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Exhibit 10.12
THE INDEBTEDNESS EVIDENCED BY THIS NOTE IS SUBJECT TO CERTAIN RIGHTS OF OFFSET
DESCRIBED IN SECTION 10.8 OF A STOCK PURCHASE AGREEMENT DATED AS OF JULY 31,
1996, TO WHICH MAKER AND PAYEE ARE PARTIES. THIS NOTE AND THE INDEBTEDNESS
EVIDENCED HEREBY ARE ALSO SUBJECT TO THE TERMS AND PROVISIONS OF AN
INTERCREDITOR AND SUBORDINATION AGREEMENT DATED AS OF JULY 31, 1996, TO WHICH
WASTEQUIP, INC., MAKER, PAYEE AND SANWA BUSINESS CREDIT CORPORATION ARE PARTIES.
MAKER WILL MAIL TO THE HOLDER HEREOF A COPY OF SUCH INTERCREDITOR AND
SUBORDINATION AGREEMENT WITHOUT CHARGE WITHIN FIVE DAYS AFTER RECEIPT OF A
WRITTEN REQUEST THEREFOR ADDRESSED TO MAKER. ANY PERMITTED ASSIGNEE, TRANSFEREE
OR PLEDGEE HEREUNDER SHALL TAKE THIS NOTE SUBJECT TO THE TERMS HEREOF AND THE
TERMS OF SUCH INTERCREDITOR AND SUBORDINATION AGREEMENT.
THIS NOTE AND THE SECURITIES ISSUABLE UPON THE CONVERSION HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAW, OR QUALIFIED UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED. NEITHER
THIS NOTE NOR THE SECURITIES ISSUABLE UPON THE CONVERSION HEREOF MAY BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS THE SAME ARE REGISTERED AND
QUALIFIED IN ACCORDANCE WITH SAID ACTS AND ANY APPLICABLE STATE SECURITIES LAW,
OR IT IS ESTABLISHED TO THE SATISFACTION OF WASTEQUIP, INC. THAT SUCH
REGISTRATION AND QUALIFICATION ARE NOT REQUIRED.
9% NONCONVERTIBLE SUBORDINATED
PROMISSORY NOTE
July 31, 1996
Cleveland, Ohio $500,000
Wastequip Manufacturing Company, an Ohio corporation
("Maker"), hereby promises, pursuant to the terms, conditions and provisions set
forth herein, to pay to the order of Xxxxx X. May, Sr. ("Payee"), at 00000 Xxxx
Xxxx Xxxxxx #00, Xxxxxx, Xxxxxxxx 00000 (or at such other address as Payee may
designate), the principal amount of Five Hundred Thousand Dollars ($500,000)
(unless this Note shall have been surrendered for conversion as hereinafter
provided) together with interest thereon calculated from the date hereof in
accordance with the provisions of this Note.
1. PAYMENT. The principal amount due hereunder shall be payable
to Payee in four (4) consecutive, equal annual installments of One Hundred
Twenty-Five Thousand Dollars ($125,000) each, commencing on July 31, 2000, and
continuing on each succeeding July 31st, until the entire indebtedness evidenced
hereby, together with accrued interest, has been paid in full. Commencing on the
date hereof, interest will accrue at the rate of nine percent (9%) per annum
(calculated on the basis of a year of 360 days) on the unpaid principal amount
of this Note
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outstanding from time to time; PROVIDED, HOWEVER, that if an Event of Default
(as such term is defined in Section 6 below) occurs, then interest on any amount
of principal which was not paid when due (whether at stated maturity, by
acceleration or otherwise), shall accrue at the rate of eleven percent (11%) per
annum (calculated on the basis of a year of 360 days). Interest accrued on the
unpaid principal balance of this Note shall be paid in annual installments
commencing July 31, 1997, and continue on each succeeding July 31st thereafter
until the entire indebtedness evidenced hereby, together with accrued interest,
has been paid in full. Any accrued interest which for any reason has not
theretofore been paid will be paid in full on the date on which the final
principal payment on this Note is paid. This Note is issued pursuant to a Stock
Purchase Agreement by and between Maker and Payee dated as of July 31, 1996 (the
"Stock Purchase Agreement").
2. FORM OF PAYMENTS; PAYMENT CERTIFICATE. Any payment to be
made hereunder shall be made in lawful money of the United States of America or
by wire transfer of immediately available funds in the manner agreed to by Maker
and Payee. At the time Maker makes any payment hereunder, it shall deliver to
Payee a certificate signed by the President of Maker certifying that Maker is
not then in default under any Senior Indebtedness (as such term is defined in
the Intercreditor and Subordination Agreement described in Section 3 of this
Note).
3. SUBORDINATION. This Note and the indebtedness evidenced
hereby are subject to the terms and provisions of an Intercreditor and
Subordination Agreement, of even date herewith (the "Subordination Agreement"),
by and among Wastequip, Inc., an Ohio corporation and the sole shareholder of
Maker ("Wastequip"), Maker, Payee and Sanwa Business Credit Corporation ("Bank")
including, without limitation, the terms and conditions by which the payment of
principal and interest on this Note is expressly subordinated to the prior
payment of all Senior Indebtedness as defined in the Subordination Agreement
(the "Senior Indebtedness"). Payee covenants and agrees that, upon written
request from Wastequip or Maker, Payee shall, within three (3) days of receipt
of such written request, execute an intercreditor and subordination agreement,
in substantially the same form as the Subordination Agreement, in favor of the
holder of any Senior Indebtedness, whether such Senior Indebtedness is now
existing or is hereafter created, incurred, assumed, acquired or guaranteed. Any
permitted assignee or transferee of this Note, by the taking of such Note, shall
be deemed to have agreed to be bound by the provisions contained herein and in
the Subordination Agreement.
4. PREPAYMENT. Subject to the terms and provisions set forth
herein and in the Subordination Agreement, this Note may be prepaid in whole or
in part at any time without bonus, penalty or premium. Maker shall give Payee at
least 30 days advance written notice of any intent to prepay all or a portion of
this Note and shall deliver to Payee a copy of the consent of the holders of any
Senior Indebtedness to such prepayment on or prior to the date of such
prepayment. Any prepayment shall be credited first against accrued interest due
and payable hereunder, with any remaining balance credited against principal
installments in direct order of maturity.
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5. ADJUSTMENT OF NOTE AND RIGHT OF SETOFF. The terms and
provisions of this Note and the rights of Payee are subject to the rights of
setoff set forth in Section 10.8 of the Stock Purchase Agreement.
6. EVENT OF DEFAULT; ACCELERATION. Each of the following shall
constitute an "Event of Default" under this Note:
(a) if Maker shall: (i) apply for or consent to the
appointment of, or the taking of possession by, a receiver, custodian, trustee
or liquidator of itself or of all or a substantial part of its property; (ii)
admit in writing its general inability to pay its debts as they become due;
(iii) make a general assignment for the benefit of creditors; (iv) commence a
voluntary case under the federal bankruptcy laws (as now or hereafter in
effect); (v) be adjudicated a bankrupt or insolvent; (vi) file a petition
seeking to take advantage of any other law providing for the relief of debtors;
(vii) acquiesce to, or fail to have dismissed, within 30 days, any petition
filed against it in any involuntary case under such bankruptcy laws; or
(b) if Maker shall fail to pay the principal or interest due
hereunder as the same becomes due and payable, which failure: (i) is not
permitted by the setoff provisions of Section 10.8 of the Stock Purchase
Agreement; (ii) is not required by the Subordination Agreement; or (iii) is not
remedied by Maker within 10 business days after its receipt of written notice
from Payee with respect thereto.
Subject to the terms and provisions of the Subordination Agreement, if an Event
of Default occurs, Payee, at its option, may declare the outstanding principal
balance of and all accrued but unpaid interest on this Note to be immediately
due and payable by giving written notice thereof to Maker. In addition, if an
Event of Default occurs, Payee shall be reimbursed for its reasonable attorneys'
fees and collection costs.
7. OPTIONAL ACCELERATION UPON PUBLIC OFFERING. Upon the
Closing of a Public Offering (as such term is hereinafter defined), Payee, at
its option, may declare the outstanding principal balance of and all accrued but
unpaid interest on this Note to be immediately due and payable by giving written
notice thereof to Maker within 30 days of such Closing of a Public Offering. The
"Closing of a Public Offering" shall mean the consummation of the sale by
Wastequip of its Common Shares at a price per share at least equal to the
"Conversion Price" (as adjusted) (as such term is defined in the 7% Convertible
Subordinated Promissory Note in the principal amount of $1,250,000 issued by
Maker to Payee concurrently herewith) pursuant to an effective registration
statement under the Securities Act of 1933, as amended, provided that such sale
yields net proceeds to Wastequip of at least Ten Million Dollars ($10,000,000)
and is made pursuant to a firm commitment underwriting.
8. NOTICES. All notices, correspondence or other documents to
be delivered in connection herewith shall be delivered as follows:
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(a) If to Maker or Wastequip, to:
Wastequip Manufacturing Company
c/o Wastequip, Inc.
00000 Xxxxxxx Xxxx Xxxxx
Xxxxx 000
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx
With a copy to:
Xxxxxx, Halter & Xxxxxxxx
0000 XxXxxxxx Xxxxxxxxxx Xxxxxx
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Attention: Xxxx X. XxXxxxx, Esq.
(b) If to Payee, to:
Xxxxx X. May, Sr.
00000 Xxxx Xxxx Xxxxxx #00
Xxxxxx, Xxxxxxxx 00000
With a copy to:
Xxxxxxx X. Xxxxxx, Esq.
000 Xxxxxx Xxxxxx #000
Xxxxxx, Xxxxxxxx 00000
or to such other address as may have been designated in a prior notice. Notices
shall be deemed to have been given two business days after being mailed if sent
by registered or certified mail, or upon delivery to such address if delivered
in person, mailed by regular mail, or sent by courier, telecopy or facsimile.
9. GOVERNING LAW. This Note shall be interpreted, and the
rights and liabilities of the parties determined, in accordance with the laws of
the United States, where applicable, and the laws of the State of Ohio, without
regard to the conflict of laws provisions thereof.
10. SECTION TITLES. The section titles contained in this Note
are intended for convenience of reference only and shall be without substantive
meaning or content of any kind whatsoever and are not a part of the agreement
between the parties.
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11. CANCELLATION. After all principal and accrued interest at
any time owed on this Note have been paid in full, in accordance with the terms
hereof, this Note shall be surrendered to Maker for cancellation and shall not
be reissued.
12. ASSIGNMENT. Payee shall not give, sell, assign, transfer (by
operation of law or otherwise, including transfers pursuant to divorce or
separation, but excluding testamentary disposition), pledge, mortgage,
hypothecate or otherwise dispose of this Note without the prior written approval
of Maker.
13. AMENDMENT AND MODIFICATION. This Note may not be amended or
modified without the prior written consent of the holder or holders of the
Senior Indebtedness.
Wastequip Manufacturing Company
("Maker")
By: /s/ Xxxxxxx X. Xxxxxx
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Title: Chief Financial Officer
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