-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NzokZAzW/ZuAK49VIylDHdBqz7Y24loOQSZFFgTd+L2qZiy/o+mngjLBFlpiVFJU X0NQrI8ON0yHLUpgVu0ToA== 0001019687-08-003670.txt : 20080815 0001019687-08-003670.hdr.sgml : 20080814 20080814190851 ACCESSION NUMBER: 0001019687-08-003670 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20080630 FILED AS OF DATE: 20080815 DATE AS OF CHANGE: 20080814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WORLD WASTE TECHNOLOGIES INC CENTRAL INDEX KEY: 0000890447 STANDARD INDUSTRIAL CLASSIFICATION: REFUSE SYSTEMS [4953] IRS NUMBER: 953977501 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-11476 FILM NUMBER: 081020977 BUSINESS ADDRESS: STREET 1: 13520 EVENING CREEK DRIVE STREET 2: SUITE 130 CITY: SAN DIEGO STATE: CA ZIP: 93065 BUSINESS PHONE: 8583913400 MAIL ADDRESS: STREET 1: 13520 EVENING CREEK DRIVE STREET 2: SUITE 130 CITY: SAN DIEGO STATE: CA ZIP: 93065 FORMER COMPANY: FORMER CONFORMED NAME: VOICE POWERED TECHNOLOGY INTERNATIONAL INC DATE OF NAME CHANGE: 19940831 10-Q 1 worldwaste_10q-063008.txt FORM 10-Q ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended June 30, 2008 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the transition period from ____________ to ____________. Commission file number 1-11476 WORLD WASTE TECHNOLOGIES, INC. (Exact Name of Registrant as Specified in its Charter) CALIFORNIA 95-3977501 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 13500 EVENING CREEK DRIVE, SUITE 440, SAN DIEGO, CALIFORNIA 92128 (Address of Principal Executive Offices) (858) 391-3400 (Registrant's Telephone Number, Including Area Code) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes |X| No |_| Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non- accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one): Large Accelerated Filer |_| Accelerated Filer |_| Non-accelerated Filer |_| Smaller Reporting Company |X| Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes |_| No |X| State the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 27,596,491 shares issued and outstanding as of August 1, 2008. ================================================================================ WORLD WASTE TECHNOLOGIES, INC. FORM 10-Q TABLE OF CONTENTS PAGE PART I. FINANCIAL INFORMATION Item 1 Condensed Financial Statements: Condensed Consolidated Balance Sheets 1 Condensed Consolidated Statements of Operations 2 Condensed Consolidated Statements of Stockholders' Equity (Deficit) 4 Condensed Consolidated Statements of Cash Flow 6 Condensed Notes to Consolidated Financial Statements 7 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 16 Item 4 Controls and Procedures 26 PART II OTHER INFORMATION 27 Item 1 Litigation 27 Item 1A Risk Factors 27 Item 6 Exhibits 27 SIGNATURES 28 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS WORLD WASTE TECHNOLOGIES, INC. AND SUBSIDIARIES (A DEVELOPMENT STAGE COMPANY) CONDENSED CONSOLIDATED BALANCE SHEETS June 30, December 31, 2008 2007 ---------------------------------- ASSETS: (UNAUDITED) Current Assets: Cash and cash equivalents $ 3,856,488 $ 2,711,200 Short-term investments 4,542,966 7,093,418 Prepaid expenses 310,549 336,726 Assets held for sale, less equipment sold to date 88,977 1,083,223 ---------------------------------- Total Current Assets 8,798,980 11,224,567 ---------------------------------- Fixed Assets: Machinery, equipment net of accumulated depreciation of $25,991 on 6/30/08 and $23,358 on 12/31/07. 30,535 35,302 ---------------------------------- Total Fixed Assets 30,535 35,302 Other Assets: Deposit L/T 4,719 36,519 ---------------------------------- TOTAL ASSETS $ 8,834,234 $ 11,296,388 ================================== LIABILITIES AND STOCKHOLDERS' (DEFICIT): LIABILITIES: Current Liabilities: Accounts payable $ 394,493 $ 359,988 Accrued salaries payable 194,117 108,992 Capital lease S/T - 49,524 Accrued liabilities 292,755 - Other liabilities 39,994 290,181 ---------------------------------- Total Current Liabilities 921,359 808,685 ---------------------------------- Long Term Liabilities: Capital lease L/T - 30,826 ---------------------------------- Total Long Term Liabilities - 30,826 ---------------------------------- TOTAL LIABILITIES 921,359 839,511 ---------------------------------- Convertible Redeemable preferred stock (See Note 5) 27,885,429 22,812,640 ---------------------------------- Commitments and Contingencies (See Note 7) STOCKHOLDERS' (DEFICIT): Common Stock - $.001 par value: 100,000,000 shares authorized, 27,596,491 and 27,576,046 shares issued and outstanding at June 30, 2008 and December 31, 2007, respectively. 27,595 27,575 Additional paid-in-capital 58,701,540 57,782,888 Deficit accumulated during development stage (78,112,999) (70,000,282) Accumulated comprehensive income (loss) (588,690) (165,944) ---------------------------------- TOTAL STOCKHOLDERS' (DEFICIT) (19,972,554) (12,355,763) ---------------------------------- TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' (DEFICIT) $ 8,834,234 $ 11,296,388 ================================== SEE ACCOMPANYING NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS. 1 WORLD WASTE TECHNOLOGIES, INC. AND SUBSIDIARIES (A DEVELOPMENT STAGE COMPANY) UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Three Months June 18, 2002 Ended Ended Inception to June 30, 2008 June 30, 2007 June 30, 2008 * ----------------------------------------------------------------- GROSS REVENUE: $ - $ - $ 93,784 Disposal of rejects (65,526) Plant operation cost (2,720,922) Depreciation (1,843,615) ----------------------------------------------------------------- Total cost of goods sold - - (4,630,063) ----------------------------------------------------------------- Gross Margin - - (4,536,279) G&A Expense Research and development - (804,018) (3,438,582) General and administrative (1,401,814) (1,425,176) (19,188,033) Impairment of assets (18,191,450) ----------------------------------------------------------------- Loss from operations (1,401,814) (2,229,194) (45,354,344) ----------------------------------------------------------------- Interest income 78,134 105,717 757,141 Financing transaction expense - - (7,442,426) Other income - - 1,969,073 ----------------------------------------------------------------- Net loss before provision for income tax (1,323,680) (2,123,477) (50,070,556) ----------------------------------------------------------------- Income taxes - - - ----------------------------------------------------------------- Net loss $ (1,323,680) $ (2,123,477) $ (50,070,556) ----------------------------------------------------------------- Preferred stock dividend and amortization of beneficial conversion feature, warrant discount and offering costs (2,566,197) (3,347,388) (27,974,918) ----------------------------------------------------------------- Net loss attributable to common shareholders $ (3,889,877) $ (5,470,865) $ (78,045,474) ================================================================= BASIC AND DILUTED NET LOSS PER SHARE $ (0.14) $ (0.20) $ (3.86) ================================================================= WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING USED IN CALCULATION 27,596,491 26,723,264 20,240,293 ================================================================= *APPROXIMATELY $67,526 IN CONSULTING AND TRAVEL EXPENSES INCURRED PRIOR TO INCEPTION OF THE BUSINESS ON JUNE 18, 2002 ARE NOT INCLUDED. SEE ACCOMPANYING NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS. 2 WORLD WASTE TECHNOLOGIES, INC. AND SUBSIDIARIES (A DEVELOPMENT STAGE COMPANY) UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Six Months Six Months June 18, 2002 Ended Ended Inception to June 30, 2008 June 30, 2007 June 30, 2008 * ----------------------------------------------------------------- GROSS REVENUE: $ - $ - $ 93,784 Disposal of rejects (65,526) Plant operation cost (2,720,922) Depreciation (1,843,615) ----------------------------------------------------------------- Total cost of goods sold - - (4,630,063) ----------------------------------------------------------------- Gross Margin - - (4,536,279) G&A Expense Research and development (16,359) (1,749,875) (3,438,582) General and administrative (3,178,745) (2,408,667) (19,188,033) Impairment of assets - - (18,191,450) ----------------------------------------------------------------- Loss from operations (3,195,104) (4,158,542) (45,354,344) ----------------------------------------------------------------- Interest income 147,871 235,854 757,141 Financing transaction expense - - (7,442,426) Other income 24,940 - 1,969,073 ----------------------------------------------------------------- Net loss before provision for income tax (3,022,293) (3,922,688) (50,070,556) ----------------------------------------------------------------- Income taxes - - - ----------------------------------------------------------------- Net loss $ (3,022,293) $ (3,922,688) $ (50,070,556) ----------------------------------------------------------------- Preferred stock dividend and amortization of beneficial conversion feature, warrant discount and offering costs (5,090,424) (7,051,028) (27,974,918) ----------------------------------------------------------------- Net loss attributable to common shareholders $ (8,112,717) $ (10,973,716) $ (78,045,474) ================================================================= BASIC AND DILUTED NET LOSS PER SHARE $ (0.29) $ (0.42) $ (3.86) ================================================================= WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING USED IN CALCULATION 27,592,010 26,273,342 20,240,293 ================================================================= *APPROXIMATELY $67,526 IN CONSULTING AND TRAVEL EXPENSES INCURRED PRIOR TO INCEPTION OF THE BUSINESS ON JUNE 18, 2002 ARE NOT INCLUDED. SEE ACCOMPANYING NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS. 3 WORLD WASTE TECHNOLOGIES, INC. AND SUBSIDIARIES (A DEVELOPMENT STAGE COMPANY) CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) Additional Accumulated Paid in Common Stock Accumulated Comprehensive Shares Dollars Capital Subscription Deficit * Income (Loss) Total ------------------------------------------------------------------------------------- $ $ $ $ $ $ Preformation expenses (67,526) (67,526) Formation - June 18, 2002 9,100,000 100 73,036 73,136 Net Loss - 2002 (359,363) (359,363) ------------------------------------------------------------------------------------ December 31, 2002 9,100,000 100 73,036 (426,889) (353,753) ==================================================================================== Additional paid in capital 100 100 Common stock subscribed 125,000 125,000 Net Loss - 2003 (804,605) (804,605) ------------------------------------------------------------------------------------ December 31, 2003 9,100,000 100 73,136 125,000 (1,231,494) (1,033,258) ==================================================================================== Merger with Waste Solutions, Inc. 7,100,000 63 2,137 2,200 Common stock subscriptions 125,000 1 124,999 (125,000) - Common stock and warrants net of offering cost prior to VPTI merger 3,045,206 31 3,952,321 3,952,352 Shares cancelled (500,000) (5) 5 - Warrants issued 281,171 281,171 Merger with VPTI 1,200,817 21,062 (21,062) - Conversion of promissory notes 1,193,500 12 1,193,488 1,193,500 Accrued Interest on notes forgiven 135,327 135,327 Common stock and warrants net of offering cost 1,460,667 1,461 2,865,462 2,866,923 Amortization of stock options and warrants to employees and consultants 217,827 217,827 Net loss - 2004 (2,496,188) (2,496,188) ------------------------------------------------------------------------------------ December 31, 2004 22,725,190 22,725 8,824,811 (3,727,682) 5,119,854 ==================================================================================== Common stock and warrants net of offering cost 1,961,040 1,961 3,072,116 3,074,077 Amortization of stock options and warrants to employees and consultants 654,220 654,220 Dividend redeemable (Preferred Stock) 106,645 (671,769) (565,124) Warrants issued 861,853 861,853 Bridge financing warrants 1,114,105 1,114,105 Beneficial conversion feature on redeemable preferred stock 1,328,066 1,328,066 Amortization of beneficial conversion feature, warrant discount and offering costs on redeemable preferred stock (562,704) (562,704) Net loss - December 2005 (3,078,917) (3,078,917) ------------------------------------------------------------------------------------ December 31, 2005 24,686,230 24,686 15,961,816 (8,041,072) 7,945,430 ==================================================================================== 4 Additional Accumulated Paid in Common Stock Accumulated Comprehensive Shares Dollars Capital Subscription Deficit * Income (Loss) Total ------------------------------------------------------------------------------------ Common stock and warrants net of offering cost 262,851 263 9,561 9,824 Amortization of stock options and warrants to employees and consultants 989,252 989,252 Dividend (Preferred Stock) 386,954 (2,920,893) (2,533,939) Warrants issued preferred stock 1,647,250 1,647,250 Bridge financing warrants 787,500 787,500 Beneficial conversion feature - Series B 18,207,102 18,207,102 Conversion of Series B preferred stock 296,581 296 840,716 841,012 Series B Investor & placement warrants 7,922,663 7,922,663 Series A Investor warrants 3,065,931 3,065,931 Elimination of warrant liabilities 674,420 674,420 UAH stock for purchase of patent 167,000 167 697,833 698,000 Registration filing fees (11,529) (11,529) Amortization of beneficial conversion feature, warrant discount and offering costs on redeemable preferred stock (5,717,378) (5,717,378) Net loss - 2006 (24,956,520) (24,956,520) ------------------------------------------------------------------------------------ December 31, 2006 25,412,662 25,412 51,179,469 (41,635,863) 9,569,018 ==================================================================================== Common stock for services 302,660 302 261,192 261,494 Warrant exercises Amortization of stock options and warrants to employees and consultants 1,638,128 1,638,128 Dividend (Preferred Stock) (3,173,396) (3,173,396) Conversion of Series B preferred stock 1,860,724 1,861 4,704,099 4,705,960 Amortization of beneficial conversion feature, warrant discount and offering costs on redeemable preferred stock (9,838,354) (9,838,354) Net loss - 2007 (15,352,669) (15,352,669) Unrealized gain (loss) on short term investments held for sale (165,944) (165,944) ------------------------------------------------------------------------------------ December 31, 2007 27,576,046 27,575 57,782,888 $ 0 (70,000,282) (165,944) (12,355,763) ==================================================================================== Amortization of stock options and warrants to employees and consultants 901,037 901,037 Dividend (Preferred Stock) (1,595,434) (1,595,434) Conversion of Series B preferred stock 20,445 20 17,615 17,635 Amortization of beneficial conversion feature, warrant discount and offering costs on redeemable preferred stock (3,494,990) (3,494,990) Net loss - June 30, 2008 (Unaudited) (3,022,293) (3,022,293) Unrealized gain (loss) on short term investments held for sale (422,746) (422,746) ------------------------------------------------------------------------------------ June 30, 2008 (Unaudited) 27,596,491 $27,595 $58,701,540 $ 0 $(78,112,999) $(588,690)$(19,972,554) ==================================================================================== * During 2002, the Company issued $67,526 of Convertible Promissory Notes payable for preformation funds received and expended prior to Inception. SEE ACCOMPANYING NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS. 5 WORLD WASTE TECHNOLOGIES, INC. AND SUBSIDIARIES (A DEVELOPMENT STAGE COMPANY) UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW Six Months Six Months June 18, 2002 Ended Ended (Inception) to June 30, 2008 June 30, 2007 June 30, 2008 -------------------------------------------------------------- Cash Flow from operating activities: $ $ $ Net loss (3,022,293) (3,922,688) (50,070,556) Adjustments to reconcile net loss to net cash used in operating activities: Impairment of assets 18,191,450 Depreciation and amortization 4,767 686,314 3,021,562 Interest forgiveness 135,327 Warrant and common stock Issued for consulting 84,566 Amortization of warrants & options to employees 901,037 631,198 3,923,825 Fair value adjustment warrant liability (1,789,134) Financial transaction expense 7,442,426 Amortization of offering cost 252,277 Changes in operating assets and liabilities: Accounts receivable 12,517 - Prepaid expenses/Emp. receivable 26,177 (8,775) (310,549) Asset held for sale 994,246 650,398 Accounts payable 34,505 (57,098) 394,493 Accrued salaries 85,125 (23,410) 194,117 Accrued other liabilities 42,568 209,694 592,249 -------------------------------------------------------------- Net Cash used in operating activities (933,868) (2,472,248) (17,287,549) -------------------------------------------------------------- Cash flows from investing activities: Construction in progress (4,043,205) Leasehold improvements (6,222) (2,970,548) Deposits on equipment (5,231,636) Purchase machinery & equipment (80,350) (147,025) (8,333,759) Patient license Deposits 31,800 (4,719) (Purchase)sale of short-term investments 2,127,706 (9,813,486) (5,131,656) -------------------------------------------------------------- Net Cash provided by(used in)investing activities 2,079,156 (9,966,733) (25,715,523) -------------------------------------------------------------- Cash flows from financing activities: Capital Lease Redeemable preferred stock 30,346,461 Senior secured debt 6,265,000 Repayment of senior secured debt Senior secured debt offering cost (420,523) Payment of senior secured debt (2,785,000) Warrants, common stock and Additional paid in capital 1,996 13,453,622 -------------------------------------------------------------- Net Cash provided by financing activities 0 1,996 46,859,560 -------------------------------------------------------------- Net increase (decrease)in cash and cash equivalents 1,145,288 (12,436,985) 3,856,488 Beginning cash and cash equivalents 2,711,200 14,330,840 -------------------------------------------------------------- Ending cash and cash equivalents 3,856,488 1,893,855 3,856,488 ============================================================== Non-cash investing and financing activities: Interest (Paid) Received $ 105,717 $ 236,207 $ 787,143 Income Taxes Paid -- -- -- *During 2002, the Company issued $67,526 of Convertible Promissory Notes payable for preformation funds received and expended prior to Inception. *The Company issued warrants to purchase 315,354 shares of common stock to the placement agent for services rendered in connection with the fund raising effort. *The Company issued warrants to purchase 50,000 shares of common stock for consulting services in 2004 and 100,000 shares of common stock upon the exercise of a warrant in exchange for services rendered. *The Company issued 1,193,500 shares of common stock upon conversion of the Convertible Promissory notes payable and accrued interest of $135,327. *The Company issued warrants to purchase 250,000 shares of its common stock for a modification to the technology license agreement. *During the six months ended June 30, 2007, the Company issued 103,340 shares in exchange for services rendered in 2006. *During the six month periods ended June 30, 2007 and 2008, the Company issued 1,209,646 shares and 20,445, respectively, of common stock in exchange for conversion of Preferred Series B stock. *Short-term investments have been adjusted for unrealized losses of $588,690. SEE ACCOMPANYING NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS. 6
WORLD WASTE TECHNOLOGIES, INC. AND SUBSIDIARIES (A DEVELOPMENT STAGE COMPANY) NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2008 AND 2007 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. The Company is a new enterprise in the development stage as defined by Statement No. 7 of the Financial Accounting Standards Board, since it has not derived substantial revenues from its activities to date. USE OF ESTIMATES The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. INTERIM FINANCIAL STATEMENTS The accompanying consolidated financial statements include all adjustments (consisting of only normal recurring accruals), which are, in the opinion of management, necessary for a fair presentation. Operating results for the six months ended June 30, 2008 are not necessarily indicative of the results to be expected for a full year. December 31, 2007 balances were derived from audited financial statements. The consolidated financial statements should be read in conjunction with the Company's consolidated financial statements for the year ended December 31, 2007. RESEARCH AND DEVELOPMENT Research and development costs are charged to operations when incurred. INCOME TAXES The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes." In accordance with SFAS No. 109, the Company records a valuation allowance against net deferred tax assets if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and when temporary differences become deductible and may be limited due to future changes in control. The Company considers, among other available information, uncertainties surrounding the recoverability of deferred tax assets, scheduled reversals of deferred tax liabilities, projected future taxable income, and other matters in making this assessment. The Company adopted FIN 48, Accounting for Uncertainty in Income Taxes - An Interpretation of FASB Statement No. 109, on January 1, 2007. There was no material impact on the Company's financial statements as a result of the adoption. CASH AND CASH EQUIVALENTS The Company considers all highly liquid investments with a maturity of three months or less when purchased, which are not securing any corporate obligations, to be cash equivalents. 7 SHORT TERM INVESTMENTS The Company determines the appropriate classification of its investments at the time of acquisition and reevaluates such determination at each balance sheet date. All investments held at June 30, 2008 are short-term available for sale securities. At June 30, 2008, their face value was $5.1 million. They are carried at quoted fair market value of $4.5, with unrealized gains and losses reported in shareholders' equity as a component of accumulated comprehensive income. Due to the uncertainty in the financial markets, auction rate securities have experienced liquidity uncertainty. In August 2008, the Company sold securities with a face value of $3.6 million for $3.3 million, which was equal to their fair market value at June 30, 2008. The Company has not been able to liquidate the remaining $1.5 million securities as of August 14, 2008. The Company has not been required to liquidate any of these investments for operating purposes and the failure to sell the securities has not affected the Company's operations. The Company is working with its investment advisor and closely monitoring the market in an effort to reduce its risk and minimize any losses. The Company has evaluated the solvency of the issuers of these securities as of August 14, 2008 and, as of this date, did not believe that a further write-down or recognition of any losses other than temporary was necessary in accordance with FSP 115-1 "The Meaning of Other-Than-Temporary Impairment and its Application to Certain Investments." The net unrealized loss of $588,690 recorded in shareholders' equity as of June 30, 2008 was comprised entirely of unrealized losses. Maturity dates of investments, primarily auction rate securities, classified as available for sale securities extend to 2050. CONCENTRATION OF CREDIT RISK The Company maintains its cash balances at financial institutions. Cash balances at the institution are insured by the Federal Deposit Insurance Corporation up to $100,000. FIXED ASSETS Machinery and equipment is stated at cost. Depreciation is computed on the straight-line method over the estimated useful asset lives or for leasehold improvements or equipment installed in our Anaheim plant (no longer leased or otherwise being used by us),over the remaining life of the lease, whichever is shorter. Our policy regarding fixed assets is to review such fixed assets for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. If the review indicates that fixed assets are not recoverable (i.e. the carrying amounts are more than the future projected undiscounted cash flows), their carrying amounts would be reduced to fair value. During the third quarter of 2007, we determined that our ongoing research and development work, if necessary, would more efficiently be carried out at a facility other than our Anaheim Facility. As of June 30, 2008, the Anaheim Facility lease had been terminated and all assets had been sold or scrapped. We capitalize leases in accordance with FASB 13. 8 INTANGIBLES Intangible assets are recorded at cost and are classified as held for sale at June 30, 2008. At June 30, 2008, the remaining intangible asset value is associated with the patent purchased from the University of Alabama in Huntsville on May 1, 2006. In February of 2008, we entered into an agreement to, among other things, sell the patent and all of its associated rights. The sale was scheduled to be completed by July 31, 2008. As of August 14, 2008, the sale had not been completed. The Company is still in discussions with CES for the purchase of the patent. The Company believes a sale will be completed within one year, as prescribed by the requirements in SFAS 144, and therefore the Company has concluded that the "held for sale" classification is appropriate. REDEEMABLE CONVERTIBLE PREFERRED STOCK Convertible Preferred Stock which may be redeemable for cash at the determination of the holder is classified as mezzanine equity, in accordance with FAS 150 "Accounting for Certain Financial Instruments with Characteristics of Both Debt and Equity," EITF Topic D 98 and ASR 268, and is shown net of discounts for offering costs, warrant values and beneficial conversion features. STOCK-BASED COMPENSATION As of June 30, 2008, the Company had two share-based compensation plans, which are described below. The compensation cost that has been charged against income for the plans was $451,036 and $446,090 for the three months ended June 30, 2008 and 2007, respectively, and $901,037, $631,198 and $3,923,825 for the six months ended June 30, 2008 and 2007 and for the period from inception to June 30, 2008, respectively. Because the Company is in a net loss position, no income tax benefit has been recognized in the income statement for share-based compensation arrangements. As of June 30, 2008 and 2007, no share-based compensation cost had been capitalized as part of inventory or fixed assets. The Company's 2004 Incentive Stock Option Plan (the "2004 Plan"), which is shareholder-approved, provides for the issuance by the Company of a total of up to 2.0 million shares of common stock and options to acquire common stock to the Company's employees, directors and consultants. At December 31,2007, there were 1,812,000 options outstanding under the 2004 Plan. In May of 2007, the board of directors approved the Company's 2007 Incentive Stock Plan (the "2007 Plan"), which is not shareholder-approved. The 2007 plan provides for the issuance by the Company of a total of up to 6.0 million shares of common stock and options to acquire common stock to the Company's employees, directors and consultants. The Company granted options to acquire 2,856,000 shares during the year ended December 31, 2007 to employees, members of the board of directors and consultants. During the quarter ended June 30, 2008, the Company granted options to acquire 1,575,000 shares to employees and members of the board of directors. In November of 2007, the board of directors approved the extension of the period of time in which an optionee has to exercise vested options after termination of employment from three months to three years. The Company's calculation of the incremental expense resulting from this change in accordance with SFAS 123R paragraph 51 was approximately $70,000. The Company believes that such awards better align the interests of its employees with those of its shareholders. Option awards are generally granted with an exercise price equal to the market price of the Company's stock at the date of grant; those option awards generally vest based on 2 to 4 years of continuous service and have 10-year contractual terms. Certain option awards provide for accelerated vesting if there is a change in control (as defined in each Plan). 9 The fair value of each option award is estimated on the date of grant using the Black-Scholes option valuation model that uses the assumptions noted in the table below. Expected volatilities are based on the historical volatility of the Company's common stock from August 24, 2004 through the date of the respective grant. The Company uses historical data to estimate option exercise and employee terminations within the valuation model. The expected term of options granted was estimated using the simple method which the Company believes provides a reasonable estimation of the period of time that options granted are expected to be outstanding. The risk-free rate for periods within the contractual life of the option is based on the LIBOR rate at the time of grant. SIX MONTHS ENDED SIX MONTHS ENDED JUNE 30, 2008 JUNE 30, 2007 ------------------- ------------------ Expected volatility 81.20 - 94.46 % 75% Expected dividends 0 % 0 % Expected term (in years) 5.15 - 9.45 5.5 - 9.9 Risk-free rate 1.55 - 4.19% 4.98 - 5.1% In an effort to provide certain employees and consultants with an incentive to remain committed to the Company's business while it is evaluating its strategic alternatives (as described below), on February 27, 2008, the Company's Board of Directors granted an option to acquire up to 300,000 shares of its common stock to John Pimentel, the Company's Chief Executive Officer, and an option to acquire up to 75,000 shares of its common stock to David Rane, the Company's former Chief Financial Officer (currently serving in a consulting capacity), in each case pursuant to the Company's 2007 Plan. Each option has an exercise price equal to $0.155 per share (the closing price of the Company's common stock on the date of grant) and vests in 12 equal monthly installments commencing as of March 27, 2008. On February 27, 2008, the Company also announced that it has formed a Special Committee of its Board of Directors to evaluate the Company's strategic alternatives, and that the Special Committee plans to retain a financial advisor to assist in this process. These alternatives may include, but are not limited to, a sale or merger of the Company and/or a restructuring. As compensation for serving on the Special Committee, each of the members thereof is entitled to receive $5,000 per month for up to 6 months and was granted an option to acquire up to 300,000, or a total of 1,200,000, shares of common stock pursuant to the Company's 2007 Plan. Each option has an exercise price equal to $0.155 per share (the closing price of WWT's common stock on the date of grant) and vests in six equal monthly installments commencing as of March 27, 2008. EARNINGS PER SHARE The Company has adopted Statement of Financial Accounting Standards No. 128, "Earnings per Share" (SFAS No. 128). SFAS No. 128 provides for the calculation of basic and diluted earnings per share. Basic earnings per share includes no dilution and is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution of securities that could share in the earnings of an entity, such as stock options, warrants or convertible securities. Due to their anti-dilutive effect, common stock equivalents of 30,579,551, consisting of employee options of 6,418,000, non-employment warrants of 6,829,827, Preferred Series A of 6,253,341 and Preferred Series B of 11,078,382, were not included in the calculation of diluted earnings per share at June 30, 2008 . Due to their anti-dilutive effect, common stock equivalents of 28,526,234, consisting of employee options of 4,843,000, investor warrants of 6,803,827, Preferred Series A of 5,777,119 and Preferred Series B of 11,102,288, were not included in the calculation of diluted earnings per share at June 30, 2007. NEW ACCOUNTING PRONOUNCEMENTS 10 SFAS NO. 162, THE HIERARCHY OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES The FASB has issued FASB Statement No. 162, The Hierarchy of Generally Accepted Accounting Principles. Statement 162 is intended to improve financial reporting by identifying a consistent framework, or hierarchy, for selecting accounting principles to be used in preparing financial statements that are presented in conformity with U.S. generally accepted accounting principles for nongovernmental entities. Statement 162 is effective 60 days following the SEC's approval of the PCAOB amendments to AU Section 411, The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles. Management does not believe the adoption of SFAS No. 162 will have a material impact on the Company's financial statements. ISSUE NO. 08-4, "TRANSITION GUIDANCE FOR CONFORMING CHANGES TO ISSUE NO. 98-5" - ------------------------------------------------------------------------------- At the November 2007 EITF meeting, the FASB staff and EITF discussed a document highlighting revisions that should be made to Issue 98-5 as a result of the guidance in: (a) EITF Issue No. 00-27, "Application of EITF Issue No. 98-5, 'Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios,' to Certain Convertible Instruments," and (b) FASB Statement No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. At the FASB meeting of June 12, 2008, the FASB ratified the final consensus reached in this issue. Management does not believe the adoption of Issue No. 08-4 will have a material impact on the Company's financial statements. ISSUE NO. 08-3, "ACCOUNTING BY LESSEES FOR MAINTENANCE DEPOSITS UNDER LEASE AGREEMENTS" - -------------------------------------------------------------------------------- Equipment lease agreements often call for the lessee to repair and maintain a leased asset over the term of the lease. In some cases, the lease agreement requires the lessee to pay a maintenance deposit to the lessor. The purpose of this deposit is to protect the lessor in the event the lessee does not fulfill its repair and maintenance responsibilities related to the leased asset. Requiring such a deposit from the lessee does not excuse the lessee from its obligation to repair and maintain the leased asset. In addition, the lessor's acceptance of such a deposit does not transfer the responsibility for repairing and maintaining the leased asset to the lessor, nor does it transfer to the lessor the cost or quality risk associated with the repair and maintenance activities. As the lessee incurs costs to repair and maintain the leased asset, the lessor may be required to reimburse the lessee for these costs using the maintenance deposit, to the extent the maintenance deposit includes sufficient funds. If there are funds left in the maintenance deposit at the end of the lease term, the lease agreement may call for either: (a) the lessor making a payment to the lessee for that remaining amount or (b) the lessor retaining that remaining amount. The former is often referred to as a refundable maintenance deposit. The latter is often referred to as a nonrefundable maintenance deposit. At the FASB meeting of June 12, 2008, the FASB ratified the final consensus reached in this issue. Management does not believe the adoption of Issue No. 08-4 will have a material impact on the Company's financial statements. FASB STAFF POSITION NO. EITF 03-6-1 DETERMINING WHETHER INSTRUMENTS GRANTED IN SHARE-BASED PAYMENT TRANSACTIONS ARE PARTICIPATING SECURITIES - ------------------------------------------------------------------------------- This FASB Staff Position (FSP) addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the earnings allocation in computing earnings per share (EPS) under the two-class method described in paragraphs 60 and 61 of FASB Statement No. 128, Earnings per Share. Management does not believe the adoption of this staff position will have a material impact on the Company's financial statements. FASB STAFF POSITION NO. APB 14-1 ACCOUNTING FOR CONVERTIBLE DEBT INSTRUMENTS THAT MAY BE SETTLED IN CASH UPON CONVERSION (INCLUDING PARTIAL CASH SETTLEMENT) - ------------------------------------------------------------------------------- This FSP applies to convertible debt instruments that, by their stated terms, may be settled in cash (or other assets) upon conversion, including partial cash settlement, unless the embedded conversion option is required to be separately accounted for as a derivative under FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities. Management does not believe that the adoption of this staff position will have a material impact on the Company's financial statements. FASB STAFF POSITION NO. FAS 142-3 DETERMINATION OF THE USEFUL LIFE OF INTANGIBLE ASSETS - -------------------------------------------------------------------------------- This FASB Staff Position (FSP) amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB Statement No. 142, Goodwill and Other Intangible Assets. The intent of this FSP is to improve the consistency between the useful life of a recognized intangible asset under Statement 142 and the period of expected cash flows used to measure the fair value of the asset under FASB Statement No. 141 (revised 2007), Business Combinations, and other U.S. generally accepted accounting principles (GAAP). Management does not believe that the adoption of the staff position will have a material impact on the Company's financial statements. 11 NOTE 2. GOING CONCERN The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company had a net loss for the six months ended June 30, 2008 of $8,112,717 and an accumulated deficit attributable to common shareholders of $78,112,999 for the six months ended June 30, 2008. The Company expects to incur substantial additional losses and costs and capital expenditures before it can operate profitably. These issues raise substantial doubt about the Company's ability to continue as a going concern. The ability to operate profitably is subject to, among other things, developing products. The Company's ability to accomplish this is dependent on successful research and development, engineering and obtaining additional funding. If the Company is unsuccessful, it may be unable to continue as a going concern for a reasonable period of time. There can be no assurance that the Company's research and development and engineering activities or any future efforts to raise additional debt and/or equity financing will be successful. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. In addition to looking for traditional capital, the Company is looking for a joint venture partner to assist in the development of its gasification strategy and is also evaluating strategic alternatives, such as a merger or acquisition, to help generate additional financing. In this regard, on May 15, 2008, the Company entered into a definitive agreement to merge with Vertex Energy, Inc., which agreement was amended and restated on May 19, 2008. There can be no assurance that the transaction will be completed, and the Company's continuation as a going concern remains dependent upon its ability to generate sufficient cash flow to meet its obligations on a timely basis, to obtain additional financing, and ultimately to attain successful operations. NOTE 3. LICENSE AGREEMENT On June 21, 2002, the Company entered into a U.S. technology sub-license agreement with Bio-Products International, Inc. (BPI), an Alabama corporation, with respect to certain intellectual property and patented methods and processes. This agreement was amended on June 21, 2004 and again on August 19, 2006. The technology was designed to provide for the processing and separation of material contained in Municipal Solid Waste (MSW). Through April 30, 2006, the University of Alabama in Huntsville ("UAH") owned the patent for this technology. On May 1, 2006, the Company acquired the patent from UAH for $100,000 and 167,000 shares of the Company's unregistered common stock valued at its fair value on the date of issuance of approximately $698,000. The patent reverts to UAH in the event of bankruptcy of the Company. This patent is licensed to BPI. The license to the patent in the United States was assigned to the Company. In April 2007, the Company filed a lawsuit against BPI alleging, among other things, breach of contract and negligence with respect to the construction of the vessels. 12 During the fourth quarter of 2007, the Company determined it would not use the technologies related to the intangible assets in its future plants. Consequently, it reclassified the unamortized intangible assets to Assets Held for Sale and accounted for at the lower of fair value less cost to sell (net fair value) or carrying value. In March of 2008, the Company entered into a definitive agreement to sell the intangible assets, settle the lawsuit with BPI and sell a significant amount of the assets which were used in the Anaheim plant to exploit the patent, for a total of approximately $1.9 million. As of August 14, 2008, the Company had not received the entire payment for the purchase of the patent. Because the carrying value of $89,000 is less than the net fair value no adjustment was recorded. NOTE 4. TERMINATION OF SIGNIFICANT CONTRACT In June 2003, the Company entered into a multi-year recycle agreement with Taormina Industries, Inc. pursuant to which, among other things, Taormina agreed to deliver residual municipal solid waste (MSW) to the Company for processing and the Company agreed to lease a building for the related recycling facility on Taormina's campus in Anaheim, California (the "Anaheim Facility"). The lease for the Anaheim Facility was entered into in July 2004. The recycling agreement, as amended, provided that the recycling agreement would terminate automatically upon termination of the lease. As previously disclosed, during early 2007 the Company began using the Anaheim Facility to conduct research and development activities related to the production of renewable energy from MSW. The Company subsequently determined that the ongoing research and development work, if necessary, would more efficiently be carried out at another location. Consequently, in order to reduce costs and focus management attention and cash resources on the Company's renewable energy process, the Company initiated conversations with Taormina regarding termination of the lease of the Anaheim Facility and the cancellation of the associated recycling agreement. On October 29, 2007, Taormina terminated the lease and the recycling agreement, effective as of October 31, 2007. On November 7, 2007, Taormina filed an unlawful detainer action in the Superior Court of the State of California, County of Orange (the "Action") against the Company as to the Anaheim Facility. On March 5, 2008, Taormina and the Company entered into a stipulation for entry of judgment in the Action (the "Stipulation"). The Stipulation provides for: (a) the cancellation and forfeiture of the lease; (b) the Company to make a payment of $192,217.57 (the "Payment") to Taormina; and (c) the Company to remain in possession of the Anaheim Facility until June 30, 2008. The Company has made the Payment to Taormina and, on May 8, 2008, vacated the premises. The non-competition and right of first refusal provisions of the recycle agreement will survive termination of such agreement through July 25, 2014 (the date that the lease would have expired had it not been terminated). NOTE 5. REDEEMABLE CONVERTIBLE PREFERRED STOCK The Company has outstanding two classes of Preferred Stock, Series A and Series B. Holders of both series of preferred stock are entitled to receive cumulative dividends, payable quarterly in additional shares of preferred stock, at the rate of 8% per annum as and if declared by the Board of Directors. The holders of a majority of each class of preferred shares have the option to require the Company to redeem all outstanding shares on April 28, 2010. If all of the shares that are outstanding at June 30, 2008 were outstanding and redeemed at April 28, 2010, the liability would be approximately $46 million. In the event the holders do not exercise this redemption right, all shares of Series A and Series B will automatically convert into shares of common stock on such date. The warrant values, offering costs and beneficial conversion features of both classes of preferred stock have been treated as discounts to the carrying value of the preferred stock, and are being accreted through their redemption date under an acceptable method in accordance with EITF Topic D-98. For the Series B Preferred Stock the Company deemed the straight-line method to be a preferable method, giving rise to a more appropriate distribution of the dividend recognition over the accretion period. The amortization costs are treated consistent with the treatment of preferred stock dividends. 13 THE SUMMARY FOR THE SERIES A AND B IS AS FOLLOWS:
SERIES A SERIES B TOTAL ---------------- ---------------- ---------------- Gross proceeds $ 10,189,000 $ 28,488,800 $ 38,677,800 Cumulative in kind dividends 3,099,351 4,771,762 7,871,113 Converted to common stock -- (5,564,608) (5,564,608) ---------------- ---------------- ---------------- Total outstanding 13,288,351 27,695,954 40,984,305 Unamortized beneficial conversion feature (581,610) (7,175,024) (7,756,634) Unamortized offering costs (685,014) (1,806,431) (2,491,445) Unamortized warrant value (581,611) (2,269,186) (2,850,797) ---------------- ---------------- ---------------- Balance at June 30, 2008 $ 11,440,116 $ 16,445,313 $ 27,885,429 ================ ================ ================ NOTE 6. CAPITAL LEASE OBLIGATION Capital Lease obligation is comprised as follows: JUNE 30, 2008 DECEMBER 31, 2007 -------------------- ------------------- Capital Lease for Front End Loader, 0 monthly $ 80,350 installments were remaining at June 30, 2008 , interest was imputed at 8.25% Less: Current portion 49,524 -------------------- ------------------- $0 $ 30,826 ==================== =================== The capital lease was terminated in March of 2008.
NOTE 7. COMMITMENT AND CONTINGENCIES On October 29, 2007 the lease for the Company's Anaheim plant was terminated (see Note 4). Consequently, the Company has not included the future rent obligations in the schedule below. The Company has an operating lease obligation for its San Diego office space through September 2008 of approximately $13,029: Less than 1 year $13,029 more than 1 less than 3 $ -- more than 3 less than 5 $ -- after 5 years $ -- 14 NOTE 8. SUBSEQUENT EVENTS As previously disclosed, in March 2008, the Company entered into an agreement with Clean Earth Solutions, Inc. ("CES"), pursuant to which the Company agreed (i) to sell to CES specified assets relating to the "front end" process of the Company's Anaheim Facility for a cash payment to us of $500,000 (the "First Closing"), (ii) to settle a dispute arising from design issues related to the steam classification vessels that the Company had intended to use in its operations, in exchange for a payment to the Company of $640,000 (the "Second Closing") and (iii) to sell to CES all of the Company's intellectual property rights in the Company's pressurized steam classification process in exchange for a payment to the Company of $800,000 (of which $236,000 was previously paid by CES to the Company) (the "Third Closing"). On March 7, 2008, CES paid the Company $500,000 and the First Closing was consummated. In June 2008, CES paid the Company $640,000 for the Second Closing. Pursuant to this agreement, the Third Closing is to occur on such a date as determined by CES, provided that the Third Closing must occur no later than July 31, 2008. As of August 14, the Third Closing had not occurred. At June 30, 2008, approximately $4.5 million of our securities were in the form of auction rate securities. These securities are stated at the lower of cost or market. The face value of these securities was approximately $5.1 million. The securities had been offered for sale during the quarter ended June 30, 2008. However, due to the failure of the auctions, no securities were sold. The failure of the auctions did not affect the Company's ability to meet its obligations in the normal course of business. Management has evaluated the solvency of the issuers of these securities and does not believe an additional reserve is necessary. In August of 2008, the Company sold some of its auction rate securities with a face value of $3.6 million for $3.3 million, which was the stated fair market value at June 30, 2008. As of August 14, 2008, the Company continues to hold auction rate securities with a face value of $1.5 million. The market value of these securities at June 30, 2008, as reflected in the financial statements, was estimated to be approximately $1.2 million. 15 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FORWARD-LOOKING STATEMENTS The following discussion, as well as information contained elsewhere in this report, contains "forward-looking statements." These statements include statements regarding the intent, belief or current expectations of us, our directors or our officers with respect to, among other things: anticipated financial or operating results, financial projections, business prospects, future product performance and other matters that are not historical facts. The success of our business operations is dependent on factors such as the impact of competitive products, product development, commercialization and technology difficulties, the results of financing efforts and the effectiveness of our marketing strategies, and general competitive and economic conditions. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Actual results may differ materially from those projected in the forward-looking statements as a result of various factors, including those described under "Item 1A - Risk Factors" in our annual report on Form 10K for the year ended December 31, 2007. PROPOSED MERGER On May 15, 2008, the Company entered into an Agreement and Plan of Merger (the "Merger Agreement") with Vertex Energy, LP, a Texas limited partnership ("Vertex LP"), Vertex Energy, Inc., a Nevada corporation ("Vertex Nevada"), Vertex Merger Sub, Inc., a California corporation and wholly owned subsidiary of Vertex Nevada, and Benjamin P. Cowart, as agent for the shareholders of Vertex Nevada (the "Agent"). On May 19, 2008, the Company, Vertex LP, Vertex Nevada and Vertex Merger Sub, LLC., a California limited liability company and wholly owned subsidiary of Vertex Nevada ("Merger Sub"), entered into an Amended and Restated Merger Agreement (as so amended and restated, the "Merger Agreement"). Vertex LP is a Texas-based privately held limited partnership controlled by the Agent. Among other businesses, Vertex LP engages in the recycling of used motor oil and other hydrocarbons. This is accomplished (1) through Vertex LP's Black Oil division, which aggregates used motor oil from third-party collectors and manages the delivery of its feedstock primarily to a third-party re-refining facility, and (2) through Vertex LP's Refining and Marketing division, which aggregates hydrocarbon streams from collectors and generators and manages the delivery of the hydrocarbon waste products to a third-party facility for further processing, and then manages the sale of the end products. In addition, Vertex LP proposes to implement proprietary re-refining technology that will process used motor oil and convert it to higher value products such as marine diesel oil and vacuum-gas oil. Vertex Nevada generated revenues of approximately $36.5 million and approximately $42 million in 2006 and 2007, respectively. Pursuant to the merger, Vertex LP will transfer the assets relating to the foregoing businesses to Vertex Nevada. Immediately following the merger and assuming no appraisal rights are exercised, the existing partners of Vertex LP will hold approximately 45% of the outstanding shares of Vertex Nevada (including shares to be held by advisors and consultants to Vertex LP), the existing holders of the Company's common stock will hold approximately 20% of the outstanding shares of Vertex Nevada, the existing holders of the Company's Series A Preferred Stock will hold approximately 14% of the outstanding shares of Vertex Nevada, and the existing holders of the Company's Series B Preferred Stock will hold approximately 21% of the outstanding shares of Vertex Nevada (in each case, treating as outstanding, shares issuable upon the exercise of warrants to acquire shares of common stock at a nominal exercise price). Immediately prior to the Merger, the Company will be required to make a cash payment to the existing Vertex shareholders of $4.4 million. As a result of these transactions, immediately following the merger the existing shareholders of World Waste will own approximately 55% of the capital stock of Vertex Nevada, in exchange for which World Waste will have made net payments of $7.0 million (comprised of (1) the $4.4 million just described, plus (2) $5.0 million that World Waste is required to transfer to Vertex Nevada, less (3) $2.4 million of World Waste indebtedness being assumed by Vertex Nevada). The Merger Agreement contains customary and mutual representations, warranties, covenants and indemnification provisions. Either party has the right to terminate the Merger Agreement if the merger has not closed by December 31, 2008. 16 The obligation of each party to consummate the Merger is subject to the approval of the Merger by the shareholders of the Company in accordance with California law and the Company's charter documents, the exemption of the issuance of the shares of Vertex Nevada to the Company's shareholders from the registration requirements of the Securities Act of 1933, as amended (or the inclusion of such shares on a registration statement declared effective by the SEC), and the satisfaction or waiver (where permissible) of other customary closing conditions set forth in the Merger Agreement. The obligation of Vertex to consummate the Merger is subject to the satisfaction or waiver (where permissible) of additional closing conditions including the following: o the Company has no liabilities (except for up to $2.4 million of permitted indebtedness); o after taking into account the $4.4 million payment by the Company to the Vertex LP partners, the Company has at least $5.0 million of cash on hand (inclusive of the proceeds of up to $2.4 million of permitted indebtedness). In order to satisfy these cash requirements, the Company will need to liquidate its short term investments in auction rate securities ("ARS's"). Due to the illiquidity of the ARS market, the Company may not be able liquidate these securities at their face amount. Accordingly, the Company may not be able to meet this cash on hand requirement; and o the Agent and certain members of his immediate family have been removed as personal guarantors on certain indebtedness of Vertex LP to be assumed by Vertex Nevada. COMPANY OVERVIEW World Waste management is currently focused on completing the merger with Vertex Nevada while maintaining the viability of its renewable energy business plan. Following the merger, it is anticipated that the renewable energy business plan may continue to be pursued by Vertex Nevada through a subsidiary. Expenditures related to the renewable energy business are being minimized as World Waste seeks to maintain relationships, contract negotiations and other relevant activities related to the potential development of renewable energy projects without encumbering its ability to meet the closing conditions of a merger in a timely manner. However, the primary focus of the combined company post merger will be Vertex's hydrocarbon recycling business and the pursuit of growth opportunities related to this business segment. The following is an overview of World Waste and its business operations prior to consummation of the merger and other transactions contemplated by the merger agreement. World Waste is a development stage company formed to develop, design, build, own and operate facilities which employ systems and technologies designed to profitably convert municipal solid waste (MSW) and other waste streams, such as wood waste and construction and demolition debris, into usable commodities and products. These products are expected to include renewable energy, recyclable commodities, and potentially bio-fuels. World Waste plans to continue to concentrate its efforts on producing renewable energy from waste materials through the use of gasification and pyrolysis technologies in order to meet the rapidly growing demand for renewable power. World Waste believes that this increased demand is being driven, to a large extent, by the adoption of Renewable Portfolio Standards in a number of states, which require or encourage utilities to have a specific percentage of their electricity sales come from renewable sources. 17 To implement its renewable energy platform, World Waste may plan to pursue the development of facilities in targeted markets where it believes World Waste will be able to earn a "tipping" fee for accepting wastes and a premium for the sale of renewable energy products or receive a very low cost biomass feedstock. World Waste also may plan to develop or obtain the rights to use gasification technologies in demonstration application to gain operating experience with the unique aspects of gasifying biomass derived from municipal solid waste and other waste streams such as construction and demolition debris, and to develop detailed design criteria for larger-scale systems. World Waste anticipates that the development of projects using these technologies could position it to generate three distinct revenue streams: (a) "tipping" fees charged to the entities that supply it with MSW or other waste materials, (b) recycling revenue from the sale of commodity recyclables (such as beverage containers, aluminum, steel, plastics, and glass) that its process recovers and which otherwise would be interred in landfills, and (c) revenue from the sale of its end products, anticipated to be primarily renewable electricity, and potentially bio-fuels. World Waste believes that its receipt of fees from waste generators or handlers could provide it with a low cost fuel source, which is an important and beneficial characteristic of its business model. RENEWABLE ELECTRICITY OPPORTUNITIES World Waste may plan to continue to focus its efforts on the utilization of one or more gasification and/or pyrolysis technologies that may be used to generate various renewable energy products from MSW and other waste streams. It may plan to seek to continue to enter into strategic relationships with companies that have developed gasification technologies, and to further investigate the commercialization of its own technology. A process, which it believes has significant potential for successful commercialization, involves using a gasification technology to produce a synthetic gas (or "syngas") from the cellulose biomass fraction of MSW and construction and demolition debris derived from a materials' separation and classification process. Wood waste, sewage sludge and other commercial waste streams are also potential feedstocks. The resulting syngas or bio-oil would be used to fire a boiler driving a steam turbine. World Waste also believes that after a gas clean-up process, it may be possible to put the syngas directly into a gas-fired turbine. In either case, World Waste believes the process has the potential to produce a significant amount of renewable electricity for sale to utilities. STRATEGY World Waste's goal is to develop and/or acquire full-scale commercial facilities which profitably transform residual MSW, wood waste and other waste streams into usable renewable energy or products, including electricity, synthetic gas and bio-oil and/or bio-fuels. AGREEMENT WITH CES In March 2008, we entered into an agreement with Clean Earth Solutions, Inc. ("CES"), pursuant to which we agreed (i) to sell to CES specified assets relating to the "front end" process of our Anaheim Facility for a cash payment to us of $500,000 (the "First Closing"), (ii) to settle a dispute arising from design issues related to the steam classification vessels that we had intended to use in our operations, in exchange for a payment to us of $640,000 (the "Second Closing") and (iii) to sell to CES all of our intellectual property rights in our pressurized steam classification process in exchange for a payment to us of $800,000 (of which $236,000 was previously paid by CES to us) (the "Third Closing"). On March 7, 2008, CES paid $500,000 to us, and the First Closing was consummated. In June 2008, CES paid The Company $640,000 for the Second Closing. Pursuant to this agreement, the Third Closing is to occur on such a date as determined by CES, provided that the Third Closing must occur no later than July 31, 2008. As of August 14, 2008, the Third Closing had not occurred. In the event that CES is unable to comply with its commitments as set forth in this agreement, taking into account any agreed-upon extensions, we would continue to pursue our rights with respect to the dispute (unless it is otherwise resolved) and we would seek an alternative buyer or licensee for our intellectual property rights, in addition to any pursuing any other remedies we might be entitled to from CES. 18 CRITICAL ACCOUNTING POLICIES AND ESTIMATES Management's discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, management evaluates its estimates, including those related to impairment of long-lived assets, including finite lived intangible assets, accrued liabilities and certain expenses. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates under different assumptions or conditions. Our significant accounting policies are summarized in Note 1 to our audited financial statements for the year ended December 31, 2007 and our unaudited financial statements dated June 30, 2008. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements: BASIS OF PRESENTATION The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. The Company is a new enterprise in the development stage as defined by Statement No. 7 of the Financial Accounting Standards Board, since it has not derived substantial revenues from its activities to date. INTERIM FINANCIAL STATEMENTS The accompanying consolidated financial statements include all adjustments (consisting of only normal recurring accruals), which are, in the opinion of management, necessary for a fair presentation. Operating results for the six months ended June 30, 2008 are not necessarily indicative of the results to be expected for a full year. The consolidated financial statements should be read in conjunction with the Company's consolidated financial statements for the year ended December 31, 2007. USE OF ESTIMATES The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. We used estimates to perform the undiscounted cash flow projections used in the impairment analysis of the Anaheim plant assets (see Fixed Assets below). We also used estimates to determine the employee stock-based compensation expense. 19 SHORT TERM INVESTMENTS The Company determines the appropriate classification of its investments at the time of acquisition and reevaluates such determination at each balance sheet date. All investments held at June 30, 2008 are short-term available for sale securities. They are carried at quoted fair value, with unrealized gains and losses reported in shareholders' equity as a component of accumulated comprehensive income. FIXED ASSETS Machinery and equipment is stated at cost. Depreciation is computed on the straight-line method over the estimated useful asset lives or for leasehold improvements or equipment installed in our Anaheim plant (no longer being used), over the remaining life of the lease, whichever is shorter. Our policy regarding fixed assets is to review such fixed assets for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. If the review indicates that fixed assets are not recoverable (i.e. the carrying amounts are more than the future projected undiscounted cash flows), their carrying amounts would be reduced to fair value. During the third quarter of 2007, we determined that our ongoing research and development work, if necessary, would more efficiently be carried out at a facility other than our Anaheim Facility. As of June 30, 2008, the Anaheim Facility lease had been terminated and all assets had been sold or scrapped. We capitalize leases in accordance with FASB 13. 20 INTANGIBLES Intangible assets are recorded at cost and are classified as held for sale at June 30, 2008. At June 30, 2008, the remaining intangible asset value is associated with the patent purchased from the University of Alabama in Huntsville on May 1, 2006.In February of 2008, we entered into an agreement to, among other things, sell the patent and all of its associated rights. The sale was scheduled to be completed by July 31, 2008. As of August 14, 2008, the sale had not been completed. The Company is still in discussions with CES for the purchase of the patent. The Company believes a sale will be completed within one year, as prescribed by the requirements in SFAS 144, and therefore the Company has concluded that the "held for sale" classification is appropriate. INCOME TAXES The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes." In accordance with SFAS No. 109, the Company records a valuation allowance against net deferred tax assets if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and when temporary differences become deductible. The Company considers, among other available information, uncertainties surrounding the recoverability of deferred tax assets, scheduled reversals of deferred tax liabilities, projected future taxable income, and other matters in making this assessment. The Company adopted FIN 48 on January 1, 2007. There was no material impact on the Company's financial statements as a result of this adoption. REDEEMABLE CONVERTIBLE PREFERRED STOCK Convertible preferred stock which may be redeemable for cash at the determination of the holder is classified as mezzanine equity, in accordance with FAS 150, EITF Topic D 98 and ASR 268, and is shown net of discounts for offering costs, warrant values and beneficial conversion features. STOCK-BASED COMPENSATION During the fourth quarter of 2004, we adopted SFAS No. 123 entitled, "Accounting for Stock-Based Compensation" retroactively to our inception. Accordingly, we have expensed the compensation cost for the options and warrants issued based on their fair value at their grant dates. During the quarter ended March 31, 2006, we adopted SFAS No. 123R, "Share Based Payments." NEW ACCOUNTING PRONOUNCEMENTS SFAS NO. 162, THE HIERARCHY OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES - ----------------------------------------------------------------------- The FASB has issued FASB Statement No. 162, The Hierarchy of Generally Accepted Accounting Principles. Statement 162 is intended to improve financial reporting by identifying a consistent framework, or hierarchy, for selecting accounting principles to be used in preparing financial statements that are presented in conformity with U.S. generally accepted accounting principles for nongovernmental entities. Statement 162 is effective 60 days following the SEC's approval of the PCAOB amendments to AU Section 411, The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles. Management does not believe the adoption of SFAS No. 162 will have a material impact on the Company's financial statements. ISSUE NO. 08-4, "TRANSITION GUIDANCE FOR CONFORMING CHANGES TO ISSUE NO. 98-5" - ------------------------------------------------------------------------------- At the November 2007 EITF meeting, the FASB staff and EITF discussed a document highlighting revisions that should be made to Issue 98-5 as a result of the guidance in: (a) EITF Issue No. 00-27, "Application of EITF Issue No. 98-5, 'Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios,' to Certain Convertible Instruments ," and (b) FASB Statement No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. At the FASB meeting of June 12, 2008, the FASB ratified the final consensus reached in this issue. Management does not believe the adoption of Issue No. 08-4 will have a material impact on the Company's financial statements. 21 ISSUE NO. 08-3, "ACCOUNTING BY LESSEES FOR MAINTENANCE DEPOSITS UNDER LEASE AGREEMENTS" - ------------------------------------------------------------------------------- Equipment lease agreements often call for the lessee to repair and maintain a leased asset over the term of the lease. In some cases, the lease agreement requires the lessee to pay a maintenance deposit to the lessor. The purpose of this deposit is to protect the lessor in the event the lessee does not fulfill its repair and maintenance responsibilities related to the leased asset. Requiring such a deposit from the lessee does not excuse the lessee from its obligation to repair and maintain the leased asset. In addition, the lessor's acceptance of such a deposit does not transfer the responsibility for repairing and maintaining the leased asset to the lessor, nor does it transfer to the lessor the cost or quality risk associated with the repair and maintenance activities. As the lessee incurs costs to repair and maintain the leased asset, the lessor may be required to reimburse the lessee for these costs using the maintenance deposit, to the extent the maintenance deposit includes sufficient funds. If there are funds left in the maintenance deposit at the end of the lease term, the lease agreement may call for either: (a) the lessor making a payment to the lessee for that remaining amount or (b) the lessor retaining that remaining amount. The former is often referred to as a refundable maintenance deposit. The latter is often referred to as a nonrefundable maintenance deposit. At the FASB meeting of June 12, 2008, the FASB ratified the final consensus reached in this issue. Management does not believe the adoption of Issue No. 08-4 will have a material impact on the Company's financial statements. FASB STAFF POSITION NO. EITF 03-6-1 DETERMINING WHETHER INSTRUMENTS GRANTED IN SHARE-BASED PAYMENT TRANSACTIONS ARE PARTICIPATING SECURITIES - -------------------------------------------------------------------------------- This FASB Staff Position (FSP) addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the earnings allocation in computing earnings per share (EPS) under the two-class method described in paragraphs 60 and 61 of FASB Statement No. 128, Earnings per Share. Management does not believe the adoption of this staff position will have a material impact on the Company's financial statements. FASB STAFF POSITION NO. APB 14-1 ACCOUNTING FOR CONVERTIBLE DEBT INSTRUMENTS THAT MAY BE SETTLED IN CASH UPON CONVERSION (INCLUDING PARTIAL CASH SETTLEMENT) - ------------------------------------------------------------------------------- This FSP applies to convertible debt instruments that, by their stated terms, may be settled in cash (or other assets) upon conversion, including partial cash settlement, unless the embedded conversion option is required to be separately accounted for as a derivative under FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities. Management does not believe that the adoption of this staff position will have a material impact on the Company's financial statements. FASB STAFF POSITION NO. FAS 142-3 DETERMINATION OF THE USEFUL LIFE OF INTANGIBLE ASSETS - -------------------------------------------------------------------------------- This FASB Staff Position (FSP) amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB Statement No. 142, Goodwill and Other Intangible Assets. The intent of this FSP is to improve the consistency between the useful life of a recognized intangible asset under Statement 142 and the period of expected cash flows used to measure the fair value of the asset under FASB Statement No. 141 (revised 2007), Business Combinations, and other U.S. generally accepted accounting principles (GAAP). Management does not believe that the adoption of the staff position will have a material impact on the Company's financial statements. 22 RESULTS OF OPERATIONS COMPARISON OF QUARTERS ENDED JUNE 30, 2008 AND 2007 REVENUES AND COST OF GOODS SOLD During the plant start-up phase of our Anaheim plant, we confronted several issues, including an unexpected high level of biological oxygen demand from organic waste in the wastewater from the pulp screening and cleaning process. In January 2007, we decided not to make the capital improvements necessary to the Anaheim plant's wetlap process which the Company considered necessary to operate the plant with the expectation of being profitable. Therefore, beginning in January 2007, we began to operate the plant only as part of research and development projects including but not limited to the development of alternative back-end processes such as gasification and acid hydrolysis for the production of ethanol. Consequently, we have not recognized any revenue since. We essentially ceased utilizing the plant for any purpose in the third quarter of 2007 and vacated the plant completely in May 2008. World Waste management is currently focused on completing the merger with Vertex Nevada while attempting to maintain the viability of its renewable energy business plan. EXPENSES There was no research and development expense during the quarter ended June 30, 2008, a decrease from approximately $800,000 during the comparable quarter in 2007. The decrease was primarily due to the closure of the Anaheim plant and our focus on completing the transaction with Vertex Nevada as described above. General and administrative expense decreased to $1,401,814 during the quarter ended June 30, 2008 from $1,425,176 for the comparable period in 2007. This $23,362 decrease was primarily the result of a decrease in payroll expenses due to a decrease in headcount, offset by an increase in employee stock option expense of approximately $270,000. General and administrative expense for the quarter ended June 30,2008 was comprised primarily of employee option expense of approximately $451,000, compensation expense, including Board of Director's fees, of approximately $296,000, including severance of $50,000, business development expenses of approximately $200,000, professional fees of approximately $267,000, property taxes of $107,000 and other expenses of $83,000. The Company's "cash burn" rate (net loss before depreciation, stock compensation and accrued severance expense) decreased during the quarter ended June 30, 2008 to approximately $820,000 from approximately $1,360,000 for the quarter ended June 30, 2007. This is a result of our focus on completing the transaction with Vertex Nevada as described above. Interest income of $78,134 and $105,717 for the second quarter of 2008 and 2007, respectively, represents the interest earned on the cash received for the issuance of the Series B Preferred Stock in May of 2006. Preferred stock dividend and amortization of beneficial conversion feature, warrant discount and offering costs decreased to $2,556,197 in the quarter ended June 30, 2008 from $3,347,388 during the comparable period in 2007 due to the amortization of beneficial conversion feature. COMPARISON OF SIX MONTHS ENDED JUNE 30, 2008 TO THE SIX MONTHS ENDED JUNE 30, 2007 REVENUES AND COST OF GOODS SOLD During the plant start up phase of our Anaheim plant, we confronted several issues, including an unexpected high level of biological oxygen demand from organic waste in the wastewater from the pulp screening and cleaning process. In January 2007, we decided not to make the capital improvements necessary to the Anaheim plant's wetlap process which the Company considers necessary to operate the plant with the expectation of being profitable. Therefore, beginning in January 2007, we began to operate the plant only as part of research and development projects including but not limited to the development of alternative back end processes such as gasification and acid hydrolysis for the production of ethanol. Consequently, we did not recognize any revenue since. We essentially ceased utilizing the plant for any purpose in the third quarter of 2007 and vacated the plant completely in May 2008. World Waste management is currently focused on completing the merger with Vertex Nevada while maintaining the viability of its renewable energy business plan. EXPENSES Research and development expense decreased from $1,749,875 for the six months ended June 30, 2007 to $16,359 for the six months ended June 30, 2008. The decrease was primarily due to the closure of the Anaheim plant in 2008 and our focus on the transaction with Vertex Nevada compared to the cost of research and development activities related to gasification of approximately $150,000, Anaheim plant costs of approximately $750,000, and plant depreciation of $630,000 in the 2007 period being classified as research and development expense due to the then-current nature and intent of the plant operations. 23 General and administrative expense increased from $2,408,667 for the six months ended June 30, 2007 to $3,178,745 for the comparable period in 2008. This $770,078 increase was primarily the result of an increase in employee stock option expense of $270,000, consulting fees of approximately $262,000 primarily related to technologies and new sites, and legal fees due to agreements with CES, Taormina and the Vertex Nevada merger. General and administrative expense for the six months ended June 30,2008 was comprised primarily of employee option expense of approximately $901,000, compensation expense, including Board of Director's fees, of approximately $864,000, including severance of $288,000, business development expenses of approximately $600,000, professional fees of approximately $556,000, property tax of approximately $93,000,and other expenses of $165,000. The Company's "cash burn" rate (net loss before depreciation and stock compensation) decreased during the six months ended June 30, 2008 to approximately $2 million from approximately $2.7 million for the six months ended June 30, 2007 The interest income of approximately $147,000 for the six months ended June 30, 2008 represents the interest earned on the cash received for the issuance of the Series B Preferred Stock in May of 2006. Interest expense of approximately $235,000 for the six month period ended June 30, 2007 related to interest on the Senior Secured Debt which was issued in November of 2005 and February of 2006. All of the Senior Secured Debt was extinguished in May of 2006. Preferred stock dividend and amortization of beneficial conversion feature, warrant discount and offering costs decreased to $5,090,424 for the first six months ended June 30, 2008 from $7,051,028 from the comparable period in 2007 due to the conversion of some of the preferred stock to common. 24 LIQUIDITY AND CAPITAL RESOURCES At June 30, 2008, we had cash and cash equivalents on hand of approximately $3.9 million and short-term investments of approximately $4.5 million (a total of approximately $8.4 million) representing a decrease of $1.4 million from our December 31, 2007 cash, cash equivalents and short-term investments totaling approximately $9.8 million. During the first six months of 2008, net cash used for operating activities was approximately $934,000, net of cash received from assets held for sale of $994,000. The use of cash was primarily for general and administrative expenses. During the six months ended June 30, 2008, approximately $80,000 was used for the buyout of the Company's capital lease. Cash and cash equivalents and short-term investments were also negatively impacted during the six months ended June 30, 2008 due to the temporary write-down of the Company's auction rate securities (short-term investments) by $422,746, as described below. In March 2008 and June 2008, we received payments from CES of $676,000 and $640,000,respectively, upon the sale of assets relating to the front-end process of our facility. These payments were accounted for as a reduction of the Company's assets held for sale. CES is obligated to make additional payments to us aggregating $564,000 in 2008 pursuant to our sale of certain intellectual property rights. As of August 14, 2008, CES has not made the final payment. We cannot assure you that the Company will receive the final payment. At June 30, 2008, approximately $4.5 million of our securities were in the form of auction rate securities. These securities are stated at the lower of cost or market. As of June 30, 2008, the face value of these securities was approximately $5.1 million. The securities had been offered for sale during the quarter ended June 30, 2008. However, due to the failure of the auctions, no such securities were sold. The failure of the auctions did not affect the Company's ability to meet its obligations in the normal course of business. Management has evaluated the solvency of the issuers of these securities and does not believe an additional reserve is necessary. In August of 2008, the Company sold auction rate securities with a face value of $3.6 million for $3.3 million which was the stated fair market value at June 30, 2008. As of August 14, 2008, the Company continues to hold auction rate securities with a face value of $1.5 million. The market value of these securities at June 30, 2008, as reflected in the financial statements, was estimated to be approximately $1.2 million. In order to close the proposed merger with Vertex Nevada, the Company will need to have a minimum of $9.4 million on hand, after satisfying all of its liabilities (other than up to $2.4 million of permitted indebtedness). Due to a number of factors, including (1) that the transaction has taken longer than originally anticipated to close, (2) the possibility that the Company will be unable to liquidate its remaining auction rate securities at or near their face amount, (3) the possibility that the Company will be unable to secure the necessary borrowing, and (4) the possibility that the transaction costs exceed the Company's estimates, the Company might not have sufficient cash on hand to satisfy this condition to the closing of the Proposed Merger. In this case, absent a waiver of this closing condition by the other party to the transaction, the proposed merger could not be consummated. As of June 30, 2008, the Company had no long-term debt obligations, capital lease obligations, operating lease obligations, purchase obligations, or other similar long-term liabilities. The capital lease outstanding at December 31, 2007 was paid off in March 2008. The holders of our preferred stock have the right to require our company to redeem their shares on April 10, 2010, at a price equal to the original issuance price (with accrued but unpaid dividends being treated as outstanding for purposes of calculating the total redemption price), for a total of approximately $46 million (assuming none of such shares of preferred stock are converted to common stock prior to any such redemption). In the event that the proposed merger with Vertex Nevada does not close, we will need to raise significant additional capital or restructure the terms of our preferred stock in order to meet this redemption obligation if and when it become due. If we are unable to do so, and if the holders of World Waste's preferred stock exercise their redemption right, World Waste would likely be rendered insolvent. In addition, if the merger does not close, the holders of World Waste's Series A Preferred Stock could exercise their right to elect a majority of World Waste's Board of Directors, which would give such holders effective control over World Waste. 25 ITEM 4. CONTROLS AND PROCEDURES The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to the Company's management, including the Chief Executive Officer and the Acting Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. As required by SEC Rule 13a-15(b), the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Chief Executive Officer and the Acting Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures as of the end of the period covered by this report. Based on the foregoing, the Company's Chief Executive Officer and Acting Chief Financial Officer concluded that, as of the end of the period covered by this report, the Company's disclosure controls and procedures were effective in ensuring that the information required to be disclosed in reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and that such information is accumulated and communicated to the Company's management, including the Chief Executive Officer and the Acting Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. There was no change in the Company's internal control over financial reporting during the six months ended June 30, 2008 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting. 26 PART II - OTHER INFORMATION ITEM 1 - LITIGATION As previously disclosed, during early 2007 we began using our Anaheim Facility to conduct research and development activities related to the production of renewable energy from MSW. In the third quarter of 2007, we determined that the ongoing research and development work would more efficiently be carried out at the location of Applied Power Concepts, our research and development partner, or at some other outsourced research and development partner. Consequently, in order to reduce costs and focus management attention and cash resources on our renewable energy process, we initiated conversations with Taormina regarding termination of the lease of the Anaheim Facility and the cancellation of the associated recycle agreement. On October 29, 2007, Taormina terminated the lease and the recycling agreement, effective as of October 31, 2007. On November 7, 2007, Taormina filed an unlawful detainer action against us, and in March 2008, we entered into a stipulation for entry of judgment in this action. The stipulation provided for: (a) the cancellation and forfeiture of the lease; (b) a payment by us to Taormina of $192,218 (which payment was subsequently made by us); and (c) our right to remain in possession of the Anaheim Facility until June 30, 2008. Pursuant to the Stipulation, we gave notice to Taormina of our intention to vacate the premises on May 15, 2008. We engaged in discussions with Taormina concerning the alterations and utility installations to be removed from the premises prior to the return of the premises to Taormina. In connection with those discussions, we entered into a letter agreement with Taormina concerning the South Yard of the property, which letter agreement provided that we would have no further obligation with respect to the turnover condition of the South Yard, in exchange for our payment to Taormina of $29,096 and the release of our rights to a refund of $30,904 of pre-paid rent. We made the $29,096 payment, and, on May 8, 2008, we turned over physical possession of the property to Taormina. On May 12, 2008, we advised Taormina that we had vacated the property, and requested that Taormina dismiss the unlawful detainer action. On June 11, 2008, Taormina requested dismissal of the Action with prejudice, and the dismissal was entered. ITEM 1A - RISK FACTORS There have not been any changes in the risk factors previously disclosed in Form 10K for the year ended December 31, 2007. ITEM 6. EXHIBITS Exhibits 2.1 Amended and Restated Agreement and Plan of Merger, dated May 19, 2008, by and among the Company, Vertex Energy, LP, Vertex Energy, LLC., Vertex Merger Sub, Inc., and Benjamin P. Cowart, as agent for the shareholders of Vertex Energy, Inc. 31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act. 31.2 Certification of Acting Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act. 32.1 Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act 32.2 Certification of Acting Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act 27 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 thereunto duly authorized. Date: August 14, 2008 WORLD WASTE TECHNOLOGIES, INC. (Registrant) By: /s/ David Rane ------------------------------ David Rane Acting Chief Accounting Officer 28 INDEX TO EXHIBITS Exhibit Number Description - ------ ----------- 2.1 Amended and Restated Agreement and Plan of Merger, dated May 19, 2008, by and among the Company, Vertex Energy, LP, Vertex Energy, Inc., Vertex Merger Sub, LLC., and Benjamin P. Cowart, as agent for the shareholders of Vertex Energy, Inc. 31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act. 31.2 Certification of Acting Chief Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act. 32.1 Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act 32.2 Certification of Acting Chief Accounting Officer Pursuant to Section 906 of the Sarbanes-Oxley Act 29 EX-2.1 2 worldwaste_10q-ex0201.txt AMENDED AND RESTATED ARTICLES Exhibit 2.1 AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER BY AND BETWEEN WORLD WASTE TECHNOLOGIES, INC., A CALIFORNIA CORPORATION, ON THE ONE HAND, AND VERTEX ENERGY, LP, A TEXAS LIMITED PARTNERSHIP, VERTEX ENERGY, INC., A NEVADA CORPORATION, VERTEX MERGER SUB, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY, AND BEN COWART, AS AGENT FOR ALL OF THE SHAREHOLDERS OF VERTEX, ON THE OTHER HAND MAY 19, 2008 AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER This AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER, is made and entered into as of May 19, 2008 (this "AGREEMENT"), by and between World Waste Technologies, Inc., a California corporation ("WWT"), on the one hand, and Vertex Energy, LP, a Texas limited partnership ("VERTEX LP"), Vertex Energy, Inc., a Nevada corporation ("VERTEX NEVADA"), Vertex Merger Sub, LLC, a California limited liability company and wholly owned subsidiary of Vertex Nevada ("MERGER SUB"), and Ben Cowart, as agent ("AGENT") of all of the shareholders of Vertex Nevada (the "VERTEX SHAREHOLDERS"), on the other hand. WWT, Vertex LP, Vertex Nevada, Merger Sub and the Agent are collectively referred to herein as the "PARTIES". Vertex Nevada, Vertex LP, Merger Sub and the Agent are sometimes referred to herein as the "VERTEX PARTIES." Capitalized terms used and not otherwise defined herein have the meanings set forth in Article 1. The Parties hereto have previously entered into an Agreement and Plan of Merger dated as of May 15, 2008 (the "Original Agreement"). The Parties now desire to amend and restate the Original Agreement in its entirety to reflect various mutually acceptable modifications to the agreement as originally executed. RECITALS WHEREAS, the respective Boards of Directors of WWT, Vertex Nevada and Merger Sub, and the partners of Vertex LP (the "PARTNERS"), have deemed it in the best interests of their respective corporations, shareholders and partners that (i) Vertex LP transfer the Vertex Business to Vertex Nevada (the "TRANSFER"), and (ii) immediately following the Transfer, that WWT, Vertex Nevada and Merger Sub enter into a business combination transaction; WHEREAS, in furtherance thereof, the Partners have approved the Transfer and the respective Boards of Directors of WWT, Vertex Nevada and Merger Sub each have approved this Agreement and the merger of WWT with and into Merger Sub(the "MERGER"), upon the terms and subject to the conditions set forth in this Agreement and in accordance with the provisions of the California Corporations Code (the "CCC"); WHEREAS, in connection with the Merger, the Parties desire to make certain representations, warranties, covenants and agreements and also to prescribe various conditions to the Merger, upon the terms and subject to the conditions contained herein. NOW, THEREFORE, in consideration of the covenants, promises, representations and warranties set forth herein, and for other good and valuable consideration, intending to be legally bound hereby, the Parties agree as follows: ARTICLE I DEFINITIONS 1.1 CERTAIN DEFINITIONS. The following terms shall, when used in this Agreement, have the following meanings: "AFFILIATE" means, with respect to any Person: (i) any Person directly or indirectly owning, controlling or holding with power to vote ten percent (10%) or more of the outstanding voting securities of such other Person (other than passive or institutional investors); (ii) any Person ten percent (10%) or more of whose outstanding voting securities are directly or indirectly owned, controlled or held with power to vote, by such other Person; (iii) any Person directly or indirectly controlling, controlled by or under common control with such other Person; and (iv) any officer, director or partner of such other Person. "Control" for the foregoing purposes shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities or voting interests, by contract or otherwise. "AGENT" shall have the meaning set forth in the preamble to this Agreement. "AGREEMENT" shall have the meaning set forth in the preamble to this Agreement. "ALTERNATIVE ACQUISITION" shall have the meaning set forth in Section 5.14 of this Agreement. "BENEFIT ARRANGEMENT" means any employment, consulting, severance or other similar contract, plan, arrangement or policy, and each plan, arrangement (written or oral), program, agreement or commitment providing for insurance coverage (including any self-insured arrangements), workers' compensation, disability benefits, supplemental unemployment benefits, vacation benefits, retirement benefits, life, health, disability or accident benefits or for deferred compensation, profit-sharing bonuses, stock options, stock purchases or other forms of incentive compensation or post-retirement insurance, compensation or benefits which is not a Welfare Plan, Pension Plan or Multiemployer Plan. "BUSINESS DAY" means any day other than Saturday, Sunday or a day on which banking institutions in California or Nevada are required or authorized to be closed. "CCC" shall have the meaning set forth in the recitals of this Agreement. "CERTIFICATE OF MERGER" shall have the meaning set forth in Section 2.3 of this Agreement. "CLAIM" shall have the meaning set forth in Section 7.3 of this Agreement. "CLAIM NOTICE" shall have the meaning set forth in Section 7.3 of this Agreement. "CLOSING" shall have the meaning set forth in Section 2.2 of this Agreement. "CLOSING DATE" shall have the meaning set forth in Section 2.2 of this Agreement. "CMT AGREEMENTS" shall have the meaning set forth in Section 5.23 of this Agreement "CODE" means the United States Internal Revenue Code of 1986, as amended. "COLLATERAL DOCUMENTS" mean the Cowart Employment Agreement, the Vertex Disclosure Schedules, the WWT Disclosure Schedules, all of the Exhibits to this Agreement, and any other documents, instruments and certificates to be executed and delivered by the Parties hereunder or thereunder. A-2 "CONTRACT" means any agreement, contract, note, loan, evidence of indebtedness, purchase order, letter of credit, indenture, security or pledge agreement, covenant not to compete, license, instrument, commitment, obligation, promise or undertaking (whether written or oral and whether express or implied). "COWART EMPLOYMENT AGREEMENT" shall have the meaning set forth in Section 5.1 of this Agreement. "COWART GUARANTEES" shall have the meaning set forth in Section 5.2 of this Agreement. "DISSENTING SHARES" shall have the meaning set forth in Section 2.14 of this Agreement. "EFFECTIVE DATE" shall have the meaning set forth in Section 2.3 of this Agreement. "EFFECTIVE TIME" shall have the meaning set forth in Section 2.3 of this Agreement. "EMPLOYEE PLANS" means all Benefit Arrangements, Pension Plans and Welfare Plans. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended. "ERISA AFFILIATE" means any trade or business, whether or not incorporated, that together with Vertex LP or WWT, as applicable, would be deemed a single employer for purposes of Section 4001 of ERISA or Sections 414(b), (c), (m), (n) or (o) of the Code. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and the rules and regulations there under. "FAMILY MEMBER" means, with respect to any individual (i) the individual, (ii) the individual's spouse, (iii) any other natural Person who is related to the individual or the individual's spouse within the second degree (including adopted children) and (iv) any other natural Person who resides with such individual. "GAAP" means U.S. generally accepted accounting principles consistently applied, as in effect from time to time. "INDEMNIFICATION AGREEMENTS" means those certain director and officer indemnification agreements by and between WWT and its officers and directors. "INDEPENDENT DIRECTOR" means any individual who does not beneficially own more than 5% of the outstanding voting shares of Vertex Nevada, is not employed by, or an officer of, Vertex Nevada or any Cowart Party, is not a director or manager of any Cowart Party, is not a family member of Ben Cowart, and would qualify as an "Independent Director" as defined in the rules and regulations of the New York Stock Exchange. A-3 "INTELLECTUAL PROPERTY" means all trademarks and trademark rights, trade names and trade name rights, service marks and service mark rights, service names and service name rights, patents and patent rights, utility models and utility model rights, copyrights, mask work rights, brand names, trade dress, product designs, product packaging, business and product names, logos, slogans, rights of publicity, trade secrets, inventions (whether patentable or not), invention disclosures, improvements, processes, formulae, industrial models, processes, designs, specifications, technology, methodologies, computer software (including all source code and object code), firmware, development tools, flow charts, annotations, all Web addresses, sites and domain names, all data bases and data collections and all rights therein, any other confidential and proprietary right or information, whether or not subject to statutory registration, and all related technical information, the information set forth in manufacturing, engineering and technical drawings, know-how and all pending applications for and registrations of patents, utility models, trademarks, service marks and copyrights, and the right to sue for past infringement, if any, in connection with any of the foregoing. "LAWS" means any statute, ordinance, law, rule, regulation, code, injunction, judgment, order, decree, ruling, or other requirement enacted, adopted or applied by any Regulatory Authority, including judicial decisions applying common law or interpreting any other Law. "LEGAL PROCEEDING" means any action, arbitration, audit, hearing, investigation, litigation or suit (whether civil, criminal, administrative, investigative or informal) commenced, brought, conducted or heard by or before, or otherwise involving, any Regulatory Authority or arbitrator. "LIABILITIES" means any direct or indirect liability, indebtedness, obligation, commitment, expense, claim, deficiency, guaranty or endorsement of or by any Person of any type, whether known or unknown, accrued, absolute, contingent, matured, unmatured, liquidated or unliquidated or otherwise. "LIEN" means any mortgage, pledge, lien, encumbrance, charge, security interest, security agreement, conditional sale or other title retention agreement, limitation, option, assessment, restrictive agreement, restriction, adverse interest, restriction on transfer or exception to or material defect in title or other ownership interest (including but not limited to restrictive covenants, leases and licenses). "LOSSES" means any claim, liability, obligation, loss, damage, assessment, penalty, judgment, settlement, cost and expense, including costs attributable to the loss of the use of funds to the date on which a payment is made with respect to a matter of indemnification under Article 7 hereof, and including reasonable attorneys' and accountants' fees and disbursements incurred in investigating, preparing, defending against or prosecuting any claim. "MAKE-WHOLE WARRANTS" shall have the same meaning set forth in Section 6.1(i) of this Agreement. "MATERIAL ADVERSE EFFECT" or "MATERIAL ADVERSE CHANGE" with respect to a Person means a material adverse effect on (i) the assets, liabilities, condition (financial or otherwise), properties, business or prospectus of such Person, (ii) the validity, binding effect or enforceability of this Agreement or any of the Collateral Documents against such Person or (iii) the ability of such Person to perform its obligations under this Agreement or any of the Collateral Documents. A-4 "MERGER" shall have the meaning set forth in the recitals of this Agreement. "MERGER CONSIDERATION" shall have the meaning set forth in Section 2.6 of this Agreement. "MERGER SUB" shall have the meaning set forth in the preamble to this Agreement. "MULTIEMPLOYER PLAN" means any "multiemployer plan" as defined in Section 3(37) of ERISA. "ORDER" means any writ, judgment, decree, ruling, injunction or similar order of any Regulatory Authority (in each such case whether preliminary or final). "ORDINARY COURSE OF BUSINESS" or "ORDINARY COURSE" or any similar phrase means the usual and ordinary course of business of a Party, consistent with its past custom and practice. "ORGANIZATIONAL DOCUMENTS" shall mean (a) the articles or certificate of incorporation, all certificates of determination and designation, and the bylaws of a corporation; (b) the partnership agreement and any statement of partnership of a general partnership; (c) the limited partnership agreement and the certificate or articles of limited partnership of a limited partnership; (d) the operating agreement, limited liability company agreement and the certificate or articles of organization or formation of a limited liability company; (e) any charter or similar document adopted or filed in connection with the creation, formation or organization of any other Person; and (f) any amendment to any of the foregoing. "PARTNERS" shall have the meaning set forth in the recitals of this Agreement. "PARTY" or "PARTIES" shall have the meaning set forth in the preamble to this Agreement. "PENSION PLAN" means any "employee pension benefit plan" as defined in Section 3(2) of ERISA (other than a Multiemployer Plan) which a Person or any ERISA Affiliate maintains, administers, contributes to or is required to contribute to, or has maintained, administered, contributed to or was required to contribute to, or under which such Person or any ERISA Affiliate may incur any liability. "PERMIT" means any license, franchise, certificate, declaration, waiver, exemption, variance, permit, consent, approval, registration, authorization, qualification or similar right granted by a Regulatory Authority. "PERSON" means any natural person, individual, firm, corporation, including a non-profit corporation, partnership, trust, unincorporated organization, association, limited liability company, labor union, Regulatory Authority or other entity. "PROXY STATEMENT" shall have the meaning set forth in Section 5.5 of this Agreement. A-5 "QUALIFIED FINANCING" means an equity financing generating gross proceeds to WWT Sub of at least $500,000, at a pre-money valuation in an amount equal to no less than the total amount of cash on hand of WWT Sub as of the Closing. "REGULATORY AUTHORITY" means: any (i) federal, state, local, municipal or foreign government; (ii) governmental or quasi-governmental authority of any nature (including without limitation any governmental agency, branch, department, official, instrumentality or entity and any court or other tribunal); (iii) multi-national organization or body; or (iv) body exercising or entitled to exercise any administrative, executive, judicial, legislative, police, regulation or taxing authority or power of any nature. "REPRESENTATIVES" shall have the meaning set forth in Section 5.14 of this Agreement. "SEC" means the Securities and Exchange Commission or any Regulatory Authority that succeeds to its functions. "SEC REPORTS" has the meaning set forth in the preamble to Article 4. "SECURITIES ACT" means the Securities Act of 1933, as amended, and the rules and regulations thereunder. "SUBSIDIARY" has the meaning set forth in Section 3.1. "SURVIVING CORPORATION" shall have the meaning set forth in Section 2.1 of this Agreement. "TAX RETURNS" means all federal, state, local, provincial and foreign tax returns, declarations, reports, claims, schedules and forms for refund or credit or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof. "TAXES" means any U.S. or non U.S. federal, state, provincial, local or foreign (i) income, corporation gross income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, customs duties, capital, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, intangible property, recording, occupancy, sales, use, transfer, registration, value added minimum, ad valorem or excise tax, estimated or other tax of any kind whatsoever, including any interest, additions to tax, penalties, fees, deficiencies, assessments, additions or other charges of any nature with respect thereto, whether disputed or not; and (ii) any liability for the payment of any amount of the type described in (i) above. "TRANSACTIONS" has the meaning set forth in Section 3.2. "TRANSFER" shall have the meaning set forth in the recitals of this Agreement. "TRANSMITTAL LETTER" has the meaning set forth in Section 2.7 of this Agreement. A-6 "TREASURY REGULATIONS" means regulations promulgated by the U.S. Treasury Department under the Code. "VERTEX LP" has the meaning set forth in the preamble to this Agreement. "VERTEX NEVADA" has the meaning set forth in the preamble to this Agreement. "VERTEX BUSINESS" means each of the following businesses owned by Vertex LP: (i) the business of aggregating waste oil from third-party collectors and managing the transportation logistics of delivering the waste oil to a Chevron-Texaco refining facility in Louisiana; revenue from this business is generated from payments made by Chevron-Texaco to Vertex LP under an existing contract and is based on the volume, quality and price of the used oil feedstock delivered to the Louisiana facility; (ii) the business of aggregating petroleum waste streams from third-party collectors and managing the transportation logistics of delivering the waste petroleum products to a Kmtex-owned facility in Texas; in addition to the petroleum waste stream feedstock, this business sources a second feedstock stream directly from a major chemical company. Revenue is generated by selling end products such as pygas, gasoline blendstock and marine diesel oil made at the Kmtex facility under a contract refining agreement with Vertex LP utilizing the two streams of feedstock; and (iii) the business of implementing proprietary re-refining technology owned by Vertex LP.; the re-refining technology allows this business to take aggregated waste oil (similar to what is currently delivered to the Chevron-Texaco facility) and convert it to higher value products such as marine diesel oil and vacuum gas oil; revenue for this business area will be generated from the sale of the re-refined marine diesel oil and vacuum gas oil. For the sake of clarification, the Vertex Business does not include the businesses conducted by any of the Subsidiaries of Vertex LP. "VERTEX CAPITAL STOCK" means, collectively, the Vertex Common Stock and Vertex Preferred Stock. "VERTEX COMMON STOCK" means shares of Vertex Nevada's common stock, par value $0.001 per share. "VERTEX CONTRACT" has the meaning set forth in Section 3.11 of this Agreement. "VERTEX FINANCIAL STATEMENTS" means the audited Consolidated Balance Sheets of Vertex Nevada as of December 31, 2007, 2006 and 2005, and the audited Consolidated Statements of Operations and Statements of Stockholders' Equity for the periods then ended, in each case after taking into account the Transfer. "VERTEX LP" has the meaning set forth in the preamble to this Agreement. "VERTEX LOCK-UP" has the meaning set forth in Section 5.19 of this Agreement. "VERTEX NEVADA" has the meaning set forth in the preamble to this Agreement. "VERTEX PARTIES" shall have the meaning set forth in the preamble to this Agreement. A-7 "VERTEX PREFERRED STOCK" means, collectively, the Vertex Series A Preferred Stock and the Vertex Series B Preferred Stock. "VERTEX SERIES A PREFERRED STOCK" means the newly created Series A Preferred Stock, par value $0.001 per share, of Vertex Nevada, established and issued in connection with the transactions contemplated by this Agreement. "VERTEX SERIES B PREFERRED STOCK" means the Series B Preferred Stock, par value $0.001 per share, of Vertex Nevada, with the terms and conditions as are set forth on EXHIBIT A-2 hereto. "VERTEX SHAREHOLDERS" has the meaning set forth in the preamble to this Agreement. "WELFARE PLAN" means any "employee welfare benefit plan" as defined in Section 3(1) of ERISA which a Person or any ERISA Affiliate maintains, administers, contributes to or is required to contribute to, or under which such Person or any ERISA Affiliate may incur any Liability. "WWT" has the meaning set forth in the preamble to this Agreement. "WWT CAPITAL STOCK" means, collectively, the WWT Common Stock and WWT Preferred Stock. "WWT CERTIFICATE(S)" has the meaning set forth in Section 2.7 of this Agreement. "WWT COMMON STOCK" means shares of WWT's common stock, par value 0.001 per share. "WWT CONTRACT" has the meaning set forth in Section 4.10 of this Agreement. "WWT FINANCIAL STATEMENTS" means the audited Consolidated Balance Sheets of WWT as of December 31, 2007 and 2006, and the audited Consolidated Statements of Operations and Statement of Stockholders' Equity for each of the three years in the period ended December 31, 2007. "WWT OPTIONS" has the meaning set forth in SECTION 2.6(C) of this Agreement. "WWT PREFERRED STOCK" means, collectively, the WWT Series A Preferred Stock and WWT Series B Preferred Stock. "WWT SERIES A PREFERRED STOCK" means shares of WWT's 8% Series A Cumulative Redeemable Convertible Participating Preferred Stock, par value 0.001 per share. "WWT SERIES B PREFERRED STOCK" means shares of WWT's 8% Series B Cumulative Redeemable Convertible Participating Preferred Stock, par value 0.001 per share. "WWT MANAGEMENT AGREEMENT" shall have the meaning set forth in Section 5.6 of this Agreement. "WWT MANAGEMENT" shall have the meaning set forth in Section 5.6 of this Agreement. A-8 ARTICLE II THE MERGER 2.1 MERGER. Upon the terms and conditions set forth in this Agreement, and in accordance with the provisions of the CCC, at the Effective Time, (i) WWT shall be merged with and into Merger Sub, (ii) the separate corporate existence of WWT shall cease, (iii) Merger Sub, as the surviving company in the Merger, shall continue its existence under the laws of the State of California as a limited liability company, and (iv) Merger Sub shall succeed to and assume the rights, obligations, properties, rights, privileges, powers and franchises of WWT. Merger Sub, as the surviving limited liability company after the Merger, is sometimes referred to herein as the "SURVIVING CORPORATION." 2.2 CLOSING. Subject to the terms and conditions of this Agreement, the closing of the Merger (the "Closing") will take place at the offices of TroyGould Professional Corporation located at 1801 Century Park East, 16th Floor, Los Angeles, California 90067, or at such other place as the Parties mutually agree, at 10:00 a.m. local time on the second Business Day after the day on which the last of the closing conditions set forth in Article 6 below has been satisfied or waived, or such other date as the Parties mutually agree upon in writing (the "CLOSING DATE"). 2.3 EFFECTIVE TIME. Upon the terms of and subject to the conditions of this Agreement, as soon as practicable on the Closing Date: (a) the Parties will cause the Merger to be consummated by filing with the Secretary of State of the State of California a certificate of merger (the "CERTIFICATE OF MERGER"), together with any required related certificates, and shall make any other filings or recordings required under the CCC. The Merger shall become effective upon such filing, or at such later date and time as is agreed to by the Parties and set forth in the Certificate of Merger (the date and time of such filing being the "EFFECTIVE TIME" and the date upon which the Effective Time occurs, being the "EFFECTIVE DATE"). As soon as practicable on the Closing Date, Vertex Nevada will deliver the Merger Consideration to the holders of WWT Common Stock and WWT Preferred Stock in accordance with Section 2.6 hereof. 2.4 EFFECT OF THE MERGER. At the Effective Time, in accordance with the CCC, the separate existence of WWT will cease and the Surviving Corporation shall succeed, without further action, to all the property, assets, rights, privileges, powers and franchises of every kind of the nature and description of Merger Sub and WWT. All debts, liabilities and duties of Merger Sub and WWT will become the debts, liabilities and duties of the Surviving Corporation. The Parties acknowledge that as a condition to the closing of the transactions contemplated hereby and in accordance with Section 5.6, all Liabilities of WWT (other than up to $2.4 million of indebtedness) shall, immediately prior to the Effective Time, be satisfied in full. As of the Effective Time, the Surviving Corporation will be a single member limited liability company wholly owned by Vertex Nevada. 2.5 EFFECT OF MERGER ON OWNERSHIP INTERESTS OF MERGER SUB. At the Effective Time, the ownership interests of Merger Sub issued and outstanding immediately prior to the Effective Time shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into and become ownership interests of the Surviving Corporation. A-9 2.6 EFFECT OF MERGER ON CAPITAL STOCK OF WWT. (a) WWT COMMON STOCK. At the Effective Time, each issued and outstanding share of the WWT Common Stock shall, by virtue of the Merger and without any action on the part of the holders thereof, be converted into the right to receive one share of Vertex Common Stock. (b) WWT SERIES A PREFERRED STOCK AND WWT SERIES B PREFERRED STOCK. At the Effective Time, (i) each issued and outstanding share of WWT Series A Preferred Stock shall by virtue of the Merger and without any action on the part of the holders thereof, be converted into the right to receive 4.062 shares of Vertex Series A Preferred Stock; and (ii) each issued and outstanding share of WWT Series B Preferred Stock shall by virtue of the Merger and without any action on the part of the holders thereof, be converted into the right to receive 116.51 shares of Vertex Series A Preferred Stock, in each case subject to the terms and conditions of this Agreement. The shares of Vertex Common Stock and Vertex Series A Preferred Stock issuable pursuant to Section 2.6(a) and this Section 2.6(b) are collectively referred to herein as the "MERGER CONSIDERATION." The terms of the Vertex Series A Preferred Stock issuable hereunder shall have substantially the terms and conditions as are set forth on EXHIBIT A-1 hereto. (c) OUTSTANDING WWT OPTIONS AND WARRANTS. At the Effective Time, each outstanding option and warrant to acquire shares of WWT Common Stock (the "WWT OPTIONS") shall automatically become an option or warrant to acquire an equivalent number of shares of Vertex Common Stock. (d) WWT CAPITAL STOCK. As a result of the Merger and without any action on the part of the holders thereof, at the Effective Time, all shares of WWT Capital Stock shall be cancelled and retired and shall cease to be outstanding. Each holder of shares of the WWT Capital Stock shall thereafter cease to have any rights with respect to such shares, except that the issued and outstanding shares of WWT Capital Stock immediately prior to the Effective Time, and the respective holders thereof, shall have the right to receive the Merger Consideration in accordance with this Section 2.6 upon the surrender of the certificate or certificates representing such shares. (e) TREASURY STOCK. Each share of WWT Common Stock held in Vertex Nevada's treasury at the Effective Time, if any, shall, by virtue of the Merger and without any action on the part of WWT, cease to be outstanding and shall be cancelled and retired without payment of any Merger Consideration or any other consideration therefor. 2.7 DELIVERY OF WWT CERTIFICATES AND EXCHANGE PROCEDURES. At and after the Effective Time, Vertex Nevada will make available, and each holder of an issued and outstanding share of WWT Common Stock and WWT Preferred Stock will be entitled to receive, upon surrender to Vertex Nevada or the Agent of any certificates evidencing such WWT Capital Stock (the "WWT CERTIFICATES") for cancellation and a letter of transmittal or assignment separate from certificate in customary form (the "TRANSMITTAL LETTER"), the portion of the Merger Consideration into which such shares of WWT Capital Stock have been converted into pursuant to the Merger, and upon such surrender of each such WWT Certificate, and delivery by Vertex Nevada of the aggregate Merger Consideration in exchange therefor, the WWT Common Stock and WWT Preferred Stock evidenced by A-10 the WWT Certificates so surrendered in accordance herewith shall forthwith be cancelled. Until surrendered or delivered as contemplated by this Section 2.7, each WWT Certificate will be deemed at any time after the Effective Time for all purposes to evidence only the right to receive upon such surrender the corresponding pro rata portion of the Merger Consideration; PROVIDED, HOWEVER, that Vertex Nevada shall be under no obligation to deliver the Merger Consideration, and no holder of an issued and outstanding share of WWT Common Stock or WWT Preferred Stock shall be obligated to surrender a WWT Certificate, as contemplated herein, until and unless of the conditions and covenants set forth in Article 6 hereof shall have been performed, complied with, or otherwise waived in accordance with the provisions of Article 6. 2.8 STOCK TRANSFER BOOKS. From and after the Effective Time, the stock transfer books of WWT will be closed, and there will be no further registration or transfers of WWT Common Stock or WWT Preferred Stock thereafter on the records of WWT. 2.9 NO FURTHER OWNERSHIP RIGHTS. The Merger Consideration delivered upon the surrender for exchange of the WWT Certificates in accordance with the terms hereof will be deemed to have been issued in full satisfaction of all rights pertaining to the WWT Common Stock and WWT Preferred Stock evidenced by such WWT Certificates, and there will be no further registration of transfers of such shares which were outstanding immediately prior to the Effective Time on the records of the Surviving Corporation. If, after the Effective Time, WWT Certificates are presented to the Surviving Corporation, they will be cancelled as contemplated herein. 2.10 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any WWT Certificates are lost, stolen or destroyed, Vertex Nevada will issue in exchange for such lost, stolen or destroyed WWT Certificates, upon the making of an affidavit of that fact by the holder thereof and the other deliveries required above, the applicable Merger Consideration; PROVIDED, HOWEVER, that the Surviving Corporation may, in its sole discretion and as a condition precedent to the issuance thereof, require the holder of such lost, stolen or destroyed WWT Certificates to deliver an indemnity or bond in such sum as it may reasonably direct as indemnity against any claim that may be made against it with respect to the WWT Certificates alleged to have been lost, stolen or destroyed. 2.11 CHARTER DOCUMENTS; DIRECTORS AND OFFICERS. Unless otherwise agreed by Vertex Nevada and WWT prior to the Closing, at and as of the Effective Time, without any further action on the part of the Parties: (i) the Organizational Documents of Merger Sub as in effect immediately prior to the Effective Time will be the Organizational Documents of the Surviving Corporation at and after the Effective Time until thereafter amended as provided by applicable law and such Organizational Documents; (ii) the manager of Merger Sub immediately prior to the Effective Time will be the initial manager of the Surviving Corporation from and after the Effective Time, until its successor is appointed and qualified or until its resignation or removal; (iii) the officers of Merger Sub immediately prior to the Effective Time shall serve in their respective offices of the Surviving Corporation from and after the Effective Time, until their successors are elected or appointed and qualified or until their resignation or removal. A-11 2.12 NO FRACTIONAL SHARES. No certificate or scrip representing fractional shares of Vertex Capital Stock shall be issued upon the surrender of WWT Certificates. In lieu thereof, each holder of WWT Capital Stock who would otherwise be entitled to a fraction of a share of Vertex Capital Stock (after aggregating all shares of WWT Capital Stock that otherwise would be received by such holder), shall receive one additional share of Vertex Common Stock or Vertex Preferred Stock, as applicable. 2.13 TAKING OF NECESSARY ACTION; FURTHER ACTION. Each of the Parties will take all such reasonable lawful action as may be necessary or appropriate in order to effect the Merger in accordance with this Agreement as promptly as practicable. If, at any time after the Effective Time, any such further action is necessary or desirable to carry out the purposes of this Agreement and to vest the Surviving Corporation with full right, title and possession to all the property, rights, privileges, power and franchises of WWT and Merger Sub, the officers, directors and managers of WWT and Merger Sub immediately prior to the Effective Time are fully authorized in the name of their respective corporations or otherwise to take, and will take, all such lawful and necessary action. 2.14 WWT DISSENTING SHARES. Shares of WWT Common Stock and WWT Preferred Stock which are issued and outstanding immediately prior to the Effective Time and which are held by persons who are entitled to and have properly exercised, and not withdrawn or waived, appraisal rights with respect thereto in accordance with the CCC (the "DISSENTING SHARES"), will not be converted into the right to receive the Merger Consideration, and holders of such shares of WWT Common Stock and WWT Preferred Stock will be entitled, in lieu thereof, to receive payment of the appraised value of such shares in accordance with the provisions of the CCC unless and until such holders fail to perfect or effectively withdraw or lose their rights to appraisal and payment under the CCC. If, after the Effective Time, any such holder fails to perfect or effectively withdraws or loses such right, such shares of WWT Common Stock and WWT Preferred Stock will thereupon be treated as if they had been converted at the Effective Time into the right to receive the Merger Consideration, without any interest thereon. ARTICLE III REPRESENTATIONS AND WARRANTIES OF VERTEX PARTIES Each Vertex Party, jointly and severally, represents and warrants to WWT that the statements contained in this Article 3 are true, complete and correct as of the date of this Agreement and will be correct and complete as of the Closing Date (and as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this Article 3, except in the case of representations and warranties stated to be made as of the date of this Agreement or as of another date and except for changes contemplated or permitted by this Agreement); except as the same may be qualified or limited by the Vertex Disclosure Schedules attached hereto: 3.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. (a) Each of Vertex LP, Vertex Nevada and Merger Sub is duly organized, validly existing and in good standing under the Laws of the jurisdiction in which it is organized and has the requisite power and authority to carry on the Vertex Business, which such jurisdictions are set forth on SCHEDULE 3.1(A) of the Vertex Disclosure Schedules. A-12 (b) Each of Vertex LP, Vertex Nevada and Merger Sub is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the nature of the Vertex Business or the ownership or leasing of its properties makes such qualification or licensing necessary, other than in such jurisdictions where the failure to be so qualified or licensed (individually or in the aggregate) has not had and would not reasonably be expected to have a Material Adverse Effect on Vertex Nevada or, with respect to the Vertex Business, on Vertex LP. (c) Vertex Nevada has delivered to WWT complete and correct copies of its Organizational Documents and the same for Merger Sub, in each case as amended to the date hereof. The Organizational Documents of Vertex Nevada are attached hereto as EXHIBIT B. All of the outstanding shares of capital stock or other ownership interests of Vertex Nevada have been validly issued and are fully paid and nonassessable and are owned of record and beneficially by the Persons set forth on SCHEDULE 3.1(C)-1 of the Vertex Disclosure Schedules, in each case free and clear of all Liens, and free of any restriction on the right to vote, sell or otherwise dispose of such capital stock or other ownership interests, except for restrictions imposed by applicable securities Laws and except for restrictions on sale contained in the certificate of incorporation of Vertex Nevada. Immediately prior to the Closing, the outstanding shares of capital stock of Vertex Nevada will be owned of record and beneficially by the Persons set forth on SECTION 3.1(C)-2 of the Vertex Disclosure Schedules. (d) Vertex Nevada does not own, directly or indirectly, any capital stock or other ownership interest in any corporation, partnership, joint venture or other entity, other than Merger Sub. One hundred percent (100%) of the ownership interests of Merger Sub is owned by Vertex Nevada. (e) Vertex Nevada has no Subsidiaries, other than Merger Sub. Vertex LP has no Subsidiaries, other than as set forth on SCHEDULE 3.1(E) of the Vertex Disclosure Schedules. As used in this Agreement, the term "Subsidiary", with respect to any Person, means any corporation or other legal entity of which such Person controls (either alone or through or together with any other Subsidiary), directly or indirectly, more than 50% of the capital stock or other ownership interests the holders of which are generally entitled to vote for the election of the Board of Directors or other governing body of such corporation or other legal entity. 3.2 AUTHORIZATION; ENFORCEABILITY. Each Vertex Party has the requisite power and authority, and has taken all action necessary, to execute, deliver and perform its or his obligations under this Agreement and any Collateral Documents to which it or he is or will be a party and each other agreement, document, instrument or certificate contemplated by this Agreement and/or any Collateral Documents or to be executed by such Vertex Party in connection with the consummation of the transactions contemplated by this Agreement (including but not limited to the Transfer) (the "TRANSACTIONS"), and to consummate the Transactions. The execution and delivery by each Vertex Party of this Agreement and any applicable Collateral Documents to which it or he is a party, and the consummation by such Vertex Party of the Transactions contemplated hereby and thereby, and the performance by such Vertex Party of its or his respective A-13 obligations hereunder and thereunder, have been duly and validly authorized by all necessary corporate or other action on the part of such Vertex Party, and no other action on the part of such Vertex Party is required to authorize the execution, delivery and performance of this Agreement and the consummation by such Vertex Party of the Transactions. This Agreement has been duly and validly executed and delivered by each Vertex Party and constitutes a legal, valid and binding obligation of each such Vertex Party enforceable against such Vertex Party in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium, reorganization and other similar laws affecting creditors' rights generally and the general principles of equity, regardless of whether asserted in a proceeding in equity or at law. 3.3 CAPITALIZATION. (a) The authorized capital stock of Vertex Nevada as of the date of this Agreement consists of 750 million shares of Vertex Common Stock, and 50 million shares of Vertex Preferred Stock. Immediately prior to the Effective Time (but prior to the issuance of the Merger Consideration), there will be (i) 61,770,000 shares of Vertex Common Stock, 100 shares of Vertex Series B Preferred Stock and 0 shares of Vertex Series A Preferred Stock, issued and outstanding, all of which shares shall be owned in the amounts and by the holders set forth on SECTION 3.1(C)-2 of the Vertex Disclosure Schedule; (ii) no shares of Vertex Common Stock held in the treasury of Vertex; (iii) 6,000,000 shares of Vertex Common Stock reserved for future issuance pursuant to the exercise of outstanding options; and (iv) a sufficient number of shares of Vertex Common Stock reserved for future issuance pursuant to the exercise of the Make-Whole Warrants and the WWT Options. Except as described above, as of the Effective Time, there will be no shares of voting or non-voting capital stock, equity interests or other securities of Vertex Nevada authorized, issued, reserved for issuance or otherwise outstanding. (b) As of the Effective Time, all outstanding shares of Vertex Capital Stock will be duly authorized, validly issued, fully paid and non-assessable, and will not be subject to, or issued in violation of, any preemptive, subscription or any kind of similar rights. Vertex Nevada has no outstanding shares of Vertex Capital Stock subject to a right of repurchase that will survive the Merger. (c) There are no bonds, debentures, notes or other indebtedness of either Vertex LP or Vertex Nevada having the right to vote (or convertible into securities having the right to vote) on any matters on which partners of Vertex LP or stockholders of Vertex Nevada may vote. Except as set forth on SCHEDULE 3.3(C) of the Vertex Disclosure Schedules, there are no outstanding securities, options, warrants, calls, rights, commitments, agreements, arrangements or undertakings of any kind (contingent or otherwise) to which any Vertex Party is a party or bound obligating any such Vertex Party to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock or other voting securities of any Vertex Party or obligating any Vertex Party to issue, grant, extend or enter into any agreement to issue, grant or extend any security, option, warrant, call, right, commitment, agreement, arrangement or undertaking. No Vertex Party is subject to any obligation or requirement to provide funds for or to make any investment (in the form of a loan or capital contribution) in any Person. A-14 (d) All of the issued and outstanding partnership interests of Vertex LP have been issued in compliance in all material respects with all applicable federal and state securities Laws. As of the Effective Time, all of the issued and outstanding shares of Vertex Capital Stock will have been issued in compliance in all material respects with all applicable federal and state securities Laws. (e) Except as set forth on SCHEDULE 3.3(E) of the Vertex Disclosure Schedules, there are no outstanding contractual obligations of any Vertex Party to repurchase, redeem or otherwise acquire any shares of capital stock (or options or warrants to acquire any such shares) or other security or equity interests of any Vertex Party. Except as set forth on SCHEDULE 3.3(E) of the Vertex Disclosure Schedules, there are no stock-appreciation rights, security-based performance units, phantom stock or other security rights or other agreements, arrangements or commitments of any character (contingent or otherwise) pursuant to which any Person is or may be entitled to receive any payment or other value based on the revenues, earnings or financial performance, stock price performance or other attribute of any Vertex Party or to cause any Vertex Party to file a registration statement under the Securities Act, or which otherwise relate to the registration of any securities of any Vertex Party. (f) Except as set forth on SCHEDULE 3.3(F) of the Vertex Disclosure Schedules, there are no voting trusts, proxies or other agreements, commitments or understandings to which any Vertex Party or, to the knowledge of any Vertex Party , any of the stockholders or partners of any Vertex Party, is a party or by which any of them is bound with respect to the issuance, holding, acquisition, voting or disposition of any shares of capital stock or other security or equity interest of any Vertex Party. 3.4 NON-CONTRAVENTION. Except as set forth on SCHEDULE 3.4 of the Vertex Disclosure Schedules, the execution, delivery and performance by the Vertex Parties of this Agreement or any applicable Collateral Document or the consummation by the Vertex Parties of the Transactions does not, and the consummation of the Transactions will not, (a) contravene, conflict with, or result in any violation or breach of any provision of the Organizational Documents of any of the Vertex Parties, (b) contravene, conflict with, or result in a violation or breach of any provision of any Law applicable to the Vertex Business, (c) require any consent or other action by any Person under, constitute a breach of or default under, or cause or permit the termination, cancellation, acceleration or other change of any right or obligation or the loss of any benefit to which any Vertex Party is entitled under any provision of any agreement or other instrument binding upon any Vertex Party or any license, franchise, permit, certificate, approval or other similar authorization affecting, or relating in any way to, the Vertex Business or (d) result in the creation or imposition of any Lien on any asset of any Vertex Party, which in the case of clauses (b) or (d) above would have a Material Adverse Effect on Vertex Nevada or, with respect to the Vertex Business, on Vertex LP. 3.5 CONSENTS AND APPROVALS. Except as set forth on SCHEDULE 3.5 of the Vertex Disclosure Schedules, no consent, approval, authorization or order of, registration or filing with, or notice to, any Regulatory Authority or any other Person is necessary to be obtained, made or given by any of the Vertex Parties in connection with the execution, delivery and performance by the Vertex Parties of this Agreement or any applicable Collateral Document or for the consummation by the Vertex Parties of the Transactions, except to the extent the failure to obtain any such consent, approval, authorization or order or to make any such registration or filing would not have a Material Adverse Effect on Vertex Nevada or, with respect to the Vertex Business, on Vertex LP. A-15 3.6 BOOKS AND RECORDS. Each of Vertex LP and Vertex Nevada has made and kept books and records and accounts, which, in reasonable detail, accurately and fairly reflect the activities of such Person. Neither Vertex LP nor Vertex Nevada has, in any manner that pertains to, or could affect, the Vertex Business, engaged in any transaction, maintained any bank account or used any corporate funds except for transactions, bank accounts and funds that have been and are reflected in the normally maintained books and records of such Person. 3.7 FINANCIAL STATEMENTS. The Vertex Financial Statements to be delivered to WWT prior to the Closing will be prepared from the books and records and fairly and accurately present the financial condition and the results of operations, income, expenses, assets, Liabilities (including all reserves), changes in shareholders' equity and cash flow of Vertex Nevada as of the respective dates of, and for the periods referred to in, such Vertex Financial Statements, in accordance with GAAP applied on a consistent basis throughout the periods indicated. 3.8 TRANSFER. Upon consummation of the Transfer, the only assets and Liabilities of Vertex Nevada shall be the assets, Liabilities and Contracts as set forth on EXHIBIT C hereto. As of the Closing, the assets set forth on EXHIBIT C will, except as set forth on SCHEDULE 3.8, be owned by Vertex Nevada free and clear of any Liens and will be sufficient to operate the Vertex Business in the manner in which it is operating as of the date hereof. As of the Closing, there will be no Liabilities associated with the Vertex Business that are not set forth on EXHIBIT C. The assets and Contracts on EXHIBIT C include all properties, assets, privileges, powers, rights, interests and claims of every type and description that are owned, leased, held, used or useful in the Vertex Business in which Vertex LP has any right, title or interest. 3.9 TAXES. (a) FILING OF TAX RETURNS. Except as set forth on SCHEDULE 3.9(A) of the Vertex Disclosure Schedules, Vertex LP will duly and timely file (or caused to be filed) with the appropriate taxing authorities all Tax Returns required to be filed through the Closing Date. All such Tax Returns filed will, when filed, be complete and accurate in all respects. Except as set forth on SCHEDULE 3.9(A) of the Vertex Disclosure Schedules, Vertex LP is not currently the beneficiary of any extension of time within which to file any Tax Return. No claim has ever been made against Vertex LP or its assets by an authority in a jurisdiction where Vertex LP does not file Tax Returns such that Vertex LP is or may be subject to taxation by that jurisdiction. (b) PAYMENT OF TAXES. Except as set forth on SCHEDULE 3.9(B) of the Vertex Disclosure Schedules, all Taxes owed and due by Vertex LP (whether or not shown on any Tax Return) have been paid. The unpaid Taxes of Vertex LP, if any, (i) will not, as of December 31, 2007, exceed the reserve for Tax Liability (excluding any reserve for deferred Taxes established to reflect timing differences between book and Tax income) to be set forth on the face of the Vertex Financial Statements (rather than in any notes thereto), and (ii) will not exceed that reserve as adjusted for operations and transactions through the Closing Date in accordance with the past custom and practice of Vertex LP in filing its Tax Returns. Since December 31, 2007, Vertex LP has not (i) incurred any Liability for Taxes other than in the Ordinary Course of Business or (ii) paid Taxes other than Taxes paid on a timely basis and in a manner consistent with past custom and practice. A-16 (c) AUDITS, INVESTIGATIONS, DISPUTES OR CLAIMS. Except as set forth on SCHEDULE 3.9(C) of the Vertex Disclosure Schedules, no deficiencies for Taxes are claimed, proposed or assessed by any taxing or other governmental authority against Vertex LP, and there are no pending or, to the knowledge of Vertex LP, threatened audits, investigations, disputes or claims or other actions for or relating to any Liability for Taxes with respect to Vertex LP, and there are no matters under discussion by or on behalf of Vertex LP with any Regulatory Authority, or known to Vertex LP, with respect to Taxes that are likely to result in an additional Liability for Taxes with respect to Vertex LP. Audits of federal, state and local Tax Returns by the relevant taxing authorities have been completed for the periods set forth on SCHEDULE 3.9(C) of the Vertex Disclosure Schedules, and, except as set forth thereon, none of Vertex LP or any predecessor thereof has been notified that any taxing authority intends to audit a Tax Return for any other period. Vertex LP has not waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency. No power of attorney granted by Vertex LP with respect to any Taxes is currently in force. (d) LIEN. There are no Liens for Taxes (other than for current Taxes not yet due and payable) on any assets or capital stock of Vertex LP. (e) TAX ELECTIONS. All material elections with respect to Taxes affecting Vertex or any of its assets as of the Closing Date are set forth on SCHEDULE 3.9(E) of the Vertex Disclosure Schedules. Vertex LP has not: (i) consented at any time under Section 341(f)(1) of the Code to have the provisions of Section 341(f)(2) of the Code apply to any disposition of any of its assets; (ii) agreed, and is not required, to make any adjustment under Section 481(a) of the Code by reason of a change in accounting method or otherwise; (iii) made an election, and is not required, to treat any of its assets as owned by another Person pursuant to the provisions of Section 168(f) of the Code or as tax-exempt bond financed property or tax-exempt use property within the meaning of Section 168 of the Code; (iv) acquired, and does not own, any assets that directly or indirectly secure any debt the interest on which is tax exempt under Section 103(a) of the Code; (v) made a consent dividend election under Section 565 of the Code; or (vi) made any of the foregoing elections and is not required to apply any of the foregoing rules under any comparable state or local Tax provision. (f) PRIOR AFFILIATED GROUPS. Vertex LP is not and has never been a member of an affiliated group of corporations within the meaning of Section 1504 of the Code. Vertex LP does not have any Liability for the Taxes of any Person (i) under Treasury Regulations Section 1.1502-6 (or any similar provision of state, local or foreign law), (ii) as a transferee or successor, (iii) by Contract, or (iv) otherwise. (g) TAX SHARING AGREEMENTS. There are no agreements for the sharing of Tax liabilities or similar arrangements (including indemnity arrangements) with respect to or involving Vertex LP or any of its assets or the Vertex Business, and, after the Closing Date, neither Vertex Nevada nor any of its assets or the Vertex Business shall be bound by any such Tax-sharing agreements or similar arrangements or have any Liability thereunder for amounts due in respect of periods prior to the Closing Date. A-17 (h) PARTNERSHIPS AND SINGLE MEMBER LLCS. Except as set forth on SCHEDULE 3.9(H) of the Vertex Disclosure Schedules, Vertex LP (i) is not subject to any joint venture, partnership, or other arrangement or contract which is treated as a partnership for Tax purposes, (ii) does not own a single member limited liability company which is treated as a disregarded entity, (iii) is not a shareholder of a "controlled foreign corporation" as defined in Section 957 of the Code (or any similar provision of state, local or foreign law) and (iv) is not a "personal holding company" as defined in Section 542 of the Code (or any similar provision of state, local or foreign law). (i) NO WITHHOLDING. Vertex LP has not been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897 of the Code. Vertex LP has withheld and paid all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, shareholder or other third party. The transactions contemplated herein are not subject to the tax withholding provisions of Section 3406 of the Code, or of Subchapter A of Chapter 3 of the Code or of any other provision of law. (j) INTERNATIONAL BOYCOTT. Vertex LP has not participated in and is not participating in an international boycott within the meaning of Section 999 of the Code. (k) PERMANENT ESTABLISHMENT. Except as set forth on SCHEDULE 3.9(K) of the Vertex Disclosure Schedules, Vertex LP does not have and has never had a permanent establishment in any foreign country, as defined in any applicable Tax treaty or convention between the United States and such foreign country. (l) PARACHUTE PAYMENTS. Except as set forth on SCHEDULE 3.9(L) of the Vertex Disclosure Schedules, Vertex LP is not a party to any existing Contract, arrangement or plan that has resulted or would result (upon the Closing or otherwise), separately or in the aggregate, in the payment of any "excess parachute payments" within the meaning of Section 280(G) of the Code. (m) TAX SHELTERS. Vertex LP has not participated in and Vertex LP is not now participating in, any transaction described in Section 6111(c) or (d) of the Code or Section 6112(b) of the Code or the Treasury Regulations thereunder, or in any reportable transaction described in such regulations. 3.10 INTELLECTUAL PROPERTY. (a) Except as set forth on SCHEDULE 3.10 hereto, Vertex LP owns, or is licensed or otherwise possesses legally enforceable rights to use, all Intellectual Property that is necessary for the conduct of the Vertex Business (b) The Vertex Business, including the use of all owned and licensed Intellectual Property, does not infringe or misappropriate or otherwise materially violate the Intellectual Property rights of any third party, and no claim is pending or, to the knowledge of the Vertex Parties, threatened against Vertex LP alleging any of the foregoing. A-18 (c) To the knowledge of the Vertex Parties, (i) no third party is engaging in any activity that infringes or misappropriates the Intellectual Property owned or licensed by Vertex LP, and (ii) Vertex LP has not granted any material license or other right to any third party with respect to such Intellectual Property. (d) Vertex LP has made available to WWT all material correspondence and all written opinions in its possession relating to potential infringement or misappropriation (i) by Vertex LP of any Intellectual Property rights of any third party or (ii) by any third party of any of the Intellectual Property rights, owned or licensed, used in the Vertex Business. (e) Vertex LP has a license to use all software development tools, library functions, compilers and other third-party software that are used in the operation of the Vertex Business and are material to the Vertex Business, taken as a whole. 3.11 CONTRACTS; NO DEFAULTS. (a) SCHEDULE 3.11(A) hereto sets forth a true and complete list of all contracts, agreements, leases, commitments or other understandings or arrangements, written or oral, express or implied, to which Vertex LP is a party, or affecting the Vertex Business, or by which Vertex LP or any of its property is bound or affected requiring payments to or from, or incurring of liabilities by, Vertex LP in excess of $50,000 (the "VERTEX CONTRACTS"). (b) Except as set forth on SCHEDULE 3.11(B) hereto, Vertex LP has complied with and performed, in all material respects, all of its obligations required to be performed under and is not in default with respect to any of the Vertex Contracts, as of the date hereof, nor has any event occurred which has not been cured which, with or without the giving of notice, lapse of time, or both, would constitute a default in any respect thereunder. To the knowledge of the Vertex Parties, no other party has failed to comply with or perform, in all material respects, any of its obligations required to be performed under or is in material default with respect to any such Vertex Contracts, as of the date hereof, nor has any event occurred which, with or without the giving of notice, lapse of time or both, would constitute a material default in any respect by such party thereunder. (c) Except as set forth on SCHEDULE 3.11(C) hereto, to the knowledge of the Vertex Parties, there exists no facts or circumstances that would make a material default by any party to any contract or obligation likely to occur subsequent to the date hereof. 3.12 EMPLOYEE BENEFITS. (a) SCHEDULE 3.12(A) of the Vertex Disclosure Schedules sets forth a complete list of all Employee Plans covering employees, directors or consultants or former employees, directors or consultants in, or related to, the Vertex Business. Vertex LP has delivered or made available to WWT true and complete copies of all Employee Plans, including written interpretations thereof and written descriptions thereof which have been distributed to Vertex LP's employees and for which Vertex LP has copies, all annuity contracts or other funding instruments relating thereto, and a complete description of all Employee Plans which are not in writing. A-19 (b) Neither Vertex LP nor any ERISA Affiliate sponsors, maintains, contributes to or has an obligation to contribute to, or has sponsored, maintained, contributed to or had an obligation to contribute to, any Pension Plan subject to Title IV of ERISA, or any Multiemployer Plan. (c) Each Welfare Plan which covers or has covered employees or former employees of Vertex LP or of its Affiliates in the Vertex Business and which is a "group health plan," as defined in Section 607(1) of ERISA, has been operated in compliance with provisions of Part 6 of Title I, Subtitle B of ERISA and Section 4980B of the Code at all times. (d) There is no Legal Proceeding or Order outstanding, relating to or seeking benefits under any Employee Plan set forth on SCHEDULE 3.12(A) of the Vertex Disclosure Schedules, which is pending, threatened or anticipated against Vertex LP, any ERISA Affiliate or any Employee Plan. (e) Neither Vertex LP nor any ERISA Affiliate has any liability for unpaid contributions under Section 515 of ERISA with respect to any Welfare Plan covering employees, directors or consultants or former employees, directors or consultants in, or related to, the Vertex Business. (f) There are no Liens arising under the Code or ERISA with respect to the operation, termination, restoration or funding of any Employee Plan set forth on SCHEDULE 3.12(A) of the Vertex Disclosure Schedules, or arising in connection with any excise tax or penalty tax with respect to such Employee Plan. (g) Each Employee Plan set forth on SCHEDULE 3.12(A) of the Vertex Disclosure Schedules has at all times been maintained in all material respects, by its terms and in operation, in accordance with all applicable laws, including, without limitation, ERISA and the Code. (h) Vertex LP and its ERISA Affiliates have made full and timely payment of all amounts required to be contributed under the terms of each Employee Plan and applicable Law or required to be paid as expenses or as Taxes under applicable Laws, under such Employee Plan, and Vertex LP and its ERISA Affiliates shall continue to do so through the Closing Date. (i) Vertex LP has no Employee Plan intended to qualify under Section 401 of the Code. (j) Neither the execution and delivery of this Agreement or other related agreements by the Vertex Parties nor the consummation of the Transactions will result in the acceleration or creation of any rights of any person to benefits under any Employee Plan (including, without limitation, the acceleration of the vesting or exercisability of any stock options, the acceleration of the vesting of any restricted stock, the acceleration of the accrual or vesting of any benefits under any Pension Plan or the acceleration or creation of any rights under any severance, parachute or change in control agreement). A-20 (k) Neither Vertex LP nor any ERISA Affiliate has incurred any liability with respect to any Employee Plan, which may create, or result in any liability to Vertex Nevada. 3.13 LABOR MATTERS; EMPLOYEES. Except as set forth on SCHEDULE 3.13 of the Vertex Disclosure Schedules, Vertex LP is not a party to any collective bargaining or other labor contract. There has not been, there is not presently pending or existing, and, to the knowledge of any of the Vertex Parties, there is not threatened (i) any strike, slowdown, picketing, work stoppage or employee grievance process against Vertex LP or the Vertex Business; (ii) any Legal Proceeding against or affecting Vertex LP or the Vertex Business relating to the alleged violation of any Law or Order pertaining to labor relations or employment matters; or (iii) union organizing campaign or any application for certification of a collective bargaining agent. No event has occurred or circumstance exists that could provide the basis for any work stoppage or other labor dispute. There is no lockout of any employees by Vertex LP, and no such action is contemplated by Vertex LP. Vertex LP has complied with all material Laws relating to employment, equal employment opportunity, nondiscrimination, harassment, retaliation, immigration, wages, hours, benefits, collective bargaining, the payment of social security and similar Taxes, occupational health and safety, and plant closing. Vertex LP is not liable for the payment of any compensation, damages, Taxes, fines, penalties or other amounts (including, without limitation, amounts related to workplace safety and insurance), however designated, for failure to comply with any of the foregoing Laws. 3.14 LEGAL PROCEEDINGS. There is no material Legal Proceeding or Order (a) pending or, to the knowledge of any of the Vertex Parties, threatened or anticipated against or affecting the Vertex Business (or to the knowledge of any of the Vertex Parties, pending or threatened, against any of the officers, directors or employees of Vertex LP with respect to their business activities related to or affecting the Vertex Business); (b) that challenges or that may have the effect of preventing, making illegal, delaying or otherwise interfering with any of the Transactions; or (c) related to the Vertex Business. To the knowledge of the Vertex Parties, there is no reasonable basis for any such Legal Proceeding or Order. To the knowledge of the Vertex Parties, no officer, director, partner, agent or employee of Vertex LP is subject to any Order that prohibits such officer, director, partner, agent or employee from engaging in or continuing any conduct, activity, or practice relating to the Vertex Business. The Vertex Business is not subject to any Order of any Regulatory Authority and Vertex LP is not engaged in any Legal Proceeding relating to the Vertex Business to recover monies due it or for damages sustained by it. Vertex LP is not and has not been in default with respect to any Order relating to the Vertex Business, and there are no unsatisfied judgments against Vertex LP relating to the Vertex Business. There are no Orders or agreements with, or Liens by, any Regulatory Authority or quasi-governmental entity relating to any environmental Law, which regulate, obligate, bind or in any way affect Vertex LP or any property on which Vertex LP operates the Vertex Business. SCHEDULE 3.14 sets forth all litigation that the Vertex Parties are subject to, none of which litigation challenges or may have the effect of preventing, making illegal, delaying or otherwise interfering with any of the Transactions or is related in any way to the Vertex Business. A-21 3.15 COMPLIANCE WITH LAW. (a) To the knowledge of Vertex LP, the conduct of the Vertex Business is and at all times has been in compliance with all Laws or Orders applicable to the conduct and operations of the Vertex Business. Vertex LP has not received any notice to the effect that, or otherwise been advised of (i) any actual, alleged, possible or potential violation of, or failure to comply with, any such Laws or Orders or (ii) any actual, alleged, possible or potential obligation on the part of Vertex LP to undertake, or to bear all or any portion of the cost of, any remedial action of any nature with respect to the Vertex Business. No event has occurred or circumstance exists that (with or without notice or lapse of time) (i) may constitute or result in a violation by Vertex LP of, or a failure on the part of Vertex LP, any such Laws or Orders or (ii) may give rise to any obligation on the part of Vertex LP to undertake, or to bear all or any portion of the cost of, any remedial action of any nature, except, in either case separately or the cases together, where such violation or failure to comply could not reasonably be expected to have a Material Adverse Effect on, the Vertex Business. (b) None of Vertex LP, or any of its directors, officers or Representatives or to the knowledge of Vertex LP, any employee or other Person affiliated with or acting for or on behalf of Vertex LP, has, directly or indirectly, (i) made any contribution, bribe, rebate, payoff, influence payment, kickback or other payment to any Person, private or public, regardless of form, whether in money, property or services (A) to obtain favorable treatment in securing business, (B) to pay for favorable treatment for business secured, (C) to obtain special concessions or for special concessions already obtained, for or in respect of Vertex or any of its Affiliates or (D) in violation of any Laws of the United States (including, without limitation, the Foreign Corrupt Practices Act of 1977, as amended (15 U.S.C. Sections 78dd-1 et seq.)) or any laws of any other country having jurisdiction; or (ii) established or maintained any fund or asset that has not been recorded in the books and records of Vertex LP. 3.16 PERMITS. SCHEDULE 3.16(A) of the Vertex Disclosure Schedules sets forth a complete list of all Permits held by Vertex LP and used in the conduct of the Vertex Business, and such Permits collectively constitute all of the Permits necessary for Vertex LP to lawfully conduct and operate the Vertex Business, as it is presently conducted and to permit Vertex LP to own and use its assets in the manner in which they are presently owned and used in connection with the Vertex Business. All of such Permits will be transferred to Vertex Nevada on or prior to the Closing, and no third-party consent is required in connection therewith. Except as set forth on SCHEDULE 3.16(B) of the Vertex Disclosure Schedules, Vertex LP is and at all times has been in compliance with all material Permits applicable to it or to the conduct and operations of the Vertex Business. Vertex LP has not received any notice to the effect that, or otherwise been advised of (i) any actual, alleged, possible or potential violation of, or failure to comply with, any such Permits or (ii) any actual, alleged, possible or potential revocation, withdrawal, suspension, cancellation or termination of, or any modification to, any Permit set forth on or required to be set forth on SCHEDULE 3.16(A) of the Vertex Disclosure Schedules. No event has occurred, and to Vertex LP's knowledge no circumstance exists, that (with or without notice or lapse of time) (i) may constitute or result directly or indirectly in a violation by Vertex LP of, or a failure on the part of Vertex LP to comply with, any such Permits or (ii) result directly or indirectly in the revocation, withdrawal, suspension, cancellation or termination of, or any modification to, any Permit set forth on or required to be set forth on SCHEDULE A-22 3.16(A) of the Vertex Disclosure Schedules. All applications for or renewals of all Permits have been timely filed and made and no Permit will expire or be terminated as a result of the consummation of the transactions contemplated by this Agreement. No present or former shareholder, partner, director, officer or employee of Vertex LP or any Affiliate thereof, or any other Person, owns or has any proprietary, financial or other interest (direct or indirect) in any Permit that Vertex LP owns, possesses or uses. 3.17 ABSENCE OF CERTAIN CHANGES. Except as set forth on SCHEDULE 3.17 of the Vertex Disclosure Schedules, since December 31, 2007, there has not been any: (a) Material Adverse Effect with respect to the Vertex Business, and no event has occurred and no circumstance exists that may result in such a Material Adverse Effect other than Material Adverse Effects resulting from historical seasonality of the Vertex Business; (b) purchase, redemption, retirement or other acquisition by Vertex LP of any Vertex partnership interests or other equity interest of Vertex LP; (c) amendments to the Organizational Documents of Vertex LP; (d) payment or increase by Vertex LP of any bonuses, salaries or other compensation (including management or other similar fees) or entry into any employment, severance or similar Contract with any employee engaged in the Vertex Business, other than increases in salary to employees made in the Ordinary Course of Business; (e) adverse change in employee relations which has or is reasonably likely to have a Material Adverse Effect on Vertex LP as relates to the Vertex Business; (f) damage to or destruction or loss of any of the assets or property of Vertex LP relating to the Vertex Business, whether or not covered by insurance, that could reasonably be expected to constitute a Material Adverse Effect on Vertex LP as relates to the Vertex Business; (g) entry into, termination or acceleration of, or receipt of notice of termination by Vertex LP of (1) any material license, distributorship, dealer, sales representative, joint venture, credit or similar agreement relating to the Vertex Business, or (2) any Contract or transaction involving a Liability by or to Vertex LP (other than the Liabilities relating to the Vertex Business incurred in the Ordinary Course of Business since December 31, 2007); (h) sale (other than sales of inventory in the Ordinary Course of Business, if any), lease or other disposition of any of the assets or property of Vertex LP relating to the Vertex Business; (i) mortgage, pledge or imposition of any Lien on any assets or property of Vertex LP relating to the Vertex Business, including the sale, lease or other disposition of any of its Intellectual Property relating to the Vertex Business; (j) (1) delay or failure to repay when due any obligation of Vertex LP, which delay or failure could have a Material Adverse Effect on Vertex LP as relates to the Vertex Business, or (2) delay or failure to repay when due any obligation of Vertex LP which delay or failure could have a Material Adverse Effect on Vertex LP as relates to the Vertex Business; (k) cancellation or waiver by Vertex LP of any claims or rights with a value to Vertex LP relating to the Vertex Business in excess of Fifty Thousand Dollars ($50,000) individually or in the aggregate; (l) failure by Vertex LP to use reasonable efforts to preserve intact the current business organization of Vertex LP relating to the Vertex Business, and maintain the relations and goodwill with its suppliers, customers, landlords, creditors, employees, licensors, resellers, distributors, agents and others having business relationships with them relating to the Vertex Business where such failure could reasonably be expected to have a Material Adverse Effect on Vertex LP as relates to the Vertex Business; (m) licensing out on an exclusive basis or other than in the Ordinary Course of Business, disposition or lapsing of any Intellectual Property or any disclosure to any Person of any trade secret or other confidential information without appropriate protections in place; (n) change in the accounting methods, principles or practices used by Vertex LP; (o) capital A-23 expenditures by Vertex LP relating to the Vertex Business in excess of $20,000 individually or $50,000 in the aggregate; or (p) agreement, whether oral or written, by Vertex LP with respect to or to do any of the foregoing other than as expressly provided for herein. Vertex LP is not as of the date hereof, and after giving effect to the transactions contemplated hereby to occur at the Closing, will not be Insolvent (as defined below). For purposes of this Section 3.17, "INSOLVENT" means (i) the present fair saleable value of Vertex LP's assets is less than the amount required to pay Vertex LP's total indebtedness, contingent or otherwise, (ii) Vertex LP is unable to pay its debts and Liabilities, subordinated, contingent or otherwise, as such debts and Liabilities become absolute and matured, (iii) Vertex LP intends to incur or believes that it will incur debts that would be beyond its ability to pay as such debts mature or (iv) Vertex LP has unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted. 3.18 INSURANCE. SCHEDULE 3.18 of the Vertex Disclosure Schedules sets forth a complete and accurate list (showing as to each policy or binder the carrier, policy or binder the carrier, policy number, coverage limits, expiration dates, annual premiums and a general description of the type of coverage provided) of all policies or binders of insurance of any kind or nature covering the Vertex Business, or any employees, properties or assets of Vertex LP relating to the Vertex Business, including, without limitation, policies of life, disability, fire, theft, workers compensation, employee fidelity and other casualty and liability insurance. All such policies are in full force an effect. Vertex LP is not in default under any of such policies or binders, and Vertex LP has not failed to give any notice or to present any claim under any such policy or binder in a due and timely fashion. 3.19 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no agreement, judgment, injunction, order or decree binding upon Vertex LP which has the effect of prohibiting or materially impairing (a) any current or future business practice of Vertex LP or (b) any acquisition of any Person or property by Vertex LP, except in each of clauses (a) and (b) for any such prohibitions or impairments that would not reasonably be expected to have a Material Adverse Effect on Vertex LP as relates to the Vertex Business. 3.20 RELATED PARTY TRANSACTIONS. Except as set forth on SCHEDULE 3.20 of the Vertex Disclosure Schedules, none of Vertex LP, any Affiliate thereof, holders of the ownership interest of Vertex LP or any Affiliate or Family Member thereof is presently or has, since December 31, 2007, borrowed any moneys from or has any outstanding debt or other obligations to Vertex LP or is presently a party to any transaction with Vertex LP relating to the Vertex Business. Except as set forth on SCHEDULE 3.20 of the Vertex Disclosure Schedules, none of Vertex LP any Affiliate thereof, or any director, officer, partner or key employee of any such Persons (a) owns any direct or indirect interest of any kind in (except for ownership of less than 1% of any public company, provided, that such owner's role is that solely of a passive investor), or controls or is a director, officer, employee or partner of, consultant to, lender to or borrower from, or has the right to participate in the profits of, any Person which is (i) a competitor, supplier, customer, landlord, tenant, creditor or debtor of Vertex LP, (ii) engaged in a business related to the Vertex Business or (iii) a participant in any transaction to which Vertex LP is a party, or (b) is a party to any Contract with Vertex LP. Except as set forth on SCHEDULE 3.20 of the Vertex Disclosure Schedules, Vertex LP has no Contract or understanding with any officer, director or key employee of Vertex LP or any of Vertex LP's partners or any Affiliate or Family Member thereof with respect to the subject matter of this Agreement, the consideration payable hereunder or any other matter. SCHEDULE 3.20 sets forth each transaction that Vertex Nevada and Vertex LP would be required to disclose for the past three years pursuant to Item 404 of Regulation S-K of the Securities Act, as if such Person were subject to such disclosure requirements. A-24 3.21 BROKERS OR FINDERS. Except as set forth on SCHEDULE 3.21 of the Vertex Disclosure Schedules, all negotiations relative to this Agreement and the transactions contemplated hereby have been carried out by Vertex LP or its Affiliates in connection with the transactions contemplated by this Agreement, and neither Vertex LP nor any of its Affiliates has incurred any obligation to pay any brokerage or finder's fee or other commission in connection with the transactions contemplated by this Agreement. 3.22 NO OTHER AGREEMENTS. Except as set forth on SCHEDULE 3.22 of the Vertex Disclosure Schedules, and other than this Agreement or any agreement contemplated hereby, neither Vertex LP, nor any of its partners, officers, directors or Affiliates has any legal obligation, absolute or contingent, to any other Person to sell, assign or transfer any partnership or other equity interest in Vertex LP or to effect any merger, consolidation or other reorganization of Vertex LP or to enter into any agreement with respect thereto. 3.23 DISCLOSURE. No representation or warranty of the Vertex Parties in this Agreement or in any Collateral Document and no statement in any certificate furnished or to be furnished by any of the Vertex Parties pursuant to this Agreement contained, contains or will contain on the date such agreement or certificate was or is delivered, or on the Closing Date, any untrue statement of a material fact, or omitted, omits or will omit on such date to state any material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading. 3.24 REAL PROPERTY; TITLE TO PROPERTY. (a) Vertex LP does not own any real property or any interest, other than a leasehold interest, in any real property. SCHEDULE 3.24(A) of the Vertex Disclosure Schedules lists and describes all real property leased by Vertex LP and all subleases thereto, in each case that relates to the Vertex Business. Except for leases and subleases listed on SCHEDULE 3.24(A) of the Vertex Disclosure Schedules, there are no leases, subleases, licenses, occupancy agreements, options, rights, concessions or other agreements or arrangements, written or oral, granting to any Person the right to purchase, use or occupy any real property used in connection with the Vertex Business or any portion thereof or interest in any such real property. (b) Vertex LP has good and marketable title to all of its properties, interests in properties and assets, real and personal, used in connection with the Vertex Business or with respect to leased properties and assets, valid leasehold interests in, free and clear of all mortgages, Liens, pledges, charges or encumbrances of any kind or character, except (i) Liens for current Taxes not yet due and payable or which are being contested by Vertex LP in good faith, (ii) such imperfections of title, liens and easements as do not and will not materially detract from or interfere with the use of the properties subject thereto or affected thereby, or otherwise materially impair business operations involving such properties, and (iii) any Liens set forth on SCHEDULE 3.24 of the Vertex Disclosure Schedules. The properties and equipment of Vertex LP that are used in the operation of the Vertex Business are in good operating condition subject to normal wear and tear. All material properties used in the Vertex Business are set forth on EXHIBIT C hereto. A-25 3.25 STATUS OF VERTEX NEVADA. Since its inception, Vertex Nevada has been, and until immediately prior to the Transfer (which will occur immediately prior to the Effective Time), Vertex Nevada shall remain, a shell company with no assets, Liabilities, Contracts (other than this Agreement) or operations. 3.26 CONDUCT OF BUSINESS. Prior to the Closing Date, Vertex LP shall conduct the Vertex Business in the normal course, and shall not sell, pledge, or assign any assets, without the prior written approval of WWT, except in the regular course of business. Except as otherwise provided herein, neither Vertex LP nor Vertex Nevada shall amend its respective Organizational Documents, declare dividends, redeem or sell stock, partnership or other securities, acquire or dispose of fixed assets, change employment terms, enter into any material or long-term contract, guarantee obligations of any third party, settle or discharge any material balance sheet receivable for less than its stated amount, pay more on any liability than its stated amount or enter into any other transaction other than in the regular course of business. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF WWT WWT represents and warrants to the Vertex Parties that the statements contained in this Article 4 are true, complete and correct as of the date of this Agreement and will be correct and complete as of the Closing Date (and as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this Article 4, except in the case of representations and warranties stated to be made as of the date of this Agreement or as of another date and except for changes contemplated or permitted by this Agreement); except as the same may be qualified or limited by the WWT Disclosure Schedules and except as may be disclosed in documents filed by WWT from time to time with the SEC (the "SEC REPORTS"): 4.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. (a) WWT is duly organized, validly existing and in good standing under the Laws of the jurisdiction in which it is organized and has the requisite power and authority to carry on its business as now being conducted, which such jurisdictions are set forth on SCHEDULE 4.1(A) hereto of the WWT Disclosure Schedules. (b) WWT is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification or licensing necessary, other than in such jurisdictions where the failure to be so qualified or licensed (individually or in the aggregate) has not had and would not reasonably be expected to have a Material Adverse Effect on WWT. (c) WWT has delivered or made available to the Vertex Parties complete and correct copies of its Organizational Documents, in each case as amended to the date hereof. All of the outstanding shares of capital stock or other ownership interests of each Subsidiary of WWT have been validly issued and are fully paid and nonassessable and owned by WWT, free and clear of all Liens, and free of any restriction on the right to vote, sell or otherwise dispose of such capital stock or other ownership interests, except for restrictions imposed by applicable securities Laws. A-26 (d) There are no outstanding (i) securities of WWT or any of its Subsidiaries convertible into or exchangeable for shares of capital stock or other ownership interests in any Subsidiary of WWT, or (ii) options or other rights to acquire from WWT or any of its Subsidiaries, or other obligation of WWT or any of its Subsidiaries to issue, any capital stock or other ownership interests in, or any securities convertible into or exchangeable for any capital stock or other ownership interests in, any Subsidiary of WWT. (e) Except for ownership of less than 1% in any publicly traded company and the capital stock or other ownership interests of its Subsidiaries, WWT does not own, directly or indirectly, any capital stock or other ownership interest in any corporation, partnership, joint venture or other entity. No Subsidiary of WWT owns any shares of WWT Capital Stock. (f) SCHEDULE 3.1 of the WWT Disclosure Schedules sets forth each Subsidiary of WWT as of the date of this Agreement. 4.2 AUTHORIZATION; ENFORCEABILITY. WWT has the requisite power and authority, and has taken all action necessary, to execute, deliver and perform its obligations under this Agreement and any Collateral Documents to which it is a party and each other agreement, document, instrument or certificate contemplated by this Agreement and/or any Collateral Documents or to be executed by WWT in connection with the consummation of the Transactions, and, subject to approval of the stockholders of WWT, to consummate the Transactions. The execution and delivery by WWT of this Agreement and any applicable Collateral Documents, and the consummation by WWT of the Transactions contemplated hereby, and the performance by WWT of its obligations hereunder, have been duly and validly authorized by all necessary corporate or other action on the part of WWT, subject to adoption of this Agreement by the stockholders of WWT, and no other action on the part of WWT is required to authorize the execution, delivery and performance of this Agreement and the consummation by WWT of the Transactions. This Agreement has been duly and validly executed and delivered by WWT and constitutes a legal, valid and binding obligation of WWT enforceable against WWT in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium, reorganization and other similar laws affecting creditors' rights generally and the general principles of equity, regardless of whether asserted in a proceeding in equity or at law. 4.3 CAPITALIZATION. (a) The authorized capital stock of WWT as of the date of this Agreement consists of 100,000,000 shares of WWT Common Stock and 10,000,000 shares of Preferred Stock (of which 9,100,000 shares have been designated as WWT Series A Preferred Stock and 500,000 shares have been designated as WWT Series B Preferred Stock). As of the date of this Agreement, (i) there are 27,596,591 shares of WWT Common Stock, 4,619,481 shares of WWT Series A Preferred Stock, and 244,615 shares of WWT Series B Preferred Stock issued and outstanding; and (ii) no shares of WWT Common Stock are held in the treasury of WWT. SCHEDULE 4.3(A) of the WWT Disclosure Schedules set forth the options and warrants to acquire WWT Capital Stock outstanding as of the date hereof. Except as described above, as of the close of business on the day prior to the date hereof, there were no shares of voting or non-voting capital stock, equity interests or other securities of WWT authorized, issued, reserved for issuance or otherwise outstanding. A-27 (b) All outstanding shares of WWT Capital Stock are duly authorized, validly issued, fully paid and non-assessable, and not subject to, or issued in violation of, any preemptive, subscription or any kind of similar rights. WWT has no outstanding shares of WWT Capital Stock subject to a right of repurchase that will survive the Merger. (c) There are no bonds, debentures, notes or other indebtedness of WWT having the right to vote (or convertible into securities having the right to vote) on any matters on which stockholders of WWT may vote. Except as set forth in the SEC Reports, there are no outstanding securities, options, warrants, calls, rights, commitments, agreements, arrangements or undertakings of any kind (contingent or otherwise) to which WWT is a party or bound obligating WWT to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock or other voting securities of WWT or obligating WWT to issue, grant, extend or enter into any agreement to issue, grant or extend any security, option, warrant, call, right, commitment, agreement, arrangement or undertaking. Neither WWT nor its Subsidiaries is subject to any obligation or requirement to provide funds for or to make any investment (in the form of a loan or capital contribution) in any Person. (d) All of the issued and outstanding shares of WWT Capital Stock were issued in compliance in all material respects with all applicable federal and state securities Laws. (e) Except as set forth in the SEC Reports, there are no outstanding contractual obligations of WWT to repurchase, redeem or otherwise acquire any shares of capital stock (or options or warrants to acquire any such shares) or other security or equity interests of WWT. Except as set forth in the SEC Reports, there are no stock-appreciation rights, security-based performance units, phantom stock or other security rights or other agreements, arrangements or commitments of any character (contingent or otherwise) pursuant to which any Person is or may be entitled to receive any payment or other value based on the revenues, earnings or financial performance, stock price performance or other attribute of WWT or any of its Subsidiaries or to cause WWT or any of its Subsidiaries to file a registration statement under the Securities Act, or which otherwise relate to the registration of any securities of WWT or any of its Subsidiaries. (f) Except as set forth in the SEC Reports, there are no voting trusts, proxies or other agreements, commitments or understandings to which WWT or any of its Subsidiaries or, to the knowledge of WWT, any of the stockholders of WWT, is a party or by which any of them is bound with respect to the issuance, holding, acquisition, voting or disposition of any shares of capital stock or other security or equity interest of WWT or any of its Subsidiaries. 4.4 NON-CONTRAVENTION. Except as set forth in the SEC Reports and SCHEDULE 4.4 to the WWT Disclosure Schedules, the execution, delivery and performance of this Agreement by WWT does not and, subject to obtaining shareholder adoption of this Agreement, the consummation of the Transactions will not (a) contravene, conflict with, or result in any violation or breach of any provision of the Organizational Documents of WWT, (b) contravene, conflict with, or result in a violation or breach of any provision of any Law applicable A-28 to WWT, (c) require any consent or other action by any Person under, constitute a breach of or default under, or cause or permit the termination, cancellation, acceleration or other change of any right or obligation or the loss of any benefit to which WWT or any of its Subsidiaries is entitled under any provision of any agreement or other instrument binding upon WWT or any of its Subsidiaries or any license, franchise, permit, certificate, approval or other similar authorization affecting, or relating in any way to, the assets or business of WWT and its Subsidiaries or (d) result in the creation or imposition of any Lien on any asset of WWT or any of its Subsidiaries, which in the case of clauses (b) or (d) above would have a Material Adverse Effect on WWT. 4.5 CONSENTS AND APPROVALS. Except as set forth in the SEC Reports, no consent, approval, authorization or order of, registration or filing with, or notice to, any Regulatory Authority or any other Person is necessary to be obtained, made or given by WWT in connection with the execution, delivery and performance by WWT of this Agreement or any applicable Collateral Document or for the consummation by WWT of the Transactions, except to the extent the failure to obtain any such consent, approval, authorization or order or to make any such registration or filing would not have a Material Adverse Effect on WWT. 4.6 BOOKS AND RECORDS. WWT has made and kept books and records and accounts, which, in reasonable detail, accurately and fairly reflect the activities of WWT pertaining to its business. WWT has not, in any manner that pertains to, or could affect, its business, engaged in any transaction, maintained any bank account or used any corporate funds except for transactions, bank accounts and funds that have been and are reflected in the normally maintained books and records of WWT. 4.7 FINANCIAL STATEMENTS. Included in the SEC Reports are the WWT Financial Statements. The WWT Financial Statements have been prepared from the books and records and fairly and accurately present the financial condition and the results of operations, income, expenses, assets, Liabilities (including all reserves), changes in shareholders' equity and cash flow of WWT as of the respective dates of, and for the periods referred to in, such WWT Financial Statements, in accordance with GAAP applied on a consistent basis throughout the periods indicated. WWT maintains a standard system of accounting established and administered in accordance with GAAP. 4.8 NO UNDISCLOSED LIABILITIES. Except as set forth in the SEC Reports or on SCHEDULE 4.8 of the WWT Disclosure Schedules, WWT has no Liabilities due or to become due except (a) Liabilities that are reflected in the WWT Financial Statements which have not been paid or discharged since the date of the WWT Financial Statements, (b) Liabilities incurred in the Ordinary Course of Business since the date of the WWT Financial Statements (none of which relates to any default under any Contract, breach of warranty, tort, infringement or violation of any Law or arose out of any Legal Proceeding) and none of which would have a Material Adverse Effect on WWT, and (c) Liabilities which are satisfied by WWT prior to the Closing. A-29 4.9 TAXES. (a) FILING OF TAX RETURNS. WWT has duly and timely filed (or caused to be filed) with the appropriate taxing authorities all Tax Returns required to be filed through the date hereof. All such Tax Returns filed are complete and accurate in all respects. WWT is not currently the beneficiary of any extension of time within which to file any Tax Return. No claim has ever been made against WWT or its assets by an authority in a jurisdiction where WWT does not file Tax Returns such that WWT is or may be subject to taxation by that jurisdiction. (b) PAYMENT OF TAXES. All Taxes owed and due by WWT (whether or not shown on any Tax Return) have been paid. The unpaid Taxes of WWT, if any, (i) did not, as of the date of WWT Financial Statements, exceed the reserve for Tax liability (excluding any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the face of the WWT Financial Statements (rather than in any notes thereto), and (ii) have not exceeded that reserve as adjusted for operations and transactions through the date hereof in accordance with the past custom and practice of WWT in filing its Tax Returns. Since the WWT Financial Statements Date, WWT has not (i) incurred any Liability for Taxes other than in the Ordinary Course of Business or (ii) paid Taxes other than Taxes paid on a timely basis and in a manner consistent with past custom and practice. (c) AUDITS, INVESTIGATIONS, DISPUTES OR CLAIMS. No deficiencies for Taxes are claimed, proposed or assessed by any taxing or other governmental authority against WWT, and there are no pending or, to the knowledge of WWT, threatened audits, investigations, disputes or claims or other actions for or relating to any Liability for Taxes with respect to WWT, and there are no matters under discussion by or on behalf of WWT with any Regulatory Authority, or known to WWT, with respect to Taxes that are likely to result in an additional Liability for Taxes with respect to WWT. Audits of federal, state and local Tax Returns by the relevant taxing authorities have been completed for the periods set forth on SCHEDULE 4.9(C) of the WWT Disclosure Schedules, and, except as set forth thereon, none of WWT, any Subsidiary thereof, or any predecessor thereof has been notified that any taxing authority intends to audit a Tax Return for any other period. WWT has not waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency. No power of attorney granted by WWT with respect to any Taxes is currently in force. (d) LIEN. There are no Liens for Taxes (other than for current Taxes not yet due and payable) on any assets or capital stock of WWT. (e) TAX ELECTIONS. All material elections with respect to Taxes affecting WWT or any of its respective assets as of the date hereof are set forth on SCHEDULE 4.9(E) of the WWT Disclosure Schedules. WWT has not: (i) consented at any time under Section 341(f)(1) of the Code to have the provisions of Section 341(f)(2) of the Code apply to any disposition of any of its assets; (ii) agreed, and is not required, to make any adjustment under Section 481(a) of the Code by reason of a change in accounting method or otherwise; (iii) made an election, and is not required, to treat any of its assets as owned by another Person pursuant to the provisions of Section 168(f) of the Code or as tax-exempt bond financed property or tax-exempt use property within the meaning of Section 168 of the Code; (iv) acquired, and does not own, any assets that directly or indirectly secure any debt the interest on which is tax exempt under Section 103(a) of the Code; (v) made a consent dividend election under Section 565 of the Code; or (vi) made any of the foregoing elections and is not required to apply any of the foregoing rules under any comparable state or local Tax provision. A-30 (f) PRIOR AFFILIATED GROUPS. WWT is not and has never been a member of an affiliated group of corporations within the meaning of Section 1504 of the Code. WWT does not have any Liability for the Taxes of any Person (i) under Treasury Regulations Section 1.1502-6 (or any similar provision of state, local or foreign law), (ii) as a transferee or successor, (iii) by Contract, or (iv) otherwise. (g) TAX SHARING AGREEMENTS. There are no agreements for the sharing of Tax liabilities or similar arrangements (including indemnity arrangements) with respect to or involving WWT (or any of its Subsidiaries) or any of its assets or business, and, after the Closing Date, neither WWT nor any of its assets shall be bound by any such Tax-sharing agreements or similar arrangements or have any Liability thereunder for amounts due in respect of periods prior to the Closing Date. (h) PARTNERSHIPS AND SINGLE MEMBER LLCS. WWT (i) is not subject to any joint venture, partnership, or other arrangement or contract which is treated as a partnership for Tax purposes, (ii) does not own a single member limited liability company which is treated as a disregarded entity, (iii) is not a shareholder of a "controlled foreign corporation" as defined in Section 957 of the Code (or any similar provision of state, local or foreign law) and (iv) is not a "personal holding company" as defined in Section 542 of the Code (or any similar provision of state, local or foreign law). (i) NO WITHHOLDING. WWT has not been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897 of the Code. WWT has withheld and paid all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, shareholder or other third party. The transactions contemplated herein are not subject to the tax withholding provisions of Section 3406 of the Code, or of any other provision of law. (j) INTERNATIONAL BOYCOTT. WWT has not participated in and is not participating in an international boycott within the meaning of Section 999 of the Code. (k) PERMANENT ESTABLISHMENT. WWT does not have and has never had a permanent establishment in any foreign country, as defined in any applicable Tax treaty or convention between the United States and such foreign country. (l) PARACHUTE PAYMENTS. WWT is not a party to any existing Contract, arrangement or plan that has resulted or would result (upon the Closing or otherwise), separately or in the aggregate, in the payment of any "excess parachute payments" within the meaning of Section 280(G) of the Code. (m) TAX SHELTERS. Neither WWT nor any Subsidiary has participated in and WWT is not now participating in, any transaction described in Section 6111(c) or (d) of the Code or Section 6112(b) of the Code or the Treasury Regulations thereunder, or in any reportable transaction described in such regulations. A-31 4.10 CONTRACTS; NO DEFAULTS. (a) The Exhibit Index to WWT's Annual Report on Form 10-K for the year ended December 31, 2007 sets forth a true and complete list of all contracts, agreements, leases, commitments or other understandings or arrangements, written or oral, express or implied, to which WWT is a party, or affecting its business or by which WWT or any of its property is bound or affected requiring payments to or from, or incurring of liabilities by, WWT in excess of $50,000 (the "WWT CONTRACTS"). (b) Except as set forth in the SEC Reports, WWT has complied with and performed, in all material respects, all of its obligations required to be performed under and is not in default with respect to any of the WWT Contracts, as of the date hereof, nor has any event occurred which has not been cured which, with or without the giving of notice, lapse of time, or both, would constitute a default in any respect thereunder. To the knowledge of WWT, no other party has failed to comply with or perform, in all material respects, any of its obligations required to be performed under or is in material default with respect to any such WWT Contracts, as of the date hereof, nor has any event occurred which, with or without the giving of notice, lapse of time or both, would constitute a material default in any respect by such party thereunder. (c) Except as set forth in the SEC Reports, to the knowledge of WWT, there exists no facts or circumstances that would make a material default by any party to any contract or obligation likely to occur subsequent to the date hereof. 4.11 EMPLOYEE BENEFITS. (a) The SEC Reports include a complete list of all Employee Plans (i) covering employees, directors or consultants or former employees, directors or consultants in, or related to, WWT and/or (ii) with respect to which Surviving Corporation may incur any Liability. WWT has delivered or made available to Vertex true and complete copies of all Employee Plans, including written interpretations thereof and written descriptions thereof which have been distributed to WWT's employees and for which WWT has copies, all annuity contracts or other funding instruments relating thereto, and a complete description of all Employee Plans which are not in writing. (b) Neither WWT nor any ERISA Affiliate sponsors, maintains, contributes to or has an obligation to contribute to, or has sponsored, maintained, contributed to or had an obligation to contribute to, any Pension Plan subject to Title IV of ERISA, or any Multiemployer Plan. (c) Each Welfare Plan which covers or has covered employees or former employees of WWT or of its Affiliates in the Business and which is a "group health plan," as defined in Section 607(1) of ERISA, has been operated in compliance with provisions of Part 6 of Title I, Subtitle B of ERISA and Section 4980B of the Code at all times. A-32 (d) There is no Legal Proceeding or Order outstanding, relating to or seeking benefits under any Employee Plan set forth in the SEC Reports, which is pending, threatened or anticipated against WWT, any ERISA Affiliate or any Employee Plan. (e) Neither WWT nor any ERISA Affiliate has any liability for unpaid contributions under Section 515 of ERISA with respect to any Welfare Plan (i) covering employees, directors or consultants or former employees, directors or consultants in, or related to, WWT and (ii) with respect to which Surviving Corporation may incur any Liability. (f) There are no Liens arising under the Code or ERISA with respect to the operation, termination, restoration or funding of any Employee Plan set forth in the SEC Reports, or arising in connection with any excise tax or penalty tax with respect to such Employee Plan. (g) Each Employee Plan set forth in the SEC Reports has at all times been maintained in all material respects, by its terms and in operation, in accordance with all applicable laws, including, without limitation, ERISA and the Code. (h) WWT and its ERISA Affiliates have made full and timely payment of all amounts required to be contributed under the terms of each Employee Plan and applicable Law or required to be paid as expenses or as Taxes under applicable Laws, under such Employee Plan, and WWT and its ERISA Affiliates shall continue to do so through the Closing Date. (i) WWT has no Employee Plan intended to qualify under Section 401 of the Code. (j) Except as set forth on SCHEDULE 4.11(J) of the WWT Disclosure Schedules, neither the execution and delivery of this Agreement or other related agreements by WWT nor the consummation of the Transactions will result in the acceleration or creation of any rights of any person to benefits under any Employee Plan (including, without limitation, the acceleration of the vesting or exercisability of any stock options, the acceleration of the vesting of any restricted stock, the acceleration of the accrual or vesting of any benefits under any Pension Plan or the acceleration or creation of any rights under any severance, parachute or change in control agreement). (k) Neither WWT nor any ERISA Affiliate has incurred any liability with respect to any Employee Plan, which may create, or result in any liability to Surviving Corporation. 4.12 LABOR MATTERS; EMPLOYEES. WWT is not a party to any collective bargaining or other labor contract. There has not been, there is not presently pending or existing, and, to the knowledge of WWT, there is not threatened (i) any strike, slowdown, picketing, work stoppage or employee grievance process against WWT or its business; (ii) any Legal Proceeding against or affecting WWT or its business relating to the alleged violation of any Law or Order pertaining to labor relations or employment matters; or (iii) union organizing campaign or any application for certification of a collective bargaining agent. No event has occurred or circumstance exists that could provide the basis for any work stoppage or other labor dispute. There is no lockout of any employees by WWT, and no such action is contemplated by WWT. WWT has complied with all material Laws relating to employment, equal employment opportunity, nondiscrimination, A-33 harassment, retaliation, immigration, wages, hours, benefits, collective bargaining, the payment of social security and similar Taxes, occupational health and safety, and plant closing. WWT is not liable for the payment of any compensation, damages, Taxes, fines, penalties or other amounts (including, without limitation, amounts related to workplace safety and insurance), however designated, for failure to comply with any of the foregoing Laws. 4.13 LEGAL PROCEEDINGS. There is no Legal Proceeding or Order (a) pending or, to the knowledge of WWT, threatened or anticipated against or affecting WWT, its assets or its business (or to the knowledge of WWT, pending or threatened, against any of the officers, directors or employees of WWT with respect to their business activities related to or affecting WWT's business); (b) that challenges or that may have the effect of preventing, making illegal, delaying or otherwise interfering with any of the Transactions; or (c) related to WWT's business or WWT's assets to which WWT is otherwise a party. To the knowledge of WWT, there is no reasonable basis for any such Legal Proceeding or Order. To the knowledge of WWT, no officer, director, agent or employee of WWT is subject to any Order that prohibits such officer, director, agent or employee from engaging in or continuing any conduct, activity, or practice relating to WWT's business. Except as set forth in the SEC Reports, neither WWT, its assets or its business is subject to any Order of any Regulatory Authority and WWT is not engaged in any Legal Proceeding to recover monies due it or for damages sustained by it. WWT is not and has not been in default with respect to any Order, and there are no unsatisfied judgments against WWT, its assets or its business. There is not a reasonable likelihood of an adverse determination of any pending Legal Proceedings. There are no Orders or agreements with, or Liens by, any Regulatory Authority or quasi-governmental entity relating to any environmental Law, which regulate, obligate, bind or in any way affect WWT or any property on which WWT operates its business. 4.14 COMPLIANCE WITH LAW. (a) WWT, to its knowledge, and the conduct of WWT's business are and at all times have been in compliance with all Laws or Orders applicable to them or to the conduct and operations of WWT's business. WWT has not received any notice to the effect that, or otherwise been advised of (i) any actual, alleged, possible or potential violation of, or failure to comply with, any such Laws or Orders or (ii) any actual, alleged, possible or potential obligation on the part of WWT to undertake, or to bear all or any portion of the cost of, any remedial action of any nature. No event has occurred or circumstance exists that (with or without notice or lapse of time) (i) may constitute or result in a violation by WWT of, or a failure on the part of WWT, any such Laws or Orders or (ii) may give rise to any obligation on the part of WWT to undertake, or to bear all or any portion of the cost of, any remedial action of any nature, except, in either case separately or the cases together, where such violation or failure to comply could not reasonably be expected to have a Material Adverse Effect on WWT. (b) None of WWT, or any of its directors, officers or Representatives or to the knowledge of WWT, any employee or other Person affiliated with or acting for or on behalf of WWT, has, directly or indirectly, (i) made any contribution, bribe, rebate, payoff, influence payment, kickback or other payment to any Person, private or public, regardless of form, whether in money, property or services (A) to obtain favorable treatment in securing business, (B) to pay for favorable treatment for business secured, (C) to obtain A-34 special concessions or for special concessions already obtained, for or in respect of WWT or any of its Affiliates or (D) in violation of any Laws of the United States (including, without limitation, the Foreign Corrupt Practices Act of 1977, as amended (15 U.S.C. Sections 78dd-1 et seq.)) or any laws of any other country having jurisdiction; or (ii) established or maintained any fund or asset that has not been recorded in the books and records of WWT. 4.15 PERMITS. SCHEDULE 4.15(A) of the WWT Disclosure Schedules sets forth a complete list of all Permits held by WWT or used in the conduct of its business, and such Permits collectively constitute all of the Permits necessary for WWT to lawfully conduct and operate its business, as it is presently conducted and to permit WWT to own and use its assets in the manner in which they are presently owned and used. WWT is and at all times has been in compliance with all material Permits applicable to it or to the conduct and operations of WWT's business. WWT has not received any notice to the effect that, or otherwise been advised of (i) any actual, alleged, possible or potential violation of, or failure to comply with, any such Permits or (ii) any actual, alleged, possible or potential revocation, withdrawal, suspension, cancellation or termination of, or any modification to, any Permit set forth on or required to be set forth on SCHEDULE 4.15(A) of the WWT Disclosure Schedules. No event has occurred, and to WWT's knowledge no circumstance exists, that (with or without notice or lapse of time) (i) may constitute or result directly or indirectly in a violation by WWT of, or a failure on the part of WWT to comply with, any such Permits or (ii) result directly or indirectly in the revocation, withdrawal, suspension, cancellation or termination of, or any modification to, any Permit set forth on or required to be set forth on SCHEDULE 4.15(A) of the WWT Disclosure Schedules. All applications for or renewals of all Permits have been timely filed and made and no Permit will expire or be terminated as a result of the consummation of the transactions contemplated by this Agreement. No present or former shareholder, director, officer or employee of WWT or any Affiliate thereof, or any other Person, owns or has any proprietary, financial or other interest (direct or indirect) in any Permit that WWT owns, possesses or uses. 4.16 ABSENCE OF CERTAIN CHANGES. Except as set forth in the SEC Reports, since the date of the WWT Financial Statements, there has not been any: (a) purchase, redemption, retirement or other acquisition by WWT of any WWT Capital Stock or other equity interest of WWT; (b) amendments to the Organizational Documents of WWT; (c) payment or increase by WWT of any bonuses, salaries or other compensation (including management or other similar fees) or entry into any employment, severance or similar Contract with any employee engaged in WWT's business and which the Surviving Corporation is required to hire after Closing, other than increases in salary to employees made in the Ordinary Course of Business; (d) adverse change in employee relations which has or is reasonably likely to have a Material Adverse Effect on WWT's business; (e) entry into, termination or acceleration of, or receipt of notice of termination by WWT of (1) any material license, distributorship, dealer, sales representative, joint venture, credit or similar agreement relating to WWT's business, or (2) any Contract or transaction involving a Liability by or to WWT for which the Surviving Corporation may be liable after the Closing (other than the Liabilities set forth in the SEC Reports, Liabilities reflected on the WWT Financial Statements which have not been paid or discharged since the date of the WWT Financial Statements, and Liabilities relating to WWT's business incurred in the Ordinary Course of Business since the date of the WWT Financial Statements); (f) mortgage, pledge or imposition of any Lien on any assets or property of WWT relating to WWT's business, including the sale, lease or other A-35 disposition of any of its Intellectual Property relating to WWT's business; (j) (1) delay or failure to repay when due any obligation of WWT, which delay or failure could have a Material Adverse Effect on WWT, other than such items as have been specifically documented to WWT in writing or (2) delay or failure to repay when due any obligation of WWT which delay or failure could have a Material Adverse Effect on WWT, WWT's business or on any assets or property of WWT relating to WWT's business; (g) cancellation or waiver by WWT of any claims or rights with a value to WWT relating to its business in excess of Fifty Thousand Dollars ($50,000) individually or in the aggregate; (h) licensing out on an exclusive basis or other than in the Ordinary Course of Business, disposition or lapsing of any Intellectual Property or any disclosure to any Person of any trade secret or other confidential information without appropriate protections in place; (n) change in the accounting methods, principles or practices used by WWT; or (i) agreement, whether oral or written, by WWT with respect to or to do any of the foregoing other than as expressly provided for herein. 4.17 INSURANCE. SCHEDULE 4.17 of the WWT Disclosure Schedules sets forth a complete and accurate list (showing as to each policy or binder the carrier, policy or binder the carrier, policy number, coverage limits, expiration dates, annual premiums and a general description of the type of coverage provided) of all policies or binders of insurance of any kind or nature covering WWT, its business, or any employees, properties or assets of WWT relating to its business, including, without limitation, policies of life, disability, fire, theft, workers compensation, employee fidelity and other casualty and liability insurance. All such policies are in full force an effect. WWT is not in default under any of such policies or binders, and WWT has not failed to give any notice or to present any claim under any such policy or binder in a due and timely fashion. 4.18 RESTRICTIONS ON BUSINESS ACTIVITIES. Except as set forth in the SEC Reports, there is no agreement, judgment, injunction, order or decree binding upon WWT or any of its Subsidiaries which has the effect of prohibiting or materially impairing (a) any current or future business practice of WWT or any of its Subsidiaries or (b) any acquisition of any Person or property by WWT or any of its Subsidiaries, except in each of clauses (a) and (b) for any such prohibitions or impairments that would not reasonably be expected to have a Material Adverse Effect on WWT. 4.19 RELATED PARTY TRANSACTIONS. Except as set forth in the SEC Reports, none of WWT, any Affiliate thereof, holders of the capital stock or other ownership interest of WWT or any Affiliate or Family Member thereof is presently or has, since the date of the WWT Financial Statements, borrowed any moneys from or has any outstanding debt or other obligations to WWT or is presently a party to any transaction with WWT relating to WWT's business. Except as set forth in the SEC Reports, none of WWT, any Affiliate thereof, or any director, officer or key employee of any such Persons (a) owns any direct or indirect interest of any kind in (except for ownership of less than 1% of any public company, provided, that such owner's role is that solely of a passive investor), or controls or is a director, officer, employee or partner of, consultant to, lender to or borrower from, or has the right to participate in the profits of, any Person which is (i) a competitor, supplier, customer, landlord, tenant, creditor or debtor of WWT, (ii) engaged in a business related to WWT's business or (iii) a participant in any transaction to which WWT is a party, or (b) is a party to any Contract with WWT. Except as set forth on SCHEDULE 4.19 of the WWT Disclosure Schedules, WWT has no Contract or understanding with any officer, director or key employee of WWT or any of WWT's shareholders or any Affiliate or Family Member thereof with respect to the subject matter of this Agreement, the consideration payable hereunder or any other matter. A-36 4.20 BROKERS OR FINDERS. Except as set forth on SCHEDULE 4.20 of the WWT Disclosure Schedules, all negotiations relative to this Agreement and the transactions contemplated hereby have been carried out by WWT or its Affiliates in connection with the transactions contemplated by this Agreement, and neither WWT, or Affiliates has incurred any obligation to pay any brokerage or finder's fee or other commission in connection with the transaction contemplated by this Agreement. 4.21 NO OTHER AGREEMENTS. Except as set forth in the SEC Reports, and other than this Agreement or any agreement contemplated hereby, neither WWT, nor any of its stockholders, officers, directors or Affiliates has any legal obligation, absolute or contingent, to any other Person to sell, assign or transfer any capital stock of or other equity interest (other than warrants or options in favor of WWT's officers, directors or employees, if any) in WWT or to effect any merger, consolidation or other reorganization of WWT or to enter into any agreement with respect thereto. 4.22 DISCLOSURE. No representation or warranty of WWT in this Agreement or in any Collateral Document and no statement in any certificate furnished or to be furnished by WWT pursuant to this Agreement contained, contains or will contain on the date such agreement or certificate was or is delivered, or on the Closing Date, any untrue statement of a material fact, or omitted, omits or will omit on such date to state any material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading. 4.23 REAL PROPERTY; TITLE TO PROPERTY. (a) WWT does not own any real property or any interest, other than a leasehold interest, in any real property. A description of all real property leased by WWT and its Subsidiaries and all subleases thereto is included in the SEC Reports. Except for leases and subleases set forth in the SEC Reports, there are no leases, subleases, licenses, occupancy agreements, options, rights, concessions or other agreements or arrangements, written or oral, granting to any Person the right to purchase, use or occupy any real property used in connection with WWT's business or any portion thereof or interest in any such real property. (b) WWT and its Subsidiaries have good and marketable title to all of its properties, interests in properties and assets, real and personal, reflected in WWT Financial Statements or acquired after date of the WWT Financial Statements, or with respect to leased properties and assets, valid leasehold interests in, free and clear of all mortgages, liens, pledges, charges or encumbrances of any kind or character, except (i) Liens for current Taxes not yet due and payable or which are being contested by WWT in good faith, (ii) such imperfections of title, liens and easements as do not and will not materially detract from or interfere with the use of the properties subject thereto or affected thereby, or otherwise materially impair business operations involving such properties, (iii) Liens securing debt which is reflected on WWT Financial Statements, and (iv) any Liens described in the SEC Reports. A-37 4.24 CONDUCT OF BUSINESS. Except as otherwise provided herein, WWT shall not amend its Organizational Documents, declare dividends, redeem or sell stock or other securities, enter into any material or long-term contract, guarantee obligations of any third party, settle or discharge any material balance sheet receivable for less than its stated amount, pay more on any liability than its stated amount or enter into any other transaction other than in the regular course of business. ARTICLE V COVENANTS OF THE PARTIES The Parties hereby agree as follows: 5.1 COWART EMPLOYMENT AGREEMENT. As soon as practicable following the execution of this Agreement, but in any event prior to the Closing Date, Agent shall execute and enter into an employment agreement with Vertex Nevada, in substantially the form attached hereto as EXHIBIT D (the "COWART EMPLOYMENT AGREEMENT"). 5.2 TERMINATION OF COWART GUARANTEES. As soon as practicable following the execution of this Agreement, the Parties shall use commercially reasonable efforts to cause the release and termination of all personal guarantees (the "COWART GUARANTEES") provided by Agent and his Family Members in respect of an aggregate of $1.6 million of Indebtedness owed by Vertex LP to Regents Bank. 5.3 TRANSFER. The Agent shall cause the Transfer to occur prior to the Closing. 5.4 FAIRNESS HEARING. As soon as practicable following the execution of this Agreement, and in order to qualify for an exemption pursuant to Section 3(a)(10) of the Securities Act, the Parties shall work together to prepare an application for submission to the California Department of Corporations seeking a fairness hearing regarding the issuance of the Merger Consideration. The Parties shall cooperate with each other in connection with any hearing so held pursuant to the application. In the event that the Parties are unable to obtain the necessary ruling from the California Department of Corporations (or if WWT believes, based on advice of its counsel, that such approval is not likely to be obtained without making material changes to the terms of the Merger), the Parties will work together to prepare and file with the SEC a Registration Statement of Vertex Nevada on Form S-4 (which shall be filed jointly with the Proxy Statement referred to below) to register the issuance of the Merger Consideration. 5.5 PROXY STATEMENT. As soon as practicable following the execution of this Agreement, the Parties shall work together to prepare and file with the SEC a proxy statement in respect of the Merger and the transactions contemplated hereby (the "PROXY STATEMENT"), which Proxy Statement shall be used in respect of soliciting approval of the Merger and this Agreement by WWT's shareholders. Without limiting the generality of the foregoing, Vertex LP shall work diligently to prepare those sections of the Proxy Statement that relate to the Vertex Business. 5.6 WWT OPERATIONS. As of the Effective Time, all of WWT's assets, Intellectual Property and Contracts shall be vested in the Surviving Corporation. Immediately following the Effective Time, a total of $5.0 million in cash shall be distributed by the Surviving Corporation to Vertex Nevada. As of the Closing, management of the Surviving Corporation shall own options to A-38 acquire up to a total of 30% of the ownership interests of the Surviving Corporation. In addition, effective as of the Closing, Vertex Nevada shall enter into a management agreement with such members of management of the Surviving Corporation as shall be designated by WWT prior to the Closing (the "WWT MANAGEMENT"), pursuant to which Vertex Nevada will in good faith endeavor to execute an agreed-upon business plan (the "WWT MANAGEMENT AGREEMENT"). The WWT Management Agreement will provide that, in the event that the Surviving Corporation is unable to consummate a Qualified Financing within 180 days of the Closing Date, any cash on hand at the Surviving Corporation (less an amount necessary to satisfy any of the Surviving Corporation's Liabilities) shall be distributed to Vertex Nevada. 5.7 REPORTING COMPANY AND SEC COMPLIANCE. The Parties hereto acknowledge that as of the Effective Time, the Vertex Common Stock shall be deemed to be registered under Section 12(g) of the Exchange Act pursuant to the provisions of Rule 12g-3 thereunder. The Vertex Parties hereby covenant that Vertex Nevada shall thereafter take all action, and do all things, necessary to maintain compliance with any and all rules and regulations of the Exchange Act applicable to a Person subject to the reporting requirements thereunder, and to maintain the trading of the Vertex Common Stock on the OTC Bulletin Board or on any nationally recognized securities exchange. 5.8 DUE DILIGENCE. Each Party shall provide to the other and their respective Representatives such financial, operating and other documents, data and information relating to such Party, and their respective businesses, properties, assets and liabilities, as each Party, or its representatives may reasonably request. In addition, each Party hereby agrees to take all action necessary to enable their respective Representatives to review, inspect and audit each Party's business, properties, assets and liabilities in connection with such Party's due diligence investigation of the other Parties, and discuss them with such Party's Representatives. Notwithstanding any investigation that any Party may conduct of the other Parties, or their respective businesses, properties, assets and liabilities, each Party may fully rely on the other Party's warranties, covenants and indemnities set forth in this Agreement. 5.9 CONSENTS AND APPROVALS. As soon as practicable after execution of this Agreement, the Parties shall use commercially reasonable efforts to obtain any necessary consents, approvals, authorizations or orders of, make any registrations or filings with or give any notices to, any Regulatory Authority or Person as is required to be obtained, made or given by any Party to consummate the transactions contemplated by this Agreement and the Collateral Documents. 5.10 NOTIFICATION OF ADVERSE CHANGE AND CERTAIN MATTERS. Each Party shall promptly notify the other Parties of any material adverse change in the condition (financial or otherwise) of such Party. Each Party shall promptly notify the other Parties of any fact, event, circumstance or action known to it that is reasonably likely to cause such Party to be unable to perform any of its covenants contained herein or any condition precedent in Article 6 not to be satisfied, or that, if known on the date of this Agreement, would have been required to be disclosed to another Party pursuant to this Agreement or the existence or occurrence of which would cause any of such Party's representations or warranties under this Agreement not to be correct and/or complete. Each Party shall give prompt written notice to the other Parties of any adverse development causing a breach of any of the representations and warranties in Articles 3 and 4 as of the date made. A-39 5.11 MEETING OF THE SHAREHOLDERS. Promptly after the date hereof, and subject to SEC review of the Proxy Statement, WWT will take all action necessary in accordance with its Organizational Documents to convene a meeting of its shareholders, or seek the written consent of its shareholders to consider the adoption and approval of this Agreement and approval of the Merger to be held as promptly as practicable (including, without limitation, approval by each class of WWT Capital Stock issued and outstanding as of the date hereof). WWT will use its commercially reasonable efforts to solicit from its shareholders proxies in favor of the adoption and approval of this Agreement and the approval of the Merger. 5.12 DISCLOSURE SCHEDULES. Each Party shall, from time to time prior to Closing, supplement its Disclosure Schedules attached hereto with additional information that, if existing or known to it on the date of delivery to the other Party, would have been required to be included therein. For purposes of determining the satisfaction of any of the conditions to the obligations of any Party in Article 6 hereof, the Disclosure Schedules of such Party shall be deemed to include only (a) the information contained therein on the date of this Agreement and (b) information added to such Party's Disclosure Schedule by written supplements delivered prior to Closing by such Party that (i) are accepted in writing by the receiving Party, or (ii) reflect actions taken or events occurring after the date hereof prior to Closing. 5.13 STATE STATUTES. The Parties and their respective Boards of Directors shall, if any state takeover statute or similar law is or becomes applicable to the Merger, this Agreement or any of the transactions contemplated by this Agreement, use all reasonable efforts to ensure that the Merger and the other transactions contemplated by this Agreement may be consummated as promptly as practicable on the terms contemplated by this Agreement and otherwise to minimize the effect of such statute or regulation on the Merger, this Agreement and the transactions contemplated hereby. 5.14 NO SOLICITATION. Until the earlier of the Closing or the date of termination of this Agreement pursuant to the provisions of Article 8 hereof, no Vertex Party nor any of their respective officers, directors, agents, investment bankers or other representatives of any of them (collectively, the "REPRESENTATIVES") will, directly or indirectly, (i) solicit, engage in discussions or negotiate with any Person (regardless of who initiates such discussions or negotiations), or take any other action intended or designed to facilitate the efforts of any Person, other than the parties hereto, relating to the possible acquisition of Vertex LP (whether by way of purchase of partnership interest, capital stock, purchase of assets or otherwise) or any significant portion of its interests, capital stock or assets by any Person other than the parties hereto (an "ALTERNATIVE Acquisition"), (ii) provide information with respect to Vertex LP or any Person relating to a possible Alternative Acquisition by any Person, (iii) enter into an agreement with any Person providing for a possible Alternative Acquisition, or (iv) make or authorize any statement, recommendation or solicitation in support of any possible Alternative Acquisition by any Person. Each Vertex Party shall cause its Representatives to immediately cease and cause to be terminated all existing discussions or negotiations with any Person heretofore conducted with respect to any possible Alternative Acquisition. A-40 5.15 CONDUCT OF BUSINESS. The Vertex Parties agree that during the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement pursuant to the provisions of Article 8 hereof or the Closing, Vertex LP shall (unless otherwise required by this Agreement or WWT has given its prior written consent to the Vertex Parties) carry on its business in the ordinary course consistent with past practice, pay its Taxes and other obligations consistent with its past practices, pay or perform other obligations when due consistent with its past practices, subject to any good faith disputes over such Taxes and other obligations and, to the extent consistent with such business, use reasonable efforts and institute all policies to preserve intact its present business organization, keep available the services of its present officers and key employees, preserve its relationships with customers, suppliers, distributors, licensors, licensees, independent contractors and other Persons having business dealings with it, all with the express purpose and intent of preserving unimpaired its goodwill and ongoing businesses at the Closing. 5.16 CONFIDENTIALITY. WWT and the Vertex Parties acknowledge and agree that the terms and conditions described in this Agreement, including its existence, as well as the non-public information and data furnished to them or their respective Representatives from the first introduction of the Parties and throughout the negotiation and drafting of this Agreement is confidential and will not be disclosed to any third party, or used for any purpose not specifically contemplated herein, without prior written consent of the other Party, unless otherwise required by Law (including as required by the rules and regulations of the SEC) or unless it ceases to be confidential through no breach of the receiving party. 5.17 INSIDER LOCK-UPS. Prior to the Closing, WWT shall use commercially reasonable efforts to cause its officers, directors, and certain founders to agree to enter into a lock-up agreement on the same terms as the Vertex Lock-Up. 5.18 VERTEX FINANCIAL STATEMENTS. Promptly following execution of this Agreement, the Vertex Parties shall prepare the Vertex Financial Statements and shall retain a PCAOB-certified auditing firm to audit the Vertex Financial Statements. The foregoing audit shall include an audit of the operations of the Vertex Business as a separate division of Vertex LP as of and for the three years ended December 31, 2007. 5.19 LOCK-UP. Each shareholder of Vertex Nevada immediately prior to the Closing will enter into an agreement with Vertex Nevada pursuant to which each such shareholder agrees that it will not sell or otherwise transfer any of its shares of Vertex Common Stock during the 12-month period following the Closing and that, prior to the three-year anniversary of the Closing, it will not, in any given three-month period, sell more than that number of shares of Vertex Common Stock as equals 5% of the total number of shares of Vertex Common Stock then beneficially owned by such shareholder (in each case except for transfers to recipients that agree to comply with the foregoing restrictions) (a "VERTEX LOCK-UP"). 5.20 INSURANCE. Prior to the Closing, Vertex Nevada shall procure insurance policies in such amounts and covering such matters as are customary with respect to the Vertex Business. 5.21 FOREIGN QUALIFICATIONS. Prior to the Closing, Vertex Nevada shall be qualified as a foreign corporation to do business in Texas. A-41 5.22 INDEMNIFICATION AGREEMENTS. At the Closing, Vertex Nevada shall assume all of WWT's obligations under the Indemnification Agreements. 5.23 CMT AGREEMENTS. The Parties shall negotiate, in good faith, a ground sub-lease, a purchase and sale agreement and such other necessary documentation (collectively, the "CMT AGREEMENTS"), which agreements shall include the terms and conditions set forth on EXHIBIT E. 5.24 RELATED PARTY TRANSACTION COMMITTEE. Promptly following the Closing, the Agent shall cause the Board of Directors of Vertex Nevada to create a committee of its Board to be known as the "Related Party Transaction Committee". A majority of the members of this committee shall be Independent Directors, which shall include at least two Independent Directors. The Agent shall not serve on this Committee. This committee shall be charged with the review and pre-approval of any and all related party transactions, including between Vertex Nevada and Vertex LP, Ben Cowart, or any other company or individual which may be affiliated with Ben Cowart. 5.25 RIGHT OF FIRST REFUSAL AND RELATED RIGHTS. Effective as of the Closing, Vertex Nevada shall have: (a) a right of first refusal to match any third party offer to purchase any Cowart Party (as defined below) on the terms and conditions set forth in such offer (the "RIGHT OF FIRST REFUSAL"); and (b) the option (the "OPTION"), which can be exercised in Vertex Nevada's sole discretion, exercisable after the expiration of eighteen (18) months following the Closing (the "OPTION DATE"), to purchase all or any part thereof of the outstanding stock of any Cowart Party (as defined below) owned by Vertex LP or VTX, Inc., at a price based on an independent third-party evaluation and appraisal of the fair market value of such Cowart Party. 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. For the purposes of this paragraph, a "COWART PARTY" shall be defined 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, VTX, Inc. or any other entity which is majority owned or controlled by Ben Cowart. The Right of First Refusal and the Option shall only be exercisable by Vertex Nevada during such time as Ben Cowart is employed by Vertex Nevada as the President and Chief Executive Officer of Vertex Nevada pursuant to the terms of an Employment Agreement substantially similar to the Employment Agreement Mr. Cowart will enter into with Vertex Nevada at Closing. Nothing in this paragraph shall prevent Vertex Nevada from purchasing any or all of the interests in any Cowart Party prior to the Option Date on terms mutually agreeable to Vertex Nevada and such Cowart Party, provided however that any such transaction includes a fairness opinion passing as to the fairness of the transaction to Vertex Nevada. 5.26 LICENSE. At the Closing, Vertex LP will grant to Vertex Nevada a perpetual, royalty-free, transferable, irrevocable license to the name "Vertex." 5.27 VERTEX NEVADA DIRECTORS. Promptly following the date hereof, the Agent shall notify WWT of the four individuals who will serve on the Board of Directors of Vertex Nevada as of the Closing as the appointees of the holder of the Vertex Series B Preferred Stock, and will provide WWT with background information regarding each such individual. The Agent covenants that at least one of these individuals will be an Independent Director. A-42 5.28 VERTEX OPTION GRANTS. After the date hereof, and whether prior to or after the Closing, Vertex Nevada shall not issue any compensatory options unless such options have an exercise price at or above the fair market value of the Vertex Common Stock as of the date of grant, and such issuances are approved by the Related Party Transactions Committee. The Parties further agree and acknowledge that, in the event that any such options are issued by Vertex Nevada prior to the Closing, the determination of the fair market value of the Vertex Common Stock shall be made by Vertex Nevada in consultation with WWT and the issuer of the WWT fairness opinion (as described in Section 6.2(g)) and shall not be inconsistent with any valuation of Vertex Nevada utilized by the issuer of such opinion. ARTICLE VI CLOSING CONDITIONS 6.1 CONDITIONS TO VERTEX PARTIES' OBLIGATION TO CLOSE. The obligations of the Vertex Parties to consummate the transactions provided for hereby are subject to the satisfaction, before or on the Closing Date, of each of the conditions set forth below in this Section 6.1, any of which may be waived by the Vertex Parties: (a) ACCURACY OF REPRESENTATIONS. All representations and warranties of WWT contained in this Agreement, the Collateral Documents and any certificate delivered by WWT at or prior to Closing shall be, if specifically qualified by materiality, true in all respects and, if not so qualified, shall be true in all material respects, in each case on and as of the Closing Date with the same effect as if made on and as of the Closing Date, except for representations and warranties expressly stated to be made as of the date of this Agreement or as of another date other than the Closing Date and except for changes contemplated or permitted by this Agreement. WWT shall have delivered to the Vertex Parties a certificate dated the Closing Date to the foregoing effect. (b) COVENANTS. WWT shall, in all material respects, have performed and complied with each of the covenants, obligations and agreements contained in this Agreement and the Collateral Documents that are to be performed or complied with by it at or prior to Closing. WWT shall have delivered to the Vertex Parties a certificate dated the Closing Date to the foregoing effect. (c) CONSENTS AND APPROVALS. All consents, approvals, permits, authorizations and orders required to be obtained from, and all registrations, filings and notices required to be made with or given to any Regulatory Authority or Person as provided herein, if any, shall have been so obtained or filed with such Regulatory Authority or Person. (d) SHAREHOLDER APPROVAL. All WWT shareholder approval, as required under any applicable Law, shall have been obtained to approve the transactions contemplated hereunder including the approval of the Merger, this Agreement and the transactions contemplated hereby. (e) ISSUANCE EXEMPTION. Either (i) the issuance of the Merger Consideration shall be exempt from registration pursuant to Section 3(a)(10) of the Securities Act, or (ii) a Registration Statement on Form S-4 registering the issuance of the Merger Consideration shall have been filed and declared effective by the SEC. A-43 (f) CASH. WWT shall have cash and cash equivalents totaling at least $5.0 million. (g) TERMINATION OF COWART GUARANTEES. The Cowart Guarantees shall have been terminated. (h) NO LIABILITIES. WWT shall have no Liabilities other than up to $2.4 million of indebtedness. (i) DISTRIBUTION OF CASH AND WARRANTS. WWT shall have delivered (i) $4.4 million in cash and (ii) the Make-Whole Warrants, in each case to the Agent on behalf of the Vertex Shareholders. The Make-Whole Warrants are described on EXHIBIT F to this Agreement. The Parties acknowledge that the Make-Whole Warrants are being issued to the Vertex Shareholders so that immediately following the Merger, the Vertex Shareholders hold 40% of all outstanding options and warrants of Vertex Nevada (exclusive of warrants to purchase 933,920 shares with a nominal exercise price and exclusive of the 6,000,000 options reserved by Vertex Nevada for issuance to employees, directors and consultants). Accordingly, the Parties agree that in the event that between the date hereof and the Closing, any WWT Options expire or are cancelled without being exercised, the number of Make-Whole Warrants shall be reduced to take such expiration or cancellation into effect. (j) NO LEGAL PROCEEDINGS. No injunction, action, suit or proceeding shall be pending or threatened by or before any Regulatory Authority and no Law shall have been enacted, promulgated or issued or deemed applicable to any of the transactions contemplated by this Agreement or the Collateral Documents, which would: (i) prevent consummation of any of the transactions contemplated by this Agreement or the Collateral Documents; (ii) cause any of the transactions contemplated by this Agreement or the Collateral Documents to be rescinded following consummation; or (iii) have a Material Adverse Effect on a Party, the Merger, this Agreement or the transactions contemplated hereby. (k) RESIGNATION LETTERS. WWT shall have delivered to the Vertex Parties letters of resignation from WWT's current officers and directors. 6.2 CONDITIONS TO WWT'S OBLIGATION TO CLOSE. The obligations of WWT to consummate the transactions provided for hereby are subject to the satisfaction, before or on the Closing Date, of each of the conditions set forth below in this Section 6.2, any of which may be waived by WWT: (a) ACCURACY OF REPRESENTATIONS. All representations and warranties of each of the Vertex Parties contained in this Agreement, the Collateral Documents and any certificate delivered by the Vertex Parties at or prior to Closing shall be, if specifically qualified by materiality, true in all respects and, if not so qualified, shall be true in all material respects, in each case on and as of the Closing Date with the same effect as if made on and as of the Closing Date, except for representations and warranties expressly stated to be made as of the date of this Agreement or as of another date other than the Closing Date and except for changes contemplated or permitted by this Agreement. The Vertex Parties shall have delivered to WWT a certificate dated the Closing Date to the foregoing effect. A-44 (b) COVENANTS. The Vertex Parties shall, in all material respects, have performed and complied with each of the covenants, obligations and agreements contained in this Agreement and the Collateral Documents that are to be performed or complied with by any of them at or prior to Closing. The Vertex Parties shall have delivered to WWT a certificate dated the Closing Date to the foregoing effect. (c) CONSENTS AND APPROVALS. All consents, approvals, permits, authorizations and orders required to be obtained from, and all registrations, filings and notices required to be made with or given to any Regulatory Authority or Person as provided herein, if any, shall have been so obtained or filed with such Regulatory Authority or Person. (d) SHAREHOLDER APPROVAL. All shareholder approval, as required under any applicable Law, shall have been obtained to approve the transactions contemplated hereunder including the approval of the Merger, this Agreement and the transactions contemplated hereby. (e) ISSUANCE EXEMPTION. Either (i) the issuance of the Merger Consideration shall be exempt from registration pursuant to Section 3(a)(10) of the Securities Act, or (ii) a Registration Statement on Form S-4 registering the issuance of the Merger Consideration shall have been filed and declared effective by the SEC. (f) VERTEX FINANCIAL STATEMENTS. The Vertex Parties shall have delivered, or caused to be delivered, to WWT the Vertex Financial Statements with an unqualified report thereon by an independent accounting firm acceptable to WWT. (g) FAIRNESS OPINION. WWT shall have received a fairness opinion in form and substance satisfactory to it passing on the fairness of the transactions contemplated herein to each class of the shareholders of WWT from a financial perspective. (h) DUE DILIGENCE. WWT shall be satisfied with the results of its due diligence investigation of Vertex. (i) NO MATERIAL ADVERSE CHANGE. Since the date hereof, there shall have been no material adverse change in the Vertex Business. (j) NO LEGAL PROCEEDINGS. No injunction, action, suit or proceeding shall be pending or threatened by or before any Regulatory Authority and no Law shall have been enacted, promulgated or issued or deemed applicable to any of the transactions contemplated by this Agreement or the Collateral Documents, which would: (i) prevent consummation of any of the transactions contemplated by this Agreement or the Collateral Documents; (ii) cause any of the transactions contemplated by this Agreement or the Collateral Documents to be rescinded following consummation; or (iii) have a Material Adverse Effect on a Party, the Merger, this Agreement or the transactions contemplated hereby. (k) WWT MANAGEMENT AGREEMENT. Vertex Nevada and the WWT Management shall have entered into the WWT Management Agreement. A-45 (l) VERTEX LOCKUP. Each shareholder of Vertex Nevada immediately prior to the Closing shall have entered into a Vertex Lock-Up. (m) TRANSFER. The Transfer shall have occurred. (n) INDEMNIFICATION AGREEMENTS. Vertex Nevada shall have assumed all of WWT's obligations under the Indemnification Agreements. (o) CMT AGREEMENTS. The CMT Agreements shall have been executed by all of the parties thereto. (p) PROPRIETARY INVENTIONS AGREEMENTS. The Vertex Parties shall have delivered to WWT propriety inventions agreements with each of the employees and consultants of Vertex LP. ARTICLE VII INDEMNIFICATION 7.1 INDEMNIFICATION BY WWT. WWT shall indemnify, defend and hold harmless the Vertex Parties, and each of their respective shareholders, members, partners, directors, officers, managers, employees, agents, attorneys and representatives, from and against any and all Losses which may be incurred or suffered by any such party and which may arise out of or result from any breach of any material representation, warranty, covenant or agreement of WWT contained in this Agreement. 7.2 INDEMNIFICATION BY THE VERTEX PARTIES. The Vertex Parties shall, jointly and severally, indemnify, defend and hold harmless WWT and its shareholders, members, partners, directors, officers, managers, employees, agents, attorneys and representatives from and against any and all Losses which may be incurred or suffered by any such party hereto and which may arise out of or result from any breach of any material representation, warranty, covenant or agreement of any of the Vertex Parties contained in this Agreement. 7.3 INDEMNIFICATION PROCEDURES. (a) In the event that any Legal Proceeding shall be instituted or any claim or demand shall be asserted (individually and collectively, a "CLAIM") by any Person in respect of which payment may be sought under this Article 7, the indemnified party shall reasonably and promptly cause written notice (a "CLAIM NOTICE") of the assertion of any Claim of which it has knowledge which is covered by this indemnity to be delivered to the indemnifying party; PROVIDED, HOWEVER, that the failure of the indemnified party to give the Claim Notice shall not release, waive or otherwise affect the indemnifying party's obligations with respect thereto, except to the extent that the indemnifying party can demonstrate actual loss and material prejudice as a result of such failure. If the indemnifying party shall notify the indemnified party in writing within five (5) Business Days (or sooner, if the nature of the Claim so requires) that the indemnifying party shall be obligated under the terms of its indemnity hereunder in connection with such lawsuit or action, then the indemnifying party shall be entitled, if it so elects at its own cost, risk and expense, (i) to take control of the defense and investigation of such lawsuit or action, (ii) to employ and engage attorneys of its own choice, but, in any A-46 event, reasonably acceptable to the indemnified party, to handle and defend the same unless the named parties to such action or proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and the indemnified party has been advised in writing by counsel that there may be one or more material legal defenses available to such indemnified party that are different from or additional to those available to the indemnifying party, in which event the indemnified party shall be entitled, at the indemnifying party's cost, risk and expense, to a single firm of separate counsel (plus any necessary local counsel), all at reasonable cost, of its own choosing, reasonably acceptable to the indemnifying party and (iii) to compromise or settle such lawsuit or action, which compromise or settlement shall be made only with the prior written consent of the indemnified party, such consent not to be unreasonably withheld or delayed. (b) If the indemnifying party elects not to defend against, negotiate, settle or otherwise deal with any Claim which relates to any Losses indemnified against hereunder, fails to notify the indemnified party of its election as provided in this Article 7 or contests its obligation to indemnify the indemnified party for such Losses under this Agreement, the indemnified party may defend against, negotiate, settle or otherwise deal with such Claim. If the indemnified party defends any Claim, then the indemnifying party shall reimburse the indemnified party for the Losses incurred in defending such Claim upon submission of periodic bills. If the indemnifying party shall assume the defense of any Claim, the indemnified party may participate, at its own expense, in the defense of such Claim; PROVIDED, HOWEVER, that such indemnified party shall be entitled to participate in any such defense with separate counsel at the expense of the indemnifying party if (i) so requested by the indemnifying party to participate or (ii) in the reasonable opinion of counsel to the indemnified party, a material conflict or potential material conflict exists between the indemnified party and the indemnifying party that would make such separate representation required; and PROVIDED, FURTHER, that the indemnifying party shall not be required to pay for more than one such counsel for all indemnified parties in connection with any Claim. If the indemnifying party shall assume the defense of any Claim, the indemnifying party shall obtain the prior written consent of the indemnified party before entering into any settlement of such Claim or ceasing to defend such Claim if, pursuant to or as a result of such settlement or cessation, injunctive or other equitable relief shall be imposed against the indemnified party or if such settlement or cessation does not expressly and unconditionally release the indemnified party from all Liabilities or obligations with respect to such Claim, with prejudice. The Parties hereto agree to cooperate fully with each other in connection with the defense, negotiation or settlement of any Claim. ARTICLE VIII TERMINATION 8.1 TERMINATION. This Agreement may be terminated, and the transactions contemplated hereby may be abandoned, at any time prior to the Effective Time. (a) By mutual written agreement of the Parties; (b) By either of the Vertex Parties or WWT if the Closing does not occur on or before December 31, 2008; A-47 (c) By either of Vertex LP or WWT if the shareholders of WWT fail to approve the Merger, this Agreement and the transactions contemplated hereby; (d) By either of the Vertex Parties or WWT if any court of competent jurisdiction or other competent Regulatory Authority shall have issued an order making illegal or otherwise permanently restricting, preventing or otherwise prohibiting the Merger and such order shall have become final; or (e) By either of the Vertex Parties or WWT upon written notice to the other Party in the event of a breach of any provision or covenant of this Agreement, or any representation or warranty made by such Party hereunder becomes inaccurate; PROVIDED, HOWEVER, that such breach or inaccuracy would cause the related closing condition, if any, not be satisfied in accordance with Article 6 hereof; PROVIDED, FURTHER, that prior to any termination by the non-breaching party, such Party shall provide written notice to the breaching Party specifically identifying the breach or inaccurate representation, and the breaching Party does not cure or correct such breach or inaccuracy within 30 days following receipt of the written notice. 8.2 EFFECT OF TERMINATION. If this Agreement is validly terminated by either the Vertex Parties or WWT pursuant to Section 8.1, this Agreement will forthwith become null and void and there will be no liability or obligation on the part of the Parties hereto, except that nothing contained herein shall relieve any party hereto from liability for willful breach of its representations, warranties, covenants or agreements contained in this Agreement. ARTICLE IX MISCELLANEOUS 9.1 PARTIES OBLIGATED AND BENEFITED. This Agreement shall be binding upon the Parties and their respective successors by operation of law and shall inure solely to the benefit of the Parties and their respective successors by operation of law, and no other Person shall be entitled to any of the benefits conferred by this Agreement. Without the prior written consent of the other Party, no Party may assign this Agreement or the Collateral Documents or any of its rights or interests or delegate any of its duties under this Agreement or the Collateral Documents. 9.2 PUBLICITY. Vertex LP and WWT each shall consult with each other prior to issuing any press releases or otherwise making public announcements with respect to the Merger and the other transactions contemplated by this Agreement and prior to making any filings with any third party and/or any Regulatory Authorities (including any national securities inter dealer quotation service) with respect thereto, except as may be required by law or by obligations pursuant to any listing agreement with or rules of any national securities inter dealer quotation service. 9.3 NOTICES. Any notices and other communications required or permitted hereunder shall be in writing and shall be effective upon delivery by hand or upon receipt if sent by certified or registered mail (postage prepaid and return receipt requested) or by a nationally recognized overnight courier service (appropriately marked for overnight delivery) or upon transmission if sent by telex or facsimile (with request for immediate confirmation of receipt in a manner customary for communications of such respective type and with physical delivery of the communication being made by one or the other means specified in this Section as promptly as practicable thereafter). Notices shall be addressed as follows: A-48 If to WWT: World Waste Technologies, Inc. 10600 North De Anza Boulevard, Suite 250 Cupertino, California 95014 Attention: John Pimentel Facsimile No: (650) 873-0550 With a copy to: TroyGould PC 1801 Century Park East, Suite 1600 Los Angeles, California 90067-4746 Attention: Lawrence P. Schnapp, Esq. Facsimile No: (310) 789-1255 If to Vertex LP, Vertex Nevada, Merger Sub and/or the Agent to: Vertex Companies 1331 Gemini, Suite 103 Houston, Texas 77058 Attention: Ben Cowart Facsimile No.: (281) 486-0217 With a copy to: The Loev Law Firm, PC 6300 West Loop South, Suite 280 Bellaire, Texas 77401 Attention: David M. Loev Facsimile No.: (713) 524-4122 Any Party may change the address to which notices are required to be sent by giving notice of such change in the manner provided in this Section. 9.4 ATTORNEYS' FEES. In the event of any action or suit based upon or arising out of any alleged breach by any Party of any representation, warranty, covenant or agreement contained in this Agreement or the Collateral Documents, the prevailing Party shall be entitled to recover reasonable attorneys' fees and other costs of such action or suit from the other Party. 9.5 HEADINGS. The Article and Section headings of this Agreement are for convenience only and shall not constitute a part of this Agreement or in any way affect the meaning or interpretation thereof. A-49 9.6 CHOICE OF LAW. This Agreement and the rights of the Parties under it shall be governed by and construed in all respects in accordance with the laws of the State of Texas without giving effect to any choice of law provision or rule (whether of the State of Texas or any other jurisdiction that would cause the application of the laws of any jurisdiction other than the State of Texas). Notwithstanding the foregoing, the internal laws of the State of California shall apply with respect to the Merger. 9.7 JURISDICTION AND SERVICE OF PROCESS. Any action or proceeding seeking to enforce any provision of, or based on any right arising out of, this Agreement, may be brought against any of the Parties solely and exclusively in the courts of the State of Texas (with respect to any actions brought by any of the WWT Parties) and in the courts of the State of California (with respect to any actions brought by any of the Vertex Parties), and each of the Parties consents to the sole and exclusive jurisdiction of such courts (and of the appropriate appellate courts) in any such action or proceeding and waives any objection to venue laid therein. Process in any action or proceeding referred to in the preceding sentence may be served on any Party anywhere in the world. 9.8 RIGHTS CUMULATIVE. All rights and remedies of each of the Parties under this Agreement shall be cumulative, and the exercise of one or more rights or remedies shall not preclude the exercise of any other right or remedy available under this Agreement or applicable law. 9.9 FURTHER ACTIONS. The Parties shall execute and deliver to each other, from time to time at or after Closing, for no additional consideration and at no additional cost to the requesting party, such further assignments, certificates, instruments, records, or other documents, assurances or things as may be reasonably necessary to give full effect to this Agreement and to allow each party fully to enjoy and exercise the rights accorded and acquired by it under this Agreement. 9.10 TIME OF THE ESSENCE. Time is of the essence under this Agreement. If the last day permitted for the giving of any notice or the performance of any act required or permitted under this Agreement falls on a day which is not a Business Day, the time for the giving of such notice or the performance of such act shall be extended to the next succeeding Business Day. 9.11 COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 9.12 ENTIRE AGREEMENT. This Agreement (including the Exhibits, the Vertex Disclosure Schedules, the WWT Disclosure Schedules and any other documents, instruments and certificates referred to herein, which are incorporated in and constitute a part of this Agreement) contains the entire agreement of the Parties. 9.13 SURVIVAL OF REPRESENTATIONS AND COVENANTS. Notwithstanding any right of WWT to fully investigate the affairs of Vertex LP and notwithstanding any knowledge of facts determined or determinable by WWT pursuant to such investigation or right of investigation, WWT shall have the right to rely fully upon the representations, warranties, covenants and agreements of the Vertex Parties contained in this Agreement. Each representation, warranty, covenant and agreement of the Vertex Parties contained herein shall survive the execution and delivery of this Agreement and the Closing and shall thereafter terminate and expire on the first anniversary of the Closing Date unless, prior to such date, WWT has delivered to Agent a written notice of a claim with respect to such representation, warranty, covenant or agreement. A-50 IN WITNESS WHEREOF, the Parties hereto have duly executed this Agreement as of the day and year first above written. Dated: May 19, 2008 World Waste Technologies, Inc., a California Corporation By:/s/ John Pimentel --------------------------------- Name: John Pimentel Title: CEO Dated: May 19, 2008 Vertex Merger Sub, LLC, a California Limited Liability Company By: /s/ Ben Cowart --------------------------------- Name: Ben Cowart Title: CEO Dated: May 19, 2008 Vertex Energy, Inc., a Nevada corporation By: /s/ Ben Cowart --------------------------------- Name: Ben Cowart Title:CEO Dated: May 19, 2008 /s/ Ben Cowart ------------------------------------ Ben Cowart, individually A-51 Dated: May 19, 2008 Vertex Energy LP, a Texas limited partnership By: /s/ Ben Cowart --------------------------------- Name: Ben Cowart Title: A-52 WWT DISCLOSURE SCHEDULES SCHEDULE 4.1(A) - JURISDICTION California SCHEDULE 3.1 - SUBSIDIARIES World Waste of America, Inc. World Waste of Anaheim, Inc. World Waste of California, Inc. World Waste Operations, Inc. SCHEDULE 4.3(A) WWT OPTIONS See attached SCHEDULE 4.4 NON-CONTRAVENTION Approval of each class of WWT Capital Stock is required to approve the Transactions SCHEDULE 4.8 - UNDISCLOSED LIABILITIES Fee payable to Livingston Partners LLC SCHEDULE 4.9(C) - TAX AUDITS None SCHEDULE 4.11(J) - ACCELERATION OF RIGHTS Consummation of this transaction will accelerate the vesting of options to acquire WWT Common Stock held by certain individuals. SCHEDULE 4.15(A) - PERMITS None SCHEDULE 4.17 - INSURANCE Attached SCHEDULE 4.18- RELATED PARTY TRANSACTIONS As disclosed in the SEC Reports, CMCP has certain relationships with WWT. SCHEDULE 4.20 - BROKERS OR FINDERS Livingston Capital LLC A-53 EX-31.1 3 worldwaste_10q-ex3101.txt CERTIFICATION EXHIBIT 31.1 CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT I, John Pimentel, Chief Executive Officer of World Waste Technologies, Inc., certify that: 1. I have reviewed this Quarterly Report on Form 10-Q of World Waste Technologies, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f))for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 14, 2008 By: /s/ John Pimentel ------------------------------- Name: John Pimentel Title: Chief Executive Officer EX-31.2 4 worldwaste_10q-ex3102.txt CERTIFICATION EXHIBIT 31.2 CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT I, David A. Rane, Acting Chief Financial Officer of World Waste Technologies, Inc., certify that: 1. I have reviewed this Quarterly Report on Form 10-Q of World Waste Technologies, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 14, 2008 By: /s/ David Rane -------------------------------------- Name: David Rane Title: Acting Chief Accounting Officer EX-32.1 5 worldwaste_10q-ex3201.txt CERTIFICATION EXHIBIT 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of World Waste Technologies, Inc. on Form 10-Q for the quarter ending June 30, 2008 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, being, John Pimentel, Chief Executive Officer of World Waste Technologies, Inc., does hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, based on his knowledge: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition of the Company and the results of operations of the Company. Date: August 14,2008 By: /s/ John Pimentel ------------------------------ John Pimentel, Chief Executive Officer EX-32.2 6 worldwaste_10q-ex3202.txt CERTIFICATION EXHIBIT 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of World Waste Technologies, Inc. on Form 10-Q for the period ending June 30, 2008 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, being, David Alan Rane, the Acting Chief Financial Officer of World Waste Technologies, Inc., does hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, based on his knowledge: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition of the Company and the results of operations of the Company. Date: August 14, 2008 By: /s/ David Rane ------------------------------------------ David Rane, Acting Chief Accounting Officer -----END PRIVACY-ENHANCED MESSAGE-----