September 3, 1998
PAYMENT GUARANTY
For value and pursuant to a loan agreement of even date (the "Loan Agreement")
among Contran Corporation, a Delaware corporation ("Contran"), the undersigned
corporation (the "Affiliate"), U.S. Bank National Association, a national bank
("U.S. Bank"), and certain other banks and financial institutions referred to
therein as the "Bank Group," the Affiliate unconditionally guarantees that
Contran and the Affiliate will promptly pay and perform the Obligations under
the Loan Documents. All of the capitalized terms which are not defined in this
guaranty (this "Guaranty") will have the meanings in this Guaranty that are
given to such terms in the Loan Agreement.
1. Consideration. The Affiliate acknowledges that the members of the Bank
Group are willing to make Advances only on the condition that the Affiliate
executes this Guaranty and thereby promises and agrees to pay and perform
the Obligations as a direct and primary obligation of the Affiliate. The
Affiliate and Contran are part of an affiliated group of companies (the
"Contran Companies") whose business operations are integrated and financial
reporting is consolidated. The Affiliate is fully informed as to the
business operations and financial affairs of Contran and the other members
of the Contran Companies. The Affiliate acknowledges that the Affiliate has
received and will receive benefit from the Advances.
2. Waivers. The Affiliate hereby waives:
2.1. Acceptance, presentment (including notice of dishonor), and demand;
2.2. Claims and defenses of subrogation, contribution, indemnity,
exoneration, recourse, reimbursement, and substitution against Contran
and its property to the full extent necessary to prevent any payments
or other transfers from Contran to the Bank Group from being made for
the benefit of an "insider" in determining whether such payments or
other transfers constitute avoidable transfers or preferences under
section 547 of the Bankruptcy Code;
2.3. Claims and defenses that would require the Bank Group to (i) proceed
first against Contran or the Pledged Securities before the Bank Group
can proceed against the Affiliate, (ii) provide to the Affiliate any
information in the possession or control of the Bank Group or the
Agent relating to the status of the relationship between Contran and
the Bank Group, the financial condition of Contran, the nature,
status, location or estimated value of the Pledged Securities or any
action, inaction, or forbearance by the Bank Group against Contran or
the Pledged Securities;
2.4. Claims and defenses based on recoupment or any other disability or
defense of Contran other than repayment of the Loan and failure of
consideration, including claims such as duress, lack of capacity,
illegality, fraud, statute of limitations, accord and satisfaction,
impairment of recourse, discharge of Contran through insolvency
proceedings or otherwise, the manner, order, or timing of any
foreclosure or disposition rights, election of remedies, or the
forbearance by the Bank Group of or with respect to any right or
remedy that the Bank Group may have against Contran or the Pledged
Securities; and
2.5. Claims and defenses based on suretyship, including extension of due
dates, material modifications, and impairment of rights of recourse
and/or of Pledged Securities. /1/
3. Consent. Without thereby limiting the generality of the foregoing waivers,
the Affiliate consents to forbearance, material modification, extension of
due dates, compromise, and discharge of the debts and obligations hereby
guaranteed, and to partial or full releases, impairment, and abandonment of
any item or items of the Pledged Securities without prior notice to or
consent of the Affiliate and in such order and for such consideration as
the Bank Group may consider appropriate.
4. Insolvency Proceedings. In the event that Contran becomes the subject of
any insolvency proceedings (bankruptcy, receivership, etc.), the Affiliate
authorizes the Bank Group to make Advances (loans) and extend credit to
such person as the debtor or debtor in possession and repayment of such
Advances and/or extensions of credit will be covered by this Guaranty. This
Guaranty specifically includes any amount that the Bank Group may be
required to repay on account of an avoided transfer or preference.
Regardless of the payment or performance of the debts and obligations
hereby guaranteed, the liability of the Affiliate to the Bank Group will
continue until 10 days after the expiration of the longest of any
potentially applicable federal or state statute of limitations relating to
preferences and fraudulent transfers.
5. Subordination of Claims and Equity Interests. Effective upon an uncured
default by Contran under the Loan Documents and continuing only for so long
as such default continues to exist, the Affiliate subordinates the
Affiliate's claims against and equity security interests in Contran
(including the rights to payment, collection, or enforcement of any present
or future debt or obligation of Contran to the Affiliate) so as to provide,
to the maximum extent practicable, that the debts and obligations of
Contran to the Bank Group will be paid and performed before any debts or
obligations of Contran to the Affiliate are paid or performed or any
distribution is made on account of the equity securities of Contran that
are owned or held by the Affiliate. The Affiliate agrees that any money
that the Affiliate might receive on account of such debts, obligations,
equity securities, or contribution rights will be deemed to be held in
trust by the Affiliate for the benefit of the Bank Group and will be
delivered immediately to the Agent upon receipt.
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/1/ If the Affiliate's liability under this Guaranty might be governed by
California law, then the Affiliate also waives all suretyship rights and
defenses that are provided by any subrogation, reimbursement, election of
remedies, antideficiency, or other laws (statutory provisions and judicial
decisions) of California, including, but not limited to, CCP sections 580a,
580b, 580d, and 726.
6. Representations and Warranties. The Affiliate represents and warrants to
the Bank Group that:
6.1. This Guaranty, and any accompanying Security Documents are enforceable
against the Affiliate in accordance with its terns subject to the
effect of insolvency (including bankruptcy, reorganization, and
receivership), moratorium, and other similar laws affecting the rights
and remedies of creditors generally, general principles of equity,
whether applied by a court of law or equity, and other generally
applicable rules of law; and
6.2. Neither the execution of this Guaranty and accompanying Security
Documents nor performance by the Affiliate of the Obligations (a) is
prohibited by, or will result in a fine, penalty, or similar sanction
under, any applicable statutory law, regulation, or court or
administrative order, (b) will violate any of its organization
documents (articles, bylaws, etc.), or (c) will breach, or constitute
an event of default under, any agreement, instrument, mortgage,
indenture, or other contract to which the Affiliate is a party or by
which it or its property is bound.
7. Organization Documents. The Affiliate will promptly provide the Bank Group
with copies of its organization documents and the resolutions authorizing
this Guaranty and any accompanying Security Documents.
8. Costs. The prevailing party in the trial or appeal of any civil action or
insolvency proceeding to construe or enforce this Guaranty and/or to defend
any claims, offsets, defenses, counterclaims, and third-party claims that
are asserted under contract, tort, or other common law theories will be
entitled to recover reasonable attorney fees in addition to costs and
disbursements and such fees, costs, and disbursements will bear interest at
the default rate specified in the Note from the date when reimbursement is
requested in writing until the date when such reimbursement is made.
9. Jury Trial Waiver. On advice of counsel and in lieu of an arbitration
clause normally required by the agent, the Affiliate waives trial by jury
in any controversy (claim, offset, defense, counterclaim, or third-party
claim whether asserted in tort or contract) arising out of or in any way
related to construction, performance, and/or enforcement of this document.
10. Governing Law. This Guaranty is governed by the substantive provisions
(that is, without regard for the rules for conflict of laws) of Oregon law.
11. Consent to Jurisdiction. The Affiliate irrevocably submits to the
jurisdiction of any state and federal court sitting in Portland, Oregon, in
any action or proceeding relating to this Guaranty and waives any and all
claims that such forum is inconvenient or that there is a more convenient
forum located elsewhere.
12. Miscellaneous.
12.1.The Affiliate's liability and obligations under this Guaranty for
performance of the Obligations are primary, are joint and several with
Contran, and extend to each member of the Bank Group as well as to the
Bank Group as a whole and to the Agent.
12.2.This is an irrevocable, continuing guaranty and will remain in force
until such time as all Obligations have been discharged in full.
12.3.This Guaranty will bind and inure to the benefit of the Affiliate,
the Agent, each member of the Bank Group, and their respective
successors and assigns.
00.0.Xx this Guaranty, single pronouns are gender and number neutral and
can refer to men, women, entities, and multiple parties if and when
the context so requires.
12.5.A duplicate counterpart of this Guaranty will be executed for each
Bank. This Guaranty may be delivered by facsimile signature. If the
Affiliate delivers this Guaranty by facsimile, such delivery will
constitute the promise of that person to deliver the manually-signed
version of this Guaranty to the Agent as soon as reasonably possible.
12.6.Statutory Warning. Under Oregon law, most agreements, promises and
commitments made by a financial institution concerning Advances and
other credit extensions which are not for personal, family or
household purposes or secured solely by the borrower's principal
residence must be in writing, express consideration and be xxxx by the
financial institution to be enforceable.
NATIONAL CITY LINES, INC.
By: /s/ Xxxxx X. X'Xxxxx
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Xxxxx X. X'Xxxxx
Vice President
