-----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, OTFWW3j4gmEQBVUdOkSRuNNMJj5Ap1haWZnZVDbjAdSW0kHHa+23Q5IZC+Z31c6f 5/sTmdwqD1uNU0EzfUUlDA== 0001019687-09-000408.txt : 20090206 0001019687-09-000408.hdr.sgml : 20090206 20090206163643 ACCESSION NUMBER: 0001019687-09-000408 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20090202 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20090206 DATE AS OF CHANGE: 20090206 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: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-11476 FILM NUMBER: 09577687 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 8-K 1 worldwaste_8k-020209.txt CURRENT REPORT ON FORM 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report: February 6, 2009 Date of Earliest Event Reported: February 2, 2009 WORLD WASTE TECHNOLOGIES, INC. ----------------------------------------------------------------- (Exact name of registrant as specified in its charter) California 1-11476 95-3977501 - ------------------------------ ---------------- ---------------------- (State or other jurisdiction (Commission (I.R.S. Employer of incorporation) File Number) Identification No.) 20400 Stevens Creek Road 7th Floor Cupertino, California 95014 - ---------------------------------------------- ------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (408) 517-3306 --------------------------------------------------------------------------- (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [__] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [__] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [__] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [__] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT AMENDMENTS TO AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER --------------------------------------------------------------- As previously reported on a Current Report on Form 8-K filed on May 20, 2008 with the Securities and Exchange Commission (the "SEC"), on May 19, 2008, World Waste Technologies, Inc., a California corporation ("WORLD WASTE"), entered into an Amended and Restated Agreement and Plan of Merger (as amended thereafter, the "MERGER AGREEMENT") with Vertex Energy, L.P., 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 SUBSIDIARY"), and Benjamin P. Cowart, as agent for the shareholders of Vertex Nevada (the "AGENT") (collectively, the "VERTEX PARTIES"). On January 28, 2009, the parties entered into Amendment Number 3 to the Merger Agreement which provides that either of World Waste, on the one hand, or the Vertex Parties, on the other hand, may terminate the Merger Agreement if the merger has not closed on or before March 31, 2009. As described below under "Vertex LP Note," on February 2, 2009, World Waste loaned Vertex LP $1.0 million to enable Vertex LP to satisfy certain trade payables. In connection with this loan, on February 2, 2009, the parties entered into Amendment Number 4 to the Merger Agreement which provides that the amount of cash that World Waste is required to have on hand at the closing is reduced from $5.0 million to $2.4 million (unless the loan is repaid in full prior to the closing of the merger, in which case the required cash balance is increased to $4.8 million). Amendment Number 4 also provides that, unless the loan is repaid in full prior to the closing of the merger, the removal of Mr. Cowart as personal guarantee on certain indebtedness being assumed by Vertex Nevada in the merger is no longer a condition to the obligation of the Vertex Parties' to close the merger. The foregoing is a summary of the material terms of the Amendments, and is qualified by the full text of the Amendments, which are filed as Exhibits 2.1 and 2.2 to this Current Report on Form 8-K and are incorporated herein. VERTEX LP NOTE -------------- NOTE PURCHASE AGREEMENT On February 2, 2009, World Waste entered into a note purchase agreement ("PURCHASE AGREEMENT") with Vertex LP, pursuant to which World Waste made available to Vertex LP funds in the aggregate principal amount of $1,000,000 ("LOAN AMOUNT"). In connection with the Purchase Agreement, Vertex LP also issued a secured promissory note to World Waste in the aggregate principal amount of $1,000,000 (the "NOTE"). In addition to the foregoing, World Waste also entered into (i) a security agreement with Vertex LP (the "SECURITY AGREEMENT") pursuant to which Vertex LP provided World Waste a security interest in all of Vertex LP's assets and properties to secure its obligations under the Note and Purchase Agreement; and (ii) a guaranty agreement with Benjamin P. Cowart (the "GUARANTY") pursuant to which Mr. Cowart guaranteed all of the obligations of Vertex LP under the Note, the Purchase Agreement and the Security Agreement. Pursuant to the Purchase Agreement, Vertex LP covenanted to use proceeds of the Loan Amount to finance trade payables to certain of its feedstock suppliers, subject to certain terms and conditions specified in an exhibit to the Purchase Agreement. The Purchase Agreement includes customary representations and warranties for transactions of this nature. -1- THE NOTE The Note issued pursuant to the Purchase Agreement will accrue interest on the aggregate outstanding principal amount ($1,000,000) at the rate of 12% per annum. Interest shall be computed on the Note based on a 365-day calendar year. The Note and interest thereon shall be payable in full on the first to occur of (i) April 30, 2009, (ii) upon consummation of the merger and other transactions contemplated in the Merger Agreement, or (iii) the 60-day anniversary of the date on which the Merger Agreement is terminated by the parties thereto. Vertex LP may prepay the Note at any time without penalty. Pursuant to the Note, World Waste and Vertex LP agree that if the Note becomes due upon closing of the Merger, repayment of the Note shall be made pursuant to a dollar-for-dollar reduction in the payments required to be made by World Waste in accordance with Section 6.1(i) of the Merger Agreement. Repayment of the Note is subordinate in right of payment to certain amounts owed by Vertex LP under an existing loan agreement. The Note includes customary negative covenants, including covenants restricting Vertex LP from incurring additional indebtedness, and granting security interests or liens on its assets, except as may be permitted under the Note. THE SECURITY AGREEMENT In connection with the Purchase Agreement and the Note, World Waste and Vertex LP entered into a security agreement, dated as of February 2, 2009 ("SECURITY AGREEMENT"). Pursuant to the Security Agreement, Vertex LP granted to World Waste a senior subordinated security interest and continuing lien in all right, title and interest of Vertex LP to all of its assets and properties, including its general intangibles, as more specifically set forth in the Security Agreement (collectively, the "COLLATERAL"). The Security Agreement includes customary representations and warranties by Vertex LP with respect to the Collateral, including representations relating to Vertex LP's good and valid title in the Collateral. The Security Agreement also includes customary events of defaults and covenants, including covenants restricting Vertex LP from granting additional security interests in the Collateral. The security interest granted under the Security Agreement shall terminate upon repayment of the Note, and when Vertex LP shall have performed all of its obligations under the Purchase Agreement and the Note. THE GUARANTY In connection with the transactions contemplated under the Purchase Agreement and the Note, World Waste entered into guaranty with Benjamin P. Cowart, dated as of February 2, 2009 (the "GUARANTY"), pursuant to which Mr. Cowart guaranteed the full repayment of the Note by Vertex LP, and the performance by Vertex LP of any of its obligations under the Purchase Agreement, the Note and the Security Agreement. As security for performance of Mr. Cowart's obligations under the Guaranty, Mr. Cowart granted World Waste a first-priority lien in all of his ownership interests in Vertex LP, including any distributions or dividends payable in respect thereof. The security interest granted to World Waste under the Guaranty shall terminate upon repayment of the Note, and when Vertex LP shall have performed all of its obligations under the Purchase Agreement, the Note and the Security Agreement. Copies of the Purchase Agreement, the Note, the Security Agreement and the Guaranty are filed as exhibits to this Current Report on Form 8-K. The summaries of the Purchase Agreement, the Note, the Security Agreement and the Guaranty set forth above are qualified by reference to such exhibits. -2- ADDITIONAL INFORMATION AND WHERE TO FIND IT The information in this Current Report on Form 8-K is not a substitute for the definitive proxy statement and other documents regarding the merger that World Waste will file with the SEC and will mail to its shareholders subsequent to the filing of this Current Report on Form 8-K. WORLD WASTE'S SHAREHOLDERS AND INVESTORS ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT AND OTHER RELEVANT MATERIALS WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN ADDITIONAL IMPORTANT INFORMATION ABOUT WORLD WASTE, THE MERGER AND RELATED MATTERS. Investors and shareholders may obtain free copies of these materials (when they are available) and other documents filed with the SEC at the SEC's website at www.sec.gov. A free copy of the definitive proxy statement when it becomes available may also be obtained from World Waste Technologies, Inc., 20400 Stevens Creek Road, 7th Floor, Cupertino, California 95014, Attention: Adam Shore. The Company and its executive officers and directors may be deemed to be participants in the solicitation of proxies from World Waste's shareholders with respect to the merger. Investors and shareholders may obtain more detailed information regarding the direct and indirect interests of World Waste and its respective executive officers and directors in the proposed merger by reading the definitive proxy statement. FORWARD-LOOKING STATEMENTS This Current Report on Form 8-K contains forward-looking statements related to, among other things, the completion of the merger and the other transactions contemplated by the Merger Agreement. Investors are cautioned that forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from those contemplated in the forward-looking statements. Such risks include, but are not limited to, the ability of the parties to the Merger Agreement to satisfy the conditions to closing specified in the Merger Agreement, including, without limitation, receipt of the affirmative vote of World Waste's shareholders, World Waste's ability to maintain a sufficient cash balance, and other risks and uncertainties outlined in World Waste's documents filed with the SEC. All forward-looking statements and other information in this Current Report on Form 8-K are based upon information available as of the date of this Report. Such information may change or become invalid after the date of this Current Report, and, by making these forward-looking statements, World Waste undertakes no obligation to update these statements after the date of this Current Report, except as required by law. ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
EXHIBIT NO. DESCRIPTION ----------------- ---------------------------------------------------------------------------- 2.1 Amendment No. 3, dated as of January 28, 2009, to Amended and Restated Agreement and Plan of Merger by and among World Waste Technologies, Inc., Vertex Energy, L.P., Vertex Energy, Inc., Vertex Merger Sub, LLC and Benjamin P. Cowart. 2.2 Amendment No. 4, dated as of February 2, 2009, to Amended and Restated Agreement and Plan of Merger by and among World Waste Technologies, Inc., Vertex Energy, L.P., Vertex Energy, Inc., Vertex Merger Sub, LLC and Benjamin P. Cowart. 10.1 Note Purchase Agreement, dated as of February 2, 2009, by and between World Waste Technologies, Inc., and Vertex Energy LP. 10.2 Senior Subordinated Secured Promissory Note, dated as of February 2, 2009, by and between World Waste Technologies, Inc., and Vertex Energy, L.P. 10.3 Security Agreement, dated as of February 2, 2009, by and between World Waste Technologies, Inc., and Vertex Energy, L.P. 10.4 Guaranty dated as of February 2, 2009, by Benjamin P. Cowart in favor of World Waste Technologies, Inc.
-3- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, hereunto duly authorized. WORLD WASTE TECHNOLOGIES, INC. Date: February 5, 2009 By: /s/ John Pimentel ----------------------------- John Pimentel Chief Executive Officer -4- EX-2.1 2 worldwaste_8k-ex0201.txt AMENDMENT NO. 3 TO AGREEMENT AND PLAN OF MERGER Exhibit 2.1 AMENDMENT NO. 3 TO AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER This Amendment No. 3 (this "AMENDMENT") is made as of this 28th day of January, 2009, to that certain Amended and Restated Agreement and Plan of Merger, dated as of May 19, 2008, as amended (as so amended, the "MERGER 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 Benjamin P. Cowart, as agent ("AGENT") of the shareholders of Vertex Nevada, on the other hand. WWT, Vertex LP, Vertex Nevada, Merger Sub and the Agent are collectively referred to herein as the "PARTIES". Capitalized terms used herein but not otherwise defined shall have the meanings ascribed to them in the Merger Agreement. WHEREAS, the Parties desire to make a further change to the Merger Agreement. NOW, THEREFORE, in consideration of the mutual promises exchanged herein, the Parties agree as follows: 1. Section 8.1(b) of the Merger Agreement is hereby amended and restated in its entirety to read as follows: "By either of the Vertex Parties or WWT if the Closing does not occur on or before March 31, 2009." 2. NO FURTHER CHANGES. All other provisions of the Merger Agreement shall remain in full force and effect after the execution of this Amendment. 3. TEXAS LAW GOVERNS. This Amendment shall be governed by and construed under the internal laws of the State of Texas. IN WITNESS WHEREOF, the Parties hereto have duly executed this Amendment as of the day and year first above written. World Waste Technologies, Inc., a California Corporation By: /s/ JOHN PIMENTEL --------------------------- Name: John Pimentel Title: CEO Vertex Merger Sub, LLC, a California Limited Liability Company By: /S/ BENJAMIN P. COWART --------------------- Name: Benjamin P. Cowart Title: CEO Vertex Energy, Inc., a Nevada corporation By: /S/ BENJAMIN P. COWART --------------------- Name: Benjamin P. Cowart Title: CEO /S/ BENJAMIN P. COWART -------------------------------- Benjamin P. Cowart, individually Vertex Energy LP, a Texas limited partnership By: /S/ BENJAMIN P. COWART ----------------------- Name: Benjamin P. Cowart Title: CEO EX-2.2 3 worldwaste_8k-ex0202.txt AMENDMENT NO. 4 TO AGREEMENT AND PLAN OF MERGER Exhibit 2.2 AMENDMENT NO. 4 TO AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER This Amendment No. 4 (this "AMENDMENT") is made as of this 2nd day of February, 2009, to that certain Amended and Restated Agreement and Plan of Merger, dated as of May 19, 2008, as amended (as so amended, the "MERGER 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 Benjamin P. Cowart, as agent ("AGENT") of the shareholders of Vertex Nevada, on the other hand. WWT, Vertex LP, Vertex Nevada, Merger Sub and the Agent are collectively referred to herein as the "PARTIES". Capitalized terms used herein but not otherwise defined shall have the meanings ascribed to them in the Merger Agreement. WHEREAS, the Parties desire to make certain changes to the Merger Agreement. NOW, THEREFORE, in consideration of the mutual promises exchanged herein, the Parties agree as follows: 1. Section 1.1 of the Merger Agreement is hereby amended by adding the definition of "Closing Balance" to read in its entirety as follows: "CLOSING BALANCE" means $2.4 million, provided however that if and only if the Bridge Note, including all interest accrued thereon, is repaid in full prior to the Closing, then the term "Closing Balance" shall mean $4.8 million." 2. Section 1.1 of the Merger Agreement is hereby amended by adding the definition of "Bridge Note" to read in its entirety as follows: "BRIDGE NOTE" means that certain $1,000,000 senior secured promissory note dated as of February 2, 2009 issued by Vertex LP in favor of WWT." 3. Section 1.1of the Merger Agreement is hereby amended and restated in its entirety to eliminate the defined term "ADVANCED AMOUNT." 4. The first two sentences of Section 5.6 of the Merger Agreement are hereby amended and restated in their entirety to read as follows: "5.6 WWT OPERATIONS. As of the Effective Time, all of WWT's assets, Intellectual Property and Contracts (including that certain secured promissory note by CleanTech Biofuels, Inc. in the principal amount of $450,000 and those certain warrants to acquire shares of CleanTech Biofuels, Inc.'s common stock) shall be vested in the Surviving Corporation. Immediately following the Effective Time, an amount in cash equal to the Closing Balance shall be distributed by the Surviving Corporation to Vertex Nevada." 5. Section 6.1(f) of the Merger Agreement is hereby amended and restated in its entirety to read as follows: "(f) CASH. WWT shall have cash and cash equivalents totaling at least the Closing Balance." 6. Section 6.1(g) of the Merger Agreement is hereby amended and restated in its entirety to read as follows: "TERMINATION OF COWART GUARANTEES. If and only if the Bridge Note, including all accrued interest thereon, has been repaid in full prior to the Closing, the Cowart Guarantees shall have been terminated." 7. NO FURTHER CHANGES. All other provisions of the Merger Agreement shall remain in full force and effect after the execution of this Amendment. 8. TEXAS LAW GOVERNS. This Amendment shall be governed by and construed under the internal laws of the State of Texas. IN WITNESS WHEREOF, the Parties hereto have duly executed this Amendment as of the day and year first above written. World Waste Technologies, Inc., a California Corporation By: /S/ JOHN PIMENTEL ---------------------------- Name: John Pimentel Title: CEO Vertex Merger Sub, LLC, a California Limited Liability Company By: /S/ BENJAMIN P. COWART ---------------------- Name: Benjamin P. Cowart Title: CEO Vertex Energy, Inc., a Nevada corporation By: /S/ BENJAMIN P. COWART ----------------------- Name: Benjamin P. Cowart title: CEO /S/ BENJAMIN P. COWART ---------------------------------- Benjamin P. Cowart, individually Vertex Energy LP, a Texas limited partnership By: /S/ BENJAMIN P. COWART ----------------------- Name: Benjamin P. Cowart Title: CEO EX-10.1 4 worldwaste_8k-ex1001.txt NOTE PURCHASE AGREEMENT Exhibit 10.1 NOTE PURCHASE AGREEMENT This Note Purchase Agreement (this "Purchase Agreement") dated as of February 2, 2009, between Vertex Energy, L.P., a Texas limited partnership (the "Company") and World Waste Technologies, Inc., a California corporation (the "Lender"). RECITALS A. Lender desires to purchase from the Company, and the Company desires to sell to the Lender, upon the terms and subject to the conditions of this Agreement, a senior subordinated secured promissory note (the "Note"), substantially in the form attached hereto as Exhibit A, in the aggregate principal amount of One Million Dollars ($1,000,000.00) (the "Loan Amount"). B. This Agreement, the Note, the Security Agreement (as defined in the Note), the Guaranty (as defined in the Note) and the Amendment (as defined below) are sometimes hereinafter collectively referred to as the "Transaction Documents." C. Capitalized terms not otherwise defined herein shall have the meaning given to such terms in the Note and Security Agreement. AGREEMENTS NOW, THEREFORE, in consideration of their respective promises contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties, the Company and the Lender hereby agree as follows: 1. ISSUANCE, SALE AND DELIVERY OF NOTE. (a) ISSUANCE OF THE NOTE. Subject to the terms and conditions set forth in this Agreement and in reliance upon the representations and warranties contained herein, the Company agrees to issue and sell to the Lender, and the Lender hereby agrees to purchase from the Company, the Note. (b) CLOSING. The closing of the purchase and sale of the Note (the "Closing") shall be held at the offices of The Loev Law Firm, PC in Bellaire, Texas, or at such other location as shall be agreed upon by the parties hereto, on the date hereof (the "Closing Date"). (c) CLOSING DELIVERIES BY THE LENDER. At the Closing, the Lender shall deliver to the Company: (i) the Security Agreement, duly executed by the Lender; (ii) an amendment to the Merger Agreement in the form attached hereto as Exhibit B (the "Amendment"), duly executed by the Lender; and (ii) the Loan Amount by cashiers' check, certified funds or wire transfer. 1 (d) CLOSING DELIVERIES BY THE COMPANY. At the Closing, the Company shall deliver to the Lender: (i) the Note, duly executed by the Company; (ii) the Security Agreement, duly executed by the Company; (iii) the Guaranty, duly executed by the Guarantor (as defined in the Note); (iv) the Amendment, duly executed by the Company and the other parties thereto (other than the Lender); (v) an opinion of counsel to the Company and the Guarantor, in form and substance satisfactory to the Lender; and (vi) a certificate of the General Partner of the Company dated as of the Closing Date, certifying: (A) the Company's organizational documents as true and complete and attaching certified copies of same; (B) as to the incumbency and genuineness of the specimen signatures of each officer of the Company executing any of the Transaction Documents; (C) the resolutions of partners of the Company authorizing the execution, delivery and performance of the Transaction Documents and the consummation of the transactions contemplated thereby, as true and complete and attaching copies of same; and (D) that all consents, approvals and other actions of, and notices and filings with, all entities and persons as may be necessary or required with respect to the execution of the parties of the transactions contemplated thereby, have been obtained or made. 2. LENDER'S REPRESENTATIONS AND WARRANTIES. The Lender represents and warrants to the Company that: (a) AUTHORIZATION; ENFORCEMENT. The Transaction Documents as to which the Lender is a party have been duly and validly authorized, executed and delivered by the Lender and are each and collectively valid and binding agreements of the Lender enforceable against it in accordance with their terms, except as enforceability may be limited by bankruptcy, insolvency, moratorium, liquidation, or similar laws relating to, or affecting, generally the enforcement of creditors' rights and remedies or by other equitable principles of general application. 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and warrants to the Lender that: (a) ORGANIZATION AND QUALIFICATION. The Company is duly organized and existing in good standing under the laws of Texas and has the requisite partnership power to own its properties and to carry on its business as now being conducted. (b) AUTHORIZATION; ENFORCEMENT. (i) The Company has the requisite power and authority to enter into and perform the Transaction Documents, to issue and sell the Note in accordance with the terms hereof, and to perform its obligations under the Note in accordance with the requirements of the same, (ii) 2 the execution, delivery and performance of the Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized, (iii) the Transaction Documents have been duly and validly authorized, executed and delivered by the Company, and (iv) the Transaction Documents constitute the valid and binding obligations of the Company enforceable against it in accordance with their respective terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting, generally, the enforcement of creditors' rights and remedies or by other equitable principles of general application. (c) NO CONFLICTS. The execution, delivery and performance of the Transaction Documents by the Company and the consummation by it of the transactions contemplated thereby will not (i) result in a violation of the Company's charter documents or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company is a party, or result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations) applicable to the Company or by which any property or asset of the Company is bound or affected. (d) CONSENTS. The Company is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under the Transaction Documents. (e) ABSENCE OF LITIGATION. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board or body pending or, to the knowledge of the Company, threatened against or affecting the Company, wherein an unfavorable decision, ruling or finding would have a material adverse effect or which would adversely affect the validity or enforceability of, or the authority or ability of the Company to perform its obligations under the Transaction Documents or any of the documents contemplated therein. 4. COVENANTS. (a) USE OF PROCEEDS. The Company shall use the net proceeds from the sale of the Note to finance trade payables to feedstock suppliers strictly in accordance with the terms of Exhibit C hereto. (b) REPORTING OBLIGATION. Until the Note is repaid in full, the Company will periodically and in good faith report to the Lender and its Board of Directors with respect to the status of the Company's business and its cash position. 5. GOVERNING LAW; MISCELLANEOUS. (a) GOVERNING LAW AND VENUE. This Agreement shall be governed by and interpreted in accordance with the laws of the State of California without regard to the principles of conflict of laws. Each of the parties hereto consents to the jurisdiction of any state or federal court located within the county of Los Angeles in the State of California, and irrevocably agrees that all actions or proceedings relating to this Agreement or the transactions contemplated hereby shall be litigated in one of such courts, and each of the 3 parties waives any objection that it may have based on improper venue or FORUM NON CONVENIENS to the conduct of any such action or proceeding in any such court and waives personal service of any and all process upon it, and consents to all such service of process made in the manner set forth in Section 6(f). Nothing contained in this Section 6(a) shall affect the right of any party to serve legal process on any other party in any other manner permitted by law. (b) COUNTERPARTS. This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and signature pages from such counterparts have been delivered. (c) HEADINGS; GENDER, ETC. The headings of this Agreement are for convenience of reference and shall not form a part of, or affect the interpretation of this Agreement. As used herein, the masculine shall refer to the feminine and neuter, the feminine to the masculine and neuter, and the neuter to the masculine and feminine, as the context may require. As used herein, unless the context clearly requires otherwise, the words "herein," "hereunder" and "hereby," shall refer to this entire Agreement and not only to the Section or paragraph in which such word appears. If any date specified herein falls upon a Saturday, Sunday or public or legal holidays, the date shall be construed to mean the next business day following such Saturday, Sunday or public or legal holiday. For purposes of this Agreement, a "business day" is any day other than a Saturday, Sunday or public or legal holiday. (d) SEVERABILITY. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction. (e) ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor the Lender makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be waived or amended other than by an instrument in writing signed by the party to be charged with enforcement. (f) NOTICES. Any notices required or permitted to be given under the terms of this Agreement shall be delivered in accordance with the notice provisions of the Merger Agreement. (g) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns. Neither the Company nor the Lender shall assign this Agreement or any rights or obligations hereunder without the prior written consent of the other (which consent shall not be unreasonably withheld). (h) NO THIRD PARTY BENEFICIARIES. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person. 4 (i) SURVIVAL. The representations, warranties, agreements and covenants of the Company and the Lender contained in this Agreement shall survive the Closing of the purchase and sale of the Note purchased and sold hereby. (j) FURTHER ASSURANCE. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby. (k) REMEDIES. No provision of this Agreement providing for any specific remedy to a party shall be construed to limit such party to the specific remedy described, and any other remedy that would otherwise be available to such party at law or in equity shall be so available. Nothing in this Agreement shall limit any rights a party may have with any applicable federal or state securities laws with respect to the transactions contemplated hereby. [Remainder of the page intentionally left blank] 5 IN WITNESS WHEREOF, the Lender and the Company have caused this Note Purchase Agreement to be duly executed as of the date first written above. THE COMPANY: VERTEX ENERGY, L.P. By its General Partner VTX, INC., a Texas corporation By: /s/ Benjamin P. Cowart ---------------------- Name: Benjamin P. Cowart Title: CEO LENDER: WORLD WASTE TECHNOLOGIES, INC. By: /s/ John Pimentel --------------------------- Name: John Pimentel Title: CEO 6 EX-10.2 5 worldwaste_8k-ex1002.txt SENIOR SUBORDINATED SECURED PROMISSORY NOTE Exhibit 10.2 THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS. THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR ASSIGNED EXCEPT AS PROVIDED HEREIN AND (1) PURSUANT TO A REGISTRATION STATEMENT WITH RESPECT TO SUCH NOTE WHICH IS EFFECTIVE UNDER THE ACT OR (2) PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS RELATING TO THE DISPOSITION OF SECURITIES, PROVIDED THAT AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO VERTEX ENERGY, L.P. TO SUCH EFFECT IS PROVIDED TO IT IN CONNECTION THEREWITH. SENIOR SUBORDINATED SECURED PROMISSORY NOTE $1,000,000.00 HOUSTON, TEXAS FEBRUARY 2, 2009 This Senior Subordinated Secured Promissory Note (this "NOTE") is being delivered pursuant to that certain Note Purchase Agreement (the "PURCHASE AGREEMENT"), dated as of the date hereof, by and between Vertex Energy, L.P., a Texas limited partnership ("MAKER") and World Waste Technologies, Inc., a California corporation ("WWT"). This Note is being issued as a non-negotiable senior subordinated secured obligation of Maker and ranks senior to all of Maker's other obligations, whether now existing or hereinafter incurred or created, except that this Note is subordinated to the Bank Debt (as defined in Section 2 hereof) as set forth herein. The payment of all amounts due under this Note, including interest accrued thereon, is secured pursuant to the terms of that certain Security Agreement, dated as of the date hereof, by and between Maker and WWT (the "SECURITY AGREEMENT") and is guaranteed pursuant to the terms of that certain Guaranty Agreement, dated as of the date hereof, by Benjamin P. Cowart in favor of WWT (the "GUARANTY"). Capitalized terms not otherwise defined herein shall have the meaning given such terms in the Purchase Agreement. 1. PRINCIPAL AND INTEREST. Maker hereby promises to pay to WWT, together with its successors and authorized assigns ("PAYEE"), in immediately available funds, the principal sum of $1.0 million, together with interest accrued on the unpaid principal of this Note at the rate of 12.0% per annum, commencing on the date hereof. Interest shall be computed based on the basis of a 360-day year for the actual number of days elapsed. Principal and interest on this Note shall be payable in full on the first to occur of (i) April 30, 2009, (ii) upon consummation of the closing of the Merger, and (iii) the 60-day anniversary of the date that the Merger is terminated or abandoned by the parties thereto (the first to occur of such dates being referred to herein as the "MATURITY DATE"). In the event that this Note becomes due upon consummation of the Merger, WWT and Maker agree that the repayment hereof shall be made pursuant to a dollar-for-dollar reduction in the $4.4 payment required to be made by WWT to the Agent in accordance with Section 6.1(i) of the Merger Agreement. All or any portion of the principal amount outstanding under this Note may be prepaid by Maker at any time without premium or penalty. Each such principal prepayment shall be accompanied by the interest accrued and outstanding with respect to such principal amount. As of and during the 1 continuance of an Event of Default (as defined in Section 5), interest on any principal or interest then outstanding shall accrue at a rate per annum equal to 15%. 2. SUBORDINATION. (a) AGREEMENT TO SUBORDINATE. Maker, for itself and its successors, and Payee, by its acceptance of this Note, agrees that the payment of the principal of and interest on, and any other amounts due in respect of, this Note is subordinated in right of payment, to the extent and in the manner stated in this Section 2, to the prior payment in full of the Bank Debt. "BANK DEBT" means all amounts due and owing by Maker to Regions Bank (the "Bank"), pursuant to that certain Loan Agreement dated as of June 2007 between Maker and the Bank, in the aggregate principal amount of up to $8.0 million (the "BANK LOAN AGREEMENT"). (b) NO PAYMENT ON NOTE IF BANK DEBT IS IN DEFAULT. Notwithstanding anything in this Note to the contrary, no payment on account of principal of, interest on or other amounts due in respect of this Note, shall be made by or on behalf of Maker if, at the time of such payment, or immediately after giving effect thereto, there shall exist under the Bank Debt any default in the payment of all or any portion of principal of or interest thereon, which default shall have resulted in the full amount of the Bank Debt being declared due and payable and which default shall not have been cured or waived. The Maker shall notify Payee in writing promptly following the occurrence of the foregoing. In the event that, notwithstanding the provisions of this Section 2(b), payments are made by or on behalf of Maker in contravention of the provisions of this Section 2(b), such payments shall be held by Payee in trust for the benefit of, and shall be paid over to and delivered to, the Bank, for application to the payment of the Bank Debt remaining unpaid to the extent necessary to pay the Bank Debt in full in accordance with the terms of the Bank Debt, after giving effect to any concurrent payment or distribution to the Bank. (c) RELIANCE BY THE BANK ON SUBORDINATION PROVISIONS. Payee, by its acceptance hereof, acknowledges and agrees that the foregoing subordination provisions are, and are intended to be, an inducement and a consideration for the Bank to continue to hold the Bank Debt, and the Bank shall be deemed conclusively to have relied on such subordination provisions in continuing to hold the Bank Debt. In furtherance hereof, it is expressly understood by all parties to this Note that the Bank is a third-party beneficiary to Section 2 of this Note and shall be fully entitled to enforce its provisions. (d) SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS OF MAKER OR THE BANK. No right of the Bank to enforce subordination as provided herein shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of Maker or by any act or failure to act, in good faith, by the Bank, or by any noncompliance by Maker with the terms of this Note, regardless of any knowledge thereof which the Bank may have or be otherwise charged with. (e) OBLIGATION OF MAKER UNCONDITIONAL. Nothing contained in this Section 2 or elsewhere in this Note is intended to or shall impair, as between Maker and Payee, the obligation of Maker, which is absolute and unconditional, to pay to Payee the principal of and interest on this Note as and 2 when the same shall become due and payable in accordance with its terms, or is intended to or shall affect the relative rights of Payee and creditors of Maker other than the Bank, nor shall anything herein prevent Payee from exercising all remedies otherwise permitted by applicable law upon an Event of Default, subject to the rights, if any, under this Section 2, of the Bank in respect of cash received upon the exercise of any such remedy. 3. CONDUCT OF BUSINESS OF MAKER. Except as contemplated by the Merger Agreement, during the period from the date hereof to the date on which all amounts due under this Note have been satisfied in full, Maker agrees as follows: (a) Maker will (i) preserve its existence, rights and franchises; (ii) not make any material change in the nature or manner of its business activities; (iii) not liquidate, dissolve, acquire another entity or merge or consolidate with or into another entity or change its form of organization; (iv) not amend its organizational documents in any manner that may conflict with any terms or condition of this Note, the Security Agreement, the Guaranty or the Purchase Agreement; and (iv) not sell, lease transfer or otherwise dispose of any assets, other than sales and leases of inventory in the ordinary course of business consistent with past practice. (b) Maker will not create, incur, assume or have outstanding any indebtedness for borrowed money (including capitalized leases) except (i) any indebtedness owing to the Bank, (ii) any indebtedness owing to Payee, (iii) ordinary course trade payables, and (iv) indebtedness incurred after the date hereof the proceeds of which are immediately used to repay in full all amounts (principal and accrued interest) due under this Note (the indebtedness in this subsection (iv) being referred to as "REPAYMENT DEBT"). (c) Maker will not create, incur, assume or permit to exist any mortgage, pledge, encumbrance or other lien or levy upon or security interest in any of the Maker's property now owned or hereafter acquired, except (i) taxes and assessments which are either not delinquent or which are being contested in good faith with adequate reserves provided, (ii) easements, restrictions and minor title irregularities which do not, as a practical matter, have an adverse effect upon the ownership and use of the affected property, (iii) liens in favor of the Bank, (iv) liens in favor of Payee; (v) other liens disclosed in writing to the Payee prior to the date hereof, and (vi) liens in favor of the holder of any Repayment Debt. (d) Maker will not guarantee or become a surety or otherwise contingently liable for any obligations of others, except pursuant to the deposit and collection of checks and similar matters in the ordinary course of business. (e) Maker will maintain insurance to such extent, covering such risks and with such insurers as is usual and customary for businesses operating similar properties, including without limitation, insurance for fire and other risks insured against by extended coverage, public liability insurance and workers' compensation insurance. (f) Maker will pay and discharge, when due, all of its taxes, assessments and other liabilities, except when the payment thereof is being contested in good faith by appropriate procedures which will avoid foreclosure of liens securing such items, and with adequate reserves provided therefor. 3 (g) Maker will not declare, set aside or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of its ownership interests, make any other actual, constructive or deemed distribution in respect of its ownership interests or otherwise make any payments to any of its partners in their capacities as such, or redeem or otherwise acquire any of its outstanding ownership interests. 4. NO USURY. This Note is hereby expressly limited so that in no event whatsoever, whether by reason of deferment or advancement of loan proceeds, acceleration of maturity of the loan evidenced hereby, or otherwise, shall the amount paid or agreed to be paid to Payee hereunder for the loan, use, forbearance or detention of money exceed the maximum interest rate permitted by the laws of the State of Texas. If at any time the performance of any provision involves a payment exceeding the limit of the price that may be validly charged for the loan, use, forbearance or detention of money under applicable law, then automatically and retroactively, ipso facto, the obligation to be performed shall be reduced to such limit, it being the specific intent of Maker and Payee that all payments under this Note are to be credited first to interest as permitted by law, but not in excess of (i) the agreed rate of interest hereunder, or (ii) that permitted by law, whichever is the lesser, and the balance toward the reduction of principal. 5. EVENTS OF DEFAULT. If an Event of Default (as defined below) occurs (unless all Events of Default have been cured or waived by Payee), Payee may, by notice to Maker, declare the principal amount then outstanding of, and the accrued interest and all other amounts payable on, this Note to be immediately due and payable. Maker will give Payee notice of the occurrence of an Event of Default promptly (setting forth in reasonable detail all facts related thereto) and in any event no later than two business days after Maker has knowledge of the occurrence of any such event. The then-outstanding principal balance of this Note, together with any interest accrued thereon shall become immediately due and payable if any of the following events ("EVENTS OF DEFAULT") shall occur: (a) Maker shall fail to pay, when and as due, the principal or interest payable hereunder on the Maturity Date; or (b) Any event which results in or permits the acceleration or the maturity of any indebtedness of Maker to others under any agreement or undertaking and shall continue for more than the period of grace, if any, specified therein and shall not have been waived pursuant thereto; or (c) If there shall exist final judgments against Maker aggregating in excess of One Hundred Thousand Dollars ($100,000) and if any one of such judgments shall have been outstanding for any period of forty-five (45) days or more from the date of its entry and shall not have been discharged in full or stayed pending appeal; or (d) Maker shall have breached in any material respect any covenant in the Purchase Agreement, the Security Agreement, or this Note (other 4 than such as are referred to above in Section 5), and, with respect to breaches capable of being cured, such breach shall not have been cured within five (5) days following the occurrence of such breach; or (e) Guarantor shall have breached in any material respect any covenant in the Guaranty and, with respect to breaches capable of being cured, such breach shall not have been cured within five (5) days following the occurrence of such breach; or (f) Any representation or warranty subject to a materiality qualification made by Maker herein or in the Purchase Agreement, the Security Agreement or any other document referred to herein or therein shall prove to have been incorrect in any respect, or any representation or warranty not subject to a materiality qualification made by the Maker herein or in any other such document shall prove to have been incorrect in any material respect; or (g) Any representation or warranty subject to a materiality qualification made by the Guarantor in the Guaranty or any other document referred to therein shall prove to have been incorrect in any respect, or any representation or warranty not subject to a materiality qualification made by the Guarantor therein or in any other such document shall prove to have been incorrect in any material respect; or (h) Maker shall: (i) become insolvent or take any action which constitutes its admission of inability to pay its debts as they mature; (ii) make an assignment for the benefit of creditors, file a petition in bankruptcy, petition or apply to any tribunal for the appointment of a custodian, receiver or a trustee for it or a substantial portion of its assets; (iii) commence any proceeding under any bankruptcy, reorganization, arrangement, readjustment of debt, dissolution or liquidation or statute of any jurisdiction, whether now or hereafter in effect; (iv) have filed against it any such petition or application in which an order for relief is entered or which remains undismissed for a period of ninety (90) days or more; (v) indicate its consent to, approval of or acquiescence in any such petition, application, proceeding or order for relief or the appointment of a custodian, receiver or trustee for it or a substantial portion of its assets; or (vi) suffer any such custodianship, receivership or trusteeship to continue undischarged for a period of ninety (90) days or more; or (i) Maker shall take any partnership action authorizing, or in furtherance of, any of the foregoing. 6. REMEDIES ON DEFAULT. In case any one or more Events of Default shall occur and be continuing, Payee may proceed to protect and enforce its rights by an action at law, suit in equity or other appropriate proceeding, whether for the specific performance of any agreement contained herein or in the Purchase Agreement, the Security Agreement or the Guaranty or for an injunction against a violation of any of the terms hereof or thereof, or in aid of the exercise of any power granted hereby or thereby or by law or otherwise. In case of a default in the payment of any principal of or premium, if any, or interest on this Note, Maker will pay to Payee such further amount as shall be sufficient to cover the reasonable cost and expenses of collection, including, without limitation, reasonable attorneys' fees, expenses and disbursements. No course of dealing and no delay on the part of Payee in exercising any right, power or remedy shall operate as a waiver thereof or otherwise prejudice Payee's rights, powers or remedies. No right, power or remedy conferred by this Note, the Security Agreement, the Guaranty or the Purchase Agreement upon Payee shall be 5 exclusive of any other right, power or remedy referred to herein or therein or now or hereafter available at law, in equity, by statute or otherwise. 7. AMENDMENTS AND WAIVERS. Any term of this Note may be amended or waived only with the written consent of Maker and Payee. Any amendment or waiver effected in accordance with this Section 7 shall be binding upon Maker and Payee. No delay or omission on the part of Payee in exercising any right herein given to Payee shall impair such right or be considered as a waiver thereof or acquiescence in any default hereunder. 8. GOVERNING LAW. This Note shall be governed by and construed in accordance with the internal laws of the State of California. 9. ATTORNEYS' FEES. If any suit or action is instituted to enforce or interpret this Note, the prevailing party shall be entitled to recover all reasonable expenses, including, without limitation, reasonable attorneys' fees and expenses. 10. PARTIES IN INTEREST. This Note is non-negotiable and shall not be assigned or transferred by Payee without the express prior written consent of Maker. The rights and obligations of Maker and Payee shall be binding upon and shall inure to the benefit of their successors and permitted assigns. The provisions of this Note may be amended, waived or modified only upon the written consent of Maker and Payee. 11. PRESENTMENT. Maker waives presentment, demand, notice of dishonor, notice of default or delinquency, notice of acceleration, notice of protest and nonpayment, notice of costs, expenses or losses and interest thereon and diligence in taking any action to collect any sums owing under this Note or in proceeding against any of the rights or interests in or to properties securing payment of this Note. 12. PAYMENT. Principal and interest on this Note shall be payable in lawful money of the United States and shall be made at the address of Payee set forth in the Purchase Agreement, or at such other place as Payee shall have designated to Maker in writing for such purpose. 13. NOTICE. Except as otherwise expressly provided herein, all notices, requests and demands to or upon the respective parties hereto to be effective shall be in made in accordance with the notice provisions of the Purchase Agreement. 6 IN WITNESS WHEREOF, the undersigned duly authorized officer of Maker has executed this Senior Subordinated Secured Promissory Note as of the date first set forth above. VERTEX ENERGY, L.P., a Texas limited partnership By its General Partner, VTX, Inc., a Texas corporation By: /s/ Benjamin P. Cowart ----------------------- Name: Benjamin P. Cowart Its: CEO 7 EX-10.3 6 worldwaste_8k-ex1003.txt SECURITY AGREEMENT Exhibit 10.3 SECURITY AGREEMENT This SECURITY AGREEMENT, dated as of February 2, 2009 (as the same may from time to time be amended, supplemented or otherwise modified, this "SECURITY AGREEMENT"), by and between World Waste Technologies, Inc., a California corporation (the "SECURED PARTY"), and Vertex Energy, L.P., a Texas limited partnership (the "DEBTOR"). W I T N E S S E T H: - - - - - - - - - - WHEREAS, the Debtor and the Secured Party are parties to the certain Note Purchase Agreement, dated as of the date hereof (the "PURCHASE AGREEMENT"), which provides for, among other things, the issuance to the Secured Party of non-negotiable senior subordinated secured promissory note (the "NOTE") in the aggregate principal amount of $1,000,000.00; and WHEREAS, it is a condition precedent to the consummation of the transactions contemplated by the Purchase Agreement that the Debtor execute and deliver this Security Agreement to the Secured Party. NOW, THEREFORE, the parties hereto hereby agree as follows: ARTICLE I DEFINITIONS 1.1 DEFINED TERMS. As used herein, capitalized terms defined in this Agreement and not otherwise defined herein are used herein as so defined. "ACCOUNT DEBTOR" shall mean the Person who is obligated on a Receivable. "ACCOUNTS" shall mean "accounts" as such term is defined in the UCC. "CHATTEL PAPER" shall mean "chattel paper" as such term is defined in the UCC. "COLLATERAL" shall have the meaning assigned to it in Article II hereof. "COLLATERAL RECORDS" shall mean books, records, computer software, computer printouts, customer lists, blueprints, technical specifications, manuals, and similar items which relate to any Collateral other than such items obtained under license or franchise security agreements which prohibit assignment or disclosure of such items. "CONTRACTS" means all contracts, undertakings, franchise agreements or other agreements in or under which the Debtor now holds or hereafter acquires any right, title or interest, including, without limitation, with respect to an Account, any agreement relating to the terms of payment or the terms of performance thereof. "DOCUMENTS" shall mean "documents" as such term is defined in the UCC. "EQUIPMENT" shall mean "equipment" as such term is defined in the UCC, including, without limitation, machinery, manufacturing equipment, data processing equipment, computers, office equipment, furniture, appliances, and tools. "EVENT OF DEFAULT" shall have the meaning assigned to it in the Note. "FIXTURES" shall mean "fixtures" as such term is defined in the UCC. "GENERAL INTANGIBLES" shall mean "general intangibles" as such term is defined in the UCC, including, without limitation, rights to the payment of money (other than Receivables), trademarks, copyrights, patents, and contracts, licenses and franchises (except in the case of licenses and franchises in respect of which the Debtor is the licensee or franchisee if the agreement in respect of such license or franchise prohibits by its terms any assignment or grant of a security interest), limited and general partnership interests and joint venture interests, federal income tax refunds, trade names, distributions on certificated securities (as defined in ss. 8-102(a)(4) of the UCC) and uncertificated securities (as defined in ss. 8-102(a)(18) of the UCC), computer programs and other computer software, inventions, designs, trade secrets, goodwill, proprietary rights, customer lists, supplier contracts, sale orders, correspondence, advertising materials, payments due in connection with any requisition, confiscation, condemnation, seizure or forfeiture of any property, reversionary interests in pension and profit-sharing plans and reversionary, beneficial and residual interests in trusts, credits with and other claims against any Person, together with any collateral for any of the foregoing and the rights under any security agreement granting a security interest in such collateral. "INSTRUMENTS" shall mean "instruments" as such term is defined in the UCC. "INVENTORY" shall mean "inventory" as such term is defined in the UCC, including without limitation, all goods (whether such goods are in the possession of the Debtor or of a bailee or other Person for sale, lease, storage, transit, processing, use or otherwise and whether consisting of whole goods, spare parts, components, supplies, materials or consigned or returned or repossessed goods), including without limitation, all such goods which are held for sale or lease or are to be furnished (or which have been furnished) under any contract of service or which are raw materials or work in progress or materials used or consumed in the Debtor's business. "INVESTMENT PROPERTY" shall mean "investment property" as such term is defined in the UCC. "LIEN" shall mean any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), or preference, priority or other security agreement of any kind or nature whatsoever, including, without limitation, the filing of any financing statement or similar instrument under the UCC or comparable law of any jurisdiction, domestic or foreign. "PERMITTED LIENS" shall mean any of the following (1) Liens for taxes, fees, assessments or other governmental charges which are not yet due and payable or which are being contested in good faith with a reserve or other appropriate provision having been made therefor; (2) statutory liens of landlords, carriers, warehousemen, mechanics, materialmen and other similar 2 liens imposed by law which are incurred in the ordinary course of business; (3) Liens incurred or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security; (4) easements, reservations, rights of way, restrictions, minor defects or irregularities in title and other similar Liens not interfering in any material respect with the ordinary conduct of the business of the Debtor; (5) Liens in favor of the Secured Party and Regions Bank (the "SENIOR SECURED PARTY"); (6) Liens existing on the date hereof and set forth on SCHEDULE A hereto; (7) Liens (i) upon or in any Equipment acquired or held by the Debtor to secure the purchase price of such Equipment or indebtedness incurred solely for the purpose of financing the acquisition of such Equipment or (ii) existing on such Equipment at the time of its acquisition, provided that the Lien is confined solely to the Equipment so acquired, improvements thereon and the Proceeds of such Equipment; and (8) Liens arising from judgments, decrees or attachments. "PERSON" shall mean and include any individual, partnership, joint venture, firm, corporation, association, trust or other enterprise or any government or political subdivision or agency, department or instrumentality thereof. "PROCEEDS" shall mean "proceeds" as such term is defined in the UCC. "RECEIVABLES" shall mean all rights to payment for goods sold or leased or services rendered, whether or not earned by performance and all rights in respect of the Account Debtor, including, without limitation, all such rights in which the Debtor has any right, title or interest by reason of the purchase thereof by the Debtor, and including, without limitation, all such rights constituting or evidenced by any Account, Chattel Paper, Instrument, General Intangible, note, contract, invoice, purchase order, draft, acceptance, book debt, intercompany account, security agreement, or other evidence of indebtedness or security, together with (1) any collateral assigned, hypothecated or held to secure any of the foregoing and the rights under any security agreement granting a security interest in such collateral; (2) all goods, the sale of which gave rise to any of the foregoing, including, without limitation, all rights in any returned or repossessed goods and unpaid seller's rights; (3) all guarantees, endorsements and indemnifications on, or of, any of the foregoing; and (4) all powers of attorney for the execution of any evidence of indebtedness or security or other writing in connection therewith. "RECEIVABLES RECORDS" shall mean (1) all original copies of all documents, instruments or other writings evidencing the Receivables; (2) all books, correspondence, credit or other files, records, ledger sheets or cards, invoices, and other papers relating to Receivables, including, without limitation, all tapes, cards, computer tapes, computer discs, computer runs, record keeping systems and other papers and documents relating to the Receivables, whether in the possession or under the control of the Debtor or any computer bureau or agent from time to time acting for the Debtor or otherwise; (3) all evidences of the filing of financing statements and the registration of other instruments in connection therewith and amendments, supplements or other modifications thereto, notices to other creditors or secured parties, and certificates, acknowledgments, or other writings, including without limitation lien search reports, from filing or other registration officers; (4) all credit information, reports and memoranda relating thereto, and (5) all other written or non-written forms of information related in any way to the foregoing or any Receivable. 3 "SECURED OBLIGATIONS" means the indebtedness and obligations of the Debtor evidenced by the Note, including all principal and interest, together with all other indebtedness and costs and expenses for which the Debtor is responsible under this Agreement or the Note. "UCC" shall mean the Uniform Commercial Code as the same may, from time to time, be in effect in the State of Texas; provided, however, in the event that any or all of the attachment, perfection or priority of the Secured Party's security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the state of incorporation of the Debtor, the term "UCC" shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such attachment, perfection or priority and for purposes of definitions related to such provisions. ARTICLE II GRANT OF SECURITY INTERESTS As security for the prompt and complete payment and performance in full of all the Secured Obligations, the Debtor hereby assigns, conveys, mortgages, and pledges, hypothecates and transfers to the Secured Party and hereby grants to the Secured Party a security interest in and continuing lien on all of the Debtor's right, title and interest in, to and under the following, whether now owned or existing or hereafter acquired or arising, and wherever located (all of which being hereinafter collectively called the "COLLATERAL"): (i) all Accounts; (ii) all Chattel Paper; (iii) all Collateral Records; (iv) Contracts; (v) all Documents; (vi) all Equipment; (vii) all Fixtures; (viii) all General Intangibles; (ix) all Instruments; (x) all Inventory; (xi) all Investment Property; (xii) all Receivables; (xiii) all Receivables Records; 4 (xiv) all other tangible and intangible personal property; and (xv) all accessions, attachments and additions to any or all of the foregoing, all substitutions and replacements for any or all of the foregoing and all Proceeds or products of any or all of the foregoing. ARTICLE III RIGHTS OF THE SECURED PARTY; COLLECTION OF ACCOUNTS. (a) Notwithstanding anything contained in this Security Agreement to the contrary, the Debtor expressly agrees that it shall remain liable under each of its Contracts and each of its licenses to observe and perform all the conditions and obligations to be observed and performed by it thereunder and that it shall perform all of its duties and obligations thereunder, all in accordance with and pursuant to the terms and provisions of each such Contract or license. The Secured Party shall not have any obligation or liability under any Contract or license by reason of or arising out of this Security Agreement or the granting to the Secured Party of a lien therein or the receipt by the Secured Party of any payment relating to any contract or license pursuant hereto, nor shall the Secured Party be required or obligated in any manner to perform or fulfill any of the obligations of the Debtor under or pursuant to any Contract or license, or to make any payment, or to make any inquiry as to the nature or the sufficiency of any payment received by it or the sufficiency of any performance by any party under any Contract or license, or to present or file any claim, or to take any action to collect or enforce any performance or the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times. (b) The Secured Party authorizes the Debtor, upon the occurrence and continuance of an Event of Default, to collect its Accounts, provided that such collection is performed in a prudent and businesslike manner, and the Secured Party may, upon the occurrence and during the continuation of any Event of Default and without notice, limit or terminate said authority at any time. Upon the occurrence and during the continuance of any Event of Default, at the request of the Secured Party, the Debtor shall deliver to the Secured Party all original and other documents evidencing and relating to the performance of labor or service which created such Accounts, including, without limitation, all original orders, invoices and shipping receipts. (c) The Secured Party may at any time, upon the occurrence and during the continuance of any Event of Default, after notifying the Debtor of its intention to do so, notify Account Debtors of the Debtor, parties to the Contracts of the Debtor, obligors in respect of Instruments of the Debtor and 5 obligors in respect of Chattel Paper of the Debtor that the Accounts and the right, title and interest of the Debtor in and under such Contracts, Instruments and Chattel Paper have been assigned to the Secured Party and that payments shall be made directly to the Secured Party. Upon the request of the Secured Party, the Debtor shall so notify such Account Debtors, parties to such Contracts, obligors in respect of such Instruments and obligors in respect of such Chattel Paper. Upon the occurrence and during the continuance of any Event of Default, the Secured Party may, in its name or in the name of others, communicate with such Account Debtors, parties to such Contracts, obligors in respect of such Instruments and obligors in respect of such Chattel Paper to verify with such parties, to the Secured Party's satisfaction, the existence, amount and terms of any such Accounts, Contracts, Instruments or Chattel Paper. ARTICLE IV REPRESENTATIONS AND WARRANTIES The Debtor has delivered to the Secured Party a certificate signed by the Debtor and entitled "Perfection Certificate" (the "Perfection Certificate") attached as Annex A. The Debtor represents and warrants to the Secured Party as follows: (a) the Debtor's exact legal name is that indicated on the Perfection Certificate and on the signature page hereof, (b) the Debtor is an organization of the type, and is organized in the jurisdiction set forth in the Perfection Certificate, (c) the Perfection Certificate accurately sets forth the Debtor's organizational identification number or accurately states that the Debtor has none, (d) the Perfection Certificate accurately sets forth the Debtor's place of business or, if more than one, its chief executive office, as well as the Debtor's mailing address, if different, (e) all other information set forth on the Perfection Certificate pertaining to the Debtor is accurate and complete, (f) that there has been no change in any information provided in the Perfection Certificate since the date on which it was executed by the Debtor and (g) that the liquidation value of each component of the Collateral as of the date hereof is accurately set forth in all materially respects on Schedule B hereto. ARTICLE V COVENANTS The Debtor covenants and agrees with the Secured Party that from and after the date of this Security Agreement: 5.1 FURTHER ASSURANCES. The Debtor will from time to time at the expense of the Debtor, promptly execute, deliver, file and record all further instruments, endorsements and other documents, and take such further action as the Secured Party may deem reasonably desirable in obtaining the full benefits of this Security Agreement and of the rights, remedies and powers herein granted, including, without limitation, the following: (i) The filing of any financing statements, in a form reasonably acceptable to the Secured Party under the UCC or applicable law, rule or regulation in effect in any jurisdiction with respect to the Liens and security interests granted hereby. The Debtor also hereby authorizes the Secured Party to file any such financing statements, including without limitation, continuation statements, and amendments thereto, in all jurisdictions and with all filing offices as the Secured Party may determine, in its reasonable discretion are necessary or advisable to perfect the security interests granted to the Secured Party in connection herewith without the signature of the Debtor to the extent permitted by applicable law. Such financing statements may describe the Collateral in the same manner as described in this Security Agreement or may contain an indication or description of Collateral that describes such property in any other manner as the Secured Party may determine, in its reasonable discretion, is necessary, advisable or prudent to ensure the 6 perfection of the security interests in the Collateral granted to the Secured Party in connection herewith, including, without limitation, describing such property as "all assets" or "all personal property." A photocopy or other reproduction of this Security Agreement shall be sufficient as a financing statement and may be filed in lieu of the original to the extent permitted by applicable law. The Debtor will pay or reimburse the Secured Party for all filing fees and related expenses reasonably incurred in connection therewith; and (ii) Furnish to the Secured Party from time to time statements and schedules further identifying and describing the Collateral and its location and such other reports in connection with the Collateral as the Secured Party may reasonably request, all in reasonable detail and in form reasonably satisfactory to the Secured Party. 5.2 COVENANTS CONCERNING DEBTOR'S LEGAL STATUS. Without providing at least 30 days' prior written notice to the Secured Party, the Debtor will not change its name, its place of business or, if more than one, chief executive office, or its mailing address or organizational identification number if it has one. If the Debtor does not have an organizational identification number and later obtains one, the Debtor shall forthwith notify the Secured Party of such organizational identification number. The Debtor will not change its type of organization, jurisdiction of organization or other legal structure, except as specifically contemplated by the Merger Agreement. 5.3 COVENANTS CONCERNING COLLATERAL. The Collateral, to the extent not delivered to the Secured Party, will be kept at those locations listed on the Perfection Certificate and the Debtor will not remove the Collateral from such locations, without providing at least thirty days prior written notice to the Secured Party, except for sales and leases of inventory in the ordinary course of business consistent with past practice. Except as previously pledged and assigned to the Senior Secured Party, and except for the security interest herein granted, the Debtor shall be the owner of or have other rights in the Collateral free from any right or claim of any other Person, lien, security interest or other encumbrance, and the Debtor shall defend the same against all claims and demands of all Persons at any time claiming the same or any interests therein adverse to the Secured Party. The Debtor (i) shall not pledge, mortgage or create, or suffer to exist any right of any Person in or claim by any Person to the Collateral, or any security interest, lien or encumbrance in the Collateral in favor of any Person, other than the Senior Secured Party and the Secured Party; (ii) will keep the Collateral in good order and repair and will not use the same in violation of law or any policy of insurance thereon; (iii) will permit the Secured Party, or its designee, to inspect the Collateral at any reasonable time, wherever located; (iv) will pay promptly when due all taxes, assessments, governmental charges and levies upon the Collateral or incurred in connection with the use or operation of such Collateral or incurred in connection with this Agreement; (v) will continue to operate its business in compliance with all applicable provisions of the federal Fair Labor Standards Act, as amended, and with all applicable provisions of federal, state and local statutes and ordinances dealing with the control, shipment, storage or disposal of hazardous materials or substances; and (vi) will not sell or otherwise dispose, or offer to sell or otherwise dispose, of the Collateral or any interest therein except for sales and leases of inventory in the ordinary course of business. 7 5.4 MAINTAIN RECORDS. The Debtor will keep and maintain at its own cost and expense reasonably satisfactory and complete records of the Collateral. 5.5 OTHER ACTIONS AS TO ANY AND ALL COLLATERAL. The Debtor will, at the request and option of the Secured Party, take any and all other actions the Secured Party may reasonably determine to be necessary or useful for the attachment and perfection of, and the ability of the Secured Party to enforce, the Secured Party's security interest in any and all of the Collateral, including, without limitation, (i) executing, delivering and, where appropriate, filing financing statements and amendments relating thereto under the UCC, to the extent, if any, that the Debtor's signature thereon is required therefor, (ii) causing the Secured Party's name to be noted as secured party on any certificate of title for a titled good if such notation is a condition to attachment, perfection or priority of, or ability of the Secured Party to enforce, the Secured Party's security interest in such Collateral, (iii) complying with any provision of any statute, regulation or treaty of the United States as to any Collateral if compliance with such provision is a condition to attachment, perfection or priority of, or ability of the Secured Party to enforce, the Secured Party's security interest in such Collateral, (iv) obtaining governmental and other third party waivers, consents and approvals in form and substance satisfactory to Secured Party, including, without limitation, any consent of any licensor, lessor or other Person obligated on Collateral, (v) obtaining waivers from mortgagees and landlords in form and substance satisfactory to the Secured Party and (vi) taking all actions under any earlier versions of the UCC or under any other law, as reasonably determined by the Secured Party to be applicable in any relevant UCC or other jurisdiction, including any foreign jurisdiction. 5.6 RIGHT OF INSPECTION. The Secured Party shall at all times on a confidential basis have full and free access during normal business hours to the Collateral and to all the books, correspondence and records of the Debtor, and the Secured Party and its representatives may examine the same, take extracts therefrom and make photocopies thereof, and the Debtor agrees to render the Secured Party, at the Debtor's cost and expense, such clerical and other assistance as may be reasonably requested with regard thereto. The Secured Party and its representatives shall (i) at all times also have the right to enter into and upon any premises where any of the Inventory or Equipment is located for the purpose of inspecting the same or observing its use, and (ii) after an Event of Default has occurred, to repossess any or all of the Collateral. 5.7 PAYMENT OF OBLIGATIONS. The Debtor will pay promptly when due all taxes, assessments and governmental charges or levies imposed upon the Collateral, as well as all claims of any kind (including, without limitation, claims for labor, materials, supplies and services) against or with respect to the Collateral, except that no such charge need be paid if (i) the validity thereof is being contested in good faith by appropriate proceedings, (ii) the Debtor has promptly notified the Secured Party of the existence of such proceedings and such proceedings do not involve, in the good faith and reasonable opinion of the Secured Party, any material danger for the sale, forfeiture or loss of any material portion of the Collateral or any material interest therein and (iii) such charge is adequately reserved against on the Debtor's books in accordance with generally accepted accounting principles. 5.8 NEGATIVE PLEDGE. Without the consent of the Secured Party, the Debtor will not create, incur or permit to exist, will defend the Collateral 8 against, and will take such other action as is necessary to remove, any Lien or claim on or to the Collateral, other than the Liens created hereby and other than Permitted Liens. 5.9 LIMITATIONS ON DISPOSITIONS OF COLLATERAL. Without the express prior written consent of the Secured Party (which consent the Secured Party may withhold or delay in its complete and sole discretion), the Debtor will not sell, transfer, lease or otherwise dispose of any of the Collateral, or attempt, offer or contract to do so, except for sales and leases of Inventory in the ordinary course of its business consistent with past practice, except for transfers specifically contemplated by the Merger Agreement, and except for, so long as no Event of Default shall have occurred and be continuing, the disposition in the ordinary course of business of items of Equipment which have become worn out or obsolete. 5.10 EXPENSES INCURRED BY SECURED PARTY. In the Secured Party's discretion, if the Debtor fails to do so, the Secured Party may discharge taxes and other encumbrances at any time levied or placed on any of the Collateral, maintain any of the Collateral, make repairs thereto and pay any necessary filing fees or insurance premiums. The Debtor agrees to reimburse the Secured Party on demand for all expenditures so made. The Secured Party shall have no obligation to the Debtor to make any such expenditures, nor shall the making thereof be construed as the waiver or cure of any Default or Event of Default. 5.11 SECURED PARTY'S OBLIGATIONS AND DUTIES. Anything herein to the contrary notwithstanding, the Debtor shall remain obligated and liable under each contract or agreement comprised in the Collateral to be observed or performed by the Debtor thereunder. The Secured Party shall not have any obligation or liability under any such contract or agreement by reason of or arising out of this Agreement or the receipt by the Secured Party of any payment relating to any of the Collateral, nor shall the Secured Party be obligated in any manner to perform any of the obligations of the Debtor under or pursuant to any such contract or agreement, to make inquiry as to the nature or sufficiency of any payment received by the Secured Party in respect of the Collateral or as to the sufficiency of any performance by any party under any such contract or agreement, to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to the Secured Party or to which the Secured Party may be entitled at any time or times. The Secured Party's sole duty with respect to the custody, safe keeping and physical preservation of the Collateral in its possession shall be to deal with such Collateral in the same manner as the Secured Party deals with similar property for its own account. ARTICLE VI POWER OF ATTORNEY 6.1 Following the occurrence and continuance of an Event of Default, Debtor hereby irrevocably constitutes and appoints the Secured Party and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of the Debtor and in the name of the Debtor or in its own name, from time to time in the Secured Party's reasonable discretion, for the purpose of enforcing the Secured Party's rights under Article VII below, to take any and all appropriate action by any technologically available means, which may include, without limitation, any form of electronic data transmission, and to 9 execute in any appropriate manner, which may include, without limitation, using any symbol that the Secured Party may adopt to signify the Debtor's intent to authenticate, any and all documents and instruments which may be reasonably necessary or desirable to enforce Secured Party's rights under Article VII below, subject in all cases to any rights of the Senior Secured Party. The Debtor hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof. This power of attorney is a power coupled with an interest and shall be irrevocable. ARTICLE VII REMEDIES; RIGHTS UPON DEFAULT 7.1 RIGHTS AND REMEDIES GENERALLY. If an Event of Default shall occur and be continuing, then and in every such case, the Secured Party shall have all the rights and remedies of a secured party under the UCC, shall have all rights now or hereafter existing under all other applicable laws, and, subject to any mandatory requirements of applicable law then in effect, shall have all the rights set forth in this Security Agreement, the Guaranty (as defined in the Note) or the Note and all the rights set forth with respect to the Collateral or this Security Agreement in any other security agreement between the parties, subject in all cases to any rights of the Senior Secured Party. 7.2 ASSEMBLY OF COLLATERAL. If an Event of Default shall occur and be continuing, upon five (5) days' notice to the Debtor, the Debtor shall, at its own expense, assemble the Collateral (or from time to time any portion thereof) and make it available to the Secured Party at any place or places designated by the Secured Party which is reasonably convenient to both parties. 7.3 DISPOSITION OF COLLATERAL. The Secured Party will give the Debtor reasonable notice of the time and place of any public sale of the Collateral or any part thereof or the time after which any private sale or any other intended disposition thereof is to be made. The Debtor agrees that the requirements of reasonable notice to it shall be met if such notice is mailed, postage prepaid to its address specified in the Purchase Agreement (or such other address that the Debtor may provide to the Secured Party in writing) at least ten (10) days before the time of any public sale or after which any private sale may be made. The Proceeds of any sale, disposition or other realization upon all or any part of the Collateral shall be distributed by the Secured Party in the following order of priorities: First, to the Secured Party in an amount sufficient to pay in full the reasonable costs of the Secured Party in connection with such sale, disposition or other realization, including all fees, costs, expenses, liabilities and advances reasonably incurred or made by the Secured Party in connection therewith, including, without limitation, reasonable attorneys' fees; Second, to the Secured Party in an amount equal to the then unpaid Secured Obligations; and Finally, upon payment in full of the Secured Obligations, to the Debtor or its representatives, in accordance with the UCC or as a court of competent jurisdiction may direct. 7.4 RECOURSE. The Debtor shall remain liable for any deficiency if the proceeds of any sale or other disposition of the Collateral are insufficient to satisfy the Secured Obligations. The Debtor shall also be liable for all 10 expenses of the Secured Party reasonably incurred in connection with collecting such deficiency, including, without limitation, the reasonable fees and disbursements of attorneys employed by the Secured Party to collect such deficiency. 7.5 EXPENSES; ATTORNEYS' FEES. The Debtor shall reimburse the Secured Party for all of its reasonable expenses in connection with the exercise of its rights under this Article VII, including, without limitation, all reasonable attorneys' fees and legal expenses incurred by the Secured Party. Expenses of retaking, holding, preparing for sale, selling or the like shall include the reasonable attorneys' fees and legal expenses of the Secured Party. All such expenses shall be secured hereby. 7.6 RIGHTS OF SENIOR SECURED PARTY. The rights of the Secured Party as described in this Article VII, shall at all times (a) be subject to, and (b) rank in priority second to, those of the Senior Secured Party. 7.7 LIMITATION ON DUTIES REGARDING PRESERVATION OF COLLATERAL. The Secured Party's sole duty with respect to the custody, safekeeping and physical preservation of the Collateral in its possession, shall be to deal with it in the same manner as the Secured Party deals with similar property for its own account. (a) The Secured Party shall have no obligation to take any steps to preserve rights against prior parties to any Collateral. (b) Neither the Secured Party nor any of its directors, officers, employees or agents shall be liable for failure to demand, collect or realize upon all or any part of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of the Debtor or otherwise. ARTICLE VIII MISCELLANEOUS 8.1 LIMITATION ON THE SECURED PARTY'S DUTY IN RESPECT OF COLLATERAL. The Secured Party shall be deemed to have acted reasonably in the custody, preservation and disposition of any of the Collateral if it takes such action as the Debtor requests in writing, but failure of the Secured Party to comply with any such request shall not in itself be deemed a failure to act reasonably, and no failure of the Secured Party to do any act not so requested shall be deemed a failure to act reasonably. 8.2 REINSTATEMENT. This Security Agreement shall remain in full force and effect and continue to be effective should any petition be filed by or against the Debtor for liquidation or reorganization, should the Debtor become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any significant part of the Debtor's property and assets, and shall continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Secured Obligations, 11 or any part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee of the Secured Obligations, whether as a "voidable preference," "fraudulent conveyance," or otherwise, all as though such payment or performance had not been made. In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Secured Obligations shall be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned. 8.3 GOVERNING LAW. (i) This Agreement shall be governed by and construed in accordance with the laws of the State of California without regard to the principles of conflicts of law thereof. (ii) Each of the parties hereto consents to the jurisdiction of any state or federal court located within the county of Los Angeles in the State of California, and irrevocably agrees that all actions or proceedings relating to this Agreement, the Note, the Guaranty or the transactions contemplated hereby or thereby shall be litigated in one of such courts, and each of the parties waives any objection that it may have based on improper venue or FORUM NON CONVENIENS to the conduct of any such action or proceeding in any such court and waives personal service of any and all process upon it, and consents to all such service of process made in the manner set forth in Section 8.4. Nothing contained in this Section 8.3(ii) shall affect the right of any party to serve legal process on any other party in any other manner permitted by law. (iii) Each party acknowledges and agrees that any controversy which may arise under this Agreement is likely to involve complicated and difficult issues, and therefore each such party hereby irrevocably and unconditionally waives any right such party may have to a trial by jury in respect of any litigation directly or indirectly arising out of or relating to this Agreement or the transactions contemplated by this Agreement. Each party certifies and acknowledges that (i) no representative, agent or attorney of any other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce the foregoing waiver, (ii) each such party understands and has considered the implications of this waiver, (iii) each such party makes this waiver voluntarily, and (iv) each such party has been induced to enter into this agreement by, among other things, the waivers and certifications in this Section 8.3(iii). 8.4 NOTICES. Except as otherwise expressly provided herein, all notices, requests and demands to or upon the respective parties hereto to be effective shall be in made in accordance with all of the notice provisions of the Purchase Agreement. 8.5 SUCCESSORS AND ASSIGNS. This Security Agreement shall be binding upon and inure to the benefit of the Debtor, the Secured Party, all future holders of the Secured Obligations and their respective successors and assigns, except that the Debtor may not assign or transfer any of its rights or obligations under this Security Agreement without the prior written consent of the Secured Party, which consent the Secured Party may withhold or delay in its sole and complete discretion. 8.6 WAIVERS AND AMENDMENTS. None of the terms or provisions of this Security Agreement may be waived, amended, supplemented or otherwise modified except by a written instrument executed by the party against whom enforcement is sought. In the case of any waiver, the Debtor and the Secured Party shall be restored to their former position and rights hereunder and under the outstanding Secured Obligations, and any Event of Default waived shall be deemed to be cured 12 and not continuing, but no such waiver shall extend to any subsequent or other Event of Default, or impair any right consequent thereon. 8.7 NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the part of the Secured Party in exercising any right, power or privilege hereunder and no course of dealing between the Debtor and the Secured Party shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by the Secured Party of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which the Secured Party would otherwise have on any future occasion. The rights and remedies herein expressly provided are cumulative and may be exercised singly or concurrently and as often and in such order as the Secured Party deems expedient and are not exclusive of any rights or remedies which the Secured Party would otherwise have whether by security agreement or now or hereafter existing under applicable law. No notice to or demand on the Debtor in any case shall entitle the Debtor to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of the Secured Party to any other or future action in any circumstances without notice or demand. 8.8 TERMINATION; RELEASE. When the Secured Obligations have been indefeasibly paid and performed in full this Security Agreement shall terminate, and the Secured Party, at the request and sole expense of the Debtor, will execute and deliver to the Debtor the proper instruments (including UCC termination statements) acknowledging the termination of this Security Agreement, and will duly assign, transfer and deliver to the Debtor, without recourse, representation or warranty of any kind whatsoever, such of the Collateral as may be in the possession of the Secured Party and has not theretofore been disposed of, applied or released. 8.9 HEADINGS DESCRIPTIVE. The headings of the several Sections and subsections of this Security Agreement are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Security Agreement. 8.10 SEVERABILITY. In case any provision in or obligation under this Security Agreement or the Secured Obligations shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby. [THIS SPACE INTENTIONALLY LEFT BLANK] 13 IN WITNESS WHEREOF, the Debtor and the Secured Party have caused this Security Agreement to be duly executed and delivered as of the date first above written. THE DEBTOR VERTEX ENERGY, L.P. By its General Partner, VTX, Inc., a Texas corporation By: /s/ Benjamin P. Cowart -------------------------- Name: Benjamin P. Cowart Title: CEO Address: SECURED PARTY WORLD WASTE TECHNOLOGIES, INC. By: /s/ John Pimentel -------------------- Title: CEO 14 EX-10.4 7 worldwaste_8k-ex1004.txt GUARANTY Exhibit 10.4 GUARANTY This Guaranty (the "GUARANTY") is made as of February 2, 2009 by Benjamin P. Cowart ("GUARANTOR") in favor of World Waste Technologies, Inc. a California corporation ("WORLD WASTE"). RECITALS A. World Waste and Vertex Energy, L.P., a Texas limited partnership ("VERTEX"), are parties to a Note Purchase Agreement, dated the same date as this Guaranty (the "PURCHASE AGREEMENT"), which provides for, among other things, the issuance by Vertex to World Waste of a senior subordinated secured promissory note, dated the same date as this Guaranty (the "NOTE"), in the original principal amount of $1,000,000. Guarantor is the controlling partner of Vertex. B. World Waste and Vertex are also parties to a Security Agreement, dated the same date as this Guaranty (the "SECURITY AGREEMENT"), pursuant to which Vertex has granted to World Waste a security interest in certain of the assets of Vertex in order to secure its obligations under the Note. C. World Waste was unwilling to execute the Purchase Agreement and the Security Agreement and to enter into the transactions described in the Purchase Agreement, the Security Agreement and the Note without receipt from Guarantor of (1) a guaranty of all of the obligations of Vertex under the Note, the Purchase Agreement and the Security Agreement and (2) a pledge of Guarantor's ownership interest in Vertex to secure his obligations under this Guaranty and Vertex's obligations under the Note, the Purchase Agreement and the Security Agreement. The Note, the Purchase Agreement and the Security Agreement collectively are referred to in this Guaranty as the "VERTEX AGREEMENTS" and are referred to individually as a "VERTEX AGREEMENT." NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, receipt of which hereby is acknowledged, Guarantor hereby agrees as follows: 1. GUARANTY. Guarantor hereby unconditionally and irrevocably guarantees to World Waste and its successors and assigns (a) the full and punctual payment (in lawful money of the United States and in immediately available funds), as and when due, of all principal, interest, attorneys' fees, costs, expenses and other amounts which are or may become payable by Vertex under the Vertex Agreements (the "VERTEX DEBT") and (b) the full and punctual performance of all other obligations of Vertex under the Vertex Agreements. The obligations of Vertex under the Vertex Agreements, including the payment obligations regarding the Vertex Debt, are referred to in this Guaranty as the "VERTEX OBLIGATIONS," and the covenants and obligations of Guarantor that are described in the preceding sentence and elsewhere in this Guaranty are referred to in this Guaranty as "GUARANTOR'S OBLIGATIONS." 2. SECURITY INTEREST IN GUARANTOR'S OWNERSHIP INTEREST IN VERTEX. (a) GRANT OF A SECURITY INTEREST. As security for the full and timely payment and performance of the Vertex Obligations and Guarantor's Obligations, Guarantor hereby grants to World Waste a continuing and first-priority security interest (the "SECURITY INTEREST") in the following (collectively, the "COLLATERAL"): all right, title and interest of Guarantor in and to Vertex, including, without limitation, his ownership interest in Vertex and his voting rights as a partner of Vertex; all securities receivable in respect of or in exchange for the foregoing; all rights to subscribe for additional ownership interests in Vertex; all cash and other dividends or distributions paid or payable with respect to Guarantor's ownership interest in Vertex; all of Guarantor's books and records pertaining to the foregoing; and all proceeds from sales, transfers or other dispositions of the foregoing. Without limiting the generality of the foregoing, if Guarantor receives any additional ownership interests in Vertex or ownership interests in any successor to Vertex through a merger, recapitalization or another transaction, such ownership interests shall be considered "Collateral" for purposes of this Guaranty and shall be subject to the Security Interest. (b) NO TRANSFER OF THE COLLATERAL. Prior to the payment and performance in full of all of the Vertex Obligations, Guarantor shall not sell, pledge or otherwise transfer (whether voluntarily, involuntarily, by operation of law, pursuant to a marital dissolution decree or by gift or for consideration) any of the Collateral or any of his interest therein. Any such sale, pledge or other transfer shall be null and void and shall confer no rights on the purported transferee. (c) GUARANTOR'S VOTING RIGHTS. Prior to the occurrence of an Event of Default (defined in Section 8(a) below), Guarantor shall retain the right to exercise his voting rights with respect to the Collateral, provided that he may not exercise such voting rights in contravention of any term of this Guaranty. Following the occurrence of an Event of Default and until the Vertex Obligations are paid and performed in full, Guarantor's voting rights in the Collateral shall be assigned to World Waste and may be exercised by World Waste without Guarantor's consent. (d) PRESERVATION AND PROTECTION OF THE SECURITY INTEREST. Guarantor shall preserve and protect World Waste's first-priority security interest in the Collateral and shall cause the Security Interest to be perfected and to continue to be perfected until the Vertex Obligations are paid and performed in full. Guarantor shall execute and deliver to World Waste (within ten days after receipt of World Waste's request) such other security agreements, endorsements, pledges, assignments and other documents (including, without limitation, financing statements and continuation statements and amendments thereto) as World Waste may request from time to time to effectuate the grant to World Waste of the Security Interest and the perfection of the Security Interest, and World Waste is authorized to file and/or record such documents with appropriate regulatory authorities. Within ten days after receipt of World Waste's request, all instruments representing or evidencing the Collateral shall be delivered to World Waste for retention pursuant to this Guaranty and shall be in suitable form for transfer by delivery or, as applicable, shall be accompanied by Guarantor's endorsement, where necessary, of duly executed instruments of transfer, all in form and substance satisfactory to World Waste. (e) TITLE TO THE COLLATERAL. Guarantor shall at all times maintain good and marketable title to the Collateral free and clear of all liens, encumbrances and other security interests. Guarantor shall pay in full any tax that is imposed on any of the Collateral prior to its delinquency and, within ten days after any other lien or encumbrance is imposed on any of the Collateral, Guarantor shall pay and discharge such lien or other encumbrance in full. 2 (f) POWER OF ATTORNEY. Guarantor hereby appoints World Waste as his attorney-in-fact (with full power of substitution) to execute, deliver and file, effective upon the occurrence of an Event of Default, on Guarantor's behalf and at Guarantor's expense, (1) any financing statements, continuation statements or other documents required to perfect or continue the Security Interest and (2) any other documents and instruments that World Waste determines are necessary or appropriate in order to enable it to exercise its rights and remedies that are provided hereunder and by applicable law upon the occurrence of an Event of Default. This power, being coupled with an interest, shall be irrevocable until the Vertex Obligations are paid and performed in full. (g) TERMINATION OF THE SECURITY INTEREST. The Security Interest shall terminate only if and when the Vertex Obligations have been paid and performed in full. 3. CERTAIN RIGHTS OF WORLD WASTE. Guarantor authorizes World Waste, without giving notice to Guarantor or obtaining Guarantor's consent in his individual capacity and without affecting the liability of Guarantor, but subject to obtaining Vertex's written agreement to the extent its written agreement is required, from time to time to: (a) renew, extend or increase the Vertex Debt or any portion thereof; (b) declare all Vertex Debt due and payable upon the occurrence of a default under the Note; (c) make changes in the dates on which the Vertex Debt is payable; (d) otherwise modify the terms of the Vertex Debt; (e) amend the Vertex Agreements in any respect; (f) take and hold additional security for the Vertex Debt and exchange, enforce, waive and release any such security; (g) apply such security and direct the order or manner of sale thereof as World Waste in its discretion may determine; and (h) add any one or more guarantors of the Vertex Debt. 4. GUARANTOR'S WAIVERS. Guarantor waives: (a) any defense based upon any legal disability or other defense of Vertex or any other guarantor or person or based upon Vertex's cessation for any reason of liability under any Vertex Agreement; (b) any defense based upon any lack of authority of Vertex's officers or other agents acting or purporting to act on behalf of Vertex or any defect in the formation of Vertex; (c) any defense of Guarantor based upon World Waste's election of any remedy against Guarantor or Vertex or both, including, without limitation, any right to require World Waste to proceed against Vertex or another person or to proceed against any other security for the Vertex Obligations; (d) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in any other respects more burdensome than that of a principal; (e) any right of subrogation, any right to enforce any remedy which World Waste may have against Vertex and any right to participate in, or benefit from, any security for the Vertex Obligations now or hereafter held by World Waste; (f) presentment, demand, protest and notice of any kind; (g) the benefit of any statute of limitations affecting the liability of Guarantor hereunder or the enforcement hereof; (h) any right to require World Waste to pursue any other remedy in World Waste's power; (i) any right to revoke this Guaranty; and (j) any right to require World Waste to exercise its rights under the Security Interest before filing an action against Guarantor in his personal capacity. Guarantor waives any other circumstance or event, in existence now or in the future, that might otherwise constitute a legal or equitable defense to the enforcement of this Guaranty. 3 5. GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents, warrants and agrees that: (a) World Waste would not have entered into the Vertex Agreements but for this Guaranty; (b) there are no conditions precedent to the effectiveness of this Guaranty; (c) this Guaranty shall continue in full force and effect and shall be binding on Guarantor regardless of whether World Waste obtains other collateral or any guaranties from others or takes any other action; and (d) Guarantor is the controlling partner of Vertex and owns the Collateral free and clear of all liens and encumbrances. Guarantor consents to Vertex's execution, delivery and performance of the Vertex Agreements. 6. SUBORDINATION. Guarantor subordinates all present and future indebtedness owing by Vertex to Guarantor to the Vertex Debt and other obligations under the Vertex Agreements at any time owing by Vertex to World Waste. Guarantor assigns to World Waste all such indebtedness owed by Vertex to Guarantor as security for this Guaranty. Guarantor further agrees not to assign all or any part of such indebtedness prior to the full payment and performance of the Vertex Obligations. 7. NATURE OF GUARANTOR'S LIABILITY UNDER THIS GUARANTY. This is a guaranty of payment and performance and not merely of collection. Guarantor's obligations under this Guaranty are independent of Vertex's obligations to World Waste under the Vertex Agreements. World Waste may bring a separate action to enforce the provisions hereof against Guarantor without taking action against Vertex or the Collateral or joining Vertex as a party to such action. The obligations of Guarantor under this Guaranty constitute the full recourse obligations of Guarantor and are enforceable against him to the full extent of his assets. 8. EVENT OF DEFAULT; WORLD WASTE'S REMEDIES. (a) EVENT OF DEFAULT. An "EVENT OF DEFAULT" for purposes of this Guaranty means (1) Vertex's or Guarantor's failure to pay when due any Vertex Debt, (2) Vertex's or Guarantor's failure to perform any other Vertex Obligations when due or in accordance with the terms of such obligations, (3) Guarantor's failure to perform any of Guarantor's Obligations when due or in accordance with their terms, or (4) the failure to be true of any representation or warranty of Guarantor that is contained in this Guaranty, if Guarantor does not remedy in full any such failure described in this sentence within ten days after receipt of written notice from World Waste. (b) REMEDIES ON AN EVENT OF DEFAULT. Upon the occurrence of an Event of Default, World Waste shall have the immediate right to file an action at law or equity against Guarantor and/or to take control of all or any part of the Collateral, with or without judicial process, and without demand of performance, advertisement or notice to Guarantor, which are expressly waived by Guarantor; provided, however, that if any notice is required by law in connection with the exercise by World Waste of its rights and remedies, Guarantor agrees that ten days' prior written notice is a reasonable time and manner for notice. Furthermore, World Waste may exercise all of the other rights and remedies that are provided to it under this Guaranty and to a secured party by the Uniform Commercial Code and otherwise by applicable law. World Waste's rights and remedies shall include, without limitation, the power (1) to transfer into World Waste's name or into the name of its nominee any or all of the Collateral and thereafter to receive and retain all cash and other dividends, 4 distributions and payments made on account of the Collateral, and otherwise act with respect thereto as though it were the absolute owner thereof, (2) to sell all or any portion of the Collateral at a public or private sale at such place and time and at such prices and other terms as World Waste may determine, and (3) to file an action against Guarantor in his personal capacity for repayment of the Vertex Debt. Guarantor recognizes that World Waste may be compelled to resort to one or more private sales of any or all of the Collateral to a restricted group of purchasers who will be obliged to agree, among other things, to acquire the Collateral for their own account for investment and not with a view to the distribution or resale thereof. Guarantor acknowledges and agrees that any such private sale may result in prices and other terms less favorable to the seller than if such sale were a public sale and, notwithstanding such circumstances, agrees that any such private sale shall not, for such reason alone, be deemed to have been made in a commercially unreasonable manner. World Waste shall not be under any obligation to delay a sale of any Collateral for the period of time necessary to permit the registration of such Collateral for public sale under the Securities Act of 1933, as amended, or under applicable state securities laws. At any sale, World Waste may, to the extent permissible under applicable law, purchase the whole or any part of the Collateral, and World Waste shall be entitled to use and apply any or all of the Vertex Debt as a credit on account of the purchase price of any Collateral. World Waste and any other purchaser of the Collateral at any such sale shall hold the purchased Collateral free from any claim or right on the part of Guarantor, and Guarantor hereby waives any right of redemption, stay or appraisal that he might otherwise have under applicable law. (c) APPLICATION OF PROCEEDS. Any Collateral or the proceeds of the Collateral held or realized upon at any time by World Waste following an Event of Default shall be applied in satisfaction of the Vertex Debt, in such order of application as World Waste shall determine in its reasonable discretion, until the Vertex Debt is fully paid, and thereafter any balance shall be distributed to Guarantor or as otherwise required by applicable law. (d) NO IMPLIED WAIVERS; CUMULATIVE REMEDIES. No delay or failure of World Waste in exercising any right or remedy under this Guaranty shall operate as a waiver thereof, nor shall any single or partial exercise thereof or any abandonment or discontinuance of steps to enforce such a right or remedy preclude any further exercise thereof or of any other right or remedy. The rights and remedies of World Waste under this Guaranty are cumulative and not exclusive of any rights or remedies which it might otherwise have under the Uniform Commercial Code or other applicable law. Any waiver, permit, consent or approval of any kind or character on the part of World Waste of any Event of Default or any such waiver of any provision of this Guaranty must be in writing and shall be effective only to the extent specifically set forth in writing. Guarantor acknowledges and agrees that the exercise by World Waste of its rights under this Section 8 and the acquisition or sale by Waste Waste of any Collateral will not operate to release Guarantor from his personal obligation to pay the Vertex Debt until full payment of any deficiency on the Vertex Debt has been made in cash. Furthermore, Guarantor acknowledges and agrees that World Waste is not obligated to exercise any of the rights or remedies provided by this Section 8, and that World Waste shall be deemed to have exercised reasonable care in the custody and preservation of any Collateral in its possession if such Collateral is accorded treatment that is substantially similar to that which World Waste accords its own similar property. 5 9. BANKRUPTCY. This Guaranty shall continue in full force and effect in the event of any bankruptcy, insolvency, reorganization, liquidation, dissolution or similar proceeding involving Vertex or Guarantor, and this Guaranty shall continue in full force and effect notwithstanding any subsequent change in the ownership or assets of Vertex. In any bankruptcy of Vertex or other proceeding involving Vertex in which the filing of claims is required by law, Guarantor shall file all claims which Guarantor may have against Vertex relating to any indebtedness of Vertex to Guarantor and shall assign to World Waste all rights of Guarantor thereunder. If Guarantor does not file any such claim, World Waste, as attorney-in-fact for Guarantor, is hereby authorized to do so in the name of Guarantor or, in World Waste's discretion, to assign the claim to a nominee and to cause proof of claim to be filed in the name of World Waste's nominee. The foregoing power of attorney is coupled with an interest and cannot be revoked. World Waste or its nominee shall have the right, in its reasonable discretion, to accept or reject any plan proposed in such proceeding and to take any other action which a party filing a claim is entitled to do. In all such cases, whether in administration, bankruptcy or otherwise, the person or persons authorized to pay such claim shall pay to World Waste the amount payable on such claim and, to the full extent necessary for that purpose, Guarantor hereby assigns to World Waste all of Guarantor's rights to any such payments or distributions; provided, however, Guarantor's obligations hereunder shall not be satisfied except to the extent that World Waste receives cash by reason of any such payment or distribution. If all or any portion of the Vertex Debt and other obligations guaranteed hereunder is paid or performed, the obligations of Guarantor hereunder shall continue and shall remain in full force and effect in the event that all or any part of such payment or performance is avoided or recovered directly or indirectly from World Waste as a preference, fraudulent transfer or otherwise under the Bankruptcy Code or other similar laws. 10. SUCCESSORS AND ASSIGNS. This Guaranty shall be binding upon, and shall inure to the benefit of, the respective successors and assigns of Guarantor and World Waste, provided that the foregoing provision shall not be construed as permitting Guarantor to assign his obligations hereunder. 11. ATTORNEYS' FEES. If any attorney is engaged by World Waste to enforce or defend any provision of this Guaranty, with or without the filing of any legal action or proceeding, Guarantor shall pay to World Waste, within ten days after demand therefor, all reasonable attorneys' fees and costs incurred by World Waste in connection therewith (including, without limitation, in any appellate or post-judgment proceedings), together with interest thereon from the date of such demand until paid at the rate of ten percent per annum (or, if lower, at the maximum rate allowed by applicable law). 12. RULES OF CONSTRUCTION. The term "person" as used herein shall include any individual, corporation, trust or other legal entity of any kind whatsoever. When the context and construction so require, all words used in the singular herein shall be deemed to have been used in the plural and vice versa. All headings appearing in this Guaranty are for convenience only and shall be disregarded in construing this Guaranty. This Guaranty is the result of arms-length negotiations between Guarantor and World Waste and their respective attorneys. Accordingly, neither Guarantor nor World Waste shall be deemed to be the author of this Guaranty, and this Guaranty shall not be construed against either party. 6 13. NOTICES. All notices required or permitted by this Guaranty to be delivered to Guarantor or World Waste shall be delivered in writing, by personal delivery, by overnight courier, by facsimile transmission or by registered or certified mail, return receipt requested, postage prepaid, to the address for such party set forth on the signature page of this Guaranty. Any such notice shall be deemed given as follows: (a) if personally delivered, when served; (b) if sent by overnight courier, on the first business day after delivery to the courier; (c) if sent by facsimile, on the date of transmission if delivered on a business day (or, if not delivered on a business day, on the next business day after transmission); or (d) if sent by registered or certified mail, on the third day after deposit in the mail. 14. GENERAL PROVISIONS. If any provision of this Guaranty shall be determined by a court of competent jurisdiction to be invalid, illegal or unenforceable, that portion shall be deemed severed from this Guaranty and the remaining parts shall remain in full force as though the invalid, illegal or unenforceable portion had never been part of this Guaranty. This Guaranty constitutes the only agreement between Guarantor and World Waste with respect to the subject matter hereof and supersedes all previous agreements with respect thereto. This Guaranty may be amended or terminated only by an agreement in writing executed by Guarantor and World Waste. This Guaranty may be executed in two counterparts, which together shall constitute but one and the same instrument. This Guaranty may be executed by facsimile transmission or by e-mail transmission in PDF format. 15. GOVERNING LAW. This Guaranty shall be governed by, and construed in accordance with, the internal laws of the State of Texas without giving affect to such state's conflict-of-law principles. 16. WAIVER OF JURY TRIAL. Guarantor and World Waste each hereby irrevocably waives all rights that it may have under applicable law to a trial by jury of any issue or claim arising under this Guaranty in any action to enforce or interpret this Guaranty. [signature page follows] 7 IN WITNESS WHEREOF, Guarantor has executed and delivered this Guaranty as of the date appearing on the first page of this Guaranty. /S/ BENJAMIN P. COWART ---------------------- BENJAMIN P. COWART Address: ------------------------------- ------------------------------- AGREED TO AND ACCEPTED: WORLD WASTE TECHNOLOGIES, INC. By: /s/ John Pimentel ----------------- Name: John Pimentel Title: CEO Address: - ------------------------------------- - ------------------------------------- 8 -----END PRIVACY-ENHANCED MESSAGE-----