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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.
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"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
applic
