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: September 12, 2012

Date of Earliest Event Reported: September 11, 2012

VERTEX ENERGY, INC.

(Exact name of registrant as specified in its charter)

Nevada	000-53619	94-3439569
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)
1331 Gemini Street Suite 250 Houston, Texas 77058
(Address of principal executive offices) (Zip Code)
(866) 660-8156
(Registrant’s telephone number, including area code)

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 (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01.  Entry into a Material Definitive Agreement.

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

Pursuant to the Credit Agreement, the Company can request loans from time to time under the Credit Facility, subject to the terms and conditions of the Credit Agreement, provided that the total amount loaned pursuant to the Credit Facility cannot exceed the lesser of (a) $10,000,000; and (b) an amount equal to the total of (i) 80% of the Company’s accounts in which Lender has a first-priority perfected security interest; (ii) 80% of the Company’s finished-goods inventory in which Lender holds a first-priority perfected security interest, in each case subject to the terms and conditions of the Credit Agreement, plus (iii) $1,500,000 through December 31, 2012, and $0 thereafter.

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

Amounts borrowed under the Term Note bear interest at the option of the Company at the lesser of the Lender’s prime commercial lending rate then in effect or the LIBOR rate in effect plus 2.75%.  Accrued and unpaid interest on the Term Note is due and payable monthly in arrears and all amounts outstanding under the Term Note are due and payable on August 31, 2015.  Additionally, payments of principal in the amount of $141,666.67 are due and payable on the Term Note, monthly in arrears on the last day of each month beginning September 30, 2012, and continuing thereafter until the maturity date.

The Company agreed to use the proceeds from (a) the Credit Facility to consummate the acquisition of the equity interests of Target (defined below in Item 2.01), for working capital and other general corporate purposes, the issuance of letters of credit and to refinance existing debt of the Company, and (b) the Term Note to consummate the acquisition of the equity interests of Target.

The Company agreed to comply with certain standard affirmative and negative covenants in connection with the Credit Agreement and agreed to meet the following financial covenants at such time as any loans or other obligations are outstanding under the Credit Agreement, commencing with the quarter ending September 30, 2012: (1) the ratio of (a) the Company’s EBITDA minus cash taxes, minus distributions, minus unfinanced capital expenditures, in each case for the immediately preceding four fiscal-quarter period, to (b) the sum of the Company’s interest expense for the immediately preceding four fiscal-quarter period plus the Company’s current maturities of long-term debt, in each case, as of the last day of such four fiscal-quarter period, all as determined in accordance with GAAP, may not at any time be less than 1.25 to 1.00 (calculated and tested quarterly); (2) the ratio of total debt funded under the Credit Agreement to the Company’s EBITDA cannot be greater than 2.00 to 1.00 (calculated and tested quarterly); and (3) the sum of the Company’s tangible net worth cannot be less than $10,000,000 as of the last day of each fiscal quarter.

The Credit Agreement includes customary events of default for facilities of similar nature and size as the Credit Agreement and also provides that an event of default occurs if (a) Benjamin P. Cowart, the Company’s Chief Executive Officer, Chairman of the Board and largest shareholder, ceases to be actively involved in the day-to-day management or operation of the Company or if Mr. Cowart ceases to own and control at least 40% of the equity interests of the Company; (b) the Company ceases at any time to own and control 100% of the Transferred Partnerships acquired pursuant to the closing of the transactions contemplated in the Purchase Agreement (as defined and described below under Item 2.01); Vertex II GP, LLC (“Vertex GP”), a newly formed wholly-owned subsidiary of the Company, ceases to be the sole general partner of the Transferred Partnerships; (c) an agreement, letter of intent, or agreement in principle is executed with respect to any proposed transaction or event or series of transactions or events which, individually or in the aggregate, could reasonably be expected to result in either (a) or (b), above; or (d) a default occurs under the lease agreement for certain premises leased by Cedar Marine (as defined below under Item 2.01).

The Company agreed to pay the Lender the following fees in connection with the Credit Agreement: (1) a fee equal to 0.25% of the actual daily amount by which (i) the committed amount of the Credit Facility exceeds (ii) the amount outstanding under the Credit Facility plus the amount of any lines of credit issued by Lender to the Company, so long as the average daily amount drawn on the Credit Facility is less than $5,000,000, for the calendar quarter then-ended, payable quarterly in arrears beginning September 30,2012; (2) a closing fee in connection with the closing of the Credit Facility; and (3) certain fees associated with lines of credit issued by Lender as described in greater detail in the Credit Agreement.

The Company’s obligations under the Credit Agreement and Notes are secured by a first priority security interest in substantially all of the Company’s assets, including those assets and properties acquired in connection with the closing of the transactions contemplated in the Purchase Agreement (described below under Item 2.01), which was granted pursuant to the Company’s and certain of its subsidiaries’ entry into security agreements with the Lender.

Additionally, the Transferred Partnerships, Vertex GP and Target guaranteed the Company’s obligations under the Credit Agreement and Notes pursuant to guarantees entered into in favor of the Lender.

On September 11, 2012, the Company borrowed a total of $8.5 million under the Term Note and $8.75 million under the Revolving Note, the majority of which funds have been used to pay Holdings (as defined below under Item 2.01) the cash portion of the Purchase Price (defined below in Item 2.01) due in connection with the closing of the transactions contemplated in the Purchase Agreement, as described in greater detail in Item 2.01, below, and to pay fees and costs associated with the closing of the Purchase Agreement.

The above description of the Credit Agreement, Notes, Security Agreements and Guarantees is not complete and is qualified in its entirety by the full text of the Credit Agreement, Notes, Security Agreements and Guarantees, copies of which are incorporated by reference hereto as Exhibits 10.1, 10.2, 10.3 and 10.4.

Additionally, as described in greater detail in Item 2.01, below, the Company entered into the First Amendment to Unit Purchase Agreement on September 11, 2012.

Item 2.01 Completion of Acquisition or Disposition of Assets.

As previously reported in its Current Report on Form 8-K, filed with the Securities and Exchange Commission (the “Commission”) on August 15, 2012, on August 14, 2012, the Company entered into a definitive unit purchase agreement (the “Purchase Agreement”) by and among the Company, Vertex Acquisition Sub, LLC, a Nevada limited liability company (“Target”), Vertex Holdings, L.P., a Texas limited partnership (“Holdings”), and B & S Cowart Family L.P., a Texas limited partnership (“B&S LP” and together with Holdings, the “Sellers”).  On September 11, 2012, the Company, Target and the Sellers entered into a First Amendment to Unit Purchase Agreement, which established September 11, 2012 as the closing date, and August 31, 2012 as the effective date of the closing of the transactions contemplated in the Purchase Agreement, and provided for the waiver of certain pre-closing conditions.  The transactions contemplated in the Purchase Agreement closed on September 11, 2012.

Holdings was in the business of transporting, storing, processing and re-refining petroleum products, crudes and used lubricants (the “Business”).  B&S LP owned certain real property that was used by Holdings and its subsidiaries in connection with the Business. Holdings and B&S LP are related parties controlled by Mr. Cowart.  Mr. Cowart directly or indirectly owns a 77% interest in Holdings and a 100% interest in B&S LP.  Additionally, Chris Carlson, the Company’s Chief Financial Officer, owns a 10% interest in Holdings.  

In connection with the closing of the transactions contemplated in the Purchase Agreement, (i) Holdings contributed all of its assets used in connection with the Business, including all of the equity interests in Cedar Marine Terminals, L.P., a Texas limited partnership (“Cedar Marine”), Crossroad Carriers, L.P., a Texas limited partnership (“Crossroad”), Vertex Recovery L.P., a Texas limited partnership (“Recovery”), and H&H Oil, L.P., a Texas limited partnership (“H&H Oil” and together with Cedar Marine, Crossroad and Recovery, the “Transferred Partnerships”), to Target (a special purpose entity formed for purposes of the transactions contemplated in the Purchase Agreement), and (ii) B&S LP contributed certain real property located in Baytown, Texas and Pflugerville, Texas used in connection with the Business to Target, in each case in exchange for the issuance of equity interests in Target.  Pursuant to the Purchase Agreement, each Seller sold its respective equity interests in Target to the Company in exchange for such Seller’s respective portion of the Purchase Price (described in greater detail below).   

Concurrent with the closing of the transactions contemplated in the Purchase Agreement, the Company paid the following purchase price (the “Purchase Price”) for 100% of the equity interests in Target: (i) to Holdings, (a) $14.8 million in cash (less the escrow amount described below) and assumed debt; and (b) 4,545,455 restricted shares of the Company’s common stock; and (ii) to B&S LP, approximately $1.7 million in cash, representing the appraised value of certain owned real property contributed by B&S LP to Target.  The cash portion of the Purchase Price was paid with funds borrowed under the Term Note and Revolving Note.  Additionally, for each of the three one-year periods following the closing date, Holdings will be eligible to receive earn-out payments of up to $2.23 million, up to $6.7 million in the aggregate, contingent on the combined company achieving EBITDA targets of $10.75 million, $12.0 million and $13.5 million, respectively, in those periods.  The Purchase Price is also subject to a post-closing working capital adjustment.  A total of $1.0 million of the cash portion of the Purchase Price will be held in escrow for 18 months from the effective date of the closing to secure the post-closing obligations of the Sellers under the Purchase Agreement.  The Purchase Agreement contains customary representations, warranties, covenants, and indemnity provisions for transactions of similar nature and size.  

Following the closing of the transactions contemplated in the Purchase Agreement, the Company owns 100% of the outstanding equity interests of Target and indirectly owns 100% of the outstanding equity interests of the Transferred Partnerships.

The above description of the Purchase Agreement is not complete and is qualified in its entirety by the full text of the Purchase Agreement, a copy of which is incorporated by reference hereto as Exhibit 2.1 and the First Amendment to the Unit Purchase Agreement, a copy of which is filed herewith as Exhibit 2.2.

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

As described in greater detail in Item 1.01, above, the Company entered into the Credit Agreement with Lender on August 31, 2012, and became obligated under the Notes.

Item 3.02 Unregistered Sales of Equity Securities. 

In connection with the closing of the transactions contemplated in the Purchase Agreement, the Company agreed to issue to the equity owners of Holdings, as a component of the Purchase Price as described in Item 2.01 above, an aggregate of 4,545,455 restricted shares of the Company’s common stock, which included (i) 45,454 shares issued to VTX, Inc., which is beneficially owned by Mr. Cowart; (ii) 3,483,637 shares issued to Mr. Cowart directly; (iii) 454,091 shares issued to Mr. Carlson; (iv) 284,091 shares issued to Gregory Wallace, a significant employee of the Company and (v) 278,182 shares issued to three limited partners of Holdings unaffiliated with the Company.  The shares were offered and sold in reliance upon exemptions from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”). The Company made this determination based on the representations and warranties delivered by each of the equity owners of Holdings, which included, in pertinent part, that each equity owner of Holdings is an “accredited investor” within the meaning of Rule 501 of Regulation D under the Securities Act, that each equity owner of Holdings acquired the shares for his, her or its own account for investment and not for the account of any other person and not with a view to or for distribution or resale in connection with any distribution within the meaning of the Securities Act, and that each equity owner of Holdings has agreed not to sell or otherwise transfer the shares unless they are registered under the Securities Act and any applicable state securities laws, or an exemption or exemptions from such registration are available.

Item 7.01.  Regulation FD Disclosure.

On September 12, 2012, the Company issued a press release announcing the Company’s entry into the Credit Agreement and the closing of the transactions contemplated in the Purchase Agreement. A copy of the press release is attached hereto as Exhibit 99.1.

The information contained in this Item 7.01 and Exhibit 99.1 of this report (i) is not to be considered “filed” under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and (ii) shall not be incorporated by reference into any previous or future filings made by or to be made by the Company with the Commission under the Securities Act.

Item 9.01.   Financial Statements and Exhibits

(a) Financial statements of businesses acquired.

To be filed by amendment.

(b)           Pro forma financial information.

To be filed by amendment.

(d)           Exhibits

Number	Description of Exhibits
2.1(1)	Unit Purchase Agreement by and among Vertex Energy, Inc., Vertex Acquisition Sub, LLC, Vertex Holdings, L.P. and B & S Cowart Family L.P. dated as of August 14, 2012
2.2*	First Amendment to Unit Purchase Agreementby and among Vertex Energy, Inc., Vertex Acquisition Sub, LLC, Vertex Holdings, L.P. and B & S Cowart Family L.P. dated as of September 11, 2012
10.1*	Credit Agreement between Vertex Energy, Inc., a borrower and Bank of America, N.A. as lender, dated August 31, 2012
10.2*	$10,000,000 Revolving Note by Vertex Energy, Inc., in favor of Bank of America, N.A., dated August 31, 2012
10.3*	$8,500,000 Term Note by Vertex Energy, Inc., in favor of Bank of America, N.A., dated August 31, 2012
10.4*	Form of Security Agreement dated August 31, 2012
10.5*	Corporate Guaranty in favor of Bank of America, N.A., dated August 31, 2012
99.1*	Press release, dated September 12, 2012, issued by Vertex Energy, Inc. (furnished pursuant to Item 7.01) announcing the entry into the Credit Agreement and the closing of the Unit Purchase Agreement

(1) Filed as an exhibit to the Company’s Report on Form 8-K, filed with the Commission on August 15, 2012, and incorporated herein by reference.

* Filed herewith.

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: September 12, 2012	By:  /s/  Chris Carlson
	Chris Carlson
	Chief Financial Officer

EXHIBIT INDEX

Number	Description of Exhibits
2.1(1)	Unit Purchase Agreement by and among Vertex Energy, Inc., Vertex Acquisition Sub, LLC, Vertex Holdings, L.P. and B & S Cowart Family L.P. dated as of August 14, 2012
2.2*	First Amendment to Unit Purchase Agreementby and among Vertex Energy, Inc., Vertex Acquisition Sub, LLC, Vertex Holdings, L.P. and B & S Cowart Family L.P. dated as of September 11, 2012
10.1*	Credit Agreement between Vertex Energy, Inc., a borrower and Bank of America, N.A. as lender, dated August 31, 2012
10.2*	$10,000,000 Revolving Note by Vertex Energy, Inc., in favor of Bank of America, N.A., dated August 31, 2012
10.3*	$8,500,000 Term Note by Vertex Energy, Inc., in favor of Bank of America, N.A., dated August 31, 2012
10.4*	Form of Security Agreement dated August 31, 2012
10.5*	Corporate Guaranty in favor of Bank of America, N.A., dated August 31, 2012
99.1*	Press release, dated September 12, 2012, issued by Vertex Energy, Inc. (furnished pursuant to Item 7.01) announcing the entry into the Credit Agreement and the closing of the Unit Purchase Agreement

(1)  Filed as an exhibit to the Company’s Report on Form 8-K, filed with the Commission on August 15, 2012, and incorporated herein by reference.

* Filed herewith.

EX-2.2

Exhibit 2.2

FIRST AMENDMENT TO

UNIT PURCHASE AGREEMENT

This FIRST AMENDMENT TO UNIT PURCHASE AGREEMENT (this “Amendment”) dated September 11, 2012 (the “Effective Date”), is entered into by and among Vertex Energy, Inc., a Nevada corporation (“Buyer”), Vertex Acquisition Sub, LLC, a Nevada limited liability company (“Target”), Vertex Holdings, L.P., a Texas limited partnership (“Holdings”), and B & S Cowart Family L.P., a Texas limited partnership (“B&S LP” and together with Holdings, the “Sellers”).  Target and the Sellers are sometimes referred to herein collectively as the “Seller Parties.”

WHEREAS, pursuant to that certain Unit Purchase Agreement dated as of August 14, 2012, by and among Buyer and the Seller Parties (as the same may be, from time to time, amended, the “Purchase Agreement”), Buyer agreed to purchase all of the issued and outstanding units representing membership interests (the “Units”) of Target from the Sellers, and the Sellers agreed to sell such Units to Buyer;

WHEREAS, the Purchase Agreement contemplates pursuant to Section 12.07 thereof that it may be amended by the written agreement of the Parties;

WHEREAS, the Parties desire to amend certain provisions of the Purchase Agreement; and

WHEREAS, capitalized terms used in this Amendment but not specifically defined herein shall have the respective meanings given to them in the Purchase Agreement.

NOW, THEREFORE, in consideration of the premises, representations and warranties and mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are herein acknowledged, the Parties agree as follows:

ARTICLE 1

MODIFICATION OF PURCHASE AGREEMENT

1.01           Closing Date.  The Closing shall occur on September 11, 2012, effective on and as of the close of business, Houston, Texas time, August 31, 2012.

1.02           Offers of Employment.  Buyer hereby waives the closing condition contained in Section 2.01(e)(xxi) of the Purchase Agreement to the extent such condition requires that the Seller Parties deliver to Buyer the Employee Confidentiality and Proprietary Rights Agreements, duly executed by each of the Continuing Employees.  Nothing herein shall be construed to diminish or negate the closing condition contained in Section 2.01(e)(xxi) of the Purchase Agreement with respect to the Retained Employees.  This waiver shall not constitute a waiver of any other rights Buyer may have pursuant to the Purchase Agreement.  Promptly following the Closing, the Sellers shall deliver to Buyer the Employee Confidentiality and Proprietary Rights Agreements, duly executed by each of the Continuing Employees.

ARTICLE 2

Miscellaneous

2.01           Continuing Force and Effect.  Except as amended hereby, the Purchase Agreement shall remain unmodified and in full force and effect.  The Parties hereby ratify and confirm the Purchase Agreement, as amended hereby.  Each reference in the Purchase Agreement shall, unless the context otherwise requires, mean the Purchase Agreement as amended by this Amendment.

2.02           Reaffirm Existing Representations and Warranties. Each representation and warranty of the Parties contained in the Purchase Agreement is true and correct on the Effective Date and will be true and correct after giving effect to the amendments set forth in Article 1 hereof, except to the extent such representations and warranties are expressly limited to an earlier date, in which case such representations and warranties shall be true and correct as of such specified earlier date.

2.03           Counterparts.  This Amendment may be executed in multiple counterparts (including by means of telecopied signature pages), any one of which need not contain the signatures of more than one party, but all such counterparts taken together shall constitute one and the same instrument.

2.04           Governing Law.  All matters relating to the interpretation, construction, validity and enforcement of this Amendment shall be governed by and construed in accordance with the domestic Laws of the State of Texas without giving effect to any choice or conflict of law provision or rule (whether of the State of Texas or any other jurisdiction) that would cause the application of Laws of any jurisdiction other than the State of Texas.

[Signature page follows.]

IN WITNESS WHEREOF, the Parties have executed this Amendment as of the Effective Date.

 

EX-10.1

Exhibit 10.1

CREDIT AGREEMENT

between

VERTEX ENERGY, INC.,

as Borrower

and

BANK OF AMERICA, N.A.,

Lender

As of August 31, 2012

TABLE OF CONTENTS

TABLE OF CONTENTS
		Page
SECTION 1	DEFINITIONS AND TERMS	1
1.1	Definitions	1
1.2	Interpretive Provisions	17
1.3	Accounting Terms	17
1.4	References to Documents	18
1.5	Time	18
SECTION 2	LOAN COMMITMENTS.	18
2.1	Revolving Credit Facility	18
2.2	Term Loan	18
2.3	Loan Procedure	18
2.4	Prepayments	19
2.5	LC Facility	20
SECTION 3	TERMS OF PAYMENT.	23
3.1	Notes and Payments	23
3.2	Revolving Credit Facility	23
3.3	Term Loan	23
3.4	Order of Application	24
3.5	Interest	24
3.6	Interest Calculations	24
3.7	Maximum Rate	24
3.8	Set off	25
3.9	Debit Account	25
3.10	Interest Periods, Conversions, and Continuations	25
3.11	Limitation on Types of Loans.	26
3.12	Increased Cost and Reduced Return.	26
3.13	Illegality.	27
3.14	Treatment of Affected Loans.	27
3.15	Funding Loss.	28
SECTION 4	FEES.	28
4.1	Treatment of Fees	28
4.2	Unused Commitment Fee	28
4.3	Closing Fee	28
4.4	LC Fees.	28
SECTION 5	CONDITIONS PRECEDENT.	29
5.1	Conditions to Initial Credit Extension	29
5.2	Conditions to all Credit Extensions	29
5.3	Conditions to all LIBOR Loans.	29
5.4	Post-Closing	29
5.5	No Waiver	29

SECTION 6	SECURITY AND GUARANTIES.	29
6.1	Collateral	29
6.2	Financing Statements	30
6.3	Guaranties	30
6.4	Reserves	30
SECTION 7	REPRESENTATIONS AND WARRANTIES.	30
7.1	Existence, Good Standing, and Authority to do Business	30
7.2	Subsidiaries	30
7.3	Authorization, Compliance, and No Default	30
7.4	Enforceability	30
7.5	Litigation	30
7.6	Taxes	30
7.7	Environmental Matters	31
7.8	Ownership of Assets; Intellectual Property	31
7.9	Liens	31
7.10	Debt	31
7.11	Insurance	31
7.12	Place of Business; Real Property	31
7.13	Purpose of Credit Facilities	31
7.14	Trade Names	31
7.15	Transactions with Affiliates	31
7.16	Financial Information	32
7.17	Material Agreements and Funded Debt	32
7.18	ERISA.	32
7.19	Tax Shelter Regulations	32
SECTION 8	AFFIRMATIVE COVENANTS.	32
8.1	Items to be Furnished	32
8.2	Books, Records and Inspections	34
8.3	Taxes	34
8.4	Compliance with Laws	34
8.5	Maintenance of Existence, Assets, and Business	34
8.6	Insurance	34
8.7	Environmental Laws	35
8.8	ERISA	35
8.9	Use of Proceeds	35
8.10	Application of Insurance and Eminent Domain Proceeds	35
8.11	New Subsidiaries	35
8.12	Expenses	35
8.13	Primary Depositary Institution	36
8.14	Further Assurances	36
SECTION 9	NEGATIVE COVENANTS.	36
9.1	Debt	36
9.2	Liens	36
9.3	Compliance	36
9.4	Loans and Investments	36
9.5	Dividends	36
9.6	Acquisition, Mergers, and Dissolutions	37
9.7	Assignment	37
9.8	Fiscal Year and Accounting Methods	37

9.9	Sale of Assets	37
9.10	New Businesses	37
9.11	Transactions with Affiliates	37
9.12	Payroll Taxes	37
9.13	Prepayment of Debt	38
9.14	Purchase Agreement	38
SECTION 10	FINANCIAL COVENANTS.	38
10.1	Fixed Charge Coverage Ratio	38
10.2	Senior Funded Debt to EBITDA Ratio	38
10.3	Minimum Tangible Net Worth	38
SECTION 11	DEFAULT.	38
11.1	Payment of Obligation	38
11.2	Covenants	38
11.3	Debtor Relief	38
11.4	Judgments	39
11.5	False Information; Misrepresentation	39
11.6	Default Under Other Agreements	39
11.7	Validity and Enforceability of Loan Documents	39
11.8	Swap Agreement	39
11.9	Change of Management or Control	39
11.10	Material Adverse Event	39
11.11	LCs	39
11.12	Default under the CMT Lease	40
SECTION 12	RIGHTS AND REMEDIES.	40
12.1	Remedies Upon Default	40
12.2	Waivers	40
12.3	No Waiver	40
12.4	Performance by Lender	40
12.5	Cash Collateral	40
12.6	Cumulative Rights	40
SECTION 13	MISCELLANEOUS.	41
13.1	Governing Law	41
13.2	Invalid Provisions	41
13.3	Multiple Counterparts and Electronic Signatures	41
13.4	Notice	41
13.5	Binding Effect; Survival	41
13.6	Amendments	41
13.7	Participants	41
13.8	Discharge Only Upon Payment in Full; Reinstatement in Certain Circumstances	42
13.9	Arbitration; Waiver of Jury Trial	42
13.10	INDEMNITY	43
13.11	USA Patriot Act Notice	44
13.12	Entirety	44

SCHEDULES AND EXHIBITS

SCHEDULE 1	Parties, Addresses, and Wiring Information
SCHEDULE 2	Existing Debt and Liens
SCHEDULE 5	Conditions Precedent
SCHEDULE 7.2	Subsidiaries
SCHEDULE 7.5	Litigation
SCHEDULE 7.7	Environmental
SCHEDULE 7.12	Place of Business
SCHEDULE 7.14	Trade Names
SCHEDULE 7.15	Transactions with Affiliates
SCHEDULE 7.17	Material Agreements
EXHIBIT A-1	Revolving Note
EXHIBIT A-2	Term Note
EXHIBIT B	Loan Request
EXHIBIT C	Borrowing Base Certificate
EXHIBIT D	Compliance Certificate
EXHIBIT E	Security Agreement
EXHIBIT F	Corporate Guaranty
EXHIBIT G	Conversion/Continuation Request

CREDIT AGREEMENT

THIS CREDIT AGREEMENT is entered into as of August 31, 2012, between VERTEX ENERGY, INC., a Nevada corporation (“Borrower”), and BANK OF AMERICA, N.A.  (“Lender”).

RECITALS

A.          Borrower has requested that Lender extend credit to Borrower in the maximum principal amount of $10,000,000 in the form of a revolving credit facility.

B.           Borrower has requested that Lender make a loan to Borrower in the original principal amount of $8,500,000 in the form of a single advance term loan to be made on the Closing Date.

C.           Lender is willing to extend the requested credit on the terms and conditions of this Agreement.

Accordingly, Borrower and Lender agree as follow:

SECTION 1DEFINITIONS AND TERMS.

1.1           Definitions.  As used in the Loan Documents:

Acquisition means the acquisition by Borrower of all of the issued and outstanding Equity Interests of Target from Holdings and of certain real property from B&S LP, pursuant to the terms of the Purchase Agreement.

Affiliate means as to any Person, any other Person that directly or indirectly controls, or is controlled by, or is under common control with, that Person.  For purposes of this definition (a) “control,” “controlled by,” and “under common control with” mean possession, directly or indirectly, of power to direct (or cause the direction of) management or policies of a Person, whether through ownership of voting interests or other ownership interests, by contract, or otherwise, and (b) the term “Affiliate” includes each officer and director of any Company, and each of the following as “Affiliates” of the others:  (i) each Guarantor; (ii) Borrower, and (ii) each Company.

Agreement means this Credit Agreement, and all exhibits and schedules to this Agreement, in each case as amended, supplemented, or restated from time to time.

Applicable Margin means, when determined, (a) for LIBOR Loans, 2.75%, and (b) for Base Rate Loans, 0.00%.

Auto-Renewal LC is defined in Section 2.5(a)(iv).

B&S LP means B&S Cowart Family, L.P., a Texas limited partnership.

Bank of America means Bank of America, N.A., and its successors.

Bank Product Provider means Lender or any Affiliate of Lender.

Bank Products means any one or more of the following types or services or facilities provided to Borrower by a Bank Product Provider:  (a) credit cards and stored value cards, (b) Cash Management Agreements and similar or related services, including (i) the automated clearinghouse transfer of funds for the account of Borrower pursuant to agreement or overdraft for any accounts of Borrower maintained with Lender or any Bank Product Provider and (ii) controlled disbursement services, and (c) Swap Contracts if and to the extent permitted hereunder.  Any of the foregoing shall only be included in the definition of the term “Bank Products” to the extent that the Bank Product Provider has been approved by Lender in writing.

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Base Rate means, for any day, a fluctuating rate per annum equal to Prime Rate.

Base Rate Loan means a Loan bearing interest based on the Base Rate.

BBA LIBOR means the British Bankers Association LIBOR Rate.

Borrowing Base means, when determined, an amount equal to the total of (a) 80% of Eligible Accounts, plus (b) 80% of Eligible Inventory, minus (c) any Reserves established by Lender and in effect at such time, in each case as shown on the most recent Borrowing Base Certificate.  Inventory will be valued at the lower of average cost or market as set out in the Current Financials.

Borrowing Base Certificate means a certificate substantially in the form of Exhibit C which is signed by a Responsible Officer.

Business Day means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state where Lender’s Office is located and, if such day relates to any LIBOR Loan, means any such day on which dealings in Dollar deposits are conducted by and between banks in the London interbank eurodollar market.

Capital Expenditures means, for any period and without duplication, (a) the gross amount of expenditures for fixed or capital assets determined in accordance with GAAP (excluding any such assets acquired in connection with normal replacement and maintenance programs properly expensed in accordance with GAAP), plus (b) to the extent not included in clause (a), the aggregate principal portion of all payments under any capital lease required to be capitalized in accordance with GAAP (excluding the portion thereof allocable to interest expense).

Cash Collateralize means to pledge and deposit with or deliver to Lender, as collateral for the LC Exposure, cash or deposit account balances pursuant to documentation in Proper Form.

Cash Management Agreement means one or more treasury management, cash management, or lockbox agreements (or a combination of such agreements) entered into by one or more of the Companies and Lender under which amounts paid to Borrower are automatically deposited into Borrower’s accounts with Lender and such accounts are swept or debited via ACH transactions and amounts are automatically invested overnight or are repaid under the Revolving Credit Facility, as such agreements may be amended or replaced from time to time.

Change of Control means (a) Benjamin P. Cowart ceases to own and control at least 40% of the Equity Interests of Borrower, (b) following the Acquisition, Borrower at any time ceases to own and control 100% of the Equity Interests of Target or Vertex-GP, (c) following the Acquisition, Target at any time ceases to own 100% of the Equity Interests of CMT, Crossroad Carriers, Vertex Recovery, or H&H or (d) following the Acquisition, Vertex-GP ceases to be the sole general partner of CMT, Crossroad Carriers, Vertex Recovery, or H&H.

Change of Management means Benjamin P. Cowart ceases to be actively involved in the day-to-day management or operation of Borrower and its Subsidiaries.

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Closing Date means September 11, 2012.

CMT means Cedar Marine Terminals, L.P., a Texas limited partnership.

CMT Lease means that certain Lease Agreement dated as of July 25, 1997, between CP Terminal, LLC, as landlord, and TRW Trading, Inc., as tenant, to which CMT has succeeded as tenant, and as renewed, extended, modified, or supplemented from time to time.

Collateral is defined in Section 6.1.

Commitment means Lender’s obligation and commitment to make (a) Loans and LC Credit Extensions under the Revolving Credit Facility up to the Revolving Committed Amount, and (b) the Term Loan in a single advance in the Term Loan Committed Amount.

Company or Companies means, at any time, Borrower and each of Borrower’s Subsidiaries.

Compliance Certificate means a certificate substantially in the form of Exhibit D signed by a Responsible Officer.

Continue, Continuation, and Continued shall refer to the continuation of a LIBOR Loan from one Interest Period to the next Interest Period as provided in Section 3.10.

Convert, Conversion, and Converted shall refer to a conversion of one Type of Loan into another Type of Loan as provided in Section 3.10.

Conversion/Continuation Notice means a notice substantially in the form of Exhibit G.

Credit Extension means a Loan or an LC Credit Extension.

Crossroad Carriers means Crossroad Carriers, L.P., a Texas limited partnership.

Current Financials means, when determined, the consolidated financial statements of Borrower and the other Companies most recently delivered to Lender pursuant to Section 8.1.

Debt means (without duplication), for any Person, (a) all obligations required by GAAP to be classified upon such Person’s balance sheet as liabilities, (b) liabilities to the extent secured (or for which and to the extent the holder of the Debt has an existing right, contingent or otherwise, to be so secured) by any Lien existing on property owned or acquired by that Person, (c) capital leases and other obligations that have been (or under GAAP should be) capitalized for financial reporting purposes, (d) all guaranties, endorsements, letters of credit, and other contingent liabilities with respect to Debt or obligations of others, and (e) the net obligation of such Person under any Swap Contract (which, on any date, shall be deemed to be the Swap Termination Value as of such date).  For purposes hereof, the Debt of any Person shall include the Debt of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, unless such Debt is expressly made non-recourse to such Person.

Debtor Relief Laws means Title 11 of the United States Code and all other applicable liquidation, conservatorship, bankruptcy, fraudulent transfer, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, suspension of payments, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

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Deed of Trust means (a) that certain Deed of Trust, Assignment of Leases and Rents, Security Agreement and UCC Financing Statement for Fixture Filing dated as of the date hereof, executed byBorrower, as grantor, to PRLAP, Inc., as trustee, for the benefit of Lender, with respect to the Harris County Property, (b) that that certain Deed of Trust, Assignment of Leases and Rents, Security Agreement and UCC Financing Statement for Fixture Filing dated as of the date hereof, executed by Borrower, as grantor, to PRLAP, Inc., as trustee, for the benefit of Lender, with respect to the Nueces County Property, (c) that certain Deed of Trust, Assignment of Leases and Rents, Security Agreement and UCC Financing Statement for Fixture Filing dated as of the date hereof, executed byBorrower, as grantor, to PRLAP, Inc., as trustee, for the benefit of Lender, with respect to the Travis County Property, (d) that certain Leasehold Deed of Trust, Assignment of Leases and Rents, Security Agreement and UCC Financing Statement for Fixture Filing dated as of the date hereof, executed byCMT, as grantor, to PRLAP, Inc., as trustee, for the benefit of Lender, with respect to the Leasehold Property, and (e) each other deed of trust in form and substance reasonably acceptable to Lender, and executed by any Company, as grantor, in favor of PRLAP, Inc., as trustee, for the benefit of Lender, to secure the Obligation.

Default is defined in Section 11.

Default Rate means, from day to day, an annual rate of interest equal to the lesser of (a) the Base Rate plus 4%, and (b) the Maximum Rate.

Disposition means the sale, lease, transfer, conveyance, assignment, license, or other disposition (including any sale and leaseback transaction) of any asset by any Person, including any sale, assignment, transfer, conveyance, or other disposition, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.

Dollar, Dollars or $ mean lawful money of the U.S.

EBITDA means, when determined for the applicable period, consolidated net income of the Companies plus income taxes (to the extent deducted from net income), plus interest expense, plus depreciation and amortization expense, plus other non-cash charges, or minus other non-cash gains, plus,to the extent approved by Lender,transaction costs and expenses incurred by Borrower in connection with the Purchase Agreement and the consummation of the Acquisition.  The EBITDA amount of Holdings and its Subsidiaries for periods prior to the Acquisition will be added to the trailing twelve months calculation of EBITDA of the Companies, subject to Lender’s approval of such EBITDA amount.

Eligible Accounts means an account or account receivable of any Company in which Lender holds a first-priority perfected security interest and which satisfies all of the following requirements:

(a)	it has not been outstanding more than 90 days after the relevant invoice date;
(b)	it has not been outstanding more than 60days after the date it became due and payable;
(c)	it arises from the sale or lease of goods or from services rendered, such goods have been shipped or delivered to the account debtor under such account or such services have been fully performed and have been accepted by the account debtor, and such Company’s full right to payment for all sums due from such account debtor with respect to such account shall have been earned and then be due and payable;

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(d)	it is a valid and legally enforceable obligation of the account debtor thereunder according to its express terms, and is not subject to any offset, counterclaim, crossclaim, or other defense on the part of such account debtor denying liability thereunder in whole or in part;
(e)	it is not subject to any mortgage, lien, security interest, right of a surety under a performance bond or otherwise or similar adverse rights or interests whatsoever other than the security interests granted to Lender under the Loan Documents;
(f)	it is evidenced by an invoice dated the date of shipment (in the case of goods sold or leased) or the date of performance (in the case of services rendered) and having payment terms acceptable to Lender, and is not evidenced by an instrument, note, draft, title retention and lien instrument, security agreement, acceptance, conditional sales contract, chattel mortgage or chattel paper and, if requested by Lender, a copy of such invoice shall have been delivered to and received by Lender;
(g)	it is not owed by an account debtor which is an Affiliate of any Company;
(h)	it does not constitute, require or provide for progress billings, retainages or deferred payments under a contract not fully performed;
(i)	it does not constitute, in whole or in part, interest or finance charges on outstanding balances, any amount received as a down payment or prepayment or other principal reduction or similar payment, any chargebacks or contra amounts or accounts;
(j)	it is an account with respect to which no return, repossession, rejection, cancellation, or repudiation shall have occurred or have been threatened;
(k)	it is an account with respect to which such Company continues to be in full conformity with the representations, warranties and covenants of such Company made with respect thereto;
(l)	it is not subject to any sales terms, trial terms, sales-or-return terms, consignment terms, guaranteed sales or performance terms, minimum sales terms, C.O.D. terms, cash terms, or similar terms or conditions;
(m)	it is not owed by an account debtor which is a Foreign Person;
(n)	it is not an account subject, in whole or in part, to any “bill and hold” or similar arrangement pursuant to which the invoice is delivered prior to the actual delivery of the sold or leased goods or the performance of the services;
(o)	it is not an account owed by the United States Government or any other Governmental Authority unless such account arises from a government contract that is a United States Government contract in Proper Form and such Company and Lender have completed and executed all forms and documents necessary to assign  such Company’s right, title and interest in such contract and all accounts and other rights arising thereunder to Lender in compliance with the Federal Assignment of Claims Act of 1940, as amended;
(p)	it is not owed by an account debtor with respect to which thirty percent (30%)or more of such account debtor’s total accounts owing to the Companies would not be deemed to be Eligible Accounts under clause (a) or (b) above;

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(q)	it is not owed by an account debtor whose aggregate account balance with such Company exceeds twenty-five percent (25%) of the total value of such Company’s total Accounts, provided that, such accounts shall be excluded from the definition of Eligible Account only to the extent to which such accounts exceed twenty-five percent (25%)of the accounts of such Company; and
(r)	it is not owed by an account debtor which is subject to any Debtor Relief Law or whose obligations with respect to which Lender, acting in its discretion, shall have notified the applicable Company in writing are not deemed to constitute an Eligible Account;

The amount of Eligible Accounts owed by an account debtor to such Company shall be reduced by the amount of all “contra accounts” and other obligations owed by any Company to such account debtor.  Accounts which are at any time Eligible Accounts, but which subsequently fail to meet any of the foregoing requirements shall, at such time, cease to be Eligible Accounts. Borrower and Lender acknowledge and agree that (i) at the time any account becomes subject to a security interest in favor of Lender, said account shall be a good and valid account representing an undisputed, bona fide Debt incurred by the account debtor named therein, for merchandise held subject to delivery instructions or theretofore shipped or delivered pursuant to a contract of sale, or for services theretofore performed by such Company with or for said account debtor, (ii) there shall be no set-offs, counterclaims, or disputes against any such account except as indicated in some written list, statement or invoice furnished to Lender with reference thereto, (iii) one or more of the Companies shall be the lawful owner of all such accounts and shall have good right to subject the same to a security interest in favor of Lender, and (iv) no such account shall be sold, assigned, or transferred to any Person other than Lender or in any way encumbered except to Lender, and such Company shall defend the same against the lawful claims and demands of all persons other than Lender.  If any account shall be in violation of (A) the immediately preceding sentence or (B) any of the requirements to be an Eligible Account, it shall not be deemed an Eligible Account for purposes of this Agreement.

Eligible Inventory means any Company’s finished-goods inventory in which Lender holds a first-priority perfected security interest and which satisfies all of the following requirements:

(a)           it is not private label or styled type or otherwise subject to special marketing conditions or marketability limitations judged by Lender, in its sole discretion, to be unacceptable;

(b)           it is not parts, supplies, raw materials, nor work in process, nor does it include any shipping or packaging materials;

(c)           it is not materials or supplies used or to be used, or consumed or to be consumed, in the normal course of business of such Company;

(d)           it is new and unused;

(e)           it is owned by such Company and is not subject to any Lien or security interest whatsoever other than the Liens or security interests granted to Lender under the Loan Documents or a Lien or security interest which has been subordinated to Liens or security interests granted under the Loan Documents, on terms acceptable to Lender;

(f)           it is held for sale in the normal and ordinary course of such Company’s business;

(g)          it is located at one of such Company’s places of business as set forth on Schedule 7.12;

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(h)          it is not located on any leased premises unless Lender has a signed landlord waiver or landlord subordination agreement from the relevant landlord in Proper Form;

(i)           it is not of a type of inventory that is subject to any recall, class action litigation, governmental action, order, inquiry or investigation;

(j)           it is not on consignment, has not been shipped on a sale or return basis, and no warehouse receipt or document of title is or shall have been issued in respect of such inventory;

(k)          it is not inventory that Lender, in its reasonable discretion, has determined to be unmarketable or unacceptable; and

(l)           it is not an item, type, or class of inventory which is Slow Moving.

The value of all Eligible Inventory shall be determined on the basis of any and all factors and criteria as Lender (in its sole discretion) shall deem appropriate, including, without limitation, that unless Lender shall determine that some other basis is more appropriate, such value shall be determined on the basis of the lower of cost, book or market value, net of all handling charges, taxes, assessments, insurance, warranty, interest, finance and other charges.

Eminent Domain Event means any Governmental Authority or any Person acting under a Governmental Authority institutes proceedings to condemn, seize or appropriate all or part of any asset of a Company.

Eminent Domain Proceeds means all amounts received by any Company as a result of any Eminent Domain Event.

Employee Plan means a pension, profit-sharing, or stock bonus plan intended to qualify under Section 401(a) of the Tax Code, maintained or contributed to by the Borrower or any ERISA Affiliate, including any multiemployer plan within the meaning of Section 4001(a)(3) of ERISA.

Environmental Law means any Law that relates to the pollution or protection of the environment, the release of any materials into the environment, including those related to Hazardous Substances, air emissions and discharges to waste or public systems, or to health and safety.

Equity Interests means, with respect to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests), and all of the other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination.

ERISA means the Employee Retirement Income Security Act of 1974, as amended, and its related rules, regulations, and published interpretations.

ERISA Affiliate means any trade or business (whether or not incorporated) under common control with the Borrower within the meaning of Section 414(b) or (c) of the Tax Code (including any multiemployer plan within the meaning of Section 4001(a)(3) of ERISA).

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Fee Letter means that certain fee letter dated as of the date hereof between Borrower and Lender, as amended, restated, or supplemented from time to time.

Fixed Charge Coverage Ratio means, when determined, the ratio of (a) EBITDA minus cash Taxes, minus distributions,minus unfinanced Capital Expenditures, in each case for the immediately preceding four fiscal-quarter period, to (b) the sum ofthe Companies’ interest expense for the immediately preceding four fiscal-quarter period plus the Companies’ current maturities of long-term Debt (including, but not limited to, any Subordinated Debt and capital leases), in each case, as of the last day of such four fiscal-quarter period, all as determined in accordance with GAAP.

Foreign Person means (a) a natural person who does not reside in the U.S., or (b) any Person (other than a natural person) that is not organized and validly existing under the laws of the U.S. or a state within the U.S.

Funded Debt means, when determined, (a) all Debt of the Companies for borrowed money (whether as a direct obligor on a promissory note, a reimbursement obligor on a letter of credit, a guarantor, or otherwise), and (b) all capital lease obligations of the Companies.

Funding Loss means, without duplication, all losses, costs, and expenses incurred by Lender (including liquidation, administrative, or reemployment costs), incurred as a result of:

(a)      any payment, prepayment, or Conversion of a LIBOR Loan for any reason (including the acceleration of the Loans pursuant to Section 12); or

(b)      any failure by Borrower for any reason (including the failure of any condition precedent specified in Section 5 to be satisfied) to borrow, Convert, Continue, or prepay a LIBOR Loan on the Conversion date, Continuation date, or prepayment date specified in the relevant Loan Request, Conversion/Continuation Notice, or prepayment notice under this Agreement.

A Funding Loss shall be calculated as though Lender funded the principal amount requested or prepaid through the purchase of dollar deposits in the London, England interbank market having a maturity corresponding to such Interest Period and bearing an interest rate equal to LIBOR for such Interest Period.

GAAP means generally accepted accounting principles in the U.S. set out in the opinions and pronouncements of the of the Accounting Principles Board of the American Institute of Certified Public Accountants and the Financial Accounting Standards Board as in effect from time to time.

Governmental Authority means any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality, regulatory body, court, administrative tribunal, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of, or pertaining to, government.

Guarantor means each of, and Guarantors means all of (a) Target, (b) Vertex-GP, (c) CMT, (d) Crossroad Carriers, (e) Vertex Recovery, (f) H&H Oil, (g) each other Subsidiary of Borrower, and (h) each other Person executing a Guaranty.

Guaranty means a guaranty substantially in the form of Exhibit F.

H&H Oil means H & H Oil, L.P., a Texas limited partnership.

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Harris County Property means that certain real property owned by Borrower and having an address commonly known as 7311 Decker Drive, Baytown, Harris County, Texas  77520.

Hazardous Substance means (a) any explosive or radioactive substance or waste, all hazardous or toxic substances, waste, or other pollutants, and any other substance the presence of which requires removal, remediation or investigation under any applicable Environmental Law, (b) any substance that is defined or classified as a hazardous waste, hazardous material, pollutant, contaminant, or toxic or hazardous substance under any applicable Environmental Law, or (c) petroleum, petroleum distillates, petroleum products, oil, polychlorinated biphenyls, radon gas, infectious medical wastes, and asbestos or asbestos-containing materials.

Holdings means Vertex Holdings, L.P., a Texas limited partnership.

Honor Date is defined in Section 2.5(b).

Insurance Proceeds means all cash and non-cash proceeds in respect of any insurance policy maintained by any Company under the terms of this Agreement, excluding (a) any key man life insurance, and (b) provided no Potential Default or Default then exists or would result therefrom, any business interruption insurance proceeds.

Interest Period means as to each LIBOR Loan, the period commencing on the date such LIBOR Loan is disbursed or Converted to, or Continued as, a LIBOR Loan and ending on the dateone monththereafter, provided that:

(i)           any Interest Period that would otherwise end of a day that is not Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day;

(ii)           any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and

(iii)           no Interest Period under the Revolving Credit Facility shall extend beyond the Revolving Credit Termination Date, and no Interest Period under the Term Loan shall extend beyond the Term Loan Maturity Date.

Laws means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority (whether or not such orders, requests, licenses, authorizations, permits or agreements have the force of law).

Leasehold Property means that certain real property leased by CMT pursuant to the CMT Lease and having an address commonly known as 200 Atlantic Pipeline Road, Baytown, Chambers County, Texas  77520.

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LC means each documentary, standby, or direct pay letter of credit issued by Lender for the account of any Company on or after the Closing Date under the terms of this Agreement and the applicable LC Application.

LC Application means an application and agreement for the issuance or amendment of an LC in the form from time to time in use by Lender.

LC Borrowing means an LC Credit Extension resulting from a drawing under any LC which has not been reimbursed or refinanced as a Loan under the Revolving Credit Facility.

LC Credit Extension means, with respect to any LC, the issuance, extension of the expiry date, amendment, renewal, or increase of the amount of such LC.

LC Credit Extension Date means the date on which an LC Credit Extension occurs.

LC Exposure means, when determined and without duplication, the sum of (a) the aggregate undrawn maximum face amount of each LC at such time, plus (b) the aggregate unpaid obligations of the Companies to reimburse Lender for amounts paid by Lender under LCs (including all LC Borrowings and excluding any Loans to fund such reimbursement obligations under Section 2.5).

LC Facility means a subfacility for the issuance of LCs, as described in Section 2.5.

LC Sublimit means $1,000,000.

LC Termination Date means the date that is 180 days beyond the Revolving Credit Termination Date.

Lender’s Office means Lender’s address, and, as appropriate, account as set out on Schedule 1, or such other address or account of which Lender may from time to time notify Borrower in writing.

LIBOR means, for any Interest Period with respect to a LIBOR Loan, a rate per annum determined by Lender pursuant to the following formula:

LIBOR = LIBOR Base Rate 1.00 – LIBOR Reserve Percentage

Where,

“LIBOR Base Rate” means, for such Interest Period, the rate per annum equal to BBA LIBOR, as published by Reuters (or other commercially available source providing quotations of BBA LIBOR as selected by Lender from time to time) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, for U.S. Dollar deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period.  If such rate is not available at such time for any reason, then the “LIBOR Base Rate” for such Interest Period shall be the rate per annum determined by Lender to be the rate at which deposits in U.S. Dollars for delivery on the first day of such Interest Period in same day funds in the approximate amount of the LIBOR Loan being made, Continued or Converted by Lender and with a term equivalent to such Interest Period would be offered by Lender’s London Branch to major banks in the London interbank eurodollar market at their request at approximately 11:00 a.m. (London time) two Business Days prior to the commencement of such Interest Period.

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LIBOR Reserve Percentage means, for any day during any Interest Period, the reserve percentage (expressed as a decimal, carried out to five decimal places) in effect on such day, whether or not applicable to Lender, under regulations issued from time to time by the Board of Governors of the Federal Reserve System of the United States for determining the maximum reserve requirement (including any emergency, supplemental or other marginal reserve requirement) with respect to LIBOR funding (currently referred to as “Eurocurrency liabilities”).  LIBOR for each outstanding LIBOR Loan shall be adjusted automatically as of the effective date of any change in the LIBOR Reserve Percentage.

LIBOR Loan means a Loan that bears interest at a rate based on LIBOR.

Lien means any lien (statutory or other), mortgage, security interest, financing statement, collateral assignment, pledge, assignment, charge, hypothecation, deposit arrangement, or preference, priority or other security interest or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement, and any financing lease having substantially the same economic effect as any of the foregoing), or encumbrance of any kind, and any other right of or arrangement with any creditor (whether based on common law, constitutional provision, statute or contract) to have its claim satisfied out of any property or assets, or their proceeds, before the claims of the general creditors of the owner of the property or assets.

Litigation means any action by or before any Governmental Authority, arbitrator, or arbitration panel.

Loan means any amount disbursed by Lender to, or on behalf of, any Company under the Loan Documents, whether such amount constitutes an original disbursement of funds or the financing of an LC reimbursement obligation, or a disbursement in in accordance with, and to satisfy the obligations of any Company under, any Loan Document.

Loan Documents means (a) this Agreement, certificates and requests delivered under this Agreement, and exhibits and schedules to this Agreement, (b) the Notes, (c) all Guaranties, (d) the Security Documents, (e) all Bank Products (including all Swap Contracts and all Cash Management Agreements), (f) all LCs and LC Applications, (g) any Subordination Agreement, (h) all other agreements, documents, and instruments in favor of Lender ever delivered in connection with or under this Agreement, and (i) all renewals, extensions, amendments, modifications, supplements, restatements, and replacements of, or substitutions for, any of the foregoing.

Loan Request means a request substantially in the form of Exhibit B.

Material Adverse Event means any circumstance or event that, individually or collectively with other circumstances or events, could reasonably be expected to result in (a) impairment of the ability of any Company to perform any of its payment or other material obligations under any Loan Document when due or as required therein, (b) impairment of the ability of Lender to enforce any Company’s material obligations, or Lender’ rights, under any Loan Document, (c) a material adverse effect upon the legality, validity, binding effect or enforceability against any Company of any Loan Document to which it is a party, or (d) a material and adverse change in, or a material adverse effect upon, the operations, business, properties, liabilities (actual or contingent), condition (financial or otherwise), or prospects of any Company as represented in the initial financial statements delivered to Lender on or about the Closing Date.

Material Agreement means, for any Person, any agreement to which that Person is a party by which that Person is bound, or to which any assets of that Person may be subject, and that is not cancelable by that Person upon 30 or fewer days’ notice without liability for further payment other than nominal penalty, and that requires that Person to pay more than $100,000in the aggregate during the term of such agreement.

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Maximum Amount and Maximum Rate respectively mean the maximum non-usurious amount and the maximum non-usurious rate of interest that, under applicable Law, Lender is permitted to contract for, charge, take, reserve or receive on the Obligation.

Moody’s means Moody’s Investors Service, Inc. and any successor thereto.

Net Proceeds means, with respect to (a) any Disposition of any asset by any Person, the aggregate amount of cash and non-cash proceeds from such Disposition received by, or paid to or for the account of, such Person, net of customary and reasonable out-of-pocket costs, fees, and expenses, (b) the issuance of Funded Debt (including Subordinated Debt), Equity Interests, or similar instruments, the cash and non-cash proceeds received from such issuance or incurrence, net of attorneys’ fees, investment banking fees, accountants fees, underwriting discounts and commissions, legal fees, and other customary fees and expenses actually incurred in connection with such issuance, (c) insurance proceeds, the aggregate amount of such cash proceeds received by, or paid to or for the account of, such Person, net of customary and reasonable legal fees, out-of-pocket costs, fees, and expenses, and (d) eminent domain or condemnation proceeds, the aggregate amount of such cash proceeds received by, or paid to or for the account of, such Person, net of customary and reasonable legal fees, out-of-pocket costs, fees, and expenses.  Non-cash proceeds include any proceeds received by way of deferred payment of principal pursuant to a note, installment receivable, purchase price adjustment receivable, or otherwise, but only as and when received.

Net Worth means, when determined, (a) the aggregate amount at which all assets of the Companies would be shown on a balance sheet at such date, less (b) Total Liabilities of the Companies.

Non-renewal Notice Date is defined in Section 2.5(a)(iv).

Notes means all of, and Note means any of, the Revolving Note and the Term Note.

Nueces County Property means that certain real property owned by Borrower and having an address commonly known as 7941 Recycle Road, Corpus Christi, Nueces County, Texas 78409.

Obligation means all present and future Debt, liabilities and obligations (including the Loans, the LC Exposure, the obligations under any Bank Products and indemnity obligations), whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, and all renewals, increases and extensions thereof, or any part thereof, now or in the future owed to Lender by any Company under any Loan Document, together with all interest accruing thereon, reasonable fees, costs and expenses payable under the Loan Documents or in connection with the enforcement of rights under the Loan Documents, including (a) fees and expenses under Section 8.12, and (b) interest and fees that accrue after the commencement by or against any Company or any Affiliate thereof of any proceeding under any Debtor Relief Law naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding.

Overadvance means $1,500,000 through December 31, 2012, and $0 thereafter.

PBGC means Pension Benefit Guaranty Corporation, or any successor thereof, established under ERISA.

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Permitted Debt means (a) the Obligation, (b) Debt arising from endorsing negotiable instruments for collection in the ordinary course of business, (c) purchase money Debt, capital lease obligations or other Debt incurred in the ordinary course of business which, in the aggregate, does not exceed $1,000,000in the aggregate principal outstanding at any time for all Companies, (d) Debt among the Companies and guaranties by any Company of Permitted Debt, (e) Debt existing on the Closing Date and described on Schedule 2, (f) indemnities arising under agreements entered into by any Company in the ordinary course of business, and (g) trade payables, Tax liabilities and other current liabilities incurred in the ordinary course of business.

Permitted Investments means (a) marketable obligations backed by the full faith and credit of the U.S. (and investments in mutual funds investing primarily in those obligations), (b) certificates of deposit or banker’s acceptances that are fully insured by the Federal Deposit Insurance Corporation or are issued by commercial banks having combined capital, surplus, and undivided profits of not less than $250,000,000 (as shown on its most recently published statement of condition), (c) cash or cash equivalents, (d) eurodollar time deposits or investments managed by Lender, (e) commercial paper and similar obligations rated “P-2” or better by Moody’s or “A-2” or better by S&P, (f) investments in securities purchased by any Company under repurchase obligations pursuant to which arrangements are made with selling financial institutions (being a financial institution having unimpaired capital and surplus of not less than $500,000,000 and with a rating of “A-1” by S&P or “P-1” by Moody’s) for such financial institutions to repurchase such securities within 30 days from the date of purchase by such Company, and other similar short term investments made in connection with the Company’s cash management practices, (g) non-cash proceeds from dispositions permitted under Section 9.9, and (h) investments by Borrower in its wholly-owned Subsidiaries which are Guarantors.

Permitted Liens means (a) Liens securing the Obligation, (b) Liens existing on the Closing Date and described on Schedule 2, (c) Liens which secure purchase money Debt and capital lease obligations permitted under clause (c) of the definition of Permitted Debt, (d) easements, rights-of-way, encumbrances and other restrictions on the use of real property which do not materially impair the use thereof, (e) Liens for Taxes; provided that, (i) no amounts are due and payable and no Lien has been filed or agreed to, or (ii)  the validity or amount thereof is being contested in good faith by lawful proceedings diligently conducted, and reserve or other provision required by GAAP has been made, (f) judgments and attachments permitted by Section 11.4, (g) pledges or deposits made to secure payment of workers’ compensation, unemployment insurance or other forms of governmental insurance or benefits or to participate in any fund in connection with workers’ compensation, unemployment insurance, pensions or other social security programs, (h) good-faith pledges or deposits made in the ordinary course of business to secure (i) performance of bids, tenders, trade contracts (other than for the repayment of borrowed money) or leases, (ii) statutory obligations, or (iii) surety or appeal bonds, or indemnity, performance or other similar bonds, which, in the aggregate under this clause (h), do not exceed $100,000 at any time, (i) rights of offset or statutory banker’s Lien arising in the ordinary course of business in favor of commercial banks; provided that, any such Lien shall only extend to deposits and property in possession of such commercial bank and its Affiliates, and (j) Liens (other than for Taxes) imposed by operation of law (including Liens of mechanics, materialmen, warehousemen, carriers and landlords and similar Liens); provided that, (i) the validity or amount thereof is being contested in good faith by lawful proceedings diligently conducted, (ii) reserve or other provision required by GAAP has been made, and (iii) within 60 days after the entry thereof, levy and execution thereon have been (and continue to be) stayed or payment thereof is covered in full by insurance (subject to the customary deductible).

Person means any individual, partnership, limited partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, syndicate, Governmental Authority or other entity or organization of whatever nature.

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Potential Default means the occurrence of any event or the existence of any circumstance that would, with the giving of notice or lapse of time or both, become a Default.

Prime Rate means the rate of interest publicly announced from time to time by Lender as its Prime Rate.  The Prime Rate is set by Lender based on various factors, including Lender’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans.  Lender may price loans to its customers at, above, or below the Prime Rate.  Any change in the Prime Rate shall take effect at the opening of business on the day specified in the public announcement of a change in Lender’s Prime Rate.  The Prime Rate is not necessarily the lowest rate charged by Lender on its loans and is set by Lender in its sole discretion.

Principal Amount means, when determined, the sum of (a) the Revolving Principal Amount plus (b) the Term Principal Amount.

Proper Form means in form and substance satisfactory to Lender and its legal counsel.

Purchase Agreement means that certain Unit Purchase Agreement dated August 14, 2012, among Borrower, Target, Holdings, and B&S LP, as amended by a First Amendment to the Unit Purchase Agreement dated the Closing Date, among the parties thereto.

Representatives means representatives, officers, directors, employees, consultants, contractors, attorneys of Lender.

Reserves means reserves established from time to time by Lender in its reasonable credit judgment against Eligible Inventory, Eligible Accounts, or the Borrowing Base.  Without limiting the generality of the foregoing, Reserves established to ensure the payment of accrued interest expense, Taxes, Debt rent for locations without landlord waivers shall be deemed to be an exercise of Lender’s reasonable credit judgment as will any Slow Moving Reserve in respect of inventory.

Responsible Officer means the president, chief executive officer, chief financial officer, treasurer, controller, chief accounting officer, or chief operating officer of Borrower.

Revolving Committed Amount means $10,000,000.

Revolving Credit Exposure means, when determined the sum of (a) the Revolving Principal Amount, plus (b) the LC Exposure.

Revolving Credit Facility is defined in Section 2.1.

Revolving Credit Limit means the lesser of (a) the Revolving Committed Amount and (b) the Borrowing Base plus the Overadvance.

Revolving Credit Termination Date means the earlier of (a) August 31, 2014, or (b) the effective date that Lender’s Commitment to make Credit Extensions under the Revolving Credit Facility under this Agreement is otherwise canceled or terminated in accordance with Section 12 of this Agreement or otherwise.

Revolving Note means a promissory note substantially in the form of Exhibit A-1, executed by Borrower and made payable to Lender and all renewals, extensions, modifications, amendments, supplements, restatements, and replacements of, or substitutions for, that promissory note.

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Revolving Principal Amount means, when determined, the outstanding principal balance of the Revolving Note.

S&P means Standard & Poor’s Ratings Group (a division of The McGraw-Hill Companies, Inc.).

Security Agreement means each Security Agreement in substantially the form of Exhibit E, and executed by any Company, as debtor, and by Lender, as secured party, granting Lender a Lien on, and security interest in, among other things, such Company’s accounts receivable, inventory, equipment, goods, general intangibles, intellectual property, chattel paper, instruments, and documents.

Security Documents means all Security Agreements, Deeds of Trusts, and all documents executed in connection therewith to create or perfect a Lien on the Collateral.

Senior Funded Debt means, when determined, all Funded Debt other than Subordinated Debt.

Senior Funded Debt to EBITDA Ratio means, when determined, the ratio of (a) Senior Funded Debt of the Companies as of such date, to (b) EBITDA for the period of four fiscal quarters most recently ended.

Slow Moving means inventory that turns less than once each 365 days.

Subordinated Debt means Debt which is contractually subordinated in right of payment, collection, enforcement and lien rights to the prior payment in full of the Obligation on terms satisfactory to Lender.

Subordination Agreement means a subordination agreement in Proper Form.

Subsidiary of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the Voting Interests are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person.  Unless otherwise specified, all references in this Agreement or the Loan Documents to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or to Subsidiaries of Borrower.

Swap Contract means, to the extent any Company and Lender or an Affiliate of Lender is a party thereto, (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.

Swap Termination Value means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include Lender or any Affiliate of Lender).

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Tangible Net Worth means, when determined, the Companies’ Net Worth after deducting capitalized research and development costs, capitalized interest, debt discount and expense, goodwill, patents, trademarks, copyrights, franchises, licenses and such other assets as are properly classified as “intangible assets”.

Target means Vertex Acquisition Sub, LLC, a Nevada limited liability company.

Tax Code means the Internal Revenue Code of 1986, as amended, and related rules, regulations and published interpretations.

Taxes means, for any Person, taxes, assessments or other governmental charges or levies imposed upon that Person, its income, or any of its properties, franchises or assets.

Term Loan is defined in Section 2.2 below.

Term Loan Committed Amount means $8,500,000.

Term Loan Maturity Date meansthe earlier of (a) August 31, 2015, or (b) the acceleration of maturity of the Term Loan in accordance with Section 12 of this Agreement.

Term Note means a promissory note substantially in the form of Exhibit A-2, executed by Borrower and made payable to Lender in the original principal amount of the Term Loan Committed Amount, together with all renewals, extensions, modifications, amendments, supplements, restatements and replacements of, or substitutions for, each such promissory note.

Term Principal Amount means, when determined, the outstanding principal balance of the Term Note.

Total Liabilities means, when determined, all obligations required by GAAP to be classified as liabilities upon the Companies’ balance sheet, including the aggregate amount of all Debt, liabilities (including tax and other proper accruals) and reserves of the Companies.

Travis County Property means that certain real property owned by Borrower and having an address commonly known as 20909 FM 685, Pflugerville, Travis County, Texas 77660.

Type means, with respect to a Loan, its character as a Base Rate Loan or a LIBOR Loan.

UCC means the Uniform Commercial Code, as adopted in Texas and as amended from time to time.

Unreimbursed Amount is defined in Section 2.5(b)(i).

U.S. means United States of America.

Vertex-GP means Vertex II GP, LLC, a Nevada limited liability company.

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Vertex Processing means Vertex Processing, LP, a Texas limited partnership.

Voting Interests of any Person means the Equity Interests of such Person having ordinary voting power for the election of directors (or other governing body).

VRM means Vertex Merger Sub, LLC, a California limited liability company.

1.2           Interpretive Provisions

(a)           Terms used but not defined in this Agreement, but which are defined in the UCC, have the meaning given them in the UCC.

(b)           The meanings of words and defined terms are equally applicable to the singular and plural forms of the defined terms and words.  Defined terms in respect of one gender include each other gender where appropriate.  Derivatives of defined terms have corresponding meanings.

(c)           Any conflict or ambiguity between this Agreement and any other Loan Document is controlled by the terms and provisions of this Agreement.

(d)           The headings and captions used in this Agreement and the other Loan Documents are for convenience only and will not be deemed to limit, amplify or modify the terms of this Agreement or the Loan Documents.

(e)           Article, Section, Exhibit and Schedule references are to the Loan Document in which such reference appears, unless otherwise indicated.

(f)            In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including;” the words “to” and “until” each mean “to but excluding;” and the word “through” means “to and including.”

(g)           The words “herein,” “hereto,” “hereof” and “hereunder” and words of similar import when used in any Loan Document shall refer to such Loan Document as a whole and not to any particular provision of such Loan Document.

(h)           The term “including” is by way of example and not limitation.

1.3           Accounting Terms.

  All accounting terms not specifically or completely defined in this Agreement shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP, with all accounting principles being consistently applied from period to period and on a basis consistent with the most recent audited consolidated financial statements of Borrower and its Subsidiaries.  While Borrower has any Subsidiaries, all accounting and financial terms and financial calculations (including the calculation of all financial covenants, ratios, and related definitions) in respect of Borrower or any Company are on a consolidated and consolidating basis for all Companies, unless otherwise indicated.

(a)           If at any time any change in GAAP would affect the computation of any financial ratio or requirement set out in any Loan Document, and either the Borrower or Lender shall so request, Lender and the Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of Lender); provided that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP as in effect prior to such change and (ii) the Borrower shall provide to Lender financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.

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1.4           References to Documents.

  Unless otherwise expressly provided in this Agreement, (a) references to corporate formation or governance documents, contractual agreements (including this Agreement and the Loan Documents) and other contractual instruments shall be deemed to include all subsequent amendments, restatements, extensions, supplements and other modifications thereto, but only to the extent that such amendments, restatements, extensions, supplements and other modifications are not prohibited by any Loan Document, and (b) references to any Law shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such Law.

1.5           Time.

  Unless otherwise indicated, all time references (e.g., 11:00 a.m.) are to Central time (daylight or standard, as applicable).

SECTION 2LOAN COMMITMENTS.

2.1           Revolving Credit Facility.

  Subject to the terms and conditions of this Agreement, Lender agrees to make a loan to Borrower in an amount not to exceed the Revolving Committed Amount in one or more Loans from time to time, which Borrower may borrow, repay, and reborrow under this Agreement (collectively, the “Revolving Credit Facility”).

2.2           Term Loan.

  Subject to the terms and conditions of this Agreement, Lender agrees to make a term loan to Borrower in an amount equal to the Term Loan Committed Amount in a single Loan on the Closing Date, which, when paid or prepaid, may not be reborrowed (the “Term Loan”).

2.3           Loan Procedure.

(a)           Subject to compliance with Section 5, Borrower may request a Loan under the Revolving Credit Facility or the Term Loan by submitting a Loan Request to Lender.  A Loan Request is irrevocable and binding on Borrower.  Each Loan Request must be received by Lender no later than 11:00 a.m. on (a) the third Business Day preceding the proposed Loan Date for a LIBOR Loan, and (b) the proposed Loan Date for a Base Rate Loan.  Each Loan Date must be a Business Day, and each Loan Date under the Revolving Credit Facility must occur before the Revolving Credit Termination Date.  Each Loan under the Revolving Credit Facility is subject to the following conditions:

(i)           each Loan (unless the remaining amount under clause (ii) below is less) must be in an amount not less than $50,000 or a greater integral multiple of $10,000;

(ii)           no Loan may exceed an amount equal to the excess of the Revolving Credit Limit over the Revolving Credit Exposure; and

(iii)           after giving effect to any Loan, the Revolving Credit Exposure may not exceed the Revolving Credit Limit.

(b)           Each Loan under the Revolving Credit Facility or the Term Loan will be deposited by Lender into Borrower’s account with Lender set out on Schedule 1.

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(c)           From time to time, Lender may provide certain treasury or cash management services to Borrower under which Borrower incurs Loans under the Revolving Credit Facility.  While a Cash Management Agreement is in effect, Borrower may repay the Revolving Principal Amount under the terms of the Cash Management Agreement without notice.  Each Borrower hereby authorizes Lender to honor all checks or other drafts received against the accounts subject to the Cash Management Agreement.  Subject to Section 2.3(c), Loans borrowed under the terms of any Cash Management Agreement between Borrower and Lender shall be borrowed as LIBOR Loans.

2.4           Prepayments

(a)           Borrower may voluntarily prepay all or any part of the Revolving Principal Amount or the Term Principal Amount at any time, without premium or penalty, subject to the following conditions:

(i)           Lender must receive Borrower’s written or telephonic prepayment notice by 2:00 p.m. at least one Business Day preceding the proposed prepayment date;

(ii)           Borrower’s prepayment notice shall (A) specify the prepayment date, (B) specify the amount of the Loan to be prepaid, (C) specify whether the Revolving Principal Amount or the Term Principal Amount is being prepaid, and (D) constitute an irrevocable and binding obligation of Borrower to make a prepayment in such amount on the designated prepayment date;

(iii)           except as otherwise provided in clause (iv) below, each partial prepayment must be in a minimum amount of not less than (A) $50,000 or in a greater integral multiple of $10,000, or (B) if less than the requested minimum amount, the outstanding balance of the Revolving Principal Amount or the Term Principal Amount, as applicable; and

(iv)           if the Term Principal Amount is being prepaid, all accrued and unpaid interest on the portion of the Term Principal Amount prepaid must also be paid in full on the prepayment date and each partial prepayment of the Term Principal Amount shall be applied to the Term Loan’s scheduled principal payments thereunder in the inverse order of their maturity.

(b)           If the Revolving Credit Exposure at any time exceeds the Revolving Credit Limit, then Borrower shall promptly prepay the Revolving Principal Amount (or if no Revolving Principal Amount is outstanding, Cash Collateralize the LC Exposure), in at least the amount of that excess, together with all accrued and unpaid interest on the principal amount so prepaid.

(c)           If the Term Principal Amount ever exceeds the Term Committed Amount, then Borrower shall promptly prepay the Term Principal Amount in an amount equal to the excess, together with all accrued and unpaid interest on the principal amount prepaid.

(d)           On the date such amounts are received by, or for the account of, Borrower (or the applicable Company), the following amounts shall be paid to Lender in the form received with any endorsement or assignment and shall be applied to the Principal Amount in accordance with this Section 2.4:  100% of the Net Proceeds from the Disposition of assets other than Dispositions described in Section 9.9, Eminent Domain Proceeds or Insurance Proceeds (but excluding any Eminent Domain Proceeds or Insurance Proceeds to the extent such proceeds are reinvested in or committed to be reinvested in, or are used to repair or replace, assets useful in the business of such Company within 90 days after the date such Company receives such proceeds, so long as (i) no Default exists, and (ii) Lender consents to such use of such proceeds).  The non-cash portion of all Net Proceeds Lender is entitled to receive under this Section 2.4 shall be pledged to Lender concurrently with the applicable Disposition.

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(e)           Unless otherwise specified in this Agreement, prepayments under this Section 2.4 shall be applied to the prepayment of the outstanding Term Principal Amount to be applied to the scheduled principal payments in the inverse order of their maturity until the Term Principal Amount is paid in full.  After the Term Principal Amount is paid in full, any remaining proceeds shall be applied first, to Cash Collateralize all LC Exposure, and second, to repay the Loans under the Revolving Credit Facility (with the proceeds being applied in accordance with Section 3.4), and the Revolving Committed Amount shall be automatically reduced by the amount of such repayment.

(f)           After proper application of all proceeds under this Section 2.4, the excess proceeds, if any, shall be payable to Borrower.

(g)           All prepayments under this Section 2.4 shall be without premium or penalty; provided that, each prepayment of a LIBOR Loan, whether voluntary, by reason of acceleration or otherwise, will be accompanied by the amount of accrued interest on the amount prepaid and a prepayment fee as described below, if applicable.  A “prepayment” is a payment of an amount on a date earlier than the scheduled payment date for such amount as required by this Agreement.  The prepayment fee shall be in an amount sufficient to compensate Lender for any loss, cost or expense incurred by it as a result of the prepayment of a LIBOR Loan arising from any assignment, continuation, conversion, payment or prepayment occurring other than the last day of the Interest Period for such LIBOR Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise), or any failure by the Borrower (for a reason other than the failure of such Lender to make a Loan) to prepay, borrow, continue or convert any LIBOR Loan on the date or in the amount notified by the Borrower, and such fee may include any loss of anticipated profits and any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain a LIBOR Loan or from fees payable to terminate the deposits from which such funds were obtained.  Borrower shall also pay any customary administrative fees charged by Lender in connection with the foregoing.  For purposes of this Section 2.4, Lender shall be deemed to have funded each LIBOR Loan by a matching deposit or other borrowing in the applicable interbank market, whether or not such Loan was in fact so funded.

2.5           LC Facility.

(a)           The LC Commitment.

(i)           Subject to the terms and conditions set out in this Agreement, Lender agrees, from time to time on any Business Day during the period from the Closing Date until the Revolving Credit Termination Date, to issue LCs for the account of Borrower or any Company or make any other LC Credit Extension, provided that, Lender shall not be obligated to make any LC Credit Extension if, as of the LC Credit Extension Date, (A) the Revolving Credit Exposure would exceed the Revolving Credit Limit (after giving effect to such LC Credit Extension), (B) the LC Exposure would exceed the LC Sublimit (after giving effect to such LC Credit Extension), (C) the expiry date of such requested LC would occur after the LC Termination Date, unless Lender has approved such expiry date, (D) the LC is to be denominated in a currency other than Dollars, (E)) any Litigation shall by its terms purport to enjoin or restrain Lender from making such LC Credit Extension, (F) the beneficiary of such LC does not accept the LC or any proposed amendment to, or renewal of, such LC, or (G) a Default or Potential Default exists.

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(ii)           Each LC Credit Extension shall be made upon the request of Borrower delivered to Lender in the form of an LC Application, appropriately completed and signed by a Responsible Officer of Borrower.  Such LC Application must be received by Lender not later than 11:00 a.m. at least four (4) Business Days prior to the proposed LC Credit Extension Date.

(A)           In the case of a request for an initial issuance of an LC, such LC Application shall specify in form and detail satisfactory to Lender (1) the proposed issuance date of the requested LC (which shall be a Business Day), (2) the amount of the requested LC, (3) the expiry date of the requested LC, (4) the name and address of the beneficiary of the requested LC, (5) the documents to be presented by such beneficiary in case of any drawing under the requested LC, (6) the full text of any certificate to be presented by such beneficiary in case of any drawing under the requested LC, and (7) such other matters as Lender may reasonably require.

(B)           In the case of a request for an amendment of any outstanding LC, such LC Application shall specify in form and detail satisfactory to Lender (1) the LC to be amended, (2) the proposed date of the amendment (which shall be a Business Day), (3) the nature of the proposed amendment, and (4) such other matters as Lender may reasonably require.

(iii)           Promptly after receipt of any LC Application, Lender will confirm that the requested LC Credit Extension is permitted in accordance with the terms of this Agreement, then, subject to the terms and conditions hereof, Lender shall, on the requested date, issue an LC for the account of such requesting Borrower or enter into the applicable amendment, as the case may be, in each case in accordance with Lender’s usual and customary business practices.

(iv)           If Borrower so requests in any applicable LC Application, Lender may, in its sole and absolute discretion, agree to issue an LC that has automatic renewal provisions (each, an “Auto-Renewal LC”); provided that, any such Auto-Renewal LC must permit Lender to prevent any such renewal at least once in each twelve-month period (commencing with the date of issuance of such LC) by giving prior notice to the beneficiary thereof not later than a day (the “Nonrenewal Notice Date”) in each such twelve-month period to be agreed upon at the time such LC is issued.  Unless otherwise directed by Lender, Borrower shall not be required to make a specific request to Lender for any such renewal.  Lender may elect not to renew any auto-renewal LC for any reason, including, (A) Lender has reasonably determined that it would have no obligation at such time to issue such LC in its renewed form under the terms hereof (by reason of the provisions of Section 2.5(a)(i) or otherwise), or (B) it has received notice (which may be by telephone or in writing) on or before the day that is two (2) Business Days before the Nonrenewal Notice Date (1) that beneficiary has elected not to permit such renewal or (2) that one or more of the applicable conditions specified in Section 5 is not then satisfied.

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(b)           Drawings and Reimbursements.

(i)           Upon receipt from the beneficiary of any LC of any notice of a drawing under such LC, Lender shall notify Borrower thereof.  Not later than 11:00 a.m. on the date of any payment by Lender under an LC (each such date, an “Honor Date”), Borrower shall reimburse Lender in an amount equal to the amount of such drawing.  If Borrower fails to so reimburse Lender by such time, Borrower shall be deemed to have requested a Loan under the Revolving Credit Facility to be disbursed on the Honor Date in an amount equal to the amount of the unreimbursed drawing (the “Unreimbursed Amount”), without regard to the minimum and multiples specified in Section 2.3 for the principal amount of Loans, but subject to the conditions set out in Section 5 (other than the delivery of a Loan Request).  Any notice given by Lender pursuant to this Section 2.5(b)(i) may be given by telephone if immediately confirmed in writing; provided that, the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.

(ii)           With respect to any Unreimbursed Amount that is not fully refinanced by a Loan because the conditions set out in Section 5 cannot be satisfied, there are not sufficient available funds under the Revolving Credit Facility, or for any other reason, Borrower shall be deemed to have incurred from Lender an LC Borrowing in the amount of the Unreimbursed Amount that is not so refinanced, which LC Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the Default Rate.

(c)           Obligations Absolute.  The obligation of Borrower to reimburse Lender for each drawing under each LC and to repay each LC Borrowing shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances.  Borrower shall promptly examine a copy of each LC and each amendment thereto that is delivered to it and, in the event of any claim of noncompliance with Borrower’s instructions or other irregularity, Borrower will immediately notify Lender.  Borrower shall be conclusively deemed to have waived any such claim against Lender and its correspondents unless such notice is given as aforesaid.

(d)           Cash Collateral.  Upon the request of Lender, (i) if Lender has honored any full or partial drawing request under any LC and such drawing has resulted in an LC Borrowing, or (ii) if, as of the Revolving Credit Termination Date, any LC for any reason remains outstanding and partially or wholly undrawn, Borrower shall immediately Cash Collateralize the then outstanding LC Exposure in an amount equal to 105% of such LC Exposure determined as of the date of such LC Borrowing or the Revolving Credit Termination Date, as the case may be).  If LCs are to be outstanding after the Revolving Credit Termination Date, not later than ten (10) Business Days prior to the Revolving Credit Termination Date, Borrower shall Cash Collateralize the LC Exposure for each such LC as provided in this Section 2.5(d).  Borrower hereby grants to Lender a security interest in and Lien upon all such cash, deposit accounts and all balances therein and all proceeds of the foregoing.  All such Cash Collateral shall be maintained in blocked, non-interest bearing deposit accounts at Lender.

(e)           Applicability of ISP98 and UCP.  Unless otherwise expressly agreed by Lender and Borrower when an LC Credit Extension is made, (i) the rules of the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice (or such later version thereof as may be in effect at the time of issuance) shall apply to each standby LC, and (ii) the rules of the Uniform Customs and Practice for Documentary Credits, as most recently published by the International Chamber of Commerce (the “ICC”) at the time of issuance (including the ICC decision published by the Commission on Banking Technique and Practice on April 6, 1998, regarding the European single currency (euro)) shall apply to each documentary LC.

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(f)           Provisions Regarding Electronic Issuance of Letters of Credit.  Lender may adopt procedures pursuant to which Borrower may request the issuance of LCs by electronic means and Lender may issue LCs based on such electronic requests.  Such procedures may include the entering by Borrower into the LC Applications electronically.  All the procedures, actions and documents referred to in the two preceding sentences are referred to as “Electronic Applications”.  Borrower holds Lender harmless with respect to actions taken by Lender based upon Electronic Applications.  Borrower further agrees to be bound by all the terms and provisions contained in the LC Applications, including, without limitation, the terms and provisions of the LC Applications contained on the reverse side of the paper copies thereof, including the release and indemnification provisions contained therein.

SECTION 3TERMS OF PAYMENT.

3.1           Notes and Payments.

(a)           The Loans under the Revolving Credit Facility shall be evidenced by the Revolving Note.  The Term Loan shall be evidenced by the Term Note.

(b)           Borrower must make each payment on the Obligation, without offset, counterclaim or deduction to Lender’s Office, in funds that will be available for immediate use by Lender by 12:00 noon on the day due.  Payments received after such time (and payments received on a day which is not a Business Day) will be deemed received on the next Business Day but interest shall continue to accrue during such period.

3.2           Revolving Credit Facility.

(a)           Accrued and unpaid interest on the Revolving Principal Amount is due and payable (i) for a Base Rate Loan outstanding under the Revolving Credit Facility, monthly in arrears on the last day of each month beginning September 30, 2012, and continuing thereafter up to and on the Revolving Credit Termination Date or (ii) for a LIBOR Loan outstanding under the Revolving Credit Facility, on the last day of each Interest Period and on the Revolving Credit Termination Date.

(b)           The Revolving Principal Amount, all accrued and unpaid interest thereon, and all of the Obligation in respect of the Revolving Credit Facility are due and payable on the Revolving Credit Termination Date.

3.3           Term Loan.

(a)           Accrued interest on the Term Principal Amount is due and payable (i) for a Base Rate Loan outstanding under the Term Loan, monthly in arrears on the last day of each month beginning September 30, 2012, and continuing thereafter up to and on the Term Loan Maturity Date or (ii) for a LIBOR Loan outstanding under the Term Loan, on the last day of each Interest Period and on the Term Loan Maturity Date.

(b)           Payments of principal in the amount of $141,666.67are due and payable monthly in arrears on the last day of each month beginning September 30, 2012, and continuing thereafter until the Term Loan Maturity Date, when all of the outstanding Term Principal Amount, all accrued but unpaid interest thereon, and all of the Obligation in respect of the Term Loan are due and payable (taking into account prepayments made prior to the Term Loan Maturity Date permitted under this Agreement).

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3.4           Order of Application.

(a)           All payments and prepayments shall be applied as specified in this Agreement and, if not specified, shall be applied in the following order: (i) to all fees, expenses, late charges, collection costs, and other charges, costs and expenses for which Lender has not been paid or reimbursed under the Loan Documents; (ii) to accrued and unpaid interest on the Principal Amount; and (iii)  to the remaining Obligation in the order and manner Lender deems appropriate in its sole discretion.

(b)           All proceeds from the exercise of any rights shall be applied at Lender’s discretion among principal, interest, fees, expenses, late charges, collection costs, and other charges, costs and expenses, for which Lender has not been paid or reimbursed under the Loan Documents.

3.5           Interest.

(a)           Except as otherwise provided in this Agreement, Loans under the Revolving Credit Facility shall accrue interest at an annual rate equal to the lesser of (i) at Borrower’s option (A) for a Base Rate Loan, the sum of the Base Rate plus the Applicable Margin for Base Rate Loans, or (B) for a LIBOR Loan, the sum of LIBOR plus the Applicable Margin for LIBOR Loans, and (ii) the Maximum Rate.

(b)           Except as otherwise provided in this Agreement, the Term Principal Amount shall accrue interest at an annual rate equal to the lesser of (i) at Borrower’s option (A) for a Base Rate Loan, the sum of the Base Rate plus the Applicable Margin for Base Rate Loans, or (B) for a LIBOR Loan, the sum of LIBOR plus the Applicable Margin for LIBOR Loans, and (ii) the Maximum Rate.

(c)           Each change in LIBOR Rate, the Base Rate or the Maximum Rate is effective as of the effective date of such change without notice to Borrower or any other Person.

(d)           To the extent permitted by Law, while a Default exists, the Obligation shall accrue interest at the lesser of (i) the Default Rate and (ii) the Maximum Rate until such Default is waived or cured.  Subject to Section 3.7, if a Default exists, Lender may, in its sole discretion, to the extent permitted by Law, add accrued and unpaid interest to the Principal Amount and such amount will accrue interest until paid at the applicable interest rate.

3.6           Interest Calculations.  Interest on Loans will be calculated on the basis of actual number of days elapsed (including the first day but excluding the last day), but computed as if each calendar year consisted of 360 days (unless computation would result in an interest rate in excess of the Maximum Rate, in which event the computation is made on the basis of a year of 365 or 366 days, as the case may be).  All interest rate determinations and calculations by Lender are conclusive and binding, absent manifest error.

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3.7           Maximum Rate.  It is the intention of the parties to comply with applicable usury laws.  The parties agree that the total amount of interest contracted for, charged, collected or received by Lender under this Agreement shall not exceed the Maximum Rate.  To the extent, if any, that Chapter 303 of the Texas Finance Code (the “Finance Code”) is relevant to Lender for purposes of determining the Maximum Rate, the parties elect to determine the Maximum Rate under the Finance Code pursuant to the “weekly ceiling” from time to time in effect, as referred to and defined in § 303.001-303.016 of the Finance Code; subject, however, to any right Lender subsequently may have under applicable law to change the method of determining the Maximum Rate.  Notwithstanding any contrary provisions contained herein, (a) the Maximum Rate shall be calculated on the basis of the actual number of days elapsed over a year of 365 or 366 days, as the case may be; (b) in determining whether the interest hereunder exceeds interest at the Maximum Rate, the total amount of interest shall be spread throughout the entire term of this Agreement until its payment in full; (c) if at any time the interest rate chargeable under this Agreement would exceed the Maximum Rate, thereby causing the interest payable under this Agreement to be limited to the Maximum Rate, then any subsequent reductions in the interest rate(s) shall not reduce the rate of interest charged under this Agreement below the Maximum Rate until the total amount of interest accrued from and after the date of this Agreement equals the amount of interest which would have accrued if the interest rate(s) had at all times been in effect; (d) if Lender ever charges or receives anything of value which is deemed to be interest under applicable Texas law, and if the occurrence of any event, including acceleration of maturity of obligations owing to Lender, should cause such interest to exceed the maximum lawful amount, any amount which exceeds interest at the Maximum Rate shall be applied to the reduction of the unpaid principal balance under this Agreement or any other indebtedness owed to Lender by Borrower, and if this Agreement and such other indebtedness are paid in full, any remaining excess shall be paid to Borrower; and (e) Chapter 346 of the Finance Code shall not be applicable to this Agreement or the indebtedness outstanding hereunder.

3.8           Set off.  While a Default exists, Lender (and each of its Affiliates) is hereby authorized at any time and from time to time, to the fullest extent permitted by Law, to set off and apply (a) any and all deposits (general or special, time or demand, provisional or final) at any time held by Lender (or its Affiliates) and (b) any other Debt at any time owing by Lender (or any of its Affiliates) to or for the credit or the account of any Company, against the Obligation even if Lender has not made demand under this Agreement and the Obligation is unmatured.  Lender agrees to promptly notify the applicable Company after any such set off and application is made; provided that, the failure to give such notice shall not affect the validity of such set off and application.  The rights of Lender under this Section 3.8 are in addition to other rights and remedies (including other rights of set off) that Lender may have.

3.9           Debit Account.  Borrower agrees that interest and principal payments and any fees will be deducted automatically on the due date from Borrower’s account number 488032919202or such other of Borrower’s accounts with Lender as designated in writing by Borrower.  This authorization shall not affect the obligation of Borrower to pay such sums when due, without notice, if there are insufficient funds in such account to make such payment in full on the due date thereof, or if Lender fails to debit such account.

3.10           Interest Periods, Conversions, and Continuations.

Subject to the proviso in the defined term “Interest Period”:

(a)           When Borrower requests any LIBOR Loan, Borrower may elect an Interest Period of, at Borrower’s option, one month, subject to the following conditions: (i) no Interest Period for a LIBOR Loan under the Revolving Credit Facility may extend beyond the Revolving Credit Termination Date, (ii) no Interest Period for a LIBOR Loan under the Term Loan may extend beyond the Term Loan Maturity Date, and (iii) no more than 2 Interest Periods may be in effect at any time.

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(b)           Conversions and Continuations.  Borrower may (i) on the last day of the applicable Interest Period, Convert all or part of a LIBOR Loan to a Base Rate Loan, and (ii) on the last day of the applicable Interest Period, Continue a LIBOR Loan by electing a new Interest Period for such Loan.  Any such Conversion or Continuation is subject to the applicable dollar limits and denominations as set forth in the Conversion/Continuation Notice and shall be accomplished by delivering such Conversion/Continuation Notice to Lender no later than 10:00 a.m. (1) on the third Business Day before the Conversion date for Conversion to a LIBOR Loan, (2) on the third Business Day before the Continuation for the election of a new Interest Period, and (3) one Business Day before the last day of the Interest Period for Conversion to a Base Rate Loan.  Absent Borrower’s Conversion/Continuation Notice, when an Interest Period expires, the applicable LIBOR Loan shall be automatically Converted to a Base Rate Loan.

3.11           Limitation on Types of Loans.

  If on or prior to the first day of any Interest Period:

(a)           Lender determines (which determination shall be conclusive) that by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining LIBOR for such Interest Period; or

(b)           Lender reasonably determines (which determination shall be conclusive) that LIBOR will not adequately and fairly reflect the cost to it of funding LIBOR Loans for such Interest Period;

then Lender shall give Borrower prompt notice thereof specifying the relevant Loans and the relevant amounts or periods, and so long as such condition remains in effect, Lender shall be under no obligation to make additional Loans of such Type, Continue Loans of such Type, or Convert Loans of any other Type into Loans of such Type and Borrower shall, on the last day of the then current Interest Period for the outstanding Loans of the affected Type, either prepay such Loans or Convert such Loans into another Type of Loan in accordance with the terms of this Agreement.

3.12           Increased Cost and Reduced Return.

(a)           Increased Cost.  If the adoption of any applicable Law, any change in any applicable Law, any change in the interpretation or administration of any applicable Law by any Governmental Authority, central bank, or comparable agency charged with the interpretation or administration of such Law, or the compliance by Lender with any request or directive (whether or not having the force of law) of any such Governmental Authority, central bank, or comparable agency:

(i)           shall subject Lender to any tax, duty, or other charge with respect to LIBOR Loans or its obligation to make LIBOR Loans, or change the basis of taxation of any amounts payable to it under this Agreement in respect of any such Loans (other than Taxes imposed on its overall net income by the jurisdiction in which Lender has its principal office);

(ii)           shall impose, modify, or deem applicable any reserve, special deposit, assessment, or similar requirement relating to any extensions of credit or other assets of, or any deposits with or other liabilities or commitments of, Lender;

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(iii)           shall impose on Lender or on the U. S. market for certificates of deposit or the London interbank market any other condition affecting this Agreement or any of the extensions of credit, liabilities or commitments under this Agreement; and the result of any of the foregoing is to increase the cost to Lender of making, Converting into, Continuing, or maintaining any LIBOR Loans or to reduce any sum received or receivable by Lender under this Agreement with respect to any LIBOR Loans, then Borrower shall pay to Lender on demand such amount or amounts as will compensate Lender for such increased cost or reduction.   If Lender requests compensation by Borrower under this Section 3.12, Borrower may, by notice to Lender, suspend the obligation of Lender to make or Continue Loans of the Type with respect to which such compensation is requested, or to Convert Loans of any other Type into Loans of such Type, until the event or condition giving rise to such request ceases to be in effect (in which case the provisions of Section 3.15 shall be applicable); provided that such suspension shall not affect the right of Lender to receive the compensation so requested for which it is entitled to prior to such notice by Borrower.

(b)           Reduced Return.  If the adoption of any applicable Law, any change in any applicable Law, any change in the interpretation or administration of any applicable Law by any Governmental Authority, central bank, or comparable agency charged with the interpretation or administration of such Law, or the compliance by Lender with any request or directive (whether or not having the force of law) of any such Governmental Authority, central bank, or comparable agency, has or would have the effect of reducing the rate of return on the capital of Lender or any corporation controlling Lender as a consequence of its obligations under this Agreement to a level below that Lender or such corporation could have achieved but for such adoption, change, request, or directive (taking into consideration its policies with respect to capital adequacy), then from time to time upon demand Borrower shall pay to Lender such additional amount or amounts as will compensate Lender for such reduction.

(c)           Notice of Entitlement to Compensation.  Lender shall promptly notify Borrower of any event of which it has knowledge which will entitle Lender to compensation pursuant to this Section 3.12 and will designate a different lending office if such designation will avoid the need for, or reduce the amount of, such compensation and will not, in the reasonable judgment of Lender, be otherwise disadvantageous to it.  If Lender claims compensation under this Section 3.12 it shall furnish to Borrower a statement setting out the additional amount or amounts to be paid to it hereunder which shall be conclusive in the absence of manifest error.  In determining such amount, Lender may use any reasonable averaging and attribution methods.

3.13           Illegality. Notwithstanding any other provision of this Agreement, if it becomes unlawful for Lender to make, maintain, or fund LIBOR Loans under this Agreement, Lender shall promptly notify Borrower and Lender’s obligation to make or Continue LIBOR Loans and to Convert other Types of Loans into LIBOR Loans shall be suspended until such time as Lender may again make, maintain, and fund LIBOR Loans (in which case the provisions of Section 3.15 shall apply).

3.14           Treatment of Affected Loans.If the obligation of Lender to make a particular Type of Loan or to Continue or Convert Loans of any other Type into Loans of a particular Type shall be suspended pursuant to Sections 3.12 or 3.13 (Loans of such Type are “Affected Loans” and such Type is the “Affected Type”), Lender’s Affected Loans shall be automatically Converted into Base Rate Loans on the last day of the then current Interest Period for Affected Loans (or, in the case of a Conversion required by Section 3.13, on such earlier date as Lender may specify to Borrower), and, unless and until Lender gives notice as provided below that the circumstances specified in Sections 3.12 or 3.13 that gave rise to such Conversion no longer exist:

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(a)           to the extent that Lender’s Affected Loans have been so Converted, all payments and prepayments of principal that would otherwise be applied to Lender’s Affected Loans shall be applied instead to its Base Rate Loans; and

(b)           all Loans that would otherwise be made or Continued by Lender as Loans of the Affected Type shall be made or Continued instead as Base Rate Loans, and all Loans of Lender that would otherwise be Converted into Loans of the Affected Type shall be Converted instead into (or shall remain as) Base Rate Loans.

3.15           Funding Loss.   Within 5 days after receipt of Lender’s request setting out in writing the amount of any Funding Loss and the basis of calculation thereof, Borrower shall pay to Lender the amount of any Funding Loss.  Lender’s determination of the amount of any Funding Loss shall be conclusive in the absence of manifest error.

SECTION 4FEES.

4.1           Treatment of Fees.  To the extent permitted by Law, the fees described in this Section 4 (a) do not constitute compensation for the use, detention, or forbearance of money, (b) are in addition to, and not in lieu of, interest and expenses otherwise described in this Agreement or in any other Loan Document, (c) are payable in accordance with Section 3.1, (d) are non-refundable, (e) accrue interest, if not paid when due, at the Default Rate, and (f) are calculated on the basis of actual number of days elapsed (including the first day but excluding the last day), but computed as if each calendar year consisted of 360 days (unless computation would result in an interest rate in excess of the Maximum Rate, in which event the computation is made on the basis of a year of 365 or 366 days, as the case may be).  The fees described in this Section 4 are in all events subject to the provisions of Section 3.7.

4.2           Unused Commitment Fee.  Borrower shall pay to Lender a fee equal to 0.25% multiplied by the actual daily amount by which the Revolving Committed Amount exceeds the Revolving Credit Exposure, so long as the average daily Revolving Credit Exposure is less than 50% of the Revolving Committed Amount for the calendar quarter then-ended. The fee shall be due and payable quarterly in arrears on the last day of eachMarch, June, September, and December, beginning September 30, 2012, and continuing until the Revolving Credit Termination Date.

4.3           Closing Fee.  On the Closing Date, Borrower shall pay to Lender all fees due and payable in accordance with the Fee Letter.  Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.

4.4           LC Fees.

(a)           Borrower shall pay to Lender (i) an  LC fee for each documentary LC equal to the greater of (A) 2.00% per annum multiplied by the daily maximum amount available to be drawn under such LC (whether or not such maximum amount is then in effect under such LC), and (B) $500, and (ii) an LC fee for each standby LC equal to the greater of (A) 2.00% multiplied by the daily maximum amount available to be drawn under such LC (whether or not such maximum amount is then in effect under such LC), and (B) $500.

(b)           Such LC fees shall be computed on the date of issuance, shall be due and payable in advance on the date of issuance (and, for each Auto-Renewal LC, on the date of each such renewal), and are nonrefundable.

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(c)           In addition, Borrower shall pay directly to Lender all other customary issuance, presentation, amendment and other processing fees, and other standard costs and charges, of Lender relating to letters of credit as from time to time in effect.  Such customary fees and standard costs and charges are due and payable on demand and are nonrefundable.

SECTION 5CONDITIONS PRECEDENT.

5.1           Conditions to Initial Credit Extension.  This Agreement will become effective once all parties have executed and delivered this Agreement. Lender will not be obligated to make the initial Credit Extension on the Closing Date until (a) Lender has received all of the items described on Schedule 5, each in Proper Form, including, but not limited to, payment of all fees due and payable under Section 4.3, (b) Borrower has established (and thereafter maintains) with Lender a Cash Management Agreement acceptable to Borrower and Lender, and (c) all conditions to closing the Acquisition under the Purchase Agreement have been satisfied.

5.2           Conditions to all Credit Extensions.  Lender will not be obligated to make any Credit Extension unless:  (a) Lender has timely received a Loan Request; (b) all of the representations and warranties of the Companies in the Loan Documents are true and correct in all material respects (except to the extent that the representations and warranties speak to a specific date); (c) Lender has received and continues to maintain evidence of insurance as set out in Section 8.6 (including certificates and endorsements); (d) no Material Adverse Event exists; and (e) no Default or Potential Default exists or will result from such Credit Extension (whether a funding, issuance, amendment or renewal).  Each Loan Request delivered to Lender constitutes the representation and warranty by the Companies that the statements in clauses (b), (c), (d), and (e) above are true and correct in all material respects.

5.3           Conditions to all LIBOR Loans. Lender will have no obligation to make or continue a LIBOR Loan if any of the following described events has occurred and is continuing:  (a) Dollar deposits are not available in the London inter-bank market; or (b) LIBOR does not accurately reflect Lender’s cost with respect to any LIBOR Loan.  If either of the foregoing conditions exists, then the applicable rate of interest on the Loans will be determined by such alternate method as reasonably selected by Lender.

5.4           Post-Closing.  By no later than December 31, 2012, Borrower shall deliver to Lender, at the sole cost and expense of Borrower, a field examination of the Companies accounts receivable and inventory, in form, scope and substance satisfactory to Lender, which may be conducted by a third party examiner or Lender’s internal field examiners.

5.5           No Waiver.  Each condition precedent in this Agreement (including matters listed on Schedule 5) is material to the transactions contemplated by this Agreement, and time is of the essence with respect to each condition precedent.  Lender may make any Credit Extension without all conditions being satisfied, but such Credit Extension shall not be deemed a waiver of any condition precedent for any subsequent Credit Extension.

SECTION 6 SECURITY AND GUARANTIES.

6.1           Collateral.  The complete payment and performance of the Obligation shall be secured by all of the items and types of property (collectively, the “Collateral”) described as “Collateral” in each Security Agreement and Deed of Trust.  Each Company shall execute all applicable Security Documents necessary to pledge all of the Collateral it owns, and in respect of all Subsidiaries of Borrower, each such Subsidiary shall execute all applicable Security Documents within ten (10) Business Days after such Subsidiary is created or acquired.

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6.2           Financing Statements.  Each Company (other than VRM) hereby authorizes Lender to file, and agrees to execute, in Proper Form, if requested, financing statements, continuation statements, or termination statements, or take other action reasonably requested by Lender relating to the Collateral, including any Lien search required by Lender.

6.3           Guaranties.  Each Company (other than Borrower and VRM) shall guaranty the complete payment and performance of the Obligation (including the Revolving Credit Facility, the Term Loan, LCs, and any Bank Products) by executing and delivering a Guaranty to Lender on the Closing Date or, with respect to each Company, within 10 Business Days after such Company is created or acquired.

6.4           Reserves.   Upon 7 days prior notice to Borrower, Lender shall have the right to establish, modify or eliminate Reserves against Eligible Accounts, Eligible Inventory, and the Borrowing Base from time to time in its reasonable credit judgment.  In addition upon 7 days prior notice to Borrower, Lender reserves the right, at any time and from time to time after the Closing Date, to adjust any of the criteria set out in the definitions of “Eligible Accounts” or “Eligible Inventory” or to establish new criteria in its reasonable credit judgment.

SECTION 7REPRESENTATIONS AND WARRANTIES.  Each Company represents and warrants to Lender as follows:

7.1           Existence, Good Standing, and Authority to do Business.  Borrower is a corporation duly organized, validly existing, and in good standing under the Laws of the jurisdiction in which it is organized.  Each other Company is duly organized, validly existing, and in good standing under the Laws of the jurisdiction in which it is organized.  In each state in which each Company does business, it is properly licensed, in good standing, and, where required, in compliance with fictitious name statutes.

7.2           Subsidiaries.  Except as disclosed on Schedule 7.2, Borrower has no Subsidiaries.  VRM is a dormant entity and does not now, and in the future shall not without the prior written consent of Lender, conduct any business activities.

7.3           Authorization, Compliance, and No Default.  The execution and delivery by each Company of the Loan Documents to which it is a party and each Company’s performance of its obligations under the Loan Documents are within such Company’s powers, have been duly authorized, do not conflict with any of its organizational documents, and do not conflict with any Law, agreement, or obligation by which such Company is bound.

7.4           Enforceability.  Each Loan Document has been executed and delivered by each Company which is a party to it, and the Loan Documents are enforceable against each Company in accordance with their respective terms, except as enforceability may be limited by applicable Debtor Relief Laws and general principles of equity.

7.5           Litigation.  Except as disclosed on Schedule 7.5, no Company is subject to, or aware of the threat of, any Litigation involving any Company which, (a) purports to affect or pertain to this Agreement, any other Loan Document, or any of the transactions contemplated by the Loan Documents, or (b) if determined adversely to any Company could reasonably be expected to result in a Material Adverse Event.

7.6           Taxes.  All Tax returns of each Company required to be filed have been timely filed (or extensions have been granted) and all Taxes imposed upon any Company that are due and payable have been paid before delinquency, other than Taxes which are being contested in good faith by lawful proceedings diligently conducted, against which reserve or other provision required by GAAP has been made.

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7.7           Environmental Matters.  Except as disclosed in Schedule 7.7, no facility of any Company is used for, or to the knowledge of any Company has been used for, storage, treatment, or disposal of any Hazardous Substance in violation of any applicable Environmental Law, other than violations that individually or collectively would not constitute a Material Adverse Event.  No Company knows of any environmental condition or circumstance adversely affecting its assets, properties, or operations that could reasonably be expected to result in a Material Adverse Event.

7.8           Ownership of Assets; Intellectual Property.  Each Company has (a) indefeasible title to its real property, (b) a vested leasehold interest in all of its leased property, and (c) good and marketable title to its personal property, all as reflected on the Current Financials (except for property that has been disposed of as permitted by Section 9.9).  Each Company is conducting its business without infringement or claim of infringement of any license, patent, copyright, service mark, trademark, trade name, trade secret or other intellectual property right of others, other than any infringements or claims that, if successfully asserted against or determined adversely to any Company, could not, individually or collectively, reasonably be expected to result in a Material Adverse Event.

7.9           Liens.  No Lien exists on any asset of any Company, other than Permitted Liens.

7.10          Debt.  No Company is an obligor on any Debt, other than Permitted Debt.

7.11           Insurance.  The Companies maintain the insurance required under Section 8.6.

7.12           Place of Business; Real Property.  The location of each Company’s place of business or chief executive office is set out on Schedule 7.12.  The books and records of each Company are located at its place of business or chief executive office.  All of each Company’s inventory (other than inventory on consignment, in transit, or in the possession of a Person under the terms of a contract with a Company) is at one or more of the locations set out on Schedule 7.12.  Except as described on Schedule 7.12, no Company has any ownership, leasehold, or other interest in real estate.

7.13           Purpose of Credit Facilities.  Borrower will use the proceeds of (a) the Revolving Credit Facility to consummate the Acquisition, for working capital and other general corporate purposes, the issuance of LCs, and to refinance existing Debt of Borrower, and (b) the Term Loan to consummate the Acquisition.No part of the proceeds of the Revolving Credit Facility or the Term Loan will be used, directly or indirectly, for a purpose under Regulation U of the Board of Governors of the Federal Reserve, or for a purpose that violates any Law.

7.14           Trade Names.  Except as disclosed on Schedule 7.14, no Company has used or transacted business under any other corporate or trade name in the five-year period preceding the Closing Date (including names of all Persons with which any Company has merged or consolidated, or from which any Company has acquired all or substantially all of such Person’s assets).

7.15           Transactions with Affiliates.  Except as disclosed on Schedule 7.15, no Company is a party to an agreement or transaction with any of its Affiliates (excluding other Companies), other than transactions in the ordinary course of business and upon fair and reasonable terms not materially less favorable than it could obtain or could become entitled to in an arm’s-length transaction with a Person that was not its Affiliate.

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7.16           Financial Information.  Each material fact or condition relating to the Loan Documents or the Companies’ financial condition, business, property, or prospects has been disclosed to Lender in writing.  All financial and other information supplied to Lender is sufficiently complete to give Lender accurate knowledge of each Company’s financial condition, including all material contingent liabilities.  Since the date of the most recent financial statement provided to Lender, there has been no material adverse change in the business condition (financial or otherwise), operations, properties or prospects of the Companies.

7.17           Material Agreements and Funded Debt.  No Company is a party to any Material Agreement, other than the Loan Documents and the Material Agreements described on attached Schedule 7.17.  No Company has breached or is in default under any Material Agreement or Funded Debt obligation.

7.18           ERISA.

(a)           Each Employee Plan (i) (other than a multiemployer plan) is in compliance in all material respects with the applicable provisions of ERISA,  the Tax Code and other federal or state law, (ii) has received a favorable determination letter from the IRS and to the best knowledge of Borrower, nothing has occurred which would cause the loss of such qualification.

(b)           Borrower has fulfilled its obligations, if any, under the minimum funding standards of ERISA and the Tax Code with respect to each Employee Plan, and has not incurred any liability with respect to any Employee Plan under Title IV of ERISA.

(c)           There are no claims, actions, or Litigation (including by any Governmental Authority), and there has been no prohibited transaction or violation of the fiduciary responsibility rules, with respect to any Employee Plan which is or could reasonably be expected to be a Material Adverse Event.

(d)           With respect to any Employee Plan subject to Title IV of ERISA: (i) no reportable event has occurred under Section 4043(c) of ERISA for which the PBGC requires 30 day notice; (ii) no action by the Borrower or any ERISA Affiliate to terminate or withdraw from any Employee Plan has been taken and no notice of intent to terminate any Employee Plan has been filed under Section 4041 of ERISA; and (iii) no termination proceeding has been commenced with respect to an Employee Plan under Section 4042 of ERISA, and no event has occurred or condition exists which might constitute grounds for the commencement of such a proceeding.

7.19           Tax Shelter Regulations.  Borrower does not intend to treat the Loans and related transactions as being a “reportable transaction” (within the meaning of Treasury Regulation Section 1.6011-4).  In the event Borrower determines to take any action inconsistent with such intention, it will promptly notify Lender thereof.  If Borrower so notifies Lender, Borrower acknowledges that Lender may treat its Loans as part of a transaction that is subject to Treasury Regulation Section 301.6112-1, and Lender will maintain the lists and other records required by such Treasury Regulation.

SECTION 8AFFIRMATIVE COVENANTS. So long as Lender is committed to make any Credit Extension under this Agreement, and thereafter until the Obligation is paid in full, each Company agrees as follows:

8.1           Items to be Furnished.  Borrower shall cause the following to be furnished to Lender:

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(a)           Promptly after preparation, and no later than 120days after the last day of each fiscal year of Borrower, audited financial statements (including statements of income, statements of retained earnings and cash flows and a balance sheet) showing the consolidated financial condition and results of operations of the Companies as of, and for the year ended on, that last day, setting out, in each case, in comparative form the figures for the previous fiscal year and accompanied by:

(i)           the unqualified opinion of LLB & Associates Ltd., LLP, or a firm of nationally or regionally recognized independent certified public accountants satisfactory to Lender, based on an audit using generally accepted auditing standards, that the financial statements were prepared in accordance with GAAP and present fairly, in all material respects, the consolidated financial condition and results of operations of Companies, and

(ii)           a Compliance Certificate with respect to such financial statements to be delivered under this clause (a), calculating and certifying as to the Companies’ compliance with the financial covenants under this Agreement.

(b)           Promptly after preparation, and no later than 45 days after each fiscal quarter of Borrower, unaudited financial statements (including statements of income, statements of retained earnings and cash flows and a balance sheet) showing the consolidated and consolidating financial condition and results of operations of the Companies for the prior quarter and for the period from the beginning of the current fiscal year to the last day of such quarter.

(c)           Within 45 days after the end of each fiscal quarter of Borrower, a Compliance Certificate executed by a Responsible Officer with respect to the financial covenants set forth in Section 10 hereof, together with calculations of such financial covenants.

(d)           Promptly after preparation, and no later than 20 days after the last day of each month (or more often as Lender shall request), (i) a Borrowing Base Certificate as of the last day of such month certifying as to the Companies’ Borrowing Base, and (ii) all supporting information for the calculation of the Borrowing Base, including supporting schedules, inventory listings, accounts payable, accounts receivable agings and such other information as Lender may reasonably request.

(e)           The Companies will permit Lender to conduct and complete, by a third party satisfactory to Lender, a field examination and appraisal, in form and substance satisfactory to Lender, and at the sole expense of the Companies, regarding all accounts receivable, inventory, equipment or real property of the Companies at any time at Lender’s request.

(f)            Notice, within 5 days after any Company receives notice of, or otherwise becomes aware of, (i) the institution of any Litigation involving any Company for which the monetary amount at issue is greater than $50,000,individually, or $100,000 in the aggregate, (ii) any liability or alleged liability under any Environmental Law arising out of, or directly affecting, the properties or operations of such Company, (iii) any substantial dispute with any Governmental Authority, (iv) the incurrence of any material contingent Debt, and (v) a Default or Potential Default, specifying the nature thereof and what action each Company has taken, is taking, or proposes to take.

(g)           Concurrently with the occurrence of (i) such change, notify Lender of any change in the name, legal structure, place of business, or chief executive office of any Company, or (ii) any acquisition or creation of a Subsidiary by any Company, notify Lender that any Person has become a Subsidiary of such Company.

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(h)           Promptly upon reasonable request by Lender, information and documents not otherwise required to be furnished under the Loan Documents respecting the business affairs, assets and liabilities of the Companies.

8.2           Books, Records and Inspections.  Each Company shall maintain books, records, and accounts necessary to prepare the financial statements required by Section 8.1.  Upon reasonable notice, each Company shall allow Lender (or its Representatives) during business hours or at other reasonable times to inspect each Company’s properties and examine, audit, and make copies of books and records.  If any of the Companies’ properties, books or records are in the possession of a third party, the applicable Company shall authorize that third party to permit Lender or its Representatives to have access to perform inspections or audits and to respond to Lender’s requests for information concerning such properties, books and records.  Lender may discuss, from time to time, any of the Companies’ affairs, conditions and finances with its directors, officers, and certified public accountants.

8.3           Taxes.  Each Company will promptly pay when due any and all Taxes, other than Taxes which are being contested in good faith by lawful proceedings diligently conducted, against which reserve or other provision required by GAAP has been made, and in respect of which levy and execution of any Lien are stayed.

8.4           Compliance with Laws.  Each Company shall comply in all material respects of the requirements of all Laws (including fictitious or trade name statutes) and all orders, writs, injunctions and decrees applicable to it or its business or property, except in such instances in which (a) such requirement is deemed contested in good faith by lawful proceedings diligently conducted, against which reserve or other provision required by GAAP has been made, and (b) the failure to comply would not result in a Material Adverse Event.

8.5           Maintenance of Existence, Assets, and Business.  Except as otherwise permitted by Section 9.6, each Company will (a) maintain its existence and good standing in its state of organization and its authority to transact business and good standing in all other jurisdictions where the nature and extent of its business and properties require due qualification and good standing, (b) maintain all licenses, permits and franchises necessary for its business where failure to do so is a Material Adverse Event, and (c) keep all of its assets that are useful in and necessary to its business in good working order and condition (ordinary wear and tear excepted) and make all necessary repairs and replacements.

8.6           Insurance.  Each Company shall maintain (a) insurance satisfactory to Lender as to amount, nature and carrier covering property damage (including loss of use and occupancy) to any of the Companies’ properties, business interruption insurance, public liability insurance including coverage for contractual liability, product liability and workers’ compensation, and any other insurance which is usual for the Companies’ business.  Each policy shall provide for at least thirty (30) days’ prior notice to Lender of any cancellation thereof, and (b) insurance policies covering the tangible property comprising the Collateral.  Each insurance policy must be for the full replacement cost of the Collateral and include a replacement cost endorsement in an amount acceptable to Lender.  The insurance must be issued by an insurance company acceptable to Lender and must include a lender’s loss payable endorsement in favor of Lender in a form acceptable to Lender.  Upon Lender’s request, Borrower shall deliver to Lender a copy of each insurance policy, or, if permitted by Lender, a certificate of insurance listing all insurance in force.

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8.7           Environmental Laws.  Each Company shall conduct its business so as to comply with all applicable Environmental Laws, shall promptly take corrective action to remedy any violation of any Environmental Law, and shall immediately notify Lender of any claims or demands by any Governmental Authority or Person with respect to any Environmental Law or Hazardous Substance.

8.8           ERISA.  Promptly during each year (a) pay contributions adequate to meet at least the minimum funding standards under ERISA with respect to each and every Employee Plan, (b) file each annual report required to be filed pursuant to ERISA in connection with each Employee Plan for each year, and (c) notify Lender within ten (10) days of the occurrence of any reportable event under Section 4043(c) of ERISA that might constitute grounds for termination of any capital Employee Plan by the Pension Benefit Guaranty Corporation or for the appointment by the appropriate United States District Court of a trustee to administer any Employee Plan.

8.9           Use of Proceeds.  Borrower shall use the proceeds of the Term Loan and the Revolving Credit Facility only for the purposes represented and warranted in this Agreement.

8.10           Application of Insurance and Eminent Domain Proceeds.

(a)           Subject to Section 2.4(d), Lender and each Company agree (i) that all Insurance Proceeds shall be paid by the insurers directly to Lender (as loss payee or additional insured), and (ii) to cause all Eminent Domain Proceeds to be paid by the condemning Governmental Authority directly to Lender.

(b)           Subject to Section 2.4(d), if any Insurance Proceeds or Eminent Domain Proceeds are paid to any Company, such Insurance Proceeds or Eminent Domain Proceeds shall be received only in trust for Lender, shall be segregated from other funds of the Companies and shall promptly be paid over to Lender in the same form as received (with any necessary endorsement).

(c)           Notwithstanding anything to the contrary in this Section 8.10, reimbursement under any liability insurance maintained by any Company may be paid directly to the Person who incurred the liability, cost, or expense covered by such insurance.

(d)           Any Eminent Domain Proceeds or Insurance Proceeds shall be applied to the repayment of the Principal Amount in accordance with Section 2.4, with the excess, if any, payable to Borrower.

8.11           New Subsidiaries.  Each Company shall promptly cause each newly created or acquired Subsidiary to comply with Section 6.

8.12           Expenses.  Borrower shall promptly pay upon demand (a) all reasonable costs, fees and expenses paid or incurred by Lender (including those incurred under Section 6)in connection with the negotiation, preparation, delivery and execution of any Loan Document, and any related or subsequent amendment, waiver, or consent (including in each case, the reasonable fees and expenses of Lender’s counsel), (b) all due diligence, closing, and post-closing costs including filing fees, recording costs, lien searches, corporate due diligence, third-party expenses, appraisals (if required), title insurance (if required), environmental surveys, annual field audits, and other related due diligence, closing and post-closing costs and expenses, and (c) all costs, fees and expenses of Lender incurred in connection with the enforcement of the Loan Documents or the exercise of any rights arising under the Loan Documents or the negotiation, workout, or restructure and any action taken in connection with any Debtor Relief Laws (including in each case, the reasonable fees and expenses of Lender’s counsel), all of which shall be a part of the Obligation and shall accrue interest, if not paid upon demand, at the Default Rate until repaid.

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8.13           Primary Depositary Institution.  Borrower shall establish and maintain with Lender all of Borrower’s primary depositary and treasury management accounts.

8.14           Further Assurances.  Each Company shall take such action as Lender may reasonably request to carry out the intent of this Agreement and the terms of the Loan Documents (including to perfect and protect its security interests and Liens), including executing, acknowledging, authorizing, delivering or recording or filing additional instruments or documents.  Because each Company agrees that Lender’s remedies at Law for failure of any Company to comply with the provisions of this Section 8.14 would be inadequate and that failure would not be adequately compensable in damages, each Company agrees that the covenants of this Section 8.14 may be specifically enforced.

SECTION 9NEGATIVE COVENANTS.

  So long as Lender is committed to make any Credit Extension under this Agreement, and thereafter until the Obligation is paid in full, each Company agrees as follows:

9.1           Debt.  No Company may create, incur, or permit to exist, any Debt except Permitted Debt.

9.2           Liens.  No Company shall create, incur, or permit any Lien upon any of its assets, except Permitted Liens.  No Company shall enter into any agreement (other than the Loan Documents) prohibiting the creation or assumption of any Lien upon its assets or revenues or prohibiting or restricting the ability of the Borrower or any Company to amend or otherwise modify this Agreement or any other Loan Document.

9.3           Compliance.  No Company may violate the provisions of any Laws applicable to it, any agreement to which it is a party, or the provisions of its organizational documents, if such violations individually or collectively would constitute a Material Adverse Event.  No Company will modify, repeal, replace or amend any provision of its organizational or governing documents in any manner which would be adverse to the interests of Lender.

9.4           Loans and Investments

(a)           No Company may extend credit to any other Person, other than (i) extensions of credit among the Companies which have recourse liability for the Obligation, (ii) extensions of credit in the nature of accounts receivable or notes receivable arising from the sale or lease of goods or services in the ordinary course of business to Persons which are not Affiliates, (iii) demand deposit accounts maintained in the ordinary course of business, (iv) expense accounts for employees in the ordinary course of business which do not, in the aggregate, at any time exceed $25,000, and (v) extensions of credit that do not exceed an aggregate amount of $25,000 outstanding at any one time.

(b)           No Company may make any investment in, or purchase or commit to purchase any Equity Interests in, any other Person, other than Permitted Investments.

9.5           Dividends.  No Company may (a) declare or make any dividend or other distribution (other than (i) dividends or distributions declared or made by such Company wholly in the form of its capital stock, or (ii) dividends or distributions by a Company to another Company), (b) retire, redeem, purchase, withdraw, or otherwise acquire any Equity Interests in such Company (including the purchase of warrants or other options to acquire such interests), or (c) declare or make any distribution of assets to the holders of its Equity Interests (in that capacity), whether in cash, assets, or in its obligations.  No Company may enter into or permit to exist any arrangement or agreement (other than this Agreement) that prohibits it from paying dividends or making other distributions.

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9.6           Acquisition, Mergers, and Dissolutions.

(a)           Except as provided in this Section 9.6, no Company may (whether in one transaction or a series of transactions) (i) acquire all or any substantial portion of the stock issued by, equity interest in, Voting Interest in, or assets of, any other Person, (ii) merge or consolidate with any other Person without Lender’s consent, (iii) liquidate, wind up or dissolve (or suffer any liquidation or dissolution), (iv) suspend operations, or (v) create or acquire any Subsidiaries.

(b)           Any Company may merge or consolidate with, or acquire stock issued by, Equity Interests in, or assets of, another Company (and, in the case of such merger or consolidation or, in the case of the conveyance or distribution of all of such assets, the non-surviving or selling entity, as the case may be, may be liquidated, wound up or dissolved); provided that, if the surviving entity is a Guarantor it shall comply with Section 6 and if Borrower is a party to such merger or consolidation, Borrower must be the surviving entity.

9.7           Assignment.  No Company may assign or transfer any of its rights, duties or obligations under any of the Loan Documents.

9.8           Fiscal Year and Accounting Methods.  No Company may change its fiscal year or its method of accounting (other than immaterial changes in methods or as required by GAAP).

9.9           Sale of Assets.  No Company may make any Disposition or enter into any agreement to make any Disposition, except (a) Dispositions of obsolete or worn out assets in the ordinary course of business, (b) Dispositions of inventory in the ordinary course of business, (c) the Disposition of delinquent accounts receivable in the ordinary course of business for purposes of collection, (d) Dispositions of property by any Company to another Company or to a wholly-owned Subsidiary; provided that, if the transferor of such property is the Borrower or a Guarantor, the transferee thereof must either be the Borrower or a Guarantor and must comply with Section 6, and (e) to the extent permitted by Section 9.6.

9.10           New Businesses.  No Company may engage in any business except the business in which it is engaged as of the Closing Date.

9.11           Transactions with Affiliates.  Except as disclosed on Schedule 7.15, no Company may enter into any Material Agreement or any material transaction with any of its Affiliates other than transactions in the ordinary course of business which are upon fair and reasonable terms not materially less favorable to such Company than such Company could obtain in an arms’ length transaction with a Person that was not an Affiliate; provided that, no Company shall make loans or advances to any of its Affiliates (other than extensions of credit among the Companies which have recourse liability for the Obligation) at any time.

9.12           Payroll Taxes.  No Company may use any portion of the proceeds of any Loan to pay the wages of employees, unless a timely payment to or deposit with the appropriate Governmental Authority of all Taxes required to be deducted and withheld with respect to such wages is also made.

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9.13           Prepayment of Debt.  No Company may voluntarily prepay principal of, or interest on, any Debt, other than the Obligation, if a Default or Potential Default exists or would result after giving effect to such payment.  No Company may prepay, repay, repurchase, redeem or defease Subordinated Debt prior to the irrevocable payment and performance in full of the Obligation without the prior written consent of Lender.

9.14           Purchase Agreement.  The Purchase Agreement shall not be amended, modified or supplemented after the Acquisition, without the prior written consent of Lender.  No Company may make any “Earn-out Payment” (such term is used herein as defined in the Purchase Agreement) under the terms of the Purchase Agreement, if a Default exists at the time of such payment or would arise after giving effect to any such payment.  Borrower shall provide notice to Lender prior to making any “Earn-out Payment” under the Purchase Agreement.

SECTION 10FINANCIAL COVENANTS.So long as Lender is committed to make any  Credit Extension under this Agreement, and thereafter until the Obligation is paid in full, each Company agrees as follows:

10.1           Fixed Charge Coverage Ratio.  Beginning with the fiscal quarter ending September 30, 2012, and at all times thereafter, the Fixed Charge Coverage Ratio may not at any time be less than 1.25 to 1.00.  The Fixed Charge Coverage Ratio shall be calculated and tested quarterly for the four fiscal-quarter period ending as of the last day of each fiscal quarter of Borrower.

10.2           Senior Funded Debt to EBITDA Ratio.  Beginning with the fiscal quarter ending September 30, 2012, and at all times thereafter, the Senior Funded Debt to EBITDA Ratio may not at any time be greater than 2.00 to 1.00.  The Senior Funded Debt to EBITDA Ratio shall be calculated and tested quarterly for the four fiscal-quarter period ending as of the last day of each fiscal quarter of Borrower.

10.3           Minimum Tangible Net Worth.  The sum of Tangible Net Worth may not at any time be less than $10,000,000 as of the last day of each fiscal quarter, commencing with the fiscal quarter of Borrower ending September 30, 2012.

SECTION 11DEFAULT. The term “Default” means the occurrence of any one or more of the following events:

11.1           Payment of Obligation.  The failure of any Company to pay any part of the Obligation when and as required to be paid under the Loan Documents.

11.2           Covenants.  The failure of any Company to punctually and properly perform, observe and comply with:

(a)           Any covenant, agreement, or condition contained in (i) Sections 6.1, 6.3, 8.2, 8.6, 8.8, 8.9, or 8.10, and such failure continues for 10 days or (ii) Sections 9 and 10, or,

(b)           Any other covenant, agreement, or condition contained in any Loan Document, (other than the covenants to pay the Obligation as set out in Section 11.1 above, the covenants in clause (a) preceding and as set out below in this Section 11), and such failure continues for 30 days.

11.3           Debtor Relief.  Any Company or any Guarantor (a) voluntarily seeks, consents to, or acquiesces in the benefit of any Debtor Relief Law, other than a voluntary liquidation or dissolution permitted by Section 9.6, (b) becomes a party to or is made the subject of any proceeding provided for by any Debtor Relief Law (other than as a creditor or claimant), and (i) the petition is not controverted within 10 days and is not dismissed within 60 days, or (ii) an order for relief is entered under Title 11 of the United States Code, (c) makes an assignment for the benefit of creditors, or (d) fails (or admits in writing its inability) to pay its debts generally as they become due.

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11.4           Judgments.  There is entered against any Company or any Guarantor (a) a final non-appealable judgment or arbitration award for the payment of money in the amount exceeding $100,000 (individually or in the aggregate and net of applicable insurance if the insurer has accepted coverage) or (b) one or more non-monetary final non-appealable judgments that could be, or could reasonably be expected to be, individually or in the aggregate, a Material Adverse Event, and, in either case enforcement of such judgment or award is not stayed.

11.5           False Information; Misrepresentation.  Any information given to Lender by any Company is false or any representation or warranty made to Lender by any Company or contained in any Loan Document at any time proves to have been incorrect in any material respect when made.

11.6           Default Under Other Agreements.

(a)           Any Company fails to pay when due (after any applicable grace period) any Debt which (individually or in the aggregate) exceeds $100,000, or any default exists under any agreement which permits any Person to cause any Debt which (individually or in the aggregate) exceeds $100,000 to become due and payable by any Company before its stated maturity.

(b)           Any Company breaches or defaults under any term, condition, provision, representation or warranty contained in any Material Agreement, including any agreement with Lender (other than the Loan Documents), and such Company fails for 5 Business Days to commence and thereafter diligently pursue a cure.

11.7           Validity and Enforceability of Loan Documents.  Any Lien granted under any Security Document ceases to be a first priority Lien on the Companies’ assets.  Any Loan Document at any time after its execution and delivery (a) ceases to be in effect in any material respect or is declared by a Governmental Authority to be null and void, or (b) its validity or enforceability is contested by a Company or a Company denies that it has any further liability or obligations under any Loan Document.

11.8           Swap Agreement.  Notwithstanding Section 11.2(b) above, (a) any Company breaches any provision of any Swap Agreement and the breach is not cured or waived within any applicable grace period, or (b) any Swap Agreement is terminated.

11.9           Change of Management or Control.  (a) A Change of Management occurs, (b) a Change of Control occurs, or (c) an agreement, letter of intent, or agreement in principle is executed with respect to any proposed transaction or event or series of transactions or events which, individually or in the aggregate, could reasonably be expected to result in a Change of Control or a Change of Management.

11.10           Material Adverse Event.  A Material Adverse Event exists.

11.11           LCs.  Lender is served with, or becomes subject to, a court order, injunction, or other process or decree restraining or seeking to restrain it from paying any amount under any LC and either (a) a drawing has occurred under the LC and the applicable Company has refused to reimburse Lender for payment or (b) the expiration date of the LC has occurred but the right of any beneficiary thereunder to draw under the LC has been extended past the expiration date in connection with the pendency of the related court action or proceeding and Borrower has failed to Cash Collateralize the then existing LC Exposure.

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11.12           Default under the CMT Lease.  A default under the CMT Lease occurs.

SECTION 12RIGHTS AND REMEDIES.

12.1           Remedies Upon Default.

(a)           If a Default exists under Section 11.3, the Commitment to extend credit under this Agreement automatically terminates and the unpaid balance of the Obligation automatically becomes due and payable without any action of any kind.

(b)           If a Default exists, Lender may do any one or more of the following:  (i) if the maturity of the Obligation has not already been accelerated under Section 12.1(a), declare the unpaid balance of the Obligation immediately due and payable and to the extent permitted by applicable Law, the Obligation shall accrue interest at the Default Rate; (ii) terminate the commitment to extend credit under this Agreement; (iii) reduce any claim to judgment; (iv) exercise the rights of set-off or banker’s Lien under Section 3.8 to the extent of the full amount of the Obligation; and (v) exercise any and all other legal or equitable rights afforded by the Loan Documents, the Laws of the State of Texas, or any other applicable jurisdiction.

12.2           Waivers.  To the extent permitted by Law, each Company waives presentment and demand for payment, protest, notice of intention to accelerate, notice of acceleration and notice of protest and nonpayment, and agrees that its liability with respect to all or any part of the Obligation is not affected by any renewal or extension in the time of payment of all or any part of the Obligation, by any indulgence, or by any release or change in any security for the payment of all or any part of the Obligation.

12.3           No Waiver.  No waiver of any Default shall be deemed to be a waiver of any other then-existing or subsequent Default.  No delay or omission by Lender in exercising any right under the Loan Documents will impair that right or be construed as a waiver thereof or any acquiescence therein, nor will any single or partial exercise of any right preclude other or further exercise thereof or the exercise of any other right. The acceptance by Lender of any partial payment shall not be deemed to be a waiver of any Default then existing.

12.4           Performance by Lender.  If any covenant, duty or agreement of any Company is not performed in accordance with the terms of the Loan Documents, Lender may, but is not obligated to, perform or attempt to perform that covenant, duty or agreement on behalf of that Company (and any amount expended by Lender in its performance or attempted performance is payable on demand, becomes part of the Obligation, and bears interest at the Default Rate from the date of Lender’s expenditure until paid).

12.5           Cash Collateral.  If any Default exists, Borrower shall, if requested by Lender, immediately deposit with and pledge to Lender, cash or cash equivalent investments in an amount equal to the LC Exposure as security for the Obligation for so long as such Default continues or until such Default is waived by Lender.

12.6           Cumulative Rights.  All rights available to Lender under the Loan Documents are cumulative of, and in addition to, all other rights granted at law or in equity, whether or not the Obligation is due and payable and whether or not Lender has instituted any suit for collection, foreclosure, or other action in connection with the Loan Documents.

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SECTION 13MISCELLANEOUS.

13.1           Governing Law.  Each Loan Document must be construed, and its performance enforced, under Texas law.

13.2           Invalid Provisions.  If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby and (b) the parties shall engage in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions.  The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

13.3           Multiple Counterparts and Electronic Signatures.  Each Loan Document may be executed in any number of counterparts with the same effect as if all signatories had signed the same document.  All counterparts must be construed together to constitute one and the same instrument.  Loan Documents may be transmitted and signed by facsimile or other electronic means and shall have the same effect as manually-signed originals and shall be binding on all Companies and Lender.

13.4           Notice.  Unless otherwise provided in this Agreement, all notices or consents required under this Agreement shall be personally delivered or sent by first class mail, postage prepaid, or by overnight courier, or sent by facsimile.  Notices and other communications shall be effective (a) if mailed, upon the earlier of receipt or five (5) days after deposit in the U.S. mail, first class, postage prepaid, (b) if faxed, when transmitted, or (c) if hand-delivered, by courier or otherwise (including telegram, lettergram or mailgram), when delivered.  Until changed by notice pursuant to this Agreement, the addresses and facsimile numbers for each party is set out on Schedule 1.  Lender shall be entitled to rely and act upon any notices (including telephonic Loan Requests permitted by Lender) purportedly given by or on behalf of Borrower even if (i) such notices were not made in a manner specified in this Section 13.4, were incomplete or were not preceded or followed by any other form of notice specified in this Section 13.4, or (ii) the terms of the notice, as understood by the recipient, varied from any confirmation of the notice.  Borrower shall indemnify Lender and its Affiliates and representatives from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of Borrower.  All telephonic notices to and other communications with Lender may be recorded by Lender, and each of the parties to this Agreement hereby consents to such recording.

13.5           Binding Effect; Survival.  This Agreement is binding upon, and inures to the benefit of, the parties hereto and their respective successors and permitted assigns.  Unless otherwise provided, all covenants, agreements, indemnities, representations and warranties made in any of the Loan Documents survive and continue in effect as long as the Commitment is in effect or the Obligation is outstanding.

13.6           Amendments.  The Loan Documents may be amended, modified, supplemented or be the subject of a waiver only by a writing executed by Lender and each Company party thereto.

13.7           Participants.  Lender may, at any time, sell to one or more Persons (each a “Participant”) participating interests in the Obligation; provided that, (i) Lender remains the holder of the Principal Amount, (ii) Lender’s obligations under this Agreement remain unchanged and Lender remains solely responsible for the performance of those obligations, and (iii) each Company continues to deal solely and directly with Lender regarding the Loan Documents.  Lender may furnish any information concerning the Companies in its possession from time to time to assignees and Participants (including prospective assignees and Participants).

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13.8           Discharge Only Upon Payment in Full; Reinstatement in Certain Circumstances.  Each Company’s obligations under the Loan Documents remain in full force and effect until the Commitment is terminated and the Obligation is paid in full (except for provisions under the Loan Documents which by their terms expressly survive payment of the Obligation and termination of the Loan Documents).  If at any time any payment of the principal of or interest on the any Note or any other amount payable by any Company or any other obligor on the Obligation under any Loan Document is rescinded or must be restored or returned upon the insolvency, bankruptcy or reorganization of Borrower or otherwise, the obligations of each Company under the Loan Documents with respect to that payment shall be reinstated as though the payment had been due but not made at that time.

13.9           Arbitration; Waiver of Jury Trial.  This paragraph, including the subparagraphs below, is referred to as the “Dispute Resolution Provision.”  This Dispute Resolution Provision is a material inducement for the parties entering into this Agreement.

(a)           This Dispute Resolution Provision concerns the resolution of any controversies or claims between the parties, whether arising in contract, tort or by statute, including but not limited to controversies or claims that arise out of or relate to: (i) this Agreement (including any renewals, extensions or modifications); or (ii) any document related to this Agreement (collectively a “Claim”).  For the purposes of this Dispute Resolution Provision only, the term “parties” shall include any parent corporation, subsidiary or affiliate of Lender involved in the servicing, management or administration of any obligation described or evidenced by this Agreement.

(b)           At the request of any party to this agreement, any Claim shall be resolved by binding arbitration in accordance with the Federal Arbitration Act (Title 9, U.S. Code) (the “Act”).  The Act will apply even though this agreement provides that it is governed by the law of a specified state.

(c)           Arbitration proceedings will be determined in accordance with the Act, the then-current rules and procedures for the arbitration of financial services disputes of the American Arbitration Association or any successor thereof (“AAA”), and the terms of this Dispute Resolution Provision.  In the event of any inconsistency, the terms of this Dispute Resolution Provision shall control.  If AAA is unwilling or unable to (i) serve as the provider of arbitration or (ii) enforce any provision of this arbitration clause, Lender may designate another arbitration organization with similar procedures to serve as the provider of arbitration.

(d)           The arbitration shall be administered by AAA and conducted, unless otherwise required by law, in any U.S. state where real or tangible personal property collateral for this credit is located or if there is no such collateral, in the state specified in the governing law section of this agreement.  All Claims shall be determined by one arbitrator; however, if Claims exceed Five Million Dollars ($5,000,000), upon the request of any party, the Claims shall be decided by three arbitrators.  All arbitration hearings shall commence within ninety (90) days of the demand for arbitration and close within ninety (90) days of commencement and the award of the arbitrator(s) shall be issued within thirty (30) days of the close of the hearing.  However, the arbitrator(s), upon a showing of good cause, may extend the commencement of the hearing for up to an additional sixty (60) days.  The arbitrator(s) shall provide a concise written statement of reasons for the award.  The arbitration award may be submitted to any court having jurisdiction to be confirmed and have judgment entered and enforced.

42

(e)           The arbitrator(s) will give effect to statutes of limitation in determining any Claim and shall dismiss the arbitration if the Claim is barred under the applicable statutes of limitation. For purposes of the application of any statutes of limitation, the service on AAA under applicable AAA rules of a notice of Claim is the equivalent of the filing of a lawsuit.  Any dispute concerning this arbitration provision or whether a Claim is arbitrable shall be determined by the arbitrator(s), except as set forth at subparagraph (h) of this Dispute Resolution Provision.  The arbitrator(s) shall have the power to award legal fees pursuant to the terms of this agreement.

(f)           This paragraph does not limit the right of any party to: (i) exercise self-help remedies, such as but not limited to, setoff; (ii) initiate judicial or non-judicial foreclosure against any real or personal property collateral; (iii) exercise any judicial or power of sale rights, or (iv) act in a court of law to obtain an interim remedy, such as but not limited to, injunctive relief, writ of possession or appointment of a receiver, or additional or supplementary remedies.

(g)           The filing of a court action is not intended to constitute a waiver of the right of any party, including the suing party, thereafter to require submittal of the Claim to arbitration.

(h)           Any arbitration or court trial (whether before a judge or jury) of any Claim will take place on an individual basis without resort to any form of class or representative action (the “Class Action Waiver”).  The Class Action Waiver precludes any party from participating in or being represented in any class or representative action regarding a Claim.  Regardless of anything else in this Dispute Resolution Provision, the validity and effect of the Class Action Waiver may be determined only by a court and not by an arbitrator.  The parties to this agreement acknowledge that the Class Action Waiver is material and essential to the arbitration of any disputes between the parties and is nonseverable from the agreement to arbitrate Claims. If the Class Action Waiver is limited, voided or found unenforceable, then the parties’ agreement to arbitrate shall be null and void with respect to such proceeding, subject to the right to appeal the limitation or invalidation of the Class Action Waiver.  THE PARTIES ACKNOWLEDGE AND AGREE THAT UNDER NO CIRCUMSTANCES WILL A CLASS ACTION BE ARBITRATED.

(i)           By agreeing to binding arbitration, the parties irrevocably and voluntarily waive any right they may have to a trial by jury in respect of any Claim.  Furthermore, without intending in any way to limit this agreement to arbitrate, to the extent any Claim is not arbitrated, the parties irrevocably and voluntarily waive any right they may have to a trial by jury in respect of such Claim.  This waiver of jury trial shall remain in effect even if the Class Action Waiver is limited, voided or found unenforceable.  WHETHER THE CLAIM IS DECIDED BY ARBITRATION OR BY TRIAL BY A JUDGE, THE PARTIES AGREE AND UNDERSTAND THAT THE EFFECT OF THIS AGREEMENT IS THAT THEY ARE GIVING UP THE RIGHT TO TRIAL BY JURY TO THE EXTENT PERMITTED BY LAW.

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13.10           Indemnity.  Whether or not the transactions contemplated by this Agreement are consummated, each Company shall indemnify and hold harmless Lender and its Affiliates and representatives (collectively the “Indemnitees”) from and against any and all liabilities, obligations, losses, damages, penalties, claims, demands, actions, judgments, suits, costs, expenses and disbursements (including fees and expenses of counsel) of any kind or nature whatsoever which may at any time be imposed on, incurred by or asserted against any such Indemnitee in any way relating to or arising out of or in connection with (a) the execution, delivery, enforcement, performance or administration of any Loan Document or any other agreement, letter or instrument delivered in connection with the transactions contemplated thereby or the consummation of the transactions contemplated thereby, (b) any Commitment, any Loan, or the use or proposed use of the proceeds therefrom, or (c) any actual or alleged presence or release of Hazardous Substance on or from any property currently or formerly owned or operated by Borrower, any Subsidiary or any other Company, or any liability in respect of any Environmental Law related in any way to Borrower, any Subsidiary or any other Company, or (d) any actual or prospective Litigation, claim, or investigation relating to any of the foregoing, whether based on contract, tort or any other theory (including any investigation of, preparation for, or defense of any pending or threatened claim, investigation, litigation or proceeding) and regardless of whether any Indemnitee is a party thereto (all the foregoing, collectively, the “Indemnified Liabilities”), in all cases, whether or not caused by or arising, in whole or in part, out of the negligence of the Indemnitee; provided that, such indemnity shall not, as to any Indemnitee, be available to the extent that such liabilities, obligations, losses, damages, penalties, claims, demands, actions, judgments, suits, costs, expenses or disbursements are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee.  All amounts due under this Section 13.10 shall be payable within ten (10) Business Days after demand.  The agreements in this Section 13.10 shall survive the resignation of Lender, the replacement of Lender, the termination of the Commitments hereunder and the repayment, satisfaction or discharge of the Obligation.

13.11           USA Patriot Act Notice.  Lender hereby notifies Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Patriot Act”), Lender is required to obtain, verify and record information that identifies Borrower, which information includes the name and address of Borrower and other information that will allow Lender to identify Borrower in accordance with the Patriot Act.

13.12           Entirety.  THE LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

[Signatures are on the following pages.]

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EXECUTED as of the day and year set out in the Preamble.

BORROWER:

45

LENDER:

 

46

SCHEDULE 1

Parties, Addresses, and Wiring Information

Borrowers and other Companies	Borrowers’ Wire Instructions
Vertex Energy, Inc.	Location of Account:  Bank of America
1331 Gemini, Suite 250	ABA No.:  XXXXXXXXX
Houston, Texas  77058	Account No.:Please contact
Attn:  Benjamin P. Cowart	Shawyna Jarrett
Phone:(281) 486-4182	(713) 247-6406
Fax:(281) 486-0217	for account information.
	For credit to:  Vertex Energy, Inc

.

copy to:

The Loev Law Firm, PC

6300 West Loop South, Suite 280

Bellaire, Texas  77404

Telephone No.: (713) 524-4110

Facsimile No.:   (713) 524-4122

Attention:  David M. Loev

Lender’s Office

Bank of America, N.A.

700 Louisiana, 8th Floor

Houston, Texas 77002

Attn: Shawyna Jarrett

Phone: (713) 247-6406

Fax:      (713) 247-7569

copy to:

Porter Hedges LLP

1000 Main St., 36th Floor

Houston, Texas  77002

Attn: Joyce K. Soliman

Phone: (713) 226-6685

Fax:      (713) 226-6285

47

SCHEDULE 2

Existing Debt and Liens

H&H Oil and  CMT have an agreement for uniform rental and janitorial supplies through February, 2015. The expense under this agreement was approximately $53,000 and $30,000 for the years ended December 31, 2011 and 2010, respectively.

H&H Oil Baytown leases trailer vehicles under a twelve month operating lease which expired in July, 2012. The trailers are currently being leased on a month to month basis. Rental expense under this and previous leases was approximately $21,000 and $9,000 for the years ended December 31, 2011 and 2010, respectively.

CMT has a long term note for equipment purchase that is due in monthly installments of $1,786, with interest at 10.90%, and is secured by CMT’s assets, maturing January, 2015. The principal due at December 31, 2011 was $55,909.

At December 31, 2011, equipment acquired by CMT under capital leases during 2011 include:

Gross capital lease obligations	$	104,646
Imputed interest		(18,774	)
Present value of minimum lease payments		85,872
Current capital lease obligations		(28,213	)
Long-term capital lease obligations	$	57,659

The capital lease payments for the leases above (CMT) consist of monthly installments of $1,213.98 and $1,781.

Beginning in March 2012, Crossroad Carriers leases trucks under a 48 month operating lease with monthly installments of $4,250.87, and a 48 month operating lease with monthly installments of $4,234.11.

Beginning in June, 2012, H&H Oil Corpus Christi leases a truck under a 48 month operating lease with monthly installments of $2,207.02.

CMT leases radio equipment under a 60 month, $354.17 per month operating lease and a 48 month, $292.18 per month operating lease.

48

SCHEDULE 5

Conditions Precedent

(See closing checklist.)

1.	Credit Agreement
	Schedule 1 Parties, Addresses, and Wiring Information
	Schedule 2 Existing Debt and Liens
	Schedule 5 Conditions Precedent
	Schedule 7.2  Subsidiaries
	Schedule 7.5  Litigation
	Schedule 7.7  Environmental Matters
	Schedule 7.12 Place of Business
	Schedule 7.14 Trade Names
	Schedule 7.15 Transactions with Affiliates
	Schedule 7.17 Material Agreements
	Exhibit A-1 Revolving Note
	Exhibit A-2 Term Note
	Exhibit B Loan Request
	Exhibit C Borrowing Base Certificate
	Exhibit D Compliance Certificate
	Exhibit E Security Agreement
	Exhibit F Corporate Guaranty
	Exhibit G Conversion/Continuation Request
2.	Revolving Note ($10,000,000.00)
3.	Term Note ($8,500,000.00)
4.	Corporate Guaranty
5.	Security Agreement (Borrower)
	- Schedule 1 - Schedule 2
6.	Security Agreement (Target)
	- Schedule 1 - Schedule 2

49

7.	Security Agreement (CMT)
	- Schedule 1 - Schedule 2
8.	Security Agreement (Crossroad Carriers)
	- Schedule 1 - Schedule 2
9.	Security Agreement (Vertex Recovery)
	- Schedule 1 - Schedule 2
10.	Security Agreement (H&H Oil)
	- Schedule 1 - Schedule 2
11.	Security Agreement (Vertex II)
	- Schedule 1 - Schedule 2
12.	Collateral Assignment of Unit Purchase Agreement
13.	Copy of executed Unit Purchase Agreement dated August 14, 2012, and any amendments thereto
14.	Pay-off Letter – Regions Bank
15.	Officer’s Certificate of Borrower
	-Articles of Incorporation
	-Bylaws
	-Resolutions
	-Incumbency
16.	Officer’s Certificate of Target
	-Articles of Organization
	-Operating Agreement
	-Resolutions
	-Incumbency
17.	General Partner’s Certificate of Vertex-GP, as General Partner of  CMT, Crossroad Carriers, Vertex Recovery, and H&H Oil
	-Certificate of Formation of CMT
	-Limited Partnership Agreement of CMT
	-Certificate of Formation of Crossroad Carriers
	-Limited Partnership Agreement of Crossroad Carriers
	-Certificate of Formation of Vertex Recovery
	-Limited Partnership Agreement of Vertex Recovery
	-Certificate of Formation of H&H Oil
	-Limited Partnership Agreement of H&H Oil
	-Articles of Organization of Vertex-GP
	-Limited Liability Company Agreement of Vertex-GP
	-Resolutions
	-Incumbency

50

18.	Fee Letter
19.	Loan Request (Revolving Loan)
20.	Loan Request (Term Loan)
21.	Legal Opinion of The Loev Law Firm, PC
22.	Flow of Funds Memorandum
23.	Certificates of Existence/Good Standing/Authority -Borrower (Nevada) -CMT (TX) -Crossroad Carriers (TX) -Vertex Recovery (TX) -H&H Oil (TX) -Target (Nevada) -Vertex-GP (Nevada)
24.	UCC Lien Searches -Borrower (Nevada) -CMT (TX) -Crossroad Carriers (TX) -Vertex Recovery (TX) -H&H Oil (TX) -Target (Nevada) -Vertex-GP (Nevada)
25.	UCC-1 Financing Statements -Borrower (Nevada) -CMT (TX) -Crossroad Carriers (TX) -Vertex Recovery (TX) -H&H Oil (TX) -Target (Nevada) -Vertex-GP (Nevada)
26.	Post-Closing Letter Agreement

51

27.	Payment of Lender’s fees and expenses
28.	Due Diligence Review by Lender
29.	Insurance Certificates
	a.  Liability
	b.  Casualty
	c.  Flood,(Nueces County Property)
30.	Release of Liens – Regions Bank a.Harris County b.Travis County c.Chambers County
31.	Release of Liens – Harold and Victoria Heine (Travis County)
32.	Release of Liens – Charter Bank
33.	Release of Liens – Compass Bank
34.	Deeds from B & S Cowart Family, LP, to Target a.Harris County Property b.Travis County Property
35.	Deed of Trust (Harris County) -Harris County Property
36.	Deed of Trust (Nueces County) -Nueces County Property
37.	Deed of Trust (Travis County) -Travis County Property
38.	Leasehold Deed of Trust (Chambers County) -Leasehold Property
39.	Copy of Ground Lease – Leasehold Property
40.	Consent to Leasehold Deed of Trust executed by the Landlord
41.	Surveys
	a.Harris County Property
	b.Nueces County Property
	c.Travis County Property
	d.Leasehold Property

52

42.	Environmental Reports a.Harris County Property b.Nueces County Property c.Travis County Property d.Leasehold Property
43.	Appraisals a.Harris County Property b.Nueces County Property c.Travis County Property
44.	Flood Determinations a.Harris County Property b.Nueces County Property c.Travis County Property d.Leasehold Property
45.	Notice to Borrower in Special Flood Hazard Area a.Nueces County Property
46.	Title Commitment a.Harris County Property b.Nueces County Property c.Travis County Property d.Leasehold Property
47.	Title Objection Letter from PH
48.	Instruction Letter to Title Company
49.	Title Company Affidavits
50.	Settlement Statements a.Harris County Property b.Nueces County Property c.Travis County Property d.Leasehold Property

53

SCHEDULE 7.2

Subsidiaries

Parent	Subsidiary	I/O Shares/Units	% Ownership	Entity Type	Jurisdiction of Incorporation
Vertex Energy, Inc.	Vertex Merger Sub, LLC	1	100%	Limited Liability Company	California
Vertex Energy, Inc.	Vertex Acquisition Sub, LLC	100,000	100%	Limited Liability Company	Nevada
Vertex Energy, Inc.	Vertex II GP, LLC	N/A	100%	Limited Liability Company	Nevada
Vertex Acquisition Sub, LLC	Cedar Marine Terminals, LP	N/A	100%	Limited Partnership	Texas
Vertex Acquisition Sub, LLC	Cross Road Carriers, L.P.	N/A	100%	Limited Partnership	Texas
Vertex Acquisition Sub, LLC	H & H Oil, L. P.	N/A	100%	Limited Partnership	Texas
Vertex Acquisition Sub, LLC	Vertex Recovery, L.P.	N/A	100%	Limited Partnership	Texas

54

SCHEDULE 7.5

Litigation

On July 28, 2011, Buffalo Marine Service, Inc. (“Buffalo”) filed a complaint against Trafigura AG d/b/a Trafigura AG Inc. (“Trafigura”), KMTEX, Ltd. (“KMTEX”) and Borrower in the United States District Court for the Southern District of Texas (Civil Action No. 4:11-cv-02544).

The complaint alleged that certain maritime liquid cargo transported by Buffalo (as operator of barges) was contaminated by Trafigura (who purchased products from Borrower which were then transported on Buffalo’s barges) and/or KMTEX (who processes Borrower's products) and/or Borrower (who sold certain products to Trafigura which were then transported on Buffalo’s barges).  The causes of actions set forth in the complaint included Breach of Contract against Trafigura, Breach of Warranty against Trafigura, KMTEX and Borrower, and Negligence/Gross Negligence by Trafigura, KMTEX (who processes Borrower’s products), and Borrower.

The total amount of damages claimed by Buffalo is not currently known.  Borrower has engaged legal counsel in the matter and filed an answer to the complaint denying Buffalo’s allegations.  We intend to vigorously defend ourselves against Buffalo’s claims; however, at this stage of the litigation the outcome cannot be predicted with any degree of reasonable certainty.

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

55

SCHEDULE 7.7

Environmental Matters

None.

56

SCHEDULE 7.12

Place of Business

Corporate Offices:

1331 Gemini, Suite 250

Houston, Texas 77058

57

SCHEDULE 7.14

Trade Names

Vertex Energy, Inc.

Vertex Recovery

H&H Oil

CMT (Cedar Marine Terminals)

Crossroad Carriers

58

SCHEDULE 7.15

Transactions with Affiliates

None.

59

SCHEDULE 7.17

Material Agreements

None.

60

EX-10.2

Exhibit 10.2

REVOLVING NOTE

$10,000,000 Houston, Texas As of August 31, 2012

FOR VALUE RECEIVED, VERTEX ENERGY, INC., a Nevada corporation (“Borrower”), hereby promises to pay to the order of Bank of America, N.A. (“Lender”) on or before the Term Loan Maturity Date, the principal amount of $10,000,000 or so much thereof as may then be outstanding under this note, together with interest, as described below.

This note has been executed and delivered under, and is subject to the terms of, the Credit Agreement dated as of the date hereof (as amended, supplemented or restated from time to time, the “Credit Agreement”), between Borrower and Lender and is the “Revolving Note” referred to in the Credit Agreement.  Unless defined in this note, or the context requires otherwise, capitalized terms used in this note have the meanings given them in the Credit Agreement.  Reference is made to the Credit Agreement for provisions affecting this note regarding applicable interest rates, principal and interest payment dates, final maturity, voluntary and mandatory prepayments, acceleration of maturity, exercise of rights, payment of attorneys’ fees, court costs and other costs of collection, certain waivers by Borrower and others now or hereafter obligated for payment of any sums due under this note, and security for the payment of this note.  This note is a Loan Document and, therefore, is subject to the applicable provisions of Section 13 of the Credit Agreement, all of which applicable provisions are incorporated into this note by reference as if set forth in this note verbatim.

Specific reference is made to Section 3.7 of the Credit Agreement for usury savings provisions.

The rights and obligations of Borrower and Lender shall be determined solely from written agreements, documents, and instruments, and any prior oral agreements between Borrower and Lender are superseded by and merged into such writings.  this note, the Credit Agreement and the other written loan documents executed by Borrower and Lender (or by Borrower for the benefit of Lender) represent the final agreement between Borrower and Lender and may not be contradicted by evidence of prior, contemporaneous, or subsequent oral agreements by the parties.  there are no unwritten oral agreements between the parties.

This note must be construed — and its performance enforced — under Texas law.

[Signature is on the following page.]

EXECUTED as of the date first written above.

BORROWER:

EX-10.3

Exhibit 10.3

TERM NOTE

$8,500,000 Houston, Texas As of August 31, 2012  

FOR VALUE RECEIVED, VERTEX ENERGY, INC., a Nevada corporation (“Borrower”), hereby promises to pay to the order of Bank of America, N.A. (“Lender”) on or before the Term Loan Maturity Date, the principal amount of $8,500,000 or so much thereof as may then be outstanding under this note, together with interest, as described below.

This note has been executed and delivered under, and is subject to the terms of, the Credit Agreement dated as of the date hereof (as amended, supplemented or restated from time to time, the “Credit Agreement”), between Borrower and Lender and is the “Term Note” referred to in the Credit Agreement.  Unless defined in this note, or the context requires otherwise, capitalized terms used in this note have the meanings given them in the Credit Agreement.  Reference is made to the Credit Agreement for provisions affecting this note regarding applicable interest rates, principal and interest payment dates, final maturity, voluntary and mandatory prepayments, acceleration of maturity, exercise of rights, payment of attorneys’ fees, court costs and other costs of collection, certain waivers by Borrower and others now or hereafter obligated for payment of any sums due under this note, and security for the payment of this note.  This note is a Loan Document and, therefore, is subject to the applicable provisions of Section 13 of the Credit Agreement, all of which applicable provisions are incorporated into this note by reference as if set forth in this note verbatim.

Specific reference is made to Section 3.7 of the Credit Agreement for usury savings provisions.

The rights and obligations of Borrower and Lender shall be determined solely from written agreements, documents, and instruments, and any prior oral agreements between Borrower and Lender are superseded by and merged into such writings.  this note, the Credit Agreement and the other written loan documents executed by Borrower and Lender (or by Borrower for the benefit of Lender) represent the final agreement between Borrower and Lender and may not be contradicted by evidence of prior, contemporaneous, or subsequent oral agreements by the parties.  there are no unwritten oral agreements between the parties.

This note must be construed — and its performance enforced — under Texas law.

[Signature is on the following page.]

EXECUTED as of the date first written above.

BORROWER:

EX-10.4

Exhibit 10.4

FORM OF SECURITY AGREEMENT

[(Vertex Energy, Inc.)] [(Vertex Acquisition Sub, LLC)] [(Cedar Marine Terminals, LP)]

[(Crossroad Carriers, L.P.)] [(Vertex Recovery, L.P.)][H & H Oil, L.P.)] [(Vertex II GP, LLC)]

THIS SECURITY AGREEMENT (as amended, supplemented or restated from time to time, this “Agreement”) is executed as of August 31, 2012 by [VERTEX ENERGY, INC.] [VERTEX ACQUISITION SUB, LLC] [CEDAR MARINE TERMINALS, LP] [CROSSROAD CARRIERS, L.P.] [VERTEX RECOVERY, L.P.] [H & H OIL, L.P.] [Vertex II GP, LLC], a [Nevada corporation/limited liability company] [Texas limited partnership] (“Debtor”), for the benefit of BANK OF AMERICA, N.A. (“Secured Party”).

RECITALS

A           [Debtor] [Vertex Energy, Inc., a Nevada corporation (“Borrower”)] and Secured Party have entered into that certain Credit Agreement dated the same date as this Agreement (as amended, supplemented or restated from time to time, the “Credit Agreement”), together with certain other Loan Documents.

B           [To guaranty the complete payment and performance of Borrower’s obligations under the Credit Agreement, Debtor executed that certain Guaranty dated as of the date hereof (as amended, restated, or supplemented, the “Guaranty”) for the benefit of Secured Party.]

C.           As a condition precedent to Secured Party’s agreement to enter into the Credit Agreement, Secured Party has required, and Debtor has agreed to execute, this Agreement to secure Debtor’s obligations under the [Credit Agreement and the other Loan Documents] [Guaranty].

D.           The execution and delivery of this Agreement is an integral part of the transactions contemplated by the Loan Documents and a condition precedent to Secured Party’s obligations to extend credit or make loans under the Credit Agreement.

AGREEMENTS

In consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Debtor covenants and agrees with Secured Party as follows:

1.           Certain Definitions.  Each capitalized term used but not defined in this Agreement has the meaning given that term in the Credit Agreement or in the UCC (as hereafter defined).  If a defined term in the Credit Agreement conflicts with the definition given that term in the UCC, the Credit Agreement definition shall control to the extent allowed by Law.  If the definition given a term in Chapter 9 (or Article 9) of the UCC conflicts with the definition given that term in any other chapter of the UCC, the Chapter 9 (or Article 9) definition shall control.  Terms used in this Agreement which are not capitalized but are defined in the UCC have the meanings given them in the UCC.  As used in this Agreement, the following terms have the meanings indicated:

Agreement means this Agreement together with all schedules and exhibits and all amendments, restatements and supplements.

Collateral is defined in Section 3 of this Agreement.

Debtor is defined in the preamble to this Agreement.

Default is defined in the Credit Agreement.

Governmental Authority is defined in the Credit Agreement.

Obligation means the [“Obligation” under, and as defined in, the Credit Agreement] [the “Guaranteed Obligation” under, and as defined in, the Guaranty].

Obligor means a Person that, with respect to an obligation secured by a security interest in the Collateral, (a) owes payment or other performance on the obligation, (b) has provided property or other security or credit support other than the Collateral to secure payment or other performance of the obligation, or (c) is otherwise accountable in whole or in part for payment or other performance of the obligation.  The term does not include issuers or nominated persons under a letter of credit.

Patents means (a) all letters patent of the United States or any other country or any political subdivision thereof and all reissues and extensions thereof, and (b) all applications for letters patent of the United States or any other country and all divisions, continuations and continuations-in-part thereof.

Secured Party is defined in the preamble to this Agreement.

Security Interest means the security interests granted and the transfers, pledges and assignments made under Section 3 of this Agreement.

Trademarks means (a) all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, logos and other source or business identifiers, and the goodwill associated therewith, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all applications in connection therewith, whether in the United States Patent and Trademark Office or in any similar office or agency of the United States or any other country, any state thereof or any political subdivision thereof, or otherwise and (b) all renewals thereof.

UCC means (a) the Uniform Commercial Code, as adopted and in effect from time to time in Texas, and (b) if the UCC provides that the law of another jurisdiction governs certain matters, then, in respect of such matters, the Uniform Commercial Code as adopted and in effect from time to time in such jurisdiction.

2.           Credit Agreement.  This Agreement is being executed and delivered pursuant to the terms and conditions of the Credit Agreement.  Each Security Interest granted under this Agreement is a “Lien” referred to in the Credit Agreement.

3.           Security Interest.  To secure the prompt, unconditional, and complete payment and performance of the Obligation when due, Debtor hereby pledges and assigns to Secured Party, and grants to Secured Party a continuing security interest in all of its right, title and interest in, to, and under the following, wherever located and whether now owned or hereafter acquired or created (collectively, the “Collateral”):  all personal and fixture property of every kind and nature including without limitation all goods (including inventory, equipment and any accessions thereto), instruments (including promissory notes), documents, accounts, chattel paper (whether tangible or electronic), deposit accounts, letter-of-credit rights (whether or not the letter of credit is evidenced by a writing), commercial tort claims described on Schedule 2, securities and all other investment property, supporting obligations, any other contract rights or rights to the payment of money, insurance claims and proceeds, all software, fixtures, vehicles (whether or not subject to a certificate of title statute), leasehold improvements, all general intangibles (including all payment intangibles), all Patents and Trademarks, and all products and proceeds of each of the foregoing.

4.           Collateral Security; No Assumption or Modification.  The Security Interest is given as security only.  Secured Party does not assume, and shall not be liable for, any of Debtor’s liabilities, duties or obligations under, or in connection with, the Collateral.  Secured Party’s acceptance of this Agreement, or its taking any action in connection with this Agreement, does not constitute Secured Party’s approval of the Collateral or Secured Party’s assumption of any liability, duty, or obligation under, or in connection with, the Collateral.  This Agreement does not affect or modify Debtor’s obligations with respect to the Collateral.

5.           Fraudulent Conveyance.  Notwithstanding anything contained in this Agreement to the contrary, Debtor agrees that if, but for the application of this Section 5, the Obligation or any Security Interest would constitute a preferential transfer under 11 U.S.C. § 547, a fraudulent conveyance under 11 U.S.C. § 548 (or any successor section of that Statute) or a fraudulent conveyance or transfer under any state fraudulent conveyance or fraudulent transfer law or similar Law in effect from time to time (each a “Fraudulent Conveyance”), then the Obligation and each affected Security Interest will be enforceable to the maximum extent possible without causing the Obligation or any Security Interest to be a Fraudulent Conveyance, and shall be deemed to have been automatically amended to carry out the intent of this Section 5.

6.           Representations and Warranties.  Debtor represents and warrants to Secured Party that:

(a)           Binding Obligation.  The Security Interest in the Collateral created by this Agreement (i) is a valid and binding obligation of Debtor in favor of Secured Party and is enforceable against Debtor, and (ii) will be duly perfected once the action required for perfection under applicable Law has been taken.  Once perfected, the Security Interest will constitute a first and prior lien on the Collateral, subject only to Permitted Liens.  The creation, attachment and perfection of the Security Interest does not require the consent of any third party.

(b)           Place of Business; Location of Records.  Schedule 1 sets out the following information; (i) the exact name of Debtor, as such name appears in its organizational documents, (ii) each other name Debtor has used in the past five years, together with the date of the relevant change, (iii) any change in Debtor’s identity or legal structure within the past five years, (iv) all other names (including trade names) used by Debtor or any of its divisions or other business units in connection with the conduct of its business or ownership of its properties at any time in the past five years, (v) Debtor’s federal taxpayer identification number, (vi) Debtor’s chief executive office or principal place of business, (vii) the locations where Debtor maintains its Inventory, (viii) all real property owned by Debtor, and (ix) all real property leased by Debtor.  The failure of the description of locations of Collateral on Schedule 1 to be accurate or complete will not impair the Security Interest in such Collateral.

(c)           No Prior Lien.  Except for Permitted Liens, the Collateral is owned by Debtor free and clear of any Lien and Debtor has not executed any transfer, assignment, pledge or security interest covering the Collateral or any interest in the Collateral.

(d)           No Defenses.  The amounts due Debtor under the Collateral are not subject to any material setoff, counterclaim, defense, allowance or adjustment (other than discounts for prompt payment shown on the invoice) or to any material dispute, objection or complaint by any account debtor or other Obligor.

(e)           Existence and Ownership of Patents and Trademarks.  Debtor has full right to use the Patents and Trademarks, and all Patents and Trademarks owned, controlled, or acquired by Debtor, or which Debtor has a right to use: (i) are subsisting and have not been adjudged or claimed to be invalid or unenforceable (either in whole or in part), and Debtor is not aware of any basis for such a claim, (ii) are valid and enforceable, (iii) are in the name of Debtor, (iv) are properly recorded and/or filed in the United States Patent and Trademark Offices, and (v) Debtor has taken all necessary steps to properly record or file ownership in the name of Debtor in the proper foreign filing offices (the “Foreign Filing Offices”) with respect to foreign patents and trademarks, as appropriate.  Debtor’s right, title and interest in the Patents and Trademarks is free and clear of any Liens, registered user agreements, or covenants by Debtor not to sue third Persons or licenses.

(f)           Registration.  Debtor has properly completed all required filings, payments, renewals and obligations in the United States Patent and Trademark Offices or the appropriate Foreign Filing Offices, as the case may be, to maintain Patents and Trademarks as fully valid and enforceable.

(g)           Third Party Rights.  No claim has been made that the ownership or use of any of the Patents and Trademarks, or the manufacture, use or sale of any product made in accordance therewith or service rendered thereunder, does or may violate the rights of any third Person, and Debtor has no knowledge of any third party rights which may be infringed or otherwise violated by the use of any of the Patents and Trademarks.

(h)           Additional Collateral.  The delivery at any time by Debtor to Secured Party of Collateral or of additional specific descriptions of certain Collateral will constitute a representation and warranty by Debtor to Secured Party under this Agreement that the representations and warranties of this Section 6 are true and correct with respect to each item of such Collateral.

7.           Covenants.  Debtor covenants and agrees with Secured Party that so long as Secured Party is committed to extend credit to [Debtor][Borrower] under the Credit Agreement and thereafter until the Obligation is paid and performed in full, all commitments to extend credit under the Credit Agreement have terminated, Debtor shall:

(a)           Relocation of Office or Books and Records; Change of Name or Address.  Give Secured Party at least 30 days prior written notice of (i) any proposed relocation of its principal place of business or chief executive office, (ii) any proposed relocation of the place where its books and records relating to accounts and general intangibles are kept, (iii) a change of its name or type of organizational structure, and (iv) any proposed relocation of any of the Collateral (other than with respect to goods in transit between facilities, temporary warehousing for up to 30 days, or sales of inventory in the ordinary course of business or the sale of other Collateral to the extent permitted by the Credit Agreement) to a location other than those set out on Schedule 1.

(b)           Material Change.  Promptly notify Secured Party in writing of any change in any material fact or circumstance represented or warranted by Debtor with respect to any of the Collateral.

(c)           Record of Collateral.  Maintain at its principal place of business or chief executive office a current record of the location of all Collateral and permit Secured Party or its representatives to inspect and make copies from such records pursuant to the Credit Agreement and furnish to Secured Party, from time to time, such documents, lists, descriptions, certificates and other information necessary or helpful to keep Secured Party informed with respect to the identity, location, status, condition, terms of, parties to, and value of the Collateral.

(d)           Adverse Claim.  Promptly notify Secured Party in writing of any claim, action or proceeding challenging the Security Interest or affecting title to all or any material portion of the Collateral or the Security Interest and, at Secured Party’s request, appear in and defend any such action or proceeding at Debtor’s reasonable expense.

(e)           Hold Collateral In Trust.  Upon the occurrence and during the continuation of a Default, hold in trust (and not commingle with its other assets) for Secured Party all Collateral that is Chattel Paper, Instruments or Documents at any time received by it and promptly deliver same to Secured Party unless Secured Party at its option gives Debtor written permission to retain such Collateral.  Upon the occurrence and during the continuation of a Default, at Secured Party’s request, each contract, Chattel Paper, Instrument or Document so retained shall be marked to state that it is assigned to Secured Party and each instrument shall be endorsed to the order of Secured Party (but failure to so mark or endorse shall not impair the Security Interest).

(f)           No Assignment.  Not sell, assign, or otherwise dispose of, or permit the sale, assignment or disposition of, any Collateral, except as permitted by the Credit Agreement.

(g)           Maintain Collateral.  (i) Perform all of its obligations under or in connection with the Collateral in accordance with customary business practices, (ii) not amend, alter or modify, or permit the amendment, alteration or modification of, any material portion (individually or collectively) of the Collateral, and (iii) not do or permit any act which would impair any material portion of the Collateral.

(h)           Default Under Collateral.  Promptly notify Secured Party in writing of any default by Debtor or any other party under or in connection with any material portion (individually or collectively) of the Collateral and immediately use commercially reasonable efforts to remedy the same or immediately demand that the same be remedied.

(i)           Lock Box Account.  Upon the occurrence of a Default, Secured Party may request that Debtor direct that all accounts receivable be paid directly to a lock box account established with, or for the benefit of, Secured Party.

8.           Authorization to File Financing Statements.  Debtor hereby irrevocably authorizes Secured Party at any time and from time to time to file in any filing office in any UCC jurisdiction any initial financing statements and amendments thereto that (a) indicate the Collateral (i) as “all assets of Debtor” or words of similar effect, regardless of whether any particular asset comprised in the Collateral falls within the scope of Article 9 of the UCC of such jurisdiction, or (ii) as being of an equal or lesser scope or with greater detail, and (b) provide any other information required by part 5 of Article 9 of the UCC, for the sufficiency or filing office acceptance of any financing statement or amendment, including (i) whether Debtor is an organization, the type of organization and any organizational identification number issued to Debtor and, (ii) in the case of a financing statement filed as a fixture filing or indicating Collateral as as-extracted collateral or timber to be cut, a sufficient description of real property to which the Collateral relates.  Debtor agrees to furnish any such information to Secured Party promptly at Secured Party’s request.

9.           Further Assurances.  To further the attachment, perfection and first priority of, and the ability of Secured Party to enforce Secured Party's Security Interest in and lien upon the Collateral, and without limiting Debtor’s other obligations in this Agreement, Debtor agrees, in each case at Debtor’s expense, to take the following actions with respect to the following Collateral:

(a)           Promissory Notes and Tangible Chattel Paper.  If Debtor at any time holds or acquires any promissory notes or tangible chattel paper, Debtor shall promptly endorse, assign and deliver the same to Secured Party, accompanied by such instruments of transfer or assignment duly executed in blank as Secured Party may from time to time request.

(b)           Deposit Accounts.  For each deposit account that Debtor currently has open or at any time opens or maintains, Debtor shall, at Secured Party’s request and option, pursuant to an agreement in form and substance satisfactory to Secured Party, either (i) cause the depositary bank to comply at any time with instructions from Secured Party to such depositary bank directing the disposition of funds from time to time credited to such deposit account, without further consent of Debtor, or (ii) arrange for Secured Party to become the customer of the depositary bank with respect to the deposit account, with Debtor being permitted, only with the consent of Secured Party, to exercise rights to withdraw funds from such deposit account.  Secured Party agrees with Debtor that Secured Party shall not give any such instructions or withhold any withdrawal rights from Debtor, unless a Default exists, or would occur, if effect were given to any withdrawal not otherwise permitted by the Loan Documents.

(c)           Investment Property.  If Debtor at any time holds or acquires any certificated securities comprising part of the Collateral, Debtor shall promptly endorse, assign and deliver the same to Secured Party, accompanied by such instruments of transfer or assignment duly executed in blank as Secured Party may from time to time specify.  If any Securities now or hereafter acquired by Debtor are uncertificated and are issued to Debtor or its nominee directly by the issuer thereof, Debtor shall immediately notify Secured Party thereof and, at Secured Party’s request and option, pursuant to an agreement in form and substance satisfactory to Secured Party, either (i) cause the issuer to agree to comply with instructions from Secured Party as to such securities, without further consent of Debtor or such nominee, or (ii) arrange for Secured Party to become the registered owner of the securities. If any securities, whether certificated or uncertificated, or other Investment Property now or hereafter acquired by Debtor are held by Debtor or its nominee through a securities intermediary or commodity intermediary, Debtor shall immediately notify Secured Party thereof and, at Secured Party’s request and option, pursuant to an agreement in form and substance satisfactory to Secured Party, either (A) cause such securities intermediary or (as the case may be) commodity intermediary to agree to comply with entitlement orders or other instructions from Secured Party to such securities intermediary as to such Securities or other Investment Property, or (as the case may be) to apply any value distributed on account of any Commodity Contract as directed by Secured Party to such commodity intermediary, in each case without further consent of Debtor or such nominee, or (B) in the case of financial assets or other Investment Property held through a securities intermediary, arrange for Secured Party to become the entitlement holder with respect to such Investment Property, with Debtor being permitted, only with the consent of Secured Party, to exercise rights to withdraw or otherwise deal with such Investment Property.  Secured Party agrees with Debtor that Secured Party shall not give any such entitlement orders or instructions or directions to any such issuer, securities intermediary or commodity intermediary, and shall not withhold its consent to the exercise of any withdrawal or dealing rights by Debtor, unless a Default exists or, after giving effect to any such investment and withdrawal rights not otherwise permitted by the Loan Documents, would occur.  The provisions of this Section shall not apply to any financial assets credited to a securities account for which Secured Party is the securities intermediary.

(d)           Collateral in the Possession of a Bailee.  If any Collateral is at any time in the possession of a bailee, Debtor shall promptly notify Secured Party and, at Secured Party’s request and option, shall promptly obtain an acknowledgement from the bailee, in form and substance satisfactory to Secured Party, that the bailee holds such Collateral for the benefit of Secured Party, and that such bailee agrees to comply, without further consent of Debtor, with instructions from Secured Party as to such Collateral.  Secured Party agrees with Debtor that Secured Party shall not give any such instructions unless a Default exists or would occur after taking into account any action by Debtor with respect to the bailee.

(e)           Electronic Chattel Paper and Transferable Records.  If Debtor at any time holds or acquires an interest in any electronic chattel paper or any “transferable record,” as that term is defined in Section 201 of the federal Electronic Signatures in Global and National Commerce Act, or in Section 16 of the Uniform Electronic Transactions Act as in effect in any relevant jurisdiction, Debtor shall promptly notify Secured Party thereof and, at the request and option of Secured Party, shall take such action as Secured Party may reasonably request to vest in Secured Party control, under Section 9.105 of the UCC, of such electronic chattel paper or control under Section 201 of the federal Electronic Signatures in Global and National Commerce Act or, as the case may be, Section 16 of the Uniform Electronic Transactions Act, as so in effect in such jurisdiction, of such transferable record.  Secured Party agrees with Debtor that Secured Party will arrange, pursuant to procedures satisfactory to Secured Party and so long as such procedures will not result in Secured Party’s loss of control, for Debtor to make alterations to the electronic chattel paper or transferable record permitted under Section 9.105 of the UCC or, as the case may be, Section 201 of the federal Electronic Signatures in Global and National Commerce Act or Section 16 of the Uniform Electronic Transactions Act for a party in control to make without loss of control, unless a Default exists or would occur after taking into account any action by Debtor with respect to such electronic chattel paper or transferable record.

(f)           Letter-of-Credit Rights.  If Debtor is at any time a beneficiary under a letter of credit, Debtor shall promptly notify Secured Party thereof and, at the request and option of Secured Party, Debtor shall, pursuant to an agreement in Proper Form, either (i) arrange for the issuer and any confirmer or other nominated Person of such letter of credit to consent to an assignment to Secured Party of the proceeds of the letter of credit, or (ii) arrange for Secured Party to become the transferee beneficiary of the letter of credit, with Secured Party agreeing, in each case, that the proceeds of the letter of credit are to be applied to the Obligation.

(g)           Other Actions as to Any and All Collateral.  Debtor further agrees, at the request and option of Secured Party, all to the extent applicable, to (i) take any and all other commercially reasonable actions Secured Party may determine to be necessary or useful for the attachment, perfection and first priority of, and the ability of Secured Party to enforce, Secured Party’s Security Interest, and (ii) cooperate with Secured Party in identifying all of Debtor’s personal property assets and proper descriptions of such assets for the purpose of including such assets as part of the Collateral, including, without limitation (A) authenticating, executing, delivering and, where appropriate, filing financing statements and amendments relating thereto under the UCC, to the extent, if any, that Debtor’s signature thereon is required, (B) causing Secured Party’s name to be noted as secured party on any certificate of title for a titled good if such notation is a condition to attachment, perfection or priority of, or ability of Secured Party to enforce, Secured Party’s security interest in such Collateral, (C) complying with any provision of any statute, regulation or treaty of the United States as to any Collateral if compliance with such provision is a condition to attachment, perfection or priority of, or ability of Secured Party to enforce, Secured Party’s security interest in such Collateral, (D) obtaining governmental and other third party waivers, consents and approvals in Proper Form, including, without limitation, any consent of any licensor, lessor or other Person obligated on Collateral, (E) obtaining waivers from mortgagees and landlords in form and substance satisfactory to Secured Party, (F) taking all actions under the UCC or under any other Law, as reasonably determined by Secured Party to be applicable in any relevant Uniform Commercial Code or other jurisdiction, including any foreign jurisdiction, (G) providing Secured Party promptly upon its request with proper legal descriptions of, and all other information and documents pertaining to, Debtor’s interest in real property, deposit accounts, brokerage accounts, jewelry and all other personal property assets of Debtor, and (H) providing such other information and documents, and executing such other appropriate documents or instruments as Secured Party may request in order to give effect to this Agreement and the collateral security contemplated by this Agreement.

10.           Default; Remedies. Upon the occurrence of a Default, and subject to the terms and conditions of the Credit Agreement, Secured Party has the following cumulative rights and remedies under this Agreement;

(a)           UCC Rights.  Secured Party may exercise any and all rights available to a secured party under the UCC, in addition to any and all other rights afforded by this Agreement and the other Loan Documents, at law, in equity or otherwise, including, without limitation, (i) requiring Debtor to assemble all or part of the Collateral and make it available to Secured Party at a place to be designated by Secured Party which is reasonably convenient to Debtor and Secured Party, (ii) applying by appropriate judicial proceedings for appointment of a receiver for all or part of the Collateral, (iii) applying to the Obligation any cash held by Secured Party under this Agreement, (iv) reducing any claim to judgment, (v) exercising the rights of offset or banker’s lien against the interest of Debtor in and to every account and other property of Debtor in Secured Party’s possession to the extent of the full amount of the Obligation, (vi) foreclosing the Security Interest and any other liens Secured Party may have or otherwise realize upon any and all of the rights Secured Party may have in and to the Collateral, or any part thereof, and (vii) bringing suit or other proceedings before any Governmental Authority either for specific performance of any covenant or condition contained in any of the Loan Documents or in aid of the exercise of any right granted to Secured Party in any of the Loan Documents.

(b)           Notice.  Reasonable notification of the time and place of any public sale of the Collateral, or reasonable notification of the time after which any private sale or other intended disposition of the Collateral is to be made, shall be sent to Debtor and to any other Person entitled to notice under the UCC; provided that, if any of the Collateral threatens to decline speedily in value or is of the type customarily sold on a recognized market, Secured Party may sell or otherwise dispose of the Collateral without notification, advertisement, or other notice of any kind.  It is agreed that notice sent or given not less than ten calendar days prior to the taking of the action to which the notice relates is reasonable notification and notice for the purposes of this subparagraph.  It shall not be necessary that the Collateral be at the location of the sale.

(c)           Standards for Exercising Rights and Remedies.  To the extent that applicable Law imposes duties on Secured Party to exercise remedies in a commercially reasonable manner, Debtor acknowledges and agrees that it is not commercially unreasonable for Secured Party (i) to fail to incur expenses reasonably deemed significant by Secured Party to prepare Collateral for disposition or otherwise to fail to complete raw material or work in process into finished goods or other finished products for disposition, (ii) to fail to obtain third party consents for access to Collateral to be disposed of, or to obtain or, if not required by other Law, to fail to obtain governmental or third party consents for the collection or disposition of Collateral to be collected or disposed of, (iii) to fail to exercise collection remedies against account debtors or other Obligors, directly or through the use of collection agencies and other collection specialists, (iv) to fail to remove liens or encumbrances on or any adverse claims against Collateral, (v) to advertise dispositions of Collateral through publications or media of general circulation, whether or not the Collateral is of a specialized nature, (vi) to contact other Persons, whether or not in the same business as Debtor, for expressions of interest in acquiring all or any portion of the Collateral, (vii) to hire one or more professional auctioneers to assist in the disposition of Collateral, whether or not the Collateral is of a specialized nature, (viii) to dispose of Collateral by utilizing Internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capability of doing so, or that match buyers and sellers of assets, (ix) to dispose of assets in wholesale rather than retail markets, (x) to disclaim disposition warranties, (xi) to purchase insurance or credit enhancements to insure Secured Party against risks of loss, collection or disposition of Collateral or to provide to Secured Party a guaranteed return from the collection or disposition of Collateral, or (xii) to the extent deemed appropriate by Secured Party, to obtain the services of other brokers, investment bankers, consultants and other professionals to assist Secured Party in the collection or disposition of any of the Collateral.  Debtor acknowledges that the purpose of this Section is to provide non-exhaustive indications of what actions or omissions by Secured Party would fulfill Secured Party’s duties under the UCC or other Law of any relevant jurisdiction in Secured Party’s exercise of remedies against the Collateral and that other actions or omissions by Secured Party shall not be deemed to fail to fulfill such duties solely on account of not being indicated in this Section. Without limiting the foregoing, nothing contained in this Section shall be construed to grant any rights to Debtor or to impose any duties on Secured Party that would not have been granted or imposed by this Agreement or by applicable Law in the absence of this Section.

(d)           Debtor’s Agent.  Secured Party shall be deemed to be irrevocably appointed as Debtor’s agent and attorney-in-fact with all right and power to enforce all of Debtor’s rights and remedies under or in connection with the Collateral and this power is coupled with an interest.  All reasonable costs, expenses and liabilities incurred and all payments made by Secured Party as Debtor’s agent and attorney-in-fact, including, without limitation, reasonable attorney’s fees and expenses, shall be considered a loan by Secured Party to Debtor which shall be repayable on demand and shall accrue interest at the Default Rate and shall constitute part of the Obligation.

(e)           Account Debtors and Obligors.  Secured Party may notify or require each account debtor or other Obligor to make payment directly to Secured Party and Secured Party may take control of the proceeds paid to Secured Party.  Until Secured Party elects to exercise these rights, Debtor is authorized to collect and enforce the Collateral and to retain and expend all payments made on Collateral.  After Secured Party elects to exercise these rights, Secured Party shall have the right in its own name or in the name of Debtor to (i) compromise or extend time of payment with respect to all or any portion of the Collateral for such amounts and upon such terms as Secured Party may reasonably determine, (ii) demand, collect, receive, receipt for, sue for, compound and give acquittance for any and all amounts due or to become due with respect to Collateral, (iii) take control of cash and other proceeds of any Collateral, (iv) endorse Debtor’s name on any notes, acceptances, checks, drafts, money orders or other evidences of payment on Collateral that may come into Secured Party’s possession, (v) sign Debtor’s name on any invoice or bill of lading relating to any Collateral, on any drafts against Obligors or other Persons making payment with respect to Collateral, on assignments and verifications of accounts or other Collateral and on notices to Obligors making payment with respect to Collateral, (vi) send requests for verification of obligations to any Obligor, and (vii) do all other acts and things reasonably necessary to carry out the intent of this Agreement.  If any Obligor or account party fails to make payment on any Collateral when due, Secured Party is authorized, in its sole discretion, either in its own name or in Debtor’s name, to take such action as Secured Party reasonably shall deem appropriate for the collection of any amounts owed with respect to Collateral or upon which a delinquency exists.  Regardless of any other provision of this Agreement, however, Secured Party shall not be liable for its failure to collect, or for its failure to exercise diligence in the collection of, any amounts owed with respect to Collateral except for its own fraud, gross negligence, or willful misconduct, nor shall it be under any duty to anyone except Debtor to account for funds that it shall actually receive under this Agreement.  A receipt given by Secured Party to any Obligor or account debtor shall be a full and complete release, discharge, and acquittance to such Obligor or account party, to the extent of any amount so paid to Secured Party.  Secured Party may apply or set off amounts paid and the deposits against any liability of Debtor to Secured Party.

(f)           Sale.  Secured Party’s sale of less than all the Collateral shall not exhaust Secured Party’s rights under this Agreement and Secured Party is specifically empowered to make successive sales until all the Collateral is sold.  If the proceeds of a sale of less than all the Collateral shall be less than the Obligation, this Agreement and the Security Interest shall remain in full force and effect as to the unsold portion of the Collateral just as though no sale had been made.  In the event any sale under this Agreement is not completed or is, in Secured Party’s opinion, defective, such sale shall not exhaust Secured Party’s rights under this Agreement and Secured Party shall have the right to cause a subsequent sale or sales to be made.  Any and all statements of fact or other recitals made in any bill of sale or assignment or other instrument evidencing any foreclosure sale under this Agreement as to nonpayment of the Obligation, or as to the occurrence of any Default, or as to Secured Party’s having declared all of such Obligation to be due and payable, or as to notice of time, place and terms of sale and the properties to be sold having been duly given, or as to any other act or thing having been duly done by Secured Party, shall be taken as prima facie evidence of the truth of the facts so stated and recited subject however, to manifest error.  Secured Party may appoint or delegate any one or more Persons as agent to perform any act or acts necessary or incident to any sale held by Secured Party, including the sending of notices and the conduct of sale, but such acts must be done in the name and on behalf of Secured Party.

(g)           Existence of Default.  Regarding the existence of any Default for purposes of this Agreement, Debtor agrees that the Obligors or account debtors on any Collateral may rely upon written certification from Secured Party that such a Default exists and Debtor expressly agrees that Secured Party shall not be liable to Debtor for any claims, damages, costs, expenses or causes of action of any nature whatsoever in connection with, arising out of, or related to Secured Party’s exercise of any rights, powers or remedies under any Loan Document except for its own fraud, gross negligence, or willful misconduct.

(h)           Application of Proceeds.  Secured Party shall apply the proceeds of any sale or other disposition of the Collateral under this Section 10 in the following order (i) to the payment of all its reasonable expenses incurred in retaking, holding and preparing any of the Collateral for sale(s) or other disposition, in arranging for such sale(s) or other disposition, and in actually selling or disposing of the same (all of which are part of the Obligation), (ii) to repay Secured Party for amounts reasonably expended by Secured Party under Section 11, (iii) to payment of the balance of the Obligation in the order and manner specified in the Credit Agreement, and (iv) to make any payments required under Sections 9.608(a)(1)(C) and 9.615(a)(3) of the UCC.  Any surplus remaining shall be delivered to Debtor or as a court of competent jurisdiction may direct.

11.           Other Rights of Secured Party.

(a)           Performance.  In the event Debtor fails to preserve the priority of the Security Interest in any of the Collateral or, upon the occurrence and during the continuance of a Default, otherwise fails to perform any of its obligations under the Loan Documents with respect to the Collateral, then Secured Party may (but is not required to) prosecute or defend any suits in relation to the Collateral or take any other action which Debtor is required to take under the Loan Documents, but has failed to take.  Any sum which may be reasonably expended or paid by Secured Party under this Section (including, without limitation, court costs and reasonable attorneys’ fees and expenses) shall bear interest from the date of expenditure or payment at the Default Rate until paid and, together with such interest, shall be payable by Debtor to Secured Party upon demand and shall be part of the Obligation.

(b)           Collateral in Secured Party’s Possession.  If, while a Default exists, any Collateral comes into Secured Party’s possession, Secured Party may use such Collateral for the purpose of preserving it or its value pursuant to the order of a court of appropriate jurisdiction or in accordance with any other rights held by Secured Party in respect of such Collateral.  Debtor covenants to promptly reimburse and pay to Secured Party, at Secured Party’s request, the amount of all reasonable expenses incurred by Secured Party in connection with its custody and preservation of such Collateral, and all such expenses, costs, Taxes and other charges shall bear interest at the Default Rate until repaid and, together with such interest, shall be payable by Debtor to Secured Party upon demand and shall be part of the Obligation.  However, the risk of accidental loss or damage to, or diminution in value of, Collateral is on Debtor, except for Secured Party’s own fraud, gross negligence, or willful misconduct.  Secured Party shall have no liability for failure to obtain or maintain insurance, nor to determine whether any insurance ever in force is adequate as to amount or as to the risks insured.  With respect to Collateral that is in the possession of Secured Party, Secured Party shall have no duty to fix or preserve rights against prior parties to such Collateral and shall never be liable for any failure to use diligence to collect any amount payable in respect of such Collateral, but shall be liable only to account to Debtor for what it actually collects or receives thereon.

(c)           Subrogation.  If any of the proceeds of the Obligation are given in renewal or are extension of, or are applied toward the payment of, indebtedness secured by any Lien, Secured Party shall be, and is hereby, subrogated to all of the rights, titles, interests and Liens securing the indebtedness so renewed, extended or paid.

12.           Arbitration; Waiver of Jury Trial.  This paragraph, including the subparagraphs below, is referred to as the “Dispute Resolution Provision.”  This Dispute Resolution Provision is a material inducement for the parties entering into this Agreement.

(a)           This Dispute Resolution Provision concerns the resolution of any controversies or claims between the parties, whether arising in contract, tort or by statute, including but not limited to controversies or claims that arise out of or relate to:  (i) this Agreement (including any renewals, extensions or modifications); or (ii) any document related to this Agreement (collectively a “Claim”).  For the purposes of this Dispute Resolution Provision only, the term “parties” shall include any parent corporation, subsidiary or affiliate of Secured Party involved in the servicing, management or administration of any obligation described or evidenced by this Agreement.

(b)           At the request of any party to this agreement, any Claim shall be resolved by binding arbitration in accordance with the Federal Arbitration Act (Title 9, U.S. Code) (the “Act”).  The Act will apply even though this agreement provides that it is governed by the law of a specified state.

(c)           Arbitration proceedings will be determined in accordance with the Act, the then-current rules and procedures for the arbitration of financial services disputes of the American Arbitration Association or any successor thereof (“AAA”), and the terms of this Dispute Resolution Provision.  In the event of any inconsistency, the terms of this Dispute Resolution Provision shall control.  If AAA is unwilling or unable to (i) serve as the provider of arbitration or (ii) enforce any provision of this arbitration clause, Secured Party may designate another arbitration organization with similar procedures to serve as the provider of arbitration.

(d)           The arbitration shall be administered by AAA and conducted, unless otherwise required by law, in any U.S. state where real or tangible personal property collateral for this credit is located or if there is no such collateral, in the state specified in the governing law section of this agreement.  All Claims shall be determined by one arbitrator; however, if Claims exceed Five Million Dollars ($5,000,000), upon the request of any party, the Claims shall be decided by three arbitrators.  All arbitration hearings shall commence within ninety (90) days of the demand for arbitration and close within ninety (90) days of commencement and the award of the arbitrator(s) shall be issued within thirty (30) days of the close of the hearing.  However, the arbitrator(s), upon a showing of good cause, may extend the commencement of the hearing for up to an additional sixty (60) days.  The arbitrator(s) shall provide a concise written statement of reasons for the award.  The arbitration award may be submitted to any court having jurisdiction to be confirmed and have judgment entered and enforced.

(e)           The arbitrator(s) will give effect to statutes of limitation in determining any Claim and shall dismiss the arbitration if the Claim is barred under the applicable statutes of limitation. For purposes of the application of any statutes of limitation, the service on AAA under applicable AAA rules of a notice of Claim is the equivalent of the filing of a lawsuit.  Any dispute concerning this arbitration provision or whether a Claim is arbitrable shall be determined by the arbitrator(s), except as set forth at subparagraph (h) of this Dispute Resolution Provision.  The arbitrator(s) shall have the power to award legal fees pursuant to the terms of this agreement.

(f)           This paragraph does not limit the right of any party to: (i) exercise self-help remedies, such as but not limited to, setoff; (ii) initiate judicial or non-judicial foreclosure against any real or personal property collateral; (iii) exercise any judicial or power of sale rights, or (iv) act in a court of law to obtain an interim remedy, such as but not limited to, injunctive relief, writ of possession or appointment of a receiver, or additional or supplementary remedies.

(g)           The filing of a court action is not intended to constitute a waiver of the right of any party, including the suing party, thereafter to require submittal of the Claim to arbitration.

(h)           Any arbitration or court trial (whether before a judge or jury) of any Claim will take place on an individual basis without resort to any form of class or representative action (the “Class Action Waiver”).  The Class Action Waiver precludes any party from participating in or being represented in any class or representative action regarding a Claim.  Regardless of anything else in this Dispute Resolution Provision, the validity and effect of the Class Action Waiver may be determined only by a court and not by an arbitrator.  The parties to this agreement acknowledge that the Class Action Waiver is material and essential to the arbitration of any disputes between the parties and is nonseverable from the agreement to arbitrate Claims. If the Class Action Waiver is limited, voided or found unenforceable, then the parties’ agreement to arbitrate shall be null and void with respect to such proceeding, subject to the right to appeal the limitation or invalidation of the Class Action Waiver.  THE PARTIES ACKNOWLEDGE AND AGREE THAT UNDER NO CIRCUMSTANCES WILL A CLASS ACTION BE ARBITRATED.

(i)           By agreeing to binding arbitration, the parties irrevocably and voluntarily waive any right they may have to a trial by jury in respect of any Claim.  Furthermore, without intending in any way to limit this agreement to arbitrate, to the extent any Claim is not arbitrated, the parties irrevocably and voluntarily waive any right they may have to a trial by jury in respect of such Claim.  This waiver of jury trial shall remain in effect even if the Class Action Waiver is limited, voided or found unenforceable.  WHETHER THE CLAIM IS DECIDED BY ARBITRATION OR BY TRIAL BY A JUDGE, THE PARTIES AGREE AND UNDERSTAND THAT THE EFFECT OF THIS AGREEMENT IS THAT THEY ARE GIVING UP THE RIGHT TO TRIAL BY JURY TO THE EXTENT PERMITTED BY LAW.

13.           Miscellaneous.

(a)           Term.  Upon full and final payment of the Obligation and final termination of Secured Party’s commitment to extend credit under the Credit Agreement without Secured Party having exercised its rights under this Agreement, this Agreement shall terminate; provided that, no Obligor or account debtor on any of the Collateral shall be obligated to inquire as to the termination of this Agreement, but shall be fully protected in making payment directly to Secured Party.

(b)           Actions Not Releases.  The Security Interest and Debtor’s obligations and Secured Party’s rights under this Agreement shall not be released, diminished, impaired or adversely affected by the occurrence of any one or more of the following events:  (i) the taking or accepting of any other security or assurance for any or all of the Obligation; (ii) any release, surrender, exchange, subordination or loss of any security or assurance at any time existing in connection with any or all of the Obligation; (iii) the modification of, amendment to, or waiver of compliance with any terms of any of the other Loan Documents without Debtor’s consent, except as required therein; (iv) the insolvency, bankruptcy or lack of corporate or trust power of any party at any time liable for the payment of any or all of the Obligation, whether now existing or hereafter occurring; (v) any renewal, extension or rearrangement of the payment of any or all of the Obligation, either with or without notice to or consent of Debtor, or any adjustment, indulgence, forbearance or compromise that may be granted or given by Secured Party to Debtor, in each case, except as required by the Loan Documents; (vi) any neglect, delay, omission, failure or refusal of Secured Party to take or prosecute any action in connection with any other agreement, document, guaranty or instrument evidencing, securing or assuring the payment of all or any of the Obligation; (vii) any failure of Secured Party to notify Debtor of any renewal, extension, or assignment of the Obligation or any part thereof, or the release of any security under any other document or instrument, or of any other action taken or refrained from being taken by Secured Party against Debtor or any new agreement between Secured Party and Debtor, it being understood that, except as expressly required by the Credit Agreement, Secured Party shall not be required to give Debtor any notice of any kind under any circumstances whatsoever with respect to or in connection with the Obligation, including, without limitation, notice of acceptance of this Agreement or any Collateral ever delivered to or for the account of Secured Party under this Agreement; (viii) the illegality, invalidity or unenforceability of all or any part of the Obligation against any third party obligated with respect thereto by reason of the fact that the Obligation, or the interest paid or payable with respect thereto, exceeds the amount permitted by Law, the act of creating the Obligation, or any part thereof, is ultra vires, or the officers, partners or trustees creating same acted in excess of their authority, or for any other reason; or (ix) if any payment by any party obligated with respect thereto is held to constitute a preference under applicable Laws or for any other reason Secured Party is required to refund such payment or pay the amount thereof to someone else.

(c)           Waivers.  Except to the extent expressly otherwise provided in this Agreement or in other Loan Documents, Debtor waives (i) any right to require Secured Party to proceed against any other Person, to exhaust its rights in Collateral, or to pursue any other right which Secured Party may have, (ii) with respect to the Obligation, presentment and demand for payment, protest, notice of protest and nonpayment, notice of acceleration, and notice of the intention to accelerate; and (iii) all rights of marshaling in respect of any and all of the Collateral.

(d)           Parties Bound.  This Agreement shall be binding on Debtor and its successors and assigns and shall inure to the benefit of Secured Party and its successors and assigns.

(e)           Assignment.  Debtor may not, without Secured Party’s prior written consent, assign any rights, duties or obligations under this Agreement, except as permitted by the Credit Agreement.  In the event of an assignment of all or part of the Obligation permitted by the Credit Agreement, the Security Interest and other rights and benefits under this Agreement, to the extent applicable to the part of the Obligation so assigned, may be transferred with the Obligation.

(f)           Notice.  Any notice or communication required or permitted under this Agreement must be given as prescribed in the [Credit Agreement][Guaranty].

(g)           Amendments.  This Agreement may only be amended by a writing executed by Debtor and Secured Party.

(h)           Multiple Counterparts, Facsimile, and PDF Signatures.  This Agreement may be executed in any number of counterparts with the same effect as if all signatories had signed the same document.  All counterparts must be construed together to constitute one and the same instrument.  This Agreement may be transmitted and signed by facsimile or in portable document format (PDF).  The effectiveness of any such documents and signatures shall, subject to applicable Law, have the same force and effect as manually-signed originals and shall be binding on Debtor and Secured Party.  Secured Party may also require that any such documents and signatures be confirmed by a manually-signed original; provided that, the failure to request or deliver the same shall not limit the effectiveness of any facsimile or PDF document or signature.

(i)           Governing Law.  This Agreement and the other loan documents must be construed, and their performance enforced, under Texas law without regard to conflicts of law principles.

(j)           Entirety.  THIS AGREEMENT, THE CREDIT AGREEMENT, AND THE LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

[Signatures are on the following pages.]

EXECUTED as of the date set forth in the preamble.

DEBTOR:

[VERTEX ENERGY, INC.,

a Nevada corporation

By:

Name:                                                                           

Title:                                                                           ]

[VERTEX ACQUISITION SUB, LLC,

a Nevada limited liability company

By:

Name:                                                                           

Title:                                                                           ]

[CEDAR MARINE TERMINALS, LP,

a Texas limited partnership

By:          Vertex II GP, LLC,

a Nevada limited liability company,

its general partner

By:

Name:                                                                

Title:                                                                ]

[CROSSROAD CARRIERS, L.P.,

a Texas limited partnership

By:          Vertex II GP, LLC,

a Nevada limited liability company,

its general partner

By:

Name:                                                                

Title:                                                                ]

[VERTEX RECOVERY, L.P.,

a Texas limited partnership

By:          Vertex II GP, LLC,

a Nevada limited liability company,

its general partner

By:

Name:                                                                

Title:                                                                ]

[H & H OIL, L.P.,

a Texas limited partnership

By:         Vertex II GP, LLC,

a Nevada limited liability company,

its general partner

By:

Name:                                                                

Title:                                                                ]

[VERTEX II GP, LLC,

a Nevada limited liability company

By:

Name:                                                                           

Title:                                                                           ]

SECURED PARTY:

BANK OF AMERICA, N.A.

By:

Shawyna Jarrett

Vice President

Attachments:

Schedule 1  -  Information

SCHEDULE 1

Location of Books and Records

and Chief Executive Office

(a) The exact name of Debtor, as such name appears in its organizational documents.

(b) Each other name Debtor has used in the past five years, together with the date of the relevant change.

(c) Any change in Debtor’s identity or legal structure within the past five years.

(d) All other names (including trade names) used by Debtor or any of its divisions or other business units in connection with the conduct of its business or ownership of its properties at any time in the past five years.

(e) Debtor’s federal taxpayer identification number.

(f) Debtor’s chief executive office.

(g) The locations where Debtor maintains its Inventory.

(h) All real property owned by Debtor.

(i) All real property leased by Debtor.

SCHEDULE 2

Commercial Tort Claims

EX-10.5

Exhibit 10.5

CORPORATE GUARANTY

This Guaranty (as amended, supplemented, or restated, this “Guaranty”) is executed as of August 31, 2012, by VERTEX ACQUISITION SUB, LLC, a Nevada limited liability company, CEDAR MARINE TERMINALS, LP, a Texas limited partnership, CROSSROAD CARRIERS, L.P., a Texas limited partnership, VERTEX RECOVERY, L.P., a Texas limited partnership, and H & H OIL, L.P., a Texas limited partnership, and VERTEX II GP, LLC, a Nevada limited liability company (each a “Guarantor”, and collectively, the “Guarantors”) for the benefit of BANK OF AMERICA, N.A., as lender (“Lender”).

RECITALS

A.           Vertex Energy, Inc., a Nevada corporation (“Borrower”), as borrower, and Lender, as lender, have entered into that certain Credit Agreement dated of even date herewith (as amended, supplemented or restated, the “Credit Agreement”), together with certain other Loan Documents.

B.           Each Guarantor is a direct or indirect subsidiary or an affiliate of Borrower and expects to benefit, directly and indirectly, from Lender’s extending credit to Borrower under the Credit Agreement.

C.           In each Guarantor’s judgment, the value of the consideration received and to be received by such Guarantor under the Loan Documents is reasonably worth at least as much as its liability and obligation under this Guaranty, and such liability and obligation may reasonably be expected to benefit such Guarantor directly or indirectly.

D.           It is expressly understood among Borrower, Guarantors, and Lender that the execution and delivery of this Guaranty is a condition precedent to Lender’s obligations to extend credit under the Credit Agreement.

NOW, THEREFORE, for valuable consideration, the receipt and adequacy of which are hereby acknowledged, each Guarantor guarantees to Lender the prompt payment at maturity (by acceleration or otherwise), and at all times thereafter, of the Guaranteed Obligation, as follows:

1.           Definitions.  Each capitalized term used but not defined in this Guaranty shall have the meaning given that term in the Credit Agreement.  The following terms shall have the following meanings as used in this Guaranty:

Borrower has the meaning given in Recital A and includes, without limitation, all of Borrower’s successors and assigns, Borrower as a debtor-in-possession, and any receiver, trustee, liquidator, conservator, custodian, or similar party hereafter appointed for Borrower or for all or any portion of Borrower’s assets pursuant to any liquidation, conservatorship, bankruptcy, moratorium, rearrangement, receivership, insolvency, reorganization, or similar Debtor Relief Law from time to time in effect.

Company Debt means all obligations of Borrower to any Guarantor, whether direct, indirect, fixed, contingent, liquidated, unliquidated, joint, several, or joint and several, now existing or arising after the date of this Guaranty, due or to become due to any Guarantor, or held or to be held by any Guarantor, whether created directly or acquired by assignment or otherwise, and whether or not evidenced by written instrument including the obligation of Borrower to any Guarantor as a subrogee of the Lender or resulting from any Guarantor’s performance under this Guaranty.

Guaranteed Obligation means any and all existing and future indebtedness and liabilities of every kind, nature, and character, direct or indirect, absolute or contingent, liquidated or unliquidated, voluntary or involuntary, of Borrower to the Lender arising under the Credit Agreement and the other Loan Documents, including, the Obligation (as defined in the Credit Agreement) and any premium and all interest (including, without limitation, interest accruing before and after maturity, before and after a Default, and during the pendency of any bankruptcy, receivership, insolvency or other similar proceeding under any applicable Debtor Relief Law (regardless whether such interest is allowed in such proceeding)), and any and all costs, attorney and paralegal fees and expenses reasonably incurred by Lender (a) in connection with any waiver, amendment, consent or default under the Loan Documents, or (b) to enforce Borrower’s, any Guarantor’s, or any other obligor’s payment of any portion of the Guaranteed Obligation.

Paid in Full or Payment in Full means that the Guaranteed Obligation is completely paid (including principal, interest, fees and expenses), and all commitments to lend or issue letters of credit under the Credit Agreement have terminated.

2.           Guaranty.  Each Guarantor hereby guarantees the prompt payment and performance of the Guaranteed Obligation when due (at the stated maturity, upon acceleration, or otherwise) and at all times thereafter.  This is an absolute, unconditional, irrevocable and continuing guaranty of payment (and not of collection) of the Guaranteed Obligation which will remain in effect until the Guaranteed Obligation is Paid in Full.  The circumstance that at any time or from time to time all or any portion of the Guaranteed Obligation may be paid in full shall not affect the Guarantors’ obligation with respect to the Guaranteed Obligation thereafter incurred.  No Guarantor may rescind or revoke its obligations to Lender under this Guaranty with respect to the Guaranteed Obligation.  At the Lender’s option, all payments under this Guaranty shall be made to the office of Lender and in U.S. Dollars.

3.           Default by Borrower.  If a Default exists, Guarantors shall pay the amount of the Guaranteed Obligation then due and payable to Lender on demand and without (a) further notice of dishonor to any Guarantor, (b) any prior notice to any Guarantor of the acceptance by Lender of this Guaranty, (c) any notice having been given to any Guarantor prior to such demand of the creating or incurring of such Debt, or (d) notice of intent to accelerate or notice of acceleration to any Guarantor or Borrower.  To enforce such payment by Guarantors it shall not be necessary for Lender to first or contemporaneously institute suit or exhaust remedies against Borrower or others liable on such Debt, or to enforce rights against any security or collateral ever given to secure such Debt.

4.           Amount of Guaranty and Consideration.  The Lender’s books and records showing the amount of the Guaranteed Obligation shall be admissible in evidence in any action or proceeding, and shall be binding upon the Guarantors and conclusive for the purpose of establishing the amount of the Guaranteed Obligation.  In consummating the transactions contemplated by the Credit Agreement, Guarantors do not intend to disturb, delay, hinder, or defraud either any of their present or future creditors.  Each Guarantor is familiar with, and has independently reviewed books and records regarding, the financial condition of Borrower and is familiar with the value of the security and support for the payment and performance of the Guaranteed Obligation.  Based upon such examination, and taking into account the fairly discounted value of each Guarantor’s contingent obligations under this Guaranty and the value of the subrogation and contribution claims any Guarantor could make in connection with this Guaranty, and assuming each of the transactions contemplated by the Credit Agreement is consummated and Borrower makes full use of the credit facilities thereunder, the present realizable fair market value of the assets of each Guarantor exceeds the total obligations of each such Guarantor, and each Guarantor is able to realize upon its assets and pay its obligations as such obligations mature in the normal course of business.  Each Guarantor represents and warrants to Lender that the value of consideration received and to be received by it is reasonably worth at least as much as its liability under this Guaranty, and such liability may reasonably be expected to benefit each Guarantor, directly or indirectly.

5.           Avoidance Limitation.  The obligations of Guarantors under this Guaranty shall be limited to an aggregate amount equal to the largest amount that would not render its obligations under this Guaranty subject to avoidance under Section 548 of the U.S. Bankruptcy Code or any comparable provisions of any applicable state law.

6.           Liability for Other Debt of Borrower.  If any Guarantor becomes liable for any Debt owing by Borrower to Lender, by endorsement or otherwise, other than under this Guaranty, such liability shall not be impaired or affected by this Guaranty and the rights of Lender under this Guaranty shall be cumulative of any and all other rights that Lender may ever have against Guarantors.

7.           Subordination.  Each Guarantor hereby expressly subordinates all Company Debt to the Payment in Full of the Guaranteed Obligation.  Each Guarantor agrees not to receive or accept any payment from Borrower with respect to the Company Debt at any time a Default exists and, in the event any Guarantor receives any payment on the Company Debt in violation of the foregoing, such Guarantor shall hold any such payment for the benefit of Lender and promptly turn it over to Lender, in the form received (with any necessary endorsements), to be applied to the Guaranteed Obligation.  If Lender so requests, any such Company Debt shall be enforced and all amounts received by any Guarantor shall be received in trust for the Lender and the proceeds thereof shall be paid over to the Lender on account of the Guaranteed Obligation, but without reducing or affecting in any manner the liability of Guarantors under this Guaranty.

8.           Subrogation and Contribution.

(a)           Until the Guaranteed Obligation is Paid In Full, each Guarantor agrees that it will not assert, enforce, or otherwise exercise (i) any right of subrogation to any of the rights or liens of Lender or any other beneficiary against Borrower or any other obligor on the Guaranteed Obligation or any Collateral or other security, or (ii) any right of recourse, reimbursement, subrogation, contribution, indemnification, or similar right against Borrower or any other obligor or other guarantor on all or any part of the Guaranteed Obligation (whether such rights in clause (i) or clause (ii), or under clause (b) below, arise in equity, under contract, by statute, under common law, or otherwise).

(b)           To the extent that any Guarantor makes a payment (a “Guarantor Payment”) of all or any portion of the Guaranteed Obligation, then such Guarantor shall be entitled to contribution and indemnification from, and be reimbursed by, each of the other Guarantors in an amount, for each such Guarantor, equal to a fraction of such Guarantor Payment, the numerator of which is such Guarantor’s Allocable Amount and the denominator of which is the sum of the Allocable Amounts of all Guarantors.

(c)           As of any date of determination, the “Allocable Amount” of each Guarantor shall be equal to the maximum amount of liability which could be asserted against such Guarantor under this Guaranty with respect to the applicable Guarantor Payment without (i) rendering such Guarantor “insolvent”, (ii) leaving such Guarantor with unreasonably small capital, or (iii) leaving such Guarantor unable to pay its debts as they become due, in each case, under or within the meaning of any Debtor Relief Law.

9.           Enforceability of Guaranty; No Release.

(a)           This Guaranty shall not be affected by the genuineness, validity, regularity or enforceability of the Guaranteed Obligation or any instrument or agreement evidencing any part of the Guaranteed Obligation, or by the existence, validity, enforceability, perfection, or extent of any Collateral securing the Guaranteed Obligation, or by any fact or circumstance relating to the Guaranteed Obligation which might otherwise constitute a defense to the obligations of the Guarantors under this Guaranty.

(b)           Each Guarantor agrees that the Lender may, at any time and from time to time, and without notice to any Guarantor, make any agreement with the Borrower or with any other person or entity liable on any of the Guaranteed Obligation or providing collateral as security for the Guaranteed Obligation, for the extension, renewal, payment, compromise, discharge or release of the Guaranteed Obligation or any Collateral (in whole or in part), or for any modification or amendment of the terms thereof or of any instrument or agreement evidencing the Guaranteed Obligation or the provision of Collateral, all without in any way impairing, releasing, discharging or otherwise affecting the obligations of the Guarantors under this Guaranty.

(c)           Each Guarantor hereby agrees its obligations under the terms of this Guaranty shall not be released, discharged, diminished, impaired, reduced or otherwise adversely affected by any of the following: (a) Lender’s taking or accepting of any other security or guaranty for any or all of the Guaranteed Obligation; (b) any release, surrender, exchange, subordination or loss of any security at any time existing in connection with any or all of the Guaranteed Obligation; (c) any full or partial release of the liability of any other obligor on the Obligation; (d) the insolvency, becoming subject to any Debtor Relief Law, or lack of corporate power of Borrower or any party at any time liable for the payment of any or all of the Guaranteed Obligation; (e) any renewal, extension or rearrangement of the payment of any or all of the Guaranteed Obligation, either with or without notice to or consent of any Guarantor, or any adjustment, indulgence, forbearance, or compromise that may be granted or given by Lender to Borrower, any Guarantor, or any other obligor on the Obligation; (f) any neglect, delay, omission, failure or refusal of Lender to take or prosecute any action for the collection of all or any part of the Guaranteed Obligation or to foreclose or take or prosecute any action in connection with any instrument or agreement evidencing or securing any or all of the Guaranteed Obligation; (g) any failure of Lender to give any Guarantor notice of any of the foregoing it being understood that Lender shall not be required to give any Guarantor any notice of any kind under any circumstances with respect to or in connection with the Guaranteed Obligation, other than any notice expressly required to be given to Guarantors under this Guaranty; (h) the unenforceability of all or any part of the Guaranteed Obligation against Borrower by reason of the fact that the Guaranteed Obligation (or the interest on the Guaranteed Obligation) exceeds the amount permitted by Law, the act of creating the Guaranteed Obligation, or any part thereof, is ultra vires, or the officers creating same exceeded their authority or violated their fiduciary duties in connection therewith; (i) any payment of the Obligation to Lender is held to constitute a preference under any Debtor Relief Law or if for any other reason Lender is required to refund such payment or make payment to someone else (and in each such instance this Guaranty shall be reinstated in an amount equal to such payment); or (j) any discharge, release, or other forgiveness of Borrower’s personal liability for the payment of the Guaranteed Obligation.

10.           Exercise of Rights and Waiver.

(a)           No failure by Lender to exercise, and no delay in exercising, any right or remedy under this Guaranty shall operate as a waiver thereof.  The exercise by Lender of any right or remedy under this Guaranty under the Loan Documents, or other instrument, or at Law or in equity, shall not preclude the concurrent or subsequent exercise of any other right or remedy.  The remedies provided in this Guaranty are cumulative and not exclusive of any remedies provided by law or in equity.  The unenforceability or invalidity of any provision of this Guaranty shall not affect the enforceability or validity of any other provision herein.

(b)           The obligations of each Guarantor under this Guaranty are those of primary obligor, and not merely as surety, and are independent of the Guaranteed Obligation. Each Guarantor waives diligence by Lender and action on delinquency in respect of the Guaranteed Obligation or any part thereof, including any provisions of laws requiring Lender to exhaust any right or remedy or to take any action against Borrower, any other Guarantor, or any other Person before enforcing this Guaranty against any Guarantor.  Each Guarantor hereby waives all rights by which it might be entitled to require suit on an accrued right of action in respect of any of the Guaranteed Obligation or require suit against Borrower or others, whether arising pursuant to Section 43.002 of the Texas Civil Practice and Remedies Code (regarding Guarantors’ right to require Lender to sue Borrower on accrued right of action following Guarantors’ written notice to Lender), Section 17.001 of the Texas Civil Practice and Remedies Code, as amended (allowing suit against Guarantor without suit against Borrower, but precluding entry of judgment against Guarantors prior to entry of judgment against Borrower), Rule 31 of the Texas Rules of Civil Procedure, as amended (requiring Lender to join Borrower in any suit against Guarantors unless judgment has been previously entered against Borrower), or otherwise.

(c)           Each Guarantor waives notice of acceptance of this Guaranty, notice of any loan to which it may apply, and waives presentment, demand for payment, protest, notice of dishonor or nonpayment of any loan, notice of intent to accelerate, notice of acceleration, and notice of any suit or notice of the taking of other action by Lender against Borrower, any Guarantor, or any other person and any notice to any party liable thereon (including any Guarantor), without reducing or affecting in any manner the liability of the Guarantors under this Guaranty.

11.           Information.  Each Guarantor agrees to furnish promptly to the Lender any and all financial or other information regarding such Guarantor or its property as the Lender may reasonably request in writing.

12.           Stay of Acceleration.  In the event that acceleration of the time for payment of any of the Guaranteed Obligation is stayed, upon the insolvency, bankruptcy or reorganization of the Borrower or any other Person, or otherwise, all such amounts shall nonetheless be payable by Guarantors immediately upon demand by Lender.

13.           Expenses.  Each Guarantor shall pay on demand all out-of-pocket expenses (including reasonable attorneys’ fees and expenses and the allocated cost and disbursements of internal legal counsel) in any way relating to the enforcement or protection of the Lender’s rights under this Guaranty, including any incurred in the preservation, protection or enforcement of any rights of the Lender in any case commenced by or against any Guarantor under Title 11, United States Code or any similar or successor statute.  The obligations of the Guarantors under the preceding sentence shall survive termination of this Guaranty.

14.           Amendments.  No provision of this Guaranty may be waived, amended, supplemented or modified, except by a written instrument executed by Lender and Guarantors.

15.           Reliance and Duty to Remain Informed.  Each Guarantor confirms that it has executed and delivered this Guaranty after reviewing the terms and conditions of the Credit Agreement and the other Loan Documents and such other information as it has deemed appropriate in order to make its own credit analysis and decision to execute and deliver this Guaranty.  Each Guarantor confirms that it has made its own independent investigation with respect to Borrower’s creditworthiness and is not executing and delivering this Guaranty in reliance on any representation or warranty by Lender as to such creditworthiness.  Each Guarantor expressly assumes all responsibilities to remain informed of the financial condition of Borrower and any circumstances affecting (a) Borrower’s ability to perform under the Loan Documents to which Borrower is a party or (b) any collateral securing all or any part of the Guaranteed Obligation.

16.           Change in any Guarantor’s Status.  Should any Guarantor become insolvent, or fail to pay its debts generally as they become due, or voluntarily seek, consent to, or acquiesce in the benefit or benefits of any Debtor Relief Law or become a party to (or be made the subject of) any proceeding provided for by any Debtor Relief Law (other than as a creditor or claimant) that could suspend or otherwise adversely affect the rights of Lender granted under this Guaranty, then, in any such event, the Guaranteed Obligation shall be, as between Guarantors and Lender, a fully matured, due, and payable obligation of Guarantors to Lender (without regard to whether Borrower is then in Default or whether the Guaranteed Obligation, or any part thereof is then due and owing by Borrower to Lender), payable in full by Guarantors to Lender upon demand, which shall be the estimated amount owing in respect of the contingent claim created under this Guaranty.

17.           Representations and Warranties.  Each Guarantor acknowledges that certain representations and warranties set out in the Credit Agreement are in respect of it, and each Guarantor reaffirms that each such representation and warranty is true and correct.

18.           Covenants.  Each Guarantor acknowledges that certain covenants set forth in the Credit Agreement are in respect of it or shall be imposed upon it, and each Guarantor covenants and agrees to promptly and properly perform, observe, and comply with each such covenant.

19.           INDEMNITY.  EachGuarantor shall indemnify, protect, and hold Lender and its parent, subsidiaries, directors, officers, employees, representatives, agents, successors, permitted assigns, and attorneys (collectively, the “indemnified parties”) harmless from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, and proceedings and all costs, expenses (including, without limitation, all reasonable attorneys’ fees and legal expenses whether or not suit is brought), and reasonable disbursements of any kind or nature (the “indemnified liabilities”) that may at any time be imposed on, incurred by, or asserted against the indemnified parties, in any way relating to or arising out of (a) the direct or indirect result of the violation by Borrower of any Environmental Law, (b) Borrower’s generation, manufacture, production, storage, release, threatened release, discharge, disposal, or presence in connection with its properties of a Hazardous Substance (including, without limitation, (i) all damages from any use, generation, manufacture, production, storage, release, threatened release, discharge, disposal, or presence, or (ii) the costs of any environmental investigation, monitoring, repair, cleanup, or detoxification and the preparation and implementation of any closure, remedial, or other plans), or (c) the Loan Documents or any of the transactions contemplated therein.  However, although each indemnified party shall be indemnified under the Loan Documents for its own ordinary negligence, no indemnified party has the right to be indemnified under the Loan Documents for its own fraud, gross negligence, or willful misconduct.  The provisions of and undertakings and indemnification set forth in this Section 19 shall survive the Payment in Full of the Guaranteed Obligation and termination of this Guaranty.

20.           Offset Claims.  The Guaranteed Obligation shall not be reduced, discharged or released because or by reason of any existing or future offset, claim or defense (except for the defense of Payment in Full of the Guaranteed Obligation) of Borrower or any other party against Lender or against payment of the Guaranteed Obligation, whether such offset, claim, or defense arises in connection with the Guaranteed Obligation or otherwise.  Such claims and defenses include, without limitation, failure of consideration, breach of warranty, fraud, statute of frauds, bankruptcy, infancy, statute of limitations, lender liability, accord and satisfaction, and usury.

21.           Setoff.  If and to the extent any payment is not made when due under this Guaranty, Lender may setoff and charge from time to time any amounts so due against any or all of any Guarantor’s accounts or deposits with Lender.

22.           Binding Agreement.  This Guaranty is for the benefit of Lender and its successors and assigns.  Each Guarantor acknowledges that in the event of an assignment of the Guaranteed Obligation or any part thereof in accordance with the Credit Agreement, the rights and benefits under this Guaranty, to the extent applicable to the Debt so assigned, may be transferred with such Debt.  This Guaranty is binding on each Guarantor and its successors and permitted assigns, provided that no Guarantor may assign its rights or obligations under this Guaranty without the prior written consent of Lender (and any attempted assignment without such consent shall be void).

23.           Notices.  All notices required or permitted to be given under this Guaranty, if any, must be in writing and shall or may, as the case may be, be given in the same manner as notice is given under the Credit Agreement as follows:

If to Lender:

Bank of America, N.A.

700 Louisiana, 8th Floor

Houston, Texas  77002

Telephone No.: 713-247-6406

Facsimile No.: 713-247-7569

Attention:  Shawyna Jarrett

with a copy to:

Porter Hedges LLP

1000 Main Street, 36th Floor

Houston, Texas 77002

Telephone No.: 713-226-6685

Facsimile No.: 713-226-6285

Attention:  Joyce K. Soliman

If to Borrower:

Vertex Energy, Inc.

1331 Gemini, Suite 250

Houston, Texas  77058

Telephone No.: (281) 486-4182

Facsimile No.: (281) 486-0217

Attention:  Chris Carlson

with a copy to:

The Loev Law Firm, PC

6300 West Loop South, Suite 280

Bellaire, Texas  77404

Telephone No.: (713) 524-4110

Facsimile No.: (713) 524-4122

Attention:  David M. Loev

If to Guarantors:

c/o Vertex Energy, Inc.

1331 Gemini, Suite 250

Houston, Texas  77058

Telephone No.: (281) 486-4182

Facsimile No.: (281) 486-0217

Attention:  Chris Carlson

with a copy to:

The Loev Law Firm, PC

6300 West Loop South, Suite 280

Bellaire, Texas  77404

Telephone No.: (713) 524-4110

Facsimile No.: (713) 524-4122

Attention:  David M. Loev

Subject to the terms of the Credit Agreement, by giving at least 30 days written notice, any party to this Guaranty shall have the right from time to time and at any time while this Guaranty is in effect to change its addresses or fax numbers and each shall have the right to specify a different address or fax number within the United States of America.  Nothing in this Section 23 shall be construed to require any notice to any Guarantor not otherwise expressly required in this Guaranty.

24.           Termination.  Subject to Section 25 regarding reinstatement, this Guaranty shall terminate and be released upon the earlier occurrence of the date the Guaranteed Obligation is Paid In Full.

25.           Reinstatement.  Notwithstanding anything in this Guaranty to the contrary, this Guaranty shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any portion of the Guaranteed Obligation is revoked, terminated, rescinded or reduced or must otherwise be restored or returned upon the insolvency, bankruptcy or reorganization of the Borrower or any other Person or otherwise, as if such payment had not been made and whether or not the Lender is in possession of or has released this Guaranty and regardless of any prior revocation, rescission, termination or reduction.

26.           Governing Law.  THIS GUARANTY IS TO BE CONSTRUED — AND ITS PERFORMANCE ENFORCED — UNDER TEXAS LAW.

27.           Arbitration; Waiver of Jury Trial.  This paragraph, including the subparagraphs below, is referred to as the “Dispute Resolution Provision.”  This Dispute Resolution Provision is a material inducement for the parties entering into this Guaranty.

(a)           This Dispute Resolution Provision concerns the resolution of any controversies or claims between the parties, whether arising in contract, tort or by statute, including but not limited to controversies or claims that arise out of or relate to: (i) this Guaranty (including any renewals, extensions or modifications); or (ii) any document related to this Guaranty (collectively a “Claim”).  For the purposes of this Dispute Resolution Provision only, the term “parties” shall include any parent corporation, subsidiary or affiliate of Lender involved in the servicing, management or administration of any obligation described or evidenced by this Guaranty.

(b)           At the request of any party to this agreement, any Claim shall be resolved by binding arbitration in accordance with the Federal Arbitration Act (Title 9, U.S. Code) (the “Act”).  The Act will apply even though this agreement provides that it is governed by the law of a specified state.

(c)           Arbitration proceedings will be determined in accordance with the Act, the then-current rules and procedures for the arbitration of financial services disputes of the American Arbitration Association or any successor thereof (“AAA”), and the terms of this Dispute Resolution Provision.  In the event of any inconsistency, the terms of this Dispute Resolution Provision shall control.  If AAA is unwilling or unable to (i) serve as the provider of arbitration or (ii) enforce any provision of this arbitration clause, Lender may designate another arbitration organization with similar procedures to serve as the provider of arbitration.

(d)           The arbitration shall be administered by AAA and conducted, unless otherwise required by law, in any U.S. state where real or tangible personal property collateral for this credit is located or if there is no such collateral, in the state specified in the governing law section of this agreement.  All Claims shall be determined by one arbitrator; however, if Claims exceed Five Million Dollars ($5,000,000), upon the request of any party, the Claims shall be decided by three arbitrators.  All arbitration hearings shall commence within ninety (90) days of the demand for arbitration and close within ninety (90) days of commencement and the award of the arbitrator(s) shall be issued within thirty (30) days of the close of the hearing.  However, the arbitrator(s), upon a showing of good cause, may extend the commencement of the hearing for up to an additional sixty (60) days.  The arbitrator(s) shall provide a concise written statement of reasons for the award.  The arbitration award may be submitted to any court having jurisdiction to be confirmed and have judgment entered and enforced.

(e)           The arbitrator(s) will give effect to statutes of limitation in determining any Claim and shall dismiss the arbitration if the Claim is barred under the applicable statutes of limitation. For purposes of the application of any statutes of limitation, the service on AAA under applicable AAA rules of a notice of Claim is the equivalent of the filing of a lawsuit.  Any dispute concerning this arbitration provision or whether a Claim is arbitrable shall be determined by the arbitrator(s), except as set forth at subparagraph (h) of this Dispute Resolution Provision.  The arbitrator(s) shall have the power to award legal fees pursuant to the terms of this agreement.

(f)           This paragraph does not limit the right of any party to: (i) exercise self-help remedies, such as but not limited to, setoff; (ii) initiate judicial or non-judicial foreclosure against any real or personal property collateral; (iii) exercise any judicial or power of sale rights, or (iv) act in a court of law to obtain an interim remedy, such as but not limited to, injunctive relief, writ of possession or appointment of a receiver, or additional or supplementary remedies.

(g)           The filing of a court action is not intended to constitute a waiver of the right of any party, including the suing party, thereafter to require submittal of the Claim to arbitration.

(h)           Any arbitration or court trial (whether before a judge or jury) of any Claim will take place on an individual basis without resort to any form of class or representative action (the “Class Action Waiver”).  The Class Action Waiver precludes any party from participating in or being represented in any class or representative action regarding a Claim.  Regardless of anything else in this Dispute Resolution Provision, the validity and effect of the Class Action Waiver may be determined only by a court and not by an arbitrator.  The parties to this agreement acknowledge that the Class Action Waiver is material and essential to the arbitration of any disputes between the parties and is nonseverable from the agreement to arbitrate Claims. If the Class Action Waiver is limited, voided or found unenforceable, then the parties’ agreement to arbitrate shall be null and void with respect to such proceeding, subject to the right to appeal the limitation or invalidation of the Class Action Waiver.  THE PARTIES ACKNOWLEDGE AND AGREE THAT UNDER NO CIRCUMSTANCES WILL A CLASS ACTION BE ARBITRATED.

(i)           By agreeing to binding arbitration, the parties irrevocably and voluntarily waive any right they may have to a trial by jury in respect of any Claim.  Furthermore, without intending in any way to limit this agreement to arbitrate, to the extent any Claim is not arbitrated, the parties irrevocably and voluntarily waive any right they may have to a trial by jury in respect of such Claim.  This waiver of jury trial shall remain in effect even if the Class Action Waiver is limited, voided or found unenforceable.  WHETHER THE CLAIM IS DECIDED BY ARBITRATION OR BY TRIAL BY A JUDGE, THE PARTIES AGREE AND UNDERSTAND THAT THE EFFECT OF THIS AGREEMENT IS THAT THEY ARE GIVING UP THE RIGHT TO TRIAL BY JURY TO THE EXTENT PERMITTED BY LAW.

28.           No Oral Agreements.  The Rights And Obligations Of The Parties Hereto Shall Be Determined Solely From Written Agreements, Documents, And Instruments, And Any Prior Oral Agreements Among The Parties Are Superseded By And Merged Into Such Writings.  This Guaranty (As Amended In Writing From Time To Time) The Credit Agreement, And The Other Written Loan Documents Executed By Borrower, Lender, or Guarantors (Or By Borrower Or Guarantors For The Benefit Of Lender) Represent The Final Agreement Among Borrower, Guarantors, And Lender And May Not Be Contradicted By Evidence Of Prior, Contemporaneous, Or Subsequent Oral Agreements By The Parties.  There Are No Unwritten Oral Agreements Between The Parties.

[Signatures are on the following page.]

EXECUTED as of the date first written above.

EX-99.1

Exhibit 99.1

Vertex Energy Announces the Closing of the Acquisition of Substantially All of the Assets and Liabilities of Vertex Holdings and Entry into $18.5 Million Lending Facility

September 12, 2012 - HOUSTON, TX  ̶  Vertex Energy, Inc. (OTCQB:VTNR) (the “Company” or “Vertex Energy”), a leader in the aggregation, re-refining and processing of distressed petroleum streams, today announced that it has closed the acquisition of substantially all of the assets and liabilities of Vertex Holdings and entered into a Credit Agreement with Bank of America, N.A. (the “Lender”) to finance the transaction.  Pursuant to the Credit Agreement, the Lender provided the Company $8,500,000 in the form of a term loan and agreed to provide the Company an additional $10,000,000 revolving credit facility.

David Phillips, a member of Vertex Energy's Board of Directors and the Chairman of the Related Party Transaction Committee stated, “We are excited to have closed the Purchase Agreement and completed the acquisition of these valuable assets, which will allow us to operate as a vertically integrated company that spans the full value chain within our industry, from feedstock collection through processing and end-product sales.  We look forward to continuing to grow our operations with funding available through the revolving credit facility and building on economies of scale while streamlining our business with the assets acquired through the Purchase Agreement.”

Benjamin P. Cowart, Chairman and CEO of Vertex Energy said, "We are pleased to have closed this definitive agreement which we believe will further strengthen our foothold in the collection and re-refining business.  We believe there are many opportunities for the newly combined businesses to increase our presence in the industry, improve profitability and shareholder value.  I also want to thank our employees and shareholders for their continued support of our strategy."

For the fiscal year ended December 31, 2011, Vertex Holdings generated revenue and EBITDA of approximately $31 million and $6 million, respectively. For the six-months ended June 30, 2012, Vertex Holdings generated revenue and EBITDA of approximately $19 million and $3 million, respectively.

As a result of the closing of the Purchase Agreement, the Company, through the Acquired Company, owns the intellectual property relating to the Thermal Chemical Extraction Process (“TCEP”).  Prior to the closing, Cedar Marine had conducted the TCEP re-refining process at the Cedar Marine facility on behalf of the Company. This acquisition is part of the Company’s vertical integration strategy to own and operate collection and re-refining businesses. The Company expects the acquisition to be accretive to earnings per share in 2013.

On September 11, 2012, but effective as of August 31, 2012, the Company closed the transactions contemplated by the August 14, 2012 definitive unit purchase agreement (the “Purchase Agreement”), among the Company, Vertex Acquisition Sub, LLC, a special purpose entity formed for purposes of the transactions contemplated in the Purchase Agreement (the “Acquired Company”),Vertex Holdings, L.P. (“Holdings”) and B & S Cowart Family L.P. (“B&S LP”), and acquired all of the outstanding equity interests of the Acquired Company.  Prior to the closing under the Purchase Agreement, Holdings contributed to the Acquired Company substantially all of its assets and liabilities relating to the business of transporting, storing, processing and re-refining petroleum products, crudes and used lubricants (the “Business”), including all of the outstanding equity interests in Holdings’ wholly-owned operating subsidiaries, Cedar Marine Terminals, L.P. (“Cedar Marine”), Crossroad Carriers, L.P. (“Crossroad”), Vertex Recovery L.P. (“Recovery”) and H&H Oil, L.P. (“H&H Oil”), and B&S LP contributed to the Acquired Company the real estate associated with H&H Oil’s operations held by B&S LP.

Holdings and B&S LP are related parties controlled by Benjamin P. Cowart, Chairman and Chief Executive Officer of Vertex Energy. Mr. Cowart directly or indirectly owns a 77% interest in Holdings and a 100% interest in B&S LP. Additionally, Chris Carlson, the Company’s Chief Financial Officer, owns a 10% interest in Holdings. The Company had numerous relationships and transactions with Holdings and its subsidiaries prior to the closing of the Purchase Agreement, including the lease of a storage facility, subletting of office space, operating agreement for Holdings’ TCEP facility on behalf of the Company (acquired by the Company as part of the Purchase Agreement), transportation of feedstock to re-refiners and the Company’s storage facility, and delivery from the TCEP re-refinery to end customers.  In connection with the closing of the Purchase Agreement, the Company paid the following consideration for 100% of the equity interests in the Acquired Company: (i) to Holdings, (a) $14.8 million in cash and assumed debt (which cash consideration was borrowed under loans made possible by the Credit Agreement); and (b) 4,545,455 million restricted shares of the Company’s common stock; and (ii) to B&S LP, $1.7 million cash consideration (which was borrowed under loans made possible by the Credit Agreement), representing the appraised value of certain real estate contributed by B&S LP to the Acquired Company.  Additionally, for each of the three one-year periods following the closing date of the transaction, Holdings will be eligible to receive earn-out payments of $2.23 million, up to $6.7 million in the aggregate, contingent on the combined company achieving EBITDA targets of $10.75 million, $12.0 million and $13.5 million, respectively, in those periods. The final purchase price is subject to a post-closing working capital adjustment, and $1.0 million of the purchase price will be held in escrow for 18 months to satisfy indemnity claims.

More information regarding the Credit Agreement credit facilities and the closing of the Purchase Agreement can be found in the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on September 12, 2012.

Craig-Hallum Capital Group LLC served as exclusive financial adviser to the Company in connection with the acquisition, and Mayer Brown LLP acted as its legal adviser. Sedgwick LLP acted as legal adviser to Holdings and B&S LP.

Information Regarding Newly Acquired Subsidiaries:

· Cedar Marine Terminals, L.P.  Cedar Marine operates a 19-acre bulk liquid storage facility on the Houston Ship Channel. The terminal serves as a truck-in, barge-out facility and provides throughput terminal operations. Cedar Marine is also the site of the TCEP re-refining process.

· Crossroad Carriers, L.P.  Crossroad is a third-party common carrier that provides transportation and logistical services for liquid petroleum products, as well as other hazardous materials and waste streams.

· Vertex Recovery L.P. Recovery collects and recycles used oil and residual materials from large regional and national customers throughout the US and Canada. It facilitates its services through a network of independent recyclers and franchise collectors.

· H&H Oil, L.P. H&H Oil collects and recycles used oil and residual materials from customers based in Austin, Baytown, and Corpus Christi, Texas.

About Vertex Energy, Inc.

Vertex Energy, Inc. (OTCQB:VTNR) is a leader in the aggregation, re-refining and processing of distressed petroleum streams, such as used oil, transmix, fuel oils and off-specification commercial chemical products, thereby reducing the United States’ reliance on foreign crude oil. Vertex Energy’s focus, as a participant in the alternative energy and environmentally friendly investment sectors, is on creating increased value in the products it manages. It utilizes a variety of strategies and technologies that facilitate the re-refining of used oil and off-specification commercial chemical products into higher value commodities. By creating higher value products from distressed hydrocarbon streams, the Company is positioned to produce both financial and environmental benefits. Vertex Energy is based in Houston, Texas with offices in Georgia and California. More information on the Company can be found on the Company’s website at www.vertexenergy.com, and in documents filed with the U.S. Securities and Exchange Commission, on the SEC’s web site at www.sec.gov.

This press release may contain forward-looking statements, including information about management’s view of Vertex Energy’s future expectations, plans and prospects, within the safe harbor provisions under The Private Securities Litigation Reform Act of 1995 (the “Act”). In particular, when used in the preceding discussion, the words "believes," "expects," "intends," "plans," "anticipates," or "may," and similar conditional expressions are intended to identify forward-looking statements within the meaning of the Act, and are subject to the safe harbor created by the Act. Any statements made in this news release other than those of historical fact, about an action, event or development, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors, which may cause the results of Vertex Energy, its divisions and concepts to be materially different than those expressed or implied in such statements. These risk factors and others are included from time to time in documents Vertex Energy files with the Securities and Exchange Commission, including but not limited to, its Form 10-Ks, Form 10-Qs and Form 8-Ks. Other unknown or unpredictable factors also could have material adverse effects on Vertex Energy’s future results. The forward-looking statements included in this press release are made only as of the date hereof. Vertex Energy cannot guarantee future results, levels of activity, performance or achievements. Accordingly, you should not place undue reliance on these forward-looking statements. Finally, Vertex Energy undertakes no obligation to update these statements after the date of this release, except as required by law, and also takes no obligation to update or correct information prepared by third parties that are not paid for by Vertex Energy.

Investor Relation Contacts

Marlon Nurse

Porter, LeVay & Rose, Inc.

SVP – Investor Relations

Marlon Nurse

(212) 564-4700

Matthew Lieb

Vertex Energy, Inc.

Chief Operating Officer

(310) 230-5450