Exhibit 10.5
This Instrument Prepared By: GPIN: Frederick County Tax Map Number 63-A-110
Thomas E. duB. Fauls City of Winchester Tax Map Number 371-01-1
Troutman Sanders LLP
Post Office Box 1122
Richmond, Virginia 23218-1122
CREDIT LINE DEED OF TRUST
dated June 19, 2002,
by and among
TREX COMPANY, LLC,
as Grantor,
BB&T-VA COLLATERAL SERVICE CORPORATION
as Trustee,
and
BRANCH BANKING AND TRUST COMPANY OF VIRGINIA and
BRANCH BANKING AND TRUST COMPANY,
as Noteholder
THIS IS A CREDIT LINE DEED OF TRUST within the meaning of Section 55-58.2 of the
Code of Virginia (1950), as amended. For the purposes of and to the extent
required by such Section, (i) the name of the noteholder secured by this Deed of
Trust is Branch Banking and Trust Company of Virginia and Branch Banking and
Trust Company, (ii) the address at which communications may be mailed or
delivered to such noteholder is 110 South Stratford Road, Suite 301,
Winston-Salem, North Carolina 27104, Attention: Cory Boyte, and (iii) the
maximum aggregate amount of principal to be secured at any one time is
$12,600,000.
This Instrument Prepared By: GPIN: Frederick County Tax Map Number 63-A-110
Thomas E. duB. Fauls City of Winchester Tax Map Number 371-01-1
Troutman Sanders LLP
Post Office Box 1122
Richmond, Virginia 23218-1122
THIS IS A CREDIT LINE DEED OF TRUST
THIS CREDIT LINE DEED OF TRUST (this "Deed of Trust"), dated this 19th day
of June, 2002, by and among TREX COMPANY, LLC, a Delaware limited liability
company (hereinafter referred to as the "Grantor"), as grantor, the first party;
BB&T-VA COLLATERAL SERVICE CORPORATION, a Virginia corporation whose address is
823 East Main Street, 11th Floor, Richmond, Virginia 23219, as trustee
(hereinafter referred to as the "Trustee"), as grantee, the second party; and
BRANCH BANKING AND TRUST COMPANY OF VIRGINIA, a Virginia banking corporation,
and BRANCH BANKING AND TRUST COMPANY, a North Carolina banking corporation
(hereinafter collectively referred to as the "Noteholder"), as beneficiaries,
the third party;
The Noteholder's address to which any notice or communication
permitted to be given pursuant to the provisions of ss. 55-58.2 of the
Code of Virginia of 1950, as amended, may be mailed or delivered is
Branch Banking and Trust Company of Virginia and Branch Banking and
Trust Company, 110 South Stratford Road, Suite 301, Winston-Salem,
North Carolina 27104, Attention: Cory Boyte.
W I T N E S S E T H:
The Grantor does hereby grant and convey, with General Warranty and English
Covenants of Title, unto the Trustee, the property described in SCHEDULE A
attached hereto and by this reference made a part hereof; subject however to
Permitted Exceptions, as hereinafter defined;
TOGETHER with (i) all buildings and improvements now or hereafter
constructed thereon; (ii) all the estate and rights, if any, of the Grantor in
and to all land lying in public and private streets, roads and alleyways
abutting the above-described property; (iii) all easements, rights of way,
privileges and appurtenances now or hereafter belonging to or in any way related
to the above-described property; (iv) except for the Excluded Property (as
hereinafter defined), all fixtures, machinery, equipment, building materials and
other personal property of every nature whatsoever owned by the Grantor now or
hereafter located in, or on, or used, or intended to be used, in connection with
the operation of the above-described property, including, but without
limitation, heating, air conditioning, cooking, refrigerating, plumbing, and
electrical apparatus and equipment, boilers, engines, motors, dynamos,
generating equipment, piping and plumbing fixtures, ventilating and vacuum
cleaning systems, fire extinguishing apparatus, gas and electric fixtures,
elevators, escalators, partitions, mantels, built-in mirrors, disposals,
washers, dryers, window shades, blinds, screens, storm sashes, storm doors,
awnings, carpeting, underpadding, drapes, plants and shrubbery, furniture, and
furnishings of public spaces, halls and lobbies, all of which personal property,
including replacements thereof and additions thereto, shall be deemed part of
the realty hereby
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conveyed (and the Grantor does hereby declare such personal property to be part
of said realty, whether attached thereto or not, and subject to the lien hereby
created); and (v) all proceeds of the conversion, whether voluntary or
involuntary, of any of the above-described property into cash or other liquid
claims, including, without limitation, all awards, payments or proceeds,
including interest thereon, and the right to receive same, which may be made as
a result of any casualty, any exercise of the right of eminent domain or deed in
lieu thereof, the alteration of the grade of any street and any injury to or
decrease in the value of the above-described property, together with all costs
and expenses incurred by the Noteholder in connection with the collection of
such awards, payments and proceeds, including, without limitation, reasonable
attorneys' fees.
All the above-described real and personal property, and each part thereof,
is hereinafter sometimes referred to as the "Property."
"Permitted Exceptions" shall mean, as of any particular time (a) liens for
ad valorem taxes and special assessments not then delinquent, (b) this Deed of
Trust and any liens created hereby, (c) the matters listed on SCHEDULE B
attached hereto as a part hereof, and (d) Permitted Liens (as defined in the
Credit Agreement dated as of June 19, 2002, by and among the Grantor, Trex
Company, Inc. and Branch Banking and Trust Company of Virginia, as amended,
restated, supplemented or otherwise modified from time to time (the "Credit
Agreement")).
"Excluded Property" shall mean all property of the Grantor, whether now
owned or hereafter acquired, that constitutes inventory (as defined in the
Uniform Commercial Code as adopted in the Commonwealth of Virginia (the "UCC"))
or equipment (as defined in the UCC) other than Excluded Fixtures (as
hereinafter defined), whether now or hereafter located in, or on, or used, or
intended to be used, in connection with the operation of the Property, together
with all cash and non-cash proceeds thereof. For purposes hereof, "Excluded
Fixtures" shall mean all fixtures (as defined in the UCC) other than
manufacturing or production equipment of the Grantor.
IN TRUST to secure to the Noteholder the following:
(a) (i) the payment and performance of all principal of and interest
(including, without limitation, any interest which accrues after the
commencement of any case, proceeding or other action relating to the
bankruptcy, insolvency or reorganization of the Borrower, whether or not
allowed or allowable as a claim in any such proceeding) on Real Estate Term
Loans 1, 2, 3 & 4 (as each such term is defined in the Credit Agreement),
fees payable or reimbursement obligations under, Real Estate Term Loan 1,
Real Estate Term Loan 2, Real Estate Term Loan 3, or Real Estate Term Loan
4 (as each such term is defined in the Credit Agreement);
(ii) all other amounts now or hereafter payable by the Borrower and
all other obligations or liabilities now existing or hereafter arising or
incurred (including, without limitation, any amounts which accrue after the
commencement of any case, proceeding or other action relating to the
bankruptcy, insolvency or reorganization of the Borrower, whether or not
allowed or allowable as a claim in any such proceeding) on the part of the
Borrower pursuant to Real Estate Term Loan 1, Real Estate Term Loan 2, Real
Estate Term Loan 3, or Real Estate Term Loan 4;
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(iii) all Derivatives Obligations (as defined in the Credit
Agreement)(including, without limitation, all amounts payable with respect
to the ISDA Master Agreement (as defined in the Credit Agreement) and any
amounts which accrue after the commencement of any case, proceeding or
other action relating to the bankruptcy, insolvency or reorganization of
the Borrower, whether or not allowed or allowable as a claim in any such
proceeding) of the Borrower to Branch Banking and Trust Company;
(iv) all other indebtedness, obligations and liabilities of the
Borrower to Branch Banking and Trust Company of Virginia or Branch Banking
and Trust Company, now existing or hereafter arising or incurred, whether
or not evidenced by notes or other instruments, and whether such
indebtedness, obligations and liabilities are direct or indirect, fixed or
contingent, liquidated or unliquidated, due or to become due, secured or
unsecured, joint, several or joint and several, but excluding the Revolving
Credit Loan Obligations (as defined in the Credit Agreement);
(v) all renewals, modifications, consolidations or extensions
of or to each of the obligations described in clauses (a)(i) to and
including (a)(iv) above (the obligations described in clauses (a)(i) to and
including (a)(v) shall collectively be referred to herein as the "Real
Estate Term Loan Obligations"); and
(vi) all reasonable costs and expenses, including, without
limitation, reasonable attorneys' fees incurred by the Noteholder for taxes
and/or insurance relating to, or maintenance or preservation of, the
Property and any other collateral securing the Real Estate Term Loan
Obligations or incurred by the Noteholder in the collection or enforcement
of the Real Estate Term Loan Obligations, including, without limitation,
any such collection or enforcement of the Real Estate Term Loan Obligations
owing to the Noteholder by any action or participation in, or in connection
with, a case or proceeding under Chapter 7 or Chapter 11 of the U.S.
Bankruptcy Code or any successor statute; all of which obligations
described in clauses (a)(i) to and including (a)(vi) shall not exceed, at
any one time, the aggregate principal amount of TWELVE MILLION SIX HUNDRED
THOUSAND AND NO/100 DOLLARS ($12,600,000.00), together with interest
thereon as provided in the Credit Agreement; and
(b) the performance of, and compliance with, all of the covenants,
duties, obligations and conditions of the Grantor contained in this Deed of
Trust.
The above-described indebtedness, liabilities, obligations,
covenants, duties and conditions are hereinafter referred to collectively
as the "Secured Obligations."
The Grantor does also hereby irrevocably assign and convey unto the
Noteholder, and hereby grants to the Noteholder a security interest in, all
leases now or hereafter existing on any part of the Property and any guaranties
thereof and all rents from the Property to secure additionally the Secured
Obligations. The Grantor does hereby irrevocably appoint the Noteholder as its
attorney-in-fact to do all things which the Grantor might otherwise do with
respect to the leasing of the Property, including, without limitation, (i)
collecting such rents with or without suit and applying
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the same, less expenses of collection, to any of the Secured Obligations in such
manner as may be determined by the Noteholder, or at the option of the
Noteholder, holding the same as security for the payment of all of the Secured
Obligations, (ii) leasing, in the name of the Grantor, the whole or any part of
the Property which may become vacant, and (iii) employing agents therefor and
paying such agents reasonable compensation for their services; provided,
however, that until there be an Event of Default (as hereinafter defined), the
Grantor may continue to collect and enjoy such rents in the ordinary course of
business as the rents become due and payable without accountability to the
Noteholder. The curing of such Event of Default, however, shall not entitle the
Grantor to do any such things which the Grantor might otherwise do with respect
to the Property and the leases thereon or again to collect such rents unless
consented to in writing by the Noteholder. The powers and rights granted in this
paragraph shall be in addition to the other remedies herein provided for upon
the occurrence of an Event of Default and may be exercised independently of or
concurrently with any of such remedies. Nothing in the foregoing shall be
construed to impose any obligation upon the Noteholder to exercise any power or
right granted in this paragraph or to assume any liability under any lease of
any part of the Property, and no liability shall attach to the Noteholder for
failure or inability to collect any rents under any such lease. The Grantor
covenants and warrants that (i) it will comply with all terms and conditions of
all leases now existing or that may hereafter come into existence in respect of
the Property or of any part thereof; (ii) all leases with respect to the
Property now or hereafter in effect are and shall be valid and subsisting
leases; (iii) it has not sold, assigned, transferred, mortgaged or pledged, and
will not sell, assign, transfer, mortgage or pledge, without the Noteholder's
prior written consent, the rents, issues or profits from the Property and leases
thereof to any person other than the Noteholder; (iv) no rents, issues or
profits derived from the Property and leases, and becoming due subsequent to the
date hereof, have been collected or anticipated in advance of their due date by
more than thirty (30) days; (v) it will not reduce the rental due under any
lease of all or any part of the Property without the Noteholder's prior written
consent; and (vi) upon request of the Noteholder, it will serve such written
notice or notices as the Noteholder may from time to time require upon the
tenant(s) under such leases or occupant(s) of the Property or any part thereof,
it will execute and deliver to the Noteholder such other instruments or
documents reasonably requested by the Noteholder for the purpose of securing or
exercising its rights herein and it will provide to the Noteholder true copies
or originals of such leases and all amendments, supplements, renewals or
correspondence related thereto. All leases and renewals and extensions of
existing leases shall be subject in all respects to the Noteholder's advance
written approval. Whenever in this paragraph there is a reference to "leases,"
such reference shall also apply to subleases and any other forms of agreement
for the use of the Property or any part thereof.
So long as no Event of Default exists under this Deed of Trust, and except
as specifically provided herein to the contrary, the Grantor shall remain in
quiet use, possession and management of the Property, and in the enjoyment of
the income, revenue and profits therefrom.
So long as any part of the Secured Obligations remains outstanding, the
Grantor covenants and agrees as follows:
1. TAXES AND ASSESSMENTS. The Grantor will pay, promptly when due, all
taxes, assessments and public charges upon the Property, except for those being
contested in good faith, by appropriate proceedings, and for which adequate
reserves have been established (in accordance with GAAP (as defined in the
Credit Agreement)), and immediately thereafter will
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forward to the Noteholder official receipts evidencing such payments; or in
the alternative and at the option of the Noteholder, exercisable at any time
upon the occurrence and during the continuance of an Event of Default, will
deposit with the Noteholder, at such time or times as the Noteholder directs,
such amounts as are necessary, in the sole and absolute discretion of the
Noteholder, to enable the Noteholder to make timely payment of such taxes,
assessments and charges. Such amounts so deposited shall bear no interest and
may be commingled with other funds held by the Noteholder. If, at any time, the
Noteholder determines in its sole and absolute discretion that a deficiency
exists between the amounts deposited and the actual amount required to be paid
with respect to taxes, assessments and charges, then the Grantor shall
immediately pay such deficiency upon notification thereof by the Noteholder. The
Grantor does hereby grant to the Noteholder a security interest in the funds it
receives under this paragraph 1 to secure the payment of the Secured
Obligations.
2. INSURANCE; DAMAGE TO PROPERTY.
a. The Grantor will continuously insure the Property with a
responsible company or companies reasonably satisfactory to the Noteholder
against fire (with extended coverage) in the full insurable value of the
Property, and against such other casualties and in such amounts as required by
the Noteholder pursuant to the Credit Agreement. The insurance policy (or
policies) will have attached thereto a standard mortgagee clause, without
contribution, in favor of the Noteholder, as its interest may appear, and will
otherwise be in form reasonably acceptable to the Noteholder, and the Grantor
will cause such policy (or policies) to provide that it (they) may not be
canceled without thirty (30) days' prior written notice to the Noteholder. The
Grantor will deliver to the Noteholder certificates evidencing that the
Noteholder has been named as loss payee and additional insured on all such
insurance, and certificates of insurance at least fifteen (15) days prior to the
renewal of such insurance policy (or policies). The Noteholder shall have the
right, exercisable at any time upon the occurrence and during the continuance of
an Event of Default, to require the Grantor to deposit with the Noteholder, at
such time or times as the Noteholder directs, such amounts as are necessary, in
the sole and absolute discretion of the Noteholder, to enable the Noteholder to
make timely payment of the premiums on such policy or policies. Such amounts so
deposited shall bear no interest and may be commingled with other funds held by
the Noteholder. If, at any time, the Noteholder determines in its sole and
absolute discretion that a deficiency exists between the amounts deposited and
the actual amount required to be paid with respect to such premiums, then the
Grantor shall immediately pay such deficiency upon notification thereof by the
Noteholder. The Grantor does hereby grant to the Noteholder for the benefit of
the Noteholder a security interest in the funds it receives under this paragraph
2 to secure the payment of the Secured Obligations. As to such insurance, upon
the occurrence and during the continuance of an Event of Default, the Noteholder
may, after ten (10) days' written notice mailed to the Grantor at its last known
address, change any or all of the coverages, terms, amounts or insurers, cause
any policy to name the Noteholder as insured as its interest may appear,
surrender existing policies for cancellation, obtain any cancellation, obtain
any additional insurance it so desires, pay any required premiums and receive
premium refunds, and in any such event any premium adjustments shall be charged
against or credited to the Secured Obligations. In the event any claim for loss
covered by such insurance is not settled within one hundred twenty (120) days
after the occurrence of such loss, the Noteholder may negotiate with any
insurance companies involved and make a reasonable settlement of such claim, and
the Noteholder and such insurance companies, upon such settlement
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being made, shall not be liable in any manner to the Grantor with respect to
such claim and settlement.
b. The Grantor shall promptly notify the Noteholder of any damage to
or destruction of the Property or any part thereof having an aggregate fair
market value in excess of $250,000. In case of any damage to or destruction of
the Property or any part thereof, the Grantor, whether or not the insurance
proceeds, if any, received on account of such damage or destruction shall be
sufficient for the purpose, at the Grantor's expense, will promptly commence and
complete the restoration, replacement or rebuilding of the Property as nearly as
possible to its value, condition and character immediately prior to such damage
or destruction. Insurance proceeds received by the Noteholder in the aggregate
amount of less than $1,000,000 in any fiscal year of the Grantor under any
policy or policies covering the Property or any part thereof shall be remitted
to the Grantor, provided that (i) no Default (as defined in the Credit
Agreement) or Event of Default then exists and (ii) the Grantor restores that
portion of the Property so damaged or destroyed within 360 days of the
occurrence of such damage or destruction. Insurance proceeds received by the
Noteholder in the aggregate amount of more than $1,000,000 in any fiscal year of
the Grantor under any policy or policies of insurance covering the Property or
any part thereof shall first be applied toward the payment of the amount owing
on the Secured Obligations in such order of application as the Noteholder may
elect whether or not the same may then be due or be otherwise adequately
secured; provided, however, that such proceeds shall be made available for the
restoration of the portion of the Property damaged or destroyed if written
application for such use is made within thirty (30) calendar days of receipt of
such proceeds and the following conditions are satisfied: (i) the Grantor has in
effect business interruption insurance in the amounts required by the Credit
Agreement; (ii) no Default or Event of Default exists (and if an Event of
Default shall occur during restoration the Noteholder may, at its election,
apply any insurance proceeds then remaining in its hands to the reduction of the
Secured Obligations); (iii) the Grantor shall have submitted to the Noteholder
plans and specifications for the restoration which shall be reasonably
satisfactory to it; (iv) the Grantor shall submit to the Noteholder fixed price
contracts with good and responsible contractors and materialmen covering all
work and materials necessary to complete restoration and providing for a total
completion price not in excess of the amount of insurance proceeds available for
restoration, or, if a deficiency shall exist, the Grantor shall have deposited
the amount of such deficiency with the Noteholder; and (v) the Grantor shall
have provided to the Noteholder a written release from each insurer under such
policies of insurance to the effect that all such proceeds are paid without any
reservation of rights and that such insurer has no cause of action, right of
set-off or other claim against the Grantor or the insured under such policies.
Any insurance proceeds to be released pursuant to the foregoing provisions may
at the option of the Noteholder be disbursed from time to time as restoration
progresses to pay for restoration work completed and in place and such
disbursements may at the Noteholder's option be made directly to the Grantor or
to or through any contractor or materialman to whom payment is due or to or
through a construction escrow to be maintained by a title insurer acceptable to
the Noteholder. The Noteholder may impose such further conditions upon the
release of insurance proceeds (including the receipt of title insurance) as are
customarily imposed by prudent construction lenders to insure the completion of
the restoration work free and clear of all liens or claims for liens. All title
insurance charges and other costs and expenses paid to or for the account of the
Grantor in connection with the release of such insurance proceeds shall
constitute so much additional indebtedness hereby secured to be payable upon
demand with interest at the rate
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applicable to Real Estate Term Loans 1, 2, 3 & 4 at the time such costs or
expenses are incurred. The Noteholder may deduct any such costs and expenses
from insurance proceeds at any time standing in its hands. If the Grantor fails
to request that insurance proceeds be applied to the restoration of the Property
or if the Grantor makes such a request but fails to complete restoration within
twelve (12) months of the occurrence of the damage or destruction of the
Property giving rise to payment of such insurance proceeds, the Noteholder shall
have the right, but not the duty, to release the proceeds thereof for use in
restoring the Property or any part thereof for or on behalf of the Grantor in
lieu of applying said proceeds to the Secured Obligations and for such purpose
may do all acts necessary to complete such restoration, including advancing
additional funds, and any additional funds so advanced shall constitute part of
the indebtedness hereby secured and shall be payable on demand with interest at
the Default Rate applicable to Real Estate Term Loans 1, 2, 3 & 4.
Notwithstanding the foregoing, if, despite the exercise of reasonable diligence,
the Grantor is unable to complete the restoration of the Property within twelve
(12) months of the occurrence of the damage or destruction of the Property
giving rise to the payment of insurance proceeds, the Grantor shall have not
more than three (3) additional months (the "Extended Restoration Period") to
complete such restoration, provided that (i) no Default or Event of Default
shall have occurred and be continuing at the commencement of or at any time
during the Extended Restoration Period and (ii) the Noteholder remains satisfied
during the Extended Restoration Period that the Grantor is pursuing such
completion with reasonable diligence at all times.
3. PRESERVATION AND MAINTENANCE OF PROPERTY. Except as otherwise may be
permitted in the Credit Agreement, the Grantor will keep the Property (including
any private roads on or over which the Grantor has any easement or right
appurtenant to the Property) in good order and repair, including the making of
such replacements as may be necessary for that purpose, and the Grantor will
promptly restore any part of the Property which may be damaged by fire or other
casualty as required by paragraph 2 hereof.
4. WASTE. The Grantor will not permit, suffer or commit any material
waste, impairment or deterioration of, nor allow any material nuisance to exist
upon, the Property or any part thereof.
5. ASSURANCES OF TITLE. The Grantor will execute, or cause to be
executed, such further assurances of title to the Property, and will take, and
cause to be taken, such steps, including legal proceedings, as may at any time
be reasonably necessary to perfect the title to the Property in the Trustee.
6. CONTRACTS. The Grantor will keep and maintain at its principal place
of business copies of all written contracts, leases and other instruments which
affect the Property. Such contracts, leases and other instruments shall be
subject to examination and inspection by the Noteholder at any reasonable time
and from time to time, and, if no Event of Default has occurred, upon reasonable
prior notice.
7. LIENS AND ENCUMBRANCES. The Grantor will not, without the prior
written consent of the Noteholder, permit or suffer to exist any lien or
encumbrance on the Property, or interest therein (legal or equitable), or any
part thereof, either inferior or superior in right to the lien of this Deed of
Trust, other than Permitted Exceptions.
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8. WAIVER OF EXEMPTIONS. The Grantor will not set up or claim the benefit
of any homestead or other exemption of law, or any other law or rule of law
intended for its advantage or protection as an obligor under any note evidencing
the Secured Obligations (collectively, the "Notes"), under the ISDA Master
Agreement or under this Deed of Trust or providing for its release or discharge
from any liability under the Notes, the ISDA Master Agreement or this Deed of
Trust on account of any facts or circumstances other than full and complete
payment of all amounts due under the Notes, the ISDA Master Agreement and this
Deed of Trust, all of such exemptions and benefits being hereby expressly
waived.
9. EMINENT DOMAIN. The Grantor covenants and agrees to give prompt
written notice to the Noteholder by certified mail, postage prepaid, return
receipt requested, of any taking or condemnation, or any threatened or pending
proceedings for the taking or condemnation, of any part of the Property under
any power of eminent domain; and in the event that title to, or possession of,
the Property or any portion thereof, is taken or condemned under any power of
eminent domain, then the Grantor will (and hereby does) assign to the
Noteholder, and will forthwith upon receipt pay to the Noteholder, the proceeds
and consideration resulting from taking or condemnation, not to exceed the
unpaid balance of the Secured Obligations, such proceeds so paid to be applied
to the Secured Obligations.
10. TRANSFER OF PROPERTY. The Grantor will not, without the prior written
consent of the Noteholder, lease, bargain, sell, transfer, assign or convey the
Property, or any portion thereof, or any legal or equitable interest therein.
NOTICE -- THE DEBT SECURED HEREBY IS SUBJECT TO CALL IN FULL OR THE TERMS
THEREOF BEING MODIFIED IN THE EVENT OF SALE OR CONVEYANCE OF THE PROPERTY
CONVEYED.
11. USE OF PROPERTY. The Grantor will not, without the prior written
consent of the Noteholder, (a) change, or permit any material changes in, the
general use for which all or any part of the Property was intended at the time
of the execution of this Deed of Trust, or (b) initiate or acquiesce in a change
in the zoning classification of the Property.
12. ENTRY; PROTECTION OF THE NOTEHOLDER'S SECURITY. The Grantor does
hereby grant to the Noteholder, the Trustee and their designees the right to
enter, examine and inspect the Property, and to do such other things as are
permitted under this Deed of Trust, at any reasonable time and from time to
time, and if no Event of Default has occurred, upon reasonable prior notice. In
the event (a) the Grantor fails to perform any of its covenants or agreements
herein contained, or (b) any action or proceeding is commenced or threatened
which affects the Property or title thereto or the interest of the Trustee or
the Noteholder therein, including, without limitation, eminent domain,
insolvency, arrangements or proceedings involving a bankrupt or decedent, then,
in any of such events, the Noteholder may, at its option, make such appearances,
disburse such amount and take such action as the Noteholder deems necessary, in
its reasonable discretion, to protect its interest, including, without
limitation, (i) the employment of attorneys and disbursement of attorneys' fees,
(ii) the entry upon the Property to make repairs, (iii) the procurement of
insurance as provided in paragraph 2 hereof, and (iv) if the Property is subject
to another deed of trust or lien, whether inferior or superior hereto, the
curing of any default in the performance of any of the terms and provisions
thereof, or if the indebtedness thereby secured is
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accelerated, the purchase or payment in full of such indebtedness, all on such
terms as the Noteholder shall, in its sole and absolute discretion, deem
necessary or advisable. Any amounts disbursed by the Noteholder pursuant to the
provisions of this paragraph 12 shall be added to, and deemed a part of, the
Secured Obligations, shall be secured in the same manner as the Notes and the
other Real Estate Term Loan Obligations are secured, shall bear interest from
the date of the disbursement thereof at a fluctuating rate of interest equal to
the Default Rate (as defined in the Credit Agreement) applicable to Real Estate
Term Loans 1, 2, 3 & 4, and shall, together with the interest thereon, be
repayable by the Grantor on demand.
13. ESTOPPEL CERTIFICATE. The Grantor will, within ten (10) days of being
requested in writing by the Noteholder so to do, furnish a written statement to
the Noteholder, duly acknowledged, setting forth in detail the Secured
Obligations and any right of setoff, counterclaim or other defense which exists
against the payment or performance thereof.
14. ENVIRONMENTAL PROTECTION. The Grantor covenants and agrees as follows:
a. The Grantor warrants and represents that it has investigated or
caused to be investigated the previous ownership and uses of the Property, in a
manner consistent with good commercial practices, to determine whether
activities have been conducted which might involve the use, manufacturing,
storage or disposal of Hazardous Substances (as defined in the Credit
Agreement), and this investigation has revealed no fact which would indicate
that the Property has been involved in the use, manufacturing, storage or
disposal of Hazardous Substances other than in accordance with all applicable
Environmental Laws (as defined in the Credit Agreement). This investigation has
taken into account, among other factors, (i) the relationship of the purchase
price to the value of the Property if uncontaminated when originally purchased
by the Grantor, (ii) commonly known or reasonably ascertainable information
about the Property, and (iii) the obviousness of the presence or likely presence
of contamination at the Property.
b. The Grantor warrants and represents to the best of its knowledge
after due investigation that it has disclosed to the Noteholder all pending or
threatened litigation and all orders, rulings, notices, permits or
investigations regarding Hazardous Substances on the Property.
c. The Grantor and any other parties, including, but not limited to,
tenants, licensees and occupants, will not be involved in any activity at or
near the Property, which activity is likely to involve or lead to (i) the use,
manufacture, storage or disposal of Hazardous Substances except in accordance
with all applicable Environmental Laws and all other laws, ordinances and
regulations, or (ii) the imposition of liability on the Grantor or any other
subsequent or former owner of the Property or the creation of a lien on the
Property under any Environmental Laws.
d. The Grantor will comply in all material respects with the
requirements of all Environmental Laws and shall promptly notify the Noteholder
in the event of the discovery of Hazardous Substances at the Property which are
not in compliance with applicable Environmental Laws. Further, the Grantor will
promptly forward to the Noteholder copies of all orders, notices, permits,
applications and other communications and reports in connection with any
discharge, spillage, use or discovery of Hazardous Substances on the Property
which constitutes or is alleged to constitute a violation of any Environmental
Law. Grantor will not permit any other party,
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including, but not limited to, tenants, licensees and occupants to conduct any
such discharge, spillage or use of any Hazardous Substances except in compliance
with all applicable Environmental Laws and shall take immediate action to stop
any such activity and to correct any violations resulting therefrom.
e. The Grantor agrees that if at any time the Noteholder has
reasonable cause to believe there are Hazardous Substances upon the Property
that are being used, stored, manufactured or disposed of other than in
accordance with all applicable Environmental Laws, the Noteholder may with prior
notice to Grantor obtain, at Grantor's cost, an environmental site assessment or
environmental audit report of reasonable scope under the circumstances from a
firm acceptable to the Noteholder, to assess with a reasonable degree of
certainty (i) the presence of any such Hazardous Substances and (ii) the cost in
connection with the abatement, cleanup or removal of such.
f. The Grantor agrees that in the event of the presence of any
Hazardous Substances upon the Property which is not in compliance with all
applicable Environmental Laws, whether or not the same originates or emanates
from the Property, or if Grantor shall fail to comply with all requirements of
all applicable Environmental Laws, the Noteholder may at its election, but
without the obligation to do so, (i) give such notices as are required by
applicable Environmental Laws, (ii) cause such work to be performed at the
Property or (iii) take any and all other actions as the Noteholder shall deem
necessary or advisable in order to abate, remove and clean up the Hazardous
Substances or otherwise cure the Grantor's noncompliance.
g. The Grantor shall be liable for all reasonable costs and expenses
incurred by or asserted against the Noteholder arising under this paragraph even
if said costs and expenses exceed the amount of the loans secured by this Deed
of Trust.
h. Any amounts disbursed by the Noteholder pursuant to the
provisions of this paragraph 14 shall be added to, and deemed a part of, the
Secured Obligations, shall be secured in the same manner as the Notes and the
other Real Estate Term Loan Obligations are secured, shall bear interest from
the date of the disbursement thereof at a fluctuating rate of interest equal to
the Default Rate (as defined in the Credit Agreement) applicable to Real Estate
Term Loans 1, 2, 3 & 4, and shall, together with the interest thereon, be
repayable by the Grantor on demand.
15. COMPLIANCE WITH LAWS. Except as otherwise may be permitted in the
Credit Agreement, the Grantor shall comply with all applicable laws, ordinances,
rules, regulations and judicial or administrative orders (collectively, "Laws")
now in force or hereafter enacted or promulgated relating to the construction,
maintenance, operation and use of the Property, or any part thereof, including,
but not limited to, Environmental Laws. Without limiting the generality of the
foregoing, the Grantor shall apply for, obtain, keep in force and comply with
all governmental permits, licenses and approvals (collectively, "Permits") now
or hereafter at any time required in connection with the construction,
maintenance, operation and use of the Property, or any part thereof, except
where the failure to apply for, obtain, keep in force and comply with all
Permits could not reasonably be expected to have a Material Adverse Effect (as
defined in the Credit Agreement). The Grantor represents and warrants that, as
of the date hereof, its activities and the Property are in compliance with all
Laws in all material respects and that all Permits are in full force and effect
in all material respects. To the extent required under the Credit Agreement, the
Grantor
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covenants and agrees to give prompt written notice to the Noteholder by
certified mail, postage prepaid, return receipt requested, of any present or
future pending or threatened litigation and any orders, rulings, notices,
permits or investigations with respect to Laws and/or Permits if such
litigation, orders, rulings, notices, permits or investigations with respect to
the Property.
16. EVENTS OF DEFAULT AND FORECLOSURE. If any one or more of the following
events (herein sometimes referred to as "Events of Default") shall occur:
a. An Event of Default as defined in the Credit Agreement or any
renewal, extension or modification thereof or any substitution or replacement
therefor; or
b. Default under any other lien or encumbrance placed on the
Property, or any interest therein (legal or equitable), or any part thereof,
either inferior or superior in right to the lien of this Deed of Trust, and such
default shall continue beyond any applicable grace period; or
c. The termination of, or occurrence of any event affecting, the
validity of this Deed of Trust or the priority of this Deed of Trust as to all
outstanding or future advances intended to be secured hereby; or
d. The passage after the date of this Deed of Trust of any law of
the Commonwealth of Virginia deducting from the value of the land, for the
purposes of taxation, any lien thereon, or providing for, or changing in any way
the laws relating to, the taxation of deeds of trust or the notes or debts
secured by deeds of trust for state or local purposes, or the manner of the
collection of any such taxes, so as to impair the lien of this Deed of Trust or
the security afforded hereunder, unless the Grantor is permitted by law to pay
the whole of such tax imposed upon this Deed of Trust and/or the Secured
Obligations (in addition to all other payments required hereunder) and the
Grantor pays such tax and agrees to pay and thereafter pay such tax whenever
levied; or
e. The passage of any law or the decision of any court rendering or
declaring any material covenant or agreement set out in any Note, the ISDA
Master Agreement, any agreement evidencing or securing any of the other Real
Estate Term Loan Obligations, or in this Deed of Trust to be legally
unenforceable, inoperative, void or voidable;
then, in any of such events, the Trustee and the Noteholder shall, in addition
to any other rights and remedies provided in the Credit Agreement, or by law or
in equity, have the following rights and remedies, any one or more of which
shall be exercisable from time to time at the Noteholder's option and without
notice to the Grantor:
(i) The Noteholder may declare the Notes, or any of them, and
all of the other Secured Obligations immediately due and payable, without
demand;
(ii) The Noteholder may dispossess the Grantor of the Property
and exercise any right or remedy provided in this Deed of Trust with
respect to taking possession of the Property and collecting the rents
relating thereto;
(iii) The Noteholder may apply for and obtain the appointment of
a receiver for the Property, with the power to collect the rents, issues
and profits therefrom, without regard to the value of the Property or of
the solvency of any person or persons liable
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for the payment of the Secured Obligations, and the Grantor does hereby
waive any and all defenses to the application for appointment of such
receiver and consent to the appointment of such receiver without notice,
but reserves the right to apply for vacation of any order of appointment of
such receiver, or for any other appropriate relief, upon showing that none
of the foregoing events of default occurred prior to application for the
appointment of such receiver or during the pendency of such application in
court; and
(iv) The Trustee may foreclose by a sale of the Property as
follows:
(A) The Trustee may take possession of the Property and
proceed to sell the same at auction at the premises or at such other
place in the city or county in which the Property or the greater part
thereof lies, or in the corporate limits of any city surrounded by or
contiguous to such county, or in the case of annexed land, in the
county of which the land was formerly a part, as the Trustee may
select upon such terms and conditions as the Trustee may deem best,
after first advertising the time, place and terms of sale in at least
three (3) consecutive issues (which may be on consecutive days), in
advance of the date of such sale, of a newspaper published or having
general circulation in the county or city in which the Property or
some portion thereof is located.
(B) The power of sale above granted may be exercised at
different times as to different portions of the Property, and if for
any reason any executory contract of sale shall not be performed, then
new contracts may be made with respect to the same portion of the
Property (with or without other portions). If the Trustee deems it
best for any reason to postpone or continue the sale at any time or
from time to time, they may do so.
(C) Full power and authority is hereby expressly granted
and conferred upon the Trustee to make, execute, and deliver all
necessary deeds of conveyance for the purpose of vesting in the
purchaser or purchasers complete and entire legal and equitable title
to the Property, or the portion thereof so sold, and the recitals
therein shall be received in all courts of law and equity as prima
facie evidence of the matters therein stated; and at such sale the
Noteholder may become a purchaser, and no purchaser shall be required
to see to the proper application of the purchase money.
(D) The proceeds of such sale shall be applied, first, to
discharge the expenses of executing their Deed of Trust, including a
commission to the Trustee of three percent (3%) of the gross proceeds
of sale; next, to discharge all taxes, levies, and assessments on the
Property, with costs and interest, including a proper proration
thereof for the current year; next, to reimburse the Trustee and the
Noteholder for all amounts expended by them or any of them pursuant to
the provisions of this Deed of Trust, with interest thereon; next, to
pay the accrued interest on the unpaid principal balance due under the
Notes and under the other Secured Obligations; next, to pay such
unpaid principal balance of the Notes and the other Secured
Obligations; next to pay any remaining Secured Obligations; next, to
pay any indebtedness secured by any lien of record inferior to the
lien of this Deed
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of Trust; and any residue of such proceeds shall be paid to the
Grantor provided, however, that the Trustee as to such residue shall
not be bound by any inheritance, devise, conveyance, assignment or
lien of or upon the Grantor's equity, without actual notice thereof
prior to distribution.
17. [Reserved.]
18. NONWAIVER. No delay, act or failure to act, by the Trustee and the
Noteholder, or any of them, however long continued, shall be construed as a
waiver of any of their rights hereunder or of any default by the Grantor.
19. NO LIABILITY OR OBLIGATION ON THE TRUSTEE OR THE NOTEHOLDER. Nothing
in this Deed of Trust shall be construed to impose any obligation upon the
Noteholder or the Trustee to expend any money or to take any other discretionary
act herein permitted, and neither the Noteholder nor the Trustee shall have any
liability or obligation for any delay or failure to take any discretionary act.
The Trustee shall not be required to see that this Deed of Trust is recorded and
shall not be liable for the default or misconduct of the Noteholder or any agent
or attorney appointed by them in pursuance hereof, or for anything whatever in
connection with this Deed of Trust, except willful misconduct or gross
negligence. The Trustee may act upon any instrument or paper believed by it in
good faith to be genuine and to be signed by the proper party or parties, and
shall be fully protected for any action taken or suffered by them in reliance
thereon.
20. RELEASE UPON FULL PAYMENT. Upon full payment of all sums due under the
Notes, the ISDA Master Agreement, this Deed of Trust and the other Secured
Obligations, the Trustee shall, upon the request of, and at the cost of, the
Grantor, execute a proper release of this Deed of Trust.
21. SUBSTITUTION OF THE TRUSTEE. Notwithstanding anything herein contained
to the contrary, if the Trustee fails, refuses, or becomes unable to act, or if
for any reason the Noteholder, in its sole and absolute discretion, deems it
advisable, the Noteholder is hereby authorized and empowered to appoint, by an
instrument recorded wherever this Deed of Trust is recorded, one or more other
Trustees, in the place and stead of the Trustee named herein, which substitute
Trustee or Trustees shall have all rights, powers, and authority and be charged
with all the duties that are conferred or charged upon the Trustee named herein;
and if more than one Trustee is so named, any one or more of such Trustees may
act hereunder without the joinder of any other Trustee or Trustees and any act
taken hereunder by any one or more Trustees shall be as effective as if taken by
all Trustees.
22. ADVANCES AND FUTURE ADVANCES. It is understood and agreed that the
Noteholder reserves the right, but shall have no obligation, to make additional
advances of proceeds in connection with the Real Estate Term Loan Obligations
from time to time, including the advance of the proceeds of Real Estate Term
Loan 4 (as defined in the Credit Agreement) and the readvance of any sums
previously repaid on the Notes.
23. INDEMNIFICATION BY THE GRANTOR. The Grantor shall protect and
indemnify the Trustee and the Noteholder from and against all liabilities,
obligations, claims,
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damages, penalties, causes of action, costs and expenses (including, without
limitation, reasonable attorneys' fees and disbursements), imposed upon or
incurred by or asserted against the Trustee, the Noteholder or the directors,
officers or employees of the Noteholder by reason of (a) ownership of the
Property or any interest therein, or receipt of any rent or other sum therefrom,
(b) any accident to, injury to or death of persons or loss of or damage to
property occurring on or about the Property or the adjoining sidewalks, curbs,
vaults or vault space, if any, streets or ways, (c) any use, nonuse or condition
of the Property or the adjoining sidewalks, curbs, vaults or vault space, if
any, streets or ways, (d) any failure on the part of the Grantor to perform or
comply with any of the terms, covenants, conditions and agreements set forth in
this Deed of Trust, any of the Notes, the ISDA Master Agreement, or any other
agreements executed by the Grantor or any other persons liable for the payment
of the Secured Obligations, (e) performance of any labor or services or the
furnishing of any materials or other property in respect of the Property or any
part thereof for construction or maintenance or otherwise, (f) any action
brought against the Trustee or the Noteholder, or any of them, attacking the
validity, priority or enforceability of this Deed of Trust, any Note, the ISDA
Master Agreement, or any other agreements executed by the Grantor or any other
persons liable for the payment of the Secured Obligations, and/or (g) the
presence of Hazardous Substances on the Property; provided, however, that the
Grantor shall not be obligated to indemnify the Trustee or the Noteholder from
any loss, damage, cost or expense directly attributable to their or any of their
gross negligence or willful misconduct. Any amounts payable to the Trustee or
the Noteholder under this paragraph 23 which are not paid within ten (10) days
after written demand therefor by the Trustee or the Noteholder shall be added
to, and deemed a part of, the Secured Obligations, shall be secured in the same
manner as the Notes and the other Real Estate Term Loan Obligations are secured,
shall bear interest from the date of the disbursement thereof at a fluctuating
rate of interest equal to the Default Rate (as defined in the Credit Agreement)
applicable to Real Estate Term Loans 1, 2, 3 & 4, and shall, together with the
interest thereon, be repayable by the Grantor on demand. In the event any
action, suit or proceeding is brought against the Trustee, the Noteholder or the
directors, officers, agents of employees of the Noteholder by reason of any such
occurrence, the Grantor, upon the request of the Trustee or the Noteholder and
at the Grantor's expense, shall resist and defend such action, suit or
proceeding or cause the same to be resisted and defended by counsel designated
by the Grantor and approved by the Trustee and/or the Noteholder. Such
obligations under this paragraph 23 shall survive the termination, satisfaction
or release of this Deed of Trust.
24. RELEASE. The Grantor agrees that the Noteholder, without notice to or
further consent of the Grantor, may release or discharge any maker of any Note,
or any other persons who are or may become liable for the Secured Obligations or
release or discharge any other collateral for the Secured Obligations, and that
any such release or discharge shall not alter, modify, release or limit the
liability of the Grantor hereunder or the validity and enforceability of this
Deed of Trust.
25. HEADINGS. The headings of the paragraphs of this Deed of Trust are for
the convenience of reference only and are not to be considered a part hereof and
shall not limit or otherwise affect any of the terms hereof.
26. NUMBER AND GENDER. The pronouns and verbs set forth herein shall be
construed as being of such number and gender as the context may require.
27. SUCCESSORS AND ASSIGNS. This Deed of Trust shall be binding upon, and
shall inure to the benefit of, the parties hereto and their respective heirs,
personal representatives,
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successors and assigns, and any descriptive term used herein shall include such
heirs, personal representatives, successors and assigns.
28. PERSONS. The use of the word "persons" in this Deed of Trust includes
individuals, corporations, partnerships, and all other entities.
IN WITNESS WHEREOF the Grantor has caused this Credit Line Deed of Trust to
be executed in its name and on its behalf by its duly authorized officers
pursuant to due authorization.
TREX COMPANY, LLC
By: /s/ Anthony J. Cavanna
____________________________________
Name: Anthony J. Cavanna
Title: Executive Vice President and
Chief Financial Officer
COMMONWEALTH OF VIRGINIA
CITY OF RICHMOND, to-wit:
The foregoing instrument was duly acknowledged before me in my jurisdiction
aforesaid this 19th day of June, 2002, by Anthony J. Cavanna who is Executive
Vice President and Chief Financial Officer of TREX Company, LLC, a Delaware
limited liability company, on behalf of the company.
[AFFIX NOTARIAL SEAL]
/s/ Trudi Brown
________________________________
(Notary Public)
My commission expires: May 31, 2003
___________________________
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