EXHIBIT 10.4
PAYMENT GUANRANTY
(Commercial Real Estate)
This Payment Guaranty ("Guaranty") is made as of September 28, 1999 by TREX
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COMPANY, INC., a Delaware corporation ("Guarantor") in favor of BANK OF AMERICA,
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N.A. (the "Bank").
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Factual Background
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A. Guarantor is executing this Guaranty to induce Bank to make a loan
(defined in Section 2 as the "Loan") to Trex Company, LLC, a Delaware Limited
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Liability Company ("Borrower") in the principal amount of Six Million Seven
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Hundred Twenty-Eight Thousand Dollars ($6,728,000). The Loan is being made
under a standing loan agreement (the "Loan Agreement") entered into as of the
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date hereof between Bank and Borrower.
B. The Loan is evidenced by a promissory note (the "Note") made payable
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to Bank in the principal amount of the Loan. The Note is or is to be secured by
a Deed of Trust, Assignment of Rents and Leases, Security Agreement and Fixture
Filing (the "Deed of Trust") covering certain property, as therein described
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(all collectively, the "Property"). The Note may also be secured by other
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collateral, as more fully explained in the Loan Agreement. In connection with
the Loan, Borrower is signing an Secured Indemnity Agreement (the "Borrower's
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Indemnity").
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C. This Guaranty is one of several Loan Documents, as defined and
designated in the Loan Agreement. The Loan Documents also include the Loan
Agreement, the Note, the Deed of Trust and certain other specified instruments
and agreements.
Guaranty
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1. Guaranty of Loan. Guarantor unconditionally guarantees to Bank the
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full payment of the Loan, and unconditionally agrees to pay Bank the full amount
of the Loan. This is a guaranty of payment, not of collection. If Borrower
defaults in the payment when due of the Loan or any part of it, Guarantor shall
in lawful money of the United States pay to Bank or order, on demand, all sums
due and owing on the Loan, including all interest, charges, fees and other sums,
costs and expenses.
2. Loan. In this Guaranty, the term "Loan" is broadly defined to mean
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and include all primary, secondary, direct, indirect, fixed and contingent
obligations of Borrower to pay principal, interest, prepayment charges, late
charges, loan fees and any other fees, charges, sums, costs and expenses which
may be owing at any time under the Note or the other Loan Documents, as any or
all of them may from time to time be modified, amended, extended or renewed. For
purposes of this Guaranty, the Loan includes any and all such obligations which
may arise in connection with (a) the Borrower's Indemnity, (b) any set aside
letters, (c) any advances made before recording of any of the Deed of Trust, and
(d) any interest rate swaps or other transactions between Borrower and Bank
which may afford interest rate protection to all or part of the Loan. If the
amount outstanding under the Loan is determined by a court of competent
jurisdiction, that determination shall be conclusive and binding on Guarantor,
regardless of whether Guarantor was a party to the proceeding in which the
determination was made or not.
3. Rights of Bank. Guarantor authorizes Bank to perform any or all of
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the following acts at any time in its sole discretion, all without notice to
Guarantor and without affecting Guarantor's obligations under the Guaranty:
(a) Bank may alter any terms of the Loan or any part of it, including
renewing, compromising, extending or accelerating, or otherwise changing the
time for payment of, or increasing or decreasing the rate of interest on, the
Loan or any part of it.
(b) Bank may take and hold security for the Loan or this Guaranty,
accept additional or substituted security for either, and subordinate, exchange,
enforce, waive, release, compromise, fail to perfect and sell or otherwise
dispose of any such security.
(c) Bank may direct the order and manner of any sale of all or any
part of any security now or later to be held for the Loan or this Guaranty, and
Bank may also bid at any such sale.
(d) Bank may apply any payments or recoveries from Borrower,
Guarantor or any other source, and any proceeds of any security, to Borrower's
obligations under the Loan Documents in such manner, order and priority as Bank
may elect, whether or not those obligations are guarantied by this Guaranty or
secured at the time of the application.
(e) Bank may release Borrower of its liability for the Loan or any
part of it.
(f) Bank may substitute, add or release any one or more guarantors or
endorsers.
(g) In addition to the Loan, Bank may extend other credit to
Borrower, and may take and hold security for the credit so extended, all without
affecting Guarantor's liability under this Guaranty.
4. Guaranty to be Absolute. Guarantor expressly agrees that until the
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Loan is paid and performed in full and each and every term, covenant and
condition of this Guaranty is fully performed, Guarantor shall not be released
by or because of:
(a) Any act or event which might otherwise discharge, reduce, limit
or modify Guarantor's obligations under this Guaranty;
(b) Any waiver, extension, modification, forbearance, delay or other
act or omission of Bank, or its failure to proceed promptly or otherwise as
against Borrower, Guarantor or any security;
(c) Any action, omission or circumstance which might increase the
likelihood that Guarantor may be called upon to perform under this Guaranty or
which might affect the rights or remedies of Guarantor as against Borrower; or
(d) Any dealings occurring at any time between Borrower and Bank,
whether relating to the Loan or otherwise.
Guarantor hereby expressly waives and surrenders any defense to its
liability under this Guaranty based upon any of the foregoing acts, omissions,
agreements, waivers or matters. It is the purpose and intent of this Guaranty
that the obligations of Guarantor under it shall be absolute and unconditional
under any and all circumstances.
5. Guarantor's Waivers. Guarantor waives:
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(a) Any right it may have to require Bank to proceed against
Borrower, proceed against or exhaust any security held by Bank, or pursue any
other remedy in Bank's power to pursue;
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(b) Any defense based on any claim that Guarantor's obligations
exceed or are more burdensome than those of Borrower;
(c) Any defense based on: (i) any legal disability of Borrower, (ii)
any discharge, modification, impairment or limitation of the liability of
Borrower to Bank from any cause, whether consented to by Bank or arising by
operation of law or from any bankruptcy or other voluntary or involuntary
proceeding, in or out of court, for the adjustment of debtor-creditor
relationships ("Insolvency Proceeding") and (iii) any rejection or disaffirmance
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of the Loan, or any part of it, or any security held for it, in any such
Insolvency Proceeding;
(d) Any defense based on any action taken or omitted by Bank in any
Insolvency Proceeding involving Borrower, including any election to have Bank's
claim allowed as being secured, partially secured or unsecured, any extension of
credit by Bank to Borrower in any Insolvency Proceeding, and the taking and
holding by Bank of any security for any such extension of credit;
(e) All presentments, demands for performance, notices of
nonperformance, protests, notices of protest, notices of dishonor, notices of
acceptance of this Guaranty and of the existence, creation, or incurring of new
or additional indebtedness, and demands and notices of every kind except for any
demand or notice by Bank to Guarantor expressly provided for in Section 1;
(f) Any defense based on or arising out of any defense that Borrower
may have to the payment or performance of the Loan or any part of it; and
(g) To the extent permitted in paragraph 40.495(4) of the Nevada
Revised Statutes ("NRS"), the benefits of the one-action rule under NRS Section
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40.430, and to the extent permitted by NRS 104.3605, discharge under NRS
104.3605(9).
6. Waivers of Subrogation and Other Rights.
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(a) Upon a default by Borrower, Bank in its sole discretion, without
prior notice to or consent of Guarantor, may elect to: (i) foreclose either
judicially or nonjudicially against any real or personal property security it
may hold for the Loan, (ii) accept a transfer of any such security in lieu of
foreclosure, (iii) compromise or adjust the Loan or any part of it or make any
other accommodation with Borrower or Guarantor, or (iv) exercise any other
remedy against Borrower or any security. No such action by Bank shall release or
limit the liability of Guarantor, who shall remain liable under this Guaranty
after the action, even if the effect of the action is to deprive Guarantor of
any subrogation rights, rights of indemnity, or other rights to collect
reimbursement from Borrower for any sums paid to Bank, whether contractual or
arising by operation of law or otherwise. Guarantor expressly agrees that under
no circumstances shall it be deemed to have any right, title, interest or claim
in or to any real or personal property to be held by Bank or any third party
after any foreclosure or transfer in lieu of foreclosure of any security for the
Loan.
(b) Regardless of whether Guarantor may have made any payments to
Bank, Guarantor forever waives: (i) all rights of subrogation, all rights of
indemnity, and any other rights to collect reimbursement from Borrower for any
sums paid to Bank, whether contractual or arising by operation of law (including
the United States Bankruptcy Code or any successor or similar statute) or
otherwise, (ii) all rights to enforce any remedy that Bank may have against
Borrower, and (iii) all rights to participate in any security now or later to be
held by Bank for the Loan.
7. Revival and Reinstatement. If Bank is required to pay, return or
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restore to Borrower or any other person any amounts previously paid on the Loan
because of any Insolvency Proceeding of
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Borrower, any stop notice or any other reason, the obligations of Guarantor
shall be reinstated and revived and the rights of Bank shall continue with
regard to such amounts, all as though they had never been paid.
8. Information Regarding Borrower and the Property. Before signing this
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Guaranty, Guarantor investigated the financial condition and business operations
of Borrower, the present and former condition, uses and ownership of the
Property, and such other matters as Guarantor deemed appropriate to assure
itself of Borrower's ability to discharge its obligations under the Loan
Documents. Guarantor assumes full responsibility for that due diligence, as
well as for keeping informed of all matters which may affect Borrower's ability
to pay and perform its obligations to Bank. Bank has no duty to disclose to
Guarantor any information which Bank may have or receive about Borrower's
financial condition or business operations, the condition or uses of the
Property, or any other circumstances bearing on Borrower's ability to perform.
9. Subordination. Any rights of Guarantor, whether now existing or later
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arising, to receive payment on account of any indebtedness (including interest)
owed to it by Borrower or any subsequent owner of the Property, or to withdraw
capital invested by it in Borrower, or to receive distributions from Borrower,
shall at all times be subordinate as to lien and time of payment and in all
other respects to the full and prior repayment to Bank of the Loan. Guarantor
shall not be entitled to enforce or receive payment of any sums hereby
subordinated until the Loan has been paid and performed in full and any such
sums received in violation of this Guaranty shall be received by Guarantor in
trust for Bank. The foregoing notwithstanding, Guarantor is not prohibited from
receiving (a) such reasonable management fees or reasonable salary from Borrower
as Bank may find acceptable from time to time, and (b) distributions from
Borrower in an amount equal to any income taxes imposed on Guarantor which are
attributable to Borrower's income from the Property.
10. Financial Information. Guarantor shall keep true and correct
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financial books and records, using generally accepted accounting principles
consistently applied, or such other accounting principles as Bank in its
reasonable judgment may find acceptable from time to time. Within one hundred
and twenty (120) days after the end of each fiscal year, Guarantor shall deliver
to Bank its annual report (10-K's) and compliance certificate. Within 45 days
of each fiscal quarter, Guarantor shall provide to Bank its quarterly reports
(10-Q's). Guarantor shall also promptly deliver to Bank all quarterly balance
sheets and income statements if they become available or if Bank requests them.
Guarantor shall promptly provide Bank with any additional financial information
that Guarantor may obtain, upon Bank's reasonable request.
11. Guarantor's Representations and Warranties. Guarantor represents and
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warrants that:
(a) All financial statements and other financial information
furnished or to be furnished to Bank are or will be true and correct and do or
will fairly represent the financial condition of Guarantor (including all
contingent liabilities);
(b) All financial statements were or will be prepared in accordance
with generally accepted accounting principles, or such other accounting
principles as may be acceptable to Bank at the time of their preparation,
consistently applied; and
(c) There has been no material adverse change in Guarantor's
financial condition since the dates of the statements most recently furnished to
Bank.
12. Events of Default. Bank may declare Guarantor to be in default under
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this Guaranty upon the occurrence of any of the following events ("Events of
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Default"):
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(a) Guarantor fails, within thirty (30) days after written notice
from Bank, to perform any of its obligations under this Guaranty; or
(b) Guarantor revokes this Guaranty or this Guaranty becomes
ineffective for any reason; or
(c) Any representation or warranty made or given by Guarantor to Bank
proves to be false or misleading in any material respect; or
(d) Guarantor becomes insolvent or the subject of any Insolvency
Proceeding and same is not dismissed within sixty (60) days thereof; or
(e) Guarantor dissolves or liquidates (sells all or substantially all
of its assets).
13. Arbitration.
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(a) This paragraph concerns the resolution of any controversies or
claims among the parties, including, but not limited to, those that arise from:
(i) This Guaranty (including any modifications of this
Guaranty);
(ii) Any document, agreement, or procedure related to or
delivered in connection with this Guaranty; or
(iii) Any violation of this Guaranty.
(b) At the request of either party, any such controversies or claims
will be settled by arbitration in accordance with the United States Arbitration
Act. The United States Arbitration Act will apply even though this Agreement
provides that it is governed by Nevada law.
(c) Arbitration proceedings will be administered by the American
Arbitration Association and will be subject to its commercial rules of
arbitration. The arbitration will be conducted within Clark County, Nevada.
(d) For purposes of the application of the statute of limitations,
the filing of an arbitration pursuant to this paragraph is the equivalent of the
filing of a lawsuit, and any claim or controversy which may be arbitrated under
this paragraph is subject to any applicable statute of limitations. The
arbitrators will have the authority to decide whether any such claim or
controversy is barred by the statute of limitations and, if so, to dismiss the
arbitration on that basis.
(e) If there is a dispute as to whether an issue is arbitrable, the
arbitrators will have the authority to resolve any such dispute.
(f) The decision that results from an arbitration proceeding may be
submitted to any authorized court of law to be confirmed and enforced.
(g) This provision does not limit the right of the Guarantor or the
Bank to:
(i) exercise self-help remedies such as setoff;
(ii) foreclose against or sell any real or personal property
collateral; or
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(iii) act in a court of law, before, during or after the
arbitration proceeding to obtain:
(A) an interim remedy; and/or
(B) additional or supplementary remedies.
(h) The pursuit of, or a successful action for interim, additional or
supplementary remedies, or the filing of a court action, does not constitute a
waiver of the right of the Borrower or the Guarantor, including the suing party,
to submit the controversy or claim to arbitration if the other party contests
the lawsuit.
(i) If the Bank forecloses against any real property securing this
Guaranty, the Bank has the option to exercise the power of sale under the deed
of trust or mortgage, or to proceed by judicial foreclosure.
14. Authorization; No Violation. Guarantor is authorized to execute,
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deliver and perform under this Guaranty, which is a valid and binding obligation
of Guarantor. No provision or obligation of Guarantor contained in this
Guaranty violates any applicable law, regulation or ordinance, or any order or
ruling of any court or governmental agency. No such provision or obligation
conflicts with, or constitutes a breach or default under, any agreement to which
Guarantor is a party.
15. Additional and Independent Obligations. Guarantor's obligations under
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this Guaranty are in addition to its obligations under any other existing or
future guaranties, each of which shall remain in full force and effect until it
is expressly modified or released in a writing signed by Bank. Guarantor's
obligations under this Guaranty are independent of those of Borrower on the
Loan. Bank may bring a separate action or commence a separate arbitration
proceeding against Guarantor without first proceeding against Borrower, any
other person or any security that Bank may hold, and without pursuing any other
remedy. Bank's rights under this Guaranty shall not be exhausted by any action
by Bank until the Loan has been paid and performed in full.
16. No Waiver; Consents; Cumulative Remedies. Each waiver by Bank must be
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in writing, and no waiver shall be construed as a continuing waiver. No waiver
shall be implied from Bank's delay in exercising or failure to exercise any
right or remedy against Borrower, Guarantor or any security. Consent by Bank to
any act or omission by Borrower or Guarantor shall not be construed as a consent
to any other or subsequent act or omission, or as a waiver of the requirement
for Bank's consent to be obtained in any future or other instance. All remedies
of Bank against Borrower and Guarantor are cumulative.
17. No Release. Guarantor shall not be released from its obligations
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under this Guaranty except by a writing signed by Bank.
18. Heirs, Successors and Assigns; Participations. The terms of this
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Guaranty shall bind and benefit the heirs, legal representatives, successors and
assigns of Bank and Guarantor; provided, however, that Guarantor may not assign
this Guaranty, or assign or delegate any of its rights or obligations under this
Guaranty, without the prior written consent of Bank in each instance. Bank in
its sole discretion may sell or assign participations or other interests in the
Loan and this Guaranty, in whole or in part, all without notice to or the
consent of Guarantor and without affecting Guarantor's obligations under this
Guaranty. Also without notice to or the consent of Guarantor, Bank may disclose
any and all information in its possession concerning Guarantor, this Guaranty
and any security for this Guaranty to any actual or
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prospective purchaser of any securities issued or to be issued by Bank, and to
any actual or prospective purchaser or assignee of any participation or other
interest in the Loan and this Guaranty.
19. Notices. All notices given under this Guaranty must be in writing and
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shall be effectively served upon delivery, or if mailed, upon the first to occur
of receipt or the expiration of forty-eight hours after deposit in certified
United States mail, postage prepaid, sent to the party at its address given at
the end of this Guaranty. Those addresses may be changed by Bank or Guarantor
by written notice to the other party. Service of any notice on any one
Guarantor signing this Guaranty shall be effective service on Guarantor for all
purposes.
20. Rules of Construction. In this Guaranty, the word "Borrower" includes
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both the named Borrower and any other person who at any time assumes or
otherwise becomes primarily liable for all or any part of the obligations of the
named Borrower on the Loan. The word "person" includes any individual, company,
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trust or other legal entity of any kind. If this Guaranty is executed by more
than one person, the word "Guarantor" includes all such persons. The word
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"include(s)" means "include(s), without limitation," and the word "including"
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means "including, but not limited to." When the context and construction so
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require, all words used in the singular shall be deemed to have been used in the
plural and vice versa. No listing of specific instances, items or matters in
any way limits the scope or generality of any language of this Guaranty. All
headings appearing in this Guaranty are for convenience only and shall be
disregarded in construing this Guaranty.
21. Governing Law. This Guaranty shall be governed by, and construed in
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accordance with, the laws of the State of Nevada.
22. Costs and Expenses. If any lawsuit or arbitration is commenced which
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arises out of, or which relates to this Guaranty, the Loan Documents or the
Loan, the prevailing party shall be entitled to recover from each other party
such sums as the court or arbitrator may adjudge to be reasonable attorneys'
fees (including allocated costs for services of in-house counsel) in the action
or proceeding, in addition to costs and expenses otherwise allowed by law. In
all other situations, including any Insolvency Proceeding, Guarantor agrees to
pay all of Bank's costs and expenses, including attorneys, fees (including
allocated costs for services of Bank's in-house counsel) which may be incurred
in any effort to collect or enforce the Loan or any part of it or any term of
this Guaranty. From the time(s) incurred until paid in full to Bank, all sums
shall bear interest at the Default Rate, as defined in the Note.
23. Consideration. Guarantor acknowledges that it expects to benefit from
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Bank's extension of the Loan to Borrower because of its relationship to
Borrower, and that it is executing this Guaranty in consideration of that
anticipated benefit.
24. Integration; Modifications. This Guaranty (a) integrates all the
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terms and conditions mentioned in or incidental to this Guaranty, (b) supersedes
all oral negotiations and prior writings with respect to its subject matter, and
(c) is intended by Guarantor and Bank as the final expression of the agreement
with respect to the terms and conditions set forth in this Guaranty and as the
complete and exclusive statement of the terms agreed to by Guarantor and Bank.
No representation, understanding, promise or condition shall be enforceable
against any party unless it is contained in this Guaranty. This Guaranty may
not be modified except in a writing signed by both Bank and Guarantor.
25. Miscellaneous. The death or legal incapacity of any Guarantor shall
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not terminate the obligations of such Guarantor or any other Guarantor under
this Guaranty, including its obligations with regard to future advances under
the Loan Documents. The liability of all persons who are in any manner
obligated under this Guaranty shall be joint and several. The illegality or
unenforceability of one or more provisions of this Guaranty shall not affect any
other provision. Any Guarantor who is married agrees
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that Bank may look to all of his or her community property and separate property
to satisfy his or her obligations under this Guaranty. Time is of the essence in
the performance of this Guaranty by Guarantor.
Guarantor: Address Where Notices to
Guarantor are to be Sent:
TREX COMPANY, INC.,
a Delaware corporation 20 South Cameron Street, Suite 200
Winchester, Virginia 22601
By: /s/ Robert Matheny
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Robert Matheny
President
Print Name and Title
Address Where Notices to
Bank are to be Sent:
BANK OF AMERICA, N.A.
P.O. Box 20000
Reno, Nevada 89520-0025
Attn: Mark McVeigh, mail code NV2-117-02-12
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