THIS DOCUMENT WAS PREPARED
BY AND WHEN RECORDED, RETURN
BY MAIL TO:
Erika K. Del Duca, Esq.
Milbank, Tweed, Hadley & McCloy LLP
1 Chase Manhattan Plaza
New York, NY 10005-1413
DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING dated December 1, 2005 (together with any amendments or modifications hereto in effect from time to time, the " Deed of Trust" ) , by WINCUP TEXAS, LTD. , a Texas limited partnership, having an address c/o Radnor Holdings Corporation, Radnor Financial Center, 150 Radnor Chester Road, Building A, Suite 300, Radnor, Pennsylvania 19087 (" Grantor" ) in favor of COMMONWEALTH LAND TITLE OF FORT WORTH, INC., having an address at 777 Taylor Street, Suite 902, Fort Worth, TX 76102 (the " Trustee" ) for the benefit of TENNENBAUM CAPITAL PARTNERS, LLC , having an address of 2951 28 th Street, Suite 1000, Santa Monica, CA 90405, in its capacity as collateral agent (together with its successors and assigns in such capacity, " Beneficiary" ).
WHEREAS, the Lenders (as defined in the Credit Agreement (as defined below)) have extended, at the request of Radnor Holdings Corporation (the " Company" ), $92,600,000 aggregate principal amount of Tranche A Loans (the " Tranche A Loans" ) and $2,400,000 aggregate principal amount of Tranche B Loans (the " Tranche B Loans" )(the Tranche A Loans and the Tranche B Loans are collectively referred herein as, the " Loans" ); the total aggregate principal amount of the Loans not exceeding ninety-five million dollars ($95,000,000) and which Loans are evidenced by the Tranche A Notes executed by the Company (the " Tranche A Notes" ) and Tranche B Notes executed by the Company (the " Tranche B Notes" ) pursuant to that certain Credit Agreement, of even date herewith (the " Credit Agreement" ), between the Company, the Company' s subsidiaries that provide guarantees under the Credit Agreement (the " Guarantors" ), the Lenders and Tennenbaum Capital Partners, LLC, as agent and collateral agent; WHEREAS, the Company, the Guarantors, and Beneficiary, as collateral agent, have entered into that certain Tranche A Security Agreement (the " Tranche A Security Agreement" ) dated as of the date hereof pursuant to which the Company and the Guarantors have granted a security interest in, and undertaken obligations with respect to, certain collateral and other property described therein;
WHEREAS, Grantor is the owner of fee simple title to certain tract of land located at 1102 Blue Creek Road, in the City of El Campo, County of Wharton, State of Texas, as more particularly described in Schedule " A" attached hereto and made a part hereof (the " Real Estate" );
WHEREAS , pursuant to the Credit Agreement, the Guarantors have unconditionally guaranteed the repayment of the indebtedness evidenced and represented by the Tranche A Notes (the " Indebtedness" ), as well as the payment, performance, observance and discharge by the Company of all obligations, covenants, conditions and agreements made by the Company to, with, in favor of and for the benefit of Beneficiary or any of the Tranche A Lenders (as defined in the Credit Agreement) under the Credit Agreement and the Other Documents (as defined below); WHEREAS , Beneficiary and the Tranche A Lenders, as a condition precedent to the transactions contemplated by the Credit Agreement, have required that Grantor execute and deliver this Deed of Trust to the Trustee for the benefit of Beneficiary; and
WHEREAS , Grantor is one of the Guarantors and Grantor will directly and substantially benefit from the transactions contemplated by the Credit Agreement.
NOW, THEREFORE, to secure to Tranche A Lenders (i) the payment or performance and discharge of all sums due under this Deed of Trust; (ii) the payment or performance and discharge of all terms, conditions and covenants, including the Secured Obligations, set forth in the Credit Agreement and the Other Documents, other than the payment of principal, prepayment premium, if any, and interest on, the Tranche B Loans and the performance of the Guarantors with respect thereto; and (iii) the payment or performance and discharge of all other obligations or indebtedness of Grantor, the Company, or the other Guarantors to Beneficiary or Tranche A Lenders of whatever kind or character and whenever borrowed or incurred under the Credit Agreement or the Other Documents, including without limitation, principal, prepayment premium, if any, and interest (as the same may vary in accordance with the terms of the Credit Agreement) on the Tranche A Loans (but excluding the payment of principal, prepayment premium, if any, and interest on, the Tranche B Loans), fees, late charges and expenses, including attorneys' fees (subsections (i), (ii) and (iii) collectively, the " Liabilities" ), Grantor DOES HEREBY GRANT, BARGAIN, SELL, CONVEY, TRANSFER, ASSIGN, MORTGAGE and SET OVER to Trustee, his/her substitutes and assigns, for the benefit of Beneficiary and Tranche A Lenders, all right, title and interest of Grantor in and to the following (collectively, the " Property" ): (A) The Real Estate;
(B) Any and all buildings and improvements now or hereafter erected on, under or over the Real Estate (the " Improvements" );
(C) Any and all fixtures, machinery, equipment and other articles of real, personal or mixed property, belonging to Grantor, at any time now or hereafter installed in, attached to or situated in or upon the Real Estate, or the Improvements, or used or intended to be used in connection with the Real Estate, or in the operation of the Improvements, plant, business or dwelling situate thereon, whether or not such real, personal or mixed property is or shall be affixed thereto, and all replacements, substitutions and proceeds of the foregoing (all of the foregoing herein called the " Service Equipment" ), including without limitation: (i) all appliances, furniture and furnishings; all articles of interior decoration, floor, wall and window coverings; all office, restaurant, bar, kitchen and laundry fixtures, utensils, appliances and equipment; all supplies, tools and accessories; all storm and screen windows, shutters, doors, decorations, awnings, shades, blinds, signs, trees, shrubbery and other plantings; (ii) all building service fixtures, machinery and equipment of any kind whatsoever; all lighting, heating, ventilating, air conditioning, refrigerating, sprinkling, plumbing, security, irrigating, cleaning, incinerating, waste disposal, communications, alarm, fire prevention and extinguishing systems, fixtures, apparatus,
machinery and equipment; all elevators, escalators, lifts, cranes, hoists and platforms; all pipes, conduits, pumps, boilers, tanks, motors, engines, furnaces and compressors; all dynamos, transformers and generators; (iii) all building materials, building machinery and building equipment delivered on site to the Real Estate during the course of, or in connection with any construction or repair or renovation of the Improvements; (iv) all parts, fittings, accessories, accessions, substitutions and replacements therefor and thereof; and (v) all files, books, ledgers, reports and records relating to any of the foregoing;
(D) Any and all leases, subleases, tenancies, licenses, occupancy agreements or agreements to lease all or any portion of the Real Estate, Improvements, Service Equipment or all or any other portion of the Property and all extensions, renewals, amendments, modifications and replacements thereof, and any options, rights of first refusal or guarantees relating thereto (collectively, the " Leases" ); all rents, income, receipts, revenues, security deposits, escrow accounts, reserves, issues, profits, awards and payments of any kind payable under the Leases or otherwise arising from the Real Estate, Improvements, Service Equipment or all or any other portion of the Property including, without limitation, minimum rents, additional rents, percentage rents, parking, maintenance and deficiency rents (collectively, the " Rents" ); all of the following personal property to the extent assignable (collectively referred to as the " Contracts" ): all accounts, general intangibles and contract rights (including any right to payment thereunder, whether or not earned by performance) of any nature relating to the Real Estate, Improvements, Service Equipment or all or any other portion of the Property or the use, occupancy, maintenance, construction, repair or operation thereof; all management agreements, franchise agreements, utility agreements and deposits, building service contracts, maintenance contracts, construction contracts and architect' s agreements; all maps, plans, surveys and specifications; all warranties and guaranties; all permits, licenses and approvals; and all insurance policies, books of account and other documents, of whatever kind or character, relating to the use, construction upon, occupancy, leasing, sale or operation of the Real Estate, Improvements, Service Equipment or all or any other portion of the Property;
(E) Any and all estates, rights, tenements, hereditaments, privileges, easements, reversions, remainders and appurtenances of any kind benefiting or appurtenant to the Real Estate, Improvements or all or any other portion of the Property; all means of access to and from the Real Estate, Improvements or all or any other portion of the Property, whether public or private; all streets, alleys, passages, ways, water courses, water and mineral rights relating to the Real Estate, Improvements or all or any other portion of the Property; all rights of Grantor as declarant or unit owner under any declaration of condominium or association applicable to the Real Estate, Improvements or all or any other portion of the Property including, without limitation, all development rights and special declarant rights; and all other claims or demands of Grantor, either at law or in equity, in possession or expectancy of, in, or to the Real Estate, Improvements or all or any other portion of the Property (all of the foregoing described in this subsection E herein called the " Appurtenances" ); and
(F) Any and all " proceeds" of any of the above-described Real Estate, Improvements, Service Equipment, Leases, Rents, Contracts and Appurtenances, which term " proceeds" shall have the meaning given to it in the Uniform Commercial Code, as amended, (the " Code" ) of the State in which the Real Estate is located (collectively, the " Proceeds" ) and shall additionally include whatever is received upon the use, lease, sale, exchange, transfer, collection or other utilization or any disposition or conversion of any of the Real Estate, Improvements, Service Equipment, Leases, Rents, Contracts and Appurtenances, voluntary or involuntary, whether cash or non-cash, including, subject to the terms of this Deed of Trust, proceeds of insurance and condemnation awards, rental or lease payments, accounts, chattel paper, instruments, documents, contract rights, general intangibles, equipment and inventory.
TO HAVE AND TO HOLD the above granted and conveyed Property unto and to the proper use and benefit of Trustee, its successors and assigns, in trust, forever, to secure the payment and performance of the Liabilities.
IN TRUST, WITH THE POWER OF SALE , to secure payment and performance to Beneficiary of the Liabilities at the time and in the manner provided for its payment in the Credit Agreement and in this Deed of Trust. PROVIDED, HOWEVER , these presents are upon the express condition that, if Grantor shall well and truly perform and pay to Beneficiary the Liabilities at the time and in the manner provided in the Credit Agreement, this Deed of Trust and the Other Documents, and shall well and truly perform the Liabilities as set forth in the Credit Agreement, this Deed of Trust and the Other Documents and shall well and truly abide by and comply with each and every covenant and condition set forth herein and in the Credit Agreement and the Other Documents, these presents and the estate hereby granted shall cease, terminate and be void and Beneficiary shall release the lien and security interest created by this Deed of Trust upon the request of and at the sole cost and expense of Grantor; provided, however, that any obligation of Grantor to indemnify and hold harmless Beneficiary pursuant to the Credit Agreement, this Deed of Trust and/or the Other Documents, to the extent specified herein or therein to survive, and any other obligation that is specifically agreed to survive such full repayment, performance and release and shall survive any such payment, performance or release.
All capitalized terms not otherwise defined herein shall have the meaning ascribed to them in the Tranche A Security Agreement. To the extent of any inconsistency between the terms hereof and the terms of the Tranche A Security Agreement, the terms of the Tranche A Security Agreement shall control, except that with respect to the remedies of a Trustee under the law of the State of Texas, the terms of this Deed of Trust shall govern; provided , however , that Grantor and Trustee expressly agree that no conflict shall be deemed to exist where one document imposes a stricter obligation than another, so long as compliance with the stricter obligation does not make compliance with the less strict obligation impossible. This Deed of Trust, the Tranche A Security Agreement, the other Collateral Documents (as defined in the Credit Agreement) and any other instrument given to evidence or further secure the payment and performance of any of the Liabilities are sometimes hereinafter collectively referred to as the " Other Documents" .
The present principal amount of the Liabilities secured hereby is $92,600,000; the maximum principal amount, including present and future Liabilities, which may be secured hereby at any one time is $92,600,000, plus interest, plus prepayment premium, if any, plus any disbursements and taxes and insurance on the Property and any other sums advanced in accordance with the terms hereof or the Credit Agreement or any of the Other Documents to protect the security of this Deed of Trust, the Credit Agreement or any of the Other Documents, plus interest on such disbursements and advances at the rates set forth in the Credit Agreement (the " Secured Amount" ). For purposes of this Deed of Trust, so long as the aggregate principal balance of the Liabilities outstanding equals or exceeds the Secured Amount, the amount of the Liabilities secured by this Deed of Trust shall at all times equal only the Secured Amount. The Secured Amount shall be reduced only by the last and final sums that are repaid with respect to the Liabilities so as to make the aggregate principal balance of the Liabilities equal to an amount less than the Secured Amount, and shall not be reduced by any intervening repayments of the Liabilities. The parties acknowledge and agree that this Deed of Trust does not secure the Tranche B Loans as evidenced by the Tranche B Notes or the obligations of the Guarantors under the Credit Agreement with respect to the Tranche B Loans.
AND Grantor covenants and agrees with and represents to Trustee as follows: 1. FUTURE ADVANCES; PROTECTION OF PROPERTY . This Deed of Trust shall secure any additional loans as well as any and all present or future advances and re-advances under the Credit Agreement or any other Liabilities made by Beneficiary or any Tranche A Lender to or for the benefit of Grantor, the Company, the other Guarantors or the Property, including, without limitation: (a) principal, interest, late charges, fees and other amounts due under the Credit Agreement, the Other Documents or this Deed of Trust; (b) all advances by Beneficiary to Grantor or any other person to pay costs of erection, construction, alteration, repair, restoration, maintenance and completion of any Improvements; (c) all advances made or costs incurred by Beneficiary for the payment of real estate taxes, assessments or other governmental charges, maintenance charges, insurance premiums, appraisal charges, environmental inspection, audit, testing or compliance costs, and costs incurred by Beneficiary for the enforcement and protection of the Property or the lien of this Deed of Trust; and (d) all legal fees, costs and other expenses incurred by Beneficiary and/or Trustee by reason of any default or otherwise in connection with the Liabilities. Grantor agrees that if, at any time during the term of this Deed of Trust or following a foreclosure hereof (whether before or after the entry of a judgment of foreclosure), Grantor fails to perform or observe any covenant or obligation under this Deed of Trust including, without limitation, payment of any of the foregoing, Trustee may (but shall not be obligated to) take such steps as are reasonably necessary to remedy any such nonperformance or nonobservance and provide payment thereof. All amounts advanced by Trustee or Beneficiary shall be added to the amount secured by this Deed of Trust (and, if advanced after the entry of a judgment of foreclosure, by such judgment of foreclosure), and shall be due and payable on demand, together with interest at the rate borne by the Tranche A Loans, such interest to be calculated from the date of such advance to the date of repayment thereof.
2. REPRESENTATIONS, WARRANTIES AND COVENANTS . 2.1. Payment and Performance . Grantor shall (a) pay all sums required to be paid by Grantor under the Credit Agreement and the Other Documents, in accordance with their stated terms and conditions; (b) perform and comply with all terms, conditions and covenants set forth in the Credit Agreement and each of the Other Documents by which Grantor is bound; and (c) perform and comply with all of Grantor' s obligations and duties as landlord under any Leases.
2.2. Seisin and Warranty . Grantor hereby warrants that (a) Grantor is seized of an indefeasible estate in fee simple in, and warrants the title to, the Real Estate and the Improvements subject only to those exceptions more particularly described in the title pro forma Policy No. 2211001064.M issued by Commonwealth Land Title Insurance Company and accepted by Beneficiary in connection with this transaction (the " Permitted Exceptions" ); (b) Grantor has the right, full power and lawful authority to warrant, grant, bargain, sell, convey, transfer, assign and set over the same to Trustee in the manner and form set forth herein; and (c) this Deed of Trust is a valid and enforceable first lien on the Property. Grantor hereby covenants that Grantor shall (a) preserve such title and the validity and priority of the lien of this Deed of Trust and shall forever warrant and defend the same, subject to the Permitted Exceptions, to Trustee against all lawful claims whatsoever; and (b) execute, acknowledge and deliver all such further documents or assurances as may at any time hereafter be required by Deed of Trust to protect fully the lien of this Deed of Trust. 2.3. Insurance .
(a) Grantor shall obtain and maintain at all times throughout the term of this Deed of Trust the following insurance: (i) insurance in accordance with the terms of the Credit Agreement;
(ii) " All-Risk" fire and extended coverage hazard insurance (non-reporting Commercial Property Policy with Special Cause of Loss form) covering the Property in an aggregate amount not less than 100% of the agreed upon full insurable replacement value of the tangible Property, including coverage for loss of rents or business interruption and excluding roads, foundations, parking areas, walkways and like improvements to the extent customarily excluded from policies being issued by insurers of similarly situated properties; (iii) during the course of any construction, reconstruction, remodeling or repair of any Improvements, builders' all-risk extended coverage insurance (non-reporting Completed Value with Special Cause of Loss form) in amounts based upon the completed replacement value of the Improvements (excluding roads, foundations, parking areas, paths, walkways and like improvements) and endorsed to provide that occupancy by any person shall not void such coverage; and (iv) if the Improvements are required to be insured pursuant to the National Flood Insurance Reform Act of 1994, and the regulations promulgated thereunder, flood insurance in an amount at least equal to the lesser of the agreed upon full insurable replacement value of the Improvements or the maximum limit of coverage available. (b) Each insurance policy required under this Section shall: (i) be written by an insurance company authorized or licensed to do business in the state within which the Real Estate is located having an Alfred M. Best Company, Inc. rating of " A-" or higher and a financial size category of not less than IX; (ii) be for terms of a least one year, with premium prepaid; (iii) be subject to the reasonable approval of Beneficiary as to insurance companies, amounts, content, forms of policies and expiration dates; and (iv) name Beneficiary, Trustee, their successors and assigns: (1) as additional insureds under all liability insurance policies, and (2) as the first mortgagee, under a standard non-contributory mortgagee clause, on all property insurance policies and all loss of rents or loss of business income insurance policies.
(c) Grantor further agrees that each insurance policy: (i) shall provide at least thirty (30) days' prior written notice to Beneficiary prior to any policy reduction or cancellation for any reason; (ii) shall contain an endorsement or agreement by the insurer that any loss shall be payable to Beneficiary in accordance with the terms of such policy notwithstanding any act or negligence of Grantor which might otherwise result in forfeiture of such insurance; (iii) shall waive all rights of setoff, counterclaim, deduction or subrogation against Grantor; and (iv) shall exclude Beneficiary from the operation of any coinsurance clause.
(d) On or before the date hereof, Grantor will deliver to Beneficiary certificates of insurance reasonably satisfactory to Beneficiary evidencing the existence of all insurance required to be maintained by Grantor hereunder setting forth the respective coverages, limits of liability, carrier, policy number and period of coverage and showing that such insurance will remain in effect through the December 31 falling at least six months after the date hereof, subject only to the payment of premiums as they become due, together with an Officers Certificate stating that such insurance complies with the provisions hereof. At least thirty (30) days prior to the expiration of any insurance policy, Grantor shall furnish evidence satisfactory to Beneficiary that such policy has been renewed or replaced or is no longer required. Nothing in this Section 2.3 shall be deemed to limit in any respect the obligations of the Grantor under any applicable provision of the Tranche A Security Agreement. 2.4. Transfer of Title . Except as expressly provided in the Credit Agreement, without the prior written consent of Beneficiary in each instance, Grantor shall not cause or permit any transfer of the Property or any part thereof, whether voluntarily, involuntarily (other than by reason of condemnation) or by operation of law, nor shall Grantor enter into any agreement or transaction to transfer, or accomplish in form or substance a transfer, of the Property. A " transfer" of the Property includes: (a) the direct or indirect sale, transfer or conveyance of the Property or any portion thereof or interest therein; (b) the
execution of an installment sale contract or similar instrument affecting all or any portion of the Property; (c) if Grantor, or any general partner or member of Grantor, is a corporation, partnership, limited liability company or other business entity, the transfer (whether in one transaction or a series of transactions) of any stock, partnership, limited liability company or other ownership interests in such corporation, partnership, limited liability company or entity other than the transfer of any such interest between or among the members of Grantor, or to the estate of its current owner, upon the death of such owner; (d) if Grantor, or any general partner or member of Grantor, is a corporation, the creation or issuance of new stock by which an aggregate of more than 10% of such corporation' s stock shall be vested in a party or parties who are not now stockholders; and (e) an agreement by Grantor leasing all or a substantial part of the Property for other than actual occupancy by a space tenant thereunder or a sale, assignment or other transfer of or the grant of a security interest in and to any Leases.
2.5. No Encumbrances . Except as permitted in the Credit Agreement and for the Permitted Exceptions, Grantor shall not create or permit to exist any mortgage, deed of trust, pledge, lien, security interest (including, without limitation, a purchase money security interest), encumbrance, attachment, levy, distraint or other judicial process on or against the Property or any part thereof (including, without limitation, fixtures and other personalty), whether superior or inferior to the lien of this Deed of Trust.
2.6. Removal of Fixtures . Except as permitted in the Credit Agreement or the Tranche A Security Agreement, Grantor shall not remove or permit to be removed from the Real Estate any fixtures presently or in the future owned by Grantor as the term " fixtures" is defined by the law of the state where the Property is located (unless such fixtures have been replaced with similar fixtures of equal or greater utility and value). 2.7. Compliance with Applicable Laws . Grantor agrees to observe, conform and comply, and to cause its tenants to observe, conform and comply in all material respects with all applicable federal, state, county, municipal and other governmental or quasi-governmental laws, rules, regulations, ordinances, codes, requirements, covenants, conditions, orders, licenses, permits, approvals and restrictions, including without limitation, Environmental Laws (as defined below) and the Americans with Disabilities Act of 1990 (collectively, the " Legal Requirements" ), now or hereafter affecting all or any part of the Property, its occupancy or the business or operations now or hereafter conducted thereon and the personalty contained therein, within such time as required by such Legal Requirements to the extent the non-observance, non-conformance or non-compliance with the Legal Requirements could have a Material Adverse Effect. Grantor represents and warrants that the Property currently is in compliance in all material respects with all Legal Requirements applicable to the Property.
2.8. Damage, Destruction and Condemnation . (a) If all or any part of the Property shall be damaged or destroyed, or if title to or the temporary use of the whole or any part of the Property shall be taken or condemned by a competent authority for any public or quasi-public use or purpose, subject to the terms of the Credit Agreement, there shall be no abatement or reduction in the amounts payable by Grantor under the Credit Agreement and Grantor shall continue to be obligated to make such payments.
(b) If all or any part of the Property is partially or totally damaged or destroyed, Grantor shall give prompt notice thereof to Beneficiary, and Beneficiary may make proof of loss if not made promptly by Grantor. Grantor hereby authorizes and directs any affected insurance company to make payment in excess of $500,000 under such insurance, including return of unearned premiums, to Beneficiary instead of to Grantor and Beneficiary jointly, and Grantor appoints Beneficiary as Grantor' s attorney-in-fact to endorse any draft thereof, which appointment, being for security, is coupled with an
interest and irrevocable. Beneficiary is hereby authorized and empowered by Grantor to settle, adjust or compromise, any claim for loss, damage or destruction to the Property if Grantor does not promptly settle, adjust or compromise such claim. Grantor shall pay all costs of collection of insurance proceeds payable on account of such damage or destruction. Grantor shall have no claim against the insurance proceeds, or be entitled to any portion thereof, and all rights to the insurance proceeds are hereby assigned to Beneficiary as security for payment of the Liabilities. Beneficiary and Grantor shall pay or apply all or any part of the insurance proceeds in accordance with the terms of the Credit Agreement.
(c) Promptly upon obtaining knowledge of the institution of any proceeding for the condemnation of all or any part of the Property, Grantor shall give notice to Beneficiary. Grantor shall, at its sole cost and expense, diligently prosecute any such proceeding and shall consult with Beneficiary, its attorneys and experts, and shall cooperate with it in the defense of any such proceeding. Beneficiary may participate in any such proceeding and Grantor shall from time to time deliver to Benefi