RIGHT OF FIRST REFUSAL AGREEMENT
EXHIBIT
10.3
This Right of First Refusal and Related
Rights Agreement (this “Agreement”)
entered into on March __, 2009 to be effective as of the Effective Date (as
defined below), is by and between Vertex Holdings, L.P. (formerly Vertex Energy,
L.P.), a Texas limited partnership (“Vertex
LP”), VTX, Inc. (“VTX”),
Xxxxxxxx X. Xxxxxx, an individual (“Xxxxxx”),
and Vertex Energy, Inc., a Nevada corporation (“Vertex
Nevada”), each sometimes referred to herein as a “Party,”
and collectively referred to herein as the “Parties.”
W I T N E S S E T H:
WHEREAS, on or about May 19,
2008, World Waste Technologies, Inc., a California corporation (“WWT”),
Vertex LP, Xxxxxx, Vertex Nevada and Vertex Merger Sub, LLC, a California
limited liability company, entered into an Amended and Restated Agreement and
Plan of Merger (as amended and extended from time to time, the “Merger
Agreement”), which Merger Agreement is incorporated herein by
reference;
WHEREAS, pursuant to Section
5.25 of the Merger Agreement, Vertex Nevada was granted a “Right of First Refusal and
Related Rights;” and
WHEREAS, the Parties desire to
memorialize the terms and conditions of the Right of First Refusal and Related
Rights contained in Section 5.25 of the Merger Agreement.
NOW, THEREFORE, in
consideration for the promises and pledges contained below and other good and
valuable consideration, which consideration the Parties acknowledge receipt of,
and the premises and the mutual covenants, agreements, and considerations herein
contained, the Parties hereto agree as follows:
1. Right of First
Refusal.
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1.1
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In
consideration of the agreements and covenants set forth herein above and
below and set forth in the Merger Agreement, the sufficiency of which is
hereby acknowledged and confessed, the Parties agree that Vertex Nevada is
granted a right of first refusal to match any third party offer to
purchase the securities of any Xxxxxx Party (as defined below) owned by
Vertex LP or VTX, and/or any assets of any Xxxxxx Party on the terms and
conditions set forth in such third party offer (the “Right
of First Refusal”), only in the event that such Xxxxxx Party
desires to accept such third party offer. A “Xxxxxx
Party” shall be defined throughout this Agreement as one or more of
the following: Cross Road Carriers, Vertex Recovery (or its subsidiaries),
Cedar Marine Terminals, LP, Vertex Residual Management Group, LP, Vertex
Green, LP, or any other entity which is majority owned or controlled by
Xxxxxx or Vertex LP. Such Right of First Refusal shall have the
following terms, rights and
conditions:
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1.1.1
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Notice of
Offer. Within Forty-Eight (48) hours of the receipt of a
third party offer to purchase all or any substantial part of the
securities of any Xxxxxx Party owned by Vertex LP or VTX, or any of the
assets of any Xxxxxx Party (an “Offer”),
Vertex LP shall (a) deliver to Vertex Nevada a written notice (the “Notice”)
stating: (i) the name of each proposed purchaser or other transferee
(“Proposed
Transferee”); (ii) the name of the Xxxxxx Party entity(ies) or
assets that the Proposed Transferee has offered to purchase (the “Subject
Entities”); (iii) the bona fide cash price or other consideration
for which the Proposed Transferee has offered to purchase the Subject
Entities and the timing and terms of the payment of any such consideration
(the “Offered
Price”); and (iv) the material terms and conditions of the proposed
purchase (the “Offer
Terms”); (b) shall deliver a copy of any correspondence,
agreements, term sheets or letter of intents received in connection with
the proposed offer to purchase; and (c) shall deliver a copy of any such
correspondence, agreements, term sheets or letter of intents to Vertex
Nevada’s Related Party Transaction
Committee.
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1.1.2
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Exercise of Right of First
Refusal. At any time within thirty (30) days after
receipt of the Notice and written notice from Vertex LP or such Xxxxxx
Party of its desire to accept the Offer, Vertex Nevada may, by giving
written notice to Vertex LP, elect to purchase the Subject Entities
proposed to be sold to the Proposed Transferees, at the Purchase Price and
on the terms and conditions described below (the “Vertex
Notice”).
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1.1.3
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Purchase
Price. The purchase price (“Purchase
Price”) for the Subject Entities purchased by Vertex Nevada shall
be the Offered Price, and the terms and conditions of the transfer shall
be identical in all material respects to the Offer Terms (the “Terms”). If
the Offered Price includes consideration other than cash, the cash
equivalent value of the non-cash consideration shall be determined by the
Parties in good faith, and the Purchase Price shall be payable by Vertex
Nevada (a) solely in cash; or (b) in cash and securities of Vertex Nevada,
as agreed by the mutual consent of Vertex LP and Vertex
Nevada. If such consideration is unable to be determined by the
Parties in good faith, the value of the non-cash consideration provided
for in the Terms shall be determined by the valuation of an agreed upon
third party valuation specialist in its sole determination, with any costs
of such valuation being paid by Vertex Nevada. Payment of the
Purchase Price shall be made by Vertex Nevada after delivery of the
written notice by Vertex Nevada as set forth in Section 1.1.2 and after
adequate due diligence by Vertex Nevada, which payment date shall not
exceed sixty (60) days from the date the Vertex Notice is provided by
Vertex Nevada to Vertex LP.
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1.1.4
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Right to Sell Subject
Entities. If any of the Subject Entities proposed in the
Notice to be sold to a given Proposed Transferee are not purchased by
Vertex Nevada, then such may be sold or otherwise transferred to such
Proposed Transferees at the Offered Price in connection with and pursuant
to the Offer Terms, provided that such sale or other transfer is
consummated within sixty (60) days after the date of the
Notice. If the Subject Entities described in the Notice are not
sold or transferred to the Proposed Transferee within such Sixty (60) day
period, a new Notice shall be given to Vertex Nevada, and Vertex Nevada
shall again be offered the Right of First Refusal as provided above,
before any Subject Entities may be sold or otherwise transferred to any
third party.
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2.
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Option.
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2.1
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In
consideration of the agreements and covenants set forth herein above and
below and set forth in the Merger Agreement, the sufficiency of which is
hereby acknowledged and confessed, the Parties agree that Vertex Nevada is
granted an option (the “Option”),
which can be exercised in Vertex Nevada’s sole discretion, to purchase all
or any part thereof of the outstanding stock or other ownership interests
of any Xxxxxx Party owned by Vertex LP or VTX, under the following terms
and conditions:
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2.1.1
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Option Date and Exercise of
Option. The Option shall be exercisable after the
expiration of eighteen (18) months following the closing date of the
Merger Agreement (the “Closing”
and the “Option
Date”). The Option shall be exercisable at any time
following the Option Date in the sole discretion of the majority vote of
the Related Party Transaction Committee (as defined in Section 5.24 of the
Merger Agreement). If the Related Party Transaction Committee
elects to exercise the Option, it shall give written notice (the “Option
Notice”) to Vertex LP and/or VTX, disclosing its election, and
describing such outstanding stock or other ownership interests of such
Xxxxxx Parties that it desires to purchase (the “Subject
Stock”).
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2.1.2
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Option
Price. The purchase price for the Subject Stock
purchased by Vertex Nevada shall be determined by an independent
third-party evaluation and appraisal (the “Appraisal”)
of the fair market value of such Subject Stock based on the value of the
Xxxxxx Party(ies) and/or other relevant factors deemed necessary (the
“Option
Price”). Such Appraisal shall be performed by an
unaffiliated independent appraiser (the “Appraiser”),
which Appraiser shall be mutually agreed upon by Vertex Nevada and Vertex
LP (and/or VTX in the event the Option as exercised relates to the
ownership of interests held by VTX). Nothing in this Section
2.1.2 shall prohibit any party from obtaining any additional appraisals at
their own cost and expense, which additional appraisals shall have no
effect on the Appraisal or the Option Price. Payment of the
Option Price shall be made by Vertex Nevada in cash within thirty (30)
days after delivery of the Option Notice as set forth in Section 2.1.1
(or, if the Appraisal has not yet been determined, within five (5)
business days of the date such Appraisal is determined), or as otherwise
agreed by the mutual agreement of each
Party.
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2.1.3
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Non-Shop
Provision. No Xxxxxx Party shall be able to offer for
sale the Subject Stock to any party after receiving an Option Notice,
unless the proposed purchase of the Subject Stock pursuant to any Option
Notice is not consummated within one hundred and twenty (120) days of the
date such Option Notice is
received.
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2.1.4
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Purchase Outside of
Options. Nothing in this Section 2 of the Agreement
shall prevent Vertex Nevada from purchasing any or all of the interests in
any Xxxxxx Party prior to the Option Date on terms mutually agreeable to
Vertex Nevada and such Xxxxxx Party, provided however that any such
transaction includes an analysis by the Related Party Transaction
Committee, which may include a fairness opinion opining as to the fairness
of the transaction to Vertex
Nevada.
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3.
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Xxxxxxxx X. Xxxxxx
Right to Terminate Right of First Refusal and
Option.
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3.1
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Notwithstanding
the foregoing terms and conditions in Section 1 and Section 2 of this
Agreement, each Party to this Agreement warrants, understands,
acknowledges and agrees that the Right of First Refusal and the Option
shall remain in effect only so long as Xxxxxxxx X. Xxxxxx is employed by
Vertex Nevada as the Chief Executive Officer of Vertex Nevada pursuant to
the terms of an Employment Agreement substantially similar to the
Employment Agreement Xx. Xxxxxx will enter into with Vertex Nevada at
Closing of the Merger Agreement, which has an initial five (5) year term
(the “Employment
Agreement”), or any subsequent Employment Agreement or
understanding substantially similar to the Employment
Agreement. As such, if Xx. Xxxxxx’x employment with Vertex
Nevada should terminate for any reason (including Xx. Xxxxxx’x resignation
from Vertex Nevada), this Agreement, including the Option and the Right of
First Refusal shall immediately terminate upon the termination of Xx.
Xxxxxx’x employment. If Vertex Nevada should be in the process
of purchasing any Subject Entities and/or any Subject Stock at the time
that Xx. Xxxxxx’x employment with Vertex Nevada terminates, such
transaction(s) shall not be validly effected unless the termination of Xx.
Xxxxxx’x employment occurs after such time as full payment from Vertex
Nevada for the purchase of any Subject Stock pursuant to the Option is
received and/or full payment from Vertex Nevada for the purchase of any
Subject Entity pursuant to the Right of First Refusal is received, unless
otherwise agreed by Xx. Xxxxxx.
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4.
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Effectiveness and
Term.
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4.1 This
Agreement shall be effective as of the Closing (the “Effective
Date”).
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4.2
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Subject
to Section 3, above, this Agreement shall remain in full force and effect
as long as Xx. Xxxxxx is employed by Vertex Nevada as Chief Executive
Officer.
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5.
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Miscellaneous.
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5.1
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Capacity and
Authorization. The Parties to this Agreement further
represent that they have read it in full before its execution and that
they fully understand the meaning, operation and effect of its
terms. Each individual signing this Agreement warrants and
represents that he, she, or it has the full authority and is duly
authorized and empowered to execute this Agreement on behalf of the Party
for which it signs.
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5.2
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Consideration. Each
Party represents that it has received valid consideration as a result of
the terms and conditions of this Agreement, from another Party which has
executed this Agreement below.
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5.3
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Section Headings.
Section headings are for convenience only and shall not define or limit
the provisions of this Agreement.
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5.4
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Waiver. No failure on
the part of any Party to enforce any provisions of this Agreement will act
as a waiver of the right to enforce that
provision.
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5.5
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No Presumption from
Drafting. This Agreement has been negotiated at arm's-length
between persons knowledgeable in the matters set forth within this
Agreement. Accordingly, given that all Parties have had the opportunity to
draft, review and/or edit the language of this Agreement, no presumption
for or against any Party arising out of drafting all or any part of this
Agreement will be applied in any action relating to, connected with or
involving this Agreement. In particular, any rule of law, legal decisions,
or common law principles of similar effect that would require
interpretation of any ambiguities in this Agreement against the Party that
has drafted it is of no application and is hereby expressly waived. The
provisions of this Agreement shall be interpreted in a reasonable manner
to effect the intentions of the
Parties.
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5.6
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Voluntary Execution of
Agreement. Each Party to this Agreement represents and acknowledges
that it has freely and voluntarily executed this Agreement after
independent investigation and without fraud, duress, or undue influence,
with the full understanding of the legal and binding effect of this
Agreement.
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5.7
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Binding
Effect. This Agreement shall be binding on and inure to
the benefit of the Parties and their respective heirs, successors,
assigns, directors, officers, agents, employees and personal
representatives.
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5.8
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Modification. No
modification or amendment of this Agreement shall be effective unless such
modification or amendment shall be in writing and signed by all Parties
hereto. Notwithstanding any provision herein to the contrary,
the Parties agree that Vertex Nevada shall not agree to terminate or amend
this Agreement without having first obtained the written consent of the
Related Party Transaction Committee of Vertex Nevada’s Board of
Directors.
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5.9
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Entire
Agreement. This Agreement constitutes the entire
agreement between the Parties pertaining to the subject matter hereof and
supersedes all prior and contemporaneous agreements, understandings,
negotiations and discussions, whether oral or written, of the Parties in
connection with the subject matter
hereof.
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5.10
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Interpretation. The
interpretation, construction and performance of this Agreement shall be
governed by the laws of the State of Texas. Whenever used
herein, the singular number shall include the plural, the plural shall
include the singular and the use of any gender shall be applicable to all
genders. If any provision of this Agreement shall be adjudged
invalid or unenforceable pursuant to its terms, such provision shall
remain in effect and be enforced as strictly as possible to allow such
provision to be valid and
enforceable.
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5.11
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Faxed
Signatures. For purposes of this Agreement a faxed
signature shall constitute an original
signature.
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5.12
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Execution. This
Agreement may be executed in several counterparts, each of which shall be
deemed an original, and such counterparts taken together shall constitute
but one and the same Agreement. A photocopy of this Agreement
shall be effective as an original for all
purposes.
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[Remainder
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IN WITNESS WHEREOF, intending
to be legally bound, the Parties hereto have executed this Agreement as of the
dates written below to be effective as of the Effective Date.
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Dated:
March __, 2009
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VTX,
Inc.,
a
Texas Corporation
By:
/s/
Xxxxxxxx X. Xxxxxx
Name:
Xxxxxxxx X. Xxxxxx
Title:
President
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Dated:
March __, 2009
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Vertex
Energy, Inc.,
a
Nevada corporation
By:
/s/
Xxxxxxxx X.
Xxxxxx
Name:
Xxxxxxxx X. Xxxxxx
Title:
President
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Dated:
March __, 2009
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/s/
Xxxxxxxx X. Xxxxxx
Xxxxxxxx
X. Xxxxxx, individually
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Dated:
March __, 2009
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Vertex
Holdings, L.P.
(formerly
Vertex Energy, L.P.),
a
Texas limited partnership
By
VTX, Inc., a Texas corporation,
its
General Partner
By:
/s/
Xxxxxxxx X. Xxxxxx
Name:
Xxxxxxxx X. Xxxxxx
Title:
President
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