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
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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.
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"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;
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(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
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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
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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.
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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
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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
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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
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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,
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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
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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]
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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/ Xxxxxxxx X. Xxxxxx
--------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: CEO
Address:
SECURED PARTY
WORLD WASTE TECHNOLOGIES, INC.
By: /s/ Xxxx Xxxxxxxx
--------------------
Title: CEO
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