award Change of Control”), the equity-based compensation held by the Executive prior to the date of this Agreement shall vest to the extent set forth in such Equity Agreements and shall be exercisable for the time periods set forth in such Equity Agreements.

3.10.3The Equity Agreements for all Equity Bonus and other equity-based compensation granted to Executive on and after the date of this Agreement shall provide that upon an Equity Award Change of Control all of Executive’s Equity Bonus and other equity-based compensation shall immediately vest regardless of whether the Executive is retained by the Company or successor following the Equity Award Change of Control and any outstanding stock options and other equity compensation held by the Executive shall be exercisable by the Executive pursuant to the terms thereof until the earlier of (A) three (3) months from Executive’s Termination Date and (B) the latest date upon which such stock options and other equity compensation would have expired by their original terms under any circumstances.

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ARTICLE IV.
TERMINATION OF EMPLOYMENT

4.1.Termination of Employment. Executive’s employment pursuant to this Agreement shall terminate on the earliest to occur of the following:

4.1.1upon the death of Executive;

4.1.2upon the delivery to Executive of written notice of termination by the Company if Executive shall suffer a physical or mental disability which renders Executive, in the reasonable judgment of the Committee or the Board, unable to perform his duties and obligations under this Agreement for either 90 consecutive days or 180 days in any 12-month period;

4.1.3upon delivery to the Company of a written notice of termination by Executive for any reason other than for Good Reason (for which Executive shall provide sixty (60) days of notice); except, if Executive delivers a notice of termination pursuant to Section 2.1, upon the expiration of the Initial Term or the applicable Automatic Renewal Term during which such notice is provided, which shall instead be subject to Section 4.1.7;

4.1.4upon delivery to Executive of written notice of termination by the Company for Cause;

4.1.5upon delivery of written notice of termination from Executive to the Company for Good Reason, provided, however, prior to any such termination by Executive pursuant to this Section 4.1.5, Executive shall have advised the Company in writing within ninety (90) days after the initial occurrence of any circumstances that would constitute Good Reason, the Company shall have thirty (30) days following receipt of Executive’s written notice (the “Cure Period”) to cure such initial occurrence of any circumstances that would constitute Good Reason, and further provided that such written notice of termination is provided by Executive within thirty (30) days after the end of such Cure Period, provided that such initial occurrence of the circumstances constituting Good Reason has not been cured during such Cure Period; or

4.1.6upon delivery to Executive of a written notice of termination by the Company without Cause; except if Company delivers a notice of termination pursuant to Section 2.1, upon the expiration of the Initial Term or the applicable Automatic Renewal Term during which such notice is provided, which shall instead be subject to Section 4.1.8;

4.1.7if the Executive delivers a notice of termination pursuant to Section 2.1, upon the expiration of the Initial Term or the applicable Automatic Renewal Term during which such notice is provided; or

4.1.8if the Company delivers a notice of termination pursuant to Section 2.1, upon the expiration of the Initial Term or the applicable Automatic Renewal Term during which such notice is provided. The Company’s notice of termination under this section must contain a statement notifying the Executive that either:

(a)the Company shall apply Section 6.1 of this Agreement and abrogates its right to enforce certain sections of ARTICLE VI as provided therein; or

(b)the Company shall not apply Section 6.1 of this Agreement and intends that all of ARTICLE VI remains in full force and effect as provided therein.

4.2.Effect of Termination. In the event that Executive’s employment hereunder is terminated in accordance with the provisions of this Agreement, Executive shall be entitled to the following:

4.2.1If Executive’s employment is terminated pursuant to Sections 4.1.1 (death) or Section 4.1.2 (disability), Executive or his estate shall be entitled to a lump sum cash severance payment equal to the sum of (i) Executive’s Base Salary accrued through the Termination Date; (ii) any unpaid Cash Bonus for the prior year that would have been paid had Executive not been terminated prior to such payment; and (iii) the pro rata amount of the current year’s bonus (through the end of the month of termination), which would have been payable to the Executive, had the Executive been employed through the end of the then current calendar year, based on the Board or Committee’s good faith assessment of the amount which would have been paid to Executive as a cash bonus for such calendar year, based on the Company’s and Executive’s quantifiable performance through the Date of Termination, and the Board or Committee’s customary bonus determination matrix, with rankings based on the Company’s peer group and the Board or Committee’s individual rankings of such matrix items, in each case utilizing the Company’s then current process for determining bonuses as determined by the Committee in their reasonable discretion (the “Good Faith Bonus Determination”). Such amount shall be paid within 60 days after the Termination Date. Executive or his estate shall be entitled to no other benefits other than as required under the terms of employee benefit plans in which Executive was participating as of the Termination Date and continuation of health insurance benefits on the terms and to the extent required by COBRA, or such other similar law or regulation as may be applicable to the Executive or the Company with respect to the Executive. Additionally, and notwithstanding anything to the contrary in any Equity Agreement, any unvested stock options or equity compensation held by Executive shall vest and shall be exercisable until the earlier of (A) ninety days (90) days from the date of termination and (B) the latest date upon which such stock options or equity would have expired by their original terms under any circumstances.

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4.2.2If Executive’s employment is terminated pursuant to Section 4.1.3 (without Good Reason by the Executive), Section 4.1.7 (Executive’s Non-Renewal Notice), Section 4.1.8(a) (Company’s Non-Renewal Notice providing that Section 6.1 shall apply), or Section 4.1.4 (by the Company for Cause): Executive shall be entitled to his Base Salary accrued through the Termination Date and no other benefits other than as required under the terms of employee benefit plans in which Executive was participating as of the Termination Date and continuation of health insurance benefits on the terms and to the extent required by COBRA, or such other similar law or regulation as may be applicable to the Executive or the Company with respect to the Executive. Additionally, any unvested stock options or equity compensation held by Executive shall immediately terminate and be forfeited (unless otherwise provided in the applicable award) and any previously vested stock options (or if applicable equity compensation) shall be subject to terms and conditions set forth in the applicable Equity Agreement, as such may describe the rights and obligations upon termination of employment of Executive.

4.2.3If Executive’s employment is terminated by Executive pursuant to Section 4.1.5 (Good Reason), by the Company pursuant to Section 4.1.6 (without Cause by the Company), or by the Company pursuant to Section 4.1.8(b) (Company’s Non-Renewal Notice providing that Section 6.1 shall not apply): (a) Executive shall be entitled to his Base Salary accrued through the Termination Date and any unpaid Cash Bonus for the prior completed calendar year that would have been paid had Executive not been terminated prior to such payment, plus a lump sum cash severance payment equal to the sum of (i) an amount equal to Executive’s current annual Base Salary plus (ii) an amount equal to the Good Faith Bonus Determination for the full calendar year containing the Termination Date (instead of the period through the Termination Date as discussed in Section 4.2.1)(such total payment referred to herein in Section 4.2.3(a) as the “Severance Payment”); and (b) provided Executive elects to receive continued health insurance coverage through COBRA, the Company will pay Executive’s monthly COBRA contributions for health insurance coverage, as may be amended from time to time (less an amount equal to the premium contribution paid by active Company employees, if any) for twelve (12) months following the Termination Date (the “Health Payment”); provided, however, that if at any time Executive is covered by a substantially similar level of health insurance through subsequent employment or otherwise, the Company’s health benefit obligations shall immediately cease, and the Company shall have no further obligation to make the Health Payment. Additionally, and notwithstanding anything to the contrary in any Equity Agreement, any unvested stock options or equity compensation previously granted to the Executive will vest immediately upon such termination and shall be exercisable by the Executive until the earlier of (A) three (3) months from the date of termination and (B) the latest date upon which such stock options or equity would have expired by their original terms under any circumstances. Executive shall be entitled to no other post-employment benefits except as provided for under this Section 4.2.3 and for benefits payable under applicable benefit plans in which Executive is entitled to participate through the Termination Date, subject to and in accordance with the terms of such plans. The Severance Payment shall be paid in cash within sixty (60) days after the Termination Date.

4.2.4As a condition to Executive’s right to receive any benefits pursuant to Section 4.2.3 of this Agreement, (A) Executive must execute and deliver to the Company a written release in form and substance satisfactory to the Company, of any and all claims against the Company and all directors and officers of the Company with respect to all matters arising out of Executive’s employment hereunder, or the termination thereof (other than claims for entitlements under the terms of this Agreement or plans or programs of the Company in which Executive has accrued a benefit), which shall become effective by the 90^th day following the Executive’s Termination Date; and (B) Executive must not have breached any of his covenants and agreements under ARTICLE V or ARTICLE VI of this Agreement, which shall continue following the Termination Date.

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	Alvaro Ruiz
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4.2.5In the event of termination of Executive’s employment pursuant to Section 4.1.4 (by the Company for Cause), and subject to applicable law and regulations, the Company shall be entitled to offset against any payments due Executive the demonstrable loss and damage, if any, which shall have been suffered by the Company as a result of the acts or omissions of Executive giving rise to termination. The foregoing shall not be construed to limit any cause of action, claim or other rights, which the Company may have against Executive in connection with such acts or omissions.

4.2.6Upon termination of Executive’s employment hereunder, or on demand by the Company during the Term of this Agreement, Executive will immediately deliver to the Company, and will not keep in his possession, recreate or deliver to anyone else, any and all Company property, as well as all devices and equipment belonging to the Company (including computers, handheld electronic devices, telephone equipment, and other electronic devices), Company credit cards, records, data, notes, notebooks, reports, files, proposals, lists, correspondence, specifications, drawings blueprints, sketches, materials, photographs, charts, all documents and property, and reproductions of any of the aforementioned items that were developed by Executive pursuant to his employment with the Company, obtained by Executive in connection with his employment with the Company, or otherwise belonging to the Company, its successors or assigns, including, without limitation, those records maintained pursuant to this Agreement. However, Executive may retain any materials or documents which he shall need in any legal action to enforce the terms of this Agreement.

4.2.7Executive also agrees to keep the Company advised of his home and business address for a period of three (3) years after termination of Executive’s employment hereunder, so that the Company can contact Executive regarding his continuing obligations provided by this Agreement. In the event that Executive’s employment hereunder is terminated, Executive agrees to grant consent to notification by the Company to Executive’s new employer about his obligations under this Agreement.

4.3.Consulting. During the sixty (60) day period following any termination of this Agreement pursuant to Section 4.1.3, Section 4.1.4, Section 4.1.5, Section 4.1.6, or Section 4.1.8(b), and provided that Company and Executive have no disputes regarding the payment of any severance amounts under this Agreement, Executive shall be available, subject to his other reasonable commitments or obligations made or incurred in mitigation of the termination of his employment, by telephone, email or fax, as a consultant to the Company, without further compensation, to consult with its officers and directors regarding projects and/or tasks as defined by the Board. In no extent shall the consulting services required pursuant to this Section 4.3 exceed 80 hours.

4.4.Treatment of Equity. To the extent not specifically provided for herein, the vesting and exercisability of equity and equity-based awards (if any) held by the Executive at termination, and all other terms of such equity and equity-based awards (if any), shall be governed by the Equity Agreements.

ARTICLE V.
INVENTIONS

5.1.Inventions in General. As described in further detail in this ARTICLE V, all processes, technologies and inventions relating to the business of the Company (collectively, “Inventions”), including new contributions, improvements, ideas, discoveries, trademarks and trade names, conceived, developed, invented, made or found by Executive, alone or with others, during his employment by the Company, whether or not patentable and whether or not conceived, developed, invented, made or found on the Company’s time or with the use of the Company’s facilities or materials, shall be the property of the Company and shall be promptly and fully disclosed by Executive to the Company. Executive shall perform all necessary acts (including, without limitation, executing and delivering any confirmatory assignments, documents or instruments requested by the Company) to assign or otherwise to vest title to any such Inventions in the Company and to enable the Company, at its sole expense, to secure and maintain domestic and/or foreign patents or any other rights for such Inventions.

5.2.Inventions Retained and Licensed. Executive has attached hereto, as Exhibit A, a list describing all inventions, discoveries, original works of authorship, developments, improvements, and trade secrets, which were conceived in whole or in part by Executive prior to his employment with the Company to which Executive has any right, title or interest, which relate to the Company’s proposed business, products, or research and development (“Prior Inventions”); or, if no such list is attached, Executive represents and warrants that there are no such Prior Inventions. Furthermore, Executive represents and warrants that the inclusion of any Prior Inventions from Exhibit A of this Agreement will not materially affect his ability to perform all obligations under this Agreement. If, in the course of Executive’s employment with the Company, Executive incorporates into or uses in connection with any product, process, service, technology or other work by or on behalf of Company any Prior Invention, Executive hereby grants to the Company a nonexclusive, royalty-free, fully paid-up, irrevocable, perpetual, worldwide license, with the right to grant and authorize sublicenses, to make, have made, modify, use, import, offer for sale, and sell such Prior Invention as part of or in connection with such product, process, service, technology or other work and to practice any method related thereto.

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5.3.Assignment of Inventions. Executive agrees that Executive will promptly make full written disclosure to the Company, will hold in trust for the sole right and benefit of the Company, and hereby assigns to the Company, or its designee, all of his right, title, and interest in and to any and all inventions, original works of authorship, developments, concepts, improvements, designs, discoveries, ideas, trademarks or trade secrets, whether or not patentable or registrable under patent, copyright or similar laws, which Executive may solely or jointly conceive, develop, or reduce to practice, or cause to be conceived, developed, or reduced to practice, during his employment with the Company, or with the use of Company’s equipment, supplies, facilities, or Confidential/Trade Secret Information (collectively referred to as “Conceived Inventions”). All Conceived Inventions that Executive conceives, reduces to practice, develops or has developed (in whole or in part, either alone or jointly with others) shall be the sole property of the Company and its assigns to the maximum extent permitted by law (and to the fullest extent permitted by law shall be deemed “works made for hire”). Executive also agrees to irrevocably assign (or cause to be irrevocably assigned) and hereby irrevocably assigns to the Company all right, title and interest in all Conceived Inventions and any copyrights, patents, trademarks, trade secrets, mask work rights, moral rights and intellectual property and other rights (“Intellectual Property Rights”). Executive understands and agrees that the decision whether or not to commercialize or market any Conceived Inventions is within the Company’s sole discretion and for the Company’s sole benefit and that no royalty or other consideration will be due to Executive as a result of the Company’s efforts to commercialize or market any such Conceived Inventions.

5.4.Assignment of Other Rights. In addition to the foregoing assignment of Inventions to the Company, Executive hereby irrevocably transfers and assigns to the Company: (i) all worldwide patents, patent applications, copyrights, mask works, trade secrets and other intellectual property rights in any Conceived Inventions; and (ii) any and all “Moral Rights” (as defined below) that Executive may have in or with respect to any Conceived Inventions. Executive also hereby forever waives and agrees never to assert any and all Moral Rights Executive may have in or with respect to any Conceived Inventions, even after termination of Executive’s work on behalf of the Company. “Moral Rights” means any rights to claim authorship of any Conceived Inventions, to object to or prevent the modification of any Conceived Inventions, or to withdraw from circulation or control the publication or distribution of any Conceived Inventions, and any similar right, existing under judicial or statutory law of any country in the world, or under any treaty, regardless of whether or not such right is denominated or generally referred to as a “moral right”.

5.5.Inventions Assigned to the United States. Executive agrees to assign to the United States government all of his right, title, and interest in and to any and all Inventions whenever such full title is required to be in the United States by a contract between the Company and the United States or any of its agencies.

5.6.Maintenance of Records. Executive agrees to keep and maintain adequate, current, accurate, and authentic written records of all such Conceived Inventions, which may be in the form of notes, sketches, drawings, electronic files, reports, or any other format that may be specified by the Company and which will be available to and remain the sole property of the Company at all times.

5.7.Patent and Copyright Registrations. Executive agrees to take steps that may be necessary to assist the Company, or its designee, at the Company’s expense, in every proper way to complete the transfer of and secure the Company’s rights in the Conceived Inventions, Intellectual Property Rights and any rights relating thereto in any and all countries, including by making the disclosure to the Company of all pertinent information and data with respect thereto, executing all applications, specifications, oaths, assignments and all other instruments which the Company shall deem proper or necessary in order to apply for, register, obtain, maintain, defend, and enforce such rights and in order to assign and convey to the Company, its successors, assigns, and nominees the sole and exclusive rights, title and interest in and to such Conceived Inventions and any rights relating thereto, and by testifying in a suit or other proceeding relating to such Conceived Inventions and any rights relating thereto. Executive further agrees that his obligation to execute or cause to be executed, when it is in his power to do so, any such instrument or papers shall continue after the termination of this Agreement. If the Company is unable because of Executive’s mental or physical incapacity or for any other reason to secure Executive’s signature with respect to any Conceived Inventions including, without limitation, to apply for or to pursue any application for any United States or foreign patents or copyright registrations covering such Conceived Inventions, then Executive hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as his agent and attorney in fact, to act for and in his behalf and stead to execute and file any papers, oaths and to do all other lawfully permitted acts with respect to such Conceived Inventions with the same legal force and effect as if executed by Executive.

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ARTICLE VI.
CONFIDENTIAL/TRADE SECRET INFORMATION

AND RESTRICTIVE COVENANTS; NON-COMPETE

6.1.Applicability of Provisions after Lapse of Agreement.If the Executive’s employment terminates pursuant to Section 4.1.8 of this Agreement, then the Company must elect whether the provisions of this Section 6.1 shall apply or not apply after Executive’s termination of employment. The Company agrees that in the event the Company elects that this Section 6.1 applies, then notwithstanding anything herein to the contrary, (a) the provisions of Sections 6.3, 6.8, and 6.9 below shall not apply to Executive after the Termination Date, and the Company abrogates its rights to enforce such provisions after his termination; and (b) the Executive agrees that the provisions of Section 4.2.3 shall not apply and instead the provisions of Section 4.2.2 shall apply. Executive agrees that in the event the Company elects that this Section 6.1 shall not apply after Executive’s termination of employment, then notwithstanding anything herein to the contrary, the provisions of Sections 6.3, 6.8, and 6.9 below shall continue to apply to Executive after the Termination Date and the Company agrees that it shall continue to be bound by Section 4.2.3.

6.2.Confidential/Trade Secret Information. During the course of Executive’s employment, Executive will have access to Confidential/Trade Secret Information of the Company and information developed for the Company.

6.3.Non-Compete. For $10 and in exchange for Executive’s access to Confidential/Trade Secret Information and other good and valuable consideration which Executive acknowledges the receipt and sufficiency of, Executive agrees to (a) devote substantially all of Executive’s business time, energy and efforts to the business of the Company (except as specifically provided for in Section 6.5 below), (b) to use Executive’s best efforts and abilities faithfully and diligently to promote the business interests of the Company and (c) to comply with the other terms and conditions of ARTICLE VI. For so long as Executive is employed hereunder, and for the twelve months following the Termination Date, Executive (whether by himself, through his employers or employees or agents or otherwise, and whether on his own behalf or on behalf of any other Person) shall not, directly or indirectly, either as an employee, employer, consultant, agent, investor, principal, partner, stockholder (except as the holder of less than 1% of the issued and outstanding stock of a publicly held corporation), own, manage, operate, control, be employed by, act as an officer, director, agent or consultant for, or be in any other way connected with or provide services or products to or for, any Person in the business of manufacturing, selling, creating, renting, aggregating, trading, distributing, marketing, producing, undertaking, developing, supplying, or otherwise dealing with or in Restricted Services or Restricted Products in the Restricted Area.

6.4.Non-Solicitation During Employment. During his employment with the Company, Executive shall not: (a) interfere with the Company’s business relationship with its customers or suppliers, (b) solicit, directly or indirectly, or otherwise encourage any of the Company’s customers or suppliers to terminate their business relationship with the Company, or (c) solicit, directly or indirectly, or otherwise encourage any employees of the Company to leave the employ of the Company, or solicit any of the Company’s employees for employment outside the Company.

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6.5.Restriction on Use of Confidential/Trade Secret Information. Executive agrees that his use of Confidential/Trade Secret Information is subject to the following restrictions for an indefinite period of time so long as the Confidential/Trade Secret Information does not become generally known to the public:

(i)Non-Disclosure. Executive agrees that he will not publish or disclose, or allow to be published or disclosed, Confidential/Trade Secret Information to any person without the prior written authorization of the Company unless pursuant to or in connection with Executive’s job duties to the Company under this Agreement or as otherwise allowed pursuant to the terms of this Agreement; and

(ii) Non-Removal/Surrender. Executive agrees that he will not remove any Confidential/Trade Secret Information from the offices of the Company or the premises of any facility in which the Company is performing services, except pursuant to his duties under this Agreement and except as needed in any legal action to enforce the terms of this Agreement. Executive further agrees that he shall surrender to the Company and/or destroy all documents and materials in his possession or control which contain Confidential/Trade Secret Information and which are the property of the Company upon the termination of his employment with the Company, and that he shall not thereafter retain any copies of any such materials except as needed in any legal action to enforce the terms of this Agreement.

6.6.Other Activities. Subject to the foregoing prohibition and provided such services or investments do not violate any applicable law, regulation or order, or interfere in any way with the faithful and diligent performance by Executive of the services to the Company otherwise required or contemplated by this Agreement, the Company expressly acknowledges that Executive may:

6.6.1make and manage personal business investments of Executive’s choice without consulting the Board;

6.6.2serve in any capacity with any non-profit civic, educational or charitable organization; and

6.6.3undertake any other actions, business transactions, agreements and undertakings of which the Executive has received approval of the Related Party Transaction Committee (as defined below) or the Audit Committee of the Company, to enter into and/or undertake, provided that

6.6.4Executive shall undertake only such actions or services that do not interfere with the Executive’s obligations hereunder.

6.7.Prohibition Against Unfair Competition. Executive agrees that at no time after his employment with the Company will he engage in competition with the Company while making any use of the Confidential/Trade Secret Information, or otherwise exploit or make use of the Confidential/Trade Secret Information.

6.8.Non-Solicitation of Customers. Executive agrees that during the twelve-month period following the Termination Date, he will not, for any customer of the Company with whom Executive worked or otherwise had access to the Confidential/Trade Secret Information pertaining to the Company’s business with such customer during the last year of Executive’s employment with the Company, (i) directly or indirectly accept or solicit, in any capacity, Restricted Services or Restricted Products or (ii) solicit, directly or indirectly, or encourage any of the Company’s customers or suppliers to terminate their use of Restricted Products or Restricted Services.

6.9.Non-Solicitation of Employees. Executive agrees that during the twelve-month period following the Termination Date, he shall not, directly or indirectly, solicit or otherwise encourage any employees of the Company to leave the employ of the Company, or solicit, directly or indirectly, any of the Company’s employees for employment.

6.10.Former Employer Information. Executive agrees that he will not, during his employment with the Company, improperly use or disclose, or induce the Company to use any proprietary information or trade secrets of any former or concurrent employer or other third party person or entity and that Executive will not bring onto the premises of the Company or transfer onto the Company’s technology systems any proprietary information or trade secrets belonging to any such former or concurrent employer or third party person or entity, unless consented to in writing by both Company and such employer, person or entity.

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6.11.Third Party Information. Executive acknowledges that the Company may have received and in the future may receive from third parties associated with the Company (including, but not limited to, the Company’s customers, suppliers, licensors, licensees, partners, or collaborators (“Associated Third Parties”)) confidential or proprietary information (“Associated Third Party Confidential Information”). By way of example, Associated Third Party Confidential Information may include the habits or practices, technology, or requirements of Associated Third Parties, or other information related to the business conducted between the Company and Associated Third Parties. Executive agrees that Associated Third Party Confidential Information is Confidential/Trade Secret Information, and at all times during Executive’s employment with the Company and thereafter, Executive agrees to hold in the strictest confidence, and not to use or to disclose to any Person any Associated Third-Party Confidential Information, except as necessary in carrying out his work for the Company consistent with the Company’s agreement with such Associated Third Parties.

6.12.Immunity From Liability for Certain Confidential Disclosures and Certain Allowed Disclosures. Executive acknowledges, agrees, and understands that (i) nothing in this Agreement prohibits him from reporting to any governmental authority or attorney information concerning suspected violations of law or regulation, provided that Executive does so consistent with 18 U.S.C. § 1833, and (ii) Executive may disclose trade secret information to a government official or to an attorney and use it in certain court proceedings without fear of prosecution or liability, provided that Executive does so consistent with 18 U.S.C. § 1833.

6.13.Conflict of Interest. During Executive’s employment with the Company, Executive must not engage in any work, paid or unpaid, that creates an actual conflict of interest with the Company. If the Company or the Executive has any question as to the actual or apparent potential for a conflict of interest, either shall raise the issue formally to the other, and if appropriate and necessary the issue shall be put to the Related Party Transaction Committee or Audit Committee of the Company for consideration and approval or non-approval, which approval or non-approval the Executive agrees shall be binding on the Executive.

6.14.Reasonable Restrictions. The Parties acknowledge that the foregoing restrictions, as well as the duration and the territorial scope thereof as set forth in this ARTICLE VI or ARTICLE V, are under all of the circumstances reasonable and necessary for the protection of the Company and its business and are (i) reasonable given Executive’s role with the Company, and are necessary to protect the interests of the Company and (ii) completely severable and independent agreements supported by good and valuable consideration and, as such, shall survive the termination of this Agreement for any reason whatsoever.

6.15.Specific Performance. Executive acknowledges and agrees that the Company’s remedies at law for a breach or threatened breach of any of the provisions of this ARTICLE VI or ARTICLE V would be inadequate and, in recognition of this fact, Executive agrees that, in the event of such a breach or threatened breach, in addition to any remedies at law, the Company, without posting any bond, shall be entitled to obtain equitable relief in the form of specific performance, temporary restraining order, temporary or permanent injunction or any other equitable remedy which may then be available. Executive further agrees that the restricted period set forth in this ARTICLE VI or ARTICLE V shall be tolled, and shall not run, during the period of any breach by Executive of any of the covenants contained this ARTICLE VI or ARTICLE V, as applicable. Finally, no other violation of law attributed to the Company, or change in the nature or scope of Executive’s employment or other relationship with the Company, shall operate to excuse Executive from the performance of his obligations under this ARTICLE VI or ARTICLE V. The remedies under this Agreement are without prejudice to the Company’s right to seek any other remedy to which it may be entitled at law or in equity.

6.16.Response to Legal Process; Allowable Disclosures. Notwithstanding any other term of this Agreement (including this ARTICLE VI or ARTICLE V), including any exhibit hereto, (a) the Executive may respond to a lawful and valid subpoena or other legal process relating to the Company or its business or operations; provided that the Executive shall: (i) give the Company the earliest possible notice thereof; (ii) as far in advance of the return date as possible, at the Company’s sole cost and expense, make available to the Company and its counsel the documents and other information sought; and (iii) at the Company’s sole cost and expense, assist such counsel in resisting or otherwise responding to such process, or (b) the Executive’s reporting of possible violations of federal law or regulation to any governmental agency or entity in accordance with the provisions of and rules promulgated under Section 21F of the Exchange Act, or any other whistleblower protection provisions of state or federal law or regulation shall not violate or constitute a breach of this Agreement. Nothing contained in this Agreement (or any exhibit hereto) shall be construed to prevent the Executive from reporting any act or failure to act to the Securities and Exchange Commission or other governmental body or prevent the Executive from obtaining a fee as a “whistleblower” under Rule 21F-17(a) under the Exchange Act or other rules or regulations implemented under the Dodd-Frank Wall Street Reform Act and Consumer Protection Act.

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ARTICLE VII.
INDEMNIFICATION

7.1.Required Indemnification. The Company agrees to indemnify Executive and hold Executive harmless from and against any and all losses, claims, damages, liabilities and costs (and all actions in respect thereof and any legal or other expenses in giving testimony or furnishing documents in response to a subpoena or otherwise), including, without limitation, the costs of investigating, preparing or defending any such action or claim, whether or not in connection with litigation in which Executive is a party, as and when incurred, directly or indirectly caused by, relating to, based upon or arising out of any work performed by Executive in connection with this Agreement to the full extent permitted by the Nevada Revised Statutes, and by the Articles of Incorporation and Bylaws of the Company, as may be amended from time to time, and pursuant to any indemnification agreement between Executive and the Company.

7.2.In Addition to Other Obligations. The indemnification provision of this ARTICLE VII shall be in addition to any liability which the Company may otherwise have to Executive.

7.3.Notification and Required Actions. If any action, proceeding or investigation is commenced as to which Executive proposes to demand such indemnification, Executive shall notify the Company with reasonable promptness. Executive shall have the right to retain counsel of Executive’s own choice to represent Executive and the Company shall pay all reasonable fees and expenses of such counsel; and such counsel shall, to the fullest extent consistent with such counsel’s professional responsibilities, cooperate with the Company and any counsel designated by the Company. The Company shall be liable for any settlement of any claim against Executive made with the Company’s written consent, which consent shall not be unreasonably withheld or delayed, to the fullest extent permitted by the Nevada Revised Statutes and the Articles of Incorporation and Bylaws of the Company, as may be amended from time to time.

ARTICLE VIII.
ARBITRATION

8.1.Scope. To the fullest extent permitted by law, Executive and the Company agree to the binding arbitration of any and all controversies, claims or disputes between them arising out of or in any way related to this Agreement, the employment relationship between the Company and Executive and any disputes upon termination of employment, including but not limited to breach of contract, tort, discrimination, harassment, wrongful termination, demotion, discipline, failure to accommodate, family and medical leave, compensation or benefits claims, constitutional claims; and any claims for violation of any local, state or federal law, statute, regulation or ordinance or common law. For the purpose of this agreement to arbitrate, references to “Company” include all subsidiaries or related entities and their respective executives, supervisors, officers, directors, agents, pension or benefit plans, pension or benefit plan sponsors, fiduciaries, administrators, affiliates and all successors and assigns of any of them, and this agreement to arbitrate shall apply to them to the extent Executive’s claims arise out of or relate to their actions on behalf of the Company.

8.2.Mediation and Arbitration Procedure. Before bringing any dispute to arbitration, and presuming that there is sufficient time prior to expiration of the limitations period to do so, the Parties agree that they will first mediate that dispute in good faith. They will agree on the mediator and split equally the costs of mediation. To commence any such arbitration proceeding, the Party commencing the arbitration must provide the other Party with written notice of any and all claims forming the basis of such right in sufficient detail to inform the other Party of the substance of such claims, and file this notice with the American Arbitration Association (“AAA”). The arbitration will be conducted in such location as mutually agreed upon by the Company and the Executive, provided that if such parties cannot mutually agree on a location, the arbitration shall be conducted in the city where the Company’s principal business location is located, by a single neutral arbitrator and in accordance with the then-current rules for resolution of employment disputes of the AAA. The Arbitrator is to be selected by the mutual agreement of the Parties using the AAA procedures. If the Parties cannot agree, the AAA will select the arbitrator. The Parties are entitled to representation by an attorney or other representative of their choosing. The arbitrator shall have the power to enter any award that could be entered by a judge of the trial court of the State of Texas, and only such power, and shall follow the law. The award shall be binding and the Parties agree to abide by and perform any award rendered by the arbitrator. The arbitrator shall issue the award in writing and therein state the essential findings and conclusions on which the award is based. Judgment on the award may be entered in any court having jurisdiction thereof. The Parties shall split equally the costs in the arbitration and, should the arbitrator find reasonable grounds for doing so, the arbitrator may order the losing Party in the arbitration hearing to bear the full costs of the arbitration filing and hearing fees and the cost of the arbitrator, including requiring such losing Party to reimburse the winning Party for such costs and expenses as previously paid.

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8.3.Limitations Period; Deadline to Assert Claims. Executive and the Company and its affiliates agree that arbitration of any disputes, claims, or controversies shall be initiated within one year of the act or occurrence giving rise to the dispute, claim or controversy, even though that deadline is or may be shorter than the period provided by statutes of limitations that would apply in the absence of this Section. Any claim that is not asserted in an arbitration within one (1) year of the act or occurrence giving rise to it shall be deemed waived. In order to effectuate this waiver of limitations, the Company waives its right to argue that Executive may not proceed with his claim(s) due to his failure to file any charge or complaint with a government agency having jurisdiction of his claim(s) under state and federal laws, such as the Equal Employment Opportunity Commission, Texas Workforce Commission-Civil Rights Division, or Occupational Safety and Health Administration.

ARTICLE IX.
MISCELLANEOUS

9.1.Binding Effect; Assignment. This Agreement shall be binding upon any successor (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company’s business and/or assets. Any such successor will within a reasonable period of becoming the successor assume in writing and be bound by all of the Company’s obligations under this Agreement. For all purposes under this Agreement, the term “Company” shall include any successor to the Company’s business or assets that becomes bound by this Agreement. Executive may not assign any of his rights or obligations under this Agreement.

9.2.Notices. Any notice provided for herein shall be in writing and shall be deemed to have been given or made (a) when personally delivered or (b) when sent by email and confirmed within 48 hours by letter mailed or delivered to the Party to be notified at its or his address set forth herein; or three (3) days after being sent by registered or certified mail, return receipt requested (or by equivalent currier with delivery documentation such as FEDEX or UPS) to the address of the other Party set forth or to such other address as may be specified by notice given in accordance with this Section 9.2: 

If to the Company: Vertex Energy, Inc.  1331 Gemini, Suite 250  Houston, Texas 77058  Telephone: (866) 660-8156  Attention: Secretary  

If to the Executive: Alvaro Ruiz  (Address and contact information on file)   

9.3.Severability. If any provision of this Agreement, or portion thereof, shall be held invalid or unenforceable by a court of competent jurisdiction, such invalidity or unenforceability shall attach only to such provision or portion thereof, and shall not in any manner affect or render invalid or unenforceable any other provision of this Agreement or portion thereof, provided that should a court of competent jurisdiction determine that the scope of any provision of this Agreement is too broad to be enforced as written, the Parties hereby authorize the court to reform the provision to such narrower scope as it determines to be reasonable and enforceable and the Parties intend that the affected provision be enforced as so amended.

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9.4.Waiver. No waiver by a Party of a breach or default hereunder by the other Party shall be considered valid, unless expressed in a writing signed by such first Party, and no such waiver shall be deemed a waiver of any subsequent breach or default of the same or any other nature.

9.5.Entire Agreement. This Agreement, along with the Equity Agreements, sets forth the entire agreement between the Parties with respect to the subject matter hereof, and supersedes any and all prior agreements between the Company and Executive, whether written or oral, relating to any or all matters covered by and contained or otherwise dealt with in this Agreement, including, but not limited to that certain Employment Agreement between the parties dated October 23, 2015. This Agreement does not constitute a commitment of the Company with regard to Executive’s employment, express or implied, other than to the extent expressly provided for herein.

9.6.Amendment. No modification, change or amendment of this Agreement or any of its provisions shall be valid, unless in a writing signed by the Parties and approved by the Committee or the Board of Directors.

9.7.Authority. The Parties each represent and warrant that it/he has the power, authority and right to enter into this Agreement and to carry out and perform the terms, covenants and conditions hereof.

9.8.Attorneys’ and Arbitration Fees. Except as prohibited by law, if either Party hereto commences an arbitration or other action against the other Party to enforce any of the terms hereof, each Party shall pay its own costs and attorney’s fees, if any. If, however, any Party prevails on a statutory or contractual claim that affords the prevailing party attorneys’ fees (including pursuant to this Agreement), the arbitrator may award reasonable attorneys’ fees to the prevailing party to the extent permitted by law.

9.9.Construction. When used in this Agreement, unless a contrary intention appears: (i) a term has the meaning assigned to it; (ii) “or” is not exclusive; (iii) “including” means including without limitation; (iv) words in the singular include the plural and words in the plural include the singular, and words importing the masculine gender include the feminine and neuter genders; (v) any agreement, instrument or statute defined or referred to herein or in any instrument or certificate delivered in connection herewith means such agreement, instrument or statute as from time to time amended, modified or supplemented and includes (in the case of agreements or instruments) references to all attachments thereto and instruments incorporated therein; (vi) 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 hereof; (vii) references contained herein to Article, Section, Schedule and Exhibit, as applicable, are references to Articles, Sections, Schedules and Exhibits in this Agreement unless otherwise specified; (viii) references to “writing” include printing, typing, lithography and other means of reproducing words in a visible form, including, but not limited to email; (ix) references to “dollars”, “Dollars” or “$” in this Agreement shall mean United States dollars; (x) reference to a particular statute, regulation or Law means such statute, regulation or Law as amended or otherwise modified from time to time; (xi) 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 or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein); (xii) unless otherwise stated in this Agreement, in the computation of a period of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each mean “to but excluding”; (xiii) references to “days” shall mean calendar days; and (xiv) the paragraph headings contained in this Agreement are for convenience only, and shall in no manner be construed as part of this Agreement.

9.10.Governing Law. This Agreement, and all of the rights and obligations of the Parties in connection with the employment relationship established hereby, shall be governed by and construed in accordance with the substantive laws of the State of Texas without giving effect to principles relating to conflicts of law.

9.11.Survival. The termination of Executive’s employment with the Company pursuant to the provisions of this Agreement shall not affect Executive’s obligations to the Company hereunder which by the nature thereof are intended to survive any such termination, including, without limitation, Executive’s obligations under ARTICLE V and ARTICLE VI of this Agreement.

December 12, 2022	Executive Employment Agreement
	Alvaro Ruiz
	Page 16 of 20

9.12.Section 280G Safe Harbor Cap. In the event it shall be determined that any payment or distribution or any part thereof of any type to or for the benefit of Executive whether pursuant to the Agreement or any other agreement between Executive and the Company, or any person or entity that acquires ownership or effective control the Company or ownership of a substantial portion of the Company’s assets (within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended, and the regulations thereunder (the “Code”)) whether paid or payable or distributed or distributable pursuant to the terms of the Agreement or any other agreement, (the “Total Payments”), is or will be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the Total Payments shall be reduced to the maximum amount that could be paid to Executive without giving rise to the Excise Tax (the “Safe Harbor Cap”), if the net after-tax payment to Executive after reducing Executive’s Total Payments to the Safe Harbor Cap is greater than the net after-tax (including the Excise Tax) payment to Executive without such reduction. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payment made pursuant to the Agreement and then to any other agreement that triggers such Excise Tax, unless an alternative method of reduction is elected by Executive. All mathematical determinations, and all determinations as to whether any of the Total Payments are “parachute payments” (within the meaning of Section 280G of the Code), that are required to be made under ARTICLE IV, including determinations as to whether the Total Payments to Executive shall be reduced to the Safe Harbor Cap and the assumptions to be utilized in arriving at such determinations, shall be made by a nationally recognized accounting firm selected by the Company (the “Accounting Firm”). In making such determinations, the Accounting Firm shall allocate payments hereunder to Executive’s covenants under ARTICLE VI and to services provided or required to be provided following a Change of Control to the maximum extent permissible. If the Accounting Firm determines that the Total Payments to Executive shall be reduced to the Safe Harbor Cap (the “Cutback Payment”) and it is established pursuant to a final determination of a court or an Internal Revenue Service (the “IRS”) proceeding which has been finally and conclusively resolved, that the Cutback Payment is in excess of the limitations provided in this Section 9.12 (hereinafter referred to as an “Excess Payment”), such Excess Payment shall be deemed for all purposes to be an overpayment to Executive made on the date such Executive received the Excess Payment and Executive shall repay the Excess Payment to the Company on demand; provided, however, if Executive shall be required to pay an Excise Tax by reason of receiving such Excess Payment (regardless of the obligation to repay the Company), Executive shall not be required to repay the Excess Payment (if Executive has already repaid such amount, the Company shall refund the amount to the Executive), and the Company shall pay Executive an amount equal to the difference between the Total Payments and the Safe Harbor Cap (provided that such amount has previously been repaid by the Executive or not previously paid by the Company).

9.13.Section 409A Compliance.

9.13.1This Agreement is intended to comply with Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), or an exemption thereunder. This Agreement shall be construed and administered in accordance with Section 409A. To the extent that any provision of this Agreement is ambiguous as to its compliance with Section 409A, the provision shall be read in such a manner so that all payments hereunder comply with Section 409A. The parties agree that this Agreement may be amended, as reasonably requested by either party, and as may be necessary to fully comply with Section 409A and all related rules and regulations in order to preserve the payments and benefits provided hereunder without additional cost to either party. Notwithstanding any other provision of this Agreement to the contrary, payments provided under this Agreement shall be made upon an event and in a manner that complies with Section 409A or an applicable exemption. Any payments under this Agreement that may be excluded from Section 409A either as separation pay due to an involuntary separation from service (including a voluntary separation from service for good reason that is considered an involuntary separation for purposes of the separation pay exception under Treasury Regulation 1.409A-1(n)(2)) or as a short-term deferral shall be excluded from Section 409A to the maximum extent possible. For purposes of Section 409A, each installment payment provided under this Agreement shall be treated as a separate payment. Any payments of “nonqualified deferred compensation” subject to Section 409A (e.g., payments and benefits that do not qualify as a short-term deferral or as a separation pay exception) to be made under this Agreement upon a termination of employment shall only be made if such termination of employment constitutes a “separation from service” under Section 409A. Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under this Agreement comply with Section 409A and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest, or other expenses that may be incurred by the Executive on account of non-compliance with Section 409A.

December 12, 2022	Executive Employment Agreement
	Alvaro Ruiz
	Page 17 of 20

9.13.2Notwithstanding any other provision of this Agreement, if at the time of the Executive’s termination of employment, the Executive is a “specified employee”, determined in accordance with Section 409A, any payments and benefits provided under this Agreement that constitute “nonqualified deferred compensation” subject to Section 409A (e.g., payments and benefits that do not qualify as a short-term deferral or as a separation pay exception) that are provided to the Executive on account of the Executive’s separation from service shall not be paid until the first payroll date to occur following the six-month anniversary of the Executive’s termination date (“Specified Employee Payment Date”). The aggregate amount of any payments that would otherwise have been made during such six-month period shall be paid in a lump sum on the Specified Employee Payment Date without interest and thereafter, any remaining payments shall be paid without delay in accordance with their original schedule. If the Executive dies during the six-month period, any delayed payments shall be paid to the Executive’s estate in a lump sum upon the Executive’s death. To the extent that the foregoing applies to the provision of benefits (including, but not limited to, life insurance and medical insurance), such benefit coverage shall nonetheless be provided to the Executive during the first six months following his separation from service (the “Six-Month Period”), provided that, during such Six-Month Period, the Executive pays to the Company, on a monthly basis in advance, an amount equal to the Monthly Cost (as defined below) of such benefit coverage. The Company shall reimburse the Executive for any such payments made by the Executive in a lump sum not later than 30 days following the sixth-month anniversary of the Executive’s separation from service. For purposes of this subparagraph, “Monthly Cost” means the minimum dollar amount which, if paid by the Executive on a monthly basis in advance, results in the Executive not being required to recognize any federal income tax on receipt of the benefit coverage during the Six-Month Period.

9.13.3To the extent required to avoid taxation under Section 409A, each reimbursement or in-kind benefit provided under this Agreement shall be provided in accordance with the following:

(i)the amount of expenses eligible for reimbursement, or in-kind benefits provided, during each calendar year cannot affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year;

(ii)any reimbursement of an eligible expense shall be paid to the Executive on or before the last day of the calendar year following the calendar year in which the expense was incurred; and

9.13.4any right to reimbursements or in-kind benefits under this Agreement shall not be subject to liquidation or exchange for another benefit.

9.14.Withholding of Taxes and Other Executive Deductions. The Company may withhold from any benefits and payments made pursuant to this Agreement all federal, state, city and other taxes as may be required pursuant to any law or governmental regulation or ruling and any and all other normal Executive deductions made with respect to the Company’s Executives generally.

9.15.Clawback. Notwithstanding any provision in this Agreement to the contrary, any portion of the payments and benefits provided under this Agreement, as well as any other payments and benefits which the Executive receives pursuant to a Company plan or other arrangement, shall be subject to a clawback (a) to the extent necessary to comply with the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act or any Securities and Exchange Commission rule or any other applicable law; and/or (b) any policy adopted by the Company and applicable generally to Executive and other officers of the Company, relating to the recovery of compensation granted, paid, delivered, awarded or otherwise provided to Executive by the Company or its subsidiaries or any of their respective affiliates, as applicable, as may be amended from time to time.

9.16.Legal Counsel. Executive acknowledges and warrants that (A) he has been advised that Executive’s interests may be different from the Company’s interests, (B) he has been afforded a reasonable opportunity to review this Agreement, to understand its terms and to discuss it with an attorney and/or financial advisor of his choice, (C) that Executive fully understands the terms and contents of this Agreement and the exhibits hereto, and (D) he knowingly and voluntarily entered into this Agreement. The Company and Executive shall each bear their own costs and expenses in connection with the negotiation and execution of this Agreement. Executive understands and agrees that any attorney retained by the Company who has discussed any term or condition of this Agreement with Executive or its advisor is only acting on behalf of the Company and not on its behalf.

December 12, 2022	Executive Employment Agreement
	Alvaro Ruiz
	Page 18 of 20

9.17.Right to Negotiate. Executive hereby acknowledges that Executive has been given the opportunity to participate in the negotiation of the terms of this Agreement. Executive acknowledges and confirms that he has read this Agreement and fully understands its terms and contents.

9.18.Voluntary Nature of Agreement. Executive acknowledges and agrees that he is executing this Agreement voluntarily and without any duress or undue influence by the Company or anyone else. Executive agrees that he has been provided an opportunity to seek the advice of an attorney of his choice before signing this Agreement.

9.19.Counterparts, Effect of Facsimile, Emailed and Photocopied Signatures. This Agreement and any signed agreement or instrument entered into in connection with this Agreement, and any amendments hereto or thereto, may be executed in one or more counterparts, all of which shall constitute one and the same instrument. 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 manners 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. At the request of any Party, each other Party shall re execute the original form of this Agreement and deliver such form to all other Parties. No Party shall raise the use of Electronic Delivery to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of Electronic Delivery as a defense to the formation of a contract, and each such Party forever waives any such defense, except to the extent such defense relates to lack of authenticity.

[Remainder of page left intentionally blank. Signature page follows]

December 12, 2022	Executive Employment Agreement
	Alvaro Ruiz
	Page 19 of 20

This Agreement contains provisions requiring binding arbitration of disputes. By signing this Agreement, Executive acknowledges that he (i) has read and understood the entire Agreement; (ii) has received a copy of it (iii) has had the opportunity to ask questions and consult counsel or other advisors about its terms; and (iv) agrees to be bound by it.

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the day and year first above written.

“COMPANY”
	VERTEX ENERGY, INC.
	a Nevada corporation
	By:	/s/ Chris Carlson
	Name: Chris Carlson
	Title: Chief Financial Officer

“EXECUTIVE”
	/s/ Alvaro Ruiz
	Alvaro Ruiz
	(Address and contact information on file)

December 12, 2022	Executive Employment Agreement
	Alvaro Ruiz
	Page 20 of 20

EXHIBIT A

LIST OF PRIOR INVENTIONS
AND ORIGINAL WORKS OF AUTHORSHIP

Title Date Identifying Number
or Brief Description 

________        No inventions or improvements

________        Additional Sheets Attached

Signature of Executive:        ______________________________

Print Name of Executive:     Alvaro Ruiz

Date: ______________________________

EX-99.1

Vertex Energy, Inc. 8-K

Exhibit 99.1

Vertex Energy, Inc. (the “Company”)

Amended Charter of the

Nominating, Corporate Governance and
Environmental, Social, and Governance Committee

Adopted by the Board of Directors on December 12, 2022

Role:

The Nominating, Corporate Governance and Environmental, Social, and Governance Committee’s role is to (a) determine the slate of director nominees for election to the Company’s Board of Directors (the “Board”), to identify and recommend candidates to fill vacancies occurring between annual shareholder meetings, (b) to review, evaluate and recommend changes to the Company’s Corporate Governance Guidelines, and to establish the process for conducting the review of the Chief Executive Officer’s performance; and (c) to oversee the Company’s Environmental, Social, and Governance (“ESG”) policies and practices, including, but not limited to, health and safety, environmental sustainability, human rights, and other social and public matters of significance to the Company and, when appropriate, provide the Board with its assessment or recommendation regarding such matters.

Membership:

The membership of the Committee will consist of at least two directors of the Company, who shall satisfy the definition of “independent” under the listing standard of the NASDAQ Capital Market, or such other exchange(s) upon which the Company’s securities are then listed from time to time (the “Exchange”).  If the Committee is comprised of at least three members, one director who is not “independent” as defined under the rules of the Exchange and is not currently an executive officer or employee or a family member of an executive officer, may be appointed to the Committee if the Board, under exceptional and limited circumstances, determines that such individual’s membership on the Committee is required by the best interests of the Company and its shareholders (with such member being defined as an “Excepted Member”). An Excepted Member may not serve longer than two years.

Operations:

The Board shall designate one member of the Committee to act as its chairperson.  The Committee will meet a minimum of once a year. Additional meetings may occur as the Committee or its chair deems advisable. The Committee may also meet periodically in executive session without Company management present. The Committee will cause to be kept adequate minutes of its proceedings, and will report on its actions and activities at the next quarterly meeting of the Board. Committee members will be furnished with copies of the minutes of each meeting and any action taken by unanimous consent. The Committee is governed by the same rules regarding meetings (including meetings by conference telephone, video conferencing or similar communications equipment), action without meetings, notice, waiver of notice, and quorum and voting requirements as are applicable to the Board. The Committee is authorized to adopt its own rules of procedure not inconsistent with (a) any provision of the Company’s Articles of Incorporation, (b) any provision of the Bylaws of the Company, or (c) the laws of the State of Nevada.

Authority:

The Committee will have the resources and authority necessary to discharge its duties and responsibilities. The Committee has sole authority to retain and terminate outside counsel, compensation consultants, or other experts or consultants, as it deems appropriate, including sole authority to approve the fees and other retention terms for such persons. Any communications between the Committee and legal counsel in the course of obtaining legal advice will be considered privileged communications of the Company and the Committee will take all necessary steps to preserve the privileged nature of those communications.

Vertex Energy, Inc.

Amended Charter of the Nominating, Corporate Governance and

Environmental, Social, and Governance Committee

Page 1 of 4

Except as otherwise delegated by the Board or the Committee, the Committee will act on behalf of the Board.

The Committee may form and delegate authority to subcommittees and may delegate authority to one or more designated members of the Committee to perform certain of its duties from time to time.

Performance Evaluation:

The Committee shall review its own performance and reassess the adequacy of this Charter at least annually in such manner as it deems appropriate, and submit such evaluation, including any recommendations for change, to the full Board for review, discussion and approval.

Nominating and Corporate Governance Responsibilities:

The Committee will have the authority, to the extent it deems necessary or appropriate, to retain a search firm to be used to identify director candidates.  The Committee shall have sole authority to retain and terminate any such search firm, including sole authority to approve the firm’s fees and other retention terms.  The Committee shall also have authority, to the extent it deems necessary or appropriate, to retain other advisors.  The Company will provide the appropriate funding, as determined by the Committee, for payment of compensation to any search firm or other advisors employed by the Committee.

Specific responsibilities and duties of the Committee include:

a) Establishing criteria for selection of new directors and nominees for vacancies on the Board;

b) Approving director nominations to be presented for stockholder approval at the Company annual Meeting;

c) Identifying and assisting with the recruitment of qualified candidates for Board membership and for the positions of Chairman of the Board and Chairman of the committees of the Board;

d) Recommending to the Board to accept or decline any tendered resignation of a director;

e) Considering any nomination of director candidates validly made by stockholders;

f) Reviewing any director conflict of interest issues and determining how to handle such issues;

g) Insuring a review at least annually of incumbent directors’ performance and attendance at Board and committee meetings in connection with the independent directors’ decision regarding directors to be slated for election at the Company’s annual meeting;

h) Providing appropriate orientation programs for new directors;

i) Develop and periodically review and recommend to the Board appropriate revisions to the Company’s corporate governance framework, including its Articles of Incorporation and Bylaws;

j) Monitor compliance with the corporate governance guidelines; and

k) Reviewing and assessing the adequacy of the Company’s corporate governance policies and practices at least annually and recommending any proposed changes to the Board.

Vertex Energy, Inc.

Amended Charter of the Nominating, Corporate Governance and

Environmental, Social, and Governance Committee

Page 2 of 4

The Committee will also provide periodic reports to the Board and will propose any necessary actions to the Board.  The Committee will also be responsible for the review and reassessment of the adequacy of this Charter annually and for recommending any proposed changes to the Board for approval.

Nomination Process:

The Committee has the authority to lead the search for individuals qualified to become members of the Board of the Company and to select or recommend to the Board nominees to be presented for stockholder approval.  The Committee will select individuals who have high personal and professional integrity, have demonstrated ability and sound judgment and are effective, in conjunction with other director nominees, in collectively serving the long-term interests of the Company’s stockholders.  The Committee may use its network of contacts to compile a list of potential candidates, but may also engage, if it deems appropriate, a professional search firm. The Committee may meet to discuss and consider candidates’ qualifications and then choose a candidate by majority vote.

The Committee will consider nominees for the Board recommended in good faith by the Company’s stockholders, provided those nominees meet the requirements of the Exchange and applicable federal securities law.  Stockholders should submit the candidate’s name, credentials, contact information and his or her written consent to be considered as a candidate.  These recommendations should be submitted in writing to the Company Secretary.  The proposing stockholder should also include his or her contact information and a statement of his or her share ownership (how many shares owned and for how long).  The Committee may request further information about stockholder recommended nominees in order to comply with any applicable laws, rules or regulations or to the extent such information is required to be provided by such stockholder pursuant to any applicable laws, rules or regulations.

ESG Responsibilities:

Specific ESG responsibilities and duties of the Committee include:

a) The Committee shall oversee and review any reports the Company prepares and publishes related to ESG matters.

b) The Committee shall review and make recommendations to the Board with respect to proposals for corporate action relating to ESG matters received from the Company’s shareholders.

c) The Committee shall review and receive updates from management on significant social and public responsibility matters of interest to the Company and its stakeholders and strategies for enhancing the Company’s reputation among its stakeholders regarding ESG matters.

d) The Committee shall make regular reports to the Board, directly or through the Chairperson, about Committee activities.

e) The Committee shall review the Company’s strategy, policies and practices for consistency with its responsibility toward environmental, social and governance matters, including its diversity and inclusion efforts, and make recommendations to the Board and management regarding such matters as it may deem advisable.

f) The Committee shall oversee management’s monitoring and enforcement of the Company’s policies to protect the health and safety of employees, contractors, customers, the public, and the environment and review with management the quality of the Company’s procedures for identifying, assessing, monitoring and managing key environmental, safety and social risks in the Company’s business.

Vertex Energy, Inc.

Amended Charter of the Nominating, Corporate Governance and

Environmental, Social, and Governance Committee

Page 3 of 4

g) The Committee shall review and advise the Board on (a) the Company’s sustainability goals and commitments, (b) the Company’s achievement of its sustainability goals and commitments, (c) the Company’s position in relevant independent ranking systems and (d) any reporting of such targets and the Company’s progress and position in rankings.

h) The Committee shall assist the Board in identifying, evaluating, and monitoring public policy trends, regulatory developments and environmental issues that affect the Company’s activities and performance, as well as oversight of voluntary reporting of these matters, and shall recommend to the Board policies, programs and strategies concerning such trends, developments and issues.

i) The Committee shall advise the Board on significant stakeholder concerns relating to sustainability.

j) The Committee shall oversee and review the Company’s policies on community investment and corporate charitable activities.

Vertex Energy, Inc.

Amended Charter of the Nominating, Corporate Governance and

Environmental, Social, and Governance Committee

Page 4 of 4

EX-99.2

Vertex Energy, Inc. 8-K

Exhibit 99.2

VERTEX ENERGY, INC.

CLAWBACK AND FORFEITURE POLICY

Effective as of December 12, 2022 (the “Effective Date”), this Clawback and Forfeiture Policy (the “Policy”) of Vertex Energy, Inc. (”Vertex”), as adopted by Vertex’s Board of Directors, is as follows.

1.Definitions. For purposes of this Policy the following terms shall have the meanings set forth below:

1.1.“Affiliate” means any entity, individual, firm, or corporation, directly or indirectly, through one or more intermediaries, controlling, controlled by, or under common control with Vertex.

1.2.“Award” means any specific award of Incentive Compensation.

1.3.“Board” means the Board of Directors of Vertex.

1.4.“Cause” has the meaning given to such term in any employment or consulting agreement between the employee and the Company, or if there is not then any employment or consulting agreement in place between the employee and the Company, means (1) the continued failure by the employee to substantially perform his/her duties; (2) commission of, or participation in, intentional acts of fraud or dishonesty that in either case results in material harm to the reputation or business of the Company; (3) the conviction of a crime involving dishonesty or breach of trust, conviction of a felony, or commission of any act that makes the employee ineligible for continued employment; (4) the employee’s violation of the Company’s written policies including but not limited to the Company’s Code of Ethical Business Conduct and Whistleblower Protection Policy, Insider Trading Policy, or employee handbook, each as amended from time to time; (5) the employee’s breach in any material respect of a restrictive covenant set forth in any agreement between the employee and Vertex, including, but not limited to any employment agreement, and including, but not limited to those relating to confidentiality or relating to restrictive covenants or any statutory duty the employee owes to the Company, that results in material harm to the business of the Company or to the reputation or business of the Company; (6) the employee’s conduct that constitutes gross insubordination or habitual neglect of duties and that in either case results in material harm to the business of the Company; or (7) the employee’s intentional, material refusal to follow the lawful directions of the Board, the Company’s Chief Executive Officer, or his or her direct manager (other than as a result of physical or mental illness). For the avoidance of doubt, an event or conduct constituting Cause could arise, or be discovered by the Company, before or after the employee’s termination of employment.

1.5.“Committee” means the Compensation Committee of the Board or such other committee as designated by the Board.

1.6.“Company” means Vertex, a Nevada corporation, and its Affiliates.

1.7.“Covered Employee” means each current or former (a) Executive Officer of the Company; and (b) each employee who has been designated as a Covered Employee by the Committee, based on his or her role, responsibilities, or activities, in each case under criteria established by the Committee from time to time.

Vertex Energy, Inc.

Clawback and Forfeiture Policy

Page 1 of 4

1.8.“Exchange Act” means the Securities Exchange Act of 1934, as amended.

1.9.“Executive Officer” means (a) each “officer,” as defined in Rule 16a-1 under the Exchange Act, and (b) any executive officer as designated by the Board to be subject to Section 16 of the Securities Exchange Act of 1934, as amended.

1.10.“Incentive Compensation” means all incentives, whether paid in cash or in equity that are awarded, granted, earned, vested or paid to an employee, including, but not limited to bonuses.

1.11.“Performance Conditions” has the meaning set forth in Section 2.2 of the Policy.

2.Authority to Claw back, Cancel, or Forfeit Incentive Compensation. The Committee shall be authorized to claw back, cancel, or forfeit Incentive Compensation from employees, including former employees of the Company, to the extent permitted by applicable law, in the following circumstances:

2.1.Cash-Based Incentive Compensation. The Committee may claw back of all or part of any cash-based Incentive Compensation (“cash incentive”) previously paid to a Covered Employee to the extent that:

2.1.1.The amount of the cash incentive was based upon the achievement of certain financial results that were subsequently reduced due to a financial restatement (public restatement) or was based upon one or more materially inaccurate performance metrics; or

2.1.2.The Covered Employee engaged in willful misconduct or gross negligence that caused material financial or reputational harm to the Company.

2.2.Other Incentive Compensation. The Committee may (a) claw back all or a portion of any previously vested or paid non-cash Award; or (b) cause a performance adjustment, including the forfeiture or cancellation, of all or a portion of any unpaid or unvested Award, if the Committee, or such other designee as referenced above, determines, in its discretion, that any one of the following “Performance Conditions” has occurred:

2.2.1.The employee engages in: (a) misconduct or commits an error that, in each case, causes material financial or reputational harm to the Company or to the employee’s business group; or (b) for purposes of a cancellation or forfeiture (but not for clawback), any conduct that constitutes Cause;

2.2.2.The amount of the Award was based upon the achievement of certain financial results that were subsequently reduced due to a financial restatement (public restatement) or was based upon one or more materially inaccurate performance metrics; or

2.2.3.In connection with the employee’s job responsibilities, (a) failure through willful misconduct or gross negligence of the employee, including in a supervisory capacity, to identify, escalate, monitor, or manage, in a timely manner risks material to the Company or to the employee’s business group in accordance with Company policies and procedures (as applicable) or (b) the Company or the employee’s business group suffers a material failure of risk management.

The Committee may consider any factors it determines necessary or appropriate in determining whether any of the aforementioned conditions apply and in determining whether a clawback or a performance adjustment, including forfeiture or cancellation, is appropriate and the amount thereof based on the particular facts and circumstances. All determinations by the Committee will be final and binding, subject to the dispute resolution terms of any employment agreement (or in the absence of an employment agreement under applicable law) in the event of a challenge by an affected employee.

Vertex Energy, Inc.

Clawback and Forfeiture Policy

Page 2 of 4

In addition, the Company may dismiss the employee, authorize legal action, or take such other action to enforce the employee’s obligations to the Company as the Company may deem appropriate based on the particular facts and circumstances. The Company in determining the appropriate action, may but shall not be required to take into account penalties or punishments imposed by third parties, such as law enforcement agencies, regulators or other authorities. The Company’s power to determine the appropriate remedial action with respect to the employee is in addition to, and not in replacement of, remedies imposed by such third-party entities.

3.Method of Clawback. The Committee, in its discretion, shall determine whether the Company shall effect a clawback (subject to applicable law) by (a) seeking repayment from the employee, (b) reducing the amount that would otherwise be payable to the employee under any compensation, bonus, incentive, equity or other benefit plan, agreement, policy or arrangement maintained by the Company, (c) canceling any unpaid or unvested Incentive Compensation previously awarded to the employee, (d) withholding compensation including grants of compensatory or equity awards, that otherwise would have been paid or made in accordance with the Company’s compensation practices, commitments, or decisions, or (e) any combination of the foregoing.

4.Delegation of Authority. Any power of the Committee under this Policy may be exercised, except with respect to Executive Officers, by a duly authorized delegate of the Committee.

5.Interpretation.

5.1.The Committee has full authority to make determinations regarding the interpretation of the provisions of this Policy.

5.2.This Policy is applicable to all Incentive Compensation vested, unvested, paid, awarded or granted after the Effective Date.

5.3.In the event of any conflict between the terms of this Policy and the terms of any Company plan, agreement, policy or arrangement under which Incentive Compensation has been granted or awarded, the terms of this Policy shall prevail.

5.4.To the extent Section 409A of the Internal Revenue Code is applicable to any Award, this Policy does not authorize any offset or substitution that would not comply with such Section.

5.5. This Policy shall be interpreted in a manner that is consistent with any applicable rules or regulations adopted by the Securities and Exchange Commission and the Nasdaq Stock Market pursuant to Section 10D of the Securities Exchange Act of 1934 or otherwise (the “Applicable Rules”) and any other applicable law and shall otherwise be interpreted (including in the determination of amounts recoverable) in the business judgment of the Committee. To the extent the Applicable Rules require recovery of incentive-based compensation in additional circumstances besides those specified above, nothing in this Policy shall be deemed to limit or restrict the Company’s right or obligation to recover incentive-based compensation to the fullest extent required by the Applicable Rules. This Policy shall be deemed to be automatically amended, as of the date the Applicable Rules become effective with respect to the Company, to the extent required for this Policy to comply with the Applicable Rules, and any such amendment shall apply to Incentive Compensation granted either before or after that amendment to the extent the Applicable Rules so require.

Vertex Energy, Inc.

Clawback and Forfeiture Policy

Page 3 of 4

6.Amendment or Termination. The Board or the Committee shall have the right to amend or cancel this Policy at any time if it determines in its sole discretion that such action would be in the best interests of the Company or would be required to comply with any applicable law or regulation, including, but not limited to any requirement of The Nasdaq Capital Market, and any such amendment will apply to Incentive Compensation granted on or after the effective date of that amendment. Nothing in this Policy will be deemed to limit or restrict the Company from providing for forfeiture or repayment of compensation (including Incentive Compensation) under circumstances not set forth in this Policy.

7.Limitations. The authority set forth in Section 2 of this Policy shall be limited to the extent that it would violate any applicable statute or government regulation or, unless otherwise required by applicable statute or government regulation, (1) result in substantial adverse tax or accounting consequences for the Company, (2) prejudice the Company’s interests in any related proceeding or investigation, or (3) reasonably result in expenses that exceed the amount that would be forfeited and/or recouped in exercising such authority. In each case, the Committee will determine the extent of such limitation in its sole discretion. Nothing in this Policy will limit in any respect (i) the Company’s right to take or not to take any action with respect to any Covered Employee or any other person’s employment or (ii) the obligation of the Chief Executive Officer or the Chief Financial Officer to reimburse the Company in accordance with Section 304 of the Sarbanes-Oxley Act of 2002, as amended.

8. Acknowledgement by Covered Employees. The Committee or its delegate shall provide notice and seek written acknowledgement of this Policy from each Covered Employee as soon as practicable after the later of (i) the Effective Date and (ii) the date on which the employee is designated as a Covered Employee; provided, however, that failure to obtain such acknowledgement shall have no impact on the enforceability of this Policy.

9. Accountability A Covered Employee subject to clawback shall pay any outstanding amount requested to be repaid under this Policy within 30 days of being notified by the Company and is responsible for promptly, upon request, signing any documents as may be required to effect any of the provisions in this Policy.

10.Severability. If any provision of this Policy or its application to any Covered Employee shall be adjudicated to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Policy, and the invalid, illegal or unenforceable provision shall be deemed amended to the minimum extent necessary to render any such provision or application enforceable.

Vertex Energy, Inc.

Clawback and Forfeiture Policy

Page 4 of 4

XML

Cover	Dec. 09, 2022
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Dec. 09, 2022
Entity File Number	001-11476
Entity Registrant Name	VERTEX ENERGY, INC.
Entity Central Index Key	0000890447
Entity Tax Identification Number	94-3439569
Entity Incorporation, State or Country Code	NV
Entity Address, Address Line One	1331 Gemini Street
Entity Address, Address Line Two	Suite 250
Entity Address, City or Town	Houston
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	77058
City Area Code	(866)
Local Phone Number	660-8156
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock
Trading Symbol	VTNR
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false