Exhibit 10.15
PATENT PURCHASE AGREEMENT
This Patent Purchase Agreement (this “Agreement”), between World Waste Technologies, Inc., a
California corporation (the “Seller”), and CleanTech Biofuels, Inc., a Delaware corporation (the
“Buyer”), is entered into as of October 22, 2008 (the “Effective Date”). The Seller and the Buyer
together may be referred to herein as the “Parties” and each of them may be referred to herein as a
“Party.”
RECITALS
WHEREAS, the Seller owns U.S. Patent No. 6,306,248 (the “Patent”); and
WHEREAS, the Buyer wishes to buy the Patent and certain other associated rights, and the
Seller is willing to sell the Patent and certain associated rights, all in accordance with the
terms of this Agreement;
NOW THEREFORE, in consideration of the foregoing recitals and of the following covenants, the
sufficiency of which are hereby acknowledged, the Seller and the Buyer hereby agree as follows:
1.1.
Purchase and Sale of Patent
. At the Closing (as defined below), the Seller
hereby agrees to sell, transfer and deliver to the Buyer, and the Buyer hereby agrees to
purchase and pay for, all of the Seller’s right, title and interest in and to the Patent,
including (i) all rights, claims, credits, judgments, choses in action, or rights for past,
present or future infringement against third parties relating to the Patent, (ii) all
inventions (whether patentable or unpatentable and whether or not reduced to practice),
improvements thereto, and patents, patent applications, and patent disclosures, together
with all reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (iii) all trademarks, service marks, trade dress, logos, and trade
names (whether or not registered), together with all translations, adaptations, derivations,
and combinations thereof and including all goodwill associated therewith, and all
applications, registrations, and renewals in connection therewith, (iv) all copyrightable
works, all copyrights, and all applications, registrations, and renewals in connections
therewith, (v) all trade secrets and confidential business information (including research
and development, know-how, formulas, compositions, manufacturing and production processes
and techniques, technical data, designs, drawings, and specifications), (vi) all computer
software (including data and related documentation), (vii) all other proprietary rights, and
(viii) all copies and tangible embodiments thereof (in whatever form or medium), in the case
of each of (i) through (viii), if and solely to the extent that they (1) directly relate to,
directly describe or directly involve the technology described in the Patent, (2) are, to
the Seller’s Knowledge (as defined below), in the actual possession of the Seller, and (3)
do not violate any of the Ancillary Agreements (as defined below). All of the foregoing are
referred to herein as the “Acquired Patent.” The Seller makes no representations or
warranties as to what, if anything, is in its possession with respect to the foregoing,
other than the actual Patent. The term “Seller’s Knowledge” means the
actual knowledge of Seller’s chief executive officer or chief operating officer, without
independent inquiry or investigation.
1.2.
Consideration
. At the Closing, the Buyer shall pay the Seller a total of
$600,000.00 for the Acquired Patent. The foregoing purchase price shall be paid on the
Closing Date as follows: (i) $150,000.00 in the form of cash in immediately available funds
(the “Initial Payment”), and (ii) $450,000.00 in the form of a Note for a term of nine
months bearing interest at the rate of 6.0% (the “Note”) to be issued on the Closing Date in
the form of
Exhibit A
attached hereto. The Note shall be secured by a pledge of the
Patent pursuant to a Security Agreement in the form of
Exhibit B
attached hereto
(the “Security Agreement”). In addition, in consideration for the Seller entering into this
Agreement, Buyer shall, on the Closing Date, issue to Seller (i) an immediately exercisable
warrant to purchase up to 900,000 shares of the Common Stock of the Buyer at a price equal
to $0.45 per share (the “Warrant”) and (ii) a contingent warrant to purchase up to an
additional 900,000 shares of the Common Stock of the Buyer at a price equal to $0.45 per
share (the “Contingent Warrant”), in the respective forms of
Exhibit C
and
Exhibit D
attached hereto.
1.3.
Assignment of Litigation Rights
. The Seller may currently have the right to
initiate legal proceedings against third parties and to collect damages and other payments
relating to the Acquired Patent, including claims for patent infringement (any such
possible rights and actions relating to the Acquired Patent that are assigned hereunder are
referred to as the “Potential Claims”). Effective as of the Closing, the Seller hereby
assigns and transfers any and all rights it currently has or hereafter may acquire (i) to
initiate legal proceedings against any party related to the Potential Claims, if any, and
(ii) to collect and keep for its own benefit all damages or other payments that it may
collect from any party based on any Potential Claims. Nothing herein, however, shall grant
the Buyer any rights that the Seller currently has or may hereafter acquire to initiate and
pursue legal proceedings based on any patents, patent applications or other intellectual
property owned by the Seller
other
than the Acquired Patent, all of which are
expressly retained by the Seller.
1.4.
Status of Various Agreements
. The Buyer understands that the Seller initially
acquired the Patent from the University of Alabama in Huntsville (“UAH”) pursuant to a
Patent Assignment Agreement, a copy of which is attached hereto as
Exhibit E
(the
“UAH Patent Assignment”). The Buyer acknowledges that it is acquiring the Patent hereunder
subject in all respects to the UAH Patent Assignment. The Buyer further understands that
the Seller had sub-licensed the Patent pursuant to a Revised Amended and Restated
Technology License Agreement between the Seller and Bio-Products International, Inc.
(“BPI”), dated August 19, 2005, a copy of which is attached hereto as
Exhibit F
(the “BPI License Agreement”). Although the Seller believes that the BPI License Agreement
is no longer effective, the Buyer acknowledges that the Seller is making no representations
or warranties with respect to the status of such agreement, and that if such agreement is
in effect, the Buyer is acquiring the Acquired Patent subject in all respects thereto. The
Buyer further acknowledges that the use of the Acquired Patent is subject to a license
agreement between UAH and BPI (the “Main License Agreement”). In this regard, the Buyer
acknowledges that it is acquiring the
Acquired Patent subject to an exclusive worldwide license and subject to any other licenses
and sub-licenses that the holder of such license may have granted.
2
1.5.
Closing
. The closing of the transactions contemplated hereby (the “Closing”)
shall take place at the offices of TroyGould PC, 1801 Century Park East, Los Angeles,
California, on the Effective Date (the “Closing Date”).
1.6.
The Seller’s Deliveries at Closing
. On the Closing Date, the Seller shall
execute and deliver, or cause to be executed and delivered, to the Buyer, an Assignment of
Patent (the “Assignment of Patent”) in the form set forth on
Exhibit G
hereto, the
Security Agreement (duly executed by the Seller), and such other instruments of conveyance
and assignment as the Buyer and its counsel shall deem reasonably necessary to vest in the
Buyer the right, title and interest in and to the Acquired Patent. Notwithstanding the
foregoing, the Seller shall not be obligated to deliver to the Buyer any documentation or
other materials relating to the Patent (as described in Section 1.1) unless and until the
Note has been repaid in full.
1.7.
The Buyer’s Deliveries at Closing
. On the Closing Date, the Buyer shall
deliver to the Seller the Closing Payment by wire transfer of immediately available funds in
accordance with the wire instructions set forth in
Schedule 1
hereto, the Note, the
Warrant, the Contingent Warrant and the Security Agreement (each duly executed by the
Buyer).
|
2.
|
|
Representations and Warranties
.
|
2.1.
Representations and Warranties of the Seller
. The Seller hereby represents and
warrants to the Buyer as follows, which representations shall be true and correct as of the
date of this Agreement and as of the Closing Date:
2.1.1.
Organization and Authorization
. (i) The Seller is duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization, with all requisite corporate power and authority to enter into this
Agreement and the transactions contemplated hereby, (ii) the execution, delivery and
performance of this Agreement and the Assignment of Patent has been authorized by
all necessary corporate action of the Seller, (iii) each of this Agreement and the
Assignment of Patent is a valid, binding obligation of the Seller, enforceable
against the Seller in accordance with its terms except as may be limited by
applicable federal or state bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors’ rights generally; and (iv) the CES Agreement (as
defined below) is the full and complete agreement on the subject matter thereof and
there have been no extensions, modifications, waivers, or amendments thereto.
Notwithstanding the foregoing, the Buyer acknowledges its understanding that the
Seller has granted to CES (as defined below) a series of extensions of time to
conclude the consummation of the transactions contemplated by the CES Agreement.
Although the Seller believes that it currently has no obligations to CES under the
CES Agreement, the Seller makes no representations or warranties to the Buyer with
respect thereto and the Buyer
agrees to assume any risk associated therewith as provided for in Section 2.2.2
hereof.
3
2.1.2.
Status of Patent
. To the Seller’s actual knowledge, without
independent investigation or inquiry, (i) the Acquired Patent includes all of the
applications owned or controlled by the Seller on the date hereof that relate to
processes for cleaning and separating municipal solid waste into its component parts
or any equipment designed for such purposes, (ii) there are no other US or foreign
filings owned or controlled by the Seller filed prior to the date hereof which claim
rights in any technology that could be used to clean and separate municipal solid
waste into its component parts, and (iii) the Seller has provided the Buyer with
copies of all existing agreements relating to the right to use all or part of the
Acquired Patent that are in the Seller’s possession. The Buyer expressly
acknowledges that it understands that the holder of the worldwide license to the
Patent and other parties (i) may have foreign patent applications pending relating
to technology that could be used to clean and separate municipal solid waste into
its component parts, and (ii) may have granted sublicenses to third parties with
respect to the Patent.
2.1.3.
Indemnification
. The Seller shall indemnify, defend and hold
harmless the Buyer and each of its shareholders, directors, officers, employees,
agents, attorneys and representatives, from and against any and all Losses (as
defined below) which may be incurred or suffered by any such party and which arises
out of or results from any breach of any representation, warranty, covenant or
agreement of the Seller contained in this Agreement. “Losses” means any claim,
liability, obligation, loss, damage, assessment, penalty, judgment, settlement,
cost and expense, and including reasonable fees and disbursements incurred in
investigating, preparing, defending against or prosecuting any claim.
2.2.
Representations and Warranties of the Buyer
. The Buyer hereby represents and
warrants to the Seller as follows:
2.2.1.
Organization and Authorization
. (i) The Buyer is duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization, with all requisite corporate power and authority to enter into this
Agreement, the Security Agreement, the Note, the Warrant and the Contingent Warrant
(collectively, the “Transaction Documents”) and the transactions contemplated hereby
and thereby; (ii) the execution, delivery and performance of each Transaction
Document has been authorized by all necessary corporate action of the Buyer; and
(iii) each Transaction Document is a valid, binding obligation of the Buyer,
enforceable against the Buyer in accordance with its terms except as may be limited
by applicable federal or state bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors’ rights generally.
4
2.2.2.
CES Agreement
. The Buyer hereby acknowledges that it is aware that
the Seller is party to an agreement (the “CES Agreement”) relating to the sale of
the Acquired Patent to Clean Earth Solutions, Inc. (“CES”). A copy of the CES
Agreement is attached hereto as
Exhibit H
. The Buyer further acknowledges
that it is fully aware of all of the circumstances surrounding the CES Agreement and
that in entering into this Agreement, it is assuming all risks associated with any
possible claims that might be made against it or the Seller by CES arising under the
CES Agreement with respect to the performance thereof after the date of this
Agreement.
2.2.3.
Indemnification
. The Buyer shall indemnify, defend and hold
harmless the Seller, the Seller’s current and future affiliates, and each of their
respective shareholders, directors, officers, employees, agents, attorneys and
representatives, from and against any and all Losses which may be incurred or
suffered by any such party and which arises out of or results from (i) any breach of
any representation, warranty, covenant or agreement of the Buyer contained in any
Transaction Document, (ii) any action taken by CES or any of the License Parties (as
defined below) (or any of their sub-licensees) against the Seller as a result of the
Seller entering into this Agreement, and (iii) any use by the Buyer of the Acquired
Patent following the Closing.
2.2.4.
Capitalization; Warrants
The capitalization of the Buyer is as set
forth on the Capitalization Schedule attached hereto as
Schedule 2
. The
shares of Common Stock issuable upon exercise of each of the Warrant and the
Contingent Warrant will, upon issuance, be validly issued and outstanding, fully
paid and non-assessable shares of the Buyer’s Common Stock, with no personal
liability attaching to the ownership thereof, free and clear of any liens whatsoever
and with no restrictions on the voting rights or transfer thereof and other
incidents of record and beneficial ownership pertaining thereto.
2.3.
Definitions
. As used herein, the following terms shall be defined as follows:
2.3.1. “Ancillary Agreements” means the UAH Patent Assignment, the BPI License
Agreement, the Main License Agreement and the CES Agreement.
2.3.2. “License Parties” means the UAH, BPI and CES, and their respective
affiliates.
2.4.
Disclaimer
.
EXCEPT AS EXPRESSLY SET FORTH IN SECTION 2.1, THE ACQUIRED PATENT
IS BEING SOLD “AS-IS AND WHERE-IS” AND THE SELLER MAKES NO, AND HEREBY DISCLAIMS ANY,
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, TO THE BUYER WITH RESPECT TO THE ACQUIRED
PATENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, INCLUDING, WITHOUT LIMITATION, WARRANTIES OF
VALIDITY, MERCHANTABILITY, NONINFRINGEMENT, AND FITNESS FOR A PARTICULAR PURPOSE.
Without
limiting the generality of the foregoing, the Seller makes no representations as to the
efficacy or usefulness of the Acquired Patent and the associated licenses and sub-licenses,
and the Seller assumes no responsibility for the successful or unsuccessful application of
the technology contained in the Acquired Patent or in the Buyer’s ability to
successfully defend the Acquired Patent, collect fees from licensees, resell the Acquired
Patent, or use the Acquired Patent in any way.
5
2.5.
LIMITATION ON LIABILITY
. THE SELLER SHALL HAVE NO LIABILITY WITH RESPECT TO
ITS OBLIGATIONS UNDER THIS AGREEMENT OR OTHERWISE FOR CONSEQUENTIAL, EXEMPLARY, SPECIAL,
INDIRECT, INCIDENTAL OR PUNITIVE DAMAGES, EVEN IF IT HAS BEEN ADVISED OF THE POSSIBILITY OF
SUCH DAMAGES. IN ANY EVENT, THE LIABILITY OF THE SELLER TO THE BUYER FOR ANY REASON AND
UPON ANY CAUSE OF ACTION OR CLAIM IN CONTRACT, TORT OR OTHERWISE WITH RESPECT TO THIS
AGREEMENT SHALL BE LIMITED TO THE AMOUNTS ACTUALLY PAID BY THE BUYER TO THE SELLER
HEREUNDER. BOTH PARTIES UNDERSTAND AND AGREE THAT THE LIMITATIONS AND EXCLUSIONS SET FORTH
HEREIN REPRESENT THE PARTIES’ AGREEMENT AS TO THE ALLOCATION OF RISK BETWEEN THE PARTIES
UNDER THIS AGREEMENT.
3.1.
Seller’s Closing Conditions
. The Seller’s obligations to consummate the
transactions contemplated hereby are subject to the satisfaction of the following conditions
as of the Closing Date:
3.1.1.
Representations and Warranties; Performance of Obligations
. All
representations and warranties of the Buyer contained in each Transaction Document
shall be true and correct in all material respects as of the Closing Date with the
same force and effect as though made at and as of the Closing Date and all of the
terms, covenants and conditions of each Transaction Document to be complied with,
performed and satisfied by the Buyer at or before the Closing Date shall have been
complied with, performed and satisfied in all material respects.
3.2.
Buyer’s Closing Conditions
. The Buyer’s obligations to consummate the
transactions contemplated hereby are subject to the satisfaction of the following conditions
as of the Closing Date:
3.2.1.
Representations and Warranties; Performance of Obligations
. All
representations and warranties of the Seller contained in this Agreement shall be
true and correct in all material respects as of the Closing Date with the same force
and effect as though made at and as of the Closing Date and all of the terms,
covenants and conditions of this Agreement to be complied with, performed and
satisfied by the Seller at or before the Closing Date shall have been complied with,
performed and satisfied in all material respects.
6
4.
Omitted
5.
Confidentiality
.
5.1. Either Party may disclose or may have disclosed (the “Disclosing Party”) to the other
party (the “Receiving Party”) certain information that the Disclosing Party considers to be
confidential and/or proprietary, including, but not limited to confidential and/or
proprietary information relating to the Acquired Patent, the Disclosing Party’s technical
processes and formulas, product designs, customer lists, product and business plans,
revenues, projections, marketing and other data (collectively, “Confidential Information”).
Notwithstanding the foregoing, Confidential Information does not include information (i)
already known by the Receiving Party without an obligation of confidentiality, (ii) publicly
known or which becomes publicly known through no omission or unauthorized act of the
Receiving Party, (iii) rightfully received from a third party without any obligation of
confidentiality, or (iv) independently developed by the Receiving Party without use of the
Disclosing Party’s Confidential Information.
5.2. The Receiving Party shall make use of the Confidential Information only for the
purposes of this Agreement and shall protect the Disclosing Party’s Confidential Information
by using the same degree of care, but not less than a reasonable degree of care, to prevent
the unauthorized access, use, dissemination, or publication of the Confidential Information
as the Receiving Party uses to protect its own Confidential Information of a like nature.
5.3. All Confidential Information shall remain the property of the Disclosing Party, and
such Confidential Information and all copies thereof (if any), shall be promptly returned to
the Disclosing Party upon request or upon termination of this Agreement or, at the
Disclosing Party’s sole option, destroyed, in which case the Disclosing Party shall be
notified promptly in writing when its Confidential Information has been destroyed. The
furnishing of any Confidential Information between the Parties shall not constitute the
granting of any right or license to use such Confidential Information.
5.4. The Buyer acknowledges and agrees that (i) certain Confidential Information about the
Seller, including this Agreement, constitutes “confidential information” within the meaning
of Regulation FD promulgated by the Securities and Exchange Commission, and (ii) it is are
aware that federal securities laws prohibit any person who has confidential information
about a public company from purchasing or selling, directly or indirectly, securities of
such public company (including entering into hedging transactions involving such
securities), or from communicating such information to any other person under circumstances
in which it is reasonably foreseeable that such person is likely to trade in such
securities.
7
6.
Notices
. Any notice or communication required or permitted to be delivered to any Party
under this Agreement shall be in writing and shall be deemed properly delivered, given and received
when delivered (by hand, by registered mail, by courier or express delivery service or by fax) to
the address or fax number set forth beneath the name of such Party below (or to such other address
or fax number as such Party shall have specified in a written notice given to the other Party
hereto):
|
|
|
|
|
If to the Seller:
|
|
World Waste Technologies, Inc.
|
|
|
|
13500 Evening Creek Drive North
|
|
|
|
Suite 440
|
|
|
|
San Diego, California 92128
|
|
|
|
Attention: Chief Executive Officer
|
|
|
|
Facsimile: (858) 486-3352
|
|
|
|
|
|
With a copy to:
|
|
TroyGould PC
|
|
|
|
1801 Century Park East, 16th Floor
|
|
|
|
Los Angeles, California 90067
|
|
|
|
Attention: Lawrence P. Schnapp
|
|
|
|
Fax: (310) 201-4746
|
|
|
|
|
|
If to the Buyer to:
|
|
CleanTech Biofuels, Inc.
|
|
|
|
7386 Pershing Avenue
|
|
|
|
St. Louis, Missouri 63130
|
|
|
|
Attention: Michael D. Kime
|
|
|
|
Facsimile: (314) 802-8675
|
7.
Termination; Survival of Representations, Warranties and Covenants; Etc
. This Agreement
shall terminate automatically if the Closing does not occur on or before October
_____
, 2008. No
termination of this Agreement shall relieve any Party from liability for any breach of this
Agreement committed prior to termination. All representations and warranties contained in this
Agreement shall survive for a period of two years following the Closing Date. The provisions of
Sections 2.1.3, 2.2.3, 2.3, 2.4, 2.5, 5, 6 and 8 and shall survive the termination of this
Agreement.
8.1.
Governing Law; Jurisdiction
. This Agreement was executed in, and the
transactions contemplated by and the provisions of this Agreement shall be governed by and
construed in accordance with, the laws of the State of California, without giving effect to
the conflict of laws provisions thereof; and both Parties consent to the jurisdiction of the
state and federal courts sitting in California.
8.2.
Expenses
. Except as provide for in Section 2.1.3 and 2.2.3, each Party shall
be responsible for its own expenses incurred in connection with this Agreement and the
transactions contemplated hereby, and the Buyer shall be responsible for all filing and
recordation fees relating to the transfer of the Acquired Patent hereunder.
8.3.
Entire Agreement; Third Party Beneficiaries; Assignment; Etc.
This Agreement,
including all exhibits and schedules attached hereto, constitutes and contains the entire
agreement of the Parties and supersedes any and all prior negotiations, correspondence,
understandings and agreements between the Parties respecting the subject matter hereof,
except that the terms and conditions of that certain Confidentiality Agreement between the
Parties shall remain in effect. No Transaction Document is intended to confer upon any
person other than the Parties thereto any rights or remedies. Neither Party may
assign its rights or obligations under any Transaction Document without the prior written
consent of the other Party (not to be unreasonably withheld).
8
8.4.
Counterparts
. This Agreement may be executed in counterparts and shall be
effective when each Party has executed at least one of the counterparts even though both
Parties have not executed the same counterpart.
IN WITNESS WHEREOF, this Agreement has been executed as of the date first written above.
|
|
|
|
|
|
|
|
SELLER: WORLD WASTE TECHNOLOGIES, INC.
|
|
|
By:
|
|
|
|
|
|
Name:
|
John Pimentel
|
|
|
|
|
Title:
|
President and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
BUYER: CLEANTECH BIOFUELS, INC.
|
|
|
|
By:
|
|
|
|
|
|
Name:
|
Edward P. Hennessey
|
|
|
|
|
Title:
|
President
|
|
9
EXHIBIT B
FORM OF SECURITY AGREEMENT
EXHIBIT C
FORM OF WARRANT
EXHIBIT D
FORM OF CONTINGENT WARRANT
EXHIBIT E
UAH PATENT ASSIGNMENT
EXHIBIT F
BPI LICENSE AGREEMENT
EXHIBIT G
FORM OF PATENT ASSIGNMENT
Schedule 1
Wire Instructions
Schedule 2
Capitalization Schedule
Exhibit 10.17
SECURITY AGREEMENT
This
SECURITY AGREEMENT
(this “Agreement”) is entered into as of the 22nd day of October,
2008, by CleanTechBiofuels, Inc., a Delaware corporation (“Debtor”), in favor of World Waste
Technologies, Inc. (the “Secured Party”).
W I T N E S S E T H:
WHEREAS
, pursuant to that certain Patent Purchase Agreement between Debtor and the Secured
Party of even date herewith (the “Purchase Agreement”), the Secured Party has agreed to make
certain loans and advances to Debtor which are to be evidenced by that certain Promissory Note of
even date herewith (the “Note”).
WHEREAS
, it is a condition precedent to the effectiveness of the Note that Debtor shall grant
the security interest contemplated by this Agreement.
NOW, THEREFORE
, in consideration of the premises and in order to induce the Secured Party to
make the loans and advances contemplated by the Note, Debtor hereby agrees with the Secured Party
as follows:
Section 1.
Grant of Security
. Debtor hereby assigns and pledges to the Secured Party
and grants to the Secured Party a security interest in all of Debtor’s right, title and interest in
and to the U.S. Patent No. 6,306,248 (“Patent”), all the rights associated with such Patent as set
forth in Section 1.1 of the Purchase Agreement, and all collections, receipts and other proceeds
(cash and non-cash) of any of the foregoing (the “Collateral”).
Section 2.
Security for Obligations
. This Agreement secures the payment of all
obligations of Debtor now or hereafter existing under the Note (all such obligations of Debtor
being the “Obligations”). Without limiting the generality of the foregoing, this Agreement secures
the payment of all amounts that constitute part of the Obligations, including all amounts that
would be owed by Debtor to the Secured Party under the Note but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving Debtor.
Section 3.
Release of Security
. As of the date of the repayment in full of all
indebtedness under the Note, the security interest granted hereby shall terminate and all rights to
the Collateral shall revert to Debtor.
Section 4.
Representations and Warranties
. Debtor represents and warrants, which
representations and warranties shall survive execution and delivery of this Security Agreement, as
follows: (a) The exact legal name, the type of organization, and the jurisdiction of organization
of the Company is accurately set forth on the first page of this Agreement. (b) This Agreement has
been duly executed and delivered by Debtor and is a valid and binding obligation of Debtor,
enforceable against Debtor in accordance with its terms. (c) The execution and delivery by Debtor
of this Agreement and the performance of its obligations hereunder are within Debtor’s authority
and capacity and do not contravene any law, regulation, order or contractual
restriction binding on or affecting Debtor. (d) The pledge and grant of security interest in
the Collateral pursuant to this Agreement creates a valid and perfected security interest in the
Collateral in favor of the Secured Party, securing the payment of all of the Obligations. (g) The
Company will be the sole, legal and equitable owner of the Collateral, and no financing statement
or other evidence of lien covering or purporting to cover the Collateral will be on file in any
public office other than the financing statements filed in connection with the security interest
granted to the Secured Party hereunder.
Section 5.
Further Assurances
.
(a) Debtor agrees that from time to time, at the expense of Debtor, Debtor will promptly
execute and deliver all further instruments and documents, and take all further action, that may be
necessary or desirable, or that the Secured Party may reasonably request, in order to perfect and
protect any pledge, assignment or security interest granted or purported to be granted hereby or to
enable the Secured Party to exercise and enforce its rights and remedies hereunder with respect to
any Collateral. Without limiting the generality of the foregoing, Debtor will: (i) deliver and
pledge to the Secured Party promptly upon receipt thereof all instruments or certificates
representing or evidencing any of the Collateral duly endorsed and accompanied by duly executed
instruments of transfer or assignment, all in form and substance satisfactory to the Secured Party;
and (ii) execute and file such financing or continuation statements, or amendments thereto, and
such other instruments or notices, as may be necessary or desirable, or as the Secured Party may
request, in order to perfect and preserve the pledge, assignment and security interest granted or
purported to be granted hereby.
(b) Debtor hereby authorizes the Secured Party to file one or more financing or continuation
statements, and amendments thereto, relating to all or any part of the Collateral without the
signature of Debtor where permitted by law. A photocopy or other reproduction of this Agreement or
any financing statement covering the Collateral or any part thereof shall be sufficient as a
financing statement where permitted by law.
(c) Debtor will furnish to the Secured Party from time to time statements and schedules
further identifying and describing the Collateral and such other reports in connection with the
Collateral as the Secured Party may reasonably request, all in reasonable detail.
(d) Until payment in full of all of the Obligations, Debtor agrees: (i) to defend the title of
the Collateral and the lien thereon of the Secured Party against the claim of any other person;
(ii) to maintain and preserve such lien until payment; (iii) not use or permit any Collateral to be
used unlawfully or in violation of any provision of this Agreement or any applicable statute,
regulation or ordinance or any policy of insurance covering the Collateral; (iv) to give the
Secured Party at least 30 days’ prior written notice of any change in Debtor’s name, domicile, or
structure; (v) pay promptly when due all property and other taxes, assessments and governmental
charges or levies imposed upon, and all claims against, the Collateral except to the extent the
validity thereof is being contested in good faith; provided that such Debtor shall in any event pay
such taxes, assessments, charges, levies or claims not later than five days prior to the date of
any proposed sale under any judgment, writ or warrant of attachment entered or filed against such
Debtor or any of the Collateral as a result of the failure to make such payment; and
(vi) not sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any
option with respect to, any of the Collateral, or create or suffer to exist any lien upon or with
respect to any of the Collateral.
Page 2
If Debtor fails to perform any agreement contained herein, the Secured Party may itself perform, or
cause performance of, such agreement. Debtor agrees to reimburse the Secured Party on demand for
any payments made or expenses incurred by the Secured Party pursuant to the foregoing authorization
and any unreimbursed amounts shall constitute amounts outstanding under the Note for all purposes
hereof. The powers conferred on the Secured Party by this Agreement are solely to protect the
interests of the Secured Party and shall not impose any duty upon the Secured Party to exercise any
such power, and if the Secured Party shall exercise any such power, such exercise shall not relieve
the Company of any Event of Default (defined below), and the Secured Party shall be accountable
only for amounts actually received as a result thereof. The Secured Party shall be under no
obligation to take steps necessary to preserve the rights in or value of or to collect any sums due
in respect of any Collateral against any other person or entity but may do so at its option.
Section 6.
Events of Default
.
(a) All of the following are Events of Default under this Agreement: (a) Debtor violates any
provisions of this Agreement, the Note or the Purchase Agreement or any representation or warranty
by Debtor under any such agreement is not true. (b) Debtor fails to make payments as and when due
under the Note. (c) The dissolution, liquidation or termination of the legal existence of Debtor.
(d) The appointment of a receiver, trustee or similar judicial officer or agent to take charge of
or to liquidate any property or assets of Debtor. (e) The commencement of any proceeding against
Debtor under any provision of the Bankruptcy Code of the United States, as amended. (f) The
occurrence of a Change of Control, unless either (X) the Secured Party consents thereto or (Y) all
amounts due hereunder are repaid in full concurrently therewith. A Change of Control shall mean the
sale of all or any substantial portion of Debtor’s assets outside of the ordinary course of
business, or the closing of any transaction pursuant to which any person (other than Debtor’s
existing owners) becomes the holder of more than 50% of Debtor’s outstanding ownership interests.
(h) Debtor ceases any material portion of its business operations as presently conducted.
(b) Debtor shall deliver to the Secured Party, immediately upon becoming aware that an Event
of Default has occurred, a written notice specifying the nature and period of existence.
Page 3
Section 7.
Remedies
. If any Event of Default shall have occurred and be continuing:
(a) The Secured Party may exercise in respect of the Collateral, in addition to other rights
and remedies provided for herein or otherwise available to it, all the rights and remedies of a
secured party on default under the Uniform Commercial Code in effect in the State of California at
that time (the “UCC”) (whether or not the UCC applies to the affected Collateral), and also may (i)
take possession of the Collateral in accordance with the applicable provisions of the UCC, (ii)
require Debtor to, and Debtor hereby agrees, that it will at its expense
and upon request of the Secured Party forthwith, assemble all or part of the Collateral as
directed by the Secured Party and make it available to the Secured Party at a place to be
designated by the Secured Party which is reasonably convenient to both parties, and/or
(iii) without notice except as specified below, sell or, to the extent permitted by applicable law,
purchase the Collateral or any part thereof in one or more parcels at public or private sale, at
any of the Secured Party’s offices or elsewhere, for cash, on credit or for future delivery, and
upon such other terms as the Secured Party may deem commercially reasonable. Debtor agrees that if
it sells the Collateral, to the extent notice of sale shall be required by law, at least ten days’
notice to Debtor of the time and place of any public sale or the time after which any private sale
is to be made shall constitute reasonable notification. The Secured Party shall not be obligated to
make any sale of Collateral regardless of notice of sale having been given. The Secured Party may
adjourn any public or private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time and place to which it was
so adjourned. Debtor hereby waives any claim against the Secured Party arising by reason of the
fact that the Secured Party chose to retain the Collateral or the price at which any Collateral may
have been sold at a private sale was less than the price that might have been obtained at a public
sale, even if the Secured Party accepts the first offer received and does not offer such Collateral
to more than one offeree, and agrees that any such private placement shall, in and of itself, not
be deemed to be commercially unreasonable.
(b) Any cash held by the Secured Party as Collateral and all cash proceeds received by the
Secured Party in respect of any sale of, collection from, or other realization upon all or any part
of the Collateral may, in the discretion of the Secured Party, be held by the Secured Party as
collateral for, and then or at any time thereafter be applied (after payment of any amounts payable
to the Secured Party pursuant to this Agreement) in whole or in part by the Secured Party against,
all or any part of the Obligations in such order as the Secured Party shall elect. Any surplus of
such cash or cash proceeds held by the Secured Party and remaining after payment in full of all the
Obligations shall be paid over to Debtor or to whomsoever may be lawfully entitled to receive such
surplus.
(c) The Secured Party may exercise any and all rights and remedies of Debtor under or in
connection with or otherwise in respect of the Collateral, including, without limitation, any and
all rights of Debtor to demand or otherwise require payment of any amount under, or performance of
any provision of, the agreements included within the Collateral.
(d) Debtor agrees that a breach of any of the covenants contained in Section 5 will cause
irreparable injury to the Secured Party, that the Secured Party has no adequate remedy at law in
respect of such breach and, as a consequence, that each and every covenant contained in Section 5
shall be specifically enforceable against Debtor, and Debtor hereby waives and agrees not to assert
any defenses against an action for specific performance of such covenants except for a defense that
no default has occurred giving rise to the Obligations becoming due and payable prior to their
stated maturities.
(e) If the proceeds of any sale or other disposition of the Collateral are insufficient to pay
all the Obligations, Debtor shall be liable for the deficiency and the fees of any attorneys
employed by the Secured Party to collect such deficiency. All rights and remedies
existing under this Agreement are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
Page 4
(f) Upon the occurrence and during the continuance of an Event of Default, Debtor hereby
constitutes and appoints the Secured Party its true and lawful attorney, with full power, in the
name of the Company or otherwise, at the expense of the Company and without notice to or demand
upon the Company, to grant, sell, convey, assign and transfer the Collateral in accordance with the
UCC, free and clear of all liens. The Company agrees to reimburse the Secured Party on demand for
any payments made or expenses incurred by the Secured Party pursuant to the foregoing authorization
and any unreimbursed amounts shall constitute amounts outstanding under the Note for all purposes
hereof. The above power of attorney is irrevocable and coupled with an interest.
Section 9.
Indemnification
. The Company shall defend, indemnify and hold harmless the
Secured Party for any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses, or disbursements (including reasonable attorneys’ fees) of any
kind whatsoever which may be imposed on, incurred by or asserted against the Secured Party in
connection with or in any way arising out of or relating to the Collateral or this Agreement,
except to the extent the same is finally determined by a court of competent jurisdiction to have
arisen as a result of the willful misconduct or bad faith of the Secured Party.
Section 10.
Amendments
. No amendment or waiver of any provision of this Agreement,
and no consent to any departure by Debtor herefrom, shall in any event be effective unless the same
shall be in writing and signed by the Secured Party. Any waiver, express or implied, of any breach
or default shall not be considered a waiver of any subsequent breach or default.
Section 11.
Continuing Security Interest
. This Agreement shall create a continuing
security interest in the Collateral and shall (a) remain in full force and effect until the payment
in full of the Obligations and all other amounts payable under the Note (b) be binding upon Debtor,
its successors and assigns and (c) inure to the benefit of, and be enforceable by, the Secured
Party and its successors, transferees and assigns.
Section 12.
Severability
. Whenever possible each provision of this Note shall be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Note shall be or become prohibited or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
Section 13.
Notices
.
Any notice or other communication herein required or permitted
to be given shall be in writing and may be personally served or sent by facsimile or United States
mail or courier service and shall be deemed to have been given when delivered in person or by
courier service, upon receipt of facsimile, or three business days after depositing it in the
United States mail with postage prepaid and properly addressed. For the purposes hereof, the
address of each party hereto shall be the address for such party set forth in the Purchase
Agreement or such other address as shall be designated by such party in a written notice delivered
to the other parties hereto.
Page 5
Section 14.
Governing Law
.
This Agreement was executed in, and the transactions
contemplated by and the provisions of this Agreement shall be governed by and construed in
accordance with, the laws of the State of California, without giving effect to the conflict of laws
provisions thereof; and both parties consent to the jurisdiction of the state and federal courts
sitting in California.
Section 15.
Counterparts
.
This Agreement may be executed in counterparts and shall be
effective when each party has executed at least one of the counterparts even though both parties
have not executed the same counterpart.
* * * * * * *
Page 6
IN WITNESS WHEREOF, Debtor has duly executed and delivered this Agreement, and the Secured
Party has caused this Agreement to be duly executed and delivered, as of the date first above
written.
|
|
|
|
|
|
|
|
DEBTOR: CLEANTECH BIOFUELS, INC.
|
|
|
|
By:
|
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
|
SECURED PARTY: WORLD WASTE TECHNOLOGIES, INC.
|
|
|
|
By:
|
|
|
|
|
|
Title:
|
|
Page 7