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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
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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
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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 N
