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Exhibit 10.10
EXECUTION COPY
THE OBLIGATIONS EVIDENCED BY THIS GUARANTY ARE SUBJECT TO CERTAIN RIGHTS OF
OFFSET AND ARE SUBORDINATE TO THE INDEBTEDNESS OF GUARANTOR TO CERTAIN OTHER
PERSONS AND ENTITIES PURSUANT TO THE TERMS HEREOF. ANY PERMITTED ASSIGNEE,
TRANSFEREE OR PLEDGEE HEREUNDER SHALL TAKE THIS GUARANTY SUBJECT TO THE TERMS
HEREOF.
SUBORDINATED NOTE GUARANTY
This Subordinated Note Guaranty ("Subordinated Guaranty"),
dated as of February 16, 1996, is made by Wastequip, Inc., an Ohio corporation
("Guarantor"), in favor of Teem Enterprises, Inc., a South Dakota corporation,
to become known as Freestone, Inc. (the "Payee").
PRELIMINARY STATEMENT
The Guarantor's wholly owned subsidiary, Wastequip
Manufacturing Company, an Ohio corporation ("Maker"), and Payee have entered
into an Asset Purchase Agreement, dated January 8, 1996 (the "Asset Purchase
Agreement"), pursuant to which Maker has delivered to Payee an 8% Subordinated
Promissory Note, of even date herewith, in the principal amount of $1,644,032
(the "Subordinated Note"). It is a condition precedent to the consummation of
the transactions described in the Asset Purchase Agreement that the Guarantor,
as the sole shareholder of Maker, shall have executed and delivered this
Subordinated Guaranty. Capitalized terms defined in the Asset Purchase Agreement
or in the Subordinated Note, and not otherwise defined herein, are used herein
as so defined.
NOW THEREFORE, for good and valuable consideration, Guarantor
hereby agrees as follows:
1. SUBORDINATED GUARANTY. Subject to the terms and conditions
hereof, Guarantor hereby guarantees the prompt payment when due, whether at
stated maturity or by acceleration, of all obligations of Maker now or hereafter
existing under the Subordinated Note, whether for principal, interest, fees,
expenses or otherwise.
2. SUBROGATION. Guarantor will not exercise any rights that it
may acquire by way of subrogation under this Subordinated Guaranty by any
payment made hereunder or otherwise until the Subordinated Note has been paid in
full. If any amount shall be paid to Guarantor on account of such subrogation
rights at any time when the Subordinated Note has not been paid in full, such
amount shall be held in trust for the benefit of the Note Holder (as defined in
the Subordinated Note) and shall forthwith be paid to the Note Holder in
accordance with the terms of the Subordinated Note. If Guarantor makes payment
to the Note Holder of all or any part of the Subordinated Note, and the
Subordinated Note is paid in full, the Note Holder will, at Guarantor's request,
execute and deliver to Guarantor appropriate documents, without recourse and
without representation or warranty, necessary to evidence the transfer by
subrogation to Guarantor of an interest in the Subordinated Note resulting from
such payment by Guarantor.
3. RIGHT OF SETOFF. The terms and provisions of this
Subordinated Guaranty are subject to the terms and provisions, including but not
limited to rights of setoff, set forth in the Asset Purchase Agreement and the
Subordinated Note. The terms and provisions of the Asset Purchase Agreement and
the Subordinated Note are incorporated herein by reference as if fully
rewritten.
4. NO WAIVER; REMEDIES. No failure on the part of the Payee to
exercise and no delay in exercising any right hereunder shall operate as a
waiver thereof nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
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5. DEMAND. The liability of Guarantor to make payment under this
Subordinated Guaranty shall arise forthwith after: (a) failure of Maker to make
any payment otherwise due and payable pursuant to the Subordinated Note (where
such payment is not prohibited by the terms of the Subordinated Note or subject
to a right of setoff) and (b) demand for payment has been made in writing upon
Guarantor in accordance with Section 11 hereof.
6. SUBORDINATION.
6.1 DEFINITION OF GUARANTOR SENIOR DEBT. As used herein,
"Guarantor Senior Debt" means: (a) all liabilities, obligations or indebtedness
of Guarantor under or pursuant to that certain Fourth Amended and Restated Loan
and Security Agreement, dated February __, 1996, to which, by its or their terms
is secured, whether such liabilities, obligations or indebtedness are now
existing or are hereafter created, incurred, assumed, arising, acquired or
guaranteed by Guarantor (either directly, outright, conditionally or as
collateral security for another); and (b) any renewals, extensions,
refinancings, replacements or refundings thereof from any Financial Institution
(as hereinafter defined), whether such renewals, extensions, refinancings,
replacements or refundings (i) are secured or unsecured or (ii) effect any
change in any of the terms or conditions thereof (including, without limitation,
increases in the amount borrowed or changes in the rate of interest charged in
connection therewith). As used herein, "Financial Institution" shall mean any
entity which, as a part of its principal business, is engaged in the lending of
money.
6.2 SUBORDINATION OF PAYMENTS.
(a) GENERALLY. Except as set forth in paragraph (d) of this
Subsection 6.2, the obligations evidenced by this Subordinated Guaranty (the
"Obligations") are subordinate and junior in right of payment to the prior
payment in full of the Guarantor Senior Debt.
(b) LIMIT ON RIGHT TO PROCEED AGAINST GUARANTOR. Payee shall
not, during a Standstill Period (as defined in the Subordinated Note) or during
the continuance of a default or Event of Default with respect to the payment of
principal or interest under the Guarantor Senior Debt, ask, demand, xxx for,
take or receive from Guarantor either directly or indirectly (including without
limitation through setoff or by way of any collateral redemption or sale) the
whole or any part of any monies which now or may hereafter be owing by Guarantor
to Payee pursuant to this Subordinated Guaranty.
(c) PAYMENT EXCEPTION. Notwithstanding the provisions of
Subsection 6.2(a), Guarantor shall pay and the Payee may receive payments under
or pursuant to the terms hereof, so long as at the time of such payment no
Standstill Period is in effect and neither Maker nor Guarantor has received
notice of a default or Event of Default with respect to the payment of principal
or interest on the Guarantor Senior Debt.
6.3 PERMISSIBLE ACTIONS. Subject in all cases to the right
of the holder of Guarantor Senior Debt (the "Guarantor Senior Debt Holder") to
receive prior payment pursuant to Section 6.2 hereof:
(a) the Payee may institute legal proceedings against
Guarantor to enforce and collect upon any amount due hereunder (including any
payments which become due after the expiration of a Standstill Period) if: (i)
Guarantor is liable for payment pursuant to Section 5 above, and (ii) such
payment is not prohibited hereunder;
(b) in the event legal proceedings have been instituted by
the Guarantor Senior Debt Holder to enforce and collect upon the amounts
outstanding under the Guarantor Senior Debt, the Payee may institute legal
proceedings (consistent with such legal proceedings of the Guarantor Senior Debt
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Holder) to the extent such proceedings by the Payee are necessary to preserve
the claims of the Payee; and
(c) the Payee may, subject to the Guarantor Senior Debt
Holder's rights set forth in Section 6.5 hereof, file a proof of claim in
respect of the amounts due under the Note in connection with any bankruptcy or
similar proceedings of the Guarantor.
6.4 NO SECURITY. The Payee may not take, demand or accept
any mortgage, security interest or other lien whatsoever securing the
Obligations without the prior written consent of the Guarantor Senior Debt
Holder(s).
6.5 PRIORITY. Upon any distribution of assets of Guarantor
upon any dissolution, winding up, liquidation or reorganization of Guarantor,
whether in bankruptcy, insolvency, reorganization or receivership proceedings or
upon an assignment for the benefit of creditors or any other marshalling of the
assets and liabilities of Guarantor;
(a) all Guarantor Senior Debt Holders shall be entitled to
receive payment in full of the principal thereof, premium, if any, and the
interest due thereon (and all other liabilities, obligations or indebtedness
thereunder, including interest due from time to time on the Guarantor Senior
Debt after the commencement of an insolvency or bankruptcy proceeding, whether
or not a claim for such interest is allowable under any such proceeding) in cash
before the Payee or any Note Holder is entitled to receive any payment upon the
principal amount of or interest on this Guaranty or the Subordinated Note; and
(b) any payment or distribution of assets of Guarantor of
any kind or character, whether in cash, property or securities, by setoff or
other wise, to which the Payee or any Note Holder would be entitled but for the
provisions hereof shall be paid by the liquidating trustee or agent or other
person making such payment or distribution (whether a trustee in bankruptcy, a
receiver or liquidating trustee or otherwise), directly to the Guarantor Senior
Debt Holders or their agents, representative or representatives, or to the
trustee or trustees under any indenture under which any instruments evidencing
any of such Guarantor Senior Debt may have been issued, ratably according to the
aggregate amounts remaining unpaid on account of the principal of, and premium
and interest, if any, on the Guarantor Senior Debt held or represented by each,
to the extent necessary to make payment in full of all Guarantor Senior Debt
remaining unpaid, after giving effect to any concurrent payment or distribution
to such Guarantor Senior Debt Holders.
If any proceeding referred to in this Section 6.5 is commenced by or against
Guarantor, Payee, by its acceptance hereof, hereby authorizes and empowers each
Guarantor Senior Debt Holder to demand, xxx for, collect and receive every such
payment or distribution described above and give acquittance therefor and to
file claims and take such other proceedings, in its own name or in the name of
the Payee or otherwise, as such Guarantor Senior Debt Holder may deem necessary
or advisable for the enforcement of its rights under this Subordinated Guaranty.
By its acceptance hereof, the Payee covenants and agrees to execute and deliver
to each such Guarantor Senior Debt Holder such documents as may be reasonably
requested by such Guarantor Senior Debt Holder in order to enable it to enforce
any and all claims which are not inconsistent with the provisions of this
Subordinated Guaranty and to collect and receive any and all payments or
distributions which may be payable or deliverable at any time in accordance with
the terms and provisions of this Subordinated Guaranty, all for the benefit of
such Guarantor Senior Debt Holder.
6.6 PAYMENTS HELD IN TRUST. By its acceptance hereof, the
Payee agrees that if any payment, distribution, security (other than securities
issuable upon conversion of the Subordinated Note) or instrument, or proceeds
thereof, is received by the Payee upon or with respect to the Obligations after
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Maker or Guarantor has received written notice from a Guarantor Senior Debt
Holder that Guarantor is in default under the terms of the Guarantor Senior
Debt, Payee shall receive and hold the same in trust, as trustee, for the
benefit of the Guarantor Senior Debt Holders and forthwith deliver the same to
the Guarantor Senior Debt Holders for application on or against the Guarantor
Senior Debt, whether due or not due, and until so delivered, the same shall be
held in trust by the Payee as the property of such Guarantor Senior Debt
Holders. In the event of the failure of the Payee to make any endorsement or
assignment necessary to carry out the intent of the preceding sentence, such
Guarantor Senior Debt Holder(s), or any of its officers or employees, is hereby
irrevocably authorized to make the same. The liability of the Payee pursuant to
this Subsection 6.6 shall not exceed the amount or value, if any, held (or
considered hereunder to be held) in trust from time to time, plus interest
thereon at the rate of 8% per annum.
6.7 CONTINUING NATURE OF SUBORDINATION. This is a continuing
agreement of subordination and Guarantor may continue, at any time and without
notice to the Payee, to obtain credit or other financial accommodation or
benefit and loans from any Guarantor Senior Debt Holders.
7. UNDERSIGNED'S WAIVERS. By its acceptance hereof, the Payee
waives all notice of the acceptance by the Guarantor Senior Debt Holders of the
subordination and other provisions of this Subordinated Guaranty and the
reliance by any Guarantor Senior Debt Holder upon the subordination and other
terms as herein provided. Each Guarantor Senior Debt Holder shall be entitled to
manage and supervise its loans to Guarantor in accordance with its usual
practices, modified from time to time as it deems appropriate under the
circumstances, without regard to the existence of any rights that the Payee may
now or hereafter have in or to any of the assets of Guarantor. No Guarantor
Senior Debt Holder shall have any liability to the Payee for any claim which the
Payee may now or hereafter have against such Guarantor Senior Debt Holder
arising out of:
(a) any and all actions which such Guarantor Senior Debt
Holder, in good faith, takes or omits to take, including, without limitation,
actions with respect to: (i) the creation, perfection or continuation of liens
or security interests in any collateral, (ii) the occurrence of any event of
default under any agreement with Guarantor, (iii) the foreclosure upon, sale,
release of, depreciation of or failure to realize upon, any collateral, or (iv)
the collection of any claim for all or any part of the Guarantor Senior Debt
from any account debtor, guarantor or any other party; or
(b) an election by any such Guarantor Senior Debt Holder, in
any proceeding instituted under the U.S. Bankruptcy Code or any similar
legislation.
8. WAIVERS. No waiver shall be deemed to be made by any Guarantor
Senior Debt Holder of any of its rights hereunder unless the same shall be in
writing signed on behalf of such Guarantor Senior Debt Holder, and each waiver,
if any, shall be a waiver only with respect to the specific instance involved
and shall in no way impair the rights of any Guarantor Senior Debt Holder or the
obligations of the Payee to such Guarantor Senior Debt Holder in any other
respect at any other time. The Payee hereby assents to any extension or
postponement of the time of payment of the Guarantor Senior Debt or to any other
indulgence with respect thereto, to any substitution, exchange or release of
collateral which may at any time secure the Guarantor Senior Debt and to the
addition or release of any other party or person primarily or secondarily liable
therefor.
9. INFORMATION CONCERNING FINANCIAL CONDITION OF GUARANTOR. No
Guarantor Senior Debt Holder shall have any duty to advise the Payee of
information known to any such Guarantor Senior Debt Holder regarding the
financial condition of Guarantor and any and all endorsers and guarantors of the
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Guarantor Senior Debt, or any other circumstances bearing upon the risk of
nonpayment of the Guarantor Senior Debt or the Obligations, or both, that
diligent inquiry would reveal. In the event any Guarantor Senior Debt Holder, in
its sole discretion, undertakes, at any time or from time to time, to provide
any such information to the Payee, such Guarantor Senior Debt Holder shall be
under no obligation to undertake any investigation and shall be under no
obligation to disclose any information which such Guarantor Senior Debt Holder
wishes to maintain confidential. Until payment in full of the Subordinated Note,
Guarantor shall deliver to Payee the following financial statements:
(a) QUARTERLY STATEMENTS. On or before the forty-fifth
(45th) day after the end of each fiscal quarter, Guarantor shall furnish to
Payee a copy of unaudited financial statements of Guarantor, prepared in
accordance with generally accepted accounting practices, consistently applied,
except for the absence of footnote disclosure and customary year-end audit
adjustments of a normal, recurring type.
(b) ANNUAL STATEMENTS. On or before the fifteenth (15th) day
after Guarantor's receipt of the same, Guarantor shall furnish to Note Holder a
copy of an unqualified annual audit report of Guarantor and its affiliates
prepared in accordance with generally accepted accounting principles and duly
certified by Guarantor's independent certified public accountants.
10. APPLICATION OF PAYMENTS. All payments received by any
Guarantor Senior Debt Holder may be applied and reapplied, in whole or in part,
to the Guarantor Senior Debt, as such Guarantor Senior Debt Holder, in its sole
discretion, deems appropriate.
11. NOTICES. All notices, correspondence or other documents to be
delivered in connection herewith shall be delivered as follows:
(a) If to Guarantor, to:
Wastequip, Inc.
00000 Xxxxxxx Xxxx Xxxxx
Xxxxx 000
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx
With a copy to:
Xxxxxx, Xxxxxx & Xxxxxxxx
Xxxxx 0000
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Attention: Xxxx X. XxXxxxx, Esq.
(b) If to Payee, to:
XxXxxxx Xxxxxx
Teem Enterprises, Inc.
0 Xxxx Xxxx
Xxxxx Xxxxx, Xxxxx Xxxxxx 00000
With a copy to:
Davenport, Evens, Harwitz & Xxxxx
000 Xxxxx Xxxx Xxxxxx
X.X. Xxx 0000
Xxxxx Xxxxx, Xxxxx Xxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
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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 said address if delivered
in person, mailed by regular mail, or sent by courier, telecopy or facsimile.
12. CONSOLIDATION OR MERGER. The consolidation of Guarantor
with, or the merger of Guarantor into, another corporation, or the liquidation
or dissolution of Guarantor following the sale or conveyance of its property or
assets as an entirety, or substantially as an entirety, to another corporation
shall not be deemed a dissolution, winding up, liquidation or reorganization of
Guarantor for the purposes of Section 6 hereof if such other corporation is an
Affiliate (as defined in the Asset Purchase Agreement) of Guarantor and, as a
part of such consolidation, merger, sale or conveyance, succeeds to
substantially all of the property and assumes the obligations (including this
Subordinated Guaranty) of Guarantor.
13. GOVERNING LAW. This Subordinated Guaranty shall be
interpreted, and the rights and liabilities of the parties hereto determined, in
accordance with the laws of the United States, where applicable, and the laws of
the State of South Dakota, without regard to the conflict of laws provisions
thereof, and shall be immediately binding upon Guarantor, the Payee, and their
respective successors and permitted assigns, and shall inure to the benefit of
the successors and assigns of the Guarantor and Guarantor Senior Debt Holders.
14. SECTION TITLES. The section titles contained in this
Subordinated Guaranty 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 hereto.
15. CANCELLATION. After all principal and accrued interest at
any time owed on the Subordinated Note have been paid in full, in accordance
with the terms hereof and thereof, this Subordinated Guaranty shall be
surrendered to Guarantor for cancellation and will not be reissued.
16. SUBSEQUENT HOLDERS. Any subsequent holder of the
Subordinated Note, by the taking of such Note, shall be deemed to have agreed to
be bound by the provisions contained herein.
17. ASSIGNMENT. This Subordinated Guaranty may not be
assigned, transferred, pledged or negotiated by the Payee unless and until the
proposed assignee, transferee or pledgee first agrees through the execution of a
document which is satisfactory in form and substance to Guarantor, to be bound
by the provisions contained herein.
Wastequip, Inc.
By: /s/ Xxxxxxx X. Xxxxxx
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Its: Chairman
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("Guarantor")
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